EXHIBIT 10.1
 
ASSET PURCHASE AGREEMENT
 

 
by and among
 

 
SCHAWK USA INC.
 
(“Buyer”)
 
and
 

 
LAGA, INC.
 
LIPSON ASSOCIATES, INC.
 
(individually a “Seller” and collectively, “Sellers”),
 
BRANDIMAGE-DESGRIPPES & LAGA,
BRANDIMAGE BELGIQUE HOLDING S.A. F/K/A
DESGRIPPES GOBE BRUXELLES S.A.,
DESGRIPPES GOBE GROUP (HK) LTD.,
DESGRIPPES (SHANGHAI) BRAND CONSULTING CO, LTD.,
DESGRIPPES GOBE GROUP (YUHAN HOESA),

 
(individually a “Foreign Subsidiary” and collectively, “Foreign Subsidiaries”)
 
DESIGN PARTNERS, LLC
 
(“Design Partners”)
 
and
 
MARK ANTHONY
 
and
 
JOHN HILBRICH
 
(individually a “Principal” and collectively “Principals”)
 

 
Dated September 15, 2011
 
 
 
 

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TABLE OF CONTENTS
 
Page
 
SECTION 1.
DEFINITIONS AND USAGE 
1

 
 
1.1
DEFINITIONS 
1

 
 
1.2
USAGE 
13

 
SECTION 2.
SALE AND TRANSFER OF ASSETS; CLOSING 
14

 
 
2.1
ASSETS TO BE SOLD 
14

 
 
2.2
EXCLUDED ASSETS 
15

 
 
2.3
CONSIDERATION 
16

 
 
2.4
LIABILITIES 
17

 
 
2.5
ALLOCATION 
20

 
 
2.6
CLOSING 
20

 
 
2.7
CLOSING OBLIGATIONS 
20

 
 
2.8
POST-CLOSING ADJUSTMENTS; DETERMINATION OF ADJUSTMENT AMOUNT 
22

 
 
2.9
CONSENTS 
23

 
SECTION 3.
REPRESENTATIONS AND WARRANTIES OF SELLERS AND DESIGN PARTNERS 
24

 
 
3.1
ORGANIZATION AND GOOD STANDING 
24

 
 
3.2
ENFORCEABILITY; AUTHORITY; NO CONFLICT 
25

 
 
3.3
CAPITALIZATION 
26

 
 
3.4
FINANCIAL REPORTS 
26

 
 
3.5
BOOKS AND RECORDS 
27

 
 
3.6
SUFFICIENCY OF ASSETS 
27

 
 
3.7
DESCRIPTION OF OWNED REAL PROPERTY 
27

 
 
3.8
DESCRIPTION OF LEASED REAL PROPERTY 
27

 
 
3.9
TITLE TO ASSETS; ENCUMBRANCES 
27

 
 
3.10
CONDITION OF FACILITIES 
28

 
 
3.11
ACCOUNTS RECEIVABLE 
28

 
 
3.12
MATERIALS AND SUPPLIES INVENTORIES 
29

 
 
3.13
NO UNDISCLOSED LIABILITIES 
29

 
 
 
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TABLE OF CONTENTS
(continued)
 
Page
 
 
3.14
TAXES 
29

 
 
3.15
NO MATERIAL ADVERSE CHANGE 
31

 
 
3.16
EMPLOYEE BENEFITS 
31

 
 
3.17
COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS 
35

 
 
3.18
LEGAL PROCEEDINGS; ORDERS 
36

 
 
3.19
ABSENCE OF CERTAIN CHANGES AND EVENTS 
37

 
 
3.20
CONTRACTS; NO DEFAULTS 
38

 
 
3.21
INSURANCE 
41

 
 
3.22
ENVIRONMENTAL MATTERS 
42

 
 
3.23
EMPLOYEES 
44

 
 
3.24
LABOR DISPUTES; COMPLIANCE 
44

 
 
3.25
INTELLECTUAL PROPERTY ASSETS 
45

 
 
3.26
COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT AND EXPORT CONTROL AND
ANTIBOYCOTT LAWS 
47

 
 
3.27
RELATIONSHIPS WITH RELATED PERSONS 
48

 
 
3.28
CUSTOMERS AND VENDORS 
49

 
 
3.29
BROKERS OR FINDERS 
49

 
 
3.30
DISCLOSURE 
49

 
SECTION 4.
REPRESENTATIONS AND WARRANTIES OF BUYER 
50

 
 
4.1
ORGANIZATION AND GOOD STANDING 
50

 
 
4.2
AUTHORITY; NO CONFLICT 
50

 
 
4.3
CERTAIN PROCEEDINGS 
50

 
 
4.4
BROKERS OR FINDERS 
51

 
SECTION 5.
COVENANTS OF SELLERS PRIOR TO CLOSING 
51

 
 
5.1
ACCESS AND INVESTIGATION 
51

 
 
5.2
OPERATION OF THE BUSINESS 
51

 
 
5.3
NEGATIVE COVENANT 
52

 
 
5.4
REQUIRED APPROVALS 
53

 
 
 
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TABLE OF CONTENTS
(continued)
 
Page
 
 
5.5
NOTIFICATION 
53

 
 
5.6
NO NEGOTIATION 
54

 
 
5.7
BEST EFFORTS 
54

 
 
5.8
INTERIM FINANCIAL STATEMENTS 
54

 
 
5.9
CHANGE OF NAME 
54

 
 
5.10
PAYMENT OF LIABILITIES 
54

 
SECTION 6.
COVENANTS OF BUYER PRIOR TO CLOSING 
54

 
 
6.1
REQUIRED APPROVALS 
54

 
 
6.2
BEST EFFORTS 
55

 
SECTION 7.
CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE 
55

 
 
7.1
ACCURACY OF REPRESENTATIONS 
55

 
 
7.2
SELLERS’, FOREIGN SUBSIDIARIES’, DESIGN PARTNERS’ AND PRINCIPALS’ PERFORMANCE 
55

 
 
7.3
CONSENTS 
55

 
 
7.4
ADDITIONAL DOCUMENTS 
56

 
 
7.5
NO PROCEEDINGS 
56

 
 
7.6
NO CONFLICT 
56

 
 
7.7
REAL PROPERTY LEASES 
57

 
 
7.8
GOVERNMENTAL AUTHORIZATIONS 
57

 
 
7.9
ENVIRONMENTAL REPORT 
57

 
 
7.10
WARN ACT NOTICE PERIODS AND EMPLOYEES 
57

 
 
7.11
ANCILLARY AGREEMENTS 
57

 
 
7.12
ACCOUNT RELATIONSHIPS 
57

 
 
7.13
FIXED AND OTHER ASSETS 
58

 
SECTION 8.
CONDITIONS PRECEDENT TO SELLERS’ OBLIGATION TO CLOSE 
58

 
 
8.1
ACCURACY OF REPRESENTATIONS 
58

 
 
8.2
BUYER’S PERFORMANCE 
58

 
 
 
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TABLE OF CONTENTS
(continued)
 
Page
 
 
8.3
CONSENTS 
58

 
 
8.4
ADDITIONAL DOCUMENTS 
58

 
 
8.5
NO INJUNCTION 
59

 
SECTION 9.
TERMINATION 
59

 
 
9.1
TERMINATION EVENTS 
59

 
 
9.2
EFFECT OF TERMINATION 
60

 
SECTION 10.
ADDITIONAL COVENANTS 
60

 
 
10.1
EMPLOYEES AND EMPLOYEE BENEFITS 
60

 
 
10.2
PAYMENT OF ALL TAXES RESULTING FROM SALE OF ASSETS BY SELLERS 
63

 
 
10.3
PAYMENT OF OTHER RETAINED LIABILITIES 
63

 
 
10.4
INTENTIONALLY OMITTED 
64

 
 
10.5
REMOVING EXCLUDED ASSETS 
64

 
 
10.6
REPORTS AND RETURNS 
64

 
 
10.7
ASSISTANCE IN PROCEEDINGS 
64

 
 
10.8
NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT 
64

 
 
10.9
CUSTOMER AND OTHER BUSINESS RELATIONSHIPS 
66

 
 
10.10
RETENTION OF AND ACCESS TO RECORDS 
66

 
 
10.11
REPLACEMENT OF FIDUCIARIES AND OTHER REPRESENTATIVES 
67

 
 
10.12
FURTHER ASSURANCES 
67

 
SECTION 11.
INDEMNIFICATION; REMEDIES 
67

 
 
11.1
SURVIVAL 
67

 
 
11.2
INDEMNIFICATION AND REIMBURSEMENT BY SELLERS AND DESIGN PARTNERS 
67

 
 
11.3
INDEMNIFICATION AND REIMBURSEMENT BY BUYER 
68

 
 
11.4
LIMITATIONS ON AMOUNT—SELLERS AND DESIGN PARTNERS 
69

 
 
11.5
LIMITATIONS ON AMOUNT—BUYER 
69

 
 
 
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TABLE OF CONTENTS
(continued)
 
Page
 
 
11.6
TIME LIMITATIONS 
69

 
 
11.7
ESCROW 
70

 
 
11.8
THIRD-PARTY CLAIMS 
70

 
 
11.9
OTHER CLAIMS 
72

 
 
11.10
INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE 
72

 
 
11.11
MITIGATION 
72

 
 
11.12
EXCLUSIVE REMEDY 
72

 
SECTION 12.
GENERAL PROVISIONS 
73

 
 
12.1
EXPENSES 
73

 
 
12.2
PUBLIC ANNOUNCEMENTS 
73

 
 
12.3
NOTICES 
73

 
 
12.4
ARBITRATION 
74

 
 
12.5
ENFORCEMENT OF AGREEMENT 
74

 
 
12.6
WAIVER; REMEDIES CUMULATIVE 
75

 
 
12.7
ENTIRE AGREEMENT AND MODIFICATION 
75

 
 
12.8
DISCLOSURE LETTER AND EXHIBITS 
75

 
 
12.9
ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS 
76

 
 
12.10
SEVERABILITY 
76

 
 
12.11
CONSTRUCTION 
76

 
 
12.12
TIME OF ESSENCE 
77

 
 
12.13
GOVERNING LAW 
77

 
 
12.14
EXECUTION OF AGREEMENT 
77

 
 
12.15
SELLERS’ AND DESIGN PARTNERS’ OBLIGATIONS 
77

 
 
12.16
REPRESENTATIVE OF SELLERS AND DESIGN PARTNERS 
77

 

 
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ASSET PURCHASE AGREEMENT
 
This Asset Purchase Agreement (“Agreement”) is dated as of September 15, 2011
(the “APA Effective Date”), by and among SCHAWK USA INC., a Delaware corporation
(“Buyer” or “Schawk”); LAGA, INC. (d/b/a Brandimage Desgrippes & LAGA and herein
“Brandimage” or “Seller Representative”), a Delaware corporation; LIPSON
ASSOCIATES, INC., an Ohio corporation (“LAI” and together with Brandimage,
individually a “Seller” and collectively “Sellers”); Brandimage-Desgrippes &
LAGA, a French company (“LAGA Paris”), Brandimage Belgique Holdings S.A. f/k/a
Desgrippes Gobe Bruxelles S.A., a Belgian company (“LAGA Brussels”), Desgrippes
Gobe Group (HK) Ltd., a Hong Kong company (“LAGA Hong Kong”), Desgrippes
(Shanghai) Brand Consulting Co, Ltd., a PRC company (“LAGA Shanghai”) and
Desgrippes Gobe Group (Yuhan Hoesa), a Korean company (“LAGA Seoul” and together
with LAGA Paris, LAGA Brussels, LAGA Hong Kong and LAGA Shanghai, individually a
“Foreign Subsidiary” and collectively “Foreign Subsidiaries”); Design Partners,
LLC, a Nevada limited liability company (“Design Partners”), Mark Anthony, a
resident of Ontario, Canada (“Anthony”); and John Hilbrich, a resident of
Illinois (“Hilbrich”) (Anthony and Hilbrich are referred to herein individually
as a “Principal” and collectively as “Principals”).
 
RECITALS
 
A.           Principals (either directly or indirectly through the ownership of
another entity) own all of the membership interests in Design Partners which in
turn owns one hundred percent (100%) of the capital stock of Brandimage, which
in turn directly owns one hundred percent (100%) of the capital stock of LAI,
and LAI owns directly and indirectly all of the Foreign Subsidiaries in the
percentages specified in Part A.
 
B.           Sellers desire to sell, and Buyer desires to purchase, the Assets
of Sellers for the consideration and on the terms set forth in this Agreement.
 
The parties, intending to be legally bound, agree as follows:
 
Section 1.   Definitions and Usage
 
1.1   DEFINITIONS
 
For purposes of this Agreement, the following terms and variations thereof have
the meanings specified or referred to in this Section 1.1:
 
“Accounts Receivable”—(a) all trade accounts receivable and other rights to
payment from customers of Sellers and Foreign Subsidiaries and the full benefit
of all security for such accounts or rights to payment, including all trade
accounts receivable representing amounts receivable in respect of goods shipped
or products sold or services rendered to customers of Sellers and Foreign
Subsidiaries, (b) all other accounts or notes receivable of Sellers and Foreign
Subsidiaries and the full benefit of all security for such accounts or notes and
(c) any claim, remedy or other right related to any of the foregoing.
 
“Adjustment Amount”—the amount by which the Cash Portion of the Purchase Price
is finally adjusted, upward or downward, if any, as determined in accordance
with Section 2.8.
 
 
 
 

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“APA Effective Date”—as defined in the first paragraph of this Agreement.
 
“Appurtenances”—all privileges, rights, easements, hereditaments and
appurtenances belonging to or for the benefit of the Land, including all
easements appurtenant to and for the benefit of any Land (a “Dominant
Parcel”) for, and as the primary means of access between, the Dominant Parcel
and a public way, or for any other use upon which lawful use of the Dominant
Parcel for the purposes for which it is presently being used is dependent, and
all rights existing in and to any streets, alleys, passages and other
rights-of-way included thereon or adjacent thereto (before or after vacation
thereof) and vaults beneath any such streets.
 
“Assets”—as defined in Section 2.1.
 
“Assumed Liabilities”—as defined in Section 2.4(a).
 
“Best Efforts”—the efforts that a prudent Person desirous of achieving a result
would use in similar circumstances to achieve that result as expeditiously as
possible; provided, however, that a Person required to use Best Efforts under
this Agreement will not be thereby required to take actions that would result in
a Material Adverse Change in the benefits to such Person of this Agreement and
the Contemplated Transactions or to dispose of or make any change to its
business, expend any material funds or incur any other material burden.
 
“Breach”—any breach of, or any inaccuracy in, any representation or warranty or
any breach of, or failure to perform or comply with, any covenant or obligation,
in or of this Agreement or any other Contract, or any event which with the
passing of time or the giving of notice, or both, would constitute such a
breach, inaccuracy or failure.
 
“Bulk Sales Laws”—as defined in Section 5.10.
 
“Business”—the business and operations of Sellers and Foreign Subsidiaries;
provided that the Business shall not include the Excluded Assets or the Retained
Liabilities.
 
“Business Day”—any day other than (a) Saturday or Sunday or (b) any other day on
which banks in Illinois are permitted or required to be closed.
 
“Buyer”—as defined in the first paragraph of this Agreement.
 
“Buyer Indemnified Persons”—as defined in Section 11.2.
 
“Cash”—all currency and/or legal tender of any nature and cash equivalents, in
all cases and purposes for this Agreement measured in US Dollar denominations
based upon The Wall Street Journal exchange rate published at the measurement
date in question.
 
“Closing”—as defined in Section 2.6.
 
“Closing Date”—the date on which the Closing actually takes place.
 
“COBRA”—as defined in Section 3.16(f).
 
 
 
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“Code”—the Internal Revenue Code of 1986.
 
“Confidential Information”—as defined in Section 10.8(b).
 
“Consent”—any approval, consent, ratification, waiver or other authorization.
 
“Consulting Agreement”—as defined in Section 2.7(a)(vi).
 
“Contemplated Transactions”—all of the transactions contemplated by this
Agreement.
 
“Contract”—any agreement, contract, Lease, consensual obligation, promise or
undertaking (whether written or oral and whether express or implied), whether or
not legally binding, including those Contracts specified in Section 3.19(a).
 
“Copyrights”—as defined in Section 3.25(a)(iii).
 
“Damages”—as defined in Section 11.2.
 
“Design Partners”—as defined in the first paragraph of this Agreement.
 
“Disclosure Letter”—the disclosure letter delivered by Sellers, Foreign
Subsidiaries and Design Partners to Buyer concurrently with the execution and
delivery of this Agreement.
 
“Effective Time”—the time at which the Closing is consummated.
 
“Employee Plans”—as defined in Section 3.16(a).
 
“Encumbrance”—any charge, claim, community or other marital property interest,
condition, equitable interest, lien, option, pledge, security interest,
mortgage, right of way, easement, encroachment, servitude, right of first
option, right of first refusal or similar restriction, including any restriction
on use, voting (in the case of any security or equity interest), transfer,
receipt of income or exercise of any other attribute of ownership.
 
“Environment”—soil, land surface or subsurface strata, surface waters (including
navigable waters and ocean waters), groundwaters, drinking water supply, stream
sediments, ambient air (including indoor air), plant and animal life and any
other environmental medium or natural resource.
 
“Environmental, Health and Safety Liabilities”—any cost, damages, expense,
liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law, including those
consisting of or relating to:
 
(a)           any environmental, health or safety matter or condition (including
on-site or off-site contamination, occupational safety and health and regulation
of any chemical substance or product);
 
(b)           any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand or response, remedial or
inspection cost or expense arising under any Environmental Law or Occupational
Safety and Health Law;
 
 
 
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(c)           financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment or other remediation or response
actions (“Cleanup”) required by any Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
 
(d)           any other compliance, corrective or remedial measure required
under any Environmental Law or Occupational Safety and Health Law.
 
The terms “removal,” “remedial” and “response action” include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA).
 
“Environmental Law”—any Legal Requirement that requires or relates to:
 
(a)           advising appropriate authorities, employees or the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits or other prohibitions and the commencement of
activities, such as resource extraction or construction, that could have
significant impact on the Environment;
 
(b)           preventing or reducing to acceptable levels the Release of
pollutants or hazardous substances or materials into the Environment;
 
(c)           reducing the quantities, preventing the Release or minimizing the
hazardous characteristics of wastes that are generated;
 
(d)           assuring that products are designed, formulated, packaged and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
 
(e)           protecting resources, species or ecological amenities;
 
(f)           reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances;
 
(g)           cleaning up pollutants that have been Released, preventing the
Threat of Release or paying the costs of such cleanup or prevention; or
 
(h)           making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
 
“ERISA”—the Employee Retirement Income Security Act of 1974.
 
“Escrow Agent”—PNC Bank, N.A. — “Escrow Services.”.
 
“Escrow Agreement”—as defined in Section 2.7(a)(vii).
 
 
 
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“Escrow Amount”—Four Million Dollars ($4,000,000).
 
“Estimated Net Working Capital”—the Net Working Capital, as set forth on the
Estimated Working Capital Schedule.
 
“Estimated Working Capital Schedule”—the draft schedule of the Net Working
Capital as of the Closing Date, prepared and delivered in good faith by Sellers
three (3) days prior to the Closing in accordance with the Net Working Capital
Calculation Formula.
 
“Exchange Act”—the Securities Exchange Act of 1934.
 
“Excluded Assets”—as defined in Section 2.2.
 
“Facilities”—any real property, leasehold or other interest in real property
currently owned or operated by any Seller or any Foreign Subsidiary, including
the Tangible Personal Property used or operated by any Seller or Foreign
Subsidiary at the respective locations of the Real Property specified in
Section 3.7 or 3.8.  Notwithstanding the foregoing, for purposes of the
definitions of “Hazardous Activity” and “Remedial Action” and Section 3.22,
“Facilities” shall mean any real property, leasehold or other interest in real
property currently or formerly owned or operated by a Seller or a Foreign
Subsidiary, including the Tangible Personal Property used or operated by such
Seller at the respective locations of the Real Property specified in Section 3.7
or 3.8.
 
“Film and Digitized Information Files”—all film files, digitized information
files and related computer software owned by any Seller.
 
“Final Net Working Capital”—Net Working Capital as of the Closing Date as
determined in accordance with and specified on the Final Working Capital
Schedule.
 
“Final Working Capital Schedule”—the schedule of the Final Net Working Capital
as of the Closing Date, which shall be in the same format as the Estimated
Working Capital Schedule and will include a calculation of the Net Working
Capital, as finally agreed to or otherwise determined by operation of Section
2.8 and the Working Capital Deficit or Working Capital Surplus, if any.
 
“Financial Reports”—as defined in Section 3.4.
 
“Foreign Subsidiaries” or “Foreign Subsidiary”—all or each of the non-United
States of America chartered legal entities listed on Part A.
 
“Foreign Subsidiaries’ Cash Balance”—all Cash in accounts and reported on hand
at Foreign Subsidiaries at the measurement date in question.
 
“GAAP”—generally accepted accounting principles for financial reporting in the
United States, applied on a basis consistent with the basis on which the
Statement of Assets and Liabilities and the other Financial Reports were
prepared.
 
 
 
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“GAAP Exceptions”—the exceptions to GAAP and/or the accounting principles and
methods of Sellers and Foreign Subsidiary which modify or interpret GAAP, all as
set forth on Exhibit 3.4.
 
“Governing Documents”—with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws or
foreign equivalent; (b) if a general partnership, the partnership agreement and
any statement of partnership; (c) if a limited partnership,  the limited
partnership agreement and the certificate of limited partnership; (d) if a
limited liability company, the articles or certificate of organization and
operating agreement or foreign equivalent; (e) if another type of Person, any
other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; (f) all equityholders’
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person or relating
to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.
 
“Governmental Authorization”—any Consent, license, registration or permit
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement.
 
“Governmental Body”—any:
 
(a)           nation, state, county, city, town, borough, village, district or
other jurisdiction;
 
(b)           federal, state, local, municipal, foreign or other government;
 
(c)           governmental or quasi-governmental authority of any nature
(including any agency, branch, department, board, commission, court, tribunal or
other entity exercising governmental or quasi-governmental powers);
 
(d)           multinational organization or body;
 
(e)           body exercising, or entitled or purporting to exercise, any
administrative, executive, judicial, legislative, police, regulatory or taxing
authority or power; or
 
(f)           official of any of the foregoing.
 
“Ground Lease”—any long-term lease of land in which most of the rights and
benefits comprising ownership of the land and the improvements thereon or to be
constructed thereon, if any, are transferred to the tenant for the term thereof.
 
“Ground Lease Property”—any land, improvements and Appurtenances subject to a
Ground Lease in favor of any Seller or any Foreign Subsidiary.
 
“Hazardous Activity”—the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment or use (including any withdrawal or other
use of groundwater) of Hazardous Material in, on, under, about or from any of
the Facilities or any part thereof into the Environment and
 
 
 
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any other act, business, operation or thing that increases the danger, or risk
of danger, or poses an unreasonable risk of harm, to persons or property on or
off the Facilities.
 
“Hazardous Material”—any substance, material or waste which is or will
foreseeably be regulated by any Governmental Body, including any material,
substance or waste which is defined as a “hazardous waste,” “hazardous
material,” “hazardous substance,” “extremely hazardous waste,” “restricted
hazardous waste,” “contaminant,” “toxic waste” or “toxic substance” under any
provision of Environmental Law, and including petroleum, petroleum products,
asbestos, presumed asbestos-containing material or asbestos-containing material,
urea formaldehyde and polychlorinated biphenyls.
 
“HSR Act”—the Hart-Scott-Rodino Antitrust Improvements Act.
 
“Improvements”—all buildings, structures, fixtures and improvements located on
the Land or included in the Assets, including those under construction.
 
“Indemnified Person”—as defined in Section 11.8.
 
“Indemnifying Person”—as defined in Section 11.8.
 
“Initial Cash Payment”—as defined in Section 2.3.
 
“Intellectual Property Assets”—as defined in Section 3.25(a).
 
“IRS”—the United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.
 
“Knowledge”—an individual will be deemed to have Knowledge of a particular fact
or other matter if:
 
(a)           that individual is actually aware of that fact or matter; or
 
(b)           a prudent individual could be expected to discover or otherwise
become aware of that fact or matter in the course of conducting a reasonably
comprehensive investigation regarding the accuracy of any representation or
warranty contained in this Agreement; provided that this paragraph (b) shall
only be deemed to apply to that portion of the Business conducted in the United
States of America and shall not be deemed to apply to the business and
operations of the Foreign Subsidiaries.
 
A Person (other than an individual) will be deemed to have Knowledge of a
particular fact or other matter if any individual who is serving, or who has at
any time served, as a director, officer, partner, executor or trustee of that
Person (or in any similar capacity) has, or at any time had, Knowledge of that
fact or other matter (as set forth in (a) and (b) above), and any such
individual (and any individual party to this Agreement) will be deemed to have
conducted a reasonably comprehensive investigation regarding the accuracy of the
representations and warranties made herein by that Person or individual.
 
 
 
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“Land”—all parcels and tracts of land in which any Seller or Foreign Subsidiary
has an ownership interest.
 
“Lease”—any Real Property Lease or any lease or rental agreement, license, right
to use or installment and conditional sale agreement to which any Seller or any
Foreign Subsidiary is a party and any other Seller Contract pertaining to the
leasing or use of any Tangible Personal Property.
 
“Legal Requirement”—any federal, state, local, municipal, foreign,
international, multinational or other constitutional, law, ordinance, principle
of common law, code, regulation, statute or treaty.
 
“Liability”—with respect to any Person, any liability or obligation of such
Person of any kind, character or description, whether known or unknown, absolute
or contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.
 
“Marks”—as defined in Section 3.25(a)(i).
 
“Material Adverse Effect” or “Material Adverse Change”—with respect to any
occurrence, incident, action, failure to act, event, change or effect that is or
could reasonably be expected to be, materially adverse to the condition
(financial or otherwise), properties, assets, liabilities, business, results of
operations, or prospects of the Business, taken as a whole, or to the
enforcement of this Agreement and any agreement contemplated herein, except
changes or any effect resulting from (a) the announcement or other disclosure of
this Agreement, (b) changes in general business and/or economic conditions,
hostilities involving the United States or in general financial market
conditions; (c) any changes in Laws directly or indirectly affecting the Buyer,
any Seller or any Foreign Subsidiary; and (d) general developments affecting the
industry in which any Seller or any Foreign Subsidiary competes.
 
“Material” or “Materially”—as used in connection with events, contingencies,
claims or other matters (or a series of related such matters) expressly relating
in the Agreement to any particular asset of Sellers or the Business as a whole
as the case may be, shall mean such matters as a reasonably prudent investor
would consider important (either, individually, or when considering the
collective effect of all such matters) in deciding whether to purchase the
Assets, as a whole, Sellers, or the Business on the terms provided herein.
 
“Material Consents”—as defined in Section 7.3.
 
“Materials and Supplies Inventories”—all inventories of Sellers, wherever
located, and of all materials and supplies to be used or consumed by Sellers in
the production of finished goods.
 
“Net Working Capital”—the current assets (other than Cash) included in the
definition of Assets, less the current liabilities of Sellers and the Foreign
Subsidiaries as of the close of business on the relevant measurement date,
prepared in accordance with the Net Working Capital
 
 
 
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Formula.  For purposes of clarity, current liabilities shall specifically
exclude any Retained Liabilities.
 
