Exhibit 10.2

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Stock Purchase Agreement

by and among
Stratitude, Inc.,
The Shareholders of Stratitude, Inc.,
and
Quadrant 4 System Corporation
 
 
 
 
 
 
 
 
Dated as of November 3, 2016
 

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TABLE OF CONTENTS

   
Page
ARTICLE I PURCHASE AND SALE OF THE SHARES
1
1.1.
The Purchase and Sale of the Shares
1
1.2.
Purchase Price
1
1.3.
Closing Statement; Closing Payments
1
1.4.
Final Closing Statement; Post-Closing Adjustments
2
1.5.
Earnout
3
1.6.
Withholding; Deductions
5
     
ARTICLE II CLOSING AND TERMINATION
5
2.1.
Closing
5
2.2.
Termination
5
2.3.
Procedure Upon Termination
6
2.4.
Effect of Termination
6
     
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6
3.1.
Organization and Qualification of the Company
6
3.2.
Organization and Qualification of the Subsidiaries
7
3.3.
Capitalization
7
3.4.
Authority
8
3.5.
No Conflict
8
3.6.
Consents
8
3.7.
Financial Statements
9
3.8.
No Undisclosed Liabilities
9
3.9.
Absence of Certain Changes
10
3.10.
Title to Assets and Properties; Equipment and Other Tangible Properties
10
3.11.
Owned and Leased Real Property
10
3.12.
Intellectual Property
11
3.13.
Contracts
12
3.14.
Litigation
13
3.15.
Compliance with Laws
14
3.16.
Permits and Authorizations
14
3.17.
Insurance
15
3.18.
Environmental Matters
15
3.19.
Employment Matters
16
3.20.
Employee Benefit Plans
18
3.21.
Tax Matters
19
3.22.
Interested Party Transactions
21
3.23.
Absence of Certain Practices
21
3.24.
Bank Accounts
22
3.25.
Brokers’ and Finders’ Fees
22
3.26.
Customers and Suppliers
22
3.27.
Export Compliance
22
3.28.
Disclosure
23
     
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS
23
4.1.
Organization of the Sellers
23
4.2.
Authority
23
4.3.
No Conflict
23
4.4.
Consents
23

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4.5.
No Legal Actions
24
4.6.
Title to the Shares
24
4.7.
Investment Intent
24
     
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
26
5.1.
Organization of the Purchaser
26
5.2.
Authority
26
5.3.
No Conflict
26
5.4.
Consents
26
5.5.
No Legal Actions
26
5.6.
Investment Intention
27
5.7.
Brokers’ and Finders’ Fees
27
5.8.
Purchaser Shares
27
5.9.
No Representations
27
     
ARTICLE VI COVENANTS
27
6.1.
Access to Information
27
6.2.
No Solicitation
28
6.3.
Conduct of the Business Prior to Closing
28
6.4.
Regulatory Approvals
29
6.5.
Required Consents
29
6.6.
Notice of Certain Events
29
6.7.
Release of Liens
30
6.8.
Employee Benefit Plans
30
6.9.
Termination of Contracts
30
6.10.
[Intentionally Deleted]
30
6.11.
Indemnification of Officers and Directors
30
6.12.
Satisfaction of Conditions Precedent
31
6.13.
Preservation of Records
31
6.14.
Cooperation with Financing
31
6.15.
Asset Purchase Agreement
31
6.16.
Restrictions on Agama’s Sale or Dissolution
31
     
ARTICLE VII CONDITIONS PRECEDENT TO THE CLOSING
32
7.1.
Conditions to the Obligations of the Purchaser
32
7.2.
Conditions to the Obligations of the Sellers
33
     
ARTICLE VIII INDEMNIFICATION
34
8.1.
Survival of the Representations and Warranties
34
8.2.
Indemnification
35
8.3.
Limitations on Liability
36
8.4.
Defense of Third Party Claims
36
8.5.
Indemnification Claims Procedure
37
8.6.
No Contribution
38
8.7.
Right of Setoff
38
8.8.
Exercise of Remedies Other Than by the Purchaser
39
8.9.
Purchase Price Adjustment
39
     
ARTICLE IX TAX MATTERS
39
9.1.
Taxes and Tax Refunds for Pre-Closing Tax Periods
39
9.2.
Allocation of Straddle Period Taxes
40
9.3.
Tax Returns
40
9.4.
Tax Contests
41

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9.5.
Assistance and Cooperation
42
9.6.
Transfer Taxes
42
9.7.
Treatment of Payments
42
     
ARTICLE X DEFINITIONS; CONSTRUCTION
42
10.1.
Definitions
42
10.2.
Construction
54
     
ARTICLE XI GENERAL PROVISIONS
55
11.1.
Expenses
55
11.2.
Public Announcements
55
11.3.
Notices
55
11.4.
Entire Agreement
56
11.5.
Severability
56
11.6.
Specific Performance
56
11.7.
Successors and Assigns; Assignment; Parties in Interest
57
11.8.
Amendment; Waiver
57
11.9.
Governing Law; Venue
57
11.10.
Waiver of Jury Trial
57
11.11.
Other Remedies
58
11.12.
Counterparts; Electronic Delivery
59
11.13.
Time is of the Essence
59
11.14.
Confidentiality
59
11.15.
Liability of Affiliates of the Purchaser or the Sellers
59
11.16.
Sellers’ Representative
60
11.17.
Release
60
11.18.
Effective Time
62

 
EXHIBITS

Exhibit A – List of Sellers

Exhibit B – Earnout Consideration

Exhibit C – Share Consideration

Exhibit D – Calculation of EBITDA

Exhibit E – Form of Subscription Agreement

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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of November 3, 2016 (this “Agreement”),
is entered into by and among Quadrant 4 System Corporation, an Illinois
corporation (the “Purchaser”), Stratitude, Inc., a California corporation (the
“Company”), and all of the shareholders of the Company listed on Exhibit A
attached hereto (each referred to herein as a “Seller,” and collectively
referred to herein as the “Sellers”).  Unless the context otherwise makes clear,
capitalized terms used in this Agreement are defined in Article X.
RECITALS
WHEREAS, the Sellers own of all of the issued and outstanding shares of capital
stock of the Company (the “Shares”);
WHEREAS, as an inducement for the Purchaser to enter into this Agreement,
concurrently with the execution and delivery hereof, each Seller is entering
into Non-Competition and Non-Solicitation Agreements in favor of the Purchaser,
which shall become effective at the Closing; and
WHEREAS, the Sellers desire to sell to the Purchaser, and the Purchaser desires
to purchase from the Sellers, the Shares upon the terms and conditions
hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties and agreements contained herein, the Parties hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1.          The Purchase and Sale of the Shares.  Upon the terms and subject
to the conditions contained herein, at the Closing, each Seller hereby agrees to
sell to the Purchaser the Shares as held by such Seller as reflected on
Exhibit A, and the Purchaser hereby agrees to purchase the Shares from the
Sellers.
1.2.          Purchase Price.   The aggregate purchase price for the Shares is
an amount equal to the Final Cash Amount plus the Share Consideration Amount
plus the Earnout Consideration, if any, in each case as determined in accordance
with the terms and conditions of this Agreement.
1.3.          Closing Statement; Closing Payments.
(a)          Within three (3) Business Days prior to the anticipated Closing
Date, the Company shall deliver to the Purchaser a statement (the “Closing
Statement”) executed by the Company setting forth:
(i)          the Company’s good faith estimate of (A) the Closing Net Current
Assets (the “Estimated Closing Net Current Assets”), (B) the Closing Debt (the
“Estimated Closing Debt”) and (C) the Unpaid Transaction Expenses (the
“Estimated Unpaid Transaction Expenses”), which Closing Statement quantifies in
reasonable detail the items constituting such Estimated Closing Net Current
Assets, Estimated Closing Debt and Estimated Unpaid Transaction Expenses, in
each case calculated in accordance with the terms and provisions of this
Agreement; and
(ii)          on the basis of the foregoing, a calculation of the Estimated Cash
Amount.
All such estimates shall control solely for purposes of determining the amounts
payable at the Closing pursuant to Sections 1.3(b)(i), 1.3(b)(ii), and
1.3(b)(iii) and shall not limit or otherwise affect the Purchaser’s remedies
 

