Execution Version

AGREEMENT AND PLAN OF MERGER

DATED AS OF AUGUST 18, 2008

BY AND AMONG

ANAREN, INC., A NEW YORK CORPORATION,

ANAREN ACQUISITION, INC., A COLORADO CORPORATION,

UNICIRCUIT, INC., A COLORADO CORPORATION

AND

OWEN AGENCY, LLC, A COLORADO LIMITED LIABILITY COMPANY, AS STOCKHOLDERS’ AGENT

 
 

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Execution Version

TABLE OF CONTENTS

   
Page:
§1.
Certain Definitions
2
     
§2.
Merger; Merger Consideration; Closing
11
(a)
Effective Time
11
(b)
Surviving Corporation
11
(c)
Articles of Incorporation
11
(d)
By-Laws
11
(e)
Directors and Officers
11
(f)
Effect of Merger
11
(g)
Merger Consideration
11
(h)
Cancellation of Shares
12
(i)
Status of Buyer Shares
13
(j)
Escrow of Merger Consideration
13
(k)
Stockholders’ Agent
14
(l)
Closing
15
(m)
Deliveries by the Company
15
(n)
Deliveries by Buyer and Parent
16
(o)
Procedure for Shares
17
(p)
Dissenting Shares
18
     
§3.
Representations and Warranties of the Company
18
(a)
Organization of the Company
19
(b)
Authorization of Transaction
19
(c)
Non-contravention
19
(d)
Brokers’ Fees
19
(e)
The Company Stock
20
(f)
No Subsidiaries
20
(g)
Qualification
20
(h)
Capitalization
20
(i)
Financial Statements
20
(j)
Events Subsequent to Most Recent Fiscal Month End
20
(k)
Tax Matters
21
(l)
Real Property
21
(m)
Powers of Attorney
22
(n)
Litigation
22
(o)
Employee Benefit Plans and Related Matters
22
(p)
Certain Business Relationships with the Company
25
(q)
Absence of Undisclosed Liabilities
25
(r)
Absence of Changes
25
(s)
Government Approvals
27
(t)
Compliance with Laws
27
(u)
Title to Assets
27
(v)
Contracts
27
(w)
Intellectual Property
28

 
 
 

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Execution Version
 
(x)
Real Property Leases
30
(y)
Environmental Matters
30
(z)
Employees, Labor Matters, etc
31
(aa)
Insurance
31
(bb)
Product and Service Warranties
32
(cc)
Product Liability
32
(dd)
Inventory
32
(ee)
Receivables and Payables
32
(ff)
No Material Adverse Effect
33
(gg)
Suppliers and Customers
33
(hh)
Indebtedness
33
(ii)
Government Contracts
33
(jj)
Books and Records
35
(kk)
Condition of Assets
35
(ll)
Trade Controls
35
(mm)
Ethical Practices
36
(nn)
Stockholder Voting Requirements
36
(oo)
SERP
36
(pp)
Disclosure
36
     
§4.
Representations and Warranties of Parent
36
(a)
Organization of Parent and Buyer
36
(b)
Authorization of Transaction
36
(c)
Non-contravention
37
(d)
Brokers’ Fees
37
(e)
Disclosure
37
     
§5.
Pre-Closing Covenants
37
(a)
General
37
(b)
Notices and Consents
37
(c)
Operation of Business
38
(d)
Preservation of Business
38
(e)
Full Access
38
(f)
Notice of Developments
38
(g)
Exclusivity
38
(h)
Maintenance of Real Property
38
(i)
Leases
39
(j)
Title Insurance, Surveys and Certificate of Compliance
39
(k)
The Company’s Stockholders’ Meeting
39
(l)
Employment Agreements
39
(m)
Identified Liabilities
39
(n)
Line of Credit.
39
(o)
Adjustments
39
(p)
Letters of Credit
39
(q)
Transaction Expenses
39
(r)
Termination of Certain Equity Based Rights and Certain Bonus Participation
39

 
 
 

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Execution Version
 
§6.
Post-Closing Covenants
40
(a)
General
40
(b)
Litigation Support
40
(c)
Transition
40
(d)
Satisfaction of Real Estate Mortgage Loan
40
(e)
No 338 Election
40
     
§7.
Conditions to Obligation to Close
41
(a)
Conditions to Buyer’s Obligation
41
(b)
Conditions to the Company’s Obligation
43
     
§8.
Remedies for Breaches of this Agreement
44
(a)
Survival of Representations and Warranties
44
(b)
Tipping Basket
44
(c)
Indemnification Provisions for Buyer Indemnitees’ Benefit
44
(d)
Indemnification Provisions for the Stockholders’ Benefit
45
(e)
Limitations for Adjustment Items
45
(f)
Matters Involving Third Parties
45
(g)
Purchase Price Adjustment
47
(h)
Other Indemnification Provisions
47
     
§9.
Tax Matters.
47
(a)
Straddle Period
47
(b)
Responsibility for Filing Tax Returns
47
(c)
Cooperation on Tax Matters
47
(d)
Certain Taxes and Fees
48
     
§10.
Termination
48
(a)
Termination of Agreement
48
(b)
Effect of Termination
49
(c)
Fiduciary Duties
49
     
§11.
Miscellaneous
50
(a)
Press Releases and Public Announcements
50
(b)
No Third-Party Beneficiaries
50
(c)
Entire Agreement
50
(d)
Succession and Assignment
50
(e)
Counterparts
51
(f)
Headings
51
(g)
Notices
51
(h)
Governing Law
52
(i)
Specific Performance
52
(j)
Submission to Jurisdiction
52
(k)
Amendments and Waivers
53
(l)
Severability
53
(m)
Expenses
53
(n)
Construction
53

 
 
 

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Execution Version
 
(o)
Incorporation of Exhibits, Annexes, and Schedules
53
(p)
Time of the Essence
53

 
EXHIBITS

Exhibit A
Form of Statement of Merger
Exhibit B
Form of Employment Agreement for Kerry Bode
Exhibit C
Form of Employment Agreement for Lance Riley
Exhibit D
Form of Employment Agreement for Ty Gragg
Exhibit E
Form of Employment Agreement for Anthony Carfagna
Exhibit F
Opinion of Unicircuit Counsel
Exhibit G
Opinion of Buyer’s Counsel
Exhibit H
Escrow Agreement
Exhibit I
Paying Agent Agreement
Exhibit J
Financial Statements of Unicircuit

Company Disclosure Schedule

Buyer Disclosure Schedule

Schedule §5(o)
 
 
 

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Execution Version

AGREEMENT AND PLAN OF MERGER
 
AGREEMENT AND PLAN OF MERGER, dated as of August 18, 2008, by and among Anaren,
Inc., a New York Corporation (the “Parent”), Anaren Acquisition, Inc., a
Colorado corporation (the “Merger Sub” or “Buyer”), Unicircuit, Inc., a Colorado
corporation (“Unicircuit” or the “Company”), and Owen Agency, LLC, a Colorado
limited liability company as Stockholders’ Agent (collectively, the “Parties”).

R E C I T A L S
 
A. The Company is in the business of manufacturing complex printed circuit
boards (the “Business”); and
 
B. Buyer and the Company desire to consummate a business combination in a
transaction whereby, upon the terms and subject to the conditions set forth in
this Agreement, Buyer will merge with and into the Company (the “Merger”), each
holder of common and preferred stock of the Company (the “Company Stock”) will
be entitled to receive his, her, or its share of the Merger Consideration as
provided herein and subject to the terms hereof, and the Company will be the
surviving corporation in the Merger; and
 
C. The Board of Directors of the Company has unanimously determined and resolved
that the Merger and all of the transactions contemplated by this Agreement are
in the best interest of the holders of all of the issued and outstanding shares
of capital stock of the Company (the “Shares”), and has approved this Agreement
in accordance with the Colorado Business Corporation Act, as amended (the
“CBCA”); and
 
D. The Board of Directors of Buyer has unanimously determined and resolved that
the Merger and all of the transactions contemplated by this Agreement are in the
best interest of the holder of all of the issued and outstanding shares of
capital stock of Buyer, and that the Merger is fair and advisable, and has
approved and adopted this Agreement in accordance with the CBCA; and
 
E. Each of the Parties desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe various
conditions thereto; and
 
F. As an inducement for Buyer to enter into this Agreement, and as a condition
to the closing of the transactions contemplated hereby, Kerry Bode, Lance Riley,
Ty Gragg and Anthony Carfagna have each agreed to enter into the Employment
Agreements attached hereto as Exhibits B, C, D and E, respectively; and
 
G. Buyer and the Company have taken all other action or intend to take all
action necessary in connection with the execution of this Agreement and the
transactions contemplated hereby, including without limitation, obtaining all
consents and approvals required in connection herewith.

 
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Execution Version
 
W I T N E S S E T H
 
For good and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:
 
§1. Certain Definitions
 
As used in this Agreement each of the following terms shall have the following
meaning:
 
Adverse Consequences shall mean all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, Taxes, liens, Encumbrances, losses,
expenses, and fees, including court costs and reasonable attorneys’ fees and
expenses.
 
Affiliate shall mean an affiliate of an individual or entity as the term
“affiliate” is defined in the rules and regulations promulgated under the
Securities Act of 1933, as amended.
 
Agreement shall mean this Agreement and Plan of Merger and all schedules and
exhibits hereto.
 
Audit shall mean any audit, assessment of Taxes, any other examination or claim
by any Tax Authority, judicial, administrative or other proceeding or litigation
(including any appeal of any such judicial, administrative or other proceeding
or litigation) relating to Taxes and/or Tax Returns.
 
Balance Sheet shall mean the audited balance sheet of the Company dated as of
December 31, 2007.
 
Business shall have the meaning provided such term in Recital Paragraph A.
 
Buyer shall have the meaning provided such term in the preamble to this
Agreement.
 
Buyer Disclosure Schedule means the disclosure schedule of Buyer that is part of
this Agreement and relates to §4 of this Agreement.
 
Buyer Indemnitees shall have the meaning set forth in §8(c).
 
CBCA shall have the meaning provided such term in Recital Paragraph C.
 
Closing shall have the meaning set forth in §2(l)
 
Closing Date shall have meaning set forth in §2(k).
 
Closing Date Cash Consideration has the meaning set forth in §2(g)(1).
 
Closing Schedule - see “Transaction Expenses” defined below.

 
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Execution Version
 
CO Secretary shall have meaning set forth in §2(a).
 
Code shall mean the Internal Revenue Code of 1986, as amended.
 
Company shall have the meaning provided such term in the preamble to this
Agreement.
 
Company Disclosure Schedule shall mean the disclosure schedule of the Company
that is part of this Agreement and relates to §3 of this Agreement.
 
Company Indemnitees shall have the meaning set forth in §8(d).
 
Company Stock shall have the meaning provided such term in Recital Paragraph B.
 
Computer Equipment shall mean all computer equipment, devices and accessories
(including, but not limited to, personal computers, workstations, servers, data
processing hardware and related telecommunications equipment, media (e.g. CD
Rom, floppy disks and tapes)) used in Business.
 
Confidential Information shall mean technical, commercial, marketing, strategic,
business or other information, data, plans and material of the kind either
identified as confidential or proprietary or which a reasonable person would
recognize to be confidential or proprietary, either from its nature or the
manner of its disclosure including, but not limited to, any process, design,
formula, know-how, information, invention, trade secret, Technology, Programs,
list of customers, product documentation, development work, lead list or
research, marketing or other data which has not entered the public domain.
 
Contract shall mean, with respect to a Party, any contract, license agreement,
commitment, obligation, lease, or restriction of any kind to which such Party is
a party or by which such Party is bound or to which any of such Party’s assets
are subject, including but not limited to, Third-Party Licenses.
 
Disclosure Schedule shall mean Buyer Disclosure Schedule or the Company
Disclosure Schedule, as the context requires.
 
Dissenting Shares shall have the meaning set forth in §2(p).
 
Employment Agreements shall mean the Kerry Bode Employment Agreement, the Lance
Riley Employment Agreement, the Ty Gragg Employment Agreement and the Anthony
Carfagna Employment Agreement all as described in more detail in §2(l) below.
 
Effective Time shall have meaning set forth in §2(a).
 
Encumbrance shall mean any assessment, claim, mortgage, pledge, lien, security
or other third party right or interest of any kind whatsoever, conditional sales
agreement, option, right of first refusal, right of repurchase, encumbrance or
charge of any kind affecting real or personal property, other than the Permitted
Encumbrances.

 
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Execution Version
 
Environmental Claims shall mean any and all claims, actions, causes of action,
or other written notices by any person or entity alleging potential liability
(including, but not limited to, potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or civil or criminal penalties) arising out of or
resulting from (i) circumstances forming the basis of any violation of any
Environmental Laws or (ii) any releases of Hazardous Materials at any real
property or from any personal property presently or formerly owned, leased or
managed by the Company or at any disposal facility which may have received
Hazardous Materials generated by the Company.
 
Environmental Laws shall mean any applicable federal, state, local or foreign
law, judicial decision, regulation, rule, judgment, order, decree, injunction,
Permit or governmental restriction, each as in effect on or prior to the Closing
Date, relating to the environment, safety or health, including, without
limitation, the Comprehensive Environmental Response Compensation and Liability
Act, the Superfund Amendments and Authorization Act of 1986, the Occupational
Safety and Health Act, the Resource Conservation and Recovery Act, the Federal
Water Pollution Control Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act, the Clean
Air Act, the Federal Insecticide Fungicide and Rodenticide Act, the Oil
Pollution Act, and equivalent or additional state and local laws.
 
Environmental Permits shall mean Permits, certificates, registrations or other
documents required by or otherwise issued pursuant to Environmental Laws.
 
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended.
 
ERISA Affiliate shall mean any trade or business (whether or not incorporated)
that is treated as a single employer together with the Company under Code § 414.
 
Escrow shall have the meaning set forth in §2(j)(1).
 
Escrow Agent shall have the meaning set forth in §2(j)(1).
 
Escrow Agreement shall have the meaning set forth in §2(j)(1).
 
Escrow Fund shall have the meaning set forth in §2(j)(1).
 
Facility or Facilities shall have the set forth set forth in §3(y)(3).
 
FCPA shall have the meaning set forth in §3(mm).
 
Final Month shall have the meaning set forth in §2(g)(4).
 
Financial Statements shall have the meaning set forth in §3(i).
 
GAAP shall mean generally accepted accounting principles as in effect in the
United States.

 
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Execution Version
 
Governmental Authorizations shall mean all governmental approvals,
authorizations, certifications, consents, variances, permissions, licenses,
directives, and Permits to or from, or filings, notices, or recordings to or
with United States federal, state, and local governmental authorities.
 
Hazardous Materials shall mean (a) any element, compound, or chemical that is
defined, listed or otherwise classified as a contaminant, pollutant, toxic
pollutant, toxic chemical, toxic or hazardous substance, extremely hazardous
substance, radioactive material, hazardous waste, bio-hazardous or infectious
waste, special waste, or solid waste under Environmental Laws; (b) oil,
petroleum, petroleum-based or petroleum-derived products; (c) polychlorinated
biphenyls; and (d) any asbestos-containing materials.
 
Improper Payment Laws shall have the meaning set forth in §3(mm).
 
Indemnified Party shall have the meaning set forth in §8(f)(1).
 
Indemnifying Party shall have the meaning set forth in §8(f)(1).
 
Identified Liabilities shall mean, if any: any line of credit balance, all
accrued but unpaid dividends on the Company Stock; contractual payments of the
Company to Kerry Bode upon the consummation of the transactions contemplated by
this Agreement and the Related Documents; all amounts owed by the Company under
any Plans through the Closing Date, including amounts owed to any Person under
the Unicircuit, Inc. 2004 Stock Incentive Plan, the related stock purchase
agreements and any other related documents; and any stub or “short year” income
Tax liabilities of the Company through the Closing Date.
 
Intellectual Property shall mean all intellectual property and all rights
therein, whether common law, statutory or otherwise, domestic and foreign, and
all registrations and registration applications for any such rights, including,
but not limited to:
 
(1) United States Letters Patent, any non-U.S. patents, and any and all
reissues, divisions, continuations, continuations-in-part, re-examinations,
renewals, extensions and substitutes thereof, any applications therefor, and all
non-U.S. counterparts of the foregoing (including, in the case of patent
applications, international or multi-national applications filed in accordance
with Chapter II of the Patent Cooperation Treaty or any other multi-lateral
agreement);
 
(2) service marks, trademarks, trade names, brands, product and service names,
logos and other distinctive identifications used in commerce, whether in
connection with products or services, together with all goodwill related to any
of the foregoing;
 
(3) copyrights;
 
(4) domain names (uniform resource locators);
 
(5) Technology and the copyright and/or patents in any fixations of the
Technology; and

 
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Execution Version
 
(6) Confidential Information and the copyright in any fixations of the
Confidential Information.
 
