Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

by and among

 

APPARATUS, INC.

 

VIRTUSA CORPORATION

 

AND

 

KELLY PFLEDDERER AND THE OTHER PARTIES

 

LISTED ON SCHEDULE 2.2

 

AS THE SELLER SHAREHOLDERS

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1

PURCHASE AND SALE OF PURCHASED SECURITIES

1

1.1

Purchase and Sale

1

1.2

The Closing

1

1.3

Working Capital Adjustment

3

1.4

The Post-Closing Adjustment Payments

5

1.5

Intentionally Omitted

5

1.6

Post-Closing Allocations; Earn-out

5

1.7

Escrow Amount Adjustments

8

 

 

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER SHAREHOLDERS

8

2.1

Organization; Corporate Power and Licenses of the Company

9

2.2

Capitalization and Related Matters

9

2.3

Subsidiaries: Investments

9

2.4

Authorization: No Breach

9

2.5

Financial Statements

10

2.6

Absence of Undisclosed Liabilities

11

2.7

Assets

11

2.8

Tax Matters

11

2.9

Contracts and Commitments

13

2.10

Intellectual Property Rights

15

2.11

Litigation, Etc

17

2.12

Brokers

18

2.13

Insurance

18

2.14

Employees

18

2.15

ERISA

19

2.16

Compliance with Laws

22

2.17

Affiliated Transactions

22

2.18

Customers and Suppliers

22

2.19

Real Property

22

2.20

Environmental and Safety Matters

23

2.21

Legal Compliance

23

2.22

Absence of Certain Developments

23

2.23

Bank Accounts

25

2.24

Privacy of Individually Identifiable Personal Information

25

2.25

Investment Company Status

25

2.26

Indebtedness

25

2.27

Statements True and Correct

25

 

 

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF BUYER

25

3.1

Organization of Buyer

26

3.2

Authorization of Transaction

26

 

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3.3

Noncontravention

26

3.4

Brokers

26

3.5

Financial Availability

26

3.6

Accredited Investor

26

3.7

Litigation

26

 

 

 

ARTICLE 4

ADDITIONAL AGREEMENTS

27

4.1

Expenses

27

4.2

Tax Matters

27

4.3

Confidentiality; Non-Compete: Non-Solicitation; Non-Disparagement

30

4.4

Litigation Support

34

4.5

Transition Services

34

4.6

Proceeds from Purchase Price

34

4.7

Key Employee Restricted Stock Bonus Pool

34

4.8

Key Employee Bonus Pool

34

4.9

Press Releases

35

4.10

Customer Consents

35

 

 

 

ARTICLE 5

DELIVERABLES

35

5.1

Company Deliverables

35

5.2

Buyer Deliverables

36

 

 

 

ARTICLE 6

REMEDIES FOR BREACHES OF THIS AGREEMENT AND OTHER MATTERS

37

6.1

Survival of Representations and Warranties

37

6.2

Indemnification of Buyer

37

6.3

Indemnification of the Seller Shareholders

39

6.4

Indemnification Matters

40

6.5

Manner of Payment

42

6.6

Insurance and Third Party Recovery

42

6.7

Offset

42

6.8

Delivery and Release of Escrow Fund

42

6.9

Sole Remedy

43

 

 

 

ARTICLE 7

CERTAIN DEFINITIONS

43

7.1

Additional Definitions

49

 

 

 

ARTICLE 8

MISCELLANEOUS

50

8.1

No Third Party Beneficiaries

50

8.2

Entire Agreement

50

8.3

Successors and Assigns

50

8.4

Counterparts

51

8.5

Headings

51

8.6

Notices

51

8.7

Governing Law; Prevailing Party

52

8.8

Amendments and Waivers

53

8.9

Incorporation of Schedules

53

 

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8.10

Construction

53

8.11

Severability of Provisions

53

8.12

Specific Performance

53

8.13

Successor Laws

54

8.14

Release of the Company

54

8.15

Delivery by Facsimile

54

8.16

Appointment of Representative

54

8.17

Administrative Expense Account

56

 

 

 

EXHIBITS

 

 

EXHIBIT A

EMPLOYMENT AGREEMENTS

 

 

 

 

EXHIBIT B

FORMS OF AGREEMENTS EXECUTED BY KEY EMPLOYEES, THE COMPANY AND SELLER
SHAREHOLDERS

 

 

 

 

EXHIBIT C

FORM OF TREASURY REGULATIONS SECTION 1445 CERTIFICATE

 

 

 

 

EXHIBIT D

EXECUTED ACKNOWLEDGEMENTS FROM ALL EMPLOYEES WHO PARTICIPATED IN SAR PLAN

 

 

 

 

EXHIBIT E

EMPLOYEE BONUS PLAN

 

 

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INDEX OF SCHEDULES

 

Schedule 1.2(b)(i)

Seller Shareholders’ Percentage Interests and Payments

Schedule 1.2(b)(iii)

SAR Holders and Payments

Schedule 1.3(a)

Estimated Closing Date Balance Sheet and Estimated Working Capital

Schedule 1.3(b)

Working Capital Methodology

Schedule 1.6(a)

Purchase Price Allocation

Schedule 1.6(b)

Earn-Out Schedule

Schedule 2.2

Capitalization

Schedule 2.5

Financial Statements

Schedule 2.7(a)

Title to Assets

Schedule 2.7(b)

Condition of Assets

Schedule 2.7(c)

Assets for Conduct of Business

Schedule 2.8

Tax Matters

Schedule 2.9(a)

Material Contracts

Schedule 2.9(d)

Prior Names

Schedule 2.10(a)

Company Intellectual Property

Schedule 2.10(b)

Ownership of Company Intellectual Property

Schedule 2.10(d)

Actions Regarding Company Intellectual Property

Schedule 2.10(e)

Infringement of Company Intellectual Property

Schedule 2.10(f)

Compensation or Consideration Regarding Company Intellectual Property

Schedule 2.10(h)

Assignment of Invention Agreements

Schedule 2.11

Litigation, etc.

Schedule 2.12

Brokers

Schedule 2.13

Insurance

Schedule 2.14

Employees

Schedule 2.15(a)

Employee Benefit Plans

Schedule 2.15(b)

Qualification of Employee Benefit Plans

Schedule 2.17

Affiliated Transactions

Schedule 2.18(a)

Material Customers

Schedule 2.18(b)

Material Suppliers

Schedule 2.19(b)

Leased Real Property

Schedule 2.21

Legal Compliance

Schedule 2.22

Absence of Certain Developments

Schedule 2.23

Bank Accounts

Schedule 2.26

Indebtedness

Schedule 3.4

Buyer Brokers

Schedule 4.7

Buyer Restricted Stock Grants

Schedule 4.8

Bonus Pool: Key Employees

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of April 1, 2015, by
and among Apparatus, Inc., an Indiana corporation (the “Company”), Virtusa
Corporation, a Delaware corporation (“Buyer”), Kelly Pfledderer (“Major Seller
Shareholder”) and the other persons listed on Schedule 2.2 hereto (collectively,
“Seller Shareholders”).  Terms used herein and not otherwise defined herein
shall have the meaning given such terms in Article 7 hereof.

 

WHEREAS, as described on Schedule 2.2, the Seller Shareholders own beneficially
and of record all of the issued and outstanding shares of the Company as set
forth on Schedule 2.2 (the “Securities”).

 

WHEREAS, this Agreement contemplates a transaction in which, pursuant to the
terms and subject to the conditions set forth herein, Buyer will purchase from
the Seller Shareholders all of the issued and outstanding Securities and the
Seller Shareholders will sell to Buyer, all of the issued and outstanding
Securities (the “Purchased Securities”) for the consideration and on the terms
and conditions, as set forth below.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto, intending to be legally
bound, hereby agree as follows:

 

ARTICLE 1
PURCHASE AND SALE OF PURCHASED SECURITIES

 

1.1                               Purchase and Sale.  Pursuant to the terms and
subject to the conditions set forth herein, at the Closing (as defined below)
and in the amounts and for an aggregate purchase price as determined pursuant to
this Article 1, the Seller Shareholders hereby sell, assign, transfer, convey
and deliver to Buyer, and Buyer hereby accepts and purchases from the Seller
Shareholders, the Purchased Securities free and clear of all Liens in exchange
for the Purchase Price (as defined below).  For the avoidance of doubt, in
connection with such purchase and sale, Buyer shall collectively own, upon the
consummation of the transactions contemplated by the Transaction Documents, all
of the outstanding Purchased Securities free and clean of all Liens.

 

1.2                               The Closing.

 

(a)                                 The closing of the purchase and sale of the
Purchased Securities (the “Closing”) shall take place at the offices of Goodwin
Procter LLP, 53 State Street, Exchange Place, Boston, MA 02109, at 10:00 a.m.
local time on the date of this Agreement, or at such other place as is mutually
acceptable to Buyer and the Seller Shareholders.  In lieu of an in-person
Closing, the Closing may instead be accomplished by facsimile or email (in PDF
format) transmission to the respective offices of legal counsel for the parties
of the requisite documents, duly executed where required.  The date of the
Closing hereunder is referred to herein as the “Closing Date” and the Closing
will be deemed to be effective as of 12:01 a.m. Eastern daylight time on the
Closing Date.

 

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(b)                                 At the Closing, the initial purchase price
(the “Closing Purchase Price”) to be paid by Buyer for the Purchased Securities
shall be $34,951,254, plus (x) an amount equal to the Estimated Working Capital
Adjustment (which may be negative).  Subject to the terms and conditions set
forth herein, and on the basis of the representations, warranties, covenants and
agreements set forth herein, the Closing Purchase Price shall be paid by Buyer
at the Closing pursuant to this Section 1.2(b) in the following order:

 

(i)                                     at the Closing, Buyer shall deliver, in
exchange for the Purchased Securities, the Closing Purchase Price, except as
delivered pursuant to Sections 1.2(b)(ii) through (vi), to the Seller
Shareholders in the amounts as set forth on Schedule 1.2(b)(i) in immediately
available funds by wire transfer to the account of the Seller Shareholders
designated by the Seller Shareholders by notice to Buyer (the parties having
mutually agreed in in advance for wire transfer, or if not so designated or
agreed, then by certified or official bank check payable in immediately
available funds to the order of the Seller Shareholders in such amount).

 

For purposes of this agreement, “Estimated Working Capital Adjustment” shall be
equal to an amount, which may be negative, obtained by subtracting the Target
Working Capital from the Estimated Working Capital.

 

(ii)                                  at the Closing, Buyer shall deliver to the
payees of all Indebtedness which are required to be paid by the Company as of
the Closing Date as specified in a payoff letter or similar letters delivered by
the Company to Buyer before the Closing Date) an amount to pay all such
Indebtedness with the result that following the Closing there will be no further
monetary obligations of the Company with respect to any Indebtedness.

 

(iii)                               At the Closing, the Buyer shall deliver to
the Company or the Company’s payroll provider, and the Company and the Company’s
payroll provider shall pay, the amount of the SAR Plan Obligations that remain
outstanding and unpaid on the Closing Date immediately prior to the various
payments made by the Company on or before the Closing pursuant to the terms of
this Agreement.  Immediately prior to, but upon the Closing, the Seller
Shareholders shall cause the Company to deliver to the payees of the holders of
vested stock appreciation rights listed on Schedule 1.2(b)(iii) hereto (“SAR
Holders”) pursuant to each SAR Holder’s respective stock appreciation right
agreement (collectively, the “SAR Plan”) all amounts due to each such SAR Holder
upon the Closing as set forth in Schedule 1.2(b)(iii) hereto (collectively, the
“SAR Plan Obligations”), with the result that following the Closing there will
be no further monetary obligations of the Company with respect to the SAR Plan
Obligations and the SAR Plan shall be terminated and any remaining monetary
obligations shall be assumed and borne by the Seller Stockholders.  All amounts
payable in cash to the SAR Holders upon the Closing shall be paid in immediately
available funds, either by wire transfer to one or more accounts designated in
writing by the SAR Holders (or through the Company’s payroll practices and all
applicable Taxes withheld).  The amounts paid to the SAR Holders by the Company
shall not be accrued for as a Liability on the Estimated Closing Date Balance
Sheet, the Closing Date Balance Sheet or included in the calculation of the

 

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Closing Working Capital.  The payments made to the SAR Holders at Closing will
be reflected and treated as pre-Closing payments by the Company for all
purposes.

 

(iv)                              At the Closing, the Buyer shall deliver to the
payees of the Company Transaction Expenses to the extent not paid by the Company
or the Seller Shareholders prior to the Closing, the amounts specified by the
Major Seller Shareholder in writing, and to the Escrow Agent, 50% of the Escrow
Fees.

 

(v)                                 At the Closing, Buyer shall withhold from
the Purchase Price and deposit in an escrow account held by JP Morgan Chase Bank
National Association (“Escrow Agent”) the amount of 8.5% of the Closing Purchase
Price (the “Escrow Amount”), subject to adjustment pursuant to Section 1.7 and
in accordance with the terms of this Agreement. The Escrow Amount shall be held
for the purpose of the payment to Buyer of the Final Working Capital adjustment
amount, if any such payment is required by Section 1.4, and will serve as one
source, but not the exclusive source, for the satisfaction of any
indemnification or other claims of any Buyer Party pursuant to Article 6 (the
“Escrow Fund”).  On the date that is twelve (12) months following the Closing
Date, any remaining Escrow Amount shall be released to the Major Seller
Shareholder or as directed by the Major Seller Shareholder from the Escrow Fund,
less the amount of any pending or unresolved claim properly made by Buyer
against the Escrow Fund.  The Buyer, on one hand, and the Seller Stockholders,
on the other hand, shall share the escrow fees equally.

 

(vi)                              At the Closing, Buyer shall deliver on behalf
of the Seller Shareholders, $50,000 (the “Administrative Expense Amount”) in
immediately available funds by wire transfer to an account designated by the
Major Seller Shareholder (the “Administrative Expense Account”) by notice to
Buyer.

 

(c)                                  Closing Deliveries.  At the Closing,
subject to and on the terms and conditions set forth in this Agreement: (a) the
Buyer shall deliver to the Company or Seller Shareholders, as appropriate, each
of the documents required to be delivered by the Buyer pursuant to Section 5.2
that has not been delivered prior to the Closing Date; and (b) the Company shall
deliver to the Buyer each of the documents required to be delivered by such
Parties pursuant to Section 5.1 that has not been delivered prior to the Closing
Date.

 

1.3                               Working Capital Adjustment.

 

(a)                                 Attached hereto as Schedule 1.3(a) is the
estimated closing date balance sheet of the Company as of the close of business
on the day immediately prior to the Closing Date (“Estimated Closing Date
Balance Sheet”), which was prepared and delivered by the Major Seller
Shareholder in good faith and in accordance with GAAP and Schedule 1.3(b) and a
statement of the amount of Closing Working Capital which Major Seller
Shareholder estimates in good faith to exist (the “Estimated Working Capital”).

 

(b)                                 As promptly as practicable, but no later
than 75 days following the Closing Date, Buyer will cause to be prepared and
delivered to the Major Seller Shareholder (i) a closing date balance sheet of
the Company as of the close of business on the day immediately

 

3

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prior to the Closing prepared in accordance with GAAP (“Closing Date Balance
Sheet”) and (ii) a certificate setting forth Buyer’s calculation of each
component of Closing Working Capital, including any adjustments to Estimated
Closing Date Balance Sheet to ensure the Estimated Closing Date Balance Sheet
and the Closing Working Capital amount conforms to GAAP.  “Closing Working
Capital” means the Working Capital as of the close of business on the day
preceding the Closing Date determined for accounting and tax purposes as if such
date were the end of the fiscal year and prepared in accordance with GAAP and
Schedule 1.3(b). Buyer will make available to the Major Seller Shareholder and
his agents all files and records (including financial statements and work
papers) of the Company and all personnel of the Company or Buyer involved with
the preparation and/or financial affairs of the Company and/or used in preparing
the Closing Date Balance sheet or the calculation of the Closing Working
Capital, and any adjustments to the Estimated Closing Date Balance Sheet to
ensure compliance with GAAP.

 

(c)                                  If the Major Seller Shareholder disagrees
with Buyer’s calculation of the Closing Date Balance Sheet or the Closing
Working Capital delivered pursuant to Section 1.3(b), the Major Seller
Shareholder may, within 30 days after delivery of the documents referred to in
Section 1.3(b), deliver a written notice (the “Objection Notice”) to Buyer
disagreeing with such calculation and setting forth the Major Seller
Shareholder’s calculation of such amount.  Any such Objection Notice shall
specify those items or amounts as to which the Major Shareholder disagrees, and
the Major Seller Shareholder (and Seller Shareholders) shall be deemed to have
agreed with all other items and amounts contained in Buyer’s calculation of the
Closing Date Balance Sheet and the Closing Working Capital delivered pursuant to
Section 1.3(b) other than those not directly disputed by which are affected by
or relate to the items or amounts in dispute.  If the Major Seller Shareholder
does not deliver an Objection Notice within such 30 day period, then the Closing
Date Balance Sheet and the amount of Closing Working Capital shall be deemed to
be finally determined as set forth on Buyer’s calculation thereof.

 

(d)                                 If an Objection Notice shall be delivered
pursuant to Section 1.3(c), the Major Shareholder and Buyer shall, during the 15
day period following the delivery of the Objection Notice, use their reasonable
best efforts to reach agreement on the disputed items or amounts in order to
determine, as may be required, the amount of Closing Working Capital, which
amount shall not be less than the amount thereof shown in Buyer’s calculations
delivered pursuant to Section 1.3(b), nor more than the amount thereof shown in
the Major Seller Shareholder’s calculation delivered pursuant to
Section 1.3(c).  If, during such period, the Major Seller Shareholder and Buyer
are unable to reach such agreement, they shall promptly thereafter cause the
Independent Accounting Firm to promptly to review this Agreement and the
disputed items or amounts for the purpose of calculating Closing Working
Capital.  In making such calculation, the Independent Accounting Firm shall
consider only those items or amounts in the Closing Date Balance Sheet or
Buyer’s calculation of Closing Working Capital as to which the Major Seller
Shareholder has disagreed.  The Independent Accounting Firm’s determination will
be based solely on presentations by the Major Seller Shareholder and Buyer and
the Independent Accounting Firm shall deliver to the Major Seller Shareholder
and Buyer as promptly as practicable (but in any event within thirty (30) days
of its retention) a report setting forth such calculation (such date, the “Final
Resolution Date”).  Such report shall be final and binding upon the Seller
Shareholders and Buyer.  Buyer, on the one hand, and Seller Shareholders, on the
other hand (with such fees to deducted from the Escrow Account), shall share in
the fees of the Independent Accounting Firm.

 

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1.4                               The Post-Closing Adjustment Payments.

 

(a)                                 Buyer and the Major Seller Shareholder agree
that they will, and agree to cause their respective independent accountants to
cooperate and assist in the preparation of the Closing Date Balance Sheet and
the calculation of the Closing Working Capital and in the conduct of the reviews
referred to in Section 1.3 including without limitation, the making available to
the extent necessary of books, written and electronic records, work papers and
personnel.

 

(b)                                 If the Final Working Capital is less than
the Estimated Working Capital, the Major Seller Shareholder shall, within 5 days
after the Final Resolution Date, deliver to the Escrow Agent a notice of the
aggregate amount by which the Final Working Capital is less than the Estimated
Working Capital with a request to release the aggregate amount from the Escrow
Fund.

