Exhibit 10.1

 

EXECUTION COPY

 

 

STOCK PURCHASE AGREEMENT

 

between

 

REGIS CORPORATION

 

and

 

ADERANS CO., LTD.

 

DATED AS OF JULY 13, 2012

 

 

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TABLE OF CONTENTS

 

 

 

Page

ARTICLE I                                PURCHASE AND SALE OF THE SHARES

1

 

 

 

SECTION 1.01

Purchase and Sale of the Shares

1

 

 

 

ARTICLE II                           CLOSING; WORKING CAPITAL ADJUSTMENT

1

 

 

 

SECTION 2.01

Closing

1

SECTION 2.02

Working Capital Adjustment

2

 

 

 

ARTICLE III                      CONDITIONS TO CLOSING

5

 

 

 

SECTION 3.01

Buyer’s Obligation

5

SECTION 3.02

Seller’s Obligation

6

SECTION 3.03

Frustration of Closing Conditions

6

 

 

 

ARTICLE IV                       REPRESENTATIONS AND WARRANTIES OF SELLER

7

 

 

 

SECTION 4.01

Authority

7

SECTION 4.02

No Conflicts; Consents

7

SECTION 4.03

The Shares

8

SECTION 4.04

Organization and Standing; Books and Records

8

SECTION 4.05

Capital Stock of the Company

9

SECTION 4.06

Company Subsidiaries; Equity Interests

9

SECTION 4.07

Financial Statements; Undisclosed Liabilities

10

SECTION 4.08

Taxes

11

SECTION 4.09

Assets Other than Real Property Interests

13

SECTION 4.10

Title to Real Property

14

SECTION 4.11

Intellectual Property

15

SECTION 4.12

Material Contracts

16

SECTION 4.13

Litigation

19

SECTION 4.14

Benefit Plans

19

SECTION 4.15

Absence of Changes or Events

21

SECTION 4.16

Compliance with Applicable Laws; Permits; Environmental Laws

21

SECTION 4.17

Regulatory Compliance

23

SECTION 4.18

Employee and Labor Matters

24

SECTION 4.19

Material Services Provided by Seller or Its Affiliates

25

SECTION 4.20

Franchise Matters

25

SECTION 4.21

Insurance

27

SECTION 4.22

Suppliers

27

SECTION 4.23

Products

27

 

 

 

ARTICLE V                            COVENANTS OF SELLER

27

 

 

 

SECTION 5.01

Access

27

SECTION 5.02

Ordinary Conduct

28

SECTION 5.03

Certain Matters

31

SECTION 5.04

Exclusivity

31

SECTION 5.05

Non-Competition; Non-Interference

31

SECTION 5.06

Pre-Closing Balance Sheet

32

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

SECTION 5.07

No Additional Representations

32

 

 

 

ARTICLE VI                       REPRESENTATIONS AND WARRANTIES OF BUYER

33

 

 

 

SECTION 6.01

Authority

33

SECTION 6.02

No Conflicts; Consents

33

SECTION 6.03

Securities Act

34

SECTION 6.04

Actions and Proceedings, etc.

34

SECTION 6.05

Financing

34

SECTION 6.06

Certain Matters

35

SECTION 6.07

Certain Arrangements

35

SECTION 6.08

Solvency

35

 

 

 

ARTICLE VII                  COVENANTS OF BUYER

36

 

 

 

SECTION 7.01

Confidentiality

36

SECTION 7.02

No Additional Representations

36

SECTION 7.03

No Use of Certain Names

37

SECTION 7.04

Buyer Activity on Closing Date

37

 

 

 

ARTICLE VIII             MUTUAL COVENANTS

37

 

 

 

SECTION 8.01

Consents

37

SECTION 8.02

Cooperation

38

SECTION 8.03

Publicity

38

SECTION 8.04

Reasonable Best Efforts

38

SECTION 8.05

Antitrust Matters

39

SECTION 8.06

Records

40

SECTION 8.07

Support Services

41

SECTION 8.08

Financing

41

SECTION 8.09

Status

44

 

 

 

ARTICLE IX                       EMPLOYEE AND RELATED MATTERS

44

 

 

 

SECTION 9.01

Employee Benefits

44

 

 

 

ARTICLE X                            FURTHER ASSURANCES

45

 

 

 

SECTION 10.01

Further Assurances

45

 

 

 

ARTICLE XI                       INDEMNIFICATION

46

 

 

 

SECTION 11.01

Tax Indemnification

46

SECTION 11.02

Other Indemnification by Seller

47

SECTION 11.03

Other Indemnification by Buyer

48

SECTION 11.04

Limitations on Indemnification; Cooperation

48

SECTION 11.05

Losses Net of Insurance, etc.

49

SECTION 11.06

Termination of Indemnification

49

SECTION 11.07

Procedures Relating to Indemnification for Third Party Claims

49

 

ii

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TABLE OF CONTENTS

(continued)

 

 

 

Page

SECTION 11.08

Procedures Related to Indemnification for Other Claims (Other than Tax Claims
under Section 11.01)

51

SECTION 11.09

Procedures Relating to Indemnification of Tax Claims

51

SECTION 11.10

Exclusive Remedy

52

 

 

 

ARTICLE XII                  TAX MATTERS

53

 

 

 

SECTION 12.01

Responsibility for Preparation and Filing of Tax Returns and Amendments

53

SECTION 12.02

Cooperation

53

SECTION 12.03

Refunds and Credits

54

SECTION 12.04

Transfer Taxes

54

SECTION 12.05

FIRPTA Certificate

54

SECTION 12.06

Buyer Activity Post Closing

54

SECTION 12.07

Loss Shares

55

 

 

 

ARTICLE XIII             TERMINATION

55

 

 

 

SECTION 13.01

Termination

55

SECTION 13.02

Return of Confidential Information

55

SECTION 13.03

Consequences of Termination

56

 

 

 

ARTICLE XIV              SURVIVAL OF REPRESENTATIONS

56

 

 

 

SECTION 14.01

Survival of Representations

56

 

 

 

ARTICLE XV                   MISCELLANEOUS

56

 

 

 

SECTION 15.01

Assignment

56

SECTION 15.02

No Third Party Beneficiaries

57

SECTION 15.03

Expenses

57

SECTION 15.04

Specific Performance

58

SECTION 15.05

Amendments

58

SECTION 15.06

Notices

58

SECTION 15.07

Interpretation; Exhibits and the Seller Disclosure Schedule; Definitions

59

SECTION 15.08

Counterparts

66

SECTION 15.09

Entire Agreement

66

SECTION 15.10

Fees

66

SECTION 15.11

Severability

67

SECTION 15.12

Consent to Jurisdiction

67

SECTION 15.13

Waiver of Jury Trial

68

SECTION 15.14

GOVERNING LAW

68

 

iii

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STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT, dated as of July 13, 2012 (this “Agreement”), between
REGIS CORPORATION, a Minnesota corporation (“Seller”), and ADERANS CO., LTD., a
Japanese corporation (“Buyer”).  All capitalized terms used in this Agreement
shall have the respective meanings assigned to such terms in Section 15.07.

 

WHEREAS, Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the issued and outstanding shares of Common Stock, par value $.01
per share (the “Shares”), of HC (USA), Inc., a Delaware corporation and wholly
owned subsidiary of Seller (the “Company”); and

 

WHEREAS, the board of directors of each of Buyer and Seller has unanimously
declared that it is advisable and in the best interest of Buyer and Seller and
the stockholders of Buyer and Seller, respectively, to consummate, and each have
approved, this Agreement and the transactions contemplated hereby.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

 

ARTICLE I

 

Purchase and Sale of the Shares

 

SECTION 1.01                                      Purchase and Sale of the
Shares.  On the terms and subject to the conditions of this Agreement, at the
Closing, Seller will sell, transfer and deliver to Buyer, and Buyer will
purchase from Seller, all of Seller’s right, title and interest in and to the
Shares, free and clear of all Liens (such sale and purchase transaction, the
“Purchase and Sale”), for an aggregate purchase price equal to $163,500,000.00
(the “Purchase Price”), payable and subject to adjustment as set forth in
Article II.

 

ARTICLE II

 

Closing; Working Capital Adjustment

 

SECTION 2.01                                      Closing.  On the terms and
subject to the conditions of this Agreement, the Purchase and Sale contemplated
by this Agreement shall take place at a closing (the “Closing”) to be held at
10:00 a.m., New York City time, on the third business day after the satisfaction
or waiver (subject to Applicable Law) of the conditions set forth in Article III
(excluding conditions that, by their terms, are to be satisfied at Closing but
subject to the satisfaction or waiver of such conditions), at the offices of
O’Melveny & Myers LLP at Times Square Tower, 7 Times Square, New York, NY, or at
such other time or on such other date or at such other place as Seller and Buyer
may mutually agree upon in writing.  The day on which the Closing takes place is
referred to herein as the “Closing Date” and the Closing shall be deemed
effective as of 11:59 p.m., New York City time, on the Closing Date.  The
parties may agree that the Closing shall take place via the exchange of
facsimile or scanned final instruments and

 

1

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executed signature pages.  At the Closing, (a) Buyer shall deliver to Seller, by
wire transfer to a bank account designated in writing by Seller at least three
business days prior to the Closing Date, immediately available funds in an
amount equal to the Purchase Price plus or minus an estimate, prepared in good
faith by Seller and delivered to Buyer at least three business days prior to the
Closing Date, of any adjustment to the Purchase Price under Section 2.02 and
calculating and setting out in writing reasonable details of such calculations
(the Purchase Price plus or minus such estimate of any adjustment under Section
2.02 being hereinafter called the “Closing Date Amount”), and (b) Seller shall
deliver or cause to be delivered to Buyer (i) certificates representing the
Shares, duly endorsed in blank or accompanied by stock powers duly endorsed in
blank in proper form for transfer, with appropriate transfer stamps, if any,
affixed, in form and substance reasonably acceptable to Buyer, and (ii) written
resignations, duly executed and effective as of the Closing Date, of the
directors of the Company and the Company Subsidiaries set forth in Section
2.01(b) of the Seller Disclosure Schedule.

 

SECTION 2.02                                      Working Capital Adjustment. 
(a) (i) Within 60 days after the Closing Date, Buyer shall prepare in good faith
and deliver to Seller a statement (the “Statement”) setting forth Working
Capital as of the close of business on the Closing Date (“Closing Working
Capital”) and setting out in reasonable detail such calculations. The Statement
shall be prepared in compliance with the requirements of this Section 2.02.

 

(ii)                                  During the 45-day period following
Seller’s receipt of the Statement, Seller shall be permitted to review the
working papers of Buyer relating to the Statement. The Statement shall be deemed
to have been accepted by Seller and shall become final and binding upon the
parties on the forty-fifth (45th) day following delivery thereof, unless Seller
gives written notice of its disagreement with the Statement (“Notice of
Disagreement”) to Buyer on or prior to such date. The Notice of Disagreement
shall (A) specify in reasonable detail the nature of and basis for any
disagreement so asserted, the amounts involved and Seller’s determination of the
amount of Working Capital, and (B) only include disagreements based on
mathematical errors or based on Closing Working Capital not being calculated in
accordance with this Section 2.02. Any items not disputed in the Notice of
Disagreement shall be deemed to have been accepted by Seller; provided, that
Seller shall not be deemed to have agreed with any items which are affected by
the resolution of the items disputed in the Notice of Disagreement. If a Notice
of Disagreement is received by Buyer, then the Statement (as revised in
accordance with clause (1) or (2) below) shall become final and binding upon
Seller and Buyer on the earlier of (1) the date Seller and Buyer resolve in
writing any differences they have with respect to the matters specified in the
Notice of Disagreement or (2) the date any disputed matters are finally resolved
in writing by the Accounting Firm, in each case in accordance with the terms of
this Section 2.02.

 

(iii)                               During the 45-day period following the
delivery of a Notice of Disagreement, Seller and Buyer shall seek in good faith
to resolve in writing any differences which they may have with respect to the
matters specified in the Notice of Disagreement. If, at the end of such 45-day
period, Seller and Buyer have been unable to resolve all differences that they
may have with respect to the matters specified in the Notice of Disagreement,
then Seller and Buyer shall submit to a nationally recognized independent
accounting firm mutually agreed upon by Seller and Buyer (the “Accounting Firm”)
for review and resolution any and all matters which remain in dispute and which
were properly included in the Notice of Disagreement (along with a copy of the
Statement marked to indicate those line items that are in dispute). The scope of
the

 

2

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Accounting Firm’s review shall be limited to only those matters which remain in
dispute and which were properly included in the Notice of Disagreement. Seller
and Buyer shall use reasonable best efforts to cause the Accounting Firm to
render a decision resolving the matters submitted to the Accounting Firm within
30 days of the receipt of such submission.  Seller and Buyer agree that judgment
may be entered upon the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be enforced. 
The Accounting Firm’s determination shall be accompanied by a certificate of the
Accounting Firm that it reached its decision in accordance with the provisions
of this Section 2.02, and that all disputed amounts resolved by the Accounting
Firm were calculated in accordance with the Seller Accounting Policies. The cost
of the Accounting Firm’s review and determination pursuant to this Section
2.02(a) shall be borne by Buyer and Seller in inverse proportion as they may
prevail on matters resolved by the Accounting Firm, which proportionate
allocation also shall be determined by the Accounting Firm at the time the
determination of the Accounting Firm is rendered on the merits of the matter
submitted; provided, however, that Seller and Buyer shall each bear the fees of
their respective counsel, auditors and other Representatives incurred in
connection with the determination and review of the Statement. During the review
by the Accounting Firm, Buyer and Seller shall each make available to the
Accounting Firm such individuals and copies of such information, books, records
and work papers, as may be reasonably required by the Accounting Firm to fulfill
its obligations under this Section 2.02(a); provided, however, that the
independent accountants of Seller or Buyer shall not be obligated to make any
working papers available to the Accounting Firm unless and until the Accounting
Firm has signed a reasonably customary confidentiality agreement relating to
such access to working papers.

 

(b)                                 The Purchase Price shall be increased by the
amount by which Closing Working Capital exceeds $3,438,779 (the “WC Amount”),
and the Purchase Price shall be decreased by the amount by which Closing Working
Capital is less than the WC Amount (the Purchase Price as so increased or
decreased shall hereinafter be referred to as the “Adjusted Purchase Price”). If
the Closing Date Amount is less than the Adjusted Purchase Price, Buyer shall,
and if the Closing Date Amount is more than the Adjusted Purchase Price, Seller
shall, within three business days after the Statement becomes final and binding
on the parties, make payment of the amount of such difference, by wire transfer
of immediately available funds to an account designated in writing by the party
to which such amount is to be paid.  Any adjustment of the Purchase Price
pursuant to this Section 2.02 shall be referred to as the “Working Capital
Adjustment”.

 

(c)                                  The term “Working Capital” shall mean
Current Assets minus Current Liabilities.  The WC Amount shall not be subject to
change regardless of whether the items included therein were in accordance with
generally accepted accounting principles.  The term “Current Assets” shall mean
the net receivables, net inventories and other current assets (excluding any
prepaid expenses relating to capital expenditures, if any, and prepaid security
deposits) of the Company and the Company Subsidiaries, calculated in accordance
with the Regis Corporation Accounting Procedures previously delivered to Buyer
and in effect for the fiscal year ended June 30, 2012 (the “Seller Accounting
Policies”), which are in accordance with GAAP. The term “Current Liabilities”
shall mean the accounts payable (excluding accounts payable relating to capital
expenditures) and accrued expenses (excluding accrued bonuses and legal accrual)
of the

 

3

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Company and the Company Subsidiaries, calculated in accordance with the Seller
Accounting Policies. For the avoidance of doubt, Current Liabilities shall not
include any deferred revenue, including the net due to the related medical
practices.  Current assets and current liabilities relating to Taxes and
intercompany transactions are not included in the Reference Balance Sheet and
shall not be taken into account in determining Working Capital.  Cash and items
for which Buyer and its Affiliates (including the Company) are indemnified by
Seller pursuant to Article XI shall not be taken into account in determining
Working Capital. The parties agree that the adjustment contemplated by this
Section 2.02(c) is intended to show the change in Working Capital from the date
of the Reference Balance Sheet to the business day immediately prior to the
Closing Date, and that such change can only be measured if the calculation is
done in the same way, using the Seller Accounting Policies at both dates. The
scope of the disputes to be resolved by the Accounting Firm is limited to
whether such calculation was done in accordance with this Section 2.02(c),
including whether the Seller Accounting Policies were used, and whether there
were mathematical errors in the Statement. The Accounting Firm is not to make
any other determination, including any determination as to whether GAAP was
followed for the Reference Balance Sheet or the Statement or as to whether the
WC Amount is correct, and the Accounting Firm shall not be permitted or
authorized to determine an amount with respect to any disputed item that is (A)
greater than the highest amount of such disputed item, or (B) less than the
lowest amount of such disputed item, in each case, as proposed by Seller in the
Notice of Disagreement or as proposed by Buyer in the Statement. Any items on or
omissions from the Reference Balance Sheet that are based upon errors of fact or
mathematical errors or that are not in accordance with the Seller Accounting
Policies shall be carried forward for purposes of calculating Closing Working
Capital.

 

(d)                                 Buyer agrees that, during the period of time
from and after the Closing Date through the resolution of any Working Capital
Adjustment contemplated by this Section 2.02, it shall not take any actions with
respect to the accounting books and records of the Company on which the
Statement is to be based that are not consistent with the Company’s past
practices. Without limiting the generality of the foregoing, no changes shall be
made during such period in any reserve or other account existing as of the date
of the Reference Balance Sheet except as a result of events occurring after the
date of the Reference Balance Sheet and, in such event, only in a manner
consistent with past practices.

 

(e)                                  During the period of time from and after
the Closing Date through the resolution of any Working Capital Adjustment
contemplated by this Section 2.02, Buyer shall cause the Company to afford to
Seller and any accountants, counsel or financial advisers retained by Seller in
connection with any Working Capital Adjustment contemplated by this Section 2.02
reasonable access during normal business hours to all the Company’s properties,
books, contracts, personnel and records relevant to the adjustment contemplated
by this Section 2.02 and shall provide Seller, upon Seller’s request and at
Seller’s expense, with copies of any such books, contracts and records,
including Buyer’s work papers relating to the Statement, to the extent the
provision of such copies are reasonably necessary to allow Seller to review the
Statement; provided, however, that the accountants of Buyer or the Company shall
not be obligated to make any working papers available to Seller unless and until
Seller has signed a reasonably customary confidentiality agreement relating to
such access to working papers.

 

4

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ARTICLE III

 

Conditions to Closing

 

SECTION 3.01                                      Buyer’s Obligation.  The
obligation of Buyer to purchase and pay for the Shares is subject to the
satisfaction (or waiver by Buyer) as of the Closing of the following conditions:

 

(a)                                 The representations and warranties of Seller
made (i) in Sections 4.01 and 4.05 of this Agreement shall be true and correct
in all material respects, as of the date hereof and as of the time of the
Closing as though made as of such time (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date), (ii) in this Agreement, other
than those described in clause (i) above or clause (iii) below, shall be true
and correct (disregarding all materiality and Material Adverse Effect
qualifications contained therein), as of the date hereof and as of the time of
the Closing as though made as of such time (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date), except in the case of this
clause (ii) where the failure to be so true and correct, individually or in the
aggregate, has not had, and would not reasonably be expected to have, a Material
Adverse Effect and (iii) in Section 4.03 and the first two sentences of Section
4.05 shall be true and correct in all respects as of the date hereof and as of
the time of the Closing. Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Seller by the time of the Closing. Seller shall
have delivered to Buyer a certificate dated the Closing Date and signed by an
authorized officer of Seller confirming that the foregoing conditions in this
Section 3.01(a) have been satisfied.

 

(b)                                 No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order or judgment enacted, entered, promulgated, enforced or issued by
any Federal, state, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a “Governmental Entity”) or
other legal restraint or prohibition preventing or making illegal the Purchase
and Sale shall have been issued and remain in effect.

 

(c)                                  The waiting period under the Hart Scott
Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations thereunder (the “HSR Act”), if applicable to the Purchase and Sale,
shall have expired or been terminated.

 

(d)                                 Seller shall have executed and delivered the
Other Transaction Documents to which Seller is a party.

 

(e)                                  Buyer shall have received all applicable
deliverables in accordance with Section 2.01(b).

 

5

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(f)                                   During the period from the date of this
Agreement through the Closing Date, there shall not have occurred and be
continuing any Material Adverse Effect.

 

SECTION 3.02                                      Seller’s Obligation.  The
obligation of Seller to sell and deliver the Shares to Buyer is subject to the
satisfaction (or waiver by Seller) as of the Closing of the following
conditions:

 

(a)                                 The representations and warranties of Buyer
(i) made in Sections 6.05, 6.06 and 6.07 of this Agreement shall be true and
correct in all material respects, as of the date hereof and as of the time of
the Closing as though made as of such time (except to the extent such
representations and warranties expressly relate to an earlier date, in which
case such representations and warranties shall be true and correct in all
material respects on and as of such earlier date), and (ii) made in this
Agreement, other than those described in clause (i) above, shall be true and
correct (disregarding all materiality and Material Adverse Effect qualifications
contained therein), as of the date hereof and as of the time of the Closing as
though made as of such time (except to the extent such representations and
warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct in all material
respects on and as of such earlier date), except in the case of this clause (ii)
where the failure to be so true and correct, individually or in the aggregate,
has not had, and would not reasonably be expected to have, a material adverse
effect on, or materially delay, Buyer’s ability to consummate the Purchase and
Sale and the other transactions contemplated by this Agreement and the Other
Transaction Documents on the terms and conditions set forth herein and therein.
Buyer shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or complied
with by Buyer by the time of the Closing.  Buyer shall have delivered to Seller
a certificate dated the Closing Date and signed by an authorized officer of
Buyer confirming that the foregoing conditions in this Section 3.02(a) have been
satisfied.

 

(b)                                 No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order or judgment enacted, entered, promulgated, enforced or issued by
any Governmental Entity or other legal restraint or prohibition preventing or
making illegal the Purchase and Sale shall have been issued and remain in
effect.

 

(c)                                  The waiting period under the HSR Act, if
applicable to the Purchase and Sale, shall have expired or been terminated.

 

(d)                                 Buyer shall have executed and delivered the
Other Transaction Documents to which Buyer is a party.

 

SECTION 3.03                                      Frustration of Closing
Conditions.  Neither Buyer nor Seller may rely on the failure of any condition
set forth in Section 3.01 or 3.02, respectively, to be satisfied if such failure
was caused by such party’s failure to act in good faith or to use its reasonable
best efforts to cause the Closing to occur, as required by Section 8.04.

 

6

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ARTICLE IV

 

Representations and Warranties of Seller

 

Except as set forth in the Seller Disclosure Schedule delivered by Seller to
Buyer concurrent with the execution and delivery of this Agreement (it being
understood that any information set forth in one section or subsection of the
Seller Disclosure Schedule shall be deemed to apply to and qualify the Section
or subsection of this Agreement to which it corresponds and each other Section
or subsection of this Agreement to the extent that it is reasonably apparent on
the face of such disclosure that such information is relevant to such other
Section or subsection) (the “Seller Disclosure Schedule”), Seller hereby
represents and warrants to Buyer as follows:

 

SECTION 4.01                                      Authority.  Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota. Seller has all requisite corporate power and
authority to enter into and deliver this Agreement and the Other Transaction
Documents, and to perform its obligations hereunder and thereunder. Seller has
all requisite corporate power and authority to consummate the transactions
contemplated hereby and thereby.  All corporate acts and other proceedings
required to be taken by Seller to authorize the execution, delivery and
performance of this Agreement and the Other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
and properly taken. This Agreement has been duly executed and delivered by
Seller and, assuming the due authorization, execution and delivery by the other
party hereto, constitutes, and the Other Transaction Documents on the Closing
Date will be duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery by the other parties thereto, will
constitute, a legal, valid and binding obligation of Seller, enforceable against
Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
affecting creditors’ rights generally from time to time in effect and to general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or at law (the “Bankruptcy and Equity Exception”).

