Exhibit 10.1

 
STOCK PURCHASE AGREEMENT
 
BY AND BETWEEN
 
GRADESAVER, LLC,
A MASSACHUSETTS LIMITED LIABILITY COMPANY (AS THE BUYER),
 
AND
 
AMBASSADORS GROUP, INC.
A DELAWARE CORPORATION (AS THE SELLER)
 
 
DATED AS OF SEPTEMBER 5, 2014
 
 
 
 

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STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREEMENT (this “Agreement”) dated as of September 5, 2014
(the “Effective Date”), is by and between GradeSaver, LLC, a Massachusetts
limited liability company (“Buyer”) and Ambassadors Group, Inc., a Delaware
corporation (“Seller”).  Buyer and Seller are sometimes referred to in this
Agreement individually as a “Party” and collectively as the “Parties”.
 
R E C I T A L S
 
A.           Seller owns an aggregate of nine hundred seventy-five thousand five
hundred fifty-five (975,555) shares of common stock of BookRags, Inc., a
Delaware corporation (the “Company”), which shares constitute all of the issued
and outstanding shares of the capital stock of the Company (the “Shares”).  The
Shares consist of 731,666 shares of common stock which are to be redeemed by the
Company immediately prior to the Closing (the “Redemption Shares”) and 243,889
shares of common stock which are to be purchased by Buyer pursuant to the terms
and conditions hereof (the “Purchased Shares”).
 
B.           The Company is in the business of providing online research
capabilities for school students and teachers through book summaries, critical
essays, online study guides, lesson plans, biographies, and references to
encyclopedia articles, all as conducted by the Company as of the Effective Date
(the “Business”).
 
C.           Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, all of the Purchased Shares for the purchase price and upon the other
terms and conditions hereinafter set forth.  The purchase and sale of the
Purchased Shares and the other transactions contemplated by this Agreement and
the Ancillary Agreements (hereinafter defined) are sometimes hereinafter
collectively referred to as the “Transactions”.
 
NOW, THEREFORE, in consideration of the representations, warranties, covenants
and agreements contained herein, the Parties hereto agree as follows:
 
ARTICLE I
 
DEFINITIONS
 
1.1 Certain Definitions.  The following definitions of terms used in this
Agreement are in addition to any other terms which are defined in this
Agreement:
 
“Affiliate” has the meaning ascribed to it in Rule 405 promulgated under the
Securities Act of 1933, as amended.
 
“Ancillary Agreements” means all of the other agreements, instruments and
certificates contemplated by this Agreement or otherwise made or given by a
Party in connection with this Agreement, including the Escrow Agreement and the
Redemption Agreement.
 
“National Bank of Arizona Financing” means the loan to the Company in the amount
of Three Million Seven Hundred Fifty Thousand Dollars ($3,750,000) to, among
other things, fund the Redemption, all as arranged by Buyer prior to Closing.
 
 
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“National Bank of Arizona Financing Documents” means the loan agreement and each
loan document relating to the National Bank of Arizona Financing.
 
“Assets” means, with respect to any Person, the tangible and intangible personal
property, real property, facilities, and all other rights and assets owned,
leased and/or used by such Person in the operation of its business (including,
as it pertains to the Company, the Business), including the Books and Records of
such Person.
 
“Books and Records” means, with respect to any Person, all financial records,
invoices and other documents and information related to the ownership of such
Person’s Assets and/or operation of the business of such Person, including all
customer and vendor purchase orders and invoices, all marketing and statistical
information pertaining to the products of a Person and of its competitors and
customers, bills of sale and warranties received by a Person upon its
acquisition of machinery and equipment, and all other books of account and other
written records maintained by or relating to such Person or its business
(including, as it pertains to the Company, the Business).
 
“Business Day” means any day of the year on which national banking institutions
in New York City are open to the public for conducting business and are not
required or authorized to close, other than a Saturday or a Sunday.
 
“Buyer Agreements” means this Agreement and all Ancillary Agreements to which
Buyer is a signatory.
 
“Claim” means a claim made by a Party against another Party, as described in a
Claim Notice.
 
“Claim Notice” means a Notice from either Buyer to Seller or from Seller to
Buyer, (i) describing in reasonable detail the nature of any claim made by
either Buyer or Seller (on their own behalf and/or on behalf of the applicable
Indemnified Parties) against another Party that has given or is reasonably
expected to give rise to an obligation of the Party to whom such Notice is given
for indemnification under ARTICLE VI, including any Third Party Claim,
(ii) describing in reasonable detail the amount of the Losses with respect to
such claim, if then known, or reasonably estimated if not then known, (iii)
describing in reasonable detail the basis of such Losses, including a reference
to the provision of this Agreement or any other Ancillary Agreements upon which
such claim is based and (iv) in the case of a Third Party Claim, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim.
 
“Code” means the Internal Revenue Code of 1986, as amended.
 
“Contracts” means any written or oral agreement, contract, understanding,
arrangement, instrument, note, guaranty, indemnity, representation, warranty,
deed, assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance or undertaking
or other legally binding commitment of any nature.
 
 
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“Data Delivery” means the delivery to or the making available to Buyer of
various information and documents concerning the Company or Seller, either
through the delivery of hard copies, delivery of electronic copies or access
given to Buyer to the Data Site; it being understood and agreed that
irrespective of the manner, method or mode of initial delivery, no document
shall be considered to have been “delivered”, “provided” or “made available” to
Buyer (other than the delivery of the Agreement and Ancillary Agreements, other
deliveries pursuant to Article III (unless Data Delivery is expressly required
thereunder), and any document delivered, provided or made available after the
Closing) unless such document has been uploaded to the Data Site prior to 11:59
PM PDT on September 4, 2014.
 
“Data Site” means the electronic data room hosted at
https://datasite.merrillcorp.com/bidder/index_frame.do?projectId=154303.
 
“Disclosure Schedule” means a schedule, dated as of the Effective Date, which
sets forth the exceptions to and the disclosures required by the representations
and warranties contained in ARTICLE IV and certain other information called for
by this Agreement. Unless otherwise specified, each reference in this Agreement
to any numbered schedule is a reference to that numbered schedule which is
included in the Disclosure Schedule.
 
“Employee Benefit Plan” means any “employee benefit plan” within the meaning of
Section 3(3) of ERISA, and any other plan, program or arrangement providing for
compensation or benefits, including bonuses, profit-sharing, deferred
compensation, life insurance, pension, retirement, medical, hospital,
disability, welfare or fringe benefits, change of control, severance, stock
purchase, stock option, or vacation pay,  to which the Company or any ERISA
Affiliates is a party or have any Liability or contingent Liability or which are
maintained, contributed to or sponsored by the Company for the benefit of any
current or former employee, officer or director.
 
“Environmental, Health and Safety Requirements” means all federal, state, local
or foreign statutes, regulations, ordinances and other Legal Requirements ,
concerning public health and safety, worker health and safety, and pollution or
protection of the environment.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
 
“ERISA Affiliate” means any Person, trade or business (whether or not
incorporated) that is under common control or treated as a single employer with
the Company under Sections 414 (b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA.
 
“Escrow Agent” means BOKF, NA DBA Colorado State Bank & Trust.
 
“Expenses” means any and all reasonable out-of-pocket expenses incurred in
connection with investigating, defending or asserting any Claim or Proceeding
incident to any matter indemnified against hereunder (including court filing
fees, court costs, arbitration fees or costs, witness fees and reasonable fees
and disbursements of legal counsel, investigators, expert witnesses, accountants
and other professionals).
 
 
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“Fundamental Representations” means, collectively, the Group I Fundamental
Representations, the Group II Fundamental Representations and the Group III
Fundamental Representations.
 
“GAAP” means United States generally accepted accounting principles as in effect
on the Effective Date, consistently applied.
 
“Governmental Entity” means any: (i) nation, principality, state, commonwealth,
province, territory, county, municipality, district or other jurisdiction of any
nature; (ii) federal, state, local, municipal, foreign or other government;
(iii) governmental or quasi-governmental authority of any nature (including any
division, agency, bureau, commission, court, authority, department, official,
political subdivision, administrative body, tribunal or other instrumentality of
any government, whether federal, state or local, municipal, domestic or
foreign); (iv) multi-national organization or body; or (v) Person exercising, or
entitled to exercise, any executive, legislative, judicial, administrative,
regulatory, police, military or taxing authority or power of any nature.
 
“Group I Fundamental Representations” means individually and collectively the
representations and warranties of Seller contained in Section 4.13 (‘Taxes’).
 
“Group II Fundamental Representations” means individually and collectively the
representations and warranties of Seller contained in Sections 4.22 (‘Licenses’)
and 4.26 (‘Proprietary Rights’).
 
“Group III Fundamental Representations” means individually and collectively the
representations and warranties of Seller contained in Sections 4.1 (‘Corporate
Organization of Company’), 4.2 (‘Subsidiaries’), 4.3 (‘Authorization’), 4.6
(‘Capitalization’), 4.7 (‘Clear Title to Shares’) and 4.29 (‘Broker’s Fees’)
 
“Hazardous Material” means any substance, waste, or other material which is
regulated or defined under Environmental, Health and Safety Requirements,
including without limitation petroleum and its by-products, asbestos, “hazardous
waste”, “hazardous substance”, “hazardous material”, “restricted hazardous
waste”, “industrial waste”, “solid waste”, “contaminant”, “pollutant”,
“toxic waste” or “toxic substance”.
 
“Indebtedness” means with respect to any Person at any particular time: (i) all
obligations of such Person for borrowed money, or obligations with respect to
deposits or advances of any kind (including amounts by reason of overdrafts and
amounts owed under or in respect of letters of credit); (ii) all obligations of
such Person evidenced by bonds, debentures, notes or similar instruments; (iii)
all obligations of such Person under or in respect of conditional sale or other
title retention agreements relating to property purchased by such Person; (iv)
all obligations of such Person issued or assumed as the deferred purchase price
of property or services; (v) all obligations of such Person under or in respect
of interest rate, currency or other hedging arrangements; (vi) all obligations
of such Person under or in respect of capital leases; and (vii) all obligations
of another Person of the type described in the foregoing clauses (i) – (vi)
which have been guaranteed by such Person, or which are secured by (or for which
the holder of such obligations has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such Person, whether
or not the obligations secured thereby have been assumed.
 
 
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“IRS” means the Internal Revenue Service, a division of the United States
Treasury Department, or any successor thereto.
 
“Knowledge”, or any similar term or knowledge qualification contained herein,
means (i) with respect to any individual, the knowledge of such Person or the
knowledge that such Person should have after reasonable inquiry, (ii) with
respect to Seller, the knowledge of Philip Livingston or Holly Heath or the
knowledge that any such Person should have after reasonable inquiry; and
(iii) with respect to Buyer, the knowledge of J. Nicholas Smith or Olivia Verma
Smith or the knowledge that any such Person should have after reasonable
inquiry.
 
“Leased Premises” means each real property demised under a Real Property Lease
at or from which the Business is operated.
 
“Legal Requirement” means, with respect to any Person, any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion,
interpretation or Order issued, enacted, adopted, passed, approved, promulgated,
made, implemented or otherwise put into effect by or under the authority of any
Governmental Entity with jurisdiction over such Person and having the force or
effect of law with respect to such Person, including Environmental, Health and
Safety Requirements.
 
“Liability” means any commitment, liability, obligation, Indebtedness, accounts
payable and/or accrued expenses, including any liability or obligation for
Taxes, whether absolute, accrued, matured, contingent (or based upon any
contingency), known or unknown, fixed or otherwise, or whether due or to become
due, and “Liabilities” means and includes any and all of the foregoing.
 
“Licenses” means any permit, license, certificate, franchise, concession,
approval, consent, ratification, permission, clearance, confirmation,
endorsement, waiver, certification, designation, rating, registration,
qualification or authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Entity or other Person
or pursuant to any Legal Requirement.
 
“Lien” means any lien, pledge, mortgage, deed of trust, security interest,
lease, charge, option, right of first refusal, easement, servitude, transfer
restriction under any shareholder or similar agreement, encumbrance or any other
similar restriction or limitation.
 
“Loss” means any cost, fee, expense, loss, damage, deficiency, injury, decline
in value, lost opportunity, claim, demand, settlement, judgment, award, fine,
penalty, Liability or Expense of any nature, and “Losses” means and includes any
and all of the foregoing.
 
 “Mulcahy Matter” means any dispute arising from or in connection with the
employment or other engagement of Ryan Mulcahy with the Company, Seller or any
Affiliate, or the termination of Ryan Mulcahy’s employment or other engagement
with the Company, Seller or any Affiliate, or the terms of any severance,
employment, incentive or similar arrangement in connection therewith, including
any complaint for breach of contract and related claims filed by Mr. Mulcahy
against Seller, the Company and Philip Livingston, interim CEO of Seller.
 
 
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“Multiemployer Plan” has the meaning set forth in Section 3(37) of ERISA.
 
“Order” means any: (i) order, injunction, judgment, edict, decree, ruling, writ
or assessment, issued, made, entered, rendered or otherwise put into effect by
or under the authority of any court, administrative agency or other Governmental
Entity or any arbitrator or arbitration panel; or (ii) Contract with any
Governmental Entity entered into in connection with any Proceeding.
 
“Ordinary Course of Business” means, with respect to any Person, the usual and
ordinary course of business consistent with such Person’s past practice,
including activities associated with or in anticipation of this Agreement or the
Transactions. An action taken by or on behalf of the Company shall not be deemed
to have been taken in the “Ordinary Course of Business” unless: (i) such action
is consistent with the past practices of the Person so acting and is taken in
the ordinary course of the normal day-to-day operations of such Person; and (ii)
such action is not required to be authorized by the shareholder(s) of such
Person or the board of directors of such Person (or any committee of the board
of directors of such Person).
 
