EXHIBIT 10.1
 

 
ASSET PURCHASE AGREEMENT

by and between

Campus Labs, LLC
(the “Target”)

and

the Members of Campus Labs, LLC
(the “Members” and, together with the Target, the “Sellers”)
and

Higher One, Inc.
(the “Buyer”)

Dated as of August 7, 2012

 
 
 
 

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EXECUTION COPY

TABLE OF CONTENTS

 
ARTICLE I
TRANSFER OF ASSETS AND LIABILITIES
1
Section 1.1
Assets and Liabilities
1
Section 1.2
Purchase Price; Assumption of Liabilities
3
Section 1.3
Closing
4
Section 1.4
Deliveries by the Target
5
Section 1.5
Deliveries by Buyer
5
Section 1.6
Working Capital Adjustment
6
Section 1.7
Dispute Resolution; Estimated Purchase Price Adjustment
7
Section 1.8
Earn Out Payment
8
Section 1.9
Certain Taxes and Fees
12
     
ARTICLE II
RELATED MATTERS
12
Section 2.1
Books and Records of the Target
13
Section 2.2
Employees and Employee Benefits
12
     
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
14
Section 3.1
Organization and Good Standing
14
Section 3.2
Authorization; No Conflict
15
Section 3.3
Title to Assets; No Sale of Asset
15
Section 3.4
Consents and Approvals; No Violations
16
Section 3.5
Financial Statements
16
Section 3.6
Absence of Certain Changes
16
Section 3.7
Absence of Material Adverse Effect
18
Section 3.8
Properties and Related Matters
18
Section 3.9
Business Products; Warranties; Defects; Liabilities
19
Section 3.10
Intellectual Property
20
Section 3.11
Litigation
21
Section 3.12
Compliance with Applicable Law; Permits
22
Section 3.13
Certain Contracts and Arrangements
22
Section 3.14
Employee Benefit Plans; ERISA
22
Section 3.15
Taxes
25
Section 3.16
Labor Matters
25
Section 3.17
Certain Fees
26
Section 3.18
Full Force and Effect
25
Section 3.19
Customers and Vendors
26
Section 3.20
Sufficiency and Condition of Assets
26
Section 3.21
Environmental Matters
27
Section 3.22
Accounts Receivable
28
Section 3.23
Insurance
29
Section 3.24
Related Party Transactions
29
Section 3.25
Gifts and Benefits
29
Section 3.26
Guaranties
30
Section 3.27
Disclosure
30
     
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
30
Section 4.1
Organization and Good Standing
30
Section 4.2
Authorization
30
Section 4.3
Consents and Approvals; No Violations
30
Section 4.4
Litigation
31
Section 4.5
Certain Fees
31
Section 4.6
Financial Ability
31
     
ARTICLE V
COVENANTS
32
Section 5.1
Consents
32
Section 5.2
Accounts Receivable
32
Section 5.3
Inspection of Records
32
Section 5.4
Link to Buyer’s Website
33
Section 5.5
Trademarks
33
Section 5.6
Covenant Not to Compete
33
Section 5.7
Disclosure of Confidential Information
33
Section 5.8
Injunctive Relief
34
Section 5.9
Payroll Taxes and Payroll Records
34
Section 5.10
Health Insurance
34
Section 5.11
COBRA Liabilities
34
Section 5.12
401(k) Termination
35
Section 5.13
Tax Clearance Certificates and Allocations
35
Section 5.14
Option Grants and Bonus Plan
35
Section 5.15
Investigation by Sellers
35
Section 5.16
Investigation by Buyer
35
Section 5.17
Further Assurances
36
     
ARTICLE VI
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
36
Section 6.1
Survival of Representations
36
Section 6.2
Sellers’ Agreement to Indemnify
36
Section 6.3
Buyer’s Agreement to Indemnify
37
Section 6.4
Third Party Indemnification
38
Section 6.5
Certain Tax Matters
39
     
ARTICLE VII
MISCELLANEOUS
40
Section 7.1
Fees and Expenses
40
Section 7.2
Further Assurances
40
Section 7.3
Counterparts
40
Section 7.4
Notices
40
Section 7.5
Amendments and Waivers
42
Section 7.6
Severability
42
Section 7.7
Binding Effect; Assignment
42
Section 7.8
No Third Party Beneficiaries
42
Section 7.9
Interpretation
43
Section 7.10
Jurisdiction; Consent to Service; Waiver of Jury Trial
43
Section 7.11
Entire Agreement
43
Section 7.12
Law Governing
43

 
 

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EXECUTION COPY

EXHIBITS

 
Exhibit A
Tangible Personal Property
Exhibit B
Assigned Agreements
Exhibit C
Bill of Sale
Exhibit D
Intellectual Property Assignment
Exhibit E
Certain Excluded Assets
Exhibit F
Assignment and Assumption Agreement
Exhibit G
Cash Escrow Agreement
Exhibit H
Hypothetical Working Capital Calculation
Exhibit I
Non-Competition and Non-Solicitation Agreements

DISCLOSURE SCHEDULE

Section 1.1(c)
Assumed Liabilities
Section 1.1(d)
Excluded Liabilities
Section 1.4(d)
Deliveries by the Target
Section 1.8(a)
Sample Earn Out Payment
Section 1.8(b)
Earn Out Payment
Section 1.8(f)
Earn Out Payment
Section 1.8(f)(ii)(E)
List of Key Sales Employees
Section 2.2(a)
Employees
Section 3.2
Authorization; No Conflict
Section 3.3
Title to Assets; No Sale of Assets
Section 3.4
Consents and Approvals
Section 3.5
Financial Statements
Section 3.6
Absence of Certain Changes
Section 3.7
Absence of Material Adverse Effect
Section 3.8(a)
Properties and Related Matters
Section 3.8(b)
Properties and Related Matters
Section 3.9(a)
Business Products
Section 3.9(b)
Business Products
Section 3.11
Litigation
Section 3.12
Compliance with Applicable Law; Permits
Section 3.13
Certain Contracts and Arrangements
Section 3.14(a)
Employee Benefit Plans; ERISA
Section 3.14(c)
Employee Benefit Plans; ERISA
Section 3.14(d)
Employee Benefit Plans; ERISA
Section 3.14(f)
Employee Benefit Plans; ERISA
Section 3.14(h)
Employee Benefit Plans; ERISA
Section 3.14(l)
Employee Benefit Plans; ERISA
Section 3.14(n)
Employee Benefit Plans; ERISA
Section 3.15
Taxes
Section 3.17
Certain Fees
Section 3.18
Full Force and Effect
Section 3.19(a)
Customers and Vendors
Section 3.19(b)
Customers and Vendors
Section 3.21(b)
Environmental Matters
Section 3.23
Insurance
Section 3.24
Related Party Transactions
Section 3.27
Disclosure
Section 5.1
Consents

 
BUYER’S DISCLOSURE SCHEDULE
 
Section 4.4
Litigation

 
 

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EXECUTION COPY

 
LOCATION OF DEFINITIONS
 

Agreement
Recitals
Ancillary Agreements
Sec. 3.2
Assets
Sec. 1.1(a)
Assigned Agreements
Sec. 1.1(a)(vii)
Assignment and Assumption
Sec. 1.1(c)
Assumed Liabilities
Sec. 1.1(c)
Basket Amount
Sec. 6.2(b)(i)
Benefit Plans
Sec. 3.14(m)
Bill of Sale
Sec. 1.1(a)(xiv)
Business
Recitals
Business Intellectual Property
Sec. 1.1(a)(ii)
Business Product
Sec. 3.9(a)
Business Records
Sec. 1.1(a)(v)
Buyer
Recitals
Buyer Damages
Sec. 6.2(a)
Buyer Indemnified Party
Sec. 6.2(a)
Buyer’s Disclosure Schedule
Article IV Preamble
Cap
Sec. 6.2(b)(ii)
Cases
Sec. 3.11
Claim
Sec. 6.4
Closing
Sec. 1.3
Closing Date
Sec. 1.3
Closing Date Statement
Sec. 1.6
Closing Date Working Capital
Sec. 1.6
Code
Sec. 14(b)
Confidential
Sec. 5.7
Confidential Information
Sec. 5.7
Copyrights
Sec. 3.10(h)
Disclosure Schedule
Article III preamble
Dispute
Sec. 1.8(g)
Earn Out Objection Notice
Sec. 1.8(c)
Earn Out Payment
Sec. 1.2(a)(ii)
Earn Out Payment Determination Date
Sec. 1.8(c)
Earn Out Statement
Sec. 1.8(b)
Earn Out Target
Sec. 1.8(a)
Environmental and Safety Laws
Sec. 3.21(i)
ERISA
Sec. 2.2(f)
ERISA Affiliate
Sec. 3.14(m)
Escrow Agent
Sec. 1.2(b)(iii)
Escrow Agreement
Sec. 1.2(b)(iii)
Escrow Deposit
Sec. 1.2(b)(iii)
Estimated Initial Purchase Price
 Sec. 1.6
Estimated Closing Date Settlement
 Sec. 1.6
Estimated Closing Date Working Capital
Sec. 1.6
Excluded Assets
Sec. 1.1(b)
Excluded Liabilities
Sec. 1.1(d)
Excluded Representations
Sec. 6.1
Facilities
Sec. 3.21(iv)
Final Closing Purchase Price
Sec. 1.2(a)
Final Statement
Sec. 1.7(a)(ii)
Financial Statements
Sec. 3.5
GAAP
Sec. 3.5
Hazardous Materials
Sec. 3.21(ii)
Historical Financial Statements
Sec. 3.5
Independent Accounting Firm
Sec. 1.7(a)(ii)
Initial Purchase Price
Sec. 1.2(a)(i)
Intellectual Property
Sec. 1.1(a)(ii)
Intellectual Property Assignment
Sec. 1.1(a)(xiv)
Interim Financial Statements
Sec. 3.5
Interim Financial Statements Date
Sec. 3.5
Knowledge
Sec. 3.9(b)
Liabilities
Sec. 1.1(d)
Liens
Sec. 3.3
Marks
Sec. 3.10(h)
Material Adverse Effect
Sec. 3.1
Members
Recitals
Member Options
Sec. 5.14
Member Party
Sec. 1.8(a)
Net Working Capital
Sec. 1.6
Notice of Employment
Sec. 2.2(b)
Patents
Sec. 3.10(h)
Payoff Amount
Sec. 1.2(b)(i)
Payoff Letter
Sec. 1.2(b)(i)
Permitted Liens
Sec. 3.3
Plans
Sec. 3.14(a)
Pre-Closing Tax Period
Sec. 6.5(a)(i)
Property
Sec. 3.21(iii)
Purchase Price
Sec. 1.2(a)
Revenue
Sec. 1.8(e)
Seller
Recitals
Seller Damages
Sec. 6.3(a)
Seller Indemnified Party
Sec. 6.3
Tangible Personal Property
Sec. 1.1(a)(i)
Target Working Capital
Sec. 1.6
Target’s Key Employees
Sec. 3.9(b)
Tax Return
Sec. 3.15(c)
Taxes
Sec. 3.15(b)
Transfer Taxes
Sec. 1.9
Transferred Employees
Sec. 2.2(b)
Warrants
Sec. 1.2(a)(iii)
Working Capital
Sec. 1.6

 
 

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ASSET PURCHASE AGREEMENT
 
This ASSET PURCHASE AGREEMENT, dated as of August 7, 2012 (this “Agreement”), is
by and among Campus Labs, LLC, a New York limited liability company (the
“Target”), Eric Reich and Michael Weisman (the “Members” and, together with the
Target, the “Sellers” , and Higher One, Inc., a Delaware corporation (the
“Buyer”).  Capitalized terms used herein shall have the meanings assigned to
such terms in the text of this Agreement and the locations of such definitions
are referenced following the table of contents.
 
WHEREAS, the Target operates a business which offers specialized, comprehensive
assessment programs that combine data collection, reporting, organization and
campus-wide integration to higher education institutions (the “Business”); and
 
WHEREAS, the Target desires to sell and assign to the Buyer, and the Buyer
desires to purchase from the Target, substantially all of the assets of the
Business, and at the same time the Buyer will assume certain liabilities of the
Business, all on the terms set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements hereinafter set forth, and
intending to be legally bound hereby, the parties hereto agree as follows:
 
ARTICLE I
 
TRANSFER OF ASSETS AND LIABILITIES
 
Section 1.1 Assets and Liabilities
 
(a) Subject to the terms of this Agreement, at the Closing provided for in
Section 1.3, the Target shall sell, convey, assign, transfer and deliver, or
shall cause to be sold, conveyed, assigned, transferred and delivered to the
Buyer, all of the Target’s right, title and interest in and to the assets (other
than the Excluded Assets set forth in Section 1.1(b) hereof) owned, leased or
licensed directly or indirectly by the Target on the Closing Date (collectively,
the “Assets”), free and clear of any Liens (other than any Permitted Liens),
including but not limited to the following:
 
(i) all equipment listed in Exhibit A hereto, components, spare parts, furniture
and other tangible personal property owned or leased or held under license by
the Target (collectively, the “Tangible Personal Property”);
 
(ii) all Intellectual Property owned or held under any transferable license by
the Target (the “Business Intellectual Property”);
 
(iii) any and all copies in a tangible medium of the Business Intellectual
Property, including all designs and any registrations and applications
therefore, all computer software, including all source code, object code and
firmware, and all other tangible assets and material used in connection with the
Business Intellectual Property;
 
(iv) all transferable licenses, permits, authorizations, consents, approvals,
orders, filings or registrations with any court or administrative or
governmental authority held by the Target;
 
 
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(v) copies (which need not be original) of all of Target’s general and financial
records, financial information, marketing and sales information, customer and
vendor lists, and (to the extent permitted by applicable law) records and
information relating to the Target’s employees and consultants (collectively,
the “Business Records”), it being understood that the Seller may retain a copy
(which may be the original copy) of each such Business Record;
 
(vi) all rights with respect to deposits, advance payments and prepaid expenses
made or incurred by Target, deferred charges and all credits and claims for
refund held by the Target;
 
(vii)  those written agreements listed on Exhibit B (collectively,  the
“Assigned Agreements”;
 
(viii) all goodwill associated with the Business;
 
(ix) all of the Target’s rights, claims, credits, causes of action or rights of
set off against third parties, including all rights to seek and obtain
injunctive relief and to recover damages for past, present and future
infringement relating to the Business Intellectual Property;
 
(x) the Target’s rights in the names “Student Voice”, “Campus Labs”
“Collegiatelink” and “Compliance Assist”, the registered trademarks associated
with such names and any other Marks or Copyrights relating to or used by the
Target in connection with the Business;
 
(xi) all domain names owned or used by the Target, including but not limited to
www.campuslabs.com and www.studentvoice.com;
 
(xii) any cash, cash equivalents and marketable securities; and
 
(xiii) the accounts receivable held by the Target existing as of Closing Date.
 
Such sale, conveyance, assignment, transfer and delivery shall be effected by
delivery by the Target to the Buyer of (i) a duly executed bill of sale (the
“Bill of Sale”) in the form of Exhibit C attached hereto, (ii) duly executed
instruments of assignment assigning Target’s interest in and to the Intellectual
Property in the form of Exhibit D attached hereto (the “Intellectual Property
Assignment”) and (iii) such other good and sufficient instruments of conveyance,
transfer and assignment as shall be necessary to vest in the Buyer good and
valid title to the other Assets, free and clear of all Liens (other than any
Permitted Liens).
 
(b) Anything contained in Section 1.1(a) to the contrary notwithstanding, the
term “Assets” shall not include the following assets of the Target (each and all
such items being herein referred to as the “Excluded Assets”):
 
(i) the articles of organization, operating agreement, minute books and company
seal;
 
(ii) all rights and benefits of Target arising in connection with or related to
the Target’s status as a New York State Qualified Empire Zone Entity;
 
 
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(iii) all rights of Target arising under any insurance policies of the Target;
 
(iv) all rights of Target under this Agreement;
 
(v) any other property or assets expressly listed on Exhibit E.
 