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under this Agreement or otherwise, or constitute an acknowledgement by the
Purchaser of the accuracy of the amounts reflected thereof.
(b)          At the Closing, the Purchaser shall make or cause to be made the
following payments by wire transfer of immediately available funds:
(i)          On the Company’s or one or more of its Subsidiaries’ behalf, to the
holders of the Closing Debt, the amount necessary to repay in full all such
Closing Debt as set forth in the Payoff Letters delivered by the Company to the
Purchaser within three (3) Business Days prior to the Closing Date, such
payments to be remitted to the accounts and in the amounts specified in such
Payoff Letters;
(ii)          On the Company’s or one or more of its Subsidiaries’ behalf, the
amount necessary to pay the Unpaid Transaction Expenses, such payments to be
remitted to the accounts and in the amounts specified by the Company in the
Closing Statement; and
(iii)          To each Seller, an amount equal to the product of (A) such
Seller’s Equity Ownership Percentage multiplied by (B) the Estimated Cash
Amount, such payments to be remitted to the accounts designated by the Sellers
in the Closing Statement.
1.4.          Final Closing Statement; Post-Closing Adjustments.
(a)          Within ninety (90) days after the Closing Date, the Purchaser shall
prepare and deliver to the Sellers’ Representative a statement (the “Final
Closing Statement”) executed by the Purchaser setting forth (i) the Purchaser’s
determination of the Closing Net Current Assets, Closing Debt and Unpaid
Transaction Expenses, which Final Closing Statement shall quantify in reasonable
detail the items constituting such Closing Net Current Assets, Closing Debt and
Unpaid Transaction Expenses reflected in the Final Closing Statement, and in
each case calculated in accordance with the terms and provisions of this
Agreement, and (ii) on the basis of the foregoing, a calculation of the Final
Cash Amount.
(b)          The Final Closing Statement and the calculation of the Final Cash
Amount set forth therein shall be final and binding on the Parties unless the
Sellers’ Representative delivers to the Purchaser, within sixty (60) days
following the Sellers’ Representative’s receipt of the Final Closing Statement
(the “Objection Period”), a written notice (the “Objection Notice”) advising the
Purchaser that the Sellers dispute the Purchaser’s calculations set forth in the
Final Closing Statement.  Such Objection Notice shall describe the nature of any
such disagreement in reasonable detail, identifying the specific items as to
which the Sellers disagree and shall be accompanied by reasonable supporting
documentation.  During the Objection Period, the Purchaser shall cause the
Company and its Subsidiaries to provide the Sellers’ Representative with
reasonable access (including on-site access and electronic access to the extent
available) during regular business hours and upon reasonable notice to all
relevant books and records and employees (including key accounting and finance
personnel) of the Company and its Subsidiaries to the extent reasonably
necessary to review the matters and information used to prepare and to support
the Final Closing Statement, all in a manner not unreasonably interfering with
the business of the Company and its Subsidiaries.  All fees, costs and expenses
of the Sellers’ Representative and of the Sellers relating to the review of the
Final Closing Statement shall be borne by the Sellers, and all fees, costs and
expenses of the Purchaser or the Company relating thereto shall be borne by the
Purchaser.  If the Sellers’ Representative timely deliver an Objection Notice
during the Objection Period pursuant to this Section 1.4(b), then the Sellers’
Representative and the Purchaser shall attempt in good faith to resolve all such
matters identified in such Objection Notice.  If the Sellers’ Representative and
the Purchaser are unable to resolve all such disagreements within thirty (30)
days after the receipt by the Purchaser of the Objection Notice (or such longer
period as may be agreed in writing by the Purchaser and the Sellers’
Representative), then the remaining disputed matters (the “Disputed Matters”)
shall be promptly submitted to the Accounting Arbitrator for binding
resolution.  The Accounting Arbitrator will consider only the Disputed Matters
and shall resolve such Disputed Matters in accordance with the terms and
provisions of this Agreement.  The Accounting Arbitrator shall issue a written
report setting forth its determination with respect
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to the Disputed Matters and the Final Cash Amount, which determination shall be
final and binding upon the Parties.  The fees and expenses of the Accounting
Arbitrator incurred in connection with the determination of the Disputed Matters
and the Final Cash Amount shall be paid by the Purchaser and by the Sellers
based on the relative success of their positions as compared to the final
determination of the Accounting Arbitrator.  By way of example, if the Purchaser
has taken the position that the Final Cash Amount was $1,000,000 less than the
Estimated Cash Amount and the Sellers have taken the position that the Final
Cash Amount was $500,000 greater than the Estimated Cash Amount, and the
Accounting Arbitrator finally determines that the Final Cash Amount was equal to
the Estimated Cash Amount, then the Purchaser shall pay two thirds of the fees
and expenses of the Accounting Arbitrator and the Sellers shall pay one third of
the fees and expenses of the Accounting Arbitrator. The Purchaser and the
Sellers shall, and the Purchaser shall cause the Company and its Subsidiaries
to, cooperate fully with the Accounting Arbitrator and respond on a timely basis
to all reasonable requests for information or access to documents or personnel
made by the Accounting Arbitrator, all with the intent to fairly and in good
faith resolve the Disputed Matters as promptly as reasonably practicable.
(c)          If the Final Cash Amount, as finally determined in accordance with
Section 1.4(b), is less than the Estimated Cash Amount, then the Sellers shall
jointly and severally pay to the Purchaser the amount of such difference by wire
transfer of immediately available funds within five (5) Business Days after the
final determination of such Final Cash Amount.
(d)          If the Final Cash Amount, as finally determined in accordance with
Section 1.4(b), is greater than the Estimated Cash Amount, then the Purchaser
shall pay or cause to be paid to the Sellers (in accordance with their
respective Equity Ownership Percentages and the payment instructions provided by
the Sellers) the amount of such difference by wire transfer of immediately
available funds within five (5) Business Days after the final determination of
such Final Cash Amount.
1.5.          Earnout.
(a)          Subject to the terms and conditions of this Section 1.5, the
Sellers shall be entitled to additional consideration for the Shares if the
Purchaser meets certain EBITDA targets as set forth below:
(i)          For the 2017 Earnout Period, the Purchaser shall pay to the Sellers
the amount of the Guaranteed Earnout as set forth on Exhibit B for the 2017
Earnout Period; provided, however, if the actual EBITDA amount of the Company
during the 2017 Earnout Period is equal to or greater than the EBITDA Floor (as
set forth on Exhibit B for the 2017 Earnout Period), then the Purchasers shall
pay to the Sellers’ Representative (on behalf of the Sellers) an amount equal to
the sum of (x) the amount of the Guaranteed Earnout (as set forth on Exhibit B
for the 2017 Earnout Period) plus (y) the amount of the Variable Earnout (as set
forth on Exhibit B for the 2017 Earnout Period); provided, further, that if the
actual EBITDA of the Company for the 2017 Earnout Period is equal to or greater
than the Target EBITDA (as set forth on Exhibit B for the 2017 Earnout Period),
then the Purchaser shall pay to the Sellers’ Representative (on behalf of the
Sellers) an amount equal to the sum of (x) the amount of the Guaranteed Earnout
(as set forth on Exhibit B for the 2017 Earnout Period)  plus (y) the amount of
the Variable Earnout (as set forth on Exhibit B for the 2017 Earnout Period),
plus (z) 60% of the amount in excess of the Target EBITDA (as set forth on
Exhibit B for the 2017 Earnout Period).
(ii)          For the 2018 Earnout Period, the Purchaser shall pay to the
Sellers the amount of the Guaranteed Earnout as set forth on Exhibit B for the
2018 Earnout Period; provided, however, if the actual EBITDA amount of the
Company during the 2018 Earnout Period is equal to or greater than the EBITDA
Floor (as set forth on Exhibit B for the 2018 Earnout Period), then the
Purchasers shall pay to the Sellers’ Representative (on behalf of the Sellers)
an amount equal to the sum of (x) the amount of the Guaranteed Earnout (as set
forth on Exhibit B for the 2018 Earnout Period) plus (y) the amount of the
Variable Earnout (as set forth on Exhibit B for the 2018 Earnout Period);
provided, further, that if the actual EBITDA of the Company for the 2018 Earnout
Period is equal to or greater than the Target EBITDA (as set forth on Exhibit B
for the 2018 Earnout Period), then the Purchaser shall pay to the Sellers’
Representative (on behalf
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of the Sellers) an amount equal to the sum of (x) the amount of the Guaranteed
Earnout (as set forth on Exhibit B for the 2018 Earnout Period)  plus (y) the
amount of the Variable Earnout (as set forth on Exhibit B for the 2018 Earnout
Period), plus (z) 60% of the amount in excess of the Target EBITDA (as set forth
on Exhibit B for the 2018 Earnout Period).
(iii)          For the 2019 Earnout Period, the Purchaser shall pay to the
Sellers the amount of the Guaranteed Earnout as set forth on Exhibit B for the
2019 Earnout Period; provided, however, if the actual EBITDA amount of the
Company during the 2019 Earnout Period is equal to or greater than the EBITDA
Floor (as set forth on Exhibit B for the 2019 Earnout Period), then the
Purchasers shall pay to the Sellers’ Representative (on behalf of the Sellers)
an amount equal to the sum of (x) the amount of the Guaranteed Earnout (as set
forth on Exhibit B for the 2019 Earnout Period) plus (y) the amount of the
Variable Earnout (as set forth on Exhibit B for the 2019 Earnout Period);
provided, further, that if the actual EBITDA of the Company for the 2019 Earnout
Period is equal to or greater than the Target EBITDA (as set forth on Exhibit B
for the 2019 Earnout Period), then the Purchaser shall pay to the Sellers’
Representative (on behalf of the Sellers) an amount equal to the sum of (x) the
amount of the Guaranteed Earnout (as set forth on Exhibit B for the 2019 Earnout
Period)  plus (y) the amount of the Variable Earnout (as set forth on Exhibit B
for the 2019 Earnout Period), plus (z) 60% of the amount in excess of the Target
EBITDA (as set forth on Exhibit B for the 2019 Earnout Period).
(b)          All payments due and payable by the Purchaser to the Sellers
pursuant to this Section 1.5 shall be paid to the Sellers’ Representative (on
behalf of the Sellers) by wire transfer within ninety (90) days after the end of
the 2017 Earnout Period, 2018 Earnout Period and 2019 Earnout Period,
respectively.  The Sellers’ Representative shall distribute to each Seller an
amount of any received Earnout Consideration equal to the product of (A) such
Seller’s Equity Ownership Percentage multiplied by (B) the Earnout Consideration
received from the Purchaser.
(c)          The obligations of the Purchaser pursuant to this Section 1.5 are
subject to (i) that certain Subordination Agreements dated as of the date hereof
by and among the Company, the Purchaser, the Sellers, and each of the Lenders,
respectively (the “Subordination Agreements”) and (ii) the Purchaser’s right of
set off pursuant to Section 8.7 hereof in order to secure the Sellers’
indemnification obligations under Article VIII (Indemnification).
(d)          Notwithstanding anything to the contrary contained herein, no
Seller shall be entitled to any Earnout Consideration for any upcoming Earnout
Period (and the Purchaser shall have no obligation to pay any such Earnout
Consideration) pursuant to this Section 1.5 if both Employee Shareholders’
employment or consulting relationships with the Company are terminated (i) by
the Purchaser for Cause or (ii) by such Seller without Good Reason; provided,
however, that upon the termination of both Employee Shareholders, Ashish Sanan
shall enter into an employment arrangement with the Company on terms no less
favorable than the employment terms of each Employee Shareholder immediately
prior to such Employee Shareholder’s termination in order to maintain the
Sellers’ rights to the Earnout Consideration; provided, further, that, upon a
Change in Control, the Earnout Consideration shall accelerate in accordance with
the terms and conditions of Section 1.5(f).  For the avoidance of doubt, any
Seller whose employment or consulting arrangement with the Company is terminated
shall still be entitled to Earnout Consideration so long as any of the Sellers
are still in an employment or consulting relationship with the Company at the
time such Earnout Consideration is payable in accordance with this Section 1.5.
(e)          Sellers and Purchaser shall mutually agree on a business plan for
the Company through the Fiscal Year-Ended 2019 (the “Business Plan”) to be
implemented by the Purchaser and Sellers (as employees of Purchaser).
(f)           Subject to the continued employment or consulting relationship of
at least one (1) Seller as set forth in Section 1.5(d), upon a Change in Control
the Earnout Consideration shall accelerate as follows:
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(i)          if the Change in Control occurs on or prior to the end of the 2017
Earnout Period, the Earnout Consideration due and payable upon the consummation
of the Change in Control transaction shall equal $1,791,204;
(ii)          if the Change in Control occurs after the end of the 2017 Earnout
Period and on or prior to the end of the 2018 Earnout Period, the Earnout
Consideration due and payable upon the consummation of the Change in Control
transaction shall equal $1,337,996 in addition to the Earnout Consideration
already paid for the 2017 Earnout Period; and
(iii)          if the Change in Control occurs after the end of the 2018 Earnout
Period and on or prior to the end of the 2019 Earnout Period, the Earnout
Consideration due and payable upon the consummation of the Change in Control
transaction shall equal $736,364 in addition to the Earnout Consideration paid
for the 2017 and 2018 Earnout Periods.
1.6.          Withholding; Deductions.  Each of the Purchaser and the Company,
as applicable, shall be entitled to deduct and withhold from any amounts payable
by it pursuant to this Agreement any withholding Taxes or other amounts required
by Law to be deducted and withheld.  To the extent that any such amounts are so
deducted or withheld, such amounts will be treated for all purposes of this
Agreement as having been paid prior to the Closing to the Person in respect of
which such deduction and withholding was made.
ARTICLE II
CLOSING AND TERMINATION
2.1.          Closing.  The closing of the transactions contemplated hereby (the
“Closing”) shall take place via the electronic exchange of signature pages
between the Parties concurrently with the execution and delivery of this
Agreement on the date of this Agreement (the “Closing Date”).  The transfers and
deliveries occurring at the Closing are mutually interdependent and shall be
regarded as occurring simultaneously, and, notwithstanding any other provision
of this Agreement, no such transfer or delivery shall become effective or shall
be deemed to have occurred until all of the other transfers and deliveries to
occur at the Closing shall have also occurred or been waived in writing by the
Party entitled to waive the same.  Such transfers and deliveries shall be deemed
to have occurred, and the Closing shall be effective, as of 10:00 a.m., Pacific
time, on the Closing Date.
2.2.          Termination.  This Agreement may be terminated prior to the
Closing as follows:
(a)          At the election of the Sellers’ Representative (on behalf of the
Sellers) or the Purchaser on or after December 31, 2016, if the Closing shall
not have occurred by the close of business on such date, provided that the
terminating party is not in material default of any of its obligations
hereunder;
(b)          by mutual written consent of the Purchaser and the Sellers’
Representative (on behalf of the Sellers);
(c)          by the Sellers’ Representative (on behalf of the Sellers) or the
Purchaser if there shall be in effect a final nonappealable Judgment of a
Governmental Entity of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
(d)          by the Purchaser if there shall have been a material breach of any
representation, warranty, covenant or agreement of the Sellers set forth in this
Agreement, which breach would give rise to a failure of a condition set forth in
Sections 7.1(a) or 7.1(b) and is incapable of being cured or, if capable of
being cured, shall not have been cured within thirty (30) days following the
date of the notice of such breach from the Purchaser to the Sellers’
Representative; or
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(e)          by the Sellers’ Representative (on behalf of the Sellers) if there
shall have been a material breach of any representation, warranty, covenant or
agreement of the Purchaser set forth in this Agreement, which breach would give
rise to a failure of a condition set forth in Sections 7.2(a) or 7.2(b) and is
incapable of being cured or, if capable of being cured, shall not have been
cured within thirty (30) days following receipt by the Purchaser of notice of
such breach from the Sellers’ Representative.
2.3.          Procedure Upon Termination.  In the event of termination and
abandonment by the Purchaser or the Sellers’ Representative (on behalf of the
Sellers), or both, pursuant to Section 2.2 hereof, written notice thereof shall
forthwith be given to the other party or parties, and this Agreement shall
terminate, and the transactions contemplated by this Agreement shall be
abandoned, without further action by the Purchaser, the Sellers, the Company or
the Sellers’ Representative.
2.4.          Effect of Termination.  In the event that this Agreement is
validly terminated as provided herein, then each of the parties shall be
relieved of their duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to the
Purchaser, the Sellers, the Sellers’ Representative or the Company; provided,
however, that (i) the obligations of the parties set forth in this Section 2.4
and Article XI (General Provisions) hereof shall survive any such termination
and shall be enforceable hereunder and (ii) nothing in this Section 2.4 shall
relieve the Purchaser, the Sellers, the Sellers’ Representative or the Company
of any liability for a breach of this Agreement prior to the effective date of
termination.
ARTICLE III 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to such exceptions as are disclosed in the disclosure letter dated the
date of this Agreement and delivered herewith to the Purchaser (the “Disclosure
Letter”) referencing the appropriate Section or subsection of this Article III
(or as may be otherwise readily apparent on the face of the Disclosure Letter as
responsive to any other Section of this Article III), the Company hereby
represents and warrants to the Purchaser as of the date of this Agreement as
follows (for the avoidance of doubt, for purposes of this Agreement, the assets
and liabilities acquired by the Company pursuant to the terms of the Asset
Purchase Agreement shall be included as assets and liabilities of the Company in
all respects):
3.1.          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 California.  The Company has all
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business.  Section 3.1 of the Disclosure Letter
sets forth, as of the date of this Agreement, each jurisdiction where the
Company is duly qualified to do business as a foreign corporation. The Company
is duly qualified or licensed to do business and is in good standing as a
foreign corporation in each jurisdiction in which the conduct of its business or
the ownership, leasing, holding or use of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or licensed or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect.
(b)          The Company has made available to the Purchaser a correct and
complete copy of the Company’s Constitutional Documents, each as amended and in
effect as of the date hereof.  The Company’s Constitutional Documents are in
full force and effect and the Company is not in violation of any provision of
its Constitutional Documents.  The stock and minute books of the Company made
available to the Purchaser for review are correct and complete, no further
entries have been made through the date of this Agreement, and such stock and
minute books contain an accurate record of all material corporate actions of the
Board of Directors (and any committees thereof) and shareholders of the Company
taken by written consent or at a meeting.
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3.2.          Organization and Qualification of the Subsidiaries.
(a)          Except for the Persons listed in Section 3.2(a) of the Disclosure
Letter, the Company does not own or control, and has never owned or controlled,
directly or indirectly, any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture, other business entity
or Person.  The Company does not have, and has never had, any commitment or
obligation to invest in, purchase any securities or obligations of, fund,
guarantee, contribute or maintain the capital of, or otherwise financially
support any corporation, partnership, limited liability company, joint venture
or other business entity.
(b)          Section 3.2(b) of the Disclosure Letter sets forth, as of the date
of this Agreement, the name of each Subsidiary of the Company and, with respect
to each such Subsidiary of the Company, the type of entity and the jurisdiction
in which it is incorporated or organized.  Each Subsidiary of the Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation or organization.  Each Subsidiary of the
Company has all requisite corporate power and authority to own, lease, and
operate its properties and to carry on its business.  Each Subsidiary of the
Company is duly qualified or licensed to do business and is in good standing as
a foreign corporation in each jurisdiction in which the conduct of its business
or the ownership, leasing, holding or use of its properties makes such
qualification necessary, except such jurisdictions where the failure to be so
qualified or licensed or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect.  Section 3.2(b) of the Disclosure
Letter lists each jurisdiction where each Subsidiary of the Company is duly
qualified to do business as a foreign corporation.
(c)          The Company has made available to the Purchaser a correct and
complete copy of each of its Subsidiaries’ Constitutional Documents, each as
amended and in effect as of the date hereof.  The Constitutional Documents of
each Subsidiary of the Company are in full force and effect and no Subsidiary of
the Company is in violation of any provision of its Constitutional Documents. 
The stock and minute books of each Subsidiary of the Company made available to
the Purchaser for review are correct and complete, no further entries have been
made through the date of this Agreement, and such stock and minute books contain
an accurate record of all material actions of the Board of Directors (and any
committees thereof) and shareholders (or other governing body) of each
Subsidiary of the Company taken by written consent or at a meeting.
3.3.          Capitalization.
(a)          Section 3.3(a) of the Disclosure Letter lists (i) the authorized
Equity Securities of the Company and each of its Subsidiaries, (ii) the number
and kind of Equity Securities of the Company that are issued and outstanding as
of the date of this Agreement and the shareholders of record thereof, and
(iii) the number and kind of Equity Securities of each of the Company’s
Subsidiaries that are issued and outstanding as of the date of this Agreement
and the equity holders of record thereof.  All of the outstanding Equity
Securities of the Company and each of its Subsidiaries are duly authorized,
validly issued, fully paid and non-assessable and were not issued in violation
of any purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right under any of the Constitutional
Documents of the Company or any of its Subsidiaries, as applicable, or any
Contract to which the Company or any Subsidiary is or was a party to.  Except as
set forth in Section 3.3(a) of the Disclosure Letter and except for the rights
granted to the Purchaser under this Agreement, there are no outstanding options,
warrants, calls, demands, stock appreciation rights, Contracts, rights of first
refusal, preemptive rights, subscription rights or other rights of any nature to
purchase, obtain or acquire, obligating the Company or any of its Subsidiaries
to repurchase or redeem, or otherwise relating to, or any outstanding securities
or obligations convertible into or exchangeable for, or any voting agreements
with respect to, any Equity Securities of the Company or any of its
Subsidiaries.  Immediately prior to the Closing, the Company will not have any
outstanding Equity Securities other than the Shares as set forth in
Section 3.3(a) of the Disclosure Letter.  All of the outstanding Equity
Securities of the Company and its Subsidiaries have been issued in compliance
with all requirements of Laws and Contracts applicable to the
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Company and the Subsidiaries and their respective Equity Securities.  To the
Company’s Knowledge, all of the outstanding Equity Securities of the Company are
owned by the Sellers free and clear of any and all Liens of any kind
whatsoever.  No Equity Securities are held by the Company or any of its
Subsidiaries as treasury stock.
(b)          The Company has not adopted, sponsored or maintained any stock
option plan or any other plan or agreement providing for equity-related
compensation to any Person (whether payable in shares, cash or otherwise) and
there are no outstanding or authorized stock appreciation, phantom stock, profit
participation or other similar rights with respect to the Company (whether
payable in shares, cash or otherwise).
3.4.          Authority.  The Company has all requisite corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements
executed and delivered or to be executed and delivered by the Company in
connection with the transactions provided for hereby, to perform all of its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.  The execution and delivery by the Company of
this Agreement and the Ancillary Agreements, the performance by each of the
Company of all of its obligations hereunder and thereunder and the consummation
by the Company of the transactions contemplated hereby and thereby have been
duly authorized by all necessary and proper corporate action on its part, and no
additional corporate proceedings or actions on the part of the Company are
necessary to authorize the execution and delivery by the Company of this
Agreement and the Ancillary Agreements, the performance by the Company of all of
its obligations hereunder and thereunder and the consummation by the Company of
the transactions contemplated hereby and thereby.  This Agreement has been duly
executed and delivered by the Company.  This Agreement and each Ancillary
Agreement to which the Company is a party constitutes, or upon execution and
delivery will constitute, the legal, valid and binding obligation of the
Company, enforceable against them in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar Laws relating to or affecting the
enforcement of creditors’ rights in general and by general principles of equity.
3.5.          No Conflict.  Subject to the receipt of the Consents listed in
Section 3.5 of the Disclosure Letter, the execution, delivery and performance by
the Company of this Agreement and the Ancillary Agreements and the consummation
by the Company of the transactions contemplated hereby and thereby will not,
with or without the giving of notice or the lapse of time or both, (a) result in
the creation of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries, (b) conflict with the Constitutional Documents of the
Company or any of its Subsidiaries, each as amended to date, or (c) conflict
with, result in a breach or violation of, constitute a default under, result in
the acceleration of, create in any Person the right to accelerate, terminate,
modify or cancel, or require any notice, Consent or waiver under, or result in
the loss of any benefit to which the Company or any of its Subsidiaries is
entitled under, any Contract, Law, Permit or Judgment binding upon or applicable
to the Company, any of its Subsidiaries or any of their respective properties or
assets.
3.6.          Consents.
(a)          Except as set forth on Section 3.6(a) of the Disclosure Letter, no
Consent under any Contract is required to be obtained, and the Company is not or
will not be required to give any notice to, any Person in connection with the
execution, delivery or performance of this Agreement or any other Ancillary
Agreement by the Company or the consummation of the transactions contemplated
hereby or thereby.  For purposes of this Agreement, a Consent will be deemed
“required to be obtained,” and a notice will be deemed “required to be given,”
if the failure to obtain such Consent or give such notice could result in the
Company becoming subject to any liability, being required to make any payment or
losing or foregoing any right or benefit.
(b)          Except as set forth on Section 3.6(b) of the Disclosure Letter
(collectively with the consent set forth on Section 3.6(a) of the Disclosure
Letter, the “Required Consents”), no Consent of any
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Governmental Entity is required to be obtained from, and no filing is required
to be made with, any Governmental Entity, by the Company either (i) in
connection with the execution, delivery and performance of this Agreement or any
other Ancillary Agreement by the Company, or (ii) the consummation of the
transactions contemplated hereby or thereby.
3.7.          Financial Statements.
(a)          Section 3.7 of the Disclosure Letter sets forth (i) the unaudited
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 2014 and 2015 and the unaudited consolidated statements of income and cash
flows of the Company and its Subsidiaries for the fiscal years then ended (the
“Unaudited Financial Statements”), and (ii) the unaudited consolidated balance
sheet of the Company and its Subsidiaries (the “Company Balance Sheet”) as of
June 30, 2016 (the “Balance Sheet Date”) and the related unaudited consolidated
statements of income and cash flows of the Company and its Subsidiaries for the
six (6)-month period then ended (the “Interim Financial Statements” and,
together with the Unaudited Financial Statements, the “Company Financial
Statements”).  The Company Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods indicated, except
that the Interim Financial Statements do not contain footnotes and are subject
to normal year-end adjustments, none of which are reasonably expected to have a
material impact on the results of operations of the Company and its
Subsidiaries.  The Company Financial Statements present fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of the Company and its Subsidiaries as of the dates and for the periods
indicated therein.  The books and records of the Company and its Subsidiaries
for the periods covered by the Company Financial Statements have been, and the
current books and records of the Company and its Subsidiaries are being,
maintained in all material respects in accordance with applicable legal and
accounting requirements, and the Company Financial Statements are consistent
with such books and records.
(a)          The accounts receivable reflected on the Company Balance Sheet, and
all of the accounts receivable of the Company and its Subsidiaries arising since
the Balance Sheet Date, arose from bona fide transactions in the ordinary course
of business, and the goods and services involved have been sold, delivered and
performed to the account obligors, and no further filings (with governmental
agencies, insurers or others) are required to be made, no further goods are
required to be provided and no further services are required to be rendered to
properly reflect such accounts receivable on a balance sheet in accordance with
GAAP.  No such account has been assigned or pledged to any Person and, except
only to the extent fully reserved against as set forth on the Company Balance
Sheet, no defense or set-off to any such account has been asserted by the
account obligor or exists.
(b)          All accounts payable and notes payable of the Company arose in bona
fide arm’s length transactions in the ordinary course of business and no such
account payable or note payable is delinquent in its payment.  Since the Balance
Sheet Date, the Company has paid its accounts payable in the ordinary course of
its business and in a manner which is consistent with its past practices.
(c)          The Company and its Subsidiaries maintain in all material respects
an adequate system of internal controls and procedures of the accounting
practices, procedures and policies employed by the Company and its
Subsidiaries.  There have not been any significant deficiencies or material
weaknesses in the financial reporting of the Company and its Subsidiaries which
are or were reasonably likely to materially and adversely affect the ability to
record, process, summarize and report financial information, or any fraud
(whether or not material) that involved management or other employees who have
or had a significant role in financial reporting.
3.8.          No Undisclosed Liabilities.  Except for (i) the liabilities
reflected or reserved against on the Company Balance Sheet, (ii) trade payables
and accrued expenses incurred by the Company or any of its Subsidiaries since
the Balance Sheet Date in the ordinary course of business, (iii) executory
contract obligations under (x) Contracts listed in Section 3.13 of the
Disclosure Letter or (y) Contracts not required to be listed in Section 3.13 of
the Disclosure Letter, and (iv) liabilities with respect to matters disclosed on
the
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Disclosure Letter, neither the Company nor any of its Subsidiaries has any
liabilities, obligations or commitments (whether accrued, absolute, contingent,
unliquidated, known, unknown, due or to become due or otherwise, and regardless
of when asserted, and whether or not of a nature required to be reflected or
reserved against in a balance sheet in accordance with GAAP).
3.9.          Absence of Certain Changes.  Since the Balance Sheet Date,
(i) there have not been any events, occurrences, changes, developments or
circumstances that had, or would reasonably be anticipated to have, a Material
Adverse Effect, and (ii) neither the Company nor any of its Subsidiaries has
taken any Material Action.
3.10.          Title to Assets and Properties; Equipment and Other Tangible
Properties.
(a)          The Company and its Subsidiaries have good and valid title to, or,
in the case of leased properties and assets, a valid leasehold interest in, or
otherwise have a valid legal right to use, all of their respective material
tangible personal assets and properties (i) reflected on the Company Balance
Sheet or acquired after the Balance Sheet Date, other than assets and properties
disposed of in the ordinary course of business consistent with past practice
since the Balance Sheet Date, or (ii) necessary to conduct the business and
operations of the Company and its Subsidiaries as currently conducted.  All of
said properties and assets that are owned by the Company or any of its
Subsidiaries are owned free and clear of any Liens, other than Permitted Liens.
(b)          The equipment, furniture, machinery, vehicles, spare parts,
structures, fixtures and other tangible property of the Company and its
Subsidiaries (the “Tangible Company Properties”) are (i) in good operating
condition and repair consistent with normal industry standards, except for
ordinary wear and tear, and except for such Tangible Company Properties as shall
have been taken out of service on a temporary basis for repairs or replacement
consistent with the prior practices of the Company and its Subsidiaries and
normal industry standards, and (ii) in compliance in all material respects with
all federal and state safety standards.  To the Company’s knowledge, the
Tangible Company Properties are free of any structural or engineering defects,
and there has not been any significant interruption of the business of the
Company and its Subsidiaries due to inadequate maintenance or obsolescence of
the Tangible Company Properties.
3.11.          Owned and Leased Real Property.
(a)          Section 3.11(a) of the Disclosure Letter contains a list of each
lease, sublease or license pursuant to which the Company or any of its
Subsidiaries leases or licenses the use or occupancy of any real property as of
the date of this Agreement (each, a “Lease” and, such real property, the “Leased
Real Property”).  Each Lease is valid and binding on the Company and any of its
Subsidiaries party thereto and, to the Company’s Knowledge, each other party
thereto, and is in full force and effect.  There is no material breach or
default under any Lease by the Company or any of its Subsidiaries or, to the
Company’s Knowledge, any other party thereto.  No event has occurred that with
or without the lapse of time or the giving of notice or both would constitute a
material breach or default under any Lease by the Company or any of its
Subsidiaries or, to the Company’s Knowledge, any other party thereto.  The
Company or one of its Subsidiaries that is either the tenant or licensee named
under a Lease has a good and valid leasehold interest in and to the Leased Real
Property, and, except to the extent of the portion of any Leased Real Property
under a sublease, is in possession of the Leased Real Property.  Neither the
Company, any of its Subsidiaries nor any of their respective authorized agents
or employees has received written notice of any claimed abatements, offsets,
defenses or other bases for relief or adjustment with respect to any Lease.
(b)          Section 3.11(b) of the Disclosure Letter contains a list of all
real property owned by the Company or any of its Subsidiaries (the “Owned Real
Property”). The Company or the Subsidiary shown in Section 3.11(b) of the
Disclosure Letter as the record owner of such parcel of Owned Real Property has
good and marketable fee simple title to the Owned Real Property free and clear
of all Liens other than
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Permitted Liens.  There are no outstanding agreements, options, rights of first
offer or rights of first refusal on the part of any Person to purchase or lease
any Owned Real Property.
(c)          With respect to each Leased Real Property and Owned Real Property,
(i) there are no pending or, to the Company’s Knowledge, contemplated, rezoning
or special designation proceedings affecting any of the Leased Real Property or
the Owned Real Property, (ii) there are no pending or, to the Company’s
Knowledge, threatened, condemnation proceedings related to any of the Leased
Real Property or the Owned Real Property, (iii) all of the buildings,
structures, appurtenances and other improvements situated on any of the Leased
Real Property or the Owned Real Property have been maintained in accordance with
the Company’s usual business practices, and are in good operating condition and
in a state of good maintenance and repair, are adequate for the purposes for
which they are presently being used and none of such buildings, structures,
appurtenances, fixtures or other improvements, nor the operation or maintenance
thereof, violates any restrictive covenant, applicable building, zoning or other
applicable land use Laws, and (iv) each parcel of Owned Real Property and Leased
Real Property has adequate rights for ingress and egress for operation of their
respective businesses in the ordinary course of business, and for service of
such property by sewer, water, gas, electric, telephone and other utilities in
sufficient capacities as are necessary for operation of their respective
businesses in the ordinary course of business.
3.12.          Intellectual Property.
(a)          Section 3.12(a) of the Disclosure Letter (i) sets forth a list and
description of all Registered Intellectual Property included in the Company
Intellectual Property and (ii) specifies, where applicable, the jurisdictions in
which any Registered Intellectual Property has been registered or in which an
application for such registration has been filed, including the respective
registration or application numbers and the names of all registered owners.  The
Company Intellectual Property includes all intellectual property rights
necessary for the Company and its Subsidiaries to conduct their businesses as
presently being conducted.  No interest in the Company Intellectual Property has
been assigned, transferred, licensed or sublicensed by the Company or any of its
Subsidiaries to any Person.  The Company and its Subsidiaries are in compliance
in all material respects with all legal requirements applicable to the Company
Intellectual Property and the Company’s and its Subsidiaries’ ownership and use
thereof.
(b)          The Company and its Subsidiaries are the sole owners of all right,
title and interest in and to the Registered Intellectual Property owned by them,
and all governmental fees as well as all registration, maintenance and renewal
fees associated therewith and due as of the date hereof have been paid in full. 
With respect to the Registered Intellectual Property, such registrations,
filings or issuances were duly made and remain in full force and effect.  With
respect to all Company Intellectual Property, the Company or one of its
Subsidiaries either owns such Company Intellectual Property free and clear of
any and all Liens (other than Permitted Liens) or, with respect to the Company
Intellectual Property which is not owned by the Company or one of its
Subsidiaries, the Company or one of its Subsidiaries are validly licensed or
otherwise possess valid and enforceable rights to use such Company Intellectual
Property as currently used in the conduct of business operations of the Company
and its Subsidiaries.  No royalties, honorariums or fees are payable by the
Company or any of its Subsidiaries to any Person by reason of the ownership or
use of any of the Company Intellectual Property.
(c)          Neither the Company nor any of its Subsidiaries in the operation of
its businesses, no service of the Company or any of its Subsidiaries and no
utilization of the Company Intellectual Property by or on behalf of the Company
or any of its Subsidiaries infringes, violates or misappropriates the
intellectual property rights of any third party.  There have been no claims made
against the Company or any of its Subsidiaries asserting the infringement,
violation, misappropriation, invalidity, abuse, misuse or unenforceability of
any of the Company Intellectual Property and, to the Company’s Knowledge, no
grounds for any such claims exist.  Neither the Company nor any of its
Subsidiaries has received any written notice that it is in conflict with or
infringing upon the asserted intellectual property rights of others in
connection with the Company Intellectual Property.  Neither the Company nor any
of its Subsidiaries has made any claim of any
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violation or infringement by others of any of the Company Intellectual Property
or interests therein and, to the Company’s Knowledge, no grounds for any such
claims exist.
(d)          Section 3.12(d) of the Disclosure Letter identifies all license
agreements as to which the Company or any of its Subsidiaries is a party and
pursuant to which the Company or any of its Subsidiaries is authorized to use,
or authorizes any third party to use, any Company Intellectual Property (other
than commercial off-the-shelf software licenses).  None of the Company or any of
its Subsidiaries nor, to the Company’s Knowledge, any other party or parties
thereto, is in violation or default in any material respect of any such license
agreements.
(e)          No former or current employees, agents, consultants and independent
contractors of the Company or any of its Subsidiaries have (i) asserted any
claim against the Company or any of its Subsidiaries in connection with such
Person’s involvement in the conception and development of any Intellectual
Property, and, to the Company’s Knowledge, no such claim has been threatened, or
(ii) been named as an inventor on any patent owned by, or pending patent
application by, the Company or any of its Subsidiaries for any device, process,
design or invention of any kind now used or needed by the Company or any of its
Subsidiaries in the furtherance of their businesses, except for inventions that
have been assigned to the Company or any of its Subsidiaries, with an assignment
thereof duly recorded in the U.S. Patent and Trademark Office.
(f)          To the extent any of the Company Intellectual Property constitutes
proprietary or confidential information, the Company and its Subsidiaries have
taken steps reasonable under the circumstances to adequately safeguard such
information from disclosure.
3.13.          Contracts.
(a)          Section 3.13(a) of the Disclosure Letter lists each of the
following Contracts to which the Company or one of its Subsidiaries is a party
or by which any of their respective assets or properties is bound:
(i)          any Contract relating to the employment or retention of consulting
services of any Person (including employment agreements, consulting agreements,
severance arrangements, retention arrangements, change of control arrangements,
transaction bonus or payment arrangements and any Contracts related to employee
benefits or compensation or payments to any Company employees that are not
available on the same terms to employees of the Company and its Subsidiaries
generally);
(ii)          any Contract containing a covenant not to compete or other
covenant restricting the development, marketing, sale or distribution of the
services of the Company or any of its Subsidiaries or otherwise restricting or
limiting the ability of the Company or any of its Subsidiaries to do business;
(iii)          any Contract with any current or former officer, director,
employee, consultant or shareholder of the Company or any of its Subsidiaries
(other than any employment and consulting Contracts covered by clause (i)
above);
(iv)          any lease, sublease or similar Contract with any Person under
which the Company or any of its Subsidiaries (A) is lessee of, or holds or uses,
any machinery, equipment, vehicle or other tangible personal property owned by
any Person or (B) is a lessor or sublessor of, or makes available for use by any
Person, any tangible personal property owned or leased by the Company or any of
its Subsidiaries, in any such case in the foregoing clause (A) or in this clause
(B) which has an aggregate future liability or receivable, as the case may be,
in excess of $25,000;
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(v)            any Contract requiring payments to or from the Company or any of
its Subsidiaries in excess of $75,000 annually or $150,000 in the aggregate;
(vi)           any Contract for capital expenditures by the Company or any of
its Subsidiaries in excess of $25,000;
(vii)          any Contract evidencing, securing or otherwise relating to Debt
incurred by the Company or any of its Subsidiaries, including guarantees of such
Debt by the Company or any of its Subsidiaries;
(viii)          any Contract under which the Company or any of its Subsidiaries
has, directly or indirectly, made, committed to make or is otherwise obligated
to make any advance, loan, extension of credit or capital contribution to, or
other investment in, any Person (other than extensions of trade credit in the
ordinary course of business), in any such case which, individually or together
with any similar advances, loans, extensions of credit, capital contributions or
investments (and any commitments or obligations to make any of the foregoing),
is in excess of $25,000;
(ix)            any guaranty, surety or performance bond or letter of credit
issued or posted, as applicable, by the Company or any of its Subsidiaries;
(x)             any Contract under which any Governmental Entity has any
material rights or that requires consent, approval or waiver of, or notice to, a
Governmental Entity in connection with the transactions contemplated by this
Agreement;
(xi)            any preferential purchase right, right of first refusal or
similar Contract;
(xii)           any Contract for any joint venture, partnership or similar
arrangement;
(xiii)          any Contract with any Material Customer or Material Supplier;
(xiv)          any collective bargaining agreement or any Contract with any
union to which a Company or Subsidiary is a party or by which a Company or
Subsidiary is bound;
(xv)           any Contract relating to or concerning Company Intellectual
Property; and
(xvi)          any Contract that grants a counterparty “most favored nation” or
similar rights.
(b)          All Contracts listed or required to be listed in Section 3.13(a) of
the Disclosure Letter (the “Company Material Contracts”) are valid and binding
on the Company and any of its Subsidiaries party thereto and, to the Company’s
Knowledge, each other party thereto, and are in full force and effect.  The
Company and its Subsidiaries have performed in all material respects all
obligations required to be performed by them to date under the Company Material
Contracts, and they are not (with or without the lapse of time or the giving of
notice, or both) in material breach or default thereunder and, to the Company’s
Knowledge, no other party to any Company Material Contract is (with or without
the lapse of time or the giving of notice, or both) in material breach or
default thereunder.  Neither the Company nor any of its Subsidiaries has
received any written (or, to the Company’s Knowledge, oral) notice of the
intention of any party to terminate, cancel, not renew (to the extent
applicable) or fail to perform any material obligation under any Company
Material Contract.
3.14.          Litigation.
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(a)          There is no Legal Action pending or, to the Company’s Knowledge,
threatened against or affecting the Company or any of its Subsidiaries, any of
their respective properties or assets.  None of the Company, any of its
Subsidiaries or their respective properties or assets is subject to any Judgment
that materially impairs the Company’s or such Subsidiary’s ability to conduct
its business as currently conducted.  Section 3.14(a) of the Disclosure Letter
lists all material Legal Actions relating to the Company and its Subsidiaries
that were pending, settled or adjudicated.
(b)          There is no Legal Action pending or, to the Company’s Knowledge,
threatened against or affecting the Company or any of its Subsidiaries or any of
their respective properties or assets or otherwise that would reasonably be
expected to have a material adverse effect on the ability of the Company to
perform its obligations pursuant to this Agreement or to consummate the
transactions contemplated hereby in a timely manner or that in any manner draws
into question the validity of this Agreement.
3.15.          Compliance with Laws.  The Company and each of its Subsidiaries
and their respective properties and assets are, and at all times have been, in
material compliance with all applicable Law.  Without limiting the generality of
the foregoing, (i) no formal or informal non-routine administrative, civil or
criminal investigation, audit or review relating to the Company or any of its
Subsidiaries or any of their respective properties or assets is being (or has
been) conducted by any commission, board or other Governmental Entity, and, to
the Company’s Knowledge, no such investigation, audit or review is scheduled,
pending or threatened, (ii) neither the Company nor any of its Subsidiaries has
received or entered into any material citations, complaints, consent orders,
imminent hazard orders, revocations of authority, compliance schedules or other
similar enforcement orders, or has received any written notice from any
Governmental Entity or any other written notice that would indicate that there
is not currently material compliance with all such applicable Law or Judgment,
and (iii) neither the Company nor any of its Subsidiaries is in material default
under, and, to the Company’s Knowledge, no condition exists (whether covered by
insurance or not) that with or without notice or lapse of time or both would
constitute a material default under, or material breach or violation of, any
Law, Judgment or Permit applicable to the Company and its Subsidiaries or any of
their respective properties or assets.
3.16.          Permits and Authorizations.
(a)          The Company and each of its Subsidiaries possess all material
Permits required to own or hold under lease or license and operate its
properties and assets and to conduct its business as currently conducted, and
all such Permits (except for any single use, special load Permits) are listed in
Section 3.16(a) of the Disclosure Letter.  All such Permits are in full force
and effect, and the Company and its Subsidiaries have complied in all material
respects with all terms and conditions thereof.  Neither the Company nor any of
its Subsidiaries has received written (or, to the Company’s Knowledge, oral)
notice of any Legal Action relating to the revocation, violation, forfeiture or
modification of any such Permits and, to the Company’s Knowledge, no such Legal
Action is threatened, and no Legal Action has been taken or, to the Company’s
Knowledge, threatened in connection with the expiration or renewal of such
Permits which could reasonably be expected to materially adversely affect the
ability of the Company and its Subsidiaries to own, lease, license, operate, use
or maintain any of their assets or properties or to conduct their businesses and
operations as presently conducted.  The Company and each of its Subsidiaries
have at all times been in compliance in all material respects with all Permits
held by it.  No violations have occurred that remain uncured, unwaived or
otherwise unresolved, or are occurring in respect of any such Permits, other
than immaterial violations.  To the Company’s Knowledge, (i) no circumstances
exist that would prevent or delay the obtaining of any requisite consent,
approval, waiver or other authorization of the transactions contemplated hereby
with respect to such Permits that by their terms or under applicable Law may be
obtained only after the Closing, and (ii) there exists no set of facts which
would reasonably be expected to result in the recall, withdrawal or suspension
of any registration, license or other Permit, approval or consent of any
Governmental Entity with respect to the Company or any of its Subsidiaries. 
There is not pending or, to the Company’s Knowledge, threatened, any Legal
Action, written (or to the Company’s Knowledge, oral) notice of violation, order
of forfeiture, or written (or to the Company’s Knowledge, oral) complaint or
investigation against the Company or any of its
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Subsidiaries or their employees relating to any Permits.  To the Company’s
Knowledge, all Persons employed or engaged by the Company or any of its
Subsidiaries which are required to hold Permits as a result of or in connection
with their job functions with the Company or any of its Subsidiaries hold all
such Permits, and the Company and its Subsidiaries have implemented commercially
reasonable controls designed to provide reasonable assurance that all such
Persons maintain such requisite Permits in full force and effect at all relevant
times.
(b)          Section 3.16(b) of the Disclosure Letter sets forth a list of all
material authorizations, consents, approvals, franchises, licenses and permits
of Persons (other than Governmental Entities) that are required to be obtained
by the Company or any of its Subsidiaries for the operation of their businesses
as presently operated (the “Other Person Authorizations”).  All of the Other
Person Authorizations have been duly issued or obtained and are in full force
and effect, and the Company and its Subsidiaries are in compliance in all
material respects with the terms of all the Other Person Authorizations.  To the
Company’s Knowledge, (i) there are no facts that would cause the Company or any
of its Subsidiaries to believe that the Other Person Authorizations will not be
renewed by the appropriate Person in the ordinary course, and (ii) each of the
Other Person Authorizations will continue in full force and effect following the
Closing without (A) the occurrence of any breach, default or forfeiture of
rights thereunder, or (B) the consent, approval or act of, or the making of any
filings with, any Person.
3.17.          Insurance.  Section 3.17 of the Disclosure Letter sets forth as
of the date of this Agreement a list of all insurance policies covering the
assets, business, equipment, properties, operations or Employees of the Company
or any of its Subsidiaries, all of which are in full force and effect.  Such
insurance policies are sufficient for compliance by the Company and its
Subsidiaries in all material respects with all applicable Laws and all Company
Material Contracts.  Section 3.17 of the Disclosure Letter sets forth a correct
and complete list of all claims by the Company or any of its Subsidiaries
pending under any of such policies.  There is no claim by the Company or any of
its Subsidiaries pending under any of such policies as to which coverage has
been questioned, denied or disputed or that the Company has a reason to believe
will be denied or disputed by the underwriters of such policies or bonds and, to
the Company’s Knowledge, there is no pending claim that will exceed the policy
limits.  All premiums due and payable under all such policies and bonds have
been paid (or if installment payments are due, will be paid if incurred prior to
the Closing) and the Company and its Subsidiaries are otherwise in material
compliance with the terms of such policies.  None of the insurance carriers has
provided written (or, to the Company’s Knowledge, oral) notice to the Company or
any of its Subsidiaries of its intention to cancel any such policy or to
materially increase any insurance premiums, or that any insurance required to be
listed in Section 3.17 of the Disclosure Letter will not be available in the
future on substantially the same terms as currently in effect.
3.18.          Environmental Matters.
(a)          All reports prepared by or on behalf of the Sellers, the Company or
any of its Subsidiaries concerning environmental investigations, audits,
assessments and remedial activities conducted by or on behalf of the Company or
any of its Subsidiaries since December 31, 2008 have been made available to the
Purchaser.
(b)          There are no Legal Actions pending or, to the Company’s Knowledge,
threatened against the Company or any of its Subsidiaries, or any claims,
investigations, litigation or Judgments involving the Company or any of its
Subsidiaries, relating to Environmental Laws or relating to any real property
currently or formerly owned, leased or otherwise used by the Company or any of
its Subsidiaries (collectively, “Environmental Claims”), the disposition of
which may result in: (i) liability against the Company or any of its
Subsidiaries for penalties, fines, environmental costs, damages, monitoring,
maintenance of wells, testing, sampling, response, remedial or inspection costs
or other monetary relief; (ii) interruption of the operations or business of the
Company or any of its Subsidiaries; or (iii) the making of a capital
expenditure.
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(c)          The Company and each of its Subsidiaries are, and at all times have
been, in material compliance with all applicable Environmental Laws.
(d)          Neither the Company nor any of its Subsidiaries has received any
written notice of violation, demand letter or notice of claim from a
Governmental Entity or other Person with respect to any Environmental Claim or
the presence of Hazardous Materials in, on, under, about, migrating onto or
emanating from any real property currently or formerly owned, leased or
otherwise used by the Company or any of its Subsidiaries.  Neither the Company,
any of its Subsidiaries nor, to the Company’s Knowledge, any prior owner, lessee
or operator of any real property currently or formerly owned, leased or
otherwise used by the Company or any of its Subsidiaries, has caused or
permitted any Hazardous Material to be used, generated, reclaimed, transported,
Released, treated, stored or disposed or arranged to be transported or disposed
of in a manner which would reasonably form the basis for an Environmental Claim
against the Company, any of its Subsidiaries or the Purchaser.  No Hazardous
Materials have been stored or otherwise located, and no underground storage
tanks or surface impoundments have been located, on real property currently
owned, leased or used by the Company or any of its Subsidiaries or, to the
Company’s Knowledge, on adjacent parcels of real property or real property
formerly owned, leased or used by the Company or any of its Subsidiaries.  To
the Company’s Knowledge, no part of any real property currently or formerly
owned, leased or used by the Company or any of its Subsidiaries or any adjacent
parcels of real property, including the groundwater located thereon, is
presently contaminated by Hazardous Materials.
(e)          Neither the Company nor any of its Subsidiaries has (i) entered
into or agreed to any Judgment requiring compliance by the Company or any of its
Subsidiaries with any Environmental Law or the investigation or cleanup of
Hazardous Materials, or (ii) assumed any liability of any Person for cleanup,
compliance or required capital expenditures in connection with any Environmental
Claim.
(f)          To the Company’s Knowledge, there are no asbestos-containing
materials or equipment or other devices containing polychlorinated biphenyls on,
at or under the Owned Real Property or the Leased Real Property.  All damaged
friable asbestos-containing materials that to the Company’s Knowledge are on or
at the Owned Real Property or the Leased Real Property have been maintained,
repaired, encapsulated or removed in accordance with applicable Environmental
Laws.
3.19.          Employment Matters.
(a)          (i) There is not, and there has never been, any labor strike,
dispute, work stoppage, work slowdown, or lockout pending or, to the Company’s
Knowledge, threatened, against or affecting the Company or any of its
Subsidiaries; (ii) to the Company’s Knowledge, no union organizational campaign,
petition or other unionization activities is in progress with respect to the
Employees of the Company or any of its Subsidiaries; (iii) neither the Company
nor any of its Subsidiaries has ever engaged in any unfair labor practices and
there are not any unfair labor practice charges or complaints against the
Company or any of its Subsidiaries pending or, to the Company’s Knowledge,
threatened, before the National Labor Relations Board or any other applicable
Governmental Entity, nor have there ever been any such pending charges or
complaints; (iv) there are not any pending or, to the Company’s Knowledge,
threatened, charges against the Company or any of its Subsidiaries or any of
their Employees before the Equal Employment Opportunity Commission or any state
or local agency responsible for the prevention of unlawful employment
practices;  (v) neither the Company nor any of its Subsidiaries has received any
written (or, to the Company’s Knowledge, oral) communication during the twelve
(12) months immediately preceding the date of this Agreement of the intent of
any Governmental Entity responsible for the enforcement of labor or employment
Laws to conduct an investigation or audit of it and/or to initiate a claim or
action against it, and, to the Company’s Knowledge, no such investigation or
audit is in progress; (vi) there are no union, labor or collective bargaining
agreements to which the Company is a party or otherwise bound relating to any
employee or employment practices, wages, hours or terms or conditions of
employment and no Company employee, to the Company’s Knowledge, is represented
by a union; (vii) the Company is not a party to or otherwise bound by any
consent decree or order with, or citation by, any Governmental Entity relating
to any
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employee or employment practices, wages, hours or terms or conditions of
employment; and (viii) there are no unsatisfied obligations, claims, lawsuits,
grievances, workers’ compensation proceedings or similar proceedings in respect
of the Company.
(b)          The Company and each of its Subsidiaries (i) are, and at all times
have been, in compliance in all material respects with all applicable Laws
respecting employment of labor, including those related to wages, hours,
eligibility for and payment of overtime compensation, meal and rest break
periods, worker classification (including the proper classification of
independent contractors and consultants), Tax withholding, collective
bargaining, unemployment insurance, workers’ compensation, immigration, equal
employment opportunities, harassment, retaliation, and discrimination in
employment, disability rights and benefits, disability accommodation, leaves of
absence, employee privacy, affirmative action, plant closing and mass layoff
issues, occupational safety and health Laws; (ii) have at all times withheld and
reported all amounts required by Law or by Contract to be withheld and reported
with respect to wages, salaries and other payments to its Employees; (iii) are
not liable for any amount in respect of arrears of wages, Taxes or any penalty
for failure to comply with the Laws applicable to the foregoing; (iv) are not
liable for any payment to any trust or other fund governed by or maintained by
or on behalf of any Governmental Entity with respect to unemployment
compensation benefits, social security or other benefits or obligations for its
Employees (other than routine payments to be made in the normal course of
business and consistent with past practice); and (v) have no leased employees.
(c)          The Company and its Subsidiaries have properly classified in all
material respects all individuals who perform services for the Company and its
Subsidiaries as an employee or independent contractor and as exempt or
non-exempt under the Fair Labor Standards Act and analogous state wage-hour
laws, and there is no proceeding pending or, to the Company’s Knowledge,
threatened that challenges such classifications.
(d)          The Company and its Subsidiaries are employing individuals who are
lawfully permitted to work in the United States and the Company and its
Subsidiaries are in compliance in all material respects with all applicable Laws
regarding immigration or employment of non-citizen workers.  Neither the Company
nor any of its Subsidiaries has been notified of any pending or threatened
investigation by any branch or department of U.S. Immigration and Customs
Enforcement (“ICE”), or other applicable Governmental Entity charged with
administration and enforcement of federal immigration laws concerning it, and
neither the Company nor any of its Subsidiaries has received any “no match”
notices from ICE, the Social Security Administration or the IRS within the
previous twelve (12) months of the date of this Agreement.
(e) The Company has made available to the Purchaser: (i) a correct and complete
list of all officers, directors and employees of the Company as of the date of
this Agreement, which list contains each such employee’s name, date of hire, job
title, work location, full/part-time status, exempt/non-exempt status,
commission eligibility, equity holdings in the Company, severance entitlement,
current compensation paid or payable (including annual vacation, sick time, and
other forms of paid leave (both allotted annually and accrued but unused as of
the date hereof)), any bonus amounts paid with respect to 2015 and 2016, and
leave status (e.g., leave of absence, disability, layoff, active, temporary);
and (ii) a correct and complete list of each independent contractor who has
worked for the Company in the three (3) year period preceding the date of this
Agreement, who has (A) received more than $25,000 from the Company, and/or (B)
provided services to the Company for a period of six (6) consecutive months or
longer, which list contains each such independent contractor’s name, dates of
engagement, nature of work performed, compensation paid, and work location. The
Company has paid in full or accrued in its financial statements all wages,
salaries, commissions, incentives, bonuses and other compensation due to any
employee or otherwise arising under any employee benefit plan or Law prior to
the Closing.
(f)          Neither the Company nor any of its Subsidiaries has implemented any
employee layoffs that implicated or would reasonably be expected to implicate
the Worker Adjustment and Notification
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Act of 1988 or any similar or related Law (collectively, the “WARN Act”), and no
such events have been announced or are currently planned.
(g)          Set forth on Section 3.19(g) of the Disclosure Letter is a list of
the number of employees terminated or laid-off by the Company within the last
three (3) calendar years, together with a complete and accurate list of the
following information in respect of each former employee who has been terminated
or laid-off, or whose hours of work have been reduced by more than fifty percent
(50%) in the prior three (3) years: (i) the date of such termination, layoff or
reduction in hours; (ii) the reason therefor; (iii) the employee’s base salary
as well as any bonus or commission eligibility; (iv) whether the employee
executed a general release of claims or other separation agreement; and (v) the
employee’s work location.  To the extent that any of the employees listed on
Section 3.19(g) of the Disclosure Letter have executed a general release of
claims or other separation agreement, the Company has provided a true, correct
and complete copy of such document to the Purchaser.
3.20.          Employee Benefit Plans.
(a)          Section 3.20(a) of the Disclosure Letter sets forth a list of all
Company Employee Plans.
