Exhibit 10.24
STOCK PURCHASE AGREEMENT
     This STOCK PURCHASE AGREEMENT, dated as of November 9, 2007, is by and
among INTERSECTIONS INC., a Delaware corporation (“Purchaser”), NET ENFORCERS,
INC., a Florida corporation (the “Company”), and JOSEPH C. LOOMIS, a Florida
resident (“Seller”). Certain capitalized terms used but not defined in the text
hereof shall have the meanings ascribed to them in Section 11.1 hereof.
RECITALS
     A. Seller owns all of the issued and outstanding capital stock of the
Company.
     B. Purchaser desires to purchase and acquire from Seller, and Seller
desires to sell and transfer to Purchaser, all of the shares of Company Stock
which are issued and outstanding immediately prior to the Closing for the
consideration set forth herein, and upon the terms and subject to the conditions
set forth in this Agreement and the related documents to be executed and
delivered in connection herewith (the “Acquisition”).
     NOW, THEREFORE, in consideration of the covenants, representations and
warranties set forth herein, intending to be legally bound hereby, the parties
agree as follows:
ARTICLE 1
THE ACQUISITION
     1.1 The Acquisition. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing, Purchaser shall purchase and acquire from
Seller, and Seller shall sell and transfer to Purchaser, all shares of Company
Stock issued and outstanding immediately prior to the Closing for and in
exchange of the Purchase Price. Immediately following the Closing, Purchaser
shall own all of the issued and outstanding equity and any other ownership
interests of the Company.
     1.2 Closing. Unless this Agreement is earlier terminated pursuant to
Section 9.1, the closing of the Acquisition (the “Closing”), will take place
within three (3) Business Days following satisfaction or waiver of the
conditions set forth in Article 7, at the offices of Venable LLP, 8010 Towers
Crescent Drive, Suite 300, Vienna, Virginia 22182, unless another place or time
is agreed to by the parties (the “Closing Date”).
     1.3 Purchase Price; Closing Deliverables.
          (a) On the terms and subject to the conditions set forth in this
Agreement, Purchaser agrees to deliver the amounts set forth in this
Section 1.3(a) (collectively, the “Purchase Price”). The Purchase Price shall be
subject to adjustment after Closing in accordance with Section 1.4. The Purchase
Price shall be payable as follows:
               (i) Fourteen Million Dollars ($14,000,000) in cash (less any and
all amounts paid pursuant to Section 1.3(a)(ii)) (the “Closing Payment”) shall
be paid to Seller at Closing by wire transfer of immediately available funds to
such bank account or accounts as per

 

--------------------------------------------------------------------------------

 

written instructions of Seller, given to Purchaser at least three (3) days prior
to the Closing (with such Closing Payment subject to adjustment at the Closing
in accordance with Section 1.4(b));
               (ii) An aggregate amount equal to any Company Expenses, including
any and all amounts contemplated by the release described in Section 7.3(h), and
any Company Debt outstanding as of the Closing Date, shall be paid to each of
the payees with respect to such Company Expenses and the holders of such Company
Debt at Closing by wire transfer of immediately available funds to such bank
account or accounts as per written instructions of such payees and holders,
which wire instructions (and payoff letters with respect to such Company Debt)
shall be given to Purchaser at least three (3) days prior to the Closing, and
Purchaser shall reduce the amount of the Closing Payment to be paid to Seller by
the sum of such aggregate amount paid; and
               (iii) In the event that the terms and conditions of Section 1.5
are satisfied, up to an additional Three Million Five Hundred Thousand Dollars
($3,500,000) (the “Earnout”) shall be paid to Seller in one payment or separate
payments after the Closing, pursuant to the terms and conditions of Sections 1.5
and 1.6 hereof.
          (b) Additionally, at the Closing Purchaser shall deliver to Seller the
documents and instruments specified in Section 7.2, and shall deliver or cause
to be delivered to Seller such additional documents as may reasonably be
requested by Seller in order to carry out the intentions and purposes of this
Agreement.
          (c) At the Closing Seller and the Company shall deliver or cause to be
delivered to Purchaser the documents and instruments specified in Section 7.3,
and shall deliver or cause to be delivered to Purchaser such additional
documents as may reasonably be requested by Purchaser in order to carry out the
intentions and purposes of this Agreement.
     1.4 Potential Purchase Price Adjustments.
          (a) As used herein, (1) “Closing Cash Balances” means an amount equal
to the value of all of the Company’s unrestricted cash and cash equivalents as
of the close of business on the Closing Date; (2) “Closing Debt” means the
Company’s Debt as of the Closing of business on the Closing Date (other than
Debt paid at Closing pursuant to Section 1.3(a)(ii)); (3) “Closing Working
Capital Amount” means an amount equal to the value of all of the Company’s
inventory, accounts receivable, prepaid expenses and all other current assets of
the Company (exclusive of Closing Cash Balances) less the current liabilities of
the Company (including accounts payable, accrued Taxes, accrued expenses and
prepaid revenues, including those certain prepaid revenues described on
Schedule 1.4(a)(2), and including Company Expenses, other than Company Expenses
paid at Closing pursuant to Section 1.3(a)(ii)), in each case as of the close of
business on the Closing Date; and (4) “Closing Assets” means an amount equal to
the value of all of the Assets less an amount equal to all of the Company’s
Liabilities (including Company Expenses, other than Company Expenses paid at
Closing pursuant to Section 1.3(a)(ii)), in each case as of the close of
business on the Closing Date; as each such capitalized and underscored term in
the foregoing clauses (1) through (4) is determined from and set forth with
(i) the balance sheet of the Company as of the close of business on the Closing
Date, as finalized pursuant to Section 1.4(c) or Section 1.4(d) (the “Closing
Balance Sheet”), or

2

--------------------------------------------------------------------------------

 

(ii) the Company’s good faith estimate of the Closing Balance Sheet, delivered
pursuant to Section 1.4(b) (the “Estimated Closing Balance Sheet”), as
applicable.
          (b) Not less than three (3) Business Days prior to the scheduled
Closing Date, the Company will prepare and furnish to Purchaser a schedule
describing all outstanding Company Expenses and Company Debt (and the payees and
holders thereof), which amounts shall be paid pursuant to Section 1.3(a)(ii),
and the Estimated Closing Balance Sheet, which will be prepared in accordance
with GAAP and on an accrual basis, will be in reasonable detail and accompanied
by such other financial information and methods of calculation as may be
reasonably necessary for Purchaser to evaluate the accuracy thereof, and will
include estimated calculations of Closing Cash Balances, Closing Debt, Closing
Working Capital Amount and Closing Assets. The Closing Payment will be
(x) reduced at Closing by the sum of (A) any shortfall between the Closing Cash
Balances shown on the Estimated Closing Balance Sheet and a target of $150,000,
plus (B) Closing Debt shown on the Estimated Closing Balance Sheet, plus (C) any
shortfall between the Closing Working Capital Amount shown on the Estimated
Closing Balance Sheet and a target of $0, plus (D) any shortfall between the
Closing Assets shown on the Estimated Closing Balance Sheet and a target of
$200,000 (such sum, the “Closing Payment Adjustment”) and then (x) in the event
that the Closing Working Capital Amount shown on the Estimated Closing Balance
Sheet is greater than a target of $0, increased by the excess of such Closing
Working Capital Amount over a target of $0 (such adjustment, the “Closing
Payment Working Capital Adjustment”).
          (c) Within ninety (90) days after the Closing, Purchaser will prepare
and furnish to Seller a draft Closing Balance Sheet, which will be in reasonable
detail and accompanied by such other financial information and methods of
calculation as may be reasonably necessary for Seller to evaluate the accuracy
thereof. Purchaser’s draft Closing Balance Sheet will set forth Purchaser’s
calculation of Closing Cash Balances, Closing Debt, Closing Working Capital
Amount and Closing Assets and, if applicable, Purchaser’s calculation of the
Purchase Price adjustment required by Section 1.4(e). Seller will have a period
of thirty (30) days after receipt of Purchaser’s draft Closing Balance Sheet to
notify Purchaser in writing of its election to accept or reject Purchaser’s
draft Closing Balance Sheet and any Purchase Price adjustment resulting
therefrom (and in the case of a rejection, there must be included in such notice
the reasons for rejection in reasonable detail and Seller’s calculations
thereof). In the event no written notice is received by Purchaser during such
30-day period (or earlier upon a written notice from Seller agreeing thereto),
Purchaser’s draft Closing Balance Sheet and the accompanying calculation of
Closing Cash Balances, Closing Debt, Closing Working Capital Amount, Closing
Assets, and any Purchase Price adjustment resulting therefrom, will be deemed
accepted by Seller and final and binding on the parties hereto.
          (d) In the event Seller timely rejects Purchaser’s draft Closing
Balance Sheet and any Purchase Price adjustment resulting therefrom, Purchaser
and Seller will promptly (and in any event within 20 days following the date
upon which Purchaser receives written notice from Seller that Seller rejects
Purchaser’s draft Closing Balance Sheet) attempt to make a joint determination
of the Closing Balance Sheet and any Purchase Price adjustment resulting
therefrom. If the parties are unable to agree upon the final determination of
the Closing Balance Sheet within such 20-day period, then Purchaser and Seller
will submit the issues in dispute to an independent certified public accountant
jointly chosen by Seller and Purchaser, which will act as the

3

--------------------------------------------------------------------------------

 

arbitrator of the issues in dispute (the “Arbitrator”). In making its
determination, the Arbitrator will consider only those items or amounts in
Purchaser’s draft Closing Balance Sheet and its calculations of Closing Cash
Balances, Closing Debt, Closing Working Capital Amount, Closing Assets and the
Purchase Price adjustment required by Section 1.4(e) as to which Seller has
disagreed. The determination of the Arbitrator shall be set forth in a written
notice delivered to Purchaser and Seller by Arbitrator and will be binding and
conclusive on the parties; provided, however, that in no event will the
Arbitrator’s calculation of the Purchase Price adjustment required by
Section 1.4(e) be more in favor of Purchaser than the amount thereof shown in
Purchaser’s draft Closing Balance Sheet and its calculations of Closing Cash
Balances, Closing Debt, Closing Working Capital Amount, Closing Assets and the
Purchase Price adjustment nor more in favor of Seller than the amount thereof
shown in Seller’s calculation thereof delivered pursuant to Section 1.4(c).
Purchaser and Seller will each bear 50% of the fees and expenses of the
Arbitrator for such determination.
          (e) (i) The “Post-Closing Adjustment Amount” shall be equal to the sum
of (A) any shortfall between the Closing Cash Balances shown on the Closing
Balance Sheet and a target of $150,000, plus (B) Closing Debt shown on the
Closing Balance Sheet, plus (C) any shortfall between the Closing Working
Capital Amount shown on the Closing Balance Sheet and a target of $0, plus
(D) any shortfall between the Closing Assets shown on the Closing Balance Sheet
and a target of $200,000, and the “Post-Closing Working Capital Adjustment
Amount” shall be equal to the amount (if any), by which the Closing Working
Capital Amount shown on the Closing Balance Sheet is greater than a target of
$0.
               (ii) If the Post-Closing Adjustment Amount is greater than the
Closing Payment Adjustment, then the Purchase Price shall be reduced on a
dollar-for-dollar basis by the amount of such difference, and if the Closing
Payment Adjustment is greater than the Post-Closing Adjustment Amount, then the
Purchase Price shall be increased on a dollar-for-dollar basis by the amount of
such difference. In addition, if the Post-Closing Working Capital Adjustment
Amount is greater than the Closing Payment Working Capital Adjustment, then the
Purchase Price shall be increased on a dollar-for-dollar basis by the amount of
such difference, and if the Closing Payment Working Capital Adjustment is
greater than the Post-Closing Working Capital Adjustment Amount, then the
Purchase Price shall be reduced on a dollar-for-dollar basis by the amount of
such difference.
               (iii) The amount of any aggregate negative Purchase Price
adjustment (determined pursuant to subsection (ii) above) will be paid by Seller
to the Purchaser (and Seller shall be responsible for such payment), and the
amount of any positive Purchase Price adjustment (determined pursuant to
subsection (ii) above) will be paid by Purchaser to Seller, in either case
within three (3) Business Days after the final determination thereof.

4

--------------------------------------------------------------------------------

 

     1.5 Earnout.
          (a) Subject to the terms and conditions of this Section 1.5 and
Section 1.6, in the event that the terms and conditions of this Section 1.5 are
satisfied, the Earnout shall be paid to Seller in one payment or separate
payments (as described herein) based on the Company Business Unit’s Revenue and
EBITDA Margins during the Earnout Periods following the Closing. For purposes
hereof, (1) “Revenue” means the Company Business Unit’s net revenue measured for
a particular Earnout Period of twelve (12) consecutive calendar months ending on
or prior to the Earnout Termination Date and as adjusted pursuant to
Schedule 1.5(a), (2) “EBITDA” means the Company Business Unit’s net income, plus
interest expense, plus tax expense, plus depreciation, plus amortization expense
measured for a particular Earnout Period and as adjusted pursuant to
Schedule 1.5(a), (3) “EBITDA Margin” means the Company Business Unit’s EBITDA
divided by the Company Business Unit’s Revenue, in each case for a particular
Earnout Period, (4) “Earnout Period” means each period of twelve (12) full
consecutive calendar months that begins after the Closing Date and ends on or
before the Earnout Termination Date (the parties hereto acknowledge that there
shall be forty-nine (49) such periods between the Closing Date and the Earnout
Termination Date), (5) “Earnout Termination Date” means the last day of the
sixtieth (60th) full calendar month beginning after the Closing Date and (6)
“Corporate Overhead Charges” shall mean the charges for general corporate
oversight, advice, guidance and assistance provided by Purchaser or any of its
Affiliates to the Company Business Unit after the Closing, but shall not include
charges for specific services purchased by the Company Business Unit from
Purchaser or any such Affiliate or other Person. (For example, Corporate
Overhead Charges shall include charges for general human resources advice
provided by Purchaser or any of its Affiliates to the Company Business Unit, but
shall not include charges for payroll processing if the Company Business Unit
procures these services through Purchaser.) Each of Revenue and EBITDA will be
determined in accordance with GAAP. In determining EBITDA for a particular
Earnout Period, Corporate Overhead Charges allocated to the Company Business
Unit shall not exceed 2.5% of Revenue for such Earnout Period.
          (b) Subject to Section 1.6:
               (1) Seller shall be entitled to an Earnout payment of Five
Hundred Thousand Dollars ($500,000) the first time that Revenue for any Earnout
Period exceeds Seven Million Five Hundred Thousand Dollars ($7,500,000) and
EBITDA Margin for such Earnout Period exceeds 25%;
               (2) Seller shall be entitled to an additional Earnout payment of
Five Hundred Thousand Dollars ($500,000) the first time that Revenue for any
Earnout Period exceeds Ten Million Dollars ($10,000,000) and EBITDA Margin for
such Earnout Period exceeds 27.5%;
               (3) Seller shall be entitled to an additional Earnout payment of
Six Hundred Twenty-Five Thousand Dollars ($625,000) the first time that Revenue
for any Earnout Period exceeds Fifteen Million Dollars ($15,000,000) and EBITDA
Margin for such Earnout Period exceeds 30%;

5

--------------------------------------------------------------------------------

 

               (4) Seller shall be entitled to an additional Earnout payment of
Eight Hundred Seventy-Five Thousand Dollars ($875,000) the first time that
Revenue for any Earnout Period exceeds Twenty Million Dollars ($20,000,000) and
EBITDA Margin for such Earnout Period exceeds 35%; and
               (5) Seller shall be entitled to an additional Earnout payment of
One Million Dollars ($1,000,000) the first time that Revenue for any Earnout
Period exceeds Twenty-Five Million Dollars ($25,000,000) and EBITDA Margin for
such Earnout Period exceeds 40%.
More than one Earnout payment may be paid to Seller for a particular Earnout
Period if the conditions for more than one (1) Earnout payment set forth herein
have been met for such Earnout Period.
          (c) Unless Purchaser has already paid to Seller the entire Earnout,
Purchaser will prepare and furnish to Seller in writing within sixty (60) days
following the end of such Earnout Period Purchaser’s calculation of Revenue,
EBITDA Margin and the amount of any Earnout payment for such Earnout Period to
which Seller is entitled pursuant to Section 1.5(b) (each such writing, an
“Earnout Proposal”). Each Earnout Proposal will be in reasonable detail and
accompanied by such other financial information and methods of calculation as
may be reasonably necessary for Seller to evaluate the accuracy thereof. Seller
will have a period of thirty (30) days after receipt of Purchaser’s Earnout
Proposal to notify Purchaser in writing of its election to accept or reject
Purchaser’s Earnout Proposal (and in the case of a rejection, there must be
included in such notice the reasons for rejection in reasonable detail and
Seller’s calculations thereof). In the event no written notice is received by
Purchaser during such 30-day period (or earlier upon a written notice from
Seller agreeing thereto), Purchaser’s Earnout Proposal will be deemed accepted
by Seller and final and binding on the parties hereto. The procedures and
timeframes established pursuant to Section 1.4(d) shall apply in the event that
Seller timely rejects Purchaser’s Earnout Proposal.
          (d) Subject to Section 1.6, the amount of any Earnout payment finally
determined pursuant to Section 1.5(c) will be paid by Purchaser to Seller within
three (3) Business Days after such determination.
     1.6 Holdback Amount. Notwithstanding anything herein to the contrary,
Purchaser shall retain, in accordance with the terms of this Section 1.6, from
any amounts otherwise payable under Section 1.5 as part of the Earnout, an
amount (the “Holdback Amount”) equal to One Million Five Hundred Thousand
Dollars ($1,500,000), and, until such date as Purchaser has so retained such
amount in full (such date, the “Funded Holdback Date”), no payments with respect
to the Earnout shall be made to Seller. Following the Funded Holdback Date,
Purchaser shall pay to Seller, in accordance with Section 1.5, any additional
amounts otherwise payable under Section 1.5 as part of the Earnout to the extent
that such additional amounts exceed the Holdback Amount. The Holdback Amount
shall serve as security for, and be available to satisfy, any payment
obligations of Seller under Section 1.4(e) and/or Section 6.11 and/or any
indemnification obligations of Seller under Article 8 of this Agreement. Any
remaining Holdback Amount less amounts deducted from the Holdback Amount in
connection with any payment under Section 1.4(e) and/or Section 1.6 and/or
indemnity claims pursuant to Article 8 of

6

--------------------------------------------------------------------------------

 

this Agreement and less the aggregate amount of any then-outstanding indemnity
claims), if any, shall be paid by Purchaser to Seller on the date thirty
(30) days following the third anniversary of the Tax Return Filing Date.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
     The Company and Seller hereby represent and warrant to Purchaser as
follows:
     2.1 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Florida and has full corporate power and authority to conduct the Business as
now conducted and to own, use, license and lease the Assets. The Company is duly
qualified, licensed or admitted to do business and is in good standing as a
foreign corporation in each jurisdiction in which the ownership, use, licensing
or leasing of the Assets, or the conduct or nature of the Business, makes such
qualification, licensing or admission necessary, except for such failures to be
so duly qualified, licensed or admitted and in good standing that would not
reasonably be expected to have a Material Adverse Effect. Schedule 2.1 attached
hereto sets forth each jurisdiction where the Company is so qualified, licensed
or admitted to do business as a foreign corporation.
     2.2 Authority; Binding Agreements. The Company has full corporate power and
authority to execute and deliver this Agreement and the other agreements which
are attached (or forms of which are attached) as exhibits hereto (the “Ancillary
Agreements”) to which the Company is or will become a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by the Company of
this Agreement and the Ancillary Agreements to which the Company is or will
become a party, the consummation by the Company of the transactions contemplated
hereby and thereby, and the performance by the Company of its obligations
hereunder and thereunder, have been duly and validly authorized by all necessary
corporate action of the Company, and no other corporate action on the part of
the Company is required to authorize the execution, delivery and performance of
this Agreement and the Ancillary Agreements to which the Company is or will
become a party, or the consummation by the Company of the transactions
contemplated hereby and thereby. This Agreement and the Ancillary Agreements to
which the Company is or will become a party have been or will be, as applicable,
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof (and, in the case of the Ancillary
Agreements to which Purchaser is a party, thereof) by, and enforceability
against, Purchaser, each constitutes or will upon execution and delivery
constitute, as applicable, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its respective terms, except
as the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar Laws relating
to the enforcement of creditors’ rights generally and by general principles of
equity.