(c) Subject to the terms of this Agreement, the Buyer shall assume on the
Closing Date, and pay, perform and discharge when due, those obligations and
liabilities of the Business:  (i) under all the Assigned Agreements to the
extent that such obligations and liabilities: (A) arise after the Closing Date
and (B) do not arise from or relate to any breach by the Target of any provision
of such Assigned Agreements on or prior to the Closing Date; (ii) accounts
payable and accrued expenses of the Business as of the Closing Date (but only to
the extent accrued on the Closing Date Statement and incurred in the ordinary
course of the Target’s business consistent with past practice); (iii) to the
Target’s customers incurred by the Target in the ordinary course of business
consistent with past practice for orders outstanding as of the Closing Date and
reflected in the Closing Date Statement; (iv) to the Target’s customers under
written warranty agreements given by the Target to its customers prior to the
Closing Date; and (v) all Liabilities of the Target set forth in the Closing
Date Statement (collectively, the “Assumed Liabilities”). Section 1.1(c) of the
Disclosure Schedule contains a list of the Assumed Liabilities including
accounts payable determined based on the Estimated Closing Date Statement.  At
the Closing, the Target and the Buyer shall execute an instrument of assignment
and assumption agreement in respect to the Assumed Liabilities, in the form of
Exhibit F attached hereto (the “Assignment and Assumption”), whereby the Buyer
agrees to perform, pay, become liable for and discharge when due, any and all
Assumed Liabilities.
 
(d) The Target shall retain, and shall be solely responsible for paying,
performing and discharging when due, and the Buyer shall not assume or otherwise
have any responsibility or Liability for, (i) any and all Liabilities (as
defined below) of Target (whether now existing or hereafter arising) including
those listed on Section 1.1(d) of the Disclosure Schedule  hereto other than the
Assumed Liabilities, (ii) all liabilities and obligations of the Target or any
of its affiliates or any of their respective predecessors-in-interest for any
Taxes due or becoming due by reason of the conduct of the Business prior to the
Closing, the ownership, possession, use, operation or sale or other disposition
of any assets (including the Assets), properties, rights or interests associated
with the Business or the sale of any products, including but not limited to (A)
Taxes attributable to employee withholding tax obligations, (B) income-based
Taxes imposed on or accruing as a result of the purchase and sale of the Assets
pursuant to this Agreement and (C) Taxes attributable to or resulting from
recapture of depreciation or other tax benefit items or otherwise arising from
or relating to any of the transactions contemplated by this Agreement, and (iii)
all liabilities related to or arising from the Benefit Plans of the Target prior
to or after the Closing, including without limitation documentation and
administration obligations, and any post-Closing obligations relating thereto or
arising therefrom, including without limitation COBRA administration (the
“Excluded Liabilities”).  As used in this Agreement, “Liability” means any and
all debts, liabilities and obligations, whether accrued or fixed, absolute or
contingent, matured or unmatured, determined or determinable, known or unknown,
including, without limitation, those arising under any law, action or
governmental order and those arising under any contract, agreement, arrangement,
commitment or undertaking.
 
Section 1.2 Purchase Price; Assumption of Liabilities
 
 
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(a) Subject to the adjustments as provided by this Agreement, the total purchase
price of the Assets and the Business (the “Purchase Price” ) shall be an amount
equal to the sum of the Initial Purchase Price, which amount shall be adjusted
pursuant to Section 1.7 (as so adjusted, the “Final Closing Purchase Price”),
and the Earn Out Payment and the Warrants.
 
(i) The “Initial Purchase Price” equals $38.4 million in cash.
 
(ii) The “Earn Out Payment”  equals the amount payable to the Target under
Section 1.8.
 
(iii) The “Warrants” shall mean 150,000 warrants to purchase the same number of
shares of common stock of Higher One Holdings, Inc.
 
(b) On the Closing Date, the Buyer shall:
 
(i) pay to any lenders of the Target who have security interests in any of the
Assets (including capitalized leases), by wire transfer of immediately available
funds, the amounts (in the aggregate, the “Payoff Amount”) required at Closing
to pay in full any indebtedness (including any prepayment penalties) of Target
secured by such security interests, as evidenced by payoff letters (“Payoff
Letters”) executed by such lenders and delivered to the Buyer on or prior to the
Closing Date;
 
(ii) cause the Estimated Initial Purchase Price (defined below), less (A) the
Escrow Deposit and (B) the Payoff Amount to be delivered to the Target via wire
transfer of immediately available funds to a bank account identified by the
Target;
 
(iii) cause the Escrow Deposit to be delivered to U.S. Bank (the “Escrow Agent”)
to be held in accordance with the terms and conditions of an escrow agreement
(the “Escrow Agreement”), in the form of Exhibit G attached hereto, in order to
secure certain indemnity claims that the Buyer may be entitled to assert
pursuant to this Agreement, but not to be used for any downward adjustment to
the Initial Purchase Price in the event of a Working Capital adjustment as
provided for in Section 1.7.  As used in this Agreement, the “Escrow
Deposit”  means an amount equal to the Cap plus $1,500,000; and
 
(iv) deliver to Target a certificate issuing the Warrants.
 
Section 1.3 Closing
 
The closing of the transactions contemplated by this Agreement (the “Closing”)
shall take place at such time and place as are mutually agreed to by the parties
(or remotely by electronic mail and/or facsimile) on the date hereof, to be
effective as of 12:01AM, New Haven, Connecticut time, on such date.  The
effective time of the Closing is sometimes referred to herein as the “Closing
Date.”  The exchange of copies of this Agreement and the Ancillary Agreements
and of all signature pages by electronic mail or facsimile transmission shall
constitute effective execution and delivery hereof and thereof as to the parties
and may be used in lieu of the originals for all purposes.  Signatures of the
parties transmitted by electronic mail or facsimile shall be deemed to be their
original signatures for all purposes.
 
 
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Section 1.4 Deliveries by the Target
 
At the Closing, the Target shall deliver or cause to be delivered to the Buyer
(unless delivered previously) the following:
 
(a) A duly executed Bill of Sale and Intellectual Property Assignment;
 
(b) Duly executed counterparts of the Assignment and Assumption and the Escrow
Agreement;
 
(c) The Estimated Closing Date Statement, accompanied by such supporting
documentation, information and calculations as are reasonably necessary for the
Buyer to verify and determine the Estimated Closing Date Working Capital;
 
(d) Copies of all filings and all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and other
third parties that are necessary to consummate the transactions contemplated by
this Agreement, as identified on Section 1.4 of the Disclosure Schedule;
 
(e) Duly executed non-competition and non-solicitation agreements for Eric Reich
and Michael Weisman;
 
(f) Copies of the Payoff Letters;
 
(g) Discharges, releases and UCC termination statements adequate to discharge
all Liens, if any, on the Assets other than Permitted Liens and Liens which will
be discharged, as provided by the Payoff Letters, upon receipt by the Target’s
lenders of the Payoff Amount;
 
(h) A certificate of good standing with respect to Target certified as of a date
not more than fifteen (15) days prior to the Closing Date from the Secretary of
State of the State of New York;
 
(i) A certificate by a manager of the Target certifying as to (A) the Target’s
resolutions approving this Agreement and each of the transactions contemplated
hereby as in effect on the Closing Date, (B) the incumbency of the Target’s
officers or managers, and (C) the Target’s resolutions terminating the Benefit
Plan known as the Student Voice, LLC 401(k) Profit Sharing Plan;
 
(j) A written legal opinion letter from Target’s counsel addressed to the Buyer
and dated as of the Closing Date, in substantially the form attached hereto as
Exhibit J;  and
 
(k) All other documents, instruments and writings required or reasonably
requested by the Buyer to be delivered at or prior to the Closing pursuant to
this Agreement or otherwise required in connection herewith.
 
Section 1.5 Deliveries by Buyer
 
At the Closing, the Buyer shall deliver or cause to be delivered to the Target
(unless otherwise specified and unless previously delivered) the following:
 
 
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(a) By wire transfer of immediately available funds, an amount equal to the
Estimated Initial Purchase Price, less (i) the Escrow Deposit and (ii) the
Payoff Amount;
 
(b) By wire transfer of immediately available funds to the Escrow Agent, an
amount equal to the Escrow Deposit;
 
(c) By wire transfer of immediately available funds to each of the Target’s
lenders that have issued a Payoff Letter to the Target, an amount equal to the
amount required to be paid to each such lender by the terms of the Payoff Letter
issued by such lender;
 
(d) A duly executed counterpart of the Escrow Agreement;
 
(e) A duly executed counterpart of the Assignment and Assumption;
 
(f) A letter, addressed to each Member, setting forth the terms and conditions
of the employment by the Buyer of such Member, including, but not limited to,
the amount of the annual base salary, the structure of the annual bonus
compensation program and the employee benefits (each such letter being
hereinafter an (“Employment Letter”);
 
(g) A duly executed counterpart of each of the non-competition and
non-solicitation agreements for Eric Reich and Michael Weisman;
 
(h) A certificate of good standing with respect to the Buyer certified as of a
date not more than fifteen (15) days prior to the Closing Date from the
Secretary of State of the State of Delaware
 
(i) A copy of the 2012 Employment and Retention Bonus Plan, in substantially the
form attached hereto as Exhibit K (the “Bonus Plan”);
 
(j) A certificate issuing the Warrants; and
 
(k) All other documents, instruments and writings required or reasonably
requested by the Target to be delivered at or prior to the Closing pursuant to
this Agreement or otherwise required in connection herewith.
 
Section 1.6 Working Capital Adjustment
 
Prior to the Closing, the Target shall deliver to the Buyer an unaudited
statement (the “Estimated Closing Date Statement”) of Working Capital, setting
forth the Target’s reasonable and good faith estimate of Working Capital as of
August 5, 2012 (“Estimated Closing Date Working Capital”).  Based on the amount
of the Estimated Closing Date Working Capital as contained in the Estimated
Closing Date Statement, at Closing the amount of the Initial Purchase Price
shall be adjusted (the Initial Purchase Price as adjusted being hereinafter the
“Estimated Initial Purchase Price” ) as follows:
 
The Initial Purchase Price shall be increased or decreased, as the case may be,
by the amount, if any, by which the Estimated Closing Date Working Capital is
greater than or less than, as the case may be, - $2,873,238 (the “Target Working
Capital”).  For purposes herein, the term “Working Capital” shall mean , (x) the
sum of (i) cash and cash equivalents, plus (ii) accounts receivable, plus (iii)
prepaid expenses and other current assets for which Buyer will receive the
benefit, minus (y) the sum of (i) the current accounts payable and accrued
expenses, plus (ii) plus prepaid contracts, plus (iii) deferred revenue, all
determined in accordance with GAAP. For the avoidance of doubt, Target Working
Capital is a negative number.   For purposes of illustration only, a
hypothetical calculation of Working Capital is attached as Exhibit H.
 
 
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No later than ninety (90) days after the Closing Date, the Members shall deliver
to the Buyer an unaudited statement (the “Closing Date Statement”) of Working
Capital, setting forth the Members’ good faith calculation of Working Capital as
of the Closing Date
 
Section 1.7 Dispute Resolution; Estimated Purchase Price Adjustment
 
(a) Dispute Resolution.
 
(i) Following the Closing, each of the Buyer and the Members shall give the
other party and any independent auditors and authorized representatives of such
other party reasonable access during normal business hours to the properties,
books, records and personnel of the Business for purposes of preparing,
reviewing and resolving any disputes concerning the Closing Date Statement.  The
Buyer shall have thirty (30) days following the delivery to the Buyer of the
Closing Date Statement during which to notify the Members in writing of any
dispute of any item contained in the Closing Date Statement, which notice shall
set forth in reasonable detail the basis for such dispute.
 
(ii) If the Buyer fails to notify the Members of any dispute of any item
contained in the Closing Date Statement within thirty (30) days following the
delivery to the Buyer of the Closing Date Statement, the Closing Date Statement
shall be deemed to be accepted by the Buyer and the Closing Date Statement and
the Working Capital of the Target as of the Closing Date as set forth therein
shall be final, binding and conclusive for all purposes of this Agreement and
not subject to any further recourse by the Buyer under any provision hereof.  In
the event that the Buyer shall so notify the Members of any dispute and the
Buyer and the Members are unable to resolve such dispute within thirty (30) days
of such notice, then all amounts remaining in dispute shall be submitted to KPMG
LLP (or, if such accounting firm shall decline to act, to another independent
accounting firm mutually acceptable to the Buyer and the Members, which shall
not have had a material relationship with the Buyer or any of its affiliates
within the past two (2) years) (either KPMG LLP or such other accounting firm
being the “Independent Accounting Firm”).  Each party hereto agrees to execute,
if requested by the Independent Accounting Firm, a reasonable engagement
letter.  The Independent Accounting Firm shall act as an arbitrator to
determine, based solely on presentations by the Members and the Buyer (including
any working papers of the Target and the Buyer) and not by any independent
review, only those issues still in dispute.  The Independent Accounting Firm’s
determination shall be requested to be made within thirty (30) days of its
selection and shall be set forth in a written statement delivered to the Members
and the Buyer, and the Working Capital of the Target as of the Closing Date as
set forth in such written statement shall be final, binding and conclusive for
all purposes of this Agreement and not subject to any further recourse by any
party pursuant to any provision hereof.  The “Final Statement” shall be (i) the
Closing Date Statement in the event that the Buyer does not deliver a notice of
dispute in the 30-day period specified in Section 1.7(a)(i) or accepts the
Closing Date Statement or (ii) the Closing Date Statement, as modified by
resolution of any disputes by the Buyer and the Members or by the Independent
Accounting Firm.  The Final Statement shall be deemed to be effective on the
earliest to occur of: (x) issuance by the Buyer of its written agreement to the
Net Working Capital of the Target as of the Closing Date as contained in the
Closing Date Statement; (y) in the event that the Buyer does not deliver a
notice of dispute to the Target within the thirty (30) day period specified in
Section 1.7(c)(i), the first business day following the end of such period; and
(z) in the event that the Buyer delivers a notice of dispute to the Target
within the thirty (30) day period specified in Section 1.7(a)(i), the first
business day following the date the dispute is resolved by written agreement of
the Buyer and the Target or by the Independent Accounting Firm.  In addition,
the “Closing Date Working Capital”  shall be the Working Capital of the Target
as of the Closing Date as set forth in the Final Statement.  The procedures set
forth in this Section 1.7(a)(ii) are the sole remedy for any disputes with
respect to matters set forth on or arising in connection with the Closing Date
Statement.
 
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In the event the parties submit any unresolved objections to the Independent
Accounting Firm for resolution as provided in Section 1.7(a)(ii) above, the
Buyer, as one party, and the Members, collectively, as the other party, shall
each be responsible for fifty percent (50%) of the fees and expenses of the
Independent Accounting Firm.

(b) Determination of Final Closing Purchase Price.
 
The Final Closing Purchase Price shall be an amount equal to the Initial
Purchase Price, increased or decreased, as the case may be, by the amount, if
any, by which the Closing Date Working Capital as determined by the Final
Statement, is greater than or less than, as the case may be, the Target Working
Capital.
 
(c) Payment of Working Capital Adjustment.
 
No later than ten (10) business days following the date the Final Statement
becomes effective: (i) if the Final Closing Purchase Price exceeds the Estimated
Initial Purchase Price, the Buyer shall pay the amount of such excess to the
Target by wire transfer of immediately available funds; (ii) if the Final
Closing Purchase Price is less than the Estimate Initial Purchase Price, the
Target and each of the Members shall pay to the Buyer (and shall be jointly and
severally liable for the amount of such payment, with the Buyer having a right
of set off with respect to any amounts owed to it by the Members) by wire
transfer of immediately available funds, the amount by which the Estimated
Initial Purchase Price exceeds the Final Closing Purchase Price; and (iii) if
the Final Closing Purchase Price equals the Estimated Initial Purchase Price, no
payment shall be due from Buyer or from the Target and each Member.
 
