EXHIBIT 10.1

 

 

 

SECURITIES PURCHASE AGREEMENT

BY AND BETWEEN

ESCO TECHNOLOGIES HOLDING LLC

 

AND

METER READINGS HOLDING, LLC

Dated March 14, 2014

 

 

 

 

TABLE OF CONTENTS

 

Page

 

Article I DEFINITIONS   1 Article II PURCHASE AND SALE OF THE INTERESTS 14   2.1
Transfer of Interests and Caribe Shares 14   2.2 Consideration 14   2.3 Closing
14   2.4 Benchmark Statement, Estimated Closing Statement and Closing Statement
15   2.5 Post-Closing Adjustment 15   2.6 Post-Closing Receipt of Invoices 18  
2.7 Intercompany Accounts 18   2.8 Withholding 18 Article III REPRESENTATIONS
AND WARRANTIES OF PARENT 18   3.1 Existence and Power; Non-Contravention 18  
3.2 Valid and Enforceable Agreement; Authorization 19   3.3 Capitalization and
Ownership 20   3.4 Financial Statements 21   3.5 Undisclosed Liabilities 21  
3.6 Absence of Certain Developments 21   3.7 Taxes 23   3.8 Litigation 24   3.9
Real Property 25   3.10 Property; Title 26   3.11 Condition of Personal Property
27   3.12 Contracts 27   3.13 Licenses and Permits 30   3.14 Compliance with
Laws 30   3.15 Environmental Matters 30   3.16 Intellectual Property 31   3.17
Insurance 34   3.18 Labor Matters 34

 

 

I

 

 

  3.19 Employee Benefit Matters 35   3.20 Indebtedness 37   3.21 Accounts
Receivable; Inventory 37   3.22 Related Party Transactions 38   3.23 Bank
Accounts 38   3.24 Customers and Suppliers 38   3.25 Warranties and Returns 39  
3.26 Foreign Operations 39   3.27 Brokers, Finders 39   3.28 No Other
Representations or Warranties 39 Article IV REPRESENTATIONS AND WARRANTIES OF
THE BUYER 40   4.1 Existence and Power; Non-Contravention 40   4.2 Valid and
Enforceable Agreement; Authorization 40   4.3 Compliance with Securities Laws 40
  4.4 Litigation 41   4.5 Funds 41   4.6 Independent Investigation 41   4.7 No
Other Representations or Warranties 41 Article V EMPLOYEES 42   5.1 The Buyer’s
Obligations 42   5.2 Employment Matters 42   5.3 No Third Party Beneficiaries 45
  5.4 COBRA 45   5.5 Bonus 45 Article VI ADDITIONAL COVENANTS OF THE PARTIES 45
  6.1 Conduct of Business Until Closing 45   6.2 Access Pending Closing 47   6.3
Books and Records 48   6.4 Confidentiality; Announcements 49   6.5 Further
Assurances; Cooperation 50   6.6 Disclosure Supplement 51   6.7 Pre-closing
Insurance 51   6.8 Regulatory Approval 51

 

II

 

 

  6.9 Taxes 52   6.10 Covenant Not to Compete and Non-Solicitation of Employees.
56   6.11 Brokers, Finders 57   6.12 No Solicitation of Other Bids. 57   6.13
RELEASE 58   6.14 Special Receivable 59   6.15 Surety Bonds 59   6.16 Estoppel
Certificates 59   6.17 Share Transfer and Minute Books 59 Article VII CONDITIONS
PRECEDENT TO OBLIGATIONS OF THE BUYER 60   7.1 Accuracy of Representations and
Warranties, Performance of Obligations and No Material Adverse Effect 60   7.2
Consents and Approvals 60   7.3 No Contrary Judgment 60   7.4 Deliveries 60
Article VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT 62   8.1 Accuracy of
Representations and Warranties and Performance of Obligations 62   8.2 Consents
and Approvals 62   8.3 No Contrary Judgment 62   8.4 Deliveries 62 Article IX
INDEMNIFICATION 63   9.1 Indemnification by Parent 63   9.2 Indemnification by
the Buyer 64   9.3 Notice and Payment of Losses 64   9.4 Defense of Third-Party
Claims 65   9.5 Survival of Representations and Warranties and Covenants. 67  
9.6 Limitation on Indemnification. 67   9.7 Indemnifiable Warranty Claims 69  
9.8 Characterization of Indemnity Payments 70   9.9 Exclusive Remedy 70   9.10
Certain Damages 70

 

 

III

 

 

Article X MISCELLANEOUS PROVISIONS 70   10.1 Notice 70   10.2 Termination 72  
10.3 Entire Agreement 72   10.4 Severability 72   10.5 Assignment; Binding
Agreement 73   10.6 Counterparts 73   10.7 Expenses 73   10.8 Headings;
Interpretation 73   10.9 Governing Law 74   10.10 Submission to Jurisdiction 74
  10.11 Disclosure Generally 74   10.12 No Third Party Beneficiaries or Other
Rights 74   10.13 WAIVER OF JURY TRIAL 75

 

IV

 

 

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT is entered into as of this 14th day of March,
2014, by and between ESCO Technologies Holding LLC, a Delaware limited liability
company (“Parent”), and Meter Readings Holding, LLC, a Delaware limited
liability company (the “Buyer”). Capitalized terms are defined in Article I.

 

RECITALS

 

WHEREAS, Parent (i) owns all of the issued and outstanding equity interests (the
“Company Interests”) of Aclara Technologies LLC, an Ohio limited liability
company (the “Company”), (ii) indirectly through the Company, owns all of the
issued and outstanding equity interests (the “International Interests”) of
Aclara International LLC, a Missouri limited liability company (“Aclara
International”) and (iii) indirectly through ESCO Finance International
S.a.r.l., a Luxembourg private limited liability company (“ESCO Luxembourg”),
owns all of the issued and outstanding capital stock (the “Caribe Shares” and,
together with the Company Interests and the International Interests,
collectively, the “Interests”) of Distribution Control Systems Caribe, Inc., a
Puerto Rico corporation (“Caribe”); and

 

WHEREAS, (i) Parent desires to sell the Company Interests to the Buyer and to
cause ESCO Luxembourg to sell the Caribe Shares to the Buyer, (ii) ESCO
Luxembourg desires to sell the Caribe Shares to the Buyer, and (iii) the Buyer
desires to purchase the Company Interests and the Caribe Shares, at the Closing
on the following terms and conditions.

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants, representations, warranties, conditions, and agreements hereinafter
expressed, the Parties agree as follows:

 

Article I
DEFINITIONS

 

Without limiting the effect of any other terms defined in the text of this
Agreement, the following words shall have the meaning given them in this Article
I:

 

1.1 “Aclara International” has the meaning set forth in the recitals.

 

1.2 “Acquisition Proposal” shall mean any inquiry, proposal or offer from any
Person (other than the Buyer or any of its Affiliates) concerning (i) a merger,
consolidation, liquidation, recapitalization, share exchange or other business
combination transaction involving the Company or the Company Subsidiaries; (ii)
the issuance or acquisition of shares of capital stock or other equity
securities of the Company or the Company Subsidiaries; or (iii) the sale, lease,
exchange or other disposition of any material portion of the Company's or the
Company Subsidiaries’ properties or assets other than sales of inventory in the
Ordinary Course or as otherwise contemplated by this Agreement.

 

1.3 “Affiliate” means, with respect to any person, any person or entity which is
controlling, controlled by, or under common control with, directly or indirectly
through any person or entity, the person referred to, and, if the person
referred to is a natural person, any member of such person’s immediate family.
The term “control” (including, with correlative meaning, the terms
“controlling,” “controlled by” and “under common control with”) as used with
respect to any person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
person, whether through the ownership of voting securities, by contract or
otherwise.

 

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1.4 “Agreed Accounting Principles” has the meaning set forth in Section 2.4(a).

 

1.5 “Agreed Allocation” has the meaning set forth in Section 6.9(g).

 

1.6 “Agreement” means this Agreement as executed on the date hereof and as
amended or supplemented in accordance with the terms hereof, including all
Disclosure Schedules and Exhibits hereto.

 

1.7 “Ancillary Agreements” means the other agreements delivered pursuant to this
Agreement or the other Ancillary Agreements, and the instruments and documents
delivered pursuant to this Agreement and such other agreements.

 

1.8 “Arbiter” means the firm or individual appointed under Section 2.5(c).

 

1.9 “Balance Sheet” has the meaning set forth in Section 1.76.

 

1.10 “Benchmark Statement” has the meaning set forth in Section 2.4(a).

 

1.11 “Beneficiary” means any spouse, domestic partner, child, alternate payee
(as defined in Section 414 of the Code) or other person who is receiving or may
receive benefits under a Benefit Plan by virtue of his or her relationship or
former relationship with an Employee or a former Employee and any M&A Qualified
Beneficiary (as defined in Treas. Reg. Section 54.4980-B) of a Benefit Plan.

 

1.12 “Benchmark Working Capital” has the meaning set forth in Section 2.4(a).

 

1.13 “Benefit Plan(s)” has the meaning set forth in Section 3.19(a).

 

1.14 “Bonus Plan” has the meaning set forth in Section 5.5.

 

1.15 “Business” means the business of the Company and the Company Subsidiaries
in the manner carried on by the Company and the Company Subsidiaries as of the
date hereof.

 

1.16 “Business Day” means any day which is not a Saturday, Sunday or a legal
holiday in the States of New York or Missouri, United States of America.

 

1.17 “Business Intellectual Property” means all Intellectual Property owned by,
or purported by the Company to be owned by, the Company and the Company
Subsidiaries. For purposes of this Section 1.17, “purported” shall mean that the
Company purported that the Company or the Company Subsidiaries owned a
particular item of Intellectual Property: (i) in a Contract between the Company
and a third party, (ii) in a written statement of work, quotation or proposal or
similar document from the Company to a third party, or (iii) in a product
specification sheet, press release or other formal statement offered to the
public.

 

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1.18 “Business Leases” has the meaning set forth in Section 3.9(d).

 

1.19 “Buyer” has the meaning set forth in the preamble.

 

1.20 “Buyer Authorization Representations” means the representations and
warranties set forth in Sections 4.1 and 4.2.

 

1.21 “Buyer Indemnified Parties” has the meaning set forth in Section 9.1.

 

1.22 “Buyer’s 401(k) Plan” has the meaning set forth in Section 5.2(c)(i).

 

1.23 “Campus Parkway Property” means that certain real property and related
appurtenances located at 5657 Campus Parkway, Hazelwood, Missouri 63041.

 

1.24 “Caribe” has the meaning set forth in the recitals.

 

1.25 “Caribe Shares” has the meaning set forth in the recitals.

 

1.26 “Closing” means the consummation of the transactions contemplated by this
Agreement, as provided for in Section 2.3.

 

1.27 “Closing Date” has the meaning set forth in Section 2.3.

 

1.28 “Closing Indebtedness” has the meaning set forth in Section 2.5(a).

 

1.29 “Closing Payment” means an amount equal to the Purchase Price, minus
Transactional Expenses to the extent not paid by the Company, the Company
Subsidiaries or Parent before the Closing Date, minus the aggregate amount of
Indebtedness as of the Closing, minus the Employee Escrow Amount, plus or minus
the Estimated Adjustment Amount.

 

1.30 “Closing Statement” has the meaning set forth in Section 2.5(a).

 

1.31 “Closing Special Receivable” has the meaning set forth in Section 2.5(a).

 

1.32 “Closing Transactional Expenses” has the meaning set forth in Section
2.5(a).

 

1.33 “Closing Working Capital” has the meaning set forth in Section 2.5(a).

 

1.34 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act, as
amended from time to time.

 

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

 

1.36 “Company” has the meaning set forth in the recitals.

 

1.37 “Company Interests” has the meaning set forth in the recitals.

 

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1.38 “Company Properties” has the meaning set forth in Section 3.9(c).

 

1.39 “Company Subsidiaries” means Aclara International and Caribe and any other
direct or indirect Subsidiary of the Company.

 

1.40 “Competition Law” means any Law that is designed or intended to prohibit,
restrict or regulate foreign investment or antitrust monopolization, restraint
of trade or competition.

 

1.41 “Competitive Activities” has the meaning set forth in Section 6.10(a).

 

1.42 “Computer Software” means all computer software (including data and related
documentation) and databases, and any and all software implementations of
algorithms, specifications, models and methodologies, whether in source code or
object code, design documents, flow-charts, user manuals and training materials
relating thereto and any translations, compilations, arrangements, adaptations,
and derivative works thereof.

 

1.43 “Confidential Information” has the meaning set forth in Section 1.99.

 

1.44 “Confidentiality Agreement” has the meaning set forth in Section 6.4(a).

 

1.45 “Consent” means any consent, approval, authorization, clearance, exception,
waiver or similar affirmation by any person pursuant to any Contract, Law, Order
or Permit.

 

1.46 “Contract” means any written or oral contract, agreement, lease, indenture,
mortgage, deed of trust, evidence of indebtedness, binding commitment or
instrument.

 

1.47 “Deductible” has the meaning set forth in Section 9.6(h)(iv).

 

1.48 “Deferred Compensation Arrangements” means any non-qualified deferred
compensation plan within the meaning of Section 409A of the Code sponsored by
the Company or a Company Subsidiary, which, for the avoidance of doubt,
specifically excludes any annual bonus plans.

 

1.49 “Effective Time” has the meaning set forth in Section 2.3.

 

1.50 “Employee Escrow Account” has the meaning set forth in Section 2.3.

 

1.51 “Employee Escrow Agreement” has the meaning set forth in Section 5.2(a).

 

1.52 “Employee Escrow Agent” means Commerce Bank, N.A.

 

1.53 “Employee Escrow Amount” means One Million Four Hundred Forty-One Thousand
Two Hundred Dollars ($1,441,200).

 

1.54 “Employees” means individuals who as of the Effective Time are employees of
the Company or the Company Subsidiaries (including active and inactive
employees).

 

4

 

 

1.55 “Employment and Compensation Agreements” has the meaning set forth in
Section 5.2(a).

 

1.56 “Encumbrances” means with respect to any property or asset (including the
Interests), mortgages, liens, charges, claims, security interests, easements,
leases (other than a lease by the Company or a Company Subsidiary),
encumbrances, pledges, adverse claims of ownership or use, deeds of trust or
hypothecations, whether imposed by Contract or Law.

 

1.57 “Environmental Law” means any Law governing pollution or protection of
health and the environment, and worker health and safety, and/or governing the
handling, use, generation, treatment, storage, transportation, disposal,
manufacture, distribution, formulation, packaging, labeling or Release of or
exposure to Hazardous Materials, in effect on or prior to the date hereof.

 

1.58 “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time.

 

1.59 “ESCO Guarantee” has the meaning set forth in the Guarantee Reimbursement
Agreement.

 

1.60 “ESCO Luxembourg” has the meaning set forth in the recitals.

 

1.61 “Escrow Reimbursement Amount” has the meaning set forth in Section 5.2(a).

 

1.62 “Estimated Adjustment Amount” has the meaning set forth in Section 2.4(b).

 

1.63 “Estimated Closing Statement” has the meaning set forth in Section 2.4(b).

 

1.64 “Estimated Indebtedness” has the meaning set forth in Section 2.4(b).

 

1.65 “Estimated Special Receivable” has the meaning set forth in Section 2.4(b).

 

1.66 “Estimated Transaction Expenses” has the meaning set forth in Section
2.4(b).

 

1.67 “Estimated Working Capital” has the meaning set forth in Section 2.4(b).

 

1.68 “FCC” has the meaning set forth in Section 6.8(b).

 

1.69 “FCC Licenses” means the authorizations, equipment certifications, licenses
and permits issued to and continued to be held by the Company from the FCC.

 

1.70 “FCPA” has the meaning set forth in Section 3.26.

 

1.71 “Final Indebtedness” has the meaning set forth in Section 2.5(c).

 

1.72 “Final Special Receivable” has the meaning set forth in Section 2.5(c).

 

1.73 “Final Statement” has the meaning set forth in Section 2.5(c).

 

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1.74 “Final Transactional Expenses” has the meaning set forth in Section 2.5(c).

 

1.75 “Final Working Capital” has the meaning set forth in Section 2.5(c).

 

1.76 “Financial Statements” means: (a) the unaudited combined balance sheets of
the Company and the Company Subsidiaries as of September 30, 2013, September 30,
2012 and September 30, 2011, and the related statements of income for the
twelve-month periods then ended; and (b) the unaudited combined balance sheets
of the Company and the Company Subsidiaries as of January 31, 2014 (the “Balance
Sheet”), and the related statement of income for the 4 month period then ended.

 

1.77 “Former Leases” has the meaning set forth in Section 3.9(e).

 

1.78 “Fundamental Representations” has the meaning set forth in Section 9.5(a)

 

1.79 “GAAP” means U.S. generally accepted accounting principles consistently
applied by the Company.

 

1.80 “General Enforceability Exceptions” has the meaning set forth in Section
3.2.

 

1.81 “Governmental Authority” means any national, central, federal, state,
provincial, municipal, local or other domestic, foreign or supranational
governmental, legislative, administrative, or regulatory authority, agency,
court, arbitration tribunal, board, department, commission or other
governmental, or regulatory entity, including any competent governmental
authority responsible for the determination, assessment or collection of Taxes.

 

1.82 “Guaranteed Contracts” has the meaning set forth in the Guarantee
Reimbursement Agreement.

 

1.83 “Guaranteed Obligations” has the meaning set forth in the Guarantee
Reimbursement Agreement.

 

1.84 “Guarantee Reimbursement Agreement” has the meaning set forth in Section
7.4(k).

 

1.85 “Hazardous Materials” means any hazardous waste, as defined by 42 U.S.C.
section 6903(5), any hazardous substance as defined by 42 U.S.C. section
9601(14), any pollutant or contaminant as defined by 42 U.S.C. section 9601(33),
any toxic substance, radioactive material or waste, asbestos or
asbestos-containing materials, mold, polychlorinated biphenyls, radon, petroleum
products and by-products, gasoline and waste, oil, or hazardous material, or any
other chemical or substance regulated by any Environmental Law.

 

1.86 “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.

 

1.87 “HSR Approval” has the meaning set forth in Section 7.2.

 

1.88 “HSR Filing” has the meaning set forth in Section 6.8.

 

6

 

 

1.89 “In-Bound Licenses” means all agreements currently in force that grant the
Company or any Company Subsidiary a license to use any Intellectual Property of
any other Person.

 

1.90 “Income Tax” means any Tax imposed on or measured with respect to gross
income or net income (but not gross receipts).

 

1.91 “Income Tax Return” means any Tax Return relating to Income Tax.

 

1.92 “Indebtedness” means, without duplication of any item included in the
calculation of Working Capital, any of the foregoing: (i) all obligations for
borrowed money or in respect of loans or advances, (ii) all obligations
evidenced by bonds (other than performance bonds), debentures, notes or other
similar instruments or debt securities, (iii) all obligations in respect of
letters of credit and bankers' acceptances, (iv) all obligations arising from
cash/book overdrafts and the amount of any outstanding checks and wire
transfers, (v) all obligations arising from the Deferred Compensation
Arrangements and the Underfunded Employee Benefit Obligations, (vi) all
obligations secured by (or for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured by) any Encumbrance
through or under a financing statement, security agreement, mortgage, pledge
agreement or other financing or credit agreement, (vii) all capital lease
obligations, (viii) all deferred rent, (ix) all obligations (determined on the
basis of actual, not notional, obligations) with respect to interest rate
protection agreements, interest rate swap agreements, foreign currency exchange
agreements, or other interest or exchange rate hedging agreements or
arrangements, (x) all subordinated debt obligations and subordinated debt-like
instruments, (xi) the aggregate amount by which any post-Closing one time
separation or restructuring costs of the Solon, Ohio outsourcing initiative set
forth in Schedule 1.92(xi) exceed $1,000,000, and (xii) all fees, accrued and
unpaid interest, premiums or penalties related to any of the foregoing;
provided, however, that “Indebtedness” shall not include trade payables incurred
in the Ordinary Course which are not past due.

 

1.93 “Indemnifiable Warranty Claim” has the meaning set forth in Section 9.7.

 

1.94 “Indemnifiable Warranty Claim Deductible” has the meaning set forth in
Section 9.7.

 

1.95 “Indemnification Cap” has the meaning set forth in Section 9.6(a).

 

1.96 “Indemnifying Party” has the meaning set forth in Section 9.3.

 

1.97 “Indemnifying Party Defense Review Period” has the meaning set forth in
Section 9.3.

 

1.98 “Injured Party” has the meaning set forth in Section 9.3.

 

1.99 “Intellectual Property” means intellectual property of any type throughout
the world, including, but not limited to: (i) patents, patent applications and
statutory invention registrations, including, but not limited to, continuations,
continuations-in-part, divisions, provisionals, non-provisionals,
reexaminations, reissues and extensions; (ii) trademarks, service marks, trade
names, brand names, logos and corporate names, slogans and other indicia of
source of origin, whether or not registered, including all common law rights
thereto and all goodwill associated therewith, and registrations and
applications for registration thereof; (iii) copyrights and copyrightable works,
whether registered or unregistered, and registrations and applications for
registration thereof; (iv) trade secrets, confidential information and know-how
(“Confidential Information”); (v) domain names, IP addresses and registrations
therefor; (vi) rights of publicity and privacy and moral rights; (vii) shop
rights; (viii) inventions (whether patentable or unpatentable), invention
disclosures, mask works, industrial design rights, discoveries, ideas,
developments, data, Computer Software, confidential or proprietary technical,
business and other information, including, but not limited to processes,
techniques, methods, formulae, designs, algorithms, prospect lists, customer
lists, projections, analyses and market studies; and (ix) all causes of action
(resulting from past and future infringement thereof), damages, and remedies
relating to any and all of the foregoing in (i) through (viii).

 

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1.100 “Intellectual Property Licenses” means the In-Bound Licenses and the
Out-Bound Licenses.

 

1.101 “Interests” has the meaning set forth in the recitals.

 

1.102 “International Interests” has the meaning set forth in the recitals.

 

1.103 “IRS” means the United States Internal Revenue Service.

 

1.104 “knowledge” means (a) with respect to Parent, including the terms “to
Parent’s knowledge,” “to its knowledge,” “known” or a similar phrase, the
“knowledge” so referred to shall be deemed to be the actual knowledge of Victor
L. Richey, Jr., Gary E. Muenster, Alyson S. Barclay, Deborah J. Hanlon, Dave
Schatz, Brad Kitterman, Terry Messmer, Nancy Rich and Michael Garcia, after
reasonable inquiry and (b) with respect to the Buyer, including the terms
“actually known by the Buyer,” “to the Buyer’s knowledge” or a similar phrase,
the “knowledge” so referred to shall be deemed to be the actual knowledge of
Brian Urbanek, Daniel Florian or Blake Richardson, after reasonable inquiry.

 

1.105 “Law” means any applicable federal, state, local or foreign material
statute, law (including common law), ordinance, decree, order, injunction, rule,
directive, or regulation of any Governmental Authority, and includes rules and
regulations of any regulatory or self-regulatory authority, compliance with
which is required by Law.

 

1.106 “Leased Personal Property” has the meaning set forth in Section 3.9(c).

 

1.107 “Leased Real Property” has the meaning set forth in Section 3.9(b).

 

1.108 “Liability” or “Liabilities” means any direct or indirect liabilities
(unless otherwise expressly provided in the context where used, whether known or
unknown, absolute or contingent, due or to become due, liquidated or
unliquidated, matured or unmatured) or obligations and any reasonable expenses,
claims, losses, damages or deficiencies related to such direct or indirect
liabilities or obligations.

 

1.109 “Loss” or “Losses” means each and all of the following items: losses,
liabilities, damages, judgments, fines, costs, penalties, claims (including
third party claims), charges, actions, suits, proceedings, interest, Taxes,
diminutions in value (except to the extent of consequential, incidental or
indirect damages), expenses and amounts paid in settlement (including legal,
consulting, accounting and other professional fees and disbursements, costs of
sampling, testing, investigation, removal, treatment and remediation of
contamination and fees and costs incurred in enforcing rights under this
Agreement), but net of any insurance proceeds actually received by the Injured
Party with respect to such Losses and net of any Tax benefit when and as
actually recognized by the Injured Party in respect of such Losses.

 

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1.110 “Loss Estimate” has the meaning set forth in Section 9.6(h).

 

1.111 “Material Adverse Effect” means any event, circumstance, change, result,
occurrence, fact or effect that, individually or in the aggregate with all such
other like events, circumstances, changes, results, occurrences, facts or
effects of a similar nature, has, or could reasonably be expected to have, a
material adverse effect (after taking into account any insurance recoveries) on
(x) the Business, financial condition, operations, or results of operations of
the Company and the Company Subsidiaries taken as a whole, or (y) the ability of
Parent to consummate the transactions contemplated by this Agreement; provided
that for purposes of clause (x) none of the following will be deemed, either
alone or in combination to constitute, and none of the following will be taken
into account in determining whether there has been a Material Adverse Effect:
any change, occurrence or development arising out of, resulting from or
attributable to (i) general business, economic, or regulatory conditions; (ii)
national or international political or social conditions (including but not
limited to war or military or terrorist activities); (iii) changes in financial,
banking or securities markets (including but not limited to changes in foreign
currency exchange rates) and any disruption thereof and decline in the price of
any security or any market index; (iv) changes in GAAP (or other applicable
accounting regulations) or accounting principles (or interpretations thereof);
(v) changes in general economic factors or conditions that affect the industries
in which the Company and the Company Subsidiaries operate generally; (vi)
changes in Law or other binding directives issued by any Governmental Authority,
or in interpretation thereof by any Governmental Authority; in the case of each
of (i) through (vi) to the extent the Company and the Company Subsidiaries are
not materially disproportionately affected thereby; (vii) compliance with the
terms of, or the taking of any action contemplated by, this Agreement; (viii)
any action taken or statement made by the Buyer or its respective Affiliates; or
(ix) the execution, delivery, announcement or pendency of this Agreement or the
transactions provided for in this Agreement, including any disclosure of the
identity of Buyer.

 

1.112 “Material Contracts” has the meaning set forth in Section 3.12(a).

 

1.113 “Material Customers” has the meaning set forth in Section 3.24.

 

1.114 “Material Suppliers” has the meaning set forth in Section 3.24.

 

1.115 “Net Adjustment Amount” has the meaning set forth in Section 2.5(d).

 

1.116 “New Facts” has the meaning set forth in Section 9.4(a).

 

1.117 “Notice of Claim” has the meaning set forth in Section 9.3.

 

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1.118 “Notice of Dispute” means a written notice by the Buyer to Parent
delivered pursuant to Section 2.5, specifying in reasonable detail all points of
disagreement with Parent’s calculation of the Closing Working Capital.

 

1.119 “Open Source Software” means any Computer Software that is distributed as
free Computer Software, open source Computer Software or under similar licensing
or distribution models, including Computer Software licensed or distributed
under any of the licenses or distribution models identified by the Open Source
Initiative at http://www.opensource.org/licenses/alphabetical, or any similar
license or distribution model.

 

1.120 “Order” means any order, judgment, ruling, decree, award, verdict or writ
of any Governmental Authority.

 

1.121 “Ordinary Course” means, with respect to the Business, the ordinary course
of commercial operations customarily engaged in by the Business consistent with
past practice.

 

1.122 “Organizational Documents” has the meaning set forth in Section 3.1(d).

 

1.123 “Out-Bound Licenses” means all agreements currently in force that grant a
third party a license to use any Business Intellectual Property or that restrict
the Company’s or any Company Subsidiary’s use or employment of any Business
Intellectual Property.

 

1.124 “Outside Date” has the meaning set forth in Section 10.2(a)(ii).

 

1.125 “Owned Real Property” has the meaning set forth in Section 3.9(a).

 

1.126 “Parent” has the meaning set forth in the preamble.

 

1.127 “Parent Indemnified Parties” has the meaning set forth in Section 9.2.

 

1.128 “Parent Releasing Group” has the meaning set forth in Section 6.13.

 

1.129 “Parent’s Savings Programs” has the meaning set forth in Section
5.2(c)(i).

 

1.130 “Party” means either Parent or the Buyer, and “Parties” means both of
them.

 

1.131 “Pension Plan” means the ESCO Technologies Inc. Pension Plan.

 

1.132 “Permit” has the meaning set forth in Section 3.13.

 

1.133 “Permitted Encumbrances” means, collectively, (a) Encumbrances that are
disclosed in Disclosure Schedule 1.133, (b) liens for Taxes, fees, levies,
duties or other governmental charges of any kind that are not yet due and
payable, or are being contested in good faith by appropriate proceedings and
with respect to which an adequate reserve is maintained in the Financial
Statements or may be satisfied without incurring penalty and where an adequate
reserve is maintained in the Financial Statements, (c) liens for mechanics,
materialmen, laborers, employees, suppliers or similar liens arising by
operation of Law and in the Ordinary Course securing payments not yet due and
payable or contested in good faith by appropriate proceedings (provided that
adequate reserves with respect to those Encumbrances contested in good faith are
maintained), (d) in the case of real property, (i) any matters, restrictions,
covenants, conditions, limitations, rights, rights of way, encumbrances,
defects, encroachments, reservations, easements, agreements and other matters
currently stated in the real property records and affecting the real property
underlying the Leased Real Property, (ii) the provisions of any Law affecting
the real property, the use thereof or the improvements thereon, (iii) any
encroachment, encumbrance, violation, variation or adverse circumstance or
matter that would be disclosed by an accurate survey or inspection of the real
property, including the Owned Real Property, in each case which do not
materially impair the value or the use of such real property (including the
Owned Real Property) as it is currently used by the Business, and (iv) all
matters, exclusions, limitations, obligations, conditions, exceptions, and
disclaimers, if any, reflected in the Business Leases, (e) statutory liens of
landlords or lessors arising in the Ordinary Course for amounts not yet due and
payable, and (f) restrictions on transfers of securities imposed by and
generally arising under applicable state and federal securities Laws.

 

10

 

 

1.134 “Person” means and includes an individual, a partnership, a limited
liability partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization, a group and a Governmental
Authority.

 

1.135 “Policies” has the meaning set forth in Section 3.17.

 

1.136 “Pre-Closing Breach” has the meaning set forth in Section 9.6(h).

 

1.137 “Post-Closing Period” means any taxable period beginning after the
Effective Time.

 

1.138 “Pre-Closing Period” means any taxable period ending at or prior to the
Effective Time.

 

1.139 “Property Taxes” means all real estate, personal property, ad valorem and
any other similar Taxes imposed by any Governmental Authority.

 

1.140 “Property Tax Return” means any Tax Return relating to Property Taxes.

 

1.141 “Purchase Price” has the meaning set forth in Section 2.2.

 

1.142 “Purchase Price Allocation” has the meaning set forth in Section 6.9(g).

 

1.143 “Qualified Plans” has the meaning set forth in Section 3.19(c).

 

1.144 “Records” has the meaning set forth in Section 6.3.

 

1.145 “Registered Intellectual Property” has the meaning set forth in Section
3.16(a).

 

1.146 “Release” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, migrating leaching, dumping, or
disposing of a Hazardous Material.

 

11

 

 

1.147 “Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.

 

1.148 “Restated AMI Agreement” means that certain Amended and Restated AMI
Equipment, Software and Services Agreement dated as of September 1, 2013 between
SoCal Gas and the Company.

 

1.149 “Retention Bonuses” has the meaning set forth in Section 5.1(d).

 

1.150 “Section 280G” has the meaning set forth in Section 3.19(n).

 

1.151 “Severance Payment Amount” has the meaning set forth in Section 5.2(a).

 

1.152 “Site” means any real properties currently or previously owned, leased,
occupied or operated by the Company or any Company Subsidiary.

 

1.153 “SoCal Gas” means Southern California Gas Company.

 

1.154 “Special Receivable” means the unbilled receivable of the Company relating
to any amounts owed by Agile Sourcing Partners, Inc. or SoCal Gas to the Company
for MTU’s shipped pursuant to Scenario #3 described on Appendix A25-123 of the
Restated AMI Agreement by either the Company or one of its contract
manufacturers prior to the Closing Date, but for which the Company has not
received payment as of the Closing Date.

 

1.155 “Straddle Period” has the meaning set forth in Section 6.9(c)(i).

 

1.156 “Subsidiary” means, as to any person, any other person controlled by such
person, whether directly or indirectly through one or more intermediaries.

 

1.157 “Supplemental Information” has the meaning set forth in Section 6.6.

 

1.158 “Surety Bonds” means those performance or surety bonds obtained,
supported, arranged or entered into by Parent or any of its Affiliates for the
benefit of the Company or any of the Company Subsidiaries (or any predecessor of
the Company or any Company Subsidiary) and set forth on Disclosure Schedule
1.158.

 

1.159 “Surety Bond Obligations” means Liabilities of Parent or any of its
Affiliates under or with respect to the Surety Bonds (including any obligation
to provide indemnification, perform any covenants, make any payments, provide
cash collateral or other security or pay any premiums therefor).

 

1.160 “Tax” or “Taxes” means any and all federal, state, local, or foreign net
or gross income, gross receipts, net proceeds, sales, use, ad valorem, value
added, franchise, bank shares, real property transfer, recording, documentary,
stamp, registration and stock transfer taxes and fees, withholding, payroll,
employment, excise, property, abandoned property, escheat, deed, stamp,
alternative or add-on minimum, environmental, profits, windfall profits,
transaction, license, lease, service, service use, occupation, severance
(relating to the removal of non-renewable natural resources), energy,
unemployment, social security, capital, premium, and other taxes, assessments,
levies, or other like governmental assessments, together with any interest,
penalties or additions to tax. Any one of the foregoing Taxes shall be referred
to sometimes as a “Tax.”

 

12

 

 

1.161 “Tax Matter” has the meaning set forth in Section 6.9(f).

 

1.162 “Tax Return” means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, required by Law to be filed
with respect to the Interests, including any schedule or attachment thereto, and
including any amendment thereof.

 

1.163 “Third Party Claim” has the meaning set forth in Section 9.4(a).

 

1.164 “Title and Authorization Representations” means the representations and
warranties set forth in Sections 3.1 (other than 3.1(d)(iii) or 3.1(d)(v)), 3.2
and 3.3 (other than 3.3(e)).

 

1.165 “Title Policy” has the meaning set forth in Section 6.5(c).

 

1.166 “Transactional Expenses” means, without duplication of any item which is
Indebtedness or included in the calculation of Working Capital, (i) fees, costs
and expenses (including investment banking, legal and accounting fees, costs and
expenses) of the Company and the Companies Subsidiaries incurred through the
Effective Time at the direction of Parent in connection with the consummation of
the transactions contemplated by this Agreement, (ii) the amount of any change
of control fees, termination fees or similar payments owed by the Company or the
Company Subsidiaries to customers, suppliers, landlords or other persons arising
in connection with the transaction, but only to the extent any such amounts are
expressly provided for in a Contract with such customers, suppliers, landlords
or other persons; and (iii) any transaction, success, stay, change of control or
similar fee or bonus payment (or any severance or retention payment, other than
as set forth in the Employment and Compensation Agreements or the Retention
Bonuses) payable to any employee, officer, director or consultant of the Company
or the Company Subsidiaries arising in connection with the transaction
(including “double trigger” change of control obligations), but only to the
extent any such payments are expressly provided for in a Contract with such
employee, officer, director or consultant. For the avoidance of doubt, neither
any severance amounts paid or payable under the Employment and Compensation
Agreements, the Retention Bonuses nor any severance or retention payment(s)
included in the Solon, Ohio outsourcing initiative set forth in Disclosure
Schedule 1.92(xi) shall constitute Transactional Expenses.

 

1.167 “Transfer Taxes” has the meaning set forth in Section 6.9(a).

 

1.168 “Underfunded Employee Benefit Obligations” means a defined benefit plan
subject to Title IV of ERISA sponsored by the Company or a Company Subsidiary.

 

1.169 “Warranty Costs” means the costs and expenses associated with refunding,
correcting, returning or replacing defective products or services, whether such
costs and expenses arise out of claims sounding in warranty, contract, tort or
otherwise.

 

13

 

 

1.170 “Working Capital” means the sum of the current assets of the Company and
the Company Subsidiaries (excluding cash, deferred Tax assets, deferred revenue,
the Special Receivable and deferred costs), less the sum of the current
liabilities of the Company and the Company Subsidiaries (excluding deferred
revenue and deferred Tax liabilities), all as determined in accordance with GAAP
applied on a basis consistent with the preparation of the Benchmark Statement,
subject in any event to the Agreed Accounting Principles. Any unrestricted cash
held by the Company or any Company Subsidiary at the Closing in an aggregate
amount of up to Fifty Thousand Dollars ($50,000) will be included in Working
Capital.

 

Article II
PURCHASE AND SALE OF THE INTERESTS

 

2.1 Transfer of Interests and Caribe Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing and as of the Effective Time,
Parent shall (a) sell, assign, transfer and convey to the Buyer and the Buyer
shall purchase, acquire and accept from Parent, all of Parent’s right, title and
interest to and in all of the Company Interests, free and clear of all
Encumbrances (other than any restrictions on transfer generally arising under
applicable federal or state securities Laws), and (b) cause ESCO Luxembourg to
sell, assign, transfer and convey to the Buyer and the Buyer shall purchase,
acquire and accept from ESCO Luxembourg all of ESCO Luxembourg’s right, title
and interest to and in all of the Caribe Shares, free and clear of all
Encumbrances (other than any restrictions on transfer generally arising under
applicable federal or state securities Laws), pursuant to a separate share
transfer agreement in the form attached hereto as Exhibit B (the “Caribe
Transfer Agreement”).

 

2.2 Consideration. The consideration that the Buyer shall pay Parent, for itself
and on behalf of ESCO Luxembourg, for the Company Interests, the Caribe Shares
and other rights of the Buyer hereunder shall be One Hundred Thirty Million U.S.
Dollars (US$130,000,000), subject to adjustment as provided in this Agreement
(the “Purchase Price”).

 

2.3 Closing(a) . The Closing shall take place at 9:00 a.m. U.S. Central Time on
the Closing Date at the offices of Bryan Cave LLP, in St. Louis, Missouri on the
fourth Business Day following the satisfaction or waiver, if permissible, of the
conditions set forth in Article VII and Article VIII (other than conditions
which by their nature are to be satisfied or waived at the Closing and are
expected to be satisfied at the Closing) (such date, the “Closing Date”), unless
another date or place is agreed to in writing by Parent and the Buyer. At
Closing, Parent shall deliver or cause to be delivered to the Buyer the
documents identified in Section 7.4, and the Buyer shall (a) deposit with the
Employee Escrow Agent an amount equal to the Employee Escrow Amount into a
segregated account (the “Employee Escrow Account”) and (b) deliver to Parent (i)
by wire transfer of immediately available funds, in accordance with the wire
transfer instructions set forth on Disclosure Schedule 2.3, the Closing Payment
and (ii) the documents identified in Section 8.4. All proceedings to be taken
and all documents to be executed and delivered by all Parties at the Closing
will be deemed to have been taken and executed simultaneously and no proceedings
will be deemed to have been taken nor documents executed or delivered until all
have been taken, executed and delivered. The effective time of the Closing shall
be at 11:59 p.m. U.S. Central Time on the Closing Date (the “Effective Time”).
The Parties intend that the pre-Closing and Closing shall be effected, to the
extent practicable, by conference call, the electronic delivery of documents and
the prior physical exchange of certificates and certain other documents and
instruments to be held in escrow by outside counsel to the recipient Party
pending authorization by the delivering Party (or their outside counsel) of
their release at Closing. If any Consent required to be obtained by Parent in
connection with the consummation of the transactions contemplated hereby is not
obtained as of the Closing Date, Parent agrees to reasonably cooperate with the
Buyer to obtain such Consents within a reasonable time post-Closing.

 

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2.4 Benchmark Statement, Estimated Closing Statement and Closing Statement.

 

(a) Attached hereto as Disclosure Schedule 2.4(a)(i) is a statement of working
capital of the Company and the Company Subsidiaries as of January 31, 2014 (the
“Benchmark Statement”), calculated and adjusted pursuant to GAAP applied on a
basis consistent with the Balance Sheet, except for those items described on
Disclosure Schedule 2.4(a)(ii) (the “Agreed Accounting Principles”). For
purposes of this Agreement, the term “Benchmark Working Capital” shall mean
Fifty One Million Five Hundred Thousand Dollars ($51,500,000.00).

 

(b) No later than three (3) Business Days prior to Closing, Parent shall deliver
or cause to be delivered to the Buyer a statement (the “Estimated Closing
Statement”) setting forth Parent’s good faith estimate of (i) the Working
Capital of the Company and the Company Subsidiaries as of the Effective Time
(such estimate, the “Estimated Working Capital”), (ii) the Indebtedness of the
Company and the Company Subsidiaries as of the Effective Time (the “Estimated
Indebtedness”), (iii) the unpaid Transactional Expenses (the “Estimated
Transactional Expenses”) and (iv) the Special Receivable as of the Effective
Time (the “Estimated Special Receivable,” which shall be reflected in a separate
statement to be delivered to Buyer at the same time as the delivery of all other
items comprising the Estimated Closing Statement), in each case prepared in
accordance with the Agreed Accounting Principles and the applicable provisions
of this Agreement. If the Estimated Working Capital is greater or less than the
Benchmark Working Capital, then for purposes of determining the Closing Payment,
the Purchase Price shall be increased or decreased, as the case may be, on a
dollar-for-dollar basis by the amount by which the Estimated Working Capital
reflected on the Estimated Closing Statement is greater or less than the
Benchmark Working Capital (the “Estimated Adjustment Amount”). In addition, for
purposes of determining the Closing Payment, the Purchase Price shall be
decreased on a dollar-for-dollar basis by the amount of the Estimated
Indebtedness and the Estimated Transactional Expenses.

 

2.5 Post-Closing Adjustment.

 

(a) As soon as reasonably practicable following the Closing Date, and in any
event no later than 90 days thereafter, the Buyer shall cause to be prepared and
delivered to Parent a statement (the “Closing Statement”) setting forth the
Working Capital of the Company and the Company Subsidiaries as of the Effective
Time (the “Closing Working Capital”), the Indebtedness of the Company and the
Company Subsidiaries as of the Effective Time (the “Closing Indebtedness”), the
Transactional Expenses of the Company and the Company Subsidiaries (the “Closing
Transactional Expenses”) and the Special Receivable as of the Effective Time
(the “Closing Special Receivable”). The Closing Statement shall be prepared in
accordance with GAAP (with respect to such accounts as are required to be
included on the Closing Statement), subject to the Agreed Accounting Principles
and the applicable provisions of this Agreement. Parent and Buyer shall permit
each other and their respective accountants to review promptly upon request all
records necessary for the preparation by the Buyer and review by Parent of such
Closing Statement and computation of the Closing Working Capital, the Closing
Indebtedness, the Closing Transactional Expenses and the Closing Special
Receivable and to take copies of the same. At the other party’s request, Parent
or Buyer, as the case may be, (i) shall reasonably cooperate and assist, and
shall cause their respective Representatives to reasonably cooperate and assist,
the requesting party and its Representatives in the preparation or review, as
the case may be, of the Closing Statement (including by executing such documents
and other instruments and taking further actions as may be reasonably required
to cause a party’s accountants to deliver to the other party and its
Representatives copies of their work paper relating to the computation of the
Closing Payment) and (ii) shall provide the other party and its Representatives
with any information reasonably requested by them.

 

15

 

 

(b) If Parent disputes the Closing Working Capital, the Closing Indebtedness,
the Closing Transactional Expenses or the Closing Special Receivable as
calculated by the Buyer and set forth on the Closing Statement, not more than 30
calendar days after the date Parent receives the Buyer’s calculation thereof,
Parent shall deliver to the Buyer a Notice of Dispute. If no Notice of Dispute
is delivered by Parent within such 30 calendar day period or if Parent delivers
a written acceptance of the Closing Statement during such 30 calendar day
period, then such Closing Statement and Closing Working Capital, the Closing
Indebtedness, the Closing Transactional Expenses and the Closing Special
Receivable shall become final and binding as of the end of such 30 calendar day
period or the date of receipt by the Buyer of such written acceptance, as
applicable.

 

(c) In the event that Parent delivers to the Buyer a Notice of Dispute, the
Buyer and Parent shall promptly consult and cooperate with each other in good
faith with respect to the specified points of disagreement in an effort to
resolve the dispute and upon such resolution, if any, any adjustments to the
Closing Statement or Closing Working Capital, the Closing Indebtedness, the
Closing Transactional Expenses or the Closing Special Receivable shall be made
as agreed upon by the Buyer and Parent. If any such dispute cannot be resolved
by Parent and the Buyer within 30 calendar days after the Buyer receives the
Notice of Dispute, Parent and the Buyer shall jointly refer the dispute to
Deloitte & Touche LLP (the “Arbiter”), as an arbitrator to finally resolve, as
soon as practicable, and in any event within 45 calendar days after such
reference, all points of disagreement with respect to the Closing Working
Capital, the Closing Indebtedness, the Closing Transactional Expenses or the
Closing Special Receivable reflected on the Closing Statement. For purposes of
such arbitration each of Parent and the Buyer shall submit a proposed
calculation of the Closing Working Capital, the Closing Indebtedness, the
Closing Transactional Expenses or the Closing Special Receivable, as applicable.
The Arbiter shall apply the terms of Sections 2.4 and 2.5 of this Agreement and
all relevant definitions contained herein, and shall otherwise conduct the
arbitration under such procedures as the Parties may agree or, failing such
agreement, under the then prevailing Commercial Rules of the American
Arbitration Association. Parent and the Buyer shall each furnish the Arbiter
with such work papers and other documents and information relating to the
disputed issues as the Arbiter shall request, and, subject to Section 6.4, shall
provide copies to the other Party of any work papers, documents and information
so furnished to the Arbiter. Each of the Parties shall bear its own expenses in
connection with the arbitration. The fees and expenses of the Arbiter incurred
in connection with the arbitration of the Closing Working Capital, the Closing
Indebtedness, the Closing Transactional Expenses or the Closing Special
Receivable, as applicable, shall be allocated between Parent and the Buyer by
the Arbiter in proportion to the extent either of such Parties did not prevail
on items in dispute with respect to the Closing Working Capital, the Closing
Indebtedness, the Closing Transactional Expenses or the Closing Special
Receivable, as applicable, reflected on the Closing Statement; provided, that
such fees and expenses shall not include, so long as a Party complies with the
procedures of this Section, the other Party’s outside counsel or accounting
fees. The Parties agree not to engage in any ex parte communication with the
Arbiter. All determinations by the Arbiter shall be final, conclusive and
binding with respect to the Closing Working Capital, the Closing Indebtedness,
the Closing Transactional Expenses or the Closing Special Receivable and the
allocation of arbitration fees and expenses, in the absence of fraud or manifest
error. The Closing Statement and Closing Working Capital (i) if deemed final in
accordance with Section 2.5(b), as originally submitted by Parent, or (ii) if a
Notice of Dispute has been timely delivered by the Buyer in accordance with this
Section 2.5(c), as determined pursuant to the resolution of such dispute
pursuant to this Section 2.5(c), shall be, respectively, the “Final Statement”,
the “Final Working Capital”, the “Final Indebtedness”, the “Final Transactional
Expenses” and the “Final Special Receivable”.