 

SECTION 4.02                                      No Conflicts; Consents.  (a)
The execution, delivery and performance of this Agreement by Seller does not,
and the execution, delivery and performance of the Other Transaction Documents
by Seller will not, and the consummation by Seller of the transactions
contemplated hereby and thereby and compliance by Seller with the terms hereof
and thereof will not, conflict with, or result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of, or result in, termination, modification, cancellation or
acceleration of any obligation or to the loss of a benefit under, or result in
the creation of any liens (statutory or other), pledges, claims, encumbrances,
security interests, options, charges, rights of first offer or refusal,
third-party rights or restrictions of any kind or nature whatsoever (“Liens”) in
or upon any of the properties, rights or assets of the Company or any Company
Subsidiary under, or require any consent, waiver or approval by, or any notice
to, any provision of or any person under (i) the Certificate of Incorporation or
Bylaws (or the comparable governing instruments) of Seller, the Company or any
Company Subsidiary, or (ii) any Material Contract other than the Franchise
Agreements and the Physician Agreements, or (iii) the Franchise Agreements and
the Physician Agreements, or (iv)(A) any judgment, order, decree, writ,
injunction, award, directive, settlement or stipulation issued, promulgated or
entered

 

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into by or with any Governmental Entity (each, an “Order”) applicable to Seller,
the Company or any Company Subsidiary or any of its or their properties, rights
or assets, or (B) subject to the matters referred to in clauses (i), (ii), (iii)
and (iv) of paragraph (b) below, any statute, law, ordinance, rule or regulation
applicable to Seller, the Company or any Company Subsidiary or any of their
respective properties, rights or assets, other than, in the case of clause (iii)
of this paragraph (a), any such items that, individually or in the aggregate,
would not reasonably be expected to be material to the Company and the Company
Subsidiaries, taken as a whole, and in the case of clauses (ii) and (iv) of this
paragraph (a), any such items that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.

 

(b)                                 No consent, approval, license, permit,
order, qualification or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained or made by or with respect to Seller, the Company or any Company
Subsidiary in connection with the execution, delivery and performance of this
Agreement or the Other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby other than (i) compliance with and
filings under the HSR Act, if applicable, (ii) those that may be required solely
by reason of Buyer’s (as opposed to any other third party’s) participation in
the transactions contemplated hereby and (iii) such consents, approvals,
licenses, permits, orders, qualifications, authorizations, registrations,
declarations and filings the absence of which, or the failure to make which,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.

 

SECTION 4.03                                      The Shares.  Seller has good
and valid title to the Shares, free and clear of any Liens.  Assuming Buyer has
the requisite power and authority to be the lawful owner of the Shares, upon
delivery to Buyer at the Closing of certificates representing the Shares, duly
endorsed by Seller for transfer to Buyer, and upon Seller’s receipt of the
Closing Date Amount, good and valid title to the Shares will pass to Buyer, free
and clear of any Liens, other than those arising from acts of Buyer or its
Affiliates.  Other than this Agreement, the Shares are not subject to any voting
trust agreement or other Contract, including any such Contract restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares.

 

SECTION 4.04                                      Organization and Standing;
Books and Records.  The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority and possesses and has in
effect all governmental franchises, licenses, permits, authorizations and
approvals (collectively, “Permits”) necessary to enable it to own, lease or
otherwise hold and operate its properties and assets and to carry on its
business as presently conducted, other than such Permits the lack of which,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect. The Company is duly qualified or
licensed to do business and is in good standing as a foreign corporation in each
jurisdiction in which the conduct or nature of its business or the ownership,
leasing or holding or operation of its properties or assets makes such
qualification, licensing or good standing necessary, except such jurisdictions
where the failure to be so qualified, licensed or in good standing, individually
or in the aggregate, has not had and would not reasonably be expected to have a
Material Adverse Effect. Seller has prior to the execution of this Agreement
made available to Buyer true and complete copies of the Certificate of
Incorporation and Bylaws of the Company, each as amended to, and in effect on,

 

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the date hereof, and the Company is not in default under or in violation of any
provision thereof in any material respect.

 

SECTION 4.05                                      Capital Stock of the Company. 
The authorized capital stock of the Company consists of One Hundred Thousand
(100,000) shares of common stock, $.01 par value, of which twenty nine thousand
one hundred seventy six (29,176) shares, constituting the Shares, are duly
authorized and validly issued and outstanding, fully paid and nonassessable. 
Seller is the direct record and beneficial owner of the Shares. Except for the
Shares, there are no shares of capital stock or other equity securities of the
Company outstanding.  The Shares have not been issued in violation of, and are
not subject to, any purchase option, call option, right of first refusal or
offer or any preemptive, subscription or similar rights under any provision of
Applicable Law, the Certificate of Incorporation or Bylaws of the Company, any
Contract to which the Company is subject, bound or a party or otherwise, and are
owned directly by Seller free and clear of all Liens, and are free of any
restriction on the right to vote, sell or otherwise dispose of such Shares.
There are no outstanding warrants, options, calls, rights, “phantom” stock
rights, agreements, contracts, convertible or exchangeable securities or other
commitments or other obligations of any kind (contingent or otherwise) or any
right or privilege capable of becoming a warrant, option, call, right, “phantom”
stock right, agreement, contract, convertible or exchangeable security or other
commitment or obligation (other than this Agreement) (a) pursuant to which
Seller or the Company is or may become obligated to issue, sell, purchase,
return or redeem any shares of capital stock or other securities of the Company
or (b) that give any person the right to receive any benefits or rights similar
to any rights enjoyed by or accruing to the holders of shares of capital stock
of the Company.  There are no outstanding bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which stockholders of
the Company may vote.

 

SECTION 4.06                                      Company Subsidiaries; Equity
Interests.  (a) Section 4.06(a) of the Seller Disclosure Schedule sets forth a
true and complete list, as of the date hereof, of all direct and indirect
Subsidiaries of the Company (each a “Company Subsidiary”), listing each Company
Subsidiary’s name, type of entity, jurisdiction, authorized capital stock,
membership interests or equivalent, the number and type of its issued and
outstanding shares of capital stock, membership units or similar ownership
interests, and the current ownership of such shares, membership units or similar
ownership interests.

 

(b)                                 Except for the Company Subsidiaries, there
are no other corporations, limited liability companies, partnerships, joint
ventures, associations or other entities or persons in which the Company or any
Company Subsidiary owns, of record or beneficially, any direct or indirect
equity or other interest or any right (contingent or otherwise) to acquire the
same. None of the Company or any Company Subsidiary is subject to any obligation
(by Applicable Law, Contract or otherwise) to make any investment or otherwise
acquire capital stock or other equity interests in any other person.

 

(c)                                  Each Company Subsidiary is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be. Each Company Subsidiary has all
requisite organizational power and authority and possesses and has

 

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in effect all Permits necessary to enable it to own, lease or otherwise hold and
operate its properties and assets and to carry on its business as presently
conducted, other than such Permits the lack of which, individually or in the
aggregate, have not had and would not reasonably be expected to have a Material
Adverse Effect. Each Company Subsidiary is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the conduct or
nature of its business or the ownership, leasing or holding or operation of its
properties or assets makes such qualification, licensing or good standing
necessary, except such jurisdictions where the failure to be so qualified,
licensed or in good standing, individually or in the aggregate, has not had and
would not reasonably be expected to have a Material Adverse Effect. Seller has
prior to the execution of this Agreement made available to Buyer true and
complete copies of the organizational documents of each Company Subsidiary, each
as amended to, and in effect on, the date hereof, and none of the Company
Subsidiaries is in default under or in violation of any provision thereof in any
material respect.

 

(d)                                 All of the issued and outstanding equity
securities or similar ownership interests in each Company Subsidiary have been
duly authorized and validly issued, and are fully paid and nonassessable.  The
Company is the direct or indirect record and beneficial owner of all of the
outstanding equity securities or similar ownership interests in each Company
Subsidiary. The outstanding equity securities or similar ownership interests in
each Company Subsidiary have not been issued in violation of, and are not
subject to, any purchase option, call option, right of first refusal or offer or
any preemptive, subscription or similar rights under any provision of Applicable
Law, the organizational documents of such Company Subsidiary, or any Contract to
which the Company or such Company Subsidiary is subject, bound or a party or
otherwise, and are owned directly or indirectly by the Company free and clear of
all Liens, and are free of any restriction on the right to vote, sell or
otherwise dispose of such equity securities or similar ownership interests. With
respect to each Company Subsidiary, there are no outstanding warrants, options,
calls, rights, “phantom” stock rights, agreements, contracts, convertible or
exchangeable securities or other commitments or obligations of any kind
(contingent or otherwise), or any right or privilege capable of becoming a
warrant, option, call, right, “phantom” stock right, agreement, contract,
convertible or exchangeable security or other commitment or obligation (i)
pursuant to which Seller, the Company or any Company Subsidiary is or may become
obligated to issue, sell, purchase, return or redeem any shares of capital stock
or other securities of such Company Subsidiary or (ii) that give any person the
right to receive any benefits or rights similar to any rights enjoyed by or
accruing to the holders of shares of capital stock or other securities of such
Company Subsidiary.

 

SECTION 4.07                                      Financial Statements;
Undisclosed Liabilities.  Section 4.07 of the Seller Disclosure Schedule sets
forth (a) the audited consolidated balance sheets of the Company as of June 30,
2011 (the “Balance Sheet”) and June 30, 2010, and the related audited
consolidated statements of operations and audited consolidated statements of
cash flows of the Company for the years ended June 30, 2011 and June 30, 2010,
together with the notes to such financial statements, and (b) the unaudited
balance sheet trial balance of the Company as of June 30, 2012 (the “Reference
Balance Sheet”), and the unaudited statement of profit and loss trial balance of
the Company for the twelve months ended June 30, 2012, together with the notes
to such financial statements (the financial statements described in clauses (a)
and (b) above, together with the notes to such financial statements,
collectively, the “Financial Statements”).

 

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The Financial Statements have been prepared in conformity with the Seller
Accounting Policies consistently applied (except in each case as described in
the notes thereto), but have not been prepared in accordance with GAAP, and do
not include allocations for corporate overhead or other costs or inter-company
revenue items, and taking into account all of the foregoing qualifications, on
that basis present in all material respects the consolidated financial condition
and results of operations of the Company as of the respective dates thereof and
for the respective periods indicated.  Except for matters, and only to the
extent, reflected or reserved against in the Financial Statements, neither the
Company nor any of the Company Subsidiaries has any liabilities (whether
absolute, accrued, contingent, fixed or otherwise) of any nature that would be
required under GAAP, as in effect on the date of this Agreement, to be reflected
on a consolidated balance sheet of the Company (including the notes thereto),
except liabilities that (A) were incurred since June 30, 2011 in the ordinary
course of business, (B) are incurred in connection with the transactions
contemplated by this Agreement or (C) would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. As of the
Closing Date, the Company and the Company Subsidiaries will have no outstanding
Indebtedness.

 

SECTION 4.08                                      Taxes.  (a) For purposes of
this Agreement, (i) “Tax” or “Taxes” shall mean all Federal, state, local and
foreign (or governmental unit, agency, or political subdivision of any of the
foregoing) taxes, assessments, duties, charges, fees, premiums, imposts,
escheatment, withholding obligations, levies and similar assessments imposed by
a taxing authority, including all interest, fines, penalties and additions
imposed with respect to such amounts; (ii) “Pre-Closing Tax Period” shall mean
all taxable periods ending on or before the Closing Date and the portion ending
on the Closing Date of any taxable period that includes (but does not end on)
the Closing Date; (iii) “Code” shall mean the Internal Revenue Code of 1986, as
amended; and (iv) “Tax Returns” means all returns, reports, forms and statements
(including Form TD F 90-22.1) required to be filed with a taxing authority with
respect to Taxes.

 

(b)                                 (i) All material Tax Returns required to be
filed by or on behalf of the Company and each Company Subsidiary have been filed
and all such Tax Returns are true, correct and complete in all material
respects, (ii) all Taxes of the Company and each Company Subsidiary (whether or
not reflected on any Tax Return) have been paid, and (iii) no material Tax liens
(other than for current Taxes not yet due and payable) have been filed and no
material claims are being asserted in writing with respect to any Taxes of the
Company or any Company Subsidiary.

 

(c)                                  The Company is not a “United States real
property holding corporation” within the meaning of Section 897 of the Code.

 

(d)                                 Neither the Company nor any Company
Subsidiary has agreed to, requested or filed any extension of time for the
assessment or collection of any Tax.

 

(e)                                  Except as set forth in Section 4.08(e) of
the Seller Disclosure Schedule, neither the Company nor any Company Subsidiary
is the subject of any material audit or proceeding with respect to Taxes.  No
claim has ever been made in writing by an authority in a jurisdiction

 

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where the Company or any Company Subsidiary does not file Tax Returns that the
Company or any Company Subsidiary is or may be subject to Tax by that
jurisdiction.

 

(f)                                   The Company and each Company Subsidiary
has in all material respects timely withheld and paid, or caused to be withheld
and paid, all Taxes required to have been withheld and paid in connection with
any amounts paid or owing to any employee, independent contractor, creditor,
shareholder or other third party, including amounts required to be withheld
under Sections 1441 and 1442 of the Code (or any similar provisions of state,
local or non-U.S. Tax law).

 

(g)                                  The Company has not been the “distributing
corporation” or the “controlled corporation” (in each case, within the meaning
of Section 355(a)(1) of the Code) with respect to a transaction described in
Section 355 of the Code.

 

(h)                                 Neither the Company nor any Company
Subsidiary has any liability for the Taxes of another person (other than
liability with respect to Taxes of the Seller consolidated group) (i) under
Treasury Regulations Section 1.1502-6 (or any comparable or similar provision of
federal, state, local or foreign law) or (ii) as a transferee or successor. 
Neither the Company nor any Company Subsidiary is a party to or bound by any Tax
allocation agreement, Tax indemnity agreement, Tax sharing agreement or other
similar contract or agreement (other than liability with respect to the Seller
consolidated group and any contract or agreement entered into in the ordinary
course of business and the primary purpose of which is not the sharing of
Taxes).

 

(i)                                     (A) The Company and each Company
Subsidiary have (i) filed or caused to be filed with the appropriate Tax
authority all unclaimed property reports required to be filed and has remitted
to the appropriate Tax authority all unclaimed property required to be remitted,
or (ii) delivered and paid all unclaimed property to its original or proper
recipient and (B) there is no property of either the Company or any Company
Subsidiary that is (or will be with the passage of time) escheatable to any
state, province or municipality under any applicable escheatment laws currently
in effect, including uncashed checks to vendors, customers, employees,
non-refunded overpayments, customer deposits, or credits.

 

(j)                                    Neither the Company nor any Company
Subsidiary has entered into any “listed transactions” as defined in Section
1.6011-4(b)(2) of the Treasury Regulations and the Company and each Company
Subsidiary has properly disclosed all reportable transactions as required by
Section 1.6011-4(b) of the Treasury Regulations (or any corresponding provisions
of state, local or non-U.S. Tax law), including filing Form 8886 with Tax
Returns.

 

(k)                                 Neither the Company nor any Company
Subsidiary will be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date) as a result of: (a) a change in method
of accounting for a taxable period ending on or prior to the Closing Date; (b)
any “closing agreement,” as described in Section 7121 of the Code (or any
corresponding provision of state,

 

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local or non-U.S. Tax law); (c) any installment sale or open transaction
disposition made on or prior to the Closing Date; (d) any prepaid amount
received on or prior to the Closing Date; (e) any intercompany transaction or
excess loss account described in Treasury Regulations under Section 1502 of the
Code (or any corresponding provision of state, local or non-U.S. Tax law) or (f)
an election under Section 108(i) of the Code (or any corresponding provisions of
state, local or non-U.S. Tax law).

 

(l)                                     The Company and each Company Subsidiary
have provided access to complete copies of all Tax Returns of the Company and
each Company Subsidiary relating to the prior three taxable periods, and any
audit report relating to any Taxes due from or related to the Company and each
Company Subsidiary for such periods.

 

(m)                             The Company and each Company Subsidiary are
corporations for U.S. income tax purposes except for HCMG, LLC and TTEM, LLC. 
HCMG, LLC and TTEM, LLC are disregarded entities for U.S. income tax purposes.

 

(n)                                 The Company and each Company Subsidiary are
in material compliance with all transfer pricing laws and regulations (including
section 482 of the Code and the regulations thereunder).

 

(o)                                 8045950 Canada, Inc. was formed on December
12, 2011 and has not engaged in material operations since formation.

 

(p)                                 Neither 8045950 Canada, Inc. nor 3115038
Canada, Inc. has generated material amounts of income that would be included in
income by a shareholder of 8045950 Canada, Inc. or 3115038 Canada, Inc. under
section 951 of the Code.

 

(q)                                 Notwithstanding any other provision of this
Agreement, Seller makes no representation or warranty as to the amount or
availability of any tax attributes of the Company or any Company Subsidiary,
including, without limitation, any net operating loss, tax credit or tax basis.

 

SECTION 4.09                                      Assets Other than Real
Property Interests.  The Company or one or more of the Company Subsidiaries has,
or as of the Closing Date will have, good and valid title to all material
tangible personal property it owns or leases (including the Company’s and the
Company’s Subsidiaries’ plants, machinery, tools, equipment, buildings and other
tangible physical assets) reflected on the Balance Sheet or thereafter acquired,
except those sold or otherwise disposed of since the date of the Balance Sheet
in the ordinary course of business consistent with past practice and not in
violation of this Agreement, in each case free and clear of all Liens, except
(a) such as are set forth in Section 4.09 of the Seller Disclosure Schedule; (b)
mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or
incurred in the ordinary course of business for amounts not yet delinquent, or
the validity of which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been established, Liens
arising under original purchase price conditional sales contracts and

 

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equipment leases with third parties entered into in the ordinary course of
business and liens for Taxes and other governmental charges which are not due
and payable or which may thereafter be paid without penalty or interest or are
being contested in good faith by appropriate proceedings; (c) mortgages and
Liens which secure debt that is reflected as a liability on the Balance Sheet
and the existence of which is indicated in the notes thereto; and (d) other
imperfections of title or encumbrances, if any, which do not, individually or in
the aggregate, materially impair the continued use and operation of the assets
to which they relate in the business of the Company and the Company
Subsidiaries, as presently conducted (the mortgages and Liens described in
clauses (a), (b), (c) and (d) above are hereinafter referred to collectively as
“Permitted Liens”). The assets of the Company and the Company Subsidiaries
constitute all of the material assets used by the Company and the Company
Subsidiaries in operating their businesses as they are currently operated, and,
other than the Support Services, will enable the Company and the Company
Subsidiaries to operate their business immediately following the Closing in
substantially the same manner as operated immediately prior to the Closing. 
Notwithstanding the foregoing or anything to the contrary contained herein, the
parties acknowledge and agree that Seller is not making any representation or
warranty regarding the sufficiency of the cash of the Company or the Company
Subsidiaries. This Section 4.09 does not relate to real property or interests in
real property, Intellectual Property Rights or Material Contracts, such items
being the subjects of Section 4.10, 4.11 and 4.12, respectively.

 

SECTION 4.10                                      Title to Real Property. 
Neither the Company nor any Company Subsidiary owns any real property or
interests in real property. Section 4.10 of the Seller Disclosure Schedule sets
forth a true and complete list of all real property and interests in real
property leased by the Company and the Company Subsidiaries, including without
limitation all leased operating facilities (individually, a “Leased Property”).
The Company or one or more of the Company Subsidiaries has good and valid title
to the leasehold estates in all Leased Property (a Leased Property being
sometimes referred to herein, individually, as a “Company Property”), in each
case free and clear of all mortgages, Liens, leases, assignments, subleases,
easements, covenants, rights of way and other similar restrictions of any nature
whatsoever, except (a) such as are set forth in Section 4.10 of the Seller
Disclosure Schedule; (b) leases, subleases and similar agreements set forth in
Section 4.12 of the Seller Disclosure Schedule; (c) Permitted Liens; (d)
easements, covenants, rights of way and other similar restrictions of record;
(e) any conditions that may be shown by a current, accurate survey or physical
inspection of any Company Property made prior to Closing; and (f) (i) zoning,
building and other similar restrictions, and (ii) mortgages, Liens, easements,
covenants, rights of way and other similar restrictions that have been placed by
any developer, landlord or other third party on property over which the Company
or one or more of the Company Subsidiaries has easement rights or on any Company
Property and subordination or similar agreements relating thereto, none of which
items set forth in clause (d), individually or in the aggregate, materially
impair the continued use and operation of the property to which they relate in
the business of the Company and the Company Subsidiaries as presently conducted.
There are no pending or, to the knowledge of Seller, threatened appropriation,
condemnation, imminent domain or like proceedings relating to the Leased
Properties. Since June 30, 2011, none of the Leased Properties has suffered any
material damage by fire or other casualty that is not covered by insurance which
has not heretofore been repaired and restored in all material respects, except
for damage that would not, individually or in the aggregate, materially impair
the continued use and operation of the

 

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property to which such damage relates in the business of the Company and the
Company Subsidiaries as presently conducted.

 

SECTION 4.11                                      Intellectual Property.  (a)
Section 4.11(a) of the Seller Disclosure Schedule sets forth as of the date
hereof all Company Registered Intellectual Property and specifies, where
applicable, the jurisdiction in which each such item of Company Registered
Intellectual Property has been filed, issued or registered, and the respective
application and registration numbers and dates.  All necessary registration,
maintenance and renewal fees currently due in connection with each item of
Company Registered Intellectual Property that is currently in use by the Company
or any Company Subsidiary have been made, all necessary documents, recordations
and certificates in connection with such Company Registered Intellectual
Property have been filed with the appropriate Governmental Entity, and all
necessary registrations and applications for such Company Registered
Intellectual Property are subsisting and unexpired, have not been abandoned or
cancelled and, to the knowledge of Seller, are valid and enforceable, except
where failure to take any of the foregoing actions would not materially affect
the rights of the Company or any Company Subsidiary in such Company Registered
Intellectual Property.

 

(b)                                 The Company or one or more of the Company
Subsidiaries has good and marketable title to each material item of owned
Company Intellectual Property, free and clear of any Liens, except for Permitted
Liens or non-exclusive licenses with respect to such Company Intellectual
Property granted in the ordinary course of business. No material Actions or
Orders are pending or, to the knowledge of Seller, have been threatened since
January 1, 2009 (including cease and desist letters) against Seller, the
Company, or any Company Subsidiary with regard to any Intellectual Property
Right.

 

(c)                                  To the knowledge of Seller, the operation
of the business of the Company and the Company Subsidiaries as such business is
currently conducted does not infringe, misappropriate or violate the
Intellectual Property Rights of any third party.  During the last two (2) years
from the date hereof, to the knowledge of Seller, neither the Company nor any
Company Subsidiary has received notice from any third party that the operation
of the business of the Company or any Company Subsidiary or any product or
service of the Company or any Company Subsidiary, infringes or misappropriates
the Intellectual Property Rights of any third party.  To the knowledge of
Seller, no person is infringing, misappropriating or violating any Company
Intellectual Property in a manner that, individually or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect.

 

(d)                                 Seller, the Company and the Company
Subsidiaries have taken reasonable steps to protect the rights of the Company
and the Company Subsidiaries in the Company Intellectual Property (including
confidential information and trade secrets). To the knowledge of Seller, there
has not been any unauthorized disclosure by the Company or any Company
Subsidiary or by any of their respective officers or employees, in their
capacity as such of any trade secrets or confidential information of third
parties in the possession or control of the Company or any Company Subsidiary.

 

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(e)                                  Immediately following the Closing, Buyer
will be permitted to exercise all of the Company’s and any of the Company
Subsidiaries’ rights under the Company Intellectual Property used in the
operation of their businesses as currently conducted to the same extent the
Company or any of the Company Subsidiaries would have been able to had the
transactions contemplated by this Agreement not occurred and without the payment
of any additional funds other than ongoing fees, royalties or payments which the
Company or any of the Company Subsidiaries would otherwise be required to pay.

 

(f)                                   To the knowledge of Seller, none of the
products sold by the Company or any Company Subsidiary is violating any
applicable Laws with respect to marking of Intellectual Property Rights.