“Packaged Software Products” means so-called “off-the-shelf” products and
“shrink wrap” software licensed to the Company in the Ordinary Course of
Business and obtainable without material expense.
 
“Permitted Liens” means (i) any liens for Taxes and assessments of Governmental
Entities not yet due and payable or that are being contested in good faith by
appropriate proceedings; (ii) any liens in favor of carriers, warehousemen,
repairmen, mechanics or similar liens arising by operation of law or in the
Ordinary Course of Business in respect of obligations that are not yet due and
payable, that are not yet subject to penalties for delinquent nonpayment, or
that are being contested in good faith by appropriate proceeding; (iii) any
liens created by Buyer or its Affiliates; and (iv) all items set forth on
Schedule 1.1.
 
“Person” means an individual, a partnership, a limited liability company or
partnership, a corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a Governmental Entity.
 
 
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“Pre-Closing Taxes” means (i) all Taxes (or the non-payment thereof) of the
Company for any Pre-Closing Tax Period; (ii) any and all Taxes of any member of
an affiliated, consolidated, combined or unitary group of which the Company (or
any predecessor of the Company) is or was a member on or prior to the Effective
Date (other than Buyer or Buyer Affiliates), including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous or similar state, local or foreign
Legal Requirement, and (iii) any and all Taxes of any Person (other than the
Company) imposed on the Company as a transferee or successor, by contract or
pursuant to any Legal Requirement, which Taxes arise from an event or
transaction occurring on or before the Closing.
 
“Proceeding” shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Entity or any arbitrator or arbitration
panel.
 
“Proprietary Rights” means all of the following owned by, issued to, used by or
licensed to the Company (whether pursuant to a written license or not), along
with all associated income, royalties, damages and payments due from or payable
by any third party (including damages and payments for past, present, or future
infringements or misappropriations thereof), all other associated rights
(including the right to sue and recover for past, present, or future
infringements or misappropriations thereof), and any and all corresponding
rights: (i) trademarks, service marks, trade dress, logos, slogans, trade names
and corporate names and all registrations and applications for registration
thereof, together with all goodwill associated therewith; (ii) copyrights and
works of authorship, and all registrations and applications for registration
thereof; (iii) computer software (including data, data bases and related
documentation); (iv) trade secrets, confidential information, and proprietary
data and information (including compilations of data (whether or not copyrighted
or copyrightable), ideas, know how, marketing, information, financial and
accounting data, business and marketing plans, and customer and supplier lists
and related information); (v) internet sites and related code, graphics, assets
and other properties related thereto as well as all rights associated therewith;
(vi) all other intellectual property rights, including without limitation all
content licensed by the Company; and (vii) all copies and tangible embodiments
of the foregoing (in whatever form or medium).
 
“Real Property Leases” shall mean all of the existing leases, subleases,
licenses, use, occupancy agreements, options, rights, concessions or other
agreements or arrangements with respect to real property to which the Company is
a party or by which the Company or any of the Assets is bound, together with any
and all amendments thereto, modifications thereof, side letter and other
agreements relating thereto (including, without limitation, subordination,
non-disturbance and attornment and like agreements).
 
“Seattle Lease Agreement” means the Lease Agreement dated March 28, 2011 between
Prisa market Place Tower WA, LLC, as landlord, and the Company, as tenant, as
amended, relating to the lease of the premises located at 2025 1st Ave., Suite
270, Seattle, Washington
 
“Seller Agreements” means this Agreement and all Ancillary Agreements to which
Seller is a signatory.
 
“Seller’s Original Acquisition Date” means May 15, 2008.
 
“Subsidiary” means, with respect to any Person, any other Person of which the
first Person (or a Subsidiary thereof) owns a majority of the common stock or
other voting interests or otherwise has the power to vote or direct the voting
of sufficient securities to elect a majority of the directors, managers or other
Persons controlling the activities of such Person.
 
 
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“Tax” or “Taxes” means (i) any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, abandoned property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated or
other tax, assessment or similar type of governmental charge of any kind
whatsoever, including any interest, penalty or addition thereto, whether
disputed or not, (ii) any Liability for the payment of any amounts of the type
described in clause (i) of this sentence as a result of being a member of an
affiliated, consolidated, combined, unitary or aggregate group for any Taxable
period and (iii) any Liability for the payment of any amounts of the type
described in clause (i) or (ii) of this sentence as a result of being a
transferee of or successor to any Person or as a result of any express or
implied obligation to assume such Taxes or to indemnify any other Person.
 
“Tax Return” means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
 
“Third-Party Claim” means any Claim arising out of any third-party claim or the
commencement of a Proceeding by any third party with respect to which an
Indemnified Party is entitled to indemnification pursuant to ARTICLE VI.
 
“Wire Transfer” means a payment of money by same day wire transfer in
immediately available funds to an account or accounts designated in writing by
the recipient to the payor.
 
1.2 Other Defined Terms.  Other terms shall have the meanings ascribed to them
in the Agreement as set forth herein.
 
1.3 Interpretation and Construction of Terms.  Generally, unless particular
terms of this Agreement state otherwise, or unless the context indicates
otherwise, words and phrases used in this Agreement will be interpreted and
construed as follows:
 
(a) Words in the present tense include the future and vise-versa. Words and
phrases used as nouns include singular and plural forms.
 
(b) “Or” is not exclusive. “Shall”, “will”, and “must”, signify mandatory
obligations. “May” signifies a discretionary or permissive act.
 
(c) In all circumstances, the phrase “without limitation” will be deemed to
follow the words “include”, “includes”, and “including”.
 
(d) The captions and headings of the Articles, Sections, and subsections of this
Agreement are for convenience and reference only, and shall not be deemed to
define or limit the provisions thereof.
 
(e) Unless otherwise specified herein, any references to “dollars”, “$” or other
dollar amounts in this Agreement shall mean the lawful currency of United
States.
 
 
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ARTICLE II
PURCHASE AND PRICE
 
 
2.1 Sale and Purchase of Shares; Purchase Price.  Upon the terms and subject to
the conditions contained herein, Seller hereby sells, assigns, transfers,
conveys and delivers to Buyer, free and clear of all Liens, and Buyer purchases
from Seller, the Purchased Shares.  The aggregate purchase price for the
Purchased Shares, subject to adjustment as hereinafter provided, is One Million
Two Hundred Fifty Thousand Dollars ($1,250,000) (the “Purchase Price”).  Buyer
shall make or cause to be made, by Wire Transfer, the following payments (in an
amount, in the aggregate, equal to the Purchase Price):
 
(a) first, to the Escrow Agent, the Escrow Amount; and
 
(b) second, to Seller, the balance.
 
2.2 Escrowed Funds.  Simultaneous with the execution and delivery of this
Agreement, Escrow Agent, Buyer and Seller shall execute an agreement in
substantially the form of Exhibit A hereto (the “Escrow Agreement”). Buyer shall
deliver or cause to be delivered to the Escrow Agent, for the purpose securing
the indemnification obligations of Seller under ARTICLE VI of this Agreement,
the sum of $400,000 (such amount, together with all interest, dividends and
other income earned with respect thereto, less amounts disbursed therefrom in
accordance with this Agreement and the Escrow Agreement, is sometimes
hereinafter referred to as the “Escrow Amount”).

2.3           Redemption.  Immediately prior to Closing, Three Million Seven
Hundred Fifty Thousand Dollars ($3,750,000) (the “Redemption Price”) was paid by
the Company to Seller to redeem the Redemption Shares, using funds from the
National Bank of Arizona Financing (the “Redemption Loan”), pursuant to and in
accordance with the terms and conditions of the Redemption Agreement set forth
in Exhibit B hereto (the “Redemption Agreement”).
 
2.4 Taking of Necessary Action; Further Action.  If at any time after the
Closing, any further action is reasonably necessary or desirable to carry out
the purposes of this Agreement and to vest in Buyer full right, title and
possession to the Shares (and, indirectly as a result thereof, to all Assets
(including all Proprietary Rights), property, rights, privileges, powers and
franchises of the Company), then Buyer shall be fully authorized in the name of
Seller and the Company to take, and will take, all such lawful and necessary
action.  In addition the Parties agree and acknowledge that the accounts payable
set forth on Schedule 2.4, and the accounts receivable of the Company as of the
Effective Date shall remain with the Company, and Seller shall forward any mail
or other correspondence, and any payments, relating thereto to Buyer within five
(5) calendar days after receipt.
 
2.5 Characterization of Transactions; Withholding.
 
(a) The Parties agree that, for tax purposes, the sale and purchase of the
Purchased Shares pursuant to Section 2.1 and the redemption of the Redemption
Shares pursuant to Section 2.3 shall together be characterized as a single sale
of the Shares for aggregate consideration equal to the sum of the Purchase Price
and the Redemption Price, as adjusted pursuant to this Agreement.
 
(b) To the extent that any amounts otherwise payable to any recipient pursuant
to this Agreement or any Ancillary Agreement are withheld as required by law by
the Company, a Party or the Escrow Agent, as the case may be, such withheld
amounts shall be treated for all purposes of the Agreement as having been
delivered and paid to such recipient by the Company, such Party or the Escrow
Agent, as applicable.
 
 
 
ARTICLE III
CLOSING MATTERS AND CLOSING DELIVERIES
 
3.1 The Closing. The closing of the Transactions (the “Closing”) is being
conducted remotely via facsimile and electronic exchange of documents and
signature pages (with originals to be delivered promptly thereafter) on the
Effective Date. For purposes of determining tax and accounting periods, the
Closing shall be deemed to have occurred with respect to the Company, effective
at 11:59 PM EST on the Effective Date.
3.2 Seller’s Closing Deliveries. Seller shall make or cause to be made the
following deliveries to Buyer:
(a) All consents listed on Schedule 4.5;
(b) An assignment agreement pursuant to which the Company has assigned or will
assign the Seattle Lease Agreement to Seller, in form and substance reasonably
acceptable to Buyer (the “Lease Assignment”);
(c) All stock certificates evidencing (i) the Purchased Shares, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, in proper form for
transfer, and with any required stock transfer tax stamps affixed, if any, and
(ii) the Redemption Shares, showing such shares have been cancelled;
(d) The Escrow Agreement, duly executed by Seller;
(e) The Redemption Agreement, duly executed by Seller and the Company;
(f) Copies by Data Delivery of the Company’s consolidated, unaudited statements
of income and statements of cash flow for the seven (7) months ended July 31,
2014 and the balance sheet as of July 31, 2014 (the “Interim Financial
Statements”);
(g) Copies of all necessary corporate resolutions, duly adopted by the Company
or Seller, as applicable, terminating the Company’s employees as requested by
Buyer, as well as any and all of the Company’s 401(k) retirement plans, stock
option and incentive plans and agreements, employment agreements and severance
agreements, incentive plans and programs including without limitation all
retention plans and agreements, and commission plans and agreements (including
without limitation all Employee Benefit Plans but excluding the Employment
Agreements and the Consulting Agreements), as well as any other agreements and
plans requested by Buyer, together with copies of resignations of all officers
and directors of the Company and all applicable termination agreements, all in
form and substance satisfactory to Buyer;

 
 
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(h) A statement conforming to the requirements of Section 1.897-2(h)(1)(i) of
the United States Treasury Regulations; and the notification to the Internal
Revenue Service required under Section 1.897-2(h)(2) of the United States
Treasury Regulations;
 
(i) All databases, and all account passwords, credentials and keys, relating to
the Company or the Business;
 
(j) Evidence satisfactory to Buyer that each of the agreements listed on
Schedule 4.20 has been terminated in its entirety and of no further force or
effect, with no outstanding obligations of the Company including obligations to
honor any subscription codes issued pursuant to any such agreement after
September 16, 2014 or any subscriptions redeemed pursuant to any such agreement
after December 1, 2014;
 
(k) Copies of each of the following, certified to Buyer’s satisfaction by an
officer of the Company: (i) the Company’s articles of incorporation, as amended,
certified as of a recent date by the appropriate Governmental Entity; (ii) a
certificate as to the legal existence and good standing of the Company,
certified as of a recent date by the appropriate Governmental Entity; (iii) the
Company’s by-laws, as amended; (iv) votes adopted by the shareholders and
resolutions adopted by the directors of the Company authorizing the execution,
delivery and performance of this Agreement and the Ancillary Agreements, and the
consummation of the Transactions; and (v) evidence as of a recent date of the
qualification of the Company in the jurisdictions listed on Schedule 4.1; and
 
(l) Copies of each of the following, certified to Buyer’s satisfaction by an
officer of the Seller: (i) the Seller’s articles of incorporation and by-laws,
as amended; (ii) a certificate of good standing of the Seller, certified as of a
recent date by the appropriate Governmental Entity; and (iii) resolutions
adopted by the directors of the Seller authorizing the execution, delivery and
performance of this Agreement and the Ancillary Agreements, and the consummation
of the Transactions.
 
3.3 Buyer’s Closing Deliveries.  Buyer shall make or cause to be made the
following deliveries to Seller:
 
(a) The Purchase Price, paid by Wire Transfer by Buyer to Seller;
 
(b) The Redemption Price, paid by Wire Transfer by the Company to Seller to
redeem the Redemption Shares;
 
(c) Evidence reasonably satisfactory to Seller that the Redemption Loan was made
to the Company on the terms and conditions of the National Bank of Arizona
Financing Documents;
 
(d) Evidence reasonably satisfactory to Seller that the Escrow Amount has been
paid to the Escrow Agent by Wire Transfer;
 
(e) Copies of the fully executed National Bank of Arizona Financing Documents,
setting forth the terms and conditions of the National Bank of Arizona
Financing;
 
(f) The Escrow Agreement, duly executed by Seller; and
 
(g) Copies of each of the following, certified to Seller’s satisfaction by an
officer of the Buyer: (i) the Buyer’s certificate of organization, as amended;
(ii) a certificate of good standing of the Buyer, certified as of a recent date
by the appropriate Governmental Entity; and (iii) resolutions adopted by the
managers or members of Buyer authorizing the execution, delivery and performance
of this Agreement and the Ancillary Agreements, and the consummation of the
Transactions.
 