Intracompany Arrangement shall have the meaning set forth in §3(p).
 
Investment shall mean, as applied to any Person, (i) any direct or indirect
ownership, purchase or other acquisition by such Person of any notes,
obligations, instruments, stock, securities or ownership interest (including
partnership interests and joint venture interests) of any Person and (ii) any
capital contribution by such Person to any other Person.
 
Knowledge means, with respect to the Company, the actual knowledge of any
executive officer or director of the Company after due inquiry and
investigation, which includes diligent review of files and books and records and
the making of reasonable inquiry of the directors, officers and managers (and
for this purpose Anthony Carfagna shall be considered a manager) of the Company
and its Affiliates, who have knowledge of, responsibility for, or control over
the relevant subject matter, and the awareness that such individuals could
reasonably be expected to have acquired in the course of having acted in such
capacity with the care that an ordinarily prudent person in a like position
would use.
 
Leases shall mean all lease agreements to which the Company is party.
 
Leased Real Property shall mean all real property, in each case which is subject
to a leasehold interest to which the Company is a party.
 
Leased Tangible Property shall mean all Computer Equipment and other machinery,
furniture, equipment and other tangible personal property, in each case which is
subject to a leasehold interest held by the Company.
 
Licensed Intellectual Property shall mean Intellectual Property which the
Company uses or has the right to use, in each case pursuant to Third-Party
Licenses.
 
Litigation shall have the meaning set forth in §3(n).
 
Material Adverse Effect shall mean, with respect to a Party, a material adverse
effect on the assets, business, condition (financial or otherwise), prospects or
results of operations of such Party and its Subsidiaries, taken as a whole, or a
material adverse effect on such Party’s ability to consummate the transactions
contemplated hereby. 
 
Merger shall have the meaning set forth in Recital Paragraph B.
 
Merger Consideration shall have the meaning set forth in §2(g).
 
Merger Sub shall have the meaning provided such term in the preamble to this
Agreement.
 
Most Recent Financial Statements shall have the meaning set forth in §3(i).
 
Most Recent Fiscal Month End shall have the meaning set forth in §3(i).

 
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Execution Version
 
Net Book Value shall mean the Stockholders’ equity of the Company determined in
accordance with GAAP as of the Closing Date, provided, notwithstanding the
foregoing, to the extent not included by GAAP, the Identified Liabilities, the
Real Estate Mortgage Loan, the unpaid Transaction Expenses, and any other
amounts explicitly set forth in this Agreement, shall be included as liabilities
for purposes of calculating Net Book Value and, provided, further, that solely
for purposes of calculating the Net Book Value, the amount of the liability,
write-off and/or reserve for each item referred to in Schedule §5(o) shall equal
the amount of such item as set forth on Schedule §5(o) immediately before the
adjustment required by Section §5(o), plus one-half (1/2) of the difference
between the amount of such item after the adjustment required by Section §5(o)
and the amount of such item set forth on Schedule §5(o) immediately before such
adjustment. (e.g., if immediately before the adjustments required by Section
§5(o) the reserve for research and development tax credits is $50,000 and it is
to be adjusted to be $400,000, for purposes of calculating the Net Book Value,
the reserve for research and development tax credits is $225,000 (i.e., $50,000
+ (($400,000 - $50,000) ÷ 2))).
 
Net Book Value Range shall mean the Net Book Value of the Company being no less
than Ten Million One Hundred Thousand Dollars ($10,100,000) and no greater than
Ten Million Nine Hundred Thousand Dollars ($10,900,000).
 
Owned Intellectual Property shall mean Intellectual Property (i) created or
developed by employees of the Company or (ii) to which the Company has acquired,
by purchase, assignment or other transfer the unconditional, unrestricted,
exclusive right to control or prevent any and all use of such Intellectual
Property by others without any consent or approval of or payment to any other
Person.
 
Owned Real Property shall mean all real property owned in fee simple by the
Company.
 
Owned Tangible Property shall mean all Computer Equipment and other machinery,
furniture, fixtures, equipment and other tangible personal property owned by the
Company.
 
Parent shall have the meaning provided such term in the preamble to this
Agreement.
 
Parties shall have the meaning provided such term in the preamble to this
Agreement.
 
Paying Agent shall mean Manufacturers and Traders Trust Company.
 
Paying Agent Agreement shall mean Paying Agent Agreement dated as of the date
hereof by and among Parent, Stockholders’ Agent, the Company and Manufacturers
and Traders Trust Company, substantially in the form attached hereto as Exhibit
I.
 
Permit shall mean any license, franchise, permit, consent, order, approval,
certificate, authorization or registration from, of or with a governmental
entity.
 
Permitted Encumbrances shall mean (a) statutory Encumbrances for current Taxes,
special assessments or other governmental charges not yet due and payable or the
amount or validity of which is being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established in
accordance with U.S. generally accepted accounting principles, (b) mechanics’,
materialmen’s, carriers’, workers’, repairers’ and similar statutory
Encumbrances arising or incurred in the ordinary course of business which
Encumbrances secure obligations that are not overdue by more than thirty (30)
days or are being contested in good faith, (c) deposits or pledges made in
connection with, or to secure payment of, worker’s compensation, unemployment
insurance, old age pension programs mandated under applicable legal requirements
or other social security, (d) restrictions on the transfer of securities arising
under federal and state securities laws, and (e) lien of the Real Estate
Mortgage Loan.

 
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Execution Version
 
Person shall mean an individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or governmental entity or any department, agency or political
subdivision thereof.
 
Plan shall have the meaning set forth in §3(o)(1).
 
Prohibited Person means a Person who or which has been convicted of a felony
crime of dishonesty, breach of trust or similar crime in a state or federal
jurisdiction.
 
Real Estate Mortgage Loan shall mean the real estate mortgage loan on the
Company’s Littleton, Colorado headquarters building and property which has a
currently outstanding principal balance of One Million Three Hundred Twenty Two
Thousand Dollars ($1,322,000) as of December 31, 2007 payable to American Life
Insurance Company at an interest rate per annum of 6.7% maturing May 26, 2014.
 
Real Property means all fee or leasehold interests, easements, real estate
licenses, right to access and other rights with respect to real property.
 
Related Documents shall mean the Escrow Agreement, the Employment Agreements and
all other agreements, instruments, documents and certificates to be executed and
delivered pursuant to this Agreement.
 
Release shall mean any spilling, leaking, pumping, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, dumping, or disposing of
Hazardous Materials (including the abandonment or discarding of barrels,
containers or other closed receptacles containing Hazardous Materials) into the
environment in violation of any applicable Environmental Law.
 
Representatives shall mean the attorneys, accountants or other agents or
employees of a Party to this Agreement.
 
Selling Stockholders and Stockholders shall mean the holders of the issued and
outstanding shares of the Company Stock.
 
Shares shall have the meaning set forth in Recital Paragraph C.
 
Software Programs shall mean computer programs and software and databases,
together with all additional computer code, developed or acquired by or on
behalf of the Company (including Intellectual Property in respect thereof and
modifications or improvements by the Company to Licensed Intellectual Property)
and including in each instance all Program Documentation with respect thereto.

 
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Execution Version
 
Software Program Documentation shall mean all records, technical and descriptive
materials, documentation and procedures (including computerized records, if any)
existing and relating to the creation, acquisition, design, development,
programming, enhancement, modification, translation or other manipulation,
operation, use or maintenance of any Program, and all embodiments and
descriptions in any medium, including, but not limited to, all computer tapes,
disks and CD-ROMs of any such Programs (including all prior versions).
 
Southpark Covenants shall have the meaning set forth in §3(l)(1)(iii).
 
Statement of Merger shall have meaning set forth in §2(a).
 
Straddle Period shall have the meaning set forth in §9(a).
 
Subsidiary shall mean with respect to any Person, each entity of which a
majority of the voting power or equity interest is owned, directly or
indirectly, by such Person.
 
Superior Proposal shall have the meaning set forth in §10(c)(1).
 
Surveys shall have meaning set forth in §7(a)(9).
 
Surviving Corporation shall have the meaning ascribed to such term in §2(b).
 
Tangible Property shall mean the Owned Tangible Property and the Leased Tangible
Property.
 
Tangible Property Leases shall mean any Contract granting a right to use Leased
Tangible Property.
 
Tax shall mean any federal, territorial, state, local or foreign income, gross
receipts, license, payroll, wage, employment, excise, utility, communications,
production, occupancy, severance, stamp occupation, premium, windfall profits,
environmental, customs duties, capital stock, capital levy, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, real property gains, recordation, business license, workers’
compensation, personal property, sales, use, transfer, registration, value
added, ad valorem, alternative or add-on minimum, estimated, or other tax, fee,
charge, premium, imposition of any kind whatsoever however denominated, imposed
by any Tax Authority, together with any interest, penalties or other additions
to tax and any interest on any such interest, penalties and additions to tax
that may become payable in respect thereof.
 
Tax Authority shall mean the Internal Revenue Service (“IRS”) and any other
federal, territorial, state, local or foreign government and any agency,
authority or political subdivision of any of the foregoing.
 
Tax Law shall mean the Code, any federal, territorial, state, county, local or
foreign laws related to Taxes and any regulations or official administrative
pronouncements released under any thereof.

 
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Execution Version
 
Tax Returns shall mean all reports, estimates, declarations of estimated Tax,
information statements and returns relating to, or required to be filed in
connection with, any Taxes, including information returns or reports with
respect to backup withholding and other payments to third parties.
 
Taxable Period means any taxable year or any other period with respect to which
any Tax may be imposed or a filing of Tax Returns may be required under any Tax
Law.
 
Technology shall mean all formulae; algorithms; processes; procedures; designs;
ideas; concepts; strategic, business and other plans; research; inventions and
invention disclosures (whether patentable or unpatentable); and all records of
the foregoing, including, but not limited to, any laboratory notes; test,
engineering and technical information, data and materials, know-how and
methodologies; trade secrets; technology; web sites; communications and
associates peripheral devices and resources; computer software, programs and
code, both object and source, in whatever form and media; databases;
specifications, software manuals and program documentation.
 
Third-Party Claim shall have the meaning set forth in §8(f)(1).
 
Tipping Basket shall have the meaning set forth in §2(j)(2).
 
Title Commitments shall have meaning set forth in §7(a)(7).
 
Title Company shall have meaning set forth in §7(a)(7).
 
Title Policies shall have meaning set forth in §7(a)(8).
 
Transaction Expenses shall mean (i) the aggregate attorneys’ and accountants’
fees and expenses incurred or to be incurred by the Company and the
Stockholders’ Agent (that are required to be paid at or prior to the Closing),
(ii) Taxes referred to in §9(d), in connection with the transactions
contemplated by this Agreement and (iii) any other costs, expenses, fees,
liabilities or obligations out of the ordinary course of business of the Company
or are incurred in connection with the transactions contemplated by this
Agreement and/or that are required to be paid at or prior to the Closing,
including the Escrow Agent fees, the Paying Agent fees and the Stockholders’
Agent fees, but excluding the Real Estate Mortgage Loan. The Transaction
Expenses shall be set forth on the closing schedule (the “Closing Schedule”).
The Closing Schedule shall list (i) all of the Transaction Expenses, (ii) any
portion of the Transaction Expenses that have been paid or advanced by the
Company prior to the Closing Date, (iii) any Identified Liabilities that remain
outstanding on the Closing Date, and (iv) the name, address, respective amounts
and bank account information from (A) each recipient of Transaction Expenses and
(B) the creditors owed the unpaid Identified Liabilities.
 
Unicircuit shall have the meaning provided such term in the preamble to this
Agreement.
 
WARN Act shall mean the federal Worker Adjustment and Retraining Notification
Act.
 
 
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Execution Version
 
§2. Merger; Merger Consideration; Closing
 
(a) Effective Time. Upon the terms and subject to the conditions set forth in
this Agreement, at the time of the Closing, the Parties shall cause the Merger
to be consummated by filing with the Secretary of State of the State of Colorado
(the “CO Secretary”) the Statement of Merger (the “Statement of Merger”),
substantially in the form attached hereto as Exhibit A, duly executed and so
filed in accordance with the CBCA and shall make all other filings and
recordings required under the CBCA to effectuate the Merger and the transactions
contemplated by this Agreement. The Merger shall become effective at such time
as the Statement of Merger is duly filed with the CO Secretary, or at such
subsequent date or time as Buyer and the Company mutually shall agree and
specify in the Statement of Merger (the time the Merger becomes so effective
being hereinafter referred to as the “Effective Time”).
 
(b) Surviving Corporation. Upon the terms and subject to the conditions set
forth in this Agreement and in accordance with the CBCA, at the Effective Time,
Buyer shall be merged with and into the Company and the Company shall be the
surviving corporation in the Merger (the “Surviving Corporation”) and, as such,
the Company shall continue its corporate existence as a wholly owned subsidiary
of Parent under the laws of the State of Colorado, and the separate corporate
existence of Buyer thereupon shall cease. It is intended that after the
Effective Time, the Company will undergo a reorganization to become organized
under the laws of the State of Delaware.
 
(c) Articles of Incorporation. At the Effective Time, the Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable law.
 
(d) By-Laws. At the Effective Time, the By-Laws of the Company, which have been
delivered to Buyer, shall be the By-Laws of the Surviving Corporation until
thereafter amended in accordance therewith or with applicable law.
 
(e) Directors and Officers. At the Effective Time, the directors and officers of
the Company immediately prior to the Effective Time shall resign and the
directors and officers listed on Schedule §2(e) shall become the directors and
officers of the Surviving Corporation. Each director and officer of the
Surviving Corporation shall hold office in accordance with the Articles of
Incorporation and By-Laws of the Surviving Corporation.
 
(f) Effect of Merger. At and after the Effective Time, the effect of the Merger
shall, in all respects, be as provided in § 7-90-204 of the CBCA.
 
(g) Merger Consideration. 
 
(1) At the Closing Parent shall pay by wire transfer of immediately available
funds Twenty Two Million Dollars ($22,000,000) (the “Merger Consideration”),
less One Hundred Thousand Dollars ($100,000) to be paid at the Closing by Parent
to Kerry L. Bode on behalf of the Company, less One Hundred Thousand Dollars
($100,000) to be paid by Parent to the Stockholders’ Agent on behalf of the
Company to fund any costs and expenses incurred thereby, and subject to
adjustments provided as provided below (including any adjustment as a result of
the Net Book Value as of the Closing Date not being within the Net Book Value
Range), for 100% of the shares of the Company Stock by delivery of (i) the
Escrow Fund to the Escrow Agent, to be held in escrow for up to twenty-four (24)
months pursuant to the Escrow Agreement; and (ii)a the balance of the Merger
Consideration (the “Closing Date Cash Consideration”) in cash to the Paying
Agent by wire transfer; provided, however, that the amounts payable to the
Escrow Agent and to the Paying Agent shall be reduced in proportion to the
amounts due any Stockholders who dissent to the Merger in accordance with the
CBCA and who do not transfer his, her or its Shares to Buyer pursuant to the
terms and conditions of this Agreement. The Closing Date Cash Consideration
shall be allocated among and paid to the Stockholders as set forth in the Paying
Agent Agreement. 
 
 
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Execution Version
 
(2) At least fifteen (15) days prior to the Closing, as a condition precedent to
the closing of the transactions contemplated by this Agreement and the Merger,
the Company shall deliver to Buyer month end financial statements through the
month-end preceding the Closing Date (“Final Month”), prepared in accordance
with GAAP consistently applied, and reflecting any GAAP adjustments required in
connection with the Company’s 2008 short period federal income Tax Return. The
Company shall provide to Buyer any and all information reasonably requested in
writing relating to the calculation of the Company’s Net Book Value as of the
Final Month within five (5) days after the request therefor.
 
(3) At least five (5) days before the Closing, Buyer and the Company shall
prepare a mutually agreed upon Closing Schedule, which mutual agreement shall be
evidenced by Buyer’s and the Company’s signatures thereon at the Closing.
 