7

--------------------------------------------------------------------------------

 

     2.3 Capital Stock.
          (a) The authorized capital stock of the Company consists of One
Hundred (100) shares of stock (the “Company Stock”), all of which shares of
Company Stock are issued and outstanding. All of the issued and outstanding
shares of Company Stock are validly issued, fully paid and non-assessable, have
not been issued in violation of any federal or state securities Laws, and are
owned beneficially and of record by Seller.
          (b) No Company Stock has been issued subject to a repurchase option or
buy-back agreement on the part of the Company.
          (c) There are no outstanding Company Options or other Equity
Equivalents or any agreements, arrangements or understandings to which the
Company is a party (written or oral) to issue any Company Options or other
Equity Equivalents. There is no stock plan of the Company or Seller or any of
their respective Affiliates pursuant to which Company Options or other Equity
Equivalents are issued and outstanding or are available for issuance.
          (d) There are no preemptive rights or agreements, arrangements or
understandings to issue preemptive rights with respect to the issuance or sale
of Company Stock created by statute, the articles of incorporation or bylaws of
the Company, or any agreement or other arrangement to which the Company is a
party (written or oral) or to which it is bound, and there are no agreements,
arrangements or understandings to which the Company is a party (written or oral)
pursuant to which the Company has the right to elect to satisfy any Liability by
issuing Company Stock or Equity Equivalents. No shares of Company Stock have
been issued in violation of any preemptive or similar rights, including rights
of first refusal or first offer.
          (e) The Company is not a party or subject to any agreement,
arrangement or understanding, and there is no agreement, arrangement or
understanding between or among any Persons which affects, restricts or relates
to voting, giving of written consents, dividend rights or transferability of
shares with respect to Company Stock, including any voting trust agreement or
proxy.
     2.4 No Subsidiaries. The Company has no (and prior to the Closing will have
no) Subsidiaries and does not (and prior to the Closing will not) otherwise hold
any equity, membership, partnership, joint venture or other ownership interest
or Investment Assets in any Person.
     2.5 Directors, Officers and Employees. The names of each director and
officer of the Company on the date hereof, and his or her position with the
Company are listed in Schedule 2.5 attached hereto. No claims for
indemnification by any current or former director, officer or other employee of
the Company are currently outstanding, and no basis exists for any such claim
for indemnification.
     2.6 No Conflicts; Approvals. The execution and delivery by the Company of
this Agreement and the Ancillary Agreements to which the Company is or will be a
party does not and will not upon execution and delivery, and the performance by
the Company of its obligations under this Agreement and the Ancillary Agreements
to which the Company is or will be a party and the consummation of the
transactions contemplated hereby and thereby do not and will not:

8

--------------------------------------------------------------------------------

 

          (a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or bylaws of
the Company;
          (b) subject to obtaining or making the Approvals disclosed in
Schedule 2.6(c), if any, result in a violation or breach of, or a conflict with,
any Law or Order applicable to the Company or any of the Assets; or
          (c) except as disclosed in Schedule 2.6(c) attached hereto, (i) result
in a violation or breach of or conflict with, (ii) constitute a default (or an
event that, with or without notice or lapse of time or both, would constitute a
default) under, (iii) require the Company to obtain or make any Approval to any
Person as a result or under the terms of, (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon the Company or any of the Assets
under or (vii) result in the loss of any benefit under, any of the terms,
conditions or provisions of any Contract or License to which the Company is a
party or by which any of the Assets are bound.
Subject to obtaining or making the Approvals disclosed in Schedule 2.6(c), no
Approval is required to be obtained from or made with any Governmental or
Regulatory Authority by the Company in connection with the execution and
delivery by the Company of this Agreement and the Ancillary Agreements to which
the Company is or will be a party, and the performance by the Company of its
obligations under this Agreement and the Ancillary Agreements to which the
Company is or will be a party and the consummation of the transactions
contemplated hereby and thereby.
     2.7 Company Financial Statements. Schedule 2.7 attached hereto sets forth
(a) the unaudited balance sheet of the Company as of September 30, 2007 and
profit and loss statements for the period from January through September, 2007,
and (b) the unaudited balance sheet of the Company as of December 31, 2006, and
December 31, 2005, and the profit and loss statements for each of the fiscal
years then ended (collectively, the “Company Financials”). The Company
Financials are complete and correct in all material respects, are in accordance
with the Books and Records of the Company and present fairly, in all material
respects, the financial condition and operating results of the Company as of the
dates and during the periods indicated therein.
     2.8 Books and Records; Organizational Documents. Except as disclosed in
Schedule 2.8 attached hereto, copies of the minute books and stock record books
of the Company (a) have been provided or made available to Purchaser or its
counsel prior to the execution of this Agreement, and (b) are complete and
correct. Except as disclosed in Schedule 2.8, such minute books contain a true
and complete record of actions taken at meetings and by all written consents in
lieu of meetings of the directors, stockholders and committees of the board of
directors of the Company from the date of the incorporation through the date
hereof.
     2.9 Absence of Changes. Since December 31, 2006, except as set forth in
Schedule 2.9, there has not been any event which has had or is reasonably
expected to have any Material

9

--------------------------------------------------------------------------------

 

Adverse Effect. Without limiting the generality of the foregoing sentence, and
except as set forth on Schedule 2.9, since December 31, 2006:
          (a) The Company has not entered into any Contract or License (other
than with Purchaser or its Affiliates), commitment or transaction or incurred
any Liabilities outside of the ordinary course of business;
          (b) The Company has not entered into any strategic alliance, joint
development or joint marketing Contract;
          (c) there has not been any amendment or other modification (or
agreement to do so) or violation of the terms of, any of the Contracts set forth
or described in Schedule 2.18(a);
          (d) The Company has not entered into any transaction with any officer,
director, stockholder, Affiliate or Associate of the Company, other than
pursuant to any Contract disclosed to Purchaser pursuant to Schedule 2.20(a) or
other than pursuant to any Contract of employment listed pursuant to
Schedule 2.l8(a);
          (e) The Company has not entered into or amended any Contract or
License pursuant to which any other Person is granted production, marketing,
distribution, licensing or similar rights of any type or scope with respect to
any products or services of the Company or Company Intellectual Property, other
than as contemplated by the Contracts and Licenses disclosed in Schedule
2.18(a);
          (f) no Action or Proceeding has been commenced or, to the knowledge of
Seller and/or the Company, has been threatened, by or against the Company;
          (g) The Company has not declared or set aside or paid any dividends on
or made any other distributions (whether in cash, stock or property) in respect
of any Company Stock or Equity Equivalents, or effected or approved any split,
combination or reclassification of any Company Stock or Equity Equivalents, or
issued or authorized the issuance of any other securities in respect of, in lieu
of or in substitution for shares of Company Stock or Equity Equivalents, or
repurchased, redeemed or otherwise acquired, directly or indirectly, any shares
of Company Stock or Equity Equivalents;
          (h) (1) The Company has not issued, granted, delivered, sold or
authorized or proposed to issue, grant, deliver or sell, or purchased or
proposed to purchase, any shares of Company Stock or Equity Equivalents, (2) the
Company has not modified or amended the rights of any holder of any outstanding
shares of Company Stock or Equity Equivalents, and (3) there have not been any
agreements, arrangements, plans or understandings obligating the Company to make
any such modification or amendment;
          (i) there has not been any amendment to the Company’s articles of
incorporation or bylaws;
          (j) there has not been any transfer (by way of a Contract, License or
otherwise) to any Person of rights to any Company Intellectual Property, and the
Company has

10

--------------------------------------------------------------------------------

 

used all commercially reasonable to secure all Company Intellectual Property
from unauthorized disclosure or removal from the Company premises by the Company
personnel or contractors or any other persons or entities;
          (k) The Company has not made or agreed to make any disposition or sale
of, waiver of rights to, license or lease of, or incurrence of any Lien on, any
of the Assets, other than dispositions of inventory, or nonexclusive licenses of
assets or properties in the ordinary course of business of the Company;
          (l) The Company has not made or agreed to make any purchase of any
assets or properties of any Person other than (i) acquisitions of inventory, or
licenses of assets or properties, in the ordinary course of business of the
Company, and (ii) other acquisitions in an amount not exceeding Twenty-Five
Thousand Dollars ($25,000) in the case of any individual item or Fifty Thousand
Dollars ($50,000) in the aggregate;
          (m) The Company has not made or agreed to make any capital
expenditures or commitments for additions to property, plant or equipment of the
Company constituting capital assets in the aggregate in an amount exceeding
Fifty Thousand Dollars ($50,000);
          (n) The Company has not made or agreed to make any write-off or
write-down, any determination to write off or write-down, or revalue, any of the
Assets, or change any reserves or Liabilities associated therewith, in the
aggregate in an amount exceeding Twenty-Five Thousand Dollars ($25,000);
          (o) The Company has not made or agreed to make payment, discharge or
satisfaction, in an amount in excess of Five Thousand Dollars ($5,000), in any
one case, or Twenty-Five Thousand Dollars ($25,000) in the aggregate, of any
claim, Liability or obligation (whether absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business of Liabilities reflected or
reserved against in Company Financials and other than Liabilities incurred in
the ordinary course of business since December 31, 2006;
          (p) The Company has not failed to pay or otherwise satisfy any
Liabilities presently due and payable of the Company;
          (q) The Company has not incurred any Debt or guaranteed any Debt of
any other Person, and has not issued or sold any debt securities of the Company
or guaranteed any debt securities of others;
          (r) The Company has not granted any severance or termination pay to
any director, officer, employee or consultant of the Company;
          (s) The Company has not (i) granted or approved any increase in
salary, rate of commissions, rate of consulting fees or any other compensation
of any current or former officer, director, stockholder, employee, independent
contractor or consultant of the Company, or (ii) paid or agreed or made any
commitment to pay any discretionary or stay bonus;

11

--------------------------------------------------------------------------------

 

          (t) The Company has not paid or approved the payment of any
consideration of any nature whatsoever (other than salary, commissions or
consulting fees and customary benefits paid to any current or former officer,
director, stockholder, employee or consultant of the Company in the ordinary
course of business) to any current or former officer, director, stockholder,
employee, independent contractor or consultant of the Company;
          (u) The Company has not adopted, entered into, amended, modified or
terminated (partially or completely) any Plan;
          (v) The Company has not made any change in accounting policies,
principles, methods, practices or procedures (including for bad debts,
allocation of corporate expenses, contingent liabilities or otherwise,
respecting capitalization or expense of research and development expenditures,
depreciation or amortization rates or timing of recognition of income and
expense);
          (w) The Company has not commenced or terminated, or made any material
change in, any line of business;
          (x) there has been no physical damage, destruction or other casualty
loss (whether or not covered by insurance) affecting any of the real or personal
property or Equipment of the Company in the aggregate in an amount exceeding
Fifty Thousand Dollars ($50,000); and
          (y) neither the Company, its Affiliates nor Seller has entered into or
approved any contract, arrangement or understanding to do, engage in or cause or
having the effect of any of the foregoing by the Company, including with respect
to any Business Combination not otherwise restricted by the foregoing
paragraphs.
     2.10 No Undisclosed Liabilities. Except as reflected or reserved against in
Company Financials or as disclosed in Schedule 2.10, there are no Liabilities of
the Company or affecting any of the Assets or the Business.
     2.11 Taxes. Except as set forth on Schedule 2.11:
          (a) The Company (and any predecessor of the Company) has been a
validly electing S corporation within the meaning of Sections 1361 and 1362 of
the Code since January 1, 2005, and will be an S corporation up to and including
the Closing Date.
          (b) The Company has properly prepared and timely filed all Tax Returns
required to be filed. All such Tax Returns are true, correct and complete in all
material respects. All Taxes owed by the Company (whether or not shown on any
Tax Return) have been paid except for Taxes not yet due. The Company is not
currently the beneficiary of any extension of time within which to file any Tax
Return. The Company has not received any notice of Tax deficiency or additional
assessment from any Governmental or Regulatory Authority with respect to
Liabilities for Taxes payable by the Company that has not been fully paid or
finally settled. No claim has ever been made by any Governmental or Regulatory
Authority in any jurisdiction where the Company does not file Tax Returns that
the Company is or may be subject to taxation by that jurisdiction. There are no
Liens with respect to Taxes on any of the Assets.

12

--------------------------------------------------------------------------------

 

          (c) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to or on behalf of
any employee, independent contractor, creditor, stockholder or other third party
(including any nonresident alien or foreign corporation pursuant to
Sections 1441 and 1442 of the Internal Revenue Code or similar provisions under
any foreign Tax laws), and all Forms W-2 and 1099 required with respect thereto
have been properly completed and timely filed.
          (d) No reasonable basis exists for, and no shareholder, director or
officer (or employee responsible for Tax matters) of the Company has knowledge
of any intention or threat by, any Governmental or Regulatory Authority to
assess any additional Taxes for any period for which Tax Returns have been
filed. There are no disputes pending in respect of, or claims asserted by a
Governmental or Regulatory Authority for Taxes for which the Company or Seller
may be liable, nor are there any pending, or, to the knowledge of Seller and/or
the Company, threatened (whether orally or in writing), audits, investigations
or outstanding matters under discussion with any Governmental or Regulatory
Authority with respect to the Taxes for which the Company or Seller may be
liable.
          (e) Schedule 2.11(e) lists all federal, state, local, and foreign
income or franchise Tax Returns and material Tax elections filed with respect to
the Company filed since January 1, 2004, indicates those Tax Returns that have
been audited, and indicates those Tax Returns that currently are the subject of
audit. The Company has delivered or made available to Purchaser true, correct
and complete copies of all of the Company’s federal income Tax Returns filed
since January 1, 2004 and all Tax opinions and examination reports received, and
statements of Tax deficiencies assessed against or agreed to, by or on behalf of
the Company. The Company has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial understatement of
federal income Tax within the meaning of Section 6662 of the Internal Revenue
Code. The Company has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency.
          (f) The Company is not a party to or bound by (and will not prior to
the Closing become a party to or bound by) any Tax indemnity, Tax allocation,
Tax sharing or gain recognition agreement (whether written, unwritten or arising
under operation of federal Law as a result of being a member of a group filing
consolidated Tax Returns (other than a group the common parent of which is or
was the Company), under operation of state Laws as a result of being a member of
a unitary group, or under comparable Laws of other states or foreign
jurisdictions). The Company has not been, and will not be, required to include
any item of income in, or exclude any item of deduction from, taxable income for
any Tax period (or portion thereof) ending on or after the Closing Date as a
result of (A) any change in method of accounting for a Tax period ending on or
prior to the Closing Date under Section 481 of the Internal Revenue Code (or any
corresponding or similar provision of state, local or foreign income Tax Law);
(B) any “closing agreement” as described in Section 7121 of the Internal Revenue
Code (or any corresponding or similar provision of state, local or foreign
income Tax Law); (C) any deferred inter-Company gain or any excess loss account
described in the Treasury Regulations under Section 1502 of the Internal Revenue
Code (or any corresponding or similar provision of state, local or foreign
income Tax Law); (D) any installment sale or open transaction disposition made
on or prior to the Closing Date; (E)any prepaid amount received on or prior to

13

--------------------------------------------------------------------------------

 

the Closing Date; or (F) the application of Section 263A of the Internal Revenue
Code (or any corresponding or similar provision of state, local or foreign
income Tax Law) with respect to a Tax period ending on or prior to the Closing
Date.
          (g) The Company (A) has never been a member of an “affiliated group”
(within the meaning of Section 1504(a) of the Internal Revenue Code) filing a
consolidated federal income Tax Return, and (B) has no Liability for the Taxes
of any Person other than the Company (i) under Treasury Regulation §1.1502-6 (or
any similar provision of state, local or foreign Law), (ii) as a transferee or
successor, (iii) by Contract, or (iv) otherwise.
          (h) The Company has not made any payments, is not obligated to make
any payments, and is not a party to any Contract, agreement or arrangement
covering any current or former employee or consultant of the Company that under
certain circumstances could require it to make or give rise to any payments that
are not fully deductible as a result of the provisions set forth in Section 280G
of the Internal Revenue Code or the Treasury Regulations thereunder (or any
corresponding provisions of state, local or foreign Tax Law) or would result in
an excise Tax to the recipient of any such payment under Section 4999 of the
Internal Revenue Code. The Company has no liability for the Taxes of any other
person either as a transferee under Section 6901 of the Internal Revenue Code,
or any similar provision of state, local or foreign law, as a successor, or by
contract or otherwise.
          (i) None of the Company’s Liabilities is an obligation to make a
payment that is not deductible under Section 280G of the Internal Revenue Code.
          (j) The unpaid Taxes of the Company (A) did not, as of the most recent
fiscal month end, exceed the reserve for Tax Liabilities (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of the most recent balance sheet
(rather than in any notes thereto) and (B) do not exceed that reserve as
adjusted for the passage of time through the Closing Date in accordance with the
past custom and practice of the Company in filing its Tax Returns.
          (k) The Company is not party to or bound by any written ruling or
agreement, or to the knowledge of Seller and/or the Company any other agreement,
with any Governmental or Regulatory Authority which would have continuing effect
in any Tax period of the Company for which a Tax Return has not yet been filed.
          (l) The Company has timely disclosed any “reportable transaction”
required to be disclosed under Section 6011 of the Internal Revenue Code on a
federal Tax Return with respect to any taxable year ending on or before the
Closing Date. Except for these “reportable transaction” disclosures, the Company
has not, directly or indirectly, engaged in a “reportable transaction” within
the meaning of Section 6011 of the Internal Revenue Code and the Treasury
Regulations thereunder on or before the Closing Date.
          (m) The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Internal Revenue Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code,
and the Company has not participated in an international boycott within the
meaning of Section 999 of the Internal

14

--------------------------------------------------------------------------------

 

Revenue Code. The Company does not and has not had a permanent establishment in
any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country.
          (n) The Company is not party to any joint venture, partnership, or
other arrangement or contract that would be treated as a partnership for federal
income Tax purposes.
          (o) The amount of built-in gain that the Company would recognize under
Section 1374 of the Internal Revenue Code upon a sale of all of its assets for
fair market value on or before the Closing Date would not exceed Three Hundred
Fifty Thousand Dollars ($350,000).
     2.12 Legal Proceedings. Except as set forth in Schedule 2.12:
          (a) there are no Actions or Proceedings pending or, to the knowledge
of Seller and/or the Company, threatened, against or adversely affecting the
Company or any of the Assets or the Business;
          (b) there are no Orders outstanding against or adversely affecting the
Company or any of the Assets or the Business; and
          (c) there are no facts or circumstances known to Seller and/or the
Company that would reasonably be expected to give rise to any Action or
Proceeding against or adversely affecting the Company or any of the Assets or
the Business.
     Schedule 2.12 sets forth all Actions or Proceedings against or affecting,
or, to the knowledge of Seller and/or the Company, threatened against or
adversely affecting the Company or any of the Assets or the Business during the
three-year period prior to the date of this Agreement.
     2.13 Compliance with Laws and Orders.
          (a) The operation of the Business as currently conducted does not
violate any Law or Order applicable to the Company or any of the Assets, nor
does it constitute unfair competition or deceptive or unfair trade practices, or
the so-called unauthorized practice of law, under any Law. Neither the Company
nor any of its directors, officers, Affiliates, agents or employees has violated
or is currently in default or violation under, any Law or Order applicable to
the Company or any of the Assets, including any Law with respect to unfair
competition, unfair trade practices, or the so-called unauthorized practice of
law.
          (b) The Company has all Permits required by any Law or any
Governmental or Regulatory Authority for the conduct of the Company’s business
as presently conducted. Each of such Permits is in full force and effect and the
Company is in compliance with the terms and requirements thereof, and no such
Permit is subject to any conditions or limitations other than those applicable
to permits of that kind generally. All Permits of the Company are listed on
Schedule 2.13 (the “Company’s Permits”) and the Company has made available to
Purchaser a true and correct copy of each such Permit. No loss or expiration of
any Permit is pending or, to the knowledge of Seller and/or the Company,
threatened (including as a result of the transactions contemplated hereby) other
than expiration in accordance with the terms thereof, which terms do

15

--------------------------------------------------------------------------------

 

not expire as a result of the consummation of the transactions contemplated
hereby and which terms, except as set forth on Schedule 2.13, do not expire
within ninety (90) days from the date hereof.
     2.14 Plans; ERISA.
          (a) All of the Plans of the Company and its ERISA Affiliates are
listed on Schedule 2.14(a). Copies of all such Plans and written descriptions of
any oral Plans have been made available to Purchaser, along with annual reports
(Forms 5500) required for any Plan for the last three (3) years. To the extent
applicable, each Plan has been maintained and administered in accordance with
its terms and all applicable Laws, including but not limited to the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder (“ERISA”) and the Internal Revenue Code. Any
Plan intended to be qualified under Section 401(a) of the Internal Revenue Code
or tax-exempt under Section 501(a) of the Internal Revenue Code is so qualified
or tax-exempt and is subject to a current opinion or determination letter from
the Internal Revenue Service regarding such qualification or tax exemption,
which has been made available to Purchaser. No Plan is covered by Title IV of
ERISA or Section 412 of the Internal Revenue Code. Neither the Company nor any
of its ERISA Affiliates has been a contributing employer to any multiemployer
plan as defined under Section 4001 of ERISA. Neither the Company nor any officer
or director of the Company has incurred any Liability or penalty under
Section 4971 through 4980E of the Internal Revenue Code or Title 1 of ERISA. No
ERISA Affiliate or officer of any ERISA Affiliate has incurred any such
liability or penalty. None of the Plans promises or provides retiree medical or
other retiree welfare benefits to any person except as required by applicable
Law, including but not limited to, Sections 601 to 608 of ERISA and
Section 4980B of the Internal Revenue Code. No Action or Proceeding (excluding
claims for benefits incurred in the ordinary course of Plan activities) has been
brought, or to the knowledge of Seller and/or the Company, is threatened,
against or with respect to any such Plan. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Plans have
been made or accrued. All reports, returns, forms and notices required to be
filed with any Government or Regulatory Authority or furnished to participants
or beneficiaries with respect to the Plans, by the Internal Revenue Code, ERISA
or any other applicable Law, have been so filed and furnished. Except as
disclosed on Schedule 2.14(a), neither the Company nor any of its ERISA
Affiliates is under a legal or contractual obligation to continue any of the
Plans and may terminate any or all of the Plans at any time in accordance with
the terms of the Plans and applicable Law without incurring any Liability.
          (b) Except as provided in Schedule 2.14(b), neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment or increased benefit (including severance,
unemployment compensation, bonus or otherwise) becoming due to any current or
former director, officer, employee or consultant of the Company or any ERISA
Affiliate under any Plan or otherwise, (ii) result in a payment or benefit
becoming due to any director, officer or employee of the Company or any ERISA
Affiliate under any Plan or otherwise which will be characterized as a
“parachute payment” within the meaning of Section 280G of the Internal Revenue
Code (but without regard to clause (b)(2)(A)(ii) thereof), (iii) increase any
benefits otherwise payable under any Plan, or (iv) result in the acceleration of
the time of payment or vesting of any such benefits.

