Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

BY AND AMONG

 

TIMIOS, INC.,

 

ADOBE TITLE, L.L.C.

 

AND

 

THE MEMBERS OF ADOBE TITLE, L.L.C.

 

September 15, 2013

 

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TABLE OF CONTENTS

 

ARTICLE I  PURCHASE AND SALE OF ASSETS

1

 

 

1.1

PURCHASE AND SALE OF ASSETS

1

1.2

EXCLUDED ASSETS

3

1.3

ASSUMPTION OF LIABILITIES

3

1.4

EXCLUDED LIABILITIES

4

1.5

CLOSING

5

1.6

TRANSFER DOCUMENTS; OTHER CLOSING DELIVERABLES

6

1.7

CONSENT OF THIRD PARTIES

7

1.8

FURTHER ASSURANCES

8

1.9

WITHHOLDING RIGHTS

8

1.10

TRANSFER TAXES

8

 

 

 

ARTICLE II PURCHASE PRICE; CONTINGENT PAYMENTS

8

 

 

2.1

PURCHASE PRICE

8

2.2

CONTINGENT PAYMENTS

8

2.3

RIGHT OF SET-OFF

10

2.4

ALLOCATION OF PURCHASE PRICE

10

 

 

 

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBERS

10

 

 

3.1

ORGANIZATION, GOOD STANDING AND QUALIFICATION

11

3.2

SUBSIDIARIES AND INVESTMENTS

11

3.3

OWNERSHIP OF THE COMPANY

11

3.4

AUTHORIZATION; BINDING OBLIGATION

11

3.5

CONSENTS AND APPROVALS

12

3.6

NO VIOLATION

12

3.7

BUSINESS LICENSES

12

3.8

TITLE TO AND CONDITION OF PROPERTIES; SUFFICIENCY OF ASSETS; OWNERSHIP OF ASSETS

13

3.9

REAL PROPERTY

13

3.10

PERSONAL PROPERTY LEASES

15

3.11

ENVIRONMENTAL MATTERS

15

3.12

FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES

16

3.13

ABSENCE OF CERTAIN EVENTS

17

3.14

LEGAL PROCEEDINGS

18

3.15

COMPLIANCE WITH LAWS

19

3.16

EMPLOYMENT MATTERS

19

3.17

NO BROKERS

21

3.18

TAXES

21

3.19

CONTRACTS

22

3.20

TRANSACTIONS WITH AFFILIATES

24

3.21

INSURANCE

24

3.22

INTELLECTUAL PROPERTY

24

3.23

ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE

27

3.24

ABSENCE OF RESTRICTIONS ON BUSINESS ACTIVITIES

28

3.25

CERTAIN BUSINESS PRACTICES

28

 

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3.26

ANTI-TERRORISM LAWS; TRADING WITH THE ENEMY

28

3.27

BOOKS AND RECORDS

28

3.28

INTERNAL CONTROLS

28

3.29

RELATIONSHIPS WITH CLIENTS AND VENDORS

29

3.30

SOLVENCY

29

3.31

NO BROKERS

29

3.32

DISCLOSURE

30

 

 

 

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

30

 

 

4.1

AUTHORITY; EXECUTION; ENFORCEABILITY

30

4.2

TITLE TO COMPANY MEMBERSHIP INTERESTS

30

4.3

CONSENTS AND APPROVALS

30

4.4

NO VIOLATION

30

4.5

LEGAL PROCEEDINGS

31

4.6

NO BROKERS

31

 

 

 

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER

31

 

 

5.1

ORGANIZATION; GOOD STANDING AND QUALIFICATION

31

5.2

AUTHORIZATION; BINDING OBLIGATION

31

5.3

CONSENTS AND APPROVALS

31

5.4

NO CONFLICT

31

5.5

NO BROKERS

32

5.6

LEGAL PROCEEDINGS

32

 

 

 

ARTICLE VI COVENANTS

32

 

 

6.1

PUBLIC ANNOUNCEMENTS

32

6.2

RETENTION OF AND ACCESS TO BOOKS AND RECORDS

32

6.3

LITIGATION COOPERATION

32

6.4

ASSIGNMENT OF REAL PROPERTY LEASES

33

6.5

TRANSITION MATTERS

33

6.6

ACCOUNTS RECEIVABLE/COLLECTIONS

33

6.7

EMPLOYMENT MATTERS

33

 

 

 

ARTICLE VII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION

35

 

 

7.1

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS

35

7.2

INDEMNIFICATION

35

7.3

LIMITATIONS ON INDEMNIFICATION

36

7.4

INDEMNIFICATION PROCESS

37

7.5

OTHER CLAIMS

38

7.6

FRAUD AND RELATED CLAIMS; CHARACTERIZATION OF PAYMENTS

38

7.7

INSURANCE CLAIMS

39

7.8

DUTY TO MITIGATE

39

 

 

 

ARTICLE VIII MISCELLANEOUS

39

 

 

8.1

ENTIRE AGREEMENT

39

8.2

ASSIGNMENT

39

8.3

AMENDMENT AND WAIVER

39

8.4

EXPENSES

40

8.5

COUNTERPARTS

40

8.6

GOVERNING LAW; VENUE

40

 

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8.7

SPECIFIC PERFORMANCE

40

8.8

INTERPRETATION

40

8.9

SEVERABILITY

41

8.10

NOTICES

41

8.11

REPRESENTATION BY COUNSEL

42

8.12

CONSTRUCTION

42

8.13

WAIVERS

42

8.14

THIRD PARTY BENEFICIARIES

42

8.15

BULK SALES LAW

43

8.16

WAIVER OF JURY TRIAL

43

 

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EXHIBITS AND SCHEDULES

 

EXHIBITS:

 

Exhibit A

Form of Non-Competition Agreement

Exhibit B

Form of Bill of Sale

Exhibit C

Form of Promissory Note

 

SCHEDULES:

 

Schedule I

Index of Defined Terms; Table of Definitions

 

Schedule 1.1a Contracts

Schedule 1.1b Tangible Personal Property revised

Schedule 1.1c Approvals and Orders

Schedule 1.1d Prepaid Expenses etc

Schedule 1.1g Telephone Numbers

Schedule 1.1h Real and Personal Property

Schedule 1.2a Certain Excluded Assets

Schedule 1.2g Excluded Assets

Schedule 1.2hCertainExcludedAssets

Schedule 1.4b Certain Excluded Liabilities

Schedule 3.10 Personal Property Leases

Schedule 3.9 a Schedule of Real Property leases

Schedule 3.11a and bEnvironmental Consideration

Schedule 3.12

Schedule 3.14a Pending Litigation

Schedule 3.14b Prior Litigation

Schedule 3.15 Compliance with Law

Schedule 3.16a Employee Start Date Schedule with Salary

Schedule 3.16b Employee - Outstanding loans and advances

Schedule 3.16 e Employee Benefit Plans

Schedule 3.18

Schedule 3.19 Contracts Reference

Schedule 3.1b Licensed

Schedule 3.21 - Insurance

Schedule 3.22a Intellectual Property

Schedule 3.22b Licensed Intellectual Property

Schedule 3.22d Intellectual Properties Inventions

Schedule 3.22h Software

Schedule 3.22i Open Source Software

Schedule 3.22k Databases2

Schedule 3.23 b AP

Schedule 3.23a AR

Schedule 3.29a List of clients with more than 10k in revenue

Schedule 3.29b list all vendors

Schedule 3.31 Brokers

Schedule 4.6 Brokers

 

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ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of September 15,
2013, is made by and among Timios, Inc., a Delaware corporation (“Buyer”), Adobe
Title, L.L.C., a Texas limited liability company (the “Company”), and Hudson
Henley and Geoff Henley (each, individually a “Member” and collectively the
“Members”).

 

WHEREAS, the Company is engaged in the business of providing title insurance and
escrow services (the “Business”);

 

WHEREAS, subject to the terms and conditions set forth in this Agreement, the
Company wishes to sell, assign and transfer to the Buyer, and the Buyer wishes
to purchase from the Company, all of the assets and properties owned, used or
held for use by the Company, and the Buyer is willing to assume from the Company
certain Liabilities;

 

WHEREAS, the Members own all of the issued and outstanding membership interests
in the Company, which consists of two (2) units of the Company;

 

WHEREAS, as a condition and material inducement to the Buyer entering into this
Agreement, concurrently with the execution and delivery of this Agreement, each
of the Company and the Members is entering into a non-competition,
non-solicitation and confidentiality agreement with the Buyer in substantially
the form attached hereto as Exhibit A (each, a “Non-Competition Agreement”); and

 

WHEREAS, capitalized terms used and not otherwise defined herein shall have the
meanings set forth in Schedule I attached hereto.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:

 

ARTICLE I

 

PURCHASE AND SALE OF ASSETS

 

1.1                         Purchase and Sale of Assets.  At the Closing, on the
terms and subject to the conditions set forth in this Agreement, the Company
shall sell, assign, transfer and deliver to the Buyer, and relinquish to the
Buyer (together with its successors and assigns) in perpetuity, free and clear
of all Liens, all right, title and interest in and to all of the Acquired
Assets.  As used in this Agreement, the term “Acquired Assets” means all of the
assets, properties, rights, interests and goodwill of the Company of every kind
and nature whatsoever, whether real, personal or mixed, tangible or intangible,
wherever located, owned, used or held for use by the Company, including the
following, but excluding the Excluded Assets:

 

(a)                                 all sales Contracts pursuant to which the
Seller has agreed to provide services to customers and (ii) all other Contracts
listed on Schedule 1.1(a) attached hereto (collectively, the “Assigned
Contracts”);

 

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(b)                                 all tangible personal property of the
Company, including, all equipment, machinery, tools, molds, furniture, fixtures,
office equipment, computers, communications equipment, supplies, spare and
replacement parts and other physical assets of the Company (including the
tangible personal property listed on Schedule 1.1(b) attached hereto);

 

(c)                                  all rights of the Company, to the extent
transferable, under all Approvals and Orders relating to the operation of the
Business, including those listed on Schedule 1.1(c) attached hereto;

 

(d)                                 all rights of the Company with respect to
all credits, refunds, prepaid expenses, deferred charges, advance payments,
security deposits and prepaid items, including those listed on Schedule
1.1(d) attached hereto;

 

(e)                                  all accounts receivable, notes
receivable, Indebtedness, and other rights to payment payable or otherwise owed
to the Company (collectively, the “Accounts Receivable”);

 

(f)                                   all books, records, information, files,
manuals, databases and other materials maintained by or on behalf of the Company
in any medium (including, where available, digital media), including all
customer, vendor and mailing lists and databases, advertising materials, files
and correspondence, market research studies and surveys, operating data and
plans, production data, technical documentation (design specifications,
functional requirements, operating instructions, logic manuals, flow
charts, etc.), user documentation (installation guides, user manuals, training
materials, release notes, working papers, etc.), equipment repair, maintenance
and service records, sales and promotional materials and records, purchasing and
billing records, research and development files, data, intellectual property
disclosures, media materials, accounting files and records, sales order files,
personnel records and all lists of and all rights in and to the information
contained therein (collectively, the “Books and Records”);

 

(g)                                  all telephone numbers, facsimile numbers,
websites (including the content thereof), e-mail addresses and Internet domain
names, including those listed on Schedule 1.1(g) attached hereto;

 

(h)                                 all real and personal property interests and
rights hereunder (including leasehold interests, licenses, and occupancy rights,
collocation rights, easements, servitudes and access to rights-of-way) relating
to real or personal property, including the real and personal property listed on
Schedule 1.1(h) attached hereto;

 

(i)                                     all claims, demands, causes of action,
rights of recovery, rights of set-off, rights of recoupment, guarantees,
warranties, indemnities and similar rights of the Company and all rights to
proceeds under insurance policies and indemnity agreements, except to the extent
related to the Excluded Assets;

 

(j)                                    all improvements and fixtures to the real
property leased by the Company; and

 

(k)                                 all goodwill of the Company.

 

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1.2                         Excluded Assets.  Notwithstanding anything to the
contrary in Section 1.1 above, the following assets and property of the Company
are to be retained by the Company and shall not constitute Acquired Assets
(collectively, the “Excluded Assets”):

 

(a)                                 all Contracts to which the Company is a
party or by which the Company or any of its assets or properties are bound,
other than the Assigned Contracts (the “Excluded Contracts”);

 

(b)                                 all rights of the Company under this
Agreement and the Related Agreements;

 

(c)                                  all minute books and equity records of the
Company;

 

(d)                                 subject to the provisions of Section 1.1(i),
all insurance policies of the Company;

 

(e)                                  all personnel records of all Company
Employees other than Transferred Employees and all medical records and other
medical information of Transferred Employees that the Company is prohibited by
Law from transferring to the Buyer;

 

(f)                                   all Employee Benefit Plans of the Company
and all assets related thereto;

 

(g)                                  those assets specifically set forth in
Schedule 1.2(g) attached hereto;

 

(h)                                 all Company Intellectual Property, and all
goodwill associated therewith, licenses and sublicenses granted in respect
thereto and rights thereunder, together with all claims against third parties
for profits and all costs, losses, claims, liabilities, fines, penalties,
damages and expenses (including interest which may be imposed in connection
therewith), court costs and reasonable fees and disbursements of counsel,
consultants and expert witnesses incurred by reason of the past infringement,
alleged infringement, unauthorized use or disclosure or alleged unauthorized use
or disclosure of any Company Intellectual Property, together with the right to
sue for, and collect the same, or to sue for injunctive relief, for the Buyer’s
own use and benefit, and for the use and benefit of its successors, assigns or
other legal representatives; and

 

(i)                                     all claims, demands, causes of action,
rights of recovery, rights of set-off, rights of recoupment, guarantees,
warranties, indemnities and similar rights of the Company all rights to proceeds
under insurance policies and indemnity agreements relating to (i) claims by the
Company against third parties for tortious interference, defamation, conversion,
conspiracy, conversion or other business disparagement that arose on or about
April 2, 2013; and (ii) against any third party for the violation of any civil
or constitutional right.

 

1.3                         Assumption of Liabilities.  Upon the terms and
subject to the conditions set forth in this Agreement, at the Closing, the Buyer
shall assume from the Company only the liabilities and obligations relating to
contractual obligations of the Company arising after the Closing under any of
the Assigned Contracts to the extent that the Company’s rights thereunder are
actually (with consent where required) assigned to the Buyer; provided, that,
the Buyer shall not assume, and does not hereby agree to pay, discharge or
perform, (i) any Damages relating in any manner to or arising from any breach or
default of the Company of any Assigned Contract occurring on or prior to the
Closing Date regardless of whether the Company discloses such breach or default
pursuant to this Agreement, or (ii) any Liability to indemnify any Person under
such Assigned Contract arising from or relating to any act or omission occurring
prior to the Closing (the “Assumed Liabilities”).

 

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1.4                         Excluded Liabilities.  Except as expressly assumed
pursuant to Section 1.3, the Buyer is not assuming and shall not have any
liability or obligation whatsoever for any Liabilities of the Company or any of
its predecessors or Affiliates whatsoever, whether or not arising out of the
ownership or operation of the Business or the Acquired Assets, all of which will
be retained and satisfied when due by the Company (the “Excluded Liabilities”). 
Without limiting the generality of the foregoing, the Buyer shall not assume or
be deemed to assume any of the following Liabilities, all of which shall
constitute Excluded Liabilities:

 

(a)                                 any Liabilities arising under or relating to
any written or oral Contract to which the Company or its assets or properties
are otherwise subject or bound, other than Liabilities arising under the
Assigned Contracts to the extent provided in Section 1.3(a);

 

(b)                                 any Liabilities of the Company or any of its
predecessors or Affiliates in respect of any Indebtedness, trade payables,
accrued expenses or Company Transaction Expenses, except to the extent provided
in Section 1.3(b);

 

(c)                                  any Liabilities of the Company or any of
its predecessors or Affiliates to any Affiliate or current or former member,
option holder or holder of other equity interests of the Company or any of its
predecessors or Affiliates;

 

(d)                                 any Liabilities of the Company or any of its
predecessors or Affiliates for or in respect of Taxes, including any sales Taxes
or Taxes resulting from or relating to the consummation of the transactions
contemplated hereby (including any Taxes that may become due as a result of any
bulk sales or similar tax that may be assessed against the Company following the
Closing);

 

(e)                                  any Liabilities of the Company to any
present or former manager, member, officer, employee, consultant or independent
contractor of the Company or any of its predecessors or Affiliates, or any of
their respective spouses, children, other dependents or beneficiaries, including
any and all Liabilities arising under any federal, state, local or foreign Laws
or Orders (including those relating to employee health and safety);

 

(f)                                   any Liabilities of the Company or any of
its predecessors or Affiliates for any Actions against the Company or any of its
predecessors or Affiliates, including any Actions pending or threatened against
the Company or any of its predecessors or Affiliates as of the Closing Date;

 

(g)                                  any Liabilities of the Company or any of
its predecessors or Affiliates arising out of or resulting from and violation of
or non-compliance with any federal, state, local or foreign Laws or Orders;

 

(h)                                 any Liabilities of the Company or any of its
predecessors or Affiliates arising out of, relating to or resulting from any
obligation to indemnify any Person (other than pursuant to an Assigned Contract
to the extent assumed pursuant to Section 1.3(a));

 

(i)                                     any Liabilities of the Company arising
under this Agreement or any of the Related Agreements;

 

(j)                                    any Liabilities resulting from or
relating to products sold or services performed by the Company or any of its
predecessors or Affiliates, including any warranty Liabilities;

 

(k)                                 any Liabilities relating to, based in whole
or in substantial part on events or conditions occurring or existing in
connection with, or arising out of, the shutdown prior to the Closing of any of
the operations and facilities utilized by the Company in connection with the
Business, including any action prior to the Closing that could be construed as a
“plant closing” or “mass layoff,” as those terms are defined in WARN, or any
“employment loss,” as defined in

 

4

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WARN, that any Company Employee may suffer or may be deemed to suffer prior to
the Closing;

 

(l)                                     any Liabilities of the Company or any of
its predecessors or Affiliates based upon such Person’s acts or omissions
occurring after the Closing;

 

(m)                             any Liabilities arising under or with respect to
any Employee Benefit Plan or any benefit, tax or compensation Liability of any
ERISA Affiliate;

 

(n)                                 any Liabilities of the Company arising in
connection with or in any way relating to any property now or previously owned,
leased or operated by the Company, its predecessors or Affiliates, or any
activities or operations occurring or conducted at any real property now or
previously owned, operated or leased by the Company, its predecessors or
Affiliates (including offsite disposal), including any Liabilities which arise
under or relate to any Environmental Laws;

 

(o)                                 any other Liabilities attributable in any
manner to the Excluded Assets; and

 

(p)                                 any Liabilities set forth on Schedule
1.4(p) attached hereto.

