Exhibit 10.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
FEDERAL SIGNAL CORPORATION
AND
ALAN K. SEFTON
August 6, 2007

 

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TABLE OF CONTENTS

         
Article 1. PURCHASE AND SALE OF SHARES
    1  
1.1 Transfer of Shares
    1  
Article 2. CONSIDERATION
    1  
2.1 Purchase Price
    1  
2.2 Other Payments
    1  
2.3 Determination of Adjustment Amount
    1  
2.4 Escrow
    5  
Article 3. CLOSING; OBLIGATIONS OF THE PARTIES
    5  
3.1 Closing Date
    5  
3.2 Obligations of the Parties at the Closing
    5  
Article 4. REPRESENTATIONS AND WARRANTIES OF SELLER
    6  
4.1 Corporate Status
    6  
4.2 Authority
    6  
4.3 No Conflict
    6  
4.4 Capitalization; Subsidiaries
    6  
4.5 Financial Statements
    7  
4.6 Real Property
    8  
4.7 Assets
    9  
4.8 Material Contracts
    9  
4.9 Intellectual Property
    11  
4.10 Litigation, Claims and Proceedings
    12  
4.11 Environmental and Safety and Health Matters
    13  
4.12 Compliance with Law.
    14  
4.13 Employee Matters and Benefit Plans
    14  
4.14 Taxes
    16  
4.15 Absence of Undisclosed Liabilities
    17  
4.16 Absence of Certain Changes
    17  
4.17 Labor Matters
    18  
4.18 Finder’s Fee
    19  
4.19 Insurance
    19  
4.20 Related Party Transactions
    19  
4.21 Disclosure
    19  
Article 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
    19  
5.1 Corporate Status
    19  
5.2 Authority
    20  
5.3 No Conflict
    20  
5.4 Compliance with Law
    20  
5.5 Consents
    20  
5.6 Sufficient Funds
    21  
5.7 Finder’s Fee
    21  
5.8 No Reliance
    21  
5.9 Investment Intent
    21  
5.10 Litigation, Claims and Proceedings
    21  

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Article 6. COVENANTS
    22  
6.1 Publicity
    22  
6.2 Further Action
    22  
6.3 Expenses
    22  
6.4 Notification of Certain Matters
    22  
6.5 Non-Competition
    22  
6.6 Nonsolicitation
    23  
6.7 Seller Guarantees
    23  
6.8 Certain Taxes
    23  
6.9 Confidentiality
    24  
6.10 Release
    24  
6.11 Litigation Support
    24  
Article 7. CLOSING CONDITIONS
    25  
7.1 Conditions to Obligations of Seller and Purchaser to Consummate the
Transaction
    25  
7.2 Additional Conditions to Obligations of Purchaser
    25  
7.3 Additional Conditions to Obligations of Seller
    26  
Article 8. INDEMNIFICATION
    27  
8.1 Survival of Representations, Warranties and Covenants
    27  
8.2 Indemnification Provisions for Benefit of Purchaser
    27  
8.3 Indemnification Provisions for Benefit of Seller
    27  
8.4 Indemnification Procedures
    28  
8.5 Determination of Losses
    32  
8.6 Limitations in Joint Issues Agreement to Apply
    32  
8.7 Conversion and Aggregation of Indemnification Claims
    32  
8.8 Exclusive Remedy
    32  
Article 9. MISCELLANEOUS
    32  
9.1 Notices
    32  
9.2 Certain Definitions; Interpretation
    33  
9.3 Severability
    39  
9.4 Entire Agreement; No Third-Party Beneficiaries
    39  
9.5 Amendment; Waiver
    39  
9.6 Binding Effect; Assignment
    40  
9.7 Disclosure Schedule
    40  
9.8 Governing Law; Jurisdiction
    40  
9.9 Construction
    40  
9.10 Counterparts
    40  
9.11 Enforcement
    40  

Exhibits
Exhibit A — Supplemental Stock Purchase Agreement
Exhibit B — Escrow Agreement
Exhibit C — Joint Issues Agreement
Exhibit D — First Amendment to Office Lease
Exhibit E — Sefton Employment Letter

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Index of Defined Terms

      Term   Section
2006 Financial Statements
   4.5(a)
Action
   9.2(a)
Adjustment Amount
   9.2(a)
Affiliate
   9.2(a)
Affiliated Group
   9.2(a)
Agreement
   Preamble
Applicable Rate
   9.2(a)
Assets
   4.7
Base NAV
   9.2(a)
Business Day
   9.2(a)
Cash Closing Payment
   2.1
Claim Notice
   8.4(a)
Claims
   9.2(a)
Class B Common Stock
   4.4(a)
Closing
   3.1
Closing Accounts
   9.2(a)
Closing Date
   3.1
Code
   9.2(a)
Common Stock
   4.4(a)
Company
   Recitals
Company IP Rights
   4.9(a)
Company IP Rights Agreements
   4.9(d)
Confidential Information
   6.13
Confidentiality Agreement
   9.2(a)
control
   9.2(a)
Direct Claim
   8.4(a)
Disclosure Schedule
   9.7
Draft Closing Accounts
   2.3(c)
Effective Time
   3.1
Encumbrances
   4.3
Environmental Law
   4.11(a)
ERISA
   9.2(a)
ERISA Affiliate
   4.13(f)
Escrow Agent
   9.2(a)
Escrow Agreement
   9.2(a)
Escrow Amount
   9.2(a)
GAAP
   9.2(a)
GBP
   9.2(a)
Governmental Authority
   9.2(a)
Governmental Order
   9.2(a)

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      Term   Section
Hazardous Substance
   4.11(a)
Indebtedness for Borrowed Money
   9.2(a)
Indemnified Party
   8.4(a)
Indemnifying Party
   8.4(a)
Independent Accountants
   2.3(f)
Intellectual Property
   9.2(a)
Interim Financial Statements
   4.5(b)
IP Claim
   9.2(a)
Joint Issues Agreement
   9.2(a)
knowledge
   9.2(a)
Law
   9.2(a)
Losses
   8.2
Material Contracts
   4.8(a)
Most Recent Balance Sheet
   9.2(a)
Net Asset Value
   9.2(a)
Office Lease Amendment
   9.2(a)
Opinion
   9.2(a)
Option Holders
   7.2(l)
Permit
   9.2(a)
Permitted Encumbrances
   4.6(b)
Person
   9.2(a)
Plans
   4.13(a)
Potential Claim
   8.4(e)(ii)
Proceedings
   8.4(c)(iv)
Prohibited Area
   9.2(a)
Purchase Price
   2.1
Purchaser
   Preamble
Purchaser Ancillary Agreements
   9.2(a)
Purchaser Indemnified Parties
   8.2
Purchaser Material Adverse Effect
   9.2(a)
Real Property
   4.6(a)
Real Property Leases
   4.6(a)
Restricted Products
   9.2(a)
Restricted Services
   9.2(a)
Review Period
   2.3(e)
Securities Act
   9.2(a)
Sefton Employment Letter
   9.2(a)
Seller
  Preamble
Seller Ancillary Agreements
   9.2(a)
Seller Material Adverse Effect
   9.2(a)
Shares
  Recitals
Subsidiary
   9.2(a)
Supplemental Stock Purchase Agreement
   7.2(l)
Taxes
   9.2(a)
Taxing Authority
   9.2(a)
Tax Return
   9.2(a)

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      Term   Section
Third Party Claim
   8.4(a)
Third Party IP Claim
   9.2(a)
Third Party IP Recovery Right
   9.2(a)
Third Party Recovery Right
   9.2(a)
UK SPA
   7.1(b)

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STOCK PURCHASE AGREEMENT
     THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made this 6th day of August,
2007, by and between Federal Signal Corporation, a Delaware corporation
(“Purchaser”), and Alan K. Sefton (“Seller”).
     WHEREAS, Seller owns all of the issued and outstanding shares (the
“Shares”) of the capital stock of PIPS Technology Inc., a Tennessee corporation
(the “Company”); and
     WHEREAS, Purchaser desires to acquire from Seller, and Seller desires to
sell to Purchaser, the Shares upon and subject to the terms and conditions
contained in this Agreement.
     NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
          1.1 Transfer of Shares. Subject to all of the terms and conditions of
this Agreement, at the Closing, Seller hereby agrees to sell, transfer and
convey to Purchaser, and Purchaser agrees to purchase and acquire from Seller,
the Shares free and clear of all Encumbrances.
ARTICLE 2.
CONSIDERATION
          2.1 Purchase Price. The aggregate consideration to be paid by
Purchaser to Seller in connection with the sale of the Shares shall be
£6,000,000 (the “Cash Closing Payment”) plus amounts set forth in Section 2.2
(collectively, the “Purchase Price”).
          2.2 Other Payments.
     (a) Seller shall have the right to receive additional consideration for the
Shares based on the aggregate earnings before interest and tax of the Company
and PIPS Technology Limited to the extent provided in the Joint Issues
Agreement.
     (b) After the Adjustment Amount is determined and finalized pursuant to
Section 2.3, Purchaser or Seller, as the case may be, shall have the right to
receive the Adjustment Amount.
          2.3 Determination of Adjustment Amount.
     (a) If the Net Asset Value is:
     (i) a positive sum which is greater than the Base NAV, Purchaser shall pay
to Seller in accordance with Section 2.3(b) a sum equal to the difference;

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     (ii) a positive sum which is less than the Base NAV, Seller shall pay to
Purchaser in accordance with Section 2.3(b) a sum equal to the difference;
     (iii) a negative sum, Seller shall pay to Purchaser in accordance with
Section 2.3(b) a sum equal to the aggregate of the Base NAV and the amount by
which the Net Asset Value is less than zero; or
     (iv) equal to the Base NAV, no payment shall be made under this Section
2.3(a);
PROVIDED ALWAYS that there shall be taken fully into account the payment under
Section 2.3 of the Adjustment Amount by Purchaser to Seller on account of the
amount (if any) due to Seller pursuant to this Section 2.3(a), to the effect
that in circumstances where such payment on account is greater than the amount
actually due to Seller under this Section 2.3(a), Seller shall immediately on
demand repay the difference to Purchaser together with interest thereon
calculated in accordance with Section 2.3(b) and in respect of the period from
the Closing Date up to and including the date of payment.
     (b) Every cash sum payable under Section 2.3(a) shall be paid within five
(5) Business Days after the date of determination of the Net Asset Value,
together with interest on it at the rate of two percent (2%) above the base
lending rate of Barclays Bank plc for the time being in force which shall accrue
from day to day and shall be calculated on the basis of a year of 365 days from
the Closing Date up to and including the date of payment, by electronic funds
transfer to an account specified by Purchaser or Seller, as applicable.
     (c) The parties shall procure that as soon as practicable following the
Closing Date, and in any event not later than 30 Business Days after Closing, a
draft of the Closing Accounts (the “Draft Closing Accounts”), is prepared by the
Company or (at the option of the Company) by the Company’s auditors in
accordance with Section 2.3(d) and delivered simultaneously to Purchaser and
Seller.
     (d) The Draft Closing Accounts and the Closing Accounts shall be prepared
in accordance with GAAP (except for the valuation and expensing of stock
options) applied consistently with the Interim Financial Statements.
     (e) As soon as practicable after delivery of the Draft Closing Accounts in
accordance with Section 2.3(d), and in any event within 30 Business Days after
their delivery (or such longer period as may be agreed in writing between
Purchaser and Seller (the “Review Period”), Seller and Purchaser shall review
the Draft Closing Accounts and endeavor to agree by negotiation what adjustments
(if any) need to be made to them in order for them to comply with
Section 2.3(d). If Seller or Purchaser disputes the preparation of the Draft
Closing Accounts and the computation of the Net Asset Value he or it shall
within the Review Period promptly give written notice to the other of the facts
and matters in dispute