3.4 Other Closing Deliveries.  At Closing, employment agreements (the
“Employment Agreements”) shall be executed by each of Vanessa Hoying, Kade
Grantham and Liz Legg, on the one hand, and Buyer, on the other hand, and
consulting agreements (the “Consulting Agreements”) shall be executed by each of
Damian Wadley, Holly Heath and Ian Maddox, on the one hand, and Buyer on the
other hand.
 
 
 
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
 
 
Seller represents and warrants to Buyer that the statements contained in this
ARTICLE IV are true, correct and complete as of the Effective Date.
4.1 Corporate Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has all requisite corporate power and authority to own, lease and operate its
Assets and other properties and to carry on the Business. The Company is duly
qualified or authorized to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of the Business or the
ownership of its Assets and other properties requires such qualification or
authorization. Schedule 4.1 sets forth a true, correct and complete list of each
jurisdiction in which the Company is qualified or authorized to do business as a
foreign corporation.
4.2 Subsidiaries. Except for the Subsidiaries listed on Schedule 4.2, the
Company does not own any direct or indirect interest in any Person. Except for
the Subsidiaries listed on Schedule 4.2, the Company does not have any other
Subsidiaries.
4.3 Authorization. The execution, delivery and performance of this Agreement and
all of the other Seller Agreements are within the power and authority of Seller,
and have been duly authorized, executed and delivered by Seller.
4.4 Binding Agreement. This Agreement and the other Seller Agreements, upon
execution by Seller, constitute the legal, valid and binding obligations of
Seller, enforceable against Seller in accordance with their terms, except to the
extent that (x) such enforcement may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or
hereafter in effect relating to creditors’ rights generally; and (y) the remedy
of specific performance and injunctive and other forms of equitable or legal
remedies may be subject to equitable defenses, equitable principles and to the
discretion of the court before which any Proceeding therefor may be brought
(collectively, the “Remedies Exceptions”).

 
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4.5 Required Consents; Non-Contravention.  Except as set forth on Schedule 4.5,
the execution, delivery and performance of this Agreement and all of the
Ancillary Agreements to which Seller is a party (i) do not require the consent
or approval of any Governmental Entity or any other Person, (ii) will not
conflict with, result in the breach of, or constitute a violation of any of the
terms, conditions or provisions of the articles of incorporation or by-laws of
the Company, (iii)  will not be in violation of any Legal Requirement, (iv) will
not conflict with, result in the breach of, or constitute a default under any
Contract to which the Company is a party or by which the Company is bound, or to
which any of the Company’s Assets or any of the Shares are subject, (v) will not
conflict with, result in the breach of, or constitute a default under any
Contract relating to the Shares or the Company to which the Seller is a party or
by which the Seller is bound, and (vi) will not result in the creation or
imposition of any Lien upon any of the Assets of the Company or upon any of the
Shares.
 
4.6 Capitalization.  The authorized capital stock of the Company consists of one
million (1,000,000) shares of preferred stock having $0.001 par value per share,
of which no shares are issued and outstanding, and two million (2,000,000)
shares of common stock having $0.001 par value per share, of which nine hundred
seventy-five thousand five hundred fifty-five (975,555) shares are issued and
outstanding. All issued and outstanding shares of the authorized capital stock
of the Company are validly issued, fully paid and non-assessable, and since the
Seller’s Original Acquisition Date have been offered, issued, sold and delivered
in compliance with all applicable Legal Requirements (including all applicable
securities laws), and all of the issued and outstanding shares of the capital
stock of the Company are owned beneficially and of record by Seller, free and
clear of all Liens. No amounts other than the Redemption Price and the Purchase
Price are payable to any Person with respect to the Shares. There are no voting
trust agreements or any other Contracts restricting or otherwise relating to
voting or dividend rights with respect to any shares of the capital stock of the
Company or with respect to the ownership or transfer of any such shares,
including the Shares. There do not exist any options, warrants, calls,
subscriptions, convertible or exchangeable securities, rights, agreements,
commitments or arrangements obligating Seller or the Company to issue, transfer
or sell any shares of the capital stock of the Company or any other securities
convertible into, exchangeable for, or evidencing the right to subscribe for,
any such shares of capital stock.
 
4.7 Clear Title to Shares.  Seller is the lawful record and beneficial owner of
all of the Shares, free and clear of all Liens. On the Effective Date, the sale
of the Purchased Shares and delivery of certificates evidencing same by Seller
to Buyer will transfer valid title and beneficial ownership thereto, free and
clear of all Liens, and such Purchased Shares shall constitute all of the issued
and outstanding shares of the Company at such time.
 
4.8 Financial Statements.  Included in Seller’s Annual Report on Form 10-K for
the year ended December 31, 2013 are true, correct and complete copies of the
Company’s consolidated, audited income statement, cash flow statement and
balance sheet for the period ended as of December 31, 2013 (the “Most Recent
Year-End Statements”).  Included in Seller’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2014 are true, correct and complete copies of the
Company’s consolidated, audited income statement, cash flow statement and
balance sheet for the period ended March 31, 2014 (the “Most Recent Quarter-End
Statements.”) Attached to Schedule 4.8 are true, correct and complete copies of
the Interim Financial Statements. (The Most Recent Year-End Statements, Most
Recent Quarter-End Statements and Interim Financial Statements are sometimes
collectively referred to in this Agreement as the “Financial Statements.”) The
Financial Statements are complete and accurate and present fairly the
consolidated financial position of the Company as of the dates thereof and the
results of operations, cash flows and changes in stockholders’ equity of the
Company for the periods covered by said statements, in conformity with GAAP
(except as may be indicated in the notes and schedules thereto) except, in the
case of the Interim Financial Statements, for (i) normal year-end adjustments
which are not, individually and in the aggregate, material and (ii) the omission
of notes and schedules required by GAAP.
 
 
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4.9 Governing Instruments.  True, correct and complete copies of the certificate
of incorporation and bylaws of the Company, as amended, and true, correct and
complete copies of all minutes of meetings of the directors and shareholders of
the Company and of all consents in lieu thereof have been provided to Buyer
using Data Delivery. Schedule 4.9 identifies each member of the Board of
Directors and each officer of the Company holding office immediately prior to
Closing, all of whom shall have submitted their resignations to the Company
effective as of the Effective Date.
 
4.10 Title to Assets; Condition; Possession under Leases.
 
(a) Other than as set forth on Schedule 4.10(a), the Company has good and
marketable title to, or a valid leasehold or license interest in, each and all
of its respective Material Assets, free and clear of all Liens except for
Permitted Liens.
 
(b) The Material Assets of the Company are in satisfactory operating condition
and repair, normal wear and tear excepted. The Material Assets and other
properties of the Company include all assets and properties necessary for the
conduct of the Business and are adequate to conduct the Business.
 
(c) Each personal property lease or license of an Asset in the name of the
Company is a valid and subsisting obligation enforceable by the Company in
accordance with its terms, except as limited by the Remedies Exceptions.
 
(d) Except as set forth on Schedule 4.10(d), no Person other than the Company,
including Seller, owns or has any rights in any Material Assets used to carry on
the Business.
 
4.11 Inventory and Assets.  The Company has no inventory.  Schedule 4.11 lists
all of the tangible Assets of the Company with fair market value of $1,000 or
greater (the “Material Assets”). 
 
 
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4.12 Accounts Receivable; Accounts Payable.  Schedule 4.12 sets forth all of the
(i) accounts receivable of the Company as of the Effective Date, which (other
than the Assigned Receivables set forth on Schedule 7.6) are true and accurate
on an aggregate basis within a margin of error of five percent (5%), (ii) the
Company’ prepaid expenses as of the Effective Date, and (iii) to the Seller’s
Knowledge, the accounts payable of the Company as of the Effective Date.  All of
the accounts receivable and prepaid expenses set forth on Schedule 4.12 (i) are
determined in accordance with GAAP and arose out of bona fide transactions in
the Ordinary Course of Business and (ii) subject to the first sentence of this
Section 4.12, are valid and enforceable claims, subject to no set-off or
counterclaim.  As of the Effective Date no Person will have any Lien on such
receivables or any part thereof, except for Permitted Liens and Seller’s rights
to the Assigned Receivables as set forth in Section 7.6, and no agreement for
deduction, free goods, discount or other deferred price or quantity adjustment
has been made with respect to any such receivables other than in the Ordinary
Course of Business.  All of the accounts payable set forth on Schedule 4.12
represent, to Seller’s Knowledge, (i) the total amount of accounts payable of
the Company as of the Effective Date and (ii) the agings of such accounts
payable from the date of the invoice based on the following schedule:  0-30
days; 31-60 days; and over 90 days.
 
4.13 Taxes.
 
(a) The Company has duly and timely filed (taking into account any extension of
time within which to file) all Tax Returns required to be filed by it, all such
Tax Returns are correct and complete in all material respects, and all Taxes
required to be paid by or with respect to the Company (whether or not shown as
due on such Tax Returns) have been paid to the appropriate Governmental Entity.
Except as set forth on Schedule 4.13(a), the Company is not currently the
beneficiary of any extension of time within which to file any Tax Return.
 
(b) There is no Tax deficiency outstanding, assessed or proposed against the
Company. No audit or other examination of any Tax Return of the Company is
presently in progress, nor has the Company been notified in writing of any
request for such an audit or other examination.
 
(c) There are no Liens for Taxes upon any of the Assets of the Company.
 
(d) The Company: (i) has not been a member of an affiliated group filing a
consolidated, or unitary Tax Return (other than any affiliated group of which
the Company is the common parent) and (ii) does not have any Liability for the
Taxes of any Person under Treas. Reg. §1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise, other than commercial contracts entered into in the Ordinary Course
of Business that do not primarily relate to Taxes.
 
(e) Since the date of the Most Recent Year-End Statements, the Company has not
incurred any Liability for Taxes outside the Ordinary Course of Business.
 
(f) The Company has not, within the past ten (10) years: (i) acquired Assets
from another corporation in a transaction in which its Tax basis for the
acquired assets was determined, in whole or in part, by reference to the Tax
basis of the acquired assets (or any other property) in the hands of the
transferor or (ii) acquired the stock of any corporation which is a qualified
subchapter S subsidiary. The Company is not a “qualified subchapter S
subsidiary” within the meaning of Section 1361(b)(3)(B) of the Code.
 
 
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(g) The Company is properly classified for U.S. federal and applicable state tax
purposes as a corporation. Seller is properly classified for U.S. federal and
applicable state tax purposes as a corporation. Neither the Company nor the
Seller has ever made an election under Section 1362 of the Code to be treated as
an S corporation for U.S. Federal income tax purposes or made a similar election
under any comparable provision of any Tax law.  The Company is not a party to
any joint venture, partnership, other arrangement or contract which could be
treated as a partnership for federal income Tax purposes.
 
(h) The Company has withheld and paid all Taxes required to have been withheld
and paid in connection with any amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other Person, and all IRS Forms
W-2 and 1099 required with respect thereto have been properly completed and
timely filed.
 
(i) The Company is not and has not been a party to any “reportable transaction”
as defined in Section 6707A(c)(1) of the Code and Treas. Reg. §1.6011-4(b).
 
(j) The Company will not be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending on or after the Effective Date as a result of any: (i)
change in method of accounting for a taxable period ending on or prior to the
Effective Date; (ii) “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign
income Tax law) executed on or prior to the Effective Date; (iii) installment
sale or open transaction disposition made on or prior to the Effective Date;
(iv) prepaid amount received on or prior to the Effective Date; or (v) election
by the Company under Section 108(i) of the Code.
 
(k) Except for customary powers of attorney granted to the Company’s accountants
and tax advisors, no power of attorney granted by or with respect to the
Company’s relating to Taxes is currently in force.
 
(l) No claim has been made by a Governmental Entity in a jurisdiction where the
Company does not file Tax Returns that the Company is or may be subject to
taxation by that jurisdiction.  The Company is not required to file Tax Returns
or pay Taxes in a country other than the United States.
 