 

The disclosure of any obligation or Liability on any schedule to this Agreement
shall not create an Assumed Liability or other Liability of the Buyer, except
where such disclosed obligation has been expressly assumed by the Buyer as an
Assumed Liability in accordance with provisions of Section 1.3 hereof.

 

1.5                         Closing.  The closing of the transactions
contemplated by this Agreement (the “Closing”) will take place remotely via the
exchange of documents and signatures commencing at 10:00 a.m. simultaneously
with the execution of this Agreement on the date of this Agreement (the “Closing
Date”).  The consummation of the transactions contemplated by this Agreement
shall be deemed to occur at 12:01 a.m. on the Closing Date.

 

1.6                         Transfer Documents; Other Closing Deliverables.  At
the Closing, the parties shall execute and deliver, or cause to be executed and
delivered, the following:

 

(a)                                 the Company and the Buyer shall execute and
deliver to one another a bill of sale, assignment and assumption agreement in
substantially the form of Exhibit B attached hereto (the “Bill of Sale”)
pursuant to which the Company will transfer and assign to the Buyer the Acquired
Assets and the Buyer will assume from the Company the Assumed Liabilities;

 

(b)                                 all third party consents, and all other
Approvals from any Persons or Governmental Authorities that, in the reasonable
discretion of the Buyer, are necessary or desirable for the consummation of the
transactions contemplated hereby and by the Related Agreements, on the terms,
and conferring upon the Buyer all of the rights and benefits, as contemplated
herein and therein, shall have been received in form and substance reasonably
satisfactory to the Buyer;

 

(c)                                  all loans or advances made to Company
Employees or the Members shall be repaid to the Company in full prior to the
Closing;

 

(d)                                 all Company Indebtedness shall be paid in
full or otherwise discharged prior to the Closing and all Liens shall have been
discharged to the satisfaction of the Buyer or, at the Buyer’s sole discretion,
satisfied by the Buyer’s right to set-off pursuant to Section 2.3;

 

(e)                                  any accrued vacation and bonus liability
with respect to the Transferred Employees shall be paid in full prior to the
Closing;

 

5

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(f)                                   the Company shall have delivered to the
Buyer a certificate of the Company’s Secretary, dated as of the Closing Date, in
form and substance reasonably satisfactory to the Buyer, certifying as to and
attaching (if applicable): (i) complete and accurate copies of the
Organizational Documents of the Company, (ii) the incumbency of the officers
executing this Agreement and (iii) complete and accurate copies of resolutions
of the Board of Managers and Members authorizing and approving the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby, and the acts of the managers and officers of the Company in carrying out
the terms and provisions hereof and thereof;

 

(g)                                  each of the Company and the Members shall
execute and deliver to the Buyer the Non-Competition Agreement;

 

(h)                                 the Company shall have delivered to the
Buyer a certificate of legal existence and good standing from the Secretary of
State of its jurisdiction of organization and any jurisdiction where the Company
is qualified to do business, which certificates shall be dated no more than five
(5) Business Days prior to the Closing Date;

 

(i)                                     the Company shall have delivered to the
Buyer a certificate of non-foreign status that complies with Treasury Regulation
Section 1.1445-2(b); and

 

(j)                                    the Company and the Members shall have
delivered to the Buyer such other instruments, certificates, documents or
materials as may be reasonably requested by the Buyer in connection with the
consummation of the transactions contemplated hereby.

 

1.7                         Consent of Third Parties.

 

(a)                                 Notwithstanding anything in this Agreement
or in any Related Agreement to the contrary, neither this Agreement nor any such
Related Agreement shall constitute an agreement to assign or otherwise transfer,
or require the Buyer to assume any obligations under, any Assigned Contract if
an attempted assignment or transfer thereof would, without the consent of a
third party to such assignment or transfer, constitute a breach thereof, would
be ineffective, would affect adversely the rights of the Buyer thereunder or
would violate any applicable law.  If any such consent has not been obtained as
of the Closing Date and the Buyer nevertheless determines to proceed with the
Closing, the Buyer may waive the closing condition that such consent be
delivered at the Closing, and the Company shall use its best efforts to obtain
such consent following the Closing, and the Buyer will provide reasonable
cooperation to the Company in seeking to obtain any such consent.  The Company
shall pay and discharge any and all out-of-pocket costs or expenses of seeking
to obtain or obtaining any such consent or approval whether before or after the
Closing Date.

 

(b)                                 If any Assigned Contract is not transferred
to the Buyer at the Closing pursuant to this Agreement, the Company shall
cooperate with the Buyer in any reasonable arrangement designed to provide for
the Buyer all of the benefits of, and to have the Buyer assume the burdens,
liabilities, obligations and expenses expressly assumed by the Buyer hereunder
with respect to, such Assigned Contract.  In such event, until such consent has
been obtained, (i) the Buyer shall use commercially reasonable efforts to
perform in the Company’s name, and, in respect of the incremental costs incurred
by the Buyer in performing in the

 

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Company’s name, at the Company’s expense, all of the Company’s obligations with
respect to each Assigned Contract; provided, however, that the Company shall not
be required to take any action in performing such obligations which, in the
Buyer’s reasonable judgment, would subject the Buyer to any Liability or an
unreasonable risk of incurring any such Liability and (ii) the Company shall
take all actions reasonably requested by the Buyer to enforce for the benefit of
the Buyer any and all rights of the Company with respect to any such Assigned
Contract.

 

(c)                                  The Company hereby authorizes the Buyer to
perform all of its obligations after the Closing with respect to all Assigned
Contracts that are not assigned to the Buyer at the Closing and the Company
hereby grants to the Buyer a power of attorney to act in the name of the Company
with respect thereto.  Such power of attorney shall be coupled with an interest
and shall be irrevocable.  The Company agrees to remit promptly to the Buyer all
collections or payments received by the Company in respect of all such Assigned
Contracts, and shall hold all such collections or payments in trust for the
benefit of, and promptly pay the same over to, the Buyer; provided, however,
that nothing herein shall create or provide any rights or benefits in or to
third parties.

 

(d)                                 Nothing in this Section 1.7 shall be deemed
to modify in any respect any of the Company’s representations or warranties set
forth herein or be deemed to constitute an agreement to exclude from the
Acquired Assets any assets described under Section 1.1.

 

1.8                         Further Assurances.  At any time and from time to
time after the Closing, at the request of the Buyer and without further
consideration, the Company will, and the Members will cause the Company to,
execute and deliver such other instruments of sale, transfer, conveyance,
assignment and confirmation, and will take such further action, as may be
reasonably requested in order to more effectively transfer, convey and assign to
the Buyer, and to confirm the Buyer’s title in and to, the Acquired Assets, and
each of the parties shall execute such other documents and take such further
action as may be reasonably required or desirable to carry out the provisions of
this Agreement and the transactions contemplated hereby.

 

1.9                         Withholding Rights.  The Buyer shall be entitled to
deduct and withhold from any amounts otherwise payable pursuant to this
Agreement such amounts as are required to be deducted and withheld with respect
to the making of such payments under the provisions of any applicable Tax Laws. 
Any such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Person in respect of which such deduction and
withholding was made.

 

1.10                  Transfer Taxes.  All sales (including bulk sales),
transfer and similar Taxes, if any, payable in connection with the transactions
contemplated hereby shall be paid, jointly and severally, by the Company and the
Members.

 

ARTICLE II

 

PURCHASE PRICE; CONTINGENT PAYMENTS

 

2.1                         Purchase Price.  The aggregate purchase price (the
“Purchase Price”) payable for the Acquired Assets shall be the aggregate of
(i) Five Hundred Thousand Dollars ($500,000) (the “Base Purchase Price”), plus
(ii) any Contingent Payment Amount that becomes payable pursuant to Section 2.2,
as may be adjusted pursuant to Section 2.3.  The Base Purchase Price shall be
payable as follows: (1) two equal installments of One Hundred Thousand Dollars

 

7

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($100,000) each, payable by wire transfer of immediately available funds to a
United States bank account designated by the Company to the Buyer in writing,
the first installment to be paid at the Closing and the second installment to be
paid on November 30, 2013 (together, the “Cash Consideration”); and (2) a
promissory note, in substantially the form of Exhibit C (the “Promissory Note”),
in the aggregate principal amount of Three Hundred Thousand Dollars ($300,000),
plus interest at an annual rate of Eight Percent (8%) compounded annually,
payable in one lump sum (subject to the Buyer’s voluntary pre-payments) to the
order of the Company, at any time prior to the payment of the last Contingent
Payment Amount, if any, relating to the last Measurement Period.

 

2.2                         Contingent Payments.

 

(a)                                 The Company shall be eligible to earn up to
an aggregate of Three Million Five Hundred Thousand Dollars ($3,500,000) (a
“Maximum Contingent Payment Amount”) in contingent payments equal to Seven and
One-Quarter Percent (7.25%) of the Gross Revenue during each Measurement Period,
on the terms and conditions set forth in this Section 2.2 (any amount earned
pursuant to this Section 2.2, a “Contingent Payment Amount”).

 

(b)                                 Within fifteen (15) days following the end
of each seventeen (17) Measurement Period; commencing as of March 1, 2014, the
Buyer, in good faith, shall calculate the Gross Revenue for such Measurement
Period and shall deliver to the Seller a certificate setting forth such
calculation in reasonable detail, which calculation shall be final and binding
on all parties unless the Seller objects to such calculation as set forth in
Section 2.2(e) below.  Subject to the provisions of Section 7.2(b), within ten
(10) days following the final determination of the Gross Revenue for such
Measurement Period, Buyer shall pay to the Company an amount equal to Seven and
One-Quarter Percent (7.25%) of the Gross Revenue for such Measurement Period;
provided, however, that the maximum aggregate payments to which the Seller shall
be entitled to hereunder shall not exceed the Maximum Contingent Payment Amount.

 

(c)                                  Upon payment of the aggregate Contingent
Payment Amounts in the amount of the Maximum Contingent Payment Amount (whether
such payments are paid to the Company or set-off pursuant to the provisions of
Section 7.2(b)), the respective rights and obligations of the Company and the
Buyer pursuant to this Section 2.2 shall terminate.

 

(d)                                 With respect to Section 2.2(b), the Buyer
shall, upon the reasonable request of the Company, provide the Company with
reasonable evidence substantiating such calculations; provided, however, that
the Company shall hold all such information in strict confidence and shall not
use any such information for any purpose whatsoever other than to verify the
calculation of Gross Revenue.

 

(e)                                  If the Company objects to the calculation
of the Gross Revenue pertaining to any Contingent Payment, all undisputed
amounts shall be paid to Company as they become due and payable.  The parties
shall then work together in good faith to resolve any disputes concerning the
calculation of the Contingent Payments with the Buyer providing an accounting to
Company within 15 days of any written objection.  The Buyer and Company may, at
each party’s own expense, retain any third parties to assist in resolving the
dispute.

 

(f)                                   For purposes hereof, the term “Gross
Revenue” shall mean the aggregate dollar amount of revenues from all offices,
personnel, referral sources and other derivative business generated by the
Acquired Assets (including credits, discounts, refunds, rebates and returns)
recognized by the Business during a Measurement Period, calculated in accordance
with GAAP and the Buyer’s accounting principles.

 

8

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2.3                         Right of Set-Off.  In addition to any other rights
or remedies set forth herein, any amounts payable to the Company pursuant to
this Agreement is subject to set-off for any amounts payable by the Company to
any Buyer Indemnified Person pursuant to the terms of this Agreement.  This
right of set-off shall apply the Buyer’s obligation to pay any Contingent
Payment Amount.

 

2.4                         Allocation of Purchase Price.  The Purchase Price
shall be allocated among the Acquired Assets as proposed by the Buyer in good
faith, in accordance with Section 1060 of the Code and the Treasury Regulations
thereunder, and shall be as set forth in a schedule produced by the Buyer and
delivered to the Company within the later to occur of one hundred twenty (120)
days following the Closing Date and thirty (30) days following the determination
of the Final Working Capital (the “Allocation Schedule”).  The parties shall,
and shall cause their respective Affiliates to, use the allocations set forth in
the Allocation Schedule (as reasonably adjusted to account for events occurring
after the determination of the Allocation Schedule) for all Tax purposes, file
all Tax Returns in a manner consistent with such Allocation Schedule (as
adjusted) and take no tax position contrary thereto unless required to do so by
a change in applicable Laws or a good faith resolution of a Tax contest.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE MEMBERS

 

Except as disclosed by the Company in the disclosure schedule, dated as of the
date of this Agreement and attached hereto (the “Disclosure Schedule”), the
Company and the Members, jointly and severally, hereby represent and warrant to
the Buyer as of the date hereof as follows.  The Disclosure Schedule shall be
arranged in sections corresponding to the numbered and lettered sections and
subsections contained in this Article III, and the disclosures in any section or
subsection of the Disclosure Schedule shall qualify only the corresponding
section or subsection of this Article III.

 

3.1                         Organization, Good Standing and Qualification.

 

(a)                                 The Company is duly organized and validly
existing and in good standing under the Laws of the State of Texas.

 

(b)                                 The Company is duly qualified or licensed as
a foreign limited liability company to do business and is in corporate and tax
good standing under the Laws of each jurisdiction where the character of the
Acquired Assets or the nature of the Business makes such qualification or
licensing necessary, other than in those jurisdictions where the failure to be
so qualified would not have a Company Material Adverse Effect.  The Company has
all requisite power and authority, and is in possession of all Approvals
necessary, to own, lease and operate the Acquired Assets and to carry on the
Business as it is now being conducted and as currently proposed to be
conducted.  Set forth in Section 3.1(b) of the Disclosure Schedule is a list of
(i) the jurisdictions in which the Company is qualified or licensed to transact
business, (ii) every

 

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county, state or foreign jurisdiction in which the Company has employees or
facilities and (iii) the managers and officers of the Company.

 

(c)                                  The Company has delivered to the Buyer true
and complete copies of the Company’s Organizational Documents, as amended (if
applicable) and in effect as of the date hereof.

 

3.2                         Subsidiaries and Investments.  The Company has not
had, nor does it currently have, any Subsidiaries, nor has it ever owned, nor
does it currently own, any capital stock or other proprietary interest, directly
or indirectly, in any other Person.

 

3.3                         Ownership of the Company.  The outstanding
membership interest of the Company consist of two (2) units and are owned
beneficially and of record by the Members, and no other Person has at any time
held any membership or other equity interests of the Company.  Except as
represented in the preceding sentence, there are no outstanding membership or
other equity interests of the Company or any options, warrants, calls, rights,
agreements, arrangements or undertakings of any kind (contingent or otherwise)
obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, any membership or other equity interests or any other
securities of the Company.

 

3.4                         Authorization; Binding Obligation.  The Company has
all necessary power and authority to execute and deliver this Agreement, each
Related Agreement to which it is a party and each other instrument or document
required to be executed and delivered by it pursuant to this Agreement or any
such Related Agreement, and to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby.  The
execution and delivery by the Company of this Agreement and the Related
Agreement to which it is a party, the performance of its obligations hereunder
and thereunder and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly authorized by all
requisite action on the part of the Company and no other proceedings on the part
of the Company are necessary to authorize this Agreement or any Related
Agreement to which it is a party or to consummate the transactions so
contemplated herein and therein.  This Agreement has been, and each of the
Related Agreements to which the Company is a party, when executed and delivered
by the Company, will be, duly and validly executed and delivered by the Company
and constitute a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of
general application affecting enforcement of creditors’ rights generally and
(ii) as limited by Laws relating to the availability of specific performance,
injunctive relief or other equitable remedies (together, the “Enforceability
Exceptions”).