 

SECTION 4.12                                      Material Contracts. 
Section 4.12 of the Seller Disclosure Schedule sets forth a list of the
following Contracts to which the Company or any Company Subsidiary is a party
(excluding the Company Benefit Plans) as of the date hereof:

 

(a)                                 Contracts or other arrangements that contain
a covenant materially limiting or prohibiting the right of the Company or any
Company Subsidiary to compete or engage with any person in any line of business
in any geographical area, or to engage in any line of business in any
geographical area or to distribute or offer any products or services (other than
pursuant to any radius restriction contained in any lease, reciprocal easement
or development, construction, operating or similar agreement);

 

(b)                                 Contracts or other arrangements (other than
employment agreements, nonsolicitation/noncompetition agreements or releases)
with (i) Seller or any Affiliate of Seller (other than the Company or any
Company Subsidiary), (ii) any Affiliate of the Company or any Company Subsidiary
(other than the Company or any Company Subsidiary), or (iii) any officer,
director or employee of the Company, Seller, any Company Subsidiary or any other
Affiliate of Seller, the Company or any Company Subsidiary (collectively, the
“Affiliate Material Contracts”);

 

(c)                                  (i) leases for Leased Property for the top
10 Hair Club corporate centers based on EBITDA contribution to the Company and
the Company Subsidiaries, taken as a whole, for the fiscal year ended June 30,
2012, (ii) the lease with respect to the Company’s corporate headquarters in
Boca Raton, FL, and (iii) all other leases that constitute leasehold interests
in the Leased Properties involving annual payments exceeding $200,000;

 

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(d)                                 each Material Franchise Agreement;

 

(e)                                  each Physician Agreement taken as a whole
by physician representing revenues to the Company and the Company Subsidiaries
in excess of a 2% EBITDA Contribution (a “Material Physician Agreement”).

 

(f)                                   supply agreements for the top 10 suppliers
of the Company and the Company Subsidiaries, based on the aggregate purchases
made by the Company and the Company Subsidiaries under such agreements, taken as
a whole, for the fiscal year ended June 30, 2012;

 

(g)                                  joint venture, partnership, limited
liability or other similar agreements or arrangements with respect to the
operation of a Hair Club center;

 

(h)                                 advertising agreements, in any such case
which has an aggregate future liability to any person in excess of $250,000 and
is not terminable by the Company by notice of not more than 90 days for a cost
of less than $50,000;

 

(i)                                     other than for (i) “shrink wrap” and
other commercially available software licensed on standard, non-negotiated
terms, (ii) non-disclosure agreements that provide no more than limited rights
to use trade secrets or confidential information of a person, or
(iii) non-exclusive licenses or sublicenses granted by the Company or any
Company Subsidiary in the ordinary course of business, consistent with past
practice, any Contracts that are, licenses, options or other similar agreements
(x) with respect to Company Intellectual Property licensed or transferred to any
third party or (y) pursuant to which a third party has licensed or transferred
any Intellectual Property Rights to the Company or any Company Subsidiary;

 

(j)                                    Contracts or other instruments under
which the Company or any Company Subsidiary has borrowed any money from, or
issued any note, bond, debenture or other evidence of indebtedness to, any
person or any other note, bond, debenture or other evidence of indebtedness
issued to any person in any such case which, individually, is in excess of
$100,000;

 

(k)                                 Contracts or other instruments (including so
called take or pay or keepwell agreements) under which (i) any person has
directly or indirectly guaranteed indebtedness, liabilities or obligations of
the Company or any Company Subsidiary or (ii) the Company or any Company
Subsidiary has directly or indirectly guaranteed indebtedness, liabilities or
obligations of any person (in each case other than endorsements for the purpose
of collection in the ordinary course of business consistent with past practice),
in any such case which, individually, is in excess of $100,000;

 

(l)                                     Contracts or other instruments under
which the Company or any Company Subsidiary has, directly or indirectly, made
any advance, loan, extension of credit or capital

 

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contribution to, or other investment in, any person, in any such case which,
individually, is in excess of $100,000;

 

(m)                             mortgages, indentures, pledges, security
agreements, letters of credit, promissory notes, loan agreements, deeds of trust
or other instruments granting a Lien upon any Company Property, which Lien is
not set forth in Section 4.10 of the Seller Disclosure Schedule;

 

(n)                                 Contracts or other instruments governing an
acquisition, divestiture, merger or similar transaction, regardless of whether
such transaction has yet been consummated, that contain indemnities (excluding
indemnities in respect of representations, warranties or other provisions that
customarily survive until the expiration of the statute of limitations or
indefinitely and are customary for transactions of that type) or other
obligations (including payment, “earn-out” or other contingent obligations) of
the Company or any Company Subsidiary that are in effect;

 

(o)                                 Contracts or other instruments that prohibit
the payment of dividends or distributions in respect of the Shares or the
capital stock of the Company Subsidiaries, prohibits the pledging of the Shares
or capital stock of the Company Subsidiaries or prohibits the issuance of
guarantees by the Company or any Company Subsidiary;

 

(p)                                 Contracts or other instruments which grant
any exclusive rights, right of first refusal, right of first offer or similar
right with respect to any material assets, rights or properties of the Company
or any Company Subsidiaries;

 

(q)                                 employment, retention, material independent
contractor arrangements, change in control and collective bargaining agreements
with any directors, officers, other employees, or trade unions of the Company or
any Company Subsidiaries, involving annual payments exceeding $150,000; or

 

(r)                                    other Contracts to which the Company or
any Company Subsidiary is a party or by or to which it or any of its properties,
assets or businesses are bound or subject which has an aggregate future
liability to any person in excess of $500,000 and is not terminable by the
Company by notice of not more than 90 days for a cost of less than $50,000.

 

Each Contract of the Company and the Company Subsidiaries listed in Section 4.12
of the Seller Disclosure Schedule that is not a Company Benefit Plan
(collectively, the “Material Contracts”), each Franchise Agreement that is not a
Material Franchise Agreement (an “Other Franchise Agreement”) and each Physician
Agreement that is not a Material Physician Agreement (an “Other Physician
Agreement” and, collectively with the Other Franchise Agreements, the “Other
Franchise/Physician Agreements”) is valid, binding and in full force and effect,
is enforceable by the Company or the Company Subsidiary party thereto and, to
the knowledge of Seller, each other party thereto, in accordance with its terms
subject to the Bankruptcy and Equity Exception

 

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and except to the extent that the failure of a Material Contract or an Other
Franchise/Physician Agreement to be valid, binding and in full force and effect
has not had and would not reasonably be expected to have a Material Adverse
Effect. The Company and each Company Subsidiary and, to the knowledge of Seller,
each other party to each Material Contract or Other Franchise/Physician
Agreement, have performed all material obligations required to be performed by
them to date under the Material Contracts or the Other Franchise/Physician
Agreements and neither the Company nor any Company Subsidiary is (with or
without the lapse of time or the giving of notice, or both) in breach or default
in any respect thereunder and, to the knowledge of Seller, no other party to any
of the Material Contracts and the Other Franchise/Physician Agreements, as of
the date hereof, is (with or without the lapse of time or the giving of notice,
or both) in breach or default in any respect thereunder, except to the extent
that such breach or default has not had and would not reasonably be expected to
have a Material Adverse Effect. To the knowledge of Seller, no party to any
Material Contract or Other Franchise/Physician Agreement has given the Company
or any Company Subsidiary notice of its intention to cancel, terminate, change
the scope of rights under, decrease its services or supplies to the Company or
the Company Subsidiaries or its usage of the services or products of the Company
or the Company Subsidiaries under, or not to renew any Material Contract or
Other Franchise/Physician Agreement, except to the extent that such
cancellation, termination, change, decrease or non-renewal has not had and would
not reasonably be expected to have a Material Adverse Effect. Seller has made
available to Buyer true, correct and complete copies of each Material Contract
and Other Franchise/Physician Agreement.

 

SECTION 4.13                                      Litigation.  Section 4.13 of
the Seller Disclosure Schedule sets forth a list, as of the date of this
Agreement, of all pending or threatened in writing criminal, civil and
administrative actions, suits, claims, hearings, proceedings, arbitrations,
mediations, audits, inquiries and investigations (“Actions”) against or
involving Seller, the Company or any Company Subsidiary or any of their
respective properties, assets, rights, operations or businesses or, to the
knowledge of Seller, any present or former officer, director or manager of the
Company or any of the Company Subsidiaries (in their capacity as such) and which
(a) if determined adversely to Seller, the Company or such Company Subsidiary,
would reasonably be expected to result in a liability of the Company or such
Company Subsidiary of more than $100,000, (b) seek any material injunctive
relief or (c) challenge, or seek any legal restraint on, modification of, or
prohibition against, the transactions contemplated by this Agreement.  Neither
the Company nor any Company Subsidiary nor any of their respective properties,
assets, rights, operations or businesses nor, to the knowledge of Seller, any
present or former officer, director or manager of the Company or any of the
Company Subsidiaries (in their capacity as such) is a party or subject to or in
default under any material Order applicable to it or any of its respective
properties, assets, rights, operations or businesses. This Section 4.13 does not
relate to matters with respect to environmental matters, which are the subject
of Section 4.16(c), or to matters with respect to employee benefits or ERISA
matters, which are the subject of Section 4.14.

 

SECTION 4.14                                      Benefit Plans. 
(a) Section 4.14(a) of the Seller Disclosure Schedule contains a list of all
material written “employee benefit plans” (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 (“ERISA”)) and all other
material employment, severance, consulting, vacation benefits, post-retirement,
bonus, stock option, deferred and incentive compensation plans and programs
(excluding workers’ compensation,

 

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unemployment compensation and other government programs) (a) maintained or
contributed to by the Company or any Company Subsidiary or (b) maintained or
contributed to by Seller or any of its Affiliates for the benefit of employees
of the Company or any Company Subsidiary or for which the Company or any Company
Subsidiary may reasonably be expected to have any liability (all of the
foregoing collectively, the “Company Benefit Plans”).

 

(b)                                 Each Company Benefit Plan is in compliance
in all material respects with, to the extent applicable to such plan, ERISA, the
Code, and all Applicable Laws.  Neither the Company nor any Company Subsidiaries
nor any entity which is considered a “single employer” with the Company or any
Company Subsidiaries under Section 414(b), (m) or (o) of the Code maintains or
has an obligation to contribute to (i) a “multiemployer plan” within the meaning
of Section 3(37) of ERISA, (ii) a plan described in Section 413 of the Code,
(iii) a plan subject to Title IV of ERISA or (iv) a plan subject to the minimum
funding standards of Section 412 of the Code.  As of the date hereof, no
proceedings (other than routine benefit claims) are pending or, to the knowledge
of Seller, threatened against or relating to any Company Benefit Plan, or any
fiduciary thereof.

 

(c)                                  No Company Benefit Plan provides benefits
with respect to any former or current employee of the Company or any Company
Subsidiary, or any spouse or dependent of any such employee, beyond the
employee’s retirement or other termination of employment with the Company or any
Company Subsidiary other than (1) coverage mandated by Part 6 of Title I of
ERISA or Section 4980B of the Code, or (2) benefits in the nature of severance
pay with respect to one or more of the employment contracts set forth on
Section 4.14(a) of the Seller Disclosure Schedule.

 

(d)                                 The Company and all Company Subsidiaries
have in all material respects paid or caused to be paid all amounts, if any,
required to be paid by such entities to or in respect of any Company Benefit
Plan under Applicable Law or the terms of such Company Benefit Plan, and, as to
the Company Benefit Plans, all required payments, premiums, contributions and
distributions for all periods ending prior to the Closing Date have been made or
properly accrued, except as would not reasonably be expected to result in any
material liability of the Company and all Company Subsidiaries.

 

(e)                                  Neither the Company nor any Company
Subsidiary has made any payments, and are not and will not become obligated
(under any contract entered into before the Closing and excluding any contract
to which Buyer or any of its Affiliates is a party) to make any payments, that
shall be nondeductible under either Code Section 162(m) or Code Section 280G (or
any corresponding provisions of state, local or non-U.S. Tax law).

 

(f)                                   Neither the Company nor any Company
Subsidiary is a party to any nonqualified deferred compensation plan, as defined
in Section 409A(d)(1) of the Code and the applicable Treasury Regulations
promulgated thereunder, which would be subject to a gross income inclusion by
reason of Section 409A(a)(1) of the Code and the applicable Treasury Regulations

 

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promulgated thereunder.  Neither the Company nor any Company Subsidiary will be
required (under any contract entered into before the Closing and excluding any
contract to which Buyer or any of its Affiliates is a party) to make any
payments of any nature whatsoever to any Person on account of such Person having
a liability for amounts payable under Section 409A of the Code.

 

(g)                                  This Section 4.14 contains the sole and
exclusive representations and warranties of Seller with respect to any of the
Company Benefit Plans.

 

SECTION 4.15                                      Absence of Changes or Events. 
(a) Since the date of the Balance Sheet to the date hereof, (i) there has not
been any Material Adverse Effect, and (ii) the Company and the Company
Subsidiaries have not collected, or accelerated the collection of, any accounts
receivable or paid, or delayed the payment of, any accounts payable in a manner
that is materially inconsistent with the operation of their businesses in the
ordinary course of business consistent with past practice. Buyer acknowledges
that there has been and will continue to be a disruption to the business of the
Company and the Company Subsidiaries as a result of Seller’s intention to sell
the Company to Buyer (and there may be further disruption to the business of the
Company and the Company Subsidiaries as a result of the execution of this
Agreement and the consummation of the transactions contemplated hereby), and
Buyer agrees that such disruptions do not and shall not constitute a breach of
this Section 4.15.

 

(b)                                 Except as contemplated by this Agreement,
since the date of the Balance Sheet to the date hereof, Seller has caused the
business of the Company and the Company Subsidiaries to be conducted in the
ordinary course consistent with past practice and neither the Company nor any
Company Subsidiary has taken any action that, if taken after the date of this
Agreement, would constitute a breach of any of the covenants set forth in
Section 5.02.

 

SECTION 4.16                                      Compliance with Applicable
Laws; Permits; Environmental Laws.  (a) Except as set forth in
Section 4.16(a) of the Seller Disclosure Schedule, the Company and each Company
Subsidiary is and has been during the past three (3) years in compliance with
all federal, state, local or foreign statutes, laws, ordinances, rules, orders
and regulations issued, promulgated or entered into, by or with any Governmental
Entity applicable to it, its properties, rights or assets or its business or
operations (“Applicable Laws”), except for instances of noncompliance that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect. No criminal, civil or administrative
Action has been filed, commenced or, to the knowledge of Seller, threatened
against Seller, the Company or any Company Subsidiary that alleges that the
Company or any Company Subsidiary is in violation in any material respect with
any Applicable Laws. There has occurred during the past two (2) years no default
under, or violation of, any of the Permits necessary to enable the Company or
any Company Subsidiary to own, lease or otherwise hold and operate its
properties and assets and to carry on its business as presently conducted and
the Company and each of the Company Subsidiaries is in compliance with the terms
of such Permits, except for any such default, violation or noncompliance that,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect. The consummation of the transactions
contemplated by this Agreement will not cause the revocation, modification or
cancellation of any material Permit. This Section 4.16(a) does not relate to
matters with respect to Taxes, which

 

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are the subject of Section 4.08, to employee benefit or ERISA matters which are
the subject of Section 4.14 or to environmental matters, which are the subject
of Section 4.16(c).

 

(b)                                 None of the Company or any Company
Subsidiary or, to the knowledge of Seller, any of their officers, directors,
employees, agents or representatives, has, in the course of its actions for, or
on behalf of, any of them violated any provision of the United States Foreign
Corrupt Practices Act of 1977, as amended (the “Foreign Corrupt Practices Act”)
or any other material United States and foreign Laws concerning corrupting
payments or practices, and each of the Company and the Company Subsidiaries is
in compliance with the Foreign Corrupt Practices Act and any other material
United States and foreign Laws concerning corrupting payments or practices.
During the past three (3) years, neither Seller, the Company nor any Company
Subsidiary has been investigated by any Governmental Entity with respect to, or
given notice by a Governmental Entity of, any violation by the Company or any
Company Subsidiary of the Foreign Corrupt Practices Act or any other United
States or foreign Laws concerning corrupting payments or practices. The Company
and the Company Subsidiaries have instituted and maintain policies and
procedures designed to ensure, and which are reasonably expected to continue to
ensure, continued compliance with the Foreign Corrupt Practices Act and any
other United States or foreign Laws concerning corrupting payments or practices.

 

(c)                                  Except as set forth in Section 4.16(c) of
the Seller Disclosure Schedule, and except as has not had and would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) neither Seller nor the Company nor any Company Subsidiary
has received any written communication during the past five (5) years from a
Governmental Entity of any Action, or is the subject of any Order that is open,
pending, unresolved or, to the knowledge of Seller, threatened against the
Company or any Company Subsidiary, alleging that the Company or any Company
Subsidiary is in violation of any Environmental Laws (as hereinafter defined) or
that it is a potentially responsible party under the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(“CERCLA”), (ii) no property or facility currently owned, operated or leased by
the Company or any Company Subsidiary and, to the knowledge of Seller, no
property or facility formerly owned, operated or leased by the Company, any
Company Subsidiary or any of their predecessors in interest, is listed or
proposed for listing on the National Priorities List or the Comprehensive
Environmental Response, Compensation and Liability Information System, both
promulgated under CERCLA, or on any comparable foreign or state list established
under any Environmental Law, (iii) the Company and the Company Subsidiaries
collectively hold, and are, and for the past five (5) years have been, in
compliance with, all permits, licenses and governmental authorizations required
under Environmental Laws for the Company and the Company Subsidiaries to conduct
the business of the Company and the Company Subsidiaries, and neither the
Company nor any Company Subsidiary has received written notice that any such
permit, license or governmental authorization possessed by the Company or any
Company Subsidiary will be revoked, suspended or will not be renewed, (iv) the
Company and the Company Subsidiaries are, and for the past five (5) years have
been, in compliance with all Environmental Laws, (v) neither the Company nor any
of the Company Subsidiaries is investigating or remediating, nor has either
agreed to pay for the investigation or remediation of, or entered into or agreed
to any consent decree or order, which decree or order is still in effect, and is
not subject to any outstanding judgment, decree or

 

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judicial order with respect to any property currently or formerly owned, leased
or operated by the Company or any Company Subsidiary relating to compliance with
any Environmental Law or to the Release, investigation or cleanup of Hazardous
Substances under any Environmental Law, (vi) neither the Company nor any Company
Subsidiary has retained or assumed any environmental liability by Contract that
has not been fully resolved, and that would reasonably be expected to result in
costs to the Company or any Company Subsidiary and (vii) (A) there has been no
Release of any Hazardous Substance generated, used, owned, stored or controlled
by the Company or any of the Company Subsidiaries on, at, or under any property
presently or formerly leased or operated, or formerly owned, by the Company or
any Company Subsidiary and (B) to the knowledge of Seller, there are no
Hazardous Substances located in, at, on, or under any property presently or
formerly leased or operated, or formerly owned, by the Company or any Company
Subsidiary in either case (A) or (B) that would reasonably be expected to
require any investigation, removal, remedial or corrective action by the Company
or any Company Subsidiary or that would reasonably be expected, individually or
in the aggregate, to result in liabilities of, or losses, damages or costs
(including, response costs, corrective action costs, damages for personal injury
or property damage, or natural resource damages) to the Company or any Company
Subsidiary under any Environmental Law. The representations and warranties made
in this Section 4.16(c) are Seller’s exclusive representations and warranties
relating to environmental matters. As used in this Agreement, the term
“Environmental Laws” means any and all applicable statutes, laws (including
common law), regulations, ordinances, rules, orders or decrees now or previously
in effect and in any such case entered into, issued or promulgated in final form
by any Governmental Entity, relating to the environment, preservation or
reclamation of natural resources, the management or Release of Hazardous
Substances, noise emissions, or otherwise relating to pollution or protection of
the outdoor or indoor environment or health or safety related to exposure to
Hazardous Substances, including, without limitation, CERCLA, the Federal Water
Pollution Control Act, the Clean Air Act of 1970, the Toxic Substances Control
Act of 1976, the Resource Conservation and Recover Act of 1976, the Emergency
Planning and Community Right to Know Act of 1986, the Safe Drinking Water Act of
1974, the Hazardous Materials Transportation Act, and any similar or
implementing state or local law, and all amendments thereto or regulations
promulgated thereunder. As used in this Agreement, the term “Hazardous
Substances” means any contaminant, pollutant or hazardous, toxic, biohazardous
or dangerous waste, material, constituent or substance that is defined or
regulated as such in, for purposes of, or gives rise to liability under, any
Environmental Law. As used in this Agreement, the term “Release” has the same
meaning as set forth in Section 9601(22) of CERCLA.

 

SECTION 4.17                                      Regulatory Compliance.  (a) As
to each product subject to the United States Federal Food, Drug, and Cosmetic
Act of 1938, as amended (21 U.S.C. §§ 301 et. seq. (the “FDCA”) and the
regulations of the United States Food and Drug Administration (the “FDA”)
promulgated thereunder that has been distributed and/or marketed by or on behalf
of the Company or any of the Company Subsidiaries (each such product, a “Medical
Device”), during the past two (2) years, neither the Company nor any of the
Company Subsidiaries has received any written notice from the FDA or any other
Governmental Entity (i) contesting the distribution or marketing of any Medical
Device distributed or marketed by the Company or any of the Company Subsidiaries
or (ii) otherwise alleging any violation that would be material to the Company
and the Company Subsidiaries taken as a whole applicable to any Medical Device
by the Company or any of the Company Subsidiaries of the FDCA or the FDA. 
Neither the

 

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Company nor any Company Subsidiary has ever developed, manufactured, tested (for
purposes of seeking FDA approval) or labeled (as the manufacturer of the device)
any Medical Device, nor has any Medical Device ever been developed,
manufactured, tested (for purposes of seeking FDA approval) or labeled (as the
manufacturer of the device) by or on behalf of the Company or any Company
Subsidiary.

 

(b)                                 There are no, and during the past two
(2) years there have been no proceedings by any Governmental Entity pending or
threatened in writing seeking the recall, correction, removal, withdrawal,
suspension, seizure or discontinuance of any Medical Device against the Company
or any of the Company Subsidiaries.

 

(c)                                  During the past two (2) years, neither the
Company nor any of the Company Subsidiaries has received any written notice that
the FDA or any other Governmental Entity has (i) commenced, or threatened in
writing to initiate, any action or request the recall of any Medical Device, or
(ii) commenced, or threatened in writing to initiate, any action to enjoin
distribution of any Medical Device.

 

(d)                                 During the past two (2) years, neither the
Company nor any of the Company Subsidiaries have received any FDA Form 483,
written notice of adverse finding, warning letter, untitled letter or other
correspondence or written notice from the FDA or other Governmental Entity.

 

(e)                                  Neither the Company nor any Company
Subsidiary provides any medical or supervisory services, all of which are
provided by or through the franchisees under the Franchise Agreements or the
physicians or other medical doctors under the Physician Agreements.

 

SECTION 4.18                                      Employee and Labor Matters. 
Except as set forth in Section 4.18 of the Seller Disclosure Schedule, (a) none
of the Company’s or the Company Subsidiaries’ employees is represented for
purposes of collective bargaining by any labor organization and there is not and
in the past three years has not been, any labor strike, dispute, work
stoppage or lockout pending, or, to the knowledge of Seller, threatened, against
the Company or any Company Subsidiary; (b) to the knowledge of Seller, no union
organizational campaign is in progress with respect to the employees of the
Company or any Company Subsidiary and no question concerning representation
exists respecting such employees; (c)  there is no unfair labor practice charge
or complaint against the Company or the Company Subsidiaries pending, or, to the
knowledge of Seller, threatened, before the National Labor Relations Board;
(d) there are no pending, or, to the knowledge of Seller, threatened, union
grievances against the Company or any of the Company Subsidiaries as to which
there is a reasonable possibility of adverse determination and that, if so
determined, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect; (e) there are no pending, or, to the knowledge
of Seller, threatened, charges against the Company or any of the Company
Subsidiaries or any of their respective current or former employees before the
Equal Employment Opportunity Commission or any state or local agency responsible
for the prevention of unlawful employment practices; (f) neither Seller nor the
Company has received written notice of the intent of any

 

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Governmental Entity responsible for the enforcement of labor or employment laws
to conduct an investigation of the Company or any Company Subsidiary and, to the
knowledge of Seller, no such investigation is in progress; and (g) the Company
and each Company Subsidiary is in compliance with all Laws concerning
employment, wages and labor, including, without limitation, provisions thereof
relating to equal opportunity, hours of work, immigration, collective bargaining
and occupational health and safety except for such non-compliance as,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect.

