Exhibit 10.4






Exhibit 10.4




 




STOCK PURCHASE AGREEMENT




among




Lime Energy Co.,




Applied Energy Management, Inc.,




The Sellers Named Herein




And




The Sellers’ Representative




Dated
as of June 11, 2008




 





 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	ARTICLE II TRANSACTIONS AT THE CLOSING
	 	 	7	 
	2.1 Purchase and Sale of the Shares
	 	 	7	 
	2.2 Purchase Price
	 	 	7	 
	2.3 Payments at Closing
	 	 	8	 
	2.4 Restricted Shares
	 	 	8	 
	2.5 Closing
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III EARN-OUT
	 	 	8	 
	3.1 Earn-Out
	 	 	8	 
	3.2 Earn-Out Payment
	 	 	9	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY
	 	 	10	 
	4.1 Organization
	 	 	10	 
	4.2 Authority; Binding Agreements
	 	 	10	 
	4.3 Conflicts; Consents
	 	 	11	 
	4.4 Capitalization; Title to Shares; Subsidiaries
	 	 	11	 
	4.5 Liens
	 	 	12	 
	4.6 Financial Information
	 	 	12	 
	4.7 Undisclosed Liabilities
	 	 	13	 
	4.8 No Change
	 	 	13	 
	4.9 Taxes
	 	 	14	 
	4.10 Intellectual Property
	 	 	16	 
	4.11 Litigation, Etc
	 	 	17	 
	4.12 Employees; Labor Matters
	 	 	17	 
	4.13 Benefit Plans
	 	 	18	 
	4.14 Contracts
	 	 	19	 
	4.15 Real Property
	 	 	20	 
	4.16 Compliance with Laws
	 	 	20	 
	4.17 Insurance
	 	 	21	 
	4.18 Permits
	 	 	21	 
	4.19 Brokers
	 	 	21	 
	4.20 Customer Contracts
	 	 	21	 
	4.21 Customers and Suppliers
	 	 	21	 
	4.22 Accounts Receivable
	 	 	21	 
	4.23 Banking Information
	 	 	22	 
	4.24 Unlawful Payments
	 	 	22	 
	4.25 Affiliate Transactions
	 	 	22	 
	4.26 Accuracy of Information Furnished
	 	 	22	 
	 
	 	 	 	 
	ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	 	 	22	 
	5.1 Authority; Binding Agreements
	 	 	22	 
	5.2 Conflicts, Consents
	 	 	22	 
	5.3 Litigation
	 	 	23	 
	5.4 Title
	 	 	23	 
	5.5 Investment Representations
	 	 	23	 
	5.6 Accuracy of Information Furnished
	 	 	23	 
	5.7 Agreement for Arbitration and Split of Pro Rata Shares
	 	 	24	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	24	 
	6.1 Organization and Power
	 	 	24	 
	6.2 Authority; Binding Agreements
	 	 	24	 
	6.3 Conflicts; Consents
	 	 	24	 
	6.4 Restricted Shares
	 	 	24	 
	6.5 Litigation, Etc
	 	 	24	 
	6.6 Brokers
	 	 	25	 
	 
	 	 	 	 
	ARTICLE VII ADDITIONAL AGREEMENTS AND COVENANTS
	 	 	25	 
	7.1 Expenses
	 	 	25	 
	7.2 Conduct of Business Pending Closing
	 	 	25	 
	7.3 Access and Information
	 	 	26	 
	7.4 Public Announcements
	 	 	26	 
	7.5 Exclusivity
	 	 	26	 
	7.6 Fulfillment of Conditions
	 	 	27	 
	7.7 Covenant Not to Compete by Majority Shareholder
	 	 	27	 
	7.8 Non-Solicitation Covenant by Majority Shareholder
	 	 	27	 
	7.9 Confidential Information
	 	 	27	 
	7.10 Acknowledgments by the Majority Shareholder
	 	 	27	 
	7.11 Seller Release
	 	 	27	 
	7.12 Transfer of Title
	 	 	28	 
	7.13 Interim Financial Statements and Reports
	 	 	28	 
	7.14 Legending of Restricted Shares
	 	 	28	 
	7.15 WARN Act
	 	 	28	 
	7.16 Company 401(k) Plans
	 	 	28	 
	7.17 Release of Debt
	 	 	29	 
	7.18 Parent Company Guarantee
	 	 	29	 
	7.19 Future Bond Requirements
	 	 	29	 
	7.20 Delivery of Additional Agreements
	 	 	30	 
	7.21 Restricted Shares
	 	 	30	 
	7.22 Glick Notes
	 	 	30	 
	 
	 	 	 	 
	ARTICLE VIII CONDITIONS PRECEDENT
	 	 	30	 
	8.1 Conditions to Obligations of Buyer
	 	 	30	 
	8.2 Conditions to Obligations of the Sellers
	 	 	32	 
	 
	 	 	 	 
	ARTICLE IX INDEMNITY
	 	 	32	 
	9.1 Survival
	 	 	32	 
	9.2 Sellers’ Indemnification
	 	 	32	 
	9.3 Buyer’s Indemnification
	 	 	33	 
	9.4 Defense of Claims
	 	 	33	 
	9.5 Adjustment
	 	 	34	 
	9.6 Limitations
	 	 	34	 
	9.7 No Waiver
	 	 	34	 
	9.8 Tax Indemnity
	 	 	34	 
	 
	 	 	 	 
	ARTICLE X TAX MATTERS
	 	 	35	 
	10.1 Allocation of Tax Liability
	 	 	35	 
	10.2 Filing and Payment Responsibility
	 	 	36	 
	10.3 Conduct of Tax Proceedings
	 	 	36	 
	10.4 Cooperation
	 	 	37	 
	10.5 Transfer Taxes
	 	 	37	 
	10.6 Tax Sharing Agreements
	 	 	37	 
	10.7 Closing Date Activities
	 	 	37	 
	 
	 	 	 	 
	ARTICLE XI TERMINATION OF AGREEMENT
	 	 	38	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	11.1 Events of Termination
	 	 	38	 
	11.2 Effect of Termination
	 	 	38	 
	 
	 	 	 	 
	ARTICLE XII SHAREHOLDERS’ REPRESENTATIVE
	 	 	38	 
	12.1 Authorization of the Sellers’ Representative
	 	 	38	 
	12.2 Hold Harmless
	 	 	39	 
	12.3 Removal and Replacement
	 	 	39	 
	12.4 Reliance
	 	 	39	 
	 
	 	 	 	 
	ARTICLE XIII MISCELLANEOUS
	 	 	39	 
	13.1 Entire Agreement
	 	 	39	 
	13.2 Descriptive Headings; Certain Interpretations
	 	 	40	 
	13.3 Notices
	 	 	40	 
	13.4 Counterparts
	 	 	41	 
	13.5 Survival
	 	 	41	 
	13.6 Benefits of Agreement
	 	 	41	 
	13.7 Amendments and Waivers
	 	 	41	 
	13.8 Assignment
	 	 	41	 
	13.9 Enforceability
	 	 	41	 
	13.10 Governing Law; Arbitration, Waiver of Jury Trial
	 	 	41	 
	13.11 Disclosure Schedules
	 	 	43	 







iv









 








STOCK PURCHASE AGREEMENT




     THIS
STOCK PURCHASE AGREEMENT (this “Agreement”) is dated
as of June 11, 2008, by and
among Lime Energy Co., a Delaware corporation (“Buyer”), Applied Energy Management, Inc., a
Massachusetts corporation (the “Company”), and the persons listed as Sellers on the
signature pages hereto (each, a “Seller” and, collectively, the “Sellers”).



     WHEREAS, the Sellers own and will own immediately prior to Closing (as defined below), of
record and beneficially, all of the issued and outstanding capital stock of the Company
(collectively, the “Shares”); and



     WHEREAS, Buyer desires to purchase the Shares from the Sellers in accordance with the terms
and conditions of this Agreement.



     NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and
of the representations, warranties, conditions, agreements and promises contained in this
Agreement, and the execution and delivery of the other documents referred to herein, the parties to
this Agreement agree as follows:



ARTICLE I

DEFINITIONS




     In this Agreement, the following terms have the meanings set forth below, which shall be
equally applicable to both the singular and plural forms. Any agreement referred to below shall
mean such agreement as amended, supplemented and modified from time to time to the extent permitted
by the applicable provisions thereof and by this Agreement.



     “Adjusted EBITDA” means the net income of the Company and its Subsidiaries (or the net
income of any successor business of the Company that would have been otherwise attributable to the
Company) determined in accordance with GAAP, plus, to the extent deducted in determining such net
income, (i) the expense for interest, (ii) income Taxes, (iii) depreciation, (iv) amortization, and
(v) share-based compensation.



     “Adjusted Tax Reserve” means the amount of current Taxes (excluding deferred Taxes),
reduced by amounts not payable by the Sellers under Section 10.2(b) and Section 9.8(a) on account
of the then existing balance (if any) in the Adjusted Tax Reserve.



     “Affiliate” means, when used with reference to a specified Person, (i) any Person that
directly or indirectly controls or is controlled by or is under common control with the specified
Person, (ii) any Person that is an officer, director, general partner, manager or managing member
of the specified Person or of which the specified Person is an officer, director, general partner,
manager or managing member, (iii) any Person that, directly or indirectly, is the beneficial owner
of 10% or more of any class of the outstanding voting securities of the specified Person, and (iv)
such Person’s relatives, including such Person’s spouse or domestic partner (and relatives of such
spouse or domestic partner), parents, siblings and lineal descendants if such Person is an
individual.



     “Applicable Law” means, with respect to any Person, any domestic or foreign, federal,
provincial, state or local statute, law, ordinance, rule, regulation, Order, writ, injunction,
judgment, decree or other requirement of any Governmental Authority applicable to such Person or
any of its Affiliates or any of their respective properties, assets, officers, directors or
employees (in connection with such officer’s, director’s or employee’s activities on behalf of such
Person or any of its Affiliates).



     “Available Cash” means cash and cash equivalents held by the Company at Closing
(including marketable securities and short-term investments), calculated in accordance with GAAP.



1









 





     “Benefit Plans” mean all “employee benefit plans” within the meaning of Section 3(3)
of ERISA, all medical, dental, life insurance, equity, bonus or other incentive compensation,
disability, salary continuation, severance, retention, retirement, pension, deferred compensation,
vacation, sick pay or paid time off plans or policies, and any other plans, agreements (including
employment, consulting and collective bargaining agreements), policies, trust funds or arrangements
(whether written or unwritten, insured or self-insured) (i) established, maintained, sponsored or
contributed to (or with respect to which any obligation to contribute has been undertaken) by the
Company, its Subsidiaries or any ERISA Affiliate on behalf of any employee, officer, director,
shareholder or other service provider of the Company or its Subsidiaries (whether current, former
or retired) or their beneficiaries, or (ii) with respect to which the Company, its Subsidiaries or
any ERISA Affiliate has or has had any obligation on behalf of any such employee, officer,
director, shareholder or other service provider or beneficiary.



     “Business” means the business and operations presently carried on by the Company and
its Subsidiaries.



     “Business Day” means any day other than a Saturday, Sunday or other day on which banks
in Chicago, Illinois are authorized or required by law to be closed.



     “Closing Share Price” is Seven Dollars and 93/100 ($7.93) per share.



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



     “Company’s Knowledge” or similar phrases, means the actual knowledge of Sellers after
due inquiry and investigation.



     “Company Technology” means the all Intellectual Property owned, used, or held for use
by or licensed to, the Company or any of its Subsidiaries in its Business.



     “Competing Business” means any business engaged in energy engineering and consulting
services, energy efficiency services and construction and HVAC services, any business that
produces, sells, distributes or licenses any products or services that are the same as or similar
to any products and services produced, sold, distributed or licensed by the Company or its
Subsidiaries at the time of Closing (or that was under active consideration by the Company or any
of its Subsidiaries at the time of the Closing).



     “Confidential Information” means any information or data not generally known outside
of the Company or the Company Affiliates, for which the Company or a Company Affiliate has invoked
reasonable measures to protect such information or data, and shall include, without limitation, the
Company’s and the Company Affiliates’ data, designs, compilations of information, apparatus,
computer programs, identity of suppliers, identity of customers, customer requirements, cost or
price data, research data, business plans, marketing or sales plans and information, financial
data, salary and wage information, policies and procedures, manufacturing and sales know-how and
any other information that is proprietary to or a trade secret of the Company or any Company
Affiliate, whether or not such information is considered a trade secret within the meaning of
applicable law.



     “Copyrights” means all unregistered copyrights, copyright applications and copyright
registrations and renewals in connection therewith, in both published works and unpublished works,
and all works of authorship, and moral and economic rights of authors and inventors (however
denominated).



     “Distribution Deduction” means the value of all cash dividends and distributions paid
by the Company to its shareholders in the period beginning May 5, 2008 and ending on the Closing.



     “Earn-Out Adjusted EBITDA” means the adjusted EBITDA of the Company and its
Subsidiaries during the Earn-Out Period. In determining the Earn-Out Adjusted EBITDA, the parties
agree that it will be calculated in accordance with the following: (i) revenues and expenses
related to any additional entities or businesses acquired by the Company during the Earn-Out
Period, and charges and costs related thereto, shall be excluded, (ii) gains or losses derived from
any unusual or infrequent, nonrecurring event that would be characterized as “extraordinary” under
GAAP shall be excluded, (iii) gains or losses resulting from the sale or other disposition of
assets not in the



2









 







Ordinary Course of Business shall be excluded, and (iv) gains or losses attributable to
adjustments relating to prior periods shall be excluded.



     “Earn-Out Payment” means the payment amounts determined in accordance with Section
3.1.



     “Earn-Out Period” means the seven-month period beginning on June 1, 2008 and ending
December 31, 2008.



     “Earn-Out Revenue” means the gross revenue of the Company and its Subsidiaries (or the
gross revenue of any successor business of the Company or its Subsidiaries that would have been
otherwise attributable to the Company or its Subsidiaries) for the Earn-Out Period, determined in
accordance with GAAP; provided, however that: (i) revenues and any offsets or charges related to
any additional entities or businesses acquired by the Company or the Buyer or its Affiliates shall
be excluded, (ii) gains or offsets or charges derived from any unusual or infrequent, nonrecurring
event that would be characterized as “extraordinary” under GAAP shall be excluded, (iii) gains
resulting from the sale or other disposition of assets not in the Ordinary Course of Business shall
be excluded, (iv) gains attributable to adjustments relating to prior periods shall be excluded,
and (v) any revenue recognized by Buyer or its Subsidiaries, that is not recognized by the Company
or its Subsidiaries, which is attributable to any business opportunities created by any of the
Company’s employees or officers shall be included.



     “Earn-Out Share Price” is Seven Dollars and 93/100 ($7.93) per share.



     “Employment Agreements” is defined in Section 8.1(i) of this Agreement.



     “Environmental Condition” means any condition or circumstance, including the presence
of Hazardous Substances, whether created by the Company, any of its Subsidiaries or any third
party, at or relating to any property or premises of the Company or any of its Subsidiaries that
did, does or may reasonably be expected to (a) require abatement or correction under an
Environmental Law, (b) give rise to any civil or criminal liability on the part of the Company or
any of its Subsidiaries under an Environmental Law, or (c) create a public or private nuisance.



     “Environmental Law” means all Applicable Laws and Orders relating to pollution or
protection of human health, public safety or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface strata) as they currently
exist, including, without limitation, laws relating to public health and safety, worker health and
safety, emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of hazardous materials, as well as all authorizations, codes, decrees, demands or
demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans
or regulations issued, entered, promulgated or approved thereunder.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any
laws, rules, or regulations related thereto.



     “ERISA Affiliate” means any entity required to be aggregated in a controlled group or
Affiliated service group with the Company for purposes of ERISA or the Code (including under
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA), at any relevant time.



     “Existing Contracts” means all of the Company’s and its Subsidiaries’ contracts,
leases, subleases, licenses, Permits, purchase and sale orders and any other agreements,
commitments or binding arrangements or understandings, whether written or oral, to which the
Company or any of its Subsidiaries is a party, including each amendment, modification, renewal or
extension or other ancillary document pertaining thereto, including, but not limited to, those
contracts set forth on Schedule 4.14(a).



     “GAAP” means, at a given time, United States generally accepted accounting principles.



     “Glick Notes” means (i) that certain Amended and Restated Nonnegotiable Promissory
Note representing the unsecured obligation of the Company to pay Felber/Glick, LLC the principal
amount of Four Hundred Twenty-



3









 







Two Thousand Three Hundred and Ninety Dollars ($422,390) and (ii) that certain Amended and
Restated Commercial Term Promissory Note representing the unsecured obligation of the Company to
pay Felber/Glick, LLC the principal amount of One Million Dollars ($1,000,000).



     “Governmental Authority” means any foreign, United States federal, state, local
provincial or municipal government or any subdivision thereof, any regulatory or administrative
authority, or any agency or commission or any court, tribunal or judicial or arbitral body.



     “Hazardous Substances” means (i) any pollutants, contaminants, toxic or hazardous
gaseous, liquid or solid material or waste that may or could pose a hazard to the environment or
human health or safety and (ii) any regulated substance or waste under any Applicable Laws or
Orders that have been enacted, promulgated or issued by any Governmental Authority concerning
protection of the environment.



     “Income Tax Return” means any Tax Return relating to any federal, state, local or
foreign Tax based on, or measured by reference to, net income.



     “Indebtedness” with respect to any Person means (i) any indebtedness or other
obligation for borrowed money; (ii) any obligation incurred for all or any part of the purchase
price of property or other assets or for the cost of property or other assets constructed or of
improvements thereto, other than accounts payable included in current liabilities and incurred in
respect of property purchased in the Ordinary Course of Business; (iii) the face amount of all
letters of credit issued for the account of such Person; (iv) obligations (whether or not such
Person has assumed or become liable for the payment of such obligation) secured by Liens; (v)
capitalized lease obligations; (vi) unfunded obligations for pension, retirement, severance
benefits for any officer, director or employee of such Person; (vii) unfunded obligations for
deferred compensation for any officer, director or employee of such Person; (viii) all guarantees
and similar obligations of such Person; (ix) all accrued interest, fees and charges in respect of
any indebtedness; (x) all bankers acceptances and overdrafts; and (xi) all interest, prepayment
premiums and penalties, and any other fees, expenses, indemnities and other amounts payable as a
result of the prepayment or discharge of any indebtedness.



     “Independent Auditor” means an auditing firm mutually acceptable to Buyer and Sellers’
Representative; provided that if no agreement can be reached by such persons within ten (10)
Business Days, the Independent Auditor shall be Blackman Kallick, unless Blackman Kallick is
regularly serving as the Company’s auditor at or near the time, in which case the Sellers’
Representative shall have the right to select any independent nationally recognized accounting firm
to be the Independent Auditor.



     “Intellectual Property” means Copyrights, Patents, Trademarks, trade secrets, Internet
domain names, proprietary rights, Technology, franchises, licenses, and other intellectual property
and intellectual property rights on a worldwide basis, any goodwill associated with any of the
foregoing and all copies and tangible embodiments thereof (in whatever form of medium), and
registrations, applications and renewals for any of the foregoing assets, and all claims or causes
of action arising out of or relating to any infringement or misappropriation of any of the
foregoing.



     “Intercompany Income” shall mean the amount of any intercompany charges from the
Company to Lime which are recognized as revenue by the Company under GAAP and which are
attributable to the performance of services by the Company for Lime.



     “Liability” means any direct or indirect indebtedness, liability, claim, loss, damage,
deficiency, cost, expense, fines, penalties, responsibility or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether secured or
unsecured, whether choate or inchoate, whether fixed or unfixed, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due and regardless of when
asserted), including, without limitation, any liability for Taxes.