 

(c)                                  If the Final Working Capital exceeds the
Estimated Working Capital, Buyer shall, within 5 days after the Final Resolution
Date, deliver to the Major Seller Shareholder, on behalf of the Seller
Shareholders, by wire transfer of immediately available funds to the account
designated by the Major Seller Shareholder, the amount by which the Final
Working Capital exceeds the Estimated Working Capital.  “Final Working Capital”
means Closing Working Capital as shown in Buyer’s calculation delivered pursuant
to Section 1.3(b), if no Objection Notice with respect thereto is duly delivered
pursuant to Section 1.3(c); or, if an Objection Notice is delivered, as agreed
by Buyer and the Major Seller Shareholder pursuant to Section 1.3(d) or in the
absence of such agreement, as shown in the Independent Accounting Firm’s
calculation delivered pursuant to Section 1.3(d); provided that, in no event
shall Final Working Capital be less than Buyer’s calculation of Closing Working
Capital delivered pursuant to Section 1.3(b), or more than the Major Seller
Shareholder’s calculation of Closing Working Capital delivered pursuant to
Section 1.3(c).

 

1.5                               Intentionally Omitted.

 

1.6                               Post-Closing Allocations; Earn-out.

 

(a)                                 Allocation.  No later than ninety (90) days
after the Closing, Buyer shall prepare and deliver to the Major Seller
Shareholder a proposed schedule computing the “aggregate deemed sales price” (as
defined in Treasury Regulations Section 1.338-4(b)), the “aggregate grossed-up
basis” (as defined in Treasury Regulations Section 1.338-5(b)) and the
allocation among the assets of the Company and all other relevant items for
purposes of Section 338 of the Code and the Treasury Regulations promulgated
thereunder (the “Allocation”).  For purposes of the Allocation, the non-compete
covenant in Section 4.3 shall not be valued separately from goodwill or other
intangibles.  The Major Seller Shareholder shall have fifteen (15) days from the
date such Allocation is provided by Buyer to provide comments to Buyer on such
Allocation.  If the Major Seller Shareholder does not respond by the end of such
fifteen (15) day period, the Major Seller Shareholder shall be deemed to have
agreed with such Allocation. In the event the Major Seller Shareholder disagrees
with the proposed allocation, Buyer and the Major Seller Shareholder agree to
negotiate in good faith to determine the allocation hereunder within ten
(10) days from the date on which the Major Seller Shareholder notified Buyer of
such

 

5

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disagreement.  Any issues with respect to the allocations under this
Section which have not been resolved by the Parties within such ten (10) day
period shall be referred to the Independent Accounting Firm whose determination
shall be final and binding upon the Parties.  The fees and expenses of the
Independent Accounting Firm shall be shared equally by Buyer, on one hand, and
the Seller Shareholders, on the other hand.  Each of Buyer and the Seller
Shareholders shall timely file IRS Form 8883 in accordance with the Allocation
within the applicable statutory time limits and shall file all other Tax Returns
in a manner consistent with such IRS Form 8883.  Neither Buyer nor the Company
shall take any position for Tax purposes (whether in audits, Tax Returns, or
otherwise) that is inconsistent with such final IRS Form 8883 unless otherwise
required by applicable law.

 

(b)                                 Earn-Out Statement.  Promptly, but in any
event within sixty days (60) calendar days after the end of the date which is 12
full calendar months after the Closing Date (the “Earn-out Period”), Buyer shall
in good faith prepare or cause to be prepared and furnished to the Major Seller
Shareholder a written statement (the “Earn-Out Statement”) setting forth its
calculation of the Revenue Earn-out and EBITDA Earn-out (each as defined on
Schedule 1.6(b)), in each case, prepared in accordance with Schedule
1.6(b) hereto for the Earn-out Period.  Following receipt of the Earn-Out
Statement for the Earn-out Period, the Major Seller Shareholder shall be
afforded a period of thirty (30) calendar days to review the Buyer’s calculation
of the Revenue Earn-out and EBITDA Earn-out.  At or before the end of the thirty
(30) day review period, the Major Seller Shareholder shall either (i) accept the
Earn-Out Statement in its entirety or (ii) deliver to the Buyer a written notice
(a “Dispute Notice”) setting forth a detailed explanation of those items in or
omitted from the Earn-Out Statement that the Major Seller Shareholder disputes,
including the amount thereof (each, an “Item of Dispute”); provided, that the
only basis on which the Major Seller Shareholder shall be permitted to submit an
Item of Dispute is if such Item of Dispute was not prepared in accordance with
the terms of this Agreement and Schedule 1.6(b) or contains a mathematical or
clerical error or other errors.  If the Major Seller Shareholder does not
deliver a Dispute Notice to the Buyer within the thirty (30) day review period,
the Major Seller Shareholder (and Seller Shareholders) shall be deemed to have
accepted the Earn-Out Statement in its entirety.  If the Major Seller
Shareholder delivers a Notice of Dispute in which some, but not all, of the
items in the Earn-Out Statement are properly disputed, the Major Seller
Shareholder (and the Seller Shareholders) shall be deemed to have accepted all
of the items not disputed other than those not directly disputed but which are
affected by or relate to an Item of Dispute.  The Parties shall and shall cause
their respective Affiliates to cooperate fully with Buyer in connection with the
preparation of the Earn-Out Statement.  After the delivery of the Earn-Out
Statement, Buyer shall cooperate with the Major Seller Shareholder and his
representatives in connection with his review of the Earn-Out Statement,
including by providing the Major Seller Shareholder and his agents reasonable
access during business hours to the files and records of the Company and Buyer
(including the financial statements and materials used in the preparation of the
Earn-Out Statement) and access to personnel of Buyer and/or the Company who
assisted in the preparation of the Earn-Out Statement.

 

(c)                                  Company Revenue Record Retention.  During
the Earn-out Period and for one (1) year thereafter, Buyer shall keep, and shall
cause the Company and their respective Affiliates to keep, complete and accurate
books and records of all Revenue Earn-out and EBITDA Earn-out matters.  Upon the
written request of the Major Seller Shareholder, Buyer

 

6

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shall permit, and shall cause the Company and their respective Affiliates to
permit, at the expense of the Major Seller Shareholder, an independent certified
public accounting firm, selected by the Major Seller Shareholder and reasonably
acceptable to the Buyer, to have access during normal business hours to such of
the records of the Buyer and the Company as may be reasonably necessary to
verify the Revenue Earn-out and EBITDA Earn-out matters; provided, however, that
such accounting firm has entered into a confidentiality agreement in reasonably
customary form and substance with the Buyer.

 

(d)                                 Dispute Resolution by the Parties.  If the
Major Seller Shareholder delivers a Dispute Notice to Buyer within the required
thirty (30) day period set forth in Section 1.6(b), Buyer and the Major Seller
Shareholder shall use reasonable best efforts to resolve their differences
concerning the Items of Dispute, and if any Item of Dispute is so resolved, the
Earn-Out Statement shall be modified as necessary to reflect such resolution. 
If all Items of Dispute are so resolved, the Earn-Out Statement (as so modified)
shall be conclusive and binding on all Parties.

 

(e)                                  Determination by Independent Accounting
Firm.  If any Item of Dispute remains unresolved for a period of fifteen (15)
days after Buyer’s receipt of a Dispute Notice, then either the Buyer or the
Major Seller Shareholder may, within fifteen (15) days thereafter, submit the
outstanding Items of Dispute to the Independent Accounting Firm.  Buyer and the
Major Seller Shareholder shall each provide their respective calculations of the
Revenue Earn-out and the EBITDA Earn-out and the Items of Dispute in writing to
the Independent Accounting Firm and shall request that the Independent
Accounting Firm render a written determination, which determination (i) shall be
based solely on whether each such Item of Dispute was prepared in accordance
with the terms of this Agreement and Schedule 1.6(b) or whether each such Item
of Dispute contains a mathematical or clerical error or other errors and
(ii) shall not be resolved so the final amount determined by the Independent
Accounting Firm is more favorable to the Major Seller Shareholder than the
calculation(s) presented in any Item of Dispute delivered by the Major Seller
Shareholder or more favorable to the Buyer than the calculation(s) presented in
any Item of Dispute delivered by Buyer, as to each unresolved Item of Dispute as
soon as reasonably practicable, but in no event later than thirty (30) days
after its retention, and the Parties shall cooperate fully with the Independent
Accounting Firm so as to enable it to make such determination as quickly and as
accurately as practicable.  The Independent Accounting Firm’s determination as
to each Item of Dispute submitted to it shall be in writing and shall be
conclusive and binding upon the Parties, absent fraud, manifest error or willful
misconduct, and the Revenue Earn-out and/or EBITDA Earn-out shall be modified to
the extent necessary to reflect such determination.  The fees and expenses of
the Independent Accounting Firm shall be shared equally by the Buyer, on the one
hand, and Seller Shareholders, on the other hand (and Seller Shareholders’
allocation of the fees and expenses may be deducted from the Escrow Amount).

 

(f)                                   Final Revenue Earn-out and EBITDA
Earn-out.  The Revenue Earn-out and EBITDA Earn-out shall be deemed final for
the purposes of Section 1.6(b) upon the earliest of (x) the failure of the Major
Seller Shareholder to provide Buyer with a Dispute Notice within thirty (30)
days of the Buyer’s delivery of the Earn-Out Statement, (y) the resolution of
all Items of Dispute pursuant to Section 1.6(d) by the Seller Shareholder and
the Buyer and (z) the resolution of all Items of Dispute, pursuant to
Section 1.6(e), by the Independent Accounting

 

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Firm.  Upon the final determination of the Revenue Earn-out and EBITDA Earn-out
as set forth in this paragraph, Buyer shall adjust, if applicable, the Earn-Out
Statement accordingly and such adjusted Earn-Out Statement shall be deemed
final.

 

(g)                                  Purchase Price Adjustment.  Subject to and
in accordance with Schedule 1.6(b), if the amount of the Revenue Earn-out or
EBITDA Earn-out as reflected on the final Earn-Out Statement is equal to or
greater than 90% of the Revenue Earn-out Target or 90% of the EBITDA Earn-out
Target, as the case may be, as set forth on Schedule 1.6(b) such that additional
amounts are owed to the Seller Shareholders, the Purchase Price shall be
adjusted upward by the amounts as set forth in and subject to the terms and
conditions of Schedule 1.6(b) and this Agreement (“Earn-out Amount”).

 

(h)                                 Payment of Earn-out Amount.  The payment of
the applicable Earn-out Amount (as defined in Schedule 1.6(b)) for the Earn-out
Period, if any, payable by Buyer to the Seller Shareholders pursuant to this
Section 1.6 and Schedule 1.6(b) hereto shall be paid in cash to the Seller
Shareholders in accordance with the percentages set forth on Schedule
1.2(b)(i) in immediately available funds by wire transfer within ten
(10) Business Days after the Earn-Out Statement is deemed final pursuant to
Section 1.6(f); provided, however, that the portion of the Earn-out Amount not
subject to dispute shall be paid within ten (10) Business Days after delivery of
the Dispute Notice or acceptance by the Major Seller Shareholder of the Earn-Out
Statement. Any additional amounts paid pursuant to Section 1.6(g) shall be
treated as additional Purchase Price hereunder.

 

(i)                                     Financial Information;
Conduct.               During the Earn-out Period, Buyer will, and will cause
the Company to, (A) account for the businesses of the Company as a separate
accounting entity and such accounting shall include the operations of VIBU (as
defined in Schedule 1.6(b)); (B) use its reasonable efforts to maintain good
relationships with the customers and suppliers of the Company; (C) deliver to
the Major Seller Shareholder within forty-five (45) days after the end of each
quarter containing the Earn-out Period an unaudited statement of income and a
calculation of EBITDA in accordance with GAAP (which financials shall include
the operations of VIBU) (which will not be audited and will not contain any
notes); and (D) be operated in a manner consistent with the general practices of
the Buyer with respect to its Subsidiaries or operating divisions (including
VIBU).

 

1.7                               Escrow Amount Adjustments.  To the extent that
Buyer is required to make payments to the Seller Shareholders pursuant to
Sections 1.4, then the Escrow Amount shall be proportionately adjusted by Buyer
in connection with any post-closing adjustments to the Purchase Price made
pursuant to Sections 1.4, such that following any such payments the Escrow
Amount shall equal eight and half percent (8.5%) of the Closing Purchase Price
as adjusted pursuant to Section 1.4.

 

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER SHAREHOLDERS

 

As a material inducement to Buyer to enter into and perform its obligations
under this Agreement, the Company and the Seller Shareholders jointly and
severally represent and warrant

 

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to Buyer that the statements contained in this Article 2 are true and correct as
of the Closing Date as set forth herein but subject to such exceptions as are
specifically disclosed in the Disclosure Schedules delivered by Company and
Seller Shareholders concurrently with the execution of this Agreement (the
“Disclosure Schedules”) to the following:

 

2.1                               Organization; Corporate Power and Licenses of
the Company.  The Company is a corporation duly organized and validly existing
under the laws of the State of Indiana, for which all reports required to be
filed with the Indiana Secretary of State have been filed, and for which no
articles of dissolution have been filed with the Indiana Secretary of State. 
The State of Indiana is the only jurisdiction in which the Company’s ownership
of property or conduct of business requires it to be qualified, except as would
not have a material adverse effect on the Company.  The Company possesses all
requisite corporate power and authority and all licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and to carry out the transactions contemplated by
this Agreement and the Transaction Documents.  Copies of the Company’s articles
of incorporation and organizational documents, previously provided to Buyer,
reflect all amendments made thereto at any time prior to the Closing Date and
are correct and complete.

 

2.2                               Capitalization and Related Matters.  The
Securities consist of the number of authorized shares of common stock and the
number of issued and outstanding shares of common stock held beneficially and of
record by the Seller Shareholders as set out on Schedule 2.2 hereto.  Each
Seller Shareholder owns the Securities set forth opposite his or her name on
Schedule 2.2 free and clear of all Liens.  Except for the Securities and
otherwise as set forth in Schedule 2.2, the Company has no other outstanding
common stock or preferred stock or other equity securities or securities
convertible or exchangeable for any Securities or containing any profit
participation features, nor is there any outstanding rights or options to
subscribe for or to purchase any Securities or any securities convertible into
or exchangeable for any Securities or any equity or stock appreciation rights or
phantom equity or stock appreciation plans (other than the SAR Plan which will
be terminated as of Closing).  All of the Securities are validly issued, fully
paid and non-assessable and free and clear of any Liens.  There are no statutory
or contractual equity-holder preemptive rights or rights of refusal with respect
to the Securities.  The Company has not violated any applicable federal or state
securities laws in connection with the offer, sale or issuance of any of its
equity securities.  There are no agreements with respect to the voting or
transfer of the Securities.  No former shareholder of the Company has any claim
or rights against the Company that remains unresolved or to which the Company
has or may have (now or in the future) any Liability.

 

2.3                               Subsidiaries: Investments.  The Company has no
Subsidiaries or investments in any other Persons of any kind.

 

2.4                               Authorization: No Breach.  Each Seller
Shareholder has the power and authority to enter into this Agreement and to
carry out his, her or its obligations hereunder.  The execution and delivery of
this Agreement and the performance by such Seller Shareholder of his, her or its
obligations hereunder have been duly authorized, and no other proceedings on the
part of such Seller Shareholder are necessary to authorize such execution,
delivery and performance.  This Agreement has been duly executed by such Seller
Shareholder and constitutes the valid and legally binding obligation of such
Seller Shareholder enforceable against such Seller Shareholder

 

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in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Legal
Requirements affecting the enforcement of creditors’ rights generally or by
general principles of equity.  The execution, delivery and performance of the
Transaction Documents to which the Company is a party have been duly authorized
by the Company and the Seller Shareholders, as the case may be.  Each
Transaction Document to which the Company is a party constitutes a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Legal Requirements affecting the
enforcement of creditors’ rights generally or by general principles of equity. 
Except as set forth on the attached Schedule 2.21, the execution and delivery by
the Company and the Seller Shareholders of this Agreement, and all other
Transaction Documents to which such Person is a party, and the fulfillment of
and compliance with the respective terms hereof and thereof, do not and shall
not (i) conflict with or result in a breach of the terms, conditions or
provisions of, (ii) constitute a default under, (iii) result in the creation of
any Lien upon the Securities or any asset or property of the Company pursuant
to, (iv) give any third party the right to modify, terminate or accelerate any
obligation under, (v) result in a violation of, or (vi) require any exemption or
other action by or notice or declaration to, or filing with, or other Consent
from, any Governmental Entity pursuant to, the charter or bylaws or equivalent
governing document of the Company or any Legal Requirement to which the Company
or the Seller Shareholders or any of their Affiliates or any of their assets or
properties is subject, or any Contract, order, judgment or decree to which the
Company or the Seller Shareholders or any of their Affiliates or any of their
assets or properties is subject.

 

2.5                               Financial Statements.  Attached hereto as
Schedule 2.5 are copies of the Company’s (i) unaudited balance sheet as of
February 28, 2015 (the “Latest Balance Sheet”) and the related statements of
income and cash flows for the 2-month period then ended and (ii) compiled
consolidated balance sheets and related statements of income and cash flows for
the fiscal years ended December 31, 2012, 2013 and 2014.  Each of the foregoing
financial statements (including in all cases the notes thereto, if any) is
accurate and complete in all material respects, is consistent with the books and
records of the Company (which, in turn, are accurate and complete in all
material respects) and has been prepared in accordance with the Company’s past
practices, and presents fairly, in all material respects, the financial
condition, results of operations, shareholders’ equity and cash flows of the
Company as of the dates and for the periods referred to therein in accordance
with GAAP except that the financial statements (including in all cases the notes
thereto, if any) are prepared on a cash basis instead of an accrual basis.

 

(a)                                 The accounts receivable of the Company as
set forth on the Latest Balance Sheet or arising since such date are valid and
genuine subject to the reserve for bad debt set forth in the Final Working
Capital, and have arisen solely out of bona fide sales and deliveries of goods,
performance of services and other business transactions in the ordinary course
of business.

 

(b)                                 The Company maintains in all material
respects such internal accounting controls and procedures as are reasonably
necessary to provide assurance regarding the reliability of the financial
statements of the Company, including controls and procedures that provide
reasonable assurance that (i) the financial records and financial statements are
complete and

 

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accurate in all respects; (ii) transactions are executed in accordance with
management’s specific authorization where such authorization is required;
(iii) transactions are recorded as necessary to permit preparation of the
financial statements of the Company and to maintain accountability for assets
and liabilities of the Company; (iv) the reporting of the assets and liabilities
of the Company is compared with the existing assets and liabilities of the
Company at regular intervals; and (vi) accounts, notes and other receivables are
recorded accurately and properly.

 

2.6                               Absence of Undisclosed Liabilities.  The
Company has no Liabilities and, to Knowledge of the Company and the Seller
Shareholders, there is no basis for any proceeding, hearing, investigation,
charge, complaint or claim with respect to any Liability, except for
(i) Liabilities reflected on the face of the Latest Balance Sheet and,
(ii) Liabilities of the type reflected on the face of the Latest Balance Sheet
which have arisen since the date of the Latest Balance Sheet in the ordinary
course of business (none of which relates to breach of Contract, breach of
warranty, tort, infringement, violation of or Liability under any Legal
Requirements, or any action, suit or proceeding) all of which will be reflected
in Final Working Capital and (iii) performance obligations under Contracts
entered into by the Company in the ordinary course of business which are not
required to be reflected on the financial statements.