(b)          The Company has made available to the Purchaser copies, as of the
date hereof, of all of the Company Employee Plans that have been reduced to
writing (or a written summary of any Company Employee Plan that is not in
writing) and a copy of each material document, if any, prepared in connection
with each such Company Employee Plan, including (i) a copy of each trust or
other funding arrangement, (ii) the most recent summary plan description and
summary of material modifications made thereto, (iii) the three (3) most recent
annual reports (Form 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA, the Code or other applicable Law in
connection with each Company Employee Plan, (iv) the nondiscrimination testing
results for the three (3) most recent plan years, if applicable; (v) the most
recently received IRS determination letter for each Company Employee Plan
intended to qualify under ERISA or the Code, and (vi) the most recently prepared
actuarial report, if any, and financial statement in connection with each such
Company Employee Plan.
(c)          Each Company Employee Plan has been operated in all material
respects in accordance with its terms and the requirements of all applicable
Laws including ERISA and the Code. The Company and each of its Subsidiaries have
performed all obligations required to be performed by them under, are not in any
respect in default under or in violation of, and have no knowledge of any
default or violation by any party to, any Company Employee Plan, and no
“prohibited transaction” has occurred within the meaning of the applicable
provisions of ERISA and the Code.  No action, claim or proceeding is pending or,
to the Company’s Knowledge, threatened with respect to any Company Employee Plan
(other than claims for benefits in the ordinary course) and no fact or event
exists that could give rise to any such action, claim or proceeding.  Neither
the Company, any of its Subsidiaries or any ERISA Affiliate is subject to any
penalty or Tax with respect to any Company Employee Plan under Section 502(i) of
ERISA or Sections 4975 through 4980B of the Code.  Neither the Company nor any
of its Subsidiaries nor any ERISA Affiliate has incurred nor shall incur any
liability under, arising out of or by operation of Title IV of ERISA.
(d)          Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, either alone or together
with another event, will (i) result in any payment (including severance,
unemployment compensation, golden parachute, forgiveness of indebtedness or
otherwise) becoming due under any Company Employee Plan, whether or not such
payment is contingent, (ii) increase any benefits otherwise payable under any
Company Employee Plan or other arrangement, or (iii) result in the acceleration
of the time of payment, vesting or funding of any benefits, whether or not
contingent. No Company Employee Plan provides for a deferral of compensation
that will be subject to the taxes imposed by Section 409A of the Code.
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(e)          Neither the Company nor any of its Subsidiaries maintains,
contributes to, or in any way provides for any benefits of any kind to, or has
any liability of any kind to any current or future retiree, including medical
and death benefits, other than coverage mandated by the Consolidated Omnibus
Reconciliation Act of 1985 or similar state insurance Law.
(f)          The Company Financial Statements include appropriate accruals for
all obligations and liabilities under all Company Employee Plans, and all
contributions, premiums or other amounts required to be paid or provided by any
person or entity to or under any such Company Employee Plan have been timely
made in accordance with the terms thereof. No plan assets have been pledged as
collateral for any loan, other than bona fide loans made to participants of any
Company Employee Plan, or other obligation of any Person.  To the Company’s
Knowledge, no act or event has occurred or circumstance exists that may result
in a material increase in premium or benefit costs of any Company Employee
Plan.  No Company Employee Plan has been declared to be fully or partially
terminated, nor has any act or event occurred pursuant to which any Company
Employee Plan could be ordered to be terminated, in whole or in part, by any
Governmental Entity.
(g)          Neither the Company nor any of its ERISA Affiliates has at any time
had any obligation to contribute to a “defined benefit plan” as defined in
Section 3(35) of ERISA, a pension plan subject to the funding standards of
Section 302 of ERISA or Section 412 of the Code or a “multiemployer plan” as
defined in Section 3(37) of ERISA or Section 414(f) of the Code.
(h)          Each Company Employee Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has timely received a
favorable determination or opinion letter from the IRS covering all of the
provisions applicable to the Company Employee Plan for which determination
letters are currently available that the Company Employee Plan is so qualified. 
Each trust established in connection with any Company Employee Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received a determination or opinion letter from the IRS that it is so
exempt.
3.21.          Tax Matters.
(a)          The Company and each of its Subsidiaries have filed in a timely
manner (within any applicable extension periods) all Tax Returns required to be
filed by them.  All such Tax Returns are complete and accurate in all material
respects.  All income and other material Taxes due and owing by the Company or
any of its Subsidiaries (whether or not shown on any Tax Returns) have been
timely paid in full, or have been reserved for in accordance with GAAP on the
Company Balance Sheet.  Neither the Company nor any of its Subsidiaries is
currently the beneficiary of any extension of time within which to file any Tax
Return.
(b)          Neither the Company nor any of its Subsidiaries nor any
predecessors has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a material Tax assessment or
deficiency, which waiver or extension is currently effective, nor has the
Company nor any of its Subsidiaries made any request in writing for any such
extension or waiver that is currently outstanding.
(c)          There are no Liens for Taxes (other than for current Taxes not yet
due and payable and Taxes that are being contested in good faith) on the assets
of the Company or any of its Subsidiaries.
(d)          Since January 1, 2010, neither the Company nor any of its
Subsidiaries has received a written claim from a Taxing Authority in a
jurisdiction in which it does not file a Tax Return that it is or may be subject
to taxation by that jurisdiction that has not yet been settled or otherwise
resolved.
(e)          All Taxes that are required by Law to be withheld or collected by
the Company and any of its Subsidiaries have been duly and timely withheld or
collected and, to the extent required, have been paid to the proper Taxing
Authority.
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(f)           Since January 1, 2010, no material deficiencies for Taxes of the
Company or any of its Subsidiaries have been claimed, proposed or assessed in
writing by any Taxing Authority or other Governmental Entity.  There are no
pending or, to the Company’s Knowledge, threatened audits, assessments or other
actions for or relating to any material liability in respect of Taxes of the
Company or any of its Subsidiaries.  The Company has made available to the
Purchaser copies of (i) all federal income Tax Returns and other material
federal Tax Returns of the Company and its Subsidiaries and their predecessors
for each of their three (3) most recently completed fiscal years, (ii) all state
and local income Tax Returns and other material state and local Tax Returns of
the Company and its Subsidiaries for the most recently completed fiscal year,
and (iii) copies of all examination reports and statements of deficiencies
assessed against or agreed to by the Company or any of its Subsidiaries or any
predecessors since January 1, 2010, with respect to Taxes of any type.
(g)          Neither the Company nor any of its Subsidiaries has been a U.S.
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(h)          Neither the Company nor any of its Subsidiaries has any liability
for the Taxes of any Person (other than the Company or any of its Subsidiaries)
under Treasury Regulation Section 1.1502–6 (or any similar provision of state,
local, or foreign Law), as a transferee or by contract.  Since January 1, 2010,
neither the Company nor any of its Subsidiaries has 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).
(i)           There are no Tax sharing agreements or similar arrangements
(including indemnity arrangements) with respect to or involving the Company or
any of its Subsidiaries that is currently effective.
(j)           Neither the Company nor any of its Subsidiaries has constituted a
“distributing corporation” or a “controlled corporation” (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock to which Section
355 of the Code (or so much of Section 356 of the Code as relates to Section 355
of the Code) applies.
(k)          Neither the Company nor any of its Subsidiaries has agreed, and
neither the Company nor any of its Subsidiaries is required, (i) to make any
adjustment under Section 481(a) of the Code for any period after the Closing
Date by reason of a change in accounting method or otherwise prior to the
Closing Date; or (ii) to include any item of income in taxable income, or
exclude any item of deduction, for any taxable period (or portion thereof)
ending after the Closing Date as a result of (A) any installment sale or open
transaction disposition made on or prior to the Closing Date, (B) any prepaid
amount received on or prior to the Closing Date, or (C) any election under
Section 108(i) of the Code (or any similar provision of state, local or foreign
Law).  Neither the Company nor any of its Subsidiaries is subject to Tax by any
jurisdiction outside of the United States by virtue of (i) having a permanent
establishment or other place of business or (ii) having a source of income in
that jurisdiction.  Neither the Company nor any of its Subsidiaries is a
shareholder of a “controlled foreign corporation” as defined in Section 957 of
the Code (or any similar provision of state, local or foreign Law) or is a
shareholder in a “passive foreign investment company” within the meaning of
Section 1297 of the Code (or any similar provision of state, local or foreign
Law).
(l)           There are no requests for rulings or determinations in respect of
any Tax pending between the Company or any of its Subsidiaries and any Taxing
Authority.  Neither the Company nor any of its Subsidiaries has (i) received
from any Taxing Authority any Tax ruling relating to or affecting the Company or
any of its Subsidiaries or (ii) executed or entered into a closing agreement
relating to or affecting the Company or any of its Subsidiaries pursuant to
Section 7121 of the Code or any predecessor provision thereof or any similar
provision of any Law.
(m)          Neither the Company nor any of its Subsidiaries has participated in
any “reportable transaction” as defined in Section 1.6011-4(b) of the Treasury
Regulations or a “listed transaction” as set forth
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in Treasury Regulation Section 301.6111-2(b)(2) or any analogous provision of
state, local or foreign Law.  The Company has disclosed on its federal income
Tax Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code (or any similar provision under any state, local or foreign Tax Law).
(n)          Neither the Company nor any of its Subsidiaries is a party to any
joint venture, partnership or other arrangement that is treated as a partnership
for federal income tax purposes.
(o)          All related party transactions involving the Company or any of its
Subsidiaries have been conducted at arm’s length in compliance with Section 482
of the Code and the Treasury Regulations promulgated thereunder and any
comparable provisions of any other Tax Law.
(p)          The Company has made a valid election under Section 1362 of the
Code to be an S corporation (within the meaning of Section 1361 of the Code) and
each of the Company’s Subsidiaries has made a valid election under Section 1362
of the Code to be a qualified subchapter S subsidiary (within the meaning of
Section 1361(b)(1)(B) of the Code).  Each such election: (i) has been in effect
and valid at all times since the formation of the Company or such Subsidiary, as
applicable; and (ii) will be effective until the Closing.
3.22.          Interested Party Transactions.  No officer, director, employee,
shareholder or Affiliate (including the Sellers and their respective Affiliates)
of the Company or any of its Subsidiaries or, to the Company’s Knowledge, any
entity in which any such Person or individual owns any material beneficial
interest, (a) is a party to any Contract or transaction with the Company or any
of its Subsidiaries (other than Contracts or transactions related to their
employment with, or Equity Interests in, the Company or any of its
Subsidiaries), (b) has any material direct or indirect legal interest in any
asset or property used by the Company or any of its Subsidiaries, (c) sold,
transferred or leased any property or services to the Company or any of its
Subsidiaries, (d) purchased, acquired or leased any property or services from
the Company or any of its Subsidiaries, (e) loaned or advanced any money to the
Company or any of its Subsidiaries, or (f) borrowed any money from the Company
or any of its Subsidiaries.
3.23.          Absence of Certain Practices.
(a)          None of the Company, any of its Subsidiaries or any director,
manager, officer, employee or shareholder of the Company or any of its
Subsidiaries or other Person acting on their behalf, directly or indirectly, has
given, made or agreed to give or make any illegal commission, payment, gratuity,
gift, political contribution or other similar benefit to any employee or
official of any Governmental Entity or any other Person who is or may be in a
position to help or hinder the Company or any of its Subsidiaries or assist the
Company or any of its Subsidiaries in connection with any proposed transaction.
(b)          None of the Company, any of its Subsidiaries or any director,
manager, officer, employee or shareholder of the Company or any of its
Subsidiaries or other Person acting on their behalf, has taken any action,
directly or indirectly, (i) that would constitute a violation in any material
respect by such Persons of the Foreign Corrupt Practices Act of 1977, 15 USC
78dd-1, et seq., as amended, and the rules and regulations thereunder (the
“FCPA”), or other relevant multilateral measures such as the OECD Convention on
Combating Bribery of Foreign Public Officials in International Business
Transactions and the UN Convention Against Corruption, including making use of
the mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give or authorization of the
giving of anything of value to any “foreign official” (as defined under the
FCPA) or government employee, political party or campaign, official or employee
of any public international organization, or official or employee of any
government-owned enterprise or institution to obtain or retain business or to
secure an improper advantage, or (ii) that would constitute an offer to pay, a
promise to pay or a payment of money or anything else of value, or an
authorization of such offer, promise or payment, directly or indirectly, to any
employee, agent or representative of another company or entity in the
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course of their business dealings with the Company, any of its Subsidiaries or
any of their respective Affiliates, in order to induce such person to act
against the best interest of his or her employer or principal.
(c)          The Company and its Subsidiaries have conducted their respective
operations in compliance in all material respects with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, and the money laundering Laws of
all jurisdictions in which the Company and each Subsidiary operates.
3.24.          Bank Accounts.  Section 3.24 of the Disclosure Letter lists all
bank accounts, safety deposit boxes and lock boxes (designating each authorized
signatory with respect thereto) of the Company and its Subsidiaries, including
the account number and purpose for each such account, safety deposit box or lock
box.
3.25.          Brokers’ and Finders’ Fees.  Except for the fees and expenses of
Business Venture Group, Inc., which will be paid at the Closing as an Unpaid
Transaction Expense, no investment banker, broker, finder or other intermediary
is entitled to any fee or commission in connection with the transactions
contemplated by this Agreement based on arrangements made on behalf of the
Company, any of its Subsidiaries or any Seller.
3.26.          Customers and Suppliers.  Section 3.26 of the Disclosure Letter
lists (i) the ten (10) largest customers (measured by annual revenue to the
Company and its Subsidiaries) of the Company and its Subsidiaries during the
twelve (12) month period ending on the Balance Sheet Date (collectively, the
“Material Customers”), together with the annual revenue to the Company and its
Subsidiaries from each such Material Customer during such period, and (ii) the
ten (10) largest suppliers (measured by annual expenditures of the Company and
its Subsidiaries) of the Company and its Subsidiaries during the twelve (12)
month period ending on the Balance Sheet Date (collectively, the “Material
Suppliers”), together with the annual expenditures of the Company and its
Subsidiaries to each such Material Supplier during such period.  No Material
Customer or Material Supplier has canceled or otherwise modified in any material
respect its relationship with the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries has received written notice (or
to the Company’s Knowledge, any other notice or indication) that any such
Material Customer or Material Supplier intends to cancel or otherwise modify in
any material respect its relationship with the Company or any of its
Subsidiaries.
3.27.          Export Compliance.
(a)          The Company and its Subsidiaries are, and at all times have been,
in full compliance in all material respects with applicable provisions of U.S.
export Laws, including the International Traffic in Arms Regulations, the Export
Administration Regulations, the economic sanctions regulations and guidelines
administered by the Department of Treasury, Office of Foreign Assets Control and
the USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26,
2001), as amended; and restrictions against dealings with certain prohibited,
debarred, denied or specially designated entities or individuals under statutes,
regulations, orders and decrees of various agencies of the U.S. government, and
the export Laws of the other countries where it conducts business, and neither
the Company, any of its Subsidiaries nor any of their respective Affiliates have
received any written (or, to the Company’s Knowledge, oral) notices of
noncompliance, complaints or warnings with respect to its compliance with export
Laws.
(b)          Neither the Company nor any of its Subsidiaries is (i) in violation
of any Anti-Terrorism Law, (ii) a Prohibited Person, (iii) conducting any
business or engaging in any transaction or dealing with any Prohibited Person,
including the making or receiving of any contribution of funds, goods or
services to or for the benefit of any Prohibited Person, (iv) dealing in or
otherwise engaging in any transaction relating to property or interests in
property blocked pursuant to Executive Order No. 13224 or (v) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose or intent of evading or avoiding, or attempting to violate, any of the
prohibitions set forth in any Anti-Terrorism Law.
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3.28.          Disclosure.  No representations or warranties by the Company in
this Agreement or any Ancillary Agreement, and no statement contained in any
certificates furnished or to be furnished by the Company to the Purchaser
pursuant to the provisions hereof contains or will contain any untrue statement
of material fact or omits or will omit to state any material fact necessary, in
order to make the statements herein or therein in light of the circumstances
under which they are made, not misleading.  The Company has furnished or caused
to be furnished to the Purchaser complete and correct copies of all Contracts or
other documents referred to in the Disclosure Letter hereto or underlying a
disclosure of the Company set forth in the Disclosure Letter hereto.
ARTICLE IV 
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Subject to such exceptions as are disclosed in the Disclosure Letter referencing
the appropriate Section or subsection of this Article IV, each Seller, severally
and jointly, hereby represents and warrants to the Purchaser as of the date of
this Agreement as follows:
4.1.          Organization of the Sellers.  If such Seller is an entity, it is
duly organized, validly existing and in good standing under the laws of the
State of its formation.  If such Seller is an entity, it has all requisite power
and authority to own its properties and to carry on its business as now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the conduct of its business or the ownership, leasing,
holding or use of its properties makes such qualification necessary, except such
jurisdictions where the failure to be so qualified or licensed or in good
standing would not, individually or in the aggregate, have a material adverse
effect on the ability of such Seller to perform its obligations pursuant to this
Agreement or to consummate the transactions contemplated hereby in a timely
manner.
4.2.          Authority.  Such Seller has all requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements executed and
delivered or to be executed and delivered by such Seller in connection with the
transactions provided for hereby, to perform all of its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by such Seller of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary and
proper action on its part, and no additional proceedings or actions on the part
of such Seller are necessary to authorize the execution, delivery and
performance by such Seller of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby.  This
Agreement has been duly executed and delivered by such Seller.  This Agreement
and each Ancillary Agreement to which such Seller and is a party constitutes, or
upon execution and delivery will constitute, the legal, valid and binding
obligation of such Seller, enforceable against such Seller in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar Laws relating to
or affecting the enforcement of creditors’ rights in general and by general
principles of equity.
4.3.          No Conflict.  The execution, delivery and performance by such
Seller of this Agreement and the Ancillary Agreements and the consummation by
such Seller of the transactions contemplated hereby and thereby will not, with
or without the giving of notice or the lapse of time or both, (a) if such Seller
is an entity, conflict with such Seller’s Constitutional Documents, each as
amended to date, or (b) conflict with, result in a breach or violation of,
constitute a default under, result in the acceleration of, create in any Person
the right to accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, or result in the loss of any benefit to which such
Seller is entitled under, any material Contract or any Law, Permit or Judgment
to which such Seller or any of its properties or assets are subject.
4.4.          Consents.  No consent, waiver, order, approval or authorization
of, or registration, declaration or filing with, or notice to, any Governmental
Entity or other Person is required by, or with respect to, such Seller in
connection with the execution, delivery and performance of this Agreement and
the Ancillary
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Agreements or the consummation of the transactions contemplated hereby and
thereby, except for any filings that are required under any applicable federal
or state securities laws.
4.5.          No Legal Actions.  There is no Legal Action pending or, to the
knowledge of such Seller, threatened against or affecting such Seller or any of
its properties or assets or otherwise that would reasonably be expected to have
a material adverse effect on the ability of such Seller to perform its
obligations pursuant to this Agreement or to consummate the transactions
contemplated hereby in a timely manner or that in any manner draws into question
the validity of this Agreement.
4.6.          Title to the Shares.  Such Seller is the record and beneficial
owner of the Shares set forth opposite such Seller’s name on Exhibit A attached
hereto.  At the Closing, such Seller will convey to the Purchaser good and
marketable title to such Shares, free and clear of any and all Liens except for
restrictions on transfer under federal and state securities Laws.
4.7.          Investment Intent.
(a)          Such Seller is an “accredited investor” (as defined in Rule 501(a)
promulgated under the Securities Act) and is represented by counsel in
connection with the transactions contemplated hereby.  If other than an
individual, such Seller also represents that such Seller has not been organized
for the purpose of acquiring the Purchaser Shares that such Seller is entitled
to receive pursuant to the terms of this Agreement.
(b)          Such Seller has had an opportunity to ask questions and receive
answers from the Purchaser regarding the terms and conditions of this Agreement,
the transactions contemplated hereby and the issuance of the Purchaser Shares
and the Purchaser’s business, financial condition, properties and prospects and
to obtain additional information (to the extent the Purchaser possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to such Seller or
to which such Seller had access.  The foregoing, however, does not limit or
modify the representations and warranties of the Purchaser in Article VI of this
Agreement or the right of such Seller to rely thereon.  Such Seller acknowledges
and agrees that the issuance of the Purchaser Shares hereunder may constitute
material non-public information and disclosure of such information or use of
such information by such Seller or anyone receiving such information from such
Seller in connection with the purchase, sale or trade of the Purchaser’s
securities, or any hedging, derivative or similar transactions or activities
involving the Purchaser’s securities, may be a violation of securities laws.
(c)          Such Seller understands that an investment in the Purchaser
involves substantial risks.  Such Seller is experienced in evaluating and
investing in private placement transactions of securities of micro-cap companies
(similar to that of the Purchaser) and acknowledges that such Seller is able to
fend for himself, herself or itself.  Such Seller has such knowledge and
experience in financial and business matters that such Seller is capable of
evaluating the merits and risks of an investment in the Purchaser Shares.  Such
Seller can bear the economic risk of such Seller’s investment and is able,
without impairing such Seller’s financial condition, to hold the Purchaser
Shares for an indefinite period of time and to suffer a complete loss of such
Seller’s investment.
(d)          Such Seller understands that the Purchaser Shares will be
characterized as “restricted securities” under the federal securities laws
inasmuch as they are being acquired from the Purchaser in a transaction not
involving a public offering and that under such federal securities laws and
applicable regulations such Purchaser Shares may be resold without registration
under the Securities Act only in certain limited circumstances.  In this
connection, such Seller represents that it is aware of the provisions of Rule
144 promulgated under the Securities Act which permit limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things, the existence of a public market for
the shares, the availability of certain current public information about the
Purchaser, the resale occurring after the passage of the required holding period
and, if such Seller is at any time in the future an “affiliate” of the Purchaser
(as that term is defined under the Securities Act) the sale being effected
through a “broker’s
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transaction” or in transactions directly with a “market maker” and the number of
shares being sold during any three-month period not exceeding specified
limitations.
(e)          The Purchaser Shares will be acquired for investment for such
Seller’s own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such Seller has no present
intention of selling, granting any participation in, or otherwise distributing
the same.  By executing this Agreement or otherwise becoming Party to this
Agreement, such Seller further represents that such Seller does not have any
Contract, undertaking, agreement or arrangement with any Person to sell,
transfer or grant participations to such Person or to any third Person with
respect to any of the Purchaser Shares.
(f)          Such Seller understands that the Purchaser Shares are not currently
(and, at the time of issuance, will not be) registered under the Securities Act
on the ground that the sale provided for in this Agreement and the issuance of
the Purchaser Shares hereunder is exempt from registration under the Securities
Act pursuant to Section 4(a)(2) thereof, and that the Purchaser’s reliance on
such exemption is predicated on the Sellers’ representations set forth herein.
(g)          Without in any way limiting the representations set forth above,
such Seller further agrees not to make any disposition of all or any portion of
the Purchaser Shares unless and until (i) there is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement or (ii) such
Seller shall have notified the Purchaser of the proposed disposition and shall
have furnished the Purchaser with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by the
Purchaser, such Seller shall have furnished the Purchaser with an opinion of
counsel, reasonably satisfactory to the Purchaser, that such disposition will be
exempt from registration under the Securities Act.
(h)          Such Seller understands and agrees that the Purchaser Shares will
be issued in book-entry form and shall bear the following legend (in addition to
any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Subject to such exceptions as are disclosed in the disclosure letter dated the
date of this Agreement and delivered herewith to the Sellers (the “Purchaser’s
Disclosure Letter”) referencing the appropriate Section or subsection of this
Article IV (or as may be otherwise readily apparent on the face of the
Purchaser’s Disclosure Letter as responsive to any other Section of this Article
IV), Purchaser hereby represents and warrants to the Company and to each Seller
as of the date of this Agreement as follows:
5.1.          Organization of the Purchaser.  The Purchaser is duly organized,
validly existing and in good standing under the laws of the State of Illinois. 
The Purchaser has all requisite power and authority to own its properties and to
carry on its business as now being conducted and is duly qualified to do
business and is in good standing in each jurisdiction in which the conduct of
its business or the ownership, leasing, holding or use of its properties makes
such qualification necessary, except such jurisdictions where the failure to be
so qualified or licensed or in good standing would not, individually or in the
aggregate, have a material adverse effect on the ability of the Purchaser to
perform its obligations pursuant to this Agreement or to consummate the
transactions contemplated hereby in a timely manner.
5.2.          Authority.  The Purchaser has all requisite power and authority to
execute and deliver this Agreement and the Ancillary Agreements executed and
delivered or to be executed and delivered by it in connection with the
transactions provided for hereby, to perform all of its obligations hereunder
and thereunder and to consummate the transactions contemplated hereby and
thereby.  The execution, delivery and performance by the Purchaser of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all necessary and
proper action on its part, and no additional proceedings or actions on the part
of the Purchaser are necessary to authorize the execution, delivery and
performance by it of this Agreement and the Ancillary Agreements and the
consummation of the transactions contemplated hereby and thereby.  This
Agreement has been duly executed and delivered by the Purchaser.  This Agreement
and each Ancillary Agreement to which the Purchaser is a party constitutes, or
upon execution and delivery will constitute, the legal, valid and binding
obligation of the Purchaser enforceable against it in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar Laws relating to or affecting
the enforcement of creditors’ rights in general and by general principles of
equity.
5.3.          No Conflict.  The execution, delivery and performance by the
Purchaser of this Agreement and the Ancillary Agreements and the consummation by
the Purchaser of the transactions contemplated hereby and thereby will not, with
or without the giving of notice or the lapse of time or both, (a) conflict with
the Constitutional Documents (each as amended to date) of the Purchaser, or
(b) conflict with, result in a breach or violation of, constitute a default
under, result in the acceleration of, create in any Person the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, or result in the loss of any benefit to which the Purchaser is
entitled under, any material Contract or any Law, Permit or Judgment to which
the Purchaser or any of its respective properties or assets are subject.
5.4.          Consents.  No consent, waiver, order, approval or authorization
of, or registration, declaration or filing with, or notice to, any Governmental
Entity or other Person is required by, or with respect to, the Purchaser in
connection with the execution, delivery and performance of this Agreement and
the Ancillary Agreements or the consummation of the transactions contemplated
hereby and thereby, except for any filings that are required under any
applicable federal or state securities laws.  Without limiting the generality of
the foregoing, no vote or consent of the holders of any class or series of
capital stock of the Purchaser is necessary to approve this Agreement.
5.5.          No Legal Actions.  There is no Legal Action pending or, to the
knowledge of the Purchaser, threatened against or affecting the Purchaser or any
of its respective properties or assets or otherwise that would reasonably be
expected to have a material adverse effect on the ability of the Purchaser to
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perform its obligations pursuant to this Agreement or to consummate the
transactions contemplated hereby in a timely manner or that in any manner draws
into question the validity of this Agreement.
5.6.          Investment Intention. The Purchaser is acquiring the Shares for
its own account, for investment purposes only and not with a view to any public
distribution thereof or with any intention of selling, distributing or otherwise
disposing of the Shares in a manner that would violate the registration or
qualification requirements of the Securities Act of 1933, as amended (the
“Securities Act”) or any applicable securities Laws.  The Purchaser agrees that
the Shares may not be sold, transferred, offered for sale, pledged, hypothecated
or otherwise disposed of without registration or qualification under the
Securities Act and any applicable securities Laws, except pursuant to an
exemption from such registration or qualification under the Securities Act and
such applicable securities Laws.  The Purchaser is able to bear the economic
risk of holding the Shares for an indefinite period (including total loss of its
investment) and (either alone or together with its representatives) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment.
5.7.          Brokers’ and Finders’ Fees.  No investment banker, broker, finder
or other intermediary is entitled to any fee or commission payable by the
Company, any of its Subsidiaries or any Seller in connection with the
transactions contemplated by this Agreement based on arrangements made on behalf
of the Purchaser.
5.8.          Purchaser Shares.  All Purchaser Shares that may be issued to the
Sellers  hereunder will be, when issued in accordance with the terms thereof,
duly authorized, validly issued, fully paid and nonassessable, not subject to
any preemptive rights created by statute, the certificate of incorporation or
bylaws of the Purchaser or any contract, agreement, instrument or other
obligation to which the Purchaser is a party or by which it is bound and free
from restrictions or transfer other than restrictions under this Agreement and
under applicable federal and state securities laws.  The Purchaser has
authorized and reserved a sufficient number of shares of its common stock to
issue the Purchaser Shares required to be issued by the terms of this Agreement.
5.9.          No Representations.  Except for the representations and warranties
made by the Purchaser in this Article V, neither the Purchaser nor any other
Person acting on its behalf makes or has made any representation or warranty,
express or implied, relating or with respect to this Agreement or the
transactions contemplated hereby to the Sellers, the Company or any other
Person.
ARTICLE VI
COVENANTS
6.1.          Access to Information.  The Company shall, and shall cause its
officers, shareholders, employees, consultants, agents, accountants, attorneys
and other representatives, to afford to the Purchaser, and to the accountants,
attorneys, advisors, potential financing sources and other representatives of
the Purchaser, reasonable access during normal business hours from the date
hereof throughout the period prior to the Closing Date to all properties,
assets, books, Contracts, employees, customers, suppliers, agents, files and
books and records of the Company and, during such period, shall furnish promptly
to the Purchaser and all other information concerning the properties, business,
operations and assets of the Company as the Purchaser may reasonably request. 
Without limiting the foregoing, from the date hereof throughout the period prior
to the Closing Date, the Company shall use its best efforts to assist and
cooperate with the Purchaser’s investigation of the Company’s customers and
suppliers.  No investigation by the Purchaser prior to or after the date of this
Agreement shall diminish or obviate any of the representations, warranties,
covenants or agreements of the Company contained in this Agreement or the
Ancillary Documents.
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6.2.          No Solicitation.
(a)          Each of the Company and each Seller agree that it will not, and
will not authorize or permit, directly or indirectly, any of its respective
directors, officers, employees, shareholders or Affiliates or any investment
banker, attorney or other advisor or representative retained by any of them (all
of the foregoing collectively being, the “Company Representatives”) to, (i)
solicit, initiate, seek, entertain, knowingly encourage, knowingly facilitate,
support or induce the making, submission or announcement of any inquiry,
expression of interest, proposal or offer that constitutes, or would reasonably
be expected to lead to, an Acquisition Proposal, (ii) enter into, participate
in, maintain or continue any communications (except solely to provide written
notice as to the existence of these provisions) or negotiations regarding, or
deliver or make available to any Person any non-public information with respect
to, or take any other action regarding, any inquiry, expression of interest,
proposal or offer that constitutes, or would reasonably be expected to lead to,
an Acquisition Proposal, (iii) agree to, accept, approve, endorse or recommend
any Acquisition Proposal, (iv) enter into any letter of intent or any other
Contract contemplating or otherwise relating to any Acquisition Proposal, or (v)
submit any Acquisition Proposal to the vote of any Sellers of the Company.
(b)          Each Seller and the Company will immediately cease and cause to be
terminated any and all existing activities, discussions or negotiations with any
Persons conducted prior to or on the date of this Agreement with respect to any
Acquisition Proposal.  If any Company Representative, whether in his or her
capacity as such or in any other capacity, takes any action that the Company is
obligated pursuant to this Section 6.2 to cause such Company Representative not
to take, then the Company shall be deemed for all purposes of this Agreement to
have breached this Section 6.2.  Between the date of this Agreement and the
earlier of the Closing Date or the date this Agreement is validly terminated,
the Company shall not terminate, amend, waive or fail to enforce any material
rights under any confidentiality, non-solicitation, non-hire or similar
agreement between the Company and any Person.
(c)          The Company shall promptly (but in any event, within 24 hours)
notify the Purchaser in writing after receipt by the Company (or, to the
knowledge of the Company, by any of the Company Representatives), of (i) any
Acquisition Proposal, (ii) any inquiry, expression of interest, proposal or
offer that would reasonably be expected to lead to an Acquisition Proposal,
(iii) any other notice that any Person is considering making an Acquisition
Proposal, or (iv) any request for non-public information relating to the Company
or for access to any of the properties, books or records of the Company by any
Person or Persons other than the Purchaser that would reasonably be expected to
lead to an Acquisition Proposal.  Such notice shall describe: (i) the material
terms and conditions of such Acquisition Proposal, inquiry, expression of
interest, proposal, offer, notice or request, and (ii) the identity of the
Person or group making any such Acquisition Proposal, inquiry, expression of
interest, proposal, offer, notice or request.  The Company and the Sellers’
Representative shall keep the Purchaser fully informed of the status and details
of, and any modification to, any such inquiry, expression of interest, proposal
or offer and any correspondence or communications related thereto and shall
provide to the Purchaser a true, correct and complete copy of such inquiry,
expression of interest, proposal or offer and any amendments, correspondence and
communications related thereto, if it is in writing, or a reasonable written
summary thereof, if it is not in writing.
6.3.          Conduct of the Business Prior to Closing.
(a)          Except with the prior written consent of the Purchaser, the Company
shall: (i) conduct the businesses of the Company in the ordinary course of
business; (ii) use its best efforts to (A) preserve the present business
operations, organization (including management and the sales force) and goodwill
of the Company and (B) preserve the present relationship with Persons having
business dealings with the Company (including customers and suppliers); (iii)
maintain (A) all of the assets and properties of the Company in their current
condition (ordinary wear and tear excepted) and (B) insurance upon all of the
properties and assets of the Company in such amounts and of such kinds
comparable to that in effect on the date of this Agreement; (iv) (A) maintain
the books, accounts and records of the Company in the ordinary course of
business, (B) continue to collect accounts receivable and pay accounts payable
utilizing normal
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procedures and without discounting or accelerating payment of such accounts, and
(C) comply with all contractual and other obligations applicable to the
operation of the Company; (v) comply in all material respects with all
applicable Legal Requirements; (vi) timely provide to holders of Equity
Securities all advance notices required to be given to such holders in
connection with this Agreement and the transactions contemplated by this
Agreement under the Company’s Constitutional Documents or other applicable
Contracts, (vii) timely provide all notices and other information required to be
given (which notices and information shall be in form and substance reasonably
satisfactory to the Purchaser) to the employees of the Company, any collective
bargaining unit representing any group of employees of the Company, and any
applicable Governmental Authority under the WARN Act, the National Labor
Relations Act, as amended, the Code, COBRA and other Law in connection with the
transactions contemplated by this Agreement or other applicable Contracts, and
(viii) not take any action which would adversely affect the ability of the
parties to consummate the transactions contemplated by this Agreement.
(b)          Except with the prior written consent of the Purchaser or as
specifically set forth in Section 6.3 of the Disclosure Letter, the Company
shall not take any Material Action.
6.4.          Regulatory Approvals.  The Company shall promptly execute and
file, or join in the execution and filing of, any application, notification or
other document that may be necessary in order to obtain the authorization,
approval or consent of any Governmental Authority, whether federal, state, local
or foreign, which may be reasonably required, or which the Purchaser may
reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement or any Ancillary Document.  The Company shall use
commercially reasonable efforts to obtain, and to cooperate with the Purchaser
to promptly obtain, all such authorizations, approvals and consents and shall
pay any associated filing fees payable by the Company with respect to such
authorizations, approvals and consents.  To the extent permitted by Law, the
Company shall promptly inform the Purchaser of any material communication
between the Company and any Governmental Authority regarding any of the
transactions contemplated hereby, and shall provide the Purchaser reasonable
advance notice of the nature and substance of any planned communication with any
Governmental Authority. If the Company, any Seller or any of their respective
Affiliates receives any formal or informal request for supplemental information
or documentary material from any Governmental Authority with respect to the
transactions contemplated hereby, then the Company and the Sellers shall make,
or cause to be made, as soon as reasonably practicable, a response in compliance
with such request.  The Company shall direct, in its sole discretion, the making
of such response, but shall review any proposed response in advance with, and
consider in good faith the views of, the Purchaser.
6.5.          Required Consents.  The Company shall use commercially reasonable
efforts to promptly obtain the Required Consents of third parties, give notices
to third parties and take such other actions as may be necessary or appropriate
in order (i) to effect the consummation of the transactions contemplated by this
Agreement, (ii) to enable the Company and its Subsidiaries to continue to carry
on the Company’s businesses immediately after the Closing Date, and (iii) to
keep in effect and avoid the breach, violation of or termination of any Material
Contract.  The Company will (i) consult with the Purchaser beforehand regarding
the process for seeking such consents and providing such notices, (ii) provide
the Purchaser with a reasonable opportunity to review and comment in advance on
the forms of such consent requests and notices and (iii) incorporate any
reasonable comments thereto made by the Purchaser.
6.6.          Notice of Certain Events.  The Company and the Sellers shall
promptly notify the Purchaser in writing of (i) any event occurring after the
date hereof that would render any representation or warranty of the Company
contained in Articles III and IV untrue or inaccurate such that the condition
set forth in Section 7.1(a) would not be satisfied, (ii) any breach of any
covenant or obligation of the Company pursuant to this Agreement or any
Ancillary Agreement such that the condition set forth in Section 7.1(b) would
not be satisfied, (iii) any Material Adverse Effect, (iv) any Legal Action
initiated against the Company or any Sellers, or known by the Company or any
Seller to be threatened in writing against the Company, any Seller or any of its
directors, officers or employees in their capacity as such, or (v) any change,
event, circumstance, condition or effect that would reasonably be expected to
cause any of the other conditions set forth in Section 7.1 not to
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be satisfied; provided, however, that the delivery of any notice pursuant to
this Section 6.6 shall not (i) be deemed to amend or supplement the Disclosure
Letter, (ii) be considered in determining whether any representation or warranty
is true for purposes of Section 7.1, (iii) cure any breach or non-compliance
with any other provision of this Agreement, or (iv) limit the remedies available
to the Purchaser or the Purchaser Indemnified Parties.
6.7.          Release of Liens.  Promptly following the date hereof, the Company
shall conduct a search for UCC-1 filings, federal and state Tax Liens on file in
the office of the Secretary of State of each State in which a filing would be
required under applicable Law in order to perfect any Lien in any of the assets
of the Company’s business.  The Company shall deliver to the Purchaser prior to
Closing, a copy of the results of such search and shall cause any Liens in the
assets of the Company’s business that are identified through such search (other
than Permitted Exceptions) to be terminated on or prior to or simultaneously
with the Closing (including, all Liens set forth in the Disclosure Letter).
6.8.          Employee Benefit Plans.  Upon the Purchaser’s written request made
at least five (5) Business Days in advance of the Closing Date, the Company
shall terminate any Employee Benefit Plan (including the Company’s 401(k) plan)
that the Company is legally entitled to unilaterally terminate no later than the
day immediately prior to the Closing Date.  If the Purchaser so requests that
the Company’s Employee Benefit Plans be terminated, the Company’s Board of
Directors shall adopt resolutions terminating the 401(k) Plan and the Company
shall execute an amendment to the 401(k) Plan that is sufficient to assure
compliance with all applicable requirements of the Code and regulations
thereunder so that the tax-qualified status of the 401(k) Plan shall be
maintained at the time of its termination, such resolutions and amendment to be
subject to review and approval by the Purchaser’s counsel.
6.9.          Termination of Contracts.  The Company shall use its commercially
reasonable efforts to terminate prior to the Closing, the Contracts set forth in
Section 6.9 of the Disclosure Letter, which terminations shall be in form and
substance satisfactory to the Purchaser; provided, however, that the Company
shall not, as a condition to obtaining the consent to any such termination from
the applicable counterparty to a Contract, agree to provide additional
consideration or otherwise agree to incur an additional liability (beyond that
which is already contemplated by the Contract) without the prior written consent
of the Purchaser.   The Company shall provide the Purchaser with regular updates
regarding the status of negotiations with the applicable counterparties and
promptly inform the Purchaser of any material communication between the Company
and any such counterparty.  The Company shall direct negotiations with the
applicable counterparties, but shall consult regularly with the Purchaser
regarding such negotiations and consider in good faith the input and advice of
the Purchaser.
6.10.          [Intentionally Deleted].
6.11.          Indemnification of Officers and Directors.
(a)          All rights to indemnification by the Company existing in favor of
all current and former directors and officers of the Company (the “Covered
Persons”) for their acts and omissions occurring prior to the Closing Date, as
provided in the Constitutional Documents of the Company (as in effect as of the
date of this Agreement) and as provided in any indemnification agreements
between the Company and said Covered Persons (as in effect as of the date of
this Agreement) in the forms made available by the Company to the Purchaser
prior to the date of this Agreement, shall survive the Closing and the Purchaser
shall cause the Company to observe all such rights to indemnification for a
period of six (6) years from the Closing Date, and any claim made requesting
indemnification pursuant to such indemnification rights within such six (6)-year
period shall continue to be subject to this Section 6.12(a) until disposition of
such claim.
(b)          In the event the Company 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 and assets to any
Person, then,
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and in each such case, the Purchaser shall ensure that the successors and
assigns of the Company, or at the Purchaser’s option, the Purchaser, shall
assume the obligations set forth in this Section 6.12.
(c)          The provisions of this Section 6.12 shall survive the consummation
of the transactions contemplated by this Agreement and are (i) intended to be
for the benefit of, and will be enforceable by, each of the Covered Persons and
their successors, assigns and heirs and (ii) in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such Person may have by contract or otherwise.  This Section 6.12 may not be
amended, altered or repealed after the Closing Date without the prior written
consent of the affected Covered Persons.
6.12.          Satisfaction of Conditions Precedent.  Each of the Sellers and
the Company shall use their commercially reasonable efforts to satisfy or cause
to be satisfied all of the conditions precedent that are set forth in Section
7.1, and the Purchaser shall use its commercially reasonable efforts to satisfy
or cause to be satisfied all of the conditions precedent that are set forth in
Section 7.2. Each party hereto shall use its commercially reasonable efforts to
cause the transactions contemplated by this Agreement to be consummated in
accordance with the terms of this Agreement.
6.13.          Preservation of Records.  The Purchaser agrees that it shall not,
for a period of at least six (6) years following the Closing Date, destroy or
cause to be destroyed, or permit the Company or any of its Subsidiaries to
destroy or cause to be destroyed, any material books or records relating to the
pre-Closing operations of the Company or any of its Subsidiaries without first
obtaining the consent of the Sellers (or providing to the Sellers notice of such
intent and a reasonable opportunity to copy such books or records, at the
Sellers’ expense, at least thirty (30) days prior to such destruction).  The
Purchaser, the Company and its Subsidiaries shall allow the Sellers to have
access to such books and records for all reasonable purposes.
6.14.          Cooperation with Financing.  In order to assist the Purchaser in
obtaining the financing, the Company and each Seller shall provide such
assistance and cooperation as the Purchaser and its Affiliates may reasonably
request, including, but not limited to, cooperation in the preparation of any
offering memorandum or similar document, cooperating with initial purchasers or
placements agents, making senior management of the Company reasonably available
for customary “roadshow” presentations and cooperation with prospective lenders
in performing their due diligence, entering into customary agreements with
underwriters, initial purchasers or placement agents, performing, environmental
assessments, and entering into pledge and security documents, other definitive
financing documents or other requested certificates or documents, including a
customary certificate of the chief financial officer of the Company with respect
to solvency matters, comfort letters of accountants, legal opinions and real
estate title documentation.
6.15.          Asset Purchase Agreement.  Prior to the Closing, the Company
shall have entered into the Asset Purchase Agreement with Agama Solutions Inc.,
a California corporation (“Agama”), in a form reasonably acceptable to the
Purchaser and its counsel, pursuant to which the Company will acquire certain
assets of Agama on the terms and conditions set forth in the Asset Purchase
Agreement.
6.16.          Restrictions on Agama’s Sale or Dissolution.  From and after the
Closing Date and continuing until consented to in writing by the Purchaser in
its sole discretion, the Sellers shall (i) maintain Agama’s corporate existence
in good standing, (ii) perform its obligations and satisfy its liabilities when
due, including the payment of Taxes and the performance of its obligations under
all Contracts (including, the Asset Purchase Agreement and the Excluded
Contracts) (iii) maintain adequate cash and liquid assets to pay and perform its
liabilities as they become due, (iv) not dissolve or liquidate, or file any
voluntary bankruptcy petition and (v) not sell the capital stock or any assets
of Agama.
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ARTICLE VII
CONDITIONS PRECEDENT TO THE CLOSING
7.1.          Conditions to the Obligations of the Purchaser.  The obligation of
the Purchaser to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by the Purchaser in
whole or in part in its sole discretion):
(a)          The representations and warranties of the contained in Article III
and IV that are (i) qualified as to materiality or Material Adverse Effect shall
be true and correct in all respects and (ii) not so qualified shall be true and
correct in all material respects, as of the date of this Agreement and as of the
Closing Date as though made at and as of the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date (in
which case such representations and warranties qualified as to materiality or
Material Adverse Effect shall be true and correct in all respects, and those not
so qualified shall be true and correct in all material respects, on and as of
such earlier date);
(b)          The Company and each Seller shall have performed and complied in
all material respects with all covenants and agreements required in this
Agreement to be performed or complied with by them prior to the Closing Date;
(c)          There shall not be issued, enacted or adopted by any Governmental
Entity of competent jurisdiction any statute, regulation, enactment, Judgment or
Legal Action (whether temporary, preliminary or permanent) that prohibits or
renders illegal or imposes limitations on: (i) any material transaction
contemplated by this Agreement, or (ii) the Purchaser’s right (or the right of
any Affiliate of the Purchaser) to conduct the Company’s business on or after
the Closing;
(d)          No Legal Action by any Governmental Entity of competent
jurisdiction shall be pending (i) for the purpose or with the probable effect of
enjoining or preventing the consummation of any of the transactions contemplated
by this Agreement or (ii) seeking any antitrust restraint;
(e)          After the date of this Agreement, no event shall have occurred and
be in existence and continuing as of the Closing Date that, singularly or in the
aggregate, has had a Material Adverse Effect;
(f)          There shall have been obtained at or prior to the Closing Date such
permits or authorizations, and there shall have been taken all such other
actions by any Governmental Entity having competent jurisdiction over the
parties and the actions herein proposed to be taken, as may be required to
lawfully consummate the transactions contemplated by this Agreement; and
(g)          The Sellers shall have, or caused the Company to have, delivered to
the Purchaser all of the following documents, certificates and other
information:
(i)            a certificate signed by the Chief Executive Officer of the
Company and the Sellers’ Representative (on behalf of the Sellers), in a form
and substance reasonably satisfactory to the Purchaser, dated the Closing Date,
to the effect that each of the conditions specified above in Sections 7.1(a)-(f)
have been satisfied in all respects;
(ii)           a certificate of the Secretary or an Assistant Secretary (or
equivalent officer) of the Company certifying (A) that attached thereto are true
and complete copies of all resolutions adopted by the board of directors and
shareholders of the Company authorizing the execution, delivery and performance
of this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby, and that all such resolutions are
in full force and effect and are all the resolutions adopted in connection with
the transactions contemplated hereby and thereby, (B) the names and signatures
of the officers of the Company authorized to sign this Agreement, the Ancillary
Agreements and the other documents to be
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delivered hereunder and thereunder, (C) that attached thereto are copies of the
certificate of incorporation, bylaws or other organizational documents of the
Company, and (D) certificates of good standing with respect to the Company,
dated within five (5) days of the Closing Date, from the Secretary of State of
the State of California;
(iii)          the Closing Statement;
(iv)          a copy of a FIRPTA certificate in a form reasonably acceptable to
the Purchaser for purposes of satisfying the Purchaser’s obligations under
Treasury Regulation Section 1.1445-2(c)(3), duly and validly executed by a duly
authorized officer of the Company;
(v)           evidence, in form and substance reasonably satisfactory to the
Purchaser, that the Company has obtained each of the Required Consents;
(vi)          the Payoff Letters;
(vii)         the Non-Competition and Non-Solicitation Agreements;
(viii)        the Subscription Agreements;
(ix)           the Resignations;
(x)            the Landlord Consents;
(xi)           the Certificates, duly endorsed in blank or accompanied by
transfer powers;
(xii)          the stock transfer book, minute book and corporate seal of the
Company and its Subsidiaries;
(xiii)         the Subordination Agreements, duly executed and delivered by the
Sellers’ Representative;
(xiv)        the Asset Purchase Agreement, duly executed and delivered by the
Company and Agama Solutions Inc.;
(xv)          a true, correct and complete copy of resolutions adopted by the
Board of Directors of the Company, certified by the Secretary of the Company,
authorizing the termination of each or all of the Company Employee Plans,
including the Company’s 401(k) plan, requested in writing by the Purchaser to be
terminated at least five (5) Business Days prior to the Closing Date; and
(xvi)        such other further documents and instruments as counsel for the
Sellers and Purchaser mutually agree to be reasonably necessary to consummate
the transactions contemplated by this Agreement.
7.2.          Conditions to the Obligations of the Sellers.  The obligation of
the Sellers to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by the Sellers’
Representative in whole or in part in its sole discretion):
(a)          The representations and warranties of the Purchaser contained in
Article V that are (i) qualified as to materiality or Material Adverse Effect
shall be true and correct in all respects and (ii) not so qualified shall be
true and correct in all material respects, as of the date of this Agreement and
as of the Closing Date as though made at and as of the Closing Date, except to
the extent such representations and
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warranties expressly relate to an earlier date (in which case such
representations and warranties qualified as to materiality or Material Adverse
Effect shall be true and correct in all respects, and those not so qualified
shall be true and correct in all material respects, on and as of such earlier
date);
(b)          The Purchaser shall have performed and complied in all material
respects with all covenants and agreements required in this Agreement to be
performed or complied with by them prior to the Closing Date;
(c)          There shall not be issued, enacted or adopted by any Governmental
Entity of competent jurisdiction any statute, regulation, enactment, order or
Legal Action (whether temporary, preliminary or permanent) that prohibits or
renders illegal or imposes limitations on any material transaction contemplated
by this Agreement.
(d)          No Legal Action by any Governmental Entity of competent
jurisdiction shall be pending (i) for the purpose or with the probable effect of
enjoining or preventing the consummation of any of the transactions contemplated
by this Agreement or (ii) seeking any antitrust restraint;
(e)          The Purchaser shall have, or caused to have, delivered to the
Sellers’ Representative or the parties as specified in this Agreement all of the
following documents, certificates and other information:
(i)            a certificate signed by the Chief Executive Officer of the
Purchaser, in a form and substance reasonably satisfactory to the Sellers’
Representative, dated the Closing Date, to the effect that each of the
conditions specified above in Sections 7.2(a)-(d) have been satisfied in all
respects;
(ii)           a certificate of the Secretary or an Assistant Secretary (or
equivalent officer) of the Purchaser certifying (A) that attached thereto are
true and complete copies of all resolutions adopted by the board of directors of
the Purchaser authorizing the execution, delivery and performance of this
Agreement and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby, and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated hereby and thereby and (B) the names and signatures of
the officers of the Purchaser authorized to sign this Agreement, the Ancillary
Agreements and the other documents to be delivered hereunder and thereunder;
(iii)          the Subordination Agreements, duly executed and delivered by the
Lenders and the Purchaser;
(iv)          the Non-Competition and Non-Solicitation Agreements;
(v)           the Subscription Agreements; and
(vi)          the payments required to be made pursuant to Section 1.3.
(f)          The Purchaser shall have instructed its transfer agent to create a
reserve of shares in the amount equal to the Share Consideration, which shall be
issued to each Seller in the amounts set forth on Exhibit C.
ARTICLE VIII
INDEMNIFICATION
8.1.          Survival of the Representations and Warranties.  The
representations and warranties of the  Sellers contained in this Agreement or in
any certificate, document or other instrument delivered by or on behalf of the
Company or the Sellers pursuant to this Agreement (other than the Fundamental
Representations), shall survive for a period of thirty-six (36) months following
the Closing Date (the date of
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expiration of such thirty-six (36)-month period, the “Expiration Date”);
provided, however, that in the event of fraud or intentional misrepresentation
with respect to a representation or warranty, such representation or warranty
shall survive for the applicable statute of limitations for such a claim;
provided, further, that the Fundamental Representations survive until the date
that is sixty (60) days after the expiration of all statutes of limitations
applicable to such representations and warranties (including all periods of
extension); provided, further, that all representations and warranties of the
Company and the Sellers shall survive beyond the Expiration Date or other
survival periods specified above with respect to any inaccuracy therein or
breach thereof if a claim is made hereunder in writing setting forth the
specific claim and the basis therefor prior to the expiration of the survival
period for such representation and warranty, in which case such representation
and warranty shall survive as to such claim until such claim has been finally
resolved.  The representations and warranties of the Purchaser contained in this
Agreement or in any certificate, document or other instrument delivered by or on
behalf of the Purchaser pursuant to this Agreement shall survive the Closing and
terminate on the Expiration Date; provided, however, that all representations
and warranties of the Purchaser shall survive beyond the Expiration Date with
respect to any inaccuracy therein or breach thereof if a claim is made hereunder
in writing setting forth the specific claim and the basis therefor prior to the
Expiration Date, in which case such representation and warranty shall survive as
to such claim until such claim has been finally resolved.  For the avoidance of
doubt, it is the intention of the Parties hereto, and each of the Parties
expressly acknowledge and agree, that the foregoing respective survival periods
and termination dates supersede any applicable statutes of limitations that
would otherwise apply to such representations and warranties.
8.2.          Indemnification.
(a)          Subject to the other provisions of this Article VIII, the Sellers
shall jointly and severally indemnify, defend and hold harmless the Purchaser,
the Company, each of the Company’s Subsidiaries, and each of their respective
officers, directors, employees, partners, members, agents and Affiliates (the
“Purchaser Indemnified Parties”) against any and all Losses, including income
and other Taxes, incurred or suffered by any such Purchaser Indemnified Parties
directly or indirectly as a result of, with respect to or in connection with:
(i)            a breach of, or inaccuracy in, any of the representations or
warranties made by the Company or the Sellers in this Agreement (it being agreed
that, for purposes of this Article VIII, all qualifications and exceptions
relating to materiality, material adverse effect, Material Adverse Effect or
words of similar import (but not specific dollar thresholds) shall be
disregarded, including for purposes of determining whether or not a breach of a
representation or warranty has occurred, determining whether any deductible
amounts have been surpassed, or determining the amount of any Losses);
(ii)           any failure by the Company to fully perform, fulfill or comply
with any covenant set forth herein to be performed, fulfilled or complied with
by the Company at or prior to the Closing;
(iii)          any failure by the Sellers to fully perform, fulfill or comply
with any covenant set forth herein or in any Ancillary Agreement to be
performed, fulfilled or complied with by the Sellers at any time before or after
Closing;
(iv)          any Debt outstanding as of the Closing Date that is not taken into
account in determining the Final Cash Amount;
(v)           any of the assets acquired, and liabilities accrued, by the
Company pursuant to the terms of the Asset Purchase Agreement; or
(vi)          any Transaction Expenses that are not taken into account in