     “Lien” means any claim, lien (statutory or otherwise), encumbrance, pledge, Liability,
restriction, charge, instrument, license, preference, priority, security agreement, covenant, right
of recovery, option, charge, hypothecation, easement, security interest, interest, right of way,
encroachment, mortgage, deed of trust,



4









 







imperfection of title, prior assignments, Tax (including foreign, federal, state and local
Tax), Order or other encumbrance or charge of any kind or nature whatsoever including, without
limitation (i) any conditional sale or other title retention agreement and any lease having
substantially the same effect as any of the foregoing; (ii) any assignment or deposit arrangement
in the nature of a security device; and (iii) any leasehold interest, license or other right, in
favor of a third party, to use any portion of the Company’s, or any of its Subsidiaries’, assets or
properties, whether secured or unsecured, choate or inchoate, filed or unfiled, scheduled or
unscheduled, noticed or unnoticed, recorded or unrecorded, contingent or non-contingent, material
or non-material, known or unknown.



     “Line of Credit” means that certain Four Million Dollar ($4,000,000) line of credit
under that certain Loan Agreement between the Company and Wachovia Bank, National Association
(“Wachovia”), dated March 6, 2007 and all related Promissory Notes.



     “Majority Shareholder” means Stephen Glick.



     “Material Adverse Change” means any fact, event, circumstance or change affecting the
Company, its Subsidiaries or the Business which individually or in the aggregate when taken
together with one or more other facts, events, circumstances or changes affecting the Company, its
Subsidiaries or the Business is, or could reasonably be expected to be, adverse in any material
respect to (i) the condition (financial or otherwise), business, prospects, revenue, profitability,
assets, Liabilities or results of operations of the Company, its Subsidiaries or the Business or
(ii) the ability of the Sellers or the Company to perform their respective obligations hereunder or
under the other Operative Documents.



     “Operative Documents” means this Agreement, the Employment Agreements, the
Registration Rights Agreement, and the Glick Notes.



     “Order” means any decree, order, injunction, rule, judgment, or consent of or by any
Governmental Authority.



     “Ordinary Course of Business” means the ordinary course of business of the Company and
its Subsidiaries consistent with past custom and practice during the one year period preceding this
Agreement (including with respect to quantity, quality and frequency).



     “Patents” means all patents (including all reissues, divisions, continuations,
continuations-in-part, reexaminations and extensions thereof), patent applications, utility models
and design rights.



     “Permits” means all municipal, state, federal, local and foreign consents, Orders,
filings, franchises, permits, approvals, certificates, licenses, agreements, waivers, quotas, and
authorizations held or used in connection with the Company or its Subsidiaries, or required under
any Applicable Law for the continued operation of the Business other than job permits.



     “Person” means any person, firm, corporation, partnership, joint venture, limited
liability company, association or other entity (governmental or private).



     “Post-Closing Tax Period” means (i) any taxable period beginning after the close of
business on the Business Day immediately preceding the Closing Date and (ii) the portion of any
Straddle Period beginning immediately after the close of business on the Business Day immediately
preceding the Closing Date and ending on the last day of a Straddle Period.



     “Pre-Closing Tax Period” means (i) any taxable period ending at or before the close of
business on the Business Day immediately preceding the Closing Date and (ii) the portion of any
Straddle Period beginning on the first day of such Straddle Period and ending at the close of
business on the Business Day immediately preceding the Closing Date.



5









 





     “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation,
suit or other proceeding (whether civil, criminal, administrative, investigative, or informal)
commenced, brought, conducted, or heard by or before, or otherwise involving, any court or other
Governmental Authority or referee, trustee, arbitrator or mediator.



     “Pro Rata Portion” means, for each Seller, the various percentage(s) for each
Shareholder as calculated in the “Agreement Between Sellers for Arbitration and Pro Rata Splits”
between Sellers dated June 9, 2008 executed and delivered among Sellers previously.



     “Representative” means, with respect to any Person, its attorneys, accountants,
agents, consultants or other representatives.



     “Restricted Shares” means the number of shares of Common Stock of Buyer to be issued
to the Sellers upon the terms and subject to the conditions set forth in this Agreement.



     “SEC Reports” means each Form 10-K, Form 10-Q, Form 8-K, registration statement under
the Securities Act and proxy or information statement, together with any amendments thereto,
required to be filed by Buyer with the SEC since December 31, 2004.



     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



     “Sellers’ Representative” is defined in Section 12.1(a) of this Agreement.



     “Share Transfer” means any transfer, sale, assignment, disposition, pledge,
encumbrance or mortgage of any of the Restricted Shares.



     “Straddle Period” means any taxable period beginning on or before and ending after the
Closing Date.



     “Subsidiary” means, with respect to any Person, any corporation, limited liability
company, partnership, association, or other business entity of which (i) if a corporation, a
majority of the total voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers, or trustees thereof is at the time
owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof or (ii) if a limited liability company,
partnership, association, or other business entity (other than a corporation), a majority of the
partnership or other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination
thereof and for this purpose, a Person or Persons own a majority ownership interest in such a
business entity (other than a corporation) if such Person or Persons shall be allocated a majority
of such business entity’s gains or losses or shall be or control any managing director or general
partner of such business entity (other than a corporation). The term “Subsidiary” shall include
all Subsidiaries of such Subsidiary.



     “Tax” or “Taxes” means (i) any federal, state, local or foreign net or gross
income, gross receipts, turnover, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs, duties, export taxes and
withholdings, exchange control mandatory differentials, mandatory savings, capital stock,
franchise, profits, withholding, social security (or similar), unemployment, supplementary,
retirement system, disability, real property, personal property, sales, use, transfer,
registration, value added, recording, intangible, documentary, goods and services, ad valorem, net
proceeds, net worth, special assessments, workers’ compensation, utility, production, gains,
alternative or add-on minimum, estimated, or other tax of any kind whatsoever, together with any
interest, penalty, or addition thereto payable in connection with such taxes, whether disputed or
not and (ii) any liability of any Person for the payment of amounts of the type described in
clause (i) as a transferee, successor or payable pursuant to a contractual obligation.



     “Tax Arbitrator” means a nationally or regionally recognized accounting firm
reasonably satisfactory to both Buyer and the Sellers’ Representative.



6









 





     “Tax Proceeding” means any audit, action, suit, claim, examination, investigation,
deficiency, assessment or other administrative or judicial proceeding by any Governmental Authority
involving Taxes.



     “Tax Return” means any return, declaration, report, or information return or statement
relating to Taxes, including Tax losses, deductions, credits and the like, including any schedule
or attachment thereto, and including any amendment thereof.



     “Tax Sharing Agreement” means any written or unwritten agreement, indemnity or other
arrangement for the allocation or payment of Tax liabilities or payment for Tax benefits between
the Company or any of its Subsidiaries (including its predecessor) and any Person (other than the
indemnity provided pursuant to this Agreement).



     “Technology” means all ideas, concepts, inventions, discoveries, research information,
test and engineering data, developments, methods, tools, techniques, processes, machinery,
products, models, devices, data, prototypes, improvements, designs, systems, engineering and
product specifications, schematics, drawings, programs, code, databases, algorithms, formulas, mask
works, works of authorship, software, information and know-how, whether or not patentable or
copyrightable, and all related notes, drawings, reports, manuals, notebooks, summaries, memoranda
and other documentation and materials.



     “Trademarks” means all unregistered trademarks, trademark registrations, trademark
applications, unregistered service marks, service mark registrations and service mark applications,
brand names, corporate names, trade names, logos, slogans, trade dress, designs and packaging,
together with all transactions, adaptions, derivations and combinations thereof.



     “Transaction Expenses” means all of the Company’s costs, fees and expenses, including
attorney, investment banker, broker, accountant and other Representative and consultant fees,
incurred in connection with the execution and negotiation of this Agreement and the other Operative
Documents and the consummation of the transactions contemplated hereby and thereby which, in each
case, have not been paid as of the Closing.



ARTICLE II

TRANSACTIONS AT THE CLOSING





     2.1 Purchase and Sale of the Shares. Upon the terms and subject to the conditions
set forth in this Agreement and in reliance upon the representations and warranties contained
herein, at the Closing, each Seller shall sell and deliver to Buyer the Shares owned by such
Seller as set forth on Schedule 4.4(b) and Buyer shall purchase the Shares free and clear
of all Liens, for the Purchase Price determined in accordance with this ARTICLE II. At the
Closing, the Sellers shall convey and deliver to Buyer stock certificates representing all of the
Shares, duly endorsed in blank or accompanied by stock powers duly executed in blank, against
payment of the Purchase Price for the Shares, as provided in Section 2.2.




     2.2 Purchase Price. The aggregate consideration (the “Purchase Price”) to
be paid by Buyer for the Shares is comprised of:




          (a) a cash payment (the “Cash Consideration”) equal to $3,500,000




               (i) minus the Distribution Deductions, if any, and




               (ii) minus the Available Cash, which shall be distributed to the Sellers at Closing;




          (b) the number of Restricted Shares determined by dividing $7,000,000 by the Closing Share
Price; and




          (c) the Earn-Out Payment, if any.



7









 






     2.3 Payments at Closing. At the Closing, the Purchase Price shall be paid or
satisfied as follows: the Buyer shall (A) pay to the Sellers the Cash Consideration by wire
transfer of immediately available funds to such bank accounts designated by the Sellers by
written notice to Buyer prior to Closing in accordance to Section 2.2, and (B) the Restricted
Shares shall be issued and delivered in accordance with Section 2.4. Each Seller shall receive
Cash Consideration in accordance with such Seller’s Pro Rata Portion.




     2.4 Restricted Shares. Upon the terms and subject to the conditions set forth in
this Agreement and in reliance upon the representations and warranties contained herein, at the
Closing, Buyer shall issue the Restricted Shares to the Sellers in accordance their Pro Rata
Portions.




     2.5 Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall take place at the offices of Reed Smith LLP, 10 S. Wacker Dr., Chicago,
Illinois, at 10:00 a.m. on June 11, 2008, or such other date as the parties may mutually agree.
The date on which the Closing actually occurs shall be referred to herein as the “Closing
Date”.



ARTICLE III

EARN-OUT





     3.1 Earn-Out.




          (a) The Earn-Out Payment shall be equal to the sum of (1) the lesser of the (i) Earn-Out
Revenue Payment or (ii) $500,000 in cash plus the number of Restricted Shares determined by
dividing $500,000 by the Earn-Out Share Price and (2) the lesser of (i) the Earn-Out Adjusted
EBITDA Payment or (ii) $500,000 in cash plus the number of Restricted Shares determined by
dividing $500,000 by the Earn-Out Share Price.




          (b) The Earn-Out Revenue Payment and the Earn-Out Adjusted EBITDA Payment shall be calculated
as follows:




               (i) The “Earn-Out Revenue Payment” shall equal the sum of (i) the cash payment that
corresponds to the applicable Earn-Out Revenue range set forth in the first column of the following
table, plus (ii) the corresponding Earn-Out Revenue Share Payment.



	 	 	 	 	 	 	 
	 	 	Earn-Out Revenue Cash	 	Earn-Out Revenue Share
	Earn-Out Revenue	 	Payment	 	Payment
	$22 to $25 million

	 	$	50,000	 	 	a number of Restricted
Shares equal to $50,000
divided by the Earn-Out
Share Price
	 
	 	 	 	 	 	 
	$25 to $28 million

	 	$	150,000	 	 	a number of Restricted
Shares equal to $150,000
divided by the Earn-Out
Share Price
	 
	 	 	 	 	 	 
	$28 to $31 million

	 	$	300,000	 	 	a number of Restricted
Shares equal to $300,000
divided by the Earn-Out
Share Price
	 
	 	 	 	 	 	 
	over $31 million

	 	$	500,000	 	 	a number of Restricted
Shares equal to $500,000
divided by the Earn-Out
Share Price






8









 







               (ii) The “Earn-Out Adjusted EBITDA Payment” shall equal the sum of (i) the cash
payment that corresponds to the applicable Earn-Out EBITDA range set forth in the first column of
the following table, plus (ii) the corresponding Earn-Out EBITDA Share Payment.



	 	 	 	 	 	 	 
	 	 	Earn-Out Adjusted EBITDA	 	Earn-Out Adjusted EBITDA
	Earn-Out Adjusted EBITDA	 	Cash Payment	 	Share Payment
	$1.4 to $1.7 million

	 	$	50,000	 	 	a number of
Restricted Shares
equal to $50,000
divided by the
Earn-Out Share Price
	 
	 	 	 	 	 	 
	$1.7 to $2 million

	 	$	150,000	 	 	a number of
Restricted Shares
equal to $150,000
divided by the
Earn-Out Share Price
	 
	 	 	 	 	 	 
	$2 to $2.2 million

	 	$	300,000	 	 	a number of
Restricted Shares
equal to $300,000
divided by the
Earn-Out Share Price
	 
	 	 	 	 	 	 
	over $2.2 million

	 	$	500,000	 	 	a number of
Restricted Shares
equal to $500,000
divided by the
Earn-Out Share Price







     3.2 Earn-Out Payment.




          (a) As soon as practicable after the end of the Earn-Out Period but in no event later than
thirty (30) days after the completion of the Company’s annual audit, Buyer shall prepare a
schedule (setting out in reasonable detail each of the items comprising such calculation) setting
its determination of the Earn-Out Revenue and the Earn-Out Adjusted EBITDA (the “Earn-Out
Schedule”) and shall deliver the Earn-Out Statement to the Sellers’ Representative.




          (b) Within thirty (30) days of Buyer’s delivery of the Earn-Out Schedule, the Sellers’
Representative may deliver written notice (a “Notice of Objection”) to Buyer of any
objections, specifying the basis therefore, which the Sellers’ Representative may have to the
Earn-Out Schedule. The failure of the Sellers’ Representative to deliver Notice of Objection
within the prescribed time period will constitute the Sellers’ Representative’s acceptance of the
Earn-Out Schedule as determined by Buyer. Upon receipt of the Earn-Out Schedule, the Sellers’
Representative and his accountants will be given reasonable access to inspect and make copies of
the Buyer’s and the Company’s relevant books, records and personnel during reasonable business
hours for the purpose of verifying the Earn-Out Schedule.




          (c) If Buyer and the Sellers’ Representative are unable to resolve any disagreement with
respect to the Earn-Out Schedule within fifteen (15) Business Days following Buyer’s receipt of
the Notice of Objection, then the items in dispute will be referred to the Independent Auditor for
final determination within thirty (30) days. The determination by the Independent Auditor shall
be based solely on presentations by Buyer, on the one hand, and the Sellers’ Representative, on
the other hand, and shall not involve independent review. Any determination by the Independent
Auditor shall be final, binding and non-appealable upon the parties. Each of Buyer on the one
hand, and Sellers, on the other hand, shall bear that percentage of the fees and expenses of the
Independent Auditor equal to the proportion of the dollar value of the unresolved disputed issues
that are determined in favor of the other party.




          (d) Within five (5) Business Days of the final determination of the Earn-Out Schedule, if the
Earn-Out Payment is a positive number, Buyer shall remit cash in amounts equal to the Earn-Out
Payment by wire transfer of immediately available funds to the Sellers’ Representative (for
further distribution by the Sellers’ Representative to the Sellers in accordance their Pro Rata
Portions) and initiate the request and delivery of the stock certificates. The Company’s failure
to meet the minimum thresholds for an Earn-Out Payment and/or and



9









 






Earn-Out Adjusted EBITDA Payment shall not entitle the Buyer to any offset or other form of
payment from the Sellers under this Article III.




          (e) Notwithstanding anything in this Agreement to the contrary, this Agreement shall impose
no restrictions on the operation of the Company’s business after the Closing or on the operations,
business or activities of Buyer after the Closing; provided, however, that Buyer shall not act in
an arbitrary or commercially unreasonable manner in the conduct or operation of the Company’s
business if such action would be reasonably likely to interfere with the achievement of the
earn-out targets set forth in this Article III; provided, further, that the Company may be charged
its allocable share of any corporate overhead and out-of-pocket costs for products or services
purchased, provided or procured by Buyer or its Subsidiaries for the direct benefit of the
Company, to the extent such charges and costs are reasonably allocable to the operation of the
Company during the earn out period and are incurred during the applicable Earn-Out Period, and
further provided, that any such charges and costs shall not include any costs incurred primarily
for the use of Buyer or its Subsidiaries’ personnel. Without limiting the foregoing, following
the Closing, as may be reasonably determined by Buyer, (i) Buyer may operate the Company’s
business under any name, (ii) all financial statements, billing matters, payment of accounts
payables, collections of accounts receivables, bank accounts, credit facilities and other
financial operations or activities of the Company’s business may be consolidated with Buyer, (iii)
the Company’s business may transition to using Buyer’s operational and financial technology, and
in connection with such transition, Buyer shall use its commercially reasonable efforts to ensure
that no material deterioration in the timeliness and accuracy of order processing, job tracking,
billing, collections or the availability of budgeted operating capital results from such
transition, and (iv) Buyer may dissolve or terminate the Company and operate the Company’s
business as a division of Buyer.



ARTICLE IV

REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY




     The Company and each of the Sellers hereby represent and warrant to Buyer, as of the date
hereof and as of the Closing Date, as follows:




     4.1 Organization. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts and has all corporate power
and authority and all necessary governmental approvals to own, lease, and operate its properties
and to carry on its business as it is now being conducted and to enter into this Agreement and
each of the other Operative Documents to which it is a party and to carry out its obligations
hereunder and thereunder. Except as listed in Schedule 4.1(a), neither the Company nor
any of its Subsidiaries requires a foreign qualification to do business in any other
jurisdictions in which it now conducts business. The Company has delivered to Buyer complete and
correct copies of the articles of incorporation and bylaws (or other constitutive documents),
stock ledger and minute books as in effect on the date hereof for the Company and each of its
Subsidiaries. The stock ledgers of the Company and each of its Subsidiaries are complete,
accurate and current and the minute books of the Company and each of its Subsidiaries are
complete, accurate and current in all material respects. Schedule 4.1(b) sets forth the
current officers and directors of the Company and each of its Subsidiaries.




     4.2 Authority; Binding Agreements. The execution and delivery of this Agreement and
the other Operative Documents to which the Company is a party, and the consummation of the
transactions contemplated by this Agreement and the Operative Documents to which the Company is a
party, have been duly and validly authorized by all necessary corporate action on the part of the
Company. The Company has all requisite corporate power and authority to execute and deliver this
Agreement and the other Operative Documents to which it is a party and to consummate the
transactions contemplated by this Agreement and the other Operative Documents to which it is a
party. This Agreement and the other Operative Documents have been, or upon execution and
delivery thereof will be, duly executed and delivered by the Company. This Agreement is, and the
other Operative Documents upon the execution and delivery thereof will be, valid and binding
obligations of the Company, enforceable against the Company in accordance with their respective
terms.



10









 






     4.3 Conflicts; Consents. With respect to this Agreement and the other Operative
Documents to which the Company is party:




          (a) Neither the execution and delivery thereof, the consummation of the transactions
contemplated hereby or thereby, nor compliance by the Company with any provisions thereof will
violate any law, statute, rule, regulation, Order or writ applicable to the Company, any of its
Subsidiaries or any of the Company’s or any of its Subsidiaries’ properties or assets.




          (b) No such agreement will: (i) conflict with, (ii) result in any breach of any of the terms,
conditions or provisions of, (iii) constitute a default (whether with notice or lapse of time, or
both) under, (iv) result in a violation of, (v) give any third party the right to modify,
terminate, cancel or accelerate any obligation under; or (vi) result in the creation or imposition
of any Lien upon any asset of the Company or any of its Subsidiaries under, the provisions of the
articles of incorporation, bylaws or other constitutive documents of the Company or its
Subsidiaries or any note, bond, mortgage, indenture, Existing Contract, agreement, lease, license,
permit, franchise or other instrument to which the Company or any of its Subsidiaries is a party
or by which any asset of the Company or any of its Subsidiaries is bound or affected, or any law,
statute, Order, rule or regulation to which the Company, or any of its Subsidiaries, or any asset
of the Company, or any asset of its Subsidiaries, is subject.




