TABLE OF CONTENTS

Exhibit 10.1

Execution Version

AGREEMENT AND PLAN OF MERGER

Dated as of July 28, 2017

by and among

INNOPHOS HOLDINGS, INC.,

THOR MERGER SUB, INC.,

GENNX NOVEL HOLDING, INC.

and

GENNX NOVEL REPRESENTATIVE, LLC as the Shareholders’ Representative

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     Page  

ARTICLE I DEFINED TERMS

     1  

Section 1.01

 

Certain Definitions

     1  

Section 1.02

 

Additional Definitions

     10  

Section 1.03

 

Interpretation

     11  

Section 1.04

 

Calculation of Time Period

     12  

ARTICLE II THE MERGER

     12  

Section 2.01

 

The Merger

     12  

Section 2.02

 

Closing

     12  

Section 2.03

 

Effective Time

     12  

Section 2.04

 

Effect of the Merger

     13  

Section 2.05

 

Certificate of Incorporation; By-laws

     13  

Section 2.06

 

Directors

     13  

Section 2.07

 

Officers

     13  

ARTICLE III EFFECT OF MERGER ON THE EQUITY SECURITIES OF THE CONSTITUENT
ENTITIES; EXCHANGE OF CERTIFICATES

     13  

Section 3.01

 

Conversion of Capital Stock

     13  

Section 3.02

 

Pre-Closing Statement

     14  

Section 3.03

 

Closing Payments

     14  

Section 3.04

 

Closing Deliverables.

     15  

Section 3.05

 

Exchange of Certificates; Withholding

     16  

Section 3.06

 

Post-Closing Adjustment

     16  

Section 3.07

 

Escrow Amount

     19  

Section 3.08

 

Closing of Company Stock Transfer Books

     19  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     19  

Section 4.01

 

Corporate Organization

     19  

Section 4.02

 

Subsidiaries

     19  

Section 4.03

 

Capitalization; Ownership; Indebtedness

     20  

Section 4.04

 

Authority

     20  

Section 4.05

 

Consents and Approvals; No Violations

     21  

Section 4.06

 

Financial Statements

     21  

Section 4.07

 

No Undisclosed Liabilities

     21  

Section 4.08

 

Absence of Certain Changes

     22  

Section 4.09

 

Personal Property

     22  

Section 4.10

 

Real Property

     22  

Section 4.11

 

Intellectual Property

     22  

Section 4.12

 

Contracts

     23  

Section 4.13

 

Related Party Agreements

     24  

Section 4.14

 

Compliance with Applicable Law; Permits

     25  

Section 4.15

 

Anti-Corruption Laws

     25  

Section 4.16

 

Litigation

     25  

Section 4.17

 

Labor

     26  

 

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(continued)

 

     Page  

Section 4.18

 

Employee Matters

     26  

Section 4.19

 

Environmental Matters

     28  

Section 4.20

 

Tax Returns and Tax Payments

     29  

Section 4.21

 

Insurance

     31  

Section 4.22

 

Suppliers; Customers; and Receivables.

     31  

Section 4.23

 

Broker’s Fees

     32  

Section 4.24

 

No Other Representations or Warranties

     32  

ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

     32  

Section 5.01

 

Organization

     32  

Section 5.02

 

Authority

     32  

Section 5.03

 

Consents and Approvals; No Violation

     33  

Section 5.04

 

Litigation

     33  

Section 5.05

 

Ownership of Merger Sub; No Prior Activities

     33  

Section 5.06

 

Acquisition for Investment

     34  

Section 5.07

 

Funding

     34  

Section 5.08

 

Broker’s Fees

     34  

Section 5.09

 

Investigation

     34  

ARTICLE VI COVENANTS

     35  

Section 6.01

 

Conduct of Business Prior to the Closing

     35  

Section 6.02

 

Payoff Letters

     37  

Section 6.03

 

Company Transaction Expense Direction Notice

     37  

Section 6.04

 

Employee Matters.

     37  

Section 6.05

 

Section 280G Vote

     38  

ARTICLE VII ADDITIONAL AGREEMENTS

     39  

Section 7.01

 

Expenses

     39  

Section 7.02

 

Certain Tax Matters

     39  

Section 7.03

 

Publication/Distribution of Agreement

     39  

Section 7.04

 

Access to Information

     40  

Section 7.05

 

Consents; Further Assurances

     41  

Section 7.06

 

No Shop

     42  

Section 7.07

 

Termination of Company Stock Options

     42  

Section 7.08

 

Company 401(k) Plan

     42  

Section 7.09

 

Indemnification of Directors and Officers

     43  

ARTICLE VIII CONDITIONS PRECEDENT

     44  

Section 8.01

 

Conditions to Each Party’s Obligation To Effect the Transactions

     44  

Section 8.02

 

Conditions to Obligations of Parent and Merger Sub

     44  

Section 8.03

 

Conditions to Obligation of the Company

     45  

Section 8.04

 

Frustration of Closing Conditions

     45  

ARTICLE IX TERMINATION, AMENDMENT AND WAIVER

     45  

Section 9.01

 

Termination

     45  

 

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(continued)

 

     Page  

Section 9.02

 

Effect of Termination

     46  

ARTICLE X GENERAL PROVISIONS

     46  

Section 10.01

 

No Waiver or Survival of Representations, Warranties, Covenants and Agreements

     46  

Section 10.02

 

Notices

     47  

Section 10.03

 

Counterparts

     48  

Section 10.04

 

Entire Agreement; No Third-Party Beneficiaries

     48  

Section 10.05

 

Amendment

     48  

Section 10.06

 

Extension; Waiver

     48  

Section 10.07

 

Governing Law

     48  

Section 10.08

 

Assignment; Binding Effect

     48  

Section 10.09

 

Shareholders’ Representative

     48  

Section 10.10

 

Specific Performance; Enforcement

     49  

Section 10.11

 

Jurisdiction

     50  

Section 10.12

 

WAIVER OF TRIAL BY JURY

     50  

Section 10.13

 

Severability

     50  

Section 10.14

 

Legal Representation

     51  

 

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EXHIBITS AND SCHEDULES

Exhibits

 

Exhibit A    Company Shareholder Agreement Exhibit B    Merger Certificate
Exhibit C    Escrow Agreement Exhibit D    Sample Net Working Capital
Calculation

Company Disclosure Schedule

 

Section 4.02    Subsidiaries Section 4.03(b)    Capitalization Section 4.03(d)
   Indebtedness Consents Section 4.05(a)    Governmental Consents Section 4.07
   Liabilities Section 4.10    Leased Real Property Section 4.11(a)   
Registered Intellectual Property Section 4.11(c)    Intellectual Property Claims
Section 4.12(a)    Material Contracts Section 4.12(b)    Material Contract
Exceptions Section 4.13    Related Party Agreements Section 4.14    Compliance
with Applicable Law; Permits Section 4.15(b)    Anti-Corruption and Money
Laundering Proceedings Section 4.16    Litigation Section 4.17(a)    Employment
Discrimination Section 4.17(c)    Labor Laws Section 4.18(a)    Employees
Section 4.18(b)    Company Benefit Plans Section 4.19    Environmental Matters
Section 4.21    Insurance Policies Section 4.22    Suppliers and Customers
Section 6.01    Conduct of Business Prior to Closing Section 6.02   
Indebtedness

Annexes

 

Annex 1.1(a)    Allocation Annex Annex 1.1(b)    In-the-Money Options

 

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of July 28, 2017 (this “Agreement”),
is made by and among: (i) Innophos Holdings, Inc., a Delaware corporation,
(“Parent”); (ii) Thor Merger Sub, Inc., a Delaware corporation and an indirect
wholly owned subsidiary of Parent (“Merger Sub”); (iii) GenNx Novel Holding,
Inc., a Delaware corporation (the “Company”) and (iv) GenNx Novel
Representative, LLC, a Delaware limited liability company, solely in its
capacity as the shareholder representative hereunder (the “Shareholders’
Representative”). Capitalized terms used herein without definition shall have
the meanings specified in ARTICLE I.

RECITALS

WHEREAS, the Company, Parent and Merger Sub intend to effect a merger of Merger
Sub with and into the Company (the “Merger”) upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law, as amended (the “DGCL”);

WHEREAS, the boards of directors of each of the Company and Merger Sub have
determined that the Merger is in the best interest of their respective
shareholders and have declared advisable and approved this Agreement and the
transactions contemplated hereby (including the Merger), and have recommended
the adoption of this Agreement and the consummation of the transactions
contemplated hereby (including the Merger) by their respective shareholders;

WHEREAS, the Company has secured the requisite consents from the Company
Shareholders by written consent (the “Company Shareholder Consent”) necessary to
adopt this Agreement, and consummate the transactions contemplated hereby
including the Merger, in accordance with Section 251 of the DGCL; and

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
each Shareholder of the Company is executing and delivering to Parent and the
Company an agreement (the “Company Shareholder Agreement”) in substantially the
form attached as Exhibit A;

NOW, THEREFORE, in consideration of the foregoing, and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:

ARTICLE I

DEFINED TERMS

Section 1.01 Certain Definitions. For purposes of this Agreement:

“Adjustment Amount” equals the sum (which may be positive or negative) of

(a) The Closing Net Working Capital Adjustment, plus

(b) Estimated Closing Indebtedness minus Closing Indebtedness (as finally
determined in accordance with the procedures set forth in Section 3.06), plus

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(c) Estimated Company Transaction Expenses minus Company Transaction Expenses
(as finally determined in accordance with the procedures set forth in Section
3.06), plus

(d) Closing Cash Amount (as finally determined in accordance with the procedures
set forth in Section 3.06) minus Estimated Closing Cash Amount.

An “affiliate” of any Person means another Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such first person; provided that such Person shall be
deemed an affiliate for only so long as such control exists and, for purposes of
this definition, “control” means the possession, directly or indirectly, of the
power to direct, or cause the direction of, the management and policies of such
person, whether through the ownership of voting securities, by Contract, or
otherwise.

“Allocation Annex” means Annex 1.1(a) hereto.

“Antitrust Laws” means the HSR Act, the Sherman Antitrust Act of 1890, as
amended, the Clayton Act of 1914, as amended, the Federal Trade Commission Act
of 1914, as amended, and any other Laws that are designed or intended to
prohibit, restrict or regulate (a) foreign investment or (b) actions having the
purpose or effect of monopolization or restraint of trade or lessening of
competition through merger and acquisition.

“Audited Financial Statements” means the audited consolidated balance sheets of
the Company and its Subsidiaries as of December 31, 2016 and the related
consolidated statements of operations, changes in stockholders’ equity and cash
flows for the fiscal year ended December 31, 2016.

“Business Day” means a day, other than Saturday or Sunday, on which banks
generally are open for the transaction of business in New York, New York.

“Cash and Cash Equivalents” means the sum, as of immediately prior to the
Closing, of the fair market value (expressed in United States Dollars) of
(i) all cash and cash equivalents (including marketable securities and short
term investments) of the Company and its Subsidiaries, (ii) plus all deposited
but uncleared bank deposits of the Company and its Subsidiaries and (iii) minus
all outstanding undrawn checks of the Company and its Subsidiaries.

“Capital Stock” means, with respect to: (i) any corporation, any share, or any
depositary receipt or other certificate representing any share, of an equity
ownership interest in that corporation; and (ii) any other entity, any share,
membership or other percentage interest, unit of participation or other
equivalent (however designated) of an equity interest in that entity.

“Closing Cash Amount” means the aggregate amount of all Cash and Cash
Equivalents of the Company as of 11:59 PM (Eastern Time) on the Business Day
immediately preceding the Closing Date, which amount, for purposes of any
calculation under this Agreement, shall not exceed $100,000.

“Closing Date Amount” means the Estimated Merger Consideration minus the Escrow
Amount minus the Reserve Amount.

 

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“Closing Net Working Capital Adjustment” means:

(a) If no Estimated Net Working Capital Adjustment Amount was made, then

(1) If Closing Net Working Capital exceeds the Upper Target, a positive
adjustment equal to such excess;

(2) If Closing Net Working Capital is less than the Lower Target, a negative
adjustment equal to such deficiency; or

(3) If Closing Net Working Capital is between the Upper Target and the Lower
Target, $0.

(b) If a positive Estimated Net Working Capital Adjustment Amount was made, then

(1) If the Closing Net Working Capital is greater than the Estimated Closing Net
Working Capital, a positive adjustment equal to such excess;

(2) If the Closing Net Working Capital is lower than the Estimated Closing Net
Working Capital but greater than the Upper Target, a negative adjustment equal
to the difference between Closing Net Working Capital and the Estimated Closing
Net Working Capital;

(3) If the Closing Net Working Capital is lower than the Estimated Closing Net
Working Capital and lower than the Upper Target but greater than the Lower
Target, a negative adjustment equal to the positive Estimated Net Working
Capital Adjustment Amount that was made at Closing; or

(4) If the Closing Net Working Capital is lower than the Estimated Closing Net
Working Capital and lower than the Lower Target, a negative adjustment equal to
(i) the positive Estimated Net Working Capital Adjustment Amount that was made
at Closing plus (ii) the difference between the Closing Net Working Capital and
the Lower Target.

(c) If a negative Estimated Net Working Capital Adjustment Amount was made, then

(1) If the Closing Net Working Capital is less than the Estimated Closing Net
Working Capital, a negative adjustment equal to such deficiency;

(2) If the Closing Net Working Capital is higher than the Estimated Closing Net
Working Capital but lower than the Lower Target, a positive adjustment equal to
the difference between Closing Net Working Capital and the Estimated Closing Net
Working Capital;

(3) If the Closing Net Working Capital is higher than the Estimated Closing Net
Working Capital and higher than the Lower Target but lower than the Upper
Target, a positive adjustment equal to the absolute value of the Estimated Net
Working Capital Adjustment Amount that was made at Closing; or

(4) If the Closing Net Working Capital is higher than the Estimated Closing Net
Working Capital and higher than the Upper Target, a positive adjustment equal to
(i) the absolute value of the Estimated Net Working Capital Adjustment Amount
that was made at Closing plus (ii) the difference between the Closing Net
Working Capital and the Upper Target.

 

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

“Common Stock” means the common stock, par value $.001 per share, of the
Company.

“Company Disclosure Schedule” means the Disclosure Schedule attached hereto and
delivered by the Company to Parent concurrent with the execution of this
Agreement.

“Company Fundamental Representations” means the representations and warranties
set forth in the first sentence of Section 4.01 (Corporate Organization),
Section 4.02 (Subsidiaries), Section 4.03(a) through (c) (Capitalization;
Ownership), Section 4.04 (Authority) and Section 4.23 (Broker’s Fees).

“Company Material Adverse Effect” means, with respect to the Company and its
Subsidiaries, any result, occurrence, fact, change, event, development or effect
that, individually or in the aggregate with all other results, occurrences,
facts, changes, events, developments or effects, has, or would be reasonably
expected to have, a material and adverse effect on (a) the ability of the
Company to consummate the Merger and the other transactions contemplated hereby
or (b) the business, assets, liabilities, condition (whether financial or
otherwise) or results of operations of the Company and its Subsidiaries;
provided that in no event shall any of the following, alone or in combination,
be deemed to constitute, nor shall any of the following constitute a “Company
Material Adverse Effect”, nor shall any of the following be taken into account
in determining whether a Company Material Adverse Effect has occurred or would
be reasonably likely to occur: (i) changes affecting the United States or
international economy or political, regulatory, business, economic, financial,
credit or capital market conditions, or any changes therein; (ii) the
negotiation, execution, delivery, performance, pendency or announcement of this
Agreement and the transactions contemplated hereby (provided that, for purposes
of Section 4.05, Section 4.16, Section 4.18(i) and the last sentence of Section
4.22(a), events, occurrences, facts, conditions, changes, developments or
effects described in this clause (ii) may be taken into account in determining
whether a Company Material Adverse Effect has occurred); (iii) any change
arising from or relating to compliance by the Company with the terms of this
Agreement, or action taken, or failure to act, at the request of Parent or to
which Parent has consented; (iv) acts of war or military actions (whether or not
declared), acts of armed hostility, sabotage or terrorism or other international
or national calamity; (v) any hurricane, tornado, volcano, earthquake, flood, or
other natural disaster, act of God or force majeure event; (vi) changes in
applicable Laws, accounting requirements or principles, including GAAP, after
the date hereof, or any interpretations thereof by any Governmental Entity after
the date hereof (or other authoritative interpretation or enforcement thereof);
(vii) the effect of any action taken by the Parent, Merger Sub or its Affiliates
with respect to the transactions contemplated hereby; or (viii) any failure to
meet internal or published projections, estimates or forecasts of revenues,
earnings, or other measures of financial or operating performance for any
period; provided, further, that none of clauses (i), (iv), (v) or (vi) shall
prevent a determination that there has been a Company Material Adverse Effect if
the item referred to therein affects the Company or its Subsidiaries
disproportionately relative to other industry participants.

“Company Stock Plan” means the GenNx Novel Holding Inc. 2014 Stock Incentive
Plan.

 

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“Company Transaction Expenses” means the sum of (i) all out-of-pocket fees and
expenses of third party advisors incurred by the Company and its Subsidiaries in
connection with the transactions contemplated by this Agreement, including the
fees and expenses of investment bankers, legal counsel and accountants, plus
(ii) any fees payable by the Company or any of its Subsidiaries to any of the
Shareholders or any of its Subsidiaries or any affiliate of the Company or any
of its Subsidiaries, plus (iii) any prepayment penalties, acceleration charges,
termination fees, change of control payments, payments to be made by the Company
in connection with obtaining any third party consents to the transactions
contemplated hereby and similar fees, charges and payments payable by the
Company or any of its Subsidiaries in connection with the acceleration of or
default under any Contract as a result of the consummation of the transactions
contemplated by this Agreement, plus (iv) any amounts payable by the Company or
any of its Subsidiaries on or after the Closing to any officer, director or
employee of the Company or any of its Subsidiaries in the nature of a “change in
control,” closing or signing bonus or retention payment or severance payment
arising solely from the transactions contemplated by this Agreement pursuant to
an agreement entered into prior to the Closing Date, including, but not limited
to, the amounts set forth in the Company Transaction Expense Direction Notice
and any payroll Taxes incurred by the Company or any of its Subsidiaries in
connection therewith or with respect to the Company Stock Options, to the extent
such items in (i) through (iv) result from or were incurred in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, including the Closing. Company
Transaction Expenses shall not include any Company Transaction Expenses to the
extent paid prior to opening of business on the Closing Date.