 

2.7                               Assets.  All of the Company’s assets are
located at the premises disclosed on Schedule 2.19(b).  Except as set forth on
the attached Schedule 2.7(a), the Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets, tangible or intangible,
used by it or located on its premises or, if applicable, shown on the Latest
Balance Sheet or acquired thereafter, free and clear of all Liens, except for
Permitted Liens.  Except as described on the attached Schedule 2.7(b), the
Company’s equipment and other tangible assets are, taken as a whole, in good
operating condition (normal wear and tear and repairs and replacements excepted)
and are fit in all material respects for use in the ordinary course of business
as currently used.  Except as described on the attached Schedule 2.7(c), the
Company owns, or has a valid leasehold interest in, all properties and assets
necessary for the conduct of the Business as presently conducted.

 

2.8                               Tax Matters.

 

(a)                                 The Company has timely filed all Tax Returns
required to be filed by it, each such Tax Return has been prepared in compliance
with all Legal Requirements, and all such Tax Returns are complete and accurate
in all respects.  All Taxes due and payable by the Company (whether or not shown
on any Tax Return) have been paid. The unpaid Taxes of the Company (A) did not,
as of the end of the most recent fiscal month, exceed the reserve for Tax
Liability (without regard to any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) set forth on the face of
the Latest Balance Sheet (rather than in any notes thereto) and (B) do not
exceed that reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Company in filing its Tax
Returns.  Since the date of the Latest Balance Sheet, the Company has not
incurred any liability for Taxes arising from extraordinary gains or losses, as
that term is used in GAAP, outside the ordinary course of business consistent
with past custom and practice.

 

(i)                                     The Company has complied in all respects
with all statutory provisions, rules, regulations, orders and directions in
respect of sales and use, valued

 

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added or similar tax on transactions or consumption, has promptly submitted
accurate returns, maintains full and accurate records and has not been subject
to any interest, forfeiture, surcharge or penalty.

 

(ii)                                  There have been and are no circumstances
or transactions to which the Company has or has been a party such that a
Liability for Tax on any documents or instruments of transfer on which the
Company must rely on to enforce any right is or could become payable by the
Company and all Taxes due and payable by the Company have been paid and all sums
which the Company was liable to withhold have been withheld.

 

(b)                                 Except as set forth in Schedule 2.8 attached
hereto:

 

(i)                                     neither the Company nor any member of
its Affiliated Group has consented to extend the time in which any Tax may be
assessed or collected by any taxing authority;

 

(ii)                                  the Company has not paid or become liable
to pay any penalty, fine, or surcharge in relation to Tax;

 

(iii)                               no deficiency or proposed adjustment, which
has not been settled or otherwise resolved, for any amount of Tax has been
proposed, asserted or assessed by any taxing authority against the Company;

 

(iv)                              there is no action, suit, taxing authority
proceeding or audit now in progress; pending; threatened in writing, or, to the
Knowledge of the Company and the Seller Shareholders, otherwise threatened
against or with respect to the Company;

 

(v)                                 the Company will not be required to include
any amount in taxable income or exclude any item of deduction or loss from
taxable income for any taxable period (or portion thereof) ending after the
Closing Date (A) as a result of a change in method of accounting for a taxable
period ending on or prior to the Closing Date, (B) as a result of any “closing
agreement,” as described in Code Section 7121 (or any corresponding provision of
state, local or foreign income Tax law) entered into on or prior to the Closing
Date, (C) as a result of any sale reported on the installment method where such
sale occurred on or prior to the Closing Date, (D) as a result of any prepaid
amount received on or prior to the Closing Date, (E) as a result of any
intercompany transaction or excess loss account described in Treasury
Regulations under Code §1502 (or any corresponding or similar provision of
state, local, or non-U.S.  income Tax law), and (F) as a result of any election
under Code Section 108(i).

 

(vi)                              the Company has no Liability for the payment
of Taxes of any other Person, including a Liability of the Company for the
payment of any Tax arising (A) as a result of any expressed or implied
obligation to indemnify another Person, and (B) as a result of the Company
assuming or succeeding to the Tax Liability of any other Person as a successor,
transferee or otherwise;

 

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(vii)                           there are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the assets of the Company;

 

(viii)                        to the Knowledge of the Company and Seller
Shareholders, there is no basis for any taxing authority to claim or assess any
amount of additional Taxes against the Company;

 

(ix)                              no claim has ever been made by a taxing
authority in a jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to Taxes assessed by such jurisdiction;

 

(x)                                 the Company has not made any payment, and is
not and will not become obligated (under any contract entered into on or before
the Closing Date) to make any payment, that will be non-deductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign income Tax law);

 

(xi)                              Buyer will not be required to deduct and
withhold any amount pursuant to Section 1445(a) of the Code upon the transfer of
any cash or property pursuant to this Agreement;

 

(xii)                           the Company has been a validly electing S
corporation within the meaning of Code Sections 1361 and 1362 at all times
during its existence and the Company will be an S corporation up to and
including the Closing..

 

(xiii)                        Each shareholder of the S corporation is a valid
shareholder of an S corporation within the meaning of Code Section 1361(b) at
all times up to and including the Closing.

 

(xiv)                       the Company shall not be liable for any Tax under
Section 1374 of the Code in connection with the deemed sale of the Company’s
assets (including the assets of any qualified subchapter S subsidiary) caused by
the Section 338(h)(10) Election.  The Company has not in the past 7 years
(A) acquired assets from another corporation in a transaction in which the
Company’s Tax basis for the acquired assets was determined, in whole or in part,
by reference to the Tax basis of the acquired assets (or any other property) in
the hands of the transferor or (B) acquired the stock of any corporation that is
a qualified subchapter S subsidiary.

 

2.9                               Contracts and Commitments.

 

(a)                                 Except as set forth on the attached
Schedule 2.9(a), the Company is not a party to or bound by any written or oral:

 

(i)                                     collective bargaining agreement or other
Contract with any labor union;

 

(ii)                                  management agreement or other Contract for
the employment of any officer, individual employee or other Person on a full
time, part-time or consulting basis or providing for the payment of any cash or
other compensation or benefits in

 

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connection with the sale of all or a material portion of its assets or a change
of control (other than at-will employment agreements with its employees which do
not commit the Company to severance, termination or other similar payments);

 

(iii)                               Contract relating to Indebtedness (including
any letter of credit arrangements and guarantees of any obligations) or to the
mortgaging, pledging or otherwise placing a Lien on any of its assets or any of
its equity securities;

 

(iv)                              Contract, including, but not limited to,
purchase orders, for the purchase of raw materials, commodities, supplies,
products or other personal property or for the receipt of services which either
calls for performance by the vendor over a period of more than one year or which
involves consideration payable by the Company in excess of $75,000 per year or
$150,000 in the aggregate;

 

(v)                                 Contract which prohibits it from freely
engaging in business anywhere in the world without any limitation or adverse
consequences;

 

(vi)                              Contract under which it has advanced or loaned
any other Person any amounts;

 

(vii)                           Contract under which it is lessee of or holds or
operates any property, real or personal, owned by any other party which involves
annual rental payments of greater than $50,000 or group of such Contracts with
the same Person which involve consideration in excess of $100,000 in the
aggregate;

 

(viii)                        Contract under which it is lessor of or permits
any third party to hold or operate any property, real or personal, owned or
controlled by it which involves consideration in excess of $50,000;

 

(ix)                              Licenses, indemnification or other Contract
with respect to any intangible property (including any Company Intellectual
Property), other than (A) licenses to the Company of unmodified, mass-marketed,
executable desktop software applications with a total license fee of less than
$25,000 in the aggregate for any such license or group of related licenses, and
(B) customer Contracts entered into in the ordinary course of business and
containing terms and conditions substantially similar to the terms and
conditions of the Company’s standard customer agreement, copies of which have
been previously provided to the Buyer;

 

(x)                                 any profit sharing, stock option, stock
purchase, stock appreciation, deferred compensation, severance, incentive
compensation or other plan, program or arrangement for the benefit of its
current or former directors, officers or employees;

 

(xi)                              Contract that provides any customer with
pricing, discounts or benefits that change based on the pricing, discounts or
benefits offered to other customers of the Company, including, without
limitation, Contracts containing “most favored nation” provisions;

 

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(xii)                           Contract involving the settlement of any Action
or threatened Action with respect to which, as of the date of this Agreement,
(A) any unpaid amount exceeds $50,000 or (B) conditions precedent to the
settlement have not been satisfied;

 

(xiii)                        Contract appointing any agent to act on its or
their behalf;

 

(xiv)                       power of attorney;

 

(xv)                          Contract relating to the acquisition or sale of
the business (or any material portion thereof), whether or not consummated and
including any confidentiality agreements entered into with respect thereto; or

 

(xvi)                       other Contract (or group of related Contracts) the
performance of which involves consideration in excess of $100,000 per year or
$300,000 in the aggregate or any other Contract material to the Company, whether
or not entered into in the ordinary course of business.

 

(b)                                 With respect to the Company’s obligations
thereunder and, with respect to the obligations of the other parties thereto,
all of the Contracts set forth or required to be set forth on Schedule
2.9(a) (each a “Material Contract”) hereto are valid, binding and enforceable
against the Company and enforceable by the Company against the other parties
thereto, in accordance with their respective terms.  The Company has performed
its obligations required to be performed by it under such Contract as of the
date hereof and the Company has not received any written notice that it is in
default or refund claim or under or in breach of nor in receipt of any claim of
default, refund, or breach under any such Contract; and to the Knowledge of the
Company and the Seller Shareholders, no event has occurred which with the
passage of time or the giving of notice or both would result in a default,
refund, breach or event of noncompliance by the Company under any such Contract.

 

(c)                                  A true, correct and complete copy of each
of the written Material Contracts and an accurate description of each of the
oral Material Contracts which are referred to on the attached Schedule 2.9(a),
have been delivered to Buyer.

 

(d)                                 Except as set forth on the attached
Schedule 2.9(d) during the preceding five-year period, the Company has not used
any name or names under which it invoiced account debtors, maintained records
concerning their assets or otherwise conducted their business, other than the
exact names under which it has executed the Transaction Documents.

 

2.10                        Intellectual Property Rights.

 

(a)                                 The attached Schedule 2.10(a) sets forth
true and complete lists of (i) all registered and unregistered marks, all
patents and registered copyrights owned by the Company or used or held for use
by the Company in the business of the Company as currently conducted (the
“Business”) (such marks, patents and copyrights, together with all other
Intellectual Property owned by the Company or used or held for use by the
Company in the Business, the “Company Intellectual Property”), (ii) software
products and/or services currently or previously designed, developed,
manufactured, performed (within the last 24 months), licensed, sold, distributed
and/or otherwise made commercially available by the Company (the “Products”),
(iii) all

 

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licenses or other agreements under which the Company is granted rights by others
in Company Intellectual Property, other than licenses to the Company of
unmodified, mass-marketed, executable desktop software applications with a total
license fee of less than $25,000 in the aggregate for any such license or group
of related licenses, and (iv) all licenses or other agreements under which the
Company has granted rights to others in Company Intellectual Property, other
than customer Contracts entered into in the ordinary course of business and
containing terms and conditions substantially similar to the terms and
conditions of the Company’s standard customer agreement, copies of which have
been provided to Buyer.

 

(b)           The Company exclusively owns and possesses all right, title and
interest in and to all Company Intellectual Property purported to be owned by
the Company and has valid and enforceable licenses to use all other Intellectual
Property necessary for the conduct of its Business, in each case without any
conflict with or infringement by the Company of the rights of any Person and
free and clear of all Liens by the Company, except as disclosed on the attached
Schedule 2.10(b).  The Company is and has always been in compliance with all
licenses set forth or required to be set forth on Schedule 2.10(a) including,
without limitation, all licenses for Open Source Software.

 

(c)           All patents, marks and copyrights owned by the Company that have
been issued by, or registered or the subject of an application filed with, as
applicable, the U.S. Patent and Trademark Office, the U.S. Copyright Office or
any similar office or agency anywhere in the world, have been duly maintained
(including the payment of maintenance fees) and are not expired, cancelled or
abandoned and, to the Knowledge of the Company and the Seller Shareholders, are
valid and enforceable.

 

(d)           Except as disclosed on Schedule 2.10(d), there are no pending or,
to the Knowledge of the Company and the Seller Shareholders, threatened claims
against the Company alleging that the operation of the Business or any activity
of the Company has infringed, misappropriated or otherwise conflicted with, or
that the Company, by conducting its Business, would infringe, misappropriate or
otherwise conflict with, any rights of any other Person in Intellectual
Property, or that any Company Intellectual Property is invalid or
unenforceable.  Neither the operation of the Business, nor any activity by the
Company, infringes, misappropriates or violates (or in the past infringed,
misappropriated or violated) any rights of any other Person in Intellectual
Property.

 

(e)           To the Knowledge of the Company and the Seller Shareholders,
except as set forth on Schedule 2.10(e), no third party is infringing,
misappropriating or violating, or has infringed, misappropriated or violated,
any of the Company Intellectual Property.

 

(f)            Except as set forth on Schedule 2.10(f) or except as set forth on
Schedule 2.10(a), no compensation or other consideration is owed to or claimed
to be owed to any third party by the Company due to the Company’s ownership,
license (as licensor or licensee) or use (directly or indirectly via another
party) of the Company Intellectual Property.

 

(g)           No loss of Company Intellectual Property by the Company (other
than by expiration in the ordinary course) is pending or, to the Knowledge of
Seller Shareholders, threatened.  All of the computer firmware, computer
hardware, and computer software (whether

 

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general or special purpose) and other similar or related items of automated,
computerized, and/or software system(s) owned or leased by the Company and in
the conduct of its business are in good operating condition, repair, subject
only to the provision of usual and customary maintenance, and sufficient for the
conduct of the Business.

 

(h)           Except as set forth in Schedule 2.10(h), every current and former
officer, director, consultant, independent contractor and employee of the
Company has executed a Contract that assigns to the Company all of their
interests in any and all inventions, improvements, discoveries, writings and
other works of authorship, and information relating to the Business or any of
the products or services being researched, developed, manufactured or sold by
the Company or that may be used with any such products or services, and all
rights in Intellectual Property relating thereto.  To the Knowledge of the
Company and the Seller Shareholders, no such Person is in breach of his or her
obligations under such Contracts, and no such Person is party to any conflicting
Contract, including any Contract that restricts them from engaging in activities
for the Company.

 

(i)            The Company has not (except in the ordinary course of business
under obligations of confidentiality) disclosed or permitted to be disclosed or
undertaken or arranged to disclose to any Person other than Buyer any trade
secrets owned by the Company or used or held for use by the Company in the
Business (the “Company Trade Secrets”).  The Company has taken all reasonable
security measures to protect the secrecy and confidentiality of the Company
Trade Secrets, including, without limitation, requiring each employee and
consultant of the Company and any other person with access to Company Trade
Secrets to execute a binding confidentiality agreement, copies or forms of which
have been provided to the Buyer, and to the Knowledge of the Company and the
Seller Shareholders, there has not been any breach by any party to such
confidentiality agreements.

 

(j)            None of the Products contain, incorporate, link or call to or
otherwise use Open Source Software in a manner that would obligate the Company
to disclose, make available, offer or deliver any portion of the source code of
such Product or component thereof to any third party other than the applicable
Open Source Software.

 

2.11        Litigation, Etc.  Except as set forth on Schedule 2.11, there are no
Actions pending or, to the Knowledge of the Company and the Seller Shareholders,
threatened against or affecting the Company (or to the Knowledge of the Company
and the Seller Shareholders, pending or threatened against or affecting any of
the officers, directors or employees of the Company with respect to the
Company’s business or proposed business activities), or pending or threatened by
the Company against any third party, at law or in equity, or before or by any
Governmental Entity (including any actions, suits, proceedings or investigations
with respect to the transactions contemplated by the Transaction Documents). 
The Company is not subject to any arbitration proceedings under collective
bargaining Contracts or any governmental investigations or inquiries; and, to
the Knowledge of the Company and the Seller Shareholders, there is no valid
basis for any of the foregoing.  The Company is not subject to any judgment,
order or decree of any court or other Governmental Entity, or have received any
opinion or memorandum or legal advice from legal counsel to the effect that it
is exposed, from a legal standpoint, to any Liability or disadvantage which may
be material to their business.

 

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2.12        Brokers.  There are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated by
this Agreement or any of the other Transaction Documents based on any Contract
to which the Company is a party or otherwise binding upon the Company. Except as
set forth in Schedule 2.12, the Company has not made, and the Company is not
obligated to make, any payment to any Person with respect to brokerage
commissions, finders’ fees or similar compensation in connection with the
transactions contemplated by the Transaction Documents.

 

2.13        Insurance.  The attached Schedule 2.13 lists each insurance policy
maintained for or on behalf of the Company with respect to its properties,
assets and business.  All of such insurance policies are in full force and
effect, no default exists with respect to the obligations of the Company under
any such insurance policies and the Company has not received any notification of
cancellation of any of such insurance policies.  All premiums with respect to
such insurance policies have been paid through the date hereof.  There are no
pending claims against such insurance with respect to the Company as to which
the insurers have denied coverage or otherwise reserved rights.  Except as set
forth on Schedule 2.13, the Company has no self-insurance or co-insurance
programs.