Section 1.8 Earn Out Payment
 
(a) The Buyer shall pay the Members (or an entity designated by Members, the
“Members’ Designee” and together with the Members, the “Member Party”) an
aggregate amount equal to the Earn Out Payment, if any, determined in accordance
with the following formula: in the event that Revenue for the 2013 calendar year
is (A) less than or equal to $12.5 million (the “Earn Out Target”), the Earn Out
Payment shall be equal to $0, or (B) greater than $12.5 million, the Earn Out
Payment shall be equal to three and one half (3.5) times the amount of Revenue
in excess of $12.5 million; provided, however, that the Earn Out Payment shall
not exceed $46.4 million and the Earn Out Payment shall be paid quarterly during
the 2013 fiscal year based on 12 months trailing Revenue of the Business in
excess of $12.5 million.  Section 1.8(a) of the Disclosure Schedule hereto
contains a sample calculation of an annual Earn Out Payment.
 
 
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(b) Within forty-five (45) days after the end of each quarter during fiscal year
2013, the Buyer shall prepare and deliver to the Member Party a statement
setting forth a calculation of 2013 year-to-date Revenue of the Business as of
the end of each then applicable quarter, and the portion of the Earn Out Payment
payable hereby, together with a certificate of a duly authorized officer of the
Buyer certifying the foregoing (the “Earn Out Statement”.  Such statement shall
be prepared in a manner consistent with Section 1.8(b) of the Disclosure
Schedule hereto, which sets forth, for illustrative purposes only, an example of
the calculation of the Revenue for the calendar year ending December 31, 2011,
as provided to the Buyer by the Target.
 
(c) The Member Party shall have the right to review, for a period of thirty (30)
days commencing on the date of delivery by the Buyer of each Earn Out Statement
(the “Earn Out Objection Period” (and the Buyer shall during such period provide
reasonable access during normal business hours to) all books, records (including
copies of all purchase orders and contracts with customers for the applicable
quarter and for the period of the Earn Out then completed)  and supporting work
of the Buyer related to the calculation of Revenue and the Earn Out Payment for
the applicable quarter and the preparation of such Earn Out Statement.  The
Member Party shall have the right during the Earn Out Objection Period to
provide written notice to the Buyer of any objections to any item of calculation
in the Earn Out Statement (the “Earn Out Objection Notice”.  If the Member Party
fails to timely object to the calculations set forth in the Earn Out Statement
during the Earn Out Objection Period, then the Earn Out Statement shall become
final and binding on the parties and the Earn Out Payment for the applicable
quarter, if any, shall be as set forth in the Earn Out Statement.  If the Member
Party shall timely give the Earn Out Objection Notice, then the Member Party and
the Buyer shall attempt in good faith to resolve any dispute concerning the
item(s) subject to such Earn Out Objection Notice.  If the Member Party and the
Buyer do not resolve any dispute arising in connection with the Earn Out
Statement within 30 days after the date of delivery of the Earn Out Objection
Notice, which 30-day period may be extended by written agreement of the Buyer
and the Member Party, such dispute shall be resolved fully, finally and
exclusively in accordance with the procedures set forth in Section
1.7(a)(ii).  Any Earn Out Payment to be made by the Buyer to the Member Party
hereby shall be paid within five (5) business days by wire transfer of
immediately available funds after the applicable Earn Out Payment Determination
Date.  The “Earn Out Payment Determination Date” shall mean the first business
day following the earliest of the:  (i) Member Party’s failure to timely object
to the calculation of the Earn Out Payment pursuant to this Section,
(ii) determination of the Earn Out Payment by the agreement of the parties; or
(iii) the determination of the Earn Out Payment by the Independent Accounting
Firm.
 
(d) The Earn Out Payment shall represent only a contingent right to receive a
cash payment, and shall not possess any attributes of common stock or entitle
the Target or Members to any rights of any kind other than as specifically set
forth herein.
 
 
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(e) As used herein, the term “Revenue” shall mean, for any period, the gross
revenues of the Business determined in accordance with GAAP without adjustment
for any write down of opening deferred revenue as set forth on the Closing Date
Statement.
 
(f) The Buyer acknowledges that changes in the manner in which the Business is
operated after the Closing Date could reduce the amount of the Revenue during
the 2013 calendar year and further acknowledges that Buyer does not intend to
implement changes in the manner in which the Business is operated after the
Closing Date if such changes could reasonably be expected to reduce the amount
of Revenue for the 2013 calendar year.  In connection with the foregoing, the
Buyer hereby agrees that it shall not, at any time prior to January 1, 2014: (i)
terminate either of the Members without “Cause” (as “Cause” is hereinafter
defined); or (ii) to the extent that either Eric Reich or Michael Weisman remain
employed by the Buyer, without the consent of Eric Reich (or Michael Weisman if
Eric Reich is no longer employed by Buyer or is disabled or incapacitated): (A)
terminate the employment of any of the Target’s Key Employees (other than the
Members) without “Cause”; (B) reduce the salary, bonus opportunity (whether by
changes in the structure of the annual bonus program or otherwise) or benefits
payable to each of the Members as determined by the terms of Employment Letters;
(C) materially reduce the salary and benefits of any of the Target’s Key
Employees (other than the Members); (D) assign duties to any of the Target’s Key
Employees which are materially inconsistent with the duties of any of such
Target’s Key Employees as set forth on Section 1.8(f) of the Disclosure Schedule
or change the location of any of Target’s Key Employees; (E) terminate the
employment of (I) any Key Sales Employee set forth on Section 1.8(f)(ii)(E) of
the Disclosure Schedule other than for “Cause” or (II) a material portion of the
Transferred Employees of Target devoted to sales; provided, however, that with
respect to Transferred Employees that are not Key Employees or Key Sales
Employees, the Buyer may replace any such employees without eliminating such
position without such consent; (F) redirect the efforts of programmers to the
development of products different from products under development or planned as
of the Closing Date; or (G) assign duties and responsibilities to any of the
Target Key Employees which could reasonably be expected to hinder or prohibit or
to otherwise hinder or prohibit the implementation of any enhancement or
expansion of any of the Business’ existing products or products under
development or in planning as of the Closing Date; provided, however, that the
Buyer may require the Target Key Employees to complete employee training
programs and other such responsibilities that are typically required of all
employees of the Buyer without such consent.  For purposes of the foregoing, the
Buyer shall be deemed to have “Cause” to terminate the employment of a Target
Key Employee only as a result of: (u) a willful and continued failure of the
Target Key Employee to substantially perform the duties which have been assigned
to the Target Key Employee (subject to the limitations on the nature of the
duties which may be assigned to a Target Key Employee provided in Section
1.8(f)(ii)(D) above); provided that, for the avoidance of doubt, the failure of
any Target Key Employee to achieve targeted performance goals shall not, without
more, be deemed to constitute “Cause” within the meaning of this Section 1.8(f);
and, provided, further, that the failure of a Target Key Employee to
substantially perform the duties as a result of the Target Key Employee’s
incapacity due to his suffering of a physical or mental illness or disability
shall not be deemed to constitute “Cause” within the meaning of this Section
1.8(f); (v) criminal charges against the Target Key Employee of a felony; (w)
any action or omission by such Target Key Employee relating to his or her
service to the Buyer involving willful misconduct or gross negligence that
results in more than de minimis harm to the Buyer; (x) the commission by such
Target Key Employee of an act of fraud or embezzlement that results in harm to
the Buyer or disregard of a rule or policy of the Buyer that results in harm to
the Buyer; or (y) a material breach or violation by such Target Key Employee of
any of any written agreement between such Target Key Employee and the Buyer or
the Buyer’s written employment policies as applied to the employees of Buyer
consistent with the past practices of Buyer.  For the purpose of this Section
1.8(f), consent of an individual to an event shall be deemed to be given if such
individual knows of or learns of such event and does not object to the event
within fourteen (14) days.
 
 
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(g) In the event of any breach of the provisions of 1.8(f) by Buyer or dispute
between the parties hereto arising out of or related to Section 1.8(f), (a
“Dispute”), such Dispute shall be resolved in the manner provided in this
Section.  Any Dispute shall be resolved in the order of progression of
subsections (i) through (iii) below.
 
(i) The Member Party shall notify the Buyer in writing of any Dispute.  The
parties shall negotiate in good faith to attempt to resolve such Dispute for a
period of thirty (30) days, unless otherwise agreed by the parties.  No
settlement reached under this Section 1.8(g)(i) shall be binding on the parties
until reduced to a writing signed on behalf of the parties.  The existence and
substance of any negotiations pursuant to this Section 1.8(g)(i) shall be
considered confidential under this Agreement and shall not be used by any party
in any court, agency or tribunal in any jurisdiction for any reason.
 
(ii)  If the procedure outlined in subsection (i) above fails to bring about a
resolution of each outstanding Dispute within the thirty (30) day period
described above or any other time period agreed upon by the parties, either
party may, by written notice to the other, demand resolution of the Dispute(s)
by non-binding mediation to be held in Buffalo, New York.  Such mediation shall
be conducted by a mediator based in the United States mutually agreed to by the
parties.  No settlement reached under this Section shall be binding on the
parties until reduced to a writing signed on behalf of the parties.  The
existence and substance of the mediation pursuant to this Section 1.8(g)(ii)
shall be considered confidential under this Agreement and shall not be used by
any party in any court, agency or tribunal in any jurisdiction for any reason.
 
(iii) If a Dispute is not resolved within forty-five (45) days of the receipt by
either party of a demand for mediation (or such later date as the parties may
mutually agree in writing), the Member Party may commence a lawsuit. The venue
for any such legal proceeding shall be before a federal located in Erie County,
New York.
 
(iv) In the event that any Dispute results in any judgment or order in favor of
the Member Party, the Buyer shall pay and reimburse the Member Party for all
actual and reasonable costs and expenses, including without limitation,
attorneys’ fees, disbursements, and any other litigation costs through all
appeals in addition to other costs and disbursements allowed by law, including
those incurred on appeal. If as a result of a judgment or order of a court in an
action described in this Section 1.8(g)(vi), the Member Party is not entitled to
any damages as a result of the Dispute, the Member Party shall pay to the Buyer
all actual and reasonable costs and expenses, including without limitation,
attorneys’ fees, disbursements, and any other litigation costs incurred.
 
 
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(v) In the event any Dispute results in the execution of a written settlement
agreement among the parties requiring the Buyer to pay the Member Party, the
Buyer shall pay and reimburse the Member Party for all actual and reasonable
costs and expenses, including without limitation, attorneys’ fees,
disbursements, and any other litigation costs incurred through execution of the
written settlement agreement.
 
(vi) Fees and costs payable to the prevailing party under this Section shall
only apply to Disputes under this Section 1.8.
 
Section 1.9                      Certain Taxes and Fees
 
The Sellers shall be responsible for the payment of any stamp, transfer,
documentary, sales, use, registration and other such taxes, recording fees,
personal property title application fees, patent and trademark assignment
registration fees and other such fees, including any penalties and interest
payable in connection with the transfer of the Assets contemplated by this
Agreement, for the filing and recording of any documents required to discharge
any Liens on the Assets (other than Permitted Liens) and arising otherwise in
connection with the transactions contemplated by this Agreement.
 
ARTICLE II
 

 
RELATED MATTERS
 
Section 2.1 Books and Records of the Target
 
Subject to applicable law, the Sellers agree to deliver, or cause to be
delivered, to the Buyer as soon as reasonably practicable after the Closing but
in no event later than ten (10) business days after the Closing Date, originals
or copies of the Business Records.  For a period of three (3) years after the
Closing, the Buyer shall preserve and make available (for review and copying) to
the Target and each of the Members, and their respective authorized
representatives, upon reasonable notice during normal business hours the books
and records transferred by the Target for reasonable business purposes with
respect to all transactions occurring prior to and those relating to the
Closing, the historical financial condition, assets, liabilities, results of
operations and cash flows of the Target, with the Buyer’s agreement to make
available such books and records to the Target not to be unreasonably withheld
or delayed.
 
 
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Section 2.2 Employees and Employee Benefits
 
(a) Employees.  As of the Closing Date, the Target shall terminate all of its
employees and the Buyer shall then be permitted, at the Buyer’s sole discretion,
to offer each such employee employment in connection with the Business.  Section
2.2(a) of the Disclosure Schedule contains a complete and accurate list of the
Target’s employees.  As to all such employees, the Target has provided the Buyer
with a writing setting forth the locations at which such employees are working
as of the date of this Agreement, as well as each employee’s position and
department in which he/she works, together with a complete and accurate list of
all written employment contracts (if any) related to any of such employees.
 
(b) Transferred Employees.  Not later than one (1) day prior to the Closing
Date, the Buyer shall identify the employees listed in Section 2.2(a) of the
Disclosure Schedule to whom the Buyer will offer employment as of the Closing
(“Transferred Employees”), and shall provide the Target with a list of those
Transferred Employees (“Notice of Employment”).  The Target shall be fully
liable for the employment (or termination or severance thereof) of any employees
not identified as Transferred Employees in the Notice of Employment.  In
addition, the Target shall be liable for, and shall pay, all wages, salaries,
payroll taxes and employee benefits due, owing or accrued for all employees of
the Business through the Closing Date.
 
(c) Pre-Closing Claims.  The Target shall remain responsible for all claims
under the applicable Plans for health, accident, sickness and disability
benefits that are deemed incurred prior to the Closing Date by any of the
Transferred Employees.  For all purposes under such Plans, such employees shall
be considered to have terminated employment with the Target as of the Closing
Date.  For purposes of this Agreement: (i) a claim for health benefits
(including, without limitation, claims for medical, prescription drug and dental
expenses) shall be deemed to have been incurred on the date on which the related
medical service or material was rendered to or received by the Transferred
Employee claiming any such benefits and (ii) in the case of any claim for
benefits other than health benefits and sickness and disability benefits (e.g.,
life insurance benefits), a claim shall be deemed to have been incurred upon the
occurrence of the event giving rise thereto.  As of the Closing, any Transferred
Employee who is receiving benefits under the Target’s short-term disability
program shall be deemed to be an employee of Target until such time as such
employee is no longer eligible for the Target’s short-term disability program
and, if at such time such Transferred Employee will be returning to work, such
employee shall at that time be employed by the Buyer.  If at such time such
employee shall be eligible for long-term disability benefits or disability
retirement, such employee shall receive such benefits under the Target’s
long-term disability program or pension plan.
 
(d) Disabled Employees.  Target shall remain responsible for (i) all benefits
payable to Transferred Employees who, as of the close of business on the day
immediately preceding the Closing Date, were determined to be totally and
permanently disabled in accordance with the applicable provisions of Target’s
health, accident, sickness, salary continuation or short-term or long-term
disability benefits plans or programs and (ii) all workers compensation claims
based on injuries occurring prior to the Closing Date.
 
(e) WARN.  The Target agrees to comply, if applicable, with the provisions of
the Worker Adjustment and Retraining Notification Act of 1988, as amended, and
any other federal, state or local statute or regulation regarding termination of
employment, and to perform all obligations that might otherwise be required by
the Target with respect to the Target’s conduct of the Business.
 
 
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(f) Cooperation of Parties.  The Target and the Buyer agree to cooperate fully
with respect to the actions which are necessary or reasonably desirable to
accomplish the transactions contemplated hereunder, including, without
limitation, the provision of records and information as each may reasonably
request and the making of all appropriate filings under the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”).
 
(g) No Right of Employment.  Nothing contained herein, express or implied, is
intended to confer upon any of the Target’s employees any right to continued
employment for any period by reason of this Agreement.  Nothing contained herein
is intended to confer upon any of the Target’s employees any particular term or
condition of employment other than with respect to the particular employee
benefit plans or severance plans, policies or arrangements expressly referred to
in this Agreement.
 

 
ARTICLE III
 

 
REPRESENTATIONS AND WARRANTIES OF TARGET AND MEMBERS
 
Except as disclosed in a separate disclosure letter, a copy of which is being
delivered to the Buyer herewith and is incorporated herein by reference (the
“Disclosure Schedule”), the Sellers, jointly and severally, hereby represent and
warrant to the Buyer as set forth below.  Information disclosed in any section
of the Disclosure Schedule shall be deemed to be disclosed with respect to such
other sections of this Agreement or the Disclosure Schedule to which such
disclosure would reasonably pertain in light of the form and substance of the
disclosure made.
 