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together with details of the grounds on which such matter is disputed. If Seller
and Purchaser agree that no adjustments need to be made to the Draft Closing
Accounts or Seller and Purchaser agree on the adjustments to be made to the
draft Closing Accounts in order for them to comply with Section 2.3(d), they
shall jointly incorporate into, and reflect any such adjustments in, the Draft
Closing Accounts, confirm in writing that they have carried out such work as
they consider necessary and that in their opinion the Closing Accounts have been
prepared in accordance with the provisions of Section 2.3(d) and comply with
those provisions, and confirm in writing the amount of the Net Asset Value on
the basis of those Closing Accounts; and the Closing Accounts and the amount of
Net Asset Value as so confirmed in writing shall be the Closing Accounts and the
Net Asset Value respectively for the purpose of calculating the sum (if any) due
under Section 2.3(a), shall in the absence of manifest error be final and
binding on the parties and shall not be subject to question on any ground, and
the date of that written confirmation shall for all purposes of this Agreement
be the date of determination of the Net Asset Value.
     (f) If Seller and Purchaser have not resolved any matter(s) in dispute and
have not provided the written confirmations referred to in Section 2.3(e) within
the Review Period, then the relevant matter(s) shall be in dispute between
Seller and Purchaser and shall immediately be referred to a firm of independent
public accountants of national standing to which the parties mutually agree (the
“Independent Accountants”) for determination on the following basis:
     (i) the Independent Accountants shall be instructed to notify Seller and
Purchaser of their determination of any such matter within 30 Business Days (or
such longer period as may be agreed in writing between Purchaser and Seller) of
that referral;
     (ii) Seller and Purchaser may make written submissions to the Independent
Accountants, but subject to those rights, the Independent Accountants shall have
the power to determine the procedure to be followed in relation to their
determination;
     (iii) in making any such submissions Seller and Purchaser shall state their
respective best estimates of any monetary amounts referred for determination;
     (iv) in making their determination, the Independent Accountants shall act
as experts and not as arbitrators, and their decisions as to any matter referred
to them for determination shall, in the absence of manifest error, be final and
binding on the parties and shall not be subject to question on any ground; and
     (v) the fees and expenses of the Independent Accountants shall be borne and
paid as the Independent Accountants shall direct (or in the

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absence of any such direction, as to half by Seller and as to half by
Purchaser).
     (g) Following any determination between Seller and Purchaser in accordance
with Section 2.3(f), the parties shall jointly incorporate into and reflect in
the Draft Closing Accounts the matters determined by the Independent Accountants
and provide written confirmation of those adjusted accounts in the terms set out
in Section 2.3(e); and the Closing Accounts and the amount of the Net Asset
Value so confirmed in writing shall be the Closing Accounts and the Net Asset
Value, respectively, for the purposes of calculating the sum (if any) due under
Section 2.3(a), shall in the absence of manifest error be final and binding on
the parties and shall not be subject to question on any ground, and the date of
that written confirmation shall for all purposes of this Agreement be the date
of determination of the Net Asset Value.
     (h) Until the Net Asset Value shall have been agreed or determined, Seller
and Purchaser shall respectively give or procure that Seller or Purchaser and
the Independent Accountants (as the case may require) are given access at all
reasonable times on prior appointment during normal working hours on Business
Days to all relevant books and records which are in the possession or under the
control of Seller, the Company or Purchaser (as the case may be); and generally
provide Seller or Purchaser and the Independent Accountants (as the case may
require) with such other information and assistance as they may reasonably
require (including access to and assistance at reasonable times on prior
appointment during normal working hours on Business Days from personnel employed
by Seller, the Company or Purchaser, as the case may be), in relation to their
review, agreement or determination of the Closing Accounts and the determination
of the Net Asset Value.
     (i) The fees and expenses of the Company’s auditors in respect of the
preparation of the Closing Accounts as provided in Section 2.3(c) (if
applicable) shall be borne equally by Purchaser and Seller who shall indemnify
each other accordingly, and the cost to be borne by Seller may be satisfied by
being a liability in the Closing Accounts.
     (j) Purchaser and Seller shall execute any documents (including any terms
of engagement or limitations on liability), provide any information and take any
steps which, in each case, may reasonably be required by the Company’s auditors
or, as the case may be, the Independent Accountants in order to enable them to
complete the work required of them by this Section 2.3.
     (k) Nothing in this Agreement shall prevent Purchaser or Seller from
obtaining, at its or his own expense, professional advice in relation to any
matter arising in connection with the agreement or determination of the Closing
Accounts and the Net Asset Value.

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     (l) The preparation of the Closing Accounts and the agreement and/or
determination of the Net Asset Value shall be without prejudice to any claim
which Purchaser might have against Seller under or in respect of this Agreement,
but Seller shall not be liable more than once in respect of the same loss.
          2.4 Escrow. The Escrow Amount (together with any earnings thereon)
will be held by the Escrow Agent and shall be applied as set out in the Escrow
Agreement. Notwithstanding any provision herein or in the Joint Issues Agreement
to the contrary, in no event shall amounts on deposit pursuant to the Escrow
Agreement limit Seller’s liability hereunder or thereunder, and Seller shall
remain liable for any amounts owed to Purchaser under this Agreement or the
Joint Issues Agreement that are not satisfied out of the amounts on deposit
pursuant to the Escrow Agreement.
ARTICLE 3.
CLOSING; OBLIGATIONS OF THE PARTIES
          3.1 Closing Date. The closing of the purchase and sale of the Shares
(the “Closing”) shall take place at 10:00 a.m., local time, at the offices of
Seller’s counsel at 315 Deaderick Street, Suite 2700, Nashville, Tennessee 37238
on the date hereof (the “Closing Date”). The transfer shall be deemed to have
become effective at 12:01 a.m., Eastern time on the Closing Date (the “Effective
Time”) or at such other time and place as the parties may agree.
          3.2 Obligations of the Parties at the Closing.
     (a) At the Closing, Purchaser shall deliver to Seller:
     (i) by wire transfer of immediately available funds into an account or
accounts designated in advance by Seller, an amount equal to the Cash Closing
Payment less the Escrow Amount; and
     (ii) the various certificates, instruments, and documents to be delivered
by Purchaser to Seller pursuant to Article 7.
     (b) At the Closing, Purchaser shall deliver to Escrow Agent, by wire
transfer of immediately available funds into an account or accounts designated
in advance by the Escrow Agent, the Escrow Amount.
     (c) At the Closing, Seller will deliver to Purchaser:
     (i) stock certificates for the Shares, which certificates shall be duly
endorsed to Purchaser or accompanied by duly executed stock powers; and
     (ii) the various certificates, instruments, and documents to be delivered
by Seller to Purchaser pursuant to Article 7.

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ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
          4.1 Corporate Status. The Company is duly organized, validly existing
and in good standing under the laws of the State of Tennessee and (a) has all
requisite corporate power and authority to own, operate or lease its properties
and assets and to carry on its business as it is now being conducted, and (b) is
duly qualified to do business and is in good standing in each of the
jurisdictions in which the ownership, operation or leasing of its properties and
assets and the conduct of its business requires it to be so qualified, licensed
or authorized. Seller has made available to Purchaser a copy of the charter and
bylaws of the Company.
          4.2 Authority. Seller has the right, capacity, power and authority to
enter into this Agreement and the Seller Ancillary Agreements and to consummate
the transactions contemplated hereby and thereby. This Agreement (assuming due
authorization, execution and delivery by Purchaser) and each of the Seller
Ancillary Agreements (assuming due authorization, execution and delivery by the
other parties thereto) constitute legal, valid and binding obligations of Seller
enforceable against him in accordance with their terms, subject to general
principles of equity and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to creditors’ rights.
          4.3 No Conflict. Except as set forth in Section 4.3 of the Disclosure
Schedule, neither the execution, delivery and performance of this Agreement or
the Seller Ancillary Agreements by Seller nor the consummation by Seller of the
transactions contemplated hereby or thereby will (a) violate, conflict with or
result in the breach of any term or provision of the charter or bylaws of the
Company, (b) materially conflict with or violate any Law applicable to the
Company or any of its assets, properties or businesses, or (c) materially
conflict with or violate, result in the breach of any term or provision of, or
constitute a default (or event which with the giving of notice or lapse of time,
or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of,
any Material Contract, any Real Property Lease, or, to Seller’s knowledge, any
Immaterial Contract, or (d) result in the creation of any mortgage, pledge,
hypothecation, claim, security interest, encumbrance, interest, option, lien or
other restriction (collectively, “Encumbrances”) on, any of the Shares or on any
of the assets or properties of the Company.
          4.4 Capitalization; Subsidiaries.
     (a) The authorized capital stock of the Company consists of 8,265,000
shares of common stock, no par value per share (the “Common Stock”), and
1,735,000 shares of Class B Common Stock, no par value per share (the “Class B
Common Stock”), of which 5,000,000 shares of Common Stock are issued and
outstanding and 975,000 shares of Class B Common Stock are issued and
outstanding. All of the Shares are validly issued, fully paid and nonassessable
and

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held of record and owned by Seller free and clear of all Encumbrances. The
Shares constitute all of the issued and outstanding capital stock of the
Company.
     (b) Except as set forth in Section 4.4(b) of the Disclosure Schedule, there
are (i) no outstanding obligations, options, warrants, convertible securities or
other rights, agreements, arrangements or commitments of any kind relating to
the capital stock of the Company or obligating the Company to issue or sell any
shares of capital stock of, or any other interest in, the Company, (ii) no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of its capital stock or to provide funds to, or
make any investment (in the form of a loan, capital contribution or otherwise)
in, any other Person, and (iii) no voting trusts, shareholder agreements,
proxies or other agreements or understandings in effect with respect to the
voting or transfer of any of the capital stock of the Company.
     (c) The Company does not own any equity interest or any right to acquire
the same in any other Person.
4.5 Financial Statements.
     (a) Attached hereto as Section 4.5(a) of the Disclosure Schedule are true
and complete copies of the compiled financial statements on the income tax basis
of accounting of the Company for the two-year period ended December 31, 2006
(collectively, the “2006 Financial Statements”). The 2006 Financial Statements
(i) have been prepared based on the books and records of the Company in
accordance with income tax basis accounting rules and the Company’s normal
accounting practices, consistent with past practice (except as may be indicated
therein or in the notes or schedules thereto), and (ii) present fairly, in all
material respects, the financial condition and results of operations of the
Company as of the date indicated or for the periods indicated on the basis of
accounting as described.
     (b) Attached hereto as Section 4.5(b) of the Disclosure Schedule are the
following financial statements (collectively, the “Interim Financial
Statements”): an unaudited consolidated balance sheet and statements of income
and cash flow as and for the five-month period ended May 31, 2007 for the
Company. The Interim Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis throughout the period covered thereby (except
for the valuation and expensing of stock options and the omission of footnotes
and changes in shareholders equity), and present fairly, in all material
respects, the financial condition of the Company as of such date and the results
of operations of the Company for such period.
     (c) All notes and accounts receivable of the Company are reflected properly
on its books and records, are valuable receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in accordance

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with their terms at their recorded amounts, subject only to the reserve for bad
debts set forth on the face of the Closing Accounts.
4.6 Real Property.
     (a) The Company does not own fee simple title to any real property. Section
4.6(a) of the Disclosure Schedule sets forth a true and complete list of the
locations of all of the real property leased by the Company (including all
leased improvements thereon, the “Real Property”) as well as a listing of each
Real Property lease (collectively, the “Real Property Leases”) to which the
Company is a party.
     (b) Except for (i) the Encumbrances set forth in Section 4.6(b) and
Section 4.7 of the Disclosure Schedule, (ii) statutory liens of landlords,
(iii) zoning restrictions, (iv) easements, licenses and other restrictions of a
similar nature affecting the use of real property, (v) liens appropriately
reserved against in the Interim Financial Statements, and (vi) liens for Taxes
not yet due and payable or which are being contested in good faith
(collectively, the “Permitted Encumbrances”), the Company has a valid leasehold
interest in the Real Property and none of the Real Property is subject to any
Encumbrances. None of the Permitted Encumbrances materially and adversely
affects the use of the Real Property as currently used in connection with the
Company’s business. To Seller’s knowledge, there are no leases, subleases,
licenses, concessions or other agreements granting to any other Person the right
to use or occupy the Real Property, and the Company is in quiet possession of
the Real Property.
     (c) Each Real Property Lease is valid and binding on the Company and, to
the knowledge of Seller, each respective counterparty thereto, and each Real
Property Lease is in full force and effect, subject to general principles of
equity and except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws of general
application relating to creditors’ rights.
     (d) The transactions contemplated by this Agreement will not require the
consent of any other party to a Real Property Lease, will not result in a breach
of or default under such Real Property Lease, and will not otherwise cause such
Real Property Lease to cease to be valid and binding on identical terms
following the Closing.
     (e) Neither the Company nor, to Seller’s knowledge, any other party to a
Real Property Lease is in breach or default under such Real Property Lease, and
no event has occurred or circumstance exists which, with the delivery of notice,
the passage of time or both, would constitute such breach or default, or permit
the termination or modification of such Real Property Lease or the acceleration
of rent under such Real Property Lease.