“Contract” means any written contract, commitment, agreement, arrangement
(excluding any regulatory tariff), note, bond, mortgage, lease or other
agreement legally binding on any party (excluding purchase orders).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Escrow Agent” means KeyBank National Association, or its successor, in its
capacity as such pursuant to the Escrow Agreement.

“Escrow Agreement” means an escrow agreement in substantially the form attached
hereto as Exhibit C among Parent, the Shareholders’ Representative and the
Escrow Agent.

“Estimated Merger Consideration” means $125,000,000 plus or minus the Estimated
Net Working Capital Adjustment Amount, minus the Estimated Closing Indebtedness,
minus the Estimated Company Transaction Expenses and plus the Estimated Closing
Cash Amount.

“Estimated Net Working Capital Adjustment Amount” means:

(a) If Estimated Closing Net Working Capital exceeds the Upper Target, a
positive adjustment equal to such excess;

(b) If Estimated Closing Net Working Capital is less than the Lower Target, a
negative adjustment equal to such deficiency; and

(c) If Estimated Closing Net Working Capital is between the Upper Target and the
Lower Target, $0.

 

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“Financial Statements” means (i) the audited consolidated balance sheets of the
Company and its Subsidiaries as of December 31, 2016 and the related
consolidated statements of operations, changes in stockholders’ equity and cash
flows for the fiscal year ended December 31, 2016 and (ii) the unaudited
consolidated balance sheet as of March 31, 2017.

“GAAP” means United States generally accepted accounting principles.

“Governmental Entity” means any federal, state or local court, administrative or
regulatory agency or commission or other governmental authority or
instrumentality, domestic or foreign (including, without limitation,
multi-national).

“Indebtedness” means, without duplication (but, in each case, excluding
obligations of the Company or any of its Subsidiaries to the Company or any of
its Subsidiaries), the sum of (in each case, including any accrued interest,
prepayment penalties, make whole payments and premiums, breakage costs, fees and
other amounts due on payment): (a) all obligations of the Company and its
Subsidiaries for borrowed money, (b) all obligations of the Company and its
Subsidiaries evidenced by bonds, debentures, notes, credit agreements or similar
instruments, or upon which interest payments are customarily made; (c) any
obligations of the Company or any of its Subsidiaries to pay the deferred
purchase price of property, goods or services (including, without limitation,
earnout obligations), except trade accounts payable arising in the ordinary
course of business; (d) all capitalized lease obligations of the Company and its
Subsidiaries (including any capitalized interest thereon); (e) all obligations
under conditional sale or other title retention agreements relating to property
purchased by the Company or any of its Subsidiaries (other than customary
reservations or retentions of title under agreements with suppliers entered into
in the ordinary course of business); (f) letters of credit issued or bankers’
acceptances facilities created for the account of the Company or any of its
Subsidiaries, in each case, to the extent drawn; (g) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by the Company or any of its Subsidiaries, whether or not the
obligations secured thereby have been assumed; provided that if the Company or
any such Subsidiary has not assumed or otherwise become liable for payment of
such Indebtedness of others, the amount of Indebtedness under this clause
(g) shall be the lesser of the amount of such Indebtedness of others and the
fair market value of such property; (h) all guarantees issued by the Company and
its Subsidiaries in respect of the obligations described in clauses (a) through
(g) above of any other Person (contingent or otherwise), in each case including
the aggregate principal amount of, and any accrued interest and applicable
prepayment charges, fees, penalties or premiums with respect to such
obligations, (i) all amounts due GenNx360 Management Company (“GenNx360
Management’) under the Management Services Agreement, dated as of March 27,
2014, among Novel Ingredient Services, LLC. Advantra Z, Inc. and GenNx360
Management, and (j) all amounts due directors of the Company in the form of
director fees, travel expenses and similar payments. Notwithstanding the
foregoing, “Indebtedness” shall not include any (i) intercompany obligations
among the Company and its Subsidiaries, specifically including any intercompany
debt or intercompany guarantees, (ii) obligations under operating leases,
(iii) obligations relating to outstanding checks, (iv) deferred lease expense,
(v) amounts included as Company Transaction Expenses, (vi) outstanding
liabilities not in excess of $248,000 associated with the Company’s December
2016 settlement concerning meter reading discrepancies, or (vi) outstanding
customer credits not in excess of $859,667 relating to periods prior to March
2014.

 

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“Intellectual Property” means all intellectual property rights arising from or
in respect of the following, whether protected, created or arising under the
Laws of the United States or any other jurisdiction or under any international
convention: all (a) patents and patent applications, including all
continuations, divisionals, continuations-in-part and provisionals and patents
issuing on any of the foregoing, and all reissues, reexaminations,
substitutions, renewals and extensions of any of the foregoing (“Patents”);
(b) trademarks, service marks, trade dress, trade names, domain names, logos,
corporate names and other source or business identifiers, and all of the
goodwill associated with any of the foregoing, and all registrations,
applications for registration, renewals and extensions for any of the foregoing
(collectively, “Marks”); (c) copyrights and copyrightable works, and all
registrations, applications for registration, renewals, extensions and
reversions of any of the foregoing (collectively, “Copyrights”); (d) Internet
domain names; and (e) trade secrets.

“In-the-Money Options” means all outstanding Company Stock Options that are
vested at the Effective Time (or that will vest at the Effective Time as a
result of consummation of the Merger), all of which are listed on Annex 1.1(b).

“Knowledge of the Company” and similar phrases mean the actual knowledge, after
reasonable inquiry, of any of Rick Antonoff and Frank Kimmerling.

“Liens” means all liens, charges, encumbrances or claims and security interests
whatsoever, including any restriction on the right to vote, sell or otherwise
dispose of Capital Stock or other ownership interests.

“Lower Target” means $17,970,000.

“Merger Consideration” means $125,000,000 plus the Closing Net Working Capital,
minus the Estimated Closing Net Working Capital, minus the Closing Indebtedness,
minus the Company Transaction Expenses, plus the Closing Cash Amount, as finally
determined pursuant to Section 3.06.

“Most Recent Balance Sheet” means the unaudited consolidated balance sheet of
the Company as of March 31, 2017.

“Net Working Capital” means the sum of, without duplication, (a) a positive
amount equal to the consolidated current assets of the Company and its
Subsidiaries and (b) a negative amount equal to the consolidated current
liabilities of the Company and its Subsidiaries, each component as calculated on
a consolidated basis using only the line items and adjustments listed on Exhibit
D and determined in accordance with GAAP and, to the extent consistent with
GAAP, using the same accounting principles, practices and methodologies as
utilized in the Audited Financial Statements, as calculated as of 11:59 pm
(Eastern Time) on the day immediately prior to the Closing Date, and for the
avoidance of doubt, not taking into account any of the transactions contemplated
hereby. Notwithstanding the foregoing, for purposes of calculating Net Working
Capital, current assets and current liabilities shall exclude (A) any
Indebtedness (but only to the extent included in the calculation of Closing
Indebtedness), (B) Company Transaction Expenses (but only to the extent paid in
accordance with Section 3.03(c)), (C) any deferred Tax assets and liabilities,
(D) current Tax assets (except as provided in the following sentence) and
(E) Cash and Cash Equivalents. Notwithstanding the foregoing, any current Tax
asset shall be included in the calculation of Net Working Capital only (i) if
such current Tax asset is a Tax refund and (ii) to the extent such current Tax
asset is a current income Tax asset that actually reduces or offsets a current

 

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income Tax liability (but not below zero); provided, however, that no current
income Tax asset in an applicable jurisdiction shall be taken into account under
clause (ii) of this sentence to the extent that it exceeds the current income
Tax liability payable in such jurisdiction. In the event the Closing Date is not
on the last day of a month, then each item included in the calculation of Net
Working Capital shall be prorated to the extent applicable as of the Closing
Date by multiplying the amount of each such item for the full calendar month by
a fraction, the numerator of which is the number of days elapsed from and
including the first day of the month in which the Closing Date occurs to and
including the Closing Date, and the denominator of which is the total number of
days in such month, provided that to the extent items may be determined on a
daily basis, such amounts will be allocated on a daily basis. Attached hereto as
Exhibit D is a sample calculation of Net Working Capital.

“Order” means any judgment, order, decree, injunction or ruling of any
Governmental Entity.

“Parent Material Adverse Effect” means any material adverse effect on the
ability of Parent or Merger Sub to consummate the Closing or to perform any of
its material obligations under this Agreement.

“Payoff Letters” means the letters provided by any Person holding Indebtedness
listed in Section 6.02 of the Company Disclosure Schedule, in such form as are
customary for transactions of the type of the Merger, setting forth the amount
of such Indebtedness and the instructions for the payment of such Indebtedness
and providing for the satisfaction and discharge of all obligations relating
thereto, automatic releases for any Liens on the assets of the Company and its
Subsidiaries relating thereto and the return of all collateral in possession of
the lenders thereunder, and the termination of all commitments and credit
documentation relating thereto, in each case upon such payment and including an
undertaking by such Person to execute other documents as may be reasonably
necessary to evidence the release of such Liens.

“Permitted Liens” means all (a) mechanics’, carriers’ materialmen’s, workmen’s,
warehousemen’s, repairmen’s and similar Liens that do not secure Indebtedness
and are for amounts not yet due or delinquent or which are being contested in
good faith by appropriate proceedings; (b) Liens for Taxes that are not yet due
and payable or that may thereafter be paid without interest or penalty or which
are being contested in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP; (c) pledges or
deposits to secure obligations under workers’ compensation or other similar Laws
or to secure public or statutory obligations, in each case incurred in the
ordinary course business; (d) pledges or deposits to secure the performance of
bids, Contracts, leases, surety or appeal bonds, performance bonds, or other
similar obligations, in each case incurred in the ordinary course of business;
(e) recorded easements, covenants, rights of way and other similar restrictions;
(f) unrecorded easements, covenants, rights of way and other similar
restrictions that do not adversely affect in any material respect the current
use of the applicable property; (g) zoning and building Laws and codes and other
similar restrictions; (h) any other Liens that will be terminated at or prior to
Closing in accordance with this Agreement; (i) Liens incurred in the ordinary
course of business securing obligations or liabilities that are not material to
the assets of the Company or its Subsidiaries and that do not constitute
Indebtedness for borrowed money or letters of credit; (j) in the case of
Intellectual Property, licenses, options to license or covenants not to assert
claims of infringement in each case entered into in the ordinary course of
business and in existence as of the date hereof from the Company or any of its
Affiliates to third parties; (k) leases, subleases, licenses or sublicenses
granted to other Persons

 

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in the ordinary course of business not materially interfering with the conduct
of the business of the Company or any of its Subsidiaries and only covering the
assets so leased, subleased, licensed or sublicensed; or (l) Liens in favor of a
banking or other financial institutions arising as a matter of law encumbering
deposits or other funds maintained with a financial institution.

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

“R&W Insurance” means the insurance coverage provided pursuant to a buyer-side
representation and warranty insurance policy purchased by and for the benefit of
Parent in connection with the transactions contemplated by the Agreement.

“Representatives” means, as to any person, its officers, directors, employees,
legal counsel, accountants, financial advisors, financing sources, consultants
and other agents and advisors.

“Reserve Amount” means $500,000.

“Shareholders” means all holders of Common Stock (excluding, for the avoidance
of doubt, holders solely of Company Stock Options) issued and outstanding as of
immediately prior to the Effective Time (excluding, for the avoidance of doubt,
the Company and any Subsidiary of the Company).

“Subsidiary” when used with respect to any Person means any corporation,
partnership, limited liability company or other organization, whether
incorporated or unincorporated, of which at least a majority of the securities,
or other interests having by their terms voting power to elect a majority of the
board of directors or others performing similar functions with respect to such
corporation or other organization, is directly or indirectly owned by such
Person or by any one or more of its subsidiaries. As used in this Agreement, a
Subsidiary of the Company shall include its direct and indirect Subsidiaries.

“Tax” or “Taxes” means (a) all federal, state, local and foreign taxes measured
by or referred to as income, gross receipts, capital gains, margin, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, escheat, real property,
personal property, ad valorem, sales, use, consumption, goods and services,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax and any similar fees, assessments, duties, levies or similar
governmental charges whatsoever in the nature of a tax, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any Governmental Entity and (b) any liability to any Governmental Entity for the
payment of any item described in clause (a) by contract or as a result of being
a member of an affiliated, consolidated, combined or unitary group for any
period, including pursuant to Treasury Regulation Section 1.1502-6 or any
analogous or similar state, local or foreign Law.

“Taxing Authority” means the Internal Revenue Service and any other Governmental
Entity responsible for the administration of any Tax.

“Tax Return” means any return, report or statement required to be filed with any
Governmental Entity with respect to Taxes, including any schedules, attachments
or amendments thereto.

 

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“Treasury Regulation” means the income tax regulations promulgated by the
Internal Revenue Service, Department of Treasury, pursuant to the Code.

“Upper Target” means $18,970,000.

Section 1.02 Additional Definitions. In addition to those terms defined in
Section 1.01, the following terms have the meaning set forth in the Sections set
forth below:

 

Acceptance Period

     3.06(c)  

Agreement

     Preamble  

Antitrust Division

     7.05(b)  

Arbitrator

     3.06(d)  

Balance Sheet Date

     4.07  

Certificate of Merger

     2.03  

Closing

     2.02  

Closing Date

     2.02  

Closing Indebtedness

     3.06(a)  

Closing Net Working Capital

     3.06(a)  

Closing Payments

     3.03  

Company

     Preamble  

Company 401(k) Plan

     7.08  

Company Benefit Plans

     4.18(b)  

Company Closing Deliverables

     3.04(b)  

Company Shareholder Agreement

     Recitals  

Company Shareholder Consent

     Recitals  

Company Stock Option

     3.01(c)  

Company Transaction Expense Direction Notice

     6.03  

Continuing Employees

     6.04(a)  

Copyrights

     1.01  

Current Representation

     10.14  

Customer

     4.22(a)  

DGCL

     Recitals  

Disputed Items

     3.06(d)  

Effective Time

     2.03  

Environmental Laws

     4.19(a)  

Environmental Permits

     4.19(c)  

ERISA Affiliate

     4.18(g)  

Estimated Closing Cash Amount

     3.02  

Estimated Closing Indebtedness

     3.02  

Estimated Closing Net Working Capital

     3.02  

Estimated Company Transaction Expenses

     3.02  

FTC

     7.05(b)  

Hazardous Material

     4.19(a)  

HSR Act

     4.05(a)  

Insurance Policies

     4.21  

Law

     4.05(b)  

Leased Real Property

     4.10  

 

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Leases

     4.10  

Licensed Intellectual Property

     4.11(b)  

Marks

     1.01  

Material Contract

     4.12(a)  

Merger

     Recitals  

Merger Sub

     Preamble  

Notice of Objection

     3.06(c)  

Outside Date

     9.01(c)  

Owned Intellectual Property

     4.11(a)  

Parent

     Preamble  

Continuing Employees

     6.04(b)  

Parent Closing Deliverables

     3.04(a)  

Parent DC Plan

     7.08  

Patents

     1.01  

Post-Closing Representation

     10.14  

Post-Closing Statement

     3.06(a)  

Pre-Closing Statement

     3.02  

Registered Intellectual Property

     4.11(a)  

Section 280G Waived Payments

     6.05(a)  

Shareholder Group

     10.14  

Shareholders’ Representative

     Preamble  

Surviving Corporation

     2.01  

Transfer Taxes

     7.02(a)  

Waiving Parties

     10.14  

Section 1.03 Interpretation.

(a) When a reference is made in this Agreement to an Article or Section, such
reference shall be to an Article or Section of this Agreement unless otherwise
indicated.

(b) The table of contents, headings and index of defined terms contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

(c) Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.” The word “will” shall be construed to have the same meaning and
effect of the word “shall.” The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
word “extent” in the phrase “to the extent” shall mean the degree to which a
subject or other thing extends, and such phrase shall not mean simply “if.” The
word “or” shall be deemed to mean “and/or.”

(d) All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant thereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term.

 

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(e) The phrase “made available,” when used in reference to anything made
available to Parent, Merger Sub or their Representatives shall be deemed to mean
uploaded to and made available to Parent, Merger Sub and their Representatives
in the on-line data room hosted on behalf of the Company in the on-line
workspace captioned “Project Thor” or otherwise delivered to Parent, Merger Sub
or their Representatives.

(f) Each of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement.

(g) Reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular capacity excludes such
Person in any other capacity or individually.

Section 1.04 Calculation of Time Period. When calculating the period of time
before which, within which, or following which, any act is to be done or step
taken pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period is a
non-Business Day, then the period in question shall end on the next succeeding
Business Day.

ARTICLE II

THE MERGER

Section 2.01 The Merger. On the Closing Date, and upon the terms and subject to
the conditions set forth in this Agreement, and in accordance with the DGCL,
Merger Sub shall be merged with and into the Company at the Effective Time. As a
result of the Merger, the separate corporate existence of Merger Sub shall cease
and the Company shall continue as the surviving corporation of the Merger
(referred to herein as the “Surviving Corporation”).

Section 2.02 Closing. Unless this Agreement shall have been terminated pursuant
to Section 9.01, and subject to the satisfaction or waiver of the conditions set
forth in ARTICLE VIII, the closing of the Merger and the other transactions
contemplated hereby (the “Closing”) shall take place at the offices of Baker
Botts L.L.P., 30 Rockefeller Plaza, New York, New York 10112 at 10:00 a.m. on a
date within five (5) Business Days immediately following the date on which all
of the conditions set forth in ARTICLE VIII are satisfied or waived (other than
those conditions that by their terms cannot be satisfied until the Closing, but
subject to the satisfaction or waiver of such conditions) or such other date or
time as may be mutually agreed in writing by Parent and the Company (the date on
which the Closing actually occurs is the “Closing Date”).

Section 2.03 Effective Time. Upon the terms and subject to the satisfaction or
waiver of the conditions set forth in this Agreement, at the Closing, the
Company shall cause the Merger to be consummated by filing with the Secretary of
State of the State of Delaware a certificate of merger (the “Certificate of
Merger”) substantially in the form of Exhibit B, in such form as required by,
and executed in accordance with the relevant provisions of, the DGCL (the date
and time of such filing, or at such later date and time as Parent and the
Company shall agree and specify in the Certificate of Merger, the “Effective
Time”).