“Net Working Capital Calculation Formula”—the formula utilized in determining
each of the Target Net Working Capital, Estimated Net Working Capital, and the
Final Net Working Capital as set forth on Exhibit 2.8.
 
“Occupational Safety and Health Law”—any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, including the Occupational Safety and Health Act, and any
program, whether governmental or private (such as those promulgated or sponsored
by industry associations and insurance companies), designed to provide safe and
healthful working conditions.
 
“Order”—any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.
 
“Ordinary Course of Business”—an action taken by a Person will be deemed to have
been taken in the Ordinary Course of Business only if that action:
 
(a)           is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person;
 
(b)           does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
 
(c)           is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of
the normal, day-to-day operations of other Persons that are in the same line of
business as such Person.
 
“Part”—a part or section of the Disclosure Letter.
 
“Patents”—as defined in Section 3.25(a)(ii).
 
“Permitted Encumbrances”—as defined in Section 3.9(b).
 
“Person”—an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Body.
 
“Preliminary Adjustment Amount”—the difference, positive or negative, between
the Target Net Working Capital and the Estimated Net Working Capital.
 
“Principal(s)”—John Hilbrich and Mark Anthony (individually a “Principal” and
collectively, “Principals”).
 
“Proceeding”—any action, arbitration, audit, hearing, investigation, litigation
or suit (whether civil, criminal, administrative, judicial or investigative,
whether formal or informal,
 
 
 
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whether public or private) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
 
“Proscribed Business”—the strategic design business performed for the Retail,
Pharmaceuticals, Consumer Packaged Goods and Technology industries.  Such
business shall include a go to market strategy like or similar to the type of
work and business being performed and operated by Schawk and its Anthem division
and the Business as of the Effective Time.  Such work and business includes
providing goods and services related to strategy, creative, design, structural,
digital and premedia for branding and packaging as historically conducted by
Schawk or the Business.  Notwithstanding the foregoing, Proscribed Business
shall not include traditional advertising agency and promotional service, or
internet strategy, online communications strategy, online advertising, internet
marketing and communications.
 
“Purchase Price”—as defined in Section 2.3.
 
“Real Property”—the Land and Improvements and all Appurtenances thereto and any
Ground Lease Property.
 
“Real Property Lease”—any Ground Lease or Space Lease.
 
“Record”—information that is inscribed on a tangible medium or that is stored in
an electronic or other medium and is retrievable in perceivable form.
 
“Related Person”—
 
(a)           With respect to a particular individual:
 
(i)           each other member of such individual’s family;
 
(ii)           any Person that is directly or indirectly controlled by one or
more members of such individual’s family;
 
(iii)           any Person in which members of such individual’s family hold
(individually or in the aggregate) a Material Interest; and
 
(iv)           any Person with respect to which one or more members of such
individual’s family serve as directors, officers, partners, executors or
trustees (or in a similar capacity).
 
(b)           With respect to a specified Person other than an individual:
 
(i)           any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common control with
such specified Person;
 
(ii)           any Person that holds a Material Interest in such specified
Person;
 
(ii)           each Person that serves as a director, officer, partner, executor
or trustee of such specified Person (or in a similar capacity);
 
 
 
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(iv)           any Person in which such specified Person holds a Material
Interest; and
 
(v)           any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
 
For purposes of this definition, (a) “control” (including “controlling,”
“controlled by,” and “under common control with”) means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the “Family” of an individual includes
(i) the individual, (ii) the individual’s spouse, (iii) any other natural person
who is related to the individual or the individual’s spouse within the first
degree and (iv) any other natural person who resides with such individual; and
(c) “Material Interest” means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least ten percent (10%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity securities or
equity interests in a Person.
 
“Release”—any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching or
migration on or into the Environment or into or out of any property.
 
“Remedial Action”—all actions, including any capital expenditures, required or
voluntarily undertaken (a) to clean up, remove, treat or in any other way
address any Hazardous Material or other substance; (b) to prevent the Release or
Threat of Release or to minimize the further Release of any Hazardous Material
or other substance so it does not migrate or endanger or threaten to endanger
public health or welfare or the Environment; (c) to perform pre-remedial studies
and investigations or post-remedial monitoring and care; or  (d) to bring all
Facilities and the operations conducted thereon into compliance with
Environmental Laws and environmental Governmental Authorizations.
 
“Representative”—with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor, accountant, financial advisor,
legal counsel or other representative of that Person.
 
“Retained Liabilities”—as defined in Section 2.4(b).
 
“SEC”—the United States Securities and Exchange Commission.
 
“Securities Act”—as defined in Section 3.3.
 
“Seller” and “Sellers”—as defined in the first paragraph of this Agreement.
 
“Seller Contract”—with respect to each Seller and each Foreign Subsidiary, any
Contract (a) under which any Seller or any Foreign Subsidiary has acquired or
may acquire any rights or benefits; (b) under which any Seller or any Foreign
Subsidiary has or may become subject to any obligation or liability; or (c) by
which any Seller or any Foreign Subsidiary or any of the assets owned or used by
such Seller or such Foreign Subsidiary is or may become bound.
 
 
 
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“Software”—all computer software and subsequent versions thereof, including
source code, object, executable or binary code, objects, comments, screens, user
interfaces, report formats, templates, menus, buttons and icons and all files,
data, materials, manuals, design notes and other items and documentation related
thereto or associated therewith.
 
“Space Lease”—any lease or rental agreement pertaining to the occupancy of any
improved space on any Land.
 
“Statement of Assets and Liabilities”—as defined in Section 3.4.
 
“Subsidiary”—with respect to any Person (the “Owner”), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation’s or other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.
 
“Tangible Personal Property”—all machinery, equipment, tools, furniture, office
equipment, computer hardware, supplies, materials, vehicles and other items of
tangible personal property of every kind owned or leased by any Seller or any
Foreign Subsidiary (wherever located and whether or not carried on such Seller’s
or such Foreign Subsidiary’s books), together with any express or implied
warranty by the manufacturers or sellers or lessors of any item or component
part thereof and all maintenance records and other documents relating thereto.
 
“Target Net Working Capital”—an amount specified in and/or derived from
application of the Net Working Capital Calculation Formula.
 
“Tax”—any income, gross receipts, license, payroll, employment, excise, escheat
or unclaimed property, severance, stamp, occupation, premium, property,
environmental, windfall profit, customs, vehicle, airplane, boat, vessel or
other title or registration, capital stock, franchise, employees’ income
withholding, foreign or domestic withholding, social security, unemployment,
disability, real property, personal property, sales, use, transfer, value added,
alternative, add-on minimum and other tax, fee, assessment, levy, tariff, charge
or duty of any kind whatsoever and any interest, penalty, addition or additional
amount thereon imposed, assessed or collected by or under the authority of any
Governmental Body or payable under any tax-sharing agreement or any other
Contract.
 
“Tax Return”—any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
 
“Third Party”—a Person that is not a party to this Agreement.
 
“Third-Party Claim”—any claim against any Indemnified Person by a Third Party,
whether or not involving a Proceeding.
 
 
 
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“Threat of Release”—a reasonable likelihood of a Release that may require action
in order to prevent or mitigate damage to the Environment that may result from
such Release.
 
“Transfer, Assignment, Bill of Sale and Assumption Agreement”—as defined in
Section 2.7(a)(i).
 
“WARN Act”—as defined in Section 3.23(d).
 
“WIP”—work-in-process for customers that has a reasonably certain likelihood to
become a completed project in respect of which an Account Receivable will be
generated upon such completion, including, but not limited to, unbilled
receivables on the Statement of Assets and Liabilities.
 
“Working Capital Deficit”—the amount, if any, by which the Final Net Working
Capital reflected on the Final Working Capital Schedule is less than the
Estimated Net Working Capital applying the Net Working Capital Calculation
Formula.
 
“Working Capital Surplus”—the amount, if any, by which the Final Net Working
Capital reflected on the Final Working Capital Schedule is more than the
Estimated Net Working Capital, applying the Net Working Capital Calculation
Formula.
 
1.2   USAGE
 
(a)   Interpretation.  In this Agreement, unless a clear contrary intention
appears:
 
(i)   the singular number includes the plural number and vice versa;
 
(ii)   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;
 
(iii)   reference to any gender includes each other gender;
 
(iv)   reference to any agreement, document or instrument means such agreement,
document or instrument as amended or modified and in effect from time to time in
accordance with the terms thereof;
 
(v)   reference to any Legal Requirement means such Legal Requirement as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated
thereunder, and reference to any section or other provision of any Legal
Requirement means that provision of such Legal Requirement from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such section or other provision;
 
 
 
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(vi)   “hereunder,” “hereof,” “hereto,”  and words of similar import shall be
deemed references to this Agreement as a whole and not to any particular
Article, Section or other provision hereof;
 
(vii)   “including” (and with correlative meaning “include”) means including
without limiting the generality of any description preceding such term;
 
(viii)   “or” is used in the inclusive sense of “and/or”;
 
(ix)   with respect to the determination of any period of time, “from” means
“from and including” and “to” means “to but excluding”; and
 
(x)   references to documents, instruments or agreements shall be deemed to
refer as well to all addenda, exhibits, schedules or amendments thereto.
 
(b)   Accounting Terms and Determinations.  Unless otherwise specified herein,
all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP.
 
(c)   Legal Representation of the Parties.  This Agreement was negotiated by the
parties with the benefit of legal representation, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any party shall not apply to any construction or
interpretation hereof.
 
Section 2.   Sale and Transfer of Assets; Closing
 
2.1   ASSETS TO BE SOLD
 
Upon the terms and subject to the conditions set forth in this Agreement, at the
Closing, but effective as of the Effective Time, each Seller shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase and acquire from
Sellers, free and clear of any Encumbrances other than Permitted Encumbrances,
all of Sellers’ right, title and interest in and to all of each Seller’s
property and assets, real, personal or mixed, tangible and intangible, of every
kind and description, wherever located, including the following (but excluding
the Excluded Assets):
 
(a)   all ownership interests (whether in the form of shares or other equity
interests) in each of the Foreign Subsidiaries all as more particularly
expressed in Part A;
 
(b)   all Real Property, including the Real Property described in Part 3.8;
 
(c)   all Tangible Personal Property, including those items described in
Part 2.1(b);
 
(d)   all Materials and Supplies Inventories and all Film and Digitized
Information Files;
 
(e)   all Accounts Receivable and WIP;
 
 
 
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(f)   all Seller Contracts, including those listed in Part 3.20(a), and all
outstanding offers or solicitations made by or to any Seller to enter into any
Contract;
 
(g)   all Governmental Authorizations related to the Business and all pending
applications therefor or renewals thereof, in each case to the extent
transferable to Buyer, including those listed in Part 3.17(b);
 
(h)   all data and Records related to the operations of the Business by Sellers,
including client and customer lists and Records, referral sources, research and
development reports  and Records, production reports and Records, service and
warranty Records, equipment logs, operating guides and manuals, financial and
accounting Records, customer accounts, pricing and quotation records, creative
materials, advertising materials, promotional materials, studies, reports,
correspondence and other similar documents and Records and, subject to Legal
Requirements, copies of all personnel Records and other Records described in
Section 2.2(g);
 
(i)   all of the intangible rights and property of Sellers, including
Intellectual Property Assets, going concern value, goodwill, telephone, telecopy
and e-mail addresses  and listings and those items listed in Parts 3.25(e),
(f) and (h);
 
(j)   all insurance benefits, including rights and proceeds, but only to the
extent arising from or relating to the Assets or the Assumed Liabilities prior
to the Effective Time, unless expended in accordance with this Agreement;
 
(k)   all claims of any Seller against third parties but only to the extent
arising from or relating to the Assets or the Assumed Liabilities, whether
choate or inchoate, known or unknown, contingent or noncontingent, including all
such claims listed in Part 2.1(j);
 
(l)   all rights of any Seller relating to deposits and prepaid expenses, claims
for refunds and rights to offset in respect thereof that are not listed in Part
2.2(d) and that are not excluded under Section 2.2(g) but only to the extent
arising from or relating to the Assets or the Assumed Liabilities;
 
(m)   all Cash on hand and bank accounts of Foreign Subsidiaries at Closing; and
 
(n)   all rights in connection with, and assets of, any non-US Employee Plans.
 
All of the property, rights and assets to be transferred to Buyer hereunder are
herein referred to collectively as the “Assets.”
 
Notwithstanding the foregoing, the transfer of the Assets pursuant to this
Agreement shall not include the assumption of any Liability related to the
Assets unless Buyer expressly assumes that Liability pursuant to Section 2.4(a).
 
2.2   EXCLUDED ASSETS
 
Notwithstanding anything to the contrary contained in Section 2.1 or elsewhere
in this Agreement, the following property, rights and assets of Sellers
(collectively, the “Excluded
 
 
 
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Assets”) are not part of the sale and purchase contemplated hereunder, are
excluded from the Assets and shall remain the property of Sellers after the
Closing:
 
(a)   all Cash, cash equivalents and short-term investments (other than Cash on
hand and in the bank accounts of Foreign Subsidiaries);
 
(b)   all minute books, stock Records, historic computer server based corporate
data and e-mail communications of Sellers’ executive officers and Board of
Directors pertaining to corporate, financial and tax matters and all Records
solely pertaining to Retained Liabilities and corporate seals;
 
(c)   the shares of capital stock (or equivalent) of any Seller held in
treasury;
 
(d)   those rights relating to deposits and prepaid expenses and claims for
refunds and rights to offset in respect thereof related to other Excluded Assets
and/or Retained Liabilities, including those listed in Part 2.2(d);
 
(e)   all insurance policies and rights thereunder (except to the extent
specified in Part 2.1(i) and (j)) but only to the extent related to or arising
out of the Excluded Assets or the Retained Liabilities;
 
(f)   all personnel Records and other Records pertaining solely to Excluded
Assets and Retained Liabilities that Seller is required by law to retain in its
possession;
 
(g)   all claims for refund of Taxes and other governmental charges of whatever
nature;
 
(h)   all rights in connection with and assets of the Employee Plans;
 
(i)   all rights of Sellers under this Agreement, the Transfer, Assignment, Bill
of Sale and Assumption Agreement and the Escrow Agreement;
 
(j)   all claims of Sellers or any Foreign Subsidiaries against third parties
arising from or relating in any manner to Excluded Assets and/or Excluded
Liabilities; and
 
(k)   the property and assets expressly designated in Part 2.2(k).
 
2.3   CONSIDERATION
 
The consideration for the Assets (the “Purchase Price”) will be (a) Twenty-Five
Million Dollars ($25,000,000) (the “Cash Portion”) plus or minus the Adjustment
Amount and (b) the assumption of the Assumed Liabilities.  In accordance with
Section 2.7(b), at the Closing, the Purchase Price, prior and subject to
adjustment on account of the Preliminary Adjustment Amount, shall be delivered
by Buyer to Seller as follows: (a) Twenty-One Million Dollars ($21,000,000) (the
“Initial Cash Payment”) by wire transfer to an account or accounts as specified
by Seller Representative which specification will be made at least three (3)
days prior to the Closing Date; (b) Four Million Dollars ($4,000,000) paid to
Escrow Agent pursuant to the Escrow Agreement; and (c) the balance of the
Purchase Price by the execution and delivery of
 
 
 
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the Assignment, Bill of Sale and Assumption Agreement.  The Preliminary
Adjustment Amount shall be subtracted or added to the Initial Cash Payment, as
appropriate, if negative or positive respectively.  The Escrow Agreement shall
provide, inter alia, that one-half (1/2) of the Escrow Amount (less any amount
disbursed pursuant to Section 2.8 or any amount disbursed or reserved for
disbursement pursuant to Section 11) shall be released on the first anniversary
date of the Closing Date and that any remaining Escrow Amount (net of
disbursements and amounts reserved for disputed items) shall be released on the
second anniversary of the Closing Date.  Buyer agrees to discuss, in good faith,
with Sellers a reduction in the Escrow Amount to Two Million Dollars
($2,000,000) and the Indemnification Cap to $2,500,000 prior to Closing as a
result of Buyer’s due diligence investigation but shall not be obligated to
agree to any such reduction.
 
2.4   LIABILITIES
 
(a)   Assumed Liabilities.  On the Closing Date, but effective as of the
Effective Time, Buyer shall assume and agree to discharge only the following
Liabilities of Sellers (the “Assumed Liabilities”):
 
(i)   any trade account payable reflected on the Interim Statement of Assets and
Liabilities (other than a trade account payable to a Related Person of a
Seller) that remains unpaid at and is not delinquent as of the Effective Time;
 
(ii)   any trade account payable (other than a trade account payable to a
Related Person of a Seller) incurred by a Seller in the Ordinary Course of
Business between the date of the Interim Statement of Assets and Liabilities and
the Effective Time that remains unpaid as of the Effective Time and is included
in the Estimated Net Working Capital;
 
(iii)   any Liability to Sellers’ and Foreign Subsidiaries’ customers incurred
by a Seller or a Foreign Subsidiary in the Ordinary Course of Business for
orders outstanding as of the Effective Time reflected on Sellers’ or Foreign
Subsidiaries’ books (other than any Liability arising out of or relating to a
Breach that occurred prior to the Effective Time);
 
(iv)   any Liability to Sellers’ or Foreign Subsidiaries’ customers in the
Ordinary Course or under any customer mandated warranty agreements or
arrangements in the forms disclosed in Part 2.4(a)(iv) given by a Seller or a
Foreign Subsidiary to its customers in the Ordinary Course of Business prior to
the Effective Time (except to the extent any Liability arises out of or relates
to a Breach that occurred prior to the Effective Time);
 
(v)   any Liability arising after the Effective Time under the Seller Contracts
described in Part 3.20(a) (other than any Liability arising under the Seller
Contracts described on Exhibit 2.4(a)(v) or to the extent arising out of or
relating to a Breach that occurred prior to the Effective Time).  Buyer
acknowledges that Part 3.20(a) may contain a generic reference to Seller
Contracts of Foreign Subsidiaries entered into in the Ordinary Course of
Business so long as the dollar equivalent if any such Seller
 
 
 
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Contract does not exceed One Hundred Fifty Thousand Dollars ($150,000).  At
Closing, Buyer shall be deemed to have assumed all such Seller Contracts;
 
(vi)   any Liability of any Seller or any Foreign Subsidiary arising after the
Effective Time under any Seller Contract included in the Assets that is entered
into by a Seller or a Foreign Subsidiary after the APA Effective Date in
accordance with the provisions of this Agreement (other than any Liability to
the extent arising out of or relating to a Breach that occurred prior to the
Effective Time);
 
(vii)   accrued vacation pay and other accrued benefits owed to employees of the
Business;
 
(viii)   current accrued payroll and payroll taxes (including federal, state and
local) with respect to employees of the Business for the then outstanding pay
period straddling the Effective Time to the extent included in the Estimated Net
Working Capital forward;
 
(ix)   deferred revenue (to the extent included on the Final Working Capital
Schedule);
 
(x)   any Liability of any Seller or any Foreign Subsidiary described in Part
2.4(a)(x);
 
(xi)   all Liabilities of the Foreign Subsidiaries of every nature whatsoever
arising after the Effective Time; except to the extent specifically included in
the Retained Liabilities;
 
(xii)   all Liabilities associated with Buyer’s operation of the Business or
ownership of the Assets arising on and after the Effective Time; and
 
(xiii)   all Liabilities associated with the termination or retirement of any
Hired Active Employee after the Effective Time.
 
(b)   Retained Liabilities.  The Retained Liabilities shall remain the sole
responsibility of and shall be retained, paid, performed and discharged solely
by each of the Sellers, respectively, or, with respect to Liabilities of the
Foreign Subsidiaries, paid prior to the Effective Time.  “Retained Liabilities”
shall mean every Liability of any Seller or any Foreign Subsidiary other than
the Assumed Liabilities, including:
 
(i)   any Liability arising out of or relating to products of any Seller or
Foreign Subsidiary to the extent manufactured or sold prior to the Effective
Time other than to the extent assumed under Section 2.4(a)(iii), (iv) or (v);
 
(ii)   any Liability under any Contract assumed by Buyer pursuant to
Section 2.4(a) or under a Contract of a Foreign Subsidiary that arises after the
Effective Time to the extent such Liability arises out of or relates to any
Breach that occurred prior to the Effective Time;
 
 
 
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(iii)   any Liability for Taxes, including (A) any Taxes arising as a result of
Seller’s operation of its business or ownership of the Assets prior to the
Effective Time (except to the extent assumed under Section 2.4(c)(viii)),
(B) any Taxes that will arise as a result of the sale of the Assets pursuant to
this Agreement and (C) any deferred Taxes of any nature;
 
(iv)   any Liability under any Contract not assumed by Buyer under
Section 2.4(a) or under any Contract of any Foreign Subsidiary not identified on
Part 3.20(a) or, including any Liability arising out of or relating to Sellers’
or Foreign Subsidiaries’ credit facilities or any security interest related
thereto;
 
(v)   any Environmental, Health and Safety Liabilities arising out of or
relating to the operation of the Business prior to the Effective Time or
Seller’s or any Foreign Subsidiary’s leasing, ownership or operation of real
property prior to the Effective Time;
 
(vi)   all Liabilities of Sellers or Foreign Subsidiaries, including, without
limitation, accrued and/or, if applicable, deferred taxes (except as otherwise
provided in Section 2.4 above in respect to current accrued payroll taxes),
costs, expenses or liabilities arising out of or related to terminated Employee
Plans or Employee Plans in the process of being terminated, indebtedness for
borrowed money (including any interest thereof), obligations under capital
leases, all other long-term liabilities and current portions thereof and all
unfunded pension liabilities;
 
(vii)   any Liability under the Employee Plans or relating to workers’
compensation (measured on a claims made basis), unemployment benefits, pension
benefits, employee stock option or profit-sharing plans, health care plans or
benefits or any other employee plans or benefits of any kind for Sellers’ or
Foreign Subsidiaries’ employees or former employees or both except to the extent
arising after the Effective Time as a part of Buyer’s operation of the Business;
 
(viii)   any Liability under any employment, severance, retention or termination
agreement with any employee of any Seller;
 
(ix)   any Liability arising out of or relating to any employee grievance for
any matters occurring prior to the Effective Time whether or not the affected
employees of Seller or Foreign Subsidiaries are hired by Buyer;
 
(x)   any Liability of any Seller or any Foreign Subsidiary to any Related
Person of any Seller;
 
(xi)   any Liability to indemnify, reimburse or advance amounts to any officer,
director, employee or agent of any Seller or any Foreign Subsidiary;
 
(xii)   any Liability to distribute to any of any Seller’s or any Foreign
Subsidiary’s shareholders or other equity holders or otherwise apply all or any
part of the consideration received hereunder;
 
 
 
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(xiii)   any Liability of any Seller or any Foreign Subsidiary arising out of
any Proceeding pending as of the Effective Time;
 
(xiv)   any Liability of any Seller or any Foreign Subsidiary arising out of any
Proceeding commenced after the Effective Time and to the extent arising out of
or relating to any occurrence or event happening prior to the Effective Time;
 
(xv)   any Liability arising out of or resulting from any Seller’s or any
Foreign Subsidiary’s compliance or noncompliance with any Legal Requirement or
Order of any Governmental Body;
 
(xvi)   any Liability of any Seller under this Agreement or any other document
executed in connection with the Contemplated Transactions; and
 
(xvii)   any Liability of any Seller based upon any Seller’s acts or omissions
occurring after the Effective Time.
 
2.5   ALLOCATION
 
The Purchase Price shall be allocated among the Assets and the covenant not to
compete contained in Section 10.8 hereof as set forth on Exhibit 2.5
hereto.  Exhibit 2.5 shall be completed and based upon a valuation of the
Purchased Assets completed by Duff and Phelps Ltd. (at Buyer’s expense) after
the Closing Date, subject to Sellers’ and UHY, LLP’s acceptance and agreement to
such allocation.  In the event that Sellers dispute the asset allocation as
proposed by Duff & Phelps Ltd., then any such dispute shall be resolved (and the
cost of such resolution shall be allocated among the parties) pursuant to the
dispute resolution provisions of Section 2.8.  The parties agree that the
allocations to be set forth in Exhibit 2.5 shall be used by them and respected
for all purposes, including income tax purposes if in conformance with the rules
and regulations of the Code and that the parties shall follow such allocation
for all reporting purposes.  The parties shall file IRS Form 8954 and make such
other filings as legally required.
 
2.6   CLOSING
 
The closing (“Closing”) of the transactions contemplated hereby shall take place
on a date mutually agreed to by Sellers and Buyer, not later than October 1,
2011, with an effective date of 12:01 a.m. (Chicago time) October 1, 2011, at
such place as may be mutually agreed to by Sellers and Buyer.
 
2.7   CLOSING OBLIGATIONS
 
In addition to any other documents to be delivered under other provisions of
this Agreement, at the Closing:
 
(a)   Sellers shall deliver to Buyer, together with funds sufficient to pay all
Taxes necessary for the transfer, filing or recording thereof:
 
(i)   a Transfer, Assignment, Bill of Sale and Assumption Agreement of all of
the Assets that are intangible personal property in the form of
Exhibit 2.7(a)(i),
 
 
 
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executed by Seller which Transfer, Assignment, Bill of Sale and Assumption
Agreement shall also contain Buyer’s undertaking and assumption of the Assumed
Liabilities (the “Transfer, Assignment, Bill of Sale and Assumption Agreement”);
 
(ii)   for each interest in Real Property identified on Part 3.8, an Assignment
and Assumption of Lease in the form of Exhibit 2.7(a)(ii) or such other
appropriate document or instrument of transfer, as the case may require, each in
form and substance satisfactory to the parties and their counsel and executed by
Sellers;
 
(iii)   assignments of all Intellectual Property Assets and separate assignments
of all registered Marks, Patents and Copyrights in the form of
Exhibit 2.7(a)(iii) executed by Sellers;
 
(iv)   such other deeds, bills of sale, assignments, stock or membership
certificates, certificates of title, documents and other instruments of transfer
and conveyance as may reasonably be requested by Buyer, including an assignment
of ownership interests in each Foreign Subsidiary to the extent owned directly
or indirectly, by a Seller, each in form and substance satisfactory to the
parties and their legal counsel and executed by Sellers;
 
(v)   Consulting Agreement in the form of Exhibit 2.7(a)(v), executed by John
Hilbrich and Dan Doster (the “Consulting Agreement”);
 
(vi)   an escrow agreement in the form of Exhibit 2.7(a)(vi), executed by Buyer
and Sellers and the Escrow Agent (the “Escrow Agreement”); and
 
(vii)   a certificate of the Secretary of each Seller certifying, as complete
and accurate as of the Closing, attached copies of the Governing Documents of
Sellers, certifying and attaching all requisite resolutions or actions of each
Seller’s board of directors and shareholders (or equivalent) approving the
execution and delivery of this Agreement and the consummation of the
Contemplated Transactions and the change of name contemplated by Section 5.9 and
certifying to the incumbency and signatures of the officers of each Seller
executing this Agreement and any other document relating to the Contemplated
Transactions  and accompanied by the requisite documents for amending the
relevant Governing Documents of each Seller required to effect such change of
name in form sufficient for filing with the appropriate Governmental Body.
 
