exv10w1



 





Exhibit 10.1




STOCK PURCHASE AGREEMENT




BY AND BETWEEN




FEDERAL SIGNAL CORPORATION




AND




ALAN K. SEFTON




August 6, 2007




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	Article 1. PURCHASE AND SALE OF SHARES
	 	 	1	 
	1.1 Transfer of Shares
	 	 	1	 
	Article 2. CONSIDERATION
	 	 	1	 
	2.1 Purchase Price
	 	 	1	 
	2.2 Other Payments
	 	 	1	 
	2.3 Determination of Adjustment Amount
	 	 	1	 
	2.4 Escrow
	 	 	5	 
	Article 3. CLOSING; OBLIGATIONS OF THE PARTIES
	 	 	5	 
	3.1 Closing Date
	 	 	5	 
	3.2 Obligations of the Parties at the Closing
	 	 	5	 
	Article 4. REPRESENTATIONS AND WARRANTIES OF SELLER
	 	 	6	 
	4.1 Corporate Status
	 	 	6	 
	4.2 Authority
	 	 	6	 
	4.3 No Conflict
	 	 	6	 
	4.4 Capitalization; Subsidiaries
	 	 	6	 
	4.5 Financial Statements
	 	 	7	 
	4.6 Real Property
	 	 	8	 
	4.7 Assets
	 	 	9	 
	4.8 Material Contracts
	 	 	9	 
	4.9 Intellectual Property
	 	 	11	 
	4.10 Litigation, Claims and Proceedings
	 	 	12	 
	4.11 Environmental and Safety and Health Matters
	 	 	13	 
	4.12 Compliance with Law.
	 	 	14	 
	4.13 Employee Matters and Benefit Plans
	 	 	14	 
	4.14 Taxes
	 	 	16	 
	4.15 Absence of Undisclosed Liabilities
	 	 	17	 
	4.16 Absence of Certain Changes
	 	 	17	 
	4.17 Labor Matters
	 	 	18	 
	4.18 Finder’s Fee
	 	 	19	 
	4.19 Insurance
	 	 	19	 
	4.20 Related Party Transactions
	 	 	19	 
	4.21 Disclosure
	 	 	19	 
	Article 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	19	 
	5.1 Corporate Status
	 	 	19	 
	5.2 Authority
	 	 	20	 
	5.3 No Conflict
	 	 	20	 
	5.4 Compliance with Law
	 	 	20	 
	5.5 Consents
	 	 	20	 
	5.6 Sufficient Funds
	 	 	21	 
	5.7 Finder’s Fee
	 	 	21	 
	5.8 No Reliance
	 	 	21	 
	5.9 Investment Intent
	 	 	21	 
	5.10 Litigation, Claims and Proceedings
	 	 	21	 






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	Article 6. COVENANTS
	 	 	22	 
	6.1 Publicity
	 	 	22	 
	6.2 Further Action
	 	 	22	 
	6.3 Expenses
	 	 	22	 
	6.4 Notification of Certain Matters
	 	 	22	 
	6.5 Non-Competition
	 	 	22	 
	6.6 Nonsolicitation
	 	 	23	 
	6.7 Seller Guarantees
	 	 	23	 
	6.8 Certain Taxes
	 	 	23	 
	6.9 Confidentiality
	 	 	24	 
	6.10 Release
	 	 	24	 
	6.11 Litigation Support
	 	 	24	 
	Article 7. CLOSING CONDITIONS
	 	 	25	 
	7.1 Conditions to Obligations of Seller and Purchaser to
Consummate the Transaction
	 	 	25	 
	7.2 Additional Conditions to Obligations of Purchaser
	 	 	25	 
	7.3 Additional Conditions to Obligations of Seller
	 	 	26	 
	Article 8. INDEMNIFICATION
	 	 	27	 
	8.1 Survival of Representations, Warranties and Covenants
	 	 	27	 
	8.2 Indemnification Provisions for Benefit of Purchaser
	 	 	27	 
	8.3 Indemnification Provisions for Benefit of Seller
	 	 	27	 
	8.4 Indemnification Procedures
	 	 	28	 
	8.5 Determination of Losses
	 	 	32	 
	8.6 Limitations in Joint Issues Agreement to Apply
	 	 	32	 
	8.7 Conversion and Aggregation of Indemnification Claims
	 	 	32	 
	8.8 Exclusive Remedy
	 	 	32	 
	Article 9. MISCELLANEOUS
	 	 	32	 
	9.1 Notices
	 	 	32	 
	9.2 Certain Definitions; Interpretation
	 	 	33	 
	9.3 Severability
	 	 	39	 
	9.4 Entire Agreement; No Third-Party Beneficiaries
	 	 	39	 
	9.5 Amendment; Waiver
	 	 	39	 
	9.6 Binding Effect; Assignment
	 	 	40	 
	9.7 Disclosure Schedule
	 	 	40	 
	9.8 Governing Law; Jurisdiction
	 	 	40	 
	9.9 Construction
	 	 	40	 
	9.10 Counterparts
	 	 	40	 
	9.11 Enforcement
	 	 	40	 






Exhibits




Exhibit A — Supplemental Stock Purchase Agreement

Exhibit B — Escrow Agreement

Exhibit C — Joint Issues Agreement

Exhibit D — First Amendment to Office Lease

Exhibit E — Sefton Employment Letter




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Index of Defined Terms




	 	 	 
	Term	 	Section
	2006 Financial Statements

	 	 4.5(a)
	Action

	 	 9.2(a)
	Adjustment Amount

	 	 9.2(a)
	Affiliate

	 	 9.2(a)
	Affiliated Group

	 	 9.2(a)
	Agreement

	 	 Preamble
	Applicable Rate

	 	 9.2(a)
	Assets

	 	 4.7
	Base NAV

	 	 9.2(a)
	Business Day

	 	 9.2(a)
	Cash Closing Payment

	 	 2.1
	Claim Notice

	 	 8.4(a)
	Claims

	 	 9.2(a)
	Class B Common Stock

	 	 4.4(a)
	Closing

	 	 3.1
	Closing Accounts

	 	 9.2(a)
	Closing Date

	 	 3.1
	Code

	 	 9.2(a)
	Common Stock

	 	 4.4(a)
	Company

	 	 Recitals
	Company IP Rights

	 	 4.9(a)
	Company IP Rights Agreements

	 	 4.9(d)
	Confidential Information

	 	 6.13
	Confidentiality Agreement

	 	 9.2(a)
	control

	 	 9.2(a)
	Direct Claim

	 	 8.4(a)
	Disclosure Schedule

	 	 9.7
	Draft Closing Accounts

	 	 2.3(c)
	Effective Time

	 	 3.1
	Encumbrances

	 	 4.3
	Environmental Law

	 	 4.11(a)
	ERISA

	 	 9.2(a)
	ERISA Affiliate

	 	 4.13(f)
	Escrow Agent

	 	 9.2(a)
	Escrow Agreement

	 	 9.2(a)
	Escrow Amount

	 	 9.2(a)
	GAAP

	 	 9.2(a)
	GBP

	 	 9.2(a)
	Governmental Authority

	 	 9.2(a)
	Governmental Order

	 	 9.2(a)






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	Term	 	Section
	Hazardous Substance

	 	 4.11(a)
	Indebtedness for Borrowed Money

	 	 9.2(a)
	Indemnified Party

	 	 8.4(a)
	Indemnifying Party

	 	 8.4(a)
	Independent Accountants

	 	 2.3(f)
	Intellectual Property

	 	 9.2(a)
	Interim Financial Statements

	 	 4.5(b)
	IP Claim

	 	 9.2(a)
	Joint Issues Agreement

	 	 9.2(a)
	knowledge

	 	 9.2(a)
	Law

	 	 9.2(a)
	Losses

	 	 8.2
	Material Contracts

	 	 4.8(a)
	Most Recent Balance Sheet

	 	 9.2(a)
	Net Asset Value

	 	 9.2(a)
	Office Lease Amendment

	 	 9.2(a)
	Opinion

	 	 9.2(a)
	Option Holders

	 	 7.2(l)
	Permit

	 	 9.2(a)
	Permitted Encumbrances

	 	 4.6(b)
	Person

	 	 9.2(a)
	Plans

	 	 4.13(a)
	Potential Claim

	 	 8.4(e)(ii)
	Proceedings

	 	 8.4(c)(iv)
	Prohibited Area

	 	 9.2(a)
	Purchase Price

	 	 2.1
	Purchaser

	 	 Preamble
	Purchaser Ancillary Agreements

	 	 9.2(a)
	Purchaser Indemnified Parties

	 	 8.2
	Purchaser Material Adverse Effect

	 	 9.2(a)
	Real Property

	 	 4.6(a)
	Real Property Leases

	 	 4.6(a)
	Restricted Products

	 	 9.2(a)
	Restricted Services

	 	 9.2(a)
	Review Period

	 	 2.3(e)
	Securities Act

	 	 9.2(a)
	Sefton Employment Letter

	 	 9.2(a)
	Seller

	 	Preamble
	Seller Ancillary Agreements

	 	 9.2(a)
	Seller Material Adverse Effect

	 	 9.2(a)
	Shares

	 	Recitals
	Subsidiary

	 	 9.2(a)
	Supplemental Stock Purchase Agreement

	 	 7.2(l)
	Taxes

	 	 9.2(a)
	Taxing Authority

	 	 9.2(a)
	Tax Return

	 	 9.2(a)






iv 









 






	 	 	 
	Term	 	Section
	Third Party Claim

	 	 8.4(a)
	Third Party IP Claim

	 	 9.2(a)
	Third Party IP Recovery Right

	 	 9.2(a)
	Third Party Recovery Right

	 	 9.2(a)
	UK SPA

	 	 7.1(b)






v 









 





STOCK PURCHASE AGREEMENT




     THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made this 6th day of August, 2007, by
and between Federal Signal Corporation, a Delaware corporation (“Purchaser”), and Alan K. Sefton
(“Seller”).



     WHEREAS, Seller owns all of the issued and outstanding shares (the “Shares”) of the
capital stock of PIPS Technology Inc., a Tennessee corporation (the “Company”); and



     WHEREAS, Purchaser desires to acquire from Seller, and Seller desires to sell to Purchaser,
the Shares upon and subject to the terms and conditions contained in this Agreement.



     NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements herein
contained, the parties agree as follows:



ARTICLE 1.