 

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Section 2.04 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, at the Effective Time, all property rights, privileges, immunities,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, restrictions, liabilities and duties of the Company
and Merger Sub shall become the debts, restrictions, liabilities and duties of
the Surviving Corporation.

Section 2.05 Certificate of Incorporation; By-laws. The certificate of
incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable Law.
The by-laws of the Company, as in effect immediately prior to the Effective
Time, shall be the by-laws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable Law.

Section 2.06 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall, from and after the Effective Time, be the initial
directors of the Surviving Corporation, each to hold office until their
respective successors are duly elected or appointed and qualified, or until
their earlier death, resignation or removal.

Section 2.07 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Company, effective
as of the Effective Time, each to hold office in accordance with the terms of
the Surviving Company’s certificate of incorporation and bylaws.

ARTICLE III

EFFECT OF MERGER ON THE EQUITY SECURITIES OF THE CONSTITUENT ENTITIES;

EXCHANGE OF CERTIFICATES

Section 3.01 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any further action on the part of Parent, Merger Sub, the
Company or the holders of any of the following securities:

(a) Shares of Common Stock of Merger Sub. Each share of common stock, par value
$0.0001 per share, of Merger Sub issued and outstanding as of immediately prior
to the Effective Time shall automatically be converted into, and be exchanged
for, one validly issued, fully paid and non-assessable share of common stock of
the Surviving Corporation such that, immediately following the Effective Time,
Parent will be the sole and exclusive owner of the shares of all common stock of
the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any such shares shall, as of the Effective Time, evidence ownership
of such shares of common stock of the Surviving Corporation.

(b) Shares of Common Stock of the Company. Each share of Common Stock issued and
outstanding as of immediately prior to the Effective Time (excluding any shares
of Common Stock held as treasury stock or held or owned by the Company or any
Subsidiary of the Company immediately prior to the Effective Time, which shares
shall be canceled without any payment being made in respect thereof) shall
automatically be converted into the right to receive its respective portion of
the Merger Consideration set forth on the Allocation Annex and thereafter shall
no longer be outstanding and shall automatically be canceled, and shall cease to
exist after the Effective Time.

 

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(c) Treatment of Company Stock Options. As of the Effective Time, each
outstanding option to purchase shares of Common Stock (a “Company Stock Option”)
issued by the Company and vested (whether based on time or performance) as of
the Effective Time shall be cancelled and extinguished and be converted
automatically into the right to receive an amount of cash equal to (i) the
number of outstanding shares of Common Stock underlying such Company Stock
Option multiplied by (ii) the amount by which the per share consideration
determined in accordance with the Allocation Annex exceeds the per share
exercise price of such Company Stock Option payable to the former holder thereof
in accordance with the terms of this Agreement, as and when such disbursements
are required to be made less amounts required to be withheld pursuant to
applicable Law. For the avoidance of doubt, any Company Stock Option that
(i) has a per share exercise price that is greater than or equal to the per
share consideration determined in the Allocation Annex or (ii)  will not be
vested as of the Effective Time by its terms shall be cancelled as of the
Effective Time for no consideration.

Section 3.02 Pre-Closing Statement. On or prior to the fifth (5th) Business Day
preceding the Closing Date, the Company shall deliver to Parent a statement (the
“Pre-Closing Statement”) setting forth its (a) good faith estimate of Closing
Net Working Capital (“Estimated Closing Net Working Capital”), Closing
Indebtedness (“Estimated Closing Indebtedness”), Company Transaction Expenses
(“Estimated Company Transaction Expenses”) and Closing Cash Amount (“Estimated
Closing Cash Amount”) and (b) calculation of the Estimated Merger Consideration.
The Estimated Closing Net Working Capital shall be calculated using only the
same line items and adjustments listed on Exhibit D and in accordance with GAAP
and, to the extent consistent with GAAP, using the same accounting principles,
practices and methodologies as utilized in the Audited Financial Statements. The
Company shall cooperate with Parent in its review of the Pre-Closing Statement
and provide Parent with reasonable access during work hours to the relevant
books, records, work papers, facilities, employees, accountants, advisors and
other Representatives of the Company in connection with Parent’s review of the
Pre-Closing Statement. In the event that Parent disagrees with any component set
forth in the Pre-Closing Statement, the Company and Parent shall work together
in good faith to resolve any such disagreement as soon as possible after which
the Company shall redeliver the Pre-Closing Statement; provided, that, if the
Company and Parent have not reached an agreement on any component of the
Pre-Closing Statement by the anticipated Closing Date, then for purposes of the
Pre-Closing Statement, such disputed components shall be as determined in good
faith by the Company.

Section 3.03 Closing Payments. At the Closing, Parent shall make, or cause to be
made, the following payments (collectively, the “Closing Payments”) by wire
transfer of immediately available funds:

(a) to the Shareholders’ Representative, on behalf of and for the benefit of the
Shareholders, (A) the portion of the Closing Date Amount payable to holders of
Common Stock as set forth on the Allocation Annex and (B) the Reserve Amount;

(b) to an account in the name of the Company, the portion of the Closing Date
Amount payable to holders of In-the-Money Options for further distribution to
the holders of In-the-Money Options as set forth on the Allocation Annex
pursuant to the payroll system of the Surviving Corporation (and the Surviving
Corporation shall ensure that such portion of the Closing Date Amount is
promptly distributed to such holders of In-the-Money Options pursuant to its
payroll system);

 

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(c) to the Person or Persons entitled thereto pursuant to the Company
Transaction Expense Direction Notice, the applicable portion of the Estimated
Company Transaction Expenses in the amounts and to the account or accounts
designated therein, on behalf and for the account of the Company;

(d) to the Persons or Persons entitled thereto pursuant to the Payoff Letters,
the applicable portion of the Estimated Closing Indebtedness specified in such
Payoff Letters, to the account or accounts designated therein; and

(e) to the Escrow Agent, the Escrow Amount as provided in Section 3.07, which
shall be held by the Escrow Agent in accordance with the terms of the Escrow
Agreement.

Section 3.04 Closing Deliverables.

(a) At the Closing, Parent shall deliver, or cause to be delivered, the
following (collectively, the “Parent Closing Deliverables”):

(i) Secretary’s Certificate. A certificate, dated as of the Closing Date and
executed on behalf of the Secretary of the Merger Sub and Parent certifying,
among other things, (A) the incumbency of all officers of Merger Sub and Parent
having authority to execute and deliver this Agreement and the agreements and
documents contemplated hereby and (B) the resolutions of the board of Merger Sub
and Parent approving the Merger and adopting this Agreement and the Merger
Certificate, attached to such certificate, are true and correct.

(ii) Officer’s Certificates. Certificates executed by an officer of each of
Parent and Merger Sub certifying that each of Parent and Merger Sub has
satisfied the conditions set forth in Section 8.03(a) and Section 8.03(b).

(iii) Escrow Agreement. A counterpart of the Escrow Agreement executed by
Parent.

(b) At the Closing, the Company shall deliver, or cause to be delivered, the
following (collectively, the “Company Closing Deliverables”):

(i) Secretary’s Certificate. A certificate, dated as of the Closing Date and
executed on behalf of the Secretary of the Company certifying, among other
things, (A) the incumbency of all officers of the Company having authority to
execute and deliver this Agreement and the agreements and documents contemplated
hereby and (B) the resolutions of the board of the Company approving the Merger
and adopting this Agreement and the Merger Certificate, attached to such
certificate, are true and correct.

(ii) Certificate of Good Standing. A certificate from the Secretary of State of
the State of Delaware dated within five (5) Business Days prior to the Closing
Date certifying that the Company is in good standing under the laws of the State
of Delaware.

(iii) FIRPTA Certificate. A Certificate executed by an officer of the Company,
in form reasonably acceptable to Parent, that satisfies the requirements of
Treasury Regulation Section 1.1445-2(c)(3).

 

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(iv) Officer’s Certificate. A certificate executed by an officer of the Company
certifying that the Company has satisfied the conditions set forth in Section
8.02(a), Section 8.02(b) and Section 8.02(c).

(v) Shareholder Consent and Shareholder Agreement. Executed counterparts of the
Company Shareholder Consent and Company Shareholder Agreements.

(vi) Escrow Agreement. A counterpart of the Escrow Agreement executed by the
Shareholders’ Representative.

Section 3.05 Exchange of Certificates; Withholding.

(a) Stock Certificates. At the Closing, each of the Shareholders shall deliver
to Parent all original certificate(s) evidencing the shares of Common Stock held
of record or beneficially by such Shareholder, duly endorsed or accompanied by
duly executed stock transfer powers. The Shareholders’ Representative shall
deliver or cause to be delivered to such Shareholder on the Closing Date by wire
transfer of immediately available funds, the portion of the Estimated Merger
Consideration payable to such Shareholder calculated in accordance with the
Allocation Annex.

(b) Withholding Taxes. Parent, the Surviving Corporation or the Shareholders’
Representative shall be entitled to deduct or withhold from any amounts payable
pursuant to this Agreement to any Person such amounts as Parent, the Surviving
Corporation or the Shareholders’ Representative, as the case may be, is required
to deduct and withhold with respect to the making of such payment under the Code
or any provision of state, local, or non-U.S. Tax law. To the extent that
amounts are so withheld by Parent, the Surviving Corporation or the
Shareholders’ Representative, they shall be paid over to the appropriate
Governmental Entity, and such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to such Person in respect of which such
deduction and withholding was made by Parent, the Surviving Corporation or the
Shareholders’ Representative, as the case may be. Notwithstanding the foregoing,
to the extent Parent or the Surviving Corporation determines that it may need to
deduct and withhold any Tax on any payments made pursuant to this Agreement
(other than with respect to amounts treated as wages or compensation for U.S.
federal income Tax purposes), Parent or the Surviving Corporation, as
applicable, shall provide reasonable notice to the Shareholders’ Representative
and the parties shall cooperate in good faith to reduce or eliminate any such
withholding to the extent permitted under applicable Law.

Section 3.06 Post-Closing Adjustment.

(a) As soon as practicable but in no event later than the sixtieth (60th) day
following the Closing Date, the Chief Financial Officer of Parent shall deliver
to the Shareholders’ Representative a statement (the “Post-Closing Statement”)
setting forth Parent’s good faith calculation of the (w) Company Transaction
Expenses, (x) Net Working Capital as of 11:59 PM (Eastern Time) on the Business
Day immediately preceding the Closing Date (“Closing Net Working Capital”),
(y) aggregate amount of all Indebtedness of the Company as of 11:59 PM (Eastern
Time) on the Business Day immediately preceding the Closing Date (“Closing
Indebtedness”) and (z) the Closing Cash Amount. The Closing Net Working Capital
shall be calculated using only the same line items and adjustments used listed
on Exhibit D and determined in accordance with GAAP and, to the extent
consistent with GAAP, using the same accounting principles, practices and
methodologies as utilized in the Audited Financial Statements.

 

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(b) Parent shall provide to the Shareholders’ Representative such back-up or
supporting data relating to the preparation of the Post-Closing Statement as the
Shareholders’ Representative may reasonably request. Parent shall provide, and
cause the Surviving Corporation to provide, the Shareholders’ Representative and
its Representatives with reasonable access to the Surviving Corporation’s
auditors and accounting and other personnel and to the relevant books and
records of the Surviving Corporation and its Subsidiaries, and any other
relevant document or information reasonably requested by the Shareholders’
Representative for all purposes of this Section 3.06, including in order to
allow the Shareholders’ Representative and its Representatives to prepare the
Notice of Objection and participate in the resolution of any items set forth in
a Notice of Objection.

(c) If the Shareholders’ Representative has any objections to the Post-Closing
Statement or any of the amounts set forth therein, it shall deliver to Parent a
written statement (a “Notice of Objection”) describing the nature of any such
objection in reasonable detail, not later than thirty (30) days after its
receipt of the Post-Closing Statement (such thirty (30) day period, the
“Acceptance Period”). After the end of the Acceptance Period, the Shareholders’
Representative may not introduce additional objections with respect to any item
in the Post-Closing Statement or increase the amount of any objection set forth
in the Notice of Objection, and any item not so identified in the Notice of
Objection shall be deemed to be agreed to by the Shareholders’ Representative
and will be final and binding upon all of the parties to this Agreement. If the
Shareholders’ Representative fails to deliver a Notice of Objection within the
Acceptance Period, the Post-Closing Statement and the amounts set forth therein
shall be deemed to have been accepted by the Shareholders’ Representative and
shall be binding upon all of the parties to this Agreement for all purposes
hereof. If the Shareholders’ Representative delivers a Notice of Objection to
Parent within the Acceptance Period, the Shareholders’ Representative and Parent
shall endeavor in good faith to resolve the Shareholders’ Representative’s
objections within the twenty (20) day period following the delivery of the
Notice of Objection. Within ten (10) days of delivery by the Shareholders’
Representative of the Notice of Objection, (i) if the aggregate amount disputed
in the Notice of Objection is less than the aggregate amount claimed to be due
Parent in the Closing Statement, Parent and the Shareholders’ Representative
shall provide joint written instructions to the Escrow Agent to deliver promptly
from the Escrow Account an amount equal to such difference to Parent, and
(ii) if after making such payment to Parent, the balance of the Escrow Account
exceeds the aggregate amount disputed in the Notice of Objection, Parent and the
Shareholders’ Representative shall provide joint written instructions to the
Escrow Agent to deliver promptly from the Escrow Account an amount equal to such
excess to the Shareholders’ Representative.

(d) In the event that a written agreement resolving all of the Shareholders’
Representative’s objections has not been reached within the twenty (20) day
period (or such longer period as may be agreed by Parent and the Shareholders’
Representative) after the delivery of the Notice of Objection, the resolution of
all unresolved items (“Disputed Items”) shall be submitted for final and binding
resolution to Deloitte LLP or, if Deloitte LLP is unable or unwilling to serve,
another internationally recognized accounting firm mutually acceptable to Parent
and the Shareholders’ Representative (the “Arbitrator”) and the following
procedures will apply:

(i) The Shareholders’ Representative and Parent shall use their commercially
reasonable efforts to cause the Arbitrator to render a decision in accordance
with this Section 3.06(d), along with a statement of reasons therefor, within
sixty (60) days of the submission of the Disputed Items, or a reasonable time
thereafter. The decision of the Arbitrator shall be final and binding upon each
party hereto and the decision of the Arbitrator shall constitute an arbitral
award that is final, binding and non-appealable and upon which a judgment may be
entered by a court having jurisdiction thereover.

 

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(ii) In the event the Shareholders’ Representative and Parent submit any
Disputed Items to the Arbitrator for resolution, the Shareholders’
Representative and Parent shall each pay their own costs and expenses incurred
under this Section 3.06(d). The Shareholders’ Representative shall be
responsible for that fraction of the fees and costs of the Arbitrator equal to
(1) the absolute value of the difference between the Shareholders’
Representative’s aggregate position with respect to the Disputed Items and the
Arbitrator’s final determination with respect to the Disputed Items over (2) the
absolute value of the difference between the Shareholders’ Representative’s
aggregate position with respect to the Disputed Items and Parent’s aggregate
position with respect to the Disputed Items, and Parent shall be responsible for
the remainder of such fees and costs.

(iii) The Arbitrator shall act as an arbitrator to determine, based upon the
provisions of this Section 3.06(d), only the Disputed Items and the
determination of each amount of the Disputed Items shall be made in accordance
with the procedures set forth in Section 3.06(d) and, in any event, shall be no
less than the lesser of the amount claimed by either Parent or the Shareholders’
Representative, and shall be no greater than the greater of the amount claimed
by either Parent or the Shareholders’ Representative.

(e) If, following the final determination procedures set forth in Section
3.06(c) and (d):

(i) the Adjustment Amount is zero or a positive number:

(A) Parent and the Shareholders’ Representative shall provide joint written
instructions to the Escrow Agent to deliver promptly all of the funds contained
in the Escrow Account to the Shareholders’ Representative for payment to the
Shareholders and to an account in the name of the Surviving Corporation for
further distribution to the holders of In-the-Money Options pursuant to the
payroll system of the Surviving Corporation, in each case, pro rata in
accordance with the Allocation Annex; and

(B) Parent shall pay an amount equal to the Adjustment Amount to the
Shareholders’ Representative for payment to the Shareholders and to an account
in the name of the Surviving Corporation for further distribution to the holders
of In-the-Money Options pursuant to the payroll system of the Surviving
Corporation, in each case, pro rata in accordance with the Allocation Annex.

(ii) the Adjustment Amount is a negative number, then Parent and the
Shareholders’ Representative shall provide joint written instructions to the
Escrow Agent to deliver promptly from the Escrow Account all of the funds
contained therein as follows:

(A) to Parent, an amount equal to the lesser of: (x) the balance of the Escrow
Account, or (y) the absolute value of the Adjustment Amount; and

(B) to the extent any funds remain in the Escrow Account after giving effect to
the payment in (A) above, such remaining funds to the Shareholders’
Representative for payment to the Shareholders and to an account in the name of
the Surviving Corporation for further distribution to the holders of
In-the-Money Options pursuant to the payroll system of the Surviving
Corporation, in each case, pro rata in accordance with the Allocation Annex; and

 

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(iii) the absolute value of the Adjustment Amount exceeds the balance of the
Escrow Account, Parent shall be deemed to have irrevocably waived its right to
recover such excess adjustment amount.

(f) Any amounts payable pursuant to this Section 3.06 shall be paid (or joint
instruction to the Escrow Agent shall be provided) within five (5) Business Days
after final determination pursuant to this Section 3.06 of the Post-Closing
Statement, by wire transfer of immediately available funds to an account
designated by the party receiving such payment.

Section 3.07 Escrow Amount. For the purpose of securing the obligations of the
Shareholders’ Representative under Section 3.06, at the Closing, Parent shall
deliver $5,000,000 in cash (the “Escrow Amount”) to the Escrow Agent by wire
transfer of immediately available funds to an account (the “Escrow Account”)
that will be designated and administered by the Escrow Agent pursuant to the
Escrow Agreement. The Escrow Agreement will provide, among other things, that
all amounts in the Escrow Account will be released in accordance with the
provisions of Section 3.06.