 

16

 

 

(d) Based on the Closing Statement as finally determined under Section 2.5(a)
or, if necessary, Section 2.5(b) or (c), the Closing Payment shall be increased
or decreased, as the case may be, on dollar-for-dollar basis by the amount equal
to the following (the “Net Adjustment Amount”):

 

(i) the sum of (a) any amount by which Closing Working Capital reflected on the
Closing Statement exceeds the Estimated Working Capital, (b) any amount by which
Estimated Indebtedness exceeds Final Indebtedness and (c) any amount by which
Estimated Transactional Expenses exceed Final Transaction Expenses;

 

minus

 

(ii) the sum of (x) any amount by which Estimated Working Capital exceeds the
Closing Working Capital reflected on the Closing Statement, (y) any amount by
which Final Indebtedness exceeds Estimated Indebtedness and (z) any amount by
which Final Transactional Expenses exceed Estimated Transactional Expenses.

 

(e) If the Net Adjustment Amount is a positive number, then the Buyer shall pay
or cause to be paid to Parent the Net Adjustment Amount, or, if the Net
Adjustment Amount is a negative number, then Parent shall cause to be paid to
the Buyer the Net Adjustment Amount, in either case, plus interest, compounded
annually, calculated using a 365 day year from the Closing Date through the date
prior to the date of payment at the prime lending rate of Bank of America, N.A.
as in effect as of the Closing Date. Any payment so required to be made by
either Parent or the Buyer shall be by wire transfer of immediately available
funds, not more than seven (7) Business Days after final determination thereof
pursuant to Section 2.5(c), to an account to be designated by the payee at least
two (2) Business Days prior to the due date.

 

17

 

 

(f) Any adjustment attributable to the difference between the Estimated Special
Receivable and the Final Special Receivable shall not require any payment or
set-off, but instead shall increase or decrease the amount to be remitted in
accordance with the Special Receivable payment process described in Section
6.14.

 

2.6 Post-Closing Receipt of Invoices. From and after the Closing Date, (a) the
Buyer shall remit to Parent all invoices and amounts received by the Buyer after
the Closing Date which relate to Parent’s or any of its Affiliates’ businesses
and (b) Parent shall remit to the Buyer all invoices and amounts received by
Parent after the Closing Date which relate to the operation of the Business
(other than amounts received in respect of the Special Receivable), including
invoices for any charges incurred by Employees following the Effective Time
(including any charges on credit cards issued in Parent’s name). The Buyer or
Parent, as the case may be, shall pay and remit to the applicable payee the
amount of all such invoices in no event later than the due date specified on the
applicable invoice.

 

2.7 Intercompany Accounts. As of the Effective Time, all intercompany accounts,
other than those between the Company and the Company Subsidiaries, will be
eliminated.

 

2.8 Withholding. Provided that Buyer gives prompt written notice to Parent that
Buyer reasonably believes it will be obligated to withhold tax, the Buyer may
deduct and withhold from the amounts otherwise payable by it pursuant to this
Agreement to any Person such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of
state, local or foreign Tax Law, provided that if there is a change in the Code
or any provision of state, local or foreign Tax Law after the provision of such
notice to Parent and prior to Closing that would require the Buyer to deduct and
withhold from the amounts otherwise payable by it pursuant to this Agreement,
the Buyer shall be permitted to withhold and deduct any such amounts from the
amount paid hereunder. The Buyer shall use its commercially reasonable efforts
to mitigate any such withholding. In the event that any amount is so deducted
and withheld, the Buyer shall properly remit such amounts to the appropriate
Governmental Authority. Any such amounts will be treated for all purposes of
this Agreement as having been paid to the Person from whom such amount was
withheld. Notwithstanding the foregoing, the Buyer shall not withhold with
respect to U.S. Taxes so long as Parent complies with the requirements of
Section 6.9(h) of this Agreement.

 

Article III
REPRESENTATIONS AND WARRANTIES OF PARENT

 

Parent hereby makes the following representations and warranties to the Buyer,
each of which is true and correct on the date hereof and as of the Closing and
shall survive the Closing as set forth in Section 9.5(a):

 

3.1 Existence and Power; Non-Contravention.

 

(a) Parent has the corporate power and authority to execute and deliver this
Agreement and the Ancillary Agreements, to transfer the Company Interests, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. ESCO Luxembourg has the authority
to execute and deliver each Ancillary Agreement to which it is a party, to
perform its obligations thereunder, to consummate the transactions contemplated
thereby and to transfer the Caribe Shares.

 

18

 

 

(b) Each of Parent, ESCO Luxembourg, the Company and the Company Subsidiaries,
is duly organized, validly existing and in good standing under the laws of its
jurisdiction set forth on Disclosure Schedule 3.1(b).

 

(c) The Company and the Company Subsidiaries have the power and authority to
own, lease and use their assets and to transact the business in which they are
engaged, including the Business, and hold all material Permits required
therefor. Each of the Company and the Company Subsidiaries is duly licensed or
qualified to do business and is in good standing in each jurisdiction where such
license or qualification is required, except those jurisdictions where the
failure to be so licensed or qualified would not have a Material Adverse Effect.

 

(d) Except as set forth on Disclosure Schedule 3.1(d), neither the execution and
delivery of this Agreement or the Ancillary Agreements by Parent or, as
applicable, ESCO Luxembourg, nor the consummation by Parent or ESCO Luxembourg
of the transactions contemplated herein or therein nor compliance by Parent or
ESCO Luxembourg with any of the provisions hereof or thereof, will (i) conflict
with or result in a breach of any provisions of the certificate of incorporation
or bylaws or equivalent organizational documents (“Organizational Documents”) of
Parent, ESCO Luxembourg, the Company or the Company Subsidiaries (ii) subject to
receipt of the requisite approvals referred to in Disclosure Schedule 3.1(e),
violate any Order or Law applicable to Parent, ESCO Luxembourg, the Company or
the Company Subsidiaries, (iii) conflict with, result in a breach or default of,
or render void or result in the withdrawal or cancelation of any right, interest
or option under, any Material Contract, lease in respect of the Leased Real
Property or Permit, (iv) result in the creation or imposition of any
Encumbrances on any of the Interests of the Company or the Company Subsidiaries
or (v) result in the creation or imposition of any material Encumbrances on any
material assets of the Company or the Company Subsidiaries.

 

(e) Except as set forth on Disclosure Schedule 3.1(e) or otherwise provided for
herein, no Consent of, or declaration to or filing or registration with, any
Governmental Authority (other than in the capacity as a customer in the Ordinary
Course) is required in connection with the execution, delivery, performance of
this Agreement and the Ancillary Agreements, the transfer of the Company
Interests or Caribe Shares or the consummation of the transactions contemplated
hereby and thereby by Parent or ESCO Luxembourg.

 

(f) Parent or the Company has made available to the Buyer true and complete
copies of the Organizational Documents of the Company and the Company
Subsidiaries as in effect on the date of this Agreement. None of the Company nor
any Company Subsidiary is in material breach or violation of or default under
any provision of its Organizational Documents.

 

3.2 Valid and Enforceable Agreement; Authorization. This Agreement and the
Ancillary Agreements have been duly executed and delivered by Parent and, as
applicable, ESCO Luxembourg (assuming due authorization, execution and delivery
by the Buyer), and constitute legal, valid and binding obligations of Parent
and, as applicable, ESCO Luxembourg, enforceable against Parent and, as
applicable, ESCO Luxembourg in accordance with their terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors’ rights generally, and (ii) general principles of equity
(collectively, the “General Enforceability Exceptions”). The execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly authorized,
approved and ratified by all necessary corporate action on the part of Parent
and, as applicable, ESCO Luxembourg. Each of Parent and, as applicable, ESCO
Luxembourg has full corporate authority to enter into and deliver this Agreement
and the Ancillary Agreements, to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.

 

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3.3 Capitalization and Ownership.

 

(a) Disclosure Schedule 3.3 sets forth the capitalization of the Company and the
Company Subsidiaries. All of the issued and outstanding Interests have been
validly issued. Parent is the legal and beneficial owner of the Company
Interests, the Company is the legal and beneficial owner of all of the
International Interests and ESCO Luxembourg is the legal and beneficial owner of
the Caribe Shares, in each case free and clear of Encumbrances (other than any
restrictions on transfer generally arising under applicable federal or state
securities Laws).

 

(b) The authorized, issued and outstanding shares of capital stock or membership
interests of the Company and the Company Subsidiaries, and their respective
jurisdictions of formation are identified on Disclosure Schedule 3.3. Neither
the Company nor any Company Subsidiary owns any shares of capital stock or
membership interests of any other person, except as set forth on Disclosure
Schedule 3.3.

 

(c) There are no (i) outstanding securities convertible or exchangeable into
shares of capital stock or interests of the Company or any Company Subsidiary;
(ii) options, warrants, calls, subscriptions, or other rights, agreements or
commitments obligating the Company or any Company Subsidiary to issue, transfer
or sell any shares of its capital stock or interests or (iii) voting trusts or
other agreements or understandings to which any of the Company or any Company
Subsidiary is a party or by which the Company or any Company Subsidiary is bound
with respect to the voting, transfer or other disposition of its shares of
capital stock or interests. There are no Contracts, contingent or otherwise,
obligating any of the Company or any Company Subsidiary to repurchase, redeem or
otherwise acquire or dispose of any shares of capital stock of, or other equity
or voting interests in, any of the Company or any Company Subsidiary.

 

(d) Upon the Closing, the Buyer will own, directly or indirectly, all of the
Interests free and clear of all Encumbrances (other than any restrictions on
transfer generally arising under applicable federal or state securities Laws),
subscriptions, options, warrants, calls and proxies, except for any of the
foregoing created by the action of the Buyer or any of its Affiliates.

 

(e) The minute books and stock record books of the Company and the Company
Subsidiaries, all of which have been made available to the Buyer, are complete
and correct in all material respects and have been maintained in accordance with
sound business practices. The minute books of the Company and the Company
Subsidiaries contain accurate and complete records of all meetings, and actions
taken by written consent of, the stockholders, members or other equity holders,
the board of directors and any committees of the board of directors of the
Company or the Company Subsidiaries, and any managers of the Company or the
Company Subsidiaries, and no meeting, or action taken by written consent, of any
such stockholders, members or other equity holders, the board of directors and
any committees thereof, and any managers has been held for which minutes have
not been prepared and are not contained in such minute books, it being
understood and acknowledged that the representation in this sentence with
respect to entities acquired by the Company is made to Parent’s knowledge with
respect to minutes of meetings and actions taken prior to the acquisition of
such entities by the Company. At the Closing, all of those books and records
will be in the possession of the Company or the Company Subsidiaries.

 

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3.4 Financial Statements. Attached as Disclosure Schedule 3.4(a) are the
Financial Statements. The Financial Statements (a) were derived from the books
and records of the Company and the Company Subsidiaries, (b) are complete and
accurate in all material respects and (c) present fairly in all material
respects the financial position and results of operations of the Company and the
Company Subsidiaries at the dates and for the periods indicated in accordance
with GAAP (except as described in Disclosure Schedule 3.4(b)) applied on a basis
consistent with the historical financial statements of the Company and the
Company Subsidiaries.

 

3.5 Undisclosed Liabilities. To Parent’s knowledge, except as set forth in
Disclosure Schedule 3.5, neither the Company nor any Company Subsidiary has any
Liability, other than (a) those set forth on the Balance Sheet, (b) liabilities
that have arisen after the date of the Balance Sheet in the Ordinary Course that
are not, individually or in the aggregate, material to the Company or the
Business, and (c) those set forth in or arising under Contracts (other than as a
result of any breach or nonperformance thereof).

 

3.6 Absence of Certain Developments. Except for the transactions contemplated
hereby or as set forth in Disclosure Schedule 3.6, since November 30, 2013, the
Company and the Company Subsidiaries have operated in the Ordinary Course and
neither the Company nor any Company Subsidiary has:

 

(a) suffered any Material Adverse Effect;

 

(b) incurred any Liability or entered into any transaction except in the
Ordinary Course;

 

(c) suffered any material adverse change in its relationship with any of its
suppliers, customers, distributors, lessors, licensors, licensees or other third
parties;

 

(d) increased the rate or terms of compensation or benefits payable to or to
become payable by it to its directors, officers, or employees or increased the
rate or terms of any bonus, pension or other employee benefit plan covering any
of its directors, officers or employees except in each case increases occurring
in the Ordinary Course in accordance with its customary practice (including
normal periodic performance reviews and related compensation and benefits
increases consistent with past practice);

 

21

 

 

(e) waived any claims or rights other than in the Ordinary Course;

 

(f) acquired, sold, transferred, conveyed, leased, subleased or otherwise
disposed of any businesses or any properties or assets in excess of $50,000,
individually or in the aggregate, (whether by merger, consolidation or
otherwise), other than acquisitions of supplies and sales of inventory in the
Ordinary Course;

 

(g) amended or changed its Organizational Documents;

 

(h) issued, created, granted, sold or otherwise disposed of or repurchased,
redeemed or otherwise acquired any shares or interests of, or rights of any kind
to acquire or subscribe to (including options) any shares of or interests in,
any of its capital stock or other equity interests or securities (including
convertible securities);

 

(i) declared, set aside or paid any dividend or other distribution (whether in
cash, stock or property, or any combination thereof) on any of its capital stock
or other equity interest;

 

(j) reclassified, combined, split, subdivided or issued any other securities in
respect of, in lieu of or in substitution for, directly or indirectly, any of
its capital stock or other equity interests;

 

(k) except in the Ordinary Course, cancelled, materially modified, terminated or
granted a material waiver or release of any Permit, Business Lease, Material
Contract or gave any consent or exercised any material right thereunder;

 

(l) suffered any material damage, destruction or Loss with respect to any of its
properties or assets, whether or not covered by insurance;

 

(m) (i) incurred, guaranteed or assumed any Indebtedness, or mortgaged, pledged
or subjected to any Encumbrance (other than a Permitted Encumbrance) any of its
properties or assets, or (ii) failed to pay any creditor any amount owed to such
creditor when due;

 

(n) made any loan, advance or capital contribution to, or investment in, any
Person other than travel loans or advances to employees in the Ordinary Course;

 

(o) participated in any arbitration, trial, hearing or other proceeding or
adjudication of any kind, whether before a court, judge, agency, arbitrator,
panel or any other type of adjudicator, concerning any claim(s) of any kind
against the Company or any Company Subsidiary and/or any of their respective
partners, directors, stockholders, members, officers, executives, managers or
employees;

 

(p) made any capital expenditure or commitment for any capital expenditure in
excess of $100,000, or failed to make property, plant and equipment (PP&E)
capital expenditures in accordance with the Company’s year-to-date budget;

 

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(q) failed to maintain in full force and effect or failed to replace or renew
any Policies in respect of the Company, Company Subsidiaries or the Business;

 

(r) failed to maintain the existence of the Company or any Company Subsidiary,
or merged or consolidated the Company or any Company Subsidiary with any other
Person;

 

(s) adopted a plan of complete or partial liquidation, dissolution, merger,
consolidation or recapitalization or otherwise wound up its business;

 

(t) made any material change in any method of accounting or accounting practice;

 

(u) made or revoked any material Tax election that would be binding on the
Company or the Company Subsidiaries after the Effective Time;

 

(v) failed to discharge any material Liability or make any material payment
required to be made by it when it became due except in connection with a good
faith dispute; or

 

(w) committed to do any of the foregoing.

 

3.7 Taxes. Except as set forth on Disclosure Schedule 3.7:

 

(a) All Tax Returns in respect of Pre-Closing Periods required to be filed
solely by the Company or the Company Subsidiaries before the Closing Date have
been filed and all such Tax Returns are true, correct, and complete in all
material respects.

 

(b) All Taxes due and owing that relate to the operations or activities of the
Company or the Company Subsidiaries (whether or not reflected on any Tax Return)
have been fully paid.

 

(c) No deficiencies for any Taxes for which the Company or the Company
Subsidiaries are solely liable have been asserted or assessed in writing which
remain unpaid.

 

(d) Each of the Company and the Company Subsidiaries has properly 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 third party, and all Forms W-2 and 1099 required with
respect thereto have been properly filed.

 

(e) There are no Encumbrances relating to unpaid Taxes upon the assets of the
Company or the Company Subsidiaries other than Permitted Encumbrances.

 

(f) There are no federal, state, or local Tax audits or administrative or
judicial Tax proceedings or Tax ruling requests pending, being conducted, or
threatened in writing with respect to Taxes that relate to the operations or
activities of the Company or any Company Subsidiary or with respect to the
Business. No issues have been raised in any examination with respect to the
Company or any Subsidiary that are expected to result in liabilities for Taxes
for any of the Company or Company Subsidiary or period not so examined.

 

23

 

 

(g) No waiver of any statutes of limitation or any extension of time with
respect to an assessment or deficiency for Taxes solely of the Company or the
Company Subsidiaries is currently in effect.

 

(h) Within the last five (5) years, no claim has been made by a taxing authority
in a jurisdiction where the Company or the Company Subsidiaries does not file
Tax Returns that it is subject to taxation by that jurisdiction.

 

(i) At all times since their formation, the Company and Aclara International
(and their predecessors) have been characterized as disregarded entities for
federal Income Tax purposes pursuant to Treas. Reg. § 301.7701-3.

 

(j) Neither the Company nor any Company Subsidiary has any Liabilities for the
Taxes of any person (i) as a transferee or successor, (ii) by Contract, or
(iii) under Section 1.1502-6 of the Treasury regulations or any similar
provision of state, local or foreign Law (other than (1) this Agreement, (2) Tax
sharing agreements solely between or among any of the Company and the Company
Subsidiaries or (3) any agreement or arrangement that the principal purpose is
not Tax indemnity, sharing, or allocation). Neither the Company nor any Company
Subsidiary is a party to, a beneficiary of or is subject to, any joint venture,
partnership or other arrangement that is treated as a partnership for federal
income tax purposes.

 

(k) The undistributed earnings and profits of Caribe generated during the period
of its industrial tax exemption granted to Caribe by the Commonwealth of Puerto
Rico continue to be exempt under Section 7(b) of the 1998 Tax Incentives Act
(Act 135) through the Closing Date.

 

(l) No Company or Company Subsidiary has been, or has been a member of a U.S.
federal consolidated return group, that is the “distributing corporation” or the
“controlled corporation” (within the meaning of Section 355 of the Code) with
respect to a transaction described in Section 355 of the Code within the
five-year period ending as of the date of this Agreement.

 

(m) No Company or Company Subsidiary is or has been a party to any “listed
transaction,” as defined in Section 6707A(c)(2) of the Code and Treasury
Regulations Section 1.6011-4(b)(2) or to any “transaction of interest” as
defined in Treasury Regulations Section 1.6011-4(b)(6).

 

3.8 Litigation(a) . Except as set forth on Disclosure Schedule 3.8, there are no
actions, suits, proceedings, orders or, to Parent’s knowledge, investigations
pending or, to Parent’s knowledge, threatened against the Parent, ESCO
Luxembourg, the Company or the Company Subsidiaries. There is no action, suit,
proceeding order or, to Parent’s knowledge, investigation, pending or, to
Parent’s knowledge, threatened that challenges or seeks to prevent, enjoin or
otherwise delay or which would otherwise interfere with the consummation of the
transactions contemplated hereby and by the Ancillary Agreements. None of the
Company nor any Company Subsidiary is subject to any Order of any Governmental
Authority (excluding any such matters of general applicability or applicable to
entities situated similarly to the Company and the Company Subsidiaries rather
than to any of them specifically).

 

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3.9 Real Property.

 

(a) Disclosure Schedule 3.9(a) sets forth a list of all land and real property
owned in fee simple by the Company or any Company Subsidiary, together with all
buildings, structures, improvements and fixtures located thereon and any
easements, rights-of-way, licenses, privileges, air rights and other rights and
interests appurtenant thereto (collectively, and specifically including the
Campus Parkway Property, the “Owned Real Property”). With respect to each parcel
of Owned Real Property, (i) the Company or the applicable Company Subsidiary
owns good and valid title to such parcel of real property, free and clear of
Encumbrances except Permitted Encumbrances, (ii) to Parent’s knowledge, the
current use and occupancy of the Owned Real Property and the operation of the
Business by the Company as currently conducted thereon do not violate any
applicable zoning law, easement, covenant, condition, restriction or similar
provision in any instrument of record or other unrecorded agreement affecting
the Owned Real Property, (iii) none of Parent, Company or the Company
Subsidiaries has received any written notice of any pending or threatened
condemnation proceedings in the nature of eminent domain in connection with such
Owned Real Property, (iv) there are no leases, subleases, licenses, concessions
or other agreements, written or oral, granting to any party or parties the right
of use or occupancy of any portion of such parcel of real property, (v) there
are no outstanding options or rights of first refusal to purchase such parcel of
real property, or any portion thereof or interest therein, and (vi) to Parent’s
knowledge, all utilities and major building systems currently serving the Owned
Real Property are properly installed, connected and operating, and are
sufficient for the operation of the Business as currently conducted.

 

(b) Disclosure Schedule 3.9(b) sets forth a list of all leases and subleases
(including any amendments, extensions, renewals, guaranties and licenses to
occupy real property relating thereto) with respect to real property pursuant to
which the Company or any Company Subsidiary is a lessee, sublessor, sublessee,
licensee, occupant or which is otherwise used in connection with the Business as
of the date hereof, including the address of any such parcel of real property,
the name and address of the third party lessor, sublessor, sublessee or
licensor, the expiration date of each such lease, license or sublease (the
“Leased Real Property”).

 

(c) Disclosure Schedule 3.9(c) sets forth a list of all material leases with
respect to personal property pursuant to which the Company or any Company
Subsidiary is a lessee as of the date hereof (the “Leased Personal Property”
and, together with the Leased Real Property, the “Company Properties”).

 

25

 

 

(d) Each of the leases set forth on Disclosure Schedule 3.9(b) and Disclosure
Schedule 3.9(c) (collectively, the “Business Leases”) is legal, valid and
binding on the Company or the Company Subsidiary party thereto, as applicable,
and, to Parent’s knowledge, the other party thereto, subject to the General
Enforceability Exceptions, and is free from any Encumbrance other than Permitted
Encumbrances. Parent has delivered or made available to the Buyer a true and
complete copy of each Business Lease document (including, without limitation,
any renewal, amendment, extension or modification thereof) and in the case of
any oral Business Lease, if any, a written summary of the material terms of such
Business Lease. To Parent’s knowledge, (i) all rentals due under such Business
Leases have been paid, (ii) there are no disputes with respect to the Business
Leases, (iii) there exists no material default by the Company or the Company
Subsidiary party thereto, or by any other party to such Business Lease under the
terms thereof, and (iv) no event has occurred or circumstance exists which, with
the delivery of notice, the passage of time or both, could reasonably be
expected to constitute such a breach or default, or permit the termination,
modification, penalty increase in or acceleration of rent under such Business
Lease. As of the date of this Agreement, neither the Company nor any Company
Subsidiary has received any written notice of termination of such Business Lease
by the landlord or sublessee, as applicable, party thereto. Except as set forth
on Disclosure Schedule 3.9(b), the Company and the Company Subsidiaries have not
assigned, transferred, sublet or granted any Person the right to use or occupy
the Leased Real Property or granted any other security interest in any Business
Lease or any interest therein. The Company’s and the Company Subsidiaries’
possession and quiet enjoyment of the Leased Real Property have not been
disturbed. There is no option to purchase, right of first refusal, right of
first offer, or other agreement granting any person or entity any right to
acquire, sublease or use the Company Properties, which right or option is not
expressly contained in the relevant Business Lease. No security deposit or
portion thereof deposited with respect to such Business Lease has been applied
in respect of a breach or default under such Business Lease which has not been
redeposited in full. None of Parent, the Company nor any Company Subsidiary owes
any brokerage commissions or finder’s fees with respect to any Business Lease.
To the knowledge of Parent, there are no unsatisfied and/or deferred capital
expenditure requirements or remodeling obligations (with respect to remodeling
obligations, to the extent set forth in a Contract or required by Law) of
Parent, the Company or any Company Subsidiary in connection with any Company
Property and/or Business Lease other than ordinary maintenance and repair
obligations and, to the knowledge of Parent, there are no defects in the
buildings, improvements and structures located on or at the Company Properties
which would materially impair the conduct of the Business by the Buyer
immediately following the Closing. To the knowledge of Parent, the mechanical,
electrical, plumbing, HVAC and other systems servicing the Company Properties
are in good working order and repair, ordinary wear and tear excepted, and to
the knowledge of Parent, there are no defects in such systems which would
reasonably be expected to impair the conduct of the Business by the Buyer
immediately following the Closing. None of the Company Properties consists of a
ground lease except as set forth on Disclosure Schedule 3.9(b), and if any
ground leases are identified in Disclosure Schedule 3.9(b), the Company or the
Company Subsidiaries own all buildings and structures on the land encumbered by
such ground leases subject to and as set forth in the terms of such ground
leases.

 

(e) Disclosure Schedule 3.9(e) sets forth a complete list of any real property
formerly leased by the Company or any Company Subsidiary within the last three
(3) years, together with the address of such location, the names of all parties
to such lease, and the date of termination of such lease and the date the
Company or applicable Company Subsidiary fully vacated such location
(collectively, the “Former Leases”). There are no outstanding termination fees
or contingent liabilities related to any Former Leases.

 

3.10 Property; Title.

 

(a) Each of the Company and the Company Subsidiaries has good and valid title to
(or a valid leasehold interest in (subject to the terms of the applicable lease)
or other right to use, as the case may be) the assets, rights and properties
shown to be owned by the Company and the Company Subsidiaries on the Balance
Sheet, free and clear of all Encumbrances, other than Permitted Encumbrances.
Except as set forth on Disclosure Schedule 3.10(a), the assets, rights and
properties that the Company and the Company Subsidiaries own, together with (i)
all property or assets leased to the Company or the Company Subsidiaries, (ii)
Intellectual Property licensed to the Company or the Company Subsidiaries or as
described on Disclosure Schedule 3.16(b)(i)(1) and (iii) those assets, rights or
properties which are owned or used by Parent or its Affiliates (other than the
Company and the Company Subsidiaries) to provide financial, legal, accounting,
information technology, insurance, tax, and human resources services and other
types of similar administrative services to the Company and the Company
Subsidiaries described on Disclosure Schedule 3.10(a)(iii), constitute all
material property, real and personal, tangible and intangible, used by the
Company and the Company Subsidiaries to transact the Business as presently
conducted and as proposed to be conducted by Parent in the Ordinary Course. Upon
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, to Parent’s knowledge, the Company and the Company
Subsidiaries will be entitled to continue to use all the properties and assets
except those described above in Section 3.10(a)(iii) which are currently used by
them in the conduct of the Business.

 

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(b) Parent has provided to Buyer or its Representatives a complete and accurate
fixed asset register dated as of September 30, 2013 listing the tangible
personal property and tangible assets of the Company and the Company
Subsidiaries as of such date, other than inventory, materials and supplies, in
each case with a fair market value in excess of $50,000.

 

3.11 Condition of Personal Property. Except as set forth in Disclosure
Schedule 3.11, all tangible personal property which is material to the conduct
of the Business has been maintained in good operating condition and repair, in
the Ordinary Course in a manner consistent with past maintenance practices of
the Business in accordance with standard industry practices.

 

3.12 Contracts.

 

(a) Except as set forth on Disclosure Schedule 3.12(a), neither the Company nor
any Company Subsidiary is a party to or otherwise obligated under any of the
following (each a “Material Contract”):

 

(i) Any Contract, agreement or purchase order providing for the sale of products
or the provision of services in excess of $500,000 in any twelve (12) month
period during the last twenty-four (24) month period, or $1,000,000 in the
aggregate in the last thirty-six (36) month period, in any such case, by the
Company or any Company Subsidiary;

 

(ii) Any Contract providing for an expenditure by the Company or any Company
Subsidiary in excess of $500,000 in any twelve (12) month period during the last
twenty-four (24) month period, or $1,000,000 in the aggregate in the last
thirty-six (36) month period;

 

(iii) Any Contract providing for an expenditure by the Company or any Company
Subsidiary for the purchase, lease or sale of real property in excess of $60,000
in any twelve (12) month period during the last thirty-six (36) month period;

 

(iv) Any Contract pursuant to which the Company or any Company Subsidiary is the
lessee or sublessee of, or holds or operates, any personal property owned or
leased by any other person (other than leases of personal property leased in the
Ordinary Course with lease payments no greater than $100,000 in any twelve (12)
month period during the last thirty-six (36) month period);

 

27

 

 

(v) Any loan agreement, indenture, promissory note, letter of credit
arrangement, capital lease, Contract providing for deferred rent, interest rate
protection Contract, interest rate swap Contract, foreign currency exchange
Contract, or other interest or exchange rate hedging Contract;

 

(vi) Any Contract which involves a sharing of profits or any joint venture or
partnership;

 

(vii) Any sales agency, sales representation or distributorship Contract that by
its terms is not terminable without cost or penalty within thirty (30) days;

 

(viii) Any Contract not made in the Ordinary Course that is in excess of
$100,000 in the last twelve (12) months;

 

(ix) Any Contract relating to the settlement of any action, complaint, petition,
suit, arbitration, litigation or other proceeding in the last thirty-six (36)
months;

 

(x) Any Contract requiring the Company or any Company Subsidiary to purchase its
total requirements of any product or service from a third party or that contains
“take or pay” or other minimum purchase requirements in excess of $100,000 in
any twelve (12) month period;

 

(xi) Any Contract that (A) limits the ability of the Company or any Company
Subsidiary to compete with or conduct any business or line of business
(including geographic restrictions), (B) provides for “most favored nation”
terms or (C) grants exclusive rights to any Person to sell products or services
of the Business in any market, field or territory;

 

(xii) Any Contract under which any Person has directly guaranteed the
performance of the Company or any Company Subsidiary under a Contract disclosed
pursuant to Sections 3.12(a)(i) or 3.12(a)(ii);

 

(xiii) Any Contract under which the Company or any Company Subsidiary has
directly made any advance, loan, extension of credit or capital contribution to,
or other investment in, any Person;

 

(xiv) Any Contract providing for a guarantee by the Company or any Company
Subsidiary of the obligations of any third party (other than with respect to
products);

 

(xv) Any Contract between or among any of the Company or Company Subsidiaries,
on the one hand, and Parent or any of its Affiliates, on the other hand;

 

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(xvi) Any Contract with a Governmental Authority, other than in the capacity as
a customer in the Ordinary Course;

 

(xvii) Any powers of attorney or similar instruments, other than those granted
to employees in the Ordinary Course or those granted to third parties for
purposes of processing goods or services through customs;

 

(xviii) Any Contract for the grant to any Person of any option or right of first
refusal or preferential right to purchase any of the assets of the Company or
any Company Subsidiary;

 

(xix) Any Contract that provides for payments that are conditioned, in whole or
in part, on the change of control of the Company or any Company Subsidiary,
other than any such Contracts with employees;

 

(xx) Any Contract that provides for an assignment of exclusive ownership of, or
the granting of exclusive rights to, any Intellectual Property Rights owned,
developed or created by the Company;

 

(xxi) Any Contract that provides for the payment of any royalty or contingent
license fees by the Company based upon the Company’s use or exploitation of any
Intellectual Property Rights; or

 

(xxii) Any Contract that provides for the disclosure or escrow of any source
code owned, developed or created by the Company, other than any such Contract
requiring disclosure to, or escrow of source code for the benefit of, customers
in the event of a (1) failure or refusal of the Company to maintain or support
applicable software or (2) default by the Company or any Company Subsidiary.

 

(b) Each of the Material Contracts is legal, valid and binding on the Company or
the Company Subsidiary, as the case may be, and, to Parent’s knowledge, the
other party thereto, subject to the General Enforceability Exceptions. Except as
set forth in Disclosure Schedule 3.12(b), to Parent’s knowledge, the terms of
all Material Contracts have been complied with in all material respects by the
Company or the Company Subsidiary, as applicable, and by the other parties to
such Material Contract. Parent has provided to the Buyer an accurate and
complete copy of each Material Contract (including all modifications, amendments
and supplements thereto and waivers thereunder). Except as set forth in
Disclosure Schedule 3.12(b), with respect to each Material Contract, none of the
Company nor any Company Subsidiary has given or received notice to or from any
Person relating to any alleged or potential default that has not been cured and
no event has occurred which with or without the giving of notice or lapse of
time, or both, could violate, breach, conflict with or constitute a default, an
event of default, or an event creating any additional rights (including rights
of amendment, impairment, modification, suspension, revocation, acceleration,
termination, or cancellation), impose additional obligations or result in a loss
of any rights, or require a consent or the delivery of notice, under any
Material Contract.

 

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(c) Except as set forth on Disclosure Schedule 3.12(c), neither the Company nor
any Company Subsidiary is a party to, subject to or bound by any Material
Contract, which would be breached or violated or its obligations thereunder
accelerated or increased (whether or not with notice or lapse of time or both)
in any material respect by the execution or delivery by Parent of this Agreement
or the performance by Parent of the transactions contemplated by this Agreement.

 

3.13 Licenses and Permits. Except as set forth on Disclosure Schedule 3.13, the
Company and the Company Subsidiaries have all material permits, licenses and
authorizations of Governmental Authorities (collectively, “Permits”) necessary
for the conduct of the Business as presently conducted in the Ordinary Course,
and all such Permits are in full force and effect in all material respects. To
Parent’s knowledge, no action is pending or threatened by any Governmental
Authority relating to the suspension of any such Permit.

 

3.14 Compliance with Laws(a) . Except for Laws relating to Taxes, environmental
matters, intellectual property, labor matters and employee benefits, which shall
be governed exclusively by Section 3.7, Section 3.15, Section 3.16, Section 3.18
and Section 3.19, respectively, and except as set forth in Disclosure Schedule
3.14, the Company and the Company Subsidiaries are in compliance with all
applicable Laws currently in effect. None of the Company nor any Company
Subsidiary has received a notice or other communication from any Governmental
Authority (other than in the capacity as a customer in the Ordinary Course)
alleging a possible violation of any Law applicable to it, its personnel,
properties (including the Company Properties) or other assets or its businesses
or operations.

 

3.15 Environmental Matters. Except as set forth in Disclosure Schedule 3.15 (i)
the Company and the Company Subsidiaries are and have for the three (3) year
period prior to the Closing Date been in material compliance with all applicable
Environmental Laws and have obtained and are and have for the three (3) year
period prior to the Closing Date been in material compliance with all Permits
required by any applicable Environmental Law and which are necessary for the
conduct of the Business as presently conducted in the Ordinary Course, and all
such Permits are in full force and effect, (ii) neither the Company nor any
Company Subsidiary has Released a Hazardous Material into the environment which
could reasonably be expected to result in any material liability to the Company
or any Company Subsidiary under any Environmental Law, (iii) there are no
asbestos-containing materials, polychlorinated biphenyl containing equipment or
underground storage tanks which currently or previously contained Hazardous
Materials on or under any real property that the Company or any Company
Subsidiary owns or leases, (iv) there is no civil, criminal or administrative
action, suit, proceeding or, to Parent’s knowledge, investigation, pending or to
Parent’s knowledge, threatened against the Company or any Company Subsidiary
relating to or arising from any Environmental Laws and neither the Company nor
any Company Subsidiary has received written notice from a third party, including
a Governmental Authority, that it is a potentially responsible party pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Sec. 9601 et. seq. which remains unresolved, (v) no Releases of Hazardous
Materials have occurred and no Person has been exposed to any Hazardous
Materials at, from, to, or on any Site that could reasonably be expected to
result in any material liability to the Company or any Company Subsidiary under
any Environmental Law, (vi) neither the Company, any Company Subsidiary nor to
Parent’s knowledge, any of their respective predecessors, has transported or
arranged for the treatment, storage, disposal, or transportation of any
Hazardous Material to any off-Site location which has or could reasonably be
expected to result in any material liability to the Company or any Company
Subsidiary under any Environmental Law, (vii) there are no written reports
documenting any Phase I or Phase II environmental assessments, environmental
investigations, studies, audits, or tests conducted by, on behalf of, and which
are in the possession of the Company or any Company Subsidiary (or any advisors
or representatives thereof) with respect to any Site which have not been made
available to the Buyer prior to execution of this Agreement, (viii) neither the
Company nor any Company Subsidiary has entered into or is subject to, any Order
under any Environmental Laws under which the Company or any Company Subsidiary
has any ongoing obligations, and (ix) neither the Company nor any Company
Subsidiary has assumed responsibility for or agreed to indemnify or hold
harmless any Person for any liability or obligation arising under any
Environmental Law for which the Company or any Company Subsidiary has any
ongoing obligations. Notwithstanding anything in this Agreement to the contrary,
the representations and warranties in this Section 3.15 are the sole
representations and warranties of Parent with respect to Environmental Laws.

 

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3.16 Intellectual Property.

 

(a) Disclosure Schedule 3.16(a) sets forth a list of all patents, patent
applications, registered trademarks and applications for trademark registration,
copyright registrations and applications for registration of copyright, domain
name registrations (collectively, “Registered Intellectual Property”) that are
included in Business Intellectual Property.

 

(b) Except as set forth in Disclosure Schedule 3.16(b)(i)(1), Disclosure
Schedule 3.16(b)(i)(2) sets forth a list of all In-Bound Licenses that are
material to the Business (including all In-Bound Licenses between the Parent and
the Company or a Company Subsidiary or In-Bound Licenses for which the Parent is
the licensee for the benefit of the Company or a Company Subsidiary) other than
licenses to use commercially available software products with annual fees of
$100,000 or less or under standard end-user object code license agreements.
Disclosure Schedule 3.16(b)(ii) sets forth a list of all Out-Bound Licenses that
are material to the Business, other than any such agreements entered into by the
Company or a Company Subsidiary with a customer of the Business in the Ordinary
Course. Parent has provided Buyer with true and complete copies of all form
customer agreements. As of the date hereof, with respect to the Intellectual
Property Licenses listed on Disclosure Schedule 3.16(b)(i)(2) and Disclosure
Schedule 3.16(b)(ii) (i) each such Intellectual Property License is legal, valid
and binding on the Company or the Company Subsidiary party thereto, as
applicable, and, to Parent’s knowledge, the other party thereto, subject to the
General Enforceability Exceptions; (ii) the terms of all such Intellectual
Property Licenses have been complied with in all material respects by the
Company or by the Company Subsidiary that is a party thereto, as applicable,
and, to Parent’s knowledge, by the other parties to such Intellectual Property
Licenses; and (iii) except as set forth on Disclosure Schedule 3.16(b)(iii),
neither the Company nor any Company Subsidiary is a party to, subject to or
bound by any Intellectual Property License, which would be breached or violated
or its obligations thereunder accelerated or increased (whether or not with
notice or lapse of time or both) in any material respect by the execution or
delivery by Parent or ESCO Luxembourg of this Agreement or any Ancillary
Agreement, as applicable, or the performance by Parent or ESCO Luxembourg of the
transactions contemplated by this Agreement or any Ancillary Agreement. Except
as set forth in Disclosure Schedule 3.16(b)(iv), the Business Intellectual
Property and the Intellectual Property licensed pursuant to the In-Bound
Licenses owned or used by the Company or the Company Subsidiaries immediately
prior to the Closing Date will be owned or available for use (as applicable) on
identical terms and conditions immediately after the Closing Date. Except as set
forth in Disclosure Schedule 3.16(b)(v), neither the Company nor any Company
Subsidiary is bound by, and no Business Intellectual Property is subject to, any
agreement or arrangement containing any covenant or other provision that in any
way limits or restricts the ability of the Company or the Company Subsidiaries
to use, transfer, exploit, assert, or enforce any Business Intellectual Property
anywhere in the world.

 

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(c) Except as described in Disclosure Schedule 3.16(c), (i) the Company and/or
the Company Subsidiaries are the sole and exclusive owner of all right, title
and interest in and to the Business Intellectual Property and (ii) the Company
and/or the Company Subsidiaries are the sole and exclusive owner of all right,
title and interest in and to the patents that are included in the Business
Intellectual Property, in each case free and clear of all Encumbrances (other
than Permitted Encumbrances and restrictions on Business Intellectual Property
that are set forth in (1) the terms and conditions of any Out-Bound Licenses
listed in Disclosure Schedule 3.16(b)(ii) or (2) any license agreement between
the Company or any Company Subsidiary and a customer entered into in the
Ordinary Course).

 

(d) Except as set forth in Disclosure Schedule 3.16(d), the issued patents and
registered trademarks included in Business Intellectual Property set forth on
Schedule 3.16(a) and that are material to the conduct of the Business as
presently conducted, (i) have not been held invalid or unenforceable by any
court of competent jurisdiction, and (ii) are not the subject of any pending
proceeding alleging the invalidity or unenforceability of any such item of
Business Intellectual Property, or challenging or contesting the Company’s or
the applicable Company Subsidiary’s ownership thereof.

 

(e) Except as set forth in Disclosure Schedule 3.16(e)(i), the conduct of the
Business as presently conducted by the Company and any Company Subsidiary: (i)
with respect to all aspects of the Business other than the development of future
product lines, does not infringe or misappropriate any third party’s rights in
Intellectual Property, and (ii) with respect to aspects of the Business related
to the development of future product lines, to Parent’s knowledge, does not
infringe or misappropriate any third party’s rights in Intellectual Property.
Except as set forth in Disclosure Schedule 3.16(e)(ii), there are no, and there
have not been in the past six (6) years any, pending written claims, demands or
assertions, proceedings or actions alleging such infringement or
misappropriation, including by way of example and not limitation cease and
desist letters or offers of license. Except as set forth in Disclosure Schedule
3.16(e)(iii), to Parent’s knowledge, no Business Intellectual Property is being
infringed or misappropriated in any material respect.

 

(f) Except as set forth in Disclosure Schedule 3.16(f), the Business
Intellectual Property together with the Intellectual Property licensed pursuant
to the In-Bound Licenses constitute all Intellectual Property necessary for the
conduct of the Business as presently conducted.

 

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(g) The Company and the Company Subsidiaries (i) have established and adhere to
commercially reasonable processes and procedures to identify, document, track
and maintain, and (ii) use commercially reasonable measures to protect, the
Confidential Information in their possession. Except as set forth on Disclosure
Schedule 3.16(g), no such Confidential Information has been disclosed or
permitted to be disclosed to any Person (except in the Ordinary Course and under
an obligation of confidence), and all such Confidential Information held outside
the Company or a Company Subsidiary are subject to contractual confidentiality
obligations to which the Company or a Company Subsidiary is a party and able to
enforce. The Company or a Company Subsidiary possesses documentation relevant to
the Confidential Information contained in the Business Intellectual Property
that is current, accurate, and sufficient in detail and content to identify and
explain the nature and character of such Confidential Information.

 

(h) All Computer Software used internally by the Company or a Company Subsidiary
in the Business is owned by the Company or the relevant Company Subsidiary or
used pursuant to a valid license or other enforceable right and is not a
“bootleg” version or unauthorized copy. Except as set forth on Disclosure
Schedule 3.16(h), the Company or a Company Subsidiary possess such working
copies of all of the Computer Software, including, object and (to the extent
owned or licensed) source codes, and all related manuals, licenses and other
documentation, necessary for the current conduct of the Business. The Computer
Software used to operate the Business, including Computer Software offered by
the Company or a Company Subsidiary as part of their product or service
offerings (i) are in satisfactory working order; (ii) have appropriate security,
back ups, disaster recovery arrangements and hardware and software support and
maintenance to minimize the risk of material error, breakdown, failure or
security breach occurring and to ensure if such event does occur it does not
cause a material disruption to the Business; (iii) are configured and maintained
to minimize the effects of viruses and do not contain trojan horses, spyware,
adware, malware or other malicious code; and (iv) have not suffered any material
error, breakdown, failure or security breach in the last twenty-four (24) months
which has caused a Material Adverse Effect on the Business.

 

(i) The Open Source Software used by the Company or the Company Subsidiaries is
fully segregable and independent from the Company’s and the Company
Subsidiaries’ proprietary Computer Software. Neither the Company nor any Company
Subsidiary has used Open Source Software in any manner that (i) requires the
disclosure or distribution of any source code of any of the Company’s or the
Company Subsidiaries’ proprietary Computer Software, (ii) requires the licensing
of any Business Intellectual Property for the purpose of making derivative
works, (iii) imposes any restriction on the consideration to be charged for the
distribution of any Business Intellectual Property, (iv) creates, or purports to
create, obligations for the Company or any of the Company Subsidiaries with
respect to the Business Intellectual Property or grants, or purports to grant,
to any third party any rights or immunities under any Business Intellectual
Property, or (v) imposes any other material limitation, restriction, or
condition on the right of the Company or the Subsidiaries to use or distribute
any Business Intellectual Property.

 

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(j) Except as set forth in Disclosure Schedule 3.16(j), the Company and the
Company Subsidiaries have at all times complied in all material respects with
all applicable Laws, as well as their own rules, policies and procedures,
relating to privacy, data protection, and the collection, use, storage and
disposal of personal information collected, used, or held for use by the Company
or a Company Subsidiary in the conduct of the Business. No claim, action or
proceeding has been asserted or, to Parent’s knowledge, threatened alleging a
violation of any person’s rights of publicity or privacy or personal information
or data rights and the consummation of the transactions contemplated hereby will
not breach or otherwise cause any violation of any Laws or rule, policy, or
procedure related to rights of publicity, privacy, data protection, information
security, or the collection, use, storage or disposal of personal information
collected, used, or held for use by the Company or a Company Subsidiary in the
conduct of the Business. The Company and the Company Subsidiaries (i) have
complied in all material respects with all local regulatory requirements
relating to the collection, use, storage or disposal of personal information and
(ii) take commercially reasonable measures, including, any measures required by
any applicable Laws, to ensure that such information is protected against
unauthorized access, use, modification, or other misuse.