PURCHASE AND SALE OF SHARES




          1.1 Transfer of Shares. Subject to all of the terms and conditions of this Agreement, at the Closing, Seller hereby
agrees to sell, transfer and convey to Purchaser, and Purchaser agrees to purchase and acquire from
Seller, the Shares free and clear of all Encumbrances.




ARTICLE 2.

CONSIDERATION




          2.1 Purchase Price. The aggregate consideration to be paid by Purchaser to Seller in connection with the sale of
the Shares shall be £6,000,000 (the “Cash Closing Payment”) plus amounts set forth in
Section 2.2 (collectively, the “Purchase Price”).




          2.2 Other Payments.





     (a) Seller shall have the right to receive additional consideration for the
Shares based on the aggregate earnings before interest and tax of the Company and
PIPS Technology Limited to the extent provided in the Joint Issues Agreement.




     (b) After the Adjustment Amount is determined and finalized pursuant to Section
2.3, Purchaser or Seller, as the case may be, shall have the right to receive the
Adjustment Amount.



          2.3 Determination of Adjustment Amount.





     (a) If the Net Asset Value is:




     (i) a positive sum which is greater than the Base NAV, Purchaser shall
pay to Seller in accordance with Section 2.3(b) a sum equal to the
difference;



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     (ii) a positive sum which is less than the Base NAV, Seller shall pay
to Purchaser in accordance with Section 2.3(b) a sum equal to the
difference;




     (iii) a negative sum, Seller shall pay to Purchaser in accordance with
Section 2.3(b) a sum equal to the aggregate of the Base NAV and the amount
by which the Net Asset Value is less than zero; or




     (iv) equal to the Base NAV, no payment shall be made under this Section
2.3(a);


PROVIDED ALWAYS that there shall be taken fully into account the payment under Section 2.3 of the
Adjustment Amount by Purchaser to Seller on account of the amount (if any) due to Seller pursuant
to this Section 2.3(a), to the effect that in circumstances where such payment on account is
greater than the amount actually due to Seller under this Section 2.3(a), Seller shall immediately
on demand repay the difference to Purchaser together with interest thereon calculated in accordance
with Section 2.3(b) and in respect of the period from the Closing Date up to and including the date
of payment.





     (b) Every cash sum payable under Section 2.3(a) shall be paid within five (5)
Business Days after the date of determination of the Net Asset Value, together with
interest on it at the rate of two percent (2%) above the base lending rate of
Barclays Bank plc for the time being in force which shall accrue from day to day and
shall be calculated on the basis of a year of 365 days from the Closing Date up to
and including the date of payment, by electronic funds transfer to an account
specified by Purchaser or Seller, as applicable.




     (c) The parties shall procure that as soon as practicable following the Closing
Date, and in any event not later than 30 Business Days after Closing, a draft of the
Closing Accounts (the “Draft Closing Accounts”), is prepared by the Company
or (at the option of the Company) by the Company’s auditors in accordance with
Section 2.3(d) and delivered simultaneously to Purchaser and Seller.




     (d) The Draft Closing Accounts and the Closing Accounts shall be prepared in
accordance with GAAP (except for the valuation and expensing of stock options)
applied consistently with the Interim Financial Statements.




     (e) As soon as practicable after delivery of the Draft Closing Accounts in
accordance with Section 2.3(d), and in any event within 30 Business Days after their
delivery (or such longer period as may be agreed in writing between Purchaser and
Seller (the “Review Period”), Seller and Purchaser shall review the
Draft Closing Accounts and endeavor to agree by negotiation what adjustments
(if any) need to be made to them in order for them to comply with Section 2.3(d).
If Seller or Purchaser disputes the preparation of the Draft Closing Accounts and
the computation of the Net Asset Value he or it shall within the Review Period
promptly give written notice to the other of the facts and matters in dispute



 2









 






together with details of the grounds on which such matter is disputed.
If Seller and Purchaser agree that no adjustments need to be made to the Draft Closing
Accounts or Seller and Purchaser agree on the adjustments to be made to the draft
Closing Accounts in order for them to comply with Section 2.3(d), they shall jointly
incorporate into, and reflect any such adjustments in, the Draft Closing Accounts,
confirm in writing that they have carried out such work as they consider necessary
and that in their opinion the Closing Accounts have been prepared in accordance with
the provisions of Section 2.3(d) and comply with those provisions, and confirm in
writing the amount of the Net Asset Value on the basis of those Closing Accounts;
and the Closing Accounts and the amount of Net Asset Value as so confirmed in
writing shall be the Closing Accounts and the Net Asset Value respectively for the
purpose of calculating the sum (if any) due under Section 2.3(a), shall in the
absence of manifest error be final and binding on the parties and shall not be
subject to question on any ground, and the date of that written confirmation shall
for all purposes of this Agreement be the date of determination of the Net Asset
Value.




     (f) If Seller and Purchaser have not resolved any matter(s) in dispute and have
not provided the written confirmations referred to in Section 2.3(e) within the
Review Period, then the relevant matter(s) shall be in dispute between Seller and
Purchaser and shall immediately be referred to a firm of independent public
accountants of national standing to which the parties mutually agree (the
“Independent Accountants”) for determination on the following basis:




     (i) the Independent Accountants shall be instructed to notify Seller
and Purchaser of their determination of any such matter within 30 Business
Days (or such longer period as may be agreed in writing between Purchaser
and Seller) of that referral;




     (ii) Seller and Purchaser may make written submissions to the
Independent Accountants, but subject to those rights, the Independent
Accountants shall have the power to determine the procedure to be followed
in relation to their determination;




     (iii) in making any such submissions Seller and Purchaser shall state
their respective best estimates of any monetary amounts referred for
determination;




     (iv) in making their determination, the Independent Accountants shall
act as experts and not as arbitrators, and their decisions as to any matter
referred to them for determination shall, in the absence of
manifest error, be final and binding on the parties and shall not be
subject to question on any ground; and




     (v) the fees and expenses of the Independent Accountants shall be borne
and paid as the Independent Accountants shall direct (or in the



 3









 






absence of any such direction, as to half by Seller and as to half by Purchaser).




     (g) Following any determination between Seller and Purchaser in accordance with
Section 2.3(f), the parties shall jointly incorporate into and reflect in the Draft
Closing Accounts the matters determined by the Independent Accountants and provide
written confirmation of those adjusted accounts in the terms set out in Section
2.3(e); and the Closing Accounts and the amount of the Net Asset Value so confirmed
in writing shall be the Closing Accounts and the Net Asset Value, respectively, for
the purposes of calculating the sum (if any) due under Section 2.3(a), shall in the
absence of manifest error be final and binding on the parties and shall not be
subject to question on any ground, and the date of that written confirmation shall
for all purposes of this Agreement be the date of determination of the Net Asset
Value.




     (h) Until the Net Asset Value shall have been agreed or determined, Seller and
Purchaser shall respectively give or procure that Seller or Purchaser and the
Independent Accountants (as the case may require) are given access at all reasonable
times on prior appointment during normal working hours on Business Days to all
relevant books and records which are in the possession or under the control of
Seller, the Company or Purchaser (as the case may be); and generally provide Seller
or Purchaser and the Independent Accountants (as the case may require) with such
other information and assistance as they may reasonably require (including access to
and assistance at reasonable times on prior appointment during normal working hours
on Business Days from personnel employed by Seller, the Company or Purchaser, as the
case may be), in relation to their review, agreement or determination of the Closing
Accounts and the determination of the Net Asset Value.




     (i) The fees and expenses of the Company’s auditors in respect of the
preparation of the Closing Accounts as provided in Section 2.3(c) (if applicable)
shall be borne equally by Purchaser and Seller who shall indemnify each other
accordingly, and the cost to be borne by Seller may be satisfied by being a
liability in the Closing Accounts.




     (j) Purchaser and Seller shall execute any documents (including any terms of
engagement or limitations on liability), provide any information and take any steps
which, in each case, may reasonably be required by the Company’s auditors or, as the
case may be, the Independent Accountants in order to enable them to complete the
work required of them by this Section 2.3.




     (k) Nothing in this Agreement shall prevent Purchaser or Seller from obtaining,
at its or his own expense, professional advice in relation to any matter arising in
connection with the agreement or determination of the Closing Accounts and the Net
Asset Value.



 4









 







     (l) The preparation of the Closing Accounts and the agreement and/or
determination of the Net Asset Value shall be without prejudice to any claim which
Purchaser might have against Seller under or in respect of this Agreement, but
Seller shall not be liable more than once in respect of the same loss.



          2.4 Escrow.
The Escrow Amount (together with any earnings thereon) will be held by the Escrow Agent and
shall be applied as set out in the Escrow Agreement. Notwithstanding any provision herein or in
the Joint Issues Agreement to the contrary, in no event shall amounts on deposit pursuant to the
Escrow Agreement limit Seller’s liability hereunder or thereunder, and Seller shall remain liable
for any amounts owed to Purchaser under this Agreement or the Joint Issues Agreement that are not
satisfied out of the amounts on deposit pursuant to the Escrow Agreement.




ARTICLE 3.

CLOSING; OBLIGATIONS OF THE PARTIES




          3.1 Closing Date.
The closing of the purchase and sale of the Shares (the “Closing”) shall take place at
10:00 a.m., local time, at the offices of Seller’s counsel at 315 Deaderick Street, Suite 2700,
Nashville, Tennessee 37238 on the date hereof (the “Closing Date”). The transfer shall be
deemed to have become effective at 12:01 a.m., Eastern time on the Closing Date (the “Effective
Time”) or at such other time and place as the parties may agree.




          3.2 Obligations of the Parties at the Closing.





     (a) At the Closing, Purchaser shall deliver to Seller:




     (i) by wire transfer of immediately available funds into an account or
accounts designated in advance by Seller, an amount equal to the Cash
Closing Payment less the Escrow Amount; and




     (ii) the various certificates, instruments, and documents to be
delivered by Purchaser to Seller pursuant to Article 7.




     (b) At the Closing, Purchaser shall deliver to Escrow Agent, by wire transfer
of immediately available funds into an account or accounts designated in advance by
the Escrow Agent, the Escrow Amount.




     (c) At the Closing, Seller will deliver to Purchaser:




     (i) stock certificates for the Shares, which certificates shall be duly
endorsed to Purchaser or accompanied by duly executed stock powers; and




     (ii) the various certificates, instruments, and documents to be
delivered by Seller to Purchaser pursuant to Article 7.



 5









 





ARTICLE 4.

