Exhibit 10.1

 

Execution Copy

 

STOCK PURCHASE AGREEMENT

 

by and among

 

INSOURCE HOLDINGS, INC.,

 

VIRTUSA CORPORATION,

 

DAVID SHALABY,

 

AND

 

MICHELE SHALABY

 

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

ARTICLE 1 PURCHASE AND SALE OF PURCHASED SECURITIES

1

1.1

Purchase and Sale

1

1.2

The Closing

1

1.3

Working Capital Adjustment

3

1.4

The Post-Closing Adjustment Payments

4

1.5

Post-Closing Contingent Purchase Price Adjustments

4

1.6

Holdback Amount Adjustments

5

 

 

 

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

5

2.1

Organization; Corporate Power and Licenses of the Company

5

2.2

Capitalization and Related Matters

5

2.3

Subsidiaries: Investments

6

2.4

Authorization: No Breach

6

2.5

Financial Statements

6

2.6

Absence of Undisclosed Liabilities

7

2.7

Assets

7

2.8

Tax Matters

7

2.9

Contracts and Commitments

9

2.10

Intellectual Property Rights

11

2.11

Litigation, Etc.

13

2.12

Brokers

13

2.13

Insurance

13

2.14

Employees

14

2.15

ERISA

15

2.16

Compliance with Laws

17

2.17

Affiliated Transactions

17

2.18

Customers and Suppliers

17

2.19

Real Property

17

2.20

Environmental and Safety Matters

18

2.21

Legal Compliance

18

2.22

Absence of Certain Developments

18

2.23

Bank Accounts

20

2.24

Privacy of Individually Identifiable Personal Information

20

2.25

Investment Company Status

20

2.26

State Takeover Laws

20

2.27

Statements True and Correct

20

 

 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER

20

3.1

Organization of Buyer

20

3.2

Authorization of Transaction

20

3.3

Noncontravention

21

3.4

Brokers

21

3.5

Statements True and Correct

21

 

 

 

ARTICLE 4 ADDITIONAL AGREEMENTS

21

 

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4.1

Expenses

21

4.2

Tax Matters

21

4.3

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

23

4.4

Litigation Support

25

4.5

Transition Services

26

4.6

Proceeds from Purchase Price

26

 

 

 

ARTICLE 5 DELIVERABLES

26

5.1

Company Deliverables

26

5.2

Buyer Deliverables

27

 

 

 

ARTICLE 6 REMEDIES FOR BREACHES OF THIS AGREEMENT AND OTHER MATTERS

27

6.1

Survival of Representations and Warranties

27

6.2

Indemnification of Buyer

28

6.3

Indemnification Provisions for Benefit of the Company and the Seller
Shareholders

29

6.4

Matters Involving Third Parties

30

6.5

Manner of Payment

31

6.6

Insurance and Third Party Recovery

31

6.7

Offset

32

6.8

Delivery and Release of Holdback Fund

32

 

 

 

ARTICLE 7 CERTAIN DEFINITIONS

32

7.1

Additional Definitions

37

 

 

 

ARTICLE 8 MISCELLANEOUS

38

8.1

No Third Party Beneficiaries

38

8.2

Entire Agreement

39

8.3

Successors and Assigns

39

8.4

Counterparts

39

8.5

Headings

39

8.6

Notices

39

8.7

Governing Law

40

8.8

Amendments and Waivers

40

8.9

Incorporation of Schedules

41

8.10

Construction

41

8.11

Severability of Provisions

41

8.12

Specific Performance

41

8.13

Successor Laws

41

8.14

Release of the Company

41

8.15

Delivery by Facsimile

41

8.16

Disagreements and Disputes

42

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of November 4, 2009,
by and among Insource Holdings, Inc., a Connecticut corporation, and each of its
Subsidiaries (collectively, except with respect to Section 2.1 herein, the
“Company”), Virtusa Corporation, a Delaware corporation (“Buyer”), and David
Shalaby and Michele Shalaby (collectively, the “Seller Shareholders”).  Terms
used herein and not otherwise defined herein shall have the meaning given such
terms in Article 7 hereof.

 

WHEREAS, as described on Schedule 2.2, the Seller Shareholders own beneficially
and of record all of the issued and outstanding ownership interests in Insource
Holdings, Inc. (the “Securities”).

 

WHEREAS, this Agreement contemplates a transaction in which, pursuant to the
terms and subject to the conditions set forth herein, Buyer will purchase from
the Seller Shareholders, and the Seller Shareholders will sell to Buyer, 80,000
shares of common stock of Insource Holdings, Inc. (the “Purchased Securities”)
for the consideration and on the terms and conditions, as set forth below.

 

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

 

ARTICLE 1

PURCHASE AND SALE OF PURCHASED SECURITIES

 

1.1                                 Purchase and Sale.  Pursuant to the terms
and subject to the conditions set forth herein, at the Closing (as defined
below) and in the amounts and for an aggregate purchase price as determined
pursuant to this Article 1, the Seller Shareholders shall sell, assign,
transfer, convey and deliver to Buyer, and Buyer shall accept and purchase from
the Seller Shareholders, the Purchased Securities free and clear of all Liens as
set forth on the attached Schedule 2.2 in exchange for the Purchase Price (as
defined below).  For the avoidance of doubt, in connection with such purchase
and sale, Buyer and the Seller Shareholders shall collectively own, upon the
consummation of the transactions contemplated by the Transaction Documents, all
of the outstanding Securities free and clean of all Liens.

 

1.2                                 The Closing.

 

(A)                                  THE CLOSING OF THE PURCHASE AND SALE OF THE
PURCHASED SECURITIES (THE “CLOSING”) SHALL TAKE PLACE AT THE OFFICES OF GOODWIN
PROCTER LLP, 53 STATE STREET, EXCHANGE PLACE, BOSTON, MA 02109, AT 10:00 A.M.
LOCAL TIME ON THE BUSINESS DAY FOLLOWING THE SATISFACTION OR WAIVER OF ALL
CONDITIONS SET FORTH IN ARTICLE 5 HEREOF, OR AT SUCH OTHER PLACE OR ON SUCH
OTHER DATE AS IS MUTUALLY ACCEPTABLE TO BUYER AND THE SELLER SHAREHOLDERS.  THE
DATE OF THE CLOSING HEREUNDER IS REFERRED TO HEREIN AS THE “CLOSING DATE” AND
THE CLOSING DATE WILL BE DEEMED TO BE 11:59 P.M. ON THE DATE UPON WHICH THE
CLOSING OCCURS.

 

(B)                                 SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH HEREIN, AND ON THE BASIS OF THE REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS SET FORTH HEREIN, AND IN THE FOLLOWING ORDER:

 

(I)                                     AT THE CLOSING, THE INITIAL PURCHASE
PRICE (THE “PURCHASE PRICE”) TO BE PAID BY BUYER FOR THE PURCHASED SECURITIES
SHALL BE $7,300,000, PLUS (X) AN AMOUNT EQUAL TO THE ESTIMATED WORKING CAPITAL
ADJUSTMENT (WHICH MAY BE NEGATIVE), LESS (Y) ANY INDEBTEDNESS IN EXISTENCE AS OF
THE CLOSING (AFTER GIVING EFFECT TO ANY FEES, PREMIUMS, PENALTIES AND OTHER
AMOUNTS TO BE INCURRED ASSUMING REPAYMENT OF ALL INDEBTEDNESS IN FULL ON SUCH
DATE), AS SET FORTH ON

 

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SCHEDULE 1.2(B)(I)(Y) (THE “DEBT PAYOFF AMOUNTS”).  THE PURCHASE PRICE SHALL BE
PAID AS PROVIDED IN SECTION 1.2(B)(II).

 

(II)                                  AT THE CLOSING, BUYER SHALL DELIVER, IN
EXCHANGE FOR THE PURCHASED SECURITIES, THE PURCHASE PRICE TO THE SELLER
SHAREHOLDERS IN THE AMOUNTS AS SET FORTH ON SCHEDULE 2.2 IN IMMEDIATELY
AVAILABLE FUNDS BY WIRE TRANSFER TO THE ACCOUNT OF THE SELLER SHAREHOLDERS,
DESIGNATED BY THE SELLER SHAREHOLDERS BY NOTICE TO BUYER, WHICH NOTICE SHALL BE
DELIVERED NOT LATER THAN TWO BUSINESS DAYS PRIOR TO THE CLOSING DATE (OR IF NOT
SO DESIGNATED, THEN BY CERTIFIED OR OFFICIAL BANK CHECK PAYABLE IN IMMEDIATELY
AVAILABLE FUNDS TO THE ORDER OF THE SELLER SHAREHOLDERS IN SUCH AMOUNT).

 

For purposes of this agreement, “Estimated Working Capital Adjustment” shall be
equal to an amount, which may be negative, obtained by subtracting the Target
Working Capital from the Estimated Working Capital (as defined below), and
“Estimated Working Capital” shall be equal to the anticipated Working Capital of
the Company as of the Closing Date, as determined in accordance with
Section 1.3.

 

(III)                               AT THE CLOSING, BUYER SHALL DELIVER TO THE
PAYEES OF ALL DEBT PAYOFF AMOUNTS WHICH ARE REQUIRED TO BE PAID BY THE COMPANY
AS OF THE CLOSING DATE AND WHICH HAS REDUCED THE PURCHASE PRICE (AS SPECIFIED IN
A PAYOFF LETTER OR SIMILAR LETTERS DELIVERED BY THE COMPANY TO BUYER BEFORE THE
CLOSING DATE) AN AMOUNT TO PAY ALL SUCH DEBT PAYOFF AMOUNTS, IF ANY, WITH THE
RESULT THAT FOLLOWING THE CLOSING THERE WILL BE NO FURTHER MONETARY OBLIGATIONS
OF THE COMPANY WITH RESPECT TO ANY DEBT PAYOFF AMOUNTS.  ALL AMOUNTS PAYABLE IN
CASH TO THE SELLER SHAREHOLDERS AT CLOSING SHALL BE PAID IN IMMEDIATELY
AVAILABLE FUNDS, EITHER BY WIRE TRANSFER TO ONE OR MORE ACCOUNTS DESIGNATED IN
WRITING BY THE COMPANY OR BY BANK CHECK ISSUED BY A BANK APPROVED BY THE
COMPANY, AT THE COMPANY’S ELECTION.  FOR THE AVOIDANCE OF ANY DOUBT, PAYMENTS
MADE WITH RESPECT TO ALL DEBT PAYOFF AMOUNTS TO THE EXTENT PAID IN ACCORDANCE
WITH SECTION 1.2 OF THIS AGREEMENT SHALL BE TREATED AS A REDUCTION IN THE
PURCHASE PRICE TO THE SELLER SHAREHOLDERS FOR TAX PURPOSES.

 

(C)                                  IN ADDITION TO THE FOREGOING, AS
APPLICABLE, THE SELLER SHAREHOLDERS SHALL DELIVER TO BUYER OR ONE OR MORE OF ITS
DESIGNEES SUCH DEEDS, BILLS OF SALE, ENDORSEMENTS, CONSENTS, ASSIGNMENTS AND
OTHER GOOD AND SUFFICIENT INSTRUMENTS OF CONVEYANCE AND ASSIGNMENT AS BUYER
SHALL DEEM REASONABLY NECESSARY TO VEST IN BUYER OR ONE OR MORE OF THEIR
DESIGNEES ALL RIGHT, TITLE AND INTEREST IN, TO AND UNDER THE PURCHASED
SECURITIES IN THE MANNER DESCRIBED HEREIN FREE AND CLEAR OF ALL LIENS AND IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO BUYER.

 

(D)                                 ON THE DATE OF CLOSING, BUYER SHALL WITHHOLD
FROM THE PURCHASE PRICE THE AMOUNT OF SEVEN HUNDRED AND THIRTY THOUSAND DOLLARS
($730,000.00) (THE “HOLDBACK AMOUNT”) SUBJECT TO ADJUSTMENT PURSUANT TO
SECTION 1.5 AND IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT. THE HOLDBACK
AMOUNT SHALL BE HELD FOR THE PURPOSE OF THE PAYMENT TO BUYER OF THE FINAL
WORKING CAPITAL ADJUSTMENT AMOUNT AND POST-CLOSING PURCHASE PRICE ADJUSTMENTS,
IF ANY SUCH PAYMENTS ARE REQUIRED BY SECTIONS 1.4 AND 1.5, AND WILL SERVE AS ONE
SOURCE, BUT NOT THE EXCLUSIVE SOURCE, FOR THE SATISFACTION OF ANY
INDEMNIFICATION OR OTHER CLAIMS OF ANY BUYER PARTY PURSUANT TO ARTICLE 6 (THE
“HOLDBACK FUND”).  ON THE DATE THAT IS TWELVE (12) MONTHS FOLLOWING THE CLOSING
DATE, PROVIDED THAT NO BUYER PARTY HAS ANY CLAIM FOR INDEMNIFICATION PURSUANT TO
ARTICLE 6 HEREOF, ANY REMAINING HOLDBACK AMOUNT SHALL BE RELEASED TO THE SELLER
SHAREHOLDERS FROM THE HOLDBACK FUND.

 

(E)                                  CLOSING DELIVERIES.  AT THE CLOSING,
SUBJECT TO AND ON THE TERMS AND CONDITIONS SET FORTH IN THIS AGREEMENT: (A) THE
BUYER SHALL DELIVER TO THE COMPANY OR SELLER SHAREHOLDERS, AS APPROPRIATE, EACH
OF THE DOCUMENTS REQUIRED TO BE DELIVERED BY THE BUYER PURSUANT TO SECTION 5.2
THAT HAS

 

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NOT BEEN DELIVERED PRIOR TO THE CLOSING DATE; AND (B) THE COMPANY AND THE SELLER
SHAREHOLDERS SHALL DELIVER TO THE BUYER EACH OF THE DOCUMENTS REQUIRED TO BE
DELIVERED BY SUCH PARTIES PURSUANT TO SECTION 5.1 THAT HAS NOT BEEN DELIVERED
PRIOR TO THE CLOSING DATE.

 

1.3                                 Working Capital Adjustment.

 

(A)                                  NOT MORE THAN FIVE (5) BUSINESS DAYS, BUT
AT LEAST ONE (1) BUSINESS DAY, PRIOR TO THE CLOSING DATE, THE SELLER
SHAREHOLDERS SHALL IN GOOD FAITH CAUSE TO BE PREPARED A BALANCE SHEET OF THE
COMPANY AS OF THE CLOSING DATE, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO
BUYER (THE “CLOSING DATE BALANCE SHEET”), WHICH SHALL BE PREPARED IN A MANNER
CONSISTENT WITH THE LATEST BALANCE SHEET AND SHALL INCLUDE A STATEMENT OF THE
AMOUNT OF WORKING CAPITAL WHICH IT ESTIMATES WILL EXIST AS OF THE CLOSE OF
BUSINESS ON THE DAY IMMEDIATELY PRECEDING THE CLOSING DATE DETERMINED FOR
ACCOUNTING AND TAX PURPOSES AS IF SUCH DATE WERE THE END OF THE FISCAL YEAR
TOGETHER WITH A REPRESENTATION THAT SUCH AMOUNT WAS DETERMINED IN ACCORDANCE
WITH GAAP (THE “ESTIMATED WORKING CAPITAL”).

 

(B)                                 AS PROMPTLY AS PRACTICABLE, BUT NO LATER
THAN 60 DAYS FOLLOWING THE LAST DAY OF THE MONTH IN WHICH THE CLOSING DATE
FALLS, BUYER WILL CAUSE TO BE PREPARED AND DELIVERED TO THE SELLER SHAREHOLDERS
A CERTIFICATE SETTING FORTH BUYER’S CALCULATION OF EACH COMPONENT OF CLOSING
WORKING CAPITAL.  “CLOSING WORKING CAPITAL” MEANS THE WORKING CAPITAL AS OF THE
CLOSE OF BUSINESS ON THE DAY PRECEDING THE CLOSING DATE BE PREPARED IN
ACCORDANCE WITH GAAP.  BUYER WILL MAKE AVAILABLE TO THE SELLER SHAREHOLDERS AND
THEIR ACCOUNTANT ALL RECORDS AND WORK PAPERS USED IN PREPARING THE CALCULATION
OF CLOSING WORKING CAPITAL.

 

(C)                                  IF THE SELLER SHAREHOLDERS DISAGREE WITH
BUYER’S CALCULATION OF CLOSING WORKING CAPITAL DELIVERED PURSUANT TO
SECTION 1.3(B), THE SELLER SHAREHOLDERS MAY, WITHIN 10 DAYS AFTER DELIVERY OF
THE DOCUMENTS REFERRED TO IN SECTION 1.3(B), DELIVER A WRITTEN NOTICE (THE
“OBJECTION NOTICE”) TO BUYER DISAGREEING WITH SUCH CALCULATION AND SETTING FORTH
THE SELLER SHAREHOLDERS’ CALCULATION OF SUCH AMOUNT.  ANY SUCH OBJECTION NOTICE
SHALL SPECIFY THOSE ITEMS OR AMOUNTS AS TO WHICH THE SELLER SHAREHOLDERS
DISAGREE, AND THE SELLER SHAREHOLDERS SHALL BE DEEMED TO HAVE AGREED WITH ALL
OTHER ITEMS AND AMOUNTS CONTAINED IN BUYER’S CALCULATION OF CLOSING WORKING
CAPITAL DELIVERED PURSUANT TO SECTION 1.3(B).  IF THE SELLER SHAREHOLDERS DO NOT
DELIVER AN OBJECTION NOTICE WITHIN SUCH 10 DAY PERIOD, THEN THE AMOUNT OF
CLOSING WORKING CAPITAL SHALL BE DEEMED TO BE FINALLY DETERMINED AS SET FORTH ON
BUYER’S CALCULATION THEREOF.

 

(D)                                 IF AN OBJECTION NOTICE SHALL BE DELIVERED
PURSUANT TO SECTION 1.3(C), THE SELLER SHAREHOLDERS AND BUYER SHALL, DURING THE
15 DAYS FOLLOWING SUCH DELIVERY, USE THEIR REASONABLE BEST EFFORTS TO REACH
AGREEMENT ON THE DISPUTED ITEMS OR AMOUNTS IN ORDER TO DETERMINE, AS MAY BE
REQUIRED, THE AMOUNT OF CLOSING WORKING CAPITAL, WHICH AMOUNT SHALL NOT BE LESS
THAN THE AMOUNT THEREOF SHOWN IN BUYER’S CALCULATIONS DELIVERED PURSUANT TO
SECTION 1.3(B), NOR MORE THAN THE AMOUNT THEREOF SHOWN IN THE SELLER
SHAREHOLDERS’ CALCULATION DELIVERED PURSUANT TO SECTION 1.3(C).  IF, DURING SUCH
PERIOD, THE SELLER SHAREHOLDERS AND BUYER ARE UNABLE TO REACH SUCH AGREEMENT,
THEY SHALL PROMPTLY THEREAFTER CAUSE ERNST & YOUNG OR ANOTHER “BIG FOUR”
INDEPENDENT ACCOUNTING FIRM OF NATIONALLY RECOGNIZED STANDING REASONABLY
SATISFACTORY TO THE SELLER SHAREHOLDERS AND BUYER (WHO SHALL NOT HAVE ANY
MATERIAL RELATIONSHIP WITH THE COMPANY, THE SELLER SHAREHOLDERS OR BUYER)
PROMPTLY TO REVIEW THIS AGREEMENT AND THE DISPUTED ITEMS OR AMOUNTS FOR THE
PURPOSE OF CALCULATING CLOSING WORKING CAPITAL.  IN MAKING SUCH CALCULATION,
SUCH INDEPENDENT ACCOUNTANTS SHALL CONSIDER ONLY THOSE ITEMS OR AMOUNTS IN THE
CLOSING DATE BALANCE SHEET OR BUYER’S CALCULATION OF CLOSING WORKING CAPITAL AS
TO WHICH THE SELLER SHAREHOLDERS HAVE DISAGREED.  THE INDEPENDENT ACCOUNTANT’S
DETERMINATION WILL BE BASED SOLELY ON PRESENTATIONS BY THE SELLER SHAREHOLDERS
AND BUYER AND SUCH INDEPENDENT ACCOUNTANTS SHALL DELIVER TO THE SELLER
SHAREHOLDERS AND BUYER AS PROMPTLY AS PRACTICABLE (BUT IN ANY EVENT WITHIN
THIRTY (30) DAYS OF ITS RETENTION) A REPORT SETTING FORTH SUCH CALCULATION (SUCH
DATE, THE “FINAL RESOLUTION DATE”).  SUCH REPORT SHALL BE FINAL AND BINDING UPON
THE

 

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SELLER SHAREHOLDERS AND BUYER.  THE COST OF SUCH REVIEW AND REPORT SHALL BE
BORNE BY THE SELLER SHAREHOLDERS IF THE DIFFERENCE BETWEEN FINAL WORKING CAPITAL
(AS DEFINED IN SECTION 1.4(C) BELOW) AND THE SELLER SHAREHOLDERS’ CALCULATION OF
CLOSING WORKING CAPITAL DELIVERED PURSUANT TO SECTION 1.3(C) IS GREATER THAN THE
DIFFERENCE BETWEEN FINAL WORKING CAPITAL AND BUYER’S CALCULATION OF CLOSING
WORKING CAPITAL DELIVERED PURSUANT TO SECTION 1.3(B), AND BY BUYER IF THE FIRST
SUCH DIFFERENCE IS LESS THAN THE SECOND SUCH DIFFERENCE.

 

1.4                                 The Post-Closing Adjustment Payments.

 

(A)                                  BUYER AND THE SELLER SHAREHOLDERS AGREE
THAT THEY WILL, AND AGREE TO CAUSE THEIR RESPECTIVE INDEPENDENT ACCOUNTANTS TO
COOPERATE AND ASSIST IN THE PREPARATION OF THE CLOSING DATE BALANCE SHEET AND
THE CALCULATION OF CLOSING WORKING CAPITAL AND IN THE CONDUCT OF THE REVIEWS
REFERRED TO IN SECTION 1.3 INCLUDING WITHOUT LIMITATION, THE MAKING AVAILABLE TO
THE EXTENT NECESSARY OF BOOKS, WRITTEN AND ELECTRONIC RECORDS, WORK PAPERS AND
PERSONNEL.

 

(B)                                 IF THE FINAL WORKING CAPITAL IS LESS THAN
THE TARGET WORKING CAPITAL, THE SELLER SHAREHOLDERS SHALL, WITHIN 5 DAYS AFTER
THE FINAL RESOLUTION DATE, DELIVER TO BUYER A NOTICE OF THE AGGREGATE AMOUNT BY
WHICH THE FINAL WORKING CAPITAL IS LESS THAN THE TARGET WORKING CAPITAL WITH A
REQUEST TO RELEASE THE AGGREGATE AMOUNT FROM THE HOLDBACK FUND.