 

SECTION 4.19                                      Material Services Provided by
Seller or Its Affiliates.  Except to the extent any of the Support Services set
forth in Section 4.19 of the Seller Disclosure Schedule are material, Seller and
its Affiliates provide no material services to the Company or the Company
Subsidiaries.  Except as set forth in Section 4.19 of the Seller Disclosure
Schedule, neither Seller nor its subsidiaries (other than the Company and the
Company Subsidiaries) nor any officer or director of Seller, the Company or the
Company Subsidiaries nor, to the knowledge of Seller, any stockholder of Seller
owns any interest in any assets (including fixed assets, inventories and
Intellectual Property Rights) that are used exclusively or primarily in the
conduct of the business of the Company and the Company Subsidiaries. Except as
set forth in Section 4.19 of the Seller Disclosure Schedule, at or prior to the
Closing, all Affiliate Material Contracts shall be terminated.

 

SECTION 4.20                                      Franchise Matters. 
(a) Section 4.20(a) of the Seller Disclosure Schedule sets forth a true and
complete list of all Franchise Agreements representing revenues to the Company
and the Company Subsidiaries in excess of 2% of the EBITDA contribution to the
Company and the Company Subsidiaries taken as a whole by Franchise for the
fiscal year ended June 30, 2012 (a “2% EBITDA Contribution”, and each such
Franchise Agreement, a “Material Franchise Agreement”).  Except as set forth in
Section 4.20(a) of the Seller Disclosure Schedule, none of the Material
Franchise Agreements are subject to or affected by any “side letter,”
modification, amendment, addendum, or waiver, and none of the Other Franchise
Agreements are subject to or affected by any “side letter,” modification,
amendment, addendum, or waiver that has not previously been delivered to Buyer.

 

(b)                                 The Company and each Company Subsidiary
have, at all times since January 1, 2004, offered, sold and renewed Franchises
(and otherwise conducted its or their Franchise business and activities) in
compliance with all Applicable Laws, including all Franchise Laws, except for
such non-compliance as, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect.

 

(c)                                  The Company and each Company Subsidiary
have at all times during the past four (4) years complied with the Relationship
Laws, except for such non-compliance as, individually or in the aggregate, has
not had and would not reasonably be expected to have a Material Adverse Effect.

 

(d)                                 Section 4.20(d) of the Seller Disclosure
Schedule sets forth the name and address of each current Franchisee and
identifies the top ten Franchisees based upon the total royalties

 

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paid by each such Franchisee to the Company and the Company Subsidiaries, taken
as a whole, during the fiscal year ending June 30, 2012.

 

(e)                                  No party to a Franchise Agreement has
notified the Company or any of the Company Subsidiaries in writing that it plans
to close and not re-open its Franchise, terminate its Franchise Agreement, sell
its Franchise, not renew its Franchise Agreement (when due or otherwise), cease
to meet the obligations under its Franchise Agreement or cease to operate, leave
or abandon its Franchise.

 

(f)                                   To the knowledge of Seller, all funds
administered by or paid to the Company or any Company Subsidiary by or on behalf
of one or more Franchises at any time during the past four (4) years, including
funds that Franchisees contributed for marketing, advertising and promotion and
rebates and other payments made by suppliers and other third parties on account
of Franchisees’ purchases from those suppliers and third parties, have been
administered and spent in compliance in all material respects with the Franchise
Agreements and Franchise Disclosure Documents.

 

(g)                                  During the past four (4) years, none of the
Company and the Company Subsidiaries have used brokers or finders in connection
with the offer and sale of Franchise Agreements.

 

(h)                                 To the extent that the Company or any
Company Subsidiary offers or sells goods or services to Franchisees, such offers
and sales are made in material compliance with the terms and conditions of the
applicable Franchise Agreements.

 

(i)                                     Neither the Company nor any Company
Subsidiary has offered or sold goods or services to the public in breach or
violation of the terms and conditions of the applicable Franchise Agreements,
including territorial exclusivity provisions, except to the extent that such
breach or violation has not had and would not reasonably be expected to have a
Material Adverse Effect on the Company and the Company Subsidiaries taken as a
whole.

 

(j)                                    As used in this Section 4.20, the term
“Franchise Disclosure Document” means any franchise disclosure document used by
the Company or any Company Subsidiary in connection with the offer or sale of
Franchises. The term “Franchisee” means a person other than the Company or any
Company Subsidiary that is granted a right (whether directly by the Company or
any Company Subsidiary) to develop, subfranchise and/or operate one or more
Franchises within a specific geographic area or at a specific location. The term
“Relationship Laws” means any franchise termination, non-renewal, unfair
practices or similar Laws, including the requirements of such Laws with respect
to the notice of default, time to cure and the actual termination of any
franchisee or business opportunity operator. The term “Franchise Laws” means the
FTC Rule and any other Law regulating the offer, sale or amendment of
franchises, including any pre-sale franchise, business opportunity or seller
assisted marketing plan

 

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registration or disclosure Law and including any unfair or deceptive trade
practice Law. The term “FTC Rule” means the Federal Trade Commission trade
regulation rule entitled “Disclosure Requirements and Prohibitions Concerning
Franchising,” 16 CFR Part 436.

 

SECTION 4.21                                      Insurance.  Section 4.21 of
the Seller Disclosure Schedule sets forth a true and complete list of all
material insurance policies maintained by or on behalf of the Company and the
Company Subsidiaries as of the date of this Agreement, indicating the types of
insurance, identity of insurers, premium amounts and coverages.  All of such
insurance policies are in full force and effect, and neither the Company nor any
Company Subsidiaries has during the past two (2) years been (a) in default with
respect to its obligation under any such insurance policies or (b) denied
insurance coverage.  None of the Company or any Company Subsidiary has any
self-insurance or co-insurance programs.

 

SECTION 4.22                                      Suppliers.  Section 4.22 of
the Seller Disclosure Schedule sets forth for the Company and the Company
Subsidiaries, with respect to the fiscal year ended June 30, 2012, a true and
complete list of the ten (10) largest suppliers of the Company and the Company
Subsidiaries, taken as a whole, based on the aggregate purchases for the fiscal
year ended June 30, 2012. Except as set forth in Section 4.22 of the Seller
Disclosure Schedule, there are no sales representatives or third party
distributors of the Company or any of the Company Subsidiaries. With respect to
each supplier listed on Section 4.22 of the Seller Disclosure Schedule, no such
supplier has requested or indicated in writing that it may request a material
change, in the terms or prices at which such supplier provides products and
services to the Company and the Company Subsidiaries.

 

SECTION 4.23                                      Products.  Section 4.23 of the
Seller Disclosure Schedule sets forth all complaints filed in a court at any
time during the past three (3) years in excess of $20,000 against the Company or
the Company Subsidiaries in respect of personal injury or wrongful death alleged
to have resulted from products or services provided by any of the Company or the
Company Subsidiaries, including in connection with the design, manufacture,
marketing, sale, distribution, servicing or use of any such products or
services.

 

ARTICLE V

 

Covenants of Seller

 

Seller covenants and agrees as follows:

 

SECTION 5.01                                      Access.  From the date hereof
to the Closing, Seller shall, and shall cause the Company and the Company
Subsidiaries to, give Buyer and its Representatives reasonable access, during
normal business hours and upon reasonable notice, to the personnel, properties,
offices, books and records of the Company and the Company Subsidiaries, and
furnish to Buyer’s Representatives such additional financial data and other
information regarding the Company and the Company Subsidiaries as Buyer may from
time to time reasonably request; provided, however, that such access does not
unreasonably disrupt the normal operations of Seller or the Company or the
Company Subsidiaries or cause the loss of any attorney-client privilege.

 

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SECTION 5.02                                      Ordinary Conduct.  (a) Except
as set forth in Section 5.02 of the Seller Disclosure Schedule or otherwise
contemplated by the terms of this Agreement, from the date hereof to the
Closing, Seller shall, and shall cause the Company and each Company Subsidiary
to, conduct the business of the Company and the Company Subsidiaries in all
material respects in the ordinary course consistent with past practice in
substantially the same manner as presently conducted and shall use commercially
reasonable efforts to preserve its relationships with Franchisees, customers,
suppliers, licensors, licensees, distributors and others having significant
business dealings with it, its current business organization and goodwill and
its assets and properties in good repair and condition, and to maintain capital
expenditure levels consistent with past practice; provided that Seller shall not
be obligated to, directly or indirectly, provide any funds to the Company or any
of the Company Subsidiaries.

 

(b)                                 Except as set forth in Section 5.02 of the
Seller Disclosure Schedule or otherwise contemplated by the terms of this
Agreement, neither the Company nor any Company Subsidiary shall, and Seller
shall not permit the Company or any Company Subsidiary to, do any of the
following without the prior written consent of Buyer (which consent, if the
Closing has not occurred by the date that is six months after the date hereof,
shall not be unreasonably withheld, delayed or conditioned in the case of
clauses (v), (viii), (xi), (xii), (xiii), (xvi), (xvii) or (xviii) below):

 

(i)                                     propose or adopt any amendments to its
Certificate of Incorporation or Bylaws or similar charter documents;

 

(ii)                                  declare, set aside or pay any dividend or
make any other distribution (whether in cash, stock or property) to its
stockholders whether or not upon or in respect of any shares of its capital
stock or otherwise make any payments to its equityholders in their capacity as
such, other than dividends or other distributions paid or made solely to the
Company or any other Company Subsidiary by a direct or indirect wholly owned
Company Subsidiary; provided, however, that (A) Buyer acknowledges that the
Company does not maintain cash balances and, at the time of the Closing, Seller
will withdraw any cash balances of the Company, and (B) dividends and
distributions of cash shall continue to be made by the Company to Seller or its
Affiliates following the Closing Date until all cash balances of the Company up
through the close of business on the Closing Date have been distributed to
Seller or its Affiliates.  The final distribution of such amounts shall occur no
later than 90 days following the Closing Date;

 

(iii)                               redeem or otherwise acquire any shares of
its capital stock or issue or authorize the issuance of, or split, combine,
reclassify or subject to any Lien, any capital stock or any option, warrant,
“phantom” stock, “phantom” stock right, stock appreciation right or other right
relating thereto or any securities convertible into or exchangeable for any
shares of capital stock;

 

(iv)                              authorize or adopt, or publicly propose, (A) a
plan of complete or partial liquidation or dissolution of the Company or any
Company Subsidiary or (B) to merge or consolidate the Company with or into any
other person;

 

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(v)                                 (A) grant to any executive officer or
employee of the Company or any Company Subsidiary any increase in, or agree to
increase, compensation (including bonus) or benefits paid or due to, or enter
into or amend any employment, change-in-control or severance agreement with such
executive officer or employee, (B) grant any bonuses to any directors, officers
or employees of the Company or any Company Subsidiary, (C) enter into or adopt
any Company Benefit Plan or amend, terminate or modify in any material respect
any existing Company Benefit Plan, except in each case to the extent that such
action relates to a Company Benefit Plan that covers employees of the Seller and
its Affiliates generally, or enter into or adopt any new collective bargaining
agreement (or amend, modify or terminate any existing collective bargaining
agreement), or (D) take any action to accelerate the vesting or payment, or fund
or in any other way secure the payment, of compensation or benefits under any
Company Benefit Plan, except in each case in the ordinary course of business
consistent with past practice or as may be required under existing agreements
and except for any increases for which Seller (or any of its Affiliates other
than the Company and the Company Subsidiaries) shall be solely obligated;

 

(vi)                              incur or assume, or modify in any respect
materially adverse to the Company and the Company Subsidiaries, taken as a
whole, the terms of, any Indebtedness or guarantee or otherwise become
responsible for any such Indebtedness of another person, or issue or sell any
debt securities or calls, options, warrants or other rights to acquire any debt
securities of the Company or any of the Company Subsidiaries, other than in the
ordinary course of business consistent with past practice; provided that in no
event shall the Company or any Company Subsidiary incur, assume or guarantee any
long-term Indebtedness for borrowed money;

 

(vii)                           permit, allow or suffer any of its properties or
assets to become subjected to any mortgage, Lien, security interest,
encumbrance, easement, covenant, right of way or other similar restriction of
any nature whatsoever which would have been required to be set forth in
Section 4.09 or 4.10 of the Seller Disclosure Schedule if existing on the date
of this Agreement;

 

(viii)                        (A) cancel any material Indebtedness (individually
or in the aggregate) or waive any claims or rights of material value or (B) make
any loans or advances to any person, other than loans or advances made in the
ordinary course of business consistent with past practice;

 

(ix)                              except for (A) dividends and distributions
permitted under clause (ii) above, and (B) intercompany transactions in the
ordinary course of business consistent with past practice or necessary to settle
intercompany accounts prior to the Closing, pay, loan or advance any amount to,
or sell, transfer or lease any of its assets to, or enter into any agreement or
arrangement with, Seller or any of its Affiliates other than the Company and the
Company Subsidiaries;

 

(x)                                 make any change in any method of financial
accounting or accounting practice, principle or policy or practices affecting
the reported consolidated assets, liabilities or results of operations of the
Company or the Company Subsidiaries, including but not limited to (A) decreasing
the amount of any reserves for doubtful accounts receivable or writing down or
writing up the value of any inventory or equipment or other asset, except for
decreases or write

 

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downs or write ups in the ordinary course of business consistent with past
practice and (B) with respect to the payments of accounts payable and
collections of accounts receivable, other than those required by United States
generally accepted accounting principles or applicable Law;

 

(xi)                              acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire any assets (other than
inventory), except for purchases of assets in the ordinary course of business
consistent with past practice;

 

(xii)                           make or incur any capital expenditure that is
not currently approved in writing or budgeted which, individually, is in excess
of $100,000 or make or incur any such expenditures which, in the aggregate, are
in excess of $250,000;

 

(xiii)                        sell, lease or otherwise dispose of any of its
assets which are material, individually or in the aggregate, to the business of
the Company and the Company Subsidiaries, taken as a whole, except in the
ordinary course of business consistent with past practice or enter into any
lease of any personal property except leases entered into in the ordinary course
of business consistent with past practice with aggregate lease payments not in
excess of $250,000;

 

(xiv)                       enter into any lease of real property, except any
renewals of existing leases in the ordinary course of business consistent with
past practice or as contemplated by the existing budget/forecast of the Company
for 2012;

 

(xv)                          modify, amend, terminate or permit the lapse of
any lease of, or reciprocal easement agreement, operating agreement or other
material agreement relating to, real property (except modifications or
amendments associated with renewals of existing leases in the ordinary course of
business consistent with past practice)

 

(xvi)                       other than in the ordinary course of business
consistent with past practice, enter into, amend or waive any material right
under or, other than substantially pursuant to its current terms, terminate any
Material Contract or Other Franchise/Physician Agreement;

 

(xvii)                    waive, release, assign, settle or compromise any
Action or threatened Action other than settlements or compromises of Actions
that involve solely cash payments where the amount paid by the Company and the
Company Subsidiaries (less the amount reserved for such matters by the Company
and the Company Subsidiaries and less the amount of any insurance recoveries) in
settlement or compromise does not exceed $100,000 in the aggregate;

 

(xviii)                 make or change any election, change an annual accounting
period, adopt or change any accounting method, file any amended Tax Return,
enter into any closing agreement, settle any Tax claim or assessment relating to
the Company and the Company Subsidiaries, or take any other similar action
relating to the filing of any Tax Return or the payment of any Tax if such
election, adoption, change, amendment, agreement, settlement, surrender, consent
or other action would have the effect of increasing the Tax liability of the
Company or any Company Subsidiary for any Tax period beginning after the Closing
Date other than as a result of a decrease, change or adjustment to any Tax
attribute of the Company or the Company Subsidiaries; or

 

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(xix)                       agree, whether in writing or otherwise, to do any of
the foregoing.

 

(c)                                  Prior to and on the Closing Date, Seller
shall promptly notify Buyer of:

 

(i)                                     any notice or other communication Seller
receives from any person alleging that the consent of such person is or may be
required in connection with the transactions contemplated by this Agreement; and

 

(ii)                                  any material notice or other material oral
or written communication Seller receives from any Governmental Entity in
connection with the transactions contemplated by this Agreement.

 

SECTION 5.03                                      Certain Matters.  Effective
upon and subject to the Closing, Seller hereby assigns to the Company all of its
rights under all confidentiality and non-disclosure agreements entered into by
Seller with any person who would be considered a strategic buyer (as opposed to
a financial buyer) concerning the proposed sale of the Company, to the extent
that Seller is permitted to assign such rights without the consent of any such
other person, and then only to the extent such rights relate to the Company and
the Company Subsidiaries.

 

SECTION 5.04                                      Exclusivity.  From the date
hereof through the Closing Date or the earlier termination of this Agreement,
Seller shall not, and Seller shall cause the Company and the Company
Subsidiaries and instruct its and their respective directors, officers,
managers, partners, financial advisors and other Representatives not to,
directly or indirectly, knowingly encourage, solicit, initiate or facilitate any
inquiries or proposals from, discuss or negotiate with, or provide any
non-public information to, any person concerning any merger, sale of
substantially all of the assets, sale of more than 2% of the outstanding shares
of capital stock or similar transaction involving the Company or any Company
Subsidiary or enter into any agreement or with respect thereto.  Upon execution
of this Agreement, Seller shall, and shall cause the Company and the Company
Subsidiaries and instruct its and their respective directors, officers,
managers, partners, financial advisors and other Representatives to, immediately
cease and cause to be terminated all existing activities, discussions or
negotiations with any person conducted heretofore with respect to any merger,
sale of substantially all of the assets, sale of more than 2% of the outstanding
shares of capital stock or similar transaction involving the Company or any
Company Subsidiary. Seller shall promptly request the prompt return or written
acknowledgement of destruction of all confidential information previously
furnished to such parties or their Representatives in connection with any
merger, sale of substantially all of the assets, sale of more than 2% of the
outstanding shares of capital stock or similar transaction involving the Company
or any Company Subsidiary to the extent that Seller, the Company or any Company
Subsidiary is entitled to have such documents returned or destroyed.

 

SECTION 5.05                                      Non-Competition;
Non-Interference.  (a) For a period of three (3) years from the Closing Date,
Seller shall not, acting individually or as an owner, shareholder, member,
partner, or independent contractor of any person other than Buyer or one of its
Subsidiaries or Affiliates, and Seller shall cause its Subsidiaries not to,
directly or indirectly, establish, own, manage, operate, control, acquire,
invest in or otherwise engage or participate in

 

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any business, operation or activity that is engaged primarily in the business of
non-surgical hair replacement systems or hair transplants, in each case of the
type provided by the Company or a Company Subsidiary as of the date of this
Agreement, or EXT® Extreme hair therapy treatments provided exclusively by the
Company or a Company Subsidiary as of the date of this Agreement (a “Competing
Business”) within a one hundred (100) mile radius of any HCI Location; provided,
however, that Seller and its Subsidiaries may, directly or indirectly, (i) hold,
solely as an investment, interests in or securities of or indebtedness of any
person engaged in a Competing Business to the extent that such investment does
not, directly or indirectly, result in Seller or any of its Subsidiaries owning
five percent (5%) or more of any class of securities or indebtedness of such
person, or (ii) acquire or own a person engaged in a Competing Business if such
Competing Business activities of such person account for less than five (5%) of
such person’s consolidated annual revenues.  Notwithstanding anything herein to
the contrary, and for the avoidance of doubt, any business, operation or
activity that Seller or any of its Subsidiaries (other than the Company and the
Company Subsidiaries) owns, manages, operates, controls or is engaged in or
participates in as of the date of this Agreement shall not be deemed to breach
or violate any of the restrictions or covenants contained in this Section 5.05.

 

(b)                                 The parties hereto acknowledge that the
covenants set forth in this Section 5.05 are a material inducement to Buyer to
enter into this Agreement. The parties hereto acknowledge that this Section 5.05
constitutes an independent covenant and shall not be affected by performance or
nonperformance of any other provision of this Agreement or any other document
contemplated by this Agreement.

 

(c)                                  It is the intention of the parties hereto
that if any of the restrictions or covenants contained in this Section 5.05 is
held to cover a geographic area or to be for a length of time which is not
permitted by Applicable Law, or in any way construed to be too broad or to any
extent invalid, such restrictions or covenants shall not be held to be null,
void and of no effect, but to the extent such restrictions or covenants would be
valid or enforceable under any Applicable Law, if modified, a court of competent
jurisdiction shall construe and interpret or modify this Section 5.05 to provide
for a covenant having the maximum enforceable geographic area, time period and
scope (not greater than those contained in this Section 5.05) that would be
valid and enforceable under such Applicable Law.

 

SECTION 5.06                                      Pre-Closing Balance Sheet.  At
least three business days prior to the Closing Date, Seller shall deliver to
Buyer an unaudited statement of assets (the “Pre-Closing Balance Sheet”) of the
Company as of the last day of the month immediately preceding the month in which
the Closing occurs in substantially the same form as such unaudited statements
of assets have previously been prepared by the Company consistent with past
practice.

 

SECTION 5.07                                      No Additional
Representations.  Seller acknowledges and agrees (on behalf of itself and its
Affiliates) that (a) neither Buyer nor any other person has made any
representation or warranty, expressed or implied, with respect to the
transactions contemplated by this Agreement or as to the accuracy or
completeness of any information regarding Buyer furnished or made available to
Seller, the Company or the Company Subsidiaries and their representatives,
except as expressly set forth in this Agreement, (b) Seller and its Affiliates
have

 

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not relied on any representation or warranty from Buyer or any other person with
respect to Buyer or any other matter, except for the representations and
warranties expressly set forth in this Agreement and (c) neither Buyer nor any
other person shall have or be subject to any liability to Seller or any other
person resulting from the distribution to Seller, or Seller’s use of, any such
information except as and to the extent any such information is expressly set
forth in (or expressly required to be set forth in) a representation or warranty
in this Agreement.

 

ARTICLE VI

 

Representations and Warranties of Buyer

 

Buyer hereby represents and warrants to Seller as follows:

 

SECTION 6.01                                      Authority.  Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of Japan.  Buyer has all requisite corporate power and authority to enter into
and deliver this Agreement and the Other Transaction Documents, and to perform
its obligations hereunder and thereunder. Buyer has all requisite corporate
power and authority to consummate the transactions contemplated hereby and
thereby.  All corporate acts and other proceedings required to be taken by Buyer
to authorize the execution, delivery and performance of this Agreement and the
Other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby have been duly and properly taken. This
Agreement has been duly executed and delivered by Buyer and, assuming the due
authorization, execution and delivery by the other party hereto, constitutes,
and the Other Transaction Documents on the Closing Date will be duly executed
and delivered by Buyer and, assuming the due authorization, execution and
delivery by the other parties thereto, will constitute, a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, subject to the Bankruptcy and Equity Exception.

 

SECTION 6.02                                      No Conflicts; Consents. 
(a) The execution, delivery and performance of this Agreement by Buyer does not,
and the execution, delivery and performance of the Other Transaction Documents
by Buyer will not, and the consummation by Buyer of the transactions
contemplated hereby and thereby and compliance by Buyer with the terms hereof
and thereof will not, conflict with, or result in any violation or breach of or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of, or result in, termination, modification, cancellation or
acceleration of any obligation or to the loss of a benefit under, or result in
the creation of any Liens in or upon any of the properties, rights or assets of
Buyer or any subsidiary of Buyer under, or require any consent, waiver or
approval by, or any notice to, any provision of or any person under (i) the
Certificate of Incorporation or Bylaws of Buyer (or the comparable governing
instruments of any subsidiary of Buyer), or (ii) any material note, bond,
mortgage, indenture, deed of trust, license, lease, contract, commitment,
agreement or arrangement to which Buyer or any subsidiary of Buyer is a party or
by which any of their respective properties, rights or assets is subject, or
(iii)(A) any Order applicable to Buyer or any subsidiary of Buyer or any of its
or their properties, rights or assets, or (B) subject to the matters referred to
in clauses (i) and (ii) of paragraph (b) below, any statute, law, ordinance,
rule or regulation applicable to Buyer or any subsidiary of Buyer or any of
their respective properties, rights or assets, other than, in the case of clause
(iii) of this paragraph (a), any such items that,

 

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individually or in the aggregate, would not reasonably be expected to have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby.