REPRESENTATIONS AND WARRANTIES OF SELLER



Seller represents and warrants to Purchaser as follows:




          4.1 Corporate Status.
The Company is duly organized, validly existing and in good standing under the laws of the
State of Tennessee and (a) has all requisite corporate power and authority to own, operate or lease
its properties and assets and to carry on its business as it is now being conducted, and (b) is
duly qualified to do business and is in good standing in each of the jurisdictions in which the
ownership, operation or leasing of its properties and assets and the conduct of its business
requires it to be so qualified, licensed or authorized. Seller has made available to Purchaser a
copy of the charter and bylaws of the Company.




          4.2 Authority.
Seller has the right, capacity, power and authority to enter into this Agreement and the
Seller Ancillary Agreements and to consummate the transactions contemplated hereby and thereby.
This Agreement (assuming due authorization, execution and delivery by Purchaser) and each of the
Seller Ancillary Agreements (assuming due authorization, execution and delivery by the other
parties thereto) constitute legal, valid and binding obligations of Seller enforceable against him
in accordance with their terms, subject to general principles of equity and except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws of general application relating to creditors’ rights.




          4.3 No Conflict.
Except as set forth in Section 4.3 of the Disclosure Schedule, neither the execution, delivery
and performance of this Agreement or the Seller Ancillary Agreements by Seller nor the consummation
by Seller of the transactions contemplated hereby or thereby will (a) violate, conflict with or
result in the breach of any term or provision of the charter or bylaws of the Company, (b)
materially conflict with or violate any Law applicable to the Company or any of its assets,
properties or businesses, or (c) materially conflict with or violate, result in the breach of any
term or provision of, or constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of termination,
amendment, acceleration, suspension, revocation or cancellation of, any Material Contract, any Real
Property Lease, or, to Seller’s knowledge, any Immaterial Contract, or (d)
result in the creation of any mortgage, pledge, hypothecation, claim, security interest,
encumbrance, interest, option, lien or other restriction (collectively, “Encumbrances”) on,
any of the Shares or on any of the assets or properties of the Company.




          4.4 Capitalization; Subsidiaries.





     (a) The authorized capital stock of the Company consists of 8,265,000 shares of
common stock, no par value per share (the “Common Stock”), and 1,735,000
shares of Class B Common Stock, no par value per share (the “Class B Common
Stock”), of which 5,000,000 shares of Common Stock are issued and outstanding
and 975,000 shares of Class B Common Stock are issued and outstanding. All of the
Shares are validly issued, fully paid and nonassessable and



 6









 






held of record and owned
by Seller free and clear of all Encumbrances. The Shares constitute all of the
issued and outstanding capital stock of the Company.




     (b) Except as set forth in Section 4.4(b) of the Disclosure Schedule, there are
(i) no outstanding obligations, options, warrants, convertible securities or other
rights, agreements, arrangements or commitments of any kind relating to the capital
stock of the Company or obligating the Company to issue or sell any shares of
capital stock of, or any other interest in, the Company, (ii) no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise acquire
any shares of its capital stock or to provide funds to, or make any investment (in
the form of a loan, capital contribution or otherwise) in, any other Person, and
(iii) no voting trusts, shareholder agreements, proxies or other agreements or
understandings in effect with respect to the voting or transfer of any of the
capital stock of the Company.




     (c) The Company does not own any equity interest or any right to acquire the
same in any other Person.




4.5 Financial Statements.




     (a) Attached hereto as Section 4.5(a) of the Disclosure Schedule are true and
complete copies of the compiled financial statements on the income tax basis of
accounting of the Company for the two-year period ended December 31, 2006
(collectively, the “2006 Financial Statements”). The 2006 Financial
Statements (i) have been prepared based on the books and records of the Company in
accordance with income tax basis accounting rules and the Company’s normal
accounting practices, consistent with past practice (except as may be indicated
therein or in the notes or schedules thereto), and (ii) present fairly, in all
material respects, the financial condition and results of operations of the Company
as of the date indicated or for the periods indicated on the basis of accounting as
described.




     (b) Attached hereto as Section 4.5(b) of the Disclosure Schedule are the
following financial statements (collectively, the “Interim Financial 
Statements”): an unaudited consolidated balance sheet and statements of
income and cash flow as and for the five-month period ended May 31, 2007 for the
Company. The Interim Financial Statements have been prepared in accordance with
GAAP applied on a consistent basis throughout the period covered thereby (except for
the valuation and expensing of stock options and the omission of footnotes and
changes in shareholders equity), and present fairly, in all material respects, the
financial condition of the Company as of such date and the results of operations of
the Company for such period.




     (c) All notes and accounts receivable of the Company are reflected properly on
its books and records, are valuable receivables subject to no setoffs or
counterclaims, are current and collectible, and will be collected in accordance



 7









 






with their terms at their recorded amounts, subject only to the reserve for bad debts set
forth on the face of the Closing Accounts.




4.6 Real Property.




     (a) The Company does not own fee simple title to any real property. Section
4.6(a) of the Disclosure Schedule sets forth a true and complete list of the
locations of all of the real property leased by the Company (including all leased
improvements thereon, the “Real Property”) as well as a listing of each Real
Property lease (collectively, the “Real Property Leases”) to which the
Company is a party.




     (b) Except for (i) the Encumbrances set forth in Section 4.6(b) and Section 4.7
of the Disclosure Schedule, (ii) statutory liens of landlords, (iii) zoning
restrictions, (iv) easements, licenses and other restrictions of a similar nature
affecting the use of real property, (v) liens appropriately reserved against in the
Interim Financial Statements, and (vi) liens for Taxes not yet due and payable or
which are being contested in good faith (collectively, the “Permitted
Encumbrances”), the Company has a valid leasehold interest in the Real Property
and none of the Real Property is subject to any Encumbrances. None of the Permitted
Encumbrances materially and adversely affects the use of the Real Property as
currently used in connection with the Company’s business. To Seller’s knowledge,
there are no leases, subleases, licenses, concessions or other agreements granting
to any other Person the right to use or occupy the Real Property, and the Company is
in quiet possession of the Real Property.




     (c) Each Real Property Lease is valid and binding on the Company and, to the
knowledge of Seller, each respective counterparty thereto, and each Real Property
Lease is in full force and effect, subject to general principles of equity and
except as the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws of general application relating to
creditors’ rights.




     (d) The transactions contemplated by this Agreement will not require the
consent of any other party to a Real Property Lease, will not result in a breach of
or default under such Real Property Lease, and will not otherwise cause such Real
Property Lease to cease to be valid and binding on identical terms following the
Closing.




     (e) Neither the Company nor, to Seller’s knowledge, any other party to a Real
Property Lease is in breach or default under such Real Property Lease, and no event
has occurred or circumstance exists which, with the delivery of notice, the passage
of time or both, would constitute such breach or default, or permit the termination
or modification of such Real Property Lease or the acceleration of rent under such
Real Property Lease.



 8









 






     (f) No security deposit or portion thereof has been applied in respect of a
breach or default under a Real Property Lease which has not been redeposited in
full.




     (g) To Seller’s knowledge, the Real Property is in material compliance with all
applicable building, zoning, subdivision, health and safety and other land use Laws,
including The Americans with Disabilities Act of 1990, as amended, and all insurance
requirements affecting the Real Property




     (h) Each parcel of Real Property has direct access to a public street adjoining
the Real Property or has access to a public street via insurable easements
benefiting such parcel of Real Property.




     (i) To Seller’s knowledge, all water, oil, gas, electric, steam, compressed
air, telecommunications, sewer, storm and waste water systems and other utility
services or systems for the Real Property have been installed and are operational
and sufficient for the operation of the business as currently conducted thereon.



          4.7 Assets.
Except as disclosed in Section 4.7 of the Disclosure Schedule, the Company owns, leases or has
the legal right to use all the properties and assets, including, without limitation, the Company’s
Intellectual Property, reflected in the Most Recent Balance Sheet (except for inventory or other
assets disposed of in the ordinary course of business as presently conducted), but excluding the
Real Property, used by the Company in the conduct of its business (all such properties and assets
being the “Assets”). The Company has good and valid title to, or in the case of leased or
subleased Assets, valid and subsisting leasehold interests in, all of the Assets, free and clear of
all Encumbrances, except (a) as disclosed in Section 4.7 of the Disclosure Schedule, or (b) for
Permitted Encumbrances. The tangible Assets that the Company owns and leases are free from
material defects (patent and latent), have been maintained in accordance with normal industry
practice, and are in good operating condition and repair (subject to normal wear and tear).




          4.8 Material Contracts.





     (a) Section 4.8(a) of the Disclosure Schedule sets forth a true and complete
list of all of the Company’s Material Contracts. As used herein, “Material
Contracts” means all of the following:




     (i) each agreement or arrangement of the Company that requires the
payment or incurrence of liabilities by the Company subsequent to the date
of this Agreement of more than Twenty-Five Thousand Dollars ($25,000) during
any one year;




     (ii) each agreement or arrangement of the Company that requires the
rendering of services or delivery of products by the Company, subsequent to
the date of this Agreement of more than Twenty-Five Thousand Dollars
($25,000);



 9









 






     (iii) each agreement (or group of related agreements) under which the
Company has created, incurred, assumed, guaranteed or provided security for,
any Indebtedness for Borrowed Money;




     (iv) each partnership, joint venture or other similar agreement to
which the Company is a party or by which it is otherwise bound;




     (v) each agreement, arrangement, contract or commitment of the Company
restricting or otherwise affecting the ability of the Company to compete in
any jurisdiction or to hire any or engage any Person as an employee or
consultant, and each agreement, arrangement, contract or commitment
concerning confidentiality;




     (vi) each agreement for the employment of any individual on a
full-time, part-time, consulting or other basis providing base salary in
excess of Fifty Thousand Dollars ($50,000) or providing material severance
benefits;




     (vii) each agreement for the sale of a material Asset (or material
amount of Assets) that has not yet been consummated and was not entered into
in connection with the sale of products in the ordinary course of business
as presently conducted;




     (viii) each agreement for the lease of real or personal property by the
Company that requires the payment by the Company of more than Twenty-Five
Thousand Dollars ($25,000) during any one year;




     (ix) except for travel and other Company advances made in accordance
with the Company’s standard policies, each agreement under which the Company
has advanced or loaned any amount of money to any of its directors, officers
and employees;




     (x) each agreement under which the consequences of a default or
termination could result in a Seller Material Adverse Effect;




     (xi) each agreement with respect to the licensing of patents,
trademarks, copyrights or other Intellectual Property owned or used by the
Company that was not granted as part of a sale of products or services to a
customer in the ordinary course of business as presently conducted;




     (xii) any agreement, contract or arrangement between Seller or any of
his Affiliates and the Company or any of its Affiliates, or any agreement,
contract or arrangement between the Company or Seller (or any of their
Affiliates) and any Option Holder or any of his or her Affiliates;




     (xiii) any profit sharing, stock, option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan or



 10









 






arrangement for the benefit of the Company’s current or former directors,
officers and employees;




     (xiv) any collective bargaining agreement; and




     (xv) each other existing agreement, not otherwise covered by clauses
(i) through (xiv), that requires payments by or to the Company in excess of
Twenty-Five Thousand Dollars ($25,000) subsequent to the date of this
Agreement during any one year.