 

3.5                         Consents and Approvals.  The execution and delivery
by the Company of this Agreement, the Related Agreements to which the Company is
a party or any other instrument or document required by this Agreement or any
Related Agreement to be executed and delivered by the Company do not, and the
performance of this Agreement, the Related Agreements to which the Company is a
party and any other instrument or document required by this Agreement or any
Related Agreement to be executed and delivered by the Company shall not, require
the Company to obtain any Approval of any Person or Approval of, observe any
waiting period imposed by, or make any filing with or notification to, any
Governmental Authority.

 

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3.6                         No Violation.  The execution and delivery by the
Company of this Agreement, the Related Agreements to which the Company is a
party or any other instrument or document required by this Agreement or any
Related Agreement to be executed by the Company do not, and the performance of
this Agreement, the Related Agreements to which the Company is a party or any
other instrument or document required by this Agreement or any Related Agreement
to be executed and delivered by the Company will not, (a) conflict with or
violate the Organizational Documents of the Company, (b) conflict with or
violate any Law or Order applicable to the Company, or (c) result in any breach
or violation of or constitute a material default (or an event that with notice
or lapse of time or both would become a breach, violation or default) under, or
impair the Company’s rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the Acquired Assets pursuant to, any Assigned Contract or any other material
Contract to which the Company is a party or is otherwise bound, or any Approval
to which the Company is a party or by which the Company or any of its properties
are bound or affected.

 

3.7                         Business Licenses.  Section 3.7 of the Disclosure
Schedule contains a true and complete list of all Approvals and Orders which are
necessary for the ownership or operation of the Acquired Assets or the Business,
or that have been issued, granted or otherwise made available to the Company
(the “Business Licenses”).  Each Business License is valid and in full force and
effect, no Business License is subject to any Lien, limitation, restriction,
probation or other qualification and there is no default under any Business
License or, to the Knowledge of Company, any basis for the assertion of any
default thereunder.  Section 3.7 of the Disclosure Schedule specifies the holder
of each Business License.  There is no Action pending or, to the Knowledge of
the Company, threatened that could result in the termination, revocation,
limitation, suspension, restriction or impairment of any Business License or the
imposition of any fine, penalty or other sanctions for violation of any legal or
regulatory requirements relating to any Business License or, to the Knowledge of
the Company, any basis therefor.  The Company has, and has had at all relevant
times, all Approvals that are or were necessary in order to enable the Company
to own and operate the Acquired Assets and to conduct the Business.  None of the
Business Licenses shall be affected by the consummation of the transactions
contemplated hereby.  All Business Licenses are validly held by the Company and
the Company has complied and is in compliance with the terms and conditions of
each Business License held by it.  Other than as set forth in Section 3.7 of the
Disclosure Schedule, the Company has not received notice of any Action, and no
such Action is pending, relating to the cancellation, suspension, revocation,
modification or non-renewal of any Business License.

 

3.8                         Title to and Condition of Properties; Sufficiency of
Assets; Ownership of Assets.

 

(a)                                 The Company is the sole and exclusive legal
and equitable owner of all right, title and interest in, and has good, valid and
marketable title to, all of the Acquired Assets purported to be owned by the
Company, and the legal and valid right to use all other Acquired Assets used or
held for use by the Company, free and clear of all Liens. The Company has the
power and the right to sell, assign and transfer, the Company will sell and
deliver to the Buyer, and upon consummation of the transactions contemplated by
this Agreement the Buyer will acquire, good, valid and marketable title to all
of the Acquired Assets purported to be owned by

 

11

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the Company and the valid, enforceable and sufficient right to use all of the
Acquired Assets, free and clear of all Liens.

 

(b)                                 All tangible assets included in the Acquired
Assets have been maintained in accordance with normal industry practice and are
in good operating condition and repair, subject to ordinary wear and tear, and
there has not been any interruption of the operations of the Business due to the
condition of any such assets or properties.  The Acquired Assets comprise all
assets, properties, rights and Contracts used in connection with the operation
of the Business, which are all of the assets, properties, rights and Contracts
necessary for the operation of the Business by the Buyer following the Closing
in the manner in which the Business is currently conducted and is contemplated
to be conducted.  No other Person, including the Members or any Affiliate of the
Company or the Members, owns or has the right to use any of the assets or
property used in connection with the operation of the Business.

 

3.9                         Real Property.

 

(a)                                 The Company does not own and has never owned
any real property.  Section 3.9(a) of the Disclosure Schedule sets forth a
complete and accurate list of: (i) all real property that is leased by the
Company (the “Leased Real Property”) and (ii) all leases and subleases to which
the Company is a party or is otherwise bound pursuant to which the Company
leases or subleases real property (the “Real Property Leases”).  All Real
Property Leases are in full force and effect and are the legal, valid and
binding obligations of the Company and, to the Knowledge of the Company, of each
other party thereto enforceable in accordance with their respective terms, and
the Company has neither given or received a notice of default with respect to
the Real Property Leases and neither the Company nor, to the Knowledge of the
Company, the other party or parties thereto is or are in breach or default
thereunder and there exists no event, condition or occurrence which (with or
without due notice or lapse of time, or both) would constitute such a breach,
default or alleged breach or default by the Company or, to the Knowledge of the
Company, the other party or parties thereto of any of the foregoing.  No consent
of, or notice to, any third party is required under any Real Property Lease as a
result of or in connection with, and the enforceability of any such Real
Property Lease will not be affected by, the execution, delivery and performance
of this Agreement or any Related Agreement, or the transactions contemplated
hereby or thereby.  The Company has delivered to the Buyer true and complete
copies of all Real Property Leases, including all amendments thereto.

 

(b)                                 The Company holds all Leased Real Property
free and clear of all Liens, claims or rights of any third parties, and the
possession of the Leased Real Property (collectively, the “Premises”) by the
Company has not been disturbed and no claim has been asserted against the
Company adverse to its rights in such Premises.  All improvements, fixtures and
structures on the Premises, and the current uses of the Premises, conform to all
applicable Laws, including building, zoning, health, safety and other Laws, and
applicable zoning Laws permit the presently existing improvements and the
conduct and continuation of the Business as being conducted on the Premises. 
All improvements, mechanical equipment, fixtures and operating systems included
in the Premises are in good operating condition and repair (ordinary wear and
tear excepted) and there does not exist any condition which materially
interferes with the use of such property and improvements.  If any Leased Real
Property subject to a Real Property Lease were surrendered to the landlord
thereunder in its present condition, such Leased Real property would be required
to be accepted by the landlord in such condition pursuant to the terms of the
applicable Real Property Lease.

 

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(c)                                  The Company has not granted any leases or
licenses, nor created any tenancies, affecting the Premises.  There are no other
parties in possession of any portion of the Premises as trespassers or
otherwise.

 

(d)                                 The Company is not a party to or is not
otherwise bound by, nor is any of the Premises subject to, any Contract
requiring it to pay any commissions or other compensation to any brokers or
agents in connection with any of the Premises, and has had no dealings with any
broker or agent with respect to the Premises upon which any such broker or agent
would be entitled to a commission or other compensation.

 

(e)                                  To the Knowledge of the Company, (i) there
are no Laws or Orders now in existence or, to the Knowledge of the Company,
under active consideration by any Governmental Authority which would require the
tenant of any Leased Real Property to make any expenditure in excess of $10,000
to modify or improve such Leased Real Property to bring it into compliance
therewith and (ii) the Company is not required to expend more than $10,000 in
the aggregate under all Real Property Leases to restore the Leased Real Property
at the end of the term of the Real Property Leases to the condition required
under the Real Property Leases (assuming the conditions existing in such Leased
Real Property as of the date hereof)

 

(f)                                   No party under a Real Property Lease or
any other party has any right to purchase or lease, or holds any right of first
offer or refusal to purchase or lease the Leased Real Property.

 

(g)                                  The Company has not received any written
notice of, and is not aware of any pending or threatened condemnation action,
any proposed change proceeding to change or redefine the zoning classification
of all or any portion of the Leased Real Property.

 

(h)                                 There is no proposed or pending imposition
of any special or other assessments affecting any portion of the Leased Real
Property.

 

(i)                                     There is no free rent, rent abatement,
construction credits or other tenant concession, inducement or incentive
applicable to any portion of the Leased Real Property, except as set forth on
Section 3.9(a) of the Disclosure Schedule.

 

(j)                                    There are no letters of credits or cash
security deposits held by any landlord under any of the Real Property Leases,
except as set forth on Section 3.9(a) of the Disclosure Schedule.  No security
deposits are subject to any liens or have been pledged or encumbered in any
way.  No rents or other payments due under any Real Property Lease have been
paid in advance of the dates specified in the corresponding Real Property Lease.

 

3.10                  Personal Property Leases.  Section 3.10 of the Disclosure
Schedule sets forth a complete and accurate list of all personal property that
is leased by the Company (the “Leased Personal Property” and, the leases
covering the Leased Personal Property, collectively, the “Personal Property
Leases”).  The Company is the owner and holder of the leasehold interests
purported to be granted by each Personal Property Lease, and all Personal
Property Leases are in full force and effect in accordance with the terms
thereof and are the legal, valid and binding obligations of the Company and, to
the Knowledge of the Company, of each other party thereto enforceable in
accordance with their respective terms, and neither the Company nor, to the
Knowledge of the Company, the other party or parties thereto is or are in breach
or default thereunder and there exists no event, condition or occurrence which
(with or without due notice or lapse of time, or both) would constitute such a
breach, default or alleged breach or default by the Company or, to the Knowledge
of the Company, the other party or parties thereto of any of the foregoing.  No
consent of, or notice to, any third party is required under any Personal
Property Lease as a result of or in connection with, and the enforceability of
any such Personal

 

13

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Property Lease will not be affected by, the execution, delivery and performance
of this Agreement or any Related Agreement, or the transactions contemplated
hereby or thereby.  The Company has delivered to the Buyer complete and accurate
copies of all Personal Property Leases, including all amendments thereto.

 

3.11                  Environmental Matters.

 

(a)                                 The Company has complied and is in
compliance with all Environmental Laws, which compliance includes the possession
by the Company of all Approvals required under Environmental Laws and compliance
with the terms and conditions thereof.  Section 3.11(a) of the Disclosure
Schedule includes a list of all of the Approvals required under Environmental
Laws necessary to own and operate the Acquired Assets or the Business as
currently conducted and contemplated to be conducted.  There are no past or
present facts, circumstances, conditions, activities or incidents, including
release of any Materials of Environmental Concern at any facilities owned or
operated by the Company or any of its Affiliates, which could give rise to any
Liability or result in a claim against the Company or the Buyer under any
Environmental Law.  There have been no releases by the Company or any of its
predecessors or Affiliates of any Materials of Environmental Concern into the
environment at any real property or facility formerly or currently owned or
operated by the Company or any of its predecessors or Affiliates that is or was
ever used by the Company or any of its predecessors or Affiliates.  The Company
does not have Knowledge of any release by any other Person of any Materials of
Environmental Concern into the environment at any parcel of real property or any
facility formerly or currently operated or occupied by the Company that is or
was ever used by the Company or any of its predecessors or Affiliates.  There is
no Action pending or, to the Knowledge of the Company, threatened or other
notice of violation, formal administrative proceeding or written information
request by any Governmental Authority, nor has the Company received notice of
any investigation by any Governmental Authority relating to any Environmental
Law nor any other notice from a Governmental Authority or any other Person
alleging that the Company is not in compliance with any Environmental Law or
Approval required under any Environmental Law or has any Liability under any
Environmental Law or for the remediation of any Materials of Environmental
Concern at any property.

 

(b)                                 Set forth in Section 3.11(b) of the
Disclosure Schedule is a complete and accurate list of all environmental
reports, investigations or audits (whether in hard copy or electronic form)
relating to premises currently or previously owned, operated or occupied by the
Company or any of its predecessors or Affiliates (whether conducted by or on
behalf of the Company or any of its predecessors or Affiliates or a third party,
and whether done at the initiative of the Company or a predecessor or an
Affiliate or directed by a Governmental Authority or other third party) of which
the Company is aware.  A complete and accurate copy of each such document has
been provided to the Buyer.

 

3.12                  Financial Statements; No Undisclosed Liabilities.

 

(a)                                 Section 3.12 of the Disclosure Schedule
contains the following financial statements (collectively, the “Financial
Statements”):

 

(i)                                     the unaudited balance sheet of the
Company as of August 31, 2013 (the “Interim Balance Sheet”) and the related
statements of income, cash flow and members’ equity for the eight-month period
then ended (the “Interim Financial Statements”); and

 

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(ii)                                  the unaudited balance sheets of the
Company as of December 31, 2012 and December 31, 2011, and the related
statements of income, members’ equity and cash flows for the respective twelve
(12) month periods then ended.

 

(b)                                 Except as disclosed on Section 3.12 of the
Disclosure Schedule, the Financial Statements were prepared in accordance with
the books and records of the Company, are complete and correct and fairly and
accurately present the financial condition of the Company as of the dates
indicated and the results of operations of the Company for the respective
periods indicated, and have been prepared in accordance with GAAP, consistently
applied, except, in the case of the Interim Financial Statements, for the
absence of complete footnote disclosure as required by GAAP and subject to
changes resulting from normal, recurring period-end audit adjustments, which
adjustments shall not be material.  The Financial Statements reflect the
consistent application of GAAP throughout the periods involved.

 

(c)                                  Except as and to the extent the amounts are
specifically accrued or disclosed in the Interim Balance Sheet, the Company does
not have any Liabilities, whether or not required by GAAP to be reflected in the
Interim Balance Sheet, except for Liabilities that were incurred in the ordinary
course of business consistent with past practice since the date of the Interim
Balance Sheet.

 

(d)                                 As of the Closing, the Company will pay off
all Indebtedness and will not have any outstanding Indebtedness.

 

3.13                  Absence of Certain Events.  Since December 31, 2012, the
Company has conducted the Business only in the ordinary and usual course and in
a manner consistent with past practice and there has not been any change, event,
loss, development, damage or circumstance affecting the Acquired Assets or the
Business which, individually or in the aggregate, has had or could reasonably be
expected to have a Company Material Adverse Effect (a “Company Material Adverse
Change”).  As amplification and not in limitation of the foregoing, since
December 31, 2012, the Company has not:

 

(a)                                 incurred any material decrease in the value
of any of the Acquired Assets;

 

(b)                                 suffered any loss to its property or asset
used in connection with or related to the operation of the Business, or incurred
any liability, damage, award or judgment for injury to the property or business
of others or for injury to any person (in each case, whether or not covered by
insurance) in excess of $5,000 in any one case or $10,000 in the aggregate;

 

(c)                                  made any capital expenditure or commitment
in excess of $5,000 or series of capital expenditures or commitments in excess
of $10,000 in the aggregate;

 

(d)                                 made any assignment, termination,
modification or amendment of any Contract to which the Company was or is a party
or which otherwise related to the Business, or any account receivable relating
thereto, whether as a security interest or otherwise;

 

(e)                                  made any change in the rate of
compensation, commission, bonus or other direct or indirect remuneration payable
or to become payable to any Company Employee, or agreed to pay any bonus or
extra compensation or other employee benefit to any Company Employee;

 

(f)                                   paid, discharged or satisfied, in any
amount in excess of $5,000 in any one case, or $10,000 in the aggregate, any
Liability arising from the operation of the Business, other than payments made
in the ordinary course of business of Liabilities reflected or reserved against
in the Interim Balance Sheet or Liabilities incurred since that date in the
ordinary course of business consistent with past practice;

 

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(g)                                  made any change in the accounting
principles adopted by the Company, or any change in the Company’s accounting
policies, procedures, practices or methods with respect to applying such
principles, other than as required by GAAP;

 

(h)                                 sold, assigned, leased or transferred any
assets (tangible or intangible) or properties, other than sales of inventory in
the ordinary course of business;

 

(i)                                     amended its Organizational Documents;

 

(j)                                    made any Tax election, changed any annual
Tax accounting period, amended any Tax Return, settled any income Tax Liability,
entered into any closing agreement, settled any Tax claim or assessment,
surrendered any right to claim a Tax refund or consented to any extension or
waiver of the limitations period applicable to any Tax claim or assessment;

 

(k)                                 acquired or agreed to acquire by merging or
consolidating with, or by purchasing a substantial portion of the capital stock
or assets of, or by any other manner, any business or any corporation,
partnership, limited liability entity, joint venture, association or other
business organization;

 

(l)                                     terminated the employment (or other form
of engagement) or expressed any intention to terminate the employment (or other
engagement) of any employee of the Company;

 

(m)                             incurred, assumed or created any Indebtedness or
guaranteed any Indebtedness of any other Person, or made, incurred, assumed,
created or guaranteed any loan or made any advance or capital contribution to or
investment in any Person;

 

(n)                                 cancelled or forfeited any debts or claims,
waived or released any rights or claims of material value to the Company or
settled any Action;

 

(o)                                 granted any license or sublicense of any
rights under or with respect to, or sold, transferred or permitted to lapse, any
Intellectual Property;

 

(p)                                 entered into, terminated or received notice
of termination of (1) any distributorship, sales or service representative,
credit, or similar agreement to which the Company is a party, or (2) any
Contract or transaction, other than purchase orders in the ordinary course of
business, involving a total remaining commitment by or to the Company of at
least $50,000;

 

(q)                                 suffered a loss of (1) a client which has
purchased at least $100,000 of products or services from the Company, or (2) a
vendor which has supplied at least $100,000 of products or services to the
Company;

 

(r)                                    wrote-off any accounts receivable of the
Company or any portion thereof in excess of $5,000 individually or $10,000 in
the aggregate, or any sale, assignment or disposition of any account receivable;

 

(s)                                   made any material change in the manner in
which the Company extends or receives discounts or credit from customers or
suppliers; or

 

(t)                                    entered into any agreement,
understanding, authorization or proposal, whether in writing or otherwise, for
the Company to take any of the actions specified in this Section 3.13.

