Exhibit 10.29

 

 

AGREEMENT AND PLAN OF MERGER

 

AMONG

 

UFP TECHNOLOGIES, INC.

 

S&L ACQUISITION CORP.

 

and

 

STEPHENSON & LAWYER, INC.

 

DATED:  JANUARY 14, 2008

 

 

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AGREEMENT AND PLAN OF MERGER

 

TABLE OF CONTENTS AND LIST OF EXHIBITS

 

Exhibit A

 

List of Company Shareholders, the number and class of Company Shares held by
each Company Shareholder and the Merger Consideration to be received by each
Company Shareholder

 

 

 

Exhibit B

 

Form of General Release

 

 

 

Exhibit C

 

Form of Legal Opinion by the Company’s Counsel

 

 

 

Exhibit D-1

 

Form of Noncompetition Agreement

 

 

 

Exhibit D-2

 

Form of Noncompetition Agreement

 

 

 

Exhibit D-3

 

Form of Noncompetition Agreement

 

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AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND PLAN OF MERGER (“Agreement”) entered into as of January 14, 2008,
by and among UFP Technologies, Inc., a Delaware corporation (“Parent”), S&L
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of
Parent (the “Merger Sub”), and Stephenson & Lawyer, Inc., a Michigan corporation
(“Company”).  All capitalized terms used in this Agreement have the meanings
specified or referred to in Article 11.

 

RECITALS

 

WHEREAS, Parent, Merger Sub and the Company desire to effectuate a business
combination of Parent and the Company and to effectuate this combination, Merger
Sub will be merged with and into the Company (the “Merger”) and the shareholders
of the Company will receive cash consideration upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the provisions of
the MBCA and the DGCL;

 

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the Merger, upon the terms and subject to the conditions
set forth in this Agreement; and

 

WHEREAS, it is intended that, for U.S. federal income tax purposes, the Merger
constitute a taxable sale of the stock of the Company to Parent.

 

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

 

ARTICLE 1.           THE MERGER

 

1.1           Procedure for the Merger

 

Upon the terms and subject to the conditions set forth in this Agreement, Merger
Sub shall be merged, in accordance with the provisions of the MBCA and the DGCL,
with and into the Company.  The Merger shall be effected by filing a certificate
of merger with the Department of Labor & Economic Growth of the State of
Michigan in accordance with the MBCA and a certificate of merger with the
Secretary of State of the State of Delaware in accordance with the DGCL.

 

1.2           Surviving Corporation

 

Following the Merger, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation (the “Surviving
Corporation”).  The name of the Surviving Corporation shall be Stephenson &
Lawyer, Inc.

 

1.3           Time and Place of Closing

 

The closing of the Merger provided for in this Agreement ( the “Closing”) shall
be held at the law offices of Brown Rudnick Berlack Israels LLP, One Financial
Center, Boston,

 

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Massachusetts, within three (3) business days of the satisfaction or waiver of
all conditions to the obligations of the parties to consummate the transactions
contemplated hereby (other than conditions with respect to action that will be
taken at the Closing itself), or at such other place, date or time as may be
fixed by mutual agreement of the parties (the “Closing Date”); provided,
however, that in no event shall the Closing Date be extended beyond February 29,
2008.  Each of the parties agrees to use its reasonable efforts to close the
Merger by January 21, 2008.

 

1.4           Effective Time

 

Subject to the provisions of this Agreement, as soon as practicable after the
Closing Date, the parties shall cause the Merger contemplated by this Agreement
to be consummated by the filing of a certificate of merger with the Department
of Labor & Economic Growth of the State of Michigan executed in accordance with
the relevant provisions of the MBCA, and the parties shall make all other
filings or recordings required under the MBCA, and the filing of a certificate
of merger with the Secretary of State of the State of Delaware executed in
accordance with the relevant provisions of the DGCL, and the parties shall make
all other filings or recordings required under the MBCA and the DGCL.  The
Merger shall become effective at the later of the filing of the certificate of
merger with the Secretary of State of the State of Michigan or the filing of the
certificate of merger with the Secretary of State of the State of Delaware, or
at such subsequent date or time as the parties shall agree upon in writing and
specify in such filings (the time the Merger becomes effective being hereinafter
referred to as the “Effective Time”).

 

1.5           Certificate of Incorporation, Bylaws and Officers and Directors of
the Surviving Corporation

 

(A)           CERTIFICATE.  UNLESS OTHERWISE DETERMINED BY PARENT IN ITS SOLE
DISCRETION PRIOR TO THE EFFECTIVE TIME, AT THE EFFECTIVE TIME, THE CERTIFICATE
OF INCORPORATION OF MERGER SUB, AS IN EFFECT IMMEDIATELY PRIOR TO THE EFFECTIVE
TIME, SHALL BE THE CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION,
UNLESS AND UNTIL THEREAFTER CHANGED OR AMENDED IN ACCORDANCE WITH APPLICABLE
LAW.

 

(B)           BYLAWS.  UNLESS OTHERWISE DETERMINED BY PARENT IN ITS SOLE
DISCRETION PRIOR TO THE EFFECTIVE TIME, AT THE EFFECTIVE TIME, THE BYLAWS OF
MERGER SUB, AS IN EFFECT IMMEDIATELY PRIOR TO THE EFFECTIVE TIME, SHALL BE THE
BYLAWS OF THE SURVIVING CORPORATION, UNLESS AND UNTIL THEREAFTER CHANGED OR
AMENDED IN ACCORDANCE WITH APPLICABLE LAW.

 

(C)           OFFICERS AND DIRECTORS.  THE OFFICERS OF MERGER SUB IMMEDIATELY
PRIOR TO THE EFFECTIVE TIME SHALL BE THE INITIAL OFFICERS OF THE SURVIVING
CORPORATION, IN EACH CASE UNTIL THE EARLIEST OF THEIR RESIGNATION OR REMOVAL
FROM OFFICE OR THEIR OTHERWISE CEASING TO BE OFFICERS OR UNTIL THEIR RESPECTIVE
SUCCESSORS ARE DULY ELECTED AND QUALIFIED.  THE DIRECTORS OF MERGER SUB
IMMEDIATELY PRIOR TO THE EFFECTIVE TIME SHALL BE THE INITIAL DIRECTORS OF THE
SURVIVING CORPORATION, EACH TO HOLD OFFICE IN ACCORDANCE WITH THE CERTIFICATE OF
INCORPORATION AND BYLAWS OF THE SURVIVING CORPORATION.

 

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1.6           Intentionally Deleted

 

1.7           Effect of Merger on Capital Stock

 

As of the Effective Time, by virtue of the Merger and without any action on the
part of any of the Constituent Corporations or the holders of any securities of
the Constituent Corporations:

 

(A)           SURVIVING CORPORATION.  AT THE EFFECTIVE TIME, THE EFFECT OF THE
MERGER SHALL BE AS PROVIDED IN THIS AGREEMENT AND THE APPLICABLE PROVISIONS OF
THE MBCA AND THE DGCL.  WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AND
SUBJECT THERETO, AT THE EFFECTIVE TIME, ALL THE PROPERTY, RIGHTS, PRIVILEGES,
POWERS AND FRANCHISES OF MERGER SUB AND THE COMPANY SHALL VEST IN THE SURVIVING
CORPORATION, AND ALL DEBTS, LIABILITIES AND DUTIES OF MERGER SUB AND THE COMPANY
SHALL BECOME THE DEBTS, LIABILITIES AND DUTIES OF THE SURVIVING CORPORATION.

 

(B)           COMPANY SHARES.  UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET
FORTH IN THIS AGREEMENT, AT THE EFFECTIVE TIME, BY VIRTUE OF THE MERGER AND
WITHOUT ANY ACTION ON THE PART OF MERGER SUB, THE COMPANY OR THE COMPANY
SHAREHOLDERS, THE COMPANY SHARES (EXCLUDING ANY TREASURY SHARES) SHALL BE
CONVERTED INTO THE RIGHT TO RECEIVE AND BE EXCHANGEABLE FOR THE AMOUNT OF CASH
SET FORTH NEXT TO SUCH COMPANY SHAREHOLDER’S NAME ON EXHIBIT A (AN AGGREGATE
PURCHASE PRICE OF $7,225,000 IN CASH) (THE “MERGER CONSIDERATION”).

 

(C)           CANCELLATION OF CERTIFICATES FOR COMPANY SHARES.  AT THE EFFECTIVE
TIME, ALL COMPANY SHARES SHALL CEASE TO BE OUTSTANDING, SHALL BE CANCELED AND
RETIRED AND SHALL CEASE TO EXIST, AND EACH CERTIFICATE (A “CERTIFICATE”)
FORMERLY REPRESENTING A COMPANY SHARE (OTHER THAN A TREASURY SHARE) SHALL
THEREAFTER CEASE TO HAVE ANY RIGHTS WITH RESPECT TO THE COMPANY SHARES, EXCEPT
AS PROVIDED HEREIN OR BY LAW.

 

(D)           TREASURY STOCK.  EACH COMPANY SHARE OWNED BY THE COMPANY
(“TREASURY SHARES”) SHALL AUTOMATICALLY BE CANCELED AND RETIRED AND SHALL CEASE
TO EXIST, AND NO CONSIDERATION SHALL BE DELIVERED IN EXCHANGE THEREFOR.

 

(E)           MERGER SUB STOCK.  EACH SHARE OF COMMON STOCK, PAR VALUE $0.01 PER
SHARE, OF MERGER SUB ISSUED AND OUTSTANDING IMMEDIATELY PRIOR TO THE EFFECTIVE
TIME SHALL BE CONVERTED INTO AND BECOME ONE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE SHARE OF CAPITAL STOCK, PAR VALUE $0.01 PER SHARE, OF THE
SURVIVING CORPORATION, SUCH THAT PARENT SHALL BE THE HOLDER OF ALL OF THE ISSUED
AND OUTSTANDING SHARES OF CAPITAL STOCK OF THE SURVIVING CORPORATION FOLLOWING
THE MERGER.

 

1.8           Payment of Merger Consideration

 

The Merger Consideration shall be paid as follows:

 

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(A)           AT THE CLOSING, THE AGGREGATE SUM OF $6,975,000 SHALL BE PAID TO
THE COMPANY SHAREHOLDERS IN CASH BY PAYING TO EACH COMPANY SHAREHOLDER BY
CERTIFIED OR BANK CHECK OR BY WIRE TRANSFER OF FUNDS TO AN ACCOUNT SPECIFIED BY
SUCH COMPANY SHAREHOLDER IN WRITING AT LEAST THREE DAYS PRIOR TO THE CLOSING
DATE THE CASH AMOUNT SET FORTH NEXT TO HIS NAME UNDER THE HEADING “CASH PAYMENT
AT CLOSING” ON EXHIBIT A HERETO, AS AMENDED;

 

(B)           WITHIN FIVE (5) BUSINESS DAYS FOLLOWING THE END OF THE AR
COLLECTION PERIOD, PARENT SHALL PAY EACH COMPANY SHAREHOLDER ITS PRO RATA
PERCENTAGE OF AN AMOUNT, IF ANY, EQUAL TO (I) THE AR HOLDBACK, MINUS (II) ANY
PORTION OF THE AR HOLDBACK WHICH PARENT IS ENTITLED TO RETAIN UNDER SECTION 8.7,
BY CERTIFIED OR BANK CHECK OR BY WIRE TRANSFER OF FUNDS TO ACCOUNTS SPECIFIED BY
THE SHAREHOLDER REPRESENTATIVE IN WRITING AT LEAST THREE DAYS PRIOR TO SUCH
DISTRIBUTION DATE.

 

1.9           Delivery of Company Shares

 

At the Closing, the Company Shareholders shall deliver or cause to be delivered
to Parent:

 

(A)           CERTIFICATES FOR ALL THE COMPANY SHARES OWNED BY EACH COMPANY
SHAREHOLDER, DULY ENDORSED IN BLANK FOR TRANSFER, OR WITH STOCK POWERS ATTACHED
DULY EXECUTED IN BLANK, WITH ALL SIGNATURES NOTARIZED;

 

(B)           SUCH OTHER DOCUMENTS AS MAY BE REQUIRED TO EFFECT A VALID TRANSFER
OF THE COMPANY SHARES BY THE COMPANY SHAREHOLDERS, FREE AND CLEAR OF ANY AND ALL
ENCUMBRANCES INCLUDING, WITHOUT LIMITATION, ANY ENCUMBRANCES OR OTHER CLAIMS
UNDER ARTICLE 8 OF THE UNIFORM COMMERCIAL CODE, PROVIDED THAT PARENT AND MERGER
SUB QUALIFY AS PROTECTED PURCHASERS UNDER ARTICLE 8 OF THE UNIFORM COMMERCIAL
CODE TO THE EXTENT THAT THE COMPANY’S REPRESENTATIONS IN SECTION 2.2 ARE
ACCURATE;

 

(C)           GENERAL RELEASES IN SUBSTANTIALLY THE FORM OF EXHIBIT B BY ALL
OFFICERS, DIRECTORS AND STOCKHOLDERS OF THE COMPANY RELEASING ANY LIABILITY OF
THE COMPANY TO THEM, OR ANY CLAIM THAT THEY MAY HAVE AGAINST THE COMPANY
(EXCLUDING CLAIMS ARISING UNDER THIS AGREEMENT AND THE COMPANY’S OBLIGATION TO
PAY ACCRUED AND UNPAID COMPENSATION AND TO CONTINUE OFFICER AND DIRECTOR
INDEMNIFICATION IN ACCORDANCE WITH THE TERMS HEREOF) (THE “GENERAL RELEASES”);
AND

 

(D)           SUCH OTHER DOCUMENTS AS MAY BE REQUIRED ELSEWHERE IN THIS
AGREEMENT OR MAY BE REASONABLY REQUESTED BY COUNSEL TO THE PARENT.

 

1.10         Further Assurances

 

The Company Shareholders from time to time after the Closing, at the request of
Parent and without further consideration, shall execute and deliver such further
instruments of transfer and assignment (in addition to those delivered under
Section 1.9) and take such other action as

 

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the Parent may reasonably require to effect the Merger and the other
transactions contemplated by this Agreement and the Ancillary Agreements.

 

1.11         Shareholder Representative

 

(A)           EACH COMPANY SHAREHOLDER WILL BE DEEMED TO HAVE IRREVOCABLY
CONSTITUTED AND APPOINTED, EFFECTIVE AS OF THE CLOSING, MR. JOHN BARROWS
(TOGETHER WITH HIS PERMITTED SUCCESSORS, THE “SHAREHOLDER REPRESENTATIVE”), AS
HIS TRUE AND LAWFUL AGENT AND ATTORNEY-IN-FACT TO ENTER INTO ANY AGREEMENT IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, TO EXERCISE ALL
OR ANY OF THE POWERS, AUTHORITY AND DISCRETION CONFERRED ON HIM UNDER ANY SUCH
AGREEMENT, TO WAIVE ANY TERMS AND CONDITIONS OF ANY SUCH AGREEMENT (OTHER THAN
THE PAYMENT OF THE MERGER CONSIDERATION IN ACCORDANCE WITH SECTION 1.8), TO GIVE
AND RECEIVE NOTICES ON HIS BEHALF AND TO BE HIS EXCLUSIVE REPRESENTATIVE WITH
RESPECT TO ANY MATTER, SUIT, CLAIM, ACTION OR PROCEEDING ARISING WITH RESPECT TO
ANY TRANSACTION CONTEMPLATED BY ANY SUCH AGREEMENT, INCLUDING, WITHOUT
LIMITATION, THE DEFENSE, SETTLEMENT OR COMPROMISE OF ANY CLAIM, ACTION OR
PROCEEDING FOR WHICH PARENT OR, FOLLOWING THE CLOSING, COMPANY MAY BE ENTITLED
TO INDEMNIFICATION.  THIS POWER OF ATTORNEY IS COUPLED WITH AN INTEREST AND IS
IRREVOCABLE.  EACH COMPANY SHAREHOLDER AGREES THAT ANY ACTION THAT MAY BE TAKEN
OR RIGHT THAT MAY BE EXERCISED UNDER OR RELATED TO THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY BY SUCH COMPANY SHAREHOLDER MAY ONLY BE TAKEN OR
EXERCISED BY THE SHAREHOLDER REPRESENTATIVE, AND THAT SUCH COMPANY SHAREHOLDER
SHALL BE BOUND BY ALL ACTIONS AND OMISSIONS OF THE SHAREHOLDER REPRESENTATIVE. 
WITHOUT LIMITING THE FOREGOING, ANY NOTICE OR OTHER COMMUNICATION TO BE
DELIVERED TO THE COMPANY SHAREHOLDERS HEREUNDER SHALL BE EFFECTIVE FOR ALL
PURPOSES IF SUCH NOTICE OR OTHER COMMUNICATION IS DELIVERED TO THE SHAREHOLDER
REPRESENTATIVE.

 

(B)           THE SHAREHOLDER REPRESENTATIVE SHALL NOT BE LIABLE TO ANYONE FOR
ANY ACTION TAKEN OR NOT TAKEN BY HIM IN GOOD FAITH OR FOR ANY MISTAKE OF FACT OR
LAW FOR ANYTHING THAT HE MAY DO OR REFRAIN FROM DOING IN CONNECTION WITH HIS
OBLIGATIONS UNDER THIS AGREEMENT (I) WITH THE CONSENT OF COMPANY SHAREHOLDERS
WHO, AS OF THE DATE OF THIS AGREEMENT, OWNED A MAJORITY IN NUMBER OF THE
OUTSTANDING COMPANY SHARES OR (II) EVEN WITHOUT SUCH CONSENT, IN THE ABSENCE OF
HIS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.  ANY ACTION TAKEN OR NOT TAKEN
PURSUANT TO THE ADVICE OF COUNSEL SHALL BE CONCLUSIVE EVIDENCE OF SUCH GOOD
FAITH.  THE COMPANY SHAREHOLDERS SHALL, JOINTLY AND SEVERALLY, INDEMNIFY AND
HOLD THE SHAREHOLDER REPRESENTATIVE, AND EACH SUCCESSOR THEREOF, HARMLESS FROM
ANY AND ALL LIABILITY AND EXPENSES (INCLUDING, WITHOUT LIMITATION, COUNSEL FEES)
THAT MAY ARISE OUT OF ANY ACTION TAKEN OR OMITTED BY HIM AS SHAREHOLDER
REPRESENTATIVE IN ACCORDANCE WITH THIS AGREEMENT, AS THE SAME MAY BE AMENDED,
MODIFIED OR SUPPLEMENTED, EXCEPT SUCH LIABILITY AND EXPENSE AS MAY RESULT FROM
THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE SHAREHOLDER REPRESENTATIVE.

 

(C)           THE SHAREHOLDER REPRESENTATIVE MAY RELY AND SHALL BE PROTECTED IN
RELYING OR REFRAINING FROM ACTING ON ANY INSTRUMENT REASONABLY

 

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BELIEVED TO BE GENUINE AND TO HAVE BEEN SIGNED OR PRESENTED BY THE PROPER PARTY
OR PARTIES.  THE SHAREHOLDER REPRESENTATIVE SHALL NOT BE LIABLE FOR OTHER
PARTIES’ FORGERIES, FRAUD OR FALSE PRESENTATIONS.

 

(D)           THE SHAREHOLDER REPRESENTATIVE SHALL HAVE REASONABLE ACCESS TO
INFORMATION ABOUT THE COMPANY AND THE REASONABLE ASSISTANCE OF THE COMPANY’S
OFFICERS AND EMPLOYEES FOR PURPOSES OF PERFORMING HIS DUTIES AND EXERCISING HIS
RIGHTS HEREUNDER, PROVIDED THAT THE SHAREHOLDER REPRESENTATIVE SHALL TREAT
CONFIDENTIALLY AND NOT DISCLOSE ANY NONPUBLIC INFORMATION FROM OR ABOUT THE
COMPANY TO ANYONE (EXCEPT ON A NEED TO KNOW BASIS TO INDIVIDUALS WHO AGREE TO
TREAT SUCH INFORMATION CONFIDENTIALLY).

 

(E)           IF THE SHAREHOLDER REPRESENTATIVE SHALL BE UNABLE OR UNWILLING TO
SERVE IN SUCH CAPACITY, HIS SUCCESSOR SHALL BE NAMED BY THOSE PERSONS HOLDING A
MAJORITY OF THE COMPANY SHARES OUTSTANDING IMMEDIATELY PRIOR TO THE CLOSING, AND
SUCH SUCCESSOR(S) SHALL SERVE AND EXERCISE THE POWERS OF THE SHAREHOLDER
REPRESENTATIVE HEREUNDER.

 

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

 

The Company and each Company Shareholder, jointly and severally, hereby
represent and warrant to Parent as follows.  The Schedules to this Article 2
(and the information contained in such Schedules) constitute exceptions to and
limitations of the representations and warranties of the Company and the Company
Shareholders contained in this Agreement.  Any exception, limitation or
information disclosed on any specific Schedule shall be deemed to be disclosed
in each other applicable Schedule if and to the extent the relevance of such
exception, limitation or information is reasonably apparent on the face of the
Schedules and to apply to and limit all representations and warranties of the
Company and the Company Shareholders to which it is relevant.

 

2.1           Organization and Qualification of the Company

 

(A)           THE COMPANY IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND
IN GOOD STANDING UNDER THE LAWS OF THE STATE OF MICHIGAN, WITH FULL POWER AND
AUTHORITY TO OWN OR LEASE ITS PROPERTIES AND TO CONDUCT ITS BUSINESS IN THE
MANNER AND IN THE PLACES WHERE SUCH PROPERTIES ARE OWNED OR LEASED OR SUCH
BUSINESS IS CONDUCTED BY IT.  THE COPIES OF THE COMPANY’S ARTICLES OF
INCORPORATION, AS AMENDED TO DATE (“CHARTER”), CERTIFIED BY THE DEPARTMENT OF
LABOR & ECONOMIC GROWTH OF THE STATE OF MICHIGAN, AND OF THE COMPANY’S BYLAWS,
AS AMENDED TO DATE, CERTIFIED BY THE COMPANY’S SECRETARY, ARE ATTACHED TO
SCHEDULE 2.1(A) HERETO AND ARE COMPLETE AND CORRECT.  THE COMPANY IS DULY
QUALIFIED TO DO BUSINESS AS A FOREIGN CORPORATION IN EACH OF THE JURISDICTIONS
LISTED ON SAID SCHEDULE 2.1(A) AND IS NOT REQUIRED TO BE QUALIFIED IN ANY OTHER
JURISDICTION, EXCEPT JURISDICTIONS WHERE A FAILURE TO SO QUALIFY WOULD NOT
RESULT IN A MATERIAL ADVERSE EFFECT.

 

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2.2           Capitalization of the Company

 

(A)           THE AUTHORIZED EQUITY SECURITIES OF THE COMPANY CONSIST OF FIVE
HUNDRED THOUSAND (500,000) SHARES OF CLASS A COMMON STOCK, PAR VALUE OF $0.10
PER SHARE, AND FOUR MILLION FIVE HUNDRED THOUSAND (4,500,000) SHARES OF CLASS B
COMMON STOCK, PAR VALUE OF $0.10 PER SHARE.   AS OF THE DATE HEREOF, 345,623
SHARES OF THE COMPANY’S CLASS A COMMON STOCK AND 2,981,724 SHARES OF THE
COMPANY’S CLASS B COMMON STOCK WERE ISSUED AND OUTSTANDING.  SCHEDULE
2.2(A) CONTAINS A COMPLETE AND ACCURATE LIST OF ALL ISSUED AND OUTSTANDING
OPTIONS, WARRANTS OR OTHER RIGHTS TO ACQUIRE COMPANY SHARES INCLUDING THE NAME
OF THE HOLDER, THE ISSUE DATE, THE EXERCISE PRICE, THE AMOUNT AND TYPE OF
SECURITY UNDERLYING SUCH RIGHT AND THE EXPIRATION DATE.

