ASSET PURCHASE AGREEMENT

Exhibit 10.1

Execution Version

ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is made and entered into as of the 17^th day of 2010 by and among B&B Roadway and Security Solutions, LLC, a Delaware limited liability company (“Buyer”), B&B ARMR Corporation, a Delaware corporation (“Seller”) and Integrated Security Systems, Inc., a Delaware corporation (“Parent”).

W I T N E S S E T H :

WHEREAS, Seller designs, engineers, manufactures, distributes and services anti-terrorist crash rated barriers, parking and traffic control equipment and other security systems in the commercial or government sectors (collectively, the “Business”);

WHEREAS, Seller desires to sell substantially all of its assets to Buyer, and Buyer desires to acquire such assets and assume certain balance sheet liabilities and obligations from Seller (the “Transaction”); and

WHEREAS, Parent, as the parent of Seller, intends to ensure performance by Seller of its obligations hereunder.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements, and upon the terms and conditions hereinafter set forth, the parties do hereby agree as follows:

ARTICLE I
PURCHASE AND SALE

1.1

Purchase of Assets.  Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 5.1), Seller shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall purchase, acquire and accept from Seller all of the assets (collectively, the “Acquired Assets”) of Seller (other than Excluded Assets (as defined in Section 1.2)), free and clear of all liens, mortgages, pledges, security interests, charges, claims, options or other encumbrances (collectively, “Liens”), except for Permitted Liens (as defined below) expressly including, but not limited to:

(a)

Cash and cash equivalents;

(b)

Accounts, notes and other receivables and all rights relating thereto existing or accrued as of the Closing Date (as defined in Section 5.1), including receivables owing by Xxxxxx Xxxx Enterprises, Inc. (“CLE”) and B&B Roadway, LLC (“B&B Roadway”), but specifically excluding (x) receivables from any account debtor that as of the Closing Date is in bankruptcy or otherwise in a reorganization process and (y) receivables owing by Parent or any Affiliate (as defined below) of Seller or Parent other than B&B Roadway (the “Acquired Receivables”);

(c)

Inventories and supplies;

(d)

Prepaid expenses;

(e)

All vehicles, equipment, furniture, fixtures and other tangible personal property, except as set forth on Schedule 1.2;

(f)

All rights in, to and under all contracts, agreements, leases, sales and purchase orders, commitments and other instruments (collectively, “Contracts”) to be assigned pursuant to Section 1.4;

(g)

All rights in and to any employment, confidentiality and/or non-competition agreements between Seller and its current and former employees, consultants and suppliers;

(h)

All rights in and to any licenses, certificates, approvals, permits and other authorizations, to the extent assignable, issued or to be issued by any Governmental Authority (as defined in Section 2.5);

(i)

Copies of all business and accounting records, data, supplier, dealer, broker, distributor and customer lists, manuals, books, files, procedures, systems, business records, production records, advertising materials and other proprietary information relating to the Business, in each case subject to the requirements of law (collectively, “Records”);

(j)

All Intellectual Property (as defined in Section 2.13);

(k)

All claims, deposits, refunds, rebates, causes of action, choses in action, rights of recovery, rights of recoupment and other rights of action against third parties, except to the extent the same relate to any Excluded Assets;

(l)

All transferable warranties or similar rights;

(m)

All membership interests of B&B Roadway owned by Seller (the “B&B Roadway Membership Interest”);

(n)

All limited liability company records of B&B Roadway in possession of Seller or Parent, including B&B Roadway’s corporate minute books, stock records, certificate of formation, company agreement and related corporate documents and instruments (provided, however, the Seller may retain copies of all such items) ; and

(o)

All other intangible personal property and the goodwill associated with the Business.

For purposes of this Agreement, the following terms shall have the meaning set forth below:

“Permitted Liens” means (i) Liens for Taxes (as defined in Section 2.7), assessments and other governmental charges that are not yet due and payable, (ii) Liens arising under original purchase price conditional sales contracts and equipment leases with third parties, (iii) easements, covenants, conditions and restrictions of record and (iv) mechanic’s, materialman’s, supplier’s, vendor’s or similar Liens arising or incurred in the ordinary course of business securing amounts that are not overdue for a period of more than sixty (60) days.

“Affiliate” shall mean (x) any Person or entity directly or indirectly controlling, controlled by, under common control with another Person or entity, or through one or more intermediaries, controls another Person or entity, (y) any director, officer, partner or employee of a Person or entity, or (z) any father, mother, brother, sister or immediate descendant of a Person; a Person or entity shall be deemed to control another Person or entity if such Person or entity possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person or entity, whether through ownership of voting securities, by contract, or otherwise.

1.2

Excluded Assets.  Notwithstanding anything contained in Section 1.1 to the contrary, Seller shall not sell to Buyer, and Buyer shall not acquire any of the following assets (collectively, the “Excluded Assets”):  (i) all corporate records of Seller not otherwise identified in Section 1.1 above, including Seller’s corporate minute books, stock records, certificate of incorporation, bylaws and related corporate documents and instruments; (ii) the assets listed on Schedule 1.2; (iii) all personnel records and other records that Seller is required by law to retain in its possession; (iv) all rights in connection with, and assets of, any Employee Benefit Plans other than those Employee Benefit Plans set forth on Schedule 1.4(a); (v) all shares of capital stock of Seller held in treasury by Parent; and (vi) all rights of Seller under this Agreement and all other documents entered into in connection with the transactions contemplated hereby (including the Note), and all consideration received by Seller pursuant to Section 1.3.

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1.3

Consideration.  The total consideration (the “Total Consideration”) for the Acquired Assets shall consist of (i) cash in the amount of $5,550,000 (the “Cash Portion”), as adjusted pursuant to Section 1.5, plus (ii) a promissory note in the original principal amount of $450,000 and in the form of Exhibit A attached hereto (the “Note”), plus (iii) the assumption of certain liabilities as provided in Section 1.4.  The Cash Portion shall be payable at the Closing as follows: (i) 95% of the Cash Portion shall be paid to Seller, as such amount may be adjusted pursuant to Sections 1.4(c) and 1.5(a), and (ii) 5% of the Cash Portion (the “Escrow Amount”) shall be deposited into escrow with HAL Commercial Escrow Services, Inc. (the “Escrow Agent”) to be held pursuant to the terms of the Escrow Agreement (as defined in Section 5.2(d)).

1.4

Assumption of Liabilities.

(a)

On and subject to the terms and conditions of this Agreement, as of and after the Effective Time (as defined in Section 5.1), Buyer shall assume the following liabilities and obligations (the “Assumed Liabilities”): (i) all trade payables and accrued expenses existing as of the Effective Time to the extent such liabilities are incurred in the ordinary course but excluding any contingent liabilities or liabilities of the type described in Section 1.4(b), (ii) all contractual liabilities of Seller under the Contracts assigned to Buyer and listed on Schedule 1.4(c)  and any Contracts entered into after the date of this Agreement in the ordinary course of business of Seller to the extent such Contracts are disclosed to Buyer in an update to Schedule 1.4(c) at least two (2) days prior to Closing and accepted by Buyer in writing (the “Assumed Contracts”) but only with respect to performance obligations arising after the Effective Time, (iii) all liabilities and obligations under the Employee Benefit Plans (as defined in Section 2.14) set forth on Schedule 1.4(a), but only with respect to liabilities and obligations that accrue after the Effective Time, and (iv) all liabilities and obligations under any and all product or service warranties furnished to Seller’s customers with respect to goods and products sold or services provided to such customers on or prior to the Closing Date (“Warranty Claims”).

(b)

Except as expressly provided in Section 1.4(a) above, Buyer shall not assume or be liable for any other liabilities, obligations or duties of Seller.  Without limiting the preceding sentence, Buyer will not assume or be responsible for any of the following:

(i)

any liability of Seller or Parent for Taxes;

(ii)

other than accounts payable owing to CLE or B&B Roadway, any liability of Seller with respect to accounts payable or accrued expenses or other obligations that are subject to a payment plan, are past due by more than ninety (90) days or have otherwise been written off (the “Excluded Payables”);

(iii)

any liability associated with or arising out of any Excluded Asset;

(iv)

any liability of Seller to indemnify any natural person, corporation, partnership, association, trust, business trust, limited liability company, joint venture organization, whether or not a legal entity, or a Governmental Authority or other entity(collectively, a “Person”), unless such indemnity is set forth in the Assumed Contracts;

(v)

any claims or pending or threatened litigation against Seller, the Acquired Assets or the Business relating to events occurring prior to the Closing Date regardless of when such claims are asserted or such litigation or proceedings commenced;

(vi)

other than accounts payable owing to CLE or B&B Roadway, any liability of Seller relating to intercompany obligations or other obligations between Seller and Parent or any other Affiliate of Seller;

(vii)

any liability of Seller for costs and expenses incurred in connection with the transactions contemplated by this Agreement;

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(viii)

indebtedness for borrowed money, capital lease obligations, deferred purchase price of property or services or other interest bearing obligations of Seller or any guarantee by Seller of any of the foregoing, except with respect to Permitted Liens;

(ix)

accrued workers’ compensation and medical insurance liabilities for any period prior to the Effective Time;

(x)

except as provided in clauses (ii) and (iii) of Section 1.4(a) above, any liability or obligation under any Employee Benefit Plan (as defined in Section 2.14);

(xi)

any liability of Seller under any Contract that is not an Assumed Contract;

(xii)

liabilities to any Governmental Authority except with respect to the Assumed Contracts;

(xiii)

tort liabilities of Seller;

(xiv)

criminal claims against Seller;

(xv)

any other liabilities of Seller not expressly assumed hereunder; or

(xvi)

any liability of Seller under this Agreement.

(c)

To the extent that after Closing an Excluded Payable is owed to a current vendor of Buyer and such vendor threatens to either cease supplying products to Buyer or to materially change the payment terms applicable to such vendor unless the applicable Excluded Payable is paid current, Buyer shall have the right to pay such Excluded Payable on behalf of Seller and obtain reimbursement against Seller or as provided in Section 6.7(e).  

1.5

Working Capital Adjustment.

(a)

Prior to Closing, Buyer and Seller shall estimate the Closing Net Working Capital (as defined below).  To the extent the estimated Closing Net Working Capital is less than $230,000, the Cash Portion shall be reduced on a dollar-for-dollar basis by the shortfall (the “Preliminary Adjustment”).  For purposes of this Agreement, “Closing Net Working Capital” means the Net Working Capital as of the Effective Time.  The “Net Working Capital” means the book value of the current assets of Seller included in the Acquired Assets less the current liabilities of Seller included in the Assumed Liabilities (including Seller’s 65% interest in B&B Roadway’s net working capital), as calculated in accordance with Exhibit B attached hereto.

(b)

Within sixty (60) days following the Closing, Buyer shall prepare a balance sheet of the Business reflecting the Acquired Assets and Assumed Liabilities as well as the working capital of B&B Roadway as of the Effective Time (the “Closing Balance Sheet”).  The Closing Balance Sheet shall be prepared in accordance with generally accepted accounting principles consistently applied (“GAAP”) and consistent with Exhibit B, and (to the extent consistent with the foregoing) prepared on the same basis and applying the same accounting principles, policies and practices that were used in estimating the Closing Net Working Capital pursuant to Section 1.5(a).  The Closing Balance Sheet shall include an accrual for employee bonuses for the period July 1, 2010 through the Closing Date.  Based on the Closing Balance Sheet, Buyer shall calculate the Closing Net Working Capital and the post-Closing cash adjustment, which shall equal the amount, if any, by which the Closing Net Working Capital is less than or exceeds $230,000 (the amount by which the Closing Net Working Capital is less than or exceeds $230,000, the “Post-Closing Adjustment”). Buyer shall submit the Closing Balance Sheet along with its calculation of the Post-Closing Adjustment to Seller and if Seller does not object to the amount of the Post-Closing Adjustment within twenty (20) days of receipt thereof, Seller shall pay to Buyer (if the Closing Net Working Capital is less than $230,000) or Buyer shall pay to Seller (if the Closing Net Working Capital exceeds $230,000), as the case may be, an amount equal to the Post-Closing Adjustment, but in either case taking into account any Preliminary Adjustment, not later than twenty (20) days following receipt of the Closing Balance Sheet.

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(c)

If Seller objects to the Post-Closing Adjustment, it shall notify Buyer within thirty (30) days following receipt thereof, setting forth in specific detail the basis for its objection and its proposal for any adjustments to the Post-Closing Adjustment.  Buyer and Seller shall use their reasonable best efforts to reach agreement as to any such proposed adjustment or that no such adjustment is necessary.  If agreement is reached as to all proposed further adjustments or that no adjustments are necessary, the parties shall make such adjustments, if any, and the Post-Closing Adjustment shall be based thereon, and Seller or Buyer, as the case may be, shall pay the amount of the Post-Closing Adjustment within ten (10) days of such agreement.  If Buyer and Seller are unable to reach agreement within thirty (30) days of notification to Buyer of an objection to the Post-Closing Adjustment, then an independent accounting firm mutually acceptable to Buyer and Seller (or if the parties are unable to agree upon a firm, each party shall select a firm and the two firms together shall select a third firm to make the determination hereunder) (the “Independent Firm”) shall be engaged to review the proposed adjustments as to which agreement has not been reached and shall make a determination as to the resolution of the proposed adjustments to cause the Post-Closing Adjustment to have been properly prepared in accordance with the provisions of this Agreement.  Each party shall be given the opportunity to make presentations to such Independent Firm.  All resolutions rendered by the Independent Firm shall represent either agreement with the position taken by Buyer or Seller or a compromise between such positions.  The determination of the Independent Firm shall be final, conclusive and binding upon Buyer and Seller.  Thereafter, either Seller or Buyer, as the case may be, shall pay to the other party not later than ten (10) days following a determination of adjustments by the Independent Firm, an amount in cash equal to the Post-Closing Adjustment, as determined by the Independent Firm.  Either Buyer or Seller, as the case may be, shall pay the costs of the Independent Firm, depending on which party’s calculation of the Post-Closing Adjustment is further from the Post-Closing Adjustment determined by the Independent Firm.

(d)

If Seller fails to pay the Post-Closing Adjustment, if any, within the time period prescribed herein, Buyer shall have the right, but not the obligation, to recover the amount owing pursuant to this Section 1.5 against the Escrow Amount; provided, that any recovery of the Post-Closing Adjustment from the Escrow Amount shall not in any way reduce the maximum liability of Seller and Parent pursuant to Section 6.7(d).  If Buyer fails to pay the Post-Closing Adjustment, if any, within the time period prescribed herein, Seller shall have the right, but not the obligation, to recover the amount owing pursuant to this Section 1.5 against the Escrow Amount, and any recovery of the Post-Closing Adjustment from the Escrow Amount shall reduce the maximum liability of Seller and Parent pursuant to Section 6.7(d) by the amount recovered from the Escrow Amount.