Any contract, agreement or arrangement to which the Company is a party but which is not included in
the definition of “Material Contracts” is referred to herein as an “Immaterial
Contract.”





     (b) Except as disclosed in Section 4.8(b) of the Disclosure Schedule:




     (i) neither the Company, nor, to the knowledge of Seller, any other
party to any Material Contract, is in breach thereof or default thereunder,
or has given notice of breach or default to any other party thereunder.
Neither the Company, nor, to the knowledge of Seller, any other party to any
Immaterial Contract, is in breach thereof or default thereunder, or has
given notice of breach or default to any party thereunder, except where such
breach or default would not reasonably be expected to have a Seller Material
Adverse Effect; and




     (ii) each Material Contract is valid and binding on the Company and, to
the knowledge of Seller, each respective counterparty thereto, and each
Material Contract is in full force and effect, subject to general principles
of equity and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws of
general application relating to creditors’ rights.




     (c) Except as disclosed in Section 4.8(c) of the Disclosure Schedule, the
Company has no Indebtedness for Borrowed Money.




4.9 Intellectual Property.




     (a) The Company owns, or has the right to use, sell or license all material
Intellectual Property utilized in its business as presently conducted (such
Intellectual Property and the rights thereto are collectively referred to herein as
the “Company IP Rights”). Each item of Intellectual Property owned or used
by the Company immediately prior to the Closing will continue to be owned or
available for use by the Company immediately after the Closing. The Company has
taken all commercially reasonable actions to maintain and protect each item of
Intellectual Property that it owns or uses.




     (b) Except as disclosed in Section 4.9(b) of the Disclosure Schedule, the
Company has not interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of any third



 11









 






parties. Except as
disclosed in Section 4.9(b) of the Disclosure Schedule, the Company has never
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim that
the Company must license or refrain from using any Intellectual Property rights of
any third party).




     (c) Section 4.9(c) of the Disclosure Schedule identifies each patent or
registration which has been issued to the Company and identifies each pending patent
application or application for registration which the Company has made. Section
4.9(c) of the Disclosure Schedule also identifies each domain name, material trade
name or unregistered trademark used by the Company in connection with its business.
With respect to each item required to be listed in Section 4.9(c) of the Disclosure
Schedule, (i) the Company possesses all right, title and interest in and to the
item, free and clear of any Encumbrances, (ii) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling or charge, and (iii) no
action, suit, proceeding, hearing, investigation, charge, compliant, claim, or
demand is pending or, to the knowledge of Seller, is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item.




     (d) Section 4.9(d) of the Disclosure Schedule identifies each material item of
Intellectual Property that any third party owns and that the Company uses pursuant
to a written license, sublicense or agreement (the “Company IP Rights
Agreements”). With respect to each Company IP Rights Agreement required to be
identified in Section 4.9(d) of the Disclosure Schedule, (i) to Seller’s knowledge,
the Company IP Rights Agreement is legal, binding and in full force and effect, (ii)
neither the Company nor, to the knowledge of Seller, any other party to a Company IP
Rights Agreement is in material breach or default of such Company IP Rights
Agreement, and, to the knowledge of Seller, no event has occurred which with notice
or lapse of time would constitute a material breach or
default or permit termination, modification or acceleration thereunder, and
(iii) no party to the Company IP Rights Agreement has repudiated any material
provision thereof.




     (e) The Company has used commercially reasonable efforts to maintain its
material trade secrets in confidence, including using commercially reasonable
efforts to enter into licenses and contracts which require employees, licensees,
contractors and all other third persons with access to such trade secrets to keep
such trade secrets confidential.



          4.10 Litigation, Claims and Proceedings.
Except as set forth in Section 4.10 of the Disclosure Schedule, there are no actions that have
been brought by or against any Governmental Authority or any other Person pending or, to the
knowledge of Seller, threatened, against or by the Company, any Assets or any Real Property. To
Seller’s knowledge, there are no existing Governmental Orders naming the Company as an affected
party. The services and products provided by the Company to its customers prior to the Closing
Date have conformed in all material respects with all applicable contractual commitments and all
express and implied



 12









 






warranties, and the Company has no material liability (whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) for damages in connection therewith. Seller makes no
representation in this Section 4.10 as to any matter the subject matter of which is specifically
covered by Sections 4.9, 4.11, 4.13 or 4.14 of this Agreement.




          4.11 Environmental and Safety and Health Matters.
Except as disclosed in Section 4.11 of the Disclosure Schedule:





     (a) The Company has obtained all material Permits that are required under any
Environmental Law for the operation of its business as currently being conducted.
All such Permits are listed in Section 4.11 of the Disclosure Schedule. All such
Permits are valid and in full force and effect and will not be affected or deemed
invalid or terminated as a result of the transactions contemplated by this
Agreement. “Environmental Law” means any applicable law in effect on the
date hereof relating to (i) the protection, investigation or restoration of the
environment or natural resources or health and human safety, or (ii) the handling,
use, presence, disposal, treatment, storage, release or threatened release of any
material defined as hazardous or toxic in any statute or regulation pertaining to
the environment, including, but not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, the United States Resource Conservation
and Recovery Act, the Federal Water Pollution Control Act and the Clean Air Act.
“Hazardous Substance” means any substance that is (i) listed, classified,
designated or regulated pursuant to any Environmental Law, (ii) PCBs, asbestos, any
petroleum product or by-product, and (iii) any other substance which is the subject
of regulatory action by any Governmental Authority pursuant to any Environmental
Law.




     (b) The Company is in material compliance with all Permits required under all
Environmental Laws that are used in the operation of its business as currently being
conducted. To the knowledge of Seller, no circumstances exist which could cause any
such Permit to be revoked, modified or rendered non-renewable (except failure in the
future to pay any permit fee not yet due and payable). No such Permit will be
revoked or otherwise adversely affected as a result of the transactions contemplated
by this Agreement.




     (c) The Company and the Real Property are in material compliance with all
applicable Environmental Laws. No underground storage tanks and no amount of
Hazardous Substance are on or under any property, including the Real Property and
the ground water and surface water thereof, that the Company currently owns,
operates, occupies or leases (except for Hazardous Substances used in the normal
operation of the Company’s business and in material compliance with Environmental
Law) or has at any time owned, operated, occupied or leased. No action, suit,
proceeding, revocation proceeding, amendment procedures, writ, injunction or Claim
has been brought or asserted, or to the knowledge of Seller, threatened, against the
Company concerning any Permit or environmental matters, including but not limited to
any alleged liability



 13









 






(including strict liability) of the Company for injury,
damages, cleanup costs, injunctive or other relief associated with or arising out of
Hazardous Substances or violations of Environmental Law. To the knowledge of
Seller, no fact or circumstance exists which would reasonably be expected to involve
the Company in any environmental litigation, or impose upon the Company or Purchaser
any material environmental liability.




     (d) The Company has not generated, transported, stored, used, manufactured,
disposed of, or released or exposed its employees or others to Hazardous Substances
in violation of any applicable law. The Company has not had a material disposal or
release of any Hazardous Substances on, under, in, from or about the Real Property.




     (e) The Company has not disposed or arranged for the disposal of Hazardous
Substances on any third party property that has subjected or, to the knowledge of
Seller, may subject the Company to material liability under any Environmental Law.



          4.12 Compliance with Law.
The Company has conducted and currently is conducting its business in material compliance with
all Laws and Governmental Orders applicable to the Company or any of the Assets, the Real Property
or the Company’s business. Except as disclosed in Section 4.12 of the Disclosure Schedule, the
Company has not received any outstanding or uncured written notice alleging any material default or
violation of any Law or Governmental Order. Seller makes no representation in this Section 4.12 as
to any matter the subject matter of which is specifically covered by Section 4.9, 4.11, 4.13 or
4.14 of this Agreement.




          4.13 Employee Matters and Benefit Plans.





     (a) Section 4.13 of the Disclosure Schedule identifies each written and
unwritten employment, bonus, incentive, deferred compensation, pension, stock or
other security option, stock or other security appreciation right, security
purchase, profit-sharing or retirement plan, severance or golden parachute
arrangement or practice, each medical, vacation, retiree medical, severance pay
plan, and each other agreement or fringe benefit plan, arrangement or practice, of
the Company or any Subsidiary which affects or covers any current or former employee
of the Company or any Subsidiary, including all “employee benefit plans” as defined
by Section 3(3) of ERISA (collectively, the “Plans”).




     (b) For each Plan, correct and complete copies of (i) the plan documents and
summary plan descriptions, (ii) the three most recent Form 5500 annual reports as
filed with the Internal Revenue Service, (iii) all related trust agreements,
insurance contracts and funding agreements which implement each such Plan, (iv) the
most recent actuarial report relating to any Plan subject to Title IV of ERISA, (v)
the most recent Internal Revenue Service determination or opinion letter issued with
respect to such Plan (to the extent such plan is subject to Code Section 401(a)),
and (vi) all contracts or service agreements with the benefit



 14









 






plan provider or
administrator (if applicable), have been made available to Purchaser.




     (c) Neither the Company nor any Subsidiary has a commitment, whether formal or
informal, (i) to create any additional such Plan; (ii) to modify or change any such
Plan; or (iii) to maintain for any period of time any such Plan, except as described
in Section 4.13 of the Disclosure Schedule.




