Exhibit 10.1

EQUITY PURCHASE AGREEMENT

by and among

GSI GROUP INC.,

GSI GROUP CORPORATION,

JADAK, LLC,

JADAK TECHNOLOGIES, INC.,

ADVANCED DATA CAPTURE CORPORATION,

EACH OF THE SELLERS SET FORTH ON THE SIGNATURE PAGES HERETO

and

WITH RESPECT TO SECTIONS 2.2, 2.3 AND 2.5 AND ARTICLES VIII, X, XI AND XII

ONLY

MARK MCCARTHY,

AS THE EQUITYHOLDERS’ REPRESENTATIVE

Dated as of February 18, 2014

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TABLE OF CONTENTS

 

         Page   ARTICLE I DEFINITIONS      1   

Section 1.1

  Definitions      1    ARTICLE II PURCHASE AND SALE OF EQUITY INTERESTS;
CLOSING      15   

Section 2.1

  Purchase and Sale      15   

Section 2.2

  Purchase Price      15   

Section 2.3

  Post-Closing Purchase Price Adjustment      16   

Section 2.4

  Closing      18   

Section 2.5

  Allocation of Purchase Price      19    ARTICLE III REPRESENTATIONS AND
WARRANTIES OF THE ACQUIRED COMPANIES      20   

Section 3.1

  Organization, Standing and Power      20   

Section 3.2

  Capitalization; Title to Equity Interests      21   

Section 3.3

  Subsidiaries; Investments      21   

Section 3.4

  Authority; Binding Agreement; No Conflict      22   

Section 3.5

  Financial Statements      23   

Section 3.6

  No Undisclosed Liabilities      24   

Section 3.7

  Absence of Certain Changes or Events      24   

Section 3.8

  Tax      25   

Section 3.9

  Real Estate      26   

Section 3.10

  Title to Assets      28   

Section 3.11

  Intellectual Property      29   

Section 3.12

  Contracts      31   

Section 3.13

  Litigation; Orders      35   

Section 3.14

  Environmental      35   

Section 3.15

  Employee Benefit Plans      37   

Section 3.16

  Compliance With Laws      40   

Section 3.17

  Permits      41   

Section 3.18

  Labor and Employees      42   

Section 3.19

  Insurance      44   

Section 3.20

  Accounts Receivable; Accounts Payable      45   

Section 3.21

  Bank Accounts      45   

Section 3.22

  Brokers; Fees      45   

Section 3.23

  Transactions with Affiliates      46   

Section 3.24

  Customers and Suppliers      46   

Section 3.25

  Complete Copies of Materials      47   

Section 3.26

  Product Warranty; Product Liability      47   

Section 3.27

  Inventory      48    ARTICLE IV      49    REPRESENTATIONS AND WARRANTIES OF
THE SELLERS      49   

 

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Section 4.1

  Title to Equity Interests    49  

Section 4.2

  Authority; Binding Agreement; No Conflict      49   

Section 4.3

  Litigation; Orders      50   

Section 4.4

  Brokers; Fees      50    ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
AND PARENT      51   

Section 5.1

  Organization, Standing and Power      51   

Section 5.2

  Authority; Binding Agreement; No Conflict      51   

Section 5.3

  Investment Purpose      52   

Section 5.4

  Brokers; Fees      52   

Section 5.5

  Due Diligence      52   

Section 5.6

  Sufficiency of Funds      52    ARTICLE VI CONDUCT OF BUSINESS      53   

Section 6.1

  Interim Operations of the Acquired Companies      53   

Section 6.2

  The Confidentiality Agreement      56    ARTICLE VII ADDITIONAL AGREEMENTS   
  57   

Section 7.1

  Access to Information      57   

Section 7.2

  Legal Requirements; Consents; Further Assurances; Cooperation      57   

Section 7.3

  Public Disclosure      59   

Section 7.4

  Director and Officer Indemnification      60   

Section 7.5

  Notification of Certain Matters      61   

Section 7.6

  Resignations; Removal      62   

Section 7.7

  Delivery of Monthly Financials      62   

Section 7.8

  Affiliate Agreements      62   

Section 7.9

  Employee Benefit Matters.      62   

Section 7.10

  Restrictive Covenants      63   

Section 7.11

  Waiver of Rights of First Offer      65   

Section 7.12

  Exclusive Dealing      65   

Section 7.13

  Data Room Contents      65   

Section 7.14

  R&W Insurance Policy      66    ARTICLE VIII CERTAIN COVENANTS REGARDING TAX
MATTERS      66   

Section 8.1

  Tax Returns      66   

Section 8.2

  Cooperation on Tax Matters      67   

Section 8.3

  Tax Indemnification      68   

Section 8.4

  Transfer Taxes      69   

Section 8.5

  Post-Closing Transactions, Etc      69   

Section 8.6

  Dispute Resolution      69    ARTICLE IX CLOSING CONDITIONS      70   

Section 9.1

  Conditions to Each Party’s Obligations      70   

Section 9.2

  Additional Conditions to Obligations of Purchaser      70   

Section 9.3

  Additional Conditions to Obligations of the Sellers      74   

 

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ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION    75  

Section 10.1

   Survival of Representations, Warranties and Covenants      75   

Section 10.2

   Indemnification by the Sellers      76   

Section 10.3

   Indemnification by Purchaser and Parent      77   

Section 10.4

   Indemnification Limitations      78   

Section 10.5

   Payment Source; No Contribution from the Company      82   

Section 10.6

   Procedures for Indemnification      82   

Section 10.7

   Determination of Loss Amount      84   

Section 10.8

   Tax Treatment      84   

Section 10.9

   Election of Claims      85   

Section 10.10

   Insurance Collection      85   

Section 10.11

   Subrogation      85   

Section 10.12

   Exclusive Remedy      85    ARTICLE XI TERMINATION      85   

Section 11.1

   Termination      85   

Section 11.2

   Effect of Termination      86    ARTICLE XII MISCELLANEOUS      87   

Section 12.1

   Releases      87   

Section 12.2

   Equityholders’ Representative      87   

Section 12.3

   Post-Closing Confidentiality      89   

Section 12.4

   Notices      90   

Section 12.5

   Fees and Expenses      91   

Section 12.6

   Amendment      92   

Section 12.7

   Extension; Waiver      92   

Section 12.8

   Entire Agreement      92   

Section 12.9

   No Third Party Beneficiaries      92   

Section 12.10

   Assignment      93   

Section 12.11

   Severability      93   

Section 12.12

   Counterparts and Signature      93   

Section 12.13

   Interpretation      93   

Section 12.14

   Governing Law      94   

Section 12.15

   Consent to Jurisdiction      94   

Section 12.16

   Remedies; Specific Performance      94   

Section 12.17

   Waiver of Jury Trial      94   

Section 12.18

   Disclosures      94   

Section 12.19

   Parent Guaranty      95   

Section 12.20

   Role of Bingham McCutchen LLP      95   

 

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Exhibits

 

Exhibit A:

  Sellers’ Ownership Interests in the Acquired Companies

Exhibit B:

  Form of Escrow Agreement

Exhibit C:

  Form of Purchaser Adjustment Statement

Exhibit D:

  Terms of R&W Insurance Policy

Exhibit E:

  Form of Flow of Funds Memorandum

Exhibit F:

  Treasury Regulations Section 1.1445-2(b)(2)(iv) Certificate

 

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EQUITY PURCHASE AGREEMENT

This EQUITY PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of
February 18, 2014, by and among GSI Group Inc., a New Brunswick, Canada
corporation (the “Parent”), GSI Group Corporation, a Michigan corporation that
is a wholly owned subsidiary of Parent (“Purchaser”), JADAK, LLC, a New York
limited liability company (the “LLC”), JADAK Technologies Inc., a New York
corporation (the “Corporation”), Advanced Data Capture Corporation, a
Massachusetts corporation (“ADCC” and together with the LLC and the Corporation,
the “Acquired Companies”), the equity holders of the Acquired Companies set
forth on the signature pages hereto (collectively, the “Sellers” and each
individually, a “Seller”), and with respect to Sections 2.2, 2.3 and 2.5 and
ARTICLES VIII, X, XI and XII only, Mark McCarthy, as the Equityholders’
Representative (as such term is defined in Section 12.2).

WHEREAS, the Acquired Companies are engaged in the business of developing,
manufacturing and distributing Auto-ID, RFID, barcode reading and machine vision
software and hardware products;

WHEREAS, the Sellers, ADCC and the Corporation are the record and beneficial
owners of all of the issued and outstanding equity membership interests of the
LLC (the “LLC Interests”), all of the issued and outstanding capital stock of
the Corporation (the “Corporation Shares”), and all of the issued and
outstanding capital stock of ADCC (the “ADCC Shares” and, together with the LLC
Interests and the Corporation Shares, the “Equity Interests”), in the amounts
and percentages that are set forth opposite each Seller’s name on Exhibit A
attached hereto;

WHEREAS, upon the terms and subject to the conditions contained in this
Agreement, Purchaser desires to purchase from the Sellers, and the Sellers
desire to sell, transfer and deliver to Purchaser all of the Equity Interests.

NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. For all purposes of this Agreement, the following terms
shall have the following respective meanings:

“Accepted Adjustment Statement” has the meaning set forth in Section 2.3(f).

“Accountant” shall mean a certified public accountant at a nationally recognized
accounting firm who is mutually agreeable to Purchaser and the Equityholders’
Representative.

“Accountant’s Report” has the meaning set forth in Section 2.3(e).

 

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“Acquired Businesses” shall mean the businesses of the Acquired Companies and
their Subsidiaries as are being conducted as of the date of this Agreement.

“Acquired Companies” has the meaning set forth in the Preamble.

“Acquired Company Employees” has the meaning set forth in Section 3.15(a).

“Acquired Company Fundamental Representations” has the meaning set forth in
Section 10.1.

“Acquired Company IP” shall mean all Intellectual Property owned or purported to
be owned by any of the Acquired Companies or any of their Subsidiaries,
including the Scheduled Intellectual Property.

“Acquired Company Material Adverse Effect” shall mean any state of facts,
change, event, violation, inaccuracy, effect, condition, circumstance,
occurrence or development (any such item, an “Effect”) that, individually or
taken together with all other Effects that have occurred prior to the date of
determination of the occurrence of the Acquired Company Material Adverse Effect,
(a) is or could reasonably be expected to be materially adverse to the business,
operations, properties, results of operations, assets, liabilities or condition
(including financial condition) of the Acquired Companies and their respective
Subsidiaries, taken as a whole, or the Acquired Businesses, taken as a whole, or
(b) prevents or could reasonably be expected to prevent the performance by any
Acquired Company or any of its Subsidiaries or any of the Sellers of any of its
obligations under this Agreement or any Ancillary Document to which it is a
party or the consummation of the transactions contemplated hereby or thereby;
provided, however, that a determination of an Acquired Company Material Adverse
Effect shall exclude any Effect, resulting from (i) changes affecting the
general economic, financial or political conditions, (ii) changes affecting the
industry in which the Acquired Companies or their respective Subsidiaries
operate, (iii) acts of terrorism, war or other force majeure events,
(iv) changes in Applicable Law or GAAP (or any interpretation of GAAP)
applicable to the Acquired Companies or their respective Subsidiaries, (v) the
announcement, disclosure or pendency of the transactions contemplated by this
Agreement (including, without limitation, (1) departure of employees of the
Acquired Companies or their respective Subsidiaries, (2) loss of customers or
suppliers of the Acquired Companies or their respective Subsidiaries and
(3) termination or non-renewal, or notification of intent to terminate or not
renew, by third parties of any Contract, in each case to the extent that any
such departure, loss, termination or non-renewal can be reasonably directly
attributed to the announcement or pendency of the transactions contemplated by
this Agreement), (vi) failure of the Company to meet any internal projection or
forecast (it being understood and agreed that the facts and circumstances giving
rise to such failure that are not otherwise excluded from the definition of
Acquired Company Material Adverse Effect may be taken into account in
determining whether there has been an Acquired Company Material Adverse Effect)
or (vii) the treatment of the New Hancock Park Lease as a capital or financial
lease instead of as an operating lease, but, in the case of each of clauses
(i) through (iv) above only to the extent not disproportionately impacting the
Acquired Companies or their respective Subsidiaries relative to other companies
of similar size and scope in the same industry.

 

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“Acquired Company Organizational Documents” has the meaning set forth in
Section 3.1(b).

“Acquired Company Permits” has the meaning set forth in Section 3.17.

“Acquired Company Plans” has the meaning set forth in Section 3.15(a).

“Acquired Company Software Products” shall mean any and all Software distributed
or otherwise provided, directly or indirectly, by the Acquired Companies or
their Subsidiaries to their customers, including Software so distributed or
otherwise provided by the Acquired Companies or their Subsidiaries that is
embedded in hardware products sold by the Acquired Companies or their
Subsidiaries or their customers.

“Actions” has the meaning set forth in Section 3.13.

“ADCC” has the meaning set forth in the Preamble.

“ADCC Shares” has the meaning set forth in the Recitals.

“ADCC Stock Agreement” has the meaning set forth in Section 7.11.

“Additional Closing Payoff Indebtedness Amount” shall mean the amount, if any,
by which the Closing Payoff Indebtedness set forth in the Accepted Adjustment
Statement exceeds the Estimated Payoff Indebtedness.

“Additional Closing Transaction Expenses Amount” shall mean the amount, if any,
by which the Closing Transaction Expenses set forth in the Accepted Adjustment
Statement exceed the Estimated Transaction Expenses.

“Affiliate” shall mean with respect to any Person, any other Person that,
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person; for purposes of
this definition, “control” (including, with correlative meanings, the terms
“controlling”, “controlled by” and “under common control with”) as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract or otherwise.

“Affiliate Agreements” has the meaning set forth in Section 7.8.

“Agreement” has the meaning set forth in the Preamble.

“Allocation Statement” has the meaning set forth in Section 2.5(a).

“Ancillary Documents” shall mean, collectively, the Escrow Agreement, the Flow
of Funds Memorandum, the Retention Agreements and any certificates delivered
pursuant to ARTICLE IX.

“Antitrust Laws” has the meaning set forth in Section 7.2(b).

 

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“Applicable Law” shall mean the applicable provisions of (a) all constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Entities, including any
building, zoning, subdivision, health, safety and other land use statutes, laws,
codes, ordinances, rules, orders and regulations, (b) any consent, approval,
authorization, waiver, permit, grant, franchise, concession, agreement, license,
certificate, exemption, registration, clearance, declaration or filing with, or
report or notice to, any Governmental Entity, and (c) all orders, decisions,
directions, summons, rulings, demands, subpoenas, verdicts, writs, injunctions,
judgments, awards (including the award of any arbitrator to the extent
enforceable by a Governmental Entity) and decrees of or agreements with any
Governmental Entity.

“Approved Indemnification Claim” has the meaning set forth in Section 10.6(b).

“Basket Amount” has the meaning set forth in Section 10.4(a).

“Balance Sheet Date” has the meaning set forth in Section 3.5.

“Books and Records” shall mean all books and records, including all manuals,
data, data models, reports, surveys, invoices, customer and supplier lists and
reports, financial data and information, sales, distribution and purchase
correspondence, repair logs and other notebooks and logbooks, all original and
duplicate copies of the foregoing and computer Software and data in computer
readable and human readable form used to maintain such books and records
together with the media on which such software and data are stored and all
documentation relating thereto.

“Business Day(s)” shall mean each day that is not a Saturday, Sunday or other
day on which banking institutions located in New York, New York are authorized
or obligated by law or executive order to close.

“Business Facility” shall mean any property, including the land, the
improvements thereon, the groundwater thereunder and the surface water thereon,
(a) that is or at any time has been owned, operated, occupied, controlled or
leased by any Acquired Company or any of its Subsidiaries or (b) upon which any
of the Acquired Companies or any of their Subsidiaries currently performs or has
at any time performed any work under any Government Contract.

“Caruso Change in Control Agreement” has the meaning set forth in
Section 9.2(k).

“Caruso Severance Agreement” has the meaning set forth in Section 9.2(k).

“Cash On Hand” shall mean, as of the applicable time of measurement, the
aggregate cash balance of the Acquired Companies and their Subsidiaries, whether
positive or negative, including all cash, commercial paper, certificates of
deposit and other bank deposits, treasury bills, and all other cash equivalents
(in each case determined in accordance with GAAP) in all accounts of any of the
Acquired Companies and each of their Subsidiaries, but in all cases excluding
any Restricted Cash.

 

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“Closing” has the meaning set forth in Section 2.4.

“Closing Date” has the meaning set forth in Section 2.4.

“Closing Payoff Indebtedness” has the meaning set forth in Section 2.3(a).

“Closing Transaction Expenses” has the meaning set forth in Section 2.3(a).

“Closing Working Capital” shall mean, as of the applicable time of measurement,
an amount equal to: (i) the Minimum Cash Amount, plus (ii) the consolidated
current assets (excluding Cash On Hand, Restricted Cash and the current portion
of any assets relating to current and deferred income Taxes) of the Acquired
Companies and their Subsidiaries, minus (iii) the consolidated current
liabilities (excluding all Payoff Indebtedness, Transaction Expenses and the
current portion of any liabilities attributable to current and deferred income
Taxes) of the Acquired Companies and their Subsidiaries, determined in each case
in accordance with GAAP and in conformity with the same accounting methods,
policies, practices, and procedures, with consistent classification, judgments,
and estimation methodology, as were used by the Acquired Companies in preparing
the Company Financials. For the avoidance of doubt, the New Hancock Park Lease
shall be treated as an operating lease for purposes of the definition of
“Closing Working Capital” and the calculation of Closing Working Capital under
Section 2.3.

“Closing Working Capital Shortfall” shall mean the amount, if any, by which the
Target Net Working Capital exceeds the Closing Net Working Capital set forth in
the Accepted Adjustment Statement.

“Closing Working Capital Surplus” shall mean the amount, if any, by which the
Closing Net Working Capital set forth in the Accepted Adjustment Statement
exceeds the Target Net Working Capital.

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

“Company Balance Sheet” has the meaning set forth in Section 3.5.

“Company Customer” has the meaning set forth in Section 7.10(b).

“Company Financials” has the meaning set forth in Section 3.5.

“Company Interim Financials” has the meaning set forth in Section 3.5.

“Company Year-End Financials” has the meaning set forth in Section 3.5.

“Competing Transaction” has the meaning set forth in Section 7.12.

“Confidentiality Agreement” has the meaning set forth in Section 6.2.

“Continuing Employee” has the meaning set forth in Section 7.9(a).

“Contract” shall mean any loan agreement, mortgage, indenture, deed of trust,
lease, sublease, contract, covenant, plan, insurance policy or other agreement,
instrument, arrangement, obligation, understanding or commitment, permit,
concession, franchise or license, whether oral or written, expressed or implied.

 

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“Controlled Group” has the meaning set forth in Section 3.15(d).

“Corporation” has the meaning set forth in the Preamble.

“Corporation Shares” has the meaning set forth in the Recitals.

“Covered Person” has the meaning set forth Section 7.4(a).

“D&O Insurance” has the meaning set forth in Section 7.4(c).

“Disclosure Schedule” has the meaning set forth in the preamble of ARTICLE III.

“Disposal Site” shall mean a landfill, disposal site, or any real property other
than a Business Facility where Hazardous Materials used or generated by a
Business Facility have been disposed of or otherwise released into the
environment.

“Dispute Notice” has the meaning set forth in Section 10.6(b).

“Dispute Period” has the meaning set forth in Section 10.6(b).

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

“Effect” has the meaning set forth above in the definition of “Acquired Company
Material Adverse Effect.”

“Environmental Laws” shall mean all laws, rules, regulations, orders, treaties,
statutes, and codes promulgated by any Governmental Entity that require or
relate to the protection of human health, safety or the environment, including
any of the foregoing which prohibit, regulate or control any Hazardous Materials
or any Hazardous Materials Activity, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, the Federal Water Pollution Control Act, the Clean Air
Act, the Hazardous Materials Transportation Act, the Occupational Safety and
Health Act, the Clean Water Act, all as amended at any time.

“Environmental Permit” shall mean any Permit required to be obtained from any
Governmental Entity with respect to any Hazardous Materials Activity, business
or operation that is or was conducted by any Acquired Company or any of its
Subsidiaries at any Business Facility.

“Equity Interests” has the meaning set forth in the Recitals.

“Equityholders’ Representative” has the meaning set forth in Section 12.2.

“ERISA” has the meaning set forth in Section 3.15(a).

“Escrow Agent” has the meaning set forth in Section 2.2(b).

 

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“Escrow Agreement” has the meaning set forth in Section 2.2(b).

“Estimated Payoff Indebtedness” has the meaning set forth in Section 2.2(c).

“Estimated Payoff Indebtedness Schedule” has the meaning set forth in
Section 2.2(c).

“Estimated Transaction Expense Schedule” has the meaning set forth in
Section 2.2(d).

“Estimated Transaction Expenses” has the meaning set forth in Section 2.2(d).

“FCPA” has the meaning set forth in Section 3.16(c).

“Final Purchase Price” has the meaning set forth in Section 2.2(a)(i).

“Flow of Funds Memorandum” has the meaning set forth in Section 9.2(j).

“Foreign Benefit Plans” has the meaning set forth in Section 3.15(b).

“GAAP” shall mean United States generally accepted accounting principles,
consistently applied.

“Government Bid” means any quotation, bid or proposal by any of the Acquired
Companies or any of their Subsidiaries that, if accepted or awarded, would lead
to a Government Contract.

“Government Contract” shall mean any Contract, task or delivery order, blanket
purchase agreement, basic agreement or binding obligation (whether performed or
not) between any of the Acquired Companies or any of their Subsidiaries, on one
hand, and a Governmental Entity (or a prime contractor of a Governmental
Entity), on the other.

“Governmental Entity” shall mean any federal, state, provincial or local, U.S.
or foreign government, court, arbitrational tribunal, administrative agency,
department or commission or other governmental or regulatory authority, agency
or instrumentality.

“Guarantee” shall mean (a) any guarantee of the payment or performance of any
Indebtedness or other obligation of any other Person, including bonds and
letters of credit provided in respect of an obligation of another Person,
(b) any other arrangement whereby credit is extended to one obligor on the basis
of any Contract of another Person (i) to pay the Indebtedness of such obligor,
(ii) to purchase any Indebtedness owed by such obligor, or (iii) to maintain the
capital, working capital, solvency or general financial condition of such
obligor (including any agreement of one Person to maintain the solvency, net
worth or financial condition of another Person), and (c) any liability as a
venturer in a joint venture in respect of Indebtedness or other obligations of
such partnership or venture.

“Hazardous Material” shall mean any material, chemical, emission, substance,
waste, toxic substance, hazardous substance, radioactive material, asbestos,
petroleum and

 

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petroleum product and any other material which is regulated by any Governmental
Entity as “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous substance,” “restricted hazardous waste,” “contaminant,”
“toxic waste,” “toxic substance,” “radioactive,” or poses a threat to worker
safety, human health or the environment.

“Hazardous Materials Activity” shall mean the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal, remediation, release,
handling, exposure to, sale, disposal, or distribution of any Hazardous Material
or any product or waste containing any Hazardous Material at any Business
Facility or, by or at the direction of any of the Acquired Companies or any of
their Subsidiaries.

“HSR Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

“Indebtedness” shall mean: (a) indebtedness for borrowed money, whether secured
or unsecured or for the extension of credit (including principal and interest
thereon); (b) any deferred obligations for the purchase of property or services
(other than ordinary course trade payables and accrued expenses); (c) all
indebtedness secured by a purchase money mortgage or other Lien to secure all or
part of the purchase price of property subject to such Lien, (d) all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of such Person or lender under such agreement in
the event of default are limited to repossession or sale of such property);
(e) all obligations for the reimbursement of any obligor on any letter of credit
or similar credit transaction securing obligations of a Person of a type
described in clauses (a), (b), (c) and (d) above and clauses (f), (g) and
(h) below, but only to the extent of the obligation secured; (f) all obligations
to pay rent or other amounts under any lease of real or personal property, which
obligations are or would be required to be classified and accounted for as
capital or financial leases in accordance with GAAP, in an amount equal to the
capitalized amount thereof determined in accordance with GAAP (other than any
such obligations under the New Hancock Park Lease in the event that it should be
treated as a capital or financial lease in accordance with GAAP); (g) all
prepayment premiums and penalties, and any other fees, breakage charges,
expenses, indemnities and other amounts payable as a result of the prepayment or
discharge of any other item of Indebtedness; (h) the cash portion of the
settlement of Contracts relating to any hedging, swap, derivative or other
similar transactions; (i) all Guarantees of obligations of other Persons of the
type referred to in clauses (a) through (h); (j) any compensation payments
(including retention bonuses and severance) owed at the time of the Closing by
any Acquired Company, on the one hand, to any current or former stockholder,
equity holder, director, officer or employee of any Acquired Company, on the
other hand, solely in connection with, or as a result of, the transactions
contemplated by this Agreement; and (k) obligations under any foreign exchange
contracts. Notwithstanding the foregoing, the term “Indebtedness” shall not
include any intercompany liability or obligations owed by any Acquired Company
or any Subsidiary of an Acquired Company to any other Acquired Company or
Subsidiary of an Acquired Company. For purposes of clarification, the parties
acknowledge and agree that the New Hancock Park Lease (and all obligations to
pay rent or other amounts thereunder) shall not be considered indebtedness for
purposes of this definition in the event that the New Hancock Park Lease is
treated as a capital or financial lease and not as an operating lease.

 

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“Indemnification Escrow Account” has the meaning set forth in Section 2.2(b).

“Indemnification Escrow Amount” has the meaning set forth in Section 2.2(b).

“Indemnified Party” has the meaning set forth in Section 10.6(a).

“Indemnifying Party” has the meaning set forth in Section 10.6(a).

“Initial Purchase Price” has the meaning set forth in Section 2.2(a)(i).

“Insurance Cap” has the meaning set forth in Section 7.4(c).

“Intellectual Property” shall mean any or all of the following and all rights
arising out of or associated therewith, in each case, in any jurisdiction in the
world: (a) patents and patent applications (including reissues, reexaminations,
divisions, renewals, extensions, provisionals, continuations and
continuations-in-part), inventions (whether or not patentable and whether or not
reduced to practice), invention or patent disclosures and inventor’s
certificates; (b) trade secrets, proprietary information and know-how, including
methods, processes, designs, drawings, technical data and customer lists;
(c) original works of authorship (whether copyrightable or not), copyrights,
copyright registrations and copyright applications; (d) industrial designs and
all registrations and applications thereof; (e) Marks; (f) Software; (g) moral
and economic rights of authors and inventors, however denominated; and (h) all
other intellectual property or industrial property rights.

“Inventory” shall mean all inventory to the extent used or held for use by the
Acquired Businesses or produced in the operation or conduct of the Acquired
Businesses, including raw materials, work-in-progress, finished goods and spare
parts, each as determined in accordance with GAAP.

“Knowledge of the Acquired Companies” shall mean the actual knowledge of David
Miller, Jeffery Pine, Kim Little, Peter Mott, Chris Daly and/or Dominick Caruso
after (i) having made a reasonable effort to ascertain the fact in question by
means of an inquiry directed to such managers, directors, officers, employees
and advisors to any of the Acquired Companies or any of their Subsidiaries as
would be reasonably likely to have information relating to the fact in question,
and (ii) conducting a reasonable investigation of any relevant information
received by David Miller, Jeffery Pine, Kim Little, Peter Mott, Chris Daly
and/or Dominick Caruso from such inquiry if, but only if and to the extent that,
it is reasonably prudent to conduct such investigation in light of any such
relevant information.

“Leased Real Property” has the meaning set forth in Section 3.9(b).

“Leases” has the meaning set forth in Section 3.9(b).

“Licensed IP” shall mean Intellectual Property licensed to the Acquired
Companies or their Subsidiaries pursuant to any of the Material Contracts set
forth on Section 3.12(a) of the Disclosure Schedule.

 

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“Lien” shall mean any lien (including for Taxes), pledge, hypothecation, right
of others, ownership interest of other Persons, charge, claim, mortgage,
security interest, encumbrance, lease, sublease, license, occupancy agreement,
adverse claim or interest, easement, covenant, encroachment, burden, title
defect, title retention agreement, voting trust agreement, interest, equity,
option, lien, right of first refusal, charge or other restrictions or
limitations of any nature whatsoever, including such as may arise under any
Contract.

“LLC” has the meaning set forth in the Preamble.

“LLC Interests” has the meaning set forth in the Recitals.

“LLC Operating Agreement” has the meaning set forth in Section 7.11.

“Loss” and “Losses” have the meanings set forth in Section 10.2.

“Made Available” shall mean that the information referred to (a) has been
actually delivered (whether by email transmission or hand delivery) to Purchaser
or to its outside legal counsel or (b) has been posted in a “data room” (virtual
or otherwise) established by the Acquired Companies and to which Purchaser has
access, in each case, at least two (2) Business Days prior to the execution of
this Agreement (or such other period prior to the execution of this Agreement as
may be mutually agreed upon by the Purchaser and the Acquired Companies).

“Marks” shall mean any and all trademarks, service marks, certification marks,
trade names, corporate names, domain names, logos, trade dress or other indicia
of source or origin, including unregistered and common law rights in the
foregoing, and all registrations of and applications to register the foregoing,
in each case in any jurisdiction throughout the world.

“Material Contract” has the meaning set forth in Section 3.12(a).

“Material Customers” has the meaning set forth in Section 3.24(a).

“Material Suppliers” has the meaning set forth in Section 3.24(b).

“Minimum Cash Amount” shall mean $1,000,000 cash (other than Restricted Cash)
held in one or more bank accounts of the Acquired Companies.

“Multiemployer Plan” shall mean a multiemployer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA.

“New Hancock Park Lease” shall mean that certain Standard Property Lease, dated
as of May 31, 2013, by and between the LLC and Hancock Park Development, LLC.

“New Plans” has the meaning set forth in Section 7.9(a).

“Objection Notice” has the meaning set forth in Section 2.3(b).

 

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“Open Source Software” shall mean Software that is “open source” or “copyleft”
as those terms are commonly understood in the software industry, including any
Software that is: (a) distributed pursuant to a license or other agreement that
requires licensees to disclose or otherwise make available the source code for
any Software incorporating or using such licensed Software or developed using
such licensed Software, or to distribute or make available such software on
terms specified in such license or agreement; (b) subject to the GNU General
Public License (GPL) or the GNU Lesser General Public License (LGPL) (in each
case, any version thereof) or any license approved by the Open Source Initiative
(as currently set forth at http://opensource.org/licenses/index.html); or
(c) listed in the Free Software Directory maintained by the Free Software
Foundation (in cooperation with the United Nations Education, Scientific and
Cultural Organization (UNESCO)) (as currently set forth at
http://directory.fsf.org/).

“Open Source Software License” shall mean a Contract pursuant to which any Open
Source Software is licensed or distributed.

“Outside Time” has the meaning set forth in Section 11.1(b).

“Parent” has the meaning set forth in the Preamble.

“Payoff Indebtedness” shall mean (i) the Indebtedness of the Acquired Companies
and their Subsidiaries described in clauses (a), (b), (c), (d), (g), (h) and
(j) of the above definition of “Indebtedness” and (ii) amounts constituting
intercompany accounts payable owing from the LLC to the Corporation, in each
case, which shall be repaid in full and extinguished at or prior to the Closing.

“Per Diem Taxes” has the meaning set forth in Section 8.3(c).

“Permits” shall mean all licenses, permits, franchises, registrations,
approvals, authorizations, certifications, permissions, directives,
qualifications, consents, waivers, exemptions, releases, variances or orders of,
or filings, notices or recordings with, or issued by, any Governmental Entity.

“Permitted Liens” shall mean (a) Liens for Taxes, assessments and other charges
of Governmental Entities not yet due and payable or being contested in good
faith by appropriate proceedings for which collection or enforcement against the
property is stayed and an adequate reserve is included in the Company
Financials, (b) mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or
other like Liens arising or incurred in the ordinary course of business or by
operation of Applicable Law if the underlying obligations are not delinquent
and, if material, have been disclosed in writing to Purchaser, (c) with respect
to the Leased Real Property (i) zoning, entitlement, building and other land use
regulations imposed by Governmental Entities having jurisdiction over the Leased
Real Property which do not materially impair the continued use or operation of
the Leased Real Property to which they relate in the Acquired Businesses as
presently conducted and (ii) covenants, conditions, restrictions, rights-of-way,
easements and other similar matters of record which do not materially impair the
continued use or operation of the Leased Real Property to which they relate in
the Acquired Businesses as presently conducted, (d) other than with respect to
owned Real Property, Liens arising under original purchase conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business, and (e) minor imperfections of title that do not materially
impair the continued use or operation of the asset or property subject to any
such minor imperfection of title.

 

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“Person” shall mean an individual or entity, including a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a Governmental Entity
(or any department, agency, or political subdivision thereof).

“PPACA” has the meaning set forth in Section 3.15(n).

“Pre-Closing Period” has the meaning set forth in Section 6.1.

“Pre-Closing Tax Period” has the meaning set forth in Section 8.1(a).

“Products” has the meaning set forth in Section 3.26(a).

“Purchase Price Adjustment Amount” shall mean an amount equal to the Additional
Closing Payoff Indebtedness Amount, if any, plus the Additional Closing
Transaction Expenses Amount, if any, plus the Closing Working Capital Shortfall,
if any, or minus the Closing Working Capital Surplus, if any.

“Purchase Price Shortfall” shall mean the Purchase Price Adjustment Amount, if
negative.

“Purchase Price Surplus” shall mean the Purchase Price Adjustment Amount, if
positive.

“Purchaser” has the meaning set forth in the Preamble.

“Purchaser Adjustment Statement” shall have the meaning set forth in
Section 2.3(a).

“Purchaser Fundamental Representations” has the meaning set forth in
Section 10.1.