 

3.17 Insurance. Disclosure Schedule 3.17 sets forth a listing of the types and
each policy of insurance and fidelity bond which covers the Company or any
Company Subsidiary or the Business, including those maintained by Parent and its
Affiliates in connection with the foregoing (other than any insurance contracts
that relate to employee benefits under Disclosure Schedule 3.19(a)) (the
“Policies”), and such Policies are in full force and effect as of the date of
this Agreement. Except as set forth in Disclosure Schedule 3.17, there are no
pending claims under any of such Policies as to which coverage has been denied
or disputed by the insurer or in respect of which the insurer has reserved its
rights. All Policies are issued by an insurer that is financially sound and
reputable, are in full force and effect, are valid and are enforceable in
accordance with their terms. All premiums due under the Policies have been paid
in full or, with respect to premiums not yet due, accrued. Such Policies provide
adequate insurance coverage for the Company and each Company Subsidiary, and are
sufficient for compliance with all Laws and Contracts to which the Company and
each Company Subsidiary is a party or a beneficiary or by which the Company and
Company Subsidiary or their assets are subject. None of Parent or its
Affiliates, the Company nor any Company Subsidiary has received a notice of
cancellation or termination of any Policy or of any material changes that are
required in the conduct of the Business as a condition to the continuation of
coverage under, or renewal of, any such Policy. None of the Company nor any
Company Subsidiary has any self-insurance arrangements.

 

3.18 Labor Matters.

 

(a) There is no controversy existing, pending or, to Parent’s knowledge,
threatened with any association or union or collective bargaining representative
of the Employees and no such agreements are currently being negotiated. To
Parent’s knowledge, no labor organization or group of employees of the Company
has made a pending demand for recognition or certification. There are no
certification proceedings or petitions seeking a representation proceeding
pending or, to Parent’s knowledge, threatened to be brought or filed with the
National Labor Relations Board or any other applicable labor relations
authority. To Parent’s knowledge, as of the date of this Agreement, the Company
is in material compliance with all applicable Laws relating to labor or
employment practices or decisions (including employee classification,
employment-related background and credit checks, non-discrimination, wage and
hour issues (including meal and rest break issues), whistleblower, safety, and
immigration).

 

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(b) There is no charge or complaint relating to an unfair labor practice pending
against the Company or any Company Subsidiary or, to Parent’s knowledge,
threatened by or on behalf of any employee or group of employees against the
Company or any Company Subsidiary; nor is there any labor strike, work stoppage,
material grievance or other labor dispute pending or, to Parent’s knowledge,
threatened against the Company or any Company Subsidiary.

 

(c) There are no collective bargaining, works council or similar agreements
between the Company or any Company Subsidiary or any employers’ or trade
association of which the Company or any Company Subsidiary is a member and any
trade union, staff association or other body representing employees or a
substantial number of them.

 

(d) Except as described in Disclosure Schedule 3.18(d), since January 1, 2011,
none of the Company or any of the Company Subsidiaries has engaged in layoffs or
employment terminations sufficient to trigger application of the Worker
Adjustment and Retraining Notification Act of 1988 (the “WARN Act”) or any
similar state Law.

 

(e) The representations and warranties in this Section 3.18 are the sole and
exclusive representations and warranties of the Company concerning labor
matters.

 

3.19 Employee Benefit Matters.

 

(a) Except for the Pension Plan and the retiree welfare benefit obligations
described in Section 5.2(e), for which Parent retains all liability, Disclosure
Schedule 3.19(a) sets forth all material employee benefit plans, policies,
agreements and programs (i) sponsored or contributed to or required to be
contributed to by the Company or a Company Subsidiary, (ii) with respect to
which the Company and/or the Company Subsidiaries have any Liability, or (iii)
otherwise applicable to Employees as of the date hereof, including plans,
policies, agreements and programs providing for pension, retirement, profit
sharing, savings, bonus, deferred or incentive compensation, restricted stock,
stock option or stock appreciation rights, phantom stock, stock purchase, cash
awards, change in control benefits, and welfare or fringe benefits, including
without limitation, hospitalization, medical, life or disability insurance,
vacation and paid holiday, termination or severance benefits, and any other
“employee benefit plan” within the meaning of Section 3(3) of ERISA (“Benefit
Plans”).

 

(b) The Benefit Plans have been maintained and administered in compliance in all
material respects with applicable Laws, including ERISA and the Code.

 

(c) Disclosure Schedule 3.19(c) identifies each of the Benefit Plans that is
intended to meet the requirements of Section 401(a) of the Code (the “Qualified
Plans”). Each Qualified Plan has received a favorable IRS determination letter
or opinion letter that is currently in effect, and no event has occurred and no
condition exists which would reasonably be expected to result in the revocation
of any such determination letter or opinion letter. Each Qualified Plan has been
administered in all material respects in accordance with its terms, except for
those terms that are inconsistent with statutes, regulations, and rulings
requiring changes in the administration of such Qualified Plan in operation but
for which amendments to such terms of such Qualified Plan are not yet required
to be made, in which case each Qualified Plan has been administered in all
material respects in accordance with the provision of applicable statutes,
regulations and rulings.

 

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(d) No Benefit Plan is a “multiemployer plan” within the meaning of Section
3(37) or 4001(a)(3) of ERISA or a “multiple employer plan” within the meaning of
Section 413(c) of the Code, and neither the Company nor any Company Subsidiary
has any obligation or liability in connection with any such “multiemployer plan”
or “multiple employer plan.”

 

(e) No Benefit Plan is subject to Title IV of ERISA and there have been no
missed contributions or other event involving the Pension Plan which would have
a material risk of causing the Company to incur any Liability or any lien under
Title IV of ERISA, Section 303(k) of ERISA or Section 412 of the Code.

 

(f) Neither Parent nor any of its Affiliates has engaged in any “prohibited
transaction,” as defined in Section 4975 of the Code or ERISA Section 406 with
respect to the Benefit Plans for which an applicable statutory or administrative
exemption does not exist, and all “fiduciaries,” as defined in Section 3(21) of
ERISA, with respect to the Benefit Plans, have complied with the requirements of
Section 404 of ERISA.

 

(g) Other than routine claims for benefits, there are no actions, audits,
investigations, suits, or claims pending or, to Parent’s knowledge, threatened
against any of the Benefit Plans or any fiduciary thereof or against the assets
of any of the Benefit Plans.

 

(h) No Benefit Plan provides for post-employment or retiree welfare benefits,
except as required by applicable Laws.

 

(i) Neither the Company, the Company Subsidiaries nor any of their Subsidiaries,
nor any other “disqualified person” or “party in interest” (as defined in
Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has
engaged in any transactions in connection with any Benefit Plan of the Company
or a Company Subsidiary that would reasonably be expected to result in the
imposition of a penalty pursuant to Section 502 of ERISA, damages pursuant to
Section 409 of ERISA or a tax pursuant to Section 4975 of the Code.

 

(j) Each Benefit Plan which is a “nonqualified deferred compensation plan”
(within the meaning of Section 409A of the Code) that the Company is a party to
has been operated and administered in material compliance with Section 409A of
the Code and any proposed and final guidance under Section 409A of the Code.

 

(k) Except to the extent a fund that is offered under the Parent Savings Plan
may from time to time include Parent stock, no Benefit Plan of the Company or a
Company Subsidiary has assets that include securities issued by the Company or
any of the Company Subsidiaries.

 

(l) Neither the Company nor any of the Company Subsidiaries has filed, or is
considering filing, an application under the IRS Employee Plans Compliance
Resolution System or the Department of Labor’s Voluntary Fiduciary Correction
Program with respect to any Benefit Plan of the Company or a Company Subsidiary.

 

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(m) Except as set forth on Disclosure Schedule 5.2(a), neither the execution of
this Agreement nor the consummation of the transactions contemplated hereby
constitutes a triggering event under any Benefit Plan, policy, arrangement,
statement, commitment or agreement, which (either alone or upon the occurrence
of any additional or subsequent event) will or may result in any payment,
severance, bonus, retirement or job security or similar-type benefit, or
increase any benefits or accelerate the payment, vesting or funding of any
benefits to any employee or former employee or director of the Company or any of
its Affiliates.

 

(n) Any amount that could be, or has been, received (whether in cash, property
or the vesting of property or in other benefits) by any employee, officer,
director, stockholder or other service provider of the Company or any Company
Subsidiary (in each case either former or current) under any Benefit Plan or
otherwise will not (i) fail to be deductible by reason of Section 280G of the
Code (“Section 280G”) or (ii) be subject to an excise tax under Section 4999 of
the Code.

 

(o) To Parent’s knowledge, the Company and the Company Subsidiaries have
classified all individuals who perform services for them correctly under each
Benefit Plan, ERISA, the Code and all other applicable Laws as common law
employees, independent contractors or leased employees.

 

(p) With respect to each Benefit Plan sponsored solely by the Company or a
Company Subsidiary (and excluding any Benefit Plan which Parent sponsors,
whether or not the Company or a Company Subsidiary is an adopting employer of or
otherwise participates in such Benefit Plan), the Parent has made available to
the Buyer (i) the most recent, true and complete copies of each Benefit Plan,
together with all amendments thereto, including, in the case of any Benefit Plan
not set forth in writing, a written description thereof, and, to the extent
applicable, (ii) all current summary plan descriptions and any summaries of
material modification, (iii) all current trust agreements, declarations of trust
and other documents establishing funding arrangements (and all amendments
thereto and the latest financial statements thereof), (iv) the annual report on
IRS Form 5500-series, including any attachments thereto, for each of the last
two (2) plan years, (v) the most recent actuarial valuation report, (vi) the
most recent determination letter and/or opinion letter from the IRS, (vii) any
materials relating to any government investigation or audit or any submissions
under any voluntary compliance procedures, and (viii) all material Contracts
relating to each Benefit Plan of the Company or a Company Subsidiary, including
service provider agreements, insurance contracts, annuity contracts, investment
management agreements, subscription agreements, participation agreements,
recordkeeping agreements and collective bargaining agreements.

 

(q) Notwithstanding anything in this Agreement to the contrary, the
representations and warranties in this Section 3.19 are the sole representations
and warranties of Parent with respect to employee benefits matters.

 

3.20 Indebtedness. Except as set forth on Disclosure Schedule 3.20, neither the
Company nor any Company Subsidiary has any Indebtedness, excluding any
Indebtedness as such term is defined in Section 1.92(iv) and (xii).

 

3.21 Accounts Receivable; Inventory.

 

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(a) Set forth on Disclosure Schedule 3.21(a) is a list of all the accounts
receivable of the Company and the Company Subsidiaries with respect to the
Business as of January 31, 2014. Such accounts receivable, and any accounts
receivable with respect to the Business arising between such date and the
Closing represent valid obligations arising from sales actually made in the
Ordinary Course.

 

(b) All inventories, whether included in inventory or deferred costs on the
Financial Statements, held by the Company and/or the Company Subsidiaries at any
location are valued on the Financial Statements at the lower of cost or market
(cost being determined by the first in, first out method). Such inventories
consist of a quantity and quality usable and salable in the Ordinary Course. Set
forth on Disclosure Schedule 3.21(b) is a list of locations of the inventory,
other than inventory in transit in the Ordinary Course or located within the
Leased Real Property.

 

3.22 Related Party Transactions. Other than any employment-related Contract, no
director, officer, employee or Affiliate of Parent, the Company or any Company
Subsidiary is a party to any Contract with the Company or any Company Subsidiary
or has any interest in any of the assets or property of the Company or any
Company Subsidiary, including any Business Intellectual Property, except as
specifically disclosed on Disclosure Schedule 3.22.

 

3.23 Bank Accounts. Set forth on Disclosure Schedule 3.23 is a list of the
locations and numbers of all bank accounts, investment accounts and safe deposit
boxes maintained by the Company and the Company Subsidiaries.

 

3.24 Customers and Suppliers. Disclosure Schedule 3.24(i) sets forth a true,
complete and correct list, by company, of the 10 largest customers of the
Company and the Company Subsidiaries and (to the extent not covered by the
foregoing) the top five largest customers with respect to each of the Company’s
and the Company Subsidiaries’ electric, natural gas and water business units
(the “Material Customers”) and the 10 largest suppliers (including
subcontractors to the Company and the Company Subsidiaries under any Contracts)
of the Company and the Company Subsidiaries with respect to the Business (the
“Material Suppliers”) by volume of sales and purchases, respectively (by dollar
volume), during each of the fiscal years ended September 30, 2013 and 2012.
Disclosure Schedule 3.24(i) shows the percentage of such goods and services sold
or purchased by the Company and the Company Subsidiaries, as applicable, to each
Material Customer or from each Material Supplier, as applicable, in each such
year. No Material Customer or Material Supplier has during the last 12 months
materially decreased or materially limited, or, to Parent’s knowledge,
threatened to materially decrease or materially limit, its purchase of the
products of the Company or the Company Subsidiaries, or its supply of materials
or services to the Company or the Company Subsidiaries, as the case may be. The
Company or the Company Subsidiaries have not received any written notice that
any Material Customer or Material Supplier intends to discontinue its business
relationship with the Company. Except as set forth on Disclosure Schedule
3.24(ii), since September 30, 2012 through the date of this Agreement, there has
not been any material dispute with or claim by any of the Material Customers or
Material Suppliers concerning the purchase of the products or services of the
Company or the Company Subsidiaries or the supply of materials or services to
the Company or the Company Subsidiaries that remain unresolved.

 

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3.25 Warranties and Returns. Disclosure Schedule 3.25(i) discloses the amounts
charged to “warranty expense” from the Company’s and the Company Subsidiaries’
operations on the books and records for the past three years. Except as set
forth in Disclosure Schedule 3.25(ii), to Parent’s knowledge there are no
outstanding or threatened claims, and no events have occurred or conditions
exist that would reasonably be expected to give rise to any claims, for any
Warranty Costs that would exceed $100,000 per customer as of the date hereof.

 

3.26 Foreign Operations. Except as described on Disclosure Schedule 3.26, the
Company and the Company Subsidiaries have acted in compliance with any and all
applicable export and re-export control Laws, applicable sanctions Laws of the
United States, applicable import Laws of any applicable jurisdiction and all
applicable anti-boycott Laws. Neither the Company nor any Company Subsidiary has
received notice of violation of the United States Foreign Corrupt Practices Act
of 1977, as amended (the “FCPA”). None of Parent, ESCO Luxembourg, the Company
nor any Company Subsidiary (nor any director, officer, agent, employee,
consultant of or other Person associated with or acting on behalf of the
foregoing) has (a) made, authorized, offered or promised to make any payment or
transfer of anything of value, directly, indirectly or through a third party, to
any foreign government official, employee or other Representative (including
employees of a government owned or controlled entity or public international
organization and including any political party or candidate for public office),
in violation of the FCPA, or any Law of similar effect in any jurisdiction to
which such Person is subject or (b) otherwise taken any action which would cause
the Company or a Company Subsidiary to be in violation of the FCPA, or any Law
of similar effect in any jurisdiction to which such Person is subject. For the
purposes of this Section 3.26, the acts specified include, but are not limited
to (x) the making or payment of any illegal contributions, commissions, fees,
gifts, entertainment, travel or other unlawful expenses relating to political
activity, (y) the direct or indirect payment, gift, offer, promise or
authorization to make a payment, gift, offer or promise of, anything of material
value to any foreign government Representative and (z) the making of any bribe,
illegal payoff, influence payment, kickback or other unlawful payment, using
funds of Parent, ESCO Luxembourg, the Company or of a Company Subsidiary or
otherwise on behalf of Parent, ESCO Luxembourg, the Company or a Company
Subsidiary.

 

3.27 Brokers, Finders. Other than Stephens Inc., no finder, broker, agent, or
other intermediary acting on behalf of Parent is entitled to a commission, fee,
or other compensation in connection with the negotiation or consummation of this
Agreement or any of the transactions contemplated hereby.

 

3.28 No Other Representations or Warranties. Except for the representations and
warranties contained in this Article III (as modified by the Disclosure
Schedules), this Agreement and the Ancillary Agreements, the Interests are sold
“as is, where is” and Parent expressly disclaims any other representations or
warranties of any kind or nature, express or implied, as to liabilities,
operations of the facilities, the title, condition, value or quality of the
Company, the Company Subsidiaries and the Business or the prospects (financial
or otherwise), risks and other incidents of the Company, Company Subsidiaries
and the Business. No other material or information provided by or communications
made by Parent or any of its Affiliates, or by any representative or advisor
thereof, whether by use of a “data room,” or in any information memorandum,
presentation or otherwise, or by any broker or investment banker, will cause or
create any warranty, express or implied, as to the title, condition, value or
quality of Parent, the Interests, the Company, the Company Subsidiaries or the
Business.

 

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Article IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER

 

The Buyer hereby makes the following representations and warranties to Parent,
each of which is true and correct on the date hereof and as of the Closing and
shall survive the Closing as set forth in Section 9.5(a):

 

4.1 Existence and Power; Non-Contravention.

 

(a) The Buyer has the corporate power and authority to enter into this Agreement
and the Ancillary Agreements, to perform its obligations hereunder and
thereunder, and to consummate the transactions contemplated hereby and thereby.

 

(b) The Buyer is duly organized, validly existing and in good standing under the
laws of the jurisdiction set forth on Disclosure Schedule 4.1(b).

 

(c) Neither the execution and delivery of this Agreement and the Ancillary
Agreements by the Buyer, nor the consummation by the Buyer of the transactions
contemplated herein or therein nor compliance by the Buyer with any of the
provisions hereof or thereof, will (i) conflict with or result in a breach of
any provisions of the certificate of incorporation or bylaws or equivalent
organizational documents of the Buyer or (ii) subject to receipt of the
requisite approvals referred to in Disclosure Schedule 4.1(c), violate any Order
or Law applicable to the Buyer, except with respect to the foregoing clause
(ii), as would not materially impair Buyer’s ability to consummate the
transactions contemplated hereby on a timely basis.

 

(d) Other than as set forth in Disclosure Schedule 4.1(c), no Consent of any
Governmental Authority is necessary for the consummation by the Buyer of the
transactions contemplated in this Agreement and by the Ancillary Agreements.

 

4.2 Valid and Enforceable Agreement; Authorization. This Agreement and the
Ancillary Agreements have been duly executed and delivered by the Buyer and,
assuming due authorization, execution and delivery by Parent, constitute legal,
valid and binding obligations of the Buyer, enforceable against it in accordance
with their terms, except that such enforcement may be subject to the General
Enforceability Exceptions. The execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly authorized, approved and ratified by all
necessary action on the part of the Buyer. The Buyer has full authority to enter
into and deliver this Agreement and the Ancillary Agreements, to perform its
obligations hereunder and thereunder, and to consummate the transactions
contemplated hereby and thereby.

 

4.3 Compliance with Securities Laws. The Buyer has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of the Buyer’s purchase of the Interests. The Buyer confirms that it
can bear the economic risk of its investment in the Interests. The Buyer is
acquiring the Interests for investment and not with a view to distribution
thereof, and understands that the Interests or any interest therein cannot be
sold, offered for sale, pledged, transferred or otherwise disposed of except in
compliance with the Securities Act of 1933, as amended, and any other applicable
federal, state or foreign securities laws.

 

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4.4 Litigation. There are no actions, suits, proceedings, orders or
investigations pending or, to the Buyer’s knowledge, threatened against the
Buyer or any of the Buyer’s Affiliates, at law or in equity, which if adversely
determined would have a material adverse effect on the Buyer’s performance under
this Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby and thereby. There are no injunctions, decrees
or unsatisfied judgments outstanding against or related to the Buyer which could
interfere with the Buyer’s ability to consummate the transactions contemplated
by this Agreement on a timely basis.

 

4.5 Funds. The Buyer will have at the Closing sufficient funds to consummate the
transactions contemplated by this Agreement and by the Ancillary Agreements and
to satisfy its obligations hereunder, including payment of the Purchase Price
and any adjustment thereof and any fees and expenses relating to the
transactions contemplated by this Agreement. The Buyer acknowledges and agrees
that its obligations hereunder are not subject to any conditions regarding the
Buyer’s or any other person’s ability to obtain financing for the consummation
of the transactions contemplated by this Agreement.

 

4.6 Independent Investigation. In making the decision to enter into this
Agreement and to consummate the transactions contemplated hereby, Buyer
acknowledges that neither the Company, nor any Company Subsidiary, nor Parent
has made, nor is making, any representations or warranties whatsoever regarding
the subject matter of this Agreement, express or implied, including with respect
to any information, document or material made available to the Buyer or its
Affiliates and representatives in any online “data rooms”, information
memoranda, management presentation or in any other form, and that the Buyer is
not relying and has not relied on any representations or warranties whatsoever,
other than reliance on the representations, warranties, covenants and
obligations of Parent set forth in this Agreement and the Ancillary Agreements,
and the Buyer made its own independent investigation, analysis and evaluation of
the Business, the Company and the Company Subsidiaries (including the Buyer’s
own estimate and appraisal of the value of the financial condition, assets,
operations and prospects of the Business, the Company and the Company
Subsidiaries). The Buyer confirms to Parent that the Buyer is sophisticated and
is capable of evaluating the matters relating to the transactions contemplated
hereby. The Buyer acknowledges that there are uncertainties inherent in
attempting to make estimates, projections and other forecasts and plans so
furnished to it (including the reasonableness of the assumptions underlying such
estimates, projections and forecasts), and that the Buyer shall not have any
claim against Parent with respect thereto except as provided herein or in any
Ancillary Agreement.

 

4.7 No Other Representations or Warranties. Except for the representations and
warranties contained in this Article IV, neither the Buyer, nor any other
person, makes any other express or implied representation or warranty on behalf
of the Buyer.

 

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Article V
EMPLOYEES

 

5.1 The Buyer’s Obligations.

 

(a) The Buyer shall credit (or cause to be credited) service accrued by
Employees as of the Effective Time for all purposes under its employee benefit
plans and shall treat such credit as the assumption of a liability for all Tax
purposes.

 

(b) Each Employee and, as applicable, Beneficiary shall be immediately eligible
to participate, without any waiting time, in welfare benefit plans of the Buyer
or one of its Affiliates made available to such Employee and Beneficiary (to the
extent that coverage replaces coverage under a comparable welfare benefit plan
of Parent, in which such Employee or Beneficiary participated immediately prior
to the Closing). For purposes of each welfare benefit plan of the Buyer or one
of its Affiliates providing life insurance (employer paid), disability or
accident (employer paid), or medical, dental, pharmaceutical and/or vision
benefits to any Employee or Beneficiary, the Buyer shall cause all evidence of
insurability, pre-existing condition exclusions and actively-at-work
requirements of such plans to be waived for such Employee and his or her
Beneficiaries.

 

(c) With respect to Benefit Plans in which benefits are subject to co-payments,
deductibles or similar thresholds, the Buyer or one of its Affiliates will take
any and all required actions necessary to give full credit for all co-payments
and deductibles satisfied prior to the Effective Time in the same plan year as
if there had been a single continuous employer.

 

(d) Any retention bonuses due as a result of the Closing as disclosed in
Disclosure Schedule 5.1(d) (including any employer Taxes, such as FICA, FUTA and
Medicare Taxes with respect thereto) (the “Retention Bonuses”) will be accrued
on the Estimated Closing Statement and the Closing Statement and, for the
avoidance of doubt, will not constitute Transactional Expenses. Parent shall
report any deductions from the Retention Bonuses (and related Taxes) as a
deduction on an income Tax Return of Parent. Parent shall receive the benefit of
any available deductions on any Tax Returns relating to the payment of such
Retention Bonuses. Neither the Buyer nor the Company shall claim the benefit of
such deduction on any Tax Return unless Parent is denied such deduction and
requests the Buyer or the Company to claim the deduction (with any out-of-pocket
expenses relating thereto, at Parent’s sole expense), and if the benefit is
received by the Buyer or the Company, the after-Tax amount of such benefit shall
be paid to Parent by Buyer. On the first payroll date following the Closing, the
Company shall pay the Retention Bonuses to the Employees and in the amounts as
set forth in Disclosure Schedule 5.1(d).

 

5.2 Employment Matters.

 

(a) Continuation of Employment. Effective as of the Effective Time, the Company
shall continue to be responsible for performing, and the Buyer shall cause the
Company and the Company Subsidiaries to perform, the Company’s obligations under
the employment and compensation agreements disclosed on Disclosure Schedule
5.2(a) (the “Employment and Compensation Agreements”). The Company or the Buyer
shall inform Parent of the aggregate amount of severance payments that is to be
paid pursuant to the Employment and Compensation Agreements as a result of the
severance of an employee at any time during the two-year period following the
Closing (including required employer Taxes, such as FICA, FUTA and Medicare
Taxes) (such amount, less any amount that is to be contemporaneously paid
pursuant to such Employment and Compensation Agreement on account of any
pro-rata bonus under the Bonus Plan for a Pre-Closing Period to the extent the
Estimated Closing Statement and the Closing Statement contain an accrual for
such amount, the “Severance Payment Amount”), pursuant to the employee escrow
agreement in the form attached hereto as Exhibit C (the “Employee Escrow
Agreement”). In such event and pursuant to the terms of the Employee Escrow
Agreement, an amount equal to a percentage (which percentage shall be as set
forth in the Employee Escrow Agreement) of the Severance Payment Amount shall be
paid from the Employee Escrow Account, to the Company (the “Escrow Reimbursement
Amount”). Such Escrow Reimbursement Amounts will be disbursed from the Employee
Escrow Account to the Company to reimburse amounts the Company has paid through
the Company’s regular payroll process, subject to the provisions of Section
5.2(a).

 

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(b) Pension Plan. Any Employees who are participants in the Pension Plan as of
the Effective Time shall continue to participate under the terms of such plan
following the Effective Time. Parent shall retain all liability relating to the
Pension Plan and any accrued benefits under the Pension Plan as of the Closing
Date.

 

(c) Individual Account Plans.

 

(i) Parent shall, effective as of the Effective Time, cease all contributions in
respect of each Employee in Parent’s tax-qualified defined contribution plans in
which such individual is then participating. As of the Effective Time, the Buyer
or one of its Affiliates shall have in effect one or more defined contribution
plans that include a qualified cash or deferred arrangement within the meaning
of Section 401(k) of the Code (“Buyer’s 401(k) Plan”). Each Employee who was a
participant in one or more of the Qualified Plans that are individual account
plans as set forth on Disclosure Schedule 3.19(c) (“Parent’s Savings Programs”)
shall become a participant in Buyer’s 401(k) Plan as of the Effective Time. The
Buyer’s 401(k) Plan shall comply with Section 411(d)(6) of the Code with respect
to the account balances to be transferred to the Buyer’s 401(k) Plan, and the
Buyer shall indemnify and hold Parent and its Affiliates harmless from and
against any Losses arising from any failure to so comply.

 

(ii) As soon as practicable following the Effective Time and before such date
that Employees’ loans under Parent’s Savings Program would be deemed to be in
default, Buyer agrees to designate or establish one or more defined contribution
plans to receive a transfer of account balances of the affected Employees
maintained under the Parent’s Savings Program. As soon as reasonably possible
after the requirements set forth in the preceding sentence are satisfied, Parent
shall cause the portion of the Parent’s Savings Program representing the account
balances of the affected Employees to be transferred to the plan(s) designated
or established by Buyer pursuant to the first sentence of this paragraph. Parent
and Buyer shall take all steps necessary or appropriate to carry out the
plan-to-plan transfer contemplated by this paragraph, including but not limited
to, providing any advance notice to participants and beneficiaries of the
Parent’s Savings Program and filing any advance notices required by any federal
laws, including the Code and the regulations issued thereunder. Buyer shall take
any and all steps necessary or appropriate to maintain the tax-qualified status
of any plan(s) (and the related tax-exempt status of the accompanying trust(s))
designated or maintained pursuant to this paragraph.

 

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(d) Welfare Benefits.

 

(i) Except with respect to workers’ compensation and employer’s liability claims
which shall be treated as set forth in Section 5.2(f), Parent shall be
responsible in accordance with its applicable welfare plans in effect prior to
the Effective Time for all medical and dental claims for expenses incurred prior
to the Effective Time by Employees and Beneficiaries. Reimbursement for medical
and dental expenses associated with such claims shall be determined in
accordance with the terms of Parent’s medical and dental programs as in effect
immediately prior to the Effective Time. The Buyer shall be responsible for all
medical and dental claims for expenses incurred on and after the Effective Time
by Employees and Beneficiaries pursuant to and in accordance with the terms of
plans maintained by the Buyer or one of its Affiliates and in which Employees
and Beneficiaries become enrolled following the Effective Time.

 

(ii) Except with respect to workers’ compensation and employer’s liability
claims which shall be treated as set forth in Section 5.2(f), (A) the Buyer
shall be responsible for all other insurance and disability benefit coverage
claims of Employees and Beneficiaries made by such Employees or Beneficiaries on
and after the Effective Time, including group life, travel, disability accident,
and employer’s liability and accidental death and dismemberment insurance
policies and plans; and (B) Parent shall be responsible for claims made under
such policies and plans prior to the Effective Time.

 

(e) Retiree Welfare Benefits. The Parent shall retain its obligations to provide
retiree life insurance and retiree medical benefits with respect to (i)
Employees and (ii) former employees of the Company, Aclara Power-Line Systems
Inc. (formerly known as Distribution Control Systems Inc.), the Company
Subsidiaries or an Affiliate whose last source of eligible service under the
applicable retiree welfare benefit plan was with the Company, Aclara Power-Line
Systems Inc. (formerly known as Distribution Control Systems Inc.) or the
Company Subsidiaries, who retired prior to the Closing Date and who were covered
under retiree welfare programs of Parent or any other Affiliate of Parent as of
the Closing Date, and to Beneficiaries of any such individuals. For the
avoidance of doubt, to the extent there is any unfunded retiree welfare
liability as of Closing, any such unfunded retiree welfare liability shall be
retained by Parent and shall not be transferred to the Buyer. Nothing in this
Section shall impair, and the Parent explicitly retains, the right to modify
and/or terminate the retiree welfare benefits described herein.

 

(f) Workers’ Compensation. Beginning at the Closing and subject to Section 6.7,
all Employees shall be eligible for coverage under the Buyer’s workers’
compensation insurance, and Buyer shall assume liability with respect to all
worker’s compensation and employer’s liability claims, whether they occurred
before or after Closing, for former and current employees of the Company, the
Company Subsidiaries or an Affiliate.

 

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5.3 No Third Party Beneficiaries. No agreement between the Parties hereto nor
any action by Parent, the Buyer or their Affiliates shall be deemed to create
any third party beneficiary rights in any person or organization, including any
employee or former employee (including any beneficiary or dependent thereof) of
Parent, the Company, the Company Subsidiaries, the Buyer, or any Affiliate of
any of them, and no person or organization other than the Parties to this
Agreement shall have any rights to enforce any provision hereof, including any
provision pertaining to any benefits that may be provided, directly or
indirectly, under any employee benefit plan, including the currently existing
Benefit Plans.

 

5.4 COBRA. The Buyer shall be responsible for the continuation of health care
coverage, in accordance with the requirements of COBRA and Sections 601 through
608 of ERISA, and any equivalent and applicable state health care continuation
coverage law, for any Employee under a Benefit Plan that is a health plan, who
has a loss of coverage due to a qualifying event under COBRA or state or local
healthcare continuation coverage benefits after Closing.

 

5.5 Bonus. Buyer shall cause the Company to assume Parent’s obligations under
Parent’s Performance Compensation Plan (the “Bonus Plan”) with respect to the
Employees listed on Disclosure Schedule 5.5 and to pay any amounts due to such
Employees under the Bonus Plan for fiscal year 2014 as and when due if such
Employees are employed by the Company or any Company Subsidiary and are
otherwise in compliance with the terms of the Bonus Plan, in each case at the
end of fiscal year 2014, provided that the Estimated Closing Statement and the
Closing Statement will contain an accrual for year-to-date amounts attributable
to the Bonus Plan. Buyer shall timely and fully deduct or cause to be deducted
for all Tax purposes any amount paid pursuant to the Bonus Plan with respect to
the Employees listed on Disclosure Schedule 5.5, and Parent shall not claim any
Tax deduction for the amounts accrued with respect to such Employees pursuant to
the Bonus Plan. None of Parent, the Buyer nor the Company (nor any Affiliates of
any of them) shall take any Tax position inconsistent therewith or contrary
thereto.

 

Article VI
ADDITIONAL COVENANTS OF THE PARTIES

 

6.1 Conduct of Business Until Closing. Except as (i) set forth on Disclosure
Schedule 6.1, (ii) otherwise expressly provided in this Agreement, or (iii) the
Buyer may otherwise consent to or approve in writing, on and after the date
hereof and prior to the Closing Date with respect to the Business, which
consent, with respect to the matters identified in subclauses (c), (e), (f),
(i), (j), (k), (t) below, shall not be unreasonably withheld, conditioned or
delayed, Parent agrees to cause the Company and the Company Subsidiaries:

 

(a) not to enter into discussions (i) relating to the disposal of any of the
Interests or the merger or consolidation of the Company or any Company
Subsidiary with or into any person or entity, or (ii) relating to the
disposition of any material part of the assets of the Company and the Company
Subsidiaries, other than in the Ordinary Course;

 

(b) to conduct its business, operations, activities and practices in the
Ordinary Course;

 

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(c) not to enter into any collective bargaining agreement;

 

(d) not to (i) merge with or into, consolidate with or acquire the stock or
assets of any other corporation, partnership, limited partnership, joint
venture, association or other entity, (ii) change the character of its business,
operations, activities and practices in any material way, (iii) amend in any
material respect (except in the Ordinary Course), terminate any Material
Contract (except as contemplated by this Agreement) or enter into a Contract
that would be considered a Material Contract hereunder (except in the Ordinary
Course), or (iv) sell, lease, or grant any option to sell or lease, give a
security interest in or otherwise create any Encumbrance (other than a Permitted
Encumbrance) on any part of its assets;

 

(e) not to sell, license or transfer any Business Intellectual Property other
than in the Ordinary Course;

 

(f) to preserve and maintain all of its Permits in the Ordinary Course;

 

(g) to make all payments in respect of Indebtedness and other obligations when
due or make adequate reserves therefor on the books and records of the Company;

 

(h) to make all payments in respect of Taxes when due in the Ordinary Course;

 

(i) to maintain the properties and assets owned, leased, operated or used by the
Company and the Company Subsidiaries in substantially the same condition as they
were on the date of this Agreement, subject to reasonable wear and tear;

 

(j) to continue in full force and effect without material modification all
Policies, except as required by applicable Law;

 

(k) to perform in all material respects all of the Company’s and the Company
Subsidiaries’ obligations under all Material Contracts relating to or affecting
their properties, assets or business;

 

(l) to maintain their books and records in accordance with past practice;

 

(m) to comply in all material respects with all applicable Laws;

 

(n) not to increase the rate or terms of compensation or benefits payable to or
to become payable by it to its directors, officers, or employees or increase the
rate or terms of any bonus, pension or other employee benefit plan covering any
of its directors, officers or employees, other than normal merit adjustments for
employees (not including any employee that is also an officer) in the Ordinary
Course;

 

(o) not to issue, create, grant, sell or otherwise dispose of or repurchase,
redeem or otherwise acquire any shares or interests of, or rights of any kind to
acquire or subscribe to (including options) any shares of or interests in, any
of its capital stock or other equity interests or securities (including
convertible securities);

 

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(p) not to declare, set aside or pay any dividend or other distribution (other
than in cash) on any of its capital stock or other equity interest;

 

(q) not to incur, guarantee or assume any obligations for borrowed money,
whether evidenced by notes, bonds, letters of credit or other similar
instruments, other than any such intercompany obligations;

 

(r) not to reclassify, combine, split, subdivide or issue any other securities
in respect of, in lieu of or in substitution for, directly or indirectly, any of
its capital stock or other equity interests;

 

(s) not to make any loan, advance or capital contribution to, or investment in,
any Person other than travel loans in the Ordinary Course or with respect to
sales to customers;

 

(t) not to make any capital expenditure or commitment for any capital
expenditure in excess of $100,000;

 

(u) not to adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, recapitalization or otherwise wind up its business;

 

(v) not to make any material change in any method of accounting or accounting
practice;

 

(w) not to make or revoke any material Tax election that would be binding on the
Company or any Company Subsidiary after the Effective Time;

 

(x) not to affect adversely the undistributed earnings and profits of Caribe
generated during the period of the industrial tax exemption granted to Caribe by
the Commonwealth of Puerto Rico that are presently exempt under Section 7(b) of
the 1998 Tax Incentives Act (Act 135); and

 

(y) not to enter into any Contract (conditional or otherwise) to do any of the
foregoing.

 

Notwithstanding the foregoing, prior to Closing the Company and the Company
Subsidiaries shall be permitted to distribute to Parent or Parent’s Affiliates
all cash and cash equivalents. Parent shall promptly notify the Buyer of any
breach of this Section 6.1.

 

6.2 Access Pending Closing. Parent shall, at all reasonable times prior to
Closing, make the plants, properties (including, for the avoidance of doubt and
without limitation, the Leased Real Property), assets, Contracts, other
documents and data, books and records of the Company and the Company
Subsidiaries available to the Buyer, its Representatives, financial advisors,
lenders and auditors, and Parent shall and shall cause the Company and the
Company Subsidiaries to furnish or cause to be furnished to such persons during
such period all such information and data concerning the same as such persons
may reasonably request and shall instruct the employees and Representatives of
Parent, the Company and the Company Subsidiaries to cooperate with the Buyer in
its investigation. Notwithstanding the above, (a) Parent may limit such access
to the extent it reasonably deems necessary to avoid unreasonable disruption of
the Business, (b) Parent may redact any information that would result in the
disclosure of any competitively sensitive information of Parent or any of its
Affiliates unrelated to the Business and (c) neither Parent nor any of its
Affiliates (including the Company and the Company Subsidiaries) shall be
required to disclose to the Buyer or any agent or Representative thereof any (i)
information if doing so (A) would violate any Contract or Law to which Parent or
any of its Affiliates (including the Company or the Company Subsidiaries) is a
party or subject or (B) would result (in the good faith determination of Parent)
in a loss of the ability to successfully assert a claim of privilege (including
the attorney-client and work product privileges), and (ii) consolidated,
combined, affiliated or unitary Tax Return which includes Parent or any of its
Affiliates or any Tax-related work papers, except for portions or pro formas of
such Tax Returns that relate to the Company and the Company Subsidiaries.

 

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6.3 Books and Records. From and after the Closing, the Buyer shall provide
Parent and its Affiliates and their Representatives, and Parent shall provide
the Buyer and its Affiliates and their Representatives with reasonable access,
for any reasonable purpose, including but not limited to (a) preparing Tax
Returns, (b) defending any claim in respect of which a Notice of Claim has been
served on Parent or the Buyer, (c) reviewing the Closing Statement as referred
to in Section 2.5, (d) in connection with any dispute referred to in Section
2.5, (e) preparing or completing any conflict mineral reports, and (f) reviewing
the Special Receivable amounts due to Parent or its Affiliate as referred to in
Section 6.14, during normal business hours, to all books and records of the
Business, the Company and the Company Subsidiaries, including, but not limited
to, accounting and Tax records, sales and purchase documents, notes, memoranda,
test records and any other electronic or written data (“Records”) pertaining or
relating to the period prior to the Effective Time. To the extent deemed
necessary by Parent and its Affiliates with respect to their other business
operations, Parent and its Affiliates may retain copies of such Records prior to
providing the originals to the Buyer, or, as soon as practicable after Closing,
the Buyer shall provide to Parent and its Affiliates copies of all or any
portion of such Records as requested by Parent and its Affiliates. Unless
otherwise consented to in writing by Parent, the Buyer shall not, for a period
of six (6) years following the date hereof or such longer period as retention
thereof is required by applicable Law, destroy, alter or otherwise dispose of
(or allow the destruction, alteration or disposal of) any of the Records without
first offering to surrender to Parent such Records. Notwithstanding the above,
except as necessary to prepare a Tax Return, the Buyer may limit the access
provided in this Section 6.3 to the extent it reasonably deems it necessary to
avoid unreasonable disruption of the Business and neither Buyer nor any of its
Affiliates (including the Company and the Company Subsidiaries) shall be
required to disclose to the Parent, its Affiliates or any agent or
Representative thereof any information if doing so would result (in the good
faith determination of Buyer) in a loss of the ability to successfully assert a
claim of privilege (including the attorney-client and work product privileges);
provided that, if such information is sought in connection with defending a
Third Party Claim, the Buyer shall disclose such information if Parent enters
into a reasonably acceptable common interest agreement covering such
information. Unless otherwise consented to in writing by Buyer, Parent shall
not, for a period of six (6) years following the date hereof or such longer
period as retention thereof is required by applicable Law, destroy, alter or
otherwise dispose of (or allow the destruction, alteration or disposal of) any
of the Records without first offering to surrender to Buyer such Records.

 

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6.4 Confidentiality; Announcements.

 

(a) In addition to, and without limitation of, the terms, provisions and
covenants of the Confidentiality Agreement dated July 19, 2013, between the
Buyer and Parent (the “Confidentiality Agreement”), the Buyer acknowledges that,
in the course of its investigations of the Business, the Buyer and its
Representatives have and will become aware of confidential information and
documents of the Business, and that its use of such confidential information and
documents, or communication of such information to third parties, could be
detrimental to the Business. The Buyer covenants that prior to Closing all
information and documents concerning the Business reviewed by the Buyer or its
Representatives in connection with this Agreement or the transactions
contemplated hereby, shall be maintained in confidence and shall not be
disclosed or used by the Buyer or its Representatives without Parent’s prior
written consent, unless the Buyer can demonstrate that such information is (i)
otherwise publicly available without fault of the Buyer, its Affiliates or
Representatives or (ii) required to be disclosed pursuant to any Law or Order
applicable to the Buyer. With respect to information and documents related to
the Business, at Parent’s request in the event that the Closing shall not occur,
(x) the Buyer shall, and shall cause its Representatives to, promptly destroy
all information and documents received from Parent and its Representatives
concerning the Business, as the case may be, (including any copies thereof), and
the Buyer shall certify in writing to Parent that such destruction has taken
place, and (y) the Buyer shall keep confidential and shall not use any such
information or documents unless required to disclose such information or
documents pursuant to any Law or Order applicable to the Buyer. In the event
that the Buyer or any of its Representatives becomes legally compelled to
disclose any such information or documents as referred to in this paragraph, the
Buyer shall provide Parent with prompt written notice before such disclosure,
sufficient to enable Parent either to seek a protective order, at its expense,
or other appropriate remedy preventing or prohibiting such disclosure (and the
Buyer shall cooperate with Parent in seeking any such protective order or other
appropriate remedy) or to waive compliance with the provisions of this Section
6.4(a) or both. In the event that such protective order or other appropriate
remedy is not obtained, the Buyer shall furnish only that portion of such
information or documents that has been legally compelled, and shall exercise its
reasonable best efforts to obtain assurances that confidential treatment will be
accorded to such disclosed documents or information.

 

(b) Following the Closing, Parent shall maintain, and shall cause its Affiliates
to maintain, in confidence any information it or they have in relation to the
Business, including information acquired pursuant to Section 6.3, and such
information shall not be disclosed or used by Parent or its Affiliates without
the Buyer’s prior written consent, unless such information is (i) otherwise
publicly available through no breach by Parent or its Affiliates of this Section
6.4(b) or (ii) required to be disclosed pursuant to any Law or Order applicable
to Parent or its Affiliates, in which event Parent shall provide the Buyer with
prompt written notice before such disclosure, sufficient to enable the Buyer
either to seek a protective order, at its expense, or other appropriate remedy
preventing or prohibiting such disclosure (and Parent shall reasonably cooperate
with the Buyer, at the Buyer’s expense, in seeking any such protective order or
other appropriate remedy) or to waive compliance with the provisions of this
Section 6.4(b) or both. In the event that such protective order or other
appropriate remedy is not obtained, Parent shall furnish only that portion of
such information or documents that has been legally compelled, and shall
exercise its reasonable best efforts to obtain assurances that confidential
treatment will be accorded to such disclosed documents or information.

 

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(c) The Parties agree that no press release or other public statement concerning
the negotiation, execution and delivery of this Agreement or the transactions
contemplated hereby shall be issued or made without the prior written approval
of both Parent and the Buyer (which approval shall not be unreasonably
withheld), except (i) the following details regarding the transaction: (A)
identity of the Parties, (B) the Purchase Price and (C) the date of the Closing
may be disclosed without the prior written approval of the other Party, or (ii)
as Parent or its Affiliates reasonably deem necessary according to the rules of
the New York Stock Exchange or applicable Law.

 

6.5 Further Assurances; Cooperation.

 

(a) From and after the Closing, the Parties shall, on request, cooperate with
one another by furnishing any additional information, executing and delivering
any additional documents and instruments, and doing such other things as may be
reasonably required by the Parties or their counsel to consummate or otherwise
implement the transactions contemplated by this Agreement.

 

(b) Prior to the Closing, Parent shall cooperate (by providing access as set
forth in Section 6.2) and shall cause the Company and the Company Subsidiaries
to cooperate with the Buyer in obtaining any financing with respect to the
Company and the Company Subsidiaries; provided that (i) such cooperation does
not interfere with the ongoing operations of Parent, the Company or the Company
Subsidiaries; (ii) in no event shall Parent, or, prior to the Closing, the
Company or the Company Subsidiaries, be required to pay any commitment or other
similar fee or incur any other Liability in connection with the financing; (iii)
no obligation of the Company or the Company Subsidiaries shall be effective
until the Closing and neither the Company nor any Company Subsidiary or any of
their respective directors, officers, employees or representatives shall be
required to take any action under, or execute or agree to, any certificate,
agreement or other document that is not contingent upon the Closing and does not
terminate without Liability to Parent, the Company or the Company Subsidiaries
or any of their respective Affiliates upon termination of this Agreement; and
(iv) neither Parent nor any of its directors, officers, employees or
representatives shall be required to take any action under, or execute or agree
to, any certificate, agreement or other document in connection with Buyer’s
financing. None of Parent, the Company, the Company Subsidiaries or their
respective Affiliates shall be required to bear any cost or expense or to pay
any commitment or other similar fee or make any other payment in connection with
Buyer’s financing. For the avoidance of doubt, obtaining any financing by Buyer
with respect to the Company and the Company Subsidiaries shall not be a
condition to Closing.