1.6

Federal Income Tax Treatment.

(a)

For federal income tax purposes, the transactions contemplated by this Agreement shall be treated: (A) with respect to the Acquired Assets other than the B&B Roadway Membership Interest (the “Non-Equity Assets”), as a sale by Seller, and purchase by Holdings, of assets (i.e., the Non-Equity Assets) (the “Non-Equity Transaction”), and (B) with respect to the B&B Roadway Membership Interest, in accordance with Revenue Ruling 99-6, 1999-1 C.B. 432 (Situation 2) (i) as a sale of partnership interests with respect to the Seller and (ii) with respect to Holdings, as a purchase by Holdings of all of the assets of B&B Roadway and assumption by Holdings of all of the liabilities of B&B Roadway (other than liabilities for which Buyer is required to be indemnified pursuant to this Agreement) (the “B&B Roadway Transaction”).  For purposes of clause (B), Buyer, Holdings and Seller acknowledge and agree that Buyer’s acquisition of the B&B Roadway Membership Interest from Seller pursuant to this Agreement is integrally related to and dependent upon Buyer’s acquisition of all membership interests of B&B Roadway not owned by Seller pursuant to the transaction with CLE contemplated by Section 5.2(i) of this Agreement.

(b)

Buyer, Holdings, Seller and the Principals shall file all income tax returns or reports, including without limitation, IRS Form 8594, for their respective taxable years in which the Closing occurs to reflect an allocation of the amount of the Total Consideration in a manner consistent with the allocations set forth on Schedule 1.6(b).  The amount allocated to the Non-Equity Assets pursuant to such Schedule shall be treated as consideration paid pursuant to the Non-Equity Transaction.  The amount allocated to the B&B Roadway Membership Interest pursuant to such Schedule shall be treated as consideration paid pursuant to the B&B Roadway Transaction.

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(c)

Buyer, Holdings, Seller and the Principals shall not take any position inconsistent with the foregoing provisions of this Section 1.6 before any governmental agency charged with the collection of taxes or in any judicial proceedings relating to such tax reporting, unless otherwise required by applicable law.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT

Seller and Parent make the following representations and warranties to Buyer.  All references in Sections 2.4 – 2.25 to Seller shall be deemed to include references to B&B Roadway, except that all such representations and warranties with respect to B&B Roadway shall be made to the Knowledge of Seller.  For purposes hereof, to the “Knowledge of Seller” shall mean to the actual knowledge of Xxxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxx Xxxxxx, and Xxxxxx Xxxxxxx.  Seller and Parent jointly and severally represent and warrant as follows:

2.1

Existence and Good Standing.  

(a)

Seller.  Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.  Seller has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  Seller is duly qualified or licensed as a foreign corporation and in good standing in each jurisdiction in which the character or location of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, which jurisdictions are listed on Schedule 2.1.  Except as disclosed on Schedule 2.1, Seller does not have any subsidiaries or otherwise own an interest in any other Person.  

(b)

B&B Roadway.  B&B Roadway is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas.  B&B Roadway has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  B&B Roadway is duly qualified or licensed as a foreign corporation and in good standing in each jurisdiction in which the character or location of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary, which jurisdictions are listed on Schedule 2.1.  Except as disclosed on Schedule 2.1, B&B Roadway does not have any subsidiaries or otherwise own an interest in any other Person.  

2.2

Capitalization and Ownership of Seller.  

(a)

Seller.  The capitalization of Seller consists of 1,000 shares of common stock, par value $0.01 per share, and all issued and outstanding shares are owned by Parent.  All of the outstanding stock of Seller has been duly authorized, validly issued and is fully paid and nonassessable, and none of such capital stock was issued in violation of any preemptive or preferential right.  

(b)

B&B Roadway.  Seller owns the B&B Roadway Membership Interest, which is a 65% membership interest in B&B Roadway.  Such interest is owned free and clear of any Liens.  There are no outstanding conversion or exchange rights, subscriptions, options, warrants or other arrangements or commitments obligating B&B Roadway to issue any capital stock or other securities. There are no outstanding or authorized stock appreciation, phantom stock or similar rights with respect to B&B Roadway.  There are no agreements, written or oral, relating to the acquisition, disposition, voting or registration under applicable securities laws of any security of B&B Roadway.

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2.3

Authorization of Seller and Parent.

(a)

Subject to the approval of this Agreement and the transactions contemplated hereby by the stockholders of Parent (the “Parent Stockholder Approval”), Seller has the requisite corporate power and authority to execute this Agreement and all other agreements and documents contemplated hereby to which it is party.  Subject to Parent Stockholder Approval,  the execution and delivery of this Agreement and such other agreements and documents by Seller and the consummation by Seller of the transactions contemplated hereby have been duly authorized by Seller and no other action on the part of Seller is necessary to authorize the transactions contemplated hereby.  This Agreement has been duly executed and delivered by Seller and (subject to Parent Stockholder Approval) constitutes the valid and binding obligation of Seller, enforceable in accordance with its terms, except that (i) enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and (ii) the remedies of specific performance and injunctive relief are subject to certain equitable defenses and to the discretion of the court before which any proceedings may be brought.

(b)

Subject to Parent Stockholder Approval, Parent has the requisite corporate power and authority to execute this Agreement and all other agreements and documents contemplated hereby to which it is party.  Subject to Parent Stockholder Approval, the execution and delivery of this Agreement and such other agreements and documents by Parent and the consummation by Parent of the transactions contemplated hereby have been duly authorized by Parent.  Subject to Parent Stockholder Approval, Parent has received the requisite approval by its stockholders to consummate the transactions contemplated hereby, and no other action on the part of Parent is necessary to authorize the transactions contemplated hereby except as contemplated by Section 4.2.  Subject to Parent Stockholder Approval, this Agreement has been duly executed and delivered by Parent and constitutes the valid and binding obligation of Parent, enforceable in accordance with its terms, except that (i) enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and (ii) the remedies of specific performance and injunctive relief are subject to certain equitable defenses and to the discretion of the court before which any proceedings may be brought.

2.4

Financial Statements and Related Matters.

(a)

Seller has previously furnished to Buyer (i) the audited balance sheet of Parent at June 30, 2010 and June 30, 2009, and the related statements of income and cash flows for the fiscal years then ended together with the report thereon by Xxxxxxxxxx Xxxxxx Xxxxxxxx L.L.P., and (ii) the internal balance sheet of Seller at October 31, 2010 and the related statements of income for the four (4) months then ended (the financial statements referenced in clauses (i) and (ii) are collectively referred to as the “Financial Statements”), copies of which are attached hereto as Schedule 2.4(a).  The Financial Statements are complete and accurate in all material respects and present fairly the financial position and results of operations of Seller as of the indicated dates and for the indicated periods, make full provision for all established, deferred or contingent liabilities to the extent required by GAAP and have been prepared in accordance with GAAP consistently applied; provided, however, the interim Financial Statements are subject to normal year-end adjustments and lack footnotes and other presentation items.  

(b)

Except to the extent (and not in excess of the amounts) reflected in the balance sheet of Seller at October 31, 2010 (the “Recent Balance Sheet”) or as disclosed on Schedule 2.4(b), Seller does not have and is not aware of any liabilities or obligations of any nature, whether absolute, accrued, unmatured, contingent or otherwise, or any unsatisfied judgments or any unusual or extraordinary commitments of the type required to be disclosed in a balance sheet prepared in accordance with GAAP other than trade payables and accrued expenses incurred in the ordinary course of business since the date of the Recent Balance Sheet.

(c)

Since June 30, 2010, (i) the Business has been conducted only in the ordinary course consistent with past practice, and (ii) there has not been any change in the accounting methods, principles or practices of Seller.

(d)

The accounts receivable to be assigned hereunder represent valid and bona fide sales to third parties incurred in the ordinary course of business, subject to no known defenses, set-offs or counterclaims.  All such receivables are and will be collectible in full at their recorded amounts, subject to any reserves for doubtful accounts and sales allowances reflected in the Closing Balance Sheet.

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(e)

The accounts receivable set forth on the Recent Balance Sheet and those accounts receivable accruing through the Closing Date represent valid and bona fide charges for services to third parties incurred in the ordinary course of business consistent with past practice, subject to no defenses, set-offs or counterclaims and are collectible in full at their recorded amounts in the ordinary course of business, subject to any reserves for doubtful accounts and sales allowances established therefor but not in excess of the amount of the reserve and sales allowances reflected in the applicable Recent Balance Sheet.

(f)

The inventories of Seller consist of items of a quality and quantity which are useable or saleable in the ordinary course of business.  All of the inventories have been maintained at adequate levels for the Business in normal course consistent with past practice and taking into account normal seasonality, no writedown of the value of such inventories has occurred or is required under GAAP (other than as reflected on the Financial Statements and the Recent Balance Sheet), and no additional amounts have been reserved with respect to such inventories.  

(g)

Set forth on Schedule 2.4(g) is a list of Seller’s payables and accrued expenses as of October 31, 2010 that are subject to a payment plan, are past due by more than ninety (90) days or have otherwise been written off.

2.5

SEC Filings.  Since July 1, 2008, as of their respective dates or, if amended and publicly available prior to the date of this Agreement, as of the date of such amendment with respect to those disclosures that are amended, the forms and documents filed by Parent with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including the financial statements and schedules provided therein or incorporated by reference therein, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  Seller is not subject to the periodic reporting requirements of the Exchange Act or required to file any form, report or other document with the SEC, any stock exchange or any other comparable Governmental Authority.

2.6

No Violation.  Except for the consents, authorizations and approvals listed on Schedule 2.7 and required to be obtained at or prior to Closing, the execution, delivery and performance of this Agreement and the other agreements and documents contemplated hereby by Seller and the consummation of the transactions contemplated hereby will not (i) violate any provision of the articles of incorporation or bylaws of Seller; (ii) violate any law, rule, code, statute, regulation (including foreign, federal, state and local), standard or ordinance (collectively, “Laws”) or order, writ, judgment, injunction, decree, ruling or consent (collectively “Orders”) of any governmental, regulatory or administrative body, department, commission, board, bureau, agency or instrumentality, any court or judicial authority or any public, private or industry regulatory authority, in each case whether federal, state, local or foreign (collectively, “Governmental Authority”) by which Seller or any of its properties or assets are bound; or (iii) result in a violation or breach of, or constitute a default under, or result in the creation of any Lien upon, or create any rights of termination, cancellation or acceleration in any Person with respect to any Contract to which Seller is a party or any license, franchise, permit authorization or certificate of any Governmental Authority (collectively, “Permits”) of Seller, or any other Contract to which Seller is a party or by which any of its properties or assets are bound.

2.7

Consents.  Except as set forth on Schedule 2.7, no Order or filing, including without limitation any consent, approval or other authorization of any Governmental Authority or under any Material Contract (as defined in Section 2.12) to which Seller is a party or by which its assets are bound is required as a result of or in connection with the execution or delivery of this Agreement and the other agreements and documents to be executed by Seller or the consummation by Seller of the transactions contemplated hereby.

2.8

Tax Matters.  Except as set forth on Schedule 2.8 hereto,

(a)

Returns and Reports.  All Tax returns and reports required to be filed by or on behalf of Seller are true, correct and complete in all material respects, have been duly and timely filed in accordance with all applicable Laws or extensions of time within which to file such returns have been obtained, and the income, activities, operations and transactions of Seller have been properly included and correctly reflected thereon.

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(b)

Payment.  (i) Seller has paid or, in case of Taxes not yet due, has made adequate provision on the Financial Statements for the payment of all Taxes for which Seller is or may become liable for payment; (ii) all Tax deficiencies assessed against Seller for which Seller may be directly or indirectly liable as a result of any examination of Tax returns of Seller have been paid, and (iii) Seller is not, as of the date hereof, the subject of any audit or other proceeding in respect of payment of Taxes for which Seller may be directly or indirectly liable and, to the Knowledge of Seller, no such proceeding has been threatened.

(c)

Extensions.  No agreements, waivers, or other arrangements exist providing for an extension of time or statutory periods of limitations with respect to payment by, or assessment against, Seller for any Tax for which Seller may be directly or indirectly liable and no written request for any such agreement, waiver or other arrangement has been made and is currently outstanding.

(d)

Proceedings.  No suits, actions, claims, or proceedings have been asserted or, to the Knowledge of Seller, have been threatened against Seller in respect of any Tax for which Seller may be directly or indirectly liable.

(e)

Tax Liens.  There are no Tax Liens as of the date hereof upon any of the assets of Seller, except for statutory Liens for Taxes not yet due or delinquent.

(f)

Withholding.  The amounts of Taxes withheld by or on behalf of Seller with respect to all compensation paid to employees, contractors, consultants or other persons for all periods ending on or before the date hereof have been proper and accurate in all material respects, and all deposits required with respect to compensation have been made in compliance in all material respects with the provisions of all applicable Tax laws.

(g)

Tax Sharing or Allocation Agreements.  B&B Roadway is not a party to or bound by any tax indemnity, tax sharing or tax allocation agreement.

(h)

Classification as a Partnership.  B&B Roadway is, and at all times since its formation has been, classified as a partnership for federal income tax purposes.  B&B Roadway has not made an election to be treated as an association taxable as a corporation for federal income tax purposes.

(i)

Claims in Other Jurisdictions.  No claim has ever been made by a Governmental Authority in a jurisdiction where Seller does not file Tax returns that it is or may be subject to taxation by that jurisdiction.

(j)

Transferee Liability.  Seller does not have any liability for the Taxes of any Person as a transferee or successor, by contract, or otherwise.

For purposes hereof, the terms “Tax” or “Taxes” include any federal, foreign, state, county, and local income, gross receipts, excise, import, property, franchise, ad valorem, license, sales or use tax or other withholding, social security, Medicare, unemployment compensation or other employment-related tax, or any other charge (including any Tax liability incurred or borne as a transferee or successor or by contract or otherwise), together with all deficiencies, penalties, additions, interest, assessments, and other governmental charges with respect thereto.

2.9

Assets and Properties.

(a)

Real Property.  Seller does not own, nor does Seller hold any options or contractual obligations to purchase or acquire, any interest in any real property.