 

(C)                                  IF THE FINAL WORKING CAPITAL EXCEEDS THE
TARGET WORKING CAPITAL, BUYER SHALL, WITHIN 5 DAYS AFTER THE FINAL RESOLUTION
DATE, DELIVER TO THE SELLER SHAREHOLDERS A CASHIER’S OR CERTIFIED CHECK, OR WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO THE ACCOUNT DESIGNATED BY THE SELLER
SHAREHOLDERS, IN AN AGGREGATE AMOUNT BY WHICH THE FINAL WORKING CAPITAL EXCEEDS
THE TARGET WORKING CAPITAL.  “FINAL WORKING CAPITAL” MEANS CLOSING WORKING
CAPITAL AS SHOWN IN BUYER’S CALCULATION DELIVERED PURSUANT TO SECTION 1.3(B), IF
NO OBJECTION NOTICE WITH RESPECT THERETO IS DULY DELIVERED PURSUANT TO
SECTION 1.3(C); OR, IF AN OBJECTION NOTICE IS DELIVERED, AS AGREED BY BUYER AND
THE SELLER SHAREHOLDERS PURSUANT TO SECTION 1.3(D) OR IN THE ABSENCE OF SUCH
AGREEMENT, AS SHOWN IN THE INDEPENDENT ACCOUNTANTS’ CALCULATION DELIVERED
PURSUANT TO SECTION 1.3(D); PROVIDED THAT, IN NO EVENT SHALL FINAL WORKING
CAPITAL BE LESS THAN BUYER’S CALCULATION OF CLOSING WORKING CAPITAL DELIVERED
PURSUANT TO SECTION 1.3(B), OR MORE THAN THE SELLER SHAREHOLDERS’ CALCULATION OF
CLOSING WORKING CAPITAL DELIVERED PURSUANT TO SECTION 1.3(C).

 

1.5                                 Post-Closing Contingent Purchase Price
Adjustments.

 

(A)                                  WITHIN SIXTY (60) DAYS AFTER DECEMBER 31,
2009, BUYER SHALL PREPARE AND DELIVER TO THE SELLER SHAREHOLDERS BUYER’S
CALCULATION OF THE COMPANY’S AND ITS SUBSIDIARIES’ CONSOLIDATED ACTUAL CALENDAR
YEAR 2009 GAAP REVENUE (THE “CY2009 REVENUE”) AS PREPARED IN COMPLIANCE WITH
SCHEDULE 1.5(A).

 

(B)                                 THE PURCHASE PRICE SHALL BE ADJUSTED UPWARD
BY UP TO $500,000.00 IN THE EVENT THAT THE COMPANY’S CY2009 REVENUE AND GAAP
OPERATING MARGIN MEET OR EXCEED THE THRESHOLDS SET FORTH ON SCHEDULE 1.5(B), OR
DOWNWARD IF THE CY2009 REVENUE IS BELOW THE THRESHOLD SET FORTH ON SCHEDULE
1.5(B).

 

(C)                                  THE POST-CLOSING ADJUSTMENT TO THE PURCHASE
PRICE, IF ANY, PAYABLE BY SELLER SHAREHOLDERS TO BUYER, PURSUANT TO THIS
SECTION 1.5 SHALL BE SUBJECT TO NOTICE TO THE BUYER TO RELEASE SUCH AMOUNTS FROM
THE HOLDBACK AMOUNT.  IN ADDITION, THE POST-CLOSING ADJUSTMENT TO THE PURCHASE
PRICE, IF ANY, PAYABLE BY BUYER TO SELLER SHAREHOLDERS SHALL BE PAID IN CASH TO
THE SELLER SHAREHOLDERS IN ACCORDANCE WITH THEIR PRO RATA PORTION, AS SET FORTH
ON SCHEDULE 2.2.  FOR THE AVOIDANCE OF DOUBT, ANY PAYMENTS MADE TO THE SELLER
SHAREHOLDERS PURSUANT TO THIS SECTION 1.5 ARE NOT INTENDED TO BE DEEMED

 

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COMPENSATION.  SUCH PAYMENTS SHALL BE MADE IN IMMEDIATELY AVAILABLE FUNDS BY
WIRE TRANSFER WITHIN TWENTY (20) BUSINESS DAYS OF DELIVERY OF THE CY2009 REVENUE
STATEMENT, BUT IN NO EVENT LATER THAN SEVENTY-FIVE (75) CALENDAR DAYS FROM
DECEMBER 31, 2009, UNLESS SELLER SHAREHOLDERS DISPUTE ANY ITEMS ON THE CY2009
REVENUE STATEMENT, IN WHICH CASE (I) ANY PAYMENTS THAT ARE NOT SUBJECT TO
DISPUTE SHALL BE MADE IN IMMEDIATELY AVAILABLE FUNDS BY WIRE TRANSFER WITHIN
TWENTY (20) BUSINESS DAYS OF DELIVERY OF THE CY2009 REVENUE STATEMENT AND
(II) ANY PAYMENTS THAT ARE SUBJECT TO DISPUTE SHALL BE PAID WITHIN TWENTY (20)
BUSINESS DAYS AFTER BUYER AND THE SELLER SHAREHOLDERS HAVE RESOLVED SUCH
DISPUTED ITEMS TO THEIR MUTUAL SATISFACTION.

 

1.6                                 Holdback Amount Adjustments.  To the extent
that Buyer is required to make payments to the Seller Shareholders pursuant to
Sections 1.4 or 1.5 above, then the Holdback Amount shall be proportionately
adjusted by Buyer in connection with any post-closing adjustments to the
Purchase Price made pursuant to Sections 1.4 or 1.5 hereof, such that following
any such payments the Holdback Amount shall equal ten percent (10%) of the
Purchase Price as adjusted pursuant to Sections 1.4 and 1.5 of this Agreement.

 

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER SHAREHOLDERS

 

As a material inducement to Buyer to enter into and perform its obligations
under this Agreement, the Company and the Seller Shareholders jointly and
severally represent and warrant to Buyer that the statements contained in this
Article 2 are true and correct as of the Closing Date.

 

2.1                                 Organization; Corporate Power and Licenses
of the Company.  Insource Holdings, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Connecticut, which is the only jurisdiction in which its ownership of property
or conduct of business requires it to be qualified.  Insource Holdings, Inc. is
and has been since its inception a holding company without employees,
operations, real property or other assets other than (i) minimal cash and
(ii) equity of InSource, LLC and AlfaSource, LLC.  The Company possesses all
requisite corporate power and authority and all licenses, permits and
authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and to carry out the transactions contemplated by
this Agreement and the Transaction Documents.  Copies of the Company’s
certificate of formation and organizational documents, previously provided to
Buyer, reflect all amendments made thereto at any time prior to the Closing Date
and are correct and complete.

 

2.2                                 Capitalization and Related Matters.  As of
the Closing, the Securities shall consist of the number of authorized shares of
common stock and the number of issued and outstanding shares of common stock
held beneficially and of record by the Seller Shareholders as set out on
Schedule 2.2 hereto.  Except for the Securities, Insource Holdings, Inc. shall
not have outstanding any common stock or preferred stock or other equity
securities or securities convertible or exchangeable for any Securities or
containing any profit participation features, nor shall it have outstanding any
rights or options to subscribe for or to purchase any Securities or any
securities convertible into or exchangeable for any Securities or any equity
appreciation rights or phantom equity plans.  As of the Closing, all of the
Securities shall be validly issued, fully paid and nonassessable and free and
clear of any Liens.  Immediately after the Closing, Buyer shall own such amount
of the outstanding Securities, free and clear of any Liens, as set out on
Schedule 2.2 hereto.  There are no statutory or contractual equityholder
preemptive rights or rights of refusal with respect to the Securities.  The
Company has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its equity securities. 
There are no agreements with respect to the voting or transfer of the
Securities.  All of the Securities are owned

 

5

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(beneficially and of record) by the Seller Shareholders.  No former shareholder
of the Company has any claim or rights against the Company that remains
unresolved or to which the Company has or may have (now or in the future) any
Liability.

 

2.3                                 Subsidiaries: Investments.  All of Insource
Holdings, Inc.’s Subsidiaries and investments in other Persons of any kind are
listed on Schedule 2.3.  Except as set forth on Schedule 2.3, Insource
Holdings, Inc. owns directly each of the outstanding shares of capital stock or
other equity interest of each Subsidiary, free and clear of any encumbrances. 
Each Subsidiary is a corporation or limited liability company duly incorporated
or organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization.  Each Subsidiary does not own
directly or indirectly any interest or investments in any Person of any kind. 
Each Subsidiary is duly qualified to do business and is in good standing as a
foreign corporation in the jurisdictions listed on Schedule 2.3.

 

2.4                                 Authorization: No Breach.  Each Seller
Shareholder has the power and authority to enter into this Agreement and to
carry out his, her or its obligations hereunder.  The execution and delivery of
this Agreement and the performance by such Seller Shareholder of his, her or its
obligations hereunder have been duly authorized, and no other proceedings on the
part of such Seller Shareholder are necessary to authorize such execution,
delivery and performance.  This Agreement has been duly executed by such Seller
Shareholder and constitutes the valid and legally binding obligation of such
Seller Shareholder enforceable against such Seller Shareholder in accordance
with its terms.  The execution, delivery and performance of the Transaction
Documents to which the Company and the Seller Shareholders are a party have been
duly authorized by the Company and the Seller Shareholders, as the case may be. 
Each Transaction Document to which the Company or the Seller Shareholders are a
party constitutes a valid and binding obligation of such Person, enforceable in
accordance with its terms.  Except as set forth on the attached Schedule 2.21,
the execution and delivery by the Company and the Seller Shareholders of this
Agreement, and all other Transaction Documents to which such Person is a party,
and the fulfillment of and compliance with the respective terms hereof and
thereof, do not and shall not (i) conflict with or result in a breach of the
terms, conditions or provisions of, (ii) constitute a default under,
(iii) result in the creation of any Lien upon the Securities or any asset or
property of the Company pursuant to, (iv) give any third party the right to
modify, terminate or accelerate any obligation under, (v) result in a violation
of, or (vi) require any exemption or other action by or notice or declaration
to, or filing with, or other Consent from, any Governmental Entity pursuant to,
the charter or bylaws or equivalent governing document of the Company or any
Legal Requirement to which the Company or the Seller Shareholders or any of
their Affiliates or any of their assets or properties is subject, or any
Contract, order, judgment or decree to which the Company or the Seller
Shareholders or any of their Affiliates or any of their assets or properties is
subject.

 

2.5                                 Financial Statements.  Attached hereto as
Schedule 2.5 are copies of InSource, LLC’s (i) unaudited consolidated balance
sheet as of September 30, 2009 (the “Latest Balance Sheet”) and the related
statements of income and cash flows for the 9-month period then ended and
(ii) reviewed consolidated balance sheets and related statements of income and
cash flows for the fiscal years ended December 31, 2008, 2007 and 2006.  Each of
the foregoing financial statements (including in all cases the notes thereto, if
any) is accurate and complete in all respects, is consistent with the books and
records of the Company (which, in turn, are accurate and complete in all
respects) and has been prepared in accordance with GAAP, and presents fairly the
financial condition, results of operations, shareholders’ equity and cash flows
of the Company as of the dates and for the periods referred to therein in
accordance with GAAP.  Since the date of the Latest Balance Sheet, there has not
been any adverse change in the business, financial condition, operating results,
assets, Liabilities, operations, applicable regulations, customer, supplier,
employee or sales representative or distributor relations or business prospects
of the Company.

 

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(A)                                  THE ACCOUNTS RECEIVABLE OF THE COMPANY AS
SET FORTH ON THE LATEST BALANCE SHEET OR ARISING SINCE THE DATE THEREOF ARE
VALID AND GENUINE; AND HAVE ARISEN SOLELY OUT OF BONA FIDE SALES AND DELIVERIES
OF GOODS, PERFORMANCE OF SERVICES AND OTHER BUSINESS TRANSACTIONS IN THE
ORDINARY COURSE OF BUSINESS.

 

(B)                                 THE COMPANY HAS DESIGNED AND MAINTAINS SUCH
INTERNAL ACCOUNTING CONTROLS AND PROCEDURES AS ARE REASONABLY NECESSARY TO
PROVIDE ASSURANCE REGARDING THE RELIABILITY OF THE CONSOLIDATED FINANCIAL
STATEMENTS OF INSOURCE, LLC, INCLUDING CONTROLS AND PROCEDURES THAT PROVIDE
REASONABLE ASSURANCE THAT (I) THE FINANCIAL RECORDS AND FINANCIAL STATEMENTS ARE
COMPLETE AND ACCURATE IN ALL RESPECTS; (II) TRANSACTIONS ARE EXECUTED IN
ACCORDANCE WITH MANAGEMENT’S SPECIFIC AUTHORIZATION WHERE SUCH AUTHORIZATION IS
REQUIRED; (III) TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION OF
THE CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY AND TO MAINTAIN
ACCOUNTABILITY FOR ASSETS AND LIABILITIES OF THE COMPANY; (IV) ACCESS TO THE
ASSETS OF THE COMPANY IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S
AUTHORIZATION; (V) THE REPORTING OF THE ASSETS AND LIABILITIES OF THE COMPANY IS
COMPARED WITH THE EXISTING ASSETS AND LIABILITIES OF THE COMPANY AT REGULAR
INTERVALS; AND (VI) ACCOUNTS, NOTES AND OTHER RECEIVABLES ARE RECORDED
ACCURATELY AND PROPER AND ADEQUATE PROCEDURES ARE IMPLEMENTED TO EFFECT THE
COLLECTION THEREOF ON A CURRENT AND TIMELY BASIS.

 

2.6                                 Absence of Undisclosed Liabilities.  The
Company has no Liability and, to the Seller Parties’ Knowledge, there is no
basis for any proceeding, hearing, investigation, charge, complaint or claim
with respect to any Liability, except for (i) Liabilities reflected on the face
of the Latest Balance Sheet and (ii) Liabilities of the type reflected on the
face of the Latest Balance Sheet which have arisen since the date of the Latest
Balance Sheet in the ordinary course of business (none of which relates to
breach of Contract, breach of warranty, tort, infringement, violation of or
Liability under any Legal Requirements, or any action, suit or proceeding and
all of which will be reflected in Closing Working Capital).  Except as set forth
on the attached Schedule 2.6, the Company has no outstanding Indebtedness.

 

2.7                                 Assets.  All of the Company’s assets are
located at the premises disclosed on Schedule 2.19(b). Except as set forth on
the attached Schedule 2.7(a), the Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets, tangible or intangible,
used by it, located on its premises or, if applicable, shown on the Latest
Balance Sheet or acquired thereafter, free and clear of all Liens, except for
Liens for current property taxes not yet due and payable (“Permitted Liens”). 
Except as described on the attached Schedule 2.7(b), the Company’s equipment and
other tangible assets are in good operating condition (normal wear and tear
excepted) and are fit in all respects for use in the ordinary course of
business.  Except as described on the attached Schedule 2.7(c), the Company
owns, or has a valid leasehold interest in, all properties and assets necessary
or desirable for the conduct of its businesses as presently conducted and as
previously proposed to be conducted.

 

2.8                                 Tax Matters.

 

(A)                                  THE COMPANY HAS TIMELY FILED ALL TAX
RETURNS REQUIRED TO BE FILED BY IT, EACH SUCH TAX RETURN HAS BEEN PREPARED IN
COMPLIANCE WITH ALL LEGAL REQUIREMENTS, AND ALL SUCH TAX RETURNS ARE COMPLETE
AND ACCURATE IN ALL RESPECTS.  ALL TAXES DUE AND PAYABLE BY THE COMPANY (WHETHER
OR NOT SHOWN ON ANY TAX RETURN) HAVE BEEN PAID.  THE UNPAID TAXES OF THE COMPANY
(A) DID NOT, AS OF THE END OF THE MOST RECENT FISCAL MONTH, EXCEED THE RESERVE
FOR TAX LIABILITY (RATHER THAN ANY RESERVE FOR DEFERRED TAXES ESTABLISHED TO
REFLECT TIMING DIFFERENCES BETWEEN BOOK AND TAX INCOME) SET FORTH ON THE FACE OF
THE LATEST BALANCE SHEET (RATHER THAN IN ANY NOTES THERETO) AND (B) DO NOT
EXCEED THAT RESERVE AS ADJUSTED FOR THE PASSAGE OF TIME THROUGH THE CLOSING DATE
IN ACCORDANCE WITH THE PAST CUSTOM AND PRACTICE OF COMPANY IN FILING ITS TAX
RETURNS. SINCE THE DATE OF THE LATEST BALANCE SHEET, NEITHER THE COMPANY NOR ANY
OF ITS SUBSIDIARIES HAS INCURRED ANY LIABILITY FOR TAXES ARISING FROM
EXTRAORDINARY GAINS OR LOSSES, AS

 

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THAT TERM IS USED IN GAAP, OUTSIDE THE ORDINARY COURSE OF BUSINESS CONSISTENT
WITH PAST CUSTOM AND PRACTICE.

 

(I)                                     THE COMPANY HAS COMPLIED IN ALL RESPECTS
WITH ALL STATUTORY PROVISIONS, RULES, REGULATIONS, ORDERS AND DIRECTIONS IN
RESPECT OF VALUED ADDED OR SIMILAR TAX ON CONSUMPTION, HAS PROMPTLY SUBMITTED
ACCURATE RETURNS, MAINTAINS FULL AND ACCURATE RECORDS AND HAS NOT BEEN SUBJECT
TO ANY INTEREST, FORFEITURE, SURCHARGE OR PENALTY.

 

(II)                                  THERE HAVE BEEN AND ARE NO CIRCUMSTANCES
OR TRANSACTIONS TO WHICH THE COMPANY HAS OR HAS BEEN A PARTY SUCH THAT A
LIABILITY TO TAX ON ANY DOCUMENTS OR INSTRUMENTS OF TRANSFER ON WHICH THE
COMPANY MUST RELY ON TO ENFORCE ANY RIGHT IS OR COULD BECOME PAYABLE BY THE
COMPANY AND ALL TAXES DUE AND PAYABLE BY THE COMPANY HAVE BEEN PAID AND ALL SUMS
WHICH THE COMPANY OR ITS SUBSIDIARY WAS LIABLE TO WITHHOLD HAVE BEEN WITHHELD.

 

(B)                                 EXCEPT AS SET FORTH IN
SCHEDULE 2.8(B) ATTACHED HERETO:

 

(I)                                     NEITHER THE COMPANY NOR ANY MEMBER OF
ITS AFFILIATED GROUP HAS CONSENTED TO EXTEND THE TIME IN WHICH ANY TAX MAY BE
ASSESSED OR COLLECTED BY ANY TAXING AUTHORITY;

 

(II)                                  THE COMPANY HAS NOT PAID OR BECOME LIABLE
TO PAY ANY PENALTY, FINE, OR SURCHARGE IN RELATION TO TAX;

 

(III)                               NO DEFICIENCY OR PROPOSED ADJUSTMENT, WHICH
HAS NOT BEEN SETTLED OR OTHERWISE RESOLVED, FOR ANY AMOUNT OF TAX HAS BEEN
PROPOSED, ASSERTED OR ASSESSED BY ANY TAXING AUTHORITY AGAINST THE COMPANY;

 

(IV)                              THERE IS NO ACTION, SUIT, TAXING AUTHORITY
PROCEEDING OR AUDIT NOW IN PROGRESS; PENDING OR THREATENED AGAINST OR WITH
RESPECT TO THE COMPANY;

 

(V)                                 THE COMPANY WILL NOT BE REQUIRED TO INCLUDE
ANY AMOUNT IN TAXABLE INCOME OR EXCLUDE ANY ITEM OF DEDUCTION OR LOSS FROM
TAXABLE INCOME FOR ANY TAXABLE PERIOD (OR PORTION THEREOF) ENDING AFTER THE
CLOSING DATE (A) AS A RESULT OF A CHANGE IN METHOD OF ACCOUNTING FOR A TAXABLE
PERIOD ENDING ON OR PRIOR TO THE CLOSING DATE, (B) AS A RESULT OF ANY “CLOSING
AGREEMENT,” AS DESCRIBED IN CODE SECTION 7121 (OR ANY CORRESPONDING PROVISION OF
STATE, LOCAL OR FOREIGN INCOME TAX LAW) ENTERED INTO ON OR PRIOR TO THE CLOSING
DATE, (C) AS A RESULT OF ANY SALE REPORTED ON THE INSTALLMENT METHOD WHERE SUCH
SALE OCCURRED ON OR PRIOR TO THE CLOSING DATE, (D) AS A RESULT OF ANY PREPAID
AMOUNT RECEIVED ON OR PRIOR TO THE CLOSING DATE, (E) AS A RESULT OF ANY
INTERCOMPANY TRANSACTION OR EXCESS LOSS ACCOUNT DESCRIBED IN TREASURY
REGULATIONS UNDER CODE §1502 (OR ANY CORRESPONDING OR SIMILAR PROVISION OF
STATE, LOCAL, OR NON-U.S. INCOME TAX LAW), AND (F) AS A RESULT OF ANY ELECTION
UNDER CODE SECTION 108(I).

 

(VI)                              THE COMPANY HAS NO LIABILITY FOR THE PAYMENT
OF TAXES OF ANY OTHER PERSON, INCLUDING A LIABILITY OF THE COMPANY FOR THE
PAYMENT OF ANY TAX ARISING (A) AS A RESULT OF ANY EXPRESSED OR IMPLIED
OBLIGATION TO INDEMNIFY ANOTHER PERSON, AND (B) AS A RESULT OF THE COMPANY
ASSUMING OR SUCCEEDING TO THE TAX LIABILITY OF ANY OTHER PERSON AS A SUCCESSOR,
TRANSFEREE OR OTHERWISE;

 

(VII)                           THERE ARE NO LIENS FOR TAXES (OTHER THAN FOR
CURRENT TAXES NOT YET DUE AND PAYABLE) UPON THE ASSETS OF THE COMPANY;

 

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(VIII)                        THE COMPANY DOES NOT EXPECT ANY TAXING AUTHORITY
TO CLAIM OR ASSESS ANY AMOUNT OF ADDITIONAL TAXES AGAINST THE COMPANY;

 

(IX)                                NO CLAIM HAS EVER BEEN MADE BY A TAXING
AUTHORITY IN A JURISDICTION WHERE THE COMPANY DOES NOT FILE TAX RETURNS THAT THE
COMPANY IS OR MAY BE SUBJECT TO TAXES ASSESSED BY SUCH JURISDICTION;

 

(X)                                   THE COMPANY HAS NOT MADE ANY PAYMENT, AND
IS NOT AND WILL NOT BECOME OBLIGATED (UNDER ANY CONTRACT ENTERED INTO ON OR
BEFORE THE CLOSING DATE) TO MAKE ANY PAYMENT, THAT WILL BE NON-DEDUCTIBLE UNDER
SECTION 280G OF THE CODE (OR ANY CORRESPONDING PROVISION OF STATE, LOCAL OR
FOREIGN INCOME TAX LAW);

 

(XI)                                BUYER WILL NOT BE REQUIRED TO DEDUCT AND
WITHHOLD ANY AMOUNT PURSUANT TO SECTION 1445(A) OF THE CODE UPON THE TRANSFER OF
ANY CASH OR PROPERTY PURSUANT TO THIS AGREEMENT;

 

(XII)                             THE COMPANY HAS BEEN A VALIDLY ELECTING S
CORPORATION WITHIN THE MEANING OF CODE SECTIONS 1361 AND 1362 AT ALL TIMES
DURING ITS EXISTENCE AND THE COMPANY WILL BE AN S CORPORATION UP TO AND
INCLUDING THE CLOSING DATE.

 

(XIII)                          SCHEDULE 2.8(B) IDENTIFIES EACH SUBSIDIARY OF
THE COMPANY THAT IS A “QUALIFIED SUBCHAPTER S SUBSIDIARY” WITHIN THE MEANING OF
CODE SECTION 1361(B)(3)(B).  EACH SUBSIDIARY OF THE COMPANY SO IDENTIFIED HAS
BEEN A QUALIFIED SUBCHAPTER S SUBSIDIARY AT ALL TIMES SINCE THE DATE SHOWN ON
SUCH SCHEDULE UP TO AND INCLUDING THE CLOSING DATE.