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     (f) No security deposit or portion thereof has been applied in respect of a
breach or default under a Real Property Lease which has not been redeposited in
full.
     (g) To Seller’s knowledge, the Real Property is in material compliance with
all applicable building, zoning, subdivision, health and safety and other land
use Laws, including The Americans with Disabilities Act of 1990, as amended, and
all insurance requirements affecting the Real Property
     (h) Each parcel of Real Property has direct access to a public street
adjoining the Real Property or has access to a public street via insurable
easements benefiting such parcel of Real Property.
     (i) To Seller’s knowledge, all water, oil, gas, electric, steam, compressed
air, telecommunications, sewer, storm and waste water systems and other utility
services or systems for the Real Property have been installed and are
operational and sufficient for the operation of the business as currently
conducted thereon.
          4.7 Assets. Except as disclosed in Section 4.7 of the Disclosure
Schedule, the Company owns, leases or has the legal right to use all the
properties and assets, including, without limitation, the Company’s Intellectual
Property, reflected in the Most Recent Balance Sheet (except for inventory or
other assets disposed of in the ordinary course of business as presently
conducted), but excluding the Real Property, used by the Company in the conduct
of its business (all such properties and assets being the “Assets”). The Company
has good and valid title to, or in the case of leased or subleased Assets, valid
and subsisting leasehold interests in, all of the Assets, free and clear of all
Encumbrances, except (a) as disclosed in Section 4.7 of the Disclosure Schedule,
or (b) for Permitted Encumbrances. The tangible Assets that the Company owns and
leases are free from material defects (patent and latent), have been maintained
in accordance with normal industry practice, and are in good operating condition
and repair (subject to normal wear and tear).
          4.8 Material Contracts.
     (a) Section 4.8(a) of the Disclosure Schedule sets forth a true and
complete list of all of the Company’s Material Contracts. As used herein,
“Material Contracts” means all of the following:
     (i) each agreement or arrangement of the Company that requires the payment
or incurrence of liabilities by the Company subsequent to the date of this
Agreement of more than Twenty-Five Thousand Dollars ($25,000) during any one
year;
     (ii) each agreement or arrangement of the Company that requires the
rendering of services or delivery of products by the Company, subsequent to the
date of this Agreement of more than Twenty-Five Thousand Dollars ($25,000);

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     (iii) each agreement (or group of related agreements) under which the
Company has created, incurred, assumed, guaranteed or provided security for, any
Indebtedness for Borrowed Money;
     (iv) each partnership, joint venture or other similar agreement to which
the Company is a party or by which it is otherwise bound;
     (v) each agreement, arrangement, contract or commitment of the Company
restricting or otherwise affecting the ability of the Company to compete in any
jurisdiction or to hire any or engage any Person as an employee or consultant,
and each agreement, arrangement, contract or commitment concerning
confidentiality;
     (vi) each agreement for the employment of any individual on a full-time,
part-time, consulting or other basis providing base salary in excess of Fifty
Thousand Dollars ($50,000) or providing material severance benefits;
     (vii) each agreement for the sale of a material Asset (or material amount
of Assets) that has not yet been consummated and was not entered into in
connection with the sale of products in the ordinary course of business as
presently conducted;
     (viii) each agreement for the lease of real or personal property by the
Company that requires the payment by the Company of more than Twenty-Five
Thousand Dollars ($25,000) during any one year;
     (ix) except for travel and other Company advances made in accordance with
the Company’s standard policies, each agreement under which the Company has
advanced or loaned any amount of money to any of its directors, officers and
employees;
     (x) each agreement under which the consequences of a default or termination
could result in a Seller Material Adverse Effect;
     (xi) each agreement with respect to the licensing of patents, trademarks,
copyrights or other Intellectual Property owned or used by the Company that was
not granted as part of a sale of products or services to a customer in the
ordinary course of business as presently conducted;
     (xii) any agreement, contract or arrangement between Seller or any of his
Affiliates and the Company or any of its Affiliates, or any agreement, contract
or arrangement between the Company or Seller (or any of their Affiliates) and
any Option Holder or any of his or her Affiliates;
     (xiii) any profit sharing, stock, option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan or

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arrangement for the benefit of the Company’s current or former directors,
officers and employees;
     (xiv) any collective bargaining agreement; and
     (xv) each other existing agreement, not otherwise covered by clauses
(i) through (xiv), that requires payments by or to the Company in excess of
Twenty-Five Thousand Dollars ($25,000) subsequent to the date of this Agreement
during any one year.
Any contract, agreement or arrangement to which the Company is a party but which
is not included in the definition of “Material Contracts” is referred to herein
as an “Immaterial Contract.”
     (b) Except as disclosed in Section 4.8(b) of the Disclosure Schedule:
     (i) neither the Company, nor, to the knowledge of Seller, any other party
to any Material Contract, is in breach thereof or default thereunder, or has
given notice of breach or default to any other party thereunder. Neither the
Company, nor, to the knowledge of Seller, any other party to any Immaterial
Contract, is in breach thereof or default thereunder, or has given notice of
breach or default to any party thereunder, except where such breach or default
would not reasonably be expected to have a Seller Material Adverse Effect; and
     (ii) each Material Contract is valid and binding on the Company and, to the
knowledge of Seller, each respective counterparty thereto, and each Material
Contract is in full force and effect, subject to general principles of equity
and except as the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws of general
application relating to creditors’ rights.
     (c) Except as disclosed in Section 4.8(c) of the Disclosure Schedule, the
Company has no Indebtedness for Borrowed Money.
4.9 Intellectual Property.
     (a) The Company owns, or has the right to use, sell or license all material
Intellectual Property utilized in its business as presently conducted (such
Intellectual Property and the rights thereto are collectively referred to herein
as the “Company IP Rights”). Each item of Intellectual Property owned or used by
the Company immediately prior to the Closing will continue to be owned or
available for use by the Company immediately after the Closing. The Company has
taken all commercially reasonable actions to maintain and protect each item of
Intellectual Property that it owns or uses.
     (b) Except as disclosed in Section 4.9(b) of the Disclosure Schedule, the
Company has not interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of any third

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parties. Except as disclosed in Section 4.9(b) of the Disclosure Schedule, the
Company has never received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain from using any
Intellectual Property rights of any third party).
     (c) Section 4.9(c) of the Disclosure Schedule identifies each patent or
registration which has been issued to the Company and identifies each pending
patent application or application for registration which the Company has made.
Section 4.9(c) of the Disclosure Schedule also identifies each domain name,
material trade name or unregistered trademark used by the Company in connection
with its business. With respect to each item required to be listed in
Section 4.9(c) of the Disclosure Schedule, (i) the Company possesses all right,
title and interest in and to the item, free and clear of any Encumbrances,
(ii) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling or charge, and (iii) no action, suit, proceeding, hearing,
investigation, charge, compliant, claim, or demand is pending or, to the
knowledge of Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item.
     (d) Section 4.9(d) of the Disclosure Schedule identifies each material item
of Intellectual Property that any third party owns and that the Company uses
pursuant to a written license, sublicense or agreement (the “Company IP Rights
Agreements”). With respect to each Company IP Rights Agreement required to be
identified in Section 4.9(d) of the Disclosure Schedule, (i) to Seller’s
knowledge, the Company IP Rights Agreement is legal, binding and in full force
and effect, (ii) neither the Company nor, to the knowledge of Seller, any other
party to a Company IP Rights Agreement is in material breach or default of such
Company IP Rights Agreement, and, to the knowledge of Seller, no event has
occurred which with notice or lapse of time would constitute a material breach
or default or permit termination, modification or acceleration thereunder, and
(iii) no party to the Company IP Rights Agreement has repudiated any material
provision thereof.
     (e) The Company has used commercially reasonable efforts to maintain its
material trade secrets in confidence, including using commercially reasonable
efforts to enter into licenses and contracts which require employees, licensees,
contractors and all other third persons with access to such trade secrets to
keep such trade secrets confidential.
          4.10 Litigation, Claims and Proceedings. Except as set forth in
Section 4.10 of the Disclosure Schedule, there are no actions that have been
brought by or against any Governmental Authority or any other Person pending or,
to the knowledge of Seller, threatened, against or by the Company, any Assets or
any Real Property. To Seller’s knowledge, there are no existing Governmental
Orders naming the Company as an affected party. The services and products
provided by the Company to its customers prior to the Closing Date have
conformed in all material respects with all applicable contractual commitments
and all express and implied

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warranties, and the Company has no material liability (whether known or unknown,
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated, or due or to become due) for damages in connection therewith.
Seller makes no representation in this Section 4.10 as to any matter the subject
matter of which is specifically covered by Sections 4.9, 4.11, 4.13 or 4.14 of
this Agreement.
          4.11 Environmental and Safety and Health Matters. Except as disclosed
in Section 4.11 of the Disclosure Schedule:
     (a) The Company has obtained all material Permits that are required under
any Environmental Law for the operation of its business as currently being
conducted. All such Permits are listed in Section 4.11 of the Disclosure
Schedule. All such Permits are valid and in full force and effect and will not
be affected or deemed invalid or terminated as a result of the transactions
contemplated by this Agreement. “Environmental Law” means any applicable law in
effect on the date hereof relating to (i) the protection, investigation or
restoration of the environment or natural resources or health and human safety,
or (ii) the handling, use, presence, disposal, treatment, storage, release or
threatened release of any material defined as hazardous or toxic in any statute
or regulation pertaining to the environment, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, the United
States Resource Conservation and Recovery Act, the Federal Water Pollution
Control Act and the Clean Air Act. “Hazardous Substance” means any substance
that is (i) listed, classified, designated or regulated pursuant to any
Environmental Law, (ii) PCBs, asbestos, any petroleum product or by-product, and
(iii) any other substance which is the subject of regulatory action by any
Governmental Authority pursuant to any Environmental Law.
     (b) The Company is in material compliance with all Permits required under
all Environmental Laws that are used in the operation of its business as
currently being conducted. To the knowledge of Seller, no circumstances exist
which could cause any such Permit to be revoked, modified or rendered
non-renewable (except failure in the future to pay any permit fee not yet due
and payable). No such Permit will be revoked or otherwise adversely affected as
a result of the transactions contemplated by this Agreement.
     (c) The Company and the Real Property are in material compliance with all
applicable Environmental Laws. No underground storage tanks and no amount of
Hazardous Substance are on or under any property, including the Real Property
and the ground water and surface water thereof, that the Company currently owns,
operates, occupies or leases (except for Hazardous Substances used in the normal
operation of the Company’s business and in material compliance with
Environmental Law) or has at any time owned, operated, occupied or leased. No
action, suit, proceeding, revocation proceeding, amendment procedures, writ,
injunction or Claim has been brought or asserted, or to the knowledge of Seller,
threatened, against the Company concerning any Permit or environmental matters,
including but not limited to any alleged liability