Section 3.08 Closing of Company Stock Transfer Books. At the Effective Time, the
Company’s stock transfer books shall be closed and no transfer of Common Stock
shall thereafter be made. At the Effective Time, by virtue of the Merger and
without any further action on the part of the Shareholders, the Company, Parent
or the Merger Sub, all shares of Common Stock shall be cancelled and
extinguished, and each certificate, book-entry share or instrument previously
representing such shares of Common Stock shall represent only the right to
receive its relevant portion of the consideration pursuant to this ARTICLE III.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Merger Sub as follows:

Section 4.01 Corporate Organization. The Company and each of its Subsidiaries is
duly organized, validly existing and in good standing or active under the Laws
of the jurisdiction of its organization and has the requisite power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted. The Company and each of its Subsidiaries
is duly qualified to do business in each jurisdiction in which the nature of the
business conducted by it or the character or location of the properties and
assets owned or leased by it makes such qualification necessary, except where
the failure to be so qualified would not reasonably be expected to have a
Company Material Adverse Effect. The copies of the certificates of incorporation
and by-laws or similar organizational documents of the Company and its
Subsidiaries, in the forms made available to Parent and Merger Sub, are true,
complete and correct copies of such documents as in effect as of the date of
this Agreement. The Company’s minute books, true and complete copies of which
have been made available to Parent, reflect in all material respects the actions
taken at all meetings of directors and shareholders of the Company since
January 1, 2014.

Section 4.02 Subsidiaries. Section 4.02 of the Company Disclosure Schedule sets
forth (a) the name of each direct and indirect Subsidiary of the Company,
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such Subsidiary, and (c) a description of the number and type of the authorized
and outstanding equity interests or securities of each direct and indirect
Subsidiary. All of the outstanding shares of Capital Stock of each Subsidiary of
the Company has been validly issued and, to the extent applicable, are fully
paid and nonassessable.

Section 4.03 Capitalization; Ownership; Indebtedness.

(a) As of the date hereof, the authorized Capital Stock of the Company consists
solely of 10,000,000 shares of Common Stock.

(b) As of the date hereof, (i) 3,785,000 shares of Common Stock were issued and
outstanding, (ii) no shares of Common Stock were issued and held by the Company
or by Subsidiaries of the Company, (iii) 600,000 shares of Common Stock were
reserved for issuance upon exercise of outstanding Company Stock Options, (iv) 0
shares were reserved for issuance upon exercise of Company Stock Options
available for grant under the Company Stock Plan. Section 4.03(b) of the Company
Disclosure Schedule sets forth the name and number of shares of Common Stock and
Company Stock Options beneficially owned or held of record by any Person.

(c) All of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. As of the
date of this Agreement and except as set forth in Section 4.03(b) of the Company
Disclosure Schedule, there are not any subscriptions, options, warrants, calls,
rights, commitments or agreements of any character calling for the purchase or
issuance of any securities of the Company or any Subsidiary, or requiring
payments based on or related to the value of any securities of the Company or
any Subsidiary, including any securities representing the right to purchase or
otherwise receive any other securities of the Company or any Subsidiary.

(d) There are no issued or outstanding bonds, debentures, notes or other
Indebtedness of the Company or any of its Subsidiaries that have the right to
vote (or that are convertible into other securities having the right to vote) on
any matters on which shareholders may vote. Except for the items set forth in
Section 4.03(d) of the Company Disclosure Schedule, no Indebtedness of the
Company or any of its Subsidiaries contains any restriction (other than
customary notice provisions) upon (i) the prepayment of any indebtedness of the
Company or any of its Subsidiaries, (ii) the incurrence of indebtedness by the
Company or any of its Subsidiaries, or (iii) the ability of the Company or any
of its Subsidiaries to grant any Lien on the properties or assets of the Company
or any of its Subsidiaries.

Section 4.04 Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and, subject to the filing of
the Certificate of Merger pursuant to the DGCL, to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this Agreement, and the consummation of the transactions contemplated hereby,
have been duly and validly authorized and approved by the board of directors and
shareholders of the Company, and no other action on the part of the Company is
necessary to authorize the execution and delivery by the Company and of this
Agreement and the consummation by the Company and of the transactions
contemplated hereby. This Agreement (a) has been duly and validly executed and
delivered by the Company and (b) assuming due and valid authorization, execution
and delivery hereof by the other parties hereto, constitutes a valid and binding
obligation of the Company and enforceable against it in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar Laws affecting or relating to the
enforcement of creditors’ rights generally and (ii) is subject to general
principles of equity.

 

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Section 4.05 Consents and Approvals; No Violations.

(a) Except for (i) filings, permits, authorizations, consents and approvals as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the “HSR Act”), and any other Antitrust Laws, (ii) the filing of the
Certificate of Merger as required by the DGCL and (iii) as set forth in Section
4.05(a) of the Company Disclosure Schedule, no consents or approvals of, or
filings, declarations or registrations with, any Governmental Entity are
necessary for the consummation by the Company and its Subsidiaries of the
transactions contemplated hereby, other than such other consents, approvals,
filings, declarations or registrations that, if not obtained, made or given,
would not, individually or in the aggregate, reasonably be expected to result in
a Company Material Adverse Effect.

(b) Subject to the filing of the Certificate of Merger as required by the DGCL,
none of the execution and delivery of this Agreement by the Company, the
consummation by the Company and its Subsidiaries of the transactions
contemplated hereby or compliance by the Company and its Subsidiaries with any
of the terms or provisions hereof, will (i) conflict with or violate any
provision of the certificate of incorporation or by-laws of the Company,
(ii) conflict with or violate any provision of the certificate of incorporation,
by-laws or other organizational or governing documents of any of the Company’s
Subsidiaries or (iii) assuming that the authorizations, consents and approvals
referred to in Section 4.05(a) are duly obtained in accordance with applicable
Law, (x) violate any statute, code, ordinance, rule, regulation, treaty,
convention, judgment, order, writ, decree or injunction of any Governmental
Entity (a “Law”) applicable to the Company or its Subsidiaries or (y) violate,
conflict with, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under or result in the termination of
any Contract to which the Company or any of its Subsidiaries is a party, or by
which any of them or any of their respective properties or assets is bound,
except, with respect to clause (iii), for such violations, conflicts, breaches,
defaults, terminations which, individually or in the aggregate, would not
reasonably be expected to result in a Company Material Adverse Effect.

Section 4.06 Financial Statements. The Financial Statements have been provided
to Parent. The Financial Statements are based upon the information contained in
the books and records of the Company and its Subsidiaries, are prepared in
conformity with GAAP in all material respects, and present fairly in all
material respects the consolidated financial condition and results of operations
of the Company and its Subsidiaries as of the times and for the periods referred
to therein and the consolidated results of their operations and their
consolidated cash flows for the periods then ended, subject in the case of the
unaudited financial statements to (i) the absence of footnote disclosures and
(ii) changes resulting from normal year-end adjustments.

Section 4.07 No Undisclosed Liabilities. Except as set forth in Section 4.07 of
the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
has any debt or other liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise, and including any liabilities relating to
product liability, product recall or warranty claims) other than liabilities and
obligations (a) incurred in the ordinary course of business since March 31, 2017
(the “Balance Sheet Date”), (b) incurred or to be incurred in connection with
(but not in violation of) this Agreement or any transaction or agreement
contemplated by this Agreement or (c) that would not, individually or in the
aggregate, reasonably be expected to result in a Company Material Adverse
Effect.

 

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Section 4.08 Absence of Certain Changes. Since the Balance Sheet Date the
Company and its Subsidiaries have conducted their businesses in the ordinary
course of business and in a manner consistent with past practice (except as
required by this Agreement) and none of the following has occurred with respect
to the Company or any of its Subsidiaries: (i) any event, change, effect or
occurrence that has constituted a Company Material Adverse Effect; (ii) any
distribution, sale or transfer of, or entry into any Material Contract to
distribute, sell or transfer, any of its properties or other assets, other than
in the ordinary course of business; (iii) any change in its operations or
accounting that in the aggregate are material to the Company or any Subsidiary;
(iv) any material damage, destruction or other casualty loss, in excess of
applicable insurance coverage limits; (v) any labor dispute, other than routine
grievances; and (vi) any event or action that, if it had taken place after the
execution of this Agreement, would not have been permitted by Section 6.01.

Section 4.09 Personal Property. The Company and its Subsidiaries own good and
marketable title to, or hold a valid leasehold interest in, all of the material
personal property used by them in the conduct of their business, free and clear
of all Liens, except for Permitted Liens. Each such item of material personal
property necessary for the operation or conduct of the businesses of the Company
and its subsidiaries as conducted on the date hereof is in operable condition
and repair, subject to normal wear and tear, ongoing repairs or refurbishments
in the ordinary course of business and obsolescence in the ordinary course of
business, and is suitable for the purpose for which it is used by the Company
and its Subsidiaries.

Section 4.10 Real Property. Section 4.10 of the Company Disclosure Schedule
lists all leased real property of the Company and its Subsidiaries (the “Leased
Real Property”). Other than such exceptions as would not reasonably be expected
to result in a Company Material Adverse Effect, the Company or one or more of
its Subsidiaries holds a valid and binding leasehold interest in the Leased Real
Property, in each case, in accordance with the provisions of the applicable
lease agreement and any amendments thereto (the “Leases”), free and clear of all
Liens, except for Permitted Liens. Other than such exceptions as would not
reasonably be expected to result in a Company Material Adverse Effect, all of
the Leases to which the Company and/or any Subsidiary of the Company is a party
are in full force and effect and grant the leasehold estates or rights of
occupancy or use they purport to grant. Other than the leasehold interests in
the Leased Real Property, neither the Company nor any of its Subsidiaries owns
any interest in any parcel or parcels of real property.

Section 4.11 Intellectual Property.

(a) Section 4.11(a) of the Company Disclosure Schedule lists all registered
Patents, Marks and Copyrights and pending applications for registration of
Patents, Marks and Copyrights owned, filed or applied for by the Company or any
of its Subsidiaries, in each case, that are material to the conduct of the
Company’s business (collectively, the “Registered Intellectual Property”). The
Company or its Subsidiaries own exclusively all right, title and interest in
each item of its Registered Intellectual Property that the Company or one of its
Subsidiaries owns (collectively, “Owned Intellectual Property”) free and clear
of Liens except for Permitted Liens. Since January 1, 2014, no Person has
challenged in a writing received by the Company or any of its Subsidiaries, the
validity or enforceability of the Registered Intellectual Property or the rights
of the Company or any of its Subsidiaries to continued use of the Owned
Intellectual Property; and to the Knowledge of the Company, no third party is
infringing or otherwise violating the Owned Intellectual Property.

 

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(b) Except for matters that would not, individually or in the aggregate,
reasonably be expected to result in a Company Material Adverse Effect, with
respect to proprietary rights that are licensed by the Company or one of its
Subsidiaries (the “Licensed Intellectual Property”): (i) the Company or a
Subsidiary of the Company holds a good and valid leasehold interest in each item
of its Licensed Intellectual Property, free and clear of Liens, except for
Permitted Liens and the terms and conditions of the license or other agreement
applicable to use of such Licensed Intellectual Property); and (ii) since
January 1, 2014, no Person has challenged in a writing received by the Company
or any of its Subsidiaries, the Company’s use of any of the Licensed
Intellectual Property or the rights of the Company or any Subsidiary of the
Company to continued use of the Licensed Intellectual Property.

(c) To the Knowledge of the Company (without conducting any investigation), the
conduct of the business by the Company and its Subsidiaries as presently
conducted does not infringe, violate or constitute an unauthorized use or
misappropriation of any proprietary rights of any Person (including pursuant to
any non-disclosure agreements or obligations to which the Company or any of its
Subsidiaries or any of their present or former employees is a party). Except as
described in Section 4.11(c) of the Company Disclosure Schedule, since
January 1, 2014, no claim, action, suit or proceeding has been made or asserted,
or to the Knowledge of the Company, threatened or is pending, against the
Company or any of its Subsidiaries, alleging that any of the services provided
or products manufactured or sold, or Intellectual Property used, are being
provided, manufactured, sold or used in violation of any intellectual property
rights of any third person.

Section 4.12 Contracts.

(a) Section 4.12(a) of the Company Disclosure Schedule lists all of the
following Contracts (each, a “Material Contract”) in effect as of the date of
this Agreement to which the Company or any of its Subsidiaries is a party to or
is expressly bound:

(i) loan agreements, promissory notes, indentures, bonds, guarantees or
obligations for borrowed money or other instruments involving Indebtedness,
hedging instruments, off-balance sheet obligations (such as synthetic leases) or
obligations of a partnership or unincorporated joint venture for which the
Company may be liable as general partner or joint venturer of, or held by, the
Company or any of its Subsidiaries in excess of $200,000;

(ii) partnership, joint venture or other similar agreement or arrangement with
any Person that is not wholly owned by the Company;

(iii) agreements containing (A) any covenant or provision prohibiting the
Company or any of its Subsidiaries from engaging in any line or type of business
or (B) any exclusivity, most-favored-nation or similar provision;

(iv) Contracts for the acquisition or sale, directly or indirectly (by merger or
otherwise), of assets or the securities of another Person, other than in the
ordinary course of business, that either (A) was entered into within the last
three years or (B) has any material ongoing obligations thereunder;

(v) Contracts for the employment of any officer, individual employee or other
Person on a full-time, part-time, consulting or other basis providing annual
compensation in excess of $150,000 (other than standard offer letters);

 

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(vi) Customer Contracts involving payments in excess of $500,000 per year (other
than purchase orders in the ordinary course of business consistent with past
practice);

(vii) any Contract relating to capital expenditures with respect to the Company
and involving future payments which exceed $100,000 in any 12-month period;

(viii) leases pursuant to which personal property is leased to or from the
Company requiring payments in excess of $100,000 per year;

(ix) Contracts providing for indemnification obligations in favor of any Person
(other than any indemnification provisions that will be for the benefit of the
Company or any of its Subsidiaries after the Closing), other than customary
indemnification provisions contained in contracts entered into in the ordinary
course of business and pursuant to which no claims for indemnification are
outstanding;

(x) Contracts (other than those listed in clause (vi) above) that are reasonably
likely to require payments by the Company or any of its Subsidiaries in excess
of $500,000 in any one (1) year, other than Contracts that are terminable by the
Company or any of its Subsidiaries on sixty (60) days’ notice or less without
obligation to make any material payment;

(xi) Contracts that are reasonably likely to require payments to the Company or
any of its Subsidiaries in excess of $500,000 in any one (1) year other than
Customer Contracts and purchase orders in the ordinary course of business
consistent with past practice; or

(xii) Contracts with any investment bank or financial advisor or similar
arrangements whether in connection with the transactions contemplated hereby or
otherwise.

(b) The Company has made available to Parent a copy of each Material Contract
(including all amendments thereto). Except as set forth in Section 4.12(b) of
the Company Disclosure Schedule, each Material Contract (i) constitutes a valid
and binding obligation of the Company and/or its Subsidiaries, as applicable,
and, to the Knowledge of the Company, constitutes a valid and binding obligation
of the other parties thereto and (ii) to the Knowledge of the Company, is in
full force and effect. To the Knowledge of the Company, no party to any Material
Contract is in breach thereof or default thereunder.

Section 4.13 Related Party Agreements. Except as set forth in Section 4.13 of
the Company Disclosure Schedule and except for payment of salaries and benefits
to employees in the ordinary course of business, (a) neither the Company nor any
of its Subsidiaries is a party to any Contract or other agreement, written or
oral, (i) to which any of their respective officers, directors, managers,
members or Shareholders are also a party, (ii) to which any of their respective
officers, directors, managers, members or Shareholders is a beneficiary or
(iii) to which any transaction contemplated thereby properly would be
characterized (without regard to the amount involved) as a related party
transaction for purposes of applying the disclosure requirements of GAAP or
Item 404(a) of Regulation S-K promulgated by the Securities and Exchange
Commission, as if they were applicable to the financial statements of the
Company, and (b) no officer, director, manager, member or Shareholder of the
Company or any of its Subsidiaries is indebted to the Company or any of its
Subsidiaries or, to the Knowledge of the Company, has any direct or indirect
ownership interest in any property used by or any contractual business
relationship with, the Company or any of its Subsidiaries, or any Person with
which the Company or any of its Subsidiaries has a material business
relationship.

 

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Section 4.14 Compliance with Applicable Law; Permits. Except as set forth in
Section 4.14 of the Company Disclosure Schedule, since January 1, 2014, the
Company and each of its Subsidiaries has conducted its respective businesses in
all material respects in accordance with applicable federal, state, local,
foreign and territorial Laws and Orders and other requirements of any
Governmental Entity, except for: (i) violations relating to employee, labor and
benefits matters, which are covered by Section 4.17 and Section 4.18,
(ii) violations relating to Environmental Laws, which are covered by Section
4.19, and (iii) violations relating to Taxes, which are covered by Section
4.20. To the Knowledge of the Company, no investigation or review by any
Governmental Entity concerning any such possible violation of Law is pending or
threatened. The Company and each of its Subsidiaries holds all licenses,
permits, registrations and other authorizations required to conduct its
business, and all such licenses, permits, registrations and other authorizations
are valid and in full force and effect, except for those the absence of which
would not, individually or in the aggregate, reasonably be expected to
constitute a Company Material Adverse Effect. Except as would not materially and
adversely impact the Company’s or any of its Subsidiaries’ ability to carry on
its business as presently conducted, the Company and each of its Subsidiaries is
in compliance with all such licenses, permits, registrations and other
authorizations. The Company has received no written notice from a Governmental
Entity that any such license, permit, registration or other authorization will
be terminated or impaired or become terminable or impaired, in whole or in part,
as a result of the transactions contemplated hereby.

Section 4.15 Anti-Corruption Laws.

(a) Neither the Company nor any of its Subsidiaries has and, to the Knowledge of
the Company, no officer, director, agent, employee or other Person acting on
behalf of the Company or any of its Subsidiaries has, directly or indirectly,
made or offered any payment or transfer of anything of value to any government
official or officer, director, or employee of any government department or
instrumentality; any officer, director, employee, or agent of a customer; any
candidate for political office, political party or campaign; or any official or
employee of any public international organization to obtain or retain business
or to secure an improper or undue advantage in violation of any provision of any
anti-corruption or anti-money laundering Law, rule, or regulation in any
jurisdiction, including, but not limited to, the Foreign Corrupt Practices Act
of 1977, as amended, the Travel Act, the USA PATRIOT Act, as amended and the
U.S. Trading with the Enemy Act, as amended.