4.14 Recent Events.  Except as set forth on Schedule 4.14, or except as
expressly contemplated by this Agreement, since the date of the Most Recent
Year-End Statements, the Company has not:
 
(a) suffered a materially adverse change (i) in or to its financial condition,
operating results, earnings or Assets or (ii) in its relations with any material
customer, supplier, employee or sales representative;
 
(b) borrowed or otherwise incurred or became subject to any Indebtedness;
 
 
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(c) discharged or satisfied any Lien, or prepaid any amount of Indebtedness for
borrowed money, other than those discharged, satisfied, or prepaid in the
Ordinary Course of Business;
 
(d) mortgaged, pledged, or subjected to any Lien any portion of the Assets used
in the Business other than Permitted Liens;
 
(e) sold, leased, assigned, or transferred (including transfers to any employees
or Affiliates of the Company) any portion of its respective tangible Assets used
in the Business, except the Lease Assignment or in the Ordinary Course of
Business or sales of obsolete or damaged tangible Assets, or cancelled without
fair consideration any debts or claims owing to or held by the Company in excess
of $10,000;
 
(f) sold, assigned, licensed, or transferred (including transfers to any
employees or Affiliates of the Company) any Proprietary Rights or disclosed any
confidential information other than pursuant to agreements preserving all rights
of the Company in such confidential information;
 
(g) suffered any losses or waived in writing any rights of value in each case in
excess of $50,000, whether or not in the Ordinary Course of Business;
 
(h) suffered any theft, damage, destruction or casualty loss in excess of
$10,000 per incident and $25,000 in the aggregate, to any Assets associated with
or used in the Business, whether or not covered by insurance;
 
(i) made or granted any bonus or any wage, salary, or compensation increase to
any director, officer, employee, or consultant, or made or granted any increase
in any Employee Benefit Plan, or amended or terminated any existing Employee
Benefit Plan, or adopted any new Employee Benefit Plan, except in the Ordinary
Course of Business;
 
(j) made any capital expenditures or commitments for capital in excess of
$10,000, individually or in the aggregate;
 
(k) made any loans or advances of money, individually or in the aggregate (it
being understood that this item does not include accounts receivable generated
in the Ordinary Course of Business);
 
(l) made or paid any material charitable contributions or pledges; or made or
paid any association fees or dues other than in the Ordinary Course of Business;
 
(m) entered into any lease of capital equipment or real estate involving rents
in excess, individually or in the aggregate, of $10,000 per annum, other than
the Lease Assignment;
 
(n) changed or authorized any change in the Company’s organizational documents;
 
 
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(o) declared, made, set aside or paid any payment, dividend or other
distribution of any nature in respect of any of its capital stock, except for
the Redemption Payment;
 
(p) directly or indirectly, issued, redeemed, retired, purchased or otherwise
acquired any of its shares of capital stock or other ownership interests except
pursuant to the Redemption Agreement;
 
(q) acquired all or any substantial portion of the stock or assets of any other
Person, including any such acquisition structured as a merger or consolidation,
or made any loan of money to or investment in any other Person;
 
(r) adopted or amended any bonus, profit sharing, compensation, stock option,
stock purchase, pension, retirement, deferred compensation or other plan,
agreement, trust, fund or arrangement for the benefit of employees;
 
(s) changed accounting or tax reporting principles, methods or policies, made or
changed any Tax election, filed any amended Tax Return, entered into any closing
agreement, settled any Tax claim or assessment, surrendered any right to claim a
refund of Taxes, or consented to any extension or waiver of the Tax statute of
limitations period;
 
(t) instituted or settled any Proceeding; or
 
(u) obligated to do any of the foregoing.
 
4.15 No Liabilities.  The Company does not have any Liabilities (and there is no
reasonable basis for any present or future Proceeding giving rise to any
Liability), and will not have any Liabilities as a result of the Closing of the
Transactions or any pre-Closing occurrences, agreements or understandings, other
than, in each case, Liabilities (i) arising from accounts payable set forth on
Schedule 2.4 (but specifically excluding any severance payments or other amounts
due employees except pursuant to the Employment Agreements or the Consulting
Agreements), (ii) set forth on Schedule 4.15, and (iii) the Redemption
Loan.  The Seller assumes all Liabilities that may arise in connection with the
agreements and plans being terminated or required to have been terminated
pursuant to Section 3.2(g), whether such terminations occur before, on or after
the Effective Date (all such Liability shall be hereinafter referred to as the
“Plan Liability” and shall revert to Seller).
 
4.16 Real Property.  Except as set forth on Schedule 4.16:
 
(a) The Company (i) does not own directly or indirectly any real property or
interest therein and (ii) is not a party to, or holder of, any option, right,
offer, letter of intent or other agreement that provides for or contemplates the
purchase of any real property or interest therein by the Company (except as may
be provided in any Real Property Lease).
 
(b) Subject to the Lease Assignment, the Seattle Lease Agreement is the only
Real Property Lease to which the Company is a party. The Company does not
operate its Business at any real property or otherwise lease, license, use or
occupy any real property except at the Leased Premises that is the subject of
the Seattle Lease Agreement and the Lease Assignment.  Seller has made available
to Buyer using Data Delivery a complete and accurate copy of the Seattle Lease
Agreement and the form of Lease Assignment.
 
 
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(c) The Leased Premises comply with all applicable Legal Requirements. The
Company has not received any written notice from any insurance company that has
issued a policy of insurance with respect to any of the Leased Premises
requiring performance of any structural or other repairs or alterations to any
Improvements or claiming or threatening the cancellation of any insurance
coverage respecting any Leased Premises.
 
4.17 Compliance with Environmental Laws.  Except as set forth on Schedule 4.17:
 
(a) The Company, including in connection with its operation of the Business, has
complied with, and is in compliance with, all Environmental, Health and Safety
Requirements.
 
(b) Schedule 4.17 sets forth a list of all permits, licenses and other
authorizations that are required pursuant to Environmental, Health, and Safety
Requirements for the occupation and use of the Company facility, the Leased
Premises, the Improvements, and the operation of the Business (“Environmental
Permits”). Copies of Environmental Permits have been provided to Buyer via Data
Delivery. The Company has obtained and complied with, and is in compliance with,
all Environmental Permits. All Environmental Permits are in full force and
effect and no Proceeding is pending or, to Seller’s Knowledge, threatened,
concerning or relating to any Environmental Permit. Neither the execution and
delivery of this Agreement, nor compliance by Seller with any of the provisions
herein, will result in the termination or revocation of, or a right of
termination or cancellation under, any Environmental Permit.
 
(c) There is no Proceeding pending against the Company and the Company has not
received any written notice, report or other written information regarding any
actual or alleged violation of Environmental, Health and Safety Requirements, or
regarding any Liabilities or potential Liabilities arising under Environmental,
Health and Safety Requirements, including with respect to any release or
threatened release of Hazardous Material, investigatory, remedial or corrective
obligations, relating to the Leased Premises, any former facility, the operation
of the Business, the Company or any predecessor or Affiliate of the Company.
 
(d) None of the following exists at any property or facility currently or, since
the Seller’s Original Acquisition Date, formerly owned or operated by the
Company or, to the Knowledge of Seller, its predecessors or Affiliates: (i)
release or threat or release of Hazardous Material; (ii) underground storage
tanks, (iii) asbestos containing material in any form or condition, (iv)
materials or equipment containing polychlorinated biphenyls, or (v) landfills,
surface impoundments, or disposal areas.
 
(e) The Company has not, since the Seller’s Original Acquisition Date, and, to
the Knowledge of Seller, its predecessors have not ever, treated, stored,
disposed of, arranged for or permitted the disposal of, transported, handled, or
released any substance, including any Hazardous Material, or owned or operated
any property or facility (and no such property or facility is contaminated by
any such substance), in a manner that has given or would give rise to
Liabilities, including any Liabilities for response costs, corrective action
costs, personal injury, property damage, natural resources damages or attorney
fees, pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, the Solid Waste Disposal Act, as amended, or
any other Environmental, Health, and Safety Requirements.
 
 
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(f) Neither this Agreement nor the consummation of the Transactions will result
in any obligations for site investigation or cleanup, or notification to or
consent of government agencies or third parties, pursuant to any of the so
called “transaction triggered” or “responsible property transfer” Environmental,
Health and Safety Requirements.
 
(g) The Company has not, since the Seller’s Original Acquisition Date, and, to
the Knowledge of Seller, its predecessors have not ever, either expressly or by
operation of law, assumed or undertaken any obligation or Liability, including
any obligation or Liability for corrective or remedial action, of any other
Person relating to Environmental, Health, and Safety Requirements.
 
(h) To the Knowledge of the Seller, no facts, events or conditions relating to
the Leased Premises or the operation of the Business of the Company nor, to the
Knowledge of Seller, relating to any former facility or any of its predecessors
or Affiliates will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental, Health, and Safety
Requirements, or give rise to any other Liabilities pursuant to Environmental,
Health and Safety Requirements, including any Liabilities relating to onsite or
offsite releases or threatened releases of any Hazardous Material.
 
(i) Since the Seller’s Original Acquisition Date, the Company has not
intentionally or, to Seller’s Knowledge, accidentally, taken or failed to take
any action which has resulted in environmental harm which, if discovered, would
result in Liability or a requirement to remediate such harm.
 
(j) Seller has made available via Data Delivery true, correct and complete
copies of all environmentally-related audits, studies, analyses and results of
investigations in the Company’s possession or, to the Seller’s Knowledge, former
possession, that have been performed with respect to the Leased Premises, any
former facilities and the operation of the Business of the Company or any of its
predecessors or Affiliates.
 
4.18 Material Contracts.
 
(a) Schedule 4.18(a) contains a list of the eight (8) largest customers of, and
the eight (8) largest suppliers measured by dollar amounts to, the Company’s
Business, in each case during the twelve (12) months ended December 31, 2013 and
the eight (8) months ended August 31, 2014.  Since the date of the Most Recent
Year-End Statements, no Person listed or required to be listed on
Schedule 4.18(a) (i) has terminated or, to the Knowledge of Seller threatened to
terminate, its relationship with the Company, or (ii) has materially decreased
or limited materially or, to the Knowledge of Seller threatened to materially
decrease or limit materially, the services, supplies or materials supplied to or
purchased from the Company.
 
(b) Schedule 4.18(b) contains a list all of the following Contracts included as
part of the Assets (collectively, the “Material Contracts”): (i) all Contracts
with customers, suppliers, vendors (including advertising, content, freelancer
and distribution agreements) providing for expenditures, payments, indebtedness
of or to the Company in excess of $10,000 or more annually; (ii) all Contracts
restricting the ability of the Company to engage in any line of business or
compete with any Person; (iii) all Contracts relating to employment,
compensation or termination (including severance) of any Company employee or
independent contractor; (iv) all lease agreements (whether or real or personal
property); and (v) all other Contracts not made in the Ordinary Course of
Business.  Seller has provided to Buyer using Data Delivery true, correct and
complete copies of all written documents evidencing the items listed in
Schedule 4.18(b) (or, with respect to oral Contracts, a written description of
all material terms thereof). Each such description of an oral Material Contract
describes all of the material terms and conditions of such Material Contract.
 
 
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4.19 Contracts and Commitments.  All of the Material Contracts listed or
required to be listed in Schedule 4.18(b) (a) are in full force and effect and
are legal, valid and binding obligations of the parties thereto enforceable in
accordance with their respective terms, except as limited by the Remedies
Exceptions and (b) there has occurred no event which would constitute any breach
of or default in any provision of any such Contracts or which would permit the
acceleration or termination of any obligation of the Company or, to Seller’s
Knowledge, any other party thereto, or the creation of a Lien upon any Assets
other than Permitted Liens, or which would give rise to any of the foregoing
upon the giving of notice or lapse of time or both. Except as will be separately
identified on Schedule 4.19, no approval or consent of any Person is needed in
order that the Material Contracts continue in full force and effect immediately
following the consummation of the Transactions.
 
4.20 Related Party Transactions.  Except as set forth on Schedule 4.20, (a) the
Company is not a party to any Contract with, or indebted, either directly or
indirectly, to any of its current or former officers, directors, managers,
members or stockholders, or any of their respective relatives or Affiliates, (b)
none of such Persons is indebted to the Company or has any direct or indirect
ownership interest in, or any contractual or business relationship with, any
Person with which the Company is affiliated or with which the Company has a
business relationship, or any Person which, directly or indirectly, competes
with the Company, and (c) none of the current or former officers, directors,
managers, members or stockholders of the Company have any interest in any
Assets, including Proprietary Rights, used in or pertaining to the Business, or
in any supplier, distributor or customer of the Company.  The Company shall not
be required to honor any subscription codes issued after September 16, 2014 or
any subscriptions redeemed after December 1, 2014 pursuant to any such agreement
set forth on Schedule 4.20, and any Liability of the Company or the Buyer
related to any such subscription codes issued after September 16, 2014 or issued
not pursuant to the terms of the agreement set forth on Schedule 4.20 shall
revert to Seller (the “Affiliate Agreement Liability”).
 
4.21 Compliance with Legal Requirements; Proceedings.  Except as set forth on
Schedule 4.21:
 
(a) The Company is and has at all times since the Seller’s Original Acquisition
Date been in compliance, in all material respects, with each Legal Requirement
that is applicable to the Business or the ownership or use of any of the Assets
of the Company. No event has occurred, and no condition or circumstance exists,
that would (with or without notice or lapse of time) constitute or result in a
violation by the Company of, or a failure on the part of the Company to comply
with, any Legal Requirement, in each case with respect to the Business or any of
the Assets of the Company.  The Company has not received any written notice or
other communication from any Governmental Entity or any other Person regarding
any actual, alleged, possible or potential violation of, or failure to comply
with, any Legal Requirement that is applicable to the Business or the ownership
or use of any of the Assets of the Company and that has not been cured without
further Liability to the Company. The Company has delivered to Buyer using Data
Delivery an accurate and complete copy of each report, study, survey or other
document in the possession of or, to the Seller’s Knowledge, former possession
of the Company, that addresses or otherwise relates to the current compliance of
the Business with, or the applicability to the Business of, any Legal
Requirement.
 
 
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(b) The Company has not received notice of any inspection or investigation
relating to alleged noncompliance with or violation of the Immigration Reform
and Control Act of 1986, as amended, and all regulations promulgated thereunder
(“IRCA”), nor has the Company been warned, fined or otherwise penalized by
reason of any failure to comply with IRCA.
 
(c) The Company is not subject to any Order, and no Proceeding is pending or, to
the Knowledge of Seller, threatened against the Company or, to the Knowledge of
Seller, against any stockholder, corporate officer or director of the Company in
relation to the Business or the affairs of the Company. The Company is not
currently planning to initiate any Proceeding before any court, arbitrator or
Governmental Entity.
 