 

(B)           NO EQUITY SECURITIES OF THE COMPANY ARE HELD IN THE TREASURY OF
THE COMPANY.  ALL OF THE OUTSTANDING EQUITY SECURITIES OF THE COMPANY HAVE BEEN
DULY AUTHORIZED AND VALIDLY ISSUED AND ARE FULLY PAID AND NONASSESSABLE. 
SCHEDULE 2.2(B) SETS FORTH A COMPLETE AND CORRECT LIST OF ALL OF THE COMPANY
SHAREHOLDERS AND THE NUMBER OF SHARES OF EACH TYPE OF CAPITAL STOCK OF THE
COMPANY OWNED, OF RECORD AND BENEFICIALLY, BY EACH SUCH COMPANY SHAREHOLDER. 
EXCEPT AS SET FORTH ON SCHEDULE 2.2(B), NO COMPANY SHAREHOLDER OWNS OF RECORD OR
BENEFICIALLY ANY OTHER SHARES OF CAPITAL STOCK OF THE COMPANY, OR ANY RIGHTS,
OPTIONS, OR WARRANTS WITH RESPECT THERETO.  THE COMPANY SHARES TO BE DELIVERED
BY THE COMPANY SHAREHOLDERS TO THE PARENT HEREUNDER WILL BE, WHEN DELIVERED
PURSUANT TO THE TERMS OF THIS AGREEMENT AND UPON PAYMENT THEREFOR, DULY
AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE AND CLEAR OF ALL
ENCUMBRANCES.  EXCEPT AS SET FORTH IN SCHEDULE 2.2(B), THE COMPANY IS SUBJECT TO
NO LIABILITY ON ACCOUNT OF THE ISSUANCE OR SALE OF ANY SECURITIES INCLUDING,
WITHOUT LIMITATION, ALL OUTSTANDING COMPANY SHARES.  SCHEDULE 2.2(B) SETS FORTH
ALL OUTSTANDING SECURITIES OF THE COMPANY, INCLUDING BUT NOT LIMITED TO
SECURITIES RESERVED FOR ANY PURPOSE, ALL DEBT AND EQUITY SECURITIES AND COMPANY
SHARES. EXCEPT AS SET FORTH ON SCHEDULE 2.2(A) THERE ARE NO (I) OUTSTANDING OR
AUTHORIZED SUBSCRIPTIONS, WARRANTS, OPTIONS OR OTHER RIGHTS GRANTED BY THE
COMPANY OR BINDING UPON THE COMPANY TO PURCHASE OR ACQUIRE, OR PREEMPTIVE RIGHTS
WITH RESPECT TO THE ISSUANCE OR SALE OF, THE CAPITAL STOCK OF THE COMPANY OR
WHICH OBLIGATE OR MAY OBLIGATE THE COMPANY TO ISSUE ANY ADDITIONAL SHARES OF ITS
CAPITAL STOCK OR ANY SECURITIES CONVERTIBLE INTO OR EVIDENCING THE RIGHT TO
SUBSCRIBE FOR ANY SHARES OF ITS CAPITAL STOCK, (II) OTHER SECURITIES OF THE
COMPANY DIRECTLY OR INDIRECTLY CONVERTIBLE INTO OR EXCHANGEABLE FOR SHARES OF
CAPITAL STOCK OF THE COMPANY, (III) RESTRICTIONS ON THE TRANSFER OF THE
COMPANY’S CAPITAL STOCK (OTHER THAN RESTRICTIONS UNDER THE SECURITIES ACT AND
STATE SECURITIES LAWS), (IV) VOTING RIGHTS WITH RESPECT TO THE CAPITAL STOCK OF
THE COMPANY OR (V) STOCK APPRECIATION, PHANTOM STOCK OR SIMILAR RIGHTS WITH
RESPECT TO THE COMPANY.  EXCEPT AS SET FORTH ON SCHEDULE 2.2(B), NONE OF THE
SECURITIES OF THE COMPANY ARE SUBJECT TO “ANTIDILUTION” OR SIMILAR PROVISIONS. 
EXCEPT AS SET FORTH ON SCHEDULE 2.2(B) THERE ARE NO VOTING TRUSTS OR OTHER
CONTRACTS OR UNDERSTANDINGS TO WHICH THE COMPANY OR ANY COMPANY SHAREHOLDER IS A
PARTY WITH RESPECT TO THE TRANSFER, VOTING OR REGISTRATION OF THE CAPITAL STOCK
OF THE COMPANY.  EXCEPT AS SET FORTH ON SCHEDULE

 

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2.2(B) THERE ARE NO CONTRACTS RELATING TO THE SALE OR TRANSFER OF ANY EQUITY
SECURITIES OR OTHER SECURITIES OF THE COMPANY.  EXCEPT AS SET FORTH ON SCHEDULE
2.2(B) THE COMPANY DOES NOT OWN, NOR DOES IT HAVE ANY CONTRACT TO ACQUIRE ANY
EQUITY SECURITIES OR OTHER SECURITIES OF ANY PERSON OR ANY DIRECT OR INDIRECT
EQUITY OR OWNERSHIP INTEREST IN ANY OTHER BUSINESS.  EXCEPT AS SET FORTH ON
SCHEDULE 2.2(B) NO PERSON HAS ANY PREEMPTIVE RIGHTS WITH RESPECT TO ANY SECURITY
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES.

 

2.3           Organization, Qualification and Capitalization of the Subsidiaries

 

(A)           EACH OF THE COMPANY’S SUBSIDIARIES IS SET FORTH ON SCHEDULE
2.3(A) AND IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD
STANDING UNDER THE LAWS OF ITS STATE OF ORGANIZATION, EACH OF WHICH IS SET FORTH
ON SCHEDULE 2.3(A), AND EACH OF THE COMPANY’S SUBSIDIARIES HAS THE FULL POWER
AND AUTHORITY TO OWN OR LEASE ITS PROPERTIES AND TO CONDUCT ITS BUSINESS IN THE
MANNER AND IN THE PLACES WHERE SUCH PROPERTIES ARE OWNED OR LEASED OR SUCH
BUSINESS IS CONDUCTED BY IT.  THE COPIES OF THE COMPANY’S SUBSIDIARIES’ ARTICLES
OF INCORPORATION, AS AMENDED TO DATE, CERTIFIED BY THE APPLICABLE DEPARTMENT OR
DIVISION OF THE RELEVANT STATE GOVERNMENT, AND OF THE COMPANY’S SUBSIDIARIES’
BYLAWS, AS AMENDED TO DATE, CERTIFIED BY THE COMPANY’S SECRETARY, ARE ATTACHED
TO SCHEDULE 2.3(A) HERETO AND ARE COMPLETE AND CORRECT.  EACH OF THE COMPANY’S
SUBSIDIARIES IS DULY QUALIFIED TO DO BUSINESS AS A FOREIGN CORPORATION IN EACH
OF THE JURISDICTIONS LISTED ON SAID SCHEDULE 2.3(A) AND IS NOT REQUIRED TO BE
QUALIFIED IN ANY OTHER JURISDICTION, EXCEPT JURISDICTIONS WHERE A FAILURE TO SO
QUALIFY WOULD NOT RESULT IN A MATERIAL ADVERSE EFFECT.

 

(B)           SCHEDULE 2.3(B) SETS FORTH THE TOTAL AUTHORIZED AND OUTSTANDING
CAPITAL STOCK OF EACH OF THE COMPANY’S SUBSIDIARIES.  ALL OF THE ISSUED AND
OUTSTANDING SHARES OF CAPITAL STOCK OF EACH OF THE COMPANY’S SUBSIDIARIES HAVE
BEEN DULY AUTHORIZED AND ARE VALIDLY ISSUED AND OUTSTANDING, FULLY PAID AND
NON-ASSESSABLE.  ALL OF THE ISSUED AND OUTSTANDING SHARES OF CAPITAL STOCK OF
EACH OF THE COMPANY’S SUBSIDIARIES ARE OWNED BENEFICIALLY AND OF RECORD BY THE
COMPANY FREE AND CLEAR OF ALL ENCUMBRANCES.  EXCEPT AS SET FORTH ON SCHEDULE
2.3(B), THERE ARE NO OUTSTANDING SUBSCRIPTIONS, OPTIONS, WARRANTS, COMMITMENTS,
PREEMPTIVE RIGHTS, AGREEMENTS, ARRANGEMENTS OR COMMITMENTS OF ANY KIND FOR OR
RELATING TO THE OWNERSHIP, ISSUANCE, SALE, REGISTRATION OR VOTING OF, OR
OUTSTANDING SECURITIES CONVERTIBLE INTO OR EXCHANGEABLE FOR, ANY SHARES OF
CAPITAL STOCK OF ANY CLASS OR OTHER EQUITY OR OWNERSHIP INTERESTS OF ANY OF THE
COMPANY’S SUBSIDIARIES.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A
PARTNER OR PARTICIPANT IN ANY JOINT VENTURE OR PARTNERSHIP OF ANY KIND.

 

2.4           Authorization of Transaction

 

(A)           THE COMPANY HAS THE FULL CORPORATE POWER AND AUTHORITY TO EXECUTE,
DELIVER AND PERFORM THIS AGREEMENT AND THE ANCILLARY AGREEMENTS; TO PERFORM ITS
OBLIGATIONS HEREUNDER AND THEREUNDER, AND TO CARRY OUT THE TRANSACTIONS
CONTEMPLATED HEREBY AND THEREBY.  ALL NECESSARY ACTION, CORPORATE OR OTHERWISE,

 

8

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HAS BEEN TAKEN BY THE COMPANY TO AUTHORIZE THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT AND EACH OF THE ANCILLARY AGREEMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.  THIS AGREEMENT HAS BEEN, AND EACH
ANCILLARY AGREEMENT WILL BE AT THE CLOSING, DULY EXECUTED AND DELIVERED BY THE
COMPANY AND THIS AGREEMENT AND EACH ANCILLARY AGREEMENT IS, OR UPON THE CLOSING
WILL BE, THE LEGAL, VALID AND BINDING OBLIGATION OF THE COMPANY, ENFORCEABLE
AGAINST THE COMPANY IN ACCORDANCE WITH THEIR TERMS, EXCEPT (I) AS SUCH
ENFORCEABILITY MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, REORGANIZATION OR
SIMILAR LAWS AFFECTING CREDITORS’ RIGHTS GENERALLY, AND (II) THAT THE REMEDY OF
SPECIFIC PERFORMANCE AND INJUNCTIVE AND OTHER FORMS OF EQUITABLE RELIEF MAY BE
SUBJECT TO THE EQUITABLE DEFENSES AND TO THE DISCRETION OF THE COURT BEFORE
WHICH ANY PROCEEDING THEREFORE MAY BE BROUGHT.

 

(B)           THE BOARD OF DIRECTORS OF THE COMPANY, AT A MEETING DULY CALLED
AND HELD, OR THROUGH AN ACTION BY WRITTEN CONSENT, UNANIMOUSLY HAS (I) APPROVED
THE MERGER IN ACCORDANCE WITH THE PROVISIONS OF THE MBCA, (II) APPROVED THIS
AGREEMENT, THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED HEREBY,
(III) AUTHORIZED THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE OTHER
ANCILLARY AGREEMENTS, (IV) DIRECTED THAT THIS AGREEMENT AND THE MERGER BE
SUBMITTED TO THE COMPANY SHAREHOLDERS FOR THEIR APPROVAL AND (V) RESOLVED TO
RECOMMEND THAT THE COMPANY SHAREHOLDERS VOTE IN FAVOR OF THE APPROVAL OF THIS
AGREEMENT AND THE MERGER.  EXCEPT FOR APPROVAL OF THE COMPANY’S SHAREHOLDERS,
ALL OTHER NECESSARY ACTION, CORPORATE OR OTHERWISE, HAS BEEN TAKEN BY THE
COMPANY TO APPROVE THE MERGER AND TO AUTHORIZE THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT AND THE ANCILLARY AGREEMENTS.

 

2.5           Present Compliance with Obligations and Laws

 

Except as set forth on Schedule 2.5, neither the Company nor any of its
Subsidiaries is:  (a) in violation of its Charter or bylaws or similar
organizational or governing documents; (b) in default in the performance of or
breach of (with or without the passage of time or the giving of notice) any
Material Contract to which it is a party or by which it or any of its assets are
bound; or (d) in violation of any court order, judgment, administrative or
judicial order, writ, decree, stipulation, arbitration, award or injunction
(collectively, “Court Orders”) or any license, permit, order, franchise
agreement, concession, grant, authorization, consent or approval (collectively,
“Government Authorizations”) that is held by the Company applicable to it or its
business or assets, or any statute, law, ordinance, rule or regulation
applicable to its business or assets (collectively, “Laws”).

 

2.6           No Conflict of Transaction With Obligations and Laws

 

Except as set forth on Schedule 2.6, neither the execution, delivery and
performance of this Agreement or the Ancillary Agreements by the Company, nor
the performance by the Company of the transactions contemplated hereby or
thereby, will:  (i) constitute a breach or violation of any provision of the
Charter or bylaws of the Company or the Charter or bylaws or similar
organizational or governing documents of any of the Company’s Subsidiaries;
(ii) require any consent, approval or authorization of or declaration, filing or
registration with any Person;

 

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(iii) constitute (with or without the passage of time or giving of notice) a
default under or breach of any agreement, instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their assets are bound; (iv) result in the creation
of any lien, option (including right of first refusal or first offer),
encumbrance, charge, restriction of any kind (including any restriction on use,
voting, transfer, receipt of income or exercise of any other attribute of
ownership), easement, mortgage, pledge, security interest, title exception or
defect, condition, conditional sale agreement, community property interest,
lease, deed of trust, equitable interest, claim or charge of any kind or
character, any filing of any financing statement as debtor under the Uniform
Commercial Code or comparable law of any jurisdiction, any other restriction or
limitation whatsoever and any agreement to give or make any of the foregoing
(each an “Encumbrance”), other than Permitted Encumbrances, upon any of the
properties or assets of the Company or any of its Subsidiaries; (v) contravene,
conflict with, or result in the violation of any Court Order or Law, or give any
governmental authority, whether foreign, federal, state, local, tribunal, or
other commission, political subdivision or agency of any of the foregoing (each
a “Government Authority”), or any other person, the right to exercise any remedy
or obtain any relief under any Court Order or Law, to which the Company or any
of its Subsidiaries are subject or by which the properties or assets of the
Company or any of its Subsidiaries are bound; or (vi) contravene, conflict with
or result in the violation of any of the terms and requirements of, or give any
Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate
or modify, any Government Authorization.

 

2.7           Financial Statements

 

(A)           EXCEPT AS PROVIDED ON SCHEDULE 2.7, THE COMPANY HAS DELIVERED TO
PARENT THE FOLLOWING FINANCIAL STATEMENTS (THE “FINANCIAL STATEMENTS”) OF THE
COMPANY, ALL OF WHICH ARE UNAUDITED AND ALL OF WHICH STATEMENTS (EXCLUDING ALL
ISSUES AND ITEMS RELATED TO INVENTORY) ARE COMPLETE AND CORRECT AND FAIRLY
PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY AND ITS
SUBSIDIARIES ON A CONSOLIDATED BASIS, ON THE DATE OF SUCH STATEMENTS AND THE
RESULTS OF THEIR OPERATIONS FOR THE PERIODS COVERED THEREBY, AND SUCH FINANCIAL
STATEMENTS (EXCLUDING ALL ISSUES AND ITEMS RELATED TO INVENTORY) HAVE BEEN
PREPARED IN ACCORDANCE WITH GAAP CONSISTENTLY APPLIED THROUGHOUT THE PERIODS
INVOLVED AND PRIOR PERIODS:

 

·      Unaudited balance sheet, income statement, statement of changes in
stockholders equity and statement of cash flow at and as of the twelve (12)
months ended June 30, 2007.

 

·      Unaudited balance sheet, income statement, statement of changes in
stockholders equity and statement of cash flow at and as of the five (5) months
ended November 30, 2007.

 

The balance sheet dated June 30, 2007 (the “Base Balance Sheet Date”) in the
above-referenced financial statements is hereinafter referred to as the “Base
Balance Sheet”.

 

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(b)           Except as provided on Schedule 2.7, excluding all issues and items
related to inventory, the books of account of the Company for all periods fairly
reflect in all material respects the financial position of the Company and its
Subsidiaries on a consolidated basis, in all respects, and have been maintained
on a consistent basis.  All auditor’s letters to management of the Company for
all years and other significant correspondence from or to such auditors during
such period, if any, are attached as Schedule 2.7(b) hereto.

 

2.8           Absence of Undisclosed Liabilities

 

Neither the Company nor any of its Subsidiaries have any liabilities of any
nature (including without limitation liabilities as guarantor or otherwise with
respect to obligations of others, or liabilities for taxes due), except:
(a) liabilities stated or reserved against on the Base Balance Sheet to the
extent required by GAAP; (b) liabilities not required by GAAP to be reserved
against on the Base Balance Sheet and incurred in the ordinary course of
business; (c) liabilities incurred since the Base Balance Sheet Date in the
ordinary course of business consistent with past practices and liabilities, or
liabilities stated or reserved against in the Company’s other Financial
Statements delivered to Parent to the extent required by GAAP; and
(d) liabilities disclosed in Schedule 2.8 hereto or any other Schedule hereto.

 

2.9           Absence of Certain Changes

 

Except as set forth on Schedule 2.9 hereto, since the Base Balance Sheet Date
there has not been:

 

(A)           ANY MATERIAL ADVERSE EFFECT;

 

(B)           ANY SALE OR OTHER DISPOSITION, OR ANY AGREEMENT OR OTHER
ARRANGEMENTS FOR THE SALE OR OTHER DISPOSITION, OF ANY OF THE PROPERTIES OR
ASSETS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OTHER THAN THE SALE OF
INVENTORY IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICES;

 

(C)           ANY ENCUMBRANCE, OTHER THAN A PERMITTED ENCUMBRANCE, PLACED ON ANY
OF THE PROPERTIES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES WHICH REMAINS IN
EXISTENCE AT THE TIME OF CLOSING;

 

(D)           ANY CAPITAL EXPENDITURE, LEASE OR COMMITMENT OR AGREEMENT TO LEASE
IN EXCESS OF $15,000 WITH RESPECT TO ANY INDIVIDUAL ITEM OR $50,000 WITH RESPECT
TO ALL SUCH ITEMS;

 

(E)           ANY ELIMINATION OR DISPOSAL OF ANY INVENTORY, EXCEPT FOR
ELIMINATIONS OR DISPOSALS THAT ARE IN THE AGGREGATE LESS THAN $10,000 IN THE
ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICES, AND EXCEPT FOR SALES
OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICES;

 

(F)            ANY WRITE-DOWNS OF THE VALUE OF ANY NOTES OR ACCOUNTS RECEIVABLE
AS UNCOLLECTIBLE, EXCEPT FOR WRITE-DOWNS OR WRITE-OFFS THAT ARE IN THE

 

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AGGREGATE LESS THAN $10,000 IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH
PAST PRACTICES;

 

(G)           ANY MATERIAL DAMAGE, DESTRUCTION OR LOSS, WHETHER OR NOT COVERED
BY INSURANCE, TO THE PROPERTIES OR ASSETS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES;

 

(H)           OTHER THAN (I) DIVIDENDS DECLARED AND PAID IN JANUARY 2008 TO
CERTAIN COMPANY SHAREHOLDERS IN THE AMOUNT OF $1,151,776.87 AS CONTEMPLATED BY
SECTION 4.9 RELATING TO THE LIFE INSURANCE POLICIES, AND (II) STOCK REDEMPTIONS
IN THE AMOUNT OF $13,627.10, ANY DECLARATION, SETTING ASIDE OR PAYMENT OF ANY
DIVIDEND ON, OR THE MAKING OF ANY OTHER DISTRIBUTION IN RESPECT OF, THE CAPITAL
STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, INCLUDING DISTRIBUTIONS ON
ACCOUNT OF ANY INCOME TAX LIABILITIES; ANY DIRECT OR INDIRECT REDEMPTION,
PURCHASE OR OTHER ACQUISITION BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OF ANY
OF THEIR CAPITAL STOCK, OR ANY ISSUANCE OF ANY SECURITIES OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES, OR ANY PAYMENT MADE TO OR FOR THE PERSONAL ACCOUNT OR
BENEFIT OF ANY COMPANY SHAREHOLDER;

 

(I)            ANY ENTRANCE INTO ANY EMPLOYMENT, SEVERANCE OR CONSULTING
AGREEMENT; OR (EXCEPT FOR ANNUAL INCREASES IN THE ORDINARY COURSE OF BUSINESS)
ANY CHANGE IN THE COMPENSATION PAYABLE OR TO BECOME PAYABLE BY THE COMPANY OR
ANY OF ITS SUBSIDIARIES TO ANY OF THEIR AFFILIATES, DIRECTORS, OFFICERS,
EMPLOYEES OR AGENTS OR IN ANY BONUS, PENSION OR PROFIT SHARING PAYMENT,
ENHANCEMENT OR ARRANGEMENT MADE TO OR WITH ANY SUCH AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS, OR ANY GRANT OR TERMINATION OF, OR MODIFICATION
TO, ANY SEVERANCE, TERMINATION OR CHANGE OF CONTROL PAYMENTS OR BENEFITS TO ANY
AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS OF THE COMPANY OR ANY OF
ITS SUBSIDIARIES;

 

(J)            ANY CHANGE WITH RESPECT TO THE BUSINESS ORGANIZATION, MANAGEMENT,
OR SUPERVISORY PERSONNEL OF THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(K)           ANY PAYMENT OR DISCHARGE OF A MATERIAL LIEN, CLAIM, OBLIGATION,
LIABILITY OR OTHER ENCUMBRANCE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES WHICH
WAS NOT SHOWN ON OR INCLUDED IN THE BASE BALANCE SHEET OR INCURRED IN THE
ORDINARY COURSE OF BUSINESS, CONSISTENT WITH PAST PRACTICES, AFTER THE BASE
BALANCE SHEET DATE;

 

(L)            ANY OBLIGATION OR LIABILITY INCURRED BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES TO ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS OR STOCKHOLDERS, OR
ANY LOANS OR ADVANCES MADE BY THE COMPANY OR ANY OF ITS SUBSIDIARIES TO ANY OF
THEIR AFFILIATES, OFFICERS, DIRECTORS OR STOCKHOLDERS, EXCEPT NORMAL
COMPENSATION, BENEFITS AND EXPENSE ALLOWANCES;

 

(M)          ANY CHANGE IN ANY METHOD OF ACCOUNTING OR ACCOUNTING PRACTICE,
WHETHER OR NOT SUCH CHANGE WAS PERMITTED BY GAAP;

 

12

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(N)           ANY AGREEMENT, ARRANGEMENT, UNDERSTANDING OR COMMITMENT, WHETHER
IN WRITING OR OTHERWISE, TO TAKE ANY ACTION DESCRIBED IN THIS SECTION 2.9.

 

2.10         Conduct of Business

 

Since the Base Balance Sheet Date, the Company and each of its Subsidiaries has
conducted their business only in the ordinary course, in substantially the same
manner as operated prior to such date.

 

2.11         Payment of Taxes

 

For purposes of this Section 2.11, “the Company” refers to “the Company and each
of its Subsidiaries”.

 

(A)           THE COMPANY HAS DULY AND TIMELY FILED ALL FEDERAL, STATE, LOCAL,
AND FOREIGN GOVERNMENT INCOME, EXCISE, GROSS RECEIPTS OR FRANCHISE TAX RETURNS,
REAL ESTATE AND PERSONAL PROPERTY TAX RETURNS, SALES AND USE TAX RETURNS,
EMPLOYEE TAX AND CONTRIBUTION RETURNS, AND ALL OTHER TAX RETURNS, REPORTS AND
DECLARATIONS, INCLUDING VALID EXTENSIONS THEREFOR, OR ESTIMATED TAXES REQUIRED
TO BE FILED BY IT, WITH RESPECT TO ALL APPLICABLE TAXES (“TAX RETURNS”) OF EVERY
KIND, CHARACTER OR DESCRIPTION, AND IMPOSED BY ANY GOVERNMENT OR
QUASI-GOVERNMENTAL AUTHORITY (DOMESTIC OR FOREIGN), AND ANY INTEREST OR FINES,
AND ANY AND ALL PENALTIES OR ADDITIONS RELATING TO SUCH TAXES, CHARGES, FEES,
LEVIES OR OTHER ASSESSMENTS (“TAXES”).  ALL OF THE TAX RETURNS ARE COMPLETE AND
CORRECT.  COPIES OF THE COMPANY’S FEDERAL AND STATE TAX RETURNS FOR THE PAST
THREE (3) YEARS ARE IDENTIFIED ON SCHEDULE 2.11 AND HAVE BEEN DELIVERED TO
PARENT.  ALL TAXES SHOWN TO BE DUE ON EACH TAX RETURN HAVE BEEN PAID OR ARE
BEING CONTESTED IN GOOD FAITH BY THE COMPANY (WHICH CONTEST IS BEING DILIGENTLY
PURSUED AND IS DESCRIBED ON SCHEDULE 2.11).  WITH RESPECT TO ALL OTHER TAXES FOR
WHICH NO RETURN IS REQUIRED, OR WHICH HAVE NOT YET BECOME DUE, PROVISION HAS
BEEN MADE FOR SUCH TAXES IN THE PERTINENT FINANCIAL STATEMENTS TO THE EXTENT
REQUIRED BY GAAP.  ALL TAXES AND OTHER ASSESSMENTS AND LEVIES WHICH THE COMPANY
IS REQUIRED TO WITHHOLD OR COLLECT HAVE BEEN WITHHELD OR COLLECTED AND PAID OVER
OR WILL BE PAID OVER TO PROPER GOVERNMENTAL AUTHORITIES AS REQUIRED.  EXCEPT AS
SET FORTH ON SCHEDULE 2.11, IN THE PAST THREE (3) YEARS THE INCOME TAX RETURNS
OF THE COMPANY HAVE NEVER BEEN AUDITED BY THE INTERNAL REVENUE SERVICE OR ANY
STATE, LOCAL OR FOREIGN TAX AUTHORITY.  THE COMPANY DOES NOT HAVE KNOWLEDGE OF
ANY INTENTION ON THE PART OF ANY GOVERNMENTAL AGENCY, TO EXAMINE ANY OF THE TAX
RETURNS.  NO DEFICIENCIES HAVE BEEN ASSERTED OR ASSESSMENTS MADE AGAINST THE
COMPANY, NOR IS THE INTERNAL REVENUE SERVICE OR ANY OTHER TAXING AUTHORITY NOW
ASSERTING OR, TO THE KNOWLEDGE OF THE COMPANY WITHOUT INQUIRY, THREATENING TO
ASSERT AGAINST THE COMPANY ANY DEFICIENCY OR CLAIM FOR ADDITIONAL TAXES OR
INTEREST THEREON OR PENALTIES IN CONNECTION THEREWITH.  THE COMPANY HAS NOT
EXTENDED THE TIME FOR THE FILING OF ANY TAX RETURN OR THE ASSESSMENT OF
DEFICIENCIES OR WAIVED ANY STATUTE OF LIMITATIONS FOR ANY YEAR, WHICH EXTENSION
OR WAIVER IS STILL IN EFFECT.