 

(b)                                 No consent, approval, license, permit,
order, qualification or authorization of, action by or in respect of, or
registration, declaration or filing with, any Governmental Entity is required to
be obtained or made by or with respect to Buyer or any subsidiary of Buyer in
connection with the execution, delivery and performance of this Agreement or the
Other Transaction Documents or the consummation of the transactions contemplated
hereby or thereby other than (i) compliance with and filings under the HSR Act,
if applicable, and (ii) those that may be required solely by reason of Seller’s
participation in the transactions contemplated hereby.

 

SECTION 6.03                                      Securities Act.  The Shares
purchased by Buyer pursuant to this Agreement are being acquired for investment
only and not with a view to any public distribution thereof, and Buyer shall not
offer to sell or otherwise dispose of the Shares so acquired by it in violation
of any of the registration requirements of the Securities Act of 1933, as
amended.

 

SECTION 6.04                                      Actions and Proceedings, etc. 
There are no (a) outstanding judgments, orders, injunctions or decrees of any
Governmental Entity or arbitration tribunal against Buyer or any of its
Affiliates, (b) lawsuits, actions or proceedings pending or, to the knowledge of
Buyer, threatened against Buyer or any of its Affiliates, or (c) investigations
by any Governmental Entity which are, to the knowledge of Buyer, pending or
threatened against Buyer or any of its Affiliates, which, in the case of each of
clauses (a), (b) and (c), have had or would reasonably be expected to have a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby.

 

SECTION 6.05                                      Financing.  Buyer has
delivered to Seller true and complete copies of the fully executed commitment
letter and related term sheets, dated as of the date of this Agreement, between
Buyer and Aozora Bank, Ltd. (the “Debt Financing Commitments” or “Financing
Commitments”), pursuant to which the lenders party thereto have committed,
subject to the terms and conditions thereof, to lend the amounts set forth
therein (the “Debt Financing” or “Financing”). Prior to the date of this
Agreement, none of the Financing Commitments has been amended or modified, and
the respective commitments contained in the Financing Commitments have not been
withdrawn or rescinded in any respect. Each of the Debt Financing Commitments,
in the form so delivered, is in full force and effect as of the date of this
Agreement and constitutes a legal, valid and binding obligation of Buyer and, to
the knowledge of Buyer, the other parties thereto, subject to the Bankruptcy and
Equity Exception. The obligations to make the Financing available to Buyer
pursuant to the terms of the Financing Commitments are not subject to any
conditions other than the conditions set forth in the Financing Commitments. As
of the date of this Agreement, (i) none of the Financing Commitments has been
supplemented, modified or amended in any material respect, (ii) no event has
occurred which, with or without notice, lapse of time or both, would constitute
a default or breach on the part of Buyer under any term or condition of the
Financing Commitments and (iii) the commitments contained in the Financing
Commitments have not been withdrawn, terminated or rescinded. Buyer (x) is not
aware of any fact or occurrence that makes any of the assumptions, or the
representations or warranties of Buyer, in any of the Financing Commitments
inaccurate in any material respect, (y) has no reason to believe that it will be
unable to satisfy on a timely basis

 

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any term or condition of closing to be satisfied by it or its Affiliates
contained in the Financing Commitments and (z) has no reason to believe that any
portion of the Financing required to consummate the transactions contemplated
hereby will not be made available to Buyer on the Closing Date. Buyer has fully
paid any and all commitment fees or other fees required by the Financing
Commitments to be paid by it on or prior to the date of this Agreement and shall
in the future pay any such fees as they become due. Subject to the terms and
conditions of the Financing Commitments, the net proceeds of the Financing, if
and when funded, together with other financial resources of Buyer including cash
on hand, will in the aggregate provide Buyer with financing at Closing
sufficient to satisfy all of Buyer’s obligations under this Agreement, including
the consummation of the Purchase and Sale and the other transactions
contemplated by this Agreement and the Other Transaction Documents upon the
terms set forth herein and therein, including the payment of the Purchase Price
and all related fees and expenses associated with the foregoing. Buyer
acknowledges that its obligations under this Agreement are not conditioned upon
or subject to its receipt of the proceeds made available under the Financing
Commitments or any other Financing (such obligations being subject only to the
satisfaction of the conditions set forth in Section 3.01).

 

SECTION 6.06                                      Certain Matters.  Buyer has
provided to Seller, prior to the date hereof, true and correct copies of the
most recent audited consolidated balance sheet of Buyer and related audited
consolidated statements of income and cash flows for Buyer, and such financial
statements fairly present in all material respects, in conformity with Japanese
generally accepted accounting principles (“Japanese GAAP”) applied on a
consistent basis, the consolidated financial position of Buyer as of the dates
thereof and the consolidated results of operations and cash flows of Buyer for
the periods then ended.  The books and records of Buyer and its Subsidiaries
have been, and are being, maintained, in all material respects, in accordance
with Japanese GAAP and any other applicable legal and accounting requirements.
Since the date of its most recent audited consolidated balance sheet, the
business of Buyer and its Subsidiaries has been conducted in the ordinary course
consistent with past practices and there has not been any event, occurrence,
development or state of circumstances or facts that has had or would reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect
(for purposes of this sentence only, substituting “Buyer” for “the Company” in
such definition).  Buyer is its own “ultimate parent entity” for purposes of the
HSR Act.

 

SECTION 6.07                                      Certain Arrangements.  There
are no Contracts or instruments, or commitments to enter into Contracts or
instruments, between Buyer or any of its Affiliates, on the one hand, and any
director, officer or employee of the Company or any of the Company Subsidiaries,
on the other hand.

 

SECTION 6.08                                      Solvency.  Assuming each of
the Company and the Company Subsidiaries are Solvent immediately prior to the
Closing, then immediately after the Closing and after giving effect to the
transactions contemplated by this Agreement, each of the Company and the Company
Subsidiaries will be Solvent.

 

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ARTICLE VII

 

Covenants of Buyer

 

Buyer covenants and agrees as follows:

 

SECTION 7.01                                      Confidentiality.  Buyer
acknowledges that the information being provided to it in connection with the
Purchase and Sale and the consummation of the other transactions contemplated
hereby is subject to the terms of a confidentiality agreement between Aderans
America Holdings, Inc. and Seller (the “Confidentiality Agreement”), the terms
of which are incorporated herein by reference. Effective upon, and only upon,
the Closing, the Confidentiality Agreement shall terminate with respect to
information relating solely to the Company and the Company Subsidiaries;
provided that Buyer acknowledges that any and all other information provided to
it by or on behalf of Seller or Seller’s Representatives concerning Seller and
its Affiliates (other than the Company and the Company Subsidiaries) shall
remain subject to the terms and conditions of the Confidentiality Agreement
after the Closing Date.

 

SECTION 7.02                                      No Additional
Representations.  Buyer acknowledges (on behalf of itself and its Affiliates)
that it and its representatives have received or been afforded the opportunity
to review prior to the date hereof all written materials which Seller was
required to deliver or make available, as the case may be, to Buyer pursuant to
this Agreement on or prior to the date hereof. Buyer acknowledges (on behalf of
itself and its Affiliates) that it and its representatives have been permitted
full and complete access to the books and records, facilities, equipment, tax
returns, contracts, insurance policies (or summaries thereof) and other
properties and assets of the Company and the Company Subsidiaries that it and
its representatives have desired or requested to see and/or review, and that it
and its representatives have had a full opportunity to meet with the partners,
officers and employees of Seller, the Company and the Company Subsidiaries to
discuss the businesses and assets of the Company and the Company Subsidiaries.
Buyer acknowledges and agrees (on behalf of itself and its Affiliates) that
(a) none of Seller, the Company, or any other person has made any representation
or warranty, expressed or implied, with respect to the transactions contemplated
by this Agreement or as to the accuracy or completeness of any information
regarding the Company and the Company Subsidiaries furnished or made available
to Buyer and its representatives, except as expressly set forth in this
Agreement or the Seller Disclosure Schedule, (b) Buyer and its Affiliates have
not relied on any representation or warranty from Seller, the Company or any
other person with respect to the Company, the Shares, the business of the
Company or any other matter, except for the representations and warranties
expressly set forth in this Agreement, (c) none of Seller, the Company or any
other person shall have or be subject to any liability to Buyer or any other
person resulting from the distribution to Buyer, or Buyer’s use of, any such
information (including the Confidential Information Memorandum concerning the
Company and its business prepared by Bank of America Merrill Lynch) and any
information, documents or material made available to Buyer in certain “data
rooms”, management presentations or in any other form in expectation of the
transactions contemplated hereby except as and to the extent any such
information is expressly set forth in (or expressly required to be set forth in)
a representation or warranty in this Agreement or in the Seller Disclosure
Schedules and (d) SHOULD THE CLOSING OCCUR, THE SHARES (AND THEREFORE THE
COMPANY) ARE ACQUIRED BY BUYER WITHOUT ANY REPRESENTATION OR WARRANTY AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, IN AN “AS IS” CONDITION
AND ON A “WHERE IS” BASIS.

 

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SECTION 7.03                                      No Use of Certain Names. 
Buyer shall cause the Company and the Company Subsidiaries promptly, and in any
event (a) within 45 days after Closing, to revise product and service literature
and labeling to delete all references to the Names and (b) within 45 days after
Closing, to change signing and stationery and otherwise discontinue use of the
Names; provided, however, that for a period of 45 days from the Closing Date
(or, in the event that despite the Company and the Company Subsidiaries using
reasonable best efforts to discontinue use of the names, a longer period is
needed by the Company and the Company Subsidiaries but not to exceed in any
event 65 days after the Closing or, in the event of marketing materials, 95 days
after the Closing; provided that the Company and the Company Subsidiaries
continue to use their reasonable best efforts to discontinue use of the Names)
the Company and the Company Subsidiaries may continue to distribute product and
service literature that uses any Names and distribute products and services with
labeling that uses any Names to the extent that such product and service
literature and labeling exists on the Closing Date. In no event shall Buyer or
the Company or any of the Company Subsidiaries use any Names after the Closing
in any manner or for any purpose different from the use of such Names by the
Company and the Company Subsidiaries during the 45-day period preceding the
Closing.  “Names” means “Regis” any variations and derivatives thereof and any
other logos or trademarks of Seller or its Affiliates not included in
Section 4.11 of the Seller Disclosure Schedule.

 

SECTION 7.04                                      Buyer Activity on Closing
Date.  On the Closing Date, Buyer shall cause the Company and the Company
Subsidiaries to conduct their business in the ordinary course in substantially
the same manner as presently conducted and on the Closing Date shall not permit
the Company or any of the Company Subsidiaries to effect any extraordinary
transactions (other than any such transactions expressly required by Applicable
Law or by this Agreement) that could result in Tax liability to the Company or
any of the Company Subsidiaries in excess of Tax liability associated with the
conduct of its business in the ordinary course.

 

ARTICLE VIII

 

Mutual Covenants

 

Each of Seller and Buyer covenants and agrees as follows:

 

SECTION 8.01                                      Consents.  Buyer acknowledges
that certain consents and waivers with respect to the transactions contemplated
by this Agreement may be required from parties to the Contracts listed in the
Seller Disclosure Schedule and that such consents and waivers have not been
obtained. Buyer agrees that Seller shall not have any liability whatsoever to
Buyer arising out of or relating to the failure to obtain any consents or
waivers that may be required in connection with the transactions contemplated by
this Agreement or because of the termination of any Contract as a result
thereof. Buyer further agrees that no representation, warranty or covenant of
Seller contained herein shall be breached or deemed breached, and no condition
shall be deemed not satisfied, as a result of (a) the failure to obtain any such
consent or waiver, (b) any such termination or (c) any lawsuit, action,
proceeding or investigation commenced or threatened by or on behalf of any
person arising out of or relating to the failure to obtain any such consent or
any such termination. Prior to the Closing, Seller shall, and shall cause the
Company and the Company Subsidiaries to, cooperate with Buyer, upon the request
of Buyer, in any reasonable manner in connection with Buyer obtaining any such
consents and waivers;

 

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provided, however, that such cooperation shall not include any requirement of
Seller or any of its Affiliates (including the Company and the Company
Subsidiaries) to expend money, commence, defend or participate in any litigation
or offer or grant any accommodation (financial or otherwise) to any third party.

 

SECTION 8.02                                      Cooperation.  (a)  Buyer and
Seller shall cooperate with each other, and shall cause their officers,
employees, agents, auditors and other Representatives to cooperate with each
other, for a period of 60 days after the Closing to ensure the orderly
transition of the Company and the Company Subsidiaries from Seller to Buyer and
to minimize any disruption to the respective businesses of Seller, Buyer, the
Company and the Company Subsidiaries that might result from the transactions
contemplated hereby.  At all times after the Closing, upon reasonable written
notice, Buyer and Seller shall furnish or cause to be furnished to each other
and their employees, counsel, auditors and other Representatives access, during
normal business hours, to such information and assistance relating to the
Company and the Company Subsidiaries as is reasonably necessary for financial
reporting and accounting matters, the preparation and filing of any Tax returns,
reports or forms or the defense of any Tax claim or assessment.  Each party
shall reimburse the other for reasonable out-of-pocket costs and expenses
incurred in assisting the other pursuant to this Section 8.02. Neither party
shall be required by this Section 8.02 to take any action that would
unreasonably interfere with the conduct of its business or unreasonably disrupt
its normal operations (or, in the case of Buyer, the business or operations of
the Company and the Company Subsidiaries).

 

(b)  To the extent not completed prior to the Closing, Seller shall cooperate
with Buyer for a period of up to 120 days following the Closing to assist Buyer
in making necessary filings with the appropriate Governmental Entity or domain
name registrar such that any Company Registered Intellectual Property set forth
in Section 8.02(b) of the Seller Disclosure Schedule is (i) transferred to the
name of the Company or a Company Subsidiary, or (ii) released from any Liens
(other than Permitted Liens) thereon in favor of National Bank of Canada as of
the date of this Agreement.

 

SECTION 8.03                                      Publicity.  Seller and Buyer
agree that, from the date hereof through the Closing Date, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
either party without the prior consent of the other party (which consent shall
not be unreasonably withheld), except as such release or announcement may be
required by law or the rules or regulations of any United States or foreign
securities exchange, in which case the party required to make the release or
announcement shall allow the other party reasonable time to comment on such
release or announcement in advance of such issuance.

 

SECTION 8.04                                      Reasonable Best Efforts. 
Subject to the terms and conditions of this Agreement (including the provisions
set forth in Sections 8.01 and 8.05), each party shall use its reasonable best
efforts to cause the Closing to occur. Without limiting the foregoing or the
provisions set forth in Section 8.05, Buyer and Seller shall use its respective
reasonable best efforts to cause the Closing to occur as promptly as practicable
after the date hereof, including to, (a) use its reasonable best efforts to
consummate the transactions contemplated by this Agreement as promptly as
practicable and to obtain or make as promptly as practicable, and in any event
prior to the End Date, all requisite authorizations, consents, orders, approvals
or filings

 

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that are or may become necessary, proper or advisable to be obtained or made
respectively by them to consummate the transactions contemplated by this
Agreement, and (b) cooperate with the reasonable requests of each other in
seeking to obtain as promptly as practicable all such authorizations, consents,
orders and approvals.  Each of Seller and Buyer shall not, and shall not permit
any of its respective Affiliates to, and Seller shall cause the Company and the
Company Subsidiaries not to, take or cause to be taken any action that would, or
that would reasonably be expected to have the effect of delaying, impairing or
impeding the receipt or making of any such required authorizations, consents,
orders, approvals or filings, or result in any of the conditions set forth in
Article III not being satisfied.

 

SECTION 8.05                                      Antitrust Matters.  (a) Each
of Seller and Buyer and, to the extent applicable, their respective parents,
subsidiaries and Affiliates, shall as promptly as practicable make or cause to
be made, as applicable, all filings and notifications with all Government
Entities that may be or may become necessary, proper or advisable under
applicable Antitrust Laws to consummate and make effective the Purchase and Sale
and the other transactions contemplated by this Agreement.  Seller and Buyer
agree, promptly and in any event within five business days following the
execution and delivery of this Agreement, (1) to file or cause to be filed with
the United States Federal Trade Commission (the “FTC”) and the United States
Department of Justice (the “DOJ”) the notification and report form, if any,
required under the HSR Act with respect to the Purchase and Sale (which filing,
including the exhibits thereto, need not be shared or otherwise disclosed to the
other party except that it shall be shared with outside counsel of the other
party within 5 days of filing) and (2) to request early termination of the
applicable waiting period under the HSR Act. Each of Seller and Buyer shall use
its reasonable best efforts to achieve substantial compliance as promptly as
practicable with any request for additional information or documentary material
issued by a Governmental Entity under 15 U.S.C. § 18a(e) in conjunction with the
transactions contemplated by this Agreement (a “Second Request”), and each of
Seller and Buyer shall certify substantial compliance with any Second Request as
promptly as practicable after the date of issue of such Second Request. Any such
notification and report form and supplemental information provided in response
to a Second Request shall be in substantial compliance with the requirements of
the HSR Act.  Each of Buyer and Seller shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any filing or submission that is necessary under the HSR
Act.

 

(b)                                 Subject to applicable Laws relating to the
sharing of information, in connection with obtaining or making all
authorizations, consents, orders, approvals or filings that are or may become
necessary, proper or advisable to be obtained or made to consummate the Purchase
and Sale and the other transactions contemplated by this Agreement, each of
Seller and Buyer shall, Seller shall cause the Company and the Company
Subsidiaries to, promptly notify each other of any communication it receives
from any Governmental Entity and permit outside counsel for the other party to
review in advance any proposed communication by such party to any Governmental
Entity and shall provide each other with copies of all correspondence, filings
or communications between such party or any of its Representatives, on the one
hand, and any Governmental Entity or members of the staff of any Governmental
Entity, on the other hand, in each case to the extent relating to the matters
that are the subject of this Agreement.  None of Buyer or Seller shall, and
Seller shall cause the Company and the Company Subsidiaries not to,

 

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agree to participate in any meeting with any Governmental Entity relating to the
matters that are the subject of this Agreement unless it consults with Seller or
Buyer, as applicable, in advance and to the extent permitted by relevant
Governmental Entity, gives Seller or Buyer, as applicable, the opportunity to
attend and participate in such meeting. Each of Buyer and Seller may, as they
deem advisable and necessary, reasonably designate any competitively sensitive
material provided to the other under this Section 8.05 as “outside counsel
only.”  Such competitively sensitive material and the information contained
therein shall be given only to the outside legal counsel of the recipient and
will not be disclosed by such outside counsel to employees, officers or
directors of the recipient unless express permission is obtained in advance from
Buyer Seller, as the case may be, or its legal counsel.

 

(c)                                  Each of Seller and Buyer shall use its
reasonable best efforts to obtain any clearance required by, and cause the
expiration or termination of any applicable waiting period under, the HSR Act
for the Purchase and Sale as soon as practicable. Notwithstanding anything to
the contrary herein, and without limitation of the foregoing, if any objections
are asserted under the HSR Act or any other U.S. or foreign antitrust, merger
control or competition law, or any administrative or judicial action or
proceeding, including any proceeding by a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement or any of the other Transaction Documents as violative of the HSR Act
or any other U.S. or foreign antitrust, merger control or competition law, each
of Seller and Buyer shall reasonably cooperate with each other.

 

(d)                                 Neither Seller nor Buyer will extend any
waiting period under the HSR Act or enter into any agreement with any
Governmental Entity not to consummate the transactions contemplated by this
Agreement and the Other Transaction Documents, except with the prior written
consent of the other party hereto. Buyer may withdraw and resubmit its initial
filing under the HSR Act with Seller’s consent (which consent shall not be
unreasonably withheld or delayed), if Buyer in good faith and acting reasonably
deems it advisable in order to obtain expiration of the waiting period under the
HSR Act. For purposes of this Agreement, “Antitrust Law” means the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign, if any,
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines and other Laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening of competition through merger or acquisition.

 

SECTION 8.06                                      Records.  (a) As soon as
practicable on or after the Closing Date, Seller shall deliver or cause to be
delivered to Buyer all material original agreements, documents, books, records
and files, including records and files stored on computer disks or tapes or any
other storage medium (collectively, “Records”), if any, in the possession of
Seller and its subsidiaries (other than the Company and the Company
Subsidiaries) relating to the business and operations of the Company and the
Company Subsidiaries to the extent not then in the possession of the Company and
the Company Subsidiaries, subject to the following exceptions:

 

(i)                                     Buyer recognizes that certain Records
may contain incidental information relating to the Company and the Company
Subsidiaries or may relate primarily to subsidiaries or

 

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divisions of Seller other than the Company and the Company Subsidiaries and that
Seller may retain such Records and shall provide copies of the relevant portions
thereof to Buyer; and

 

(ii)                                  Seller may retain all Records prepared in
connection with the sale of the Shares, including bids received from other
parties and analyses relating to the Company and the Company Subsidiaries.

 

(b)                                 After the Closing, upon reasonable written
notice, Buyer and Seller agree to furnish or cause to be furnished to each other
and their Representatives access, during normal business hours, to, and provide
copies of, such information (including Records pertinent to the Company and the
Company Subsidiaries) and assistance relating to the Company and the Company
Subsidiaries as is reasonably necessary for financial reporting and accounting
matters, the preparation and filing of any Tax returns, reports or forms or the
defense of any Tax claim or assessment; provided, however, that such access does
not unreasonably disrupt the normal operations of Seller, Buyer, the Company or
any of the Company Subsidiaries.

 

SECTION 8.07                                      Support Services.  Seller and
its Affiliates provide the Company and the Company Subsidiaries with certain
support services (“Support Services”).  The Support Services include the
services listed in Section 4.19 of the Seller Disclosure Schedule.  Buyer
acknowledges that all Support Services will be terminated as of the Closing
Date.

 

SECTION 8.08                                      Financing.  (a) Prior to
Closing, Seller shall cause the Company and the Company Subsidiaries to provide,
and shall use its reasonable best efforts to cause the Company, the Company
Subsidiaries and their respective Affiliates, officers, directors, employees,
stockholders, agents and other Representatives to provide, all cooperation
reasonably requested by Buyer and/or its Financing sources in connection with
the arrangement of the Debt Financing (provided that such requested cooperation
does not unreasonably interfere with the ongoing operations of Seller, the
Company and the Company Subsidiaries), including (i) participating in a
reasonable number of meetings (including customary one-on-one meetings with the
parties acting as lead arrangers for the Financing and senior management and
Representatives, with appropriate seniority and expertise, of the Company and
the Company Subsidiaries), presentations, road shows, drafting sessions, due
diligence sessions and sessions with rating agencies, (ii) using reasonable best
efforts to facilitate the pledging of collateral, (iii) furnishing Buyer and its
Financing sources as promptly as reasonably practicable with such financial and
other pertinent information regarding the Company and the Company Subsidiaries
as may be reasonably requested by Buyer, (iv) assisting in the preparation of
documents and materials, including, but not limited to, (A) any customary
offering documents, bank information memoranda, prospectuses and similar
documents (including historical and pro forma financial statements and
information) necessary for any of the Financing, and (B) materials for rating
agency presentations, (v) cooperating with the marketing efforts for any of the
Financing (including consenting to the use of the Company’s and the Company
Subsidiaries’ logos; provided that such logos are used consistent with past use
and solely in a manner that is not intended to or reasonably expected to harm or
disparage the Company or the Company Subsidiaries or the reputation or goodwill
of the Company or any of the Company Subsidiaries), (vi) using its reasonable
best efforts, as appropriate, to have its independent accountants provide their
reasonable cooperation and assistance and (vii) cooperating reasonably with
Buyer’s

 

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Financing sources’ due diligence, to the extent customary and not unreasonably
interfering with the business of the Company or the Company Subsidiaries.  The
foregoing notwithstanding, (x) no person who is a director of the Company or any
Company Subsidiary at any time prior to the Closing (a “Pre-Closing Director”)
shall be required to take any action with respect to the foregoing and neither
the Company nor any of the Company Subsidiaries shall be obligated to take any
action that requires action or approval by any Pre-Closing Director, (y) no
obligation of the Company or any of the Company Subsidiaries or any of their
respective Affiliates, officers, directors, employees, stockholders, agents and
representatives undertaken pursuant to the foregoing shall be effective until
after the Closing, and (z) none of the Company or any of the Company
Subsidiaries or any of their respective Affiliates, officers, directors,
employees, stockholders, agents and other Representatives shall be required to
pay any commitment or other similar fee or incur any other cost or expense that
is not simultaneously reimbursed by Buyer in connection with the Debt Financing
prior to the Closing. Buyer shall, promptly upon request by Seller, reimburse
the Company, the Company Subsidiaries and their respective Affiliates, officers,
directors, employees, stockholders, agents and other Representatives for all
reasonable and documented out-of-pocket costs incurred thereby in connection
with such cooperation and shall indemnify and hold harmless the Company, the
Company Subsidiaries and their respective Affiliates, officers, directors,
employees, stockholders, agents and other Representatives for and against any
and all losses suffered or incurred by them in connection with the arrangement
of the Financing and any information utilized in connection therewith, unless
such loss results from the indemnified party’s gross negligence or willful
misconduct. All nonpublic or otherwise confidential information regarding
Seller, the Company, the Company Subsidiaries and their respective Affiliates
obtained by Buyer and its Affiliates, officers, directors, employees,
stockholders, agents and other Representatives pursuant to this
Section 8.08(a) shall be kept confidential in accordance with the
Confidentiality Agreement, except that Buyer shall be permitted to disclose such
information to potential syndicate members during syndication, subject to
customary confidentiality undertakings by such potential syndicate members.