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(b)

Real Property Leases.  Set forth on Schedule 2.9(b) is a list of all leases and subleases under which Seller is lessee or sublessor or sublessee of any real property, together with all amendments, supplements, nondisturbance agreements, brokerage and commission agreements and other agreements pertaining thereto (“Real Property Leases”).  There are no Liens on Seller’s interest in the Real Property Leases, subject only to (i) Liens for taxes and assessments not yet due and payable, and other liens that are created by statute or except as provided in the Real Property Leases,  and (ii) those matters set forth on Schedule 2.9(b).  The Real Property Leases listed on Schedule 2.9(b) are in full force and effect and (x) constitute binding obligations of Seller, except that (i) enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and (ii) the remedies of specific performance and injunctive relief are subject to certain equitable defenses and to the discretion of the court before which any proceedings may be brought, and to the Knowledge of Seller, the other parties thereto, (y) there are no defaults thereunder by Seller, or to the Knowledge of Seller, the other party thereto, and (z) to the Knowledge of Seller, no event has occurred which with notice, lapse of time or both would constitute a default by Seller or by any other party thereto.  Seller has materially complied with and timely performed all conditions, covenants, undertakings and obligations on its part to be complied with or performed under each of the Real Property Leases.  Seller has paid all rents and other charges to the extent due and payable under the Real Property Leases.  To the Knowledge of Seller, there are no leases, subleases, licenses, concessions or any other contracts or agreements granting to any Person other than Seller any right to the possession, use, occupancy or enjoyment of any real property leased by Seller or any portion thereof.

(c)

Personal Property.  Attached hereto as Schedule 2.9(c) is a true and complete fixed asset listing for Seller.  Seller owns or leases all of its inventory, equipment and other personal property (both tangible and intangible) free and clear of any Lien, except for Permitted Liens or as set forth on Schedule 2.9(c).  Except for Permitted Liens, the Liens on Schedule 2.9(c) will be released at or prior to Closing.    

(d)

Condition of Properties.  Except as set forth on Schedule 2.9(d), Seller’s equipment and other personal property (when taken as a whole, and not on an item by item basis) are usable in the ordinary course of business and conform in all material respects to all applicable Laws relating to their use and operation as they are currently used in the conduct of the Business.  The leasehold estates which are the subject of the Real Property Leases (the “Leased Properties”) and the tangible personal property owned or leased by Seller are in good operating condition and repair, ordinary wear and tear excepted; and Seller does not have Knowledge of any condition or defect of any leasehold estate that has materially affected the use or operation of any Leased Property or otherwise had a material adverse effect on the Business or the assets, operations, financial condition, results of operations of Seller and B&B Roadway, taken as a whole, other than as a result of (i) changes adversely affecting the United States economy (so long as Seller is not disproportionately affected thereby), or (ii) changes adversely affecting the industry in which Seller operates (so long as Seller is not disproportionately affected thereby) (a “Material Adverse Effect”).

(e)

Compliance.  Except for such violations as could not reasonably be expected to have a Material Adverse Effect, to the Knowledge of Seller the continued operation, use and occupancy of the Leased Properties as currently operated, used and occupied will not violate any zoning, building, health, flood control, fire or other law, ordinance, order or regulation, any restrictive covenant or other applicable Law.  Except as set forth on Schedule 2.9(e), to the Knowledge of Seller there are no violations of any Law affecting any portion of the Leased Properties or the Business and no written notice of any such violation has been issued by any Governmental Authority, except for such violations as could not reasonably be expected to have a Material Adverse Effect.

(f)

Sufficiency of Assets.  Except for Acquired Assets that will be sold or otherwise disposed of in the ordinary course of business prior to Closing, the Acquired Assets constitute all of the material assets, properties, licenses, rights, permits and contracts that are being used in and that are necessary for the operation of the Business as presently conducted.

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2.10

Compliance with Laws.  Seller (i) is in compliance with all applicable Laws, except for such violations as could not reasonably be expected to have a Material Adverse Effect, and (ii) possesses all necessary Permits to conduct its business in the manner in which and in the jurisdictions and places where such business is now conducted, except for such Permits as could not reasonably be expected to have a Material Adverse Effect.  Set forth on Schedule 2.10 is a list of all material Permits and all applications pending before any Governmental Authority for the issuance of any Permits or the renewal thereof.  There are no other such Permits which are material to Seller or the Business, which Seller has not obtained or which in good industry practice Seller should hold for the conduct of the Business.  Seller is not in default, nor has it received any written notice of, nor is there, to the Knowledge of Seller, any claim or threatened claim of default, with respect to any such Permit.  No present or former director, officer, employee or shareholder of Seller, any Affiliates, or any other Person owns or has any proprietary, financial or other interest (direct or indirect) in any Permit which Seller owns, possesses, operates under or pursuant to or uses.

2.11

Environmental Laws and Regulations.

(a)

(i) Seller is in compliance with all applicable Environmental Requirements (as defined below) relating to the Business and the Leased Properties including, but not limited to, those relating to the use, storage, release, treatment, disposal, including any arrangement thereof, or transportation of any Materials of Environmental Concern (as defined below), except where noncompliance would not have a Material Adverse Effect; (ii) during the occupancy and operation of the Leased Properties by Seller, Seller has not released, leaked, discharged, spilled, disposed of or emitted any Materials of Environmental Concern in, on, or under the Leased Properties in a quantity or manner that violates, requires further investigation or remediation under, or imposes material liability under, Environmental Requirements; (iii) Seller does not use, treat, store, dispose or transport any Materials of Environmental Concern other than in the ordinary course of business and in compliance with all applicable Environmental Requirements, or as set forth on Schedule 2.11; (iv) there is no pending or, to the Knowledge of Seller, threatened litigation or administrative proceeding (whether civil, criminal or administrative) concerning the Business or the Leased Properties involving any Materials of Environmental Concern or Environmental Requirements; and (v) to the Knowledge of Seller, except as otherwise set forth on Schedule 2.11, there are no material quantities of friable ACM (as defined below) within the Leased Properties, and there are no above-ground or underground storage tank systems located at the Leased Properties.  

(b)

Definitions.  The following terms shall have the following meanings:

“Environmental Requirements” means all laws, statutes, rules, regulations, ordinances, guidance documents, judgments, decrees, orders, agreements and other restrictions and requirements of any Governmental Authority  relating to the regulation of, imposing standards of conduct or liability regarding, or protection of, human health and safety (including, without limitation, employee health and safety), public welfare, natural resources, conservation, the environment, or the storage, treatment, disposal, transportation, handling, release, threatened release, or any aspect of management or use of Materials of Environmental Concern.

“Materials of Environmental Concern” means (i) any “hazardous substance” as defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time (42 U.S.C. §§ 9601 et seq.) (“CERCLA”) or any regulations promulgated thereunder; (ii) petroleum and petroleum by-products or fractions or constituents thereof; (iii) asbestos or asbestos-containing material (“ACM”); (iv) any chemical, waste, material or substance defined as, or included in the definition of, “hazardous substances,” “hazardous wastes,” “hazardous materials,” “contaminant,” “air contaminant,” “extremely hazardous wastes,” “restricted hazardous waste” or “toxic substances” or words of similar import under any applicable federal, state or local law or under the regulations adopted or publications promulgated pursuant thereto; or (v) any other chemical, waste, material or substance, exposure to which is prohibited, limited or regulated by any Governmental Authority.

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2.12

Material Contracts.  Schedule 2.12 sets forth a complete and accurate list, in each case whether written or unwritten, of all:

(a)

Contracts with respect to which Seller has any liability or obligation involving more than $25,000, contingent or otherwise, or which may extend for a term of more than one year after the Closing, excluding purchase and sale orders incurred in the ordinary course of business;

(b)

Contracts under which the amount payable by Seller is dependent on the revenue, income or other similar measure of Seller or any other Person;

(c)

Contracts with respect to any material property of Seller, including without limitation, licenses relating to Intellectual Property, service contracts and sales and supply contracts;

(d)

Contracts to which Seller is a party relating to indebtedness for borrowed money (including capital leases) or the guarantee of any indebtedness for borrowing money;

(e)

Contracts with officers, directors, stockholders or other Affiliates of Seller;

(f)

Contracts which place any material limitation on the method of conducting, or scope of, the Business;

(g)

employment, collective bargaining, severance, consulting, deferred compensation, benefit and similar plans or Contracts;

(h)

Contracts for the acquisition of all or any portion of any business entity;

(i)

Joint venture, partnership, manufacturer, development or supply agreement or other agreement which involves a sharing of revenues, profits, losses, costs or liabilities by Seller with any other Person;

(j)

Contracts involving fixed price terms, fixed volume arrangements or “most favored nation” arrangements, excluding purchase and sale agreements entered into in the ordinary course of business;

(k)

Management agreements that require Seller to make payments equal to more than $25,000 per annum;

(l)

Contracts relating to the licensing, distribution, development, purchase, sale or servicing of Seller’s products or services except in the ordinary course of business consistent with past practices;

(m)

Contracts with a third party providing for the granting of rights or licenses in or to patents, trademarks, service marks, trade names, copyrights or other Intellectual Property (other than commercial off-the-shelf software);

(n)

Material Contracts with any Governmental Authority; and

(o)

other Contracts, plans or arrangements of that are material to the business of Seller.

All the foregoing, including all amendments or modifications thereto, are referred to as “Material Contracts.”  Each Material Contract (or description) sets forth the entire agreement and understanding between Seller and the other parties thereto.  Each Material Contract is valid, binding and in full force and effect, and, to the Knowledge of Seller, there is no event or condition which has occurred or exists, which constitutes or which, with or without notice, the happening of any event and/or the passage of time, could constitute a default or breach under any such Material Contract by  Seller or any other party thereto, or could cause the acceleration of any obligation of any party thereto or give rise to any right of termination or cancellation thereof (a “Default”).    

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2.13

Litigation and Related Matters.  

(a)

Set forth on Schedule 2.13 is a list of all judgments, decrees, actions, suits, proceedings, claims, complaints, injunctions, Orders, investigations or grievances before or by any Authority, at law or in equity, pending against Seller or Parent or, to the Knowledge of Seller, threatened against Seller, Parent or any property or rights of Seller, or to the Knowledge of Seller, pending or threatened against any present or former officer, director or employee of Seller in his or her capacity as such.  None of the actions, suits, proceedings, investigations or claims listed on Schedule 2.13 affects or could reasonably be expected, if adversely determined, affect the right or ability of Seller to carry on the Business substantially as now conducted or the ability of Seller to enter into this Agreement or any other agreement contemplated hereby or to consummate the Transaction.  Schedule 2.13 includes a description of all litigation claims, suits, actions and proceedings or, to the Knowledge of Seller, investigations involving Seller, or, to the Knowledge of Seller, any of its officers, directors, stockholders or key employees in connection with the Business during the period beginning June 30, 2008 through the date hereof.

(b)

To Seller’s Knowledge, no officer or director of Seller has been:  (i) subject to voluntary or involuntary petition under the federal bankruptcy laws or any state insolvency law or the appointment of a receiver, fiscal agent or similar officer by a court for his or her business or property or that of any partnership of which he or she was a general partner or any corporation or business association of which he or she was an executive officer; (ii) convicted in a criminal proceeding or named as a subject of a pending criminal proceeding (excluding traffic violations and other minor offenses) or been otherwise accused of any act of moral turpitude; (iii) the subject of any order, judgment, or decree (not subsequently reversed, suspended or vacated) of any court of competent jurisdiction permanently or temporarily enjoining him or her from, or otherwise imposing limits or conditions on his or her ability to engage in any securities, investment advisory, banking, insurance or other type of business or acting as an officer or director of a public company; or (iv) found by a court of competent jurisdiction in a civil action or by the U.S. Securities and Exchange Commission to have violated any federal or state commodities, securities or unfair trade practices law, which judgment or finding has not been subsequently reversed, suspended, or vacated.

2.14

Intellectual Property.

(a)

Schedule 2.14 lists (i) the licenses and similar agreements under which Seller is granted rights to the use, reproduction, distribution, manufacture, sale or licensing of items embodying the Intellectual Property or other proprietary rights of any third parties (“Third Party Intellectual Property”), (ii) licenses and similar agreements under which Seller has granted any exclusive rights of whatever nature to third parties of, to or under the Intellectual Property, (iii) domestic and foreign patents, (iv) Internet domain addresses registered by Seller, (v) registered trademarks, (vi) registered copyrights, and all pending applications, registrations, issuances, divisions, continuations, renewals, reissuances and extensions of any of the foregoing that Seller owns, or otherwise possesses adequate and enforceable licenses or other rights to use, or are used in the operation of the Business, which Schedule indicates (i) the application or registration date, application or registration number, expiration date, owner of record and jurisdiction, if applicable, (ii) the term and exclusivity of its rights with respect to the Intellectual Property and (ii) whether each item of Intellectual Property is owned or licensed by Seller, and if licensed, the licensor, license fees and any key provisions thereof.

(b)

The Intellectual Property is valid, enforceable and free of all claims, liens and encumbrances, and to Seller’s Knowledge constitutes all of the intellectual property necessary to operate the Business as it is currently conducted.

(c)

Seller owns or has the right to use the Intellectual Property, and the consummation of the transactions contemplated hereby will not result in the violation, loss or material impairment of any rights of Seller in the Intellectual Property.

(d)

Except as set forth on Schedule 2.14, to Seller’s Knowledge no Person is entitled to any royalty, fee and/or other payment or other consideration of whatever nature with respect to the Intellectual Property.

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(e)

Each item constituting part of the Intellectual Property is in full compliance with all formal legal requirements and has been, to the extent indicated on Schedule 2.14, registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entity, domestic or foreign, as is indicated on Schedule 2.14, and all such registrations, filings and issuances remain in full force and effect, and all fees and other charges with respect thereto are current.

(f)

Except as set forth on Schedule 2.14:  (i) there are no pending proceedings or adverse claims made or to Seller’s Knowledge threatened against Seller with respect to the Intellectual Property or Seller’s rights therein or use thereof, nor does Seller know of any valid grounds for any bona fide claims for such a claim; (ii) there has been no litigation commenced or to Seller’s Knowledge threatened against Seller within the past five (5) years with respect to the Intellectual Property or Seller’s rights therein or use thereof; (iii) to Seller’s Knowledge, the Intellectual Property and Seller’s use, license, sale or other distribution thereof does not and will not conflict with, infringe, violate, misappropriate or misuse any Third Party Intellectual Property; (iv) to the Knowledge of Seller, there is not and has not been any infringement, misappropriation or any other unauthorized use of the Intellectual Property by any third party; and (v) the Intellectual Property is not subject to any settlement agreements, consents, judgments, orders or forbearances to xxx that limit or restrict in any manner the use or licensing thereof by Seller.