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(including strict liability) of the Company for injury, damages, cleanup costs,
injunctive or other relief associated with or arising out of Hazardous
Substances or violations of Environmental Law. To the knowledge of Seller, no
fact or circumstance exists which would reasonably be expected to involve the
Company in any environmental litigation, or impose upon the Company or Purchaser
any material environmental liability.
     (d) The Company has not generated, transported, stored, used, manufactured,
disposed of, or released or exposed its employees or others to Hazardous
Substances in violation of any applicable law. The Company has not had a
material disposal or release of any Hazardous Substances on, under, in, from or
about the Real Property.
     (e) The Company has not disposed or arranged for the disposal of Hazardous
Substances on any third party property that has subjected or, to the knowledge
of Seller, may subject the Company to material liability under any Environmental
Law.
          4.12 Compliance with Law. The Company has conducted and currently is
conducting its business in material compliance with all Laws and Governmental
Orders applicable to the Company or any of the Assets, the Real Property or the
Company’s business. Except as disclosed in Section 4.12 of the Disclosure
Schedule, the Company has not received any outstanding or uncured written notice
alleging any material default or violation of any Law or Governmental Order.
Seller makes no representation in this Section 4.12 as to any matter the subject
matter of which is specifically covered by Section 4.9, 4.11, 4.13 or 4.14 of
this Agreement.
          4.13 Employee Matters and Benefit Plans.
     (a) Section 4.13 of the Disclosure Schedule identifies each written and
unwritten employment, bonus, incentive, deferred compensation, pension, stock or
other security option, stock or other security appreciation right, security
purchase, profit-sharing or retirement plan, severance or golden parachute
arrangement or practice, each medical, vacation, retiree medical, severance pay
plan, and each other agreement or fringe benefit plan, arrangement or practice,
of the Company or any Subsidiary which affects or covers any current or former
employee of the Company or any Subsidiary, including all “employee benefit
plans” as defined by Section 3(3) of ERISA (collectively, the “Plans”).
     (b) For each Plan, correct and complete copies of (i) the plan documents
and summary plan descriptions, (ii) the three most recent Form 5500 annual
reports as filed with the Internal Revenue Service, (iii) all related trust
agreements, insurance contracts and funding agreements which implement each such
Plan, (iv) the most recent actuarial report relating to any Plan subject to
Title IV of ERISA, (v) the most recent Internal Revenue Service determination or
opinion letter issued with respect to such Plan (to the extent such plan is
subject to Code Section 401(a)), and (vi) all contracts or service agreements
with the benefit

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plan provider or administrator (if applicable), have been made available to
Purchaser.
     (c) Neither the Company nor any Subsidiary has a commitment, whether formal
or informal, (i) to create any additional such Plan; (ii) to modify or change
any such Plan; or (iii) to maintain for any period of time any such Plan, except
as described in Section 4.13 of the Disclosure Schedule.
     (d) Except as disclosed in Section 4.13 of the Disclosure Schedule,
(i) neither the Company or any Subsidiary, nor any Plan or any trustee,
administrator, fiduciary or sponsor of any Plan has engaged in any prohibited
transactions as defined in Section 406 of ERISA or Section 4975 of the Code for
which there is no statutory exemption under Section 408 of ERISA or Section 4975
of the Code; (ii) no fiduciary has any liability for a material breach of
fiduciary duty or any other material failure to act or comply in connection with
the administration or investment of the assets of any Plan; (iii) there is no
material litigation, action, Claim (other than routine claims for benefits),
governmental proceeding or investigation pending or, to the knowledge of Seller,
threatened with respect to any of such Plans, the related trusts, or any
fiduciary, trustee, administrator or sponsor of such Plans, nor are there any
current or threatened Encumbrances on the assets of any such Plans. All material
filings, reports and descriptions as to the Plans (including Form 5500 annual
reports, summary plan descriptions, and summary annual reports) required to have
been made or distributed to participants, the Internal Revenue Service, the
United States Department of Labor and other Governmental Authorities have been
made in a timely manner. The Plans have been established, maintained and
administered in all material respects in accordance with their governing
documents and applicable provisions of ERISA, the Code, and other applicable
law, including, but not limited to COBRA and HIPAA and any nonqualified deferred
compensation plans have been administered in good faith compliance with guidance
issued under Code Section 409A. Each Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination or
opinion letter from the Internal Revenue Service covering the provisions of the
Tax Reform Act of 1986 and GUST stating that such Plan is so qualified, and
nothing has occurred since the date of such letter that could reasonably be
expected to affect the qualified status of such Plan.
     (e) Except as disclosed in Section 4.13(e) of the Disclosure Schedule, none
of the Plans which are “employee welfare benefit plans,” within the meaning of
Section 3(1) of ERISA, provide for continuing benefits or coverage after
termination or retirement from employment, except for COBRA rights under a
“group health plan” as defined in Section 4980B(g) of the Code and Section 607
of ERISA. No tax under Section 4980B or Section 4980D of the Code has been
incurred in respect of any Plan that is a group health plan, as defined in
Section 5000(b)(1) of the Code.

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     (f) Neither the Company or any Subsidiary, nor any entity required to be
aggregated with the Company or any Subsidiary under Section 414(b), (c), (m) or
(o) of the Code (“ERISA Affiliate”) has ever sponsored, participated in, or
contributed to either a plan subject to Title IV of ERISA, or a multiemployer
plan as defined in Section 4001(a)(3) of ERISA, or a “single-employer plan under
multiple controlled groups” as described in Section 4063 of ERISA, and neither
the Company nor any ERISA Affiliate has ever withdrawn from such a multiemployer
plan nor incurred any liability as a result of any partial or complete
withdrawal by any employer from a multiemployer plan as described under
Sections 4201, 4203, or 4205 of ERISA. No Plan is a “multiple employer plan”
within the meaning of Section 413(c) of the Code or Section 3(40) of ERISA.
     (g) All contributions (including all employer contributions and employee
salary reduction contributions) that are due have been made within the time
periods prescribed by ERISA and the Code to each Plan that is an “employee
pension benefit plan,” as defined in ERISA Section 3(2), and all contributions
for any period ending on or before the Closing Date that are not yet due have
been made to each such Plan or accrued in accordance with the past custom and
practice of the Company or its Subsidiaries. All premiums or other payments for
all periods ending or before the Closing Date have been paid with respect to
each Plan that is an employee welfare benefit plan as defined in ERISA
Section 3(1).
4.14 Taxes
     (a) The Company has filed all Tax Returns that it was required to file.
Each such Tax Return is true, complete and correct and has been prepared in
compliance with applicable Law. The Company has paid, or will pay, all Taxes,
including any interest and penalties, for all periods prior to the Closing Date.
True and correct copies of all federal, state and local income Tax Returns filed
by the Company for all periods since January 1, 2004, have been heretofore made
available to Purchaser. All Taxes not yet due and payable by the Company have
been properly accrued on the books of account of the Company in accordance with
income tax basis accounting rules (prior to January 1, 2007) or GAAP (on and
after January 1, 2007). There are no existing penalty, interest or deficiency
assessments or pending audits relating to Taxes with respect to the Company,
except as set forth in Section 4.14(a) of the Disclosure Schedule.
     (b) The Company is not a party to any Tax allocation or sharing agreement.
     (c) There are no liens for Taxes upon the Assets or properties of the
Company (whether real, personal or mixed, tangible or intangible) except for
statutory liens for Taxes not yet due or payable.
     (d) The Company is not a “foreign person” for purposes of Section 1445 of
the Code.

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     (e) The Company (i) has not been a member of an Affiliated Group and
(ii) does not have any liability for the Taxes of any other Person under Treas.
Reg. Section 1.1502-6 (or any similar provision of state, local or foreign law),
as a transferee or successor, by contract or otherwise.
     (f) The Company has withheld and/or paid all Taxes required to have been
withheld and/or paid in connection with amounts paid or owed to any employee,
independent contractor, creditor, shareholder, member or other third party.
          4.15 Absence of Undisclosed Liabilities. Except as set forth in
Section 4.15 of the Disclosure Schedule, and except for liabilities or
obligations which are accrued or reserved against in the Most Recent Balance
Sheet (and except for the expensing of stock options), as of May 31, 2007, the
Company did not have any liabilities or obligations which would be of a nature
required by GAAP to be reflected in, reserved against or otherwise described in
the Most Recent Balance Sheet (or reflected in the notes thereto). Seller makes
no representation in this Section 4.15 as to any matter the subject matter of
which is specifically covered by Section 4.9, 4.11, 4.13 or 4.14 of this
Agreement.
          4.16 Absence of Certain Changes. Except as disclosed in the Most
Recent Balance Sheet or in Section 4.16 of the Disclosure Schedule or as
expressly contemplated by this Agreement, since December 31, 2006, there has not
been any Seller Material Adverse Effect. Without limiting the generality of the
foregoing, since that date:
     (a) the Company has not suffered any change constituting a Seller Material
Adverse Effect;
     (b) the Company has not sold, leased, transferred, or assigned any material
assets, tangible or intangible, outside the ordinary course of business;
     (c) the Company has not entered into any material agreement, contract,
lease or license outside the ordinary course of business;
     (d) the Company has not imposed (or permitted to be imposed) any
Encumbrance upon any of its assets, tangible or intangible, other than Permitted
Encumbrances;
     (e) the Company has not made any material capital expenditures outside the
ordinary course of business;
     (f) the Company has not made any material capital investment in, or any
material loan to, any other Person;
     (g) the Company has not created, incurred, assumed or guaranteed any
Indebtedness for Borrowed Money (including capitalized lease obligations);

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     (h) the Company has not granted any license or sublicense of any material
rights under or with respect to any Intellectual Property outside of the
ordinary course of business;
     (i) there has been no change made or authorized in the charter or bylaws of
the Company;
     (j) neither the Company nor Seller has issued, sold or otherwise disposed
of any of the capital stock of the Company, or granted any options, warrants, or
other rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of the capital stock of the Company, and the Company has not
split, combined or reclassified its capital stock;
     (k) the Company has not declared set aside, or paid any dividend or made
any distribution with respect to its capital stock (whether in cash or in kind)
or redeemed, purchased, or otherwise acquired any of its capital stock;
     (l) the Company has not experienced any material damage, destruction or
loss (whether or not covered by insurance) to its property;
     (m) except for travel and other Company advances made in accordance with
the Company’s standard policies, the Company has not made any loan to, or
entered into any other transaction with (other than employment compensation
arrangements), any of its directors, officers and employees that has not been
fully repaid and the obligation terminated prior to the Closing Date;
     (n) the Company has not entered into any employment agreement or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement;
     (o) the Company has not granted any increase in the base compensation of
any of its directors, officers or employees, except in the ordinary course of
business and consistent with past practice;
     (p) the Company has not adopted, amended, modified, or terminated any Plan;
     (q) the Company has not made any other material change in employment terms
for any of its directors, officers or employees;
     (r) the Company has not changed its accounting principles, practices or
methods; and
     (s) the Company has not committed to do any of the foregoing.
          4.17 Labor Matters. The Company is not a party to any collective
bargaining agreement or other labor union contract. There is no labor strike,
slowdown or stoppage in progress or, to the knowledge of Seller, threatened,
against or involving the Company. Since