(b) Except as set forth in Section 4.15(b) of the Company Disclosure Schedule,
(i) there are no legal proceedings relating to anti-corruption or anti-money
laundering Laws pending or, to the Knowledge of the Company, threatened against
the Company or any of its Subsidiaries and (ii) neither the Company nor any of
its Subsidiaries has settled any legal proceedings relating to any
anti-corruption or anti-money laundering Law since January 1, 2014.

Section 4.16 Litigation. Except as set forth in Section 4.16 of the Company
Disclosure Schedule, (a) there are no claims, suits, actions, proceedings or
arbitrations pending or, to the Knowledge of the Company, threatened in writing
against the Company or its Subsidiaries, the outcome of which, if adversely
decided, would reasonably be expected to result in damages of more than
$250,000, and (b) there is no Order outstanding against the Company or its
Subsidiaries that has resulted or would reasonably be expected to result in a
Company Material Adverse Effect.

 

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Section 4.17 Labor.

(a) Except as set forth in Section 4.17(a) of the Company Disclosure Schedule,
no written charge or complaint of employment discrimination or other similar
charge or complaint has been filed against the Company or any of its
Subsidiaries since January 1, 2016, or is pending or, to the Knowledge of the
Company, threatened.

(b) Neither the Company nor any of its Subsidiaries is a party to or bound by
any labor agreement, collective bargaining agreement, work rules or practices or
any other material labor-related agreements or arrangements with any labor
union, labor organization, employee organization or works counsel.

(c) Except as disclosed in Section 4.17(c) of the Company Disclosure Schedule,
the Company and its Subsidiaries are in material compliance with all applicable
Laws relating to (i) employment and employment practices and (ii) terms and
conditions of employment, health and safety, wages and hours, child labor,
immigration, employment discrimination, disability rights or benefits, equal
opportunity, plant closures and layoffs, affirmative action, workers’
compensation, labor relations, employee leave issues and unemployment insurance.

Section 4.18 Employee Matters.

(a) Section 4.18(a) of the Company Disclosure Schedule contains a list of the
name, employee identification number, job title, country of employment, hire
date and hourly rate or annual base salary of each officer and employee of the
Company or any of its Subsidiaries as of the date of this Agreement.

(b) Section 4.18(b) of the Company Disclosure Schedule contains a list of
(i) all material “employee benefit plans,” as defined in Section 3(3) of ERISA,
whether or not subject to ERISA and whether or not maintained in the United
States or another jurisdiction, and (ii) all other material severance or other
termination, bonus or other incentive compensation, change of control, profit
sharing, equity based compensation, deferred compensation or other employee
benefit plan, fund or arrangement maintained or contributed to or required to be
contributed to, by or on behalf of the Company or any of its Subsidiaries for
the benefit or welfare of any director, officer, employee, or former employee of
the Company or any of its Subsidiaries (such plans and arrangements being
collectively, the “Company Benefit Plans”).

(c) Each of the Company Benefit Plans is in material compliance with all
applicable Laws. There are no pending or, to the Knowledge of the Company,
threatened claims (other than routine claims for benefits or immaterial claims)
by, on behalf of or against any of the Company Benefit Plans or any trusts
related thereto.

(d) With respect to each Company Benefit Plan, the Company has heretofore made
available to Parent true, correct and complete copies of each such Company
Benefit Plan and any amendments thereto, and to the extent applicable, any
related trust or other funding vehicle, the latest version of any annual report
on Form 5500 filed with the IRS with respect to each Company Benefit Plan (if
any such report was required) with all required attachments and the most recent
summary plan description (if required) and summaries of material modification
with respect to any Company Benefit Plan for which a summary plan description is
required and the most recent determination letter received from the Internal
Revenue Service with respect to each Company Benefit Plan intended to qualify
under Section 401(a) of the Code.

 

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(e) Each Company Benefit Plan has been operated and administered, in all
material respects, in accordance with its terms and, with respect to the Company
Benefit Plans, the requirements of ERISA and the Code. No event has occurred
with respect to any Company Benefit Plan that would reasonably be expected to
result in payment or assessment by or against the Company or any of its
Subsidiaries or ERISA Affiliates (as defined below) of any Taxes under Sections
4972, 4975, 4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code.

(f) Each Company Benefit Plan that is intended to be qualified within the
meaning of Section 401(a) of the Code has received a favorable opinion letter
from the Internal Revenue Service and no circumstances exist which could
reasonably be expected to result in material liability to the Company or its
Subsidiaries in respect of such qualified status. There are no pending or, to
the Knowledge of the Company, threatened claims (other than routine claims for
benefits or immaterial claims) by, on behalf of or against any of the Company
Benefit Plans or any trusts related thereto.

(g) Neither the Company nor any of its Subsidiaries or any of their respective
ERISA Affiliates maintains, sponsors, contributes to or has any liability with
respect to, or, within the past six years, has maintained, sponsored or
contributed to, any plan that is or was subject to Title IV of ERISA. “ERISA
Affiliate” means, with respect to any person, any trade or business, whether or
not incorporated, that together with such Person would be deemed a “single
employer” within the meaning of Section 4001(a)(15) of ERISA.

(h) None of the Company Benefit Plans provide for post-employment retiree life
or health insurance, benefits or coverage for any participant or any beneficiary
of a participant who performs or performed services principally within the
United States, except as may be required under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended or similar state Laws.

(i) To the Knowledge of the Company (i) at all times since January 1, 2005, all
Company Benefit Plans that are subject to Section 409A of the Code have been
operated in a manner that materially complies with Section 409A of the Code,
(ii) all Company Benefit Plans that were in effect prior to January 1, 2009 were
validly amended no later than December 31, 2008 to become in material
documentary compliance with Section 409A of the Code and (iii) all new Company
Benefit Plans that were established after December 31, 2008 have, since their
inceptions, been in material documentary compliance with Section 409A of the
Code.

(j) Except with respect to payments contemplated pursuant to ARTICLE III of this
Agreement, the consummation of the transactions contemplated hereby shall not
(i) result in any contractual or legal obligation on the part of the Company or
any of its Subsidiaries to make any severance, sale award, change of control or
other payment to any of their directors, officers or employees, or any other
persons, or (ii) increase any benefits under any Company Benefit Plans. No such
amount or benefit will constitute an “excess parachute payment” within the
meaning of Section 280G of the Code. Neither the Company nor any of its
Subsidiaries has any obligation to gross-up, indemnify or otherwise reimburse
any current or former employee, director or other independent contractor of the
Company or any of its Subsidiaries for any tax incurred by such individual under
Section 409A or 4999 of the Code or otherwise.

 

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Section 4.19 Environmental Matters.

(a) Except as set forth on Section 4.19 of the Company Disclosure Schedule, the
Company and its Subsidiaries are in compliance in all material respects and, to
the Knowledge of the Company, have been in compliance in all material respects
at all times in the past five (5) years with applicable Laws (i) relating to
pollution (or the remediation thereof) or the protection of natural resources,
endangered, threatened or protected species, the environment, or worker health
or safety (as it relates to exposure to Hazardous Material (as defined below);
or (ii) concerning the management, manufacture, distribution, use, release,
emission, containment, storage, recycling, reclamation, reuse, treatment,
generation, discharge, transportation, processing, production, disposal or
remediation of any Hazardous Material (as defined below) (“Environmental Laws”).
“Hazardous Material” means: (a) any material, substance, or waste, whether in
solid, liquid, mineral or gas form, in each case, whether naturally occurring or
manmade, that is listed, defined, or regulated as a hazardous waste, pollutant,
contaminant or as hazardous, acutely hazardous, toxic, radioactive or dangerous
under Environmental Laws; and (b) any petroleum or petroleum-derived products,
byproducts or derivatives thereof, radioactive materials or wastes, asbestos in
any form, lead or lead-containing materials, urea formaldehyde foam insulation,
and polychlorinated biphenyls. The Company and its Subsidiaries have made all
material filings with Governmental Entities required under Environmental Laws
for their respective operations as conducted as of or prior to the Closing Date,
as applicable, and made such filings in material compliance with the
requirements of such Environmental Laws.

(b) As of the date hereof, no litigation, arbitration, mediation or other
contested proceeding related to Environmental Laws is pending or, to the
Knowledge of the Company, threatened against the Company or any of its
Subsidiaries, no Order or settlement agreement related to Environmental Laws to
which the Company or any of its Subsidiaries has outstanding obligations that
require action or impose costs or liabilities post Closing, and none of the
Company or any of its Subsidiaries has received any written notice of or request
for information relating to any violation or alleged violation of, or any
liability or potential liability under, any Environmental Law, which proceeding,
Order, settlement agreement, violation or liability would reasonably be expected
to result in a material loss for the Company or any of its Subsidiaries.

(c) Except as set forth on Section 4.19 of the Company Disclosure Schedule, the
Company and its Subsidiaries have obtained, maintain in full force and effect,
including the timely filing of renewal applications, and are in material
compliance with all material permits required under Environmental Laws
(“Environmental Permits”) necessary for the ownership, lease, operation or use
of their respective businesses as conducted as of the Closing Date.

(d) None of the Leased Real Property or, to the Knowledge of the Company, any
other real property formerly owned, leased or operated by the Company or its
Subsidiaries, is listed on, or has been proposed for listing on, the National
Priorities List under the Comprehensive Environmental Response, Compensation,
and Liability Act or any similar state or federal list.

(e) Neither the Company nor any of its Subsidiaries has contractually assumed or
provided any indemnity against any material liability of any other Person,
arising under any Environmental Laws except for such assumption or indemnity
provided by the Company or any Subsidiary in the ordinary course of conducting
business.

 

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(f) Except as would not be reasonably expected to result in a material claim or
result in a material loss under Environmental Law, there has been no release of
Hazardous Materials by the Company, its Subsidiaries or their authorized agents
or contractors with respect to the operations of the Company or its Subsidiaries
or any Leased Real Property, and neither the Company nor any of its Subsidiaries
has received any written notice that any Leased Real Property (including soils,
groundwater, surface water, buildings and other structures located on any such
Leased Real Property) has been contaminated with any Hazardous Material that
would reasonably be expected to result in a material violation of Environmental
Laws or the provisions of any Environmental Permit by, or give rise to material
liability or a material remediation obligation of, in each case, the Company or
any of its Subsidiaries.

(g) The Company has made available to Parent true, correct, and complete copies
of all reports of Phase I and Phase II environmental site assessments or other
environmental reports or assessment of a material nature in the Company’s
possession relating to the Leased Real Property.

(h) Neither the Company nor any of its Subsidiaries is required by any
Environmental Law and by virtue of the transactions set forth herein or as a
condition to the effectiveness of the transactions contemplated hereby (i) to
perform a site assessment for Hazardous Materials, (ii) to remove or remediate
Hazardous Materials, (iii) to give notice to or receive approval from any
Governmental Authority under any state transfer statute, including the New
Jersey Industrial Site Recovery Act, or (iv) to record or deliver to any person
or entity any disclosure document or statement pertaining to environmental
matters.

(i) The representations set forth in this Section 4.19 and Section 4.07 are the
sole and exclusive representations regarding environmental matters.

Section 4.20 Tax Returns and Tax Payments.

(a) The Company and each of its Subsidiaries has filed all Tax Returns that it
was required to file (after giving effect to extensions of time) and have paid
all Taxes required to be paid whether or not shown on such Tax Returns. All such
Tax Returns are accurate and complete in all respects and have been prepared in
compliance with all applicable Laws.

(b) There are no outstanding agreements extending or waiving the statutory
period of limitations applicable to any claim for, or the period for the
collection or assessment or reassessment of, Tax due from, or the due date for
filing any Tax Return of, the Company or any Subsidiary for any taxable period
and no request for any such waiver or extension is currently pending.

(c) The Company and its Subsidiaries have withheld and paid over to the proper
taxing authorities or other Governmental Entities all Taxes required to be
withheld and paid over.

(d) There is no pending dispute, claim, audit, action, suit or proceeding
concerning any Tax liability of the Company or any of its Subsidiaries either
claimed or raised by any Governmental Entity; and all deficiencies, assessments
or proposed adjustments asserted against the Company or any Subsidiary by any
Taxing Authority have been paid or fully and finally settled.

(e) Neither the Company nor any Subsidiary of the Company will be required to
include any item of income or exclude any item of deduction from taxable income
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(or portion thereof) ending after the Closing Date as a result of any
(i) “closing agreement” as described in Section 7121 of the Code (or any similar
agreement under state, local or foreign Tax law) with any Governmental Entity
executed on or prior to the Closing Date, (ii) change in method of accounting
for a taxable period ending on or prior to the Closing Date, (iii) any
installment sale or open transaction disposition made prior to the Closing,
(iv) any prepaid amount received on or prior to the Closing Date, (v) any
intercompany transaction or excess loss account described in U.S. Treasury
Regulations under Section 1502 of the Code (or any corresponding or similar
provision of state, local or foreign Tax Law), or (vi) Section 108(i) of the
Code.

(f) Neither the Company nor any of its Subsidiaries has constituted either a
“distributing corporation” or a “controlled corporation” (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code in a distribution which could
constitute part of a “plan” or “series of related transactions” (within the
meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement.

(g) Neither the Company nor any of its Subsidiaries (i) has been a member of an
affiliated group for U.S. federal, state or local Tax law purposes (other than a
group the common parent of which is the Company), (ii) has any liability for
Taxes of any Person (other than the Company or any of its Subsidiaries) arising
from the application of Treasury Regulation Section 1.1502-6 or any analogous
provision of state, local or foreign Law, or (iii) is a party to or bound by, or
has any obligation under, any Tax allocation agreement, Tax indemnity agreement,
Tax sharing agreement or similar contract or arrangement or any other obligation
(other than such an agreement or arrangement that is an ordinary course
commercial agreement the primary purpose of which does not relate to Taxes) to
indemnify any other Person with respect to Taxes that will be in effect after
the Closing.

(h) There are no Liens other than Permitted Liens as a result of any unpaid
Taxes upon any of the assets of the Company or any of its Subsidiaries.

(i) No written claim, which has not been resolved, has been received by the
Company or any Subsidiary from a Taxing Authority in a jurisdiction where the
Company or such Subsidiary does not file a Tax Return asserting that the Company
or such Subsidiary is or may be subject to taxation by that jurisdiction.
Neither the Company nor any of its Subsidiaries has received an inquiry from a
jurisdiction in which it does not file Tax Returns regarding its taxability in
such jurisdiction, such as a nexus questionnaire.

(j) Neither the Company nor any of its Subsidiaries has participated in any
“reportable transaction” as defined in Treasury Regulation Section 1.6011-4(b).

(k) Neither the Company nor any of its Subsidiaries is a party to or bound by
any advance pricing agreement or other agreement or ruling relating to Taxes
with any Taxing Authority.

(l) The Company is not and has never been a “United States real property holding
corporation” within the meaning of Section 897(c)(2) of the Code.

(m) The Company and its Subsidiaries have complied with all unclaimed property
or escheat Laws with respect to unclaimed or abandoned property and do not hold
any property required to have been remitted or escheated to a Governmental
Entity.

 

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(n) The Company and its Subsidiaries have obtained and hold or have held on file
for the longer of the period required by applicable Law or the expiration of the
applicable statute of limitations (taking into account any extensions thereof)
sales and use tax resale and exemption certificates with respect to sales of
taxable items for which the Company or its Subsidiaries did not collect and
remit sales, use, or similar Taxes.

(o) None of the Tax attributes (including net operating loss carry forwards and
general business Tax credits) of the Company and its Subsidiaries is limited by
Sections 269, 382, 383 or 384 of the Code (or any corresponding or similar
provision of federal, state, local or foreign Tax law) excluding any limitation
resulting from the transactions contemplated hereby.

(p) The Financial Statements contain proper and accurate reserves for all unpaid
Taxes.

(q) All transfer pricing rules have been complied with, and all documentation
required by all relevant transfer pricing Laws, including to avoid the
application of penalties, has been timely prepared and maintained by the
Company.

Section 4.21 Insurance. Section 4.21 of the Company Disclosure Schedule contains
a true and complete list of all insurance policies carried by or covering the
Company or any of its Subsidiaries (collectively, the “Insurance Policies”). The
Insurance Policies are in full force and effect, and no notice of cancellation
has been received by the Company or any of its Subsidiaries with respect to any
Insurance Policy which has not been cured by the payment of premiums that are
due. All premiums due on the Insurance Policies have been paid in a timely
manner and the Company and its Subsidiaries have complied in all material
respects with the terms and provisions of the Insurance Policies. The insurance
coverage provided by the Insurance Policies (including as to deductibles and
self-insured retentions) is substantially consistent with the Company’s past
practices

Section 4.22 Suppliers; Customers; and Receivables.

(a) Section 4.22 of the Company Disclosure Schedule identifies the 10 largest
suppliers based on the aggregate dollar volume of supplies purchased the Company
for the fiscal year ended December 31, 2016. The Company has not received any
written notice from any supplier identified in Section 4.22 of the Company
Disclosure Schedule that any such supplier has or intends to cease or otherwise
decrease in any material respect the amount of products or services supplied to
the Company or otherwise amend or change in any material respect the terms of
the supply arrangements in effect between the Company and any such supplier.
Section 4.22 of the Company Disclosure Schedule also identifies the 10 largest
customers of the Company based on the aggregate dollar volume of purchases for
the fiscal year ended December 31, 2016 (any such entity, a “Customer”). The
Company has not received any written notice from any Customer that any such
Customer has or intends to cease or otherwise decrease in any material respect
the amount of purchases from the Company or otherwise amend or change in any
material respect the terms of the arrangements in effect between the Company and
any such Customer.

(b) All the accounts receivable of the Company, including trade accounts,
existing at Closing (a) represent actual indebtedness incurred by the applicable
account debtors; and (b) have arisen from bona fide transactions in the ordinary
course of business. Since the Balance Sheet Date, there have not been any
write-offs as uncollectible of any receivables, except for write-offs in the
ordinary course of business and consistent with past practice.

 

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Section 4.23 Broker’s Fees. None of the Company or any Subsidiary of the
Company, or any of their respective officers or directors, as applicable, has
employed any financial advisor, broker or finder, or incurred any liability for
any broker’s fees, commissions or finder’s fees, in connection with any of the
transactions contemplated hereby.