(g)

For purposes hereof, “Intellectual Property” shall mean the domestic and foreign patents, patent applications, patent licenses, software licenses in which Seller has a protectable interest and has accrued goodwill, trade names, trademarks, service marks, trademark registrations and applications, service xxxx registrations and applications, and copyright registrations and applications owned by Seller or used in the operation of the Business other than standard over-the-counter software products.

2.15

Employee Benefit Plans.  

(a)

Since January 1, 2010, and except as set forth on Schedule 2.15, neither Seller nor any person (as defined in Section 3(9) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is or has been a member of any group of persons described in Section 414(b), (c), (m) or (o) of the Code, including Seller (“ERISA Affiliate”), maintains or contributes to, nor has it maintained or contributed to, any “employee pension benefit plans” as defined in Section 3(2) of ERISA, “employee welfare benefit plans” as defined in Section 3(l) of ERISA, or stock bonus, stock option, restricted stock, stock appreciation right, stock purchase, bonus, incentive, deferred compensation, severance, or vacation plans, or any other employee benefit plan, program, policy or arrangement maintained or contributed to by Seller or any of its ERISA Affiliates or to which Seller or any of its ERISA Affiliates, contributes or is obligated to make payments thereunder or otherwise may have any liability (collectively, the “Employee Benefit Plans”).

(b)

Except as set forth on Schedule 2.15, neither Seller nor any of its ERISA Affiliates have any liability (including any contingent liability under Section 4204 of ERISA) with respect to any multiemployer plan defined as such in Section 3(37) of ERISA to which contributions are or have been made by Seller or any of its ERISA Affiliates or as to which Seller or any of its ERISA Affiliates may have liability and that is covered by Title IV of ERISA (“Multiemployer Plan”) covering employees (or former employees) employed in the United States.  Neither Seller nor any ERISA Affiliate have incurred any liability or taken any action that could reasonably be expected to cause it to incur any liability (i) on account of a partial or complete withdrawal (within the meaning of Section 4205 and 4203 of ERISA, respectively) with respect to any Multiemployer Plan or (ii) on account of unpaid contributions to any such Multiemployer Plan.

(c)

All contributions required to be made to the Employee Benefit Plans by Seller, or any of its ERISA Affiliates, in accordance with the Employee Benefit Plans, have been timely made, and all contributions for any period ending on or before the Closing Date that are not yet due have been paid to each Employee Benefit Plan or accrued in accordance with the past custom and practice of Seller and its ERISA Affiliates.

(d)

Except as disclosed on Schedule 2.15 hereof, neither Seller nor any of its ERISA Affiliates maintain or contribute to, nor have they ever maintained or contributed to, any pension plan subject to Title IV of ERISA or Sections 412 of the Code or 302 of ERISA.

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(e)

The Employee Benefit Plans intended to qualify under Section 401 of the Code have been determined by the Internal Revenue Service to be so qualified (or is a prototype plan that is entitled to rely on an opinion letter issued by the Internal Revenue Service to the prototype plan sponsor regarding qualification of the form of the prototype plan) and, to the Knowledge of Seller, no event has occurred and no condition exists with respect to the form or operation of such Employee Benefit Plans which would cause the loss of such qualification or exemption or the imposition of any material liability, penalty or tax under ERISA or the Code.

(f)

There are (i) no investigations pending by any governmental entity involving the Employee Benefit Plans or, to the Knowledge of Seller, any Multiemployer Plan, and (ii) no pending or, to the Knowledge of Seller, threatened claims (other than routine claims for benefits), suits or proceedings against any Employee Benefit Plan, against the assets of any of the trusts under any Employee Benefit Plan or against any fiduciary of any Employee Benefit Plan with respect to the operation of such plan or asserting any rights or claims to benefits under any Employee Benefit Plan or against the assets of any trust under such plan.

(g)

Except as disclosed on Schedule 2.15 hereof, none of the “welfare benefit plans” as defined in Section 3(l) of ERISA maintained by Seller provide for continuing benefits or coverage for any participant or any beneficiary of a participant following termination of employment, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) or similar law, or except at the expense of the participant or the participant’s beneficiary.

(h)

Except as disclosed on Schedule 2.15 hereof, the consummation of the transactions contemplated hereby will not result in an increase in the amount of compensation or benefits or accelerate the vesting or timing of payment of any benefits or compensation payable to or in respect of any individual and there is no amount payable to any person on account of the transactions except as otherwise provided herein. Seller is not obligated to make any payment or transfer, accelerate any payment or transfer, or otherwise provide any benefit that would constitute an “excess parachute payment” under Section 280G of the Code.

(i)

Schedule 2.15(i) contains a list of each Employee Benefit Plan that provides nonqualified deferred compensation and is subject to Section 409A of the Code, and each such Employee Benefit Plan has been operated in good faith compliance with Section 409A of the Code and the Internal Revenue Service guidance issued thereunder.

2.16

Employees; Employee Relations.  

(a)

Schedule 2.16 sets forth (i) the name and current annual salary (or rate of pay) and other compensation (including, without limitation, normal bonus, profit-sharing and other compensation) now payable by Seller to each director, officer, employee, independent contractor or consultant of Seller, (ii) any increase to become effective after the date of this Agreement in the total compensation or rate of total compensation payable by Seller to each such person, (iii) all presently outstanding loans and advances (other than routine travel advances to be repaid or formally accounted for within sixty (60) days) made by Seller to, or made to Seller by, any director, officer, employee, independent contractor or consultant of Seller, (iv) all other transactions between Seller and any of its or Parent’s directors, officers or employees since January 1, 2010, resulting in aggregate payments to such person in excess of $10,000 during such period, (v) all accrued but unpaid vacation pay owing to any director, officer, employee, independent contractor or consultant of Seller which is not disclosed on the Recent Balance Sheet and (vi) any current employment or consulting agreements that Seller is a party to with any director, officer, employee, independent contractor or consultant.  Seller has properly classified individuals providing services to Seller as independent contractors or employees, as the case may be, and all such Persons have been treated in accordance with applicable laws for purposes of all Employee Benefit Plans and perquisites.  Except as set forth on Schedule 2.16, each employee of Seller is terminable at will, and there are no employment agreements, independent contractor agreements, severance agreements, change of control agreements, non-competition agreements or similar agreements between any of such employees and Seller or any Affiliates thereof.

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(b)

Except as disclosed on Schedule 2.16, Seller is not a party to, nor bound by, the terms of any collective bargaining agreement, contract, letter of understanding (formal or informal) with any labor union or organization, and Seller has never experienced any material labor difficulties.  There are no and during the three (3) year period prior to the date hereof have not been any labor disputes, labor strikes, work stoppages or lockouts, or to the Knowledge of Seller, threatened involving, by way of example, strikes, work stoppages, slowdowns, picketing, or any other interference with work or production.  No grievance or other legal action arising out of any collective bargaining agreement or relationship exists, or to the Knowledge of Seller, is threatened.  No charges or proceedings before the National Labor Relations Board, or similar Governmental Authority, exist, or to the Knowledge of Seller, are threatened.

(c)

To Seller’s Knowledge, Seller’s relationship with its employees is good.  No legal proceedings, charges, complaints, or similar actions exist under any Laws affecting the employment relationship, and to the Knowledge of Seller, no proceedings, charges, or complaints are threatened under any such Laws.  Seller is not nor during the three (3) years prior to the date hereof has been, subject to any settlement or consent decree with any present or former employee, employee representative or any Governmental Authority relating to claims of discrimination or other claims in respect to employment practices and policies (including involving harassment, retaliation, or wage and hour violations, unfair labor practices or strikes, slowdowns, stoppages of work, or any other concerted interference with normal operations); no Governmental Authority has issued an Order with respect to the labor and employment practices (including practices relating to discrimination) of Seller.  Seller has not received written notice of the intent of any Governmental Authority responsible for the enforcement of labor or employment Laws to conduct an investigation with respect to or relating to Seller and, to Seller’s Knowledge, no such investigation is in progress.  Seller has complied in all material respects with all applicable Laws relating to Seller’s employment of its employees, including but not limited to, those relating to wages, hours, collective bargaining, unemployment insurance, workers’ compensation, discrimination and the withholding of payroll taxes.

(d)

Prior to the Closing, Seller has not engaged in any plant closing or employee layoff activities since the date of the Recent Balance Sheet that would violate or give rise to an obligation to provide any notice required pursuant to the Worker Adjustment Retraining and Notification Act of 1988, as amended (the “WARN Act”), or any similar state or local plant closing or mass layoff statute, rule or regulation, and no layoffs that could require notice under such laws or regulations are currently contemplated or have been effected within the past six (6) months.  During the preceding 180 days, no employee of Seller has suffered an “employment loss” as defined in the WARN Act.  Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses, severance, termination pay, consulting fees or other direct compensation or remuneration for any services performed therefor or amounts required to be reimbursed to such employees.  Seller is, and has been, in compliance in all material respects with the requirements of the Immigration Reform Control Act of 1986.  Seller does not have a policy, practice, plan or program of paying severance pay or any written form of severance compensation in connection with the termination of employment.  Seller has not received written notice of pending or threatened changes with respect to the employment status of (including resignation of) any officer or key employee or key supervisory personnel of such Person.  

2.17

Insurance.  Schedule 2.17 contains a list of the policies and contracts (including insurer, named insured, type of coverage, limits of insurance, required deductibles or co-payments, annual premiums and expiration date) for fire, casualty, liability and other forms of insurance maintained by, or for the benefit of, Seller.  All such policies are in full force and effect and are adequate for the Business.  Seller has not received any notice of cancellation or non-renewal or of significant premium increases with respect to any such policy.  Except as disclosed on Schedule 2.17, no pending claims made by or on behalf of Seller under such policies have been denied or are being defended against third parties under a reservation of rights by an insurer of Seller.  Schedule 2.17 contains a list of claims paid by Seller’s insurance carriers on behalf of Seller during the three (3) year period prior to the date hereof.  No gaps in coverage have accrued with respect to the policies listed on Schedule 2.17 or any other policies retained by Seller.

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2.18

Warranties.

(a)

Set forth on Schedule 2.18 is a complete list of all warranty claims made to Seller with respect to all products and goods sold, or services rendered, by Seller since June 30, 2008, including the costs related thereto.  Except as set forth on Schedule 2.18, all products and goods sold, and services rendered, by Seller have been in material conformity with all contractual commitments and all express and implied warranties.  Seller has not received any written or oral threat or claim with regard to its warranties.  No products or goods sold, or services provided, by Seller are subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions.  Seller has previously provided to Buyer copies of all applicable warranties.

(b)

All products manufactured by Seller were constructed in accordance with supplier guidelines which satisfy any warranty coverage guidelines. All installations by or on behalf of Seller with respect to products sold by Seller were done properly and in accordance with the respective manufacturer’s guidelines and specifications.  All applications and certifications necessary to obtain the benefit of manufacturers’ warranties were properly and timely completed and remain in full force and effect.  Seller has not taken any action that would nullify any manufacturer’s warranty.

2.19

No Illegal Payments, Etc.  Neither Seller nor any of its directors, officers, employees, agents or shareholders has (a) directly or indirectly given or agreed to give any illegal gift, contribution, payment or similar benefit to any supplier, customer, governmental official or employee or other person who was, is or may be in a position to help or hinder Seller (or assist in connection with any actual or proposed transaction) or made or agreed to make any illegal contribution, or reimbursed any illegal political gift or contribution made by any other person, to any candidate for federal, state, local or foreign public office (i) which might subject Seller to any damage or penalty in any civil, criminal or governmental litigation or proceeding or (ii) the non-continuation of which has had or might have, individually or in the aggregate, a Material Adverse Effect or (b) established or maintained any unrecorded fund or asset or made any false entries on any books or records for any purpose.

2.20

Absence of Certain Changes or Events.  Except as set forth on Schedule 2.20 or as otherwise contemplated by this Agreement, since July 1, 2010, there has not been with respect to Seller (a) any damage, destruction or casualty loss to the physical properties of Seller (whether or not covered by insurance) that could have a Material Adverse Effect; (b) any material adverse change in the business, operations, condition (financial or otherwise) or results of operations or prospects of Seller; (c) any entry into any transaction, commitment or agreement (including, without limitation, any borrowing) material to Seller, except transactions, commitments or agreements in the ordinary course of business consistent with past practice; (d) any increase which is material in the compensation payable or to become payable by Seller to its directors, officers, employees, independent contractors or agents or any increase in the rate or terms of any bonus, pension or other employee benefit plan, payment or arrangement made to, for or with any such directors, officers, employees, independent contractors or agents; (e) any sale, transfer or other disposition of, or the creation of any Lien upon, any part of the assets, tangible or intangible, of Seller except for sales of inventory and use of supplies and collections of accounts receivables in the ordinary course of business consistent with past practice; (f) any change in the relations of Seller with or loss of its customers or suppliers, of any loss of business or increase in the cost of inventory items or change in the terms offered to customers; (g) any cancellation or forgiveness of any debts or claims by Seller; (h) any capital expenditure (including any capital leases) or commitment therefor by Seller in excess of $5,000 in the aggregate; (i) any acceleration, termination, modification or cancellation of any Contract to which Seller is a party or by which it is bound; or (j) any delay or postponement of payment of accounts payable and other liabilities outside the ordinary course of business.

2.21

Interests in Other Persons.  Except as set forth on Schedule 2.21, no director, officer, shareholder, family member or Affiliate of Seller (i), possesses, directly or indirectly, any financial interest in, or is a director, officer, employee or Affiliate of, any corporation, firm, association or business organization which is a customer, supplier, franchisee, distributor, contractor, broker, lessor, lessee, sublessor, sublessee or competitor of or otherwise having a contractual relationship with Seller or (ii) is involved in any contract, commitment arrangement, understanding or agreement with Seller.  Ownership of securities of an entity that has a class of securities registered under the Securities Exchange Act of 1934, as amended, not in excess of one percent (1%) of any such class shall not be deemed to be a financial interest for purposes of this Section.

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2.22

Customers and Suppliers.  Schedule 2.22 sets forth a complete and accurate list of (i) all material suppliers of Seller for whom Seller paid at least $25,000 in fiscal 2010, and (ii) each customer who accounted for 5% or more of Seller’s revenues in fiscal year 2010.  To the Knowledge of Seller, no such customer or supplier intends or has threatened (orally or in writing) to cease to do business with Seller following the consummation of the transactions contemplated hereby or intends to modify such relationship in a manner which is less favorable to Seller, and Seller has no Knowledge of facts that would be reasonably likely to result in such a termination or modification.  Seller has not experienced any difficulties in obtaining any inventory items necessary to the operation of the Business that has had an adverse effect on the Business or the operations or financial condition of Seller and, to the Knowledge of Seller, no such shortage of supply of inventory items is threatened or pending.  Except as set forth in Schedule 2.22, Seller is not required to provide any bonding or other financial security arrangements in any material amount in connection with any transactions with any of its suppliers.  