 

(B)           THERE ARE NO LIENS FOR TAXES (OTHER THAN TAXES NOT YET DUE AND
PAYABLE) UPON ANY OF THE ASSETS OF THE COMPANY.  THE COMPANY IS NOT A PARTY TO
ANY AGREEMENT, CONTRACT, ARRANGEMENT, OR PLAN THAT HAS RESULTED OR WOULD RESULT,
SEPARATELY OR IN THE AGGREGATE, IN THE PAYMENT OF ANY “EXCESS PARACHUTE PAYMENT”
WITHIN THE MEANING OF SECTION 280G OF THE

 

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CODE (OR ANY CORRESPONDING PROVISION OF STATE, LOCAL, OR FOREIGN TAX LAW) AS A
RESULT OF THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY HAS NOT BEEN A
UNITED STATES REAL PROPERTY HOLDING CORPORATION WITHIN THE MEANING OF
SECTION 897(C)(2) OF THE CODE DURING THE APPLICABLE PERIOD SPECIFIED IN
SECTION 897(C)(1)(A)(II).  THE COMPANY IS NOT A PARTY TO AND IS NOT BOUND BY ANY
TAX ALLOCATION OR SHARING AGREEMENT.  THE COMPANY HAS NOT BEEN A MEMBER OF AN
AFFILIATED GROUP FILING A CONSOLIDATED FEDERAL INCOME TAX RETURN (OTHER THAN A
GROUP THE COMMON PARENT OF WHICH IS THE COMPANY), AND DOES NOT HAVE ANY
LIABILITY FOR THE TAXES OF ANY PERSON (OTHER THAN THE COMPANY) UNDER TREASURY
REGULATIONS SECTION 1.1502-6 (OR ANY SIMILAR PROVISION OF STATE, LOCAL, OR
FOREIGN LAW).

 

(C)           THE COMPANY WILL NOT 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 ANY: (A) CHANGE IN
METHOD OF ACCOUNTING FOR A TAXABLE PERIOD ENDING ON OR PRIOR TO THE CLOSING
DATE; (B) “CLOSING AGREEMENT” AS DESCRIBED IN SECTION 7121 OF THE CODE (OR ANY
CORRESPONDING OR SIMILAR PROVISION OF STATE, LOCAL, OR FOREIGN INCOME TAX LAW)
EXECUTED ON OR PRIOR TO THE CLOSING DATE;  (C) INTERCOMPANY TRANSACTIONS OR ANY
EXCESS LOSS ACCOUNT DESCRIBED IN TREASURY REGULATIONS UNDER SECTION 1502 OF THE
CODE (OR ANY CORRESPONDING OR SIMILAR PROVISION OF STATE, LOCAL, OR FOREIGN
INCOME TAX LAW);  (D) INSTALLMENT SALE OR OPEN TRANSACTION DISPOSITION MADE ON
OR PRIOR TO THE CLOSING DATE; OR (E) PREPAID AMOUNT RECEIVED ON OR PRIOR TO THE
CLOSING DATE.

 

(D)           THE COMPANY HAS NOT DISTRIBUTED STOCK OF ANOTHER PERSON, OR HAS
HAD ITS STOCK DISTRIBUTED BY ANOTHER PERSON, IN A TRANSACTION THAT WAS PURPORTED
OR INTENDED TO BE GOVERNED IN WHOLE OR IN PART BY SECTIONS 355 OR 361 OF THE
CODE.

 

2.12         Title to Properties; Liens; Condition of Properties

 

(A)           SET FORTH ON SCHEDULE 2.12(A) IS A LISTING OF (I) ALL THE REAL
PROPERTY OWNED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES AT THE DATE HEREOF AND
(II) ALL LEASES UNDER WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES LEASES REAL
PROPERTY AT THE DATE HEREOF WHETHER AS LESSOR OR LESSEE.  EXCEPT AS SPECIFICALLY
DISCLOSED IN SCHEDULE 2.12(A), (I) THE COMPANY AND EACH OF ITS SUBSIDIARIES HAS,
AND AT CLOSING SHALL HAVE, GOOD AND MARKETABLE TITLE IN FEE SIMPLE ABSOLUTE TO
ALL OF THE REAL PROPERTY THEY OWN, FREE AND CLEAR OF ALL ENCUMBRANCES (EXCEPT
FOR PERMITTED ENCUMBRANCES); AND (II) ALL OF ITS LEASES FOR REAL PROPERTY ARE,
AND AT CLOSING SHALL BE (SUBJECT TO OBTAINING REQUIRED CONSENTS, ALL OF WHICH
ARE LISTED ON SCHEDULE 2.6),, VALID AND SUBSISTING AND NO MATERIAL DEFAULT BY
COMPANY (OR TO COMPANY’S KNOWLEDGE, BY ANY OTHER PARTY THERETO) EXISTS UNDER ANY
THEREOF.  THE COMPANY HAS DELIVERED TO PARENT TRUE, CORRECT AND COMPLETE COPIES
OF ALL LEASES, SUBLEASES, RENTAL AGREEMENTS, CONTRACTS OF SALE, TENANCIES OR
LICENSES RELATED TO ANY OF THE REAL PROPERTY IDENTIFIED ON SCHEDULE 2.12(A). 
THE PROPERTY LOCATED AT 3831 PATTERSON AVE., S.E. GRAND RAPIDS, MICHIGAN THAT IS
LISTED ON SCHEDULE 2.12(A) IS HEREIN REFERRED TO AS THE “PROPERTY”.

 

(B)           SET FORTH ON SCHEDULE 2.12(B) IS (I) A COMPLETE DESCRIPTION OF ALL
PERSONAL PROPERTY WITH A VALUE IN EXCESS OF $10,000 (EXCLUDING INVENTORY) (THE
“PERSONAL PROPERTY”) USED OR OWNED BY THE COMPANY OR ANY OF ITS

 

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SUBSIDIARIES AS OF THE DATE HEREOF, AND (II) ALL LEASES UNDER WHICH THE COMPANY
OR ANY OF ITS SUBSIDIARIES LEASES ANY PERSONAL PROPERTY AT THE DATE HEREOF
WHETHER AS LESSOR OR LESSEE.  EXCEPT AS SPECIFICALLY DISCLOSED IN SCHEDULE
2.12(B), (I) THE COMPANY AND EACH OF ITS SUBSIDIARIES HAS, AND AT CLOSING SHALL
HAVE, GOOD AND MARKETABLE TITLE TO ALL OF THEIR OWNED PERSONAL PROPERTY, FREE
AND CLEAR OF ALL ENCUMBRANCES, EXCEPTING ONLY PERMITTED ENCUMBRANCES; AND
(II) ALL OF ITS LEASES FOR PERSONAL PROPERTY ARE, AND AT CLOSING SHALL BE
(SUBJECT TO OBTAINING REQUIRED CONSENTS, ALL OF WHICH ARE LISTED ON SCHEDULE
2.6), VALID AND SUBSISTING, AND NO MATERIAL DEFAULT BY COMPANY (OR TO COMPANY’S
KNOWLEDGE, BY ANY OTHER PARTY THERETO) EXISTS UNDER ANY THEREOF.  THE COMPANY
HAS DELIVERED TO PARENT TRUE, CORRECT AND COMPLETE COPIES OF ALL LEASES,
SUBLEASES, RENTAL AGREEMENTS, CONTRACTS OF SALE, TENANCIES OR LICENSES RELATED
TO ANY OF THE PERSONAL PROPERTY IDENTIFIED ON SCHEDULE 2.12(B).

 

(C)                                  NONE OF THE REAL PROPERTY OWNED OR USED BY
THE COMPANY OR ANY OF ITS SUBSIDIARIES IS SUBJECT TO ANY ENCUMBRANCE (OTHER THAN
PERMITTED ENCUMBRANCES) OF ANY NATURE WHATSOEVER, EXCEPT AS SPECIFICALLY
DISCLOSED IN SCHEDULE 2.12(A) OR IN THE BASE BALANCE SHEET.

 

(D)                                 AS OF THE DATE HEREOF, THE COMPANY DOES NOT
HAVE KNOWLEDGE OF ANY PENDING OR THREATENED CHANGE OF ANY ORDINANCE, REGULATION
OR ZONING OR OTHER LAW THAT AFFECTS THE REAL OR PERSONAL PROPERTY OF THE COMPANY
OR ANY OF ITS SUBSIDIARIES, AND THERE IS NO PENDING OR, TO COMPANY’S KNOWLEDGE,
THREATENED CONDEMNATION OF ANY SUCH PROPERTY.

 

(E)                                  TO THE COMPANY’S KNOWLEDGE, ALL WATER,
WASTE DISPOSAL, SEWER, GAS, ELECTRIC, TELEPHONE, DRAINAGE FACILITIES AND ALL
OTHER UTILITIES ARE INSTALLED ACROSS PUBLIC PROPERTY OR VALID EASEMENTS TO THE
BOUNDARY LINES OF THE PROPERTY, AND ARE CONNECTED PURSUANT TO VALID PERMITS, AND
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS RECEIVED ANY NOTICE THAT
SUCH UTILITIES ARE INADEQUATE TO SERVICE THE PROPERTY.

 

(F)                                    TO THE KNOWLEDGE OF THE COMPANY, THE
COMPANY AND EACH OF ITS SUBSIDIARIES HAVE OBTAINED ALL LICENSES, PERMITS,
EASEMENTS, AND RIGHTS-OF-WAY, INCLUDING WITHOUT LIMITATION, PROOF OF DEDICATION,
REQUIRED FROM ALL GOVERNMENTAL AUTHORITIES HAVING JURISDICTION OVER THE PROPERTY
OR FROM PRIVATE PARTIES TO ASSURE VEHICULAR AND PEDESTRIAN INGRESS TO AND EGRESS
FROM THE PROPERTY.

 

(G)                                 ALSO SET FORTH ON SCHEDULE 2.12(B) IS A LIST
OF ALL LOCATIONS WHERE ANY OF THE PERSONAL PROPERTY OR THE COMPANY’S OR ANY OF
ITS SUBSIDIARIES’ INVENTORIES (OTHER THAN GOODS IN TRANSIT IN THE ORDINARY
COURSE OF BUSINESS, CONSISTENT WITH PAST PRACTICES) ARE LOCATED.

 

(H)                                 THE REAL AND PERSONAL PROPERTY IDENTIFIED ON
SUCH SCHEDULE 2.12(A) AND SCHEDULE 2.12(B) INCLUDES ALL MATERIAL PROPERTY AND
ASSETS USED OR REQUIRED FOR USE IN THE COMPANY’S AND ITS SUBSIDIARIES’
BUSINESSES, EXCEPT FOR PROPERTY NOT REQUIRED TO BE DISCLOSED ON SUCH SCHEDULE.

 

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2.13                                       Collectibility of Receivables

 

All of the accounts receivable of the Company and its Subsidiaries shown or
reflected on the Company’s balance sheet dated December 31, 2007 (the “12/31
Balance Sheet”), less a reserve for bad debts in the amount of $17,644 (the
“Allowed Reserve”) (regardless of the total amount of reserves that may appear
on the 12/31 Balance Sheet) and less any portion of such accounts receivable
collected prior to the Closing are (a) valid and enforceable claims, (b) arose
out of transactions with unaffiliated, independent third parties, (c) fully
collectible within one hundred fifty (150) days of the Closing Date through
normal means of collection, and (d) subject to no set-off, defense or
counterclaim.  The reserves for doubtful accounts and the values at which
accounts receivable are accrued on the Financial Statements and the 12/31
Balance Sheet are in accordance with GAAP applied on a basis consistent with
prior financial statements of the Company, on a consolidated basis.  A complete
and accurate list of each account receivable accrued on the 12/31 Balance Sheet
that remains uncollected (the “12/31 Balance Sheet AR”), which lists the name,
age and amount thereof, and any reserve for bad debts related thereto, is
attached as Schedule 2.13.  Since the Base Balance Sheet Date, there has not
been a material change in the Company’s or its Subsidiaries’ receivables’ aging
practice.

 

2.14                                       Inventories

 

NOTWITHSTANDING ANY OTHER PROVISION HEREOF (OTHER THAN SECTION 2.9(E) REGARDING
THE ELIMINATION OR DISPOSAL OF INVENTORY SINCE THE BASE BALANCE SHEET DATE),
PARENT ACCEPTS THE COMPANY’S INVENTORY “AS IS, WHERE IS”, AND NEITHER THE
COMPANY NOR THE COMPANY SHAREHOLDERS MAKES ANY REPRESENTATION OR WARRANTY OF ANY
KIND WITH RESPECT TO THE COMPANY’S OR ITS SUBSIDIARIES’ INVENTORY.  WITHOUT
LIMITATION TO THE FOREGOING, NEITHER THE COMPANY NOR THE COMPANY SHAREHOLDERS
MAKES ANY REPRESENTATION OR WARRANTY WITH RESPECT TO WHETHER THE COMPANY’S
INVENTORY IS GOOD OR SALEABLE OR THE EXTENT TO WHICH ANY INVENTORY MAY BE
OBSOLETE.  NOTWITHSTANDING THE FOREGOING, THE PARTIES ACKNOWLEDGE AND AGREE THAT
THE MERGER CONSIDERATION WAS REDUCED FROM $7,500,000 TO $7,250,000 TO ADDRESS
ALL POTENTIAL INVENTORY ISSUES (OTHER THAN SECTION 2.9(E) REGARDING THE
ELIMINATION OR DISPOSAL OF INVENTORY SINCE THE BASE BALANCE SHEET DATE).  THE
PARTIES AGREE THAT IN THE EVENT OF A CONFLICT BETWEEN THIS PROVISION AND ANOTHER
PROVISION HEREOF (SUCH AS ANOTHER PROVISION WHICH MAY IMPLY THAT THE COMPANY OR
THE COMPANY SHAREHOLDERS ARE MAKING A REPRESENTATION OR WARRANTY RELATED TO THE
COMPANY’S OR ITS SUBSIDIARIES’ INVENTORY (OTHER THAN SECTION 2.9(E) REGARDING
THE ELIMINATION OR DISPOSAL OF INVENTORY SINCE THE BASE BALANCE SHEET DATE)),
THIS PROVISION SHALL CONTROL AND LIMIT THE OTHER CONFLICTING PROVISION.

 

2.15                                       Intellectual Property Rights

 

(A)                                  FOR PURPOSES OF THIS SECTION 2.15,
“INTELLECTUAL PROPERTY” MEANS ALL PATENTS, MARKS, COPYRIGHTS AND TRADE SECRETS,
AND ANY LICENSES (IN OR OUT) OF OR RELATING TO ANY PATENTS, MARKS, COPYRIGHTS
AND TRADE SECRETS, OWNED OR USED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES.

 

(B)                                 ALL RIGHTS OF OWNERSHIP OF, OR MATERIAL
LICENSES TO USE, MATERIAL INTELLECTUAL PROPERTY HELD BY THE COMPANY OR ANY OF
ITS SUBSIDIARIES ARE LISTED ON SCHEDULE 2.15.  THERE ARE NO INTELLECTUAL
PROPERTY RIGHTS OTHER THAN THOSE

 

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SET FORTH ON SCHEDULE 2.15, NECESSARY TO OR REGULARLY USED IN, THE CONDUCT OF
THE BUSINESS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES AS PRESENTLY CONDUCTED OR
PRESENTLY IN THE PROCESS OF DEVELOPMENT.

 

(C)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.15, ALL
RIGHTS TO PATENTS, MARKS, AND COPYRIGHTS REQUIRED TO BE LISTED IN SCHEDULE 2.15:

 

(I)                                     HAVE BEEN DULY REGISTERED, FILED IN, OR
ISSUED BY, THE UNITED STATES PATENT AND TRADEMARK OFFICE, AND UNITED STATES
REGISTER OF COPYRIGHTS;

 

(II)                                  HAVE BEEN PROPERLY MAINTAINED AND RENEWED
IN ACCORDANCE WITH ALL APPLICABLE LAWS AND REGULATIONS IN THE UNITED STATES; AND

 

(III)                               HAVE BEEN DULY ASSIGNED TO THE COMPANY OR
ONE OF ITS SUBSIDIARIES AND SUCH ASSIGNMENT(S) HAVE BEEN RECORDED IN THE
APPROPRIATE GOVERNMENT OFFICES.

 

(D)                                 NO PROCEEDINGS TO WHICH THE COMPANY OR ANY
OF ITS SUBSIDIARIES IS A PARTY HAVE BEEN COMMENCED WHICH (I) CHALLENGE THE
RIGHTS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES IN RESPECT OF THE INTELLECTUAL
PROPERTY LISTED ON SCHEDULE 2.15, OR (II) CHARGE THE COMPANY OR ANY OF ITS
SUBSIDIARIES WITH INFRINGEMENT OF ANY OTHER PERSON’S RIGHTS IN INTELLECTUAL
PROPERTY AND, TO THE KNOWLEDGE OF THE COMPANY, NO SUCH PROCEEDING HAS BEEN
THREATENED OR IS THREATENED TO BE FILED.  TO COMPANY’S KNOWLEDGE, NONE OF THE
RIGHTS IN INTELLECTUAL PROPERTY LISTED ON SCHEDULE 2.15 IS BEING INFRINGED BY
ANY OTHER PERSON.

 

(E)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.15, NO
AFFILIATE, DIRECTOR, OFFICER OR EMPLOYEE OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OWNS, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, ANY INTELLECTUAL
PROPERTY RIGHT WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES HAVE USED, IS
PRESENTLY USING, OR THE USE OF WHICH IS REASONABLY NECESSARY TO ANY OF THEIR
BUSINESSES AS NOW CONDUCTED OR PRESENTLY CONTEMPLATED TO BE CONDUCTED.

 

(F)                                    IN ADDITION TO THE INTELLECTUAL PROPERTY
DESCRIBED ABOVE, THE COMPANY AND EACH OF ITS SUBSIDIARIES HAS THE RIGHT TO USE,
FREE AND CLEAR OF ANY CLAIMS OR RIGHTS OF OTHERS, EXCEPT CLAIMS OR RIGHTS
DESCRIBED IN SCHEDULE 2.15, ALL TRADE SECRETS REQUIRED FOR OR USED IN THE
MANUFACTURE OR MARKETING OF ALL PRODUCTS FORMERLY OR PRESENTLY PRODUCED BY THE
COMPANY OR ANY OF ITS SUBSIDIARIES, INCLUDING PRODUCTS LICENSED FROM OTHERS. 
THE COMPANY HAS DISCLOSED TO PARENT ALL WRITTEN DOCUMENTATION RELATING TO ITS
AND EACH OF ITS SUBSIDIARIES’ TRADE SECRETS.  NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES IS USING OR IN ANY WAY MAKING USE OF ANY TRADE SECRETS OF ANY THIRD
PARTY, INCLUDING WITHOUT LIMITATION, A FORMER EMPLOYER OF ANY PRESENT OR PAST
EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES.

 

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2.16                                       Contracts and Commitments

 

(A)                                  EXCEPT FOR CONTRACTS, COMMITMENTS, PLANS,
AGREEMENTS, ARRANGEMENTS, UNDERSTANDINGS AND LICENSES DESCRIBED IN SCHEDULE
2.16(A) HERETO (THE “MATERIAL CONTRACTS”), NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES IS A PARTY TO OR SUBJECT TO ANY CONTRACT (EXCLUDING PURCHASE ORDERS
ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS):

 

(I)                                     FOR THE PURCHASE OF ANY COMMODITY,
MATERIAL, EQUIPMENT OR ASSET (EXCEPT FOR PURCHASE ORDERS IN THE ORDINARY COURSE
OF BUSINESS, CONSISTENT WITH PAST PRACTICE, OR CONTRACTS INVOLVING PAYMENTS OF
LESS THAN $50,000 EACH);

 

(II)                                  CREATING ANY OBLIGATIONS OF THE COMPANY OR
ANY OF ITS SUBSIDIARIES AFTER THE BASE BALANCE SHEET DATE WHICH CALL FOR
PAYMENTS OF MORE THAN $15,000 DURING ANY MONTH FOR AGREEMENTS WITHOUT A FIXED
TERM OR MORE THAN $50,000 OVER THE TERM OF THE AGREEMENT FOR AGREEMENTS WITH A
FIXED TERM;

 

(III)                               PROVIDING FOR THE PURCHASE OF ALL OR
SUBSTANTIALLY ALL OF ITS REQUIREMENTS OF A PARTICULAR PRODUCT FROM A SUPPLIER;

 

(IV)                              WHICH BY ITS TERMS DOES NOT TERMINATE OR IS
NOT TERMINABLE WITHOUT PREMIUM OR PENALTY BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES, AS APPLICABLE (OR THEIR RESPECTIVE SUCCESSORS OR ASSIGNS) UPON
NOTICE OF NINETY (90) DAYS OR LESS;

 

(V)                                 FOR THE SALE OR LEASE OF ITS PRODUCTS NOT
MADE IN THE ORDINARY COURSE OF BUSINESS;

 

(VI)                              WITH ANY SALES AGENT OR DISTRIBUTOR OF
PRODUCTS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(VII)                           CONTAINING COVENANTS LIMITING THE FREEDOM OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES TO COMPETE IN ANY LINE OF BUSINESS OR WITH
ANY PERSON OR ENTITY;

 

(VIII)                        FOR A LICENSE OR FRANCHISE (AS LICENSOR OR
LICENSEE OR FRANCHISOR OR FRANCHISEE);

 

(IX)                                INVOLVING ANY ARRANGEMENT OR OBLIGATION WITH
RESPECT TO THE RETURN OF INVENTORY OR MERCHANDISE OTHER THAN ON ACCOUNT OF A
DEFECT IN CONDITION, OR FAILURE TO CONFORM TO THE APPLICABLE CONTRACT;

 

(X)                                   WITH THE UNITED STATES GOVERNMENT;

 

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(XI)                                WHICH CONTAINS COVENANTS AS TO
NONCOMPETITION OR NONSOLICITATION RESTRICTING OR FOR THE BENEFIT OF THE COMPANY
OR ANY OF ITS SUBSIDIARIES; OR (EXCLUDING CONTRACTS ENTERED INTO IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICES) WHICH CONTAINS COVENANTS AS
TO NONDISCLOSURE OR CONFIDENTIALITY RESTRICTING OR FOR THE BENEFIT OF THE
COMPANY OR ITS SUBSIDIARIES; OR

 

(XII)                             WHICH IS MATERIAL TO THE ASSETS OR BUSINESS OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES.

 

(B)                                 EACH OF THE CONTRACTS, COMMITMENTS, PLANS,
AGREEMENTS AND LICENSES TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A
PARTY OR TO WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS SUBJECT (WHETHER
WRITTEN OR ORAL), INCLUDING THOSE LISTED ON SCHEDULE 2.16(A) (EACH A “CONTRACT”)
IS VALID, BINDING AND ENFORCEABLE AGAINST THE COMPANY AND ITS SUBSIDIARIES, AS
APPLICABLE, AND, TO THE KNOWLEDGE OF THE COMPANY, AGAINST THE OTHER PARTIES
THERETO; THE COMPANY AND ITS SUBSIDIARIES, AS APPLICABLE, IS IN MATERIAL
COMPLIANCE WITH ALL TERMS AND CONDITIONS OF EACH CONTRACT; AND NEITHER THE
COMPANY NOR ANY OF ITS SUBSIDIARIES HAS GIVEN OR RECEIVED NOTICE OF ANY ALLEGED
VIOLATION OF OR DEFAULT UNDER ANY SUCH CONTRACT.

 

(C)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.16(C),
SINCE JANUARY 1, 2007, NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAVE
EXPERIENCED ANY TERMINATION, CANCELLATION, LIMITATION OR MODIFICATION OR
MATERIAL AND ADVERSE CHANGE IN ANY BUSINESS RELATIONSHIP WITH ANY MATERIAL
SUPPLIER OR MATERIAL CUSTOMER, NOR HAS THE COMPANY OR ANY OF ITS SUBSIDIARIES
RECEIVED NOTICE OR OTHERWISE HAVE KNOWLEDGE THAT ANY MATERIAL CUSTOMER OR
MATERIAL SUPPLIER INTENDS TO CEASE, OR MATERIALLY REDUCE OR CHANGE THE TERMS OF,
DOING BUSINESS WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES OR TO TERMINATE ANY
AGREEMENT WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES, WHERE ANY SUCH ACTION,
INDIVIDUALLY OR IN THE AGGREGATE, HAS HAD OR WOULD HAVE A MATERIAL ADVERSE
EFFECT.  SCHEDULE 2.16(C) LISTS EVERY MATERIAL CUSTOMER OR SUPPLIER OF THE
COMPANY AND EACH OF ITS SUBSIDIARIES AND THE AMOUNT OF BUSINESS WITH THAT
CUSTOMER.  FOR PURPOSES HEREOF, (I) A SUPPLIER IS MATERIAL IF DURING FISCAL
2005, 2006 OR 2007, IT ACCOUNTED FOR MORE THAN FIVE PERCENT (5%) BY VALUE OF THE
ORDERS OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE, FOR PURCHASE OF
ALL THEIR RAW MATERIALS AND OTHER PRODUCTS ESSENTIAL TO THEIR MANUFACTURING
PROCESSES FOR SUCH YEAR, AND (II) A CUSTOMER IS MATERIAL IF IT ACCOUNTED FOR
MORE THAN THREE PERCENT (3%) BY VALUE OF THE ORDERS OF THE COMPANY AND ITS
SUBSIDIARIES, TAKEN AS A WHOLE, IN EITHER FISCAL 2005, 2006 OR 2007.

 

(D)                                 ALL OF THE COMPANY’S SALES AND PURCHASE
COMMITMENTS WERE MADE IN THE ORDINARY COURSE OF BUSINESS, CONSISTENT WITH PAST
PRACTICES.

 

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2.17                                       Labor and Employee Relations

 

(A)                                  EXCEPT AS SHOWN ON SCHEDULE 2.17 HERETO,
THERE ARE NO CURRENTLY EFFECTIVE CONSULTING, EMPLOYMENT, NONCOMPETITION,
NONSOLICITATION, RETENTION, SEVERANCE OR CHANGE OF CONTROL AGREEMENTS, OR OTHER
MATERIAL AGREEMENTS WITH INDIVIDUAL CONSULTANTS, DIRECTORS OR EMPLOYEES TO WHICH
THE COMPANY OR ANY OF ITS SUBSIDIARIES IS A PARTY.  COMPLETE AND ACCURATE COPIES
OF ALL SUCH WRITTEN AGREEMENTS HAVE BEEN DELIVERED TO PARENT.  ALSO SHOWN ON
SCHEDULE 2.17 ARE THE NAME AND RATE OF COMPENSATION (INCLUDING ALL BONUS
COMPENSATION) OF EACH OFFICER, EMPLOYEE OR AGENT OF THE COMPANY AND EACH OF ITS
SUBSIDIARIES.