Section 3.1 Organization and Good Standing
 
The Target is a limited liability company duly organized, validly existing and
in good standing under the laws of the State of New York.  The Target has all
requisite company power and authority to own, lease and operate its properties
and to carry on the Business as now being conducted, except where any such
failure to be so organized and existing or to have such power and authority
would not individually or in the aggregate have a Material Adverse Effect.  All
membership interests of the Target are held by the Members.  The Target is duly
qualified or licensed to do business in each jurisdiction in which the property
owned, leased or operated by the Target in the conduct of the Business or the
nature of the Business makes such qualification necessary, except in any such
jurisdictions where the failure to be duly qualified or licensed would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect.
 
As used in this Agreement, “Material Adverse Effect” means any effect or change
which, individually or in the case of multiple occurrences, events or
circumstances having the same fundamental underlying cause or basis, in the
aggregate, would be (or could reasonably be expected to be) materially adverse
to the Business, the Assets, condition (financial or otherwise), the operating
results or the operations of the Target, or to the ability of the Target to
consummate timely the transactions contemplated hereby (regardless of whether or
not such adverse effect or change can be or has been cured at any time or
whether the Buyer has knowledge of such effect or change on the date hereof);
provided, that, an effect or change that applies to the economy in general or to
the Target’s industry, as a whole, which effect or change does not substantially
disproportionately affect the Target shall not be considered to be a Material
Adverse Effect.
 
 
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Section 3.2 Authorization and Non-Contravention
 
The Target has the requisite company power and authority to execute and deliver
this Agreement and the other agreements required to be delivered by the Target
(the “Ancillary Agreements”  and to consummate the transactions contemplated
hereby and thereby.  The execution, delivery and performance of this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by the
Target and no other proceeding on the part of the Target is necessary to
authorize the execution, delivery and performance of this Agreement or the
Ancillary Agreements or the consummation of the transactions contemplated hereby
or thereby.  Except as set forth on Section 3.2 of the Disclosure Schedule,
neither the execution and delivery of this Agreement and the Ancillary
Agreements nor the consummation or performance of the contemplated transactions
thereunder will, directly or indirectly (with or without notice or lapse of
time) (i) breach any provision of any resolution adopted by the Target; (ii)
breach or give any governmental body or other person the right to challenge any
of the transactions contemplated hereby or to exercise any remedy or obtain any
relief under any legal requirement or any order to which any Member  may be
subject; (iii) contravene, conflict with or result in a violation or breach of
any of the terms or requirements of, or give any governmental body the right to
revoke, withdraw, suspend, cancel, terminate or modify any government
authorization or permit that is held by the Target or that otherwise related to
the Assets or to the Business; (iv) except for taxes on income earned by the
Buyer following the Closing, cause the Buyer to become subject to, or to become
liable for, the payment of any tax imposed, assessed or collected by or under
the authority of any governmental body or payable under any tax-sharing
agreement; or (v) result in any Member having a right to exercise dissenter’s
appraisal rights.  This Agreement has been, and the Ancillary Agreements will
be, duly executed and delivered by the Sellers and, assuming the valid execution
and delivery by all counterparties thereto, will constitute the valid and
binding agreements of the Sellers, enforceable against the Sellers in accordance
with their respective terms, except to the extent that enforceability may be
limited by bankruptcy, moratorium, reorganization and other laws affecting the
enforcement of creditors’ rights generally and by general principals of equity.
 
Section 3.3 Title to Assets; No Sale of Assets
 
The Target is the beneficial owner of the Assets other than the Assets leased
from third parties, and has good and marketable title to such Assets, free and
clear of all Liens (other than any Permitted Liens).  As used herein, the term
“Liens” means any pledge, mortgage, charge, claim, title, imperfection, defect
or objection, security interest, conditional and installment sales agreement,
encumbrance, easement, encroachment, third party right or restriction of any
kind and the term “Permitted Liens” means (i) rights, if any, (other than for a
breach or default occurring prior to the Closing Date) of parties under any of
the Assigned Agreements; (ii) any Liens for Taxes that are not yet due and
payable; (iii) Liens to be discharged at Closing as set forth on Section 3.3. of
the Disclosure Schedule; (iv) licenses of Business Intellectual Property; (v)
other Liens that have been granted under or attach to the Assets with respect to
any of the Assumed Liabilities, in each case to the extent set forth on Section
3.3 of the Disclosure Schedule; and (vii) imperfections in title or
encumbrances, if any, that individually or in the aggregate would not cause a
Material Adverse Effect on the continued use, operation and value of the assets
to which they relate in the conduct of the Business as presently
conducted.  Except as set forth on Section 3.3 of the Disclosure Schedule, since
the Interim Financial Statements Date, the Target has not sold or otherwise
encumbered any of its assets other than with respect to sales and dispositions
of Tangible Personal Property in the ordinary course of the Target’s business
consistent with past practice.
 
 
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Section 3.4 Consents and Approvals; No Violations
 
Except as set forth on Section 3.4 of the Disclosure Schedule, neither the
execution, delivery or performance of this Agreement or the Ancillary Agreements
nor the consummation by the Sellers of the transactions contemplated hereby or
thereby will (a) conflict with or result in any breach or violation of any
provision of the limited liability company operating agreement or other
governing documents of the Target; (b) require any filing or registration with,
or notice or declaration to, or the obtaining of any permit, license,
authorization, consent or approval of, any governmental or regulatory authority
whether within or outside the United States, except where the failure to file,
register or obtain any permit license, authorization, consent or approval could
not reasonably be expected to have a Material Adverse Effect; (c) violate,
conflict with or result in a default (or any event which, with notice or lapse
of time or both, would constitute a default) under, or result in any
termination, cancellation or acceleration, or give rise to any such right of
consent, approval, notice, termination, cancellation or acceleration under, any
of the terms, conditions or provisions of any agreement related to the Business
or the Assets to which the Target is a party (d) violate any order, injunction,
decree, statute, rule or regulation applicable to the Target, or any of the
Assets or the Business; or (e) result in the creation or imposition of any Lien
(other than any Permitted Liens) upon any of the Assets.
 
Section 3.5 Financial Statements
 
Section 3.5 of the Disclosure Schedule contains the Business’ (i) unaudited
balance sheet and income statement (the “Interim Financial Statements”) as of
June 30, 2012 (the “Interim Financial Statements Date”), and (ii) unaudited
balance sheet, income statement, statement of members’ equity and statement of
cash flows for the year ended December 31, 2011 (the “Historical Financial
Statements”, and together with the Interim Financial Statements, the “Financial
Statements”), which have been extracted from the books and records of the
Target.  Neither the Target nor either of the Members possess or have access to
any balance sheet or income statement for the Business with respect to any
period ending subsequent to June 30, 2012.  Except as disclosed in the Financial
Statements or on Section 3.5 of the Disclosure Schedule, the Financial
Statements fairly present in all material respects the financial position and
the results of operations of the Business as of the respective dates thereof for
the respective periods indicated in accordance with U.S. generally accepted
accounting principles consistently applied (“GAAP”), subject, in the case of the
Interim Financial Statements, to normal year-end accruals and adjustments and
the absence of notes, and have been derived from the books and records of the
Target.  The Target’s books, accounts and records are, and have been, maintained
in all material respects in the Target’s usual, regular and ordinary manner, in
accordance with GAAP, and all material transactions to which the Target has been
a party are properly reflected therein.
 
Section 3.6 Absence of Certain Changes
 
Since the Interim Financial Statements Date, and except as noted in Section 3.6
of the Disclosure Schedule, the Target has conducted the Business only in the
ordinary course consistent with past practice, and with respect to the Business:
(a) the Target has not acquired, sold, leased or in any way transferred or
otherwise disposed of any of the assets of the Business, or made or entered into
any contract or letter of intent with respect to any acquisition, sale, lease or
transfer of any asset of the Business (other than the sale or disposition of
Business Products or other Tangible Personal Property to Business customers in
the ordinary course of its business consistent with its past practice), (b) no
Assigned Agreement has been amended or terminated  and there has not occurred
any material default by the Target or, to the Knowledge of the Target or either
of the Members, a third party under any Assigned Agreement, (c) the Target has
not made any deferral of the payment of any accounts payable other than in the
ordinary course of business, consistent with past practice, or given any
discount, accommodation or other concession other than in the ordinary course of
business, consistent with past practice, in order to accelerate or induce the
collection of any receivable, (d) the Target has not made any material change in
the manner in which it extends discounts, credits or warranties to customers or
otherwise deals with its customers, (e) there has been no material casualty,
damage, destruction or loss affecting, or any material interruption in the use
of, whether or not covered by insurance, the Assets or the Business, (f) the
Target has not sold, disposed of, transferred or licensed to any person any
rights to any Business Intellectual Property, other than in the ordinary course
of business consistent with past practice, nor has the Target acquired or
licensed from any person any Intellectual Property, or disposed of, transferred
or provided a copy of any source code relating to the Business Intellectual
Property to any person or entity, (g) the Target has not made or suffered any
material change in the conduct or nature of any aspect of the Business, (h) the
Target has neither waived any right or benefit under the Assigned Agreements nor
canceled or compromised any debt or claim,
 
 
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other than in the ordinary course of business, (i) the Target has not made (or
committed to make) capital expenditures in an amount which exceeds $25,000  in
the aggregate, (j) the Target has used the same degree of persistence in the
collection of any accounts or other receivables as it used to collect any such
accounts or accounts receivable prior to the Interim Financial Statement Date or
the payment of any accounts or other payables, except for any restatement of any
customer payment schedule in connection with the renewal or restatement of any
Assignment Agreement, (k) the Target has not experienced a material increase in
the length of time required for the Target to implement its customers, (l)
except as set forth on Section 3.6 of the Disclosure Schedule, the Target has
not had a backlog (which means for purposes hereof, a customer order that is
still unfilled or unimplemented after the date promised or requested or the
normal completion dated thereof) of greater than thirty (30) days for any
customer implementation,  (m) the Target has not incurred any Liabilities,
except Liabilities incurred in the ordinary course of business and Liabilities
incurred in connection with or as a result of this Agreement and the
transactions contemplated hereby, (n) the Target has not canceled, compromised,
waived or released any material right or claim (or series of related rights and
claims); (o) there has been no change made or authorized in the operating
agreement or other governing document of the Target; (p) the Target has not made
any loan to, or entered into any other transaction with either of the Members or
any of its officers or employees outside the ordinary course of business; (q)
the Target has not granted any increase in the base compensation of either of
the Members or any of its officers or employees; (r) except as contemplated by
Section 5.12 or as otherwise contemplated by this Agreement, the Target has not
adopted, amended, modified or terminated any bonus, profit sharing, incentive,
severance or other plan, contract or commitment for the benefit of any of either
of the Members or any of its officers or employees; (s) the Target has not made
any other changes in employment terms for either of the Members, officers or
employees; (t) the Target has not made or pledged to make any charitable or
other capital contribution outside the ordinary course of business; (u) the
Target has not discharged a material liability or lien outside the ordinary
course of business; (v) the Target has not made any loans or advances of money
including, without limitation, any such loans or advances between or among
Target, the Members and any affiliate or employee of Target; (w) the Target has
not disclosed any Confidential Information; (x) the Target has not changed any
accounting method for tax purposes or made, changed or revoked any tax
elections; (y) there has not occurred any announcement of, any negotiation by or
any entry into any contract by the Target to do any of the things described in
the preceding clauses (other than negotiations and agreements with the Buyer and
its representatives regarding the transactions contemplated by this Agreement),
(z) without limitation by the enumeration of any of the foregoing, except for
the execution of this Agreement, the Target has not entered into any transaction
other than in the usual and ordinary course of business.
 
 
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Section 3.7 Absence of Material Adverse Effect
 
Except as set forth on Section 3.7 of the Disclosure Schedule or as otherwise
contemplated by this Agreement, since the Interim Financial Statements Date,
there has not been any Material Adverse Effect.
 
Section 3.8 Properties and Related Matters
 
(a) Target does not own any real property, land, buildings or
structures.  Section 3.8(a) of the Disclosure Schedules sets forth the address
of each parcel of leased real property, and a true and complete list of all
leases for such leased real property (including the date and name of the parties
to such lease document).  Target has delivered to the Buyer a true and complete
copy of such lease document, and in the case of any oral lease, a written
summary of the terms of such lease.  Except as set forth on Schedule 3.8(a),
with respect to each such lease: (i) such lease is valid, binding, enforceable
and in full force and effect; (ii) the transactions contemplated by this
Agreement do not require the consent of any other party to such lease, will not
result in a breach of or default under such lease, and will not otherwise cause
such lease to cease to be legal, valid, binding, enforceable and in full force
and effect on identical terms following the Closing; (iii) the Target’s
possession and quiet enjoyment of the leased real property under such lease has
not been disturbed and, to the Target’s Knowledge, there are no disputes with
respect to such lease; (iv) neither the Target, nor to the Target’s Knowledge,
any other party to the lease is in breach of or default under such lease, and,
to Target’s Knowledge, no event has occurred or circumstance exists that, with
the delivery of notice, the passage of time or both, would constitute such a
breach or default, or permit the termination, modification or acceleration of
rent under such lease; (v) no security deposit or portion thereof deposited with
respect to such lease has been applied in respect of a breach of or default
under such lease that has not been redeposited in full; (vi) the Target does not
owe, nor will it owe in the future, any brokerage commissions or finder’s fees
with respect to such lease; (vii) the other party to such lease is not an
affiliate of, and otherwise does not have any economic interest in, the Target;
the Target has not subleased, licensed or otherwise granted any person the right
to use or occupy the leased real property or any portion thereof; (viii) the
Target has not collaterally assigned or granted any other lien in such lease or
any interest therein; and (ix) there are no liens on the estate or interest
created by such lease.  The leased real property identified in Section 3.8 of
the Disclosure Schedule comprises all of the real property used to operate the
Business; and Target is not a party to any agreement or option to purchase any
real property or interest therein.  To the Knowledge of the Sellers, all
buildings, structures, fixtures, and equipment, and all components thereof
(including the roof, foundation, load-bearing walls and other structural
elements thereof), heating, ventilation, air conditioning, mechanical,
electrical, plumbing and other building systems included in the leased real
property are in good condition and repair and sufficient for the operation of
the Business.  There is no injunction, decree order, writ or judgment
outstanding or any claim, litigation, administrative action or similar
proceeding, pending or, to the Target’s Knowledge, threatened, relating to the
ownership, lease, use or occupancy of the leased real property or any portion
thereof or the operation of the Business as currently conducted thereon.  To the
Target’s Knowledge, the leased real property is in compliance, in all material
respects, with all applicable building, zoning, subdivision, health and safety
and other land use laws, including the Americans with Disabilities Act of 1990,
as amended, and all insurance requirements affecting the leased real property
(collectively, the “Real Property Laws” , and the current use and occupancy of
the leased real property and operation of Target’s business thereon do not
violate any Real Property Laws. The Target has not received any notice of
violation of any Real Property Law and, to Target’s Knowledge, there is no basis
for the issuance of any such notice or the taking of any action for such
violation.
 
 
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(b) Section 3.8(b) of the Disclosure Schedule describes, as of the date hereof,
all items of Tangible Personal Property having a value in excess of $1,000
owned, leased or subleased by the Target, specifying in the case of leases or
subleases, the name of the lessor or sublessor, the lease term and basic annual
rent.  All such leases of personal property are in good standing and are valid,
binding and enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors rights generally and there does not
exist under any such lease any material breach by the Target or any event known
to the Target that, with notice or lapse of time or both, would constitute a
material breach.
 
Section 3.9 Business Products; Warranties; Defects; Liabilities
 
(a) A general description of the products that are, as of the date hereof (or
were at any time during the one-year period immediately preceding the date
hereof), owned, created, designed, developed, manufactured, marketed, licensed
or sold (whether in existence or in development) by or on behalf of the Target
is set forth in Section 3.9(a) of the Disclosure Schedule (hereinafter referred
to collectively as the “Business Products” and individually as a “Business
Product”).
 