(b)   Buyer shall deliver to Sellers:
 
(i)   The Initial Cash Payment as adjusted by the Preliminary Adjustment Amount
plus the Foreign Subsidiaries Cash Balance, by wire transfer to an account
specified by Seller Representative in a writing delivered to Buyer at least
three (3) business days prior to the Closing Date;
 
(ii)   the Escrow Agreement, executed by Buyer and the Escrow Agent, together
with the delivery of Four Million Dollars (US$4,000,000) to the Escrow Agent
thereunder, by wire transfer to an account specified by the Escrow Agent;
 
 
 
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(iii)   the Transfer, Assignment, Bill of Sale and Assumption Agreement executed
by Buyer;
 
(iv)   the Consulting Agreement executed by Buyer;
 
(v)   a certificate of the Secretary of Buyer certifying, as complete and
accurate as of the Closing, attached copies of the Governing Documents of Buyer
and certifying and attaching all requisite resolutions or actions of Buyer’s
board of directors approving the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Buyer executing this Agreement and
any other document relating to the Contemplated Transactions; and
 
(vi)   an Assignment and Assumption of Lease(s) executed by Buyer.
 
2.8   POST-CLOSING ADJUSTMENTS; DETERMINATION OF ADJUSTMENT AMOUNT
 
(a)   Buyer shall prepare in good faith and deliver to Sellers within sixty (60)
days of the Closing Date the Final Working Capital Schedule.  Buyer shall
provide Sellers and their accounting and tax representatives with full and
prompt access to the books and records of Sellers and the Foreign Subsidiaries
for purposes of validating the Final Working Capital Schedule.  In the absence
of any objections from Sellers within thirty (30) days following receipt of such
calculation, Buyer’s determination of the Final Working Capital Schedule shall
be conclusive, final and binding on the parties for purposes of determining the
Net Working Capital, Working Capital Surplus and Working Capital
Deficit.  However, such determination shall not affect any other rights under
this Agreement.  If Sellers object to the Final Working Capital Schedule within
thirty (30) days following receipt of such calculation from Buyer, Sellers shall
deliver a written dispute notice to Buyer which shall set forth the specific
line items in dispute and/or provide the basis for such dispute in reasonable
detail, including, but not limited to, a claim that Sellers and their
Representatives have not been furnished adequate information to confirm or
refute the determination of Buyer.  If, after ten (10) days from the date notice
of a dispute is given hereunder, Sellers and Buyer cannot agree on the
resolution of all of the disputed items, the Final Working Capital Schedule
shall be adjusted to the extent of any items that are not in dispute, and the
items still in dispute shall be referred to BDO USA, LLP or another independent
public accounting firm acceptable to both the Sellers and Buyer (the “Unrelated
Accounting Firm”) to resolve the dispute (which determination must be made by
the Unrelated Accounting Firm within an additional sixty (60) day period), whose
decision as to the issues in dispute shall be conclusive, final and binding upon
Sellers and Buyer for purposes of this Agreement.  The Unrelated Accounting Firm
shall address only those issues in dispute in accordance with the terms of this
Section 2.8 and may not assign a value to any item greater than the greatest
value for such items claimed by either party or less than the smallest value for
such item claimed by either party.  The cost (if any) of the Unrelated
Accounting Firm shall be borne (i) by Sellers to the extent the benefit to
Sellers as a result of the determination of the dispute by the Unrelated
Accounting Firm does not exceed the cost of the Unrelated Accounting Firm and
(ii) in all other events or extent by Buyer.
 
 
 
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(b)   Upon finalizing the Final Working Capital Schedule, either by agreement or
by the Unrelated Accounting Firm:  (i) to the extent there is a Working Capital
Surplus, Buyer will pay Sellers an amount equal to such Working Capital Surplus
within ten (10) days of delivery of the Final Working Capital Schedule.  If such
Working Capital Surplus is not paid within such ten (10) day period, then
interest shall accrue and be due and payable from Buyer on the Working Capital
Surplus from and including the Closing through and including the date of payment
at the Prime Rate (or if not paid within five (5) days when due the Prime Rate
plus five percent (5%)) per annum; and (ii) to the extent there is a Working
Capital Deficit, within ten (10) days following the delivery of the Final
Working Capital Schedule, Sellers will pay to Buyer in Cash available in the
Escrow Account (up to Two Million Dollars ($2,000,000)) (and thereafter by wire
transfer of immediately available funds to an account designated by Buyer) the
amount of the Working Capital Deficit, if any.  If such amounts are not paid
within such ten (10) day period, then interest shall accrue and be due and
payable from the Seller on such amounts from and including the Closing through
and including the date of payment at the Prime Rate (or if not paid within
five (5) days when due the Prime Rate plus five percent (5%)) per annum.  The
accrual of interest shall not relieve the responsible party from the payment
obligation specified herein and therefore the other party may immediately seek
legal remedies including attorneys fees expended to enforce/collect amounts
owing hereunder.
 
2.9   CONSENTS
 
(a)   If there are any Material Consents that have not yet been obtained (or
otherwise are not in full force and effect) as of the Closing, in the case of
each Seller Contract as to which such Material Consents were not obtained (or
otherwise are not in full force and effect) (the “Restricted Material
Contracts”), Buyer may waive the closing conditions as to any such Material
Consent and either:
 
(i)   elect to have Sellers continue their efforts to obtain the Material
Consents; or
 
(ii)   elect to have Sellers retain that Restricted Material Contract and all
Liabilities arising therefrom or relating thereto.
 
If Buyer elects to have Sellers continue their efforts to obtain any Material
Consents and the Closing occurs, notwithstanding Sections 2.1 and 2.4, neither
this Agreement nor the Transfer, Assignment, Bill of Sale and Assumption
Agreement nor any other document related to the consummation of the Contemplated
Transactions shall constitute a sale, assignment, assumption, transfer,
conveyance or delivery or an attempted sale, assignment, assumption, transfer,
conveyance or delivery of the Restricted Material Contracts, and following the
Closing, the parties shall use Best Efforts, and cooperate with each other, to
obtain the Material Consent relating to each Restricted Material Contract as
quickly as practicable.  Pending the obtaining of such Material Consents
relating to any Restricted Material Contract, the parties shall cooperate with
each other in any reasonable and lawful arrangements designed to provide to
Buyer the benefits of use of the Restricted Material Contract for its term (or
any right or benefit arising thereunder, including the enforcement for the
benefit of Buyer of any and all rights of the applicable Seller against a third
party thereunder).  Once a Material Consent for the sale, assignment,
assumption, transfer, conveyance and delivery of a Restricted Material Contract
is
 
 
 
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obtained, Sellers shall promptly assign, transfer, convey and deliver such
Restricted Material Contract to Buyer, and Buyer shall assume the obligations
under such Restricted Material Contract assigned to Buyer from and after the
date of assignment to Buyer pursuant to a special-purpose assignment and
assumption agreement substantially similar in terms to those of the Transfer,
Assignment, Bill of Sale and Assumption Agreement (which special-purpose
agreement the parties shall prepare, execute and deliver in good faith at the
time of such transfer).
 
(b)   If there are any Consents not listed on Exhibit 7.3 necessary for the
assignment and transfer of any Seller Contracts to Buyer (the “Nonmaterial
Consents”) which have not yet been obtained (or otherwise are not in full force
and effect) as of the Closing, Buyer shall elect at the Closing, in the case of
each of the Seller Contracts as to which such Nonmaterial Consents were not
obtained (or otherwise are not in full force and effect) (the “Restricted
Nonmaterial Contracts”), whether to:
 
(i)   accept the assignment of such Restricted Nonmaterial Contract, in which
case, as between Buyer and Sellers, such Restricted Nonmaterial Contract shall,
to the maximum extent practicable and notwithstanding the failure to obtain the
applicable Nonmaterial Consent, be transferred at the Closing pursuant to the
Transfer, Assignment, Bill of Sale and Assumption Agreement as elsewhere
provided under this Agreement; or
 
(ii)   reject the assignment of such Restricted Nonmaterial Contract, in which
case, notwithstanding Sections 2.1 and 2.4, (A) neither this Agreement nor the
Transfer, Assignment, Bill of Sale and Assumption Agreement nor any other
document related to the consummation of the Contemplated Transactions shall
constitute a sale, assignment, assumption, conveyance or delivery or an
attempted sale, assignment, assumption, transfer, conveyance or delivery of such
Restricted Nonmaterial Contract, and  (B) Sellers shall retain such Restricted
Nonmaterial Contract and all Liabilities arising therefrom or relating thereto.
 
Section 3.   Representations and Warranties of Sellers and Design Partners
 
Each Seller and Design Partners represent and warrant, jointly and severally, to
Buyer as follows:
 
3.1   ORGANIZATION AND GOOD STANDING
 
(a)   Part 3.1(a) contains a complete and accurate list of each Seller’s and
each Foreign Subsidiary’s jurisdiction of incorporation and any other
jurisdictions in which it is qualified to do business as a foreign
corporation.  Each Seller, each Foreign Subsidiary and Design Partners is a
corporation, limited liability company or foreign entity equivalent duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, with full corporate, limited
liability or other power and authority to conduct its business as it is now
being conducted, to own or use the properties and assets that it purports to own
or use, and to perform all its obligations under the Seller Contracts.  Each
Seller and each Foreign Subsidiary is duly qualified to do business as a foreign
corporation, limited liability company or other applicable entity and is in good
standing under the laws of each state
 
 
 
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or other jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification.
 
(b)   Complete and accurate copies of the Governing Documents of each Seller and
each Foreign Subsidiary, as currently in effect, have been delivered to Buyer.
 
(c)   Except as disclosed in Part 3.1(c), no Seller and no Foreign Subsidiary
has any Subsidiary and does not own any shares of capital stock or other
securities or interest of any other Person.
 
3.2   ENFORCEABILITY; AUTHORITY; NO CONFLICT
 
(a)   This Agreement constitutes the legal, valid and binding obligation of each
Seller, each Foreign Subsidiary and Design Partners and, with respect to
Sections 3.2, 5.4, 5.6, 5.7 10.1, 10.8, 10.9, 12.2 and 12.5, Principals,
enforceable against each of them in accordance with its terms.  Upon the
execution and delivery by Sellers, Foreign Subsidiaries and Design Partners of
the Escrow Agreement and each other agreement to be executed or delivered by any
or all of any Seller, any Foreign Subsidiary, and Design Partners at the Closing
(collectively, the “Sellers’ Closing Documents”), each of Sellers’ Closing
Documents will constitute the legal, valid and binding obligation of each of
each Seller, each Foreign Subsidiary and Design Partners, enforceable against
each of them in accordance with its terms.  Each Seller, each Foreign Subsidiary
and Design Partners has the absolute and unrestricted right, power and authority
to execute and deliver this Agreement and the Sellers’ Closing Documents to
which it is a party and to perform its obligations under this Agreement and the
Sellers’ Closing Documents, and such action has been duly authorized by all
necessary action by each Seller’s, each Foreign Subsidiary’s and Design
Partners’ shareholders, members, board of directors, managers or
equivalent.  Each Principal has all necessary legal capacity to enter into this
Agreement and to perform his obligations hereunder.
 
(b)   Except as set forth in Part 3.2(b), neither the execution and delivery of
this Agreement nor the consummation or performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time):
 
(i)   breach (A) any provision of any of the Governing Documents of any Seller,
any Foreign Subsidiary or Design Partners or (B) any resolution adopted by the
board of directors or managers or the shareholders or members or equivalent of
any Seller, any Foreign or Design Partners;
 
(ii)   breach or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under any Legal Requirement or any Order to which any Seller,
any Foreign Subsidiary, Design Partners or any Principal, or any of the Assets,
may be subject;
 
(iii)   contravene, conflict with or result in a violation or breach of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any Seller, any Foreign Subsidiary or that otherwise relates to
the Assets or to the Business of any Seller or Foreign Subsidiary;
 
 
 
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(iv)   cause Buyer to become subject to, or to become liable for the payment of,
any Tax (other than income Taxes incurred as the result of any gain realized as
a result of the transactions contemplated hereby);
 
(v)   breach any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or payment under, or to cancel, terminate or modify, any Seller Contract;
 
(vi)   result in the imposition or creation of any Encumbrance upon or with
respect to any of the Assets; or
 
(vii)   result in any shareholder, member or equivalent of any Seller, any
Foreign Subsidiary or Design Partners having the right to exercise dissenters’
appraisal rights.
 
(c)   Except as set forth in Part 3.2(c), none of any Seller, any Foreign
Subsidiary or Design Partners nor any Principal is required to give any notice
to or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
 
3.3   CAPITALIZATION
 
The authorized equity securities of each Seller and each Foreign Subsidiary are
set forth on Part 3.3.  The ownership of such equity securities is as set forth
on Part 3.3, free and clear of all Encumbrances.  There are no Contracts
relating to the issuance, sale or transfer of any equity securities or other
securities of any Seller or any Foreign Subsidiary.  None of the outstanding
equity securities of any Seller or any Foreign Subsidiary was issued in
violation of the Securities Act of 1933, as amended (the “Securities Act”), or
any other Legal Requirement.
 
3.4   FINANCIAL REPORTS
 
Sellers have delivered to Buyer: (a) an unaudited consolidated balance sheet of
the Business as at December 31, 2010, (the “2010 Statement of Assets and
Liabilities”), and the related unaudited statements of income and retained
earnings roll forward of Sellers for the fiscal year then ended (the “2010
Operating Statements”), and (b) an unaudited consolidated and consolidating pro
forma balance sheet of Sellers as at June 30, 2011 (the “Interim Statement of
Assets and Liabilities”) and the related unaudited consolidated and
consolidating statements of income and retained earnings roll forward for the
eight (8) months then ended (the “Interim Operating Statements” and together
with the 2010 Statement of Assets and Liabilities, the 2010 Operating Statements
and the Interim Statement of Assets and Liabilities and the financial statements
required to be delivered pursuant to Section 5.8 collectively, the “Financial
Reports”) certified by Seller Representative’s chief financial officer.  Such
Financial Reports fairly present (and the Financial Reports delivered pursuant
to Section 5.8 will fairly present) the financial condition and the results of
operations and cash flows of Sellers as at the respective dates of and for the
periods referred to in such financial statements, all in accordance with GAAP,
except for GAAP Exceptions and except as such Financial Reports include
information as to that portion of Seller’ Business and operations that are not
included in the Business.  The Financial Reports referred to in this Section 3.4
and delivered pursuant to Section 5.8 reflect and will reflect the
 
 
 
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consistent application of such accounting principles throughout the periods
involved, except as disclosed in the notes to such Financial Reports.  The
Financial Reports have been and will be prepared from and are in accordance with
the accounting Records of Sellers and Foreign Subsidiaries.  The foregoing
notwithstanding, Buyer acknowledges and agrees that the representations and
warranties contained in this Section 3.4 do not extend to any information
contained in the Financial Report relating to Excluded Assets or the Retained
Liabilities.
 
3.5   BOOKS AND RECORDS
 
The books of account and other financial Records of Sellers and Foreign
Subsidiaries related to the Business for the period from January 1, 2010 to the
Closing Date, all of which have been made available to Buyer, are complete and
correct, in all material respects, and represent actual, bona fide transactions
and have been maintained in accordance with sound business practices, including
the maintenance of an adequate system of internal controls.  The minute books of
each Seller and each Foreign Subsidiary pertaining to the period from January 1,
2010 to the Closing Date have been made available to Buyer, contain accurate and
complete Records of all meetings held of, and corporate, limited liability
company or other action taken by, the shareholders, members, the board of
directors or managers and committees of the board of directors or managers or
foreign equivalent of each Seller and each Foreign Subsidiary, and no meeting of
any such shareholders, members, board of directors or managers or committee has
been held for which minutes have not been prepared or are not contained in such
minute books.
 
3.6   SUFFICIENCY OF ASSETS
 
Except as set forth in Part 3.6 and except for the Excluded Assets, the Assets
(a) constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate the Business in the manner presently operated
by Sellers and Foreign Subsidiaries and (b) include all of the operating assets
of each Seller (except with respect to the Excluded Assets).
 
3.7   DESCRIPTION OF OWNED REAL PROPERTY
 
No Seller nor any Foreign Subsidiary has an ownership interest in any Real
Property.
 
3.8   DESCRIPTION OF LEASED REAL PROPERTY
 
Part 3.8 contains a correct legal description, street address and tax parcel
identification number of all tracts, parcels and subdivided lots in which any
Seller or any Foreign Subsidiary has a leasehold interest and an accurate
description (by location, name of lessor, date of Lease and term expiry date) of
all Real Property Leases.
 
3.9   TITLE TO ASSETS; ENCUMBRANCES
 
(a)   Each Seller and each Foreign Subsidiary owns good and marketable title to
its respective Lease estates in the Real Property, free and clear of any
Encumbrances, other than:
 
(i)   liens for Taxes for the current tax year which are not yet due and
payable; and
 
 
 
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(ii)   those described in Part 3.9(a) (“Real Estate Encumbrances”).
 
True and complete copies of all instruments, agreements and other documents
evidencing, creating or constituting any Real Estate Encumbrances have been
delivered to Buyer.  At the time of Closing, the Real Estate shall be free and
clear of all Real Estate Encumbrances other than those identified on Part
3.9(a) as acceptable to Buyer (“Permitted Real Estate Encumbrances”).
 
(b)   Sellers own good and transferable title to all of the other Assets free
and clear of any Encumbrances other than those described in Part
3.9(b) (“Non-Real Estate Encumbrances”).  At the time of Closing, all other
Assets shall be free and clear of all Non-Real Estate Encumbrances other than
those identified on Part 3.9(b) as acceptable to Buyer (“Permitted Non-Real
Estate Encumbrances” and, together with the Permitted Real Estate Encumbrances,
“Permitted Encumbrances”).
 
3.10   CONDITION OF FACILITIES
 
(a)   Use of the Real Property for the various purposes for which it is
presently being used is permitted as a right under all applicable zoning legal
requirements and is not subject to “permitted nonconforming” use or structure
classifications.
 
(b)   Each item of Tangible Personal Property is in operating condition,
ordinary wear and tear excepted, is suitable for immediate use in the Ordinary
Course of Business and is, to the Knowledge of Sellers, free from latent and
patent defects.  No item of Tangible Personal Property is in need of repair or
replacement other than as part of routine maintenance in the Ordinary Course of
Business.  Except as disclosed in Part 3.10(b), all Tangible Personal Property
used in the Business is in the possession of the applicable Seller or Foreign
Subsidiary.  All Tangible Personal Property is being sold “As Is, Where Is”
without warranties except to title.
 
3.11   ACCOUNTS RECEIVABLE
 
All Accounts Receivable that are reflected on the Statement of Assets and
Liabilities or the Interim Statement of Assets and Liabilities or on the
accounting Records of Sellers and Foreign Subsidiaries as of the Closing Date
represent or will represent valid obligations arising from sales actually made
or services actually performed by Sellers or Foreign Subsidiaries in the
Ordinary Course of Business.  Except to the extent paid prior to the Closing
Date, such Accounts Receivable are or will be as of the Closing Date current net
of the respective reserves shown on the 2010 Statement of Assets and Liabilities
or the Interim Statement of Assets and Liabilities or on the Final Working
Capital Schedule (which reserves, to Sellers’ Knowledge, are adequate and
calculated consistent with past practice and, in the case of the reserve on the
Final Working Capital Schedule, will not represent a greater percentage of the
Accounts Receivable reflected on the Final Working Schedule than the reserve
reflected on the Interim Statement of Assets and Liabilities represented of the
Accounts Receivable reflected thereon and will not represent a material adverse
change in the composition of such Accounts Receivable in terms of
aging).  Subject to such reserves, to Sellers’ Knowledge each of such Accounts
Receivable either has been or will be collected in full, without any setoff,
within ninety (90) days after the day on
 
 
 
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which it first becomes due and payable.  There is no contest, claim, defense or
right of setoff, other than returns in the Ordinary Course of Business of
Sellers or Foreign Subsidiaries, under any Contract with any account debtor of
an Account Receivable relating to the amount or validity of such Account
Receivable.  Part 3.11 contains a complete and accurate list of all Accounts
Receivable as of the date of the Interim Statement of Assets and Liabilities,
which list sets forth the aging of each such Account Receivable.
 
3.12   MATERIALS AND SUPPLIES INVENTORIES
 
All items included in the Materials and Supplies Inventories consist of a
quality and quantity usable in the Ordinary Course of Business of Sellers and
Foreign Subsidiaries except for obsolete items and items of below-standard
quality, all of which have been written off or written down to net realizable
value in the 2010 Statement of Assets and Liabilities or the Interim Statement
of Assets and Liabilities or on the accounting Records of Sellers and Foreign
Subsidiaries as of the Closing Date, as the case may be.
 
3.13   NO UNDISCLOSED LIABILITIES
 
Except as set forth in Part 3.13, the Business has no Liability except for
Liabilities reflected or reserved against in the Statement of Assets and
Liabilities or the Interim Statement of Assets and Liabilities and current
liabilities incurred in the Ordinary Course of Business of Sellers or Foreign
Subsidiaries since the date of the Interim Statement of Assets and Liabilities.
 
3.14   TAXES
 
Sellers and Design Partners make the following representations only with respect
to periods commencing on January 1, 2010 through the Closing Date; provided that
such limitation does not affect Sellers’ and Design Partners’ obligations to pay
Retained Liabilities:
 
(a)   Tax Returns Filed and Taxes Paid.  Except as provided in Part 3.14(a),
each Seller and each Foreign Subsidiary has filed or caused to be filed on a
timely basis all Tax Returns and all reports with respect to Taxes that are or
were required to be filed pursuant to applicable Legal Requirements.  All Tax
Returns and reports filed by Sellers or Foreign Subsidiaries are true, correct
and complete.  Each Seller and each Foreign Subsidiary has paid, or made
provision for the payment of, all Taxes that have or may have become due for all
periods covered by the Tax Returns or otherwise, or pursuant to any assessment
received by such Seller or such Foreign Subsidiary, except such Taxes, if any,
as are listed in Part 3.14(a) and are being contested in good faith and as to
which, to the extent included in the Assumed Liabilities, adequate reserves
(determined in accordance with GAAP) have been provided in the 2010 Statement of
Assets and Liabilities and the Interim Statement of Assets and
Liabilities.  Except as provided in Part 3.14(a), no Seller nor any Foreign
Subsidiary currently is the beneficiary of any extension of time within which to
file any Tax Return.  No claim has ever been made or is expected to be made by
any Governmental Body in a jurisdiction where any Seller or any Foreign
Subsidiary does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction.  Except as provided in Part 3.14(a), there are no
Encumbrances on any of the Assets that arose in connection with any failure (or
alleged failure) to pay any Tax, and, except as
 
 
 
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provided in Part 3.14(a), no Seller has any Knowledge of any basis for assertion
of any claims attributable to Taxes which, if adversely determined, would result
in any such Encumbrance.
 
(b)   Delivery of Tax Returns and Information Regarding Audits and Potential
Audits.  Each Seller and each Foreign Subsidiary has delivered or made available
to Buyer copies of, and Part 3.14(b) contains a complete and accurate list of,
all Tax Returns filed since January 1, 2010.  The foreign, federal, state or
local income or franchise Tax Returns of each Seller and each Foreign Subsidiary
have been audited by the IRS or relevant state or foreign tax authorities or are
closed by the applicable statute of limitations for all taxable years through
December 31, 2006.  Part 3.14(b) contains a complete and accurate list of all
Tax Returns of each Seller and each Foreign Subsidiary that have been audited or
are currently under audit and accurately describe any deficiencies or other
amounts that were paid or are currently being contested.  To the Knowledge of
Sellers and Foreign Subsidiaries, no undisclosed deficiencies are expected to be
asserted with respect to any such audit.  All deficiencies proposed as a result
of such audits have been paid, reserved against, settled or are being contested
in good faith by appropriate proceedings as described in Part 3.14(b).  Each
Seller and each Foreign Subsidiary has delivered, or made available to Buyer,
copies of any examination reports, statements or deficiencies or similar items
with respect to such audits.  Except as provided in Part 3.14(b), no Seller nor
any Foreign Subsidiary has any Knowledge that any Governmental Body is likely to
assess any additional taxes for any period for which Tax Returns have been
filed.  There is no dispute or claim concerning any Taxes of any Seller or any
Foreign Subsidiary either (i) claimed or raised by any Governmental Body in
writing or (ii) as to which any Seller or any Foreign Subsidiary has Knowledge
except as provided in Part 3.14(d)(iv).  Part 3.14(b) contains a list of all Tax
Returns for which the applicable statute of limitations has not run.  Except as
described in Part 3.14(b), no Seller or any Foreign Subsidiary has given or been
requested to give waivers or extensions (or is or would be subject to a waiver
or extension given by any other Person) of any statute of limitations relating
to the payment of Taxes of any Seller or any Foreign Subsidiary or for which
such Seller may be liable.
 
(c)   Proper Accrual.  The charges, accruals and reserves with respect to Taxes
on the Records of Sellers and Foreign Subsidiaries are adequate (determined in
accordance with GAAP) and are at least equal to Sellers’ and Foreign
Subsidiaries’ liability for Taxes.  There exists no proposed tax assessment or
deficiency against any Seller except as disclosed in the Interim Statement of
Assets and Liabilities or in Part 3.14(c).
 
(d)   Specific Potential Tax Liabilities and Tax Situations.
 
(i)   Withholding.  All Taxes that any Seller or any Foreign Subsidiary is or
was required by Legal Requirements to withhold, deduct or collect have been duly
withheld, deducted or collected and, to the extent required, have been paid to
the proper Governmental Body or other Person.
 
(ii)   Tax Sharing or Similar Agreements.  There is no tax sharing agreement,
tax allocation agreement, tax indemnity obligation or similar written or
unwritten agreement, arrangement, understanding or practice with respect to
Taxes (including any advance pricing agreement, closing agreement or other
arrangement relating to Taxes) that will require any payment by any Seller.
 
 
 
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(iii)   Consolidated Group.  Sellers and Foreign Subsidiaries (A) are members of
an affiliated group with each other and their Subsidiaries within the meaning of
Code §1504(a) (or any similar group defined under a similar provision of state
or local law) and (B) no Seller nor any Foreign Subsidiary has any liability for
Taxes of any person (other than a Seller or a Foreign Subsidiary) under Treas.
Reg. §1.1502-6 (or any similar provision of state or local law), as a transferee
or successor by contract or otherwise.
 
(iv)   Part 3.14(d)(iv) lists all the states, provinces and localities with
respect to which any Seller or any Foreign Subsidiary is required to file any
corporate, income or franchise tax returns.
 
3.15   NO MATERIAL ADVERSE CHANGE
 
Since the date of the 2010 Statement of Assets and Liabilities, there has not
been any Material Adverse Change in the Business and no event has occurred or
circumstance exists that may result in such a Material Adverse Change.
 