 

(B)                                 NONE OF THE EMPLOYEES OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES IS COVERED BY ANY COLLECTIVE BARGAINING AGREEMENT WITH ANY
TRADE OR LABOR UNION, EMPLOYEES’ ASSOCIATION OR SIMILAR ASSOCIATION.  THERE ARE
NO REPRESENTATION ELECTIONS, ARBITRATION PROCEEDINGS, LABOR STRIKES, SLOWDOWNS
OR STOPPAGES, OR CLAIMS OF DISCRIMINATION OR UNFAIR LABOR PRACTICES PENDING, OR,
TO THE KNOWLEDGE OF THE COMPANY, THREATENED, WITH RESPECT TO THE EMPLOYEES OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES, NOR HAS THE COMPANY OR ANY OF ITS
SUBSIDIARIES EXPERIENCED ANY WORK STOPPAGE OR OTHER MATERIAL LABOR DIFFICULTY
DURING THE FIVE (5) YEARS IMMEDIATELY PRECEDING THE DATE OF THIS AGREEMENT.

 

(C)                                  THE COMPANY AND EACH OF ITS SUBSIDIARIES
HAS COMPLIED IN ALL MATERIAL RESPECTS WITH APPLICABLE LAWS, RULES AND
REGULATIONS RELATING TO THE EMPLOYMENT OF LABOR, INCLUDING WITHOUT LIMITATION
THOSE RELATING TO WAGES, HOURS, UNFAIR LABOR PRACTICES, DISCRIMINATION, AND
PAYMENT OF SOCIAL SECURITY AND SIMILAR TAXES.  THERE ARE NO COMPLAINTS AGAINST
THE COMPANY OR ANY OF ITS SUBSIDIARIES PENDING OR, TO THE KNOWLEDGE OF THE
COMPANY, THREATENED BEFORE THE NATIONAL LABOR RELATIONS BOARD OR ANY SIMILAR
STATE OR LOCAL LABOR AGENCIES, OR BEFORE THE EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION OR ANY SIMILAR STATE OR LOCAL AGENCY, BY OR ON BEHALF OF ANY EMPLOYEE
OR FORMER EMPLOYEE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES.

 

(D)                                 EXCEPT AS DESCRIBED ON SCHEDULE 2.17, THE
EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT AND THE ANCILLARY
AGREEMENTS AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY WILL NOT TRIGGER ANY ENTITLEMENT TO COMPENSATION, SEVERANCE PAY OR
CHANGE OF CONTROL OBLIGATION TO ANY CURRENT OR FORMER EMPLOYEE, DIRECTOR OR
CONSULTANT OF THE COMPANY OR ITS SUBSIDIARIES UNDER ANY CONTRACT, AGREEMENT,
ARRANGEMENT, COMMITMENT OR UNDERSTANDING OR AT LAW.

 

(E)                                  THE COMPANY HAS PROVIDED TO PARENT A
COMPLETE DESCRIPTION OF ALL EMPLOYMENT POLICIES UNDER WHICH THE COMPANY AND EACH
OF ITS SUBSIDIARIES HAS OPERATED OR WHICH HAVE BEEN COMMUNICATED TO THEIR
EMPLOYEES.

 

(F)                                    EXCEPT AS SET FORTH IN SCHEDULE 2.17, THE
COMPANY AND EACH OF ITS SUBSIDIARIES HAS PAID IN FULL (OR MADE PROVISIONS FOR
PAYMENT IN FULL) TO EACH

 

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OF THEIR EMPLOYEES, AGENTS AND CONTRACTORS ALL WAGES, SALARIES, COMMISSIONS,
BONUSES AND OTHER DIRECT COMPENSATION FOR ALL SERVICES PERFORMED BY THEM WHICH
HAVE BECOME DUE AND PAYABLE.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES
HAVE AND WILL NOT HAVE ON THE CLOSING DATE, ANY CONTINGENT LIABILITY FOR SICK
LEAVE, VACATION TIME, HOLIDAY PAY, SEVERANCE PAY OR SIMILAR ITEMS NOT SET FORTH
ON SCHEDULE 2.17, EXCLUDING SUCH AMOUNTS ARISING IN THE ORDINARY COURSE OF
BUSINESS.  SCHEDULE 2.17 SETS FORTH, AS OF JANUARY 1, 2008, ALL ACCRUED VACATION
PAY OF THE COMPANY AND ITS SUBSIDIARIES.

 

(G)                                 IN THE PAST THREE (3) YEARS, EXCEPT AS SET
FORTH ON SCHEDULE 2.17, THERE HAS NOT BEEN ANY CITATION, FINE OR PENALTY IMPOSED
OR ASSERTED AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES UNDER ANY LAW OR
REGULATION RELATING TO EMPLOYMENT, IMMIGRATION OR OCCUPATIONAL SAFETY MATTERS.

 

2.18                                       ERISA and Employee Benefits

 

(A)                                  SCHEDULE 2.18 SETS FORTH A BRIEF
DESCRIPTION OF EVERY PLAN, ARRANGEMENT OR POLICY, WRITTEN OR ORAL, RELATING TO
EMPLOYEES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR OF ANY MEMBER OF A
CONTROLLED GROUP OR AFFILIATED SERVICE GROUP (AS DEFINED IN INTERNAL REVENUE
CODE SECTION 414(B), (C), (M) AND (O)) WHICH INCLUDES THE COMPANY OR ANY OF ITS
SUBSIDIARIES (AN “ERISA AFFILIATE”), WHICH IS:

 

(I)                                     AN EMPLOYEE BENEFIT PLAN WITHIN THE
MEANING OF SECTION 3 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED (“ERISA”); OR

 

(II)                                  A MULTIEMPLOYER PENSION PLAN WITHIN THE
MEANING OF SECTION 3(37) OR 4001(A)(3) OF ERISA; OR

 

(III)                               A COMPENSATION, STOCK PURCHASE, STOCK
OPTION, STOCK BONUS, STOCK APPRECIATION, PHANTOM STOCK, SEVERANCE, DEFERRED
COMPENSATION, HEALTH, WELFARE, LIFE, DISABILITY OR OTHER BENEFIT PLAN, FUND,
PROGRAM, ARRANGEMENT OR PRACTICE WHICH IS NOT COVERED BY CLAUSE (I) OR
(II) ABOVE (INCLUDING POLICIES RELATED TO VACATION PAY, HOLIDAY TIME, MOVING
EXPENSE REIMBURSEMENT PROGRAMS, SICK LEAVE AND SALARY REDUCTION AGREEMENTS,
CHARGE-IN-CONTROL AGREEMENTS, AND SEVERANCE AGREEMENTS).

 

(Hereinafter, “ERISA Benefit Plan” refers to plans or arrangements under clauses
(i) and (ii) above and “Benefit Plan” refers to plans or arrangements under
clauses (i) - (iii) above.)

 

(B)                                 THERE ARE NO AGREEMENTS OR COMMITMENTS OF
THE COMPANY OR ANY ERISA AFFILIATE, WHETHER OR NOT LEGALLY BINDING, TO CREATE
ANY ADDITIONAL ERISA BENEFIT PLAN OR BENEFIT PLAN NOT LISTED ON SCHEDULE 2.18. 
EXCEPT AS SET FORTH ON SCHEDULE 2.18, THERE HAVE BEEN NO MULTIEMPLOYER PENSION
PLANS OR DEFINED BENEFIT PENSION PLANS COVERING EMPLOYEES OF THE COMPANY OR AN
ERISA AFFILIATE WITHIN THE LAST TEN (10) YEARS.

 

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(C)                                  WITH RESPECT TO EACH BENEFIT PLAN, THE
COMPANY HAS FURNISHED TO PARENT COMPLETE AND ACCURATE COPIES OF EACH BENEFIT
PLAN DESCRIBED IN SCHEDULE 2.18, INCLUDING ALL AMENDMENTS THERETO.  WITH RESPECT
TO EACH ERISA BENEFIT PLAN, THE COMPANY HAS ALSO FURNISHED THE THREE MOST RECENT
FORM 5500S AND THE MOST RECENT INTERNAL REVENUE SERVICE DETERMINATION LETTER (IF
ANY), PLAN ACTUARIAL REPORT, SUMMARY PLAN DESCRIPTION, SUMMARY ANNUAL REPORT AND
EMPLOYEE MANUAL, DISCRIMINATION TESTING RESULTS FOR ANY BENEFIT PLAN QUALIFIED
UNDER SECTION 401(A) OF THE CODE FOR THE CURRENT YEAR AND THREE PRIOR YEARS AS
WELL AS SUMMARIES OF MATERIAL MODIFICATIONS, MATERIAL EMPLOYEE COMMUNICATIONS,
AND ALL REPORTS OF THE BENEFIT PLAN REQUIRED BY ERISA AND THE REGULATIONS
THEREUNDER.  THE COMPANY HAS ALSO FURNISHED PARENT COPIES OF ANY INSURANCE
CONTRACTS OR TRUST AGREEMENTS THROUGH WHICH ANY ERISA BENEFIT PLAN IS FUNDED,
ANY CUSTODIAL OR INVESTMENT CONTRACTS RELATING TO ASSETS OR BENEFITS UNDER THE
BENEFIT PLAN, ANY CONTRACTS RELATING TO RECORD KEEPING OR ADMINISTRATION FOR THE
BENEFIT PLAN, AND NOTICE OF ANY MATERIAL ADVERSE CHANGE OCCURRING WITH RESPECT
TO ANY BENEFIT PLAN SINCE THE DATE OF THE MOST RECENTLY COMPLETED AND FILED
ANNUAL REPORT.

 

(D)                                 NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES HAVE ANY ERISA BENEFIT PLAN WHICH CONSTITUTES A PENSION PLAN WITHIN
THE MEANING OF SECTION 3(2) OF ERISA.

 

(E)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.18, WITH
RESPECT TO EACH BENEFIT PLAN:

 

(I)                                     EACH BENEFIT PLAN COMPLIES CURRENTLY IN
ALL MATERIAL RESPECTS AND HAS COMPLIED IN ALL MATERIAL RESPECTS IN THE PAST, AS
TO FORM AND OPERATION, WITH THE PROVISIONS OF ALL APPLICABLE FEDERAL AND STATE
LAWS, SUCH AS ERISA AND THE INTERNAL REVENUE CODE, INCLUDING WITHOUT LIMITATION
ALL REQUIREMENTS REGARDING DISCRIMINATION, DISCLOSURE, AND CONTINUATION COVERAGE
(UNDER SECTION 4980B OF THE CODE); AND NO NONEXEMPT “PROHIBITED TRANSACTION” (AS
DEFINED IN SECTION 4975 OF THE CODE OR ENUMERATED IN SECTION 406(A) OR (B) OF
ERISA) HAS OCCURRED;

 

(II)                                  ALL REQUIRED GOVERNMENT FILINGS, REPORTS,
AND NOTICES HAVE BEEN PROPERLY AND TIMELY MADE, AND ALL SUCH FILINGS AND
EMPLOYEE DISCLOSURES REQUIRED TO BE MADE WITHIN THIRTY (30) DAYS AFTER CLOSING
THAT ARE BASED IN WHOLE OR IN PART UPON THE PERIOD PRIOR TO THE CLOSING SHALL
HAVE BEEN PREPARED AND DELIVERED TO PARENT ON OR BEFORE THE CLOSING;

 

(III)                               NO SUCH BENEFIT PLAN IS CURRENTLY UNDER
AUDIT OR INVESTIGATION BY ANY GOVERNMENTAL AGENCY OR BODY;

 

(IV)                              THERE ARE NO ACTIONS, SUITS OR CLAIMS (OTHER
THAN ROUTINE CLAIMS FOR BENEFITS) PENDING OR, TO COMPANY’S

 

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KNOWLEDGE, THREATENED AGAINST ANY OF THE BENEFIT PLANS OR AGAINST THE ASSETS OF
ANY BENEFIT PLAN;

 

(V)                                 ALL PREMIUMS AND CONTRIBUTIONS DUE IN
CONNECTION WITH THE BENEFIT PLAN, INCLUDING WITHOUT LIMITATION PREMIUMS DUE THE
PBGC AND PREMIUMS FOR LIFE AND HEALTH INSURANCE AND ANNUITY CONTRACTS, HAVE BEEN
PAID IN FULL WHEN DUE AND, EXCEPT AS SPECIFICALLY DISCLOSED ON SCHEDULE 2.18,
THERE ARE NO SUCH PREMIUMS THAT ARE ATTRIBUTABLE TO ANY PERIOD OF TIME BEFORE
THE CLOSING THAT WILL NOT HAVE BEEN PAID ON OR BEFORE THE CLOSING;

 

(VI)                              ALL REPORTS AND FILINGS MADE PURSUANT TO
ERISA, INCLUDING WITHOUT LIMITATION ALL FORM 5500 AND ATTACHMENTS, SUMMARY
ANNUAL REPORTS, AND PARTICIPANT REPORTS, AND ANY OTHER DOCUMENTS REASONABLY
NECESSARY TO ENABLE PARENT TO PERFORM ITS RESPONSIBILITIES WITH RESPECT TO ANY
EMPLOYEE PROGRAM SUBSEQUENT TO THE CLOSING, ARE AND SHALL BE AVAILABLE AT THE
OFFICES OF THE COMPANY ON AND IMMEDIATELY AFTER THE CLOSING;

 

(VII)                           EXCEPT AS REQUIRED BY COBRA (SECTION 4980B OF
THE INTERNAL REVENUE CODE) OR THE FAMILY MEDICAL LEAVE ACT, NO BENEFIT PLAN
PROVIDES HEALTH OR OTHER WELFARE BENEFITS TO RETIREES, FORMER EMPLOYEES, OR
THEIR DEPENDENTS.

 

(F)                                    EXCEPT AS REQUIRED BY COBRA OR THE FAMILY
MEDICAL LEAVE ACT, NEITHER THE COMPANY NOR ANY ERISA AFFILIATE HAS MADE ANY
PROMISES OR INCURRED ANY OBLIGATION TO PROVIDE ANY HEALTH OR OTHER WELFARE
BENEFITS TO ANY RETIREES, FORMER EMPLOYEES, OR THEIR DEPENDENTS.

 

(G)                                 THE EXECUTION AND DELIVERY OF THIS AGREEMENT
AND THE ANCILLARY AGREEMENTS BY THE COMPANY AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THEREUNDER:

 

(I)                                     DO NOT CONSTITUTE A PROHIBITED
TRANSACTION WITHIN THE MEANING OF SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE;

 

(II)                                  WILL NOT RESULT IN ANY OBLIGATION OR
LIABILITY OF THE PARENT OR THE COMPANY TO ANY EMPLOYEE OF THE COMPANY OR ANY
ERISA AFFILIATE OR TO THE PBGC IN RESPECT OF ANY BENEFIT PLAN (OTHER THAN
$40,000 IN RESPECT OF THE EMPLOYMENT CONTRACT).

 

2.19                                       Environmental Matters

 

(A)                                  EXCEPT AS DISCLOSED IN SCHEDULE 2.19
HERETO, ANY AND ALL HAZARDOUS MATERIALS USED OR GENERATED BY THE COMPANY OR ANY
OF ITS SUBSIDIARIES HAVE ALWAYS BEEN AND ARE BEING GENERATED, USED, STORED,
TREATED AND DISPOSED ON

 

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AND AT ANY OF THE PROPERTIES OR FACILITIES OWNED OR LEASED BY THE COMPANY AND
EACH OF ITS SUBSIDIARIES, OR, TO THE KNOWLEDGE OF THE COMPANY, ANY
PREDECESSORS-IN-INTEREST OF THE COMPANY AND EACH OF ITS SUBSIDIARIES (FOR THE
PURPOSES OF THIS SECTION 2.19, A “SITE”) IN COMPLIANCE WITH ALL APPLICABLE
ENVIRONMENTAL LAWS.

 

(B)                                 EXCEPT AS SET FORTH ON SCHEDULE 2.19 HERETO,
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS RECEIVED OR BECOME SUBJECT
TO ANY CLAIM, NOTICE, COMPLAINT, COURT ORDER, ADMINISTRATIVE ORDER OR REQUEST
FOR INFORMATION FROM ANY GOVERNMENTAL AUTHORITY OR PRIVATE PARTY OR ANY OTHER
PERSON (I) ALLEGING VIOLATION OF, OR ASSERTING ANY EXCEEDENCE OR NONCOMPLIANCE
WITH ANY ENVIRONMENTAL LAW, BY IT, (II) ASSERTING POTENTIAL LIABILITY,
(III) REQUESTING INFORMATION, OR (IV) REQUESTING INVESTIGATION OR CLEAN-UP OF
ANY SITE UNDER ANY ENVIRONMENTAL LAW.

 

(C)                                  EXCEPT AS DISCLOSED IN SCHEDULE 2.19, NO
HAZARDOUS MATERIALS USED OR GENERATED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES,
OR, TO THE KNOWLEDGE OF THE COMPANY, ANY PREDECESSORS-IN-INTEREST TO THE COMPANY
OR ANY OF ITS SUBSIDIARIES, HAVE EVER BEEN, OR ARE BEING SPILLED, RELEASED,
DISCHARGED, DISPOSED, PLACED, LEAKED, OR OTHERWISE CAUSED TO BECOME LOCATED IN
THE AIR, SOIL OR WATER IN, UNDER OR UPON A SITE OR ANY LAND ADJACENT THERETO IN
VIOLATION OF ENVIRONMENTAL LAW.

 

(D)                                 NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES HAS RECEIVED ANY NOTICE THAT ANY SITES OR FACILITIES TO WHICH ANY
HAZARDOUS MATERIALS HAVE BEEN SHIPPED OR SENT TO ARE SUBJECT TO OR, TO THE
KNOWLEDGE OF THE COMPANY, ARE THREATENED TO BECOME SUBJECT TO ANY GOVERNMENTAL
RESPONSE ACTION OR CLEAN UP ORDER.

 

(E)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.19
NEITHER THE COMPANY, ANY OF ITS SUBSIDIARIES, NOR, TO THE KNOWLEDGE OF THE
COMPANY, ANY PREDECESSOR-IN-INTEREST TO THE COMPANY OR ANY OF ITS SUBSIDIARIES,
HAVE TREATED, STORED FOR MORE THAN NINETY (90) DAYS, DISPOSED OF OR RECYCLED ANY
HAZARDOUS MATERIALS ON ANY SITE NOR TO COMPANY’S KNOWLEDGE HAS ANYONE ELSE,
TREATED, STORED FOR MORE THAN NINETY (90) DAYS, DISPOSED OF OR RECYCLED ANY OF
THE FOREGOING ON ANY SITE.

 

(F)                                    EXCEPT AS DISCLOSED IN SCHEDULE 2.19
HERETO, HAZARDOUS MATERIALS HAVE BEEN COLLECTED, MANAGED, RECYCLED, SHIPPED AND
DISPOSED BY THE COMPANY AND EACH OF ITS SUBSIDIARIES IN ACCORDANCE WITH ALL
ENVIRONMENTAL LAWS.

 

(G)                                 ALL UNDERGROUND TANKS AND OTHER STORAGE
FACILITIES FOR HAZARDOUS MATERIALS LOCATED AT ANY SITE ARE DISCLOSED IN SCHEDULE
2.19 HERETO AND, EXCEPT AS SET FORTH ON SCHEDULE 2.19, TO THE KNOWLEDGE OF THE
COMPANY, NO OTHER UNDERGROUND TANKS OR OTHER STORAGE FACILITIES FOR HAZARDOUS
MATERIALS HAVE BEEN LOCATED ON A SITE.  TO THE EXTENT THAT SUCH DOCUMENTS ARE
REASONABLY AVAILABLE AND IN THE POSSESSION OR CONTROL OF THE COMPANY, COPIES OF
ALL NOTIFICATIONS MADE TO FEDERAL, STATE OR LOCAL AUTHORITIES PURSUANT TO
ENVIRONMENTAL LAWS RELATING TO UNDERGROUND STORAGE TANKS HAVE BEEN PROVIDED TO
PARENT.  AS OF THE DATE HEREOF,

 

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NONE OF SUCH TANKS AND OTHER UNDERGROUND STORAGE FACILITIES ARE IN VIOLATION OF
ANY ENVIRONMENTAL LAW, IN ANY RESPECT.

 

(H)                                 EXCEPT AS DISCLOSED IN SCHEDULE 2.19 HERETO,
ALL WELLS, WATER DISCHARGES AND OTHER WATER DIVERSIONS AND ALL AIR EMISSION
SOURCES ON ANY SITE ARE PROPERLY REGISTERED AND/OR PERMITTED UNDER, AND COPIES
OF SUCH PERMITS HAVE BEEN PROVIDED TO PARENT AND DO NOT VIOLATE ANY APPLICABLE
LAW.

 

(I)                                     EXCEPT AS SET FORTH ON SCHEDULE 2.19, TO
THE COMPANY’S KNOWLEDGE, THERE ARE NO ASBESTOS-CONTAINING MATERIALS, OR
CAPACITORS, TRANSFORMERS OR OTHER EQUIPMENT OR FIXTURES CONTAINING PCBS LOCATED
AT ANY SITE.

 

(J)                                     TO THE KNOWLEDGE OF THE COMPANY, NEITHER
THE COMPANY NOR ANY OF ITS SUBSIDIARIES PRODUCES, PURCHASES OR USES IN ITS
PRODUCTS, OR PURCHASES OR USES ANY MATERIAL, PART, COMPONENT OR SUBASSEMBLY
INCORPORATED INTO ITS PRODUCTS, CONTAINING ANY CHEMICAL OR OTHER MATERIAL TO
WHICH STATE PACKAGING AND/OR DISCLOSURE LAWS APPLY EXCEPT AS SET FORTH ON
SCHEDULE 2.19.

 

(K)                                  THERE ARE NO ENCUMBRANCES (EXCEPT FOR
PERMITTED ENCUMBRANCES) UNDER ENVIRONMENTAL LAWS ON ANY SITE OR ANY ASSETS OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES AND NO GOVERNMENTAL ACTIONS HAVE BEEN
TAKEN OR, TO THE KNOWLEDGE OF THE COMPANY, ARE IN PROCESS WHICH WITH THE PASSAGE
OF TIME ARE LIKELY TO SUBJECT ANY SITE TO SUCH ENCUMBRANCES (EXCEPT FOR
PERMITTED ENCUMBRANCES) WITH RESPECT TO ENVIRONMENTAL, HEALTH AND SAFETY
LIABILITIES.

 

(L)                                     TO THE EXTENT THAT SUCH DOCUMENTS ARE
REASONABLY AVAILABLE AND IN THE POSSESSION OR CONTROL OF THE COMPANY, THE
COMPANY HAS MADE AVAILABLE TO PARENT ALL ENVIRONMENTAL REPORTS, AUDITS,
ASSESSMENTS OR STUDIES WITHIN THE POSSESSION OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES WITH RESPECT TO THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’
FACILITIES OR ANY SITE AND THE RESULTS OF SAMPLING AND ANALYSIS OF ANY ASBESTOS,
AIR, SOIL, OR WATER, INCLUDING GROUND AND SURFACE WATER, UNDERTAKEN WITH RESPECT
TO ITS FACILITIES OR ANY SITE.

 

(M)                               EXCEPT AS DISCLOSED ON SCHEDULE 2.19 HERETO,
THE COMPANY AND EACH OF ITS SUBSIDIARIES IS IN MATERIAL COMPLIANCE WITH ALL
FEDERAL AND STATE WORKER SAFETY LAWS AND REQUIREMENTS, INCLUDING, BUT NOT
LIMITED TO REQUIREMENTS UNDER THE OCCUPATIONAL SAFETY AND HEALTH ACT.

 

2.20                                       Governmental Authorizations

 

The Company and each of its Subsidiaries holds all material Governmental
Authorizations which are required to permit it to conduct their business as
presently conducted.  All such Governmental Authorizations are listed on
Schedule 2.20 hereto, together with the applicable expiration date, and are now,
and will be after the Closing, valid and in full force and effect, and Parent
shall have full benefit of the same.  Neither the Company nor any of its
Subsidiaries have received any notification of any present failure (or past and
unremedied failure) by any of them to obtain any such Governmental
Authorization, approval or franchise,

 

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and no proceeding is pending, or to the knowledge of the Company, threatened,
seeking the revocation or limitation of any Government Authorization.

 

2.21                                       Warranty or Other Claims

 

(A)                                  EXCEPT AS SET FORTH ON SCHEDULE 2.21, THE
COMPANY DOES NOT HAVE KNOWLEDGE OF ANY EXISTING OR THREATENED CLAIMS AGAINST THE
COMPANY OR ANY OF ITS SUBSIDIARIES FOR SERVICES OR MERCHANDISE THAT ARE
DEFECTIVE OR FAIL TO MEET ANY PRODUCT WARRANTIES.  NO CLAIM HAS BEEN ASSERTED
AGAINST THE COMPANY OR ANY OF ITS SUBSIDIARIES FOR RENEGOTIATION OR PRICE
REDETERMINATION OF ANY BUSINESS TRANSACTION.

 

(B)                                 TO COMPANY’S KNOWLEDGE, (I) ALL PRODUCTS
THAT WERE DESIGNED, MANUFACTURED OR SOLD BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES COMPLIED WITH APPLICABLE CONTRACTS, AGREED PRODUCT SPECIFICATIONS,
LAWS AND STANDARDS (WHETHER OF THE COMPANY OR ANY OF ITS SUBSIDIARIES,
GOVERNMENT OR INDUSTRY), AND (II) THERE ARE NO DEFECTS IN SUCH PRODUCTS. 
SCHEDULE 2.21 SETS FORTH THE COMPANY’S AND EACH OF ITS SUBSIDIARIES’ EXPERIENCES
WITH RETURNS OF PRODUCTS SOLD BY THE COMPANY OR ANY OF ITS SUBSIDIARIES FOR
FISCAL YEARS 2005, 2006 AND 2007 AND FOR THE PORTION OF THE CURRENT FISCAL YEAR
(INCLUDING CLAIMS OR NOTICES THAT PRODUCTS MAY OR WILL BE RETURNED, WHETHER BY
REASON OF ALLEGED OVERSHIPMENTS, DEFECTIVE MERCHANDISE OR OTHERWISE).