 

(XIV)                         THE COMPANY SHALL NOT BE LIABLE FOR ANY TAX UNDER
SECTION 1374 OF THE CODE IN CONNECTION WITH THE DEEMED SALE OF THE COMPANY’S
ASSETS (INCLUDING THE ASSETS OF ANY QUALIFIED SUBCHAPTER S SUBSIDIARY) CAUSED BY
THE SECTION 338(H)(10) ELECTION.  NEITHER THE COMPANY NOR ANY QUALIFIED
SUBCHAPTER S SUBSIDIARY OF THE COMPANY HAS, IN THE PAST 7 YEARS (A) ACQUIRED
ASSETS FROM ANOTHER CORPORATION IN A TRANSACTION IN WHICH THE COMPANY’S TAX
BASIS FOR THE ACQUIRED ASSETS WAS DETERMINED, IN WHOLE OR IN PART, BY REFERENCE
TO THE TAX BASIS OF THE ACQUIRED ASSETS (OR ANY OTHER PROPERTY) IN THE HANDS OF
THE TRANSFEROR OR (B) ACQUIRED THE STOCK OF ANY CORPORATION THAT IS A QUALIFIED
SUBCHAPTER S SUBSIDIARY.

 

2.9                                 Contracts and Commitments.

 

(A)                                  EXCEPT AS SET FORTH ON THE ATTACHED
SCHEDULE 2.9(A), THE COMPANY IS NOT A PARTY TO OR BOUND BY ANY WRITTEN OR ORAL:

 

(I)                                     COLLECTIVE BARGAINING AGREEMENT OR OTHER
CONTRACT WITH ANY LABOR UNION;

 

(II)                                  MANAGEMENT AGREEMENT OR OTHER CONTRACT FOR
THE EMPLOYMENT OF ANY OFFICER, INDIVIDUAL EMPLOYEE OR OTHER PERSON ON A FULL
TIME, PART-TIME OR CONSULTING BASIS OR PROVIDING FOR THE PAYMENT OF ANY CASH OR
OTHER COMPENSATION OR BENEFITS IN CONNECTION WITH THE SALE OF ALL OR A MATERIAL
PORTION OF ITS ASSETS OR A CHANGE OF CONTROL (OTHER THAN AT-WILL EMPLOYMENT
AGREEMENTS WITH ITS EMPLOYEES WHICH DO NOT COMMIT THE COMPANY OR ITS
SUBSIDIARIES TO SEVERANCE, TERMINATION OR OTHER SIMILAR PAYMENTS);

 

(III)                               CONTRACT RELATING TO INDEBTEDNESS (INCLUDING
ANY LETTER OF CREDIT ARRANGEMENTS AND GUARANTEES OF ANY OBLIGATIONS) OR TO THE
MORTGAGING, PLEDGING OR OTHERWISE PLACING A LIEN ON ANY OF ITS ASSETS OR ANY OF
ITS EQUITY SECURITIES;

 

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(IV)                              CONTRACT, INCLUDING, BUT NOT LIMITED TO,
PURCHASE ORDERS, FOR THE PURCHASE, SALE, DISTRIBUTION OR MARKETING OF RAW
MATERIALS, COMMODITIES, SUPPLIES, PRODUCTS OR OTHER PERSONAL PROPERTY OR FOR THE
FURNISHING OR RECEIPT OF SERVICES WHICH EITHER CALLS FOR PERFORMANCE OVER A
PERIOD OF MORE THAN ONE YEAR OR INVOLVES CONSIDERATION IN EXCESS OF $50,000 PER
YEAR OR $100,000 IN THE AGGREGATE;

 

(V)                                 CONTRACT WHICH PROHIBITS IT FROM FREELY
ENGAGING IN BUSINESS ANYWHERE IN THE WORLD WITHOUT ANY LIMITATION OR ADVERSE
CONSEQUENCES;

 

(VI)                              CONTRACT UNDER WHICH IT HAS ADVANCED OR LOANED
ANY OTHER PERSON ANY AMOUNTS;

 

(VII)                           CONTRACT UNDER WHICH IT IS LESSEE OF OR HOLDS OR
OPERATES ANY PROPERTY, REAL OR PERSONAL, OWNED BY ANY OTHER PARTY WHICH INVOLVES
ANNUAL RENTAL PAYMENTS OF GREATER THAN $50,000 OR GROUP OF SUCH CONTRACTS WITH
THE SAME PERSON WHICH INVOLVE CONSIDERATION IN EXCESS OF $100,000 IN THE
AGGREGATE;

 

(VIII)                        CONTRACT UNDER WHICH IT IS LESSOR OF OR PERMITS
ANY THIRD PARTY TO HOLD OR OPERATE ANY PROPERTY, REAL OR PERSONAL, OWNED OR
CONTROLLED BY IT WHICH INVOLVES CONSIDERATION IN EXCESS OF $50,000;

 

(IX)                                LICENSE, INDEMNIFICATION OR OTHER CONTRACT
WITH RESPECT TO ANY INTANGIBLE PROPERTY (INCLUDING ANY INTELLECTUAL PROPERTY),
OTHER THAN (A) LICENSES TO THE COMPANY OR ITS SUBSIDIARIES OF UNMODIFIED,
MASS-MARKETED, EXECUTABLE DESKTOP SOFTWARE APPLICATIONS WITH A TOTAL LICENSE FEE
OF LESS THAN $2,000 IN THE AGGREGATE FOR ANY SUCH LICENSE OR GROUP OF RELATED
LICENSES, AND (B) CUSTOMER CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF
BUSINESS AND CONTAINING TERMS AND CONDITIONS SUBSTANTIALLY SIMILAR TO THE TERMS
AND CONDITIONS OF THE COMPANY’S STANDARD CUSTOMER AGREEMENT, COPIES OF WHICH
HAVE BEEN PREVIOUSLY PROVIDED TO THE BUYER;

 

(X)                                   ANY CONTRACT THAT PROVIDES FOR A WARRANTY
OR INDEMNIFICATION WITH RESPECT TO ITS SERVICES RENDERED OR ITS PRODUCTS SOLD,
LEASED OR LICENSED;

 

(XI)                                ANY CONTRACT WITH THE COMPANY OR ITS
AFFILIATES;

 

(XII)                             ANY PROFIT SHARING, STOCK OPTION, STOCK
PURCHASE, STOCK APPRECIATION, DEFERRED COMPENSATION, SEVERANCE, INCENTIVE
COMPENSATION OR OTHER PLAN, PROGRAM OR ARRANGEMENT FOR THE BENEFIT OF ITS
CURRENT OR FORMER DIRECTORS, OFFICERS OR EMPLOYEES;

 

(XIII)                          CONTRACT THAT PROVIDES ANY CUSTOMER WITH
PRICING, DISCOUNTS OR BENEFITS THAT CHANGE BASED ON THE PRICING, DISCOUNTS OR
BENEFITS OFFERED TO OTHER CUSTOMERS OF THE COMPANY OR ITS SUBSIDIARIES,
INCLUDING, WITHOUT LIMITATION, CONTRACTS CONTAINING “MOST FAVORED NATION”
PROVISIONS;

 

(XIV)                         CONTRACT WHICH CONTAINS PERFORMANCE GUARANTEES;

 

(XV)                            CONTRACT INVOLVING THE SETTLEMENT OF ANY ACTION
OR THREATENED ACTION WITH RESPECT TO WHICH, AS OF THE DATE OF THIS AGREEMENT,
(A) ANY UNPAID AMOUNT EXCEEDS $50,000 OR (B) CONDITIONS PRECEDENT TO THE
SETTLEMENT HAVE NOT BEEN SATISFIED;

 

(XVI)                         CONTRACT APPOINTING ANY AGENT TO ACT ON ITS OR
THEIR BEHALF;

 

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(XVII)                      POWER OF ATTORNEY;

 

(XVIII)                   CONTRACT RELATING TO THE ACQUISITION OR SALE OF THE
BUSINESS (OR ANY MATERIAL PORTION THEREOF), WHETHER OR NOT CONSUMMATED AND
INCLUDING ANY CONFIDENTIALITY AGREEMENTS ENTERED INTO WITH RESPECT THERETO; OR

 

(XIX)                           OTHER CONTRACT (OR GROUP OF RELATED CONTRACTS)
THE PERFORMANCE OF WHICH INVOLVES CONSIDERATION IN EXCESS OF $50,000 PER YEAR OR
$100,000 IN THE AGGREGATE OR WHICH CANNOT BE CANCELED BY THE COMPANY OR ITS
SUBSIDIARIES WITHIN 30 DAYS NOTICE WITHOUT PREMIUM OR PENALTY OR ANY OTHER
CONTRACT MATERIAL TO THE COMPANY, WHETHER OR NOT ENTERED INTO IN THE ORDINARY
COURSE OF BUSINESS.

 

(B)                                 WITH RESPECT TO THE COMPANY’S OBLIGATIONS
THEREUNDER AND, WITH RESPECT TO THE OBLIGATIONS OF THE OTHER PARTIES THERETO,
ALL OF THE CONTRACTS SET FORTH OR REQUIRED TO BE SET FORTH ON SCHEDULE
2.9(A) (EACH A “MATERIAL CONTRACT”) HERETO ARE VALID, BINDING AND ENFORCEABLE
AGAINST THE COMPANY AND ENFORCEABLE BY THE COMPANY AGAINST THE OTHER PARTIES
THERETO, IN ACCORDANCE WITH THEIR RESPECTIVE TERMS.  THE COMPANY HAS PERFORMED
ALL OBLIGATIONS REQUIRED TO BE PERFORMED BY IT UNDER SUCH CONTRACT AND THE
COMPANY HAS NOT RECEIVED ANY NOTICE THAT IT IS IN DEFAULT UNDER OR IN BREACH OF
NOR IN RECEIPT OF ANY CLAIM OF DEFAULT OR BREACH UNDER ANY SUCH CONTRACT; NO
EVENT HAS OCCURRED WHICH WITH THE PASSAGE OF TIME OR THE GIVING OF NOTICE OR
BOTH WOULD RESULT IN A DEFAULT, BREACH OR EVENT OF NONCOMPLIANCE BY THE COMPANY
UNDER ANY SUCH CONTRACT.  THE COMPANY SHALL HAVE THE BENEFIT OF EACH MATERIAL
CONTRACT AND SHALL BE ENTITLED TO ENFORCE EACH SUCH CONTRACT IMMEDIATELY
FOLLOWING THE CLOSING.

 

(C)                                  A TRUE, CORRECT AND COMPLETE COPY OF EACH
OF THE WRITTEN CONTRACTS AND AN ACCURATE DESCRIPTION OF EACH OF THE ORAL
CONTRACTS WHICH ARE REFERRED TO ON THE ATTACHED SCHEDULE 2.9(A), HAVE BEEN
DELIVERED TO BUYER.

 

(D)                                 EXCEPT AS SET FORTH ON THE ATTACHED
SCHEDULE 2.9(D) DURING THE PRECEDING FIVE-YEAR PERIOD, THE COMPANY HAS NOT USED
ANY NAME OR NAMES UNDER WHICH IT INVOICED ACCOUNT DEBTORS, MAINTAINED RECORDS
CONCERNING THEIR ASSETS OR OTHERWISE CONDUCTED THEIR BUSINESS, OTHER THAN THE
EXACT NAMES UNDER WHICH IT HAS EXECUTED THIS AGREEMENT OR THE TRANSACTION
DOCUMENTS.

 

2.10                           Intellectual Property Rights.

 

(A)                                  THE ATTACHED SCHEDULE 2.10(A) SETS FORTH
TRUE AND COMPLETE LISTS OF (I) ALL REGISTERED AND UNREGISTERED MARKS, PATENTS
AND COPYRIGHTS OWNED BY THE COMPANY OR ITS SUBSIDIARIES (EACH, A “COMPANY
ENTITY”) OR USED OR HELD FOR USE BY A COMPANY ENTITY IN THE BUSINESS OF SUCH
COMPANY ENTITY AS CURRENTLY CONDUCTED OR AS PROPOSED TO BE CONDUCTED (THE
“BUSINESS”) (SUCH MARKS, PATENTS AND COPYRIGHTS, TOGETHER WITH ALL OTHER
INTELLECTUAL PROPERTY OWNED BY A COMPANY ENTITY OR USED OR HELD FOR USE BY A
COMPANY ENTITY IN THE BUSINESS, THE “COMPANY INTELLECTUAL PROPERTY”),
(II) PRODUCTS AND/OR SERVICES CURRENTLY OR PREVIOUSLY RESEARCHED, DESIGNED,
DEVELOPED, MANUFACTURED, PERFORMED, LICENSED, SOLD, DISTRIBUTED AND/OR OTHERWISE
MADE COMMERCIALLY AVAILABLE BY A COMPANY ENTITY (THE “PRODUCTS”), (III) ALL
LICENSES OR OTHER AGREEMENTS UNDER WHICH A COMPANY ENTITY IS GRANTED RIGHTS BY
OTHERS IN COMPANY INTELLECTUAL PROPERTY, OTHER THAN LICENSES TO A COMPANY ENTITY
OF UNMODIFIED, MASS-MARKETED, EXECUTABLE DESKTOP SOFTWARE APPLICATIONS WITH A
TOTAL LICENSE FEE OF LESS THAN $2,000 IN THE AGGREGATE FOR ANY SUCH LICENSE OR
GROUP OF RELATED LICENSES, AND (IV) ALL LICENSES OR OTHER AGREEMENTS UNDER WHICH
A COMPANY ENTITY HAS GRANTED RIGHTS TO OTHERS IN COMPANY INTELLECTUAL PROPERTY,
OTHER THAN CUSTOMER CONTRACTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS
AND CONTAINING TERMS AND CONDITIONS SUBSTANTIALLY SIMILAR TO THE TERMS AND
CONDITIONS OF SUCH COMPANY ENTITY’S STANDARD CUSTOMER AGREEMENT, COPIES OF WHICH
HAVE BEEN PROVIDED TO BUYER.

 

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(B)                                 EACH COMPANY ENTITY EXCLUSIVELY OWNS AND
POSSESSES ALL RIGHT, TITLE AND INTEREST IN AND TO ALL COMPANY INTELLECTUAL
PROPERTY PURPORTED TO BE OWNED BY SUCH COMPANY ENTITY AND HAS VALID AND
ENFORCEABLE LICENSES TO USE ALL OTHER INTELLECTUAL PROPERTY NECESSARY OR
DESIRABLE FOR THE CONDUCT OF ITS BUSINESS, IN EACH CASE WITHOUT ANY CONFLICT
WITH OR INFRINGEMENT OF THE RIGHTS OF ANY PERSON AND FREE AND CLEAR OF ALL
LIENS, EXCEPT AS DISCLOSED ON THE ATTACHED SCHEDULE 2.10(B).  THE COMPANY
ENTITIES ARE AND ALWAYS HAVE BEEN IN FULL COMPLIANCE WITH ALL LICENSES SET FORTH
OR REQUIRED TO BE SET FORTH ON SCHEDULE 2.10(A) INCLUDING, WITHOUT LIMITATION,
ALL LICENSES FOR OPEN SOURCE SOFTWARE.

 

(C)                                  ALL PATENTS, MARKS AND COPYRIGHTS OWNED BY
ANY COMPANY ENTITY THAT HAVE BEEN ISSUED BY, OR REGISTERED OR THE SUBJECT OF AN
APPLICATION FILED WITH, AS APPLICABLE, THE U.S. PATENT AND TRADEMARK OFFICE, THE
U.S. COPYRIGHT OFFICE OR ANY SIMILAR OFFICE OR AGENCY ANYWHERE IN THE WORLD,
HAVE BEEN DULY MAINTAINED (INCLUDING THE PAYMENT OF MAINTENANCE FEES) AND ARE
NOT EXPIRED, CANCELLED OR ABANDONED AND ARE VALID AND ENFORCEABLE.

 

(D)                                 EXCEPT AS DISCLOSED ON SCHEDULE 2.10(D),
THERE ARE NO PENDING OR THREATENED CLAIMS AGAINST ANY COMPANY ENTITY ALLEGING
THAT THE OPERATION OF THE BUSINESS OR ANY ACTIVITY OF SUCH COMPANY ENTITY HAS
INFRINGED, MISAPPROPRIATED OR OTHERWISE CONFLICTED WITH, OR THAT SUCH COMPANY
ENTITY, BY CONDUCTING ITS BUSINESS, WOULD INFRINGE, MISAPPROPRIATE OR OTHERWISE
CONFLICT WITH, ANY RIGHTS OF ANY OTHER PERSON IN INTELLECTUAL PROPERTY, OR THAT
ANY COMPANY INTELLECTUAL PROPERTY IS INVALID OR UNENFORCEABLE.  TO THE KNOWLEDGE
OF THE SELLER PARTIES, NEITHER THE OPERATION OF THE BUSINESS, NOR ANY ACTIVITY
BY THE COMPANY, INFRINGES, MISAPPROPRIATES OR VIOLATES (OR IN THE PAST
INFRINGED, MISAPPROPRIATED OR VIOLATED) ANY RIGHTS OF ANY OTHER PERSON IN
INTELLECTUAL PROPERTY.

 

(E)                                  TO THE KNOWLEDGE OF THE SELLER PARTIES,
EXCEPT AS SET FORTH ON SCHEDULE 2.10(E), NO THIRD PARTY IS INFRINGING,
MISAPPROPRIATING OR VIOLATING, OR HAS INFRINGED, MISAPPROPRIATED OR VIOLATED,
ANY OF THE COMPANY INTELLECTUAL PROPERTY.

 

(F)                                    EXCEPT AS SET FORTH ON SCHEDULE 2.10(F),
NO COMPENSATION OR OTHER CONSIDERATION IS OWED TO OR CLAIMED TO BE OWED TO ANY
THIRD PARTY BY ANY COMPANY ENTITY DUE TO SUCH COMPANY ENTITY’S OWNERSHIP,
LICENSE (AS LICENSOR OR LICENSEE) OR USE (DIRECTLY OR INDIRECTLY VIA ANOTHER
PARTY) OF THE COMPANY INTELLECTUAL PROPERTY.

 

(G)                                 NO LOSS OF INTELLECTUAL PROPERTY BY ANY
COMPANY ENTITY (OTHER THAN BY EXPIRATION IN THE ORDINARY COURSE) IS THREATENED,
PENDING OR REASONABLY FORESEEABLE AND THE COMPANY ENTITIES ARE NOT AWARE OF ANY
INTELLECTUAL PROPERTY OWNED OR USED BY ANY THIRD PARTY WHICH REASONABLY COULD BE
EXPECTED TO SUPERSEDE OR MAKE OBSOLETE ANY PRODUCT OR PROCESS OF THE COMPANY
ENTITIES, OR TO LIMIT THE BUSINESS.  ALL OF THE COMPUTER FIRMWARE, COMPUTER
HARDWARE, AND COMPUTER SOFTWARE (WHETHER GENERAL OR SPECIAL PURPOSE) AND OTHER
SIMILAR OR RELATED ITEMS OF AUTOMATED, COMPUTERIZED, AND/OR SOFTWARE
SYSTEM(S) USED OR RELIED UPON BY THE COMPANY ENTITIES AND IN THE CONDUCT OF ITS
BUSINESS ARE IN GOOD OPERATING CONDITION, REPAIR, SUBJECT ONLY TO THE PROVISION
OF USUAL AND CUSTOMARY MAINTENANCE, AND SUFFICIENT FOR THE CONDUCT OF THE
BUSINESS.

 

(H)                                 ALL COMPANY INTELLECTUAL PROPERTY OWNED BY
EACH OF THE COMPANY ENTITIES HAS BEEN (I) DEVELOPED BY EMPLOYEES OF SUCH COMPANY
ENTITY, (II) DEVELOPED BY INDEPENDENT CONTRACTORS TO SUCH COMPANY ENTITY,
(III) ACQUIRED FROM A THIRD PARTY UNDER A CONTRACT LISTED ON
SCHEDULE 2.10(A) AND/OR (IV) CREATED AS WORKS MADE FOR HIRE.  EVERY CURRENT AND
FORMER OFFICER, DIRECTOR, CONSULTANT, INDEPENDENT CONTRACTOR AND EMPLOYEE OF THE
COMPANY ENTITIES HAS EXECUTED A CONTRACT THAT ASSIGNS TO SUCH COMPANY ENTITY ALL
OF THEIR INTERESTS IN ANY AND ALL INVENTIONS, IMPROVEMENTS, DISCOVERIES,
WRITINGS AND OTHER WORKS OF AUTHORSHIP, AND INFORMATION RELATING TO THE BUSINESS
OR ANY OF THE PRODUCTS OR SERVICES BEING RESEARCHED, DEVELOPED, MANUFACTURED OR
SOLD BY SUCH COMPANY ENTITY OR THAT MAY BE USED WITH ANY SUCH PRODUCTS OR
SERVICES, AND ALL RIGHTS IN INTELLECTUAL PROPERTY RELATING THERETO.  NO SUCH
PERSON IS IN BREACH OF

 

12

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HIS OR HER OBLIGATIONS UNDER SUCH CONTRACTS, AND NO SUCH PERSON IS PARTY TO ANY
CONFLICTING CONTRACT, INCLUDING ANY CONTRACT THAT RESTRICTS THEM FROM ENGAGING
IN ACTIVITIES FOR THE COMPANY ENTITIES.

 

(I)                                     THE COMPANY ENTITIES HAVE NOT (EXCEPT IN
THE ORDINARY COURSE OF BUSINESS UNDER OBLIGATIONS OF CONFIDENTIALITY) DISCLOSED
OR PERMITTED TO BE DISCLOSED OR UNDERTAKEN OR ARRANGED TO DISCLOSE TO ANY PERSON
OTHER THAN BUYER ANY TRADE SECRETS OWNED BY ANY COMPANY ENTITY OR USED OR HELD
FOR USE BY ANY COMPANY ENTITY IN THE BUSINESS (THE “COMPANY TRADE SECRETS”). 
THE COMPANY ENTITIES HAVE TAKEN ALL REASONABLE SECURITY MEASURES TO PROTECT THE
SECRECY, CONFIDENTIALITY AND VALUE OF THE COMPANY TRADE SECRETS, INCLUDING,
WITHOUT LIMITATION, REQUIRING EACH EMPLOYEE AND CONSULTANT OF THE COMPANY
ENTITIES AND ANY OTHER PERSON WITH ACCESS TO COMPANY TRADE SECRETS TO EXECUTE A
BINDING CONFIDENTIALITY AGREEMENT, COPIES OR FORMS OF WHICH HAVE BEEN PROVIDED
TO THE BUYER AND THERE HAS NOT BEEN ANY BREACH BY ANY PARTY TO SUCH
CONFIDENTIALITY AGREEMENTS.

 

(J)                                     NONE OF THE PRODUCTS CONTAIN,
INCORPORATE, LINK OR CALL TO OR OTHERWISE USE OPEN SOURCE SOFTWARE, AND THE
INCORPORATION, LINKING, CALLING OR OTHER USE IN OR BY ANY SUCH PRODUCT OF ANY
SUCH OPEN SOURCE SOFTWARE DOES NOT OBLIGATE ANY COMPANY ENTITY TO DISCLOSE, MAKE
AVAILABLE, OFFER OR DELIVER ANY PORTION OF THE SOURCE CODE OF SUCH PRODUCT OR
COMPONENT THEREOF TO ANY THIRD PARTY OTHER THAN THE APPLICABLE OPEN SOURCE
SOFTWARE.