3.16   EMPLOYEE BENEFITS
 
(a)   Set forth in Part 3.16(a) is a complete and correct list of all “employee
benefit plans” as defined by Section 3(3) of ERISA, all specified fringe benefit
plans as defined in Section 6039D of the Code, and all other bonus,
incentive-compensation, deferred-compensation, profit-sharing, stock-option,
stock-appreciation-right, stock-bonus, stock-purchase, employee-stock-ownership,
savings, severance, change-in-control, supplemental-unemployment, layoff,
salary-continuation, retirement, pension, health, life-insurance, disability,
accident, group-insurance, vacation, holiday, sick-leave, fringe-benefit or
welfare plan, and any other employee compensation or benefit plan, agreement,
policy, practice, commitment, contract or understanding (whether qualified or
nonqualified, currently effective or terminated, written or unwritten) and any
trust, escrow or other agreement related thereto that (i) is maintained or
contributed to by any Seller or any Foreign Subsidiary or any other corporation
or trade or business controlled by, controlling or under common control with any
Seller or any Foreign Subsidiary (within the meaning of Section 414 of the Code
or Section 4001(a)(14) or 4001(b) of ERISA) (“ERISA Affiliate”) or has been
maintained or contributed to in the last six (6) years by any Seller or any
Foreign Subsidiary or any ERISA Affiliate, or with respect to which any Seller
or any Foreign Subsidiary or any ERISA Affiliate has or may have any liability,
and (ii) provides benefits, or describes policies or procedures applicable to
any current or former director, officer, employee or service provider of any
Seller or any Foreign Subsidiary or any ERISA Affiliate, or the dependents of
any thereof, regardless of how (or whether) liabilities for the provision of
benefits are accrued or assets are acquired or dedicated with respect to the
funding thereof (collectively the “Employee Plans”).  Part 3.16(a) identifies as
such any Employee Plan that is (w) a “Defined Benefit Plan” (as defined in
Section 414(l) of the Code); (x) a plan intended to meet the requirements of
Section 401(a) of the Code; (y) a “Multiemployer Plan” (as defined in
Section 3(37) of ERISA); or (z) a plan subject to Title IV of ERISA, other than
a Multiemployer Plan.  Also set forth on Part 3.16(a) is a complete and correct
list of all ERISA Affiliates of Sellers during the last six (6) years.
 
 
 
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(b)   Sellers and Foreign Subsidiaries have delivered to Buyer true, accurate
and complete copies of (i) the documents comprising each Employee Plan (or, with
respect to any Employee Plan which is unwritten, a detailed written description
of eligibility, participation, benefits, funding arrangements, assets and any
other matters which relate to the obligations of any Seller or any Foreign
Subsidiary or any ERISA Affiliate); (ii) all trust agreements, insurance
contracts or any other funding instruments related to the Employee Plans;
(iii) all rulings, determination letters, no-action letters or advisory opinions
from the IRS, the US Department of Labor, the Pension Benefit Guaranty
Corporation (“PBGC”) or any other Governmental Body that pertain to each
Employee Plan and any open requests therefor; (iv) the most recent actuarial and
financial reports (unaudited) and the annual reports filed with any Government
Body with respect to the Employee Plans during the current year and each of the
three preceding years; (v) all collective bargaining agreements pursuant to
which contributions to any Employee Plan(s) have been made or obligations
incurred (including both pension and welfare benefits) by Sellers, Foreign
Subsidiaries or any ERISA Affiliate, and all collective bargaining agreements
pursuant to which contributions are being made or obligations are owed by such
entities; (vi) all securities registration statements filed with respect to any
Employee Plan; (vii) all contracts with third-party administrators, actuaries,
investment managers, consultants and other independent contractors that relate
to any Employee Plan; (viii) with respect to Employee Plans that are subject to
Title IV of ERISA, the Form PBGC-1 filed for each of the three most recent plan
years; and (ix) all summary plan descriptions, summaries of material
modifications and memoranda, employee handbooks and other written communications
regarding the Employee Plans.
 
(c)   Except as disclosed in Part 3.16(c), full payment has been made of all
amounts that are required under the terms of each Employee Plan, to be paid as
contributions with respect to all periods prior to and including the last day of
the most recent fiscal year of such Employee Plan, ended on or before the date
of this Agreement and all periods thereafter prior to the Closing Date, and no
accumulated funding deficiency or liquidity shortfall (as those terms are
defined in Section 302 of ERISA and Section 412 of the Code) has been incurred
with respect to any such Employee Plan, whether or not waived.  The value of the
assets of each Employee Plan exceeds the amount of all benefit liabilities
(determined on a plan termination basis using the actuarial assumptions
established by the PBGC as of the Closing Date) of such Employee Plan.  No
Seller or no Foreign Subsidiary is required to provide security to an Employee
Plan under Section 401(a)(29) of the Code.  The funded status of each Employee
Plan that is a Defined Benefit Plan is disclosed on Part 3.16(c) in a manner
consistent with the Statement of Financial Accounting Standards No. 87.  Each
Seller and each Foreign Subsidiary has paid in full all required insurance
premiums, subject only to normal retrospective adjustments in the ordinary
course, with regard to the Employee Plans for all policy years or other
applicable policy periods ending on or before the Closing Date.
 
(d)   Except as disclosed in Part 3.16(d), no Employee Plan, if subject to Title
IV of ERISA or any foreign equivalent, has been completely or partially
terminated, nor has any event occurred nor does any circumstance exist that
could result in the partial termination of such Employee Plan.  The PBGC (or
foreign equivalent) has not instituted or threatened a Proceeding to terminate
or to appoint a trustee to administer any of the Employee Plans pursuant to
Subtitle 1 of Title IV of ERISA, and no condition or set of circumstances exists
that presents a material risk of termination or partial termination of any of
the Employee Plans by the PBGC.  None of
 
 
 
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the Employee Plans has been the subject of, and no event has occurred or
condition exists that could be deemed, a reportable event (as defined in
Section 4043 of ERISA) as to which a notice would be required (without regard to
regulatory monetary thresholds) to be filed with the PBGC.  Sellers and Foreign
Subsidiaries have paid in full all insurance premiums due to the PBGC (or
foreign equivalent) with regard to the Employee Plans for all applicable periods
ending on or before the Closing Date.
 
(e)   Neither any Seller, nor any Foreign Subsidiary nor any ERISA Affiliate has
any liability or has Knowledge of any facts or circumstances that might give
rise to any liability, and the Contemplated Transactions will not result in any
liability, (i) for the termination of or withdrawal from any Employee Plan under
Sections 4062, 4063 or 4064 of ERISA, (ii) for any lien imposed under
Section 302(f) of ERISA or Section 412(n) of the Code, (iii) for any interest
payments required under Section 302(e) of ERISA or Section 412(m) of the Code,
(iv) for any excise tax imposed by Section 4971 of the Code, (v) for any minimum
funding contributions under Section 302(c)(11) of ERISA or Section 412(c)(11) of
the Code, (vi) for withdrawal from any Multiemployer Plan under Section 4201 of
ERISA or (vii) under any comparable provision of any applicable foreign law.
 
(f)   Sellers and Foreign Subsidiaries have, at all times, complied, and
currently complies, in all material respects with the applicable continuation
requirements for its welfare benefit plans, including (1) Section 4980B of the
Code (as well as its predecessor provision, Section 162(k) of the Code) and
Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter
referred to collectively as “COBRA” and (2) any applicable state or foreign
statutes mandating health insurance continuation coverage for employees.
 
(g)   The form of all Employee Plans is in compliance with the applicable terms
of ERISA, the Code, and any other United States or foreign applicable laws,
including the Americans with Disabilities Act of 1990, the Family Medical Leave
Act of 1993 and the Health Insurance Portability and Accountability Act of 1996,
and such plans have been operated in compliance with such laws and the written
Employee Plan documents.  Neither any Seller, any Foreign Subsidiary nor any
fiduciary of an Employee Plan has violated the requirements of Section 404 of
ERISA.  All required reports and descriptions of the Employee Plans (including
Internal Revenue Service Form 5500 Annual Reports, Summary Annual Reports and
Summary Plan Descriptions and Summaries of Material Modifications) have been
(when required) timely filed with the IRS, the U.S.  Department of Labor or
other Governmental Body and distributed as required, and all notices required by
ERISA or the Code or any other Legal Requirement with respect to the Employee
Plans have been appropriately given.
 
(h)   Each Employee Plan that is intended to be qualified under
Section 401(a) of the Code has received a favorable determination letter from
the IRS, and no Seller nor any Foreign Subsidiary has any Knowledge of any
circumstances that will or could result in revocation of any such favorable
determination letter.  Each trust created under any Employee Plan has been
determined to be exempt from taxation under Section 501(a) of the Code, and no
Seller nor any Foreign Subsidiary is aware of any circumstance that will or
could result in a revocation of such exemption.  Each Employee Welfare Benefit
Plan (as defined in Section 3(1) of ERISA) that utilizes a funding vehicle
described in Section 501(c)(9) of the Code or is subject to the provisions of
Section 505 of the Code has been the subject of a notification by
 
 
 
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the IRS that such funding vehicle qualifies for tax-exempt status under
Section 501(c)(9) of the Code or that the plan complies with Section 505 of the
Code, unless the IRS does not, as a matter of policy, issue such notification
with respect to the particular type of plan.
 
(i)   There is no material pending or threatened Proceeding relating to any
Employee Plan, nor is there any basis for any such Proceeding.  No Seller, no
Foreign Subsidiary nor any fiduciary of an Employee Plan has engaged in a
transaction with respect to any Employee Plan that, assuming the taxable period
of such transaction expired as of the date hereof, could subject any Seller or
Buyer to a Tax or penalty imposed by either Section 4975 of the Code or
Section 502(l) of ERISA or a violation of Section 406 of ERISA.  The
Contemplated Transactions will not result in the potential assessment of a Tax
or penalty under Section 4975 of the Code or Section 502(l) of ERISA nor result
in a violation of Section 406 of ERISA.
 
(j)   Each Seller and each Foreign Subsidiary has maintained workers’
compensation coverage as required by applicable state law through purchase of
insurance and not by self-insurance or otherwise except as disclosed to Buyer on
Part 3.16(j).
 
(k)   Except as required by Legal Requirements and as provided in
Section 10.1(d), the consummation of the Contemplated Transactions will not
accelerate the time of vesting or the time of payment, or increase the amount of
compensation due to any director, employee, officer, former employee or former
officer of Seller.  There are no contracts or arrangements providing for
payments that could subject any person to liability for tax under Section 4999
of the Code.
 
(l)   Except for the continuation coverage requirements of COBRA, no Seller and
no Foreign Subsidiary has obligations or potential liability for benefits to
employees, former employees or their respective dependents following termination
of employment or retirement under any of the Employee Plans that are Employee
Welfare Benefit Plans.
 
(m)   Except as provided in Section 10.1(d), none of the Contemplated
Transactions will result in an amendment, modification or termination of any of
the Employee Plans.  No written or oral representations have been made to any
employee or former employee of any Seller promising or guaranteeing any employer
payment or funding for the continuation of medical, dental, life or disability
coverage for any period of time beyond the end of the current plan year (except
to the extent of coverage required under COBRA).  No written or oral
representations have been made to any employee or former employee of any Seller
or any Foreign Subsidiary concerning the employee benefits of Buyer.
 
(n)   With respect to any Employee Plan that is a “multiemployer plan” within
the meaning of Section 4001(a)(3) of ERISA (“Multiemployer Plan”), and any other
Multiemployer Plan to which any Seller or any Foreign Subsidiary has at any time
had an obligation to contribute:
 
(i)   all contributions required by the terms of such Multiemployer Plan and any
collective bargaining agreement have been made when due; and
 
(ii)   No Seller and no Foreign Subsidiary would be subject to any withdrawal
liability under Part 1 of Subtitle E of Title IV of ERISA if, as of the date
 
 
 
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hereof, such Seller or Foreign Subsidiary were to engage in a “complete
withdrawal” (as defined in ERISA Section 4203) or a “partial withdrawal” (as
defined in ERISA Section 4205) from such Multiemployer Plan.
 
3.17   COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
 
(a)   Except as set forth in Part 3.17(a):
 
(i)   Sellers and Foreign Subsidiaries are, and at all times since January 1,
2010, have been, in full compliance with each Legal Requirement that is or was
applicable to them or to the conduct or operation of their business or the
ownership or use of any of their assets;
 
(ii)   no event has occurred or circumstance exists that (with or without notice
or lapse of time) (A) may constitute or result in a violation by any Seller or
any Foreign Subsidiary of, or a failure on the part of such Seller or Foreign
Subsidiary to comply with, any Legal Requirement or (B) may give rise to any
obligation on the part of such Seller or Foreign Subsidiary to undertake, or to
bear all or any portion of the cost of, any remedial action of any nature; and
 
(iii)   No Seller and no Foreign Subsidiary has received, at any time since
January 1, 2010, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of, or failure to comply with,
any Legal Requirement or (B) any actual, alleged, possible or potential
obligation on the part of any Seller or any Foreign Subsidiary to undertake, or
to bear all or any portion of the cost of, any remedial action of any nature.
 
(b)   Part 3.17(b) contains a complete and accurate list of each Governmental
Authorization that is held by each Seller and each Foreign Subsidiary or that
otherwise relates to such Seller’s or Foreign Subsidiary’s business or the
Assets.  Each Governmental Authorization listed or required to be listed in Part
3.17(b) is valid and in full force and effect.  Except as set forth in Part
3.17(b):
 
(i)   each Seller and each Foreign Subsidiary is, and at all times since January
1, 2010, has been, in full compliance with all of the terms and requirements of
each Governmental Authorization identified or required to be identified in Part
3.17(b);
 
(ii)   no event has occurred or circumstance exists that may (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed or required to be listed in Part 3.17(b) or
(B) result directly or indirectly in the revocation, withdrawal, suspension,
cancellation or termination of, or any modification to, any Governmental
Authorization listed or required to be listed in Part 3.17(b);
 
 
 
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(iii)   no Seller and no Foreign Subsidiary has received, at any time since
January 1, 2010, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding (A) any
actual, alleged, possible or potential violation of or failure to comply with
any term or requirement of any Governmental Authorization or (B) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Governmental Authorization;
and
 
(iv)   all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Part 3.17(b) have
been duly filed on a timely basis with the appropriate Governmental Bodies, and
all other filings required to have been made with respect to such Governmental
Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies.
 
The Governmental Authorizations listed in Part 3.17(b) collectively constitute
all of the Governmental Authorizations necessary to permit any Seller or any
Foreign Subsidiary to lawfully conduct and operate its business in the manner in
which it currently conducts and operates such business and to permit such Seller
or such Foreign Subsidiary to own and use its assets in the manner in which it
currently owns and uses such assets.
 
3.18   LEGAL PROCEEDINGS; ORDERS
 
(a)   Except as set forth in Part 3.18(a), there is no pending or, to Sellers’
and/or Foreign Subsidiaries’ Knowledge, threatened Proceeding:
 
(i)   by or against any Seller or any Foreign Subsidiary or that otherwise
relates to or may affect the business of, or any of the assets owned or used by,
such Seller or Foreign Subsidiary; or
 
(ii)   that challenges, or that may have the effect of preventing, delaying,
making illegal or otherwise interfering with, any of the Contemplated
Transactions.
 
To the Knowledge of Sellers and Foreign Subsidiaries, no event has occurred or
circumstance exists that is reasonably likely to give rise to or serve as a
basis for the commencement of any such Proceeding.  Sellers and Foreign
Subsidiaries have delivered to Buyer copies of all pleadings, correspondence and
other documents relating to each Proceeding listed in Part 3.18(a).  There are
no Proceedings listed or required to be listed in Part 3.18(a) that could have a
material adverse effect on the business, operations, assets, condition or
prospects of Sellers or Foreign Subsidiaries or upon the Assets.
 
(b)   Except as set forth in Part 3.18(b):
 
(i)   there is no Order to which any Seller or any Foreign Subsidiary, its
business or any of the Assets is subject; and
 
(ii)   to the Knowledge of Sellers and/or Foreign Subsidiaries, no officer,
director, agent or employee of any Seller or any Foreign Subsidiary is subject
to any Order that prohibits such officer, director, agent or employee from
engaging in or
 
 
 
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continuing any conduct, activity or practice relating to the business of such
Seller or Foreign Subsidiary.
 
(c)   Except as set forth in Part 3.18(c):
 
(i)   each Seller and each Foreign Subsidiary is, and, at all times since
January 1, 2010, has been in compliance with all of the terms and requirements
of each Order to which it or any of the Assets is or has been subject;
 
(ii)   no event has occurred or circumstance exists that is reasonably likely to
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which any
Seller or any Foreign Subsidiary or any of the Assets is subject; and
 
(iii)   no Seller and no Foreign Subsidiary has received, at any time since
January 1, 2010, any notice or other communication (whether oral or
written) from any Governmental Body or any other Person regarding any actual,
alleged, possible or potential violation of, or failure to comply with, any term
or requirement of any Order to which such Seller or Foreign or any of the Assets
is or has been subject.
 
3.19   ABSENCE OF CERTAIN CHANGES AND EVENTS
 
Except as set forth in Part 3.19, since the date of the 2010 Statement of Assets
and Liabilities, each Seller and each Foreign Subsidiary has conducted its
business only in the Ordinary Course of Business and there has not been any:
 
(a)   change in such Seller’s or Foreign Subsidiary’s authorized or issued
capital stock or other equity interests, grant of any stock option or right to
purchase shares of capital stock of Seller or Foreign Subsidiary or issuance of
any security convertible into such capital stock;
 
(b)   amendment to the Governing Documents of any Seller or any Foreign
Subsidiary;
 
(c)   payment (except in the Ordinary Course of Business) or increase by any
Seller or Foreign Subsidiary of any bonuses, salaries or other compensation to
any shareholder, director, officer or employee or entry into any employment,
severance or similar Contract with any director, officer or employee;
 
(d)   adoption of, amendment to or increase in the payments to or benefits
under, any Employee Plan;
 
(e)   damage to or destruction or loss of any Asset, whether or not covered by
insurance;
 
(f)   entry into, termination of or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint venture, credit or
similar Contract to which any Seller or any Foreign Subsidiary is a party, or
(ii) any Contract or transaction
 
 
 
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involving a total remaining commitment by any Seller or any Foreign Subsidiary
of at least One Hundred Fifty Thousand Dollars ($150,000);
 
(g)   sale (other than sales of Inventories in the Ordinary Course of Business),
lease or other disposition of any Asset or property of any Seller (including the
Intellectual Property Assets) or the creation of any Encumbrance on any Asset;
 
(h)   cancellation or waiver of any claims or rights with a value to any Seller
or any Foreign Subsidiary in excess of Fifty Thousand Dollars ($50,000);
 
(i)   indication by any customer or supplier of an intention to discontinue or
change the terms of its relationship with any Seller or any Foreign Subsidiary;
 
(j)   material change in the accounting methods used by any Seller or any
Foreign Subsidiary; or
 
(k)   Contract by any Seller or any Foreign Subsidiary to do any of the
foregoing.
 
3.20   CONTRACTS; NO DEFAULTS
 
(a)   Part 3.20(a) contains an accurate and complete list, and Sellers and
Foreign Subsidiaries have delivered to Buyer accurate and complete copies, of:
 
(i)   each Seller Contract that involves performance of services or delivery of
goods or materials to any Seller or any Foreign Subsidiary of an amount or value
in excess of One Hundred Fifty Thousand Dollars ($150,000);
 
(ii)   each Seller Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of a Seller or a Foreign
Subsidiary in excess of One Hundred Fifty Thousand Dollars ($150,000);
 
(iii)   each Seller Contract affecting the ownership of, leasing of, title to,
use of  or any leasehold or other interest in any real or personal property
(except personal property leases and installment and conditional sales
agreements having a value per item or aggregate payments of more than Fifty
Thousand Dollars ($50,000) and with a term of less than one year);
 
(iv)   each Seller Contract with any labor union or other employee
representative of a group of employees relating to wages, hours and other
conditions of employment;
 
(v)   each Seller Contract (however named) involving a sharing of profits,
losses, costs or liabilities by Seller with any other Person;
 
(vi)   each Seller Contract containing covenants that in any way purport to
restrict any Seller’s or any Foreign Subsidiary’s business activity or limit the
freedom
 
 
 
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of any Seller or any Foreign Subsidiary to engage in any line of business or to
compete with any Person;
 
(vii)   each Seller Contract providing for payments to or by any Person based on
sales, purchases or profits, other than direct payments for goods;
 
(viii)   each power of attorney of any Seller or any Foreign Subsidiary that is
currently effective and outstanding;
 
(ix)   each Seller Contract entered into other than in the Ordinary Course of
Business that contains or provides for an express undertaking by any Seller or
any Foreign Subsidiary to be responsible for consequential damages;
 
(x)   each Seller Contract for capital expenditures in excess of Fifty Thousand
Dollars ($50,000);
 
(xi)   each written warranty, guaranty and/or other similar undertaking with
respect to contractual performance extended by any Seller or any Foreign
Subsidiary other than in the Ordinary Course of Business; and
 
(xii)   each amendment, supplement and modification (whether oral or written) in
respect of any of the foregoing.
 
Part 3.20(a) sets forth reasonably complete details concerning such Contracts,
including the parties to the Contracts and the location of such Seller’s or
Foreign Subsidiary’s office where details relating to the Contracts are located.
 
(b)   Except as set forth in Part 3.20(b), none of Design Partners nor any
Principal has or may acquire any rights under, and none of Design Partners nor
any Principal has or may become subject to any obligation or liability under,
any Contract that relates to the Business or any of the Assets.
 
(c)   Except as set forth in Part 3.20(c):
 
(i)   each Contract identified or required to be identified in Part 3.20(a) and
which is to be assigned to or assumed by Buyer under this Agreement is in full
force and effect and is valid and enforceable in accordance with its terms;
 
(ii)   each Contract identified or required to be identified in Part 3.20(a) and
which is being assigned to or assumed by Buyer is assignable by the applicable
Seller to Buyer without the consent of any other Person or with respect to such
Contracts of Foreign Subsidiaries, cannot be terminated by any other Person as a
result of the consummation of the transactions contemplated hereby; and
 
(iii)   to the Knowledge of Sellers and/or Foreign Subsidiaries, no Contract
identified or required to be identified in Part 3.20(a) and which is to be
assigned to or assumed by Buyer under this Agreement or to be continued by
Foreign Subsidiary
 
 
 
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will upon completion or performance thereof have a Material Adverse Effect on
the Business.
 
(d)   Except as set forth in Part 3.20(d):
 
(i)   each Seller or each Foreign Subsidiary is, and at all times since January
1, 2010, has been, in compliance with all applicable terms and requirements of
each Seller Contract which is being assumed by Buyer or being continued by a
Foreign Subsidiary;
 
(ii)   each other Person that has or had any obligation or liability under any
Seller Contract which is being assigned to Buyer or retained by a Foreign
Subsidiary is, and at all times since January 1, 2010, has been, in full
compliance with all applicable terms and requirements of such Contract;
 
(iii)   no event has occurred or circumstance exists that (with or without
notice or lapse of time) may contravene, conflict with or result in a Breach of,
or give the applicable Seller or Foreign Subsidiary or other Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any Seller
Contract that is being assigned to or assumed by Buyer or retained by a Foreign
Subsidiary;
 
(iv)   no event has occurred or circumstance exists under or by virtue of any
Contract that (with or without notice or lapse of time) would cause the creation
of any Encumbrance affecting any of the Assets; and
 
(v)   no Seller and no Foreign Subsidiary has given to or received from any
other Person, at any time since January 1, 2010, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible
or potential violation or Breach of, or default under, any Contract which is
being assigned to or assumed by Buyer or which belongs to a Foreign Subsidiary.
 
(e)   There are no renegotiations of, attempts to renegotiate or outstanding
rights to renegotiate any material amounts paid or payable to any Seller under
current or completed Contracts with any Person having the contractual or
statutory right to demand or require such renegotiation and no such Person has
made written demand for such renegotiation.
 
(f)   Each Contract relating to the sale, design, manufacture or provision of
products or services by a Seller or a Foreign Subsidiary has been entered into
in the Ordinary Course of Business of such Seller or Foreign Subsidiary and has
been entered into without the commission of any act alone or in concert with any
other Person, or any consideration having been paid or promised, that is or
would be in violation of any Legal Requirement.
 
(g)   Except as set forth in Part 3.20(g), no Contract restricts Seller or
Foreign Subsidiary (or Buyer as Seller’s successor in interest) from performing
or providing goods and services to other Persons, including, without limitation,
competitors to such contracting parties.
 
 
 
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3.21   INSURANCE
 
(a)   Sellers and Foreign Subsidiaries have delivered to Buyer:
 
(i)   accurate and complete copies of all policies of insurance (and
correspondence relating to coverage thereunder) to which any Seller or Foreign
Subsidiary is a party or under which a Seller or a Foreign Subsidiary is or has
been covered at any time since January 1, 2010, a list of which is included in
Part 3.21(a); and
 
(ii)   accurate and complete copies of all pending applications by any Seller or
any Foreign Subsidiary for policies of insurance.
 
(b)   Part 3.21(b) describes:
 
(i)   any self-insurance arrangement by or affecting any Seller or Foreign
Subsidiary, including any reserves established thereunder;
 
(ii)   any Contract or arrangement, other than a policy of insurance, for the
transfer or sharing of any risk to which any Seller or Foreign Subsidiary is a
party or which involves the business of any Seller or Foreign Subsidiary; and
 
(iii)   all obligations of any Seller or Foreign Subsidiary to provide insurance
coverage to Third Parties (for example, under Leases or service agreements) and
identifies the policy under which such coverage is provided.
 
(c)   Part 3.21(c) sets forth, by year, for the current policy year and each of
the three (3) preceding policy years:
 
(i)   a summary of the loss experience under each policy of insurance;
 
(ii)   a statement describing each claim under a policy of insurance for an
amount in excess of Fifty Thousand Dollars ($50,000), which sets forth:
 
(1)   the name of the claimant;
 
(2)   a description of the policy by insurer, type of insurance and period of
coverage; and
 
(3)   the amount and a brief description of the claim; and
 
(iii)   a statement describing the loss experience for all claims that were
self-insured, including the number and aggregate cost of such claims.
 
(d)   Except as set forth in Part 3.21(d):
 
(i)   all policies of insurance to which any Seller or Foreign Subsidiary is a
party or that provide coverage to Seller or any Foreign Subsidiary:
 
(1)   are valid, outstanding and enforceable;
 
 
 
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(2)   are issued by an insurer that is financially sound and reputable;
 
(3)   taken together provide adequate insurance coverage for the Assets and the
operations of Sellers and Foreign Subsidiaries for all risks normally insured
against by a Person carrying on the same business or businesses as Sellers and
Foreign Subsidiaries in the same location; and
 
(4)   are sufficient for compliance with all Legal Requirements and Seller
Contracts;
 
(ii)   no Seller and no Foreign Subsidiary has received (A) any refusal of
coverage or any notice that a defense will be afforded with reservation of
rights or (B) any notice of cancellation or any other indication that any policy
of insurance is no longer in full force or effect or that the issuer of any
policy of insurance is not willing or able to perform its obligations
thereunder;
 
(iii)   Sellers and Foreign Subsidiaries have paid all premiums due, and has
otherwise performed all of their obligations, under each policy of insurance to
which they are a party or that provides coverage to any Seller or Foreign
Subsidiary; and
 
(iv)   Sellers and Foreign Subsidiaries have given notice to the insurer of all
claims that may be insured thereby.
 
3.22   ENVIRONMENTAL MATTERS
 
Except as disclosed in Part 3.22:
 
(a)   Each Seller and each Foreign Subsidiary is, and at all times has been, in
full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law.  Neither any Seller, any Foreign Subsidiary,
Design Partners nor either Principal has any basis to expect, nor has any of
them or any other Person for whose conduct they are or may be held to be
responsible received, any actual or threatened order, notice or other
communication from (i) any Governmental Body or private citizen acting in the
public interest or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health and Safety Liabilities with respect
to any Facility or other property or asset (whether real, personal or mixed) in
which any Seller or any Foreign Subsidiary has or had an interest, or with
respect to any property or Facility at or to which Hazardous Materials were
generated, manufactured, refined, transferred, imported, used or processed by
any Seller, any Foreign Subsidiary or any other Person for whose conduct it is
or may be held responsible, or from which Hazardous Materials have been
transported, treated, stored, handled, transferred, disposed, recycled or
received.
 