 

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3.14                  Legal Proceedings.

 

(a)                                 Except as set forth in Schedule 3.14(a),
there is no Action pending or, to the Knowledge of the Company, threatened
against the Company or any of its officers or managers (in their capacities as
such), and the Company has not received any claim, complaint, incident, report,
threat or notice of any such Action and, to the Knowledge of the Company, there
is no basis therefor.  There is no Action pending or threatened against any
other Person by the Company.

 

(b)                                 Section 3.14(b) of the Disclosure Schedule
sets forth all Actions that (i) involved the Company at any time during the past
three (3) years and (ii) are no longer pending (the “Prior Actions”).  All of
the Prior Actions have been concluded in their entirety and the Company does not
have and will not have any Liability with respect to the Prior Actions.  The
Company has provided to the Buyer all formal written communications relating to
any Prior Actions between the Company and a Governmental Authority and any
Orders related thereto.

 

(c)                                  There are no outstanding Orders against or
involving or affecting the Company, the Business or the Acquired Assets, and the
Company is not in default with respect to any such Order of which it has
Knowledge or served upon it.

 

(d)                                 The Company has not received any
communication or advice from legal counsel to the effect that it is exposed,
from a legal standpoint, to any Liability relating to the ownership or operation
of the Acquired Assets or the Business.

 

3.15                  Compliance with Laws.  The Company has complied and is in
compliance with all Laws applicable to it, the Acquired Assets and the Company’s
ownership, use or operation thereof, and to the operation of the Business. 
Except as set forth on Disclosure Schedule 3.15, the Company has not received
any notice to the effect, or otherwise been advised, that it is not in
compliance with any such Laws, and the Company has no reason to anticipate that
any existing circumstances are likely to result in an Action for a violation of
any such Law.  No investigation or review by any Governmental Authority with
respect to the Company or the Business, or, to the Knowledge of the Company, the
Company’s sales agents or other representatives is pending or, to the Knowledge
of the Company, threatened, nor has any Governmental Authority indicated an
intention to conduct the same.

 

3.16                  Employment Matters.

 

(a)                                 Section 3.16(a) of the Disclosure Schedule
sets forth a complete and accurate list of all current Company Employees as of
the date hereof and each such Company Employee’s (i) base rate of pay or annual
compensation (including actual or potential bonus payments and the terms of any
commission payments or programs), (ii) title(s), (iii) leave status, including
expected return to work date, (iv) classification as exempt or non-exempt, and
(v) location of employment or engagement.  Section 3.16(a) of the Disclosure
Schedule sets forth all employment, consulting, independent contractor,
severance pay, continuation pay, termination or indemnification Contracts
between the Company and any current or former Company Employee or under which
the Company may have any Liability (each, an “Employee Agreement”).

 

(b)                                 The Company is not and, as of the Closing
Date, will not be delinquent in payments to any Company Employee for any wages,
salaries, commissions, bonuses, benefits or other compensation for any services
performed by them to date or through the Closing Date.  Section 3.16(d) of the
Disclosure Schedule sets forth a list of all outstanding loans or advances to
Company Employees.

 

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(c)                                  Neither the Company nor, to the Knowledge
of the Company, any Company Employee, is in violation of any term of any
employment, consulting, independent contractor, non-disclosure, non-competition,
inventions assignment or any other Contract (or any other legal obligation such
as a trade secrets statute or common law duty of loyalty) relating to the
relationship of such Company Employee with the Company or any other Person or
has been notified that such Company Employee may be in violation of any such
Contract or other legal obligation.

 

(d)                                 The Company is not, and has never been,
party to any collective bargaining Contract or other Contract with any labor
unions or other representatives of the Company Employees nor is it under any
obligation to bargain with any bargaining agent on behalf of any Company
Employees.  To the Knowledge of the Company, there have not been any
organization campaigns, petitions or other unionization activities seeking
recognition of a collective bargaining unit which could affect the Business.

 

(e)                                  Section 3.16(e) of the Disclosure Schedule
sets forth a complete and accurate list of each Employee Benefit Plan under
which current or former Company Employees (or their beneficiaries) are eligible
to participate or derive a benefit or for which the Acquired Assets may be
subject to any Liability.  Neither the Company nor any ERISA Affiliate has any
plan or commitment to establish any new Employee Benefit Plan, to modify any
Employee Benefit Plan (except to the extent required by Law or to conform any
such Employee Benefit Plan to the requirements of any applicable Law, in each
case as previously disclosed to the Buyer in writing, or as required by this
Agreement), or to adopt or enter into any Employee Benefit Plan.  Neither the
Company nor any ERISA Affiliate has ever maintained, established, sponsored,
participated in, contributed to, or otherwise incurred any obligation or
liability (including contingent liability) under any “multiemployer plan” (as
defined in Section 3(37) of ERISA) or an arrangement subject to
Section 501(c)(9), 419 or 419A of the Code, or a “pension plan” (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the Code,
a self insured plan providing medical benefits or a plan providing for medical
or life insurance coverage beyond termination of employment (other than COBRA
coverage or under similar state Laws).  Neither the Company nor any ERISA
Affiliate has at any time ever maintained, established, sponsored, participated
in or contributed to any multiple employer plan or to any plan described in
Section 413 of the Code.  Neither the Company nor any ERISA Affiliate has any
actual or potential withdrawal liability (including any contingent liability)
for any complete or partial withdrawal (as defined in Sections 4203 and 4205 of
ERISA) from any multiemployer plan.

 

(f)                                   The Company and its ERISA Affiliates have
performed all obligations required to be performed by them under, are not in
breach, default or violation of, and have no Knowledge of any breach, default or
violation by any other party to each Employee Benefit Plan, and all Employee
Benefit Plans have been established and maintained in compliance with the terms
thereof and requirements prescribed by any and all Laws (including ERISA and the
Code) and Orders currently in effect with respect thereto.

 

(g)                                  The Company is in compliance, and has
complied, with all its obligations under Law with respect to any aspect of the
employment or engagement of all Company Employees, including with respect to
employment practices, terms and conditions of employment, wage and hours,
discrimination in employment, worker classification (including the proper
classification of workers as employees or as independent contractors), and the
health and safety at work of their employees. There are no Actions pending or,
to the Knowledge of the

 

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Company, threatened by any person in respect of employment or engagement or any
accident or injury.

 

3.17                  No Brokers.  Neither the Company, or any of its employees,
officers, managers or agents, nor the Members, has employed or engaged, either
directly or indirectly, or incurred or will incur any Liability to, any broker,
finder, investment banker or other agent in connection with the transactions
contemplated by this Agreement.

 

3.18                  Taxes.

 

(a)                                 All Taxes payable by the Company have been
timely paid, or, to the extent not required to have been paid, have been accrued
in the Interim Balance Sheet; all federal, state, local and foreign Tax Returns
required to be filed by or on behalf of the Company with respect to any such
Taxes have been timely filed, and all such Tax Returns are complete and correct
and have been filed in accordance with all applicable Law; all Taxes that the
Company is or was required by Law to have withheld or collected, have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Authority; no unpaid Tax deficiency has been asserted against or
with respect to the Company and the Company has not received notice of any such
assertion; there are no Actions pending with respect to any Taxes for which the
Company is liable; the Company has not been informed by any jurisdiction that
such jurisdiction believes that the Company is or was required to file any Tax
Return that was not filed.  The Company has not executed or entered into any
ruling or agreement with any Governmental Authority regarding Taxes or has
agreed to make any adjustment to its income or deductions pursuant to a change
in its method of accounting.

 

(b)                                 The Company has not been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code, and no withholding pursuant to Section 1445 of the Code will be required
in connection with this Agreement or the transactions contemplated hereby.

 

(c)                                  There are no Liens with respect to Taxes
upon any of the Acquired Assets.  There is no basis for the assertion of any
claims for Taxes which, if adversely determined, would result in the imposition
of any Lien on the Acquired Assets.

 

(d)                                 The Tax Returns of the Company have been
audited by the IRS or relevant state tax authorities or are closed by the
applicable statute of limitations for all taxable years through 2006.  No Tax
Return of the Company is currently being audited by any Governmental Authority
and no examination or audit of any such Tax Return is currently threatened in
writing by any Governmental Authority.

 

3.19                  Contracts.

 

(a)                                 Section 3.19 of the Disclosure Schedule sets
forth a complete and accurate list of all of the following Contracts to which
the Company is a party or is otherwise bound or by which any of the Acquired
Assets are subject (and with respect to any oral Contract provides a complete
description of the terms of such Contract) (the “Scheduled Contracts”):

 

(i)                                     all notes, loans, credit agreements,
mortgages, indentures, security agreements, operating leases, capital leases and
other Contracts relating to Indebtedness and any Contract of suretyship or
guaranty;

 

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(ii)                                  all employee agreements, Contracts with
consultants and independent contractors, and all bonus, commission,
compensation, pension, insurance, retirement, deferred compensation and other
plans, Contracts and other arrangements for the benefit of any Company Employee;

 

(iii)                               all Contracts involving an annual payment to
or by the Company from or to any Person in excess of $2,500 individually or
$10,000 in the aggregate with respect to all Contracts with such Person;

 

(iv)                              all Contracts for capital expenditures in
excess of $2,500 individually for any Person or $10,000 in the aggregate for all
Contracts with such Person;

 

(v)                                 all client Contracts for the purchase of
products or services from the Company;

 

(vi)                              all Contracts with sales agents or other
representatives;

 

(vii)                           all Contracts for the purchase or sale of any
asset or property of the Company in excess of $2,500 individually for any Person
or $10,000 in the aggregate for all Contracts with such Person;

 

(viii)                        all joint venture, partnership or other Contracts
involving a share of profits or losses with another Person;

 

(ix)                              all Contracts with any Affiliate, officer,
manager or Member of the Company or any family member or Affiliate of any
officer, manager or Member;

 

(x)                                 all Contracts pursuant to which the Company
has granted or received manufacturing rights, most favored nation pricing
provisions or exclusive marketing, sales or other rights relating to any
product, service, technology, asset or territory;

 

(xi)                              all Government Contracts and Government Bids;

 

(xii)                           all sales, agency, representative, distributor,
franchise or similar Contracts;

 

(xiii)                        all Contracts that limit or purport to limit the
ability of the Company to compete in any line of business or with any Person or
in any geographic area or during any period of time;

 

(xiv)                       any material Contract which is terminable upon or
prohibits a sale of substantially all of the assets of the Company;

 

(xv)                          all Contracts granting or permitting any Lien on
any of the Acquired Assets;

 

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(xvi)                       all Contracts with vendors, suppliers, manufacturers
or contractors; and

 

(xvii)                    any other Contracts that are material to the Company
and have not been previously disclosed pursuant to this Section 3.19.

 

(b)                                 The Company has delivered to the Buyer true
and complete copies of all Assigned Contracts and Scheduled Contracts, including
all amendments thereto.  The Company is not in breach or default under the terms
of any Assigned Contract and there exists no event, condition or occurrence
which (with or without due notice or lapse of time, or both) would constitute
such a breach or default by the Company, nor has the Company received any notice
of any breach or default or alleged breach of default under any Assigned
Contract.  To the Knowledge of the Company, no other party to any Assigned
Contract is in breach or default under the terms thereof, and, to the Knowledge
of the Company, there exists no event, condition or occurrence which (with or
without due notice or lapse of time, or both) would constitute such a breach or
default by any such party, nor has the Company received any notice of any breach
or default by any such party.

 

(c)                                  The Assigned Contracts are in full force
and effect and are valid and binding obligations of the Company and, to the
Knowledge of the Company, the other parties thereto.  The Company has not
received any notice from any other party to an Assigned Contract of the
termination or threatened or anticipated termination thereof, or of any claim,
dispute or controversy with respect thereto, nor, to the Knowledge of the
Company, is there any basis therefor.  No party to an Assigned Contract has
(i) alleged any failure to perform on the part of the Company or (ii) made any
claims against, or sought indemnification from, the Company as to any matter
arising under or with respect to such Assigned Contract, and, to the Knowledge
of the Company, neither the Company nor any of its managers, the Members or
officers has been advised that any such claims may be asserted or initiated.

 

(d)                                 No consent of, or notice to, any third party
is required under any Assigned Contract as a result of or in connection with,
and neither the enforceability nor any of the terms or provisions of any
Assigned Contract will be affected in any manner by, the execution, delivery and
performance of this Agreement or any Related Agreement, or the transactions
contemplated hereby or thereby.

 

(e)                                  With respect to any Assigned Contract,
(i) the acceptance of any deliverables has not been contested; (ii) there are no
outstanding requests for the removal of any of the Company’s personnel from
performing services under the Contract; (iii) no penalties of any type have been
assessed; and (iv) there are no pending or, to the Knowledge of the Company,
threatened, contract suspension, scope reduction or curtailment actions.

 

3.20                  Transactions With Affiliates.  No current or former
manager, officer, member or employee of the Company or any member of any such
Person’s family, is now, or has ever been, a party to any transaction with the
Company (including any Contract providing for the employment of, furnishing of
goods or services by, rental of real or personal property from, borrowing money
from or lending money to, or otherwise requiring payments to, any such Person,
but excluding payments for normal salary and bonuses and reimbursement of
expenses), or the direct or indirect owner of an interest in any Person which is
a present or potential competitor, supplier or client of the Company and no such
Person receives income from any source other than the Company which relates to
the Business of, or should properly accrue to, the Company.

 

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3.21                  Insurance.  The Company, the Business and the Acquired
Assets are, and will through the Closing Date be, insured with reputable
insurers against risks normally insured against by similar businesses under
similar circumstances.  Section 3.21 of the Disclosure Schedule lists, by type,
carrier, policy number, limits, premium and expiration date, all insurance
coverage carried by the Company, together with a history of all claims made by
the Company thereunder since January 1, 2011, which insurance will remain in
full force and effect in accordance with policy terms, with respect to all
events occurring prior to the Closing Date.  Section 3.21 of the Disclosure
Schedule also states whether each such policy is carried on a “claims made” or
“occurrence” basis.  All such insurance policies are owned by and payable solely
to the Company and all premiums with respect thereto are currently paid and will
be paid through the Closing Date.  The Company has not failed to give any notice
of any claim under any such policy in due and timely fashion, has not received
notice of cancellation or non-renewal of any such policy and has no Knowledge of
any threatened or proposed cancellation or non-renewal of any such policy, and
the Company is otherwise in compliance with the terms of such policies.  The
Company has never maintained, established, sponsored, participated in or
contributed to any self-insurance plan.  There are no outstanding claims under
any such policy which have gone unpaid for more than thirty (30) days, or as to
which the insurer has disclaimed liability.  The Company has not been denied or
had revoked, cancelled, non-renewed or rescinded any policy of insurance.

 

3.22                  Intellectual Property.

 

(a)                                 Section 3.22(a) of the Disclosure Schedule
sets forth a complete and accurate list of all United States and foreign
Trademarks (including unregistered Trademarks), Designs (including applications
and unregistered Designs), and Internet domain names comprising Company
Intellectual Property, indicating for each, the applicable jurisdiction,
registration number (or application number) and date issued (or date filed). 
The Company has neither any registered or unregistered Patents or Copyrights,
nor is in process of applying for any Patents or Copyrights.  All registered and
applied for Trademarks and Designs included in the Company Intellectual Property
are currently pending, in compliance with all legal requirements (including the
timely filing of responses, statements or affidavits of use and incontestability
and renewal applications and required fees with respect to Trademarks and
Designs), are valid and enforceable, and are not subject to any fees, responses
or actions falling due within one hundred eighty (180) days after the Closing
Date.  No such Trademark or Design has been or is now involved in any
cancellation proceeding before the United States Patent and Trademark Office
(the “USPTO”) and, to the Knowledge of the Company, no such Action is threatened
with respect to any of such Trademarks or Designs.  All Trademarks and Designs
included in the Company Intellectual Property have been in continuous use by the
Company since they were first used by the Company.  To the Knowledge of the
Company, there has been no prior use of such Trademarks or Designs by any Person
which would confer upon such Person superior rights in such Trademarks or
Designs, respectively; and the registered Trademarks have been continuously used
in the form appearing in, and in connection with the goods and services listed
in, their respective registration certificates or identified in their respective
pending applications.  To the Knowledge of the Company, there are no
(i) Trademarks of any third party potentially conflicting with the Trademarks
included in the Company Intellectual Property, or (ii) Designs of any third
party potentially conflicting with the Designs included in the Company
Intellectual Property.