 

(b)                                 Buyer shall use its, and shall cause its
Affiliates to use their, reasonable best efforts to arrange the Financing as
promptly as practicable, on the terms and conditions described in the Financing
Commitments, including using reasonable best efforts to (i) negotiate and
finalize definitive agreements with respect thereto on the terms and conditions
contained therein or on other terms that are, in the aggregate, not materially
less favorable to Buyer than those contained in the Financing Commitments and in
any event that do not contain Prohibited Terms, (ii) maintain in full force and
effect the Financing Commitments and satisfy on a timely basis all conditions
applicable to Buyer (or its Affiliates) in such definitive agreements that are
within the control of Buyer (or any parent entity of Buyer), (iii) comply with
its and their obligations under the Financing Commitments, not take or fail to
take any action that would reasonably be expected to prevent or impede or delay
or make less likely the availability of the Financing, and consummate the
Financing no later than the Closing and (iv) enforce its and their rights under
the Financing Commitments in the event of a breach by the Financing sources that
impedes or delays the Closing. In the event that all conditions to the Financing
Commitments have been satisfied in Buyer’s good faith judgment, Buyer shall use
its reasonable best efforts to cause the lenders and the other persons providing
such Financing to fund the Financing required to consummate the Purchase and
Sale and the other transactions contemplated by this Agreement and the other
Transaction Documents upon the terms set forth herein and therein on the Closing
Date. In the

 

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event any portion of the Financing becomes unavailable on the terms and
conditions contemplated in the Financing Commitments, and such portion is
reasonably required (in light of the amount of the cash on hand that Buyer has
to fund the Purchase Price) to consummate the Purchase and Sale and the other
transactions contemplated by this Agreement, Buyer shall promptly notify Seller
and shall use its reasonable best efforts to arrange to obtain alternative
financing from alternative sources on terms that will still enable Buyer to
consummate the Purchase and Sale and the other transactions contemplated by this
Agreement and the other Transaction Documents upon the terms set forth herein
and therein as promptly as practicable following the occurrence of such event,
but no later than the End Date. Buyer shall deliver to Seller true and complete
copies of all agreements pursuant to which any such alternative source shall
have committed to provide Buyer with any portion of the Financing. Buyer shall
refrain (and shall use its reasonable best efforts to cause its Affiliates to
refrain) from taking, directly or indirectly, any action that would reasonably
be expected to result in a failure of any of the conditions contained in the
Financing Commitments or in any definitive agreement related to the Financing.
Buyer shall not agree to or permit any amendment, supplement or other
modification of, or waive any of its rights under, any Financing Commitments or
the definitive agreements relating to the Financing without first obtaining
Seller’s prior written consent; provided, however, that notwithstanding anything
to the contrary herein, Buyer shall have the right from time to time to amend,
replace, supplement or otherwise modify, or waive any of its rights under, the
Financing Commitments or the definitive agreements relating to the Financing,
including to add additional lenders, agents or other parties to the Financing
Commitments and/or the definitive agreements relating to the Financing, provided
that any such amendment, replacement, supplement or other modification to or
waiver of any provision of the Financing Commitments and/or the definitive
agreements relating to the Financing that amends the Financing shall not
(A) impose new or additional conditions or expand upon the conditions precedent
to the Financing as set forth in the Financing Commitments in a manner that
would reasonably be expected to (x) make any portion of the funding of the
Financing less likely to be obtained in any material respect or delay in any
material respect the funding of the Financing or (y) adversely impact in any
material respect the ability of Buyer to enforce its rights against the
counterparties to the Financing Commitments, (B) prevent or impede or delay the
consummation of the Purchase and Sale and the other transactions contemplated by
this Agreement, (C) provide for terms and conditions (including any “flex”
provisions) that are, in the aggregate, less favorable in any material respect
to Buyer than those in the Financing Commitments and/or (D) decrease the credit
worthiness or potential of the Financing to be funded at the Closing or impede
or delay in any material respect the funding of the Financing or the Closing
(including by way of example, but not limitation, substituting hedge funds or
non-traditional financing sources in place of commercial bank financing sources)
(the prohibited terms described in the preceding clause (A) through (D),
“Prohibited Terms”).  Buyer shall promptly provide Seller with true, complete
and correct copies of any such amendment, replacement, supplement or other
modification or waiver and shall keep Seller reasonably apprised of material
developments relating to the Financing. Without limiting the generality of the
foregoing, Buyer shall give Seller prompt notice (x) of any material breach or
default under any Financing Commitment or any definitive agreement related to
the Financing by any party thereto of which Buyer becomes aware, (y) of the
receipt of any written notice or other written communication, in each case from
any financing source (1) with respect to any actual or potential breach,
default, termination or repudiation of any provisions of any Financing
Commitment or any definitive agreement related to the Financing by any party

 

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thereto or (2) with respect to any actual or potential material dispute or
disagreement between or among any parties to any Financing Commitment or any
definitive agreement related to the Financing with respect to the obligation to
fund the Financing or the amount of the Financing to be funded at Closing and
(z) if at any time for any reason Buyer believes in good faith that it will not
be able to obtain all or any portion of such Financing on the terms and
conditions, in the manner or from the sources contemplated by the Financing
Commitments or any definitive agreements related to the Financing. As promptly
as practicable, but in any event within three (3) business days of the date
Seller delivers to Buyer a written request therefor, Buyer shall provide any
information reasonably requested by Seller relating to any circumstance referred
to in clause (A), (B) or (C) of the immediately preceding sentence. For the
avoidance of doubt, failure to obtain all or any portion of the Financing (or
any alternative financing) shall not in and of itself relieve or alter the
obligations of Buyer to consummate the Purchase and Sale and the other
transactions contemplated by this Agreement and the other Transaction Documents
upon the terms set forth herein and therein (such obligation being subject only
to the satisfaction of the conditions set forth in Section 3.01).

 

(c)                                  In the event that the Financing Commitments
or definitive agreements related to the Financing are materially amended,
replaced, supplemented or otherwise modified, including as a result of obtaining
alternative financing in accordance with Section 8.08(b), each of Buyer and
Seller shall comply with its covenants in this Section 8.08 with respect to the
Financing Commitments or definitive agreements related to the Financing, as
applicable, as so amended, replaced, supplemented or otherwise modified and with
respect to such other alternate financing to the same extent that Buyer and
Seller would have been obligated to comply with respect to the Financing.

 

SECTION 8.09                                      Status.  After the date hereof
and prior to the Closing, Buyer and Seller shall establish a mechanism, subject
to applicable Law, reasonably acceptable to both parties by which the parties
will confer on a regular and continued basis regarding the general status of
transactions contemplated by this Agreement, the arrangement of the Financing,
the projected timing of the Closing, and the ongoing operations of the Company
and the Company Subsidiaries, and communicate and consult with specific persons
to be identified by each party to the other with respect to the foregoing. 
Prior to the Closing, Buyer and Seller shall use their respective commercially
reasonable efforts to enter into the Transition Services Agreement for the
services described on Section 8.09 of the Seller Disclosure Schedule for a
period of 2 months after the Closing.

 

ARTICLE IX

 

Employee and Related Matters

 

SECTION 9.01                                      Employee Benefits.  (a) Buyer
agrees that each employee of the Company and the Company Subsidiaries who
continues employment with Buyer, the Company or any of their respective
subsidiaries or Affiliates after the Closing Date (a “Continuing Employee”)
shall be provided with, for a period extending until the earlier of the
termination of such Continuing Employee’s employment with such entities or the
first anniversary of the Closing Date, with compensation and benefits that are
not materially less favorable, in the

 

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aggregate, than the compensation and benefits provided by the Company and the
Company Subsidiaries to such Continuing Employee immediately prior to the date
of this Agreement. Nothing in this Agreement shall require Buyer or any of its
subsidiaries or Affiliates to continue to employ any particular employee of the
Company or any Company Subsidiary following the Closing Date.

 

(b)                                 Buyer shall ensure that, as of the Closing
Date, each Continuing Employee receives full credit (for all purposes, including
eligibility to participate, vesting, vacation entitlement and severance
benefits, but excluding benefit accrual) for service with the Company and the
Company Subsidiaries (or predecessor employers to the extent the Seller, the
Company or any Company Subsidiary provides such past service credit under its
employee benefit plans) under each of the comparable employee benefit plans,
programs and policies of Buyer, the Company or the relevant subsidiary, as
applicable, in which such Continuing Employee becomes a participant; provided,
however, that no such service recognition shall result in any duplication of
benefits.  As of the Closing Date, Buyer shall, or shall cause the Company or
relevant subsidiary to, credit to Continuing Employees the amount of vacation
time that such employees had accrued under any applicable Company Employee Plan
as of the Closing Date.  With respect to each health or welfare benefit plan
maintained by Buyer, the Company or the relevant subsidiary for the benefit of
any Continuing Employees, subject only to any required approval of the
applicable insurance provider, if any, Buyer shall (i) cause to be waived any
eligibility waiting periods, any evidence of insurability requirements and the
application of any pre-existing condition limitations under such plan, and
(ii) cause each Continuing Employee to be given credit under such plan for all
amounts paid by such Continuing Employee under any similar Company Employee Plan
for the plan year that includes the Closing Date for purposes of applying
deductibles, co-payments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the applicable plan
maintained by Buyer, the Company or the relevant subsidiary, as applicable, for
the plan year in which the Closing Date occurs. At the Closing, Seller shall
transfer to Buyer the health reimbursement arrangement account balances
attributable to all of the Continuing Employees for use by such Continuing
Employees in the health and welfare benefit plan maintained by Buyer.

 

(c)                                  Neither Buyer nor any of its Affiliates
will assume any liability with respect to any Company Benefit Plan or contribute
to, or adopt as a participating company in, any Company Benefit Plan, other than
obligations of the Company under the severance letter agreements set forth on
Section 9.01(c) of the Seller Disclosure Schedule.  No provision of this
Agreement shall (i) create any third party beneficiary rights in any Continuing
Employee, or any beneficiary or dependents thereof, or (ii) be construed as in
any way modifying or amending the provisions of any Company Benefit Plan.

 

ARTICLE X

 

Further Assurances

 

SECTION 10.01                               Further Assurances.  From time to
time, as and when requested by either party hereto, the other party shall
execute and deliver, or cause to be executed and

 

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delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions (subject to the provisions of Sections
8.01, 8.04 and 8.05), as such other party may reasonably deem necessary or
desirable to consummate the transactions contemplated by this Agreement.

 

ARTICLE XI

 

Indemnification

 

SECTION 11.01                               Tax Indemnification.  (a) Seller
shall indemnify Buyer and its Affiliates (including the Company and the Company
Subsidiaries) and each of their respective officers, directors, employees,
stockholders, agents and representatives and hold them harmless from (i) all
liability for Taxes of the Company and the Company Subsidiaries for the
Pre-Closing Tax Period, (ii) all liability as a result of Treasury Regulation §
1.1502-6 (or any comparable or similar provisions of Federal, state, local of
foreign law) for Taxes for a Pre-Closing Tax Period of Seller or any other
corporation which is or has been affiliated with Seller, the Company or the
Company Subsidiaries, (iii) any liability of the Company or the Company
Subsidiaries for Taxes of any other Person for a Pre-Closing Tax Period as a
transferee, by contract or otherwise (other than any such liability pursuant to
a contract or agreement entered into in the ordinary course and the primary
purpose of which is not the sharing of Taxes), (iv) all Tax liability resulting
from a breach of the representations and warranties of Seller as set forth in
Section 4.08, and (v) all Tax liability resulting from the breach of any
covenants or obligations of Seller contained in Article XII. Notwithstanding the
foregoing, Seller shall not indemnify and hold harmless Buyer and its
Affiliates, and each of their respective officers, directors, employees and
agents, from any liability for Taxes attributable to any election made by Buyer
under Section 336 or 338 of the Code or any action taken after the Closing by
Buyer, any of its Affiliates (including the Company and the Company
Subsidiaries), or any transferee of Buyer or any of its Affiliates (other than
any such action expressly required by Applicable Law or by this Agreement) (a
“Buyer Tax Act”) or attributable to a breach by Buyer of its obligations under
this Agreement.

 

(b)                                 Buyer shall, and shall cause the Company and
the Company Subsidiaries to, indemnify Seller and its Affiliates and each of
their respective officers, directors, employees, stockholders, agents and
representatives and hold them harmless from (i) all liability for Taxes of the
Company and the Company Subsidiaries for any taxable period ending after the
Closing Date (except to the extent of any Straddle Period, in which case Buyer’s
indemnity will cover only that portion of any such Taxes that are not for the
Pre-Closing Tax Period), (ii) all liability for Taxes in Section 12.04 of this
Agreement and (iii) all liability for Taxes attributable to a Buyer Tax Act or
to a breach by Buyer of its obligations under this Agreement.

 

(c)                                  In the case of any taxable period that
includes (but does not end on) the Closing Date (a “Straddle Period”):

 

(i)                                     real, personal and intangible property
and other ad valorem Taxes (“Property Taxes”) of the Company and the Company
Subsidiaries allocable to the Pre-Closing Tax Period shall be equal to the
amount of such Property Taxes for the entire Straddle Period

 

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multiplied by a fraction, the numerator of which is the number of days during
the Straddle Period that are in the Pre-Closing Tax Period and the denominator
of which is the number of days in the Straddle Period; and

 

(ii)                                  the Taxes of the Company and the Company
Subsidiaries (other than Property Taxes) allocable to the Pre-Closing Tax Period
shall be computed as if such taxable period ended as of the close of business on
the Closing Date.

 

SECTION 11.02                               Other Indemnification by Seller. 
(a) Except as relates to Taxes, for which the sole indemnification is provided
in Section 11.01, subject to Sections 11.02(b), (c) and (d), Seller shall
indemnify Buyer, its Affiliates (including the Company and the Company
Subsidiaries) and each of their respective officers, directors, employees,
stockholders, agents and representatives against and hold them harmless from any
loss, liability, claim, damage or expense (including reasonable legal fees and
expenses) suffered or incurred by any such indemnified party to the extent
arising from (i) any breach of any representation or warranty of Seller which
survives the Closing contained in this Agreement or in any certificate delivered
pursuant hereto, or (ii) any breach of any covenant of Seller contained in this
Agreement.

 

(b)                                 Seller shall not have any liability under
Section 11.02(a)(i) above:

 

(i)                                     unless the aggregate of all losses,
liabilities, costs and expenses relating thereto for which Seller would, but for
this clause (i), be liable exceeds on a cumulative basis an amount equal to
$650,000 (such amount, the “Deductible Amount”), and then only to the extent of
any such excess; provided, however, that in no event shall the liability of
Seller under Section 11.02(a)(i) exceed an amount equal to 12.5% of the Purchase
Price (such 12.5% amount, the “Cap”); and provided, further, that the
limitations in this Section 11.02(b)(i) shall not apply to any Losses resulting
from a breach of the representations and warranties made in Sections 4.01
(Authority), 4.03 (The Shares), 4.04 (first sentence only) (Organization and
Standing), or 4.05 (Capital Stock of the Company) (together, the “Seller
Fundamental Representations”);

 

(ii)                                  for any losses, liabilities, costs and
expenses with respect to (A) the Seller Fundamental Representations (other than
Section 4.03 and 4.05) in an amount that would exceed an amount equal to 50% of
the Purchase Price (such 50% amount, the “Fundamental Representations Cap”) or
(B) Section 4.03 and 4.05 in an amount that would exceed an amount equal to the
Purchase Price; or

 

(iii)                               with respect to any matter to the extent
that such matter was reflected in the calculation of the Working Capital
Adjustment, if any, pursuant to Section 2.02.

 

(c)                                  Seller shall not have any liability under
Section 11.02(a)(ii) above for any losses, liabilities, costs and expenses
relating thereto in an amount that would exceed an amount equal to the Purchase
Price.

 

(d)                                 Section 11.02 is subject to Section 11.02 of
the Seller Disclosure Schedule.

 

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SECTION 11.03                               Other Indemnification by Buyer. 
(a) Except as relates to Taxes, for which the sole indemnification is provided
in Section 11.01, subject to Section 11.03(b), Buyer shall, and shall cause the
Company and the Company Subsidiaries to, indemnify Seller, its Affiliates and
each of their respective officers, directors, employees, stockholders, agents
and representatives against and hold them harmless from any loss, liability,
claim, damage or expense (including reasonable legal fees and expenses) suffered
or incurred by any such indemnified party to the extent arising from (i) any
breach of any representation or warranty of Buyer which survives the Closing
contained in this Agreement or in any certificate delivered pursuant hereto, or
(ii) any breach of any covenant of Buyer contained in this Agreement.

 

(b)                                 Buyer shall not have any liability under
Section 11.03(a)(i) above:

 

(i)                                     unless the aggregate of all losses,
liabilities, costs and expenses relating thereto for which Seller would, but for
this clause (i), be liable exceeds on a cumulative basis an amount equal to the
Deductible Amount, and then only to the extent of any such excess; provided,
however, that in no event shall the liability of Buyer under
Section 11.03(a) exceed an amount equal to the Cap; and provided, further, that
the limitations in this Section 11.03(b)(i) shall not apply to any Losses
resulting from a breach of the representations and warranties made in
Section 6.01 (Authority) (the “Buyer Fundamental Representation”);

 

(ii)                                  for any losses, liabilities, costs and
expenses with respect to the Buyer Fundamental Representation in an amount that
would exceed an amount equal to the Fundamental Representations Cap; or

 

(iii)                               with respect to any matter to the extent
that such matter was reflected in the calculation of the Working Capital
Adjustment, if any, pursuant to Section 2.02.

 

SECTION 11.04                               Limitations on Indemnification;
Cooperation.  (a) Notwithstanding any provision herein, neither Seller nor Buyer
shall in any event be liable to the other party or its Affiliates or their
Representatives on account of any indemnity obligation set forth in
Section 11.02 or 11.03 for any indirect, consequential, special, incidental or
punitive damages.  Buyer and Seller shall cooperate with each other with respect
to resolving any claim or liability with respect to which one party is obligated
to indemnify the other party hereunder including by making commercially
reasonable efforts to mitigate or resolve any such claim or liability.

 

(b)                                 Each of Buyer and Seller also acknowledges
and agrees that in connection with the transactions contemplated hereby, it has
received certain estimates, projections, forecasts and similar forward-looking
statements relating to the future operating and financial performance of the
other party (including, as to Seller, the Company and the Company Subsidiaries)
and no representation or warranty is being made by or on behalf of either party
with respect to such matters.

 

(c)                                  No party shall have any right to
indemnification under this Article XI with respect to any Losses to the extent
(and only to the extent) such Losses (i) arise out of any action taken by or
omitted to be taken by such party; (ii) arise solely out of changes after the
Closing Date in

 

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Applicable Law or interpretations or applications thereof; or (iii) are
duplicative of Losses that have previously been recovered hereunder. No
indemnified party shall have any right to assert any claim against any
indemnifying party with respect to any Loss, cause of action or other claim to
the extent such Loss is a Loss, cause of action or claim with respect to which
such indemnified party or any of its Affiliates has taken action (or caused
action to be taken) with the primary intent of accelerating the time period in
which such matter is asserted or payable in order to cause a claim to be made
prior to the applicable expiration date set forth in Section 11.06.

 

SECTION 11.05                               Losses Net of Insurance, etc.  The
amount of any loss, liability, claim, damage, expense or Tax for which
indemnification is provided under this Article XI shall be net of any amounts
actually recovered by the indemnified party under insurance policies with
respect to such loss, liability, claim, damage, expense or Tax (collectively, a
“Loss”) and shall be reduced (or increased) to take account of any net Tax
benefit (or Tax detriment) when and as actually realized by the indemnified
party (for the avoidance of doubt, a basis adjustment is not a Tax benefit until
taken into account as a result of Tax depreciation or sale).  Any indemnity
payment under this Agreement shall be treated as an adjustment to the Purchase
Price for Tax purposes, unless a final determination (which shall include the
execution of a Form 870 AD or successor form) with respect to the indemnified
party or any of its Affiliates causes any such payment not to be treated as an
adjustment to the Purchase Price for United States Federal income Tax purposes.

 

SECTION 11.06                               Termination of Indemnification.  The
obligations to indemnify and hold harmless a party hereto (a) pursuant to
Section 11.01 shall terminate at the date that is 60 days following the
expiration of the applicable statutes of limitations with respect to the Tax
liabilities in question (giving effect to any extension thereof), (b) pursuant
to Sections 11.02(a)(i) and 11.03(a)(i), shall terminate when the applicable
representation or warranty terminates pursuant to Article XIV, and (c) pursuant
to the other clauses of Sections 11.02 and 11.03 shall not terminate; provided,
however, that as to clauses (a) and (b) above such obligations to indemnify and
hold harmless shall not terminate with respect to any item as to which the
person to be indemnified or the related party thereto shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice of such claim (stating in reasonable detail the basis of such claim) to
the indemnifying party.

 

SECTION 11.07                               Procedures Relating to
Indemnification for Third Party Claims.  (a) In order for a party to be entitled
to any indemnification provided for under this Agreement (the “indemnified
party”) (other than indemnification for a Tax Claim under Section 11.01 which
shall be governed by Section 11.09) in respect of, arising out of or involving a
claim or demand made by any person against the indemnified party (a “Third Party
Claim”), such indemnified party must notify the party under this Agreement who
may be responsible for indemnification in respect of such claim or demand (the
“indemnifying party”) in writing (which notice shall specify in reasonable
detail the events giving rise to such Third Party Claim, the amount of Losses
accrued by the indemnified party or the amount of Losses that the indemnified
party reasonably anticipates it will have to pay, and the specific
representation, warranty or covenant on which such Third Party Claim is based)
of the Third Party Claim within 10 business days after receipt by such
indemnified party of written notice of the Third Party Claim; provided, however,
that failure to give such notification shall not affect any indemnification
obligations provided hereunder except to the extent the indemnifying party shall
have been actually and

 

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materially prejudiced as a result of such failure (except that the indemnifying
party shall not be liable for any expenses incurred during the period in which
the indemnified party failed to give such notice). Thereafter, the indemnified
party shall deliver to the indemnifying party, promptly after the indemnified
party’s receipt thereof, copies of all notices and documents (including court
papers) to the extent received by the indemnified party relating to the Third
Party Claim.

 

(b)                                 If a Third Party Claim is made against an
indemnified party, the indemnifying party shall be entitled to participate in
the defense thereof and, if it so chooses and acknowledges its obligation to
indemnify the indemnified party for such Third Party Claim, to assume the
defense thereof with counsel selected by the indemnifying party; provided that
such counsel is not reasonably objected to by the indemnified party. Should the
indemnifying party so elect to assume the defense of a Third Party Claim, the
indemnifying party shall not be liable to the indemnified party for legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof. If the indemnifying party assumes such defense, the indemnified
party shall have the right to participate in the defense thereof and to employ
counsel (not reasonably objected to by the indemnifying party), at its own
expense, separate from the counsel employed by the indemnifying party, it being
understood that the indemnifying party shall control such defense. The
indemnifying party shall be liable for the fees and expenses of counsel employed
by the indemnified party for any period during which the indemnifying party has
failed to assume the defense thereof (other than during the period prior to the
time the indemnified party shall have given notice of the Third Party Claim as
provided above).  Nothing herein shall be interpreted to prevent the indemnified
party from taking any actions reasonably necessary to defend such Third Party
Claim prior to the time that it receives a notice from the indemnifying party as
contemplated by the first sentence hereof.