          (c) Except as set forth in Schedule 4.3(c), no consent, authorization or approval by,
or any notification of or filing with any Person, court or administrative or other Governmental
Authority is required in connection with the execution, delivery and performance by the Company or
any Seller of this Agreement or any of the other Operative Documents to which it is a party, or the
consummation of the transactions contemplated hereby and thereby.




     4.4 Capitalization; Title to Shares; Subsidiaries.




          (a) The Company’s authorized capital stock consists solely of 1,495 shares of Common Stock,
no par value per share. As of the date hereof, 1,495 shares of Common Stock are issued and
outstanding. All outstanding shares of Common Stock are and will on the Closing Date be validly
issued, fully paid and non-assessable. The Sellers own, of record and beneficially, all of the
Shares as of the date hereof and will own the same, of record and beneficially, immediately prior
to the Closing.




          (b) Schedule 4.4(b) is a true and complete list as of the date hereof, and as of the
Closing Date, of all issued and outstanding shares of Common Stock and the names and number of
Shares owned by each Seller. Each Seller owns of record and beneficially the number of Shares set
forth next to such Seller’s name on Schedule 4.4(b).




          (c) Except as set forth on Schedule 4.4(c), the Company has not issued any securities
in violation of any preemptive or similar rights. There are no outstanding: (i) securities
convertible into or exchangeable for any shares of capital stock or other securities of the
Company; (ii) subscriptions, options, “phantom” stock rights, warrants, calls, commitments,
preemptive rights or other rights of any kind (absolute, contingent or otherwise) entitling any
party to acquire or otherwise receive from the Company any shares of capital stock or other
securities or receive or exercise any benefits or rights similar to any rights enjoyed by or
inuring to the holder of capital stock of the Company; (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance of any membership or other
interests, convertible or exchangeable securities, or any subscriptions, options, warrants or
similar rights of the Company or granting to any Person any right to participate in the equity or
income of the Company or to participate in or direct the election of any director or officer of
the Company or the manner in which any shares of capital stock or other securities of the Company
are voted; or (iv) rights of any Person to be paid as if he, she
or it were a holder of equity or shares of capital stock of the Company or securities convertible into or exchangeable for equity
or shares of capital stock of the Company, including, without limitation, “phantom” stock and
stock appreciation rights. There are no shares of capital stock or other securities of the
Company reserved for issuance for any purpose. Except as disclosed on Schedule 4.4(c),
the Company is not a party to any voting agreements, voting trusts, proxies or other agreements,
instruments or understandings with respect to the voting of any shares of the capital stock or
other securities of the



11









 






Company,
or any agreement with respect to the transferability, purchase or redemption of any shares of capital stock or other securities of the Company.




          (d) Schedule 4.4(d) sets forth a true and complete list of all direct or indirect
Subsidiaries of the Company. Except as set forth on Schedule 4.4(d), neither the Company
nor any of its Subsidiaries, directly or indirectly, own or have any interest in the capital stock
or any other ownership interest in any Person. Schedule 4.4(d) shows for each Subsidiary:
(i) its jurisdiction of organization and each other jurisdiction in which it is qualified to do
business; (ii) the authorized and outstanding capital stock, membership or other interests or
other securities of each Subsidiary; and (iii) the identity of and number of shares of such
capital stock, membership or other interests or other securities owned (of record and
beneficially) by each holder thereof.




          (e) Each Subsidiary is duly organized, validly existing and in good standing in its
jurisdiction of organization, with full power and authority to own, lease and operate its
properties and carry on its business as presently owned or conducted. Each Subsidiary is licensed
or qualified to transact business and is in good standing as a foreign corporation or limited
liability company, as the case may be, in each of the jurisdictions indicated in Schedule
4.4(d), which are the only jurisdictions wherein, because of the business conducted there or
the nature of its properties there, such Subsidiary would be required to be so licensed or
qualified, except where the failure to be so qualified or in good standing would not, individually
or in the aggregate, have a Material Adverse Change.




          (f) All shares of capital stock, membership or other interests or other securities of each
Subsidiary issued and outstanding are duly authorized, validly issued, fully paid and
nonassessable. Except as set forth on Schedule 4.4(f), no preferred stock, bonds,
debentures, notes, debt instruments, evidences of indebtedness or other securities of any kind, of
any Subsidiary are authorized, issued or outstanding.




          (g) Except as set forth on Schedule 4.4(g), there are no outstanding: (i) securities
convertible into or exchangeable for any shares of capital stock, membership or other interests or
other securities of any Subsidiary; (ii) subscriptions, options, “phantom” stock rights, warrants,
calls, commitments, preemptive rights or other rights of any kind (absolute, contingent or
otherwise) entitling any party to acquire or otherwise receive from any Subsidiary any capital
stock, membership interests or other securities or receive or exercise any benefits or rights
similar to any rights enjoyed by or inuring to the holder of membership or other interests or
securities of any Subsidiary; (iii) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance of any capital stock, membership or other
interests, convertible or exchangeable securities, or any subscriptions, options, warrants or
similar rights of any Subsidiary or granting to any Person any right to participate in the equity
or income of any Subsidiary or to participate in or direct the election of any officer of any
Subsidiary or the manner in which any capital stock, membership or other interests or other
securities or any Subsidiary are voted; or (iv) rights of any Person to be paid as if he, she or
it were a holder of equity, capital stock or membership interests in any Subsidiary or securities
convertible into or exchangeable for equity, capital stock or membership interests in any
Subsidiary, including, without limitation, “phantom” stock and stock appreciation rights. Except
as set forth on Schedule 4.4(g), there are no shares of capital stock, membership or other
interests or other securities of any Subsidiary reserved for issuance for any purpose. Except as
set forth on Schedule 4.4(g), no Subsidiary is a party to any voting agreements, voting
trusts, proxies or other agreements, instruments or understandings with respect to the voting of
any shares of the capital stock, membership or other interests or other securities of such
Subsidiary, or any agreement with respect to the transferability,
purchase or redemption of any shares of capital stock, membership or other interests or other securities of such Subsidiary.




     4.5 Liens. Except as set forth on Schedule 4.5, the Company and each of its
Subsidiaries have good and marketable title to, or a valid and subsisting leasehold interest in
their assets and properties, free and clear of all Liens, and the consummation of the
transactions contemplated by this Agreement will not give rise to any Lien on such assets or
properties. As of the date hereof and as of the Closing Date, the assets and properties of the
Company and its Subsidiaries, including their respective Intellectual Property and constitute all
of the assets, tangible and intangible, real and personal of any nature whatsoever, necessary to
operate the Business in the manner presently operated by the Company and its Subsidiaries.




     4.6 Financial Information. The Company has provided to Buyer accurate and complete
copies of the Company’s (a) unaudited balance sheets and related statements of income and cash
flows as of the three months ended March 31, 2008 (the “Latest Balance Sheet”) and (b)
consolidated balance sheets and statements of income



12









 







and cash flows as of and for the fiscal years ended December 31, 2007, 2006, 2005. Each of
the foregoing financial statements (including in all cases the notes thereto, if any)
(collectively, the “Financial Statements”): (i) have been prepared in accordance with
the books and records of the Company and its Subsidiaries (which, in turn, are accurate and
complete in all material respects), (ii) fairly present in all material respects the Company’s or
its Subsidiaries financial condition, results of operations and cash flows as of the times and
for the periods referred to therein, and (iii) have been prepared in accordance with GAAP
consistently applied, subject in the case of interim financial statements to changes resulting
from normal year-end adjustments for recurring accruals (which shall not be material individually
or in the aggregate). All projections, estimates, financial plans or budgets previously
delivered to or made available to Buyer were based upon reasonable assumptions in light of all
material facts and circumstances at the time made and were provided to Buyer in good faith.




     4.7 Undisclosed Liabilities. Except as set forth on Schedule 4.7, neither
the Company nor any of its Subsidiaries have any Liabilities, other than (a) Liabilities for
future performance under the Existing Contracts and the Permits, (b) Liabilities set forth on the
Latest Balance Sheet (including the footnotes thereto) and adequately reserved against therein in
accordance with GAAP, and (c) Liabilities of a similar nature to those set forth on the Latest
Balance Sheet which have arisen after the date of the Latest Balance Sheet in the Ordinary Course
of Business (in each case, none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort, infringement,
violation of law or an environmental Liability under any Environmental Law).




     4.8 No Change. Except as set forth on Schedule 4.8, since May 1, 2008, the
Company and its Subsidiaries:




          (a) Have operated in the Ordinary Course of Business and there has not been any occurrence,
event, incident, action, failure to act or transaction with respect to the Company or its
Subsidiaries which is outside the Ordinary Course of Business or which has had or would be
reasonably likely to have a Material Adverse Change;




          (b) Have not sold, leased, transferred, or assigned any of its assets, tangible or intangible,
other than for fair consideration in the Ordinary Course of Business;




          (c) Have not entered into any agreement, contract, lease or license (or series of related
agreements, contracts, leases and licenses pertaining to the Business) either involving more than
$50,000 or outside the Ordinary Course of Business;




          (d) Have not made any capital expenditures outside the Ordinary Course of Business;




          (e) Have not experienced any damage, destruction or loss (whether or not covered by insurance)
to its properties or assets;




          (f) Have not made or changed any Tax election, changed an annual accounting period, adopted or
changed any accounting method, filed any amended Tax Return or claim for refund, entered into any
closing agreement, settled any Tax claim or assessment, surrendered any right to claim a refund of
Taxes, consented to any extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company or any of its Subsidiaries, or taken any other similar action
relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption,
change, amendment, claim, agreement, settlement, surrender, consent or other action would have the
effect of increasing the Company’s or any of its Subsidiaries’ Liability for Taxes for any period
ending after the Closing Date or decreasing any Tax attribute of the Company or any of its
Subsidiaries existing on the Closing Date;




          (g) Have not committed to pay any bonus or to make any equity grant or granted any increase in
base compensation or employee benefits to its employees or other service providers outside of the
Ordinary Course of Business;



13









 






          (h) Have not adopted, amended, modified or terminated any bonus, profit sharing, incentive,
severance or similar Existing Contract for the benefit of any of its employees or other service
providers (or taken any such action with respect to any Benefit Plan);




          (i) Have not paid, discharged or satisfied any Liability other than the payment, discharge or
satisfaction of Liabilities incurred in the Ordinary Course of Business;




          (j) Have not prepaid any obligation having a fixed maturity of more than ninety (90) days from
the date such obligation was issued or incurred, or not paid when due, any account payable, or
sought the extension of the payment date of any account payable;




          (k) Have not permitted or allowed any of its assets or properties to be subjected to any
Liens;




          (l) Have not written off as uncollectible any notes or accounts receivable in excess of Ten
Thousand Dollars ($10,000) individually or Twenty-Five Thousand Dollars ($25,000) in the aggregate;




          (m) Have not canceled any debts or waived any claims or rights other than in the Ordinary
Course of Business; or




          (n) Have not made any commitment or agreement to do any of the foregoing.




     4.9 Taxes.




          (a) Except as set forth on Schedule 4.9(a), all material federal, state, local and
foreign Tax Returns required to be filed by, or with respect to, the Company or any of its
Subsidiaries have been timely filed when due (taking into account all valid extensions of due
dates) and all such Tax Returns are true, correct and complete in all material respects. All
Taxes, whether or not shown to be due and payable on any Tax Returns, owed by, or with respect to,
each of the Company and its Subsidiaries, on or before the date hereof, have been timely paid in
full.




          (b) The Company and its Subsidiaries have complied in all respects with all Applicable Law
and agreements relating to the payment and withholding of Taxes and have, within the time and in
the manner prescribed by Applicable Law and agreements, withheld and paid over to the proper
Governmental Authority all amounts required to have been withheld and paid in connection with
amounts paid or owing to any past or present employee, independent contractor, creditor, member,
consultant, shareholder or other third party.




          (c) Except as set forth on Schedule 4.9(c): (i) no deficiencies for any federal,
state, local or foreign Taxes have been asserted or assessed in writing against the Company or any
of its Subsidiaries that remain unpaid or unresolved; (ii) no Tax Proceeding relating to the
Company or any of its Subsidiaries is currently pending or is threatened; (iii) no issue has been
raised by a Governmental Authority in any prior Tax Proceeding which, by application of the same
or similar principles, could reasonably be expected to result in a proposed deficiency for any
subsequent period; and (iv) any adjustment of Taxes of the Company or any of its Subsidiaries made
by the Internal Revenue Service which adjustment is required to be reported to the appropriate
state, local or foreign Governmental Authority has been so reported.




          (d) Neither the Company nor any of its Subsidiaries is a party to or is bound by any Tax
Sharing Agreement. Neither the Company nor any of its Subsidiaries has been a member of an
Affiliated group filing a consolidated federal Income Tax Return (other than the current
consolidated group) or a combined, consolidated, unitary or other Affiliated group for state,
local or foreign Tax purposes, and neither the Company nor any of its Subsidiaries has any
liability for the Taxes of any Person as a transferee or successor.




          (e) Neither the Company nor any of its Subsidiaries has engaged in any “listed transactions”
within the meaning of Section 1.6011-4(b)(2) of the Treasury Regulations. The Company and its
Subsidiaries have disclosed on their federal Income Tax Returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within the meaning of
Section 6662 of the Code.



14









 






          (f) Neither the Company nor any of its Subsidiaries has agreed, or is required or has
requested, to make any adjustment under Section 481(a) of the Code (or any corresponding or
similar provision of state, local or foreign Law) by reason of a change in accounting method or
otherwise, which adjustment would result in an income inclusion, or disallowance of deductions,
under Section 481(a) of the Code (or any corresponding or similar provision of state, local or
foreign Law) in a Post-Closing Tax Period.




          (g) No closing agreement is currently in force pursuant to Section 7121 of the Code (or any
similar provision of state, local or foreign Law) with respect to the Company or any of its
Subsidiaries and there are no Tax rulings or requests for Tax rulings or closing agreements that
could affect the liability for Taxes of the Company or any of its Subsidiaries after the Closing
Date.




          (h) Except as set forth on Schedule 4.9(h), no waivers of statutes of limitation are
in effect in respect of any Taxes and neither the Company nor any of its Subsidiaries has agreed
to any extension of time with respect to a Tax assessment or deficiency. There are no Liens for
Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or any of
its Subsidiaries.




          (i) Neither the Company nor any of its Subsidiaries has been a “distributing corporation” or
a “controlled corporation” in a transaction that qualifies or was intended to qualify as a
Tax-free transaction under Section 355 of the Code.




          (j) Neither the Company nor any of its Subsidiaries will be required to include amounts in
income, or exclude items of deduction, after the Closing Date as a result of (i) any intercompany
transaction or excess loss account described in the Treasury Regulations promulgated pursuant to
Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign
Law) arising or occurring on or prior to the Closing Date, (ii) any installment sale or open
transaction disposition made on or prior to the Closing Date, (iii) the application of the
long-term method of accounting on or prior to the Closing Date, (iv) any agreement with a
Governmental Authority entered into on or prior to the Closing Date, or (v) the receipt of prepaid
amounts on or prior to the Closing Date.




          (k) None of the Subsidiaries is a foreign corporation for federal income Tax purposes.




          (l) Neither the Company nor any of its Subsidiaries is a party to or is member of any joint
venture, partnership, limited liability company or other arrangement or contract which could be
treated as a partnership for federal income Tax purposes.




          (m) Schedule 4.9(m) lists all jurisdictions (whether foreign or domestic) in which
the each of the Company and its Subsidiaries pay Taxes and the nature of the Taxes paid by each of
the Company and its Subsidiaries. No claim has ever been made by a Governmental Authority in a
jurisdiction where neither the Company nor its Subsidiaries files Tax Returns that the Company or
any of its Subsidiaries is or may be subject to Tax in that jurisdiction nor is there a reasonable
basis for any such claim.




          (n) The Company has delivered to Buyer true, correct and complete copies of all Income Tax
Returns for the last three years, and examination reports, and statements of deficiencies assessed
against or agreed to by, or with respect to, each of the Companies and its Subsidiaries with
respect to such Taxes for the last five taxable years.




          (o) Except as set forth on Schedule 4.9(o), no power of attorney, which is currently
in effect, has been granted with respect to any matter relating to Taxes of the Company or any of
its Subsidiaries.




          (p) Neither the Company nor any of its Subsidiaries has any corporate acquisition
indebtedness as described in Section 279 of the Code.




          (q) Since December 31, 2006, neither the Company nor any of its Subsidiaries has (i) made,
rescinded or changed any material Tax election or adopted or changed any method of accounting,
(ii) entered into any settlement of or compromise of any Tax liability in excess of Twenty-Five
Thousand Dollars ($25,000), (iii)



15









 






changed any annual accounting period, (iv) entered into a closing agreement, (v) surrendered
any right to any material Tax refund or (vi) filed any amended Tax return or refund claim with
respect to any material Tax.




          (r) The reserve for unpaid Taxes in the Latest Balance Sheet (other than a reserve for
deferred Taxes established to reflect timing differences between book and Tax income) is a full
and adequate reflection of all accrued and unpaid Taxes of the Company and its Subsidiaries as of
December 31, 2007. Since December 31, 2007, neither the Company nor any of its Subsidiaries has
incurred or accrued any liability for Taxes of any nature (whether matured, unmatured, fixed or
contingent) except for those Taxes incurred or accrued in the ordinary course of business.




          (s) No Seller is a “foreign person” as that term is defined in Section 1445(f)(3) of the
Code. Neither the Company nor any of its Subsidiaries is or has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.




     4.10 Intellectual Property.




          (a) All of the Company Technology (including, without limitation, the Registered Intellectual
Property), is owned by the Company or its Subsidiaries free and clear of all Liens or licensed to
the Company or its Subsidiaries pursuant to the Intellectual Property Licenses set forth in
Schedule 4.10(d), without payment of royalty with respect to any of them.




          (b) To the Company’s Knowledge, there are no infringements of the Company Technology by any
third party. In addition, the conduct of the Business as currently conducted does not infringe
any Intellectual Property of a third party.




          (c) Schedule 4.10(c) sets forth a true and complete list of each registration of or
application for registration of Intellectual Property which has been issued to or filed by the
Company, its Subsidiaries or their predecessors or to a third party on behalf of the Company, its
Subsidiaries or their predecessors (collectively, the “Registered Intellectual Property”)
and identifies the applicable jurisdiction, status, application or registration number, date of
application, registration or issuance and all upcoming due dates and filing deadlines up to and
including the date that is twelve (12) months from the date hereof, as applicable. All Registered
Intellectual Property is owned by the Company free and clear of any Liens.




          (d) Schedule 4.10(d) sets forth a true and complete list of (i) all licenses,
sublicenses and other agreements, permissions or arrangements to which the Company, its
Subsidiaries or their predecessors is a party and pursuant to which any Person is authorized to
have access to, or use of, any Company Technology, or to exercise any other right with regard
thereto (the “Company Licenses”) and (ii) all items of Company Technology that any third
party owns and that the Company, its Subsidiaries or their predecessors use or is authorized to
use pursuant to license, sublicense or other agreement, permission or arrangement (together with
the Company Licenses set forth in clause (i), the “Intellectual Property Licenses”). Each
of the Intellectual Property Licenses is a legal, valid and binding obligation of the Company or
its Subsidiaries and the relevant other parties thereto, enforceable in accordance with its terms;
to the Company’s Knowledge, no party to such Intellectual Property License is in breach or
default, and no event has occurred which with notice or lapse of time would constitute a breach or
default or permit termination thereunder; and no notice of default with respect to any such
Intellectual Property License has been sent or received by the Company.




          (e) The execution and delivery of this Agreement and performance of the obligations of the
Sellers and the Company hereunder and under the other Operative Documents will not result in a
default under or require the consent of any other Person in respect of any Intellectual Property
License, or otherwise result in a loss or diminution of any rights of the Company or its
Subsidiaries in or to the Company Technology.