16

--------------------------------------------------------------------------------

 

          (c) To the extent applicable, the Company and its ERISA Affiliates
have complied with the continuation health care coverage requirements of
Section 4980B of the Internal Revenue Code and Sections 601 through 608 of ERISA
with respect to “qualifying events,” as defined in the Internal Revenue Code and
ERISA, which occur on or before the Closing with respect to any current or
former employees of the Company and its ERISA Affiliates and their respective
“qualified beneficiaries,” as defined in the Internal Revenue Code and ERISA,
and with the requirements of the Health Insurance Portability and Accountability
Act and other applicable health insurance requirements in Section 4980D of the
Internal Revenue Code and Sections 701 through 734 of ERISA.
          (d) Any Plan which is a “nonqualified deferred compensation plan” as
defined in Internal Revenue Code Section 409A has been operated in good faith
compliance with Internal Revenue Code Section 409A.
     2.15 Real Property.
          (a) Schedule 2.15(a) contains a true and correct list of (i) each
parcel of real property leased, utilized and/or operated by the Company (as
lessor, lessee or otherwise) (the “Leased Real Property”) and (ii) all Liens
relating to or affecting any parcel of real property referred to in clause
(i) to which the Company is a party. True and correct copies of the documents
under which the Leased Real Property is leased, subleased (to or by the Company
or otherwise), utilized, and/or operated (the “Lease Documents”) have been made
available to Purchaser, and such Lease Documents are unmodified and in full
force and effect. The Company does not own any real property other than the
Company owned leasehold improvements, if any, on Leased Real Property.
          (b) Subject to the terms of the Lease Documents, the Company has a
valid and subsisting leasehold estate in and the right to quiet enjoyment of
each of the Leased Real Properties for the full term of the leases (including
renewal periods) relating thereto. Each Lease Document referred to in
Section 2.15(a) is a legal, valid and binding agreement, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar Laws relating to the enforcement of creditors’ rights generally
and by general principles of equity, and except as set forth in
Schedule 2.15(b), there is no, and neither the Company nor any of its Affiliates
has received notice of any, default (or any condition or event which, after
notice or lapse of time or both, would constitute a default) thereunder. The
Company does not owe brokerage commissions or finders fees with respect to any
such Leased Real Property.
          (c) Except as disclosed in Schedule 2.15(c), all improvements on the
Leased Real Property comply with and are operated in accordance with applicable
Laws (including Environmental Laws) and all applicable Liens, Approvals,
Contracts, covenants and restrictions. All such improvements are in good
operating condition, in a state of good maintenance and repair, ordinary wear
and tear excepted, and are adequate for the purposes for which they are
presently being used and there are no condemnation or appropriation proceedings
pending or, to the knowledge of Seller and/or the Company, threatened against
any of such real property or the improvements thereon.

17

--------------------------------------------------------------------------------

 

     2.16 Assets. Except as set forth on Schedule 2.16, the Company is in
possession of and has good and marketable title to, or has valid leasehold
interests in or valid rights under contract to use, all Assets (including all
tangible personal property presently used in the conduct of the Business),
including all tangible personal property reflected on Company Financials and all
tangible personal property acquired since the date of Company Financials, other
than property disposed of since such date in the ordinary course of business.
Except as disclosed in Schedule 2.16, all such Assets (including all tangible
personal property presently used in the conduct of the Business, including
plant, property and equipment) are owned by the Company free and clear of all
Liens and are adequate for the conduct by the Company of the Business as
presently conducted, and are in good working order and condition, ordinary wear
and tear excepted, and their use complies with all applicable Laws.
     2.17 Intellectual Property.
          (a) Schedule 2.17(a) lists (i) all Company Registered Intellectual
Property, (ii) all other material Company Intellectual Property, and (iii) all
other Intellectual Property that is necessary or material to the conduct of the
Business in the ordinary course as currently conducted by the Company or
contemplated to be conducted (“Other Material IP”). Schedule 2.17(a) lists any
Actions or Proceedings that have occurred and/or are pending as of the date
hereof before any Governmental or Regulatory Authority (including the United
States Patent and Trademark Office (the “PTO”), the Copyright Office, the
Federal Trade Commission, or equivalent authorities anywhere in the world)
related to any of Company Registered Intellectual Property or the other material
Company Intellectual Property.
          (b) The Company has all requisite right, title and interest in or
valid and enforceable rights under Contracts or Licenses to use all Intellectual
Property that is materially necessary for the Company to conduct the Business in
the ordinary course, including the Other Material IP. The Company owns
exclusively all right, title and interest in and to the Company Intellectual
Property including that listed in Schedule 2.17(a) in its own name and free and
clear of any Liens except as disclosed in Schedule 2.17(a).
          (c) Without limitation of the foregoing, except for third party
licensed software listed on Schedule 2.17(c) hereto (“Commercially Available
Programs”), the Company is the sole and exclusive owner of, in its own name and
free and clear of any Liens except as disclosed in Schedule 2.17(a), all the
software, software systems and databases used, or held or being developed for
use in connection with the conduct of the Business, including the search
application and solution currently referred to as “GOBBLER” and the Internet
monitoring and intellectual property enforcement system known currently as
“HALE” and all prior versions, components, modules and work in progress thereof,
including all source and object code, program files, graphical user interfaces,
non-graphical interfaces, APIs, portals, web sites, look and feel, content,
software libraries, and all prior, current, or future versions and copies
thereof as well as all work-in-progress, modules, prototypes, notes, analysis,
compilations, studies, samples, parts, test units, files, records, summaries,
and other material prepared by or for the Company with respect thereto, as well
as all software user/administrator documentation and manuals, technical data and
specifications, process or method descriptions, flow charts or diagrams, test
plans, schedules, support/maintenance procedures, programming tools (including
any tools needed for maintenance), annotations, algorithms, software design and
architecture,

18

--------------------------------------------------------------------------------

 

any system level documentation detailing how programs or processes fit together,
definitions or descriptions of all modules, including any flow charts, and any
other information related thereto or necessary for the Company (or its agents)
to operate, support, and modify such software, databases and software systems,
including GOBBLER and HALE, in the future (in whatever medium or form) (all of
said software, databases and software systems collectively, including Gobbler
and HALE, the “Company Software and Systems”).
          (d) Seller, employees of the Company, customers of the Company, and
Affiliates or Subsidiaries of the Company do not have any claim of ownership or
co-ownership of the Company Software and Systems or any portion thereof.
          (e) To the extent that any Company Intellectual Property has been
conceived, developed, created or reduced to practice in whole or in part by any
Person other than the Company or the Company’s employees within the scope of
their employment with the Company, the Company obtained ownership of, and is the
exclusive owner of, all such Intellectual Property by operation of law or by
valid assignment of any such rights.
          (f) The Company has not transferred ownership of or granted any
License of or other right to use or authorized the retention of any rights to
use any Intellectual Property that is or was Company Intellectual Property to
any other Person. Moreover, neither Seller, the Company nor any of their
respective past or present Affiliates or Subsidiaries has assigned or
transferred or disposed of any interest in the Intellectual Property in the
Company Software and Systems.
          (g) Company Intellectual Property, the Other Material IP, together
with the licensed software and other Intellectual Property identified in
Schedule 2.17(g), constitutes all the material Intellectual Property used or
held or being developed for use in and/or materially necessary to the conduct of
the Business as currently conducted, including the design, development,
distribution, marketing, manufacture, use, import, license, and sale of the
products, technology and services of the Company and the infrastructure,
networks, and systems necessary to conduct same.
          (h) Schedule 2.17(h) lists all Contracts, Licenses and agreements
between the Company or a past or present Affiliate or Subsidiary and any other
Person (true and complete copies or, if none, reasonably complete and accurate
written descriptions of which, together with all amendments and supplements
thereto and all waivers of any terms thereof, have been made available to
Purchaser prior to the execution of this Agreement), including the names of the
parties thereto and the dates thereof and a description of whether such
Contacts, Licenses and agreements are written or oral, wherein or whereby the
Company or such Affiliate or Subsidiary has agreed to, or assumed, any
obligation or duty to warrant, indemnify, reimburse, hold harmless, guaranty or
otherwise assume or incur any obligation or Liability, or provide a right of
rescission, with respect to the infringement or misappropriation by the Company
or such other Person of the Intellectual Property of any Person other than the
Company.
          (i) Except as disclosed in Schedule 2.17(i), the Company Software and
Systems and the operation of the Business as currently conducted, including the
design, development, use, import, manufacture and sale of the products,
technology or services

19

--------------------------------------------------------------------------------

 

(including products, technology or services currently under development) of the
Company, do not (i) infringe or misappropriate the Intellectual Property of any
Person, (ii) violate any material term or provision of any License or Contract
concerning such Intellectual Property (including any provision required by or
imposed pursuant to 35 U.S.C. §§200-212 in any License or Contract to which the
Company is a party requiring that products be manufactured substantially in the
United States), (iii) violate the rights of privacy or publicity of any Person,
or (iv) constitute unfair competition or an unfair trade practice under any Law,
and neither Seller nor the Company has received notice from any Person claiming
that any aspect of the Company Software and Systems or such operation or any
act, product, technology or service (including products, technology or services
currently under development) of the Company infringes or misappropriates the
Intellectual Property of any Person or constitutes unfair competition or trade
practices under any Law, including notice of infringement of or notice of
availability of a license under a third-party patent or other Intellectual
Property rights from a potential licensor of such rights.
          (j) Each item of Company Registered Intellectual Property which has
actually been registered is valid and subsisting, and all necessary
registration, maintenance, renewal fees, annuity fees and Taxes due or payable
as of the Closing in connection with such Registered Intellectual Property have
been paid and all necessary documents and certificates in connection with such
Registered Intellectual Property and due as of the Closing have been filed with
the relevant patent, copyright, trademark or other authorities in the United
States or foreign jurisdictions, as the case may be, for the purposes of
maintaining such Registered Intellectual Property. Schedule 2.17(j) lists all
actions that must be taken by the Company within ninety (90) days from the date
hereof, including the payment of any registration, maintenance, renewal fees,
annuity fees and Taxes or the filing of any documents, applications or
certificates for the purposes of maintaining, perfecting or preserving or
renewing any Company Registered Intellectual Property. In each case in which the
Company has acquired ownership of any Registered Intellectual Property from any
Person, the Company has obtained a valid and enforceable assignment sufficient
to irrevocably transfer all rights in such Registered Intellectual Property
(including the right to seek past and future damages with respect to such
Registered Intellectual Property) to the Company and, to the maximum extent
provided for by and required to protect the Company’s ownership rights in and to
such Registered Intellectual Property in accordance with applicable Laws, the
Company has recorded each such assignment of Registered Intellectual Property
with the relevant Governmental or Regulatory Authority, including the PTO or the
U.S. Copyright Office.
          (k) There are no Contracts or Licenses between the Company and any
other Person with respect to Company Intellectual Property, Other Material IP or
Company Software and Systems under which there is any dispute (or, to Seller’s
or the Company’s knowledge, facts that may reasonably lead to a dispute)
regarding the scope of such Contract or License, or performance under such
Contract or License, including with respect to any payments to be made or
received by the Company thereunder.
          (l) To the knowledge of Seller and/or the Company, no Person is
infringing, violating, or misappropriating any Company Intellectual Property.

20

--------------------------------------------------------------------------------

 

          (m) Seller and the Company have taken commercially reasonable steps to
protect the rights in confidential information and trade secrets of the Company
or provided by any other Person to the Company subject to a duty of
confidentiality.
          (n) No Company Intellectual Property is subject to any Contract,
Order, Action or Proceeding that restricts, or that is reasonably expected to
restrict in any manner, the use, transfer or licensing of any Company
Intellectual Property by the Company or that may affect the validity, use or
enforceability of such Company Intellectual Property.
          (o) The Company does not believe, nor has it received any complaint or
allegation, that any (i) product, technology, service or publication of the
Company, (ii) material published or distributed by the Company, or (iii) conduct
or statement of the Company constitutes obscene or indecent material, a
defamatory statement or material, false advertising or otherwise materially
violates any Law.
          (p) Neither this Agreement nor any transactions to be accomplished
pursuant to this Agreement will result in Purchaser’s granting any rights or
licenses with respect to any Company Intellectual Property or the Intellectual
Property of Purchaser to any Person pursuant to any Contract to which the
Company or a past or present Affiliate or Subsidiary is a party or by which any
of the Assets are bound. The Company does not have and Purchaser will not assume
as a result of the Closing any obligation to pay any royalties with respect to
any Intellectual Property to any third party after Closing.
          (q) Schedule 2.17(q) sets forth a list of all software and other
Intellectual Property that the Company or any of its Affiliates or Subsidiaries
has licensed from any third party which is used by the Company in or necessary
for the Company to conduct the Business (including with respect to the Company
Software and Systems, and any of the Company’s solutions that are in development
as of the Closing), including the Contract or License pursuant to which the
rights are granted. The Company has all rights necessary to the use of such
software and other Intellectual Property. The Seller is not in breach of the
third party Contracts or Licenses referenced above and the other parties thereto
have not claimed breach or send notice of termination.
          (r) The products and services of the Company comply in all material
respects with the feature specifications and performance standards set forth in
the product/tool/solution data sheets or customer contracts of the Company.
There are no material outstanding claims (or facts known to Seller and/or the
Company that are likely to lead to a material claim) for breach of warranties by
the Company in connection with the foregoing. All material product or service
performance comparisons heretofore furnished by the Company to customers or
Purchaser are accurate in all material respects as of the dates so furnished
(except that, in the case of performance comparisons made as of a specified
earlier date, such comparisons shall be accurate as of such specified earlier
date, and, in the case of performance comparisons superseded by a subsequent
performance comparison furnished to the customer before the customer’s
acquisition of a product or service covered by the superseded comparison, the
superseding comparison shall be accurate in all material respects and the
superseded comparison shall be disregarded).

21

--------------------------------------------------------------------------------

 

          (s) Seller and the Company have taken all reasonably necessary steps
to preserve sole and exclusive ownership of material Company Intellectual
Property, except (i) where the failure to do so could not reasonably be expected
to have a Material Adverse Effect or (ii) except as set forth in
Schedule 2.17(s). Seller and the Company have secured valid written assignments
from all current and former consultants and third parties who contributed to the
conception, creation, development or reduction to practice of material Company
Intellectual Property.
          (t) The Company Software and Systems do not constitute a published
work under the United States Copyright Act, and the corresponding source code or
any other confidential information relating to or embodied in the Company
Software and Systems has not been disclosed to any third party. Except as set
forth on Schedule 2.17(t), the Company Software and Systems do not contain,
embed or include any open source software or library or any code subject to the
terms of a public licensing regime such as the GPL.
     2.18 Contracts.
          (a) Schedule 2.18(a) contains a true and complete list of each of the
Contracts (true and complete copies or, if none, reasonably complete and
accurate written descriptions of which, together with all amendments and
supplements thereto and all waivers of any terms thereof, have been made
available to Purchaser prior to the execution of this Agreement), including the
names of the parties thereto and the dates thereof and a description of whether
such Contacts are written or oral, to which the Company is a party or by which
any of the Assets are bound, including:
               (i) employment and consulting agreements related to services
provided in the Business;
               (ii) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of, any
Company Intellectual Property and the licensed software and other Intellectual
Property identified in Schedule 2.17(q), or otherwise relating to the Company
Software and Systems;
               (iii) brokerage or finder’s agreements relating to the
transactions contemplated hereby;
               (iv) outstanding orders, statements of work and other contracts
for the purchase or sale of materials, supplies, products or services that are
provided in connection with the Business, including licenses and agreements for
any inbound information technology or software data or other similar licenses or
agreements;
               (v) any lease agreements providing for the leasing of personal
property contained in the Assets;
               (vi) joint venture, partnership and similar contracts involving a
sharing of profits or expenses with respect to the Business;

22

--------------------------------------------------------------------------------

 

               (vii) asset purchase agreements and other acquisition or
divestiture agreements, regarding the sale, lease or disposal of any Assets;
               (viii) any contracts or agreements under which the Company
receives any product or service used or relied upon in connection with the
products or services provided by the Company, or otherwise in connection with
the Business, including hosting, licensed software, databases or other data
suppliers, investigative services, web or other electronic searches, legal
services, accounting services, and other outsourced services;
               (ix) the Lease Documents;
               (x) memorandums of understanding, letters of intent or similar
agreements with potential or prospective customers;
               (xi) settlement agreements;
               (xii) contracts, licenses or other agreements relating to Debt;
               (xiii) contracts or other agreements with any law firms or other
legal service providers; and
               (xiv) contracts, licenses or other agreements providing for the
payment of commissions or referral fees.
          (b) Each Contract to which the Company is a party or by which any of
the Assets are bound is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar Laws relating to the enforcement of
creditors’ rights generally and by general principles of equity. Except as
disclosed in Schedule 2.18(b), there is no event of default or event or
condition that, after notice or lapse of time or both, would constitute a
violation, breach or event of default under any Contract on the part of the
Company or, to the knowledge of Seller and/or the Company, any other party
thereto.
          (c) Except as disclosed in Schedule 2.18(c), the Company is not a
party to or bound by any Contract that (i) automatically terminates or allows
termination by the other party thereto upon consummation of the transactions
contemplated by this Agreement or (ii) contains any covenant or other provision
which limits the Company’s ability to compete with any Person in any line of
business or in any area or territory or which contains any covenant that
otherwise purports to restrict the business activity of the Company or limits
its ability to engage in any line of business.
          (d) The Company is not a party to any Government Contract.
          (e) Schedule 2.18(e) lists all Government Bids and, with respect to
each such Government Bid, (i) the prospective customer agency and title;
(ii) the date of proposal submission; (iii) the expected award date, if known;
(iv) the estimated period of performance, if known; and (v) the estimated value
based on the proposal, if any. The Company has delivered to

23

--------------------------------------------------------------------------------

 