determining the Final Cash Amount.
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(b)          Subject to the other provisions of this Article VIII, the Purchaser
shall indemnify, defend and hold harmless the Sellers and each of their
respective officers, directors, employees, partners, members, agents and
Affiliates (the “Seller Indemnified Parties”) against any and all Losses
incurred or suffered by any such Seller Indemnified Parties directly or
indirectly as a result of, with respect to or in connection with (i) any breach
of, or inaccuracy in, any of the representations or warranties made by the
Purchaser in this Agreement or (ii) any failure by the Purchaser to fully
perform, fulfill or comply with any covenant set forth herein to be performed,
fulfilled or complied with by the Purchaser at any time.
8.3.          Limitations on Liability.
(a)          Subject to Section 8.3(b), the Sellers shall not be required to
make any indemnification payment pursuant to Section 8.2(a)(i) for any actual or
alleged inaccuracy in or breach of any representation or warranty in this
Agreement until such time as the total amount of all Losses (including the
Losses arising from such actual or alleged inaccuracy or breach and all other
Losses arising from any other actual or alleged inaccuracies or breaches of any
representations or warranties) that have been directly or indirectly suffered or
incurred by any one or more of the Indemnified Parties, or to which any one or
more of the Indemnified Parties has or have otherwise directly or indirectly
become subject, exceeds $25,000 (the “Basket Amount”) in the aggregate.  If the
total amount of such Losses exceeds the Basket Amount, then the Indemnified
Parties shall be entitled to be indemnified against and compensated and
reimbursed for the entire amount of such Losses up to the Cap (as defined
below), and not merely the portion of such Losses exceeding the Basket Amount.
(b)          The limitation set forth in Section 8.3(a) shall not apply (and
shall not limit the indemnification or other obligations of any Seller):  (i) in
the event of intentional misrepresentation or fraud (whether on the part of such
Seller, any other Seller, the Company or any Representative of the Company);
(ii) to inaccuracies in or breaches of any of the Fundamental Representations;
or (iii) to any obligations of the Sellers to indemnify the Indemnified Parties
under Sections 8.2(a)(ii)-(a)(v).
(c)          Subject to Section 8.3(d), in no event shall the cumulative
indemnification obligation pursuant to Section 8.2(a)(i) or Section 8.2(b)(i),
respectively, exceed $3,000,000 (the “Cap”) in the aggregate.
(d)          The limitation set forth in Section 8.3(c) shall not apply (and
shall not limit the indemnification or other obligations of any Seller):  (i) in
the event of intentional misrepresentation or fraud (whether on the part of such
Seller, any other Seller, the Company or any Representative of the Company);
(ii) to inaccuracies in or breaches of any of the Fundamental Representations;
or (iii) to any obligations of the Sellers to indemnify the Purchaser
Indemnified Parties under Sections 8.2(a)(ii)-(a)(v).  Subject to Section 8.3,
the total amount of indemnification payments that each Seller that was not
directly or indirectly involved in any intentional misrepresentation or fraud
can be required to make to the Purchaser Indemnified Parties pursuant to
Section 8.2 shall be limited to the aggregate Final Cash Amount such Seller was
entitled to receive pursuant to Section 1.3.
(e)          Notwithstanding anything to the contrary contained in this Article
VIII, there shall be no recovery for any Damage or alleged Damage by the
Purchaser under this Article VIII, and the Losses shall not be included in
meeting the stated thresholds hereunder, to the extent such item has been
included in the calculation of (i) the Closing Date Debt, (ii) the liabilities
included in the Closing Date Net Current Assets or (iii) the Transaction
Expenses as each have been determined pursuant to Section 1.4 hereof.
8.4.          Defense of Third Party Claims.
(a)          For purposes of Sections 8.4 and 8.5, a party making a claim for
indemnity under Section 8.2 is hereinafter referred to as an “Indemnified Party”
and the party against whom such claim is asserted is hereinafter referred to as
the “Indemnifying Party.” In the event of the assertion or commencement by any
Person of any claim or Legal Proceeding (whether against the Company, the
Indemnified Party or any
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other Person) with respect to which any Indemnifying Party may become obligated
to hold harmless, indemnify, compensate or reimburse any Indemnified Party
pursuant to this Article VIII (a “Third Party Claim”), the Indemnified Party
shall have the right, at its election, to proceed with the defense of such Third
Party Claim on its own with counsel reasonably satisfactory to the Indemnifying
Party.  If the Indemnified Party so proceeds with the defense of any such Third
Party Claim, then: (i) subject to the other provisions of this Article VIII, all
reasonable expenses relating to the defense of such Third Party Claim shall be
borne and paid exclusively by the Indemnifying Party; (ii) each Indemnifying
Party shall make available to the Indemnified Party any documents and materials
in such Indemnifying Party’s possession or control that may be necessary to the
defense of such Third Party Claim; and (iii) the Indemnified Party shall have
the right to settle, adjust or compromise such Third Party Claim; provided,
however, that if the Indemnified Party settles, adjusts or compromises any such
Third Party Claim without the consent of the Sellers’ Representative, such
settlement, adjustment or compromise shall not be conclusive evidence of the
amount of Losses incurred by the Indemnified Party in connection with such Third
Party Claim (it being understood that if the Indemnified Party requests that the
Indemnifying Party consent to a settlement, adjustment or compromise, the
Indemnifying Party shall not unreasonably withhold or delay such consent).
(b)          If the Indemnified Party does not elect to proceed with the defense
of any such Third Party Claim, the Indemnifying Party may proceed with the
defense of Third Party Claim with counsel reasonably satisfactory to the
Indemnified Party; provided, however, that the Indemnifying Party may not
settle, adjust or compromise any such Third Party Claim without the prior
written consent of the Indemnified Party (which consent may not be unreasonably
withheld or delayed).  The Indemnified Party shall give the Indemnifying Party
prompt notice of the commencement of any such Third Party Claim against the
Indemnified Party; provided, however, that any failure on the part of the
Indemnified Party to so notify the Indemnifying Party shall not limit any of the
obligations of the Indemnifying Party under this Article VIII (except to the
extent such failure materially prejudices the defense of such Third Party
Claim).  The Indemnified Parties and the Indemnifying Parties agree that any
factual findings or legal conclusions by a court of competent jurisdiction or
arbitration panel in the resolution of a Third Party Claim shall be dispositive,
final and binding with respect to any dispute between the Indemnified Parties
and Indemnifying Parties concerning their respective liability to one another
for an indemnification claim under this Article VIII.
8.5.          Indemnification Claims Procedure.
(a)          If any Indemnified Party has or claims in good faith to have
incurred or suffered, or believes in good faith that it may incur or suffer,
Losses for which it is or may be entitled to be held harmless, indemnified,
compensated or reimbursed under this Article VIII or for which it is or may be
entitled to a monetary remedy (such as in the case of a claim based on fraud or
intentional misrepresentation), such Indemnified Party may deliver a notice of
claim (a “Notice of Claim”) to the Indemnifying Party.  Each Notice of Claim
shall:  (i) state that such Indemnified Party believes in good faith that such
Indemnified Party is or may be entitled to indemnification, compensation or
reimbursement under this Article VIII or is or may otherwise be entitled to a
monetary remedy; (ii) contain a brief description of the facts and circumstances
supporting the Indemnified Party’s claim; and (iii) if practicable, contain a
good faith, non-binding, preliminary estimate of the aggregate amount of the
actual and potential Losses that the Indemnified Party believes have arisen and
may arise as a result of such facts and circumstances (the aggregate amount of
such estimate, as it may be modified by such Indemnified Party in good faith
from time to time, being referred to as the “Claimed Amount”).
(b)          During the 20-day period commencing upon delivery by an Indemnified
Party to the Indemnifying Party of a Notice of Claim (the “Dispute Period”), the
Indemnifying Party may deliver to the Indemnified Party who delivered the Notice
of Claim a written response (the “Response Notice”) in which the Indemnifying
Party:  (i) agrees that the full Claimed Amount is owed to the Indemnified
Party; (ii) agrees that part, but not all, of the Claimed Amount (the “Agreed
Amount”) is owed to the Indemnified Party; or (iii) indicates that no part of
the Claimed Amount is owed to the Indemnified Party.  If the Response Notice is
delivered in accordance with clause (ii) or (iii) of the preceding sentence, the
Response Notice shall also
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contain a brief description of the facts and circumstances supporting the
Indemnifying Party’s claim that only a portion or no part of the Claimed Amount
is owed to the Indemnified Party, as the case may be.  Any part of the Claimed
Amount that is not agreed to be owed to the Indemnified Party pursuant to the
Response Notice (or the entire Claimed Amount, if the Indemnifying Party asserts
in the Response Notice that no part of the Claimed Amount is owed to the
Indemnified Party) is referred to in this Agreement as the “Contested Amount”
(it being understood that the Contested Amount shall be modified from time to
time to reflect any good faith modifications by the Indemnified Party to the
Claimed Amount).  If a Response Notice is not received by the Indemnified Party
prior to the expiration of the Dispute Period, then the Indemnifying Party shall
be conclusively deemed to have agreed that the full Claimed Amount is owed to
the Indemnified Party.
(c)          If: (i) the Indemnifying Party delivers a Response Notice to the
Indemnified Party agreeing that the full Claimed Amount is owed to the
Indemnified Party; or (ii) the Indemnifying Party does not deliver a Response
Notice to the Indemnified Party during the Dispute Period, then the Indemnifying
Party shall pay within 10 Business Days following such earlier date shall the
full Claimed Amount.
(d)          If the Indemnifying Party delivers a Response Notice to the
Indemnified Party during the Dispute Period agreeing that less than the full
Claimed Amount is owed to the Indemnified Party, then the Indemnifying Party
shall pay within 10 Business Days following the date of such Response Notice,
such Agreed Amount.
(e)          If the Indemnifying Party delivers a Response Notice to the
Indemnified Party during the Dispute Period indicating that there is a Contested
Amount, the Indemnifying Party and the Indemnified Party shall attempt in good
faith to resolve the dispute related to the Contested Amount.  If the
Indemnified Party and the Indemnifying Party resolve such dispute, then their
resolution of such dispute shall be binding on the Indemnifying Party and such
Indemnified Party and a settlement agreement stipulating the amount owed to the
Indemnified Party (the “Stipulated Amount”) shall be signed by the Indemnified
Party and the Indemnifying Party.  The Indemnifying Party shall pay within 10
Business Days following the execution of such settlement agreement (or such
shorter period of time as may be set forth in the settlement agreement), the
Stipulated Amount.
(f)          In the event that there is a dispute relating to any Notice of
Claim or Contested Amount (whether it is a matter between the Indemnified Party,
on the one hand, and the Indemnifying Party on the other hand, or it is a matter
that is subject to a claim or Legal Proceeding asserted or commenced by a third
party brought against the Indemnified Party or the Company), such dispute shall
be settled in accordance with the Accounting Arbitrator provisions set forth in
Section 1.4(b).  The Indemnifying Party shall pay within 10 Business Days
following the delivery of such final decision of the Accounting Arbitrator the
amounts determined by the Accounting Arbitrator.
8.6.          No Contribution.   Each Seller waives, and acknowledges and agrees
that such Seller shall not have and shall not exercise or assert (or attempt to
exercise or assert), any right of contribution, right of indemnity or
advancement of expenses or other right or remedy against the Company in
connection with any indemnification obligation or any other liability to which
such Seller may become subject under or in connection with this Agreement or any
other agreement or document delivered to the Purchaser in connection with this
Agreement.  Effective as of the Closing, each Seller expressly waives and
releases any and all rights of subrogation, contribution, advancement,
indemnification or other claim against the Purchaser or the Company.
8.7.          Right of Setoff.  In the event that the Purchaser is entitled to
any payments in respect to indemnification for Losses under Section 8.2(a), the
Purchaser shall, in addition to any other remedies provided for herein or
available to the Purchaser at law or in equity, be entitled to offset the amount
of such payments or Losses against any amounts due and owed to the Sellers,
including, but not limited to, any amount of the Earnout Consideration that
might become due and payable pursuant to Section 1.5.
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8.8.          Exercise of Remedies Other Than by the Purchaser.  No Indemnified
Party (other than the Purchaser or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless the Purchaser (or any successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
8.9.          Purchase Price Adjustment.  All amounts paid under this
Article VIII shall, to the extent permitted by Law, be treated as an adjustment
to the consideration being paid for the Shares.
ARTICLE IX
TAX MATTERS
9.1.          Taxes and Tax Refunds for Pre-Closing Tax Periods.
(a)          The Sellers shall jointly and severally indemnify the Purchaser
Indemnified Parties against, and be liable for any and all Losses (all herein
referred to as “Tax Losses”) arising out of, resulting from or in any way
related to:
(i)            any Taxes attributable to any Pre-Closing Tax Period
(“Pre-Closing Taxes”) imposed on the Company, any of its Subsidiaries,
including, for the avoidance of doubt, all Transaction Payroll Taxes; provided,
however, that payments in respect of any particular Pre-Closing Taxes will be
required to be made only to the extent of the amount of the liability for such
Pre-Closing Taxes which (A) is in excess of the amount of such Pre-Closing Taxes
actually paid by the Company or any of its Subsidiaries on or prior to the
Closing Date and (B) has not already been reflected as a current liability in
the calculation of Closing Net Current Assets; or
(ii)           any liability of the Company or any of its Subsidiaries as a
result of the applicability of Treasury Regulation Section 1.1502-6 or similar
provisions of foreign, state or local Tax law for Taxes of any affiliated group
(or any member thereof other than the Company and its Subsidiaries) of which the
Company or any of its Subsidiaries is or was a member on or prior to the Closing
Date.
(b)          Subject to the resolution of any Tax contest pursuant to
Section 9.4, upon notice (the “Tax Loss Notice”) from the Purchaser to the
Sellers that a Purchaser Indemnified Party is entitled to an indemnification
payment for a Tax Loss pursuant to Section 9.1(a), which Tax Loss Notice shall
state with reasonable specificity the nature of such Tax Loss, the date (if any)
such item was paid or properly accrued, and the computation of the amount of
such Tax Loss, the Sellers shall, except to the extent that such Tax Loss, or
the Sellers’ liability with respect thereto, is disputed, jointly and severally
pay to the Purchaser Indemnified Party the amount of such Tax Loss set forth in
such Tax Loss Notice by wire transfer of immediately available funds within five
(5) Business Days of receipt of such Tax Loss Notice.
(c)          Notwithstanding anything to the contrary contained in this
Agreement, the indemnification obligations of the Sellers under Section 9.1(a)
shall survive the Closing until the end of the applicable statutes of
limitations.  With respect to any indemnification obligation for any Tax for
which a Taxing Authority asserts a claim within ninety (90) days before the end
of the applicable statute of limitations, a the Purchaser Indemnified Party
shall be treated as having provided timely notice to the Sellers by providing
written notice to the Sellers on or before the ninetieth (90th) day after the
Purchaser Indemnified Party’s receipt of a written assertion of the claim by the
Taxing Authority.
(d)          The Sellers shall be entitled to receive any refund of Taxes
(including refunds paid by credit against Taxes of the Purchaser, the Company or
any of its Subsidiaries) attributable to any Pre-Closing Tax Period (other than
any refund resulting from the carryback of any net operating loss or other Tax
attribute from a Tax Period (or portion thereof) beginning after the Closing
Date to a Pre-Closing Tax Period) and any overpayment of estimated Pre-Closing
Taxes by the Company or any of its Subsidiaries, plus any
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interest on any such refund or credits received from the applicable Taxing
Authority, minus any reasonable costs and expenses incurred by the Purchaser,
the Company or any of its Subsidiaries in connection with the procurement of
such refund or credit.  The Purchaser shall, and shall cause the Company and its
Subsidiaries to, cooperate with the Sellers in obtaining any refunds or credits
which the Sellers are entitled to receive under this Section 9.1.  Such
cooperation shall include (i) informing the Sellers if and the extent that the
Purchaser, the Company or any Subsidiary of the Company becomes aware of the
possible availability of any such refund or credit, (ii) filing claims or
amended Tax Returns at the request of the Sellers to obtain any such refund or
credit and (iii) paying the amount of such credit or refund (net of such costs
and expenses) over to the Sellers (in accordance with their respective Equity
Ownership Percentages and the payment instructions as provided by the Sellers)
by wire transfer within five (5) Business Days after the receipt thereof.
(e)          Except with respect to any Taxes attributable to a breach of the
Tax Representation, the Purchaser shall be responsible for and shall pay any
Taxes attributable to the operations of the Company or any of its Subsidiaries
attributable to that portion of any Straddle Period beginning after the Closing
Date as well as for any Taxes attributable to the operations of the Company or
any of its Subsidiaries for any Tax period beginning after the Closing Date. 
The Purchaser shall be entitled to any refund of Taxes attributable to any
Straddle Period to the extent such refund is attributable to the portion of such
Straddle Period beginning after the Closing Date.
9.2.          Allocation of Straddle Period Taxes.  For purposes of this
Article IX, in order to apportion appropriately any Taxes relating to a Straddle
Period, the Parties shall, to the extent permitted or required under applicable
Law, treat the Closing Date as the last day of the taxable year or period of the
Company and all of its Subsidiaries for all Tax purposes.  In any case where
applicable Law does not permit the Company or any of its Subsidiaries to treat
the Closing Date as the last day of the taxable year or period, the portion of
any Taxes that are allocable to the portion of the Straddle Period ending on the
Closing Date shall be (i) in the case of Taxes that are imposed on a periodic
basis (for example, property taxes), deemed to be the amount of such Taxes for
the entire period multiplied by a fraction, the numerator of which is the number
of calendar days in the Straddle Period ending on (and including) the Closing
Date and the denominator of which is the number of calendar days in the entire
relevant Straddle Period, and (ii) in the case of Taxes not described in clause
(i), deemed equal to the amount that would be payable if the taxable year or
period ended on the Closing Date (such as taxes that are either based on or
related to income or receipts or imposed in connection with any sale or other
transfer or assignment of property).
9.3.          Tax Returns.
(a)          The Purchaser agrees that the Sellers shall be responsible for, and
the Purchaser shall cooperate (and cause the Company and its Subsidiaries to
cooperate) with the Sellers in the preparation and filing, when due (taking into
account all extensions properly obtained), of all Tax Returns that are required
to be filed by or with respect to the Company or any Subsidiary of the Company
for any taxable period ending on or prior to the Closing Date; provided that the
Sellers shall deliver to the Purchaser a draft copy of any Tax Return for a
Pre-Closing Tax Period at least thirty (30) days prior to the due date thereof
(taking into account all extensions properly obtained) for the Purchaser’s
review and comment, and the Sellers and the Purchaser shall cooperate in good
faith to determine whether any such Tax Return for any Straddle Period should
reflect the Purchaser’s comments (if any).  The Sellers shall jointly and
severally pay the expense for the preparation and filing of all Tax Returns that
are required to be filed by or with respect to the Company or any Subsidiary of
the Company for any taxable period ending on or prior to the Closing Date.
(b)          The Purchaser shall prepare and file or cause to be prepared and
filed when due (taking into account all extensions properly obtained) all Tax
Returns for any Straddle Periods that are required to be filed by or with
respect to the Company or any of its Subsidiaries, provided that any Tax Return
for a Straddle Period shall be submitted to the Sellers at least thirty (30)
calendar days prior to its due date (taking into account all extensions properly
obtained) for the Sellers’ review and comment, which comments shall be
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discussed by the Purchaser with the Sellers to determine in good faith whether
the Tax Returns for the Straddle Period should reflect the Sellers’ comments.
(c)          Any Taxes owed in respect of such Tax Returns for any Pre-Closing
Tax Period which are prepared and filed pursuant to this Section 9.3 shall be
paid by the Sellers at least two (2) Business Days prior to the due dates for
the payment of such Taxes.
(d)          Except to the extent otherwise required by applicable Law, neither
the Purchaser, the Company nor any of the Subsidiaries may carry back for United
States federal, state, local or non-United States Tax purposes to any taxable
year or period, or portion thereof, ending on or before the Closing Date any
operating losses, net operating losses, capital losses, Tax credits or similar
items relating solely to the operation of the Company or any of its Subsidiaries
arising in a taxable period (or portion thereof) occurring on or after the
Closing Date without the Sellers’ consent, which such consent may be withheld,
conditioned or delayed for any reason.
9.4.          Tax Contests.
(a)          If the Purchaser or any of its Affiliates or the Sellers receive
notice from any Governmental Entity of any proposed or actual audit,
examination, adjustment, claim, assessment or demand concerning the amount of
Taxes of the Company or any of its Subsidiaries with respect to any Pre-Closing
Tax Period, such Party shall inform the other thereof within ten (10) Business
Days after receipt of such notice.  No failure or delay in providing such notice
shall reduce or otherwise affect the obligations or liabilities of any Party
hereto, except to the extent such failure or delay adversely affects the
recipient Party’s ability to defend against any liability or claim with respect
to such Taxes.  Any notice shall be accompanied by a copy of any written notice
or other document received from the applicable Governmental Entity with respect
to such matter.
(b)          Except as otherwise provided in this Section 9.4, the Sellers shall
have the sole right to control, at the expense of the Sellers, the contest of
any audit, dispute or administrative, judicial or other proceeding relating to
the Taxes of the Company or any of its Subsidiaries for any taxable period
ending on or before the Closing Date so long as (i) the Sellers notify the
Purchaser in writing within fifteen (15) days after the Purchaser (or the
Purchaser’s Affiliate) has given notice of such claim that Sellers will
indemnify the Purchaser Indemnified Parties from and against the entirety of any
Tax Losses the Purchaser Indemnified Parties may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the claim, and (ii) the
Sellers conduct the defense of the claim actively and diligently.  If any of the
conditions in the preceding sentence are or become unsatisfied, (A) the
Purchaser may defend against, and, with the consent of the Sellers (which shall
not be unreasonably withheld or delayed), consent to the entry of any judgment
or enter into any settlement with respect to, the claim in any manner that it
may deem appropriate, (B) the Sellers will reimburse the Purchaser for the
reasonable costs of defending against the claim (including attorneys’,
accountants’ and experts’ fees and disbursements) and (C) the Sellers will
remain responsible for any Tax Losses the Purchaser Indemnified Parties may
suffer to the fullest extent provided in this Article IX.  If the Sellers elect
to control any such contest, the Purchaser may, at its expense, participate in
such contest. The Purchaser shall have the sole right to control, at its
expense, the contest of any audit, dispute or administrative, judicial or other
proceeding relating to the Taxes of the Company or any of its Subsidiaries for
any Straddle Period or for any period commencing after the Closing Date.  If the
Purchaser elects to control any such contest relating to any Straddle Period,
the Sellers may, at their expense, participate in such contest.  No audit,
dispute or administrative, judicial or other proceeding may be settled (i) in
the case of any such contest relating to a taxable period ending on or before
the Closing Date by Sellers without the Purchaser’s prior written consent if
such settlement would have an adverse impact on the Purchaser or any of its
Affiliates, or (ii) in the case of any such contest relating to a Straddle
Period, by the Purchaser without the Sellers’ prior written consent if such
settlement would have an adverse impact on any Seller; provided, however, that
no such consent by the Sellers or the Purchaser shall be unreasonably withheld
or delayed.
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9.5.          Assistance and Cooperation.  The Sellers and the Purchaser shall
furnish or cause to be furnished to each other, upon request, as promptly as
practicable, such information (including access to books and records) and
assistance relating to the Company and its Subsidiaries as is reasonably
requested for the filing of any Tax Returns, for the preparation of any audit,
for the filing of Tax refund claims or amended Tax Returns and for the
prosecution or defense of any Tax claim.  The Purchaser shall, and shall cause
the Company and its Subsidiaries to, preserve and keep all books and records
with respect to Taxes and Tax Returns of the Company and its Subsidiaries until
the expiration of the applicable statute of limitations.  Any information
obtained under this Section 9.5 shall be kept confidential except (i) as may be
otherwise necessary in connection with the filing of Tax Returns or claims for
refund or in conducting an audit or other proceeding or (ii) with the consent of
the Party in possession of such information.
9.6.          Transfer Taxes.  The Purchaser, on the one hand, and the Sellers,
on the other hand, shall each be responsible for one-half of (i) any and all
transfer, documentary, sales, use, stamp, registration and other Taxes and fees
payable in connection with the consummation of the transactions contemplated by
this Agreement and (ii) the costs of filing all necessary Tax Returns and other
documentation with respect to all such Taxes and fees.  The Purchaser shall file
all necessary Tax Returns and other documentation with respect to, and pay when
due, all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees, and, if required by Law, the Sellers shall join in the execution
of any such Tax Returns and documentation.  The Sellers shall jointly and
severally pay to the Purchaser the Taxes, fees and costs for which the Sellers
are responsible under this Section 9.6 by wire transfer of immediately available
funds at least two (2) Business Days prior to the applicable due dates.
9.7.          Treatment of Payments.  All amounts paid under this Article IX
shall, to the extent permitted by Law, be treated for all purposes as an
adjustment to the consideration being paid for the Shares.
ARTICLE X
DEFINITIONS; CONSTRUCTION
10.1.          Definitions.  For the purposes of this Agreement:
“2017 Earnout Period” means October 1, 2016 through September 30, 2017.
“2018 Earnout Period” means October 1, 2017 through September 30, 2018.
“2019 Earnout Period” means October 1, 2018 through September 30, 2019.
“Accounting Arbitrator” means a recognized firm of independent accountants
selected by mutual agreement of the Purchaser and the Sellers.
“Acquisition Proposal” means with respect to the Company, any agreement, offer,
proposal or bona fide indication of interest (other than this Agreement or any
other offer, proposal or indication of interest by the Purchaser), or any public
announcement of intention to enter into any such agreement or of (or intention
to make) any offer, proposal or bona fide indication of interest, relating to,
or involving:  (i) any acquisition or purchase from the Company, or from the
Sellers, by any Person or group of more than a 10% interest in the total
outstanding voting securities of the Company or any tender offer or exchange
offer that if consummated would result in any Person or group beneficially
owning 10% or more of the total outstanding voting securities of the Company, or
any merger, consolidation, business combination or similar transaction involving
the Company; (ii) any sale, lease, mortgage, pledge, exchange, transfer, license
(other than in the ordinary course of business) or disposition of more than 10%
of the assets of the Company in any single transaction or series of related
transactions; or (iii) any liquidation or dissolution of the Company, or any
extraordinary dividend or distribution, whether of cash or other property.
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“Affiliate” means, with respect to the Person to which it refers, a Person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by or is under common control with, such Person.  For the purpose of
this definition, the term “control” of a Person means the power to direct, or
cause the direction of, the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms and phrases “controlling,” “controlled by” and “under common control” have
correlative meanings.
“Agama” is defined in Section 6.15.
“Agreed Amount” is defined in Section 8.5(b).
“Agreement” is defined in the Preamble.
“Ancillary Agreements” means all agreements, instruments or documents required
or expressly provided under this Agreement to be executed and delivered in
connection with the transactions contemplated by this Agreement, including the
Asset Purchase Agreement, the Resignations, the Non-Competition and
Non-Solicitation Agreements, the Excluded Contracts, the Subordination
Agreements, and the Subscription Agreements.
“Anti-Terrorism Law” means any Law relating to terrorism or money-laundering,
including Executive Order No. 13224 and the USA Patriot Act.
“Asset Purchase Agreement” means that certain Asset Purchase Agreement, dated as
of November 3, 2016, by and between the Company and Agama Solutions Inc.
“Balance Sheet Date” is defined in Section 3.7(a).
“Base Cash Amount” means Four Million Four Hundred Thirty Thousand Seven Hundred
Forty Dollars and Seventy-Six Cents ($4,430,740.76).
“Basket Amount” is defined in Section 8.3(a).
“Business Day” means any day of the year on which national banking institutions
in the State of California are open to the public for conducting business and
are not required to close.
“Business Model” means the current business model being operated by the Company
which focuses on a training model involving students.
“Business Plan” is defined in Section 1.5(e).
“Cap” is defined in Section 8.3(c).
“Cause” shall include the following, as determined in the sole discretion of the
Purchaser:
(a)          commission by the Seller of any acts involving fraud or commission
by the Seller of a felony;
(b)          the Seller’s failure or refusal to perform adequately the Seller’s
duties and responsibilities hereunder and such failure or refusal shall have
continued for a period of twenty (20) days following written notice from the
Purchaser; or
(c)          material breach of the Seller of any of the Seller’s obligations
under any agreement between the Seller and the Company, including, without
limitation, the Non-Competition and Non-Solicitation
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Agreements, the Subscription Agreements or any agreement or covenant under this
Agreement or any Ancillary Agreement.
“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
“Certificates” means, collectively, the stock certificates evidencing the
Shares.
“Change in Control” means, (a) a sale of all or substantially all of the
Purchaser’s assets to any Person where Existing Management does not hold
management positions immediately after such sale; (b) a merger, consolidation or
other capital reorganization or business combination transaction of the
Purchaser with or into another corporation, limited liability company or other
entity (other than a wholly-owned subsidiary of the Purchaser) where Existing
Management does not hold management positions immediately after such merger,
consolidation, reorganization or business combination; or (c) the consummation
of a transaction, or series of related transactions, in which any “person” (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
“beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of all of the Purchaser’s then outstanding voting securities and
Existing Management ceases to hold management positions immediately after such
transaction or series of transactions.  Notwithstanding the foregoing, a
transaction shall not constitute a Change of Control if its purpose is to (i)
change the jurisdiction of the Purchaser’s incorporation, (ii) create a holding
company that will be owned in substantially the same proportions by the persons
who hold the Purchaser’s securities immediately before such transaction, or
(iii) obtain funding for the Purchaser in a financing that is approved by the
Purchaser’s Board.
“Claimed Amount” is defined in Section 8.5(a).
“Closing” is defined in Section 2.1.
“Closing Date” is defined in Section 2.1.
“Closing Debt” means the aggregate amount of all outstanding Debt as of 12:01
a.m., Pacific time, on the morning of the Closing Date (including such Debt to
be paid or satisfied on the Closing Date in accordance with the Payoff Letters).
“Closing Net Current Assets” means, as of 12:01 a.m., Pacific time, on the
morning of the Closing Date, the Net Current Assets Target minus Closing
Extraordinary Liabilities.
“Closing Extraordinary Liabilities” means, as of 12:01 a.m., Pacific time, on
the morning of the Closing Date, any liabilities of the Company incurred since
July 1, 2016 outside of the ordinary course of business.
“Closing Statement” is defined in Section 1.3(a).
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Company” is defined in the Preamble.
“Company Balance Sheet” is defined in Section 3.7(a).
“Company Employee Plan” means any plan, program, policy, practice, Contract,
agreement or other arrangement (written or oral) providing for deferred
compensation, profit sharing, bonus, severance, change-of-control payments,
termination pay, performance awards, stock option, share appreciation right,
phantom equity award or other stock-related awards, fringe benefits, flexible
spending, group or individual health, dental, medical, life insurance, survivor
benefit or other welfare, pension or other employee benefits or
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remuneration of any kind, whether formal or informal, funded or unfunded,
including each “employee benefit plan” within the meaning of Section 3(3) of
ERISA, whether or not subject to ERISA, which is or has been sponsored,
maintained, contributed to, or required to be contributed to, by the Company,
any Subsidiary of the Company or any of their respective ERISA Affiliates for
the benefit of any Employee, director or consultant, or pursuant to which the
Company, any Subsidiary of the Company or any of their respective ERISA
Affiliates has or may have any obligation or liability, contingent or otherwise.
“Company Financial Statements” is defined in Section 3.7(a).
“Company Intellectual Property” means any and all Intellectual Property that is
(i) used by the Company and its Subsidiaries in their businesses as currently
conducted or proposed to be conducted or (ii) incorporated in, forming any part
of or used to provide any of the Company or any of its Subsidiaries’ services.
“Company Material Contracts” is defined in Section 3.13(b).
“Company’s Knowledge” (including any derivation thereof such as “known” or
“knowing”) means the actual knowledge of any of the Sellers after inquiry of
Persons reporting directly to them with respect to the matter in question.
“Confidential Information” is defined in Section 11.16.
“Confidentiality Agreement” means the Confidentiality Agreement between the
Company and the Purchaser, as amended from time to time.
“Consents” means approvals, consents (including negative consents), waivers,
filings, authorizations, licenses, permits, notices, reports or similar items.
“Constitutional Documents” means, as to any Person, the constitutional or
organizational documents of such Person, including any charter, certificate or
articles of incorporation, certificate of formation, articles of association,
bylaws, trust instrument, partnership agreement, limited liability company
agreement or similar document.
“Contested Amount” is defined in Section 8.5(b).
“Contract” means any written or oral agreement, contract, mortgage, indenture,
lease, license, instrument, document, obligation or commitment that is legally
binding, including all amendments, modifications and supplements thereto,
provided, however, that the term Contract does not include purchase orders
entered into in the ordinary course of business.
“Covered Persons” is defined in Section 6.12(a).
“Debt” means, without duplication, (i) any indebtedness of the Company or any of
its Subsidiaries for borrowed money and accrued but unpaid interest, premiums
and penalties relating thereto (but excluding trade accounts payable and other
accrued current liabilities arising in the ordinary course of business to the
extent that such trade payables and other accrued current liabilities are
included in the calculation of Closing Net Current Assets), (ii) any
indebtedness of the Company or any of its Subsidiaries evidenced by a note,
bond, debenture or other similar security, (iii) any amount outstanding under
letters of credit or similar credit transactions or obligations (provided,
however, for the avoidance of doubt, and notwithstanding anything to the
contrary contain herein, the term “Debt” shall not include any standby letters
of credit or any undrawn letters of credit), (iv) any indebtedness under
interest rate, commodity or currency swap, hedge or similar credit transactions,
(v) any indebtedness for the deferred purchase price of goods or services (other
than trade payables incurred in the ordinary course of business) or conditional
sale obligations, (vi) all obligations under
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leases to which the Company or any of its Subsidiaries are a party and which
have been or are required to be recorded as capitalized leases under GAAP, and
(vii) any indebtedness or obligations referred to in the foregoing clauses (i)
through (vi) of any Person which is either guaranteed by, or secured by a Lien
upon any property or asset owned by, the Company or any of its Subsidiaries.
“Disclosure Letter” is defined in the preamble to Article III.
“Dispute Period” is defined in Section 8.5(b).
“Disputed Matters” is defined in Section 2.2(c).
“Earnout Consideration” means the total aggregate earnout amount paid by the
Purchaser to the Sellers pursuant to Section 1.5 and Exhibit B.
“EBITDA” means, for the 2017 Earnout Period, 2018 Earnout Period and 2019
Earnout Period, respectively, the Company’s earnings before interest, tax,
depreciation and amortization calculated consistent with past practice,
calculated consistent with past practice as set forth on Exhibit D.
“EBITDA Floor” means, for the 2017 Earnout Period, 2018 Earnout Period and 2019
Earnout Period, respectively, the EBITDA Floor set forth on Exhibit B hereto.
“Employee” means any current, former, or retired employee of the Company or any
of its Subsidiaries.
“Employee Shareholders” mean, collectively, Pankaj Kalra and Khannan Sankaran.
“Environmental Claims” is defined in Section 3.18(b).
“Environmental Law” means any and all Laws and Permits issued, promulgated or
entered into by any Governmental Entity relating to the environment, the
protection or preservation of human health or safety, including the health and
safety of employees, the preservation or reclamation of natural resources, or
the treatment, storage, transport, disposal, arrangement for transport or
disposal, management, Release or threatened Release of, or exposure to,
Hazardous Materials, in each case as in effect on the date hereof and as may be
issued, promulgated or amended from time to time.
“Equity Interest” means, with respect to any Person, any outstanding shares of
capital stock, subscriptions, options, calls, warrants or other rights to
acquire capital stock, whether or not currently exercisable.
“Equity Ownership Percentage” means, for each Seller, an amount equal to the
quotient of (i) the number of Shares held by such Seller immediately prior to
the Closing divided by (ii) the number of Shares outstanding (excluding treasury
shares) immediately prior to the Closing; provided, that the total of all such
percentages shall equal 100%.  As of the date of this Agreement, the Equity
Ownership Percentages of each Seller is set forth opposite such Seller’s name on
Exhibit A hereto.
“Equity Securities” means, with respect to any Person, any of its capital stock,
partnership interests (general or limited), limited liability company interests,
trust interests or other securities which entitle the holder thereof to
participate in the earnings of such Person or to receive dividends or
distributions on liquidation, winding up or dissolution of such Person, or to
vote for the election of directors or other management of such Person, or to
exercise other rights generally afforded to shareholders of a corporation.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
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“ERISA Affiliate” means any trade or business, whether or not incorporated, that
together with the Company would be deemed a “single employer” within the meaning
of Section 4001(b)(i) of ERISA.
“Estimated Closing Debt” is defined in Section 2.2(a).
“Estimated Closing Net Current Assets” is defined in Section 1.3(a)(i).
“Estimated Cash Amount” means an amount equal to (i) the Base Cash Amount, minus
(ii) the Estimated Unpaid Transaction Expenses, minus (iii) the Estimated
Closing Debt, minus (iv) the amount, if any, by which the Estimated Closing Net
Current Assets is less than the Net Current Asset Target.
“Estimated Unpaid Transaction Expenses” is defined in Section 1.3(a)(i).
“Excluded Contracts” means those contracts of Agama set forth on Exhibit B to
the Asset Purchase Agreement.
“Executive Order No. 13224” shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September 24, 2001, relating to “Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism”, as amended.
“Existing Management” means Nandu Thonadvadi and Dhru Desai.
“Expiration Date” is defined in Section 8.1.
“FCPA” is defined in Section 3.23(b).
“Final Closing Statement” is defined in Section 1.4(a).
“Final Cash Amount” means an amount equal to (i) the Base Cash Amount, minus
(ii) the Unpaid Transaction Expenses, minus (iii) the Closing Debt, plus
(iv) the Closing Cash, minus (v) the amount, if any, by which the Closing Net
Current Assets is less than the Net Current Asset Target.
“Fundamental Representations” means the representations and warranties of the
Sellers contained in Section 3.1 (Organization and Qualification of the
Company), Section 3.2 (Organization and Qualification of Subsidiaries),
Section 3.3 (Capitalization), Section 3.4 (Authority), Section 3.5(b) (No
Conflict with Constitutional Documents), Section 3.14 (Litigation), Section 3.16
(Permits) Section 3.18 (Environmental Matters), Section 3.19 (Employment
Matters), Section 3.20 (Employee Benefit Plans), Section 3.21 (Tax Matters),
Section 3.25 (Brokers’ and Finders’ Fees), Section 4.1 (Organization of the
Sellers),  Section 4.2 (Authority), Section 4.3(a) (No Conflict with
Constitutional Documents), and Section 4.6 (Title to the Shares).
“GAAP” means generally accepted accounting principles effective in the United
States as in effect on the date of this Agreement.
“Good Reason” means the occurrence of any of the following, in each case without
the Seller’s consent:
(a) a material reduction in the Seller’s base salary other than a general
reduction in base salary that affects all similarly situated employees in
substantially the same proportions;
(b) a relocation of the Seller’s principal place of employment by more than 50
miles;
(c) any material breach by the Company of any material provision of any
agreement between the Seller and the Company;
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(d) a material, adverse change in the Seller’s authority, duties, or
responsibilities (other than temporarily while the Seller is physically or
mentally incapacitated or as required by applicable law or other than a change
in the employment status of Ashish Sanan in accordance with the terms of
Section 1.5(d)); or
(e) a material alteration of the Business Model unless agreed to by the
Purchaser and a majority of the Sellers who, at such time, continue to have an
employment or consulting relationship with the Company.
“Governmental Entity” means any court, administrative agency or commission or
other federal, state, county, local or foreign governmental entity,
instrumentality, agency or commission.
“Hazardous Material” means those materials, substances, biogenic materials or
wastes that are regulated by, or form the basis of liability under, any
Environmental Law, including polychlorinated biphenyls, pollutants, solid
wastes, explosive, radioactive or regulated materials or substances, hazardous
or toxic materials, substances, wastes or chemicals, petroleum (including crude
oil or any fraction thereof) or petroleum distillates, asbestos or asbestos
containing materials, materials listed in 49 C.F.R. Section 172.101 and
materials defined as hazardous substances pursuant to Section 101(14) of CERCLA.
“ICE” is defined in Section 3.19(d).
“Indemnified Party” is defined in Section 8.4(a).
“Indemnifying Party” is defined in Section 8.4(a).
“Intellectual Property” means any and all patents and patent applications;
trademarks, service marks, trade names, brand names, trade dress, slogans,
logos, design rights, other proprietary indicia of goods and services worldwide
and Internet domain names and uniform resource locators, and the goodwill
associated with any of the foregoing; inventions (whether patentable or not),
industrial designs, discoveries, improvements, ideas, designs, models, formulae,
patterns, compilations, data collections, drawings, blueprints, mask works,
devices, methods, techniques, processes, know-how, proprietary information,
customer lists, software, technical information and trade secrets; copyrights,
copyrightable works, and rights in databases and data collections; original
works of authorship in any medium of expression, whether or not published or
registered, including source code, object code and software development
documentation; other intellectual or industrial property rights and foreign
equivalent or counterpart rights and forms of protection of a similar or
analogous nature to any of the foregoing or having similar effect in any
jurisdiction throughout the world; and registrations and applications for
registration of any of the foregoing, including any renewals, extensions,
continuations (in whole or in part), divisionals, re-examinations or reissues or
equivalent or counterpart thereof; and all documentation and embodiments of the
foregoing.
“Interim Financial Statements” is defined in Section 3.7(a).
“IRS” means the Internal Revenue Service.
“Judgment” means, with respect to any Person, any order, injunction, judgment,
settlement, decree, ruling, award, writ, decree or other similar requirement
enacted, adopted, promulgated or applied by a Governmental Entity or arbitrator
that is binding upon or applicable to such Person.
“Landlord Consents” means a consent and amendment for each Landlord Lease (as
such term is defined in Section 3.5 of the Disclosure Letter) by and between the
Company and the landlord to such  Landlord Lease, in each case shall have
entered into a consent and amendment for each such lease, in each case in form
and substance acceptable to the Purchaser.
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“Law” means any federal, state, foreign or local law, statute, ordinance, rule,
order, regulation, writ, injunction, directive, order, judgment, treaty, decree
or administrative or judicial decision.
“Lease” is defined in Section 3.11(a).
“Leased Real Property” is defined in Section 3.11(a).
“Legal Action” means any action, arbitration, mediation, audit, hearing,
investigation, proceeding, litigation or suit of any nature, whether civil,
criminal, administrative, regulatory, investigative or otherwise, in Law or in
equity, by or before any court, tribunal, arbitrator or other Governmental
Entity.
“Lenders” means, collectively, BMO Harris Bank N.A. and BIP Quadrant 4 Debt Fund
I, LLC.
“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
claim, charge, hypothecation, proxy, voting trust or agreement, transfer
restriction under any shareholder or similar agreement, or any exception,
reservation, easement, right-of-way, covenant, encroachment, encumbrance or
other title defect of any nature whatsoever, or any Contract to create any of
the foregoing.
“Losses” shall mean, without duplication for purposes of recovery, losses,
liabilities, damages, obligations, penalties, awards, fines, judgments, claims,
deficiencies, liquidated damages, assessments, interest and penalties, costs and
expenses, including reasonable attorneys’, accountants’, consultants’ and
experts’ fees and expenses of investigation and defense; provided, however, that
“Losses” shall not include any special or punitive damages awarded with respect
to any claim, unless such damages are part of a Tax claim or a Third Party Claim
for which indemnification is sought pursuant to this Agreement.
“Material Action” means any action by the Company or any of its Subsidiaries to:
(a)          amend its Constitutional Documents;
(b)          declare, set aside or pay any dividends in respect of its Equity
Securities or make any distribution with respect to its Equity Securities
(whether in cash or in kind) or redeem, purchase or otherwise acquire any of its
Equity Securities or split, combine or reclassify any of its Equity Securities;
(c)          authorize for issuance, issue, grant, sell, deliver or agree or
commit to issue, grant, sell or deliver, any Equity Interests in the Company or
any of its Subsidiaries, any security convertible into, exchangeable for, or
evidencing the right to subscribe for or acquire, any Equity Interests in the
Company or any of its Subsidiaries, or any rights, warrants or options to
acquire, or other agreements or commitments of any character obligating the
Company or any of its Subsidiaries to issue any Equity Interests in the Company
or any of its Subsidiaries;
(d)          sell, lease, transfer, license, mortgage, pledge or otherwise
dispose of or encumber, except for any Permitted Liens, (i)any Owned Real
Property or (ii)any of other its properties or assets, in the case of this
clause (ii), other than for fair consideration in the ordinary course of
business consistent with past practice;
(e)          incur or commit to any capital expenditures, obligations or
liabilities other than in the ordinary course of business consistent with past
practice;
(f)          create, incur, assume, guarantee or otherwise become liable or
obligated with respect to any Debt other than borrowings under its existing
revolving credit facility, or make any loan or advance to, or any investment in,
any Person;
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(g)          acquire by merging or consolidating with, or acquire by purchasing
a substantial portion of the Equity Interests or assets of, or in any other
manner, any business or Person;
(h)          change its auditor or change its methods of accounting in effect as
of the date of this Agreement except as required by changes in GAAP;
(i)           make or change any Tax election, amend any Tax Return, or adopt or
change any of its methods of accounting with respect to Taxes, change any annual
Tax accounting period, enter into any “closing agreement” with any Taxing
Authority, settle any Tax claim or assessment, surrender any right to claim a
Tax refund, offset or other reduction in Tax liability, consent to any extension
or waiver of the limitations period applicable to any Tax claim or assessment or
take or omit to take any other action related to Taxes;
(j)           dismiss, settle or compromise, or agree to dismiss, settle or
compromise, any Legal Action, except for any such dismissal, settlement or
compromise in the ordinary course of business which is not material to the
operations or financial condition of the Company and its Subsidiaries taken as a
whole;
(k)          enter into, amend, modify or renew any Contract regarding
employment, consulting, severance or similar arrangements with any of its
officers or directors, or grant any salary, wage or other increase in
compensation to any employee outside the ordinary course of business consistent
with past practice, increase any employee benefit or adopt, amend, terminate or
make any other change to any Company Employee Plan except as may be required by
Law or pursuant to this Agreement;
(l)           enter into any collective bargaining agreement or other obligation
to any labor organization or employee representative, in each case, whether
written or oral, or modify the terms of any such existing agreement except as
required by applicable Law;
(m)          implement any layoffs that could implicate the WARN Act or
otherwise implement any reduction-in-force or early retirement program;
(n)          enter into any Contract with, or for the benefit of, any Seller,
director, former director, officer of the Company or its Subsidiaries or any
Affiliate of the foregoing or any directors, former directors, officers or
shareholders of any Affiliate of the foregoing;
(o)          accelerate or delay the collection of notes or accounts receivable
in advance of or beyond their regular due dates or the dates when they would
have been collected in the ordinary course of business consistent with past
practices;
(p)          delay, postpone or accelerate the payment of accrued expenses,
trade payables or other liabilities beyond or in advance of their due dates or
the dates when such liabilities would have been paid or the receipt of any
accounts receivable except in the ordinary course of business consistent with
past practices; or
(q)          commit or agree to do any of the foregoing.
“Material Adverse Effect” means a material adverse effect (a) on the business,
properties, assets, liabilities, operations or financial condition of the
Company and its Subsidiaries, taken as a whole; provided, however, that none of
the following will be deemed, either alone or in combination, to constitute, and
none of the following will be taken into account in determining whether there
has been or will be, a Material Adverse Effect: (i) events, changes,
developments or circumstances relating to the industries or the markets in which
the Company and its Subsidiaries operate, including changes resulting from
weather or natural conditions, or changes in Law or the interpretation or
enforcement thereof (including, but not limited to, changes in reimbursement
rates), (ii) events, changes, developments, conditions or circumstances that
effect the U.S.
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economy generally, (iii) an outbreak or escalation of war, armed hostilities,
acts of terrorism, political instability or other national or international
calamity, crisis or emergency, or any governmental or other response to any of
the foregoing, in each case, whether occurring within or outside the United
States, (iv) changes in Law or GAAP, (v) any change, effect, circumstance or
event arising from the announcement of this Agreement, (vi) any action or
omission of the Company or any of its Subsidiaries prior to the Closing Date
contemplated by this Agreement or otherwise taken with the prior written consent
of the Purchaser, as long as, in the case of the foregoing clauses (i) through
(iv), such change, circumstance, event or effect has not had, and would not
reasonably be expected to have, a materially disproportionate adverse impact on
the Company and its Subsidiaries, taken as a whole, relative to other Persons
operating in the industry sector or sectors in which the Company and its
Subsidiaries operate, or (vii) any increase in the cost or availability of the
financing necessary for the Purchaser to consummate the transactions
contemplated hereby, or (b) the ability of either the Company or any Seller to
perform its obligations under this Agreement or to consummate the transactions
contemplated hereby on a timely basis.
“Material Customers” is defined in Section 3.26.
“Material Suppliers” is defined in Section 3.26.
“Net Current Asset Target” means One Million One Hundred Eighty Thousand Seven
Hundred Forty Dollars and Seventy-Six Cents ($1,180,740.76).
“Non-Competition and Non-Solicitation Agreement” means a non-competition and
non-solicitation agreement, in form and substance acceptable to the Purchaser,
dated as of the Closing Date and duly executed by the Sellers and the Purchaser.
“Objection Notice” is defined in Section 1.4(b).
“Objection Period” is defined in Section 1.4(b).
“Other Person Authorizations” is defined in Section 3.16(b).
“Owned Real Property” is defined in Section 3.11(b).
“Parties” means the Purchaser, the Company, the Sellers’ Representative and the
Sellers and “Party” means any of the Parties.
“Payoff Letters” means customary payoff letters from all holders of Debt, if any
(which Payoff Letters be in form and substance reasonably satisfactory to the
Purchaser’s lenders and shall contain (a) payoff amounts, including per diems;
(b) wire transfer instructions; (c) an affirmative statement by the holder of
the applicable Debt that (i) upon payment of the applicable payoff amount,
including any per diem, that (A) all obligations of the Company or its
Subsidiaries to such holder shall be satisfied in full, (B) all Liens, if any,
are automatically released and terminated and (C) all guarantees of the
applicable Debt are automatically released and terminated, and (ii) the
Purchaser may rely on such Payoff Letter; and (d) an agreement by the holder of
the applicable Debt to take such further action as may be reasonably requested
by the Company or the Purchaser to further evidence such payment, release and
termination), together with arrangements satisfactory to the Purchaser and its
lenders, for such holders to provide to the Company or its Subsidiaries,
simultaneously with the repayment of all such Debt, recordable form lien
releases (or, if requested by the Purchaser, an authorization for the Company,
the Purchaser or the Purchaser’s lender to file UCC termination statements),
canceled notes and other documents reasonably requested by the Purchaser or its
lenders.
“Permits” means all licenses, permits, certificates, variances, exemptions,
franchises, consents, waivers, registrations and other approvals or
authorizations issued, granted, given, required or otherwise made available by
or required to be filed with any Governmental Entity.
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“Permitted Liens” means, with respect to any Person or Owned Real Property or
Leased Real Property, Liens for (i) Taxes, assessments and other governmental
charges, if such Taxes, assessments or charges are not due and payable or the
Person is contesting them in good faith and has established adequate reserves
for them as shown in the Company Balance Sheet; (ii) workmen’s, repairmen’s or
other similar Liens incurred in the ordinary course of business in respect of
obligations which are not overdue, (iii) minor exceptions, reservations,
easements, rights-of-way, covenants, encroachments, encumbrances or other title
defects or burdens which do not, individually or in the aggregate, impair the
continued use, occupancy, value or marketability of title of the property to
which they relate, assuming that the property is used on substantially the same
basis as such property is currently being used by the Company or any of its
Subsidiaries, (iv) pledges or deposits made in the ordinary course of business
in connection with worker’s compensation, unemployment insurance or other
programs required by applicable Law, (v) any Lien against or affecting the
Leased Real Property arising by, through or under the lessor or landlord of the
Leased Real Property which is not a violation of the lease for such property and
(vi) any Lien set forth in Section 10.1 of the Disclosure Letter.
“Per Share Value” means the  Volume Weighted Average Price per share of common
stock as reported on OTC Pink Current Information on the Closing Date.
“Person” means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Entity or other entity.
“Pre-Closing Taxes” is defined in Section 9.1(a)(i).
“Pre-Closing Tax Period” means (i) any taxable period ending on or before the
Closing Date, and (ii) the portion of any Straddle Period ending on the Closing
Date.
“Prohibited Person” shall mean any Person (i) listed in the Annex to, or is
otherwise subject to the provisions of, Executive Order No. 13224, (ii) owned or
controlled by, or acting for or on behalf of, any party described in clause (i)
above, (iii) with whom any lender is prohibited from dealing or otherwise
engaging in any transaction by any Anti-Terrorism Law, (iv) who commits,
threatens or conspires to commit or supports “terrorism” as defined in Executive
Order No. 13224, (v) named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department
Office of Foreign Assets Control at its official website,
http://www.treas.gov/ofac/t11sdn.pdf, or at any replacement website or other
official publication of such list or (vi) affiliated with any party described in
clauses (i) through (v) above.
“Purchaser” is defined in the Preamble.
“Purchaser Indemnified Parties” is defined in Section 8.2(a).
“Purchaser Shares” means shares of the Purchaser’s common stock, par value
$0.001 per share.
“Registered Intellectual Property” means all patents, registered copyrights,
registered trademarks and servicemarks, and Internet domain name registrations,
and all applications for registration of any of the foregoing, including any
renewals, extensions, continuations (in whole or in part), divisionals,
re-examinations or reissues or equivalent or counterpart thereof; and all
documentation and embodiments of the foregoing.
“Release” has the meaning set forth in Section 101(22) of CERCLA.
“Required Consents” is defined in Section 3.6.
“Resignations” means the resignations of (a) the directors of the Company and
its Subsidiaries, and (b) the non-employee officers of the Company and its
Subsidiaries, with each such resignation to be effective concurrently with the
Closing.
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“Response Notice” is defined in Section 8.5(b).
“Securities Act” is defined in Section 5.7.
“Seller” and “Sellers” are defined in the Preamble.
“Seller Indemnified Parties” is defined in Section 8.2(b).
“Share Consideration Amount” means the product of (i) the Share Consideration
and (ii) the Per Share Value.
“Share Consideration” means 500,000 shares of Purchaser Shares.
“Shares” is defined in the Recitals.
“Stipulated Amount” is defined in Section 8.5(e).
“Straddle Period” means any taxable period that begins on or before the Closing
Date and ends after the Closing Date.
“Subordination Agreements” is defined in Section 1.5(c).
“Subscription Agreements” means the subscription agreement, each in the form set
forth on Exhibit E, dated as of the Closing Date and duly executed by each of
the Sellers and the Purchaser.
“Subsidiary” of any Person means (i) a corporation of which such Person owns or
controls such number of the voting securities which is sufficient to elect at
least a majority of its Board of Directors or (ii) a partnership or limited
liability company of which such Person (either alone or through or together with
any other Subsidiary) is the general partner or managing entity.
“Tangible Company Properties” is defined in Section 3.10(b).
“Target EBITDA” means, for the 2017 Earnout Period, 2018 Earnout Period and 2019
Earnout Period, respectively, the Target EBITDA set forth on Exhibit B hereto.
“Tax” means (i) any federal, state, local or foreign income, alternative or
add-on minimum, estimated, gross income, gross receipts, sales, use, ad valorem,
value added, transfer, franchise, capital profits, lease, service, license,
withholding, payroll, employment, escheat and unclaimed property, excise,
severance, stamp, occupation, premium, environmental (including taxes under
Section 59A of the Code), vehicle, customs duties, capital stock, or property
tax and any other similar governmental fee, assessment or charge constituting a
tax, together with all interest, penalties, additions to tax and additional
amounts with respect thereto, whether disputed or not, and any amounts payable
pursuant to the determination or settlement of an audit and (ii) any liability
in respect of any item in clause (i) above that arises by reason of a Contract,
assumption, transferee or successor liability, operation of Law (including by
reason of participation in a consolidated, combined or unitary Tax Return for
any Tax period) or otherwise.
“Tax Loss Notice” is defined in Section 9.1(b).
“Tax Losses” is defined in Section 9.1(a).
“Tax Representations” means the representations and warranties of the Company
set forth in Section 3.21 (Tax Matters).
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“Tax Returns” means all returns, declarations, reports, claims for refund,
information statements and other documents relating to Taxes, including all
schedules and attachments thereto, and including all amendments thereof.
“Taxing Authority” means any Governmental Entity responsible for the
administration or imposition of any Tax.
“Third Party Claim” is defined in Section 8.4(a).
“Transaction Bonuses” means the bonuses payable in connection with the
consummation of the transactions contemplated by this Agreement.
“Transaction Bonus Amount” means an amount equal to (i) the aggregate
Transaction Bonuses to be made to the recipients thereof in connection with the
transactions contemplated by this Agreement, plus (ii) the aggregate Transaction
Payroll Taxes incurred in connection with such Transaction Bonuses.
“Transaction Expenses” means all fees, costs and expenses (including investment
bankers and financial advisors, attorneys’ and accountants’ fees, costs and
expenses) incurred by the Company or any of its Subsidiaries (on behalf of the
Company, any Subsidiary of the Company or any Seller) in connection with the
transactions contemplated by this Agreement (including such fees, costs and
expenses arising after the Closing), including any bonus, severance,
change-in-control or similar payment obligations of the Company or any of its
Subsidiaries resulting solely from, or solely in connection with, the
consummation of the transactions contemplated hereby, as well as any related
Transaction Payroll Taxes, including the Transaction Bonus Amount and any Losses
incurred or suffered by any Purchaser Indemnified Party directly or indirectly
arising out of, resulting from or in any way related to the Transaction Bonuses,
including any payments made thereunder.
“Transaction Payroll Taxes” means the employer portion of payroll or employment
Taxes incurred in connection with any bonuses or other compensatory payments in
connection with the transactions contemplated by this Agreement, including with
respect to the Transaction Bonuses.
“Treasury Regulations” means the regulations currently in force as final or
temporary that have been issued by the U.S. Department of Treasury under its
authority under the Code, and any successor regulations.
“Unaudited Financial Statements” is defined in Section 3.7(a).
“Unpaid Transaction Expenses” means the Transaction Expenses that remain unpaid
as of 12:01 a.m., Pacific time, on the morning of the Closing Date.
“USA Patriot Act” shall mean the “Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001”
(Public Law 107-56), as amended.
“WARN Act” is defined in Section 3.19(f).
10.2.          Construction.
(a)          The Parties and their respective counsel have participated jointly
in the negotiation and drafting of this Agreement.  In addition, each of the
Parties acknowledges that it is sophisticated and has been advised by
experienced counsel and, to the extent it deemed necessary, other advisors in
connection with the negotiation and drafting of this Agreement.  Accordingly,
any rule of construction to the effect that ambiguities are to be resolved
against the drafting Party shall not be applied in the construction or
interpretation of this Agreement.
54