          (f) The Company, its Subsidiaries and their predecessors have taken all reasonable measures
to protect the secrecy, confidentiality and value of the Company Technology, including, without
limitation, requiring all key employees with access to the Company Technology to execute
confidentiality agreements,



16









 






substantially in the form set forth on Schedule 4.10(f), and, to the Company’s
Knowledge, no such employee is in breach of or has within the past five (5) years violated any
material term of any such confidentiality agreement.




          (g) The Company, its Subsidiaries and their predecessors have secured valid and binding
written assignments substantially in the form set forth on Schedule 4.10(g), from all
employees, consultants, contractors and other Persons (if any) who have contributed to the
creation or development of any Intellectual Property on behalf of the Company, its Subsidiaries or
their predecessors, of all rights to such contributions that the Company, its Subsidiaries or
their predecessors do not already own by operation of law.




          (h) No current or former employee, consultant or contractor of the Company, its Subsidiaries
or their predecessors has any interest in any Company Technology, and no claim asserting such an
interest has been made or, to the Company’s Knowledge, threatened by any such employee, consultant
or contractor against the Company, its Subsidiaries or their predecessors.




     4.11 Litigation, Etc. Except as set forth on Schedule 4.11, there are no
Proceedings in respect of the Company or any of its Subsidiaries, (a) pending at any time during
the five (5) years prior to the date of this Agreement or, to the Company’s Knowledge, currently
threatened, whether at law or in equity, or before or by any Governmental Authority against the
Company or any of its Subsidiaries, or otherwise involving any products, assets, liabilities,
properties or actions of or sold by the Company or any of its Subsidiaries, or (b) pending or, to
the Company’s Knowledge, currently threatened against any Seller, officer, director or employee
of the Company or any of its Subsidiaries in connection with the officer’s, director’s or
employee’s relationship with, or actions taken on behalf of the Company or its Subsidiaries.
Except as set forth on Schedule 4.11, there are no pending judgments, decrees,
injunctions or Orders, or arbitration awards against or affecting the Company or any of its
Subsidiaries.




     4.12 Employees; Labor Matters. Schedule 4.12 sets forth a true and complete
list of each executive and manager of the Company and its Subsidiaries with the job title,
location of service, date of commencement of service, 2007 base compensation and target bonus,
and anticipated 2008 base compensation and target bonus for each such executive and manager. To
the Company’s Knowledge, no such executive or manager has any present intention to terminate his
or her employment with the Company or its Subsidiaries, as applicable. Neither the Company nor
any of its Subsidiaries is a party to or bound by any collective bargaining agreement and there
are no labor unions, works councils or other organizations representing, purporting to represent
or attempting to represent any employee of the Company or any of its Subsidiaries. No strike,
slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor
activity has occurred, been threatened or, to the Company’s Knowledge, is anticipated with
respect to any employee of the Company or any of its Subsidiaries. There are no labor disputes
currently subject to any grievance procedure, arbitration or litigation and there is no
representation petition pending, threatened or, to the Company’s Knowledge, anticipated with
respect to any employee of the Company or any of its Subsidiaries. Neither the Company nor any
of its Subsidiaries have engaged in any unfair labor practices within the meaning of the National
Labor Relations Act. The Company and its Subsidiaries are in compliance in all material respects
with all Applicable Laws relating to employment and employment practices, workers’ compensation,
terms and conditions of employment, worker safety, wages and hours, civil rights, discrimination,
immigration, collective bargaining, and the Worker Adjustment and Retraining Notification Act, 29
U.S.C. § 2109 et seq. or the regulations promulgated thereunder. There have been no claims of
harassment, discrimination, retaliatory act or similar actions against any employee, officer or
director of the Company or any of its Subsidiaries at any time during the past four years and, to
the Company’s Knowledge, no facts exist that could reasonably be expected to give rise to such
claims or actions. To the Company’s Knowledge, no employees of the Company or any of its
Subsidiaries are in any material respect in violation of any term of any employment contract,
non-disclosure agreement, non-competition agreement, or any restrictive covenant to a former
employer relating to the right of any such employee to be employed by the Company or any of its
Subsidiaries because of the nature of the business conducted or presently proposed to be
conducted by the Company or any of its Subsidiaries or to the use of trade secrets or proprietary
information of others.









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     4.13 Benefit Plans.




          (a) Schedule 4.13(a) sets forth a true and complete list of all Benefit Plans. No
Benefit Plan is mandated by a government other than the United States or is subject to the laws of
a jurisdiction outside of the United States.




          (b) The Company has delivered to Buyer: (i) copies of all material documents setting forth
the terms of each Benefit Plan, including all amendments thereto and all related trust documents;
(ii) the three most recent annual reports (Form Series 5500), if any, required under ERISA or the
Code in connection with each Benefit Plan; (iii) the most recent actuarial reports (if applicable)
for all Benefit Plans; (iv) the most recent summary plan description, if any, required under ERISA
with respect to each Benefit Plan; (v) all material written contracts, instruments or agreements
relating to each Benefit Plan, including administrative service agreements and group insurance
contracts; (vi) the most recent Internal Revenue Service determination or opinion letter issued
with respect to each Benefit Plan intended to be qualified under Section 401(a) of the Code; and
(vii) all filings under the Internal Revenue Services’ Employee Plans Compliance Resolution System
Program or any of its predecessors or the Department of Labor Delinquent Filer Program.




          (c) None of the Company, its Subsidiaries, any ERISA Affiliate or any of their respective
predecessors has ever contributed to, contributes to, has ever been required to contribute to, or
otherwise participated in or participates in or in any way, directly or indirectly, has any
Liability with respect to any plan subject to Section 412 of the Code, Section 302 of ERISA or
Title IV of ERISA, including, without limitation, any “multiemployer plan” (within the meaning of
Sections 3(37) or 4001(a)(3) of ERISA or Section 414(f) of the Code) or any “single-employer plan”
(within the meaning of Section 4001(a)(15) of ERISA) which is subject to Sections 4063, 4064 or
4069 of ERISA.




          (d) With respect to each of the Benefit Plans: (i) each Benefit Plan intended to qualify
under Section 401(a) of the Code is qualified and has received a determination letter from the
Internal Revenue Service upon which it may rely regarding its qualified status under the Code for
all statutory and regulatory changes with respect to plan qualification requirements for which the
Internal Revenue Service will issue such a letter and nothing has occurred, whether by action or
by failure to act, that caused or could cause the loss of such qualification or the imposition of
any penalty or Tax Liability; (ii) all payments required by each Benefit Plan, any collective
bargaining agreement or other agreement, or by Applicable Law (including, without limitation, all
contributions, insurance premiums or intercompany charges) with respect to all prior periods have
been made or provided for by the Company or its Subsidiaries in accordance with the provisions of
each of the Benefit Plans, Applicable Law and GAAP; (iii) no proceeding has been threatened,
asserted, instituted or, to the Company’s Knowledge, is anticipated against any of the Benefit
Plans (other than non-material routine claims for benefits and appeals of such claims), any
trustee or fiduciaries thereof, any ERISA Affiliate, any employee, officer, director, shareholder
or other service provider of the Company or its Subsidiaries (whether current, former or retired),
or any of the assets of any trust of any of the Benefit Plans; (iv) each Benefit Plan complies in
form and has been maintained and operated in all material respects in accordance with its terms
and Applicable Law, including, without limitation, ERISA and the Code; (v) neither the Company,
its Subsidiaries nor, to the Company’s Knowledge, any third party, has engaged in a non-exempt
“prohibited transaction,” within the meaning of Section 4975 of the Code and Section 406 of ERISA,
with respect to the Benefit Plans and no such “prohibited transaction” with respect to the Benefit
Plans is reasonably expected to occur as a result of any action or inaction by the Company, its
Subsidiaries or, to the Company’s Knowledge, any third party; (vi) no Benefit Plan is under, and
neither the Company nor its Subsidiaries has received any notice of, an audit or investigation by
the Internal Revenue Service, Department of Labor or any other Governmental Authority, and no such
completed audit, if any, has resulted in the imposition of any Tax or penalty; (vii) with respect
to each Benefit Plan that is funded mostly or partially through an insurance policy, none of the
Company, its Subsidiaries or any ERISA Affiliate has any Liability in the nature of retroactive
rate adjustment, loss sharing arrangement or other actual or contingent Liability arising wholly
or partially out of events occurring on or before the date of this Agreement or is reasonably
expected to have such Liability with respect to periods through the Closing; and (viii) no Benefit
Plan provides post-retirement health and welfare benefits to any current or former employee of the
Company or its Subsidiaries, except as required under Section 4980B of the Code, Part 6 of Title I
of ERISA.



18









 






          (e) The consummation of the transactions contemplated by this Agreement alone, or in
combination with any other event, including a termination of any employee, officer, director,
shareholder or other service provider of the Company or its Subsidiaries (whether current, former
or retired) or their beneficiaries, will not give rise to any Liability under any Benefit Plan,
including, without limitation, Liability for severance pay, unemployment compensation, termination
pay or withdrawal Liability, or accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any employee, officer, director, shareholder or other service
provider of the Company or its Subsidiaries (whether current, former or retired) or their
beneficiaries. No amount that could be received (whether in cash or property or the vesting of
property), as a result of the consummation of the transactions contemplated by this Agreement, by
any employee, officer, director, shareholder or other service provider of the Company or its
Subsidiaries under any Benefit Plan or otherwise would not be deductible by reason of Section 280G
of the Code or would be subject to an excise tax under Section 4999 of the Code. Neither the
Company nor any of its Subsidiaries has any indemnity obligation on or after the Closing for any
Taxes imposed under Section 4999 or 409A of the Code.




          (f) None of the Company, its Subsidiaries, any ERISA Affiliate, or any employee, officer,
director, shareholder or other service provider of the Company or any of its Subsidiaries has made
any promises or commitments, whether legally binding or not, to create any additional Benefit
Plan, agreement or arrangement, or to modify or change in any material way any existing Benefit
Plan.




          (g) Neither the Company nor any of its Subsidiaries has unfunded liabilities pursuant to any
Benefit Plan that is not intended to be qualified under Section 401(a) of the Code and is an
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA, a nonqualified
deferred compensation plan or an excess benefit plan. Each Benefit Plan that is a “nonqualified
deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has been operated
and administered in good faith compliance with Section 409A of the Code from the period beginning
January 1, 2005 through the date hereof. Each Employee Option (i) has an exercise price at least
equal to the fair market value of the Company’s Common Stock on a date no earlier than the date of
the corporate action authorizing the grant, (ii) no Employee Option has had its exercise date or
grant date delayed or “back-dated,” and (iii) all Employee Options have been issued in compliance
with all Applicable Laws and properly accounted for in all material respects in accordance with
GAAP.




          (h) Any individual who performs services for the Company or any of its Subsidiaries and who
is not treated as an employee for federal income tax purposes by the Company or its Subsidiaries
is not an employee under Applicable Law or for any purpose including, without limitation, for Tax
withholding purposes or Benefit Plan purposes. The Company and its Subsidiaries have no Liability
by reason of an individual who performs or performed services for the Company or its Subsidiaries
in any capacity being improperly excluded from participating in a Benefit Plan. Each employee of
the Company and its Subsidiaries has been properly classified as “exempt” or “non-exempt” under
Applicable Law.




     4.14 Contracts.




          (a) Schedule 4.14(a) lists the following contracts, agreements, or arrangements
(whether written or oral) to which the Company or one of its Subsidiaries is a party or which
relate to the Business: (i) any agreement (or group of related agreements) for the lease of real
or personal property to or from any Person; (ii) any agreement (or group of related agreements)
for the purchase or sale of raw materials, commodities, supplies, products, or other personal
property, or for the furnishing or receipt of services, the performance of which will extend over
a period of more than three (3) months, result in a loss, or involve consideration in excess of
$50,000; (iii) any agreement binding on the Company, any of its Subsidiaries, or any of their
respective employees, officers or directors concerning confidentiality or nondisclosure; (iv) any
agreement which prohibits or restricts the Company or any of its Subsidiaries from freely engaging
in business (including the Business) anywhere in the world; (v) any collective bargaining
agreement applicable to the Company or any of its Subsidiaries; (vi) any agreement for the
employment of any individual on a full-time, part-time, consulting, or other basis providing
annual compensation (whether in base salary, commission or bonus) in excess of $50,000 or
providing severance benefits; (vii) any contract relating to Indebtedness, if any, of the Company
or any of its Subsidiaries; (viii) any guaranty or undertaking to be liable for the Indebtedness
of others; (ix) any agreement under which the consequences of a default or termination could
result in a cost or Liability to the Company or its Subsidiaries in excess of $50,000; (x) any
other agreement (or group of related agreements) the performance of which involves



19









 






consideration in excess of $50,000 per annum for the Company or any of its Subsidiaries; (xi)
any agreement relating to ownership of or investments in any Person (including investments in
joint ventures and minority equity investments); (xii) all agreements relating to the licensing of
Intellectual Property by the Company or any of its Subsidiaries to a third party or by a third
party to the Company or any of its Subsidiaries and all other agreements affecting the Company’s
or any of its Subsidiaries ability to use or disclose any Intellectual Property; (xiii) all
software maintenance and support contracts; and (xiv) all other agreements which are material to
the Company or any of its Subsidiaries, or which are required for the continued operation of the
Business in the Ordinary Course of Business.




          (b) The Company has delivered to Buyer an accurate and complete copy of each written
agreement and a written summary setting forth the terms and conditions of each oral agreement
listed on Schedule 4.14(a). With respect to each such agreement: (i) the agreement is in
full force and effect; (ii) the agreement will continue to be legal, valid, binding, and in full
force and effect on identical terms immediately following the consummation of the transactions
contemplated hereby; (iii) except as set forth on Schedule 4.14(b), neither the Company
nor any of its Subsidiaries is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit termination, modification, or
acceleration, under the agreement; (iv) except as set forth on Schedule 4.14(b), the other
party to such agreement is not in breach or default, and, to the Company’s Knowledge, no event has
occurred which with notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration, under the agreement; and (v) no party has repudiated
any provision of the agreement or given notice that the agreement has terminated or will be
terminating.




          (c) Except as set forth on Schedule 4.14(c), no consent or notice of any third party
is required under any Existing Contract for the consummation of the transactions contemplated
hereby.




     4.15 Real Property.




          (a) Neither the Company nor any of its Subsidiaries owns any real property. Schedule
4.15(a) sets forth an accurate and complete list of all leases, subleases, licenses,
concessions and other agreements (written or oral) (the “Leases”), pursuant to which the
Company or its Subsidiaries holds a leasehold or subleasehold estate in, or is granted a license,
concession, or other right to use or occupy, any land, buildings, improvements, fixtures or other
interest in real property which is used in the operation of the Business. The Company has
delivered to Buyer an accurate and complete copy of each of the Leases (including any and all
amendments thereof), and in the case of any oral Lease, a written summary of the terms of such
Lease. The Company and each of its Subsidiaries enjoys peaceful and undisturbed possession under
all Leases to which it is a party. All improvements made by or on behalf of the Company and its
Subsidiaries on the real property leased by them have been made or performed in accordance with
all Applicable Laws. All portions of those buildings and structures leased by the Company or the
Subsidiaries are in good condition of maintenance and repair and are adequate, sufficient and
suitable for their present uses and purposes.




          (b) Except as set forth on Schedule 4.15(b), with respect to each of the Leases: (i)
such Lease is legal, valid, binding, enforceable and in full force and effect; (ii) the
transactions contemplated by this Agreement do not require the consent of any other party to such
Lease, will not result in a breach of or default under such Lease, or otherwise cause such Lease
to cease to be legal, valid, binding, enforceable and in full force and effect on identical terms
following the Closing; (iii) neither the Company nor any other party to the Lease is in breach or
default under such Lease, and no event has occurred or circumstance exists which, with the
delivery of notice, passage of time or both, would constitute such a breach or default or permit
the termination, modification or acceleration of rent under such Lease; (iv) neither the Company
nor any of its Subsidiaries have received notice that a security deposit or portion thereof has
been deposited with respect to such Lease or has been applied in respect of a breach or default
under such Lease which has not been re-deposited in full; (v) there are no disputes with respect
to such Lease; and (vi) neither the Company nor any of its Subsidiaries have assigned, subleased,
mortgaged, deeded in trust or otherwise transferred or encumbered such Lease or any interest
therein.




     4.16 Compliance with Laws. Except as set forth on Schedule 4.16, the
Company, each of its Subsidiaries and all operations relating to the Business have been and are
in compliance in all material respects with all Applicable Laws to its business or operations.
To the Company’s Knowledge, there is no pending or



20









 







anticipated change in any Applicable Laws that if enacted would be reasonably likely to
adversely affect the Company, any of its Subsidiaries or any of their assets, properties or
operations. Without limiting the generality of the foregoing, there is not and never has been
any Environmental Condition: (i) at the premises at which the Business has been conducted by the
Company, any of its Subsidiaries or any of their predecessors, (ii) (A) at any property owned,
leased, occupied or operated at any time by the Company or any of its Subsidiaries or (B) at any
property owned, leased, occupied or operated at any time by any Person controlled by the Company,
any of its Subsidiaries or any predecessor of any of them in connection with the Business, or
(iii) at any property at which wastes have been deposited or disposed by, from or at the behest
or direction of any of the foregoing in connection with the Business. The Company and its
Subsidiaries have never received written notice of any such Environmental Condition.




     4.17 Insurance. The Company has delivered to Buyer accurate and complete copies or
schedules of all policies of insurance covering occurrences or claims made on or prior to the
date hereof and maintained by the Company or its Subsidiaries. All of the Company’s and its
Subsidiaries’ insurance policies are in full force and effect, and neither the Company nor any of
its Subsidiaries is in default with respect to its obligations under any of such insurance
policies and all billings for premiums with respect to such insurance have been paid. Except as
set forth on Schedule 4.17, neither the Company nor any of its Subsidiaries have any
self-insurance or co-insurance programs.




     4.18 Permits. Schedule 4.18 sets forth an accurate and complete list of all
Permits which the Company and its Subsidiaries presently hold, and the Company and its
Subsidiaries are in full compliance with all terms and conditions thereof. Such Permits are in
full force and effect, free from violations, and the assets and properties of the Company and its
Subsidiaries are being used in accordance with all such Permits. To the Company’s Knowledge, the
Company and its Subsidiaries have all Permits necessary to operate the Business on the real
property leased or subleased by it. No suspension or cancellation of any of the Company’s or its
Subsidiaries’ Permits is pending or, to the Company’s Knowledge, threatened.




     4.19 Brokers. Except as set forth on Schedule 4.19, no agent, broker,
investment banker, person or firm acting on behalf of the Company, any of the Company’s
Affiliates or under the authority of the Company is or will be entitled to any broker’s or
finder’s fee or any other commission or similar fee directly or indirectly from any of the
parties to this Agreement in connection with any of the transactions contemplated by this
Agreement.




     4.20 Customer Contracts. None of the obligations of any of the customers of the
Company or its Subsidiaries are subject to any valid rights of offset, on account of events
occurring prior to Closing. Neither the Company nor any of its Subsidiaries have notice of any
customer either planning to terminate any of its contracts with the Company or any of its
Subsidiaries, or requesting an audit as relates to any of its contracts with the Company or its
Subsidiaries. Except as set forth on Schedule 4.20, none of the Company’s customers has
made, or has threatened, any material claim against the Company or its Subsidiaries.