“Purchaser Indemnified Parties” has the meaning set forth in Section 10.2.

“R&W Insurance Policy” has the meaning set forth in Section 7.14.

“R&W Insurance Premiums” has the meaning set forth in Section 7.14.

“Representatives” has the meaning set forth in Section 12.3.

“Restricted Cash” means any cash, commercial paper, certificates of deposit or
other bank deposits, treasury bills, or any other cash equivalents, in each
case, designated, separated or otherwise earmarked for a particular use, purpose
or event and not available for general corporate use, including any deposits
held to secure workers compensation liabilities.

“Retention Agreement” has the meaning set forth in Section 9.2(l).

 

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“Scheduled Intellectual Property” has the meaning set forth in Section 3.11(a).

“Section 409A” has the meaning set forth in Section 3.15(j).

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Seller” and “Sellers” have the meanings set forth in the Preamble.

“Seller Fundamental Representations” has the meaning set forth in Section 10.1.

“Seller Indemnified Parties” has the meaning set forth in Section 10.3.

“Seller’s Knowledge” shall mean the actual knowledge of such Seller after due
inquiry and review of this Agreement and the Disclosure Schedule.

“Seller’s Proportionate Share” shall mean, with respect to each Seller, a
percentage that is equal to the percentage set forth opposite such Seller’s name
on Exhibit A under the heading “Seller’s Proportionate Share”.

“Services” has the meaning set forth in Section 3.26(a).

“Settlement Agreement” has the meaning set forth in Section 2.3(c).

“Special Customer Contracts Representations” has the meaning set forth in
Section 10.1.

“Software” shall mean all software of any type (including programs,
applications, middleware, interfaces, utilities, tools, drivers, firmware,
microcode, scripts, batch files, JCL files, instruction sets and macros) and in
any form (including source code, object code and executable code), databases,
associated data and related documentation, and all rights therein.

“Straddle Period” has the meaning set forth in Section 8.3(c).

“Subsidiary” or “Subsidiaries” shall mean, with respect to any Person (at any
particular time), any other Person (other than an individual) of which (at such
particular time), (a) if such other Person is a corporation or other business
entity in which capital stock is issued, a majority of the total voting power of
shares of capital stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other direct or indirect Subsidiaries of that Person or a
combination thereof, or (b) if such other Person is a limited liability company,
unlimited liability company, partnership, association, joint venture or other
business entity (other than a corporation), a majority of the limited liability
company, partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of
the other direct or indirect Subsidiaries of that Person or a combination
thereof and for this purpose, a Person or Persons will be deemed to have a
majority ownership interest in such a limited liability company, unlimited
liability company, partnership, association, joint venture or other business
entity (other than a corporation) if such Person or Persons will be allocated a
majority of limited liability

 

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company, unlimited liability company, partnership, association, joint venture or
other business entity gains or losses or will be or control any managing
director or general partner of such limited liability company, partnership,
association, joint venture or other business entity (other than a corporation).
For the purposes hereof, the term Subsidiary shall include all Subsidiaries of
such Subsidiary.

“Target Working Capital” shall mean an amount equal to (i) $11,500,000 less
(ii) the Minimum Cash Amount.

“Tax” or “Taxes” shall mean: all taxes, however denominated, including any
interest, penalties or additions to tax (including any underpayment penalties
for insufficient estimated tax payments) or other additional amounts that may
become payable in respect thereof (or in respect of a failure to file any tax
return when and as required), imposed by any Governmental Entity, which taxes
shall include, without limiting the generality of the foregoing, all income
taxes, payroll and employment taxes, withholding taxes (including withholding
taxes in connection with amounts paid or owing to any employee, independent
contractor, creditor, equity holder or other Person), unemployment insurance
taxes, social security (or similar) taxes, sales and use taxes, escheat and
unclaimed property taxes, excise taxes, franchise taxes, gross receipts taxes,
occupation taxes, real and personal property taxes, stamp taxes, value added
taxes, Transfer Taxes, profits or windfall profits taxes, licenses in the nature
of taxes, estimated taxes, severance taxes, duties (custom and others), workers’
compensation taxes, premium taxes, environmental taxes (including taxes under
Section 59A of the Code), disability taxes, registration taxes, alternative or
add-on minimum taxes, estimated taxes, and other fees, assessments, charges or
obligations of the same or of a similar nature.

“Tax Returns” has the meaning set forth in Section 3.8(a).

“Third Party Claim” has the meaning set forth in Section 10.6(a).

“Transaction Expenses” shall mean all fees, costs and expenses incurred by any
of the Acquired Companies or any of their Subsidiaries in connection with this
Agreement and the transactions contemplated hereby, including fees payable to
Governmental Entities, attorneys’, investment bankers’, accountants’ and
brokers’ fees and expenses. For the avoidance of doubt, the Transaction Expenses
shall include all such fees and expenses paid or payable to Bingham McCutchen
LLP and Stifel, Nicolaus & Company, Incorporated in connection with the
transactions contemplated by this Agreement.

“Transfer Taxes” shall mean all foreign, federal, state and local sales, use,
transfer, documentary transfer, excise, value-added, registration, recording,
direct and indirect real estate transfer, stamp or documentation Taxes, and
including any foreign non-resident stock sale Taxes, but excluding any Taxes
based on or attributable to gains arising by reason of the transactions
contemplated by this Agreement.

“WARN Act” has the meaning set forth in Section 3.18(d).

 

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ARTICLE II

PURCHASE AND SALE OF EQUITY INTERESTS; CLOSING

Section 2.1 Purchase and Sale. Subject to the terms set forth in this Agreement,
at the Closing, each Seller, severally and not jointly, shall sell, transfer and
deliver, free and clear of any and all Liens other than restrictions on transfer
arising under applicable securities laws, and Purchaser shall purchase, all of
the Equity Interests of such Seller.

Section 2.2 Purchase Price.

(a) Initial Purchase Price.

(i) The aggregate consideration payable by Purchaser to the Sellers at the
Closing for the purchase of the Equity Interests shall be an amount (the
“Initial Purchase Price”) equal to (A) $93,500,000, minus (B) the aggregate
amount of the Estimated Payoff Indebtedness as set forth on the Estimated Payoff
Indebtedness Schedule, minus (C) the aggregate amount of the Estimated
Transaction Expenses as set forth on the Estimated Transaction Expense Schedule,
minus (D) the Indemnification Escrow Amount, minus (E) $240,000, representing a
portion of the premium for the R&W Insurance Policy paid by Purchaser pursuant
to Section 7.14. The sum of the Initial Purchase Price paid and the
Indemnification Escrow Amount, as such sum may be adjusted in accordance with
Section 2.3 and Section 10.8, is referred to herein as the “Final Purchase
Price”.

(ii) At the Closing, Purchaser shall pay to each Seller an amount equal to such
Seller’s Proportionate Share of the Initial Purchase Price, in cash by wire
transfer of immediately available funds to such bank account(s) as shall be
designated in advance by such Seller in writing and set forth on the Flow of
Funds Memorandum.

(b) Escrow Deposits. At the Closing, the amount of $9,350,000 (the
“Indemnification Escrow Amount”) shall be deposited by Purchaser with JPMorgan
Chase Bank, N.A. (the “Escrow Agent”) to be held in an escrow account (the
“Indemnification Escrow Account”) to satisfy any indemnity obligations of the
Sellers payable out of the Indemnification Escrow Account pursuant to
Section 8.3 or ARTICLE X and to satisfy any obligations of the Sellers payable
out of the Indemnification Escrow Account pursuant to Section 2.3 to the extent
provided therein, in each case, pursuant to the terms and conditions of an
escrow agreement in the form attached hereto as Exhibit B (the “Escrow
Agreement”). The Indemnification Escrow Account established pursuant to the
Escrow Agreement shall be released to the Sellers and/or to Purchaser, as the
case may be, only in accordance with the terms of this Agreement and the Escrow
Agreement.

(c) Estimated Payoff Indebtedness. No more than five (5), but at least two (2),
Business Days prior to the Closing Date, the Equityholders’ Representative shall
deliver to Purchaser a schedule (the “Estimated Payoff Indebtedness Schedule”)
setting forth the Acquired Companies’ good faith estimate of the aggregate
amount of Payoff Indebtedness of the Acquired Companies and their Subsidiaries
that will be unpaid and outstanding as of immediately prior to the Closing and
the portion thereof to be paid to each holder of such Payoff Indebtedness (the
“Estimated Payoff Indebtedness”).

 

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(d) Estimated Transaction Expenses. No more than five (5), but at least two (2),
Business Days prior to the Closing Date, the Equityholders’ Representative shall
deliver to Purchaser a schedule (the “Estimated Transaction Expense Schedule”)
setting forth the Acquired Companies’ good faith estimate of the aggregate
amount of all Transaction Expenses that will be unpaid and outstanding as of
immediately prior to the Closing and the portion thereof to be paid to each
recipient of such Transaction Expenses (the “Estimated Transaction Expenses”).

Section 2.3 Post-Closing Purchase Price Adjustment.

(a) Within ninety (90) days after the Closing Date, Purchaser shall deliver to
the Equityholders’ Representative a certificate of the Purchaser signed by the
Purchaser’s Chief Financial Officer certifying on behalf of Purchaser (and not
individually) as to an unaudited statement (the “Purchaser Adjustment
Statement”) setting forth (i) the Closing Working Capital as of 11:59 p.m.,
Eastern Time, on the Closing Date determined in accordance with GAAP (except for
any permitted exceptions therefrom described in the definition of Closing
Working Capital) and in conformity with the same accounting methods, policies,
practices, and procedures, with consistent classification, judgments, and
estimation methodology, as were used by the Acquired Companies in preparing the
Company Financials, but, in any case, determined in accordance with GAAP,
(ii) Purchaser’s calculation of the Payoff Indebtedness outstanding as of
immediately prior to the Closing (the “Closing Payoff Indebtedness”), (iii) the
Purchaser’s calculation of all of the unpaid Transaction Expenses outstanding as
of immediately prior to the Closing (the “Closing Transaction Expenses”) and
(iv) the resulting adjustment to the Initial Purchase Price, if any, determined
in accordance with Section 2.3(f) below. The Purchaser Adjustment Statement
shall be prepared in a format consistent with the example set forth on Exhibit C
attached hereto.

(b) If the Equityholders’ Representative disputes any items included in the
Closing Working Capital, the Closing Payoff Indebtedness or the Closing
Transaction Expenses as calculated by Purchaser in the Purchaser Adjustment
Statement, the Equityholders’ Representative shall deliver to Purchaser written
notice of such dispute (the “Objection Notice”) within thirty (30) days of
receipt of the Purchaser Adjustment Statement, which shall list with reasonable
specificity the Equityholders’ Representative’s points of disagreement with the
Purchaser Adjustment Statement. The Equityholders’ Representative’s failure to
include any item listed on the Purchaser Adjustment Statement in the Objection
Notice shall be deemed an acceptance of such items and the Purchaser Adjustment
Statement shall be final and binding upon Purchaser and the Sellers with respect
to such items. The Equityholders’ Representative’s failure to provide an
Objection Notice within thirty (30) days after receipt of the Purchaser
Adjustment Statement shall be deemed an acceptance of such Purchaser Adjustment
Statement and, as such, the Purchaser Adjustment Statement shall be final and
binding upon Purchaser and the Sellers.

(c) If the Equityholders’ Representative delivers a timely Objection Notice, and
Purchaser and the Equityholders’ Representative are able to resolve the dispute
within thirty

 

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(30) days of Purchaser’s receipt of the Objection Notice (or such longer period
as Purchaser and the Equityholders’ Representative may agree), Purchaser and the
Equityholders’ Representative shall set forth the agreed upon Closing Working
Capital, the Closing Payoff Indebtedness and the Closing Transaction Expenses in
a written agreement signed by the Equityholders’ Representative and Purchaser (a
“Settlement Agreement”) and such Settlement Agreement shall be final and binding
upon Purchaser and the Sellers.

(d) If the Equityholders’ Representative delivers a timely Objection Notice and
Purchaser and the Equityholders’ Representative are unable to resolve such
dispute as provided for in Section 2.3(c) by mutual agreement within thirty
(30) days of Purchaser’s receipt of the Objection Notice (or such longer period
as Purchaser and the Equityholders’ Representative may agree), Purchaser and the
Equityholders’ Representative hereby agree that they shall promptly submit the
disputed matters to the Accountant to resolve such dispute. If issues are
submitted to the Accountant for resolution, Purchaser and the Equityholders’
Representative shall enter into a customary engagement letter with the
Accountant at the time the disputed matter is submitted to the Accountant. The
Equityholders’ Representative and Purchaser shall furnish, at their own expense,
to the Accountant and to each other a written statement of their position with
respect to each matter in dispute, and the Equityholders’ Representative and
Purchaser may deliver to the Accountant and to each other its response to the
other’s position on each such matter in dispute. With each submission, the
Equityholders’ Representative and Purchaser may also furnish to the Accountant
such other information and documents as they deem relevant or such other
information or documents as may be requested by the Accountant with appropriate
copies or notification being given to the other.

(e) Purchaser and the Equityholders’ Representative shall direct the Accountant
to resolve the disputed matters based on the materials submitted to it pursuant
to Section 2.3(d) within thirty (30) days following the submission of such
materials, and the Accountant shall not make any other determination or
undertake any independent discovery. In making such determination, the
Accountant shall act in its capacity as an expert in accounting and not as an
arbitrator and may only consider those items and amounts (and related items and
amounts) as to which Purchaser and the Equityholders’ Representative have
disagreed within the time periods and on the terms specified above and must
resolve the matter in accordance with GAAP (except for any permitted exceptions
therefrom described in the definitions of Closing Working Capital, Payoff
Indebtedness or Transaction Expenses) and in conformity with the same accounting
methods, policies, practices, and procedures, with consistent classification,
judgments, and estimation methodology, as were used by the Acquired Companies in
preparing the Company Financials, but, in any case, determined in accordance
with GAAP; provided, that the determination of the Accountant will neither be
more favorable to Purchaser than reflected in the Purchaser Adjustment
Statement, nor more favorable to the Sellers than reflected in the Objection
Notice. Purchaser and the Equityholders’ Representative shall cooperate with the
Accountant and promptly provide all documents and information reasonably
requested by the Accountant. In connection with its resolution of the dispute,
the Accountant shall deliver to Purchaser and the Equityholders’ Representative
a report (the “Accountant’s Report”) in which the Accountant shall determine
those items and amounts that are the subject of the dispute between Purchaser
and the Equityholders’ Representative. The Accountant’s Report shall set forth,
in reasonable detail, the Accountant’s determination with respect to each of the
disputed items in the Objection Notice, and a revised calculation of the Closing
Working Capital, the

 

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Closing Payoff Indebtedness or the Closing Transaction Expenses, as applicable,
if any, together with supporting calculations. All fees and expenses relating to
this work of the Accountant shall be borne by Purchaser, on one hand, and the
Sellers, on the other hand, in inverse proportion as they may prevail on the
matters resolved by the Accountant, which proportionate allocation shall also be
determined by the Accountant and be included in the Accountant’s Report. Any
such amounts that are to be borne by the Sellers shall be first paid by each
Seller in an amount equal to such Seller’s Proportionate Share of any such
amounts, and second, to the extent that any Seller does not make payment to the
Accountant of such amount owed to the Accountant by such Seller, through
distributions from the then remaining balance of the Indemnification Escrow
Account in accordance with this Agreement (including Section 10.5(a)) and the
Escrow Agreement. The Accountant’s Report shall be final and binding upon
Purchaser and the Sellers and shall be deemed a final arbitration award that is
binding on each of Purchaser and the Sellers and no party shall seek further
recourse to courts, other tribunals or otherwise, other than to enforce the
Accountant’s Report.

(f) The final determination of the Closing Working Capital, the Closing Payoff
Indebtedness and the Closing Transaction Expenses either through the
Equityholders’ Representative’s failure to timely deliver an Objection Notice
pursuant to Section 2.3(b), the entry into a Settlement Agreement pursuant to
Section 2.3(c) or the delivery of an Accountant’s Report pursuant to
Section 2.3(e) shall be referred to as the “Accepted Adjustment Statement.” If
there is a Purchase Price Surplus, then the Equityholders’ Representative, on
behalf of the Sellers, shall pay to Purchaser, within three (3) Business Days
following the determination of the Accepted Adjustment Statement, cash in the
amount of such difference by wire transfer of immediately available funds to an
account designated in writing by Purchaser. If there is a Purchase Price
Shortfall, then (i) Purchaser shall pay, within three (3) Business Days
following the determination of the Accepted Adjustment Statement, cash in the
amount of such difference, by wire transfer of immediately available funds to
such account(s) designated by the Equityholders’ Representative and
(ii) promptly upon receipt of such funds, the Equityholders’ Representative
shall distribute such funds to each Seller in an amount equal to such Seller’s
Proportionate Share of the Purchase Price Shortfall. All amounts owing to
Purchaser pursuant to this Section 2.3(f) shall be first paid by each Seller in
an amount equal to such Seller’s Proportionate Share of any such amounts, and
second, to the extent that any Seller does not make payment to Purchaser of such
amount owed to Purchaser by such Seller, through distributions from the then
remaining balance of the Indemnification Escrow Account in accordance with this
Agreement (including Section 10.5(a)) and the Escrow Agreement.

(g) The Equityholders’ Representative and its accountants, lawyers and
representatives shall be given reasonable access during regular business hours
to (and shall be allowed to make copies of) the relevant Books and Records of
the Acquired Companies and their Subsidiaries and to applicable personnel of the
Acquired Companies and their Subsidiaries reasonably requested by such persons,
in each case for the sole purpose of their review of the final determination of
the Closing Working Capital pursuant to this Section 2.3.

Section 2.4 Closing. The closing (the “Closing”) of the purchase and sale of the
Equity Interests hereunder shall take place on the third (3rd) Business Day
following the date on which all of the conditions set forth in ARTICLE IX of
this Agreement (excluding those conditions which by their nature are to be
satisfied as part of the Closing, but subject to the

 

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satisfaction or waiver of such conditions) have been satisfied or waived, at the
offices of Jenner & Block LLP, 353 N. Clark Street, Chicago, Illinois 60654, or
at such other place, time or date as the parties may mutually agree (the date on
which the Closing actually occurs, the “Closing Date”). The Closing shall be
deemed effective for all purposes at 11:59 p.m. (Eastern Time) on the Closing
Date.

Section 2.5 Allocation of Purchase Price.

(a) For Tax purposes, Purchaser and the Sellers shall allocate the Final
Purchase Price among the LLC Interests purchased by the Purchaser (excluding the
LLC Interests held by the Corporation), the Corporation Shares purchased by the
Purchaser (excluding the Corporation Shares held by ADCC), the ADCC Shares
purchased by the Purchaser, and the covenants of the Sellers set forth in
Section 7.10, as set forth on Section 2.5 of the Disclosure Schedule. Within
ninety (90) days after the completion of the adjustment of the Initial Purchase
Price described in Section 2.3, Purchaser shall prepare and provide to the
Equityholders’ Representative Purchaser’s proposed allocation of the Final
Purchase Price as of such time , consistent with the preceding sentence (the
“Allocation Statement”).

(b) The Equityholders’ Representative shall review the Allocation Statement and,
to the extent the Equityholders’ Representative in good faith disagrees with the
content of the Allocation Statement, the Equityholders’ Representative shall,
within twenty (20) days after receipt of the Allocation Statement, provide
written notice to Purchaser of such disagreement or in the absence of such a
notice within such time frame shall be deemed to have indicated its concurrence
therewith. In the event of a properly noticed disagreement, the Equityholders’
Representative and Purchaser shall attempt in good faith to resolve any such
disagreement. If the Equityholders’ Representative and Purchaser are unable to
reach a good faith agreement as to the content of the Allocation Statement
within sixty (60) days after delivery of the Allocation Statement described in
Section 2.5(a), the Equityholders’ Representative and Purchaser shall each use
its own allocation statement consistent with its own allocation of the Final
Purchase Price.

(c) If Purchaser and the Equityholders’ Representative agree on the Allocation
Statement or any modification thereof, Purchaser and the Equityholders’
Representative shall report the allocation of the Final Purchase Price for Tax
purposes in a manner consistent with such Allocation Statement or modification
and shall act in accordance with such Allocation Statement in the preparation
and timely filing of their respective income Tax Returns. Purchaser and the
Equityholders’ Representative agree to promptly provide the other party with any
additional information and reasonable assistance required to compute Taxes
arising in connection with (or otherwise affected by) the transactions
contemplated by this Agreement.

(d) Purchaser and the Equityholders’ Representative shall promptly inform one
another in writing of any challenge by any taxing authority to any purchase
price allocation or other determination made pursuant to this Section 2.5 and
agree to consult with and keep one another informed with respect to the status
of, and any discussion, proposal or submission with respect to, any such
challenge.

 

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ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE ACQUIRED COMPANIES

Except as set forth in the disclosure schedule delivered by the Acquired
Companies and Sellers to Purchaser on the date hereof (the “Disclosure
Schedule”), which Disclosure Schedule is arranged in sections and subsections
corresponding to the numbered and lettered sections and subsections contained in
this Agreement and which disclosure in any section or paragraph of the
Disclosure Schedule shall qualify the corresponding section or subsection in
this ARTICLE III other than Section 3.12(d) (it being understood and hereby
agreed that, except with respect to Section 3.12(d), any disclosure in the
Disclosure Schedule relating to one section or subsection shall also apply to
any other sections and subsections if and to the extent that it is reasonably
apparent on the face of such disclosure that such disclosure also relates to
such other sections or subsections), the Acquired Companies jointly and
severally represent and warrant to Purchaser as of the date hereof and as of the
Closing Date (unless the particular statement speaks expressly as of another
date, in which case as of such other date), as follows:

Section 3.1 Organization, Standing and Power.

(a) Each of the Acquired Companies and each of their respective Subsidiaries
(i) is an entity duly incorporated or organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation or
organization as set forth in Section 3.1(a) of the Disclosure Schedule, (ii) has
all requisite power and authority to own, lease, license and operate its
properties and assets and to carry on its business as now being conducted, and
(iii) is duly qualified or licensed to do business and is in good standing as a
foreign entity in each jurisdiction in which the character of the properties and
assets it owns, operates, leases or subleases or the nature of its activities
makes such qualification or licensing necessary, except for those jurisdictions
where the failure to be so qualified, licensed or in good standing would not
have an Acquired Company Material Adverse Effect.

(b) Each of the Acquired Companies and each of their respective Subsidiaries has
delivered or Made Available to Purchaser: (i) a complete and accurate copy of
its articles of organization, operating agreement, certificate of incorporation,
bylaws and any similar governing documents, each as amended to date (together,
the “Acquired Company Organizational Documents”), and each such instrument is in
full force and effect and no other organizational documents are applicable to or
binding upon such Acquired Company or such Subsidiary of an Acquired Company;
and (ii) complete and accurate copies of the resolutions and records of
proceedings of all meetings of, and actions taken by, the holders of Equity
Interests, the manager, the board of directors, the board of managers and any
other similar governing person or body of each of the Acquired Companies in the
last three (3) years. Section 3.1(b) of the Disclosure Schedule sets forth a
complete and accurate list of all Acquired Company Organizational Documents.
Since the date that the Acquired Company Organizational Documents and such
resolutions and records of such proceedings were delivered or Made Available to
Purchaser, there have been no changes, amendments, alterations or additions to
such documents. None of the Acquired Companies nor any of their respective
Subsidiaries is in violation in any material respect of any of the provisions of
its respective Acquired Company Organizational Documents.

 

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(c) Section 3.1(c) of the Disclosure Schedule sets forth a complete and accurate
list of the jurisdiction(s) in which each of the Acquired Companies and their
Subsidiaries is qualified to do business as a foreign corporation.

Section 3.2 Capitalization; Title to Equity Interests.

(a) The LLC Interests comprise the only authorized and/or issued equity
interests of the LLC, the Corporation Shares comprise the only authorized and/or
issued equity interests of the Corporation and the ADCC Shares comprise the only
authorized and/or issued equity interests of ADCC. All of the outstanding Equity
Interests (i) have been duly authorized and validly issued, (ii) are fully paid
and nonassessable, and (iii) except as set forth in the LLC Operating Agreement,
are not subject to, and were not issued in violation of, any preemptive rights
or rights of first refusal or first offer, subscription right or any similar
right.

(b) The Equity Interests set forth on Section 3.2(b) of the Disclosure Schedule
constitute all of the outstanding equity interests of the Acquired Companies.
The Corporation and ADCC own good, valid and marketable title to the number and
percentage of Equity Interests set forth opposite their respective names on
Section 3.2(b) of the Disclosure Schedule, free and clear of any and all Liens.
The Sellers, the Corporation and ADCC own of record all of the outstanding
Equity Interests of the Acquired Companies.

(c) There are no outstanding or authorized equity appreciation, phantom equity
interests, profit participation or similar rights with respect to any of the
Acquired Companies, nor are there any voting trusts, proxies, member agreements
or any other agreements or understandings with respect to the voting,
registration, sale or transfer of any Equity Interests of the Acquired Companies
other than the LLC Operating Agreement. There are no options, warrants or other
rights to subscribe for or purchase any Equity Interests of any Acquired Company
or securities convertible into or exchangeable for, or that otherwise confer on
the holder any right to acquire, any equity interests of any Acquired Company.

(d) There are no preemptive rights or rights of first refusal or first offer
(other than as set forth in the LLC Operating Agreement) nor are there any
Contracts (other than the LLC Operating Agreement and this Agreement) or
restrictions to which any Acquired Company is a party or by which any of the
Acquired Companies is bound relating to any Equity Interests, whether or not
outstanding. None of the Acquired Companies currently maintains, nor does any
Acquired Company have any ongoing liability for, any equity option plan or any
other plan or agreement providing for equity compensation of any Person. All of
the outstanding Equity Interests have been granted, offered, sold and issued in
compliance in all material respects with all Applicable Laws to which the
applicable Acquired Company is subject to or bound.

(e) No distributions are payable with respect to any of the Equity Interests in
an amount that would prevent the Acquired Companies from having the Minimum Cash
Amount as of the Closing.

Section 3.3 Subsidiaries; Investments.

(a) Section 3.3(a) of the Disclosure Schedule sets forth a complete and accurate
list of each Subsidiary of each Acquired Company and all other Persons in which
such

 

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Acquired Company or any of its Subsidiaries owns, directly or indirectly, any
equity interests or otherwise controls, directly or indirectly, and such list
sets forth the name, the jurisdiction of organization, the authorized and
outstanding equity interests and the record and beneficial ownership of the
equity interests of any such Subsidiary and any such other Person.

(b) All of the outstanding equity interests of each Subsidiary of the Acquired
Companies (i) have been duly and validly issued, (ii) are fully paid and
nonassessable, (iii) were not issued in violation of any preemptive rights or
rights of first refusal or first offer and (iv) are owned beneficially and of
record by the respective Acquired Company. There are no outstanding or
authorized equity appreciation, phantom equity interests, profit participation
or similar rights with respect to any Subsidiary of any Acquired Company, nor
are there any voting trusts, proxies, member agreements or any other agreements
or understandings with respect to the voting, registration, sale or transfer of
any equity interests of any Subsidiary of any Acquired Company.

(c) There are no options, warrants or other rights to subscribe for or purchase
any equity interests of any Subsidiary of any Acquired Company, and there are no
securities convertible into or exchangeable for, or that otherwise confer on the
holder any right to acquire, any equity interests of any Subsidiary of any
Acquired Company. There are no preemptive rights or rights of first refusal or
first offer, nor are there any Contracts or restrictions to which any Subsidiary
of any Acquired Company is a party or by which any Subsidiary of any Acquired
Company is bound, relating to any equity interests of such Subsidiary, whether
or not outstanding. No Subsidiary of any Acquired Company currently maintains,
nor does any Subsidiary of any Acquired Company have any ongoing liability for,
any equity option plan or any other plan or agreement providing for equity
compensation of any Person. All of the equity interests of each Subsidiary of
the Acquired Companies issued and outstanding have been granted, offered, sold
and issued in compliance in all material respects with all Applicable Laws to
which such Subsidiary is subject to or bound.

Section 3.4 Authority; Binding Agreement; No Conflict.

(a) Each of the Acquired Companies has the requisite power, authority and
capacity to execute and deliver this Agreement and the Ancillary Documents to
which it is a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions to be consummated by it under this Agreement and the
Ancillary Documents to which it is a party. The execution, delivery and
performance of this Agreement and the Ancillary Documents to which any of the
Acquired Companies is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all requisite
action of each such Acquired Company. No other action or proceeding on the part
of any Acquired Company is necessary to authorize the execution, delivery and
performance of this Agreement or any Ancillary Document to which any of the
Acquired Companies is a party, or the consummation of the transactions
contemplated hereby and thereby.

(b) This Agreement has been duly executed and delivered by each of the Acquired
Companies, and each Ancillary Document to which any of the Acquired Companies is
a party, when executed and delivered by such Acquired Company, will be duly
executed and delivered by such Acquired Company. This Agreement constitutes (and
each of the Ancillary

 

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Documents to which any Acquired Company is a party, when executed, will
constitute) (assuming, in each case, the due authorization, execution and
delivery by each other party thereto) a legal, valid and binding agreement of
each Acquired Company party thereto, enforceable against such Acquired Company
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors’ rights generally and
the exercise of judicial discretion in accordance with general equitable
principles.

(c) The execution, delivery and performance of this Agreement and the Ancillary
Documents to which any of the Acquired Companies or any Seller is a party and
the consummation of the transactions contemplated hereby and thereby by each of
the Acquired Companies and the Sellers party thereto, do not and will not
(i) violate or conflict with the Acquired Company Organizational Documents,
(ii) subject to compliance with the applicable requirements of the HSR Act and
any other applicable Antitrust Laws, result in any failure to comply in all
material respects with any Applicable Laws to which the Acquired Companies, any
of their Subsidiaries, any Seller or any assets of the Acquired Companies or any
of their Subsidiaries is subject or may be bound or any Acquired Company Permit
or (iii) conflict with, or result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise to a
right of termination, cancellation, modification, notice or acceleration of any
obligation or loss of any benefit) under, require a consent, notice or waiver
under, require the payment of a penalty or increased liabilities, fees or the
loss of a benefit under or result in the imposition of any Lien on the Acquired
Companies’ or any of their respective Subsidiaries’ assets under, any of the
terms, conditions or provisions of any Contract to which any of the Acquired
Companies or any of their respective Subsidiaries is a party or is otherwise
bound.

(d) No material Permit, Action, concession of, or registration, declaration,
notice or filing with, any Governmental Entity is required by or with respect to
the Acquired Companies, any of their Subsidiaries or any Seller in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except for the pre-merger
notification requirements of the HSR Act and any other applicable Antitrust
Laws.

Section 3.5 Financial Statements. Section 3.5(a) of the Disclosure Schedule sets
forth complete and accurate copies of (a) (i) the audited consolidated balance
sheets of the LLC and its Subsidiaries as of each of the fiscal years ended
December 31, 2010, December 31, 2011 and December 31, 2012, and the related
audited consolidated statements of operations and audited consolidated
statements of cash flows for the twelve (12) month periods then ended, including
any related notes, schedules and other supplementary information (ii) the
unaudited consolidated balance sheets of the Corporation and its Subsidiaries as
of each of the fiscal years ended June 30, 2011, June 30, 2012 and June 30,
2013, and the related unaudited consolidated statements of operations and
unaudited consolidated statements of cash flows for the twelve (12) month
periods then ended, and (iii) the unaudited consolidated balance sheets of ADCC
and its Subsidiaries as of each of the fiscal years ended December 31,
2010, December 31, 2011 and December 31, 2012, and the related unaudited
consolidated statements of operations and unaudited consolidated statements of
cash flows for the twelve (12) month periods then ended, (such financial
statements described in this clause (a), collectively, the “Company Year-End
Financials”), and (b) the unaudited consolidated balance sheet of the LLC and
its Subsidiaries,

 

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the unaudited consolidated balance sheet of the Corporation and its Subsidiaries
and the unaudited consolidated balance sheet of ADCC and its Subsidiaries
(collectively, the “Company Balance Sheet”), in each case, as of October 31,
2013 (the “Balance Sheet Date”) and the related unaudited consolidated
statements of operations and unaudited consolidated statements of cash flows for
the ten months then ended, in the case of the LLC and its Subsidiaries and ADCC
and its Subsidiaries, and for the four months then ended in the case of the
Corporation and its Subsidiaries (collectively, the “Company Interim
Financials”). The Company Year-End Financials and the Company Interim Financials
(collectively referred to as the “Company Financials”) have been prepared from,
and are in accordance with, (x) the Books and Records of the Acquired Companies
and their Subsidiaries, which Books and Records are complete and accurate in all
material respects, and (y) GAAP consistently applied throughout the periods
indicated (subject to (i) normal year-end adjustments that are not, individually
or in the aggregate, material and (ii) the treatment of the New Hancock Park
Lease as an operating lease rather than as a capital or financial lease, and
except that the unaudited Company Year-End Financials and the Company Interim
Financials do not contain notes and other presentation items that may be
required by GAAP). The Company Financials present fairly, in all material
respects, the financial condition, operating results and cash flows of the
Acquired Companies and their Subsidiaries as of the dates and during the periods
indicated therein (subject to the treatment of the New Hancock Park Lease as an
operating lease rather than as a capital or financial lease).