 

(c) Prior to the Closing, Parent shall, and shall cause the Company to,
reasonably cooperate with the Buyer (i) to allow the Buyer to obtain, at the
Buyer’s sole cost and expense, a commitment for a 2006 ALTA Owners Policy of
Title Insurance for each parcel of Owned Real Property, issued by a title
insurer reasonably satisfactory to the Buyer, in such amount as the Buyer may
reasonably elect, insuring the fee interest in each such parcel of Owned Real
Property as of the Closing, subject only to the Permitted Encumbrances and
containing such endorsements as the Buyer may reasonably require (a “Title
Policy”), and (ii) to allow the Buyer to procure, at Buyer’s sole cost and
expense, a current as-built survey of each parcel of Owned Real Property,
prepared by a licensed surveyor satisfactory to the Buyer and conforming to 2011
ALTA/ACSM Minimum Detail Requirements, and revealing no encroachments or
Encumbrances other than Permitted Encumbrances. Such cooperation by Parent shall
include providing all affidavits, undertakings and other title clearance
documents reasonably necessary or customary to cause Buyer’s title insurer to
issue a Title Policy, or a commitment to issue a Title Policy insuring, title to
each parcel of Owned Real Property.

 

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6.6 Disclosure Supplement. Parent shall prior to Closing notify the Buyer of any
development or other information which renders any representation, warranty or
statement contained in this Agreement or the Disclosure Schedules hereto
inaccurate or incomplete at any time prior to the Closing, or which could
reasonably be expected to render any representation, warranty or statement
contained in this Agreement or the Disclosure Schedules hereto inaccurate or
incomplete, including any such development or information which first becomes
known to Parent after the date hereof (“Supplemental Information”). The written
notice pursuant to this Section 6.6 shall not operate as a waiver or otherwise
affect any representation, warranty or agreement given or made by Parent in this
Agreement and shall not be deemed to amend or supplement the Disclosure
Schedules for any purpose. If any Supplemental Information constitutes a
Material Adverse Effect, Parent shall identify it as such in writing to the
Buyer and Buyer shall have the right to terminate this Agreement as set forth in
Section 10.2(a)(v).

 

6.7 Pre-closing Insurance. The Parties agree that the Buyer, the Company and the
Company Subsidiaries shall not have the benefit of or access to any insurance
policies, including any self-insurance, maintained by Parent or any of its
Affiliates (excluding the Company and the Company Subsidiaries), excepting only
any occurrence-based insurance policies which insured the Company or any Company
Subsidiary prior to Closing. In the event Buyer, the Company or any Company
Subsidiary submits a claim covered in whole or in part under any such
occurrence-based policy or policies, Buyer agrees to timely pay on behalf of
Parent or any of its Affiliates any amounts any of them may be obligated to pay
pursuant to the terms of such policy or policies, including any self-insured
retention or deductible.

 

6.8 Regulatory Approval.

 

(a) Parent and the Buyer shall, as promptly as practicable, but in no event
later than one (1) Business Day following the execution and delivery of this
Agreement, submit all filings required by the HSR Act (the “HSR Filing”) and any
other applicable Competition Law, as appropriate, and thereafter provide any
supplemental information requested in connection therewith. Any such
notification and report form and supplemental information will be in substantial
compliance with the requirements of the HSR Act or other applicable Competition
Law. Parent and the Buyer shall furnish to the other such necessary information
and reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act or
other applicable Competition Law. Parent and the Buyer shall request early
termination of the applicable waiting period under the HSR Act and any other
applicable Competition Law. Each of Parent and the Buyer, shall promptly inform
the other Party of any material communication received by such Party from any
Governmental Authority in respect of the HSR Filing or any Competition Law. Each
of Parent and the Buyer shall (a) use its respective commercially reasonable
efforts to comply as expeditiously as possible with all requests of any
Governmental Authority for additional information and documents, including
information or documents requested under the HSR Act or other applicable
Competition Law; (b) not (i) extend any waiting period under the HSR Act or any
applicable Competition Law or (ii) enter into any agreement with any
Governmental Authority not to consummate the transactions contemplated by this
Agreement, except, in each case, with the prior consent of the other Party; and
(c) cooperate with the other and use commercially reasonable efforts to contest
and resist any action, including legislative, administrative or judicial action,
and to have vacated, lifted, reversed or overturned any Order (whether
temporary, preliminary or permanent) that restricts, prevents or prohibits the
consummation of the transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Buyer shall have no obligation to
agree to any divestiture or conduct-based remedy. The HSR Act filing fee and any
filings fees arising under other Competition Law will be equally shared by the
Parent and the Buyer.

 

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(b) Parent and the Buyer shall, as promptly as practicable following the
execution and delivery of this Agreement, (i) cooperate in preparing, filing,
and prosecuting any and all applications requesting the Federal Communications
Commission’s (“FCC”) consent to the transfer of the FCC Licenses, and in
responding to any inquiries from the FCC  relating thereto, (ii) submit all
required forms, notifications, and supplements and any related filings that are
required to be made with the FCC with respect to the FCC Licenses, and
thereafter provide any supplemental information requested in connection
therewith, and (iii) take all such steps that are proper, necessary, or
desirable to expedite the prosecution of such applications to a favorable
conclusion. Parent and the Buyer shall furnish to the other such necessary
information and reasonable assistance as the other may request in connection
with its preparation of any such filing or submission. Each of Parent and the
Buyer, shall promptly inform the other Party of any material communication
received by such Party from any Governmental Authority in respect of the filings
under this Section 6.8(b). If Closing hereunder occurs prior to an FCC decision,
then both Parties’ obligations under this Section shall survive the Closing. Any
filing fees arising in connection with the submission to and approval of the FCC
as contemplated by this Section 6.8(b) will be equally shared by Parent and the
Buyer.

 

6.9 Taxes.

 

(a) All transfer, documentary, sales, use, value-added, gross receipts, stamp,
registration, occupation, excise, duty or other similar transfer Taxes
(“Transfer Taxes”) incurred in connection with the transfer and sale of the
Interests and the Caribe Shares as contemplated by the terms of this Agreement,
including all recording or filing fees, notarial fees and other similar costs of
Closing, that may be imposed, payable, collectible or incurred shall be borne
one-half by the Buyer and one-half by Parent.

 

(b) Parent shall prepare and file or cause to be prepared and filed in a timely
manner all Income Tax Returns of the Company or the Company Subsidiaries for Tax
periods ending at or prior to the Effective Time regardless of whether such Tax
Returns are due before, at or after the Effective Time. Parent shall provide any
such Income Tax Return due after the Effective Time to Buyer for its review and
comment at least fifteen (15) days prior to the due date of such Tax Return and
Parent shall integrate any reasonable comments of the Buyer to such Tax Return.
The Buyer shall prepare and file or cause to be prepared and filed all other
Pre-Closing Period Tax Returns of the Company or the Company Subsidiaries that
are due after the Effective Time. The Buyer shall provide Parent with copies of
all such Tax Returns within fifteen (15) days after filing such Tax Returns. All
Tax Returns for Pre-Closing Periods due after the Closing Date shall be prepared
in a manner consistent with past practices of the Company or the Company
Subsidiaries to the extent consistent with applicable Law. Buyer shall not amend
any Pre-Closing Period Tax Return of the Company or the Company Subsidiaries
without Parent’s prior written consent, which consent shall not be unreasonably
delayed, withheld or denied.

 

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(c) Return and Reporting Obligations.

 

(i) Following the Closing, and except as otherwise provided in Section 6.9(b),
Buyer shall prepare and file or cause to be prepared and filed in a timely
manner all Tax Returns relating to the Company and the Company Subsidiaries for
Tax periods beginning at or prior to and ending after the Effective Time
(“Straddle Period”). Buyer and Parent shall use the “Alternative Procedure”
provided in Section 5 of Revenue Procedure 99-50, 1999-52 I.R.B. 757 with
respect to the filing and furnishing of IRS Forms 1042-S, 1098, 1099, 5498, and
W-2G for any federal tax information reporting related to the Straddle Period,
excluding forms that in prior tax years were prepared by Parent or any of its
Affiliates (other than the Company and the Company Subsidiaries). Buyer and
Parent shall use the “Alternate Procedure” provided in Section 5 of Revenue
Procedure 2004-53, 2004-34 I.R.B. 320 with respect to the filing and furnishing
of IRS Forms W-2, W-3, W-4, W-5 and 941 for any Employee that is employed by
Buyer immediately following the Effective Time, and not for any Employee of
Parent or any of its Affiliates other than the Company and the Company
Subsidiaries. Parent shall provide Buyer with all reasonably necessary
information, materials and assistance with respect to any event on or prior to
the Closing Date in connection with any reporting referenced in the preceding
two sentences, which shall be accurate and complete.

 

(ii) Such Tax Returns and information reporting shall be prepared, and each item
thereon treated, in a manner consistent with past practices employed with
respect to the Company and the Company Subsidiaries to the extent consistent
with applicable Law. Parent shall have the right to review such Tax Return for
thirty (30) days prior to the filing of such Tax Returns (or, for Tax Returns
due taking into account any extension obtained less than ninety (90) days after
the end of the applicable reporting period, a number of days equal to 33% of the
number of days between the end of the applicable reporting period or the
Effective Date, if later, and the due date for such Tax Return taking into
account any extension obtained), and Buyer shall consider in good faith any
adjustments to such Tax Return that are reasonably requested by Parent.

 

(d) All Taxes payable with respect to the Company or the Company Subsidiaries in
respect of any Pre-Closing Period (and the portion of the Straddle Period ending
on the Closing Date) are the responsibility of and shall be paid by Parent
(including by payment directly or through an agent to the applicable Tax
authority (with a copy of proof of payment provided to the Buyer) or by payment
to the Company, except to the extent accrued as a current liability on the
Closing Statement. Taxes relating to a Straddle Period shall be pro-rated
between Parent and the Buyer; such Taxes for the Tax period ending at the
Effective Time are the responsibility of Parent and Taxes for the Tax period
beginning after the Effective Time are the responsibility of the Buyer. Parent
shall pay to the Buyer within fifteen (15) days after the date on which the
Taxes are paid with respect to such Straddle Periods an amount equal to the
portion of such Taxes that relates to the Tax period ending at the Effective
Time to the extent such Taxes are not paid prior to Closing, are not paid by
Parent after the Closing, or are not accrued as a liability on the Closing
Statement. For purposes of this Agreement, (i) the portion of any Property Tax
and Taxes based on capitalization, debt or shares of stock authorized, issued or
outstanding, or similar ad valorem Taxes that relates to the period ending at
the Effective Time shall be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction, the numerator of which is the number of
days in the Tax period ending at the Effective Time and the denominator of which
is the number of days in the entire Tax period and (ii) the portion of Taxes not
described in clause (i) of this sentence shall be made on the basis of an
interim closing of the books.

 

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(e) Any refund of Taxes (including any interest thereon) that relates to the
Company or any Company Subsidiary that is attributable to a Post-Closing Period
shall be the property of the Company or the Company Subsidiary, as applicable,
and shall be retained by the Company or the Company Subsidiary. Without limiting
the generality of the preceding sentence, any such refund or other benefit
realized by the Company, any Company Subsidiary or an Affiliate of the Company
in a Post-Closing Period that results from the carry-forward of any Tax
attribute from a Pre-Closing Period shall be the property of the Company or
Affiliate of the Company and shall be retained by the Company or Affiliate of
the Company, as applicable. Any refund of Taxes (including interest thereon)
received by the Buyer, the Company or the Company Subsidiaries attributable to a
Pre-Closing Period or the portion of a Straddle Period ending at the Effective
Time, and any amounts credited against Tax to which the Buyer, the Company or
the Company Subsidiaries become entitled, that relate to a refund attributable
to such periods (for the avoidance of doubt, a refund that results from the
carry-forward of a Tax attribute to a Post-Closing Period is not considered
attributable to a Pre-Closing Period) shall be for the account of Parent except
to the extent accrued as a current asset on the Closing Statement, and the Buyer
shall pay over to Parent any such Tax refund and interest received by it or the
amount of any such credit within fifteen (15) days after receipt thereof or
utilization of such credit. Any amounts credited against Tax to which the Buyer,
the Company or the Company Subsidiaries become entitled, that relate to a refund
or overpayment attributable to the portion of a Straddle Period ending at the
Effective Time shall be for the account of Parent to the extent it is
attributable to tax payments made by Parent pursuant to Section 6.9(d), and the
Buyer shall pay over to Parent the amount of any such Tax refund and interest
received by it or the amount of any such credit within fifteen (15) days after
receipt or entitlement thereto.

 

(f) Tax Cooperation.

 

(i) The Buyer and Parent agree to furnish or cause to be furnished to each
other, upon request, as promptly as practical, such information (including
reasonable access to books and records) and assistance as is reasonably
necessary for the conduct of any Tax audit, the prosecution or defense of any
claim, suit or proceeding relating to any Tax matter, and the filing of any Tax
Return, including in connection with calculating, claiming and determining any
research and development credit or deduction and any “Section 41(f)(3) letter”
(“Tax Matter”). The Buyer and Parent shall cooperate with each other in the
conduct of any Tax Matter and each shall execute and deliver such powers of
attorney and other documents as are necessary to carry out the intent of this
Section 6.9(f). In furtherance of this Section 6.9(f), with respect to any Tax
Matter: (A) upon request, the Buyer shall assist Parent with respect to Records
and any other appropriate data reasonably requested by Parent in writing.
Response to such request shall be accomplished within a reasonable period of
time, but in no event more than twenty (20) Business Days after receipt of such
request; and (B) Representatives of the Buyer, including Representatives of the
Company and the Company Subsidiaries after Closing, shall be available to
collect and interpret all Records and other appropriate data at the reasonable
request of Parent. The personnel of the Buyer, including personnel of the
Company and the Company Subsidiaries after Closing, shall also be reasonably
available to assist Parent. Response to such request for personnel assistance
shall be accomplished within a reasonable period of time, but in no event more
than twenty (20) Business Days after receipt of such request.

 

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(ii) Any Tax audit or other Tax proceeding shall be deemed to be a Third Party
Claim subject to the procedures set forth in Section 9.4 of this Agreement.

 

(iii) Notwithstanding anything in this Agreement to the contrary, Parent shall
have sole responsibility for and control over all audits, appeals or litigation
with respect to any Tax Return for all periods referred to in Section 6.9(b).

 

(g) Allocation.

 

(i) The Purchase Price shall be allocated in the manner set forth on Disclosure
Schedule 6.9(g). Within sixty (60) Business Days after the final determination
of the Closing Working Capital, Buyer shall prepare and deliver to Parent for
its approval an allocation of the Purchase Price and amounts treated as
liabilities of the Company and the Company Subsidiaries for Tax purposes among
the assets of the Company and the Company Subsidiaries in accordance with Code
Section 1060 and any similar provision of state, local, or foreign law as
appropriate (“Purchase Price Allocation”). Parent shall timely and properly
prepare, execute, file and deliver all such documents, forms and other
information as Buyer may reasonably request to prepare the Purchase Price
Allocation. Parent shall have sixty (60) days to review and comment on such
allocation, and identify potential adjustments thereto. If Parent fails to
identify potential adjustments within such sixty (60) day period, Parent shall
be deemed to have accepted the Purchase Price Allocation as calculated by the
Buyer. If Parent raises any objections to the Buyer’s proposed allocations, the
Buyer and Parent shall negotiate in good faith and use their commercially
reasonable efforts to resolve such dispute. If the Buyer and Parent are unable
to agree on the Purchase Price Allocation within one-hundred twenty (120) days
after the final determination of the Closing Working Capital, the Buyer and
Parent are permitted to report such allocation separately.

 

(ii) For all Tax purposes (including without limitation the filing of Internal
Revenue Service Form 8594), Buyer, Parent, and the Affiliates of each of them,
shall take no position for Tax purposes inconsistent or contrary to any Purchase
Price Allocation agreed to in Section 6.9(g)(i) (“Agreed Allocation”) unless
required to do so by applicable Law. In the event that the Agreed Allocation is
disputed by any Tax authority, the Party receiving notice of such dispute will
promptly notify the other Party and the Parties will consult in good faith how
to resolve such dispute in a manner consistent with such Agreed Allocation.

 

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(h) Tax Forms. Within three (3) Business Days following the execution of this
Agreement, Parent shall provide Buyer with a properly prepared and executed
certificate of non-foreign status under Treas. Reg. §1.1445-2(b)(2) and IRS Form
W-9 claiming a complete exemption from backup withholding and ESCO Luxembourg
shall provide Buyer with a properly prepared and duly executed IRS Form W-8BEN.

 

(i) Termination of Tax Sharing Agreements. Parent shall ensure that any and all
Contracts with the principal purpose of Tax allocation, Tax sharing or a similar
Tax purpose between the Company or any Company Subsidiary on the one hand and
Parent or any of its Affiliates (other than Company or the Company Subsidiaries)
on the other hand shall be terminated with respect to the Company or the Company
Subsidiary as of the day before the Closing Date and, from and after the Closing
Date, the Company and the Company Subsidiaries shall not have an obligation to
make or collect any payments in respect thereof to any Person for any period.

 

(j) Caribe. The Parties shall cooperate and make all filings necessary so that
Caribe continues the characterization of the portion of its undistributed
earnings and profits generated during the period of its industrial tax exemption
granted by the Commonwealth of Puerto Rico as exempt under Section 7(b) of Act
135 following the Effective Time.

 

6.10 Covenant Not to Compete and Non-Solicitation of Employees.

 

(a) In light of the extensive knowledge of the Business possessed by Parent, and
for good and valuable consideration which the Parties acknowledge, it is
mutually agreed that, for the period ending on the fifth (5th) anniversary of
the Closing Date, neither Parent nor any of its Affiliates shall engage in,
directly or indirectly, in any capacity, or have any direct or indirect
ownership interest in, or permit its name to be used in connection with, the
Business, including in the business of advanced metering infrastructure for
electric, gas and water utilities in the manner carried on by the Company and
the Company Subsidiaries as of the date hereof, but specifically excluding (w)
substation communications for purposes of substation monitoring and automation,
(x) distribution automation and (y) radiofrequency activities of test and
measurement, anywhere in the world (“Competitive Activities”). Notwithstanding
the foregoing, the Buyer hereby agrees that the foregoing covenant shall not be
deemed breached as a result of (1) the ownership by Parent or any of its
Affiliates of (i) the stock of a person engaged, directly or indirectly, in
Competitive Activities if owned by the Pension Plan; (ii) a person engaged,
directly or indirectly, in Competitive Activities if such Competitive Activities
account for less than five (5) percent of such person’s consolidated annual
revenues for the most recently completed fiscal year; (iii) less than an
aggregate of ten (10) percent of the stock of a person engaged, directly or
indirectly, in Competitive Activities; (iv) the shares of capital stock of
Calico Energy Inc. owned as of the Closing; or (v) the shares of capital stock
of Firetide, Inc. owned as of the Closing or (2) the engagement in the Business
by Parent or any of its Affiliates upon the exercise of the rights of Parent or
its Affiliates under Section 8 of the Guarantee Reimbursement Agreement.

 

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(b) For five (5) years following the Closing Date, Parent and its Affiliates,
shall not directly or indirectly (i) (A) solicit to hire or for engagement of
services or (B) hire or engage for services any individual who is an officer or
employee of the Company or any Company Subsidiary as of the Closing Date;
provided, however, that this prohibition shall not apply (1) to solicitations
and resulting hiring from general advertisements appearing in newspapers,
periodicals, trade journals or other media of broad circulation, to non-directed
searches conducted by recruiting firms on behalf of the Company or its
Affiliates, (2) to the extent Parent or its Affiliates exercise the rights set
forth in Section 8 of the Guarantee Reimbursement Agreement or (3) solicitations
and/or hiring of any individual terminated by the Company or any Company
Subsidiary following the Closing Date, provided, that any such solicitation or
hiring is no earlier than 180 days following the termination of such individual;
or (ii) solicit or induce, or in any manner attempt to solicit or induce, or
cause or authorize any other Person to solicit or induce any Person to cease,
diminish or not commence doing business with any of the Company, the Company
Subsidiaries, the Buyer or its Affiliates with respect to the Business, except
to the extent Parent or its Affiliates exercise the rights set forth in Section
8 of the Guarantee Reimbursement Agreement. From and after the Closing Date,
Parent shall not (and shall cause its Affiliates not to) disparage any of the
Company, the Company Subsidiaries, the Buyer or its Affiliates.

 

(c) Without limiting the remedies available, the Parties to this Agreement agree
that damages at Law may be an insufficient remedy in the event of breach of this
Section 6.10 and that the injured party should be entitled to seek injunctive
relief or other equitable remedies in the event of any such breach.

 

(d) If any of the provisions of this Section 6.10 are held to be unenforceable
or in excess of that which is valid or enforceable in any jurisdiction, then, as
to such jurisdiction, such provision shall be construed in such jurisdiction to
cover the duration, extent, activities or other limitations to the maximum
extent that it would be validly enforced in such jurisdiction, without affecting
the remaining provisions of this Section 6.10 in such jurisdiction, or affecting
in any other jurisdiction the validity or enforceability of such provision or of
this Section. The covenants contained in this Section 6.10 and each provision
thereof are severable and distinct covenants and provisions.

 

6.11 Brokers, Finders. Buyer shall pay any finder, broker, agent or other
intermediary acting on behalf of the Buyer any commission, fee, or other
compensation due to such finder, broker, agent or other intermediary in
connection with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby. Parent shall pay any finder, broker, agent or
other intermediary acting on behalf of the Parent any commission, fee, or other
compensation due to such finder, broker, agent or other intermediary in
connection with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby.

 

6.12 No Solicitation of Other Bids.

 

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(a) Parent shall not, and shall not authorize or permit any of its Affiliates
(including the Company and the Company Subsidiaries) or any of its or their
Representatives to, directly or indirectly, (i) encourage, solicit, initiate,
facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter
into discussions or negotiations with, or provide any information to, any Person
concerning a possible Acquisition Proposal; or (iii) enter into any agreements
or other instruments (whether or not binding) regarding an Acquisition Proposal.
Parent shall immediately cease and cause to be terminated, and shall cause its
Affiliates (including the Company) and all of its and their Representatives to
immediately cease and cause to be terminated, all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
could lead to, an Acquisition Proposal.

 

(b) In addition to the other obligations under this Section 6.12, subject to
Parent’s obligations pursuant to confidentiality agreements existing as of
December 19, 2013, Parent shall promptly (and in any event within one Business
Day after receipt thereof by Parent or its Representatives) advise the Buyer
orally or in writing of any Acquisition Proposal, any request for information
with respect to any Acquisition Proposal, or any inquiry with respect to or
which could reasonably be expected to result in an Acquisition Proposal, the
material terms and conditions of such request, Acquisition Proposal or inquiry,
and the identity of the Person making the same.

 

(c) Parent agrees that the rights and remedies for noncompliance with this
Section 6.12 shall include having such provision specifically enforced by any
court having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach shall cause irreparable injury to the Buyer and that
money damages would not provide an adequate remedy to the Buyer.

 

6.13 RELEASE. IN CONSIDERATION OF THE AGREEMENTS CONTAINED HEREIN AND EXCLUDING
ANY AND ALL CAUSES OF ACTION, CLAIMS, COUNTERCLAIMS, SUITS, ATTORNEYS’ FEES,
COSTS, CONTROVERSIES, DEMANDS AND OTHER OBLIGATIONS AND LIABILITIES OF ANY KIND
UNDER THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, EFFECTIVE AS OF THE EFFECTIVE
TIME, PARENT, ON BEHALF OF ITSELF AND ITS AFFILIATES (THE “PARENT RELEASING
GROUP”), HEREBY FULLY AND FINALLY WAIVES, RELEASES, ACQUITS AND FOREVER
DISCHARGES THE COMPANY, THE COMPANY SUBSIDIARIES AND THE BUYER FROM ANY AND ALL
CAUSES OF ACTION, CLAIMS, COUNTERCLAIMS, SUITS, ATTORNEYS’ FEES, COSTS,
CONTROVERSIES, DEMANDS AND OTHER OBLIGATIONS AND LIABILITIES OF ANY KIND,
WHETHER IN LAW OR EQUITY, AND WHETHER KNOWN OR UNKNOWN, THAT ANY MEMBER OF THE
PARENT RELEASING GROUP HAD OR NOW HAS, OF ANY KIND THAT WAS OR MIGHT HAVE BEEN
ALLEGED BY ANY MEMBER OF SUCH PARENT RELEASING GROUP, RELATING TO THE COMPANY OR
THE COMPANY’S SUBSIDIARIES OR THE BUSINESS, IN EACH CASE, IN RESPECT OF THE
PERIOD ON AND PRIOR TO THE EFFECTIVE TIME, NOTWITHSTANDING THE FAULT, STRICT
LIABILITY, BREACH OF CONTRACT OR NEGLIGENCE, WHETHER SOLE, JOINT OR CONCURRENT
OR ACTIVE OR PASSIVE, OF THE PERSON RELEASED BY THIS SECTION OR WHETHER ASSERTED
IN CONTRACT, IN WARRANTY, IN TORT, BY STATUTE OR OTHERWISE.

 

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6.14 Special Receivable. Buyer agrees that following the Closing, Parent shall
have all right, title and interest in and to, the Special Receivable. Buyer
shall calculate the amounts collected with respect to the Special Receivable in
a manner consistent with historical accounting procedures, and shall cause the
Company to pay to Parent on the first and fifteenth day of each month (or the
first Business Day thereafter) all such amounts received by the Company during
the previous two week period relating to the Special Receivable. Buyer shall
cause the Company to (a) use commercially reasonable efforts to collect the
Special Receivable, which shall include, for the avoidance of doubt, enforcing
its rights and performing its obligations under Schedule Q – VAR Payment
Arrangement of the Restated Agreement and (b) reasonably cooperate with Parent
and its Affiliates in the collection of the Special Receivable. If any amount of
the Special Receivable would have been paid to the Company because any MTU’s
comprising the Special Receivable have been installed, but SoCal Gas informs the
Company (whether voluntarily or in response to a request for accounting, which
the Company shall submit if requested by Parent) that such amounts are not being
paid due to set-off of any claims of SoCal Gas for any reason not relating to
the Special Receivable, Buyer shall cause the Company to pay to Parent such
amounts being set off in respect of the Special Receivable then-currently due.

 

6.15 Surety Bonds.

 

(a) From and after the Closing, Buyer shall (i) assume, or cause the Company or
one of the Company Subsidiaries to assume, all Surety Bond Obligations, or
obtain, or cause the Company or one of the Company Subsidiaries to obtain,
replacement surety bonds in full substitution for all Surety Bonds, in each case
within thirty (30) days following the Closing Date; (ii) fully and
unconditionally release Parent and its Affiliates from all Surety Bond
Obligations; and (iii) to otherwise take actions as are necessary, and
cooperate, and cause the Company to cooperate, in connection with the
replacement of the Surety Bonds and release of Parent and its Affiliates from
the Surety Bond Obligations.

 

(b) Notwithstanding the foregoing, at any time after thirty (30) days following
the Closing Date, Parent and its Affiliates shall be permitted to, and shall not
be restricted in any manner from, exercising all rights and taking any actions
necessary to obtain the full and unconditional release of Parent and its
Affiliates from any Surety Bond Obligations, including by exercising any
applicable termination rights.

 

(c) From and after the Closing, the Buyer shall cause the Company to indemnify
and hold harmless Parent and its Affiliates for any amounts paid or incurred by
Parent or any of its Affiliates to satisfy, perform, fulfill or discharge any
Surety Bond Obligation and all Losses incurred in connection therewith,
including any costs and expenses relating to the collection of amounts owed by
the Company under this Section 6.15(c).

 

6.16 Estoppel Certificates. Prior to the Closing, Parent shall use commercially
reasonable efforts to obtain landlord estoppel certificates with respect to the
Leased Real Properties in form and substance reasonably acceptable to the Buyer.

 

6.17 Share Transfer and Minute Books. On or promptly following the Closing Date,
Parent shall deliver to Buyer all share transfer and minute books of the Company
and the Company Subsidiaries not held by the Company and the Company
Subsidiaries at Closing.

 

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Article VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER

 

The obligation of the Buyer to proceed with the Closing shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent, any of which may be waived in whole or in part by the
Buyer (if permitted by applicable Law):

 

7.1 Accuracy of Representations and Warranties, Performance of Obligations and
No Material Adverse Effect. (a) The representations and warranties of Parent set
forth in this Agreement will be true and correct in all material respects taken
as a whole (without regard to any materiality, Material Adverse Effect or
similar qualification contained therein) as of the Closing Date as though made
on and as of the Closing Date (except to the extent such representations and
warranties speak as of an earlier date), other than any Title and Authorization
Representations, which shall be true and correct in all respects, (b) Parent
shall have performed or complied in all material respects with all covenants,
agreements and conditions contained in this Agreement on its part required to be
performed or complied with at or prior to the Closing, and (c) since the date of
this Agreement, there has not been a Material Adverse Effect. Parent shall have
delivered to the Buyer at the Closing a certificate of an officer of Parent
certifying that the conditions stated in this Section 7.1 have been fulfilled.

 

7.2 Consents and Approvals.

 

(a) All filings with Governmental Authorities listed on Disclosure Schedule 7.2,
including the HSR Filing and filings under any other applicable Competition Law,
shall have been made and the applicable waiting period and any extensions
thereof under applicable Law shall have expired or been terminated and/or
Consent thereunder shall have been granted (with respect to the HSR Filing, the
“HSR Approval”).

 

7.3 No Contrary Judgment. On the Closing Date there shall exist no Order which
prohibits the consummation of the transactions contemplated by this Agreement.
If any such Order has been issued, each Party shall use its reasonable best
efforts to have any such Order overturned or lifted.

 

7.4 Deliveries. Parent shall have made or tendered, or caused to be made or
tendered, delivery to the Buyer of the following documents:

 

(a) the Company Interests, accompanied by instruments of transfer duly executed
and in proper form for transfer to the Buyer under applicable Law;

 

(b) the Caribe Transfer Agreement, duly executed by ESCO Luxembourg, and the
Caribe Shares;

 

(c) resignations from each manager of the Company and Aclara International, each
director of Caribe and the officers of the Company and the Company Subsidiaries
set forth on Disclosure Schedule 7.4(c), which resignations shall be effective
as of the Closing;

 

(d) a certificate of good standing issued by the Secretary of State of the State
of Ohio as to the good standing of the Company and a good standing certificate
for Aclara International from the Secretary of State of the State of Missouri,
in each case dated as of a date not earlier than ten (10) Business Days prior to
the Closing;

 

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(e) release in the form attached as Exhibit D executed by an authorized
Representative of Parent regarding the termination of any Contracts between the
Company or the Company Subsidiaries, on the one hand, and Parent, and any
Affiliate of Parent, on the other hand, and the termination of intercompany
accounts pursuant to Section 2.7;

 

(f) recordable releases of all security interests recorded against the Company’s
or the Company Subsidiaries’ assets (including, without limitation, against any
Owned Real Property);

 

(g) (i) a certificate signed by the Secretary or Assistant Secretary of the
Company, each Company Subsidiary and the Parent, dated as of the Closing Date,
certifying as to (A) the accuracy and full force and effect of resolutions
adopted by the board of directors or managers of such entity, as applicable,
regarding this Agreement, the applicable Ancillary Agreements and the
transactions contemplated hereby and attached as one or more exhibits to such
certificate, and (B) the names and signatures of the officers of the Company,
each Company Subsidiary and the Parent, as applicable, authorized to sign this
Agreement and each Ancillary Agreement to which such entity is a party and (ii)
a certificate signed by an appropriate officer of ESCO Luxembourg, dated as of
the Closing Date, certifying as to similar matters with respect to the Share
Transfer Agreement for the Caribe Shares;

 

(h) the certificate required by an officer of Parent pursuant to Section 7.1;

 

(i) the Employee Escrow Agreement, duly executed by Parent;

 

(j) the Transition Services Agreement, duly executed by Parent, in the form
attached as Exhibit E;

 

(k) the Guarantee Reimbursement Agreement in the form attached as Exhibit F (the
“Guarantee Reimbursement Agreement”), duly executed by Parent;

 

(l) evidence of termination of any guarantees, pledges or other obligations of
the Company and the Company Subsidiaries under the Credit Agreement dated as of
May 14, 2012 among ESCO Technologies Inc., its Foreign Subsidiary Borrowers from
time to time party thereto, the Lenders from time to time party thereto,
JPMorgan Chase Bank, N.A. as Administrative Agent, PNC Bank, National
Association as Syndication Agent, and SunTrust Bank, Wells Fargo Bank, National
Association and Bank of America, N.A. as Co-Documentation Agents; and

 

(m) all other documents, instruments or certificates required to be delivered by
the Parent at or prior to the Closing pursuant to this Agreement.

 

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Article VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT

 

The obligation of Parent to proceed with the Closing shall be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent, any of which may be waived in whole or in part by Parent
(if permitted by applicable Law):

 

8.1 Accuracy of Representations and Warranties and Performance of Obligations.
(a) The representations and warranties of the Buyer set forth in this Agreement
will be true and correct in all material respects taken as a whole (without
regard to any materiality, material adverse effect or similar qualification
contained therein) as of the Closing Date as though made on and as of the
Closing Date (except to the extent such representations and warranties speak as
of an earlier date), other than any Buyer Authorization Representations, which
shall be true and correct in all respects, and (b) the Buyer shall have
performed or complied in all material respects with all covenants, agreements
and conditions contained in this Agreement on its part required to be performed
or complied with at or prior to the Closing. The Buyer shall deliver to Parent
at the Closing a certificate of an officer of the Buyer certifying that the
conditions stated in this Section 8.1 have been fulfilled.

 

8.2 Consents and Approvals. All filings with Governmental Authorities listed on
Disclosure Schedule 8.2, including the HSR Filing and filings under any other
applicable Competition Law, shall have been made and the applicable waiting
period and any extensions thereof under applicable Law shall have expired or
been terminated and/or Consent thereunder shall have been granted.

 

8.3 No Contrary Judgment. On the Closing Date there shall exist no Order which
prohibits the consummation of the transactions contemplated by this Agreement.
If any such Order has been issued, each Party shall use its reasonable best
efforts to have any such Order overturned or lifted.

 

8.4 Deliveries. The Buyer shall have made or tendered, or caused to be made or
tendered, delivery to Parent of the Closing Payment in accordance with Section
2.3 and the following documents:

 

(a) the Caribe Transfer Agreement, duly executed by the Buyer;

 

(b) the certificate required by an officer of the Buyer pursuant to Section 8.1;

 

(c) the Employee Escrow Agreement, duly executed by the Buyer;

 

(d) the Transition Services Agreement, duly executed by the Buyer, in the form
attached as Exhibit E;

 

(e) a release of the officers, directors and managers, as applicable, of each of
the Company and the Company Subsidiaries with respect to any Liability or claims
related to service at or prior to their resignation in the form attached hereto
as Exhibit G;

 

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(f) the Guarantee Reimbursement Agreement, duly executed by Buyer and the
Company; and

 

(g) all other documents, instruments or certificates required to be delivered by
the Buyer at or prior to the Closing pursuant to this Agreement.

 

Article IX
INDEMNIFICATION

 

9.1 Indemnification by Parent. Subject to the limitations set forth in this
Article IX, from and after Closing, Parent shall indemnify and hold harmless the
Buyer and Buyer’s Affiliates and each of their respective officers, directors
and employees (in their capacity as such) (collectively, the “Buyer Indemnified
Parties”) against and in respect of any and all Losses actually incurred by any
Buyer Indemnified Party arising from:

 

(a) any breach or violation of the covenants made in Articles II, V, VI or IX of
this Agreement or any Ancillary Agreement (other than the Guarantee
Reimbursement Agreement) by Parent or any of its Affiliates;

 

(b) any inaccuracy or breach of any Fundamental Representation made by Parent;

 

(c) any inaccuracy or breach of any representation or warranty made by Parent in
this Agreement, or by Parent or ESCO Luxembourg in any of the Ancillary
Agreements (other than the Guarantee Reimbursement Agreement), resulting from
fraud, intentional misrepresentation or willful misconduct of Parent or any of
its Affiliates

 

(d) any Indebtedness of the Company or a Company Subsidiary as of the Effective
Time that did not reduce the Purchase Price at Closing or pursuant to Section
2.5;

 

(e) any Transactional Expenses of the Company or a Company Subsidiary that were
not paid by the Company, a Company Subsidiary or Parent before the Closing Date
and did not reduce the Purchase Price at Closing or pursuant to Section 2.5;

 

(f) any Tax imposed on, or sought to be collected from, the Company or any
Company Subsidiary (or imposed on any other Buyer Indemnified Party relating to
the Company or any Company Subsidiary): (i) with respect to any Pre-Closing
Period or the portion of any Straddle Period ending on the Closing Date; (ii) of
any affiliated, combined, consolidated, unitary or similar group of which the
Company or any Company Subsidiary (or any predecessor thereof) was a member at
any time prior to the Closing pursuant to Section 1.1502-6 of the Treasury
regulations (or any similar provision of state, local, or foreign Law); or (iii)
of another Person as a transferee or successor, to the extent the event giving
rise to such Tax arose prior to the Closing; provided, however, in any of (i),
(ii), or (iii), that no indemnity is due hereunder to the extent such Tax was
paid by Parent or paid prior to Closing, or such Tax was accrued as a current
liability on the Closing Statement, and no Tax indemnifications in this Section
9.1(f) shall survive the expiration of the controlling statute of limitations
(including any extensions thereof);

 

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(g) any Liability imposed on the Company or the Company Subsidiaries by reason
of the treatment of the Company or any Company Subsidiary (i) as a single
employer with Parent or any of its Affiliates as a result of the application of
Sections 414(b), (c), (m) or (o) of the Code or (ii) by reason of the treatment
of the Company or any Company Subsidiary as under common control with Parent or
any of its Affiliates as a result of the application of Section 4001(b) of ERISA
(1) under Section 302 of ERISA, (2) under Title IV of ERISA, (3) under Sections
412 or 4971 of the Code, or (4) in respect of an employee benefit plan (within
the meaning of Section 3(3) of ERISA) sponsored or maintained by Parent or an
Affiliate of Parent (other than the Company or a Company Subsidiary) because of
Section 607(4) of ERISA or Section 414(t) of the Code; and

 

(h) any Liability of Parent to the extent such Liability does not relate to the
Business, the Company or any Company Subsidiary.

 

9.2 Indemnification by the Buyer. From and after Closing, the Buyer shall
indemnify and hold harmless Parent and Parent’s Affiliates and each of their
respective directors, officers and employees (in their capacity as such) (the
“Parent Indemnified Parties”) against and in respect of any and all Losses
actually incurred by any Parent Indemnified Party arising from:

 

(a) any breach or violation of the covenants made in this Agreement or any
Ancillary Agreement (other than the Guarantee Reimbursement Agreement) by the
Buyer or any of its Affiliates;

 

(b) any inaccuracy or breach of any Fundamental Representation made by the
Buyer;

 

(c) any inaccuracy or breach of any representation or warranty made by the Buyer
in this Agreement or in any of the Ancillary Agreements (other than the
Guarantee Reimbursement Agreement), resulting from fraud, intentional
misrepresentation or willful misconduct of the Buyer or any of its Affiliates;
and

 

(d) the ownership, use or possession of the Interests, the Company, the Company
Subsidiaries, or the conduct or operation of the Business, arising solely after
the Effective Time (except, in each such case, to the extent that the Buyer is
entitled to be indemnified pursuant to Section 9.1 or to the extent relating to
the Guarantee Reimbursement Agreement or the Guaranteed Obligations).

 

9.3 Notice and Payment of Losses. Upon obtaining knowledge of any Loss (other
than any Loss relating to the Guarantee Reimbursement Agreement or the
Guaranteed Obligations which are governed by the terms of the Guarantee
Reimbursement Agreement), the Party entitled to indemnification (the “Injured
Party”) shall promptly notify the Party liable for such indemnification (the
“Indemnifying Party”) in writing of such Losses which the Injured Party has
determined have given or could give rise to a claim under Section 9.1 or 9.2
(such written notice being hereinafter referred to as a “Notice of Claim”);
provided, however, that failure of an Injured Party promptly to give a Notice of
Claim to the Indemnifying Party shall not release the Indemnifying Party from
its indemnity obligations set forth in this Article IX except to the extent that
such failure materially and adversely affects the ability of the Indemnifying
Party to defend such claim or increases the amount of indemnification which the
Indemnifying Party is obligated to pay hereunder, in which event the amount of
indemnification which the Injured Party shall be entitled to receive shall be
reduced to an amount which the Injured Party would have been entitled to receive
had such Notice of Claim been promptly given. The Injured Party shall use
commercially reasonable efforts to mitigate any continuing Losses and to obtain
or use any Tax savings, benefit, relief, deduction or credit available to the
Injured Party. If the Injured Party settles or compromises any third party
claims prior to giving a Notice of Claim to the Indemnifying Party, the
Indemnifying Party shall not be released from its indemnity obligation;
provided, however, the amount of such settlement shall not be presumed to be the
amount of the indemnity obligation. A Notice of Claim shall specify in
reasonable detail, to the extent known by the Injured Party, the nature and, to
the extent reasonably calculable, estimated amount of any such claim giving rise
to a right of indemnification. The Indemnifying Party shall satisfy its
obligations under Section 9.1 or 9.2, as the case may be, within forty-five (45)
days of its receipt of a Notice of Claim; provided, however, that for so long as
the Indemnifying Party is disputing its liability or defending a Third Party
Claim in good faith, its obligations to indemnify the Injured Party with respect
thereto shall be suspended until (i) it is no longer disputing its liability or
defending a Third Party Claim in good faith or (ii) a final non-appealable
judgment of a court of competent jurisdiction is given in relation to such
claim, whichever is earlier. The Indemnifying Party shall have forty-five (45)
days after receipt of a Notice of Claim or fifteen (15) days after of receipt of
any New Facts to notify the Injured Party (a) whether or not it disputes its
liability to the Injured Party with respect to such Notice of Claim and (b)
whether it elects to defend a Third Party Claim pursuant to Section 9.4 (the
“Indemnifying Party Defense Review Period”).

 

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9.4 Defense of Third-Party Claims.

 

(a) With respect to any action or any claim set forth in a Notice of Claim
relating to a claim asserted by any claimant other than (1) an Injured Party
hereunder or (2) with respect to any claim under the Guarantee Reimbursement
Agreement, (a “Third Party Claim”), the Indemnifying Party may defend, in good
faith and at its expense, any such claim or demand. If the Indemnifying Party
elects to control or conduct the defense or prosecution of a Third Party Claim
within the Indemnifying Party Defense Review Period: (i) the Injured Party shall
have the right, but not the obligation, to participate in (but not control) the
defense of any such Third Party Claim with its own counsel at its own expense
unless separate representation is necessary to avoid a conflict of interest, in
which case such representation by a single firm of counsel for all Injured
Parties shall be at the expense of the Indemnifying Party; (ii) the Indemnifying
Party shall be conclusively deemed to have acknowledged that the Third Party
Claim is within the scope of its indemnity obligation under this Agreement,
provided, however, that upon the disclosure of New Facts to the Indemnifying
Party, such acknowledgement shall be void and the Indemnifying Party shall have
fifteen (15) days after receipt of such New Facts to notify the Injured Party
(1) whether or not it disputes its liability to the Injured Party and (2)
whether it elects to maintain the defense of such Third Party Claim; (iii) the
Indemnifying Party shall conduct the defense or prosecution of the Third Party
Claim diligently and, to the extent requested by the Injured Party, provide
copies of all correspondence and related documentation in connection with the
defense of the Third Party Claim to the Injured Party; and (iv) the Indemnifying
Party will not take any action, or omit to take any action, without the consent
of the Injured Party, that would cause (x) any Contracts, correspondence or
other documents of the Injured Party or its Affiliates containing confidential
information of the Injured Party or its Affiliates to be disclosed to a third
party except to the extent a protective order or other obligation of
confidentiality is obtained prior to any such disclosure, or (y) any director,
officer, employee or agent of the Injured Party to take any action related to
the Third Party Claim which could interfere with or contravene such Person's
duties to the Injured Party or its Affiliates. Without limiting the foregoing,
if the Injured Party previously delivered a Notice of Claim to the Indemnifying
Party, and the Indemnifying Party is or was eligible to but has not elected or
did not elect to assume control of the defense of such claim, then the Injured
Party shall promptly (i) disclose in writing to the Indemnifying Party any
material new or materially changed allegations or claims being asserted against
the Injured Party in respect of such claim, and (ii) upon request of the
Indemnifying Party, provide a written summary of the status of such claim to the
Indemnifying Party (all of the information provided in the immediately preceding
clauses (i) and (ii) above, if such summary discloses a change that is adverse
to the Indemnifying Party, “New Facts”) provided, however, that failure of an
Injured Party promptly to give a notice of New Facts to the Indemnifying Party
shall not release the Indemnifying Party from its indemnity obligations set
forth in this Article IX except to the extent that such failure materially and
adversely affects the ability of the Indemnifying Party to defend such claim or
increases the amount of indemnification which the Indemnifying Party is
obligated to pay hereunder, in which event the amount of indemnification which
the Injured Party shall be entitled to receive shall be reduced to an amount
which the Injured Party would have been entitled to receive had such notice of
New Facts been promptly given. If the Indemnifying Party elects to assume the
defense of any Third Party Claim, the Injured Party shall reasonably cooperate
(with any out-of-pocket expenses at the expense of the Indemnifying Party) with
the Indemnifying Party and its counsel in the investigation, defense and
settlement thereof, including (x) procuring potential witnesses and witness
statements, (y) promptly furnishing documentary evidence to the extent available
to it or its Affiliates, and (z) providing access to any other relevant party,
including any employees or agents of, or advisers to, the Parties as reasonably
needed, including to obtain technical advice or assistance, to ensure the proper
and adequate defense of such Third Party Claim. No Indemnifying Party or Injured
Party may compromise or settle any Third Party Claim hereunder without the
written consent of the Injured Party or Indemnifying Party, as the case may be,
which consent shall not be unreasonably withheld, conditioned or delayed,
provided that consent from the Injured Party will not be required if, as part of
such settlement, compromise or judgment, such Injured Party is unconditionally
released from or absolved of further liability at no cost to such Injured Party.
So long as the Indemnifying Party has undertaken to defend any such Third Party
Claim, the Injured Party shall not settle or compromise such Third Party Claim
without the consent of the Indemnifying Party (which shall not be unreasonably
withheld, conditioned or delayed).