Purchaser true, correct and complete copies of all Government Bids and all
documentation and correspondence related thereto. Except for the Government Bids
listed on Schedule 2.18(e), the Company has never made or submitted any
Government Bids.
          (f) The Company and each Affiliate thereof has fully complied with all
terms and conditions of each Government Bid to which it is a party, has
performed all obligations required to be performed by it thereunder, and has
complied with all statutory and regulatory requirements applicable to each of
the Government Bids. The representations, certifications and warranties, if any,
made by the Company and each Affiliate thereof with respect to the Government
Bids were accurate in all respects as of their effective date, and the Company
and each Affiliate thereof has fully complied with any and all such
certifications. With respect to the Government Bids, no Governmental or
Regulatory Authority or any other Person has notified the Company or any
Affiliate thereof, either orally or in writing, of any actual or alleged
violation or breach of any statute, regulation, representation, certification,
disclosure obligation, contract term, condition, clause, provision or
specification that could reasonably be expected to have an adverse effect on the
Business.
          (g) Neither the Company, nor any Affiliate thereof, nor any of their
respective directors, officers or employees, has ever been, nor is currently,
suspended, debarred or proposed for suspension or debarment from bidding on any
Government Contract, declared ineligible, or otherwise excluded from
participation in the award of any Government Contract or for any reason been
listed on the List of Parties Excluded from Federal Procurement and
Non-procurement programs. No circumstances exist that would warrant the
institution of suspension or debarment proceedings against the Company, any
Affiliate thereof, or their respective directors, officers or employees.
     2.19 Insurance. Schedule 2.19 contains a true and complete list of all
insurance policies (by policy number, insurer, expiration date and type, amount
and scope of coverage) relating to the Company or any of the Assets, copies of
which have been provided or made available to Purchaser. In the three (3) year
period ending on the date hereof, neither Seller nor the Company has received
any notice from, or on behalf of, any insurance carrier relating to or involving
any adverse change or any change other than in the ordinary course of business,
in the conditions of insurance, any refusal to issue an insurance policy or
non-renewal of a policy, or requiring or suggesting alteration of any of the
Assets, purchase of additional equipment or modification of any of the Company’s
methods of doing business. The insurance coverage provided by the policies
listed in Schedule 2.19 will not terminate or lapse by reason of any of the
transactions contemplated by this Agreement or any of the Ancillary Agreements.
Each policy listed in Schedule 2.19 is valid and binding and in full force and
effect, all premiums due thereunder have been paid and neither the Company nor
the Person to whom such policy has been issued has received any notice of
cancellation or termination in respect of any such policy or is in default
thereunder, and to the knowledge of Seller and/or the Company there exists no
reason or state of facts that is reasonably likely to lead to the cancellation
of such policies or of any threatened termination of, or premium increase with
respect to, any of such policies. The insurance policies listed in Schedule 2.19
(i) in light of the Business, operations and Assets are in amounts and have
coverages that are reasonable and customary for Persons engaged in similar
businesses and operations and having similar Assets and (ii) are in amounts and
have coverages

24

--------------------------------------------------------------------------------

 

as required by any Contract to which the Company is a party or by which any of
the Assets are bound. Schedule 2.19 contains a list of all claims in excess of
Ten Thousand Dollars ($10,000) made under any insurance policies covering the
Company in the last two years. Neither Seller nor the Company has received
notice that any insurer under any policy listed in Schedule 2.19 is denying,
disputing or questioning liability with respect to a claim thereunder or
defending under a reservation of rights clause.
     2.20 Affiliate Transactions.
          (a) Except as disclosed in Schedule 2.20(a), (i) there are no
Contracts or Liabilities between the Company, on the one hand, and any current
or former officer, director, stockholder, Affiliate or Associate of the Company,
on the other hand; (ii) the Company does not provide or cause to be provided any
Assets, services or facilities to any such current or former officer, director,
stockholder, Affiliate or Associate; (iii) no such current or former officer,
director, stockholder, Affiliate or Associate provides or causes to be provided
any Assets, services or facilities to the Company; and (iv) the Company does not
beneficially own, directly or indirectly, any Investment Assets of any such
current or former officer, director, stockholder, Affiliate or Associate.
          (b) Except as disclosed in Schedule 2.20(b), each of the Contracts and
Liabilities listed in Schedule 2.20(a) was entered into or incurred, as the case
may be, on terms no less favorable to the Company (in the reasonable judgment of
the Company) than terms generally available to the Company on an arm’s-length
basis.
     2.21 Employees; Labor Relations.
          (a) Neither the Company nor any of its Affiliates is a party to any
collective bargaining agreement or other Contract with any group of employees,
labor organization or other representative of any of the employees of the
Company or any of its Affiliates and, to the knowledge of Seller and/or the
Company, there are no activities or proceedings of any labor union or other
party to organize or represent such employees. There has not occurred nor, to
knowledge of Seller and/or the Company, been threatened any strike, slow-down,
picketing, work-stoppage, or other similar labor activity with respect to any
such employees. The Company and each of its Affiliates is in compliance with all
Laws relating to employment or the workplace, including provisions relating to
wages, hours, overtime, classification of employees as exempt or non-exempt
under the Fair Labor Standards Act, collective bargaining, safety and health,
work authorization, equal employment opportunity, immigration and the
withholding of income Taxes, unemployment compensation, worker’s compensation,
employee privacy and right to know and social security contributions. There are
no unresolved labor controversies (including unresolved grievances and age or
other discrimination claims) or litigation, if any, between the Company or any
of its Affiliates and Persons employed by or providing services to the Company.
Neither the Company or Seller has received notice of, nor, to the knowledge of
the Company and/or the Seller, are there, any investigations by any government
agencies of the Company or any of its Affiliates concerning such matters.
          (b) Except as set forth on Schedule 2.21(b)(i) (and notwithstanding
anything set forth on Schedule 2.21(b)(ii)), each Person who is an employee of
the Company or any of its

25

--------------------------------------------------------------------------------

 

Affiliates is employed at will. No employee of the Company or any of its
Affiliates is represented by a union. Each Person who is or was, or has been
treated as, an independent contractor of the Company or any of its Affiliates
for any purpose, including for purposes of tax withholding and reporting and
eligibility for the Plans, has been properly classified by the Company and its
Affiliates as an independent contractor under applicable employment-related Laws
and all Laws concerning the status of independent contractors applicable to the
Company. Schedule 2.21(b)(ii) sets forth, individually and by category, the name
of each Person employed by or providing services to the Company, together with
such Person’s position or function, annual base salary or wage and any
incentive, severance or bonus arrangements with respect to such Person. To the
knowledge of the Company and/or Seller, no person listed on Schedule 2.21(b)(ii)
shall have any continuing employment obligation or other obligation to provide
services to any Person other than the Company, including to Seller or any
Affiliate of Seller, following the Closing. No current employee of the Company
has made any threat, or otherwise revealed to the Company and/or Seller an
intent, to terminate such employee’s relationship with the Company for any
reason, including because of the consummation of the transactions contemplated
by this Agreement. Except as set forth on Schedule 2.22(b)(ii), the Company is
not a party to any agreement for the provision of labor from any outside agency.
There have been no claims against the Company by employees of such outside
agencies, if any, with regard to employees assigned to work for the Company, and
no claims by any Governmental or Regulatory Authority with regard to such
employees.
          (c) To the knowledge of the Company and/or Seller, no officer,
employee or consultant of the Company is obligated under any Contract or other
agreement or subject to any Order or Law that would interfere with the Business
as currently conducted. To the knowledge of the Company and/or Seller, neither
the execution nor delivery of this Agreement, nor the carrying on of the
Business as presently conducted nor any activity of such officers, employees or
consultants in connection with the carrying on of the Business as presently
conducted, will conflict with or result in a breach of the terms, conditions or
provisions of, constitute a default under, or trigger a condition precedent to
any rights under any Contract or other agreement under which any of such
officers, employees or consultants is now bound.
          (d) The Company has not received any written (or, to the knowledge of
Seller and/or the Company, oral) notice from any employee or managerial
personnel that would reasonably lead a person to believe that such employee
intends to terminate his or her employment with the Company after the Closing
Date or is not willing to continue his or her employment with he Company after
the Closing Date on terms substantially comparable to his or her existing terms
of employment at the Company.
     2.22 Environmental Matters.
          (a) To the knowledge of Seller and/or the Company, no Hazardous
Material is present in, on, under or adjacent to any property that the Company
has at any time owned, operated, occupied, leased or used (including both the
land and improvements thereon), and no reasonable likelihood exists that any
Hazardous Material will come to be present in, on, or under any properties
owned, operated, occupied, leased or used at any time (including both land and
improvements thereon) by the Company. The Company has not transported, stored,
used, manufactured, disposed of, sold, released or exposed its employees or any
other Person to any

26

--------------------------------------------------------------------------------

 

Hazardous Material, or arranged for the disposal, discharge, storage or release
of any Hazardous Material, or currently engages in any of the foregoing
activities, in violation of any applicable Environmental Law or other Law.
          (b) No Approvals are required to be obtained by the Company under any
Environmental Laws, and the Company has been and is in compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or
contained in any regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved thereunder.
          (c) No Action or Proceeding is pending, or to the knowledge of Seller
and/or the Company, threatened concerning any Environmental Law, Hazardous
Material or any Hazardous Materials activity of the Company. The Company is not
aware of any fact or circumstance that could involve the Company in any
environmental litigation or impose upon the Company any environmental Liability.
     2.23 Substantial Customers and Suppliers. Schedule 2.23 lists the twenty
(20) largest customers of the Company on the basis of revenues collected or
accrued for the twelve- (12-) month period ending June 30, 2007. Schedule 2.23
lists the twenty (20) largest suppliers of the Company on the basis of cost of
goods or services purchased for twelve- (12-) month period ending June 30, 2007.
Except as disclosed in Schedule 2.23, (i) no such customer or supplier has
ceased its business relationship with the Company or materially reduced its
purchases from or sales or provision of services to the Company since
December 31, 2006, (ii) neither Seller nor the Company has received notice
(written or oral) from any such customer or supplier of its intent to cease its
business relationship with the Company, or to materially reduce its purchases
from or sales or provision of services to the Company, after the date hereof and
(iii) no such customer or supplier has threatened to cease its business
relationship with the Company, or to materially reduce its purchases from or
sales or provision of services to the Company, after the date hereof. Except as
disclosed in Schedule 2.23, neither the Company nor Seller has received notice
that any such customer or supplier is threatened with bankruptcy or insolvency.
     2.24 Accounts and Notes Receivable. Except as set forth in Schedule 2.24,
each of the accounts receivable and notes receivable of the Company reflected on
Company Financials, and each of the accounts receivable and notes receivable
arising subsequent to June 30, 2007, (a) arose from bona fide sales transactions
in the ordinary course of business, consistent with past practice, and are
payable on ordinary trade terms, (b) is a legal, valid and binding obligation of
its debtor enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors’ rights generally and by general principles of equity,
(c) is not subject to any valid set-off or counterclaim, (d) has been collected
or is fully collectible before the date that is ninety (90) days after the date
of Closing, each net of reserves shown on the June 30, 2007 balance sheet of the
Company constituting a part of Company Financials, in amounts not less than the
aggregate amounts thereof carried on the Books and Records of the Company, and
(e) does not represent obligations for goods sold on consignment, on approval or
on a sale-or-return basis or subject to any other repurchase or return
arrangement other than customers’ rights to inspect goods upon receipt and
reject nonconforming goods.

27

--------------------------------------------------------------------------------

 

     2.25 Other Negotiations; Brokers; Third-Party Expenses. Except as disclosed
in Schedule 2.25, neither Seller nor the Company, nor any of their respective
officers, directors, managers, employees, agents, stockholders, members or
Affiliates (nor any investment banker, financial advisor, attorney, accountant
or other Person retained by or acting for or on behalf of Seller, the Company or
any such Person) (a) has entered into any Contract that conflicts with any of
the transactions contemplated by this Agreement or (b) has entered into any
Contract or arrangement with any Person regarding any transaction involving the
Company which is likely to result in Purchaser, the Company or any officer,
director, employee, agent or Affiliate of any of them being subject to any claim
for Liability to said Person as a result of entering into this Agreement or
consummating the transactions contemplated hereby. Except as set forth in
Schedule 2.25, no broker, investment banker, financial advisor or other Person
is entitled to any broker’s, finder’s, financial advisor’s or similar fee or
commission in connection with this Agreement and the transactions contemplated
hereby based on arrangements made by or on behalf of Seller or the Company.
     2.26 Banks and Brokerage Accounts. Schedule 2.26 sets forth (a) a true and
complete list of the names and locations of all banks, trust companies,
securities brokers and other financial institutions at which the Company has an
account or safe deposit box or maintains a banking, custodial, trading or other
similar relationship, (b) a true and complete list and description of each such
account, box and relationship, indicating in each case the account number and
the names of the respective officers, employees, agents or other similar
representatives of the Company having signatory power with respect thereto and
(c) a list of each Investment Asset, the name of the record and beneficial owner
thereof, the location of the certificates, if any, therefor, and any stock or
bond powers or other authority for transfer granted with respect thereto.
     2.27 Warranty Obligations. The Company has not entered into any warranties,
indemnification obligations, guarantees or written warranty policies in respect
of any of the Company’s products and services (the “Warranty Obligations”) other
than those normal and customary in the conduct of the Business. Except as set
forth on Schedule 2.27, the Company is not subject to any dispute or, to the
knowledge of Seller and/or the Company, threatened dispute relating to such
Warranty Obligations.
     2.28 Foreign Corrupt Practices Act. Neither the Company nor, to the
knowledge of Seller and/or the Company, any agent, employee or other Person
acting on behalf of the Company has, directly or indirectly, used any corporate
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other similar unlawful payment.
     2.29 Takeover Statutes. No Takeover Statute applicable to the Company is
applicable to the Acquisition or the other transactions contemplated hereby or
by the Ancillary Agreements.

28

--------------------------------------------------------------------------------

 

     2.30 Customer Services.
          (a) Schedule 2.30(a) describes, as of the Closing Date, each of the
types, and the only types, of letters, written communications and/or notices
that the Company, in whole or in part, in any capacity, prepares, drafts,
completes, fill-ins and/or sends, or causes or arranges to be prepared, drafted,
completed, filled-in and/or sent, on behalf, or for the benefit, of its
customers in connection with the operation of the Business as it is then
currently and proposed to be conducted (the “Letters and Notices”).
          (b) Schedule 2.30(b) describes in detail the four (4) different
processes utilized by the Company as of the Closing Date in connection with the
operation of the Business as it is then currently and proposed to be conducted
in connection with preparing, drafting, completing, filling-in and/or sending,
or causing or arranging the preparation, drafting, completion, filling-in and/or
sending, of the Letters and Notices contemplated by Section 2.30(a) (each such
process, a “Process”). As of the Closing Date, the Company shall have in place
and be utilizing exclusively in connection with the operation of the Business as
it is then currently and proposed to be conducted the Processes with respect to
its customers set forth on Schedule 2.30(b).
     2.31 Disclosure; Delivered Information. No representation or warranty made
by Seller or the Company contained in this Agreement, and no statement contained
in or as any schedule hereto delivered by Seller or the Company or in any
certificate, list or other writing attached hereto delivered by Seller or the
Company or delivered by Seller or the Company pursuant to Article 7 hereof,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading. Seller has
delivered to Purchaser all such financial, operating, technical and product data
and other information, materials and Books and Records as Purchaser from time to
time has requested (as so delivered, the “Delivered Information”), and Seller
has not failed to provide to Purchaser any other financial, operating, technical
or product data or other information, materials or Books and Records which is
material or otherwise necessary in order to make any of the Delivered
Information (or any representation or warranty made by Seller or the Company
contained in this Agreement, or any statement contained in or as any schedule
hereto delivered by Seller or the Company or in any certificate, list or other
writing delivered by Seller or the Company or delivered by Seller or the Company
pursuant to Article 7) not misleading. Notwithstanding anything herein to the
contrary, all financial, operating, technical or product data or other
information, materials or Books and Records delivered by Seller or the Company
to Purchaser at any time during the period beginning on October 27, 2007 and
ending on the date of this Agreement had been delivered to Purchaser prior to
such period.

29

--------------------------------------------------------------------------------

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
     Seller hereby represents and warrants to Purchaser as follows:
     3.1 Ownership of Company Stock. Seller owns of record and beneficially all
of the issued and outstanding shares of Company Stock. Such shares are, and when
delivered by Seller to Purchaser pursuant to this Agreement will be, duly
authorized, validly issued, fully paid, non-assessable and free and clear of any
and all Liens. There are no limitations or restrictions on Seller’s right to
transfer such shares of Company Stock to Purchaser pursuant to this Agreement,
and Seller is not a party to any option, warrant, purchase right, proxy, power
of attorney, voting trust or other Contract or commitment with respect to the
voting or dividend rights or the sale, acquisition, issuance, redemption,
registration, transfer or other disposition of any capital stock of the Company
(other than this Agreement).
     3.2 Binding Agreements. This Agreement and the Ancillary Agreements to
which Seller is or will become a party, assuming the due authorization,
execution and delivery hereof (and, in the case of the Ancillary Agreements to
which Purchaser is a party, thereof) by, and enforceability against, Purchaser,
constitutes or will upon execution and delivery constitute, as applicable, the
legal, valid and binding obligation of Seller enforceable against him in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar Laws relating to the enforcement of creditors’
rights generally and by general principles of equity.
     3.3 No Conflicts; Approvals. The execution and delivery by Seller of this
Agreement and the Ancillary Agreements to which it is a party does not and will
not upon execution and delivery, and the performance by Seller of his
obligations under this Agreement and the Ancillary Agreements to which he is a
party and the consummation of the transactions contemplated hereby and thereby
do not and will not:
          (a) conflict with or result in a violation or breach of any Law or
Order applicable to Seller, the Assets or the Company Stock; or
          (b) except as disclosed on Schedule 3.3(b) hereof, (i) conflict with
or result in a violation or breach of, (ii) constitute a default (or an event
that, with or without notice or lapse of time or both, would constitute a
default) under, (iii) require Seller to obtain or make any Approval to any
Person as a result or under the terms of, (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of Seller’s assets or
properties, including the Company Stock, under or (vii) result in the loss of
any benefit under, any of the terms, conditions or provisions of any Contract to
which Seller is a party or by which any of the Assets or the Company Stock are
bound.
No Approval is required to be obtained from or made with, or filed with or
delivered to, any Governmental or Regulatory Authority by Seller in connection
with the execution and delivery by Seller of this Agreement and the Ancillary
Agreements to which Seller is or will be a party, and the performance by Seller
of his obligations under this Agreement and the Ancillary Agreements to which
Seller is or will be a party and the consummation of the transactions
contemplated hereby and thereby.