 

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

 

2.12                           Brokers.  There are no claims for brokerage
commissions, finders’ fees or similar compensation in connection with the
transactions contemplated by this Agreement or any of the Transaction Documents
based on any Contract to which the Company is a party or otherwise binding upon
the Company.  Except as set forth in Schedule 2.12, the Company has not made,
and the Company is not obligated to make, any payment to any Person in
connection with the transactions contemplated by the Transaction Documents.  The
Company shall pay, and hold Buyer harmless against, any Liability (including
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
with any such claim or payment.  No rights or benefits of any Person have been
(or will be) accelerated or increased as a result of the consummation of the
transactions contemplated by the Transaction Documents.

 

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

 

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2.14                           Employees.  With respect to the Company:
(i) there is no collective bargaining agreement or relationship with any labor
organization; (ii) to the Knowledge of the Seller Parties, no executive or key
employee has any present intention to terminate their employment; (iii) no labor
organization or group of employees has filed any representation petition or made
any written or oral demand for recognition; (iv) no union organizing efforts are
underway or, to the Knowledge of the Seller Parties, threatened, and no other
question concerning representation exists; (v) no labor strike, work stoppage,
slowdown, or other labor dispute has occurred, and none is underway or, to the
Knowledge of the Seller Parties, threatened; (vi) there is no workman’s
compensation liability, experience or matter pending or, to the Knowledge of the
Seller Parties, threatened; (vii) there is no employment-related charge,
complaint, grievance, investigation, inquiry or Liability of any kind, pending
or, to the Knowledge of the Seller Parties, threatened in any forum, relating to
an alleged violation or breach by the Company of any Legal Requirements relating
to the employment of labor; and, (viii)  no employee or agent of the Company has
committed any act or omission giving rise to any Liability for any violation
identified in subsection (vii) above.  Except as set forth on Schedule 2.14,
neither the Company nor any of the Company’s employees is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or similar
Contracts relating to, affecting or in conflict with the present or proposed
business activities of the Company.  Schedule 2.14 contains a correct and
complete list of all employees and independent contractors of the Company as of
the date hereof, including a list of all officers and directors of the Company,
and whether or not they have executed and delivered to either of them any
(i) Contract providing for the nondisclosure by such Person of any confidential
information of the Company, (ii) Contract providing for the assignment or
license by such Person to the Company of any Intellectual Property, (iii) any
Contract preventing such Person from competing with the Company during and/or
following termination of employment, (iv) any Contract preventing such Person
from soliciting and hiring employees of the Company during and/or following
termination of employment and (v) any Contract preventing such Person from
soliciting and servicing any customers of the Company.  The classification of
each employee as exempt or nonexempt or an independent contractor, the base
salary or wage rates and any incentive or other form of compensation (including
bonuses thereto) for the employees and independent contractors of the Company is
set forth on Schedule 2.14 and has been accurately furnished in a letter
delivered by the Company to Buyer prior to the execution and delivery of this
Agreement.  All amounts of bonuses accrued by employees and independent
contractors of the Company up to and including the Closing Date have been
properly accrued for.  No current employee or independent contractor of the
Company has advised the Company that he or she has excluded works or inventions
made prior to his or her employment with the Company or its Subsidiaries from
any inventions agreement between the Company and such Person.  All individuals
employed by the Company devote all of their business time and attention to the
businesses of the Company.  The Company is in compliance in all respects with
all applicable laws respecting employment and employment practices, terms and
conditions of employment,  classification of employees, wages and hours,
occupational safety and health, including, but not limited to, the National
Labor Relations Act, the Immigration Reform and Control Act of 1986, Title VII
of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act, the Older Workers Benefit Protection Act, 42
U.S.C. Section 1981, the Americans With Disabilities Act, the Fair Labor
Standards Act, ERISA, the Occupational Safety and Health Act, the Family Medical
Leave Act, and any other law respecting employment, including, but not limited
to, authorization to work in the United States, equal employment opportunity
(including prohibitions against discrimination, harassment, and retaliation),
payment of wages, hours of work, occupational safety and health, and labor
practices.  In the last three years, (i) the Company has not effected a “plant
closing” (as defined in the Worker Adjustment and Retraining Notification Act
(the “WARN Act”)), affecting any site of employment or one or more facilities or
operating units within any site of employment or facility, (ii) there has not
occurred a “mass layoff” (as defined in the WARN Act) affecting any site of
employment or facility of the Company and its Subsidiaries, (iii) the Company
has not engaged in layoffs or employment terminations sufficient in number to
trigger application of, and notification requirements under, any state, local or
foreign law or regulation similar to the WARN Act and (iii) during the ninety
(90) day period immediately preceding the

 

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date of this Agreement, the Company has not terminated involuntarily the
employment of more than five (5) individuals from employment in positions,
excluding individuals who were “part-time employees” of the Company or its
Subsidiaries within the meaning of the WARN Act, 29 U.S.C. § 2101(a)(8) and
applicable regulations at 20 C.F.R. § 639.3(h).  The Company shall be
responsible for any failure to provide any notice required by the WARN Act or
any state law counterpart.  Buyer may, but is not obligated to, retain the
Company’s employees.  The Company shall use its commercially reasonable efforts
to assist Buyer in determining which employees to retain.  Upon the Closing and
effective as of the Closing Date, the Company shall, at the Company’s cost,
terminate the employment of all employees that are not being retained by Buyer. 
Employees retained by Buyer shall, unless otherwise provided by the Buyer,
(i) be employed on an “at-will” basis, (ii) be subject to the Buyer’s standard
policies and procedures applicable to the Buyer’s employees, and (iii) be
required to enter into confidentiality, assignment of inventions and
non-solicitation agreements in a form acceptable to the Buyer.  In addition, the
Seller Shareholders and those members of the Company’s management team
designated by the Buyer shall be required to enter into non competition
agreements in a form acceptable to the Buyer.

 

2.15                           ERISA.

 

(A)                                  EXCEPT AS DISCLOSED AND SET FORTH ON THE
ATTACHED SCHEDULE 2.15(A), THE COMPANY DOES NOT MAINTAIN, SPONSOR, CONTRIBUTE
TO, PROVIDE BENEFITS UNDER OR HAVE ANY ACTUAL OR POTENTIAL LIABILITY WITH
RESPECT TO ANY EMPLOYEE BENEFIT PLAN.

 

(B)                                 (I) THE EMPLOYEE BENEFIT PLANS HAVE BEEN AND
SHALL BE THROUGH THE CLOSING DATE MAINTAINED IN COMPLIANCE IN ALL RESPECTS WITH
THEIR TERMS AND WITH THE REQUIREMENTS OF THE CODE AND ERISA AND ALL OTHER
APPLICABLE LAWS AND REGULATIONS, AND THE COMPANY HAS NOT RECEIVED NOTIFICATION
TO THE CONTRARY FROM THE INTERNAL REVENUE SERVICE, DEPARTMENT OF LABOR, OR THE
PBGC.  (II) EXCEPT AS SET FORTH ON THE ATTACHED SCHEDULE 2.15(B), EACH EMPLOYEE
BENEFIT PLAN THAT IS INTENDED TO QUALIFY UNDER SECTION 401(A) OR 501(C)(9) OF
THE CODE IS SO QUALIFIED AND HAS RECEIVED A FAVORABLE DETERMINATION OR APPROVAL
LETTER FROM THE INTERNAL REVENUE SERVICE WITH RESPECT TO SUCH QUALIFICATION, OR
MAY RELY ON AN OPINION LETTER ISSUED BY THE INTERNAL REVENUE SERVICE WITH
RESPECT TO A PROTOTYPE PLAN ADOPTED IN ACCORDANCE WITH THE REQUIREMENTS FOR SUCH
RELIANCE, OR HAS TIME REMAINING FOR APPLICATION TO THE INTERNAL REVENUE SERVICE
FOR A DETERMINATION OF THE QUALIFIED STATUS OF SUCH EMPLOYEE BENEFIT PLAN FOR
ANY PERIOD FOR WHICH SUCH EMPLOYEE BENEFIT PLAN WOULD NOT OTHERWISE BE COVERED
BY AN INTERNAL REVENUE SERVICE DETERMINATION AND NO EVENT OR OMISSION HAS
OCCURRED THAT WOULD CAUSE ANY EMPLOYEE BENEFIT PLAN TO LOSE SUCH QUALIFICATION. 
(III) NO ASSET OF THE COMPANY IS SUBJECT TO ANY LIEN UNDER ERISA OR THE CODE,
AND THE COMPANY AND ITS SUBSIDIARIES HAVE NOT INCURRED ANY LIABILITY UNDER TITLE
IV OF ERISA OR TO THE PBGC.  (IV) NO LITIGATION OR GOVERNMENTAL ADMINISTRATIVE
PROCEEDING, AUDIT OR OTHER PROCEEDING (OTHER THAN THOSE RELATING TO ROUTINE
CLAIMS FOR BENEFITS) IS PENDING OR THREATENED WITH RESPECT TO ANY EMPLOYEE
BENEFIT PLAN OR ANY FIDUCIARY OR SERVICE PROVIDER THEREOF, AND THERE IS NO
REASONABLE BASIS FOR ANY SUCH LITIGATION OR PROCEEDING.

 

(C)                                  THE COMPANY HAS NEVER: (I) MAINTAINED,
CONTRIBUTED TO OR HAD ANY ACTUAL OR POTENTIAL LIABILITY WITH RESPECT TO ANY
ACTIVE OR TERMINATED, FUNDED OR UNFUNDED, MULTIEMPLOYER PLAN OR EMPLOYEE BENEFIT
PLAN SUBJECT TO SECTION 302 OF TITLE I OF ERISA, TITLE IV OF ERISA OR
SECTION 412 OF THE CODE; (II) FAILED TO SATISFY ANY MINIMUM FUNDING REQUIREMENT,
IF ANY, UNDER SECTION 412 OF THE CODE OR SECTION 302 OF ERISA; (III) FAILED TO
MAKE A REQUIRED CONTRIBUTION OR PAYMENT TO A MULTIEMPLOYER PLAN (AS DESCRIBED IN
SECTION 4001 (A)(3) OF ERISA); OR (IV) MADE A COMPLETE OR PARTIAL WITHDRAWAL
UNDER SECTIONS 4203 OR 4205 OF ERISA FROM A MULTIEMPLOYER PLAN.

 

(D)                                 WITH RESPECT TO EACH EMPLOYEE BENEFIT PLAN,
ALL REQUIRED OR RECOMMENDED (IN ACCORDANCE WITH HISTORICAL PRACTICES, INCLUDING
ANY DISCRETIONARY MATCHING OR PROFIT SHARING CONTRIBUTIONS)

 

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PAYMENTS, PREMIUMS, CONTRIBUTIONS, REIMBURSEMENTS OR ACCRUALS FOR ALL PERIODS
(OR PARTIAL PERIODS) ENDING PRIOR TO OR AS OF THE CLOSING DATE SHALL HAVE BEEN
MADE OR PROPERLY ACCRUED ON THE LATEST BALANCE SHEET.

 

(E)                                  THE COMPANY DOES NOT, AND AS OF THE CLOSING
DATE, THE COMPANY WILL NOT MAINTAIN OR CONTRIBUTE TO ANY EMPLOYEE WELFARE
BENEFIT PLAN WHICH PROVIDES BENEFITS TO EMPLOYEES AFTER TERMINATION OF
EMPLOYMENT (OTHER THAN AS REQUIRED UNDER SECTION 601 OF ERISA OR APPLICABLE
STATE LAW).  THE COMPANY HAS COMPLIED IN ALL RESPECTS WITH THE HEALTH CARE
CONTINUATION REQUIREMENTS OF PART 6 OF SUBTITLE B OF TITLE I OF ERISA AND
SECTION 4980B OF THE CODE.  EACH EMPLOYEE BENEFIT PLAN THAT PROVIDES HEALTH OR
WELFARE BENEFITS IS FULLY INSURED.

 

(F)                                    ATTACHED HERETO AS SCHEDULE 2.15(F) ARE
TRUE, COMPLETE AND CORRECT COPIES, TO THE EXTENT APPLICABLE OF (I) ALL DOCUMENTS
PURSUANT TO WHICH THE EMPLOYEE BENEFIT PLANS ARE MAINTAINED, FUNDED AND
ADMINISTERED, (II) THE TWO MOST RECENT ANNUAL REPORTS (FORM 5500 SERIES) FILED
WITH THE INTERNAL REVENUE SERVICE (WITH ATTACHMENTS), (III) THE TWO MOST RECENT
ACTUARIAL VALUATION REPORTS, (IV) THE TWO MOST RECENT FINANCIAL STATEMENTS,
(V) ALL GOVERNMENTAL RULINGS, DETERMINATIONS AND OPINIONS (AND PENDING REQUESTS
FOR GOVERNMENTAL RULINGS, DETERMINATIONS AND OPINIONS), (VI) THE MOST RECENT
VALUATION (BUT IN ANY CASE AT LEAST ONE THAT HAS BEEN COMPLETED WITHIN THE LAST
CALENDAR YEAR) OF THE PRESENT AND FUTURE BENEFIT OBLIGATIONS UNDER EACH EMPLOYEE
BENEFIT PLAN THAT PROVIDES POST-RETIREMENT OR POST-EMPLOYMENT, HEALTH, LIFE
INSURANCE, ACCIDENT OR OTHER “WELFARE-TYPE” BENEFITS, AND (VII) ALL NON-ROUTINE
CORRESPONDENCE TO AND FROM ANY STATE OR FEDERAL AGENCY.

 

(G)                                 NEITHER THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THE SHAREHOLDER APPROVAL OF THIS AGREEMENT, NOR THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREBY COULD (EITHER ALONE OR IN CONJUNCTION WITH
ANY OTHER EVENT) (I) RESULT IN, OR CAUSE THE ACCELERATED VESTING PAYMENT,
FUNDING OR DELIVERY OF, OR INCREASE THE AMOUNT OR VALUE OF, ANY PAYMENT OR
BENEFIT TO ANY EMPLOYEE, OFFICER, DIRECTOR OR OTHER SERVICE PROVIDER OF THE
COMPANY OR ANY OF ITS AFFILIATES; (II) LIMIT THE RIGHT OF THE COMPANY OR ANY OF
ITS AFFILIATES TO AMEND, MERGE, TERMINATE OR RECEIVE A REVERSION OF ASSETS FROM
ANY EMPLOYEE BENEFIT PLAN OR RELATED TRUST; (III) RESULT IN ANY “PARACHUTE
PAYMENT” AS DEFINED IN SECTION 280G(B)(2) OF THE CODE (WHETHER OR NOT SUCH
PAYMENT IS CONSIDERED TO BE REASONABLE COMPENSATION FOR SERVICES RENDERED); OR
(IV) RESULT IN A REQUIREMENT TO PAY ANY TAX “GROSS-UP” OR SIMILAR “MAKE-WHOLE”
PAYMENTS TO ANY EMPLOYEE, DIRECTOR OR INDEPENDENT CONTRACTOR OF THE COMPANY OR
AN AFFILIATE.

 

(H)                                 NEITHER THE COMPANY NOR ANY OTHER
“DISQUALIFIED PERSON” (WITHIN THE MEANING OF SECTION 4975 OF THE CODE) OR “PARTY
IN INTEREST” (WITHIN THE MEANING OF SECTION 3(14) OF ERISA) HAS TAKEN ANY ACTION
WITH RESPECT TO ANY OF THE EMPLOYEE BENEFIT PLANS WHICH COULD SUBJECT ANY SUCH
EMPLOYEE BENEFIT PLAN (OR ITS RELATED TRUST) OR THE COMPANY OR ANY OFFICER,
DIRECTOR OR EMPLOYEE OF ANY OF THE FOREGOING TO ANY PENALTY OR TAX UNDER
SECTION 502(I) OF ERISA OR SECTION 4975 OF THE CODE.

 

(I)                                     THE COMPANY HAS NO LIABILITY (POTENTIAL
OR OTHERWISE) WITH RESPECT TO ANY “EMPLOYEE BENEFIT PLAN” (AS DEFINED IN
SECTION 3(3) OF ERISA) SOLELY BY REASON OF BEING TREATED AS A SINGLE EMPLOYER
UNDER SECTION 414 OF THE CODE WITH ANY OTHER ENTITY.

 

(J)                                     (I) EACH EMPLOYEE BENEFIT PLAN MAY BE
AMENDED, TERMINATED, OR OTHERWISE MODIFIED BY THE COMPANY TO THE GREATEST EXTENT
PERMITTED BY APPLICABLE LAW, INCLUDING THE ELIMINATION OF ANY AND ALL FUTURE
BENEFIT ACCRUALS THEREUNDER AND NO EMPLOYEE COMMUNICATIONS OR PROVISION OF ANY
EMPLOYEE BENEFIT PLAN HAS FAILED TO EFFECTIVELY RESERVE THE RIGHT OF THE COMPANY
OR THE AFFILIATE TO SO AMEND, TERMINATE OR OTHERWISE MODIFY SUCH EMPLOYEE
BENEFIT PLAN.  (II) NEITHER THE COMPANY NOR ANY OF ITS AFFILIATES HAS ANNOUNCED
ITS INTENTION TO MODIFY OR TERMINATE ANY EMPLOYEE BENEFIT PLAN OR ADOPT ANY
ARRANGEMENT OR PROGRAM WHICH, ONCE ESTABLISHED, WOULD COME WITHIN THE DEFINITION
OF AN EMPLOYEE BENEFIT PLAN.  (III) EACH ASSET HELD UNDER EACH EMPLOYEE BENEFIT
PLAN MAY BE LIQUIDATED OR TERMINATED WITHOUT THE IMPOSITION OF ANY REDEMPTION
FEE, SURRENDER CHARGE OR COMPARABLE LIABILITY.

 

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(K)                                  SINCE DECEMBER 31, 2004 AND THROUGH
DECEMBER 31, 2008, EACH EMPLOYEE BENEFIT PLAN THAT CONSTITUTES IN ANY PART A
NONQUALIFIED DEFERRED COMPENSATION PLAN WITHIN THE MEANING OF SECTION 409A OF
THE CODE (EACH, A “NQDC PLAN”) HAS BEEN OPERATED AND MAINTAINED IN ACCORDANCE
WITH A GOOD FAITH, REASONABLE INTERPRETATION OF SECTION 409A OF THE CODE WITH
RESPECT TO AMOUNTS DEFERRED (WITHIN THE MEANING OF SECTION 409A OF THE CODE)
AFTER DECEMBER 31, 2004.  FROM AND AFTER JANUARY 1, 2009, EACH NQDC PLAN HAS
BEEN OPERATED AND MAINTAINED IN OPERATIONAL AND DOCUMENTARY COMPLIANCE WITH
SECTION 409A OF THE CODE AND APPLICABLE GUIDANCE THEREUNDER.  NO PAYMENT TO BE
MADE UNDER ANY EMPLOYEE BENEFIT PLAN IS, OR WILL BE, SUBJECT TO THE PENALTIES OF
SECTION 409A(A)(1) OF THE CODE.

 

(L)                                     NO EMPLOYEE BENEFIT PLAN IS SUBJECT TO
THE LAWS OF ANY JURISDICTION OUTSIDE THE UNITED STATES.

 

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

 

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

 

2.18                           Customers and Suppliers.

 

(A)                                  THE ATTACHED SCHEDULE 2.18(A) LISTS EACH
CUSTOMER OF THE COMPANY (INCLUDING DISTRIBUTORS) ACCOUNTING FOR MORE THAN 2% OF
THE GROSS REVENUES OF THE COMPANY FOR EACH OF THE TWO MOST RECENT FISCAL YEARS
(AND THE REVENUES GENERATED FROM SUCH CUSTOMER).  SCHEDULE 2.18(A) ALSO LISTS
ANY ADDITIONAL CURRENT CUSTOMERS (INCLUDING DISTRIBUTORS) WHICH THE COMPANY
REASONABLY ANTICIPATES SHALL ACCOUNT FOR MORE THAN 2% OF THE GROSS REVENUES OF
THE COMPANY FOR THE CURRENT FISCAL YEAR.

 

(B)                                 THE ATTACHED SCHEDULE 2.18(B) LISTS EACH
VENDOR, SUPPLIER, SERVICE PROVIDER AND OTHER SIMILAR BUSINESS RELATION OF THE
COMPANY FROM WHOM THE COMPANY PURCHASED GREATER THAN $50,000 IN GOODS AND/OR
SERVICES OVER THE COURSE OF THE 12 MONTHS ENDING DECEMBER 31, 2008 OR THE
9-MONTHS ENDED SEPTEMBER 30, 2009 THE AMOUNTS OWING TO EACH SUCH PERSON, AND
WHETHER SUCH AMOUNTS ARE PAST DUE.  THE COMPANY HAS NOT RECEIVED ANY INDICATION
FROM ANY SUCH PERSON TO THE EFFECT THAT, AND THE COMPANY HAS NO REASON TO
BELIEVE THAT, SUCH CUSTOMER OR SUPPLIER WILL STOP, DECREASE THE RATE OF, OR
CHANGE THE TERMS (WHETHER RELATED TO PAYMENT, PRICE OR OTHERWISE) WITH RESPECT
TO, SUPPLYING MATERIALS, PRODUCTS OR SERVICES TO THE COMPANY (WHETHER AS A
RESULT OF THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
THE OTHER TRANSACTION DOCUMENTS OR OTHERWISE).

 

2.19                           Real Property.

 

(A)                                  THE COMPANY DOES NOT OWN ANY REAL PROPERTY.

 

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(B)                                 SCHEDULE 2.19(B) ATTACHED HERETO CONTAINS A
COMPLETE LIST OF ALL REAL PROPERTY LEASED OR SUBLEASED BY THE COMPANY (THE
“LEASED REAL PROPERTY”).  THE COMPANY HAS A VALID LEASEHOLD INTEREST IN EACH
LEASED REAL PROPERTY, SUBJECT ONLY TO PERMITTED LIENS.  THE COMPANY HAS
PREVIOUSLY DELIVERED TO BUYER COMPLETE AND ACCURATE COPIES OF EACH OF THE LEASES
FOR THE LEASED REAL PROPERTY (THE “LEASES”).  WITH RESPECT TO EACH LEASE:
(I) THE LEASE IS LEGAL, VALID, BINDING, ENFORCEABLE AND IN FULL FORCE AND
EFFECT; (II) NEITHER THE COMPANY, NOR ANY OTHER PARTY TO THE LEASE IS IN BREACH
OR DEFAULT AND NO EVENT HAS OCCURRED WHICH, WITH NOTICE OR LAPSE OF TIME OR
BOTH, WOULD CONSTITUTE SUCH A BREACH OR DEFAULT OR PERMIT TERMINATION,
MODIFICATION OR ACCELERATION UNDER THE LEASE; (III) NO PARTY TO THE LEASE HAS
REPUDIATED ANY PROVISION THEREOF; (IV) THERE ARE NO DISPUTES, ORAL AGREEMENTS OR
FORBEARANCE PROGRAMS IN EFFECT AS TO THE LEASE; (V) THE LEASE HAS NOT BEEN
MODIFIED IN ANY RESPECT, EXCEPT TO THE EXTENT THAT SUCH MODIFICATIONS ARE
DISCLOSED BY THE DOCUMENTS DELIVERED TO BUYER; AND (VI) THE COMPANY AND ITS
SUBSIDIARIES HAVE NOT ASSIGNED, TRANSFERRED, CONVEYED, MORTGAGED, DEEDED IN
TRUST OR ENCUMBERED ANY INTEREST IN THE LEASE.