2.23

Export Compliance.  Seller does not sell its products or services outside the United States.

2.24

Brokerage, Financial Advisor or Finder Fees.  Except as set forth in Schedule 2.24, no agent, advisor, broker, person or firm acting on behalf of Seller or Parent is, or will be, entitled to any commission or broker’s, advisor’s or finder’s fees from any of the parties hereto, or from any of their respective Affiliates in connection with any of the transactions contemplated hereby.

2.25

Accuracy of Information.  All written information furnished to Buyer by or on behalf of Seller or Parent with respect to the transactions contemplated hereby is or when furnished will be true, correct and complete in all material respects (excluding any financial projections, and predictions or other estimates of future events).  Such information states, or when furnished will state, all material facts required to be stated therein or necessary to make the statements therein, in light of the circumstances under which the statements are made, not misleading.  

2.26

Availability of Documents.  Seller has made available for inspection by Buyer and its representatives true, correct, and complete copies of the articles of incorporation, bylaws and other organizational documents of Seller, all written agreements, arrangements, commitments, and documents referred to in the Schedules attached hereto, and the minute books of Seller.  Such minute books contain the minutes of all of the meetings of directors and any committees of Seller that have been held preceding the date hereof and all written consents to action executed in lieu thereof.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as follows:

3.1

Organization and Authorization.  Buyer is a limited liability company duly organized, validly existing and in good standing under the laws of the state of Delaware with all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.  Buyer has full power, capacity and authority to execute and deliver this Agreement and all other agreements and documents contemplated hereby.  The execution and delivery of this Agreement and such other agreements and documents by Buyer and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by Buyer and no other action on the part of Buyer is necessary to authorize the transactions contemplated hereby.  This Agreement has been duly executed and delivered by Buyer and constitute the valid and binding obligation of Buyer, enforceable in accordance with its terms except that (a) such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally, and (b) the remedies of specific performance and injunctive relief are subject to certain equitable defenses and to the discretion of the court before which any proceedings may be brought.

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3.2

No Violation.  The execution and delivery of this Agreement and the other agreements and documents contemplated hereby by Buyer and the consummation of the transactions contemplated hereby will not (a) violate any provision of the certificate of formation or operating agreement of Buyer, (b) violate any Laws or Orders of any Governmental Authority by which Buyer or its properties or assets are bound, or (c) result in a violation or breach of, or constitute a default under or result in the creation of any encumbrance upon, or create any rights of termination, cancellation or acceleration in any Person with respect to any Contract to which Buyer is a party or any of its properties or assets is bound.

3.3

Consents.  Except for those consents from Buyer’s lenders, no consent, Order, approval or other authorization of any Governmental Authority or third party is required as a result of or in connection with the execution and delivery of this Agreement and the other agreements and documents to be executed by Buyer or the consummation by Buyer of the transactions contemplated hereby.

3.4

Brokerage, Financial Advisor or Finder Fees.  No agent, advisor, broker, person or firm acting on behalf of Buyer is, or will be, entitled to any commission or broker’s, advisor’s or finder’s fees from any of the parties hereto, or from any of their respective Affiliates in connection with any of the transactions contemplated hereby other than a fee payable to Strait Lane Capital Partners, LLC (“SLCP”) and a fee payable to CCA Partners, LLC.

3.5

Non-Reliance.  Buyer acknowledges that Parent and Seller have not made, and are not making, any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied, except as provided in Article II, and that Buyer is not relying and has not relied on any representations or warranties whatsoever regarding the subject matter of this Agreement, express or implied, except as provided in Article II.

ARTICLE IV
COVENANTS OF THE PARTIES

4.1

Conduct of the Business Pending the Closing.

(a)

Except as otherwise expressly provided by this Agreement or with the prior written consent of Buyer, between the date hereof and the Closing, Seller shall and Parent shall cause Seller to:

(i)

conduct the Business only in the ordinary course of business;

(ii)

use its commercially reasonable efforts to (A) preserve the present business operations, organization (including officers and employees) and goodwill of Seller and (B) preserve the present relationships with persons having business dealings with Seller (including customers and suppliers);

(iii)

except for the sales of assets in the ordinary course of Seller’s business, maintain (A) all of the assets and properties of, or used by, Seller in their current condition, ordinary wear and tear excepted, and (B) insurance upon all of the assets and properties of Seller in such amounts and of such kinds comparable to that in effect on the date of this Agreement;

(iv)

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

(v)

comply with the capital expenditure plan of Seller for the current fiscal year, including making such capital expenditures in the amounts and at the times set forth in such plan;

(vi)

comply in all material respects with all applicable Laws;

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(vii)

pay all maintenance and similar fees and take all other appropriate actions as necessary to prevent the abandonment, loss or impairment of all Intellectual Property; and

(viii)

cause B&B Roadway to comply with the covenants in clauses (i) through (vii) with reference to B&B Roadway.

(b)

Without limiting the generality of the foregoing, except as otherwise expressly provided by this Agreement or with the prior written consent of Buyer, Seller shall not and Parent shall not permit Seller to:

(i)

(A) increase the salary or other compensation of any director or employee of Seller, (B) grant any unusual or extraordinary bonus, benefit or other direct or indirect compensation to any employee or director, (C) increase the coverage or benefits available under any (or create any new) severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, deferred compensation, bonus or other incentive compensation, insurance, pension or other Employee Benefit Plan or arrangement made to, for, or with any of the directors, officers, employees, agents or representatives of Seller or otherwise modify or amend or terminate any such plan or arrangement or (D) enter into any employment, deferred compensation, severance, special pay, consulting, non-competition or similar agreement or arrangement with any directors or officers of Seller (or amend any such agreement);

(ii)

make, change or revoke any material Tax election, settle or compromise any material Tax claim or liability or enter into a settlement or compromise, or change (or make a request to any taxing authority to change) any material aspect of its method of accounting for Tax purposes,

(iii)

subject to any Lien or otherwise encumber or, except for Permitted Liens, permit, allow or suffer to be encumbered, any of the properties or assets (whether tangible or intangible) of Seller or its subsidiaries;

(iv)

acquire any material properties or assets or sell, assign, license, transfer, convey, lease or otherwise dispose of any of the Acquired Assets (except for fair consideration in the ordinary course of business);

(v)

enter into or agree to enter into any merger or consolidation with, any corporation or other entity, and not engage in any new business or invest in, make a loan, advance or capital contribution to, or otherwise acquire the securities of any other person;

(vi)

cancel or compromise any debt or claim or waive or release any material right of Seller except in the ordinary course of business;

(vii)

enter into any commitment for capital expenditures in excess of $5,000 for any individual commitment and $10,000 for all commitments in the aggregate;

(viii)

enter into, modify or terminate any labor or collective bargaining agreement or, through negotiation or otherwise, make any commitment or incur any liability to any labor organization with respect to any employee;

(ix)

introduce any material change with respect to the operation of the Business, including any material change in the types, nature, composition or quality of products or services, or, other than in the ordinary course of business, make any change in product specifications or prices or terms of distributions of such products;

(x)

enter into any transaction or enter into, modify or renew any Contract which by reason of its size or otherwise is not in the ordinary course of business;

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(xi)

enter into any Contract, understanding or commitment that restrains, restricts, limits or impedes the ability of the Business, or the ability of Buyer, to compete with or conduct any business or line of business in any geographic area or solicit the employment of any persons;

(xii)

terminate, amend, restate, supplement or waive any rights under any (A) Assumed Contract or Real Property Lease (or enter into a new lease) or (B) Permit;

(xiii)

settle or compromise any pending or threatened legal proceeding or any claim or claims for, or that would result in a loss of revenue of, an amount that could, individually or in the aggregate, reasonably be expected to be greater than $5,000;

(xiv)

change or modify its credit, collection or payment policies, procedures or practices, including acceleration of collections or receivables (whether or not past due) or fail to pay or delay payment of payables or other liabilities; or

(xv)

agree to do anything (A) prohibited by this Section 4.1, (B) which would make any of the representations and warranties of Seller in this Agreement untrue or incorrect in any material respect or could result in any of the conditions to the Closing not being satisfied or (C) that would be reasonably expected to have a Material Adverse Effect.

4.2

Information Statement.  As promptly as practicable after the date of this Agreement, Parent shall file an information statement (the “Information Statement”) with the U.S. Securities and Exchange Commission describing the transactions contemplated by this Agreement and, Parent shall file, as necessary, any other statement or schedules relating to this Agreement and the transactions contemplated hereby.  Additionally, Parent shall, as promptly as practicable after filing with the U.S. Securities and Exchange Commission, cause the Information Statement to be distributed to its stockholders.

4.3

Monthly Financial Statements.  As soon as reasonably practicable, but in no event later than thirty (30) days after the end of each calendar month during the period from the date hereof to the Closing, Seller shall provide Buyer with (i) unaudited monthly financial statements and (ii) operating or management reports (such reports to be in the form prepared by Seller in the ordinary course of business) of Seller for such preceding month.  As soon as reasonably practicable, but in no event later than thirty (30) days after the end of each calendar month, during the period from the date hereof to the Closing, Seller shall provide Buyer with (i) unaudited monthly financial statements and (ii) operating or management reports (such reports to be in the form prepared by Seller and Parent in the ordinary course of business) for which financial statements are prepared (to the extent the same are prepared in the ordinary course of business) for such preceding month.

4.4

Notification of Certain Matters.  Seller shall give notice to Buyer, and Buyer shall give notice to Seller, as promptly as reasonably practicable upon becoming aware of (a) any fact, change, condition, circumstance, event, occurrence or non-occurrence that has caused or is reasonably likely to cause any representation or warranty in this Agreement made by it to be untrue or inaccurate in any respect at any time after the date hereof and prior to the Closing, (b) any material failure on its part to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder or (c) the institution of or the threat of institution of any legal proceeding against Seller, Parent or B&B Roadway related to this Agreement or the transactions contemplated hereby (each, a “Post-Signing Event”).  If any Post-Signing Event requires any change in any schedule to this Agreement (including adding new schedules as necessary) (the “Schedules”), or if any such event, condition, fact or circumstance would require such a change assuming the respective Schedule was dated as of the date of the Post-Signing Event, then Seller shall promptly deliver to Buyer an update to the Schedule specifying such change.  Buyer, at Buyer’s sole option, shall either accept or reject such Schedule update.  No such update shall be taken into account in determining whether the conditions to Buyer’s obligation to consummate the transactions contemplated by this Agreement in Section 5.2(a) have been satisfied.  However, all such updates shall be taken into account for the purposes of rights to indemnity under Section 6.1 in that if Buyer elects to close the transaction contemplated by this Agreement despite such update, then Buyer waives all rights to indemnification under Section 6.1 with respect to such update.

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4.5

No Solicitation.  Except with respect to Buyer and its Affiliates, after the date hereof and until Closing or termination of this Agreement pursuant to Section 8.1, Parent shall not, and Parent shall cause Seller and its officers, directors, employees, agents and representatives (including, without limitation, any investment banker, attorney or accountant retained by any of them) not to (a) initiate or solicit, directly or indirectly, any inquiries or the making of any proposal with respect to a merger, consolidation, sale of stock or similar transaction involving, or any purchase of all or substantially all of the assets (other than in the ordinary course of business) of, or any equity interest in, Seller or Parent (an “Acquisition Transaction”), or (b) engage in any negotiations concerning, or provide to any other person any information or data relating to Parent or Seller for the purposes of or have any discussions with any person relating to, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage any effort or attempt by any other person to seek or effect, an Acquisition Transaction.  Parent shall promptly advise Buyer of, and communicate to Buyer the terms of, any such inquiry or proposal Parent or Seller may receive or of which they become aware (an “Acquisition Proposal”).

4.6

Fiduciary Out.  Notwithstanding anything in Article IV to the contrary, if Parent receives an unsolicited Acquisition Proposal that the Board of Directors of Parent (the “Parent Board”) concludes in good faith, after consultation with outside counsel and its financial advisors, constitutes (or could be reasonably expected to constitute) a Superior Proposal (as defined below) after giving effect to all of the adjustments to the terms of this Agreement which may be offered by Buyer including pursuant to Section 4.6(b) below, the Parent Board may, at any time prior to the Closing Date, if it determines in good faith, after consultation with outside counsel, that such action is required to comply with its fiduciary duties to the stockholders of Parent under applicable Law, (w) engage in negotiations with such third party, and supply such third party with information on Parent, (x) withdraw, modify or qualify, or propose publicly to withdraw, modify or qualify, in a manner adverse to Buyer, its approval of this Agreement (a “Change of Board Recommendation”), (y) approve or recommend such Superior Proposal, and/or (z) terminate this Agreement to enter into a definitive agreement with respect to such Superior Proposal; provided, however, that Parent shall not terminate this Agreement pursuant to the foregoing clause (z), and any purported termination pursuant to the foregoing clause (z) shall be void and of no force or effect, unless in advance of or concurrently with such termination Parent pays the fee described in Section 8.5, by wire transfer; and provided, further, that the Parent Board may not withdraw, modify or amend its approval of this Agreement in a manner adverse to Buyer pursuant to the foregoing clause (x), approve or recommend such Superior Proposal pursuant to the foregoing clause (y) or terminate this Agreement pursuant to the foregoing clause (z) unless (A) such Superior Proposal did not result from a breach by Parent or Seller of Section 4.5 and (B):

(a)

Parent shall have provided prior written notice to Buyer, at least ten (10) days in advance (the “Notice Period”), of its taking any action contemplated by this Section 4.6 with respect to such Superior Proposal, which notice shall specify the material terms and conditions of any such Superior Proposal (including the identity of the party making such Superior Proposal), and shall have contemporaneously provided a copy of the relevant proposed transaction agreements with the party making such Superior Proposal and other material documents, including the then current form of the definitive agreement with respect to such Superior Proposal (the “Alternative Acquisition Agreement”); and

(b)

prior to effecting such Change of Board Recommendation, approving or recommending such Superior Proposal or terminating this Agreement to enter into a proposed definitive agreement with respect to such Superior Proposal, for a period of ten (10) days Parent shall provide Buyer the opportunity to submit an amended written proposal or to make a new written proposal to the Parent Board, during the Notice Period and negotiate with Buyer in good faith (to the extent Buyer desires to negotiate) during the Notice Period to make such adjustments in the terms and conditions of this Agreement so that such Acquisition Proposal ceases to constitute a Superior Proposal.