Section 3.6 No Undisclosed Liabilities. None of the Acquired Companies nor any
of their respective Subsidiaries have any liabilities or obligations, nor at the
Closing will any of the Acquired Companies or their respective Subsidiaries have
any liabilities or obligations, whether known, absolute, accrued, contingent or
otherwise and whether due or to become due, other than (a) liabilities
disclosed, recorded or otherwise reserved against in the Company Balance Sheet,
(b) liabilities incurred in the ordinary course of business consistent with past
practices since the Balance Sheet Date, (c) Transaction Expenses, if any,
incurred by or on behalf of any Acquired Company or any Subsidiary of an
Acquired Company, all of which will be paid in full at or prior to the Closing,
(d) liabilities or obligations (including, without limitation, Indebtedness)
that are taken into account for purposes of determining or calculating the
Initial Purchase Price or the Final Purchase Price pursuant to, and in
accordance with, the provisions of this Agreement, (e) liabilities or
obligations of any of the Acquired Companies and their Subsidiaries under any
and all applicable Contracts, Acquired Company Plans and Permits that are in
effect on the date of this Agreement or that are entered into or obtained at any
time after the date of this Agreement in the ordinary course of business (but
only to the extent that such liabilities or obligations do not consist of any
liability or obligation arising from any default or breach of by any of the
Acquired Companies and their Subsidiaries of any of their respective obligations
under any of such Contracts, Acquired Company Plans or Permits) and (f) any and
all intercompany liability or obligations owed by any Acquired Company or any
Subsidiary of an Acquired Company to any other Acquired Company or Subsidiary of
an Acquired Company; provided, however, that nothing in this Section 3.6 or set
forth in Section 3.6 of the Disclosure Schedule shall limit or qualify the
representations and warranties set forth in Section 3.12(d).

Section 3.7 Absence of Certain Changes or Events. Since the Balance Sheet Date,
the Acquired Companies and their Subsidiaries have conducted their respective
businesses only in the ordinary course of business consistent with past
practice. During the period commencing on the Balance Sheet Date and ending on
the date of this Agreement, there has not been any Effect

 

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(either individually or in the aggregate) that has had or is reasonably likely
to result in an Acquired Company Material Adverse Effect. During the period
commencing on the Balance Sheet Date and ending on the date of this Agreement,
(a) none of the Acquired Companies nor any of their Subsidiaries has taken any
action which, if taken as of or after the date hereof, would require the consent
of Purchaser under Section 6.1 and (b) none of the Acquired Companies nor any of
their Subsidiaries has suffered any material damage, destruction or loss
(whether or not covered by insurance).

Section 3.8 Tax. Each of the Acquired Companies and each of their Subsidiaries
has timely filed (or had filed on its behalf) all federal, state, local and
foreign returns, estimates, information statements and reports (including
amendments thereto) relating to any and all Taxes (“Tax Returns”) required to
have been filed by it, and all such Tax Returns are true, correct and complete
in all respects. All Taxes (whether or not shown on any such Tax Return) of each
of the Acquired Companies and each of their Subsidiaries due and payable have
been paid when due (including installment payments of Taxes). Section 3.8(a) of
the Disclosure Schedule contains a complete and accurate list of all
jurisdictions in which Tax Returns are filed by or with respect to any of the
Acquired Companies and each of their Subsidiaries.

(b) As of the date of this Agreement, no deficiencies for any Taxes have been
asserted or assessed, or to the Knowledge of the Acquired Companies, proposed,
against any of the Acquired Companies or any of their Subsidiaries, and none of
the Acquired Companies, nor any of their Subsidiaries has executed any
outstanding waiver of any statute of limitations on, or extending the period for
the assessment or collection of, any Tax of the Acquired Companies or any of
their Subsidiaries.

(c) Each of the Acquired Companies and each of their Subsidiaries have timely
withheld and timely paid over to the appropriate Tax authority all Taxes that
they are required to have withheld from amounts paid or owing to any employee,
independent contractor, creditor, or other third party.

(d) To the Knowledge of the Acquired Companies, no audit or other examination of
any Tax Return of any of the Acquired Companies or any of their Subsidiaries is
presently in progress, and none of the Sellers, the Acquired Companies nor any
of their Subsidiaries has been notified in writing of any request for such an
audit or other examination.

(e) ADCC has been treated and properly classified as an “S corporation” for
federal income tax purposes since February 15, 1996. The Corporation is, and has
been since the date of its incorporation, treated as a corporation for U.S.
federal income tax purposes. The LLC is, and has been since the date of its
formation, treated as a partnership for U.S. federal income Tax purposes. JADAK
Europe B.V. is, and has been since the date of its organization or formation,
treated as an entity disregarded as separate from the LLC for U.S. federal
income tax purposes.

(f) There are no Liens for Taxes (other than for current Taxes not yet due and
payable) upon the assets of any of the Acquired Companies or any of their
Subsidiaries.

 

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(g) No claim has been made in writing or, to the Knowledge of the Acquired
Companies, threatened in the past five (5) years by any Governmental Entity in a
jurisdiction where any of the Acquired Companies or any of their Subsidiaries
does not file Tax Returns that any of the Acquired Companies or any of their
Subsidiaries are or may be subject to taxation in that jurisdiction.

(h) None of the Acquired Companies nor any of their Subsidiaries are liable for
Taxes of any other Person by operation of Applicable Law or otherwise, or is
currently under any contractual obligation to indemnify any Person with respect
to Taxes, or is a party to any Tax sharing agreement or any other agreement
providing for payments by any of the Acquired Companies or any of their
Subsidiaries with respect to Taxes; provided, for purposes of this
Section 3.8(h), that any liability or obligation arising under any Contract
entered into in the ordinary course of business whose principal purpose is to
address matters other than Tax matters shall not be taken into account.

(i) None of the Acquired Companies nor any of their Subsidiaries has filed, and
does not have pending, any ruling requests with any taxing authority, including
any request to change any accounting method.

(j) None of the Acquired Companies nor any of their Subsidiaries have engaged in
a “reportable transaction,” as set forth in Treasury Regulation
Section 1.6011-4(b), or any transaction that is the same as or substantially
similar to one of the types of transactions that the Internal Revenue Service
has determined to be a Tax avoidance transaction and identified by notice,
regulation or other form of published guidance as a “listed transaction,” as set
forth in Treasury Regulation Section 1.6011-4(b)(2). The Sellers, the Acquired
Companies and each of their Subsidiaries have disclosed on their Tax Returns all
positions taken therein that could give rise to a substantial understatement
penalty under Code Section 6662 or any similar provision of other Applicable
Law, and are in possession of supporting documentation as may be required under
any such provision.

(k) Neither ADCC nor the Corporation has ever been, at any time, a “United
States real property holding corporation” within the meaning of
Section 897(c)(2) of the Code.

(l) The LLC has complied, and is currently in compliance, with all requirements
relating to Tax credits, incentives and any benefits claimed pursuant to the New
York Qualified Empire Zone Enterprise and New York Excelsior Tax Credits
regimes. All claims of Tax credits, incentives and benefits by the LLC through
the Closing Date pursuant to the New York Qualified Empire Zone Enterprise and
New York Excelsior Tax Credits regimes have been valid and permissible as of the
Closing Date.

Section 3.9 Real Estate.

(a) None of the Acquired Companies nor any of their respective Subsidiaries owns
any real property or has a fee ownership interest in any real property,
including any rights, contracts or options to acquire an ownership interest in
any real property.

(b) Section 3.9(b) of the Disclosure Schedule sets forth a complete and accurate
list of all leases, subleases, license agreements and other similar such use and

 

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occupancy agreements, including any amendments or modifications thereto, whether
written or oral (collectively, the “Leases”), pursuant to which any real
property is leased, subleased, licensed or otherwise occupied by the Acquired
Companies or any of their Subsidiaries (collectively, the “Leased Real
Property”), and which list specifies (i) the use made of each Leased Real
Property, (ii) the common street address of each Leased Real Property and
(iii) the identities of the parties under the Leases. Except for the Leases,
none of the Acquired Companies nor any of their Subsidiaries is a party to any
real property leases, subleases, licenses or occupancy agreements pursuant to
which the Acquired Companies or any of their Subsidiaries is the lessee,
sublessee, licensee or occupant of any real property.

(c) Each of the Leases (i) is in full force and effect, (ii) is a valid and
binding obligation of the Acquired Companies or their respective Subsidiaries,
as applicable, and, to the Knowledge of the Acquired Companies, each other party
thereto, (iii) is enforceable against such Acquired Company or Subsidiary, as
applicable, in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or other laws affecting creditors’ rights
generally and the exercise of judicial discretion in accordance with general
equitable principles, and (iv) will remain in full force and effect on identical
terms immediately following the Closing (unless terminated by any other party
thereto in accordance with such other party’s termination rights thereunder,
other than as a result of any material breach or default by or of any of the
Acquired Companies or any of their Subsidiaries). None of the Acquired Companies
nor any of their Subsidiaries nor, to the Knowledge of the Acquired Companies,
any other party to any Lease is in breach or default in any material respect
under any Lease (including any provision the breach or default of which would
result in termination of the applicable Lease), or ancillary documents relating
thereto, and no event has occurred or circumstance exists which with the
delivery of notice, the passage of time or both, would constitute a material
breach or default by or of any of the Acquired Companies or any of their
Subsidiaries, or, to the Knowledge of the Acquired Companies, as of the date of
this Agreement, any other party, under any Lease, or permit any of the other
parties to such Lease to terminate, modify or accelerate the rent or other
amounts payable by or to any Acquired Company or any of its Subsidiaries under,
any such Lease or ancillary document related thereto. None of the Acquired
Companies nor any of their Subsidiaries are obligated under or bound by any
option, right of first refusal, purchase contract, commitment, term sheet or
other contractual right to sell, assign, lease, sublease, use (or allow use of),
or purchase any Leased Real Property or any portions thereof or interests
therein. The Acquired Companies have Made Available to Purchaser true, correct
and complete copies of all written Leases or summaries of the primary material
terms of any oral Leases. The possession and quiet enjoyment of the Leased Real
Property by the Acquired Companies and its Subsidiaries, as applicable, has not
been disturbed in any material respect. As of the date of this Agreement, none
of the Acquired Companies has given or received notice of any dispute with
respect to any Lease. As of the date of this Agreement, none of the Acquired
Companies nor any of their Subsidiaries have received any notice that a security
deposit or portion thereof deposited with respect to any Lease has been applied
in respect to a breach or default under any Lease that has not been redeposited
in full. None of the Acquired Companies nor any of their Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any
interest in any Lease or the leasehold estate in any Leased Real Property. None
of the Acquired Companies nor any of their Subsidiaries owes, nor will it owe in
the future, any brokerage commissions or finder’s fees with respect to any
Lease.

 

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(d) The Leased Real Property (including all operations thereon) complies in all
material respects with the requirements of all Applicable Laws, including all
applicable building, zoning, subdivision, health, safety and other land use
statutes, laws, codes, ordinances, rules, orders and regulations as well as any
easements, covenants or other matters of record affecting the Leased Real
Property. The Acquired Companies have received all approvals from Governmental
Entities that the Acquired Companies are required to obtain under the Leases or
under Applicable Law in connection with their leasehold interest in the Leased
Real Property. Except as set forth in the Leases, none of the Acquired Companies
has entered into any Contract pursuant to which such Acquired Company has agreed
to, or granted, any covenants, conditions, rights-of-way, easements or similar
restrictions or any other conditions affecting all or any portion of the Leased
Real Property that materially impair the ability to use any such Leased Real
Property in the operation of the Acquired Businesses. The Acquired Companies
have taken all actions that the Acquired Companies are required to take under
the Leases or under any Material Contract to which any of the Acquired Companies
are a party to cause all buildings, facilities and other improvements located on
the Leased Real Property to be supplied with utilities and other services
necessary for the operation of such facilities by the Acquired Companies or any
of their Subsidiaries in the ordinary course of business consistent with past
practices, including gas, electricity, water, telephone, sanitary sewer and
storm sewer. The Acquired Companies and their Subsidiaries have made all
material repairs and replacements required to be made by it under any Lease or
Sublease to which it is a party relating to the applicable Leased Real Property.

Section 3.10 Title to Assets. The Acquired Companies and their Subsidiaries have
good, valid, and, if applicable, marketable title to, or a valid leasehold
interest in, all of the properties (including the Leased Real Property) and
assets, tangible or intangible, owned, used or held for use in, the Acquired
Businesses, free and clear of all Liens except for Permitted Liens and Liens
that will be terminated at or prior to the Closing. All tangible property
(including the Leased Real Property and all improvements thereon) and other
assets of the Acquired Companies and their Subsidiaries are in good operating
condition and in a state of good maintenance and repair, ordinary wear and tear
excepted, and are usable by the Acquired Companies and their Subsidiaries in the
ordinary course of business. Neither the Acquired Companies nor any of their
Subsidiaries has any legal obligation, absolute or contingent, to any other
Person to sell or otherwise dispose of any properties or assets (other than the
sale of the Products or Services in the ordinary course of business). Each
property or asset, tangible or intangible, material to the operation of the
Acquired Businesses immediately prior to the Closing will continue to be owned,
licensed or leased by the Acquired Companies or their Subsidiaries on identical
terms and conditions immediately subsequent to the Closing (unless, in the case
of those of such properties or assets that are licensed or leased by the
Acquired Companies or their Subsidiaries or that are otherwise held or used by
the Acquired Companies or their Subsidiaries pursuant to a Contract or Permit or
that are Contracts or Permits, any of the applicable licenses, leases, Contracts
or Permits are terminated by any other party thereto in accordance with such
other party’s termination rights thereunder, other than as a result of any
material breach or default under such applicable licenses, leases, Contract or
Permits by or of any of the Acquired Companies or any of their Subsidiaries or
as a result of any failure of any of the Acquired Companies or any of their
Subsidiaries to cause to be renewed any of such applicable Permits that would
otherwise terminate or expire at the Closing as a result of the transactions
contemplated under this Agreement). The property and assets owned, used or held
for use by the

 

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Acquired Businesses immediately after the Closing will include all property and
assets necessary to conduct the Acquired Businesses as presently conducted
(unless, in the case of those of such properties or assets that are licensed or
leased by the Acquired Companies or their Subsidiaries or that are otherwise
held or used by the Acquired Companies or their Subsidiaries pursuant to a
Contract or Permit or that are Contracts or Permits, any of the applicable
licenses, leases, Contracts or Permits are terminated by any other party thereto
in accordance with such other party’s termination rights thereunder, other than
as a result of any material breach or default under such applicable licenses,
leases, Contract or Permits by or of any of the Acquired Companies or any of
their Subsidiaries or as a result of any failure of any of the Acquired
Companies or any of their Subsidiaries to cause to be renewed any of such
applicable Permits that would otherwise terminate or expire at the Closing as a
result of the transactions contemplated under this Agreement). The parties
hereby agree that, solely for purposes of this Section 3.10, the terms
“property,” “properties” and “assets” shall not mean or include (i) any
Intellectual Property or (ii) employees, consultants, advisors or other
personnel of any of the Acquired Companies and their Subsidiaries.

Section 3.11 Intellectual Property.

(a) Set forth on Section 3.11(a) of the Disclosure Schedule is a list, as of the
date of this Agreement, of all the patents, material registered and unregistered
copyrights, domain names, material registered Marks (other than domain names),
and all applications for registration of any of the foregoing, included in the
Acquired Company IP, showing the owner thereof and the jurisdiction(s)
applicable thereto, if any (hereinafter referred to as the “Scheduled
Intellectual Property”). The Acquired Companies and their Subsidiaries own, free
and clear of all Liens (except for Permitted Liens), all right, title and
interest in and to all of the Acquired Company IP. Neither the Acquired
Companies nor their Subsidiaries have assigned to any person or entity (other
than the Acquired Companies or a Subsidiary of an Acquired Company) any
Intellectual Property used in or necessary for the operation of the Acquired
Businesses, including any Acquired Company IP to the extent used in or necessary
for the operation of the Acquired Businesses. To the Knowledge of the Acquired
Companies, there is no prior right of any other Person or other impediment which
would invalidate or materially and adversely affect any of the Acquired Company
IP. The Acquired Company IP and the Licensed IP together include all of the
Intellectual Property used in or necessary for the operation of the Acquired
Businesses as presently conducted; provided, however, that nothing in the
sentence prior to this proviso shall be interpreted as, or in any way be deemed,
a representation or a warranty of the Acquired Companies as to the
non-infringement of the intellectual property rights of any third party.

(b) To the Knowledge of the Acquired Companies, none of the Acquired Companies
or their Subsidiaries have infringed in the six (6) years prior to the date
hereof or are infringing the Intellectual Property of any Person. As of the date
of this Agreement: (i) the Acquired Companies and their Subsidiaries have not
received any written notice of a claim of any such infringement, (ii) neither
the Acquired Companies nor their Subsidiaries have instituted or threatened to
institute any Action against any Person alleging the infringement of any
Acquired Company IP, and (iii) to the Knowledge of the Acquired Companies, no
other Person is infringing any Acquired Company IP. For purposes of this
Section 3.11, the term “infringement” and variations thereof means infringement,
misappropriation or other violation or unlawful use.

 

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(c) The Acquired Companies and their Subsidiaries have taken commercially
reasonable steps to maintain and protect all of the Acquired Company IP so as
not to intentionally or knowingly affect, in an adverse manner, the validity or
enforceability thereof, and no loss of any of the Scheduled Intellectual
Property is threatened in writing or pending (other than the expiration of
patents or other registered Intellectual Property at the end of their maximum
statutory term). As of the date of this Agreement, the Acquired Companies and
their Subsidiaries have not received any written notice of any claim challenging
the ownership, validity or enforceability of any Acquired Company IP and, to the
Knowledge of the Acquired Companies, there is no basis for any such claim. To
the Knowledge of the Acquired Companies, the Acquired Company IP is valid and
enforceable.

(d) The Acquired Companies and their Subsidiaries have obtained from their
current and former employees and all independent contractors or other third
parties, who are or were involved in the creation or development of any
Intellectual Property for the Acquired Companies or their Subsidiaries all
right, title and interest in and to all such Intellectual Property, free and
clear of all Liens (except Permitted Liens), whether by operation of law or
through written assignments.

(e) Except as set forth on Section 3.11(e) of the Disclosure Schedule under the
heading “Third-Party Software”, as of the date of this Agreement, to the
Knowledge of the Acquired Companies: (i) none of the Acquired Company Software
Products is a derivative work of, or incorporates, any third-party Software, and
none of such Software interacts with any third-party Software, except through
application programming interfaces (APIs) (as such term is generally understood
in the software industry) or as otherwise allowed in compliance with any
applicable license for Licensed IP; and (ii) the Acquired Companies and their
Subsidiaries have not modified (or had modified) any third-party
Software. Except as set forth on Section 3.11(e) of the Disclosure Schedule
under the heading “Open Source Software”, as of the date of this Agreement, to
the Knowledge of the Acquired Companies: (A) the Acquired Companies and their
Subsidiaries have not modified (or had modified) any Open Source Software, and
do not distribute or otherwise provide access to any Open Source Software in
connection with its Products or Services; (B) none of the Acquired Company
Software Products incorporates or interacts with any Open Source Software, other
than through APIs; and (C) none of the Acquired Companies’ or their
Subsidiaries’ Software, including source code, is subject to the terms of any
Open Source Software License.

(f) No funds from any Governmental Entity were used in the development of any of
the Acquired Company IP, and none of such Acquired Company IP was first produced
in the performance of any Government Contract. No Governmental Entity has been
or is currently entitled to claim any rights (including license rights) in:
(i) any “Technical Data” (as defined below) included in or related to any of
such Acquired Company IP, other than “Limited Rights” (as defined below);
(ii) any “Computer Software” (as defined below) included in such Acquired
Company IP, other than “Restricted Rights” (as defined below); (iii) any patents
or patentable invention included in such Acquired Company IP; or (iv) any
copyright included in such Acquired Company IP. None of the Acquired Companies
or their Subsidiaries have directly provided any Governmental Entity with any
Technical Data or Computer Software in the performance of any Government
Contract. The terms “Technical Data” and “Limited Rights” have the meanings set
forth at 48 C.F.R. § 252.227-7013, and the terms “Computer Software” and
“Restricted Rights” have the meanings set forth at 48 C.F.R. § 252.227-7014.

 

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(g) This Section 3.11 sets forth the exclusive representations and warranties in
respect of ownership, validity and enforceability of Intellectual Property and
non-infringement of third party Intellectual Property and none of the
representations and warranties set forth in the other Sections of this Article
III shall be deemed or construed to relate to ownership, validity and
enforceability of Intellectual Property or non-infringement of third party
Intellectual Property.

Section 3.12 Contracts.

(a) Section 3.12(a) of the Disclosure Schedule sets forth a complete and
accurate list, or, if oral, an accurate and complete description of all material
terms, of each of the following Contracts to which any of the Acquired Companies
or their Subsidiaries is a party or by which any of their respective properties
or assets are bound, other than (1) Contracts that are currently in effect and
that as of the Closing will no longer be binding on or impose any liability on
the Acquired Companies or their Subsidiaries or their respective properties or
assets (except for any such Contract that is terminated by any other party
thereto between the date of this Agreement and the Closing as a result of any
material breach or default by or of the Acquired Companies or any of their
Subsidiaries) and (2) Contracts that are entered into by any of the Acquired
Companies or their Subsidiaries after the date of this Agreement in compliance
with the provisions of Section 6.1 hereof (each, regardless of whether or not
set forth on Section 3.12(a) of the Disclosure Schedule or referred to in the
foregoing clauses (1) or (2), a “Material Contract” and collectively, the
“Material Contracts”):

(i) any Contract limiting the freedom or that restricts the business activities
of any of the Acquired Companies or any of their Subsidiaries to engage in any
line of business or sell, supply or distribute any service or product, or to
compete with any Person or to conduct business in any geography, or to solicit
the services or employment of, or hire any individual or group of individuals;

(ii) any Contract containing (A) a most-favored-nation or best pricing term or
provision by which another party to such Contract is or could become entitled to
any benefit, right or privilege which, under the terms of such Contract, must be
at least as favorable to such party as those offered to another Person, (B) a
requirement to deal exclusively with or grant exclusive rights or rights of
first refusal to any customer, vendor, supplier, distributor, contractor or
other party or (C) a “take-or-pay” provision;

(iii) any Government Contract or outstanding Government Bid to which any of the
Acquired Companies or any of their Subsidiaries is party;

(iv) all Contracts or commitments (A) for the purchase, lease, sale or
manufacture of products, materials, supplies, equipment, components or services,
and all agreements with independent dealers, sales representatives and
resellers, in each case (x) requiring payment to or from an Acquired Company or
any Subsidiary of an Acquired Company in an amount in excess of $100,000 in any
given year or in excess of $250,000 in the aggregate (other than purchase or
sales orders entered into in the ordinary course of business at

 

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any time prior to January 1, 2013 or requiring payment to or from an Acquired
Company or any Subsidiary of an Acquired Company in an amount less than $250,000
in the aggregate, provided that such purchase or sales orders are entered into
on a stand-alone basis and not pursuant to any master contract or agreement), or
(y) pursuant to which an Acquired Company or any Subsidiary of an Acquired
Company has agreed to purchase all of its requirements for the goods and/or
services in question or which contain minimum volume or minimum payment
guarantees or (B) requiring capital expenditures by an Acquired Company or any
Subsidiary of an Acquired Company in excess of $100,000, individually, or
$200,000, in the aggregate;

(v) any Contract (including licenses and covenants not to sue) (A) pursuant to
which an Acquired Company or any Subsidiary of an Acquired Company is using or
is authorized to use any Intellectual Property on an exclusive basis or is
making or required to make payments under such Contract for the right to use
such Intellectual Property in any amount equal to or greater than $50,000
annually, or (B) pursuant to which any Person is using or authorized to use any
Acquired Company IP (other than in connection with the use of any of the
Products or Services sold by any of the Acquired Companies or its Subsidiaries
in the ordinary course of business);

(vi) any Contract pursuant to which an Acquired Company or any Subsidiary of an
Acquired Company developed, had developed or collaborated in the development of
any Acquired Company IP, any Contract pursuant to which an Acquired Company or
any Subsidiary of an Acquired Company assigned or agreed to assign, or another
person assigned or agreed to assign to an Acquired Company or a Subsidiary of an
Acquired Company, ownership of any Intellectual Property used in or necessary
for the operation of the Acquired Businesses and any settlement agreement or any
other Contract restricting an Acquired Company’s or its Subsidiaries’ right to
use, sell, license, sublicense, transfer or otherwise dispose of all or part of
any Acquired Company IP or Licensed IP;

(vii) any Contract (A) relating to the disposition, exchange or acquisition by
an Acquired Company or any Subsidiary of an Acquired Company of (x) any assets
or rights involving payment to or from an Acquired Company or any Subsidiary of
an Acquired Company in an amount in excess of $100,000 in any given year or in
excess of $250,000 in the aggregate (other than any Contract for the sale or
disposition of, or the purchase of, materials, supplies, parts, components or
services in the ordinary course of business) (y) any Person or any business
enterprise (whether by merger, sale of stock or other equity interests, sale of
assets or otherwise), (B) pursuant to which an Acquired Company or any
Subsidiary of an Acquired Company has any ownership interest in any other Person
or other business enterprise, other than Contracts under which such Acquired
Company or such Subsidiary has no further liabilities or obligations and no
continuing rights, or (C) providing for an advance or capital contribution to,
or investment in, any other Person;

(viii) any loan agreements, trusts, indentures, mortgages, notes, installment
obligations, capital leases, or other Contracts relating to Indebtedness that is
(A) secured by collateral, (B) not in the ordinary course of business, (C) in an
amount greater than $50,000, (D) an agreement of guaranty with respect to the
Indebtedness of any other Person or (E) any commitment to provide any of the
foregoing, provided, however, that this clause (viii) shall not include the New
Hancock Park Lease in the event that the New Hancock Park Lease is treated as a
capital or financial lease instead of as an operating lease;

 

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(ix) any settlement Contract, other than settlement Contracts fully discharged;

(x) any partnership, joint venture or similar Contract to which an Acquired
Company or any Subsidiary of an Acquired Company is a party;

(xi) any Contract obligating an Acquired Company or any Subsidiary of an
Acquired Company to provide indemnification, other than any such Contract
obligating the Company to provide indemnification that is entered into by such
Acquired Company or such Subsidiary with any customer or supplier in connection
with sales or purchases of good or services by such Acquired Company or such
Subsidiary in the ordinary course of business;

(xii) (A) any employment, consulting or severance Contract with any current or
former executive officer, other employee or manager of an Acquired Company or
any Subsidiary of an Acquired Company, or (B) any Contract or employee benefit
plan, including any equity option plan, equity appreciation right plan or equity
purchase plan, change-in-control Contract or plan or retention Contract or plan,
for which any of the benefits, compensation or payments will be increased, the
vesting of benefits will be accelerated or a payment will be required, as a
result of the consummation of the transactions contemplated hereby;

(xiii) any union or collective bargaining agreement with any labor union;

(xiv) any power of attorney executed by an employee, officer, director or
manager of an Acquired Company or any Subsidiary of an Acquired Company in such
employee’s, officer’s, director’s or manager’s capacity as such;

(xv) any bailment, consignment or other similar arrangement, including as may
relate to inventory, equipment or other assets of any customer, supplier or
third party;

(xvi) any Contract or sublease pursuant to which an Acquired Company or any
Subsidiary of an Acquired Company has granted to any Person the right to use or
occupy the Leased Real Property or any portion thereof or interest therein; and

(xvii) any Contract or group of Contracts with a Person (or group of affiliated
Persons), the termination or breach of which would be reasonably expected to
have an Acquired Company Material Adverse Effect on any material Product,
Service or other offerings of any Acquired Company or any Subsidiary of an
Acquired Company or otherwise have an Acquired Company Material Adverse Effect
and that is not disclosed pursuant to clauses (i) through (xvi) above.

(b) Complete and accurate copies of each of the Material Contracts, or, if oral,
an accurate and complete description of all material terms thereof, have been
Made Available to Purchaser.

 

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(c) Each Material Contract is valid and binding on the Acquired Company that is
a party thereto (and each such Subsidiary of the Acquired Company party thereto)
and, to the Knowledge of the Acquired Companies, each other party thereto, is in
full force and effect and is enforceable against such Acquired Company or such
Subsidiary, as applicable, and, to the Knowledge of the Acquired Companies, each
other party thereto, in each case in accordance with its terms, subject to laws
of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies and to general principles of equity. Each Acquired
Company and each Subsidiary of an Acquired Company has performed in all material
respects all obligations required to be performed by it under each Material
Contract and, to the Knowledge of the Acquired Companies as of the date of this
Agreement, each other party to each Material Contract has performed in all
material respects all obligations required to be performed by it under such
Material Contract. As of the date of this Agreement: none of the Acquired
Companies nor any of their Subsidiaries has received written notice (or, to the
Knowledge of the Acquired Companies, oral notice) of any violation, breach or
default under (or any condition that with the passage of time or the giving of
notice, or both, would cause such a violation of, breach of or default under)
any Material Contract and none of the Acquired Companies nor any of their
Subsidiaries has received written notice (or, to the Knowledge of the Acquired
Companies, oral notice) from any party to a Material Contract that such party
intends either to modify, cancel or terminate a Material Contract. Each Material
Contract will continue in full force and effect without penalty or other adverse
consequence (including giving rise to any obligation of any of the Acquired
Companies, their Subsidiaries, the Purchaser or any of Purchaser’s Affiliates to
make any payment or payments to any Person) upon consummation of the
transactions contemplated by this Agreement (unless such Material Contract is
terminated by any other party thereto in accordance with such other party’s
termination rights thereunder, other than as a result of any material breach or
default by or of any of the Acquired Companies or any of their Subsidiaries).

(d) Customer Contracts. No Acquired Company or any Subsidiary of any Acquired
Company has any liability for breach of contract or for indemnification under,
or product liability arising out of or related to, any Contract with any
customer of any of the Acquired Companies or any Subsidiary of any Acquired
Company (including any quote and any purchase order of such Acquired Company or
any of its Subsidiaries, or any purchase order and any acceptance of such
customer, that conflict with respect to such liability) (i) for any damages in
the nature of lost profits, diminutions in value, damage to persons or property,
or incidental, indirect, exemplary, punitive or consequential damages or
(ii) for any damages in excess of the price paid for the Products or Services
provided thereunder; provided, however, that the foregoing representation or
warranty shall not be applicable to any liability that any Acquired Company or
any Subsidiary of any Acquired Company may have for breach of contract or for
indemnification under any such Contract with a customer (x) with respect to
intellectual property matters (liabilities with respect to intellectual property
matters are governed by Section 3.11) or (y) with respect to product or service
warranty matters if and to the extent that such liability for product or service
warranty matters does not exceed the reserve for warranty claims set forth on
the face of the Company Financial Statements (or in any notes thereto) as
adjusted for operations and transactions through the Closing Date in accordance
with the past custom and practice of the Acquired Companies.

 

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Section 3.13 Litigation; Orders. Except as set forth in Section 3.13 of the
Disclosure Schedule, as of the date of this Agreement, (a) there is no action,
suit, proceeding, written claim, arbitration, charge or investigation
(collectively, “Actions”) pending or, to the Knowledge of the Acquired
Companies, threatened against or by any of the Acquired Companies or any of
their Subsidiaries, any Acquired Company Plan, any of their assets, properties
or rights or, to the Knowledge of the Acquired Companies, any of the officers,
directors, managers or employees of any of the Acquired Companies and their
Subsidiaries in their capacities as such, including any Action questioning,
challenging or seeking to prevent, hinder or delay the transactions contemplated
by this Agreement, (b) no material citations, fines or penalties have been
asserted against any of the Acquired Companies or any of their Subsidiaries
under any Applicable Law that remain outstanding, (c) there are no judgments,
orders, settlements or decrees outstanding against any of the Acquired Companies
or any of their Subsidiaries and (d) no officer, director, member, manager or
employee of any of the Acquired Companies or any of their Subsidiaries nor any
Seller is a defendant in any Action, or the subject of any investigation,
commenced by any Acquired Company, Subsidiary of an Acquired Company or, to the
Knowledge of the Acquired Companies, any Governmental Entity, in each case with
respect to the performance of such Person’s duties as an officer, director,
member, manager or employee of an Acquired Company or Subsidiary of an Acquired
Company. Section 3.13 of the Disclosure Schedule includes a list of all Actions
referred to in any of the foregoing clauses (a)-(d) of this Section 3.13 (other
than investigations of which the Acquired Companies have no Knowledge as of the
date of this Agreement) involving any of the Acquired Companies or any of their
Subsidiaries, or any officer, director, manager or employee thereof in their
respective capacities as such or any Seller in connection with the Acquired
Companies or any of their Subsidiaries occurring, arising or existing during the
past three (3) years.

Section 3.14 Environmental. Except as set forth in Section 3.14 of the
Disclosure Schedule:

(a) To the Knowledge of the Acquired Companies, no Hazardous Materials are
present on any Business Facility in violation of any applicable Environmental
Law and no release of any Hazardous Materials by the Acquired Company or any of
its Subsidiaries in violation of Environmental Law at or from any Business
Facility has occurred.

(b) The Acquired Companies and their Subsidiaries are in compliance in all
material respects with all Environmental Laws applicable to the operation of any
Business Facility including all Hazardous Materials Activities. The Hazardous
Materials Activities of any of the Acquired Companies and any of their
Subsidiaries prior to the Closing have not resulted in the exposure of any
Person or property to Hazardous Materials in a manner which has caused or could
reasonably be expected to result in any material liability to any of the
Acquired Companies or any of their Subsidiaries.

(c) The Acquired Companies and their Subsidiaries have not arranged for off-site
disposal of any Hazardous Materials except by carriers with identification
numbers issued by the Environmental Protection Agency and at Disposal Sites
maintaining valid permits under applicable Environmental Law. There are no
underground storage tanks or related piping, active or abandoned, at any Leased
Real Property in a condition that as of the Closing Date requires pursuant to
any Environmental Law any remedial action by any Acquired Company or any

 

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Subsidiary of an Acquired Company pursuant to any Environmental Law, whether or
not discovered as of the Closing Date or the subject of a current notice, claim
or government investigation as of the Closing Date.