 

2.14        Employees.  With respect to the Company: (i) there is no collective
bargaining agreement or relationship with any labor organization; (ii) to the
Knowledge of the Company and the Seller Shareholders, no executive or key
employee has any present intention to terminate their employment; (iii) no labor
organization or group of employees has filed any representation petition or made
any written or oral demand for recognition; (iv) to the Knowledge of Seller
Shareholders, no union organizing efforts are underway or threatened and no
other question concerning representation exists; (v) no labor strike, work
stoppage, slowdown, or other labor dispute has occurred, and none is underway
or, to the Knowledge of the Company and the Seller Shareholders, threatened; and
(vi) there is no workman’s compensation Liability or Action pending or, to the
Knowledge of the Company and the Major Seller Shareholder, threatened;
(vii) there is no employment-related charge, complaint, grievance,
investigation, inquiry or Liability of any kind, pending or, to the Knowledge of
the Company and the Seller Shareholders, threatened in any forum, relating to an
alleged violation or breach by the Company of any Legal Requirements relating to
the employment of labor and, (viii) to the Knowledge of the Company and the
Seller Shareholders, no employee or agent of the Company has committed any act
or omission giving rise to any Liability for any violation identified in
subsection (vii) above.  Except as set forth on Schedule 2.14 or as contemplated
by Section 2.10(h) or Section 2.10(i), neither the Company nor, to the Knowledge
of the Company and the Seller Shareholders, any of the Company’s employees is
subject to any non-compete, nondisclosure, confidentiality, employment,
consulting or similar Contracts relating to, affecting or in conflict with the
current business activities of the Company.  Schedule 2.14 contains a correct
and complete list of all employees and independent contractors of the Company as
of the date hereof, including a list of all officers and directors of the
Company, and whether or not they have executed and delivered to either of them
any (i) any Contract with the Company preventing such Person from competing with
the Company during and/or following termination of employment, (ii) any Contract
with the Company preventing such Person from soliciting and hiring employees of
the Company during and/or following termination of employment or (iii) any
Contract with the Company preventing such Person from soliciting and servicing
any customers of the Company.  The classification of each employee as exempt or
nonexempt or an independent contractor, the base salary or wage

 

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rates and any incentive or other form of compensation (including bonuses
thereto) for the employees and independent contractors of the Company is set
forth on Schedule 2.14.  All amounts of bonuses accrued by employees and
independent contractors of the Company up to and including the Closing Date have
been properly accrued for.  No current employee or independent contractor of the
Company has advised the Company that he or she has excluded works or inventions
made prior to his or her employment with the Company from any inventions
agreement between the Company and such Person.  To the Knowledge of the Company
and the Seller Shareholders, all employees employed by the Company devote all of
their business time and attention to the businesses of the Company.  The Company
is in compliance in all  respects with all applicable laws respecting employment
and employment practices, terms and conditions of employment, classification of
employees, wages and hours, occupational safety and health, including, but not
limited to, the National Labor Relations Act, the Immigration Reform and Control
Act of 1986, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of
1991, the Age Discrimination in Employment Act, the Older Workers Benefit
Protection Act, 42 U.S.C.  Section 1981, the Americans With Disabilities Act,
the Fair Labor Standards Act, ERISA, the Occupational Safety and Health Act, the
Family Medical Leave Act, and any other law respecting employment, including,
but not limited to, authorization to work in the United States, equal employment
opportunity (including prohibitions against discrimination, harassment, and
retaliation), payment of wages, hours of work, occupational safety and health,
and labor practices.  In the last three years, (i) the Company has not effected
a “plant closing” (as defined in the Worker Adjustment and Retraining
Notification Act (the “WARN Act”)), affecting any site of employment or one or
more facilities or operating units within any site of employment or facility,
(ii) there has not occurred a “mass layoff” (as defined in the WARN Act)
affecting any site of employment or facility of the Company, (iii) the Company
has not engaged in layoffs or employment terminations sufficient in number to
trigger application of, and notification requirements under, any state, local or
foreign law or regulation similar to the WARN Act and (iii) during the ninety
(90) day period immediately preceding the date of this Agreement, the Company
has not terminated involuntarily the employment of more than five
(5) individuals from employment in positions, excluding individuals who were
“part-time employees” of the Company within the meaning of the WARN Act, 29
U.S.C. § 2101(a)(8) and applicable regulations at 20 C.F.R. § 639.3(h).

 

2.15        ERISA.

 

(a)           Except as disclosed and set forth on the attached
Schedule 2.15(a), the Company does not maintain, sponsor, contribute to, provide
benefits under or have any actual or potential Liability with respect to any
Employee Benefit Plan.

 

(b)           The Employee Benefit Plans have been and shall be through the
Closing Date maintained in compliance in all  respects with their terms and with
the requirements of the Code and ERISA and all other applicable laws and
regulations, and the Company has not received notification to the contrary from
the Internal Revenue Service, Department of Labor, or the PBGC.  Except as set
forth on the attached Schedule 2.15(b), each Employee Benefit Plan that is
intended to qualify under Section 401(a) or 501(c)(9) of the Code is so
qualified and has received a favorable determination or approval letter from the
Internal Revenue Service with respect to such qualification, or may rely on an
opinion letter issued by the Internal Revenue Service with respect to a
prototype plan adopted in accordance with the requirements for such

 

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reliance, or has time remaining for application to the Internal Revenue Service
for a determination of the qualified status of such Employee Benefit Plan for
any period for which such Employee Benefit Plan would not otherwise be covered
by an Internal Revenue Service determination and no event or omission has
occurred that would cause any Employee Benefit Plan to lose such qualification. 
No asset of the Company is subject to any lien under ERISA or the Code, and the
Company has not incurred any Liability under Title IV of ERISA or to the PBGC. 
No litigation or governmental administrative proceeding, audit or other
proceeding (other than those relating to routine claims for benefits) is
pending, or to the Knowledge of the Company and the Seller Shareholders,
threatened with respect to any Employee Benefit Plan or any fiduciary or service
provider thereof, and there is no reasonable basis for any such litigation or
proceeding.

 

(c)           The Company has never: (i) maintained, contributed to or had any
actual or potential Liability with respect to any active or terminated, funded
or unfunded, Multiemployer Plan or employee benefit plan subject to Section 302
of Title I of ERISA, Title IV of ERISA or Section 412 of the Code; (ii) failed
to satisfy any minimum funding requirement, if any, under Section 412 of the
Code or Section 302 of ERISA; (iii) failed to make a required contribution or
payment to a Multiemployer Plan (as described in Section 4001 (a)(3) of ERISA);
or (iv) made a complete or partial withdrawal under Sections 4203 or 4205 of
ERISA from a Multiemployer Plan.

 

(d)           With respect to each Employee Benefit Plan, all required payments,
premiums, contributions, reimbursements or accruals or Liabilities incurred for
all periods (or partial periods) ending prior to or as of the Closing Date shall
have been made or properly accrued in the Final Working Capital.

 

(e)           The Company does not, and as of the Closing Date, the Company will
not maintain or contribute to any Employee Welfare Benefit Plan which provides
benefits to employees after termination of employment (other than as required
under Section 601 of ERISA or applicable state law).  The Company has complied
in all respects with the health care continuation requirements of Part 6 of
Subtitle B of Title I of ERISA and Section 4980B of the Code.  Each Employee
Benefit Plan that provides health benefits (except a medical reimbursement
account), long-term disability benefits, or life insurance benefits is fully
insured.

 

(f)            The Company has provided Buyer with true, complete and correct
copies, to the extent applicable of (i) all documents pursuant to which the
Employee Benefit Plans are maintained, funded and administered, (ii) the two
most recent annual reports (Form 5500 series) filed with the Internal Revenue
Service (with attachments), (iii) the two most recent actuarial valuation
reports, (iv) the two most recent financial statements, (v) all governmental
rulings, determinations and opinions (and pending requests for governmental
rulings, determinations and opinions), (vi) the most recent valuation (but in
any case at least one that has been completed within the last calendar year) of
the present and future benefit obligations under each Employee Benefit Plan that
provides post-retirement or post-employment, health, life insurance, accident or
other “welfare-type” benefits, and (vii) all non-routine correspondence to and
from any state or federal agency.

 

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(g)           Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby could (either alone or in
conjunction with any other event) (i) other than the SAR Plan Obligations,
result in, or cause the accelerated vesting payment, funding or delivery of, or
increase the amount or value of, any payment or benefit to any employee,
officer, director or other service provider of the Company or any of its
Affiliates; (ii) limit the right of the Company or any of its Affiliates to
amend, merge, terminate or receive a reversion of assets from any Employee
Benefit Plan or related trust; (iii) result in any “parachute payment” as
defined in Section 280G(b)(2) of the Code (whether or not such payment is
considered to be reasonable compensation for services rendered); or (iv) result
in a requirement to pay any tax “gross-up” or similar “make-whole” payments to
any employee, director or independent contractor of the Company or an Affiliate.

 

(h)           Neither the Company nor any other “disqualified person” (within
the meaning of Section 4975 of the Code) or “party in interest” (within the
meaning of Section 3(14) of ERISA) has taken any action with respect to any of
the Employee Benefit Plans which could subject any such Employee Benefit Plan
(or its related trust) or the Company or any officer, director or employee of
any of the foregoing to any penalty or tax under Section 502(i) of ERISA or
Section 4975 of the Code.

 

(i)            The Company has no Liability (potential or otherwise) with
respect to any “employee benefit plan” (as defined in Section 3(3) of ERISA)
solely by reason of being treated as a single employer under Section 414 of the
Code with any other entity.

 

(j)            (i) Each Employee Benefit Plan may be amended, terminated, or
otherwise modified by the Company to the greatest extent permitted by applicable
law, including the elimination of any and all future benefit accruals thereunder
and no employee communications or provision of any Employee Benefit Plan has
failed to effectively reserve the right of the Company or the Affiliate to so
amend, terminate or otherwise modify such Employee Benefit Plan.  (ii) Neither
the Company nor any of its Affiliates has announced its intention to modify or
terminate any Employee Benefit Plan or adopt any arrangement or program which,
once established, would come within the definition of an Employee Benefit Plan. 
(iii) Each asset held under each Employee Benefit Plan may be liquidated or
terminated without the imposition of any redemption fee, surrender charge or
comparable liability.

 

(k)           Since December 31, 2008 and through December 31, 2014, each
Employee Benefit Plan that constitutes in any part a nonqualified deferred
compensation plan within the meaning of Section 409A of the Code (each, a “NQDC
Plan”) has been operated and maintained in accordance with a good faith,
reasonable interpretation of Section 409A of the Code with respect to amounts
deferred (within the meaning of Section 409A of the Code) after December 31,
2008.  From and after January 1, 2009, each NQDC Plan has been operated and
maintained in operational and documentary compliance with Section 409A of the
Code and applicable guidance thereunder.  No payment to be made under any
Employee Benefit Plan is, or will be, subject to the penalties of
Section 409A(a)(1) of the Code.

 

(l)            No Employee Benefit Plan is subject to the laws of any
jurisdiction outside the United States.

 

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2.16        Compliance with Laws.  The Company has complied in all material
respects with, and is currently in compliance in all material respects with, all
applicable laws, ordinances, codes, rules, requirements, regulations and other
Legal Requirements of all Governmental Entities relating to the operation and
conduct of its business or any of its properties or facilities, including all
laws, ordinances, codes, rules, requirements, regulations and other Legal
Requirements concerning trade practices, advertising, antitrust or competition
or relating to employment of labor and the Company has not received written
notice (whether material or not) of any violation, and/or non-written notice of
a violation, of any of the foregoing.

 

2.17        Affiliated Transactions.  Except as set forth on the attached
Schedule 2.17, no officer, director, shareholder or, to the Knowledge of the
Company and the Seller Shareholders, any SAR Holder or other Affiliate of the
Company or any individual related by blood, marriage or adoption to any such
individual or any entity in which any such Person or individual owns any
beneficial interest (an “Insider”), is a party to any Contract with the Company
or has any interest in any property, asset or right used by the Company or
necessary or desirable for its Business or has received any funds from the
Company since the date of the Latest Balance Sheet other than payment of salary
and benefits to such Insider as an employee in the ordinary course of business
and Tax distributions.

 

2.18        Customers and Suppliers.

 

(a)           The attached Schedule 2.18(a) lists each customer of the Company
(including distributors) accounting for more than 2% of the gross revenues of
the Company for each of the two most recent fiscal years (and the revenues
generated from such customer).

 

(b)           The attached Schedule 2.18(b) lists each vendor, supplier, service
provider and other similar business relation of the Company from whom the
Company purchased greater than $75,000 in goods and/or services over the course
of the 12 months ending December 31, 2014 or the 2-months ended February 27,
2015, and whether such amounts are past due.

 

(c)           The Company has not received any written indication from any
customer identified on Schedule 2.18(a) or supplier identified on Schedule
2.18(b) to the effect that, and the Company has no reason to believe that, such
customer or vendor, supplier or service provider will stop, decrease the rate
of, or change the terms (whether related to payment, price or otherwise) with
respect to, supplying materials, products or services to the Company (whether as
a result of the consummation of the transactions contemplated by this Agreement
or the other Transaction Documents or otherwise).

 

2.19        Real Property.

 

(a)           The Company does not own any real property.

 

(b)           Schedule 2.19(b) attached hereto contains a complete list of all
real property leased or subleased by the Company (the “Leased Real Property”). 
The Company has a valid leasehold interest in each Leased Real Property, subject
only to Permitted Liens.  The Company has previously delivered to Buyer complete
and accurate copies of each of the leases for the Leased Real Property (the
“Leases”).  With respect to each Lease: (i) the Lease is legal, valid, binding,
enforceable and in full force and effect except as enforceability may be limited
by

 

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applicable bankruptcy, insolvency, reorganization, moratorium or similar Legal
Requirements affecting the enforcement of creditors’ rights generally or by
general principles of equity; (ii) neither the Company, nor, to the Knowledge of
the Company and the Seller Shareholders, any other party to the Lease is in
breach or default and no event has occurred which, with notice or lapse of time
or both, would constitute such a breach or default or permit termination,
modification or acceleration under the Lease; (iii) no party to the Lease has
repudiated any provision thereof; (iv) there are no disputes, oral agreements or
forbearance programs in effect as to the Lease; (v) the Lease has not been
modified in any respect, except to the extent that such modifications are
disclosed by the documents delivered to Buyer; and (vi) the Company has not
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in the Lease.

 

(c)           With respect to the Leased Real Property: (i) the current use of
such property and the operation of the Company’s business does not violate the
Lease and (ii) except for the Lease, there are no leases, subleases, licenses,
concessions or other Contracts, written or oral, granting to any Person the
right of use or occupancy of any portion of the Leased Real Property except in
favor of the Company.

 

2.20        Environmental and Safety Matters.  The Company has complied in all 
respects and is in compliance with all Environmental and Safety Requirements
(including all permits and licenses required thereunder) without any fines or
monetary Liabilities attached.  The Company has not received any oral or written
notice of any violation of, or any Liability under, any Environmental and Safety
Requirements.  No facts or circumstances with respect to the operations of the
Company through the Closing or the Leased Real Property prior to the Closing
Date or disposed of prior to such time will hinder or prevent continued
compliance with, or give rise to any Liability (including any corrective or
remedial obligation) under any Environmental and Safety Requirements.

 

2.21        Legal Compliance.  The items listed on Schedule 2.21 constitute all
of the permits, filings, notices, licenses, consents, authorizations,
accreditation, waivers and approvals, to or with any Governmental Entity or any
other Person (collectively, the “Consents”) which are required for the
consummation of the transactions contemplated by the Transaction Documents or
the ownership of the assets or the conduct of the Business of the Company.  All
such Consents have been obtained by the Company, as applicable, as of the
Closing and shall remain in full force and effect after the Closing.

 

2.22        Absence of Certain Developments.  Except as set forth in
Schedule 2.22 attached hereto, since the Latest Balance Sheet, the Company has
not:

 

(a)           redeemed or repurchased, directly or indirectly, any shares of
capital stock (or other equity securities);

 

(b)           issued, sold or transferred any notes, bonds or other debt
securities or any equity securities, securities convertible, exchangeable or
exercisable into equity securities, or warrants, options or other rights to
acquire equity securities, of the Company;

(c)           borrowed any amount or incurred or become subject to any
Indebtedness;

 

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(d)           mortgaged, pledged or subjected to any Lien any portion of its
properties or assets;

 

(e)           sold, leased, licensed (as licensor), assigned, disposed of or
transferred (including transfers to the Company or any employees or Affiliates
of the Company) any of its assets (whether tangible or intangible), except for
sales of inventory in the ordinary course of business and sales of other assets
not in excess of $50,000 in the aggregate and other than licenses granted to
customers in the ordinary course of business pursuant to Contracts containing
terms and conditions substantially similar to the terms and conditions of the
Company’s standard customer agreement, copies of which have been previously
provided to the Buyer;

 

(f)            disclosed any proprietary confidential information to any Person
that is not subject to any confidentiality agreement;

 

(g)           suffered any extraordinary losses or waived any rights of material
value, whether or not in the ordinary course of business;

 

(h)           suffered any theft, damage, destruction or casualty loss in excess
of $50,000, to its assets, whether or not covered by insurance;

 

(i)            accelerated or terminated any Contract, taken any other action or
entered into any other transaction involving more than $100,000 outside the
ordinary course of business;

 

(j)            (i) made or granted any bonus or increase in the compensation or
benefits of any employee or officer of the Company (other than in the ordinary
course of business, and not in contemplation of this transaction or other
similar transactions) or (ii) entered into, amended, modified or terminated any
Employee Benefit Plan;

 

(k)           conducted its billing and collection of receivables and inventory
purchases other than in the ordinary course of business;

 

(l)            made any capital expenditures or commitments therefor in excess
of $50,000 (other than in the ordinary course of business and in amounts
sufficient to support ongoing business operations);

 

(m)          delayed or postponed the repair and maintenance of its properties
or the payment of accounts payable, accrued liabilities and other obligations
and Liabilities;

 

(n)           made loans or advances to, guarantees for the benefit of, or any
investments in, any Persons in excess of $50,000 in the aggregate;

 

(o)           instituted or settled any claim or lawsuit involving equitable or
injunctive relief or the payment by or on behalf of the Company of more than
$50,000 in the aggregate;

 

(p)           granted any performance guarantees to its customers other than in
the ordinary course of business and consistent with the policies and practices
disclosed to Buyer;

 

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(q)           instituted or permitted any material change in the conduct of its
Business, or any material change in its method of purchase, sale, lease,
management, marketing, promotion or operation;

 

(r)            declared, set aside or paid any dividend or made any similar
distribution, redeemed, purchased or otherwise acquired, directly or indirectly,
any shares of its capital stock (or other equity securities), or made any loan
or entered into any transaction with or distributed any assets or property to
any of its officers, directors, shareholders, Affiliates or other Insiders,
except for compensation paid to Insiders as employees or Tax distributions in
the ordinary course of business;

 

(s)            acquired any other business or entity (or any significant portion
or division thereof), whether by merger, consolidation or reorganization or by
the purchase of its assets or stock; or

 

(t)            committed to do any of the foregoing.

 

2.23        Bank Accounts.  Schedule 2.23 lists all of the Company’s bank
accounts.

 

2.24        Privacy of Individually Identifiable Personal Information.  The
Company’s collection and use of individually identifiable personal information
complies in all respects with the Company’s privacy policies, any Contract
relating to privacy and all applicable state, federal and foreign privacy laws.

 

2.25        Investment Company Status.  The Company is not and has not been at
any time, nor is the Company controlled by (or has ever been controlled by) any
Person who is (or was at such time), an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.

 

2.26        Indebtedness.  Except as set forth on the attached Schedule 2.26,
the Company has no outstanding Indebtedness.

 

2.27        Statements True and Correct.  No representation or warranty or
disclosure made by the Company in any Transaction Document contains any untrue
statement of material fact or omits to state any material fact necessary in
order to make statements contained herein or therein not materially misleading
in light of circumstances under which they were made.  Except for the
representations and warranties specifically set forth in this Article 2 or any
other Transaction Document, the Seller Shareholders make no other representation
or warranty to Buyer, express or implied, at law or in equity.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER

 

As a material inducement to the Seller Shareholders and the Company to enter
into and perform their respective obligations under this Agreement, Buyer
represents and warrants that the statements contained in this Article 3 are true
and correct as of the Closing Date.

 

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3.1          Organization of Buyer.  Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
which is the only jurisdiction in which its ownership of property or conduct of
business requires it to be qualified.  The Company possesses all requisite
corporate power and authority and all licenses, permits and authorizations
necessary to own and operate its properties, to carry on its businesses as now
conducted and to carry out the transactions contemplated by this Agreement and
the Transaction Documents.

 

3.2          Authorization of Transaction.  Buyer has full corporate power and
authority to execute and deliver the Transaction Documents and to perform its
obligations thereunder.  The execution, delivery and performance of the
Transaction Documents to which Buyer is a party have been duly authorized by
Buyer.  Each of the Transaction Documents to which Buyer is a party constitutes
the valid and legally binding obligation of Buyer, enforceable in accordance
with its terms and conditions, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar Legal
Requirements affecting the enforcement of creditors’ rights generally or by
general principles of equity.