(b)   There are no pending or, to the Knowledge of Sellers and Foreign
Subsidiaries, threatened claims, Encumbrances, or other restrictions of any
nature resulting from any Environmental, Health and Safety Liabilities or
arising under or pursuant to any Environmental Law with respect to or affecting
any Facility or any other property or asset
 
 
 
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(whether real, personal or mixed) in which any Seller or any Foreign Subsidiary
has or had an interest.
 
(c)   Neither any Seller, any Foreign Subsidiary, Design Partners nor either
Principal has any Knowledge of or any basis to expect, nor has any of them, or
any other Person for whose conduct they are or may be held responsible,
received, any citation, directive, inquiry, notice, Order, summons, warning or
other communication that relates to Hazardous Activity, Hazardous Materials, or
any alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health and Safety Liabilities
with respect to any Facility or property or asset (whether real, personal or
mixed) in which a Seller or a Foreign Subsidiary has or had an interest, or with
respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, used or processed by any Seller,
any Foreign Subsidiary or any other Person for whose conduct it is or may be
held responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled or received.
 
(d)   Neither any Seller, any Foreign Subsidiary nor any other Person for whose
conduct it is or may be held responsible has any Environmental, Health and
Safety Liabilities with respect to any Facility or, to the Knowledge of Sellers
and Foreign Subsidiaries, with respect to any other property or asset (whether
real, personal or mixed) in which any Seller or any Foreign Subsidiary (or any
predecessor) has or had an interest or at any property geologically or
hydrologically adjoining any Facility or any such other property or asset.
 
(e)   There are no Hazardous Materials present on or in the Environment at any
Facility or at any geologically or hydrologically adjoining property, including
any Hazardous Materials contained in barrels, aboveground or underground storage
tanks, landfills, land deposits, dumps, equipment (whether movable or fixed) or
other containers, either temporary or permanent, and deposited or located in
land, water, sumps, or any other part of the Facility or such adjoining
property, or incorporated into any structure therein or thereon.  Neither any
Seller, any Foreign Subsidiary nor any Person for whose conduct it is or may be
held responsible, or to the Knowledge of Seller or any Foreign Subsidiary, any
other Person, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to any Facility or any other property or assets (whether
real, personal or mixed) in which any Seller or any Foreign Subsidiary has or
had an interest except in full compliance with all applicable Environmental
Laws.
 
(f)   Materials at or from any Facility or at any other location where any
Hazardous Materials were generated, manufactured, refined, transferred,
produced, imported, used, or processed from or by any Facility, or from any
other property or asset (whether real, personal or mixed) in which any Seller or
any Foreign Subsidiary has or had an interest, or to the Knowledge of any Seller
or any Foreign Subsidiary any geologically or hydrologically adjoining property,
whether by such Seller or any other Person.
 
(g)   To the extent existing, Sellers and Foreign Subsidiaries have delivered to
Buyer true and complete copies and results of any reports, studies, analyses,
tests, or monitoring possessed or initiated by any Seller pertaining to
Hazardous Materials or Hazardous Activities in,
 
 
 
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on, or under the Facilities, or concerning compliance, by any Seller or any
other Person for whose conduct it is or may be held responsible, with
Environmental Laws.
 
3.23   EMPLOYEES
 
(a)   Part 3.23(a) contains a complete and accurate list of the following
information for each employee, director, independent contractor, consultant and
agent of Sellers and Foreign Subsidiaries, including each employee on leave of
absence or layoff status:  employer; name; job title; date of hiring or
engagement; date of commencement of employment or engagement; current
compensation paid or payable and any change in compensation since January 1,
2010; sick and vacation leave that is accrued but unused; and service credited
for purposes of vesting and eligibility to participate under any Employee Plan,
or any other employee or director benefit plan.
 
(b)   Part 3.23(b) contains a complete and accurate list of the following
information for each retired employee or director of each Seller and each
Foreign Subsidiary, or their dependents, receiving benefits or scheduled to
receive benefits in the future:  name; pension benefits; pension option
election; retiree medical insurance coverage; retiree life insurance coverage;
and other benefits.
 
(c)   Part 3.23(c) states the number of employees terminated by any Seller or
any Foreign Subsidiary since January 1, 2010.
 
(d)   Sellers and Foreign Subsidiaries have not violated the Worker Adjustment
and Retraining Notification Act (the “WARN Act”), or any similar foreign, state
or local Legal Requirement.
 
(e)   To the Knowledge of Sellers and Foreign Subsidiaries, no officer,
director, agent, employee, consultant, or contractor of any Seller is bound by
any Contract that purports to limit the ability of such officer, director,
agent, employee, consultant, or contractor (i) to engage in or continue or
perform any conduct, activity, duties or practice relating to the Business or
(ii) to assign to any Seller, any Foreign Subsidiary or to any other Person any
rights to any invention, improvement, or discovery.  No former or current
employee of any Seller or any Foreign Subsidiary is a party to, or is otherwise
bound by, any Contract that in any way adversely affected, affects, or will
affect the ability of any Seller or any Foreign Subsidiary or Buyer to conduct
the business as heretofore carried on by Sellers or Foreign Subsidiaries.
 
3.24   LABOR DISPUTES; COMPLIANCE
 
(a)   Each Seller and each Foreign Subsidiary has complied in all respects with
all Legal Requirements relating to employment practices, terms and conditions of
employment, equal employment opportunity, nondiscrimination, immigration, wages,
hours, benefits, collective bargaining and other requirements, the payment of
social security and similar Taxes and occupational safety and health.  No Seller
or Foreign Subsidiary is liable for the payment of any Taxes, fines, penalties,
or other amounts, however designated, for failure to comply with any of the
foregoing Legal Requirements.
 
 
 
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(b)   Except as disclosed in Part 3.24(b), (i) no Seller and no Foreign
Subsidiary has been, or is now, a party to any collective bargaining agreement
or other labor contract; (ii) since January 1, 2010, there has not been, there
is not presently pending or existing, and to Sellers’ and Foreign Subsidiaries’
Knowledge there is not threatened, any strike, slowdown, picketing, work
stoppage or employee grievance process involving any Seller; (iii) to Sellers’
and Foreign Subsidiaries’ Knowledge no event has occurred or circumstance exists
that could provide the basis for any work stoppage or other labor dispute;
(iv) there is not pending or, to Sellers’ and Foreign Subsidiaries’ Knowledge,
threatened against or affecting any Seller or any Foreign Subsidiary any
Proceeding relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or complaint
filed with the National Labor Relations Board or any comparable Governmental
Body, and there is no organizational activity or other labor dispute against or
affecting any Seller or any Foreign Subsidiary or the Facilities; (v) no
application or petition for an election of or for certification of a collective
bargaining agent is pending; (vi) no grievance or arbitration Proceeding exists
that might have an adverse effect upon any Seller or any Foreign Subsidiary or
the conduct of its business; (vii) there is no lockout of any employees by any
Seller or any Foreign Subsidiary, and no such action is contemplated by any
Seller; and (viii) to Sellers’ and Foreign Subsidiaries’ Knowledge there has
been no charge of discrimination filed against or threatened against any Seller
with the Equal Employment Opportunity Commission or similar Governmental Body.
 
3.25   INTELLECTUAL PROPERTY ASSETS
 
(a)   The term “Intellectual Property Assets” means all intellectual property
owned or licensed (as licensor or licensee) by a Seller or a Foreign Subsidiary
in which such Seller or Foreign Subsidiary has a proprietary interest,
including:
 
(i)   such Seller’s and such Foreign Subsidiary’s name, all assumed fictional
business names, trade names, registered and unregistered trademarks, service
marks and applications (collectively, “Marks”);
 
(ii)   all patents, patent applications and inventions and discoveries that may
be patentable (collectively, “Patents”);
 
(iii)   all registered and unregistered copyrights in both published works and
unpublished works (collectively, “Copyrights”);
 
(iv)   all rights in mask works;
 
(v)   all know-how, trade secrets, confidential or proprietary information,
customer lists, Software, technical information, data, process technology,
plans, drawings and blue prints (collectively, “Trade Secrets”); and
 
(vi)   all rights in internet web sites and internet domain names presently used
by each Seller and each Foreign Subsidiary (collectively “Net Names”).
 
(b)   Part 3.25(b) contains a complete and accurate list and summary
description, including any royalties paid or received by any Seller or any
Foreign Subsidiary, and Sellers and Foreign Subsidiaries have delivered to Buyer
accurate and complete copies, of all
 
 
 
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Seller Contracts relating to the Intellectual Property Assets, except for any
license implied by the sale of a product and perpetual, paid-up licenses for
commonly available Software programs with a value of less than US$1,000 under
which a Seller or a Foreign Subsidiary is the licensee.  There are no
outstanding and, to Sellers’ and Foreign Subsidiaries’ Knowledge, no threatened
disputes or disagreements with respect to any such Contract.
 
(c)            (i)           Except as set forth in Part 3.25(c), the
Intellectual Property Assets are all those necessary for the operation of
Sellers’ and Foreign Subsidiaries’ Business as it is currently
conducted.  Sellers and/or Foreign Subsidiaries are the owners or licensees of
all right, title and interest in and to each of the Intellectual Property
Assets, free and clear of all Encumbrances, and have the right to use without
payment to a Third Party all of the Intellectual Property Assets, other than in
respect of licenses listed in Part 3.25(c).
 
             (ii)   Except as set forth in Part 3.25(c), all former and current
employees of Sellers and Foreign Subsidiaries have executed written Contracts
with Sellers or Foreign Subsidiaries that assign to Sellers or Foreign
Subsidiaries all rights to any inventions, improvements, discoveries or
information relating to the Business of Sellers.
 
(d)   No Seller and no Foreign Subsidiary has any Patent.
 
(e)            (i)           Part 3.25(e) contains a complete and accurate list
and summary description of all Marks.
 
             (ii)   To Sellers’ and Foreign Subsidiaries’ Knowledge, there is no
potentially interfering trademark or trademark application of any other Person.
 
             (iii)   No Mark is infringed or, to Sellers’ and Foreign
Subsidiaries’ Knowledge, has been challenged or threatened in any way.  None of
the Marks used by Sellers or Foreign Subsidiaries infringes or is alleged to
infringe any trade name, trademark or service mark of any other Person.
 
             (iv)   All products and materials containing a Mark bear the proper
federal registration notice where permitted by law.
 
(f)    (i)           Part 3.25(f) contains a complete and accurate list and
summary description of all Copyrights.
 
             (ii)   All of the registered Copyrights are currently in compliance
with formal Legal Requirements, are valid and enforceable, and are not subject
to any maintenance fees or taxes or actions falling due within ninety (90) days
after the date of Closing.
 
             (iii)   No Copyright is infringed or, to Sellers’ and Foreign
Subsidiaries’ Knowledge, has been challenged or threatened in any way.  None of
the subject matter of any of the Copyright infringes or is alleged to infringe
any copyright of any Third Party or is a derivative work based upon the work of
any other Person.
 
 
 
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             (iv)   All works encompassed by the Copyrights have been marked
with the proper copyright notice.
 
(g)            (i)           With respect to each Trade Secret, the
documentation relating to such Trade Secret is current, accurate and sufficient
in detail and content to identify and explain it and to allow its full and
proper use without reliance on the knowledge or memory of any individual.
 
             (ii)   Sellers and Foreign Subsidiaries have taken all reasonable
precautions to protect the secrecy, confidentiality and value of all Trade
Secrets (including the enforcement by Sellers and/or Foreign Subsidiaries of a
policy requiring each employee or contractor to execute proprietary information
and confidentiality agreements substantially in Sellers’ or Foreign
Subsidiaries’ standard form, and all current and former employees and
contractors of Sellers and Foreign Subsidiaries have executed such an
agreement).
 
             (iii)   Sellers and/or Foreign Subsidiaries have good title to and
an absolute right to use the Trade Secrets.  The Trade Secrets are not part of
the public knowledge or literature and, to Sellers’ and Foreign Subsidiaries’
Knowledge, have not been used, divulged or appropriated either for the benefit
of any Person (other than a Seller or a Foreign Subsidiary) or to the detriment
of Sellers or Foreign Subsidiaries.  No Trade Secret is subject to any adverse
claim or has been challenged or threatened in any way or infringes any
intellectual property right of any other Person.
 
(h)            (i)           Part 3.25(h) contains a complete and accurate list
and summary description of all Net Names.
 
             (ii)   All Net Names have been registered in the name of the
applicable Seller and are in compliance with all formal Legal Requirements.
 
             (iii)   No Net Name has been or is now involved in any dispute,
opposition, invalidation or cancellation Proceeding and, to Sellers’ and Foreign
Subsidiaries’ Knowledge, no such action is threatened with respect to any Net
Name.
 
             (iv)   To Sellers’ and Foreign Subsidiaries’ Knowledge, there is no
domain name application pending of any other person which would or would
potentially interfere with or infringe any Net Name.
 
             (v)   No Net Name is infringed or, to Sellers’ and Foreign
Subsidiaries’ Knowledge, has been challenged, interfered with or threatened in
any way.  No Net Name infringes, interferes with or is alleged to interfere with
or infringe the trademark, copyright or domain name of any other Person.
 
3.26   COMPLIANCE WITH THE FOREIGN CORRUPT PRACTICES ACT AND EXPORT CONTROL AND
ANTIBOYCOTT LAWS
 
(a)   No Seller, no Foreign Subsidiary nor any of their representatives have, to
obtain or retain business, directly or indirectly offered, paid or promised to
pay, or authorized the
 
 
 
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payment of, any money or other thing of value (including any fee, gift, sample,
travel expense or entertainment with a value in excess of one hundred dollars
($100.00) in the aggregate to any one individual in any year) or any commission
payment in excess of one percent (1%) of any amount payable, to:
 
             (i)   any person who is an official, officer, agent, employee or
representative of any Governmental Body or of any existing or prospective
customer (whether government owned or nongovernment owned);
 
             (ii)   any political party or official thereof;
 
             (iii)   any candidate for political or political party office; or
 
             (iv)   any other individual or entity;
 
while knowing or having reason to believe that all or any portion of such money
or thing of value would be offered, given, or promised, directly or indirectly,
to any such official, officer, agent, employee, representative, political party,
political party official, candidate, individual, or any entity affiliated with
such customer, political party or official or political office.
 
(b)   Except as set forth in Part 3.26(b), Sellers and Foreign Subsidiaries have
made all payments to Third Parties by check mailed to such Third Parties’
principal place of business or by wire transfer to a bank located in the same
jurisdiction as such party’s principal place of business.
 
(c)   Each transaction is properly and accurately recorded on the books and
Records of Sellers, and each document upon which entries in Sellers’ and Foreign
Subsidiaries’ books and Records are based is complete and accurate in all
respects.  Sellers maintain a system of internal accounting controls adequate to
insure that Sellers maintain no off-the-books accounts and that Sellers’ assets
are used only in accordance with Sellers’ management directives.
 
(d)   Sellers and Foreign Subsidiaries have at all times been in compliance with
all Legal Requirements relating to export control and trade embargoes.  No
product sold or service provided by any Seller during the last five (5) years
has been, directly or indirectly, sold to or performed on behalf of Cuba, Iraq,
Iran, Libya or North Korea.
 
(e)   Except as set forth in Part 3.26(e), no Seller and no Foreign Subsidiary
has violated the antiboycott prohibitions contained in 50 U.S.C.  sect.  2401 et
seq.  or taken any action that can be penalized under Section 999 of the
Code.  Except as set forth in Part 3.27(e), during the last five (5) years, no
Seller has been a party to, is not a beneficiary under and has not performed any
service or sold any product under any Seller Contract under which a product has
been sold to customers in Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman,
Quatar, Saudi Arabia, Sudan, Syria, United Arab Emirates or the Republic of
Yemen.
 
3.27   RELATIONSHIPS WITH RELATED PERSONS
 
Except as disclosed in Part 3.27, none of any Seller, any Foreign Subsidiary,
Design Partners nor any Principal nor any Related Person of any of them has, or
since January 1, 2010,
 
 
 
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has had, any interest in any property (whether real, personal or mixed and
whether tangible or intangible) used in or pertaining to the Business.  None of
any Seller, any Foreign Subsidiary, Design Partners nor any Principal nor any
Related Person of any of them owns, or since January 1, 2010, has owned, of
record or as a beneficial owner, an equity interest or any other financial or
profit interest in any Person that has (a) had business dealings or a material
financial interest in any transaction with any Seller or any Foreign Subsidiary
other than business dealings or transactions disclosed in Part 3.27, each of
which has been conducted in the Ordinary Course of Business with any Seller or
any Foreign Subsidiary at substantially prevailing market prices and on
substantially prevailing market terms or (b) engaged in competition with any
Seller or any Foreign Subsidiary with respect to any line of the products or
services of a Seller or a Foreign Subsidiary (a “Competing Business”) in any
market presently served by a Seller or a Foreign Subsidiary, except for
ownership of less than one percent (1%) of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the
over-the-counter market.  Except as set forth in Part 3.27, neither any Seller,
any Foreign Subsidiary, Design Partners nor any Principal nor any Related Person
of any of them is a party to any Contract with, or has any claim or right
against, any Seller or any Foreign Subsidiary.
 
3.28   CUSTOMERS AND VENDORS.
 
Part 3.28 is a true and complete list of Sellers’ and Foreign Subsidiaries’
customers and vendors during each of the fiscal years 2009 and 2010 and during
the first seven (7) months of fiscal year 2011 with annual dollar or dollar
equivalent volumes of sales or purchases in excess of Two Hundred Thousand
Dollars ($200,000) showing, with respect to each, the name, address and dollar
amount involved and the nature of the relationship (including the principal
categories of products or services bought and sole).  Except as set forth on
Part 3.28, in the twelve months prior to the date hereof, there has been no
Material Adverse Change in respect to sales volume or profit margins, in
Sellers’ and Foreign Subsidiaries’ relationship with their ten largest customers
during such period.  No Seller and no Foreign Subsidiary is required to provide
bonding or other financial security arrangements in connection with any
transactions with any of its customers or vendors in the ordinary course of its
business, other than as set forth on Part 3.28.
 
3.29   BROKERS OR FINDERS
 
Neither any Seller, any Foreign Subsidiary nor any of its Representatives have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders’ fees or agents’ commissions or other similar payments in connection
with the sale of the Business or the Assets or the Contemplated Transactions.
 
3.30   DISCLOSURE
 
None of any Seller, any Foreign Subsidiary, Design Partners nor any Principal
has any Knowledge of any fact that has specific application to Sellers or
Foreign Subsidiaries (other than general economic or industry conditions) and
that may materially adversely affect the Assets, Business, prospects, financial
condition or results of operations of Sellers and/or Foreign Subsidiaries that
has not been set forth in this Agreement or the Disclosure Letter.
 
 
 
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Section 4.   Representations and Warranties of Buyer
 
Buyer represents and warrants to Sellers, Design Partners and Principals as
follows:
 
4.1   ORGANIZATION AND GOOD STANDING
 
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with full corporate power and authority
to conduct its business as it is now conducted.  Buyer has adequate funds on
hand or available from financing in place to satisfy the Purchase Price and all
of Buyer’s other obligations under this Agreement.
 
4.2   AUTHORITY; NO CONFLICT
 
(a)   This Agreement constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.  Upon the
execution and delivery by Buyer of the Transfer, Assignment, Bill of Sale and
Assumption Agreement, the Escrow Agreement, the Employment Agreements and each
other agreement to be executed or delivered by Buyer at Closing (collectively,
the “Buyer’s Closing Documents”), each of the Buyer’s Closing Documents will
constitute the legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its respective terms.  Buyer has the absolute and
unrestricted right, power and authority to execute and deliver this Agreement
and the Buyer’s Closing Documents and to perform its obligations under this
Agreement and the Buyer’s Closing Documents, and such action has been duly
authorized by all necessary corporate action.
 
(b)   Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay or otherwise interfere with any
of the Contemplated Transactions pursuant to:
 
(i)   any provision of Buyer’s Governing Documents;
 
(ii)   any resolution adopted by the board of directors or the shareholders of
Buyer;
 
(iii)   any Legal Requirement or Order to which Buyer may be subject; or
 
(iv)   any Contract to which Buyer is a party or by which Buyer may be bound.
 
Buyer is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
 
4.3   CERTAIN PROCEEDINGS
 
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal or
otherwise
 
 
 
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interfering with, any of the Contemplated Transactions.  To Buyer’s Knowledge,
no such Proceeding has been threatened.
 
4.4   BROKERS OR FINDERS
 
Neither Buyer nor any of its Representatives have incurred any obligation or
liability, contingent or otherwise, for brokerage or finders’ fees or agents’
commissions or other similar payment in connection with the Contemplated
Transactions.
 
Section 5.   Covenants of Sellers Prior to Closing
 
5.1   ACCESS AND INVESTIGATION
 
Between the date of this Agreement and the Closing Date, and upon reasonable
advance notice received from Buyer, Sellers and Foreign Subsidiaries shall
(a) afford Buyer and its Representatives (collectively, “Buyer Group”) full and
free access, during regular business hours, to Sellers’ and Foreign
Subsidiaries’ personnel, properties (including subsurface testing), Contracts,
Governmental Authorizations, books and Records and other documents and data,
such rights of access to be exercised in a manner that does not unreasonably
interfere with the operations of Sellers and Foreign Subsidiaries; (b) furnish
Buyer Group with copies of all such Contracts, Governmental Authorizations,
books and Records and other existing documents and data as Buyer may reasonably
request; (c) furnish Buyer Group with such additional financial, operating and
other relevant data and information as Buyer may reasonably request; and
(d) otherwise cooperate and assist, to the extent reasonably requested by Buyer,
with Buyer’s investigation of the properties, assets and financial condition
related to Sellers and Foreign Subsidiaries.  In addition, Buyer shall have the
right to have the Real Property and Tangible Personal Property inspected by
Buyer Group, at Buyer’s sole cost and expense, for purposes of determining the
physical condition and legal characteristics of the Real Property and Tangible
Personal Property.  In the event subsurface or other destructive testing is
recommended by any of Buyer Group, Buyer shall be permitted to have the same
performed.
 
5.2   OPERATION OF THE BUSINESS
 
Between the date of this Agreement and the Closing, Sellers and Foreign
Subsidiaries shall:
 
(a)   conduct the Business only in the Ordinary Course of Business;
 
(b)   except as otherwise directed by Buyer in writing, and without making any
commitment on Buyer’s behalf, use its Best Efforts to preserve intact its
current business organization, keep available the services of its officers,
employees and agents and maintain its relations and good will with suppliers,
customers, landlords, creditors, employees, agents and others having business
relationships with it;
 
(c)   confer with Buyer prior to implementing operational decisions of a
material nature;
 
 
 
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(d)   otherwise report periodically to Buyer concerning the status of the
Business;
 
(e)   make no material changes in management personnel without prior
consultation with Buyer;
 
(f)   maintain the Assets in a state of repair and condition that complies with
Legal Requirements and is consistent with the requirements and normal conduct of
the Business;
 
(g)   keep in full force and effect, without amendment, all material rights
relating to the Business;
 
(h)   comply with all Legal Requirements and contractual obligations applicable
to the operations of the Business;
 
(i)   continue in full force and effect the insurance coverage under the
policies set forth in Part 3.21(a) or substantially equivalent policies;
 
(j)   except as required to comply with ERISA or to maintain qualification under
Section 401(a) of the Code, not amend, modify or terminate any Employee Plan
without the express written consent of Buyer, and except as required under the
provisions of any Employee Plan, not make any contributions to or with respect
to any Employee Plan without the express written consent of Buyer, provided that
Sellers and Foreign Subsidiaries shall contribute that amount of cash to each
Employee Plan necessary to fully fund all of the benefit liabilities of such
Employee Plan on a plan-termination basis as of the Closing Date;
 
(k)   cooperate with Buyer and assist Buyer in identifying the Governmental
Authorizations required by Buyer to operate the business from and after the
Closing Date and either transferring existing Governmental Authorizations of
Seller to Buyer, where permissible, or obtaining new Governmental Authorizations
for Buyer;
 
(l)   upon request from time to time, execute and deliver all documents, make
all truthful oaths, testify in any Proceedings and do all other acts that may be
reasonably necessary or desirable in the opinion of Buyer to consummate the
Contemplated Transactions, all without further consideration; and
 
(m)   maintain all books and Records of Sellers and Foreign Subsidiaries
relating to the Business in the Ordinary Course of Business.
 
5.3   NEGATIVE COVENANT
 
Except as otherwise expressly permitted herein, between the date of this
Agreement and the Closing Date, Sellers and Foreign Subsidiaries shall not,
without the prior written Consent of Buyer, (a) take any affirmative action, or
fail to take any reasonable action within its control, as a result of which any
of the changes or events listed in Sections 3.15 or 3.19 would be likely to
occur; (b) make any modification to any material Contract or Governmental
Authorization; (c) allow the levels of raw materials, supplies or other
materials included in the Inventories to vary materially from the levels
customarily maintained; (d) enter into any compromise or
 
 
 
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settlement of any litigation, proceeding or governmental investigation relating
to the Assets, the business of Seller or the Assumed Liabilities; and (e) except
with the written consent of Buyer (not to be unreasonably withheld), no Seller
and no Foreign Subsidiary shall authorize or pay or agree to pay or accrue any
wage, salary or other increase in remuneration of directors, officers or other
employees or agents (other than scheduled cost of living adjustments and
customary compensation reviews conducted in accordance with past practice), not
authorize or make any changes in compensation or policy regarding compensation
payable or to become payable to any directors, officers or other employees
(other than scheduled cost of living adjustments and customary compensation
reviews conducted in accordance with past practice), and not hire any new
employees or elect any new officers or directors of Sellers or Foreign
Subsidiaries; provided that, without Buyer’s written consent, Sellers and/or
Foreign Subsidiaries may, in the normal course of business, hire persons to
replace terminated employees and hire new employees as may be necessary or
appropriate to conduct its business, provided that such increases and hirings do
not increase the level of payroll costs of Sellers and Foreign Subsidiaries.
 
5.4   REQUIRED APPROVALS
 
As promptly as practicable after the date of this Agreement, Sellers and Foreign
Subsidiaries shall make all filings required by Legal Requirements to be made by
them in order to consummate the Contemplated Transactions.  Sellers, Foreign
Subsidiaries, Design Partners and Principals also shall cooperate with Buyer and
its Representatives with respect to all filings that Buyer elects to make or,
pursuant to Legal Requirements, shall be required to make in connection with the
Contemplated Transactions.  Sellers, Foreign Subsidiaries, Design Partners and
Principals also shall cooperate with Buyer and its Representatives in obtaining
all Material Consents.
 