Section 4.24 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV (as modified by the
Company Disclosure Schedule), neither the Company nor any related Person makes
any other express or implied representation or warranty with respect to the
Company or its Subsidiaries or the transactions contemplated by this Agreement,
and the Company disclaims any other representations or warranties, whether made
by the Company or any of their Affiliates, officers, directors, employees,
agents or representatives. Except for the representations and warranties
contained in this Article IV (as modified by the Company Disclosure Schedule),
the Company hereby disclaims all liability and responsibility for any
representation, warranty, projection, forecast, statement or information made,
communicated, or furnished (orally or in writing) to Parent, Merger Sub or their
respective Affiliates or representatives (including any opinion, information,
projection or advice that may have been or may be provided to Parent by any
director, officer, employee, agent, consultant, or representative of the Company
or any of its Affiliates). Notwithstanding anything contained in this Agreement
to the contrary, the Company makes no representations or warranties to Parent or
Merger Sub regarding any projections or the future or probable profitability,
success, business, opportunities, relationships and operations of the Company
and/or its Subsidiaries.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Each of Parent and Merger Sub jointly and severally represents and warrants to
the Company as follows:

Section 5.01 Organization. Parent is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware and has
the requisite power and authority to own, lease and operate all of its
properties and assets and to carry on its business as it is now being conducted.
Merger Sub is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has the requisite power and
authority to own, lease and operate all of its properties and assets and to
carry on its business as it is now being conducted. Each of Parent and Merger
Sub is duly licensed or qualified to do business in each jurisdiction in which
the nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or qualified
would not reasonably be expected to result in a Parent Material Adverse Effect.

Section 5.02 Authority. Each of Parent and Merger Sub has all necessary power
and authority to execute and deliver this Agreement and, subject to the filing
of the Certificate of Merger pursuant to the DGCL, to consummate the
transactions contemplated hereby. The execution, delivery and performance by
each of Parent and Merger Sub of this Agreement, and the consummation by Parent
and Merger Sub of the transactions contemplated hereby, have been duly and
validly authorized and approved by the board of directors of Parent and Merger
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shareholder of Merger Sub, and no other action on the part of Parent or Merger
Sub or any of their respective equityholders, directors, managers or officers,
as applicable, is necessary to authorize the execution and delivery by Parent or
Merger Sub of this Agreement, and the consummation by Parent and Merger Sub of
the transactions contemplated hereby. This Agreement (a) has been duly and
validly executed and delivered by Parent and Merger Sub, and (b) assuming due
and valid authorization, execution and delivery hereof by the other parties
hereto, constitutes a valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms, except
that such enforceability (i) may be limited by bankruptcy, insolvency,
moratorium or other similar Laws affecting or relating to the enforcement of
creditors’ rights generally, and (ii) is subject to general principles of
equity.

Section 5.03 Consents and Approvals; No Violation.

(a) Except for (i) filings, permits, authorizations, consents and approvals as
may be required under the HSR Act and any other Antitrust Laws, (ii) the filing
of the Certificate of Merger as required by the DGCL and (iii) as set forth in
the Company Disclosure Schedule, no consents or approvals of, or filings,
declarations or registrations with, any Governmental Entity are necessary for
the consummation by Parent or Merger Sub of the transactions contemplated
hereby, other than such other consents, approvals, filings, declarations or
registrations that, if not obtained, made or given, would not reasonably be
expected to result, individually or in the aggregate, in a Parent Material
Adverse Effect.

(b) Subject to the filing of the Certificate of Merger as required by the DGCL,
none of the execution and delivery of this Agreement by Parent and Merger Sub,
the consummation by Parent and Merger Sub of the transactions contemplated
hereby or compliance by Parent and Merger Sub with any of the terms or
provisions hereof will (i) conflict with or violate any provision of the
certificates of incorporation or other governing documents of Parent and Merger
Sub, or (ii) assuming that the authorizations, consents and approvals referred
to in Section 5.03(a) are duly obtained in accordance with applicable Law,
(x) violate any Law applicable to Parent or Merger Sub or any of their
respective properties or assets, or (y) violate, conflict with, constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under or result in the termination of any Contract to
which Parent or Merger sub or any of their respective Subsidiaries is a party,
or by which any of them or any of their respective properties or assets may be
bound or affected, except for such violations, conflicts, breaches, defaults or
terminations which, individually or in the aggregate, would not reasonably be
expected to result in a Parent Material Adverse Effect.

Section 5.04 Litigation. (a) To the knowledge of Parent, as of the date hereof,
there are no claims, suits, actions, proceedings or arbitrations pending or
threatened in writing against Parent or Merger Sub, the outcome of which, if
adversely decided, would reasonably be expected to result in a Parent Material
Adverse Effect, and (b) there is no Order outstanding against Parent or Merger
Sub that would reasonably be expected to result in a Parent Material Adverse
Effect.

Section 5.05 Ownership of Merger Sub; No Prior Activities. Merger Sub was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement. All of the outstanding Capital Stock of Merger Sub is owned directly
by Parent or one of its wholly owned Subsidiaries. Except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement, Merger Sub has not and will not
have incurred, directly or indirectly, through any affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.

 

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Section 5.06 Acquisition for Investment. Parent has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of its participation in the transactions contemplated by
this Agreement. Parent confirms that the Company has made available to Parent
and Parent’s Representatives (i) the opportunity to ask questions of the
officers and management employees of the Company and its Subsidiaries and
(ii) access to the documents, information and records of the Company and its
Subsidiaries, and Parent confirms that it has made an independent investigation,
analysis and evaluation of the Company and its Subsidiaries and their respective
properties, assets, business, financial condition, documents, information and
records. Parent is acquiring the stock of the Surviving Corporation for
investment purposes and not with a view toward or for sale in connection with
any distribution thereof, or with any present intention of distributing or
selling the stock of the Surviving Corporation.

Section 5.07 Funding. Parent has the necessary and immediately available funding
to meet all of its obligations under this Agreement, including its obligation to
pay the Merger Consideration, all other amounts required to be paid under
Article II, any adjustments to the Merger Consideration and all of Parent and
Merger Sub’s fees and expenses incurred in order to consummate the transactions
contemplated by this Agreement.

Section 5.08 Broker’s Fees. Neither Parent nor Merger Sub, or any of their
respective equityholders, directors or managers, as applicable, has employed any
financial advisor, broker or finder or incurred any liability for any broker’s
fees, commissions or finder’s fees in connection with any of the transactions
contemplated hereby except for Lazard Frères & Co. LLC.

Section 5.09 Investigation. EACH OF PARENT AND, MERGER SUB ACKNOWLEDGES AND
AGREES THAT IT (I) HAS MADE ITS OWN INQUIRY AND INVESTIGATION INTO, AND, BASED
THEREON, HAS FORMED AN INDEPENDENT JUDGMENT CONCERNING, THE COMPANY AND ITS
SUBSIDIARIES AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND (II) HAS
BEEN FURNISHED WITH, OR GIVEN ADEQUATE ACCESS TO, SUCH INFORMATION ABOUT THE
COMPANY AND ITS SUBSIDIARIES AS IT HAS REQUESTED. EACH OF PARENT AND MERGER SUB
FURTHER ACKNOWLEDGES THAT (I) (A) THE ONLY REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS MADE BY THE COMPANY ARE THE REPRESENTATIONS,
WARRANTIES, COVENANTS AND AGREEMENTS MADE IN THIS AGREEMENT, (B) NEITHER THE
COMPANY NOR ITS SUBSIDIARIES NOR ANY OF THEIR AFFILIATES HAVE MADE ANY
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PROJECTIONS, AND (C) NONE OF
PARENT OR MERGER SUB HAS RELIED UPON ANY OTHER REPRESENTATIONS OR OTHER
INFORMATION MADE OR SUPPLIED BY OR ON BEHALF OF THE COMPANY, ITS SUBSIDIARIES OR
ANY OF THEIR AFFILIATES OR REPRESENTATIVES, INCLUDING THE PROJECTIONS OR ANY
INFORMATION PROVIDED BY OR THROUGH THEIR BANKERS, INCLUDING THAT INFORMATION
PROVIDED IN THE CONFIDENTIAL DESCRIPTIVE MEMORANDUM, OR MANAGEMENT
PRESENTATIONS, DATA ROOMS OR OTHER DUE DILIGENCE INFORMATION AND THAT NONE OF
PARENT OR MERGER SUB WILL HAVE ANY RIGHT OR REMEDY ARISING OUT OF ANY SUCH
REPRESENTATION OR OTHER INFORMATION, (II) ANY CLAIMS PARENT OR MERGER SUB MAY
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REPRESENTATION OR WARRANTY SHALL BE BASED SOLELY ON THE REPRESENTATIONS AND
WARRANTIES OF THE COMPANY SET FORTH IN ARTICLE III HEREOF, (III) EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT, PARENT SHALL ACQUIRE THE COMMON STOCK,
THE COMPANY AND ITS SUBSIDIARY WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, AS TO MERCHANTABILITY, SATISFACTORY QUALITY OR FITNESS FOR ANY
PARTICULAR PURPOSE FOR THE AVOIDANCE OF ANY DOUBT AND WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, EACH OF PARENT AND MERGER SUB ACKNOWLEDGES AND
AGREES THAT THERE ARE UNCERTAINTIES INHERENT IN ATTEMPTING TO MAKE THE
PROJECTIONS, THAT PARENT AND MERGER SUB ARE FAMILIAR WITH SUCH UNCERTAINTIES,
THAT PARENT AND MERGER SUB ARE TAKING FULL RESPONSIBILITY FOR MAKING THEIR OWN
EVALUATION OF THE ADEQUACY AND ACCURACY OF ALL PROJECTIONS SO FURNISHED TO THEM
AND ANY USE OF OR RELIANCE BY PARENT AND MERGER SUB ON SUCH PROJECTIONS SHALL BE
AT THEIR SOLE RISK, AND PARENT AND MERGER SUB SHALL NOT HAVE ANY CLAIM AGAINST
ANYONE WITH RESPECT THERETO.

ARTICLE VI

COVENANTS

Section 6.01 Conduct of Business Prior to the Closing. Except (i) as and to the
extent expressly provided otherwise in this Agreement, (ii) as required by
applicable Law or (iii) as set forth in Section 6.01 of the Company Disclosure
Schedule, the Company will, and will cause each of its Subsidiaries to, except
as permitted, required or specifically contemplated by this Agreement or
consented to or approved in writing by Parent, during the period commencing on
the date hereof and ending at the Effective Time conduct its business in the
ordinary course of business consistent with past practice and in material
compliance with all applicable Laws. Without limiting the generality or effect
of the foregoing, and except (i) as and to the extent expressly provided
otherwise in this Agreement, (ii) as required by applicable Law, or (iii) as set
forth in Section 6.01 of the Company Disclosure Schedule, during the period from
the date of this Agreement through the Effective Time, the Company shall not,
and shall cause its Subsidiaries not to, without the prior written consent of
Parent (which consent shall not be unreasonably withheld, conditioned or
delayed):

(a) issue, sell, grant, dispose of, pledge or otherwise encumber, or authorize
or propose the issuance, sale, disposition or pledge or other encumbrance of,
(i) any additional shares of its Capital Stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for any
shares of its Capital Stock, or any rights, warrants, option, calls, commitments
or any other agreements of any character to purchase or acquire any shares of
its Capital Stock or any securities or rights convertible into, exchangeable
for, or evidencing the right to subscribe for, any shares of its Capital Stock;
or (ii) any other securities in respect of, in lieu of or in substitution for
any shares of its Capital Stock outstanding on the date hereof; (iii) redeem,
purchase or otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding shares of Capital Stock; or (iv) split, combine,
subdivide or reclassify any shares of its Capital Stock;

(b) declare, set aside for payment or pay any dividend, or make any other
actual, constructive or deemed distribution (whether in cash, Capital Stock or
property), in respect of any shares of its Capital Stock or otherwise make any
contributions or other payments to its shareholders or other equityholders in
their capacity as such other than dividends in cash prior to the Closing Date;

 

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(c) sell, transfer or otherwise dispose of any of its properties or material
assets to any Person other than a direct or indirect wholly owned Subsidiary of
the Company, other than the sale of Company products in the ordinary course of
business consistent with past practice;

(d) (i) make any acquisition or investment in a business, Person or division
thereof whether by purchase of assets, stock or securities, by merger or
consolidation or otherwise, (ii) enter into any Contract with respect to a joint
venture, strategic alliance or partnership, or (iii) purchase, or enter into any
agreement to purchase, equipment, inventory, materials, supplies, capital
expenditures in excess of $250,000 or services, in each case, other than in the
ordinary course of business consistent with past practice;

(e) (i) increase the compensation of any of the Company’s directors or
employees, (ii) enter into any labor agreement, collective bargaining agreement,
work rules or practices or any other material labor-related agreements or
(iii) establish, or amend to increase the benefits under, any Company Benefit
Plan, in each case, other than in the ordinary course of business consistent
with past practice and other than (x) renewals or replacements of health
insurance and other Company Benefit Plans customarily placed on an annual basis
or (y) as required by Law or the terms of agreements and Company Benefit Plans
in effect as of the date hereof;

(f) amend its certificate of incorporation, by-laws or similar governing
documents;

(g) change accounting methods, policies or practices (including any change in
depreciation or amortization policies) or revalue any its assets, except as may
otherwise be required under GAAP as concurred with its independent accountants
and after notice to Parent;

(h) pay, discharge, settle or satisfy any litigation, arbitration, proceedings,
claims, liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise) other than any settlement, payment,
discharge or satisfaction other than the satisfaction of liabilities and
obligations in the ordinary course of business consistent with past practice
that do not exceed $250,000;

(i) commence any litigation, arbitration or proceeding or cease any pending or
threatened litigation;

(j) (i) file any amended Tax Return or file or surrender any claim for a
material refund of Taxes, (ii) settle or compromise any material Tax liability,
(iii) change any method of tax accounting, (iv) make any Tax election
inconsistent with past practice, (v) revoke or change any Tax election, or
(vi) waive or extend the statute of limitations in respect of any Tax (other
than pursuant to extensions of time to file Tax Returns obtained in the ordinary
course of business);

(k) (i) incur, assume, guarantee, or become obligated following the date of this
Agreement with respect to any Indebtedness, trade letters of credit or
guarantees outside the ordinary scope of business or if the aggregate amount of
such incurrences, assumptions, guarantees or obligations following the date of
this Agreement would exceed $250,000 outstanding in the aggregate at any given
time (excluding intercompany debt), (ii) make any loan, advance or capital
contribution to or investment in any other Person in excess of $250,000 in the
aggregate (other than intercompany loans, advances and capital contributions),
(iii) pledge or otherwise encumber shares of capital stock of the Company or any
Subsidiary, (iv) mortgage, pledge or encumber any of its material tangible or
intangible assets, or create or suffer to exist any Liens thereupon (other than
currently existing Liens and Permitted Liens); or (v) fund or prepay any
obligations to any Person, that are not due and payable until after Closing
unless in the ordinary course of business consistent with past practices or as
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(l) amend, modify or terminate, or grant any waiver under, any Material Contract
governing Indebtedness;

(m) enter into any Contract that would constitute a Material Contract, a
Contract that would be required to be disclosed on Section 4.13 of the Company
Disclosure Schedule or a Contract requiring consent in connection with the
transactions contemplated by this Agreement, or violate, terminate, amend or
otherwise modify in any material respect (including by entering into a Contract
with such party or otherwise) or waive any material terms of any of its Material
Contracts or Contracts disclosed in Section 4.13 of the Company Disclosure
Schedule; or

(n) agree in writing, make any commitment to take or otherwise take any of the
actions prohibited by this Section 6.01.

Nothing contained herein shall give to the Parent or Merger Sub, directly or
indirectly, the right to control or direct the Company’s or its Subsidiaries’
operations or businesses prior to the Closing Date.

Section 6.02 Payoff Letters. By no later than three (3) Business Days prior to
Closing, the Company shall deliver to Parent copies of Payoff Letters for the
Indebtedness listed in Section 6.02 of the Company Disclosure Schedule.

Section 6.03 Company Transaction Expense Direction Notice. On or prior to the
second Business Day preceding the Closing Date, the Company shall provide Parent
with a written notice (the “Company Transaction Expense Direction Notice”)
setting forth wire transfer instructions and amounts due for any Company
Transaction Expenses to be paid at the Closing.

Section 6.04 Employee Matters.

(a) During the period commencing at the Effective Time and ending on the date
that is one (1) year from the Effective Time, Parent shall, or shall cause the
Surviving Corporation or an Affiliate to, provide to each employee of the
Company and its Subsidiaries who is employed immediately prior to the Effective
Time and who remains employed by Parent or its Subsidiaries immediately
following the Effective Time (collectively, the “Continuing Employees”) with
(i) base salary or wage rate and annual bonus opportunities that are no less
than the base salary or wage rate and annual bonus opportunities provided to
such Continuing Employee by the Company or its Subsidiaries, as applicable,
immediately prior to the Effective Time, and (ii) employee benefits (excluding
defined benefit pension and equity compensation benefits) that are no less
favorable, in the aggregate, than those provided to such Continuing Employee by
the Company and its Subsidiaries immediately prior to the Effective Time.

(b) Parent will cause any employee benefit plans sponsored or maintained by the
applicable group of Parent or its Subsidiaries (collectively, the “Parent
Benefit Plans”) in which the Continuing Employees are entitled to participate
(as determined by Parent) following the Effective Time, to take into account for
purposes of eligibility, vesting, level of benefits and benefit accrual
thereunder (other than for benefit accruals under defined benefit pension
plans), service by Continuing Employees to the Company and its Subsidiaries
prior to the Effective Time as if such service were with Parent, to the same
extent such service was credited under a comparable plan of the Company or its
Subsidiaries (except to the extent it would result in a duplication of
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(c) With respect to any Parent Benefit Plans, Parent will use commercially
reasonable efforts to (i) cause to be waived any eligibility requirements or
pre-existing condition limitations or waiting period requirements to the same
extent waived under comparable plans of the Company and its Subsidiaries and
(ii) give effect, in determining any deductible, co-insurance and maximum
out-of-pocket limitations, to amounts paid by such Continuing Employees during
the calendar year in which the Effective Time occurs under similar plans
maintained by the Company and its Subsidiaries.