 

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(b) Notwithstanding anything in this Section 9.4 to the contrary, the
Indemnifying Party will not be entitled to assume the defense or prosecution of
a Third Party Claim if: (i) the Third Party Claim seeks, in addition to or in
lieu of monetary damages, any injunctive or other equitable relief; or (ii) the
Third Party Claim relates to or arises in connection with any criminal action,
indictment or allegation. In such case, (1) the Indemnifying Party shall have
the right, but not the obligation, to participate in (but not control) the
defense of any such Third Party Claim with its own counsel at its own expense,
and (2) the Injured Party shall conduct the defense or prosecution of the Third
Party Claim diligently and, to the extent requested by the Indemnifying Party,
provide copies of all correspondence and related documentation in connection
with the defense of the Third Party Claim to the Indemnifying Party. The Injured
Party may not compromise or settle any Third Party Claim under this Section
9.4(b) without the written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, conditioned or delayed.

 

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9.5 Survival of Representations and Warranties and Covenants. 

 

(a) Except as otherwise set forth in Section 9.6(h), the respective
representations and warranties of Parent and the Buyer contained in Article III
and Article IV (except for the representations and warranties set forth in
Sections 3.1 (other than 3.1(d)(iii), 3.1(d)(v) or (3.1(e)) and 4.1 (Existence
and Power; Non-Contravention), Sections 3.2 and 4.2 (Valid and Enforceable
Agreement; Authorization), Section 3.3 (other than Section 3.3(e))
(Capitalization and Ownership), Section 3.7 (Taxes) and Section 3.27 (Brokers,
Finders) (the “Fundamental Representations”)) shall not survive the Closing. The
Fundamental Representations shall survive the Closing until expiration of the
applicable statute of limitations (including any extensions thereof). The
certificates delivered pursuant to Sections 7.1 and 8.1 shall be deemed to be
additional representations and warranties, and shall expire in the same manner
as the respective underlying representations and warranties in Article III and
Article IV expire and shall otherwise be subject to the same terms, conditions
and limitations as the respective underlying representations and warranties in
Article III and Article IV are subject, all as provided in this Article IX.

 

(b) All covenants and agreements contained herein which by their terms are to be
performed in whole or in part, or which prohibit actions, subsequent to the
Closing Date shall survive the Closing in accordance with their terms. All other
covenants and agreements contained herein shall not survive the Closing and
shall thereupon terminate.

 

(c) Any claim for indemnity under this Agreement with respect to any breach of
representations, warranties, covenants or agreements not made within the periods
specified in Section 9.5(a), Section 9.5(b), Section 9.6(h) and Section 9.7
shall be deemed time-barred, and no such claim shall be made after the periods
specified in Section 9.5(a), Section 9.5(b), Section 9.6(h) and Section 9.7;
provided, however, that if written notice of a claim for indemnification under
Section 9.1 or Section 9.2 shall have been provided to Parent or the Buyer, as
the case may be, within the applicable survival period and in good faith, then
any representations, warranties, covenants or agreements that are the subject of
such indemnification claim that would otherwise terminate as set forth above
shall survive as to such claim, and that claim only, until such time as such
claim is fully and finally resolved. Notwithstanding anything herein to the
contrary, any claim for fraud, willful misrepresentation or willful misconduct
shall survive until expiration of the applicable statute of limitations.

 

9.6 Limitation on Indemnification.

 

(a) In no event shall the aggregate amount of all Losses for which Parent is
obligated to indemnify the Buyer Indemnified Parties pursuant to Sections 9.1(a)
and 9.1(b) exceed an amount equal to the Purchase Price (the “Indemnification
Cap”).

 

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(b) All indemnification obligations shall be paid in U.S. Dollars in the United
States.

 

(c) Notwithstanding anything in this Agreement to the contrary, in no event
shall any Injured Party be entitled to indemnification pursuant to this Article
IX to the extent any Losses were attributable to such Injured Person’s own fraud
or willful misconduct.

 

(d) The Parties are in agreement that where the same set of facts qualifies
under more than one provision entitling the Buyer or Parent to a claim or remedy
under this Agreement, there shall be only one claim or remedy.

 

(e) Notwithstanding anything in this Agreement to the contrary, no liability,
obligation, contract or other matter shall constitute a breach of any
representation or warranty of Parent or entitle the Buyer to indemnification
hereunder:

 

(i) if the liability, obligation, contract or other matter is expressly set out
in the Disclosure Schedules in accordance with Section 10.11; or

 

(ii) to the extent that the liability, obligation, contract or other matter was
provided for, or specifically referred to, in the Closing Statement.

 

(f) All “material” and “Material Adverse Effect” or similar materiality type
qualifications contained in the representations and warranties set forth in this
Agreement shall be ignored and not given any effect for purposes of determining
the amount of any Losses subject to indemnification.

 

(g) For the avoidance of doubt, the provisions of this Article IX shall not
apply in any respect to claims under the Guarantee Reimbursement Agreement or
with respect to the Guaranteed Obligations.

 

(h) In the event that Parent notifies Buyer prior to the Closing of any material
inaccuracy or material breach of a representation or warranty made by Parent in
this Agreement (other than any Fundamental Representation) (a “Pre-Closing
Breach”) or the Buyer otherwise becomes aware of a Pre-Closing Breach and
notifies Parent of such breach prior to the Closing, then the provisions of this
Section 9.6(h) shall be applicable with respect to such Pre-Closing Breach.
Parent shall promptly deliver to the Buyer its good faith estimate of the Losses
that could reasonably be expected to be suffered by the Company and the Company
Subsidiaries in respect of the Pre-Closing Breach, together with its calculation
thereof, and the Buyer and Parent shall seek in good faith to mutually agree on
the estimate (such agreed amount, the “Loss Estimate”). In the event that the
Parties do not mutually agree on the Loss Estimate, then the Party asserting
termination rights under Sections 9.6(h)(ii) and 10.2(a)(vi) shall bear the risk
and burden of proof as to whether or not the Loss Estimate is equal to or
greater than $7,000,000.

 

(i) If the Loss Estimate is less than $7,000,000, then Parent shall indemnify
the Buyer in respect of the Losses arising from such Pre-Closing Breach pursuant
to Section 9.6(h)(iii), and neither Parent nor the Buyer shall be permitted to
terminate this Agreement as a result of such Pre-Closing Breach.

 

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(ii) In the event the Loss Estimate is equal to or greater than $7,000,000,
either the Buyer or Parent may terminate this Agreement by written notice to the
other Party in accordance with Section 10.2(a)(vi) within fifteen (15) Business
Days following determination of the Loss Estimate. If neither the Buyer nor
Parent elects to terminate this Agreement within such 15 Business Day time
period, then Parent shall indemnify the Buyer in respect of the Losses arising
from such Pre-Closing Breach pursuant to Section 9.6(h)(iii), and neither Parent
nor the Buyer shall be permitted to terminate this Agreement as a result of such
Pre-Closing Breach.

 

(iii) With respect to any Pre-Closing Breach to which this Section 9.6(h)(iii)
applies, Parent shall indemnify and hold harmless the Buyer Indemnified Parties
against and in respect of any and all Losses actually incurred by any Buyer
Indemnified Party arising from any such Pre-Closing Breach in accordance with
the procedures set forth in Sections 9.3 and 9.4. To the extent the amount of
such Losses is determinable prior to Closing, any such Losses shall offset the
Closing Payment. Any claim subject to this Section 9.6(h)(iii) shall survive
until such time as such claim is fully and finally resolved. The Parties agree
that the provision for indemnity under this Section 9.6(h)(iii) shall be
effective only when the aggregate amount of all Losses incurred by the Buyer
Indemnified Parties in respect of all claims against Parent for indemnification
under this Section 9.6(h)(iii) exceeds an amount equal to One Million Three
Hundred Thousand Dollars ($1,300,000) (the “Deductible”), in which case the
Buyer Indemnified Parties shall be entitled to indemnification for the full
amount of such Losses, including those that comprise any portion of the
Deductible.

 

9.7 Indemnifiable Warranty Claims. In the event (a) Parent has knowledge of a
claim of breach of warranty associated with any customer as of or prior to the
Closing, and to Parent’s knowledge the Losses arising from the claim are as of
the Closing, or may reasonably be estimated as of the Closing to be, in excess
of $300,000 (on an individual customer basis), and such breach of warranty or
warranty claim has not otherwise been disclosed to the Buyer under this
Agreement, including in Disclosure Schedules 2.4(a)(ii), 3.12(b) and 3.25(ii)
(an “Indemnifiable Warranty Claim”) and (b) the Buyer provides written notice of
such Indemnifiable Warranty Claim to Parent within six (6) months following the
Closing Date, Parent shall indemnify and hold harmless the Buyer Indemnified
Parties against and in respect of any and all Losses actually incurred by any
Buyer Indemnified Party arising from any such Indemnifiable Warranty Claim in
accordance with the procedures set forth in Sections 9.3 and 9.4. Any claim
subject to this Section 9.7 for which notice has been given to Parent shall
survive until such time as such claim is fully and finally resolved. The Parties
agree that the provision for indemnity under this Section 9.7 shall be effective
only when the aggregate amount of all Losses (any such individual Loss to be net
of any specifically identified warranty accrual or, alternatively, the agreed
upon warranty reserve, pro-rated pursuant to the applicable reserve formula, as
reported on the Final Statement) incurred by the Buyer Indemnified Parties in
respect of an individual Indemnifiable Warranty Claim exceeds an amount equal to
Three Hundred Thousand Dollars ($300,000) (the “Indemnifiable Warranty Claim
Deductible”), in which case the Buyer Indemnified Parties shall be entitled to
indemnification for the full amount of such Indemnifiable Warranty Claim and the
Losses relating thereto, including any that comprise any portion of the
Indemnifiable Warranty Claim Deductible; provided, however, that in no event
shall the aggregate amount of all Losses for which Parent is obligated to
indemnify the Buyer Indemnified Parties pursuant to this Section 9.7 exceed an
amount equal to Five Million Dollars ($5,000,000).

 

69

 

 

9.8 Characterization of Indemnity Payments. Any indemnification payments made
pursuant to this Agreement shall be considered, to the extent permissible under
Law, as adjustments to the Purchase Price for all Tax purposes.

 

9.9 Exclusive Remedy. In the absence of fraud, willful misrepresentation or
willful misconduct, the indemnification provisions set forth in this Article IX
shall provide the exclusive remedy for breach of any covenant, agreement,
representation or warranty set forth in this Agreement or any other agreement
ancillary hereto executed pursuant to this Agreement or related to the Company,
the Company Subsidiaries or the Business (other than the Guarantee Reimbursement
Agreement); provided however, such limitation shall not impair the rights of any
of the Parties to seek non-monetary equitable relief to redress any default or
breach of this Agreement, including specific performance or injunctive relief.
In connection with the seeking of any non-monetary equitable relief, each of the
Parties acknowledges and agrees that the other Party hereto would be damaged
irreparably in the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are breached.

 

9.10 Certain Damages. In no event shall any Injured Party be entitled to recover
or make a claim for any amounts in respect of, and in no event shall “Losses”
for purposes of this Agreement (including amounts indemnifiable under Sections
9.1, 9.2, 9.6(h) or 9.7) be deemed to include, (a) consequential, incidental or
indirect damages, lost profits or punitive, special or exemplary damages and, in
particular, damages calculated by “multiple of profits” or “multiple of cash
flow” or similar valuation methodology or (b) any Loss, Liability, damage or
expense to the extent included as a liability or expense on the Financial
Statements (including the footnotes thereto) or to the extent included in the
calculation of Closing Working Capital. For the avoidance of doubt, it is agreed
that the sole remedy for claims relating to the determination of the Net
Adjustment Amount shall be as provided in Section 2.5.

 

Article X
MISCELLANEOUS PROVISIONS

 

10.1 Notice. All notices, requests, demands, and other communications required
or permitted under this Agreement shall be in writing and shall be deemed to
have been duly given and made upon being delivered (a) when received by
facsimile, receipt confirmed, (b) by courier delivery to the Party for whom it
is intended, or (c) five (5) business days after having been deposited in the
mail, certified or registered (with receipt requested) and postage prepaid,
addressed at the address shown in this Section 10.1 for, or such other address
as may be designated in writing hereafter by, such Party:

 

70

 

 

If to the Buyer:

 

c/o Sun Capital Partners Group VI, LLC

5200 Town Center Circle, Suite 600

Boca Raton, FL 33486

Attention: Brian Urbanek, Daniel Florian, Blake Richardson and C. Deryl Couch

Facsimile No.: (561) 934-0540

 

With copies to:

 

Morgan, Lewis & Bockius LLP

One Oxford Centre

Thirty-Second Floor

Pittsburgh, PA 15219-6401

Attention: Kimberly A. Taylor

Telephone: (412) 560-3322

Facsimile No.: (412) 560-7001

 

and

 

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Attention: David A. Gerson

Telephone: (215) 963-5310

Facsimile No.: (215) 963-5001

 

If to Parent:

 

ESCO Technologies Holding LLC

9900A Clayton Road

Saint Louis, MO 63124-1186

Fax: (314) 213-7215

Attention: General Counsel

 

With a copy to:

 

Bryan Cave LLP

One Metropolitan Square

211 North Broadway, Suite 3600

St. Louis, Missouri 63102

Telephone: (314) 259-2000

Fax: (314) 259-2020

Attention: Frederick W. Bartelsmeyer

 

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10.2 Termination.

 

(a) Notwithstanding any other provision of this Agreement, this Agreement may be
terminated at any time prior to the Closing Date:

 

(i) by the mutual written consent of the Buyer and Parent;

 

(ii) by the Buyer or Parent, upon written notice to the other Party, if the
transactions contemplated by this Agreement have not been consummated on or
prior to April 30, 2014 (the “Outside Date”), unless such failure of
consummation is due to the failure of the Party seeking such termination to
perform or observe in all material respects the covenants and agreements hereof
to be performed or observed by such Party;

 

(iii) by the Buyer or Parent, upon written notice to the other Party, if a
Governmental Authority of competent jurisdiction has issued an Order permanently
enjoining or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement, and such Order has become final and
non-appealable; provided, however, that the Party seeking to terminate this
Agreement pursuant to this Section 10.2(a)(iii) has used its reasonable best
efforts to remove such Order;

 

(iv) by the Buyer or Parent if any condition to such Party’s obligations to
consummate the transactions contemplated hereby is incapable of being satisfied
on or prior to the Outside Date; provided, however, that the right to terminate
this Agreement pursuant to this Section 10.2(a)(iv) is not available to any
Party whose breach of its obligations under this Agreement has been the cause
of, or resulted in, the inability of such condition to be satisfied;

 

(v) by the Buyer, upon written notice to Parent within five (5) Business Days of
receipt from Buyer of any Supplemental Information identified by Parent as
having a Material Adverse Effect;

 

(vi) by the Buyer or Parent in accordance with Section 9.6(h)(ii).

 

(b) In the event of any termination of the Agreement as provided in this Section
10.2, this Agreement shall forthwith become wholly void and of no further force
and effect and there shall be no liability on the part of the Buyer or Parent,
except with respect to any breach of this Agreement occurring prior to
termination and except that the provisions of Section 6.4(a) and this Article X
shall survive any such termination of this Agreement.

 

10.3 Entire Agreement. This Agreement and the Schedules and Exhibits hereto and
the Ancillary Agreements (other than the Guarantee Reimbursement Agreement)
embody the entire agreement and understanding of the Parties hereto with respect
to the subject matter hereof, and supersede all prior and contemporaneous
agreements and understandings relating to such subject matter; provided,
however, that the Confidentiality Agreement will survive Closing and will remain
in effect.

 

10.4 Severability. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof, as long as the
remaining provisions, taken together, are sufficient to carry out the overall
intentions of the Parties as evidenced hereby.

 

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10.5 Assignment; Binding Agreement. This Agreement and various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
the Parties hereto and their successors and permitted assigns. Neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
transferred, delegated, or assigned by the Parties hereto without the prior
written consent of the other Party (which consent shall not be unreasonably
withheld), except that, subject to the terms of the Guarantee Reimbursement
Agreement, the Buyer shall have the right to assign the Agreement and transfer
and assign its rights hereunder without the consent of Parent to any Affiliate
of the Buyer, any financial institution, lender or investor providing the Buyer
debt or equity financing in connection with the transactions contemplated by
this Agreement, or to any Person that acquires, by purchase of stock, purchase
of assets, merger or other form of transaction, all or substantially all of the
business and assets of the Buyer.

 

10.6 Counterparts. This Agreement may be executed simultaneously in multiple
counterparts, and in separate counterparts (including facsimile and other
electronically transmitted counterparts), each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

 

10.7 Expenses. Except as otherwise provided herein, each Party hereto will pay
all costs and expenses incident to its negotiation and preparation of this
Agreement and to its performance and compliance with all agreements and
conditions contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and accountants;
provided, however, that if the transactions contemplated hereby are consummated,
the Company shall following Closing pay all fees, costs and expenses of the
Buyer (including, without limitation, the fees and expenses of its legal
counsel, accountants, investment bankers, brokers and other Representatives or
consultants) arising in connection with the transactions contemplated hereby.

 

10.8 Headings; Interpretation. The article and section headings contained in
this Agreement are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement. Each reference in this
Agreement to an Article, Section, Schedule or Exhibit, unless otherwise
indicated, shall mean an Article or a Section of this Agreement or a Schedule or
Exhibit attached to this Agreement, respectively. References herein to “days”,
unless otherwise indicated, are to consecutive calendar days. Whenever the words
“include,” “including” or “includes” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” All Parties have
participated substantially in the negotiation and drafting of this Agreement and
agree that no ambiguity herein should be construed against the draftsman.
References to a “person” shall be construed so as to include any individual,
firm, company, government, joint venture, partnership or other legal entity.
References to a “corporation” or “company” shall be construed so as to include
any corporation, company or other body corporate, wherever and however
incorporated or established.

 

73

 

 

10.9 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York applicable to contracts to be
carried out wholly within such State.

 

10.10 Submission to Jurisdiction. Each of the Parties hereto irrevocably submits
to the exclusive jurisdiction of the commercial division of the state and
federal courts sitting in the Southern District of New York for the purposes of
any suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the Parties agrees to commence any
action, suit or proceeding relating hereto in the federal courts sitting in the
Southern District of New York or if such suit, action or other proceeding may
not be brought in such court for jurisdictional reasons, in the state courts
located in the Southern District of New York. Each of the Parties further agrees
that service of any process, summons, notice or document by U.S. registered mail
to such Party’s respective address set forth above shall be effective service of
process for any action, suit or proceeding in New York with respect to any
matters to which it has submitted to jurisdiction in this Section 10.10. Each of
the Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in the state and federal courts sitting in the
Southern District of New York, and hereby further irrevocably and
unconditionally agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum or to raise any similar defense or objection.

 

10.11 Disclosure Generally. The Disclosure Schedules delivered by the Parties
concurrently with the execution of this Agreement have been arranged in sections
corresponding to each representation and warranty set forth in Article III and
Article IV. Each exception to a representation and warranty set forth in the
Disclosure Schedules shall qualify only the specific representations and
warranties which are referenced in the applicable section of the Disclosure
Schedules; provided, however, if and to the extent any information required to
be furnished in any Disclosure Schedule is contained in this Agreement or in any
other Disclosure Schedule, such information shall be deemed to be included in
all other Disclosure Schedules to the extent such disclosure in any other
Disclosure Schedule is reasonably apparent based on the substance of the
disclosure and such disclosure is responsive to such other sections of the
Disclosure Schedules. By listing matters on the Disclosure Schedules, Parent or
any of its Affiliates shall not be deemed to have established any materiality
standard, admitted any liability, or concluded that any one or more of such
matters are material, or expanded in any way the scope or effect of the
representations and warranties of Parent contained in this Agreement. Further,
no disclosure in any Disclosure Schedule relating to any possible or threatened
breach or violation of any agreement, Law, regulation or any possible
infringement on the right of a third party shall be construed as an admission or
indication that any such breach, violation or infringement exists or has
actually occurred.

 

10.12 No Third Party Beneficiaries or Other Rights. Except to the extent set
forth in Section 9.1 and Section 9.2, nothing herein shall grant to or create in
any person not a party hereto, or any such person’s Affiliates, any right to any
benefits hereunder, and no such party shall be entitled to sue either Party to
this Agreement with respect thereto. The representations and warranties
contained in this Agreement are made for purposes of this Agreement only and
shall not be construed to confer any additional rights on the Parties under
applicable state or federal or foreign securities Laws.

 

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10.13 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE TRANSACTION DOCUMENTS EXECUTED IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREUNDER OR THEREUNDER (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

75

 

 

SECTION 2.5 OF THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.

 

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to be
executed as of the date first above written.

 

“BUYER”

METER READINGS HOLDING, LLC

 

By: /s/ Daniel M. Florian

Name: Daniel M. Florian

Title: Vice President and Assistant Secretary

 

“PARENT”

ESCO TECHNOLOGIES HOLDING LLC

 

By: /s/ V.L. Richey, Jr.

Name: V.L. Richey, Jr.

Title: Chief Executive Officer

 

 

[Signature Page to Securities Purchase Agreement]

 

 

 

 

 

TABLE OF DISCLOSURE SCHEDULES AND EXHIBITS

 

  Disclosure Schedule 1.92(xi)   Solon, Ohio Outsourcing Initiative Costs  
Disclosure Schedule 1.133   Certain Permitted Encumbrances   Disclosure Schedule
1.158   Surety Bonds   Disclosure Schedule 2.3   Wire Transfer Instructions  
Disclosure Schedule 2.4(a)(i)   Benchmark Statement   Disclosure Schedule
2.4(a)(ii)   Agreed Accounting Principles   Disclosure Schedule 3.1(b)  
Jurisdictions   Disclosure Schedule 3.1(d)   Non-Contravention   Disclosure
Schedule 3.1(e)   Consents of Governmental Authorities   Disclosure Schedule 3.3
  Capitalization   Disclosure Schedule 3.4(a)   Financial Statements  
Disclosure Schedule 3.4(b)   Adjustments to the Financial Statements  
Disclosure Schedule 3.5   Undisclosed Liabilities   Disclosure Schedule 3.6  
Absence of Certain Developments   Disclosure Schedule 3.7   Taxes   Disclosure
Schedule 3.8   Litigation   Disclosure Schedule 3.9(b)   Leased Real Property  
Disclosure Schedule 3.9(a)   Owned Real Property   Disclosure Schedule 3.9(c)  
Leased Personal Property   Disclosure Schedule 3.9(e)   Former Leases  
Disclosure Schedule 3.10(a)   Property; Title   Disclosure Schedule 3.10(a)(iii)
  Parent Provided Services   Disclosure Schedule 3.11   Condition of Personal
Property   Disclosure Schedule 3.12(a)   Material Contracts   Disclosure
Schedule 3.12(b)   Non-contravention of Material Contracts   Disclosure Schedule
3.12(c)   Effect on Material Contracts   Disclosure Schedule 3.13   Licenses and
Permits   Disclosure Schedule 3.14   Compliance with Laws   Disclosure Schedule
3.15   Environmental Matters   Disclosure Schedule 3.16(a)   Registered
Intellectual Property   Disclosure Schedule 3.16(b)(i)(1)   Exceptions to
In-Bound Licenses   Disclosure Schedule 3.16(b)(i)(2)   In-Bound Licenses  
Disclosure Schedule 3.16(b)(ii)   Out-Bound Licenses   Disclosure Schedule
3.16(b)(iii)   Effect on Intellectual Property Licenses   Disclosure Schedule
3.16(b)(iv)   Licenses Immediately Following Closing   Disclosure Schedule
3.16(b)(v)   Restrictions on Business Intellectual Property   Disclosure
Schedule 3.16(c)   Title to Business Intellectual Property   Disclosure Schedule
3.16(d)   Invalidity of Business Intellectual Property; Proceedings   Disclosure
Schedule 3.16(e)(i)   Non-Infringement   Disclosure Schedule 3.16(e)(ii)  
Claims of Infringement   Disclosure Schedule 3.16(e)(iii)  
Infringement/Misappropriation of Business Intellectual Property   Disclosure
Schedule 3.16(f)   Necessary Intellectual Property   Disclosure Schedule 3.16(g)
  Disclosure of Confidential Information

 

 

 

 

 

  Disclosure Schedule 3.16(h)   Computer Software   Disclosure Schedule 3.16(j)
  Compliance with Privacy, Data Protection, Etc.   Disclosure Schedule 3.17  
Insurance Policies   Disclosure Schedule 3.18(d)   Labor Matters: WARN
(Cleveland)   Disclosure Schedule 3.19(a)   Employee Benefit Plans   Disclosure
Schedule 3.19(c)   Employee Benefit Plans: Qualified Plans   Disclosure Schedule
3.20   Indebtedness   Disclosure Schedule 3.21(a)   Accounts Receivable  
Disclosure Schedule 3.21(b)   Inventory Locations   Disclosure Schedule 3.22  
Related Party Transactions   Disclosure Schedule 3.23   Bank Accounts  
Disclosure Schedule 3.24(i)   Customers and Suppliers   Disclosure Schedule
3.24(i)   Material Disputes with Customers and Suppliers   Disclosure Schedule
3.25(i)   Warranty Expense   Disclosure Schedule 3.25(ii)   Warranty Claims  
Disclosure Schedule 3.26   Foreign Operations   Disclosure Schedule 4.1(b)  
Jurisdiction   Disclosure Schedule 4.1(c)   Consents-Buyer   Disclosure Schedule
5.1(d)   Retention Bonuses   Disclosure Schedule 5.2(a)   Employment and
Compensation Agreements   Disclosure Schedule 5.5   Bonus Plan   Disclosure
Schedule 6.1   Operation of Business   Disclosure Schedule 6.9(g)   Allocation
between Parent and ESCO Luxembourg   Disclosure Schedule 7.2   Government
Approvals – Buyer’s Conditions   Disclosure Schedule 7.4(c)   Resigning Officers
  Disclosure Schedule 8.2   Government Approvals – Parent’s Conditions

 

Exhibits

 

Exhibit A – [Reserved]

Exhibit B – Form of Caribe Transfer Agreement

Exhibit C – Form of Employee Escrow Agreement

Exhibit D – Form of Release relating to Intercompany Contracts and Accounts

Exhibit E – Form of Transition Services Agreement

Exhibit F – Form of Guarantee Reimbursement Agreement

Exhibit G – Form of Release

 

 

 

 

EXHIBIT B

 

SHARE TRANSFER AGREEMENT

 

This SHARE TRANSFER AGREEMENT (the “Agreement”) is made and entered into as of
the ___ day of ____________, 2014 by and between ESCO Finance International S.à
r.l., a Luxembourg private limited liability company (société à responsabilité
limitée) with a share capital of EUR 12,512, having its registered office at 5,
rue Guillaume Kroll, L-1882 Luxembourg and registered with the Luxembourg trade
and companies’ register under number B 155,501 (“Transferor”) and Meter Readings
Holding, LLC, a Delaware limited liability company (“Transferee” and together
with Transferor, the “Parties”).

 

Recitals

 

A. Transferor, an indirect, wholly-owned subsidiary of ESCO Technologies Holding
LLC, a Delaware limited liability company (“Parent”), owns all the issued and
outstanding shares of capital stock (the “Caribe Shares”) of Distribution
Control Systems Caribe, Inc., a Puerto Rico corporation (“Caribe”);

 

B. Pursuant to the terms of that certain Securities Purchase Agreement dated as
of _____________, 2014, by and between Parent and Transferee, a copy of which
has been received and acknowledged by the Transferor (the “Securities Purchase
Agreement”), Transferor desires to transfer the Caribe Shares to Transferee and
Transferee desires to obtain the Caribe Shares, on the terms and subject to the
conditions set forth herein.

 

Agreement

 

NOW, THEREFORE, in consideration of the promises contained herein, the Parties
hereby agree as follows:

 

1. Transfer of Caribe Shares. Transferor does hereby sell, assign, transfer, set
over and convey to Transferee and Transferee purchases, acquires and accepts
from Transferor, all of Transferor’s right, title and interest in and to the
Caribe Shares, free and clear of all material mortgages, liens, charges, claims,
security interests, easements or other encumbrances (“Encumbrances”) (other than
any restrictions on transfer generally arising under applicable federal or state
Law).

 

2. Consideration. The consideration that the Transferee shall pay Parent on
behalf of Transferor for the transfer of the Caribe Shares hereunder shall be
One Hundred Sixty Thousand United States Dollars (US$160,000), such
consideration to be paid as part of the Purchase Price (and not in addition
thereto) paid pursuant to the terms of the Securities Purchase Agreement and as
defined therein.

 

3. Effective Time. The effective time of the transfer shall be at 11:59 p.m.
U.S. Central Time on the date hereof.

 

4. Certificates. Concurrently herewith, Transferor shall endorse and deliver to
Transferee the Caribe Shares together with duly executed stock powers.

 

5. Representations and Warrantees of Transferor.

 

 

 

 

a.Transferor has the corporate power and authority to execute and deliver this
Agreement, to transfer the Caribe Shares, to perform its obligations hereunder,
and to consummate the transactions contemplated hereby.

 

b.This Agreement has been duly executed and delivered by Transferor (assuming
due authorization, execution and delivery by Transferee) and constitutes a
legal, valid and binding obligation of Transferor, enforceable against
Transferor in accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of creditors’ rights
generally, and (ii) general principles of equity. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized, approved and ratified by all necessary corporate action on
the part of Transferor. Transferor has full corporate authority to enter into
and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby.

 

c.Transferor is the legal and beneficial owner of the Caribe Shares, free and
clear of Encumbrances (other than any restrictions on transfer generally arising
under applicable federal or state securities Laws).

 

6. Representations and Warrantees of Transferee.

 

a.Transferee has the corporate power and authority to execute and deliver this
Agreement, to obtain the Caribe Shares, to perform its obligations hereunder,
and to consummate the transactions contemplated hereby.

 

b.This Agreement has been duly executed and delivered by Transferee (assuming
due authorization, execution and delivery by Transferor) and constitutes a
legal, valid and binding obligation of Transferee, enforceable against
Transferee in accordance with its terms, except that such enforcement may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar Laws affecting or relating to enforcement of creditors’ rights
generally, and (ii) general principles of equity. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized, approved and ratified by all necessary corporate action on
the part of Transferee. Transferee has full corporate authority to enter into
and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby.

 

7. Miscellaneous.

 

a.As used herein, “Laws” shall mean any federal, state, local or foreign
material statute, law, ordinance, decree, order, injunction, rule, directive, or
regulation of any governmental authority, and includes rules and regulations of
any regulatory or self-regulatory authority, compliance with which is required
by Law, in effect on the date hereof. Also as used herein, “Encumbrances” shall
mean with respect to any property or asset (including the Caribe Shares),
mortgages, liens, charges, claims, security interests, easements, leases (other
than a lease by Transferor), encumbrances, pledges, adverse claims of ownership
or use, deeds of trust or hypothecations, whether imposed by contract or Law.

 

2

 

 

b.This Agreement contains the entire agreement between the Parties with respect
to the matters set forth herein, and there are no other oral, written, express
or implied promises, agreements, representations or inducements not specified in
this Agreement.

 

c.This Agreement shall be governed by the laws of the State of New York, without
giving effect to the principles of conflicts of law thereof.

 

d.Each of the Parties hereto irrevocably submits to the exclusive jurisdiction
of the commercial division of the state and federal courts sitting in the
Southern District of New York for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the Parties agrees to commence any action, suit or proceeding relating
hereto in the federal courts sitting in the Southern District of New York or if
such suit, action or other proceeding may not be brought in such court for
jurisdictional reasons, in the state courts located in the Southern District of
New York. Each of the Parties further agrees that service of any process,
summons, notice or document by U.S. registered mail to such Party’s respective
address set forth above shall be effective service of process for any action,
suit or proceeding in New York with respect to any matters to which it has
submitted to jurisdiction in this Section 7(d). Each of the Parties irrevocably
and unconditionally waives any objection to the laying of venue of any action,
suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the state and federal courts sitting in the Southern
District of New York, and hereby further irrevocably and unconditionally agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum or to raise
any similar defense or objection.

 

e.The Parties agree to execute and deliver from time to time hereafter, upon
reasonable request, all such further documents and instruments, and to do and
perform all such acts as may be necessary, to give full effect to the intent and
meaning of, and to otherwise perform, this Agreement.

 

f.This Agreement may be executed by the Parties hereto at different times, in
any number of originals or counterparts, and/or via facsimile signature, all of
which taken together shall constitute one and the same instrument.

 

[Remainder of page left blank intentionally.]

 

3

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
and year first written above.

 

TRANSFEROR:

 

ESCO FINANCE INTERNATIONAL S.A.R.L.

 

By: _________________________________

 

Name: ______________________________

 

Title: _______________________________

 

 

 

TRANSFEREE:

 

METER READINGS HOLDING, LLC

 

By: _________________________________

 

Name: ______________________________

 

Title: _______________________________

 

 

4

 

 

EXHIBIT C

  

ESCROW AGREEMENT

 

This Escrow Agreement (this “Escrow Agreement” or this “Agreement”), dated
effective as of [___] 2014, is entered into by and among Commerce Bank, a
Missouri Trust Company duly organized and existing under the laws of the State
of Missouri (hereafter called the “Escrow Agent”), ESCO Technologies Holding
LLC, a Delaware limited liability company (“Parent”) and Meter Readings Holding,
LLC, a Delaware limited liability company (“Buyer”). Capitalized terms used
herein but not defined shall have the meanings set forth in the Purchase
Agreement (as defined below).

 

RECITALS

 

WHEREAS, Parent and Buyer have entered into that certain Securities Purchase
Agreement dated as of March [●], 2014 (the “Purchase Agreement”), which is
attached hereto as Exhibit A and incorporated by reference, which provides for
the purchase by the Buyer from Parent of all of the issued and outstanding
equity interests of Aclara Technologies LLC, an Ohio limited liability company
(the “Company”), among other matters;

 

WHEREAS, Section 2.3(a) of the Purchase Agreement provides that an amount equal
to $1,441,200 shall be deposited and held in an escrow account, such amount to
be utilized for the reimbursement by Parent of the Company pursuant to Section
5.2(a) of the Purchase Agreement with respect to certain severance payments made
pursuant to the Employment and Compensation Agreements in accordance with the
terms of this Escrow Agreement;

 

WHEREAS, the Escrow Agent has agreed to hold the Escrow Assets (hereinafter
defined) and disburse and apply the same in accordance with the Escrow
Agreement; and

 

WHEREAS, the execution and delivery of this Escrow Agreement is a condition to
the parties’ obligations under the Purchase Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

 

1.Definitions.

“Authorized Investments” means Goldman Sachs Financial Square Trust Government
Fund, until otherwise directed by Buyer and Parent.

 

“Escrow Account” means the escrow account created by Paragraph 2 of this
Agreement.

 

“Escrow Assets” or “Assets” means those assets deposited into the Escrow Account
in accordance with Paragraphs 3 hereof and/or any substitutions or replacements
therefor and/or any investments or reinvestments thereof in accordance with this
Agreement.

 

 

 

 

“Escrow Reimbursable Amount” means, (i) with respect to Terry Messmer, 100% of
each Severance Payment Amount and (ii) with respect to all other Employees, 50%
of each Severance Payment; provided that the aggregate Escrow Reimbursable
Amount shall not exceed One Million Four Hundred Forty Thousand Two Hundred
Dollars ($1,441,200).

 

2.Creation of the Escrow Account. There is hereby created and established with
the Escrow Agent the Escrow Account, to be held in the custody of the Escrow
Agent in accordance with this Agreement.

 

3.Deposits to the Escrow Account. At the Closing on the date hereof, Buyer will
deposit to the Escrow Account an amount equal to One Million Four Hundred Forty
One Thousand Two Hundred Dollars ($1,441,200) in cash. It is hereby understood
and agreed that Escrow Agent is not responsible for the sufficiency of the
amount of deposited assets.

 

4.Ownership and Registration of the Escrow Assets. The Escrow Assets shall be
the property of the Escrow Account and shall be in bearer form or, if
registered, registered in the name of Escrow Agent or its nominee, except as
otherwise provided in Paragraph 5 of this Escrow Agreement.

5.Tax Ownership and Tax Distributions. Parent and Buyer agree for all tax
purposes that: (i) the right of Parent to the Escrow Assets shall be treated as
deferred contingent purchase price eligible for installment sale treatment under
Section 453 of the Internal Revenue Code (the “Code”) and any corresponding
provision of state or local law, as appropriate; (ii) Buyer shall be treated as
the owner of the Escrow Assets, and all interest and earnings earned from the
investment and reinvestment of the Escrow Assets (the “Escrow Earnings”), or
portion thereof, shall be allocable to Buyer pursuant to Section 468B(g) of the
Code and Proposed Treasury Regulation § 1.468B-8; (iii) the Escrow Agent shall
distribute to the Buyer at least quarterly an amount equal to 38% of all Escrow
Earnings; and (iv) in no event shall the total amount of the Escrow Assets paid
to Parent under Section 7(b) of this Agreement exceed 125% of the amount set
forth in Section 3. Clause (iv) of the preceding sentence is intended to ensure
that the right of the Parent to the released Escrow Assets and any interest and
earning earned thereon is not treated as a contingent payment without a stated
maximum selling price under Section 453 of the Code and the Treasury Regulations
promulgated thereunder.

 

6.Determination of Valid Payment Notice.

 

(a)In the event that prior to the Release Date (as defined below), the Company
becomes obligated to pay to any employee of the Company who is party to an
Employment and Compensation Agreement (each, an “Employee”) any amount
constituting a severance payment pursuant to such Employee’s Employment and
Compensation Agreement (a “Triggering Event”) (including required employer
Taxes, such as FICA, FUTA and Medicare Taxes) (such amount, which shall not
include any severance due for the payment of any pro-rata bonus under the Bonus
Plan that is to be contemporaneously paid pursuant to such Employment and
Compensation Agreement on account of such pro-rata bonus to the extent the
Estimated Closing Statement and the Closing Statement contain an accrual for
such amount, the “Severance Payment Amount”), Buyer shall, or shall cause the
Company to, deliver to Parent and the Escrow Agent a written notice (a “Payment
Notice”) setting forth (i) the name of the Employee; (ii) the Severance Payment
Amount resulting from the Triggering Event and the calculation thereof; (iii)
the Escrow Reimbursable Amount reimbursable to Buyer subject to disbursement
pursuant to Section 7(a); and (iv) a schedule setting forth the dates and
amounts of all installments of the Severance Payment Amount payable to such
Employee resulting from such Triggering Event. Buyer shall promptly provide to
Parent any information reasonably requested by Parent with respect to the
preparation of such Payment Notice and computation of any amounts contained
therein.

 

2

 

 

(b)Parent shall have fifteen (15) calendar days after receipt of a Payment
Notice to notify Buyer and the Escrow Agent in writing whether it disputes the
calculation of any amounts contained in the Payment Notice (a “Notice of
Dispute”).

 

(c)If no Notice of Dispute is delivered with respect to such Payment Notice (or
there are undisputed Escrow Reimbursable Amounts contained in such Payment
Notice) within such fifteen (15) calendar day period or if Parent delivers a
written acceptance of such Payment Notice within such fifteen (15) calendar day
period, such Payment Notice (or such Payment Notice solely with respect to any
undisputed Escrow Reimbursable Amounts) shall be deemed to be a “Valid Payment
Notice” for purposes of this Agreement.

 

(d)In the event that Parent delivers to Buyer a Notice of Dispute in response to
such Payment Notice, Buyer and Parent shall promptly consult and cooperate with
each other in good faith with respect to the points of disagreement in an effort
to resolve the dispute, and upon such resolution, any adjustments to the Payment
Notice shall be made as agreed upon in writing between Buyer and Parent and, as
so adjusted, such Payment Notice shall constitute a “Valid Payment Notice” for
purposes of this Agreement, and such Valid Payment Notice shall be promptly
delivered to the Escrow Agent. If Parent and Buyer cannot resolve such dispute
within fifteen (15) calendar days of delivery of the Notice of Dispute by
Parent, then Parent and Buyer shall jointly refer the dispute to the Arbiter, as
an arbitrator, to finally resolve, as soon as practicable, and in any event
within thirty (30) calendar days after such reference, all points of
disagreement with respect to the Payment Notice that is the subject of such
Notice of Dispute. For purposes of such arbitration each of Parent and the Buyer
shall submit a proposed Payment Notice (including each item referenced in the
definition thereof). The Arbiter shall apply the terms of this Agreement and
Section 5.2(a) of the Purchase Agreement and all relevant definitions contained
herein and therein, and shall otherwise conduct the arbitration under such
procedures as Parent and Buyer may agree or, failing such agreement, under the
then prevailing Commercial Rules of the American Arbitration Association. Parent
and the Buyer shall each furnish the Arbiter with such work papers and other
documents and information relating to the disputed issues as the Arbiter shall
request, and, subject to Section 6.4 of the Purchase Agreement, shall provide
copies to the other party of any work papers, documents and information so
furnished to the Arbiter. Each of Parent and Buyer shall bear its own expenses
in connection with the arbitration. The fees and expenses of the Arbiter
incurred in connection with any arbitration pursuant to this provision shall be
allocated between Parent and the Buyer by the Arbiter in proportion to the
extent either of such parties did not prevail on items in dispute, as
applicable, reflected on the Payment Notice. The Arbiter may find a party liable
for the other party’s out-of-pocket outside counsel and accounting fees in
connection with any arbitration pursuant to this provision in the case of
failure to comply with the procedures of this Section, willful misconduct, fraud
or bad faith. Each of Parent and Buyer agrees not to engage in any ex parte
communication with the Arbiter. All determinations by the Arbiter shall be
final, conclusive and binding with respect to the Payment Notice, the amounts
set forth thereon and the allocation of arbitration fees and expenses, in the
absence of fraud or manifest error. The Payment Notice as finally determined
pursuant to the resolution of the Arbiter pursuant to this Section 6(d) shall be
deemed to be a “Valid Payment Notice” for purposes of this Agreement.

 

3

 

 

7.Disbursement of Escrow Funds; Release.

 

(a)Promptly and in no event more than five (5) days following (i) such time as
any Payment Notice (or undisputed Escrow Reimbursable Amounts contained in such
Payment Notice) is deemed to constitute a Valid Payment Notice in accordance
with the foregoing provisions of Section 6 or (ii) a notice signed by both
Parent and Buyer (a “Joint Notice”) with directions to the Escrow Agent as set
forth in Section 7(b), the Escrow Agent shall release to Buyer (by wire transfer
of immediately available funds) an amount (the “Release Amount”) equal to the
Escrow Reimbursable Amount that is set forth in such Valid Payment Notice or
Joint Notice, as applicable.

 

(b)On the date that is the earlier of (A) two years from the date of this
Agreement or (B) receipt by the Escrow Agent of a Joint Notice relating to the
disposition of all of the Escrow Assets, (the “Release Date”), the Escrow Agent
shall release to Parent (by wire transfer of immediately available funds) an
amount equal to (i) all remaining Escrow Assets less (ii) any Release Amount
that has been the subject of a Valid Payment Notice or Joint Notice but has not
yet been released to Buyer in accordance with Section 7(a) less (iii) if any
Payment Notice is outstanding and is the subject of a dispute or has not
otherwise been finalized pursuant to Section 6 hereof, an amount equal to what
would be the Release Amount if such Payment Notice was a Valid Payment Notice
(“Unresolved Claims”). After the resolution of all Unresolved Claims, any
remaining Escrow Assets shall be released by the Escrow Agent to Parent. Parent
and Buyer shall use their respective reasonable efforts to resolve all disputes
or claims as promptly as possible following the Release Date. Payment pursuant
to this Section 7(b) shall be made as soon as practicable but in no event later
than 5 calendar days following the Release Date.

 

8.Escrow Earnings. On the Release Date, the Escrow Agent shall distribute to
Parent all of the remaining Escrow Earnings. Payment pursuant to this Section 8
shall be made as soon as practicable but in no event later than 5 calendar days
following the Release Date.

 

9.Investment of Escrow Assets. Subject to Section 8, monies on deposit in the
Escrow Account may be invested and reinvested in Authorized Investments. Written
investment instructions from Parent and Buyer, if any, shall specify the type
and identity of the Authorized Investments to be purchased and/or sold.

 

4

 

 

10.Fees and Expenses. As further set forth in Exhibit B, the parties hereto
agree that a $1,500 Acceptance Fee and an annual fee of $1,500 shall be payable
to the Escrow Agent upon initial funding of the Escrow Account, which fees shall
be paid fifty percent (50%) by Buyer, on the one hand and fifty percent (50%) by
Parent, on the other hand. Thereafter, an Annual Fee of $1,500 shall be payable
fifty percent (50%) by Buyer, on the one hand and fifty percent (50%) by Parent,
on the other hand, to the Escrow Agent on each anniversary of the date of this
Escrow Agreement until this escrow is terminated by distribution of all
remaining Escrow Assets.

 

11.Duties of Escrow Agent.

 

(a)The Escrow Agent shall be liable as a depository only with its duties being
only those specifically provided herein and which are ministerial in nature and
not discretionary. The Escrow Agent shall not be liable for any mistake of fact
or error in judgment, or for any acts or failure to act of any kind taken in
good faith and believed by it to be authorized or within the rights or powers
conferred by this Agreement, except to the extent that such mistake, failure,
action or omission constitutes willful misconduct, bad faith or gross
negligence.

 

(b)The Escrow Agent shall not be responsible for the sufficiency or accuracy of
the form, execution or validity of the documents or items deposited hereunder,
nor for any description of property or other matter noted therein. It shall not
be liable for default by any party hereto because of such party’s failure to
perform, and shall have no responsibility to seek performance by any party; nor
shall it be liable for the outlawing of any rights under any statutes of
limitation in respect to any documents or items deposited. The Escrow Agent
shall not be liable for collection of items until the proceeds of same in actual
cash have been received. The Escrow Agent shall not be liable for interest on
any deposit of money.

 

(c)The Escrow Agent shall not be liable in any respect on account of identity,
authority or rights of persons executing or delivering, or purporting to execute
or deliver, any document or item, and may rely absolutely and be fully protected
in acting upon any item, document or other writing believed by it to be
authentic in performing its duties hereunder. The Escrow Agent may, as a
condition to the disbursement of money or property, require from the payee or
recipient a receipt therefor, and, upon final payment or distribution, require a
release from any liability arising out of its execution or performance of this
Agreement.