5.5   NOTIFICATION
 
Between the date of this Agreement and the Closing, Sellers, Foreign
Subsidiaries, Design Partners and Principals shall promptly notify Buyer in
writing if any of them becomes aware of (a) any fact or condition that causes or
constitutes a Breach of any of Sellers’, Foreign Subsidiaries’, Design Partners’
and Principals’ representations and warranties made as of the date of this
Agreement or (b) the occurrence after the date of this Agreement of any fact or
condition that would or be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence of, or any Seller’s, any Foreign Subsidiary’s, Design
Partners’ or any Principal’s discovery of, such fact or condition.  Should any
such fact or condition require any change to the Disclosure Letter, Sellers and
Foreign Subsidiaries shall promptly deliver to Buyer a supplement to the
Disclosure Letter specifying such change.  Such delivery shall not affect any
rights of Buyer under Section 9.2 and Section 11.  During the same period,
Sellers, Foreign Subsidiaries, Design Partners and Principals also shall
promptly notify Buyer of the occurrence of any Breach of any covenant of
Sellers, Foreign Subsidiaries, Design Partners or Principals in this Section 5
or of the occurrence of any event that may make the satisfaction of the
conditions in Section 7 impossible or unlikely.
 
 
 
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5.6   NO NEGOTIATION
 
Until such time as this Agreement shall be terminated pursuant to Section 9.1,
neither any Seller, any Foreign Subsidiary, Design Partners nor any Principal
shall directly or indirectly solicit, initiate, encourage or entertain any
inquiries or proposals from, discuss or negotiate with, provide any nonpublic
information to or consider the merits of any inquiries or proposals from any
Person (other than Buyer) relating to any business combination transaction
involving any Seller or any Foreign Subsidiary , including the sale by Design
Partners or Principals of any Seller’s, any Foreign Subsidiary’s, or Design
Partners’ equity interest, the merger or consolidation of Seller or the sale of
Seller’s business or any of the Assets (other than in the Ordinary Course of
Business).  Sellers, Foreign Subsidiaries, Design Partners and Principals shall
notify Buyer of any such inquiry or proposal within twenty-four (24) hours of
receipt or awareness of the same by any Seller, any Foreign Subsidiary, Design
Partners or any Principal.
 
5.7   BEST EFFORTS
 
Sellers, Foreign Subsidiaries, Design Partners and Principals shall use their
Best Efforts to cause the conditions in Section 7 and Section 8.3 to be
satisfied.
 
5.8   INTERIM FINANCIAL STATEMENTS
 
Sellers shall deliver to Buyer within three (3) days of the Closing Date a
Financial Report for the period ending August 31, 2011, and to the extent the
Closing is extended beyond October 1, 2011, for each month thereafter within
fifteen (15) days of such month end, in each case prepared in accordance with
past practice and certified by an officer of Sellers.
 
5.9   CHANGE OF NAME
 
On or before the Closing Date, each Seller shall (a) amend its Governing
Documents and take all other actions necessary to change its name to one
sufficiently dissimilar to such Seller’s present name, in Buyer’s judgment, to
avoid confusion and (b) take all actions requested by Buyer (or any Subsidiary
thereof) to enable Buyer to change its name to Seller’s present name.
 
5.10   PAYMENT OF LIABILITIES
 
Sellers shall pay or otherwise satisfy in the Ordinary Course of Business all of
their Liabilities and obligations.  Prior to the Closing, Foreign Subsidiaries
shall pay or otherwise satisfy all of their Liabilities that are Retained
Liabilities.  Buyer and Sellers hereby waive compliance with the bulk-transfer
provisions of the Uniform Commercial Code (or any similar law) (“Bulk
Sales Laws”) in connection with the Contemplated Transactions.
 
Section 6.   Covenants of Buyer Prior to Closing
 
6.1   REQUIRED APPROVALS
 
As promptly as practicable after the date of this Agreement, Buyer shall make,
or cause to be made, all filings required by Legal Requirements to be made by it
to consummate the Contemplated Transactions.  Buyer also shall cooperate, and
cause its Related Persons to
 
 
 
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cooperate, with Sellers and Foreign Subsidiaries (a) with respect to all filings
Sellers and/or Foreign Subsidiaries shall be required by Legal Requirements to
make and (b) in obtaining all Consents identified in Part 3.2(c), provided,
however, that Buyer shall not be required to dispose of or make any change to
its business, expend any material funds or incur any other burden in order to
comply with this Section 6.1.
 
6.2   BEST EFFORTS
 
Buyer shall use its Best Efforts to cause the conditions in Section 8 and
Section 7.3 to be satisfied.
 
Section 7.   Conditions Precedent to Buyer’s Obligation to Close
 
Buyer’s obligation to purchase the Assets and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer, in whole or in part):
 
7.1   ACCURACY OF REPRESENTATIONS
 
(a)   All of Sellers’, Foreign Subsidiaries’ and Design Partners’
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), shall
have been accurate in all material respects as of the date of this Agreement,
and shall be accurate in all material respects as of the time of the Closing as
if then made, without giving effect to any supplement to the Disclosure Letter.
 
(b)   Each of the representations and warranties in Sections 3.2(a) and 3.4, and
each of the representations and warranties in this Agreement that contains an
express materiality qualification, shall have been accurate in all respects as
of the date of this Agreement, and shall be accurate in all respects as of the
time of the Closing as if then made, without giving effect to any supplement to
the Disclosure Letter.
 
7.2   SELLERS’, FOREIGN SUBSIDIARIES’, DESIGN PARTNERS’ AND PRINCIPALS’
PERFORMANCE
 
All of the covenants and obligations that Sellers, Foreign Subsidiaries, Design
Partners and Principals are required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered collectively), and each of
these covenants and obligations (considered individually) shall have been duly
performed and complied with in all material respects.
 
7.3   CONSENTS
 
Each of the Consents identified in Exhibit 7.3 (the “Material Consents”) shall
have been obtained and shall be in full force and effect.
 
 
 
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7.4   ADDITIONAL DOCUMENTS
 
Sellers, Foreign Subsidiaries, Design Partners and Principals shall have caused
the documents and instruments required by Section 2.7(a) and the following
documents to be delivered (or tendered subject only to Closing) to Buyer:
 
(a)   an opinion of Howard & Howard Attorneys PLLC and/or appropriate foreign
counsel, dated the Closing Date, in a form reasonably acceptable to Buyer;
 
(b)   The certificate, articles and/or equivalent of incorporation or formation
and all amendments thereto of each Seller and each Foreign Subsidiary, duly
certified as of a recent date by the Secretary of State of the jurisdiction of
such Seller’s or such Foreign Subsidiary’s incorporation;
 
(c)   If requested by Buyer, any Consents or other instruments that may be
required to permit Buyer’s qualification in each jurisdiction in which any
Seller is licensed or qualified to do business as a foreign corporation under
the name “Brandimage” or “LAGA” or any derivative thereof;
 
(d)   A payoff letter or equivalent from the holder of Sellers’ and Foreign
Subsidiaries’ indebtedness for money borrowed;
 
(e)   Releases of all Encumbrances on the Assets, other than Permitted
Encumbrances, including releases of each mortgage of record and reconveyances of
each deed of trust with respect to each parcel of real property included in the
Assets; and
 
(f)   Certificates dated as of a date not earlier than the thirtieth (30th) day
prior to the Closing as to the good standing of each Seller and each Foreign
Subsidiary and payment of all applicable state (or foreign jurisdiction) Taxes
by each Seller and each Foreign Subsidiary, executed by the appropriate
officials of the State (or nation) of organization and each jurisdiction in
which any Seller or Foreign Subsidiary is licensed or qualified to do business
as a foreign corporation as specified in Part 3.1(a).
 
7.5   NO PROCEEDINGS
 
Since the date of this Agreement, there shall not have been commenced or
threatened against Buyer, or against any Related Person of Buyer, any Proceeding
(a) involving any challenge to, or seeking Damages or other relief in connection
with, any of the Contemplated Transactions or (b) that may have the effect of
preventing, delaying, making illegal, imposing limitations or conditions on or
otherwise interfering with any of the Contemplated Transactions.
 
7.6   NO CONFLICT
 
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), contravene or conflict with or result in a violation of or cause Buyer or
any Related Person of Buyer to suffer any adverse consequence under (a) any
applicable Legal Requirement or Order or (b) any Legal Requirement
 
 
 
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or Order that has been published, introduced or otherwise proposed by or before
any Governmental Body, excluding Bulk Sales Laws.
 
7.7   REAL PROPERTY LEASES
 
Buyer shall be satisfied with the terms and conditions of Sellers’ lease for
their premises at (i) 644 Eden Park Drive, Cincinnati, Ohio 45202-6031 and
(ii) 990 Skokie Boulevard, Northbrook, Illinois 60062-4005, or Buyer shall have
renegotiated the terms and conditions of any such lease to Buyer’s reasonable
satisfaction.  The lessor under each such lease shall have consented to the
transactions contemplated hereby or Buyer shall have concluded that any such
Consent is not required.
 
7.8   GOVERNMENTAL AUTHORIZATIONS
 
Buyer shall have received such Governmental Authorizations as are necessary or
desirable to allow Buyer to operate the Assets from and after the Closing.
 
7.9   ENVIRONMENTAL REPORT
 
Buyer shall have received any existing environmental site assessment report with
respect to Sellers’ Facilities, which report shall be reasonably acceptable in
form and substance to Buyer.
 
7.10   WARN ACT NOTICE PERIODS AND EMPLOYEES
 
(a)   All requisite notice periods under the Warn Act shall have expired.
 
(b)   Buyer shall have entered into employment agreements with those employees
of Seller identified in Exhibit 7.10.
 
(c)   Those key employees of Sellers identified on Exhibit 7.10, or substitutes
therefor who shall be acceptable to Buyer, in its sole discretion, shall have
accepted employment with Buyer with such employment to commence on and as of the
Closing Date.
 
(d)   Substantially all other employees of Sellers shall be available for hiring
by Buyer, in its sole discretion, on and as of the Closing Date.
 
7.11   ANCILLARY AGREEMENTS
 
The relevant Persons shall have entered into ancillary agreements in form and
substance as set forth in Exhibit 7.11 hereto.
 
7.12   ACCOUNT RELATIONSHIPS
 
Buyer’s President or Vice President shall have the opportunity to meet together
with a representative of Sellers with Sellers’ key account relationships and
Buyer shall be reasonably satisfied as to the existence and condition of the
account relationship are materially accurate as represented by Sellers.
 
 
 
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7.13   FIXED AND OTHER ASSETS
 
The Assets include all fixed assets (less normal depreciation) and any other
tangible and intangible assets of Sellers and Foreign Subsidiaries shown on the
Interim Statement of Assets and Liabilities of Sellers delivered by Seller
Representative to Buyer pre-Closing.
 
7.14   DUE DILIGENCE
 
Buyer shall have not notified Seller Representative by September 28, 2011 that
Buyer’s due diligence investigation shall have uncovered items or circumstances
that are Materially adverse to the Business or the Assets.
 
Section 8.   Conditions Precedent to Sellers’ Obligation to Close
 
Sellers’ obligation to sell the Assets and to take the other actions required to
be taken by Sellers at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Sellers in whole or in part):
 
8.1   ACCURACY OF REPRESENTATIONS
 
All of Buyer’s representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually) shall have been accurate in all material respects as of the date
of this Agreement and shall be accurate in all material respects as of the time
of the Closing as if then made.
 
8.2   BUYER’S PERFORMANCE
 
All of the covenants and obligations that Buyer is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), shall have been performed and complied with in all material
respects.
 
8.3   CONSENTS
 
Each of the Consents identified in Exhibit 8.3 shall have been obtained and
shall be in full force and effect.
 
8.4   ADDITIONAL DOCUMENTS
 
Buyer shall have caused the documents and instruments required by
Section 2.7(b) and the following documents to be delivered (or tendered subject
only to Closing) to Sellers, Design Partners and Principals:
 
(a)   an opinion of Vedder Price P.C., dated the Closing Date, in a form
acceptable to Seller Representative; and
 
 
 
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(b)   the certificate, articles and/or equivalent of incorporation or formation
and all amendments thereto of Buyer, duly certified as of a recent date by the
Secretary of State of the jurisdiction of Buyer’s incorporation.
 
8.5   NO INJUNCTION
 
There shall not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the consummation of the Contemplated Transactions and
(b) has been adopted or issued, or has otherwise become effective, since the
date of this Agreement.
 
Section 9.   Termination
 
9.1   TERMINATION EVENTS
 
By notice given prior to or at the Closing, subject to Section 9.2, this
Agreement may be terminated as follows:
 
(a)   by Buyer if a material Breach of any provision of this Agreement has been
committed by Sellers, Foreign Subsidiaries or Design Partners and such Breach
has not been cured after reasonable notice or waived by Buyer;
 
(b)   by Sellers if a material Breach of any provision of this Agreement has
been committed by Buyer and such Breach has not been cured after reasonable
notice or waived by Seller Representative;
 
(c)   by Buyer if any condition in Section 7 has not been satisfied as of the
date specified for Closing in the first sentence of Section 2.6 or if
satisfaction of such a condition by such date is or becomes impossible (other
than through the failure of Buyer to comply with its obligations under this
Agreement), and Buyer has not waived or Sellers have not satisfied such
condition on or before such date plus a reasonable cure period;
 
(d)   by Sellers if any condition in Section 8 has not been satisfied as of the
date specified for Closing in the first sentence of Section 2.6 or if
satisfaction of such a condition by such date is or becomes impossible (other
than through the failure of Sellers or Design Partners to comply with their
obligations under this Agreement), and Seller Representative has not waived or
Buyer has not satisfied such condition on or before such date plus a reasonable
cure period;
 
(e)   by mutual consent of Buyer and Sellers, Foreign Subsidiaries, Design
Partners and Principals;
 
(f)   by Buyer, if the Closing has not occurred on or before November 30, 2011,
or such later date as the parties may agree upon, unless the Buyer is in
material Breach of this Agreement; or
 
(g)   by Sellers and Design Partners, if the Closing has not occurred on or
before November 30, 2011, or such later date as the parties may agree upon,
unless the Sellers or Design Partners are in material Breach of this Agreement.
 
 
 
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9.2   EFFECT OF TERMINATION
 
Each party’s right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies.  If this Agreement is
terminated pursuant to Section 9.1, all obligations of the parties under this
Agreement will terminate, except that the obligations of the parties in this
Section 9.2 and Sections 12 and 13 (except for those in Section 13.5) will
survive; provided, however, that, if this Agreement is terminated because of a
Breach of this Agreement by the nonterminating party or because one or more of
the conditions to the terminating party’s obligations under this Agreement is
not satisfied as a result of the party’s failure to comply with its obligations
under this Agreement, the terminating party’s right to pursue all legal remedies
will survive such termination unimpaired.
 
Section 10.   Additional Covenants
 
10.1   EMPLOYEES AND EMPLOYEE BENEFITS
 
(a)   Information on Active Employees.  For the purpose of this Agreement, the
term “Active Employees” shall mean all employees employed on the Closing Date by
Sellers and Foreign Subsidiaries for the Business who are:
 
(i)   bargaining unit employees currently covered by a collective bargaining
agreement, or
 
(ii)   employed exclusively in the Business as currently conducted, including
employees on temporary leave of absence, including family medical leave,
military leave, temporary disability or sick leave, but excluding employees on
long-term disability leave.
 
(b)   Employment of Active Employees by Buyer.
 
(i)   Buyer shall hire the Active Employees of Sellers specified on Part 10.1(b)
as updated at the Closing.  Not later than three (3) days prior to the Closing
Date, Buyer and Sellers will develop a list of Active Employees to whom Buyer
will offer employment upon the Effective Time (the “Hired Active
Employees”).  Subject to Legal Requirements, Buyer will have reasonable access
to the Facilities and personnel Records (including performance appraisals,
disciplinary actions, grievances and medical Records) of Sellers and Foreign
Subsidiaries for the purpose of preparing for and conducting employment
interviews with all Active Employees and will conduct the interviews as
expeditiously as possible prior to the Closing Date.  Access will be provided by
Sellers and Foreign Subsidiaries upon reasonable prior notice during normal
business hours.  Effective immediately before the Closing, Sellers will
terminate the employment of all of its Hired Active Employees.
 
(ii)   Neither any Seller, Design Partners nor any Principal nor their Related
Persons shall solicit the continued employment of any Active Employee or hire
any Active Employee (unless and until Buyer has informed Seller Representative
in writing that the particular Active Employee will not receive any employment
offer from
 
 
 
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Buyer) or for a period of five (5) years (two (2) years with respect to the
non-hire covenant) after the Closing Date, the employment of any Hired Active
Employee after the Closing.  Buyer shall inform Seller Representative promptly
of the identities of those Active Employees to whom it will not make employment
offers, and Seller Representative shall assist Buyer in complying with the WARN
Act as to those Active Employees.  Neither Sellers, Design Partners nor
Principals shall be deemed to have breached the non-solicitation covenant
contained herein if any such Hired Active Employee responds to an advertisement
of general publication.
 
(iii)   It is understood and agreed that (A) Buyer’s expressed intention to
extend offers of employment as set forth in this section shall not constitute
any commitment, Contract or understanding (expressed or implied) of any
obligation on the part of Buyer to a post-Closing employment relationship of any
fixed term or duration or upon any terms or conditions other than those that
Buyer may establish pursuant to individual offers of employment, and
(B) employment offered by Buyer is “at will” and may be terminated by Buyer or
by an employee at any time for any reason (subject to any written commitments to
the contrary made by Buyer or an employee and Legal Requirements).  Nothing in
this Agreement shall be deemed to prevent or restrict in any way the right of
Buyer to terminate, reassign, promote or demote any of the Hired Active
Employees after the Closing or to change adversely or favorably the title,
powers, duties, responsibilities, functions, locations, salaries, other
compensation or terms or conditions of employment of such employees.
 
(c)   Salaries and Benefits.
 
(i)   Except to the extent included within the Assumed Liabilities, Sellers
shall be responsible for (A) the payment of all wages and other remuneration due
to their Active Employees with respect to their services as employees of Sellers
through the close of business on the Closing Date, including pro rata bonus
payments and all vacation pay earned prior to the Closing Date; (B) the payment
of any termination or severance payments and the provision of health plan
continuation coverage in accordance with the requirements of COBRA and
Sections 601 through 608 of ERISA; and (C) any and all payments to employees
required under the WARN Act.
 
(ii)   Sellers shall be liable for any claims made or incurred by Active
Employees and their beneficiaries through the Closing Date under the Employee
Plans.  For purposes of the immediately preceding sentence, a charge will be
deemed incurred, in the case of hospital, medical or dental benefits, when the
services that are the subject of the charge are performed and, in the case of
other benefits (such as disability or life insurance), when an event has
occurred or when a condition has been diagnosed that entitles the employee to
the benefit.
 
(d)   Sellers’ Retirement and Savings Plans.
 
(i)   All Hired Active Employees who are participants in Sellers’ retirement
plans shall retain their accrued benefits under Sellers’ retirement plans as of
the Closing Date, and Sellers (or Sellers’ retirement plans) shall retain sole
liability for
 
 
 
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the payment of such benefits as and when such Hired Active Employees become
eligible therefor under such plans.  All Hired Active Employees shall become
fully vested in their accrued benefits under Sellers’ retirement plans as of the
Closing Date, and Sellers will so amend such plans if necessary to achieve this
result.  Sellers shall cause the assets of each Employee Plan to equal or exceed
the benefit liabilities of such Employee Plan on a plan-termination basis as of
the Effective Time.
 
(ii)   Sellers shall take such actions as are necessary in order that the Hired
Active Employees shall be fully vested in their accounts under such plan as of
the Closing Date and all payments thereafter shall be made from such plan as
provided in the plan.
 
(e)   No Transfer of Assets.  Neither any Seller nor Design Partners nor their
respective Related Persons will make any transfer of pension or other employee
benefit plan assets to Buyer.  The preceding sentence shall not preclude Hired
Active Employees from electing to roll over their account balances in Sellers’
savings plan to the Buyer’s savings plan and Buyer shall take such reasonable
actions as may be necessary to permit such rollovers by Hired Active Employees,
unless Buyer determines in good faith that the acceptance of rollovers from
Sellers’ savings plan would adversely affect the qualified status of Buyer’s
savings plan.
 
(f)   Collective Bargaining Matters.  Buyer will set its own initial terms and
conditions of employment for the Hired Active Employees and others it may hire,
including work rules, benefits and salary and wage structure, all as permitted
by law.  Buyer is not obligated to assume any collective bargaining agreements
under this Agreement.  Sellers shall be solely liable for any severance payment
required to be made to its employees due to the Contemplated Transactions.  Any
bargaining obligations of Buyer with any union with respect to bargaining unit
employees subsequent to the Closing, whether such obligations arise before or
after the Closing, shall be the sole responsibility of Buyer.
 
(g)   General Employee Provisions.
 
(i)   Sellers, Foreign Subsidiaries and Buyer shall give any notices required by
Legal Requirements and take whatever other actions with respect to the plans,
programs and policies described in this Section 10.1 as may be necessary to
carry out the arrangements described in this Section 10.1.
 
(ii)   Sellers, Foreign Subsidiaries and Buyer shall provide each other with
such plan documents and summary plan descriptions, employee data or other
information as may be reasonably required to carry out the arrangements
described in this Section 10.1.
 
(iii)   If any of the arrangements described in this Section 10.1 are determined
by the IRS or other Governmental Body to be prohibited by law, Sellers and Buyer
shall modify such arrangements to as closely as possible reflect their expressed
intent and retain the allocation of economic benefits and burdens to the parties
contemplated herein in a manner that is not prohibited by law.
 
 
 
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(iv)   Sellers shall provide Buyer with completed I-9 forms (or equivalent forms
required by local law) and attachments with respect to all Hired Active
Employees, except for such employees as Sellers certify in writing to Buyer are
exempt from such requirement.
 
(v)   Buyer shall not have any responsibility, liability or obligation, whether
to Active Employees, former employees, their beneficiaries or to any other
Person, with respect to any employee benefit plans, practices, programs or
arrangements (including the establishment, operation or termination thereof and
the notification and provision of COBRA coverage extension) maintained by
Sellers.
 
(h)   Past Service credit in Buyer’s Employee Benefit Plans.
 
(i)   Buyer agrees that Hired Active Employees and employees of Foreign
Subsidiaries will not be subject to any exclusion or penalty for pre-existing
conditions that were covered under a medical plan of any Seller or Foreign
Subsidiary covering such employees immediately prior to the Closing or any
waiting period relating to coverage under the Buyer’s medical plan.  Buyer
further agrees that, to the extent that the initial period of coverage for Hired
Active Employees under any Employee Plan of Buyer that is an “Employee Welfare
Benefit Plan,” as defined in Section 3(1) of ERISA, is not a full twelve
(12) month period of coverage, Hired Active Employees and employees of Foreign
Subsidiaries shall be given credit under the applicable welfare plan for any
deductibles and co-insurance payments made by such employees under the
corresponding Seller Employee Plan during the balance of such twelve (12) month
period of coverage.
 
(ii)   With respect to any Buyer Employee Plan intended to qualify under Section
401(a) of the Code, the prior service with a Seller of Hired Active Employees
and employees of Foreign Subsidiaries shall be taken into account for purposes
of eligibility and vesting under such Plans.
 
(iii)   With respect to employee benefits such as vacation pay, sick pay,
personal days, and the like, the prior service with a Seller of Hired Active
Employees and employees of Foreign Subsidiaries shall be applied for purposes of
eligibility, vesting and the level of benefit to which the employee is entitled.
 
10.2   PAYMENT OF ALL TAXES RESULTING FROM SALE OF ASSETS BY SELLERS
 
Sellers shall pay in a timely manner all Taxes resulting from or payable in
connection with the sale of the Assets pursuant to this Agreement, regardless of
the Person on whom such Taxes are imposed by Legal Requirements.
 
10.3   PAYMENT OF OTHER RETAINED LIABILITIES
 
In addition to payment of Taxes pursuant to Section 10.2, Sellers shall pay, or
make adequate provision for the payment, in full all of the Retained Liabilities
and other Liabilities of Sellers under this Agreement.  If any such Liabilities
are not so paid or provided for, or if Buyer
 
 
 
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reasonably determines that failure to make any payments will impair Buyer’s use
or enjoyment of the Assets or conduct of the Business previously conducted by
Sellers with the Assets, Buyer may, at any time after the Closing Date, elect to
make all such payments directly (but shall have no obligation to do so) and
Sellers and Design Partners shall indemnify Buyer for any amount so paid
pursuant to the provisions of Section 11.
 
10.4   INTENTIONALLY OMITTED
 
10.5   REMOVING EXCLUDED ASSETS
 
On or before the Closing Date, Sellers shall remove all Excluded Assets from all
Facilities and other Real Property to be occupied by Buyer.  Such removal shall
be done in such manner as to avoid any damage to the Facilities and other
properties to be occupied by Buyer and any disruption of the business operations
to be conducted by Buyer after the Closing.  Any damage to the Assets or to the
Facilities resulting from such removal shall be paid by Sellers at the
Closing.  Should Sellers fail to remove the Excluded Assets as required by this
Section, Buyer shall have the right, but not the obligation:  (a) to remove the
Excluded Assets at Sellers’ sole cost and expense; (b) to store the Excluded
Assets and to charge Sellers all storage costs associated therewith; (c) to
treat the Excluded Assets as unclaimed and to proceed to dispose of the same
under the laws governing unclaimed property; or (d) to exercise any other right
or remedy conferred by this Agreement or otherwise available at law or in
equity.  Sellers shall promptly reimburse Buyer for all costs and expenses
incurred by Buyer in connection with any Excluded Assets not removed by Sellers
on or before the Closing Date.
 
10.6   REPORTS AND RETURNS
 
Sellers shall promptly after the Closing prepare and file all reports and
returns required by Legal Requirements relating to the Business of Sellers as
conducted using the Assets, to and including the Effective Time.
 
10.7   ASSISTANCE IN PROCEEDINGS
 
Sellers will cooperate with Buyer and its counsel in the contest or defense of,
and make available its personnel and provide any testimony and access to its
books and Records in connection with, any Proceeding involving or relating to
(a) any Contemplated Transaction or (b) any action, activity, circumstance,
condition, conduct, event, fact, failure to act, incident, occurrence, plan,
practice, situation, status or transaction on or before the Closing Date
involving Sellers or their Business or either Principal.
 
10.8   NONCOMPETITION, NONSOLICITATION AND NONDISPARAGEMENT
 
(a)   For a period of five (5) years after the Closing Date, none of any Seller,
Design Partners nor any Principal shall without the prior written consent of
Buyer:  (i) solicit for employment any employee of any Seller who continued
employment with Buyer after the Closing Date; (ii) directly or indirectly, alone
or as a member of a partnership, or as an officer, stockholder (owning more than
five percent of outstanding stock), corporate director, employee, consultant, or
representative of any company or entity, compete with Buyer within the United
States of America, Canada, the United Kingdom, Europe, Korea, China or Southeast
Asia (the
 
 
 
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“Territory”), in the Proscribed Business as conducted by Sellers or Foreign
Subsidiaries prior to the Closing or the Brandimage division of Schawk after the
Closing; or (iii) perform any act which would divert from Buyer to any person or
entity in which he has an interest or by whom he is employed, any trade or
business with any customer with whom any Seller had any contact or association
during the three year preceding the date hereof, or with any party whose
identity or potential as a customer of any Seller was confidential or learned by
Sellers or Principals during any period while each Principal was employed by or
was a consultant to a Seller or the Brandimage division of
Schawk.  Notwithstanding the foregoing, the restrictions contained in this
Agreement shall not apply to any business or activity acquired by Design
Partners or Principals, which is not primarily engaged in the Proscribed
Business; so long as Design Partners or Principals use best efforts to divest
that portion of any such business which would otherwise violate the
non-solicitation provisions contained herein within a reasonable period after
acquiring such business.  Further, Sellers, Design Partners or Principals, as
applicable, shall provide Buyer with a bona fide “first look” to purchase any
such business unit or division.  In the event that, based on such “first look,”
Buyer makes a bona fide offer for such business unit or division, which offer is
not accepted by Sellers, Design Partners or Principals, as applicable, then
Sellers, Design Partners or Principals, as applicable, shall provide Buyer with
a right of first refusal with respect to any offer for such business unit or
division that Sellers, Design Partners or Principals are so willing to
accept.  Buyer shall have ten (10) business days to exercise such right by
providing Design Partners or its successor with a binding written offer
accepting the third-party offer on its exact terms; absent such timely exercise,
Buyer’s right shall be extinguished with respect to that specific business unit
or division being offered for sale, provided, further, that such right shall be
revived in the event the relevant third-party offer is not consummated within
one hundred eighty (180) days thereafter.
 