     4.21 Customers and Suppliers. The Company has provided Buyer with an accurate and
complete list of the names of all material customers and material suppliers of the Company and
its Subsidiaries (on a consolidated basis by dollar volume of sales to such customers) for the
twelve month period immediately preceding the date of this Agreement. Except as set forth on
Schedule 4.21, neither the Company nor any of its Subsidiaries have received any
indication from any material customer of the Company or its Subsidiaries to the effect that such
customer will stop, materially decrease the rate of, or materially change the terms (whether
related to payment, price or otherwise) with respect to, buying materials, products or services
from the Company or its Subsidiaries, or Buyer (whether as a result of the consummation of the
transactions contemplated hereby or otherwise), and there are no disputes with any material
customer of the Company or its Subsidiaries. Except as set forth on Schedule 4.21,
neither the Company nor any of its Subsidiaries have received any indication from any material
supplier of the Company or its Subsidiaries to the effect that such supplier (i) is planning to
implement any material price changes other than in the ordinary course of business or will stop
or (ii) is terminating, canceling or threatening to terminate or cancel any commitments,
contracts or arrangements with the Company, and there are no disputes with any material supplier
of the Company or its Subsidiaries.




     4.22 Accounts Receivable. Each accounts and notes receivable (whether current or
non-current) of the Company and its Subsidiaries, including trade account receivables outstanding
as of the Closing Date and any



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other rights to receive payment in respect of services and/or sales by the Company and its
Subsidiaries prior to the Closing Date, constitutes a bona fide receivable resulting from a bona
fide sale to a customer in the Ordinary Course of Business on commercially reasonable terms and
is not subject to any valid counterclaim or setoff.




     4.23 Banking Information. Schedule 4.23 accurately lists the names and
addresses of every bank or other financial institution in which the Company or any Subsidiary
maintains an account or in which an account is maintained for the benefit of the Company or any
Subsidiary (whether checking, saving or otherwise), lock box or safe deposit box, and the account
numbers and names of Persons having signing authority or other access thereto.




     4.24 Unlawful Payments. The Company and its Subsidiaries have not, and no officer,
member, manager, agent, employee or other Person acting on their behalf has, in the course of his
or her actions for or on behalf of the Company or any Subsidiary, used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful expenses relating to political
activity; made any direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; or made any bribe, unlawful rebate, payoff, influence
payment, kickback or other unlawful payment to any Person.




     4.25 Affiliate Transactions. Except as set forth on Schedule 4.25 or those
between the Company and any of its wholly-owned Subsidiaries or between or among the Company’s
wholly-owned Subsidiaries, there are no agreements, commitments or other transactions between the
Company or any of its Subsidiaries, on the one hand, and any officer, director, equity holder
(including any of the Sellers), any respective family member of any of the foregoing, Affiliate
of the Company or any of its Subsidiaries, on the other hand.




     4.26 Accuracy of Information Furnished. No representation, statement, or
information contained in this Agreement (including the Schedules) or any Operative Document
executed in connection herewith or delivered pursuant hereto or thereto or made available or
furnished to Buyer or its representatives by the Company contains or will contain any untrue
statement of a material fact or omits or will omit any material fact necessary to make the
information contained therein not misleading. The Company has provided Buyer with accurate and
complete copies of all documents listed or described in the Schedules hereto.



ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE SELLERS




     Each Seller (solely as to such Seller and not as to any other Seller) represents and warrants
to Buyer, as of the date hereof and as of the Closing Date, as follows:




     5.1 Authority; Binding Agreements. Seller has the requisite capacity, power and
authority to execute and deliver this Agreement and the Operative Documents to which Seller is a
party and to consummate the transactions contemplated hereby and thereby. This Agreement and the
Operative Documents to which Seller is a party have been, or will be, duly executed and delivered
by Seller and constitute, and will constitute, a valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.




     5.2 Conflicts, Consents. Neither the execution, delivery or performance by Seller
of this Agreement, nor any of the other Operative Documents to which Seller is a party, nor the
consummation by Seller of the transactions contemplated hereby or thereby will (i) require any
filing with, or permit, authorization, consent or approval of, any Governmental Authority, (ii)
result in a violation or breach of, or constitute (with or without due notice or lapse of time or
both) a default (or give rise to any right of termination, amendment, cancellation or
acceleration) under any of the terms, conditions or provisions of any loan or credit agreement,
note, bond, mortgage, indenture, permit, concession, franchise, license, lease, contract,
agreement or other instrument or obligation to which Seller is a party or by which any of
Seller’s properties or assets may be bound or (iii) violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to Seller, or any of Seller’s properties or assets.




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     5.3 Litigation. There is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of Seller, threatened against Seller that could reasonably be
expected to adversely affect Seller’s performance under this Agreement or prevent or materially
delay the Closing. Seller is not subject to any outstanding order, writ, injunction or decree
that could materially and adversely affect Seller’s performance under this Agreement.




     5.4 Title. Seller owns, of record and beneficially, as of the date hereof and will
own, of record and beneficially, immediately prior to the Closing, the number of Shares as are
set forth next to Seller’s name on Schedule 4.4(b). Except as set forth on Schedule
4.4(b), there are no outstanding shares of Common Stock or any other rights or other
commitments entitling Seller to purchase or acquire any shares of capital stock of the Company or
any security convertible into or exchangeable for shares of capital stock of the Company, nor has
Seller entered into any agreement with respect to any of the foregoing. There are no irrevocable
proxies and no voting agreements to which Seller is a party with respect to any shares of the
capital stock or other voting securities of the Company held by Seller.




     5.5 Investment Representations.



          (a) Seller is acquiring the Restricted Shares for investment for his own account, not as a
nominee or agent, and not with a view to the sale or distribution of any part thereof, and Seller
has no present intention of selling, granting participation in, or otherwise distributing the
same. Seller has no contract, undertaking, agreement, or arrangement with any Person to sell,
transfer or grant participations to such Person, or to any third party, with respect to any of the
Restricted Shares to be acquired by Seller.




          (b) Seller understands that the Restricted Shares have not been registered under the
Securities Act on the grounds that the sale provided for in this Agreement and the issuance of
securities hereunder is exempt from registration under the Securities Act, and that Buyer’s
reliance on such exemption is predicated in part on the representations set forth herein.




          (c) Seller represents that he is an “accredited investor,” as defined under Regulation D of
the Securities Act, has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of his purchase of the Restricted Shares, and has the
ability to bear the economic risks of such purchase.




          (d) Seller has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, Representatives of the Buyer concerning the terms and
conditions of the issuance of the Restricted Shares pursuant to the terms of this Agreement and
the merits and risks of investing in the Restricted Shares; (ii) access to information about Buyer
and Buyer’s financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment, including the SEC Reports; and (ii)
the opportunity to obtain such additional information that Buyer possesses or can acquire without
unreasonable effort or expense that is necessary for Seller to make an informed investment
decision with respect to such investment.




          (e) Since November 1, 2007 Seller has not, directly or indirectly, nor has any Person acting
at Seller’s direction, engaged in any transactions in the securities of Buyer (including, without
limitation, any “short sales” as defined in Rule 3b-3 of the Securities Exchange Act of 1934, as
amended, or any direct or indirect stock pledges, forward sale contracts, options, puts, calls,
short sales, swaps and similar arrangements (including on a total return basis), or any sales or
other transactions through non-US broker dealers or foreign regulated brokers having the effect of
hedging securities of Buyer).





     5.6 Accuracy of Information Furnished. No representation, statement, or information
contained in this Agreement (including the Schedules) or delivered pursuant hereto or made
available or furnished to Buyer or its representatives by Seller contains any untrue statement of
a material fact or omits any material fact necessary to make the information contained therein
not misleading.



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     5.7 Agreement for Arbitration and Split of Pro Rata Shares The Company has provided
to Buyer an accurate and complete copy of the Sellers’ Agreement for Arbitration and Pro Rata
Splits” between Sellers dated June 9, 2008 executed and delivered among Sellers previously and
represents that such agreement shall be in full force and effect at and as of the Closing,
without amendment or modification.



ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER




     Buyer represents and warrants to the Sellers and the Company, as of the date hereof and as of
the Closing Date, as follows:




     6.1 Organization and Power. Buyer (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and (b) has all requisite
corporate power and authority to own, lease and operate its properties and to carry on its
business as now being conducted.




     6.2 Authority; Binding Agreements. The execution and delivery of this Agreement and
the other Operative Documents to which Buyer is a party and the consummation of the transactions
contemplated by this Agreement and the other Operative Documents to which it is a party have been
duly and validly authorized by all necessary entity action on the part of Buyer. Buyer has all
requisite corporate power and authority to enter into this Agreement and the other Operative
Documents to which it is a party and to consummate the transactions contemplated by this
Agreement and the other Operative Documents to which it is a party. This Agreement and the other
Operative Documents to which it is a party have been, or upon execution and delivery thereof will
be, duly executed and delivered by Buyer. This Agreement is, and the other Operative Documents
to which it is a party upon the execution and delivery thereof will be, valid and binding
obligations of Buyer, enforceable against it in accordance with their respective terms.




     6.3 Conflicts; Consents. The execution and delivery of this Agreement, the
Operative Documents to which it is a party, the consummation of the transactions contemplated
hereby and thereby and compliance by Buyer with the provisions of this Agreement and the other
Operative Documents to which it is a party, do not and will not (a) conflict with or result in a
breach of the certificate of incorporation or bylaws of Buyer, (b) constitute a breach of, or
default (whether with notice or lapse of time, or both) under, or, result in the termination or
cancellation of or acceleration of the performance required by, or require any consent,
authorization or approval under, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument to which Buyer is a party or by which Buyer or any
of Buyer’s properties or assets, are bound or affected, or (c) violate any law, statute, rule or
regulation or order, writ, injunction or decree applicable to Buyer or its properties or assets.
No consent or approval by, or any notification of or filing with, any Person is required in
connection with the execution, delivery and performance by Buyer of this Agreement, the other
Operative Documents to which it is a party or the consummation of the transactions contemplated
by this Agreement or the other Operative Documents to which it is a party.




     6.4 Restricted Shares. As of the Closing, the Restricted Shares shall have been
duly authorized by all required action on the part of Buyer. The Restricted Shares, when issued
in accordance with this Agreement, will be duly issued and free and clear of all encumbrances.
Assuming the representations and warranties of the Sellers contained in Sections 5.5 are true and
correct, the issuance by Buyer of the Restricted Shares to be issued to the Sellers pursuant to
this Agreement is exempt from registration under the Securities Act.




     6.5 Litigation, Etc. There is no suit, claim, action, proceeding or investigation
pending or, to the knowledge of Buyer, threatened against Buyer that would reasonably be expected
to adversely affect Buyer’s performance under this Agreement or prevent or materially delay the
Closing. Buyer is not subject to any outstanding order, writ, injunction or decree that would
reasonably be expected to affect Buyer’s performance under this Agreement.



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     6.6 Brokers. Buyer has no liability or obligation to pay any broker’s, finder’s,
financial advisor’s or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of Buyer.



ARTICLE VII

ADDITIONAL AGREEMENTS AND COVENANTS





     7.1 Expenses. The Sellers shall bear their (and the Company’s) costs, fees and
expenses, including attorney, investment banker, broker, accountant and other Representative and
consultant fees, incurred in connection with the execution and negotiation of this Agreement and
the other Operative Documents and the consummation of the transactions contemplated hereby and
thereby (the “Sellers’ Transaction Expenses”). All of the Sellers’ Transaction Expenses
shall have been paid as of the Closing and shall be sole responsibility of the Sellers. Buyer
shall bear its own costs, fees and expenses, including attorney, investment banker, broker,
accountant and other Representative and consultant fees, incurred in connection with the
execution and negotiation of this Agreement and the other Operative Documents and the
consummation of the transactions contemplated hereby and thereby.




     7.2 Conduct of Business Pending Closing.



          (a) From the date of this Agreement until the Closing Date, except as otherwise expressly
consented to in advance by Buyer in writing, the Company shall, and the Sellers shall cause the
Company and each of its Subsidiaries to (i) not sell, transfer or otherwise dispose of any of its
assets except the sale of goods and services in the Ordinary Course of Business, (ii) maintain in
the Ordinary Course of Business the operations of the Company and its Subsidiaries prior to the
Closing Date and shall conduct and operate the Company and its Subsidiaries in the Ordinary Course
of Business (including timely payment of accounts payable, purchase of inventory, performance of
all necessary maintenance and repairs, making capital expenditures and collection of accounts
receivable), (iii) take all necessary measures to preserve and maintain in good repair and
condition all of its assets and properties, (iv) not enter into, modify or negotiate the terms of
any material contracts, including, without limitation, the Leases, (v) not take any action to
amend the articles of incorporation, bylaws or other constitutive documents of the Company or its
Subsidiaries, (vi) not issue, sell or otherwise dispose of any of its authorized but unissued
capital stock, redeem any issued and outstanding capital stock of the Company or its Subsidiaries
or issue any option to acquire capital stock of the Company or its Subsidiaries or any securities
convertible into or exchangeable for capital stock of the Company or its Subsidiaries, (vii) not
declare or pay any dividend or make any other distribution in cash or property on the Company’s
capital stock, (viii) not, directly or indirectly, cause or permit any state of affairs, action or
omission that constitutes, or could lead to, a Material Adverse Change, (ix) preserve intact the
Business, to keep available the services of its current employees and agents and to maintain its
relations and good will with its suppliers, customers, distributors and any others with whom or
with which it has business relations, (x) not enter into any employment contract with any officer
or employee, modify the terms of any existing employment contract or make any loan to or enter
into any transaction of any other nature with any of the Company’s or its Subsidiaries’ officers
or employees or other service providers, (xi) not commit to pay any bonus, pension, retirement
allowance, severance, or termination pay or grant any equity compensation or any increase in base
compensation or employee benefits to its employees outside of the Ordinary Course of Business,
(xii) not enter into, adopt, amend, modify or terminate any bonus, profit sharing, incentive,
severance or similar Existing Contract for the benefit of any of its employees or other service
providers (or take any such action with respect to any Benefit Plan, except as may be required to
ensure such Benefit Plan’s compliance with Applicable Law), (xiii) hire any new employees, except
in the Ordinary Course of Business with respect to employees with an annual base salary and
incentive compensation opportunity not to exceed $100,000, (xiv) maintain and not allow to lapse
or become abandoned or grant any exclusive rights in and to any Company Intellectual Property,
(xv) provide Buyer with an update of any material developments regarding its relationship with any
top-ten customer of the Company or its Subsidiaries, (xvi) maintain in effect all material
insurance policies, including the payment of all premiums as they become due, (xvii) not make any
Tax election or rescind or change any Tax election or adopt or change any method of accounting,
not enter into any settlement of or compromise any material Tax liability, not change any annual
Tax accounting period, not enter into a closing agreement for any Tax, not
surrender any right to
any Tax refund, not file any amended Tax Return or refund claim




25









 







with respect to any Tax, or not prepare any Tax Return that is filed before the Closing Date
in a manner inconsistent with prior practices applicable to the preparation of such Tax Returns
and (xvii) not take any action inconsistent with this Agreement or with the consummation of the
Closing.




          (b) The Sellers’ Representative and Buyer shall (i) confer on a regular basis with each
other, (ii) report (to the extent permitted by Applicable Law and any applicable confidentiality
agreement) to each other on operational matters of the Company and its Subsidiaries and (iii)
promptly advise each other orally and in writing of (A) any representation or warranty made by it
contained in this Agreement becoming untrue or inaccurate in any respect such that the conditions
set forth in Section 8.1(c) or Section 8.2(a) would not be satisfied, (B) the failure by either to
comply with or satisfy in any respect any covenant, condition or agreement required to be complied
with or satisfied by it under this Agreement, (C) any change, event or circumstance that would
reasonably be expected to have a Material Adverse Effect or on a party’s ability to consummate
transactions contemplated hereby in a timely manner, (D) any written notice or other written
communication from any Person alleging that the consent of such Person is or may be required in
connection with the transactions contemplated hereby, (E) any written notice or other written
communication from any Governmental Authority in connection with the transactions contemplated
hereby or (F) the commencement of any Proceeding or, to the Company’s Knowledge, threatened
against, relating to or involving or otherwise affecting the Company or any of its Subsidiaries
which, if pending on the date of this Agreement, would have been required to have been disclosed
pursuant to ARTICLE IV or which relates to the consummation of the transactions contemplated
hereby; provided that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of the parties under
this Agreement.





     7.3 Access and Information. From the date of this Agreement until the first to
occur of the Closing Date or the termination of this Agreement, the Company shall permit Buyer
and its Representatives to make all investigations and inspections of the Company and its
Subsidiaries, the books and records of the Company and its Subsidiaries and all other documents
and information requested by Buyer related to the Company or its Subsidiaries, and to make copies
of such information as Buyer reasonably deems necessary. This access and investigation shall be
made upon reasonable notice and at reasonable places and times. No investigation or inspection
pursuant to this Section 7.3 shall in any way affect or diminish any of the representations or
warranties made by any party in this Agreement or the conditions to the obligations of the
respective parties to consummate the transactions contemplated by this Agreement.




     7.4 Public Announcements. Buyer may issue a press release or other announcement of
this Agreement, the other Operative Documents and the transactions contemplated hereby and
thereby in such form as shall be determined by Buyer in its sole discretion, provided
that Buyer shall provide the Sellers’ Representative with the contents of any such press release
and a reasonable opportunity to comment thereon prior to its public release, except to the extent
that a requirement of any Applicable Law renders it impracticable to consult with Sellers’
Representative in advance of such release. None of the Company, its Subsidiaries, the Sellers or
their respective Affiliates, officers, members, employees or agents shall issue or cause the
issuance or the publication of any press release or any other public statement or announcement
with respect to this Agreement, the other Operative Documents or the transactions contemplated
hereby or thereby, without the prior review and written consent of Buyer in each specific
instance.




     7.5 Exclusivity. Between the date hereof and the Closing Date, neither the Company,
its Subsidiaries, nor the Sellers shall, nor shall they permit any of their respective officers,
directors, Affiliates, agents or representatives to, directly or indirectly, (a) solicit,
initiate or encourage inquiries or proposals or conduct or engage in any discussions or
negotiations to enter into any agreement or understanding, with any other person or entity
relating to a merger, business combination, recapitalization or similar corporate event involving
the Company or its Subsidiaries, or relating to the sale of any of the capital stock of the
Company or any material portion of the assets of the Company or its Subsidiaries or (b) disclose
any nonpublic information relating to the Company or its Subsidiaries, or afford access to the
properties or the books and records of the Company or its Subsidiaries, to any other person or
entity that may be considering any such transaction. The Company shall promptly (and in any
event within twenty-four (24) hours) notify Buyer of its receipt of any inquiries or proposals
regarding any such transaction.



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     7.6 Fulfillment of Conditions. Each party shall take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy each of the
conditions to the obligations to the other parties in this Agreement.




     7.7 Covenant Not to Compete by Majority Shareholder. As a material inducement to
cause Buyer to enter into this Agreement, the Majority Shareholder agrees that for a period of
two (2) years from and after the Closing Date, he will not engage, whether as an officer,
director, consultant, advisor, agent, employee, partner, member, shareholder, participant, owner,
lender, guarantor, investor or otherwise, in the United States, directly or indirectly in a
Competing Business. If the final judgment of a court of competent jurisdiction declares that any
term or provision of this Section 7.7 is invalid or unenforceable, the Majority Shareholder and
Buyer agree that this Section 7.7 shall automatically be deemed modified to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases, or to replace
any invalid or unenforceable term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified.




     7.8 Non-Solicitation Covenant by Majority Shareholder. The Majority Shareholder
agrees that for a period of two (2) years after the Closing Date, he shall not, directly or
indirectly, (a) contact or solicit any customer of the Company or its Subsidiaries for the
purpose of (i) diverting or influencing any such customer to purchase any products or services
from a Competing Business or (ii) marketing, selling, distributing or providing any product or
service that is, or is proposed to be, marketed, sold, distributed or provided by the Company or
its Subsidiaries as of the Closing Date (or that was contemplated as of such date); (b) interfere
with, disrupt or attempt to disrupt, any present or prospective relationship, contractual or
otherwise, between the Company or its Subsidiaries and any vendor, supplier, dealer, distributor,
customer, employee, consultant or other Person having business dealings with the Company or its
Subsidiaries; or (c) hire or solicit for employment as an employee or consultant or in any
similar capacity any person who is or was an employee or director of, or advisor or consultant
to, the Company or any of its Subsidiaries at the time of Closing or at any time during the
twelve (12) months preceding the time of Closing, without the written consent of Buyer, until
such time as such Person has been separated from the Company or its Subsidiaries for a period of
at least one (1) year.