 

3.3          Noncontravention.  The execution and delivery by Buyer of this
Agreement, and all other Transaction Documents to which it is a party, and the
fulfillment of and compliance with the respective terms hereof and thereof, do
not and shall not (i) conflict with or result in a breach of the terms,
conditions or provisions of, (ii) constitute a default under, (iii) result in
the creation of any Lien upon the securities or any asset or property of Buyer
pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any exemption or other action by or notice or declaration to, or filing with, or
other Consent from, any Governmental Entity pursuant to, the charter or bylaws
or equivalent governing document of Buyer, or any Legal Requirement to which
Buyer or any of its Affiliates or any of their assets or properties is subject,
or any Contract, order, judgment or decree to which Buyer or any of its
Affiliates or any of their assets or properties is subject.

 

3.4          Brokers.  There are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated by
this Agreement or any of the other Transaction Documents based on any Contract
to which Buyer is a party or otherwise binding upon Buyer, except as set forth
in Schedule 3.4.  Except as set forth in Schedule 3.4, Buyer has not made, and
Buyer is not obligated to make, any payment to any Person in connection with the
transactions contemplated by the Transaction Documents.  No rights or benefits
of any Person have been (or will be) accelerated or increased as a result of the
consummation of the transactions contemplated by the Transaction Documents.

 

3.5          Financial Availability.  Buyer has the financial ability to
consummate the truncations contemplated by this Agreement, to satisfy its
obligations hereunder on or after the Closing Date, to make payment of all
amounts to be paid by it under this Agreement at Closing and after the Closing
Date.

 

3.6          Accredited Investor.  Buyer is an accredited investor as such term
is defined in Rule 501(a) of the Securities Act.

 

3.7          Litigation.  There are no proceedings pending or, to the Knowledge
of Buyer, overtly threatened against or affecting Buyer at law or in equity, or
before or by any

 

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Governmental Entity, which would adversely affect Buyer’s performance under this
Agreement or the consummation of the transactions contemplated hereby.

 

ARTICLE 4
ADDITIONAL AGREEMENTS

 

4.1          Expenses.  Except as otherwise provided herein, each Party hereto
shall pay all of its own fees, costs and expenses (including, without
limitation, fees, costs and expenses of legal counsel, investment bankers,
brokers or other representatives and consultants and appraisal fees, costs and
expenses) incurred in connection with the negotiation of this Agreement and the
Transaction Documents, the performance of its obligations hereunder and
thereunder and the consummation of the transactions contemplated hereby and
thereby (whether consummated or not).

 

4.2          Tax Matters.

 

(a)           All transfer, documentary, sales, use, stamp, registration,
notaries fees and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (including any gains tax,
transfer tax and any similar tax imposed in any state or subdivisions), shall be
borne and paid by the Seller Shareholders.  The Company will file all necessary
Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration and other Taxes and fees, and, if
required by applicable law, the Seller Shareholders, the Company and Buyer will,
and will cause their respective Affiliates to, join in the execution of any such
Tax Returns and other documentation; provided that any expenses of the Company
pursuant to this Section 4.2(a) shall be paid by the Seller Shareholders.

 

(b)           The Seller Shareholders, at their sole cost and expense, shall
prepare and timely file all income Tax Returns, other than those income Tax
Returns that could give rise to an entity level Tax, of the Company for any
Pre-Closing Tax Period that are required to be filed after the Closing Date
(including the IRS Form 1120S for the Company and any comparable state and local
Tax Returns) (the “S Corporation Returns”).  Each S Corporation Return shall be
prepared in a manner consistent with past Tax Returns in accordance with
existing procedures, practices and accounting methods of the Company except as
required by applicable Legal Requirements.  The Major Seller Shareholder shall
provide any such S Corporation Return due after the Closing Date to the Buyer at
least thirty (30) days prior to the due date for filing such S Corporation
Return (taking into account any applicable extensions) and shall incorporate any
comments reasonably requested by the Buyer on such S Corporation Returns prior
to filing.  If the Major Seller Shareholder, on one hand, and Buyer, on the
other hand, are unable to agree on any comments requested by Buyer, the disputed
issues shall be submitted to the Independent Accounting Firm whose determination
shall be final, binding and conclusive upon the parties and whose costs shall be
borne equally by Buyer, on the one hand, and the Seller Shareholders on the
other.  To the extent it is necessary for the Buyer to cause the Company to file
any S Corporation Return prepared by the Seller Shareholders, the Buyer shall
cause the Company to file such S Corporation Return prepared by the Seller
Shareholders and timely delivered to the Buyer in accordance with this Section
4.2(b) and the Seller Shareholders shall pay to Buyer the amount of Taxes with
respect to such Tax Returns fifteen (15) days prior to such filing by Buyer. 
Except as required by Legal Requirements, without the prior written consent of
the Major Seller

 

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Shareholder, which consent shall not be unreasonably delayed or withheld, Buyer,
the Company, and their Affiliates will not, and Buyer will not permit any of the
foregoing to, amend any S Corporation Return described in this Section 4.2(b) or
any Tax Return of the Company that was filed prior to the Closing Date.

 

(c)           Buyer shall prepare and file, or cause to be prepared and filed,
all Tax Returns (other than the S Corporation Returns) required to be filed for
the Company for Pre-Closing Tax Periods and Straddle Periods (the “Buyer
Prepared Returns”).  To the extent that a Buyer Prepared Return relates solely
to a taxable period ending on or prior to the Closing Date, such Buyer Prepared
Return shall be prepared, at the Seller Shareholders’ expense, consistent with
past practice of the Company in accordance with existing procedures, practices
and accounting methods, except to the extent required by applicable Legal
Requirements.  Buyer shall provide a copy of the Buyer Prepared Returns to the
Major Seller Shareholder at least thirty (30) days prior to the due date for
filing such Tax Returns (taking into account any applicable extensions) to allow
the Major Seller Shareholder to review and comment on such Tax Returns, and
shall incorporate any reasonable comments requested by the Major Seller
Shareholder on such Buyer Prepared Returns prior to filing.  Seller Shareholders
shall pay to Buyer the amount of Taxes with respect to such Tax Returns for
which they are responsible pursuant to Section 6.2(a)(iii).  Except as required
by Legal Requirements, without the prior written consent of the Major Seller
Shareholder, which consent shall not be unreasonably delayed or withheld, Buyer,
the Company and their Affiliates shall not, and Buyer shall not permit any of
the foregoing to, amend, refile or modify any Tax Return described in this
Section 4.2(c) if such amendment, refiling or modification could reasonably be
expected to give rise to an indemnification obligation of the Seller
Shareholders under this agreement.

 

(d)           In the case of Taxes of the Company that are payable with respect
to any Straddle Period, the portion of any such Tax that is allocable to the
portion of such Straddle Period ending on the Closing Date shall include the
following: (i) in the case of any Taxes based upon or measured by income, gain
or receipts, sales or use, or payroll Taxes of the Company, the amount of such
Tax which would be payable if the relevant Taxable period actually ended at the
end of the day on the Closing Date based on an interim closing of the books and
(ii) in the case of any other Taxes, the amount of such Tax for the entire
Straddle Period multiplied by a fraction the numerator of which is the number of
days in the Straddle Period prior to and including the Closing Date and the
denominator of which is the number of days in the entire Straddle Period. 
Except as otherwise required by Legal Requirements, the Company Transaction
Expenses shall be allocable to and treated solely as income Tax deductions of
the Company for the Tax year or portion of the Straddle Period that ends on the
Closing Date.

 

(e)           The amount of any Tax due from Seller Shareholders pursuant to
Section 4.2(b) and Section 4.2(c), shall be reduced to the extent such Tax was
reflected as an accrual, reserve or liability in the Final Working Capital.  In
addition, Buyer shall indemnify and hold harmless the Seller Shareholders for
any increase in income tax liability of the Seller Shareholders that is
attributable to income or gain realized by the Company on the Closing Date after
the Closing that is outside of the ordinary course of business other than Taxes
imposed as a result of the Section 338(h)(10) Election.

 

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(f)            Buyer shall file or cause to be filed all Tax Returns for the
Company that are required to be filed, and pay or cause to be paid, all Taxes
that are required to be paid by or with respect to the income, assets or
operations of the Company for any Tax period beginning  after the Closing Date
(the “Post-Closing Tax Period”).

 

(g)           After the Closing, any Tax refunds or credits for overpayment of
Taxes (including any interest paid or credited with respect thereto) of, or with
respect to, the Company that are attributable or allocable to any Pre-Closing
Tax Period shall be for the account of the Seller Shareholders.  Buyer will or
will cause the Company to use reasonable efforts to promptly inform the Major
Seller Shareholder of any refunds or credits for overpayment to which the Seller
Shareholders is entitled hereunder Buyer shall control (at the Major Seller
Shareholder’s expense) the prosecution and content of any such refund or credit
claim (including, but not limited to, any position to be taken on such claim). 
Buyer shall pay over to the Seller Shareholders any such refund or the amount of
any such credit (net of any cost to Buyer and its Affiliates attributable to the
obtaining and receipt of such refund or credit) within ten (10) calendar days
after receipt thereof or entitlement thereto.  Notwithstanding the foregoing,
any such refund or credit for overpayment shall be for the account of Buyer to
the extent such refund or credit is attributable (determined on a marginal
basis) to the carryback from a Post-Closing Tax Period of items of loss,
deduction or credit, or other Tax items, of the Company (or any of its
respective Affiliates, including Buyer).  To the extent such refund (or credit)
is subsequently disallowed or required to be returned to the applicable
Governmental Entity, the Seller Shareholders agree to promptly repay the amount
of such refund (or credit), together with any interest, penalties or other
additional amounts imposed by such Governmental Entity, to Buyer.

 

(h)           Buyer, the Company and their Affiliates, on one hand, and the
Major Seller Shareholder, on the other hand, will promptly (and in any event,
within ten (10) days) notify the other party in writing upon receipt by any of
the foregoing of any inquiries, claims, assessments, audits, examinations, or
similar events with respect to Tax Returns of the Company for any Tax period
beginning before the Closing or with respect to Taxes for which any of the
Seller Shareholders could be liable under this Agreement (any such inquiry,
claim, assessment, audit or similar event, a “Tax Matter”); provided, however,
that the failure to give such notice shall not affect the indemnification
provided hereunder except to the extent the indemnifying party has been
materially prejudiced as a result of such failure.  The Major Seller Shareholder
shall be entitled to control the defense of any such Tax Matter related to the
Company before any Governmental Entity that relates solely to an S Corporation
Return, provided, however, that Buyer, at Buyer’s cost and expense, shall have
the right to participate in and be reasonably informed of the progress of any
Tax Matter controlled by the Major Seller Shareholder, and the Major Seller
Shareholder shall not settle or compromise any such Tax Matter without obtaining
Buyer’s prior written consent thereto, which consent shall not be unreasonably
withheld, conditioned or delayed.  The Buyer shall be entitled to control the
defense of any other Tax Matter related to the Company before any Governmental
Entity, provided, however, that the Major Selling Shareholder, at the Major
Selling Shareholder’s cost and expense, shall have the right to participate in
and be reasonably informed of the progress of any Tax Matter controlled by the
Buyer, and the Buyer shall not settle or compromise any such Tax Matter without
obtaining the Major Selling Shareholder’s prior written consent thereto, which
consent shall not be unreasonably withheld, conditioned or delayed.  If the
Buyer does not elect to control the defense of such a Tax Matter, the Major
Seller Shareholder may control the defense of such Tax

 

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Matter but shall keep the Buyer informed of the progress of such Tax Matter, and
the Buyer shall be entitled to participate in such Tax Matter relating to the
Company (including through participation in meetings and conference calls with
the relevant Governmental Entity, receipt of copies of correspondence relating
to such Tax Matter and the right to review and comment on any submissions to be
made to any Governmental Entity in connection with such Tax Matter); provided,
further, that no settlement shall be agreed to without the prior written consent
of the Buyer, which consent shall not be unreasonably withheld, conditioned or
delayed.  Any indemnification Proceedings relating to Tax Matters shall be
governed solely by this Section 4.2(h) and not by Article VI.

 

(i)            The Company and Buyer shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to this Section 4.2 and any audit, litigation, or other matter
with respect to Taxes.  Such cooperation shall include the maintenance and
retention and (upon the other party’s request) the provision of records and
information which are reasonably relevant to any such audit, litigation, or
other proceeding or matter, including information necessary for Buyer to
evaluate the making of the Section 338(h)(10) Election, and making employees
reasonably available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.

 

(j)            Buyer and the Seller Shareholders shall jointly make an election
under Code Section 338(h)(10) (and any corresponding election under state,
local, and non-U.S. Tax Legal Requirements) with respect to the purchase and
sale of the Purchased Securities hereunder (collectively a “Section 338(h)(10)
Election”), and shall cooperate with each other and take all actions necessary
and appropriate (including the execution and filing of Tax forms and such other
documents as may be required) to effect and preserve a timely election.  At the
Closing, the Seller Shareholders and the Buyer shall exchange properly executed
IRS Forms 8023 in connection with the purchase and sale of the Purchased
Securities and any applicable state or local forms in a form reasonably
acceptable to Buyer.  The Seller Shareholders shall include any income, gain,
loss, deduction, or other tax item resulting from the Section 338(h)(10)
Election on their Tax Returns to the extent required by applicable Legal
Requirements and shall be responsible for any Tax imposed on the Company
attributable to the making of the Section 338(h)(10) Election (“Company
338(h)(10) Taxes”), including (i) any Tax imposed under Code Section 1374, (ii)
any Tax imposed under Reg. Section 1.338(h)(10)-1(d)(2), or (iii) any state,
local, or non-U.S. Tax imposed on the Company’s gain.

 

(k)             The Company and Seller Shareholders shall not revoke the
Company’s election to be taxed as an S corporation within the meaning of Code
Sections 1361 and 1362.  The Company and Seller Shareholders shall not take or
allow any action that would result in the termination of the Company’s status as
a validly electing S corporation within the meaning of Code Sections 1361 and
1362.  In connection thereto, the Company and Seller Shareholders shall not
allow the Company to make any distribution that could cause the Company to have
more than one class of stock within the meaning of Code section 1361 and the
Treasury Regulations promulgated thereunder.

 

4.3          Confidentiality; Non-Compete: Non-Solicitation; Non-Disparagement. 
In further consideration for the payment of the Purchase Price hereunder and in
order to protect the value

 

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of the Purchased Securities purchased by Buyer (including, without limitation,
the goodwill inherent in the Company as of the Closing Date), upon the Closing
of the transactions contemplated by this Agreement, the Major Seller Shareholder
and each Seller Shareholder, as applicable, agrees as follows:

 

(a)           As an owner of the Securities, and/or an employee of the Company,
the Seller Shareholders have had access to and contributed to information and
materials of a highly sensitive nature (including Confidential Information, as
defined below) of the Company.  Each of the Seller Shareholders agrees that
unless such Seller Shareholder first secures the written consent of an
authorized representative of the Company and Buyer, such Seller Shareholder
shall not use for his or herself or anyone else, and shall not disclose to
others, any Confidential Information, except as may be necessary for him or her
to carry out his or her duties, except with respect to any claims arising out of
any of the Transaction Documents or except to the extent such use or disclosure
is required by law or order of any Governmental Entity (in which event such
Seller Shareholder shall, to the extent practicable, inform the Company and
Buyer in advance of any such required disclosure, shall cooperate with the
Company and Buyer, at the Company’s and Buyer’s expense, in all reasonable ways
in obtaining a protective order or other protection in respect of such required
disclosure, and shall limit such disclosure to the extent reasonably possible
while still complying with such requirements).  Each Seller Shareholder shall
use reasonable care to safeguard Confidential Information and to protect it
against disclosure, misuse, espionage, loss and theft.

 

(b)           (i) Each Seller Shareholder further agrees that, at any time
requested, such Seller Shareholder shall promptly deliver to the Company and
Buyer all Confidential Information and other Intellectual Property of the
Company in such Seller Shareholder’s possession and control and all copies
thereof, in whatever form or medium, including, without limitation, written
records, optical and magnetic media, and all other materials containing or
embodying any such Intellectual Property.  If the Company requests, each Seller
Shareholder shall promptly provide written confirmation that such Seller
Shareholder has returned all such materials.

 

(c)           Each Seller Shareholder agrees that the Company has received from
third parties their confidential or proprietary information subject to a duty on
the Company’s part to maintain the confidentiality of such information and to
use it only for certain limited purposes.  Each Seller Shareholder agrees that
he or she owes the Company and such third parties a duty to hold all such
confidential or proprietary information in the strictest confidence and not to
disclose it to any Person (except as necessary in carrying out such Seller
Shareholder’s future work for the Company consistent with the Company’s
agreement with such third party) or to use it for the benefit of anyone other
than for the Company or such third party (consistent with the Company’s
agreement with such third party) without the express authorization of the
Company.

 

(d)           With respect to the Major Seller Shareholder only, the Major
Seller Shareholder acknowledges that he has and shall become familiar with
Confidential Information concerning the Company and the Buyer and its
Affiliates.  Therefore, the Major Seller Shareholder agrees that during the
period beginning on the date hereof and ending on the three (3) year anniversary
of the Closing (the “Non-compete Period”), he shall not (and shall not take any
steps toward or preparations in respect of), directly or indirectly, for himself
or for any other

 

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Person, own, manage, control, participate in, consult with, render services for,
or in any other manner engage in any business or enterprise (i) which is
competitive to the Business as conducted during the period of Major Seller
Shareholder’s employment with the Company or Buyer or its Subsidiaries or
Affiliates or (ii) which provides global information technology services using
an off-shore model where at least a majority of such Person’s (or in the case of
a business unit, division or subsidiary, majority of its employees, as the case
may be) employees are located in non-US locations (i.e., India, Sri Lanka, China
etc.) or (iii) which provides any services that are competitive to the Business
as conducted by the Company or Buyer or its Subsidiaries or Affiliates during
the period of Major Seller Shareholder’s employment with the Company or Buyer or
its Subsidiaries or Affiliates and whether on such Major Seller Shareholder’s
own or on behalf of any Apparatus Competitor to any Person that was either a
Company Customer or a Prospective Customer.  For purposes of this Agreement, the
term “participate” includes any direct or indirect interest in any enterprise,
whether as an officer, director, employee, partner, sole proprietor, agent,
representative, independent contractor, seller, franchisor, franchisee,
creditor, or owner; provided that the foregoing activities shall not include
passive ownership of less than 3% of the stock of a publicly-held corporation
whose stock is traded on a national securities exchange or in the
over-the-counter market by the Major Seller Shareholder.  The Major Seller
Shareholder agrees that this covenant is reasonable with respect to its
duration, geographical area and scope.

 

(e)

 

(i)            During the Non-compete Period, each Seller Shareholder (other
than the Major Seller Shareholder) shall not directly (A) induce or attempt to
induce any employee of the Company to leave the employ of the Company, (B) hire
or employ any person who was an employee of the Company at any time during the
six month period immediately prior to the date hereof, or (C) induce or attempt
to induce any Company Customer, supplier, licensee, licensor or other business
relation of the Company to cease doing business with the Company.  This Section
4.3(e)(i) shall not prevent general advertising in publications of general
circulation for employment not specifically directed at employees of the
Company.