 

(C)                                  WITH RESPECT TO THE LEASED REAL PROPERTY: 
(I) THE CURRENT USE OF SUCH PROPERTY AND THE OPERATION OF THE COMPANY’S BUSINESS
DOES NOT VIOLATE THE LEASE AND (II) EXCEPT FOR THE LEASE, THERE ARE NO LEASES,
SUBLEASES, LICENSES, CONCESSIONS OR OTHER CONTRACTS, WRITTEN OR ORAL, GRANTING
TO ANY PARTY OR PARTIES THE RIGHT OF USE OR OCCUPANCY OF ANY PORTION OF THE
LEASED REAL PROPERTY EXCEPT IN FAVOR OF THE COMPANY.

 

2.20                           Environmental and Safety Matters.  The Company
has complied in all respects and is in compliance with all Environmental and
Safety Requirements (including all permits and licenses required thereunder)
without any fines or monetary Liabilities attached.  The Company has not
received any oral or written notice of any violation of, or any Liability under,
any Environmental and Safety Requirements.  No facts or circumstances with
respect to the operations through the Closing Date or facilities of the Company
or any predecessor or Affiliate (including any onsite or offsite disposal or
release of, or contamination by, hazardous materials, substances or wastes)
owned or operated by the Company or any predecessor or Affiliate on or prior to
the Closing Date or disposed of prior to such time will hinder or prevent
continued compliance with, or give rise to any Liability (including any
corrective or remedial obligation) under any Environmental and Safety
Requirements.

 

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

 

2.22                           Absence of Certain Developments.  Except as set
forth in Schedule 2.22 attached hereto, since December 31, 2008, the Company has
not:

 

(A)                                  REDEEMED OR REPURCHASED, DIRECTLY OR
INDIRECTLY, ANY SHARES OF CAPITAL STOCK (OR OTHER EQUITY SECURITIES);

 

(B)                                 ISSUED, SOLD OR TRANSFERRED ANY NOTES, BONDS
OR OTHER DEBT SECURITIES OR ANY EQUITY SECURITIES, SECURITIES CONVERTIBLE,
EXCHANGEABLE OR EXERCISABLE INTO EQUITY SECURITIES, OR WARRANTS, OPTIONS OR
OTHER RIGHTS TO ACQUIRE EQUITY SECURITIES, OF THE COMPANY OR ITS SUBSIDIARIES;

 

(C)                                  BORROWED ANY AMOUNT OR INCURRED OR BECOME
SUBJECT TO ANY INDEBTEDNESS OR OTHER LIABILITIES, EXCEPT TRADE PAYABLES AND
ACCRUED LIABILITIES INCURRED IN THE ORDINARY COURSE OF BUSINESS;

 

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(D)                                 MORTGAGED, PLEDGED OR SUBJECTED TO ANY LIEN
ANY PORTION OF ITS PROPERTIES OR ASSETS;

 

(E)                                  SOLD, LEASED, LICENSED (AS LICENSOR),
ASSIGNED, DISPOSED OF OR TRANSFERRED (INCLUDING TRANSFERS TO THE COMPANY OR ANY
EMPLOYEES OR AFFILIATES OF THE COMPANY) ANY OF ITS ASSETS (WHETHER TANGIBLE OR
INTANGIBLE), EXCEPT FOR SALES OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS
AND SALES OF OTHER ASSETS NOT IN EXCESS OF $50,000 IN THE AGGREGATE AND OTHER
THAN LICENSES GRANTED TO CUSTOMERS IN THE ORDINARY COURSE OF BUSINESS PURSUANT
TO CONTRACTS CONTAINING TERMS AND CONDITIONS SUBSTANTIALLY SIMILAR TO THE TERMS
AND CONDITIONS OF THE COMPANY’S STANDARD CUSTOMER AGREEMENT, COPIES OF WHICH
HAVE BEEN PREVIOUSLY PROVIDED TO THE BUYER;

 

(F)                                    DISCLOSED ANY PROPRIETARY CONFIDENTIAL
INFORMATION TO ANY PERSON THAT IS NOT SUBJECT TO ANY CONFIDENTIALITY AGREEMENT;

 

(G)                                 SUFFERED ANY EXTRAORDINARY LOSSES OR WAIVED
ANY RIGHTS OF MATERIAL VALUE, WHETHER OR NOT IN THE ORDINARY COURSE OF BUSINESS;

 

(H)                                 SUFFERED ANY THEFT, DAMAGE, DESTRUCTION OR
CASUALTY LOSS IN EXCESS OF $50,000, TO ITS ASSETS, WHETHER OR NOT COVERED BY
INSURANCE;

 

(I)                                     ENTERED INTO, AMENDED, ACCELERATED OR
TERMINATED ANY CONTRACT, TAKEN ANY OTHER ACTION OR ENTERED INTO ANY OTHER
TRANSACTION INVOLVING MORE THAN $50,000 OR OTHERWISE OUTSIDE THE ORDINARY COURSE
OF BUSINESS, OR ENTERED INTO ANY TRANSACTION WITH ANY INSIDER;

 

(J)                                     (I) MADE OR GRANTED ANY BONUS OR
INCREASE IN THE COMPENSATION OR BENEFITS OF ANY EMPLOYEE OR OFFICER OF THE
COMPANY (OTHER THAN IN THE ORDINARY COURSE OF BUSINESS, AND NOT IN CONTEMPLATION
OF THIS TRANSACTION OR OTHER SIMILAR TRANSACTIONS) OR (II) ENTERED INTO,
AMENDED, MODIFIED OR TERMINATED ANY EMPLOYEE BENEFIT PLAN;

 

(K)                                  CONDUCTED ITS BILLING AND COLLECTION OF
RECEIVABLES AND INVENTORY PURCHASES OTHER THAN IN THE ORDINARY COURSE OF
BUSINESS OR CHANGED ITS PRICING STRUCTURE;

 

(L)                                     MADE ANY CAPITAL EXPENDITURES OR
COMMITMENTS THEREFOR (OTHER THAN IN THE ORDINARY COURSE OF BUSINESS AND IN
AMOUNTS SUFFICIENT TO SUPPORT ONGOING BUSINESS OPERATIONS);

 

(M)                               DELAYED OR POSTPONED THE REPAIR AND
MAINTENANCE OF ITS PROPERTIES OR THE PAYMENT OF ACCOUNTS PAYABLE, ACCRUED
LIABILITIES AND OTHER OBLIGATIONS AND LIABILITIES;

 

(N)                                 MADE LOANS OR ADVANCES TO, GUARANTEES FOR
THE BENEFIT OF, OR ANY INVESTMENTS IN, ANY PERSONS IN EXCESS OF $50,000 IN THE
AGGREGATE;

 

(O)                                 INSTITUTED OR SETTLED ANY CLAIM OR LAWSUIT
INVOLVING EQUITABLE OR INJUNCTIVE RELIEF OR THE PAYMENT BY OR ON BEHALF OF THE
COMPANY OF MORE THAN $50,000 IN THE AGGREGATE;

 

(P)                                 GRANTED ANY PERFORMANCE GUARANTEES TO ITS
CUSTOMERS OTHER THAN IN THE ORDINARY COURSE OF BUSINESS AND CONSISTENT WITH THE
POLICIES AND PRACTICES DISCLOSED TO BUYER;

 

(Q)                                 INSTITUTED OR PERMITTED ANY CHANGE IN THE
CONDUCT OF ITS BUSINESS, OR ANY CHANGE IN ITS METHOD OF PURCHASE, SALE, LEASE,
MANAGEMENT, MARKETING, PROMOTION OR OPERATION;

 

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(R)                                    DECLARED, SET ASIDE OR PAID ANY DIVIDEND
OR MADE ANY SIMILAR DISTRIBUTION, REDEEMED, PURCHASED OR OTHERWISE ACQUIRED,
DIRECTLY OR INDIRECTLY, ANY SHARES OF ITS CAPITAL STOCK (OR OTHER EQUITY
SECURITIES), OR MADE ANY LOAN OR ENTERED INTO ANY TRANSACTION WITH OR
DISTRIBUTED ANY ASSETS OR PROPERTY TO ANY OF ITS OFFICERS, DIRECTORS,
SHAREHOLDERS, AFFILIATES OR OTHER INSIDERS, EXCEPT FOR COMPENSATION PAID TO
INSIDERS IN THE ORDINARY COURSE OF BUSINESS;

 

(S)                                  ACQUIRED ANY OTHER BUSINESS OR ENTITY (OR
ANY SIGNIFICANT PORTION OR DIVISION THEREOF), WHETHER BY MERGER, CONSOLIDATION
OR REORGANIZATION OR BY THE PURCHASE OF ITS ASSETS OR STOCK; OR

 

(T)                                    COMMITTED TO DO ANY OF THE FOREGOING.

 

2.23                           BANK ACCOUNTS.  SCHEDULE 2.23 LISTS ALL OF THE
COMPANY’S BANK ACCOUNTS.

 

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

 

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

 

2.26                           State Takeover Laws.  The Company is not subject
to any “moratorium,” “fair price,” “business combination,” “control share” or
other anti-takeover laws under the laws of the State of Connecticut.

 

2.27                           Statements True and Correct.  No representation,
warranty or disclosure made by the Company in any Transaction Document contains
any untrue statement of fact or omits to state any fact necessary in order to
make statements contained herein or therein not misleading in light of
circumstances under which they were made.

 

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER

 

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

 

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

 

3.2                                 Authorization of Transaction.  Buyer has
full corporate power and authority to execute and deliver the Transaction
Documents and to perform its obligations thereunder.  The execution, delivery
and performance of the Transaction Documents to which Buyer is a party have been
duly authorized by Buyer.  Each of the Transaction Documents to which Buyer is a
party constitutes the valid and legally binding obligation of Buyer, enforceable
in accordance with its terms and conditions.

 

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

 

3.4                                 Brokers.  There are no claims for brokerage
commissions, finders’ fees or similar compensation in connection with the
transactions contemplated by this Agreement or any of the Transaction Documents
based on any Contract to which Buyer is a party or otherwise binding upon
Buyer.  Except as set forth in Schedule 3.4, Buyer has not made, and Buyer is
not obligated to make, any payment to any Person in connection with the
transactions contemplated by the Transaction Documents.  No rights or benefits
of any Person have been (or will be) accelerated or increased as a result of the
consummation of the transactions contemplated by the Transaction Documents. 
Buyer shall pay, and hold the Company harmless against, any Liability (including
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
with any such claim.

 

3.5                                 Statements True and Correct.  No
representation, warranty or disclosure made by Buyer in any Transaction Document
contains any untrue statement of fact or omits to state any fact necessary in
order to make statements contained herein or therein not misleading in light of
circumstances under which they were made.

 

ARTICLE 4
ADDITIONAL AGREEMENTS

 

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

 

4.2                                 Tax Matters.

 

(A)                                  ALL TRANSFER, DOCUMENTARY, SALES, USE,
STAMP, REGISTRATION, NOTARIES FEES AND OTHER SUCH TAXES AND FEES (INCLUDING ANY
PENALTIES AND INTEREST) INCURRED IN CONNECTION WITH THIS AGREEMENT (INCLUDING
ANY GAINS TAX, TRANSFER TAX AND ANY SIMILAR TAX IMPOSED IN ANY STATE OR
SUBDIVISIONS), SHALL BE PAID BY THE COMPANY.  THE COMPANY WILL FILE ALL
NECESSARY TAX RETURNS AND OTHER DOCUMENTATION WITH RESPECT TO ALL SUCH TRANSFER,
DOCUMENTARY, SALES, USE, STAMP, REGISTRATION AND OTHER TAXES AND FEES, AND, IF
REQUIRED BY APPLICABLE LAW, THE COMPANY AND BUYER WILL, AND WILL CAUSE THEIR
RESPECTIVE AFFILIATES TO, JOIN IN THE EXECUTION OF ANY SUCH TAX RETURNS AND
OTHER DOCUMENTATION; PROVIDED THAT ANY EXPENSES OF THE COMPANY PURSUANT TO THIS
SECTION 4.2(A) SHALL BE PAID BY THE COMPANY.

 

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(B)                                 AFTER THE CLOSING, THE BUYER SHALL PREPARE
OR CAUSE TO BE PREPARED AND FILE OR CAUSE TO BE FILED ALL TAX RETURNS FOR THE
COMPANY FOR ALL PERIODS ENDING ON OR PRIOR TO THE CLOSING DATE WHICH ARE
REQUIRED TO BE FILED AFTER THE CLOSING DATE.  THE BUYER SHALL PREPARE SUCH TAX
RETURNS IN A MANNER CONSISTENT WITH PAST TAX RETURNS EXCEPT AS REQUIRED BY
APPLICABLE LAW OR CHANGE IN CIRCUMSTANCE.

 

(C)                                  BUYER SHALL FILE OR CAUSE TO BE FILED ALL
TAX RETURNS THAT ARE REQUIRED TO BE FILED, AND, SUBJECT TO SECTION 6.2(A)(IV),
PAY OR CAUSE TO BE PAID, ALL TAXES THAT ARE REQUIRED TO BE PAID BY OR WITH
RESPECT TO THE INCOME, ASSETS OR OPERATIONS OF THE COMPANY FOR ANY TAX PERIOD
BEGINNING AND ENDING AFTER THE CLOSING DATE (THE “POST-CLOSING TAX PERIOD”) .

 

(D)                                 THE COMPANY AND BUYER SHALL COOPERATE FULLY,
AS AND TO THE EXTENT REASONABLY REQUESTED BY THE OTHER PARTY, IN CONNECTION WITH
THE FILING OF TAX RETURNS PURSUANT TO THIS SECTION 4.2AND ANY AUDIT, LITIGATION,
OR OTHER PROCEEDING WITH RESPECT TO TAXES.  SUCH COOPERATION SHALL INCLUDE THE
RETENTION AND (UPON THE OTHER PARTY’S REQUEST) THE PROVISION OF RECORDS AND
INFORMATION WHICH ARE REASONABLY RELEVANT TO ANY SUCH AUDIT, LITIGATION, OR
OTHER PROCEEDING, AND MAKING EMPLOYEES REASONABLY AVAILABLE ON A MUTUALLY
CONVENIENT BASIS TO PROVIDE ADDITIONAL INFORMATION AND EXPLANATION OF ANY
MATERIAL PROVIDED HEREUNDER.

 

(E)                                  AT THE SOLE OPTION OF THE BUYER AT ANY TIME
FOLLOWING THE CLOSING, THE COMPANY AND THE SELLER SHAREHOLDERS SHALL JOIN WITH
BUYER IN MAKING AN ELECTION UNDER CODE SECTION 338(H)(10) (AND ANY CORRESPONDING
ELECTION UNDER STATE, LOCAL, AND NON-U.S. TAX LAW) WITH RESPECT TO THE PURCHASE
AND SALE OF THE COMPANY’S STOCK HEREUNDER (COLLECTIVELY A
“SECTION 338(H)(10) ELECTION”).  THE SELLER SHAREHOLDERS SHALL COOPERATE FULLY
WITH THE BUYER IN MAKING THE SECTION 338(H)(10) ELECTION, INCLUDING EXECUTING
AND FILING IRS FORM 8023 AND ALL OTHER FORMS, RETURNS, ELECTIONS, SCHEDULES, AND
DOCUMENTS REQUIRED TO EFFECT THE SECTION 338(H)(10) ELECTION (THE “FORMS”) AND
DELIVERING THE FORMS TO THE BUYER PROMPTLY UPON REQUEST.  THE BUYER SHALL BE
AUTHORIZED TO COMPLETE THE FORMS IN ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT AND FILE THE FORMS WITH THE APPLICABLE GOVERNMENTAL ENTITIES.  IF THE
BUYER OPTS TO MAKE THE SECTION 338(H)(10) ELECTION, THE PARTIES AGREE THAT,
EXCEPT AS REQUIRED BY A FINAL DETERMINATION WITH ANY TAX OR APPLICABLE JUDICIAL
AUTHORITY, THEY WILL NOT TAKE, OR CAUSE OR PERMIT TO BE TAKEN, ANY ACTION IN
CONNECTION WITH THE FILING OF ANY TAX RETURN OR ELECTION ON BEHALF OF THE SELLER
SHAREHOLDERS, BUYER, OR COMPANY, WHICH WOULD BE INCONSISTENT WITH, PREJUDICE, OR
ADVERSELY AFFECT THE SECTION 338(H)(10) ELECTION.  THE SELLER SHAREHOLDERS SHALL
INCLUDE ANY INCOME, GAIN, LOSS, DEDUCTION, OR OTHER TAX ITEM RESULTING FROM THE
SECTION 338(H)(10) ELECTION ON THEIR TAX RETURNS TO THE EXTENT REQUIRED BY
APPLICABLE LAW.  THE SELLER SHAREHOLDERS SHALL ALSO PAY ANY TAX IMPOSED ON THE
COMPANY ATTRIBUTABLE TO THE MAKING OF THE SECTION 338(H)(10) ELECTION, INCLUDING
(I) ANY TAX IMPOSED UNDER CODE SECTION 1374, (II) ANY TAX IMPOSED UNDER REG.
SECTION 1.338(H)(10)-1(D)(2), OR (III) ANY STATE, LOCAL, OR NON-U.S. TAX IMPOSED
ON THE COMPANY’S GAIN, AND SELLER SHAREHOLDERS SHALL INDEMNIFY BUYER AND COMPANY
AGAINST ANY ADVERSE CONSEQUENCES ARISING OUT OF ANY FAILURE TO PAY ANY SUCH
TAXES.

 

(F)                                    IF THE BUYER ELECTS TO MAKE A
SECTION 338(H)(10) ELECTION, THE BUYER, COMPANY, AND SELLER SHAREHOLDERS AGREE
THAT THE PURCHASE PRICE AND THE LIABILITIES OF THE COMPANY AND ITS QUALIFIED
SUBCHAPTER S SUBSIDIARIES (PLUS OTHER RELEVANT ITEMS) WILL BE ALLOCATED TO THE
ASSETS OF THE COMPANY AND ITS QUALIFIED SUBCHAPTER S SUBSIDIARIES FOR ALL
PURPOSES (INCLUDING TAX AND FINANCIAL ACCOUNTING) IN A MANNER CONSISTENT WITH
CODE SECTIONS 338 AND 1060 AND THE REGULATIONS THEREUNDER, BASED ON AN
ALLOCATION SCHEDULE THAT WILL BE PREPARED BY THE BUYER WITHIN 30 DAYS OF THE
CLOSING DATE.  THE BUYER, COMPANY, AND SELLER SHAREHOLDERS SHALL FILE ALL TAX
RETURNS (INCLUDING AMENDED RETURNS AND CLAIMS FOR REFUND) AND INFORMATION
REPORTS IN A MANNER CONSISTENT WITH SUCH VALUES.

 

(G)                                 THE COMPANY AND SELLER SHAREHOLDERS SHALL
NOT REVOKE THE COMPANY’S ELECTION TO BE TAXED AS AN S CORPORATION WITHIN THE
MEANING OF CODE SECTIONS 1361 AND 1362.  THE COMPANY AND

 

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SELLER SHAREHOLDERS SHALL NOT TAKE OR ALLOW ANY ACTION THAT WOULD RESULT IN THE
TERMINATION OF THE COMPANY’S STATUS AS A VALIDLY ELECTING S CORPORATION WITHIN
THE MEANING OF CODE SECTIONS 1361 AND 1362.

 

(H)                                 IF THE BUYER ELECTS TO MAKE A
SECTION 338(H)(10) ELECTION AND SUCH ELECTION REDUCES THE AFTER-TAX NET PROCEEDS
THAT THE SELLER SHAREHOLDERS WOULD HAVE RECEIVED HAD THE
SECTION 338(H)(10) ELECTION NOT BEEN MADE BY MORE THAN $120,000.00, THEN THE
BUYER SHALL PAY, IN CASH, TO THE SELLER SHAREHOLDERS (X) THE AMOUNT OF
ADDITIONAL CONSIDERATION NECESSARY TO CAUSE THE SELLER SHAREHOLDERS AFTER-TAX
NET PROCEEDS FROM THE SALE OF THE COMPANY’S STOCK WITH THE
SECTION 338(H)(10) ELECTION TO BE EQUAL TO THE AFTER-TAX NET PROCEEDS THAT
SELLER SHAREHOLDERS WOULD HAVE RECEIVED HAD THE SECTION 338(H)(10) ELECTION NOT
BEEN MADE MINUS (Y) $120,000.00, TAKING INTO ACCOUNT ALL APPROPRIATE STATE,
FEDERAL, AND LOCAL TAX IMPLICATIONS (THE “TAX ADJUSTMENT”).  THE AGGREGATE
AMOUNT OF THE TAX ADJUSTMENT SHALL BE PAID TO THE SELLER SHAREHOLDERS AT THE
TIME THAT THE SELLER SHAREHOLDER’S TAX RETURNS ARE DUE.  THE SELLER SHAREHOLDERS
WILL PROVIDE THE COMPANY WITH A SCHEDULE COMPUTING THE AMOUNT OF THE TAX
ADJUSTMENT AND SUCH OTHER DOCUMENTS AS MAY BE REASONABLY NECESSARY TO EVIDENCE
THE AMOUNT OF SUCH TAX ADJUSTMENT FOR THE TAXABLE YEAR OF THE SELLER
SHAREHOLDERS IN WHICH THE CLOSING OCCURS AND AN ESTIMATE OF SUCH TAX ADJUSTMENT
FOR THE 2010 TAXABLE YEAR OF THE SELLER SHAREHOLDERS WITHIN 30 DAYS AFTER THE
PARTIES HAVE AGREED TO THE ALLOCATION OF THE PURCHASE PRICE.  FOR TAX PURPOSES,
THE PARTIES AGREE TO TREAT THE TAX ADJUSTMENT AS AN ADJUSTMENT TO THE PURCHASE
PRICE.

 

(I)                                     IF AND TO THE EXTENT THAT THE BUYER
RECEIVES ANY TAX BENEFIT IN A POST-CLOSING TAX PERIOD ATTRIBUTABLE TO THE
PAYMENTS IN RESPECT OF THE LTIP OBLIGATIONS MADE AT CLOSING, THE COMPANY WILL
MAKE A PAYMENT EQUAL TO FIFTY PERCENT (50%) OF SUCH TAX BENEFITS TO THE SELLER
SHAREHOLDERS AT THE TIME SUCH TAX BENEFITS ARE ACTUALLY REALIZED.  FOR TAX
PURPOSES, THE PARTIES AGREE TO TREAT ANY SUCH PAYMENTS AS AN ADJUSTMENT TO THE
PURCHASE PRICE.