 

(c)                                  If the indemnifying party so elects to
assume the defense of any Third Party Claim, all of the indemnified parties
shall cooperate with the indemnifying party in the defense or prosecution
thereof. Such cooperation shall include the retention (in accordance with the
terms of this Agreement) and (upon the indemnifying party’s reasonable request)
the provision to the indemnifying party of copies of records and information
that are reasonably relevant to such Third Party Claim, and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder; provided, however, that such
access to employees does not unreasonably disrupt the normal operations of the
indemnified party or its subsidiaries or Affiliates or cause the loss of any
attorney-client privilege. If the indemnifying party shall have assumed the
defense and control of a Third Party Claim and is in good faith defending such
Third Party Claim, the indemnified party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the indemnifying party’s prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed).  In the event that the
indemnifying party has not assumed the defense and control of a Third Party
Claim in accordance with this Article XI, the indemnified party shall be
entitled to defend and control such claim as it deems appropriate, without
prejudice to any other rights of the indemnified party under this Article XI,
but shall not be permitted to agree to any settlement, or the entry of any
judgment arising from, any Third Party Claim, without the prior written consent
of the indemnifying party (which consent shall not be unreasonably withheld,
conditioned or delayed). If the indemnifying party shall have assumed

 

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the defense and control of a Third Party Claim, or in the event that the
indemnified party shall have assumed the defense and control of a Third Party
Claim on the basis permitted in Article XI, it shall be authorized to consent to
a settlement of, or the entry of any judgment arising from, any Third Party
Claim, (A) in its sole discretion and without the consent of any indemnified
party or indemnifying party, respectively; provided, that the indemnifying party
or the indemnified party, respectively, shall (i) pay or cause to be paid all
amounts arising out of such settlement or judgment concurrently with the
effectiveness of such settlement or judgment (unless otherwise provided in such
judgment), (ii) not agree to any settlement that by its terms would encumber any
of the assets of any indemnified party or the indemnifying party, respectively,
or impose any restriction or condition on any indemnified party or the
indemnifying party, respectively, or the conduct of any indemnified party’s or
indemnifying party’s, respectively, business and (iii) obtain, as a condition of
any settlement, compromise, discharge, entry of judgment (if applicable), or
other resolution, a complete and unconditional release of each indemnified party
or indemnifying party, respectively, from any and all liabilities in respect of
such Third Party Claim or (B) with the prior written consent (not to be
unreasonably withheld, conditioned or delayed) of the indemnified party or
indemnifying party, respectively.

 

SECTION 11.08                               Procedures Related to
Indemnification for Other Claims (Other than Tax Claims under Section 11.01). 
(a) In the event any indemnified party should have a claim against any
indemnifying party under Section 11.02 or 11.03 that does not involve a Third
Party Claim being asserted against or sought to be collected from such
indemnified party, the indemnified party shall deliver notice of such claim with
reasonable promptness to the indemnifying party. The failure by any indemnified
party to so notify the indemnifying party shall not relieve the indemnifying
party from any liability which it may have to such indemnified party under
Section 11.02 or 11.03, except to the extent that the indemnifying party
demonstrates that it has been actually and materially prejudiced by such
failure.  If the indemnifying party, within a period of 60 days after the giving
of the Indemnity Notice, shall not give written notice to the indemnified party
announcing its intention to contest such assertion of the indemnified party,
such assertion of the indemnified party shall be deemed accepted and the amount
of the Losses shall be deemed established.  The indemnified party and the
indemnifying party may agree in writing, at any time, as to the existence and
the amount of the Losses, and upon the execution of such agreement, such Losses
shall be deemed established.

 

(b)                                 Indemnification Dispute Procedures.  If the
indemnifying party disputes its liability with respect to such claim, the
indemnifying party and the indemnified party shall proceed in good faith to
negotiate a resolution of such dispute.  If such dispute is not resolved through
negotiations, such dispute shall be resolved by litigation in an appropriate
court of competent jurisdiction listed in Section 15.12.

 

SECTION 11.09                               Procedures Relating to
Indemnification of Tax Claims.  (a) If a claim shall be made by any taxing
authority, which, if successful might result in an indemnity payment to Buyer,
one of its Affiliates or any of their respective officers, directors, employees,
stockholders, agents or representatives pursuant to Section 11.01 (a “Tax
Claim”), Buyer shall promptly notify Seller of such Tax Claim in writing and in
reasonable detail. If notice of a Tax Claim is not given to Seller within a
sufficient period of time to allow Seller to effectively contest such Tax Claim,
or in reasonable detail to apprise Seller of the nature of the Tax Claim, in
each case taking into account the facts and circumstances with respect to such
Tax Claim,

 

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Seller shall not be liable to Buyer, any of its Affiliates or any of their
respective officers, directors, employees, stockholders, agents or
representatives to the extent that Seller’s position is actually prejudiced as a
result thereof.

 

(b)                                 With respect to any Tax Claim (other than a
Tax Claim relating solely to Taxes of the Company or the Company Subsidiaries
for a Straddle Period), Seller shall have the right, at its own expense, to
control all proceedings taken in connection with such Tax Claim (including
selection of counsel) and, without limiting the foregoing, may in its sole
discretion pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto, and
may, in its sole discretion, either pay the Tax claimed and sue for a refund
where Applicable Law permits such refund or contest the Tax Claim in any
permissible manner, provided Seller shall not enter into any settlement,
compromise or consent to judgment with respect to such Tax Claim without the
prior written consent of Buyer, such consent not to be unreasonably withheld,
provided, however that Seller shall be entitled to settle, compromise or consent
to judgment without the consent of Buyer with respect to a Tax Claim if either
(1) the Tax Claim will not result in any Tax liability to the Company or any
Company Subsidiary in a Post-Closing Tax Period, or (2) the Tax Claim would
result in such Tax liability but such liability arises as a result of an
adjustment or change in any tax attributes of the Company or any Company
Subsidiary, including, without limitation, any net operating loss, tax credit or
tax basis.  Seller and Buyer shall jointly control all proceedings taken in
connection with any Tax Claim relating solely to Taxes of the Company for a
Straddle Period.

 

(c)                                  Seller, Buyer and the Company and each of
their respective Affiliates shall cooperate in contesting any Tax Claim, which
cooperation shall include, without limitation, the retention and (upon request)
the provision of records and information that are reasonably relevant to such
Tax Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided hereunder
or to testify at proceedings relating to such Tax Claim.

 

(d)                                 In no case shall Buyer or the Company or any
of their respective Affiliates, officers, directors, employees, stockholders,
agents or representatives settle or otherwise compromise any Tax Claim without
Seller’s prior written consent.  Neither party shall settle a Tax Claim relating
solely to Taxes of the Company or any Company Subsidiary for a Straddle Period
without the other party’s prior written consent, such consent shall not be
unreasonably withheld.

 

SECTION 11.10                               Exclusive Remedy.  Each of Buyer and
Seller further acknowledges and agrees that, should the Closing occur, its sole
and exclusive remedy with respect to any and all claims relating to this
Agreement, the transactions contemplated hereby, the Company, the Company
Subsidiaries and their respective assets, liabilities and businesses (other than
claims of, or causes of action arising from, fraud) shall be pursuant to the
indemnification provisions set forth in this Article XI. In furtherance of the
foregoing, each of Buyer and Seller hereby waives, from and after the Closing,
to the fullest extent permitted under Applicable Law, any and all rights, claims
and causes of action (other than claims of, or causes of action arising from,
fraud) it or its Affiliates may have against the other party or its Affiliates
arising under or based upon any Federal, state, local or foreign statute, law,
ordinance, rule or

 

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regulation or otherwise (except pursuant to the indemnification provisions set
forth in this Article XI). Notwithstanding the foregoing, nothing in this
Article XI shall limit Buyer’s remedies with respect to any breaches of any
covenants, including, without limitation, Section 5.05.

 

ARTICLE XII

 

Tax Matters

 

SECTION 12.01                               Responsibility for Preparation and
Filing of Tax Returns and Amendments.  (a) For any taxable period of the Company
or any of the Company Subsidiaries that includes (but does not end on) the
Closing Date, Buyer shall timely prepare and file with the appropriate
authorities all Tax Returns required to be filed and shall pay all Taxes due
with respect to such Tax Returns; provided that Seller shall reimburse Buyer (in
accordance with the procedures set forth in Section 11.01) for any amount owed
by Seller pursuant to Section 11.01 with respect to the taxable periods covered
by such Tax Returns. All such Tax Returns shall be prepared on a basis
consistent with the past practice of the Company and the Company Subsidiaries
(except as otherwise required by law) and in a manner that does not distort
taxable income (e.g., by deferring income or accelerating deductions). Buyer
shall furnish such Tax Returns to Seller for its approval (which approval shall
not be unreasonably delayed or withheld) at least 30 days prior to the due date
for filing such Tax Returns.

 

(b)                                 For any taxable period of the Company or any
of the Company Subsidiaries that ends on or before the Closing Date, Seller
shall timely prepare and file with the appropriate authorities all Tax Returns
required to be filed, and shall pay all Taxes due with respect to such Tax
Returns. To the extent that they relate to the Company or any of the Company
Subsidiaries, all such returns shall be prepared on a basis consistent with the
past practice of the Company and the Company Subsidiaries (except as otherwise
required by law). Buyer and Seller agree to cause the Company and the Company
Subsidiaries to file all Tax Returns for the period including the Closing Date
on the basis that the relevant taxable period ended as of the close of business
on the Closing Date, unless the relevant taxing authority will not accept a Tax
Return filed on that basis.

 

(c)                                  Seller shall be responsible for filing any
amended, consolidated, combined or unitary Tax Returns that include the Company
or any Company Subsidiary for any Pre-Closing Tax Period. For those
jurisdictions in which separate Tax Returns are filed by the Company or any of
the Company Subsidiaries, any required amended returns shall be prepared by
Seller and furnished to the Company or the applicable Company Subsidiary for
approval (which approval shall not be unreasonably delayed or withheld),
signature and filing at least 30 days prior to the due date for filing such Tax
Returns.

 

SECTION 12.02                               Cooperation.  Each of Seller, the
Company and Buyer shall reasonably cooperate, and shall cause their respective
Affiliates, officers, employees, agents, auditors and representatives reasonably
to cooperate, in preparing and filing all Tax Returns, including maintaining and
making available to each other all records necessary in connection with Taxes
and in resolving all disputes and audits with respect to all taxable periods
relating to Taxes. Buyer and Seller recognize that Seller and its Affiliates
will need access, from time to time, after the Closing Date, to certain
accounting and Tax records and information held by the Company and the Company
Subsidiaries to the extent such records and information pertain to

 

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events occurring prior to the Closing Date; therefore, Buyer agrees, and agrees
to cause the Company and the Company Subsidiaries, (a) to use their respective
best efforts to properly retain and maintain such records until such time as
Seller agrees that such retention and maintenance is no longer necessary, and
(b) to allow Seller and its agents and representatives (and agents or
representatives of any of its Affiliates), at times and dates mutually
acceptable to the parties, to inspect, review and make copies of such records as
Seller may deem necessary or appropriate from time to time, such activities to
be conducted during normal business hours and at Seller’s expense.

 

SECTION 12.03          Refunds and Credits.  Any refunds or credits of Taxes of
the Company or any of the Company Subsidiaries for any Pre-Closing Tax Period
shall be for the account of Seller.  Any refunds or credits of Taxes of the
Company or any of the Company Subsidiaries for any taxable period (or portion
thereof) beginning after the Closing Date shall be for the account of Buyer. 
Buyer shall, if Seller so requests and at Seller’s expense, cause the Company
and the Company Subsidiaries to file for and obtain any refunds or credits to
which Seller is entitled under this Section 12.03. Buyer shall permit Seller to
control the prosecution of any such refund claim and, where deemed appropriate
by Seller, shall cause the Company and the Company Subsidiaries to authorize by
appropriate powers of attorney such persons as Seller shall designate to
represent the Company and the Company Subsidiaries with respect to such refund
claim. Buyer shall cause the Company to forward to Seller any such refund within
10 days after the refund is received (or reimburse Seller for any such credit
within 10 days after the credit is allowed or applied against other Tax
liability). Seller and Buyer shall treat any payments under the preceding
sentence that Seller shall receive pursuant to this Section 12.03 as an
adjustment to the Purchase Price, except as otherwise required by law.

 

SECTION 12.04          Transfer Taxes.  All transfer, documentary, sales, use,
value added, registration and other such Taxes (including all applicable real
estate transfer or gains Taxes) and related fees (including any penalties,
interest and additions to Tax) incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by Buyer, and Buyer shall
file all appropriate Tax Returns as may be required with respect to such Taxes. 
Seller and Buyer shall cooperate in timely making all Tax Returns as may be
required to be filed in the preceding sentence.

 

SECTION 12.05          FIRPTA Certificate.  Seller shall deliver to Buyer, and
Buyer shall deliver to Seller, at the Closing a certificate substantially
similar to the certificate described in Treasury Regulations section
1.1445-2(b)(iv)(B) that Seller is not a non-U.S. person.

 

SECTION 12.06          Buyer Activity Post Closing.  Buyer shall not, with
respect to any Pre-Closing Tax Period, (a) file any amended Tax return with
respect to the Company or any of the Company Subsidiaries; (b) carry back any
loss or other Tax attribute of the Company or any of the Company Subsidiaries;
or (c) take or advocate any position with respect to Taxes of the Company or any
of the Company Subsidiaries that reasonably could be expected to adversely
affect Seller or that would have the effect of shifting income to a Pre-Closing
Tax Period unless, in each case, Seller shall have consented in writing to such
action by the Buyer.  Buyer shall not file any elections under Section 338 of
the Code.

 

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SECTION 12.07          Loss Shares.  If the Shares are “loss shares” for
purposes of Treasury Regulation section 1.1502-36, after taking into account the
effects of all applicable rules of law, including any adjustments under Treasury
Regulation section 1.1502-36(b), (c), or (d)(5)(iii), and if a reduction in Tax
attributes of the Company or any Company Subsidiary would otherwise be required
under Treasury Regulation section 1.1502-36(d), Seller shall make an election
pursuant to Treasury Regulation section 1.1502-36(d)(6)(i)(A) to reduce Seller’s
basis in such Shares.  Seller shall provide Buyer with a copy of such election
30 days prior to the filing of Seller’s federal income Tax return to which such
election is required to be attached.

 

ARTICLE XIII

 

Termination

 

SECTION 13.01          Termination.  Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:

 

(a)           by mutual written consent of Seller and Buyer;

 

(b)           by either party hereto, upon written notice to the other party, if
the Closing does not occur on or prior to the date that is nine months after the
date hereof (the “End Date”);

 

(c)           by either party hereto, if any Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the Purchase
and Sale, and such order, decree, ruling or action shall have become final and
nonappealable, provided, that the party seeking to terminate this Agreement
shall have used its reasonable best efforts to have such order, decree, ruling
or action lifted if and to the extent required by this Agreement;

 

(d)           by Buyer if any of the conditions set forth in Section 3.01 shall
have become incapable of fulfillment by the End Date, and shall not have been
waived by Buyer; or

 

(e)           by Seller if any of the conditions set forth in Section 3.02 shall
have become incapable of fulfillment by the End Date, and shall not have been
waived by Seller;

 

provided, however, that the party seeking termination pursuant to clause (b),
(c), (d) or (e) of this Section 13.01 is not in breach in any material respect
of any of its representations, warranties, covenants or agreements contained in
this Agreement.

 

SECTION 13.02          Return of Confidential Information.  If the transactions
contemplated by this Agreement are terminated as provided herein, Buyer shall
comply with all of its obligations under the Confidentiality Agreement.

 

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SECTION 13.03          Consequences of Termination.  In the event of termination
of this Agreement by Seller or Buyer pursuant to Article XIII, written notice
thereof shall forthwith be given to the other party and the transactions
contemplated by this Agreement shall be terminated, without further action by
either party. If this Agreement is terminated and the transactions contemplated
hereby are abandoned as described in this Article XIII, this Agreement shall
become void and of no further force or effect, without any liability or
obligation on the part of Buyer or Seller under this Agreement, except for the
provisions of (a) Section 7.01 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (b) Section 8.03
relating to publicity, (c) Section 15.03 relating to certain expenses, (d)
Section 15.10 relating to finder’s fees and broker’s fees and (e) this Article
XIII. Nothing in this Article XIII shall be deemed to release either party from
any liability for any willful and material breach by such party of the terms and
provisions of this Agreement or to impair the right of either party to compel
specific performance by the other party of its obligations under this Agreement.

 

ARTICLE XIV

 

Survival of Representations

 

SECTION 14.01          Survival of Representations.  The representations and
warranties made in this Agreement shall survive the Closing solely for purposes
of Sections 11.02 and 11.03 and shall terminate at the close of business on the
date that is 18 months after the Closing Date, except that (a) the Seller
Fundamental Representations (other than Section 4.03 and 4.05) and the Buyer
Fundamental Representation shall remain in full force and effect until the fifth
anniversary of the Closing, and Section 4.03 and 4.05 shall remain in full force
and effect indefinitely, and (b) the representations and warranties made by
Seller in Section 4.08 (Taxes), Section 4.14(e) (Code Section 280G) and Section
4.16(c) (Environmental Matters) shall survive the Closing and remain in full
force and effect until the date that is 60 days following the expiration of the
applicable statute of limitations (after giving effect to any extensions or
waivers thereof) with respect to such representation and warranty. All covenants
and agreements that by their terms apply or are to be performed in whole or in
part after the Closing will survive indefinitely or for the period provided in
such covenants and agreements, if any, or until fully performed.

 

ARTICLE XV

 

Miscellaneous

 

SECTION 15.01          Assignment.  This Agreement and the rights and
obligations hereunder shall not be assignable or transferable, in whole or in
part, by Buyer or Seller (including by operation of law in connection with a
merger, or sale of substantially all the assets, of Buyer or Seller) without the
prior written consent of the other party hereto; provided, however, that Buyer
may assign its rights to purchase the Shares under this Agreement to any direct
or indirectly held wholly owned subsidiary of Buyer without the consent of
Seller; and provided, further that no assignment shall limit or affect or
relieve the assignor of its obligations hereunder.  Any attempted assignment in
violation of this Section 15.01 shall be void.

 

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SECTION 15.02          No Third Party Beneficiaries.  Except as provided in
Section 8.08(a) and Article XI, this Agreement is for the sole benefit of the
parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any person, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
Notwithstanding the foregoing, the provisions of Article XI shall be enforceable
by the indemnified parties.

 

SECTION 15.03          Expenses.  (a) Generally.  Whether or not the Purchase
and Sale and the other transactions contemplated by this Agreement and the other
Transaction Documents are consummated, and except as otherwise specifically
provided in this Agreement (including in Section 8.08(a) and this Section
15.03), all fees, costs and expenses, including fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses.

 

(b)           Buyer Antitrust Termination Fee. In the event that this Agreement
is terminated by Seller or Buyer pursuant to Section 13.01(b), or by Seller or
Buyer pursuant to Section 13.01(c), or by Buyer pursuant to Section 13.01(d), or
by Seller pursuant to Section 13.01(e), in each case (i) when there is also a
failure to be satisfied of any of the conditions in Section 3.01(b) (due to a
Governmental Entity prohibiting or enjoining or preventing or making illegal the
transactions contemplated by this Agreement under any Antitrust Law (any of the
foregoing, an “Antitrust Restraint”)), Section 3.01(c), Section 3.02(b) (due to
an Antitrust Restraint) and/or Section 3.02(c), (ii) at the time of such
termination, the failure to be satisfied of one or more of the conditions in
Section 3.01(b) (due to an Antitrust Restraint), Section 3.01(c), Section
3.02(b) (due to an Antitrust Restraint) or Section 3.02(c) is not caused by a
willful and material breach of Sections 8.05(a), 8.05(b), 8.05(c) or 8.05(d) by
Seller and (iii) there shall not have occurred and be continuing any Material
Adverse Effect, then (1) Buyer shall pay or cause to be paid to Seller in cash
in U.S. dollars in immediately available funds a fee equal to 7% of the Purchase
Price (the “Buyer Antitrust Termination Fee”) within two business days after
such termination and (2) Seller’s receipt and acceptance of the Buyer Antitrust
Termination Fee shall be the sole and exclusive remedy of Seller against Buyer.
It is agreed that with respect to the immediately preceding sentence, (x) the
references to Sections 8.05(a), 8.05(b), 8.05(c) and 8.05(d) shall be
interpreted as if the words “advisable” and “proper” were deleted from such
sections and (y) Buyer shall have the burden of proof on proving that the Buyer
Antitrust Termination Fee is not payable. In no event shall Buyer be required to
pay the Buyer Antitrust Termination Fee on more than one occasion.

 

(c)           Other Costs and Expenses. Each party acknowledges that (i) the
agreements contained in this Section 15.03 are an integral part of the
transactions contemplated by this Agreement, (ii) the damages resulting from
termination of this Agreement under circumstances where a Buyer Antitrust
Termination Fee is payable are uncertain and incapable of accurate calculation
and therefore, the amounts payable pursuant to Section 15.03(b) are not a
penalty but rather constitute liquidated damages in a reasonable amount that
will compensate Seller for the efforts and resources expended and opportunities
foregone while negotiating this Agreement and in reliance on this Agreement and
on the expectation of the consummation of the transactions

 

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contemplated hereby, and (iii) without these agreements, the parties would not
have entered into this Agreement.

 

SECTION 15.04          Specific Performance.  The parties agree that irreparable
damage would result and that the parties would not have any adequate remedy at
law if any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached or threatened to be
breached at or prior to the Closing. It is accordingly agreed that the parties
shall be entitled to equitable relief, without the proof of actual damages,
including in the form of an injunction or injunctions or orders for specific
performance (including causing Purchaser to enforce its rights under any of the
Financing Commitments), in addition to all other remedies available to the
parties at law or in equity as a remedy for any such breach or threatened
breach, in the United States District Court in Wilmington, Delaware or in the
Court of Chancery of the State of Delaware, New Castle County. Each party agrees
(a) not to object to any attempt by the other party to obtain any such equitable
remedy (provided, that it is understood that clause (a) of this sentence is not
intended to, and shall not, preclude any party from litigating on the merits the
substantive claim to which such remedy relates) and (b) to waive any requirement
for the security or posting of any bond in connection with any such equitable
remedy.  Notwithstanding anything to the contrary in this Agreement, Seller
shall not be entitled to any equitable relief in a situation where the Buyer
Antitrust Termination Fee is payable under Section 15.03(b) in the event Buyer
pays the Buyer Antitrust Termination Fee in accordance with Section 15.03(b)

 

SECTION 15.05          Amendments.  No amendment, modification or waiver in
respect of this Agreement shall be effective unless it shall be in writing and
signed by both parties hereto.

 

SECTION 15.06          Notices.  All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent via e-mail or by prepaid telex, cable or telecopy or sent, postage
prepaid, by registered, certified or express mail or reputable overnight courier
service and shall be deemed given when so delivered by hand, sent via e-mail,
telexed, cabled or telecopied, or if mailed, three days after mailing (one
business day in the case of express mail or overnight courier service), as
follows:

 

(a)

if to Buyer,

 

 

 

Aderans Co., Ltd.

 

13-4 Araki-cho, Shinjyuku-ku

 

Tokyo 160-0007

 

Attention:

Mr. Shigeru Ishiko

 

 

Representative Director and Executive Vice President

 

Facsimile: +81-3-3352-2892

 

E-mail: shigeru.ishiko@aderans.com

 

 

with a copy to:

 

 

Bryan Cave LLP

 

1290 Avenue of the Americas

 

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New York, NY 10104

 

Attention: Tara Newell, Esq.