(b) To the Knowledge of the Target, each of the Business Products was in
conformity in all respects with the specifications for such Business Product,
all applicable contractual commitments and all applicable express warranties at
the time of the manufacture, sale, license, lease or delivery of such Business
Product, except for such nonconformities for which (and to the extent) there is
a reserve set forth on the Interim Financial Statements or as otherwise
disclosed on Section 3.9(b) of the Disclosure Schedule.
 
As used in this Agreement, “Knowledge” means as follows:
 
An individual will be deemed to have Knowledge of a particular fact or other
matter if (i) that individual is actually aware of that fact or matter; or (ii)
a prudent individual would reasonably be expected to discover or otherwise
become aware of that fact or matter in the performance of his duties for the
Target.  The Target will be deemed to have Knowledge of a particular fact or
matter if any Member or any of the Target’s Key Employees has knowledge of that
fact or other matter (as set forth in (i) and (ii) above), and any such
individual will be deemed to have conducted a reasonably comprehensive
investigation regarding the accuracy of the representations and warranties made
herein by that person or individual.  The “Target’s Key Employees” shall mean
Eric Reich, Michael Weisman, Sean Casey, John White, Kim Vanderlinden and Robert
Willer.
 

 
 
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Section 3.10 Intellectual Property
 
(a) Except as set forth on Section 3.10(a) of the Disclosure Schedule, the
Target (i) owns legal title to, or pursuant to written agreement has, to the
Knowledge of Target, valid and enforceable rights to use, all Business
Intellectual Property, in each case free and clear of any Liens (other than
Permitted Liens), and (ii) is the owner of record of any application,
registration or grant for each item of Business Intellectual Property, and to
the Knowledge of the Target, has properly executed and recorded all documents
necessary to perfect its title to the registered Business Intellectual Property
which is owned by Target.  The Target has filed all documents and paid all
Taxes, fees and other financial obligations required to renew and maintain in
force and effect all of the registered Business Intellectual Property which is
owned by the Target until Closing.  Each item of Business Intellectual Property
is currently in compliance with formal legal requirements (including payment of
filing, examination and maintenance fees, proofs of working use, timely
post-registration filing of affidavits of use and incontestability, renewal
applications), and, to the Knowledge of the Target, is valid and enforceable,
and, to the Knowledge of Target, is not subject to any maintenance fees or taxes
or actions falling due within ninety (90) days after the Closing Date.  The
Target has taken all reasonable precautions to protect the secrecy,
confidentiality and value of all trade secrets (including the enforcement by the
Target of a policy requiring each employee or contractor to execute proprietary
information and confidentiality agreement agreements, and all current and former
employees and contractors of the Target have executed such an agreement).
 
(b) Section 3.10(b) of the Disclosure Schedule contains a complete and correct
list of all Business Intellectual Property.
 
(c) The Target has not received any written notice that there is any violation
by any other person of any right of the Target with respect to any or all
Business Intellectual Property.  Except as provided in Section 3.10(c) of the
Disclosure Schedule and except for licenses by the Target of off the shelf
software, the Target has not entered into or consummated any license or user
agreement with another person in respect to any or all Business Intellectual
Property or otherwise licensed or sublicensed any third party to use the
Business Intellectual Property.
 
(d) To the Knowledge of the Target, (i) the Business Intellectual Property has
not been misappropriated nor has it been the subject of an unauthorized
disclosure, (ii) no employee, independent contractor or agent of the Target has
misappropriated any trade secrets of any other person in the course of such
employee’s performance as an employee, independent contractor or agent and (iii)
no employee, independent contractor or agent of the Target is in default or
breach of any term of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement or contract relating in
any way to the protection, ownership, development, use or transfer of the
Business Intellectual Property.  The Target has taken reasonable steps to
maintain the confidentiality of customer information, trade secrets and other
confidential or proprietary intellectual property of the Business.
 
(e) No third party has asserted in writing to the Target any ownership rights in
any of the Business Intellectual Property.  To the Knowledge of the Target, no
other person claims the right to use in connection with similar or closely
related goods and in the same geographic area any mark which is identical or
confusingly similar to any of the Marks.  To the Knowledge of Target, neither
the use of the Business Intellectual Property in the Business nor the owned
Business Products infringe any right of any third party.  To the Knowledge of
the Target, no third party is (i) infringing any of the owned Business
Intellectual Property or (ii) has made a claim relating to infringement of the
owned Business Intellectual Property and, to the Knowledge of the Target, no
third party is infringing any of the Business Intellectual Property not owned by
Target.  Without limitation of the foregoing, the Target has, and following the
Closing, Buyer will have, the legal right to use the Business Intellectual
Property (including all copies of all computer software) currently used by the
Target, except as disclosed on Section 3.10(e) of the Disclosure Schedule.  The
Business Intellectual Property constitutes all of the intangible property
necessary in order for the Target to conduct the Business consistent with past
practices and as presently conducted.  To the Knowledge of the Target, the
Members do not have any ownership rights to the Business Intellectual Property.
 
 
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(f) No litigation has ever been commenced or has been threatened, (i) alleging
that any Business Intellectual Property infringes on or misappropriates the
intellectual property of another person; or (ii) challenging the ownership,
right to use or validity of Business Intellectual Property.  To the Knowledge of
Target, there is no valid basis for any Case described in this Section 3.10(f).
 
(g) The consummation of this Agreement will not result in the loss or impairment
of any rights to own, use or sell any or all Business Intellectual Property.
 
(h) All of the Business Intellectual Property that has been created by any
independent contractor or other third party for the Target is the subject of a
proper written assignment and/or work made for hire agreement providing that the
Target is the owner of such Business Intellectual Property.  The Target has
written agreements with its past and/or present employees requiring such
employees to assign all patents, inventions and other intellectual property
rights to the Target, as necessary to protect the Target’s ownership interest in
the Intellectual Property.
 
“Copyrights” means all copyrights, registered U.S. and foreign works of
authorship and all applications to register and renewals of any of the
foregoing.
 
“Business Intellectual Property” means all (A) Patents, (B) Marks, (C)
Copyrights, (D) licenses of rights in computer software, Marks, Patents,
Copyrights and other intellectual property, whether to or by the Target, (E)
websites, domain names, URLs (including all computer software, all
documentation, source and object codes with respect to such software and all
licenses and leases of software) and (F) formulas, in each case owned by the
Target or in which the Target claims any ownership rights anywhere in the world,
used in connection with the Business.
 
“Marks” means all registered and unregistered U.S. and foreign trade names,
trademarks, trade dress, service marks, logos, and slogans, together with any
information regarding all registrations and applications related thereto.
 
“Patents” means all issued U.S. and foreign patents, design patents, utility
models, industrial designs, registered designs and pending patent applications
for any of the foregoing.
 
Section 3.11 Litigation
 
Except as set forth on Section 3.11 of the Disclosure Schedule, there are no
actions suits, or any administrative, arbitration, governmental or other
proceedings, in law or in equity or, to the Knowledge of the Target,
investigations or inquiries, (collectively, “Cases”), pending, or to the
Knowledge of the Target, threatened that (in each case) relate to the Business
and that are (a) against Target or its  officers or the Members, (b) with
respect to or affecting Target’s operation of the Business or the products or
services provided or rendered by the Business or (c) related to the consummation
of the transactions contemplated hereby.  Section 3.11 of the Disclosure
Schedule contains a complete and accurate list of all Cases filed since the
Target’s inception or to the Knowledge of the Target, threatened in the last
three (3) years: (i) by or against the Target or its officers or the Members, in
each case relating to the Business, (ii) with respect to or affecting the
operation of the Business by the Target or the products or services provided or
rendered by the Business or (iii) related to the consummation of the
transactions contemplated hereby.
 
 
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Section 3.12 Compliance with Applicable Law; Permits
 
Except as noted in Section 3.12 of the Disclosure Schedule, the Target is in
compliance in all material respects with all laws, ordinances, rules and
regulations of any federal, state, local or foreign governmental authority
applicable to the Business and no client, prospect, counsel to the company,
advisor, employee or other party has claimed otherwise or made a written inquiry
regarding the Target’s compliance.  The Target holds all material licenses,
permits, authorizations, consents, approvals, orders, filings or registrations
with any court or administrative or governmental authority necessary for the
lawful conduct of the Business.   The Target is not a party to, or bound by, any
decree, order or arbitration award (or agreement entered into in any
administrative, judicial or arbitration proceeding with any governmental or
other authority) with respect to the Target’s properties, assets, personnel or
activities.
 
Section 3.13 Certain Contracts and Arrangements
 
Except as set forth on Section 3.13 of the Disclosure Schedule and except for
any Assigned Agreements, as of the date hereof, the Target is not a party to any
written or oral (a) collective bargaining agreement, (b) any partnership, joint
venture or other similar agreement or arrangement, (c) license or other similar
agreement, (d) agency, sales representation, distribution or other similar
agreement, (e) agreement for the purchase of supplies or materials providing for
annual payments of more than Twenty-Five Thousand Dollars  ($25,000), (f)
agreement for the sale of goods or services, (g) contract for capital
expenditures, (h) agreement or arrangement regarding confidentiality or
non-competition, (i) lease or sublease of personal property or (j) agreement
that has a notice for termination period of more than three (3) months and
obligates any party thereto to make an annual payment of more than Twenty-Five
Thousand Dollars ($25,000) or total payments of more than Fifty Thousand Dollars
($50,000) during the term of such agreement.  Except as set forth on Section
3.13 of the Disclosure Schedule, each Assigned Agreement is in full force and
effect and is a valid, binding and enforceable obligation of the Target and, to
the Knowledge of the Target, of each other party thereto, enforceable against
each party thereto in accordance with its terms subject to applicable
bankruptcy, moratorium, reorganization and other laws affecting enforcement of
creditors rights generally.  Neither the Target nor, to the Knowledge of the
Target any other party to any of the aforesaid agreements, is in default under
any of the aforesaid agreements.
 
Section 3.14 Employee Benefit Plans; ERISA
 
(a) Section 3.14(a) of the Disclosure Schedule lists all Benefit Plans
maintained or contributed to by the Target for the benefit of any of its
employees or former employees (collectively, the “Plans”).  True and complete
copies of all Plans, including, but not limited to, any trust instruments and
insurance contracts forming a part of any Plans, and all amendments thereto, all
summary plan descriptions and administrative service contracts relating to all
Benefit Plans, the three most recent Forms 5500 and financial statements have
been provided or made available to the Buyer.
 
 
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(b) Each of the Plans has, in all material respects, been administered in
accordance with its terms and in compliance with applicable law (including,
where applicable, ERISA and the Internal Revenue Code of 1986, as amended (the
“Code”)), and to the extent applicable, the Patient Protection and Affordable
Care Act of 2010.
 
(c) Except as described in Section 3.14(c) of the Disclosure Schedule, each of
the Plans intended to be “qualified” within the meaning of Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so qualified,
and, to the Knowledge of the Target, no fact or set of circumstances that has
adversely affected, or is reasonably likely to adversely affect, the
qualification of such Plan prior to the Closing has occurred.  No determination
letter for any such Plan has been revoked, and no such Plan has been amended
since the date of its most recent determination letter in a manner that would
adversely affect its qualified status.  Each Plan that is required to satisfy
Section 401(k)(3) and Section 401(m)(2) of the Code has been tested for
compliance with, and satisfies the requirements of Section 401(k)(3) and Section
401(m)(2) of the Code for each plan year ending prior to the Closing Date, or is
a “safe harbor” 401(k) plan exempt from discrimination testing.
 
(d) Except as set forth in Section 3.14(d) of the Disclosure Schedule, no Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for the Target’s employees or former employees for periods
extending beyond their termination of service (by retirement or otherwise),
other than (i) coverage mandated by applicable law, (ii) death benefits under
any “pension plan,” as that term is defined in Section 3(2) of ERISA or (iii)
benefits the full cost of which is borne by the current or former employee (or
his or her beneficiary).
 
(e) There are no pending or, to the Knowledge of the Target or either of the
Members, threatened claims (other than routine claims for benefits) by, on
behalf of or against any of the Benefit Plans or any trusts related thereto,
except for those claims that are not, individually or in the aggregate,
reasonably likely to have a Material Adverse Effect.  Neither Target nor Sellers
have received any notice by the U.S. Department of Labor or Internal Revenue
Service of an audit of any Benefit Plan.
 
(f) Except as set forth in Section 3.14(f) of the Disclosure Schedule, the
Target has not made any representations to any of its employees concerning the
length of time that the employee’s work or employment with the Buyer may
continue or concerning the compensation or benefits or other terms or conditions
of employment with the Buyer to be offered to the Target’s employees by the
Buyer.
 
(g) Neither the Target nor any ERISA Affiliate has ever maintained or
contributed to any defined benefit plan subject to Title IV of ERISA or any
multiemployer pension plan as defined in Section 3(37) of ERISA, or any Benefit
Plan subject to Section 412 of the Code.
 
(h) Except as otherwise disclosed in Section 3.14(h) of the Disclosure Schedule,
no payment that is owed or may become due to any director, officer, employee or
agent of the Target or any ERISA Affiliate will be non-deductible or subject to
tax under Section 280G or Section 4999 of the Code; nor will the Target or any
ERISA Affiliate be required to “gross up” or otherwise compensate any such
person because of the imposition of any excise tax on a payment to such person.
 
 
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(i) No transaction prohibited by Section 406 of ERISA or Section 4975 of the
Code has occurred with respect to any Plan that could subject the Buyer to any
liability.
 
(j) Each Benefit Plan that is a “nonqualified deferred compensation plan” (as
defined under Section 409A(d)(1) of the Code) has been timely documented,
operated and administered in compliance with Section 409A of the Code and final
regulations and other guidance issued thereunder except for de minimis
noncompliance that would not result in adverse tax consequences to Buyer,
Sellers, or to any employee or service provider of the Target.  No stock option
or stock appreciation rights or other equity instrument has been granted that
would have an exercise price less than the fair market value on the date of the
grant.
 
(k) All filings and reports as to each Plan required to have been submitted to
the Internal Revenue Service or the U.S. Department of Labor have been timely
filed.  All contributions required to be made to Benefit Plans have been timely
made with respect to any period ending on  (and including) the Closing, or
reserves adequate for such contributions have been set aside and have been
reflected in the financial statements in accordance with GAAP.  All employee
contributions have been timely deposited in accordance with applicable
Department of Labor guidance.
 
(l) Except as set forth in Section 3.14(l) of the Disclosure Schedule, each Plan
is amendable and terminable unilaterally at any time without liability or
expense to the Target or to the Plan as a result thereof (other than for
benefits accrued through the date of termination or amendment and reasonable
administrative expenses related thereto).
 
(m) The Target has complied and currently complies in all material respects with
the applicable continuation requirements for its welfare benefit plans,
including Section 4980B of the Code and Sections 601 through 608, inclusive, of
ERISA, and any applicable state statutes maintaining health insurance
continuation coverage for employees and beneficiaries.
 
(n) Except as set forth in Section 3.14(n) of the Disclosure Schedule, none of
the Benefit Plans provides that the consummation of this transaction will,
either alone or in combination with another event (entitle any Employee or
current or former officer, director or Member) to severance pay or other
compensation except as expressly provided in this Agreement, or accelerate the
time of payment or vesting or increase the amount of such compensation.
 
“Benefit Plans” for all purposes of this Agreement means all “employee benefit
plans,” as defined in Section 3(3) of ERISA, all specified fringe benefit plans
as defined in Section 6039D of the Code, all other employment, severance pay,
salary, continuation, bonus, incentive, stock option, stock appreciation right,
stock bonus, stock purchase, employee stock ownership, savings,
change-in-control, supplemental unemployment, layoff, health, life insurance,
disability, accident, group insurance, vacation, holiday, sick leave, fringe
benefit, cafeteria, welfare, retirement, pension, profit sharing or deferred
compensation plans, contracts, programs, funds or arrangements (whether
qualified or nonqualified, funded or unfunded, foreign or domestic, currently
effective) and any trust, escrow or similar agreement related thereto, whether
or not funded.
 