     (d) Except as disclosed in Section 4.13 of the Disclosure Schedule, (i) neither
the Company or any Subsidiary, nor any Plan or any trustee, administrator, fiduciary
or sponsor of any Plan has engaged in any prohibited transactions as defined in
Section 406 of ERISA or Section 4975 of the Code for which there is no statutory
exemption under Section 408 of ERISA or Section 4975 of the Code; (ii) no fiduciary
has any liability for a material breach of fiduciary duty or any other material
failure to act or comply in connection with the administration or investment of the
assets of any Plan; (iii) there is no material litigation, action, Claim (other than
routine claims for benefits), governmental proceeding or investigation pending or,
to the knowledge of Seller, threatened with respect to any of such Plans, the
related trusts, or any fiduciary, trustee, administrator or sponsor of such Plans,
nor are there any current or threatened Encumbrances on the assets of any such
Plans. All material filings, reports and descriptions as to the Plans (including
Form 5500 annual reports, summary plan descriptions, and summary annual reports)
required to have been made or distributed to participants, the Internal Revenue
Service, the United States Department of Labor and other Governmental Authorities
have been made in a timely manner. The Plans have been established, maintained and
administered in all material respects in accordance with their governing documents
and applicable provisions of
ERISA, the Code, and other applicable law, including, but not limited to COBRA
and HIPAA and any nonqualified deferred compensation plans have been administered in
good faith compliance with guidance issued under Code Section 409A. Each Plan which
is intended to be qualified under Section 401(a) of the Code has received a
favorable determination or opinion letter from the Internal Revenue Service covering
the provisions of the Tax Reform Act of 1986 and GUST stating that such Plan is so
qualified, and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such Plan.




     (e) Except as disclosed in Section 4.13(e) of the Disclosure Schedule, none of
the Plans which are “employee welfare benefit plans,” within the meaning of Section
3(1) of ERISA, provide for continuing benefits or coverage after termination or
retirement from employment, except for COBRA rights under a “group health plan” as
defined in Section 4980B(g) of the Code and Section 607 of ERISA. No tax under
Section 4980B or Section 4980D of the Code has been incurred in respect of any Plan
that is a group health plan, as defined in Section 5000(b)(1) of the Code.



 15









 






     (f) Neither the Company or any Subsidiary, nor any entity required to be
aggregated with the Company or any Subsidiary under Section 414(b), (c), (m) or (o)
of the Code (“ERISA Affiliate”) has ever sponsored, participated in, or
contributed to either a plan subject to Title IV of ERISA, or a multiemployer plan
as defined in Section 4001(a)(3) of ERISA, or a “single-employer plan under multiple
controlled groups” as described in Section 4063 of ERISA, and neither the Company
nor any ERISA Affiliate has ever withdrawn from such a multiemployer plan nor
incurred any liability as a result of any partial or complete withdrawal by any
employer from a multiemployer plan as described under Sections 4201, 4203, or 4205
of ERISA. No Plan is a “multiple employer plan” within the meaning of Section
413(c) of the Code or Section 3(40) of ERISA.




     (g) All contributions (including all employer contributions and employee salary
reduction contributions) that are due have been made within the time periods
prescribed by ERISA and the Code to each Plan that is an “employee pension benefit
plan,” as defined in ERISA Section 3(2), and all contributions for any period ending
on or before the Closing Date that are not yet due have been made to each such Plan
or accrued in accordance with the past custom and practice of the Company or its
Subsidiaries. All premiums or other payments for all periods ending or before the
Closing Date have been paid with respect to each Plan that is an employee welfare
benefit plan as defined in ERISA Section 3(1).




4.14 Taxes




     (a) The Company has filed all Tax Returns that it was required to file. Each
such Tax Return is true, complete and correct and has been prepared in compliance
with applicable Law. The Company has paid, or will pay, all Taxes, including any
interest and penalties, for all periods prior to the Closing Date.
True and correct copies of all federal, state and local income Tax Returns
filed by the Company for all periods since January 1, 2004, have been heretofore
made available to Purchaser. All Taxes not yet due and payable by the Company have
been properly accrued on the books of account of the Company in accordance with
income tax basis accounting rules (prior to January 1, 2007) or GAAP (on and after
January 1, 2007). There are no existing penalty, interest or deficiency assessments
or pending audits relating to Taxes with respect to the Company, except as set forth
in Section 4.14(a) of the Disclosure Schedule.




     (b) The Company is not a party to any Tax allocation or sharing agreement.




     (c) There are no liens for Taxes upon the Assets or properties of the Company
(whether real, personal or mixed, tangible or intangible) except for statutory liens
for Taxes not yet due or payable.




     (d) The Company is not a “foreign person” for purposes of Section 1445 of the
Code.



 16









 






     (e) The Company (i) has not been a member of an Affiliated Group and (ii) does
not have any liability for the Taxes of any other Person under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local or foreign law), as a transferee
or successor, by contract or otherwise.




     (f) The Company has withheld and/or paid all Taxes required to have been
withheld and/or paid in connection with amounts paid or owed to any employee,
independent contractor, creditor, shareholder, member or other third party.



          4.15 Absence of Undisclosed Liabilities.
Except as set forth in Section 4.15 of the Disclosure Schedule, and except for liabilities or
obligations which are accrued or reserved against in the Most Recent Balance Sheet (and except for
the expensing of stock options), as of May 31, 2007, the Company did not have any liabilities or
obligations which would be of a nature required by GAAP to be reflected in, reserved against or
otherwise described in the Most Recent Balance Sheet (or reflected in the notes thereto). Seller
makes no representation in this Section 4.15 as to any matter the subject matter of which is
specifically covered by Section 4.9, 4.11, 4.13 or 4.14 of this Agreement.




          4.16 Absence of Certain Changes.
Except as disclosed in the Most Recent Balance Sheet or in Section 4.16 of the Disclosure
Schedule or as expressly contemplated by this Agreement, since December 31, 2006, there has not
been any Seller Material Adverse Effect. Without limiting the generality of the foregoing, since
that date:





     (a) the Company has not suffered any change constituting a Seller Material
Adverse Effect;




     (b) the Company has not sold, leased, transferred, or assigned any material
assets, tangible or intangible, outside the ordinary course of business;




     (c) the Company has not entered into any material agreement, contract, lease or
license outside the ordinary course of business;




     (d) the Company has not imposed (or permitted to be imposed) any Encumbrance
upon any of its assets, tangible or intangible, other than Permitted Encumbrances;




     (e) the Company has not made any material capital expenditures outside the
ordinary course of business;




     (f) the Company has not made any material capital investment in, or any
material loan to, any other Person;




     (g) the Company has not created, incurred, assumed or guaranteed any
Indebtedness for Borrowed Money (including capitalized lease obligations);



 17









 






     (h) the Company has not granted any license or sublicense of any material
rights under or with respect to any Intellectual Property outside of the ordinary
course of business;




     (i) there has been no change made or authorized in the charter or bylaws of the
Company;




     (j) neither the Company nor Seller has issued, sold or otherwise disposed of
any of the capital stock of the Company, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise) any
of the capital stock of the Company, and the Company has not split, combined or
reclassified its capital stock;




     (k) the Company has not declared set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash or in kind) or
redeemed, purchased, or otherwise acquired any of its capital stock;




     (l) the Company has not experienced any material damage, destruction or loss
(whether or not covered by insurance) to its property;




     (m) except for travel and other Company advances made in accordance with the
Company’s standard policies, the Company has not made any loan to, or entered into
any other transaction with (other than employment compensation arrangements), any of
its directors, officers and employees that has not been fully repaid and the
obligation terminated prior to the Closing Date;




     (n) the Company has not entered into any employment agreement or collective
bargaining agreement, written or oral, or modified the terms of any existing such
contract or agreement;




     (o) the Company has not granted any increase in the base compensation of any of
its directors, officers or employees, except in the ordinary course of business and
consistent with past practice;




     (p) the Company has not adopted, amended, modified, or terminated any Plan;




     (q) the Company has not made any other material change in employment terms for
any of its directors, officers or employees;




     (r) the Company has not changed its accounting principles, practices or
methods; and




     (s) the Company has not committed to do any of the foregoing.



          4.17 Labor Matters.
The Company is not a party to any collective bargaining agreement or other labor union
contract. There is no labor strike, slowdown or stoppage in progress or, to the knowledge of
Seller, threatened, against or involving the Company. Since



 18









 






January 1, 2000, the Company has not
experienced any labor strike, slowdown or stoppage. Seller has no knowledge of any material
activities or proceedings of any labor union to organize any employees of the Company. Since
January 1, 2000, there has been no request for collective bargaining or for a representation
election from any employee, union or the National Labor Relations Board. Section 4.17 of the
Disclosure Schedule contains a complete and accurate list of the following information for each
employee of the Company, including each employee on leave of absence or layoff status: name; job
title; current compensation paid or payable and any change in compensation since December 31, 2006;
vacation accrued; and service credited for purposes of vesting and eligibility to participate under
any Plans.




          4.18 Finder’s Fee.
Except for fees payable to Jefferies Broadview by Seller (and not by the Company), neither
Seller nor the Company has incurred any liability to any party for any brokerage or finder’s fee or
agent’s commission, or the like, in connection with the transaction contemplated by this Agreement
based upon arrangements made by or on behalf of Seller or the Company.




          4.19 Insurance.
Section 4.19 of the Disclosure Schedule sets forth all insurance policies of the Company,
including the insurance provider(s), agent(s) or broker(s), type of insurance coverage, policy
limits and deductibles and policy period(s). Seller has made available to Purchaser copies of all
policies of insurance to which the Company is a party or under which it is covered. All policies to
which the Company is a party or that provide it coverage are valid, outstanding and binding, taken
together, provide adequate insurance coverage for the assets and operations of the Company for all
risks to which the Company is normally exposed and are sufficient for compliance with all Laws
applicable to the Company, except as would not reasonably be
expected to have a Seller Material Adverse Effect. The Company has paid all premiums due
under each policy to which it is a party or under which it is covered.




          4.20 Related Party Transactions.
Except as set forth in Section 4.20 of the Disclosure Schedule, neither Seller nor any member
of Seller’s immediate family (i) owns, directly or indirectly, any interest in any property used in
the Company’s business, (ii) owns, directly or indirectly, an equity interest in a Person that has
a material financial interest in any transaction with the Company (other than transactions
conducted in the ordinary course of business at substantially prevailing market prices and on
substantially prevailing market terms) or (iii) is a party to any agreement with the Company.




          4.21 Disclosure.
All information contained in the Disclosure Schedule is in all material respects complete,
accurate and not misleading. To Seller’s knowledge, there is no other fact, matter or circumstance
which renders such information incomplete, inaccurate or otherwise misleading.




ARTICLE 5.

REPRESENTATIONS AND WARRANTIES OF PURCHASER




          5.1 Corporate Status.
Purchaser is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and (a) has




 19









 







all requisite corporate power and
authority to own, operate or lease all of its properties and assets and to carry on its business as
it is now being conducted, and (b) is duly qualified to do business and is in good standing in each
of the jurisdictions in which the ownership, operation or leasing of its properties and assets and
the conduct of its business requires it to be so qualified, licensed or authorized.