30

--------------------------------------------------------------------------------

 

     3.4 Legal Proceedings. Except as set forth in Schedule 3.4:
          (a) there are no Actions or Proceedings pending or, to the knowledge
of Seller and/or the Company, threatened, against or adversely affecting Seller
or any of his assets or properties, including the Company Stock;
          (b) there are no Orders outstanding against Seller; and
          (c) there are no facts or circumstances known to Seller and/or the
Company that would reasonably be expected to give rise to any Action or
Proceeding against or adversely affecting Seller as it relates to this Agreement
or any of the Assets or the Company Stock.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
     Purchaser represents and warrants to Seller and the Company as follows:
     4.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. Purchaser
has full corporate power and authority to conduct its business as now conducted
and as currently proposed to be conducted and to own, use and lease its assets
and properties.
     4.2 Authority; Binding Agreements. Purchaser has full corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery by Purchaser of this Agreement and the Ancillary Agreements to which it
is a party and the consummation by Purchaser of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action of Purchaser, and no other corporate action on the part of
Purchaser is required to authorize the execution, delivery and performance of
this Agreement and the Ancillary Agreements to which it is a party and the
consummation by Purchaser of the transactions contemplated hereby and thereby.
This Agreement and the Ancillary Agreements to which Purchaser is or will become
a party have been or will be, as applicable, duly and validly executed and
delivered by Purchaser and, assuming the due authorization, execution and
delivery hereof (and in the case of the Ancillary Agreements to which Seller
and/or the Company is a party, thereof) by, and enforceability against, Seller
and/or the Company, each constitutes or will upon execution and delivery
constitute, as applicable, a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its respective terms, except as
the enforceability thereof may be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar Laws relating to the
enforcement of creditors’ rights generally and by general principles of equity.
     4.3 No Conflicts; Approvals. The execution and delivery by Purchaser of
this Agreement and the Ancillary Agreements to which it is a party does not and
will not upon execution and delivery, and the performance by Purchaser of its
obligations under this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated hereby and thereby
do not and will not:

31

--------------------------------------------------------------------------------

 

          (a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or bylaws of
Purchaser;
          (b) subject to obtaining or making the Approvals disclosed in
Schedule 4.3(c), if any, result in a violation or breach of, or a conflict with,
any Law or Order applicable to Purchaser or any of its assets or properties; or
          (c) except as disclosed in Schedule 4.3(c) attached hereto, (i) result
in a violation or breach of or conflict with, (ii) constitute a default (or an
event that, with or without notice or lapse of time or both, would constitute a
default) under, (iii) require Purchaser to obtain or make any Approval to any
Person as a result or under the terms of, (iv) result in or give to any Person
any right of termination, cancellation, acceleration or modification in or with
respect to, (v) result in or give to any Person any additional rights or
entitlement to increased, additional, accelerated or guaranteed payments or
performance under, (vi) result in the creation or imposition of (or the
obligation to create or impose) any Lien upon Purchaser or any of its assets or
properties under or (vii) result in the loss of any benefit under, any of the
terms, conditions or provisions of any Contract or License to which Purchaser is
a party or by which any of its assets or properties are bound.
No Approval is required to be obtained from or made with, or filed with or
delivered to, any Governmental or Regulatory Authority by Purchaser in
connection with the execution and delivery by Purchaser of this Agreement and
the Ancillary Agreements to which Purchaser is or will be a party, and the
performance by Purchaser of its obligations under this Agreement and the
Ancillary Agreements to which Purchaser is or will be a party and the
consummation by Purchaser of the transactions contemplated hereby and thereby.
     4.4 Other Negotiations; Brokers; Third-Party Expenses. Neither Purchaser
nor any of its officers, directors, employees, agents, Subsidiaries or
Affiliates (nor any investment banker, financial advisor, attorney, accountant
or other Person retained by or acting for or on behalf of Purchaser) (a) has
entered into any Contract that conflicts with any of the transactions
contemplated by this Agreement or (b) has entered into any Contract or
arrangement with any Person regarding any transaction involving Purchaser which
is likely to result in the Company, Seller or any officer, director, employee,
agent or Affiliate of any of them being subject to any claim for Liability to
said Person as a result of entering into this Agreement or consummating the
transactions contemplated hereby. No broker, investment banker, financial
advisor or other Person is entitled to any broker’s, finder’s, financial
advisor’s or similar fee or commission in connection with this Agreement and the
transactions contemplated hereby based on arrangements made by or on behalf of
Purchaser.
     4.5 Ability to Pay Purchase Price At Closing. At Closing, Purchaser shall
have sufficient cash on hand or availability under an existing credit facility
to consummate the transactions contemplated by this Agreement.
     4.6 Independent Review. Prior to the execution of this Agreement Purchaser
has had the opportunity to conduct its own independent review and analysis of
the Business and of the Company, its financial condition, cash flow and
prospects. In entering this Agreement, except for the representations and
warranties contained in this Agreement, Purchaser has relied solely

32

--------------------------------------------------------------------------------

 

upon its own investigation and analysis as it relates to the Company. Except for
the representations and warranties contained in this Agreement (including the
schedules hereto), Seller makes no other representation or warranty to
Purchaser, express or implied, and Seller hereby disclaims any such
representation or warranty, whether by Seller or any of its agents, brokers or
representatives of any other person, notwithstanding the delivery or disclosure
to Purchaser or any of its respective officers, directors, employees, agents or
representatives or any other person of any document or other information by or
on behalf of Seller or any of his respective officers, directors, employees,
agents or representatives or any other person. Notwithstanding anything herein
to the contrary, this Section 4.6 is not applicable in the event of fraud or
intentional misrepresentation.
ARTICLE 5
CONDUCT PRIOR TO THE CLOSING
     5.1 Conduct of Business. During the period from the date of this Agreement
and continuing until the earlier of (a) the termination of this Agreement
pursuant to the provisions of Section 9.1 or (b) the Closing, the Company agrees
(unless the Company is otherwise required to take such action pursuant to this
Agreement or Purchaser shall otherwise give its prior consent in writing), and
Seller agrees to cause the Company, to carry on the Business in the usual,
regular and ordinary course consistent with past practice, to pay its
Liabilities and Taxes and to pay or perform its other obligations when due
(other than Liabilities, Taxes and other obligations, if any, contested in good
faith and for which adequate reserves have been established), and to use
commercially reasonable efforts to preserve substantially intact its present
business organization, keep available the services of its present officers and
key employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, independent contractors and other Persons
having business dealings with it, all with the express purpose and intent of
preserving substantially unimpaired its goodwill and ongoing businesses at and
after the Closing. Except as expressly contemplated by this Agreement, the
Company shall not, without the prior written consent of Purchaser, take or agree
in writing or otherwise to take, any action that would result in the occurrence
of any of the changes described in Section 2.9 or any other action that would
make any of its representations or warranties contained in this Agreement untrue
or incorrect when made in any material respect; provided, however, that Seller
may cause the Company to pay dividends on Company Stock if he reasonably
believes that after giving effect to any such payment, Closing Cash Balances
will nevertheless exceed $150,000, Closing Debt will nevertheless equal $0,
Closing Working Capital Amount will nevertheless exceed $0, and Closing Assets
will nevertheless exceed $200,000; provided, further, however, that the Company
prior to Closing shall assign and transfer to Seller, without consideration,
pursuant to documentation reasonably acceptable to Purchaser, the Assets listed
on Schedule 5.1. Neither Seller nor the Company shall, without the prior written
consent of Purchaser, take or agree in writing or otherwise to take, any action
intended to, or that would, prevent Seller or the Company from performing (or
cause Seller or the Company not to perform) its agreements and covenants
hereunder or intended to, or that would, cause any condition to Purchaser’s
closing obligations in Section 7.1 or Section 7.3 not to be satisfied.

33

--------------------------------------------------------------------------------

 

     5.2 No Solicitation. Until the earlier of the Closing or the date of
termination of this Agreement pursuant to the provisions of Section 9.1, neither
the Company nor Seller nor any of their respective Subsidiaries or Affiliates
will take, nor will the Company or Seller permit any of their representatives to
take, any of the following actions with any Person other than Purchaser and its
designees: (a) solicit, encourage or initiate any proposals or offers from, or
participate in or conduct discussions with or engage in negotiations with, any
Person relating to any offer or proposal, oral, written or otherwise, formal or
informal, with respect to any possible Business Combination with the Company (a
“Competing Proposed Transaction”), (b) provide information with respect to the
Company to any Person, other than Purchaser, relating to (or which the Company
or Seller believes would be used for the purpose of formulating an offer or
proposal with respect to), or otherwise assist, cooperate with, facilitate or
encourage any effort or attempt by any such Person with regard to, any possible
Business Combination with the Company, (c) agree to, enter into a Contract with
any Person, other than Purchaser, providing for, or approve a Business
Combination with the Company or (d) authorize or permit any of the Company’s or
Seller’s representatives to take any such action. Seller will notify Purchaser
immediately after receipt by the Company or Seller (or any of their officers,
directors, managers, employees, agents, advisors or other representatives) of
any proposal for or inquiry respecting any Competing Proposed Transaction, or
any request for nonpublic information in connection with such proposal or
inquiry or for access to the Assets, Books and Records of the Company by any
Person or entity that informs or has informed the Company or Seller that it is
considering making or has made such a proposal or inquiry. Such notice to
Purchaser shall indicate in reasonable detail the terms and conditions of such
proposal or inquiry; provided, however, that such notice shall not be required
to indicate the identity of the Person making such proposal or inquiry. Each of
the Company and Seller and their respective Affiliates (and their respective
officers, directors, employees, agents, advisors or other representatives)
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to a Competing
Proposed Transaction. Each of the Company and Seller agrees not to release any
third party from, or waive any provision of, any confidentiality or standstill
agreement to which it or any of its Subsidiaries is a party. Each of Seller, the
Company and Purchaser acknowledge that this Section 5.2 is a significant
inducement for Purchaser to enter into this Agreement and the absence of such
provision would have resulted in either (i) a material reduction in the
consideration to be paid to Seller in the Acquisition or (ii) a failure to
induce Purchaser to enter into this Agreement.
ARTICLE 6
ADDITIONAL AGREEMENTS
     6.1 Access to Information. Between the date of this Agreement and the
earlier of the Closing or the termination of this Agreement, upon reasonable
notice, the Company shall (a) give Purchaser and its officers, appropriate
employees, accountants, and counsel full access, upon reasonable prior notice
during normal business hours, to all buildings, offices, and other facilities
and to all Books and Records of the Company, whether located on the premises of
the Company or at another location; (b) furnish Purchaser such financial,
operating, technical and product data and other information with respect to the
Business and Assets as Purchaser from time to time may reasonably request,
including financial statements and schedules; (c) subject to Purchaser and the
Company agreeing to the topic and notice of any interviews (which such agreement
shall not be unreasonably withheld, delayed or conditioned), allow Purchaser the

34

--------------------------------------------------------------------------------

 

opportunity to interview (1) the customers listed on Schedule 7.3(e)(ii) and
(2) such other customers, suppliers, prime contractors (when the Company is a
subcontractor on a Contract), employees and other personnel and Affiliates of
the Company as the Purchaser may request with the Company’s prior written
consent (which consent shall not be unreasonably withheld, delayed or
conditioned), and instruct such Persons to cooperate with Purchaser in
Purchaser’s investigation of the Business; provided, however, that Purchaser
agrees not to disparage the Company or the Business in any such interviews and
otherwise acts in good faith in connection with such interviews; and (d) assist
and cooperate with Purchaser in the development of cooperation plans for
implementation by Purchaser and the Company following the Closing; provided,
however, that no investigation made prior to the date of this Agreement or made
pursuant to this Section 6.1 shall affect or be deemed to modify any
representation or warranty made by Seller or the Company, or any rights to
indemnification of the Purchaser Indemnified Parties, herein.
     6.2 Covenant Not to Compete.
          (a) For a period commencing upon the Closing and ending on the later
of (x) the third anniversary of the Closing and (y) the date the final payment
of the Earnout is made, Seller shall not anywhere in the United States, directly
or indirectly, without the prior written consent of Purchaser: (i) engage or
participate, directly or indirectly, either as principal, agent, employee,
employer, consultant, stockholder, director, officer, partner or in any other
individual or representative capacity whatsoever, in the conduct or management
of, or own any stock or other proprietary interest in, any business or
enterprise that conducts business or operations which are the same as or
substantially similar to the Business unless Seller or any such Affiliate shall
have obtained the prior written consent thereto of Purchaser; provided, however,
that Seller may purchase or otherwise acquire up to (but not more than) three
percent (3%) of any class of the securities of any Person (but may not otherwise
participate in the activities of such Person) if such securities are listed on
any national or regional securities exchange or have been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended, or
(ii) solicit, hire or employ, or cause any other Person to solicit, hire or
employ any employee or contractor then retained or employed by the Company or
Purchaser or retained or employed by the Company or Purchaser within the
one-year period immediately prior to such solicitation, hiring or employment.
          (b) Each of the covenants in this Section 6.2 is severable and
separate, and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that any specific covenant or the scope, time or
territorial restrictions thereof are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and this Agreement shall thereby be reformed.
     6.3 Confidentiality.
          (a) Purchaser. The parties acknowledge and agree that, from and after
the date hereof until the Closing, if the transactions contemplated hereby are
consummated, and for one (1) year following the termination of this Agreement
pursuant to the provisions of Section 9.1, that certain Non-disclosure Agreement
between Purchaser and the Company, dated April 6,

35

--------------------------------------------------------------------------------

 

2007 (the “Non-disclosure Agreement”), shall be incorporated herein by reference
and shall apply fully to any and all “Confidential Information” (as defined
therein) exchanged by the parties in connection therewith.
          (b) Company and Seller. Each of the Company and Seller acknowledges
and agrees that it has had in the past, currently has, and in the future may
possibly have, access to (i) certain information of the Business that has not
been disclosed to the public and which constitutes confidential and proprietary
business information (the “Confidential Information of the Company”), and
(ii) certain information of Purchaser that has not been disclosed to the public
and which constitutes confidential and proprietary business information (the
“Confidential Information of Purchaser”), including but not limited to, in each
case, client and customer lists, software, data, formulae, processes,
inventions, trade secrets, marketing information and plans, business strategies
and other information about products and services offered or developed or
planned to be offered or developed. Notwithstanding the foregoing, Confidential
Information of the Company and Confidential Information of Purchaser does not
include any information (A) that is or becomes publicly available, other than as
a result of a disclosure by Seller or any of its Affiliates in violation of this
Agreement, (B) which must be disclosed by Seller or any of its Affiliates under
applicable Laws or by order of any Governmental or Regulatory Authority, or (C)
which Seller reasonably believes is required to be disclosed in connection with
the defense of a lawsuit against Seller or any of its Affiliates. In the event
Seller or any of its Affiliates is requested or required (including by oral
questions, interrogatories, requests for information or documents in a legal
proceeding, subpoena, civil investigative or other similar process) to disclose
any Confidential Information of the Company or Confidential Information of
Purchaser as described in subpart (B) or subpart (C) of the immediately
preceding sentence, Seller shall provide Purchaser with prompt written notice of
any such request or requirement so that Purchaser may seek a protective order or
other appropriate remedy, at Purchaser’s sole expense, and/or waive compliance
with the provisions of this Agreement. If, in the absence of a protective order
or other remedy or the receipt of a waiver from Purchaser, Seller or any of its
respective Affiliates is nonetheless, on the advice of counsel, legally
compelled to disclose Confidential Information of the Company or Confidential
Information of Purchaser to any tribunal or else stand liable for contempt or
suffer other censure or penalty, Seller or such Affiliate may, without liability
hereunder, disclose to such tribunal only that portion of the Confidential
Information of the Company or Confidential Information of Purchaser, as the case
may be, which such counsel advises Seller is legally required to be disclosed,
provided that Seller exercises commercially reasonable efforts to preserve the
confidentiality of such information, including by cooperating with Purchaser to
obtain an appropriate protective order, at Purchaser’s sole expense, or other
reliable assurance that confidential treatment will be accorded such information
by such tribunal. Seller agrees that, on behalf of itself and each of its
Affiliates, without prior written consent of Purchaser, (I) from and after the
date hereof if the transactions contemplated hereby are consummated, neither it
nor its Affiliates shall in any manner directly or indirectly disclose any
Confidential Information of the Company to any Person, except to authorized
representatives of Seller and to counsel and other advisors in connection with
the consummation of the transactions contemplated hereby (provided, however,
that such advisors, other than counsel, agree to the confidentiality provisions
of this Section 6.3(b)), or use any Confidential Information of the Company for
any purpose or reason except in connection with the consummation of the
transactions contemplated hereby; and (II) from and after the date hereof,
neither Seller nor any of its respective Affiliates shall in any manner

36

--------------------------------------------------------------------------------

 

directly or indirectly disclose to any Person or use any Confidential
Information of Purchaser for any purpose or reason.
     6.4 Expenses. Other than fees and expenses incurred by Seller and the
Company related to the transactions contemplated herein and paid by the Company
prior to the Closing Date, all fees and expenses incurred by Seller and by the
Company in connection with the negotiation and effectuation of the terms and
conditions of this Agreement and the transactions contemplated hereby, including
all legal, accounting, financial advisory, consulting, success and all other
fees and expenses of third parties (collectively, the “Company Expenses”), shall
be the obligation of Seller. All fees and expenses incurred by Purchaser in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby, including all legal,
accounting, financial advisory, consulting and all other fees and expenses of
third parties, shall be the obligation of Purchaser.
     6.5 Public Disclosure. Promptly after execution of this Agreement,
Purchaser shall issue a press release relating to this Agreement. No disclosure
(whether or not in response to any inquiry) of the existence of any subject
matter of, or the terms and conditions of, this Agreement shall be made by
Seller or, prior to the Closing, by the Company unless approved by Purchaser
prior to release.
     6.6 FIRPTA Compliance. On or prior to the Closing, the Company shall
deliver to Purchaser a properly executed statement in a form reasonably
acceptable to Purchaser for purposes of Treasury
Regulation Section 1.1445-2(c)(3).
     6.7 Notification of Certain Matters. The Company and Seller shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to the
Company and Seller, of (a) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which is likely to cause any representation or
warranty of the Company or Seller or Purchaser, as the case may be, contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Closing (except for those representations and warranties that are by their
terms qualified by a standard of materiality, with respect to which notice shall
be given of the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which is likely to cause any such representation or warranty
of the Company or Seller or Purchaser, as the case may be, contained in this
Agreement to be untrue or inaccurate in any respect at or prior to the Closing)
and (b) any failure of the Company or Seller or Purchaser, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it in any material respect hereunder; provided, however,
that the delivery of any notice pursuant to this Section 6.7 shall not limit or
otherwise affect any remedies available to the party receiving such notice.
     6.8 Additional Documents and Further Assurances; Cooperation.
          (a) Each party hereto, at the request of the other party hereto, shall
use commercially reasonable efforts to execute and deliver such other
instruments and do and perform such other acts and things (including all action
reasonably necessary to seek and obtain and/or make any and all Approvals of any
Governmental or Regulatory Authority or other Person required in connection with
the Acquisition; provided, however, that neither party shall be obligated to
consent to any divestitures or operational limitations or activities in
connection

37

--------------------------------------------------------------------------------

 

therewith and no party shall be obligated to make a payment of money as a
condition to obtaining any such Approval, other than customary filing fees and
other commercially reasonable payments) as may be necessary or desirable for
effecting completely the consummation of this Agreement and the transactions
contemplated hereby.
          (b) Each party agrees to use commercially reasonable efforts to cause
the conditions set forth in Article 7 to be satisfied, where the satisfaction of
such conditions depends on action or forbearance from action by such party.
          (c) The Seller and the Company shall cause the Company to be operating
the Business, as of the Closing Date, in a manner that is consistent with, and
shall not take any action that would result (or would be reasonably likely to
result) in the Business being operated (before or after Closing) in manner that
is inconsistent with, the representations and warranties set forth in
Section 2.30.
     6.9 Resignation of Directors. The Company and Seller shall obtain and
deliver to Purchaser at the Closing the resignation of each director and officer
of the Company.
     6.10 Delivery of Stock Ledger and Minute Book of the Company. Seller shall
deliver the Company’s stock ledgers and minute books to Purchaser at the
Closing.
     6.11 Certain Tax Matters. The following provisions shall govern the
allocation of responsibility as between Purchaser and Seller for certain tax
matters following the Closing:
          (a) Section 338(h)(10) Election. At Purchaser’s option, Seller shall
join with Purchaser in making timely, effective and irrevocable elections under
Section 338(h)(10) of the Internal Revenue Code and any corresponding elections
under state, local or foreign Tax Law that have substantially the same effect as
the election under Section 338(h)(10) of the Internal Revenue Code
(collectively, a “Section 338(h)(10) Election”) with respect to the purchase of
the issued and outstanding Company Stock. Purchaser and Seller agree to
cooperate in all respects for the purposes of effectuating a timely and
effective Section 338(h)(10) Election, including the execution and filing of any
forms or Tax Returns. If the Section 338(h)(10) Election is made, Seller shall
include any income, gain, loss, deduction or other Tax item resulting from the
338(h)(10) Election in his Tax Returns, to the extent required by Law. Seller
shall indemnify the Company against any Taxes incurred and/or paid (by the
Company) by reason of the Section 338(h)(10) Election that would not have been
incurred with a stock purchase but for the Section 338(h)(10) Election,
including any Taxes imposed under Internal Revenue Code Section 1374 (the
“Corporate Tax Liability Amount”). The Corporate Tax Liability Amount shall be
initially paid by Purchaser but it shall be the obligation of Seller, and shall
be satisfied by Seller pursuant to the last sentence of this Section 6.11(a). In
determining Seller’s indemnity obligation pursuant to the prior sentences,
(i) any income, deduction, gain, loss, credit or other Tax items resulting to
Purchaser from any source other than the Company, the Acquisition or the
Section 338(h)(10) Election, and (ii) any personal Tax attributes of Purchaser
(including, but not limited to, any net operating loss carryovers, capital loss
carryovers, Tax credit carryovers, or passive loss carryovers) originating from
any source other than the Company, shall be ignored. If the Section 338(h)(10)
Election is made, Purchaser shall be entitled and required to set off against
the Holdback Amount any Corporate Tax Liability Amount reported on the initial
Tax Return with