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As used in this Section 4.6, “Superior Proposal” means any bona fide Acquisition Proposal made in writing (x) that includes consideration that the Parent Board in good faith determines is greater than the Total Consideration and otherwise is on terms that the Parent Board has determined in its good faith judgment (after consultation with its financial advisors and outside counsel and after taking into account all legal, financial (including the financing terms of such proposal), regulatory and other aspects of the proposal) are more favorable to Parent’s stockholders from a financial point of view than this Agreement, and (y) with respect to which the Parent Board has determined in good faith (after consultation with its financial advisors and outside counsel and after taking into account all legal, financial (including the financing terms of such proposal), regulatory and other aspects of the proposal) is reasonably likely to be consummated (if accepted).

4.7

Records Pertaining to Seller.  At the Closing, Seller shall deliver or cause to be delivered to Buyer copies of the Records in the possession of Seller or Parent.

4.8

Employment Matters.  

(a)

Buyer agrees to offer employment effective immediately after the Closing Date to all employees of Seller, other than any persons not actively involved in the Business or employees identified by Buyer (in its sole discretion) on a written list provided to Seller at least two (2) business days prior to the Closing (the “Excluded Employees”).  The employment offers made by Buyer will take the form of a written offer letter requiring employee responses, and any employee accepting such offer will be required to acknowledge his or her voluntary resignation from Seller as of the Closing Date.  Nothing in this Section 4.8 shall be construed to provide a guarantee of continued employment to any of the Seller’s employees who become employed by Buyer, and Buyer reserves the right to amend, modify, or terminate any employee benefit plans from time to time in its sole discretion.

(b)

Subject to acceptance of employment with Buyer, all employees (other than Excluded Employees) shall cease to be employees of Seller effective on the date they commence employment with Buyer.  With respect to employees of Seller who accept employment with Buyer, promptly following their commencement of employment with Buyer Seller will pay each such person all accrued wage, salary, commission, bonus and other employee compensation payments for all periods prior to the Closing Date to which such person is entitled.  In addition, Seller will pay or provide for all other employee benefits maintained by Seller for all periods prior to the Closing Date other than vacation accruals, which shall be assumed by Buyer (and reflected on the Closing Balance Sheet), all in accordance with applicable Law.

(c)

Seller shall be responsible for payment of any severance amounts to which any Excluded Employee is entitled under Seller’s severance pay plan in effect on the Closing Date.

(d)

Buyer and the buying group (as defined in Treasury Regulation Section 54.4980B-9, Q&A-3(b)) of which it is a part (the "Buying Group") shall be solely responsible for providing continuation coverage (and giving any required notices related thereto) pursuant to (i) Section 4980B(f) of the Code, Part 6 of Subtitle B of Title I of ERISA and similar state law to those individuals who are M&A qualified beneficiaries (as defined in Treasury Regulation Section 54.4980B-9, Q&A-4(a)) with respect to the transactions contemplated by this Agreement (collectively, the "M&A Qualified Beneficiaries"), and (ii) Title III of the American Recovery and Reinvestment Act of 2009 (as amended and extended), including all guidance promulgated thereunder, to the extent applicable with respect to the M&A Qualified Beneficiaries.  With respect to each Employee Benefit Plan that is a group health plan, Seller shall provide to Buyer prior to the Closing Date a list of the names and contact information for each individual who: (i) is currently receiving continuation coverage, (ii) is eligible to receive continuation coverage and with respect to whom the election period (as defined in Section 4980B(f)(5) of the Code) has not expired, or (iii) will otherwise be an M&A Qualified Beneficiary in connection with the transactions contemplated by this Agreement.

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4.9

Consents.  Seller shall use its commercially reasonable efforts to obtain at the earliest practicable date all consents, waivers, approvals and notices are required to consummate, or in connection with, the transactions contemplated by this Agreement, including the consents, waivers, approvals and notices referred to in Section 2.7 hereof.  All such consents, waivers, approvals and notices shall be in writing and in form and substance satisfactory to Buyer, and executed counterparts of such consents, waivers and approvals shall be delivered to Buyer promptly after receipt thereof, and copies of such notices shall be delivered to Buyer promptly after the making thereof.  Notwithstanding anything to the contrary in this Agreement, neither Buyer nor any of its Affiliates shall be required to pay any amounts in connection with obtaining any consent, waiver or approval.

4.10

Further Assurances.  Each of Seller and Buyer shall use its commercially reasonable efforts to (i) take, or cause to be taken, all actions necessary or appropriate to consummate the transactions contemplated by this Agreement and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.

4.11

Public Announcements.  Other than as contemplated herein, no party shall make any press release or public announcement with respect to the transactions contemplated by this Agreement without the prior written consent of the other party hereto, other than as required by Law.

4.12

Change of Name.  Immediately subsequent to Closing, Seller shall change its name to something that is dissimilar to its existing name and shall amend its organizational documents to reflect such change.

4.13

Rights of Endorsement.  From and after the Closing, Buyer shall have the right and authority to collect all receivables and other items transferred and assigned to it by Seller hereunder and to endorse with the name of Seller any checks received on account of such receivables or other items, and Seller agrees that it will transfer or deliver promptly to Buyer from time to time, any cash or other property that Seller may receive with respect to any of the Acquired Assets.

4.14

Assignment of Uncollected A/R.  After taking into account any reserves for bad debt and any sales allowances, to the extent any Acquired Receivable or any receivable of B&B Roadway that accrued as of or prior to the Closing Date remains outstanding as of the Cut-Off Date (as defined below) (the “Uncollected A/R”), Buyer shall assign or shall cause B&B Roadway to assign to Seller as of the Cut-off Date any such Uncollected A/R (but in the case of a B&B Roadway receivable, only 65% of such Uncollected A/R shall be assigned) (such assignment to be without any representations, warranties or recourse by or against Buyer), Seller shall thereafter have all rights and interest to any collections on the Uncollected A/R, and Seller shall concurrently pay to Buyer an amount equal to the balance of such Uncollected A/R.  To the extent Buyer receives payments on the Uncollected A/R after the Cut-off Date, it shall turn over such amounts to Seller.  If more than one invoice is outstanding for any customer of the Business, Buyer covenants and agrees that Buyer shall not agree to any credits, allowances, discounts or similar concessions with respect to such accounts receivable, nor shall Buyer waive, reduce or otherwise modify the payment amounts, due date or other terms with respect to such accounts receivable, without the express prior written consent of Seller.  For purposes of this Section, “Cut-Off Date” shall mean the date that is one hundred twenty (120) days following the Closing Date.

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4.15

Confidentiality.  Prior to Closing, all confidential and proprietary information provided by Seller or Parent to Buyer or SLCP (the “Receiving Parties”) or their Representatives (as defined below), will be kept in strict confidence by the Receiving Parties and their respective Representatives, and will only be used by them for the purposes contemplated by this Agreement.  The Receiving Parties may disclose information to their Representatives for the sole purpose of evaluating the transactions contemplated in this Agreement, so long as the Representatives agree to keep such information confidential.  The Receiving Parties shall be responsible for any breach of this Agreement by any of the Representatives.  If this Agreement is terminated, all documents or other media containing such information will be promptly returned to the appropriate party or, if the material is integrated with other information of the other party, destroyed; provided, that if a Receiving Party elects to destroy such information, it shall promptly certify in writing to the disclosing party that it has destroyed all such information in accordance with this Agreement.  Notwithstanding the foregoing, counsel to the Receiving Parties shall be entitled to retain a copy of all confidential materials for the purpose of defending any claim of non-compliance of this provision by the Receiving Parties, and any such retained confidential materials shall remain subject to this Section 4.15.  As used herein, “Representatives” shall mean, with respect to the Receiving Parties, any officer, director, stockholder, member, partner, attorney, accountant, tax advisor, agent, investment banker, lender, employee or other representative of such party.  This provision will survive termination of this Agreement.

4.16

 Meeting of Parent Stockholders.  Parent shall, in accordance with its certificate of incorporation and bylaws and with applicable Law, promptly and duly call, give notice of, convene and hold, as soon as reasonably practicable following the filing of the Information Statement for the purposes of voting upon the approval of this Agreement and the consummation of the transactions contemplated hereby, a special meeting of its stockholders for the sole purpose of considering and taking action upon this Agreement (the “Parent Special Meeting”).  Parent’s board of directors shall declare that this Agreement and the Transaction are advisable and in the best interests of Parent and Seller and recommend that the Transaction and this Agreement be approved by Parent’s stockholders; provided that Parent’s board of directors may withdraw, modify or change such recommendation pursuant to Section 4.6 hereof.

4.17

  Voting Agreement.  Concurrently with the execution of this Agreement, and as a condition and inducement to Buyer’s willingness to enter into this Agreement, Buyer, Parent, XXXX Universal Growth Investment Trust PLC, Xxxx Global Entrepreneurs Fund, Inc. and XXXX Capital Group, Inc. shall enter into a voting agreement, in the form attached hereto as Exhibit F (the “Voting Agreement”), pursuant to which such parties agree, among other things to vote all shares held by them in favor of the Transaction and approval of this Agreement.

4.18

Pre-Closing Period Tax Returns.  The Tax returns of B&B Roadway for all Tax periods ending on or before the Closing Date shall be prepared by Seller.  For this purpose, Buyer and Seller acknowledge that Buyer intends to merge or liquidate B&B Roadway into Buyer on the Closing Date.  After such returns are prepared but prior to filing, they shall be submitted to Buyer for approval, which approval shall not be unreasonably withheld or delayed.  Seller shall bear the cost of preparing and filing such returns.  

4.19

Good Standings.  Prior to Closing, Seller shall take all necessary action to cause itself to be in good standing in the jurisdictions listed in Schedule 2.1.

ARTICLE V
CLOSING

5.1

Closing.  Unless terminated in accordance with Section VIII, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at 10:00 a.m. (local time) on a day agreed to by the parties (the “Closing Date”) after satisfaction or (to the extent permitted by applicable Law) waiver by the applicable party of the conditions set forth in this Section V occurs (other than any such conditions which by their nature cannot be satisfied until the Closing Date which shall be required to be so satisfied or (to the extent permitted by applicable Law) waived in the Closing Date), at the offices of Xxxxx Lord Bissell & Liddell LLP, 0000 Xxxx Xxx., Xxxxx 0000, Xxxxxx, Xxxxx, 00000 unless another time, date or place is agreed to in writing by the parties hereto (such date upon which the Closing occurs, the “Closing Date”).  The Closing shall be effective as of 11:59 p.m. Central time on the Closing Date (the “Effective Time”).

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5.2

Conditions to Buyer’s Obligations.  The obligation of Buyer to effect the Closing shall be subject to the satisfaction of each of the following conditions at or prior to the Closing:

(a)

Representations and Warranties.  The representations and warranties of each of Seller and Parent set forth in this Agreement shall be true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date), except where the failure of such representations and warranties to be so true and correct (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein) individually or in the aggregate has not had, and would not be reasonably likely to have or result in, a Material Adverse Effect on Seller.  

(b)

Performance of Obligations.  Each of Seller and Parent shall have performed or complied with in all material respects each of its obligations under this Agreement required to be performed or complied with by it on or prior to the Closing Date pursuant to the terms of this Agreement.

(c)

Legal Proceedings.  No Legal Proceedings shall have been instituted or threatened or claim or demand made against Seller or Parent seeking to restrain or prohibit, or to obtain substantial damages with respect to, the consummation of the transactions contemplated hereby, and there shall not be in effect any Order by a Governmental Authority of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.

(d)

Certificates.  

(i)

Officer Certificate of Seller.  Seller shall have delivered to Buyer (i) certificates of the appropriate Governmental Authorities, dated as of a date not more than fifteen (15) days prior to the Closing Date, attesting to the existence and good standing of Seller in the States of Delaware, Texas, Virginia, Louisiana and Alabama and in any other jurisdiction where it is qualified or licensed as a foreign corporation; (ii) certificates of the appropriate Governmental Authorities, dated as of a date not more than fifteen (15) days prior to the Closing Date, attesting to the existence and good standing of B&B Roadway in the States of Texas and Alabama and in any other jurisdiction where B&B Roadway is qualified or licensed as a foreign corporation (iii) a copy, certified by the Secretary of State of Delaware as of a date not more than fifteen (15) days prior to the Closing Date, of the organizational documents and all amendments thereto of Seller; (iv) a copy certified by the Secretary of Seller, dated the Closing Date, of the bylaws of Seller; and (v) a certificate, dated the Closing Date, of the Secretary of Seller, relating to the incumbency and corporate proceedings in connection with the consummation of the transactions contemplated hereby.

(ii)

Officer Certificate of Parent.  Parent shall have delivered to Buyer a certificate, dated the Closing Date, of the Secretary of Parent, relating to the incumbency and corporate proceedings in connection with the consummation of the transactions contemplated hereby.

(iii)

Closing Certificate of Seller.  Buyer shall have received certificates signed by each of the Chief Executive Officer and Chief Financial Officer of Seller, each in form and substance reasonably satisfactory to Buyer, dated the Closing Date, to the effect that each of the conditions specified above in Sections 5.2(a)-(c) have been satisfied in all respects.

(iv)

Closing Certificate of Parent.  Buyer shall have received certificates signed by each of the Chief Executive Officer and Chief Financial Officer of Parent, each in form and substance reasonably satisfactory to Buyer, dated the Closing Date, to the effect that each of the conditions specified above in Sections 5.2(a)-(c) have been satisfied in all respects.

(e)

Consents and Approvals.  Seller shall have obtained and delivered to Buyer copies of all consents listed on or required to be listed on Schedule 2.7, and no such consents shall have been withdrawn or suspended.

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(f)

Employment Agreement.  Xxxx Xxxxxxxx shall have executed and delivered to Buyer an employment agreement the form of Exhibit C hereto.

(g)

Escrow Agreement.  Seller shall have executed and delivered to Buyer an escrow agreement in the form of Exhibit D hereto (the “Escrow Agreement”).

(h)

Xxxx of Sale and Assignments.  Seller shall have executed and delivered to Buyer a xxxx of sale, trademark assignments and such other instruments of conveyance with respect to the Acquired Assets as Buyer requests.

(i)

CLE Transaction.  Buyer shall have entered into an agreement with CLE whereby, concurrently with the Closing, Buyer shall purchase from CLE certain assets and assume certain liabilities of CLE.  