 

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(b)                                 Section 3.22(b) of the Disclosure Schedule
sets forth a complete and accurate list of all license agreements granting any
right to use or practice any rights under any Company Intellectual Property
(“Licensed Intellectual Property”), whether the Company is the licensee or
licensor thereunder, and any assignments, consents, forbearances to sue,
judgments, orders, settlements, indemnification or similar obligations relating
to any Licensed Intellectual Property to which the Company is a party or
otherwise bound (collectively, the “License Agreements”), indicating for each
the title, the parties, the date executed, whether or not it is exclusive and
the Licensed Intellectual Property covered thereby.  The License Agreements are
valid and binding obligations of the Company and to the Company’s Knowledge, of
each other party thereto enforceable in accordance with their respective terms,
and neither the Company nor, to the Knowledge of the Company, the other party or
parties thereto is or are in breach or default thereunder, and there exists no
event, condition or occurrence which (with or without due notice or lapse of
time, or both) would constitute such a breach or default or alleged breach or
default by the Company or, to the Knowledge of the Company, the other party or
parties thereto of any of the foregoing. No consent of, or notice to, any Person
is required under any License Agreement as a result of or in connection with,
and the terms or enforceability of any License Agreement will not be affected
by, the execution, delivery and performance of this Agreement or the Related
Agreement, or the transactions contemplated hereby or thereby.  The Company has
not received any notice of termination or cancellation under any License
Agreements.

 

(c)                                  The Company Intellectual Property
constitutes all of the Intellectual Property used in or necessary for the
conduct of the Business as currently conducted and proposed to be conducted,
including all Intellectual Property necessary to use, manufacture, market and
distribute the Company Products.

 

(d)                                 No royalties, honoraria or other fees are
payable to any third parties for the use of or right to use any Company
Intellectual Property except pursuant to the License Agreements set forth in
Section 3.22(d) of the Disclosure Schedule.  All inventions, discoveries, Trade
Secrets, ideas and works, whether or not patented or patentable or otherwise
protectable under Law, created, prepared, developed or conceived by employees or
independent contractors of the Company are the exclusive property of the Company
and were either created, prepared, developed or conceived by (i) employees of
the Company within the scope of their employment or (ii) by independent
contractors who have duly assigned their rights to the Company pursuant to
enforceable written agreements.

 

(e)                                  The Company (i) owns exclusively all
Company Intellectual Property purported to be owned by the Company, and (ii) has
a valid, enforceable, freely transferable and sufficient right to use for the
purposes as the Company has previously used, all Licensed Intellectual Property,
free and clear of all Liens.

 

(f)                                   The operation of the Business as currently
conducted or as contemplated to be conducted, the sale or use of the Company
Products, and the use of the Company Intellectual Property in connection
therewith has not, does not and will not, when conducted in substantially the
same manner following the Closing, infringe upon, violate, misappropriate or
make unlawful use of any Intellectual Property or other rights of any other
Person or constitute unfair trade practices.  The Company has not received
notice of any allegation that the use of any Company Intellectual Property or
the conduct of the Business as currently conducted or proposed to be conducted
would infringe upon, violate, misappropriate or make unlawful use of any
Intellectual Property or other rights of any other Person, nor is the Company
aware of any basis for such a claim.  To the Knowledge of the Company, no Person
is misappropriating, infringing,

 

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violating or making unlawful use of any Company Intellectual Property, nor is
the Company aware of any basis for such a claim.  There is no Action pending or,
to the Knowledge of the Company, threatened alleging that the conduct of the
Business infringes upon, violates or constitutes the unauthorized use of the
Intellectual Property or other rights of any other Person, nor is the Company
aware of any basis for such a claim.  The Company has not threatened to bring,
and the Company has not brought, any Action regarding the ownership, use,
validity or enforceability of any Company Intellectual Property.

 

(g)                                  The consummation of the transactions
contemplated hereby will not result in the loss or impairment of any Company’s
ownership or other rights in and to any of the Company Intellectual Property or
under any of the License Agreements, require the Company to grant to any third
party any right to any Company Intellectual Property or obligate the Company to
pay any royalties or other amounts to any third party in excess of any amounts
payable to such third parties prior to the Closing, nor will the consummation of
the transactions contemplated hereby require the approval or consent of any
Governmental Authority or other Person in respect of any Company Intellectual
Property.

 

(h)                                 Section 3.22(h) of the Disclosure Schedule
lists all Software (other than off-the-shelf or shrink wrap software) which is
owned, licensed or otherwise used by the Company and indicates whether such
Software is subject to an escrow agreement and/or license agreement and, if so,
indicates where such Software is held in escrow and identifies such license
agreement.  No rights in the Software have been transferred to any third party.

 

(i)                                     Section 3.22(i) of the Disclosure
Schedule lists all Software or other material that is distributed as Open Source
Software or “free software” in connection with the operation of the Business
(the “Open Source Materials”).  All of the Open Source Materials used by the
Company in connection with the Acquired Assets or the Licensed Software have
been used in compliance with the terms of each respective license.  The Company
has not used Open Source Materials that create, or purport to create,
obligations for the Company with respect to the Acquired Assets or the Business
or grant, or purport to grant, to any third party, any rights or immunities
under any Company Intellectual Property (including, but not limited to, using
any Open Source Materials that require, as a condition of use, modification or
distribution of the Open Source Materials that other Software incorporated into,
derived from or distributed with the Open Source Materials be (x) disclosed or
distributed in source code form, (y) be licensed for the purpose of making
derivative works or (z) be redistributable at no charge).

 

(j)                                    The Company has taken all reasonable
steps in accordance with normal industry practice to protect the Company
Intellectual Property, including all rights in confidential information and
Trade Secrets included in the Company Intellectual Property.  Except pursuant to
enforceable confidentiality obligations in favor of the Company, there has been
no disclosure to any third party of any confidential information or Trade
Secrets included in the Company Intellectual Property.  No current or former
employee, consultant, contractor, partner or investor of the Company is in
unauthorized possession of any of the Trade Secrets or Software included in the
Company Intellectual Property.

 

(k)                                 Section 3.22(k) of the Disclosure Schedule
describes all databases and organized or structured collections of data used by
the Company (the “Databases”).  Following the Closing, the Databases will have
at least the same information and functionality as exists prior to the Closing. 
No Person (other than the Company) has any right, title or interest in or to any
of the information contained in any of the Databases and the Company has not
sold, assigned, leased, transferred, permitted the use of or otherwise disclosed
to any Person any

 

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information contained in any of the Databases, including any Personally
Identifiable Information.  The Company has complied and is in compliance with
all applicable privacy Laws, and all information contained in the Databases has
been collected, used and maintained in accordance with all applicable privacy
Laws.  The Company has the right to sell and assign all of its rights in and to
the Databases and all information contained therein, and any such sale and
assignment will not violate any privacy policy applicable to any Personally
Identifiable Information contained therein at the time it was collected.

 

3.23                  Accounts Receivable and Accounts Payable.

 

(a)                                 All accounts receivable of the Company
(i) have arisen from bona fide transactions in the ordinary course of business
consistent with past practice, (ii) represent valid and enforceable obligations,
(iii) will be fully collected in the aggregate face amounts thereof when due
without resort to litigation and without offset or counterclaim, and (iv) are
owned by the Company free and clear of all Liens. No discount or allowance from
any such receivable has been made or agreed to and none represents billings
prior to actual sale of goods or provision of services. There is no obligor of
any such account receivable has refused or threatened to refuse to pay its
obligations for any reason and, to the Knowledge of the Company, no such obligor
has been declared bankrupt by a Court of competent jurisdiction or that is
subject to any bankruptcy proceeding.  Section 3.23(a) of the Disclosure
Schedule is a complete and accurate accounts receivable aging report as of the
date hereof.

 

(b)                                 All accounts payable and accrued expenses of
the Company have arisen only from bona fide transactions in the ordinary course
of business consistent with past practice, and no such account payable or
accrued expense is, or as of the Closing Date will be, delinquent in its
payment. Section 3.23(b) of the Disclosure Schedule is a complete and accurate
accounts payable aging report as of the date hereof.

 

3.24                  Absence of Restrictions on Business Activities.  There is
no Contract or Order binding upon the Company or any of the Acquired Assets
which has had or could reasonably be expected to have the effect of prohibiting
or impairing any business practice of the Company or the Buyer, any acquisition
of property (tangible or intangible) by the Company or the Buyer, the conduct of
business by the Company or the Buyer, or otherwise limiting the freedom of the
Company to engage in any line of business or to compete with any Person. 
Without limiting the generality of the foregoing, the Company has not entered
into any Contract under which it is restricted, or under which the Buyer would
be restricted following the Closing, from selling, licensing, manufacturing or
otherwise distributing any Company Products or from providing services to
customers or potential customers or any class of customers, in any geographic
area, during any period of time, or in any segment of the market.

 

3.25                  Certain Business Practices.  Neither the Company or any
manager, officer, employee or agent of the Company on behalf of the Company, nor
any Member, has: (a) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity,
(b) made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended, or
(c) made any other unlawful payment.

 

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3.26                  Anti-Terrorism Laws; Trading with the Enemy.

 

(a)                                 The Company is not in violation of any
Anti-Terrorism Law and has not engaged in or conspired to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism
Law.

 

(b)                                 The Company has not engaged, nor does it
intend to engage, in any business or activity prohibited by the Trading with the
Enemy Act.

 

3.27                  Books and Records.  The books and records of the Company
delivered or made available to the Buyer are complete and accurate and reflect
the assets, liabilities, prospects, business, financial condition and results of
operations of the Business and have been maintained in accordance with prudent
business practices.  The minute books of the Company contain accurate and
complete records of all meetings held by, and actions taken by, the Members or
managers of the Company, and no meeting of the Members or any of the managers
has been held where material matters were approved, voted upon or acted upon for
which minutes have not been prepared and are not contained in such minute books.

 

3.28                  Internal Controls.  The Company maintains a system of
internal control over financial reporting sufficient to provide reasonable
assurance (a) that the Company maintains records that in reasonable detail
accurately and fairly reflect their respective transactions and dispositions of
assets, (b) that transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (c) that transactions, receipts and expenditures are executed
only in accordance with authorizations of management and the Company’s Board of
Directors and (d) regarding prevention or timely detection of the unauthorized
access, acquisition, use or disposition of the Company’s assets.  The Company
(x) has no significant deficiencies or material weaknesses in the design or
operation of internal control over financial reporting that are reasonably
likely to adversely affect the Company’s ability to record, process, summarize
and report financial information and (y) has disclosed to the Buyer any and all
material fraud committed by management or other employees who have a significant
role in the Company’s internal control over financial reporting.  The Company
has provided to the Buyer true and complete copies of any correspondence with
outside accounting firms relating to reviews, audits or other procedures with
respect to the Company’s financial statements and internal controls.

 

3.29                  Relationships with Clients and Vendors.

 

(a)                                 Section 3.29(a) of the Disclosure Schedule
sets forth a list of each client of the Company that has generated greater than
$10,000 in revenue during the Company’s 2011 or 2012 fiscal year and the
eight-month period ending on August 31, 2013 (each, a “Material Client”).  There
are not, and have not been, any material disputes with any Material Client.  No
Material Client has cancelled, terminated, or otherwise altered its relationship
with the Seller nor has any current client of the Seller notified the Seller of
any intention to do so or otherwise threatened to cancel, terminate or
materially alter its relationship with the Seller.  There has been no material
reduction in the rate or amount of services provided to and paid by any current
client of the Seller.

 

(b)                                 Section 3.29(b) of the Disclosure Schedule
sets forth a list of each vendor of the Company that has supplied to the Seller
any product or service relating to the Business during the Seller’s 2011 or 2012
fiscal year and the eight-month period ending on August 31, 2013 (each, a
“Vendor”).  There are not, and have not been, any material disputes with any

 

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Vendor.  No Vendor has cancelled, terminated or otherwise altered its
relationship with the Seller nor has any current vendor of the Seller notified
the Seller of any intention to do so or otherwise threatened to cancel,
terminate or materially alter its relationship with the Seller.

 

3.30                  Solvency.  The Company (a) has sufficient capital to carry
on the Business, (b) is able to pay its debts as they mature and (c) is solvent,
and the value of its assets, at a fair valuation, is greater than all of its
debts.  The Company has not (i) made a general assignment for the benefit of
creditors, (ii) filed any voluntary petition in bankruptcy or suffered the
filing of an involuntary petition by any creditor, (iii) suffered the
appointment of a receiver to take possession of all or any portion of its
assets, (iv) suffered the attachment or judicial seizure of all or any portion
of its assets, (v) admitted in writing its inability to pay its debts as they
come due or (vi) made an offer of settlement, extension or composition to its
creditors generally.

 

3.31                  No Brokers.  Except as disclosed on Schedule 3.31of the
Disclosure Schedule, the Company has neither employed, either directly or
indirectly, nor incurred or will incur any Liability to, any broker, finder,
investment banker or other agent in connection with the transactions
contemplated by this Agreement.

 

3.32                  Disclosure.  Neither this Agreement (including the
exhibits and schedules hereto) nor any other agreement, document or certificate
delivered or to be delivered to the Buyer by or on behalf of the Company
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they were made.  There is
no fact within the Knowledge of the Company that has not been disclosed in this
Agreement and which could have a Company Material Adverse Effect.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

 

Each Member, severally and not jointly, represents and warrants to the Buyer as
follows:

 

4.1                         Authority; Execution; Enforceability.  Each Member
has all necessary power and authority to execute, deliver and perform his
obligations under this Agreement and each Related Agreement to which he is a
party and to perform all of his obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.  The execution and
delivery by each Member of this Agreement, the performance of his obligations
hereunder, and the consummation by him of the transactions contemplated hereby
have been duly and validly authorized by all action on the part of each Member
and, no other proceedings on the part of any Member are necessary to authorize
this Agreement or to consummate the transactions so contemplated herein.  This
Agreement and each Related Agreement to which each Member is party has been duly
executed and delivered by each Member and constitutes a legal, valid and binding
obligation of such Member, enforceable against such Member in accordance with
its respective terms, subject to Enforceability Exceptions.

 

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4.2                         Title to Company Membership Interests.  Each Member
is the lawful and record and beneficial owner of, and has good and marketable
title to, all of the membership interests of the Company.

 

4.3                         Consents and Approvals.  The execution and delivery
by each Member of this Agreement, the Related Agreements to which he is a part
or any instrument required by this Agreement to be executed and delivered by a
Member do not, and the performance of this Agreement, the Related Agreements to
which he is a part and any instrument required by this Agreement to be executed
and delivered by a Member at the Closing, shall not, require any Member to
obtain any Approval of any Person or Approval of, observe any waiting period
imposed by, or make any filing with or notification to, any Governmental
Authority, domestic or foreign.

 

4.4                         No Violation.  The execution and delivery by each
Member of this Agreement, the Related Agreements to which each Member is a part
or any other instrument or document required by this Agreement to be executed
and delivered by a Member do not, and the performance of this Agreement, the
Related Agreements to which a Member is a party or any other instrument or
document required by this Agreement to be executed and delivered by a Member,
will not (a) conflict with or violate any Law or Order, in each case, applicable
to each Member or by which any of the Acquired Assets are bound, or (b) result
in any breach or violation of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under any Contract or
Approval to which a Member is a party or by which a Member is, or a Members’
properties are, bound or affected.

 

4.5                         Legal Proceedings.  There is no Action pending or,
to the knowledge of any Member, threatened by or against or affecting any Member
or any Affiliate of a Member that would (a) give any Person the right to enjoin
or rescind the transactions contemplated by this Agreement or (b) otherwise
prevent any Member from (i) executing and delivering this Agreement or the
Related Agreements to which such Member is a party or (ii) performing a Member’
obligations pursuant to, or observing any of the terms and provisions of, this
Agreement or the Related Agreements to which a Member is a party.

 

4.6                         No Brokers.  Except as disclosed on Schedule 4.6 of
the Disclosure Schedule, none of the Members has employed, either directly or
indirectly, incurred or will incur any Liability to, any broker, finder,
investment banker or other agent in connection with the transactions
contemplated by this Agreement.

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer hereby represents and warrants to the Company and the Members:

 

5.1                          Organization; Good Standing and Qualification.  The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware.