     7.9 Confidential Information. Majority Shareholder agrees that he shall not at any
time use or disclose to or for the benefit of any Person other than Buyer, the Company or the
Subsidiaries, any information, knowledge or data relating to the Business (including, without
limitation, information relating to accounts, financial dealings, transactions, trade secrets,
intangibles, customer lists, pricing lists, processes, plans and proposals), whether or not
marked or otherwise identified as confidential or secret. The foregoing restrictions shall cease
to apply to any Business information, knowledge or data that becomes publicly known without
disclosure by Majority Shareholder.




     7.10 Acknowledgments by the Majority Shareholder. The Majority Shareholder
acknowledges that, in view of the nature of the Business and the business objectives of Buyer in
entering into this Agreement and the transactions contemplated hereby, the restrictions contained
in Sections 7.7, 7.8 and 7.9 are reasonably necessary to protect the legitimate business
interests of Buyer and that any violation of such restrictions will result in irreparable injury
to Buyer, the Company and the Subsidiaries for which damages will not be an adequate remedy. The
Majority Shareholder therefore acknowledges that, if any such restrictions are violated, Buyer
and/or the Company, the Subsidiaries and any of their Affiliates shall be entitled to preliminary
and injunctive relief against the Majority Shareholder as well as to an equitable accounting of
earnings, profits and other benefits arising from such violation.




     7.11 Seller Release. Effective as of the Closing, each Seller on behalf of itself
and each of its Affiliates hereby releases and forever discharges the Company, each of its
Subsidiaries and their respective officers, directors, shareholders and Affiliates, from any and
all actions, causes of action, suits, debts, accounts, claims, contracts, demands, agreements,
controversies, judgments, obligations, damages and liabilities of any nature whatsoever in law or
in equity, whether currently known or unknown, suspected or claimed, whether pursuant to
contract, statute or otherwise, in each case, arising out of events occurring on or prior to the
Closing; provided, however, that the foregoing release shall specifically not apply to the
Company’s obligations under any of the Employment Agreements or the Glick Notes.



27









 






     7.12 Transfer of Title. The Sellers shall, at any time from and after the Closing,
upon the reasonable request of Buyer and at Buyer’s expense, do, execute, acknowledge and
deliver, and cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney or assurances as may be reasonably
required to transfer, convey, grant and confirm to and vest in Buyer good title to all of the
Shares, free and clear of all Liens.




     7.13 Interim Financial Statements and Reports. As promptly as practicable and in
any event no later than thirty (30) days after the end of each calendar month ending after the
date hereof and before the Closing Date (other than the last calendar month), the Company will
deliver to Buyer true and complete copies of the unaudited balance sheet of the Company and its
Subsidiaries and the related statement of profit and losses for the Company and its Subsidiaries
as of and for such calendar month and the portion of the fiscal year then ended together with the
notes, if any, relating thereto, which financial statements shall be prepared on a basis
consistent with the Financial Statements. As promptly as practicable, the Company will also
deliver to Buyer true and complete copies of such other regularly-prepared financial statements,
reports and analyses as may be prepared by the Company and its Subsidiaries.




     7.14 Legending of Restricted Shares. Each Seller agrees to the imprinting, so long
as is required by this Section 7.14, of the following legends on any certificate evidencing
Restricted Shares (with such corrections or changes thereto as may be agreed by the Sellers’
Representative and Buyer):




“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933 OR AN OPINION
OF COUNSEL THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”




Certificates evidencing Restricted Shares shall not be required to contain such legend or any
other legend (a) following any sale of such Restricted Shares under any registration statement
effective under the Securities Act or pursuant to Rule 144 of the Securities Act or (b) if such
Restricted Shares are otherwise eligible for sale under Rule 144 of the Securities Act. At such
time as a legend is no longer required for any Restricted Shares, Buyer will, upon the request of
any Seller and upon delivery by such Seller to Buyer or Buyer’s transfer agent of a legended
certificate representing such Restricted Shares and, if reasonably requested by Buyer, a legal
opinion reasonably satisfactory to Buyer regarding the removal of such legend, deliver or cause to
be delivered to such Seller a certificate representing such Restricted Shares that is free from
all restrictive and other legends.




     7.15
WARN Act With respect to all employees of the Company and its Subsidiaries, the
Company and/or any of its Subsidiaries shall be responsible for providing any notices required to
be given and otherwise complying with the Worker Adjustment and Retraining Notification Act, 29
U.S.C. § 2109 et seq. or the regulations promulgated thereunder (the “WARN Act”) or similar
statutes or regulations of any jurisdiction relating to any plant closing or mass layoff (or
similar triggering event) caused by the Company or any of its Subsidiaries before the Closing,
and Buyer shall have no responsibility or liability under the WARN Act (or any other similar
statute or regulation) to Company employees with respect to any such plant closings, mass layoffs
and similar events occurring prior to the Closing. Schedule 7.15 contains a true and
complete list of the names and the sites of employment or facilities of those individuals who
suffered an “employment loss” (as defined in the WARN Act) at any site of employment or facility
of the Company or any of its Subsidiaries during the 90-day period prior to the date of this
Agreement. Schedule 7.15 shall be updated immediately prior to the Closing with respect
to the 90-day period prior to the Closing. Prior to the Closing, the Company agrees to provide
any notice required under the WARN Act to any employee of the Company or its Subsidiaries as may
be reasonably requested by Buyer in writing, in anticipation of any plant closing or mass layoff
anticipated to occur after the Closing.

     
7.16 Company 401(k) Plans. If requested by Buyer
at least five days prior to the Closing, the Company shall terminate any and all Benefit Plans
intended to qualify under Section 401(a) of the Code that include a cash or deferred arrangement
intended to satisfy the provisions of Section 401(k) of the Code, effective not later than
the day immediately preceding the Closing. In the event that Buyer requests that such
401(k) plan(s) be terminated, the Company shall provide Buyer with evidence that such 401(k)
plan(s) have been terminated pursuant to resolutions of the Board of Directors of the Company
(the form and substance of which shall be subject to review



28









 






and approval by Buyer) not later than
the day immediately preceding the Closing.




     7.17 Release of Debt. On or prior to December 31, 2008, Buyer shall: (i) use
commercially reasonable efforts to cause Felber/Glick, LLC, Stephen Glick, John E. O’Rourke and
Diana Felber to be released from any and all obligations in connection with that certain General
Indemnity Agreement in favor of Arch Insurance Company, dated February 5, 2007; (ii) cause
Stephen Glick, Diana Felber, and Felber/Glick, LLC to be released from any and all guarantees and
any collateral provided in favor of Wachovia in connection with the Line of Credit, the Term
Loan, and/or the new loan agreement and promissory notes that the Company has delivered or is
delivering to Wachovia at or near the time of the Closing; (iii) use commercially reasonable
efforts to cause Stephen Glick, Diana Felber, and Felber/Glick, LLC to be released from any and
all guarantees in favor of LBP Kenton, LLC.




     7.18 Parent Company Guarantee. All other provisions of this Agreement and the other
Operative Documents notwithstanding, and solely to and for the benefit of each Seller and Diana
Felber and Felber/Glick LLC and each of them and no other, Buyer hereby unconditionally and
irrevocably guarantees the Company’s and each of its subsidiaries prompt and faithful payment and
performance of the Company’s and each of its subsidiaries present, and future obligations under
the following agreements:



          (a) the Employment Agreements;




          (b) the Glick Notes;




          (c) any and all construction surety bonds and bonded construction contracts listed in
Schedule 7.18, for which the Sellers or Diana Felber or Felber/Glick LLC or any of them
now have, or will in the future have, liabilities in their capacities as indemnitors under the
General Agreement of Indemnity with Arch Insurance Company; and




          (d) any and all leases and other contracts or commitments listed in Schedule 7.18,
for which the Sellers or Diana Felber or Felber/Glick LLC or any of them now have, or will in the
future have, liability to any third parties as guarantors or endorsers or accommodation parties
for the Company or any of its subsidiaries.





     7.19 Future Bond Requirements.



          (a) After the Closing, Buyer and the Company agree to use commercially reasonable efforts to
obtain construction bonds and bonding capacity for the Company from construction surety bonding
companies using such collateral and on such other terms and conditions that will make it
unnecessary for Stephen Glick or John O’Rourke to continue to provide any guarantees, agreements
of indemnity, or collateral in support of the Company’s bonds or bonding capacity (“General
Agreements of Indemnity”).




          (b) To the extent, if any, that the Company’s construction surety bonding companies require
General Agreements of Indemnity from Stephen Glick or John O’Rourke as a condition to the issuance
of construction surety bonds for the Company or the execution of bonded construction contracts by
the Company, Stephen Glick and John O’Rourke agree to execute and deliver any and all General
Agreements of Indemnity at the Company’s request after the Closing Date. Stephen Glick and John
O’Rourke will have no obligation to deliver and execute or leave in place any General Agreements
of Indemnity on and after January 1, 2009, provided, however, that all existing General Agreements
of Indemnity shall remain in place and in effect as to construction surety bonds that are issued
for specific projects before January 1, 2009 in reliance on the General Agreements of Indemnity.




          (c) All other provisions of this Agreement notwithstanding, Buyer agrees to fully defend
indemnify, and hold harmless Stephen Glick and John O’Rourke from and against any and all charges,
complaints, actions, suits, proceedings, hearings, investigations, claims, demands, judgments,
orders, decrees, stipulations, injunctions, damages, dues, penalties, fines, costs, amounts paid in settlement, liabilities,
obligations, taxes, liens, losses, expenses, and fees (including, without limitation, reasonable
attorneys’, consultants and experts fees and court costs) which result from, arise out of or
relate to the General Agreements of Indemnity. Without limiting the



29









 








generality of the foregoing, the Buyer shall be obligated to fully defend, indemnify and hold harmless Stephen Glick and John
O’Rourke against the costs and expenses of defending any action, demand or claim against or
affecting Stephen Glick and John O’Rourke, arising out of or relating to the General Agreements of
Indemnity, which, if true or successful, would give rise to an indemnifiable claim hereunder, even
if such action, demand or claim ultimately proves to be untrue or unfounded.



          (d) After the Closing, Buyer agrees to use commercially reasonable efforts to be a guarantor
of each bond that is issued to the Company or its subsidiaries.




     7.20 Delivery of Additional Agreements. Within one (1) week from the Closing Date:



          (a) Buyer shall deliver to each Seller (except for Glick) a duly executed Stock Option
Agreement, in the form and for a number of shares acceptable to each Seller; and




          (b) Buyer shall implement and execute a plan to deliver options to certain key employees in
accordance with the terms agreed to by Buyer and Sellers’ Representative (the “Key Employee
Stock Participation Agreement”).





     7.21 Restricted Shares. Immediately following the Closing Date, the Buyer shall
order all certificates evidencing the Restricted Shares to be issued to such Seller from the
Buyer’s transfer agent and Buyer shall deliver and issue such certificates immediately upon
receipt, in the name of such Seller, free and clear of all encumbrances (other than the
restrictions and limitations imposed by this Agreement).




     7.22 Glick Notes. The Buyer agrees that it will not take any action, nor cause the
Company to take any action to invalidate or challenge the validity of the Glick Notes. The Buyer
agrees that it will cause the Company to repay the Glick Notes in the accordance with the terms
of each note.



ARTICLE VIII

CONDITIONS PRECEDENT





     8.1 Conditions to Obligations of Buyer. The obligations of Buyer to perform this
Agreement and close the transactions contemplated hereby are subject to the satisfaction, on or
prior to the Closing Date, of the following conditions unless (subject to Section 13.7) waived
(in whole or in part) in writing by Buyer:



          (a) Approvals. All authorizations, consents, filings and approvals necessary to
permit the Company and the Sellers to perform the transactions contemplated by this Agreement and
the other Operative Documents shall have been duly obtained, made or given, shall be in form and
substance reasonably satisfactory to Buyer, shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and shall be in full force and effect.

           (b)
Litigation. No action, suit or other proceedings shall be pending before any Governmental
Authority seeking or threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in respect thereof, or involving a
claim that consummation thereof would result in the violation of any law, decree or regulation of
any Governmental Authority.

          
(c) Material Adverse Change. There shall not have been any
Material Adverse Change.

          (d) Representations, Warranties and Covenants. The
representations and warranties of the Company and the Sellers contained in this Agreement shall be
accurate and complete in all material respects as of the Closing Date as though made on and as of
such date and shall not contain any untrue statement or omit to state
any material fact necessary in order to make the statements and information contained herein
not misleading (except that such representations and warranties which are qualified as to
materiality shall be accurate and complete in all respects), and the Company and the Sellers shall
have performed and complied in all respects with all covenants, agreements and conditions required
to be performed, satisfied or complied with by them hereunder on or prior to the Closing.

          (e)
Accounts. Buyer shall have received evidence that all authorized signatories on accounts,
safe deposit boxes, lockboxes and other depositories of funds of the Company and its Subsidiaries
at Wachovia, are only Persons designated by Buyer.




30









 








          (f) Closing Conditions Certificate. Buyer shall have received a certificate of the
President or Chief Financial Officer of the Company, or other duly authorized officer satisfactory
to Buyer, certifying that the conditions set forth in Section 8.1(a) through Section 8.1(d) of
this Agreement have been met as of the Closing Date.




          (g) Secretary’s Certificate. The Company shall have delivered to Buyer a certificate
executed by the Secretary of the Company dated as of the Closing Date, certifying that attached
thereto are true and complete copies of (i) the Company’s articles of incorporation, (ii) the
Company’s bylaws, (iii) the resolutions of the Sellers authorizing the execution, delivery and
performance of this Agreement and the Operative Documents and the consummation of the transactions
contemplated hereby and thereby and (iv) a certificate of good standing (or similar certificate)
for the Company issued by the Secretary of State of the Commonwealth of Massachusetts. Each
Subsidiary shall have delivered to Buyer a certificate executed by the Secretary of the Subsidiary
dated as of the Closing Date, certifying that attached thereto are true and complete copies of (i)
the Subsidiary’s articles of incorporation or articles of organization, (ii) the Subsidiary’s
bylaws or operating agreement and (iii) a certificate of good standing (or similar certificate)
for the Subsidiary issued by the applicable Secretary of State.




          (h) FIRPTA Affidavit. The Company and each Seller shall have executed and delivered
to Buyer an affidavit dated as of the Closing Date.




          (i) Employment Agreements. Eric DuPont, Kyle Marshall, John O’Rourke and James Smith
shall each have entered into an Employment Agreement with the Company that is mutually acceptable
to all the parties to the respective agreement, (the “Employment Agreements”), and each
such agreement shall be in full force and effect at and as of the Closing, without amendment or
modification.




          (j) Resignations. Buyer shall have received resignations, effective as of the
Closing Date, of all directors and, to the extent requested by Buyer, any officer, of the Company
and its Subsidiaries.




          (k) Stock Certificates. The Sellers shall have delivered to Buyer stock certificates
representing all of the Shares, duly endorsed in blank or accompanied by stock powers duly
executed in blank.




          (l) Legal Opinion. Smith, Currie & Hancock LLP, legal counsel to the Company and the
Sellers, shall deliver an opinion to Buyer, dated as of the Closing Date.




          (m) Registration Rights Agreements. Sellers shall each have entered into a
Registration Rights Agreement (the “Registration Rights Agreement”), and such agreement
shall be in full force and effect at and as of the Closing, without amendment or modification.




          (n) Glick Notes. Felber Glick, LLC shall have accepted the Glick Notes and delivered
to Buyer the Company’s original Nonnegotiable Promissory Note dated September 15, 2007 in the
original principal amount of $422,390.00 and the Company’s original Commercial Term Promissory
Note dated September 15, 2007 in the original principal amount of $1,000,000.00.




          (o) Operative Documents. Buyer shall have received copies of each Operative Document
to which it is a party duly executed by each of the other parties thereto.




          (p) Release of Encumbrances. Except as disclosed on Schedule 8.1(p), the Company
shall have delivered to Buyer evidence, in form and substance reasonably satisfactory to Buyer, of
the termination and release of all recorded outstanding Liens and financing statements on the
assets and properties of the Company or any of its Subsidiaries, other than those associated with
(i) the Line of Credit (ii) any bond, listed in the disclosure schedules, by Arch Insurance
Company or any of its affiliates in favor of the Company or (iii) any agreement, listed in the
disclosure schedules, between the Company and Arch Insurance Company or any of its affiliates.




          (q) Company Indebtedness. At the Closing, the Company’s Indebtedness shall not
exceed each of: (i) Seven Hundred Thousand Dollars ($700,000) in third-party Indebtedness (other
than the Line of




31









 









Credit), (ii) One Million Four Hundred Twenty-Two Thousand Three Hundred Ninety
Dollars ($1,422,390) owed pursuant to the Glick Notes, and (iii) Four Million Dollars ($4,000,000)
owed under the Line of Credit.



          (r) Due Diligence. Buyer shall be satisfied, in its sole discretion, with the
results of its legal and business due diligence investigation of the Company.





     8.2 Conditions to Obligations of the Sellers. The obligations of the Sellers to
perform this Agreement and close the transactions contemplated hereby are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions unless (subject to
Section 13.7) waived (in whole or in part) by each Seller:



          (a) Representations, Warranties and Covenants. The representations and warranties of
Buyer contained in this Agreement shall be accurate and complete in all material respects as of
the Closing Date as though made on and as of such date and shall not contain any untrue statement
or omit to state any material fact necessary in order to make the statements and information
contained herein not misleading (except that such representations and warranties which are
qualified as to materiality shall be accurate and complete in all respects), and Buyer shall have
performed and complied in all respects with all covenants and agreements and conditions required
to be performed, satisfied or complied with by it hereunder on or prior to the Closing.(b)
Litigation. No action, suit or other proceedings shall be pending before any Governmental
Authority seeking or threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement, or seeking to obtain damages in respect thereof, or involving a
claim that consummation thereof would result in the violation of any law, decree or regulation of
any Governmental Authority having appropriate jurisdiction.




          (c) Operative Documents. Buyer shall have delivered to Sellers’ Representative
copies for each Seller of all Operative Documents to which Seller is a party duly executed by each
of the other parties thereto.




          (d)
Employment Agreements. Buyer shall have delivered to each Seller (except for
Glick) a duly executed Employment Agreement in a form acceptable to each Seller.




ARTICLE IX

INDEMNITY





     9.1 Survival. All representations and warranties of the parties contained in this
Agreement shall survive the Closing Date until March 31, 2010, other than the representations
contained in (i) Sections 4.1, 4.2, 4.4, 4.19, 5.1, 5.4, 6.1, 6.2 and 6.6, which shall survive
indefinitely and (ii) Sections 4.9, 4.13, 4.16 and 4.25, which shall survive until the expiration
of all statutes of limitations applicable to the matters covered thereby, including any
extensions thereof (the representations and warranties referred to in clauses (i) and (ii) of
this Section 9.1 are collectively referred to as the “Excepted Matters”);
provided, however, that representations which are the basis for claims asserted
under this Agreement prior to the expiration of such applicable time periods shall also survive
until the final resolution of those claims. Covenants and other executory obligations contained
in this Agreement shall survive the Closing. The right to indemnification, payment of damages
and other remedies based on representations, warranties, covenants and obligations in this
Agreement shall not be affected by any investigation conducted or any knowledge acquired (or
capable of being acquired) at any time, whether before or
after the Closing Date, with respect to the accuracy or inaccuracy of or compliance with any
such representation, warranty, covenant or obligation.