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(b)          The words “include” and “including” and variations thereof shall
not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words “without limitation”.  The word “or” when used in a list
shall not indicate that the listed items are exclusive of each other.  The use
of the masculine, feminine or neuter gender or the singular or plural form of
words will not limit any provisions of this Agreement.
(c)          Except as otherwise indicated, all references in this Agreement to
“Articles”, “Sections”, “Exhibits” and “Schedules” are intended to refer to the
Articles and Sections of this Agreement, and to the Exhibits and Schedules to
this Agreement, including the Disclosure Letter, as the context may require. 
All such Exhibits and Schedules, including the Disclosure Letter, shall be
deemed a part of, and are hereby incorporated by this reference into, this
Agreement.
(d)          As used in this Agreement, a document shall be deemed to have been
“made available” to the Purchaser if, from the date of the Confidentiality
Agreement and through the date that is two (2) Business Days prior to the date
of this Agreement, such document has been made available for viewing by the
Purchaser in the electronic data room established by the Company in connection
with the transactions contemplated by this Agreement.
(e)          The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
ARTICLE XI
GENERAL PROVISIONS
11.1.          Expenses.  Except as otherwise specifically provided herein, each
Party shall bear its own Transaction Expenses in connection with this Agreement
and the transactions contemplated hereby.
11.2.          Public Announcements.  No public release or announcement
concerning the transactions contemplated hereby shall be issued by any Party
without the prior written consent of the Purchaser and the Sellers, which
consent shall not be unreasonably withheld or delayed, except as such release or
announcement may be required by applicable Law or the rules or regulations of
any applicable Governmental Entity or stock exchange to which the relevant Party
is subject (including the Securities and Exchange Commission), in which case the
Party required to make the release or announcement shall use its commercially
reasonable efforts to provide the other Party reasonable time to comment on such
release or announcement in advance of such issuance, it being understood that
the final form and content of any such release or announcement, to the extent so
required, shall be at the final discretion of the disclosing Party.  The Parties
may make additional announcements that are not inconsistent in any material
respects with the Parties’ prior public disclosures regarding the substance of
this Agreement without consent.
11.3.          Notices.  All notices and other communications hereunder shall be
in writing and delivered personally or mailed by registered or certified mail,
postage prepaid and return receipt requested, or by electronic mail or
facsimile, as follows:
(a)
if to the Purchaser (or to the Company or any of its Subsidiaries) to:

Quadrant 4 System Corporation
1501 E. Woodfield Road, Suite 205 S
Schaumburg, IL 60173
Attention:
Facsimile:
E-mail:
55

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with a copy (which shall not constitute notice) to:
Nixon Peabody LLP
70 West Madison, Suite 3500
Chicago, IL 60602-4224
Attention:  Gary I. Levenstein
Facsimile:  (844) 562-7985
E-mail:  gilevenstein@nixonpeabody.com
(b)
if to the Sellers to:

Pankaj Kalra
3248 Bruce Drive
Fremont, CA 94539
E-mail:   pankajkalra.usa@gmail.com
with a copy (which shall not constitute notice) to:
Inventus Law, Inc.
3260 Hillview Avenue
Palo Alto, CA 94304
Attention:  Anil Advani, Esq.
E-mail: anil@inventuslaw.com

Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder.  Notice given by personal delivery or registered
or certified mail shall be effective upon actual receipt.  Notice given by
electronic mail or facsimile shall be effective upon actual receipt if received
during the recipient’s normal business hours, or at the beginning of the
recipient’s next normal Business Day after receipt if not received during the
recipient’s normal business hours.  All notices by facsimile shall be confirmed
by the sender thereof promptly after transmission in writing by registered or
certified mail or personal delivery.
11.4.          Entire Agreement.  This Agreement, the Exhibits and the Schedules
hereto, including the Disclosure Letter and the Confidentiality Agreement,
constitute the entire agreement among the Parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the Parties with respect to the subject matter hereof.
11.5.          Severability.  In the event that any provision of this Agreement
or the application thereof becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision will be interpreted so as reasonably to effect the intent of the
Parties.  The Parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the greatest extent possible, the economic, business and other
purposes of such void or unenforceable provision.
11.6.          Specific Performance.  The Parties agree that irreparable damage
(for which monetary damages, even if available, would not be an adequate remedy)
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. 
It is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof (including the right of a Party to cause the
other Parties to consummate the transactions contemplated herein) in any court
of the United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at Law or in equity.  In the event
that any Party seeks an injunction or injunctions to prevent breaches of this
Agreement or to enforce specifically the terms and provisions of this Agreement,
such Party shall not be
56

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required to provide any bond or other security in connection with any such
injunction or other order, decree, ruling or judgment.  Each Party agrees that
it will not oppose the granting of an injunction, specific performance or other
equitable relief on the basis that the Party seeking such injunction, specific
performance or other equitable relief has an adequate remedy at law or that any
award of specific performance is not an appropriate remedy for any reason at law
or equity.
11.7.          Successors and Assigns; Assignment; Parties in Interest.  This
Agreement shall inure to the benefit of, and be binding on, the Parties and
their respective successors and assigns (if any).  Except as otherwise
specifically provided herein, no Party may assign any of its rights or delegate
any of its obligations under this Agreement without the prior written consent of
the other Parties; provided, however, that nothing herein shall prohibit the
assignment of the Purchaser’s rights (but not obligations) to any lender or to
any wholly owned Subsidiary of the Purchaser.  Nothing in this Agreement,
express or implied, is intended to or shall confer upon any Person other than a
Party any rights, interests, benefits or other remedies of any nature under or
by reason of this Agreement, except that the indemnification provisions of this
Agreement are intended to benefit the Indemnified Parties, and the provisions of
Section 6.12 are intended to benefit the Covered Persons, and all such intended
third-party beneficiaries shall be entitled to enforce such provisions of this
Agreement.
11.8.          Amendment; Waiver.  This Agreement may be amended by the Parties
only by execution of an instrument in writing signed by the Purchaser and the
Sellers.  At any time prior to the Closing, the Purchaser, on the one hand, and
the Sellers and the Company, on the other, may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations of the other
Parties, (ii) waive any inaccuracies in the representations and warranties made
to such Party contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions for the benefit
of such Party contained herein.  Any agreement by any Party to any such
extension or waiver shall be valid only if, and to the extent that, set forth in
an instrument in writing signed on behalf of such Party against whom such
extension or waiver is sought to be enforced.  No failure on the part of any
Person to exercise any power, right, privilege or remedy under this Agreement,
and no delay on the part of any Person in exercising any power, right, privilege
or remedy under this Agreement, shall operate as a waiver of such power, right,
privilege or remedy; and no single or partial exercise of any such power, right
privilege or remedy shall preclude any other or further exercise thereof or of
any other power, right, privilege or remedy.
11.9.          Governing Law; Venue.
(a)          This Agreement shall be construed in accordance with, and governed
in all respects by, the internal Laws of the State of Delaware, without giving
effect to conflicts of law or choice of law provisions thereof.
(b)          Unless otherwise explicitly provided in this Agreement, any action,
claim, suit or proceeding relating to this Agreement or the enforcement of any
provision of this Agreement shall be brought or otherwise commenced in any state
or federal court located in the State of Delaware.  Each Party (i) expressly and
irrevocably consents and submits to the jurisdiction of each such court, and
each appellate court located in the State of Delaware, in connection with any
such proceeding, (ii) agrees that each such court shall be deemed to be a
convenient forum, and (iii) agrees not to assert, by way of motion, as a defense
or otherwise, in any such proceeding commenced in any such court, any claim that
such Party is not subject personally to the jurisdiction of such court, that
such proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
11.10.          Waiver of Jury Trial.  EACH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY ANCILLARY AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
57

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EACH PARTY HERETO CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE
OTHER PARTIES HAS REPRESENTED, EXPRESSLY OR OTHERWISE THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 11.10.
11.11.          Other Remedies.  Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a Party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such Party, and the exercise by a Party of any one remedy will not preclude
the exercise of any other remedy.
 
 
 
 
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11.12.          Counterparts; Electronic Delivery.  This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.  Any
signature page delivered by facsimile or electronic image transmission shall be
binding to the same extent as an original signature page.  Any Party that
delivers a signature page by facsimile or electronic image transmission shall
deliver an original counterpart to any other Party that requests such original
counterpart, it being understood and agreed that the failure to deliver any such
original counterpart upon request shall not affect the binding nature of the
signature page delivered by facsimile or electronic image transmission.
11.13.          Time is of the Essence.  With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
11.14.          Confidentiality.  From and after the Closing Date, (i) the
Sellers shall not, and shall cause their Affiliates not to, directly or
indirectly, disclose, reveal, divulge or communicate to any Person (other than
authorized officers, directors and employees of the Purchaser, the Company or
the Company’s Subsidiaries) or use or otherwise exploit for their own benefit or
for the benefit of anyone other than the Purchaser, the Company or the Company’s
Subsidiaries, any Confidential Information relating to the Purchaser, the
Company or the Company’s Subsidiaries and (ii) the Purchaser, the Company and
each of the Company’s Subsidiaries shall not, and shall cause their Affiliates
not to, directly or indirectly, disclose, reveal, divulge or communicate to any
Person (other than authorized officers, directors and employees of the Sellers)
or use or otherwise exploit for its own benefit or for the benefit of anyone
other than Sellers, any Confidential Information relating to the Sellers;
provided, however, that in the event disclosure of any Confidential Information
is required by applicable Law or the rules and regulations of any stock exchange
to which the receiving party of such Confidential Information is subject, the
receiving party of such Confidential Information shall, to the extent reasonably
possible, provide to the disclosing party with prompt notice of such requirement
prior to making any disclosure so that the disclosing party may seek an
appropriate protective order.  For purposes of this Section 11.14, “Confidential
Information” shall mean any confidential information with respect to any
disclosing party, including, methods of operation, customers, customer lists,
financial results, statements and records, audits, correspondence and reports
filed with Governmental Authorities, products, research and development plans,
programs or results, prices, fees, costs, inventions, know-how, trade secrets,
business plans, market studies, marketing methods, plans, budgets, identified
acquisition targets, personnel and related records, suppliers, competitors,
markets or other specialized information or proprietary matters that a
reasonable business manager would treat as confidential; provided, however, that
the term “Confidential Information” does not include, and there shall be no
obligation of any receiving party hereunder with respect to, information that
(i) is generally available to the public on the date of this Agreement or (ii)
becomes generally available to the public other than as a result of a disclosure
not otherwise permissible hereunder.  Further, a party hereto may disclose any
Confidential Information of another party to the extent such disclosure is
reasonably necessary for the disclosing party to exercise its rights or perform
its obligations under this Agreement or any agreement or instrument entered into
at the Closing pursuant hereto.
11.15.          Liability of Affiliates of the Purchaser or the Sellers. 
Neither any direct or indirect holder of Equity Interests in the Purchaser, nor
any past, present or future member, director, manager, officer, employee, agent,
advisor, financing source or Affiliate of the Purchaser (other than the
Purchaser itself) or of any such holder, shall have any liability or obligation
of any nature whatsoever in connection with, arising out of, or relating to or
under this Agreement, any agreement contemplated by this Agreement or the
transactions contemplated by this Agreement or such other agreement, and the
Sellers hereby waive and release all claims of any such liability and
obligation.  Neither any direct or indirect holder of Equity Interests in any of
the Sellers, nor any past, present or future member, director, manager, officer,
employee, agent, advisor, financing source or Affiliate of any of the Sellers
(other than the Sellers themselves) or of any such holder, shall have any
liability or obligation of any nature whatsoever in connection with, arising out
of, or relating to or under this Agreement, any agreement contemplated by this
Agreement or the transactions contemplated by this Agreement or such other
agreement, and the Purchaser hereby waives and releases all claims of any such
liability and obligation.
59

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11.16.          Sellers’ Representative.
(a)          The Sellers irrevocably nominate, constitute and appoint Pankaj
Kalra as the representative, agent and true and lawful attorney in fact of the
Sellers (the “Sellers’ Representative”), with full power of substitution, to act
in the name, place and stead of the Sellers for purposes of executing any
documents and taking any actions that the Sellers’ Representative may, in the
Sellers’ Representative’s sole discretion, determine to be necessary, desirable
or appropriate in connection with any claim for indemnification, compensation or
reimbursement under Article VIII.  By way of amplification and not limitation,
as Sellers’ Representative, the Sellers’ Representative shall be authorized and
empowered, as agents of and on behalf of all Sellers to give and receive notices
and communications as provided herein, to object to any indemnification claims,
to agree to, negotiate, enter into settlements and compromises of, and comply
with orders of courts and awards of arbitrators with respect to, such claims or
Losses, to waive after the Closing any breach or default of the Purchaser of any
obligation to be performed by it under this Agreement, to receive service of
process on behalf of each Seller in connection with any claims against such
Seller arising under or in connection with this Agreement, any document or
instrument provided for hereby or any of the transactions contemplated hereby,
and to take all other actions that are either (i) necessary or appropriate in
the judgment of the Sellers’ Representative for the accomplishment of the
foregoing or (ii) specifically mandated by the terms of this Agreement.  Notices
or communications to or from the Sellers’ Representative shall constitute notice
to or from the Sellers.  Pankaj Kalra hereby accepts his appointment as Sellers’
Representative.
(b)          The Sellers grant to the Sellers’ Representative full authority to
execute, deliver, acknowledge, certify and file on behalf of such Sellers (in
the name of any or all of the Sellers or otherwise) any and all documents that
the Sellers’ Representative may, in his sole discretion, determine to be
necessary, desirable or appropriate, in such forms and containing such
provisions as the Sellers’ Representative may, in his sole discretion, determine
to be appropriate, in performing his duties as contemplated by this
Section 11.16.  Notwithstanding anything to the contrary contained in this
Agreement or in any other agreement executed in connection with the transactions
contemplated hereby:  (i) each Indemnified Party shall be entitled to deal
exclusively with the Sellers’ Representative on all matters relating to any
claim for indemnification, compensation or reimbursement under Article VIII; and
(ii) each Indemnified Party shall be entitled to rely conclusively (without
further evidence of any kind whatsoever) on any document executed or purported
to be executed on behalf of any Seller by the Sellers’ Representative, and on
any other action taken or purported to be taken on behalf of any Seller by the
Sellers’ Representative, as fully binding upon such Seller.
(c)          The Sellers recognize and intend that the power of attorney granted
in this Section 11.16:  (i) is coupled with an interest and is irrevocable; (ii)
may be delegated by the Sellers’ Representative; and (iii) shall survive the
death, incapacity, dissolution, liquidation or winding up of each of the
Sellers.
(d)          If the Sellers’ Representative shall resign, die, become disabled
or otherwise be unable to fulfill his responsibilities hereunder, the Sellers
shall (by consent of those Persons entitled to at least a majority of the Final
Cash Amount), within ten (10) days after such death, disability or inability,
appoint a successor to the Sellers’ Representative (who shall be reasonably
satisfactory to the Purchaser) and immediately thereafter notify the Purchaser
of the identity of such successor.  Any such successor shall succeed the
Sellers’ Representative as Sellers’ Representative hereunder.  If for any reason
there is no Sellers’ Representative at any time, all references herein to the
Sellers’ Representative shall be deemed to refer to the Sellers.
11.17.          Release.
(a)          Each Seller, on behalf of such Seller, anyone claiming through such
Seller (including such Seller’s Affiliates) and the respective heirs, executors,
personal representatives, beneficiaries, successors
60

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and assigns of each of the foregoing (collectively, the “Releasing Parties”),
hereby fully, finally and irrevocably releases, acquits and forever discharges
each of the Company, any Subsidiary of the Company, the Purchaser Indemnified
Parties and each Affiliate of any of the foregoing, each current and former
equity holder, director, officer, employee and agent of any of the foregoing and
the respective heirs, executors, personal representatives, successors and
assigns of each of the foregoing (collectively, the “Released Parties”), of and
from any and all claims, damages, losses, liabilities, costs and expenses of
every kind and nature whatsoever, past, present or future, at law or in equity,
whether known or unknown, contingent or otherwise, which any Releasing Party
has, ever had or may have against any Released Party by reason of any matter,
cause or thing existing as of the Closing Date or arising out of events
occurring or conditions existing on or prior to the Closing Date.  Each
Releasing Party hereby irrevocably agrees not to assert, directly or indirectly,
any claim or demand, or to commence, institute or cause to be commenced or
instituted, any proceeding of any kind against any Released Party with respect
to the foregoing.  Notwithstanding the foregoing, the foregoing shall not
constitute a release of claims with respect to (i) any claim for indemnification
or other remedy to which the Releasing Party is entitled under this Agreement,
(ii) any claims that the Releasing Party may have for indemnification under (any
indemnification agreement with the Company relating to the Releasing Party’s
service as an officer, director, employee or agent of any Company or any
Subsidiary of the Company (but specifically excluding any claim for
indemnification relating to any liability of the Releasing Party to any other
Party arising out of the transactions contemplated by this Agreement), (iii) to
the extent the Releasing Party is an employee of the  Company or any Subsidiary
of the Company, any claims for accrued but unpaid compensation with respect to
services actually provided during the most recent pay period prior to the
Closing by such Releasing Party, including salary, benefits and reimbursements
of expenses incurred and otherwise reimbursable in accordance with the Company’s
policies, as applicable during such period and (iv) to the extent the Releasing
Party is an employee of the Company or any Subsidiary of the Company, any
amounts owed to such Releasing Party under employee benefit plans of the Company
or any Subsidiary of the Company, as applicable, through the Closing Date.
(b)          Each Seller, on behalf of both himself, herself or itself and the
Releasing Parties, acknowledges that he, she or it is familiar with Section 1542
of the Civil Code of the State of California, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
(c)          Each Seller, on behalf of both himself, herself or itself and the
Releasing Parties, hereby waives and relinquishes any rights and benefits that
they may have under Section 1542 of the Civil Code of the State of California or
any similar statute or common law principle of any jurisdiction.  The Seller, on
behalf of both himself, herself or itself and the Releasing Parties,
acknowledges that he, she or it may hereafter discover facts in addition to or
different from those that such Seller or Releasing Party now knows or believes
to be true with respect to the subject matter of this release, but it is such
Seller’s and the Releasing Parties’ intention to fully and finally and forever
settle and release any and all claims (other than the non-released claims
specifically set forth above in this Section) that do now exist, may exist or
heretofore have existed with respect to the subject matter of this release.  In
furtherance of this intention, the releases contained herein shall be and remain
in effect as full and complete general releases notwithstanding the discovery or
existence of any such additional or different facts.
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11.18.          Effective Time.  The Parties agree that the Purchaser shall
recognize the revenue of the Company (after giving effect to the transactions
contemplated by the Asset Purchase Agreement) effective as of July 1, 2016, for
accounting purposes only.

[The remainder of this page has been intentionally left blank.  Signature page
follows.]
 
 
 
 
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In Witness Whereof, each of the Parties has caused this Agreement to be executed
and delivered by its duly authorized representative as of the date first written
above.
PURCHASER:
QUADRANT 4 SYSTEM CORPORATION
By: /s/ Nandu Thondavadi                                       
Name: Nandu Thondavadi
Title:   President and Chief Executive Officer
SELLERS:

/s/ Ashish Sanan                                                      
          
Ashish Sanan
/s/ Pankaj
Kalra                                                                    
Pankaj Kalra
/s/ Khannan Sankaran                                                         
Khannan Sankaran
COMPANY:
STRATITUDE, INC.
By: /s/ Khannan Sankaran                                                  
Name: Khanan Sankaran
Title:   Chief Executive Officer
SELLERS’ REPRESENTATIVE:

/s/ Pankaj
Kalra                                                                    
Pankaj Kalra
[Signature Page to Stock Purchase Agreement]
 

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Exhibit A
Sellers
Name of Seller
Number of Shares Held
Percentage of Shares of Held
Pankaj Kalra
393,939
39.4%
Ashish Sanan
393,939
39.4%
Khannan Sankaran
212,122
21.2%
Total:
1,000,000
100%

 

 
A-1

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

Exhibit B
Earnout Consideration

           
Earnout
     
Earnout Period
 
Target EBITDA
   
EBITDA Floor
   
Guaranteed Earnout Amount
   
Variable Earnout Amount
   
Incentive Earnout Amount for amounts over the Target EBITDA
 
2017 Earnout Period
 
$
1,350,000
   
$
1,000,000
   
$
200,000
   
$
600,000
     
60
%
2018 Earnout Period
 
$
1,450,000
   
$
1,000,000
   
$
100,000
   
$
700,000
     
60
%
2019 Earnout Period
 
$
1,550,000
   
$
1,000,000
   
$
100,000
   
$
700,000
     
60
%
Total:
 
$
4,350,000
   
$
3,000,000
   
$
400,000
   
$
2,000,000
     
N/A
 

Hypothetical Examples

Example 1:

If during the 2017 Earnout Period, the actual EBITDA of the Company is
$1,200,000, then the Purchaser shall pay to the Sellers’ Representative (on
behalf of the Sellers) an amount equal to the sum of (i) the Guaranteed Earnout
Amount of $200,000 plus (ii) the Variable Earnout Amount of $600,000.

Example 2:

If during the 2017 Earnout Period, the actual EBITDA of the Company is
$1,500,000, then the Purchaser shall pay to the Sellers’ Representative (on
behalf of the Sellers) an amount equal to the sum of (i) the Guaranteed Earnout
Amount of $200,000, (ii) the Variable Earnout Amount of $600,000 and (iii)
$90,000, which is an amount equal to 60% of the amount in excess of the Target
EBITDA (i.e., 60% of $150,000).

Example 3:

If during the 2017 Earnout Period, the actual EBITDA of the Company is $500,000,
then the Purchaser shall pay to the Sellers’ Representative (on behalf of the
Sellers) an amount equal to the Guaranteed Earnout Amount of $200,000.

B-1

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Exhibit C
Share Consideration
Name of Seller
Number of Shares of Purchaser Issued
Pankaj Kalra
196,975
Ashish Sanan
196,975
Khannan Sankaran
106,050
Total:
500,000

 
 
 
 

 
C-1

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Exhibit D
Calculation of EBITDA
EBITDA, as adjusted
(in thousands)
 
TTM16
   
FY15
   
FY14
   
FY13
 
Net income (loss)
 
$
933
   
$
1,094
   
$
297
   
$
687
 
Reconcilation to EBITDA:
                               
Other income
   
-
     
-
     
-
     
(45
)
Depreciation and amortization
   
61
     
54
     
19
     
41
 
Interest expense
   
17
     
21
     
19
     
18
       
78
     
75
     
38
     
14
 
EBITDA, as reported
   
1,011
     
1,169
     
335
     
701
 
% of revenue
   
5.7
%
   
6.4
%
   
2.2
%
   
4.9
%
                                 
Management proposed adjustments:
                               
[1]          Owners' expenses
   
208
     
185
     
171
     
174
 
[2]          Owner salary
   
132
     
120
     
108
     
133
       
340
     
305
     
279
     
307
 
Management proposed EBITDA
   
1,351
     
1,474
     
614
     
1,008
 
% of revenue
   
7.6
%
   
8.1
%
   
4.1
%
   
7.0
%
                                 
Proposed due diligence adjustments:
                               
[3]          Owners' expenses
   
2
     
33
     
2
     
(8
)
[4]          Commission expense
   
12
     
(25
)
   
6
     
(68
)
[5]          Vacation expense
   
(11
)
   
(16
)
 
NQ
   
NQ
 
[6]          Non-operating income
   
(108
)
   
(108
)
   
-
     
-
 
[7]          Partner buyout
   
-
     
-
     
165
     
-
 
[8]          Abode 360 consulting fees
   
-
     
-
     
-
     
45
 
[9]          Insurance expense
 
NQ
   
NQ
   
NQ
   
NQ
       
(105
)
   
(116
)
   
173
     
(31
)
                                  Proposed due diligence EBITDA     1,246      
1,358       787       977   % of revenue     7.0 %     7.4 %     5.2 %     6.8 %
                                  Pro forma adjustments:                        
       
[10]        Professional fees
  NQ       NQ       NQ       NQ  
[11]        Owner's compensation
    NQ       NQ       NQ       NQ         -       -       -       -   EBITDA, as
adjusted   $ 1,246     $ 1,358     $ 787     $ 977   % of revenue     7.0 %    
7.4 %     5.2 %     6.8 %

 
 
 
 
 
 
 

 

D-1

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

Exhibit E
Form of Subscription Agreement
[see attached]

 
 
 

 
E-1

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

 
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT
BE OFFERED OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES
ACT, OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.  THESE SECURITIES ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND SUCH LAWS.

 

SUBSCRIPTION AGREEMENT
FOR SHARES
IN

QUADRANT 4 SYSTEM CORPORATION,
an Illinois corporation
 
 
 
 
 
 

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

Quadrant 4 System Corporation
1501 Woodfield Road, Suite 205 S
Schaumburg, Illinois 60173
Attention:  Nandu Thonadvadi

Re:          Subscription for Shares of Common Stock

Ladies and Gentlemen:

Subject to the terms and conditions of this Subscription Agreement (this
“Agreement”), the undersigned Subscriber does hereby subscribe to purchase from
Quadrant 4 System Corporation, an Illinois corporation (the “Company”), [number
of shares] shares (the “Shares”) of the Company’s common stock, par value $0.001
per share (“Common Stock”).

1.          Representations and Warranties of Subscriber.  Subscriber does
hereby represent and warrant to the Company as follows:
 
(a)           Subscriber has completed the Investor Suitability Questionnaire
attached hereto as Exhibit A (the “Subscriber’s Questionnaire”).
 
(b)           All information provided to the Company on the signature page
hereto and on the Subscriber’s Questionnaire is true, correct and complete.
 
(c)           The offer to sell the Shares was directly communicated to
Subscriber by the officers or directors of the Company.  At no time was
Subscriber presented with or solicited by or through any article, notice or
other communication published in any newspaper or other leaflet, public
promotional meeting, television, radio or other broadcast or transmittal
advertisement or any other form of general advertising.
 
(d)           Subscriber has received, read, analyzed and is familiar with the
Company’s (i) latest Annual Report on Form 10-K (for the year ending December
31, 2015), including Amendment No. 1 thereto on Form 10-K/A filed on September
23, 2016, and its subsequent Quarterly Reports on Form 10-Q, in each case,
including all exhibits, (ii) Preliminary Proxy Statement on Schedule 14A and
Transaction Statement on Schedule 13E-3, in each case, including all exhibits as
filed on September 30, 2016 and (iii) all Current Reports on Form 8-K filed on
or after December 31, 2015 (collectively, as amended from time to time, the
“Filings”).
 
(e)           Subscriber understands that the Company is currently the subject
of an SEC investigation concerning possible violations of various provisions of
the federal securities laws.  In addition, Subscriber understands that while the
Company has acknowledged in SEC filings certain internal control deficiencies
and has engaged counsel to assist it in reviewing and improving its compliance
practices, the Company does not believe that it has made any material
misrepresentations concerning its financial condition or business prospects. 
Subscriber further understands that while the Company
1

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

cannot predict the outcome of the investigation, the investigation could result
in an enforcement action by the SEC.  The Company continues to cooperate with
the SEC with respect to the investigation.
 
(f)            Subscriber possesses sufficient knowledge and experience in
business and financial matters to evaluate the risk and merits of an investment
in the Shares.
 
(g)           Subscriber has received all additional documents requested and has
had an opportunity to ask questions of and receive answers from the Company, or
a person or persons acting on its behalf, concerning the terms and conditions of
the offering of the Shares and to verify the accuracy of the information set
forth in the Filings, and all such questions have been answered to Subscriber’s
full satisfaction.
 
(h)           The address set forth on the signature page is the true and
correct address of Subscriber’s primary residence.
 
(i)            Subscriber is acquiring the Shares for Subscriber’s own account
and not for the benefit of any other person or entity.
 
(j)            Subscriber understands that an investment in the Shares is
illiquid, because the Shares are subject to restrictions on transfer imposed by
federal and state securities laws.  In addition, the current trading market for
the Common Stock is extremely thin and there is no assurance that there will
continue to be any market for the Common Stock (including the Shares). 
Subscriber also understands that the Filings disclose, among other things, the
Company’s current intention to deregister the Common Stock and become a
nonreporting company.  Therefore, the Subscriber is prepared to hold the Shares
indefinitely.
 
(k)           Subscriber understands that an investment in the Company is
subject to a number of risk factors, including but not necessarily limited to
those described in the Filings, and is suitable only for those persons and
entities who can afford to bear such risk and absorb the loss of their entire
investment in the Shares, should that occur.  Subscriber further understands and
acknowledges that no federal or state agency has made any finding or
determination as to the merits of the Shares for investment or any
recommendation or endorsement of the Shares.
 
(l)            Upon the Company’s request, Subscriber will execute any documents
as may be reasonably requested in connection with Subscriber’s purchase of the
Shares.
 