          5.2 Authority.
Purchaser has all requisite corporate power and authority to enter into this Agreement and the
Purchaser Ancillary Agreements and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Purchaser Ancillary Agreements by Purchaser
and the consummation of the transactions contemplated hereby and thereby have been duly and validly
authorized by the board of directors of Purchaser and no other corporate proceedings are necessary
to authorize this Agreement or the Purchaser Ancillary Agreements or to consummate the transactions
contemplated hereby or thereby. This Agreement and each Purchaser Ancillary Agreement have been
duly executed and delivered by Purchaser, and (assuming due authorization, execution and delivery
by each other party thereto) this Agreement and the Purchaser Ancillary Agreements constitute
legal, valid and binding obligations of Purchaser, enforceable against it in accordance with its
terms, subject to general principles of equity and except as the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization or other similar laws of general
application relating to creditors’ rights.




          5.3 No Conflict.
Neither the execution, delivery and performance of this Agreement and the Purchaser Ancillary
Agreements by Purchaser nor the consummation by Purchaser of the transactions contemplated hereby
or thereby will (a) violate, conflict with or result in the breach of any term or provision of the
certificate of incorporation or bylaws of Purchaser, (b) conflict with or violate, in any material
respect, any Law applicable to Purchaser or any of its assets, properties or business, or (c)
conflict with or violate, result in the breach of any term or provision of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would become a default) under,
or give to others any rights of termination, amendment, acceleration, suspension, revocation or
cancellation of, or result in the creation of any Encumbrances on any of the assets or properties
of Purchaser pursuant to, any material note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Purchaser is a party or by which its
properties or assets may be bound.




          5.4 Compliance with Law.
Purchaser has complied with and is not in violation of applicable Laws or Governmental Orders
which would affect its ability to perform its obligations hereunder. There is no Action pending,
or to the knowledge of Purchaser, threatened against Purchaser, affecting its ability to perform
its obligations hereunder.




          5.5 Consents.
No action, approval, consent or authorization, including, but not limited to, any action,
approval, consent or authorization by, or any other order of, filing with or notification to any
Governmental Authority, is or will be necessary to make this Agreement or any of the agreements or
instruments to be executed, performed and delivered by Purchaser pursuant hereto a legal, valid and
binding obligation of Purchaser subject to general principles of equity and except as the
enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws of general application relating to creditors’ rights, or to consummate the
transactions contemplated hereunder.




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          5.6 Sufficient Funds.
Purchaser has sufficient funds available (through existing credit arrangements or otherwise)
to enable it to consummate the transactions contemplated by this Agreement.




          5.7 Finder’s Fee.
Purchaser has not done anything to cause Seller, the Company or any of the Company’s option
holders, directors, officers or other Affiliates to incur any liability to any party for any
brokerage or finder’s fee or agent’s commission, or the like, in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of Purchaser.




          5.8 No Reliance.
Purchaser acknowledges that neither Seller, the Company nor any other Person has made any
representation or warranty, express or implied, as to the accuracy or completeness of any
information regarding the Company, the Assets, the Real Property or its business or other matters
other than as set forth in this Agreement or the Disclosure Schedule hereto. Without limiting the
generality of the foregoing, neither Seller, the Company nor any other Person has made a
representation or warranty to Purchaser with respect to (i) any projections, estimates or budgets
for the Company’s business, (ii) any material, documents or information relating to the Company
made available to Purchaser or its counsel, accountants or advisors in Seller’s data room or
otherwise, except as expressly covered by a representation or warranty set forth in Article 4, or
(iii) the information contained in Seller’s Confidential Memorandum.




          5.9 Investment Intent.
Purchaser has such knowledge and experience in financial and business matters that it is
capable of evaluating the risks and merits associated with the acquisition of the Shares.
Purchaser understands that the Shares have not been registered under the Securities Act or any
state’s securities laws and may not be resold unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Purchaser understands the
resale limitations imposed by the Securities Act and can bear the economic risk of its investment
in the Shares for an indefinite period of time. Purchaser is acquiring the Shares for its own
account for investment, with no present intention of making a public distribution thereof.
Purchaser will not sell or otherwise dispose of the Shares in violation of the Securities Act or
any state securities laws.




          5.10 Litigation, Claims and Proceedings.
There are no claims or actions that have been brought by or against any Governmental Authority
or any other Person pending or, to the knowledge of Purchaser, threatened, against or by Purchaser
or any of its Subsidiaries or assets, individually or in the aggregate, which would reasonably be
expected to have a Purchaser Material Adverse Effect. To Purchaser’s knowledge, there are no
existing Governmental Orders naming Purchaser or any of its Subsidiaries as an affected party which
would reasonably be expected to have a Purchaser Material Adverse Effect. There are not any
outstanding judgments against Purchaser or any of its Subsidiaries, individually or in the
aggregate, that have had or would reasonably be expected to have a Purchaser Material Adverse
Effect.




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ARTICLE 6.

COVENANTS




          6.1 Publicity.
Seller and Purchaser agree that the initial press release with respect to the transactions
contemplated hereby shall be a joint press release. Thereafter, subject to their respective legal
obligations (including requirements of stock exchanges, national stock markets and other similar
regulatory bodies), Seller and Purchaser shall use reasonable best efforts to agree upon the text
of any press release before issuing any such press release or otherwise making public statements
with respect to the transactions contemplated hereby and in making
any filings with any federal or state governmental or regulatory agency or with any national
securities exchange or national stock market with respect thereto.




          6.2 Further Action.
Each of Seller and Purchaser shall use his or its reasonable best efforts to perform such
further acts and execute such documents as may be reasonably required to effect the transactions
contemplated hereby. Each of Seller and Purchaser will comply in all material respects with all
applicable Laws in connection with his/its execution, delivery and performance of this Agreement
and each other agreement contemplated hereby and the transactions contemplated hereby and thereby.
Each of Seller and Purchaser agrees to use his/its reasonable best efforts to obtain in a timely
manner all necessary waivers, consents, approvals and opinions and to effect all necessary
registrations and filings, and to use his/its reasonable best efforts to take, or cause to be
taken, all other actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the transactions contemplated
hereby and thereby.




          6.3 Expenses.
All costs and expenses incurred in connection with this Agreement and each other agreement
contemplated hereby and the transactions contemplated hereby and thereby shall be paid by the party
hereto incurring such expenses except as expressly provided herein.




          6.4 Notification of Certain Matters.
Each party shall give prompt notice to the other of the status of matters relating to
completion of the transactions contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received by either party or any of his/its respective
Affiliates from any Governmental Authority or other third party with respect to this Agreement or
the transactions contemplated hereby.




          6.5 Non-Competition.
For a period of five (5) years from the Closing Date, except as permitted in this Section 6.5,
Seller shall not, directly or indirectly (including owning an interest in, operating, joining,
controlling, advising, working for, consulting with, having a financial interest in, or
participating in, any Person), engage in the business of developing, manufacturing or selling the
Restricted Products or supplying the Restricted Services anywhere within the Prohibited Area. The
restrictions set forth in this Section 6.5 shall not be construed to prohibit or restrict Seller’s
employment by Purchaser or any Affiliate of Purchaser, or any minority equity investment by Seller
in any Person in which Seller holds not more than 1% of the outstanding voting securities. If the
final judgment of a court of competent jurisdiction declares that any term or provision of this
Section 6.5 is invalid or unenforceable, the parties agree that the court making the determination
of invalidity or unenforceability shall have the power to reduce the scope, duration or area of the
term or provision to replace any invalid or



 22









 






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 Section 6.5 shall be enforceable as so
modified.




     6.6 Nonsolicitation.
For a period of five (5) years from the Closing Date, Seller shall not, directly or
indirectly, without the prior written consent of Purchaser:




     (i) solicit any Person who is a customer of the Company for the
Restricted Products or the Restricted Services;




     (ii) cause, induce or attempt to cause or induce any customer,
supplier, licensee, licensor, franchisee or other business relation of the
Company to cease doing business with the Company, to deal with any
competitor of the Company or in any way interfere with its relationship with
the Company; or




     (iii) hire, retain or attempt to hire or retain any employee or
independent contractor of the Company or in any way interfere with the
relationship between the Company and any of its employees or independent
contractors; provided that Seller may continue to employ Marissa Hocson to
render certain accounting and tax services to the extent that her provision
of such services to Seller does not interfere with the performance of her
duties for the Company.


If the final judgment of a court of competent jurisdiction declares that any term or provision of
this Section 6.6 is invalid or unenforceable, the parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce the scope, duration
or area of the term or provision 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 Section 6.6 shall be enforceable as so
modified.




          6.7 Seller Guarantees.
Purchaser shall, or shall cause one of its Affiliates to, be substituted for Seller as of the
Closing, without recourse to Seller, with respect to all guarantees thereby of, or other financial
accommodations thereby of, or security provided thereby for, obligations of the Company or
reimbursement obligations of Seller to issuers of letters of credit or other third-party credit
enhancements backing obligations of the Company which are listed in Section 6.7 of the Disclosure
Schedule. Purchaser shall promptly and fully reimburse Seller, in immediately available funds and
without offset for any amounts owing by Seller to Purchaser and without regard for any limitations
on indemnification claims set forth herein or in the Joint Issues Agreement, for any obligations
incurred by Seller with respect to such guarantees, financial accommodations, security, or
reimbursement obligations that are not so released.




          6.8 Certain Taxes.
All transfer, documentary, sales, use, stamp, registration and other similar Taxes and fees
(including any penalties and interest) incurred in connection with this Agreement, shall be paid by
Seller when due, and Purchaser will, at Seller’s expense,



 23









 






file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees.