(d) None of the Acquired Companies or any of their Subsidiaries have received as
of the date of this agreement (i) any written notice alleging that any of them
has not complied in any material respect with applicable Environmental Laws in a
manner that would reasonably be expected to result in a material liability to
any Acquired Company or its Subsidiaries, and, to the Knowledge of the Acquired
Companies, there are no facts existing that reasonably would give rise to such a
notice or (ii) any written notice, demand, claim or request for information
alleging that any Acquired Company or any of its Subsidiaries may be in
violation of, liable under or have obligations under any Environmental Law or
subject to any other environmental liability.

(e) Each of the Acquired Companies and each of their Subsidiaries has and is in
material compliance with all material Environmental Permits required to conduct
their businesses, including the Acquired Businesses, in the ordinary course of
business consistent with past practice and a complete and accurate list of all
such Environmental Permits is set forth in Section 3.14(e) of the Disclosure
Schedule. No material action, proceeding, revocation proceeding, procedure,
writ, injunction or claim is pending, or, to the Knowledge of the Acquired
Companies, threatened, concerning or relating to any Environmental Permit or any
Hazardous Materials Activity of any of the Acquired Companies or any of their
Subsidiaries, or any Business Facility. No Environmental Permit shall be subject
to revocation, termination prior to its normal expiration date or non-renewal
pursuant to its terms as a result of this Agreement or the consummation of the
transactions contemplated hereby.

(f) The Acquired Companies and their Subsidiaries are not aware of any fact or
circumstance, which could result in any environmental liability which could
reasonably be expected to result in an Acquired Company Material Adverse Effect.
None of the Acquired Companies or any of their Subsidiaries have entered into
any agreement that may require it to guarantee, reimburse, pledge, defend, hold
harmless or indemnify any other party with respect to liabilities arising out of
Environmental Laws, or the Hazardous Materials Activities of any Acquired
Company, any Subsidiary of an Acquired Company or any other Person as could
reasonably be expected to result in a material liability to any of the Acquired
Companies or any of their Subsidiaries.

(g) The Acquired Companies have Made Available to Purchaser or its agents,
representatives and employees all material environmental audits, compliance
assessments or any environmental or health and safety reports of any Business
Facility conducted at the request of, or otherwise in the possession of any of
the Acquired Companies or any of their Subsidiaries.

(h) This Section 3.14 shall be the exclusive representation and warranty in
respect of environmental matters.

 

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Section 3.15 Employee Benefit Plans.

(a) Section 3.15(a) of the Disclosure Schedule contains a complete and accurate
list of each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) and all
pension, retirement, defined benefit, defined contribution, profit sharing,
equity, equity purchase, equity option, severance, employment,
change-in-control, termination, retention, medical, dental, vision, disability,
life, accidental death and dismemberment, cafeteria, flexible spending,
post-retirement health and welfare (including any retiree medical or retiree
life benefits), fringe benefit, collective bargaining, bonus, incentive,
commission, deferred compensation, employee loan and all other employee benefit
plans, agreements, programs, policies or other arrangements, whether or not
subject to ERISA (including any funding mechanism now in effect or required in
the future as a result of the transactions contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, under which (i) any
current, former or retired employee, director, manager or consultant of any of
the Acquired Companies or any of their Subsidiaries, or any members of their
respective Controlled Groups (the “Acquired Company Employees”), has any present
or future right to benefits and which are contributed to, required to be
contributed to, sponsored by or maintained by any of the Acquired Companies or
any of their Subsidiaries, or any member of their respective Controlled Groups,
or (ii) any Acquired Company or any of its Subsidiaries or any member of the
Controlled Group of an Acquired Company has any present or future liability. All
such plans, agreements, programs, policies and arrangements shall be
collectively referred to as the “Acquired Company Plans.”

(b) Section 3.15(b) of the Disclosure Schedule sets forth a complete and
accurate list, as of the date hereof, of all Acquired Company Plans maintained
outside the jurisdiction of the United States, or that covers any Acquired
Company Employee who perform services outside the United States, listed
separately by applicable country or jurisdiction (any such Acquired Company
Plans listed in Section 3.15(b) of the Disclosure Schedule, the “Foreign Benefit
Plans”). With respect to each Foreign Benefit Plan, (i) such Foreign Benefit
Plan has been established, maintained and administered in compliance, in all
material respects, with its terms and all Applicable Laws; (ii) to the extent
required to be funded such Foreign Benefit Plan is fully funded, and with
respect to all other Foreign Benefit Plans, adequate reserves therefore have
been established on the accounting statements of the applicable Acquired Company
and (iii) no material liability or obligation of the Acquired Companies exists
with respect to such Foreign Benefit Plans that has not been disclosed on
Section 3.15(b) of the Disclosure Schedule.

(c) With respect to each Acquired Company Plan, the Acquired Companies and their
Subsidiaries have provided or Made Available to Purchaser a current, accurate
and complete copy (or, to the extent no such copy exists, an accurate
description) thereof and, to the extent applicable: (i) any related trust
agreement or other funding instrument; (ii) the most recent determination
letter, if applicable; (iii) any summary plan description, summary of material
modifications and other written communications by any of the Acquired Companies
or any of their Subsidiaries to any of the Acquired Company Employees concerning
the extent of the benefits provided under an Acquired Company Plan; and (iv) for
the three (3) most recent years (A) the Form 5500 and attached schedules,
(B) audited financial statements, (C) actuarial valuation reports and
(D) nondiscrimination testing results.

(d) Each Acquired Company Plan has been established, maintained and administered
in all material respects in accordance with its terms, and in compliance in all

 

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material respects with the applicable provisions of ERISA, the Code and other
Applicable Laws. Each Acquired Company Plan that is intended to be qualified
within the meaning of Section 401(a) of the Code has received a favorable
determination letter as to its qualification, and nothing has occurred, whether
by action or failure to act, that could be expected to cause such determination
letter to be revoked. As of the date of this Agreement, no event has occurred
with respect to the Acquired Company Plans and no condition exists that would
subject any of the Acquired Companies or any of their Subsidiaries, either
directly or by reason of their affiliation with any member of their “Controlled
Group” (defined as any organization which is a member of a controlled group of
organizations within the meaning of Section 414(b), (c), (m) or (o) of the
Code), to any Tax, fine, lien, penalty or other liability imposed by ERISA, the
Code or other Applicable Laws except as would not reasonably be expected to
result in material liability to the Acquired Companies. All contributions and
other payments required by and due under the terms of each Acquired Company Plan
have been made on a timely basis. All required reports and descriptions
(including Form 5500 Annual Reports) have been timely filed or distributed
appropriately with respect to each Acquired Company Plan.

(e) None of the Acquired Companies, any of their Subsidiaries nor any member of
their respective Controlled Groups has ever maintained, established, sponsored,
participated in, contributed to, or has any liability with respect to, any
(i) pension plan which is subject to Title IV of ERISA or Section 412 of the
Code, (ii) a Multiemployer Plan, (iii) a “multiple employer plan” (as defined in
ERISA or the Code), or (iv) a “funded welfare plan” within the meaning of
Section 419 of the Code. No Acquired Company Plan provides health or welfare
benefits that are not fully insured through an insurance contract.

(f) No Acquired Company Plans provide nor are there any Acquired Company
Employees eligible for any retiree medical or other post-employment health or
welfare benefits, except as required by applicable state insurance laws and
Title I, Subtitle B, Part 6 of ERISA.

(g) As of the date of this Agreement, with respect to any Acquired Company Plan
including any assets of any such Acquired Company Plan or any fiduciary to any
such Acquired Company Plan, (i) no actions, suits or claims (other than routine
claims for benefits in the ordinary course) are pending or, to the Knowledge of
the Acquired Companies, threatened, and (ii) no administrative investigation,
audit or other administrative proceeding by the Department of Labor, the
Internal Revenue Service or other Governmental Entity is pending or, to the
Knowledge of the Acquired Companies, threatened. As of the date of this
Agreement, there has been no non-exempt “prohibited transaction” (and there will
be none as a result of any of the transactions contemplated hereby) within the
meaning of Section 4975(c) of the Code or Section 406 of ERISA involving the
assets of any Acquired Company Plan.

(h) Each Acquired Company Plan is by its terms able to be unilaterally amended
or terminated by the respective Acquired Company or its Subsidiary, as
applicable.

(i)

(i) No Acquired Company Plan exists that, as a result of the execution of this
Agreement or the transactions contemplated by this Agreement (whether alone or
in

 

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connection with any subsequent event(s)), (i) will result in severance pay or
any increase in severance pay upon any termination of employment after the date
hereof pursuant to any Contract or Acquired Company Plan, (ii) will accelerate
the time of payment or vesting or result in any payment or funding (through a
grantor trust or otherwise) of compensation or benefits under, increase the
amount payable or result in any other obligation pursuant to, any of the
Acquired Company Plans or (iii) will cause the Company to record additional
compensation expense on its income statement with respect to any outstanding
equity based award.

(ii) Section 3.15(i)(ii) of the Disclosure Schedule sets forth a complete and
accurate list of all payments payable by each of the Acquired Companies and each
of their Subsidiaries to any Seller or any director, officer, manager, employee
or former director, officer, manager or employee arising from, relating to or as
a result of the consummation of the transactions contemplated by this Agreement,
including any payments for equity appreciation or similar rights, any severance
or bonus plan payment, any payment of deferred compensation, any transaction
bonus or change in control payment, or any similar payment, including the amount
of each such payment, the party to whom such payment is or will become due, and,
to the extent determinable, the date or dates on which such payments become due.

(iii) Except as set forth on Section 3.15(i)(iii) of the Disclosure Schedule, no
individual has accrued or received, or will accrue or receive, as a direct or
indirect result of the transactions contemplated hereby, additional benefits,
severance, termination allowance, service or accelerated rights to payments
under any Acquired Company Plan or Contract, including any parachute payment (as
defined in Section 280G of the Code and Treasury Regulations
Section 1.280G-1Q/A-2) or the right to receive any gross up or other payment in
connection with the imposition of any Tax (including any excise Tax or other
amounts pursuant to Section 4999 of the Code).

(iv) None of the Acquired Companies and their Subsidiaries has any severance or
other obligation or liability to any current or former employee of any Acquired
Company or any of its Subsidiaries under any change in control or severance
agreement, except for such obligations arising under the Caruso Severance
Agreement and the Retention Agreements.

(j) Section 3.15(j) of the Disclosure Schedule sets forth a complete and
accurate list of each Acquired Company Plan that is a “nonqualified deferred
compensation plan” (as defined in Section 409A(d)(1) of the Code). Each such
Acquired Company Plan has been operated in compliance with the applicable
provisions of Section 409A of the Code, the regulations thereunder and other
official guidance issued thereunder (collectively, “Section 409A”), and is in
documentary compliance with the applicable provisions of Section 409A. With
respect to each such Acquired Company Plan that is not intended to be subject to
Section 409A because it is not a nonqualified deferred compensation plan under
Section 409A and the regulations thereunder or is otherwise exempt from its
application, all the conditions required to retain such treatment remain in
effect and are not expected to change so as to subject such Acquired Company
Plan to Section 409A.

 

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(k) As of the date of this Agreement, none of the Acquired Companies or any of
their Subsidiaries has been required to report to any Governmental Entity any
corrections made or Taxes due as a result of a failure to comply with
Section 409A.

(l) No individual classified as a non-employee, including any independent
contractor, leased employee or consultant, for purposes of receiving employee
benefits, regardless of treatment for other purposes, is eligible to participate
in, or receive benefits under, any Acquired Company Plan that does not
specifically provide for his or her participation.

(m) Each Acquired Company Plan, to the extent subject to the provisions of the
Patient Protection and Affordable Care Act (“PPACA”), is and has been
administered in all respects in accordance with the requirements of PPACA, the
Code, ERISA and other Applicable Laws. To the extent that any Acquired Company
Plan is intended to be grandfathered under the terms of PPACA, the applicable
Acquired Company and its Subsidiaries have complied in all material respects
with the applicable provisions of PPACA, the Code, ERISA, and Applicable Laws,
and such Acquired Company or such Subsidiary has not taken any action which
would cause any Acquired Company Plan to lose such grandfathered status. No
event has occurred with respect to the Acquired Company Plans that are subject
to PPACA that would subject the any of the Acquired Companies or any of their
Subsidiaries, or any member of their respective Controlled Groups, to any
material Tax, fine, Lien, penalty or other liability imposed by PPACA, ERISA,
the Code or other Applicable Laws.

(n) With respect to each Acquired Company Plan that is subject to coverage,
nondiscrimination and/or top-heavy testing, each such Acquired Company Plan has
passed each such applicable test for each plan year for which the statute of
limitations under the Code has not expired and/or has taken the appropriate
actions to correct any failure of any such test within the applicable time
limits.

(o) This Section 3.15 sets forth the exclusive representations and warranties in
respect of employee benefits matters and none of the representations and
warranties set forth in the other Sections of this Article III shall be deemed
or construed to relate to employee benefits matters.

Section 3.16 Compliance With Laws.

(a) Each of the Acquired Companies and each of their Subsidiaries has conducted
and is conducting its business in material compliance with all Applicable Laws
and, as of the date of this Agreement, no written notice, action or assertion
has been received by any of the Acquired Companies or any of their Subsidiaries
or, to the Knowledge of the Acquired Companies, has been filed, commenced or
threatened against any of the Acquired Companies or any of their Subsidiaries
alleging any violation of any Applicable Law.

(b) The Acquired Companies and their Subsidiaries are, and have been, in
compliance in all material respects with all United States and other Applicable
Laws relating to import and export controls and: (i) neither any of the Acquired
Companies nor any of their Subsidiaries has made a voluntary disclosure or
entered into a settlement, plea agreement or deferred prosecution agreement with
respect to violations of such Applicable Laws; (ii) as of the

 

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date of this Agreement are not the subject of, and have not been prior to the
date of this Agreement, the subject of, a conviction, indictment, inquiry,
audit, compliance assessment, focused assessment, penalty proceeding, citation,
file, penalty, sanction, claim or, to the Knowledge of the Acquired Companies,
investigation for alleged or actual underpayment of duties, fees or Taxes or
other amounts, suspension of export privileges or other enforcement action, in
each case with respect to violations of such Applicable Laws; and (iii) have not
made or provided any false statement or omission to any Governmental Entity or
to any customer in connection with importation or exportation of merchandise,
including valuation, classification, duty treatment, eligibility for favorable
duty rates or other special treatment, country-of-origin declaration or marking,
export licensing, or any other matter, in each case arising out of Applicable
Laws pertaining to import and export controls.

(c) None of the Acquired Companies nor any of their Subsidiaries (nor any of
their respective managers, officers, directors, employees, Affiliates or, to the
Knowledge of the Acquired Companies, agents, including sales representatives,
distributors and consultants) has made, offered or agreed to offer anything of
value to any employees or any customers of a company, as applicable, or to any
foreign or domestic governmental official, political party or candidate for
government office or any of its employees or representatives in any manner which
would result in such Acquired Company or Subsidiary being in violation of any
Applicable Law, including the United Kingdom Bribery Act 2010 and the Foreign
Corrupt Practices Act of 1977, as amended (“FCPA”). Without limiting the
foregoing, none of the Acquired Companies and none of their Subsidiaries (nor
any of their respective managers, officers, directors, employees, Affiliates or,
to the Knowledge of the Acquired Companies, agents, including sales
representatives, distributors and consultants) provide, or have provided, cash,
gifts, or other personal benefits to its customers in violation of any
Applicable Law. None of the Acquired Companies and none of their Subsidiaries
(nor any of their respective managers, officers, directors, employees,
Affiliates or, to the Knowledge of the Acquired Companies, agents, including
sales representatives, distributors and consultants) are, as the date of this
Agreement, the subject of, nor has it been prior to the date of this Agreement
the subject of, an investigation, inquiry, audit, or compliance assessment, or
been the recipient of a subpoena, letter of investigation or other document
alleging a violation, or possible violation, of the United Kingdom Bribery Act
2010, the FCPA or other applicable anti-bribery legislation.

(d) None of the representations and warranties contained in this Section 3.16
shall be deemed to relate to environmental matters (which are governed by
Section 3.14), employee benefits matters (which are governed by Section 3.15),
employment matters (which are governed by Section 3.18) or tax matters (which
are governed by Section 3.8).

Section 3.17 Permits. Each of the Acquired Companies and their Subsidiaries has
and, immediately following the Closing, each of the Acquired Companies and their
Subsidiaries will have, all material Permits required to conduct their
respective businesses, including the Acquired Businesses, in the ordinary course
consistent with past practice, and a complete and accurate list of all such
material Permits is set forth on Section 3.17 of the Disclosure Schedule (the
“Acquired Company Permits”). Each of the Acquired Companies and each of their
Subsidiaries is in compliance, and has been in compliance, in all material
respects with the terms of the Acquired Company Permits, such Acquired Company
Permits are valid and in full force and effect, and no suspension or
cancellation of any such Acquired Company Permits is pending, or

 

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to the Knowledge of the Acquired Companies, threatened as of the date of this
Agreement. No Acquired Company Permit shall be subject to revocation,
termination prior to its normal expiration date or non-renewal pursuant to its
terms as a result of this Agreement or the consummation of the transactions
contemplated hereby.

Section 3.18 Labor and Employees.

(a) Section 3.18(a) of the Disclosure Schedule sets forth a complete and
accurate list, as of the date of this Agreement, of the names and titles of all
of the directors, managers or similar governing Person or body and each officer
of each of the Acquired Companies and each of their Subsidiaries, and a complete
and accurate list, as of the date of this Agreement, of all other employees who
are working for any of the Acquired Companies or any of their Subsidiaries as of
the date hereof, including in each case, their name, employer, title,
department, birth date, service date, full time/part time status,
salaried/hourly status, active or leave status (if on leave, with type of leave
indicated and expected return date), exempt/non-exempt status, work location
(including country), status as local or expatriate (for expatriate employees
identifying both home and host country), base salary/wage, bonus entitlement,
commission entitlement, visa status (if applicable) and union affiliation.

(b) Section 3.18(b) of the Disclosure Schedule sets forth a complete and
accurate list of all third party temporary employees, consultants, and
independent contractors who are providing services as of the date of this
Agreement to any of the Acquired Companies or any of their Subsidiaries and
includes their name, employer, work location (including country), position
description or service performed, date initially contracted, hours worked, term
of assignment and fee structure. All individuals characterized and treated by
the Acquired Companies or any of their Subsidiaries as consultants or
contractors are properly treated as independent contractors under all Applicable
Laws.

(c) None of the Acquired Companies or any of their Subsidiaries is a party to
any Contract or arrangement in effect as of the date of this Agreement between
or applying to, one or more employees and a trade union, works council, group of
employees or any other employee representative body, for collective bargaining
or other negotiating or consultation purposes or reflecting the outcome of such
collective bargaining or negotiation or consultation with respect to their
respective employees with any labor organization, union, group, association,
works council or other employee representative body, or is bound as of the date
of this Agreement by any equivalent national or sectoral agreement. As of the
date of this Agreement, there are no activities or proceedings by any labor
organization, union, group or association or representative thereof to organize
any such employees, or, to the Knowledge of the Acquired Companies, any threats
thereof. As of the date of this Agreement, there are no lockouts, strikes,
slowdowns, pickets, work stoppages or, to the Knowledge of the Acquired
Companies, threats thereof by or with respect to any employees of any of the
Acquired Companies or any of their Subsidiaries nor have there been any such
lockouts, strikes, slowdowns, pickets or work stoppages.

(d) In the twelve (12) months prior to the date hereof, none of the Acquired
Companies nor any of their Subsidiaries have effectuated (i) a “plant closing”
as defined in the Worker Adjustment and Retraining Notification Act, as amended
(the “WARN Act”) (or any

 

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similar state, local or foreign Applicable Laws) affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of any of the Acquired Companies or any of their
Subsidiaries or (ii) a “mass layoff” as defined in the WARN Act (or any similar
state, local or foreign Applicable Law) affecting any site of employment or
facility of any of the Acquired Companies or any of their Subsidiaries with
respect to any site of employment or facility of any of the Acquired Companies
or any of their Subsidiaries.

(e) Each of the Acquired Companies and each of its Subsidiaries: (i) is in
compliance in all material respects with all Applicable Laws with respect to
employment, employment practices, immigration matters, terms and conditions of
employment, labor relations and wages and hours, in each case, with respect to
Acquired Company Employees; (ii) has withheld and reported all amounts required
by Applicable Law to have withheld and reported with respect to wages, salaries
and other payments to Acquired Company Employees; (iii) is not liable for any
arrears of wages or any Taxes or any penalty for failure to comply with any of
the foregoing; (iv) is not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any Governmental Entity, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for Acquired Company Employees (other than routine payments to be
made in the normal course of business and consistent with past practice) and
(v) has properly classified all of its employees as exempt or non-exempt and is
in compliance in all material respects with the Fair Labor Standards Act or any
other Applicable Law regarding payment of wages and overtime. As of the date of
this Agreement, there are no pending or, to the Knowledge of the Acquired
Companies, threatened or anticipated claims or actions against any of the
Acquired Companies or any of their Subsidiaries under any worker’s compensation
policy or long-term disability policy. None of the Acquired Companies, any of
their Subsidiaries nor any member of their respective Controlled Groups has
direct or indirect liability with respect to any misclassification of any Person
as an independent contractor rather than as an employee, or with respect to any
employee leased from another employer.

(f) Each Acquired Company Employee is or was at the time of his or her
employment with any of the Acquired Companies or any of their Subsidiaries,
(i) a United States citizen or lawful permanent resident of the United States or
(ii) an alien authorized to work in the United States either specifically for
the applicable Acquired Company or any of its Subsidiaries or for any United
States employer, and the applicable Acquired Company or its applicable
Subsidiary has completed a valid Form I-9 (Employment Eligibility Verification)
for each Acquired Company Employee. Except as set forth on Section 3.18(f) of
the Disclosure Schedule, as of the date of this Agreement, no current Acquired
Company Employee has a principal place of employment outside the United States
or is subject to the labor and employment laws of any country other than the
United States.

(g) Each Acquired Company Employee who performs services in the United States is
entitled to work in the United States under the Immigration Reform and Control
Act of 1986, as amended, and all other Applicable Laws. Any Acquired Company
Employee who performs services outside the United States is entitled to work
under Applicable Laws in the country in which such employee performs services
and the reporting and payment of, and withholding from, such employee’s
compensation complies with all Applicable Laws in both the United States and the
work country.

 

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(h) There are no material outstanding citations, assessments, penalties, fines,
liens, charges, surcharges, or other material amounts due or owing as a result
of any violation of any Applicable Laws in respect of workplace safety
applicable to the Acquired Company Employees.

(i) As of the date of this Agreement, none of the Acquired Companies nor any of
their Subsidiaries has given notice to the authorities of any collective
redundancies or started consultations with any trade union or employee
co-determination body concerning any (future) collective redundancies in
connection with the Acquired Company Employees.

(j) Except in the ordinary course of business, or except in compliance with
Section 6.1, to the Knowledge of the Acquired Companies, no proposal, assurance
or commitment has been communicated to any current Acquired Company Employee
regarding any material (i) change to his or her terms of employment or working
conditions or (ii) continuance, introduction, increase or improvement of any
benefit or any customary or discretionary arrangement or practice, and no
negotiations have commenced for any such matter.

(k) This Section 3.18 sets forth the exclusive representations and warranties in
respect of labor and employment matters and none of the representations and
warranties set forth in the other Sections of this Article III shall be deemed
or construed to relate to labor and employment matters.

Section 3.19 Insurance. Section 3.19 of the Disclosure Schedule sets forth a
complete and accurate list of all insurance policies maintained as of the date
of this Agreement by or for the benefit of any of the Acquired Companies or
their Subsidiaries, and sets forth the following information with respect to
each such insurance policy:

(a) the name, address and telephone number of the agent who is the contact
person for such policy;

(b) the name of the insurer and the name of the policyholder;

(c) the policy number and the period of coverage;

(d) the type of coverage provided under the policy;

(e) the policy premium; and

(f) the policy limits and deductibles.

With respect to each such insurance policy: (i) all policy premiums due to date
have been paid in full and the policy is valid and binding in accordance with
its terms on the Acquired Company or Subsidiary thereof that is a party to such
policy and, to the Knowledge of the Acquired Companies as of the date of this
Agreement, the insurance company that is a party to such policy, and is in full
force and effect (unless terminated by the applicable insurance company in
accordance with its termination rights thereunder, other than as a result of any
material breach or default by or of any of the Acquired Companies or any of
their Subsidiaries); and (ii) none of the Acquired Companies or any of their
Subsidiaries and, to the Knowledge of the Acquired

 

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Companies, no other party to the policy is in material breach or default
(including with respect to the payment of premiums or the giving of notices) and
no event has occurred which, with notice or the passage of time, would
constitute a material breach or default by the Acquired Companies or any of
their Subsidiaries, or permit termination, modification, or acceleration, under
the policy by the insurance company that is a party thereto. As of the date of
this Agreement, no claim under any such policies has been denied or disputed
and, to the Knowledge of the Acquired Companies, no such denial or dispute has
been threatened, at any time since January 1, 2010. The Acquired Companies have
Made Available to Purchaser true and complete copies of all current insurance
policies and a complete claims history under all such policies since January 1,
2010.

Section 3.20 Accounts Receivable; Accounts Payable.

(a) All accounts receivable of the Acquired Companies and their Subsidiaries,
whether reflected on the Company Balance Sheet or subsequently created, are
valid receivables that have arisen from bona fide transactions in the ordinary
course of business consistent with past practice. All such accounts receivable
are good and collectible (and subject to no setoffs or counterclaims) at the
aggregate recorded amounts thereof, net of any applicable reserves for doubtful
accounts reflected on the Company Balance Sheet as adjusted for operations and
transactions through the Closing Date in accordance with past custom and
practice of the Acquired Companies; provided, however, that nothing in the
foregoing shall be construed as a guarantee of collectability. Each of the
Acquired Companies and their Subsidiaries have good and marketable title to
their respective accounts receivable, free and clear of all Liens, except for
Permitted Liens. Since the Balance Sheet Date, there have not been any
write-offs as uncollectible of any notes or accounts receivable of any of the
Acquired Companies or any of their Subsidiaries, except for write-offs as
uncollectible of doubtful accounts reflected on the Company Balance Sheet as
adjusted for operations and transactions through the Closing Date in accordance
with past custom and practice of the Acquired Companies.

(b) All accounts payable and notes payable of the Acquired Companies and their
Subsidiaries, whether reflected on the Company Balance Sheet or subsequently
created, are valid payables that have arisen from bona fide transactions in the
ordinary course of business consistent with past practice. Since the Balance
Sheet Date, the Acquired Companies and their Subsidiaries have paid their
accounts payable in the ordinary course of their business and in a manner which
is consistent with past practices.

Section 3.21 Bank Accounts. Section 3.21 of the Disclosure Schedule sets forth a
full and complete list of each bank, trust company, savings institution,
brokerage firm, mutual fund or other financial institution with which any of the
Acquired Companies or any of their Subsidiaries maintains an account and safe
deposit box, the number of each such account or box, and the names of the
Persons authorized to draw on such accounts or to access such boxes. All cash in
such accounts is held in demand deposits and is not subject to any restriction
as to withdrawals.

Section 3.22 Brokers; Fees. Except for Stifel, Nicolaus & Company, Incorporated,
no agent, broker, investment banker, financial advisor or other firm or Person
is or shall be entitled, as a result of any action, agreement or commitment of
any of the Acquired Companies or their

 

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Subsidiaries, to any broker’s, finder’s, financial advisor’s or other similar
fee or commission in connection with any of the transactions contemplated by
this Agreement or the Ancillary Documents.

Section 3.23 Transactions with Affiliates. Section 3.23 of the Disclosure
Schedule contains a complete and accurate list (and if oral, an accurate and
complete description of all material terms) of all Contracts, transfers of
assets or liabilities or other arrangements, commitments or transactions to or
by which any of the Acquired Companies or any of their Subsidiaries, on the one
hand, and any Affiliate of any of the Acquired Companies, any of their
Subsidiaries, any Seller or any Affiliate of any Seller, on the other hand, are
a party or otherwise bound, except for Contracts, arrangements or commitments
entered into or made by any of the Acquired Companies or any of their
Subsidiaries in the ordinary course of business with individuals solely in their
capacities as employees, officers, directors, managers or consultants of such
Acquired Company or such Subsidiary. Since January 1, 2013, none of the equity
holders, consultants, officers, directors, managers or employees of any of the
Acquired Companies or, to the Knowledge of the Acquired Companies, any of their
respective Affiliates, have been involved in any business arrangement or
relationship with any of the Acquired Companies or any of their Subsidiaries
(other than arrangements or relationships with the Acquired Companies or any of
their Subsidiaries solely in their capacity as an employee, officer, director,
manager or consultant of such entity). None of the equity holders, consultants,
officers, directors, managers or employees of any of the Acquired Companies or,
to the Knowledge of the Acquired Companies, any of their respective Affiliates,
(i) are entitled to any payment or transfer of any assets from any of the
Acquired Companies or any of their Subsidiaries (other than compensation owed by
the Acquired Companies or any of their Subsidiaries in the ordinary course of
business to any such employee, officer, director, manager or consultant for
services rendered in such capacity and other than distributions required or
permitted under the LLC Operating Agreement), (ii) have any interest in any
material property or asset owned, leased, licensed or used by any of the
Acquired Companies or any of their Subsidiaries or (iii) have an interest in any
customer or supplier of any of the Acquired Companies or any of their
Subsidiaries or any provider of products or services to any of the Acquired
Companies or any of their Subsidiaries (other than the direct or indirect
ownership of an equity interests in a publicly traded company if such equity
interest is less than five percent of such publicly traded company’s equity
interests).

Section 3.24 Customers and Suppliers.

(a) Schedule 3.24(a) sets forth the ten (10) largest customers of the Acquired
Companies and their Subsidiaries (on a consolidated basis) as a percentage of
the revenue of the Acquired Companies and their Subsidiaries for the ten months
ended October 31, 2013 (the “Material Customers”). To the Knowledge of the
Acquired Companies, as of the date of this Agreement, neither the Acquired
Companies nor any of their Subsidiaries has a material dispute with any Material
Customer. As of the date hereof, no Material Customer has indicated in writing
that it (and to the Knowledge of the Acquired Companies, no Material Customer)
intends to terminate or materially reduce its relationship with the Acquired
Companies or their Subsidiaries. As of the date of this Agreement: no Material
Customer has modified the material terms of any existing Contract or business
relationship, and to the Knowledge of the Acquired Companies, no such Material
Customer intends to terminate or materially reduce its relationship with the
Acquired Companies or any of their Subsidiaries or materially change the
existing

 

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business relationship or the terms and conditions under which such Material
Customer currently buys such Products, Services or other property from the
Acquired Companies or their Subsidiaries.

(b) Schedule 3.24(b) sets forth the ten (10) largest suppliers of the Acquired
Companies and their Subsidiaries as a percentage of the purchases of the
Acquired Companies and their Subsidiaries (on a consolidated basis) for the ten
months ended October 31, 2013 (the “Material Suppliers”). To the Knowledge of
the Acquired Companies, as of the date of this Agreement, neither the Acquired
Companies nor any of their Subsidiaries has a material dispute with any Material
Supplier. No supplier of the Acquired Companies or their Subsidiaries represents
a sole source of supply for goods and services used in the conduct of the
Acquired Business. As of the date of this Agreement: no Material Supplier has
modified the material terms of any existing Contract or business relationship,
and to the Knowledge of the Acquired Companies, no such Material Supplier
intends to terminate or materially reduce its relationship with the Acquired
Companies or any of their Subsidiaries or materially change the existing
business relationship or the terms and conditions under which such Material
Supplier currently sells such products, services or other property to the
Acquired Companies or any of their Subsidiaries.

Section 3.25 Complete Copies of Materials. The Acquired Companies have delivered
or Made Available to Purchaser complete and accurate copies of each document
that is referenced in the Disclosure Schedule.

Section 3.26 Product Warranty; Product Liability.

(a) All of the products produced, sold, licensed, designed or delivered by any
of the Acquired Companies or any Subsidiary of any Acquired Company at any time
prior to the Closing (the “Products”) and the services performed by any of the
Acquired Companies or any Subsidiary of any Acquired Company at any time prior
to the Closing (the “Services”) have conformed in all material respects with all
applicable contractual commitments and all applicable express and implied
warranties, and no Acquired Company or any Subsidiary of any Acquired Company
has any liability for replacement or repair thereof or other damages in
connection with Services or Products sold at any time prior to the Closing in
excess of the reserve for product warranty claims set forth on the face of the
Company Financial Statements (or in any notes thereto) as adjusted for
operations and transactions through the Closing Date in accordance with the past
custom and practice of the Acquired Companies. All Products sold at any time
prior to the Closing by any of the Acquired Companies or any Subsidiary of any
Acquired Company comply in all material respects with all industry and trade
association standards and legal requirements, if any, applicable to such
Products, including consumer product, manufacturing, labeling, quality and
safety laws of the United States, each state thereof and each other jurisdiction
(including foreign jurisdictions) in which any of the Acquired Companies or any
Subsidiary of any Acquired Company sells the Products. The warranty reserves on
the Company Financial Statements are reasonable based on past experience and
have been accrued in accordance with GAAP applied on a consistent basis. Except
as set forth on Section 3.26(a)(i) of the Disclosure Schedule, none of the
Acquired Companies nor any of the Subsidiaries of the Acquired Companies is
aware of any facts or circumstances which, given the passage of time, could
result in a claim against the Acquired Companies or any of their Subsidiaries
for the breach

 

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of any contractual commitment or express or implied warranty that is applicable
to any Products or Services sold at any time prior to the Closing by any of the
Acquired Companies or any of their respective Subsidiaries. Section 3.26(a)(ii)
of the Disclosure Schedule sets forth the standard warranty terms applicable to
those Products offered for sale or sold by the Acquired Companies or any of
their Subsidiaries prior to the Closing that are still under warranty by the
Acquired Companies or any of their Subsidiaries. Except for the Contracts set
forth on Section 3.26(a)(iii) of the Disclosure Schedule, no Acquired Company
nor any Subsidiary of any Acquired Company has offered for sale or sold any
Products that are still under warranty and where the warranty terms applicable
to such Products materially deviate from the terms set forth on
Section 3.26(a)(ii) of the Disclosure Schedule. Notwithstanding the foregoing,
nothing in this Section 3.26(a) or set forth in Section 3.26(a) of the
Disclosure Schedule shall limit or qualify the representations and warranties
set forth in Section 3.12(d).