(d) This Section 6.04 shall be binding upon and inure solely to the benefit of
each of the parties to this Agreement, and nothing in this Section 6.04, express
or implied, shall confer upon any other Person any rights or remedies of any
nature whatsoever under or by reason of this Section 6.04. Nothing contained
herein, express or implied, shall be construed to establish, amend or modify any
benefit plan, program, agreement or arrangement. The parties hereto acknowledge
and agree that the terms set forth in this Section 6.04 shall not create any
right in any employee of the Company or its Subsidiaries or any other Person to
any continued employment with Parent, the Surviving Corporation or any of their
Affiliates or compensation or benefits of any nature or kind whatsoever.

Section 6.05 Section 280G Vote.

(a) Prior to the Closing Date, the Company shall use reasonable best efforts to
obtain from each person who is, with respect to the Company, a “disqualified
individual” (as defined in Section 280G(c) of the Code) a waiver of any payments
or benefits that might otherwise reasonably result in the payment or provision
of “parachute payments” (as defined in Section 280G(b)(2) of the Code), such
that after giving effect to all waivers, neither the Company nor its
Subsidiaries has made or provided, or is required to make or provide, any
payments or benefits that would not be deductible under Section 280G of the Code
(the payments and benefits waived (which, for the avoidance of doubt, shall be,
with respect to any individual, the amounts in excess of 299% of such
individual’s “base amount” (as defined in Section 280G(b)(3) of the Code)) shall
be collectively referred to as the “Section 280G Waived Payments”).

(b) Prior to the Closing Date, the Company shall submit, accompanied by adequate
disclosure, for shareholder approval all Section 280G Waived Payments in
accordance with the terms of Section 280G(b)(5)(B) of the Code and the Treasury
Regulations thereunder with the purpose of determining the right of each
“disqualified individual” to receive the Section 280G Waived Payments by
rendering the parachute payment provisions of Section 280G of the Code
inapplicable to any and all payments and benefits provided by the Company to
those individuals who have executed a waiver pursuant to this Section 6.05 that,
in the absence of such waiver, might otherwise reasonably result in the
provision of any payments or benefits that would be “parachute payments” under
Section 280G of the Code.

(c) All waivers described in Section 6.05(a) and all disclosures and any written
consents required under Section 6.05(b) shall be subject to the prior review and
approval of Parent, which approval shall not be unreasonably withheld,
conditioned or delayed.

 

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ARTICLE VII

ADDITIONAL AGREEMENTS

Section 7.01 Expenses. Subject to Section 7.02(a) and Section 7.05, whether or
not the transactions contemplated hereby are consummated and whether or not the
Closing takes place, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.

Section 7.02 Certain Tax Matters.

(a) All transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) (such Taxes, “Transfer Taxes”) incurred
in connection with consummation of the transactions contemplated by this
Agreement shall be borne 50% by the Shareholders and 50% by Parent when due, and
Parent will, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such Taxes, fees and charges if required by
applicable Law.

(b) Each of Parent, the Company and the Shareholders’ Representative and their
affiliates will provide the other parties with such assistance as may reasonably
be requested by any of them in connection with the preparation of any Tax
Return, any audit or other examination by any taxing authority, any judicial or
administrative proceedings relating to liability for Taxes, or any other claim
arising under this Agreement, and each will retain and provide the others with
any records or information that may be relevant to any such Tax Return, audit or
examination, proceeding or claim. Such assistance shall include making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder and shall include providing
copies of any relevant Tax Returns and supporting work schedules. The party
requesting assistance hereunder shall reimburse the other parties for reasonable
third-party out of pocket expenses incurred in providing such assistance.
Without limiting the generality of the foregoing, the Shareholder’s
Representative shall retain and Parent shall retain, and shall cause the
Surviving Corporation to retain, until the applicable statutes of limitations
(excluding any extensions unless the party has received notice of such
extensions) have expired, copies of all Tax Returns, supporting work schedules,
and other records or information that may be relevant to such returns for all
taxable periods beginning on or before the Closing.

Section 7.03 Publication/Distribution of Agreement. So long as this Agreement is
in effect, none of Parent, Merger Sub, the Company or any of their respective
affiliates shall, and shall cause their respective Representatives to not,
publish, distribute or make any public statements with respect to this Agreement
(including the disclosure of this Agreement or its terms) or the transactions
contemplated hereby without the prior written approval of the other parties
hereto, except as may be required (a) as expressly contemplated by this
Agreement in connection with obtaining the consents and approvals, and to
provide such notices, necessary to consummate the Merger and the other
transactions contemplated by this Agreement or (b) by Law applicable to Parent,
Merger Sub, the Company or any of their respective Subsidiaries, including the
rules and regulations of any applicable national securities exchange or market.
Notwithstanding anything contained in this Agreement to the contrary herein,
GenNx360 Management Company LLC and its Affiliates may disclose this Agreement
and its terms to their limited partners, advisors, members or other investors or
potential investors.

 

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Section 7.04 Access to Information.

(a) During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, upon
reasonable prior written notice and subject to applicable Laws relating to the
exchange of information and confidentiality obligations applicable to
information furnished to the Company or any of its Subsidiaries by third parties
that may be in the Company’s or any of its Subsidiaries’ possession from time to
time, the Company shall, and shall cause each of the Company’s Subsidiaries to,
afford to the Representatives of Parent and Merger Sub, during normal business
hours and in a manner as to not unreasonably interfere with the normal operation
of the Company and its Subsidiaries, reasonable access to the Company’s and each
of its Subsidiaries’ properties, books, Contracts and records, and to their
officers, accountants, counsel and other Representatives and, during such
period, the Company shall, and shall cause its Subsidiaries to, make available
to Parent and Merger Sub such information concerning their businesses,
properties and personnel as Parent and Merger Sub may reasonably request;
provided, however, that neither the Company nor any of its Subsidiaries is under
any obligation to disclose to the Parent or Merger Sub or any such
Representative any information the disclosure of which is restricted by contract
(it being further agreed that the Company shall use commercially reasonable
efforts to seek a waiver of any such restriction if requested by Parent) or
applicable Law or could compromise any applicable privilege (including the
attorney-client privilege). No investigation pursuant to this Section 7.04(a)
will affect any representation or warranty given by the Company to Parent
hereunder.

(b) From and after the Closing, solely in connection with any reasonable
business purpose relating to the Shareholders’ ownership of the Capital Stock of
the Company or their status as a current or former officer, director or
shareholder of the Company or any of its Subsidiaries, including preparation of
governmental or regulatory reporting obligations, or the resolution of any
claims made against or incurred by the Shareholders in respect of periods prior
to the Closing, for a period of six years after the Closing, Parent shall cause
the Surviving Corporation and its Subsidiaries to (i) retain the books and
records relating to the Surviving Corporation and its Subsidiaries with respect
to periods prior to the Closing in a manner reasonably consistent with the prior
practice of the Company and its Subsidiaries, and (ii) upon reasonable advance
notice and subject to applicable Laws relating to the exchange of information,
Parent and the Surviving Corporation shall, and shall cause each of the
Surviving Corporation’s Subsidiaries to, afford to the Shareholders and their
respective Representatives, during normal business hours following the Closing
Date, and in a manner as to not unreasonably interfere with the normal operation
of the Surviving Corporation and its Subsidiaries, reasonable access to the
Surviving Corporation’s and each of its Subsidiaries’ books, Contracts and
records, and to their officers, employees, accountants, counsel and other
representatives to provide the foregoing materials and, during such periods the
Surviving Corporation shall, and shall cause its Subsidiaries to, make available
to the Shareholders all information concerning their businesses, properties and
personnel as they may reasonably request for the purposes described above,
provided, however, that such right shall not (x) apply to information subject to
an attorney-client privilege or (y) cause the Surviving Corporation or any of
its Subsidiaries to violate any applicable confidentiality obligations. This
Section 7.04(b) shall not apply to matters relating to Taxes, which shall be
governed by Section 7.02(b). Notwithstanding anything otherwise contained in
this Agreement, Parent and its Subsidiaries may dispose or destroy material
related to the Company in accordance with their internal retention policies in
place from time to time, provided they provide the Shareholders’ Representative
reasonable access to such material, upon reasonable advance notice of such
destruction, and allow the Shareholders’ Representative to make copies of such
material.

 

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Section 7.05 Consents; Further Assurances.

(a) Subject to the terms and conditions of this Agreement and applicable Law,
the Company, on the one hand, and Parent and Merger Sub, on the other hand,
shall, and shall cause their respective Subsidiaries to, use their respective
reasonable best efforts (i) to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
that may be imposed on such parties or their Subsidiaries with respect to the
transactions contemplated hereby (including making all legally required filings)
and, subject to the conditions set forth in ARTICLE VIII, to consummate the
transactions contemplated hereby as promptly as practicable (including, in
respect of the Company and its respective Subsidiaries and without limitation,
providing Parent and Merger Sub with information reasonably requested by Parent
to create consolidated projected income statements, balance sheets and cash flow
statements, in each case after giving effect to the transactions contemplated
hereby) and (ii) to obtain (and to cooperate with the other parties to obtain)
as promptly as practicable any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and any other third party that is
required to be obtained by them or any of their respective Subsidiaries in
connection with the transactions contemplated hereby, and to comply with the
terms and conditions of any such consent, authorization, order or approval. In
connection therewith, the Company, on the one hand, and Parent and Merger Sub,
on the other hand, shall, and shall cause their respective Subsidiaries to
provide, such information and communications to Governmental Entities as such
Governmental Entities may request.

(b) Without limitation of the foregoing, each of Parent and Merger Sub, on the
one hand, and the Company, on the other hand, undertakes and agrees to file as
soon as practicable, but in all cases, no later than five (5) days following the
date hereof, (i) a Notification and Report Form under the HSR Act with the
United States Federal Trade Commission (the “FTC”) and the Antitrust Division of
the United States Department of Justice (the “Antitrust Division”), and
(ii) such other filings with any other Governmental Entities as may be required
under any other applicable Antitrust Laws. Each of Parent, Merger Sub and the
Company, as applicable, shall (x) respond as promptly as practicable to any
inquiries or requests for additional information or documentation received from
the FTC, the Antitrust Division or any other Governmental Entity, and (y) not
extend any waiting period under the HSR Act or any other Antitrust Laws or enter
into any agreement with the FTC, the Antitrust Division or any other
Governmental Entity not to consummate the transactions contemplated by this
Agreement, except with the prior written consent of the other parties hereto,
such consent not to be unreasonably withheld, conditioned or delayed. Parent
shall pay all fees required by any Antitrust filings.

(c) Parent shall promptly furnish to the Company copies of any notices or
written communications, and a written summary of any oral communications, in
each case received by Parent or any of its affiliates from any third party or
any Governmental Entity with respect to the transactions contemplated by this
Agreement, and Parent shall permit counsel to the Company an opportunity to
review in advance, and Parent shall consider in good faith the views of such
counsel in connection with, any proposed written communications (including, for
the avoidance of doubt, any filings and/or notices) by Parent and/or its
affiliates to any third party or any Governmental Entity, including the FTC and
the Antitrust Division, concerning the transactions contemplated by this
Agreement. Parent agrees to provide the Company and its counsel the opportunity,
on reasonable advance notice, to participate in any substantive meetings or
discussions, either in person or by telephone, between Parent and/or any of its
affiliates, agents or advisors, on the one hand, and any third party or
Governmental Entity, including the FTC and the Antitrust Division, on the other
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Section 7.06 No Shop. During the period beginning on the date hereof and ending
on the earlier of the Effective Time or the termination of this Agreement, the
Company shall, and shall cause its Subsidiaries and each of the Company’s and
its Subsidiaries’ respective officers, directors and employees to, (a) (i) work
exclusively with Parent to consummate the Merger pursuant to this Agreement and
(ii) refrain from (x) soliciting offers from any Person other than Parent to
acquire all or any part of the business or assets of the Company, (y) offering
all or any part of the business or assets of the Company as an acquisition
candidate or through license to any Person other than Parent and (z) providing
access to the properties, books, records, financial statements, contracts and
documents of the Company to any acquiror and (b) immediately cease and cause to
be terminated any and all existing activities, discussions or negotiations with
any Persons conducted on or prior to the date hereof with respect to any
competing transaction. The Company acknowledges that, in the event of a breach
of this Section 7.06 the damage or imminent damage to the value and goodwill of
Parent shall be inestimable and that therefore any remedy at law or in damages
would be inadequate. Accordingly, the Company agrees that, following prior
written notice to the Company, Parent shall (without the necessity of posting
any bond or other security), in addition to any losses incurred by reason of any
such breach, be entitled to injunctive relief, including specific performance,
with respect to any such breach.

Section 7.07 Termination of Company Stock Options. The Company shall take all
necessary actions so that, as of the Effective Time, the Company Stock Plan is
terminated and each Company Stock Option under such plan, whether vested or
unvested, shall have been terminated; provided, however, that, without any
action on the part of the holder thereof, the holder of any vested In-the-Money
Option (including any Company Stock Options that vest as a result of the
consummation of the transactions contemplated under this Agreement) shall
receive for each such vested In-the-Money Option an amount of cash as set forth
in Section 3.01(c).

Section 7.08 Company 401(k) Plan. Effective as of a date no later than the day
immediately prior to the Effective Time, if requested in writing by Parent at
least ten (10) Business Days prior to the Effective Time, the Company shall take
or cause to be taken all actions necessary to (i) adopt amendments to all
Section 401(k) plans maintained or contributed to by the Company or a Company
Subsidiary (collectively, the “Company 401(k) Plan”) required to be adopted in
accordance with the Code to reflect qualification requirements that apply as of
the date of termination of the Company 401(k) Plan, (ii) take all necessary
action to effect the termination of the Company 401(k) Plan and shall provide
Parent with a copy of the applicable board of directors resolutions and
termination agreements evidencing such terminations and (iii) ensure that each
active participant in the Company 401(k) Plan is fully vested in his or her
account balance under the Company 401(k) Plan. Following the Effective Time, to
the extent provided under the terms of the Company 401(k) Plan at the time of
termination, Parent shall permit participants in the Company 401(k) Plan who are
employed by Parent or its Subsidiaries to (i) make in-service withdrawals from
the Company 401(k) Plan, and (ii) continue to receive and repay any loans from
the Company 401(k) Plan. Following the Effective Time, Parent shall permit each
participant in the Company 401(k) Plan who terminates employment with the
Surviving Corporation or its Subsidiaries the right to receive a distribution of
such participant’s interest under the Company 401(k) Plan, in each case in
accordance with the terms of the Company 401(k) Plan. As soon as practicable
following Internal Revenue Service approval of the termination of the Company
401(k) Plan, Parent or the Surviving Corporation shall, with respect to
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Subsidiaries and who remain actively employed with Parent or the Surviving
Corporation (i) provide an election to roll over their interest under the
Company 401(k) Plan, including plan loans, to a tax-qualified defined
contribution plan maintained by Parent or an affiliate of Parent (the “Parent DC
Plan”), (ii) cause the trustee of the Company 401(k) Plan to roll over the
interest which the participant elects to roll over to the Parent DC Plan, and
(iii) cause the Parent DC Plan to accept any such rollovers.

Section 7.09 Indemnification of Directors and Officers.

(a) From and after the Effective Time, the Surviving Corporation will indemnify,
defend and hold harmless the present and former officers and directors of the
Company (when acting in such capacity) (each, an “Indemnified Party” and
together, the “Indemnified Parties”) against all losses, costs, expenses,
claims, damages, judgments or liabilities incurred in connection with, any
claim, action, suit, proceeding or investigation based in whole or in part on
the fact that the Indemnified Party is or was an officer or director of the
Company pertaining to any matter existing or occurring before or at the
Effective Time and whether asserted or claimed before, at or after, the
Effective Time (the “Indemnified Liabilities”) to the fullest extent permitted
under the DGCL; provided, however, that such indemnification will be provided
only to the extent any directors’ and officers’ liability insurance policy of
the Company or its Subsidiaries does not provide coverage and actual payment
thereunder with respect to the matters that would otherwise be subject to
indemnification hereunder. Parent and Merger Sub agree that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action, suit or proceeding, whether civil, criminal,
administrative or investigative (each, a “Claim”), existing in favor of the
Indemnified Parties as provided in the Company’s certificate of incorporation or
the Company’s by-laws on the date hereof or pursuant to other agreements, or
certificates of incorporation or bylaws or similar documents of any Subsidiaries
of the Company, as in effect as of the date hereof, with respect to matters
occurring through the Effective Time, will survive the Merger and will continue
in full force and effect in accordance with their terms.

(b) The Surviving Corporation shall maintain in effect for not less than six
years after the Effective Time the current policies of directors’ and officers’
liability insurance maintained by the Company with respect to matters occurring
prior to or at the Effective Time; provided, however, that (i) the Surviving
Corporation shall not be required to pay an annual premium for such insurance in
excess of two times the last annual premium paid prior to the date hereof, and
(ii) that if such insurance expires, is terminated or canceled during such
six-year period, the Surviving Corporation will use its reasonable efforts to
obtain as much directors’ and officers’ liability coverage as can be obtained
for such amount.

(c) In the event the Surviving Corporation or its successors or assigns
(i) consolidates with or merges into any other Person and is not the continuing
or surviving entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, Parent shall, and
shall cause the Surviving Corporation to, ensure that proper provisions shall be
made so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 7.09.

(d) The provisions of this Section 7.09 are intended to be for the benefit of,
and will be enforceable by, each such Person entitled to indemnification, his or
her heirs and his or her representatives.

 

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ARTICLE VIII

CONDITIONS PRECEDENT

Section 8.01 Conditions to Each Party’s Obligation To Effect the Transactions.
The respective obligation of each party hereto to effect the Merger and the
other transactions contemplated by this Agreement is subject to the satisfaction
or waiver on or prior to the Closing Date of the following conditions:

(a) Regulatory Approvals. The waiting period applicable to the consummation of
the Merger under the HSR Act (or any extension thereof) shall have expired or
early termination thereof shall have been granted.

(b) No Injunctions or Restraints. No temporary restraining order, preliminary or
permanent injunction or other Order issued by any Governmental Entity of
competent jurisdiction or other legal restraint or prohibition enjoining or
otherwise preventing or prohibiting the consummation of the transactions
contemplated hereby shall have been entered after the date hereof and shall be
in effect.