(b)   Design Partners and each Principal acknowledges that by reason of its or
his affiliation with Sellers it and he has had access to Sellers’ products,
markets and business and financial information which Sellers considers to be
confidential or proprietary (collectively, the “Confidential
Information”).  Sellers, Design Partners and each Principal covenant and agree
that such Confidential Information is included within the Assets and they shall
not, for the shorter period of two (2) years after the Closing Date or the date
the information becomes available in the public domain other than as a result of
wrongful disclosure by a Seller or a Principal (and in any event excluding
information of a general industry nature or becoming otherwise available through
a different source), directly or indirectly, in the Territory, use for their own
behalf or divulge to any third party any Confidential Information of
Sellers.  Sellers, Design Partners and Principals agree to deliver to Buyer at
the Closing all material (and all copies thereof) which contains or relates to
Confidential Information.
 
(c)   Nondisparagement.  After the Closing Date, none of any Seller, Design
Partners nor any Principal will disparage Buyer or any of Buyer’s shareholders,
directors, officers, employees or agents.
 
(d)   Modification of Covenant.  If a final judgment of a court or tribunal of
competent jurisdiction determines that any term or provision contained in
Section 10.8(a) through (c) is invalid or unenforceable, then the parties agree
that the court or tribunal will have the power to reduce the scope, duration or
geographic area of the term or provision, to delete specific words or phrases or
to replace any invalid or unenforceable term or provision with a
 
 
 
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term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision.  This Section 10.8 will be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.  This Section
10.8 is reasonable and necessary to protect and preserve Buyer’s legitimate
business interests and the value of the Assets and to prevent any unfair
advantage conferred on Sellers, Design Partners or Principals.
 
(e)   Sellers, Design Partners and Principals acknowledge that the restrictions
contained in this Section 10.8 are reasonable and necessary to protect the
legitimate interests of Buyer, do not cause Sellers, Design Partners and/or any
Principal undue hardship, and that any violations of any provision of this
Section 10.8 will result in irreparable injury to Buyer and that, therefore,
Buyer shall be entitled to preliminary and permanent injunctive relief in any
court of competent jurisdiction and to an equitable accounting of all earnings,
profits and other benefits arising from such violation, which rights shall be
cumulative and in addition to any other rights or remedies to which Buyer may be
entitled.
 
10.9   CUSTOMER AND OTHER BUSINESS RELATIONSHIPS
 
After the Closing until the first anniversary of the Closing Date, Sellers will
cooperate with Buyer in its efforts to continue and maintain for the benefit of
Buyer those business relationships of Sellers existing prior to the Closing and
relating to the business to be operated by Buyer after the Closing, including
relationships with lessors, employees, regulatory authorities, licensors,
customers, suppliers and others.  At all times Sellers will satisfy the Retained
Liabilities in a manner that is not detrimental to any of such
relationships.  After the Closing until the first anniversary of the Closing
Date, Sellers will refer to Buyer all bona fide sales opportunities.  Until the
expiration of the non-compete period, none of any Seller, Design Partners nor
any Principal nor any of its officers, employees, agents or shareholders shall
take any action that would tend to diminish the value of the Assets after the
Closing or that would interfere with the Proscribed Business to be engaged in
after the Closing.  Sellers and Principals will refrain from disparaging the
name or business of Buyer.
 
10.10   RETENTION OF AND ACCESS TO RECORDS
 
After the Closing Date, Buyer shall retain for a period consistent with Buyer’s
record-retention policies and practices those Records of Sellers delivered to
Buyer but in no event for a period less than for five (5) years since the
Closing Date.  Buyer also shall provide Sellers, Design Partners and Principals
and their Representatives reasonable access thereto, during normal business
hours and on at least three (3) days’ prior written notice, to enable them to
prepare financial statements or tax returns or deal with tax audits.  After the
Closing Date, Sellers, Design Partners and Principals shall provide Buyer and
its Representatives reasonable access to Records that are Excluded Assets,
during normal business hours and on at least three (3) days’ prior written
notice, for any reasonable business purpose specified by Buyer in such
notice.  Upon request from Sellers, Buyer will cooperate with Seller to export
from any of the information systems contained within the Assets any such Records
that are Excluded Assets or that are necessary to permit Sellers to prepare
financial statements or to prepare tax returns or to deal with Tax
Audits.  Until such information is delivered or exported to Sellers, it shall be
 
 
 
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maintained in strict confidentiality and, to the extent included in Excluded
Assets, remain the sole property of Sellers.
 
10.11   REPLACEMENT OF FIDUCIARIES AND OTHER REPRESENTATIVES.
 
On the Closing Date, Sellers shall cause all Sellers and Sellers’
Representatives to resign from any and all fiduciary positions and in any other
representative capacity as it relates to the Foreign Subsidiaries, and Buyer
shall duly appointed replacements thereto.
 
10.12   FURTHER ASSURANCES
 
Subject to the proviso in Section 6.1, the parties shall cooperate reasonably
with each other and with their respective Representatives in connection with any
steps required to be taken as part of their respective obligations under this
Agreement, and shall (a) furnish upon request to each other such further
information; (b) execute and deliver to each other such other documents; and
(c) do such other acts and things, all as the other party may reasonably request
for the purpose of carrying out the intent of this Agreement and the
Contemplated Transactions.
 
Section 11.   Indemnification; Remedies
 
11.1   SURVIVAL
 
All representations, warranties, covenants and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter, the
certificates delivered pursuant to Section 2.7 and any other certificate or
document delivered pursuant to this Agreement shall survive the Closing and the
consummation of the Contemplated Transactions, subject to Section 11.7.  All
representations, warranties, covenants and obligations in this Agreement, the
Disclosure Letter, the supplements to the Disclosure Letter, the certificates
delivered pursuant to Section 2.7 and any other certificate or document
delivered pursuant to this Agreement shall survive the Closing and the
consummation of the Contemplated Transactions, subject to
Section 11.7.  Notwithstanding anything set forth herein to the contrary, no
party shall be entitled to recover Damages from the other party for a breach or
default of a representation or warranty made in this Agreement if such party had
actual Knowledge of such breach or default and the consequences thereof
(including, without limitation, a reasonable understanding of the potential
damages arising out of such breach or default) and closed on the transactions
contemplated hereby despite Knowledge of such breach or default and the
consequences thereof.
 
11.2   INDEMNIFICATION AND REIMBURSEMENT BY SELLERS AND DESIGN PARTNERS
 
Each Seller and Design Partners, jointly and severally, will indemnify and hold
harmless Buyer, and its Representatives, shareholders, subsidiaries and Related
Persons (collectively, the “Buyer Indemnified Persons”), and will reimburse the
Buyer Indemnified Persons for any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable attorneys’ fees and
expenses) or diminution of value, whether or not involving a Third-Party Claim
(collectively, “Damages”), arising from or in connection with:
 
 
 
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(a)   any Breach of any representation or warranty made by any Seller or Design
Partners in (i) this Agreement (without giving effect to any supplement to the
Disclosure Letter, except as agreed to by Buyer prior to or at the Closing),
(ii) the Disclosure Letter, (iii) the supplements to the Disclosure Letter,
(iv)any transfer instrument or (v) any other certificate, document, writing or
instrument delivered by any Seller or Design Partners pursuant to this
Agreement;
 
(b)   any Breach of any covenant or obligation of any Seller, Design Partners or
Principals in this Agreement or in any other certificate, document, writing or
instrument delivered by any Seller or Design Partners pursuant to this
Agreement;
 
(c)   any Liability arising out of the ownership or operation of the Assets
prior to the Effective Time other than the Assumed Liabilities;
 
(d)   any brokerage or finder’s fees or commissions or similar payments based
upon any agreement or understanding made, or alleged to have been made, by any
Person with any Seller or Design Partners (or any Person acting on their
behalf) in connection with any of the Contemplated Transactions;
 
(e)   any product or component thereof manufactured by or shipped, or any
services provided by, any Seller, in whole or in part, prior to the Closing
Date;
 
(f)   any matter disclosed in those Parts of the Disclosure Letter identified by
Buyer to Seller Representative in writing at least three (3) days prior to the
Closing Date and agreed to by Seller Representative;
 
(g)   any noncompliance with any Bulk Sales Laws or fraudulent transfer law in
respect of the Contemplated Transactions;
 
(h)   any liability under the WARN Act or any similar state or local Legal
Requirement that may result from an “Employment Loss”, as defined by 29 USC
sect. 2101(a)(6), caused by any action of Sellers prior to the Closing or by
Buyer’s decision not to hire previous employees of Sellers;
 
(i)   any Employee Plan established or maintained by any Seller; or
 
(j)   any Retained Liabilities.
 
11.3   INDEMNIFICATION AND REIMBURSEMENT BY BUYER
 
Buyer will indemnify and hold harmless each Seller and Design Partners, and will
reimburse each Seller and Design Partners, for any Damages arising from or in
connection with:
 
(a)   any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate, document, writing or instrument delivered by
Buyer pursuant to this Agreement;
 
 
 
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(b)   any Breach of any covenant or obligation of Buyer in this Agreement or in
any other certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;
 
(c)   any claim by any Person for brokerage or finder’s fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by such Person with Buyer (or any Person acting on Buyer’s behalf) in
connection with any of the Contemplated Transactions; or
 
(d)   any obligations of Buyer with respect to bargaining with the collective
bargaining representatives of Hired Active Employees subsequent to the Closing.
 
11.4   LIMITATIONS ON AMOUNT—SELLERS AND DESIGN PARTNERS
 
Sellers and Design Partners shall have no liability (for indemnification or
otherwise) with respect to claims under Section 11.2(a) until each such claim or
series of related claims exceed Four Thousand Dollars ($4,000) (“Di Minimis
Claim”) and then after the total of all Damages with respect to such matters
exceeds Two Hundred Thousand Dollars ($200,000) and then only for the amount by
which such Damages exceed Two Hundred Thousand Dollars ($200,000) (the
“Basket”); provided that the maximum aggregate liability of the Sellers and
Design Partners to the Buyer Indemnified Persons all taken together for all
Losses pursuant to Section 11.2 shall not exceed an amount equal to Four
Million Dollars ($4,000,000) (the “Indemnification Cap”).  However, except as
provided in the next sentence, this Section 11.4 will not apply to claims under
Section 11.2(b) through (j) or to matters arising in respect of Sections 3.9
(Title to Assets; Encumbrances), 3.11 (Accounts Receivables), 3.14 (Taxes) and
3.29 (Brokers or Finders).  The foregoing notwithstanding, Seller and Design
Partners shall be entitled to the benefits of the Di Minimis Claim and the
Basket with respect to claims based on unpaid Retained Liabilities of Foreign
Subsidiaries.
 
11.5   LIMITATIONS ON AMOUNT—BUYER
 
Buyer will have no liability (for indemnification or otherwise) with respect to
claims  under Section 11.3(a) until the total of all Damages with respect to
such matters exceed Two Hundred Thousand Dollars ($200,000) and then only for
the amount by which such Damages exceed Two Hundred Thousand Dollars
($200,000).  However, this Section 11.5 will not apply to claims under
Section 11.3(b) through (e) or matters arising in respect of Section 4.4
(Brokers or Finders) or to any Breach of any of Buyer’s representations and
warranties of which Buyer had Knowledge at any time prior to the date on which
such representation and warranty is made or any intentional Breach by Buyer of
any covenant or obligation, and Buyer will be liable for all Damages with
respect to such Breaches.
 
11.6   TIME LIMITATIONS
 
(a)   If the Closing occurs, Sellers and Design Partners will have liability
(for indemnification or otherwise) with respect to any Breach of (i) a covenant
or obligation to be performed or complied with prior to the Closing Date (other
than those in Sections 2.1 and 2.4(b) and Sections 10 and 12, as to which a
claim may be made at any time within the applicable statute of limitation time
period) or (ii) a representation or warranty (other than those
 
 
 
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in Sections 3.9 (Title to Assets; Encumbrances), 3.14 (Taxes), 3.16 (Employee
Benefits), 3.22 (Environmental Matters) and 3.29 (Brokers or Finders), as to
which a claim may be made at any time within the applicable statute of
limitation time period), only if on or before April 1, 2013, Buyer notifies
Seller Representative of a claim specifying the factual basis of the claim in
reasonable detail to the extent then known by Buyer.
 
(b)   If the Closing occurs, Buyer will have liability (for indemnification or
otherwise) with respect to any Breach of (i) a covenant or obligation to be
performed or complied with prior to the Closing Date (other than those in
Section 12, as to which a claim may be made at any time within the applicable
statute of limitation time period) or (ii) a representation or warranty (other
than that set forth  in Section 4.4, as to which a claim may be made at any time
within the applicable statute of limitations time period), only if on or before
April 1, 2013, Seller Representative notifies Buyer of a claim specifying the
factual basis of the claim in reasonable detail to the extent then known by
Sellers or Design Partners.
 
11.7   ESCROW
 
Upon notice to Seller Representative specifying in reasonable detail the basis
therefor, Buyer may, in good faith and after reasonable inquiry into the
validity of the claim, give notice of a claim in such amount under the Escrow
Agreement.  Neither the exercise of nor the failure to exercise such right to
give a notice of a claim under the Escrow Agreement will constitute an election
of remedies or limit Buyer in any manner in the enforcement of any other
remedies that may be available to it.  Buyer shall be liable for attorney fees
of Sellers and Design Partners if any such claim is determined to be meritless,
as the prevailing party as provided in Section 12.3.
 
11.8   THIRD-PARTY CLAIMS
 
(a)   Promptly after receipt by a Person entitled to indemnity under
Section 11.2 or 11.3 (an “Indemnified Person”) of notice of the assertion of a
Third-Party Claim against it, such Indemnified Person shall give notice to the
Person obligated to indemnify under such Section (an “Indemnifying Person”) of
the assertion of such Third-Party Claim, provided that the failure to notify the
Indemnifying Person will not relieve the Indemnifying Person of any liability
that it may have to any Indemnified Person, except to the extent that the
Indemnifying Person demonstrates that the defense of such Third-Party Claim is
prejudiced by the Indemnified Person’s failure to give such notice.
 
(b)   If an Indemnified Person gives notice to the Indemnifying Person pursuant
to Section 11.9(a) of the assertion of a Third-Party Claim, the Indemnifying
Person shall be entitled to participate in the defense of such Third-Party Claim
and, to the extent that it wishes (unless (i) the Indemnifying Person is also a
Person against whom the Third-Party Claim is made and the Indemnified Person
determines in good faith that joint representation would be inappropriate or
(ii) the Indemnifying Person fails to provide reasonable assurance to the
Indemnified Person of its financial capacity to defend such Third-Party Claim
and provide indemnification with respect to such Third-Party Claim), to assume
the defense of such Third-Party Claim with counsel satisfactory to the
Indemnified Person.  After notice from the Indemnifying Person to the
Indemnified Person of its election to assume the defense of such Third-Party
Claim, the Indemnifying Person shall not, so long as it diligently conducts such
 
 
 
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defense, be liable to the Indemnified Person under this Section 11 for any fees
of other counsel or any other expenses with respect to the defense of such
Third-Party Claim, in each case subsequently incurred by the Indemnified Person
in connection with the defense of such Third-Party Claim, other than reasonable
costs of investigation.  If the Indemnifying Person assumes the defense of a
Third-Party Claim, (i) such assumption will conclusively establish for purposes
of this Agreement that the claims made in that Third-Party Claim are within the
scope of and subject to indemnification, and (ii) no compromise or settlement of
such Third-Party Claims may be effected by the Indemnifying Person without the
Indemnified Person’s Consent unless (A) there is no finding or admission of any
violation of Legal Requirement or any violation of the rights of any Person;
(B) the sole relief provided is monetary damages that are paid in full by the
Indemnifying Person; and (C) the Indemnified Person shall have no liability with
respect to any compromise or settlement of such Third-Party Claims effected
without its Consent.  If notice is given to an Indemnifying Person of the
assertion of any Third-Party Claim and the Indemnifying Person does not, within
ten (10) days after the Indemnified Person’s notice is given, give notice to the
Indemnified Person of its election to assume the defense of such Third-Party
Claim, the Indemnifying Person will be bound by any determination made in such
Third-Party Claim or any compromise or settlement effected by the Indemnified
Person.
 
(c)   Notwithstanding the foregoing, if an Indemnified Person determines in good
faith that there is a reasonable probability that a Third-Party Claim may
adversely affect it or its Related Persons other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnified Person may, by notice to the Indemnifying Person, assume the
exclusive right to defend, compromise or settle such Third-Party Claim, but the
Indemnifying Person will not be bound by any determination of any Third-Party
Claim so defended for the purposes of this Agreement or any compromise or
settlement effected without its Consent (which may not be unreasonably
withheld).
 
(d)   Notwithstanding the provisions of Section 12.4, each Seller and Design
Partners hereby consents to the nonexclusive jurisdiction of any court in which
a Proceeding in respect of a Third-Party Claim is brought against any Buyer
Indemnified Person for purposes of any claim that a Buyer Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters alleged
therein and agree that process may be served on any Seller or Design Partners
with respect to such a claim anywhere in the world.
 
(e)   With respect to any Third-Party Claim subject to indemnification under
this Section 11: (i) both the Indemnified Person and the Indemnifying Person, as
the case may be, shall keep the other Person fully informed of the status of
such Third-Party Claim and any related Proceedings at all stages thereof where
such Person is not represented by its own counsel, and (ii) the parties agree
(each at its own expense) to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third-Party Claim.
 
(f)   With respect to any Third-Party Claim subject to indemnification under
this Section 11, the parties agree to cooperate in such a manner as to preserve
in full (to the extent possible) the confidentiality of all Confidential
Information and the attorney-client and work-product privileges.  In connection
therewith, each party agrees that: (i) it will use its Best Efforts, in respect
of any Third-Party Claim in which it has assumed or participated in the
 
 
 
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defense, to avoid production of Confidential Information (consistent with
applicable law and rules of procedure), and (ii) all communications between any
party hereto and counsel responsible for or participating in the defense of any
Third-Party Claim shall, to the extent possible, be made so as to preserve any
applicable attorney-client or work product privilege.
 
11.9   OTHER CLAIMS
 
A claim for indemnification for any matter not involving a Third-Party Claim may
be asserted by notice to the party from whom indemnification is sought and shall
be paid promptly after determination of the validity of such Third-Party Claim
by way of the claims procedures set forth in this Agreement or by judicial
determination.
 
11.10   INDEMNIFICATION IN CASE OF STRICT LIABILITY OR INDEMNITEE NEGLIGENCE
 
THE INDEMNIFICATION PROVISIONS IN THIS SECTION 11 SHALL BE ENFORCEABLE
REGARDLESS OF WHETHER THE LIABILITY IS BASED UPON PAST, PRESENT OR FUTURE ACTS,
CLAIMS OR LEGAL REQUIREMENTS (INCLUDING ANY PAST, PRESENT OR FUTURE BULK SALES
LAW, ENVIRONMENTAL LAW, FRAUDULENT TRANSFER ACT, OCCUPATIONAL SAFETY AND HEALTH
LAW OR PRODUCTS LIABILITY, SECURITIES OR OTHER LEGAL REQUIREMENT).
 
11.11   MITIGATION
 
No Indemnified Party shall be entitled to recover more than the full amount of
any Loss incurred by such Indemnified Party under the provisions of this
Agreement in respect of any such Loss.  Without limiting the generality of the
foregoing, the amount of any Losses subject to indemnification under Section
11.2 and 11.3 shall be reduced by the amounts actually recovered by the
Indemnified Party incurring such Loss under applicable insurance policies with
respect to claims related to such Losses.  For purposes of this Article 11,
“Loss” or “Losses” means any and all judgments, losses, Liabilities, amounts
paid in settlement, damages, fees, fines, penalties, deficiencies, costs and
expenses (including interest, court costs, reasonable fees and expenses of
attorneys, accountants and other experts or other reasonable expenses of
litigation or other proceedings or of any claim, default or assessment).
 
11.12   EXCLUSIVE REMEDY
 
Except as otherwise expressly provided for in this Agreement following the
Closing, the indemnification provided by this Article 11 shall be the exclusive
remedy for Buyer or Sellers and Design Partners, as the case may be, with
respect to this Agreement and the transactions contemplated by this Agreement;
provided, however, that nothing herein will limit in any way any such
Indemnified Party’s (a) remedies in respect of fraud or willful or intentional
breach of any representation, warranty, covenant or agreement herein or Buyer’s
remedies in respect of any breach of the covenants contained in Section
10.1(b)(ii) (Non-Solicitation of Hired Employees) and 10.8 (Non-Competition,
Non-Solicitation and Non-Disparagement) or (b) rights hereunder to injunctive or
other equitable relief to enforce its rights under this Agreement, the Escrow
Agreement or in connection with the transactions contemplated hereby.
 
 
 
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Section 12.   General Provisions
 
12.1   EXPENSES
 
Except as otherwise provided in this Agreement, each party to this Agreement
will bear its respective fees and expenses incurred in connection with the
preparation, negotiation, execution and performance of this Agreement and the
Contemplated Transactions, including all fees and expense of its
Representatives.  Buyer will pay one-half and Sellers will pay one-half of the
fees and expenses of the Escrow Agent under the Escrow Agreement.  If this
Agreement is terminated, the obligation of each party to pay its own fees and
expenses will be subject to any rights of such party arising from a Breach of
this Agreement by another party.  In any action brought by Sellers and/or Design
Partners, on the one hand, or Buyer, on the other, to enforce any of the
provisions of this Agreement and the other agreements and documents referred to
herein, all expense incurred by the prevailing party(ies) in connection with
such actions, including reasonable attorneys’ fees shall be borne by the
non-prevailing party(ies) in such action.
 
12.2   PUBLIC ANNOUNCEMENTS
 
Any public announcement, press release or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as Buyer determines.  Except with the prior consent of
Buyer or as permitted by this Agreement, none of Sellers nor Design Partners nor
Principals nor any of their Representatives shall disclose to any Person (a) the
fact that any Confidential Information of Sellers or Design Partners has been
disclosed to Buyer or its Representatives, that Buyer or its Representatives
have inspected any portion of the Confidential Information of Sellers or Design
Partners, that any Confidential Information of Buyer has been disclosed to
Sellers or Design Partners or their Representatives or that Sellers or Design
Partners or their Representatives have inspected any portion of the Confidential
Information of Buyer or (b) any information about the Contemplated Transactions,
including the status of such discussions or negotiations, the execution of any
documents (including this Agreement) or any of the terms of the Contemplated
Transactions or the related documents (including this Agreement).  Seller
Representative and Buyer will consult with each other concerning the means by
which Sellers’ employees, customers, suppliers and others having dealings with
any Seller will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
 
12.3   NOTICES
 
All notices, Consents, waivers and other communications required or permitted by
this Agreement shall be in writing and shall be deemed given to a party when
(a) delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile or e-mail with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the person (by name or title) designated below
(or to such other address, facsimile number, e-mail address or person as a party
may designate by notice to the other parties):
 
 
 
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Sellers, Design Partners and/or Principals:
Design Partners Group, LLC
125 Cumberland Street, Suite 1610
Toronto ON M5R 3M9
Attention:  Mark Anthony
Facsimile No.:  (647) 346-7019
 
With a copy to:
Howard & Howard Attorneys PLLC
450 West Fourth Street
Royal Oak, MI  48067
Attention:  Joseph J. DeVito, Esq.
Facsimile No.:  (248) 645-1568
 
Buyer:
Schawk, Inc.
1695 South River Road
Des Plaines, IL  60018
Attention:  Ronald J. Vittorini
Facsimile No.:  (847) 827-1264
 
With a copy to:
Vedder Price P.C.
222 North LaSalle Street, Suite 2600
Chicago, IL  60601
Attention:  John T. McEnroe
Facsimile No.:  (312) 609-5005

12.4   ARBITRATION
 
If there is any dispute or claim concerning the interpretation of this
Agreement, and the relative rights and obligations of the parties hereunder, the
parties agree that each party will provide written notice of any claim or
dispute under this Agreement, and will use best efforts for a period of thirty
(30) days following delivery of such notice to agree upon a mutually acceptable
attorney to act as an arbitrator of such claim or dispute.  If the parties are
not able to agree on a mutually satisfactory arbitrator within the foregoing
thirty (30)-day period, each party will designate an attorney and the two
attorneys so designated will select a third attorney to act as an arbitrator of
such claim or dispute.  Any such arbitration shall be conducted in accordance
with the rules of the American Arbitration Association.  The decision of any
arbitrator selected in accordance with this Section 12.4 will be final and
binding upon the parties.  In order to be selected as an arbitrator pursuant to
this Section 12.4, an attorney must be a transactional specialist, independent
in all respects and unconflicted, of a law firm licensed in the State of
Illinois.  Any such arbitration proceeding shall be conducted in the Chicago,
Illinois metropolitan area.
 
12.5   ENFORCEMENT OF AGREEMENT
 
Each Seller, Design Partners and each Principal acknowledge and agree that Buyer
would be irreparably damaged if any of the provisions of this Agreement are not
performed in accordance with their specific terms and that any Breach of this
Agreement by any Seller, Design
 
 
 
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Partners or any Principal could not be adequately compensated in all cases by
monetary damages alone.  Accordingly, in addition to any other right or remedy
to which Buyer may be entitled, at law or in equity, it shall be entitled to
enforce any provision of this Agreement by a decree of specific performance and
to temporary, preliminary and permanent injunctive relief to prevent Breaches or
threatened Breaches of any of the provisions of this Agreement, without posting
any bond or other undertaking.
 
12.6   WAIVER; REMEDIES CUMULATIVE
 
The rights and remedies of the parties to this Agreement are cumulative and not
alternative.  Neither any failure nor any delay by any party in exercising any
right, power or privilege under this Agreement or any of the documents referred
to in this Agreement will operate as a waiver of such right, power or privilege,
and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege.  To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or any of the documents referred to in this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim or right
unless in writing signed by the other party; (b) no waiver that may be given by
a party will be applicable except in the specific instance for which it is
given; and (c) no notice to or demand on one party will be deemed to be a waiver
of any obligation of that party or of the right of the party giving such notice
or demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
 
12.7   ENTIRE AGREEMENT AND MODIFICATION
 
This Agreement supersedes all prior agreements, whether written or oral, between
the parties with respect to its subject matter (including any letter of intent
and, post-Closing, any confidentiality agreement between Buyer and Sellers) and
constitutes (along with the Disclosure Letter, Exhibits and other documents
delivered pursuant to this Agreement) a complete and exclusive statement of the
terms of the agreement between the parties with respect to its subject
matter.  This Agreement may not be amended, supplemented, or otherwise modified
except by a written agreement executed by the party to be charged with the
amendment.
 