(d) The Company has not and, to the Knowledge of Seller, no Person acting on
behalf of the Company has, directly or indirectly, on behalf of or with respect
to the Company, engaged in any conduct constituting a violation of the Foreign
Corrupt Practices Act of 1977, as amended (the “FCPA”), or any similar Legal
Requirement applicable to the Company, in each case at any time since the
Seller’s Original Acquisition Date. Without limiting the generality of the
foregoing, the Company has not, and no officer, employee or agent acting for or
on behalf of the Business has, at any such time, directly or indirectly: (a)
used any corporate funds (i) to make any unlawful payment to any governmental
official or employee or (ii) to establish or maintain any unlawful or unrecorded
fund or account of any nature; (b) made any false or fictitious entry, or failed
to make any entry required by GAAP or any applicable Legal Requirement in any of
the books of account or other records of the Business; (c) made any payoff,
influence payment, bribe, kickback or unlawful payment to any Person; (d) made
any payment to any Person, or provided any favor or anything of value (whether
in the form of property or services, or in any other form) to any Person, for
the purpose of obtaining or paying for (i) favorable treatment in securing
business or (ii) any other special concession; or (e) agreed, committed or
offered (in writing or otherwise) to take any of the foregoing actions; except,
in each case, as set forth on Schedule 4.21(d); provided, that an action or
omission shall not be deemed to constitute a violation of this Section 4.21(d)
if, at the time it occurred, it was not in violation of the FCPA or any other
applicable Legal Requirement.
 
4.22 Licenses.  Schedule 4.22 sets forth a list of all Licenses of the Company
or the Business, other than any Packaged Software Products; true, correct and
complete copies of such Licenses have been provided to Buyer using Data
Delivery. The Licenses listed on Schedule 4.22 comprise all Licenses necessary
for the conduct of the Business. The Company is in compliance with all such
Licenses, which are in full force and effect and will be in full force and
effect immediately after giving effect to the Transactions. To the Knowledge of
Seller, there are no other Licenses that are material to the Company or the
Business that the Company or any employee of the Company is required to obtain.
Seller has no Knowledge of any threatened suspension, revocation or invalidation
of any such License, nor of any basis therefor.
 
 
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4.23 Labor Relations; Certain Employment Matters.
 
(a) No employees of the Company are represented by a union or other labor
organization and no representation question exists or is threatened with respect
to the employees of the Company.  There has not been (A) any union
organizational activity with respect to the employees of the Company, or (B) any
application for certification of a collective bargaining agent with respect to
the employees of the Company.  In addition, (i) unless disclosed on Schedule
4.23(a), the Company has complied, in all material respects, with all applicable
Legal Requirements affecting employment and employment practices, terms and
conditions of employment and wages and hours, and mandatory insurance
contributions, and has not engaged in any unfair labor practice; (ii) no
complaint alleging unfair labor practices against or affecting the Company has
been filed with the National Labor Relations Board and, to the Knowledge of
Seller, no such complaint against or affecting the Company is pending or
threatened; (iii) there has been no labor strike, dispute, slowdown, stoppage,
or picketing against or affecting the Company, and to the Knowledge of Seller,
no such action has been or is threatened; (iv) there has been no lockout of any
employees of the Company, and no such action is contemplated by the Company; and
(v) there has been no Proceeding against the Company arising out of or under a
collective bargaining agreement, and to the Knowledge of Seller, no such
Proceeding has been or is threatened against the Company.
 
(b) Except as set forth on Schedule 4.23(b), no agreement which is binding on
the Company restricts it from relocating or closing any location of
operations.  Except as set forth on Schedule 4.23(b), the Company has not
terminated, discontinued, closed or disposed of any facility or other business
operation, except for any closed facility for which a comparable substitute
facility was thereafter opened as specifically described on Schedule 4.23(b), or
laid off any employees, or implemented any early retirement or separation
program or a program providing “early retirement window benefits” within the
meaning of Treas. Reg. §1.401(a)-4, and no such action is contemplated by the
Company.
 
4.24 Employee Benefit Plans.
 
(a) Each Employee Benefit Plan is set forth on Schedule 4.24(a). Seller has made
available to Buyer using Data Delivery the following documents with respect to
each Employee Benefit Plan, as applicable: (i) a copy of the governing plan
documents, including any trust agreement or insurance policies (ii) the most
recent summary plan description and any summary of any modification thereto and
(iii) the three most recent annual reports (Form 5500 series and all schedules
attached thereto).
 
 
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(b) Each Employee Benefit Plan has been maintained in accordance with its terms,
and conforms to, and its administration and operation is in compliance with, all
applicable Legal Requirements, including ERISA and the Code.
 
(c) Except as set forth on Schedule 4.24(c), the Company and its ERISA
Affiliates have not offered and are not obligated to provide health benefits to
any current or former employee, officer, or director (or dependent thereof)
under any retiree or post-employment medical or other health or welfare benefit
plan, other than group health plan continuation coverage pursuant to Section
4980B of the Code or Part 6 of Subtitle B of Title I of ERISA.
 
(d) No Company nor any ERISA Affiliate contributes to or has ever contributed
to, or has any Liability or contingent Liability with respect to, a
Multiemployer Plan, a “multiple employer plan” (within the meaning of Section
210 of ERISA or Section 413 of the Code), a “pension plan” within the meaning of
Section 3(2) of ERISA that is subject to Title IV of ERISA or Sections 412 or
430 of the Code, or a “welfare benefit fund” (within the meaning of Section 419
of the Code).
 
(e) Except as set forth on Schedule 4.24(e), no Employee Benefit Plan is subject
to the laws of any jurisdiction other than the United States or any State
thereof.
 
(f) No action, suit or claim (excluding routine claims for benefits incurred in
the ordinary course) has been brought or is pending or, to the Knowledge of
Seller, threatened against or with respect to any Employee Benefit Plan or any
fiduciary thereof, and there exists no condition or set of circumstances which
could reasonably be expected to subject the Company to any Liability as a result
of noncompliance under the terms of or with respect to any Employee Benefit Plan
or under ERISA, the Code, or any other applicable Legal Requirement. There are
no audits, inquiries or other Proceedings pending or, to the Knowledge of
Seller, threatened by the Internal Revenue Service or Department of Labor with
respect to any Employee Benefit Plan.
 
(g) Except as set forth in Schedule 4.24(g), neither the execution and delivery
of this Agreement nor the consummation of the Transactions (whether alone or
together with another event such as termination of employment) will (i) entitle
any individual to severance pay, (ii) accelerate the time of payment or vesting
under any Employee Benefit Plan or other agreement, (iii) trigger any funding
(though a grantor trust or otherwise) of any compensation, severance or other
benefit under any Employee Benefit Plan or other agreement to which the Company
is a party, or (iv) increase the amount of compensation or benefits due to any
individual. No amount paid or payable pursuant to the terms of any Employee
Benefit Plan or any agreement or arrangement in connection with the consummation
of the Transactions (either alone or with another event) will be an “excess
parachute payment” within the meaning of Section 280G of the Code. The Company
does not have any obligation to make a “gross-up” or similar payment in respect
of any Taxes that may become payable under Section 4999 of the Code.  The
Company will have no Liability relating to any items listed in Schedule 4.24(g)
after Closing.
 
 
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(h) Except as set forth on Schedule 4.24(h), the Companies has correctly
classified all individuals who directly or indirectly perform services for the
Company for purposes of each Employee Benefit Plan and all applicable Legal
Requirements, including ERISA and the Code.
 
(i) Each Employee Benefit Plan that is a “nonqualified deferred compensation
plan” (within the meaning of Section 409A(d)(1) of the Code) is in compliance
with Section 409A of the Code and all guidance issued by the IRS or United
States Department of Treasury.

 
4.25 Proprietary Rights.
 
(a) Except as set forth on Schedule 4.25(a), (i) the Company has not interfered
with, infringed upon, misappropriated, or violated any Proprietary Rights of
third parties, and the Company has not received any charge, complaint, claim,
demand, or notice alleging any such interference, infringement,
misappropriation, or violation (including any claim that the Company must
license or refrain from using any Proprietary Rights of any third party); and
(ii) to the Knowledge of Seller, no third party has interfered with, infringed
upon, misappropriated, or violated any Proprietary Rights of the Company.
 
(b) Schedule 4.25(b) identifies each (i) patent or registration which has been
issued to the Company with respect to any of its Proprietary Rights, (ii)
pending patent application or application for registration which the Company has
made with respect to any of its Proprietary Rights, (iii) copyright or work of
authorship, whether registered or not, owned by the Company and (iv) license,
agreement, permission or other Contract which the Company has granted to any
third party with respect to any of its Proprietary Rights (together with any
exceptions). Seller has provided to Buyer using Data Delivery true, correct and
complete copies of all such patents, registrations, applications, copyrights and
works of authorship, and all such licenses, agreements, permissions and
Contracts (all, as amended to date) for the Company. Schedule 4.25(b) also
identifies each trade name or unregistered trademark, service mark, corporate
name and Internet domain name owned by the Company, along with all other
Proprietary Rights owned by the Company. With respect to each item identified in
Schedule 4.25(b), unless otherwise set forth on Schedule 4.25(b):
 
(1) The Company possesses all right, title, and interest in and to the item,
free and clear of any Lien, other than Permitted Liens;
 
 
(2) to the Knowledge of Seller the item is not subject to any outstanding Order;
 
 
(3) no Proceeding is pending or, to the Knowledge of Seller, is threatened which
challenges the legality, validity, enforceability, use, or ownership of the
item; and
 
 
(4) The Company has not agreed to indemnify any Person for or against any
interference, infringement, misappropriation, or other conflict with respect to
the item.
 
 
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(c) Schedule 4.25(c) identifies each Proprietary Right, including without
limitation each copyright and work of authorship, that any third party owns and
that the Company uses pursuant to license, sublicense, agreement, permission or
other Contract in connection with the Business, other than any Packaged Software
Products. Seller has provided to Buyer using Data Delivery correct and complete
copies of all such licenses, sublicenses, agreements, and permissions (all, as
amended to date). With respect to each such item required to be identified in
Schedule 4.25(c):
 
(1) the license, sublicense, agreement, or permission covering the item is
legal, valid, binding, enforceable, and in full force and effect, except as may
be limited by the Remedies Exceptions;
 
 
(2) the Company is not and, to the Knowledge of Seller, no other party to the
license, sublicense, agreement, or permission is in breach or default, and no
event has occurred which with notice or lapse of time would constitute a breach
or default by the Company thereunder, or permit termination, modification, or
acceleration by any other party thereto;
 
 
(3) the Company has not and, to the Knowledge of Seller, no other party to the
license, sublicense, agreement, or permission has repudiated any provision
thereof;
 
 
(4) the Company has not granted any sublicense or similar right with respect to
the license, sublicense, agreement, or permission; and
 
 
(5) no loss or expiration of the item is threatened, pending, or reasonably
foreseeable, except for patents expiring at the end of their statutory terms
(and not as a result of any act or omission by the Company, including without
limitation, a failure by the Company to pay any required maintenance fees).
 
 
(d) Without limiting the generality of any of the foregoing provisions of this
Section 4.25, the Company owns or possesses sufficient legal rights to use all
Proprietary Rights material to or used in the Business and, to the Knowledge of
Seller, there is no threatened or reasonable foreseeable loss or expiration of
any such Proprietary Rights.  All Proprietary Rights disclosed on the Disclosure
Schedule and in the Data Site are owned by, or licensed to, the Company.
 
4.26 Insurance.  All insurance insuring the Company or its directors, officers,
employees or Assets against casualty, liability or other risks, has been
provided under the Seller’s policies and, after Closing, the Company will no
longer be named as an insured under such policies.
 
4.27 Bank Accounts.  Schedule 4.27 sets forth the account numbers and names of
each bank, broker or other depository institution at which the Company maintains
a depository account.
 
4.28 Broker’s Fees. Other than Seller’s Liability to Ridgecrest Capital
Partners, neither Seller nor the Company has any Liability to pay any fees or
commissions to, nor used the services of, any broker, finder, financial advisor
or agent (other than attorneys’ fees and fees of accountants) with respect to
the Transactions.
 
 
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4.29 Disclosure.  Except for the representations and warranties of Seller in
this Agreement, corresponding sections of the Disclosure Schedule, and the other
Ancillary Agreements, neither the Seller nor the Company has made or makes any
other representation or warranty, either written or oral, express or implied, at
law or in equity, on behalf of the Company or the Seller, as to the accuracy or
completeness of any information regarding the Company furnished or made
available to Buyer (including the Management Presentation dated December 2013
delivered to Buyer by Data Delivery), or any representation or warranty arising
from statute or otherwise.  Any such other representations or warranties are
hereby expressly disclaimed.
 
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
 
 
Buyer represents and warrants to Seller that the statements contained in this
ARTICLE V are true, correct and complete as of the Effective Date:
 
5.1 Organization.  Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts.
 
5.2 Required Consents; Non-Contravention; Authorization.  The execution,
delivery and performance of this Agreement and the other Buyer Agreements and
the consummation of the Transactions: (i) are within the power and authority of
Buyer, (ii) do not require the consent or approval of any Person, (iii) to
Buyer’s Knowledge, do not require the consent or approval of or filing with any
Governmental Entity, (iv) will not conflict with, result in the breach of, or
constitute a violation of any of the terms, conditions or provisions of the
certificate of organization or operating agreement of Buyer, (v) to Buyer’s
Knowledge, will not be in violation of any Legal Requirement, and (vi) to
Buyer’s Knowledge, will not conflict with, result in the breach of, or
constitute a default under any Contract to which Buyer is a party or is bound or
to which any of its Assets is subject. This Agreement and the other Buyer
Agreements have been duly authorized, executed and delivered by Buyer. This
Agreement and the other Buyer Agreements, upon execution by Buyer, constitute
the legal, valid and binding obligations of Buyer, enforceable against Buyer in
accordance with their terms, except as limited by the Remedies Exceptions.
 