(j)

Subordination Agreement.  Parent and Seller shall have executed and delivered to Buyer’s lenders a subordination agreement with respect to the Note in form and substance satisfactory to such lenders.

(k)

Parent Investment in Holdings.  Parent shall have made an equity investment in B&B Roadway Holdings, LLC, a Delaware limited liability company (“Holdings”) in the amount of $450,000, such investment to be on the same terms and conditions as SLCP’s equity investment in Holdings (the “Holdings Equity”), and Parent shall have executed all documents reasonably required by Holdings in connection with such investment (the “Equity Investment Documents”).

(l)

Non-Competition Agreements.  Each of Xxxxxxx Xxxxxxxxx and Xxxxxx Xxxxxxx shall have executed and delivered to Buyer a non-competition agreement the form of Exhibit E hereto.

(m)

Parent Special Meeting.   At the Parent Special Meeting, the stockholders of Parent shall have approved this Agreement and the transactions contemplated hereby, all in accordance with the organizational documents of Parent, the rules and regulations of the U.S. Securities and Exchange Commission, and Delaware law.

5.3

Conditions to Obligations of Seller.  The obligation of Seller to effect the Closing shall be subject to the satisfaction of each of the following conditions at or prior to the Closing:

(a)

Representations and Warranties.  The representations and warranties of Buyer set forth in this Agreement shall be true and correct at and as of the Closing Date, as if made at and as of such time (except to the extent expressly made as of an earlier date, in which case as of such date).  

(b)

Performance of Obligations.  Buyer shall have performed or complied with in all material respects each of its obligations under this Agreement required to be performed or complied with by it on or prior to the Closing Date pursuant to the terms of this Agreement.

(c)

Legal Proceedings.  No Legal Proceedings shall have been instituted or threatened or claim or demand made against Buyer, Seller or Parent seeking to restrain or prohibit, or to obtain substantial damages with respect to, the consummation of the transactions contemplated hereby, and there shall not be in effect any Order by a Governmental Authority of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby.

(d)

Consents and Approvals.  All material authorizations, consents, approvals, waivers and releases, if any, necessary for Buyer to consummate the transactions contemplated hereby shall have been obtained.

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(e)

Certificates.  

(i)

Certificate of Buyer.  Buyer shall have delivered to Seller: (i) a certificate of the appropriate governmental authority, dated as of a date not more than fifteen (15) days prior to the Closing Date, attesting to the existence and good standing of Buyer in the state of its organization; (ii) a copy, certified by the Secretary of State of Delaware as of a date not more than fifteen (15) days prior to the Closing Date of the certificate of formation of Buyer; (iii) a copy certified by an officer or manager of the sole member of Buyer, dated the Closing Date, of the operating agreement of Buyer; and (iv) a certificate, dated the Closing Date, of an officer or manager of the sole member of Buyer relating to the incumbency and company proceedings in connection with the consummation of the transactions contemplated hereby.

(ii)

Certificate of Holdings.  Holdings shall have delivered to Parent: (i) a certificate of the appropriate governmental authority, dated as of a date not more than fifteen (15) days prior to the Closing Date, attesting to the existence and good standing of Holdings in the state of its organization; (ii) a copy, certified by the Secretary of State of Delaware as of a date not more than fifteen (15) days prior to the Closing Date of the certificate of formation of Holdings; (iii) a copy certified by the Manager of Holdings, dated the Closing Date, of the operating agreement of Holdings; and (iv) a certificate, dated the Closing Date, of the Manager of Holdings relating to the incumbency and company proceedings in connection with the consummation of the transactions contemplated by the Equity Investment Documents.

(iii)

Closing Certificate of Buyer.  Seller shall have received a certificate signed by an officer or manager of the sole member of Buyer, in form and substance reasonably satisfactory to Seller, dated the Closing Date, to the effect that each of the conditions specified above in Sections 5.3(a)-(c) have been satisfied in all respects.

(f)

Escrow Agreement.  Buyer shall have executed and delivered to Seller the Escrow Agreement.

(g)

Equity Investment Documents.  Holdings shall have executed and delivered to Parent counterparts to the Equity Investment Documents.

(h)

Closing Payments.  Buyer shall have delivered to (i) Seller the Cash Portion (as adjusted pursuant to Section 1.5(a)), less the Escrow Amount, and the Note, and (ii) the Escrow Agent, the Escrow Amount, in each case such payment to be made by wire transfer of immediately available funds.

ARTICLE VI
INDEMNIFICATION

6.1

Buyer Losses.  Seller and Parent jointly and severally agree to indemnify and hold harmless Buyer and its respective members, managers, officers, employees, representatives, agents and attorneys (“Buyer Indemnified Parties”) from, against and in respect of any and all Losses (as defined below) suffered, sustained, incurred or required to be paid by any of them by reason of (i) any representation or warranty made by Seller or Parent in or pursuant to this Agreement being untrue or incorrect in any respect; (ii) any failure by Seller or Parent to observe or perform their covenants and agreements set forth in this Agreement; (iii) any liability relating to or involving Seller, the Acquired Assets or the Business, in each case, that accrued prior to the Effective Time to the extent it is not an Assumed Liability; (iv) 65% of all Taxes of B&B Roadway for all periods prior to the Effective Time (including, without limitation, the portion of any Tax period that begins on or before the Closing Date and ends after the Closing Date) and all Taxes imposed on or asserted against the properties, income or operations of Seller, the Acquired Assets or the Business for all periods prior to the Effective Time (including, without limitation, the portion of any Tax period that begins on or before the Closing Date and ends after the Closing Date) and any Tax liability of Seller or Parent arising in connection with the transactions contemplated hereby; (v) any failure of Seller to have good and marketable title to the Acquired Assets free and clear of all Liens other than Permitted Liens; or (vi) any matter listed or required to be listed on Schedule 2.13.

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6.2

Seller Losses.  Buyer agrees to indemnify and hold harmless Seller and Parent and their respective directors, officers, employees, representatives, agents and attorneys (“Seller Indemnified Parties”) from, against, for and in respect of any and all Losses suffered, sustained, incurred or required to be paid by any of them by reason of (i) any representation or warranty made by Buyer in or pursuant to this Agreement being untrue or incorrect in any respect; (ii) any failure by Buyer to observe or perform its covenants and agreements set forth in this Agreement; (iii) the Assumed Liabilities, or (iv) any liability relating to or involving Buyer or the Acquired Assets, in each case, that accrued after the Effective Time and that does not relate to an Excluded Asset.

6.3

Losses.  “Losses” shall mean all damages (including, without limitation, amounts paid in settlement with the Indemnifying Party’s (as defined below) consent, which consent may not be unreasonably withheld), losses, obligations, liabilities, claims, deficiencies, costs (including, without limitation, reasonable attorney’s fees) Taxes, penalties, fines, interest, monetary sanctions and expenses incurred by an Indemnified Party (as defined below), including, without limitation, reasonable attorneys’ fees and costs incurred to comply with injunctions and other court and agency orders, and other costs and expenses incident to any suit, action, investigation, claim or proceeding or to establish or enforce an Indemnified Party’s right to indemnification hereunder (but excluding incidental or consequential damages, lost profits or other indirect losses, or other diminutions in the value of the Acquired Assets).  The proceeds actually received or to be received by an indemnified party from any insurance policies shall be taken into account in determining the amount of any Losses.

6.4

Notice of Loss.  Except to the extent set forth in the next sentence, a party will not have any liability under the indemnity provisions of this Agreement with respect to a particular matter unless a written notice setting forth in reasonable detail the breach or other matter which is asserted has been given to the Indemnifying Party (as defined below) and, in addition, if such matter arises out of a suit, action, investigation, proceeding or claim, such notice is given promptly, but in any event within thirty (30) days after the Indemnified Party (as defined below) is given notice of the claim or the commencement of the suit, action, investigation or proceeding.  Notwithstanding the preceding sentence, failure of the Indemnified Party to give notice hereunder shall not release the Indemnifying Party from its obligations under this Article VI, except to the extent the Indemnifying Party is actually prejudiced by such failure to give notice.  

6.5

Right to Defend.  Upon receipt of notice of any suit, action, investigation, claim or proceeding for which indemnification might be claimed by an Indemnified Party, the Indemnifying Party shall be entitled to defend, contest or otherwise protect against any such suit, action, investigation, claim or proceeding at its own cost and expense, and the Indemnified Party must reasonably cooperate in any such defense or other action.  The Indemnified Party shall have the right, but not the obligation, to participate at its own expense in defense thereof by counsel of its own choosing, but the Indemnifying Party shall be entitled to control the defense unless the Indemnified Party has relieved the Indemnifying Party from liability with respect to the particular matter or the Indemnifying Party fails to assume defense of the matter.  In the event the Indemnifying Party shall fail to defend, contest or otherwise protect in a timely manner against any such suit, action, investigation, claim or proceeding, the Indemnified Party shall have the right, but not the obligation, thereafter to defend, contest or otherwise protect against the same and make any compromise or settlement thereof and recover the entire cost thereof from the Indemnifying Party including, without limitation, reasonable attorneys’ fees, disbursements and all amounts paid as a result of such suit, action, investigation, claim or proceeding or the compromise or settlement thereof, provided, however, that the Indemnified Party must send a written notice to the Indemnifying Party of any such proposed settlement or compromise, which settlement or compromise the Indemnifying Party may reject, in its reasonable judgment, within thirty (30) days of receipt of such notice.  Failure to reject such notice within such thirty (30) day period shall be deemed an acceptance of such settlement or compromise.  The Indemnified Party shall have the right to effect a settlement or compromise over the objection of the Indemnifying Party; provided, that if (a) the Indemnifying Party is contesting such claim in good faith or (b) the Indemnifying Party has assumed the defense from the Indemnified Party, the Indemnified Party waives any right to indemnity therefor.  If the Indemnifying Party undertakes the defense of such matters, the Indemnified Party shall not, so long as the Indemnifying Party does not abandon the defense thereof, be entitled to recover from the Indemnifying Party any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof other than the reasonable costs of investigation undertaken by the Indemnified Party with the prior written consent of the Indemnifying Party.

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6.6

Cooperation.  Buyer, Seller and Parent and each of their Affiliates, successors and assigns shall cooperate with each other in the defense of any suit, action, investigation, proceeding or claim by a third party and, during normal business hours, shall afford each other access to their books and records and employees relating to such suit, action, investigation, proceeding or claim and shall furnish each other all such further information that they have the right and power to furnish as may reasonably be necessary to defend such suit, action, investigation, proceeding or claim.

6.7

Limitation on Remedies.  Notwithstanding anything to the contrary in this Agreement, the liability of the parties under this Agreement shall be limited as follows:

(a)

In no event shall any amounts be recovered from a party for any matter for which a written notice of claim specifying in reasonable detail the specific nature of the Losses and the estimated amount of such Losses (“Claim Notice”) is not delivered to the opposite party prior to the time that such representations and warranties terminate pursuant to Section 6.7(b).

(b)

The representations and warranties of each of the parties set forth in this Agreement shall survive the Closing, and such representations and warranties shall terminate twelve (12) months following the Closing Date, except that (i) the representation and warranty in Section 2.14 shall survive for twenty-four (24) months following the Closing Date and (ii) the representations and warranties in Sections 2.1, 2.2, 2.3, 2.8, 2.15, 2.19, 2.24, 3.1, 3.2 and 3.4 (collectively, the “Specified Representations”) shall survive until ninety (90) days after all potential claims thereof shall be barred by the applicable statute of limitations; provided, however, that any such representation, warranty, covenant or agreement that is the subject of a Claim Notice delivered in good faith in compliance with the requirements of Section 6.7(a) shall survive with respect only to the specific matter described in such Claim Notice until the earlier to occur of (y) the date on which a final nonappealable resolution of the matter described in such Claim Notice has been reached or (z) the date on which the matter described in such Claim Notice has otherwise reached final resolution.

(c)

No amount shall be payable pursuant to Section 6.1, except to the extent that the aggregate amount of a party’s Losses exceeds $30,000, and then only for the amount by which such Losses exceed $30,000; except that Losses resulting from a breach of a Specified Representation or Losses in connection with matters described in clauses (iv) through (vi) of Section 6.1 shall not be subject to such limitation.

(d)

The maximum amount of Losses incurred by a party for which the other party shall be liable pursuant to Section 6.1 or 6.2, as applicable, shall not exceed an amount equal to thirty percent (30%) of the Total Consideration; provided, however Losses resulting from intentional and knowing fraud or an intentional non-disclosure or intentional misrepresentation of any representation and warranty shall not be subject to any limit.

(e)

Notwithstanding anything to the contrary set forth in Article VI, the Buyer Indemnified Parties’ recourse for Losses suffered or incurred by Buyer Indemnified Parties shall be limited exclusively to the following and in the following order: (i) a right of recovery against the Escrow Amount; (ii) next a right of set-off against the Note; and (iii) lastly, a right of set-off against any dividends, distributions or other amounts due to Parent (or its successor in interest or assigns) in connection with the Holdings Equity and Parent’s interest therein.

6.8

Characterization of Indemnity Payment for Tax Purposes.  All amounts payable under Sections 6.1 or 6.2 shall be treated for all tax purposes as adjustments to the Consideration, except as otherwise required by law.

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ARTICLE VII
POST-CLOSING MATTERS

7.1

Confidential Information.  Parent acknowledges that, through its ownership of Seller, it has gained confidential and proprietary information (the “Confidential Information”) concerning the business of Seller.  Confidential Information is any formula, pattern, device or compilation of information which is used in Seller’s and Buyer’s business and includes, but is not limited to, proprietary technology, operating procedures and methods of operation, financial statements and other financial information, trade secrets, market studies and forecasts, competitive analyses, target markets, advertising techniques, pricing policies and information, the substance of agreements with customers, subcontractors and others, marketing and similar arrangements, servicing and training programs and arrangements, customer and subcontractor lists, customer profiles, customer preferences, other trade secrets and any other documents embodying confidential and proprietary information of Buyer and Seller, which Seller has treated as proprietary and which provides Seller with a competitive advantage.  Parent acknowledges that sharing this Confidential Information with third parties would be detrimental to Buyer and could place Buyer at a competitive disadvantage.  Parent agrees that it will not, at any time following the Closing Date, directly or indirectly, disclose, use or disseminate to any person or entity any Confidential Information.  The foregoing restrictions and obligations under this Section 7.1 shall not apply to: (i) any Confidential Information that is or becomes publicly available other than as a result of a disclosure, directly or indirectly, by Parent, (ii) any information obtained by Parent from a third party which such Person has no reason to believe is violating any obligation of confidentiality to Buyer, or (iii) any information Parent is required by law to disclose.  Parent acknowledges and agrees that its confidentiality obligations apply to all Confidential Information of Seller and Buyer, no matter when it obtained knowledge or access to such Confidential Information.