 

(d)The Escrow Agent shall be indemnified and held harmless by the parties to
this Agreement from and against all costs, damages, liabilities and expenses
which the Escrow Agent may incur or sustain without willful misconduct, bad
faith or gross negligence in connection with or arising out of this Escrow
Agreement, including, but not limited to, any reasonable and necessary costs,
damages, liabilities and expenses that may be incurred as a result of claims or
actions by third parties. Fifty percent (50%) of any such indemnification
obligation is to be borne by Buyer, on the one hand, and fifty percent (50%) by
Parent, on the other hand. The Escrow Agent shall be entitled to consult with
and engage the services of legal counsel of its choice with respect to any
matter pertaining to this Escrow Agreement and shall be entitled to
reimbursement for the reasonable and necessary costs and expenses of such legal
counsel.

 

5

 

 

(e)The Escrow Agent shall be entitled to reasonable compensation and
reimbursement for its services and documented out-of-pocket expenses, which
shall be borne fifty percent (50%) by Buyer, on the one hand and fifty percent
(50%) by Parent, on the other hand. In the event any such amounts remain unpaid
60 days after billing, then the Escrow Agent shall have the right to reimburse
itself out of any funds in its possession for reasonable and necessary costs,
expenses, attorney’s fees and its compensation, and shall have a lien on all
money, documents or property held in escrow to cover same.

 

(f)The Escrow Agent may resign by giving notice in writing to Parent and Buyer
of such resignation, specifying a date which such resignation shall take effect
(which shall in no event be earlier than thirty (30) calendar days after the
giving of such notice), and shall be discharged from its duties and obligations
upon the appointment of a successor Escrow Agent as hereafter provided and the
delivery to such successor of the Escrow Assets, less any undisputed fees,
expenses, and charges then due and owing to the Escrow Agent. Immediately upon
receipt of such notice, Parent and Buyer shall appoint a successor Escrow Agent
who shall be mutually acceptable to them. Any such successor Escrow Agent shall
deliver to Parent and Buyer and to the resigning Escrow Agent a written
instrument accepting such appointment hereunder, and thereupon it shall succeed
to all the rights and duties of the Escrow Agent hereunder, and shall be
entitled to receive the Escrow Assets. In the event that a successor Escrow
Agent shall not be so appointed by the date of resignation specified by the
Escrow Agent, the Escrow Agent shall have the right to (i) appoint as a
successor Escrow Agent any financial institution having capital, surplus and
undivided profits of not less than $100,000,000 or (ii) apply to a court of
competent jurisdiction for the appointment of a successor Escrow Agent, and the
parties hereto agree to accept any such successor Escrow Agent appointed by the
Escrow Agent.

 

(g)In accepting any funds, securities or documents delivered hereunder, it is
agreed and understood that, in the event of disagreement among Parent and Buyer,
or persons claiming under them, or any of them, the Escrow Agent reserves the
right to hold all money, securities and property in its possession, and all
papers in connection with or concerning this escrow, until receipt of a Joint
Notice, or until delivery is made to court in any interpleader action.

 

12.Addresses of Parties; Notices. Notices shall be deemed to have been received
on the same day as faxed or submitted by electronic e-mail transmission, the
date of actual delivery by courier, the next day if sent by overnight express
delivery, or on the third business day following posting if sent by first class
mail. Whenever payments, instructions, notices, releases or any other documents
are required to be given by or to the parties hereto, they shall be sent by fax,
courier, express delivery or post-paid first class certified mail, return
receipt requested, as follows:

 

6

 

 

Buyer:

 

c/o Sun Capital Partners Group VI, LLC

5200 Town Center Circle, Suite 600

Boca Raton, FL 33486

Attention: Brian Urbanek, Daniel Florian, Blake Richardson and C. Deryl Couch

Telephone: (561) 394-0550

Facsimile No.: (561) 394-0540

Email: burbanek@suncappart.com, dflorian@suncappart.com,
brichardson@suncappart.com, dcouch@suncappart.com

 

with a copies to:

Morgan, Lewis & Bockius LLP

One Oxford Centre

Thirty-Second Floor

Pittsburgh, PA 15219-6401

Attention: Kimberly A. Taylor

Telephone: (412) 560-3322

Facsimile No.: (412) 560-7001

Email: ktaylor@morganlewis.com

 

and

 

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Attention: David A. Gerson

Telephone: (215) 963-5310

Facsimile No.: (215) 963-5001

Email: dgerson@morganlewis.com

 

Parent:

ESCO Technologies Holding LLC

c/o ESCO Technologies Inc.
9900A Clayton Road
St. Louis, Missouri 63124-1186
Attention: General Counsel
Telephone: (314) 213-7213

Facsimile No.: (314) 213-7215

Email: abarclay@escotechnologies.com

 

7

 

 

with a copy to:

Bryan Cave LLP
Attention: Frederick W. Bartelsmeyer
One Metropolitan Square, Suite 3600
211 N. Broadway

St. Louis, Missouri 63012
Telephone: (314) 259-2000

Facsimile No.: (314) 259-2020

Email: fwbartelsmeyer@bryancave.com

 

Escrow Agent:

 

Commerce Bank

Corporate Trust Department, TBMZ-5

922 Walnut Street, 10th Floor

Attn: Lois Agrusa

Telephone: (816) 234-7454

Facsimile No.: (816) 234-2562

Email: Lois.Agrusa@CommerceBank.com

 

13.Successors and Assigns. All of the covenants, promises, and agreements
contained in this Escrow Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns, whether so expressed or not. Except as set forth below, neither this
Agreement nor the obligations of any party hereunder shall be assignable or
transferable by such party without the prior written consent of the other
parties hereto; provided that nothing contained herein shall restrict the
assignment of this Escrow Agreement by the Escrow Agent pursuant to Section
11(f) above.

 

14.Amendment. This Escrow Agreement may be amended or altered at any time by a
writing agreed to by Parent and Buyer in any form and manner as is acceptable to
Escrow Agent.

 

15.Severability. If any one or more of the covenants or agreements provided in
this Escrow Agreement should be determined by a court of competent jurisdiction
to be contrary to law, such covenant or agreement shall be deemed and construed
to be severable from the remaining covenants and agreements herein contained and
shall in no way affect the validity of the remaining provisions of this Escrow
Agreement.

 

16.Governing Law. This Escrow Agreement shall be governed by the laws of the
State of Missouri, without reference to its choice of law rules.

 

17.Headings. Any headings preceding the text of the several paragraphs hereof
shall be solely for the convenience of reference and shall not constitute a part
of this Escrow Agreement, nor shall they affect its meaning, construction or
effect.

 

8

 

 

18.Counterparts. This Escrow Agreement may be executed in several counterparts
(including via facsimile or pdf attachment to email), all or any of which shall
be regarded for all purposes as one original and shall constitute and be but one
and the same instrument. Any signature delivered via pdf attachment to email or
facsimile shall be considered to have the same binding legal effect as if it
were the original signed version thereof delivered in person.

 

[Signature Page to Follow]

 

 

 

 

9

 

 

IN WITNESS WHEREOF, this Escrow Agreement is executed as of and from the date
first above written.

 

ESCO TECHNOLOGIES HOLDING LLC

 

By: ___________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

COMMERCE BANK

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

METER READINGS HOLDING, LLC

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

 

 

 

 

 

 

 

Exhibit A

 

Purchase Agreement

 

 

(see attached)

 

 

 

Exhibit B

 

Fee Schedule

 

Acceptance and Set-up Fee:   $ 1,500  

 

 

Annual Administration Fee:   $ 1,500 base fee plus the following:    

 

Investment Fees:

 

Purchases, sales, processing maturities or calls of obligations of the United
States or any of its agencies or obligations of the State or any of its
political subdivisions are included in the administration fee, so there will be
no additional charge for those transactions.

 

Moneys invested in any of our "money market funds" are subject to an annual fee
of .25% of the amount deposited. This fee is accounted for as a charge against
money market fund earnings posted to the account each month. The daily interest
rate we quote is the actual net interest rate in effect for that day. The
interest rate on each of our money market funds is variable and is subject to
adjustment daily.

 

Amendment or Modification of the Escrow Agreement:   $500  

 

In the event of direction to take legal action:   $5,000 plus   Per hour charge:
  $250 per hour  

  

Out-of-pocket Expenses:

 

Any out-of-pocket expenses, including fees and charges for legal counsel or
other professional advisors will be charged as incurred.

 

This fee schedule shall remain in effect for a minimum of three years and shall
be subject to periodic review and adjustment thereafter.

 

Annual administration fees are for services rendered for any year or any part
thereof. There is no pro-ration of fees if the bonds are matured, called,
defeased or otherwise retired during any year in which fees have been paid or
for which fees are due and owing.

 

 

 

 

 

 

 

 

EXHIBIT D

 

March __, 2014

 

ESCO Technologies Holding LLC

9900A Clayton Road

Saint Louis, MO 63124-1186

Fax: (314) 213-7215

Attention: General Counsel

 

Re: Cancellation of Intercompany Accounts and Contracts and Release

 

This letter is being delivered in connection with Section 7.4(e) of that certain
Securities Purchase Agreement, dated as of March __, 2014, by and between ESCO
Technologies Holding LLC and Meter Readings Holding, LLC (the “Purchase
Agreement”). Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Purchase Agreement.

 

Immediately prior to the Effective Time, (i) all payables, receivables and other
intercompany accounts between the Company or the Company Subsidiaries, on the
one hand, and Parent, or any affiliate of Parent (other than the Company and the
Company Subsidiaries) on the other hand (the “Terminating Intercompany
Accounts”) and (ii) all Contracts between the Company or the Company
Subsidiaries, on the one hand, and Parent, or any affiliate of Parent (other
than the Company and the Company Subsidiaries), on the other hand (the
“Terminating Intercompany Contracts”), shall be terminated, cancelled and
discharged in full, without further liability to the Buyer, the Company, Company
Subsidiaries or Parent. For the avoidance of doubt, the Purchase Agreement and
all Ancillary Agreements shall not be considered Terminating Intercompany
Contracts and any obligations arising under the Purchase Agreement or any
Ancillary Agreement shall not be considered Terminating Intercompany Accounts
and shall remain outstanding from and after the Effective Time.

 

IN CONSIDERATION OF THE AGREEMENTS CONTAINED HEREIN AND IN THE PURCHASE
AGREEMENT AND EXCLUDING ANY AND ALL CAUSES OF ACTION, CLAIMS, COUNTERCLAIMS,
SUITS, ATTORNEYS’ FEES, COSTS, CONTROVERSIES, DEMANDS AND OTHER OBLIGATIONS AND
LIABILITIES OF ANY KIND UNDER THE PURCHASE AGREEMENT OR ANY ANCILLARY AGREEMENT,
EFFECTIVE AS OF THE EFFECTIVE TIME, THE COMPANY, ON BEHALF OF ITSELF AND THE
COMPANY SUBSIDIARIES (THE “COMPANY RELEASING GROUP”), HEREBY FULLY AND FINALLY
WAIVES, RELEASES, ACQUITS AND FOREVER DISCHARGES PARENT AND ITS AFFILIATES FROM
ANY AND ALL CAUSES OF ACTION, CLAIMS, COUNTERCLAIMS, SUITS, ATTORNEYS’ FEES,
COSTS, CONTROVERSIES, DEMANDS AND OTHER OBLIGATIONS AND LIABILITIES OF ANY KIND,
WHETHER IN LAW OR EQUITY, AND WHETHER KNOWN OR UNKNOWN, THAT ANY MEMBER OF THE
COMPANY RELEASING GROUP HAD OR NOW HAS, OF ANY KIND THAT WAS OR MIGHT HAVE BEEN
ALLEGED BY ANY MEMBER OF SUCH COMPANY RELEASING GROUP, RELATING TO PARENT OR ITS
AFFILIATES, INCLUDING WITHOUT LIMITATION WITH RESPECT TO PARENT’S OWNERSHIP AND
OPERATION OF THE COMPANY RELEASING GROUP, IN EACH CASE, IN RESPECT OF THE PERIOD
ON AND PRIOR TO THE EFFECTIVE TIME, NOTWITHSTANDING THE FAULT, STRICT LIABILITY,
BREACH OF CONTRACT OR NEGLIGENCE, WHETHER SOLE, JOINT OR CONCURRENT OR ACTIVE OR
PASSIVE, OF THE PERSON RELEASED BY THIS SECTION OR WHETHER ASSERTED IN CONTRACT,
IN WARRANTY, IN TORT, BY STATUTE OR OTHERWISE.

 

[Signature Page Follows]

 

 

 

 

Sincerely,

 

ACLARA TECHNOLOGIES LLC

 

By: _____________________________

 

Name: _____________________________

 

Title: _____________________________

 

ACKNOWLEDGED AND AGREED

 

THIS ___ DAY OF MARCH, 2014

 

ESCO TECHNOLOGIES HOLDING LLC

 

By: _____________________________

 

Name: ___________________________

 

Title: ____________________________

 

 

 

 

 

[Signature Page to Cancellation of Intercompany Accounts Letter]

 

 

 

 

EXHIBIT E

 

 

TRANSITION SERVICES AGREEMENT

 

TRANSITION SERVICES AGREEMENT (this “Agreement”) dated as of March [_______],
2014, by and between ESCO Technologies Holding LLC, a Delaware limited liability
company (“Parent”, and, together with its Affiliates, the “ESCO Parties”)) and
Meter Readings Holding, LLC, a Delaware limited liability company (the “Buyer”
and, together with its Affiliates, including the Company and the Company
Subsidiaries, the “Buyer Parties”).

 

WITNESSETH

 

WHEREAS, the parties hereto have entered into a Securities Purchase Agreement
dated March [_____], 2014 (as amended from time to time, the “Purchase
Agreement”), pursuant to which Parent agreed, among other things, to sell and
Buyer agreed to purchase all of the outstanding equity interests of Aclara
Technologies LLC, an Ohio limited liability company (the “Company”), as more
fully described in the Purchase Agreement;

 

WHEREAS, capitalized terms used herein but not defined shall have the meanings
ascribed to them in the Purchase Agreement;

 

WHEREAS, prior to the Closing Date, the ESCO Parties performed certain services
for the Company and Company Subsidiaries, and the Company and Company
Subsidiaries performed certain services for the ESCO Parties; and

 

WHEREAS, pursuant to the Purchase Agreement, Parent and the Buyer have agreed to
enter into this Agreement on the Closing Date in order to provide for the
provision of certain transitional services in connection with the divestiture
and sale of the Company and the Company Subsidiaries from Parent or its
Affiliate to the Buyer, upon the terms and subject to the conditions hereinafter
set forth.

 

NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:

 

1. Services to be Provided.

 

(a) During the Transition Period (as defined below) (or such shorter periods as
may be specified in Schedule A with respect to any Parent Service), Parent shall
provide (or cause to be provided by an Affiliate) to the Buyer the services
described on Schedule A (the “Parent Services”) for the benefit of the operation
of the Business.

 

(b) During the Transition Period (as defined below) (or such shorter periods as
may be specified in Schedule B with respect to any Buyer Service), the Buyer
shall provide (or cause to be provided by an Affiliate (including the Company))
to the Parent or its Affiliates the services described on Schedule B (the “Buyer
Services” and with the Parent Services, the “Services”) for the benefit of the
operation of the business of the ESCO Parties (the “Parent Business”).

 

 

 

 

(c) As used herein, “Recipient” means the party receiving, or the Affiliates of
a party which receive, a Service or Services hereunder, and “Provider” means the
party providing any Services hereunder (whether directly, or indirectly through
an Affiliate).

 

(d) The parties shall cooperate and use commercially reasonable efforts to
obtain any consents, permits or licenses from any third party that may be
required in connection with the provision of the Services hereunder; provided
that (i) Provider shall not be required to provide any Service hereunder to the
extent the provision of such Service is prevented by the failure, after the
exercise of commercially reasonable efforts, to obtain any such consent, permit
or license and (ii) Provider shall not be required to pay to any such third
party any amounts to obtain any such consents, permits or licenses unless
Recipient agrees in writing to reimburse Provider for such amounts.

 

(e) The relationship of Parent and the Buyer shall be that of independent
contractors only. Except as provided in Schedule A with respect to the ESCO
Parties and Schedule B with respect to the Buyer Parties, (i) Parent shall be
solely responsible for the payment of all salary and benefits and all taxes
(including income tax, social security taxes, unemployment compensation,
workers’ compensation, other employment taxes or withholdings) and premiums and
remittances with respect to employees used to provide any Parent Services
hereunder, and (ii) the Buyer shall be solely responsible for the payment of all
salary and benefits and all taxes (including income tax, social security taxes,
unemployment compensation, workers’ compensation, other employment taxes or
withholdings) and premiums and remittances with respect to employees used to
provide any Buyer Services hereunder.

 

(f) All equipment, including computers, peripheral equipment and procedure
manuals, used by Provider or its Affiliates in connection with the provision of
Services (other than any such items being the property of Recipient that are
provided by Recipient or its Affiliates to Provider to facilitate Provider’s
provision of the Services to Recipient (such items, the “Recipient Owned Items,”
which shall include, without limitation, those items identified as such on
Schedule A or Schedule B hereto)) hereunder shall, as between the Provider and
Recipient, be the property of Provider or such Affiliate and shall at all times
be under the sole direction and control of Provider or such Affiliate. Promptly
following the expiration of the Transition Period with respect to a specified
Service, all Recipient Owned Items utilized in connection with such Service
shall be returned to the possession of the Recipient.

 

2. Consideration for Services.

 

(a) Except as otherwise provided in this Agreement or in Schedule A or Schedule
B hereto, Recipient shall pay to Provider a fee for the Services (or category of
Services, as applicable) as provided in Schedule A (with respect to the Parent
Services) or Schedule B (with respect to the Buyer Services) (each such fee
constituting a “Service Charge”). Out-of-pocket costs paid to any third-party
provider that is providing goods or services used by Provider in providing the
applicable Services and any Taxes, imposed under Law on the provision of such
Services (but not on any income of Provider received in connection with
provision of such services) will be an incremental cost to Recipient in addition
to the Service Charges, and will be charged to Recipient at the actual
third-party cost or amount of Taxes so imposed. Except as otherwise provided
herein, all costs and expenses incurred in connection with this Agreement shall
be paid by the party incurring such cost or expense.

 

-2-

 

 

(b) Provider shall deliver invoices to Recipient on a monthly basis, beginning
approximately one month after the Closing Date, and, thereafter, at the end of
each succeeding month for the duration of this Agreement in arrears for the
Service Charges due to Provider under this Agreement. Provider agrees to afford
Recipient, upon reasonable notice, access to such information, records and
documentation of Provider as Recipient may reasonably request in order to verify
any invoices and charges for Services hereunder.

 

(c) Recipient shall pay the amount of such invoice within thirty (30) calendar
days of the date of receipt of such invoice to the account specified by
Provider.

 

3. Standard for Service. Except as otherwise provided in this Agreement or
Schedule A or Schedule B hereto, as applicable, Provider shall use commercially
reasonable efforts to perform each Service such that the nature, quality,
standard of care, level of priority and the service level at which such Service
is performed is comparable to the nature, quality, standard of care, level of
priority and service level at which Provider performs similar services on its
own behalf or for its Affiliates, and in any event consistent in all material
respects with the operation of such Business or Parent Business, respectively,
during the twelve (12) month period prior to the Closing Date.

 

4. Force Majeure. Provider shall not be responsible for failure or delay in
delivery of any Service if prohibited by Law or caused by an act of god or
public enemy, war, terrorism, government acts or regulations, fire, flood,
embargo, quarantine, epidemic, unusually severe weather or other cause similar
to the foregoing, in each case which is beyond their reasonable control (a
“Force Majeure Event”). A party’s obligations hereunder (except their payment
obligations in respect of Services already provided) shall be postponed for such
time as its performance is suspended or delayed on account of the Force Majeure
Event, and upon the cessation of the Force Majeure Event, such party will use
commercially reasonable efforts to resume its performance hereunder.

 

5. Confidential Information.

 

(a) Each of the Buyer and Parent, shall, and shall cause its Affiliates to,
maintain in confidence any information or communications coming into its or any
such Affiliate’s possession pursuant to or in connection with this Agreement
(“Confidential Information”), and such Confidential Information shall not be
disclosed or used (except as contemplated by this Agreement) by the Person
receiving such Confidential Information (the “Receiving Party”) or its
Affiliates without the prior written consent of the Person disclosing such
Confidential Information (the “Disclosing Party”), unless such information is
(x) otherwise publicly available through no breach by the Receiving Party or its
Affiliates of this Section 5(a) or (y) required to be disclosed pursuant to any
Law or Order applicable to the Receiving Party or its Affiliates, in which event
the Receiving Party shall provide the Disclosing Party with prompt written
notice before such disclosure, sufficient to enable the Disclosing Party to
either seek a protective order, at its expense, or other appropriate remedy
preventing or prohibiting such disclosure (and the Receiving Party shall
reasonably cooperate with the Disclosing Party, at the Disclosing Party’s
expense, in seeking any such protective order or other appropriate remedy) or to
waive compliance with the provisions of this Section 5(a) or both. In the event
that such protective order or other appropriate remedy is not obtained, the
Receiving Party shall furnish only that portion of such information or
documentation that has been legally compelled, and shall exercise its reasonable
best efforts to obtain assurances that confidential treatment will be accorded
to such disclosed documents or information. The Receiving Party hereby agrees,
and shall cause its Affiliates and its and its Affiliates’ Representatives, to
protect the Confidential Information disclosed by the Disclosing Party by using
the same degree of care, but no less than a reasonable degree of care, to
prevent the unauthorized use or disclosure of Confidential Information disclosed
by the Disclosing Party as the Receiving Party uses to protect its own
confidential information of a like nature

 

-3-

 

 

(b) The Parties acknowledge and agree that in the event of any breach of this
Section 5, the harm to the Parties will be irreparable and without adequate
remedy at law and therefore that injunctive relief with respect thereto will be
appropriate.

 

6. Ownership of Data. Recipient shall be the sole and exclusive owner of all
data or other information about its business generated in connection with the
provision of the Services (collectively, “Recipient Data”). Provider hereby
assigns all right, title and interest in and to the Recipient Data to Recipient,
and Recipient hereby grants to Provider a non-exclusive, non-sublicensable,
non-transferable, limited license to use the Recipient Data during the
Transition Period, solely to the extent required to provide the Services and
thereafter solely to the extent required to comply with Provider’s bona fide
record retention policies and then only for bona fide archival, legal, audit and
compliance purposes.

 

7. Term and Termination.

 

(a) The term of this Agreement (the “Transition Period”) shall commence on the
Closing Date and continue with respect to each of the Services for the term
thereof, which term shall, unless otherwise agreed by Parent and the Buyer in
Schedule A or Schedule B, as applicable, terminate six (6) months following the
Closing Date; provided that except as otherwise specified on any Schedule hereto
(i) Recipient may terminate one or more of the Services it receives at any time
and for any reason on not less than fifteen (15) calendar days prior written
notice to Provider; and (ii) both parties may terminate this Agreement with
respect to one or more Services, or the entire Agreement, immediately upon
mutual agreement. Notwithstanding the foregoing, each party reserves the right
to immediately terminate this Agreement by written notice to the other in the
event that the other party breaches or is in default of any material obligation
under this Agreement and such breach or default remains uncured for fifteen (15)
days after receipt of written notice from the non-breaching party, provided that
a breach of Section 5 hereof shall not be subject to such cure period.

 

(b) Upon the effective date of termination of any Service pursuant to this
Agreement, Provider will have no further obligation to provide the terminated
Service. Recipient shall remain obligated to Provider for the Service Charges
and any other fees, costs and expenses owed and payable in accordance with the
terms of this Agreement in respect of Services provided and otherwise as
provided in Schedule A or Schedule B, as applicable. In connection with
termination of any Service, the provisions of this Agreement not relating solely
to such terminated Service shall survive any such termination.

 

-4-

 

 

(c) Any termination of this Agreement with respect to any one or more Services
shall not terminate this Agreement with respect to any other Service then being
provided pursuant to this Agreement. The failure of either party to terminate
this Agreement for breach of any term or condition shall not constitute a waiver
of such breach and shall not affect such party’s right to terminate this
Agreement by reason of subsequent breaches of the same or other terms or
conditions.

 

8. Disclaimer; Limitation of Liability.

 

(a) EXCEPT AS SET FORTH IN SECTION 3, PROVIDER MAKES NO EXPRESS OR IMPLIED
REPRESENTATIONS, WARRANTIES OR GUARANTEES RELATING TO THE SERVICES PROVIDED
HEREUNDER, AND PROVIDER EXPRESSLY DISCLAIMS ALL OTHER EXPRESS AND IMPLIED
WARRANTIES, INCLUDING THE IMPLIED WARRANTIES OF NON-INFRINGEMENT,
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. UNLESS OTHERWISE EXPRESSLY
SET FORTH IN THIS AGREEMENT, ALL SERVICES PROVIDED BY PROVIDER HEREUNDER ARE
PROVIDED ON AN “AS IS, WHERE IS” BASIS WITHOUT WARRANTY OF ANY KIND.

 

(b) Provider may rely conclusively on, and will have no liability to Recipient
or any of its Affiliates for acting in accordance with, any notice which
Recipient, its Affiliates or those acting on their behalf provides to Provider
in connection with the performance of the Services.

 

(c) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY HERETO
SHALL BE LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR
EXEMPLARY DAMAGES (INCLUDING LOST OR ANTICIPATED REVENUES OR PROFITS RELATING TO
THE SAME) EXCEPT TO THE EXTENT THAT THE OTHER PARTY IS REQUIRED TO PAY ANY SUCH
AMOUNTS TO A THIRD PARTY, IN EACH CASE ARISING FROM ANY CLAIM RELATING TO THIS
AGREEMENT OR ANY OF THE SERVICES PROVIDED HEREUNDER (INCLUDING DELIVERABLES
ASSOCIATED THEREWITH), INCLUDING PERFORMANCE OR FAILURE TO PERFORM UNDER THIS
AGREEMENT, OR THE FURNISHING, PERFORMANCE, OR USE OF ANY GOODS OR SERVICES SOLD
OR PERFORMED PURSUANT HERETO, WHETHER BASED UPON AN ACTION OR CLAIM IN CONTRACT,
TORT (INCLUDING NEGLIGENCE OR STRICT LIABILITY), BREACH OF WARRANTY, OR
OTHERWISE, EXCEPT IN THE CASE OF GROSS NEGLIGENCE OR INTENTIONAL MISCONDUCT OF
SUCH PARTY OR ITS AFFILIATES OR REPRESENTATIVES. FURTHER, EXCEPT FOR A PARTY’S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, THE LIABILITY OF SUCH PARTY TO THE OTHER
PARTY AND/OR ITS AFFILIATES FOR ANY LOSS OR DAMAGE ARISING IN CONNECTION WITH
PROVIDING THE SERVICES HEREUNDER SHALL NOT EXCEED THE TOTAL AMOUNT BILLED OR
BILLABLE TO SUCH PARTY UNDER THIS AGREEMENT. FOR THE AVOIDANCE OF DOUBT, THE
LIMITATIONS SET FORTH IN THIS PARAGRAPH 8(C) SHALL NOT APPLY TO ANY AMOUNTS OWED
ON THE SUBJECT CREDIT CARDS (AS DEFINED IN SCHEDULE A) WITH RESPECT TO COSTS
INCURRED DURING THE TRANSITION PERIOD, WHICH SHALL BE THE RESPONSIBILITY OF
BUYER.

 

-5-

 

 

(d) BUYER SHALL ASSUME ALL LIABILITY FOR AND SHALL FURTHER RELEASE, DEFEND,
INDEMNIFY AND HOLD DAVE SCHATZ (THE “RELEASED INDIVIDUAL”) FREE AND HARMLESS
FROM AND AGAINST ALL CLAIMS OF BUYER AND ITS AFFILIATES AND OF THIRD PARTIES
(OTHER THAN PARENT AND ITS AFFILIATES) (AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS) RESULTING FROM, ARISING OUT OF OR RELATED TO THE SERVICES PROVIDED BY
DAVE SCHATZ PURSUANT TO ITEM 2 OF SCHEDULE A, HOWSOEVER ARISING AND WHETHER OR
NOT CAUSED BY THE NEGLIGENCE OR GROSS NEGLIGENCE OF RELEASED INDIVIDUAL
(“RELEASED CLAIMS”). Buyer, on behalf of itself and its Affiliates and their
respective successors and assigns, agrees that it shall not seek to recover any
amounts in connection with a Released Claim from the Released Individual or
Parent or any of its Affiliates and shall not institute any claim, action or
proceeding against the Released Individual or Parent or any of its Affiliates
with respect to the Released Claims.

 

9. Covenants. Parent and the Buyer will not, and will ensure that their
respective employees, officers, directors, Affiliates and agents do not, (i)
make any use of or attempt to gain access to any part of the other party’s
business systems and communications networks or to any data of the other party
or its Affiliates not specifically made available to that party under this
Agreement, or (ii) introduce any form of breach of security, data corruption or
interruption into the other party’s network. If a party has violated any of
these covenants, then in addition to any direct damages to which the
non-breaching party and/or its Affiliates may be entitled under law or equity,
the breaching party will, to the non-breaching party’s reasonable satisfaction,
promptly take all commercially reasonable action and implement all necessary
procedures to prevent the reoccurrence of any such violation; failing which, the
non-breaching party may terminate this Agreement upon three (3) calendar days
written notice (such notice to describe the breach in reasonable detail);
provided, however, that the breaching party shall have the opportunity to cure
during the three-day notice period, to the non-breaching party’s reasonable
satisfaction, any such violation.

 

10. Indemnification.

 

(a) Except to the extent otherwise provided for in this Agreement, Recipient
shall indemnify, defend and hold harmless Provider and its employees, officers,
directors and Affiliates against any Losses which such persons may sustain or
incur by reason of any claim, demand, suit or recovery by any third party
allegedly arising out of Provider’s performance of the Services; provided, that
Recipient shall not be required to indemnify, defend or hold harmless against
any Losses to the extent resulting from the Provider’s or its Affiliates’ gross
negligence or willful misconduct in providing the Services hereunder. Provider
shall indemnify, defend, and hold Recipient and its Affiliates, and their
respective directors, officers, employees, contractors and agents, harmless from
and against any and all Losses resulting from Provider’s or its Affiliates’
gross negligence or willful misconduct in providing the Services hereunder.

 

-6-

 

 

(b) All claims made by or on behalf of Recipient or its Affiliates arising out
of, or based upon, the provision of the Services or this Agreement, including
claims arising out of, or based upon, the performance or non-performance of
Provider’s duties or obligations under this Agreement, shall be deemed waived
unless written notice of such claim is given by Recipient and received by
Provider within ninety (90) days following the sooner to occur of the expiration
or termination of the Service to which the relevant claim relates or of the
Transition Period.

 

11. General Provisions.

 

(a) Assignment; Binding Agreement. This Agreement and the various rights and
obligations arising hereunder shall inure to the benefit of and be binding upon
the parties hereto and their successors and permitted assigns. Neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
transferred, delegated, or assigned by the parties hereto without the prior
written consent of the other party (which consent shall not be unreasonably
withheld).

 

(b) Amendment; Waiver. Any provision of this Agreement (including Schedule A and
Schedule B) may be amended, supplemented or waived if, but only if, such
amendment, supplement or waiver is in writing and is signed, in the case of an
amendment or supplement, by each party hereto, or in the case of a waiver, by
the party against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.

 

(c) Representatives. Parent and the Buyer will each designate a qualified
employee to serve as its principal representative to coordinate and facilitate
the provision of Services hereunder. Such employees designated will be granted
sufficient authority to resolve on behalf of Parent and the Buyer all questions
and problems arising with respect to the provision of Services hereunder. From
the date hereof until further written notice to the other party, the
representative of Parent shall be Alyson S. Barclay, and the representative of
the Buyer shall be [______________]. Unless otherwise agreed by the parties in
writing, all communications relating to this Agreement and the Services will be
made in accordance with Section 11(h).

 

(d) Entire Agreement. All Schedules to this Agreement are incorporated into this
Agreement, and this Agreement together with the attached Schedules and the
Purchase Agreement embody the entire agreement and understanding of the parties
hereto with respect to the subject matter hereof and thereof and supersede all
prior and contemporaneous agreements and understandings relating to such subject
matter. In the case of any conflict between the body of the Agreement and any
Schedule to this Agreement, the Schedule shall govern.

 

(e) Counterparts; No Third Party Beneficiaries. This Agreement may be executed
simultaneously in multiple counterparts, and in separate counterparts (including
facsimile and other electronically transmitted counterparts), each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument. Nothing herein shall grant to or create in any
person not a party hereto, or any such person’s Affiliates, any right to any
benefits hereunder, and no such party shall be entitled to sue either party to
this Agreement with respect thereto.

 

-7-

 

 

(f) Severability. If any provision hereof shall be held invalid or unenforceable
by any court of competent jurisdiction or as a result of future legislative
action, such holding or action shall be strictly construed and shall not affect
the validity or effect of any other provision hereof, as long as the remaining
provisions, taken together, are sufficient to carry out the overall intentions
of the parties as evidenced hereby.

 

(g) Governing Law; Jurisdiction. This Agreement shall be governed by, and
construed in accordance with, the law of the State of New York applicable to
contracts to be carried out wholly within such State.

 

(h) Notices. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing (including email or facsimile
transmission) and shall be given to the email addresses, facsimile numbers or
addresses specified for notices in the Purchase Agreement or such other email
addresses, facsimile numbers or addresses as may hereafter be designated in
accordance with the Purchase Agreement. All such notices, requests, demands and
other communications shall be deemed to have been duly given and made upon being
delivered in accordance with Section 10.1 of the Purchase Agreement.

 

(i) Jurisdiction. The parties hereby acknowledge and agree that any suit, action
or proceeding relating to this Agreement or any transaction contemplated hereby
shall be subject to the provisions of Section 10.10 of the Purchase Agreement.

 

(j) Survival. The parties hereby acknowledge and agree that the obligations of
each party set forth in Sections 1(f), 5, 6, 7(b), 9, 10 and 11 hereof shall
survive any termination of this Agreement.

 

[Signature page follows]

 

-8-

 

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed as of the day and year first above written.

 

 

 

ESCO Technologies Holding LLC

 

 

 

By: _________________________________

 

Name: _________________________________

 

Title: _________________________________

 

 

 

 

 

METER READINGS HOLDING, LLC

 

 

 

By: _________________________________

 

Name: _________________________________

 

Title: _________________________________

 

 

 

 

 

SCHEDULE A

 

PARENT SERVICES

 

  Service Provider Function Description of Service to be Provided Transition
Period Cost for Providing Service

 

Additional Terms of Service

1. Parent Credit cards Employees of the Company and Company Subsidiaries may
continue to use credit cards outstanding as of the Closing that are guaranteed
by Parent (the “Subject Credit Cards”) during the Transition Period. Up to 30
days following the Closing Date. Parent’s agreement (the “Card Agreement”) with
the credit card issuer (the “Issuer”) will terminate 30 days after the Closing
Date.

All amounts incurred on the Subject Credit Cards during the Transition Period,
including any fees or penalties for late payments with respect to amounts
incurred during the Transition Period, shall be the obligation of Buyer.

 

In addition, Buyer shall pay Parent for each hour spent by a Parent employee to
provide such Service at a rate equal to 125% of such employee’s
hourly-equivalent rate in effect as of the date of the Agreement, plus
reasonable and documented out-of-pocket incidental expenses.

 

Buyer shall cause the Company and Company Subsidiaries to pay all amounts owed
on the Subject Credit Cards (including any fees or penalties for late payments)
to the Issuer in full and within the time period required under, and otherwise
in compliance with, the terms of the Card Agreement. In furtherance of the
foregoing, Buyer shall cause the Company (1) to keep open the bank account
currently used by the Company to fund payments to the Issuer and (2) to fund
such account in such amounts and at such times as is necessary to comply with
the obligations described in the preceding sentence.

 

None of Buyer, the Company nor the Company Subsidiaries shall take any action
following the Closing and prior to the end of the Transition Period intended to,
or that is reasonably likely to, limit Parent’s access to statements concerning
Subject Credit Card activity provided pursuant to the Card Agreement, it being
understood that Parent shall have the right to review and audit all transaction
processed on the Subject Credit Cards during such period.

 

 

 

 

2. Parent IP Related Consultation and Support Parent shall make available Dave
Schatz for intellectual property consultation and support with respect to (i)
the Registered Intellectual Property set forth on Disclosure Schedule 3.16(a),
(ii) the Claims of Infringement set forth on Disclosure Schedule 3.16(e)(ii),
and (iii) the IPCO/SIPCO license set forth as item #7 on Disclosure Schedule
3.16(b)(i)(2) and (iv) payment of maintenance fees and annuities for patents in
the Registered Intellectual Property through CPI.   Up to 6 months following the
Closing Date

Buyer shall pay Parent for each hour spent by Dave Schatz an amount equal to
$300, plus reasonable and documented out-of-pocket incidental expenses.

 

In addition, all amounts incurred for payment of maintenance fees and annuities
for patents in the Registered Intellectual Property, including any CPI handling
charges and any fees or penalties for late payments, shall be the obligation of
Buyer and shall be invoiced and paid in accordance with Section 2 of the
Agreement.

 

Without limiting Section 3 of the Agreement, Parent and the Buyer agree that the
aggregate time to be devoted by Dave Schatz to performing the IP Related
Consultation and Support services hereunder shall not exceed an aggregate of 100
hours.  Services shall be limited to providing background and historical
information for the matters listed.  Buyer shall not solicit legal advice from
Dave Schatz.  Buyer understands that, to the extent the common interest doctrine
does not apply to a communication, Buyer may not maintain attorney-client
privilege in communications with Dave Schatz. 3. Parent Travel agent Parent
shall permit the Company and the Company Subsidiaries to continue to have access
to the services of Parent’s travel service, Carson Travel, in the same manner
and to the same extent utilized by the Company and the Company Subsidiaries
immediately prior to the Closing. 30 days following the Closing Date.  

All Liabilities arising out of travel and other services booked by the Company
and Company Subsidiaries (and employees thereof) during the Transition Period
shall be the obligation of Buyer.

 

All fees, expenses and other amounts payable to Carson Travel or its affiliates
in connection with travel and other services booked by the Company and Company
Subsidiaries (and employees thereof) during the Transition Period shall be paid
by Buyer.

 

 

 

 

 

 

4. Parent Linked In Recruiter Corporate Account Parent shall permit the Company
and the Company Subsidiaries to continue to use Parent’s Linked In Recruiter
Corporate Service Account pursuant to the Contract between Linked In Corporate
Solutions and Parent, Contract No. CS67170-1, dated October 31, 2011 (the
“Linked In Contract”), for the Number of Licenses and Job Slots set forth in
Attachment A thereto, a copy of which Attachment A is set forth as Annex I to
this Schedule A. Until 10/31/14 which is the expiration of Parent’s Linked In
Contract

Buyer will be responsible for payment of the Fees applicable to Aclara Software,
Aclara RF and Aclara PLS for Licenses and Job Slots as set forth on Attachment A
to the Linked In Contract and Schedule C hereto for the period from Closing
through 10/31/14 and any additional Licenses or Job Slots purchased or other
Liabilities, fees, expenses or costs arising out of the Company’s or the Company
Subsidiaries’ use of the LinkedIn Contract

 

Buyer will pay for these obligations in accordance with the terms of the Linked
In Contract. Buyer will pay the amounts due directly to Linked In.

 

 

 

 

 

ANNEX I TO SCHEDULE A

 

Attachment A to Linked In Contract – Licenses and Job Slots

(see attached)

 

 

SCHEDULE B

 

BUYER SERVICES

 

 

  Service Provider Function Description of Service to be Provided Duration Cost
for Providing Service Additional Terms of Service Company Payroll

Provide centralized payroll and HRIS processing to Parent and its Affiliates,
including without limitation the functions set forth on Annex I to this Schedule
B (the “Payroll/HRIS Functions”).

 

Train employees of Parent and its Affiliates to perform the Payroll/HRIS
Functions on-site at locations requested by Parent and by use of remote
communication (i.e., phone and other electronic communication).

 

Up to 6 months following the Closing Date Parent shall pay Buyer for each hour
spent by a Buyer or Company employee to provide such Service at a rate equal to
125% of such employee’s hourly-equivalent rate in effect as of the date of the
Agreement, plus reasonable and documented out-of-pocket incidental expenses.

· Without limiting Section 3 of the Agreement, Parent and the Buyer agree that
the aggregate Buyer and Company employee time to be devoted to performing the
Payroll/HRIS Functions and training employees of Parent and its Affiliates to
perform such Payroll/HRIS Functions hereunder shall be materially consistent
with the aggregate amount of Company employee time devoted to such Payroll
Functions/HRIS in the ordinary course of the Parent Business during the 12 month
period prior to the date of this Agreement.

 

· Parent will provide Buyer with the data inputs and information necessary for
Buyer and the Company to perform the Payroll/HRIS Functions, consistent with
past practices. All such information will be used solely for the purposes of
providing the Payroll/HRIS Functions.

 

· Buyer will cause the Company to make any corrective entries or perform other
corrective measures (1) to the extent that errors are identified in the
Company’s performance of the Payroll/HRIS Functions and (2) otherwise at the
direction of Parent.

 

 

B-1

 

 

         

· Buyer shall cause the Company to provide Parent with reports regarding the
Payroll/HRIS Functions and the Company’s performance thereof (1) consistent with
the past practices of the Company and (2) otherwise promptly following the
request of Parent for any such report.

 

· Buyer shall cause the Company to retain an original or copy of all records
created in connection with its performance of the Payroll/HRIS Functions for a
period of six months following the expiration of the Transition Period and shall
deliver such records to Parent upon Parent’s request and in any event not later
than six months following the expiration of the Transition Period.

 

· The following shall constitute “Recipient Owned Items” in connection with the
Payroll Functions: (1) all procedural manuals and disks relating to the
Payroll/HRIS Functions; (2) hard copy files relating to the Payroll/HRIS
Functions, including without limitation payroll registers and related
information.

 

· As soon as practicable following the Closing, Buyer shall, or shall cause the
Company to, promptly deliver to Parent (or to a location designated by Parent)
all historical payroll and HRIS records in its possession to the extent relating
to any employees of Parent or its Affiliates (to avoid doubt, other than the
Company and the Company Subsidiaries).

 

 

B-2

 

Annex I to Schedule B – Payroll/HRIS Functions

 

Payroll/HRIS responsibilities including but not limited to the following areas
of responsibility:

 

1.Processing Per Pay Period (HRIS)

 

·Enter Changes/Additions (as needed):

 

oSalary

 

oAddress

 

oDepartment

 

oPosition

 

oManager

 

oNew Hire

 

oTerminations

 

oDeductions

 

§Medical

 

§Dental

 

§Vision

 

§Flex Spending

 

oRun Benefit Recalculation for all benefits

 

oRun Benefit to Deduction Interface for all benefits and verify results for any
changes occurring in that pay period.

 

2.Processing Per Pay Period (PAYROLL)

 

·Enter ESIP Changes off Media Out Report

 

·Verify Changes/Additions (as needed):

 

oSalary

 

oAddress

 

oDepartment

 

oPosition

 

oManager

 

oNew Hire

 

oTerminations

 

oDeductions

 

§Medical

 

§Dental

 

§Vision

 

§ESIP (remember to enter Company Match)

 

·3%, 3.5% or 4%

 

·Do not enter anything over 4%

 

§ESPP (remember to enter Company Match)

 

·.20, .40, .60, .80, 1.00, 1.20, 1.40, 1.60, 1.80, 2.00

 

·Do not enter anything over 2.00

 

§Foundation

 

 

B-3

 

 

 

·Enter Auto Allowances (First Payroll of Month ONLY):

 

oXpress Check

 

oRemove Additional Federal and/or State Tax Dollar Amounts

 

oCalculate

 

oConvert to Additional Check

 

oSave

 

·Executive ESIP Spreadsheet

 

oValidate and enter changes per spreadsheet

 

·Verify Retiree’s

 

oCycle Data Batch – Retain Data Each Pay Period

 

·Complete Cycle Data Batch

 

oEnter Timesheets

 

§Sort Alphabetically (preference)

 

§Enter “REVISED” timecards first (preference)

 

§Enter Current Timecards

 

§Verify and Total Each Timecard

 

·Cycle Data Changes

 

oEnter Cycle Data Changes – Adjustments etc…

 

§If entering a deduction for an Exempt Employee make sure to enter hours on the
hours tab otherwise the employee will NOT get paid.

 

§Retro Pay is Entered here as Earnings (no hours)

 

·Close Cycle Data Batch

 

oBatch is Complete

 

§Retain Batch – No Data (General Batch)

 

§Retain Batch – With Data (Retiree Batch)

 

·Check Entry

 

oXpress Checks

 

§Used for Auto Allowance

 

§Used for On Demand Checks

 

§Used for Bonus Check (not entered into Cycle Data)

 

·Converted to Additional Checks for Processing

 

oManual Checks

 

§Used for Recording Adjustments

 

oAdditional Checks

 

§Xpress Checks are Generally used for Calculation and then converted

 

oVoid Checks

 

§Long Voids are used to void line by line

 

·Or to void checks over three pay periods old.

 

§Auto Voids are used to void checks written within the last three periods

 

·Prepare Process

 

oMake sure batches are marked as Complete or Prepare will error out.