 
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“ERISA Affiliate” means each person (as defined in Section 3(9) of ERISA),
whether or not incorporated, which is considered a single employer with the
Target within the meaning of Section 414(b), (c) or (m) of the Code and the
regulations promulgated thereunder.
 
Section 3.15 Taxes
 
(a) Except as set forth on Section 3.15 of the Disclosure Schedule, (i) for all
periods through and including the Closing Date, the Target has timely filed or
caused to be filed with the appropriate taxing authorities all Tax Returns due
on or prior to the Closing Date and required to be filed by it, and such Tax
Returns are true, correct and complete in all material respects, (ii) for all
periods prior to the Closing Date, the Target has paid or will pay all Taxes
related to the Business due and owing, (iii) for all periods prior to the
Closing Date, the Target has withheld and paid or will timely pay all Taxes
related to the Business and required to be withheld and paid with respect to
amounts owing to any employee, creditor, independent contractor or other third
party, (iv) none of the Assets is subject to any Liens relating to or
attributable to Taxes (other than any Permitted Liens), (v) none of the Assets
is “tax-exempt use property” within the meaning of Section 168(h) of the Code,
(vi) there is no dispute, claim or proposed adjustment concerning any Tax
liability of the Target either (A) which has been claimed or raised by any
authority in writing or (B) based upon personal contact with any agent of such
authority, (vii) the Target does not have any Knowledge of any basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien (other than any Permitted Lien) upon the
Assets, (viii) the Target is not a party to any tax allocation or sharing
agreement nor does the Target owe any amount under any such agreement and (ix)
the Target has not waived any statute of limitation in respect of Taxes or
agreed to the extension of time with respect to a tax assessment or deficiency.
 
(b) As used in this Agreement, “Taxes” shall mean (i) any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts whether disputed or not; (ii) any liability
for the payment of any amounts of the type described in clause (i) as a result
of being or ceasing to be a member of an affiliated, consolidated, combined or
unitary group for any period (including, without limitation, any liability under
Treas. Reg. Section 1.1502-6 or any comparable provision of foreign, state or
local law); and (iii) any liability for the payment of any amounts of the type
described in clause (i) or (ii) as a result of any express or implied obligation
to indemnify any other person or as a result of any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor or transferor entity.
 
(c) As used in this Agreement, “Tax Return” shall mean any report, return, claim
for refund, estimate, information return or statement required to be supplied to
a taxing authority in connection with Taxes including, without limitation, any
schedule or attachment thereto, and including any amendments thereof.
 
Section 3.16 Labor Matters
 
The Target is not a party to or bound by any union contract and no
organizational effort is being or has been made or threatened by or on behalf of
any labor union with respect to the Target’s employees.  There is no labor
strike, dispute, slowdown, stoppage or lockout ongoing, or to the Knowledge of
the Target, threatened, against or affecting the Business.  There is no unfair
labor practice, employment discrimination or employee grievance charges or
complaints against the Target pending (for which notice has been provided) or,
to the Knowledge of Target, threatened, before the National Labor Relations
Board or any similar foreign agency.  The Target has not received written notice
of the intent of any federal, state or foreign governmental authority
responsible for the enforcement of labor or employment laws to conduct an
investigation with respect to or relating to the Business and no such
investigation is in progress.
 
 
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Section 3.17 Certain Fees
 
Except as set forth on Section 3.17 of the Disclosure Schedule, neither the
Target nor any of its affiliates has employed any financial advisor or finder or
incurred any liability for any financial advisory fees, finders’ fees or similar
fees in connection with this Agreement or the transactions contemplated hereby.
 
Section 3.18 Full Force and Effect
 
Except as set forth on Section 3.18 of the Disclosure Schedule, each Assigned
Agreement and each of the Ancillary Agreements is in full force, and to the
Knowledge of the Target, no event, occurrence or condition exists which, with
the lapse of time, the giving of notice, or both, would become a material
default or breach by any party to any Assigned Agreement thereunder.  Complete
and accurate copies of all Assigned Agreement and all of the agreements listed
in Section 3.13 of the Disclosure Schedule (including any amendments or
supplements thereto) have previously been made available to the Buyer.
 
Section 3.19 Customers and Vendors
 
(a) Except as set forth on Section 3.19(a) of the Disclosure Schedule, to the
Knowledge of the Target, the Target does not have any outstanding disputes
concerning products and/or services with any customer.  The Target has not
received written notice from any customer, and the Target does not otherwise
have Knowledge, that a customer intends to prematurely terminate or materially
modify their existing business relationships or an existing contract or any
portion thereof.  Within the past year, the Target has not had any of its
Business Products returned by a purchaser thereof except for normal warranty
returns consistent with past history and those returns that would not result in
a reversal of any material revenue by the Target.
 
(b) Except as set forth on Section 3.19(b) of the Disclosure Schedule, the
Target does not have any outstanding dispute concerning products and/or services
provided by vendor.  The Target has not received written notice from any vendor,
and the Seller does not otherwise have Knowledge, that a vendor intends to
prematurely terminate or materially modify their existing business relationships
or an existing contract or any portion thereof.  The Target has access, on
commercially reasonable terms, to all products and services reasonably necessary
to carry on the Business as it is presently conducted.
 
Section 3.20 Sufficiency and Condition of Assets
 
Except as disclosed on Section 3.20 of the Disclosure Schedule, the Assets
constitute all assets, properties, rights and Intellectual Property that are
used by the Target and are necessary to enable the Buyer, following the Closing,
to effectively own, conduct, operate and continue the Business, as conducted by
the Target prior to Closing.  All of the tangible Assets, whether real or
personal, owned or leased, have been maintained in accordance with the Target’s
normal maintenance practices and are in operating condition (with the exception
of normal wear and tear).
 
 
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Section 3.21 Environmental Matters
 
(a) As used in this Agreement, the following terms shall have the meanings
indicated below:
 
(i) “Environmental and Safety Laws” shall mean any federal, state or local laws,
ordinances, codes, regulations, rules, policies and orders that are intended to
assure the protection of the environment, or that classify, regulate, call for
the remediation of, require reporting with respect to, or list or define air,
water, groundwater, solid waste, hazardous or toxic substances, materials,
wastes, pollutants or contaminants, or which are intended to assure the safety
of employees, workers or other persons, including the public.
 
(ii) “Hazardous Materials” shall mean any toxic or hazardous substance, material
or waste or any pollutant or contaminant, or infectious or radioactive
substance, material or waste defined in or regulated under any Environmental and
Safety Laws, but excludes office and janitorial supplies in amounts consistent
with normal consumer usage which are properly and safely maintained.
 
(iii) “Property” shall mean all real property leased or owned by the Target
either currently or in the past.
 
(iv) “Facilities” shall mean the portion of all buildings and improvements on
the Property which is leased by the Target.
 
(b) Except as set forth in Section 3.21 of the Disclosure Schedule:
 
(i) The Target is in compliance in all material respects with currently
applicable Environmental and Safety Laws and has at all times complied in all
material respects with all Environmental and Safety Laws.
 
(ii) The Target possesses all material licenses, permits, authorizations,
consents, approvals, orders, filings or registrations with any court or
administrative or governmental authority required under Environmental and Safety
Laws for its operations as currently conducted, (ii) all such instruments are in
full force and effect, and (iii) no actions are pending, or to the Knowledge of
the Target or either of the Members, threatened, to amend, challenge, terminate,
cancel, limit, restrict or appeal any of such instruments.
 
(iii) There has been no release of any Hazardous Materials by the Target, or, to
the Target’s Knowledge, any other party, on the Property or in any of the
Facilities that is in violation of or, if discovered, would reasonably be
expected to lead to any liability or investigative, corrective or remedial
obligation arising under any Environmental and Safety Law.
 
 
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(iv) Except in the ordinary course of business pursuant to applicable law, the
Target has not transported or arranged for the treatment, storage, handling,
disposal or transportation of any Hazardous Materials to any off-site location.
 
(v) The Target has not (A) treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any Hazardous
Materials so as to give rise to any liability or any investigative, corrective
or remedial obligation under any Environmental and Safety Law or (B) either
expressly or by operation of law, assumed or undertaken any liability or
obligation for corrective or remedial action of any other person under any
Environmental and Safety Law.
 
(vi) The Target has not received any notice of violation or liability from any
governmental body, nor is any Case pending or threatened, asserting an actual or
potential liability or obligation under any Environmental and Safety Law in
respect to the Target or any of its Facilities or operations.
 
(vii) The Target is not a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or any analogous state, local or foreign laws arising out of events
occurring prior to the Closing Date.
 
(viii) All material environmental studies and audits conducted in relation to
the Property or the Facilities by or on behalf of the Target or any of its
predecessors in the last five (5) years are listed in Section 3.21 of the
Disclosure Schedule, copies of which have been provided to the Buyer.
 
(ix) All agreements between the Target and any governmental authority with
respect to environmental matters related to the Property or the Facilities are
listed on Section 3.21 of the Disclosure Schedule.
 
(x) Neither this Agreement nor the consummation of the transaction that is the
subject of this Agreement will result in any obligations for site investigation
or cleanup, or notification to or consent of government agencies or third
parties, pursuant to any Environmental and Safety Laws.
 
(xi) No judgment, sanction, restriction, probation period or other penalty by
any governmental or judicial authority has been or will be imposed upon the
Target or the Business with respect to any matter set forth in Section 3.21 of
the Disclosure Schedule.
 
Section 3.22 Accounts Receivable
 
(a) All amounts of the Target’s reserves, allowances and discounts for accounts
receivable reflected in the Financial Statements have been established in a
manner which is consistent with reserves, allowances and discounts previously
maintained by the Target in the ordinary course of its business.  Except as
disclosed on Section 3.22 of the Disclosure Schedule, no account receivable
reflected in the Interim Financial Statements is or was subject to any
counterclaim or set off (other than returns and warranty claims in the ordinary
course of business) and the Target has not issued any material credits or credit
memos in respect thereof.
 
 
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(b)  To the Knowledge of the Target, all accounts receivable reflected in the
Interim Financial Statement are good and collectible (or have been collected) in
the ordinary course of business, and at the aggregate recorded amounts thereof,
using collection practices consistent with the Target’s past collection
practices, net of the amount of applicable reserves reflected on the Closing
Date Statement for doubtful accounts and for allowances and discounts.  To the
Knowledge of the Target, all of the trade receivables and notes receivable that
are reflected on the Interim Financial Statements, or that arose subsequent to
the date of the Interim Financial Statements, arose out of bona fide,
arms-length transactions.
 
Section 3.23 Insurance.
 
Section 3.23 of the Disclosure Schedule sets forth and briefly describes, for
each insurance policy (including policies providing property, casualty,
liability and workers’ compensation coverage and bond and surety arrangements)
to which Target has been a party at any time within the past three (3) years,
the scope and amount of coverage, deductibles and ceilings, the period of
coverage and claims made within the past three (3) years.  With respect to each
such insurance policy: (i) the policy is legal, valid, binding, enforceable and
in full force and effect in all material respects; (ii) the policy will continue
to be legal, valid, binding, enforceable and in full force and effect in all
material respects following the consummation of the transaction contemplated
hereby (including the assignments and assumptions referred to in Article I
above); (iii) neither Target nor to the Knowledge of Target, any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred that, with notice
or the lapse of time, would constitute such a breach or default or permit
termination, modification or acceleration, under the policy and (iv) no party to
the policy has repudiated any provision thereof.  Target has been covered during
the past three (3) years by insurance in scope and amount customary and
reasonable for the business in which it has engaged during the aforementioned
period.  Section 3.23 of the Disclosure Schedule describes any material
self-insurance arrangements affecting Target.
 
Section 3.24 Related Party Transactions
 
Every direct or indirect business relationship (other than normal employment
relationships) between the Target, on the one hand, and the Target’s present
managers, officers, members or employees or members of the families of any of
the foregoing (or any entity in which any of them controls or has a material
financial interest, directly or indirectly), on the other hand (each, a “Related
Party”), is set forth in Section 3.24 of the Disclosure Schedule.  No Related
Party (or affiliate of a Related Party) owns, directly or indirectly, any of the
Assets and no Related Party (or affiliate of a Related Party) is engaged in any
business which competes with the Business.  Without limiting the foregoing, no
transaction between or among the Target and any of its affiliates is included in
the Financial Statements.
 
Section 3.25 Gifts and Benefits
 
No employee or agent of the Target acting on the Target’s behalf has directly or
indirectly given or agreed to give to any customer, vendor, governmental
employee or any actual or purported agent of any of the foregoing who is or may
be in a position to help or hinder the Business (or assist Target in connection
with any actual or proposed transaction relating to the Business) (a) any
illegal gift or benefit or (b) any gift or similar benefit which if not
continued or repeated in the future would have a material adverse effect on the
relationship of the Target with such entity or person.
 
 
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Section 3.26 Guaranties
 
The Target is not a guarantor or otherwise liable for any liability (including
indebtedness) to and other person.
 
Section 3.27 Disclosure
 
To the Knowledge of the Sellers, the representations and warranties contained in
this Article III do not contain any untrue statement of a fact or omit to state
any fact necessary in order to make the statements and information contained in
this Article III not misleading.  The Sellers do not have Knowledge of any facts
that are material to the Target’s business or its operations that have not been
disclosed to the Buyer in this Agreement.
 
ARTICLE IV
 

 
REPRESENTATIONS AND WARRANTIES OF BUYER
 
Except as disclosed in a separate disclosure letter, a copy of which is being
delivered to the Sellers herewith and is incorporated herein by reference (the
“Buyer’s Disclosure Schedule”), the Buyer hereby represents and warrant to the
Sellers as set forth below.
 
Section 4.1 Organization and Good Standing
 
The Buyer is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware.  The Buyer has heretofore
delivered to the Target complete and correct copies of its organization
documents, as currently in effect.  The Buyer has all requisite company power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
 
Section 4.2 Authorization
 
The Buyer has the requisite company power and authority to execute and deliver
this Agreement and the Ancillary Agreements to which it is a party and to
consummate the transactions contemplated hereby and thereby.  The execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly and validly
authorized by the Buyer and no other limited liability company proceeding on the
part of the Buyer is necessary to authorize the execution, delivery and
performance of this Agreement or the Ancillary Agreements or the consummation of
the transactions contemplated hereby or thereby.  This Agreement has been, and
the Ancillary Agreements will be, duly executed and delivered by the Buyer and,
assuming the valid execution and delivery by all counterparties thereto, will
constitute the valid and binding agreements of the Buyer, enforceable against
the Buyer in accordance with their respective terms, except to the extent that
enforceability may be limited by bankruptcy, moratorium, reorganization and
other laws affecting the enforcement of creditors’ rights generally and by
general principals of equity.
 
Section 4.3 Consents and Approvals; No Violations
 
Neither the execution, delivery or performance of this Agreement and the
Ancillary Agreements nor the consummation by the Buyer of the transactions
contemplated hereby or thereby will (a) conflict with or result in any breach or
violation of any provision of the certificate of formation or limited liability
company operating agreement of the Buyer; (b) require any filing or registration
with, or notice or declaration to, or the obtaining of any permit, license,
authorization, consent or approval of, any governmental or regulatory authority
whether within or outside the United States; (c) violate, conflict with or
result in a default (or any event which, with notice or lapse of time or both,
would constitute a default) under, or result in any termination, cancellation or
acceleration, or give rise to any such right of termination, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
mortgage, other evidence of indebtedness, guarantee, license, agreement, lease
or other instrument or obligation to which the Buyer is a party or by which the
Buyer or any of its assets is subject or by which any of them may be
 
 
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bound; (d) violate any order, injunction, decree, statute, rule or regulation
applicable to the Buyer; or (e) result in the creation or imposition of any Lien
upon any properties, assets or business of the Buyer, excluding from the
foregoing clauses (b), (c), (d) and (e), such requirements, conflicts, defaults,
rights, security interests, Liens or violations that would not adversely affect
the ability of the Buyer to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements.  The number of shares of common stock of
Higher One Holdings, Inc., a Delaware corporation, par value $0.001 per share
(such shares being hereinafter “Higher One Holdings Shares”) which are available
for issuance under the terms of the Higher One Holdings, Inc. 2010 Equity
Incentive Plan exceeds the total number of Higher One Holding Shares which will
be issuable to the Members under the terms of the Member Options which will be
granted to the Members as of the date hereof.  The issuance of the Warrants to
the Target and the issuance of the Member Options by Higher One Holdings, Inc.
has been duly authorized by all necessary corporate and stockholder action
of  Higher One Holdings, Inc., will not violate or conflict with the certificate
of incorporation or by-laws of Higher One Holdings, Inc. and will not violate or
conflict with or constitute an event which, with notice or lapse of time or
both, would constitute a breach of the obligations of Higher One Holdings, Inc.
under any contract or agreement to which Higher One Holdings, Inc. is a party or
by which its property or assets is bound.
 