5.3 Proceedings.  No Proceeding before any court or other Governmental Entity is
pending or, to Buyer’s Knowledge, threatened wherein an unfavorable judgment,
decree, injunction or order would prevent Buyer from the carrying out of this
Agreement or any of the Transactions.
 
5.4 Broker’s Fees.  Buyer has no Liability to pay any fees or commissions to any
broker, finder, financial advisor or agent (other than attorneys’ fees and fees
of accountants) with respect to the Transactions.
 
5.5 Independent Analysis.  Buyer acknowledges that it has (a) had an opportunity
to discuss the business, management and financial affairs of the Company with
officers of the Company and representatives of Seller, (b) conducted to its own
satisfaction an independent investigation of the Company including the financial
condition, results of operations, Assets, Liabilities and projected operations
of the Business and (c) in making its determination to proceed with the
Transactions, Buyer has relied solely on the results of such investigation and
the representations, warranties, covenants and agreements of Seller expressly
set forth in this Agreement, the corresponding sections of the Disclosure
Schedule, and the Ancillary Agreements. Such representations and warranties by
Seller constitute the sole and exclusive representations and warranties of
Seller to Buyer in connection with the Transactions, and Buyer acknowledges and
agrees that Seller is not making any representation or warranty whatsoever,
express or implied, beyond those expressly given in this Agreement and the
Ancillary Agreements.

 
 
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ARTICLE VI 
  INDEMNIFICATION
 
6.1 Seller Indemnities.  Subject to the limitations set forth in this ARTICLE
VI, Seller shall indemnify, defend and hold harmless Buyer, Buyer’s Affiliates
(including the Company) and the respective officers, directors and employees of
the foregoing, together with the heirs, administrators, executors, trustees and
personal representatives of any of the foregoing who are natural persons
(collectively, the “Buyer Indemnified Parties”), from, against and with respect
to any Loss arising out of or attributable to the following, without
duplication:
 
(a) any inaccuracy in any representation (or omission in any corresponding
schedule) or breach of any warranty of Seller contained in this Agreement
(including corresponding sections of the Disclosure Schedule) or the other
Ancillary Agreements;
 
(b) any failure by Seller to perform or observe, or to have performed or
observed, in full, any covenant or agreement to be performed or observed by
Seller under this Agreement or the other Ancillary Agreements;
 
(c) the Pre-Closing Taxes;
 
(d) the Plan Liability;
 
(e) the Mulcahy Matter;
 
(f) the Affiliate Agreement Liability;
 
(g) any Liability arising out of the Seattle Lease Agreement (including the
Lease Assignment); or
 
(h) any claim, demand or allegation by any Governmental Entity or other Person
party arising out of or attributable to any of the foregoing.
 
6.2 Buyer Indemnities.  Subject to the limitations set forth in this ARTICLE VI,
Buyer shall indemnify, defend and hold harmless Seller, Seller’s Affiliates and
the respective officers, directors and employees of the foregoing, together with
the heirs, administrators, executors, trustees, beneficiaries and personal
representatives of any of the foregoing who are natural persons (the “Seller
Indemnified Parties”), from, against and with respect to any Loss arising out of
or attributable to the following, without duplication:
 
 
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(a) any inaccuracy in any representation or breach of any warranty of Buyer
contained in this Agreement (or omission in any corresponding schedule) or the
other Ancillary Agreements;
 
(b) any failure by Buyer to perform or observe, or to have performed or
observed, in full, any covenant or agreement to be performed or observed by
Buyer under this Agreement or the other Ancillary Agreements; or
 
(c) any claim, demand or allegation by any Governmental Entity or other Person
arising out of or attributable to any of the foregoing.
 
6.3 Escrow Amount as Initial Source of Payment.  The Parties agree and
acknowledge that the Escrow Amount shall not be the Buyer Indemnified Parties’
exclusive method of receiving indemnification from Seller pursuant to this
ARTICLE VI, but that no amount shall be payable by Seller to any Buyer
Indemnified Party respecting indemnification from Seller until the Escrow Amount
has been reduced to zero.
 
6.4 Survival of Representations and Warranties.  The representations and
warranties of Seller and Buyer contained in this Agreement (including the
Disclosure Schedule) and the other Ancillary Agreements, and the obligations of
Seller and Buyer pursuant to this ARTICLE VI, shall, subject to the terms of
this Section 6.4, survive the Effective Date. Seller’s obligations pursuant to
Section 6.1(a) shall survive with respect to each representation and warranty
made by Seller in the Seller’s Agreements for the same period of time as that
during which the associated representation or warranty survives.  Buyer’s
obligations pursuant to Section 6.2(a) shall survive with respect to each
representation and warranty made by Buyer in the Buyer’s Agreements for the same
period of time as that during which the associated representation or warranty
survives. Notwithstanding the expiration of any period limiting the duration of
Seller’s obligations under Section 6.1(a), such obligations shall continue with
respect to all Claims as to which Buyer has given Seller a Claim Notice prior to
such expiration. Notwithstanding the expiration of any period limiting the
duration of Buyer’s obligations under Section 6.2(a), such obligations shall
continue with respect to all Claims as to which Seller has given Buyer a Claim
Notice prior to such expiration. Except for the longer expiration time periods
described below respecting Fundamental Representations, and notwithstanding
anything to the contrary contained in this Agreement or in the Ancillary
Agreements, and except as specifically provided below, all representations and
warranties of Seller contained in Article IV of this Agreement and in the other
Seller Agreements and all representations and warranties of Buyer contained in
Article V of this Agreement and in the Buyer Agreements shall expire at 11:59 PM
Pacific Time on the date that is eighteen (18) months after the Effective Date;
provided, that (i) the Group I Fundamental Representations shall expire at 11:59
PM Pacific Time on the 30th day following the expiration of all applicable
statute of limitations periods (including any extensions), (ii) the Group II
Fundamental Representations shall expire at 11:59 PM Pacific Time on the date
that is thirty-six (36) months after the Effective Date and (ii) the Group III
Fundamental Representations, as well as any fraudulent representations or
intentional misrepresentations, shall not expire and shall continue forever to
the extent permitted by law.  Except as otherwise specifically provided in this
Agreement or the Ancillary Agreements, as the case may be, all covenants
contained in this Agreement and the Ancillary Agreements to be performed after
the Closing shall survive the Closing in accordance with their respective
terms.  The Parties agree that no Claim may be brought in respect of any
inaccuracy of a representation or a breach of a warranty or covenant contained
in this Agreement or any Ancillary Agreement after the expiration of the
survival period applicable to such representation, warranty or covenant, as set
forth in this Section 6.4.  Notwithstanding anything herein to the contrary,
Seller’s indemnification obligations set forth above under Section 6.1(c),
6.1(d), 6.1(e), 6.1(f), 6.1(g) and 6.1(h) (but only as 6.1(h) relates to Section
6.1(c), 6.1(d), 6.1(e), 6.1(f) or 6.1(g)) shall not expire.
 
 
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6.5 Limitations on Indemnities.  Except as otherwise specifically provided in
this Agreement, no Buyer Indemnified Party shall be entitled to make any Claim
against Seller under Section 6.1(a) (a) until such time as the aggregate of all
Losses sustained by the Buyer Indemnified Parties under Section 6.1(a) exceeds
$25,000 (the “Threshold Amount”), and then any Claim may include such Threshold
Amount, or (b) for an aggregate amount in excess of $1,000,000 (the
“Indemnification Cap”); provided, that the foregoing limitations shall not apply
to any Claim for indemnification under Section 6.1(a) which arises out of or
relates to (i) the breach or inaccuracy of any Group I Fundamental
Representation or any Group III Fundamental Representation (or omission in any
corresponding schedule), and the Indemnification Cap for any such breaches,
omissions and inaccuracies shall be $5,000,000 in the aggregate, or (ii) fraud
or an intentional misrepresentation; provided, further, that the Indemnification
Cap for any breaches and inaccuracies of Group II Fundamental Representations
(and omissions in any corresponding schedules) shall be $2,500,000 in the
aggregate.  Breaches and inaccuracies of Fundamental Representations (and
omissions in any corresponding schedules) shall be subject to their specific
Indemnification Caps as set forth above, and any such breaches, omissions and
inaccuracies shall not be considered when calculating the $1,000,000
Indemnification Cap for other breaches, omissions and
inaccuracies.  Notwithstanding anything herein to the contrary, Seller’s
indemnification obligations set forth above under Section 6.1(c), 6.1(d),
6.1(e), 6.1(f), 6.1(g) and 6.1(h) (but only as 6.1(h) relates to Section 6.1(c),
6.1(d), 6.1(e), 6.1(f) or 6.1(g)) shall not be subject to the Threshold Amount
or any Indemnification Cap.
 
6.6 Claim Notice to Indemnifying Party.  If either any of the Buyer Indemnified
Parties, on the one hand, or any of the Seller Indemnified Parties, on the other
hand, as the case may be (the “Indemnified Party”), has a Claim against Buyer or
Seller, as the case may be (the “Indemnifying Party”), Buyer, on behalf of the
Buyer Indemnified Parties, and Seller, on behalf of the Seller Indemnified
Parties, shall promptly give the Indemnifying Party a Claim Notice (including
any Claim of the Buyer Indemnified Parties for any Losses below the Threshold
Amount); provided, that the failure of any Indemnified Party to give the Claim
Notice promptly shall not affect such Indemnified Party’s rights under this
ARTICLE VI except to the extent such failure is actually prejudicial to the
Indemnifying Party. Should an Indemnified Party be served with a Proceeding with
regard to a Third-Party Claim, the Indemnified Party must include with the Claim
Notice to the Indemnifying Party a copy of the complaint or other similar court
or governmental filings.  Notwithstanding the foregoing, Buyer shall not be
required to provide Seller with a Claim Notice with respect to the Mulcahy
Matter but shall nevertheless promptly notify Seller to any Losses arising
therefrom or relating thereto and indemnifyable by Seller under Section 6.1(e).
 
6.7 Direct Claims.  After the giving of any Claim Notice that does not involve a
Third-Party Claim, the amount of indemnification to which an Indemnified Party
shall be entitled under this ARTICLE VI shall be determined: (i) by the written
agreement between the Indemnified Party and the Indemnifying Party;
(ii) pursuant to the instructions of a court of competent jurisdiction resulting
from a final, non-appealable determination by such court regarding a Claim set
forth in such Claim Notice; or (iii) by any other means to which the Indemnified
Party and the Indemnifying Party shall agree. The Indemnified Party shall have
the burden of proof in establishing the amount of Losses suffered by it. All
amounts due to the Indemnified Party as so finally determined shall be paid by
Wire Transfer promptly following any such final determination (and, in any
event, within five (5) Business Days).
 
 
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6.8 Third Party Claims.
 
(a) After the giving of any Claim Notice that involves a Third-Party Claim, the
Indemnifying Party, if it so elects, may assume and control the defense thereof
(and shall consult with the Indemnified Party with respect thereto), including
the employment of counsel reasonably satisfactory to the Indemnified Party at
the Indemnifying Party’s sole cost and expense (it being understood that the
Indemnifying Party’s counsel used in connection with this Agreement shall be
deemed satisfactory); provided, that the Indemnifying Party may so assume the
defense of a Third-Party Claim only if it delivers written notice to the
Indemnified Party acknowledging responsibility for such Third-Party Claim and
all Losses payable in connection therewith; provided further, that if a court
later determines that the Indemnified Party was not entitled to indemnification
in respect of such Third-Party Claim, then the Indemnified Party shall pay back
to the Indemnifying Party any amounts paid by the Indemnifying Party in respect
thereof. The Indemnifying Party shall lose its right to contest, defend,
litigate and settle the Third-Party Claim if (i) it shall fail to diligently
contest the Third-Party Claim, (ii) Buyer believes, reasonably and in good
faith, that any Third-Party Claim is having or could reasonably be expected to
have a material adverse effect on the business or assets, affairs or condition
(financial or otherwise) of Buyer or any of its Affiliates (including the
Company), (iii) the Third-Party Claim is (or arises in connection with) a
criminal Proceeding, or (iv) an actual conflict of interest exists between the
Indemnifying Party and the Indemnified Party that precludes effective joint
representation.  For the avoidance of doubt, the Parties agree that the
existence of obligations under the indemnity provided in this Article VI does
not give rise to an actual conflict of interest within the meaning of the
foregoing clause (iv).
 
(b) With respect to any Third-Party Claim in which the Indemnifying Party has
assumed the defense thereof, the Indemnified Party shall have the right to
employ counsel separate from counsel employed by the Indemnifying Party in such
action and to participate in the defense thereof, but the fees and expenses of
such counsel employed by the Indemnified Party shall be at the expense of the
Indemnified Party unless the employment thereof has been specifically authorized
by the Indemnifying Party in writing in the Indemnifying Party’s sole
discretion. If the Indemnifying Party elects to assume and control the defense
of a Third-Party Claim, it will provide notice thereof at any time after the
Indemnified Party has given notice of the matter. The Indemnifying Party shall
not be liable for any settlement of any Third-Party Claim, the defense of which
it has elected to assume, if such settlement is effected without the written
consent of the Indemnifying Party (not to be unreasonably withheld, delayed or
conditioned). The Indemnified Party shall not be liable for any settlement of
any Third-Party Claim by the Indemnifying Party, without the Indemnified Party’s
written consent, which consent may not be unreasonably withheld, conditioned or
delayed, unless the relief provided under such settlement is solely for monetary
damages that are paid by the Indemnifying Party.
 