38

--------------------------------------------------------------------------------

 

respect to such Corporate Tax Liability Amount within thirty (30) Business Days
after the later of the date that the Section 338(h)(10) Election is filed or the
date when such initial Tax Return with respect to such Corporate Tax Liability
Amount is filed (the “Tax Return Filing Date”) and, to the extent that the
Holdback Amount is less than the reported Corporate Tax Liability Amount as of
the time of such set-off against the Holdback Amount, Seller shall reimburse
Purchaser for the amount by which the reported Corporate Tax Liability Amount
exceeds the Holdback Amount no later than fifteen (15) Business Days after
written notice from Purchaser that such Corporate Tax Liability Amount exceeds
the Holdback Amount.
          (b) Tax Indemnification. Except as otherwise provided herein, Seller
shall indemnify the Company and Purchaser and hold them harmless from and
against any loss, claim, liability, expense, or other damage attributable to
(i) all Taxes (or the non-payment thereof) of the Company or for which the
Company is liable for all taxable periods ending on or before the Closing Date
and the portion though the end of the Closing Date for any taxable period that
includes (but does not end on) the Closing Date (“Pre-Closing Tax Period”),
including any Corporate Tax Liability Amount in excess of any Corporate Tax
Liability Amount set off against the Holdback Amount pursuant to this Agreement,
(ii) all Taxes of any member of an affiliated, consolidated, combined or unitary
group of which the Company (or any predecessor of any of the foregoing) is or
was a member on or prior to the Closing Date, including pursuant to Treasury
Regulation §1.1502-6 or any analogous or similar Law, and (iii) any and all
Taxes of any Person (other than the Company) imposed on the Company as a
transferee or successor, by Contract or pursuant to any Law, which Taxes relate
to an event or transaction occurring before the Closing; provided however, that
in the case of clauses (i), (ii) and (iii) above, Seller shall not be liable to
the extent that such Taxes are paid before the Closing and do not exceed the
amount, if any, reserved for such Taxes (excluding any reserve for deferred
Taxes established to reflect timing differences between book and income Tax
income) on the Closing Balance Sheet as finalized (rather than in any notes
thereto) and taken into account in determining any adjustment to the Purchase
Price pursuant to Section 1.4 or Section 1.6. Seller shall reimburse Purchaser
for any Taxes of the Company that are the responsibility of Seller pursuant to
this Section 6.11(b) within fifteen (15) Business Days after written demand
therefor and payment of such Taxes by Purchaser or the Company. In the case of
any claim for Tax indemnification for Taxes determined to be payable by the
Company or a successor thereto, the indemnity obligation under this Section 6.11
shall be interpreted as running from Seller to the Company and, if it cannot be
so characterized, it shall be considered to be a Purchase Price adjustment under
this Agreement.
          (c) Straddle Period. In the case of any taxable period that includes
(but does not end on) the Closing Date (a “Straddle Period”), the amount of any
Taxes shall be determined based on an interim closing of the books as of the
close of business on the Closing Date (and for such purpose, the taxable period
of any partnership or other pass-through entity in which the Company holds a
beneficial interest shall be deemed to terminate at such time) but excluding any
transaction occurring outside the ordinary course of business after the Closing.
          (d) Responsibility for Filing Certain Tax Returns. Purchaser shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company that are filed after the Closing Date for Pre-Closing Tax
Periods and Straddle Periods, other than income Tax Returns with respect to
periods for which a consolidated, unitary or combined income Tax Return of
Seller will include the operations of the Company. All such Tax Returns shall
use the

39

--------------------------------------------------------------------------------

 

same Tax accounting methods and Tax elections as used by the Company for the
immediately preceding taxable period, except as otherwise required by Law or
agreed by Purchaser and Seller. Purchaser shall submit to Seller a draft of each
such Tax Return at least thirty (30) days (in the case of any income Tax Return)
or ten (10) days (in the case of any sales Tax Return) prior to the due date
(taking into account any extensions thereof), together with Purchaser’s
calculation of the Tax for the Pre-Closing Tax Period and the details supporting
such calculation. Such draft Tax Return and calculation shall be subject to
Seller’s review and approval, which review and approval shall not be
unreasonably withheld, delayed or conditioned. Seller shall have fifteen
(15) days (in the case of an income Tax Return) or 5 days (in the case of a
sales Tax Return) after receipt of such draft Tax Return and calculation (with
supporting details) to notify Purchaser of any disagreement with such draft Tax
Return and/or calculation. If Seller timely notifies Purchaser of any such
disagreement, Purchaser and Seller shall proceed in good faith to attempt to
resolve such disagreement. If they do not resolve such disagreement by the due
date (including extensions) for the filing of such Tax Return, Purchaser shall
cause the Tax Return to be filed, and the Arbitrator shall be retained to
resolve such disagreement. The principles of Section 1.4(d) with respect to the
effect of the Arbitrator’s determination and the payment of the fees and
expenses of the Arbitrator shall apply. If a Tax Return prepared in accordance
with the Arbitrator’s determination would differ from the Tax Return as filed,
Purchaser either shall cause the Company to file an amended Tax Return
consistent with such determination or shall indemnify Seller from any Losses it
may incur if such amended Tax Return is not filed.
          (e) Cooperation on Tax Matters.
               (i) Purchaser, the Company and Seller shall cooperate fully, as
and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns for all periods that begin before the Closing and any
audit, litigation or other Action or 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 Action or Proceeding and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. Purchaser, the Company and Seller agree
(A) to retain all Books and Records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing until the
expiration of the statute of limitations (and, to the extent notified by
Purchaser or Seller, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such Books and Records and, if the
other party so requests, Purchaser, the Company or Seller, as the case may be,
shall allow the other party to take possession of such Books and Records.
               (ii) Purchaser and Seller further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
Governmental or Regulatory Authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed with respect to the
Company or the transaction contemplated hereby.
               (iii) Purchaser and Seller further agree, upon request, to
provide the other party with all information that either party may be required
to report pursuant to

40

--------------------------------------------------------------------------------

 

Section 6043 of the Internal Revenue Code and all Treasury Department
Regulations promulgated thereunder.
          (f) Tax Sharing Agreements. All Tax sharing agreements or similar
agreements with respect to or involving the Company and Seller or any of its
Affiliates shall be terminated as of the Closing Date and, after the Closing
Date, the Company shall not be bound thereby or have any Liability or be
entitled to any benefit thereunder.
          (g) Certain Other Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with the transactions contemplated by this
Agreement, shall be paid by Seller, and Seller will, at its own expense, file
all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other such Taxes and
fees, and, if required by applicable Law, each of Purchaser, Seller and the
Company will, and will cause its Affiliates to, join in the execution of any
such Tax Returns and other documentation.
          (h) Allocation of Purchase Price. If the Section 338(h)(10) Election
is made, Purchaser and the Seller shall cooperate as provided herein in
determining the allocation (for all purposes, including Tax and financial
accounting purposes) of the Purchase Price and the liabilities of the Company
among the assets of the Company. Purchaser shall initially determine such
allocation for purposes of the Form 8883 to be attached to the final S
corporation federal income Tax Return (Form 1120-S). Purchaser shall notify the
Seller in writing of the allocation so determined within sixty (60) days after
the Closing. The Seller shall be deemed to have accepted such determination
unless the Seller notifies Purchaser in writing of the Seller’s proposed
allocation within fifteen (15) days after receipt of Purchaser’s proposed
allocation. If the Seller provides such notice to Purchaser, the parties shall
proceed in good faith to determine mutually the matters in dispute. If they are
unable to do so within fifteen (15) days, the matter shall be referred to an
appraisal firm chosen by, and mutually and reasonably acceptable to, both
Purchaser and the Seller (the “Appraiser”). The decision of the Appraiser shall
be binding on all parties. Purchaser and Seller will each bear 50% of the fees
and expenses of the Appraiser. Neither Purchaser nor the Seller shall take any
position for Tax or other purposes that is inconsistent with the final
allocation determined hereunder unless such position is required by a final
non-appealable judgment which has been rendered in any Action or Proceeding
governing such position.
          (i) Tax Elections and Returns. Seller shall not, without the prior
written consent of Purchaser, permit the Company to make any Tax election other
than in the ordinary course of business and consistent with past practice,
change any Tax election, adopt any Tax accounting method other than in the
ordinary course of business and consistent with past practice, change any Tax
accounting method, file any Tax Return (other than any estimated Tax Returns,
payroll Tax Returns or sales Tax Returns), enter into any closing agreement,
settle any Tax claim or assessment, or consent to any Tax claim or assessment.
          (j) S Corporation Status. The Company and Seller shall not revoke the
Company’s election to be taxed as an S Corporation, and the Company and Seller
shall not take

41

--------------------------------------------------------------------------------

 

or allow any action that could result in the termination of the Company’s status
as an S Corporation.
     6.12 General Release. Effective as of the Closing, Seller voluntarily,
knowingly and irrevocably releases and forever discharges the Company, Purchaser
and their respective officers, directors, employees and Affiliates from any and
all actions, agreements, amounts, claims, damages, expenses, liabilities and
obligations of every kind, nature or description, known or unknown, arising or
existing prior to the Closing against the Company, except for (a) any rights of
Seller under this Agreement and any other agreements contemplated by this
Agreement to be executed at or prior to Closing, including employment and
consulting agreements, and (b) any claim for compensation or employee benefits
accrued but not paid prior to the Closing Date.
     6.13 Operations of the Company Business Unit Post Closing.
          (a) Purchaser acknowledges that a significant amount of the
consideration for this transaction comes through the form of an Earnout
potentially payable to Seller. As such, at any time that Seller has the ability
to earn an Earnout payment, Purchaser shall, subject to the good faith business
judgment of Purchaser’s board of directors and/or management, make commercially
reasonable efforts in the then current circumstances to cause the Company
Business Unit to act in a manner reasonably intended to enhance the
profitability of the Company Business Unit and make good faith efforts to cause
the Company Business Unit:
               (i) for so long as Seller remains an officer of the Company, the
Company Business Unit or Purchaser, to regularly consult with and consider in
good faith the recommendations and requests of Seller regarding management of
then current projects proposed to be undertaken by the Company Business Unit;
and
               (ii) for so long as Seller remains an officer of the Company, the
Company Business Unit or Purchaser, to consult with and consider in good faith
the recommendations and requests of Seller regarding the budget for the Company
Business Unit.
          (b) Purchaser shall use commercially reasonable efforts to maintain a
financial reporting system that will separately account for Revenue, EBITDA,
EBITDA Margins and Corporate Overhead Charges.
          (c) The agreements provided for in this Section 6.13 shall survive the
Closing for a period until the earlier of (i) the Earnout Termination Date or
(ii) the earliest date after which the Seller shall no longer be able, or
otherwise eligible, to become entitled to any Earnout payments or additional
Earnout payments under Section 1.6(b).
ARTICLE 7
CONDITIONS TO CLOSING
     7.1 Conditions to Obligations of Each Party to Effect the Acquisition. The
respective obligations of each party to this Agreement to effect the Acquisition
shall be subject to the satisfaction at or prior to the Closing of the following
conditions:

42

--------------------------------------------------------------------------------

 

          (a) Governmental and Regulatory Approvals. Approvals from any
Governmental or Regulatory Authority (if any) necessary for consummation of the
transactions contemplated hereby shall have been obtained.
          (b) No Injunctions or Regulatory Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other Order issued by
any court of competent jurisdiction or other Governmental or Regulatory
Authority or other legal or regulatory restraint or prohibition preventing the
consummation of the Acquisition shall be in effect; nor shall there be any Law
or Order enacted, entered, enforced or deemed applicable to the Acquisition or
the other transactions contemplated by the terms of this Agreement that would
(i) prohibit the consummation of the Acquisition, (ii) prohibit or restrict
Purchaser from exercising full voting rights with respect to its shares of
capital stock of the Company or (iii) permit consummation of the Acquisition
only if certain divestitures were made or if Purchaser were to agree to
limitations on its or its Subsidiaries’ business activities or operations.
     7.2 Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate the Acquisition and the other transactions contemplated by
this Agreement shall be subject to the satisfaction at or prior to the Closing
of each of the following conditions, any of which may be waived, in writing,
exclusively by Seller:
          (a) Representations and Warranties. The representations and warranties
of Purchaser contained in this Agreement shall be accurate in all material
respects (except for those representations and warranties that are by their
terms qualified by a standard of materiality, which representations and
warranties shall be true and correct in all respects) as of the date of this
Agreement and as of the Closing as if made on and as of the Closing (other than
any such representations and warranties which by their express terms are made
solely as of a specified earlier date, which shall be accurate as of such
specified earlier date).
          (b) Performance. Purchaser shall have performed and complied with in
all material respects each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchaser at or before the
Closing.
          (c) Closing Certificate. Purchaser shall have delivered to Seller a
certificate, dated the date of the Closing and executed by a duly authorized
officer, to the effect that each of the conditions specified in Sections 7.2(a)
and (b) above is satisfied in all respects.
     7.3 Additional Conditions to the Obligations of Purchaser. The obligations
of Purchaser to consummate the Acquisition and the other transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions, any of which may be waived,
in writing, exclusively by Purchaser:
          (a) Representations and Warranties. The representations and warranties
of Seller and the Company contained in this Agreement shall be accurate in all
material respects (except for those representations and warranties that are by
their terms qualified by a standard of materiality, which representations and
warranties shall be true and correct in all respects) as of the date of this
Agreement and as of the Closing as if made on and as of the Closing (other than

43

--------------------------------------------------------------------------------

 

representations and warranties which by their express terms are made as of a
specified earlier date, which shall be accurate as of such specified earlier
date).
          (b) Performance. Seller and the Company shall have performed and
complied with in all material respects each agreement, covenant or obligation
required by this Agreement to be so performed or complied with by Seller or the
Company, as the case may be, at or before the Closing.
          (c) Closing Certificate. Seller and the Company shall have delivered
to Purchaser a certificate, dated the date of the Closing, to the effect that
each of the conditions specified in Sections 7.3(a), (b), (e), (f), (g) and
(h) is satisfied in all respects.
          (d) Legal Opinion. Purchaser shall have received a legal opinion in
form and substance satisfactory to Purchaser in its sole discretion from Taylor
Hodkin Kopelowitz & Ostrow, P.A., counsel to Seller and the Company (or such
other law firm as may be satisfactory to Purchaser in its sole discretion),
addressing each of the matters set forth in the form attached hereto as
Exhibit A.
          (e) Approvals; Customer Interviews; Contract Amendments.
               (i) Approvals, if any, from any Person necessary for consummation
of the transactions contemplated hereby shall have been obtained, including any
Approvals required to be disclosed in Schedule 2.6(c), and copies thereof (in
form and substance satisfactory to Purchaser in its sole discretion) delivered
to Purchaser.
               (ii) Purchaser shall have completed to its satisfaction, in its
sole discretion, interviews (including conversations regarding the Acquisition)
with the customers of the Company listed on Schedule 7.3(e)(ii); provided
however, that such interviews shall have occurred prior to the date seven (7)
days following the date hereof or, in the event such interviews cannot be
conducted prior to such date and so long as Purchaser is in good faith
attempting to conduct such interviews, as soon as practicable after such date.
               (iii) Each of the Contracts set forth on Schedule 7.3(e)(iii)
shall have been amended by the parties as set forth on Exhibit B hereof.
               (iv) The Company and Keats McFarland & Wilson LLP (“KMW”) shall
have entered into the service agreement set forth on Exhibit C attached hereto,
and the Company shall have entered into or otherwise have in effect an agreement
with Venable Campillo Logan & Meaney (“VCLM”), satisfactory to Purchaser in its
sole discretion, under which VCLM shall provide the services set forth on, and
in accordance with, Schedule 2.30(b).
               (v) Each of the parties listed on Schedule 7.3(e)(v) shall have
entered into an engagement letter with KMW in the form of Exhibit D.
               (vi) The representations and warranties of Seller and the Company
contained in Section 2.30 shall be accurate in all respects as of the Closing as
if made on and as of the Closing.

44

--------------------------------------------------------------------------------

 

          (f) Material Adverse Effect. There shall have not have occurred any
Material Adverse Effect since the date hereof.
          (g) Termination of Financing Statements, Release of Liens. All Liens
on the Assets shall have been terminated and Seller and the Company shall have
filed or caused the filing of UCC termination statements under applicable Laws
with respect to such Liens, and the Company shall have satisfied the
indebtedness of the Company secured by such Liens, delivered payoff letters with
respect to such indebtedness (pursuant to Section 1.3(a)(ii)), and terminated
the agreements pursuant to which such indebtedness was secured, all pursuant to
documentation delivered to Purchaser and satisfactory to Purchaser in its sole
discretion.
          (h) Release. (i) Seller shall have obtained and delivered to Purchaser
a release from Adam Cohen, to the effect that Mr. Cohen has no further interest
(whether equity or otherwise) in, or claim against, the Company, and otherwise
in the form attached hereto as Exhibit E, and such release shall be in full
force and effect, and (ii) since the date hereof, no material “Claim” (as
defined in such Exhibit E) of Purchaser or the Company against Mr. Cohen or any
of “Mr. Cohen’s Affiliates” (as defined in such Exhibit E) shall have arisen.
          (i) Consent of Bank of America. Purchaser shall have obtained from
Bank of America, N.A., in form and substance satisfactory to Purchaser in its
sole discretion, its consent to finance the Acquisition under that certain
Credit Agreement by and among Purchaser, certain subsidiaries thereof, Bank of
America, N.A., and L/C Issuer, dated as of July 3, 2006.
          (j) Ancillary Agreements.
               (1) Seller shall have executed and delivered to Purchaser the
employment agreement between Seller and the Company (or Purchaser), in the form
attached hereto as Exhibit F (the “Employment Agreement”); and
               (2) Each of Seller and Adam Cohen shall have executed and
delivered to Purchaser an Intellectual Property Assignment Agreement, in the
forms attached hereto as Exhibit G-1 and Exhibit G-2, and such Intellectual
Property Assignment Agreements shall be in full force and effect.
          (k) Employee Matters. The Company shall have taken the actions with
respect to its employees, contractors and Plans set forth on Schedule 7.3(k).
          (l) Stock Certificates. Seller shall have delivered to Purchaser the
certificate or certificates representing all of the issued and outstanding
Company Stock, duly endorsed in blank, or accompanied by a duly executed blank
stock power.
          (m) Financial Information. Seller shall have delivered to Purchaser a
complete copy of the Company’s quick books application, updated to a date
reasonably acceptable to Purchaser.
          (n) Lease Agreement. That certain Office Lease with respect to Vintage
Pointe Office Condominiums Units 260 & 270, 2633 E. Indian School Road, Phoenix,
AZ dated

45

--------------------------------------------------------------------------------

 

October 24, 2007 between the Company and SGATP, LLC shall have been amended and
restated by the parties thereto as set forth on Exhibit H.
          (o) Assignments. Each inventor with respect to any and all patent
applications set forth on Schedule 2.17(a) shall have executed and delivered to
Purchaser a recordable assignment of each such patent application, in form and
substance acceptable to Purchaser in its sole discretion.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
     8.1 Survival of Representations and Warranties and Covenants; No
Contribution. Except for the representations and warranties set forth in
Sections 2.2, 2.3, 2.16, 2.17(i), (k), (l), (o), and (r), 2.30, 3.1, 3.2 and 4.2
(which shall survive the Closing and also continue forever), and Sections 2.11
and 2.14 and the remaining provisions of Section 2.17 (which shall survive the
Closing and also continue until the applicable statute of limitations has
expired), all of the representations and warranties contained in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Closing and continue until the first anniversary of the Closing Date. Except in
the event an “Indemnified Party” (as defined below) makes a written claim for
indemnification against an “Indemnifying Party” (as defined below) prior to such
expiration, no Action or Proceeding may be instituted to enforce, or seek
damages or other remedies with respect to the breach of, any representation or
warranty after the expiration of the period of survival for such representation
or warranty as described above. Seller shall not have any right to seek
contribution from the Company with respect to all or any part of Seller’s
indemnification obligations under this Article 8.
     8.2 Indemnification.
          (a) Seller and the Company shall, jointly and severally, before the
Closing, and Seller shall, after the Closing, indemnify and hold harmless
Purchaser, its Affiliates (including, after the Closing, the Company), and their
respective officers, directors, agents, successors and assigns (“Purchaser
Indemnified Parties”) from and against any and all Liabilities, losses, damages
of any kind, claims, costs, expenses, fines, fees, deficiencies, interest,
awards, judgments, amounts paid in settlement and penalties (including
attorneys’, consultants’ and experts’ fees and expenses and other costs of
defending, investigating or settling claims) actually suffered or incurred by
them (including in connection with any action brought or otherwise initiated by
any of them) (hereinafter, “Loss(es)”) arising out of or resulting from:
               (i) any inaccuracy in or breach of any representation or warranty
of Seller or the Company, as of the date of this Agreement and as if such
representation or warranty were made on and as of the Closing Date, contained in
this Agreement or in the Ancillary Agreements or any other instrument delivered
pursuant to this Agreement;
               (ii) any breach of any covenant or agreement made by Seller or
the Company in this Agreement or in the Ancillary Agreements or any other
instrument delivered