 

(ii)           During the Non-compete Period, the Major Seller Shareholder shall
not directly or, indirectly through another Person, (A) induce or attempt to
induce any employee of the Company or Buyer to leave the employ of the Company
or Buyer, (B) hire or employ any person who was an employee of the Company or
Buyer at any time during the six month period immediately prior to the date
hereof, (C) induce or attempt to induce any Company Customer or Buyer Customer,
supplier, licensee, licensor or other business relation of the Company or Buyer
and its subsidiaries, affiliates to cease doing business with the Company or
Buyer or its Subsidiaries or Affiliates, or (D) call on, solicit, or service any
Company Customer, supplier, licensee, licensor or Prospective Customer with
respect to provision of products and/or services that are provided by the
Company or Buyer or its Subsidiaries or Affiliates during the period of Major
Seller Shareholder’s employment with the Company or Buyer or its Subsidiaries or
Affiliates for the purpose of diverting or attempting to divert or influence any
business of such Person to any Apparatus Competitor or Person competitive to
Buyer.

 

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(f)            Each of the Seller Shareholders acknowledges that, in the course
of his employment with the Company, if applicable, or holding Securities
thereof, he has become familiar with the Confidential Information of the
Company, and with respect to Major Seller Shareholder, shall become familiar
with the Confidential Information of Buyer and its Subsidiaries and Affiliates. 
The Major Seller Shareholder further acknowledges that the scope of the business
of the Company or Buyer and its subsidiaries or affiliates is independent of
location (such that is not practical to limit the restrictions contained in
Section 4.3(d) to a specified country, city, or part thereof) and, that the
Major Seller Shareholder has had direct or indirect responsibility, oversight or
duties with respect to all of the businesses of the Company and its current and
prospective employees, vendors, customers, clients and other business relations,
and Major Seller Shareholder shall become familiar with the business of Buyer
and its Affiliates and Subsidiaries and that, accordingly, the restrictions
contained in this Section 4.3 are reasonable in all respects and necessary to
protect the goodwill and Confidential Information of the Company and Buyer and
that, without such protection, the Company and Buyer customer and client
relationship and competitive advantage would be materially adversely affected. 
It is specifically recognized by the Major Seller Shareholder that his services
to the Company and services to be performed to Buyer are special, unique, and of
extraordinary value, that the Company and Buyer  have a protectable interest in
prohibiting the Major Seller Shareholder as provided in this Section 4.3, that
the Major Seller Shareholder was significantly responsible for the creation and
preservation of the Company and Buyer goodwill, and that money damages are
insufficient to protect such interest, and that such prohibitions would be
necessary and appropriate without regard to payments being made to the Major
Seller Shareholder hereunder.  The Major Seller Shareholder further acknowledges
that the restrictions contained in Section 4.3(d) do not impose an undue
hardship on him and, since he has general business skills which may be used in
industries other than that in which the Company or Buyer conducts its business
and do not deprive the Major Seller Shareholder of his livelihood.

 

(g)           If, at the time of enforcement of this Agreement, a court holds
that the restrictions stated in this Section 4.3 are unreasonable under
circumstances then existing, the Parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances as determined by
such court shall be substituted for the stated period, scope or area.  The
Parties hereto agree that money damages would not be an adequate remedy for any
breach of this Agreement.  Therefore, in the event of a breach or threatened
breach of any provisions of this Section 4.3 that is continuing, the Company,
Buyer and their respective successors and permitted assigns and any third party
beneficiary to this Agreement may, in addition to other rights and remedies
existing in their favor, apply to any court of competent jurisdiction for
specific performance and/or injunctive or other relief in order to enforce, or
prevent any violations of, the provisions hereof (without posting a bond or
other security).  In addition, in the event of a breach or violation by any
Seller Shareholder of this Section 4.3, the Non-compete Period shall be tolled
until such breach or violation has been duly cured.  Each Seller Shareholder
agrees that the restrictions contained in this Section 4.3 are reasonable.

 

(h)           Each Seller Shareholder acknowledges and represents that:
(i) sufficient consideration has been given by each party to this Agreement to
the other as it relates hereto; (ii) he has consulted with independent legal
counsel regarding his or her rights and obligations under this Section 4.3,
(iii) that he fully understands the terms and conditions contained herein,

 

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and (iv) that the agreements in this Section 4.3 are reasonable and necessary
for the protection of the Company and Buyer and are an essential inducement to
Buyer to enter into this Agreement.

 

4.4          Litigation Support.  Subject to Section 6.4, in the event that, and
for so long as, any Party is actively contesting or defending against any Action
in connection with (a) any transaction contemplated by any of the Transaction
Documents or (b) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act, or
transaction prior to the Closing Date involving the Company, each of the other
Parties will reasonably cooperate with such contesting or defending Party and
its counsel in the contest or defense, make available their personnel, and
access to their books and records as shall be reasonably necessary in connection
with the contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under the provisions of this Agreement).

 

4.5          Transition Services.  The Seller Shareholders will not take any
action which is designed  intended or would reasonably be anticipated to have
the effect of discouraging customers, suppliers, vendors, employees (other than
as contemplated hereby), service providers, lessors, licensors and other
business associates from maintaining the same business relationships with the
Company after the date of this Agreement.

 

4.6          Proceeds from Purchase Price.  From and after the Closing, Seller
Shareholders agree not to use any of the proceeds from the Purchase Price to
make any payments to any customer of the Company or to the employees of the
Company, except that the Company and the Seller Shareholders (and the Major
Seller Shareholder) may pay the SAR Holders pursuant to the terms of the
cash-out agreements entered into by the Company and the Major Seller Shareholder
with each of the SAR Holders (the “Cash-Out Agreements”).

 

4.7          Key Employee Restricted Stock Bonus Pool.  The board of directors
of Buyer has authorized and approved, and will not revoke, modify or alter, the
grant of an aggregate amount of three million dollars ($3,000,000) (but in no
event shall such incentive pool grant exceed eighty thousand (80,000) shares of
common stock of Buyer)) (the “Incentive Pool”) in the form of restricted shares
of common stock of Buyer for certain key employees (“Key Employees”) of the
Company pursuant to Buyer’s 2007 Stock Option and Incentive Plan (“Buyer Stock
Plan”).  Schedule 4.7 sets forth the Key Employees for which the Buyer’s Board
of Directors has approved awards from the Incentive Pool and the form, amounts
and vesting schedules of such awards (including a copy of the form restricted
stock award agreement or other similar Contract to be executed by Buyer and each
Key Employee of Company that has received an award from the Incentive Pool);
provided that the vesting period for each restricted stock award shall be 25% of
the shares to any Key Employee vesting on June 1, 2016, and 25% each anniversary
thereafter until full vesting on June 1, 2019.

 

4.8          Key Employee Bonus Pool.  The board of directors of Buyer has
authorized and approved an employee cash bonus pool (“Bonus Pool”) in an amount
set forth in Schedule 4.8 for Key Employees of the Company, subject to
achievement of certain revenue and EBITDA milestones set forth in Schedule 4.8
on the terms set forth therein.  Schedule 4.8 sets forth the Key Employees for
which Buyer’s board of directors has approved amounts that may be earned

 

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under the Bonus Pool, along with the terms and conditions applicable to each Key
Employee to earn any applicable bonus under such Bonus Pool.

 

4.9          Press Releases.

 

(a)           Except as may otherwise be required by Legal Requirements or as
expressly set forth herein, the timing and content of all press releases and
public announcements relating to the transactions contemplated by this Agreement
and the other Transaction Documents shall be determined jointly by Buyer and the
Company prior to the Closing Date and thereafter by Buyer.

 

(b)           Except as may otherwise be required by Legal Requirements or as
expressly set forth herein or in Section 4.9(a), the timing and content of all
communications to the Company’s customers, vendors and employees relating to the
transactions contemplated by this Agreement and the other Transaction Documents
shall be determined jointly by Buyer and the Company prior to the Closing Date
and thereafter by Buyer in consultation with the Major Seller Shareholder;
provided, however that no such other communications may disclose the Purchase
Price.

 

4.10        Customer Consents.  Following the Closing, the Major Seller
Shareholder will use commercially reasonable efforts to obtain within ten (10)
Business Days after the Closing Date the Consents listed on Schedule 2.21 which
were not obtained prior to the Closing.

 

ARTICLE 5
DELIVERABLES

 

5.1          Company Deliverables.  At the Closing, the Seller Shareholders and
Company shall deliver the following documents to the Buyer:

 

(a)           Evidence that all filings, notices, licenses, permits and other
Consents of, to or with, any Governmental Entity or any other Person that are
required by the Company (i) for the consummation of the transactions
contemplated by the Transaction Documents, or (ii) in order to prevent a breach
of or default under or a right of termination or modification of any Contract to
which the Company is a party or to which any portion of the property of the
Company is subject.

 

(b)           All payoff letters and releases relating to any Indebtedness as
set forth on Schedule 2.26 and releases from third parties of any and all Liens
relating to the assets and property of the Company.

 

(c)           The employment agreements set forth on Exhibit A hereto executed
by the Major Seller Shareholder, Jared Adams and Aman Brar.

 

(d)           The agreements in the forms set forth on Exhibit B attached hereto
executed by the Key Employees and the Company.

 

(e)           Certified copies of the Company’s Articles of Incorporation as
filed with the Secretary of State of Indiana; certified copies of the
resolutions duly adopted by the

 

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Company’s Board and its shareholders authorizing the Company’s execution,
delivery and performance of this Agreement and the Transaction Documents, the
Company’s corporate records, stock ledgers and minute books and such other
documents or instruments as Buyer may reasonably request or may be required to
effect the transactions contemplated hereby.

 

(f)                                   A certificate, dated as of the Closing
Date, executed by an authorized officer of the Company certifying that there are
no other Company Transaction Expenses owed by the Company.

 

(g)                                  A certificate, dated of the Closing Date,
executed by each Seller Shareholder establishing an exemption from withholding
Tax under Section 1445 of the Code in accordance with the Treasury Regulations
promulgated thereunder, as set forth on Exhibit C hereto.

 

(h)                                 Executed agreements from all SAR Holders
that the SAR Plan Obligation with respect to such SAR Holder has been terminated
and satisfied in full between the Company and such SAR Holder (and Company has
remitted or withheld all applicable Taxes with respect to any payments to the
SAR Holders required to be made at Closing).

 

(i)                                     The duly executed stock powers from the
Seller Shareholders together with any stock transfer stamps or receipts for any
transfer taxes required to be paid thereon.

 

(j)                                    The resignations of each director of the
Company, effective as of the Closing Date.

 

(k)                                 An Escrow Agreement by and among Buyer, the
Major Seller Shareholder and the Escrow Agent (the “Escrow Agreement”) in
accordance with the terms of this Agreement, executed by the Major Seller
Shareholder.

 

(l)                                     The 401(k) Plan of the Company shall be
terminated immediately prior to the Closing.

 

(m)                             That certain Sublease Agreement, dated
December 1, 2014, by and between the Company and 3325, LLC shall be terminated
immediately prior to the Closing.

 

(n)                                 Consents listed on Schedule 2.21.

 

5.2                               Buyer Deliverables.  At the Closing, the Buyer
shall deliver the following documents and payments to the Seller Shareholders:

 

(a)                                 Evidence that the Board of Directors of
Buyer has adopted and approved this Agreement, any other Transaction Documents
and the consummation of the Transaction to the extent and as required by the
General Corporation Law of the State of Delaware and the Buyer’s organizational
documents, certified by an officer of the Buyer.

 

(b)                                 Evidence that all filings, notices,
licenses, permits and other Consents of, to or with, any Governmental Entity or
any other Person that are required by Buyer for the consummation of the
transactions contemplated by the Transaction Documents.

 

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(c)                                  The grants to Key Employees of shares of
restricted stock under the Buyer Stock Plan has been approved by the Buyer’s
Board of Directors.

 

(d)                                 The employee bonus plan as set forth on
Exhibit E hereto has been duly adopted by the Buyer’s Board of Directors.

 

(e)                                  Payment of the Closing Purchase Price to
the Seller Shareholders by wire transfer of immediately available funds to an
account or accounts to be designated by the Seller Shareholders and such other
payments as contemplated by Section 1.2(b).

 

(f)                                   The Escrow Agreement, executed by Buyer
and the Escrow Agent.

 

ARTICLE 6
REMEDIES FOR BREACHES OF THIS AGREEMENT AND OTHER MATTERS

 

6.1                               Survival of Representations and Warranties. 
Subject to the limitations set forth in Section 6.2(b) and Section 6.3(b), all
of the representations and warranties set forth in this Agreement and in any
other Transaction Document shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
(regardless of any investigation, inquiry or examination made by or on behalf of
any Party or any of such Party’s officers, directors, shareholders, employees or
agents).

 

6.2                               Indemnification of Buyer.

 

(a)                                 Subject to the limitations set forth in
Sections 6.2(b) and 6.2(c), the Seller Shareholders shall, jointly and
severally, indemnify Buyer and each of its respective Affiliates (including,
after the Closing, the Company), officers, directors, employees, agents,
representatives, successors and assigns (each a “Buyer Party”), and save and
hold each of them harmless from and against, and pay on behalf of or reimburse
any Buyer Party as and when incurred for, all Losses which any Buyer Party may
suffer, sustain or become subject to as a result of:

 

(i)                                     any breach of any representation or
warranty made by the Company or a Seller Shareholder in Article 2 of this
Agreement and in any other Transaction Document delivered by the Company in
connection with the Closing;

 

(ii)                                  any breach of any covenant made by or in
respect of the Company prior to the Closing or a Seller Shareholder prior to or
after the Closing under this Agreement or any other Transaction Document;

 

(iii)                               any Liability of the Company, or a Seller
Shareholder, or Buyer or any of their respective Affiliates for (A) Taxes with
respect to any Tax period ending on or prior to the Closing Date (or for any
Straddle Period, the portion of such period beginning before and ending on or
before the Closing Date in accordance with Section 4.2(d) hereof), (B) all Taxes
of any member of an affiliated, consolidated, combined or unitary group of which
Company (or any predecessor of any of the foregoing) is or was a member on or
prior to the Closing Date, including pursuant to Treasury Regulation §1.1502-6
or any analogous or similar state, local, or non-U.S. law

 

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or regulation, (C) any and all Taxes of any Person (other than the Company)
imposed on Company as a transferee or successor, by contract or pursuant to any
law, rule, or regulation, which Taxes relate to an event or transaction
occurring before the Closing, (D) all Taxes for which the Seller Shareholders
are responsible pursuant to Section 4.2(a), (E) any and all Taxes with respect
to payments to the SAR Holders pursuant to Section 1.2(b)(iii) or pursuant to
the Cash-Out Agreements, and (F) any Company 338(h)(10) Taxes; provided,
however, that in the case of clauses (A)(F) above, the Seller Shareholders shall
be liable only to the extent that such Taxes exceed the amount, if any,
specifically accrued or reserved for such Taxes (excluding any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) in the Final Working Capital; and

 

(iv)                              any claim by any Person or Persons related to,
or arising out of, any of the foregoing.

 

Notwithstanding anything to the contrary contained in this Agreement, for
purposes of determining the amount of any Losses that are the subject matter of
a claim for indemnification hereunder, each representation and warranty in this
Agreement and each other Transaction Document shall be read without regard and
without giving effect to the term(s) “material” or “material adverse effect” in
each instance where the effect of such term(s) would be to make such
representation and warranty less restrictive (as if such words were deleted from
such representation and warranty).

 

(b)                                 Survival Date.  The Seller Shareholders will
not be liable with respect to any claim made pursuant to Section 6.2(a)(i) (and
related Losses arising under Section 6.2(a)(iv)) for the breach of any
representation or warranty contained in Article 2 of this Agreement or in any
other Transaction Document unless written notice of a possible claim for
indemnification with respect to such breach is given by a Buyer Party to the
Major Seller Shareholder:

 

(i)                                     on or before the date which is 90 days
after the expiration of the applicable statute of limitations (including any
extension or waivers thereof) with respect to claims arising under Sections 2.8
(Tax) and 2.15 (ERISA);

 

(ii)                                  at any time with respect to claims arising
under Sections 2.1 (Organization; Corporate Power), 2.2 (Capitalization), or 2.4
(Authorization; No Breach), as applicable (the representations and warranties
contained in the Sections referenced in clause (i) above and this clause
(ii) are collectively referred to herein as the “Seller Fundamental
Representations” and, individually, as a “Seller Fundamental Representation”);
and

 

(iii)                               on or before the first anniversary of the
Closing Date with respect to claims arising under any other Section of Article 2
(such date, with respect to each Section, is referred to herein as its “Survival
Date”);

 

it being understood that, subject to the limitations set forth in
Section 6.2(c) below, so long as written notice is given on or prior to the
applicable Survival Date with respect to any claim, the Buyer Party may continue
to seek indemnification from the

 

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Seller Shareholder under this Article 6 for all Losses that any Buyer Party may
suffer with respect to such claim through the date of the claim, the end of the
survival period and beyond.

 

(c)                                  The indemnification provided for in
Section 6.2(a)(i) shall be subject to the following limitations:

 

(i)                                     The Seller Shareholders will not be
liable to any Buyer Party for any Losses under Section 6.2(a)(i) (and related
Losses arising under Section 6.2(a)(iv)) unless and until the aggregate amount
of Losses relating to all such breaches, excluding Losses related to breaches of
Seller Fundamental Representations, exceeds $200,000 (the “Threshold”), at which
time  the Seller Shareholders shall be liable for the amount of such Losses from
dollar one in accordance with the terms hereof.  In no event shall Seller
Shareholders in the aggregate be liable to indemnify the Buyer Parties for
Losses (i) under Section 6.2(a)(i) (and related Losses arising under
Section 6.2(a)(iv)), excluding Losses related to breaches of Seller Fundamental
Representations, in an amount in excess of twenty-five percent (25%) of the
Purchase Price or (ii) under Section 6.2 in an amount in excess of the Purchase
Price, except in each case, with respect to Losses related to or arising under
or based on fraud or intentional misrepresentation.

 

(ii)                                  Notwithstanding anything contained herein
to the contrary, except for the Major Seller Shareholder, under no circumstances
shall any other Seller Shareholder be obligated to indemnify any Buyer Party for
any Loss incurred by such Buyer Party arising out of or from a breach by another
Seller Shareholder of an Individual Seller Shareholder Representation or an
Individual Seller Shareholder Covenant.

 

(iii)                               Notwithstanding anything contained herein to
the contrary, Seller Shareholders shall have no liability under this Article 6
with respect to any matter to the extent the expense, loss or liability
comprising the Loss (or part thereof) with respect to such matter has been taken
into account as an accrual, liability or reserve in the determination of the
Final Working Capital.

 

6.3                               Indemnification of the Seller Shareholders.

 

(a)                                 Subject to the limitations set forth in
Sections 6.3(b) and 6.3(c), Buyer shall indemnify the Seller Shareholders and
each of his respective Affiliates, agents, representatives, heirs, successors
and assigns (each a “Seller Party”) and save and hold each of them harmless from
and against, and pay on behalf of or reimburse any Seller Party as and when
incurred for, all Losses which any Seller Party may suffer, sustain or become
subject to as a result of:

 

(i)                                     any breach of any representation or
warranty made by Buyer and contained in Article 3 of this Agreement and any
other Transaction Document delivered by Buyer in connection with the Closing;

 

(ii)                                  any breach of any covenant or agreement of
Buyer in any of the Transaction Documents; and

 

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(iii)                               any claim by any Person or Persons related
to, or arising out of, (y) any of the foregoing or (z) the operation of the
Company by a Buyer Party after the Closing; provided, however, that with respect
to this subsection (z), any such claim does not relate to or arise from any of
the matters set forth in Section 6.2(a)(i) or 6.2(a)(iv).