 

4.3                                 Confidentiality; Non-Compete:
Non-Solicitation; Non-Disparagement. In further consideration for the payment of
the purchase price hereunder and in order to protect the value of the Purchased
Securities purchased by Buyer (including, without limitation, the goodwill
inherent in the Company as of the Closing Date), upon the Closing of the
transactions contemplated by this Agreement, each Seller Shareholder agrees as
follows:

 

(A)                                  AS AN OWNER OF THE SECURITIES, AND AN
EMPLOYEE OF THE COMPANY OR THE COMPANY’S SUBSIDIARY, EACH SELLER SHAREHOLDER HAS
HAD ACCESS TO AND CONTRIBUTED TO INFORMATION AND MATERIALS OF A HIGHLY SENSITIVE
NATURE (INCLUDING CONFIDENTIAL INFORMATION, AS DEFINED BELOW) OF THE COMPANY,
ITS CURRENT AND FUTURE, DIRECT AND INDIRECT, SUBSIDIARIES, PARENT (INCLUDING,
WITHOUT LIMITATION, BUYER), AND RELATED ENTITIES (EACH OF THE FOREGOING, AN
“INSOURCE ENTITY,” AND COLLECTIVELY, THE “INSOURCE GROUP”).  EACH SELLER
SHAREHOLDER AGREES THAT UNLESS SUCH SELLER SHAREHOLDER FIRST SECURES THE WRITTEN
CONSENT OF AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BUYER, SUCH SELLER
SHAREHOLDER SHALL NOT USE FOR HIS OR HERSELF OR ANYONE ELSE, AND SHALL NOT
DISCLOSE TO OTHERS, ANY CONFIDENTIAL INFORMATION, EXCEPT AS MAY BE NECESSARY FOR
HIM OR HER TO CARRY OUT HIS OR HER DUTIES OR EXCEPT TO THE EXTENT SUCH USE OR
DISCLOSURE IS REQUIRED BY LAW OR ORDER OF ANY GOVERNMENTAL AUTHORITY (IN WHICH
EVENT EACH SELLER SHAREHOLDER SHALL, TO THE EXTENT PRACTICABLE, INFORM THE
COMPANY IN ADVANCE OF ANY SUCH REQUIRED DISCLOSURE, SHALL COOPERATE WITH THE
COMPANY IN ALL REASONABLE WAYS IN OBTAINING A PROTECTIVE ORDER OR OTHER
PROTECTION IN RESPECT OF SUCH REQUIRED DISCLOSURE, AND SHALL LIMIT SUCH
DISCLOSURE TO THE EXTENT REASONABLY POSSIBLE WHILE STILL COMPLYING WITH SUCH
REQUIREMENTS).  EACH SELLER SHAREHOLDER SHALL USE REASONABLE CARE TO SAFEGUARD
CONFIDENTIAL INFORMATION AND TO PROTECT IT AGAINST DISCLOSURE, MISUSE,
ESPIONAGE, LOSS AND THEFT.

 

(B)                                 (I) EACH SELLER SHAREHOLDER FURTHER AGREES
THAT, AT ANY TIME REQUESTED, SUCH SELLER SHAREHOLDER SHALL PROMPTLY DELIVER TO
THE COMPANY ALL CONFIDENTIAL INFORMATION AND OTHER INTELLECTUAL PROPERTY OF THE
INSOURCE GROUP IN SUCH SELLER SHAREHOLDER’S POSSESSION AND CONTROL AND ALL
COPIES

 

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THEREOF, IN WHATEVER FORM OR MEDIUM, INCLUDING, WITHOUT LIMITATION, WRITTEN
RECORDS, OPTICAL AND MAGNETIC MEDIA, AND ALL OTHER MATERIALS CONTAINING OR
EMBODYING ANY SUCH INTELLECTUAL PROPERTY.  IF THE COMPANY REQUESTS, EACH SELLER
SHAREHOLDER SHALL PROMPTLY PROVIDE WRITTEN CONFIRMATION THAT SUCH SELLER
SHAREHOLDER HAS RETURNED ALL SUCH MATERIALS.

 

(C)                                  EACH SELLER SHAREHOLDER AGREES THAT THE
COMPANY AND ITS SUBSIDIARIES HAVE RECEIVED FROM THIRD PARTIES THEIR CONFIDENTIAL
OR PROPRIETARY INFORMATION SUBJECT TO A DUTY ON THE COMPANY’S AND ITS
SUBSIDIARIES’ PART TO MAINTAIN THE CONFIDENTIALITY OF SUCH INFORMATION AND TO
USE IT ONLY FOR CERTAIN LIMITED PURPOSES.  EACH SELLER SHAREHOLDER AGREES THAT
HE OR SHE OWES THE COMPANY, ITS SUBSIDIARIES AND SUCH THIRD PARTIES A DUTY TO
HOLD ALL SUCH CONFIDENTIAL OR PROPRIETARY INFORMATION IN THE STRICTEST
CONFIDENCE AND NOT TO DISCLOSE IT TO ANY PERSON, FIRM, OR CORPORATION (EXCEPT AS
NECESSARY IN CARRYING OUT SUCH SELLER SHAREHOLDER’S FUTURE WORK FOR THE COMPANY
OR ITS SUBSIDIARIES CONSISTENT WITH THE COMPANY’S OR SUBSIDIARIES’ AGREEMENT
WITH SUCH THIRD PARTY) OR TO USE IT FOR THE BENEFIT OF ANYONE OTHER THAN FOR THE
COMPANY, ITS SUBSIDIARIES OR SUCH THIRD PARTY (CONSISTENT WITH THE COMPANY’S OR
SUBSIDIARIES’ AGREEMENT WITH SUCH THIRD PARTY) WITHOUT THE EXPRESS AUTHORIZATION
OF THE COMPANY OR ITS SUBSIDIARIES.

 

(D)                                 EACH SELLER SHAREHOLDER ACKNOWLEDGES THAT HE
OR SHE SHALL BECOME FAMILIAR WITH CONFIDENTIAL INFORMATION CONCERNING THE
INSOURCE GROUP AND THAT HIS OR HER SERVICES HAVE BEEN AND SHALL BE OF SPECIAL,
UNIQUE AND EXTRAORDINARY VALUE TO THE INSOURCE GROUP.  THEREFORE, EACH SELLER
SHAREHOLDER AGREES THAT DURING THE PERIOD BEGINNING ON THE DATE HEREOF AND
ENDING ON THE THREE (3) YEAR ANNIVERSARY OF THE CLOSING (THE “NONCOMPETE
PERIOD”), HE OR SHE SHALL NOT (AND SHALL NOT TAKE ANY STEPS TOWARD OR
PREPARATIONS IN RESPECT OF), DIRECTLY OR INDIRECTLY, EITHER FOR HIMSELF OR
HERSELF OR FOR ANY OTHER PERSON, PARTNER, OFFICER, DIRECTOR, CONSULTANT, AGENT,
EMPLOYEE, OR STOCKHOLDER OF ANY COMPANY OR OTHER COMMERCIAL ENTERPRISE
(I) ENGAGE IN ANY BUSINESS OR ACCEPT EMPLOYMENT WITH ANY COMPETITOR OR
(II) PROVIDE ANY SERVICES WHETHER DIRECTLY OR INDIRECTLY AND WHETHER ON SUCH
SELLER SHAREHOLDER’S OWN OR ON BEHALF OF ANY INSOURCE COMPETITOR TO ANY PERSON
OR ENTITY THAT WAS EITHER A COMPANY CUSTOMER DURING THE TERM OF SUCH SELLER
SHAREHOLDER’S TERM OF EMPLOYMENT WITH THE COMPANY OR BUYER (AS THE CASE MAY BE),
OR A PROSPECTIVE CUSTOMER.  FOR PURPOSES OF THIS AGREEMENT, THE TERM
“PARTICIPATE” INCLUDES ANY DIRECT OR INDIRECT INTEREST IN ANY ENTERPRISE,
WHETHER AS AN OFFICER, DIRECTOR, EMPLOYEE, PARTNER, SOLE PROPRIETOR, AGENT,
REPRESENTATIVE, INDEPENDENT CONTRACTOR, SELLER, FRANCHISOR, FRANCHISEE,
CREDITOR, OR OWNER; PROVIDED THAT THE FOREGOING ACTIVITIES SHALL NOT INCLUDE
PASSIVE OWNERSHIP OF LESS THAN 3% OF THE STOCK OF A PUBLICLY-HELD CORPORATION
WHOSE STOCK IS TRADED ON A NATIONAL SECURITIES EXCHANGE OR IN THE
OVER-THE-COUNTER MARKET BY EACH SELLER SHAREHOLDER.  EACH SELLER SHAREHOLDER
AGREES THAT THIS COVENANT IS REASONABLE WITH RESPECT TO ITS DURATION,
GEOGRAPHICAL AREA AND SCOPE.

 

(E)                                  DURING THE NONCOMPETE PERIOD, EACH SELLER
SHAREHOLDER SHALL NOT DIRECTLY OR INDIRECTLY THROUGH ANOTHER ENTITY (I) INDUCE
OR ATTEMPT TO INDUCE ANY EMPLOYEE OF THE INSOURCE GROUP TO LEAVE THE EMPLOY OF
THE INSOURCE GROUP, (II) HIRE OR EMPLOY ANY PERSON WHO WAS AN EMPLOYEE OF THE
INSOURCE GROUP AT ANY TIME DURING THE SIX MONTH PERIOD IMMEDIATELY PRIOR TO THE
DATE HEREOF, (III) CALL ON, SOLICIT, OR SERVICE ANY CUSTOMER, SUPPLIER,
LICENSEE, LICENSOR OR OTHER BUSINESS RELATION OR PROSPECTIVE CLIENT OF THE
INSOURCE GROUP WITH RESPECT TO PRODUCTS AND/OR SERVICES THAT HAVE BEEN PROVIDED
BY THE INSOURCE GROUP, ARE CURRENTLY BEING PROVIDED BY THE INSOURCE GROUP OR
WHICH THE INSOURCE GROUP IS CURRENTLY IN THE PROCESS OF DEVELOPING OR
(IV) INDUCE OR ATTEMPT TO INDUCE ANY CUSTOMER, SUPPLIER, LICENSEE, LICENSOR OR
OTHER BUSINESS RELATION OF THE INSOURCE GROUP TO CEASE DOING BUSINESS WITH THE
INSOURCE GROUP.

 

(F)                                    EACH SELLER SHAREHOLDER ACKNOWLEDGES
THAT, IN THE COURSE OF HIS OR HER EMPLOYMENT WITH THE INSOURCE GROUP, HE OR SHE
HAS AND WILL BECOME FAMILIAR WITH THE CONFIDENTIAL INFORMATION OF THE INSOURCE
GROUP.  EACH SELLER SHAREHOLDER FURTHER ACKNOWLEDGES THAT THE SCOPE OF THE
BUSINESS OF THE INSOURCE GROUP IS INDEPENDENT OF LOCATION (SUCH THAT IS NOT
PRACTICAL TO LIMIT THE RESTRICTIONS CONTAINED IN THIS SECTION 4.3 TO A SPECIFIED
COUNTRY, CITY, OR PART THEREOF) AND, THAT SUCH SELLER

 

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SHAREHOLDER HAS HAD DIRECT OR INDIRECT RESPONSIBILITY, OVERSIGHT OR DUTIES WITH
RESPECT TO ALL OF THE BUSINESSES OF THE INSOURCE GROUP AND ITS AND THEIR CURRENT
AND PROSPECTIVE EMPLOYEES, VENDORS, CUSTOMERS, CLIENTS AND OTHER BUSINESS
RELATIONS, AND THAT, ACCORDINGLY, THE RESTRICTIONS CONTAINED IN THIS SECTION 4.3
ARE REASONABLE IN ALL RESPECTS AND NECESSARY TO PROTECT THE GOODWILL AND
CONFIDENTIAL INFORMATION OF THE INSOURCE GROUP AND THAT, WITHOUT SUCH
PROTECTION, THE INSOURCE GROUP CUSTOMER AND CLIENT RELATIONSHIP AND COMPETITIVE
ADVANTAGE WOULD BE MATERIALLY ADVERSELY AFFECTED.  IT IS SPECIFICALLY RECOGNIZED
BY EACH SELLER SHAREHOLDER THAT HIS OR HER SERVICES TO THE INSOURCE GROUP ARE
SPECIAL, UNIQUE, AND OF EXTRAORDINARY VALUE, THAT THE COMPANY AND THE OTHER
MEMBERS OF THE INSOURCE GROUP HAVE A PROTECTABLE INTEREST IN PROHIBITING EACH
SELLER SHAREHOLDER AS PROVIDED IN THIS SECTION 4.3, THAT SUCH SELLER SHAREHOLDER
WAS SIGNIFICANTLY RESPONSIBLE FOR THE CREATION AND PRESERVATION OF THE INSOURCE
GROUP GOODWILL, AND THAT MONEY DAMAGES ARE INSUFFICIENT TO PROTECT SUCH
INTEREST, AND THAT SUCH PROHIBITIONS WOULD BE NECESSARY AND APPROPRIATE WITHOUT
REGARD TO PAYMENTS BEING MADE TO EACH SELLER SHAREHOLDER HEREUNDER.  EACH SELLER
SHAREHOLDER FURTHER ACKNOWLEDGES THAT THE RESTRICTIONS CONTAINED IN THIS
SECTION 4.3 DO NOT IMPOSE AN UNDUE HARDSHIP ON HIM OR HER AND, SINCE HE OR SHE
HAS GENERAL BUSINESS SKILLS WHICH MAY BE USED IN INDUSTRIES OTHER THAN THAT IN
WHICH EACH INSOURCE ENTITY CONDUCTS ITS BUSINESS AND DO NOT DEPRIVE EITHER
SELLER SHAREHOLDER OF HIS OR HER LIVELIHOOD.

 

(G)                                 IF, AT THE TIME OF ENFORCEMENT OF THIS
AGREEMENT, A COURT OR ARBITRATOR’S AWARD HOLDS THAT THE RESTRICTIONS STATED IN
THIS SECTION 4.3 ARE UNREASONABLE UNDER CIRCUMSTANCES THEN EXISTING, THE PARTIES
HERETO AGREE THAT THE MAXIMUM PERIOD, SCOPE OR GEOGRAPHICAL AREA REASONABLE
UNDER SUCH CIRCUMSTANCES SHALL BE SUBSTITUTED FOR THE STATED PERIOD, SCOPE OR
AREA.  THE PARTIES HERETO AGREE THAT MONEY DAMAGES WOULD NOT BE AN ADEQUATE
REMEDY FOR ANY BREACH OF THIS AGREEMENT.  THEREFORE, IN THE EVENT OF A BREACH OR
THREATENED BREACH OF ANY PROVISIONS OF THIS SECTION 4.3 THAT IS CONTINUING, THE
COMPANY, ITS SUCCESSORS AND ASSIGNS AND ANY THIRD PARTY BENEFICIARY TO THIS
AGREEMENT MAY, IN ADDITION TO OTHER RIGHTS AND REMEDIES EXISTING IN THEIR FAVOR,
APPLY TO ANY COURT OF COMPETENT JURISDICTION FOR SPECIFIC PERFORMANCE AND/OR
INJUNCTIVE OR OTHER RELIEF IN ORDER TO ENFORCE, OR PREVENT ANY VIOLATIONS OF,
THE PROVISIONS HEREOF (WITHOUT POSTING A BOND OR OTHER SECURITY).  IN ADDITION,
IN THE EVENT OF A BREACH OF VIOLATION BY EACH SELLER SHAREHOLDER OF THIS
SECTION 4.3, THE NONCOMPETE PERIOD SHALL BE TOLLED UNTIL SUCH BREACH OR
VIOLATION HAS BEEN DULY CURED.  EACH SELLER SHAREHOLDER AGREES THAT THE
RESTRICTIONS CONTAINED IN THIS SECTION 4.3 ARE REASONABLE.

 

(H)                                 EACH SELLER SHAREHOLDER ACKNOWLEDGES AND
REPRESENTS THAT: (I) SUFFICIENT CONSIDERATION HAS BEEN GIVEN BY EACH PARTY TO
THIS AGREEMENT TO THE OTHER AS IT RELATES HERETO; (II) HE OR SHE HAS CONSULTED
WITH INDEPENDENT LEGAL COUNSEL REGARDING HIS OR HER RIGHTS AND OBLIGATIONS UNDER
THIS SECTION 4.3, (III) THAT HE OR SHE FULLY UNDERSTANDS THE TERMS AND
CONDITIONS CONTAINED HEREIN, AND (IV) THAT THE AGREEMENTS IN THIS SECTION 4.3
ARE REASONABLE AND NECESSARY FOR THE PROTECTION OF THE COMPANY AND THE OTHER
MEMBERS OF THE INSOURCE GROUP AND ARE AN ESSENTIAL INDUCEMENT TO BUYER TO ENTER
INTO THIS AGREEMENT.

 

(I)                                     EACH SELLER SHAREHOLDER FURTHER
REPRESENTS AND WARRANTS THAT: (I) THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT DOES NOT AND WILL NOT CONFLICT WITH, BREACH, VIOLATE OR CAUSE A
DEFAULT UNDER ANY CONTRACT, AGREEMENT, INSTRUMENT, ORDER, JUDGMENT OR DECREE TO
WHICH EITHER SELLER SHAREHOLDER IS A PARTY OR BY WHICH HE OR SHE IS BOUND;
(II) THIS AGREEMENT IS A VALID AND BINDING OBLIGATION ON EACH SELLER SHAREHOLDER
AND IS ENFORCEABLE IN ACCORDANCE WITH ITS TERMS; AND (III) EACH SELLER
SHAREHOLDER IS NOT A PARTY TO OR BOUND BY ANY EMPLOYMENT AGREEMENT, NONCOMPETE
AGREEMENT OR CONFIDENTIALITY AGREEMENT WITH ANY PERSON OR ENTITY OTHER THAN THE
COMPANY.

 

4.4                                 Litigation Support.  In the event that, and
for so long as, any Party is actively contesting or defending against any
charge, audit, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand in connection with (i) any transaction contemplated by any of
the Transaction Documents or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,

 

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action, failure to act, or transaction on or prior to the Closing Date involving
the Company, each of the other Parties will reasonably cooperate with such
contesting or defending Party and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under the provisions of this Agreement).

 

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

 

4.6                                 Proceeds from Purchase Price.  From and
after the Closing, Seller Shareholders agree not to use any of the proceeds from
the Purchase Price to make any payments to the employees of the Company.

 

ARTICLE 5
DELIVERABLES

 

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

 

(A)                                  EVIDENCE THAT ALL FILINGS, NOTICES,
LICENSES, PERMITS AND OTHER CONSENTS OF, TO OR WITH, ANY GOVERNMENTAL ENTITY OR
ANY OTHER PERSON THAT ARE REQUIRED BY THE COMPANY (I) FOR THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS; (II) IN ORDER TO
PREVENT A BREACH OF OR DEFAULT UNDER OR A RIGHT OF TERMINATION OR MODIFICATION
OF ANY CONTRACT TO WHICH THE COMPANY IS A PARTY OR TO WHICH ANY PORTION OF THE
PROPERTY OF THE COMPANY IS SUBJECT; OR (III) FOR THE CONDUCT OF THE BUSINESS OF
THE COMPANY AS HERETOFORE CONDUCTED FOLLOWING THE CLOSING.

 

(B)                                 ALL PAYOFF LETTERS AND RELEASES RELATING TO
ANY DEBT PAYOFF AMOUNTS AS SET FORTH ON SCHEDULE 5.1(B) AND RELEASES FROM THIRD
PARTIES OF ANY AND ALL LIENS RELATING TO THE ASSETS AND PROPERTY OF THE COMPANY,
AS SET FORTH ON SCHEDULE 5.1(B).

 

(C)                                  THE EMPLOYMENT AGREEMENT SET FORTH ON
EXHIBIT A HERETO EXECUTED BY MR. SHALABY.

 

(D)                                 THE AGREEMENTS IN THE FORMS SET FORTH ON
EXHIBIT B ATTACHED HERETO EXECUTED BY THE KEY EMPLOYEES, THE COMPANY AND THE
SELLER SHAREHOLDERS.

 

(E)                                  CERTIFIED COPIES OF THE COMPANY’S
CERTIFICATE OF FORMATION AS FILED WITH THE SECRETARY OF STATE OF CONNECTICUT;
CERTIFIED COPIES OF THE RESOLUTIONS DULY ADOPTED BY THE COMPANY’S BOARD AND ITS
SHAREHOLDERS AUTHORIZING THE COMPANY’S EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT AND THE TRANSACTION DOCUMENTS, THE COMPANY’S CORPORATE RECORDS,
STOCK LEDGERS AND MINUTE BOOKS AND SUCH OTHER DOCUMENTS OR INSTRUMENTS AS BUYER
MAY REASONABLY REQUEST OR MAY BE REQUIRED TO EFFECT THE TRANSACTIONS
CONTEMPLATED HEREBY.

 

(F)                                    THE OPINION, DATED AS OF THE CLOSING
DATE, FROM NICOLAI LAW GROUP, P.C., COUNSEL FOR THE COMPANY, COVERING MATTERS
PERTAINING TO THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS AS SET FORTH ON
EXHIBIT C ATTACHED HERETO.

 

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(G)                                 A CERTIFICATE, DATED AS OF THE CLOSING DATE,
EXECUTED BY AN AUTHORIZED OFFICER OF THE COMPANY CERTIFYING THAT THERE ARE NO
OTHER EXPENSES OWED BY THE COMPANY WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

 

(H)                                 A CERTIFICATE, DATED OF THE CLOSING DATE,
EXECUTED BY AN AUTHORIZED OFFICER OF THE COMPANY ESTABLISHING AN EXEMPTION FROM
WITHHOLDING TAX UNDER SECTION 1445 OF THE CODE IN ACCORDANCE WITH THE TREASURY
REGULATIONS PROMULGATED THEREUNDER, AS SET FORTH ON EXHIBIT D HERETO.

 

(I)                                     EXECUTED ACKNOWLEDGEMENTS FROM ALL
EMPLOYEES WHO PARTICIPATED IN THE LONG TERM INCENTIVE PLAN THAT THEY HAVE
RECEIVED ALL REQUIRED PAYMENTS DUE TO SUCH EMPLOYEES PURSUANT TO SUCH EMPLOYEE
BENEFIT PLAN, AS SET FORTH ON EXHIBIT E HERETO AND SATISFACTORY EVIDENCE, IN THE
BUYER’S DISCRETION, THAT THE LONG TERM INCENTIVE PLAN HAS BEEN TERMINATED AND IS
NO LONGER IN FORCE OR EFFECT.

 

(J)                                     THE DULY EXECUTED STOCK POWERS FROM THE
SELLER SHAREHOLDERS, FREE AND CLEAR OF ALL LIENS, TOGETHER WITH ANY STOCK
TRANSFER STAMPS OR RECEIPTS FOR ANY TRANSFER TAXES REQUIRED TO BE PAID THEREON.

 

(K)                                  THE RESIGNATIONS OF EACH DIRECTOR OF THE
COMPANY, EFFECTIVE AS OF THE CLOSING DATE.

 

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

 

(A)                                  EVIDENCE THAT THE BOARD OF DIRECTORS OF
BUYER HAS ADOPTED AND APPROVED THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENTS
AND THE CONSUMMATION OF THE TRANSACTION TO THE EXTENT AND AS REQUIRED BY THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE AND THE BUYER’S ORGANIZATIONAL
DOCUMENTS.

 

(B)                                 EVIDENCE THAT ALL FILINGS, NOTICES,
LICENSES, PERMITS AND OTHER CONSENTS OF, TO OR WITH, ANY GOVERNMENTAL ENTITY OR
ANY OTHER PERSON THAT ARE REQUIRED BY BUYER (I) FOR THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS; (II) IN ORDER TO PREVENT
A BREACH OF OR DEFAULT UNDER OR A RIGHT OF TERMINATION OR MODIFICATION OF ANY
CONTRACT TO WHICH THE COMPANY IS A PARTY OR TO WHICH ANY PORTION OF THE PROPERTY
OF BUYER IS SUBJECT; OR (III) FOR THE CONDUCT OF THE BUSINESS OF BUYER AS
HERETOFORE CONDUCTED FOLLOWING THE CLOSING.

 

(C)                                  THE EMPLOYEE BONUS PLAN AS SET FORTH ON
EXHIBIT F HERETO DULY ADOPTED BY THE BUYER.