46

--------------------------------------------------------------------------------

 

pursuant to this Agreement, other than any covenant or agreement to be performed
by the Company after the Closing;
               (iii) Seller’s indemnification obligations under Section 6.11;
               (iv) any Company Expenses required to be paid by Seller pursuant
to Section 6.4 and any Company Debt;
               (v) the matters set forth on Schedule 8.2(a)(v); or
               (vi) any violation, in connection with the operation of the
Business, of any employment-related Law or Order applicable to the Company, the
Business or any of the Assets.
          (b) Purchaser shall indemnify and hold harmless Seller and his
Affiliates, successors and assigns (“Seller Indemnified Parties”) from and
against any and all Losses arising out of or resulting from:
               (i) any inaccuracy in or breach of any representation or warranty
of Purchaser, as of the date of this Agreement and as if such representation or
warranty were made on and as of the Closing Date, contained in this Agreement or
in the Ancillary Agreements or any other instrument delivered pursuant to this
Agreement; or
               (ii) any breach of any covenant or agreement made by Purchaser in
this Agreement or in the Ancillary Agreements or any other instrument delivered
pursuant to this Agreement.
     8.3 Third Party Claim Indemnification Procedures.
          (a) The obligations and Liabilities of any Person required to provide
indemnification under this Article 8 (each, an “Indemnifying Party”) with
respect to Losses arising from claims of any third party which are subject to
the indemnification provided for in this Article 8 (“Third Party Claims”) shall
be governed by and contingent upon the terms and conditions set forth in this
Section 8.3. If any Person entitled to indemnification pursuant to Section
8.2(a) or 8.2(b) (an “Indemnified Party”) shall receive notice of any Third
Party Claim, the Indemnified Party shall give the Indemnifying Party notice of
such Third Party Claim within ten (10) days of the receipt by the Indemnified
Party of such notice; provided, however, that the failure to provide such notice
shall not release the Indemnifying Party from any of its respective obligations
under this Article 8 except to the extent that the Indemnifying Party is
materially prejudiced by such failure. The notice of claim shall describe in
reasonable detail the facts known to the Indemnified Party giving rise to such
indemnification claim, and the amount or good faith estimate of the amount
arising therefrom.
          (b) The Indemnifying Party shall be entitled to assume and control the
defense of a Third Party Claim at its expense and through counsel of its choice
(such counsel to be reasonably acceptable to the Indemnified Party) if it gives
notice of its intention to do so to the Indemnified Party within fifteen
(15) days after the receipt of such notice from the Indemnified Party; provided,
however, if there exists or is reasonably likely to exist a conflict of interest
that

47

--------------------------------------------------------------------------------

 

would make it inappropriate for the same counsel to represent both the
Indemnified Party and the Indemnifying Party, then the Indemnified Party shall
be entitled to retain its own counsel, in each jurisdiction for which counsel is
required, at the expense of the Indemnifying Party. In the event that the
Indemnifying Party exercises the right to undertake any such defense against any
such Third Party Claim as provided above, the Indemnifying Party shall conduct
the defense of the Third Party Claim actively and diligently and the Indemnified
Party shall cooperate with the Indemnifying Party in such defense and make
available to the Indemnifying Party at the Indemnifying Party’s expense, all
witnesses, pertinent records, materials and information in the Indemnified
Party’s possession or under the Indemnified Party’s control relating thereto as
is reasonably required by the Indemnifying Party. Similarly, in the event the
Indemnified Party is, directly or indirectly, conducting the defense against any
such Third Party Claim, the Indemnifying Party shall cooperate with the
Indemnified Party in such defense and make available to the Indemnified Party,
at the Indemnifying Party’s expense, all such witnesses, records, materials and
information in the Indemnifying Party’s possession or under the Indemnifying
Party’s control relating thereto as is reasonably required by the Indemnified
Party. No such Third Party Claim may be settled by any party conducting the
defense against such claim without the prior written consent of the other party,
which consent shall not be unreasonably withheld, delayed or conditioned.
     8.4 Right to Set-Off. The Earnout and the Holdback Amount shall be
available to Purchaser to satisfy any payment obligations of Seller under
Section 1.4(e) hereof or indemnification obligations of Seller under this
Article 8. The rights of Purchaser under this Section 8.4 shall be in addition
to and not in limitation of any other rights and remedies to which Purchaser is
or may be entitled under this Agreement or any of the Ancillary Agreements, or
at law or in equity, including injunctive relief. Seller agrees that Purchaser
may set-off against any portion of the Earnout to be delivered to Seller
pursuant to Section 1.5 and/or the Holdback Amount the full amount of any Losses
required to be paid by such Seller pursuant to this Article 8 or pursuant to
Section 1.4(e) hereof. If the amount of the Earnout and/or the Holdback Amount
that is set-off against in accordance with the preceding sentence is less than
any Losses, written notice of a request for additional payment in cash to
satisfy any such Losses shall be made by Purchaser.
     8.5 Indemnification Basket. Notwithstanding anything to the contrary
contained in this Agreement, no obligation of any Indemnifying Party hereunder
with respect to any indemnifiable Loss otherwise payable by such Indemnifying
Party under Section 8.1(a)(i) or Section 8.1(b)(i), as the case may be, shall be
payable until such time as all indemnifiable Losses payable by such Indemnifying
Party shall exceed Seventy-Five Thousand Dollars ($75,000) (the “Indemnification
Basket”), at which time such Indemnifying Party shall be liable for Seventy-Five
Thousand Dollars ($75,000) and all Losses above the Indemnification Basket that
such Indemnifying Party is required to indemnify; provided, however, that the
limitations set forth in this Section 8.5 shall not apply to indemnification
claims arising from any inaccuracy or breach of any representation or warranty
of the Company, Seller or Purchaser contained in Sections 2.2, 2.3, 2.11, 2.14,
2.16, 2.17(i), (k), (l), (o), and (r), 2.30, 3.1, 3.2 and 4.2.

48

--------------------------------------------------------------------------------

 

ARTICLE 9
TERMINATION, AMENDMENT AND WAIVER
     9.1 Termination. This Agreement may be terminated and the Acquisition
abandoned at any time prior to the Closing:
          (a) by mutual agreement of Seller and Purchaser;
          (b) by Purchaser or Seller if: (i) the Closing has not occurred before
5:00 p.m. (Eastern Time) on December 31, 2007 (provided, however, that the right
to terminate this Agreement under this Section 9.1(b)(i) shall not be available
to any party whose failure, or the failure of any of such party’s Affiliates, to
fulfill any material obligation hereunder has been the cause of, or resulted in
the failure of the Closing to occur on or before such date); (ii) there shall be
a final nonappealable Order in effect preventing consummation of the
Acquisition; or (iii) there shall be any Law or Order enacted, promulgated or
issued by any Governmental or Regulatory Authority that would make consummation
of the Acquisition illegal.
          (c) by Purchaser if there shall be any Law or Order enacted,
promulgated or issued or deemed applicable to the Acquisition, by any
Governmental or Regulatory Authority, which would: (i) prohibit Purchaser’s
ownership or operation of all or any portion of the Business or Assets or (ii)
compel Purchaser to dispose of or hold separate all or any portion of the Assets
as a result of the Acquisition;
          (d) by Purchaser if it is not in breach of its representations,
warranties, covenants and agreements under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Seller or the Company and as a result of such
breach any of the conditions set forth in Section 7.1 or Section 7.3, as the
case may be, would not be satisfied prior to the date specified in
Section 9.1(b)(i); and
          (e) by Seller if it is not in breach of its representations,
warranties, covenants and agreements under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Purchaser and as a result of such breach any of
the conditions set forth in Section 7.1 or Section 7.2, as the case may be,
would not be satisfied as of the date specified in Section 9.1(b)(i).
          (f) by Seller if it is not in breach of its representations,
warranties, covenants and agreements under this Agreement and, as of the date
that is Ten (10) Business Days following the satisfaction (and written notice
thereof by Seller to Purchaser) of each of the conditions set forth in
Sections 7.1 and  7.3 (other than Section 7.3(i)), Purchaser does not have
sufficient cash on hand or availability under an existing credit facility to
consummate the transactions contemplated by this Agreement.
     9.2 Effect of Termination. In the event of a valid termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Purchaser, the
Company or Seller, or their respective officers, directors or stockholders or
Affiliates or Associates; provided, however, that each party shall remain liable
for any breaches of this Agreement in accordance with its terms prior to its

49

--------------------------------------------------------------------------------

 

termination; and provided further that, the provisions of Section 6.3 (except
for the obligations of Seller and its Affiliates under Sections 6.3(b) with
respect to Confidential Information of the Company), 6.4, 6.5 and 9.2,
Article 10 (exclusive of Section 10.3) and the applicable definitions set forth
in Article 11 shall remain in full force and effect and survive any termination
of this Agreement.
     9.3 Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.
ARTICLE 10
MISCELLANEOUS PROVISIONS
     10.1 Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission against facsimile confirmation or mailed
by a nationally recognized overnight courier prepaid, to the parties at the
following addresses or facsimile numbers:
     If to Purchaser or the Company (after the Closing) to:
Intersections Inc.
14901 Bogle Drive, Suite 300
Chantilly, Virginia 20151
Facsimile No.: (703) 488-6180
Attn: Chief Legal Officer
     with a copy (which shall not constitute notice) to:
Venable LLP
8010 Towers Crescent Drive, Suite 300
Vienna, Virginia 22182
Facsimile No.: (703) 821-8949
Attn: Joseph C. Schmelter, Esq.
     If to the Company (prior to Closing) or Seller:
Net Enforcers, Inc.
4939 W Ray Road, Suite 4-154
Chandler, AZ 85226
Facsimile No.: (954) 827-2381
Attn: Joseph C. Loomis
     with a copy (which shall not constitute notice) to:
Seidman, Prewitt, DiBello & Lopez, P.A.
5900 Broken Sound Parkway NW
Boca Raton, Florida 33487

50

--------------------------------------------------------------------------------

 

Facsimile No.: (305) 668-8892
Attn: Neil Seidman, Esq.
All such notices, requests and other communications will (a) if delivered
personally to the address as provided in this Section 10.1, be deemed given upon
delivery, (b) if delivered by facsimile transmission to the facsimile number as
provided for in this Section 10.1, be deemed given upon facsimile confirmation,
and (c) if delivered by overnight courier to the address as provided in this
Section 10.1, be deemed given on the earlier of the first Business Day following
the date sent by such overnight courier or upon receipt (in each case regardless
of whether such notice, request or other communication is received by any other
Person to whom a copy of such notice is to be delivered pursuant to this
Section 10.1). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice in the manner provided herein specifying such change to the other party
hereto.
     10.2 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, including the Non-disclosure Agreement to the extent incorporated herein
by reference pursuant to Section 6.3(a) hereof, constitute the entire Agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof (including the Letter of Intent dated
August 20, 2007 between the Company and Purchaser).
     10.3 Further Assurances; Post-Closing Cooperation. At any time or from time
to time after the Closing, each party shall execute and deliver to the other
parties such other documents and instruments, provide such materials and
information and take such other actions as the other party may reasonably
request to consummate the transactions contemplated by this Agreement and
otherwise to cause the other party to fulfill its obligations under this
Agreement and the transactions contemplated hereby. Each party agrees to
cooperate in causing the conditions to its obligations to consummate the
Acquisition to be satisfied.
     10.4 Waiver. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
     10.5 Third-Party Beneficiaries. Except as expressly provided herein, the
terms and provisions of this Agreement are intended solely for the benefit of
each party hereto and their respective successors or permitted assigns, and it
is not the intention of the parties to confer third-party beneficiary rights,
and this Agreement does not confer any such rights, upon any other Person other
than any Person entitled to indemnity under Article 8.
     10.6 No Assignment; Binding Effect. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned (by operation of law or
otherwise) by any party without the prior written consent of the other party,
and any attempt to do so will be void; provided,

51

--------------------------------------------------------------------------------

 

however, that Purchaser may assign all or a portion of its rights and
obligations under this Agreement, following written notice to Seller, to (a) one
or more Affiliates, or (b) any lender providing financing to Purchaser or the
Company (as applicable) or any of their Affiliates and any such lender may
exercise all of the rights and remedies of Purchaser hereunder; and provided,
further, that no such assignment will relieve Purchaser of its obligations under
this Agreement. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and permitted assigns.
     10.7 Headings. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
     10.8 Invalid Provisions. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (d) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
     10.9 Governing Law; Consent to Jurisdiction.
          (a) This Agreement, any Ancillary Agreements and any other closing
documents shall be governed by and construed in accordance with the laws of the
State of Delaware, without giving effect to its principles or rules regarding
conflicts of laws.
          (b) Each party hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement or for recognition and enforcement of
any judgment in respect hereof brought by another party hereto or its successors
or assigns shall be brought and determined by either a state court or federal
court sitting in the Commonwealth of Virginia and each party hereto hereby
irrevocably submits with regard to any such action or proceeding for itself and
in respect to its property, generally and unconditionally, to the jurisdiction
of the aforesaid courts. Each party hereto hereby irrevocably waives, and agrees
not to assert, by way of motion, as a defense, counter claim or otherwise, in
any action or proceeding with respect to this Agreement, (a) any claim that it
is not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure to serve process in accordance with this
Section 10.9, (b) that it or its property is exempt or immune from jurisdiction
of any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise), and (c) to the
fullest extent permitted by applicable Law, that (i) the suit, action or
proceeding in any such court is brought in an inconvenient forum, (ii) the venue
of such suit, action or proceeding is improper and (iii) this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.

52

--------------------------------------------------------------------------------

 

     10.10 WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING ARISING
HEREFROM, THE PARTIES HERETO CONSENT TO TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST THE OTHER OR
THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT, REGARDLESS OF THE FORM OF ACTION OR PROCEEDING.
     10.11 Construction. The parties hereto agree that this Agreement is the
product of negotiation between sophisticated parties and individuals, all of
whom were represented by counsel, and each of whom had an opportunity to
participate in and did participate in, the drafting of each provision hereof.
Accordingly, ambiguities in this Agreement, if any, shall not be construed
strictly or in favor of or against any party hereto, but rather shall be given a
fair and reasonable construction without regard to the rule of contra
proferentem.
     10.12 Counterparts; Facsimiles. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument. The exchange of
copies of this Agreement and of signature pages by facsimile or electronic data
file transmission shall constitute effective execution and delivery of this
Agreement as to the parties and may be used in lieu of the original Agreement
for all purposes (and such signatures of the parties transmitted by facsimile
shall be deemed to be their original signatures for all purposes).
     10.13 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. Notwithstanding Section 10.9, it is agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity. Nothing in
Article 8 shall be construed or interpreted to limit this Section 10.13.
ARTICLE 11
DEFINITIONS
     11.1 Definitions. As used in this Agreement, the following defined terms
shall have the meanings indicated below:
          “Acquisition” shall have the meaning set forth in Recital B of this
Agreement.
          “Actions or Proceedings” means any action, suit, complaint, subpoena,
petition, investigation, proceeding, arbitration, mediation, litigation or
Governmental or Regulatory Authority investigation, audit, document request or
other proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental or Regulatory Authority.
          “Affiliate” means, as applied to any Person, any other Person directly
or indirectly controlling, controlled by or under common control with, that
Person. For the 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

53

--------------------------------------------------------------------------------

 

or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through ownership of voting securities or
by contract or otherwise.
          “Agreement” means this Stock Purchase Agreement, including (unless the
context otherwise requires) the Exhibits, the Schedules and the certificates and
instruments delivered in connection herewith, or incorporated by reference, as
the same may be amended or supplemented from time to time in accordance with the
terms hereof.
          “Ancillary Agreements” shall have the meaning set forth in
Section 2.2.
          “Appraiser” shall have the meaning set forth in Section 6.11(h).
          “Approval” means any approval, authorization, consent, novation,
Permit, qualification or registration, or any waiver of any of the foregoing,
required to be obtained from or made with, or any notice, statement or other
communication required to be filed with or delivered to, any Governmental or
Regulatory Authority or any other Person.
          “Arbitrator” shall have the meaning set forth in Section 1.4(d).
          “Assets” shall mean all assets and properties of the Company of every
kind, nature, character and description (whether real, personal or mixed,
whether tangible or intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill related thereto,
operated, used, owned, licensed or leased by the Company, including cash, cash
equivalents, Investment Assets, accounts and notes receivable, chattel paper,
documents, instruments, general intangibles, real estate, equipment, inventory,
goods and Intellectual Property.
          “Associate” means, with respect to any Person, any corporation or
other business organization of which such Person is an officer or partner or is
the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
          “Books and Records” means all files, documents, instruments, papers,
books and records relating to the Business, including financial statements,
internal reports, Tax Returns and related work papers and letters from
accountants, budgets, pricing guidelines, ledgers, journals, deeds, title
policies, minute books, stock certificates and books, stock transfer ledgers,
Contracts, Licenses, customer lists, computer files and programs (including data
processing files and records), retrieval programs, operating data and plans and
environmental studies and plans.
          “Business” means the business of the Company as such business is
presently conducted and has been conducted in the past.
          “Business Combination” means, with respect to any Person, (a) any
merger, consolidation, share exchange, reorganization or other business
combination transaction to which such Person is a party, (b) any sale, or other
disposition of all or substantially all of the capital stock or other equity
interests of such Person, (c) any tender offer (including a self tender),

54

--------------------------------------------------------------------------------

 

exchange offer, recapitalization, restructuring, liquidation, dissolution or
similar or extraordinary transaction, (d) any sale, dividend or other
disposition of all or a substantial portion of the assets of such Person
(including by way of exclusive license or joint venture formation) other than
sales of inventory and the granting of licenses in the ordinary course of such
Person’s business, or (e) the entering into of any agreement or understanding,
the granting of any rights or options, or the acquiescence of such Person, to do
any of the foregoing.
          “Business Day” means a day other than Saturday, Sunday or any day on
which banks located in the Commonwealth of Virginia are authorized or obligated
to close.
          “Closing” shall have the meaning set forth in Section 1.2.
          “Closing Assets” shall have the meaning set forth in Section 1.4(a).
          “Closing Balance Sheet” shall have the meaning set forth in
Section 1.4(a).
          “Closing Cash Balances” shall have the meaning set forth in
Section 1.4(a).
          “Closing” shall have the meaning set forth in Section 1.2.
          “Closing Date” shall have the meaning set forth in Section 1.2.
          “Closing Payment” shall have the meaning set forth in Section 1.3(a).
          “Closing Payment Adjustment” shall have the meaning set forth in
Section 1.4(b).
          “Closing Payment Working Capital Adjustment” shall have the meaning
set forth in Section 1.4(b).
          “Closing Working Capital Amount” shall have the meaning set forth in
Section 1.4(a).
          “Commercially Available Programs” shall have the meaning set forth in
Section 2.17(c).
          “Company” shall have the meaning set forth in the Preamble of this
Agreement.
          “Company Business Unit” shall mean the Company and, in the event
Company is merged with or into or otherwise consolidated with Purchaser or any
of its Affiliates and Company is not the survivor of such merger or
consolidation, or the assets and properties of the Company are otherwise
assigned and transferred to Purchaser or any of its Affiliates, then the
business unit of Purchaser or its Affiliates which after such merger,
consolidation or asset transfer consists solely of such business, assets,
employees and operations as comprised Company’s business, assets, employees and
operations immediately prior to such merger, consolidation or asset transfer.
          “Company Expenses” shall have the meaning set forth in Section 6.4.
          “Company Financials” shall have the meaning set forth in Section 2.7.