 
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(c) If an Indemnified Party is entitled to indemnification against a Third-Party
Claim, and the Indemnifying Party fails to accept a tender of the defense of a
Third-Party Claim pursuant to this Section 6.8, or if, in accordance with the
foregoing, the Indemnifying Party shall lose its right to contest, defend,
litigate and settle such a Third-Party Claim, the Indemnified Party shall have
the right, without prejudice to its right of indemnification hereunder, in its
discretion exercised in reasonable good faith and upon the advice of counsel, to
contest, defend and litigate such Third-Party Claim, and may settle such
Third-Party Claim, either before or after the initiation of litigation, at such
time and upon such terms as the Indemnified Party deems fair and reasonable;
provided, that at least five days prior to any such settlement, written notice
of its intention to settle is given to the Indemnifying Party. If, pursuant to
the preceding sentence, the Indemnified Party so contests, defends, litigates or
settles a Third-Party Claim for which it is entitled to indemnification
hereunder, the Indemnified Party shall be reimbursed by the Indemnifying Party
for the reasonable attorneys’ fees and other reasonable expenses of contesting,
defending, litigating and settling the Third-Party Claim which are incurred from
time to time, promptly following the presentation to the Indemnifying Party of
itemized bills for such attorneys’ fees and other expenses. If, with respect to
any claim for indemnification under Section 6.1, a Buyer Indemnified Party is
the Indemnified Party hereunder, any amounts paid to settle a Third-Party Claim
or in reimbursing the Indemnified Party pursuant to this Section 6.8 shall first
be reimbursed, when and as incurred, from the Escrow Amount.
 
(d) The Indemnifying Party and Indemnified Party agree to reasonably cooperate
with each other in connection with the defense, negotiation or settlement of any
Third-Party Claim. Such cooperation shall include the retention and the
provision of records and information which is reasonably relevant to such
Third-Party Claim, and making employees available in a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder.
 
(e) Notwithstanding any provision in this Section 6.8 to the contrary, Seller
shall assume and control the defense of and any settlement of any and all Claims
relating to the Mulcahy Matter and the Seattle Lease Agreement (including the
Lease Assignment).
 
6.9 Miscellaneous Seller Indemnity Provisions. 
 
(a) Seller’s indemnity obligations under this ARTICLE VI are intended solely for
the benefit of the Buyer Indemnified Parties, and are in no way intended to, nor
shall they, constitute an agreement for the benefit of, or be enforceable by,
any other Person.
 
(b) For all purposes of this ARTICLE VI, when determining the amount of Losses
associated with the breach or inaccuracy of a representation or breach of a
warranty (or omission in any corresponding schedule), any material adverse
effect or other materiality qualifier contained in any such representation or
warranty will be disregarded.
 
6.10 Mitigation and Insurance.
 
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(a) Each of the Parties agrees to take all reasonable steps to mitigate their
respective Losses and the Losses of their respective Indemnified Parties upon
and after becoming aware of any event or condition which could reasonably be
expected to give rise to any Losses that are indemnifiable hereunder.
 
(b) If any event shall occur that would otherwise entitle an Indemnified Party
to assert a Claim for indemnification under Section 6.1 or Section 6.2, no
Losses shall be deemed to have been sustained by such Indemnified Party to the
extent of any proceeds (net of collection costs or any deductible) received by
such Indemnified Party from any insurance policies maintained by or on behalf of
such Indemnified Party with respect to such Losses.  The Parties will use
commercially reasonable efforts to pursue and cause their respective Indemnified
Parties to pursue a claim or claims under such insurance policies; provided,
however, that no Party or Indemnified Party shall have an obligation to commence
litigation to recover such proceeds; provided, further, that, for the avoidance
of doubt, any additional Losses incurred by an Indemnified Party by reason of
its pursuit of proceeds (including increases in insurance premiums) under any
insurance policies pursuant to this Section 6.10(b) shall be indemnified by the
Indemnifying Party.
 
6.11 Exclusive Remedies; Waiver of Certain Losses.  Except for remedies that
cannot be waived as a matter of law and injunctive and provisional relief, this
ARTICLE VI shall (in the absence of fraud or intentional misrepresentation) be
the sole and exclusive remedy for breaches of this Agreement (including any
covenant, obligation, representation or warranty contained in this Agreement or
in any certificate delivered pursuant to this Agreement) or otherwise in respect
of the sale of the Shares contemplated hereby. Notwithstanding anything to the
contrary in this Agreement (including in Section 6.1 or 6.2), in no event shall
any Party be liable for special, punitive, exemplary, incidental, consequential
or indirect damages, lost profits, diminution in value, damage to reputation or
loss of goodwill, whether based in contract, tort, strict liability or
otherwise, and no “multiple of profits” or “multiple of cash flow” or similar
methodology shall be used in calculating the amount of any Losses; provided,
however, that this sentence shall not limit a Party’s right to recover under
this Article VI for any such Losses to the extent such Party is required to pay
such damages to a third party in connection with a matter for which such Party
is otherwise entitled to indemnification pursuant to this Article VI.

 
ARTICLE VII
POST CLOSING COVENANTS
 
7.1 Tax Covenants.
 
(a) Except as otherwise provided in Section 7.10(c), Buyer shall prepare or
cause to be prepared and filed all federal and state income Tax Returns required
to be filed by the Company for taxable periods ending prior to or on the
Effective Date (“Pre-Closing Tax Periods”) which are to be filed after the
Effective Date (the “Seller’s Returns”). Each such Seller’s Return shall be
prepared in a manner consistent with the Company’s past practice except as
otherwise required by applicable Legal Requirements. Buyer shall submit each of
the Seller’s Returns to Seller at least fifteen (15) days prior to the due date
for the filing of such Seller’s Returns (taking into account any valid
extensions of time to file) and Seller shall have the right to review and
comment on such Seller’s Returns, and thereafter, the Company shall reflect such
comments from Seller on such Seller’s Returns to the extent such comments are
consistent with the standard set forth in the previous sentence, which shall be
determined in Buyer’s reasonable sole discretion. Buyer shall make available or
shall cause the Company to make available to Seller (and to the accountants and
attorneys of Seller) any and all books and records and other documents and
information in its possession or control relating to the Company requested by
such Persons in connection with Seller’s review of any Seller’s Returns. Buyer
will cause duly authorized officers of the Company (or any successor thereof) to
timely execute such Seller’s Returns. Seller shall be responsible for all Taxes
of the Company for all Pre-Closing Tax Periods, including Taxes resulting from
any Contest, and Seller shall timely pay, or cause to be paid, any Taxes shown
as due on such Tax Returns.
 
 
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(b) Except as otherwise provided in Section 7.10(c), Buyer shall cause to be
prepared and filed all federal and state income Tax Returns required to be filed
by the Company for taxable periods beginning prior to and ending after the
Effective Date (the “Straddle Period Returns”). Each such Straddle Period Return
shall be prepared in a manner consistent with the Company’s past practice except
as otherwise required by Legal Requirements. Buyer shall submit each such
Straddle Period Return to Seller at least fifteen (15) days prior to the due
date for the filing of such Straddle Period Return (taking into account any
valid extensions of time to file) and Seller shall have the right to review and
comment on such Straddle Period Return, and Buyer shall consider such comments
in good faith but shall have no obligation to include any such comments in such
Straddle Period Return so long as such Straddle Period Return was prepared in
the manner required hereunder. Seller shall be responsible for all Taxes of the
Company allocable to the portion of the Straddle Period ending on the Effective
Date, including Taxes resulting from any Contest, and Seller shall timely pay,
or cause to be paid, any Taxes shown as due on such Straddle Period Returns.
 
(c) For purposes of apportioning liability for Taxes in connection with any
taxable period beginning prior to and ending after the Effective Date (i) in the
case of Taxes based upon or related to income or receipts, the amount of any
such Taxes allocable to the portion of the taxable period ending on the
Effective Date shall be determined based on an interim closing of the books as
of the close of business on the Effective Date; and (ii) in the case of Taxes
other than Taxes described in clause (i), the amount of such Taxes allocable to
the portion of the taxable period ending on the Effective Date shall be the
product of (x) the amount of such Taxes for the entire period and (y) a fraction
the numerator of which is the number of calendar days in the period ending with
the Effective Date and the denominator of which is the number of calendar days
in the entire period. Notwithstanding the foregoing, for purposes of this
Agreement, the taxable income of the Company for taxable periods (or portions
thereof) ending on or before the Effective Date shall not be adversely affected
by any items, events or transactions outside of the Ordinary Course of Business
occurring on the Effective Date after the Closing, other than the Transactions.
 
(d) Buyer and Seller shall promptly notify the other following receipt of any
notice of audit, examination or other Proceeding (a “Contest”) relating to any
Seller’s Return, Straddle Period Return, or any other federal or state Tax
Return filed on or before the Effective Date (together with all Seller’s Returns
and Straddle Period Returns , the “Prior Period Returns”). Seller shall have the
right at its expense to control any and all Contests relating to any Prior
Period Return that is not a Straddle Period Return, provided, that Buyer shall
have the right to participate in any Contest, and Seller shall not agree to the
resolution of any Contest relating to a Prior Period Return or file an amended
Prior Period Return without Buyer’s consent (which consent shall not be
unreasonably withheld, conditioned or delayed).  Buyer shall have the right at
its expense to control any and all Contests relating to any Straddle Period
Return.  Buyer shall make available or shall cause the Company to make available
to Seller any and all books and records of the Company and other documents
requested by Seller and shall make available employees of the Company to enable
Seller to defend any Contest with respect to any Prior Period Return that is not
a Straddle Period Return and shall cooperate with Seller in defense of such
Contests. Seller shall make available any and all books, records and other
documents requested by Buyer in connection with any Contest and shall cooperate
with Buyer in defense of such Contests.
 
 
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(e) Notwithstanding anything herein to the contrary, except as required by any
Legal Requirements, Buyer shall not file any amended Tax Returns of the Company
for any taxable periods that end on or prior to the Effective Date without first
obtaining the consent of Seller, which consent shall not be unreasonably
withheld, conditioned or delayed.
 
(f) All transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other similar fees and
charges (including any penalties and interest) incurred in connection with
consummation of the Transactions shall be borne fifty percent (50%) by Buyer and
fifty percent (50%) by Seller.
 
7.2 Noncompetition.
 
(a) During the Restricted Period:
 
(1) Seller will not, directly or indirectly, or as a stockholder, partner,
member, manager, employee, consultant or other owner or participant in any
Person other than any of the Affiliated Companies, and will not allow any
Affiliate to, engage in or assist any other Person to engage in the Covered
Business anywhere in the Covered Area (except by virtue of the passive ownership
of less than five percent (5%) of the outstanding stock of any publicly-traded
corporation);
 
 
(2) Seller will not, directly or indirectly, and will not allow any Affiliate
to, solicit or endeavor to entice away from the Affiliated Companies, or offer
employment or a consulting position to, any Person who is, or was within the one
year period prior thereto, an employee of or consultant to the Affiliated
Companies other than employees whose employment or consulting engagement is
terminated by the Company;
 
 
(3) Seller will not, directly or indirectly, and will not allow any Affiliate
to, solicit or endeavor to entice away from the Affiliated Companies, or
endeavor to reduce the business conducted with the Affiliated Companies by, any
Person who is a customer or client of, supplier, vendor or service provider to,
or other Person having business relations with, the Affiliated Companies; and
 
 
(4) Seller will not, directly or indirectly, and will not permit any Affiliate
to, publish or communicate to any Person any Disparaging remarks, comments or
statements concerning the Affiliated Companies (or any of them) or any
management-level employee of any of the Affiliated Companies (provided, that the
foregoing shall not preclude Seller or Affiliate of Seller from making truthful
statements in connection with any Proceeding).
 
 
 
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(b) For purposes of this Section 7.2, the following terms shall have the
following meanings:
 
(1) “Affiliated Companies” shall mean the Company and Buyer and all of their
respective successors and assigns;
 
 
(2) “Covered Area” means (A) anywhere in the United States, United Kingdom,
Canada and Australia and (B) anywhere else in the world where the Company does
business or plans to do business, as disclosed to Seller at or prior to the date
of this Agreement;
 
 
(3) “Covered Business” means the Business and any related business in which the
Affiliated Companies are engaged or planning to engage at the Closing, as
disclosed to Seller at or prior to the date of this Agreement;
 
 
(4) “Disparaging” remarks, comments or statements are those that impugn the
character, honesty, integrity, reputation, ethics, morality or business acumen
or abilities of the Person being disparaged.
 
 
(5)  “Restricted Period” means the period commencing as of the Closing and
ending on the four (4) year anniversary of the Closing.
 
 
7.3 Injunctive Relief.  Seller acknowledge that any breach or threatened breach
of the provisions of Sections 7.2 or 8.9(b) of this Agreement will cause
irreparable injury to Buyer and its Affiliates (including, after the Closing,
the Company) for which an adequate monetary remedy does not exist. Accordingly,
in the event of any such breach or threatened breach, Buyer and its Affiliates
shall be entitled, in addition to the exercise of other remedies, to seek and
(subject to court approval) obtain injunctive and other equitable relief,
restraining Seller and its Affiliates from committing such breach or threatened
breach. The right provided under this Section 7.3 shall be in addition to, and
not in lieu of, any other rights and remedies available to Buyer and its
Affiliates.
 