Section 4.4 Litigation
 
Except as set forth on Section 4.4 of Buyer’s Disclosure Schedule, there are no
Cases, governmental investigations or inquiries pending or threatened against
the Buyer that are reasonably likely to adversely affect the Buyer’s performance
under this Agreement or the ability of the Buyer to consummate the transactions
contemplated herein.
 
Section 4.5 Certain Fees
 
Neither the Buyer nor any of its affiliates has employed any financial advisor
or finder or incurred any liability for any financial advisory fees, finders’
fees or similar fees in connection with this Agreement or the transactions
contemplated hereby.
 
Section 4.6 Financial Ability
 
The Buyer has the financial ability to pay the Estimated Initial Purchase Price
and Final Closing Purchase Price and otherwise satisfy its obligations under
this Agreement.
 

 
ARTICLE V
 

 
COVENANTS
 
 
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Section 5.1 Consents
 
With respect to any agreements identified in Section 5.1 of the Disclosure
Schedule (i) for which any required consent or approval is not obtained prior to
the Closing, the Target and the Buyer shall each use commercially reasonable
efforts to obtain any such consent or approval after the Closing until either
such consent or approval has been obtained or the Target and the Buyer mutually
determine in good faith that such consent cannot reasonably be obtained and (ii)
for which any required consent or approval is not obtained prior to the Closing
and the third party from which consent is required (A) refuses to consent to
such assignment, (B) declares a default under the applicable agreement requiring
consent of the third party or (C) otherwise ceases to perform under such
agreement, then the Target and the Members shall use their commercially
reasonable efforts to provide the Buyer with substantially similar benefits
arising under such agreements, including performance as agent of the Buyer, if
legally and commercially feasible; provided, however, that the Buyer shall
provide the Target (and the Members, if applicable) with such access to the
premises, books and records and personnel as is reasonably necessary to enable
the Target (or the Members, if applicable) to perform its obligations under such
agreements and the Buyer shall pay or satisfy the corresponding liabilities for
the enjoyment of such benefits to the extent the Buyer would have been
responsible therefor if such consent or approval had been obtained.
 
In the event that any governmental authority challenges the proposed transaction
for any reason, the parties agree to take commercially reasonable efforts to
vigorously defend, lift, mitigate or rescind the effect of any actual or
reasonably anticipated litigation or administrative proceeding adversely
affecting this Agreement or the transactions contemplated hereby, including,
without limitation, promptly appealing any adverse court or administrative order
or injunction.
 
Section 5.2 Accounts Receivable
 
After the Closing, the Sellers shall (a) promptly deliver to the Buyer any
payments received from third parties in connection with the accounts receivable
of the Business existing as of Closing, and (b) in the event the Target or
either of the Members receives any instrument of payment of any of the accounts
receivable of the Business, the Seller or the respective Member or Members shall
forthwith deliver such instrument to the Buyer, endorsed where necessary,
without recourse, in favor of the Buyer.
 
Section 5.3 Inspection of Records
 
The Sellers, the Buyer and their respective affiliates shall each retain and
make their respective books and records (including work papers in the possession
of their respective accountants) available for inspection by the other party, or
by its duly accredited representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a three (3) year period after
the Closing Date, with respect to all transactions of the Target occurring prior
to and those relating to the Closing, and the historical financial condition,
assets, liabilities, operations and cash flows of the Target.  In the case of
records owned by the Target or any of its affiliates, such records shall be made
available at the Target’s executive office, and in the case of records owned by
Buyer, such records shall be made available at Buyer’s executive office.  For
the avoidance of doubt, the Members shall ensure that the Target’s books and
records (including work papers in the possession of the respective accountants
of the Target) are available to the Buyer during such three (3) year period.  As
used in this subsection, the right of inspection includes the right to make
extracts or copies.  The representatives of a party inspecting the records of
the other Party shall be reasonably satisfactory to the other party.
 
 
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Section 5.4 Link to Buyer’s Website
 
In the event that as of the Closing Date the Target’s websites, including but
not limited to www.campuslabs.com, www.studentvoice.com and all other Target
maintained, operated or owned websites,  have not been effectively conveyed to
the Buyer in accordance with Section 1.1(a)(xii), the Target agrees, during the
period from the Closing Date until the date on which such conveyance has been
effectively made, to maintain and operate such websites in accordance with the
Buyer’s direction.
 
Section 5.5 Trademarks
 
The Target shall, and shall cause its affiliates to, not use and shall not
license or permit any third party to use any name, slogan, logo or trademark
which is similar or deceptively similar to any of the trademarks or other name
used in connection with the Business including the names “Campus Labs” or
“Student Voice”.  At or promptly following the Closing Date, the Target shall
change its name to any name other than (or that is not confusingly similar to)
“Campus Labs” or “Student Voice”.
 
Section 5.6 Covenant Not to Compete
 
Each of the Members agrees to enter into a non-competition and non-solicitation
agreement with the Buyer in substantially the forms attached hereto as Exhibit
I as sellers of the Target.
 
Section 5.7 Disclosure of Confidential Information
 
As an inducement for the Buyer to enter into this Agreement, the Sellers agree
that for five (5) years following the Closing Date, such party shall, and shall
cause its affiliates to, maintain all Confidential Information in confidence and
shall not disclose any Confidential Information to anyone outside of the Buyer,
and the Sellers shall, and shall cause their affiliates to, not use any
Confidential Information for its own benefit or the benefit of any third
party.  Nothing in this Agreement, however, shall prohibit such party from using
or disclosing Confidential Information to the extent required by law.  If such
party is required by applicable law to disclose any Confidential Information,
such party shall (a) provide the Buyer with prompt notice before such disclosure
in order that the Buyer may attempt to obtain a protective order or other
assurance that confidential treatment will be accorded such information and
(b) cooperate with the Buyer (at the Buyer’s expense) in attempting to obtain
such order or assurance.  “Confidential Information” means information regarding
the Business to the extent it is Confidential, including the
following:  (i) information regarding operations, assets, liabilities or
financial condition; (ii) information regarding pricing, sales, merchandising,
marketing, capital expenditures, costs, joint ventures, business alliances,
purchasing or manufacturing; (iii) current or prospective customers, including
information regarding their identities, contact persons and purchasing patterns;
(iv) information regarding current or prospective vendors, suppliers,
distributors or other business partners; (v) forecasts, projections, budgets and
business plans; (vi) trade secrets and proprietary information; (vii) technical
information, patent disclosures and applications, copyright applications,
sketches, drawings, blueprints, models, know-how, discoveries, inventions,
improvements, techniques, processes, business methods, equipment, algorithms,
software programs, software source documents and formulae, in each
case  regarding current, future or proposed products or services (including
information concerning research, experimental work, development, design details
and specifications and engineering) in respect to the Business.  “Confidential”
means not generally available to the public.  “Confidential Information” shall
not, however, include information which the Sellers receive from a third party
with the legal right to disclose it to the Sellers.  Information shall not be
considered to be generally available to the public if it is made public by the
Sellers in violation of this Agreement or by a third party who has no lawful
right to disclose the information or who does so in violation of any
contractual, legal or fiduciary obligation to the Buyer.
 
 
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Section 5.8 Injunctive Relief
 
The Sellers and the Buyer specifically recognize that any breach of Section 5.7
of this Agreement will cause irreparable injury to the Buyer and that actual
damages may be difficult to ascertain, and in any event, may be
inadequate.  Accordingly, the Sellers and the Buyer agree that in the event of
any such breach, the Buyer shall be entitled to injunctive relief in addition to
such other legal and equitable remedies that may be available.
 
Section 5.9 Payroll Taxes and Payroll Records
 
The Target and the Buyer agree that upon Closing, the Buyer will have purchased
substantially all of the assets of the Business, and in connection therewith
Buyer shall employ certain individuals who immediately before the Closing Date
were employed by the Target and that the Target and the Buyer shall comply with
the Standard Procedure set forth in Section 4 of Revenue Procedure 2004-53,
unless the Buyer elects in writing within ten (10) days after the Closing Date
to have the “Alternative Procedure” set forth in Section 5 of Revenue
Procedure 2004-53 with respect to the processing, filing and transferring
Forms 941, W-2, W-3, W-4 and W-5 apply.
 
Section 5.10 Health Insurance
 
The Buyer shall satisfy the Target as of the Closing with information and
evidence reasonably satisfactory to the Target that the Buyer will extend to
each Transferred Employee the opportunity to enroll, as of the Closing, in the
Buyer’s group health plans in which each Transferred Employee is eligible to
participate (it being acknowledged that there will be a group health plan
sponsored by the Buyer in which each Transferred Employee will be eligible to
participate as of Closing if such Transferred Employee would, as of Closing, be
eligible to participate in a group health plan sponsored by the Target).
 
Section 5.11 COBRA Liabilities
 
The Target shall maintain a health plan and shall provide COBRA continuation
coverage (as generally described in Section 4980B(f) of the Code to (i) those
individuals currently receiving COBRA coverage, (ii) employees, former employees
and Qualified Beneficiaries (as such term is defined under Section 4980B(g)(1)
of the Code) who are in the COBRA election period but have not yet made a COBRA
election but hereafter do make a timely COBRA election, and (iii) those
employees who become M&A Qualified Beneficiaries (as such term is defined in
Treasury Regulations Section 54.4980B-9 Q&A 4).
 
Section 5.12 401(k) Termination by Target
 
The Members of the Target shall have adopted resolutions to terminate the
Benefit Plan known as the Student Voice LLC 401(k) Profit Sharing Plan and
Trust, effective immediately prior to, and conditioned upon, the Closing, and
shall have provided Buyer with true and correct copies of the same as of the day
immediately preceding the Closing Date. The form and substance of such
resolutions shall be subject to the reasonable advance review and approval of
Buyer.
 
 
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Section 5.13 Tax Clearance Certificates and Allocations
 
The Buyer and the Sellers shall cooperate in preparing and filing with the
appropriate governmental authorities such forms as may be required in order to
obtain a tax clearance certificate or other document absolving the Buyer from
any responsibility or liability for the Target’s income, sales and use
taxes.  The parties shall agree on an allocation of the Purchase Price which
will be prepared on a timely basis pursuant to the requirements of the Code and
any reporting requirements of the Buyer.  The Sellers and the Buyer further
agree that (A) these allocations shall be made as provided in Section 1060 of
the Code; (B) each party to this Agreement shall file Form 8594 (Asset
Allocation Statement Under Section 1060) on a timely basis for reporting the
allocation; and (C) none of the parties will take any position on its respective
income tax return that is inconsistent with this allocation.
 
Section 5.14 Option Grants and Bonus Plan
 
At Closing, Higher One Holdings, Inc. shall grant to the Members in
consideration of their employment options (the “Member Options”) to purchase
shares of common stock of Higher One Holdings, Inc. in accordance with the
equity incentive plan of Higher One Holdings, Inc. and customs and practices for
awarding employees options.  The total number of shares of common stock
underlying such option grants shall be equal to 450,000 shares.  The Member
Options shall be comprised of incentive stock options and non-qualified stock
options in accordance with applicable law.  The Members receiving such option
grants shall execute option agreements with the Buyer.
 
Buyer shall enroll each Transferred Employee in the Bonus Plan and administer
the Bonus Plan in compliance with the terms thereof unless otherwise approved by
the Members.
 
Section 5.15 Investigation by the Sellers
 
Notwithstanding anything to the contrary in this Agreement, (a) no investigation
by the Sellers shall affect the representations and warranties of the Buyer
under this Agreement or contained in any other writing to be furnished to the
Stockholders in connection with the transactions contemplated hereby, and
(b) such representations and warranties shall not be affected or deemed waived
by reason of the fact that the Sellers knew or should have known that any of the
same is or might be inaccurate in any respect.
 
Section 5.16 Investigation by the Buyer
 
Notwithstanding anything to the contrary in this Agreement, (a) no investigation
by the Buyer shall affect the representations and warranties of the Sellers
under this Agreement or contained in any other writing to be furnished to the
Buyer in connection with the transactions contemplated hereby, and (b) such
representations and warranties shall not be affected or deemed waived by reason
of the fact that the Buyer knew or should have known that any of the same is or
might be inaccurate in any respect.
 
 
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Section 5.17 Further Assurances
 
Following the Closing Date, the parties shall execute such further documents,
and perform such further acts, as may be necessary to transfer and convey the
Assets to the Buyer, on the terms herein contained, and to otherwise comply with
the terms of this Agreement and consummate the transaction contemplated hereby.
 

 
ARTICLE VI
 

 
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS
 
Section 6.1 Survival of Representations
 
All representations and warranties made in this Agreement shall survive the
Closing hereunder for a period of two (2) years beginning on the first day
following the Closing Date; provided, however, that the Indemnity Period for (a)
the representations and warranties contained in Section 3.1 (Organization);
Section 3.2 (Authorization); Section 3.3 (Title to Assets); Section 3.14
(Employee Benefit Plans; ERISA);  Section 3.15 (Taxes); Section 3.17 (Certain
Fees); Section 3.21 (Environmental Matters); Section 4.1 (Organization); Section
4.2 (Authorization); and Section 4.5 (Certain Fees) (these representations and
warranties, collectively, the “Excluded Representations”) and (b) fraud shall
survive until 30 days following the end of the applicable statute of limitations
period; provided, further, that to the extent that no applicable statute of
limitation period exists with respect to an Excluded Representation, such
Excluded Representation shall survive the Closing Date
indefinitely.  Notwithstanding anything to the contrary contained in Section 6.2
or in Section 6.3, the Sellers shall have no obligation to indemnify the Buyer
Indemnified Parties for any Buyer Damages arising as a result of a breach of any
representation or warranty made by Sellers unless written notice of the breach
of any such representation or warranty is delivered to the Sellers prior to the
expiration of the period during which the applicable representation and warranty
survives the Closing and the Buyer shall have no obligation to indemnify the
Seller Indemnified Parties for any Seller Damages arising as a result of a
breach of any representation or warranty made by Buyer unless written notice of
the breach of any such representation or warranty is delivered to the Buyer
prior to the expiration of the period during which the applicable representation
and warranty survives the Closing.
 
Section 6.2 Sellers’ Agreement to Indemnify
 
(a) Subject to the terms and limitations set forth in this Agreement, from and
after the Closing, the Sellers, jointly and severally, shall indemnify and hold
harmless the Buyer and its directors, officers, shareholders, employees,
affiliates, successors and assigns (each, a “Buyer Indemnified Party” and
collectively, the “Buyer Indemnified Parties”) from and against all liability,
demands, claims, actions or causes of action, suits, proceedings, hearings,
investigations, charges, complaints, injunctions, judgments, orders, decrees,
rulings, assessments, losses, damages, dues, penalties, fines, costs, amounts
paid in settlement, obligations, taxes, liens and expenses (including, without
limitation, reasonable attorneys’ fees) (collectively, the “Buyer Damages”)
asserted against or incurred by any Buyer Indemnified Party as a result of or
arising out of (i) the Excluded Liabilities, (ii) any misrepresentation in any
of the representations or any breach of the warranties made by the Sellers in
Article III of this Agreement, the Disclosure Schedule or any closing
certificate delivered by the Sellers pursuant to this Agreement or (iii) any
breach of, or failure to perform, any agreement or covenant of the Sellers in
this Agreement.
 