(m)          IN PURCHASING THE SHARES, SUBSCRIBER IS NOT RELYING UPON ANY
INFORMATION, OTHER THAN THE RESULTS OF SUBSCRIBER’S OWN INDEPENDENT REVIEW OF
INFORMATION PROVIDED IN THE FILINGS, INCLUDING ALL EXHIBITS THERETO, THIS
SUBSCRIPTION AGREEMENT AND SUBSCRIBER’S OWN INDEPENDENT INVESTIGATION OF THE
COMPANY’S BOOKS, RECORDS AND DOCUMENTS.
2

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

(n)           None of the following information has ever been represented,
guaranteed, or warranted to Subscriber expressly or by implication, by the
Company or any of its officers, directors, agents, employees or affiliates, or
by any other person:
(i)          The approximate or exact length of time that Subscriber will be
required to hold the Shares;
(ii)          The percentage of profit and/or amount of or type of
consideration, profit or loss to be realized, if any, as a result of an
investment in the Shares; or
(iii)          That the past performance or experience of the Company, or any of
its officers, directors, agents, employees or affiliates, or of any other
person, will in any way indicate or predict economic results from an investment
in the Shares.
(o)           Subscriber has not distributed this Agreement to anyone other than
his legal, tax, accounting or other investment advisors.
Subscriber’s representations and warranties set forth in this Section 1 shall
survive the termination or expiration of this Agreement.
2.          Confidentiality.  Subscriber will not at any time, directly or
indirectly, use, communicate, or disclose any Confidential Information of the
Company in any manner whatsoever, and will return or destroy the Confidential
Information immediately upon the request of the Company.  As used herein,
“Confidential Information” means any information not generally known or
available to the public without restriction relating to the Company, in any
format, whether marked confidential or not, including, without limitation, this
Agreement, and all the Exhibits attachments hereto.  Subscriber’s
confidentiality obligations set forth in this Section 2 shall survive the
termination or expiration of this Agreement.
3.          Restricted Shares.  Subscriber will not sell or otherwise transfer
any Shares without registration under the Securities Act or an exemption
therefrom, and fully understands and agrees that the Subscriber must bear the
economic risk of its purchase because, among other reasons, the Shares have not
been registered under the Securities Act or under the securities laws of any
state and, therefore, cannot be resold, pledged, assigned or otherwise disposed
of unless they are subsequently registered under the Securities Act and under
the applicable securities laws of such states, or an exemption from such
registration is available. In particular, the Subscriber is aware that the
Shares are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule 144”), and they may not be sold
pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The
Subscriber also understands that the Company is under no obligation to register
the Shares on behalf of the Subscriber or to assist the Subscriber in complying
with any exemption from registration under the Securities Act or applicable
state securities laws. The Subscriber understands that any sales or transfers of
the Shares are further restricted by state securities laws and the provisions of
this Agreement.
4.          Restrictive Legend. The Subscriber understands and agrees that the
certificates for the Shares shall bear substantially the following legend until
(i) such Shares shall have been registered under the Securities Act and
effectively disposed of in accordance with a registration statement that has
been declared effective or (ii) in the opinion of counsel for the Company, such
3

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

Shares may be sold without registration under the Securities Act, as well as any
applicable “Blue Sky” or state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE
STATE SECURITIES LAWS. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED.
5.          Indemnification.  Subscriber does hereby agree to indemnify and hold
harmless the Company and its officers, directors, agents, employees or
affiliates from and against any and all loss, damage, liability or expense
(including reasonable attorneys’ fees) due to or arising out of a breach of any
of Subscriber’s representations or warranties and/or confidentiality obligations
contained in this Agreement. Subscriber’s indemnification obligations set forth
in this Section 5 shall survive the termination or expiration of this Agreement.
6.          Expenses.  Subscriber shall bear his, her or its own costs and
expenses (irrespective of whether the purchase is completed) in connection with
the purchase of Shares, including engagement of attorneys, accountants, advisors
or agents to represent Subscriber’s interest.  The foregoing costs and expenses
that Subscriber bears shall not include any costs or expenses resulting from the
Company’s engagement of attorneys, accountants, advisors or agents in connection
with this purchase or any matter related to the Company.

7.          Miscellaneous.
 
(a)           This Agreement shall be governed by the laws of the State of
Illinois, without regard to its conflict of laws rules.
 
(b)           This Agreement and the Stock Purchase Agreement, dated as of
October [__], 2016, by and among the Company and Stratitude, Inc., a California
corporation, and the shareholders of Stratitude, Inc. (the “Stock Purchase
Agreement”), including their respective schedules and exhibits, contain the
entire agreement between the parties with respect to the subject matter hereof.
 
(c)           The headings of this Agreement are for convenient reference only
and they shall not limit or otherwise effect the interpretation of any term or
provision hereof.
 
(d)           This Agreement and the rights, powers, and duties set forth herein
shall, except as otherwise set forth herein, be binding upon and shall inure to
the benefit of the
4

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

parties hereto and their respective heirs, executors, administrators, legal
representatives, successors and assigns.
 
(e)           Subscriber does hereby agree and acknowledge that Subscriber may
not assign any of Subscriber’s rights or interests in and under this Agreement
without the prior written consent of the Company, and that any attempted
assignment without such consent shall be void and without effect.
 
(f)           Subscriber does hereby acknowledge that this purchase is subject
to acceptance by the Company.
 
(g)           Subscriber does hereby acknowledge that the Company is relying on
Subscriber’s representations, warranties and confidentiality obligations made
herein in its decision to accept Subscriber’s subscription.  In the event that
any of the representations and warranties made by Subscriber herein is untrue,
Subscriber’s purchase shall be void.

[signature page(s) attached]
 
 
 
5

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

IN WITNESS WHEREOF, Subscriber has executed this Subscription Agreement on the
date set forth on the signature page.

The exact name under which title to the Shares is to be taken is as follows:

          

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

(please print)
 
 
 
 
 
 

6

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

SUBSCRIPTION AGREEMENT
SIGNATURE PAGE

Date:                                          

Number of Shares of Common Stock: [number of shares]

Purchase Price for the Shares: Partial consideration for the sale of shares of
Stratitude, Inc. as set forth in the Stock Purchase Agreement.

                                                                                
             

Signature

Subscriber’s
Name:                                                                              
                  

Subscriber’s Address:                                                         
                                  
                                                                                                               
                                                                                           

Social Security Number of
Subscriber:                                                                

7

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

INDIVIDUAL ACKNOWLEDGMENT

State of ______________          )
                                                         )ss:
County of                                       )

I hereby certify that __________________, personally known to me to be the same
person whose name is subscribed to the foregoing instrument, appeared before me
this day in person and acknowledged that he/she signed and delivered the said
instrument as his/her free and voluntary act for the uses and purposes therein
set forth.

Given under my hand and official seal this ____ of _______. 20__.

SEAL                    
                                                                                           
Notary Public in and for Said County and State

My Commission expires:                                                     

ACCEPTANCE OF SUBSCRIPTION BY THE COMPANY

The foregoing subscription is accepted by Quadrant 4 System Corporation on
______ __, 20__.

QUADRANT 4 SYSTEM CORPORATION,
an Illinois corporation

By:
                                                                             
     
Nandu Thonadvadi, Chief Executive Officer

8

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

EXHIBIT A TO SUBSCRIPTION AGREEMENT

INVESTOR SUITABILITY QUESTIONNAIRE

The purpose of this Questionnaire is to solicit certain information regarding an
individual Subscriber’s financial status to determine whether Subscriber is an
“accredited investor,” as defined under applicable securities laws, for purposes
of his/her prospective purchase of Shares in the Company.  This Questionnaire is
not an offer to sell securities.
Answers to this Questionnaire will be kept as confidential as possible. 
However, this Questionnaire may be shown to such persons as the Company deems
appropriate to determine accredited investor status including the Securities and
Exchange Commission and the Illinois Securities Commissioner.
PLEASE ANSWER ALL QUESTIONS COMPLETELY AND EXECUTE THE SIGNATURE PAGE.
IF THE SHARES ARE BEING PURCHASED FOR THE ACCOUNT OF MORE THAN ONE INDIVIDUAL,
EACH INDIVIDUAL MUST COMPLETE A SEPARATE QUESTIONNAIRE.
A.          Personal
1.          Name:
                                                                                                                                                                  
   
2.          Address of Principal
Residence:                                                                                                                         
                                                                                                                                                                                   
_______________________________________
County:                                                                      
3.          Residence Telephone:
(________)                                                                                                                             
4.          Email
Address:                                                                                                                                                                
5.          Where are you registered to vote?
                                                                                                                                                                       
6.          Your driver’s license is issued by the following state:
                                                                               
   
7.          Other Residences or Contacts: Please identify any other state where
you own a residence, are registered to vote, pay income taxes, hold a driver’s
license or have any other contacts, and describe your connection with such
state:
                                                                                                                                                                                   
                                                                                                                                                                                   
8.          Date of
Birth:                                                                                                                                                                    
9.          Citizenship:                                                                                         
                                                                   
B.          Income

1.
During each of the past two years, was your individual income from all sources
in excess of $200,000 or your joint income with your spouse in excess of
$300,000?

☐ Yes          ☐ No

2.
Do you reasonably expect to reach income in excess of the foregoing threshold
during the current year?

☐ Yes          ☐ No
9

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

C.          Net Worth
Will your net worth as of the date you purchase the Company’s securities,
together with the net worth of your spouse, be in excess of $1,000,000?  (Note
that “net worth” excludes the value of your principal residence and is further
reduced to the extent, if any, that the indebtedness secured by a mortgage on
such residence exceeds the fair market value of such residence.)

☐ Yes          ☐ No
D.          Represented by Counsel
Are you represented by legal counsel in connection with the transactions
contemplated by this Subscription Agreement.

☐ Yes          ☐ No
E.          Prospective Investor’s Representations
The information contained in this Questionnaire is true and complete, and the
undersigned understands that the Company and its counsel will rely on such
information for the purpose of complying with all applicable securities laws, as
discussed above.  The undersigned agrees to notify the Company promptly of any
change in the foregoing information which may occur prior to any purchase by the
undersigned of securities from the Company.

Prospective Investor:
Date:______________________,
20__                                                                                                                             
       
Signature
                                                                                                            

(Print Name of Person Signing)

10

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

 
Disclosure Schedule
This Disclosure Letter (the “Disclosure Letter”) is delivered pursuant to that
certain Stock Purchase Agreement, dated as of November 3, 2016 (the
“Agreement”), by and among Stratitude Inc., (the “Company”), the Shareholders of
Stratitude Inc. (the “Sellers”), and Quadrant 4 System Corporation (the
“Purchaser”).  The numbered and lettered sections of this Disclosure Letter
correspond to the numbered and lettered sections contained in Article III of the
Agreement.  Any disclosures made under the heading of one section of this
Disclosure Letter shall apply to and/or qualify disclosures made under one or
more other sections only to the extent it is readily apparent from a reading of
such disclosure that such disclosure is applicable to such other section or
sections.  Unless otherwise defined, any capitalized terms in this Disclosure
Letter shall have the same meanings assigned to such terms in the Agreement.

Nothing in this Disclosure Letter is intended to broaden the scope of any
representation or warranty contained in the Agreement or to create any
covenant.  Inclusion of any item in this Disclosure Letter shall not constitute,
or be deemed to be, an admission by the Company that (a) such item is material
or establish a standard of materiality, or (b) such item did not arise in the
ordinary course of business.

3.1 Organization and Qualification of the Company

The Company is not duly qualified to do business as a foreign corporation in any
jurisdiction.

3.2(a) Additional Equity Interests

None.

3.2(b) Subsidiaries

None.

3.3(a) Capitalization

Name of Shareholder
Number of Common Shares (1,000,000 authorized shares of Common Stock)
Percentage Interest
Pankaj Kalra
393,939
39.3939%
Ashish Sanan
393,939
39.3939%
Khannan Sankaran
212,122
21.2122%
Total:
1,000,000
100%

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

3.5(a) No Conflict

The following lease agreements shall be the “Landlord Leases” and each a
“Landlord Lease.”

·
Lease agreement between West State Co, LP (Landlord) and Stratitude, Inc.
(Tenant) for 6601 Koll Center Parkway, Suite 132 – dated January 8, 2015

·
Lease agreement among Murco Plaza (Lessor) and Agama Solutions, Inc. and
Agilocity, Inc. for Suites in Murco Plaza in Fremont – dated March 14, 2013, as
amended by that certain First Amendment to Lease, by and among Murco Management
(Lessor) and Agama Solutions, Inc. and Stratitude, Inc. (Lessee)  – dated
September 27, 2016 and valid through October 31, 2019

3.6(a) Consents

Fremont Bank Line Of Credit and Term Loan for Stratitude & Agama Solutions.

The Landlord Leases.

3.6(b) Government Consents

None.

3.7 Financials

The following financial documents are attached as Exhibit A:
·
The Consolidated Income Statement for Agama Solutions, Inc. (“Agama”) and
Stratitude from January through June of 2016

·
The Consolidated Balance Sheet for Agama and Stratitude as of June 30, 2016

·
The Statement of Cash flow for Stratitude for January through June of 2016

·
The Statement of Cash flow for Agama for January through June of 2016

·
The 2015 Statement of Cash Flow for Stratitude

·
The 2015 Statement of Cash Flow for Agama

·
The 2015 Profit and Loss Statement for Stratitude

·
The 2015 Profit and Loss Statement for Agama

·
The 2015 Balance Sheet for Stratitude

·
The 2015 Balance Sheet for Agama

·
The 2014 Statement of Cash Flow for Stratitude

·
The 2014 Statement of Cash Flow for Agama

·
The 2014 Profit and Loss Statement for Stratitude

·
The 2014 Profit and Loss Statement for Agama

·
The 2014 Balance Sheet for Stratitude

·
The 2014 Balance Sheet for Agama

 
2

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

3.11(a) Leased Real Property

The Company is a party to the following leases:

·
Lease agreement between West State Co, LP (Landlord) and Stratitude, Inc.
(Tenant) for 6601 Koll Center Parkway, Suite 132 – dated January 8, 2015

·
Lease agreement among Murco Plaza (Lessor) and Agama Solutions, Inc. and
Agilocity, Inc. for Suites in Murco Plaza in Fremont – dated March 14, 2013, as
amended by that certain First Amendment to Lease, by and among Murco Management
(Lessor) and Agama Solutions, Inc. and Stratitude, Inc. (Lessee)  – dated
September 27, 2016 and valid  through October 31, 2019.

3.11(b) Owned Real Property

None.

3.12(a) Registered Intellectual Property
 
Domain Name
Registrant
www.stratitude.com
GoDaddy
Account #5444459
Login: 544459
Password: Asol9300!
www.agamasolutions.com
GoDaddy
Account #20109207
Login: agamahosting
Password: Rev@mped@2014

 
3.12(d) License Agreements

The Company has Zen (SaaS Product) licensing agreements with the following
companies:

·
MDVIP – A Procter & Gamble Company ( Paid License User) – dated June 21, 2013

·
PUBLIC CONSULTING GROUP ( PCG) ( Paid License User) – dated September 23, 2014

3.13 (a)

Stratitude has Contracts with the following customers in excess of $75,000.00
per annum:
·
Advantage Technical Resourcing Supplier Profile with Stratitude, Inc. -  dated
Jan 26th 2015

·
Armando Montelongo Master Services Agreement with Stratitude dated April 19th
2012

·
BCBS/Zerochaos/Guide Well Incepture ZeroChaos Transfer Agreement between

3

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

Stratitude & APC Workforce Solutions LLC DBA Zerochaos – dated December 15, 2014

·
DataInc.11052014 Master Services agreement between Stratitude & Data Inc. -
dated November 5, 2014.

·
Elastic Search Master Services Agreement between Statitude and Elastic Search –
Dated May 5, 2015

·
Master Services Agreement between FireEye Inc. and Stratitude Inc. – dated
January 13, 2016

·
Master Services Agreement between LoringWard/LWI Financial Inc. and Stratitude,
Inc. – dated June 15, 2015

·
Master Services Agreement between Model N, Inc. and Stratitude, Inc. – dated
January 4, 2013

·
Master Services Agreement between Shoretel and Stratitude – dated November 3,
2014

·
Master Services Agreement between Silver Spring Networks and Stratitude – dated
November 2, 2015

·
Master Services Agreement between Tavant Technologies and Stratitude – dated May
3, 2013

·
Stratitude Subcontracting Agreement with Tech Mahindra Americas Inc. – dated
April 17, 2015

·
Master Services Agreement between Tesla Motors and Stratitude – dated June 15,
2015

·
Ultra Clean Technology Staffing Agreement 12152015 with Stratitude - Dated June
24, 2014

Stratitude has Contracts with the following suppliers in excess of $75,000.00
per annum:
·
Master Services Agreement between Baanyan Software Services Inc. and Stratitude
– dated November 8, 2014

·
Master Services Agreement between E-Base Technologies Inc. and Stratitude –
dated November 26, 2014

·
Master Services Agreement between Elite Innovative Solutions Inc. and Stratitude
– dated May 15, 2014

·
Master Services Agreement between Enterprise Pals Inc. and Stratitude – dated
August 7, 2014.

4

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

·
Master Services Agreement between Eternity Systems Inc. and Stratitude – dated
March 4, 2015

·
Master Services Agreement between Kolla Soft Inc. and Stratitude – dated May 21,
2015

·
Master Services Agreement between Prodium Consulting LLC and Stratitude – dated
December 10, 2014.

·
Master Services Agreement between Sugo Inc. and Stratitude – dated March 27,
2015

·
Master Services Agreement between Tabner Inc. and Stratitude – dated February
24, 2015

·
Master Services Agreement between Taproot Solutions and Stratitude – dated April
15, 2015

·
Master Services Agreement between Virtue Group LLC and Stratitude – dated March
3, 2015

·
Master Services Agreement between Z Network Engineering LLC and Stratitude –
dated May 19, 2015

·
Master Services Agreement between Ziontech Solutions Inc. and Stratitude – dated
March 13, 2015

Agama has Contracts with the following customers in excess of $75,000.00 per
annum

·
Master Services Agreement between Abovo Inc and Agama Solutions dated April 27,
2011.

·
Master Services Agreement between Advantis Global Inc. and Agama Solutions –
dated May 14, 2009

·
Master Services Agreement between Alpha Net and Agama Solutions – dated March
13, 2015

·
Services Agreement between Apex Systems and Agama Solutions – dated May 29, 2013

·
Master Services Agreement between Ascent Services Group and Agama Solutions
dated April 3, 2009.

·
Master Services Agreement and PO between Avalon Staffing, LLC and Agama
Solutions – dated November 5, 2013

5

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

·
Master Services Agreement between Beacon Hill Staffing and Agama Solutions –
dated May 14, 2011

·
Master Services Agreement between Blackstone Technology and Agama Solutions –
dated January 31, 2008

·
Master Services Agreement between CES USA and Agama Solutions – dated January
23, 2015

·
Master Services Agreement between CSI and Agama Solutions – dated January 7,
2016

·
Master Services Agreement between IBA software Technologies, Inc and Agama
Solutions – dated April 8, 2010

·
Master Services Agreement between Judge Group and Agama Solutions – dated
January 31, 2012

·
Master Services Agreement between K-force and Agama Solutions – dated July 31,
2009

·
Master Services Agreement between M.I.S.I. Co., Ltd and Agama Solutions – dated
June 16, 2011

·
Master Services Agreement between Mainz Brady Group and Agama Solutions – dated
May 2, 2011

·
Master Services Agreement between Matrix Resources and Agama Solutions – dated
December 23, 2013

·
Master Services Agreement Addendum between Maveric Testing Solutions Ltd and
Agama Solutions – dated June 25, 2014

·
Master Services Agreement between Modis and Agama Solutions – dated October 10,
2013

·
Master Services Agreement between Polaris Consulting & Services and Agama
Solutions – dated April 11, 2013

·
Master Services Agreement between Randstad and Agama Solutions – dated January
24, 2013

·
Master Services Agreement between Red Oak Technologies and Agama Solutions –
dated January 8, 2014

·
Master Services Agreement between Robert Gatto Associates and Agama Solutions –
dated March 16, 2010

6

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

·
Master Services Agreement between SA Technologies and Agama Solutions – dated
August 8, 2012

·
Master Services Agreement between Sigma Resources LLC and Agama Solutions –
dated May 11, 2009

·
Master Services Agreement between Signature Consultant and Agama Solutions –
dated March 4, 2015

·
Master Services Agreement between Smartworks LLC and Agama Solutions – dated
September 28, 2015

·
Master Services Agreement between Solugenix Corp and Agama Solutions – dated
January 11, 2008

·
Master Services Agreement between Spire Systems Inc. and Agama Solutions – dated
October 15, 2007

·
Master Services Agreement between Strategic Staffing Solutions/Wells Fargo and
Agama Solutions – dated June 12, 2013

·
Master Services Agreement between Tac Worldwide/Advantage and Agama Solutions –
dated October 13, 2014

·
Master Services Agreement between Talent Space and Agama Solutions – dated March
24, 2014

·
Master Services Agreement between Tavant Technologies and Agama Solutions –
dated March 15, 2013

·
Master Services Agreement between Teamsoft Technologies LLC and Agama Solutions
– dated February 4, 2014

·
Master Services Agreement between Technisource and Agama Solutions – dated
February 24, 2009

·
Master Services Agreement between Vaco Technology and Agama Solutions – dated
March 14, 2012

·
Master Services Agreement between Xoriant Inc. and Agama Solutions – dated May
7, 2010

·
Master Services Agreement between Yoh Services LLC and Agama Solutions – dated
July 12, 2016

7

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

Agama has Contracts with the following suppliers in excess of $75,000.00 per
annum:
·
Master Services Agreement and PO between Copper Mobile Inc. and Agama Solutons –
dated April 14, 2014

 
·
Master Services Agreement between Red Mesa, LLC and Agama Solutions – dated
January 9, 2016

·
Master Services Agreement between Woodstar Inc. (Shayde Christian) and Agama
Solutions – dated June 23, 2015.

·
Master Services Agreement between Thebe Inc. and Agama Solutions – March 9, 2015

·
Master Services Agreement between Webster Consulting Services LLC and Agama
Solutions – dated January 31, 2014

3.14(a) Litigation

None. 

3.16(a) Permits

The Company has the following Permits:
·
Annual City of Pleasanton Business License

·
Annual City of Fremont Business License

No filings are required for Change of Control.

3.16(b) Other Person Authorization

None.

3.17 Insurance

The Company has the following insurance policies, each of which is in full force
and effect as of the date hereof:
·
An Insurance Policy with General Sentinel Insurance Company that includes:

o
General Liability

o
Blanket Contractual

o
Tech E&O & Cyber

o
Automobile Liability

o
Umbrella Liability

o
Workers Compensation and Employers Liability

 
8

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

 
·
Third Party Crime Insurance through Hartford Fire Insurance Co.

·
Medical Insurance through United Healthcare

·
Health Insurance through Cigna

·
Dental Insurance through Guardian Dental

·
Vision Insurance through Guardian Vision

There are no pending claims under any of these policies.

3.19(g) Employment Matters

List of employees terminated in the past three (3) years or whose hours of work
have been reduced by more than fifty percent (50%) in the prior three (3) years:
Name
Date of Termination
Reason for Termination
Base Salary and Bonus/Commission
Release of Claims or other Separation Agreement
Work Location
Karene Conlin
10/31/2014
Lack of Performance
$7,083.34/month
Release Agreement
Fremont, CA
Mark J. Cunningham
12/04/2014
Lack of Performance
$6,250.00/month
N/A
Fremont, CA
Sanket Jain
08/22/2014
Lack of Performance
$3,000.00/month
N/A
Fremont, CA
Shilpa Abani
12/31/2015
Lack of Performance
$3,167.00/month
N/A
Pleasanton, CA
Swati Dixit
05/04/2016
Lack of Performance
$3,750.00/month
N/A
Pleasanton, CA
Karthik Reballi
07/08/2016
Absconding
$43.50/hour
N/A
El Dorado Hills, CA
Shuyang Zhang
07/28/2016
Relocated to China without notice
$30.00/hour
N/A
Sacramento, CA

 
3.20(a) Employee Plans

The Company has the following employee plans:
·
Medical Insurance through United Healthcare

 
9

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

·
Dental Insurance through Guardian

·
Vision Insurance through Guardian

·
401K ( Only Employee Contribution)

3.24 Bank Accounts

The Company has the following Bank Accounts:
·
Fremont Bank 2971437 (Checking – Check, ACH, wire)

·
Fremont Bank 2971496 (Payroll)

·
Bank of America 0663512310 (Checking – online payment)

3.26 Customers and Suppliers

Material Customers:
1.
Kforce - $2,305,364.69 in revenue

2.
Strategic Staffing Solutions - $1,817,842.51 in revenue

3.
FireEye Inc. - $1,747,965.00 in revenue

4.
TCS/CMCA - $936,489.00 in revenue

5.
Tech Mahindra Americas Inc. - $776,265.00 in revenue

6.
Apex Systems – 686,358.38 in revenue

7.
Talent Space - $553,973.90 in revenue

8.
Ascent Services Group - $533,811.90 in revenue

9.
Avalon Staffing, LLC - $512,211.46 in revenue

10.
Tac Worldwide/Advantage Technical - $450,902.46 in revenue

Material Suppliers:
1.
Woodstar Inc. - $286,519.25 in costs

2.
Kolla Soft Inc. - $203,940.00 in costs

3.
Eternity Systems Inc. - $202,975.00 in costs

4.
Droisys Inc. - $197,030.00 in costs

5.
Tabner Inc. - $182,505.00 in costs

6.
Taproot Solutions - $168,693.00 in costs

7.
SRK Systems Inc. - $117,120.00 in costs

8.
GSR Technologies, Inc. - $86,064.00 in costs

9.
Z Network Engineering LLC - $81,840.00 in costs

10.
Red Mesa, LLC - $79,040.00 in costs

 
6.3 Material Action

None.
6.9 Terminate Contracts

None.
10

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

10.1 Additional Permitted Liens

None.
 

 

11

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

EXHIBIT A
FINANCIAL DOCUMENTS
[see attached]

 
 

 
12

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

 
AGAMA SOLUTIONS, INC.
Statement of Cash Flows
   
January through June 2016
         
Jan - Jun 16
 
OPERATING ACTIVITIES
     
Net Income
   
193,268.22
 
Adjustments to reconcile Net Income
to net cash provided by operations:
       
Accounts Receivable
   
334,010.15
 
Employee Advance
   
-7,269.67
 
Prepaid Expense
   
-52,834.09
 
Security Deposit
   
-4,856.00
 
Short Term Loan
   
100,000.00
 
Unbilled Revenue
   
-221,031.00
 
Accounts Payable
   
-22,593.15
 
AMEX- CC A/C#51001
   
8,264.47
 
Capital One- #3699
   
-5,653.81
 
Capital One - #2760
   
10,319.68
 
Fremont Bank - First Bankcard
   
2,994.85
 
Accrued Expense
   
26,327.07
 
Payroll Liabilities
   
-26,672.89
 
Salary Payable
   
-48,165.35
 
Training Fee (Refundable)
   
-5,500.00
 
Net cash provided by Operating Activities
   
280,608.48
 
INVESTING ACTIVITIES
       
Accum. Dep.- Equipments
   
5,451.00
 
Accum. Dep.- Furniture & Fix.
   
114.00
 
Accum. Dep.- Mini Van
   
594.00
 
Office Equipment
   
-2,647.68
 
Net cash provided by Investing Activities
   
3,511.32
 
Shareholder Distributions
   
-309,845.00
 
Net cash provided by Financing Activities
   
-309,845.00
 
Net cash increase for period
   
-25,725.20
 
Cash at beginning of period
   
379,812.27
 
Cash at end of period
   
354,087.07
 

Page 1 of 2

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

Stratitude Inc
Statement of Cash Flows
   
January through June 2016
         
Jan - Jun 16
 
OPERATING ACTIVITIES
     
Net Income
   
-70,873.46
 
Adjustments to reconcile Net Income
       
to net cash provided by operations:
       
Accounts Receivable
   
31,481.23
 
Unbilled Revenue
   
-55,982.00
 
Employee Advance
   
2,276.15
 
Prepaid Expense
   
12,472.09
 
Accounts Payable
   
-64,943.79
 
Fremont Bank - First Bankcard
   
-4,221.59
 
AMEX-51001
   
-24,361.36
 
Fremont Bank - Line of Credit
   
250,000.00
 
Refundable Short Term Loan
   
-100,000.00
 
Accrued Expense
   
38,252.50
 
Accrued Payroll & Taxes Payable: Net Payroll Payable
   
26,837.08
 
Accrued Payroll & Taxes Payable: Tax Liability
   
-4,958.38
 
Net cash provided by Operating Activities
   
35,978.47
 
INVESTING ACTIVITIES
       
Acc. Amt. Asset - Zen
   
7,728.48
 
Acc. Amt. Asset - AJILE
   
16,559.52
 
Acc. Depr. Furniture
   
600.00
 
Acc. Depr. Office Equipment
   
834.00
 
Acc. Depr. Computer
   
1,512.00
 
Computer
   
-1,530.82
 
Net cash provided by Investing Activities
   
25,703.18
 
FINANCING ACTIVITIES
       
Shareholder Distribution
   
-1,131.00
 
Net cash provided by Financing Activities
   
-1,131.00
 
Net cash increase for period
   
60,550.65
 
Cash at beginning of period
   
321,306.51
 
Cash at end of period
   
381,857.16
 

Page 2 of 2

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

Profit & Loss
January through June 2016
         
AGAMA
   
STRATITUDE
                   

Jan - Jun 16
   

Jan - Jun 16
 
Ordinary Income/Expense
           
Income
           
Consulting
           
Customer Discount
   
-3,995.83
     
-200.00
 
Consulting - Other
   
5,845,266.08
     
2,507,796.88
 
Total Consulting
   
5,841,270.25
     
2,507,596.88
 
Reimbursement Income
   
-5,371.67
     
-252.36
 
Total Income
   
5,835,898.58
     
2,507,344.52
 
Cost of Goods Sold
               
Consultant Salary
   
3,360,013.33
     
933,508.79
 
Consultant Salary - Sick Leave
   
66,380.00
         
Consultants - Payroll Tax
   
227,178.03
     
70,755.08
 
Outside Service
   
471,752.48
     
993,460.25
 
Total COGS
   
4,125,323.84
     
1,997,724.12
 
Gross Profit
   
1,710,574.74
     
509,620.40
 
Expense
               
Advertisement
               
Business Advertisement
   
16,986.12
     
15,475.93
 
Total Advertisement
   
16,986.12
     
15,475.93
 
Amortization
           
24,288.00
 
Auto Insurance
   
4,094.27
         
Auto Lease
   
23,088.25
     
3,601.44
 
Automobile Expense
   
1,319.99
         
Bank Service Charges
   
2,650.63
     
1,563.63
 
Business License Fee
   
600.00
         
Business Promotion
   
2,463.84
         
Depreciation Expense
   
7,344.00
     
2,946.00
 
Dues and Subscriptions
           
1,199.28
 
Gift Expense
           
1,902.53
 
Insurance Expense
               
Disability Insurance
           
2,118.57
 
Health Insurance
   
66,254.04
     
38,730.60
 
Professional Liability Ins.
   
5,112.00
     
4,703.90
 
WC/Gen Liability Insurance
   
23,275.40
     
2,773.70
 
Total Insurance Expense
   
94,641.44
     
48,326.77
 
Interest Expense
   
2,764.03
     
5,239.75
 
Internet & Cable Charges
   
9,193.14
     
704.16
 
Legal Fee
               
Attorney Fee
   
42,271.01
     
10,269.00
 

Page 1 of 6

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

   
Jan - Jun 16
   
Jan - Jun 16
 
H1 Processing Fee
   
38,252.00
     
8,820.00
 
Immigration Fee
   
3,486.00
         
Total Legal Fee
   
84,009.01
     
19,089.00
 
Office Expenses
   
29,481.29
     
10,523.13
 
Office Supplies
   
3,856.09
         
Outside Service - G&A
   
71,397.00
     
13,084.00
 
Outside Service - Recruiting
   
2,240.00
     
35,925.80
 
Payroll Expense
   
11,515.32
     
1,613.59
 
Payroll Taxes - SG&A
   
55,127.62
     
24,010.31
 
Payroll/Salaries
               
 Commission
   
295,023.00
     
76,246.65
 
 Salary-G&A
   
182,251.20
     
81,000.00
 
Salary-Management
   
139,800.00
     
60,000.00
 
Salary-Marketing
   
159,017.26
     
82,067.99
 
Salary-Recruiting
   
107,500.00
     
36,000.00
 
Salary-Training
   
92,230.20
         
salary-Vacation
   
30,818.00
     
12,328.00
 
Total Payroll/Salaries
   
1,006,639.66
     
347,642.64
 
Placement Expenses
   
3,729.78
     
6,825.94
 
Postage
   
3,206.13
     
258.07
 
Professional Fees
   
17,366.00
     
1,680.00
 
Relocation Expense
   
8,000.00
         
Rent Expense
   
132,012.03
     
19,993.17
 
Staff Meals & Promotion
   
547.84
         
Staff Medical Expense
   
1,142.00
     
254.95
 
Taxes
               
City
   
16,583.84
     
1,721.29
 
State
   
15,372.76
     
1,483.92
 
Total Taxes
   
31,956.60
     
3,205.21
 
Telephone/Communication Exp.
   
11,901.19
     
5,884.12
 
Training & Education Expense
   
23,498.00
         
Training, Boarding & Lodging
   
7,096.58
         
Travel Expense
               
Lodge
   
5,087.97
     
819.92
 
Meal
   
13,187.56
     
7,699.09
 
Transportion
   
7,624.70
     
8,437.51
 
Travel
   
24,081.92
     
980.92
 
Total Travel Expense
   
49,982.15
     
17,937.44
 
Utilities
   
3,105.52
         
Total Expense
   
1,722,955.52
     
613,174.86
 
Net Ordinary Income
   
-12,380.78
     
-103,554.46
 
Net Income
   
-12,380.78
     
-103,554.46
 

Page 2 of 6

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

 
Profit & Loss
January through June 2016
         
INTER-CO.
             

Jan - Jun 16
 
Ordinary Income/Expense
     
Income
     
Consulting
     
Customer Discount
     
Consulting - Other
   
-267,591.00
 
Total Consulting
   
-267,591.00
 
Reimbursement Income
       
Total Income
   
-267,591.00
 
Cost of Goods Sold
       
Consultant Salary
       
Consultant Salary - Sick Leave
       
Consultants - Payroll Tax
       
Outside Service
   
-183,110.00
 
Total COGS
   
-183,110.00
 
Gross Profit
   
-84,481.00
 
Expense
       
Advertisement
       
Business Advertisement
       
Total Advertisement
       
Amortization
       
Auto Insurance
       
Auto Lease
       
Automobile Expense
       
Bank Service Charges
       
Business License Fee
       
Business Promotion
       
Depreciation Expense
       
Dues and Subscriptions
       
Gift Expense
       
Insurance Expense
       
Disability Insurance
       
Health Insurance
       
Professional Liability Ins.
       
WC/Gen Liability Insurance
       
Total Insurance Expense
       
Interest Expense
       
Internet & Cable Charges
       
Legal Fee
       
Attorney Fee
       

Page 3 of 6

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

   
Jan - Jun 16
 
Ordinary Income/EHx1pPenrosceessing Fee
     
Immigration Fee
     
Total Legal Fee
     
Office Expenses
     
Office Supplies
     
Outside Service - G&A
   
-84,481.00
 
Outside Service - Recruiting
       
Payroll Expense
       
Payroll Taxes - SG&A
       
Payroll/Salaries
       
Commission
       
Salary-G&A
       
Salary-Management
       
Salary-Marketing
       
Salary-Recruiting
       
Salary-Training
       
salary-Vacation
       
Total Payroll/Salaries
       
Placement Expenses
       
Postage
       
Professional Fees
       
Relocation Expense
       
Rent Expense
       
Staff Meals & Promotion
       
Staff Medical Expense
       
Taxes
       
City
       
State
       
Total Taxes
       
Telephone/Communication Exp.
       