7.4 Reasonable Restrictions.  Seller (a) has carefully read and understands all
of the provisions of this Agreement and has had the opportunity for this
Agreement to be reviewed by counsel, (b) acknowledges that the duration,
geographical scope and subject matter of Sections 7.2, 7.3 and 8.9(b) are
reasonable and necessary to protect the goodwill, customer relationships,
legitimate business interests, trade secrets and confidential and proprietary
information of the Business, (c) acknowledges that Buyer would not have closed
the Transactions without the benefits contained in this Agreement, and (d)
understands that this Agreement is assignable by Buyer and shall inure to the
benefit of Buyer’s successors and assigns.
 
7.5 Certain Ongoing Obligations.  Effective as of the Closing, Seller shall
assume sole and exclusive responsibility for continuing the payments and other
arrangements described on Schedule 7.5, and none of Buyer, the Company or any of
their respective Affiliates shall have any obligation whatsoever with respect
thereto.
 
 
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7.6 Certain Accounts Receivable.  Effective as of the Closing, the Company
assigns to Seller and Seller assumes from the Company all proceeds relating to
the accounts receivable set forth on Schedule 7.6 (the “Assigned Receivables”),
and none of the Company, the Buyer or any of their respective Affiliates shall
have any benefit whatsoever with respect thereto.  Buyer agrees to cause the
Company to (a) use its commercially reasonable efforts to collect each of the
Assigned Receivables, (b) provide Seller electronically with monthly summaries
setting forth any and all payments received in connection with the Assigned
Receivables, and (c) remit promptly to Seller all proceeds from such accounts
receivable by check or wire payment to an account designated in writing by
Seller.
 
7.7 Lease Assignment.  Except as specifically provided below, Seller shall
assume any and all Liabilities relating to the Seattle Lease Agreement and the
Lease Assignment, including any fees paid to landlord, recording fees, or other
fees relating thereto.  Buyer agrees to cause the Company to execute,
acknowledge (if appropriate) and deliver whatever additional documents, and do
such other acts, as may be reasonably required in order to effect the Lease
Assignment and the transactions contemplated thereby.  The Company may continue
use of the Leased Premises described under the Seattle Lease Agreement through
September 30, 2014, and shall vacate such premises and dispose of all personal
property at such location no later than such date, except as otherwise agreed
with Seller in writing prior to such date.  Buyer agrees to cause the Company to
use, treat and maintain the Leased Premises in such manner as required of the
tenant under and in accordance with the Seattle Lease Agreement, and shall
promptly reimburse Seller for, and indemnify, defend and hold harmless Seller
and all Seller Indemnified Parties for, any and all Losses that may arise from
its breach of this Section 7.8.
 
7.8 Bank Accounts.  Until control of the account set forth on Schedule 4.27 is
assumed solely by Buyer (or such accounts are cancelled with the prior written
consent of Buyer), Seller shall (a) electronically deliver daily statements to
Buyer showing all activity in such accounts, and (b) not make any withdrawals or
transfers from such accounts, other than transfers made upon the request of
Buyer, but not more frequently than once weekly, to an account designated in
writing by Buyer; provided that the obligation in clause (a) shall be deemed
fulfilled to the extent Buyer is given electronic access sufficient to monitor
the activity in such accounts.

7.9          Subscription Codes.  No later than September 18, 2014, the Company
shall destroy all subscription codes created pursuant to the agreement set forth
on Schedule 4.20 which were not issued by September 16, 2014.
 
ARTICLE VIII                                
                                     GENERAL
 
8.1 Press Releases and Public Announcements.  No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement without the prior written approval of Buyer (if Seller proposes to
make such disclosure) or Seller (if Buyer proposes to make such disclosure),
except as required by applicable Legal Requirements or stock exchange rules (in
which case Buyer will be given a reasonable time to comment thereon in advance).
 
 
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8.2 Construction; Governing Law; Exclusive Venue.  This Agreement, its
construction and the determination of any rights, duties or remedies of the
Parties arising out of or relating to this Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware. Any Proceeding
relating to any matter arising under this Agreement shall be instituted in
federal or state court in the County of Kent, State of Delaware, which venue the
Parties agree shall be the exclusive venue for such Proceeding. Each Party
agrees not to assert, by way of motion, as a defense or otherwise, in any such
Proceeding, any claim that it is not subject to the personal jurisdiction of the
courts described above to the extent contrary to the intent of the preceding two
sentences or that the jurisdictions described above are in any way inconvenient.
 
8.3 Survival of Representations, Warranties and Ancillary Documents.  The
Ancillary Agreements shall survive the Closing in accordance with their terms.
Except as otherwise expressly provided in ARTICLE VI of this Agreement, the
representations, warranties, covenants and other agreements herein contained
shall continue in full force and effect after the Closing. For the avoidance of
doubt, with respect to claims for breaches of the representations and warranties
contained in this Agreement (including the Disclosure Schedule) and in any of
the Ancillary Agreements, the survival periods set forth in Section 6.4 are
specifically and unambiguously intended to replace all statute of limitations
periods otherwise applicable thereto.
 
8.4 Entire Agreement; Amendment; Waiver.  This Agreement (which term, as used in
this Agreement, includes the Disclosure Schedule) and the Ancillary Agreements
constitute the entire agreement among the Parties pertaining to the subject
matter hereof and supersede all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
Parties, and there are no representations, warranties, covenants or other
agreements between the Parties in connection with the subject matter hereof
except as set forth specifically herein or therein. No amendment, supplement,
modification or waiver of this Agreement shall be implied or be binding unless
in writing and signed by the Party against which such amendment, supplement,
modification or waiver is asserted. No waiver of a provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly therein provided.
 
8.5 Binding Effect; Successors; Assignment.  All of the terms and provisions of
this Agreement by or for the benefit of the Parties shall be binding upon and
inure to the benefit of their respective successors, permitted assigns, heirs,
trustees, administrators, executors and personal representatives. The rights and
obligations provided by this Agreement shall not be assignable by any Party,
except that a Party may (i) assign its rights under this Agreement to one or
more of its Affiliates or (ii) designate one or more of its Affiliates to
perform its obligations hereunder, and  (iii) Buyer may collaterally assign all
of its rights, interests and benefits under this Agreement to its financing
sources; provided, that in any or all of such cases such Party nonetheless shall
not be discharged from and shall remain responsible and liable for the
performance of all of its obligations under this Agreement.
 
 
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8.6 Exhibits and Schedules.  All instruments or documents to be delivered by any
Party to this Agreement shall be in form and content reasonably satisfactory to
the counsel for the Party receiving such instrument or document. Each Exhibit
and the Disclosure Schedule shall be deemed an integral part of this Agreement.
Each Section of the Disclosure Schedule shall be deemed to qualify the
corresponding Section of this Agreement and any other Section to which the
application of such disclosure is readily apparent. All references to “Sections”
in the Disclosure Schedule shall be deemed to refer to the provisions of this
Agreement.
 
8.7 Joint Preparation; Independent Significance; Validity.  The Parties have
participated jointly in the negotiation and drafting of this Agreement. In the
event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement. The Parties
intend that each representation, warranty, and covenant contained herein shall
have independent significance. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
 
8.8 Notices.  All notices, requests, approvals, demands, claims and other
communications required or permitted to be given under this Agreement
(individually and collectively, “Notice”) shall be in writing and shall be (a)
served personally, (b) sent by a national overnight delivery or courier company,
or (c) sent by electronic transmission device, such as facsimile or email to the
fax number (if any) or email address (if any) set forth below, addressed as
follows:

 
 
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If to Seller to:

Ambassadors Group, Inc.
Attention: Legal/Risk
2001 S. Flint Road
Spokane, WA  99224
E-mail: marie.rice@ambassadorsgroup.com
 
With a copy (which shall
 
not constitute notice) to:

Thomas R. Stephens
Bartlit Beck Herman Palenchar & Scott, LLP
1899 Wynkoop Street, Suite 800
Denver, CO  80202
Fax: 303-592-3140
E-mail: Thomas.stephens@bartlit-beck.com
 
If to Buyer to:
 
GradeSaver, LLC
5302 E. Palo Verde Drive
Paradise Valley, AZ 85253
Attention: J. Nicholas Smith
 
Fax: _______________
 
E-mail: readers@gradesaver.com

 
With copies (which shall
not constitute notice) to:

Joseph S. Rosen, Esq
Brown & Rosen LLC
100 State Street, Suite 900
Boston, MA 02109
Fax: 617-695-3202
E-mail: jrosen@brownrosen.com
 
Any such Notice shall be deemed delivered upon delivery or refusal to accept
delivery as indicated in writing by the person attempting to make personal
service or by similar written advice from the overnight delivery company;
provided, that if any such Notice shall be sent by electronic transmission
device, such as facsimile or email to the fax number (if any) or email address
(if any) set forth above, such Notice shall be deemed given at the time and on
the date of machine transmittal (except if sent after 5:00 p.m. recipient’s
time, then the notice shall be deemed given at 9:00 a.m. on the next Business
Day) if the sending Party receives a written send verification on its machine
and sends a duplicate Notice on the same day or the next Business Day by
personal service or overnight delivery in the manner described above. Each Party
shall make an ordinary, good faith effort to ensure that it will accept or
receive Notice that are given in accordance with this Section 8.8, and that any
Person to be given Notice actually receives such Notice. Any Party to whom
Notice is to be sent pursuant to this Agreement may from time to time change its
address, facsimile number or email address for future communication hereunder by
giving Notice in the manner prescribed herein to all other Persons named in this
Section 8.8; provided, that the address, facsimile number or email address
change shall not be effective until three (3) Business Days after the Notice of
change has been given.
 
 
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8.9 Records; Confidentiality.
 
(a) Buyer agrees that it will cause to be preserved and kept the Books and
Records of the Company (including any Books and Records relating to Taxes and
Tax Returns of the Company) for a period of five (5) years after the Closing,
and shall make such Books and Records available and allow Seller to make copies
thereof, at Seller’s sole cost and expense, as may be reasonably required by
Seller in connection with any Claim or Proceeding. In the event Buyer wishes to
have the Company destroy any such Books and Records prior to the end of such
time period, Buyer shall first give at least thirty (30) days prior Notice to
Seller, and upon such notice Seller shall have the right, at its option and at
its sole cost and expense, to take possession of such Books and Records. Seller
may retain copies of any contracts, documents or records: (i) for archival
purposes, (ii) which relate to properties or activities of Seller, (iii) which
are required to be retained pursuant to any Legal Requirement or are subject to
the attorney-client privilege, or (iv) for financial reporting purposes, for Tax
purposes or for legal defense or prosecution purposes, it being understood that
any documentation so retained shall be retained subject to Section 8.9(b),
below.
 
(b) At all times following the Closing, Seller shall not, directly or
indirectly, disclose, divulge or make use of any trade secrets or other
proprietary or confidential information of a business, financial, marketing,
technical or other nature pertaining to the Business, the Company or any of
their respective Assets or properties, except (a) to Seller’s officers,
directors, managers, agents, advisors, attorneys or other representatives who
legitimately need to know such information and who agree to keep such
information confidential and are made aware of Seller’s obligations of
confidentiality under this Agreement, (b) to the extent that such information
shall have become public knowledge other than by breach of this Agreement by
Seller, and (c) to the extent that disclosure of such information is required by
Legal Requirement or legal process (but only after Seller has provided Buyer
with reasonable notice and an opportunity to take action against any legally
required disclosure).
 
8.10 Counterparts; Facsimile or Electronic Signatures.  This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This
Agreement may also be executed by the exchange of facsimile or electronically
transmitted signatures to identical counterparts with the same effect as if
originally executed on the same instrument. The Parties expressly acknowledge
and agree that, notwithstanding any statutory or decisional law to the contrary,
the printed product of an e-mail transmission shall be deemed to be “written”
and a “writing”, and a signature delivered by facsimile or e-mail shall be as
binding upon the delivering Party as an original signature.
 
 
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8.11 No Third Party Rights.  Except as otherwise provided in ARTICLE VI with
respect to Indemnified Parties, nothing in this Agreement, express or implied,
is intended to confer on any Person not a Party any right or remedies by reason
of this Agreement.
 
8.12 Further Acts.  Each Party shall, at the request of the other, execute,
acknowledge (if appropriate) and deliver whatever additional documents, and do
such other acts, as may be reasonably required in order to accomplish the intent
and purposes of this Agreement.
 
8.13 Fees and Expenses.  Except as otherwise provided herein, the Parties hereto
shall pay all of their own fees and expenses (including, if incurred, fees and
expenses of legal counsel, investment bankers, brokers or other representatives
and consultants and appraisal fees and expenses) incurred in connection with the
negotiation of this Agreement, the performance of its obligations hereunder, and
the consummation of the Transactions. Except as otherwise provided herein, if
any Proceeding for the enforcement of this Agreement is brought, or because of
an alleged dispute, breach, default, misrepresentation in connection with any of
the provisions hereof, each Party shall pay their own attorney’s fees and other
costs incurred in such Proceeding.
 
8.14 No Rescission.  Neither Buyer nor Seller shall be entitled to rescind the
purchase of the Purchased Shares by Buyer by virtue of any failure of any
Party’s representations and warranties herein to have been true or any failure
by any Party to perform its obligations hereunder.

{SIGNATURES OF PARTIES APPEAR ON NEXT PAGE}
 
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement as an instrument
under seal effective as of the Effective Date.

 
SELLER:
 

 
AMBASSADORS GROUP, INC.
 

 
By:           /s/ Philip B. Livingston
Name:  Philip B. Livingston
Title:    Interim Chief Executive Officer
 

 
BUYER:
 

GRADESAVER, LLC

 
By:           /s/ J. Nicholas Smith
Name:  J. Nicholas Smith
Title:    Member