 

Facsimile: (212) 541-2084

 

E-mail: tara.newell@bryancave.com; and

 

 

(b)

if to Seller,

 

 

 

Regis Corporation

 

7201 Metro Boulevard

 

Minneapolis, MN 55439

 

Attention:

Eric Bakken, Esq.

 

Facsimile:

(952) 947-7200

 

E-mail: eric.bakken@regiscorp.com

 

 

with a copy to:

 

 

 

O’Melveny & Myers LLP

 

Times Square Tower

 

7 Times Square

 

New York, NY 10036

 

Attention: Paul Scrivano, Esq.

 

Facsimile: (212) 326-2061

 

E-mail: pscrivano@omm.com

 

SECTION 15.07          Interpretation; Exhibits and the Seller Disclosure
Schedule; Definitions.  (a) The headings contained in this Agreement, in the
Seller Disclosure Schedule, in any Exhibit or Schedule hereto and in the table
of contents to this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Any matter
set forth in any provision, subprovision, section or subsection of the Seller
Disclosure Schedule shall be deemed set forth for all purposes of the Seller
Disclosure Schedule to the extent readily apparent. The Seller Disclosure
Schedule and all Exhibits and Schedules annexed hereto or any certificate or
other document made or delivered pursuant hereto or referred to herein are
hereby incorporated in and made a part of this Agreement as if set forth in full
herein.  Each party has participated in the drafting of this Agreement and there
shall be no presumption of construing ambiguity against the drafting person of
this Agreement or any provision hereof.  Any capitalized terms used in the
Seller Disclosure Schedule or any Exhibit or Schedule annexed hereto but not
otherwise defined therein, shall have the meaning as defined in this Agreement. 
As used in this Agreement, the words “include”, “includes” or “including” shall
be deemed followed by the words “without limitation”.  As used in this
Agreement, the words “hereof”, “herein” and “hereunder” and words of similar
import shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  References to “this Agreement” shall include the
Seller Disclosure Schedule.  As used in this Agreement, the word “or” shall not
be exclusive.  The word “will” shall be construed to have the same meaning as
the word “shall”.  The phrase “to the extent” shall mean the extent or degree to
which a subject or thing extends, and shall not simply be construed to mean the
word “if”.  The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the

 

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masculine as well as to the feminine and neuter genders of such term. Any
Contract, instrument or Law defined or referred to herein means such Contract,
instrument or Law as from time to time amended, modified or supplemented,
including (in the case of Contracts or instruments) by waiver or consent and (in
the case of Laws) by succession of comparable successor Laws and references to
all attachments thereto and instruments incorporated therein. References to a
person are also to its permitted successors and assigns.

 

(b)           For all purposes hereof

 

“Affiliate” means, with respect to any specified person, any other person
directly or indirectly, through one or more intermediaries, controlling or
controlled by or under direct or indirect common control with such specified
person; and for the purposes of this definition, “control” when used with
respect to any specified person means the power to direct or cause the direction
of the management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

“business day” means any day that is not a Saturday, Sunday or other day on
which banking institutions are required or authorized by applicable Law to be
closed in New York, New York.

 

“Company Intellectual Property” means any Intellectual Property Right that is
owned by the Company or any Company Subsidiary.

 

“Company Registered Intellectual Property” means all of the Registered
Intellectual Property owned by, or filed in the name of, the Company or any
Company Subsidiary.

 

“Contract” means any loan or credit agreement, bond, debenture, note, mortgage,
indenture, lease, supply agreement, license agreement, franchise agreement,
distribution agreement or other contract, agreement, obligation, commitment or
instrument, including all amendments, modifications and supplements thereto.

 

“Franchise Agreement” means any Contract to which the Company or any of the
Company Subsidiaries is a party or by which the Company or any of the Company
Subsidiaries or its or their properties is bound and that grant or purport to
grant any person the right to develop or operate a business under the “Hair
Club” brand within one or more countries, states, provinces or other geographic
areas, or at any specific location (each a “Franchise”), together with all
amendments and agreements related thereto.

 

“GAAP” means United States generally accepted accounting principles.

 

“HCI Location” means any hair restoration center maintained by the Company or
any Company Subsidiary or any Franchise as of the date of this Agreement,
including, but not limited to, those hair restoration centers maintained in the
greater metropolitan areas of Birmingham, Alabama; Mobile, Alabama;  Phoenix,
Arizona; Fresno, California; Los Angeles, California; Ontario, California;
Sacramento, California; San Diego, California; San Francisco, California; San
Jose, California; Denver, Colorado; Washington, D.C.; Ft. Lauderdale, Florida;

 

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Ft. Myers, Florida; Jacksonville, Florida; Miami, Florida; Orlando, Florida;
Sarasota, Florida; Tampa, Florida; West Palm Beach, Florida; Atlanta, Georgia;
Savannah, Georgia; Bloomington, Illinois; Chicago, Illinois; Indianapolis,
Indiana; New Orleans, Louisiana; Des Moines, Iowa; Lexington, Kentucky;
Louisville, Kentucky; Baltimore, Maryland; Detroit, Michigan; Minneapolis,
Minnesota; Kansas City, Missouri; Springfield, Missouri; St. Louis, Missouri;
Omaha, Nebraska; Las Vegas, Nevada; Reno, Nevada; Paterson, New Jersey;
Albuquerque, New Mexico; Buffalo, New York; New York, New York; Charlotte, North
Carolina; Raleigh, North Carolina; Cincinnati, Ohio; Cleveland, Ohio; Columbus,
Ohio; Oklahoma City, Oklahoma; Portland, Oregon; Allentown, Pennsylvania;
Philadelphia, Pennsylvania; Pittsburgh, Pennsylvania; Greenville, South
Carolina; Knoxville, Tennessee; Amarillo, Texas; Austin, Texas; Dallas, Texas;
Houston, Texas; San Antonio, Texas; Salt Lake City, Utah; Norfolk, Virginia;
Richmond, Virginia; Seattle, Washington; Charleston, West Virginia; Edmonton,
Alberta; Winnipeg, Manitoba; Bedford, Nova Scotia; Ottawa, Ontario; Toronto,
Ontario; and Vancouver, British Columbia.

 

“Indebtedness” means any indebtedness of the Company and the Company
Subsidiaries for borrowed money, including interest bearing debt, including all
accrued and unpaid interest thereon and any other fees, costs and expenses
payable to holders thereof in connection with the payoff and termination of such
indebtedness, and all obligations in respect of capital leases.

 

“Intellectual Property Rights” means any or all worldwide intellectual property
rights, including without limitation rights in, arising out of, or associated in
the following: inventions (whether patentable or not), patents and patent
applications, trade secrets and all proprietary information, technology,
discoveries, processes, formulae and know-how, all copyrights (including
software programs in both source code and object code form and networks),
copyrightable works, copyrights , and all other rights corresponding thereto
throughout the world, industrial designs , trademarks, trade names, logos,
service marks and corporate names and all of the goodwill of the business
appurtenant to the foregoing , all databases and data collections, and all
rights therein throughout the world, all moral rights of authors and inventors,
however denominated, throughout the world, all websites (and the content
therein) and domain names, and any similar or equivalent rights to, and
applications for and registrations of, any of the foregoing anywhere in the
world.

 

“Knowledge of Seller” or “knowledge of Seller” means, with respect to any matter
in question, (i) the actual knowledge of those individuals listed in Section
15.07(b) of the Seller Disclosure Schedule and (ii) to the extent any such
individuals engaged in willful blindness, the knowledge such individuals would
have obtained in the normal and ordinary course of the performance of their
duties had they not engaged in willful blindness.

 

“Material Adverse Effect” means, with respect the Company, an effect, event,
development, change, state of facts, condition, circumstance or occurrence that,
individually or in the aggregate, has had or would have a material adverse
effect on (1) the business, financial condition, assets, liabilities, business
or results of operations of the Company and the Company Subsidiaries taken as a
whole or (2) the ability of Seller to consummate the Sale and the transactions
contemplated by this Agreement and the Other Transaction Documents; provided,
however, that, in the case of clause (1), none of the following shall be taken
into account in determining whether there has been or will be a Material Adverse
Effect: (i) effects, events,

 

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changes, state of facts, conditions, circumstances or developments relating to
or arising or resulting from (a) changes in the United States or foreign
economies in general (including securities, financial or credit markets of the
United States or elsewhere in the world in general), (b) legal, regulatory or
political requirements or conditions in the United States or elsewhere in the
world in general, (c) the industry in which the Company and the Company
Subsidiaries operate in general and the markets (including geographic, products
and services segments) in which each of the Company and the Company Subsidiaries
conducts its business or (d) the hair restoration, hair transplant or hair
system/hair piece industries (and/or segments thereof), in each case to the
extent such changes, events, developments or effects do not affect the Company
and the Company Subsidiaries taken as a whole in a materially disproportionate
manner relative to other participants in the industries in which the Company and
the Company Subsidiaries operate; (ii) the execution and delivery of this
Agreement (including disclosure of the identity of Buyer and its Affiliates), or
consummation of the transactions contemplated by this Agreement; (iii) events,
changes or developments relating to or arising or resulting from the sale of the
Shares or the other transactions contemplated by this Agreement or the Other
Transaction Agreements, the announcement or pendency of this Agreement or the
other Transaction Agreements (including the loss of personnel, customers or
suppliers); or (iv) any changes in Applicable Laws; and provided, further, that
(A) in the case of clause (2), no Antitrust Restraint (or possibility that an
Antitrust Restraint may occur) and/or (B) no matter disclosed in Section
15.07(b)(ii) of the Seller Disclosure Schedule, in either case, shall be taken
into account in determining whether there has been or will be a Material Adverse
Effect.

 

“Other Transaction Documents” means the Transaction Documents other than this
Agreement.

 

“Person” or “person” means any individual, firm, corporation, partnership,
limited liability company, trust, joint venture, Governmental Entity or other
entity.

 

“Physician Agreements” means (i) each management agreement or management and
support agreement pursuant to which the Company manages a physician’s or other
medical doctor’s relationship with the Company or any Company Subsidiary, (ii)
each agreement titled as “network agreements” or “networking agreements” with a
professional corporation providing physician services, physician or other
medical doctor representing revenues to the Company and the Company Subsidiaries
and (iii) shareholder nomination agreements with any professional corporation
providing physician services or other person providing physician services,
including but not limited to the Material Physician Agreements set forth in
Section 4.12(e) of the Seller Disclosure Schedule.

 

“Registered Intellectual Property” means all United States, international and
foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks and applications to register
trademarks; (iii) registered domain names; (iv) registered copyrights and
applications for copyright registration; and (v) any other Intellectual Property
Right that is the subject of an application, certificate, filing, registration
or other document issued, filed with, or recorded by any Governmental Entity.

 

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“Representatives” means, with respect to any person, such person’s directors,
managers, partners, stockholders, officers, employees, agents and
representatives, including any investment banker, financial advisor, attorney,
accountant or other advisor, agent, representative or Affiliate.

 

“Solvent”, when used with respect to any person, means that, as of any date of
determination, (a) the amount of the “fair saleable value” of the assets of such
person on a going concern basis will, as of such date, exceed (i) the value of
all “liabilities of such person, including contingent and other liabilities” as
of such date, as such quoted terms are generally determined in accordance with
applicable Federal laws governing determinations of the insolvency of debtors
and (ii) the amount that will be required to pay the probable liabilities of
such person on its existing debts (including contingent liabilities) as such
debts become absolute and matured, (b) such person will not have, as of such
date, an unreasonably small amount of capital for the operation of the
businesses in which it is engaged or proposed to be engaged following such date
and (c) such person will be able to pay its liabilities, including contingent
and other liabilities, as they mature. For purposes of this definition, each of
the phrases “not have an unreasonably small amount of capital for the operation
of the businesses in which it is engaged or proposed to be engaged” and “able to
pay its liabilities, including contingent and other liabilities, as they mature”
means that such person will be able to generate enough cash from operations,
asset dispositions or refinancing, or a combination thereof, to meet its
obligations as they become due.

 

A “Subsidiary” or “subsidiary” of any person means another person, an amount of
the voting securities, other voting rights or voting membership or partnership
interests of which is sufficient to elect at least a majority of its board of
directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person.

 

“Transaction Documents” means this Agreement, the Debt Financing Commitments,
the Transition Services Agreement and all other agreements, certificates,
instruments, documents and writings delivered in connection with this Agreement.

 

“Transition Services Agreement” means the Transition Services Agreement covering
the services specified in Section 8.09 of the Seller Disclosure Schedule.

 

(c)                                  The following terms have the meanings given
such terms in the Sections set forth below:

 

Term

 

Section

 

 

 

2% EBITDA Contribution

 

SECTION 4.20(a)

Accounting Firm

 

SECTION 2.02(a)(iii)

Actions

 

SECTION 4.13

Adjusted Purchase Price

 

SECTION 2.02(b)

Affiliate

 

SECTION 15.07(b)

Affiliate Material Contracts

 

SECTION 4.12(b)

Agreement

 

Preamble

Applicable Laws

 

SECTION 4.16(a)

 

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Antitrust Law

 

SECTION 8.05(d)

Balance Sheet

 

SECTION 4.07

Bankruptcy and Equity Exception

 

SECTION 4.01

business day

 

SECTION 15.07(b)

Buyer

 

Preamble

Buyer Antitrust Termination Fee

 

SECTION 15.03(b)

Buyer Fundamental Representation

 

SECTION 11.03(b)(i)

Buyer Tax Act

 

SECTION 11.01(a)

Cap

 

SECTION 11.02(b)(i)

CERCLA

 

SECTION 4.16(c)

Closing

 

SECTION 2.01

Closing Date

 

SECTION 2.01

Closing Date Amount

 

SECTION 2.01

Closing Working Capital

 

SECTION 2.02(a)

Code

 

SECTION 4.08(a)

Company

 

Recitals

Company Benefit Plans

 

SECTION 4.14(a)

Company Intellectual Property

 

SECTION 15.07(b)

Company Property

 

SECTION 4.10

Company Registered Intellectual Property

 

SECTION 15.07(b)

Company Subsidiary

 

SECTION 4.06(a)

Competing Business

 

SECTION 5.05(a)

Confidentiality Agreement

 

SECTION 7.01

Continuing Employee

 

SECTION 9.01

Contract

 

SECTION 15.07(b)

control

 

SECTION 15.07(b)

Current Assets

 

SECTION 2.02(c)

Current Liabilities

 

SECTION 2.02(c)

Debt Financing

 

SECTION 6.05

Debt Financing Commitments

 

SECTION 6.05

Deductible Amount

 

SECTION 11.02(b)(i)

DOJ

 

SECTION 8.05(a)

End Date

 

SECTION 13.01(b)

Environmental Laws

 

SECTION 4.16(c)

ERISA

 

SECTION 4.14(a)

FDA

 

SECTION 4.17(a)

FDCA

 

SECTION 4.17(a)

Financial Statements

 

SECTION 4.07

Financing

 

SECTION 6.05

Financing Commitments

 

SECTION 6.05

Foreign Corrupt Practices Act

 

SECTION 4.16(b)

Franchise

 

SECTION 15.07(b)

Franchise Agreement

 

SECTION 15.07(b)

Franchise Disclosure Statement

 

SECTION 4.20(k)

 

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Franchise Laws

 

SECTION 4.20(k)

Franchisee

 

SECTION 4.20(k)

FTC

 

SECTION 8.05(a)

FTC Rule

 

SECTION 4.20(k)

Fundamental Representations Cap

 

SECTION 11.02(b)(ii)

GAAP

 

SECTION 15.07(b)

Governmental Entity

 

SECTION 3.01(b)

Hazardous Substances

 

SECTION 4.16(c)

HCI Location

 

SECTION 15.07(b)

HSR Act

 

SECTION 3.01(c)

Indebtedness

 

SECTION 15.07(b)

indemnified party

 

SECTION 11.07(a)

indemnifying party

 

SECTION 11.07(a)

Intellectual Property Rights

 

SECTION 15.07(b)

Japanese GAAP

 

SECTION 6.06

Knowledge of Seller

 

SECTION 15.07(b)

Leased Property

 

SECTION 4.10

Liens

 

SECTION 4.02(a)

Loss

 

SECTION 11.05

Material Adverse Effect

 

SECTION 15.07(b)

Material Contracts

 

SECTION 4.12

Material Franchise Agreement

 

SECTION 4.20(a)

Material Physician Agreement

 

SECTION 4.12(e)

Medical Device

 

SECTION 4.17(a)

Names

 

SECTION 7.03

Notice of Disagreement

 

SECTION 2.02(a)(ii)

Order

 

SECTION 4.02(a)

Other Franchise Agreement

 

SECTION 4.12

Other Franchise/Physician Agreements

 

SECTION 4.12

Other Physician Agreement

 

SECTION 4.12

Other Transaction Documents

 

SECTION 15.07(b)

Permitted Liens

 

SECTION 4.09

Permits

 

SECTION 4.04

person

 

SECTION 15.07(b)

Physician Agreements

 

SECTION 15.07(b)

Pre-Closing Balance Sheet

 

SECTION 5.06

Pre-Closing Director

 

SECTION 8.08(a)

Pre-Closing Tax Period

 

SECTION 4.08(a)

Prohibited Terms

 

SECTION 8.08(b)

Property Taxes

 

SECTION 11.01(c)(i)

Purchase and Sale

 

SECTION 1.01

Purchase Price

 

SECTION 1.01

Records

 

SECTION 8.06

Reference Balance Sheet

 

SECTION 4.07

Registered Intellectual Property

 

SECTION 15.07(b)

 

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Relationship Laws

 

SECTION 4.20(k)

Release

 

SECTION 4.16(c)

Representatives

 

SECTION 15.07(b)

Second Request

 

SECTION 8.05(a)

Seller

 

Preamble

Seller Accounting Policies

 

SECTION 2.02(c)

Seller Disclosure Schedule

 

ARTICLE IV

Seller Fundamental Representations

 

SECTION 11.02(b)(i)

Shares

 

Recitals

Solvent

 

SECTION 15.07(b)

Statement

 

SECTION 2.02(a)

Straddle Period

 

SECTION 11.01(c)

Subsidiary

 

SECTION 15.07(b)

Support Services

 

SECTION 8.07

Tax

 

SECTION 4.08(a)

Tax Claim

 

SECTION 11.09(a)

Tax Returns

 

SECTION 4.08(a)

Taxes

 

SECTION 4.08(a)

Third Party Claim

 

SECTION 11.07(a)

Transaction Documents

 

SECTION 15.07(b)

Transition Services Agreement

 

SECTION 8.09

WC Amount

 

SECTION 2.02(b)

Working Capital

 

SECTION 2.02(c)

Working Capital Adjustment

 

SECTION 2.02(b)

 

SECTION 15.08          Counterparts.  This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other party.  Delivery of an
executed counterpart of a signature page to this Agreement by facsimile or
scanned pages shall be effective as delivery of a manually executed counterpart
to this Agreement.

 

SECTION 15.09          Entire Agreement.  This Agreement, the other Transaction
Documents and the Confidentiality Agreement contain the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede all prior agreements and understandings relating to such
subject matter. Neither party shall be liable or bound to any other party in any
manner by any representations, warranties or covenants relating to such subject
matter except as specifically set forth herein, in the other Transaction
Documents or in the Confidentiality Agreement.

 

SECTION 15.10          Fees.  Each party hereto hereby represents and warrants
that (a) the only brokers or finders that have acted for such party in
connection with this Agreement or the transactions contemplated hereby or that
may be entitled to any brokerage fee, finder’s fee or commission in respect
thereof are Bank of America Merrill Lynch with respect to Seller and (b) each
party shall pay all fees or commissions which may be payable to the firm so
named with respect to such party.

 

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SECTION 15.11          Severability.  If any provision of this Agreement (or any
portion thereof) or the application of any such provision (or any portion
thereof) to any person or circumstance shall be held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof (or the remaining portion thereof) or the application of such provision
to any other persons or circumstances. Upon such determination that any
provision or the application thereof is invalid, illegal or unenforceable, 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 to the fullest
extent permitted by applicable Law in an acceptable manner to the end that the
transactions contemplated by this Agreement are fulfilled to the extent
possible.

 

SECTION 15.12          Consent to Jurisdiction.  Each of Buyer and Seller
irrevocably submits to the exclusive jurisdiction of (a) the Court of Chancery
of the State of Delaware, New Castle County, and (b) the United States District
Court in Wilmington, Delaware, for the purposes of any suit, action or other
proceeding arising out of this Agreement, the other Transaction Documents or any
transaction contemplated hereby. Each of Buyer and Seller agrees to commence any
action, suit or proceeding relating hereto either in the United States District
Court in Wilmington, Delaware or if such suit, action or other proceeding may
not be brought in such court for jurisdictional reasons, in the Court of
Chancery of the State of Delaware, New Castle County. Each of Buyer and Seller
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such party’s respective address set forth above shall be
effective service of process for any action, suit or proceeding in Delaware with
respect to any matters to which it has submitted to jurisdiction in this Section
15.12. Each of Buyer and Seller irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in (i) the Court of
Chancery of the State of Delaware, New Castle County, or (ii) the United States
District Court in Wilmington, Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.  Each party irrevocably waives any objections or
immunities to jurisdiction to which it may otherwise be entitled or become
entitled (including sovereign immunity, immunity to pre-judgment attachment,
post-judgment attachment and execution) in any legal suit, action or proceeding
against it arising out of or relating to this Agreement or the transactions
contemplated hereby which is instituted in any such court. Each of the parties
hereto agrees that service of process, summons, notice or document by registered
mail addressed to it at the addresses set forth in Section 15.06 shall be
effective service of process for any suit, action or proceeding brought in any
such court.  Buyer hereby irrevocably and unconditionally designates, appoints
and empowers CT Corporation System, Corporation Trust Center, 1209 Orange
Street, Wilmington, Delaware 19801, USA, as its designee, appointee and agent to
receive, accept and acknowledge for and on its behalf service of any and all
legal process, summons, notices and documents that may be served in any action,
suit or proceeding brought against such party in any such United States federal
or state court with respect to its obligations, liabilities or any other matter
arising out of or in connection with this Agreement and that may be made on such
designee, appointee and agent in accordance with legal procedures prescribed for
such courts. If for any reason such designee, appointee and agent hereunder
shall cease to be available to act as such, Buyer agrees to promptly designate a
new designee, appointee and agent in the State of Delaware on the terms and for
the purposes of this Section 15.12 reasonably satisfactory to Seller. Buyer and
Seller hereby irrevocably consents

 

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and agrees to the service of any and all legal process, summons, notices and
documents in any such action, suit or proceeding against Buyer or Seller,
respectively, by serving a copy thereof upon the relevant agent for service of
process referred to in this Section 15.12 (whether or not the appointment of
such agent shall for any reason prove to be ineffective or such agent shall
accept or acknowledge such service) or by sending copies thereof by a recognized
next day courier service to Buyer or Seller, respectively, at its address
specified in or designated pursuant to this Agreement. Each party agrees that
the failure of any such designee, appointee and agent to give any notice of such
service to them shall not impair or affect in any way the validity of such
service or any judgment rendered in any action or proceeding based thereon.  The
parties agree that service of process may also be effected by certified or
registered mail, return receipt requested, or by reputable overnight courier
service, directed to the other party at the addresses set forth herein in
Section 15.06, and service so made shall be completed when received.

 

SECTION 15.13          Waiver of Jury Trial.  Each party hereto hereby waives to
the fullest extent permitted by Applicable Law, any right it may have to a trial
by jury in respect of any litigation directly or indirectly arising out of,
under or in connection with this Agreement or any of the other Transaction
Documents or the transactions contemplated hereby and thereby.  Each party
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce that foregoing waiver and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement and the other Transaction Documents, as applicable, by,
among other things, the mutual waivers and certifications in this Section 15.13.

 

SECTION 15.14          GOVERNING LAW.  THIS AGREEMENT, AND ANY CAUSES OF ACTION
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE THE
APPLICATION OF ANY OTHER LAW.

 

[Signature page follows.]

 

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

 

 

REGIS CORPORATION

 

 

 

 

 

By

/s/ Eric A. Bakken

 

 

Name: Eric A. Bakken

 

 

Title: Executive Vice President

 

 

 

 

 

ADERANS CO., LTD.

 

 

 

 

 

By

/s/ Nobuo Nemoto

 

 

Name: Nobuo Nemoto

 

 

Title: CEO and Representative Director

 

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