12.8   DISCLOSURE LETTER AND EXHIBITS
 
(a)   The information in the Disclosure Letter constitutes (i) exceptions to
particular representations, warranties, covenants and obligations of Sellers and
Design Partners as set forth in this Agreement or (ii) descriptions or lists of
assets and liabilities and other items referred to in this Agreement.  If there
is any inconsistency between the statements in this Agreement and those in the
Disclosure Letter (other than an exception expressly set forth as such in the
Disclosure Letter with respect to a specifically identified representation or
warranty), the statements in this Agreement will control.
 
(b)   From time to time prior to the Closing Date, Sellers will promptly
supplement or amend the Disclosure Letter (i) if any matter arises hereafter
which, if existing or occurring at or prior to the date of this Agreement, would
have been required to be set forth or
 
 
 
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described in the Disclosure Letter, or (ii) if it becomes necessary to correct
any information in the Disclosure Letter which has become inaccurate; provided,
however, that no such supplement or amendment to the Disclosure Letter shall be
considered in determining satisfaction of the conditions set forth in Section 7
of this Agreement.  If on the date on which this Agreement is executed by all
parties hereto any Part of the Disclosure Letter has not been completed, then
such Part shall be completed as promptly as commercially practical and such
completed Part shall be treated as a supplement or amendment to the Disclosure
Letter.  Notwithstanding the foregoing, if such supplemental or amended
disclosure (i) does not constitute a Material Adverse Effect, or (ii) such item
is a Retained Liability, then Buyer shall not rely upon any such item as a basis
to claim a condition in Section 7 has not been satisfied.
 
(c)   If on the date on which this Agreement is executed by all parties thereto,
any Exhibit is not completed, then such Exhibit shall be completed as promptly
as agreed to by each party acting in a commercially reasonable manner.
 
12.9   ASSIGNMENTS, SUCCESSORS AND NO THIRD-PARTY RIGHTS
 
All representations, warranties, covenants, terms and conditions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective heirs, legal representatives, successors and permitted assigns
of the parties hereto; provided, however, that none of the rights or obligations
of any of the parties hereto may be assigned without the prior written consent
of, in the case of assignment by Sellers or Design Partners, Buyer, or, in the
case of assignment by Buyer, Seller Representative, which consent shall not
unreasonably be withheld; provided, however, that Buyer may assign all or part
of its rights under this Agreement and may delegate all or part of its
obligations under this Agreement to one or more corporations or other entities
all or substantially all of the capital stock or equity interest of which is
owned, directly or indirectly, by Buyer or Buyer’s Subsidiaries, in which event
all the rights and power of Buyer and the remedies available to it under this
Agreement shall extend to and be enforceable by such assignee.  Any such
assignment and delegation shall not release Buyer from its obligations under
this Agreement, and further Buyer guarantees to Sellers, Design Partners and
Principals the performance by each such assignee of its obligations under this
Agreement.  In the event of any such assignment and delegation, the term “Buyer”
or “Schawk” as used in this Agreement shall be deemed to refer to each such
assignee of Buyer and shall be deemed to include both Buyer and each such
assignee where appropriate.
 
12.10   SEVERABILITY
 
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect.  Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
 
12.11   CONSTRUCTION
 
The headings of Sections and Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation.  All
references to “Sections,”
 
 
 
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“Sections” and “Parts” refer to the corresponding Sections, Sections and Parts
of this Agreement and the Disclosure Letter.
 
12.12   TIME OF ESSENCE
 
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
 
12.13   GOVERNING LAW
 
This Agreement will be governed by and construed under the laws of the State of
Illinois without regard to conflicts-of-laws principles that would require the
application of any other law.
 
12.14   EXECUTION OF AGREEMENT
 
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.  The exchange
of copies of this Agreement and of signature pages by facsimile transmission
shall constitute effective execution and delivery of this Agreement as to the
parties and may be used in lieu of the original Agreement for all
purposes.  Signatures of the parties transmitted by facsimile shall be deemed to
be their original signatures for all purposes.
 
12.15   SELLERS’ AND DESIGN PARTNERS’ OBLIGATIONS
 
The liability of each Seller and Design Partners hereunder shall be joint and
several with each other Seller and Design Partners.  Where in this Agreement
provision is made for any action to be taken or not taken by any Seller, each
other Seller and Design Partners jointly and severally undertake to cause such
Seller to take or not take such action, as the case may be.  Without limiting
the generality of the foregoing, each Seller and Design Partners shall be
jointly and severally liable for the indemnities set forth in Section 11.
 
12.16   REPRESENTATIVE OF SELLERS AND DESIGN PARTNERS
 
(a)   Each Seller and Design Partners hereby constitutes and appoints Brandimage
as its representative (“Seller Representative”) and its true and lawful attorney
in fact, with full power and authority in each of their names and on behalf of
each of them:
 
(i)   to act on behalf of each of them in the absolute discretion of the Seller
Representative, but only with respect to the following provisions of this
Agreement, with the power to: (A) designate the accounts for payment of the
Purchase Price pursuant to Section 2.7(b)(i); (B) act pursuant to Section 2.9
with respect to any Purchase Price adjustment; (C) act under the Escrow
Agreement; (D) consent to the assignment of rights under this Agreement in
accordance with Section 12.9; (E) give and receive notices pursuant to
Section 12.3; (F) terminate this Agreement pursuant to Section 9.1 or waive any
provision of this Agreement pursuant to Section 8, Section 9.1 and Section 12.6;
and (G) act in connection with any matter as to which each Seller and
 
 
 
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Design Partners, jointly and severally, have obligations, or are Indemnified
Persons, under Section 11; and
 
(ii)   in general, to do all things and to perform all acts, including executing
and delivering all agreements, certificates, receipts, instructions and other
instruments contemplated by or deemed advisable to effectuate the provisions of
this Section 12.16.
 
This appointment and grant of power and authority is coupled with an interest
and is in consideration of the mutual covenants made herein and is irrevocable
and shall not be terminated by any act of any other Seller or Design Partners or
by operation of law, or by the occurrence of any other event.  Design Partners
and each Seller hereby consents to the taking of any and all actions and the
making of any decisions required or permitted to be taken or made by the Seller
Representative pursuant to this Section 12.16.  Design Partners and each Seller
agree that Seller Representative shall have no obligation or liability to any
Person for any action or omission taken or omitted by Seller Representative in
good faith hereunder.
 
(b)   Buyer and the Escrow Agent shall be entitled to rely upon any document or
other paper delivered by Seller Representative as (i) genuine and correct and
(ii) having been duly signed or sent by Seller Representative, and neither Buyer
nor such Escrow Agent shall be liable to any Principal, Design Partners or any
Seller for any action taken or omitted to be taken by Buyer or such Escrow Agent
in such reliance.
 
[Signature Page Follows]
 
 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
 

BUYER:
 
SCHAWK USA INC.
 
By:/s/David Schawk                                                
Name:  David Schawk
Title:  President & C.E.O.
PRINCIPALS:
 
/s/Mark Anthony                                              
MARK ANTHONY (solely for purposes of the last sentence of Sections 3.2, 5.4,
5.5, 5.6, 10.1, 10.8, 10.9, 12.2 and 12.5)
 
 
/s/John Hilbrich                                                
JOHN HILBRICH (solely for purposes of the last sentence of Sections 3.2, 5.4,
5.5, 5.6, 10.1, 10.8, 10.9, 12.2 and 12.5)
 
 
 
DESIGN PARTNERS, LLC, a Nevada limited liability company
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  Member

 
 
 
 

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SELLERS:
 
LAGA, INC., a Delaware corporation
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  President
 
 
LIPSON ASSOCIATES, INC., an Ohio corporation
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  President

 
 
 
 

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FOREIGN SUBSIDIARIES:
 
BRANDIMAGE-DESGRIPPES & LAGA, a French company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  Director
 
 
BRANDIMAGE BELGIQUE HOLDING S.A. F/K/A DESGRIPPES GOBE BRUXELLES S.A., a Belgian
company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  Director
 
 
DESGRIPPES GOBE GROUP (HK) LTD., a Hong Kong company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  Director
 
 
DESGRIPPES (SHANGHAI), BRAND CONSULTING CO LTD., a PRC company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  Director
 
 
DESGRIPPES GOBE GROUP (YUHAN HOESA), a Korean company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  Director 

 
 
 
 

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ACCEPTANCE AND AGREEMENT OF SELLER REPRESENTATIVE
 

The undersigned, being Seller Representative designated in Section 12.16 of the
foregoing Asset Purchase Agreement, agrees to serve as Seller Representative and
to be bound by the terms of such Asset Purchase Agreement pertaining thereto.
 

 
LAGA, INC.
 
 
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:  President
 
 
Dated:  ____________________, 2011
 

 
 
 
 

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FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
 
This First Amendment to Asset Purchase Agreement (“First Amendment”) is dated as
of September 28, 2011, by and among SCHAWK USA INC., a Delaware corporation
(“Buyer” or “Schawk”); LAGA, INC. (d/b/a Brandimage Desgrippes & LAGA and herein
“Brandimage” or “Seller Representative”), a Delaware corporation; LIPSON
ASSOCIATES, INC., an Ohio corporation (“LAI” and together with Brandimage,
individually a “Seller” and collectively “Sellers”); Brandimage-Desgrippes &
LAGA, a French company (“LAGA Paris”), Brandimage Belgique Holdings S.A. f/k/a
Desgrippes Gobe Bruxelles S.A., a Belgian company (“LAGA Brussels”), Desgrippes
Gobe Group (HK) Ltd., a Hong Kong company (“LAGA Hong Kong”), Desgrippes
(Shanghai) Brand Consulting Co, Ltd., a PRC company (“LAGA Shanghai”) and
Desgrippes Gobe Group (Yuhan Hoesa), a Korean company (“LAGA Seoul” and together
with LAGA Paris, LAGA Brussels, LAGA Hong Kong and LAGA Shanghai, individually a
“Foreign Subsidiary” and collectively “Foreign Subsidiaries”); Design Partners,
LLC, a Nevada limited liability company (“Design Partners”), Mark Anthony, a
resident of Ontario, Canada (“Anthony”); and John Hilbrich, a resident of
Illinois (“Hilbrich”) (Anthony and Hilbrich are referred to herein individually
as a “Principal” and collectively as “Principals”).
 
RECITALS
 
A.           Buyer, Sellers, Foreign Subsidiaries, Design Partners and
Principals have entered into an Asset Purchase Agreement dated as of September
15, 2011 (said Asset Purchase Agreement is herein referred to as the “Asset
Purchase Agreement”).
 
B.           Buyer, Sellers, Foreign Subsidiaries, Design Partners and
Principals wish to amend certain provisions of the Asset Purchase Agreement as
provided herein.
 
NOW, THEREFORE, the parties agree as follows:
 
1.   Definitions.  Capitalized terms used herein without definition shall have
the meanings contained in the Asset Purchase Agreement.
 
2.   Closing.  Section 2.6 of the Asset Purchase Agreement is hereby deleted and
the following is inserted in its stead:
 
“2.6           CLOSING.
 
The closing (“Closing”) of the transactions contemplated hereby shall take place
on a date mutually agreed to by Sellers and Buyer, not later than October 7,
2011, with an effective date of 12:01 a.m. (Chicago time) October 8, 2011, at
such place as may be mutually agreed to by Sellers and Buyer.”
 
 
 
 

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3.   Due Diligence.  Section 7.14 of the Asset Purchase Agreement is hereby
deleted and the following is inserted in its stead:
 
“7.14           DUE DILIGENCE
 
Buyer shall have not notified Seller Representative by 5:00 p.m. (CDT) October
4, 2011 that Buyer’s due diligence investigation shall have uncovered items or
circumstances that are Materially adverse to the Business or the Assets.”
 
4.   Continuing Effect.  Except as otherwise specifically set out herein, the
provisions of the Asset Purchase Agreement shall remain in full force and
effect.
 
5.   Governing Law.  This First Amendment shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws.
 
6.   Counterparts.  This First Amendment may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
 
[Signature Page Follows]
 
 
 
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(Signature Page to First Amendment to Asset Purchase Agreement)
 
IN WITNESS WHEREOF, the parties have executed this First Amendment as of the
date first written above.
 
BUYER:
 
SCHAWK USA INC.
 
By:/s/Timothy J. Cunningham                                  
Name:  Timothy J. Cunningham
Title:  EVP & CFO
PRINCIPALS:
 
/s/Mark Anthony                                              
MARK ANTHONY
 
 
/s/John Hilbrich                                                
JOHN HILBRICH
 
 
DESIGN PARTNERS, LLC, a Nevada limited liability company
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  CEO
 

 
 
 
 

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(Signature Page to First Amendment to Asset Purchase Agreement)
 

 
SELLERS:
 
LAGA, INC., a Delaware corporation
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  CEO
 
 
LIPSON ASSOCIATES, INC., an Ohio corporation
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  CEO

 
 
 
 

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(Signature Page to First Amendment to Asset Purchase Agreement)
 
FOREIGN SUBSIDIARIES:
 
 
BRANDIMAGE-DESGRIPPES & LAGA, a French company
 
By:/s/ Mark Anthony                                              
Name:  Mark Anthony
Title:    Director
BRANDIMAGE BELGIQUE HOLDING S.A. F/K/A DESGRIPPES GOBE BRUXELLES S.A., a Belgian
company
 
By:/s/ Mark Anthony                                        
Name:  Mark Anthony
Title:    Director
 
DESGRIPPES GOBE GROUP (HK) LTD., a Hong Kong company
 
By:/s/ Mark Anthony                                              
Name:  Mark Anthony
Title:    Director
 
DESGRIPPES (SHANGHAI), BRAND CONSULTING CO LTD., a PRC company
 
By:/s/ Mark Anthony                                        
Name:  Mark Anthony
Title:    Director
DESGRIPPES GOBE GROUP (YUHAN HOESA), a Korean company
 
By:/s/ Mark Anthony                                              
Name:  Mark Anthony
Title:    Director
 

 
 
 

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SECOND AMENDMENT TO ASSET PURCHASE AGREEMENT
 
This Second Amendment to Asset Purchase Agreement (“Second Amendment”) is dated
as of October 4, 2011, by and among SCHAWK USA INC., a Delaware corporation
(“Buyer” or “Schawk”); LAGA, INC. (d/b/a Brandimage Desgrippes & LAGA and herein
“Brandimage” or “Seller Representative”), a Delaware corporation; LIPSON
ASSOCIATES, INC., an Ohio corporation (“LAI” and together with Brandimage,
individually a “Seller” and collectively “Sellers”); Brandimage-Desgrippes &
LAGA, a French company (“LAGA Paris”), Brandimage Belgique Holdings S.A. f/k/a
Desgrippes Gobe Bruxelles S.A., a Belgian company (“LAGA Brussels”), Desgrippes
Gobe Group (HK) Ltd., a Hong Kong company (“LAGA Hong Kong”), Desgrippes
(Shanghai) Brand Consulting Co, Ltd., a PRC company (“LAGA Shanghai”) and
Desgrippes Gobe Group (Yuhan Hoesa), a Korean company (“LAGA Seoul” and together
with LAGA Paris, LAGA Brussels, LAGA Hong Kong and LAGA Shanghai, individually a
“Foreign Subsidiary” and collectively “Foreign Subsidiaries”); Design Partners
Group, LLC, a Nevada limited liability company (“Design Partners”), Mark
Anthony, a resident of Ontario, Canada (“Anthony”); and John Hilbrich, a
resident of Illinois (“Hilbrich”) (Anthony and Hilbrich are referred to herein
individually as a “Principal” and collectively as “Principals”).
 
RECITALS
 
A.           Buyer, Sellers, Foreign Subsidiaries, Design Partners and
Principals have entered into an Asset Purchase Agreement dated as of September
15, 2011 as amended by a certain First Amendment to Asset Purchase Agreement
(“First Amendment”) dated as of September 28, 2011 by and among Buyer, Sellers,
Foreign Subsidiaries, Design Partners and Principals (said Asset Purchase
Agreement, as so amended, is herein referred to as the “Asset Purchase
Agreement”).
 
B.           Buyer, Sellers, Foreign Subsidiaries, Design Partners and
Principals wish to amend certain provisions of the Asset Purchase Agreement as
provided herein.
 
NOW, THEREFORE, the parties agree as follows:
 
1.   Definitions.  Capitalized terms used herein without definition shall have
the meanings contained in the Asset Purchase Agreement.
 
2.   Closing.  Section 2.6 of the Asset Purchase Agreement is hereby deleted and
the following is inserted in its stead:
 
“2.6           CLOSING.
 
The closing (“Closing”) of the transactions contemplated hereby shall take place
on a date mutually agreed to by Sellers and Buyer, not later than October 14,
2011, with an effective date of 12:01 a.m. (Chicago time) October 15, 2011, at
such place as may be mutually agreed to by Sellers and Buyer.”
 
 
 
 

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3.   Due Diligence.  Section 7.14 of the Asset Purchase Agreement is hereby
deleted and the following is inserted in its stead:
 
“7.14           DUE DILIGENCE
 
Buyer shall have not notified Seller Representative by 5:00 p.m. (CDT) October
11, 2011 that Buyer’s due diligence investigation shall have uncovered items or
circumstances that are Materially adverse to the Business or the Assets.”
 
4.   Design Partners.  The Asset Purchase Agreement as signed on September 15,
2011 and the First Amendment thereto mistakenly referred to Design Partners
Group, LLC as Design Partners, LLC.  All references to Design Partners, LLC
contained in said Asset Purchase Agreement and First Amendment shall be deemed
to be references to Design Partners Group, LLC.
 
5.   Continuing Effect.  Except as otherwise specifically set out herein, the
provisions of the Asset Purchase Agreement shall remain in full force and
effect.
 
6.   Governing Law.  This Second Amendment shall be governed by, and construed
and enforced in accordance with, the laws of the State of Illinois applicable to
contracts made and performed in such state, without regard to the principles
thereof regarding conflict of laws.
 
7.   Counterparts.  This Second Amendment may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
 
[Signature Page Follows]
 
 
 
2

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(Signature Page to Second Amendment to Asset Purchase Agreement)
 
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of the
date first written above.
 

BUYER:
 
SCHAWK USA INC.
 
By:/s/Timothy J. Cunningham                                   
Name:  Timothy J. Cunningham
Title:  EVP & CFO
PRINCIPALS:
 
/s/Mark Anthony                                              
MARK ANTHONY
 
 
/s/John Hilbrich                                                
JOHN HILBRICH
 
 
DESIGN PARTNERS GROUP, LLC, a Nevada limited liability company
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  CEO
 

 
 
 
 

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(Signature Page to Second Amendment to Asset Purchase Agreement)
 

 
SELLERS:
 
LAGA, INC., a Delaware corporation
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  CEO
 
 
LIPSON ASSOCIATES, INC., an Ohio corporation
 
By:/s/John Hilbrich                                           
Name:  John Hilbrich
Title:  CEO

 
 
 
 

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(Signature Page to Second Amendment to Asset Purchase Agreement)
 
FOREIGN SUBSIDIARIES:
 
 
BRANDIMAGE-DESGRIPPES & LAGA, a French company
 
By:/s/Mark Anthony                                                
Name:  Mark Anthony
Title:    Director
BRANDIMAGE BELGIQUE HOLDING S.A. F/K/A DESGRIPPES GOBE BRUXELLES S.A., a Belgian
company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:    Director
 
DESGRIPPES GOBE GROUP (HK) LTD., a Hong Kong company
 
By:/s/Mark Anthony                                                
Name:  Mark Anthony
Title:    Director
 
DESGRIPPES (SHANGHAI), BRAND CONSULTING CO LTD., a PRC company
 
By:/s/Mark Anthony                                         
Name:  Mark Anthony
Title:    Director
DESGRIPPES GOBE GROUP (YUHAN HOESA), a Korean company
 
By:/s/Mark Anthony                                                
Name:  Mark Anthony
Title:    Director
 

 
 
 

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Execution Copy
 
October 19, 2011
 
LAGA, Inc. (Seller Representative)
c/o Design Partners Group, LLC
125 Cumberland Street, Suite 1610
Toronto, Ontario M5R 3M9
 
 
Re:
Escrow Agreement

 
Gentlemen:
 
Reference is made to (x) that certain Asset Purchase Agreement (“Acquisition
Agreement”) dated as of September 15, 2011, by and among SCHAWK USA INC., a
Delaware corporation (“Buyer” or “Schawk”); LAGA, INC. (d/b/a Brandimage
Desgrippes & LAGA and herein “Brandimage” or “Seller Representative”), a
Delaware corporation; LIPSON ASSOCIATES, INC., an Ohio corporation (“LAI” and
together with Brandimage, individually a “Seller” and collectively “Sellers”);
Brandimage-Desgrippes & LAGA, a French company (“LAGA Paris”), Brandimage
Belgique Holding S.A. f/k/a Desgrippes Gobe Bruxelles S.A., a Belgian company
(“LAGA Brussels”), Desgrippes Gobe Group (HK) Ltd., a Hong Kong company (“LAGA
Hong Kong”), Desgrippes (Shanghai) Brand Consulting Co, Ltd., a PRC company
(“LAGA Shanghai”) and Desgrippes Gobe Group (Yuhan Hoesa), a Korean company
(“LAGA Seoul” and together with LAGA Paris, LAGA Brussels, LAGA Hong Kong and
LAGA Shanghai, individually a “Foreign Subsidiary” and collectively “Foreign
Subsidiaries”); Design Partners Group, LLC, a Nevada limited liability company
(“Design Partners”), Mark Anthony, a resident of Ohio (“Anthony”); and John
Hilbrich, a resident of Illinois (“Hilbrich”) (Anthony and Hilbrich are referred
to herein individually as a “Principal” and collectively as “Principals”) and
(y) that certain Escrow Agreement (“Escrow Agreement”) dated as of October 19,
2011 by PNC Bank, National Association, a national banking association (“Escrow
Agent”), Buyer, Sellers and Design Partners.  Capitalized terms used herein
without definition shall have the meanings contained in the Acquisition
Agreement and/or the Escrow Agreement.
 
Sellers and/or Foreign Subsidiaries may have failed to file with the applicable
French Governmental Authority in a timely manner certain Imprimé Fiscal Unique
forms (“IFUs”) for the calendar years ending 2007, 2008 and 2009.  Sellers, at
their own expense, shall file, or cause to be filed, such IFUs with the
appropriate Governmental Authorities on or before March 1, 2012, and thereafter
Sellers shall have the exclusive right to negotiate, compromise and settle the
IFU Charges (as defined below) with notice to and reasonable cooperation from
Buyer and LAGA Paris.  Buyer shall not and shall cause LAGA Paris to refrain
from any act that would toll any statute of limitations applicable to the IFUs
or otherwise exacerbate any IFU Charges (as defined below).  Any penalty,
interest, charge or other matter (collectively “IFU Charges”) assessed against
Sellers or any Foreign Subsidiary as a result of the late filing of such IFUs
shall be a Retained Liability.  In the event that the applicable French
Governmental Authority has not, to Buyer’s reasonable satisfaction, waived any
and all IFU Charges, then Seller Representative, on behalf of Sellers and Design
Partners, agrees that Buyer may file an Escrow Claim in the amount of the IFU
Charges still potentially outstanding (the IFU Charges potentially assessable
for periods where the applicable statute of limitations has not lapsed).  To the
extent the potential
 
 
 
 

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

 
 
LAGA, Inc. (Seller Representative)
c/o Design Partners Group, LLC
October 19, 2011
Page 2
 
liability for IFU Charges is still contingent, Design Partners (as
Representative) may file an objection to such Escrow Claim.  The Escrow Claim
shall then be resolved and distributed as provided in Section 8.1(c) of the
Escrow Agreement.  Each of Buyer and Representative shall act in good faith to
promptly inform the Escrow Agent whether any such Escrow Claim relating to IFU
Charges should either be disbursed to Buyer or if any such Escrow Claim has been
resolved and consequently withdrawn by Buyer.
 
The parties also agree that:
 
(A)           the valuation of the Purchased Assets shall be performed by KPMG,
LLP and not Duff & Phelps, Ltd. as originally provided in Section 2.5;
 
(B)           any Retained Liability of a Foreign Subsidiary identified as of
the applicable date of calculation and not paid on or prior to the Closing Date,
shall be included as a current liability in the determination of Estimated
Working Capital and Final Net Working Capital (but not Target Net Working
Capital) in an amount agreed to by Buyer and Seller Representative, or as
otherwise determined by Section 2.8 of the Acquisition Agreement;
 
(C)           the Escrow Amount shall be reduced to $3,000,000 and the Initial
Cash Payment shall be increased to $22,000,000.  The Escrow Agreement shall
provide that the amount to be released on the first anniversary of the Closing
Date shall be equal to $1,000,000 minus disbursements or reserves for
disbursements;
 
(D)           unfunded pension liabilities of LAGA Paris and LAGA Brussels shall
be included within the Assumed Liabilities and shall not be Retained
Liabilities.  At Closing, Buyer shall receive a credit against the Initial Cash
Payment for $332,500 as a stipulated settlement amount and not subject to any
true-up or post-Closing adjustment whatsoever;
 
(E)           Promptly after Closing, Sellers shall cause their Japanese
Subsidiary to change its name in the manner Sellers are so required to change
their names pursuant to Section 5.9 of the Acquisition Agreement.  Further,
Buyer shall provide Sellers with a list of the customers of its Japanese
Subsidiary (“Schawk Japanese Customers”).  Sellers shall cause their Japanese
Subsidiary to comply with the provisions of Section 10.8 of the Acquisition
Agreement; provided that the covenants contained in Section 10.8(a)(i) and (ii)
shall only apply to Schawk Japanese Customers;
 
(F)           From and after the Effective Time, Sellers hereby appoint Buyer
and each Subsidiary of Buyer as attorney-in-fact, with interest, to act for each
Seller and in the name of either Seller to take any actions or execute any
document, instrument, certificate, governmental form or the like (in each case
without cost to Sellers, except as specifically provided for in the Acquisition
Agreement) to effect the transfer of the capital stock or
 
 
 
 

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LAGA, Inc. (Seller Representative)
c/o Design Partners Group, LLC
October 19, 2011
Page 3
 
other equity interests of LAGA Hong Kong, LAGA Shanghai or LAGA Seoul to Buyer
or one of Buyer’s Subsidiaries; and
 
(G)           Buyer agrees that any amounts credited against payments otherwise
due to Sellers on the Closing Date for withholding or other Taxes payable in
connection with the transactions contemplated by the Acquisition Agreement shall
be so applied to such Taxes assessable against or the responsibility of Sellers
or refunded to Sellers in the event of any excess promptly after Buyer
determines that the amount of the credit exceeds the amount of the applicable
withholding or other such Taxes.
 
(H)           The Effective Time shall be 12:01 a.m. October 20, 2011
notwithstanding any other date contained on any ancillary closing document.
 
Except as otherwise provided herein, the terms and conditions of the Escrow
Agreement remain in its full force and effect.
 
 

 
Very truly yours,
 
SCHAWK USA INC.
 
 
 
By:/s/A. Alex Sarkisian                                     
Name:  A. Alex Sarkisian
Title:  Executive Vice President
 

AGREED TO this 19th day
of October, 2011
 
LAGA, INC.
 
 
 
By:/s/Mark Anthony                                                
Name:  Mark Anthony
Title:  President