(4) The Merger Consideration is predicated on the Company’s Net Book Value being
within the Net Book Value Range on the Closing Date. If Net Book Value as of the
Closing Date is below Ten Million One Hundred Thousand Dollars ($10,100,000),
the Merger Consideration shall be reduced dollar for dollar to the extent below
the Ten Million One Hundred Thousand Dollars ($10,100,000) threshold. If Net
Book Value as of the Closing Date is in excess of Ten Million Nine Hundred
Thousand Dollars ($10,900,000), the Merger Consideration shall be increased
dollar for dollar to the extent above the Ten Million Nine Hundred Thousand
Dollars ($10,900,000) threshold. At the Closing, the Company will provide a
customary “bring down” certificate that will confirm that there has been no
material adverse change in the business of the Company since the Most Recent
Financial Statements and will represent and warrant whether the Company’s Net
Book Value is at least within the Net Book Value Range. Notwithstanding anything
contained in this Agreement to the contrary, neither Buyer nor Parent shall have
any obligation to close the transactions contemplated by this Agreement if they
are not reasonably satisfied that the amount of the Company’s Net Book Value as
of the Closing Date is within the Net Book Value Range.
 
(5) Prior to the Closing Date, the Company shall accrue and pay, or reserve for,
the Identified Liabilities. 
 
(h) Cancellation of Shares. At the Effective Time, all of the shares of Company
Stock shall no longer be outstanding and shall automatically be canceled and
shall cease to exist, and shall thereafter by operation of this section
represent only the right to receive the Merger Consideration and any dividends
or distributions with respect thereto or any dividends or distributions with a
record date prior to the Effective Time that were declared or made by the
Company on such shares of Company common and preferred stock in accordance with
the terms of this Agreement on or prior to the Effective Time and which remain
unpaid at the Effective Time.
 
 
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Execution Version
 
(i) Status of Buyer Shares. At the Effective Time, by virtue of the Merger and
without any action on the part of any holder of any capital stock of Buyer, each
issued and outstanding share of common stock of Buyer shall convert into a share
of common stock of the Surviving Corporation, which after the Merger shall be
the only shares of capital stock of the Surviving Corporation issued and
outstanding after the Merger.
 
(j) Escrow of Merger Consideration.
 
(1) At the Effective Time, Parent shall deposit seven and one half percent
(7.5%) of the total Merger Consideration (One Million Six Hundred Fifty Thousand
Dollars ($1,650,000) based on Twenty-Two Million Dollars ($22,000,000) of Merger
Consideration) (the “Escrow Fund”) with Manufacturers and Traders Trust Company
as escrow agent (the “Escrow Agent”), to be held and disbursed by the Escrow
Agent in accordance with the Escrow Agreement, substantially in the form
attached hereto as Exhibit H, (the “Escrow Agreement”), subject to possible
reductions in the Escrow Fund as provided in §2(g) and §2(j) hereof. Parent
shall deposit with the Escrow Agent interest at the rate of 2.54% per annum on
the amount of the Escrow Fund not distributed and not in dispute (the “Interest”
and together with the Escrow Fund, the “Escrow”) to be paid in as provided in
the Escrow Agreement. The Interest shall be deposited by Parent with the Escrow
Agent at six (6) month anniversary, the one (1) year anniversary, the eighteen
(18) month anniversary and the twenty-four (24) month anniversary of the date of
this Agreement. Parent shall be entitled to all of the interest earned on the
Escrow as a result of being deposited with the Escrow Agent and such amounts
shall be paid to Parent as provided in the Escrow Agreement.
 
(2) No Stockholder shall be entitled to receive any Merger Consideration
deposited with the Escrow Agent and until the same is released to the
Stockholders pursuant to the terms of the Escrow Agreement. The Escrow Fund to
be deposited with the Escrow Agent shall be deducted pro rata from the Merger
Consideration allocable to the holders of the shares of Company common stock in
accordance with their shares of Company common stock, but shall not be allocable
based on any holdings of Company preferred stock. The Escrow Fund will be
subject to Adverse Consequences suffered by Buyer Indemnitees (including those
described in §8(c)) as a result of the Company’s breach of this Agreement, any
unrecorded pre-closing Tax, environmental or other third party liabilities and
liabilities resulting from a breach or inaccuracy of the Company’s
representations, warranties or covenants that become known and recorded in
accordance with GAAP during the term of the Escrow Agreement, or are identified
as potential liabilities and a good faith estimate of the amount of such
liabilities are made by any Buyer Indemnitees during the term of the Escrow
Agreement, but are not accrued until after the expiration of the term of the
Escrow Agreement. Except as provided in §8(e), the Company shall not be required
to indemnify any Buyer Indemnitee from the Escrow until the claim(s) in an
aggregate exceed One Hundred Thousand Dollars ($100,000.00) (the “Tipping
Basket”), provided, however, that the Tipping Basket shall not apply to any
breaches of representations and warranties set forth in §3 (b), (c), (d), (e),
(f) and (g) or §4 (b), (c) and (d) or the covenants by the Company herein. If
the aggregate amount exceeds the Tipping Basket, Buyer Indemnitees will be
entitled to be paid from the Escrow Fund from the first dollar up to the total
amount of the liability. (By way of example, if an Eighty Thousand Dollar
($80,000) liability is identified and subject to the Tipping Basket, Eighty
Thousand Dollars ($80,000) will be withheld until such time it is either accrued
or determined not to be an accruable liability. If accrued, the amount will only
be paid to one or more Buyer Indemnitees if the accrued liabilities (taking into
account all Buyer Indemnitees) in the aggregate exceed the Tipping Basket. Once
the total liabilities exceed the Tipping Basket, Buyer Indemnitees shall be
entitled to indemnification for all liabilities from the Escrow Fund). Parent
will use its commercially reasonable best efforts to promptly investigate any
potential liability and, within ninety (90) days after Parent first receives
notice of the potential liability, Parent shall report to the Escrow Agent and
to the Stockholders’ Agent on Parent’s preliminary determination.
 
 
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Execution Version
 
(k) Stockholders’ Agent. By virtue of their approval of this Agreement, the
Stockholders shall be deemed to have irrevocably constituted and appointed,
effective as of the date of this Agreement, Owen Agency, LLC, a Colorado limited
liability company (in such capacity the “Stockholders’ Agent”), as their true
and lawful agent and attorney-in-fact to enter into any agreement in connection
with the transactions contemplated by the Escrow Agreement and the Paying Agent
Agreement, to exercise all or any of the powers, authority and discretion
conferred on the Stockholders’ Agent under the Escrow Agreement, the Paying
Agent Agreement and this Agreement, to waive any terms and conditions of the
Escrow Agreement and the Paying Agent Agreement, to give and receive notices and
communications, to authorize delivery to Stockholders of the Surviving
Corporation of any of the Merger Consideration or other property from the Escrow
Account in satisfaction of claims by Buyer Indemnitees, to object to such
deliveries, to agree to, negotiate, enter into settlements and compromises of,
and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Stockholders’ Agent for the accomplishment of
the foregoing. The Stockholders’ Agent shall at all times act in its capacity as
the Stockholders’ Agent in a manner that the Stockholders’ Agent believes in
good faith to be in the best interest of the Stockholders. The Stockholders’
Agent and its stockholders, officers, directors, affiliates, members, agents or
representatives shall not be liable to any Stockholder for any error of
judgment, or any action taken, suffered or omitted to be taken, under this
Agreement, the Paying Agent Agreement or the Escrow Agreement, except in the
case of its gross negligence, bad faith or willful misconduct. The Stockholders’
Agent may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts. The Stockholders’ Agent shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement, the Paying Agent Agreement or Escrow
Agreement. As to any matters not expressly provided for in this Agreement, the
Paying Agent Agreement or the Escrow Agreement, the Stockholders’ Agent shall
not be required to exercise any discretion or take any action. By virtue of its
approval of this Agreement each Stockholder severally shall indemnify and hold
harmless and shall reimburse the Stockholders’ Agent from and against such
Stockholder’s ratable share of any and all liabilities, losses, damages, claims,
costs or expenses suffered or incurred by the Stockholders’ Agent arising out of
or resulting from any action taken or omitted to be taken by the Stockholders’
Agent under this Agreement or the Escrow Agreement, other than such liabilities,
losses, damages, claims, costs or expenses arising out of or resulting from the
Stockholders’ Agent’s gross negligence, bad faith or willful misconduct. In all
matters relating to §2(g), §2(j), §8 and the Paying Agent Agreement, the
Stockholders’ Agent shall be the only Person entitled to assert the rights of
the Stockholders, and the Stockholders’ Agent shall perform all of the
obligations of the Stockholders hereunder. Parent and the Surviving Corporation
shall be entitled to rely on all statements, representations and decisions of
the Stockholders’ Agent without any independent investigation or verification.
In the event that any Stockholders’ Agent shall die, become disabled or resign
or otherwise terminate his status as such, his successor shall be the
Stockholders’ Agent appointed by the vote or written consent of the former
holders of a majority in interest of each class of common and preferred stock of
the Company. The One Hundred Thousand Dollars ($100,000) paid to the
Stockholders’ Agent as provided in (g)(1) shall be used by the Stockholders
Agent to cover the third party costs and expenses incurred by the Stockholders’
Agent in fulfilling its duties as such and if any of such money has not been
utilized when the Stockholders’ Agent’s duties are complete, the Stockholders’
Agent shall pay any amount remaining to individuals listed in Schedule 1 of the
Escrow Agreement, pro rata in accordance with the “Sharing Ratio” (as defined in
the Escrow Agreement).
 
 
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Execution Version
 
(l) Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Bond, Schoeneck & King, PLLC,
attorneys for Buyer, in Syracuse, New York commencing at 9:00 a.m. local time on
August 29, 2008.
 
(m) Deliveries by the Company. Subject to the terms and conditions of this
Agreement, the Company agrees to deliver (or cause to be delivered) at the
Closing the following agreements and documents, all reasonably satisfactory in
form and substance to Buyer and its legal counsel:
 
(1) the duly executed Statement of Merger;
 
(2) the duly executed Closing Schedule;
 
(3) a certificate of good standing for the Company from each jurisdiction in
which such entity is qualified to do business dated as of a recent date prior to
the Closing and a certificate of good standing for the Company from each other
jurisdiction in which such entity is qualified to do business;
 
(4) evidence of receipt of all requisite consents;
 
(5) a duly executed copy of the Kerry Bode Employment Agreement, substantially
in the form attached hereto as Exhibit B;
 
(6) a duly executed copy of the Lance Riley Employment Agreement, substantially
in the form attached hereto as Exhibit C;
 
(7) a duly executed copy of the Ty Gragg Employment Agreement, substantially in
the form attached hereto as Exhibit D;
 
(8) a duly executed copy of the Anthony Carfagna Employment Agreement,
substantially in the form attached hereto as Exhibit E;

 
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Execution Version
 
(9) the opinion of Jones & Keller, P.C., counsel of the Company, dated the date
of the Closing, substantially in the form attached hereto as Exhibit F;
 
(10) the Escrow Agreement substantially in the form attached hereto as
Exhibit H, duly executed by the Company and the Stockholders’ Agent;
 
(11) the Paying Agent Agreement substantially in the form attached hereto as
Exhibit I, duly executed by the Company and the Stockholders’ Agent;
 
(12) a certificate, duly executed by the President of the Company, certifying
that all requisite corporate actions (including all Board and Stockholders’
approvals) on the part of each of them to consummate the transactions
contemplated by this Agreement have been duly taken; and
 
(13) such other documents and instruments as in the opinion of legal counsel for
Buyer, may be reasonably required to effectuate the terms of this Agreement and
to comply with the terms hereof.
 
(n) Deliveries by Buyer and Parent. Subject to the terms and conditions of this
Agreement, Parent agrees to deliver or cause Buyer to deliver (or cause to be
delivered) to the Company at the Closing the following:
 
(1) the duly executed Statement of Merger;
 
(2) the duly executed Closing Schedule;
 
(3) the Merger Consideration in accordance with §2(g);
 
(4) good standing certificates dated as of a recent date prior to the Closing,
issued by the Secretary of State of the State of New York, for Parent, and a
like certificate issued by the CO Secretary, with respect to Buyer, and from
each other jurisdiction in which such entities are qualified to do business;
 
(5) opinion of Bond, Schoeneck & King, PLLC, counsel to Buyer, dated the date of
Closing, substantially in the form attached hereto as Exhibit G;
 
(6) the Kerry Bode Employment Agreement, substantially in the form attached
hereto as Exhibit B, duly executed by Buyer and Parent;
 
(7) the Lance Riley Employment Agreement, substantially in the form attached
hereto as Exhibit C, duly executed by Buyer and Parent;
 
(8) a duly executed copy of the Ty Gragg Employment Agreement, substantially in
the form attached hereto as Exhibit D;
 
(9) a duly executed copy of the Anthony Carfagna Employment Agreement,
substantially in the form attached hereto as Exhibit E;

 
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Execution Version
 
(10) the Escrow Agreement, substantially in the form attached hereto as Exhibit
H, duly executed by Parent;
 
(11) the Paying Agent Agreement substantially in the form attached hereto as
Exhibit I, duly executed by Parent; and
 
(12) evidence of receipt of all consents;
 
(13) a certificate, duly executed by President of Buyer, certifying that all
requisite corporate actions (including all Board and Stockholder approvals) on
the part of each of them to consummate the transactions contemplated by this
Agreement have been duly taken;
 
(14) a letter of transmittal of Parent to be sent to Stockholders of the
Company; and
 
(15) such other documents and instruments as in the opinion of legal counsel for
the Company, may be reasonably required to effectuate the terms of this
Agreement and to comply with the terms hereof.
 
(o) Procedure for Shares.
 
(1) At the Closing, Parent shall cause to be deposited with the Paying Agent,
for exchange in accordance with this Agreement, the Closing Date Cash
Consideration, by wire transfer of immediately available funds, into which the
outstanding shares of Company Stock shall be converted pursuant to this
Agreement; provided, the amount of Closing Date Cash Consideration to be paid to
each Stockholder shall be as set forth in the Paying Agent Agreement. Pursuant
to the Paying Agent Agreement, at the Effective Time, the Paying Agent shall
mail to all of the Stockholders, excluding any holders of Dissenting Shares,
letters of transmittal specifying the procedures for delivery of such holders’
certificates formerly representing the Company Stock to the Paying Agent in
exchange for the portion of the Closing Date Cash Consideration payable at the
Closing. Upon surrender to the Paying Agent of certificate of Company Stock in
accordance with the instructions of the letter of transmittal, pursuant to the
Paying Agent Agreement, the Paying Agent shall distribute to the former holder
thereof a check for the portion of the Closing Date Cash Consideration that such
holder is entitled to receive pursuant to the Paying Agent Agreement. In no
event shall the holder of any such surrendered certificates be entitled to
receive interest on any cash to be received in the Merger, except as provided in
§2(j)(1).
 
(2) At any time following the expiration of twenty-four (24) months following
the Effective Time, Parent shall be entitled to direct the Paying Agent to
deliver to it any funds which had been deposited with the Paying Agent and not
disbursed to holders of the Company Stock, and thereafter such holders shall be
entitled to look to Parent only as general creditors thereof with respect to any
Merger Consideration that may be payable upon due surrender of their
certificates, a letter of transmittal and other related documents to the Paying
Agent or Parent, until at such time as such undisbursed cash is delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.

 
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Execution Version
 
(3) At the Effective Time, except for the Company Stock to be issued to Parent
pursuant to the Merger in exchange for Buyer’s capital stock, the stock transfer
books of the Company shall be closed and no transfer of Company Stock shall
thereafter be made or recognized. If, after the Effective Time, certificates
representing shares of Company Stock are presented for transfer, they shall be
cancelled and exchanged for the Merger Consideration as provided in this
section.
 
(4) In the event any certificate shall have been lost, stolen, destroyed or
mutilated, upon the making of an affidavit of that fact by the Person claiming
such certificate to be lost, stolen, destroyed or mutilated and, if required by
Surviving Corporation, the making of an indemnity agreement in a form reasonably
requested by Surviving Corporation and/or the posting by such Person of a bond
in such amount as Surviving Corporation may reasonably direct as indemnity
against any claim that may be made against it with respect to such certificate,
the Paying Agent will issue in exchange for such lost, stolen, destroyed or
mutilated certificate the Closing Date Cash Consideration deliverable in respect
thereof as provided in this section.
 