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January 1, 2000, the Company has not experienced any labor strike, slowdown or
stoppage. Seller has no knowledge of any material activities or proceedings of
any labor union to organize any employees of the Company. Since January 1, 2000,
there has been no request for collective bargaining or for a representation
election from any employee, union or the National Labor Relations Board.
Section 4.17 of the Disclosure Schedule contains a complete and accurate list of
the following information for each employee of the Company, including each
employee on leave of absence or layoff status: name; job title; current
compensation paid or payable and any change in compensation since December 31,
2006; vacation accrued; and service credited for purposes of vesting and
eligibility to participate under any Plans.
          4.18 Finder’s Fee. Except for fees payable to Jefferies Broadview by
Seller (and not by the Company), neither Seller nor the Company has incurred any
liability to any party for any brokerage or finder’s fee or agent’s commission,
or the like, in connection with the transaction contemplated by this Agreement
based upon arrangements made by or on behalf of Seller or the Company.
          4.19 Insurance. Section 4.19 of the Disclosure Schedule sets forth all
insurance policies of the Company, including the insurance provider(s), agent(s)
or broker(s), type of insurance coverage, policy limits and deductibles and
policy period(s). Seller has made available to Purchaser copies of all policies
of insurance to which the Company is a party or under which it is covered. All
policies to which the Company is a party or that provide it coverage are valid,
outstanding and binding, taken together, provide adequate insurance coverage for
the assets and operations of the Company for all risks to which the Company is
normally exposed and are sufficient for compliance with all Laws applicable to
the Company, except as would not reasonably be expected to have a Seller
Material Adverse Effect. The Company has paid all premiums due under each policy
to which it is a party or under which it is covered.
          4.20 Related Party Transactions. Except as set forth in Section 4.20
of the Disclosure Schedule, neither Seller nor any member of Seller’s immediate
family (i) owns, directly or indirectly, any interest in any property used in
the Company’s business, (ii) owns, directly or indirectly, an equity interest in
a Person that has a material financial interest in any transaction with the
Company (other than transactions conducted in the ordinary course of business at
substantially prevailing market prices and on substantially prevailing market
terms) or (iii) is a party to any agreement with the Company.
          4.21 Disclosure. All information contained in the Disclosure Schedule
is in all material respects complete, accurate and not misleading. To Seller’s
knowledge, there is no other fact, matter or circumstance which renders such
information incomplete, inaccurate or otherwise misleading.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
          5.1 Corporate Status. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and (a) has

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all requisite corporate power and authority to own, operate or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and (b) is duly qualified to do business and is in good standing in each of the
jurisdictions in which the ownership, operation or leasing of its properties and
assets and the conduct of its business requires it to be so qualified, licensed
or authorized.
          5.2 Authority. Purchaser has all requisite corporate power and
authority to enter into this Agreement and the Purchaser Ancillary Agreements
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Purchaser Ancillary Agreements
by Purchaser and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized by the board of directors of
Purchaser and no other corporate proceedings are necessary to authorize this
Agreement or the Purchaser Ancillary Agreements or to consummate the
transactions contemplated hereby or thereby. This Agreement and each Purchaser
Ancillary Agreement have been duly executed and delivered by Purchaser, and
(assuming due authorization, execution and delivery by each other party thereto)
this Agreement and the Purchaser Ancillary Agreements constitute legal, valid
and binding obligations of Purchaser, enforceable against it in accordance with
its terms, subject to general principles of equity and except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws of general application relating to
creditors’ rights.
          5.3 No Conflict. Neither the execution, delivery and performance of
this Agreement and the Purchaser Ancillary Agreements by Purchaser nor the
consummation by Purchaser of the transactions contemplated hereby or thereby
will (a) violate, conflict with or result in the breach of any term or provision
of the certificate of incorporation or bylaws of Purchaser, (b) conflict with or
violate, in any material respect, any Law applicable to Purchaser or any of its
assets, properties or business, or (c) conflict with or violate, result in the
breach of any term or provision of, or constitute a default (or event which with
the giving of notice or lapse of time, or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration,
suspension, revocation or cancellation of, or result in the creation of any
Encumbrances on any of the assets or properties of Purchaser pursuant to, any
material note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which Purchaser is a party or by which its
properties or assets may be bound.
          5.4 Compliance with Law. Purchaser has complied with and is not in
violation of applicable Laws or Governmental Orders which would affect its
ability to perform its obligations hereunder. There is no Action pending, or to
the knowledge of Purchaser, threatened against Purchaser, affecting its ability
to perform its obligations hereunder.
          5.5 Consents. No action, approval, consent or authorization,
including, but not limited to, any action, approval, consent or authorization
by, or any other order of, filing with or notification to any Governmental
Authority, is or will be necessary to make this Agreement or any of the
agreements or instruments to be executed, performed and delivered by Purchaser
pursuant hereto a legal, valid and binding obligation of Purchaser subject to
general principles of equity and except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws of general application relating to creditors’ rights, or to consummate the
transactions contemplated hereunder.

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          5.6 Sufficient Funds. Purchaser has sufficient funds available
(through existing credit arrangements or otherwise) to enable it to consummate
the transactions contemplated by this Agreement.
          5.7 Finder’s Fee. Purchaser has not done anything to cause Seller, the
Company or any of the Company’s option holders, directors, officers or other
Affiliates to incur any liability to any party for any brokerage or finder’s fee
or agent’s commission, or the like, in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Purchaser.
          5.8 No Reliance. Purchaser acknowledges that neither Seller, the
Company nor any other Person has made any representation or warranty, express or
implied, as to the accuracy or completeness of any information regarding the
Company, the Assets, the Real Property or its business or other matters other
than as set forth in this Agreement or the Disclosure Schedule hereto. Without
limiting the generality of the foregoing, neither Seller, the Company nor any
other Person has made a representation or warranty to Purchaser with respect to
(i) any projections, estimates or budgets for the Company’s business, (ii) any
material, documents or information relating to the Company made available to
Purchaser or its counsel, accountants or advisors in Seller’s data room or
otherwise, except as expressly covered by a representation or warranty set forth
in Article 4, or (iii) the information contained in Seller’s Confidential
Memorandum.
          5.9 Investment Intent. Purchaser has such knowledge and experience in
financial and business matters that it is capable of evaluating the risks and
merits associated with the acquisition of the Shares. Purchaser understands that
the Shares have not been registered under the Securities Act or any state’s
securities laws and may not be resold unless they are subsequently registered
under the Securities Act or an exemption from such registration is available.
Purchaser understands the resale limitations imposed by the Securities Act and
can bear the economic risk of its investment in the Shares for an indefinite
period of time. Purchaser is acquiring the Shares for its own account for
investment, with no present intention of making a public distribution thereof.
Purchaser will not sell or otherwise dispose of the Shares in violation of the
Securities Act or any state securities laws.
          5.10 Litigation, Claims and Proceedings. There are no claims or
actions that have been brought by or against any Governmental Authority or any
other Person pending or, to the knowledge of Purchaser, threatened, against or
by Purchaser or any of its Subsidiaries or assets, individually or in the
aggregate, which would reasonably be expected to have a Purchaser Material
Adverse Effect. To Purchaser’s knowledge, there are no existing Governmental
Orders naming Purchaser or any of its Subsidiaries as an affected party which
would reasonably be expected to have a Purchaser Material Adverse Effect. There
are not any outstanding judgments against Purchaser or any of its Subsidiaries,
individually or in the aggregate, that have had or would reasonably be expected
to have a Purchaser Material Adverse Effect.

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ARTICLE 6.
COVENANTS
          6.1 Publicity. Seller and Purchaser agree that the initial press
release with respect to the transactions contemplated hereby shall be a joint
press release. Thereafter, subject to their respective legal obligations
(including requirements of stock exchanges, national stock markets and other
similar regulatory bodies), Seller and Purchaser shall use reasonable best
efforts to agree upon the text of any press release before issuing any such
press release or otherwise making public statements with respect to the
transactions contemplated hereby and in making any filings with any federal or
state governmental or regulatory agency or with any national securities exchange
or national stock market with respect thereto.
          6.2 Further Action. Each of Seller and Purchaser shall use his or its
reasonable best efforts to perform such further acts and execute such documents
as may be reasonably required to effect the transactions contemplated hereby.
Each of Seller and Purchaser will comply in all material respects with all
applicable Laws in connection with his/its execution, delivery and performance
of this Agreement and each other agreement contemplated hereby and the
transactions contemplated hereby and thereby. Each of Seller and Purchaser
agrees to use his/its reasonable best efforts to obtain in a timely manner all
necessary waivers, consents, approvals and opinions and to effect all necessary
registrations and filings, and to use his/its reasonable best efforts to take,
or cause to be taken, all other actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated hereby and thereby.
          6.3 Expenses. All costs and expenses incurred in connection with this
Agreement and each other agreement contemplated hereby and the transactions
contemplated hereby and thereby shall be paid by the party hereto incurring such
expenses except as expressly provided herein.
          6.4 Notification of Certain Matters. Each party shall give prompt
notice to the other of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by either party or any of
his/its respective Affiliates from any Governmental Authority or other third
party with respect to this Agreement or the transactions contemplated hereby.
          6.5 Non-Competition. For a period of five (5) years from the Closing
Date, except as permitted in this Section 6.5, Seller shall not, directly or
indirectly (including owning an interest in, operating, joining, controlling,
advising, working for, consulting with, having a financial interest in, or
participating in, any Person), engage in the business of developing,
manufacturing or selling the Restricted Products or supplying the Restricted
Services anywhere within the Prohibited Area. The restrictions set forth in this
Section 6.5 shall not be construed to prohibit or restrict Seller’s employment
by Purchaser or any Affiliate of Purchaser, or any minority equity investment by
Seller in any Person in which Seller holds not more than 1% of the outstanding
voting securities. If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 6.5 is invalid or
unenforceable, the parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision to replace any invalid or

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unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision, and this Section 6.5 shall be enforceable as so
modified.
     6.6 Nonsolicitation. For a period of five (5) years from the Closing Date,
Seller shall not, directly or indirectly, without the prior written consent of
Purchaser:
     (i) solicit any Person who is a customer of the Company for the Restricted
Products or the Restricted Services;
     (ii) cause, induce or attempt to cause or induce any customer, supplier,
licensee, licensor, franchisee or other business relation of the Company to
cease doing business with the Company, to deal with any competitor of the
Company or in any way interfere with its relationship with the Company; or
     (iii) hire, retain or attempt to hire or retain any employee or independent
contractor of the Company or in any way interfere with the relationship between
the Company and any of its employees or independent contractors; provided that
Seller may continue to employ Marissa Hocson to render certain accounting and
tax services to the extent that her provision of such services to Seller does
not interfere with the performance of her duties for the Company.
If the final judgment of a court of competent jurisdiction declares that any
term or provision of this Section 6.6 is invalid or unenforceable, the parties
agree that the court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration or area of the term or
provision to replace any invalid or unenforceable term or provision with a term
or provision that is valid and enforceable and that comes closest to expressing
the intention of the invalid or unenforceable term or provision, and this
Section 6.6 shall be enforceable as so modified.
          6.7 Seller Guarantees. Purchaser shall, or shall cause one of its
Affiliates to, be substituted for Seller as of the Closing, without recourse to
Seller, with respect to all guarantees thereby of, or other financial
accommodations thereby of, or security provided thereby for, obligations of the
Company or reimbursement obligations of Seller to issuers of letters of credit
or other third-party credit enhancements backing obligations of the Company
which are listed in Section 6.7 of the Disclosure Schedule. Purchaser shall
promptly and fully reimburse Seller, in immediately available funds and without
offset for any amounts owing by Seller to Purchaser and without regard for any
limitations on indemnification claims set forth herein or in the Joint Issues
Agreement, for any obligations incurred by Seller with respect to such
guarantees, financial accommodations, security, or reimbursement obligations
that are not so released.
          6.8 Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other similar Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement, shall be paid by Seller
when due, and Purchaser will, at Seller’s expense,