 

(D)                                 EVIDENCE OF PAYMENT TO THE SELLER
SHAREHOLDERS BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT OR
ACCOUNTS TO BE DESIGNATED BY THE SELLER SHAREHOLDERS AND EVIDENCE THAT THE BUYER
HAS OPENED A SEPARATE ACCOUNT FOR THE HOLDBACK AMOUNT IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT.

 

ARTICLE 6
REMEDIES FOR BREACHES OF THIS AGREEMENT AND OTHER MATTERS

 

6.1                                 Survival of Representations and Warranties. 
All of the representations and warranties set forth in this Agreement, in any
other Transaction Document or in any writing delivered by Buyer or the Company
in connection herewith or therewith shall survive the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby
(regardless of any investigation, inquiry or examination made by or on behalf
of, or any knowledge of, or the acceptance of any certificate or opinion

 

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by or on behalf of, any Party and irrespective of the knowledge of any of the
Company’s officers, directors, shareholders, employees or agents, or the
acceptance of any of the disclosure schedules attached hereto or any certificate
or opinion).

 

6.2                                 Indemnification of Buyer.

 

(A)                                  SUBJECT TO THE LIMITATIONS SET FORTH IN
SECTIONS 6.2(B) AND 6.2(D), THE SELLER SHAREHOLDERS SHALL, JOINTLY AND
SEVERALLY, INDEMNIFY BUYER AND EACH OF ITS RESPECTIVE AFFILIATES (INCLUDING,
AFTER THE CLOSING, THE COMPANY), OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
REPRESENTATIVES, SUCCESSORS AND ASSIGNS (EACH A “BUYER PARTY”), AND SAVE AND
HOLD EACH OF THEM HARMLESS FROM AND AGAINST, AND PAY ON BEHALF OF OR REIMBURSE
ANY BUYER PARTY AS AND WHEN INCURRED FOR, ALL LOSSES WHICH ANY BUYER PARTY MAY
SUFFER, SUSTAIN OR BECOME SUBJECT TO AS A RESULT OF:

 

(I)                                     ANY BREACH OF ANY REPRESENTATION OR
WARRANTY MADE BY THE COMPANY OR A SELLER SHAREHOLDER AND CONTAINED IN THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR IN ANY SCHEDULE OR EXHIBIT ATTACHED
TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR IN ANY CERTIFICATE
DELIVERED BY THE COMPANY IN CONNECTION WITH THE CLOSING;

 

(II)                                  ANY BREACH OF ANY COVENANT MADE BY OR IN
RESPECT OF THE COMPANY OR A SELLER SHAREHOLDER UNDER THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT;

 

(III)                               ANY CLAIM BY ANY PERSON WITH RESPECT TO ANY
REFUND PAYMENTS OR WARRANTIES ARISING FROM ANY SERVICES PROVIDED BY THE COMPANY
OR EMPLOYEES THEREOF ON OR BEFORE THE CLOSING DATE PURSUANT TO ANY CONTRACTS;

 

(IV)                              ANY LIABILITY OF THE COMPANY, OR A SELLER
SHAREHOLDER, OR ANY OF THEIR RESPECTIVE AFFILIATES FOR (I) TAXES WITH RESPECT TO
ANY TAX PERIOD ENDING ON OR BEFORE THE CLOSING DATE (OR FOR ANY TAX PERIOD
BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE (A “STRADDLE PERIOD”) TO THE
EXTENT SUCH TAXES ARE ALLOCABLE TO THE PORTION OF SUCH PERIOD BEGINNING BEFORE
AND ENDING ON THE CLOSING DATE IN ACCORDANCE WITH SECTION 6.2 HEREOF), (II) ALL
TAXES OF ANY MEMBER OF AN AFFILIATED, CONSOLIDATED, COMBINED OR UNITARY GROUP OF
WHICH COMPANY (OR ANY PREDECESSOR OF ANY OF THE FOREGOING) IS OR WAS A MEMBER ON
OR PRIOR TO THE CLOSING DATE, INCLUDING PURSUANT TO TREASURY REGULATION
§1.1502-6 OR ANY ANALOGOUS OR SIMILAR STATE, LOCAL, OR NON-U.S. LAW OR
REGULATION, AND (III) ANY AND ALL TAXES OF ANY PERSON (OTHER THAN THE COMPANY)
IMPOSED ON COMPANY AS A TRANSFEREE OR SUCCESSOR, BY CONTRACT OR PURSUANT TO ANY
LAW, RULE, OR REGULATION, WHICH TAXES RELATE TO AN EVENT OR TRANSACTION
OCCURRING BEFORE THE CLOSING; PROVIDED, HOWEVER, THAT IN THE CASE OF CLAUSES
(I), (II), AND (III) ABOVE, SELLER SHAREHOLDERS SHALL BE LIABLE ONLY TO THE
EXTENT THAT SUCH TAXES EXCEED THE AMOUNT, IF ANY, RESERVED FOR SUCH TAXES
(EXCLUDING ANY RESERVE FOR DEFERRED TAXES ESTABLISHED TO REFLECT TIMING
DIFFERENCES BETWEEN BOOK AND TAX INCOME) ON THE FACE OF THE CLOSING DATE BALANCE
SHEET (RATHER THAN IN ANY NOTES THERETO) AND TAKEN INTO ACCOUNT IN DETERMINING
THE ADJUSTMENT TO THE PURCHASE PRICE. SELLER SHAREHOLDERS SHALL REIMBURSE BUYER
FOR ANY TAXES OF THE COMPANY THAT ARE THE RESPONSIBILITY OF THE SELLER
SHAREHOLDERS PURSUANT TO THIS SECTION 6.2(A)(IV) WITHIN FIFTEEN (15) BUSINESS
DAYS AFTER PAYMENT OF SUCH TAXES BY BUYER OR COMPANY BY FIRST DEDUCTING SUCH
TAXES FROM THE HOLDBACK FUND; AND

 

(V)                                 ANY CLAIM BY ANY PERSON OR PERSONS RELATED
TO, OR ARISING OUT OF, ANY OF THE FOREGOING.

 

(B)                                 SURVIVAL DATE.  THE SELLER SHAREHOLDERS WILL
NOT BE LIABLE WITH RESPECT TO ANY CLAIM MADE PURSUANT TO SECTION 6.2(A)(I) ABOVE
FOR THE BREACH OF ANY REPRESENTATION OR WARRANTY CONTAINED

 

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IN ARTICLE 2 OF THIS AGREEMENT UNLESS WRITTEN NOTICE OF A POSSIBLE CLAIM FOR
INDEMNIFICATION WITH RESPECT TO SUCH BREACH IS GIVEN BY A BUYER PARTY TO THE
COMPANY:

 

(I)                                     ON OR BEFORE THE DATE WHICH IS 90 DAYS
AFTER THE EXPIRATION OF THE APPLICABLE STATUTE OF LIMITATIONS (INCLUDING ANY
EXTENSION OR WAIVERS THEREOF) WITH RESPECT TO CLAIMS ARISING UNDER SECTION 2.15
(ERISA);

 

(II)                                  AT ANY TIME WITH RESPECT TO CLAIMS ARISING
UNDER SECTIONS 2.1 (ORGANIZATION; CORPORATE POWER), 2.2 (CAPITALIZATION), 2.4
(AUTHORIZATION; NO BREACH), AND/OR 2.8 (TAX), AS APPLICABLE (THE REPRESENTATIONS
AND WARRANTIES CONTAINED IN THE SECTIONS REFERENCED IN THIS CLAUSE (II) ARE
COLLECTIVELY REFERRED TO HEREIN AS THE “BUYER FUNDAMENTAL REPRESENTATIONS” AND,
INDIVIDUALLY, AS A “BUYER FUNDAMENTAL REPRESENTATION”); AND

 

(III)                               ON OR BEFORE THE FIRST ANNIVERSARY OF THE
CLOSING DATE WITH RESPECT TO CLAIMS ARISING UNDER ANY OTHER SECTION OF ARTICLE 2
(SUCH DATE, WITH RESPECT TO EACH SECTION, IS REFERRED TO HEREIN AS ITS “SURVIVAL
DATE”).

 

(C)                                  IT BEING UNDERSTOOD THAT, SUBJECT TO THE
LIMITATIONS SET FORTH IN SECTION 6.2(D) BELOW, SO LONG AS WRITTEN NOTICE IS
GIVEN ON OR PRIOR TO THE APPLICABLE SURVIVAL DATE WITH RESPECT TO ANY CLAIM, THE
SELLER SHAREHOLDERS SHALL BE REQUIRED TO INDEMNIFY ANY BUYER PARTY FOR ALL
LOSSES THAT ANY BUYER PARTY MAY SUFFER WITH RESPECT TO SUCH CLAIM THROUGH THE
DATE OF THE CLAIM, THE END OF THE SURVIVAL PERIOD AND BEYOND.

 

(D)                                 THE INDEMNIFICATION PROVIDED FOR IN
SECTION 6.2(A)(I) SHALL BE SUBJECT TO THE FOLLOWING LIMITATIONS:

 

(I)                                     THE SELLER SHAREHOLDERS WILL NOT BE
LIABLE TO ANY BUYER PARTY FOR ANY ADVERSE CONSEQUENCES UNDER
SECTION 6.2(A)(I) UNLESS AND UNTIL THE AGGREGATE AMOUNT OF ADVERSE CONSEQUENCES
RELATING TO ALL SUCH BREACHES, EXCLUDING ADVERSE CONSEQUENCES RELATED BREACHES
OF BUYER FUNDAMENTAL REPRESENTATIONS EXCEEDS $50,000.00 (THE “THRESHOLD”), AT
WHICH TIME THE COMPANY AND THE SELLER SHAREHOLDERS SHALL BE LIABLE FOR THE
AMOUNT OF ALL SUCH ADVERSE CONSEQUENCES FROM THE FIRST DOLLAR IN ACCORDANCE WITH
THE TERMS HEREOF.

 

6.3                                 Indemnification Provisions for Benefit of
the Company and the Seller Shareholders.

 

(A)                                  SUBJECT TO THE LIMITATIONS SET FORTH IN
SECTIONS 6.3(B) AND 6.3(C), BUYER SHALL INDEMNIFY THE SELLER SHAREHOLDERS AND
THE COMPANY AND EACH OF ITS RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, REPRESENTATIVES, SUCCESSORS AND ASSIGNS (EACH A “COMPANY
PARTY”) AND SAVE AND HOLD EACH OF THEM HARMLESS FROM AND AGAINST, AND PAY ON
BEHALF OF OR REIMBURSE ANY COMPANY PARTY AS AND WHEN INCURRED FOR, ALL LOSSES
WHICH ANY COMPANY PARTY MAY SUFFER, SUSTAIN OR BECOME SUBJECT TO AS A RESULT OF:

 

(I)                                     ANY BREACH OF ANY REPRESENTATION OR
WARRANTY MADE BY BUYER AND CONTAINED IN THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR IN ANY SCHEDULE OR EXHIBIT ATTACHED TO THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT OR IN ANY CERTIFICATE DELIVERED BY BUYER IN CONNECTION WITH
THE CLOSING;

 

(II)                                  ANY BREACH OF ANY COVENANT OR AGREEMENT OF
BUYER IN ANY OF THE TRANSACTION DOCUMENTS; AND

 

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(III)                               ANY CLAIM BY ANY PERSON OR PERSONS RELATED
TO, OR ARISING OUT OF, (Y) ANY OF THE FOREGOING OR (Z) THE OPERATION OF THE
COMPANY BY A BUYER PARTY AFTER THE CLOSING; PROVIDED, HOWEVER, THAT WITH RESPECT
TO THIS SUBSECTION (Z), ANY SUCH CLAIM DOES NOT RELATE TO OR ARISE FROM ANY OF
THE MATTERS SET FORTH IN SECTION 6.2(A)(I)6.2(A)(V).

 

(B)                                 SURVIVAL DATE.  BUYER WILL NOT BE LIABLE
WITH RESPECT TO ANY CLAIM MADE PURSUANT TO SECTION 6.3(A)(I) ABOVE FOR THE
BREACH OF ANY REPRESENTATION OR WARRANTY CONTAINED IN ARTICLE 3 OF THIS
AGREEMENT UNLESS WRITTEN NOTICE OF A POSSIBLE CLAIM FOR INDEMNIFICATION WITH
RESPECT TO SUCH BREACH IS GIVEN BY A COMPANY PARTY TO THE COMPANY:

 

(I)                                     AT ANY TIME WITH RESPECT TO CLAIMS
ARISING UNDER SECTIONS 3.1 (ORGANIZATION OF BUYER), 3.2 (AUTHORIZATION OF
TRANSACTION) AND 3.3 (NONCONTRAVENTION), AS APPLICABLE (THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THE SECTIONS REFERENCED IN THIS CLAUSE (I) ARE
COLLECTIVELY REFERRED TO HEREIN AS THE “COMPANY FUNDAMENTAL REPRESENTATIONS”
AND, INDIVIDUALLY, AS A “COMPANY FUNDAMENTAL REPRESENTATION”); AND

 

(II)                                  ON OR BEFORE THE FIRST ANNIVERSARY OF THE
CLOSING DATE WITH RESPECT TO CLAIMS ARISING UNDER ANY OTHER SECTIONS OF
ARTICLE 3;

 

it being understood that, subject to the limitations set forth in
Section 6.3(c) below, so long as written notice is given on or prior to the
applicable Survival Date with respect to any claim, Buyer shall be required to
indemnify any Company Party for all Losses that any Company Party may suffer
with respect to such claim through the date of the claim, the end of the
survival period and beyond.

 

(C)                                  THE INDEMNIFICATION PROVIDED FOR IN
SECTION 6.3(A)(I) SHALL BE SUBJECT TO THE FOLLOWING LIMITATIONS:

 

(I)                                     BUYER WILL NOT BE LIABLE TO ANY COMPANY
PARTY FOR ANY ADVERSE CONSEQUENCES UNDER SECTION 6.3(A)(I) UNLESS AND UNTIL THE
AGGREGATE AMOUNT OF ADVERSE CONSEQUENCES RELATING TO ALL SUCH BREACHES,
EXCLUDING ADVERSE CONSEQUENCES RELATED BREACHES OF THE COMPANY FUNDAMENTAL
REPRESENTATIONS EXCEEDS THE THRESHOLD AT WHICH TIME BUYER SHALL BE LIABLE FOR
THE AMOUNT OF ALL SUCH ADVERSE CONSEQUENCES FROM THE FIRST DOLLAR IN ACCORDANCE
WITH THE TERMS HEREOF.

 

6.4                                 Matters Involving Third Parties.

 

(A)                                  IF ANY COMPANY PARTY OR ANY BUYER PARTY
SEEKS INDEMNIFICATION UNDER THIS SECTION 6.4, SUCH PERSON (THE “INDEMNIFIED
PARTY”) SHALL GIVE WRITTEN NOTICE TO THE OTHER PERSON (THE “INDEMNIFYING
PARTY”). IN THAT REGARD, IF ANY LIABILITY SHALL BE BROUGHT OR ASSERTED BY ANY
THIRD PARTY WHICH, IF ADVERSELY DETERMINED, MAY ENTITLE THE INDEMNIFIED PARTY TO
INDEMNITY PURSUANT TO THIS SECTION 6.4 (A “THIRD PARTY CLAIM”), THE INDEMNIFIED
PARTY SHALL PROMPTLY NOTIFY THE INDEMNIFYING PARTY OF THE SAME IN WRITING,
SPECIFYING IN DETAIL THE BASIS OF SUCH LIABILITY AND THE FACTS PERTAINING
THERETO; PROVIDED, HOWEVER, THAT NO DELAY ON THE PART OF THE INDEMNIFIED PARTY
IN NOTIFYING ANY INDEMNIFYING PARTY SHALL RELIEVE THE INDEMNIFYING PARTY FROM
ANY LIABILITY OR ADVERSE CONSEQUENCES HEREUNDER UNLESS THE DELAY IN NOTICE HAS A
MATERIAL ADVERSE EFFECT ON THE INDEMNIFYING PARTY’S ABILITY TO SUCCESSFULLY
DEFEND SUCH CLAIM.

 

(B)                                 ANY INDEMNIFYING PARTY WILL HAVE THE RIGHT
TO DEFEND THE INDEMNIFIED PARTY AGAINST THE THIRD PARTY CLAIM WITH COUNSEL OF
ITS CHOICE REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTY SO LONG AS (I) THE
INDEMNIFYING PARTY NOTIFIES THE INDEMNIFIED PARTY IN WRITING WITHIN FIFTEEN (15)
DAYS AFTER THE INDEMNIFIED PARTY HAS GIVEN NOTICE OF THE THIRD PARTY CLAIM THAT
THE INDEMNIFYING PARTY WILL

 

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INDEMNIFY THE INDEMNIFIED PARTY FROM AND AGAINST THE ENTIRETY OF ANY ADVERSE
CONSEQUENCES (WITHOUT ANY LIMITATIONS) THE INDEMNIFIED PARTY MAY SUFFER
RESULTING FROM, ARISING OUT OF, RELATING TO, IN THE NATURE OF, OR CAUSED BY THE
THIRD PARTY CLAIM, (II) THE INDEMNIFYING PARTY PROVIDES THE INDEMNIFIED PARTY
WITH EVIDENCE REASONABLY ACCEPTABLE TO THE INDEMNIFIED PARTY THAT THE
INDEMNIFYING PARTY WILL HAVE THE FINANCIAL RESOURCES TO DEFEND AGAINST THE THIRD
PARTY CLAIM AND FULFILL ITS INDEMNIFICATION OBLIGATIONS HEREUNDER, (III) THE
THIRD PARTY CLAIM INVOLVES ONLY MONEY DAMAGES AND DOES NOT SEEK AN INJUNCTION OR
OTHER EQUITABLE RELIEF, (IV) SETTLEMENT OF, OR AN ADVERSE JUDGMENT WITH RESPECT
TO, THE THIRD PARTY CLAIM IS NOT, IN THE GOOD FAITH JUDGMENT OF THE INDEMNIFIED
PARTY, LIKELY TO ESTABLISH A PRECEDENT, CUSTOM OR PRACTICE MATERIALLY ADVERSE TO
THE CONTINUING BUSINESS INTERESTS OF THE INDEMNIFIED PARTY, AND (V) THE
INDEMNIFYING PARTY CONDUCTS THE DEFENSE OF THE THIRD PARTY CLAIM ACTIVELY AND
DILIGENTLY.

 

(C)                                  SO LONG AS THE INDEMNIFYING PARTY IS
CONDUCTING THE DEFENSE OF THE THIRD PARTY CLAIM IN ACCORDANCE WITH
SECTION 6.4(B) ABOVE, (I) THE INDEMNIFIED PARTY MAY RETAIN SEPARATE CO-COUNSEL
AT ITS SOLE COST AND EXPENSE AND PARTICIPATE IN THE DEFENSE OF THE THIRD PARTY
CLAIM, (II) THE INDEMNIFIED PARTY WILL NOT CONSENT TO THE ENTRY OF ANY JUDGMENT
OR ENTER INTO ANY SETTLEMENT WITH RESPECT TO THE THIRD PARTY CLAIM WITHOUT THE
PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY (WHICH CONSENT SHALL NOT BE
WITHHELD UNREASONABLY) AND (III) THE INDEMNIFYING PARTY WILL NOT CONSENT TO THE
ENTRY OR ANY JUDGMENT OR ENTER INTO ANY SETTLEMENT WITH RESPECT TO THE THIRD
PARTY CLAIM WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFIED PARTY (WHICH
CONSENT SHALL NOT BE WITHHELD UNREASONABLY).

 

(D)                                 IN THE EVENT THAT ANY OF THE CONDITIONS IN
SECTION 6.4(B) ABOVE IS OR BECOMES UNSATISFIED, HOWEVER, (I) THE INDEMNIFIED
PARTY MAY DEFEND AGAINST, AND CONSENT TO THE ENTRY OF ANY JUDGMENT OR ENTER INTO
ANY SETTLEMENT WITH RESPECT TO, THE THIRD PARTY CLAIM IN ANY MANNER IT MAY DEEM
APPROPRIATE (AND THE INDEMNIFIED PARTY NEED NOT CONSULT WITH, OR OBTAIN ANY
CONSENT FROM, ANY INDEMNIFYING PARTY IN CONNECTION THEREWITH), (II) THE
INDEMNIFYING PARTY WILL REIMBURSE THE INDEMNIFIED PARTY PROMPTLY AND
PERIODICALLY FOR THE COSTS OF DEFENDING AGAINST THE THIRD PARTY CLAIM (INCLUDING
ATTORNEYS’ FEES AND EXPENSES), AND (III) THE INDEMNIFYING PARTY WILL REMAIN
RESPONSIBLE FOR ANY ADVERSE CONSEQUENCES THE INDEMNIFIED PARTY MAY SUFFER
RESULTING FROM, ARISING OUT OF, RELATING TO, IN THE NATURE OF, OR CAUSED BY THE
THIRD PARTY CLAIM TO THE FULLEST EXTENT PROVIDED IN THIS SECTION 6.4.

 

6.5                                 Manner of Payment.

 

(A)                                  ANY INDEMNIFICATION PAYMENT OF BUYER
PARTIES OR THE COMPANY PARTIES PURSUANT TO THIS ARTICLE 6 SHALL BE EFFECTED BY
NOTICE TO THE BUYER UNDER THE HOLDBACK FUND AND, IF THE HOLDBACK FUND IS
DEPLETED, BY CASHIER’S OR CERTIFIED CHECK OR BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS TO AN ACCOUNT DESIGNATED BY THE COMPANY OR BUYER, AS THE CASE
MAY BE, WITHIN FIVE (5) DAYS AFTER THE DETERMINATION OF INDEMNIFICATION AMOUNTS.

 

(B)                                 ANY INDEMNIFICATION PAYMENT TO THE SELLER
SHAREHOLDERS PURSUANT TO THIS ARTICLE 6 SHALL BE EFFECTED BY CASHIER’S OR
CERTIFIED CHECK OR BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO AN ACCOUNT
DESIGNATED BY THE SELLER SHAREHOLDERS, AS THE CASE MAY BE, WITHIN FIVE (5) DAYS
AFTER THE DETERMINATION OF INDEMNIFICATION AMOUNTS.

 

(C)                                  ANY INDEMNIFICATION PAYMENTS MADE PURSUANT
TO THIS AGREEMENT SHALL BE DEEMED TO BE ADJUSTMENTS TO THE PURCHASE PRICE FOR
TAX PURPOSES.

 

6.6                                 Insurance and Third Party Recovery.  In
determining the liability of a Party for any Adverse Consequence pursuant to
this Article 6, no loss, liability, damage or expense shall be deemed to have
been sustained by such Party to the extent of any proceeds previously received
by such Party from any insurance recovery (net of all out-of-pocket costs
directly related to such recovery) with respect to insurance coverage in place
as of the date hereof or other recovery from a third party (net of all

 

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out-of-pocket costs directly related to such recovery).  If an amount is
actually recovered from an insurance carrier or other third party after damages
have been paid by the Indemnifying Party pursuant to Article 6 hereof, then the
party receiving such amount shall promptly remit such amount to the Indemnifying
Party.

 

6.7                                 Offset.  The Adverse Consequences which any
Buyer Party suffers, sustains or becomes subject to pursuant to this Article 6
(it being understood that such Adverse Consequences must be determined in
accordance with the terms and conditions set forth in this Agreement) may, at
the option of such Buyer Party, be satisfied by setting off all or any portion
of such Adverse Consequences against any amounts which such Buyer Party owes to
the Company or its Affiliates at such time.