 

5.2                         Authorization; Binding Obligation.  The Buyer has
all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder

 

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and to consummate the transactions contemplated hereby.  The execution and
delivery by the Buyer of this Agreement, the performance of its obligations
hereunder, and the consummation by it of the transactions contemplated hereby
have been duly and validly authorized by all action on the part of the Buyer
and, no other corporate proceedings on the part of the Buyer are necessary to
authorize this Agreement or to consummate the transactions so contemplated
herein.  This Agreement has been duly and validly executed and delivered by the
Buyer, and this Agreement constitutes a legal, valid, and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms, except as
limited by the Enforceability Exceptions.

 

5.3                         Consents and Approvals.  The execution and delivery
by the Buyer of this Agreement does not, and the performance of this Agreement
by the Buyer shall not, require the Buyer to obtain any Approval of any Person
or Approval of, observe any waiting period imposed by, or make any filing with
or notification to, any Governmental Authority.

 

5.4                         No Conflict.  The execution and delivery by the
Buyer of this Agreement does not, and the performance of this Agreement by the
Buyer will not (a) conflict with or violate the Organizational Documents of the
Buyer, (b) conflict with or violate any Law or Order applicable to the Buyer or
any of its properties or assets or (c) result in a breach or violation of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under any material Contract to which the Buyer is a
party, in any case, except where such conflict or breach would not have a
material adverse effect on the Buyer’s ability to consummate the transactions
contemplated hereby.

 

5.5                         No Brokers.  The Buyer has neither employed, either
directly or indirectly, nor incurred or will incur any Liability to, any broker,
finder, investment banker or other agent in connection with the transactions
contemplated by this Agreement.

 

5.6                         Legal Proceedings.  There is no Action pending or,
to the knowledge of the Buyer, threatened by or against or affecting the Buyer
that would (a) give any Person the right to enjoin or rescind the transactions
contemplated by this Agreement, or (b) otherwise prevent the Buyer from
(i) executing and delivering this Agreement or (ii) performing the Buyer’s
obligations pursuant to, or observing any of the terms and provisions of, this
Agreement.

 

ARTICLE VI

 

COVENANTS

 

6.1                         Public Announcements.  Neither the Company nor any
Member shall, nor shall any of their respective Affiliates or agents (including
accountants, lenders, counsel or investment bankers), without the prior written
consent of the Buyer, issue any press release announcing the execution of this
Agreement or the transactions contemplated hereby, or the Closing hereunder,
otherwise make any public statements regarding the transactions contemplated
hereby or otherwise publicly disclose any of the contents of this Agreement,
except as may be determined in good faith by a party to be required by
applicable Law and in such case, such party shall provide the other party with
reasonable advance notice thereof.

 

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6.2                         Retention of and Access to Books and Records.  After
the Closing Date, the Buyer shall retain for a period consistent with the
Buyer’s record-retention policies and practices the books and records relating
to the Business.  The Buyer shall provide the Members and their Representatives
reasonable access thereto, during normal business hours and on at least three
business days’ prior written notice, for any reasonable business purpose
specified by the Member in such notice, including, but not limited to,
verification of Contingent Payment Amounts, preparation of financial statements
or tax returns, or dealing with tax audits. After the Closing Date, each Member
shall provide the Buyer and its Representatives reasonable access to such books
and records of the Member relating to the Business during normal business hours
and on at least three days’ prior written notice, for any reasonable business
purpose specified by the Buyer in such notice.

 

6.3                         Litigation Cooperation.  If the Buyer or any of its
Affiliates shall become engaged or participate in any Action relating in any way
to the Acquired Assets, the Excluded Assets, the Assumed Liabilities or the
Excluded Liabilities, the Company and each Member shall cooperate in all
reasonable respects with such party in connection therewith, including, without
limitation, making available to such parties, without cost, all relevant records
and using its commercially reasonable efforts to make available the employees of
such party or its Affiliates who are reasonably expected to be helpful with
respect to such Action, provided that, to the extent practicable, such employees
shall be made available in a manner so as not to interfere with their employment
duties in any material respect.

 

6.4                         Assignment of Real Property Leases.

 

(a)                                 By no later than October 1, 2013, the
Company shall have taken all commercially reasonable action to assign all Real
Property Leases at no cost to the Buyer.  To the extent that the landlord or
lessor party to a Real Property Lease does not agree to assign a Real Property
Lease to the Buyer, then the Buyer shall be entitled to all Losses resulting
therefrom, and all such amounts shall be subject to the Buyer’s right of set-off
set forth in Section 2.3. The Company shall include buyer in all communications.

 

(b)                                 The Buyer shall have the right to re-assign
to the Company up to two of the Real Property Leases to be identified by the
Company [OR as listed on Section 6.4 of the Disclosure Schedule] (the
“Identified Real Property Leases”).  To the extent that the landlord or lessor
party to such Identified Real Property Lease does not agree to re-assign an
Identified Real Property Lease, then the Buyer shall continue to make all
payments required under such identified Real Property Lease or Leases on behalf
of the Company, and all such amounts shall be subject to the Buyer’s right of
set-off set forth in Section 2.3.  Company and Buyer shall use commercially
reasonable action to mitigate any potential losses.

 

6.5                         Transition Matters.  The Company and each Member
shall take all action reasonably requested by the Buyer to effectively
transition the Business, including the Acquired Assets, from the Company to the
Buyer and shall fully cooperate with the Buyer in developing and executing a
detailed transition plan for the transition of the Business and the Acquired
Assets promptly following the Closing.  Without limiting the generality of the
foregoing, at no cost to the Buyer, the Company shall (a) forward all telephone
calls, correspondence, e-mails, inquiries, sales leads and other information
relating to the Business to the Buyer in a timely and

 

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professional manner, and (b) for a period of 90 days following the Closing or
such longer period as the Member and the Buyer mutually agree, the Member shall
provide (i) assistance and support with respect to accounting and accounts
payable of the Business and (ii) access to and use of the Member’s email systems
as necessary for the uninterrupted operation of the Business by the Buyer
following the Closing.

 

6.6                         Accounts Receivable/Collections.  After the Closing,
the Company shall permit the Buyer to collect, in the name of the Company, all
Accounts Receivable and to endorse with the name of the Company for deposit in
the Buyer’s account any checks or drafts received in payment thereof.  The
Company shall promptly deliver to the Buyer any cash, checks or other property
that the Company may receive after the Closing in respect of any Accounts
Receivable or other assets constituting part of the Acquired Assets.

 

6.7                         Employment Matters.

 

(a)                                 On or before the Closing Date, the Buyer may
offer employment to any employee of the Company as of the Closing Date as the
Buyer may elect on terms acceptable to the Buyer.  The Company shall cooperate
with and assist the Buyer in its efforts to secure satisfactory employment
arrangements with such employees, including providing access to such employees
as requested by the Buyer.  Any such employee accepting a position with the
Buyer hereunder, as well as the Designated Employee, shall be referred to as a
“Transferred Employee” and such Transferred Employee’s employment with the
Company shall terminate effective as of the commencement date of employment with
the Buyer or any of its Affiliates (with respect to each Transferred Employee,
the “Transition Date”).  The Company consents to the hiring of the Transferred
Employees by the Buyer or any of its Affiliates and waives in perpetuity any
claims or rights arising under any non-competition, confidentiality, employment,
assignment of inventions or similar Contract to which any Transferred Employee
is a party after the Closing Date (other than such rights that are assigned to
the Buyer pursuant to this Agreement).  All Transferred Employees shall be
employees at-will of the Buyer, subject to the Buyer’s employment policies, and
nothing herein shall obligate the Buyer to employ any Transferred Employee for
any specific time period.

 

(b)                                 As promptly as practicable, but in no event
later than such date as is required by Law, the Company shall (i) pay to each
Transferred Employee all wages and other compensation earned through the
Transition Date, (ii) reimburse each Transferred Employee for all reimbursable
expenses incurred by him or her through the Transition Date, (iii) make all
required contributions to any Employee Benefit Plans (if permissible, or if not,
pay any amounts directly to each Transferred Employee) if such Transferred
Employee is a participant in such plan and would otherwise be eligible for such
contribution assuming he or she continued his or her employment with the Company
until the end of the relevant period, such period payment to be prorated based
on the number of days of such Transferred Employee’s employment with the Company
in the relevant period and (iv) make all other payments as may be owed to any
employee either under any Contract, in accordance with any Company policy or
practice or required by applicable Law.

 

(c)                                  The Buyer shall not have any Liability with
respect to any current or former Company Employee, including, without
limitation, any Transferred Employee, arising from such Company Employee’s
employment or engagement with the Company or the termination of such Company
Employee’s employment or engagement with the Company.

 

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Without limiting the generality of the foregoing, from and after the Closing
Date, the Company shall remain solely responsible for any and all Liabilities in
respect of the Company Employees and their beneficiaries and dependents,
relating to or arising in connection with or as a result of (i) the employment
or engagement or the actual or constructive termination of employment or
engagement of any such Company Employee by the Company (including, without
limitation, in connection with the consummation of the transactions contemplated
by this Agreement), (ii) the participation in or accrual of benefits or
compensation under, or the failure to participate in or to accrue compensation
or benefits under, or the operation and administration of, any Employee Benefits
Plan or other employee or retiree benefit or compensation plan, program,
practice, policy, agreement or arrangement of the Company and (iii) accrued but
unpaid salaries, wages, bonuses, incentive compensation, vacation or sick pay or
other compensation or payroll items (including, without limitation, deferred
compensation).  Further, the Company shall remain responsible for the payment of
any and all retention, change in control, severance or other similar
compensation or benefits which are or may become payable in connection with the
consummation of the transactions contemplated by this Agreement.  The Company
shall be responsible for timely compliance with all federal, state and local
Laws with respect to the effect to any of its employees of the transactions
contemplated by this Agreement or by any Related Agreement.  The Company shall,
to the extent required by Law, provide COBRA coverage to all employees of the
Company who have a “qualifying event” under Section 4980B of Code.

 

(d)                                 To the extent allowed by applicable Law, the
Company shall provide the Buyer access to examine all personnel records for all
Transferred Employees to the extent reasonably requested by the Buyer.

 

(e)                                  It is expressly agreed that the provisions
of this Section 6.6 are not intended to be for the benefit of, or otherwise
enforceable by, any third party, including any Company Employee, and no Company
Employee (or any dependents of such employees) will be treated as third party
beneficiaries in or under this Agreement.

 

(f)                                   To the extent allowed by applicable Law,
the Company shall provide the Buyer access to examine all personnel records for
all Transferred Employees to the extent reasonably requested by the Buyer.

 

(g)                                  It is expressly agreed that the provisions
of this Section 6.6 are not intended to be for the benefit of, or otherwise
enforceable by, any third party, including any Company Employee, and no Company
Employee (or any dependents of such employees) will be treated as third party
beneficiaries in or under this Agreement.

 

6.8                         GAAP Compliant Auditable Financial Statements.  The
Company shall, by no later than thirty (30) days from the Closing Date (or such
other date as the Buyer may agree to), cause the Financial Statements to become
GAAP compliant, at the Company’s sole cost and expense.  After Company has
compiled GAAP compliant Financial Statements, Buyer shall retain an outside
Certified Public Accounting Firm to perform GAAP compliant audits for the look
back financials.  During this audit, the Company shall provide all required
documents and support to facilitate such process at Company expense. Should
Company fail to comply with this covenant, all additional fees and costs related
to the conditions of the financial statements and audit incurred by Buyer shall
be subject to the Buyer’s right of set-off set forth in Section 2.3.

 

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ARTICLE VII

 

SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION

 

7.1                         Survival of Representations, Warranties and
Covenants.  Subject to the provisions of this Article VII, each of the
representations and warranties contained in this Agreement or in any other
agreement, exhibit, schedule, certificate, instrument or other writing delivered
by or on behalf of the Buyer, the Company or the Members pursuant to this
Agreement shall survive the Closing and shall terminate at 11:59 p.m. (EST) time
on the date that is one (1) year after the Closing Date; provided, however, that
the Excepted Representations shall survive the Closing and shall terminate at
11:59 p.m. (EST) time on the date that is sixty (60) days following the date of
the expiration of the applicable statute of limitations (including any extension
thereof) for the matter giving rise to the claim.  For convenience of reference,
the date upon which any representation or warranty shall terminate is referred
to herein as the “Survival Date.”  Unless otherwise expressly set forth in this
Agreement, the covenants and agreements set forth in this Agreement shall
survive the Closing and remain in effect indefinitely (it being understood, for
the avoidance of doubt, that the phrase “covenants and agreements” does not
include representations and warranties, the survival and termination of which
are addressed in the first sentence of this Section 7.1).  The parties hereto
hereby acknowledge and agree that the time periods set forth in this Section 7.1
for the assertion of claims under this Agreement are the result of arms’-length
negotiation among the parties hereto and that they intend for the time periods
to be enforced as agreed by the parties hereto.

 

7.2                         Indemnification.

 

(a)                                 The Company and the Members, jointly and
severally, shall indemnify, defend and hold harmless the Buyer and its
Affiliates, their respective successors and assigns, and the respective
officers, directors, employees and agents of each of the foregoing (the “Buyer
Indemnified Persons”) from and against any and all Losses of every kind, nature
or description asserted against, or sustained, incurred or accrued directly or
indirectly by, any Buyer Indemnified Person which arise out of or result from or
as a consequence of any of the following:

 

(i)                                     the breach or inaccuracy of any
representation or warranty of the Company or the Members contained in Articles
III or IV of this Agreement or in any Related Agreement or any certificate
delivered by the Company or the Members pursuant to this Agreement, provided
that, such representations and warranties shall be interpreted without giving
effect to any limitations or qualifications as to “materiality” (including the
word “material”), “Company Material Adverse Effect,” “knowledge” or any similar
limitations or qualifications;

 

(ii)                                  the breach of or non-compliance with any
agreement or covenant of the Company or the Members contained in this Agreement
or in any Related Agreement;

 

(iii)                               any of the Excluded Liabilities, including
the failure of the Company or other Person to honor, pay, discharge or perform
any Excluded Liability;

 

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(iv)                              any Taxes of any kind relating to or arising
in connection with the transfer of the Acquired Assets to the Buyer, including
any sales Taxes, any bulk sales or similar statute applicable to the
transactions contemplated by this Agreement or the failure of any Person to
comply with the provisions thereof;

 

(v)                                 the ownership of the Acquired Assets prior
to the Closing and the ownership of the Excluded Assets at any time;

 

(vi)                              the operation of the Business prior to the
Closing; or

 

(vii)                           any Company Indebtedness or Company Transaction
Expenses not satisfied at or prior to the Closing.

 

(b)                                 Subject to the right of the Buyer to seek
specific performance or injunctive relief to enforce the terms of this
Agreement, any Losses which a Buyer Indemnified Person is entitled to recover
pursuant to Section 7.2(a) shall be satisfied pursuant to the Buyer’s right of
set-off in Section 2.3.  Any Losses that become payable to a Buyer Indemnified
Person pursuant to Section 7.2(a) that are not satisfied in accordance with the
preceding sentence shall be payable by the Company and the Members, jointly and
severally, upon demand by wire transfer of immediately available funds to an
account or accounts designated in writing by the Buyer.

 

7.3                         Limitations on Indemnification.  Subject to the
provisions of Section 7.7:

 

(a)                                 no indemnification shall be payable to a
Buyer Indemnified Person as a result of any Losses arising under
Section 7.2(a)(i) until the aggregate amount of all Losses incurred by all Buyer
Indemnified Persons exceeds $25,000 (the “Basket”), whereupon (subject to
Section 7.3(b) below) the Buyer Indemnified Persons shall be entitled to receive
the amount of all Losses, including the Basket; provided, however, that the
foregoing shall not apply to any Losses resulting from or arising out of any
breach or inaccuracy of any of the Excepted Representations;

 

(b)                                 the maximum aggregate Losses payable to the
Buyer Indemnified Persons pursuant to Section 7.2(a)(i) shall be an amount equal
to $250,000; provided, however, that the foregoing shall not apply to any Losses
resulting from or arising out of any breach or inaccuracy of any of the Excepted
Representations; and

 

(c)                                  the maximum aggregate Losses payable to the
Buyer Indemnified Persons pursuant to Section 7.2(a)(ii) through
7.2(a)(viii) shall be an amount equal to the aggregate Contingent Payment
Amounts that are payable or that become payable to the Company pursuant to
Section 2.2.