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file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales, use, stamp, registration and other Taxes and fees.
          6.9 Confidentiality. Purchaser agrees to treat all information of
Seller (but not of Company) and Seller agrees to treat all information of
Purchaser and the Company which is non-public, confidential or proprietary in
nature (regardless of the form in which it is communicated or maintained) (the
“Confidential Information”) confidentially and not use such Confidential
Information to the detriment of the other party or the Company. Purchaser and
Seller further agree to cause their respective Affiliates and representatives to
treat such Confidential Information confidentially and not use such Confidential
Information to the detriment of the other party or the Company. Each of
Purchaser and Seller (and their respective Affiliates and representatives) shall
not be required to maintain the confidentiality of information that (i) became
generally available to the public through no fault of such party, (ii) such
party can show by written documentation was available to such party on a
non-confidential basis prior to the disclosure of such information to him or it,
provided that the source of such information was not known by such party or any
of his or its Affiliates or representatives, after reasonable investigation, to
be bound by a contractual, legal or fiduciary obligation of confidentiality to
the other party, the Company or another party with respect to such material, and
provided further that this clause (ii) may not be used by Seller to disclose
Confidential Information relating to the Company, or (iii) such party can show
by written documentation became available to him or it on a non-confidential
basis from a source other than the disclosing party or the Company, provided
that the source of such information was not known by such party or any of his or
its Affiliates or representatives, after reasonable investigation, to be bound
by a contractual, legal or fiduciary obligation of confidentiality to the other
party, the Company or another party with respect to such material.
Notwithstanding the foregoing, nothing in this Section 6.9 shall prohibit the
disclosure of Confidential Information whose disclosure is required by law.
          6.10 Release. Seller hereby irrevocably, unconditionally and
completely releases, acquits and forever discharges the Company from any Claim,
and hereby irrevocably, unconditionally and completely waives and relinquishes
each and every Claim against the Company, relating to any written or oral
agreements or arrangements entered into, and any events, matters, causes,
things, acts, omissions or conduct, occurring or existing, at any time up to and
including the Effective Time, including, without limitation, any Claim (a) to
the effect that Seller is or may be entitled to any compensation, benefits,
commissions or perquisites from the Company or (b) otherwise arising (directly
or indirectly) out of or in any way connected with Seller’s stockholdings,
employment or other relationship with the Company; provided, however, that
Seller is not hereby releasing his rights, if any, (i) under this Agreement or
any other agreement contemplated hereby, (ii) with respect to salary, expenses
and other benefits that have been accrued by the Company in the ordinary course
of business consistent with past practices, or (iii) to accrued vacation and
vested benefits under the Company’s Plans.
          6.11 Litigation Support. In the event and for so long as the Company
or Purchaser is actively contesting or defending against any Claim or Action in
connection with (a) any transaction contemplated under this Agreement, or
(b) any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company (except in each case for a

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Claim or Action in which Seller and Purchaser are adverse parties), Seller will
reasonably cooperate with Purchaser and its (or the Company’s) counsel in the
contest or defense and provide such testimony as shall be necessary in
connection with the contest or defense, all at the sole cost and expense of
Purchaser (unless Purchaser is entitled to indemnification therefor pursuant to
this Agreement or the Joint Issues Agreement).
ARTICLE 7.
CLOSING CONDITIONS
          7.1 Conditions to Obligations of Seller and Purchaser to Consummate
the Transaction. The respective obligation of each of Seller and Purchaser to
consummate the transactions contemplated hereby shall be subject to the
satisfaction of each of the following conditions:
     (a) Legality. No action, suit or proceeding shall be pending before any
Governmental Authority wherein an unfavorable injunction, judgment, order,
decree, ruling or charge would (i) prevent consummation of any of the
transactions contemplated by this Agreement, (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation,
(iii) affect adversely the right of Purchaser to own the Shares and to control
the Company, or (iv) affect materially and adversely the right of the Company to
own its assets and to operate its businesses (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect).
     (b) PIPS Technology Limited. Seller and Purchaser shall have entered into
an agreement for the purchase and sale of all of the outstanding shares of PIPS
Technology Limited (the “UK SPA”) and all conditions under such agreement shall
have been satisfied or waived, other than consummation of the transactions
contemplated hereby.
          7.2 Additional Conditions to Obligations of Purchaser. The obligations
of Purchaser to consummate the transactions contemplated hereby shall also be
subject to the satisfaction or waiver of each of the following conditions:
     (a) Required Third Party Consents. Seller shall have procured all required
third party consents, including the third party consents specified in
Section 7.2(a) of the Disclosure Schedule.
     (b) Required Governmental Authority Approvals. The parties shall have
received all required authorizations, consents, and approvals of Governmental
Authorities.
     (c) Escrow Agreement. Purchaser shall have received the Escrow Agreement,
duly executed by Seller and Escrow Agent.
     (d) Joint Issues Agreement. Purchaser shall have received the Joint Issues
Agreement, duly executed by Seller.

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     (e) Sefton Employment Letter. Purchaser shall have received the Sefton
Employment Letter, duly executed by Seller.
     (f) Lease Amendment. Purchaser shall have received the Office Lease
Amendment, duly executed by Sefton, L.L.C. and the Company.
     (g) Director and Officer Resignations. Purchaser shall have received the
resignations of Seller as to all offices and directorships he holds with the
Company and of Sally Sefton as to all offices she holds with the Company, each
effective at the Effective Time.
     (h) No Seller Material Adverse Effect. No Seller Material Adverse Effect
shall have occurred.
     (i) Supplemental Stock Purchase Agreement. Seller shall have entered into a
Stock Purchase Agreement with Craig Cantrell, Greg Swaggerty, Kent Rinehart,
David Bynum and Greg Lary (the “Option Holders”) pursuant to which the Option
Holders shall have exercised their options to purchase Class B Common Stock and
shall have sold the Class B Common Stock obtained thereby to Seller on
substantially the terms set forth in the form of Stock Purchase Agreement
attached hereto as Exhibit A (the “Supplemental Stock Purchase Agreement”), and
all options, warrants and other commitments by the Company to issue shares of
its capital stock shall have been accelerated and exercised.
     (j) Non-Compete Agreements. Each Option Holder shall have signed a
non-compete agreement in Purchaser’s standard form.
          7.3 Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated hereby shall also be subject
to the satisfaction or waiver of each of the following conditions:
     (a) Required Governmental Authority Approvals. The parties shall have
received all material authorizations, consents, and approvals of Governmental
Authorities.
     (b) Escrow Agreement. Seller shall have received the Escrow Agreement, duly
executed by Purchaser and Escrow Agent.
     (c) Joint Issues Agreement. Seller shall have received the Joint Issues
Agreement, duly executed by Purchaser and the Affiliates of Purchaser that are
party thereto.
     (d) Resolutions. Seller shall have received a copy of the resolutions of
the Board of Directors of Purchaser, certified by Purchaser’s Secretary,
authorizing the execution, delivery and performance of this Agreement and the
other documents referred to herein to be executed by Purchaser, and the
consummation of the transactions contemplated hereby.

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     (e) Sefton Employment Letter. Seller shall have received the Sefton
Employment Letter, duly executed by the Company or one of its Affiliates.
ARTICLE 8.
INDEMNIFICATION
          8.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of the parties contained in this Agreement will
survive the Closing and will expire 18 months after the Closing Date, except
that (a) the representations and warranties contained in Sections 4.1, 4.2, 4.3,
4.4, 5.1, 5.2 and 5.3 will survive indefinitely, (b) the representations and
warranties contained in Section 4.14 will expire three months following
expiration of the applicable statute of limitations, and (c) the representations
and warranties contained in Section 4.9 will expire six years after the Closing
Date. The covenants of the parties contained in this Agreement will survive the
Closing and expire on the earlier of (i) the date on which they are fully
discharged, or (ii) the sixth anniversary of the Closing Date; provided,
however, that notwithstanding the foregoing each party’s covenant to indemnify
the other party in accordance with this Article 8 and the Joint Issues Agreement
shall survive indefinitely (except as otherwise provided herein or therein).
          8.2 Indemnification Provisions for Benefit of Purchaser. In the event
Seller breaches (or in the event any third party alleges facts that, if true,
would mean Seller has breached) any representations, warranties, covenants or
agreements of Seller contained in this Agreement, and provided Purchaser issues
a Claim Notice (as defined in Section 8.4(a)) within the applicable survival
period, then, subject to the terms hereof, Seller agrees to indemnify Purchaser
and its Affiliates (including the Company) and each of their respective
officers, directors, members, partners, managers and employees (collectively,
the “Purchaser Indemnified Parties”) from and against any costs or expenses
(including reasonable attorneys’ fees and expenses), judgments, fines, claims,
damages and assessments (collectively, “Losses”) through and after the date of
the claim for indemnification that are imposed on or incurred by the Purchaser
Indemnified Parties that result from, arise out of, relate to, or are caused by
the breach (or the alleged breach). In addition, Seller agrees to indemnify the
Purchaser Indemnified Parties from and against any Losses through and after the
date of the claim for indemnification that are imposed on or incurred by the
Purchaser Indemnified Parties that result from, arise out of, relate to, or are
caused by (x) the Supplemental Stock Purchase Agreement and the transactions
contemplated thereby (including any allegation that an Option Holder did not
receive adequate consideration for his shares from Seller), (y) the sale by
Pearpoint Inc. (and any affiliated entities) of their image processing business
in September 2001, or (z) the potential patent infringement referenced in item
#1 on Section 4.9(b) of the Disclosure Schedule.
          8.3 Indemnification Provisions for Benefit of Seller. In the event
Purchaser breaches (or in the event any third party alleges facts that, if true,
would mean Purchaser has breached) any representations, warranties, covenants or
agreements of Purchaser contained in this Agreement, and provided Seller issues
a Claim Notice within the applicable survival period, then Purchaser agrees to
indemnify Seller from and against any Losses through and after the date of the
claim for indemnification that are imposed on or incurred by Seller that result
from, arise out of, relate to, or are caused by the breach (or the alleged
breach).

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          8.4 Indemnification Procedures.
     (a) If a party (the “Indemnified Party”) shall become aware of any Claim in
respect of which the other party (the “Indemnifying Party”) agreed to indemnify
the Indemnified Party pursuant to this Agreement, the Indemnified Party shall
promptly give written notice thereof (a “Claim Notice”) to the Indemnifying
Party. Each Claim Notice shall specify whether the Claim arises as a result of a
claim by a Person against the Indemnified Party (a “Third Party Claim”) or
whether the Claim does not so arise (a “Direct Claim”), and shall also specify
with reasonable particularity (to the extent that the information is available)
the factual basis for the Claim and the amount of the Claim. No delay in the
issuance of a Claim Notice shall relieve either party from any obligation under
this Article 8, unless and solely to the extent the Indemnifying Party is
thereby prejudiced. In addition, Purchaser shall notify Seller in writing as
soon as reasonably practicable upon becoming aware of any Third Party Recovery
Right.
     (b) With respect to any Direct Claim, following receipt of a Claim Notice
from the Indemnified Party of the Claim, the Indemnifying Party shall have
30 days to make such investigation of the Claim as is considered necessary or
desirable. For the purpose of such investigation, the Indemnified Party shall
make available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with such other
information as the Indemnifying Party may reasonably request. If both parties
agree at or before the expiration of such 30-day period (or any mutually agreed
extension thereof) to the validity and amount of such Claim, the Indemnifying
Party shall immediately pay to the Indemnified Party the full agreed upon amount
of the Claim. If the Indemnifying Party does not agree to the validity and
amount of the Claim, then the Indemnified Party may pursue any remedies
available to it.
     (c) In relation to Third Party IP Claims and Third Party IP Recovery
Rights:
     (i) Seller and Purchaser shall in good faith cooperate with each other in
relation to the Third Party IP Claim or Third Party IP Recovery Right with a
view to any possible mitigating defense or other commercially acceptable action
to minimize the risk of litigation. For the avoidance of doubt, Purchaser shall
be entitled (from time to time) to seek counsel’s opinion on any matter that is
the subject of the Third Party IP Claim or Third Party IP Recovery Right, and
Seller shall procure that Purchaser has sufficient information to prepare full,
detailed and accurate instructions to counsel to advance within the time period
required by Purchaser (acting reasonably).
     (ii) Seller shall not be entitled to require the Company or Purchaser to
initiate proceedings or himself initiate proceedings before any court, tribunal
or other competent body under any powers of delegation conferred by this
Section 8.4(c).