Training & Education Expense
       
Training, Boarding & Lodging
       
Travel Expense
       
Lodge
       
Meal
       
Transportion
       
Travel
       
Total Travel Expense
       
Utilities
       
Total Expense
   
-84,481.00
 
Net Ordinary Income
   
0.00
 
Net Income
   
0.00
 

Page 4 of 6

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

Profit & Loss
January through June 2016
         
TOTAL
             

Jan - Jun 16
 
Ordinary Income/Expense
     
Income
     
Consulting
     
Customer Discount
   
-4,195.83
 
Consulting - Other
   
8,085,471.96
 
Total Consulting
   
8,081,276.13
 
Reimbursement Income
   
-5,624.03
 
Total Income
   
8,075,652.10
 
Cost of Goods Sold
       
Consultant Salary
   
4,293,522.12
 
Consultant Salary - Sick Leave
       
Consultants - Payroll Tax
   
297,933.11
 
Outside Service
   
1,282,102.73
 
Total COGS
   
5,939,937.96
 
Gross Profit
   
2,135,714.14
 
Expense
       
Advertisement
       
Business Advertisement
   
32,462.05
 
Total Advertisement
   
32,462.05
 
Amortization
   
24,288.00
 
Auto Insurance
   
4,094.27
 
Auto Lease
   
26,689.69
 
Automobile Expense
   
1,319.99
 
Bank Service Charges
   
4,214.26
 
Business License Fee
   
600.00
 
Business Promotion
   
2,463.84
 
Depreciation Expense
   
10,290.00
 
Dues and Subscriptions
   
1,199.28
 
Gift Expense
   
1,902.53
 
Insurance Expense
       
Disability Insurance
   
2,118.57
 
Health Insurance
   
104,984.64
 
Professional Liability Ins.
   
9,815.90
 
WC/Gen Liability Insurance
   
26,049.10
 
Total Insurance Expense
   
142,968.21
 
Interest Expense
   
8,003.78
 
Internet & Cable Charges
   
9,897.30
 
Legal Fee
       
Attorney Fee
   
52,540.01
 

Page 5 of 6

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

   
Jan - Jun 16
 
Ordinary Income/EHx1pPenrosceessing Fee
   
47,072.00
 
Immigration Fee
   
3,486.00
 
Total Legal Fee
   
103,098.01
 
Office Expenses
   
40,004.42
 
Office Supplies
   
3,856.09
 
Outside Service - G&A
   
0.00
 
Outside Service - Recruiting
   
38,165.80
 
Payroll Expense
   
13,128.91
 
Payroll Taxes - SG&A
   
79,137.93
 
Payroll/Salaries
       
Commission
   
371,269.65
 
Salary-G&A
   
263,251.20
 
Salary-Management
   
199,800.00
 
Salary-Marketing
   
241,085.25
 
Salary-Recruiting
   
143,500.00
 
Salary-Training
   
92,230.20
 
salary-Vacation
   
43,146.00
 
Total Payroll/Salaries
   
1,354,282.30
 
Placement Expenses
   
10,555.72
 
Postage
   
3,464.20
 
Professional Fees
   
19,046.00
 
Relocation Expense
   
8,000.00
 
Rent Expense
   
152,005.20
 
Staff Meals & Promotion
   
547.84
 
Staff Medical Expense
   
1,396.95
 
Taxes
       
City
   
18,305.13
 
State
   
16,856.68
 
Total Taxes
   
35,161.81
 
Telephone/Communication Exp.
   
17,785.31
 
Training & Education Expense
   
23,498.00
 
Training, Boarding & Lodging
   
7,096.58
 
Travel Expense
       
Lodge
   
5,907.89
 
Meal
   
20,886.65
 
Transportion
   
16,062.21
 
Travel
   
25,062.84
 
Total Travel Expense
   
67,919.59
 
Utilities
   
3,105.52
 
Total Expense
   
2,251,649.38
 
Net Ordinary Income
   
-115,935.24
 
Net Income
   
-115,935.24
 

Page 6 of 6

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

 
AGAMA SOLUTIONS, INC.
Statement of Cash Flows
   
January through December 2014
         
Jan - Dec 14
 
OPERATING ACTIVITIES
     
Net Income
   
555,297.32
 
Adjustments to reconcile Net Income
to net cash provided by operations:
       
Accounts Receivable
   
-54,067.31
 
Employee Advance
   
2,257.71
 
Loan Recoverable
   
73,302.00
 
Prepaid Expense
   
-75,406.10
 
Security Deposit
   
-600.00
 
Short Term Loan
   
69,000.00
 
Unbilled Revenue
   
-153,011.55
 
Accounts Payable
   
-96,509.84
 
BOA-Ashish Sanan CC A/C#9580
   
13,092.84
 
BOA Visa Award - 5221
   
5,320.90
 
Capital One-Tanu Kalra #3699
   
3,972.53
 
Capital One - Sanan#2760
   
2,156.11
 
Accrued Expense
   
6,969.00
 
Payroll Liabilities
   
21,023.64
 
Salary Payable
   
201,475.39
 
Training Fee (Refundable)
   
44,000.00
 
Net cash provided by Operating Activities
   
618,272.64
 
INVESTING ACTIVITIES
       
Accum. Dep.- Equipments
   
10,664.00
 
Accum. Dep.- Furniture & Fix.
   
240.00
 
Accum. Dep.- Mini Van
   
1,188.00
 
Office Equipment
   
-7,538.54
 
Net cash provided by Investing Activities
   
4,553.46
 
FINANCING ACTIVITIES
       
Capital Stock: Ashish Sanan
   
265.50
 
Capital Stock: Khannan Sankaran
   
143.00
 
Capital Stock: Pankaj Kalra
   
265.50
 
Capital Stock: Shalesh Jawa
   
-674.00
 
Shareholder Distributions: Ashish Sanan
   
-115,000.00
 
Shareholder Distributions: Khannan Sankaran
   
-61,000.00
 
Shareholder Distributions: Pankaj Kalra
   
-115,000.00
 
Shareholder Distributions: Shalesh Jawa
   
-136,538.00
 
Net cash provided by Financing Activities
   
-427,538.00
 
Net cash increase for period
   
195,288.10
 
Cash at beginning of period
   
156,038.77
 
Cash at end of period
   
351,326.87
 

Page 1 of 2

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AGAMA SOLUTIONS, INC.
Statement of Cash Flows
   
January through December 2015
         
Jan - Dec 15
 
OPERATING ACTIVITIES
     
Net Income
   
830,356.73
 
Adjustments to reconcile Net Income
       
to net cash provided by operations:
       
Accounts Receivable
   
-103,930.84
 
Employee Advance
   
-12,930.01
 
Prepaid Expense
   
-34,210.42
 
Security Deposit
   
-100.00
 
Short Term Loan
   
151,700.00
 
Unbilled Revenue
   
188,992.00
 
Accounts Payable
   
1,435.69
 
BOA-Ashish Sanan CC A/C#9580
   
-13,216.38
 
BOA Visa Award - 5221
   
-5,187.06
 
Capital One-Tanu Kalra #3699
   
3,943.25
 
Capital One - Sanan#2760
   
1,221.49
 
Fremont Bank - First Bankcard
   
11,523.40
 
Accrued Expense
   
-3,934.62
 
Payroll Liabilities
   
-12,559.69
 
Salary Payable
   
-31,512.51
 
Training Fee (Refundable)
   
-70,665.00
 
Net cash provided by Operating Activities
   
900,926.03
 
INVESTING ACTIVITIES
       
Accum. Dep.- Equipments
   
10,908.00
 
Accum. Dep.- Furniture & Fix.
   
334.00
 
Accum. Dep.- Mini Van
   
1,183.00
 
Office Equipment
   
-3,653.63
 
Net cash provided by Investing Activities
   
8,771.37
 
FINANCING ACTIVITIES
       
Capital Stock: Ashish Sanan
   
79.25
 
Capital Stock: Khannan Sankaran
   
42.50
 
Capital Stock: Pankaj Kalra
   
79.25
 
Capital Stock: Shalesh Jawa
   
-201.00
 
Shareholder Distributions: Ashish Sanan
   
-329,334.00
 
Shareholder Distributions: Khannan Sankaran
   
-178,262.00
 
Shareholder Distributions: Pankaj Kalra
   
-329,334.00
 
Shareholder Distributions: Shalesh Jawa
   
-44,282.00
 
Net cash provided by Financing Activities
   
-881,212.00
 
Net cash increase for period
   
28,485.40
 
Cash at beginning of period
   
351,326.87
 
Cash at end of period
   
379,812.27
 

Page 2 of 2

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AGAMA SOLUTIONS, INC.
Profit & Loss
January through December 2014
 
Accrual Basis
     
TOTAL
 
Ordinary Income/Expense
     
Income
     
Consulting
     
Customer Discount
   
-28,608.25
 
Consulting - Other
   
12,150,050.43
 
Total Consulting
   
12,121,442.18
 
Reimbursement Income
   
3,793.08
 
Training Fee
   
10,000.00
 
Total Income
   
12,135,235.26
 
Cost of Goods Sold
       
Consultant Salary
   
7,406,441.33
 
Consultants - Payroll Tax
   
499,961.47
 
Outside Service
   
943,961.58
 
Total COGS
   
8,850,364.38
 
Gross Profit
   
3,284,870.88
 
Expense
       
Advertisement
     
Business Advertisement
   
23,736.06
 
Total Advertisement
   
23,736.06
 
Auto Insurance
   
3,605.40
 
Auto Lease
   
42,611.37
 
Automobile Expense
   
7,250.28
 
Bad Debts
   
4,800.00
 
Bank Service Charges
   
10,625.74
 
Business License Fee
   
350.00
 
Business Promotion
   
5,736.15
 
Charity & Donation
   
4,594.00
 
Depreciation Expense
   
12,092.00
 
Dues and Subscriptions
   
1,800.59
 
Insurance Expense
       
Health Insurance
   
131,350.30
 
Professional Liability Ins.
   
6,193.50
 
WC/Gen Liability Insurance
   
38,772.63
 
Insurance Expense - Other
   
1,928.86
 
Total Insurance Expense
   
178,245.29
 
Interest Expense
   
14,026.52
 
Internet & Cable Charges
   
23,997.51
 
Legal Fee
       
Attorney Fee
   
58,333.26
 
H1 Processing Fee
   
38,517.02
 

Page 1 of 10

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

   
TOTAL
 
Immigration Fee
   
2,036.00
 
Total Legal Fee
   
98,886.28
 
Office Expenses
   
28,067.29
 
Office Supplies
   
7,425.99
 
Outside Service - G&A
   
190,874.00
 
Payroll Expense
   
9,305.43
 
Payroll Taxes - SG&A
   
100,653.01
 
Payroll/Salaries
       
Commission
   
334,414.46
 
Salary-G&A
   
273,833.86
 
Salary-Management
   
134,000.00
 
Salary-Marketing
   
277,901.66
 
Salary-Recruiting
   
133,590.73
 
Salary-Training
   
199,505.96
 
Total Payroll/Salaries
   
1,353,246.67
 
Placement Expenses
   
7,271.64
 
Postage
   
5,865.51
 
Professional Fees
   
173,611.20
 
Relocation Expense
   
20,500.00
 
Rent Expense
   
184,523.00
 
Staff Meals & Promotion
   
21,754.50
 
Staff Medical Expense
   
9,833.41
 
Taxes
       
City
   
13,074.14
 
State
   
22,224.75
 
Total Taxes
   
35,298.89
 
Telephone/Communication Exp.
   
22,495.27
 
Training, Boarding & Lodging
   
13,602.90
 
Travel Expense
       
Lodge
   
15,097.85
 
Meal
   
25,056.07
 
Transportion
   
20,916.38
 
Travel
   
47,167.35
 
Total Travel Expense
   
108,237.65
 
Utilities
   
4,655.85
 
Total Expense
   
2,729,579.40
 
Net Ordinary Income
   
555,291.48
 
Other Income/Expense
       
Other Income
       
Interest Earned
   
5.84
 
Total Other Income
   
5.84
 
Net Other Income
   
5.84
 
Net Income
   
555,297.32
 

Page 2 of 10

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

 

   
TOTAL
         
EBITDA
   
616,708.89
 

 

 
 
Page 3 of 10

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AGAMA SOLUTIONS, INC.
     
Balance Sheet
     
As of December 31, 2014
 
Accrual Basis
             
Dec 31, 14
         
ASSETS
     
Current Assets
     
Checking/Savings
     
Bank of America - Checking-0313
   
351,326.87
 
Total Checking/Savings
   
351,326.87
 
Accounts Receivable
       
Accounts Receivable
   
1,391,181.46
 
Total Accounts Receivable
   
1,391,181.46
 
Other Current Assets
       
Employee Advance
   
3,200.00
 
Prepaid Expense
   
104,947.92
 
Security Deposit
   
16,535.00
 
Short Term Loan
   
251,700.00
 
Unbilled Revenue
   
205,145.00
 
Total Other Current Assets
   
581,527.92
           
Total Current Assets
   
2,324,036.25
           
Fixed Assets
       
Accum. Dep.- Equipments
   
-40,116.00
 
Accum. Dep.- Furniture & Fix.
   
-1,770.00
 
Accum. Dep.- Mini Van
   
-5,338.00
 
Furniture & Fixtures
   
3,153.60
 
Minivan
   
8,300.00
 
Office Equipment
   
71,988.59
 
Total Fixed Assets
   
36,218.19
 
TOTAL ASSETS
   
2,360,254.44
           
LIABILITIES & EQUITY
       
Liabilities
       
Current Liabilities
       
Accounts Payable
       
Accounts Payable
   
144,116.91
 
Total Accounts Payable
   
144,116.91
 
Credit Cards
   
29,275.02
 
Other Current Liabilities
       
Accrued Expense
   
9,849.00
 
Excess Pyt. Refundable Account
   
15,350.88
 
Payroll Liabilities
   
81,940.81
 
Salary Payable
   
764,846.55
 
Training Fee (Refundable)
   
89,665.00
 
Total Other Current Liabilities
   
961,652.24
 
Total Current Liabilities
   
1,135,044.17
 

Page 4 of 10

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

   
Dec 31, 14
 
Total Liabilities
   
1,135,044.17
 
Equity
       
Capital Stock
       
Ashish Sanan
   
1,890.50
 
Khannan Sankaran
   
1,018.00
 
Pankaj Kalra
   
1,890.50
 
Shalesh Jawa
   
201.00
 
Total Capital Stock
   
5,000.00
 
Retained Earnings
   
2,361,292.95
 
Shareholder Distributions
   
-1,696,380.00
 
Net Income
   
555,297.32
 
Total Equity
   
1,225,210.27
 
TOTAL LIABILITIES & EQUITY
   
2,360,254.44
 

 

 
Page 5 of 10

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AGAMA SOLUTIONS, INC.
Profit & Loss
     
January through December 2015
 
Accrual Basis
     
TOTAL
 
Ordinary Income/Expense
     
Income
     
Consulting
     
Customer Discount
   
-4,835.27
 
Consulting - Other
   
12,656,171.88
 
Total Consulting
   
12,651,336.61
 
Reimbursement Income
   
-1,811.75
 
Training Fee
   
111,667.00
 
Total Income
   
12,761,191.86
 
Cost of Goods Sold
       
Consultant Salary
   
7,751,375.74
 
Consultants - Payroll Tax
   
509,073.61
 
Outside Service
   
857,684.03
 
Total COGS
   
9,118,133.38
 
Gross Profit
   
3,643,058.48
 
Expense
       
Advertisement
       
Business Advertisement
   
36,698.92
 
Total Advertisement
   
36,698.92
 
Auto Insurance
   
2,869.71
 
Auto Lease
   
47,468.03
 
Automobile Expense
   
5,005.67
 
Bad Debts
   
2,595.00
 
Bank Service Charges
   
9,048.01
 
Business License Fee
   
600.00
 
Business Promotion
   
4,211.07
 
Charity & Donation
   
6,600.00
 
Depreciation Expense
   
12,425.00
 
Dues and Subscriptions
   
1,395.21
 
Insurance Expense
       
Health Insurance
   
102,263.00
 
Professional Liability Ins.
   
9,187.00
 
WC/Gen Liability Insurance
   
51,176.44
 
Insurance Expense - Other
   
1,735.61
 
Total Insurance Expense
   
164,362.05
 
Interest Expense
   
15,976.18
 
Internet & Cable Charges
   
24,216.31
 
Legal Fee
       
Attorney Fee
   
93,253.52
 
H1 Processing Fee
   
71,025.00
 

Page 6 of 10

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

   
TOTAL
 
Immigration Fee
   
7,876.00
 
Total Legal Fee
   
172,154.52
 
Office Expenses
   
45,929.98
 
Office Supplies
   
5,726.12
 
Outside Service - G&A
   
151,306.00
 
Outside Service - Marketing
   
13,372.86
 
Outside Service - Recruiting
   
25,902.34
 
Payroll Expense
   
9,257.96
 
Payroll Taxes - SG&A
   
93,173.70
 
Payroll/Salaries
       
Commission
   
358,054.68
 
Salary-G&A
   
322,029.21
 
Salary-Management
   
159,000.00
 
Salary-Marketing
   
278,623.43
 
Salary-Recruiting
   
136,602.01
 
Salary-Training
   
152,389.36
 
Total Payroll/Salaries
   
1,406,698.69
 
Placement Expenses
   
2,796.78
 
Postage
   
4,654.50
 
Professional Fees
   
91,817.63
 
Relocation Expense
   
21,250.00
 
Rent Expense
   
215,531.04
 
Staff Meals & Promotion
   
13,620.27
 
Staff Medical Expense
   
5,871.61
 
Taxes
       
City
   
15,524.44
 
Property Tax
   
41.41
 
State
   
9,594.00
 
Total Taxes
   
25,159.85
 
Telephone/Communication Exp.
   
21,819.35
 
Training & Education Expense
   
6,584.00
 
Training, Boarding & Lodging
   
13,225.85
 
   Travel Expense
       
Entertainment
   
6,000.00
 
Lodge
   
12,819.97
 
Meal
   
25,834.71
 
Transportion
   
23,615.08
 
Travel
   
59,432.22
 
Total Travel Expense
   
127,701.98
 
Utilities
   
5,675.56
 
Total Expense
   
2,812,701.75
 
Net Ordinary Income
   
830,356.73
 
Net Income
   
830,356.73
 

Page 7 of 10

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TOTAL
 
EBITDA
   
883,917.76
 

 
 

 

Page 8 of 10

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

AGAMA SOLUTIONS, INC.
Balance Sheet
     
As of December 31, 2015
 
Accrual Basis
     
Dec 31, 15
         
ASSETS
     
Current Assets
     
Checking/Savings
     
Bank of America - Checking-0313
   
29,762.37
 
Fremont Bank #1410
   
343,234.76
 
Fremont Bank #1429 - Payroll
   
6,076.19
 
Paypal
   
538.95
 
Petty Cash
   
200.00
 
Total Checking/Savings
   
379,812.27
 
Accounts Receivable
       
Accounts Receivable
   
1,495,112.30
 
Total Accounts Receivable
   
1,495,112.30
           
Other Current Assets
       
Employee Advance
   
16,130.01
 
Prepaid Expense
   
139,158.34
 
Security Deposit
   
16,635.00
 
Short Term Loan
   
100,000.00
 
Unbilled Revenue
   
16,153.00
 
Total Other Current Assets
   
288,076.35
 
Total Current Assets
   
2,163,000.92
           
Fixed Assets
       
Accum. Dep.- Equipments
   
-51,024.00
 
Accum. Dep.- Furniture & Fix.
   
-2,104.00
 
Accum. Dep.- Mini Van
   
-6,521.00
 
Furniture & Fixtures
   
3,153.60
 
Minivan
   
8,300.00
 
Office Equipment
   
75,642.22
 
Total Fixed Assets
   
27,446.82
 
TOTAL ASSETS
   
2,190,447.74
           
LIABILITIES & EQUITY
       
Liabilities
       
Current Liabilities
       
Accounts Payable
       
Accounts Payable
   
145,552.60
 
Total Accounts Payable
   
145,552.60
 
Total Credit Cards
   
27,559.72
 
Other Current Liabilities
       
Accrued Expense
   
5,914.38
 
Excess Pyt. Refundable Account
   
15,350.88
 
Payroll Liabilities
   
69,381.12
 

Page 9 of 10

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

   
Dec 31, 15
 
Salary Payable
   
733,334.04
 
Training Fee (Refundable)
   
19,000.00
 
Total Other Current Liabilities
   
842,980.42
 
Total Current Liabilities
   
1,016,092.74
 
Total Liabilities
   
1,016,092.74
 
Equity
       
Capital Stock
       
Ashish Sanan
   
1,969.75
 
Khannan Sankaran
   
1,060.50
 
Pankaj Kalra
   
1,969.75
 
Total Capital Stock
   
5,000.00
 
Retained Earnings
   
2,916,590.27
 
Shareholder Distributions
   
-2,577,592.00
 
Net Income
   
830,356.73
 
Total Equity
   
1,174,355.00
 
TOTAL LIABILITIES & EQUITY
   
2,190,447.74
 

 
 
Page 10 of 10

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Balance Sheet
           
As of June 30, 2016
                             
AGAMA
   
STRATITUDE
     
Jun 30, 16
   
Jun 30, 16
               
ASSETS
           
Current Assets
           
Checking/Savings
           
Bank of America - Checking-0313
   
28,821.22
     
10,042.36
 
Fremont Bank #1410
   
324,607.62
     
365,851.70
 
Fremont Bank #1429 - Payroll
   
-80.72
     
-20.90
 
Paypal
   
538.95
     
72.52
 
Petty Cash
   
200.00
         
Total Checking/Savings
   
354,087.07
     
375,945.68
 
Accounts Receivable
               
Accounts Receivable
   
1,161,102.15
     
894,186.26
 
Total Accounts Receivable
   
1,161,102.15
     
894,186.26
                   
Other Current Assets
               
Employee Advance
   
23,399.68
     
7,600.95
 
Prepaid Expense
   
191,992.43
     
28,241.05
 
Security Deposit
   
21,491.00
     
3,400.00
 
Unbilled Revenue
   
237,184.00
     
55,982.00
 
Undeposited Funds
         
5,984.00
 
Total Other Current Assets
   
474,067.11
     
101,208.00
 
Total Current Assets
   
1,989,256.33
     
1,371,339.94
                   
Fixed Assets
               
Acc. Amt. Asset - Zen
         
-10,304.64
 
Intangible Asset - Zen
         
33,490.00
 
Acc. Amt. Asset - AJILE
         
-49,678.56
 
Intangible Asset - AJILE
         
99,357.00
 
Accum. Dep.- Equipments
   
-56,475.00
     
-32,054.00
 
Accum. Dep.- Furniture & Fix.
   
-2,218.00
     
-6,962.00
 
Acc. Depr. Computer
         
-13,511.00
 
Furniture & Fixtures
   
3,153.60
     
9,355.36
 
Computer
         
19,626.33
 
Office Equipment
   
78,289.90
     
32,144.22
 
Total Fixed Assets
   
22,750.50
     
81,462.71
 
TOTAL ASSETS
   
2,012,006.83
     
1,452,802.65
                   
LIABILITIES & EQUITY
               
Liabilities
               
Current Liabilities
               
Accounts Payable
               
Accounts Payable
   
122,959.45
     
437,745.34
 
Total Accounts Payable
   
122,959.45
     
437,745.34
 
Credit Cards
   
43,484.91
     
1,329.64
 

Page 1 of 4

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

   
Jun 30, 16
   
Jun 30, 16
 
Other Current Liabilities
           
Accrued Expense
   
32,241.45
     
71,742.50
 
Excess Pyt. Refundable Account
   
15,350.88
         
Fremont Bank - Line of Credit
           
250,000.00
 
Payroll Liabilities
   
42,708.23
     
15,080.41
 
Salary Payable
   
889,632.69
     
244,080.01
 
Training Fee (Refundable)
   
13,500.00
         
Total Other Current Liabilities
   
993,433.25
     
580,902.92
 
Total Current Liabilities
   
1,159,877.61
     
1,019,977.90
 
Total Liabilities
   
1,159,877.61
     
1,019,977.90
 
Equity
               
Capital Stock
               
Ashish Sanan
   
1,969.75
     
39.40
 
Khannan Sankaran
   
1,060.50
     
21.20
 
Pankaj Kalra
   
1,969.75
     
39.40
 
Total Capital Stock
   
5,000.00
     
100.00
 
Retained Earnings
   
3,746,947.00
     
1,194,267.55
 
Shareholder Distributions
   
-2,887,437.00
     
-657,988.34
 
Net Income
   
-12,380.78
     
-103,554.46
 
Total Equity
   
852,129.22
     
432,824.75
 
TOTAL LIABILITIES & EQUITY
   
2,012,006.83
     
1,452,802.65
 

 

 
Page 2 of 4

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Balance Sheet
           
As of June 30, 2016
                             
INTER-CO.
   
CONSOLIDATED
     
Jun 30, 16
   
Jun 30, 16
               
ASSETS
           
Current Assets
           
Checking/Savings
           
Bank of America - Checking-0313
         
38,863.58
 
Fremont Bank #1410
         
690,459.32
 
Fremont Bank #1429 - Payroll
         
-101.62
 
Paypal
         
611.47
 
Petty Cash
         
200.00
 
Total Checking/Savings
         
730,032.75
 
Accounts Receivable
             
Accounts Receivable
   
-53,876.00
     
2,001,412.41
 
Total Accounts Receivable
   
-53,876.00
     
2,001,412.41
                   
Other Current Assets
               
Employee Advance
           
31,000.63
 
Prepaid Expense
           
220,233.48
 
Security Deposit
           
24,891.00
 
Unbilled Revenue
           
293,166.00
 
Undeposited Funds
           
5,984.00
 
Total Other Current Assets
           
575,275.11
 
Total Current Assets
   
-53,876.00
     
3,306,720.27
                   
Fixed Assets
               
Acc. Amt. Asset - Zen
           
-10,304.64
 
Intangible Asset - Zen
           
33,490.00
 
Acc. Amt. Asset - AJILE
           
-49,678.56
 
Intangible Asset - AJILE
           
99,357.00
 
Accum. Dep.- Equipments
           
-88,529.00
 
Accum. Dep.- Furniture & Fix.
           
-9,180.00
 
Acc. Depr. Computer
           
-13,511.00
 
Furniture & Fixtures
           
12,508.96
 
Computer
           
19,626.33
 
Office Equipment
           
110,434.12
 
Total Fixed Assets
           
104,213.21
 
TOTAL ASSETS
   
-53,876.00
     
3,410,933.48
                   
LIABILITIES & EQUITY
               
Liabilities
               
Current Liabilities
               
Accounts Payable
               
Accounts Payable
   
-53,876.00
     
506,828.79
 
Total Accounts Payable
   
-53,876.00
     
506,828.79
 
Credit Cards
           
44,814.55
 

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Jun 30 , 16
   
Jun 30, 16
 
Other Current Liabilities
           
Accrued Expense
         
103,983.95
 
Excess Pyt. Refundable Account
         
15,350.88
 
Fremont Bank - Line of Credit
         
250,000.00
 
Payroll Liabilities
         
57,788.64
 
Salary Payable
         
1,133,712.70
 
Training Fee (Refundable)
         
13,500.00
 
Total Other Current Liabilities
         
1,574,336.17
 
Total Current Liabilities
   
-53,876.00
     
2,125,979.51
 
Total Liabilities
   
-53,876.00
     
2,125,979.51
 
Equity
               
Capital Stock
               
Ashish Sanan
           
2,009.15
 
Khannan Sankaran
           
1,081.70
 
Pankaj Kalra
           
2,009.15
 
Total Capital Stock
           
5,100.00
 
Retained Earnings
           
4,941,214.55
 
Shareholder Distributions
           
-3,545,425.34
 
Net Income
           
-115,935.24
 
Total Equity
           
1,284,953.97
 
TOTAL LIABILITIES & EQUITY
   
-53,876.00
     
3,410,933.48
 

 

 
Page 4 of 4

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Stratitude Inc
Statement of Cash Flows
   
January through December 2014
         
Jan - Dec 14
 
OPERATING ACTIVITIES
     
Net Income
   
-257,894.19
 
Adjustments to reconcile Net Income
       
to net cash provided by operations:
       
Accounts Receivable
   
337,562.38
 
Unbilled Revenue
   
-12,588.92
 
Employee Advance
   
-6,000.00
 
Prepaid Expense
   
-85,081.06
 
Accounts Payable
   
144,873.26
 
AMEX-51001
   
821.11
 
AMEX-1003
   
-225.83
 
BOA CC #7178
   
2,927.21
 
AMEX-1006
   
-3,057.85
 
Accrued Expense
   
2,800.00
 
BOA-Commercial Line of Credit
   
90,000.00
 
Accrued Payroll & Taxes Payable: Net Payroll Payable
   
42,539.81
 
Accrued Payroll & Taxes Payable: Tax Liability
   
7,899.42
 
Net cash provided by Operating Activities
   
264,575.34
 
INVESTING ACTIVITIES
       
Intangible Asset - AJILE
   
-99,357.00
 
Acc. Depr. Furniture
   
1,272.00
 
Acc. Depr. Office Equipment
   
2,184.00
 
Acc. Depr. Computer
   
3,180.00
 
Net cash provided by Investing Activities
   
-92,721.00
 
FINANCING ACTIVITIES
       
Shareholder Distribution
   
-131,963.00
 
Net cash provided by Financing Activities
   
-131,963.00
 
Net cash increase for period
   
39,891.34
 
Cash at beginning of period
   
200,381.99
 
Cash at end of period
   
240,273.33
 

Page 1 of 2

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Stratitude Inc
Statement of Cash Flows
   
January through December 2015
         
Jan - Dec 15
 
OPERATING ACTIVITIES
     
Net Income
   
263,347.23
 
Adjustments to reconcile Net Income
       
to net cash provided by operations:
       
Accounts Receivable
   
-458,723.24
 
Unbilled Revenue
   
30,108.92
 
Employee Advance
   
-3,877.10
 
Prepaid Expense
   
53,345.04
 
Accounts Payable
   
175,097.58
 
Fremont Bank - First Bankcard
   
5,551.23
 
AMEX-51001
   
23,540.25
 
BOA CC #7178
   
-2,927.21
 
Refundable Short Term Loan
   
100,000.00
 
Accrued Expense
   
30,690.00
 
BOA-Commercial Line of Credit
   
-90,000.00
 
Accrued Payroll & Taxes Payable: Net Payroll Payable
   
-35,872.69
 
Accrued Payroll & Taxes Payable: Tax Liability
   
-7,635.28
 
Net cash provided by Operating Activities
   
82,644.73
 
INVESTING ACTIVITIES
       
Acc. Amt. Asset - Zen
   
2,576.16
 
Intangible Asset - Zen
   
-33,490.00
 
Acc. Amt. Asset - AJILE
   
33,119.04
 
Acc. Depr. Furniture
   
1,194.00
 
Acc. Depr. Office Equipment
   
1,754.00
 
Acc. Depr. Computer
   
2,843.00
 
Computer
   
-2,216.75
 
Rent Deposit
   
-2,362.00
 
Net cash provided by Investing Activities
   
3,417.45
 
FINANCING ACTIVITIES
       
Shareholder Distribution
   
38,973.83
 
Shareholders Contributions
   
-44,002.83
 
Net cash provided by Financing Activities
   
-5,029.00
 
Net cash increase for period
   
81,033.18
 
Cash at beginning of period
   
240,273.33
 
Cash at end of period
   
321,306.51
 

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Stratitude Inc
Profit & Loss
     
January through December 2014
 
Accrual Basis
     
TOTAL
 
Ordinary Income/Expense
     
Income
     
Discount
   
-11,856.52
 
Reimbursed Expenses - Income
   
8,264.50
 
Service Revenue
   
3,595,277.01
 
Total Income
   
3,591,684.99
 
Cost of Goods Sold
       
Consultants - Payroll Tax
   
121,865.23
 
Consultants Salary
   
1,496,620.82
 
Project Related Costs
       
Outside Consultants
   
962,096.58
 
Total Project Related Costs
   
962,096.58
 
Total COGS
   
2,580,582.63
 
Gross Profit
   
1,011,102.36
 
Expense
       
Placement Expense
   
1,840.33
 
Outside Services
       
Outside Service - Recruiting
   
1,602.00
 
Total Outside Services
   
1,602.00
 
Staff Meal and Promotion
   
458.42
 
Staff Medical Expense
   
1,202.98
 
Taxes
       
City
   
6,985.14
 
State
   
8,430.69
 
Total Taxes
   
15,415.83
 
Automobile Lease
   
10,822.93
 
Depreciation Expense
   
6,636.00
 
Relocation Expense
   
500.00
 
Tax Property
   
439.91
 
Payroll Expenses
       
Payroll Taxes - SG&A
   
63,920.92
 
Salary-G&A
   
106,192.30
 
Salary-Management
   
112,768.80
 
Salary-Recruiting
   
89,619.39
 
Salary-Marketing
   
319,436.51
 
Guest House exp
   
-150.00
 
Commission
   
87,621.78
 
Payroll Service Fees
   
3,146.96
 
Total Payroll Expenses
   
782,556.66
 
Rent
   
54,273.30
 

Page 1 of 3

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TOTAL
 
Advertising Expense
   
23,652.09
 
Marketing Expense
   
2,858.07
 
Business License & Fees
   
779.00
 
Office Supplies
   
145.75
 
Office Expense
   
41,436.09
 
Postage and Delivery
   
242.10
 
Telephone Expense
   
10,758.69
 
Computer and Internet Expense
   
3,204.18
 
Dues and Subscriptions
   
2,327.39
 
Website Expense
   
10,000.00
 
Gift Expense
   
8,472.79
 
Conference and Meetings
   
8,001.40
 
Contributions
   
110.00
 
Insurance
       
Auto Insurance
   
1,500.25
 
Disability Insurance
   
2,304.88
 
General Liability Insurance
   
12,510.81
 
Medical Insurance
   
29,597.92
 
Worker's Compensation
   
1,787.06
 
Insurance - Other
   
-17.00
 
Total Insurance
   
47,683.92
 
Outside Service
   
47,734.00
 
Professional Fees
       
Accounting Fees
   
71,519.16
 
Legal Fees
   
8,667.37
 
Professional Fees - Other
   
57,283.48
 
Total Professional Fees
   
137,470.01
 
H1B & GC Expense
   
5,730.78
 
Automobile Expense
   
2,348.13
 
Travel & Entertainment
       
Transportation
   
6,951.28
 
Lodging
   
10,508.15
 
Meals
   
8,703.60
 
Travel
   
6,619.89
 
Total Travel & Entertainment
   
32,782.92
 
Bank Service Charges
   
2,754.39
 
Total Expense
   
1,264,240.06
 
Net Ordinary Income
   
-253,137.70
 
Other Income/Expense
       
Other Income
       
Interest Income
   
2.04
 
Total Other Income
   
2.04
 
Other Expense
       

Page 2 of 3

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TOTAL
 
Interest Expense
   
4,758.53
 
Total Other Expense
   
4,758.53
 
Net Other Income
   
-4,756.49
 
Net Income
   
-257,894.19
           
EBITDA
   
-235,842.36
 

 
 
 
 
 
 
 
 
Page 3 of 3