55

--------------------------------------------------------------------------------

 

          “Company Intellectual Property” shall mean any and all Intellectual
Property that is owned by or in the name of the Company or to which the Company
is entitled to an assignment, including the copyrights and other Intellectual
Property in and to the Company Software and Systems, all rights to the name “Net
Enforcers” and all derivatives thereof, and all trade names and trade name
rights, service marks and service mark rights (whether or not registered),
service names and service name rights associated therewith, including Company
Registered Intellectual Property.
          “Company Registered Intellectual Property” means all Registered
Intellectual Property owned by or in the name of the Company or any of its
Subsidiaries, or to which any of them is entitled to an assignment, including
the provisional patent applications set forth in Schedule 2.17(a).
          “Company Options” means any Option to purchase or otherwise acquire
Company Stock.
          “Company Software and Systems” shall have the meaning set forth in
Section 2.17(c).
          “Company Stock” shall have the meaning set forth in Section 2.3(a).
          “Company’s Permits” shall have the meaning set forth in
Section 2.13(b).
          “Competing Proposed Transaction” shall have the meaning set forth in
Section 5.2.
          “Confidential Information of Purchaser” shall have the meaning set
forth in Section 6.3(b).
          “Confidential Information of the Company” shall have the meaning set
forth in Section 6.3(b).
          “Contract” means any note, bond, mortgage, contract, license, lease,
sublease, covenant, commitment, statement of work, power of attorney, proxy,
indenture, or other written or oral agreement or arrangement, including any
Government Contract.
          “Corporate Overhead Charges” shall have the meaning set forth in
Section 1.5(a).
          “Debt” means all of the Company’s indebtedness and other liabilities,
excluding accounts payable arising in the ordinary course of business, and
including without duplication: (A) all liabilities for money borrowed and
indebtedness evidenced by notes, debentures, bonds or other similar instruments;
(B) all obligations issued or assumed as the deferred purchase price of
property, all conditional sale obligations, all obligations under any title
retention agreement, and all obligations in respect of earnout payments or
contingent payments related to the acquisition of assets or businesses; (C) all
obligations for the reimbursement of any obligor on any letter of credit,
banker’s acceptance or similar credit transaction (other than obligations with
respect to letters of credit securing obligations (other than obligations
described in clauses (A) and (B) above) entered into in the ordinary course of
business to the extent such letters of credit are not

56

--------------------------------------------------------------------------------

 

drawn upon); (D) all obligations to pay rent or other amounts under any lease of
(or other arrangement conveying the right to use) real or personal property, or
a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet under GAAP, and the amount of
such obligations will be the capitalized amount thereof determined in accordance
with GAAP; (E) the amount of any dividends declared but not yet paid; (F) all
obligations of the type referred to in this definition of Debt of other Persons
for which the Company is responsible or liable as obligor, guarantor, or
otherwise; (G) all obligations of the type referred to in this definition of
Debt of other Persons secured by any Lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company); and (H) all
penalty payments, premiums, charges, yield maintenance amounts and other
expenses relating to the prepayment of any obligations of the types referred to
in this definition of Debt.
          “Delivered Information” shall have the meaning set forth in
Section 2.31.
          “Earnout” shall have the meaning set forth in Section 1.3(a).
          “Earnout Period” shall have the meaning set forth in Section 1.5(a).
          “Earnout Proposal” shall have the meaning set forth in Section 1.5(c).
          “Earnout Termination Date” shall have the meaning set forth in
Section 1.5(a).
          “EBITDA” shall have the meaning set forth in Section 1.5(a).
          “EBITDA Margin” shall have the meaning set forth in Section 1.5(a).
          “Employment Agreement” shall have the meaning set forth in
Section 7.3(j).
          “Environmental Law” means any federal, state, local or foreign
environmental, health and safety or other Law relating to Hazardous Materials,
including the Comprehensive, Environmental Response Compensation and Liability
Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid Waste
Disposal Act, the Federal Insecticide, Fungicide and Rodenticide Act.
          “Equipment” means (i) all furniture, fixtures, vehicles, furnishings,
molds, toolings, parts, tools, dials, jigs, patterns, office equipment, machine
tools and other items of equipment owned or leased by the Company that are used
presently or are used on the Closing Date by the Company in the conduct of the
Business; (ii) all computers, computer support equipment and software, telephone
and communication systems and security systems owned or leased by the Company
that are presently used or used on the Closing Date by the Company in the
conduct of the Business; (iii) all other furniture, supplies, maintenance
equipment and other incidental tangible personal property owned or leased the
Company that are presently used or are used on the Closing Date by the Company
in the conduct of the Business; and (iv) all other items of tangible personal
property owned or leased by the Company that are presently used or used on the
Closing Date by the Company in the conduct of the Business.

57

--------------------------------------------------------------------------------

 

          “Equity Equivalents” means securities (including Options to purchase
any shares of Company capital stock) which, by their terms, are or may be
exercisable, convertible or exchangeable for or into common stock, preferred
stock or other securities at the election of the holder thereof.
          “ERISA” shall have the meaning set forth in Section 2.14(a).
          “ERISA Affiliate” means any corporation or unincorporated trade or
business which is treated as a single employer with the Company under Internal
Revenue Code Section 414(b), (c), (m) or (o) or any member of the same
controlled group of businesses as the Company within the meaning of ERISA
Section 4001(a)(14).
          “Estimated Closing Balance Sheet” shall have the meaning set forth in
Section 1.4(a).
          “Funded Holdback Date” shall have the meaning set forth in
Section 1.6.
          “GAAP” means generally accepted accounting principles in the United
States, as in effect from time to time.
          “Government Bid” means any proposal or offer, solicited or
unsolicited, made by the Company prior to the Closing Date which, if accepted,
would result in a Government Contract.
          “Government Contract” means any Contract to which the Company is a
party with any Governmental or Regulatory Authority or any Contract to which the
Company is a party that is a subcontract (at any tier) with another Person that
holds either a prime contract with any Governmental or Regulatory Authority or a
subcontract (at any tier) under such a prime contract.
          “Governmental or Regulatory Authority” means any court, tribunal,
arbitrator, authority, agency, bureau, board, commission, department, official
or other instrumentality of the United States, any foreign country or any
domestic or foreign state, county, city or other political subdivision, and
shall include any stock exchange, quotation service and the National Association
of Securities Dealers.
          “Hazardous Material” means (a) any chemical, material, substance or
waste including, containing or constituting petroleum or petroleum products,
solvents (including chlorinated solvents), nuclear or radioactive materials,
asbestos in any form that is or could become friable, radon, lead-based paint,
urea formaldehyde foam insulation or polychlorinated biphenyls, (b) any
chemicals, materials, substances or wastes which are now defined as or included
in the definition of “hazardous substances,” “hazardous wastes,” “hazardous
materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic
substances,” “toxic pollutants” or words of similar import under any
Environmental Law; or (c) any other chemical, material, substance or waste which
is regulated by any Governmental or Regulatory Authority or which could
constitute a nuisance.
          “Holdback Amount” shall have the meaning set forth in Section 1.6.

58

--------------------------------------------------------------------------------

 

          “Indemnification Basket” shall have the meaning set forth in
Section 8.5.
          “Indemnified Party” shall have the meaning set forth in
Section 8.3(a).
          “Indemnifying Party” shall have the meaning set forth in
Section 8.3(a).
          “Intellectual Property” means all trademarks and trademark rights
(whether or not registered), trade names and trade name rights, service marks
and service mark rights (whether or not registered), service names and service
name rights, patents and patent rights, utility models and utility model rights,
copyrights (statutory or registered), mask work rights, moral rights, trade
dress, rights of publicity, trade secrets, inventions (whether patentable or
not), invention disclosures, improvements, processes, formulae, industrial
models, algorithms, designs, specifications, technology, methodologies,
techniques, software and systems used in the past, currently, or contemplated by
the Company (including all source code and object code and associated
documentation and manuals), firmware, development tools, flow charts,
annotations, all Web addresses, sites and domain names, all data bases and data
collections and all rights therein, any right to enforce confidential treatment
of information, whether or not subject to statutory registration, and all
related technical information, manufacturing, engineering and technical
drawings, know-how and all pending applications for, registrations of any of the
foregoing, and the sole and exclusive right to file for and apply for patents,
utility models, trademarks, service marks, domain names, and copyrights, and the
sole and exclusive right to sue for past, present, or future infringement, if
any, in connection with any of the foregoing, and all documents, disks, records,
files and other media on which any of the foregoing is stored.
          “Internal Revenue Code” means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
          “Investment Assets” means all debentures, notes and other evidences of
Debt, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets.
          “KMW” shall have the meaning set forth in Section 7.3(e).
          “Law” or “Laws” means any law, statute, order, decree, consent decree,
judgment, rule, regulation, ordinance or other pronouncement having the effect
of law whether in the United States, any foreign country, or any domestic or
foreign state, county, city or other political subdivision or of any
Governmental or Regulatory Authority.
          “Lease Documents” shall have the meaning set forth in Section 2.15(a).
          “Leased Real Property” shall have the meaning set forth in
Section 2.15(a).
          “Letters and Notices” shall have the meaning set forth in
Section 2.30(a).
          “Liabilities” means all Debt, obligations and other liabilities of a
Person, whether absolute, accrued, contingent (or based upon any contingency),
known or unknown, fixed or otherwise, or whether due or to become due.

59

--------------------------------------------------------------------------------

 

          “License” means any Contract that grants a Person the right to use or
otherwise enjoy the benefits of any Intellectual Property (including any
covenants not to sue with respect to any Intellectual Property).
          “Liens” means any mortgage, pledge, security interest, lien, easement,
covenant, restriction, levy, charge, adverse claim or restriction or other
encumbrance of any kind, or any conditional sale Contract, title retention
Contract or other Contract to give any of the foregoing, except for any
restrictions on transfer generally arising under any applicable federal or state
securities Law.
          “Loss(es)” shall have the meaning set forth in Section 8.2(a).
          “Material Adverse Effect” means any event, fact, circumstance or
condition that, individually or in the aggregate with any other such events,
facts, circumstances or conditions, has had or would be reasonably expected to
have, a material adverse effect on the Business or the operations, prospects,
financial condition or results of operations of the Company; provided, however,
that any effect relating to economic conditions (which effect does not
disproportionately affect the Company) that are generally applicable to the
capital, financial, banking or currency markets shall be excluded from the
definition of “Material Adverse Effect” and from the determination of whether
such a Material Adverse Effect has occurred.
          “Non-disclosure Agreement” shall have the meaning set forth in
Section 6.3(a).
          “Option” with respect to any Person means any security, right,
subscription, warrant, option, “phantom” stock right or other Contract that
gives the right to (a) purchase or otherwise receive or be issued any shares of
capital stock or other equity interests of such Person or any security of any
kind convertible into or exchangeable or exercisable for any shares of capital
stock or other equity interests of such Person or (b) receive any benefits or
rights similar to any rights enjoyed by or accruing to the holder of shares of
capital stock or other equity interests of such Person, including any rights to
participate in the equity, income or election of directors of such Person.
          “Order” means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
          “Other Material IP” shall have the meaning set forth in
Section 2.17(a).
          “Permits” means all federal, state, local or foreign permits, grants,
easements, consents, approvals, authorizations, exemptions, licenses,
franchises, insurance brokerage licenses, certificates, orders of, and/or any
other authorization required by any Governmental or Regulatory Authority, any
other Person, or the Laws of any state in which the Company does business.
          “Person” means any natural person, corporation, general partnership,
limited partnership, limited liability company or partnership, proprietorship,
other business organization, trust, union, association or Governmental or
Regulatory Authority.

60

--------------------------------------------------------------------------------

 

          “Plan” means (a) each of the “employee benefit plans” (as such term is
defined in Section 3(3) of ERISA) of which any of the Company or any ERISA
Affiliate is a sponsor or participating employer or as to which the Company or
any of its ERISA Affiliates makes contributions or is required to make
contributions or has any Liability, and (b) any employment, severance or other
agreement, plan, arrangement or policy of the Company or any of its ERISA
Affiliates (whether written or oral) providing for health, life, vision or
dental insurance coverage (including self-insured arrangements), workers’
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits or retirement benefits, fringe benefits, or for profit sharing,
deferred compensation, bonuses, severance, change in control payments, retention
benefits, commissions, stock options, stock appreciation rights, phantom stock,
restricted stock, restricted stock units or other forms of equity or incentive
compensation or post-retirement insurance, compensation or benefits.
          “Post-Closing Adjustment Amount” shall have the meaning set forth in
Section 1.4(e).
          “Post-Closing Working Capital Adjustment Amount” shall have the
meaning set forth in Section 1.4(e).
          “Pre-Closing Tax Period” shall have the meaning set forth in
Section 6.11(b).
          “Process” shall have the meaning set forth in Section 2.30(b).
          “Proprietary Rights Agreement” shall have the meaning set forth in
Section 7.3(j).
          “PTO” shall have the meaning set forth in Section 2.17(a).
          “Purchase Price” shall have the meaning set forth in Section 1.3.
          “Purchaser” shall have the meaning set forth in the Preamble of this
Agreement.
          “Purchaser Indemnified Parties” shall have the meaning set forth in
Section 8.2(a).
          “Registered Intellectual Property” shall mean all United States,
international and foreign: (a) patents and patent applications (including
provisional applications); (b) registered trademarks and service marks,
applications to register trademarks and service marks, intent-to-use
applications, or other registrations or applications to trademarks or service
marks; (c) registered copyrights and applications for copyright registration;
(d) any mask work registrations and applications to register mask works;
(e) registered domain names and applications to register domain names, and
(f) any other Intellectual Property that is the subject of an application,
certificate, filing, registration or other document issued by, filed with, or
recorded by, any Governmental or Regulatory Authority.
          “Revenue” shall have the meaning set forth in Section 1.5(a).
          “Section 338(h)(10) Election” shall have the meaning set forth in
Section 6.11(a).

61

--------------------------------------------------------------------------------

 

          “Seller” shall have the meaning set forth in the Preamble of this
Agreement.
          “Seller Indemnified Parties” shall have the meaning set forth in
Section 8.2(b).
          “Straddle Period” shall have the meaning set forth in Section 6.11(c).
          “Subsidiary” means any Person in which the Company or Purchaser, as
the context requires, directly or indirectly through Subsidiaries or otherwise,
beneficially owns at least fifty percent (50%) of either the equity interest in,
or the voting control of, such Person, whether or not existing on the date
hereof.
          “Takeover Statute” means a “fair price,” “moratorium,” “business
combination,” “control share acquisition” or other similar anti-takeover statute
or regulation enacted under state or federal laws in the United States.
          “Tax” or “Taxes” means (a) any federal, state, local, or foreign
income, gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Internal Revenue Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, and (b) any Liability for the payment of any amounts of the
type described in clause (a) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any taxable period.
          “Tax Liability Amount” shall have the meaning set forth in
Section 6.11(a).
          “Tax Return Filing Date” shall have the meaning set forth in
Section 6.11(a).
          “Tax Returns” means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
          “Third-Party Claims” shall have the meaning set forth in
Section 8.3(a).
          “Treasury Regulations” means the federal income Tax regulations
promulgated under the Internal Revenue Code, as amended from time to time, and
including corresponding provisions of succeeding regulations.
          “VCLM” shall have the meaning set forth in Section 7.3(e).
          “Warranty Obligations” shall have the meaning set forth in
Section 2.27.
    11.2 Construction.
          (a) Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender and the neuter, (ii) words using the
singular or plural number also include the plural or singular number,
respectively, (iii) the terms “hereof,” “herein,”

62

--------------------------------------------------------------------------------

 

“hereby” and derivative or similar words refer to this entire Agreement as a
whole and not to any particular Article, Section or other subdivision, (iv) the
terms “Article” or “Section” or other subdivision refer to the specified
Article, Section or other subdivision of the body of this Agreement, (v) the
phrases “ordinary course of business” and “ordinary course of business
consistent with past practice” refer to the Business and practice of the
Company, (vi) the words “include,” “includes” and “including” shall be deemed to
be followed by the phrase “without limitation,” and (vii) when a reference is
made in this Agreement to Exhibits, such reference shall be to an Exhibit to
this Agreement unless otherwise indicated. All accounting terms used herein and
not expressly defined herein shall have the meanings given to them under GAAP.
When used herein, the terms “party” or “parties” refer to Purchaser, on the one
hand, and the Company (prior to the Closing) and Seller, on the other, and the
terms “third party” or “third parties” refers to Persons other than Purchaser,
Seller or the Company.
          (b) When used herein, the phrase “knowledge of” Seller and/or the
Company or “known to” Seller and/or the Company, means in any such case the
actual knowledge of Seller and the officers and directors of the Company after
reasonable investigation.
[SIGNATURE PAGES FOLLOW]

63

--------------------------------------------------------------------------------

 

          IN WITNESS WHEREOF, Purchaser, Seller and the Company, have signed or
caused this Agreement to be signed by their duly authorized representatives, all
as of the date first written above.

            INTERSECTIONS INC.
      By:           Name:           Title:        

            NET ENFORCERS, INC.
      By:           Name:           Title:        

     
 
   
 
  Joseph C. Loomis

[Signature Page – Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Exhibit _______

      LIST OF EXHIBITS TO STOCK PURCHASE AGREEMENT
 
   
Exhibit A
  Legal Opinion
Exhibit B
  Contract Amendments
Exhibit C
  KMW Service Agreement
Exhibit D
  Form of Engagement Letter with KMW
Exhibit E
  Form of Cohen Release
Exhibit F
  Employment Agreement between Seller and Company (or Purchaser)
Exhibit G-1
  Form of Intellectual Property Assignment Agreement
Exhibit G-2
  Form of Intellectual Property Assignment Agreement
Exhibit H
  Amendment and Restatement of Office Lease
 
    LIST OF SCHEDULES TO THE STOCK PURCHASE AGREEMENT
 
   
Schedule 1.4(a)(2)
  Prepaid Revenues
Schedule 1.5(a)
  Revenue and EBITDA Adjustments
Schedule 2.1
  Foreign Qualifications
Schedule 2.5
  Directors and Officers
Schedule 2.6(c)
  No Conflicts; Approvals
Schedule 2.7
  Company Financial Statements
Schedule 2.8
  Books and Records; Organizational Documents
Schedule 2.9
  Absence of Changes
Schedule 2.10
  Liabilities
Schedule 2.11
  Taxes
Schedule 2.11(e)
  Taxes
Schedule 2.12
  Legal Proceedings
Schedule 2.13
  Company Permits
Schedule 2.14(a)
  Plans; ERISA
Schedule 2.14(b)
  Plans; ERISA
Schedule 2.15(a)
  Real Property
Schedule 2.15(b)
  Real Property
Schedule 2.15(c)
  Real Property
Schedule 2.16
  Assets
Schedule 2.17(a)
  Intellectual Property
Schedule 2.17(c)
  Intellectual Property
Schedule 2.17(g)
  Intellectual Property
Schedule 2.17(h)
  Intellectual Property
Schedule 2.17(i)
  Intellectual Property
Schedule 2.17(j)
  Intellectual Property
Schedule 2.17(q)
  Intellectual Property
Schedule 2.17(s)
  Intellectual Property
Schedule 2.17(t)
  Intellectual Property
Schedule 2.18(a)
  Contracts
Schedule 2.18(b)
  Contracts
Schedule 2.18(c)
  Contracts

 

--------------------------------------------------------------------------------

 

     
Schedule 2.18(e)
  Contracts
Schedule 2.19
  Insurance
Schedule 2.20(a)
  Affiliate Transactions
Schedule 2.20(b)
  Affiliate Transactions
Schedule 2.21(b)(i)
  Employees; Labor Relations
Schedule 2.21(b)(ii)
  Employees; Labor Relations
Schedule 2.23
  Substantial Customers and Suppliers
Schedule 2.24
  Accounts and Notes Receivable
Schedule 2.25
  Other Negotiations; Brokers; Third-Party Expenses
Schedule 2.26
  Banks and Brokerage Accounts
Schedule 2.27
  Warranty Obligations
Schedule 2.30(a)
  Customer Services
Schedule 2.30(b)
  Customer Services
Schedule 3.3(b)
  No Conflicts; Approvals
Schedule 3.4
  Legal Proceedings
Schedule 4.3(c)
  No Conflicts; Approvals
Schedule 5.1
  Conduct of Business
Schedule 7.3(e)(ii)
  Approvals; Customer Interviews, Contract Amendments
Schedule 7.3(e)(iii)
  Approvals; Customer Interviews, Contract Amendments
Schedule 7.3(e)(v)
  Approvals; Customer Interviews, Contract Amendments
Schedule 7.3(k)
  Employee Matters
Schedule 8.2(a)(v)
  Indemnification

 
(The schedules and exhibits to the Stock Purchase Agreement have been omitted.
Intersections Inc. will furnish copies of such schedules and exhibits
supplementally to the Commission upon request.)