 

(b)                                 Survival Date.  Buyer will not be liable
with respect to any claim made pursuant to Section 6.3(a)(i) (and related Losses
arising under Section 6.3(a)(iii)(y)) for the breach of any representation or
warranty contained in Article 3 of this Agreement unless written notice of a
possible claim for indemnification with respect to such breach is given by a
Seller Party to the Company:

 

(i)                                     at any time with respect to claims
arising under Sections 3.1 (Organization of Buyer), 3.2 (Authorization of
Transaction), 3.3 (Noncontravention) or 3.4 (Brokers), as applicable (the
representations and warranties contained in the Sections referenced in this
clause (i) are collectively referred to herein as the “Buyer Fundamental
Representations” and, individually, as a “Buyer Fundamental Representation”);
and

 

(ii)                                  on or before the first anniversary of the
Closing Date with respect to claims arising under any other Sections of
Article 3;

 

it being understood that, subject to the limitations set forth in
Section 6.3(c) below, so long as written notice is given on or prior to the
applicable Survival Date with respect to any claim, the Seller Party may
continue to seek indemnification from the Buyer under this Article 6 for all
Losses that any Seller Party may suffer with respect to such claim through the
date of the claim, the end of the survival period and beyond.

 

(c)                                  Buyer will not be liable to any Seller
Party for any Losses under Section 6.3(a)(i) unless and until the aggregate
amount of Losses relating to all such breaches, excluding Losses related
breaches of the Buyer Fundamental Representations exceeds the Threshold at which
time Buyer shall be liable for the amount of all such Losses from the first
dollar in accordance with the terms hereof.

 

6.4                               Indemnification Matters.

 

(a)                                 If any Seller Party or any Buyer Party seeks
indemnification under this Article 6, such Person (the “Indemnified Party”)
shall give written notice to the other Person (the “Indemnifying Party”).  All
Direct Claims shall be indemnified, paid, or reimbursed promptly in accordance
with Section 6.5, unless the Indemnifying Party does not agree that the
Indemnified Party is entitled to full reimbursement for the amount specified in
the notice delivered pursuant to this Section 6.4(a), in which case the
Indemnifying Party shall notify the Indemnified Party within twenty (20) days of
its receipt of such notice.

 

(b)                                 If any Liability shall be brought or
asserted by any third party which, if adversely determined, may entitle the
Indemnified Party to indemnity pursuant to this Section 6.4 (a “Third Party
Claim”), the Indemnified Party shall promptly notify the Indemnifying Party of
the same in writing, specifying in detail the basis of such Liability and the
facts pertaining thereto; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any Liability or Losses hereunder

 

40

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unless the delay in notice has a material adverse effect on the Indemnifying
Party’s ability to successfully defend such claim.

 

(c)                                  Any Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel of
its choice reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within fifteen (15)
days after the Indemnified Party has given notice of the Third Party Claim that
the Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Losses (without any limitations) the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (iii) the
Third Party Claim involves only money damages and does not seek an injunction or
other equitable relief, (iv) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedent, custom or practice materially adverse to
the continuing business interests of the Indemnified Party, and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.

 

(d)                                 So long as the Indemnifying Party is
conducting the defense of the Third Party Claim in accordance with
Section 6.4(b) above, (i) the Indemnified Party may retain separate co-counsel
at its sole cost and expense and participate in the defense of the Third Party
Claim, (ii) the Indemnified Party will not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (which consent shall not be
withheld unreasonably) and (iii) the Indemnifying Party will not consent to the
entry or any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnified Party (which
consent shall not be withheld unreasonably) unless (A) the settlement is solely
for monetary damages, (B) the Indemnified Party has no liability with respect to
such settlement and (C) the terms of such settlement provide for a full release
of the Indemnified Party.

 

(e)                                  In the event that any of the conditions in
Section 6.4(c) above is or becomes unsatisfied or the Indemnifying Party
provides written notice to the Indemnified Party within 20 days of receiving the
written notice specified in Section 6.4(b) that the Indemnifying Party does not
agree that the Indemnified Party is entitled to indemnification hereunder,
(i) the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party Claim in
any manner it may deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in connection
therewith), and (ii) if the Indemnifying Party is required to indemnity the
Indemnified Party with respect the Third Party Claim pursuant to this Article 6,
the Indemnifying Party will (A) reimburse the Indemnified Party for the costs of
defending against the Third Party Claim (including attorneys’ fees and
expenses), and (B) remain responsible for any Losses the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by the Third Party Claim to the fullest extent provided in this Article 6.

 

(f)                                   To the extent of any conflict between this
Section 6.4 and Section 4.2, Section 4.2 shall govern.

 

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6.5                               Manner of Payment.

 

(a)                                 Subject to Section 6.8, any indemnification
payment to Buyer Parties pursuant to this Article 6 shall be effected by wire
transfer of immediately available funds to an account designated by such Buyer
Party within five (5) days after the determination of indemnification amounts by
agreement from the Indemnified Party in accordance herewith or determination of
a court of competent jurisdiction pursuant to Section 8.7.

 

(b)                                 Any indemnification payment to the Seller
Shareholders pursuant to this Article 6 shall be effected by wire transfer of
immediately available funds to an account designated by the Major Seller
Shareholder (on behalf of the Seller Shareholders) within five (5) days after
the determination of indemnification amounts.

 

(c)                                  Any indemnification payments made pursuant
to this Agreement and any payments made under Sections 1.3, 1.4 and 1.6,
including any payments to a Buyer Party from the Escrow Fund, shall be deemed to
be adjustments to the Purchase Price for Tax purposes, unless otherwise required
by applicable Legal Requirements.

 

6.6                               Insurance and Third Party Recovery.  In
determining the liability of a Indemnifying Party for any Loss pursuant to this
Article 6, no Loss shall be deemed to have been sustained by the Indemnified
Party to the extent of any proceeds previously received by the Indemnified Party
from any insurance recovery (net of all out-of-pocket costs directly related to
such recovery) with respect to insurance coverage in place as of the date of
such Loss or other recovery from a third party (net of all out-of-pocket costs
directly related to such recovery).  If an amount is actually recovered from an
insurance carrier or other third party after damages have been paid by the
Indemnifying Party pursuant to Article 6 hereof, then the Indemnified Party
receiving such amount shall promptly remit such amount to the Indemnifying
Party.  Buyer shall, and shall cause the Company to, make any and all insurance
claims under such policies relating to any claim for which a Buyer Party is
seeking indemnification under this Article 6.

 

6.7                               Offset.  If any claims for Losses by any Buyer
Party pursuant to Section 6.4 are unresolved as of the date any Earn-Out Amount
is due and payable pursuant to Section 1.6 and the Escrow Fund is no longer
available or the claimed Losses exceed the amount remaining in the Escrow Fund,
Buyer shall deposit with the Escrow Agent the amount of such claimed Losses or
the portion thereof in excess of the Escrow Fund, as applicable, from the
Earn-Out Amount or any other right of payment to Seller Shareholders to be held
by the Escrow Agent in accordance with the Escrow Agreement and this Agreement.

 

6.8                               Delivery and Release of Escrow Fund.

 

(a)                                 Notwithstanding Section 6.5 to the contrary,
to the extent that any Buyer Party is  determined to be entitled to
indemnification for any Losses pursuant to this Article 6 by agreement from the
Indemnified Party or determination of a court of competent jurisdiction pursuant
to Section 8.7, such Buyer Party shall be entitled to reimbursement first out of
the Escrow Fund and then, to the extent that the Losses exceed the amount
remaining in the Escrow Fund or the Escrow Fund is no longer available, the
Buyer Party may collect such Losses

 

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directly from the Seller Shareholders subject to the limitations and terms and
conditions of this Article 6.

 

(b)                                 Buyer and the Major Seller Shareholder shall
give joint written instructions to the Escrow Agent to release from the Escrow
Fund and pay to the Buyer Party the amounts to which it is entitled pursuant to
Section 6.8(a) and as follows in accordance with the Escrow Agreement:

 

(i)                                     On the one year anniversary of the
Closing Date, the Escrow Amount remaining in the Escrow Fund, plus any interest
accrued thereof, minus the aggregate amount of any Pending Claims (as defined in
the Escrow Agreement);

 

(ii)                                  Within three  (3) Business Days after the
final resolution of a Pending Claim, the amount, if any, of the finally resolved
Pending Claim.

 

6.9                               Sole Remedy.  Except as set forth in
Section 8.12, the right to indemnification under Article 6, subject to all of
the terms, conditions and limitations hereof, shall constitute the sole and
exclusive right and remedy available to any Party hereto (or any specified third
party beneficiary) for any misrepresentation or breach of any representation or
warranty contained in this Agreement or any other Transaction Document.

 

ARTICLE 7
CERTAIN DEFINITIONS

 

“Action” means any action, suit, proceeding, order, investigation, claim,
grievance, arbitration, or complaint.

 

“Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, (including, but not limited to, all directors and
officers of such Person) controlled by, or under common control with, such
Person.

 

“Affiliated Group” means an affiliated group as defined in Section 1504 of the
Code (or any analogous combined, consolidated or unitary group defined under
state, local or foreign income Tax law) of which the Company is or has been a
member.

 

“Apparatus Competitor” shall mean any business that provides information
technology services, consisting of infrastructure management, networking, cloud,
data center, service design, development or hosting services and related
professional services.

 

“Business Day” means each day of the week except Saturdays, Sundays and days on
which banking institutions are authorized by law to close in the State of
Indiana.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time and
the regulations promulgated and rulings issued thereunder, as amended,
supplemented or substituted therefor from time to time.

 

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“Company Customer(s)” means any of the customers of the Company or Buyer, its
Affiliates and Subsidiaries during the period of Major Seller Shareholder’s
employment with the Company or Buyer, its Subsidiaries or Affiliates.

 

“Company Transaction Expenses” means (i) the legal fees and disbursements
payable to legal counsel and accountants of the Company in connection with the
transactions contemplated by the Transaction Documents and (ii) all other fees
and expenses, in each case, incurred by the Company in connection with the
transactions contemplated by the Transaction Documents as determined on the
Closing Date and includes, without limitation, payments to be made by the
Company pursuant to the SAR Plan including any payroll Taxes, and other
outstanding Indebtedness to be paid at Closing pursuant to Section 1.2 of this
Agreement; provided, that Company Transaction Expenses shall also exclude any
fees and expenses incurred or payable by the Seller Shareholders in connection
with the transactions contemplated by this Agreement and the Transaction
Documents.

 

“Confidential Information” means all information (whether or not specifically
identified as confidential), in any form or medium, that is disclosed to, or
developed or learned by, the Company or a Seller Shareholder as an owner of
equity securities of the Company, as the case may be, in the performance of
duties for, or on behalf of, the Company or that relates to the business,
products, services or research of the Company, including, without limitation:
(i) internal business information (including, without limitation, information
relating to strategic plans and practices, business, accounting, financial or
marketing plans, practices or programs, training practices and programs,
salaries, bonuses, incentive plans and other compensation and benefits
information and accounting and business methods); (ii) identities of, individual
requirements of, specific contractual arrangements with, and information about,
the Company, their customers and their confidential information; (iii) industry
research compiled by, or on behalf of the Company, including, without
limitation, identities of potential target companies, management teams, and
transaction sources identified by, or on behalf of, the Company;
(iv) compilations of data and analyses, processes, methods, track and
performance records, data and data bases relating thereto; and (v) information
related to the Company Intellectual Property and updates of any of the
foregoing, provided, however, “Confidential Information” shall not include any
information that can be demonstrated has become known to and available for use
within the industry other than as a result of the acts or omissions of the
Company or a person that the Company has direct control over to the extent such
acts or omissions are not authorized by the Company in the performance of such
person’s assigned duties for the Company.

 

“Contract” means any agreement, contract, instrument, commitment, lease,
guaranty, indenture, license, or other arrangement or understanding between
parties or by one party in favor of another party, whether written or oral.

 

“Direct Claim” means a claim for indemnification pursuant to Article 6 made  by
an Indemnified Party against an Indemnifying Party and does not include Third
Party Claims.

 

“Employee Benefit Plan” means any Employee Pension Benefit Plan (including any
Multiemployer Plan), Employee Welfare Benefit Plan, fringe benefit, bonus,
deferred compensation, retirement, vacation, sick leave, severance, employment,
executive compensation, change in control, incentive or other plan, program
policy or arrangement, whether or not subject

 

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to ERlSA and any plans, programs or arrangements providing compensation to
employee and non-employee directors.

 

“Employee Pension Benefit Plan” shall have the meaning set forth in
Section 3(2) of ERlSA.

 

“Employee Welfare Benefit Plan” shall have the meaning set forth in
Section 3(1) of ERISA.

 

“Environmental and Safety Requirements” means all federal, state, local and
foreign statutes, regulations, ordinances, guidelines and similar provisions
whether or not having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law concerning public health and safety, worker health and safety, and
pollution or protection of the environment, including all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, as the foregoing are enacted or
in effect prior to the Closing Date.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder, as amended, supplemented or substituted therefor from time to time.

 

“Escrow Fees” means the fees and expenses charged by the Escrow Agent.

 

“GAAP” means (for the purposes of this Agreement and any Schedules thereto)
United States generally accepted accounting principles, consistently applied.

 

“Governmental Entity” means the (a) any province, region, state, county, city,
town, village, district or other jurisdiction, (b) federal, provincial,
regional, state, local, municipal, foreign or other government, (c) governmental
or quasi-governmental authority of any nature (including any governmental
agency, branch, bureau, department or other entity and any court or other
tribunal), (d) multinational organization, (e) body exercising, or entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature, or (f) official of any of
the foregoing.

 

“Indebtedness” means any of the following indebtedness of the Company, whether
or not contingent: (i) indebtedness for borrowed money (including any principal,
premium, accrued and unpaid interest, related expenses, prepayment penalties,
commitment and other fees, sale or liquidity participation amounts,
reimbursements, indemnities and all other amounts payable in connection
therewith), (ii) Liabilities evidenced by bonds, debentures, notes, or other
similar instruments or debt securities, (iii) Liabilities of the Company under
or in connection with letters of credit or bankers’ acceptances or similar
items, (iv) Liabilities to pay the deferred purchase price of property or
services other than those trade payables incurred in the ordinary course of
business, (v) all Liabilities arising from cash/book overdrafts, (vi) all
Liabilities under capitalized leases, (vii) all Liabilities of the Company under
conditional sale or other title retention

 

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agreements, (viii) all Liabilities with respect to vendor advances or any other
advances made to the Company, (ix) all Liabilities of the Company arising out of
interest rate and currency swap arrangements and any other arrangements designed
to provide protection against fluctuations in interest or currency rates,
(x) any deferred purchase price Liabilities related to past acquisitions,
(xi) all Liabilities of the Company arising from any breach of any of the
foregoing and (xii) all indebtedness of others guaranteed or secured by any lien
or security interest on the assets of the Company.

 

“Independent Accounting Firm” means Grant Thornton LLP or such other independent
accounting firm as mutually agreed upon by the Major Seller Shareholder and
Buyer.

 

“Intellectual Property” means trademarks, service marks, trade dress, trade
names, corporate names, logos, slogans and Internet domain names, together with
all goodwill associated with each of the foregoing, patents and patent
applications, inventions, invention disclosures, trade secrets, technology,
technical data, know how, methods and processes, copyrights and copyrightable
works (including, without limitation, computer software, Open Source Software,
source code, executable code, data, databases and documentation), proprietary
information and data, all other intellectual property and registrations and
applications for any of the foregoing.

 

“Knowledge” or “knowledge” means with respect to any Person the actual knowledge
after reasonable inquiry of any director, governing body member or executive
officer of such Person; provided that in the case of the “Knowledge” or
“knowledge” of the Company and the Seller Shareholders means the actual
knowledge after reasonable inquiry of the Major Seller Shareholders, Aman Brar
and Jared Cook.

 

“Legal Requirement” means any requirement arising under (i) any constitution,
law, statute, code, treaty, decree, rule, ordinance or regulation, including any
Environmental and Safety Requirements and including any of the foregoing that
relate to data use, privacy or protection, or (ii) any determination or
direction of any arbitrator or any Governmental Entity.

 

“Liability” or “Liabilities” means any liability, debt, obligation, deficiency,
interest, Tax, penalty, fine, claim, demand, judgment, cause of action or other
loss (including, without limitation, loss of benefit or relief), cost or expense
of any kind or nature whatsoever, whether asserted or unasserted, absolute or
contingent, accrued or unaccrued, liquidated or unliquidated, and whether due or
become due and regardless of when asserted.

 

“Lien” means any security interest, pledge, bailment (in the nature of a pledge
or for purposes of security), mortgage, deed of trust, the grant of a power to
confess judgment, conditional sales and title retention agreement (including any
lease in the nature thereof), charge, encumbrance or other similar arrangement
or interest in real or personal property.

 

“Loss” or “Losses” means any and all Liabilities, damages, fines, dues, Taxes,
penalties, charges, assessments, deficiencies, judgments, defaults, settlements
and other losses (including diminution in value) and fees, costs and expenses
(including interest, expenses of investigation, defense, prosecution and
settlement of claims, court costs, reasonable fees and expenses of attorneys,
accountants and other experts, and all other fees and expenses) but excluding
any

 

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punitive or exemplary or special damages or any consequential loss which is not
reasonably foreseeable as a result of, or arising from, or in connection with,
any breach or claim, except to the extent the same are incurred, or payable to a
third party, by an Indemnified Party in connection with a Third Party Claim.

 

“Multiemployer Plan” shall have the meaning set forth in Section 3(37) of ERISA
(Code Section 29 USC Section 1002(37)).

 

“Open Source Software” means computer software (including, without limitation,
source code, object code, libraries and middleware) subject to the GNU General
Public License (GPL), the Lesser GNU Public License (LGPL) or other similar
licensing regimes commonly called “open source.”

 

“ordinary course of business” means the ordinary course of the Company’s
business consistent with past custom and practice, including as to frequency and
amount.

 

“Party” or “Parties” means any party hereto.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

 

“Permitted Liens” means any of the following:  (i) the provision of all
applicable zoning Legal Requirements, statutory items of landlords, carriers,
workmen, warehousemen, repairmen, mechanics, contractors, materialmen and other
similar Persons and other similar items imposed by the applicable Legal
Requirements, (ii) easements, rights-of-way, restrictions and other similar
changes and encumbrances of record that do not adversely affect the use of the
applicable Legal Requirements, and (iii) liens for Taxes and other governmental
assessments, charges or claims not yet due and payable or that the taxpayer is
contesting in good faith and for which adequate reserves have been established
on the Latest Balance Sheet, and (iv) purchase money liens securing rental
payments under capital loss arrangements.

 

“Person” means an individual, a partnership, a corporation, an association, a
limited liability company a joint stock company, a trust, a joint venture, an
unincorporated organization, or a Governmental Entity.

 

“Pre-Closing Tax Period” means (i) any taxable period ending on or before the
Closing Date and (ii) the portion of any Straddle Period beginning on the first
day of such Straddle Period and ending on (and including) the Closing Date.