 
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(b) The obligations of the Sellers to indemnify the Buyer Indemnified Parties
pursuant to Section 6.2(a) hereof are subject to the following limitations:
 
(i) No indemnification shall be made by the Sellers with respect to any claim
made pursuant to Section 6.2(a)(ii) unless the aggregate amount of Buyer Damages
under all claims exceeds an amount equal to $200,000 (the “Basket Amount”) and,
in such event, indemnification shall be made by the Sellers for all Buyer
Damages (including all claims under the Basket Amount); provided, however, that
the foregoing limitations shall not apply to any breach of any representation or
warranty contained in any Excluded Representation;
 
(ii) In no event shall the aggregate obligation of the Sellers to indemnify the
Buyer Indemnified Parties as a result of a breach of any representation or
warranty (other than an Excluded Representation) exceed an amount equal to
$6,000,000 (the “Cap”), it being further understood and agreed that the Escrow
Deposit less $1,500,000 shall serve as a limitation on and as the sole and
exclusive source of funds available to the Buyer Indemnified Parties for
satisfaction of the Sellers’ indemnity obligations as a result of a breach of
any representation or warranty (other than an Excluded Representation) by the
Sellers; and
 
(iii) Notwithstanding anything to the contrary herein contained, the
indemnification obligations under Section 6.2 shall not limit the right of the
Buyer Indemnified Parties to recover Buyer Damages which result from or arise
out of actual fraud by the Sellers.
 
Section 6.3 Buyer’s Agreement to Indemnify
 
(a) Subject to the terms and limitations set forth in this Agreement, from and
after the Closing, the Buyer shall indemnify and hold harmless the Sellers and
the Target’s  managers, officers, employees, affiliates, successors and assigns
(each, a “Seller Indemnified Party” and collectively, the “Seller Indemnified
Parties”) from and against all from and against all liability, demands, claims,
actions or causes of action, suits, proceedings, hearings, investigations,
charges, complaints, injunctions, judgments, orders, decrees, rulings,
assessments, losses, damages, dues, penalties, fines, costs, amounts paid in
settlement, obligations, taxes, liens and expenses (including, without
limitation, reasonable attorneys’ fees and expenses) (collectively, the “Seller
Damages”) asserted against or incurred by any Seller Indemnified Party as a
result of or arising out of (i) the Assumed Liabilities, (ii) a breach of any
representation or warranty contained in Article IV of this Agreement or (iii) a
breach of any agreement or covenant of the Buyer contained herein.  The Sellers
agree that the indemnification provided in this Section 6.3 is the exclusive
remedy for a breach by the Buyer of any representation, warranty, agreement or
covenant contained in this Agreement.
 
(b) The Buyer’s obligations to indemnify the Seller Indemnified Parties pursuant
to Section 6.3(a) hereof are subject to the following limitations:
 
(i) No indemnification shall be made by the Buyer with respect to any claim made
pursuant to Section 6.3(a)(ii) unless the aggregate amount of Seller Damages
under all claims exceeds the Basket Amount and, in such event, indemnification
shall be made by the Buyer for all Seller Damages (including all claims under
the Basket Amount); provided, however, that the foregoing limitations shall not
apply to any breach of any representation or warranty contained in any Excluded
Representation;
 
 
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(ii) In no event shall the Buyer’s aggregate obligation to indemnify the Seller
Indemnified Parties as a result of a breach of any representation or warranty
exceed an amount equal to the Cap; and
 
(iii) Notwithstanding anything to the contrary contained herein, the
indemnification obligations under Section 6.3 shall not limit the right of the
Seller Indemnified Parties to recover Seller Damages which result from or arise
out of actual fraud by the Buyer.
 
Section 6.4 Third Party Indemnification
 
The obligations of any indemnifying party to indemnify any indemnified party
under this Article VI with respect to Buyer Damages or Seller Damages, as the
case may be, resulting from the assertion of liability by third parties (a
“Claim”), shall be subject to the following terms and conditions:
 
(a) Any party against whom any Claim is asserted shall give the party required
to provide indemnity hereunder written notice, setting forth with reasonable
specificity the facts and circumstances of which such party has received notice,
of any such Claim promptly after learning of such Claim, and if the party giving
such notice is an indemnified party, specifying the basis hereunder upon which
the indemnified party’s claim for indemnification is asserted, and the
indemnifying party may at its option undertake the defense thereof by
representatives of its own choosing.  Failure to give prompt notice of a Claim
hereunder shall not affect the indemnifying party’s obligations under this
Article VI, except to the extent that the indemnifying party is actually
prejudiced by such failure to give prompt notice.  If the indemnifying party,
within thirty (30) days after notice of any such Claim, fails to assume the
defense of such Claim, the indemnifying party shall lose its right to contest,
defend, litigate and settle such a Claim and the indemnified party against whom
such claim has been made shall, without prejudice to its right, if any, of
indemnification hereunder, (upon further notice to the indemnifying party) have
the right to undertake the defense, compromise or settlement of such claim on
behalf of and for the account and risk, and at the reasonable expense, of the
indemnifying party, subject to the right of the indemnifying party to assume the
defense of such Claim at any time prior to settlement, compromise or final
determination thereof.  If, pursuant to the preceding sentence, the indemnified
party so contests, defends, litigates or settles a Claim for which it is
entitled to indemnification hereunder, the indemnified party shall, subject to
any defense that the indemnifying party may have that it is not obligated to
provide indemnity, be reimbursed by the indemnifying party for the reasonable
attorneys’ fees and other expenses of contesting, defending, litigating and
settling the Claim which are incurred from time to time, promptly following the
presentation to the indemnifying party of itemized bills for such attorneys’
fees and other expenses.
 
(b) Except as herein provided, the indemnified party shall not, and the
indemnifying party shall, have the right to contest, defend, litigate or settle
such Claim, if the defense of a Claim is so tendered and within 30 days
thereafter the indemnifying party accepts such tender and acknowledges in
writing (but without waving any defenses it may have that it is not obligated to
provide indemnity) its indemnification obligation.  The indemnified party shall
have the right to be represented by counsel at its own expense in any such
contest, defense, litigation or settlement conducted by the indemnifying
party.  The indemnifying party shall lose its right to contest, defend, litigate
and settle the Claim if it shall fail to diligently contest the Claim.  So long
as the indemnifying party has not lost its right to contest, defend, litigate
and settle as herein provided, the indemnifying party shall have the right to
contest, defend and litigate the Claim and shall have the right to enter into
any settlement of any Claim; provided, however, the indemnifying party may not
enter into any settlement of any Claim without the prior written consent of the
indemnified party, not to be unreasonably withheld or delayed, if pursuant to or
as a result of such settlement, (i) injunctive or other equitable relief would
be imposed against the indemnified party or (ii) such settlement would or could
reasonably be expected to lead to any liability or create any financial or other
obligation on the part of the indemnified party.  The indemnifying party shall
not be entitled to assume control of a Claim and shall pay the reasonable fees
and expenses of counsel retained by the indemnified party if (A) the Claim
relates to or arises in connection with any criminal proceeding, action,
indictment or allegation, (B) the Claim seeks injunctive or other equitable
relief or (C) the indemnified party in its notice to the indemnifying party of
the Claim states that, based on advice of counsel, it believes that its
interests in the Claim is or can reasonably be expected to be adverse to the
interests of the indemnifying party.
 
 
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Section 6.5 Certain Tax Matters
 
(a) Tax Indemnification.
 
(i) Notwithstanding anything in this Agreement to the contrary, the Sellers,
jointly and severally, shall indemnify and hold harmless the Buyer from and
against any liability for Taxes of the Seller, or Taxes relating to the Assets
and the Business, attributable to (A) any taxable period ending on or before the
Closing Date or (B) for any taxable period that includes but does not end on the
Closing Date, the portion thereof properly allocable to the period ending on the
Closing Date (collectively, a “Pre-Closing Tax Period”).
 
(ii) The Buyer shall indemnify and hold harmless the Sellers from and against
any liability for Taxes relating to the Assets and the Business attributable to
any taxable period that is not a Pre-Closing Tax Period.
 
(iii) To the extent that an indemnification obligation pursuant to this Section
6.5 may overlap with any other indemnification obligation pursuant to this
Article VI, the provisions of this Section 6.5 shall govern.
 
(iv) The parties hereto agree that any payments made pursuant to the
indemnification provisions of Article VI hereof are intended to be deemed to be
adjustments to the Final Purchase Price; provided, however, that to the extent
that any taxing authority successfully characterizes, in a final determination,
that any indemnification payments shall be deemed to be income to the party
receiving such payments, then the party making such payments shall pay an
additional amount to the party receiving such payments to cover all Taxes
payable thereon (including Taxes payable on the gross-up payment).
 
 
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(b) Survival of Tax Provisions.  Any claim to be made pursuant to this Section
6.5 must be made within thirty (30) days following the expiration (with valid
extensions) of the applicable statutes of limitations related to the Taxes at
issue.
 

 
ARTICLE VII
 

 
MISCELLANEOUS
 
Section 7.1 Fees and Expenses
 
Whether or not the transactions contemplated herein are consummated pursuant
hereto, except as otherwise provided herein, each of the Sellers, on the one
hand, and the Buyer, on the other hand, shall pay all fees and expenses incurred
by, or on behalf of, such party in connection with, or in anticipation of, this
Agreement and the consummation of the transactions contemplated hereby.
 
Section 7.2 Further Assurances
 
From time to time after the Closing Date, at the request of another party hereto
and at the expense of the party so requesting, each of the parties hereto shall
execute and deliver to such requesting party such documents and take such other
action as such requesting party may reasonably request in order to consummate
more effectively the transactions contemplated hereby.  If, after Closing, it is
determined by mutual agreement of Buyer and Target that any of the Excluded
Assets should more appropriately be included in the Assets but were
inadvertently omitted therefrom, the Sellers shall promptly undertake all
actions and deliver all such assets and execute all documents and instruments
necessary or desirable to transfer title in such assets to the Buyer as if they
were originally included in the Assets.
 
Section 7.3 Counterparts
 
This Agreement may be executed and delivered (including by electronic mail or
facsimile transmission) simultaneously in counterparts, each of which when
executed shall be deemed an original but all of which together shall constitute
one and the same instrument.
 
Section 7.4 Notices
 
All notices, requests, demands, waivers and other communications required or
permitted to be given under this Agreement shall be in writing and may be given
by any of the following methods: (a) personal delivery; (b) registered or
certified U.S. mail, postage prepaid, return receipt requested; (c) nationally –
recognized overnight delivery service or (d) by electronic mail transmission to
the appropriate electronic mail address set forth below (or at such other
electronic mail address for the party as shall have been previously specified in
writing to the other parties) with follow-up copy by nationally – recognized
overnight courier service the next business day.  Notices shall be sent to the
appropriate party at its address given below (or at such other address for such
party as shall be specified by notice given hereunder):
 
 
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(a) If to Target and The Members, to
 
Campus Labs, LLC
210 Ellicott Street
Buffalo, New York 14203
Telephone: (716) 652-9400
Facsimile:  (716) 652-2689
Attention:  Eric Reich
E-Mail:  ereich@campuslabs.com

and

Eric Reich
89 Arcadian Drive
Amherst, New York 14228

and
 
Michael Weisman
59 Pennington Court
Amherst, New York 14228

with a copy (which shall not constitute notice) to:
 
Lippes Mathias Wexler Friedman, LLP
665 Main Street
Suite 300
Buffalo, New York 14203
Telephone:  (716) 853-5100
Facsimile:   (716) 853-5199
Attention:  Brian J. Bocketti
E-Mail:      bbocketti@lippes.com

(c)           If to the Buyer to:
 
Higher One, Inc.
115 Munson Street
New Haven, Connecticut 06511
Telephone: (203) 776-7776
Facsimile: (203) 776-7796
Attention:  Thomas D. Kavanaugh, Esq.
E-Mail: tkavanaugh@higherone.com

 
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with a copy (which shall not constitute notice) to:
 
Wiggin and Dana LLP
One Century Tower
265 Church Street
New Haven, CT  06508-1832
Telephone:  203-498-4321
Facsimile:  203-782-2889
Attention:  Paul Hughes, Esq.
E-Mail:  phughes@wiggin.com

All such notices, requests and other communications shall be deemed received on
the date of receipt by the recipient thereof if received prior to 5 p.m. (New
Haven, Connecticut time) and such day is a business day in the place of
receipt.  Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business day in the place of
receipt.
 
Section 7.5 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 Buyer and the Sellers.  No waiver by any
party of any provision of this Agreement or any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be
valid unless the same shall be in writing and signed by the party making such
waiver nor shall such waiver 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
default, misrepresentation, or breach of warranty or covenant.
 
Section 7.6 Severability
 
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
provisions of this Agreement shall nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party.  Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, this Agreement shall be modified so as to effect the original
intent of the parties as closely as possible in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
 
Section 7.7 Binding Effect; Assignment
 
This Agreement and all of the provisions hereof shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.  Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, directly or indirectly, including,
without limitation, by operation of law, by any party without the prior written
consent of the other parties hereto.
 
Section 7.8 No Third Party Beneficiaries
 
Except as provided in Section 7.7, this Agreement is solely for the benefit of
the Sellers, and their respective successors and permitted assigns, with respect
to the obligations of the Buyer under this Agreement, and for the benefit of the
Buyer and its successors and permitted assigns, with respect to the obligations
of the Sellers under this Agreement, and this Agreement shall not be deemed to
confer upon or give to any other third party any remedy, claim, liability,
reimbursement, cause of action or other right.
 
 
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Section 7.9 Interpretation
 
(a) The article and section headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties and shall
not in any way affect the meaning or interpretation of this Agreement.
 
(b) As used in this Agreement, the term “person” shall mean and include an
individual, a partnership, a limited liability company, an association, a group,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof or any other entity.
 
(c) As used in this Agreement, an “affiliate” of, or a person “affiliated” with,
a specified person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified.
 
(d) As used in this Agreement, the term “business day” shall mean any day on
which banks are not required or authorized to close in New Haven, Connecticut.
 
Section 7.10 Jurisdiction; Consent to Service; Waiver of Jury Trial
 
(a) Except as otherwise provided in Section 1.8(g), each of the parties hereto
(a) agree that any suit, action or proceeding arising out of or relating to this
Agreement shall be brought solely in federal court located in New Haven,
Connecticut; (b) consents to the exclusive jurisdiction of such court in any
suit, action or proceeding relating to or arising out of this Agreement; (c)
irrevocably waives, and agrees not to assert by way of motion, defense or
otherwise, any objection or claim that it may have to the laying of venue in any
such suit, action or proceeding in court; and (d) agrees that service of any
court paper may be made in such manner as may be provided under applicable laws
or court rules governing service of process.
 
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
Section 7.11 Entire Agreement
 
This Agreement, the Disclosure Schedule, the Buyer’s Disclosure Schedule and the
Exhibits and other writings referred to herein to be delivered at the Closing
(including the Ancillary Agreements) constitute the entire agreement among the
parties with respect to their subject matter and supersede all other prior
agreements and understandings, both written and oral, between the parties or any
of them with respect to their subject matter (including any proposal letter,
letter of intent or memorandum of understanding).
 
Section 7.12 Law Governing
 
This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of Connecticut  (without giving effect to the choice
of law principles thereof that would cause the application of the laws of any
other jurisdiction) as to all matters, including but not limited to matters of
validity, construction, effect, performance and remedies.
 
{Remainder of page intentionally left blank.}
 

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

 
HIGHER ONE, INC.
 
 
By:   /s/ Mark Volchek
 
Name:  Mark Volchek
Title:    Chief Executive Officer
       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
{Signature page to Asset Purchase Agreement}
 

 
 

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CAMPUS LABS, LLC
 
 
 
By:          /s/ Eric Reich
  Name:    Eric Reich
Title:       President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
{Signature page to Asset Purchase Agreement}
 

 
 

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THE MEMBERS
 
 
/s/ Eric Reich
  Eric Reich

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
{Signature page to Asset Purchase Agreement}
 

 
 

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/s/ Michael Weisman
  Michael Weisman

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
{Signature page to Asset Purchase Agreement}