 

6.8                                 Delivery and Release of Holdback Fund.

 

(A)                                  TO THE EXTENT THAT ANY BUYER PARTY IS
ENTITLED TO INDEMNIFICATION FOR ANY ADVERSE CONSEQUENCES PURSUANT TO THIS
ARTICLE ARTICLE 6, SUCH BUYER PARTY SHALL BE ENTITLED TO REIMBURSEMENT OUT OF
THE HOLDBACK FUND; PROVIDED, HOWEVER, TO THE EXTENT THAT THE ADVERSE
CONSEQUENCES EXCEED THE AMOUNT REMAINING IN THE HOLDBACK FUND OR ARISE AFTER THE
SURVIVAL DATE, THE BUYER PARTY MAY COLLECT SUCH ADVERSE CONSEQUENCES DIRECTLY
FROM THE SELLER SHAREHOLDERS SUBJECT TO THE LIMITATIONS AND TERMS AND CONDITIONS
OF THIS ARTICLE ARTICLE 6.

 

(B)                                 THE COMPANY AND THE SELLER SHAREHOLDERS
SHALL GIVE JOINT WRITTEN INSTRUCTIONS TO BUYER TO RELEASE FROM THE HOLDBACK FUND
AND PAY TO THE SELLER SHAREHOLDERS THE AMOUNTS SET FORTH BELOW AT THE FOLLOWING
TIMES AND SUBJECT TO THE FOLLOWING CONDITIONS:

 

(I)                                     ON THE ONE YEAR ANNIVERSARY OF THE
CLOSING DATE, THE HOLDBACK AMOUNT REMAINING IN THE HOLDBACK FUND MINUS THE
AGGREGATE AMOUNT OF ANY GOOD FAITH DAMAGES ESTIMATE;

 

(II)                                  WITHIN ONE (1) BUSINESS DAY AFTER THE
FINAL RESOLUTION OF A PARTICULAR INDEMNITY CLAIM FOR WHICH A GOOD FAITH DAMAGES
ESTIMATE IS RETAINED IN THE HOLDBACK FUND PURSUANT TO CLAUSE (B)(I) ABOVE, THE
AMOUNT, IF ANY, BY WHICH SUCH GOOD FAITH DAMAGES ESTIMATE IN RESPECT OF SUCH
CLAIM EXCEEDED THE FINAL DETERMINATION OF ADVERSE CONSEQUENCES IN RESPECT OF
SUCH CLAIM.

 

ARTICLE 7
CERTAIN DEFINITIONS

 

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

 

“Adverse Consequences” means, with respect to any Person, damage or other
Liability whether or not arising out of a third party claim, including all
amounts paid or incurred in connection with any action, demand, proceeding,
investigation or claim by any third party (including any Governmental Entity)
against or affecting such Person or which, if determined adversely to such
Person, would give rise to, evidence the existence of, or relate to, any other
Adverse Consequences and the investigation, defense or settlement of any of the
foregoing, except that any attorney fees paid shall be reasonable.

 

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

 

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

 

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

 

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

 

“Company Customer(s)” means any of the customers of the Company (including
InSource, LLC) and Buyer and any of their subsidiaries, subdivisions, or
affiliates.

 

“Company Transaction Expenses” means (i) the legal fees and disbursements
payable to legal counsel and accountants of the Company in connection with the
transactions contemplated by the Transaction Documents and (ii) all other fees
and expenses incurred by the Company in connection with the transactions
contemplated by the Transaction Documents as determined on the Closing Date and
excludes, without limitation, the Debt Payoff Amounts to be paid at Closing
pursuant to Section 1.2 of this Agreement; provided, however, that Company
Transaction Expenses shall also exclude any fees and expenses incurred or
payable by the Seller Shareholders in connection with the transactions
contemplated by this Agreement and the Transaction Documents.

 

“Competitor” means any person or company whose principal business, or any
business unit, division or subsidiary of a company whose principal business, is
the providing of global engineering and information technology services using an
off-shore model where at least a majority of the company’s (or in the case of a
business unit, division or subsidiary, majority of its employees, as the case
may be) employees are located in non-US locations (i.e., India, Sri Lanka,
China, etc.).

 

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

 

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

 

“Employee Benefit Plan” means any Employee Pension Benefit Plan (including any
Multiemployer Plan), Employee Welfare Benefit Plan, fringe benefit, bonus,
deferred compensation, retirement, vacation, sick leave, severance, employment,
executive compensation, change in control, incentive or other plan, program
policy or arrangement, whether or not subject to ERlSA and any plans, programs
or arrangements providing compensation to employee and non-employee directors.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Good Faith Damages Estimate” means, with respect to any pending or unresolved
claim asserted by a Buyer Party that is reasonably expected to result in
indemnification pursuant to Article 6, an amount equal to the good faith
estimate by Buyer Party of its indemnifiable Adverse Consequences in respect of
such claim provided in writing to the Party from whom indemnification is claimed
and including a reasonably detailed listing of the various elements included in
the Good Faith Damages Estimate together with the projected individual elements
and the assumptions used in making said estimates.

 

“Indebtedness” means any of the following indebtedness of the Company, whether
or not contingent: (i) indebtedness for borrowed money (including any principal,
premium, accrued and unpaid interest, related expenses, prepayment penalties,
commitment and other fees, sale or liquidity participation amounts,
reimbursements, indemnities and all other amounts payable in connection
therewith),

 

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(ii) Liabilities evidenced by bonds, debentures, notes, or other similar
instruments or debt securities, (iii) Liabilities of the Company under or in
connection with letters of credit or bankers’ acceptances or similar items,
(iv) Liabilities to pay the deferred purchase price of property or services
other than those trade payables incurred in the ordinary course of business,
(v) all Liabilities arising from cash/book overdrafts, (vi) all Liabilities
under capitalized leases, (vii) all Liabilities of the Company under conditional
sale or other title retention agreements, (viii) all Liabilities with respect to
vendor advances or any other advances made to the Company, (ix) all Liabilities
of the Company arising out of interest rate and currency swap arrangements and
any other arrangements designed to provide protection against fluctuations in
interest or currency rates, (x) any deferred purchase price Liabilities related
to past acquisitions, (xi) all Liabilities of the Company arising from any
breach of any of the foregoing and (xii) all indebtedness of others guaranteed
or secured by any lien or security interest on the assets of the Company.

 

“InSource Competitor” shall mean any business that provides business and
technology management consulting in the area of financial services, healthcare
and/or government sectors.

 

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

 

“Knowledge” or “knowledge” means with respect to any Person the actual knowledge
after reasonable inquiry of any director, governing body member or executive
officer of such Person; provided that in the case of the Seller Parties’ or the
Company’s “Knowledge” or “knowledge” means the actual knowledge after reasonable
inquiry of each Seller Shareholder and senior executives of the Company or its
Subsidiaries.

 

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

 

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

 

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

 

“Long Term Incentive Plan” means the long term incentive plan for senior
management employees of InSource, LLC, as previously provided to Buyer.

 

“Loss” or “Losses” means any and all Liabilities, damages, fines, dues, Taxes,
penalties, charges,

 

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assessments, deficiencies, judgments, defaults, settlements and other losses
(including diminution in value) and fees, costs and expenses (including
interest, expenses of investigation, defense, prosecution and settlement of
claims, court costs, reasonable fees and expenses of attorneys, accountants and
other experts, and all other fees and expenses) as the same are incurred in
connection with any Action, Third Party Claim or any other claim, default or
assessment (including any claim asserting or disputing any right under this
Agreement or any Transaction Documents against any party hereto or otherwise),
plus any interest that may accrue on any of the foregoing.

 

“LTIP Obligations” means the payments to be made by the Company to certain of
its employees pursuant to the Long Term Incentive Plan, as set forth on
Exhibit G.

 

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

 

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

 

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

 

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

 

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

 

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

 

“Prospective Customer” shall mean any proposed or prospective customer of the
Company (including InSource, LLC) and Buyer and any of their subsidiaries,
subdivisions, or affiliates that (i) has had any correspondence with the Company
(including InSource, LLC), Buyer or any of their subsidiaries, subdivisions, or
affiliates, (ii) is listed on any of the Company’s, Buyer’s or any of their
subsidiaries’, subdivisions’, or affiliates’ internal pipeline discussions or
related memoranda, (iii) is engaged in active negotiations with the Company
(including InSource, LLC), Buyer or any of their subsidiaries, subdivisions, or
affiliates at the time of termination or cessation of such Seller Shareholder’s
employment with the Company (including InSource, LLC), Buyer or any of their
subsidiaries, subdivisions, or affiliates or (iv) is otherwise being solicited
by the Company (including InSource, LLC) or Buyer or any of their subsidiaries,
subdivisions, or affiliates, in each case within six months prior to the
termination or cessation of such Seller Shareholder’s employment with the
Company, Buyer or any of their subsidiaries, subdivision, or affiliates and such
Seller Shareholder has participated, directly or indirectly, in any of those
activities or been made aware of, or had knowledge of, any of these activities
with regard to any such prospective or proposed customer.

 

“Seller Parties” means the Company, its Subsidiaries and the Seller
Shareholders.

 

“Subsidiary(ies)” means any corporation or other Person which is an entity with
respect to which another specified entity either (i) has the power to vote or
direct the voting of sufficient securities to elect a majority of the directors
or managers of such Person, or (ii) owns a majority of the ownership interests
of such entity, and with respect to Insource Holdings, Inc., shall include,
without limitation, InSource LLC and AlfaSource, LLC.

 

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“Target Working Capital” means $1,750,000.00.

 

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

 

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

 

“Transaction Documents” means this Agreement, the Contracts and other documents
contemplated to be delivered or executed in connection herewith.

 

“Working Capital” means, as of any date of determination, the excess of the
Company’s total current assets on a consolidated basis as of such date over the
Company’s total current liabilities including, without limitation, the Company
Transaction Expenses, and solely to the extent not paid, the LTIP Obligations,
and the current portion of Indebtedness on a consolidated basis as of such date,
determined in accordance with GAAP and, solely to the extent consistent with
GAAP (except as otherwise provided in this definition and without regard to any
purchase accounting adjustments arising out of the transactions contemplated
hereby).  In determining total current assets and total current liabilities
hereunder, (i) all accounting entries shall be taken into account regardless of
their amount and all known errors and omissions corrected, (ii) all proper
adjustments shall be made, and (iii) appropriate reserves for all liabilities
and obligations for which reserves are appropriate in accordance with GAAP shall
be included, including, without limitation, tax liabilities and accrued bonus
payments.  For these purposes, current assets and liabilities shall not include
(i) deferred tax assets and liabilities and (ii) the payments to be made with
respect to any Debt Payoff Amounts to the extent paid pursuant to Section 1.2 of
this Agreement.  Without limiting the foregoing, all accounts receivable and
deferred revenue shall be presented on a net basis and in accordance with GAAP.

 

7.1                                 Additional Definitions.

 

Term

 

Section

Agreement

 

Preface

Business

 

2.10(a)

Buyer

 

Preface

Buyer Assignee

 

8.3

Buyer Fundamental Representation(s)

 

6.2(b)(ii)

Buyer Party

 

6.2(a)

Closing

 

1.2(a)

Closing Date

 

1.2(a)

Closing Date Balance Sheet

 

1.3(a)

Closing Working Capital

 

1.3(b)

Company

 

Preface

Company Entity

 

2.10(a)

Company Fundamental Representation(s)

 

6.3(b)(i)

Company Intellectual Property

 

2.10(a)

Company Party

 

6.3(a)

 

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Term

 

Section

Company Trade Secrets

 

2.10(i)

Consents

 

2.21

CY2009 Revenue

 

1.5(a)

Debt Payoff Amounts

 

1.2(b)

Estimated Working Capital

 

1.2(b)(i)

Estimated Working Capital Adjustment

 

1.2(b)(i)

Final Resolution Date

 

1.3(d)

Final Working Capital

 

1.4(c)

Forms

 

4.2(e)

Holdback Amount

 

1.2(d)

Holdback Fund

 

1.2(d)

Indemnified Party

 

6.4(a)

Indemnifying Party

 

6.4(a)

Insider

 

2.17

JAMS

 

8.16

JAMS Rules

 

8.16

Latest Balance Sheet

 

2.5

Leased Real Property

 

2.19(b)

Leases

 

2.19(b)

Material Contract

 

2.9(b)

Noncompete Period

 

4.3(d)

NQDC Plan

 

2.15(k)

Objection Notice

 

1.3(c)

Permitted Liens

 

2.7

Products

 

2.10(a)

Post-Closing Tax Period

 

4.2(c)

Purchase Price

 

1.2(b)(i)

Purchased Securities

 

Preface

INSOURCE Entity

 

4.3(a)

INSOURCE Group

 

4.3(a)

Section 338(h)(10) Election

 

4.2(e)

Securities

 

Preface

Seller Shareholders

 

Preface

Straddle Period

 

6.2(a)(iv)

Survival Date

 

6.2(b)(iii)

Tax Adjustment

 

4.2(e)

Third Party Claim

 

6.4(a)

Threshold

 

6.2(d)(i)

WARN Act

 

2.14

 

ARTICLE 8
MISCELLANEOUS

 

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

 

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8.2           Entire Agreement.  This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements or representations by or between
the Parties, written or oral, that may have related in any way to the subject
matter hereof.

 

8.3           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights or
obligations hereunder may be assigned (whether by operation of law, through a
change in control or otherwise) by the Company or the Seller Shareholders
without the prior written consent of Buyer, or by Buyer without the prior
written consent of the Company; provided, however, Buyer and its Affiliates
shall have the right to assign (a) its right to purchase hereunder in whole or
in part to a wholly owned subsidiary or Affiliate of Buyer (a “Buyer Assignee”),
(b) all or any portion of this Agreement and the other Transaction Documents
(including rights hereunder and thereunder), including its rights to
indemnification, to any of its or its Buyer Assignees’ (whether prior to or
subsequent to the Closing) lenders as collateral security, (c) after the
Closing, all or any portion of this Agreement and the other Transaction
Documents and its rights and obligations hereunder, including its rights to
indemnification, in connection with a (i) merger or consolidation involving
Buyer or any of Buyer’s Assignees, (ii) a sale of stock or assets (including any
real estate) of Buyer or any Buyer Assignee or (iii) dispositions of the
business of the Company and their Subsidiaries or any part thereof.

 

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

 

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

 

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

 

If to the Company:

 

Insource Holdings, Inc.

100 Northfield Drive

Windsor, CT 06095

Attention:          David Shalaby

Facsimile No.:  (860) 688-2290

 

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

 

Nicolai Law Group, P.C.

Attn: Paul P. Nicolai, Esq.

146 Chestnut Street

Springfield, MA 01103

Facsimile No:     (413) 272-2010

 

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If to the Seller Shareholders:

 

David and Michele Shalaby

188 Hostkins Road

Simbury, CT 06070

 

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

 

Nicolai Law Group, P.C.

Attn: Paul P. Nicolai, Esq.

146 Chestnut Street

Springfield, MA 01103

Facsimile No:   (413) 272-2010

 

If to Buyer:

 

Virtusa Corporation

2000 West Park Drive,
Westborough, MA 01581
Attention: Ranjan Kalia

Paul Tutun

Facsimile No.:   (508) 366 9901

 

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

 

Goodwin Procter LLP

Exchange Place

Boston, MA  02109

Attention:           John J. Egan

Edward King

Facsimile No.:   (617) 523-1231

 

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

 

8.7           Governing Law.  This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

 

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

 

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

 

8.10         Construction.  Where specific language is used to clarify by
example a general statement contained herein (such as by using the word
“including”), such specific language shall not be deemed to modify, limit or
restrict in any manner the construction of the general statement to which it
relates.  The language used in this Agreement shall be deemed to be the language
chosen by the Parties to express their mutual intent, and no rule of strict
construction shall be applied against any Party.  Whenever required by the
context, any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns, pronouns
and verbs shall include the plural and vice versa.  Nothing in the Schedules
hereto shall be deemed adequate to disclose an exception to a representation or
warranty made herein unless the Schedule identifies the exception with
reasonable particularity and describes the relevant facts in reasonable detail. 
The disclosure of an item in one section of the Schedules shall be deemed to
modify the representations and warranties of the Party contained in the section
of this Agreement to which it corresponds in number but not any other
representation and warranty of the Party in this Agreement unless such
disclosure item is explicitly cross-referenced as applying to such other
representation and warranty of the Party.  The Parties intend that each
representation, warranty, and covenant contained herein shall have independent
significance.  If any Party has breached any representation, warranty, or
covenant contained herein (or is otherwise entitled to indemnification) in any
respect, the fact that there exists another representation, warranty, or
covenant (including any indemnification provision) relating to the same subject
matter (regardless of the relative levels of specificity) which the Party has
not breached (or is not otherwise entitled to indemnification with respect
thereto) shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty, or covenant (or is otherwise entitled to
indemnification pursuant to a different provision).

 

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

 

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

 

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

 

8.14         Release of the Company.  Effective upon the Closing, each of the
Seller Shareholders hereby irrevocably waives, releases and discharges forever
the Company from any and all Liabilities arising prior to the Closing Date and
each of the Seller Shareholders hereby covenants and agrees that such Seller
Shareholder will not seek to recover any amounts in connection therewith or
thereunder from the Company.

 

8.15         Delivery by Facsimile.  This Agreement and any signed Contract
entered into in connection herewith or contemplated hereby, and any amendments
hereto or thereto, to the extent signed

 

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

 

8.16         Disagreements and Disputes.  Any disagreement, dispute or
controversy arising under, this Agreement, any amendments thereof, or the breach
thereof shall be determined and settled in accordance with this Section.  This
Section shall be limited to disputes arising out of this Agreement, but shall
not apply to any disputes arising out of, or relating to, the other Transaction
Documents, including but not limited to those documents attached as Exhibits
hereto.

 

(A)           IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES TO THIS AGREEMENT,
THE PARTIES HERETO FIRST SHALL USE THEIR BEST EFFORTS TO SETTLE THE DISPUTE,
CLAIM, QUESTION, OR DISAGREEMENT THROUGH NEGOTIATION. TO THIS EFFECT, THEY SHALL
CONSULT AND NEGOTIATE WITH EACH OTHER IN GOOD FAITH AND, RECOGNIZING THEIR
MUTUAL INTERESTS, ATTEMPT TO REACH A JUST AND EQUITABLE SOLUTION SATISFACTORY TO
ALL PARTIES. IF THEY DO NOT REACH SUCH SOLUTION WITHIN A PERIOD OF 30 DAYS,
THEN, UPON NOTICE BY ANY PARTY TO THE OTHERS, ALL DISPUTES, CLAIMS, QUESTIONS,
OR DIFFERENCES SHALL BE SUBJECT TO MEDIATION ADMINISTERED BY THE JUDICIAL
ARBITRATION AND MEDIATION SERVICE (“JAMS”).

 

(B)           IN THE EVENT THAT A SUCCESSFUL RESOLUTION OF THE MATTER IS NOT
ACHIEVED WITHIN SIXTY (60) DAYS OF SUBMISSION TO MEDIATION OR AT ANY TIME AFTER
THE FORTY (40) DAYS HAS EXPIRED, ANY PARTY MAY DEMAND SUBMISSION TO
ARBITRATION.  THE COSTS OF ANY MEDIATION SHALL BE EQUALLY BORNE BY THE PARTIES
AND EACH PARTY SHALL BEAR ITS OWN EXPENSES AND ATTORNEY FEES. ALL SESSIONS
AND/OR CONFERENCES WILL BE HELD IN THE CITY OF BOSTON, MASSACHUSETTS.

 

(C)           ANY MATTER THAT CANNOT BE RESOLVED BY NEGOTIATION OR MEDIATION
SHALL BE SUBMITTED TO ARBITRATION. THE PARTIES AGREE TO HOLD THE ARBITRATION
HEARINGS IN BOSTON, MASSACHUSETTS PURSUANT TO THE JAMS COMPREHENSIVE ARBITRATION
RULES AND PROCEDURES (“JAMS RULES”).  THE ARBITRATION SHALL BE HELD BEFORE A
SINGLE ARBITRATOR SELECTED BY THE PARTIES.  THE ARBITRATOR SHALL BE AN ATTORNEY
WITH NO LESS THAN TWENTY (20) YEARS EXPERIENCE IN MERGERS AND ACQUISITIONS,
EXCEPT THAT NO ATTORNEY WHO HAS REPRESENTED ANY PARTY TO THIS AGREEMENT SHALL BE
APPOINTED AS AN ARBITRATOR AND EACH PARTY TO THIS AGREEMENT RESERVES THE RIGHT
TO OBJECT TO THE APPOINTMENT OF ANY SUCH ARBITRATOR.  EACH PARTY AND THE
MEDIATOR OR ARBITRATOR SHALL BE BOUND TO KEEP ALL INFORMATION SHARED IN THE
RESOLUTION OF ANY DISPUTE CONFIDENTIAL. ANY FINAL AWARD RENDERED BY AN
ARBITRATOR SHALL BE FINAL AND BINDING UPON ALL PARTIES AND ALL PARTIES HEREBY
CONSENT TO THE FINALITY OF SAID AWARD, AGREE TO COMPLY THEREWITH AND AGREE THAT
A JUDGMENT ENFORCING SAID AWARD MAY BE RENDERED BY ANY COURT OF COMPETENT
JURISDICTION OVER ANY PARTY TO THE AWARD OR ANY PROPERTY SUBJECT TO THE AWARD
WITH THE COST OF ANY SAID ENFORCEMENT ACTION, INCLUDING ALL REASONABLE ATTORNEY
FEES INCURRED IN THE PROSECUTION THEREOF, TO BE ADDED TO THE AWARD.

 

(D)           ARBITRATION COSTS, ARBITRATORS’ FEES AND REASONABLE ATTORNEYS’
FEES AND COSTS SHALL BE AWARDED TO THE PREVAILING PARTIES, IF ANY, BY THE
ARBITRATOR.

 

(E)           THIS SECTION 8.16 SHALL SURVIVE THE CANCELLATION, TERMINATION OR
EXPIRATION OF THIS AGREEMENT AND SHALL APPLY REGARDLESS WHETHER A CLOSING
OCCURS.

 

(F)            NO FAILURE ON THE PART OF ANY PARTY TO THIS AGREEMENT TO
EXERCISE, AND NO DELAY IN EXERCISING, ANY RIGHT HEREUNDER SHALL OPERATE AS A
WAIVER THEREOF NOR SHALL ANY SINGLE OR PARTIAL EXERCISE OF

 

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ANY RIGHT HEREUNDER PRECLUDE ANY OTHER OR FURTHER EXERCISE THEREOF OR THE
EXERCISE OF ANY OTHER RIGHT.  THE REMEDIES PROVIDED IN THIS AGREEMENT ARE
CUMULATIVE AND NOT EXCLUSIVE OF ANY REMEDIES PROVIDED BY LAW.

 

*   *   *   *   *

 

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

 

 

INSOURCE HOLDINGS, INC.,

 

 

 

By:

/s/ David Shalaby

 

Name:

David Shalaby

 

Its:

President

 

 

 

 

 

VIRTUSA CORPORATION

 

 

 

By:

/s/ Thomas R. Holler

 

Name:

Thomas R. Holler

 

Its:

Chief Operating Officer

 

 

 

 

 

DAVID SHALABY

 

 

 

 

 

By:

/s/ David Shalaby

 

 

David Shalaby

 

 

 

 

 

MICHELE SHALABY

 

 

 

 

 

By:

/s/ Michele Shalaby

 

 

Michele Shalaby

 

 

Signature Page to the Stock Purchase Agreement

 

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