          6.9 Confidentiality.
Purchaser agrees to treat all information of Seller (but not of Company) and Seller agrees to
treat all information of Purchaser and the Company which is non-public, confidential or proprietary
in nature (regardless of the form in which it is communicated or maintained) (the “Confidential
Information”) confidentially and not use such Confidential Information to the detriment of the
other party or the Company. Purchaser and Seller further agree to cause their respective
Affiliates and representatives to treat such Confidential Information confidentially and not use
such Confidential Information to the detriment of the other party or the Company. Each of
Purchaser and Seller (and their respective Affiliates and representatives) shall not be required to
maintain the confidentiality of information that (i) became generally available to the public
through no fault of such party, (ii) such party can show by written documentation was available to
such party on a non-confidential basis prior to the disclosure of such information to him or it,
provided that the source of such information was not known by such party or any of his or its
Affiliates or representatives, after reasonable investigation, to be bound by a contractual, legal
or fiduciary obligation of confidentiality to the other party, the Company or another party with
respect to such material, and provided further that this clause (ii) may not be used by Seller to
disclose Confidential Information relating to the Company, or (iii) such party can show by written
documentation became available to him or it on a non-confidential basis from a source other than
the disclosing party or the Company, provided that the source of such information was not known by
such party or any of his or its Affiliates or representatives, after reasonable investigation, to
be bound by a contractual, legal or fiduciary obligation of confidentiality to the other party, the
Company or another party with respect to such material. Notwithstanding the foregoing, nothing in
this Section 6.9 shall prohibit the disclosure of Confidential Information whose disclosure is
required by law.




          6.10 Release.
Seller hereby irrevocably, unconditionally and completely releases, acquits and forever
discharges the Company from any Claim, and hereby irrevocably, unconditionally and completely
waives and relinquishes each and every Claim against the Company, relating to any written or oral
agreements or arrangements entered into, and any events, matters, causes, things, acts, omissions
or conduct, occurring or existing, at any time up to and including the Effective Time, including,
without limitation, any Claim (a) to the effect that Seller is or may be entitled to any
compensation, benefits, commissions or perquisites from the Company or (b) otherwise arising
(directly or indirectly) out of or in any way connected with Seller’s stockholdings, employment or
other relationship with the Company; provided, however, that Seller is not hereby releasing his
rights, if any, (i) under this Agreement or any other agreement contemplated hereby, (ii) with
respect to salary, expenses and other benefits that have been accrued by the Company in the
ordinary course of business consistent with past practices, or (iii) to accrued vacation and vested
benefits under the Company’s Plans.




          6.11 Litigation Support.
In the event and for so long as the Company or Purchaser is actively contesting or defending
against any Claim or Action in connection with (a) any transaction contemplated under this
Agreement, or (b) any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date
involving the Company (except in each case for a



 24









 






Claim or Action in which Seller and Purchaser are
adverse parties), Seller will reasonably cooperate with Purchaser and its (or the Company’s)
counsel in the contest or defense and provide such testimony as shall be necessary in connection
with the contest or defense, all at the sole cost and expense of Purchaser (unless Purchaser is
entitled to indemnification therefor pursuant to this Agreement or the Joint Issues Agreement).




ARTICLE 7.

CLOSING CONDITIONS




          7.1 Conditions to Obligations of Seller and Purchaser to Consummate the Transaction. The respective obligation of each of Seller and Purchaser to consummate the transactions
contemplated hereby shall be subject to the satisfaction of each of the following conditions:





     (a) Legality. No action, suit or proceeding shall be pending before any
Governmental Authority wherein an unfavorable injunction, judgment, order, decree,
ruling or charge would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation, (iii) affect adversely the
right of Purchaser to own the Shares and to control the Company, or (iv) affect
materially and adversely the right of the Company to own its assets and to operate
its businesses (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect).




     (b) PIPS Technology Limited. Seller and Purchaser shall have entered into an
agreement for the purchase and sale of all of the outstanding shares of PIPS
Technology Limited (the “UK SPA”) and all conditions under such agreement
shall have been satisfied or waived, other than consummation of the transactions
contemplated hereby.



          7.2 Additional Conditions to Obligations of Purchaser.
The obligations of Purchaser to consummate the transactions contemplated hereby shall also be
subject to the satisfaction or waiver of each of the following conditions:





     (a) Required Third Party Consents. Seller shall have procured all
required third party consents, including the third party consents specified in
Section 7.2(a) of the Disclosure Schedule.




     (b) Required Governmental Authority Approvals. The parties shall have
received all required authorizations, consents, and approvals of Governmental
Authorities.




     (c) Escrow Agreement. Purchaser shall have received the Escrow
Agreement, duly executed by Seller and Escrow Agent.




     (d) Joint Issues Agreement. Purchaser shall have received the Joint
Issues Agreement, duly executed by Seller.



 25









 






     (e) Sefton Employment Letter. Purchaser shall have received the Sefton
Employment Letter, duly executed by Seller.




     (f) Lease Amendment. Purchaser shall have received the Office Lease
Amendment, duly executed by Sefton, L.L.C. and the Company.




     (g) Director and Officer Resignations. Purchaser shall have received
the resignations of Seller as to all offices and directorships he holds with the
Company and of Sally Sefton as to all offices she holds with the Company, each
effective at the Effective Time.




     (h) No Seller Material Adverse Effect. No Seller Material Adverse
Effect shall have occurred.




     (i) Supplemental Stock Purchase Agreement. Seller shall have entered
into a Stock Purchase Agreement with Craig Cantrell, Greg Swaggerty, Kent Rinehart,
David Bynum and Greg Lary (the “Option Holders”) pursuant to which the
Option Holders shall have exercised their options to purchase Class B Common Stock
and shall have sold the Class B Common Stock obtained thereby to Seller on
substantially the terms set forth in the form of Stock Purchase Agreement attached
hereto as Exhibit A (the “Supplemental Stock Purchase Agreement”), and all
options, warrants and other commitments by the Company to issue shares of its
capital stock shall have been accelerated and exercised.




     (j) Non-Compete Agreements. Each Option Holder shall have signed a
non-compete agreement in Purchaser’s standard form.



          7.3 Additional Conditions to Obligations of Seller.
The obligations of Seller to consummate the transactions contemplated hereby shall also be
subject to the satisfaction or waiver of each of the following conditions:





     (a) Required Governmental Authority Approvals. The parties shall have
received all material authorizations, consents, and approvals of Governmental
Authorities.




     (b) Escrow Agreement. Seller shall have received the Escrow Agreement,
duly executed by Purchaser and Escrow Agent.




     (c) Joint Issues Agreement. Seller shall have received the Joint
Issues Agreement, duly executed by Purchaser and the Affiliates of Purchaser that
are party thereto.




     (d) Resolutions. Seller shall have received a copy of the resolutions
of the Board of Directors of Purchaser, certified by Purchaser’s Secretary,
authorizing the execution, delivery and performance of this Agreement and the other
documents referred to herein to be executed by Purchaser, and the consummation of
the transactions contemplated hereby.



 26









 






     (e) Sefton Employment Letter. Seller shall have received the Sefton
Employment Letter, duly executed by the Company or one of its Affiliates.



ARTICLE 8.

INDEMNIFICATION




          8.1 Survival of Representations, Warranties and Covenants.
The representations and warranties of the parties contained in this Agreement will survive the
Closing and will expire 18 months after the Closing Date, except that (a) the representations and
warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 5.1, 5.2 and 5.3 will survive indefinitely,
(b) the representations and warranties contained in Section 4.14 will expire three months following
expiration of the applicable statute of limitations, and (c) the representations and warranties
contained in Section 4.9 will expire six years after the Closing Date. The covenants of the
parties contained in this Agreement will survive the Closing and expire on the earlier of (i) the
date on which they are fully discharged, or (ii) the sixth anniversary of the Closing Date;
provided, however, that notwithstanding the foregoing each party’s covenant to indemnify the other
party in accordance with this Article 8 and the Joint Issues Agreement shall survive indefinitely
(except as otherwise provided herein or therein).




          8.2 Indemnification Provisions for Benefit of Purchaser.
In the event Seller breaches (or in the event any third party alleges facts that, if true,
would mean Seller has breached) any representations, warranties, covenants or agreements of Seller
contained in this Agreement, and provided Purchaser issues a Claim Notice (as defined in Section
8.4(a)) within the applicable survival period, then, subject to the terms hereof, Seller agrees to
indemnify Purchaser and its Affiliates (including the Company) and each of their respective
officers, directors, members, partners, managers and employees (collectively, the “Purchaser
Indemnified Parties”) from and against any costs or expenses (including reasonable attorneys’
fees and expenses), judgments, fines, claims, damages and assessments (collectively,
“Losses”) through and after the date of the claim for indemnification that are imposed on
or incurred by the Purchaser Indemnified Parties that result from, arise out of, relate to, or are
caused by the breach (or the alleged breach). In addition, Seller agrees to indemnify the
Purchaser Indemnified Parties from and against any Losses through and after the date of the claim
for indemnification that are imposed on or incurred by the Purchaser Indemnified Parties that
result from, arise out of, relate to, or are caused by (x) the Supplemental Stock Purchase
Agreement and the transactions contemplated thereby (including any allegation that an Option
Holder did not receive adequate consideration for his shares from Seller), (y) the sale by
Pearpoint Inc. (and any affiliated entities) of their image processing business in September 2001,
or (z) the potential patent infringement referenced in item #1 on Section 4.9(b) of the Disclosure
Schedule.




          8.3 Indemnification Provisions for Benefit of Seller.
In the event Purchaser breaches (or in the event any third party alleges facts that, if true,
would mean Purchaser has breached) any representations, warranties, covenants or agreements of
Purchaser contained in this Agreement, and provided Seller issues a Claim Notice within the
applicable survival period, then Purchaser agrees to indemnify Seller from and against any Losses
through and after the date of the claim for indemnification that are imposed on or incurred by
Seller that result from, arise out of, relate to, or are caused by the breach (or the alleged
breach).




 27









 








          8.4 Indemnification Procedures.





     (a) If a party (the “Indemnified Party”) shall become aware of any
Claim in respect of which the other party (the “Indemnifying Party”) agreed
to indemnify the Indemnified Party pursuant to this Agreement, the Indemnified Party
shall promptly give written notice thereof (a “Claim Notice”) to the
Indemnifying Party. Each Claim Notice shall specify whether the Claim arises as a
result of a claim by a Person against the Indemnified Party (a “Third Party
Claim”) or whether the Claim does not so arise (a “Direct Claim”), and
shall also specify with reasonable particularity (to the extent that the information
is available) the factual basis for the Claim and the amount of the Claim. No delay
in the issuance of a Claim Notice shall relieve either party from any obligation
under this Article 8, unless and solely to the extent the Indemnifying Party is
thereby prejudiced. In addition, Purchaser shall notify Seller in writing as soon
as reasonably practicable upon becoming aware of any Third Party Recovery Right.