     9.2 Sellers’ Indemnification. Subject to the provisions of this ARTICLE IX, the
Sellers, jointly and severally, shall indemnify and hold harmless Buyer, the Company, the
Company’s Subsidiaries and their respective Affiliates, shareholders, partners, members,
directors, officers, employees and other agents and representatives from and against any and all
direct and indirect liabilities, judgments, claims, suits, proceedings, settlements, losses,
damages, fees, Liens, Taxes, penalties, interest obligations, expenses (including costs of
investigation and defense and reasonable attorney and other professional advisor and consulting
fees and expenses) whether or not involving a third party (collectively, “Losses”)
incurred or suffered by any such person (the “Buyer Indemnified Parties”) arising from,
by reason of or, in connection with (a) any misrepresentation or breach or alleged
misrepresentation or breach of any representation or warranty of the Company or the Sellers



32









 






contained in this Agreement or any certificate or other document or agreement delivered by the
Company or the Sellers pursuant to this Agreement; or (b) the nonfulfillment by the Company or
the Sellers of any covenant or agreement made by the Company or the Sellers in this Agreement or
any document or agreement delivered in connection with this Agreement.




     9.3 Buyer’s Indemnification. Subject to the provisions of this ARTICLE IX, Buyer
shall indemnify and hold harmless the Sellers, and their respective Affiliates, directors,
officers, employees and other agents and representatives from and against any and all Losses
incurred or suffered by any such person (the “Seller Indemnified Parties”) arising from,
by reason of or in connection with (a) any misrepresentation or breach or alleged
misrepresentation or breach of any representation or warranty of Buyer contained in this
Agreement or any document delivered by Buyer pursuant to this Agreement; or (b) the
nonfulfillment by Buyer of any covenant or agreement made by Buyer in this Agreement or any
document delivered in connection with this Agreement.




     9.4 Defense of Claims. If a claim for Losses (a “Claim”) is to be made by a
Buyer Indemnified Party or a Seller Indemnified Party (an “Indemnified Party”), such
Indemnified Party shall give notice (a “Claim Notice”) to (i) Buyer, in the case of an
indemnification claim pursuant to Section 9.3, or (ii) the Sellers’ Representative, in the case
of an indemnification claim pursuant to Section 9.2 (“Indemnifying Party”), in either
case as promptly as practicable after such Indemnified Party becomes aware of any fact, condition
or event which may give rise to Losses for which indemnification may be sought under this ARTICLE
IX, provided, however, that the failure of any Indemnified Party to give timely
notice hereunder shall not affect rights to indemnification hereunder, except to the extent the
Indemnifying Party is actually prejudiced by such delay. After receipt of the Claim Notice, the
Indemnifying Party shall have the right to defend the Indemnified Party against the Claim and any
Proceeding associated therewith with counsel of its choice reasonably satisfactory to the
Indemnified Party, so long as:



          (a) The Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) days
after the Indemnified Party has given notice of the Claim or Proceeding that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any Losses the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the
Claim or raised in the Proceeding,




          (b) Upon request, the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial
resources to defend against the Proceeding and fulfill its indemnification obligations with respect
to such Loss or Claim,




          (c) The Claim or Proceeding involves only a claim for money damages and no other relief,




          (d) The Indemnifying Party conducts the defense of the Proceeding in a reasonable manner and
without utilizing the same counsel to jointly represent the Indemnified Party and the Indemnifying
Party if such joint representation would be inappropriate or unethical due to conflict of interest,
and




          (e) The Indemnifying Party does not and does not attempt to compromise or settle such Claim or
Proceeding without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld, conditioned or delayed.



In all other cases the Indemnified Party may defend the Claim or Proceeding with counsel of its
choosing at the reasonable expense of the Indemnifying Party. The Indemnified Party may, at its
own cost, participate in the investigation, trial and defense of any such Claim or Proceeding
defended by the Indemnifying Party and any appeal arising therefrom. The parties shall cooperate
with each other in connection with any defense and in any notifications to insurers. If the
Indemnifying Party fails to notify the Indemnified Party within the thirty (30) day period that it
will assume the defense of such Claim or Proceeding after receipt of notice hereunder, the
Indemnified Party against which such Claim has been asserted shall (upon delivering notice to such
effect to the Indemnifying Party) have the right to undertake the defense, compromise or settlement
of such Claim or Proceeding with counsel of its own choosing at the reasonable expense of the
Indemnifying Party and the Indemnifying Party shall have the right to participate in the defense at
its own cost.




33









 









     9.5 Adjustment. The parties to this Agreement agree that any indemnification
payments made pursuant to this Agreement shall be treated for tax purposes as an adjustment to
the Purchase Price, unless otherwise required by Applicable Law.




     9.6 Limitations.



          (a) Notwithstanding anything to the contrary in Section 9.2, except for Losses in respect of
the Excepted Matters, or Losses resulting from fraud or intentional misrepresentation by the
Sellers or any of them, the Sellers shall have no obligation to indemnify any Buyer Indemnified
Party for Losses under Section 9.2(a):





          (i) unless the aggregate amount of the Losses suffered by Buyer Indemnified Parties
exceeds on a cumulative basis an amount equal to One Hundred Thousand Dollars ($100,000)
(the “Sellers’ Basket”), in which event the Sellers shall (subject to the following
sub-clause (ii)) be liable only for an amount of such Losses in excess of the Sellers’
Basket, or




          (ii) in an amount exceeding Three Million Five Hundred Thousand Dollars ($3,500,000) in
the aggregate.




All claims for indemnification against the Sellers shall be satisfied by the Sellers jointly
and severally, in cash. In addition and notwithstanding the preceding sentence, Buyer may
at its option satisfy any unpaid indemnification claim against the Sellers by reducing the
amount of any due but unpaid Earn-Out Payments by the aggregate dollar amount of the unpaid
indemnification claim.



          (b) With respect to any Losses in connection with a breach by Majority Shareholder of the
provisions contained in Sections 7.7, 7.8 or 7.9, the Majority Shareholder shall be solely
responsible for the indemnification obligations contained in Section 9.2(a).




          (c) Notwithstanding the other provisions of Section 9.6, any Loss suffered by Buyer
Indemnified Parties for payment of any insurance deductible in connection with any Proceedings
that is disclosed in Schedule 4.11 or that should have been disclosed in Schedule
4.11, shall be excluded from the Seller’s Basket.




          (d) Notwithstanding anything to the contrary contained in Section 9.3, except for Losses in
respect of the Excepted Matters or resulting from actual fraud or intentional misrepresentation,
Buyer shall have no obligation to indemnify any Seller Indemnified Party for Losses under Section
9.3(a):





          (i) unless the aggregate amount of the Losses suffered by the Seller Indemnified
Parties exceeds on a cumulative basis an amount equal to One Hundred Thousand Dollars
($100,000) “Buyer’s Basket”, in which event Buyer shall (subject to the following
sub-clause (ii)) be liable for only for an amount of such Losses in excess of the Buyer’s
Basket, or




          (ii) in an amount exceeding Three Million Five Hundred Thousand Dollars ($3,500,000) in
the aggregate.




     9.7 No Waiver. Notwithstanding any provisions of this Agreement to the contrary,
except with respect to a breach by Majority Shareholder of any of Sections 7.7, 7.8 and 7.9 (as
to which the Buyer shall have the additional remedies set forth in Section 7.10) the remedies
available to Buyer under this ARTICLE IX shall be the sole and exclusive remedies of Buyer as
between Buyer and Sellers in relation to this Agreement, but this ARTICLE IX shall not affect any
legal or equitable rights, if any, that the Sellers or any of them may have to seek
indemnification or contribution among the Sellers or any of them, or among the Sellers’
Representative and the and Sellers or any of them.




     9.8 Tax Indemnity.



          (a) The Sellers shall be jointly and severally responsible for and shall indemnify and hold
harmless the Buyer Indemnified Parties from and against any and all Losses arising out of,
resulting from or




34









 







otherwise related to (i) Taxes of the Company or any of its Subsidiaries for any
Pre-Closing Tax Period, (ii) Taxes imposed on the Company or any of its Subsidiaries pursuant to
Treasury Regulation Section 1.1502-6 (or any analogous or similar state, local, or foreign Law) as
a result of any of those corporations (or any predecessor) having been a member of any Affiliated,
consolidated, combined or unitary group at any time prior to the Closing, and Taxes of any Person
otherwise imposed on the Company or any of its Subsidiaries for any Pre-Closing Tax Period, (iii)
any breach of or inaccuracy in any of the representations or warranties contained in Section 4.9,
(iv) any failure of the Sellers to comply with their covenants, agreements or obligations under
Section 7.2(a) or ARTICLE X, (v) Taxes imposed on the Company or any of its Subsidiaries for any
Post-Closing Tax Period as a result of any Tax Sharing Agreement entered into by the Company or
any of its Subsidiaries (or any predecessor) prior to the Closing.




          (b) Each Seller shall pay to Buyer any amount required to be paid by it pursuant to Section
9.8(a) within the later of (i) thirty (30) days after the Sellers’ Representative receives written
notice from any Buyer Indemnified Party requesting such payment and (ii) two (2) days prior to the
date that the indemnified Tax or related expense is required to be paid. The amount of
indemnification for Taxes or related expense pursuant to Section 9.8(a) shall be computed without
regard to the set-off or other utilization of any loss, deduction or Tax credit of any Buyer
Indemnified Party or resulting from the transactions contemplated by this Agreement.
Notwithstanding any other provision of this Agreement, Section 9.8(a) shall not be interpreted to
allow a Buyer Indemnified Party to be indemnified more than once for the same Loss.




          (c) Notwithstanding anything in this Agreement to the contrary, the procedural provisions of
this Section 9.8 shall govern all claims for indemnification with respect to Taxes.




          (d) Any claim for indemnification under this Section 9.8 shall be brought prior to the
expiration of any applicable statute of limitations (including all periods of extension, whether
automatic or permissive) for the assessment of Tax that gives rise or is related to the Loss which
is the subject of the indemnification claim and shall thereupon expire, except to the extent that
a claim for indemnification has been asserted in writing prior to such expiration (in which event
the claim for indemnification shall survive until such claim has been resolved).




ARTICLE X

TAX MATTERS





     10.1 Allocation of Tax Liability. In the event Applicable Law does not require or
permit the parties to this Agreement to close state, local or foreign Tax periods as of the close
of the Closing Date, the allocation of Tax liability between the Pre-Closing Tax Period and the
Post-Closing Tax Period comprising a Straddle Period shall be made in accordance with this
Section 10.1 as follows:



          (a) in the case of Taxes based upon income, gross receipts (such as sales Taxes) or specific
transactions involving Taxes other than Taxes based upon income or gross receipts, the amount of
Taxes attributable to any Pre-Closing Tax Period or Post-Closing Tax Period included in the
Straddle Period shall be determined by closing the books of the applicable corporation as of the close of the Closing
Date and by treating each of such Pre-Closing Tax Period and Post-Closing Tax Period as a separate
taxable year; and




          (b) in the case of Taxes that are determined on a basis other than income, gross receipts or
specific transactions, the amount of Taxes attributable to any Pre-Closing Tax Period included in
the Straddle Period shall be equal to the amount of such Taxes for the Straddle Period multiplied
by a fraction, the numerator of which is the number of days in the Pre-Closing Tax Period included
in the Straddle Period and the denominator of which is the total number of days in the Straddle
Period, and the amount of such Taxes attributable to any Post-Closing Tax Period included in a
Straddle Period shall be the excess of the amount of the Taxes for the Straddle Period over the
amount of Taxes attributable to the Pre-Closing Tax Period included in such Straddle Period.




35










 









     10.2 Filing and Payment Responsibility.



          (a) Buyer shall timely prepare and file, or cause to be timely prepared and filed, (at
Sellers’ reasonable expense) all Tax Returns of the Company and its Subsidiaries for, or that
include, Pre-Closing Tax Periods that are required to be filed after the Closing Date. The Buyer
shall provide, or cause to be provided, to the Sellers’ Representative a copy of each Income Tax
Return for such period no less than twenty (20) days prior to filing such Tax Return, shall permit
Sellers’ Representative to review and comment on such Tax Return, and shall make such revisions to
such Tax Return as are reasonably requested by the Sellers’ Representative to the extent such
revisions relate to Taxes of any Pre-Closing Tax Period, except (i) where a contrary position is
required by Applicable Law, (ii) to the extent such comments, if incorporated in any such Tax
Return, would cause such Tax Return to be prepared in a manner inconsistent with past Tax Returns,
or (iii) to the extent such comments, if incorporated in any such Tax Return, could reasonably be
expected to have an adverse effect (relative to the benefit to Sellers resulting from
incorporating such comments in such Tax Return) on the liability for Taxes of Buyer, the Company
or any of its Subsidiaries, or any other Affiliate of Buyer in any Post-Closing Tax Period.




          (b) Not later that two (2) Business Days prior to the due date for payment of Taxes for any
Pre-Closing Tax Period, the Sellers shall pay to the Buyer an amount equal to the Taxes for the
Pre-Closing Tax Period (as determined in the case of any Straddle Period in Section 10.1). The
amount of such Taxes for the Pre-Closing Period shall be computed without regard to the set-off or
other utilization of any loss, deduction or Tax credit of Buyer, the Company or any of its
Subsidiaries, or any other Affiliate of Buyer or resulting from the transactions contemplated by
this Agreement. If any Tax Return for, or that includes, a Pre-Closing Tax Period is filed on
extension and at the time of filing of any such Tax Return the actual amount of such Taxes due
that relates to the Pre-Closing Tax Period exceeds the amount previously determined to be due
pursuant to the first sentence of this Section 10.2(b), the Sellers shall pay an amount equal to
such excess Taxes, but only to the extent the additional amount due exceed the then existing
balance (if any) in the Adjusted Tax Reserve. If any Tax Return for, or that includes, a
Pre-Closing Tax Period is filed on extension and at the time of filing of any such Tax Return the
actual amount of Taxes due that relates to the Pre-Closing Tax Period is less than the amount
previously determined to be due pursuant to the first sentence of this Section 10.2(b), Buyer
shall pay, or cause to be paid, the amount of such excess Tax payment to the Sellers to the extent
such excess Tax payment was paid by the Sellers and shall increase the Adjusted Tax Reserve to the
extent the amount of such excess Tax payment previously reduced the Adjusted Tax Reserve.





     10.3 Conduct of Tax Proceedings.



          (a) Buyer shall promptly notify the Sellers’ Representative in writing upon receipt by Buyer,
the Company or any of its Subsidiaries of a written notice of any pending or threatened Tax
Proceeding for which the Sellers may have liability pursuant to this Agreement; provided,
however, no failure or delay by Buyer to provide notice of a Tax Proceeding shall reduce
or otherwise affect the obligation of the Sellers hereunder except to the extent the Sellers are
actually prejudiced thereby. Except as otherwise provided herein, the Sellers’ Representative
shall have the right to control the conduct of any Tax Proceeding for which the Sellers are liable
under Section 9.8(a) for any Tax payable with respect to any Pre-Closing Tax Period, by notifying
Buyer in writing within ten (10) days (or such shorter period as may be required by the notice of
the Tax Proceeding) from the receipt from Buyer of the notice described in the first sentence of
this Section 10.3(a) of its intention to assume control of the conduct of such Tax Proceeding,
provided (i) the Sellers have acknowledged in writing their indemnification obligation for
such Taxes to the extent the Tax Proceeding is resolved against the Company or any of its
Subsidiaries and (ii) the Sellers have provided evidence reasonably satisfactory to Buyer of their
ability to fulfill their indemnification obligations. Buyer and the Sellers’ Representative shall
cooperate with each other in the conduct of any Tax Proceeding. The Sellers’ Representative shall
keep Buyer informed by providing Buyer with all written materials relating to such Tax Proceeding
received from the relevant Governmental Authority, (ii) Buyer shall be entitled to participate (at
its own expense) in any Tax Proceeding, including having an opportunity to comment on any written
materials prepared in connection with any Tax Proceeding and attending any conferences relating to
any Tax Proceeding and (iii) the Sellers’ Representative shall not compromise or settle any Tax
Proceeding, without obtaining Buyer’s prior written consent which shall not be unreasonably
withheld (or delayed).




36









 








          (b) If the Sellers’ Representative shall elect in writing not to control or participate in
the control of the conduct of a Tax Proceeding described in Section 10.3(a), or otherwise fail to
take control of a Tax Proceeding which it is entitled to control, Buyer shall have the right to
control the conduct of such Tax Proceeding; provided, however, that Buyer shall
keep the Sellers’ Representative informed of all developments.




          (c) Buyer shall have the right to control the conduct of any Tax Proceeding involving a
Straddle Period. The Sellers’ Representative may participate in any such Tax Proceeding at its
own expense and the Sellers’ Representative shall be kept informed of the progress of such Tax
Proceeding. The Sellers’ Representative’s consent shall be required prior to the settlement of
any Tax Proceeding relating to a Straddle Period, which consent shall not be unreasonably withheld
(or delayed).




          (d) In the event the resolution of all or a portion of a Tax Proceeding with respect to a
Pre-Closing Tax Period (other than a Straddle Period) could result in an increase in Taxes or a
loss of Tax benefits in a Post-Closing Tax Period for the Company or any of its Subsidiaries,
Buyer or Buyer’s other Affiliates, the Sellers’ Representative and Buyer shall jointly control the
conduct and resolution of such Tax Proceeding or portion thereof.




          (e) If there is a dispute between the Sellers’ Representative and Buyer regarding the conduct
or resolution of any Tax Proceeding or portion thereof described in Section 10.3(d), such dispute
shall be referred to the Tax Arbitrator. Each of the Sellers’ Representative and Buyer shall
present its position to the Tax Arbitrator, which shall decide which position shall be adopted.
The Tax Arbitrator shall not be entitled to accept any other position, unless the Sellers’
Representative and Buyer shall so agree in writing. The decision of the Tax Arbitrator shall be
final and binding, and its fees and costs shall be paid one-half by the Sellers and one-half by
Buyer.





     10.4 Cooperation. After the Closing, Buyer and the Sellers shall promptly make
available or cause to be made available to the other, as reasonably requested, and to any
Governmental Authority, all information, records or documents relating to Tax liabilities,
potential Tax liabilities, or refunds of or relating to the Company for all Pre-Closing Tax
Periods and shall preserve all such information, records and documents until the later of five
(5) years from the end of the calendar year in which the Closing occurs or the expiration of any
applicable statute of limitations, including any extensions thereof. As soon as practicable
after the Closing Date, but not later than thirty (30) days thereafter, the Sellers will cause to
be delivered to the Buyer all of the original books and records (including work papers) and Tax
Returns of the Company which are in the possession of the Sellers, their Affiliates or their
Representatives.




     10.5 Transfer Taxes. Each party shall pay all any sales, use, purchase, transfer,
franchise, deed, fixed asset, stamp, documentary stamp, use or other Taxes and recording charges
(including any penalties and interest) (collectively, “Transfer Taxes”) (and prepare and
file all Tax Returns for such Transfer Taxes) arising out of or in connection with the
transactions effected pursuant to this Agreement for which each party is liable under Applicable
Law, and each party shall pay its own out-of-pocket expenses associated with the preparation and
filing of such Tax Returns for such Transfer Taxes. The parties shall cooperate and provide all
necessary documentation required for the filing of the Tax Returns for such Transfer Taxes.




     10.6 Tax Sharing Agreements. Prior to the Closing, the Sellers shall cause all Tax
Sharing Agreements to be terminated, and no additional payments shall be required to be made
thereunder by the Company or any of its Subsidiaries.




     10.7 Closing Date Activities. Each of the Sellers and Buyer agrees not to engage,
and not to cause the Company or any of its Subsidiaries to engage, in any transaction on the
Closing Date outside of the Ordinary Course of Business and not otherwise contemplated by this
Agreement.