(5) Neither Surviving Corporation nor Buyer shall be liable to any holder of
shares of Company Stock for any dividends or other distributions with respect
thereto, or any Merger Consideration payable in respect thereof, delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
 
(p) Dissenting Shares. Notwithstanding any other provision contained in this
Agreement, no shares of the Company Stock that are issued and outstanding as of
the Effective Time and that are held by a Stockholder who has properly exercised
his, her or its rights to dissent to the Merger (such shares being collectively
referred to herein as “Dissenting Shares”) under the CBCA shall be converted
into the right to receive the Merger Consideration as provided in this Agreement
unless and until such Stockholder shall have failed to perfect, or shall have
effectively withdrawn or lost, such Stockholder’s right to dissent from the
Merger under the CBCA and to receive such consideration as may be determined to
be due with respect to such Dissenting Shares pursuant to and subject to the
requirements of the CBCA. If any Stockholder of Dissenting Shares shall have so
failed to perfect or effectively withdrawn or lost such Stockholder’s right to
dissent from the Merger, each of such Stockholder’s shares of the Company Stock
shall thereupon no longer be deemed Dissenting Shares and deemed to have become,
as of the Effective Time, the right to receive the Merger Consideration as
provided in this section. The Company shall give Buyer (a) prompt notice of any
demands for appraisal, attempted withdrawals of such demands and any other
instruments received by the Company relating to Stockholders’ rights to
appraisal, and (b) the opportunity to direct all negotiations and proceedings
with respect of any dissent to the Merger under CBCA. The Company shall not,
except with the prior written consent of Buyer, voluntarily make any payment
with respect to any demands for appraisal of any capital stock of the Company or
agree to do so, or offer to settle or settle any such demands or approve any
withdrawals of any such demands. 
 
§3. Representations and Warranties of the Company
 
The Company hereby represents and warrants to Buyer that the statements
contained in this §3 are correct and complete as of the date of this Agreement
and will be correct and complete as of the Closing Date (as though made then and
as though the Closing Date were substituted for the date of this Agreement
throughout this §3) with respect to itself, except as set forth in the Company
Disclosure Schedule. Notwithstanding any other provision of this Agreement, no
Stockholder is making representations or warranties in a personal capacity, or
in any other names or forms, nor will any Stockholder be deemed to have made any
representations or warranties in a personal capacity; furthermore, no
Stockholder or officer will provide indemnification relating thereto. The
foregoing shall be subject to the rights set forth in §8(h).
 
 
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Execution Version
 
(a) Organization of the Company. The Company is duly organized, validly
existing, and in good standing under the laws of the State of Colorado.
 
(b) Authorization of Transaction. The Company has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder, except as enforcement
thereof may be limited by applicable bankruptcy insolvency, reorganization,
moratoriums, fraudulent conveyances, or similar laws generally affecting the
rights of creditors and otherwise subject to general principles of equity. This
Agreement constitutes the valid and legally binding obligation of the Company,
enforceable in accordance with its terms and conditions except as enforcement
thereof may be limited by applicable bankruptcy insolvency, reorganization,
moratoriums, fraudulent conveyances, or similar laws generally affecting the
rights of creditors and otherwise subject to general principles of equity.
Except for the Statement of Merger, the Company need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement. The execution, delivery and performance of this
Agreement and all other agreements contemplated hereby have been duly authorized
by all requisite corporate actions on the part of the Company Board of
Directors, and the Stockholders of the Company will be requested by the Board to
approve this Agreement and authorize the transactions contemplated hereby
subject to §10(c).
 
(c) Non-contravention. Neither the execution and delivery of this Agreement, nor
the consummation of the transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which the Company is subject, any provision of its articles of
incorporation, bylaws, or other governing documents, (B) conflict with, result
in a breach of, constitute a default under, result in the acceleration of,
create in any Person the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which the Company is a party or by which it is bound or to
which any of its assets is subject, excluding the Real Estate Mortgage Loan and
the Company’s existing line of credit, or (C) result in the imposition or
creation of an Encumbrance upon or with respect to the Company Stock.
 
(d) Brokers’ Fees. The Company has no liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
 
 
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(e) The Company Stock. To the knowledge of the Company, each Stockholder holds
of record and owns beneficially the number of shares of the Company Stock set
forth next to his, her, or its name in the Company Disclosure Schedule.
 
(f) No Subsidiaries. The Company currently has no Subsidiaries and no ownership
interest in any corporation, joint venture, trust, partnership, limited
liability company, or any other entity.
 
(g) Qualification. The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. The Company has full corporate power and authority to carry on the
business in which it is engaged and to own and use the properties owned and used
by it. The Company Disclosure Schedule lists all directors and officers of the
Company and all jurisdictions in which it is so authorized.
 
(h) Capitalization. The entire authorized capital stock of the Company consists
of Five Million (5,000,000) shares of common stock, par value $0.01 per share,
and Two Hundred Thousand (200,000) shares of preferred stock, par value $0.01
per share. The following shares of stock are issued and outstanding: Two Hundred
Forty-One Thousand Four Hundred Sixty-Five and Thirty-Three One Hundredths
(241,465.33) shares of common stock and Sixty-Two Thousand Three Hundred
Eighty-Four (62,384) shares of preferred stock. All issued and outstanding the
Company Stock have been duly authorized, are validly issued, fully paid, and
non-assessable, and are held of record by the respective Stockholders as set
forth in the Company Disclosure Schedule. There are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require the
Company to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to the
Company. No shares of the Company Stock have been issued in violation of
preemptive rights or applicable law.
 
(i) Financial Statements. Attached hereto as Exhibit J are the following
financial statements of the Company (collectively the “Financial Statements”):
(i) audited consolidated balance sheets and statements of income, changes in
stockholders’ equity, and cash flow as of and for the fiscal years ended
December 31, 2006 and December 31, 2007; and (ii) unaudited consolidated balance
sheets and statements of income (the “Most Recent Financial Statements”) as of
and for the seven (7) months ended July 31, 2008 (the “Most Recent Fiscal Month
End”). The Financial Statements (including the notes thereto) have been prepared
in accordance with GAAP throughout the periods covered thereby and present
fairly the financial condition of the Company as of such dates, and the results
of operations in the cash flows of the Company for such periods; provided,
however, that the Most Recent Financial Statements have been prepared internally
by the Company and therefore are subject to normal year-end adjustments and lack
footnotes and other related presentation items.
 
(j) Events Subsequent to Most Recent Fiscal Month End. Since the Most Recent
Fiscal Month End, there has not been any Material Adverse Effect on the Company.
Without limiting the generality of the foregoing, since that date the Company
has not engaged in any practice, taken any action, or entered into any
transaction outside the ordinary course of business except as contemplated by
this Agreement. The Company has continued to operate in the ordinary course and
has not incurred any liability outside of the ordinary course of business in
excess of Fifty Thousand Dollars ($50,000) except as contemplated by this
Agreement.
 
 
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(k) Tax Matters.
 
(1) The Company is not in default on the payment of any Tax liability, including
any Tax liability attributable to any member of an affiliated, consolidated,
combined or unitary group of which the Company (or any predecessor) is or was a
member on or prior to the Closing Date, including pursuant to Treasury
Regulation §1.1502-6 or any analogous or similar state, local, or foreign law or
regulation and of any person (other than the Company) imposed on the Company as
a transferee or successor, by contract or pursuant to any law, rule, or
regulation, which Taxes relate to an event or transaction occurring before the
Closing.
 
(2) The Company has: (i) filed all required Tax Returns, (ii) all such Tax
Returns were complete, accurate and timely filed, and (iii) the Company has
fully paid all Taxes shown thereon as owing.
 
(3) The Company Disclosure Schedule lists all Tax Returns filed with respect to
the Company for Taxable Periods ended on or after December 31, 2001, indicates
those Tax Returns that have been audited by any Taxing Authority, and indicates
those Tax Returns that currently are the subject of audit by any Taxing
Authority. The Company has delivered to Buyer correct and complete copies of all
Tax Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Company since December 31, 2001.
 
(4) The Company has not waived any statute of limitations in respect of Taxes or
agreed to any extension of time with respect to a Tax assessment or deficiency.
 
(5) The Company is not a party to any Tax allocation or sharing agreement.
 
(6) The Company has not made or changed any election, changed an annual
accounting period, adopted or changed any accounting method, filed any amended
Tax Return, entered into any closing agreement, settled any Tax claim or
assessment relating to the Company, surrendered any right to claim a refund of
Taxes, consented to any extension or waiver of the limitation period applicable
to any Tax claim or assessment relating to the Company, or taken any other
similar action relating to the filing of any Tax Return or the payment of any
Tax, if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing the Tax
liability of the Company for any current Tax Period or decreasing any Tax
attribute of the Company existing during the current Tax Period.
 
(l) Real Property.
 
(1) The Company Disclosure Schedule sets forth the address and description of
each parcel of Owned Real Property. With respect to each parcel of Owned Real
Property:
 
(i) the Company has good and marketable fee simple title, free and clear of all
Encumbrances, except Permitted Encumbrances;

 
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(ii) the Company has not leased nor otherwise granted to any Person the right to
use or occupy such Owned Real Property or any portion thereof;
 
(iii) there are no violations of the Second Amended and Restated Declarations of
Covenants, Conditions and Restrictions of Southpark dated as of June 26, 1992,
as amended (the “Southpark Covenants”);
 
(iv) the current use of the Real Property is a Permitted Use under the Southpark
Covenants; 
 
(v) there are no outstanding options, rights of first offer or rights of first
refusal to purchase such Owned Real Property or any portion thereof or interest
therein; and
 
(vi) the Real Estate Mortgage Loan is not assumable by Buyer and must be paid
or, if permitted by lender, assumed by the Surviving Corporation after the
Closing Date.
 
(2) The Company Disclosure Schedule sets forth the address of each parcel of
Leased Real Property, and a true and complete list of all Leases for each such
parcel of Leased Real Property. The Company has delivered to Buyer a true and
complete copy of each lease document.
 
(m) Powers of Attorney. To the Knowledge of the Company, there are no
outstanding powers of attorney executed on behalf of the Company.
 
(n) Litigation. The Company Disclosure Schedule sets forth each instance in
which the Company (i) is subject to any outstanding injunction, judgment, order,
decree, ruling, or charge or (ii) is a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
(“Litigation”). There is no Litigation pending or, to the knowledge of the
Company, threatened, against the Company or its assets, or seeking to prevent,
hinder or delay the transactions contemplated by this Agreement. No citations,
fines or penalties have been asserted against the Company under any applicable
law which remain outstanding. There are no outstanding orders, judgments,
decrees or injunctions issued by any governmental authority against the Company.
 
(o) Employee Benefit Plans and Related Matters.
 
(1) The Company Disclosure Schedule sets forth a true and complete list,
separately by plan sponsor of each (i) “employee benefit plan,” as such term is
defined in § 3(3) of ERISA, (ii) all other employee benefit plans, agreements,
consulting, independent contractor, and leased employee agreements; all plans,
agreements, policies or arrangements providing for bonus or other incentive
compensation, equity or equity-based compensation, deferred compensation, change
in control rights or benefits, termination or severance benefits, retention
bonuses or other retention or salary continuation compensation, sick leave,
vacation pay, stock purchase, fringe benefits and perquisites (including without
limitation, club memberships), medical, dental, and hospitalization benefits,
life insurance, short-term and long-term disability benefits, educational
assistance, rabbi trusts, Code § 501(c)(9) trusts, Code § 125 plans, multiple
employer welfare plans or arrangements, and multiemployer welfare plans or
arrangements; and (iii) all other plans, arrangements, policies or practices or
contracts involving direct or indirect compensation or benefits (including any
contracts entered into between the Company and any current or former officer,
director, or employee of the Company), currently or previously maintained,
established or entered into by the Company or to which the Company contributes
or is or has been obligated or required to contribute or with respect to which
the Company has or may have any liability (each, the “Plan”, and, collectively,
the “Plans”).

 
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(2) The Plans have been operated and administered in compliance with all
applicable laws in all material respects and there are no material pending or,
to the Knowledge of the Company, threatened claims by or on behalf of any of the
Plans, by any governmental authority, by any Person or otherwise involving any
such Plan or the assets of any Plan (other than routine claims for benefits).
 
(3) No stock or other security issued by the Company forms or has formed a part
of the assets of any Plan.
 
(4) Subject to Code § 280G(b)(5) and regulations thereunder and subject to
obtaining the Stockholder approval contemplated thereby prior to the Closing, in
connection with the Transaction contemplated by this Agreement, the Company has
not made any payments, is not obligated to make any payments, and is not a party
to any agreement that could obligate the Company to make any payments that will
not be deductible by reason of Code § 280G.
 
(5) To the Knowledge of the Company, each such Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and administered in
accordance with the terms of such Plan and complies in form and in operation in
all respects with the applicable requirements of ERISA and the Code.
 
(6) All contributions (including all employer contributions and employee salary
reduction contributions) that are due have been made to each Plan. All premiums
or other payments that are due have been paid with respect to each Plan.
 
(7) Each Plan that is intended to meet the requirements of a “qualified plan”
under Code §401(a) has received and is covered by a determination letter from
the Internal Revenue Service to the effect that it meets the requirements of
Code §401(a) as of the date of such letter. There are no facts or circumstances
that could adversely affect the qualified status of any such Plan.
 
(8) The Company has never maintained, sponsored or contributed to, and does not
currently maintain, sponsor or contribute to, any employee pension benefit plan
that is a “defined benefit plan” (as defined in ERISA §3(35)).
 
(9) No action, suit, proceeding, hearing, or investigation with respect to the
administration or the investment of the assets of any such employee benefit plan
(other than routine claims for benefits) is pending.

 
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Execution Version
 
(10) To the Knowledge of the Company, there have been no prohibited transactions
with respect to any plan or any employee benefit plan (as such term is defined
in § 3(3) of ERISA) maintained by an ERISA Affiliate. No fiduciary has any
liability for material breach of fiduciary duty or any other material failure to
act or comply in connection with the administration or investment of the assets
of any Plan that would result in any direct or indirect claim against the
Company. No action, suit, proceeding, hearing, or investigation with respect to
any Plan or other claim (other than routine claims for benefits) is pending or,
to the Knowledge of the Company, threatened.
 
(11) Neither the Company nor any ERISA Affiliate maintains, sponsors,
contributes to or has an obligation to contribute to, or has any liability or
potential liability with respect to, any Plan providing health or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, officers, directors or contractors (or any spouse or other dependent
thereof) other than in accordance with COBRA.
 
(12) Neither the Company nor any ERISA Affiliate has ever contributed to a
multiemployer plan; neither the Company nor any ERISA Affiliate has any
liability or potential liability under Title IV of ERISA, including on account
of a “partial withdrawal” or a “complete withdrawal” (within the meaning of §§
4203 and 4205 of ERISA, respectively) from any multiemployer plan; and neither
the Company nor any ERISA Affiliate is bound by any contract or agreement or has
any obligation or liability described in § 4204 of ERISA. No Employee Benefit
Plan is a multiple employer plan (within the meaning of § 3(40) of ERISA or §
413(c) of the Code.)
 
(13) To the Knowledge of the Company the consummation of the Merger will not (i)
accelerate the time of the payment or vesting of, or increase the amount of,
compensation due to the Company employees, (ii) reasonably be expected to result
in any “excess parachute payment” under Code § 280G, or (iii) give rise to any
liability or subject Buyer to any liability for the payment of severance pay,
termination pay or any similar payment pursuant to any Plan or otherwise.
 
(14) The Company has not announced a plan or legally binding commitment to
create any additional employee benefit plans or to amend or modify any existing
Plan except as otherwise required by law.
 
(15) The Company does not have any liability, whether absolute or contingent,
including any obligations under any Plan, with respect to any misclassification
of a person as an independent contractor rather than as an employee.
 
(16) With respect to each Plan, the Company has delivered to Purchaser a
current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent IRS
determination letter; (iii) any summary plan description and other written
communication by the Company to its employees concerning the benefits provided
under the plan; and (iv) for the three most recent years, the Form 5500 and
attached schedules, audited financial statements, actuarial valuation reports
and any attorney’s response to any auditor’s request for information.
 
 
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Execution Version
 
(p) Certain Business Relationships with the Company. None of the Stockholders,
the members of the Company Board of Directors or the Company officers or their
Affiliates has been involved in any material business arrangement or
relationship with the Company within the past twelve (12) months and none of
such individuals and/or their Affiliates owns any material asset, tangible or
intangible, that is used in the business of the Company, other than in their
capacities as employees of the Company. The Company Disclosure Schedule contains
a complete and correct list of all Contracts pursuant to which any loans,
leases, goods, services, materials or supplies are provided (a) by the Company,
on the one hand, to the Stockholders, directors, officers or employees of the
Company or their Affiliates (other than the Company), on the other hand, or (b)
by the Stockholders, directors, officers or employees of the Company or their
Affiliates (other than the Company), on the one hand, to the Company, on the
other hand (each, an “Intracompany Arrangement”), in each case entered into, in
effect, occurring or incurred within the past twenty-four (24) months. None of
the Stockholders, directors, officers or employees of the Company or any of
their respective Affiliates have been involved in any Intracompany Arrangement
within the past twenty-four (24) months. The Company Disclosure Schedule sets
forth all material shared corporate or administrative services that are provided
to the Company by any Stockholder, director, officer or employee of the Company
or any of their respective Affiliates, and any material asset, tangible or
intangible, which is used in the Business but not owned by the Company. Except
as expressly contemplated by this Agreement or any Related Document, no
Intracompany Arrangement shall survive Closing. All amounts due a director, an
officer or an agent have been paid in full prior to the Closing.
 