 

oAlways Generate Transaction Report

 

oAlways Generate a Trace File

 

·View/Print Sequence Transaction Report

 

oValidate all changes against this report after prepare process is complete

 

 

B-4

 

 

·Trial Payroll – Ceridian Solutions

 

oTrial Register

 

§Trial Register without Totals

 

·Verify All Changes from Sequence Trans Report are Processed

 

§Grand Totals

 

oTrial Audit Reports

 

§Edit Exceptions

 

§Wage & Tax Statements

 

§Company Processing Message

 

§Deduction Changes

 

§Deductions Not Taken

 

§Earnings

 

§EFT Changes

 

§Employee Change Report

 

§Employees NOT Paid

 

§Employee Processing Message

 

§Min/Max Checks

 

§Zero Dollar Checks

 

§ANY Additional Reports NOT Listed

 

oTrial Payroll Control

 

§Submit Payroll For Processing

 

oTrial Payroll Results

 

§Verity Payroll Was Successfully Submitted

 

oTrial Audit Reports

 

§View Each Report Each Pay Period

 

·Ceridian Business Intelligence – Ceridian Solutions

 

oView Final Payroll (Post Processing)

 

§Payroll Exceptions

 

§Funds Transfer

 

§Check Recon

 

§Employers Quarterly

 

§Adjustment Audit

 

§Wage & Tax – Main

 

§Wage & Tax – Local

 

§Payroll Register w/Totals (Final Pay Register)

 

§Accounting Totals

 

§Company Tax Info

 

§Deduction Profile

 

§Address Proof List

 

§W2 Exception

 

§W2 Management

 

§Personal Time Off/Vacation 175

 

§Personal Time Off Tables

 

§Individual Deduction Register

 

§Payroll News Bulletin

 

§Hours/Earnings Table

 

§Control Transmittal

 

§Deduction Calculation Base

 

 

B-5

 

 

·Ceridian Business Intelligence – Ceridian Solutions – CONTINUED FROM ABOVE

 

oView Final Payroll (Post Processing) – CONTINUED FROM ABOVE

 

§Final Employee Edit

 

§FIT Calculation Audit

 

§Database Report Used

 

§Vanguard 401k

 

§Vanguard CTC

 

§ANY Additional Reports NOT Listed

 

·Begin New Process

 

oBegin New

 

oReceive List

 

oReceive ALL

 

oTranslate

 

·Verify Checks

 

oGo To a Couple Employees and Verity Deposit/Checks for Check Date

 

oDouble Checks, Additional, Xpress and Voids (if any)

 

·Print IDR’s

 

oESIPB, ESIPM, ESIPS, ESIPA & ESIPM

 

oMedical & Dependent Care

 

oESPP & STOCK

 

oEMLIF, CHLIF & SPLIF

 

oMOST

 

oGVULS & CVPRM

 

·Payroll Vouchers

 

·Must make 3 copies

 

o1 copy must be on canary colored paper (paper clipped upper left hand corner)

 

o1 copy on plain white paper (stapled upper left hand corner)

 

o1 copy for the person processing payroll (put with payroll records)

 

·Carleton Counseling (optional life) Payment Authorization (check payment)

 

·MOST – Missouri 529 Savings Plan Trust (check payment)

 

·Metropolitan Life Insurance Company –

 

oACH Authorization

 

oPayment Authorization

 

§Submit File to Metropolitan Life Insurance via E-mail

 

·Vanguard Funding –

 

oACH Authorization

 

oPayment Authorization

 

oSubmit Payroll Totals on the Bridge

 

oBalance and forward SFF file to Vanguard following every payroll

 

oBalance Contributions (Pre-Tax, Pre-Tax Catch Up, Post Tax), Match, and Loan
Repayments

 

oPrepare Mistake of Fact (if required)

 

·Vanguard Termination File

 

oComplete Vanguard Termination File ESCO

 

§Must have Employee Full Legal Name

 

§Must have Employee Social Security Number (verify)

 

§Termination Date YYYYMMDD

 

§Termination Reason CODE 35

 

§Submit to ESCO via the Vanguard Bridge

 

B-6

 

 

·CBIZ

 

oSubmit File via CBIZ Bridge

 

oE-mail Control Totals ESCO

 

·Send Payroll to ESCO Overnight Priority FedEx

 

oChecks/Vouchers

 

oPayroll Register

 

oALL Paper Reports

 

oOne Copy of Payroll CDROM

 

oVouchers (two copies)

 

§One with Payment Authorization on Canary Yellow Paper (paper clipped)

 

§One on plain white paper (Stapled in upper left hand corner)

 

3.Additional Monthly Payroll Processing (usually after second payroll of the
month)

 

·ESCO Foundation

 

oProcess the ESCO Foundation

 

oSubmit File to ESCO

 

·ESPP

 

oValidate and verity totals match cannot exceed 20% of Contribution

 

oSubmit File and E-mail RTCO & Copy ESCO

 

·ESPP Booking Breakdown – Complete and submit to ESCO

 

4.Process merit increases and retro calculations

 

·(non PCP/ICP review dates are on service date)

 

·HRIS Analyst enters information into Ceridian

 

·Payroll Administrator verifies new information and calculates retro

 

Additional Duties for Payroll Processing (as needed, not generally every pay
period):

 

5.Process PCP/ICP bonus payroll

 

·HRIS Analyst enters information into Ceridian

 

·Payroll Administrator enters payment information and taxes based on the PCP
Form returned to payroll by ESCO

 

6.Process stock option exercises and submit timely tax remittances (payroll)

 

7.Process performance shares and submit timely tax remittances (payroll)

 

8.Non-Discrimination File (payroll):

 

·Prepare Non Discrimination File and Reconciliation

 

·Prepare Wage and Tax Summaries at yearend (PCP participants)

 

9.Medical Spending/Dependent Care (CBIZ):

 

·Process annual enrollments, changes and track limits (HRIS Analyst)

 

·Prepare data file/information for non discrimination file (Payroll
Administrator)

 

10.Yearend Activity:

 

·Process Yearend Activity (including but not limited to) – (payroll)

 

oCountry Club

 

oFinancial Planning

 

oGross Up

 

oISO (Incentive Stock Options)

 

·Setup New Payroll Processing Schedule (due in October for following Year)
(payroll)

 

·Process W2 Set Up (including See MyW2) (payroll)

 

·Update AD&D, LTD and Life Insurance base amounts with new CenterPoints (HRIS)

 

·Update Pay Grade Schedules(HRIS)

 

·Update Voluntary Life Rates(HRIS)

 

B-7

 

 

 

11.Fiscal Year End Activities (HRIS):

 

·Set up new benefit plan year

 

·Set up rate tables

 

·Process open enrollment changes (HRIS) and withhold the correct bi-weekly
premiums (payroll)

 

oMedical

 

oDental

 

oVision

 

oSpousal Surcharge

 

oWellness Surcharge

 

12.Tax Filing: (payroll)

 

·Responsible for All Tax Filings (FIT, SIT, FUTA, SUTA, LOCAL, Social Security,
Medicare, etc.)

 

·Timely Tax Remittances via PIN # 3803 established with the IRS for Performance
Shares, Stock Options, etc. and Notify Ceridian to Take Credit on the Next
Payroll Processing

 

·Respond to Tax Notices

 

·Verify that Federal Tax Deposits are Actually being made timely

 

13.Monthly Accounting Reconciliation: (payroll)

 

·Provide monthly accounting totals report to finance

 

·Provide assistance to reconcile differences

 

14.Special reports and data requests as needed for the tax department, proxy,
280G calculations, auditors, etc. (HRIS and Payroll share depending on what is
needed)

 

15.Maintain job titles, grades, salaries, review dates, etc. (HRIS)

 

16.FMLA tracking

 

·Track FMLA Hours in Cycle Data

 

·Track FMLA Pay According to ESCO Policy

 

17.Prepare and submit census information for life, AD&D, LTD (Principal),
optional life (Carleton Counseling), MetLife Insurance (HRIS)

 

·Prepare and submit monthly reports/reconciliations

 

·MetLife Open enrollment/updates

 

B-8

 

  

EXHIBIT F

 

GUARANTEE REIMBURSEMENT AGREEMENT

 

GUARANTEE REIMBURSEMENT AGREEMENT (this “Agreement”) dated as of [_______],
2014, by and between ESCO Technologies Holding LLC, a Delaware limited liability
company (“Parent”), ESCO Technologies Inc., a Missouri corporation (“ESCO”),
Meter Readings Holding, LLC, a Delaware limited liability company (the “Buyer”)
and Aclara Technologies LLC, an Ohio limited liability company (the “Company”).
Each of Parent, ESCO, Buyer and the Company is referred to herein as a “Party”
and, collectively, the “Parties.”

 

WITNESSETH

 

WHEREAS, Buyer and Parent have entered into a Securities Purchase Agreement
dated March [_____], 2014 (as amended from time to time, the “Purchase
Agreement”), pursuant to which Parent agreed, among other things, to sell and
Buyer agreed to purchase all of the outstanding equity interests of the Company,
as more fully described in the Purchase Agreement;

 

WHEREAS, ESCO has from time to time guaranteed or otherwise supported certain
liabilities and obligations of the Company and/or its predecessors pursuant to
the ESCO Guarantees (as defined herein);

 

WHEREAS, the Parties desire to provide for the prompt reimbursement by the
Company of ESCO for obligations paid by ESCO pursuant to or in connection with
any ESCO Guarantee, and to set forth certain agreements and obligations with
respect to the ESCO Guarantees, on the terms and conditions set forth herein;
and

 

WHEREAS, the execution and delivery of this Agreement by the Parties is a
condition to the obligations of Parent and Buyer to consummate the transactions
contemplated by the Purchase Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the mutual agreements
and covenants hereinafter set forth, the parties hereto agree as follows:

 

Certain Definitions. The following terms used in this Agreement shall have the
meanings set forth below in this Section 1:

 

(a) “Acquiring Person(s)” has the meaning set forth in Section 1(nn).

 

(b) “Affiliate” means, with respect to any Person, any Person which is
controlling, controlled by, or under common control with, directly or indirectly
through any Person, the Person referred to, and, if the Person referred to is a
natural person, any member of such Person’s immediate family. The term “control”
(including, with correlative meaning, the terms “controlling,” “controlled by”
and “under common control with”) as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

 

 

 

 

(c) “Agreement” has the meaning set forth in the preamble.

 

(d) “Assignment and Assumption Agreement” has the meaning set forth in Section
9(b).

 

(e) “Business Day” means any day which is not a Saturday, Sunday or a legal
holiday in the States of New York or Missouri, United States of America.

 

(f) “Business Line” means any of the business lines identified on Schedule 1 to
this Agreement.

 

(g) “Business Line Guaranteed Contract” means a Guaranteed Contract identified
with a particular Business Line as set forth on Schedule 1 to this Agreement.

 

(h) “Buyer” has the meaning set forth in the preamble.

 

(i) “CE Business” has the meaning set forth on Schedule 1.

 

(j) “Company” has the meaning set forth in the preamble.

 

(k) “Contract” means any written or oral contract, agreement, lease, indenture,
mortgage, deed of trust, evidence of indebtedness, binding commitment or
instrument.

 

(l) “Disclosing Party” has the meaning set forth in Section 7(a).

 

(m) “E&O Policy” has the meaning set forth in Section 5.

 

(n) “ESCO” has the meaning set forth in the preamble.

 

(o) “ESCO Guarantee” means any guarantee, indemnity, letter of credit (and any
related contract with the third party issuing the letter of credit), deposit or
other security or contingent obligation in the nature of a financial obligation,
entered into or granted by ESCO or any of its Affiliates (other than the Company
and its Subsidiaries), in each case solely to the extent set forth in a written
contract listed on Schedule 2 to this Agreement, and in relation to or arising
out of any Liabilities, contingent or otherwise, of, or payable or performable
by, the Company (including as a result of the succession or assignment to, or
assumption by, the Company of such Liabilities from any predecessor thereof)
pursuant to, or relating to or arising out of, any Guaranteed Contract (the
“Guaranteed Obligations”).

 

(p) “Escrow Agreement” has the meaning set forth in Section 9(b)(ii).

 

(q) “Escrow Amount” means (i) during the period from the date hereof until the
date that is eighteen months after the date hereof (the “First Release Date”),
an amount equal to Three Million United States Dollars ($3,000,000); (ii) during
the period from the First Release Date until the date that is eighteen months
after the date thereof (the “Second Release Date”), an amount equal to Two
Million United States Dollars ($2,000,000); and (iii) during the period from the
Second Release Date until the date on which ESCO has been fully and
unconditionally released from all Guarantee Obligations in respect of the SoCal
Contract (the “Final Release Date”), an amount equal to One Million United
States Dollars ($1,000,000).

 

2

 

 

(r) “Final Release Date” has the meaning set forth in Section 1(q).

 

(s) “First Release Date” has the meaning set forth in Section 1(q).

 

(t) “Guarantee Demand” has the meaning set forth in Section 2(c).

 

(u) “Guarantee Demand Notice” has the meaning set forth in Section 2(c).

 

(v) “Guarantee Period” means any time at which an ESCO Guarantee is outstanding.

 

(w) “Guaranteed Contract” means a contract set forth on Schedule 3 to this
Agreement, to the extent that there is at such time an outstanding ESCO
Guarantee with respect to such contract.

 

(x) “Guaranteed Obligations” has the meaning set forth in Section 1(o).

 

(y) “Initial Public Offering” means the initial public offering of any equity
interests of the Company or any of its Subsidiaries (or in each case, any
successor thereto) pursuant to a registration statement under the Securities Act
of 1933, as amended (the “Securities Act”), other than a registration relating
to the sale of securities to employees of the Company or a Subsidiary pursuant
to a stock option, stock purchase, or similar plan, or a registration relating
to a transaction pursuant to Rule 145 promulgated under the Securities Act;
provided that such sales and transactions do not, individually or in the
aggregate, involve or represent 10% or more of the Company’s (or any successor
entity’s) outstanding equity securities (measured as of the time of the first
such sale or transaction).

 

(z) “Insurance Carrier” has the meaning set forth in Section 5.

 

(aa) “Lease Contracts” means the Wellesley Lease, the Solon Lease and the
Hawthorne Lease (each as defined on Schedule 3 hereto).

 

(bb) “Liability” means any direct or indirect liabilities, obligations, claims,
losses or damages.

 

(cc) “Licensed Technology and Materials” means all intellectual property
including patents, patent applications, trademarks, servicemarks, copyrighted or
copyrightable materials, know-how, designs, processes, data packages, equipment
specifications, software, hardware, firmware (and, in each case, all source
code, schematics and specifications therefor), trade secrets, confidential or
proprietary information, and other assets owned, licensed or otherwise used by
the Company to the extent required to perform the Company’s obligations pursuant
to any Guaranteed Contract, including without limitation any technology deposit
made pursuant to a source code escrow or similar escrow agreement pursuant to
any such Guaranteed Contract.

 

3

 

 

(dd) “Loss” or “Losses” means each and all of the following items: losses,
liabilities, damages, judgments, fines, costs, penalties, claims (including
third party claims), charges, actions, suits, proceedings, interest, taxes,
diminutions in value (except to the extent of consequential, incidental or
indirect damages), expenses and amounts paid in settlement (including legal,
consulting, accounting and other professional fees and disbursements, and fees
and costs incurred in enforcing rights under this Agreement).

 

(ee) “Original Contract” has the meaning set forth in Section 4.

 

(ff) “Parent” has the meaning set forth in the preamble.

 

(gg) “Party” has the meaning set forth in the preamble.

 

(hh) “Person” means and includes an individual, a partnership, a limited
liability partnership, a joint venture, a corporation, a limited liability
company, a trust, an unincorporated organization, a group and a governmental
authority.

 

(ii) “Prime Rate” shall mean the Prime Rate as published in The Wall Street
Journal, adjusted daily.

 

(jj) “Purchase Agreement” has the meaning set forth in the recitals.

 

(kk) “Quarterly Report” has the meaning set forth in Section 6(a).

 

(ll) “Receiving Party” has the meaning set forth in Section 7(a).

 

(mm) “Reimbursement Obligations” means any amounts paid or incurred by ESCO or
any of its Affiliates to satisfy, perform, fulfill or discharge any Guaranteed
Obligation pursuant to an ESCO Guarantee and all Losses incurred by ESCO or any
of its Affiliates in connection therewith, which Losses shall include, without
limitation, reasonable out-of-pocket costs and expenses incurred by ESCO or any
of its Affiliates (i) to investigate, defend and/or cure any breach of a
Guaranteed Contract or other action or omission by the Company or any Affiliate
thereof that has given rise or resulted in a claim under any ESCO Guarantee in
respect of any Guaranteed Obligation and (ii) in collecting amounts owed by the
Company hereunder.

 

(nn) “Sale Transaction” means, (A) whether in a single transaction or series of
related transactions, whether involving a single Person or multiple Persons (the
“Acquiring Person(s)”), and whether direct or indirect, (i) the Transfer of any
Business Line or any material portion of a Business Line; (ii) any merger,
reorganization, share exchange, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries (whether or not the Company or any of its
Subsidiaries is the Surviving Entity) that results or would result in any
Acquiring Person(s) (or the holders of the capital stock or other equity
interests of such Acquiring Person(s)) (other than Buyer or its Affiliates)
being or becoming the beneficial owner (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of 51% or
more of the Company’s or any Subsidiary’s outstanding equity securities; (iii)
any purchase (whether of outstanding or newly-issued shares) or sale of, or
tender or exchange offer (including a self-tender offer) for, securities of the
Company or any of its Subsidiaries that, if consummated, would result in any
Acquiring Person(s) in a single transaction or series of related transactions
(or the holders of the capital stock of such Acquiring Person(s)) (other than
Buyer or its Affiliates), beneficially owning securities representing (including
upon conversion, exchange or exercise thereof) more than 51% of the equity or
total voting power of the Company, any of its Subsidiaries or the Surviving
Entity in such transaction or (B) an Initial Public Offering.

 

4

 

 

(oo) “Sale Transaction Closing” means the consummation of a Sale Transaction.

 

(pp) “Second Release Date” has the meaning set forth in Section 1(q).

 

(qq) “SoCal Contract” means that certain AMI Equipment, Software and Services
Agreement, #5660021654, effective as of June 1, 2011 among Southern California
Gas Company and Aclara Technologies LLC, as amended by Amendment No. 1 effective
July 31, 2011, Amendment No. 2 effective April 16, 2012, Amendment No. 3
effective June 1, 2012, Amendment No. 4 effective September 24, 2012, Amendment
No. 5 effective as of October 1, 2012 Amendment No. 6 effective November 1,
2012, as Amended and Restated effective as of September 1, 2013, as amended by
Amendment No. 1 effective as of October 1, 2013, as further amended by that
certain letter agreement dated January 15, 2014 and Amendment No. 2 effective as
of [_____] and as anticipated to be restated in a Second Restatement, along with
any future amendments (subject to Section 4 hereof).

 

(rr) “STAR Business” has the meaning set forth on Schedule 1.

 

(ss) “Subsidiary” means, as to any Person, any other Person controlled by such
Person, whether directly or indirectly through one or more intermediaries.

 

(tt) “Surviving Entity” means any Person which holds, owns or is subject to any
assets or liabilities of a Business Line upon or immediately following a Sale
Transaction Closing.

 

(uu) “Transfer” means, whether direct or indirect, any sale, lease, license or
other vesting of ownership interest in (whether by purchase, sale of assets or
equity, merger, reorganization, share exchange, consolidation, business
combination, recapitalization, liquidation or similar transaction). To avoid
doubt, any Transfer of more than 50% of the equity interests of any Person
owning or holding any assets or liabilities shall be deemed to be a Transfer of
such assets or liabilities.

 

(vv) “Triggering Event” means the occurrence of one of the following events: (i)
(A) the Company or any of its Subsidiaries shall have materially breached or be
in material default under any Guaranteed Contract, and in connection therewith
the counterparty to such Guaranteed Contract has made a claim or demand against
ESCO under the applicable ESCO Guarantee, and (B) either (x) such breach or
default is not reasonably capable of cure or (y) the Company is not using
reasonable best efforts to cure such default as promptly as possible or (ii) an
amount is payable by the Company pursuant to Section 2(b) and remains unpaid for
over sixty (60) days.

 

(ww) “TWACS Business” has the meaning set forth on Schedule 1.

 

5

 

 

(xx) “Vendor Contracts” means the Jabil Contract, the Flex STAR Contract and the
Flex TWACS Contract (each as defined on Schedule 3).

 

Performance; Reimbursement of Obligations(a) .

 

(a) During the Guarantee Period, the Company shall perform its obligations under
the Guaranteed Contracts in all material respects in accordance with the terms
thereof.

 

(b) The Company hereby agrees to pay to and reimburse ESCO for any and all
Reimbursement Obligations. Payment and Reimbursement Obligations will be due and
payable by the Company within ten (10) days upon written demand therefor by
ESCO.

 

(c) Upon ESCO’s receipt of any demand or claim by any Person for any payment,
performance or other action under an ESCO Guarantee (a “Guarantee Demand”), ESCO
shall notify the Company and Buyer in writing, and in reasonable detail
(including a copy of all materials received in respect of the Guarantee Demand),
within five (5) Business Days after receipt by ESCO of such notice of such
Guarantee Demand. The notice of the Guarantee Demand to be provided by ESCO to
Buyer and the Company is referred to as a “Guarantee Demand Notice.” In the
event that ESCO learns that a Guarantee Demand has been made by a Person prior
to such Person making a demand or claim against the Company pursuant to the
applicable Guaranteed Contract, prior to taking any other action with respect to
such Guarantee Demand, ESCO will direct such Person to deliver such demand or
claim to the Company. ESCO shall notify the Company and Buyer in writing prior
to making a payment to a Person who has made a Guarantee Demand.

 

(d) To the extent not reasonably likely to adversely affect ESCO’s ability to
timely satisfy its obligations under the applicable ESCO Guarantee, prior to
taking any action for payment or performance under the applicable ESCO
Guarantee, ESCO shall: (i) provide the Company with the reasonable opportunity
to review the Guarantee Demand Notice and to provide comments to ESCO’s proposed
response and to proffer any contractual defenses of the Company to such claims
(which ESCO shall consider in good faith), (ii) keep the Company reasonably
informed of further communications from the Person making the Guarantee Demand
(and provide the Company with copies of any such written communications) and
(iii) consider in good faith any efforts being undertaken by the Company to
remedy the circumstances giving rise to the Guarantee Demand and any dispute of
such payment obligation by the Company in good faith.

 

(e) If a payment obligation has been asserted relating to the Guarantee Demand
and the Company has provided ESCO written notice that it is disputing such
payment obligation in good faith, ESCO shall not make payment in respect of such
Guarantee Demand until the earlier of such time as (i) the Company has notified
ESCO in writing that it is no longer disputing such payment obligation in good
faith, (ii) the Person asserting such payment obligation commenced or caused to
be commenced any formal legal action against ESCO or any of its Affiliates, in
respect of which ESCO has concluded, in ESCO’s reasonable good faith belief,
after consultation with counsel and after consultation with Buyer, that ESCO is
liable for the claimed amount or (iii) ESCO has concluded, in ESCO’s reasonable
good faith belief, after consultation with counsel and after consultation with
Buyer, that the failure to make the payment would obligate ESCO to disclose a
loss contingency in its financial statements with respect to such Guarantee
Demand.

 

6

 

 

(f) Notwithstanding anything herein to the contrary, it is expressly understood
and agreed by the Company and Buyer that (i) any failure by ESCO to provide any
notice or take any action pursuant to this Section 2 will not invalidate or
otherwise reduce the Company’s liability pursuant to Section 2(b) or any other
obligation of Buyer or the Company hereunder, except to the extent the Company
is actually prejudiced by ESCO’s failure to (A) notify Buyer prior to making
payment in respect of a Guarantee Demand or (B) comply with Section 2(e), and
(ii) the obligation of the Company to pay all amounts due hereunder pursuant to
Section 2(b) is a continuing, absolute and unconditional obligation under any
and all circumstances whatsoever and shall remain in full force and effect,
subject to Section 2(g), until the expiration of the Guarantee Period and the
payment of all amounts due hereunder as Reimbursement Amounts, it being the
purpose and intent of this Agreement that the obligation of the Company
hereunder shall not be affected, modified or impaired upon the happening from
time to time of any event, including without limitation any Sale Transaction
Closing. Accordingly, the obligations of the Company to pay all amounts due
hereunder pursuant to Section 2(b) hereof shall not be subject to reduction,
impairment, limitation or termination by reason of any claim or defense or
rescission, termination, cancellation, or recoupment or for any other reason.

 

(g) In the event ESCO or any of its Affiliates is required at any time to return
to the Company or to a trustee, receiver, liquidator, custodian or similar
official any portion of any payment made by the Company, the obligations of the
Company hereunder shall be reinstated to the full extent of the amount of the
payment so returned.

 

(h) Notwithstanding anything herein to the contrary, ESCO shall not be obligated
to provide any report, correspondence or other information under this Section 2
to the extent that it is reasonably likely to result in the loss of ESCO’s
ability to successfully assert a claim of privilege (including attorney-client
or work product privileges) with respect thereto, unless Buyer and the Company
enter into a mutually acceptable (such acceptance not to be unreasonably
withheld) valid joint defense agreement or similar arrangement to preserve such
privilege.

 

CertainCovenants of Buyer, the Company and its Subsidiaries. At any time during
which (i) the Company is in breach of, or default under, any Guaranteed Contract
and a claim relating thereto has been made against ESCO or any of its Affiliates
under the related ESCO Guarantee and remains outstanding or (ii) any obligation
of the Company to pay any amount due hereunder pursuant to Section 2(b) remains
outstanding, then Buyer shall cause the Company and its Subsidiaries not to, and
the Company and its Subsidiaries shall not:

 

(a) declare, pay or set aside for payment any dividend or distribution on, or
return capital in respect of, any capital securities or other equity interests
of the Company or any Subsidiary thereof, whether in cash, capital stock or
other equity interests, property or otherwise;

 

(b) repurchase, redeem, or otherwise acquire for consideration any shares of its
capital stock or other equity interests, whether directly or indirectly, or pay
to or make available any monies for a sinking fund for the redemption of any
such capital stock or other equity interests, in each case excluding repurchases
of capital stock or other equity interests from employees of the Company or its
Subsidiaries upon termination of employment;

 

7

 

 

(c) make any advance, transfer or distribution of funds or assets, or make any
other payment of any kind or nature (including without limitation the repayment
of Indebtedness or pursuant to any Contract), to Buyer or any Affiliate thereof;
provided, that reasonable payments for services rendered by Buyer or its
Affiliates pursuant to the [Sun Consulting Agreement] shall be permitted at any
time; or

 

(d) engage in any transaction that has a substantially similar effect to the
transactions described in any of clause (a), (b), or (c) above.

 

4. Modifications to Guaranteed Contracts. During the Guarantee Period, the
Company shall be permitted to amend, modify, or supplement the terms of any
Guaranteed Contract to the extent necessary to permit the Company or its
Subsidiaries, as applicable, to comply with the terms of the Guaranteed
Contracts in effect as of the date hereof (the “Original Contract”), including
modifying existing products, or services or functions to the extent such
modifications were contemplated by, or are necessary to perform services or
provide products or functions contemplated by, the Original Contract; provided
that the Company shall promptly (and in any event within five Business Days)
provide written notice to ESCO of any such amendment, modification or supplement
(which notice shall include a copy of such amendment, modification or
supplement) to the extent that it could impact obligations of ESCO under an ESCO
Guarantee; and provided, further, that except as provided in, and then only to
the extent permitted by, the preceding sentence, Buyer shall cause the Company
and its Subsidiaries not to, and the Company and its Subsidiaries shall not,
amend, modify, supplement the terms of, or waive any rights under, any
Guaranteed Contract in any manner that would or would be reasonably likely to
increase, expand or extend the nature, duration and/or scope of the ESCO
Guarantee in respect of such Guaranteed Contract or increase, extend or expand
the Guaranteed Obligations subject to such ESCO Guarantee, or require or permit
the Company or its Subsidiaries to provide or perform new or additional
products, services or functions subject to an ESCO Guarantee. In no event shall
ESCO or any of its Affiliates be required to enter into or execute any guarantee
of any Liability or obligation of the Company or any of its Affiliates after the
date hereof. Notwithstanding the foregoing, in no event shall Buyer, the Company
or any Subsidiary of the Company take any action to extend the term of, or to
renew or permit the renewal of, any Vendor Contract or Lease Contract during the
period in which the ESCO Guarantee relating to such Vendor Contract or Lease
Contract remains outstanding.

 

5. Insurance. During the Guarantee Period, the Company shall maintain in effect
an Errors and Omissions (Professional Liability) insurance policy (the “E&O
Policy”) with a carrier having an AM Best rating of A- or better (the “Insurance
Carrier”), in the amount of Twenty Million U.S. Dollars ($20,000,000) with a
deductible or self-retention not in excess of Five Hundred Thousand U.S. Dollars
($500,000) on terms and conditions similar to the National Union Fire Insurance
Company Specialty Risk Protector Forms 101013 (11/09), 101025 (11/09), 101018
(11/09), 101024 (11/09) along with all endorsements for the foregoing held by
ESCO as policy number 01-880-58-38 of April 1, 2013, a copy of which has
previously been provided to Buyer. The Company shall have ESCO named as an
additional insured under the E&O Policy and at each subsequent renewal thereof,
and will promptly following the date hereof, and on an annual basis hereafter,
furnish ESCO with a certificate of insurance from the Insurance Carrier. The
Company shall furnish ESCO with any notice of cancellation, non-renewal or lapse
in the E&O Policy.

 

8

 

 

Information Rights. The information rights set forth in this Section 6 shall
apply during the Guarantee Period.

 

(a) Not later than thirty (30) days following the end of each calendar quarter
during the Guarantee Period, the Company shall provide to ESCO a written status
report describing in reasonable detail the Company’s performance under each
Guaranteed Contract during the preceding calendar quarter, including, to the
extent applicable, progress towards milestones and deliverables under such
Guaranteed Contract (each, a “Quarterly Report”). The Company shall make
available to ESCO personnel of the Company to discuss and respond to any
inquiries of ESCO regarding such Quarterly Report and the information contained
therein upon ESCO’s reasonable request, during normal business hours and in a
manner that does not disrupt the operation of the business of the Company.

 

(b) The Company shall promptly (and in any event within five (5) Business Days)
inform ESCO in writing of any communication or information, whether written or
oral, received by Buyer, the Company or any of its Subsidiaries that provides
notice of, or purports to provide notice of, any material, or alleged material,
breach, default or violation by the Company or any of its Subsidiaries of or
with respect to any Guaranteed Contract, and shall provide ESCO with copies of
any written correspondence in respect of the same.

 

(c) With respect to any notice of breach or default or alleged breach or default
received by Buyer, the Company or any of its Subsidiaries with respect to any
Guaranteed Contract, including any Guarantee Demand Notice delivered by ESCO,
the Company shall promptly (and in any event within ten (10) Business Days of
such receipt) provide to ESCO a written report describing in detail the facts
and circumstances underlying the notice of default or alleged default and
including the Company’s proposed response to the notice of default; a
description of the facts (if any) establishing the absence of a default; and a
description of steps proposed to be taken by the Company to cure such default.
The Company shall (i) make available to ESCO personnel of the Company to discuss
and respond to any inquiries of ESCO regarding such report and the information
contained therein upon ESCO’s reasonable request; and (ii) promptly inform ESCO
of further communications from the Person providing such notice (and provide
ESCO with copies of any such written communications).

 

(d) Notwithstanding anything herein to the contrary, the Company shall not be
obligated to provide any report, correspondence or other information under this
Section 6 to the extent that it is reasonably likely to result in the loss of
the Buyer’s or the Company’s ability to successfully assert a claim of privilege
(including attorney-client or work product privileges) with respect thereto,
unless ESCO enters into a mutually acceptable (such acceptance not to be
unreasonably withheld) valid joint defense agreement or similar arrangement to
preserve such privilege.

 

9

 

 

7.                   Confidentiality.

 

 

                                         (a)                       Each of ESCO
and Parent, on the one hand, and Buyer and the Company, on the other hand,
shall, and shall cause its Affiliates to, maintain in confidence any information
or communications shared or exchanged by Buyer, the Company or any of their
Affiliates, or ESCO, Parent or any of their Affiliates, respectively, with
respect to or in connection with the matters set forth in this Agreement,
including (i) any notices delivered pursuant to Section 2 hereof and any
correspondence in connection therewith or information exchanged with respect
thereto, (ii) any Quarterly Report and the content of any discussions, and any
information exchanged, pursuant to Section 6(a) and (iii) any information or
communications exchanged pursuant to Sections 6(b) and 6(c), and such
information or communications shall not be disclosed or used (except as
contemplated by this Agreement, including in connection with the performance,
satisfaction or fulfillment of any Guaranteed Obligations) by the Person
receiving such information or communications (the “Receiving Party”) or its
Affiliates without the prior written consent of the Person disclosing such
information or communications (the “Disclosing Party”), unless such information
is (x) otherwise publicly available through no breach by the Receiving Party or
its Affiliates of this Section 7(a) or (y) required to be disclosed pursuant to
any law, regulation, order or other legal process applicable to the Receiving
Party or its Affiliates, in which event the Receiving Party shall provide the
Disclosing Party with prompt written notice before such disclosure, sufficient
to enable the Disclosing Party to either seek a protective order, at its
expense, or other appropriate remedy preventing or prohibiting such disclosure
(and the Receiving Party shall reasonably cooperate with the Disclosing Party,
at the Disclosing Party’s expense, in seeking any such protective order or other
appropriate remedy) or to waive compliance with the provisions of this Section
7(a) or both. In the event that such protective order or other appropriate
remedy is not obtained, the Receiving Party shall furnish only that portion of
such information or documentation that has been legally compelled, and shall
exercise its reasonable best efforts to obtain assurances that confidential
treatment will be accorded to such disclosed documents or information.

 

                                            (b)                    The Parties
acknowledge and agree that in the event of any breach of this Section 7, the
harm to the Parties will be irreparable and without adequate remedy at law and
therefore that injunctive relief with respect thereto will be appropriate.

 

8.                  Technology License and Related Rights.

 

                                      (a)  The Company hereby grants to ESCO,
and ESCO hereby accepts, an irrevocable, non-transferable (except as provided
herein), perpetual, non-exclusive and royalty-free right to possess and use the
Licensed Technology and Materials, and to modify, duplicate, and create
derivative works of the source code of the Licensed Technology and Materials,
only in connection with the performance, fulfillment or satisfaction by ESCO of
any Guaranteed Obligation upon and after the occurrence of any Triggering Event.
The license described in the foregoing sentence shall also apply to use of the
Licensed Technology and Materials by any third party vendor engaged by ESCO in
connection with the performance, fulfillment or satisfaction by ESCO of any
Guaranteed Obligations; provided that ESCO shall ensure that such third party
vendor is under obligations of confidentiality with respect to such Licensed
Technology and Materials that are substantially similar to ESCO’s obligations
hereunder.

 

10

 

 

                                      (b)  Effective upon the occurrence of any
Triggering Event and terminating upon the later of (x) the cessation of such
Triggering Event or (y) if ESCO has undertaken efforts to cure the breach or
default giving rise to such Triggering Event, ESCO’s completion of the efforts
it has undertaken, the Parties acknowledge and agree that, in addition to their
other rights:

 

(i)ESCO and its Affiliates shall have the right to (or to permit any third party
vendor engaged by ESCO to) (A) manufacture, have manufactured, assemble, sell,
deliver, import or export the components of any system or product needed to
perform or satisfy the Guaranteed Obligations pursuant to the applicable
Guaranteed Contract to which the Triggering Event relates; (B) use such
components as necessary to perform or satisfy the Guaranteed Obligations; (C)
configure, test, repair, reprogram or install any components of any system or
product manufactured or assembled pursuant to such Guaranteed Contract; and (D)
provide any service required to be provided, or take any other action required
to be taken, by the Company pursuant to such Guaranteed Contract;

 

(ii)ESCO and its Affiliates shall have the right to obtain, and the Company
hereby assigns to ESCO and its Affiliates, all Contracts to which the Company or
any of its Subsidiaries is a party to the extent such Contracts are necessary
for fulfillment of the Guaranteed Obligations under the applicable Guaranteed
Contract to which the Triggering Event relates, including without limitation
manufacturing agreements and supply agreements; and

 

(iii)ESCO and its Affiliates shall have the right to, and the Company hereby
grants to ESCO and its Affiliates the right to hire, or engage as a contractor,
any employee of the Company or any Subsidiary thereof for the purpose of
satisfying the Guaranteed Obligations under the applicable Guaranteed Contract
to which the Triggering Event relates.

 

                                      (c)  The Company shall execute such
additional instruments and take all such further actions as may be necessary to
permit ESCO’s exercise of the rights referred to in this Section 8, including
obtaining such third party consents or approvals as may be necessary in
connection therewith as soon as practicable upon the occurrence of any
Triggering Event. If such consent is not obtained, to the extent that any
attempted assignment or exercise of a right referred to in this Section 8 would
be ineffective, the Company shall continue to use reasonable efforts to obtain
such consent. Until such time as a consent is obtained, the Company shall take
all actions necessary (including the appointment of ESCO as agent in fact for
the Company) to provide the benefits of the applicable right or asset to ESCO
and shall cooperate with ESCO in any arrangement reasonably requested by ESCO to
provide such benefits to ESCO.

 

                                      (d) To avoid doubt, all Losses incurred by
ESCO in connection with its exercise of any the rights set forth in Section 8(b)
are “Reimbursement Obligations” hereunder.

 

11

 

 

9.                  Sale Transactions.

 

                                      (a)  During the Guarantee Period, none of
Buyer, the Company nor any Subsidiary of the Company shall cause, permit or
suffer, any Sale Transaction Closing in which any Affiliate of Buyer is an
Acquiring Person in connection therewith (for purposes of the foregoing,
disregarding the phrase “(other than Buyer or its Affiliates)” each time it
appears in the definition of “Sale Transaction”).

 

                                      (b)  During the Guarantee Period, none of
Buyer, the Company nor any Subsidiary of the Company shall cause, permit or
suffer, any Sale Transaction Closing unless, simultaneously with such Sale
Transaction Closing, all of the conditions set forth in either clause (i) or
clause (ii) of this Section 9(b) have been satisfied in full:

 

                             (i)            ESCO and its Affiliates have been
fully and unconditionally released from all Guaranteed Obligations; or

 

                           (ii)            (A) there shall be no outstanding
amounts payable by the Company pursuant to Section 2(b); (B) if the Sale
Transaction includes the Transfer of the Star Business, (x) Buyer shall have
executed and delivered the escrow agreement in the form attached as Schedule 4
to this Agreement (the “Escrow Agreement”); and (y) Buyer shall have funded or
caused to be funded into the escrow account established pursuant to the Escrow
Agreement an amount in cash equal to the applicable Escrow Amount (as of the
date of such Sale Transaction Closing); and (C) with respect to any Sale
Transaction that is not an Initial Public Offering:

 

(I)to the extent that the Sale Transaction involves the Transfer of assets or
liabilities of any Business Line, the Business Line Guaranteed Contracts of such
Business Line and related Liabilities, including Reimbursement Obligations, must
be included in such Transfer; and

 

(II)the Acquiring Person(s) and any Surviving Entity (to the extent that an
Acquiring Person is not a Surviving Entity) in such Sale Transaction shall have
executed and delivered to ESCO an assignment and assumption agreement in the
form attached as Schedule 5 to this Agreement (the “Assignment and Assumption
Agreement”) pursuant to which such Acquiring Person(s) shall assume all
obligations of Buyer, other than the obligation of the Buyer pursuant to Section
9(b)(ii)(B) to fund the applicable Escrow Amount and enter into the Escrow
Agreement, and the Company, or to the extent that an Acquiring Person is not the
Surviving Entity, the Acquiring Person shall assume all obligations of Buyer,
other than the obligation of the Buyer pursuant to Section 9(b)(ii)(B) to fund
the applicable Escrow Amount and enter into the Escrow Agreement,  and the
Surviving Entity shall assume all obligations of the Company, under this
Agreement arising out of or relating to any Business Line with respect to which
assets or liabilities thereof are being Transferred in connection with such Sale
Transaction, including the applicable Business Line Guaranteed Contracts and the
related Reimbursement Obligations.

 

12

 

 

10.              Additional Representations, Warranties, Covenants and
Acknowledgements.

 

                                (a)        Each Party represents and warrants
that this Agreement has been duly executed and delivered by such Party and
(assuming due authorization, execution and delivery by the other Parties)
constitutes the legal, valid and binding obligation of such Party enforceable
against such Party in accordance with its terms, except that such enforcement
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting or relating to enforcement of creditors’ rights
generally, and (ii) general principles of equity. The execution and delivery of
this Agreement have been duly authorized, approved and ratified by all necessary
corporate or other action on the part of each Party hereto.

 

                                (b)        ESCO and each of its Affiliates shall
be entitled to set off any amounts owed to it by the Company hereunder against
amounts payable by ESCO or any Affiliate thereof to Buyer or any of its
Affiliates pursuant to the Purchase Agreement or any agreement entered into or
delivered in connection therewith. Neither the exercise of nor the failure to
exercise such right of setoff will constitute an election of remedies or limit
ESCO in any manner in the enforcement of any other remedies that may be
available to it.

 

                                (c)        Buyer and each of its Affiliates
shall be entitled to set off any amounts owed to it by ESCO under the Purchase
Agreement or any agreement entered into or delivered in connection therewith
against amounts payable by Buyer or any Affiliate thereof to ESCO or any of its
Affiliates hereunder. Neither the exercise of nor the failure to exercise such
right of setoff will constitute an election of remedies or limit Buyer in any
manner in the enforcement of any other remedies that may be available to it.

 

                                (d)       Buyer hereby acknowledges and agrees
that the provisions of Section 6.10 of the Purchase Agreement shall not apply to
any actions taken by ESCO or any of its Affiliates in connection with ESCO’s
performance under any ESCO Guarantee.

 

                                (e)        Nothing set forth in this Agreement
shall in any way be deemed to restrict any right of ESCO or its Affiliates to
terminate an ESCO Guarantee in accordance with its terms or otherwise obtain a
release from or under such ESCO Guarantee; provided, that such termination or
release would not cause a default by the Company or its Subsidiaries under the
applicable Guaranteed Contract. For the avoidance of doubt, ESCO has no right to
bind Buyer or the Company to any new obligations under any Guaranteed Contract.

 

11.              Miscellaneous.

 

                                      (a)  This Agreement and the various rights
and obligations arising hereunder shall inure to the benefit of and be binding
upon the parties hereto and their successors and permitted assigns. Neither this
Agreement nor any of the rights, interests, or obligations hereunder shall be
transferred, delegated, or assigned by the Parties hereto without the prior
written consent of the other Parties. Other than the obligations set forth under
Section 7, this Agreement shall terminate upon the expiration of the Guarantee
Period and the payment of all amounts due hereunder pursuant to Section 2;
provided that no such termination shall affect any liability of any Party hereto
with respect to any breach of this Agreement occurring prior to termination.

 

13

 

 

                                      (b)  Any provision of this Agreement may
be amended, supplemented or waived if, but only if, such amendment, supplement
or waiver is in writing and is signed, in the case of an amendment or
supplement, by each Party hereto, or in the case of a waiver, by the Party
against whom the waiver is to be effective. No failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.

 

                                      (c)  All Schedules to this Agreement are
incorporated into this Agreement, and in the case of any conflict between the
body of the Agreement and any Schedule to this Agreement, the Schedule shall
govern.

 

                                      (d) This Agreement may be executed
simultaneously in multiple counterparts, and in separate counterparts (including
facsimile and other electronically transmitted counterparts), each of which
shall be deemed an original, but all of which taken together shall constitute
one and the same instrument. Nothing herein shall grant to or create in any
Person not a Party hereto, or any of such Person’s Affiliates, any right to any
benefits hereunder, and no such Person shall be entitled to sue any Party to
this Agreement with respect thereto.

 

                                      (e)  The Parties will execute and deliver
such further instruments and do such further acts and things as may be required
to carry out the intent and purpose of this Agreement.

 

                                      (f)  If any provision hereof shall be held
invalid or unenforceable by any court of competent jurisdiction or as a result
of future legislative action, such holding or action shall be strictly construed
and shall not affect the validity or effect of any other provision hereof, as
long as the remaining provisions, taken together, are sufficient to carry out
the overall intentions of the Parties as evidenced hereby.

 

                                      (g)  This Agreement shall be governed by,
and construed in accordance with, the law of the State of New York applicable to
contracts to be carried out wholly within such State.

 

                                      (h)  All notices, requests, demands, and
other communications required or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given and made upon being
delivered (i) when received by facsimile, receipt confirmed, (ii) by courier
delivery to the Party for whom it is intended, or (iii) five (5) Business Days
after having been deposited in the mail, certified or registered (with receipt
requested) and postage prepaid, addressed at the address shown in this Section
11(h) for, or such other address as may be designated in writing hereafter by,
such Party.

 

14

 

 

If to the Buyer or the Company:

 

c/o Sun Capital Partners Group VI, LLC

 

5200 Town Center Circle, Suite 600

 

Boca Raton, FL 33486

 

Attention: Brian Urbanek, Daniel Florian, Blake Richardson and C. Deryl Couch

 

Facsimile No.: (561) 394-0540

 

With copies to:

 

Morgan, Lewis & Bockius LLP

 

One Oxford Centre

 

Thirty-Second Floor

 

Pittsburgh, PA 15219-6401

 

Attention: Kimberly A. Taylor

 

Telephone: (412) 560-3322

 

Facsimile No.: (412) 560-7001

 

and

 

Morgan, Lewis & Bockius LLP

 

1701 Market Street

 

Philadelphia, PA 19103-2921

 

Attention: David A. Gerson

 

Telephone: (215) 963-5310

 

Facsimile No.: (215) 963-5001

 

15

 

 

If to ESCO or Parent:

 

c/o ESCO Technologies, Inc.

 

9900A Clayton Road

 

Saint Louis, MO 63124-1186

 

Fax: (314) 213-7215

 

Attention: General Counsel

 

With a copy to:

 

Bryan Cave LLP

 

One Metropolitan Square

 

211 North Broadway, Suite 3600

 

St. Louis, Missouri 63102

 

Telephone: (314) 259-2000

 

Fax: (314) 259-2020

 

Attention: Frederick W. Bartelsmeyer

 

                                       (i)   Each of the Parties hereto
irrevocably submits to the exclusive jurisdiction of the commercial division of
the state and federal courts sitting in the Southern District of New York for
the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the Parties agrees to
commence any action, suit or proceeding relating hereto in the federal courts
sitting in the Southern District of New York or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in the
state courts located in the Southern District of New York. Each of the Parties
further agrees that service of any process, summons, notice or document by U.S.
registered mail to such Party’s respective address set forth above shall be
effective service of process for any action, suit or proceeding in New York with
respect to any matters to which it has submitted to jurisdiction in this
Section 11(i). Each of the Parties irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby in the state and
federal courts sitting in the Southern District of New York, and hereby further
irrevocably and unconditionally agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum or to raise any similar defense or objection.

 

[Signature Page Follows]

 

 

16

 

 

 

IN WITNESS WHEREOF, each of the parties has caused this Agreement to be duly
executed as of the day and year first above written.

 

ESCO Technologies Holding LLC

 

By: _________________________________

 

Name: _________________________________

 

Title: _________________________________

 

ESCO Technologies Inc.