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     (iii) Subject to Seller indemnifying and securing (and keeping indemnified
and secured including but without limitation by recourse to the Escrow Amount),
Purchaser and the Company to the reasonable satisfaction of Purchaser, Purchaser
shall take and procure that the Company takes in relation to any Third Party IP
Claim or Third Party IP Recovery Right such action as Seller may reasonably
require in relation thereto (A) to avoid, resist, mitigate, compromise, defend
or appeal against any Third Party IP Claim; or (B) to enforce any Third Party IP
Recovery Right. Purchaser shall not (and shall procure that the Company shall
not) accept or compromise any Third Party IP Claim or Third Party IP Recovery
Right without the prior agreement of Seller, which he shall not unreasonably
withhold, delay or grant only subject to unreasonable conditions.
     (iv) On the written request of Seller, the conduct of any legal proceeding
arising out of any Third Party IP Claim (“Proceedings”) shall be delegated to
Seller and for this purpose Purchaser shall and shall procure that the Company
shall give all such assistance as Seller may reasonably require and shall
appoint such lawyers and professional advisors as Seller (acting reasonably) may
nominate to act on behalf of Purchaser or the Company in accordance with
Seller’s instructions.
     (v) The rights given to Seller under Section 8.4(c)(iii) and Section
8.4(c)(iv) are conditional upon the following:
     (A) Unless an Opinion has been obtained, Purchaser shall not be bound by
Sections 8.4(c)(iii) and/or 8.4(c)(iv) (as the case may be) above to the extent
that it is of the reasonable opinion (on the basis of facts and matters
explained to Seller) that the probable consequences of any such requirements or
actions would adversely affect the conduct of the business of Purchaser, the
Company or any of their Affiliates to a material extent PROVIDED ALWAYS that
Purchaser shall not be obliged to take any form of action involving a customer
of or a licensor to the Company, Purchaser or any Affiliate.
     (B) Seller must keep Purchaser fully and promptly informed of (1) all
communications and interactions concerning the Third Party IP Claim or the Third
Party IP Recovery Right and/or (2) the Proceedings (as the case may be), shall
provide Purchaser with copies of all material correspondence and documentation
relating to the Third Party IP Claim and/or Third Party IP Recovery Right, shall
consult Purchaser on any matter which is likely to be material in relation to
any of them, shall take account of all reasonable requirements of Purchaser in
relation to any of them, and shall comply fully with the standard policies and
procedures from time to time applying to Purchaser and its

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Affiliates to the extent that they are not otherwise inconsistent with the
provisions of this Section 8.4.
     (C) Seller must not make any settlement or compromise of the Third Party IP
Claim or Third Party IP Recovery Right, whether the subject of Proceedings or
not, or agree to any matter in the conduct thereof which may affect the amount
of the liability in connection with such Third Party IP Claim or the amount of
the Third Party IP Recovery Right without the prior written approval of
Purchaser, such approval not to be unreasonably withheld.
     (D) In the event of Purchaser acting unreasonably in refusing such
settlement or compromise, Seller shall have no liability in respect of any Claim
arising therefrom in excess of the figure at which they could have settled or
compromised the Third Party IP Claim or Third Party Recovery Right, and
Purchaser shall be liable for any costs incurred since the proposed date of
settlement or compromise.
     (d) Without prejudice to the foregoing, Seller shall cease to be entitled
to exercise any of the rights under Sections 8.4(c)(iii) and/or 8.4(c)(iv) and
to have the conduct of the Proceedings in circumstances where:
     (i) aggregate professional costs (including legal and accounting fees and
the fees of patent agents and other experts) reach $750,000; or
     (ii) Seller ceases to be employed or contracted under a contract for
services to the Company or any Affiliate of the Company or Purchaser (which the
parties will negotiate in good faith) by reason of termination for misconduct or
otherwise for cause by the Company or such Affiliate, or by reason of his
voluntary resignation or voluntary termination; provided, however, that this
Section 8.4(d)(ii) shall not be applicable with respect to the potential patent
infringement referenced in item #1 on Section 4.9(b) of the Disclosure Schedule
and, subject to the other provisions contained in this Article 8 (including
Section 8.4(d)(i)), Seller shall continue to be entitled to exercise the rights
described in Sections 8.4(c)(iii) and 8.4(c)(iv) and to have the conduct of the
Proceedings arising out of the potential patent infringement referenced in item
#1 of Section 4.9(b) of the Disclosure Schedule even if he is no longer employed
or contracted under a contract for services to the Company or any Affiliate of
the Company or Purchaser.
     (e) Without limiting the generality of the foregoing and subject to Section
8.4(c):
     (i) Purchaser shall in relation to a Third Party Claim consult with Seller
with respect to any possible mitigating action or defense to the Third Party
Claim or any possible Third Party Recovery Right in relation

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to the Third Party Claim, and shall in relation to any Third Party Recovery
Right consult with Seller with respect to exercising or otherwise securing the
benefit of such Third Party Recovery Right, and shall in each case take fully
into account the reasonable representations of Seller in relation to the
appropriate action to take provided that:
     (A) such representations are provided without unreasonable delay and in any
event sufficiently ahead of any relevant time limits notified to Seller as to
enable the requested action still to be capable of being taken; and
     (B) such representations do not involve action which would have a material
adverse effect on the business of Purchaser or any of its Affiliates (including
the Company).
     (ii) Purchaser has the right to require Seller to indemnify and secure
Purchaser and the Company to the reasonable satisfaction of Purchaser in
relation to any action taken by them as a result of the representations of
Seller. The conduct of the Third Party Claim or a claim or potential claim
relating to the Third Party Recovery Right (any such Third Party Claim or a
claim or potential claim relating to the Third Party Recovery Right being
referred to as a “Potential Claim”) shall, however, be controlled by Purchaser.
     (iii) Purchaser shall be obliged to comply with the representations of
Seller where provisos (A) and (B) of Section 8.4(e)(i) above are satisfied or,
in the case where proviso (B) is not satisfied, an Opinion has been obtained,
including to the effect that the action requested by Seller is appropriate
PROVIDED ALWAYS that Purchaser shall not be obliged to take any form of action
involving a customer of or a licensor to the Company, Purchaser or any of their
Affiliates.
     (iv) Purchaser shall ensure that Seller is kept promptly and properly
informed of any actual or proposed developments in the Potential Claim which are
or may reasonably be considered to be material, including providing Seller with
copies of all material correspondence and documentation relating to the
Potential Claim, and Seller shall provide to Purchaser such assistance as
Purchaser reasonably requests in relation to the conduct of such Potential
Claim.
     (f) If any sum is recovered by Purchaser or the Company from a third party
under a Third Party Recovery Right, any Claim in respect of any Loss to which
that sum relates shall be reduced (without prejudice to any other limitations on
liability of Seller referred to in Article 4 of the Joint Issues Agreement) by
the amount of the sum recovered from the third party after deducting from it all
reasonable costs, charges and expenses incurred and not recovered by Purchaser,
the Company or any of their Affiliates in recovering that sum from the third
party.

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     (g) If Seller has paid an amount in respect of a Claim which exceeds the
amount of that Claim (as reduced by Section 8.4(f) above), Purchaser shall repay
to Seller the amount of the excess.
          8.5 Determination of Losses. The parties shall take into account the
time cost of money (using the Applicable Rate as the discount or interest rate)
in determining Losses for purposes of this Article 8. In addition, the amount of
Losses incurred by any Indemnified Party hereunder will be determined net of any
amounts received by such Indemnified Party under applicable insurance policies
with respect to such Losses (provided that any increases in insurance premiums
shall be offset against such insurance proceeds for purposes of determining
amounts received).
          8.6 Limitations in Joint Issues Agreement to Apply. Notwithstanding
any provisions herein to the contrary, Losses payable pursuant to this Article 8
shall be subject to the limitations set forth in Article 4 of the Joint Issues
Agreement.
          8.7 Conversion and Aggregation of Indemnification Claims. Losses
subject to indemnification under this Agreement shall be converted from US
Dollars into GBPs at the then current exchange rate (as determined by reference
to the spot rate for the purchase of US Dollars for GBPs as certified by HSBC
Bank Plc as prevailing in London at or about 11:00 a.m. UK time on the date of
determination) and will be aggregated with amounts (in GBP) of indemnification
claims under the UK SPA for purposes of determining the applicability of the
limitations contained in Article 4 of the Joint Issues Agreement.
          8.8 Exclusive Remedy. Purchaser and Seller acknowledge and agree that
the foregoing indemnification provisions set forth in this Article 8 shall be
the exclusive remedy of the parties (and the Purchaser Indemnified Parties) with
respect to the transactions contemplated by this Agreement (other than specific
performance of this Agreement, which shall be available as a remedy as set forth
herein). Each party to this Agreement waives all statutory, common Law and other
claims with respect to this Agreement, other than claims for indemnification
with respect to this Agreement pursuant to (and in accordance with the terms of)
this Article 8 and the Joint Issues Agreement and other than claims for specific
performance or injunctive relief. Notwithstanding anything herein to the
contrary, in the absence of fraud, in no event shall Seller or Purchaser be
liable for any special or punitive damages, consequential damages or damages
measured on the basis of a multiple of earnings or similar financial measure,
and Purchaser shall not be entitled to recover or seek any remedy under this
Agreement to the extent that Purchaser was fully compensated by the inclusion of
the Losses as a liability in the calculation of Net Asset Value (and thus the
Adjustment Amount).
ARTICLE 9.
MISCELLANEOUS
          9.1 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt requested), sent
by overnight courier or sent by telecopy, to the

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applicable party at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by like
notice):

                      (a)   if to Seller:   Alan K. Sefton
 
              2080 Wilkerson Road
 
              Knoxville, Tennessee 37922
 
              Telecopy No.: (865) 671-4308
 
                        with a copy to:   Bass, Berry & Sims PLC
 
              900 South Gay Street
 
              Suite 1700
 
              Knoxville, Tennessee 37902
 
              Attention: G. Mark Mamantov
 
              Telecopy No.: (865) 521-6234
 
                    (b)   if to Purchaser:   Federal Signal Corporation
 
              1415 West 22nd Street
 
              Oak Brook, Illinois 60523
 
              Attention: John A. Gruber
 
              Telecopy No.: (630) 954-2041
 
                        with a copy to:   Federal Signal Corporation
 
              1415 West 22nd Street
 
              Oak Brook, Illinois 60523
 
              Attention: Jennifer Sherman,
 
              General Counsel
 
              Telecopy No.: (630) 954-2138
 
                        and:   Thompson Coburn LLP
 
              One US Bank Plaza
 
              Suite 3500
 
              St. Louis, Missouri 63101
 
              Attention: Robert M. LaRose
 
              Telecopy No.: (314) 552-7068

          9.2 Certain Definitions; Interpretation.
     (a) For purposes of this Agreement, the following terms shall have the
following meanings:

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     (i) “Action” means any written claim, action or suit by or before any
Governmental Authority.
     (ii) “Adjustment Amount” means the amount by which the Net Asset Value is
greater or less than the Base NAV, such amount to be determined as provided in
Section 2.3.
     (iii) “Affiliate” of a Person means a Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person.
     (iv) “Affiliated Group” means any affiliated group within the meaning of
Section 1504(a) of the Code or any similar group defined under a similar
provision of state, local or foreign law.
     (v) “Applicable Rate” means the prime rate of interest in effect as of the
date of determination as stated in the “Money Rates” section of The Wall Street
Journal.
     (vi) “Base NAV” means an amount equal to the total assets of the Company
less the total liabilities of the Company all as shown in the balance sheet as
of May 31, 2007 included in the Interim Financial Statements but
(i) disregarding all cash shown as an asset of the Company and (ii) adding back
as an asset an amount equal to all interest-bearing indebtedness of the Company
shown therein as a liability.
     (vii) “Business Day” means a day that banks in Knoxville, Tennessee are
generally open for business.
     (viii) “Claims” means all disputes, claims, controversies, demands, rights,
obligations, liabilities, actions and causes of action of every kind and nature,
including any unknown, unsuspected or undisclosed claims.
     (ix) “Closing Accounts” means the financial statements of the Company
(including a balance sheet as of the Closing Date and an income statement from
December 31, 2006 through the Closing Date), and the statement of Net Asset
Value.
     (x) “Confidentiality Agreement” means the Unilateral Non-Disclosure
Agreement dated December 18, 2006 between Purchaser and the Company.
     (xi) “Code” means the Internal Revenue Code of 1986, as amended.
     (xii) “control” (including the terms “controlled by” and “under common
control with”) means the possession, direct or indirect, of the