 

2.22                                       Litigation

 

Except for matters described in Schedule 2.22 hereto, there is no action, suit,
claim, proceeding, arbitration or (to Company’s Knowledge) investigation pending
(or, to the Knowledge of the Company, threatened) against or, to the Knowledge
of the Company, otherwise involving, the Company Shares, or the Company, any of
its Subsidiaries or any of their Affiliates, or to the Company’s Knowledge any
of their respective officers, directors, former officers or directors,
employees, stockholders or agents (in their capacities as such) and there are no
outstanding Court Orders to which the Company or any of its Subsidiaries is a
party or by which any of the assets of the Company or any of its Subsidiaries
are bound.

 

2.23                                       Insurance

 

(A)                                  SCHEDULE 2.23 CONTAINS A COMPLETE AND
CORRECT LIST OF ALL POLICIES OF INSURANCE MAINTAINED BY THE COMPANY AND EACH OF
ITS SUBSIDIARIES (INCLUDING INSURANCE PROVIDING BENEFITS FOR EMPLOYEES) IN
EFFECT ON THE DATE HEREOF, TOGETHER WITH COMPLETE AND CORRECT INFORMATION WITH
RESPECT TO THE PREMIUMS, COVERAGES, INSURERS, EXPIRATION DATES, AND DEDUCTIBLES
IN RESPECT OF SUCH POLICIES.

 

(B)                                 EXCEPT AS SET FORTH ON SCHEDULE 2.23, THERE
ARE NO CLAIMS PENDING UNDER ANY OF SAID POLICIES, OR DISPUTES WITH INSURERS, AND
ALL PREMIUMS DUE AND PAYABLE THEREUNDER HAVE BEEN PAID, AND ALL SUCH POLICIES
ARE IN FULL FORCE AND EFFECT IN ACCORDANCE WITH THEIR RESPECTIVE TERMS.  NO
NOTICE OF CANCELLATION OR TERMINATION HAS BEEN RECEIVED WITH RESPECT TO ANY SUCH
POLICY.

 

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(C)                                  EXCEPT AS FORTH ON SCHEDULE 2.23, TO
COMPANY’S KNOWLEDGE, NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES HAS ANY
CURRENT OR PRIOR INSURANCE POLICY WHICH REMAINS SUBJECT TO RETROSPECTIVE
ADJUSTMENT OF THE PREMIUMS PAYABLE THEREUNDER.

 

2.24                                       Finder’s Fee

 

The Company has not incurred or become liable for any broker’s commission or
finder’s fee relating to or in connection with the transactions contemplated by
this Agreement or any Ancillary Agreement.

 

2.25                                       Transactions with Interested Persons

 

Except as provided on Schedule 2.25, no officer, director or stockholder of the
Company, any of its Subsidiaries, or any of their Affiliates, or any of their
respective spouses or children, (a) owns, directly or indirectly, on an
individual or joint basis, any interest in, or serves as an officer or director
of, any customer, competitor or supplier of the Company or any of its
Subsidiaries, or any organization which has a material Contract with the Company
or any of its Subsidiaries, or (b) has any Contract with the Company or any of
its Subsidiaries.

 

2.26                                       Absence of Sensitive Payments

 

Neither the Company, any of its Subsidiaries, nor any of their Affiliates, nor
any of their respective directors, officers, agents, stockholders or employees,
on behalf of any of them:

 

(A)                                  HAS MADE OR HAS AGREED TO MAKE ANY
CONTRIBUTIONS, PAYMENTS OR GIFTS OF FUNDS OR PROPERTY TO ANY GOVERNMENTAL
OFFICIAL, EMPLOYEE OR AGENT WHERE EITHER THE PAYMENT OR THE PURPOSE OF SUCH
CONTRIBUTION, PAYMENT OR GIFT WAS OR IS ILLEGAL UNDER THE LAWS OF THE UNITED
STATES, ANY STATE THEREOF, OR ANY OTHER JURISDICTION (FOREIGN OR DOMESTIC);

 

(B)                                 HAS ESTABLISHED OR MAINTAINED ANY UNRECORDED
FUND OR ASSET FOR ANY PURPOSE, OR HAS MADE ANY FALSE OR ARTIFICIAL ENTRIES ON
ANY OF ITS BOOKS OR RECORDS FOR ANY REASON; OR

 

(C)                                  HAS MADE OR HAS AGREED TO MAKE ANY
CONTRIBUTION OR EXPENDITURE, OR HAS REIMBURSED ANY POLITICAL GIFT OR
CONTRIBUTION OR EXPENDITURE MADE BY ANY OTHER PERSON TO CANDIDATES FOR PUBLIC
OFFICE, WHETHER FEDERAL, STATE OR LOCAL (FOREIGN OR DOMESTIC) WHERE SUCH
CONTRIBUTIONS WERE OR WOULD BE A VIOLATION OF APPLICABLE LAW.

 

2.27                                       Copies of Documents; Books and
Records

 

Complete and correct copies of any underlying documents listed in any Schedules
delivered pursuant to this Article 2 or described as having been delivered to
Parent in this Article 2, together with all amendments, renewals and
modifications related thereto have been delivered to Parent.  The minute books
of the Company contain true, complete and accurate records of all meetings held
of, and corporate action taken by, the shareholders, the boards of directors,
and

 

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committees of the boards of directors of the Company.  The stock books of the
Company and each of its Subsidiaries are true, complete and correct.

 

2.28                                       Absence of Material Adverse Effect. 
Since the Base Balance Sheet Date, there has not been any Material Adverse
Effect.

 

2.29                                       Disclosure of Material Information

 

Neither this Agreement, any Ancillary Agreement, nor any exhibit or Schedule
hereto or certificate issued pursuant hereto contains any untrue statement of a
material fact by the Company or the Company Shareholders, or omits to state a
material fact Known to the Company or the Company Shareholders necessary to make
the statements by the Company or the Company Shareholders herein or therein not
misleading, relating to the Company Shareholders or the business or affairs of
the Company or any of its Subsidiaries.

 

2.30                                       No Other Representations

 

Except with respect to the representations and warranties expressly contained in
this Agreement, including, without limitation, Section 2.29, COMPANY AND THE
COMPANY SHAREHOLDERS HAVE NOT MADE AND DO NOT MAKE ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND WITH RESPECT TO THE COMPANY, THE
SUBSIDIARIES, THE COMPANY’S SECURITIES, THE ASSETS OR LIABILITIES OF THE COMPANY
OR THE SUBSIDIARIES OR ANY OTHER MATTER; AND COMPANY AND THE COMPANY
SHAREHOLDERS SPECIFICALLY HAVE NOT MADE AND DO NOT MAKE ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT THERETO.

 

ARTICLE 3.                                REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB

 

Parent and Merger Sub hereby represent and warrant to the Company and the
Company Shareholders as follows:

 

3.1                                             Organization of Parent

 

Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with full power to own or lease its
properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted by it.

 

3.2                                             Authorization of Transaction

 

Parent has the full power and authority to execute, deliver and perform this
Agreement and the Ancillary Agreements and to carry out the transactions
contemplated hereby and thereby.  All necessary action, corporate or otherwise,
has been taken by Parent to authorize the execution, delivery and performance of
this Agreement and the Ancillary Agreements and the same are the valid and
binding obligation of Parent enforceable in accordance with their terms.

 

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3.3                                             No Conflict of Transaction with
Obligations and Laws

 

Except as forth on Schedule 3.3, neither the execution, delivery and performance
of this Agreement or any of the Ancillary Agreements, nor the performance of the
transactions contemplated hereby or thereby, will:  (i) constitute a breach or
violation of the Parent’s Charter or bylaws; (ii) conflict with or constitute
(with or without the passage of time or the giving of notice) a breach of, or
default under any material agreement, instrument or obligation to which Parent
is a party or by which it or its assets are bound which would materially affect
the performance by Parent of its obligations under this Agreement; or
(iii) result in a violation of any Law or Court Order applicable to Parent.

 

3.4                                             Finder’s Fee

 

Parent has not incurred or become liable for any broker’s commission or finder’s
fee relating to or in connection with the transactions contemplated by this
Agreement or any Ancillary Agreement.

 

ARTICLE 4.                                COVENANTS

 

The parties, as applicable, hereby covenant and agree as follows:

 

4.1                                             Normal Course

 

From the date hereof until the Closing Date, the Company shall, and shall cause
each of its Subsidiaries to: (i) maintain its corporate existence in good
standing; (ii) maintain the general character of its business; (iii) maintain in
effect all of its presently existing insurance coverage (or substantially
equivalent insurance coverage), other than the Life Insurance Policies; (iv) use
commercially reasonable efforts to preserve intact in all material respects its
business organization, preserve its goodwill and the confidentiality of its
business know-how, use commercially reasonable efforts to keep available to the
Company and each of its Subsidiaries, as applicable, the services of its current
officers and key employees and preserve its present material business
relationships with its collaborators, licensors, customers, suppliers and other
Persons with which the Company and each of its Subsidiaries has material
business relations; and (v) in all respects conduct its business only in the
usual and ordinary manner consistent with past practice and perform all
Contracts.

 

4.2                                             Conduct Of Business

 

From the date hereof until the Closing Date, except as set forth in Schedule 4.2
or as expressly contemplated by Section 4.9 with respect to the Life Insurance
Policies and the Employment Contract, the Company shall not, and the Company
shall cause each of its Subsidiaries not to, directly or indirectly do, or
propose to do, any of the following, without the prior written consent of
Parent, which consent shall not be unreasonably withheld:

 

(A)                                  AMEND OR OTHERWISE MODIFY ITS
ORGANIZATIONAL DOCUMENTS;

 

(B)                                 ISSUE, SELL, DISPOSE OF OR ENCUMBER
(EXCLUDING PERMITTED ENCUMBRANCES) OR AUTHORIZE THE ISSUANCE, SALE, DISPOSITION
OR ENCUMBRANCE

 

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(EXCLUDING PERMITTED ENCUMBRANCES) OF, OR GRANT OR ISSUE ANY OPTION, WARRANT OR
OTHER RIGHT TO ACQUIRE OR MAKE ANY AGREEMENT OF THE TYPE REFERRED TO IN
SECTION 2.2 WITH RESPECT TO ANY SHARES OF ITS CAPITAL STOCK OR ANY OF ITS OTHER
SECURITIES OR ANY SECURITY CONVERTIBLE OR EXERCISABLE INTO OR EXCHANGEABLE FOR
ANY SUCH SHARES OR SECURITIES, OR ALTER ANY TERM OF ANY OF ITS OUTSTANDING
SECURITIES OR MAKE ANY CHANGE IN ITS OUTSTANDING SHARES OF CAPITAL STOCK OR ITS
CAPITALIZATION, WHETHER BY REASON OF A RECLASSIFICATION, RECAPITALIZATION, STOCK
SPLIT, COMBINATION, EXCHANGE OR READJUSTMENT OF SHARES, STOCK DIVIDEND OR
OTHERWISE;

 

(C)                                  ENCUMBER (EXCLUDING PERMITTED ENCUMBRANCES)
ANY MATERIAL ASSETS OR PROPERTIES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(D)                                 DECLARE, SET ASIDE, MAKE OR PAY ANY DIVIDEND
OR OTHER DISTRIBUTION TO ANY SHAREHOLDER WITH RESPECT TO THE CAPITAL STOCK OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(E)                                  REDEEM, PURCHASE OR OTHERWISE ACQUIRE ANY
CAPITAL STOCK OR OTHER SECURITIES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(F)                                    INCREASE THE COMPENSATION OR OTHER
REMUNERATION OR BENEFITS PAYABLE OR TO BECOME PAYABLE TO ANY DIRECTOR OR OFFICER
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR INCREASE THE COMPENSATION OR OTHER
REMUNERATION OR BENEFITS PAYABLE OR TO BECOME PAYABLE TO ANY OF ITS OTHER
EMPLOYEES OR AGENTS, EXCEPT FOR INCREASES IN THE ORDINARY COURSE OF BUSINESS;

 

(G)                                 ADOPT OR (EXCEPT AS OTHERWISE REQUIRED BY
LAW) AMEND OR MAKE ANY UNSCHEDULED CONTRIBUTION TO ANY ERISA BENEFIT PLAN FOR OR
WITH EMPLOYEES, OR ENTER INTO ANY COLLECTIVE BARGAINING AGREEMENT;

 

(H)                                 TERMINATE OR MODIFY ANY CONTRACT REQUIRING
FUTURE PAYMENTS TO OR FROM THE COMPANY OR ANY OF ITS SUBSIDIARIES, INDIVIDUALLY
OR IN THE AGGREGATE, IN EXCESS OF $10,000, EXCEPT FOR TERMINATION OF CONTRACTS
UPON THEIR NATURAL EXPIRATION DURING SUCH PERIOD IN ACCORDANCE WITH THEIR TERMS;

 

(I)                                     CREATE, INCUR, ASSUME OR OTHERWISE
BECOME LIABLE FOR ANY INDEBTEDNESS IN AN AGGREGATE AMOUNT IN EXCESS OF $50,000,
OR GUARANTEE OR ENDORSE ANY OBLIGATION OR THE NET WORTH OF ANY PERSON, EXCEPT
FOR ENDORSEMENTS OF NEGOTIABLE INSTRUMENTS FOR COLLECTION IN THE ORDINARY COURSE
OF BUSINESS;

 

(J)                                     PAY, DISCHARGE OR SATISFY ANY OBLIGATION
OR LIABILITY, ABSOLUTE, ACCRUED, CONTINGENT OR OTHERWISE, WHETHER DUE OR TO
BECOME DUE, IN AN AGGREGATE AMOUNT IN EXCESS OF $50,000, EXCEPT FOR LIABILITIES
INCURRED IN THE ORDINARY COURSE OF BUSINESS;

 

(K)                                  SELL, TRANSFER, LEASE OR OTHERWISE DISPOSE
OF ANY OF ITS ASSETS OR PROPERTIES, EXCEPT FOR SALES OF INVENTORY AND PRODUCTS
IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

 

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(L)            CANCEL, COMPROMISE, RELEASE OR WAIVE ANY MATERIAL DEBT, CLAIM OR
RIGHT;

 

(M)          MAKE ANY LOAN OR ADVANCE TO ANY PERSON OTHER THAN TRAVEL AND OTHER
SIMILAR ROUTINE ADVANCES IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST
PRACTICE, OR ACQUIRE ANY CAPITAL STOCK OR OTHER SECURITIES OR ANY OWNERSHIP
INTEREST IN, OR SUBSTANTIALLY ALL OF THE ASSETS OF, ANY OTHER BUSINESS
ENTERPRISE;

 

(N)           MAKE ANY MATERIAL CAPITAL INVESTMENT OR EXPENDITURE OR CAPITAL
IMPROVEMENT, ADDITION OR BETTERMENT, IN EXCESS OF $50,000;

 

(O)           CHANGE ITS METHOD OF ACCOUNTING OR THE ACCOUNTING PRINCIPLES OR
PRACTICES UTILIZED IN THE PREPARATION OF THE FINANCIAL STATEMENTS, OTHER THAN AS
REQUIRED BY GAAP OR APPLICABLE LAW;

 

(P)           INSTITUTE OR SETTLE ANY PROCEEDING BEFORE ANY GOVERNMENTAL
AUTHORITY RELATING TO IT OR ITS ASSETS OR PROPERTIES;

 

(Q)           ADOPT A PLAN OF DISSOLUTION OR LIQUIDATION WITH RESPECT TO THE
COMPANY OR ANY OF ITS SUBSIDIARIES;

 

(R)            CREATE ANY OBLIGATION OR LIABILITY TO ANY OF THEIR AFFILIATES,
OFFICERS, DIRECTORS OR STOCKHOLDERS OTHER THAN AS EXPRESSLY PERMITTED BY THIS
AGREEMENT, OR MAKE ANY LOANS OR ADVANCES TO ANY OF THEIR AFFILIATES, OFFICERS,
DIRECTORS OR STOCKHOLDERS, EXCEPT NORMAL COMPENSATION, BENEFITS AND EXPENSE
ALLOWANCES;

 

(S)           ENTER INTO ANY CONTRACT, EXCEPT CONTRACTS MADE IN THE ORDINARY
COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE;

 

(T)            EXCEPT AS REQUIRED BY LAW, 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, SURRENDER ANY RIGHT TO CLAIM A REFUND OF TAXES, CONSENT TO ANY
EXTENSION OR WAIVER OF THE LIMITATION PERIOD APPLICABLE TO ANY TAX CLAIM OR
ASSESSMENT, OR TAKE ANY OTHER SIMILAR ACTION RELATING TO THE FILING OF ANY TAX
RETURN OR THE PAYMENT OF ANY TAX;

 

(U)           TAKE OR OMIT TO TAKE ANY ACTION THAT WOULD CONSTITUTE A MATERIAL
VIOLATION OF OR MATERIAL DEFAULT UNDER, OR WAIVE ANY MATERIAL RIGHTS UNDER, ANY
MATERIAL CONTRACT;

 

(V)           EXCEPT FOR SALES OF INVENTORY IN THE ORDINARY COURSE OF BUSINESS
CONSISTENT WITH PAST PRACTICE, ELIMINATE OR DISPOSE OF ANY INVENTORY, WHETHER OR
NOT ANY SUCH ELIMINATION OR DISPOSAL IS RESERVED AGAINST OR REFLECTED IN THE
FINANCIAL STATEMENTS OF THE COMPANY;

 

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(W)          ENTER INTO ANY COMMITMENT TO DO ANY OF THE FOREGOING, OR ANY ACTION
THAT WOULD MAKE ANY OF THE REPRESENTATIONS OR WARRANTIES OF THE COMPANY OR ANY
OF ITS SUBSIDIARIES CONTAINED IN THIS AGREEMENT UNTRUE OR INCORRECT IN ANY
MATERIAL RESPECT (SUBJECT TO THE KNOWLEDGE AND MATERIALITY LIMITATIONS SET FORTH
THEREIN) OR CAUSE ANY COVENANT, CONDITION OR AGREEMENT OF THE COMPANY OR ANY OF
ITS SUBSIDIARIES IN THIS AGREEMENT NOT TO BE COMPLIED WITH OR SATISFIED IN ANY
MATERIAL RESPECT; OR

 

(X)            ENTER INTO ANY CONTRACTS OR OTHER AGREEMENTS OF ANY NATURE
WHATSOEVER THAT WOULD REQUIRE THE CONSENT OF OR NOTICE TO ANY THIRD PARTY IN
CONNECTION WITH THE MERGER OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

4.3                     Certain Filings

 

The Company shall cooperate with Parent with respect to all filings with
Governmental Authorities that are required to be made by the Company or any of
its Subsidiaries to carry out the transactions contemplated by this Agreement
and the Ancillary Agreements.  The Company and each of its Subsidiaries shall
assist Parent in making all such filings, applications and notices as may be
necessary or desirable in order to obtain the authorization, approval or consent
of any Governmental Authority that may be reasonably required or which Parent
may reasonably request in connection with the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements.

 

4.4                     Notification Of Certain Matters

 

The Company shall promptly notify Parent of (i) the occurrence or non-occurrence
of any fact or event of which the Company has Knowledge that would be reasonably
likely (A) to cause any representation or warranty of the Company, any of its
Subsidiaries and/or each of the Company Shareholders contained in this Agreement
or any Ancillary Agreements to be untrue or incorrect in any material respect at
any time from the date hereof to the Closing Date or (B) to cause any covenant,
condition or agreement of the Company, any of its Subsidiaries and/or each of
the Company Shareholders in this Agreement or any Ancillary Agreements not to be
complied with or satisfied in any material respect and (ii) any failure of the
Company, any of its Subsidiaries and/or each of the Company Shareholders to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder or thereunder in any material respect; provided,
however, that no such notification shall affect the right of Parent to rely on
the representations and warranties of the Company in this Agreement prior to the
Closing, or the conditions to the obligations of Parent, or the remedies
available hereunder or thereunder to Parent prior to the Closing.  If the
Company or any Company Shareholder provides Parent with such a notice, which
shall be reasonably detailed, and Parent chooses to proceed to Closing, then
notwithstanding the foregoing or any other provision of this Agreement, unless
the Company and the Parent otherwise agree in writing (a) the Company and the
Company Shareholders shall not be deemed to have breached or violated this
Agreement as a result and to the extent of the information contained in any such
notice; and (b) the Company Shareholders shall have no liability or obligation,
and Parent Indemnified Parties shall not have the right to be indemnified or to
pursue any other claim or cause of action, for any matter contained in the
notice.  The Company, each of its Subsidiaries and/or each of the Company
Shareholders shall

 

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give prompt notice to Parent of any notice or other communication from any third
Person alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement or any Ancillary
Agreement.

 

4.5       No Solicitation

 

FROM THE DATE HEREOF UNTIL THE EARLIER OF (I) FEBRUARY 29, 2008, OR
(II) TERMINATION OF THIS AGREEMENT, THE COMPANY AND THE COMPANY SHAREHOLDERS
SHALL NOT, AND SHALL NOT PERMIT ANY SUBSIDIARY OF THE COMPANY OR ANY OFFICER,
DIRECTOR, SHAREHOLDER, EMPLOYEE, INVESTMENT BANKER OR OTHER AGENT OF THE COMPANY
TO, DIRECTLY OR INDIRECTLY, (A) SOLICIT, ENGAGE IN DISCUSSIONS OR NEGOTIATE WITH
ANY PERSON (WHETHER OR NOT SUCH DISCUSSIONS OR NEGOTIATIONS ARE INITIATED BY THE
COMPANY), OR TAKE ANY OTHER ACTION INTENDED OR DESIGNED TO FACILITATE THE
EFFORTS OF ANY PERSON, OTHER THAN PARENT, RELATING TO THE POSSIBLE ACQUISITION
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES (WHETHER BY WAY OF MERGER, PURCHASE OF
CAPITAL STOCK, PURCHASE OF ASSETS OR OTHERWISE) OR ANY SIGNIFICANT PORTION OF
ANY OF THEIR CAPITAL STOCK OR ASSETS (AN “ALTERNATIVE ACQUISITION”), (B) PROVIDE
INFORMATION WITH RESPECT TO THE COMPANY OR ANY OF ITS SUBSIDIARIES TO ANY
PERSON, OTHER THAN PARENT, RELATING TO A POSSIBLE ALTERNATIVE ACQUISITION BY ANY
PERSON, OTHER THAN PARENT, (C) ENTER INTO AN AGREEMENT WITH ANY PERSON, OTHER
THAN PARENT, PROVIDING FOR A POSSIBLE ALTERNATIVE ACQUISITION, OR (D) MAKE OR
AUTHORIZE ANY STATEMENT, RECOMMENDATION OR SOLICITATION IN SUPPORT OF ANY
POSSIBLE ALTERNATIVE ACQUISITION BY ANY PERSON, OTHER THAN BY PARENT.

 

4.6                     Access To Information; Confidentiality

 

(A)           SUBJECT TO THE FOLLOWING SENTENCE, UPON REASONABLE WRITTEN NOTICE,
THE COMPANY AND EACH OF ITS SUBSIDIARIES SHALL PERMIT REPRESENTATIVES OF PARENT
TO HAVE ACCESS (AT ALL REASONABLE TIMES AND IN A MANNER SO AS NOT TO INTERFERE
WITH THE NORMAL BUSINESS OPERATIONS OF THE OTHER PARTY) TO ALL PREMISES,
PROPERTIES, FINANCIAL AND ACCOUNTING RECORDS, CONTRACTS, OTHER RECORDS AND
DOCUMENTS, AND PERSONNEL OF OR PERTAINING TO THE COMPANY AND EACH OF ITS
SUBSIDIARIES, ALL IN ACCORDANCE WITH THE TERMS OF THE CONFIDENTIALITY
AGREEMENT.  NOTWITHSTANDING THE FOREGOING SENTENCE, (I) PRIOR TO HAVING ANY
CONTACT WITH ANY OF THE COMPANY’S OR ANY OF ITS SUBSIDIARIES’ EMPLOYEES,
CUSTOMERS OR SUPPLIERS, PARENT AND MR. CON OSWALD, ON BEHALF OF THE COMPANY AND
ITS SUBSIDIARIES, SHALL AGREE TO THE TERMS OF SUCH CONTACT; AND (II) PRIOR TO
CONDUCTING ANY ENVIRONMENTAL TESTING, ASSESSMENT OR INVESTIGATION WITH RESPECT
TO ANY REAL PROPERTY OWNED OR USED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES,
PARENT AND THE COMPANY SHALL HAVE ENTERED INTO A MUTUALLY AGREED UPON WRITTEN
SITE ACCESS AGREEMENT WITH RESPECT TO SUCH TESTING, ASSESSMENT AND
INVESTIGATION, PROVIDED, HOWEVER, THAT NEITHER THE COMPANY NOR ANY OF ITS
SUBSIDIARIES SHALL UNREASONABLY WITHHOLD, CONDITION OR DELAY THEIR APPROVAL OR
CONSENT OF PARENT’S REASONABLE REQUESTS FOR ACCESS AS PROVIDED HEREIN.

 

(B)           SUBJECT TO SECTION 4.4, NO INVESTIGATION OR EXAMINATION BY PARENT
SHALL DIMINISH, OBVIATE OR CONSTITUTE A WAIVER OF THE ENFORCEMENT OF ANY OF THE
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS OF THE COMPANY, OR ANY OF
ITS SUBSIDIARIES OR THE COMPANY SHAREHOLDERS UNDER THIS AGREEMENT EXCEPT TO THE
EXTENT THAT SUCH INVESTIGATION OR EXAMINATION RESULTS IN THE COMPANY ACQUIRING

 

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specific knowledge of the existence and magnitude of claim for indemnification
pursuant to Section 8.2(a) prior to the Closing Date.