(b) (i) There are no material latent or overt design, manufacturing or other
defects in any Product, (ii) none of the Products has been subject to recall or
market withdrawal and none of the Acquired Companies nor any Subsidiary of an
Acquired Company has initiated any, and there is no pending recall or market
withdrawal relating to any of the Products; and (iii) as of the date of this
Agreement, no Acquired Company or Subsidiary of an Acquired Company has received
any written notice of a claim against such Acquired Company or Subsidiary
alleging a material design or manufacturing defect in the Products; in the case
of the foregoing clauses (i)-(iii), excluding any and all requests for product
returns in the ordinary course of business which have not had and are not
expected to result in any material liability to any Acquired Company or
Subsidiary of an Acquired Company, and additionally in the case of the foregoing
clause (i), excluding any material latent or overt design, manufacturing or
other defects in any Product sold by Purchaser or any of its Affiliates at any
time after the Closing (1) if such Product is not manufactured, produced or
assembled by the Purchaser and its Affiliates after the Closing in strict
compliance with the designs in effect as of the Closing for such Product, (2) if
such Product is not manufactured, produced, assembled, stored, shipped, handled,
operated, repaired or maintained by Purchaser or any of its Affiliates after the
Closing in the same manner as such Product is manufactured, produced, assembled,
stored, shipped, handled, operated, repaired or maintained by the Acquired
Companies and their Subsidiaries prior to the Closing and in full compliance
with all of the requirements of any applicable Contract as in effect prior to
the Closing with respect to such Product or any of the materials, parts or
components of such Product, (3) if such Product is not stored, handled,
operated, maintained or repaired by any customer or user of such Product in
strict compliance with the requirements or written instructions for the storing,
handling, operation, maintenance or repair of such Product in effect as of the
Closing or (4) if Purchaser or any of its Affiliates was aware or had knowledge
of any such defect prior to the sale of such Product after the Closing;
provided, however, that nothing in this Section 3.26(b) or set forth in
Section 3.26(b) of the Disclosure Schedule shall limit or qualify the
representations and warranties set forth in Section 3.12(d).

Section 3.27 Inventory. All Inventory of each Acquired Company and each
Subsidiary of an Acquired Company is of a quality, quantity and condition
useable or saleable in the ordinary course of the Acquired Businesses, except to
the extent of any reserves reflected in the Company Financial Statements (or in
any notes thereto) as adjusted for operations and transactions through the
Closing Date in accordance with the past custom and practice of the Company
Financials. None of the Inventory reflected on the Company Financials is
obsolete

 

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and no write-down of such Inventory has been made or should have been made in
the period since the Company Financials other than in the ordinary course of the
Acquired Businesses. All of such Inventory is located at the facilities of an
Acquired Company or Subsidiary of an Acquired Company and no Inventory is held
on a consignment basis.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Except as set forth in the Disclosure Schedule, which Disclosure Schedule is
arranged in sections and subsections corresponding to the numbered and lettered
sections and subsections contained in this Agreement and which disclosure in any
section or paragraph of the Disclosure Schedule shall qualify the corresponding
section or subsection in this ARTICLE IV (it being understood and hereby agreed
that any disclosure in the Disclosure Schedule relating to one section or
subsection shall also apply to any other sections and subsections if and to the
extent that it is reasonably apparent on the face of such disclosure that such
disclosure also relates to such other sections or subsections), each Seller,
severally and not jointly, represents and warrants to Purchaser as of the date
hereof and as of the Closing Date as follows:

Section 4.1 Title to Equity Interests

(a) Such Seller owns good, valid and marketable title to the number and
percentage of Equity Interests set forth opposite such Seller’s name on
Section 4.1 of the Disclosure Schedule, free and clear of any and all Liens
(including any spousal interests (community or otherwise)), and such Equity
Interests held by such Seller constitute all of the equity interests of the
Acquired Companies owned by such Seller. There are no preemptive rights or
rights of first refusal or first offer (other than as set forth in the LLC
Operating Agreement) nor are there any Contracts (other than the LLC Operating
Agreement and this Agreement) or restrictions to which such Seller is a party
relating to any Equity Interests held by such Seller.

(b) Upon delivery of the Equity Interests held by such Seller to Purchaser on
the Closing Date in accordance with this Agreement and upon Purchaser’s payment
to such Seller of such Seller’s Proportionate Share of the Initial Purchase
Price in accordance with Section 2.2(a), the entire legal and beneficial
interest in the Equity Interests held by such Seller and good, valid and
marketable title to such Equity Interests, free and clear of all Liens
(including any spousal interests (community or otherwise)) other than
restrictions on transfer arising under applicable securities laws, will pass to
Purchaser.

Section 4.2 Authority; Binding Agreement; No Conflict

(a) Such Seller has the requisite power, authority and capacity to execute and
deliver this Agreement and the Ancillary Documents to which such Seller is a
party, to perform such Seller’s obligations hereunder and thereunder, and to
consummate the transactions to be consummated by such Seller under this
Agreement and the Ancillary Documents to which such Seller is a party. The
execution, delivery and performance of this Agreement and the Ancillary
Documents to which such Seller is a party, and the consummation of the
transactions

 

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contemplated hereby and thereby, have been duly authorized by all requisite
action of such Seller, as applicable. No other action or proceeding on the part
of such Seller is necessary to authorize the execution, delivery and performance
of this Agreement or any Ancillary Document to which such Seller is a party, or
the consummation of the transactions contemplated hereby and thereby.

(b) This Agreement has been duly executed and delivered by such Seller, and each
Ancillary Document to which such Seller is to become a party, when executed and
delivered by such Seller, will be duly executed and delivered by such Seller.
This Agreement constitutes (and each of the Ancillary Documents to which such
Seller is a party, when executed, will constitute) (assuming, in each case, the
due authorization, execution and delivery by each other party thereto) a legal,
valid and binding agreement of such Seller, enforceable against such Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors’ rights generally and
the exercise of judicial discretion in accordance with general equitable
principles.

(c) The execution, delivery and performance of this Agreement and the Ancillary
Documents to which such Seller is a party and the consummation of the
transactions contemplated hereby and thereby by such Seller do not and will not
(i) subject to compliance with the HSR Act and any other applicable Antitrust
Laws, result in any failure to comply in all material respects with any
Applicable Laws to which such Seller is subject or may be bound or (ii) conflict
with, or result in any violation or breach of, or constitute (with or without
notice or lapse of time, or both) a default (or give rise to a right of
termination, cancellation, modification, notice or acceleration of any
obligation or loss of any benefit) under, require a consent, notice or waiver
under, require the payment of a penalty or increased liabilities, fees or the
loss of a benefit under or result in the imposition of any Lien on such Seller’s
assets under, any of the terms, conditions or provisions of any Contract to
which such Seller is a party or by which such Seller or any of such Seller’s
Equity Interests is otherwise bound.

(d) No material Permit, Action, concession of, or registration, declaration,
notice or filing with, any Governmental Entity is required by or with respect to
such Seller in connection with the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby, except
for the pre-merger notification requirements of the HSR Act and any other
applicable Antitrust Laws

Section 4.3 Litigation; Orders

As of the date of this Agreement, there are no Actions pending or, to such
Seller’s Knowledge, threatened against or involving such Seller questioning,
challenging or seeking to prevent, hinder or delay the transactions contemplated
by this Agreement.

Section 4.4 Brokers; Fees.

Except for Stifel, Nicolaus & Company, Incorporated, no agent, broker,
investment banker, financial advisor or other firm or Person is or shall be
entitled, as a result of any action, agreement or commitment of such Seller, to
any broker’s, finder’s, financial advisor’s or other similar fee or commission
in connection with any of the transactions contemplated by this Agreement or the
Ancillary Documents.

 

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER AND PARENT

Purchaser and Parent, jointly and severally, represent and warrant to the
Sellers as of the date hereof and as of the Closing Date as follows:

Section 5.1 Organization, Standing and Power. Each of Purchaser and Parent is a
corporation organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation.

Section 5.2 Authority; Binding Agreement; No Conflict.

(a) Each of Purchaser and Parent has the requisite power and authority to
execute and deliver this Agreement and the Ancillary Documents to which it is a
party, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and the Ancillary Documents to which Purchaser or
Parent, as the case may be, is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all requisite
action of Purchaser and the Parent. No other action or proceeding on the part of
Purchaser or Parent is necessary to authorize this Agreement or any Ancillary
Document or to consummate the transactions contemplated hereby and thereby.

(b) This Agreement has been duly executed and delivered by each of Purchaser and
Parent, and each Ancillary Document to which Purchaser or Parent is a party,
when executed and delivered by Purchaser or Parent, as applicable, will be duly
executed and delivered by such party. This Agreement constitutes (and each of
the Ancillary Documents to which Purchaser or Parent is a party, when executed,
will constitute) (assuming, in each case, the due authorization, execution and
delivery by each other party thereto) a legal, valid and binding obligation of
each of Purchaser and/or Parent, as applicable, enforceable against such party
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting creditors’ rights generally and
the exercise of judicial discretion in accordance with general equitable
principles.

(c) The execution, delivery and performance by each of Purchaser and Parent of
this Agreement and the Ancillary Documents to which it is a party and the
consummation by such party of the transactions contemplated by this Agreement
and the Ancillary Documents to which it is a party does not and will not,
(i) violate or conflict with any provision of the certificate of incorporation
or bylaws of the Purchaser or Parent, as applicable, (ii) subject to compliance
with the applicable requirements of the HSR Act and any other applicable
Antitrust Laws, result in any failure to comply in all material respects with
any Applicable Law to which Purchaser or Parent is subject or may be bound or
(iii) conflict with, or result in any violation or breach of, or constitute
(with or without notice or lapse of time, or both) a default (or give rise to

 

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a right of termination, cancellation, modification or acceleration of any
obligation or loss of any benefit) under, require a consent or waiver under,
require the payment of a penalty or increased liabilities, fees or the loss of a
benefit under or result in the imposition of any Lien on Purchaser’s or Parent’s
assets under, any of the terms, conditions or provisions of any Contract to
which any of Purchaser or Parent is a party or by which it or any of its
properties or assets may be bound or subject.

(d) No material Permit, Action, concession of, or registration, declaration,
notice or filing with, any Governmental Entity is required by or with respect to
Purchaser or Parent in connection with the execution, delivery and performance
of this Agreement by each such party or the consummation of the transactions
contemplated hereby, except for the pre-merger notification requirements of the
HSR Act and any other applicable Antitrust Laws.

Section 5.3 Investment Purpose. Purchaser is acquiring the Equity Interests
solely for the purpose of investment and not with a view to, or for offer or
sale in connection with, any distribution thereof other than in compliance with
all Applicable Laws, including United States federal securities laws. Purchaser
agrees that the Equity Interests may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act and any applicable state securities laws, except pursuant to an
exemption from such registration under the Securities Act and such laws.

Section 5.4 Brokers; Fees. No agent, broker, investment banker, financial
advisor or other firm or Person is or shall be entitled, as a result of any
action, agreement or commitment of Purchaser or Parent or any of their
respective Affiliates, to any broker’s, finder’s, financial advisor’s or other
similar fee or commission in connection with any of the transactions
contemplated by this Agreement.

Section 5.5 Due Diligence. Each of Purchaser and Parent acknowledges that, as of
the Closing, it will have conducted to its satisfaction an independent
investigation of the financial condition, results of operations, assets,
liabilities, properties and projected operations of the Acquired Companies and
their respective Subsidiaries and the Acquired Businesses. The representations
and warranties by the Acquired Companies set forth in Article III and the
representations and warranties of the Sellers set forth in Article IV constitute
the sole and exclusive representations and warranties of the Acquired Companies
and the Sellers, as applicable, to Purchaser and Parent in connection with the
transactions contemplated hereby, and each of Purchaser and Parent acknowledges
and agrees that the Acquired Companies and the Sellers are not making any
representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, including any implied warranty as to
condition, merchantability, or suitability as to any of the assets of the
Acquired Companies and the Equity Interests. Each of Purchaser and Parent
further acknowledges and agrees that any cost estimates, projections or other
predictions that may have been provided to Purchaser or Parent or any of their
employees, agents or representatives are not representations or warranties of
the Acquired Companies, their Subsidiaries, the Sellers and/or their Affiliates.

Section 5.6 Sufficiency of Funds. Purchaser and/or Parent has available to it
sufficient cash on hand or other sources of immediately available funds to allow
Purchaser to make the payments to the Sellers and consummate the transactions
contemplated by this Agreement, subject to the terms and conditions of this
Agreement.

 

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ARTICLE VI

CONDUCT OF BUSINESS

Section 6.1 Interim Operations of the Acquired Companies. Except as set forth on
Section 6.1 of the Disclosure Schedule, as expressly permitted or required by
this Agreement or as consented to in writing by Purchaser, during the period
commencing on the date hereof and ending at the Closing or such earlier date as
this Agreement is terminated in accordance with its terms (the “Pre-Closing
Period”), each of the Acquired Companies shall, and shall cause its Subsidiaries
to, (a) maintain its existence in good standing under Applicable Law, (b) act
and carry on its business in the ordinary course of business consistent with
past practice, (c) use commercially reasonable efforts to make all capital
expenditures budgeted for the period prior to the Closing, (d) use commercially
reasonable efforts to maintain all assets and properties thereof in good
operating condition and repair and apply all insurance proceeds towards the
replacement or repair of any properties damaged or destroyed, (e) use
commercially reasonable efforts to maintain and preserve its business
organization, assets and properties, to keep available the services of its
current employees and officers and preserve its business relationships with
customers, strategic partners, suppliers, distributors and others having
business dealings with it and (f) maintain its Books and Records in the ordinary
course of business. Without limiting the generality of the foregoing, except as
set forth on Section 6.1 of the Disclosure Schedule or as expressly permitted or
required by this Agreement, during the Pre-Closing Period the Acquired Companies
shall not, and shall cause their respective Subsidiaries not to, directly or
indirectly, do any of the following without the prior written consent of
Purchaser:

(a) (i) declare, set aside or pay any dividends on, or make any other
distributions (whether in securities or other property) in respect of, any
equity interests of any of the Acquired Companies or any of their Subsidiaries
other than any dividend or distribution of cash that leaves at least the Minimum
Cash Amount in one or more bank accounts of the Acquired Companies as of the
Closing after giving effect to such dividend or distribution; (ii) adjust,
split, combine or reclassify any of the equity interests of any of the Acquired
Companies or any of their Subsidiaries or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for equity
interests or any other securities of any of the Acquired Companies or any of
their Subsidiaries; or (iii) purchase, redeem or otherwise acquire, or offer to
purchase, redeem or otherwise acquire, any equity interests or any other
securities of any of the Acquired Companies or any of their Subsidiaries or any
rights, warrants or options to acquire any such equity interests or other
securities;

(b) issue, deliver, sell, grant, pledge or amend the terms (whether by merger,
consolidation or otherwise) of any equity interests of any of the Acquired
Companies or any of their Subsidiaries, any other voting securities or any
securities convertible or exercisable into or exchangeable for, or any rights,
warrants or options to acquire, any such equity interests, voting securities or
convertible or exchangeable securities;

 

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(c) amend, adopt, authorize or propose any amendments to the Acquired Company
Organizational Documents;

(d) propose, adopt or enter into any Contract or plan with respect to or
consummate (i) any plan of liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of any of the Acquired
Companies or any of their Subsidiaries or (ii) (A) any merger, consolidation or
other business combination with, or (B) acquisition of any assets (other than
acquisitions of inventory, goods, supplies, parts and services in the ordinary
course of business consistent with past practice), securities or any capital
stock of or interest in, any Person, other than the transactions contemplated
hereby;

(e) sell, license, mortgage, transfer, lease, assign, pledge, subject to any
Lien (other than a Permitted Lien) or otherwise dispose of or encumber any
property, rights or assets of the Acquired Companies or any of their
Subsidiaries (including the Leased Real Property, equity interests or other
ownership interests of any Subsidiaries and any Acquired Company IP), except for
(i) the sale, assignment, transfer or other disposition of obsolete or worthless
assets and (ii) the sale, license, assignment, transfer or other disposition of
the products or services of the Acquired Companies or any of their Subsidiaries
in the ordinary course of business;

(f) enter into any Contract that would be binding on the Acquired Companies or
any of their Subsidiaries after the Closing and that would limit the freedom, or
restrict the business activities, of any of the Acquired Companies or any of
their Subsidiaries (1) to engage in any line of business, (2) to sell, supply or
distribute any service or product, (3) to compete with any Person or (4) to
conduct business in any geography;

(g) (i) incur or assume any Indebtedness or issue any debt securities, except
for Indebtedness incurred under existing lines of credit to fund operations of
the business in the ordinary course of business consistent with past practice,
(ii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person, except for any Indebtedness permitted under the foregoing clause (i), or
(iii) make any loans, advances or capital contributions to or investments in any
other Person except for advances for travel and other miscellaneous expenses in
the ordinary course of business consistent with past practice to employees of
the Acquired Companies or any of their Subsidiaries;

(h) make any changes in accounting methods, procedures, principles or practices
or change any assumption underlying, or method of calculating, any bad debt,
contingency or other reserve, in each case, except insofar as may have been
required by a change in GAAP after the date hereof;

(i) increase benefits payable under any existing severance or termination pay
policies or employment agreements; enter into any employment, deferred
compensation or other similar agreement (or amend any such existing agreement)
with any director, officer, manager or employee of any of the Acquired Companies
or any of their Subsidiaries, except for any such agreement entered into with
the prior written consent of Purchaser (which consent shall not be unreasonably
withheld) with any new director, officer, manager or employee hired with the
prior written consent of Purchaser; alter, establish, adopt, or amend (except as
required by Applicable

 

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Law) any collective bargaining agreement, bonus, profit-sharing, thrift,
pension, retirement, deferred compensation, compensation, change of control
payment, severance, equity option, restricted equity or other benefit plan or
arrangement (including any Acquired Company Plans) covering any past or present
director, officer, manager, employee, contractor or consultant of any of the
Acquired Companies or any of their Subsidiaries; or increase compensation, bonus
or other benefits payable to any director, officer, manager or employee of any
of the Acquired Companies or any of their Subsidiaries, except for (1) any such
increase required under Applicable Law or pursuant to the terms of an existing
Contract, benefit plan or arrangement and (2) any such increase for
non-executive employees in the ordinary course of business consistent with past
practice;

(j) hire any employees, officers, managers, consultants, directors or
contractors, terminate any employees, officers, managers, consultants, directors
or contractors (other than any such termination if it is for cause), or induce
or attempt to induce any employees, officers, managers, consultants, directors
or contractors, whether directly or indirectly, to terminate their employment or
engagement with any of the Acquired Companies or any of their Subsidiaries prior
to, at or after the Closing;

(k) (i) modify, amend, terminate or assign any Lease or sublease or enter into
any new leases or subleases for real property, (ii) waive, release, relinquish
or assign any of the rights of any of the Acquired Companies or any of their
Subsidiaries under any Lease or sublease or (iii) fail to take any action
required to be taken, or take any action not permitted to be taken, under any
Lease or sublease if such failure to act or action could reasonably be expected
to adversely affect the term, validity or enforceability of such Lease or
sublease;

(l) make or change any material Tax election, settle or compromise any Tax
liability, amend any Tax Return, change any method of Tax accounting, enter into
any closing agreement with respect to any Tax, or consent to any extension or
waiver of the limitation period applicable to any claim or assessment in respect
of any Taxes;

(m) initiate, compromise or settle any litigation (whether civil, criminal,
administrative, in law or at equity) or arbitration proceeding other than
against Purchaser;

(n) amend, modify, terminate, cancel or permit to lapse any insurance policies
maintained by any of the Acquired Companies or any of their Subsidiaries, except
for any such amendment or modification that is not material;

(o) enter into any joint venture, partnership or other similar arrangement;

(p) enter into any Contract with any Affiliate, equityholder, officer, director,
manager, employee or consultant of any of the Acquired Companies or any of their
Subsidiaries, other than (i) as expressly permitted or required under this
Agreement, (ii) transactions solely between or among an Acquired Company, any
other Acquired Company and any Subsidiary of an Acquired Company or (iii) any
payment or provisions of salary, benefits or other compensation to officers,
directors, managers, employees or consultants of an Acquired Company or its
Subsidiaries expressly permitted by this Section 6.1;

 

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(q) (i) enter into any Contract that if existing on the date hereof would be a
Material Contract or (ii) terminate, modify, amend or supplement in any material
respect any Material Contract, in either case, other than (x) transactions
solely between or among any Acquired Company, any other Acquired Company and any
Subsidiary of an Acquired Company or (y) any entry into, termination,
modification, amendment or supplement of any Material Contract in the ordinary
course of business consistent with past practices (it being understood that if
any such entry into, termination, modification, amendment or supplement of any
Material Contract is not prohibited under clause (i) or (ii) above as a result
of the ordinary course of business consistent with past practices exception set
forth in subclause (y) above, but such action would otherwise be prohibited by
any other provision of this Section 6.1, then this Section 6.1(q) will not be
interpreted to permit such action without the prior written consent of
Purchaser);

(r) enter into or become subject to a power of attorney;

(s) cancel any debts or waive any claims or rights of substantial value
(including the cancellation, compromise, release or assignment of any
Indebtedness owed to, or claims held by, any of the Acquired Companies or any of
their Subsidiaries);

(t) commit to make any capital expenditures or capital additions or improvements
involving more than $100,000 in the aggregate;

(u) create, assume, pay, discharge, settle or satisfy any liability (whether
absolute, accrued, contingent or otherwise and whether due or to become due),
other than (1) in the ordinary course of business consistent with past practice,
(2) as contemplated, permitted or required elsewhere in this Agreement, (3) as
required under Applicable Law and (4) the payment, discharge, settlement,
satisfaction or performance of any liability pursuant to, and in accordance
with, the terms of any Contract, Lease or Acquired Company Plan that is in
effect on the date of this Agreement or that is permitted pursuant to this
Section 6.1;

(v) implement any plant closing or mass layoff that would require notice
pursuant to the WARN Act (or any similar Applicable Law); or

(w) authorize any of, or commit or agree, in writing or otherwise, to take any
of, the foregoing actions.

Notwithstanding anything to the contrary contained herein, nothing contained in
this Agreement will give to Purchaser, directly or indirectly, rights to control
or direct the business or operations of any of the Acquired Companies or any of
their Subsidiaries prior to the Closing. Prior to the Closing, each of the
Acquired Companies will exercise, consistent with the terms and conditions of
this Agreement, control of its business and operations.

Section 6.2 The Confidentiality Agreement. The parties acknowledge that
Purchaser and the LLC have previously executed that certain letter agreement,
dated as of August 16, 2013, as may be further amended or supplemented (the
“Confidentiality Agreement”), which Confidentiality Agreement shall continue in
full force and effect in accordance with its terms, except as expressly waived
or modified as provided herein or therein, until the Closing, at which time it
will automatically terminate and be of no further force or effect.

 

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ARTICLE VII

ADDITIONAL AGREEMENTS

Section 7.1 Access to Information. During the Pre-Closing Period, each of the
Acquired Companies shall afford to Purchaser and its representatives reasonable
access, upon reasonable notice, during normal business hours and in a manner
that does not unreasonably or unnecessarily disrupt or interfere with business
operations, to all of the Acquired Companies’ and their Subsidiaries’
properties, including the Leased Real Property, books, contracts, commitments,
personnel and records as Purchaser shall reasonably request, and, during such
period, each of the Acquired Companies shall (and each of the Acquired Companies
shall cause each of its Subsidiaries to) (a) furnish reasonably promptly to
Purchaser and its representatives any other information concerning the Acquired
Companies and their Subsidiaries and the business, finances, operations,
properties, assets and personnel of the Acquired Companies and their
Subsidiaries as Purchaser may reasonably request and (b) instruct its employees
and representatives to reasonably cooperate with Purchaser in its investigation
of the Acquired Companies and their Subsidiaries; provided, however, that the
Acquired Companies may restrict the foregoing access to the extent that any
Applicable Law requires Acquired Companies to restrict or prohibit access to any
such properties or information; and provided, further, however, that either
David Miller or Kim Little, or their designee, shall have the right to be
present at any meeting, or participate in any telephone conversation (which such
presence or participation shall not be materially delayed following the
reasonable request of Purchaser), between any officer, employee, personnel,
customer, supplier, accountant, counsel, financial advisor, or representative of
the Acquired Companies, on the one hand, and Purchaser or representative of the
Purchaser, on the other hand. Purchaser shall hold, and cause its
representatives to hold, any such information that is nonpublic in confidence in
accordance with the Confidentiality Agreement.

Section 7.2 Legal Requirements; Consents; Further Assurances; Cooperation.

(a) Subject to the terms hereof (including without limitation Section 7.2(b) and
Section 7.2(c)), each of the Acquired Companies, Purchaser and the Sellers
shall, and each of the Acquired Companies shall cause its Subsidiaries to:

(i) use its commercially reasonable efforts to take, or cause to be taken, all
actions, and do, or cause to be done, and assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated hereby as promptly as practicable;

(ii) use its commercially reasonable efforts to, in the most expeditious manner
reasonably practicable, obtain from any Governmental Entity or any other third
party any consent or Permit required to be obtained by any of the Acquired
Companies, Purchaser, any Seller or any Subsidiary of any Acquired Company in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby; provided, that in
connection therewith, without the prior written consent of Purchaser, which
consent shall not be unreasonably withheld, none of the Sellers, the Acquired
Companies or any of their Subsidiaries will accept any material conditions or
obligations,

 

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including material amendments to existing conditions and obligations; and
provided, further that none of Purchaser, the Sellers, the Acquired Companies or
their Subsidiaries shall be obligated to make any payment or incur any
expenditure, liability or obligation with respect to obtaining any such consents
or Permits;

(iii) as promptly as practicable, make all necessary filings and notifications,
and thereafter make any other required submissions, with respect to this
Agreement and the transactions contemplated hereby required under (A) any
applicable federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder and (C) any other Applicable Law; and

(iv) execute or deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.

Each of the Acquired Companies, Purchaser and each Seller shall cooperate with
each other in determining whether any action by or in respect of, or filing
with, any Governmental Entity, is required or reasonably appropriate, in
connection with the consummation of the transactions contemplated by this
Agreement. Each of the Acquired Companies, Purchaser and each Seller shall each
use its commercially reasonable efforts to furnish to each other all information
required for any application or other filing to be made pursuant to the rules
and regulations of any Applicable Law in connection with the transactions
contemplated by this Agreement. For the avoidance of doubt, the Acquired
Companies, Purchaser and each Seller agree that nothing contained in this
Section 7.2(a) shall modify or affect their respective rights and
responsibilities under Section 7.2(b).

(b) The Acquired Companies, Purchaser and each Seller agree to (i) promptly, but
no later than ten (10) Business Days following the date hereof, file all
notifications and related materials that are required under the HSR Act and any
other Applicable Laws that are designed to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade
(collectively, “Antitrust Laws”), (ii) use their commercially reasonable efforts
to obtain any government clearances or approvals required under the HSR Act or
other Antitrust Laws for the Closing and (iii) respond to any government
requests for information under the HSR Act or other Antitrust Laws that
restrict, prevent or prohibit the consummation of the transactions contemplated
by this Agreement under the HSR Act or other Antitrust Laws; provided, however,
that nothing contained in this Agreement shall require any party to this
Agreement or any of its Affiliates to enter into any agreement, consent decree
or other commitment requiring such party or any of its Affiliates (including,
with respect to Purchaser, the Acquired Companies and their Subsidiaries from
and after the Closing) to (A) divest or hold separate or license any assets of
such party or any of its Affiliates, (B) litigate, pursue or defend any action
or proceeding challenging any of the transactions contemplated hereby as
violative of the HSR Act, other Antitrust Laws or other Applicable Laws, or
(C) agree with any Governmental Entity to any liability or restriction on the
conduct of the business of such party or its Affiliates. In connection with any
such filings, each of the Acquired Companies, Purchaser and each Seller shall
consult and reasonably cooperate with one another, and consider in good faith
the views of one another, in connection with, and provide to each other in
advance, any analyses, appearances, presentations, memoranda, briefs, arguments,
opinions and proposals

 

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made or submitted by or on behalf of any party hereto in connection with
proceedings under or relating to the HSR Act or other Antitrust Laws. Fees
payable to Governmental Entities in connection with filings required by the HSR
Act or other necessary Permits or other consents under other Antitrust Laws
shall be borne entirely by Purchaser. In connection with the foregoing, the
Acquired Companies, Purchaser and each Seller (I) shall promptly notify each of
the other parties in writing of any communication received by that party or its
Affiliates from any Governmental Entity and, subject to Applicable Laws, provide
the other parties with a copy of any such written communication (or written
summary of any oral communication) and (II) shall not participate in any
substantive meeting or discussion with any Governmental Entity in respect of any
filing, investigation or inquiry concerning the transactions contemplated by
this Agreement unless it consults with the other parties in advance and, to the
extent permitted by such Governmental Entity, gives the other parties the
opportunity to attend and participate thereat.

(c) Purchaser and the Sellers shall use commercially reasonable efforts, and the
Sellers shall cause the Acquired Companies and their Subsidiaries to use
commercially reasonable efforts to obtain, and to reasonably cooperate in
obtaining, all consents from third parties in respect of Contracts to the extent
such Contracts require such consents as a result of the transactions
contemplated hereby, including all such Contracts set forth on Section 3.4(c) of
the Disclosure Schedule; provided, however, that none of Purchaser, Sellers, the
Acquired Companies and their Subsidiaries shall be required to pay or commit to
pay any amount to (or incur any expenditure, liability or obligation in favor
of) any Person from whom any such consent may be required (other than nominal
filing, attorneys or application fees); provided, further that this does not
limit the condition precedent that those consents set forth on Section 9.2(e) of
the Disclosure Schedule be obtained).

(d) Nothing in this Section 7.2 shall limit any party’s right to terminate this
Agreement in accordance with the terms and conditions of Section 11.1.

Section 7.3 Public Disclosure. The initial press release by each of Purchaser
and the Acquired Companies with respect to the execution of this Agreement shall
be reasonably acceptable to Purchaser, the Acquired Companies and the
Equityholders’ Representative. Until the Closing, no party hereto shall issue
any press release or make any public statement or disclosure with respect to
this Agreement or the transactions contemplated hereby without the prior written
consent of Purchaser, the Acquired Companies and the Equityholders’
Representative, which consent shall not be unreasonably withheld, conditioned or
delayed; provided, however, that Purchaser and its Affiliates may, without the
prior written consent of the Acquired Companies and the Equityholders’
Representative, (a) issue any press release or make any public statement or
disclosure as may be required by Applicable Law, including federal securities
laws, or the applicable rules of the NASDAQ Stock Market or any listing
agreement (including annual and quarterly earnings press releases and conference
calls) or (b) make any public statement or disclosure to the extent the
substance of such public statement or disclosure is consistent with any previous
press release, statement or disclosure made in accordance with, or permitted by,
this Section 7.3. After the Closing, no party other than Purchaser or its
Affiliates shall issue any press release or make any public statement with
respect to the Agreement or the transactions contemplated hereby.

 

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Section 7.4 Director and Officer Indemnification.

(a) For a period of six (6) years after the Closing, Purchaser shall cause each
Acquired Company and their Subsidiaries to indemnify and hold harmless all past
and present officers, managers and directors of such Acquired Company and such
Subsidiaries (each, a “Covered Person”) for acts or omissions occurring at or
prior to the Closing pertaining to the fact that he or she is or was an officer,
manager, employee or director of such Acquired Company to the fullest extent
provided under the applicable Acquired Company Organizational Documents in
effect on the date hereof; provided, however, that such indemnification shall be
subject to any limitation (including any limitation on the ability of any
Acquired Company to indemnify and hold harmless a Covered Person) imposed from
time to time under Applicable Law. Any such indemnification under this
Section 7.4(a) shall include advancement of expenses to the fullest extent
provided under the applicable Acquired Company Organizational Documents and
Applicable Law.

(b) From and after the Closing, Purchaser or the applicable Acquired Company
shall be entitled to assume the defense of any action, suit, investigation or
proceeding against any Covered Person and Purchaser and such Acquired Company
shall not be liable to any Covered Person for any legal expenses of separate
counsel or any other expenses subsequently incurred by such Covered Person in
connection with the defense thereof, except that if Purchaser or the Acquired
Company elects not to assume such defense or in the reasonable judgment of the
Covered Person, after consultation with counsel, the Covered Person determines
that a conflict of interest with respect to such matter exists between Purchaser
or the Acquired Company (on the one hand) and the Covered Person (on the other
hand), the Covered Person may assume the defense of such action and retain
counsel of his or her choice, subject to the consent of Purchaser, which consent
shall not be unreasonably withheld, conditioned or delayed, and Purchaser or the
Acquired Company shall pay all reasonable fees and expenses of such counsel for
the Covered Person promptly as statements therefor are received; provided that
Purchaser and the Acquired Company shall not be liable for any settlement
effected without prior written consent (which consent shall not be unreasonably
withheld, conditioned or delayed).