Section 8.02 Conditions to Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to effect the Merger and the other transactions
contemplated hereby are further subject to the satisfaction or waiver by Parent
and Merger Sub on or prior to the Closing Date of the following conditions:

(a) Representations and Warranties. (i) The Company Fundamental Representations
shall be true and correct in all respects and (ii) the representations and
warranties set forth in Article IV (other than those described in clause
(i) above) shall be true and correct as of the Closing Date (without regard to
any materiality, Company Material Adverse Effect or other similar qualification
contained in or otherwise applicable to such representation or warranty) as
though made on and as of the Closing Date (except with respect to
representations and warranties that address matters only as of a particular
date, which need only be true and correct as of such date); provided that the
condition set forth in this Section 8.02(a)(ii) shall be deemed to be satisfied
unless any failure of any such representation or warranty to be true and correct
has a Company Material Adverse Effect.

(b) Performance of Obligations of the Company. The Company shall have performed
or complied in all material respects the obligations required to be performed or
complied with by it under this Agreement at or prior to the Closing Date.

(c) No Company Material Adverse Effect. Since the date hereof, there shall not
have been any change, effect, event, state of facts, development or occurrence
that has had a Company Material Adverse Effect.

(d) Closing Deliverables. The Company shall have provided the Company Closing
Deliverables.

(e) Pre-Closing Statement. The Company shall have delivered to Parent the
Pre-Closing Statement.

(f) Related Party Agreements. The Company shall have provided evidence that each
agreement set forth in Section 4.13 of the Company Disclosure Schedule, other
than those agreements listed specifically as “Retained Related Party Agreements”
in Section 4.13 of the Company Disclosure Schedule has been terminated effective
prior to the Closing Date, without any cost or continuing obligation to the
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(g) Indebtedness. The Indebtedness of the Company set forth on Schedule 6.02 has
been, or concurrently with the Closing Date is being, paid off in full and
terminated, and all Liens securing obligations under such Indebtedness have
been, or concurrently with the Closing Date are being, released.

Section 8.03 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger and the other transactions contemplated hereby is
further subject to the satisfaction or waiver by the Company on or prior to the
Closing Date of the following conditions:

(a) Representations and Warranties. Each of the representations and warranties
of Parent and Merger Sub set forth in Article V shall be true and correct as of
the Closing Date (without regard to any materiality, Parent Material Adverse
Effect or other similar qualification contained in or otherwise applicable to
such representation or warranty) as though made on and as of the Closing Date
(except with respect to representations and warranties that address matters only
as of a particular date, which need only be true and correct as of such date);
provided that the condition set forth in this Section 8.03(a) shall be deemed to
be satisfied unless any failure of any such representation or warranty to be
true and correct has a Parent Material Adverse Effect.

(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and
Merger Sub shall have performed in all material respects the obligations
required to be performed by them under this Agreement at or prior to the Closing
Date.

(c) Closing Deliverables. Parent shall have provided the Parent Closing
Deliverables.

(d) Closing Payments. Parent shall have made the Closing Payments contemplated
by Section 3.03.

Section 8.04 Frustration of Closing Conditions. None of Parent, Merger Sub or
the Company may rely on the failure of any condition to its obligation to
consummate the transactions contemplated hereby set forth in Section 8.01,
Section 8.02 or Section 8.03, as the case may be, to be satisfied if a material
cause of such failure was the failure of such party to perform any of its
obligations under this Agreement.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

Section 9.01 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Closing Date:

(a) by mutual written consent of the Company and Parent;

(b) by either the Company or Parent if any Governmental Entity of competent
jurisdiction shall have issued an Order or taken any other action after the date
hereof permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated hereby and such Order or other action shall have
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(c) by either the Company or Parent if the transactions contemplated by this
Agreement shall not have been consummated on or before September 26, 2017,
provided that, if any conditions set forth in Section 8.01(a) shall not have
been satisfied by such date, the Company or Parent may extend the Outside Date
from time to time to a date not later than October 26, 2017, (such date as may
be extended pursuant to this Section 9.01(c), the “Outside Date”); and provided,
further, that the right to terminate this Agreement under this Section 9.01(c)
shall not be available to or on behalf of any party whose action or failure to
act has been a material cause of or resulted in the failure of the Closing to be
consummated on or prior to such date;

(d) by Parent if the Company breaches or fails in any material respect to
perform or comply with any of its covenants or agreements contained herein, or
breaches any of its representations and warranties, in each case that is not
curable, such that the conditions set forth in Section 8.02(a) or Section
8.02(b) cannot be satisfied; and

(e) by the Company if Parent or Merger Sub breach or fail in any material
respect to perform or comply with any of their covenants or agreements contained
herein, or breach any of their representations and warranties, in each case that
is not curable, such that the conditions set forth in Section 8.03(a) or Section
8.03(b) cannot be satisfied.

Any proper termination of this Agreement pursuant to this Section 9.01 shall be
effective immediately upon the delivery of written notice of the terminating
party to the other parties.

Section 9.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 9.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of any party hereto or its respective affiliates,
directors, officers, employees, shareholders, partners, members or other
Representatives, other than pursuant to the provisions of Section 7.01
(Expenses), Section 7.03 (Publication/Distribution of Agreement), this Section
9.02 (Effect of Termination), and Article X (General Provisions) (which Sections
and Articles shall survive any termination of this Agreement); provided that no
such termination of this Agreement shall relieve or otherwise affect the
liability of any party hereto for any willful and intentional breach of this
Agreement by such party prior to such termination. For purposes hereof, a
“willful and intentional breach” shall mean a material breach of any
representation, warranty, covenant or other agreement set forth in this
Agreement that is a consequence of an act undertaken or failure to act by the
breaching party with the actual knowledge that the taking of such act or failure
to act would cause a breach of this Agreement.

ARTICLE X

GENERAL PROVISIONS

Section 10.01 No Waiver or Survival of Representations, Warranties, Covenants
and Agreements. The respective representations and warranties of Parent, Merger
Sub and the Company contained herein or in any certificate or other instrument
delivered pursuant hereto prior to or at the Closing shall not be deemed waived
or otherwise affected by any investigation made by any party hereto. All
representations and warranties made by each of the parties herein shall expire
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and shall thereafter be of no further force or effect (it being understood that
nothing in this Section 10.01 is intended to affect or limit the ability of
Parent to recover under the R&W Insurance for any matters covered thereunder).
The respective covenants and agreements of the parties contained herein which
are to be performed after the Closing shall survive the Effective Time and shall
only terminate in accordance their respective terms.

Section 10.02 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given (a) when received if delivered personally, (b) on the next Business Day if
sent by overnight courier for next Business Day delivery (providing proof of
delivery), (c) on receipt of confirmation if sent by facsimile, (d) in five
Business Days if sent by United States registered or certified mail, postage
prepaid (return receipt requested), or (e) upon receipt of delivery confirmation
if sent by email to the other parties at the following addresses (or at such
other address for a party as shall be specified by like notice):

(a) if to Parent or Merger Sub or, following the Closing, the Surviving
Corporation:

Innophos Holdings, Inc.

259 Prospect Plains Road, Building A

Cranbury, NJ 08512

Attention: Kim Ann Mink and Joshua S. Horenstein

Facsimile No.:

with a copy to:

Baker Botts L.L.P.

30 Rockefeller Plaza

New York, New York 10112

Attention: Lee D. Charles

Facsimile No.: (212) 259-2505

Email: Lee.Charles@BakerBotts.com

(b) if to the Company, to:

c/o GenNx360 Management Company LLC

590 Madison Avenue, 27th Floor

New York, NY 10022

Attention: W. Montague Yort

Facsimile No.:

Email:

with a copy to:

Winston & Strawn LLP

200 Park Avenue

New York, New York 10166

Attention: Bryan Goldstein

Facsimile No.: (212) 294-4700

Email: BGoldstein@winston.com

 

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Section 10.03 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when all such counterparts have been signed by each of
the parties and delivered to the other parties. The exchange of a fully executed
Agreement (in counterparts or otherwise) by facsimile or by electronic delivery
in .pdf format shall be sufficient to bind the parties to the terms and
conditions of this Agreement.

Section 10.04 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) constitutes the
entire agreement between the parties, and supersedes all prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof. Neither this Agreement nor any other agreements
contemplated hereby, is intended to confer upon any Person other than the
parties hereto any legal or equitable rights or remedies.

Section 10.05 Amendment. This Agreement may be amended by action of all the
parties, by action taken or authorized by their respective Boards of Directors,
but no amendment shall be made which the DGCL requires further approval by the
shareholders of the Company without such further approval. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties.

Section 10.06 Extension; Waiver. At any time prior to the Effective Time, each
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) to the extent
permitted by Law, waive any inaccuracies in the representations and warranties
contained in this Agreement by any other party or in any document, certificate
or writing delivered pursuant hereto by any other applicable party, or (c) waive
compliance with any of the covenants, agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.

Section 10.07 Governing Law. This Agreement and the agreements, instruments and
documents contemplated hereby shall be exclusively governed by, and construed in
accordance with, the Laws of the State of Delaware regardless of the Laws that
might otherwise govern under applicable principles of conflict of laws thereof.

Section 10.08 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned (in whole or in
part) by any of the parties hereto (whether by operation of Law or otherwise)
without the prior written consent of the other parties. No assignment by any
party shall relieve such party of any of its obligations hereunder. Subject to
the preceding sentences, this Agreement shall be binding upon, and shall inure
to the benefit of, and shall be enforceable by the parties hereto and their
respective successors and assigns.

Section 10.09 Shareholders’ Representative.

(a) Powers. The Shareholders’ Representative is hereby appointed as the
Shareholders’ true and lawful attorney-in-fact and agent, with full powers of
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Shareholders’ name, place and stead, in all capacities regarding any matter
under this Agreement, the Escrow Agreement, or otherwise relating to the
transactions contemplated hereby or thereby, including for the purposes of:
(i) making decisions with respect to the determination of the calculations set
forth in the Pre-Closing Statement and Post-Closing Statement; (ii) entering
into any settlement or submitting any dispute relating to the Post-Closing
Statement; (iii) taking any action that may be necessary or desirable, as
determined by the Shareholders’ Representative, in its sole discretion, in
connection with the termination of this Agreement in accordance with the terms
hereof; (iv) taking any action that may be necessary or desirable, as determined
by the Shareholders’ Representative, in its sole discretion, in connection with
the closing of the transactions hereunder; (v) taking any and all actions that
may be necessary or desirable, as determined by the Shareholders’
Representative, in its sole discretion, in connection with any amendment to this
Agreement in accordance with the terms hereof; (vi) accepting notices on behalf
of Shareholders; (vii) executing and delivering, on behalf of the Shareholders,
any and all notices, documents or certificates to be executed by the
Shareholders, in connection with the transactions contemplated by this
Agreement; (viii) making any payments or paying any expenses under or in
connection with this Agreement or the Escrow Agreement; (ix) granting any
consent or approval on behalf of the Shareholders or any of them; (x) entering
into any settlement, modifying any indemnification or reimbursement obligation,
or instituting or defending any litigation relating to any claim for losses
against the Shareholders or any of them; and (xi) taking any and all actions and
doing any and all other things provided in, contemplated by or related to this
Agreement or the Escrow Agreement or the actions contemplated hereby or thereby
to be performed on behalf of any Shareholder. As the representative of the
Shareholders, the Shareholders’ Representative shall act as the agent for each
Shareholder and shall have authority to bind each such Shareholder, and Parent
and Merger Sub may rely on such appointment and authority until the receipt of
notice of the appointment of a successor upon two Business Days’ prior written
notice by the existing Shareholders’ Representative to Parent. The grant of
authority described herein (i) is coupled with an interest and is irrevocable
and survives the death, incompetency, bankruptcy or liquidation of any
Shareholder and (ii) survives the consummation of the transactions contemplated
hereby.

(b) Liability. The Shareholders’ Representative will not be liable to any
Shareholder for any act done or omitted under this Agreement as the
Shareholders’ Representative while acting in good faith, and any act taken or
omitted to be taken pursuant to the advice of counsel will be conclusive
evidence of such good faith.

Section 10.10 Specific Performance; Enforcement. The parties hereto agree that
irreparable damage may occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached and that any breach of this Agreement would not be adequately
compensated by monetary damages. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions or other equitable relief to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any court identified in Section 10.11, this being in
addition to any other remedy to which they are entitled at law or in equity,
which right shall include the right of Parent and the Company to cause the
transactions contemplated by this Agreement to be consummated. Any party seeking
an injunction, a decree or order of specific performance shall not be required
to provide any bond or other security in connection therewith and any such
remedy shall be in addition and not in substitution for any other remedy to
which such party is entitled at law or in equity.

 

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Section 10.11 Jurisdiction. Each of the parties irrevocably (i) submits itself
to the exclusive jurisdiction of the Chancery Court of the State of Delaware (or
in the event, but only in the event, that such court does not have subject
matter jurisdiction over such action or proceeding, the Superior Court of the
State of Delaware or the United States District Court for the District of
Delaware) for the purpose of any litigation directly or indirectly based upon,
relating to or arising out of this Agreement or any of the transactions
contemplated hereby or the negotiation, execution or performance hereof or
thereof, (ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and
(iii) agrees that it will not bring any action relating to this Agreement or the
transactions contemplated hereby in any court other than the Chancery Court of
the State of Delaware (or in the event, but only in the event, that such court
does not have subject matter jurisdiction over such action or proceeding, in the
Superior Court of the State of Delaware or the United States District Court for
the District of Delaware). Each of the parties hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any litigation with respect to this Agreement, (x) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to serve in accordance with this Section 10.11, (y) any
claim that it or its property is exempt or immune from jurisdiction of any such
court or from any legal process commenced in such courts (whether through
service of notice, attachment prior to judgment, attachment in aid of execution
of judgment, execution of judgment or otherwise) and (z) to the fullest extent
permitted by the applicable Law, any claim that (A) the suit, action or
proceeding in such court is brought in an inconvenient forum, (B) the venue of
such suit, action or proceeding is improper or (C) this Agreement, or the
subject matter of this Agreement, may not be enforced in or by such courts. Each
of the parties hereby irrevocably consents to service being made through the
notice procedures set forth in Section 10.02 and agrees that service of any
process, summons, notice or document by personal delivery to the respective
addresses set forth in Section 10.02 shall be effective service of process for
any litigation in connection with this Agreement or the transactions
contemplated hereby. Nothing in this Section 10.11 shall affect the right of any
party to serve legal process in any other manner permitted by Law.

Section 10.12 WAIVER OF TRIAL BY JURY. EACH PARTY HERETO AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HERETO CERTIFIES AND ACKNOWLEDGES
THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) EACH PARTY HERETO
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATION OF THIS WAIVER, (C) EACH PARTY
HERETO MAKES THIS WAIVER VOLUNTARILY AND (D) EACH PARTY HERETO HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.12.

Section 10.13 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable Law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such
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unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein, so long
as the economic and legal substance of the transactions contemplated hereby are
not affected in a manner materially adverse to any party hereto. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable Law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.

Section 10.14 Legal Representation. Parent, Merger Sub and the Company hereby
agree, on their own behalf and on behalf of their directors, stockholders,
members, partners, officers, employees and Affiliates, and each of their
successors and assigns (all such parties, the “Waiving Parties”), that
(i) Winston & Strawn LLP may represent the Shareholders’ Representative, the
Shareholders, and each of their respective Affiliates (individually and
collectively, the “Shareholder Group”), on the one hand, and the Company and its
Subsidiaries, on the other hand, in connection with the negotiation,
preparation, execution and delivery of this Agreement, the other agreements
contemplated hereby and the consummation of the transactions contemplated hereby
and thereby (such representation, the “Current Representation”), and
(ii) Winston & Strawn LLP (or any successor) may represent (a) the Shareholder
Group or any director, member, partner, officer, employee or Affiliate of the
Shareholder Group, (b) the Shareholder Representative or (c) any other
Shareholder in the event such Person so requests, in each case in connection
with any dispute, litigation, claim, proceeding or obligation arising out of or
relating to this Agreement, any agreements contemplated by this Agreement or the
transactions contemplated hereby or thereby (any such representation, the
“Post-Closing Representation”) notwithstanding such representation (or any
continued representation) of the Company and/or its Subsidiaries prior to the
Effective Time, and each of Parent, Merger Sub and the Shareholders on behalf of
itself and the Waiving Parties hereby consents thereto and irrevocably waives
(and will not assert) any conflict of interest or any objection arising
therefrom or relating thereto. Each of Parent, Merger Sub and the Company, for
itself and the Waiving Parties, hereby irrevocably acknowledges and agrees that
all communications between the Shareholder Group and their counsel, including
Winston & Strawn LLP, made in connection with the negotiation, preparation,
execution, delivery and performance under, or any dispute or proceeding arising
out of or relating to, this Agreement, any agreements contemplated by this
Agreement or the transactions contemplated hereby or thereby, or any matter
relating to any of the foregoing, are privileged communications between the
Shareholder Group and such counsel and neither Parent, Merger Sub, the Company,
nor any Person purporting to act on behalf of or through Parent, Merger Sub, the
Company or any of the Waiving Parties, will seek to obtain the same by any
process. From and after the Closing, each of Parent, Merger Sub and the Company,
on behalf of itself and the Waiving Parties, waives and will not assert any
attorney-client privilege with respect to any communication between Winston &
Strawn LLP and the Company, its Subsidiaries or any Person in the Shareholder
Group occurring during the Current Representation in connection with any
Post-Closing Representation.

 

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

 

Parent:

 

INNOPHOS HOLDINGS, INC.

By:   /s/ Kim Ann Mink   Name:   Kim Ann Mink   Title:   Chief Executive Officer
and President

[Signature Page to Agreement and Plan of Merger]

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Merger Sub:

 

THOR MERGER SUB, INC.

By:   /s/ Kim Ann Mink   Name:   Kim Ann Mink   Title:   Chief Executive Officer
and President

[Signature Page to Agreement and Plan of Merger]

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Company:

 

GENNX NOVEL HOLDING, INC.

By:   /s/ W. Montague Yort   Name:   W. Montague Yort   Title:   President

[Signature Page to Agreement and Plan of Merger]

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Shareholders’ Representative:

 

GENNX NOVEL REPRESENTATIVE, LLC

By:   /s/ W. Montague Yort   Name:   W. Montague Yort   Title:   President

[Signature Page to Agreement and Plan of Merger]