 

By: _________________________________

 

Name: _________________________________

 

Title: _________________________________

 

Meter Readings Holding, LLC

 

By: _________________________________

 

Name: _________________________________

 

Title: _________________________________

 

Aclara Technologies LLC

 

By: _________________________________

 

Name: _________________________________

 

Title: _________________________________

 

 

 

 

 

SCHEDULE 1

 

BUSINESS LINES

 

Business Line Description Business Line Guaranteed Contracts (see Schedule 3 for
contract references) STAR Business Means the business of designing, supplying
and supporting for water, gas and electric utilities equipment, systems,
software and services to perform: (1) automatic meter reading or advanced meter
infrastructure functions utilizing RF, cellular or other wireless communication
technologies (e.g. STAR, Metrum Cellular) or (2) meter data management.  In
addition, any software applications provided for operational efficiency purposes
at a utility such as load research and forecasting, complex billing,
distribution asset analysis, revenue assistance, and AMI device management.

SoCal Contract

 

PG&E STAR Contract

 

Solon Lease

 

Hawthorne Lease

 

Flex STAR Contract

 

Jabil Contract

 

TWACS Business Means the business of designing, supplying and supporting for
electric utilities equipment, software and services to perform automatic meter
reading or advance meter infrastructure functions utilizing power line
communication technologies (e.g.  TWACS, eTWACS, TPLC, VLF).

PG&E TWACS Contract

 

PPL TWACS Contract

 

WPS TWACS Contract

 

Idaho Power TWACS Contract

 

Flex TWACS Contract

 

Jabil Contract

 

CE Business Means the business of designing, writing, compiling, configuring,
hosting and otherwise providing software and related services to utilities to
enable them to provide utility customers’ billing presentment, advanced metering
infrastructure (AMI) presentment, energy advising, alerting of customers and
fostering community involvement, in each of electronic delivery (including
mobile mediums) and print formats.

SDG&E Contract

 

Wellesley Lease

 

 

 

 

 

 

SCHEDULE 2

 

ESCO GUARANTEES

 

1.ESCO Guarantee, dated June 1, 2011, assumed and reaffirmed on December 31,
2011, reaffirmed on September 1, 2013, and to be reaffirmed in connection with
the Second Restatement of the SoCal Contract (see Schedule 3 for contract
reference)

 

2.Guaranty, dated January 31, 2006, by ESCO Technologies Inc. in favor of
Pacific Gas and Electric Company guaranteeing certain obligations under the PG&E
STAR Contract (see Schedule 3 for contract reference)

 

3.Guaranty, dated January 31, 2006, by ESCO Technologies Inc. in favor of
Pacific Gas and Electric Company guaranteeing certain obligations under the PG&E
TWACS Contract (see Schedule 3 for contract reference)

 

4.Guaranty and Suretyship, dated January 1, 2002, by ESCO Technologies Inc. in
favor of PPL Electric Utilities Corporation guaranteeing certain obligations
under the PPL TWACS Contract (see Schedule 3 for contract reference)

 

5.ESCO Guarantee, dated July 1, 2011, by ESCO Technologies in favor of San Diego
Gas and Electric Company guaranteeing certain obligations under the SDG&E
Contract (see Schedule 3 for contract reference).

 

6.Guarantee, dated August 2001, by ESCO Technologies Inc. in favor of Wisconsin
Public Service Corporation guaranteeing certain obligations under the WPS TWACS
Contract (see Schedule 3 for contract reference)

 

7.Guaranty, dated February 2, 2004, by ESCO Technologies Inc. in favor of Idaho
Power Company guaranteeing certain obligations under the Idaho Power TWACS
Contract (see Schedule 3 for contract reference)

 

8.Corporate Guarantee, dated October 9, 2006, by ESCO Technologies Inc. in favor
of 16 Laurel Avenue LLC guaranteeing certain obligations under the Wellesley
Lease (see Schedule 3 for contract reference)

 

9.Corporate Guarantee, dated March 26, 2008, by ESCO Technologies Inc. in favor
of 16 Laurel Avenue LLC guaranteeing certain obligations under the Wellesley
Lease (see Schedule 3 for contract reference)

 

10.Lease Guarantee, dated November 10, 2008, by ESCO Technologies Inc. in favor
of Solon, LLC and Arm Holding V, LTD guaranteeing certain obligations under the
Solon Lease (see Schedule 3 for contract reference)

 

 

 

 

11.Air Commercial Real Estate Association Guaranty of Lease, dated November 8,
2011, by ESCO Technologies Inc. in favor of A&R Management and Development
Company, L.P. and Stanley Black and Joyce Black guaranteeing certain obligations
under the Hawthorne Lease (see Schedule 3 for contract reference)

 

12.Guaranty Agreement, dated January 16, 2007, by ESCO Technologies Inc. in
favor of Solectron Corporation guaranteeing certain obligations under the Flex
STAR Contract (see Schedule 3 for contract reference)

 

13.Guaranty Agreement, dated January 16, 2007, by ESCO Technologies Inc. in
favor of Solectron Corporation guaranteeing certain obligations under the Flex
TWACS Contract (see Schedule 3 for contract reference)

 

14.Guaranty Agreement, dated March 10, 2008, by ESCO Technologies Inc. in favor
of Jabil Circuit, Inc. guaranteeing certain obligations under the Jabil Contract
(see Schedule 3 for contract reference)

 

 

 

 

 

SCHEDULE 3

 

GUARANTEED CONTRACTS

 

1.The SoCal Contract.

 

2.AMI System Supply Agreement between Hexagram (now Aclara Technologies LLC) and
Pacific Gas & Electric Company dated November 5, 2003, as amended (the “PG&E
STAR Contract”).

 

3.AMI System Supply Agreement between Distribution Control Systems Inc. and
Pacific Gas & Electric Company dated November 5, 2003, as amended. Aclara
Technologies LLC acquired this agreement (the “PG&E TWACS Contract”).

 

4.Automated Meter Reading System Master Agreement with PPL Electric Utilities
Corporation dated February 1, 2002, as amended (the “PPL TWACS Contract”).

 

5.Agreement for Hosting, Software License and Related Services with San Diego
Gas & Electric Company dated July 1, 2011 (the “SDG&E Contract”)

 

6.Contract with Wisconsin Public Service Corporation dated August 16, 2001, as
amended (the “WPS TWACS Contract”)

 

7.Purchase Agreement dated February 2, 2004 and a Software License Agreement
dated February 2, 2004 each between Distribution Control Systems Inc. and Idaho
Power Company, as amended (the “Idaho Power TWACS Contract”). Aclara
Technologies LLC acquired these agreements.[1]

 

8.Lease Agreement between Aclara Technologies LLC and 16 Laurel Ave. LLC dated
May 23, 2000, as amended (the “Wellesley Lease”).

 

9.Lease Agreement between Aclara Technologies LLC and 3400 Solon Road LLC Arm
Holding V Ltd. dated November 10, 2008 as amended (the “Solon Lease”).

 

10.Lease from A. and R. Management and Development Company, L.P. and Stanley
Black and Joyce Black, individuals dated on or about November 8, 2011 (the
“Hawthorne Lease”).

 

11.Product Supply Agreement/Star between Aclara RF Systems Inc. (now Aclara
Technologies LLC) and Flextronics Corporation f/k/a Solectron dated December 20,
2006, as amended (the “Flex STAR Contract”).

 

12.Product Supply Agreement/TWACS between Aclara Power-Line Systems Inc. and
Flextronics Corporation f/k/a Solectron dated December 20, 2006, as amended (the
“Flex TWACS Contract”).

 

13.Network Procurement Agreement between Aclara Power-Line Systems Inc. (now
Aclara Technologies LLC) Aclara RF Systems, Inc. (now Aclara Technologies LLC)
and Jabil Circuit, Inc. dated September 30, 2005, as amended (the “Jabil
Contract”).

 

 

 

 

SCHEDULE 4

 

FORM OF ESCROW AGREEMENT

 

ESCROW AGREEMENT

 

This Escrow Agreement (this “Escrow Agreement” or this “Agreement”), dated
effective as of [______________] 201[__], is entered into by and among Commerce
Bank, a Missouri Trust Company duly organized and existing under the laws of the
State of Missouri (hereafter called the “Escrow Agent”), ESCO Technologies Inc.,
a Missouri corporation (“ESCO”) and Meter Readings Holding, LLC, a Delaware
limited liability company (“Buyer”). Capitalized terms used herein but not
defined shall have the meanings set forth in the Guarantee Agreement.

 

RECITALS

 

WHEREAS, ESCO, Buyer, ESCO Technologies Holding LLC, a Delaware limited
liability company, and Aclara Technologies LLC, an Ohio limited liability
company (the “Company”) have entered into that certain Guarantee Reimbursement
Agreement dated as of [●], 2014 (the “Guarantee Agreement”), which is attached
hereto as Exhibit A and incorporated by reference, which provides for, among
other things, the reimbursement by the Company of ESCO for obligations paid by
ESCO pursuant to or in connection with any ESCO Guarantee in accordance with the
terms of the Guarantee Agreement;

 

WHEREAS, pursuant to Section 9(b) of the Guarantee Agreement, simultaneously
with any Sale Transaction Closing, if ESCO and its Affiliates have not been
fully and unconditionally released from all Guaranteed Obligations, Buyer has
agreed to enter into this Agreement and to fund or cause to be funded into an
escrow account an amount in cash equal to the Escrow Amount;

 

WHEREAS, the Escrow Agent has agreed to hold the Escrow Assets (hereinafter
defined) and disburse and apply the same in accordance with the Escrow
Agreement.

 

AGREEMENT

 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:

 

1.Definitions.

 

“Authorized Investments” means Goldman Sachs Financial Square Trust Government
Fund, until otherwise directed by Buyer and ESCO.

 

“Escrow Account” means the escrow account created by Section 2 of this
Agreement.

  

“Escrow Assets” or “Assets” means those assets deposited into the Escrow Account
in accordance with Section 3 hereof, the Escrow Earnings and/or any
substitutions or replacements therefor and/or any investments or reinvestments
thereof in accordance with this Agreement.

 

 

 

 

“Escrow Earnings” means all interest and earnings earned from the investment and
reinvestment of the Escrow Assets.

 

“Acquired Business” means [Insert description of proposed Sale Transaction,
including applicable Business Line(s)], which is subject to the proposed Sale
Transaction.

 

2.Creation of the Escrow Account. There is hereby created and established with
the Escrow Agent the Escrow Account, to be held in the custody of the Escrow
Agent in accordance with this Agreement.

 

3.Deposits to the Escrow Account. On the date of any Sale Transaction Closing
that is subject to Section 9(b)(ii) of the Guarantee Agreement, in accordance
with the Guarantee Agreement, Buyer will deposit to the Escrow Account an amount
equal to the Escrow Amount as of the date of such Sale Transaction Closing, in
cash. It is hereby understood and agreed that Escrow Agent is not responsible
for the sufficiency of the amount of deposited assets.

 

4.Ownership and Registration of the Escrow Assets. The Escrow Assets shall be
the property of the Escrow Account and shall be in bearer form or, if
registered, registered in the name of Escrow Agent or its nominee, except as
otherwise provided in Section 5 of this Escrow Agreement.

 

 

5.Tax Ownership and Tax Distributions. ESCO and Buyer agree for all tax purposes
that: Buyer shall be treated as the owner of the Escrow Assets, and all Escrow
Earnings or portion thereof, shall be allocable to Buyer pursuant to Section
468B(g) of the Internal Revenue Code and Proposed Treasury Regulation § 1.468B-8
and reported, as and to the extent required by Law, by the Escrow Agent to the
Internal Revenue Service (“IRS”), or any other taxing authority, on IRS Form
1099 or 1042-S (or other appropriate form) as income earned by the Buyer whether
or not said income has been distributed during such year. As soon as reasonably
practicable following the reporting of such income to the IRS, the Escrow Agent
shall make a distribution to Buyer equal to 38% of the amount of such net income
reported to the IRS. ESCO and Buyer agree that, upon release of cash from the
Escrow Account, a portion of any cash distributed to ESCO shall be treated as
interest in accordance with Section 483 or 1274 of the Code.

 

6.                Disbursement Pursuant to Reimbursement Obligations.

 

(a)If, at any time from time to time during which funds remain in the Escrow
Account, and each of the following conditions is met: (i) ESCO is entitled to
payment of any Reimbursement Obligations pursuant to Section 2(b) of the
Guarantee Agreement in respect of the Acquired Business and (ii) ESCO has made a
demand for reimbursement from the Company (or the Surviving Entity, as
applicable) and the applicable Acquiring Person (collectively, the “Primary
Obligors”) of the applicable Reimbursement Obligations and the time period
within which the Primary Obligors must make such payment pursuant to Section
2(b) of the Guarantee Agreement has lapsed, then in such case ESCO may, at its
election, deliver to the Escrow Agent and Buyer written notice (a “Notice of
Claim”) setting forth the proposed amount to be disbursed from the Escrow
Account in satisfaction of such Reimbursement Obligation (the “Claimed Amount”),
the nature of such Reimbursement Obligation and any calculations thereof,
together with a copy of the demand made upon the Primary Obligors. ESCO’s
delivery of any such calculations and copies shall be subject to Section 2(h)
and Section 7 of the Guarantee Agreement.

 

2

 

 

(b)If the Escrow Agent has not received from Buyer a written objection to the
claim set forth in such Notice of Claim within ten (10) Business Days after the
date on which Buyer receives such Notice of Claim (“Date of Receipt”), then on
the eleventh (11th) Business Day following the Date of Receipt (or if such day
is not a Business Day, then the next succeeding Business Day), the Escrow Agent
shall release to ESCO an amount of Escrow Assets equal to the Claimed Amount. If
Buyer delivers to the Escrow Agent and ESCO a written objection (a “Dispute
Notice”) to the Notice of Claim within ten (10) Business Days following the Date
of Receipt, the Escrow Agent shall continue to hold in escrow the Claimed Amount
stated in such notice until the Escrow Agent receives (A) written instructions
signed by Buyer and ESCO authorizing the release of such portion of the Escrow
Assets as are subject to such Dispute Notice (“Joint Instruction”) or (B) a
final, non-appealable decision or determination of a court of competent
jurisdiction directing the release of the Escrow Assets subject to such Dispute
Notice (“Directive”). ESCO and Buyer shall use their respective reasonable
efforts to resolve all disputes or claims as promptly as possible. In the event
of a dispute or claim that results in a Directive, the non-prevailing party
shall promptly (and within ten (10) calendar days of the issuance of any such
Directive) reimburse the prevailing party in such dispute or claim for all
reasonable out-of-pocket expenses (including reasonable attorneys’ fees)
incurred by the prevailing party in connection therewith. The party presenting
any Directive to the Escrow Agent shall provide to the Escrow Agent a written
statement that such Directive is final, non-appealable and from a court of
competent jurisdiction. Upon receipt of such Joint Instruction or Directive, as
the case may be, the Escrow Agent shall promptly (but in no event later than
five (5) calendar days after such receipt) release to ESCO the portion of the
Escrow Assets subject to the Dispute Notice in accordance with such Joint
Instruction or Directive.

 

(c)The parties acknowledge that ESCO may give multiple Notices of Claim during
the term hereof.

 

(d)If any Dispute Notice includes an objection to only a portion of a Claimed
Amount, the Escrow Agent shall release to ESCO an amount of Escrow Assets equal
to the portion of the Claimed Amount for which there is no objection in
accordance with the time periods specified in Section 6(b).

 

(e)Any Claimed Amount that has not been paid or otherwise resolved pursuant to
Section 6 (whether or not disputed) shall be referred to as an “Unresolved
Claim” for purposes of this Agreement.

 

3

 

 

7.                Disbursement of Escrow Funds; Release; Reimbursement.

 

(a)[Promptly following [_________] [insert date that is eighteen months after
the date of the Guarantee Agreement] (the “First Tranche Release Date”), ESCO
and Buyer shall deliver a Joint Instruction to the Escrow Agent directing the
Escrow Agent to release to Buyer an amount equal to the amount of any remaining
Escrow Assets (including any Escrow Earnings) in excess of Two Million U.S.
Dollars ($2,000,000) plus any Unresolved Claims as of the First Tranche Release
Date (the “First Tranche Release Amount”); provided, that, if the balance of the
Escrow Account, not including the amount of any Unresolved Claims, as of the
First Tranche Release Date is less than Two Million U.S. Dollars ($2,000,000) no
disbursements shall be made pursuant to this Section 7(a). Upon receipt of such
Joint Instruction, the Escrow Agent shall promptly (but in no event later than
five (5) calendar days after such receipt) release the First Tranche Release
Amount to Buyer in accordance with the Joint Instruction.][Delete this paragraph
if Escrow Agreement is entered into after the date that is eighteen months after
the date of the Guarantee Agreement.]

 

(b)Promptly following [_________] [insert date that is eighteen months after the
date of the First Tranche Release Date] (the “Second Tranche Release Date”),
ESCO and Buyer shall deliver a Joint Instruction to the Escrow Agent directing
the Escrow Agent to release to Buyer an amount equal to the amount of any
remaining Escrow Assets (including any Escrow Earnings) in excess of One Million
U.S. Dollars ($1,000,000) plus any Unresolved Claims as of the Second Tranche
Release Date (the “Second Tranche Release Amount”); provided, that, if the
balance of the Escrow Account, not including the amount of any Unresolved
Claims, as of the Second Tranche Release Date is less than One Million U.S.
Dollars ($1,000,000) no disbursements shall be made pursuant to this Section
7(b). Upon receipt of such Joint Instruction, the Escrow Agent shall promptly
(but in no event later than five (5) calendar days after such receipt) release
the Second Tranche Release Amount to Buyer in accordance with the Joint
Instruction. [Delete this paragraph if Escrow Agreement is entered into after
the date that is 36 months after the date of the Guarantee Agreement.]

 

(c)Promptly following the date on which ESCO has been fully and unconditionally
released from all Guaranteed Obligations in respect of the SoCal Contract (the
“Final Release Date”), ESCO and Buyer shall deliver to the Escrow Agent a Joint
Instruction instructing the Escrow Agent to release, and, the Escrow Agent shall
release to Buyer (by wire transfer of immediately available funds) an amount
equal to (i) all remaining Escrow Assets (including any Escrow Earnings) as of
the Final Release Date less (ii) any Unresolved Claims. After the resolution of
all Unresolved Claims, any remaining Escrow Assets shall be released by the
Escrow Agent to Buyer. ESCO and Buyer shall use their respective reasonable
efforts to resolve all disputes or claims as promptly as possible following the
Final Release Date in accordance with Section 6(b). Payment pursuant to this
Section 7(c) shall be made as soon as practicable but in no event later than
five (5) calendar days following the Final Release Date.

 

4

 

 

(d)In the event that recovery is made by ESCO or any of ESCO’s Affiliates from
the Company, any Surviving Entity or any Acquiring Person with respect to any
amount for which ESCO has been paid hereunder from the Escrow Account, ESCO
shall, if prior to the Final Release Date, refund to the Escrow Deposit the
amount of such recovery and, if following the Final Release Date, and then only
to the extent that the amount of such recovery does not exceed the amount of
funds released to Buyer pursuant to Section 7(c), refund the amount of such
recovery to Buyer at an account specified in writing.

 

8.Investment of Escrow Assets. Monies on deposit in the Escrow Account may be
invested and reinvested in Authorized Investments. Written investment
instructions from ESCO and Buyer, if any, shall specify the type and identity of
the Authorized Investments to be purchased and/or sold.

 

9.Fees and Expenses.[2] As further set forth in Exhibit B, the parties hereto
agree that a $[1,500] Acceptance Fee and an annual fee of $[1,500] shall be
payable to the Escrow Agent upon initial funding of the Escrow Account, which
fees shall be paid fifty percent (50%) by Buyer, on the one hand and fifty
percent (50%) by ESCO, on the other hand. Thereafter, an Annual Fee of $[1,500]
shall be payable fifty percent (50%) by Buyer, on the one hand and fifty percent
(50%) by ESCO, on the other hand, to the Escrow Agent on each anniversary of the
date of this Escrow Agreement until this escrow is terminated by distribution of
all remaining Escrow Assets.

 

10.Duties of Escrow Agent.

 

(a)The Escrow Agent shall be liable as a depository only with its duties being
only those specifically provided herein and which are ministerial in nature and
not discretionary. The Escrow Agent shall not be liable for any mistake of fact
or error in judgment, or for any acts or failure to act of any kind taken in
good faith and believed by it to be authorized or within the rights or powers
conferred by this Agreement, except to the extent that such mistake, failure,
action or omission constitutes willful misconduct, bad faith or gross
negligence.

 

(b)The Escrow Agent shall not be responsible for the sufficiency or accuracy of
the form, execution or validity of the documents or items deposited hereunder,
nor for any description of property or other matter noted therein. It shall not
be liable for default by any party hereto because of such party’s failure to
perform, and shall have no responsibility to seek performance by any party; nor
shall it be liable for the outlawing of any rights under any statutes of
limitation in respect to any documents or items deposited. The Escrow Agent
shall not be liable for collection of items until the proceeds of same in actual
cash have been received. The Escrow Agent shall not be liable for interest on
any deposit of money.

 

(c)The Escrow Agent shall not be liable in any respect on account of identity,
authority or rights of persons executing or delivering, or purporting to execute
or delivery, any document or item, and may rely absolutely and be fully
protected in acting upon any item, document or other writing believed by it to
be authentic in performing its duties hereunder. The Escrow Agent may, as a
condition to the disbursement of money or property, require from the payee or
recipient a receipt therefor, and, upon final payment or distribution, require a
release from any liability arising out of its execution or performance of this
Agreement.

 

 

2 Note to Draft: To be updated with then-current fees of Escrow Agent.

 

5

 

 

(d)The Escrow Agent shall be indemnified and held harmless by the parties to
this Agreement from and against all costs, damages, liabilities and expenses
which the Escrow Agent may incur or sustain without willful misconduct, bad
faith or gross negligence in connection with or arising out of this Escrow
Agreement, including, but not limited to, any reasonable and necessary costs,
damages, liabilities and expenses that may be incurred as a result of claims or
actions by third parties. Fifty percent (50%) of any such indemnification
obligation is to be borne by Buyer, on the one hand, and fifty percent (50%) by
ESCO, on the other hand. The Escrow Agent shall be entitled to consult with and
engage the services of legal counsel of its choice with respect to any matter
pertaining to this Escrow Agreement and shall be entitled to reimbursement for
the reasonable and necessary costs and expenses of such legal counsel.

 

(e)The Escrow Agent shall be entitled to reasonable compensation and
reimbursement for its services and documented out-of-pocket expenses (the “Agent
Compensation”), which shall be borne fifty percent (50%) by Buyer, on the one
hand and fifty percent (50%) by ESCO, on the other hand. In the event any such
amounts remain unpaid 60 days after billing, then the Escrow Agent shall have
the right to reimburse itself out of any funds in its possession for reasonable
and necessary costs, expenses, attorney’s fees and its compensation, and shall
have a lien on all money, documents or property held in escrow to cover same;
provided, that, to the extent that any unpaid Agent Compensation is so
reimbursed from the Escrow Account, the party originally liable for such Agent
Compensation shall promptly deposit such amount into the Escrow Account, and the
other party shall be entitled to recover from such liable party any costs
incurred to enforce such obligation.

 

(f)The Escrow Agent may resign by giving notice in writing to ESCO and Buyer of
such resignation, specifying a date which such resignation shall take effect
(which shall in no event be earlier than thirty (30) calendar days after the
giving of such notice), and shall be discharged from its duties and obligations
upon the appointment of a successor Escrow Agent as hereafter provided and the
delivery to such successor of the Escrow Assets, less any undisputed fees,
expenses, and charges then due and owing to the Escrow Agent. Immediately upon
receipt of such notice, ESCO and Buyer shall appoint a successor Escrow Agent
who shall be mutually acceptable to them. Any such successor Escrow Agent shall
deliver to ESCO and Buyer and to the resigning Escrow Agent a written instrument
accepting such appointment hereunder, and thereupon it shall succeed to all the
rights and duties of the Escrow Agent hereunder, and shall be entitled to
receive the Escrow Assets. In the event that a successor Escrow Agent shall not
be so appointed by the date of resignation specified by the Escrow Agent, the
Escrow Agent shall have the right to (i) appoint as a successor Escrow Agent any
financial institution having capital, surplus and undivided profits of not less
than $100,000,000 or (ii) apply to a court of competent jurisdiction for the
appointment of a successor Escrow Agent, and the parties hereto agree to accept
any such successor Escrow Agent appointed by the Escrow Agent.

 

6

 

 

(g)In accepting any funds, securities or documents delivered hereunder, it is
agreed and understood that, in the event of disagreement among ESCO and Buyer,
or persons claiming under them, or any of them, the Escrow Agent reserves the
right to hold all money, securities and property in its possession, and all
papers in connection with or concerning this escrow, until receipt of a Joint
Instruction, or until delivery is made to court in any interpleader action.

 

11.Addresses of Parties; Notices. Notices shall be deemed to have been received
on the same day as faxed or submitted by electronic e-mail transmission, the
date of actual delivery by courier, the next day if sent by overnight express
delivery, or on the third business day following posting if sent by first class
mail. Whenever payments, instructions, notices, releases or any other documents
are required to be given by or to the parties hereto, they shall be sent by
email, fax, courier, express delivery or post-paid first class certified mail,
return receipt requested, as follows:

 

Buyer:

 

c/o Sun Capital Partners Group VI, LLC

 

5200 Town Center Circle, Suite 600

 

Boca Raton, FL 33486

 

Attention: Brian Urbanek, Daniel Florian, Blake Richardson and C. Deryl Couch

 

Telephone: (561) 394-0550

 

Facsimile No.: (561) 394-0540

 

Email: burbanek@suncappart.com, dflorian@suncappart.com,
brichardson@suncappart.com, dcouch@suncappart.com

 

with a copies to:

Morgan, Lewis & Bockius LLP

 

One Oxford Centre

 

Thirty-Second Floor

 

Pittsburgh, PA 15219-6401

 

Attention: Kimberly A. Taylor

 

Telephone: (412) 560-3322

 

Facsimile No.: (412) 560-7001

 

Email: ktaylor@morganlewis.com

 

7

 

 

and

 

Morgan, Lewis & Bockius LLP

 

1701 Market Street

 

Philadelphia, PA 19103-2921

 

Attention: David A. Gerson

 

Telephone: (215) 963-5310

 

Facsimile No.: (215) 963-5001

 

Email: dgerson@morganlewis.com

 

ESCO:

ESCO Technologies Inc.
9900A Clayton Road
St. Louis, Missouri 63124-1186
Attention: General Counsel

 

Telephone: (314) 213-7213
Facsimile No.: (314) 213-7215

 

Email: abarclay@escotechnologies.com

 

with a copy to:

Bryan Cave LLP
Attention: Frederick W. Bartelsmeyer
One Metropolitan Square, Suite 3600
211 N. Broadway

 

St. Louis, Missouri 63012
Fax: (314) 259-2020

 

Email: fwbartelsmeyer@bryancave.com

 

Escrow Agent:

 

Commerce Bank

 

Corporate Trust Department, TBMZ-5

 

922 Walnut Street, 10th Floor

 

Kansas City, MO 64106

 

Attn: Lois Agrusa

 

Telephone: (816) 234-7454

 

Facsimile No.: (816) 234-2562

 

Email: Lois.Agrusa@CommerceBank.com

 

12.Successors and Assigns. All of the covenants, promises, and agreements
contained in this Escrow Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns, whether so expressed or not. Except as set forth below, neither this
Agreement nor the obligations of any party hereunder shall be assignable or
transferable by such party without the prior written consent of the other
parties hereto; provided that nothing contained herein shall restrict the
assignment of this Escrow Agreement by the Escrow Agent pursuant to Section
10(f) above.

 

8

 

 

13.Amendment. This Escrow Agreement may be amended or altered at any time by a
writing agreed to by ESCO and Buyer in any form and manner as is acceptable to
Escrow Agent.

 

14.Severability. If any one or more of the covenants or agreements provided in
this Escrow Agreement should be determined by a court of competent jurisdiction
to be contrary to law, such covenant or agreement shall be deemed and construed
to be severable from the remaining covenants and agreements herein contained and
shall in no way affect the validity of the remaining provisions of this Escrow
Agreement.

 

15.Governing Law. This Escrow Agreement shall be governed by the laws of the
State of Missouri, without reference to its choice of law rules.

 

16.Headings. Any headings preceding the text of the several paragraphs hereof
shall be solely for the convenience of reference and shall not constitute a part
of this Escrow Agreement, nor shall they affect its meaning, construction or
effect.

 

17.Counterparts. This Escrow Agreement may be executed in several counterparts
(including via facsimile or pdf attachment to email), all or any of which shall
be regarded for all purposes as one original and shall constitute and be but one
and the same instrument. Any signature delivered via pdf attachment to email or
facsimile shall be considered to have the same binding legal effect as if it
were the original signed version thereof delivered in person.

 

[Signature Page Follows]

 

9

 

 

 

IN WITNESS WHEREOF, this Escrow Agreement is executed as of and from the date
first above written.

 

ESCO TECHNOLOGIES INC.

 

By: ___________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

COMMERCE BANK

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

METER READINGS HOLDING, LLC

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

 

 

 

 

 

 

Exhibit A

 

Guarantee Agreement

 

 

(see attached)

 

[Note: This is Exhibit F to Securities Purchase Agreement, above]

 

 

 

Exhibit B

 

Fee Schedule

 

 

 

SCHEDULE 5

 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

 

ASSIGNMENT AND JOINDER AGREEMENT

 

ASSIGNMENT AND JOINDER AGREEMENT (this “Agreement”), dated as of ___________,
20[__], by and among ESCO Technologies Inc., a Missouri corporation (“ESCO”),
Aclara Technologies LLC, an Ohio limited liability company (the “Company”),
Meter Readings Holdings, LLC, a Delaware limited liability company (the
“Assignor”) and [NAME, ENTITY TYPE] (the “Assignee”) [insert if there is a
Surviving Entity other than the Assignee:][ and [NAME, ENTITY (the “Surviving
Entity”)]. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Guarantee Agreement (as defined below).

 

WHEREAS, ESCO Technologies Holding LLC, a Delaware limited liability company
(“Parent”), ESCO, the Assignee and the Company are parties to that certain
Guarantee Reimbursement Agreement dated as of [_____________], 2014 (the
“Guarantee Agreement”);

 

WHEREAS, the Guarantee Agreement provides for, among other things, the
reimbursement by the Company of ESCO for obligations paid by ESCO pursuant to or
in connection with any ESCO Guarantee, as well as other agreements and
obligations by and among Buyer, Parent, the Company and ESCO;

 

WHEREAS, pursuant to the Guarantee Agreement, unless ESCO and its Affiliates
have been fully and unconditionally released from all Guaranteed Obligations,
prior to any Sale Transaction Closing (with respect to any Sale Transaction that
is not an Initial Public Offering), the Acquiring Person(s) [insert if there is
a Surviving Entity other than the Assignee:][and the Surviving Entity] in such
Sale Transaction must execute and deliver to ESCO this Agreement, among other
requirements;

 

WHEREAS, the Assignee is the Acquiring Person in the proposed Sale Transaction
involving [Insert description of proposed Sale Transaction, including specifying
the Business Line(s) involved in such Sale Transaction (including each such
Business Line, the “Target Business”)] and in connection therewith desires to
acquire and assume Buyer’s [insert if no Surviving Entity:] [and the Company’s]
rights and obligations under the Guarantee Agreement with respect to such Target
Business [insert if there is a Surviving Entity other than the Assignee:][; and

 

WHEREAS, the Surviving Entity is the Surviving Entity in the proposed Sale
Transaction and in connection therewith desires to acquire and assume the
Company’s obligations under the Guarantee Agreement with respect to such Target
Business].

 

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the Assignor, the Assignee [insert if there is a
Surviving Entity other than the Assignee:][, the Surviving Entity], the Company
and ESCO agree as follows:

 

 

 

 

1.[Include bracketed text if there is a Surviving Entity other than the
Assignee]The Assignor, the Assignee [and the Surviving Entity] hereby represent
and warrant to ESCO that upon the Sale Transaction Closing, the Business Line
Guaranteed Contracts of the Target Business and the related Liabilities,
including Reimbursement Obligations, shall have been Transferred to [insert if
no Surviving Entity:][the Assignee] OR: [insert if there is a Surviving Entity
other than the Assignee:][the Surviving Entity].

 

2.[Option A: Use if the Acquiring Person is the Assignee and the Surviving
Entity][Each of the Assignor and the Company, respectively, hereby irrevocably
and unconditionally assigns to the Assignee, and the Assignee hereby irrevocably
and unconditionally assumes from the Assignor and the Company, and agrees to
perform and discharge, all of the Assignor’s and the Company’s rights, duties,
obligations and liabilities under the Guarantee Agreement arising out of or
relating to the Target Business, including the applicable Business Line
Guaranteed Contracts and the related Reimbursement Obligations, but excluding
the obligation of the Assignor pursuant to Section 9(b)(ii)(B) of the Guarantee
Agreement to fund the applicable Escrow Amount and enter into the Escrow
Agreement. Effective as of the date hereof, Assignor is hereby released from all
obligations as the “Buyer” under the Guarantee Agreement with respect to the
Target Business, other than the obligation of the Assignor pursuant to Section
9(b)(ii)(B) of the Guarantee Agreement to fund the applicable Escrow Amount and
enter into the Escrow Agreement.]

 

[Option B: Use if the Acquiring Person is the Assignee and there is a separate
Surviving Entity][The Assignor hereby irrevocably and unconditionally assigns to
the Assignee, and the Assignee hereby irrevocably and unconditionally assumes
from the Assignor, and agrees to perform and discharge, all of the Assignor’s
rights, duties, obligations and liabilities under the Guarantee Agreement
arising out of or relating to the Target Business, other than the obligation of
the Assignor pursuant to Section 9(b)(ii)(B) of the Guarantee Agreement to fund
the applicable Escrow Amount and enter into the Escrow Agreement. The Company
hereby irrevocably and unconditionally assigns to the Surviving Entity, and the
Surviving Entity hereby irrevocably and unconditionally assumes from the
Company, and agrees to perform and discharge, all of the Company’s rights,
duties, obligations and liabilities under the Guarantee Agreement arising out of
or relating to the Target Business, including the Business Line Guaranteed
Contracts of such Target Business and the related Reimbursement Obligations.
Effective as of the date hereof, Assignor is hereby released from all
obligations as the “Buyer” under the Guarantee Agreement with respect to the
Target Business, other than the obligation of the Assignor pursuant to Section
9(b)(ii)(B) of the Guarantee Agreement to fund the applicable Escrow Amount and
enter into the Escrow Agreement.]

 

3.[Include bracketed text if there is a Surviving Entity other than the
Assignee] Effective as of the date hereof, [each of] the Assignee [and the
Surviving Entity] hereby agrees to become a party to, be bound by, and to comply
with the covenants, terms and conditions of, the Guarantee Agreement with
respect to the Target Business in the same manner as if such Person were an
original signatory to the Guarantee Agreement ([in the case of the Assignee,] as
“Buyer” as defined in the Guarantee Agreement (excluding the obligation of the
“Buyer” pursuant to Section 9(b)(ii)(B) of the Guarantee Agreement to fund the
applicable Escrow Amount and enter into the Escrow Agreement) and [in the case
of the Surviving Entity,] as the “Company” as defined in the Guarantee
Agreement), in each case to the extent necessary to effect the assignments and
assumptions described herein.

 

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4.Each party hereto represents and warrants that this Agreement has been duly
executed and delivered by such party and (assuming due authorization, execution
and delivery by the other parties) constitutes the legal, valid and binding
obligation of such party enforceable against such party in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors’ rights generally, and (ii) general
principles of equity. The execution and delivery of this Agreement have been
duly authorized, approved and ratified by all necessary corporate or other
action on the part of each party hereto.

 

5.Each party hereto promises to deliver upon request of the other party all such
additional assignments, assumptions and other documents which may be reasonably
necessary to accomplish the intent of this Agreement.

 

6.This Agreement may be executed in two or more counterparts (including
facsimile and other electronically submitted counterparts), each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument.

 

7.Any provision of this Agreement may be amended, supplemented or waived if, but
only if, such amendment, supplement or waiver is in writing and is signed, in
the case of an amendment or supplement, by each party hereto, or in the case of
a waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.

 

8.This Agreement and the various rights and obligations arising hereunder shall
inure to the benefit of and be binding upon the parties hereto and their
successors and permitted assigns. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be transferred, delegated, or assigned
by the parties hereto without the prior written consent of the other parties.

 

9.This Agreement shall be governed by, and construed in accordance with, the law
of the State of New York applicable to contracts to be carried out wholly within
such State.

 

[Signature Page Follows]

 

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IN WITNESS HEREOF, the undersigned have executed and delivered this Assignment
and Joinder Agreement as of the ___ day of _____, 20__.

 

 

METER READINGS HOLDING, LLC

 

By:___________________________

 

Name:

 

Title:

 

[ASSIGNEE]

 

By:___________________________

 

Name:

 

Title:

 

[SURVIVING ENTITY]

 

By:___________________________

 

Name:

 

Title:

 

ACLARA TECHNOLOGIES LLC

 

By:___________________________

 

Name:

 

Title:

 

ESCO TECHNOLOGIES INC.

 

By:___________________________

 

Name:

 

Title:

 

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EXHIBIT G

 

 

WAIVER AND RELEASE AGREEMENT

 

This Waiver and Release Agreement (the “Agreement”) is entered into as of
____________ _____, 2014, by and between ESCO Technologies Holding LLC, a
Delaware limited liability company (“Parent”), Aclara Technologies LLC, an Ohio
limited liability company (the “Company”), Aclara International LLC, a Missouri
limited liability company (the “Missouri Subsidiary”) and Distribution Control
Systems Caribe, Inc., a Puerto Rico corporation (the “Puerto Rico Subsidiary”
and with the Missouri Subsidiary, the “Company Subsidiaries”)) and Meter
Readings Holding, LLC, a Delaware limited liability company (“Buyer” and,
together with the Company and the Company Subsidiaries, the “Releasing
Parties”). Capitalized terms used herein but not defined shall have the meanings
set forth in the Purchase Agreement.

 

RECITALS

 

WHEREAS, Parent and Buyer have entered into that certain Securities Purchase
Agreement dated as of March [●], 2014 (the “Purchase Agreement”), which provides
for the purchase by the Buyer from Parent of all of the issued and outstanding
equity interests of the Company and Company Subsidiaries; and

 

WHEREAS, Section 8.4(e) of the Purchase Agreement requires that a release of the
officers, directors and managers, as applicable, of each of the Company and the
Company Subsidiaries with respect to any Liability or claims related to service
at or prior to their resignation be executed and delivered by Buyer, the Company
and the Company Subsidiaries as a condition precedent to the obligations of
Parent under the Purchase Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the recitals and the covenants,
representations, warranties, conditions and agreement hereinafter expressed, the
parties agree as follows:

 

1. Acknowledgements. Each Releasing Party recognizes that the agreements and
covenants set forth in this Agreement are an essential part of the transactions
contemplated by the Purchase Agreement and that but for the agreement of the
Releasing Parties to comply with the agreements and covenants in this Agreement,
Parent would not enter into the Purchase Agreement.

 

2. Certain Waivers and Releases. Effective upon the Closing, each Releasing
Party, on behalf of itself and its Affiliates and their respective successors
and assigns, hereby irrevocably and unconditionally waives, forever releases and
discharges each of the officers, directors and managers, as applicable, of each
of the Company and the Company Subsidiaries listed on Schedule 1 hereto (the
“Released Individuals”) from any and all Liabilities of any kind or nature
whatsoever, related to each such Released Individual’s service as an officer,
director, manager, fiduciary, attorney, representative or agent of the Company,
the Company’s predecessors or any of the Company Subsidiaries for the period on
and prior to the Closing, in each case whether absolute or contingent,
liquidated or unliquidated, known or unknown, and whether arising under any
agreement or understanding or otherwise at law or equity (collectively, the
“Released Claims”). Each Releasing Party, on behalf of itself and its Affiliates
and their respective successors and assigns, agrees that it shall not seek to
recover any amounts in connection with a Released Claim from the Released
Individuals or Parent or any of its Affiliates and shall not institute any
claim, action or proceeding against the Released Individual or Parent or any of
its Affiliates with respect to the Released Claims. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH RELEASING PARTY waives the benefit of any
provision of APPLICABLE law to the effect that a general release does not extend
to claims which the releasing party did not know or suspect to exist in the
releasing party’s favor at the time of executing the release, which if known by
the releasing party may have affected his or her release of the released
INDIVIDUALS.

 

 

 

 

3. Remedies. If any Releasing Party has breached the covenants set forth in
Section 2 of this Agreement, the Released Individuals will be entitled to seek
the following remedies: (a) any damages, costs, expenses or losses suffered by
such Released Individual with respect to such breach; and (b) injunctive or
equitable relief, without the necessity of posting a bond, to restrain any
breach or threatened breach or otherwise to specifically enforce the provisions
of Section 2 of this Agreement, it being agreed that money damages alone may be
inadequate to compensate the Released Individuals and may be an inadequate
remedy for such breach.

 

4. Waiver of Rights. The rights and remedies of the parties to this Agreement
are cumulative and without prejudice to any other rights or remedies under Law.
Neither the failure nor any delay by any party in exercising any right, power or
privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or
privilege will preclude any other or further exercise of such right, power or
privilege or the exercise of any other right, power or privilege. To the maximum
extent permitted by applicable Law: (a) no claim or right arising out of this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement.

 

5. Notice. Any notice, request, instruction or other document to be given
hereunder shall be in writing and delivered personally or sent by telecopy or
prepaid overnight courier, if to:

 

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Buyer, the Company or any Company Subsidiary:

 

c/o Sun Capital Partners Group VI, LLC

 

5200 Town Center Circle, Suite 600

 

Boca Raton, FL 33486

 

Attention: Brian Urbanek, Daniel Florian, Blake Richardson and C. Deryl Couch

 

Facsimile No.: (561) 394-0540

 

with copies to:

Morgan, Lewis & Bockius LLP

 

One Oxford Centre

 

Thirty-Second Floor

 

Pittsburgh, PA 15219-6401

 

Attention: Kimberly A. Taylor

 

Telephone: (412) 560-3322

 

Facsimile No.: (412) 560-7001

 

and

 

Morgan, Lewis & Bockius LLP

 

1701 Market Street

 

Philadelphia, PA 19103-2921

 

Attention: David A. Gerson

 

Telephone: (215) 963-5310

 

Facsimile No.: (215) 963-5001

 

Parent:

ESCO Technologies Holding LLC

 

c/o ESCO Technologies Inc.
9900A Clayton Road
St. Louis, Missouri 63124-1186
Attention: General Counsel
Fax: (314) 213-7215

 

with a copy to:

Bryan Cave LLP
Attention: Frederick W. Bartelsmeyer
One Metropolitan Square, Suite 3600
211 N. Broadway

 

St. Louis, Missouri 63012
Fax: (314) 259-2020

 

Any notice or other communication transmitted in accordance with this Section 5
shall for all purposes of this Agreement be treated as given or effective, if
personally delivered, upon receipt, or, if sent by courier, upon the earlier of
receipt or the end of the business day following the date of delivery to such
courier, or, if by facsimile or electronic e-mail transmission, upon
transmission and confirmation of receipt.

 

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6. Third Party Beneficiaries; Assignment; Binding Agreement. The Released
Individuals, and such Released Individuals’ successors and assigns, shall be
third party beneficiaries of this Agreement, with full rights to benefit from
and enforce this Agreement and all rights and benefits of the Released
Individuals provided for herein. This Agreement and the rights and obligations
arising hereunder shall inure to the benefit of and be binding upon the parties
hereto and their successors and permitted assigns. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be transferred,
delegated or assigned (by operation of law or otherwise) by any of the parties
without the prior written consent of the other parties hereto. Any assignment or
attempted assignment in violation of this Section 6 shall be void and of no
effect.

 

7. Counterparts. This Agreement may be executed simultaneously in multiple
counterparts, and on separate counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.

 

8. Amendments. No modification, amendment or waiver of any of the provisions of
this Agreement shall be effective unless in writing specifically referring
hereto and signed by the parties hereto.

 

9. Governing Law. This Agreement shall in all respects be construed in
accordance with and governed by the substantive Laws of the State of New York,
without reference to its choice of law rules.

 

10. Submission to Jurisdiction. Each of the parties hereto irrevocably submits
to the exclusive jurisdiction of the courts located in the State of New York for
the purposes of any suit, action or other proceeding arising out of this
Agreement. Each of the parties agrees to commence any action, suit or proceeding
relating hereto in the courts located in the State of New York. Each of the
parties further agrees that service of any process, summons, notice or document
by U.S. registered mail to such party's respective address set forth above shall
be effective service of process for any action, suit or proceeding in the State
of New York with respect to any matters to which it has submitted to
jurisdiction in this Section 10. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in the courts located in the State of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum or to raise any similar defense or
objection.

 

11. Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

 

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12. Severability. If any provision of this Agreement is held to be unenforceable
because of the scope, duration or area of its applicability, the court making
such determination shall have the power to modify such scope, duration or area
or all of them, and such provision shall then be applicable in such modified
form.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have each caused this Agreement to be executed
as of the day, month and year first above written.

 

ESCO TECHNOLOGIES HOLDING LLC

 

By:___________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

METER READINGS HOLDING, LLC

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

ACLARA TECHNOLOGIES LLC

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

ACLARA INTERNATIONAL LLC

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

DISTRIBUTION CONTROL SYSTEMS CARIBE, INC.

 

By: _______________________________________

 

Name: ___________________________________

 

Title: _____________________________________

 

 

[Signature Page to Waiver and Release]

 

 

 

 

 

Schedule 1

 

Released Individuals

 

 

Aclara Technologies LLC   A.S. Barclay Manager, Vice President and Secretary
M.S. Dunger Vice President R.A. Garretson Vice President, Tax G.E. Muenster Vice
President V.L. Richey, Jr. Vice President J.A. Woodson Vice President M.B.
Cooney Assistant Secretary J.D. Fisher Assistant Secretary D.M. Schatz Assistant
Secretary M.M. Weisman Assistant Secretary     Aclara International LLC   G.E.
Muenster Vice President and Treasurer A.S. Barclay Manager, Vice President and
Secretary R.A. Garretson Vice President V.L. Richey, Jr. Vice President J.A.
Woodson Vice President, Federal Tax M.M. Weisman Assistant Secretary    
Distribution Control Systems Caribe, Inc.   V.L. Richey, Jr. Chairman, Director
and President G.E. Muenster Director, Vice President and Treasurer A.S. Barclay
Director, Vice President and Assistant Secretary J.D. Fisher Secretary D.M.
Schatz Director