(c) Prior to the Closing, Purchaser will consult with the Acquired Companies to
purchase prepaid, non-cancellable “tail” or “run-off” coverage on the Acquired
Companies’ existing policies of directors’ and officers’ liability insurance
(true, correct and complete copies of which have been delivered to Purchaser)
maintained by the Acquired Companies as of the date of this Agreement (“D&O
Insurance”); provided, however, that if such D&O Insurance is not available at a
cost less than 200% of the last annual premium paid prior to the date hereof
under the Acquired Companies’ directors’ and officers’ liability insurance
policies (the “Insurance Cap”), then Purchaser shall cause to be obtained as
much comparable insurance as can reasonably be obtained in its good faith
judgment at a cost up to but not exceeding the Insurance Cap. Such tail or
run-off coverage shall be for a claims reporting or discovery period of six
(6) years from the Closing and otherwise on terms and conditions that are no
less favorable than as provided in the Acquired Companies’ existing policies as
of the date hereof.

(d) The rights to indemnification of each Covered Person under this Section 7.4
shall be in addition to, and not in substitution for, any other rights to
indemnification or contribution that such Covered Person may have by Applicable
Law or under the applicable Acquired Company Organizational Documents.

 

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(e) This Section 7.4 is intended to benefit each Covered Person and his, her or
its heirs or successors, shall be enforceable by each Covered Person, his, her
or its heirs and successors and their respective representatives and shall be
binding on all successors and assigns of Purchaser and the Acquired Companies.
In the event Purchaser, any Acquired Company, any Subsidiary of any Acquired
Company or any of their respective successors (i) consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any Person, then, and in each
such case, to the extent necessary, proper provision shall be made to the extent
not otherwise effected by operation of law so that the successors of Purchaser,
such Acquired Company, such Subsidiary or such successor, as the case may be,
assume the obligations of Purchaser, such Acquired Company or such Subsidiary,
as the case may be, set forth in this Section 7.4. Any such assumption of the
obligations of Purchaser, such Acquired Company, such Subsidiary or such
successor, as the case may be, shall not operate to release, relieve, waive,
terminate or modify the obligations of Purchaser, such Acquired Company, such
Subsidiary or such successor, as the case may be, under this Section 7.4.

Section 7.5 Notification of Certain Matters.

(a) At all times prior to the Closing, the Acquired Companies, their
Subsidiaries and each Seller shall promptly notify Purchaser of (i) any written
notice from any Person alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this Agreement,
(ii) any notice or other communication from any Governmental Entity in
connection with the transactions contemplated by this Agreement and (iii) any
Actions commenced or, to the Knowledge of the Acquired Companies, threatened
against, relating to or involving or otherwise affecting any of the Acquired
Companies or any of their Subsidiaries or any Seller, that, if pending on the
date of this Agreement and not described in the Disclosure Schedule, would have
made the representations and warranties of the Acquired Companies under ARTICLE
III or of any of the Sellers under ARTICLE IV incomplete or inaccurate or that
would reasonably be expected to adversely impact the consummation of the
transactions contemplated by this Agreement.

(b) At all times prior to the Closing, each party shall promptly notify the
other parties in writing of any fact, condition, event or occurrence that will
or is reasonably likely to result in the failure of any of the other parties’
conditions contained in ARTICLE IX to be satisfied.

(c) No notification or communication made by any party pursuant to this
Section 7.5 or access provided or information disclosed or otherwise made
available pursuant to Section 7.1 shall modify or otherwise affect in any manner
the representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement and shall not
be deemed to cure any related breaches of representations, warranties, covenants
or agreements contained in this Agreement, nor shall the failure of any party to
take any action with respect to such notice be deemed a waiver of any such
breach or breaches.

 

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Section 7.6 Resignations; Removal. Each of the Acquired Companies shall obtain
and deliver to Purchaser at the Closing evidence reasonably satisfactory to
Purchaser of the resignation or removal, effective as of the Closing, of all
officers, managers and directors, as applicable, of such Acquired Company and
its Subsidiaries (except those designated by Purchaser to the Acquired Companies
in writing at least two (2) Business Days prior to the Closing Date).

Section 7.7 Delivery of Monthly Financials. Until the Closing Date, each of the
Acquired Companies shall, as promptly as practicable but in no event later than
fifteen (15) Business Days after the end of each calendar month, prepare and
deliver to Purchaser an unaudited balance sheet, statement of operations and
statement of cash flows of the Acquired Businesses for such calendar month. Such
unaudited statements shall be prepared on a basis consistent with the monthly
financial reports prepared for use by management of the Acquired Companies.

Section 7.8 Affiliate Agreements. Each of the Acquired Companies shall use
commercially reasonable efforts to cause all Contracts, arrangements or other
transactions between such Acquired Company or any of its Subsidiaries, on the
one hand, and any Affiliate, officer, director or manager of any Acquired
Company or any of their Subsidiaries, on the other hand (the “Affiliate
Agreements”), with respect to which there could be further or continuing
liability or obligation on the part of Purchaser or any of its Affiliates
(including after the Closing the Acquired Companies and their Subsidiaries), to
be terminated prior to the Closing without any further or continuing liability
on the part of Purchaser or any of its Affiliates (including after the Closing
the Acquired Companies and their Subsidiaries); provided, however, that
(i) nothing in this Section 7.8 shall require the termination of any Contract,
arrangement or other transaction that is solely between or among any Acquired
Company or any of its Subsidiaries, on the one hand, and any Acquired Company or
any of its Subsidiaries, on the other hand, and (ii) nothing in this Section 7.8
shall require the termination of (A) any existing Contract, arrangement or
commitment entered into or made by any of the Acquired Companies or any of their
Subsidiaries in the ordinary course of business with individuals solely in their
capacities as employees, consultants, officers, directors or managers of such
Acquired Company or such Subsidiary, (B) the compensation or benefits paid or
provided in the ordinary course of business to any officer, director, manager,
employee or consultant of any Acquired Company or any of its Subsidiaries for
services rendered solely in such capacity or (C) the rights to indemnification
of any Covered Person under the applicable Acquired Company Organizational
Documents (and no such Contract, arrangement or other transaction covered by
either clause (i) or clause (ii) of this proviso shall constitute an “Affiliate
Agreement” for purposes of this Agreement).

Section 7.9 Employee Benefit Matters.

(a) Following the Closing, (i) each employee of any of the Acquired Companies or
any of their Subsidiaries who continues employment with Purchaser, an Acquired
Company or a Subsidiary of an Acquired Company following the Closing (each, a
“Continuing Employee”) shall receive credit for all purposes under any benefit
plan, program or arrangement established or maintained by or on behalf of the
applicable Acquired Company or Subsidiary after the Closing Date that covers
such Continuing Employees (the “New Plans”) for years of service with the
applicable Acquired Company or Subsidiary, except to the extent such crediting

 

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of service will cause a duplication of benefits, and (ii) Purchaser shall cause
any and all pre-existing condition limitations, eligibility waiting periods and
evidence of insurability requirements under any New Plans that are group health
plans in which such Continuing Employees and their eligible dependents shall
participate to be waived (to the extent permissible under such New Plan) and
shall provide credit, during the applicable plan year, for any co-payments and
deductibles prior to the Closing for purposes of satisfying any applicable
deductible, out-of-pocket or similar requirements under any such plans that may
apply after the Closing.

(b) Notwithstanding anything in this Agreement to the contrary, from and after
the Closing, Purchaser and the applicable Acquired Company (or its
Subsidiaries), as applicable, shall have sole discretion over the hiring,
promotion, retention, firing and other terms and conditions of the employment of
each Continuing Employee. Nothing in this Agreement shall prevent Purchaser, any
Acquired Company or any Subsidiary of an Acquired Company from amending or
terminating any Acquired Company Plan in accordance with its terms from and
after the Closing.

(c) Nothing contained in this Agreement, express or implied, (i) except for the
provisions of Section 7.4, is intended to confer or shall confer upon any
individual or any legal representative of any individual (including employees,
retirees, or dependents or beneficiaries of employees or retirees) any right as
a direct party to, or a third party beneficiary of, this Agreement or (ii) shall
be deemed to confer upon any such individual or legal representative any rights
under or with respect to any plan, program or arrangement described in or
contemplated by this Agreement, and each such individual or legal representative
shall be entitled to look only to the express terms of any such plans, program
or arrangement for his or her rights thereunder.

(d) Nothing contained in this Agreement, express or implied, shall prohibit
Purchaser, any of the Acquired Companies or any Subsidiary of an Acquired
Company, as applicable, from, subject to Applicable Law, adding, deleting or
changing providers of benefits, changing, increasing or decreasing co-payments,
deductibles or other requirements for coverage or benefits (e.g., utilization
review or pre-certification requirements), and/or making other changes in the
administration or in the design, coverage and benefits provided to Continuing
Employees from and after the Closing. No provision of this Agreement shall be
construed as a limitation on the right of Purchaser to suspend, amend, modify or
terminate any employee benefit plan. Further, (i) no provision of this Agreement
shall be construed as an amendment to any employee benefit plan and (ii) no
provision of this Agreement shall be construed as limiting Purchaser’s or the
Acquired Companies’ or any of their Subsidiaries’ discretion and authority to
interpret the respective employee benefit and compensation plans, agreements
arrangements, and programs, in accordance with their terms and Applicable Law.

Section 7.10 Restrictive Covenants.

(a) For a period of five (5) years from and after the Closing Date, each Seller
agrees that he, she or it shall not, and shall cause his, her or its controlled
Affiliates not to, directly or indirectly, whether as principal, partner,
officer, director, employee, consultant, manager, member or stockholder, own,
manage, operate, participate in, control or acquire more than five percent
(5%) of (or the right to acquire more than five percent (5%) of) any class of

 

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voting securities of, perform services for or otherwise carry on or engage in, a
business that competes with any of the Acquired Businesses anywhere in the
United States, the Netherlands or any other jurisdiction in which the Acquired
Businesses operate as of the Closing Date.

(b) For a period of five (5) years from and after the Closing Date, except with
respect to any work that may be performed on behalf of the Acquired Businesses
as an employee or agent of the Acquired Businesses, each Seller agrees that he,
she or it shall not, and shall cause his, her or its controlled Affiliates not
to, directly or indirectly contact, solicit, market to, sell any product or
service to, consult with or perform any service whatsoever for (x) any Person
that is as of the Closing Date, or during the preceding six (6) months was, a
customer of any of the Acquired Businesses (each, a “Company Customer”) or
(y) any Affiliate of a Company Customer, which product or service is competitive
with any product or service offered by any of the Acquired Businesses on the
Closing Date.

(c) For a period of five (5) years from and after the Closing Date, each Seller
agrees that, without the consent of Purchaser, he, she or it shall not, and
shall cause his, her or its controlled Affiliates not to, directly or indirectly
hire, solicit to (or assist or encourage others to) hire, or in any way
interfere with the employment relationship of any individual who is as of the
Closing Date an employee of any Acquired Company or any of its Subsidiaries in
connection with any of the Acquired Businesses or who was employed by any
Acquired Company or any of its Subsidiaries in connection with any of the
Acquired Businesses within the six (6) months prior to the Closing Date.
Notwithstanding the foregoing, none of the Sellers or their controlled
Affiliates shall be precluded from engaging in general solicitations or
advertising for personnel, including advertisements and searches conducted by a
headhunter agency; provided that such solicitation, advertising or searches are
not directed in any way at the employees of any Acquired Company or any of its
Subsidiaries.

(d) The Sellers acknowledge and agree that the scope of the restrictive
covenants set forth in clauses (a) through (c) above are reasonably tailored,
and not broader than necessary, to protect the legitimate business interests of
Purchaser, and do not prevent or preclude the Sellers from earning a suitable
livelihood.

(e) If any term or provision of this Section 7.10 shall be determined by any
court of competent jurisdiction to be invalid, illegal or unenforceable, in
whole or in part, and such determination shall become final, such provision or
portion shall be deemed to be severed or limited, but only to the extent
required to render the remaining terms and provisions of this Section 7.10
enforceable. This Section 7.10 as thus amended shall be enforced so as to give
effect to the intention of the parties insofar as that is possible. In addition,
the parties hereby expressly empower a court of competent jurisdiction to modify
any term or provision of this Section 7.10 to the extent necessary to comply
with any Applicable Law and to enforce this Section 7.10 as modified.

(f) Each of the Sellers acknowledges and agrees that money damages would not be
an adequate remedy for breach of the provisions of this Section 7.10. In the
event of an actual or threatened breach by a Seller of any of the provisions of
this Section 7.10, Purchaser, in addition to any other remedies available to it,
may obtain from a court of competent jurisdiction specific performance and/or
injunctive relief in order to enforce, or prevent any breach of, the provisions
of this Section 7.10 without the requirement of posting any bond or other
indemnity.

 

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Section 7.11 Waiver of Rights of First Offer. In connection with the
transactions contemplated by this Agreement, (a) the LLC and each of the Sellers
signatory to that certain Amended and Restated Operating Agreement, dated as of
January 1, 2007 (the “LLC Operating Agreement”) hereby expressly agrees not to
exercise any of its rights under, and waives compliance by any of the Sellers
with any of the provisions of Section 15.2 of the LLC Operating Agreement, and
any other provisions thereof that may otherwise restrict, hinder or delay the
transactions contemplated by this Agreement, and (b) Mark McCarthy and Robert
Valleau, as parties to that certain Advanced Data Corporation Stock Purchase
Agreement, dated as of January 8, 1998 (the “ADCC Stock Agreement”), and Hickory
Lane Trust, as transferee of ADCC Shares previously held by Mark McCarthy,
hereby consent to the sale of the ADCC Shares as contemplated by this Agreement
and expressly agree not to exercise any of their rights under, and hereby waive
compliance by the other with, any of the provisions of Sections Four, Five and
Six of the ADCC Stock Agreement and any other provisions thereof that may
otherwise restrict, hinder or delay the transactions contemplated by this
Agreement.

Section 7.12 Exclusive Dealing. On the date hereof, each of the Acquired
Companies and each Seller shall, and shall cause its representatives to,
immediately cease any existing discussion or negotiation with any Person (other
than Purchaser and its Affiliates) relating to an acquisition of any of the
Acquired Companies or any of their Subsidiaries, equity interests of any of the
Acquired Companies or any of their Subsidiaries, assets of any of the Acquired
Companies or any of their Subsidiaries, or any merger, consolidation,
combination, equity exchange, recapitalization, liquidation or dissolution
involving any of the Acquired Companies or any of their Subsidiaries
(collectively, a “Competing Transaction”). During the Pre-Closing Period, the
Acquired Companies and each Seller shall, and shall cause their representatives
to, refrain from taking, directly or indirectly, any action to (a) solicit,
initiate, or encourage the submission of any proposal or indication of interest
from any Person relating to a Competing Transaction, (b) participate in any
discussions or negotiations regarding, or furnish to any Person any information
with respect to, or that may reasonably be expected to lead to, a Competing
Transaction (or any proposal or indication of interest relating to a Competing
Transaction) or (c) authorize, engage in, or enter into any Contract (other than
with Purchaser and its Affiliates) with respect to a Competing Transaction. The
Acquired Companies and each Seller will notify Purchaser as soon as practicable
but in no event later than three (3) Business Days after receipt by any of them
or any of their respective representatives of any expression of interest,
proposal or offer (including any request for non-public information) relating to
a possible Competing Transaction that is received from any Person on or after
the date hereof, identifying the Person making the expression of interest,
proposal or offer and describing the material terms thereof.

Section 7.13 Data Room Contents. The Sellers and their representatives shall
retain (i) one (1) or more CD-Rom disks containing a complete and accurate
electronic copy of the “data room” as of the date hereof, and (ii) one (1) or
more CD-Rom disks containing a complete and accurate electronic copy of the
“data room” as of the Closing, in each case for purposes of monitoring
compliance with this Agreement.

 

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Section 7.14 R&W Insurance Policy. Purchaser, Sellers and the Acquired Companies
shall cooperate and use their commercially reasonable efforts to enable
Purchaser to obtain, on or prior to the Closing Date, a buyer-side
representation and warranty insurance policy from Chartis Specialty Insurance
Company (or an affiliate thereof) having the terms specified on Exhibit D or a
similar policy from another insurance company having such terms, in each case,
reasonably satisfactory to Purchaser and Sellers (the “R&W Insurance Policy”) to
insure against up to a maximum aggregate amount of $10,000,000 in Losses
incurred by any Purchaser Indemnified Party (including, without limitation, any
of the Acquired Companies and their Subsidiaries from and after the Closing) as
a result of the failure of any representation or warranty made by the Sellers or
the Acquired Companies in Article III or Article IV hereof or in any
certificates delivered pursuant to Article IX to be true and correct as of the
Closing Date (or as of the date made, where such representation or warranty
relates to an earlier date). The premiums due under the R&W Insurance Policy
shall be paid by Purchaser to the applicable insurer at or prior to the Closing.

ARTICLE VIII

CERTAIN COVENANTS REGARDING TAX MATTERS

Section 8.1 Tax Returns.

(a) The parties agree that, as a result of the transactions contemplated by this
Agreement, (i) the taxable year of the LLC shall terminate pursuant to Code
Section 708(b)(1)(B) for federal and, unless required by applicable Tax law, any
applicable state and local income Tax purposes as of the close of business on
the Closing Date, (ii) the Corporation and ADCC will become members of the
Purchaser’s consolidated group and, accordingly, the taxable year of the
Corporation will terminate pursuant to Treasury Regulations
Section 1.1502-76(b)(1)(ii)(A) for federal and, unless required by applicable
Tax law, any applicable state and local income Tax purposes as of the close of
business on the Closing Date, (iii) the taxable year of ADCC shall terminate
pursuant to Code Section 1362(d)(2) and Treasury Regulations
Section 1.1502-76(b)(1)(ii)(A)(2) for federal and, unless required by applicable
Tax law, any applicable state and local income Tax purposes as of the close of
business on the day before the Closing Date, and (iv) in determining the taxable
income of ADCC for its taxable year ending as of the close of business on the
day before the Closing Date, a “closing of the books” method will apply pursuant
to Code Section 1362(e)(6)(D). The Equityholders’ Representative shall prepare
and timely file all Tax Returns of the Acquired Companies and their Subsidiaries
for income, gross receipts and similar Taxes (including any business,
professional and occupational license Taxes or similar Taxes) that are required
to be filed by or with respect to the Acquired Companies and each of their
Subsidiaries for all Tax periods ending on or prior to the Closing Date (the
“Pre-Closing Tax Period”) which are filed after the Closing Date. Such Tax
Returns shall be prepared by treating items on such Tax Returns in a manner
consistent with the past practices with respect to such items, unless otherwise
required by Applicable Law. The Equityholders’ Representatives shall cause the
LLC to make an election under Code Section 754 for its taxable year ending on
the Closing Date. The Equityholders’ Representative shall provide Purchaser with
reasonable opportunity to review and comment on each such Tax Return for which
the Equityholders’ Representative bears preparation responsibility in accordance
with this

 

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Section 8.1(a) prior to filing, and shall make changes to such Tax Returns
reasonably requested by Purchaser to ensure that such Tax Returns are consistent
with the terms of this Agreement. With respect to the Corporation, (i) Purchaser
shall be entitled to recover from the Sellers, not less than five (5) Business
Days prior to the filing of any such Pre-Closing Tax Period Tax Return, an
amount equal to the Taxes required to be paid in connection with such Tax
Returns, less the amount of estimated Taxes previously paid by the Corporation
and reflected as a credit on such Tax Returns, and (ii) Purchaser shall cause
the Corporation to issue a check for payment for all Taxes shown on such
Pre-Closing Tax Period Tax Return to be attached to the Pre-Closing Tax Period
Tax Return filed by the Equityholders’ Representative. If the amount of
estimated Taxes previously paid by the Corporation and reflected as a credit on
such Tax Returns exceeds the amount of Taxes required to be paid in connection
with such Tax Returns, then Purchaser shall pay such excess to the Sellers no
later than the date that is five (5) Business Days following the receipt of such
excess from the applicable Governmental Entity; provided that Purchaser and the
Sellers agree that the Corporation will request a refund of any such excess and
the Corporation will not apply any such excess as a credit in respect of any
subsequent Tax period or other Tax. The Sellers and the Corporation shall
include income, gain, loss, deduction or other Tax items for Pre-Closing Tax
Periods of the LLC on their Tax Returns in a manner consistent with the Schedule
K-1s furnished by the LLC to them for such periods. Any amended Tax Return of
the Acquired Companies or their Subsidiaries or claim for Tax refund on behalf
of the Acquired Companies or their Subsidiaries for any Pre-Closing Tax Period
shall be filed, or caused to be filed, only by the Equityholders’
Representative.

(b) Purchaser shall prepare and file, when due, any Tax Returns of the Acquired
Companies and their Subsidiaries for Tax periods which begin on or before the
Closing Date and end after the Closing Date, and all Tax Returns of the Acquired
Companies and their Subsidiaries for the Pre-Closing Tax Period, not otherwise
required to be prepared by the Equityholders’ Representative pursuant to
Section 8.1(a). To the extent such Tax Returns relate to a Pre-Closing Tax
Period or to a Straddle Period, Purchaser shall provide the Equityholders’
Representative with reasonable opportunity to review and comment on each such
Tax Return prior to filing. The Corporation shall include income, gain, loss,
deduction or other Tax items for Straddle Periods of the Corporation on its Tax
Returns in a manner consistent with the Schedule K-1 furnished by the LLC to the
Corporation in respect of the pre-Closing portion of such Straddle Period.

Section 8.2 Cooperation on Tax Matters. Purchaser, the Acquired Companies and
the Equityholders’ Representative shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of Tax
Returns pursuant to Section 8.1 and any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the 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 and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. The
Equityholders’ Representative shall (a) retain all books and records with
respect to Tax matters pertinent to the Acquired Companies or their Subsidiaries
relating to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser, any extensions thereof) of the respective taxable periods, and to
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into with any taxing authority, and (b) give Purchaser written notice prior to
transferring, destroying or discarding any such books and records and, if
Purchaser so requests, the Equityholders’ Representative shall allow Purchaser
to take possession of such books and records. Purchaser and the Equityholders’
Representative further agree, upon request, to cooperate in good faith to
mitigate, reduce or eliminate any Tax that could be imposed by the transactions
contemplated hereby. In addition, Purchaser and the Equityholders’
Representative agree to cooperate in good faith in obtaining any certificate or
other document from any Governmental Entity or any other Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed by the
transactions contemplated hereby. The Acquired Companies and their Subsidiaries,
Purchaser, the Sellers, and their respective Affiliates shall execute and
deliver such powers of attorney and other documents as may be necessary or
appropriate to give effect to this ARTICLE VIII, including Section 8.1.

Section 8.3 Tax Indemnification.

(a) The Sellers shall be liable for, and shall severally, and not jointly,
indemnify and hold Purchaser and the Acquired Companies harmless against,
(i) all Taxes imposed on the Acquired Companies, on any of their Subsidiaries or
with respect to their businesses, for all taxable periods (or portions thereof)
ending on or prior to the Closing Date, and (ii) subject to Section 8.4, all
Taxes imposed on or with respect to payments made to the Sellers pursuant to
this Agreement, except in each case (x) to the extent reflected as a current
liability in the Closing Working Capital set forth in the Accepted Adjustment
Statement or (y) to the extent such Taxes have been paid by the Sellers, the
Acquired Companies, or their Subsidiaries, on or prior to the Closing Date
(including through estimated Tax payments).

(b) Purchaser and Parent, jointly and severally, shall be liable for, and shall
indemnify and hold the Sellers harmless against, all Taxes imposed on the
Acquired Companies and their Subsidiaries for all taxable periods (or portions
thereof) beginning after the Closing Date.

(c) For purposes of Section 8.1 and this Section 8.3, and subject to the first
sentence of Section 8.1(a), Taxes for any Tax period of the Acquired Companies
and their Subsidiaries that includes but does not end on the Closing Date (a
“Straddle Period”) shall be allocated for all purposes of this Agreement (i) to
the Sellers for the portion of the Tax period up to and including the close of
business on the Closing Date, and (ii) to Purchaser for the portion of the Tax
Period subsequent to the Closing Date. For that purpose, (A) real, personal and
intangible property Taxes and any other Taxes levied on an annual or other
periodic basis (“Per Diem Taxes”) of the Acquired Companies and their
Subsidiaries for a Straddle Period shall be allocated between the periods
described in clauses (i) and (ii) of the preceding sentence on a per diem basis
based on the number of days during the Straddle Period ending with and including
the Closing Date and the number of days during the Straddle Period commencing on
the day after the Closing Date, and (B) Taxes that are not Per Diem Taxes,
including income Taxes and any transactional Taxes such as Taxes based on sales
or revenue, of the Acquired Companies and their Subsidiaries for a Straddle
Period shall be allocated between the periods described in clauses (i) and
(ii) of the preceding sentence as if such Tax Period ended as of the close of
business on the Closing Date. For purposes of clause (B) of the preceding
sentence, any allocation of gross or net income or deductions or other items
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attributable to such a Straddle Period shall be made by means of a closing of
the books and records of the Acquired Companies and their Subsidiaries as of the
close of business on the Closing Date, provided, that exemptions, allowances,
deductions or periodic Taxes (such as property Taxes) that are calculated on an
annual basis (including, but not limited to, depreciation and amortization
deductions) shall be allocated between the period ending as of the close of
business on the Closing Date and the period after the Closing Date in proportion
to the number of days in each such period. Any refund resulting from an
overpayment of Taxes for a Straddle Period shall be prorated based upon the
method employed in this Section 8.3(c) taking into account the type of the Tax
to which the refund relates.

(d) The Sellers shall be entitled to any refund of Taxes of the Acquired
Companies and their Subsidiaries for any taxable period (or portion thereof)
ending on or prior to the Closing Date, except to the extent any such credit or
refund of Taxes is specifically reflected as a current asset in the Closing
Working Capital set forth in the Accepted Adjustment Statement, net of any Taxes
borne by Purchaser or the Acquired Companies and their Subsidiaries as a result
of its receipt of such credit or refund.

(e) For the avoidance of doubt, the rules and procedures of ARTICLE X shall
apply to the indemnification covenants set forth in this Section 8.3.

Section 8.4 Transfer Taxes. All Transfer Taxes incurred in connection with the
transactions contemplated by this Agreement shall be borne fifty percent
(50%) by the Sellers, on the one hand, and fifty percent (50%) by Purchaser, on
the other hand. Purchaser and the Equityholders’ Representative will cooperate
in the preparation and filing of all necessary Tax Returns with respect to all
such Transfer Taxes.

Section 8.5 Post-Closing Transactions, Etc. Purchaser agrees to indemnify the
Sellers for any additional Tax owed by them, the Acquired Companies or the
Subsidiaries (including any Tax owed by them due to this indemnification
payment) resulting from (i) any transaction engaged in by the Acquired Companies
or their Subsidiaries not in the ordinary course of business occurring on the
Closing Date after Purchaser’s purchase of the Equity Interests or (ii) any
election made under Code Section 336(e) or Code Section 338 with respect to any
Acquired Company. Purchaser will not make any Code Section 336(e) or Code
Section 338 election with respect to any Acquired Company. The parties agree
that all transactions not in the ordinary course of business occurring on the
Closing Date after Purchaser’s purchase of the Equity Interests shall be
reported on Purchaser’s federal income Tax Return to the extent permitted by
Treasury Regulations Section 1.1502-76(b)(1)(ii)(B).

Section 8.6 Dispute Resolution. Except as provided by Section 2.5, any dispute,
controversy, or claim between Purchaser, on the one hand, and the Equityholders’
Representatives, on the other hand, arising out of or relating to the provisions
of this Agreement that relates to Taxes that cannot be resolved by negotiations
between Purchaser and the Equityholders’ Representative shall be submitted to
the Accountant for resolution. The Accountant shall determine (it being
understood that in making such determination, the Accountant shall be
functioning as an expert and not as an arbitrator), based solely on written
submissions by the parties to the dispute, and not by independent review, only
those issues in dispute and shall render a written report as to the resolution
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computation of any amount in dispute which, absent manifest error, shall be
conclusive and binding on Purchaser, the Equityholders’ Representative, the
Sellers and their respective Affiliates. In resolving any disputed item, the
Accountant may not assign a value to any item greater than the greatest value
for such items claimed by either party or less than the smallest value for such
items claimed by either party.

ARTICLE IX

CLOSING CONDITIONS

Section 9.1 Conditions to Each Party’s Obligations. The respective obligations
of each party to this Agreement to effect the transactions contemplated by this
Agreement shall be subject to the satisfaction on or prior to the Closing Date
of the following conditions:

(a) Antitrust Approvals. All applicable waiting periods (and any extensions
thereof) or approvals applicable to the consummation of the transactions
contemplated by this Agreement under the HSR Act or any other Antitrust Laws
shall have expired or been terminated or received, as the case may be.

(b) Government Restraint. No Governmental Entity of competent jurisdiction shall
have enacted, issued, promulgated, enforced or entered any order, writ,
executive order, stay, decree, stipulation, determination, award, judgment or
injunction (preliminary or permanent) or statute, rule or regulation which is in
effect which would make the transactions contemplated by this Agreement or any
Ancillary Document illegal or prohibit the consummation of the transactions
contemplated by this Agreement.

Section 9.2 Additional Conditions to Obligations of Purchaser. The obligations
of Purchaser to effect the transactions contemplated by this Agreement shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following additional conditions, any of which may be waived, in writing,
exclusively by Purchaser:

(a) Representations and Warranties. The representations and warranties of the
Acquired Companies and/or the Sellers, as the case may be, set forth in:
(i) Section 3.2 (Capitalization; Title to Equity Interests), the second sentence
of Section 3.7 (Absence of Certain Changes or Events) and Section 4.1 (Title to
Equity Interests) shall be true and correct in all respects as of the Closing
Date as though made on and as of the Closing Date; (ii) Section 3.1
(Organization, Standing and Power), Section 3.3 (Subsidiaries; Investments),
Sections 3.4(a) and 3.4(b) (Authority; Binding Agreement), Section 3.22
(Brokers; Fees), Sections 4.2(a) and 4.2(b) (Authority; Binding Agreement) and
Section 4.4 (Brokers; Fees) (in each case, without regard to any materiality or
Acquired Company Material Adverse Effect qualifications or exceptions contained
therein) shall be true and correct in all material respects as of the Closing
Date as though made on and as of the Closing Date; (iii) Article III and Article
IV (other than the Sections of Article III and Article IV described in clauses
(i) and (ii) above) (without regard to any materiality or Acquired Company
Material Adverse Effect qualifications or exceptions contained therein) shall be
true and correct as of the Closing Date as though made on and as of the Closing
Date (except to the extent such representations and warranties are specifically
made

 

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as of a particular date, in which case such representations and warranties
(without regard to any materiality or Acquired Company Material Adverse Effect
qualifications or exceptions contained therein) shall be true and correct as of
such date), except in the case of this clause (iii) to the extent that the
failure of any or all of the representations or warranties of the Acquired
Companies and the Sellers described in this clause (iii) (without regard to any
materiality or Acquired Company Material Adverse Effect qualifications or
exceptions contained therein) to be true and correct as of the Closing Date (or,
if made as of a particular date, as of such particular date) do not have, in the
aggregate, an Acquired Company Material Adverse Effect. Purchaser shall have
received (x) a certificate signed by the Equityholders’ Representative, on
behalf of the Sellers, to such effect, and (y) a certificate signed by an
executive officer of each Acquired Company, on behalf of such Acquired Company,
to such effect.

(b) Performance of Obligations. Each of the Sellers and the Acquired Companies
shall have performed in all material respects all obligations required to be
performed by him, her or it under this Agreement on or prior to the Closing
Date; and Purchaser shall have received a certificate signed by the
Equityholders’ Representative, on behalf of the Sellers, and by an executive
officer of each of the Acquired Companies, on behalf of each of the Acquired
Companies, to such effect.

(c) No Material Adverse Effect. Since the date of this Agreement, there shall
not have occurred any Effect or Effects that, individually or in the aggregate,
have had or could reasonably be expected to have an Acquired Company Material
Adverse Effect; and Purchaser shall have received a certificate signed by the
Equityholders’ Representative, on behalf of the Sellers, and by an executive
officer of each of the Acquired Companies, on behalf of each of the Acquired
Companies, to such effect.

(d) No Action. There shall be no Action pending against or involving any Seller,
any Acquired Company or any Subsidiary of an Acquired Company questioning,
challenging or seeking to prevent, hinder or delay the transactions contemplated
by this Agreement.

(e) Required Consents. The Acquired Companies shall have obtained and delivered
to Purchaser evidence, in form and substance reasonably satisfactory to
Purchaser, that the Acquired Companies have obtained or delivered, as
applicable, all consents, authorizations, notices and approvals set forth on
Section 9.2(e) of the Disclosure Schedule, and, in the case of each such consent
and authorization, that such consent or authorization has not been revoked or
cancelled.

(f) Repayment of Payoff Indebtedness. Purchaser shall have received
(i) evidence, in form and substance reasonably satisfactory to Purchaser, that
all Payoff Indebtedness will be repaid in full and extinguished as of the
Closing (including, for the avoidance of doubt, the wind-up and termination of
all interest rate swap and other hedging Contracts or other arrangements
relating to Payoff Indebtedness) and that, as of the Closing, none of the
Acquired Companies nor any of their Subsidiaries has any liability or obligation
for any Payoff Indebtedness or under any Contract relating to any Payoff
Indebtedness (including, for the avoidance of doubt, all interest rate swap and
other hedging Contracts or other arrangements relating to Payoff Indebtedness),
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substance reasonably satisfactory to Purchaser, in respect of all Payoff
Indebtedness and (y) UCC-3 Termination Statements or any other applicable
releases of all Liens on the assets and properties of the Acquired Companies and
their Subsidiaries.