 

4.7                     Reasonable Efforts; Further Action

 

(A)           UPON THE TERMS AND SUBJECT TO THE CONDITIONS HEREOF, EACH OF THE
PARTIES HERETO SHALL USE ITS REASONABLE EFFORTS (EXERCISED DILIGENTLY AND IN
GOOD FAITH) TO TAKE, OR CAUSE TO BE TAKEN, ALL ACTIONS AND TO DO, OR CAUSE TO BE
DONE, ALL OTHER THINGS REASONABLY NECESSARY, PROPER OR ADVISABLE TO CONSUMMATE
AND MAKE EFFECTIVE AS PROMPTLY AS PRACTICABLE THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, TO OBTAIN IN A TIMELY MANNER ALL NECESSARY WAIVERS, CONSENTS,
AUTHORIZATIONS AND APPROVALS AND TO EFFECT ALL NECESSARY REGISTRATIONS AND
FILINGS, AND OTHERWISE TO SATISFY OR CAUSE TO BE SATISFIED ALL CONDITIONS
PRECEDENT TO ITS OBLIGATIONS UNDER THIS AGREEMENT.

 

(B)           NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT TO THE CONTRARY,
PARENT SHALL NOT BE OBLIGATED TO DIVEST, ABANDON, LICENSE, DISPOSE OF, HOLD
SEPARATE OR TAKE SIMILAR ACTION WITH RESPECT TO ANY PORTION OF THE BUSINESS,
ASSETS OR PROPERTIES (TANGIBLE OR INTANGIBLE) OF PARENT, ANY OF ITS SUBSIDIARIES
OR THE COMPANY, IN CONNECTION WITH SEEKING TO OBTAIN OR OBTAINING ANY WAIVER,
CONSENT, AUTHORIZATION OR APPROVAL OF ANY PERSON ASSOCIATED WITH THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR OTHERWISE.

 

4.8                     Tax Matters

 

(A)       PARENT SHALL PREPARE OR CAUSE TO BE PREPARED AND FILED OR CAUSE TO BE
FILED ALL TAX RETURNS FOR THE COMPANY AND ITS SUBSIDIARIES THAT ARE FILED AFTER
THE CLOSING, AND BE RESPONSIBLE FOR AND PAY OR CAUSE TO BE PAID ALL TAXES DUE
WITH RESPECT TO SUCH TAX RETURNS.

 

(I)            THE COMPANY SHAREHOLDERS SHALL COOPERATE FULLY WITH PARENT AND
THE COMPANY AND ITS SUBSIDIARIES, AS AND TO THE EXTENT REASONABLY REQUESTED BY
PARENT, IN CONNECTION WITH THE FILING OF TAX RETURNS PURSUANT TO THIS SUBSECTION
(A), AND ANY AUDIT, LITIGATION OR OTHER PROCEEDING WITH RESPECT TO TAXES. TO THE
EXTENT IN ITS POSSESSION OR UNDER ITS CONTROL, EACH PARTY AGREES (A) TO RETAIN
ALL BOOKS AND RECORDS WITH RESPECT TO TAX MATTERS PERTINENT TO THE COMPANY AND
ITS SUBSIDIARIES RELATING TO ANY TAXABLE PERIOD BEGINNING BEFORE THE CLOSING
DATE UNTIL THE EXPIRATION OF THE STATUE OF LIMITATIONS (AND, TO THE EXTENT
NOTIFIED THEREOF, ANY EXTENSIONS THEREOF) OF THE RESPECTIVE TAXABLE PERIODS, AND
TO ABIDE BY ALL RECORD RETENTION AGREEMENTS ENTERED INTO WITH ANY TAXING
AUTHORITY, AND (B) TO GIVE EACH OTHER PARTY REASONABLE WRITTEN NOTICE PRIOR TO
TRANSFERRING, DESTROYING OR DISCARDING ANY SUCH BOOKS AND RECORDS AND, IF
ANOTHER PARTY SO REQUESTS, THE OTHER COMPANY SHALL ALLOW PARENT TO TAKE
POSSESSION OF SUCH BOOKS AND RECORDS.

 

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(II)           PARENT AND THE COMPANY SHAREHOLDERS FURTHER AGREE, UPON REQUEST,
TO PROVIDE THE OTHER PARTY WITH ALL INFORMATION THAT EITHER PARTY MAY BE
REQUIRED TO REPORT PURSUANT TO SECTIONS 6043 OR 6043A OF THE CODE, OR TREASURY
REGULATIONS PROMULGATED THEREUNDER.

 

(B)           ALL TAX-SHARING AGREEMENTS OR SIMILAR AGREEMENTS WITH RESPECT TO
OR INVOLVING THE COMPANY AND ITS SUBSIDIARIES SHALL BE TERMINATED AS OF THE
CLOSING DATE AND, AFTER THE CLOSING DATE, THE COMPANY AND ITS SUBSIDIARIES SHALL
NOT BE BOUND THEREBY OR HAVE ANY LIABILITY THEREUNDER.

 

(C)           ALL TRANSFER, DOCUMENTARY, SALES, USE, STAMP, REGISTRATION AND
OTHER SUCH TAXES, AND ALL CONVEYANCE FEES, RECORDING CHARGES AND OTHER FEES AND
CHARGES (INCLUDING ANY PENALTIES AND INTEREST) INCURRED IN CONNECTION WITH
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE PAID
ONE-HALF BY PARENT AND ONE-HALF BY THE COMPANY SHAREHOLDERS WHEN DUE, AND THE
COMPANY WILL FILE ALL NECESSARY TAX RETURNS AND OTHER DOCUMENTATION WITH RESPECT
TO ALL SUCH TAXES, FEES AND CHARGES IF REQUIRED BY APPLICABLE LAW, AND PARENT
WILL, AND WILL CAUSE ITS AFFILIATES TO, JOIN IN THE EXECUTION OF ANY SUCH TAX
RETURNS AND OTHER DOCUMENTATION IF REQUIRED BY APPLICABLE LAW.

 

4.9                     Life Insurance Payments And Employment Contracts

 

(A)           THE COMPANY HAS CANCELLED THE LIFE INSURANCE POLICIES AND PRIOR TO
THE CLOSING, THE COMPANY SHALL DIVIDEND AND DISTRIBUTE AN AMOUNT EQUAL TO
$1,151,776.87 (WHICH AMOUNT EQUALS (I) THE CASH SURRENDER VALUE OF THE LIFE
INSURANCE POLICIES, MINUS (II) $36,051.93, THE AMOUNT OF PREMIUMS PAID BY THE
COMPANY WITH RESPECT TO THE LIFE INSURANCE POLICIES BETWEEN THE BASE BALANCE
SHEET DATE AND THE CLOSING DATE) TO THE COMPANY SHAREHOLDERS, SUCH THAT (I) NONE
OF THE LIFE INSURANCE POLICIES SHALL BE OUTSTANDING ON THE CLOSING DATE AND
(II) NEITHER PARENT NOR THE COMPANY SHALL BE ENCUMBERED IN ANY MANNER WHATSOEVER
BY THE LIFE INSURANCE POLICIES AS OF AND AFTER THE CLOSING OR OWE ANY FURTHER
DIVIDEND, PAYMENT OR OTHER AMOUNT RELATED THERETO.

 

(B)           PRIOR TO OR AT THE CLOSING, THE COMPANY SHALL, AND SHALL CAUSE
EACH OF ITS SUBSIDIARIES, AS APPLICABLE, TO TERMINATE THE EMPLOYMENT CONTRACT,
AT THE COST OF THE COMPANY SHAREHOLDERS (EXCEPT $40,000, WHICH IS THE PORTION OF
SUCH COST WHICH IS ACCRUED ON THE BASE BALANCE SHEET, WHICH COST, IF THE CLOSING
OCCURS, SHALL BE BORNE BY THE COMPANY AND PARENT AND NOT BORNE BY THE COMPANY
SHAREHOLDERS), SUCH THAT (I) THE EMPLOYMENT CONTRACT SHALL NOT BE OUTSTANDING
IMMEDIATELY FOLLOWING THE CLOSING AND (II) EXCEPT AS OTHERWISE PROVIDED ABOVE,
NEITHER PARENT NOR THE COMPANY SHALL BE ENCUMBERED IN ANY MANNER WHATSOEVER BY
THE EMPLOYMENT CONTRACT AS OF AND AFTER THE CLOSING.

 

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4.10     Company Shareholders’ Meeting

 

PROMPTLY AFTER THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY SHALL
TAKE ALL REASONABLE ACTIONS NECESSARY UNDER ALL APPLICABLE LAWS TO CALL, GIVE
NOTICE OF AND HOLD A MEETING OF THE COMPANY SHAREHOLDERS TO VOTE ON THE APPROVAL
OF THE MERGER, THIS AGREEMENT, AND ALL THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.  THE NOTICE TO THE COMPANY SHAREHOLDERS SHALL INCLUDE A STATEMENT TO
THE EFFECT THAT THE COMPANY’S BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE
MERGER, THIS AGREEMENT, AND ALL THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
AND RECOMMENDS THAT THE COMPANY SHAREHOLDERS VOTE TO APPROVE THE MERGER, THIS
AGREEMENT, AND ALL THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT TO
THE EXTENT THAT THE FIDUCIARY OBLIGATIONS OF THE COMPANY’S BOARD OF DIRECTORS
MAY CAUSE THE BOARD OF DIRECTORS TO WITHDRAW OR MODIFY ITS RECOMMENDATION.

 

ARTICLE 5.                                ADDITIONAL COVENANTS OF PARENT AND
MERGER SUB

 

Parent hereby covenants and agrees as follows:

 

5.1                     Certain Filings

 

Parent agrees to make or cause to be made all filings with Governmental
Authorities that are required to be made by Parent to carry out the transactions
contemplated by this Agreement and the Ancillary Agreements.

 

5.2                     Notification Of Certain Matters

 

Parent shall promptly notify the Company of (i) the occurrence or non-occurrence
of any fact or event of which Parent has knowledge which would be reasonably
likely (A) to cause any representation or warranty of Parent contained in this
Agreement and/or the Ancillary Agreements to be untrue or incorrect in any
material respect at any time from the date hereof to the Closing Date or (B) to
cause any covenant, condition or agreement of Parent in this Agreement and/or
the Ancillary Agreements not to be complied with or satisfied in any material
respect and (ii) any failure of Parent to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder in any
material respect; provided, however, that no such notification shall affect the
right of the Company to rely on the representations and warranties of Parent in
this Agreement prior to the Closing, or the conditions to the obligations of the
Company, or the remedies available hereunder or thereunder to the Company prior
to the Closing.  If Parent provides the Company with such a notice, which shall
be reasonably detailed, and the Company chooses to proceed to Closing, then
notwithstanding the foregoing or any other provision of this Agreement, unless
the Company and the Parent otherwise agree in writing (a) Parent shall not be
deemed to have breached or violated this Agreement as a result and to the extent
of the information contained in any such notice; and (b) Parent shall have no
liability or obligation, and the Company Indemnified Parties shall not have the
right to be indemnified or to pursue any other claim or cause of action, for any
matter contained in the notice.  Parent shall give prompt notice to the Company
of any notice or other communication from any third Person alleging that the
consent of such third Person is or may be required in connection with the
transactions contemplated by this Agreement.

 

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5.3       Officer and Director Insurance and Indemnification.

 

(a)           Parent agrees that on and after the Closing Date it shall cause
all rights to indemnification or exculpation now existing in favor of the
employees, agents, directors and/or officers of each member of the Company and
its Subsidiaries (the “Company Indemnified Parties”) as provided in the
organizational documents of the Company and its Subsidiaries, or as provided in
any agreements between a Company Indemnified Party and the Company or its
Subsidiaries that are listed on Schedule 5.3 and which have been provided to
Parent prior to Closing (the “Indemnification Agreements”) to continue in full
force and effect for a period of six (6) years from the Closing Date; provided,
however, that, in the event any claim or claims are asserted or made within such
six (6) year period, Parent shall cause all rights to indemnification in respect
of any such claim or claims to continue until the final disposition of any and
all such claims.  Any determination required to be made with respect to whether
a Company Indemnified Party’s conduct complies with the standards set forth in
the organizational documents of the Company or its Subsidiaries or the
Indemnification Agreements, or whether a Company Indemnified Party is otherwise
entitled to indemnification, shall be made by independent counsel selected by
the Company Indemnified Party in question and who is approved in advance as
reasonably satisfactory to Parent, which approval shall not be unreasonably
withheld (whose reasonable fees and expenses shall be paid by the Surviving
Corporation).  Parent agrees from and after the Closing Date to cause the
Surviving Corporation to fully perform all obligations to be performed with
respect to the indemnification of the Company Indemnified Parties.  Parent
further agrees that, for six (6) years after the Closing, it shall cause the
Surviving Corporation to maintain officers’ and directors’ liability insurance
policies indemnifying and holding harmless the Company Indemnified Parties with
respect to any actions or omissions occurring prior to the Closing, with amounts
of coverage that are not less than, and on terms no less advantageous to the
Company Indemnified Parties than, the Company’s existing policy(ies) of
officers’ and directors’ liability insurance; provided that in the event any
claim is asserted or made within such six (6) year period, Parent shall cause
the coverage under such insurance to be continued in respect thereof until final
disposition of such claim.  In the event the foregoing indemnities or insurance
policies become unavailable or unenforceable for any reason, Parent agrees from
and after the Closing to cause the Surviving Corporation to indemnify and hold
harmless the Company Indemnified Parties to the same extent as if such
indemnities and insurance were available and in full force and effect.  The
provisions of this Section 5.3(a) and Section 5.3(b) are intended to be for the
benefit of, and shall be enforceable by, each Company Indemnified Party, his or
her heirs and his or her personal representatives and shall be binding on all
successors and assigns of the Surviving Corporation.

 

(b)           In the event that, during the six (6) year period described in
Section 5.3(a) above (as such may be extended as provided above with respect to
on-going claims), the Surviving Corporation or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers all or substantially all of its properties, assets or stock to
any person, then and in each such case, Parent shall cause proper provision to
be made so that the successors and assigns of

 

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the Surviving Corporation (or its successors and assigns) shall assume the
obligations of the Surviving Corporation set forth in this Section 5.3.

 

ARTICLE 6.                                CONDITIONS TO OBLIGATIONS OF PARENT.

 

The obligation of Parent to consummate this Agreement and the transactions
contemplated hereby are subject to the satisfaction on or before the Closing of
the following actions:

 

6.1                     Representations and Warranties

 

The representations and warranties of the Company, each of its Subsidiaries and
each of the Company Shareholders contained in this Agreement or in the Schedules
hereto or any certificate delivered pursuant hereto shall be true, complete and
correct in all material respects (except for representations and warranties that
by their terms are already qualified by materiality, which shall be true,
complete and correct in all respects) as of the date when made and as of the
Closing Date.

 

6.2                     Performance of Covenants and Agreements

 

The Company, each of its Subsidiaries and each of the Company Shareholders shall
have performed and complied in all respects with each covenant, agreement and
condition required by this Agreement and the Ancillary Agreements to be
performed or complied with by them at or prior to the Closing Date.

 

6.3                     No Material Adverse Effect

 

THERE SHALL HAVE BEEN NO MATERIAL ADVERSE EFFECT.

 

6.4                     Absence of Certain Litigation

 

THERE SHALL NOT BE ANY (I) INJUNCTION, RESTRAINING ORDER OR ORDER OF ANY NATURE
ISSUED BY ANY COURT OF COMPETENT JURISDICTION WHICH DIRECTS THAT THIS AGREEMENT
OR ANY MATERIAL TRANSACTION CONTEMPLATED HEREBY SHALL NOT BE CONSUMMATED AS
HEREIN PROVIDED, (II) SUIT, ACTION OR OTHER PROCEEDING BY ANY GOVERNMENTAL
AUTHORITY, OR THREATENED TO BE FILED OR INITIATED, WHEREIN SUCH COMPLAINANT
SEEKS THE RESTRAINT OR PROHIBITION OF THE CONSUMMATION OF ANY MATERIAL
TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR ASSERTS THE ILLEGALITY THEREOF, OR
(III) SUIT, ACTION OR OTHER PROCEEDING BY A PRIVATE PARTY PENDING BEFORE ANY
GOVERNMENTAL AUTHORITY, OR THREATENED TO BE FILED OR INITIATED, WHICH, IN THE
REASONABLE OPINION OF COUNSEL FOR PARENT, IS LIKELY TO RESULT IN THE RESTRAINT
OR PROHIBITION OF THE CONSUMMATION OF ANY MATERIAL TRANSACTION CONTEMPLATED
HEREBY OR THE OBTAINING OF AN AMOUNT IN PAYMENT (OR INDEMNIFICATION) OF MATERIAL
DAMAGES FROM OR OTHER MATERIAL RELIEF AGAINST PARENT OR AGAINST ANY DIRECTORS OR
OFFICERS OF PARENT IN CONNECTION WITH THE CONSUMMATION OF ANY MATERIAL
TRANSACTION CONTEMPLATED HEREBY.

 

6.5                     Resignations

 

Parent shall have received the written resignations, dated as of the Closing
Date, of each of the directors and corporate and executive officers of the
Company and each of its Subsidiaries.

 

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6.6                     General Releases

 

Parent shall have received the General Releases, dated as of the Closing Date,
of each of the officers, directors and stockholders of the Company.

 

6.7                     Retained Liabilities

 

The Company shall have delivered to Parent evidence reasonably satisfactory to
Parent and its counsel that (i) the Company Shareholders are able to deliver all
of the Company Shares, free and clear of all Encumbrances of any nature
whatsoever at or prior to Closing and (ii) notwithstanding anything herein to
the contrary, as of the Closing, the Company and each of its Subsidiaries shall
be free and clear of all Encumbrances of any nature whatsoever relating to the
Retained Liabilities.

 

6.8                     Exhibit A

 

The Company shall have delivered a completed Exhibit A in form and substance
reasonably satisfactory to Parent.

 

6.9                     Third Party Consents

 

The Company shall have delivered to Parent all consents of third parties
necessary to effectuate the transactions contemplated by this Agreement and the
Ancillary Agreements, including under any contracts and leases; provided,
however, that it shall not be a condition to Parent’s obligations that a consent
be obtained if proceeding to Closing without first obtaining such consent would
not be likely to result in a Material Adverse Effect or involve a violation of
Law.

 

6.10               Financial Statements

 

The Company shall have delivered to Parent, at the Company’s cost (which cost
notwithstanding any other provision hereof shall not be the responsibility of
the Company Shareholders) (i) the audited balance sheet, income statement,
statement of changes in stockholders equity and statement of cash flow at and as
of the twelve (12) months ended June 30, 2007 with an unqualified audit opinion,
and (ii) the remainder of the Financial Statements.

 

6.11               Opinion of the Company’s Counsel

 

Varnum, Riddering, Schmidt & Howlett LLP, counsel to the Company, shall have
delivered to Parent an opinion in the form of Exhibit C hereto.

 

6.12               Noncompetition Agreements

 

Each of the Key Employees shall have executed and delivered to Parent a
noncompetition agreement in either the form attached as Exhibit D-1 or
Exhibit D-2, or Exhibit D-3, as indicated by Parent.

 

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6.13               FIRPTA Certificate

 

At the Closing, the Company shall have delivered to Parent a certificate which
satisfies the requirements of the regulations under Section 1445 of the Internal
Revenue Code of 1986, as amended.

 

6.14               Secretary’s Certificate

 

Parent shall have received from the Company a Certificate executed by the
Secretary of the Company certifying as to:  (i) the Company’s Charter, certified
as of a recent date by the Department of Labor & Economic Growth of the State of
Michigan, (ii) the bylaws of the Company, (iii) that said Charter and bylaws as
appended thereto have not been amended or modified, (iv) the incumbency of the
officers of the Company certifying the names, titles and signatures of the
officers authorized to execute this Agreement and the Ancillary Agreements,
(v) copies of the minutes, unanimous written consents or resolutions, as
applicable, of the Company’s board of directors and stockholders authorizing and
approving the Merger and the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the transactions contemplated hereby
and thereby, (vi) that said board and stockholders’ minutes, unanimous written
consents or resolutions, as applicable, are the only minutes, unanimous written
consents or resolutions, as applicable, relating to the subject matter thereof,
have not been amended or rescinded and are in full force and effect; and
(vii) the number of Company Shares voted in favor of the authorization and
approval of the Merger.  Such Certificate shall be in form and substance
reasonably satisfactory to Parent.

 

6.15     Required Shareholder Approval

 

At a duly called Company Shareholders’ meeting, the Company Shareholders shall
have approved this Agreement, the Merger and all transactions contemplated
hereby, as required by the MBCA.

 

ARTICLE 7.                                CONDITIONS TO OBLIGATION OF THE
COMPANY.

 

The obligation of the Company to consummate this Agreement and the transactions
contemplated hereby are subject to the satisfaction on or before the Closing of
the following actions:

 

7.1                     Representations and Warranties

 

The representations and warranties of Parent and Merger Sub contained in this
Agreement or in the Schedules hereto or any certificate delivered pursuant
hereto shall be complete and correct in all material respects (except for
representations and warranties that by their terms are already qualified by
materiality, which shall be true, complete and correct in all respects) as of
the date when made and as of the Closing Date.

 

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7.2                     Performance of Covenants and Agreements

 

Each of Parent and Merger Sub shall have performed and complied in all material
respects with each covenant, agreement and condition required by this Agreement
to be performed or complied with by it at or prior to the Closing Date.

 

7.3                     Required Shareholder Approval

 

At a duly called Company Shareholders’ meeting, the Company Shareholders shall
have approved this Agreement, the Merger and all transactions contemplated
hereby, as required by the MBCA.

 

ARTICLE 8.                                INDEMNIFICATION.

 

8.1                     Definitions

 

For purposes of this Article 8:

 

“Indemnified Person” means any person entitled to be indemnified under this
Article 8.

 

“Indemnifying Person” means any person obligated to indemnify another person
under this Article 8.

 

“Losses” means all losses, damages (including, without limitation, punitive and
consequential damages), fines, penalties, liabilities, payments and obligations,
and all reasonable expenses related thereto.  Losses shall include any
reasonable legal fees and reasonable costs incurred by any of the Indemnified
Persons subsequent to the Closing in defense of or in connection with any
alleged or asserted liability, payment or obligation, whether or not any
liability or payment, obligation or judgment is ultimately imposed against the
Indemnified Persons and whether or not the Indemnified Persons are made or
become parties to any such action.

 

“Parent’s Indemnified Persons” means the Parent, its Affiliates and their
respective directors, officers, employees, stockholders and agents, the Company
after the Closing, and any person serving as a director, officer, employee or
agent of the Company at Parent’s request after the Closing.

 

“Third Party Action” means any written assertion of a claim, or the commencement
of any action, suit, or proceeding, by a third party as to which any person
believes it may be an Indemnified Person hereunder.

 

8.2       Indemnification by the Company.

 

(A)           SUBJECT TO THE LIMITATIONS IN PARAGRAPH (B) BELOW, THE COMPANY
SHAREHOLDERS AND, PRIOR TO THE CLOSING, THE COMPANY, JOINTLY AND SEVERALLY AGREE
TO DEFEND, INDEMNIFY AND HOLD HARMLESS PARENT’S INDEMNIFIED PERSONS FROM AND
AGAINST ALL LOSSES DIRECTLY AND INDIRECTLY INCURRED BY THEM TO THE EXTENT:

 

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(I)            RESULTING FROM OR ARISING OUT OF ANY BREACH OF ANY OF THE
REPRESENTATIONS OR WARRANTIES (OTHER THAN THOSE IN SECTIONS 2.2, 2.3, 2.4, 2.11,
2.12(A), (B), (C) AND (H), 2.13, 2.18 AND 2.19) MADE BY THE COMPANY, ANY OF ITS
SUBSIDIARIES OR THE COMPANY SHAREHOLDERS IN OR PURSUANT TO THIS AGREEMENT OR ANY
ANCILLARY AGREEMENT;

 

(II)           RESULTING FROM OR ARISING OUT OF ANY BREACH OF ANY OF THE
REPRESENTATIONS OR WARRANTIES MADE BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR
THE COMPANY SHAREHOLDERS PURSUANT TO SECTIONS 2.2, 2.3, 2.4 AND 2.12(A), (B),
(C) AND (H) OF THIS AGREEMENT;

 

(III)          RESULTING FROM OR ARISING OUT OF ANY BREACH OF ANY OF THE
REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR
THE COMPANY SHAREHOLDERS PURSUANT TO SECTION 2.11;

 

(IV)          RESULTING FROM OR ARISING OUT OF ANY BREACH OF ANY OF THE
REPRESENTATIONS OR WARRANTIES MADE BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR
THE COMPANY SHAREHOLDERS PURSUANT TO SECTION 2.18 OF THIS AGREEMENT;

 

(V)           RESULTING FROM OR ARISING OUT OF (A) ANY BREACH OF ANY OF THE
REPRESENTATIONS AND WARRANTIES MADE BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR
THE COMPANY SHAREHOLDERS PURSUANT TO SECTION 2.19 OR (B) ANY THIRD PARTY ACTION,
WHETHER BY A GOVERNMENTAL AUTHORITY OR OTHER THIRD PARTY FOR DAMAGES, INCLUDING
FINES OR PENALTIES, OR CLEAN-UP COSTS OR OTHER COMPLIANCE COSTS UNDER ANY
ENVIRONMENTAL LAW OR FROM THE VIOLATION OF ANY ENVIRONMENTAL LAW ARISING OUT OF
THE ACTS OR OMISSIONS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES ON OR BEFORE THE
CLOSING DATE; PROVIDED, HOWEVER, THAT SUBPARAGRAPH (B) ABOVE SHALL NOT APPLY TO
OR IMPOSE ANY LIABILITY OR OBLIGATION ON THE COMPANY SHAREHOLDERS OR ANY OTHER
INDEMNIFYING PERSON (X) TO PERFORM THE REMOVAL, ABATEMENT OR REMEDIATION OF ANY
ASBESTOS OR ASBESTOS-CONTAINING MATERIALS IDENTIFIED IN THE ASBESTOS INSPECTION
AND SURVEY REPORT, DATED DECEMBER 19, 2007, PERFORMED BY GRAND RAPIDS
ENVIRONMENTAL, LLC FOR DRIESENGA & ASSOCIATES, INC. FOR PARENT, OR (Y) FOR OR
WITH RESPECT TO ANY LOSSES ARISING DIRECTLY OR INDIRECTLY FROM (A) ANYTHING
DISCLOSED IN THIS AGREEMENT, THE FINANCIAL STATEMENTS OR THE SCHEDULES HERETO
(PROVIDED SUCH DISCLOSURE IS REASONABLY APPARENT ON THE FACE OF SUCH DOCUMENTS),
AND (B) ACTIONS OR OMISSIONS OCCURRING AFTER THE CLOSING DATE, INCLUDING,
WITHOUT LIMITATION, ANY NONCOMPLIANCE OR VIOLATIONS OF ENVIRONMENTAL LAWS, BY
THE SURVIVING CORPORATION OR ITS AFFILIATES AFTER THE CLOSING DATE.