(q) Absence of Undisclosed Liabilities. Except as specified in the balance sheet
of the Company as of July 31, 2008, and on the Closing Schedule, the Company has
no liabilities or obligations of a nature required to be disclosed on a balance
sheet prepared in accordance with GAAP, except (a) as and to the extent
disclosed, provided for and reserved for in the audited balance sheet of the
Company as of December 31, 2007, included in the Financial Statements (or notes
thereto) and (b) for liabilities and obligations that were incurred after the
date of the balance sheet of the Company as of July 31, 2008 in the ordinary
course of business.
 
(r) Absence of Changes. Except as contemplated by this Agreement, since the date
of the Financial Statements, the Company has not:
 
(1) declared, set aside, made, set a record date for or paid any dividend or
other distribution in respect of its capital stock or otherwise purchased or
redeemed, directly or indirectly, any shares of its capital stock;
 
(2) issued or sold any shares of any class of its capital stock or other
ownership interest, or any securities convertible into or exchangeable for any
such shares or interest, or issued, sold, granted or entered into any
subscription, options, warrants, conversion or other rights, agreements,
commitments, arrangements or understandings of any kind, contingently or
otherwise, to purchase or otherwise acquire any such shares or interest or any
securities convertible into or exchangeable for any such shares or interest;
 
(3) incurred any material obligation or liability except current liabilities for
trade or business obligations incurred in connection with the purchase of goods
or services in the ordinary course of business;

 
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(4) discharged or satisfied any Encumbrance, other than those required to be
discharged or satisfied, or paid any obligation or liability, other than (i)
current liabilities shown on the Balance Sheet, (ii) current liabilities
incurred since the date thereof in the ordinary course of business, (iii)
scheduled payments of principal or interest on any indebtedness for borrowed
money through the Closing Date, and (iv) intracompany liabilities as set forth
on Company Disclosure Schedule;
 
(5) subjected any of its assets to any Encumbrance other than any Permitted
Encumbrances;
 
(6) sold, transferred, leased to others or otherwise disposed of any of its
assets, except in the ordinary course of business or fixed assets having an
aggregate value of less than Fifty Thousand Dollars ($50,000), or canceled or
compromised any debts or claims having an aggregate value in excess of Fifty
Thousand Dollars ($50,000), or waived or released any right of substantial
value, except in the ordinary course of business;
 
(7) received any written notice of termination of any Material Contract as
defined in §3(v) below;
 
(8) suffered any damage, destruction or loss (whether or not covered by
insurance) in excess of Fifty Thousand Dollars ($50,000) to any of its assets;
 
(9) changed in any material respect its Tax or accounting practices, policies or
principles except as required by any applicable law or GAAP except as required
by §5(o);
 
(10) paid, granted or committed to grant any increase in any remuneration or
benefits (including salary, incentive, change in control, retention or severance
compensation) of any current or former director, officer, agent, other employee
of or consultant to the Company outside of the ordinary course of business,
except where such payment or increase is required by any applicable law or any
contractual obligation existing on the date of this Agreement, all of which are
set forth in the Company Disclosure Schedule;
 
(11) made or committed to make any capital expenditures or capital additions or
improvements in excess of an aggregate of Fifty Thousand Dollars ($50,000),
except for capital expenditures or capital additions or improvements made in the
ordinary course of business or contemplated by an approved budget of the
Company;
 
(12) instituted, settled or agreed to settle any Litigation;
 
(13) transferred or granted any material rights or licenses under, or entered
into any settlement regarding the infringement of, its Intellectual Property or
entered into any licensing or similar agreements or arrangements with respect
thereto;
 
(14) made any amendment or changes in its articles of incorporation or bylaws;
 
(15) engaged in any other transactions (i) outside the ordinary course of
business and involving payments to or by the Company in excess of Fifty Thousand
Dollars ($50,000) per annum, or (ii) that bind the Company for a term of more
than one year or involving payments to or by the Company in excess of Fifty
Thousand Dollars ($50,000) per annum (other than any sales by the Company to a
customer to whom the Company has made a sale at any time within the past three
(3) years, in an amount not exceeding the lesser of (A) One Hundred Thousand
Dollars ($100,000) per purchase order, or (B) the maximum amount approved for
extension of credit to such customer by the Company under its credit policy as
in effect on December 31, 2007), in each case except as set forth in the Company
Disclosure Schedule; or

 
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Execution Version
 
(16) made a commitment to take any of the foregoing actions.
 
(s) Government Approvals. The Company Disclosure Schedule sets forth all
governmental approvals used in the Company’s business. All such government
approvals have been duly obtained and are in full force and effect, and the
Company is in compliance with each such governmental approval.
 
(t) Compliance with Laws. Since December 31, 1998, the Company is, and at all
times has been in compliance with all applicable laws in all respects. Prior to
January 1, 1999, the Company at all times has been in compliance with all
material applicable laws in all respects. The Company has not received any
written notice alleging any violation or breach of, or failure to be in
compliance with, any applicable law that has not been cured or waived; the
Company collectively holds all permits applicable to the business required by
applicable laws; and, the Company is in compliance with the terms of such
permits.
 
(u) Title to Assets. The Company has good and marketable title to, a valid
leasehold interest in, or a valid license for, the tangible and intangible
assets it uses regularly in the conduct of its business. The Company has good
and marketable title to all of the material tangible and intangible assets owned
by it, free and clear of any Encumbrances. The Company owns, leases, licenses or
otherwise has the contractual right to use all of the assets used in or
necessary for the conduct of the business as currently conducted.
 
(v) Contracts. The Company Disclosure Schedule sets forth a true and complete
list, and the Company has provided access to Buyer to the complete copies
(including all amendments and extensions thereof) or, if oral, an accurate and
complete description of all material terms, of each of the following to which
the Company is a party or is otherwise bound (each, a “Material Contract”):
 
(1) all loan agreements, indentures, mortgages, notes, installment obligations,
capital leases, or other agreements or instruments relating to indebtedness for
borrowed money (or guarantees thereof);
 
(2) all continuing contracts or commitments for the future purchase, sale or
manufacture of products, materials, supplies, equipment or services, and all
agreements with independent dealers or manufacturer’s representatives, in each
case requiring payment to or from the Company in an amount in excess of Fifty
Thousand Dollars ($50,000) per annum which are not terminable on 60 days’ or
less notice without cost or other liability;
 
(3) all collective bargaining, employment, severance and other agreements
requiring change of control or parachute payments from the Company, or any other
type of contract or understanding between the Company and any of its respective
officers or employees, other than pursuant to the Plans, which is not terminable
by the Company upon 30 days’ or less notice without cost or other liability;

 
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Execution Version
 
(4) all joint venture, partnership or other contracts involving a sharing of
profits, losses, costs or liabilities by the Company with any other Person;
 
(5) all rights to use the intellectual property of a third party, whether
pursuant to a license, sublicense, agreement or otherwise;
 
(6) all government contracts; and
 
(7) all agreements containing covenants that in any way purport to restrict the
business activity of the Company or limit the freedom of the Company to engage
in any line of business or to compete with any Person.
 
The Company is not in default under any Material Contract such that the other
party thereto is legally entitled to modify, cancel, accelerate or terminate
such Material Contract, and to the Knowledge of the Company, no other party to
any Material Contract is in default thereunder such that the Company is legally
entitled to modify, cancel, accelerate or terminate the Material Contract. No
event has occurred which (after notice or lapse of time or both) would become a
breach or default under, or would otherwise permit modification, cancellation,
acceleration or termination of, any Material Contract or would result in the
creation of or right to obtain any Encumbrance upon, or any Person obtaining any
right to acquire, any assets, rights or interests of the Company. Each Material
Contract is in full force and effect and is a valid and binding obligation of
the Company and, to the Knowledge of the Company, the other parties thereto. The
Company has not received notice from any party to a Material Contract that such
party intends either to modify, cancel or terminate a Material Contract.
 
(w) Intellectual Property.
 
(1) The Company owns or has the right to use pursuant to licenses, sublicenses,
agreement, permission or other rights to use all Intellectual Property rights
that are necessary to the conduct of the Business as currently conducted. The
stockholders, directors, officers and employees of the Company have heretofore
transferred to the Company all right, title and interest of such person in and
to the Intellectual Property listed in the Company Disclosure Schedule.
Following the consummation of the transactions contemplated by this Agreement,
each Intellectual Property listed in the Company Disclosure Schedule (except to
the extent, if any, otherwise indicated thereon) will be owned or available for
use by the Company on the same terms and conditions as were applicable
immediately prior to Closing.
 
(2) The Company Disclosure Schedule sets forth a true and complete list of:
 
(i) all material unregistered trademarks used in the Business and owned by the
Company, and all trademark registrations and applications to register trademarks
owned by the Company, including for each such registered trademark,
identification of the owner, the application or registration number, country,
filing or registration date, expiration date, filing class and description of
the mark;

 
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(ii) all service mark registrations and applications to register service marks
owned by the Company, including for each such service mark, identification of
the owner, the application or registration number, country, filing or
registration date, expiration date, filing class and description of the mark;
 
(iii) all copyrights registrations and applications to register copyrights owned
by the Company, including for each such copyright, identification of the owner,
the application or registration number, country, filing or registration date,
expiration date, filing class and description of the copyrighted work;
 
(iv) all patents and patent applications owned or licensed by the Company,
including for each such patent and patent application, identification of the
owner, the application serial number or issue patent number and country; and
 
(v) any other Intellectual Property used in the Business and licensed by the
Company, or licensed or sublicensed by the Company to a third party, including
without limitation, any of the Stockholders, directors, officers, employees of
the Company and their respective Affiliates (and a summary description of the
Intellectual Property subject to such license or sublicense, and the names of
the parties thereto).
 
(3) To the Knowledge of the Company, the Company is not required to pay any
royalty, license fee or similar compensation in connection with the conduct of
the Business as currently conducted.
 
(4) To the Knowledge of the Company, the Company has not infringed upon or
misappropriated any Intellectual Property of third parties in any respect. No
claims have been asserted in writing by any Person alleging that the Company
infringed upon or misappropriated the Intellectual Property of any other Person.
No action, suit, proceeding, complaint, claim or demand is pending, or to the
Knowledge of the Company, threatened, which challenges the legality, validity,
use or ownership of the Intellectual Property listed as owned by the Company in
the Company Disclosure Schedule.
 
(5) To the Knowledge of the Company, no Person is infringing upon or
misappropriating any Intellectual Property of the Company.
 
(6) To the Knowledge of the Company, no material action, suit, proceeding,
assertion, challenge or claim is pending or threatened against a third party
challenging the legality, validity, use or ownership of the same Intellectual
Property licensed or otherwise used in the Business by the Company.
 
(7) No Intellectual Property listed as owned by the Company in the Company
Disclosure Schedule, nor any of the Company’s products or services are subject
to an outstanding injunction, judgment, order, decree, agreement or ruling
restricting the use of the Intellectual Property with respect to the Business of
the Company or restricting the licensing thereof to any Person.

 
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(8) With respect to the Intellectual Property listed in the Company Disclosure
Schedule as resulting from a license, sublicense, agreement, or permission,
except for Permitted Encumbrances, to the Knowledge of the Company each such
license, sublicense, agreement or permission is valid, binding, and in full
force and effect in all material respects; the Company is not in material breach
or default thereunder, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination thereunder; and
the Company has not granted a sublicense or similar right with respect to the
license, sublicense, agreement or permission.
 
(9) All required maintenance fees concerning the material Intellectual Property
have been paid.
 
(x) Real Property Leases. The Company is not a party to any real property
leases, subleases or occupancy agreements pursuant to which the Company is the
lessee, sublessee, licensee or occupant of any real property. Each Lease is in
full force and effect, the Company is not in default of any of its material
obligations under any Lease, and, to the Knowledge of the Company, the lessor is
not in material default thereunder. There is no interest superior to the
Company’s interest in any Lease which would have the right to terminate any
Lease or otherwise affect the Company’s rights under any Lease so long as the
Company is not in default of its obligations under any Lease beyond the
applicable periods of notice and grace. The Company is not required under any
Lease to obtain the consent of any lessor to execute this Agreement and the
Related Documents, or otherwise consummate the transactions contemplated hereby
and thereby.
 
(y) Environmental Matters.
 
(1) To the Knowledge of the Company, the Company is in compliance with the
requirements of all Environmental Laws.
 
(2) To the Knowledge of the Company, the Company has not received any written
notice, report, or other information regarding any actual or alleged violation
of Environmental Laws, or any Environmental Claims.
 
(3) With respect to facilities currently owned, leased or operated by the
Company, to the knowledge of the Company no Release or threatened Release of
Hazardous Materials has occurred in, on or from, and with respect to, any
facilities (each a “Facility” and collectively, the “Facilities”) previously
owned, leased or operated by the Company, no Release or, to the Knowledge of the
Company, threatened Release of Hazardous Materials has occurred in, on or from
the Facility during the period that the Company owned, leased or operated the
facility. The facilities currently owned, leased or operated by the Company are
free of Hazardous Materials as of the date of this Agreement, except for
Hazardous Materials used, stored or present in compliance with applicable
Environmental Laws or in a condition or quantity that would not require
remediation under applicable Environmental Laws.
 
(4) During the time that the Company has owned or leased any Facility, the
Company has not used, generated, manufactured or stored on, under or about such
facilities or transported or arranged for disposal to or from such facilities,
any Hazardous Materials in violation of applicable Environmental Laws.

 
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(5) The Company holds and is in compliance with all Environmental Permits, or
exemptions from Environmental Permits, required for its facilities and
operations.
 
(6) During the time that the Company has owned or leased any Facility, there has
been no litigation brought or, to the Knowledge of the Company, threatened in
writing against the Company by, or any settlement reached by the Company with,
any Person or Persons alleging the presence, disposal, Release or threatened
Release of any Hazardous Materials on from or under such Facility.
 
(7) The Company previously has furnished or made available to Buyer accurate,
true, and complete copies of any and all environmental audits or risk
assessments, site assessments, documentation regarding on-site or off-site
disposal of Hazardous Materials or Release of Hazardous Materials, spill control
plans, and all other material correspondence, documents or communications with
any governmental authority or other entity regarding the foregoing since January
1, 2003, that the Company currently has in its possession, or otherwise exists
to the Knowledge of the Company (in which case, the Company has previously
disclosed the existence of such documents and the identity of the Person
possessing the same, if known).
 
(8) The Company is aware of no requirements under applicable Environmental Laws,
or of any other circumstances, which raise a reasonable concern that the Company
will not be able to continue to operate its business as presently conducted.
 
(z) Employees, Labor Matters, etc. The Company is not a party to or bound by any
collective bargaining agreement, and there are no labor unions, work councils or
other organizations representing or, to the Knowledge of the Company, purporting
or attempting to represent any employee of the Company. No strike, slowdown,
picketing, work stoppage, concerted refusal to work overtime or other similar
labor activity with respect to any current employee of the Company is currently
ongoing or, to the Knowledge of the Company, has been threatened since January
1, 2003. To the Knowledge of the Company, since January 1, 2003, the Company has
complied in all material respects with all applicable provisions of applicable
law pertaining to the employment or termination of employment of any Person,
including, without limitation, all such applicable laws relating to labor
relations, equal employment, fair employment practices, wage and hour, workers
compensation, prohibited discrimination, immigration status, tax information
reporting, employment and withholding taxes or other similar employment
practices or acts. The Company has not ordered any “plant closing” or “mass
layoff” as those terms are defined in the WARN Act.
 
(aa) Insurance. The Company Disclosure Schedule sets forth a true and correct
list of all insurance policies currently maintained by or for the benefit of the
Company, including policies providing property, fire and extended coverage and
casualty, liability and workers’ compensation coverage and bond and surety
agreements, and other forms of insurance, and sets forth the following
information with respect to each such insurance policy:

 
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(1) the name, address and telephone number of the agent who is the contact
person for such policy;
 
(2) the name of the insurer, the name of the policyholder and the name of each
covered insured;
 
(3) the policy number and the period of coverage; and
 
(4) the type and limits of coverage provided under the policy.
 
With respect to each such insurance policy: (i) all policy premiums due to date
have been paid in full and, to the Knowledge of the Company, the policy is
legal, valid binding and enforceable; and in full force and effect in all
material respects; and (ii) none of the Company or its Affiliates and, to the
Knowledge of the Company, no other party to the policy is in material breach or
default (including with respect to the payment of premiums or the giving of
notices) and no event has occurred which, with notice or the passage of time,
would constitute such a material breach or default, or permit termination,
modification, or acceleration, under the policy.
 