(g) Deliveries. Purchaser shall have received (i) the equity books, equity
ledger, minute books and corporate seal, if any, of each of the Acquired
Companies and their Subsidiaries, (ii) original certificates (or affidavits of
lost certificates in form and substance reasonably satisfactory to Purchaser)
representing all of the Equity Interests, duly endorsed in blank (or accompanied
by duly executed equity powers) and in the event the Equity Interests are
uncertificated, such evidence of the assignment and transfer of the Equity
Interests from the Sellers to Purchaser, in form and substance reasonably
satisfactory to Purchaser, accompanied by duly executed equity powers,
(iii) such other certificates relating to the limited liability company or
corporate existence of the Acquired Companies and their Subsidiaries and the
Acquired Companies’ authority to enter into this Agreement (including a copy of
the resolutions of the manager or board of directors, as applicable, of each of
the Acquired Companies authorizing and approving this Agreement and the
transactions contemplated hereby, certificates of good standing of the Acquired
Companies and each of their Subsidiaries in their respective jurisdictions of
organization and the foreign jurisdictions in which they are qualified and
copies of the Acquired Company Organizational Documents certified by the
secretary or equivalent officer of the respective Acquired Companies) as
Purchaser may reasonably request, and (iv) quitclaim assignments executed by
each Seller and assigning to the Acquired Companies all of Seller’s rights to
any Acquired Company IP, in form and substance reasonably satisfactory to
Purchaser.

(h) Resignation of Officers, Managers and Directors. Purchaser shall have
received copies of resignation letters executed by each of the managers,
directors and officers of each of the Acquired Companies and their Subsidiaries
(except those designated by Purchaser to the Company in writing at least two
(2) Business Days prior to the Closing Date), in form and substance reasonably
satisfactory to Purchaser, such resignations to be effective as of the Closing.

(i) Escrow Agreement. Purchaser shall have received a duly executed counterpart
of the Escrow Agreement, executed by each Seller and the Equityholders’
Representative.

(j) Flow of Funds Memorandum. Purchaser shall have received a duly executed
counterpart of a flow of funds memorandum, in substantially the form attached
hereto as Exhibit E (the “Flow of Funds Memorandum”), executed by each Acquired
Company, each Seller and the Equityholders’ Representative.

(k) Caruso Change in Control Agreement. Purchaser shall have received evidence,
in form and substance reasonably satisfactory to Purchaser, that the agreement
set forth on Section 9.2(k) of the Disclosure Schedule (the “Caruso Change in
Control Agreement”) has been terminated. The severance agreement executed on or
prior to the date of this Agreement by LLC and Dominick J. Caruso in replacement
of the Caruso Change in Control Agreement (the “Caruso Severance Agreement”),
which Caruso Severance Agreement contain provisions making the effectiveness
thereof subject to, and contingent upon, the Closing, shall remain in full force
and effect at the Closing.

 

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(l) Retention Agreements. The letter agreements executed on or prior to the date
of this Agreement by Purchaser and each of David Miller, Jeffery Pine, Kim
Little and Peter Mott (the “Retention Agreements”), which Retention Agreements
contain provisions making the effectiveness thereof subject to, and contingent
upon, the Closing, shall remain in full force and effect at the Closing.

(m) Tax Certificate. Purchaser shall have received a duly executed certificate
of non-foreign status from each of the Sellers in the form attached hereto as
Exhibit F.

(n) Audited Financials. Purchaser shall have received audited combined financial
statements with respect to the Acquired Companies and their Subsidiaries for
each of the fiscal years ended December 31, 2012 and December 31, 2013, prepared
in accordance with GAAP and audited by the LLC’s independent auditor.

(o) Transaction Expense Payment. Purchaser shall have received evidence in form
and substance reasonably satisfactory to Purchaser that all Transaction Expenses
will be paid in full as of the Closing, and that, as of the Closing, none of the
Acquired Companies or any of their Subsidiaries have any obligation or liability
for any Transaction Expenses, and copies of pay-off letters, in form and
substance reasonably satisfactory to Purchaser, in respect of all Transaction
Expenses.

(p) Termination of the Affiliate Agreements. Purchaser shall have received
evidence, in form and substance reasonably satisfactory to Purchaser, that each
of the ADCC Stock Agreement and the Affiliate Agreements has been terminated
without any continuing obligation of any of the Sellers, the Acquired Companies
or any of their Subsidiaries thereunder.

(q) R&W Insurance Policy. The R&W Insurance Policy, in form and substance
reasonably acceptable to Purchaser, shall have been issued to the Purchaser.

(r) Minimum Cash Amount. The Acquired Companies shall have the Minimum Cash
Amount available for use in one or more of their respective bank accounts and
Purchaser shall have received evidence, in form and substance reasonably
satisfactory to Purchaser, of the same.

(s) No Termination of Certain Customer and Supplier Contracts. No Material
Customer or Material Supplier shall have terminated, or provided a written
notice of its intent to terminate, its relationship or any Contract with any of
the Acquired Companies and their Subsidiaries as a result of the announcement,
disclosure or pendency of the transactions contemplated by this Agreement.

(t) No Termination of Leases. None of the Leases shall have been terminated by
the applicable landlord, nor shall the applicable landlord have provided a
written notice of its intent to terminate any such Lease, in each case at any
time after the date of this Agreement.

(u) No FCPA Investigation. None of the Acquired Companies and their Subsidiaries
(nor any of their respective managers, officers, directors, employees or
Affiliates) shall have become, at any time after the date of this Agreement, the
subject of an investigation, inquiry, audit or compliance assessment, or shall
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Agreement, the recipient of a subpoena, letter of investigation or other
document alleging a violation, or possible violation, of the United Kingdom
Bribery Act 2010, the FCPA or other applicable anti-bribery legislation.

(v) No Notice of Infringement. None of the Acquired Companies or any of their
respective Subsidiaries shall have received any written notice of a claim that
any of the Acquired Companies or their respective Subsidiaries have infringed or
are infringing the Intellectual Property of any Person, which infringement has
caused or could reasonably be expected to result in any material liability to
any of the Acquired Companies or their Subsidiaries.

(w) Termination of 401(k) Plan. Purchaser shall have received a copy of the
resolutions of the board of directors of ADCC, certified by the secretary or
other officer of ADCC, approving, such approval conditioned on the occurrence of
the Closing, (i) the termination of the Advance Data Capture Corp. 401(k) plan
effective at least one Business Day prior to the Closing Date, (ii) the full
vesting of all participant accounts in such 401(k) plan and (iii) the
contribution of all applicable employee contributions and employer matching
contributions to be made to such 401(k) plan.

(x) Additional Documents. Purchaser shall have received such other agreements,
documents, instruments or certificates of transfer and conveyance as Purchaser
may reasonably request in connection with the consummation of the transactions
contemplated hereby.

Section 9.3 Additional Conditions to Obligations of the Sellers. The obligation
of each Seller to effect the transactions contemplated by this Agreement shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following additional conditions, any of which may be waived, in writing,
exclusively by such Seller:

(a) Representations and Warranties. The representations and warranties of
Purchaser and Parent set forth in this Agreement (without regard to any
materiality qualifications or exceptions contained therein) shall be true and
correct as of the Closing Date as though made on and as of the Closing Date
(except to the extent such representations and warranties are specifically made
as of a particular date, in which case such representations and warranties
(without regard to any materiality qualifications or exceptions contained
therein) shall be true and correct as of such date), in each case, in all
material respects; and the Sellers shall have received a certificate signed on
behalf of Purchaser and Parent by an officer of Purchaser and an officer of
Parent to such effect.

(b) Performance of Obligations. Purchaser and Parent shall have performed in all
material respects all obligations required to be performed by Purchaser or
Parent, as applicable, under this Agreement on or prior to the Closing Date; and
the Company shall have received (i) a certificate signed on behalf of Purchaser
by an officer of Purchaser to such effect, and (ii) a certificate signed on
behalf of Parent by an officer of Parent to such effect.

(c) Flow of Funds Memorandum. The Sellers shall have received a duly executed
counterpart of the Flow of Funds Memorandum, executed by Purchaser.

 

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(d) Escrow Agreement. The Sellers and the Equityholders’ Representative shall
have received a duly executed counterpart of the Escrow Agreement, executed by
Purchaser and Escrow Agent.

(e) Caruso Severance Agreement. The Caruso Severance Agreement, which shall
contain provisions making the effectiveness thereof subject to, and contingent
upon, the Closing, shall remain in full force and effect at the Closing.

(f) Retention Agreements. The Retention Agreements, which shall contain
provisions making the effectiveness thereof subject to, and contingent upon, the
Closing, shall remain in full force and effect at the Closing.

(g) R&W Insurance Policy. The R&W Insurance Policy, in form and substance
reasonably acceptable to the Sellers, shall have been issued to the Purchaser
and Purchaser shall have delivered a copy thereof to the Sellers.

(h) No Action. There shall be no Action pending against or involving the
Purchaser, Parent or any Subsidiary of the Purchaser or Parent questioning,
challenging or seeking to prevent, hinder or delay the transactions contemplated
by this Agreement.

(i) Deliveries. The Sellers shall have received (i) a certificate from an
officer of each of Purchaser and Parent certifying that any required approval of
the board of directors of Purchaser or Parent, as applicable, with respect to
such party’s entry into this Agreement and the other Ancillary Documents to
which it is a party and the transactions contemplated hereby and thereby has
been obtained and (ii) a certificate of good standing of each of Purchaser and
Parent in its jurisdiction of organization.

ARTICLE X

SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

Section 10.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the Sellers, the Acquired Companies, Purchaser
and Parent contained in this Agreement or in any certificates delivered pursuant
to ARTICLE IX shall survive the Closing until the date that is fifteen
(15) months following the Closing Date, except that (a) the representations and
warranties set forth in Sections 3.1 (Organization, Standing and Power), 3.2
(Capitalization; Title to Equity Interests), 3.3 (Subsidiaries; Investments),
3.4(a) and 3.4(b) (Authority; Binding Agreement), 3.8 (Tax), 3.15(i)(iv)
(Employee Benefit Plans) and 3.22 (Brokers; Fees) (collectively, the “Acquired
Company Fundamental Representations”) shall survive the Closing until ninety
(90) days following the expiration of the applicable statute of limitations,
(b) the representations and warranties set forth in Sections 4.1 (Title to
Equity Interests), 4.2(a) and 4.2(b) (Authority; Binding Agreement) and 4.4
(Brokers; Fees) (collectively, the “Seller Fundamental Representations”) shall
survive the Closing until ninety (90) days following the expiration of the
applicable statute of limitations, (c) the representations and warranties set
forth in Sections 5.1 (Organization, Standing and Power), 5.2(a) and
5.2(b) (Authority; Binding Agreement), and 5.4 (Brokers; Fees) (collectively,
the “Purchaser

 

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Fundamental Representations”) shall survive the Closing until ninety (90) days
following the expiration of the applicable statute of limitations and (d) the
representations and warranties contained in Section 3.12(d) (Customer Contracts)
(the “Special Customer Contracts Representations”) shall survive the Closing
until the date that is twenty-seven (27) months following the Closing Date. The
covenants contained in this Agreement shall survive the Closing and remain in
full force and effect until ninety (90) days following the expiration of the
applicable statute of limitations. No Purchaser Indemnified Party shall make any
claim for indemnification under this Article X with respect to any breach of any
representation, warranty or covenant at any time after the end of the survival
period applicable to such representation, warranty or covenant, and no Purchaser
Indemnified Party shall make any claim for indemnification under
(i) Section 10.2(e) or Section 10.2(f) at any time after the date that is
fifteen (15) months following the Closing Date and (ii) Section 10.2(g) or
Article VIII at any time after ninety (90) days following the expiration of the
applicable statute of limitations. Notwithstanding the foregoing, any claim made
under and in accordance with this ARTICLE X prior to the expiration of the
applicable period set forth above shall survive until such claim is finally
resolved. No knowledge of, or investigation by or on behalf of, any party hereto
will constitute a waiver of such party’s right to enforce any covenant,
representation or warranty contained herein against any of the other parties or
affect the right of a party to indemnification.

Section 10.2 Indemnification by the Sellers. Subject to the provisions of this
ARTICLE X, and subject to, and without duplication of, ARTICLE VIII, from and
after the Closing, the Sellers shall indemnify Purchaser, Parent, their
respective Affiliates and their respective officers, directors, attorneys,
accountants, representatives and agents (the “Purchaser Indemnified Parties”)
for all losses, liabilities, environmental liabilities, Taxes, damages, costs,
environmental investigation or cleanup costs, interest, awards, judgments,
penalties and expenses, including reasonable attorneys’ and accountants’ fees
and expenses whether incurred in connection with a direct claim or a Third Party
Claim (hereinafter individually a “Loss” and collectively “Losses”) that any
Purchaser Indemnified Party may suffer, sustain or incur and that result from,
arise out of, relate to, or are caused by, any of the following:

(a) any breach or inaccuracy of any representation or warranty of any Acquired
Company or the Sellers (disregarding all materiality or Acquired Company
Material Adverse Effect qualifications for purposes of calculating the
applicable Losses, but not for purposes of determining whether there has been a
breach or inaccuracy of any such representation or warranty) contained in
ARTICLE III or ARTICLE IV or in any certificates delivered by any of the
Acquired Companies or any of the Sellers pursuant to ARTICLE IX, other than the
Acquired Company Fundamental Representations, the Seller Fundamental
Representations and the Special Customer Contracts Representations;

(b) any breach or inaccuracy of any of the Acquired Company Fundamental
Representations or the Seller Fundamental Representations (disregarding all
materiality or Acquired Company Material Adverse Effect qualifications for
purposes of calculating the applicable Losses, but not for purposes of
determining whether there has been a breach or inaccuracy of any such
representation or warranty);

(c) any breach or inaccuracy of any of the Special Customer Contracts
Representations;

 

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(d) any failure by any of the Acquired Companies or any of the Sellers (as of or
prior to the Closing) to perform or comply with any covenant or agreement
contained in this Agreement that is applicable to any such Acquired Company or
Seller;

(e) the excess, if any, of the Closing Payoff Indebtedness over the Estimated
Payoff Indebtedness, but only if and to the extent that all or any portion of
such excess is not recovered by Purchaser pursuant to Section 2.3(f);

(f) the excess, if any, of the Closing Transaction Expenses over the Estimated
Transaction Expenses, but only if and to the extent that all or any portion of
such excess is not recovered by Purchaser pursuant to Section 2.3(f); and

(g) any claim by any current, former or purported holder of any equity interests
or securities of any of the Acquired Companies involving (A) the allocation of
the Initial Purchase Price, the Final Purchase Price or any other amounts
payable pursuant to this Agreement, (B) any allegation or claim relating to any
breach of fiduciary duties by any of the Acquired Companies or their respective
directors, managers or officers in connection with the transactions contemplated
by this Agreement, including the negotiation and approval of the terms hereof,
or (C) any action or omission of the Equityholders’ Representative in its
capacity as such or the appointment, compensation or reimbursement thereof in
connection with the transactions contemplated by the Escrow Agreement or this
Agreement.

Section 10.3 Indemnification by Purchaser and Parent. Subject to the provisions
of this Article X, from and after the Closing, Purchaser and Parent shall
jointly and severally indemnify the Sellers and their respective officers,
directors, Affiliates, attorneys, accountants, representatives and agents (the
“Seller Indemnified Parties”) for all Losses that any Seller Indemnified Party
may suffer, sustain or incur and that result from, arise out of, relate to, or
are caused by any of the following:

(a) any breach or inaccuracy of any representation or warranty of the Purchaser
or Parent (disregarding all materiality qualifications for purposes of
calculating the applicable Losses, but not for purposes of determining whether
there has been a breach or inaccuracy of any such representation or warranty)
contained in ARTICLE V or in any certificates delivered pursuant to Article X,
other than the Purchaser Fundamental Representations;

(b) any breach or inaccuracy of any of the Purchaser Fundamental Representations
(disregarding all materiality qualifications for purposes of calculating the
applicable Losses, but not for purposes of determining whether there has been a
breach or inaccuracy of any such representation or warranty); and

(c) any failure by Purchaser or Parent, as applicable, to perform or comply with
any covenant or agreement contained in this Agreement that is applicable to
Purchaser or Parent, as applicable.

 

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Section 10.4 Indemnification Limitations. Notwithstanding anything in this
Agreement to the contrary (except to the extent otherwise provided in the first
sentence of the last paragraph of this Section 10.4):

(a) (i) neither the Purchaser Indemnified Parties nor the Seller Indemnified
Parties shall be entitled to indemnification for any Losses claimed under
Sections 10.2(a), 10.2(c) or 10.3(a), as applicable, unless and until the
aggregate amount of all Losses incurred by the Purchaser Indemnified Parties or
Seller Indemnified Parties, as applicable, for which they are entitled to
indemnification under Section 10.2(a), Section 10.2(c) or Section 10.3(a), as
applicable, exceeds $607,750 (the “Basket Amount”), (ii) once the Losses claimed
under Sections 10.2(a), 10.2(c) or 10.3(a), as applicable, by the Purchaser
Indemnified Parties or Seller Indemnified Parties, as applicable, exceeds the
Basket Amount, the applicable Indemnifying Party shall be liable for all Losses
in excess of $303,875, and (iii) the aggregate amount of Losses claimed under
Section 10.3(a) by the Seller Indemnified Parties shall not exceed $9,350,000,
in each case, subject to, and after giving effect to, all other applicable
limitations of liability set forth in this Section 10.4;

(b) the sole recourse of the Purchaser Indemnified Parties in connection with
any and all Losses for which the Purchaser Indemnified Parties are entitled to
indemnification under Section 10.2(a) that arise from any breach or inaccuracy
of any representation or warranty of any Acquired Company (subject to, and after
giving effect to, all other applicable limitations of liability set forth in
this Section 10.4 and the provisions of Section 10.5(a)) shall be first, to
satisfy such Losses out of proceeds from the R&W Insurance Policy and second, if
all or any portion of such Losses are not covered by the R&W Insurance Policy,
to satisfy the amount of such Losses that are not covered by the R&W Insurance
Policy against all or any portion of the Indemnification Escrow Amount then
being held in escrow pursuant to, and in accordance with, this Agreement and the
Escrow Agreement, and if the Indemnification Escrow Amount then being held in
escrow in accordance with this Agreement and the Escrow Agreement is
insufficient to satisfy all of such Losses that are not covered by the R&W
Insurance Policy, no Seller shall have any liability of any kind or nature with
respect to such Losses;

(c) the sole recourse of the Purchaser Indemnified Parties in connection with
any and all Losses (subject to, and after giving effect to, all other applicable
limitations of liability set forth in this Section 10.4) for which the Purchaser
Indemnified Parties are entitled to indemnification under (1) Section 10.2(b) in
connection with any breach or inaccuracy of any of the Acquired Company
Fundamental Representations, (2) Section 10.2(d) in connection with any failure
by any of the Acquired Companies to perform or comply with any covenant or
agreement contained in this Agreement that is applicable to any such Acquired
Company, (3) Section 10.2(g) or Section 10.2(h) or (4) under ARTICLE VIII, shall
be first, to satisfy such Losses out of proceeds from the R&W Insurance Policy
(except with respect to any Losses under Sections 10.2(d) or 10.2(g) or Article
VIII), second, with respect to any Losses under Sections 10.2(d) or 10.2(g) or
Article VIII or if all or any portion of such Losses are not covered by the R&W
Insurance Policy, to satisfy the amount of such Losses that are not insured or
covered by the R&W Insurance Policy against all or any portion of the
Indemnification Escrow Amount then being held in escrow pursuant to, and in
accordance with, this Agreement and the Escrow Agreement, and third, if the
Indemnification Escrow Amount then being held in escrow pursuant to, and in
accordance with, this Agreement and the Escrow Agreement is insufficient to
satisfy all of such Losses that are not insured or covered by the R&W Insurance
Policy, to proceed against the Sellers for the portion of such Losses (subject
to, and after giving effect to, all other applicable limitations of liability
set forth in this Section 10.4, including, without limitation, Section 10.4(f))
that cannot be satisfied out of the Indemnification Escrow Amount;

 

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(d) the sole recourse of the Purchaser Indemnified Parties in connection with
any and all Losses (subject to, and after giving effect to, all other applicable
limitations of liability set forth in this Section 10.4) for which the Purchaser
Indemnified Parties are entitled to indemnification under (1) Section 10.2(a) or
Section 10.2(b) in connection with any breach or inaccuracy of any
representation or warranty made by a Seller, (2) Section 10.2(d) in connection
with any failure by a Seller to perform or comply with any covenant or agreement
contained in this Agreement that is applicable to such Seller or
(3) Section 10.2(e) or Section 10.2(f), shall be first, to satisfy such Losses
out of proceeds from the R&W Insurance Policy (except with respect to any Losses
under Sections 10.2(d), 10.2(e) or 10.2(f)), second, with respect to any Losses
under Sections 10.2(d), 10.2(e) or 10.2(f) or if all or any portion of such
Losses are not covered by the R&W Insurance Policy, to satisfy the amount of
such Losses that are not insured or covered by the R&W Insurance Policy against
such Seller’s Proportionate Share of all or any portion of the Indemnification
Escrow Amount then being held in escrow pursuant to, and in accordance with,
this Agreement and the Escrow Agreement, and third, if such Seller’s
Proportionate Share of the Indemnification Escrow Amount then being held in
escrow pursuant to, and in accordance with, this Agreement and the Escrow
Agreement is insufficient to satisfy all of such Losses that are not insured or
covered by the R&W Insurance Policy, to proceed against such Seller and not
against any of the other Sellers for the portion of such Losses (subject to, and
after giving effect to, all other applicable limitations of liability set forth
in this Section 10.4, including, without limitation, Section 10.4(g)) that
cannot be satisfied out of such Seller’s Proportionate Share of the
Indemnification Escrow Amount (it being understood and agreed that the purpose
of this limitation of liability is to reflect that the representations and
warranties of the Sellers in this Agreement are several and not joint and
several and that the covenants and agreements of the Sellers in this Agreement
are also several and not joint and several);

(e) the sole recourse of the Purchaser Indemnified Parties in connection with
any and all Losses for which the Purchaser Indemnified Parties are entitled to
indemnification under Section 10.2(c) (subject to, and after giving effect to,
all other applicable limitations of liability set forth in this Section 10.4 and
the provisions of Section 10.5(a)) shall be first, to satisfy such Losses out of
proceeds from the R&W Insurance Policy, second, if all or any portion of such
Losses are not covered by the R&W Insurance Policy, to satisfy the amount of
such Losses that are not covered by the R&W Insurance Policy against all or any
portion of the Indemnification Escrow Amount then being held in escrow pursuant
to, and in accordance with, this Agreement and the Escrow Agreement, and third,
if the Indemnification Escrow Amount then being held in escrow pursuant to, and
in accordance with, this Agreement and the Escrow Agreement is insufficient to
satisfy all of such Losses that are not covered by the R&W Insurance Policy, to
proceed against each Seller (subject to, and after giving effect to, all other
applicable limitations of liability set forth in this Section 10.4) for up to a
maximum aggregate portion of all of such Losses that is equal to the lesser of
(1) such Seller’s Proportionate Share of all of such Losses not otherwise
covered by the R&W Insurance Policy or the Indemnification Escrow Amount, and
(2) such Seller’s Proportionate Share of $5,000,000;

(f) no Seller shall have any liability for any portion of any Loss (subject to,
and after giving effect to, all other applicable limitations of liability set
forth in this Section 10.4) for which the Purchaser Indemnified Parties are
entitled to indemnification under ARTICLE VIII or Section 10.2 (other than as
otherwise provided in Section 10.4(g) or in Section 10.4(l) below) if and to the
extent that (1) such portion of such Loss exceeds such Seller’s Proportionate
Share

 

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of such Loss or (2) such portion of such Loss, when added together with the
amount of all other Losses for which such Seller has been liable under ARTICLE
VIII or this ARTICLE X, exceeds the portion of the Final Purchase Price actually
received by such Seller;

(g) no Seller shall have any liability for any portion of any Loss (subject to,
and after giving effect to, all other applicable limitations of liability set
forth in this Section 10.4) for which the Purchaser Indemnified Parties are
entitled to indemnification under (1) Section 10.2(a) or Section 10.2(b) in
connection with any breach or inaccuracy by such Seller of any representation or
warranty made by such Seller, (2) Section 10.2(d) in connection with any failure
by such Seller to perform or comply with any covenant or agreement contained in
this Agreement that is applicable to Seller or (3) Section 10.2(e) or
Section 10.2(f), if and to the extent that such portion of such Loss, when added
together with the amount of all other Losses for which such Seller has been
liable under ARTICLE VIII or this ARTICLE X, exceeds the portion of the Final
Purchase Price actually received by such Seller;

(h) no Seller shall have any liability for any portion of any Loss for which the
Purchaser Indemnified Parties would otherwise be entitled to indemnification
under Section 10.2 as a result of any breach or inaccuracy of any representation
or warranty made as of the Closing Date by the Acquired Companies or any Seller
if such breach or inaccuracy was caused by or was the result of any action taken
or not taken by any of the Acquired Companies, any Subsidiary of any of the
Acquired Companies or such Seller at any time during the period after the date
of this Agreement and through and including the Closing and if the taking of
such action or refraining from taking such action either was expressly permitted
under any of clauses (a)-(w) of Section 6.1 or Section 6.1 of the Disclosure
Schedule or was consented to in writing by the Purchaser in accordance with the
provisions of Section 6.1;

(i) there shall be no liability arising from any breach or inaccuracy of the
Special Customer Contracts Representations, and no Purchaser Indemnified Party
shall make any claim for indemnification under Section 10.2(c) in connection
with any such breach or inaccuracy, unless the Losses arising from such breach
or inaccuracy relate to or arise out of (i) Products sold by any of the Acquired
Companies prior to the Closing or (ii) Products sold by Purchaser or any of its
Affiliates at any time during the period commencing after the Closing and ending
on the 180th day after the Closing, provided, however, that, in the case of this
clause (ii), such Products (1) were designed by any of the Acquired Companies
and their Subsidiaries prior to the Closing, (2) are manufactured, produced or
assembled by the Purchaser and its Affiliates in strict compliance with the
designs in effect as of the Closing for such Product, (3) are manufactured,
produced, assembled, stored, shipped, handled, operated, repaired or maintained
by Purchaser or any of its Affiliates after the Closing in the same manner as
such Products were manufactured, produced, assembled, stored, shipped, handled,
operated, repaired or maintained by the Acquired Companies and their
Subsidiaries prior to the Closing and in full compliance with all of the
requirements of any applicable Contract as in effect prior to the Closing with
respect to such Product or any of the materials, parts or components of such
Product and (4) are stored, handled, operated, maintained or repaired by the
applicable customer or user of such Product in strict compliance with the
requirements or written instructions for the storing, handling, operation,
maintenance or repair of such Product in effect as of the Closing;

 

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(j) notwithstanding anything to the contrary contained in this Agreement,
(i) for purposes of determining Losses in connection with any claim for
indemnification under this Article X, each Indemnifying Party shall, subject to
the limitations set forth elsewhere in this Article X, be liable only for those
damages that were reasonably foreseeable and flow naturally from the facts and
circumstances giving rise to such claim for indemnification and, as such, are
recoverable under Applicable Law in an action, suit or proceeding brought in a
court of competent jurisdiction to recover such damages, and (ii) subject in all
cases to clause (i) above, and except for amounts paid or required to be paid to
a Third Party in connection with a Third Party Claim, no Indemnifying Party
shall have any liability under this Article X for (A) any punitive or incidental
damages or (B) any consequential, special or indirect damages, lost profits or
diminution in value (in each case, other than damages described in clause
(i) above);

(k) the amount of Losses for which an Indemnified Party shall be entitled to
indemnification under this ARTICLE X shall be calculated net of any insurance
proceeds actually received by such Indemnified Party with respect to such Losses
and net of the amount of any Tax benefits actually realized by such Indemnified
Party with respect to such Losses; and

(l) no Seller shall have any liability for any portion of any Loss (subject to,
and after giving effect to, all other applicable limitations of liability set
forth in this Section 10.4) for which the Purchaser Indemnified Parties are
entitled to indemnification under Section 10.2(b) in connection with any breach
or inaccuracy of any of the representations or warranties set forth in
Section 3.15(i)(iv) if and to the extent that (1) such portion of such Loss
exceeds such Seller’s Proportionate Share of such Loss or (2) such Seller’s
Proportionate Share of $600,000;

(m) no Indemnified Party shall be entitled to indemnification for any Losses
under this ARTICLE X with respect to any matter to the extent that such matter
has already been taken into account and reflected in full in any reduction of
the Initial Purchase Price pursuant to, and in accordance with, Section 2.3 or
has been previously claimed and paid in full under ARTICLE VIII or this ARTICLE
X (it being understood and agreed by the parties that their intent in this
clause (m) is to agree to avoid duplicative claims for the same matters).

Notwithstanding the foregoing, the limitations of liability set forth in this
Section 10.4 shall not operate to limit the liability of any Seller under this
Article X for any Losses if such Losses arise from any fraud or willful
misconduct by such Seller. For purposes of clarification, the parties hereby
acknowledge and agree that the obligation of the Purchaser Indemnified Parties
to satisfy Losses that are subject to the provisions of Section 10.4(b),
Section 10.4(c), Section 10.4(d) or Section 10.4(e) first from the R&W Insurance
Policy before seeking recourse to the Indemnification Escrow Amount or, if
applicable in accordance with the provisions of Section 10.4(c), Section 10.4(d)
or Section 10.4(e), the Sellers, shall not be construed to limit the Purchaser
Indemnified Parties from recovering from the Indemnification Escrow Amount or,
if applicable in accordance with the provisions of Section 10.4(c),
Section 10.4(d) or Section 10.4(e), the Sellers, all or any portion of such
Losses (subject to, and after giving effect to, all applicable limitations of
liability set forth in this Section 10.4, including, without limitation,
Section 10.4(a)) that cannot be recovered from the R&W Insurance Policy by
virtue of the application of the retention amount provisions set forth in the
R&W Insurance Policy; provided, however, that the foregoing provisions of this
sentence are subject to Purchaser’s compliance with its obligations under the
next sentence. Purchaser covenants and agrees to present to the

 

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applicable insurer under the R&W Insurance Policy all indemnification claims
covered by the R&W Insurance Policy for application against the retention
amount. Purchaser hereby further covenants and agrees to use commercially
reasonable efforts to comply with terms of, and enforce, the R&W Insurance
Policy. For the avoidance of doubt, the preceding two sentences shall constitute
covenants and agreements of the Purchaser notwithstanding the placement of such
sentences in this Section 10.4 which otherwise generally addresses limitation of
liability matters.

Section 10.5 Payment Source; No Contribution from the Company.

(a) All amounts owing to the Purchaser Indemnified Parties pursuant to this
ARTICLE X and Section 8.3 shall be satisfied in accordance with the provisions
of Section 10.4 and this Section 10.5(a). On the date that is fifteen
(15) months following the Closing Date, Purchaser shall distribute to the
Equityholders’ Representative, for the benefit of the Sellers, an amount equal
to the remaining balance of the Indemnification Escrow Account (together with
any earnings thereon) as of such date less (i) the amount of any claims for
indemnification under this ARTICLE X of any Purchaser Indemnified Party that
have been settled out of the Indemnification Escrow Account, but against which
the Indemnification Escrow Account has not yet been applied and (ii) an amount
sufficient to satisfy any then-pending claims for indemnification under this
ARTICLE X of the Purchaser Indemnified Parties if and to the extent that such
then-pending claims for indemnification are not covered by the R&W Insurance
Policy; provided, that, in the event that (1) at the time of the distribution of
the remaining balance of the Indemnification Escrow Account (together with any
earnings thereon) pursuant to the foregoing provisions of this Section 10.5(a),
there are then-pending claims for indemnification under Section 10.2 that would
be satisfied out of the amount of such distribution but for the fact that such
then-pending claims are or would be covered by the R&W Insurance Policy if the
Purchaser complies or had complied with all of its obligations under the R&W
Insurance Policy with respect to providing notice of, and submitting for
payment, such then-pending claims, and (ii) following such distribution, a
determination is made by a court of competent jurisdiction that such
then-pending claims for indemnification referred to in the foregoing clause
(1) are not in fact covered by the R&W Insurance Policy, then each Seller
severally shall be liable for an amount equal to the lesser of (x) such Seller’s
Proportionate Share of such then-pending claims referred to in the foregoing
clause (1) and (y) the portion of such distribution actually received by such
Seller. Any amounts not released under clause (ii) above due to any such
then-pending claim shall be paid to (x) Purchaser promptly upon the resolution
of such claim in favor of Purchaser or (y) the Equityholders’ Representative,
for the benefit of the Sellers, within ten (10) Business Days after the
resolution of all such then-pending claims, in each case, in accordance with the
terms of this Agreement and the Escrow Agreement.

(b) From and after the Closing, the Sellers shall have no rights of contribution
or recovery against any of the Acquired Companies or any of their Subsidiaries
with respect to any indemnification obligations hereunder.

Section 10.6 Procedures for Indemnification.

(a) No party hereto shall be liable for any claim for indemnification under this
ARTICLE X unless written notice of a claim for indemnification is delivered by
the party

 

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seeking indemnification (the “Indemnified Party”) to the party from whom
indemnification is sought (the “Indemnifying Party”) prior to the expiration of
any applicable survival period set forth in Section 10.1 (in which event the
claim shall survive until resolved). If any third party notifies the Indemnified
Party with respect to any matter which may give rise to a claim for
indemnification (a “Third Party Claim”) against the Indemnifying Party under
this ARTICLE X, then the Indemnified Party shall notify the Indemnifying Party
reasonably promptly thereof in writing; provided that no delay on the part of
the Indemnified Party in notifying the Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder except to the extent that the
Indemnifying Party is actually and materially prejudiced thereby. All notices
given pursuant to this Section 10.6(a) shall describe with reasonable
specificity the nature of the claim, the amount of the claim (to the extent then
known) and the basis of the Indemnified Party’s claim for indemnification.