 

7.4                         Indemnification Process.

 

(a)                                 Any Buyer Indemnified Person seeking
indemnification under this Article VII (including in connection with a Third
Party Claim) shall give the Company notice of any matter (a “Notice of Claim”)
which such Buyer Indemnified Person has determined has given rise to or would
reasonably be expected to give rise to a right of indemnification under this
Agreement, stating the amount of the Loss, if known (each, a “Loss Estimate”)
and containing a reference to the provisions of this Agreement in respect of
which such right of indemnification is claimed or arises as promptly as
practicable after becoming aware of such matter; provided,

 

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however, that the failure so to provide such Notice of Claim will not affect the
rights of Buyer Indemnified Persons to obtain indemnification hereunder. 
Notwithstanding the foregoing, no claim shall be brought under this Article VII
with respect to an event of indemnification described in
Section 7.2(a)(i) unless a Buyer Indemnified Person, at any time prior to the
applicable Survival Date, gives the Company a Notice of Claim with respect to
such claim.  If a Notice of Claim has been given on or prior to the applicable
Survival Date, the relevant representations and warranties shall survive as to
such claim until the claim has been finally resolved.

 

(b)                                 Claims for indemnification hereunder
resulting from the assertion of liability by third parties (each, a “Third Party
Claim”) shall be subject to the following terms and conditions:

 

(i)                                     The Buyer Indemnified Person may defend
any Third Party Claim with counsel of its own choosing, and shall act in a
commercially reasonable manner and in accordance with its good faith business
judgment in handling such Third Party Claim.  All costs (including attorneys’
fees) incurred by the Buyer Indemnified Person in defending any Third Party
Claim that may give rise to indemnification under Section 7.2(a) shall be
satisfied as such costs are incurred in the same manner as Losses are satisfied
pursuant to Section 7.2(b).  If the Buyer Indemnified Person elects not to
defend such Third Party Claim, the Buyer Indemnified Person shall promptly
provide notice to the Company.  The Company shall have ten (10) days to advise
the Buyer Indemnified Person whether the Company accepts the defense of such
claim, and the Company shall have no obligation to the Buyer Indemnified Person
for legal fees incurred by the Buyer Indemnified Person after the date of any
assumption of the defense by the Company.  If the Company determines to accept
the defense of such Third Party Claim, it shall defend such Third Party Claim
with counsel of its own choice that is reasonably satisfactory to the Buyer
Indemnified Person and at its own expense, provided that, the Buyer Indemnified
Person shall have the right to be represented by its own counsel at its own
expense.  If the Company fails to undertake the defense of or settle or pay any
such Third Party Claim within ten (10) days after the Buyer Indemnified Person
has given written notice to the Company of the claim, or if the Company, after
having given such notification to the Buyer Indemnified Person, fails within ten
(10) days, or at any time thereafter, to defend to the reasonable satisfaction
of the Buyer Indemnified Person, settle or pay such claim, then the Buyer
Indemnified Person may take any and all necessary action to dispose of such
claim, and any costs (including attorneys’ fees) incurred by the Buyer
Indemnified Person in so doing with respect to any Third Party Claim that may
give rise to indemnification under Section 7.2(a) shall be satisfied as such
costs are incurred in the same manner as Losses are satisfied pursuant to
Section 7.2(b).

 

(ii)                                  The Company and the Buyer Indemnified
Person shall make available to each other and their counsel and accountants all
books and records and information relating to any Third Party Claims, keep each
other apprised as to the details and progress of all proceedings relating
thereto and render to each other such assistance as may be reasonably required
to ensure the proper and adequate defense of any and all Third Party Claims.

 

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(iii)          The party controlling the defense of a Third Party Claim may
settle such Third Party Claim on any terms which it may deem reasonable,
provided that, the Company shall not without the Buyer Indemnified Person’s
prior written consent settle or compromise such proceeding, claim or demand, or
consent to the entry of any judgment which does not include as an unconditional
term thereof the delivery by the claimant or plaintiff to the Buyer Indemnified
Person of a written release from all liability in respect of such proceeding,
claim or demand.

 

7.5        Other Claims.  A claim for indemnification for any matter not
involving a third-party claim shall be asserted by a Buyer Indemnified Party to
the Indemnifying Party in writing, setting forth specifically the obligation
with respect to which the claim is made, the facts giving rise to and the
alleged basis for such claim and, if known or reasonably ascertainable, the
amount of the liability asserted or which may be asserted by reason thereof, but
any failure to so notify the Indemnifying Party shall not relieve it from any
liability that it may have to the Indemnified Party other than to the extent the
Indemnifying Party is actually prejudiced thereby.

 

7.6        Fraud and Related Claims; Characterization of Payments. 
Notwithstanding any provision of this Agreement to the contrary, nothing
contained in this Agreement shall in any way limit, impair, modify or otherwise
affect the rights of a Buyer Indemnified Person to bring any claim, demand, suit
or cause of action otherwise available to such Buyer Indemnified Person based
upon, or to seek or recover any Losses arising from or related to, nor shall any
of the limitations set forth in Section 7.3 apply with respect to, an allegation
or allegations of fraud or willful or intentional misrepresentation or omission
of a material fact in connection with this Agreement or any of the Related
Agreements or the transactions contemplated hereby and thereby.  The parties
agree that any payment pursuant to an indemnification obligation under this
Article VII shall be treated for Tax purposes as an adjustment to the Purchase
Price.  If, notwithstanding the treatment required by the preceding sentence,
any indemnification payment under this Article VII is determined to be taxable
to a Buyer Indemnified Person, such Buyer Indemnified Person shall also be
entitled to indemnification for any Taxes incurred by reason of the receipt of
such payment and any Losses incurred by the Buyer Indemnified Person in
connection with such Taxes (or any asserted deficiency, claim, demand, action,
suit, proceeding, judgment or assessment, including the defense or settlement
thereof, relating to such Taxes) payable in accordance with Section 7.2(b).

 

7.7        Insurance Claims.  If Losses with respect to any claim for
indemnification under Section 7.2 may be covered by an insurance policy of the
Company, at the request of a Buyer Indemnified Person and without further
consideration, the Company shall use commercially reasonable efforts to seek and
recover all payments under any such insurance policy to which the Company may be
entitled with respect to such Losses and pay over such amounts to the applicable
Buyer Indemnified Person, subject to the provisions of Sections 7.3(b) and
7.3(c).

 

7.8        Duty to Mitigate. Each Buyer Indemnified Party shall take, and cause
its Affiliates to take, all reasonable steps to mitigate any Loss to the extent
commercially reasonable.

 

36

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ARTICLE VIII

 

MISCELLANEOUS

 

8.1        Entire Agreement.  This Agreement, together with the schedules and
exhibits attached hereto, the Related Agreements and all other ancillary
agreements, documents and instruments to be delivered in connection herewith
contain the entire understanding of the parties hereto with respect to the
subject matter hereof and supersede all prior agreements, either oral or
written.  The parties hereto agree that, notwithstanding any access to
information by any party or any right of any party to this Agreement to
investigate the affairs of any other party to this Agreement, the party having
such access and right to investigate shall have the right to rely fully upon the
representations and warranties of the other party expressly contained in this
Agreement and on the accuracy of any schedule, exhibit or other document
attached hereto or referred to herein or delivered by such other party or
pursuant to this Agreement.

 

8.2        Assignment.  This Agreement shall not be assignable by operation of
Law or otherwise by the Company or the Members without the consent of the Buyer.

 

8.3        Amendment and Waiver.  This Agreement may be amended only by an
instrument in writing specifically amending this Agreement signed by the Buyer,
the Company and the Members.

 

8.4        Expenses.  Each of the parties shall bear its own fees, costs and
expenses incurred in connection with this Agreement (including the preparation,
negotiation and performance hereof) and the transactions contemplated hereby
(including fees and disbursements of attorneys, accountants, agents,
representatives and financial and other advisors) (collectively, the
“Transaction Expenses”).  The Company and the Members shall pay any filing fee
that is required to be paid to any Governmental Authority as a result of the
transactions contemplated by this Agreement.  Notwithstanding the foregoing, in
the event that a party institutes an Action to enforce its rights under this
Agreement or any Related Agreement, the prevailing party in such Action shall be
entitled to recover its reasonable costs and expenses (including reasonable
attorneys’ fees) incurred in connection with such Action from the losing party.

 

8.5        Counterparts.  This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of all parties,
but all of which counterparts when taken together will constitute one and the
same agreement.

 

8.6        Governing Law; Venue.  This Agreement shall be governed by the Laws
of the State of Texas without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of Texas or any other jurisdictions)
that would cause application of the Laws of any jurisdiction other than the
State of Texas.  All Actions arising out of or relating to this Agreement shall
be heard and determined in any state or federal court sitting in the State of
Texas.  Each of the parties to this Agreement irrevocably submits to the
exclusive jurisdiction of the state courts of Texas and to the jurisdiction of
the United States District Court for the District of Texas, for the purpose of
any Action arising out of or relating to this Agreement and each of the parties
to this Agreement irrevocably agrees that all claims in respect to such Action
may be heard and determined exclusively in any Texas state or federal court
sitting in the State

 

37

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of Texas.  Each of the parties to this Agreement consents to service of process
by delivery pursuant to Section 8.10 hereof and agrees that a final judgment in
any Action shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by Law.

 

8.7        Specific Performance.  The rights and remedies of the parties hereto
shall be cumulative.  The transactions contemplated by this Agreement are unique
transactions and any failure on the part of any party to complete the
transactions contemplated by this Agreement on the terms of this Agreement will
not be fully compensable in damages and the breach or threatened breach of the
provisions of this Agreement would cause the other parties hereto irreparable
harm.  Accordingly, in addition to and not in limitation of any other remedies
available to the parties hereto for a breach or threatened breach of this
Agreement, the parties shall be entitled to seek specific performance of this
Agreement and seek an injunction restraining any such party from such breach or
threatened breach.

 

8.8        Interpretation.  The schedules and exhibits attached hereto are an
integral part of this Agreement.  All schedules and exhibits attached to this
Agreement are incorporated herein by this reference and all references herein to
this “Agreement” shall mean this Agreement together with all such schedules and
exhibits.  When a reference is made in this Agreement to Sections, subsections,
schedules or exhibits, such reference shall be to a Section, subsection,
schedule or exhibit to this Agreement unless otherwise indicated.  The words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.”  The word “herein” and
similar references mean, except where a specific Section or Article reference is
expressly indicated, the entire Agreement rather than any specific Section or
Article.  The table of contents and the headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.  The term $ shall mean dollars of the United
States of America.  As used herein, all pronouns shall include the masculine,
feminine, neuter, singular and plural thereof whenever the context and facts
require such construction.

 

8.9        Severability.  If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party.  Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.

 

8.10      Notices.  All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally-recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested or by facsimile, with
confirmation as provided above addressed as follows:

 

If to the Buyer:

 

 

38

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Timios, Inc.

5716 Corsa Avenue, Suite 102

Westlake Village, CA 91362

Attention:

Trevor Stoffer

Facsimile:

(800) 858-0275

 

 

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

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

666 Third Avenue

New York, NY 10017

Attention:

Jeffrey P. Schultz, Esq.

Facsimile:

(212) 983-9115

 

 

If to the Company or the Members, addressed to:

Adobe Title, L.L.C.

3300 Oak Lawn Avenue

Dallas, TX 75219

Attention:

Hudson Henley, Esq.

Email:

ghenley@henleylawpc.com, hhenley@henleylawpc.com

Facsimile:

(214) 821-0124

 

 

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

Henley & Henley PC.

3300 Oak Lawn Avenue

Dallas, TX 75219

Attention:

Geoff Henley, Esq.

Email:

ghenley@henleylawpc.com, hhenley@henleylawpc.com

Facsimile:

(214) 821-0124

 

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith.  All such
notices or communications shall be deemed to be received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next Business Day after the date
when sent, (c) in the case of facsimile transmission, upon confirmed receipt,
and (d) in the case of mailing, on the second Business Day following the date on
which the piece of mail containing such communication was posted.

 

8.11      Representation by Counsel.  Each party hereto acknowledges that it has
been or has had an opportunity to be advised by legal counsel retained by such
party in its sole discretion.  Each party acknowledges that such party has had a
full opportunity to review this Agreement and all related exhibits, schedules
and ancillary agreements and to negotiate any and all such documents in its sole
discretion, without any undue influence by any other party hereto or any third
party.

 

8.12      Construction.  The parties have participated jointly in the
negotiations and drafting of this Agreement and in the event of any ambiguity or
question of intent or

 

39

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interpretation, 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.

 

8.13      Waivers.  No waiver by any party, whether express or implied, of its
rights under any provision of this Agreement shall constitute a waiver of the
party’s rights under such provisions at any other time or a waiver of the
party’s rights under any other provision of this Agreement.  No failure by any
party to take any action against any breach of this Agreement or default by
another party shall constitute a waiver of the former party’s right to enforce
any provision of this Agreement or to take action against such breach or default
or any subsequent breach or default by the other party.  To be effective any
waiver must be in writing and signed by the waiving party.

 

8.14      Third Party Beneficiaries.  Nothing express or implied in this
Agreement is intended to confer, nor shall anything herein confer, upon any
Person other than the parties hereto and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities whatsoever,
except to the extent that such third person is an indemnified person in respect
of the indemnification provided in accordance with Article VII of this
Agreement.  The representations and warranties contained in this Agreement are
for the sole benefit of the parties hereto and no other Person may rely on such
representations and warranties for any purpose whatsoever.

 

8.15      Bulk Sales Law.  Each party hereby waives compliance by each other
with the so-called “bulk sales law” and other similar Law in any jurisdiction in
respect of the transactions contemplated by this Agreement.

 

8.16      Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED
AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUR OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

[Signature Page to Follow]

 

40

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NOW THEREFORE, the parties hereto have executed, or caused this Asset Purchase
Agreement to be executed by their duly authorized representatives, as of the
date first written above.

 

 

BUYER:

 

 

 

TIMIOS, INC.

 

 

 

 

 

By:

/s/ Trevor Stoffer

 

Name:

Trevor Stoffer

 

Title:

President & CEO

 

 

 

 

 

COMPANY:

 

 

 

ADOBE TITLE, L.L.C.

 

 

 

 

 

By:

/s/ Hudson Henley

 

Name:

Hudson Henley

 

Title:

President

 

 

 

 

 

MEMBERS:

 

 

 

 

 

/s/ Hudson Henley

 

HUDSON HENLEY

 

 

 

 

 

/s/ Geoff Henley

 

GEOFF HENLEY

 

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

 

SCHEDULE I

 

INDEX OF DEFINED TERMS

 

Accounts Receivable

Section 1.1(e)

Action

Schedule I

Affiliate

Schedule I

Agreement

Preamble

Allocation Schedule

Section 2.4

Anti-Terrorism Laws

Schedule I

Approval

Schedule I

Assigned Contracts

Section 1.1(a)

Assumed Liabilities

Section 1.3

Base Purchase Price

Section 2.1

Bill of Sale

Section 1.6(a)

Books and Records

Section 1.1(g)

Business

Recitals

Business Day

Schedule I

Business Licenses

Section 3.7(a)

Buyer

Preamble

Buyer Indemnified Persons

Section 7.2(a)

Cash Consideration

Section 2.1

CERCLA

Schedule I

Closing Date

Section 1.5

Closing

Section 1.5

COBRA

Schedule I

Code

Schedule I

Company

Preamble

Company Employee

Schedule I

Company Indebtedness

Schedule I

Company Intellectual Property

Schedule I

Company Material Adverse Change

Section 3.13

Company Material Adverse Effect

Schedule I

Company Products

Schedule I

Company Transaction Expenses

Schedule I

Contingent Payment Amount

Section 2.2(a)

Contracts

Schedule I

Control

Schedule I

Copyright Assignment

Section 1.6(d)

Copyrights

Schedule I

Cost of Goods

Schedule 2.5

Court

Schedule I

Databases

Section 3.22(l)

Designated Employee

Recitals

Disclosure Schedule

Article III

 

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Dispute Accounting Firm

2.2(3)

Employee Agreement

Section 3.16(a)

Employee Benefit Plan

Schedule I

Employment Agreement

Recitals

Enforceability Exceptions

Section 3.4

Environmental Laws

Schedule I

ERISA

Schedule I

ERISA Affiliate

Schedule I

Excepted Representations

Schedule I

Excluded Assets

Section 1.2

Excluded Contracts

Section 1.2(a)

Excluded Liabilities

Section 1.4

Financial Statements

Section 3.12(a)

GAAP

Schedule I

Governmental Authority

Schedule I

Government Bid

Schedule I

Government Contracts

Schedule I

Gross Revenue

Section 2.2(f)

Indebtedness

Schedule I

Intellectual Property

Schedule I

Interim Balance Sheet

Section 3.12(a)

Interim Financial Statements

Section 3.12(a)

IRS

Schedule I

Knowledge

Schedule I

Laws

Schedule I

Leased Personal Property

Section 3.10

Leased Real Property

Section 3.9(a)

Liabilities

Schedule I

License Agreements

Section 3.22(b)

Licensed Intellectual Property

Section 3.22(b)

Lien

Schedule I

Loss Estimate

Section 7.4(a)

Losses

Schedule I

Material Client

Section 3.29(a)

Materials of Environmental Concern

Schedule I

Maximum Contingent Payment Amount

Section 2.2(a)

Measurement Period

Section 2.2(b)

Members

Recitals

Net Revenue Objection Notice

Section 2.2(e)

Non-Competition Agreement

Recitals

Notice of Claim

Section 7.4(a)

Open Source Materials

Section 3.22(i)

Order

Schedule I

Organizational Documents

Schedule I

Patent Assignment

Section 1.6(c)

Patents

Schedule I

 

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

 

Person

Schedule I

Personal Property Leases

Section 3.10

Personally Identifiable Information

Schedule I

Premises

Section 3.9(b)

Prior Actions

Section 3.14(b)

Promissory Note

Section 2.2(f)

Purchase Price

Section 2.1

Real Property Leases

Section 3.9(a)

Regulation

Schedule I

Related Agreements

Schedule I

Scheduled Contracts

Section 3.19(a)

Software

Schedule I

Subsidiary

Schedule I

Survival Date

Section 7.1

Tax or Taxes

Schedule I

Tax Return

Schedule I

Third Party Claim

Section 7.4(b)

Trade Secrets

Schedule I

Trademark Assignment

Section 1.6(b)

Trademarks

Schedule I

Trading with the Enemy Act

Schedule I

Transaction Expenses

Section 8.3

Transfer Documents

Section 1.6

Transferred Employee

Section 6.6(a)

Transition Date

Section 6.6(a)

USPTO

Section 3.22(a)

Vendor

Section 3.29(b)

WARN

Schedule I

 

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TABLE OF DEFINITIONS

 

“Action” means any suit, action, arbitration, cause of action, claim, complaint,
prosecution, audit, inquiry, investigation, governmental or other proceeding,
whether civil, criminal, administrative, investigative or informal, at law or at
equity, before or by any Governmental Authority, arbitrator or other tribunal.