(bb) Product and Service Warranties. Set forth in the Company Disclosure
Schedule are copies of the standard forms of warranty offered by the Company to
third parties with respect to each of the products marketed by the Company at
any time since January 1, 2003. All material service or warranty liabilities of
the Company to customers or other Persons are reflected on the Financial
Statements or on the accounting records of the Company as of the Closing Date.
 
(cc) Product Liability. There are no material defects in the design or
manufacture of any of the products sold by the Company. The Company has not
initiated a recall of any of the products sold by them during the last three
years. During the last three years, the Company has not received any written
notice or, to the Knowledge of the Company, any oral or other notice of a claim
against the Company alleging a design or manufacturing defect in the products
sold by the Company.
 
(dd) Inventory. Except for reserves for obsolescence reflected on the Most
Recent Financial Statements or books of account of the Company, the inventory of
the Company (including that reflected on the Financial Statements), taken as a
whole, is in merchantable condition, and suitable and usable or salable in the
ordinary course of business for the purposes for which it was intended, and has
been reflected on the Financial Statements and carried on the books of account
of the Company in accordance with GAAP consistently applied. Without limiting
the generality of the foregoing, such inventory does not include any obsolete
materials or any excess stock items, except as have been reserved against as
reflected on the Financial Statements and for adjustments to be made pursuant to
§5(o). The reserves created by the Company to cover returns have been calculated
and carried on the books of account of the Company in accordance with GAAP
consistently applied.
 
(ee) Receivables and Payables. (i) The accounts and notes receivable reflected
on the Financial Statements or arising since the date of the Balance Sheet
(collectively, the “Receivables”), are bona fide, represent valid obligations to
the Company, and have arisen or were acquired in the ordinary course of business
and in a manner substantially consistent with recent past practice and with the
regular credit practices of the Company; (ii) the Company’s provision for
doubtful accounts reflected on its Financial Statements or reserved on its books
since the date of the Balance Sheet has been determined in accordance with GAAP
consistently applied; (iii) none of the Receivables will at the Closing Date be
subject to any valid defense, counterclaim or setoff; (iv) since the date of the
Balance Sheet, the Company has not canceled, reduced, discounted, credited or
rebated or agreed to cancel, reduce, discount, credit or rebate, in whole or in
part, any Receivables, except in the ordinary course of business consistent with
past practice; and (v) there has not been any material change since the date of
the Balance Sheet in the amounts of Receivables or the allowances with respect
thereto, or accounts payable of the Company, from those reflected in the Balance
Sheet. Upon request by Parent, the Company will make available to Buyer a
schedule of aged Receivables and payables for the Company as of a date which is
within three (3) business days of the date of this Agreement.
 
 
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(ff) No Material Adverse Effect. Since the date of the most recent Balance
Sheet, no change, event, occurrence, condition or development has occurred that,
either individually or in the aggregate with other changes, events, occurrences,
conditions or developments, has had or could reasonably be expected to have a
Material Adverse Effect on the Company.
 
(gg) Suppliers and Customers. The Company Disclosure Schedule sets forth the
five (5) largest suppliers and ten (10) largest customers of the Company, based
on the dollar amount of sales or purchases for each of the three years ended
December 31, 2007. To the Knowledge of the Company, no such supplier or customer
has cancelled or terminated, or provided notice that it intends to cancel or
otherwise terminate its relationship with the Company, or has during the last
twelve (12) months provided written that it will materially decrease or
materially limit, its services, supplies or materials for use by the Company or
its usage or purchase of the services and products of the Company.
 
(hh) Indebtedness. Except for indebtedness for borrowed money set forth in the
Company Disclosure Schedule, the Company has no indebtedness for borrowed money
outstanding. The Company is not in material default with respect to any
agreement or instrument governing the terms of any outstanding indebtedness for
borrowed money. Complete and correct copies, and if oral, accurate and complete
descriptions of the material terms, of all instruments, (including amendments,
waivers and consents) relating to any indebtedness for borrowed money has been
made available to Buyer. As of the Closing Date, the Company will have no
indebtedness for borrowed money outstanding, except the Real Estate Mortgage
Loan, which shall be paid as provided in §6(d).
 
(ii) Government Contracts.
 
(1) With respect to each government contract (whether the Company is a prime
contractor or a direct or indirect subcontractor), since January 1, 2002 (A) the
Company has complied in all material respects with all terms and conditions of
such government contract, including all clauses, provisions, and requirements
incorporated expressly, by reference, or by operation of applicable law therein,
(B) the Company has complied in all material respects with all requirements of
applicable law or agreements pertaining to such government contract, including,
if and to the extent applicable, the Truth in Negotiations Act, the Price
Reductions and Industrial Funding Fee clauses and the Commercial Sales Practices
disclosure requirements of the Company’s General Services Administration
Schedule Solicitation, Proposal and Contract, and each the Company’s Cost
Accounting Standards disclosure statement, if any, (C) all representations and
certifications executed, acknowledged or set forth in or pertaining to such
government contract were complete and correct as of their effective date and the
Company has complied in all material respects with all such representations and
certifications, (D) neither the United States Government nor any non-US
government, state government, local government, prime contractor, subcontractor
or other person has notified the Company in writing that the Company has
breached or violated any applicable law, certification, representation, clause,
provision or requirement pertaining to such government contract, (E) no
termination for convenience, termination for default, cure notice, show cause
notice, or stop work order is currently in effect pertaining to such government
contract, (F) no cost incurred by the Company pertaining to such government
contract has been challenged, is the subject of any audit or investigation or
has been disallowed by any governmental authority, or prime contractor or
subcontractor relating to a government contract and (G) no money due to the
Company pertaining to such government contract has been withheld, reduced or set
off nor has any claim been made to withhold or set off money and, to the
Knowledge of the Company, the Company is entitled to all progress payments
received with respect thereto.

 
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(2) Neither the Company nor any of its directors, officers, employees,
consultants or agents is or since January 1, 2002 has (A) been under
administrative, civil or criminal investigation to the Knowledge of the Company,
indictment or information by any governmental authority or any audit
investigation by any governmental authority with respect to any alleged act or
omission arising under or relating to any government contract or (B) conducted
or initiated any internal investigation, any investigation or made a voluntary
disclosure to any governmental authority with respect to any alleged act or
omission arising under or relating to a government contract.
 
(3) To the Knowledge of the Company, there exist (A) no outstanding claims
against the Company by any governmental authority or by any non-US government,
state or local government, prime contractor, subcontractor, vendor or other
Person, arising under or relating to any government contract and (B) no disputes
between the Company and the United States government under the Contract Disputes
Act or any other federal statute or between the Company and any prime
contractor, subcontractor or vendor arising under or relating to any government
contract. The Company has no direct financial interest in any pending or
potential claim against any governmental authority or any non-US government,
state or local government, prime contractor, subcontractor or vendor arising
under or relating to any government contract.
 
(4) Since January 1, 2002, (A) the Company has not been debarred or suspended
from participation in the award of contracts with the United States Government
or any other governmental authority; (B) to the Knowledge of the Company, there
exist no facts or circumstances that would warrant the institution of suspension
or debarment proceedings or the finding of nonresponsibility or ineligibility on
the part of the Company or any director, officer or employee of such; (C) no
payment has been made by the Company, or, to the knowledge of the Company, any
of its employees, agents, consultants or any other Person acting for, or on
behalf of, the Company in connection with any government contract in violation
of applicable procurement laws or in violation of, or requiring disclosure
pursuant to, the FCPA; provided, however, that representations set forth in
clause (C) shall be applicable to the Company’s agents, and consultants and
other Persons acting for, or on behalf of, the Company solely to the extent that
such actions of such Persons result in the imposition of liability on the
Company or Buyer under FCPA or such other applicable procurement laws; and (D)
all of the Company’s cost accounting and procurement systems and the associated
entries reflected in the Company’s financial statements with respect to the
government contracts are in compliance in all material respects with applicable
law if and to the extent applicable.

 
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Execution Version
 
(5) Since January 1, 2002 (A) all test and inspection results provided by the
Company to any governmental authority pursuant to any government contract or to
any other Person pursuant to a government contract or as a part of the delivery
to any governmental authority or other Person pursuant to a government contract
of any article designed, engineered, manufactured or repaired by the Company
were complete and correct in all material respects as of the date so provided;
and (B) the Company has provided all test and inspection results to the United
States Government or to any other Person pursuant to a government contract as
required by applicable law and the terms of the applicable government contract.
 
(6) The Company is not in possession of any material government-owned property,
including material, tooling and test equipment, provided under, necessary to
perform the obligations under or for which Buyer could be held accountable under
the government contracts, other than any such property that has been returned to
the Company for repair or other service.
 
(7) All of the government contracts were entered into in the ordinary course of
the business and, to the Knowledge of the Company, would be capable of
performance by the Company in accordance with the terms and conditions thereof
without loss if Stockholders had continued to own and operate the Business
without regard to the Transaction contemplated by this Agreement.
 
(jj) Books and Records. The minute books and other corporate records of the
Company, all of which have been made available to Buyer, are complete and
correct. The Company currently maintains an adequate system of internal
controls. At the Closing, all of those books and records will be in the
possession of the Company or will be delivered to Buyer or the Company.
 
(kk) Condition of Assets. The equipment and leasehold improvements owned by the
Company are, taken as a whole, in good operating condition and repair, normal
wear and tear excepted, and are adequate for the uses to which they are being
put. The real property, personal property, intangible property and intellectual
property owned, licensed or leased by the Company are sufficient for the
continued conduct of the businesses of the Company after the Closing in
substantially the same manner as conducted prior to the Closing.
 
(ll) Trade Controls. The Company is not a party to any contract or bid with a
Prohibited Person. Since January 1, 2002, the Company has not, to the Knowledge
of the Company, conducted business with a Person who was, at the time of the
Transaction in question, a Prohibited Person.
 

 
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Execution Version
 
(mm) Ethical Practices. Each of the Company and, to the Knowledge of the
Company, its employees, agents, consultants and each other Person acting for, or
on behalf of, the Company, has complied with the United States Foreign Corrupt
Practices Act (the “FCPA”) and all other applicable laws regarding illegal
payments and gratuities (collectively with the FCPA, the “Improper Payment
Laws”), and has not, directly or indirectly, used funds or other assets, or made
any promise or undertaking in such regard, for any illegal payments to or for
the benefit of any Person or the establishment or maintenance of a secret or
unrecorded fund. Notwithstanding the provisions of the immediately preceding
sentence, the representations set forth in such sentence shall be applicable to
the Company’s employees, agents, and consultants and other Persons acting for,
or on behalf of, the Company solely to the extent that such actions of such
Persons result in the imposition of liability on the Company or Buyer under any
Improper Payment Laws. There have been no false or fictitious entries made in
the books or records of the Company relating to any such illegal payment or
secret or unrecorded fund.
 
(nn) Stockholder Voting Requirements. The Stockholders’ vote in favor of the
adoption of this Agreement, the Related Documents and the transactions
contemplated hereby and thereby is the only vote of the holders of any class or
series of the Company Stock required by applicable law (including, without
limitation, the CBCA) and the Company’s organizational instruments to duly
effect such adoption. All requisite Stockholder votes and approvals under
applicable law have been or shall be obtained prior to the Closing.
 
(oo) SERP. The Unicircuit Nonqualified Supplemental Executive Retirement Plan
and any and all related documents have been terminated and the Company has no
obligation to any Person with respect thereto and no liability or obligation
thereunder.
 
(pp) Disclosure. None of the representations and warranties of the Company
contained in this Agreement or any of the transaction documents to which it is a
party, taken as a whole, contains or will contain any untrue statement of a
material fact, or omits to state any material fact required to be stated or
necessary to make any such information or document, in light of the
circumstances, not misleading.
 
§4. Representations and Warranties of Parent
 
Parent represents and warrants to the Stockholders that the statements contained
in this §4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
§4), except as set forth in Buyer Disclosure Schedule.
 
(a) Organization of Parent and Buyer. Parent is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of the
State of New York. Buyer is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of the State of Colorado.
 
(b) Authorization of Transaction. Each of Parent and Buyer has full power and
authority (including full corporate or other entity power and authority) to
execute and deliver this Agreement and the Related Documents to which it is or
will be a party and to perform its obligations hereunder and thereunder. This
Agreement and the Related Documents to which each of Parent and Buyer is or will
be a party constitute the valid and legally binding obligations of such persons,
enforceable in accordance with their terms and conditions. Each of Parent and
Buyer need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement or the
Related Documents to which Buyer is or will be a party. The execution, delivery
and performance of this Agreement and the Related Document to which each of
Buyer and Parent is or will be a party have been duly authorized by them as
applicable.
 
 
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Execution Version
 
(c) Non-contravention. Neither the execution and delivery of this Agreement or
the Related Documents to which each of Parent and Buyer is or will be a party,
nor the consummation of the transactions contemplated hereby or thereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any provision of its
charter, bylaws, or other governing documents or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any Person the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which Buyer is a party or by which it is bound or to which any of
its assets is subject.
 
(d) Brokers’ Fees. Each of Parent and Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.
 
(e) Disclosure. None of the representations and warranties of Parent contained
in this Agreement or any of the transaction documents to which it is a party,
taken as a whole, contains or will contain any untrue statement of a material
fact, or omits to state any material fact required to be stated or necessary to
make any such information or document, in light of the circumstances, not
misleading.
 
§5. Pre-Closing Covenants
 
The Parties agree as follows with respect to the period between the execution of
this Agreement and the Closing.
 
(a) General. Each of the Parties will use his, her, or its reasonable best
efforts to take all actions and to do all things necessary in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the Closing conditions set forth in
this Agreement).
 
(b) Notices and Consents. The Company will give any requisite notices to third
parties, and the Company will use its commercially reasonable efforts to obtain
any required third party consents. Each of the Parties will give any notices to,
make any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies necessary to
consummate the transactions contemplated by this Agreement and the Related
Documents.
 
 
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(c) Operation of Business. The Company will not engage in any practice, take any
action, or enter into any transaction outside the ordinary course of business
other than as contemplated by this Agreement. Without limiting the generality of
the foregoing, the Company will not cause or permit the Company to (i) declare,
set aside, or pay any dividend or make any distribution with respect to its
capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, (ii) purchase any asset or incur any liability in excess of Fifty
Thousand Dollars ($50,000) without obtaining Buyer’s prior written consent, or
(iii) otherwise engage in any practice, take any action, or enter into any
transaction of the sort described above; provided, however, that the Company may
make distributions to its preferred stockholders as permitted in §2(g)(5) of
this Agreement and may pay employee stockholders as permitted in §2(g)(5) of
this Agreement.
 
(d) Preservation of Business. The Company will keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, insurance policies, and relationships with lessors,
licensors, suppliers, customers, and employees.
 
(e) Full Access. The Company will permit representatives of Buyer and its
professionals to have full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Company, to all
premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to the Company.
 
(f) Notice of Developments. The Company will give prompt written notice to Buyer
of any material adverse development causing a breach of any of the
representations and warranties in §3 above. Each Party will give prompt written
notice to the others of any material adverse development causing a breach of any
of its own representations and warranties in §3 or §4 above. No disclosure by
any Party pursuant to this paragraph, however, shall be deemed to amend or
supplement the Disclosure Schedule or to prevent or cure any misrepresentation,
breach of warranty, or breach of covenant
 
(g) Exclusivity. Subject to the provisions of §10(c) below, neither the Company
nor any of its directors, officers, employees or agents will directly or
indirectly (i) solicit, initiate, or encourage the submission of any proposal or
offer from any Person relating to the acquisition of any capital stock or other
voting securities, or any portion of the assets, of the Company (including any
acquisition structured as a merger, consolidation, or share exchange), other
than in the ordinary course of business or (ii) participate in any discussions
or negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing. The Company shall notify Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact with
respect to any of the foregoing.
 
(h) Maintenance of Real Property. The Company will maintain the Real Property,
including all of the improvements, in substantially the same condition as
existed on the date of this Agreement, ordinary wear and tear excepted, and
shall not demolish or remove any of the existing improvements, or erect new
improvements on the Real Property or any portion thereof, without the prior
written consent of Buyer.
 
 
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Execution Version
 
(i) Leases. The Company will not permit any of the Company’s Leases to be
amended, modified, extended, renewed or terminated, nor shall the Company enter
into any new lease, sublease, license or other agreement for the use or
occupancy of any Real Property, without the prior written consent of Buyer.
 