 

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(VI)          RESULTING FROM OR ARISING OUT OF ANY BREACH OF ANY OF THE
REPRESENTATIONS OR WARRANTIES MADE BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR
THE COMPANY SHAREHOLDERS PURSUANT TO SECTIONS 2.13 OF THIS AGREEMENT;

 

(VII)         RESULTING FROM OR ARISING OUT OF ANY BREACH OF ANY COVENANT OR
AGREEMENT MADE BY THE COMPANY, ANY OF ITS SUBSIDIARIES OR THE COMPANY
SHAREHOLDERS IN OR PURSUANT TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT;

 

(VIII)        IN RESPECT OF ANY RETAINED LIABILITY;

 

(IX)           RESULTING FROM OR ARISING OUT OF THE INTENTIONAL
MISREPRESENTATION OR INTENTIONAL BREACH OF WARRANTY OF THE COMPANY, ANY OF ITS
SUBSIDIARIES OR ANY OF THE COMPANY SHAREHOLDERS, OR ANY INTENTIONAL FAILURE OF
THE COMPANY, ANY OF ITS SUBSIDIARIES OR ANY OF THE COMPANY SHAREHOLDERS TO
PERFORM OR COMPLY WITH ANY COVENANT OR AGREEMENT OF THE COMPANY, ANY OF ITS
SUBSIDIARIES OR ANY OF THE COMPANY SHAREHOLDERS, RESPECTIVELY; OR

 

(X)            RESULTING FROM OR ARISING OUT OF ANY THIRD PARTY ACTION
(INCLUDING A BINDING ARBITRATION OR AN AUDIT BY ANY TAXING AUTHORITY), THAT IT
IS INSTITUTED OR THREATENED AGAINST ANY OF PARENT’S INDEMNIFIED PERSONS AS A
RESULT OF THE MATTERS DESCRIBED IN SUBSECTIONS (I)-(IX) OF THIS SECTION 8.2(A).

 

(B)           THE RIGHT TO INDEMNIFICATION UNDER PARAGRAPH (A) IS SUBJECT TO THE
FOLLOWING LIMITATIONS:

 

(I)            THE COMPANY AND THE COMPANY SHAREHOLDERS SHALL HAVE NO LIABILITY,
OBLIGATION OR LOSS UNDER PARAGRAPH (A) OR OTHERWISE WITH RESPECT TO INDEMNIFYING
ANY PARENT’S INDEMNIFIED PERSON UNLESS ONE OR MORE OF THE PARENT’S INDEMNIFIED
PERSONS GIVES WRITTEN NOTICE TO THE COMPANY SHAREHOLDERS ASSERTING A CLAIM FOR
LOSSES, INCLUDING REASONABLY DETAILED FACTS AND CIRCUMSTANCES PERTAINING
THERETO, BEFORE THE EXPIRATION OF THE PERIOD SET FORTH BELOW:

 

(A)                              FOR CLAIMS UNDER CLAUSES (VI) AND (X) (INSOFAR
AS A CLAIM UNDER CLAUSE (X) RELATES TO ANY MATTERS INCLUDED UNDER CLAUSE (VI))
OF PARAGRAPH (A) ABOVE, A PERIOD OF THIRTY (30) BUSINESS DAYS FOLLOWING THE AR
COLLECTION PERIOD;

 

(B)                                FOR CLAIMS UNDER CLAUSES (I) AND (X) (INSOFAR
AS A CLAIM UNDER CLAUSE (X) RELATES TO ANY MATTER INCLUDED UNDER CLAUSE (I)) OF
PARAGRAPH (A) ABOVE, A PERIOD OF TWO (2) YEARS FROM THE CLOSING DATE;

 

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(C)                                FOR CLAIMS UNDER CLAUSES (III), (IV), (V) AND
(X) (INSOFAR AS A CLAIM UNDER CLAUSE (X) RELATES TO ANY MATTER INCLUDED UNDER
CLAUSE (III), (IV) OR (V)) OF PARAGRAPH (A) ABOVE, FOR SO LONG AS ANY CLAIM MAY
BE MADE IN RESPECT OF SUCH MATTERS UNDER ANY APPLICABLE STATUTE OF LIMITATIONS,
AS IT MAY BE EXTENDED; AND

 

(D)                               FOR CLAIMS UNDER CLAUSES (II), (VII), (VIII),
(IX) AND (X) (INSOFAR AS A CLAIM UNDER CLAUSE (X) RELATES TO ANY MATTER INCLUDED
UNDER CLAUSE (II), (VII), (VIII) OR (IX)) OF PARAGRAPH (A) ABOVE, WITHOUT
LIMITATION AS TO TIME.

 

(II)           FOR THE PURPOSE OF THIS SECTION 8.2, ANY QUALIFICATION OF ANY
REPRESENTATIONS AND WARRANTIES BY REFERENCE TO THE MATERIALITY OF MATTERS STATED
THEREIN SHALL BE DISREGARDED IN DETERMINING ANY BREACH THEREOF OR ANY LOSSES.

 

(III)          INDEMNIFICATION FOR CLAIMS UNDER PARAGRAPH (A) SHALL BE PAYABLE
BY THE COMPANY SHAREHOLDERS ONLY IF THE AGGREGATE AMOUNT OF INDEMNIFIABLE LOSSES
FOR ALL CLAIMS UNDER THIS SECTION 8.2 IS IN EXCESS $25,000, AT WHICH POINT THE
COMPANY SHAREHOLDERS SHALL BE RESPONSIBLE FOR ALL SUCH LOSSES; PROVIDED,
HOWEVER, THAT THIS CLAUSE (B)(III) SHALL NOT APPLY TO CLAIMS UNDER CLAUSES (II),
(VI), (VII), (VIII), (IX) AND (X) (INSOFAR AS A CLAIM UNDER CLAUSE (X) RELATES
TO ANY MATTER INCLUDED UNDER CLAUSE (II), (VI), (VII), (VIII) OR (IX)) OF
PARAGRAPH (A) ABOVE.

 

(IV)          THE COMPANY SHAREHOLDERS’ AGGREGATE LIABILITY FOR CLAIMS MADE
UNDER PARAGRAPH (A) SHALL NOT EXCEED THE AMOUNT SET FORTH BELOW:

 

(A)                              FOR CLAIMS UNDER CLAUSES (I), (III), (IV) AND
(V) AND (X) (INSOFAR AS A CLAIM UNDER CLAUSE (X) RELATES TO ANY MATTER INCLUDED
UNDER CLAUSE (I), (III), (IV) AND (V)) OF PARAGRAPH (A) ABOVE, AN AMOUNT EQUAL
TO 100% OF THE MERGER CONSIDERATION; AND

 

(B)                                FOR CLAIMS UNDER CLAUSES (II), (VI), (VII),
(VIII), (IX) AND (X) (INSOFAR AS A CLAIM UNDER CLAUSE (X) RELATES TO ANY MATTER
INCLUDED UNDER CLAUSE (II), (VI), (VII), (VIII) OR (IX)) OF PARAGRAPH (A) ABOVE,
OR FOR CLAIMS ARISING FROM THE FRAUD OR WILLFUL MISCONDUCT OF THE COMPANY, ANY
OF ITS SUBSIDIARIES OR ANY OF THE COMPANY SHAREHOLDERS, WITHOUT LIMIT AS TO
AMOUNT.

 

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8.3                     Defense of Third Party Actions

 

(A)           PROMPTLY AFTER RECEIPT OF NOTICE OF ANY THIRD PARTY ACTION, ANY
PERSON WHO BELIEVES HE, SHE OR IT MAY BE AN INDEMNIFIED PERSON WILL GIVE NOTICE
TO THE POTENTIAL INDEMNIFYING PERSON OF SUCH ACTION.  THE OMISSION TO GIVE SUCH
NOTICE TO THE INDEMNIFYING PERSON WILL NOT RELIEVE THE INDEMNIFYING PERSON OF
ANY LIABILITY HEREUNDER UNLESS IT WAS PREJUDICED THEREBY.

 

(B)           UPON RECEIPT OF A NOTICE OF A THIRD PARTY ACTION, THE INDEMNIFYING
PERSON SHALL HAVE THE RIGHT, AT ITS OPTION AND AT ITS OWN EXPENSE, TO
PARTICIPATE IN AND BE PRESENT AT THE DEFENSE OF SUCH THIRD PARTY ACTION, BUT NOT
TO CONTROL THE DEFENSE, NEGOTIATION OR SETTLEMENT THEREOF, WHICH CONTROL SHALL
REMAIN WITH THE INDEMNIFIED PERSON, UNLESS THE INDEMNIFYING PERSON MAKES THE
ELECTION PROVIDED IN PARAGRAPH (C) BELOW.

 

(C)           BY WRITTEN NOTICE WITHIN FORTY-FIVE (45) DAYS AFTER RECEIPT OF A
NOTICE OF A THIRD PARTY ACTION, AN INDEMNIFYING PERSON MAY ELECT TO ASSUME
CONTROL OF THE DEFENSE, NEGOTIATION AND SETTLEMENT THEREOF, WITH COUNSEL
REASONABLY SATISFACTORY TO THE INDEMNIFIED PERSON; PROVIDED, HOWEVER, THAT THE
INDEMNIFYING PERSON AGREES (SUBJECT TO THE OTHER LIMITATIONS SET FORTH HEREIN)
(I) TO PROMPTLY INDEMNIFY THE INDEMNIFIED PERSON FOR ITS REASONABLE EXPENSES TO
DATE, AND (II) TO HOLD THE INDEMNIFIED PERSON HARMLESS FROM AND AGAINST ANY AND
ALL LOSSES CAUSED BY OR ARISING OUT OF ANY SETTLEMENT OF THE THIRD PARTY ACTION
APPROVED BY THE INDEMNIFYING PERSON OR ANY JUDGMENT IN CONNECTION WITH THAT
THIRD PARTY ACTION.  THE INDEMNIFYING PERSONS SHALL NOT IN THE DEFENSE OF THE
THIRD PARTY ACTION ENTER INTO ANY SETTLEMENT OR CONSENT TO ENTRY OF ANY JUDGMENT
EXCEPT WITH THE CONSENT OF THE INDEMNIFIED PERSON, WHICH CONSENT SHALL NOT BE
UNREASONABLY WITHHELD.

 

(D)           UPON ASSUMPTION OF CONTROL OF THE DEFENSE OF A THIRD PARTY ACTION
UNDER PARAGRAPH (C) ABOVE, THE INDEMNIFYING PERSON WILL NOT BE LIABLE TO THE
INDEMNIFIED PERSON HEREUNDER FOR ANY LEGAL OR OTHER EXPENSES SUBSEQUENTLY
INCURRED IN CONNECTION WITH THE DEFENSE OF THE THIRD PARTY ACTION, OTHER THAN
REASONABLE EXPENSES OF INVESTIGATION.

 

(E)           IF THE INDEMNIFYING PERSON DOES NOT ELECT TO CONTROL THE DEFENSE
OF A THIRD PARTY ACTION UNDER PARAGRAPH (C), THE INDEMNIFYING PERSON SHALL
PROMPTLY REIMBURSE THE INDEMNIFIED PERSON FOR EXPENSES INCURRED BY THE
INDEMNIFIED PERSON IN CONNECTION WITH DEFENSE OF SUCH THIRD PARTY ACTION, AS AND
WHEN THE SAME SHALL BE INCURRED BY THE INDEMNIFIED PERSON.

 

(F)            ANY PERSON WHO IS NOT CONTROLLING THE DEFENSE OF ANY THIRD PARTY
ACTION SHALL HAVE THE DUTY TO COOPERATE WITH THE PARTY WHICH IS CONTROLLING SUCH
DEFENSE.

 

(G)           WITH RESPECT TO ANY CLAIM RELATED TO ENVIRONMENTAL MATTERS OR
ISSUES (“ENVIRONMENTAL INDEMNITY CLAIMS”), THEN, IN ADDITION TO THE PROCEDURES
SET FORTH ABOVE, THE FOLLOWING SHALL APPLY: (I) THE INDEMNIFIED PARTY

 

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SHALL COOPERATE WITH, AND PROVIDE REASONABLE ACCESS TO THE RELEVANT REAL
PROPERTY TO, THE INDEMNIFYING PARTY IN RESPONDING TO OR REMEDIATING OR
ADDRESSING ANY ENVIRONMENTAL INDEMNITY CLAIM; AND (II) IN THE EVENT THAT
REMEDIATION OR CLEANUP WITH RESPECT TO AN ENVIRONMENTAL INDEMNITY CLAIM IS
NECESSARY AND THE RESPONSIBILITY OF THE INDEMNIFYING PARTY, THE INDEMNIFYING
PARTY SHALL ONLY BE RESPONSIBLE FOR REMEDIATING OR CLEANING UP TO APPLICABLE
INDUSTRIAL CLEANUP CRITERIA, UNLESS ADDITIONAL REMEDIATION IS REQUIRED BY
APPLICABLE ENVIRONMENTAL LAW OR GOVERNMENTAL AUTHORITY, AND THE INDEMNIFIED
PARTY SHALL RECORD OR IMPLEMENT ANY DEED RESTRICTIONS AND INSTITUTIONAL CONTROLS
NECESSARY TO ALLOW THE USE OF SUCH INDUSTRIAL CLEANUP CRITERIA.  THE INDEMNIFIED
PARTY MAY PURSUE ADDITIONAL CLEANUP OR REMEDIATION BEYOND SUCH LEVELS AT ITS OWN
EXPENSE, WITHOUT LIABILITY TO THE INDEMNIFYING PARTY (AND THE INDEMNIFIED PARTY
SHALL NOT BE ENTITLED TO INDEMNIFICATION THEREFOR).

 

8.4                     Miscellaneous

 

(A)           PARENT’S INDEMNIFIED PERSONS SHALL BE ENTITLED TO INDEMNIFICATION
UNDER SECTION 8.2(A), REGARDLESS OF WHETHER THE MATTER GIVING RISE TO THE
APPLICABLE LIABILITY, PAYMENT, OBLIGATION OR EXPENSE MAY HAVE BEEN PREVIOUSLY
DISCLOSED TO ANY SUCH PERSON UNLESS EXPRESSLY DISCLOSED IN THIS AGREEMENT, THE
FINANCIAL STATEMENTS OF THE COMPANY OR THE SCHEDULES (PROVIDED SUCH DISCLOSURE
IS REASONABLY APPARENT ON THE FACE OF SUCH DOCUMENTS).

 

(B)           IF ANY LOSS IS RECOVERABLE UNDER MORE THAN ONE PROVISION HEREOF,
THE INDEMNIFIED PERSON SHALL BE ENTITLED TO ASSERT A CLAIM FOR SUCH LOSS UNTIL
THE EXPIRATION OF THE LONGEST PERIOD OF TIME WITHIN WHICH TO ASSERT A CLAIM FOR
LOSS UNDER ANY OF THE PROVISIONS WHICH ARE APPLICABLE.

 

(C)           IN COMPUTING ANY INDIVIDUAL OR AGGREGATE AMOUNTS OF LOSSES,
DAMAGES, LIABILITIES, COSTS AND EXPENSES FOR INDEMNIFICATION, THE AMOUNT OF EACH
SUCH ITEM SHALL BE DEEMED TO BE AN AMOUNT (I) NET OF ANY TAX BENEFIT REALIZED BY
THE PARTY TO BE INDEMNIFIED; AND (II) NET OF ANY INSURANCE PROCEEDS RECEIVED BY
THE PARTY TO BE INDEMNIFIED AND ANY INDEMNITY, CONTRIBUTION OR OTHER SIMILAR
PAYMENT PAID BY ANY THIRD PARTY TO THE PARTY TO BE INDEMNIFIED WITH RESPECT
THERETO.

 

(D)           THE INDEMNIFICATION PROVISIONS OF THIS ARTICLE 8 CONSTITUTE THE
SOLE AND EXCLUSIVE REMEDY OF PARENT’S INDEMNIFIED PERSONS WITH RESPECT TO ANY
AND ALL CLAIMS RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT (AND ALL
ANCILLARY AGREEMENTS), AND NO OTHER REMEDY SHALL BE HAD IN LAW OR AT EQUITY OR
OTHERWISE BY ANY PARENT’S INDEMNIFIED PERSON OR ITS OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, AFFILIATES, ATTORNEYS, CONSULTANTS, SUCCESSORS OR ASSIGNS,
ALL SUCH REMEDIES BEING HEREBY EXPRESSLY WAIVED TO THE FULLEST EXTENT PERMITTED
UNDER APPLICABLE LAW.  WITHOUT LIMITATION, THE PROCEDURES SET FORTH IN THIS
ARTICLE 8 CONSTITUTE THE SOLE AND EXCLUSIVE REMEDY OF THE PARENT’S INDEMNIFIED
PERSONS ARISING OUT OF ANY BREACH OR CLAIMED BREACH OF THE REPRESENTATIONS AND
WARRANTIES SET FORTH IN THIS AGREEMENT OR ANY ANCILLARY AGREEMENT.  IN ADDITION
TO THE FOREGOING, THE AMOUNT OF

 

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INDEMNIFICATION OBLIGATIONS OF THE COMPANY SHAREHOLDERS SET FORTH IN THIS
ARTICLE 8 SHALL BE THE MAXIMUM AMOUNT OF THEIR INDEMNIFICATION OBLIGATIONS WITH
RESPECT TO THIS AGREEMENT (AND ALL RELATED ANCILLARY AGREEMENTS) AND POTENTIAL
LIABILITY AND LOSSES UNDER THIS AGREEMENT (AND ALL RELATED ANCILLARY
AGREEMENTS), AND PARENT’S INDEMNIFIED PERSONS SHALL NOT BE ENTITLED TO ANY
FURTHER INDEMNIFICATION OR OTHER RIGHTS OR CLAIMS OF ANY NATURE WHATSOEVER, ALL
OF WHICH SUCH PARTIES HEREBY WAIVE.

 

(E)           PARENT MAY, AT ITS OPTION, RECOVER ANY AMOUNT OWING BY THE COMPANY
SHAREHOLDERS FOR INDEMNIFICATION HEREUNDER BY SETOFF AGAINST ANY AMOUNTS THAT
MAY OTHERWISE BE DUE FROM THE PARENT OR THE COMPANY TO THE COMPANY SHAREHOLDERS,
OR ANY OF THEM, UNDER THIS AGREEMENT; PROVIDED THAT PARENT SHALL NOT BE REQUIRED
TO RECOVER SUCH CLAIMS IN SUCH MANNER AND MAY PROCEED AGAINST THE INDEMNIFIED
PARTY AT ANY TIME OR TIMES FOR RECOVERY OF INDEMNIFICATION CLAIMS.

 

8.5                     Payment of Indemnification

 

Claims for indemnification under this Article 8 shall be paid or otherwise
satisfied by Indemnifying Persons within thirty (30) days after notice thereof
is given by the Indemnified Person.

 

8.6                     AR Holdback

 

At the end of the AR Collection Period (a) to the extent there are 12/31 Balance
Sheet AR which have not been collected by the Surviving Corporation, then Parent
shall (i) retain that portion of the AR Holdback equal to (A) the amount of such
12/31 Balance Sheet AR that has not been collected, minus (B) the Allowed
Reserve (the “Uncollectible AR Amount”) and (ii) properly and effectively
transfer, convey and assign such uncollected 12/31 Balance Sheet AR to the
Company Shareholders, and (b) pay each Company Shareholder, in accordance with
Section 1.8(b), its Pro Rata Percentage of any portion of the AR Holdback which
Parent is not entitled to retain pursuant to subparagraph (a) above, if any.  To
the extent the Uncollectible AR Amount exceeds the amount of the AR Holdback,
Parent shall be entitled to pursue indemnification to the extent provided in
this Article 8.  Parent shall cause the Surviving Corporation to use all
reasonable efforts to collect all of the Company’s accounts receivable and shall
act with respect to such accounts receivable in a manner consistent with the
Company’s past practice.  To the extent requested by the Shareholder
Representative and subject to the Shareholder Representative agreeing to
reasonable confidentiality restrictions and any other restrictions reasonably
required by the Company’s accountant with respect to its work papers, Parent
shall cause the Surviving Corporation to provide the Shareholder Representative
with reasonable access to the Surviving Corporation’s books and records to
confirm the Uncollectible AR Amount.

 

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ARTICLE 9.                                TERMINATION OF AGREEMENT

 

9.1                     TERMINATION

 

This Agreement shall not be terminated, except in accordance with the provisions
of this Article 9, strictly construed against the party seeking such
termination.  This Agreement may be terminated any time prior to the Closing
Date:

 

(A)           BY MUTUAL WRITTEN CONSENT OF THE PARTIES;

 

(B)           BY EITHER THE PARENT OR THE SHAREHOLDER REPRESENTATIVE, IF,
WITHOUT FAULT OF SUCH TERMINATING PARTY, THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT SHALL NOT HAVE BEEN CONSUMMATED ON OR BEFORE FEBRUARY 29, 2008, UNLESS
SUCH FAILURE SHALL BE DUE TO A MATERIAL BREACH OF ANY REPRESENTATION OR
WARRANTY, OR THE NONFULFILLMENT IN A MATERIAL RESPECT, AND FAILURE TO CURE SUCH
NONFULFILLMENT, OF ANY COVENANT OR AGREEMENT CONTAINED HEREIN ON THE PART OF THE
PARTY OR PARTIES SEEKING TO TERMINATE; AND

 

(C)           BY PARENT OR THE SHAREHOLDER REPRESENTATIVE IF A GOVERNMENTAL
AUTHORITY SHALL HAVE ISSUED A NONAPPEALABLE FINAL ORDER OR TAKEN ANY OTHER
ACTION HAVING THE EFFECT OF PERMANENTLY RESTRAINING, ENJOINING OR OTHERWISE
PROHIBITING THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (PROVIDED THAT THE
RIGHT TO TERMINATE THIS AGREEMENT UNDER THIS SECTION 9.1 SHALL NOT BE AVAILABLE
TO ANY PARTY WHO HAS NOT COMPLIED WITH ITS OBLIGATIONS UNDER THIS AGREEMENT IF
SUCH NONCOMPLIANCE MATERIALLY CONTRIBUTED TO THE ISSUANCE OF ANY SUCH ORDER OR
THE TAKING OF SUCH ACTION).

 

9.2                     TERMINATION BY PARENT

 

This Agreement may be terminated by Parent, at any time prior to the Closing
Date, if:

 

(A)           THE COMPANY, ANY OF ITS SUBSIDIARIES OR ANY OF THE COMPANY
SHAREHOLDERS SHALL HAVE FAILED TO COMPLY WITH ANY OF THE COVENANTS OR AGREEMENTS
CONTAINED IN THIS AGREEMENT SUCH THAT THE CLOSING CONDITION SET FORTH IN
SECTION 6.2 WOULD NOT BE SATISFIED; PROVIDED, HOWEVER, THAT IF SUCH BREACH OR
BREACHES ARE CAPABLE OF BEING CURED PRIOR TO THE CLOSING DATE, SUCH BREACH OR
BREACHES SHALL NOT HAVE BEEN CURED WITHIN 15 DAYS OF DELIVERY TO THE COMPANY OR
THE COMPANY SHAREHOLDERS OF WRITTEN NOTICE OF SUCH BREACH;

 

(B)           THERE EXISTS A BREACH OF ANY REPRESENTATION OR WARRANTY OF THE
COMPANY, ANY OF ITS SUBSIDIARIES OR ANY OF THE COMPANY SHAREHOLDERS CONTAINED IN
THIS AGREEMENT SUCH THAT THE CLOSING CONDITION SET FORTH IN SECTION 6.1 WOULD
NOT BE SATISFIED; PROVIDED, HOWEVER, THAT IF SUCH FAILURE OR FAILURES ARE
CAPABLE OF BEING CURED PRIOR TO THE CLOSING DATE, SUCH FAILURE OR FAILURES SHALL
NOT HAVE BEEN CURED WITHIN 15 DAYS OF DELIVERY TO THE COMPANY OR THE COMPANY
SHAREHOLDERS OF WRITTEN NOTICE OF SUCH FAILURE; OR

 

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(C)           THE COMPANY OR THE COMPANY SHAREHOLDERS BREACHES SECTION 4.5
HEREOF.