7.2

Noncompetition.

(a)

Parent acknowledges that the Business is presently conducted throughout the United States of America (the “Territory”).  In consideration of the numerous other mutual promises contained in this Agreement, including, without limitation, those involving Confidential Information and the substantial consideration paid by Buyer to Seller with respect to the Acquired Assets, including Seller’s business and customer goodwill, and the resulting financial benefit to Parent, Parent covenants and agrees that during the period of three (3) years from the Closing Date, neither it, nor any Person with which it is in any way affiliated, will engage, directly or indirectly, in any or all of the following activities:

(i)

Enter into or engage in the Business or any other business directly or indirectly competitive with Buyer anywhere in the Territory;

(ii)

Request, solicit or induce, or attempt to request, solicit or induce, any employee, consultant or independent contractor of Buyer to leave or terminate his or her relationship with Buyer for any reason whatsoever or hire or attempt to hire any such employee, consultant or contractor of Buyer for a period of twelve (12) months following the termination of such person’s relationship with Buyer;

(iii)

Interfere with, disrupt or attempt to disrupt the relationship, contractual or otherwise, between Buyer and any customer, supplier, lessor, lessee, employee, subcontractor or other independent contractor of Buyer or in any way encourage them to terminate or otherwise negatively alter their relationship with Buyer; or

(iv)

Solicit or accept business from, or perform services on behalf of, any subcontractor or customer of Buyer for like products or services.

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(b)

Parent recognizes that its breach of any of the provisions of Section 7.1 or this Section 7.2 would result in serious harm to Buyer for which monetary damages might not be an adequate remedy and that the amount of such damages would be difficult to determine.  Therefore, if Parent breaches any provision of Section 7.1 or this Section 7.2, then Buyer shall be entitled to injunctive relief and specific performance in addition to any other available legal or equitable remedies.  Buyer may recover by appropriate action the amount, if ascertainable, of the actual damage caused to Buyer by any failure, refusal or neglect of Parent to perform the agreements contained in Section 7.1 or this Section 7.2, together with any and all costs incurred by Buyer, including reasonable attorneys’ fees, in seeking such relief.  The remedies provided in this Section shall be deemed cumulative and the exercise of one shall not preclude the exercise of any other remedy at law or in equity for the same event or any other event.

7.3

It is the express intention of the parties hereto to comply with all laws that may be applicable to Section 7.1 and this Section 7.2.  It is the express intention of Buyer to restrict Parent’s activities only to the extent necessary to protect the legitimate business interests of Buyer.  Parent acknowledges and agrees that the time, geographic, and other restrictions in Section 7.1 and this Section 7.2 are only as broad as reasonably necessary to protect the Confidential Information and goodwill being acquired by Buyer and Buyer’s own Confidential Information and goodwill, and that the covenants in Section 7.1 and this Section 7.2 are subsidiary to this Agreement’s main purpose of disposing of an established business.  Nevertheless, should any restriction contained in Section 7.1 or this Section 7.2 be found to exceed in time, scope or activity the restriction permitted by law, it is expressly agreed that the covenants contained in Section 7.1 or this Section 7.2 shall be reformed or modified by the final judgment of a court of competent jurisdiction to reflect a lawful and enforceable duration, scope and activity

7.4

Transition Support.  From time to time after the Closing, Buyer shall make Xxxx Xxxxxxxx, Xxxx Xxxxxx, and Xxxxx Xxxxxx reasonably available to Seller and Parent for the purpose of assisting Seller and Parent in certain administrative matters provided that such matters do not interfere with their responsibilities to Buyer.  Such matters include the assistance with litigation or other disputed matters and other administrative matters.  In addition, Buyer shall also make reasonably available to Seller and Parent all information and materials reasonably requested by Seller and Parent in connection with the provision of the administrative services hereunder and in connection with the preparation of tax returns, the preparation of, and making filings with, the U.S. Securities and Exchange Commission and other administrative services.  Buyer shall give Seller and Parent reasonable access, during regular business hours and at such other times as are reasonably required, to the Buyer’s premises to the extent any such access is needed for the purposes of all such administrative services. Buyer shall not charge any fee in connection with any such services.  Seller or Parent shall reimburse Buyer for all reasonable expenses of Buyer incurred in connection with such services.

ARTICLE VIII
TERMINATION

8.1

Termination.  This Agreement may be terminated and the transactions contemplated hereby abandoned at any time prior to Closing:

(a)

by mutual written consent of Buyer and Seller;

(b)

by either Buyer or Seller, by written notice to the other party, if there has been a material breach of the other party's covenants, representations or warranties or if there has been a failure on a scheduled Closing Date of satisfaction of the conditions to the obligations of the terminating party that, in any such case, has not been cured within ten (10) days after written notice thereof by the terminating party to the other party;

(c)

by either Buyer or Seller, by written notice to the other party, if the transactions contemplated hereby have not been consummated by March 15, 2011, and such failure to consummate is not caused by a breach of this Agreement (or any covenant, representation or warranty included herein) by the party electing to terminate pursuant to this Section 8.1(c);

(d)

by Parent pursuant to Section 4.6; or

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(e)

by either Buyer or Seller, by written notice to the other party, if there shall be any law or regulation that makes consummation of the transactions contemplated hereby illegal or otherwise prohibited or if any judgment, injunction, order or decree enjoining Seller or Buyer from consummating the transactions contemplated hereby is entered and shall become final.

8.2

Effect of Termination.  If this Agreement is terminated pursuant to Section 8.1, this Agreement shall forthwith become void and have no effect, except that this Section 8.2 and Sections 8.3, 8.4, 8.5 and Article 9 shall survive the termination of this Agreement and shall be enforceable to the extent applicable.

8.3

Return of Confidential Information.  Promptly following termination of this Agreement, Buyer shall return to Seller any information concerning the business and affairs of Seller disclosed to Buyer in connection with the transactions contemplated hereby and that is not publicly available.

8.4

Specific Performance.  In the event any of the conditions to a party's obligations set forth in Sections 5.2 or 5.3 is not satisfied at the Closing Date and this Agreement has not otherwise been terminated by either party, the party may elect to waive such non-satisfaction and enforce specific performance of the obligations of the other party under this Agreement.

8.5

Termination Fee.  In the event that (i) this Agreement is terminated by Buyer pursuant to Section 8.1(b) or by Parent pursuant to Section 8.1(c) or (d) and (ii) Seller and/or Parent consummates an Acquisition Transaction with a third party within one (1) year of such termination, then Seller and Parent shall reimburse Buyer and SLCP for all out-of-pocket expenses incurred by them in connection with the transactions contemplated hereby, but not to exceed $200,000 in the aggregate.  Such amount shall be due and payable on the day of closing of such Acquisition Transaction, unless such termination occurs pursuant to Section 8.1(d), in which case, such amount shall be due and payable immediately upon such termination.

ARTICLE IX
MISCELLANEOUS

9.1

Entire Agreement.  This Agreement (including the Exhibits and Schedules hereto) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof, and no party shall be liable or bound to the other in any manner by any representations or warranties not set forth herein.

9.2

Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.  Neither this Agreement nor any rights, interests, or obligations hereunder may be assigned by any party hereto without the prior written consent of all other parties hereto; provided, however, that Buyer may assign its rights to its lenders or to a successor of the business of Buyer, in each case without the consent of Seller or Parent, and Seller and Parent may assign their rights to a successor to their business without the consent of any of the other parties to this Agreement.

9.3

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument.

9.4

Headings.  The headings of the articles and sections of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

9.5

Use of Certain Terms.  As used in this Agreement, the words “herein,” “hereof’ and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular article, section, paragraph, or other subdivision.

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9.6

Modification and Waiver.  Any of the terms or conditions of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof, and this Agreement may be modified or amended by a written instrument executed by all parties hereto.  No supplement, modification, or amendment of this Agreement shall be binding unless executed in writing by all of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

9.7

Schedules, Etc.  All Exhibits and Schedules annexed hereto are expressly made a part of this Agreement as though fully set forth herein, and all references to this Agreement herein or in any such Exhibits or Schedules shall refer to and include all such Exhibits and Schedules.

9.8

Notices.  Any notice, request, instruction, document or other communication to be given hereunder by any party hereto to any other party hereto shall be in writing and validly given if (a) delivered personally, (b) sent by telecopy, (c) delivered by overnight express, or (d) sent by registered or certified mail, postage prepaid, as follows:

If to Buyer or SLCP, to:

B&B Roadway and Security Solutions, LLC

c/o Strait Lane Capital Partners LLC

000 Xxxxxxxx Xxxxx, Xxxxx 000

Xxxxxx, XX 00000

Attn: Xxxx Xxxx

Facsimile No. (000) 000-0000

email:  xxxx.xxxx@xxxxxxxxxxxxxxxxx.xxx

with copies to:

Xxxxx Lord Xxxxxxx & Xxxxxxx LLP

0000 Xxxx Xxxxxx, Xxxxx 0000

Xxxxxx, XX 00000-0000

Attn:  Xxxx X. Xxxxxxxx

Facsimile No. (000) 000-0000

Email:  xxxxxxxxx@xxxxxxxxx.xxx

If to Seller or Parent (prior to Closing):

Chairman and CEO

Integrated Security Systems, Inc.

0000 Xxxxxxxx Xxxxx, Xxxxx 000

Xxxxxxxxx, XX 00000

Attn:  Xxxxxx Xxxxxxx

Facsimile No. (0-000) 000-0000

email:  xxxxxxxxxxxxxx@xxxxx.xxx

If to Seller or Parent (after Closing):

Chairman & CEO

Integrated Security Systems, Inc.

c/o RENN Capital Group, Inc.

0000 X. Xxxxxxx Xxxxxxxxxx

Xxxxx 000, XX00

Xxxxxx, XX  00000

Facsimile No. (000) 000-0000

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in each case, with a copy to:

Xxxxxx and Xxxxx, LLP

0000 Xxxxx Xxxxx Xxxx, Xxxxx 0000

Xxxxxxxxxx, XX  00000

Attn:  Xxxxx X. Xxxx

Facsimile No. (000) 000-0000

email:  xxxxx.xxxx@xxxxxxxxxxx.xxx

or at such other address for a party as shall be specified by like notice.  Any notice which is delivered personally, or sent by telecopy or overnight express in the manner provided herein shall be deemed to have been duly given to the party to whom it is directed upon actual receipt by such party.  Any notice which is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the third day after the day it is so placed in the mail.

9.9

Governing Law.  This Agreement shall be construed, enforced, and governed by the internal laws of the State of Delaware (without regard to its choice of law principles).

9.10

Survival of Covenants, Agreements, Representations and Warranties.  Except as otherwise expressly provided herein, all representations, warranties, covenants and agreements made hereunder or pursuant hereto or in connection with the transactions contemplated hereby shall survive the Closing and shall continue in full force and effect thereafter.

9.11

Responsibility for Taxes.  Each party shall be responsible for any Taxes that such party may incur pursuant to the transactions contemplated hereby and specifically Seller shall be responsible for and pay all sales, use and other transfer Taxes resulting from the transactions contemplated hereunder.

9.12

Invalid Provisions.  If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws, such provision shall be fully severable, this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid, or unenforceable provision or by its severance from this Agreement.

9.13

Expenses.  Except as provided in Section 8.5, each party shall pay all of its own costs and expenses incurred by it in connection with the transactions contemplated hereby.

9.14

Third Party Beneficiaries.  Except as otherwise specifically provided in Article VI, no individual or firm, corporation, partnership, or other entity shall be a third-party beneficiary of the representations, warranties, covenants, and agreements made by any party hereto.

9.15

Number and Gender of Words.  Whenever the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate.

9.16

Further Assurances.  From time to time after the Closing, at the request of any other party but at the expense of the requesting party, Buyer, Seller or Parent, as the case may be, will execute and deliver any such other instruments of conveyance, assignment and transfer, and take such other action as the other party may reasonably request in order to consummate the transactions contemplated hereby.

[The next page is the signature page.]

-35-

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written.

B&B ROADWAY AND SECURITY SOLUTIONS, LLC

By: B&B Roadway Holdings, LLC, its sole member

By:

Name:

Title:

B&B ARMR CORPORATION

By:

Name:

Title:

INTEGRATED SECURITY SYSTEMS, INC.

By:

Name:

Title:

Solely for the purpose of Section 4.15:

STRAIT LANE CAPITAL PARTNERS LLC

By:

Name:

Title:

[Signature Page to Asset Purchase Agreement]

DISCLOSURE SCHEDULES

Schedule 1.2

-

Excluded Assets

Schedule 1.3(b)

-

Asset Allocation

Schedule 1.4(a)

-

Assumed Employee Benefit Plans

Schedule 1.4(c)

-

Assumed Contracts

Schedule 2.1

-

Jurisdictions; Subsidiaries

Schedule 2.4(a)

-

Financial Statements

Schedule 2.4(b)

-

Recent Balance Sheet

Schedule 2.4(g)

-

Payables and Accrued Expenses

Schedule 2.7

-

Consents

Schedule 2.8

-

Tax Matters

Schedule 2.9(b)

-

Real Property Leases

Schedule 2.9(c)

-

Fixed Asset Listing

Schedule 2.9(d)

-

Equipment and Other Personal Property

Schedule 2.9(e)

-

Violations

Schedule 2.10

-

Compliance with Laws

Schedule 2.11

-

Environmental Laws

Schedule 2.12

-

Material Contracts

Schedule 2.13

-

Litigation

Schedule 2.14

-

Intellectual Property

Schedule 2.15

-

Employee Benefit Plans

Schedule 2.15(i)

-

Section 409(A)

Schedule 2.16

-

Employees; Employee Relations

Schedule 2.17

-

Insurance

Schedule 2.18

-

Warranties

Schedule 2.20

-

Absence of Changes

Schedule 2.21

-

Interests in Other Persons

Schedule 2.22

-

Customers and Suppliers

Schedule 2.24

-

Brokers

EXHIBIT A

Note

See Attached.

EXHIBIT B

Net Working Capital

See Attached.

EXHIBIT C

Employment Agreement

See Attached.

EXHIBIT D

Escrow Agreement

See Attached.

EXHIBIT E

Non-Competition Agreement

See Attached.

EXHIBIT F

Voting Agreement

See Attached.