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power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise.
     (xiii) “ERISA” means the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
     (xiv) “Escrow Agent” means Associated Bank, N.A., a Wisconsin corporation.
     (xv) “Escrow Agreement” means the Escrow Agreement in the form attached
hereto as Exhibit B.
     (xvi) “Escrow Amount” means £428,400.
     (xvii) “GAAP” means accounting principles generally accepted in the United
States of America.
     (xviii) “GBP” means British Pounds Sterling.
     (xix) “Governmental Authority” means any federal, state, local or foreign
governmental, regulatory or administrative agency or any court.
     (xx) “Governmental Order” means any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
     (xxi) “Indebtedness for Borrowed Money” means, as to any Person, (a) any
liability of that Person (i) for borrowed money or arising out of any extension
of credit to or for the account of that Person, including reimbursement or
payment obligations respecting banker’s acceptances, letters of credit, surety
bonds or similar instruments, and leases required to be accounted for as capital
leases by GAAP, or (ii) evidenced by bonds, debentures, notes or similar
instruments, (b) any liability secured by any Encumbrance upon any property of
that Person, or upon any revenues, income or profits of that Person therefrom,
or (c) any liability of the type described in the preceding clause (a) or (b) in
respect of which that Person has acquired assumed or incurred a liability by
means of a guarantee or similar arrangement.
     (xxii) “Intellectual Property” means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all re-issuances, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
domain names, trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations

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thereof including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and proposals),
(f) all computer software (including data and related documentation), (g) all
other proprietary rights, and (h) all copies and tangible embodiments thereof
(in whatever form or medium).
     (xxiii) “IP Claim” means a claim which would be capable of being made
against Seller in respect of a breach of Section 4.9 or a Claim arising out of
the potential patent infringement referenced in item #1 on Section 4.9(b) of the
Disclosure Schedule.
     (xxiv) “Joint Issues Agreement” means the Joint Issues Agreement dated as
of the date hereof by and among Purchaser, Federal Signal of Europe BV y CIA,
SC, FS PIPS UK Limited and Seller in the form attached hereto as Exhibit C.
     (xxv) “knowledge” means, (A) with respect to Seller, the actual knowledge
of Seller or the knowledge that Seller would have after reasonable inquiry of
the individual officers, employees or representatives of the Company who are
responsible for or otherwise have knowledge of the subject matter of the
inquiry, and (B) with respect to Purchaser, the actual knowledge of John Gruber,
Paul Henry, Brian Boettger, Mark Cassens, Michael Wons, and Guy Wernet or the
knowledge those individuals would have after reasonable inquiry of the
individual officers, employees or representatives of Purchaser who are
responsible for or otherwise have knowledge of the subject matter of the
inquiry.
     (xxvi) “Law” means any Governmental Order or any law, statute, ordinance,
rule or regulation of any Governmental Authority, or any binding agreement with
any Governmental Authority.
     (xxvii) “Most Recent Balance Sheet” means the balance sheet contained in
the Interim Financial Statements.
     (xxviii) “Net Asset Value” means, as of the Closing Date, the amount
(determined in US dollars) of the excess of the total assets of the Company less
the total liabilities of the Company.

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     (xxix) “Office Lease Amendment” means the First Amendment to Office Lease
in the form attached hereto as Exhibit D, which shall amend the Office Lease
dated as of January 2, 2007 between Sefton, L.L.C. and the Company.
     (xxx) “Opinion” shall mean the opinion of counsel jointly selected by
Purchaser and Seller to the effect that (a) in respect of a Third Party Claim,
such claim could on the balance of probabilities be successfully defended by
Purchaser, the Company or its Affiliate(s), and that the action requested by
Seller is appropriate, or (b) where Seller is requesting Purchaser to pursue a
Third Party Recovery Right, that the Third Party Recovery Right could, on the
balance of probabilities, be successfully pursued.
     (xxxi) “Permit” means any permit, franchise, authorization, or other
license or approval issued or granted by any Governmental Authority.
     (xxxii) “Person” means an individual, corporation, partnership, limited
liability company, joint stock company, association, trust, unincorporated
organization, entity or Governmental Authority (or any department, agency, or
political subdivision thereof).
     (xxxiii) “Prohibited Area” means any country or state or other territorial
area in which the Restricted Products and/or Restricted Services were supplied
by the Company during the period of 2 years prior to Closing.
     (xxxiv) “Purchaser Ancillary Agreements” means the Escrow Agreement, the
Joint Issues Agreement and the Sefton Employment Letter.
     (xxxv) “Purchaser Material Adverse Effect” means any material adverse
change in or material adverse effect on the business, results of operations or
financial condition of Purchaser or on the ability of Purchaser to perform its
obligations under this Agreement and any ancillary agreements or on the ability
of Purchaser to consummate the purchase of the Shares and the other transactions
contemplated hereby.
     (xxxvi) “Restricted Products” means (a) all products which are
manufactured, produced, distributed or sold by the Company as of the Closing
Date (including without limitation automated license plate recognition systems);
(b) the following products not manufactured, produced, distributed or sold by
the Company as of the Closing Date (but which Seller acknowledges that Purchaser
may wish the Company to manufacture, produce and/or sell during the term of the
covenant set forth in Section 6.5): red light traffic cameras, general
surveillance cameras, facial recognition processing products, speed detection
enforcement

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cameras and police vehicle mounted cameras and all related software; and (c) any
other products which are of a type similar to or competing with any of the
products referred to in (a) and/or (b) above.
     (xxxvii) “Restricted Services” means all services which are supplied by the
Company as of the Closing Date relating to the supply of automated license plate
recognition systems; (b) the following services not provided by the Company as
of the Closing Date (but which Seller acknowledges that Purchaser may wish the
Company to manufacture, produce and/or sell during the term of the covenant set
forth in Section 6.5): services relating to red light traffic cameras, general
surveillance cameras, facial recognition processing products, speed detection
enforcement cameras, police vehicle mounted cameras and remote construction
speed enforcement back office procedures and all related software services; and
(c) any other services which are of a type similar to or competing with any of
the services referred to in (a) and/or (b) above.
     (xxxviii) “Securities Act” means the Securities Act of 1933, as amended.
     (xxxix) “Sefton Employment Letter” means the letter in the form attached
hereto as Exhibit E.
     (xl) “Seller Ancillary Agreements” means the Escrow Agreement, the Joint
Issues Agreement and the Sefton Employment Letter.
     (xli) “Seller Material Adverse Effect” means any material adverse change in
or material adverse effect on the business, results of operations or financial
condition of the Company.
     (xlii) “Subsidiary” of a Person means any corporation or other legal entity
of which such Person (either alone or through or together with any other
Subsidiary or Subsidiaries) is the general partner or managing entity or of
which at least a majority of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the board of directors
or others performing similar functions of such corporation or other legal entity
is directly or indirectly owned or controlled by such Person (either alone or
through or together with any other Subsidiary or Subsidiaries).
     (xliii) “Taxes” shall mean any and all taxes, fees, levies or other
assessments, including, without limitation, federal, state, local or foreign
income, gross receipts, excise, real or personal property, sales, withholding,
social security, occupation, use, service, service use, value added, license,
net worth, payroll franchise or similar taxes, imposed by any Taxing Authority,
together with any interest, penalties or additions to Tax and additional amounts
imposed with respect thereto.

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     (xliv) “Taxing Authority” shall mean any Governmental Authority responsible
for the imposition or collection of any Taxes.
     (xlv) “Tax Return” shall mean any report, return, document, declaration or
other information or filing required to be supplied to any Taxing Authority or
jurisdiction (foreign or domestic) with respect to Taxes.
     (xlvi) “Third Party IP Claim” means any claim by a third party against the
Company and/or Purchaser that may give rise to an IP Claim.
     (xlvii) “Third Party IP Recovery Right” means any right to which Purchaser
or the Company is or becomes entitled (whether by way of payment, discount,
credit, set off, counterclaim or otherwise) to recover from any third party any
sum in respect of any Loss which is or may be the subject of an IP Claim.
     (xlviii) “Third Party Recovery Right” means any right to which Purchaser or
the Company becomes entitled (whether by way of payment, discount, credit, set
off, counterclaim or otherwise) to recover from any third party any sum in
respect of any Loss which is or may be the subject to a Claim.
     (b) When a reference is made in this Agreement to Articles, Sections, or
Disclosure Schedule, such reference is to an Article or a Section of, or
Disclosure Schedule to, this Agreement, unless otherwise indicated. 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. Whenever the words “include,” “includes” or “including” are used in
this Agreement, they shall be understood to be followed by the words “without
limitation.” All references to “£” or “pounds sterling” in this Agreement shall
be to the lawful currency of the United Kingdom. All references to “$” or
“dollars” in this Agreement shall be to the lawful currency of the United States
of America.
          9.3 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to either party. Upon a determination that any term or other provision
is invalid, illegal or incapable of being enforced, Seller and Purchaser shall
negotiate in good faith to modify this Agreement so as to effect their original
intent as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.
          9.4 Entire Agreement; No Third-Party Beneficiaries. This Agreement,
including all exhibits and schedules attached hereto, the Joint Issues Agreement
and the other agreements referenced herein, constitute the entire agreement and
supersede any and all other

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prior agreements and undertakings (including the Confidentiality Agreement),
both written and oral, between the parties hereto, or either of them, with
respect to the subject matter hereof and does not, and is not intended to,
confer upon any Person other than the parties hereto and those Persons
identified in Section 6.9 and 6.10 any rights or remedies hereunder.
          9.5 Amendment; Waiver. This Agreement may be amended only in a writing
signed by both parties hereto. Any waiver of rights hereunder must be set forth
in writing. A waiver of any breach or failure to enforce any of the terms or
conditions of this Agreement shall not in any way affect, limit or waive either
party’s rights at any time to enforce strict compliance thereafter with every
term or condition of this Agreement.
          9.6 Binding Effect; Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective legal
representatives, successors and permitted assigns. Notwithstanding the
foregoing, this Agreement shall not be assigned by either party hereto by
operation of law or otherwise without the express written consent of the other
party.
          9.7 Disclosure Schedule. The disclosure schedule attached hereto (the
“Disclosure Schedule”) shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Any matter disclosed pursuant to the Disclosure Schedule shall not be deemed to
be an admission or representation as to the materiality of the item so
disclosed.
          9.8 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed in accordance with, the laws of the State of Illinois (except to
the extent that the laws of Tennessee mandatorily apply to the sale of stock in
a Tennessee corporation) without regard to the conflicts of laws provisions
thereof. Each of the parties hereby irrevocably and unconditionally agrees not
to commence any litigation relating hereto except in the federal courts of the
United States of America or the state courts of a state of the United States of
America. Each of the parties further agrees that any service of process,
summons, notice or document by U.S. registered mail to his or its respective
address set forth in Section 9.1 shall be effective service of process for any
litigation brought against him or it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any right he or it may have
to trial by jury in connection with any litigation arising out of or relating to
this Agreement, the transactions contemplated hereby or any of the other
transactions contemplated hereby.
          9.9 Construction. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against either party.
          9.10 Counterparts. This Agreement may be executed simultaneously in
one or more counterparts (including by facsimile or electronic .pdf submission),
and by the different parties in separate counterparts, each of which when
executed shall be deemed to be an original, but all of which shall constitute
one and the same agreement.
          9.11 Enforcement. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in

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accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties hereto shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at Law or in equity.
[Remainder of page intentionally left blank; signature page follows]

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

              FEDERAL SIGNAL CORPORATION
 
       
 
  By:    
 
       
 
  Name:    
 
       
 
  Title:    
 
       
 
                    Alan K. Sefton

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