 

9.3                     TERMINATION BY THE COMPANY

 

This Agreement may be terminated at any time prior to the Closing Date by action
of the Shareholder Representative, if:

 

(A)           PARENT SHALL HAVE FAILED TO COMPLY WITH ANY OF THE COVENANTS OR
AGREEMENTS CONTAINED IN THIS AGREEMENT SUCH THAT THE CLOSING CONDITION SET FORTH
IN SECTION 7.2 WOULD NOT BE SATISFIED; PROVIDED HOWEVER, THAT IF SUCH FAILURE OR
FAILURES ARE CAPABLE OF BEING CURED PRIOR TO THE CLOSING DATE, SUCH FAILURE OR
FAILURES SHALL NOT HAVE BEEN CURED WITHIN 15 DAYS OF DELIVERY TO THE PARENT OF
WRITTEN NOTICE OF SUCH FAILURE; OR

 

(B)           THERE EXISTS A BREACH OR BREACHES OF ANY REPRESENTATION OR
WARRANTY OF THE PARENT CONTAINED IN THIS AGREEMENT SUCH THAT THE CLOSING
CONDITION SET FORTH IN SECTION 7.1 WOULD NOT BE SATISFIED; PROVIDED HOWEVER,
THAT IF SUCH BREACH OR BREACHES ARE CAPABLE OF BEING CURED PRIOR TO THE CLOSING
DATE, SUCH BREACH OR BREACHES SHALL NOT HAVE BEEN CURED WITHIN 15 DAYS OF
DELIVERY TO THE PARENT OF WRITTEN NOTICE OF SUCH BREACH.

 

9.4                     PROCEDURE FOR TERMINATION

 

In the event of termination by the Parent or the Shareholder Representative
pursuant to this Article 9, written notice thereof shall forthwith be given to
the other party.

 

9.5                     EFFECT OF TERMINATION

 

(A)           IN THE EVENT OF TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH
THE PROVISIONS OF THIS ARTICLE 9, THIS AGREEMENT SHALL FORTHWITH BECOME VOID AND
NO PARTY TO THIS AGREEMENT SHALL HAVE ANY LIABILITY OR FURTHER OBLIGATION TO ANY
OTHER PARTY, EXCEPT AS PROVIDED IN THE CONFIDENTIALITY AGREEMENT, THIS
SECTION 9.5 AND IN ARTICLE 10 OF THIS AGREEMENT, WHICH PROVISIONS SHALL SURVIVE
SUCH TERMINATION, AND EXCEPT THAT NOTHING HEREIN SHALL RELIEVE ANY PARTY FROM
LIABILITY FOR ANY BREACH OF THIS AGREEMENT.

 

(B)           IN THE EVENT OF TERMINATION OF THIS AGREEMENT BY PARENT IN
ACCORDANCE WITH SECTION 9.2(C), THE COMPANY SHALL PROMPTLY (BUT IN ANY EVENT
WITHIN TWO (2) BUSINESS DAYS OF SUCH TERMINATION) PAY TO PARENT, BY WIRE
TRANSFER OF IMMEDIATELY AVAILABLE FUNDS TO SUCH ACCOUNTS AS PARENT MAY
DESIGNATE, THE SUM OF $50,000.

 

9.6                     RIGHT TO PROCEED

 

Anything in this Agreement to the contrary notwithstanding, if any of the
conditions specified in Article 6 hereof have not been satisfied, Parent shall
have the right to waive the satisfaction of any such condition as provided in
Article 6 and to proceed with the transactions

 

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contemplated hereby, however, it shall be deemed to have waived any claim for
indemnification arising out of any condition which has been so waived and the
underlying facts related thereto (including, without limitation, any related
breach of this Agreement).  If any of the conditions specified in Article 7
hereof has not been satisfied, the Shareholder Representative shall have the
right to waive the satisfaction of any such condition as provided in Article 7
and to proceed with the transactions contemplated hereby, however, the Company
and the Company Shareholders shall be deemed to have waived any claim for
indemnification arising out of any condition which has been so waived and the
underlying facts related thereto (including, without limitation, any related
breach of this Agreement).

 

ARTICLE 10.                          MISCELLANEOUS.

 

10.1               Fees and Expenses

 

Unless as otherwise set forth herein, the Company Shareholders will pay their
own and the Company’s legal, accounting, financial advisory and any other
expenses in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement.  The Company Shareholders shall
bear such expenses in such proportions as they may agree.  No expenses of the
Company Shareholders or the Company to the extent relating to the Retained
Liabilities shall be included in any account of the Company as of the Closing or
shall be charged to or paid by Parent.  Parent will pay its own legal,
accounting, financial advisory and other expenses incurred in connection with
the negotiation and consummation of the transactions contemplated by this
Agreement.  Notwithstanding the foregoing, if the Closing occurs, the Company
(and not the Company Shareholders) shall after the Closing be responsible for
(a) the cost of the audit of the Company’s June 30, 2007, financial statements
and (b) any other costs of the Company to the extent accrued in the Base Balance
Sheet (including, without limitation, $40,000 related to the termination of the
Employment Contract).

 

10.2               Notices

 

Any notice or other communication in connection with this Agreement shall be
deemed to be delivered if in writing addressed as provided below and if either
(a) actually delivered electronically or physically at said address (provided
that if said address is a business, delivery is made during normal business
hours), or (b) in the case of a letter, three business days shall have elapsed
after the same shall have been deposited in the United States mail, postage
prepaid and registered or certified, return receipt requested, or (c) forty
eight (48) hours shall have elapsed after the same shall have been sent by
nationally recognized overnight receipted courier:

 

If to the Company prior to the Closing, to:

 

Stephenson & Lawyer, Inc.

3831 Patterson Ave.

P.O. Box 8834

Grand Rapids, MI 49518
Attn:  Conrad Oswald

Telephone:  (616) 949-8100

Facsimile:   (616) 949-5175

 

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with a copy to:

 

Varnum, Riddering, Schmidt & Howlett LLP
Bridgewater Place
333 Bridge Street, N.W.
P.O. Box 352
Grand Rapids, MI 49501-0352

Attn:  Peter G. Roth

Telephone:  (616) 336-6429

Facsimile:  (616) 336-7000

 

If to the Company Shareholders, to:

 

c/o John Barrows

2106 N. Quail Crest Ct., S.E.

Grand Rapids, MI  49546

Telephone:  (616) 285-9910

 

with a copy to:

 

Varnum, Riddering, Schmidt & Howlett LLP
Bridgewater Place
333 Bridge Street, N.W.
P.O. Box 352
Grand Rapids, MI 49501-0352

Attn:  Peter G. Roth

Telephone:  (616) 336-6429

Facsimile:  (616) 336-7000

 

If to the Parent or, after the Closing, the Company, to:

 

UFP Technologies, Inc.

172 East Main Street

Georgetown, MA  01833

Attn:  R. Jeffrey Bailly

Tel: (978) 352-2200

Fax:  (978) 352-5616

 

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with a copy to:

 

Brown Rudnick Berlack Israels LLP

One Financial Center

Boston, MA  02111

Attn:  Samuel P. Williams, Esquire

Telephone:  (617) 856-8200

Facsimile:  (617) 852-8201

 

and in any case at such other address as the addressee shall have specified by
written notice.  All periods of notice shall be measured from the date of
delivery thereof.

 

10.3               Confidentiality; Public Announcements

 

Except as required by law, no press releases or any public disclosure, either
written or oral, of the transactions contemplated by this Agreement shall be
made without the prior knowledge and written consent of both the Parent and the
Shareholder Representative.  If such a public notice is required by law, the
disclosing party will use its reasonable best efforts to give the other prior
written notice of the disclosure to be made; provided, however, that Parent may
disclose this Agreement and the transactions contemplated hereby to third
parties in connection with its financing arrangements for the Merger, so long as
such third parties are subject to reasonable confidentiality restrictions.  The
Company, the Shareholder Representative and Parent will consult with each other
concerning the means by which the Company’s employees, customers and suppliers
and other Persons having dealings with the Company will be informed of this
Agreement, the Closing, and the other transactions contemplated hereby, and
representatives of Parent may at its option be present for any such
communication.  This provision shall survive the Closing of the transactions
contemplated hereby.

 

10.4               Entire Agreement

 

This Agreement (including all exhibits or schedules appended to this Agreement
and all documents delivered pursuant to or referred to in this Agreement,
including without limitation the Ancillary Agreements, all of which are hereby
incorporated herein by reference) constitutes the entire agreement between the
parties, and all promises, representations, understandings, warranties and
agreements with reference to the subject matter hereof and inducements to the
making of this Agreement relied upon by any party hereto, have been expressed
herein.  This Agreement supersedes, replaces and terminates all prior written or
verbal agreements and all contemporaneous verbal agreements, including the
letter of intent between the parties dated November 13, 2007.

 

10.5               Severability

 

The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision hereof.

 

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10.6               Assignability, Successors and No Third Party Rights

 

Neither this Agreement nor any right to the payment of money or other
obligations hereunder may be assigned by any party without the prior written
consent of all of the other parties.  This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.  Except as expressly provided for in Section 5.3 hereof,
nothing expressed or referred to in this Agreement shall be construed to give
any Person other than the parties to this Agreement any legal or equitable
right, remedy or claim under or with respect to this Agreement or any provision
of this Agreement.

 

10.7               Amendment

 

This Agreement may be amended, and provisions hereof may be waived, only by a
written agreement executed by Parent and the Company.

 

10.8               Governing Law

 

This Agreement will be governed by the internal laws of The Commonwealth of
Massachusetts without regard to principles of conflict of laws.

 

10.9               Jurisdiction; Service Of Process

 

Any Proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement shall be brought exclusively in the courts of the
State of Michigan located in Kent county, Michigan, or the United States
District Court located in the Western District of Michigan, and each of the
parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such Proceeding and waives any objection to venue laid
therein.

 

10.10         Counterparts

 

This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

 

10.11   Effect of Table of Contents and Headings

 

Any table of contents, title of an article or section heading herein contained
is for convenience of reference only and shall not affect the meaning or
construction of any or the provisions hereof.

 

ARTICLE 11.                          DEFINITIONS

 

For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 11:

 

“Affiliate” – as to any Person, any other Person which, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such

 

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Person.  As used in this definition, “control” (including, with its correlative
meanings, “controlling,” “controlled by” and “under common control with”) means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.

 

“Agreement” - this Agreement, including the Schedules and Exhibits hereto.

 

“Ancillary Agreements” - are the other agreements to be executed and delivered
pursuant to and in connection with this Agreement, and the Confidentiality
Agreement.

 

“Alternative Acquisition” - is defined in Section 4.5.

 

“AR Collection Period” - is defined as the period from the Closing Date through
the date which is one hundred fifty (150) days after the Closing Date.

 

“AR Holdback” - is defined as Two Hundred Fifty Thousand Dollars ($250,000).

 

“Base Balance Sheet” - is defined in Section 2.7(a).

 

“Base Balance Sheet Date” – is defined in Section 2.7(a).

 

“Certificate” - is defined in Section 1.7(c).

 

“Charter” - is defined in Section 2.1.

 

“Closing” - is defined in Section 1.3.

 

“Closing Date” - is defined in Section 1.3.

 

“Code” - the Internal Revenue Code of 1986, as amended.

 

“Company” - is defined in the first paragraph of this Agreement.

 

“Company Indemnified Parties” - is defined in Section 5.3(a).

 

“Company Shareholders” - the holders of the Company Shares listed on Exhibit A.

 

“Company Shareholders Indemnified Persons” - is defined in Section 8.1.

 

“Company Shares” - all of the issued and outstanding shares of the Company’s
capital stock, which includes the Company’s Class A and Class B common stock,
all of which is owned by the Company Shareholders.

 

“Confidentiality Agreement” - the two Confidentiality and Non-Disclosure
Agreements between Parent and Company, dated May 30, 2007.

 

“Constituent Corporations” - Parent, Merger Sub and the Company.

 

“Contract” - is defined in Section 2.16(b).

 

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“Copyrights” - means all copyrights in both published works and unpublished
works, including training manuals, marketing and promotional materials, internal
reports, websites, business plans, mask works, software (both source and object
code), programs and related documentation, and videos and any other expressions,
whether registered or unregistered, and all registrations or applications in
connection therewith.

 

“Court Orders” - is defined in Section 2.5.

 

“DGCL” - the Delaware General Corporation Law, as amended.

 

“Effective Time” - is defined in Section 1.4.

 

“Employment Contract” - means that certain Employment Agreement, dated
September 23, 2005, between the Company and Mr. Conrad Oswald.

 

“Encumbrance” - is defined in Section 2.6.

 

“Environmental Claim” - any accusation, allegation, notice of violation, action,
claim, Encumbrance, demand, abatement or other Court Order or direction
(conditional or otherwise) by any Governmental Authority or any Person for
personal injury (including sickness, disease or death), tangible or intangible
property damage, damage to the environment, nuisance, pollution, contamination
or other adverse effects on the environment, or for fines, penalties or
restrictions resulting from or based upon (i) the existence, or the continuation
of the existence, of a Release (including, without limitation, sudden or
non-sudden accidental or non-accidental Releases) of, or exposure to, any
Hazardous Material or other substance, chemical, material, pollutant,
contaminant, odor, audible noise, or other Release in, into or onto the
environment (including, without limitation, the air soil, soil, surface water or
groundwater) at, in, by, from or related to the Facilities or any activities
conducted thereon; (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Materials in connection with the
operation of the Facilities; or (iii) the violation, or alleged violation, of
any Environmental Laws, Court Orders or Governmental Permits of or from any
Governmental Authority relating to environmental matters connected with the
Facilities.

 

“Environmental Indemnity Claim” - is defined in Section 8.4(g).

 

“Environmental, Health and Safety Liabilities” – any cost, damage, expense,
liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to: (a) any environmental, health or safety matter or condition
(including on-site or off-site contamination, generation, handling and disposal
of Hazardous Materials, occupational safety and health, and regulation of
chemical and Hazardous Materials); (b) fines, penalties, judgments, awards,
settlements, legal or administrative proceedings, damages, losses, litigation,
including civil and criminal claims, demands and responses, investigative,
remedial, response or inspection costs and expenses arising under Environmental
Law or Occupational Safety and Health Law; (c) financial responsibility under
Environmental Law or Occupational Safety and Health Law for cleanup costs or
corrective action, including any investigation, cleanup, removal, containment or
other remediation or response actions required by applicable Environmental Law
or Occupational Safety and Health Law and for any natural resource damages; or
(d) any other compliance,

 

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corrective, investigative or remedial measures required under Environmental Law
or Occupational Safety and Health Law.  The terms “removal,” “remedial,” and
“response action,” include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§ 9601 et seq., as amended (“CERCLA”).

 

“Environmental Law” – means Laws, Court Orders and Governmental Authorizations
concerning the environment, or activities that might threaten or result in
damage to the environment or human health, or any Laws, Court Orders and
Governmental Permits that are concerned, in whole or in part, with: (1) the
environment and with protecting or improving the quality of the environment and
human and employee health and safety issues; or (2) the management of pollution
or Hazardous Materials, (including, but not limited to, in the case of the
United States of America, the following federal laws: (a) CERCLA; (b) Resource
Conservation and Recovery Act (“RCRA”); (c) Clean Air Act; (d) Clean Water Act;
(e) Toxic Substances Control Act; (f) Emergency Planning and Community
Right-to-Know Act of 1986; (g) Hazardous Materials Transportation Act;
(h) Federal Water Pollution Control Act; (i) the Federal Insecticide, Fungicide
and Rodenticide Act (“FIFRA”), and (j) Occupational Safety and Health Act
(“OSHA”), as such laws have been amended or supplemented, and the regulations
promulgated pursuant thereto.

 

“ERISA” - the Employee Retirement Income Security Act of 1974, as amended, or
any successor law.

 

“ERISA Affiliate” - is defined in Section 2.18(a).

 

“ERISA Benefit Plan” - is defined in Section 2.18(a).

 

“Facilities” - any real property, leaseholds or other interests currently or
formerly owned or operated by the Company or any of its Subsidiaries and any
buildings, plants, structures or equipment (including motor vehicles) currently
or formerly owned or operated by the Company or any of its Subsidiaries.

 

“Financial Statements” = is defined in Section 2.7(a).

 

“GAAP” - United States generally accepted accounting principles, practices and
methods.

 

“General Releases” - is defined in Section 1.9(c).

 

“Government Authority” - is defined in Section 2.6.

 

“Governmental Authorizations” - is defined in Section 2.5.

 

“Hazardous Materials” - any substance, material or waste which is regulated by
Environmental Law, including, without limitation, any material or substance
which is defined as a “hazardous waste,” “hazardous material,” “hazardous
substance,” “extremely hazardous waste,” “restricted hazardous waste,” “subject
waste,” “contaminant,” “toxic waste” or “toxic substance”

 

56

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under any provision of Environmental Law, including but not limited to,
petroleum products, asbestos and polychlorinated biphenyls.

 

“Indemnification Agreements” - is defined in Section 5.3(a).

 

“Indemnified Person” - is defined in Section 8.1.

 

“Indemnifying Person” - is defined in Section 8.1.

 

“Intellectual Property” - is defined in Section 2.15.

 

“Key Employees” - Mr. John Barrows, Mr. Con Oswald, Mr. Larry Barrows and
Mr. Mike Dale.

 

“Knowledge” or “knowledge” - Except as specified otherwise in this Agreement,
any reference to the knowledge of any Person shall mean to the actual knowledge
of such Person after due inquiry and, with respect to the Company, means (i) the
actual knowledge after due inquiry of Mr. Con Oswald and Mr. Larry Barrows and
(ii) the actual knowledge of Mr. John Barrows and Mr. Mike Dale.

 

“Law” - is defined in Section 2.5.

 

“Life Insurance Policies” - means the $1,000,000 life insurance policy on the
life of John W. Barrows (Guardian Policy No. 3570774) and the $2,000,000
second-to-die life insurance policy on the lives of John W. Barrows and Nancy L.
Barrows (Guardian Policy No. 3539148).

 

“Losses” - is defined in Section 8.1.

 

“Marks” - means (whether registered or unregistered) all trademarks, service
marks, trade names, common law trademarks, business names, Internet domain names
and addresses, trade dress, slogans, and all registrations or applications
therefor, and the goodwill associated therewith.

 

“Material Adverse Effect” - means any state of facts, change, circumstance,
condition or effect which, individually or in the aggregate, has had or would
reasonably be expected to have a material adverse effect on, or cause a material
adverse change in, the assets, liabilities, financial condition, results of
operations or business of the Company and each of its Subsidiaries, taken as a
whole, or on the ability of the Company to execute, deliver and perform this
Agreement, any Ancillary Agreements and the transactions contemplated hereby and
thereby, other than any such state of facts, change, circumstance, condition or
effect resulting from or arising in connection with: (a) any change in general
economic, capital or financial markets; (b) war, act of terrorism, or similar
event; (c) any change generally affecting the industry in which the Company and
its Subsidiaries operate; (d) any change in any Law or accounting rule or
standard; and (e) any event, condition, circumstance or fact disclosed in the
Schedules hereto or in the Company Financial Statements; and (f) action
permitted or required by this Agreement or any fact, change, circumstance,
condition or effect proximately caused by the announcement or pendency of the
transactions contemplated by this Agreement; provided, however, that no

 

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exception enumerated in any of the immediately preceding clauses (a), (b),
(c) or (d) shall apply to the extent any such fact, change, circumstance,
condition or effect has a disproportionate effect on the Company and its
Subsidiaries, taken as a whole, relative to other comparable companies in the
industry in which the Company and its Subsidiaries operate.

 

“Material Contracts” - is defined in Section 2.16(a).

 

“MBCA” - is the Michigan Business Corporation Act, as amended.

 

“Merger” - is defined in the Recitals of this Agreement.

 

“Merger Consideration” - is defined in Section 1.7(b).

 

“Merger Sub” - is defined in the first paragraph of this Agreement.

 

“Occupational Safety and Health Law” - any legal or governmental requirement or
obligation relating to safe and healthful working conditions or to reduce
occupational safety and health hazards, and any program, whether governmental or
private (including those promulgated or sponsored by industry associations and
insurance companies issuing insurance policies to a party to this Agreement),
designed to provide safe and healthful working conditions.

 

“Organizational Documents” - (a) the articles or certificate of incorporation
and the bylaws or code of regulations of a corporation; (b) the partnership
agreement and any statement of partnership of a general partnership; (c) the
limited partnership agreement and the certificate of limited partnership of a
limited partnership; (d) the articles or certificate of formation and operating
agreement of a limited liability company; (e) any charter, trust certificate or
document or similar document adopted or filed in connection with the creation,
formation or organization of a Person; and (e) any and all currently effective
amendments to any of the foregoing.

 

“Parent” - is defined in the first paragraph of this Agreement.

 

“Parent’s Indemnified Persons” - is defined in Section 8.1.

 

“Patents” - means all patents, patent applications and inventions and
discoveries that may be patentable, including any patents issuing therefrom, and
any reissues, reexaminations, divisions, continuations in whole or in part,
extensions and foreign counterparts thereof.

 

“Permitted Encumbrances” - is defined as (a) Encumbrances, liens (statutory or
otherwise), security interests, mortgages, pledges and other similar matters for
taxes and other governmental charges and assessments which are not yet due and
payable or are being contested in good faith by appropriate proceedings;
(b) Encumbrances, liens (statutory or otherwise), security interests, mortgages,
pledges and other similar matters of landlords or of carriers, warehousemen,
mechanics and materialmen and other like items arising in the ordinary course of
business for sums not yet due and payable; (c) with respect to any real
property, (i) applicable zoning Laws, building codes and other land use Laws,
(ii) easements, Encumbrances, restrictions and other matters of record,
(iii) easements, Encumbrances, restrictions and other matters that would be
shown by an accurate ALTA title insurance policy or an accurate ALTA/ACSM
survey, and (iv) rights of any landlords;; and (d) any other Encumbrances, liens
(statutory or

 

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otherwise), security interests, mortgages, pledges and other similar matters
which are insignificant in amount or that do not significantly detract from the
value of or significantly impair or interfere with the existing use of the
property affected by such.

 

“Person” - any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union or other entity or
governmental body or Governmental Authority.

 

“Personal Property” - is defined in Section 2.12(b).

 

“Pro Rata Percentage” - is defined with respect to each Company Shareholder as
the percentage set forth next to such Company Shareholder’s name on Exhibit A,
and indicates such Company Shareholder’s percentage ownership of the Company
Shares.

 

“Proceeding” - any pending claim, action, formal or informal investigation,
arbitration, litigation or other judicial, regulatory or administrative
proceeding.

 

“Property” - as defined in Section 2.12(a).

 

“Release” - any release, spill, effluent, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching, or migration into the indoor
or outdoor environment of any Hazardous Material through or in the air, soil,
surface water or groundwater.

 

“Retained Liabilities” - means any and all claims, liabilities, obligations and
Encumbrances (a) relating to the Life Insurance Policies and (b) in excess of
$40,000 (which is the amount accrued in the Base Balance Sheet with respect to
the Employment Contract and is not a Retained Liability) relating to the
Employment Contract, all of each of which shall be retained by the Company
Shareholders.

 

“Securities Act” - the Securities Act of 1933, as amended, or any successor law.

 

“Shareholder Representative” - as defined in Section 1.11.

 

“Site” - is defined in Section 2.19(a).

 

“Subsidiary” - with respect to any Person, any corporation, joint venture,
limited liability company, partnership, association or other business entity of
which more than 50% of the total voting power of stock or other equity entitled
to vote generally in the election of directors or managers or equivalent persons
thereof is owned or controlled, directly or indirectly, by such Person.

 

“Surviving Corporation” - is defined in Section 1.12.

 

“Tax Returns” - is defined in Section 2.11(a).

 

“Taxes” - is defined in Section 2.11(a).

 

“Third Party Action” - is defined in Section 8.1.

 

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“Trade Secrets” - means all trade secrets, know-how, confidential information,
customer lists, technical information, proprietary information, technologies,
processes and formulae, source code, algorithms, architecture, structure,
display screens and development tools, data, plans, drawings and blue prints,
whether tangible or intangible and whether stored, compiled, or memorialized
physically, electronically, photographically, or otherwise.

 

“Treasury Shares” - is defined in Section 1.7(d).

 

 

[remainder of page intentionally blank; signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or caused
this Agreement to be executed by their duly authorized representatives in
multiple counterparts as of the date set forth above.

 

 

 

PARENT:

 

 

 

UFP TECHNOLOGIES, INC.

 

 

 

 

 

By:

/s/ R. Jeffrey Bailly

 

 

Name:

R. Jeffrey Bailly

 

 

Title:

President & CEO

 

 

 

 

 

 

 

 

MERGER SUB:

 

 

 

S&L ACQUISITION CORP.

 

 

 

 

 

By:

/s/ R. Jeffrey Bailly

 

 

Name:

R. Jeffrey Bailly

 

 

Title:

President

 

 

 

 

 

 

COMPANY:

 

 

 

STEPHENSON & LAWYER, INC.

 

 

 

 

 

By:

/s/ Conrad S. Oswald

 

 

Name:

Conrad S. Oswald

 

 

Title:

President & CEO

 

 

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List of Schedules

 

 

Schedule 2.1(a):

 Organization and Qualification

 

 

Schedule 2.2:

 Capitalization

 

 

Schedule 2.3:

 Organization and Qualification of Subsidiaries

 

 

Schedule 2.5:

 Compliance with Obligations and Laws

 

 

Schedule 2.6:

 Conflicts

 

 

Schedule 2.7:

 Financial Statements

 

 

Schedule 2.8:

 Absence of Undisclosed Indebtedness

 

 

Schedule 2.9:

 Absence of Certain Changes

 

 

Schedule 2.11:

 Taxes

 

 

Schedule 2.12:

 Real and Personal Property

 

 

Schedule 2.13:

 Accounts Receivable

 

 

Schedule 2.15:

 Intellectual Property

 

 

Schedule 2.16:

 Contracts and Commitments

 

 

Schedule 2.17:

 Labor and Employee Relations

 

 

Schedule 2.18:

 ERISA and Employee Benefits

 

 

Schedule 2.19:

 Environmental Matters

 

 

Schedule 2.20:

 Governmental Authorizations

 

 

Schedule 2.21:

 Warranty and Other Claims

 

 

Schedule 2.22:

 Litigation

 

 

Schedule 2.23:

 Insurance

 

 

Schedule 2.25:

 Transactions with Interested Persons

 

 

Schedule 4.2:

 Conduct of Business

 

 

Schedule 5.3:

 Officer and Director Indemnification

 

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