(b) Following receipt of notice in accordance with Section 10.6(a) (other than a
notice of a Third Party Claim against the Indemnified Party, in which case
Section 10.6(c) below shall apply), the Indemnifying Party shall have thirty
(30) days from the date it receives such notice (the “Dispute Period”) to make
such investigation of the claim as the Indemnifying Party deems necessary or
desirable. For purposes of such investigation, the Indemnified Party shall make
available to the Indemnifying Party all the material information related to such
claim relied upon by or in possession or control of, the Indemnified Party. If
the Indemnifying Party disagrees with the validity or amount of all or a portion
of such claim made by the Indemnified Party, the Indemnifying Party shall
deliver to the Indemnified Party written notice thereof (the “Dispute Notice”)
prior to the expiration of the Dispute Period. If no Dispute Notice is received
by the Indemnified Party within the Dispute Period or the Indemnifying Party
provides notice that it does not have a dispute with respect to such claim, such
claim shall be deemed approved and consented to by the Indemnifying Party (such
claim, an “Approved Indemnification Claim”). If a Dispute Notice is received by
the Indemnified Party within the Dispute Period and the Indemnified Party and
the Indemnifying Party do not agree to the validity and/or amount of such
disputed claim, no payment shall be made until such disputed claim is resolved,
whether by adjudication of such matter, agreement between the Indemnified Party
and the Indemnifying Party, or otherwise (and upon any such resolution, such
claim shall be deemed to be an Approved Indemnification Claim). Subject to
Section 10.4 (including, without limitation, any provision thereof that requires
that the Purchaser Indemnified Parties first satisfy Losses for which the
Purchaser Indemnified Parties are entitled to indemnification against the R&W
Insurance Policy and second satisfy the amount of such Losses that are not
insured or covered by the R&W Insurance Policy against all or any portion of the
Indemnification Escrow Amount then being held in escrow pursuant to, and in
accordance with, this Agreement and the Escrow Agreement), each Approved
Indemnification Claim shall be paid no later than five (5) Business Days after
the date on which the subject claim became an Approved Indemnification Claim, in
each case by wire transfer of immediately available funds to the account
designated in writing by the party entitled to such payment.

(c) After the Indemnified Party has given notice of a Third Party Claim to the
Indemnifying Party pursuant to Section 10.6(a), the Indemnifying Party may, at
its, his or her election, undertake and conduct the defense of such Third Party
Claim; provided that the Indemnifying Party fully acknowledges in writing its
indemnification obligations to the Indemnified Party. In such case, the
Indemnified Party may continue to participate in the defense

 

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of such Third Party Claim; provided, however, that (except to the extent
otherwise provided below in this Section 10.6 with respect to disputes related
to Taxes) following the Indemnifying Party’s assumption of the defense of such
Third Party Claim, all legal or other expenses subsequently incurred by the
Indemnified Party shall be borne by the Indemnified Party unless the Indemnified
Party reasonably concludes that the Indemnifying Party and the Indemnified Party
have conflicting interests available with respect to such legal proceeding, in
which case the Indemnified Party shall be indemnified for the reasonable fees
and expenses of counsel to the Indemnified Party (including local counsel). With
respect to Third Party Claims related to Taxes, the Indemnifying Party shall be
responsible for making all deposits or down payments required with respect to
the defense of the Third Party Claim. If the Indemnifying Party assumes the
defense of any Third Party Claim, the Indemnifying Party shall not settle or
consent to judgment with respect to such Third Party Claim without the written
consent of the Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. Notwithstanding anything to the contrary, the
Indemnifying Party shall not be entitled to assume the administration and
defense of any Third Party Claim made by any customer or supplier of the
Acquired Companies or any of their Subsidiaries. If (i) the Indemnifying Party
has failed to assume the defense of such Third Party Claim within twenty
(20) days of the Indemnified Party’s delivery of notice of such Third Party
Claim to the Indemnifying Party, (ii) the aggregate amount reasonably expected
to be incurred in connection with such Third Party Claim and all other
outstanding claims on the Indemnification Escrow Account exceeds the sum of
(1) the maximum amount of coverage under the R&W Insurance Policy plus (2) the
amount remaining in the Indemnification Escrow Account, (iii) such Third Party
Claim involves criminal or quasi-criminal allegations or (iv) the Third Party
Claim includes a claim for injunctive relief, then the Indemnified Party shall
have the right to assume the defense of such Third Party Claim. The Indemnified
Party and the Indemnifying Party shall render to each other such assistance as
may reasonably be required of each other in order to ensure proper and adequate
defense of any Third Party Claim subject to this Section 10.6. To the extent
that the Indemnified Party or the Indemnifying Party does not participate in the
defense of a particular Third Party Claim, the party so proceeding with such
Third Party Claim shall keep the other party informed of all material
developments and events relating to such Third Party Claim. No Indemnified Party
shall settle or consent to judgment with respect to any Third Party Claim
without the written consent of the Indemnifying Party, which consent shall not
be unreasonably withheld, conditioned or delayed. In the event that the
Indemnifying Party has consented to any settlement or consented to any judgment
and except as otherwise provided in such settlement or judgment, such
Indemnifying Party shall not have any power or authority to object to any claim
by any Indemnified Person under and in accordance with this ARTICLE X, including
against the Indemnification Escrow Account, if applicable, for indemnity in the
amount of such settlement or judgment.

Section 10.7 Determination of Loss Amount. If an indemnifiable matter is
identified and noticed prior to the end of any applicable period set forth in
Section 10.1, all Losses incurred or paid in connection with such matter shall
remain subject to indemnification hereunder.

Section 10.8 Tax Treatment. Any payment under this ARTICLE X or under ARTICLE
VIII shall be treated by the parties for federal, state, local and foreign
income Tax purposes as an adjustment to the Final Purchase Price unless
otherwise required by Applicable Law.

 

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Section 10.9 Election of Claims. In the event that any Person alleges that they
are entitled to indemnification hereunder, and that Person’s claim is covered
under more than one provision of this Agreement, such Person shall be entitled
to elect the provision or provisions under which it may bring a claim for
indemnification; provided, however, that no Person shall be entitled to receive
indemnification payment in respect of any Losses if such Person has previously
received indemnification payment for such Loss. The provisions of this
Section 10.9 are subject to the provisions of Section 10.4, and in the event
that any of the provisions of this Section 10.9 conflict or are inconsistent
with or contravene the provisions of Section 10.4, the provisions of
Section 10.4 shall control.

Section 10.10 Insurance Collection. If any Purchaser Indemnified Party recovers
any amount from any insurer in connection with any matter in respect of which
such Purchaser Indemnified Party obtained indemnification under this ARTICLE X,
then such Purchaser Indemnified Party will promptly pay over to the
Equityholders’ Representative for distribution to the Sellers the amount so
recovered from such insurer to the extent not in excess of the amount of the
indemnification obtained by such Purchaser Indemnified Party under this ARTICLE
X in respect of such matter. With respect to any Losses for which any Purchaser
Indemnified Person is entitled to indemnification under this ARTICLE X,
Purchaser shall use commercially reasonable efforts, and shall cause its
Affiliates to use commercially reasonable efforts, to make and pursue claims for
such Losses under the R&W Insurance Policy.

Section 10.11 Subrogation. Each Seller shall be subrogated to the rights of the
Purchaser Indemnified Parties against any and all third parties in respect of
any matter for which such Seller is required to indemnify the Purchaser
Indemnified Parties pursuant to this ARTICLE X.

Section 10.12 Exclusive Remedy. Except (a) for remedies that cannot be waived as
a matter of Applicable Law, (b) as provided in Section 2.3, (c) for specific
performance, injunctive relief or other equitable remedies, including pursuant
to Section 12.16, or (d) in respect of claims by any Purchaser Indemnified Party
against a Seller based on fraud or willful misconduct by such Seller, the
indemnification provisions of Section 8.3 and this ARTICLE X shall be the sole
and exclusive remedy for any breach of this Agreement from and after the
Closing.

ARTICLE XI

TERMINATION

Section 11.1 Termination. This Agreement may be terminated at any time prior to
the Closing:

(a) by mutual written consent of Purchaser and all Sellers;

(b) by Purchaser upon written notice to the Equityholders’ Representative if the
Closing has not occurred, or if it becomes reasonably apparent that any of the
conditions set forth in Section 9.1 or Section 9.2 cannot be fulfilled, by 5:00
p.m. Eastern Time, on March 31, 2014 (the “Outside Time”); provided that the
right to terminate this Agreement under this Section 11.1(b) shall not be
available to Purchaser if Purchaser’s failure to perform any covenant or
agreement under this Agreement has been a principal cause of, or results in, the
failure of the Closing to occur on or before the Outside Time;

 

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(c) by the Equityholders’ Representative, upon written notice to Purchaser if
the Closing has not occurred, or if it becomes reasonably apparent that any of
the conditions set forth in Section 9.1 or Section 9.3 cannot be fulfilled, by
the Outside Time; provided that the right to terminate this Agreement under this
Section 11.1(c) shall not be available to the Equityholders’ Representative if
the Sellers’ or any of the Acquired Companies’ failure to perform any covenant
or agreement under this Agreement has been a principal cause of, or results in,
the failure of the Closing to occur on or before the Outside Time;

(d) by Purchaser upon written notice to the Equityholders’ Representative in the
event that at any time after the date of this Agreement, there shall have
occurred an Acquired Company Material Adverse Effect;

(e) by either Purchaser or the Equityholders’ Representative, upon written
notice to the other party if a Governmental Entity of competent jurisdiction
shall have issued a nonappealable final order, decree or ruling or taken any
other nonappealable final action, in each case having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby;

(f) by Purchaser, upon written notice to the Equityholders’ Representative, if
there has been a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of any of the Acquired Companies or the
Sellers set forth in this Agreement (or if any of the representations or
warranties of the Acquired Companies or the Sellers set forth in this Agreement
shall fail to be true) which breach or failure (i) would cause any of the
conditions set forth in Section 9.2(a) or Section 9.2(b) not to be satisfied and
(ii) shall not have been cured within thirty (30) days following receipt by the
Equityholders’ Representative of written notice of such breach or failure to
perform from Purchaser; or

(g) by the Equityholders’ Representative, upon written notice to Purchaser, if
there has been a breach of any representation or warranty or failure to perform
any covenant or agreement on the part of Purchaser set forth in this Agreement
(or if any of the representations and warranties of Purchaser set forth in this
Agreement shall fail to be true) which breach or failure (i) would cause any of
the conditions set forth in Section 9.3(a) or Section 9.3(b) not to be
satisfied, and (ii) shall not have been cured within thirty (30) days following
receipt by Purchaser of written notice of such breach or failure to perform from
the Equityholders’ Representative.

Section 11.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall immediately become
void and of no further force and effect; provided that (a) any such termination
shall not relieve any party from liability for any fraud or willful breach of
this Agreement and (b) the provisions of Section 7.3 (Public Disclosure),
Section 11.2 (Effect of Termination), ARTICLE I (Definitions) and ARTICLE XII
(Miscellaneous) of this Agreement and the Confidentiality Agreement shall remain
in full force and effect and survive any termination of this Agreement in
accordance with its terms.

 

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ARTICLE XII

MISCELLANEOUS

Section 12.1 Releases. Each of the Sellers hereby releases and forever
discharges the Acquired Companies and each of their current and former
Subsidiaries, and each officer, director, manager, employee, representative and
agent of any of the foregoing, from liability for any and all claims for Losses,
of whatever kind or nature, in law or equity, known or unknown, vested or
contingent, suspected or unsuspected, and whether or not concealed or hidden,
whichever have or may have existed, or which do exist, that may now or hereafter
at any time be made or brought against any such Person or individual by or on
behalf of such Seller arising out of, relating to or in respect of any period on
or prior to the Closing, but excluding (i) rights arising under this Agreement,
the Escrow Agreement or any other agreements or instruments executed and
delivered in connection with any of the transactions contemplated under this
Agreement, (ii) rights to indemnification under Section 7.4 hereof, (iii) rights
to indemnification under the operating agreement, certificate of incorporation
or by-laws, as applicable, of any of the Acquired Companies as in effect
immediately prior to the Closing or under applicable law, (iv) rights that are
not waivable or that may not be released under applicable laws, (v) any right to
raise any defense or counterclaim to any claim, suit or proceeding brought
against such Seller by any of the Acquired Companies and their Subsidiaries and
(vi) any and all claims for accrued but unpaid compensation for employment or
other services rendered by such Seller to any of the Acquired Companies or any
of their Subsidiaries.

Section 12.2 Equityholders’ Representative.

(a) By the execution and delivery of this Agreement, including counterparts
hereof, each Seller hereby irrevocably constitutes and appoints Mark McCarthy as
the true and lawful agent and attorney-in-fact (the “Equityholders’
Representative”) of such Seller with full powers of substitution to act in the
name, place and stead of such Seller with respect to the performance on behalf
of such Seller under the terms and provisions of this Agreement and the Escrow
Agreement, as the same may be from time to time amended, and to do or refrain
from doing all such further acts and things, and to execute all such documents
on such Seller’s behalf, as the Equityholders’ Representative shall deem
necessary or appropriate in connection with any of the transactions contemplated
under this Agreement or the Escrow Agreement, including:

(i) to receive all payments (A) made by Purchaser to such Seller under this
Agreement and (B) required to be made to such Seller upon release of the funds
held in the Indemnification Escrow Account;

(ii) to agree upon or compromise any matter related to the calculation of any
adjustments to the Initial Purchase Price pursuant to Section 2.3 or otherwise
or to other payments to be made;

(iii) to act for such Seller with respect to all indemnification matters
referred to in this Agreement and the Escrow Agreement, including the right to
compromise on behalf of such Seller any indemnification claim made by or against
such Seller;

 

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(iv) to act for such Seller with respect to all post-Closing matters;

(v) to terminate, amend, or waive any provision of this Agreement and the Escrow
Agreement in accordance with Section 12.6 and Section 12.7 hereof, as applicable
(and Section 12 of the Escrow Agreement);

(vi) to employ and obtain the advice of legal counsel, accountants and other
professional advisors as the Equityholders’ Representative, in his, her or its
sole discretion, deems necessary or advisable in the performance of his, her or
its duties as the Equityholders’ Representative and to rely on their advice and
counsel;

(vii) to incur and pay out of the Initial Purchase Price and/or any subsequent
payments due to such Seller (including, without limitation, out of payments due
to such Seller upon release of the funds held in the Indemnification Escrow
Account) (1) expenses in connection with the transactions contemplated by this
Agreement and the Escrow Agreement, including fees of brokers, attorneys and
accountants, and any other fees and expenses allocable or in any way relating to
such transactions or (2) any indemnification claim made by any of the Purchaser
Indemnified Parties or by the Equityholders’ Representative pursuant to this
Agreement, whether such expenses, fees or indemnification claims are incurred
prior or subsequent to Closing;

(viii) to retain a portion of the Initial Purchase Price and/or any subsequent
payments due to such Seller as a reserve against the payment of expenses
incurred in his capacity as Equityholders’ Representative; and

(ix) to do or refrain from doing any further act or deed on behalf of such
Seller which the Equityholders’ Representative deems necessary or appropriate in
his sole discretion relating to the subject matter of this Agreement and the
Escrow Agreement (including amending or waiving any term or provision hereof or
thereof) as fully and completely as any of such Seller could do if personally
present and acting.

(b) The appointment of the Equityholders’ Representative shall be deemed coupled
with an interest and shall be irrevocable, and any other person may conclusively
and absolutely rely, without inquiry, upon any actions of the Equityholders’
Representative as the acts of the Sellers in all matters referred to in this
Agreement and the Escrow Agreement. Each of the Sellers hereby ratifies and
confirms all that the Equityholders’ Representative shall do or cause to be done
by virtue of the appointment of the Equityholders’ Representative as
Equityholders’ Representative of such Seller. The Equityholders’ Representative
shall act for the Sellers on all of the matters set forth in this Agreement and
the Escrow Agreement in the manner the Equityholders’ Representative believes to
be in the best interest of the Sellers, but the Equityholders’ Representative
shall not be responsible to any such Seller for any loss or damage any such
Seller may suffer by reason of the performance by the Equityholders’
Representative of his duties under this Agreement and the Escrow Agreement,
other than loss or damage arising from willful misconduct in the performance of
such duties. In no event shall the Equityholders’ Representative be liable
hereunder or in connection herewith for any indirect, punitive, exemplary,
special, incidental or consequential damages. The Equityholders’ Representative
shall be fully protected against the Sellers in relying upon any written notice,
demand, certificate or document that he in good faith believes to be genuine,
including facsimiles or copies thereof.

 

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(c) Each Seller hereby expressly acknowledges and agrees that the Equityholders’
Representative is authorized to act on behalf of such Seller notwithstanding any
dispute or disagreement among the Sellers, and that any Person shall be entitled
to rely on any and all action taken by the Equityholders’ Representative under
this Agreement without liability to, or obligation to inquire of, any of the
Sellers. The Equityholders’ Representative may be removed from time to time by
the Sellers that held at least a majority of the Equity Interests immediately
prior to the Closing, and the Equityholders’ Representative may resign by giving
written notice to the Sellers and the Purchaser. If the Equityholders’
Representative is so removed, dies, becomes disabled, resigns or otherwise is
unable to fulfill his responsibilities as agent of the Sellers, or there is a
vacancy in the position of the Equityholders’ Representative, then the Sellers
that held a majority of the Equity Interests immediately prior to the Closing
shall, within ten (10) Business Days after such removal, death, disability,
resignation or other cause of such vacancy, appoint a successor representative
reasonably satisfactory to Purchaser. Any successor shall become the
Equityholders’ Representative for purposes of the Escrow Agreement and this
Agreement, and each successor Equityholders’ Representative shall have all of
the power, authority, rights and privileges conferred by this Agreement upon the
original Equityholders’ Representative. No bond shall be required of the
Equityholders’ Representative, and the Equityholders’ Representative shall not
receive any compensation for its services. The Sellers do hereby jointly and
severally agree to indemnify and hold the Equityholders’ Representative harmless
from and against any and all liability, loss, cost, damage or expense (including
without limitation reasonable attorneys’ fees) reasonably incurred or suffered
as a result of the performance of such Equityholders’ Representative’s duties
under this Agreement and the Escrow Agreement except for any such liability
arising out of the willful misconduct of the Equityholders’ Representative. The
provisions of this Section 12.2 shall be binding upon the executors, heirs,
legal representatives, personal representatives, successor trustees and
successors of each of the Sellers, and any references in this Section 12.2 to a
Seller shall mean and include the successors to the rights of the Sellers
hereunder, whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise. All of the indemnities, immunities, releases and
powers granted to the Equityholders’ Representative under this Agreement shall
survive the Closing.

Section 12.3 Post-Closing Confidentiality. From and after the Closing Date until
the fourth (4th) anniversary thereof, the Equityholders’ Representative and each
of the Sellers shall, and shall cause his, her or its Affiliates to, keep
confidential (except as may be disclosed to his, her or its Affiliates,
attorneys, accountants, financial advisors or other representatives) and not use
or disclose any and all confidential information relating directly to Purchaser
or the Acquired Businesses that remains in or comes into his, her or its
possession after the Closing. The foregoing will not preclude the Equityholders’
Representative, the Sellers and the foregoing Persons from (a) disclosing such
confidential information if compelled to disclose the same by judicial or
administrative process or by other requirements of law (subject to the following
sentence), (b) discussing, disclosing or using such confidential information if
the same hereafter is in the public domain (other than as a result of a breach
of this Section 12.3), or (c) discussing, disclosing or using such confidential
information if the same is acquired from a Person that is not, to such
discussing, disclosing or using Person’s knowledge, after reasonable inquiry,
under

 

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an obligation to keep such information confidential. If the Equityholders’
Representative or any Seller is requested or required (by oral questions,
interrogatories, requests for information or documents in legal, administrative,
arbitration or other formal proceedings, subpoena, civil investigative demand or
other similar process) to disclose any such confidential information, the
Equityholders’ Representative or such Seller, as applicable, shall promptly
notify Purchaser of any such request or requirement so that Purchaser may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Section 12.3. If, in the absence of a protective order or
other remedy or the receipt of a waiver by Purchaser, the Equityholders’
Representative or any Seller is required to disclose such information, the
Equityholders’ Representative or such Seller, as applicable, without liability
hereunder, may disclose that portion of such information that it believes in
good faith it is legally required to disclose. Notwithstanding the first
sentence of this Section 12.3, the Equityholders’ Representative and any Seller
may only disclose such confidential information to those of its or his
Affiliates, attorneys, accountants, financial advisors or other representatives
(collectively, “Representatives”) if such Representative (i) needs to know such
information and (ii) is subject to obligations of confidentiality that are no
less stringent than those to which the Equityholders’ Representative and the
Sellers are subject to pursuant to the terms of this Section 12.3. The
Equityholders’ Representative and the Sellers shall be liable to Purchaser for
the breach of this Section 12.3 by any of their Representatives.

Section 12.4 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly delivered (a) one (1) Business Day after being
sent for next Business Day delivery, fees prepaid, via a reputable nationwide
overnight courier service, or (b) on the date of confirmation of receipt (or,
the first Business Day following such receipt if the date of such receipt is not
a Business Day) of transmission by facsimile or e-mail, in each case to the
intended recipient as set forth below:

(i) if to Purchaser or the Acquired Companies (after the Closing), to:

GSI Group, Inc.

125 Middlesex Turnpike

Bedford, MA 01730

Attention: John Fox

Facsimile: (781) 266-5114

E-mail: John.Fox@gsig.com

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

Jenner & Block LLP

353 N. Clark Street

Chicago, IL 60654-3456

Attention: Thomas A. Monson

Facsimile: (312) 840-8711

E-mail: tmonson@jenner.com

 

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(ii) if to the Sellers or the Acquired Companies (prior to the Closing), to:

Jadak, LLC

7279 William Barry Blvd.

North Syracuse, NY 13212

Attention: Chief Executive Officer

Facsimile: 315-701-0679

E-mail: dmiller@jadaktech.com

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

Bingham McCutchen LLP

One Federal Street

Boston, MA 02110

Attention: Julio E. Vega

Facsimile: 617-951-8736

E-mail: julio.vega@bingham.com

(iii) if to the Equityholders’ Representative to:

Mark McCarthy

191 Nagog Hill Road

Acton, MA 01720

Telephone: 978-831-2032

Facsimile: 978-964-0544

Email: markmccar@gmail.com

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

Bingham McCutchen LLP

One Federal Street

Boston, MA 02110

Attention: Julio E. Vega

Facsimile: 617-951-8736

E-mail: julio.vega@bingham.com

Any party to this Agreement may change the address to which notices and other
communications hereunder are to be delivered by giving the other parties to this
Agreement notice in the manner herein set forth.

Section 12.5 Fees and Expenses. Except as otherwise specifically provided
herein, all fees, costs and expenses, including, without limitation, fees and
disbursements of counsel, advisors and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses. In the event that (i) a party commences an
action, suit or proceeding against any other party seeking to enforce any right
that such party has to obtain indemnification from such other party pursuant to
this

 

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Agreement and/or the Escrow Agreement and (ii) the court in which such action,
suit or proceeding is filed makes a determination that the party seeking to
enforce such right of indemnification is not entitled to indemnification under
this Agreement or the Escrow Agreement with respect to the matter in dispute,
then, subject to the provisions of, and limitations of liability set forth in,
ARTICLE X if and to the extent applicable, the other party shall be entitled to
recover all out-of-pocket costs and expenses (including, without limitation,
reasonable fees and disbursements of outside counsel) incurred by such other
party in connection with the investigation, preparation and defense of such
action, suit or proceeding or any of the matters or claims alleged in such
action, suit or proceeding, regardless of whether such out-of-pocket costs and
expenses (including, without limitation, reasonable fees and disbursements of
outside counsel) were incurred by such prevailing party at any time prior to or
after the commencement of such action, suit or proceeding.

Section 12.6 Amendment. This Agreement may be amended, modified or supplemented
at any time by mutual written agreement of the Acquired Companies, the Sellers
and Purchaser. Notwithstanding the preceding sentence, any amendments,
modifications or supplements of any term or condition of this Agreement that
expressly relates to the Equityholders’ Representative shall also require the
written consent of the Equityholders’ Representative.

Section 12.7 Extension; Waiver. At any time the parties hereto may, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed on behalf of such party. Such extension or waiver
shall not be deemed to apply to any time for performance, inaccuracy in any
representation or warranty, or noncompliance with any agreement or condition, as
the case may be, other than that which is specified in the extension or waiver.
A waiver by any party of the performance of any act will not constitute a waiver
of the performance of any other act or an identical act required to be performed
at a later time. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.

Section 12.8 Entire Agreement. This Agreement (including the Ancillary
Documents, the Exhibits hereto, the Disclosure Schedule, documents and
instruments referred to herein that are to be delivered at the Closing)
constitutes the entire agreement among the parties to this Agreement and
supersedes any prior understandings, agreements or representations by or among
the parties hereto, or any of them, written or oral, with respect to the subject
matter hereof.

Section 12.9 No Third Party Beneficiaries. Except as set forth in Section 7.4,
ARTICLE X and Section 12.1, this Agreement is not intended, and shall not be
deemed, to (a) confer any rights or remedies upon any Person other than the
parties hereto and their respective successors and permitted assigns, (b) create
any agreement of employment with any Person, or (c) otherwise create any
third-party beneficiary hereto.

 

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Section 12.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of law or otherwise by any of the parties hereto
without the prior written consent of the other parties, and any such assignment
without such prior written consent shall be null and void; provided that
notwithstanding the foregoing, (i) Purchaser may assign its rights and/or
obligations hereunder to (A) any Affiliate of the Acquired Companies so long as
such assignment shall not cause any Taxes to be imposed upon any Seller or
(B) to any subsequent purchaser of the Acquired Companies or all or
substantially all of the assets comprising the business of the Acquired
Companies, in each case, without the prior written consent of the other parties
hereto, and (ii) each Seller may assign its right to receive any payment under
this Agreement or the Escrow Agreement to a successor pursuant to any and all
applicable laws of descent or distribution. No permitted assignment by Purchaser
shall relieve Purchaser of its obligations hereunder, and no permitted
assignment by a Seller shall relieve such Seller or its estate of its
obligations hereunder. Subject to the preceding sentence, this Agreement shall
be binding upon, inure to the benefit of, and be enforceable by, the parties
hereto and their respective successors and permitted assigns.

Section 12.11 Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms and provisions of this Agreement shall
remain in full force and effect. Upon such determination, the parties hereto
shall negotiate in good faith to modify this Agreement so as to give effect to
the original intent of the parties to the fullest extent permitted by Applicable
Law.

Section 12.12 Counterparts and Signature. This Agreement may be executed in two
(2) or more counterparts, each of which shall be deemed an original but all of
which together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties hereto and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart. This Agreement may be executed and delivered by
facsimile or electronic transmission.

Section 12.13 Interpretation. The table of contents and headings contained in
this Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement. The language used in this
Agreement shall be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction shall be applied
against any party. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns and pronouns shall include the plural, and vice
versa. Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The words “included,”
“includes” or “including” (or any other tense or variation of the word
“include”) in this Agreement shall be deemed to be followed by the words
“without limitation.” The use of the term “ordinary course of business” shall in
all cases herein mean “ordinary course of business consistent in an amount and
frequency with past practices.” When reference is made in this Agreement to an
Article, Section, schedule or exhibit, such reference shall be to an Article,
Section, schedule or exhibit of this Agreement unless otherwise indicated. The
words “hereof,” and “hereunder” and words of similar import when used in this
Agreement shall refer to this

 

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Agreement as a whole and not to any particular provision of this Agreement. No
summary of this Agreement prepared by any party shall affect the meaning or
interpretation of this Agreement.

Section 12.14 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, without regard
to the conflict of law provisions thereof.

Section 12.15 Consent to Jurisdiction. Each of the parties hereto irrevocably
consents to the exclusive jurisdiction and venue of the United States District
Court for the Southern District of New York and of any New York State court
sitting in New York City in connection with any matter based upon or arising out
of this Agreement or the transactions contemplated hereby, agrees that process
may be served upon them in any manner authorized by the laws of the State of New
York for such persons and waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction, venue and
process. Each party hereto hereby agrees not to commence any legal proceedings
relating to or arising out of this Agreement or the transactions contemplated
hereby in any jurisdiction or courts other than as provided herein.

Section 12.16 Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The transactions
contemplated by this Agreement are unique transactions and any failure on the
part of any party to complete the transactions contemplated by this Agreement on
the terms of this Agreement will not be fully compensable in damages and the
breach or threatened breach of the provisions of this Agreement would cause the
other parties hereto irreparable harm. Accordingly, in addition to and not in
limitation of any other remedies available to the parties hereto for a breach or
threatened breach of this Agreement, the parties shall be entitled to seek,
without the posting of a bond, specific performance of this Agreement and seek
an injunction restraining any such party from such breach or threatened breach.

Section 12.17 Waiver of Jury Trial. EACH OF PURCHASER, THE EQUITYHOLDERS’
REPRESENTATIVE, THE SELLERS AND THE ACQUIRED COMPANIES HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF PURCHASER,
THE EQUITYHOLDERS’ REPRESENTATIVE, THE SELLERS OR THE ACQUIRED COMPANIES IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

Section 12.18 Disclosures.

(a) Except with respect to Section 3.12(d), a disclosure made by the Sellers or
any Acquired Company in any Section of this Agreement or any section of the
Disclosure Schedule (or subparts thereof) that reasonably informs Purchaser of
information with respect to

 

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another Section of this Agreement or any other section of the Disclosure
Schedule (or subparts thereof) in order to avoid a misrepresentation thereunder
shall be deemed, for all purposes of this Agreement, to have been made with
respect to all such other Sections of this Agreement and all such other sections
of the Disclosure Schedule (or subparts thereof) to which the relevance of such
disclosure is reasonably apparent on its face without review or other
examination of underlying documentation. Except with respect to Section 3.12(d),
matters, conditions, events or circumstances identified in one or more of the
Sections of this Agreement or the sections of the Disclosure Schedule shall be
deemed disclosed for purposes of the representations and warranties made in the
Agreement only to the extent of the facts specifically and explicitly identified
in such Section(s) of this Agreement or the section(s) of the Disclosure
Schedule and the direct results thereof (including, for the purposes of such
referenced Section(s) and the other Sections into which such Sections are
specifically incorporated by reference only, the content of any documents
specifically referenced herein or therein.

(b) By way of example and not limitation, (i) the disclosure of any facts or
circumstances does not have the effect of disclosing any undisclosed effects
that are not the natural and probable consequence thereof; (ii) the disclosure
of one or more claims arising out of similar facts or circumstances does not
have the effect of disclosing other claims arising out of such facts or
circumstances, (iii) the disclosure of an identified litigation matter does not
have the effect of disclosing claims, facts or requested relief additional to or
different than the claims or facts plead or relief requested in the complaints
or pleadings relating to such litigation, (iv) the disclosure of wrongdoing or
alleged wrongdoing by one or more Persons does not have the effect of disclosing
similar wrongdoing by other Persons (whether pursuant to the same or different
transactions, at the same or different sites, or otherwise) and (v) the
disclosure of the failure of an Acquired Company Plan to comply with Applicable
Laws in one or more respects does not have the effect of disclosing other
failures of such Acquired Company Plan to comply with Applicable Laws.

Section 12.19 Parent Guaranty. Parent shall cause the Purchaser to perform all
of its agreements and obligations under this Agreement and to make payment, when
due, of all amounts that Purchaser is required to pay to the Sellers under this
Agreement, and Parent hereby guarantees to the Sellers the full and punctual
performance by Purchaser of all of such agreements and obligations and the full
and punctual payment of all of such amounts.

Section 12.20 Role of Bingham McCutchen LLP. Each of Purchaser, the Acquired
Companies, the Sellers and Equityholders’ Representative hereby (i) acknowledges
that attorneys with the firm of Bingham McCutchen LLP have acted as legal
counsel for the Acquired Companies, the Equityholders’ Representative and the
Sellers in connection with this Agreement and the transactions contemplated
under this Agreement, (ii) also acknowledges and agrees that Bingham McCutchen
LLP and its attorneys may continue to provide legal counsel and representation
to the Acquired Companies, the Equityholders’ Representative, the Sellers and
their respective Affiliates, or any of them, at all times prior to the Closing,
and (iii) further acknowledges and agrees that Bingham McCutchen LLP and its
attorneys may continue to provide legal counsel and representation to the
Equityholders’ Representative, the Sellers and their respective Affiliates
(other than the Acquired Companies and their Subsidiaries), or any of them, at
all times after the Closing, including in connection with any dispute that may
arise among any of the parties to this Agreement in connection with this
Agreement or the transactions contemplated under this Agreement.

[Remainder of Page Intentionally Left Blank]

 

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

 

PURCHASER:   GSI GROUP CORPORATION   By:  

/s/ Robert J. Buckley

  Name:   Robert J. Buckley   Title:   Chief Financial Officer PARENT:   GSI
GROUP INC.   By:  

/s/ Robert J. Buckley

  Name:   Robert J. Buckley   Title:   Chief Financial Officer

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ACQUIRED COMPANIES:   JADAK, LLC   By:  

/s/ David P. Miller

  Name:   David P. Miller   Title:   President & CEO   JADAK TECHNOLOGIES, INC.
  By:  

/s/ Jeffrey Pine

  Name:   Jeffrey Pine   Title:   President   ADVANCED DATA CAPTURE CORPORATION
 

/s/ Robert D. Valleau

  Name:   Robert D. Valleau   Title:   President