(j) Title Insurance, Surveys and Certificate of Compliance. The Company will use
its commercially reasonable efforts to assist Buyer in obtaining the Title
Commitments, Title Policies and Surveys in form and substance as set forth in
this Agreement, within the time periods set forth therein, including removing
from title any Encumbrances or encumbrances that are not Permitted Encumbrances.
The Stockholders shall provide the Title Company with any affidavits,
indemnities, memoranda or other assurances requested by the Title Company to
issue the Title Policies. Prior to Closing, the Company will obtain and deliver
to Parent a Certificate of Compliance in accordance with Section 10.7 of the
Southpark Covenants that the Real Property is not in violation of the Southpark
Covenants.
 
(k) The Company’s Stockholders’ Meeting. No less than three (3) business days
after the execution and delivery of this Agreement by all Parties, the Company
shall duly call a meeting of the Stockholders to obtain all necessary
Stockholders’ approvals of this Agreement, including, without limitation, the
plan of merger described herein with such meeting being scheduled for the
earliest time permissible under applicable law and the Company’s By-laws.
Subject to §10(c) of this Agreement, prior to and at the Company Stockholders’
meeting, the Company Board of Directors shall unanimously recommend that the
Stockholders approve this Agreement and the Merger.
 
(l) Employment Agreements. Prior to Closing the Company shall satisfy in full
all current obligations of the Company in employment agreements between the
Company and officers or employees of the Company.
 
(m) Identified Liabilities. Prior to or at the Closing the Company shall either
satisfy or accrue for financial accounting purposes the Identified Liabilities.
 
(n) Line of Credit. Effective as of the Closing, the Company shall terminate all
of its letters of credit.
 
(o) Adjustments. Prior to the Closing the Company shall write off, write down
and/or adjust the items listed on Schedule §5(o) in the manner set forth in
Schedule §5(o) on its books and financial records and for Tax purposes. 
 
(p) Letters of Credit. At or before the Closing the Company shall terminate its
letters of credit.
 
(q) Transaction Expenses. At or before the Closing the Company shall pay all of
the Transaction Expenses by check or wire transfer.
 
(r) Termination of Certain Equity Based Rights and Certain Bonus Participation.
Prior to the Closing the Company shall terminate all outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments, and all related plans, that
could require the Company to issue, sell, or otherwise cause to become
outstanding any of its capital stock. Prior to the Closing the Company shall
terminate all stock appreciation, phantom stock, profit participation, or
similar rights, and all related plans, with respect to the Company, excluding
the Company’s 401(k) retirement Plan. The following individuals’ rights to
participate in any bonus arrangement and/or bonus plan of the Company in
existence immediately prior to the Closing shall be terminated: Kerry Bode,
Lance Riley, Ty Gragg and Anthony Carfanga.
 
 
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§6. Post-Closing Covenants
 
The Parties agree as follows with respect to the period following the Closing.
 
(a) General. In case at any time after the Closing any further actions are
necessary or desirable to carry out the purposes of this Agreement or any of the
Related Documents, each of the Parties will take such further reasonable actions
(including the execution and delivery of such further instruments and documents)
as any other Party may reasonably request, all at the sole cost and expense of
the requesting Party (unless the requesting Party is entitled to indemnification
therefor). The Company acknowledges and agrees that from and after the Closing,
the Surviving Corporation will be entitled to possession of all documents,
books, records (including Tax records), agreements, and financial data of any
sort relating to the Company.
 
(b) Litigation Support. In the event and for so long as any Party actively is
contesting or defending against any action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or any Related Document, (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction, on or prior
to the Closing Date, involving the Company, each of the other Parties shall
cooperate with him, her, or it and his, her, or its counsel in the defense or
contest, make available his, her, or its personnel, and provide such testimony
and access to his, her, or its books and records as shall be reasonably
necessary in connection with the defense or contest, all at the sole cost and
expense of the contesting or defending Party (unless the contesting or defending
Party is entitled to indemnification therefore). The provision of this§6(b)
shall not apply to any litigation where at least one Party hereto is opposing
another Party hereto in any litigation.
 
(c) Transition. The Company shall not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of the Company from maintaining the same
business relationships with the Company after the Closing as it maintained with
the Company prior to the Closing.
 
(d) Satisfaction of Real Estate Mortgage Loan. Immediately following the Closing
or the next business day Parent shall cause the Surviving Corporation to satisfy
the Real Estate Mortgage Loan.
 
(e) No 338 Election. Neither Parent, Buyer nor the Company shall make an
election under Code§ 338 or under take any action resulting in a deemed election
under Code § 338 regarding the Merger.
 
 
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§7. Conditions to Obligation to Close
 
(a) Conditions to Buyer’s Obligation. Each of Buyer’s and Parent’s obligations
to consummate the transactions to be performed by them in connection with the
Closing are subject to satisfaction of all the following conditions:
 
(1) the representations and warranties set forth in §3 above shall be true and
correct in all material respects at and as of the Closing Date, except to the
extent that such representations and warranties are qualified by the term
“material,” or contain terms such as “Material Adverse Effect” or “Material
Adverse Effect on The Company,” in which case such representations and
warranties (as so written, including the term “material” or “Material”) shall be
true and correct in all respects at and as of the Closing Date;
 
(2) The Company shall have performed and complied with all of their covenants
hereunder in all respects through the Closing;
 
(3) The Company shall have procured all requisite third-party consents;
 
(4) no action, suit, or proceeding shall be pending or threatened before (or
that could come before) any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before (or that could come
before) any arbitrator wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or any Related Document, (B) cause
any of the transactions contemplated by this Agreement or any Related Document
to be rescinded following consummation, (C) adversely affect the right of Parent
to own the Company Stock and to control the Company, (D) adversely affect the
right of the Company to own its assets and to operate its business (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect), or
(E) amount to a liability for the Company (including reasonable attorneys’ fees
and expense) in excess of one hundred thousand dollars ($100,000);
 
(5) The Company shall have delivered to Buyer a certificate to the effect that
each of the conditions specified above is satisfied in all respects;
 
(6) Parent and Buyer shall have received from counsel to the Company an opinion
in form and substance as set forth in Exhibit F attached hereto, addressed to
Parent and Buyer and on which Parent and Buyer shall be entitled to rely, and
dated as of the Closing Date;
 
(7) Buyer shall have obtained, no later than ten (10) days prior to the Closing,
a commitment for a 1992 ALTA Owner’s Title Insurance Policy or other form of
policy reasonably acceptable to Buyer for each Owned Real Property (other than
Owned Real Property located outside the U.S.) issued by a title insurance
company satisfactory to Buyer (the “Title Company”), together with a copy of all
documents referenced therein (the “Title Commitments”); 
 
(8) at the Closing, Buyer shall have obtained title insurance policies from the
Title Company (which may be in the form of a mark-up of a pro forma of the Title
Commitments) in accordance with the Title Commitments, insuring each of the
Company’s fee simple title to each Owned Real Property as of the Closing Date
(including all recorded appurtenant easements, insured as separate legal
parcels), with gap coverage from the Company through the date of recording,
subject only to Permitted Encumbrances, in such amount as Buyer determines to be
the value of the Real Property insured thereunder and which shall include the
endorsements identified herein (the “Title Policies”); the Title Policies shall
have the creditor’s rights exception deleted, and shall include the following
endorsements (to the extent available in the applicable jurisdiction, but
regardless of whether any additional amount is charged for such endorsement), in
form and substance reasonably acceptable to Buyer: (i) extended coverage
endorsement (insuring over the general or standard exceptions); (ii) a survey
accuracy endorsement (insuring that the Real Property described therein is the
real property shown on the Survey (as defined below) delivered with respect
thereto and that such Survey is an accurate survey thereof); (iii)
non-imputation endorsement (to the effect that title defects known to the
employees, officers, directors, and stockholders of the Company prior to the
Closing shall not be deemed to be “facts known to the insured”); and (iv) such
other endorsements as reasonably requested by Buyer; and Buyer shall have paid
or committed to pay all fees, costs and expenses with respect to the Title
Commitments and Title Policies prior to Closing;
 
 
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(9) the Company shall have obtained and delivered to Buyer a zoning letter
issued by the governmental agency having jurisdiction over zoning matters,
stating the zone designation of the Real Property, and that such designation is
the correct designation for the current use of the Real Property and that the
Real Property otherwise complies with all zoning and similar laws;
 
(10) the Company shall have obtained and delivered to Buyer an estoppel
certificate with respect to each of the Leases, dated no more than 30 days prior
to the Closing Date, from the other party to such Lease, in form and substance
satisfactory to Buyer;
 
(11) no damage or destruction or other change has occurred with respect to any
of the Real Property or any portion thereof that, individually or in the
aggregate, would materially impair the use or occupancy of the Real Property or
the operation of the Company’s business as currently conducted thereon;
 
(12) no damage or destruction or other change has occurred with respect to any
of the personal property of the Company or any portion thereof that,
individually or in the aggregate, would materially impair the use or occupancy
of the Real Property or the operation of the Company’s business as currently
conducted thereon;
 
(13) each of Kerry Bode, Lance Riley, Ty Gragg and Anthony Carfagna shall have
entered into employment agreements with Buyer substantially in the form and
substance of Exhibits B, C, D and E of this Agreement, and such agreements shall
be in full force and effect as of the Closing;
 
(14) the Company shall have delivered to Buyer copies of the articles of
incorporation of the Company certified on or soon before the Closing Date by the
CO Secretary;
 
(15) the Company shall have delivered to Buyer the certificate of good standing
of the Company issued on or soon before the Closing Date by the Secretary of
State (or comparable officer) of the jurisdiction of each of the States in which
the Company is qualified to do business;

 
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(16) the Company shall have delivered to Buyer a certificate of the Secretary or
an Assistant Secretary of the Company, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, as to: (i) no amendments to the
articles of incorporation of the Company since the July 1, 2008; (ii) the
By-laws of the Company; (iii) the resolutions of the board of directors and
Stockholders of the Company authorizing the execution, delivery, and performance
of this Agreement and the transactions contemplated hereby; (iv) incumbency and
signatures of the officers of the Company executing this Agreement or any other
agreement contemplated by this Agreement, and (v) the required approvals of the
Company’s common Stockholders and preferred Stockholders; and, not more than
five percent (5%) of each of the outstanding common and the outstanding
preferred shares of the Company have exercised rights to dissent to the Merger
under the CBCA;
 
(17) Buyer shall have received the documents specified in §2(m) of this
Agreement;
 
(18) Buyer shall have received a certificate from the Company dated as of the
Closing Date and sworn under penalty of perjury stating that the Company is or
has been at any time during the five (5)-year period ending on the date of
certification a “United States real property holding company” within the meaning
of Code § 897(c)(2); and
 
(19) Buyer has determined, in its sole and reasonable discretion, that the Net
Book Value of the Company as of the Closing Date is within the Net Book Value
Range.
 
Each of Buyer and Parent may waive any condition specified in this Agreement by
executing a writing so stating prior to Closing.
 
(b) Conditions to the Company’s Obligation. The obligation of the Company to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
 
(1) the representations and warranties set forth in §4 above shall be true and
correct in all material respects at and as of the Closing Date;
 
(2) Buyer and Parent shall have performed and complied with all of their
respective covenants hereunder in all material respects through the Closing;
 
(3) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);

 
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Execution Version
 
(4) Parent shall have delivered to the Company a certificate to the effect that
each of the conditions specified above is satisfied in all respects;
 
(5) the Company shall have received from counsel to Parent an opinion in form
and substance as set forth in Exhibit G attached hereto; and
 
(6) Parent shall have delivered to the Company the documents specified in §2(n)
of this Agreement.
 
The Company may waive any condition specified in this Agreement by executing a
writing so stating at or prior to the Closing.
 
§8. Remedies for Breaches of this Agreement
 
(a) Survival of Representations and Warranties. Subject to §8(h), all of the
representations and warranties of the Company and Parent contained in this
Agreement shall survive the Closing hereunder (even if the damaged Party knew or
had reason to know of any misrepresentation or breach of warranty or covenant at
the time of Closing) and continue in full force and effect until the second
(2nd) anniversary of the Closing Date; provided, however, that any claims for
indemnification made prior to the second (2nd) anniversary of the Closing Date
shall continue until finally resolved provided the same become known and
recorded in accordance with GAAP during the escrow period or are identified as
potential indemnifiable liabilities under this Agreement or any Related Document
during the escrow period and Parent has made a good faith estimate of the amount
of such liability within the escrow period and the restriction in §8(b) no
longer applies (or would no longer apply after taking into account such claims).
 
(b) Tipping Basket. Subject to the limitations in §2(j), no Buyer Indemnitee or
Company Indemnitee shall be entitled to indemnification under this §8 unless and
until the aggregate amount of Adverse Consequences for Buyer Indemnitees and
Company Indemnitees, respectively, resulting from, arising out of, relating to
and the nature of, or caused by, a breach of a representation, warranty and/or
covenant exceed one hundred thousand dollars ($100,000) in the aggregate in
which case the Indemnifying Party shall be liable for all Adverse Consequences
Damages relating thereto on a dollar for dollar basis beginning with the first
dollar of Adverse Consequences relating thereto (e.g., if there are $100,001 of
Adverse Consequences, the indemnitee shall be entitled to $100,001 dollars of
indemnification).
 
(c) Indemnification Provisions for Buyer Indemnitees’ Benefit. In the event the
Company breaches any of its representations, warranties, and/or covenants
contained in this Agreement or any Related Documents, and/or under the
provisions in §2(j) of this Agreement, or any of the Company’s representations,
warranties, and covenants contained in this Agreement, any Related Documents,
and/or under the provisions in §2(j) of this Agreement are inaccurate or untrue,
and, provided that Buyer Indemnitee complies with the terms of the Escrow
Agreement, then Buyer, Parent and the Surviving Corporation and their Affiliates
and respective officers, directors, shareholders, employees, attorneys,
accountants and agents (the “Buyer Indemnitees”), subject to §8(b), shall be
entitled to all rights and privileges under the Escrow Agreement, and shall be
indemnified and held harmless out of the Escrow Fund from and against the
entirety of any Adverse Consequences suffered by Buyer Indemnitees resulting
from, arising out of, relating to and the nature of, or caused by, such breach,
inaccuracy or untrue statement.
 
 
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Execution Version
 
(d) Indemnification Provisions for the Stockholders’ Benefit. In the event
Parent or Buyer breaches any of its representations, warranties, and/or
covenants contained this Agreement or any Related Documents, or any of Parent or
Buyer’s representations, warranties, and covenants contained in this Agreement
or any Related Documents are inaccurate or untrue, and, provided that the
Company Indemnitee complies with the terms of the Escrow Agreement, then the
Stockholders and their Affiliates and their respective officers, directors,
shareholders, employees, trustees, attorneys, accountants and agents (the
“Company Indemnitees”), subject to §8(b), shall be entitled to all rights and
privileges under the Escrow Agreement, and the Surviving Corporation shall
indemnify the Company Indemnitees from and against the entirety of any Adverse
Consequences suffered by Company Indemnitees resulting from, arising out of,
relating to and the nature of, or caused by, such breach, inaccuracy or untrue
statement. Notwithstanding anything to the contrary in this Agreement or any
Related Document, the Surviving Corporation’s aggregate indemnification
obligations for a new claim under this Agreement shall not exceed the balance of
Escrow Funds available to indemnify Buyer Indemnitees for new claims against the
Company.
 
(e) Limitations for Adjustment Items. Notwithstanding anything contained in this
§8, §2(j), or elsewhere in this Agreement to the contrary, Buyer Indemnitees
shall be entitled to dollar for dollar indemnification from the Escrow for each
item listed in Schedule §5(o) only to the extent the liabilities, write-offs
and/or reserves for such item are required by applicable law to be increased to
equal more than the amount of such item as set forth on Schedule §5(o)
immediately before the adjustment required by Schedule §5(o) plus one-half (1/2)
of the difference between the amount of such item after the adjustment required
by Section §5(o) and the amount of such item set forth on Schedule §5(o)
immediately before such adjustment; provided, however, that the foregoing
indemnification shall be subject to the Tipping Basket limitations on
indemnification as provided in §8(b).
 
(f) Matters Involving Third Parties.
 
(1) If any third party shall notify any Party (the “Indemnified Party“) with
respect to any matter (a “Third-Party Claim”) which may give rise to a claim for
indemnification against any other Party (the “Indemnifying Party”) under this
§8, then the Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party is thereby prejudiced.
 