37









 





ARTICLE XI

TERMINATION OF AGREEMENT





     11.1 Events of Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned, at any time prior to the Closing Date:



          (a) by the mutual written agreement of Buyer and the Company;




          (b) by Buyer, if the Company or any Seller breaches any of its respective representations,
warranties, covenants or agreements contained in this Agreement, and such breach cannot be cured
within thirty (30) days after receipt of notice of the breach from the Buyer;




          (c) by the Company, if Buyer breaches any of its representations, warranties, covenants or
agreements contained in this Agreement, and such breach cannot be cured within thirty (30) days
after receipt of notice of the breach from the Buyer; and




          (d) by Buyer, on the one hand, or the Sellers, on the other hand, if any of the conditions to
such party’s obligation to close the transactions contemplated by this Agreement is not satisfied
(or waived in writing by such party) on or prior to June 30, 2008 (the “Termination
Date”); provided, however, that if any such condition is not satisfied as a
result of a breach by any party of its representations, warranties, covenants or agreements
contained in this Agreement, then the party responsible for such breach shall not have the right
to terminate this Agreement pursuant to this clause (d).





     11.2 Effect of Termination. In the event that this Agreement is terminated in
accordance with Section 11.1, this Agreement shall forthwith terminate and have no further effect
and no party shall have any further obligation or liability to any other party with respect to
this Agreement.



ARTICLE XII

SHAREHOLDERS’ REPRESENTATIVE





     12.1 Authorization of the Sellers’ Representative.



          (a) Each of the Sellers hereby designates and appoints, authorizes and empowers Eric M.
Dupont (the “Sellers’ Representative”) (and each successor appointed in accordance with
this Article XII) to perform all such acts, on behalf of each Seller, as are required, authorized
or contemplated to be performed by Sellers’ Representative by this Agreement and the transactions
contemplated hereby, which will include the power and authority to: (i) execute and deliver all
documents necessary or desirable to carry out the intent of this Agreement; (ii) determine whether
the conditions to Closing in Section 8.2 hereof have been satisfied; (iii) serve as the named
party with respect to any claim for indemnification by any Buyer Indemnified Party and to resolve
such claims as the Sellers’ Representative in its sole good faith discretion deems appropriate;
(iv) give and receive any and all notices pursuant to this Agreement or any other Operative
Document; (v) act on behalf of the Sellers with respect to any matter concerning the Restricted
Stock; (vi) grant any consent or approval under this Agreement; (vii) make all other elections or
decisions contemplated by this Agreement; (viii) approve waivers, clarifications or post-Closing
modifications to this Agreement which do not materially and adversely affect the rights of any one
Seller disproportionately to the other Sellers; (ix) receive any payments contemplated hereunder
on behalf of the Sellers; (xi) review the Earn-Out Schedule and, if necessary, deliver an
Objection Notice to the Buyer under Section 3.2 of any items of disagreement related thereto or
approval thereof, and agree upon any resolution of any dispute with respect thereto; and (xii)
perform each such act and thing whatsoever that the Sellers’ Representative may be or is required
to do, or which the Sellers’ Representative in his sole good faith discretion determines is
desirable to do, pursuant to or to carry out the intent of this Agreement, and to amend, modify or
supplement any of the foregoing. No Seller will have any cause of action against the Seller’s
Representative for any action taken or not taken, decision made or instruction given by the
Sellers’ Representative under this Agreement, except for actual fraud, gross negligence,
intentional misrepresentation or willful misconduct by the Sellers’ Representative.




38









 








          (b) Each Seller hereby acknowledges and agrees that the Sellers’ Representative shall be the
only person authorized to take any action so required, authorized or contemplated by this
Agreement by any Seller and, without limiting the generality of the foregoing, each Seller hereby
acknowledges and agrees that Buyer shall be required to provide notices to the Sellers pursuant to
this Agreement solely to the Sellers’ Representative. Each Seller further designates and appoints
the Sellers’ Representative as its agent for service of process with respect to any disputes
regarding or arising out of this Agreement or the transactions contemplated hereby. Any action
taken by the Sellers’ Representative in the name of or on behalf of any Seller in connection with
any matter arising under this Agreement shall be binding upon such Seller and its successors,
agents and heirs.




          (c) The grant of authority provided for in this Section 12.1: (i) is coupled with an
interest and is being granted, in part, as an inducement to the Company, the Sellers and Buyer to
enter into this Agreement and will be irrevocable and survive the death, incompetence, bankruptcy
or liquidation of any Seller and will be binding on any successor thereto; and (ii) may be
exercised by the Sellers’ Representative acting by signing in his capacity as the Sellers’
Representative.




     12.2 Hold Harmless. The Sellers hereby agree, severally as to each Seller only and
not jointly as to or with any other Sellers, to indemnify the Sellers’ Representative (in his
capacity as such) on a pro rata basis in accordance with each Sellers’ respective ownership
percentage in the Company as of the time of Closing, and to hold the Sellers’ Representative (in
his capacity as such) harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of whatever kind which may
at any time be imposed upon, incurred by or asserted against the Sellers’ Representative in such
capacity in any way relating to or arising out of the Sellers’ Representative’s action or failure
to take action pursuant to this Agreement, provided, however, that Seller’s Representative will
have no right to be indemnified or held harmless for liabilities, etc., that result from actual
fraud, intentional misrepresentation, gross negligence, or willful misconduct by the Sellers’
Representative. Each of the Sellers hereby authorizes the Sellers’ Representative to apply
proceeds otherwise distributable to such Seller pursuant to this Agreement to satisfy any of such
Sellers’s obligations under this Article XII.




     12.3 Removal and Replacement. Sellers can replace the Seller’s Representative at
any time, with or without cause, by majority vote of the number of shares of common stock the
Company has outstanding at the time this Agreement becomes effective (including any shares then
held by the Seller’s Representative). If the Sellers’ Representative or its heirs or personal
representative, as the case may be, advises the Sellers that Seller’s Representative is
unavailable to perform its duties hereunder, then within five (5) Business Days of delivery of
notice of such advice, an alternative Sellers’ Representative will be appointed by the Sellers,
by majority vote of the number of shares of common stock the Company has outstanding at the time
this Agreement becomes effective. Any references in this Agreement to the Sellers’
Representative shall be deemed to include any duly appointed successor Sellers’ Representative.
Replacement of the Seller’s representative will become effective as to Buyer immediately upon
delivery of notice to Buyer.




     12.4 Reliance. Buyer may conclusively and absolutely rely, without inquiry, and
until the receipt of written notice of a change of the Sellers’ Representative under Section
12.3, may continue to rely, without inquiry, upon the actions of the Sellers’ Representative
as the actions of each Seller in all matters referred to in this ARTICLE XII. Each Seller hereby
authorizes the other parties hereto to disregard any notice delivered or other action taken by
any Seller pursuant to this Agreement except for the Sellers’ Representative.



ARTICLE XIII

MISCELLANEOUS





     13.1 Entire Agreement. This Agreement, including the schedules hereto, and the
other Operative Documents contain the complete and final agreement among the parties with respect
to the transactions contemplated by this Agreement and supersede all prior agreements or
understandings among the parties. No party is entering into this Agreement in reliance on any
representation by any other party or parties that is not set forth in writing in this Agreement
or another Operative Document.



39









 






     13.2 Descriptive Headings; Certain Interpretations. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of any provision of
this Agreement. Except as otherwise expressly provided in this Agreement, the singular includes
the plural and the plural includes the singular and a reference in this Agreement to an Article,
Section, Exhibit or Schedule is to the articles, sections, exhibits or schedules, if any, of this
Agreement. The parties are each represented by legal counsel and have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties,
and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Agreement




     13.3 Notices. All notices, requests, demands or other communications
(“Notices”) required to be given pursuant to this Agreement by any party shall be in
writing and shall be delivered by (a) certified mail, postage prepaid, return receipt requested,
(b) commercial overnight courier service with signature required for delivery, or (c) electronic
mail (with confirmation of successful transmission). If the Notice is given by mail or courier
service, delivery shall be evidenced by the certified mail return receipt, or the commercial
courier’s standard method of confirming delivery. If the Notice is sent by electronic mail,
delivery shall be conclusively deemed made the first Business Day following successful
transmission. Notices shall be provided to the following addresses (any of which may be changed
upon like notice to the other parties to this Agreement):



If to Buyer, to:


c/o Lime Energy Co.

1280 Landmeier Road

Elk Grove Village, Illinois 60007

Attention: Jeffrey Mistarz

Telephone No.: 847.437.1666

Email to                                        




with a copy (which shall not constitute notice) to:


Reed Smith LLP

10 S. Wacker Dr.

Chicago, Illinois 60606

Attention: Evelyn C. Arkebauer, Esq.

Telephone No.: 312.207.3879

Email to                                        




If to the Company prior to Closing, or to the Sellers or the Sellers’ Representative, to:


Applied Energy Management, Inc.

16810 Kenton Drive, Suite 240

Huntersville, NC 28078

Attention: Eric M. Dupont

Telephone No.: 704.892.4442

Email to                                        




with a copy to (which will not constitute notice):


Smith, Currie & Hancock LLP

2700 Marquis One Tower

245 Peachtree Center Avenue, N.E.

Atlanta, GA 30303-1277

Attention: James W. Copeland, Esq.

Telephone No.: 404.582.8042

Email to                                        




40









 









     13.4 Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument. Any counterpart or other signature delivered by electronic mail in portable
document format (.pdf) shall be deemed for all purposes as being good and valid execution and
delivery of this Agreement by that party.




     13.5 Survival. All representations and warranties, agreements and covenants
contained in this Agreement or in any document delivered pursuant to, or in connection with, this
Agreement (unless otherwise expressly provided otherwise in this Agreement) shall survive the
Closing.




     13.6 Benefits of Agreement. All of the terms and provisions of this Agreement shall
be binding upon and inure to the benefit of the parties to this Agreement and their respective
successors and assigns. This Agreement is for the sole benefit of the parties to this Agreement
and not for the benefit of any third party.




     13.7 Amendments and Waivers. No modification, amendment or waiver of any provision
of, or consent required by, this Agreement, nor any consent to any departure from the terms of
this Agreement, shall be effective unless it is in writing and signed by the parties to this
Agreement. Any modification, amendment, waiver or consent shall be effective only in the
specific instance and for the purpose for which it is given.




     13.8 Assignment. This Agreement and the rights and obligations under this Agreement
shall not be assignable or transferable by any party to this Agreement without the prior written
consent of the other party to this Agreement.




     13.9 Enforceability. It is the desire and intent of the parties to this Agreement
that the provisions of this Agreement shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated to be invalid or
unenforceable, the provision shall be deemed amended to delete therefrom the portion adjudicated
to be invalid or unenforceable, with the deletion to apply only with respect to the operation of
the provision in the particular jurisdiction in which the adjudication is made.




     13.10 Governing Law; Arbitration, Waiver of Jury Trial.



          (a) Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Illinois, without giving effect to any choice of law or
conflict of law provision or rule that would cause the application of the laws of any jurisdiction
other than the State of Illinois.




          (b) Arbitration. Each party to this Agreement hereby irrevocably agrees that, all
claims, disputes, legal actions, or proceeding arising out of or relating to this Agreement, the
Operative Documents or the transactions contemplated hereby and thereby, shall be resolved by
binding arbitration (“Arbitration”) in accordance with the following procedures:





               (i) Initiation of the Arbitration. The party or parties on one side of the dispute(s)
(collectively the “Claimant”) may initiate the Arbitration by sending to the party or
parties on the other side of the dispute(s) (collectively the “Respondent”) written notice
identifying the matter(s) in dispute and invoking the procedures of this Section 13.10(b)
(the “Demand”). The Demand shall include a statement setting forth the nature of the
dispute(s), the amount in controversy, if any, and the remedy sought. Within thirty (30) days of
receipt of the Demand, the Respondent shall submit a statement (the “Answer”), that shall
set forth the Respondent’s response(s) to the Claimant’s claim(s) and any counterclaims asserted by
the Respondent, setting forth the nature and amount of such counterclaim(s), and the remedy sought
by the Respondent.




               (ii) Selection of the Arbitrators. Within five (5) Business Days after the due date of the
Answer (the (“Answering Date”), the parties shall confer and make a bona fide attempt to
agree upon three (3) independent arbitrators to whom to submit the matter in dispute for final and
binding arbitration (the “Arbitrators”). The Arbitrators shall be individuals who are
either attorneys or business persons experienced with merger and acquisition transactions of the
type set forth in this Agreement. If the parties cannot agree upon three arbitrators, the
arbitrators they do agree upon shall select the remaining member or members of the panel. In the
event that, on or



41









 




prior to the fifteenth (15th) Business Day following the Answering Date, the
parties cannot agree upon at least one Arbitrator, the parties shall submit the Demand and Answer,
along with required fees, to the American Arbitration Association (“AAA”), and a three
member neutral panel of Arbitrators who have familiarity and experience with merger and acquisition
transactions of the type set forth in this Agreement shall be selected in accordance with the
Commercial Arbitration Rules of the AAA, or any successor thereto, in effect at the time the
relevant dispute, controversy, difference or claim is submitted for arbitration pursuant to this
Agreement (the “AAA Rules”). However chosen, the parties shall use commercially reasonable
efforts to engage the Arbitrators within thirty (30) days of the Answering Date.





               (iii) Rules of Procedure. The Arbitration proceeding shall be conducted in accordance with
the AAA Rules, except as modified in this Section 13.10(b) (collectively, the
“Arbitration Rules”).




               (iv) Discovery. The parties shall be entitled to commence discovery five (5) Business Days
after the due date of the Answer, and shall have sixty (60) calendar days following the date the
third and last Arbitrator is engaged (the “Arbitrator Engagement Date”) to serve written
document requests and not more than twenty-five (25) interrogatories (including subparts).
Responses to written discovery shall be due thirty (30) calendar days after service on the
party(ies) from whom such discovery is sought. The party(ies) on each side of the dispute shall
have the opportunity to take up to ten (10) depositions, with each deposition limited to seven
hours of testimony. Such depositions shall be completed within three (3) months of the Arbitrator
Engagement Date. For good cause shown, the Arbitrators can modify the scope of and schedule for
discovery.




               (v) The Arbitration Hearing. At a date that is mutually convenient to the Arbitrators and the
parties, but commencing no later than thirty (30) days following the close of discovery, the
Arbitrators shall commence the arbitration hearing (the “Arbitration Hearing”). The
Arbitration Hearing shall take place in Chicago, Illinois, at a location mutually selected by the
parties or, absent agreement, chosen by the Arbitrators. The Arbitration Hearing need not run for
consecutive days but must be completed within sixty (60) days following commencement of the
Arbitration Hearing. At the Arbitration Hearing, the parties to this Agreement shall follow the
Federal Rules of Evidence, and the Arbitrators are bound to apply such rules of evidence, unless
the parties mutually agree to deviate from any rule in writing in advance of the Arbitration
Hearing. The Arbitrators are also bound to follow the substantive laws of Illinois applicable to
the issues in the case, without regard to conflict of law principles. For good cause shown, the
Arbitrators can modify the provisions of this Section 13.10(b)(v).




               (vi) Form of Decision. The Arbitrators shall render a final award in writing, setting forth
their decision, the basis therefore, and the relief to be granted to the party(ies) on each side of
the dispute (the “Award”), no later than the thirty (30) days following the close of the
Arbitration Hearing. In no event shall the Arbitrators award punitive damages to any of the
parties involved in the dispute. The Arbitrators shall be authorized to grant injunctive relief.
The Arbitrators’ decision shall be a final and binding determination of the dispute. Judgment upon
the Award may be entered in any court having jurisdiction.




               (vii) Attorneys Fees and Costs. The Arbitrator shall have the authority to award the payment
of reasonable out-of-pocket costs and expenses of each party (including reasonable and documented
fees and disbursements of counsel and other professionals) for bad faith, stubborn litigiousness,
or unnecessary trouble and expense. Furthermore, if a party fails to proceed with the Arbitration,
unsuccessfully challenges the Award, or fails to comply with the Award, the party(ies) on the other
side of the dispute shall, in any resulting litigation, be entitled to apply to the court(s) for
and recover its(their) costs of suit including reasonable attorneys’ fees for having to compel
arbitration or defend or enforce the Award.




               (viii) Payment of Arbitration Expenses. The parties shall pay the Arbitrators’ fees and
expenses while the Arbitration is pending in accordance with the AAA Rules.




               (ix) Submission to Jurisdiction. To the extent any party seeks to challenge or dispute the
scope, jurisdiction, conduct or result of the Arbitration, or requires judicial intervention in aid
or furtherance of the Arbitration, such party(ies) shall bring such action in the state or federal
court located in the County of Cook, Chicago, Illinois. With respect to any such action, the
parties irrevocably submit to the exclusive jurisdiction of the state and federal courts located in
the County of Cook, Chicago, Illinois; irrevocably and unconditionally waive any objection to the
laying of venue of any such action in the state or federal courts located in the County of Cook,



42









 




Chicago, Illinois; and hereby further irrevocably and unconditionally agree not to plead or
claim that any such action in such court has been brought in an inconvenient forum or to raise any
similar defense or objection.





               (x) Waiver of Trial by Jury. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY
IN ANY ACTION OR PROCEEDING BROUGHT ON OR WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTION
DOCUMENTS, INCLUDING TO ENFORCE OR DEFEND ANY RIGHTS HEREUNDER, AND AGREES THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.




               (xi) Consent to Joinder of Certain Other Indemnitors and Guarantors. Each party to
this agreement to arbitrate agrees that this agreement to arbitrate shall also inure to the benefit
of any other person or other entity that provides (or has provided) collateral or enters (or has
entered) into an agreement of indemnity before January 1, 2009 for the purpose of obtaining,
maintaining or increasing the Company’s bonding capacity, to the end that any and all claims and
disputes, if any, among the parties to this Agreement and the Company’s various construction surety
bonding indemnitors or guarantors (whether presently known or known) can be decided in one
consolidated arbitration proceeding.


     13.11 Disclosure Schedules. Nothing in any Schedule
attached hereto shall be adequate to disclose an exception to a representation or warranty made in
this Agreement unless such Schedule identifies the exception with particularity and describes the
relevant facts in reasonable detail. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be adequate to disclose an
exception to a representation or warranty made in this Agreement, unless the representation or
warranty has to do with the existence of the document or other item itself. No exceptions to any
representations or warranties disclosed on one Schedule shall constitute an exception to any other
representations or warranties made in this Agreement unless the exception is disclosed as provided
herein on each such other applicable Schedule or cross-referenced in such other applicable section
or Schedule.



* * * *




43









 








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



	 	 	 	 	 
	 

	 	SELLERS:	 	 
	 
	 	 	 	 
	 

	 	      /s/ Stephen Glick
 

	 	 
	 

	 	STEPHEN GLICK, individually	 	 
	 
	 	 	 	 
	 

	 	      /s/ John O’Rourke
 

JOHN O’ROURKE, individually
	 	 
	 
	 	 	 	 
	 

	 	      /s/ R. Kyle Marshall
 

R. KYLE MARSHALL, individually
	 	 
	 
	 	 	 	 
	 

	 	      /s/ James Smith
 

JAMES SMITH, individually
	 	 
	 
	 	 	 	 
	 

	 	      /s/ Eric M. Dupont
 

ERIC M. DUPONT, individually
	 	 
	 
	 	 	 	 





	 	 	 	 	 	 	 
	 	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	APPLIED ENERGY MANAGEMENT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John O’Roarke
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	John O’Rourke
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	President and CEO
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Attest:
	 	/s/ Eric M. Dupont
 

	 	 






 









 






	 	 	 	 	 	 	 
	 	 	SELLERS’
REPRESENTATIVE:	 	 
	 
	 	 	 	 	 	 
	 	 	The undersigned hereby acknowledges his appointment as
the Sellers’ Representative and his willingness to
fulfill the duties of the Sellers’ Representative as
contemplated by this Agreement.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Eric M. Dupont
 

	 	 
	 

	 	 	 	Eric M. Dupont, solely in his capacity as Sellers’
Representative	 	 
	 
	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	LIME ENERGY CO.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jeffrey Mistarz
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	Jeffrey Mistarz
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Title:
	 	Chief Financial Officer
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Attest:
	 	 /s/ Marisa Sierra