 

“Prospective Customer” shall mean any proposed or prospective customer of the
Company and Buyer and any of their Subsidiaries, subdivisions, or Affiliates
that (i) has had any correspondence with the Company, Buyer or any of their
Subsidiaries, subdivisions, or Affiliates, (ii) is listed on any of the
Company’s, Buyer’s or any of their Subsidiaries’, subdivisions’, or Affiliates’
internal pipeline discussions or related memoranda, (iii) is engaged in active
negotiations with the Company, Buyer or any of their Subsidiaries, subdivisions,
or Affiliates or (iv) is otherwise being solicited by the Company, Buyer or any
of their Subsidiaries, subdivisions, or Affiliates, in each case within six
months prior to the termination or cessation of the period of the Major Seller
Shareholder’s employment with the Company, Buyer or any of their Subsidiaries,
subdivisions or Affiliates, and the Major Seller Shareholder had participated,

 

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directly or indirectly, in any of those activities or been made aware of, or had
knowledge of, any of these activities with regard to any such prospective or
proposed customer.

 

“Purchase Price” means the Closing Purchase Price and any Revenue Earn-out and
EBITDA Earn-out (if earned and payable) payable pursuant to this Agreement.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Straddle Period” means any Tax period beginning before or on the Closing Date
and ending after the Closing Date.

 

“Subsidiary(ies)” means any corporation or other Person which is an entity with
respect to which another specified entity either (i) has the power to vote or
direct the voting of sufficient securities to elect a majority of the directors
or managers of such Person, or (ii) owns a majority of the ownership interests
of such entity, and with respect to the Company.

 

“Target Working Capital” means $2,358,000.

 

“Tax” or “Taxes” means any federal, state, local, or foreign income, gross
receipts, license; payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock, branch,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
goods and services, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, including any interest, penalty, or addition thereto,
whether disputed or not, and including any obligation to indemnify or otherwise
assume or succeed to the Tax Liability of any other Person.

 

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

 

“Transaction Documents” means this Agreement (including the Schedules and
Disclosure Schedules referenced herein), the Escrow Agreement, the certificate
attached hereto as Exhibit C, the employee bonus plan as set forth on Exhibit E,
the stock powers delivered by the Seller Shareholders and the Secretary’s
Certificates delivered by the Company and Buyer.

 

“Working Capital” means, as of any date of determination, the excess of the
Company’s total current assets (including cash and cash investments) as of such
date over the Company’s total current liabilities including, without limitation,
the Company Transaction Expenses (not paid as of Closing) as calculated in
accordance with Schedule 1.3(b).  For these purposes, current assets and
liabilities shall not include the payments to be made with respect to any
Indebtedness and Company Transaction Expenses and the SAR Obligations to the
extent such were paid pursuant to Section 1.2 of this Agreement or prior to the
Closing, any Tax assets (including deferred Tax assets) or deferred Tax
liabilities.

 

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7.1                               Additional Definitions.

 

Term

 

Section

Administrative Expense Account

 

1.2(b)(vi)

Administrative Expense Amount

 

1.2(b)(vi)

Agreement

 

Preface  

Allocation

 

1.6(a)

Apparatus Group

 

4.3(d)

Bonus Pool

 

4.8

Business

 

2.10(a)

Buyer

 

Preface

Buyer Assignee

 

8.3

Buyer Fundamental Representation(s)

 

6.3(b)(i)

Buyer Party 

 

6.2(a) 

Buyer Prepared Returns

 

4.2(c)

Buyer Stock Plan

 

4.7

Cash-Out Agreements

 

4.6

Closing

 

1.2(a)

Closing Date

 

1.2(a)

Closing Date Balance Sheet

 

1.3(b)

Closing Purchase Price

 

1.2(b)

Closing Working Capital

 

1.3(b)

Company

 

Preface

Company 338(h)(10) Taxes

 

4.2(j)

Company Intellectual Property

 

2.10(a)

Company Trade Secrets

 

2.10(i)

Consents

 

2.21

Dispute Notice

 

1.6(b)

Earn-Out Amount

 

1.6(g)

Earn-out Period

 

1.6(b)

Earn-Out Statement

 

1.6(b)

Escrow Agent

 

1.2(b)(v)

Escrow Agreement

 

5.1(k)

Escrow Amount

 

1.2(b)(v)

Escrow Fund

 

1.2(b)(v)

Estimated Closing Date Balance Sheet

 

1.3(a)

Estimated Working Capital

 

1.3(a)

Estimated Working Capital Adjustment

 

1.2(b)(i)

Final Working Capital

 

1.4(c)

Incentive Pool

 

4.7

Indemnified Party

 

6.4(a)

Indemnifying Party

 

6.4(a)

Insider

 

2.17

Item of Dispute

 

1.6(b)

Key Employees

 

4.7

Latest Balance Sheet

 

2.5

Leased Real Property

 

2.19(b)

Leases

 

2.19(b)

Major Seller Shareholder

 

Preface

 

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Material Contract

 

2.9(b)

Non-compete Period

 

4.3(d)

NQDC Plan

 

2.15(k)

Pre-Closing Tax Period

 

4.2(b)

Products

 

2.10(a)

Post-Closing Tax Period

 

4.2(f)

Purchased Securities

 

Preface

S Corporation Returns

 

4.2(b)

SAR Holders 

 

1.2(b)(iii) 

SAR Plan

 

1.2(b)(iii)

SAR Plan Obligations

 

1.2(b)(iii)

Section 338(h)(10) Election

 

4.2(j)

Securities

 

Preface

Seller Fundamental Representation(s)

 

6.3(b)(i)

Seller Party

 

6.3(a)

Seller Shareholders

 

Preface

Straddle Period Tax Return

 

4.2(c)

Survival Date

 

6.2(b)(iii)

Tax Matter

 

4.2(h)

Third Party Claim

 

6.4(b)

Threshold

 

6.2(d)(i)

WARN Act

 

2.14

 

ARTICLE 8
MISCELLANEOUS

 

8.1                               No Third Party Beneficiaries.  This Agreement
shall not confer any rights or remedies upon any Person other than the Parties
(and, where indicated herein, with respect to Article 4, the Affiliates of the
Parties and such other Persons designated therein) and their respective
successors and permitted assigns and the Buyer Parties and Seller Parties as
specified in Article 6.

 

8.2                               Entire Agreement.  This Agreement (including
the documents referred to herein) constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements or representations
by or between the Parties, written or oral, that may have related in any way to
the subject matter hereof including that certain letter of intent executed as of
February 25, 2015, by and between the Company and Buyer.

 

8.3                               Successors and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights or obligations hereunder may be assigned (whether by operation of
law, through a change in control or otherwise) by the Company or the Seller
Shareholders without the prior written consent of Buyer, or by Buyer without the
prior written consent of the Major Seller Shareholder; provided, however, Buyer,
whether directly or through its Affiliates (a “Buyer Assignee”), shall have the
right to assign (a) all or any portion of this Agreement and the other
Transaction Documents (including rights hereunder and thereunder), including its
rights to indemnification, to any of its or its Buyer Assignees’ lenders as
collateral

 

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security, (c) after the Closing, all of this Agreement and the other Transaction
Documents and its rights and obligations hereunder, including its rights to
indemnification and obligations with respect to the payment of the Earn-Out
Amount, in connection with a (i) merger or consolidation involving Buyer or any
of Buyer’s Assignees, (ii) a sale of stock or assets (including any real estate)
of Buyer or any Buyer Assignee or (iii) dispositions of the business of the
Company and its Subsidiaries; provided, that such assignee agrees to assume all
obligations of Buyer under this Agreement and the other Transaction Documents.

 

8.4                               Counterparts.  This Agreement may be executed
in two or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.

 

8.5                               Headings.  The section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.

 

8.6                               Notices.  All notices, requests, demands,
claims, and other communications hereunder shall be in writing.  Any notice,
request, demand, claim or other communication hereunder shall be deemed duly
given when delivered personally to the recipient or sent to the recipient by
telecopy (receipt confirmed) or by reputable express courier service (charges
prepaid), and addressed to the intended recipient as set forth below:

 

If to the Company to Buyer at the address below

 

 

 

If to the Major Seller Shareholder:

 

 

 

Kelly Pfledderer

 

8620 Green Braes North Dr

 

Indianapolis, IN 46234

 

Facsimile No.:

 

 

 

With a copy to (which shall not constitute notice):

 

 

 

Ice Miller LLP

 

One American Square

 

Suite 2900

 

Indianapolis, IN 46282-0200

 

Attn: Scott Snively

 

Facsimile No: 317-592.4772

 

 

 

If to Buyer:

 

 

 

Virtusa Corporation

 

2000 West Park Drive,

 

Westborough, MA 01581

 

 

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Attention:

Ranjan Kalia

 

 

Paul Tutun

 

Facsimile No.:(508) 389-7224

 

 

 

with a copy to (which shall not constitute notice):

 

 

 

Goodwin Procter LLP

 

Exchange Place

 

Boston, MA 02109

 

Attention:

John J. Egan

 

 

Edward King

 

Facsimile No.:(617) 523-1231

 

 

Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient.  Any Party may change the address to which notices,
requests, demands, claims, and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.

 

8.7                               Governing Law; Prevailing Party.

 

(a)                                 This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule that would
cause the application of the laws of any jurisdiction other than the State of
Delaware.  Any Action permitted by the terms of this Agreement to be filed in a
court (which shall not include disputes which are reserved in Article 1 and
Section 4.2 to be resolved by the Independent Accounting Firm), which Action is
brought to enforce, challenge or construe the terms or making of any of the
Transaction Documents, and any claims arising out of or related to any of the
Transaction Documents, shall be exclusively brought and litigated exclusively in
a state or federal court having subject matter jurisdiction and located in the
State of Delaware.  For the purpose of any Action instituted with respect to any
claim arising out of or related to any of the Transaction Documents, each Party
hereby irrevocably submits to the exclusive jurisdiction of the state or federal
courts having subject matter jurisdiction and located in the State of Delaware. 
Each Party hereby irrevocably waives any objection or defense which it may now
or hereafter have of improper venue, forum non conveniens or lack of personal
jurisdiction. Each Party further irrevocably consents to the service of process
out of such courts by the mailing of a copy thereof, by registered mail, postage
prepaid, to the party and agrees that such service, to the fullest extent
permitted by applicable laws, (i) shall be deemed in every respect effective
service of process upon it in any Action arising out of or related to any of the
Transaction Documents and (ii) shall be taken and held to be valid personal
service upon and personal delivery to it. Nothing herein contained shall affect
the right of each party to serve process in any other manner permitted by
applicable Legal Requirements.

 

(b)                                 In the event of any litigation with regard
to this Agreement, the prevailing party or parties shall be entitled to receive
from the non-prevailing party or parties, and the non-prevailing party or
parties shall pay, all reasonable attorneys’ fees incurred by the prevailing

 

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party or parties in connection with the resolution of such litigation.  The term
“prevailing party” shall include, but not be limited to, a party who obtains
legal counsel or brings an action or makes a claim against the other by reason
of the other’s alleged breach or alleged default and obtains substantially the
relief sought.

 

8.8                               Amendments and Waivers.  No amendment of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the Parties hereto.  No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.

 

8.9                               Incorporation of Schedules.  The Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.

 

8.10                        Construction.  Where specific language is used to
clarify by example a general statement contained herein (such as by using the
word “including”), such specific language shall not be deemed to modify, limit
or restrict in any manner the construction of the general statement to which it
relates.  The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.  Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.  The disclosure of an item in
one section of the Schedules shall be deemed to modify the representations and
warranties of the Party contained in the section of this Agreement to which it
corresponds in number but not any other representation and warranty of the Party
in this Agreement unless (a) such disclosure item is explicitly cross-referenced
as applying to such other representation and warranty of the Party or (b) it is
reasonably apparent from the plain reading of such disclosure that such
disclosure item applies to such other representations and warranty of the
Party.  The Parties intend that each representation, warranty, and covenant
contained herein shall have independent significance.  If any Party has breached
any representation, warranty, or covenant contained herein (or is otherwise
entitled to indemnification) in any respect, the fact that there exists another
representation, warranty, or covenant (including any indemnification provision)
relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached (or is not otherwise entitled to
indemnification with respect thereto) shall not detract from or mitigate the
fact that the Party is in breach of the first representation, warranty, or
covenant (or is otherwise entitled to indemnification pursuant to a different
provision).

 

8.11                        Severability of Provisions.  If any covenant,
agreement, provision or term of this Agreement is held to be invalid for any
reason whatsoever, then such covenant, agreement, provision or term will be
deemed severable from the remaining covenants, agreements, provisions and terms
of this Agreement and will in no way affect the validity or enforceability of
any other provision of this Agreement.

 

8.12                        Specific Performance.  Each of the Parties
acknowledges and agrees that the other Parties would be damaged irreparably in
the event any of the provisions of this Agreement are

 

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not performed in accordance with their specific terms or otherwise are
breached.  Accordingly, each of the Parties agrees that the other Parties shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter in addition to any
other remedy to which they may be entitled, at law or equity.

 

8.13                        Successor Laws.  Any reference to any particular
Code section or any other Legal Requirement will be interpreted to include any
revision of or successor to that section regardless of how it is numbered or
classified.

 

8.14                        Release of the Company.  Effective upon the Closing,
each of the Seller Shareholders hereby irrevocably waives, releases and
discharges forever the Company from any and all Liabilities arising prior to the
Closing Date but excluding claims arising out of (a) any of the Transaction
Documents or (b) if such Seller Shareholder is an employee of the Company, any
accrued but unpaid portion of such Seller Shareholder’s salary or benefits
(including accrued vacation) as of the Closing, and each of the Seller
Shareholders hereby covenants and agrees that such Seller Shareholder will not
seek to recover any amounts in connection therewith or thereunder from the
Company.

 

8.15                        Delivery by Facsimile.  This Agreement and any
signed Contract entered into in connection herewith or contemplated hereby, and
any amendments hereto or thereto, to the extent signed and delivered by means of
a facsimile machine, shall be treated in all manner and respects as an original
Contract and shall be considered to have the same binding legal effects as if it
were the original signed version thereof delivered in person.  At the request of
any party hereto or to any such Contract, each other party hereto or thereto
shall re-execute original forms thereof and deliver them to all other parties. 
No party hereto or to any such Contract shall raise the use of a facsimile
machine to deliver a signature or the fact that any signature or Contract was
transmitted or communicated through the use of facsimile machine as a defense to
the formation of a Contract and each such party forever waives any such defense.

 

8.16                        Appointment of Representative.

 

(a)                                 Each of the Seller Shareholders irrevocably
constitutes and appoints Major Seller Shareholder as the Seller Shareholder’s
representative, and acknowledges that he shall act as each of the Seller
Shareholder’s true and lawful attorney-in-fact and agent, and the each of the
Seller Shareholders authorizes the Major Seller Shareholder acting for such
Seller Shareholder and in such Seller Shareholder’s name, place and stead, in
any and all capacities to do and perform every act and thing required or
permitted to be done in connection with the transactions contemplated by this
Agreement, as fully to all intents and purposes as such Seller Shareholder might
or could do in person, including as follows:

 

(i)                                     to take any and all action on behalf of
the Seller Shareholder from time to time as the representative of the Seller
Shareholders may deem necessary or desirable to fulfill the interests and
purposes of this Section 8.16 and to engage agents and representatives
(including accountants and legal counsel) to assist in connection therewith;

 

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(ii)                                  to take any and all action on behalf of
the Seller Shareholders from time to time as he may deem necessary or desirable
to make or enter into any waiver, amendment, agreement, certificate or other
document contemplated hereunder;

 

(iii)                               to deliver all notices required to be
delivered by the Seller Shareholder;

 

(iv)                              to receive all notices required to be
delivered to the Seller Shareholder;

 

(v)                                 to act for the Seller Shareholder with
regard to matters pertaining to indemnification referred to in this Agreement,
including the power to receive notices and communications, to authorize delivery
to the Buyer Parties of the funds from the Escrow Amount in satisfaction of
claims by the Buyer Parties, to negotiate, enter into settlements and
compromises of, and comply with all orders of courts with respect to, such
claims; and

 

(vi)                              to execute the Escrow Agreement and make all
decisions required or allowed to be made by him as the representative of the
Seller Shareholders pursuant to the provisions thereof.

 

(b)                                 Each of the Seller Shareholders grants unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing necessary or desirable to be done in connection with the
matters described above, as fully to effect all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
that the Major Seller Shareholder may lawfully do or cause to be done by virtue
hereof. Each of the Seller Shareholders further acknowledges and agrees that,
upon execution of this Agreement, with respect to any delivery by the Major
Seller Shareholder of any waiver, amendment, agreement, certificate or other
documents executed by the Major Seller Shareholder pursuant to this
Section 8.16, each of the Seller Shareholders shall be bound by such documents
as fully as if such Seller Shareholder had executed and delivered such
documents. The Major Seller Shareholders  in his capacity as the representative
of the Seller Shareholder shall be deemed to be an intended third party
beneficiary of this Section 8.16.

 

(c)                                  Each of the Seller Shareholders agrees that
Buyer shall be entitled to unconditionally assume that any action taken or
omitted, or any document executed by, the Major Seller Shareholder, purporting
to act as the representative of the Seller Shareholders under or pursuant to
this Agreement or the Escrow Agreement or in connection with any of the
transactions contemplated by this Agreement or the Escrow Agreement has been
unconditionally authorized by the Seller Shareholders to be taken, omitted to be
taken, or executed on their behalf so that they will be legally bound thereby,
and each of the Seller Shareholders agrees not to institute any claim, lawsuit,
arbitration or other proceeding against Buyer alleging that the Major Seller
Shareholder did not have the authority to act as the representative on behalf of
the Seller Shareholders in connection with any such action, omission or
execution. No modification or revocation of the power of attorney granted by the
Seller Shareholders herein to the Major Seller Shareholder to serve as the
representative shall be effective as against Buyer until Buyer

 

55

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has received a document signed by each of the Seller Shareholders effecting said
modification or revocation, and Buyer has agreed in writing to such modification
or revocation.

 

8.17                        Administrative Expense Account.  The Major Seller
Shareholder shall hold the Administrative Expense Amount in the Administrative
Expense Account as a fund from which the Major Seller Shareholder may pay any
amounts due by the Seller Shareholders hereunder, including, any losses,
third-party fees, expenses or costs he incurs in performing his duties and
obligations under this Agreement by or on behalf of the Seller Shareholders and
other liabilities of the Seller Shareholders with respect to post-Closing
matters, including, without limitation, expenses, costs and liabilities incurred
(i) pursuant to the procedures and provisions set forth in Section 1.3,
Section 1.6 and Article 6, (ii) for legal, accounting or consultants for
reviewing, analyzing and defending any claim or process arising under or
pursuant to this Agreement and (iii) relating to tax filings and the
administration of payments to SAR Holders.

 

* * * * *

 

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IN WITNESS WHEREOF. the Parties have executed this Stock Purchase Agreement as
of the date first above written.

 

 

 

APPARATUS, INC.

 

 

 

 

By:

/s/ Kelly Pfledderer

 

 

Kelly Pfledderer, CEO

 

 

 

 

 

 

 

VIRTUSA CORPORATION

 

 

 

 

By:

/s/ Thomas R. Holler

 

Name:

Thomas R. Holler

 

Its:

EVP & Chief Strategy Officer

 

 

 

 

 

 

 

SELLER SHAREHOLDERS:

 

 

 

 

 

 

 

By:

/s/ Kelly Pfledderer

 

 

Kelly Pfledderer

 

 

 

 

 

 

 

By:

/s/ Mark E. Hill

 

 

Mark E. Hill

 

 

 

 

 

 

 

By:

/s/ J. Mark Howell

 

 

J. Mark Howell

 

 

 

 

 

 

 

By:

/s/ Larry Sablosky

 

 

Larry Sablosky

 

Signature Page to the Stock Purchase Agreement

 

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