(2) Any Indemnifying Party will have the right to defend the Indemnified Party
against the Third-Party Claim with counsel of its choice satisfactory to the
Indemnified Party so long as (A) the Indemnifying Party notifies the Indemnified
Party in writing within fifteen (15) days after the Indemnified Party has given
notice of the Third-Party Claim that the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third-Party Claim, (B) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to defend against
the Third-Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third-Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse judgment
with respect to, the third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or practice
materially adverse to the continuing business interests or the reputation of the
Indemnified Party, and (E) the Indemnifying Party conducts the defense of the
Third-Party Claim actively and diligently; provided, however, if the Adverse
Consequences might exceed the sum of Five Hundred Thousand Dollars ($500,000) as
reasonably estimated in good faith by the Indemnified Party or, in addition, in
the case where Buyer Indemnitees are the Indemnified Party, the balance
remaining in the Escrow Fund, whichever is less, then the Indemnified Party may,
at its option, control the defense of the Third-Party Claim.

 
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Execution Version
 
(3) So long as the Indemnifying Party is conducting the defense of the
Third-Party Claim in accordance with §8(f)(2) above, (A) the Indemnified Party
may retain separate co-counsel at his, her, or its sole cost and expense and
participate in the defense of the Third-Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment on or enter into any settlement
with respect to the Third-Party Claim without the prior written consent of the
Indemnifying Party (not to be unreasonably withheld), and (C) the Indemnifying
Party will not consent to the entry of any judgment on or enter into any
settlement with respect to the Third-Party Claim without the prior written
consent of the Indemnified Party (not to be unreasonably withheld).
 
(4) In the event any of the conditions in this Agreement above is or becomes
unsatisfied, however, (A) the Indemnified Party may defend against, and consent
to the entry of any judgment on or enter into any settlement with respect to,
the Third-Party Claim in any manner the Indemnified Party may deem appropriate
(and the Indemnified Party need not consult with, or obtain any consent from,
any Indemnifying Party in connection therewith), (B) the Indemnifying Parties
will reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third-Party Claim (including reasonable attorneys’ fees
and expenses), and (C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third-Party Claim to the
fullest extent provided in this §8.
 
 
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Execution Version
 
(g) Purchase Price Adjustment. All indemnification payments under this Agreement
to Buyer Indemnitees shall be adjustments to the Merger Consideration and shall
be made as a payment to Buyer Indemnitees from the Escrow Fund in accordance
with the terms of the Escrow Agreement.
 
(h) Other Indemnification Provisions. The indemnification provisions in this
Agreement are in addition to, and not in derogation of, any statutory, equitable
or common law remedy (including without limitation any such remedy arising under
environmental, health, and safety requirements), and/or any remedy for fraud or
intentional misrepresentation any Party may have with respect to any other
Party, or the transactions contemplated by this Agreement and/or any of the
Related Documents, and the limitations set forth in this Agreement shall not
apply thereto. 
 
§9. Tax Matters.
 
The following provisions shall govern the allocation of responsibility as
between Buyer and Stockholders for certain Tax matters following the Closing
Date:
 
(a) Straddle Period. In the case of any Taxable Period that includes (but does
not end on) the Closing Date (a “Straddle Period”), the amount of any Taxes
based on or measured by income or receipts of the Company for the Pre-Closing
Tax Period shall be determined based on an interim closing of the books as of
the close of business on the Closing Date (and for such purpose, the taxable
period of any partnership or other pass-through entity in which the Company
holds a beneficial interest shall be deemed to terminate at such time) and the
amount of other Taxes of the Company for a Straddle Period that relates to the
Pre-Closing Tax Period shall be deemed to be the amount of such Tax for the
entire Taxable Period multiplied by a fraction the numerator of which is the
number of days in the Taxable Period ending on the Closing Date and the
denominator of which is the number of days in such Straddle Period.
 
(b) Responsibility for Filing Tax Returns. The Company shall prepare or cause to
be prepared and file or cause to be filed all Tax Returns for the Company that
are for periods ending on or after the Closing Date and are to be filed after
the Closing Date. The reasonable estimated expenses associated with the
preparation of the foregoing Tax Returns shall be accrued as a liability for
purposes of calculating Net Book Value.
 
(c) Cooperation on Tax Matters.
 
(1) Each Party shall cooperate using its commercially reasonable best efforts,
as and to the extent reasonably requested by the other Party, in connection with
the filing of Tax Returns pursuant to §9(b) and any audit, litigation or other
proceeding with respect to Taxes. Such cooperation shall include the retention
and (upon the other Party’s request) the provision of records and information
that are reasonably relevant to any such audit, litigation or other proceeding
and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. The
Company agrees (A) to retain all books and records with respect to Tax matters
pertinent to the Company relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by Buyer, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other Parties reasonable written notice
prior to transferring, destroying or discarding any such books and records and,
if the other Party so requests, the Company shall allow the other Party to take
possession of such books and records.

 
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Execution Version
 
(2) The Company further agrees, upon request from Buyer, to use its commercially
reasonable best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
 
(3) Buyer and the Company further agree, upon request, to provide the other
Party with all information that either Party may be required to report pursuant
to Code §6043, or Code §6043A, or Treasury Regulations promulgated thereunder.
 
(d) Certain Taxes and Fees. All transfer, documentary, sales, use, stamp,
registration and other such Taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred in
connection with consummation of the transactions contemplated by this Agreement
shall be paid by the Company at or prior to Closing.
 
§10. Termination
 
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
 
(1) Buyer and the Company may terminate this Agreement by mutual written consent
at any time prior to the Closing;
 
(2) Buyer may terminate this Agreement by giving written notice to the Company
and the Stockholders’ Agent (A) at any time prior to the Closing in the event
the Company has breached any material representation, warranty, or covenant
contained in this Agreement, Buyer has notified the Company of the breach, and
the breach has continued without cure for a period of thirty (30) days after the
notice of breach, or (B) if the Closing shall not have occurred on or before
August 29, 2008, by reason of the failure of any condition precedent in this
Agreement (unless the failure results primarily from Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement).
 
(3) The Company may terminate this Agreement by giving written notice to Buyer
(A) at any time prior to the Closing in the event Buyer has breached any
material representation, warranty, or covenant contained in this Agreement, the
Company has notified Buyer of the breach, and the breach has continued without
cure for a period of thirty (30) days after the notice of breach or (B) if the
Closing shall not have occurred on or before August 29, 2008, by reason of the
failure of any condition precedent under this Agreement hereof (unless the
failure results primarily from the Company breaching any representation,
warranty, or covenant contained in this Agreement).

 
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(4) The Company or Buyer may terminate this Agreement if a triggering event
occurs under §10(c) of this Agreement upon the condition that the Company pays
the fee and expenses of Buyer as provided in §10(c).
 
(b) Effect of Termination. Subject to §10(c), if any Party terminates this
Agreement pursuant to §10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach). Notwithstanding the
termination of this Agreement, §10(c)(4) and §11(m) of this Agreement shall
continue in full force and effect for the period of one (1) year immediately
following the date of termination.
 
(c) Fiduciary Duties.
 
(1) Notwithstanding anything to the contrary contained in this Agreement, prior
to the closing or the termination of this Agreement in accordance with its
terms, the Company may, to the extent the Board of Directors of the Company
determines, in good faith, after consultation with outside legal counsel, that
the Board’s fiduciary duties require it to do so, participate in discussions or
negotiations with, furnish non-public information of the Company, (but not
Buyer, Parent or any of their respective affiliates), and afford access to the
properties, books or records of the Company to any Person after such Person has
delivered to the Company in writing, an unsolicited bona fide proposal with
respect to the Company (which has not been withdrawn) which the Board of
Directors of the Company in its good faith judgment determines, after reasonable
inquiry and consultation with its financial advisor (i) would be reasonably
likely to result in a transaction more favorable than that contemplated by this
Agreement to the Stockholders of the Company (which judgment must be
reasonable), and (ii) that the Person making such proposal is financially
capable of consummating such proposal or that the financing necessary to
consummate such proposal, to the extent required, is then committed or is
capable of being obtained by such Person (a “Superior Proposal”). 
 
(2) In the event the Company receives a Superior Proposal, nothing contained in
this Agreement will prevent the Board of Directors of the Company from
recommending such Superior Proposal to the Stockholders of the Company, if the
Board determines, in good faith, after consultation with outside legal counsel,
that such action is required by its fiduciary duties; in such case, the Board of
Directors of the Company may withdraw, modify or refrain from making its
recommendations set forth in the relevant sections in this Agreement; provided,
however, that the Company shall (A) provide Buyer notice of any meeting of the
Board of Directors of the Company at which such Board of Directors is reasonably
expected to consider a Superior Proposal at the same time that notice thereof is
given to the Board of Directors, (B) not recommend to its Stockholders a
Superior Proposal for a period of not less than the greater of two (2) full
business days and forty-eight (48) hours after Buyer’s receipt of a copy of such
Superior Proposal and the identity of the third party, and (C) not enter into a
definitive agreement relating to such Superior Proposal unless Buyer fails to
match the terms of the Superior Proposal within the greater of two full business
days and forty-eight (48) hours after Buyer’s receipt of a copy of such Superior
Proposal and the identity of the third party; and provided, further, that unless
this Agreement is terminated nothing contained in this Agreement shall limit the
Company’s obligation to hold and convene a special meeting of the Stockholders
(regardless of whether the recommendation of the Board of Directors of the
Company shall have been withdrawn, modified or not yet made) to obtain the
approval thereof for the transactions contemplated by this Agreement and the
Related Documents or to provide the Stockholders with material information
relating to such meeting.

 
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(3) Notwithstanding anything to the contrary herein, in the event of a Superior
Proposal, the Company shall not provide any non-public information of the
Company to a third party unless: (x) the Company provides such non-public
information pursuant to a nondisclosure agreement with terms regarding the
protection of oral or written confidential information at least as restrictive
as such terms in the confidentiality agreement heretofore entered into with
Parent; and (y) such non-public information has been previously delivered or
made available to Buyer.
 
(4) In the event this Agreement is terminated because (i) the Company receives
and accepts a Superior Proposal, or (ii) after the receipt of a Superior
Proposal, the Stockholders do not approve this transaction, then, the Company
shall pay in immediately available funds to Buyer, no later than three (3)
business days after the date of the triggering event, a fee equal to Two Hundred
Fifty Thousand Dollars ($250,000), as liquidated damages and not as a penalty,
plus Buyer’s out-of-pocket expenses, including, without limitation, reasonable
attorneys’ fees, incurred in connection with the proposed transaction. 
 
§11. Miscellaneous
 
(a) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of Buyer and
the Company; provided, however, that Parent may make any public disclosure it
believes in good faith is required by applicable law or any listing or trading
agreement concerning Parent’s publicly traded securities (in which case the
disclosing Parent will use its reasonable best efforts to inform the other
Parties prior to making the disclosure).
 
(b) No Third-Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any Person other than the Parties and their respective successors
and permitted assigns.
 
(c) Entire Agreement. This Agreement (including the documents referred to
herein), the nondisclosure agreements effective March 8, 2007, constitute the
entire agreement among the Parties and supersede all prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they relate in any way to the subject matter hereof. In the event of any
conflict between the provisions of this Agreement and the provisions of the
nondisclosure agreements, this Agreement shall prevail.
 
(d) Succession and Assignment. This Agreement shall be binding upon and inure to
the benefit of the Parties named herein and their respective successors and
permitted assigns. No Party may assign or delegate either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of all other Parties; provided, however, that Buyer may (i) assign any
or all of its rights and interests hereunder to one or more of its Affiliates
and (ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder).
 
 
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Execution Version

 
(e) Counterparts. This Agreement may be executed in one or more counterparts
(including by means of facsimile), each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.
 
(f) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
 
(g) Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other
communication hereunder shall be deemed duly given (i) when delivered personally
to the recipient, (ii) one (1) business day after being sent to the recipient by
reputable overnight courier service (charges prepaid), (iii) one (1) business
day after being sent to the recipient by facsimile transmission if completely
sent and received, as evidenced by a transmission or activity report of the
sender’s facsimile machine, or (iv) four (4) business days after being mailed to
the recipient by certified or registered mail, return receipt requested and
postage prepaid, and addressed to the intended recipient as set forth below:

 
If to Stockholders’ Agent:
 
Owen Agency, LLC
438 S. Reed Court
Lakewood, Colorado 80226
Attn: Taylor Owen
Facsimile 303-948-3642
 
Copy to:
 
Jones & Keller, P.C.
1625 Broadway
Denver, CO 80202
Facsimile: 303-573-0769
Attn: Reid A. Godbolt, Esq.

 
 
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If to Parent:
 
Anaren, Inc.
P.O. Box 178
East Syracuse, NY 13057
Facsimile: 315-432-8328 
Attn: David M. Ferrara, General Counsel
Copy to:
 
Bond, Schoeneck & King, PLLC
One Lincoln Center
Syracuse, New York 13202
Facsimile: 315-218-8000
Attn: Courtney Wellar, Esq.
 
If to Buyer:
 
Anaren Acquisition, Inc.
c/o Anaren, Inc.
P.O. Box 178
East Syracuse, NY 13057
Facsimile: 315-432-8328
Attn: David M. Ferrara, General Counsel
 
Copy to:
 
Bond, Schoeneck & King, PLLC
One Lincoln Center
Syracuse, New York 13202
Facsimile: 315-218-8000
Attn: Courtney Wellar, Esq.
 
If to Unicircuit, Inc.:
 
Unicircuit, Inc.
8192 Southpark Lane
Littleton, CO 80120
Facsimile: 303-797-9277
Attn: Mr. Kerry Bode, President
 
Copy to:
 
Jones & Keller, P.C.
1625 Broadway
Denver, CO 80202
Facsimile: 303-573-0769
Attn: Reid A. Godbolt, Esq.

(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Delaware without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Delaware or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Delaware.
 
(i) Specific Performance. The Parties acknowledge and agree that the business of
the Company is unique and recognize and affirm that in the event a Party
breaches this Agreement, money damages would be inadequate and the other Parties
would have no adequate remedy at law, so that each of the non-breaching Parties
shall have the right, in addition to any other rights and remedies existing in
its favor, to enforce their respective rights and the breaching Parties’
obligations hereunder not only by action for damages but also by action for
specific performance, injunctive, and/or other equitable relief.
 
(j) Submission to Jurisdiction. Each of the Parties submits to the jurisdiction
of any state or federal court sitting in Delaware in any action or proceeding
arising out of or relating to this Agreement and agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
court. Each Party also agrees not to bring any action or proceeding arising out
of or relating to this Agreement in any other court. Each of the Parties waives
any defense of inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety, or other security that might be required
of any other Party with respect thereto. Each Party agrees that a final judgment
in any action or proceeding so brought shall be conclusive and may be enforced
by suit on the judgment or in any other manner provided by law or at equity.
 
 
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Execution Version
 
(k) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Parties. 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.
 
(l) Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
 
(m) Expenses. Except as provided in this Agreement, each Party will pay its own
expenses in connection with the transactions contemplated by this Agreement and
the Related Documents.
 
(n) Construction. The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word “including” shall
mean including without limitation. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) that the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
 
(o) Incorporation of Exhibits, Annexes, and Schedules. The exhibits,
certificates, annexes, and schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
 
(p) Time of the Essence. The Parties agree that time is of the essence as to the
Closing and consummating the Merger on and no later than August 29, 2008.
 
 
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Execution Version

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the date first above written.
 

 
ANAREN, INC.
 
         
By:
/s/ Lawrence A. Sala
           
Name:
Lawrence A. Sala
           
Title: 
President and CEO
           
 
ANAREN ACQUISITION, INC.
 
         
By:
/s/ Lawrence A. Sala
           
Name:
Lawrence A. Sala
           
Title: 
President
           
 
OWEN AGENCY, LLC
 
         
By:
/s/ Taylor Owen
           
Name:
Taylor Owen
           
Title: 
Manager
           
 
UNICIRCUIT, INC.
 
         
By:
/s/ Kerry L. Bode
           
Name:
Kerry L. Bode
           
Title: 
President and CEO
 

 
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Execution Version

SCHEDULE §2(e)
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION

Directors:

Lawrence Sala

George Blanton

Kerry Bode

David Ferrara

David Whitaker
 

Officers:

Lawrence Sala
President

   

David Ferrara Secretary

 

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Execution Version

SCHEDULE §5(o)
ADJUSTMENTS

Before the Closing, the Company shall make the following adjustments on it books
and records for both financial accounting purposes and for tax purposes:
 
1.
The reserve for the research and development tax credits shall be increased from
$50,000 to a total reserve of $400,000, the charge upon adoption of FIN 48 is
charged to equity.

 
2.
The tax payable shall be increased from $20,000 to a total reserve of $80,000.

 
3.
An accounts receivable reserve shall be created in a total amount of $60,000.

 
4.
The Company shall increase its inventory excess and obsolete reserve by
$218,000.

 
5.
For Net Book Value purposes, the reserves shall be as follows for the above
numbered items, respectively: 1) $225,000; 2) $50,000; 3) $30,000; and 4)
$109,000.

 

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