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person; including any
partnership or joint venture in which the Company (either alone, or through or
together with any other Subsidiary) has, directly or indirectly, an interest of
10% or more; and “control” (including the terms “controlled by” and “under
common control with”) means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of stock or other securities, as trustee or
executor, by contract or credit arrangement or otherwise.

 

“Anti-Terrorism Laws” means any applicable Laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA PATRIOT Act, applicable
Laws comprising or implementing the Bank Secrecy Act and applicable Laws
administered by the United States Treasury Department’s Office of Foreign Asset
Control (as any of the foregoing Laws may from time to time be amended, renewed,
extended, or replaced).

 

“Approval” means any license, permit, consent, approval, authorization,
registration, filing, waiver, exemption, clearance, qualification or
certification, including all pending applications therefor or renewals thereof,
issued by, made available by or filed with any Government Authority.

 

“Business Day” means any day other than a Saturday, Sunday or day on which banks
are permitted to close in the State of New York.

 

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

 

“COBRA” means the group health plan continuation coverage requirements of
Section 4980B of the Code, Sections 601 through 608 of ERISA and the applicable
provisions of the American Recovery and Reinvestment Act of 2009.

 

“Code” means the Internal Revenue Code of 1986, as amended, and all Regulations
promulgated thereunder.

 

“Company Employee” means any individual who is or was employed or engaged as a
consultant or independent contractor by the Company on or at any time prior to
the Transition Date.

 

“Company Indebtedness” means any Indebtedness of the Company outstanding as of
immediately prior to the Closing plus any costs or expenses arising or resulting
from the payment of any such Indebtedness prior to the Closing (including any
pre-payment fees or penalties).

 

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

 

“Company Intellectual Property” means all Intellectual Property owned, licensed,
used or held by the Company.

 

“Company Material Adverse Effect” means a material adverse effect on the
condition (financial or otherwise), properties, prospects, operations or results
of operations of the Company or the Company’s ability to perform its obligations
as contemplated by this Agreement or any Related Agreement.

 

“Company Products” means title insurance and escrow services within the state of
Texas.

 

“Company Transaction Expenses” means all Transaction Expenses of the Company
outstanding as of immediately prior to the Closing.

 

“Contract” means any loan agreement, indenture, letter of credit (including
related letter of credit applications and reimbursement obligations), mortgage,
security agreement, pledge agreement, deed of trust, bond, note, guarantee,
surety obligation, warranty, license, franchise, permit, power of attorney,
invoice, purchase order, sales order, lease, endorsement agreement, and any
other agreement, contract, instrument, obligation, offer, commitment, plan,
arrangement, understanding or undertaking, written or oral, express or implied,
to which a Person is a party or by which any of its properties, assets or
Intellectual Property are bound, in each case as amended, supplemented, waived
or otherwise modified.

 

“Court” means any court or arbitration tribunal of any country or territory, or
any state, province or other subdivision thereof.

 

“Employee Benefit Plans” means each plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, pension, retirement,
cash balance, money purchase, savings, profit sharing, annuity, deferred
compensation, bonus, incentive (including cash, equity option, equity bonus,
equity appreciation, phantom equity, restricted equity and equity purchase),
medical, dental, vision, hospitalization, long-term care, prescription drug and
other health, employee assistance, cafeteria, flexible benefits, life insurance,
short and long term disability, vacation pay, severance or other termination
pay, other welfare and fringe benefit or remuneration of any kind, whether
written or unwritten or otherwise funded or unfunded, including all employee
benefit plans within the meaning of Section 3(3) of ERISA which is or has been
sponsored, maintained, contributed to or required to be contributed to, by the
Company or any ERISA Affiliate for the benefit of any employee, officer, manager
or member of the Company or under which the Company or any ERISA Affiliate has
or may have any current or future liability or obligation.

 

“Environmental Law” means any Law or Order relating to the environment or
occupational health and safety, including any Law or Order pertaining to
(i) treatment, storage, disposal, generation and transportation of Materials of
Environmental Concern; (ii) air, water and noise pollution; (iii) the protection
of groundwater, surface water or soil; (iv) the release or threatened release
into the environment of Materials of Environmental Concern, including emissions,
discharges, injections, spills, escapes or dumping; or (v) storage tanks,
vessels, containers, abandoned or discarded barrels, and other closed
receptacles used for Materials of

 

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Environmental Concern.  As used above, the terms “release” and “environment”
shall have the meaning set forth in CERCLA.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and all Regulations promulgated thereunder.

 

“ERISA Affiliate” means any person, trade, business or other entity treated as a
single employer with the Company under Section 414 of the Code or
Section 4001(a)(14) of ERISA.

 

“Excepted Representations” means the representations and warranties set forth in
Sections 3.1—3.6, 3.8, 3.11, 3.16(e)—(f), 3.17, 3.18, 3.22(e), 3.25, 3.26, and
4.1—4.4 hereof.

 

“GAAP” means generally accepted accounting principles in the United States.

 

“Governmental Authority” means: (a) any nation, state, county, city, town,
municipality, or other jurisdiction of any nature; (b) any federal, state,
municipal or local governmental or quasi-governmental entity or authority of any
nature; (c) any Court or tribunal exercising or entitled to exercise judicial
authority or power of any nature; (d) any multinational organization or body
exercising any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature; and (e) any department or
subdivision of any of the foregoing, including any commission, branch, board,
bureau, agency, official or other instrumentality exercising or entitled to
exercise any administrative, executive, judicial, legislative, police,
regulatory or taxing authority or power of any nature.

 

“Government Bid” means any offer, proposal or quote made by the Company prior to
the Closing Date which is outstanding and which, if accepted, would result in a
Government Contract.

 

“Government Contract” means any contract, subcontract, teaming agreement or
arrangement, joint venture, basic ordering agreement, blanket purchasing
agreement, Federal Supply Schedule contract, pricing agreement, CRADA, letter
agreement, grant or other similar Contract of any kind, between the Company, on
the one hand, and (a) any Governmental Authority, (b) any prime contractor of a
Governmental Authority in its capacity as a prime contractor, or (c) any
subcontractor with respect to any Contract of a type described in clauses (a) or
(b) of this definition, on the other hand.  A task, purchase or delivery order
under a Government Contract shall not constitute a separate Government Contract,
for purposes of this definition, but shall be part of the Government Contract to
which it relates.

 

“Indebtedness” means Liabilities (including Liabilities for principal, accrued
interest, penalties, fees and premiums) (i) for borrowed money, or with respect
to deposits or advances of any kind (other than deposits, advances or excess
payments accepted in connection with the sale of products or services in the
ordinary course of business), (ii)  evidenced by bonds, debentures, notes or
similar instruments, (iii) upon which interest charges are customarily paid
(other than obligations accepted in connection with the purchase of products or
services in the ordinary course of business), (iv) under conditional sale or
other title retention agreements, (v)  issued or assumed as the deferred
purchase price of property or services (other than accounts payable to suppliers
incurred in the ordinary course of business and paid when due), (vi)  of others
secured by (or for which the holder of such Liabilities has an existing right,
contingent or otherwise, to be secured by) any Lien or

 

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security interest on property owned or acquired by the Person in question
whether or not the obligations secured thereby have been assumed and (vii) under
leases required to be accounted for as capital leases under GAAP.

 

“Intellectual Property” means worldwide trademarks, service marks, trade names,
trade dress, designs, logos, slogans and general intangibles of like nature,
together with all goodwill related to the foregoing (whether registered or not,
but including any registrations and applications for any of the foregoing)
(collectively, “Trademarks”); designs (whether registered or unregistered, but
including any registrations and applications for any such designs and any
non-disclosed designs) (collectively, “Designs”); patents (including the ideas,
inventions and discoveries described therein, any pending applications, any
registrations, patents or patent applications based on applications that are
continuations, continuations-in-part, divisional, reexamination, reissues,
renewals of any of the foregoing and applications and patents granted on
applications that claim the benefit of priority to any of the foregoing)
(collectively, “Patents”); works of authorship or copyrights (including any
registrations, applications and renewals for any of the foregoing) and other
rights of authorship (collectively, “Copyrights”); trade secrets and other
confidential or proprietary information, know-how, confidential or proprietary
technology, processes, work flows, formulae, algorithms, models, user
interfaces, customer, supplier and user lists, databases, pricing and marketing
information, inventions, marketing materials, inventions and discoveries
(whether patentable or not) (collectively, “Trade Secrets”); computer programs
and other Software, macros, scripts, source code, object code, binary code,
methodologies, processes, work flows, architecture, structure, display screens,
layouts, development tools, instructions and templates; published and
unpublished works of authorship, including audiovisual works, databases and
literary works; rights in, or associated with a person’s name, voice, signature,
photograph or likeness, including rights of personality, privacy and publicity;
rights of attribution and integrity and other moral rights; Uniform Resource
Locators (URLs) and Internet domain names and applications therefor (and all
interest therein), IP addresses, adwords, key word associations and related
rights; all other proprietary, intellectual property and other rights relating
to any or all of the foregoing; all copies and tangible embodiments of any or
all of the foregoing (in whatever form or medium, including electronic media);
and all rights to sue for and any and all remedies for past, present and future
infringements of any or all of the foregoing and rights of priority and
protection of interests therein under the Laws of any jurisdiction.

 

“IRS” means the United States Internal Revenue Service and, to the extent
relevant, the United States Department of Treasury.

 

“Knowledge” (and similar terms and phrases) means the actual knowledge of any of
Hudson Henley and Geoff Henley, and any knowledge which was or could reasonably
have been obtained by such Persons in the prudent exercise of their duties or
upon due inquiry of those employees reporting thereto, whose duties would, in
the normal course of business affairs, result in such employees having knowledge
concerning the subject in question.

 

“Laws” means all laws, statutes, codes, written policies, licensing
requirements, ordinances and Regulations of any Governmental Authority,
including all Orders, having the effect of law in each such jurisdiction.

 

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“Liabilities” means any debts, liabilities, obligations, claims, charges,
damages, demands and assessments of any kind, including those with respect to
any Governmental Authority, whether accrued or not, known or unknown, disclosed
or undisclosed, fixed or contingent, asserted or unasserted, liquidated or
unliquidated, whenever or however arising (including, those arising out of any
contract or tort based on negligence or strict liability) and whether or not the
same would be required by GAAP to be reflected in financial statements or
disclosed in the notes thereto.

 

“Lien” means any mortgage, easement, right of way, charge, claim, community
property interest, condition, equitable interest, lien, option, pledge, security
interest, right of first refusal, or restriction or adverse claim of any kind,
including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership, or any other encumbrance or
exception to title of any kind.

 

“Losses” means losses, damages, liabilities, demands, taxes, sanctions,
deficiencies, assessments, judgments, costs, interest, penalties and expenses
(including reasonable attorneys’ fees).

 

“Materials of Environmental Concern” means any substances, chemicals, compounds,
solids, liquids, gases, materials, pollutants or contaminants, hazardous
substances (including as such term is defined under CERCLA), solid wastes and
hazardous wastes (including as such terms are defined under the Resource
Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum
products, asbestos or substances containing asbestos, polychlorinated biphenyls
or any other material subject to regulation under any Environmental Law.

 

“Measurement Period” means each of the following seventeen periods:
(1) March 2014; (2) April, May and June 2014; (3) July, August and
September 2014; (4) October, November and December 2014; (5) January,
February and March 2015; (6)  April, May and June 2015; (7) July, August and
September 2015; (8) October, November and December 2015; (9) January,
February and March 2016; (10) April, May and June 2016; (11) July, August and
September 2016; (12) October, November and December 2016; (13) January,
February and March 2017; (14) April, May and June 2017; (15) July, August and
September 2017; (16) October, November, December 2017; and (17) January,
February 2018

 

“Open Source Software” means (i) any software that requires as a condition of
use, modification and/or distribution of such software, that such software:
(a) be disclosed or distributed in source code, (b) be licensed for the purpose
of making derivative works, and/or (c) can be redistributed only free of
enforceable Intellectual Property rights, and/or (ii) any software that
contains, is derived in any manner (in whole or in part) from, or statically or
dynamically links against any software specified in (i).  For exemplary purposes
only, and without limitation, any software modules or packages licensed or
distributed under any of the following licenses or distribution models shall
qualify as Open Source Software:  (a) the GNU General Public License or
Lesser/Library GPL, (b) the Artistic License, (c) the Mozilla Public License,
(d) the Common Public License, (e) the Sun Community Source License, and (f) the
Sun Industry Standards Source License.

 

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“Order” means any judgment, order, writ, injunction, ruling, decision or decree
of, or any settlement under the jurisdiction of any Governmental Authority.

 

“Organizational Documents” means, with respect to any corporation, those
instruments that at the time constitute its corporate charter as filed or
recorded under the Laws of the jurisdiction of its incorporation, including the
articles or certificate of incorporation, organization or association, and its
by-laws or memorandum of association, and with respect to any limited liability
company, those instruments that at the time constitute its certificate of
formation as filed or recorded under the Laws of the jurisdiction of its
organization, and its operating agreement or limited liability company
agreement, in each case including all amendments thereto, as the same may have
been restated and, with respect to any other entity, the equivalent
organizational or governing documents of such entity.

 

“Person” means an individual, corporation, partnership, association, trust,
unincorporated organization, limited liability company or other legal entity.

 

“Personally Identifiable Information” means information that can be used to
identify or contact Persons, which may include their first and last name,
physical address, e-mail address and telephone number.

 

“Regulation” means any rule or regulation of any Governmental Authority.

 

“Related Agreements” means the Transfer Documents, the Non-competition
Agreements and the Employment Agreement.

 

“Software” means computer programs, known by any name, including all versions
thereof, and all related documentation, training manuals and materials, user
manuals, technical and support documentation, source code and object code, code
libraries, debugging files, linking files, program files, data files, computer
and related data, field and date definitions and relationships, data definition
specifications, data models, program and system logic, interfaces, program
modules, routines, sub-routines, algorithms, macros, scripts, compiler
directives, program architecture, design concepts, system designs, program
structure, sequence and organizations, screen displays and report layouts and
all other material related to any such computer programs.

 

“Subsidiary” means, with respect to any Person, any corporation, partnership,
joint venture, limited liability company, trust or other legal entity of which
such Person (either alone or through or together with any other Subsidiary)
owns, directly or indirectly, more than fifty percent (50%) of the stock or
other equity interests in such entity.

 

“Tax Returns” means any and all returns, declarations, reports, claims for
refunds and information returns or statements relating to Taxes, including all
schedules or attachments thereto and including any amendment thereof, required
to be filed with any Governmental Authority, including consolidated, combined
and unitary tax returns.

 

“Taxes” means all taxes and governmental impositions of any kind in the nature
of (or similar to) taxes, payable to any Governmental Authority, including those
on or measured by or referred to as income, franchise, profits, gross receipts,
capital, ad valorem, custom duties,

 

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alternative or add-on minimum taxes, estimated, environmental, disability,
registration, value added, sales, use, service, real or personal property,
capital stock, license, payroll, withholding, employment, social security,
workers’ compensation, unemployment compensation, health insurance, utility,
severance, production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes, and interest, penalties and additions to tax imposed
with respect thereto.

 

“Trading with the Enemy Act” means the Trading with the Enemy Act of 1917, 50
U.S.C. §1, et. seq., and any Regulations thereunder, as the same may be amended
from time to time.

 

“WARN” means the Worker Adjustment and Retraining Notification Act, as amended,
and the Regulations promulgated thereunder.

 

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