     (b) With respect to any Direct Claim, following receipt of a Claim Notice from
the Indemnified Party of the Claim, the Indemnifying Party shall have 30 days to
make such investigation of the Claim as is considered necessary or desirable. For
the purpose of such investigation, the Indemnified Party shall make available to the
Indemnifying Party the information relied upon by the Indemnified Party to
substantiate the Claim, together with such other information as the Indemnifying
Party may reasonably request. If both parties agree at or before the expiration of
such 30-day period (or any mutually agreed extension thereof) to the validity and
amount of such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the Claim. If the Indemnifying
Party does not agree to the validity and amount of the Claim, then the Indemnified
Party may pursue any remedies available to it.




     (c) In relation to Third Party IP Claims and Third Party IP Recovery Rights:




     (i) Seller and Purchaser shall in good faith cooperate with each other
in relation to the Third Party IP Claim or Third Party IP Recovery Right
with a view to any possible mitigating defense or other commercially
acceptable action to minimize the risk of litigation. For the avoidance of
doubt, Purchaser shall be entitled (from time to time) to seek counsel’s
opinion on any matter that is the subject of the Third Party IP Claim or
Third Party IP Recovery Right, and Seller shall procure that Purchaser has
sufficient information to prepare full, detailed and accurate instructions
to counsel to advance within the time period required by Purchaser (acting
reasonably).




     (ii) Seller shall not be entitled to require the Company or Purchaser
to initiate proceedings or himself initiate proceedings before any court,
tribunal or other competent body under any powers of delegation conferred by
this Section 8.4(c).



 28









 






     (iii) Subject to Seller indemnifying and securing (and keeping
indemnified and secured including but without limitation by recourse to the
Escrow Amount), Purchaser and the Company to the reasonable satisfaction of
Purchaser, Purchaser shall take and procure that the Company takes in
relation to any Third Party IP Claim or Third Party IP Recovery Right such
action as Seller may reasonably require in relation thereto (A) to avoid,
resist, mitigate, compromise, defend or appeal against any Third Party IP
Claim; or (B) to enforce any Third Party IP Recovery Right. Purchaser shall
not (and shall procure that the Company shall not) accept or compromise any
Third Party IP Claim or Third Party IP Recovery Right without the prior
agreement of Seller, which he shall not unreasonably withhold, delay or
grant only subject to unreasonable conditions.




     (iv) On the written request of Seller, the conduct of any legal
proceeding arising out of any Third Party IP Claim (“Proceedings”)
shall be delegated to Seller and for this purpose Purchaser shall and shall
procure that the Company shall give all such assistance as Seller may
reasonably require and shall appoint such lawyers and professional advisors
as Seller (acting reasonably) may nominate to act on behalf of Purchaser or
the Company in accordance with Seller’s instructions.




     (v) The rights given to Seller under Section 8.4(c)(iii) and Section
8.4(c)(iv) are conditional upon the following:




     (A) Unless an Opinion has been obtained, Purchaser shall not be
bound by Sections 8.4(c)(iii) and/or 8.4(c)(iv) (as the case may be)
above to the extent that it is of the reasonable opinion (on the
basis of facts and matters explained to Seller) that the probable
consequences of any such requirements or actions would adversely
affect the conduct of the business of Purchaser, the
Company or any of their Affiliates to a material extent PROVIDED
ALWAYS that Purchaser shall not be obliged to take any form of action
involving a customer of or a licensor to the Company, Purchaser or
any Affiliate.




     (B) Seller must keep Purchaser fully and promptly informed of
(1) all communications and interactions concerning the Third Party IP
Claim or the Third Party IP Recovery Right and/or (2) the Proceedings
(as the case may be), shall provide Purchaser with copies of all
material correspondence and documentation relating to the Third Party
IP Claim and/or Third Party IP Recovery Right, shall consult
Purchaser on any matter which is likely to be material in relation to
any of them, shall take account of all reasonable requirements of
Purchaser in relation to any of them, and shall comply fully with the
standard policies and procedures from time to time applying to
Purchaser and its



 29









 






Affiliates to the extent that they are not
otherwise inconsistent with the provisions of this Section 8.4.




     (C) Seller must not make any settlement or compromise of the
Third Party IP Claim or Third Party IP Recovery Right, whether the
subject of Proceedings or not, or agree to any matter in the conduct
thereof which may affect the amount of the liability in connection
with such Third Party IP Claim or the amount of the Third Party IP
Recovery Right without the prior written approval of Purchaser, such
approval not to be unreasonably withheld.




     (D) In the event of Purchaser acting unreasonably in refusing
such settlement or compromise, Seller shall have no liability in
respect of any Claim arising therefrom in excess of the figure at
which they could have settled or compromised the Third Party IP Claim
or Third Party Recovery Right, and Purchaser shall be liable for any
costs incurred since the proposed date of settlement or compromise.




     (d) Without prejudice to the foregoing, Seller shall cease to be entitled to
exercise any of the rights under Sections 8.4(c)(iii) and/or 8.4(c)(iv) and to have
the conduct of the Proceedings in circumstances where:




     (i) aggregate professional costs (including legal and accounting fees
and the fees of patent agents and other experts) reach $750,000; or




     (ii) Seller ceases to be employed or contracted under a contract for
services to the Company or any Affiliate of the Company or Purchaser (which
the parties will negotiate in good faith) by reason of termination for
misconduct or otherwise for cause by the Company or such Affiliate, or by
reason of his voluntary resignation or voluntary termination; provided,
however, that this Section 8.4(d)(ii) shall not be applicable with
respect to the potential patent infringement referenced in item #1 on
Section 4.9(b) of the Disclosure Schedule and, subject to the other
provisions contained in this Article 8 (including Section 8.4(d)(i)), Seller
shall continue to be entitled to exercise the rights described in Sections
8.4(c)(iii) and 8.4(c)(iv) and to have the conduct of the Proceedings
arising out of the potential patent infringement referenced in item #1 of
Section 4.9(b) of the Disclosure Schedule even if he is no longer employed
or contracted under a contract for services to the Company or any Affiliate
of the Company or Purchaser.




     (e) Without limiting the generality of the foregoing and subject to Section
8.4(c):




     (i) Purchaser shall in relation to a Third Party Claim consult with
Seller with respect to any possible mitigating action or defense to the
Third Party Claim or any possible Third Party Recovery Right in relation



 30









 






to the Third Party Claim, and shall in relation to any Third Party Recovery
Right consult with Seller with respect to exercising or otherwise securing
the benefit of such Third Party Recovery Right, and shall in each case take
fully into account the reasonable representations of Seller in relation to
the appropriate action to take provided that:




     (A) such representations are provided without unreasonable delay
and in any event sufficiently ahead of any relevant time limits
notified to Seller as to enable the requested action still to be
capable of being taken; and




     (B) such representations do not involve action which would have
a material adverse effect on the business of Purchaser or any of its
Affiliates (including the Company).




     (ii) Purchaser has the right to require Seller to indemnify and secure
Purchaser and the Company to the reasonable satisfaction of Purchaser in
relation to any action taken by them as a result of the representations of
Seller. The conduct of the Third Party Claim or a claim or potential claim
relating to the Third Party Recovery Right (any such Third Party Claim or a
claim or potential claim relating to the Third Party Recovery Right being
referred to as a “Potential Claim”) shall, however, be controlled by
Purchaser.




     (iii) Purchaser shall be obliged to comply with the representations of
Seller where provisos (A) and (B) of Section 8.4(e)(i) above are satisfied
or, in the case where proviso (B) is not satisfied, an Opinion has been
obtained, including to the effect that the action requested by Seller is
appropriate PROVIDED ALWAYS that Purchaser shall not be obliged to take any
form of action involving a customer of or a licensor to the Company,
Purchaser or any of their Affiliates.




     (iv) Purchaser shall ensure that Seller is kept promptly and properly
informed of any actual or proposed developments in the Potential Claim which
are or may reasonably be considered to be material, including providing
Seller with copies of all material correspondence and documentation relating
to the Potential Claim, and Seller shall provide to Purchaser such
assistance as Purchaser reasonably requests in relation to the conduct of
such Potential Claim.




     (f) If any sum is recovered by Purchaser or the Company from a third party
under a Third Party Recovery Right, any Claim in respect of any Loss to which that
sum relates shall be reduced (without prejudice to any other limitations on
liability of Seller referred to in Article 4 of the Joint Issues Agreement) by the
amount of the sum recovered from the third party after deducting from it all
reasonable costs, charges and expenses incurred and not recovered by Purchaser, the
Company or any of their Affiliates in recovering that sum from the third party.



 31









 






     (g) If Seller has paid an amount in respect of a Claim which exceeds the amount
of that Claim (as reduced by Section 8.4(f) above), Purchaser shall repay to Seller
the amount of the excess.



          8.5 Determination of Losses.
The parties shall take into account the time cost of money (using the Applicable Rate as the
discount or interest rate) in determining Losses for purposes of this Article 8. In addition, the
amount of Losses incurred by any Indemnified Party hereunder will be determined net of any amounts
received by such Indemnified Party under applicable insurance policies with respect to such Losses
(provided that any increases in insurance premiums shall be offset against such insurance proceeds
for purposes of determining amounts received).




          8.6 Limitations in Joint Issues Agreement to Apply.
Notwithstanding any provisions herein to the contrary, Losses payable pursuant to this Article
8 shall be subject to the limitations set forth in Article 4 of the Joint Issues Agreement.




          8.7 Conversion and Aggregation of Indemnification Claims.
Losses subject to indemnification under this Agreement shall be converted from US Dollars into
GBPs at the then current exchange rate (as determined by reference to the spot rate for the
purchase of US Dollars for GBPs as certified by HSBC Bank Plc as prevailing in London at or about
11:00 a.m. UK time on the date of determination) and will be aggregated with amounts (in GBP) of
indemnification claims under the UK SPA for purposes of determining the applicability of the
limitations contained in Article 4 of the Joint Issues Agreement.




          8.8 Exclusive Remedy.
Purchaser and Seller acknowledge and agree that the foregoing indemnification provisions set
forth in this Article 8 shall be the exclusive remedy of the parties (and the Purchaser Indemnified
Parties) with respect to the transactions contemplated by this Agreement (other than specific
performance of this Agreement, which shall be available as a remedy as set forth herein). Each
party to this Agreement waives all statutory, common Law and other claims with respect to this
Agreement, other than claims for indemnification with respect to this Agreement pursuant to (and in
accordance with the terms of) this Article 8 and the Joint Issues Agreement and other than claims
for specific performance or injunctive relief. Notwithstanding anything herein to the contrary, in
the absence of fraud, in no event shall Seller or Purchaser be liable for any special or punitive
damages, consequential damages or damages measured on the basis of a multiple of earnings or
similar financial measure, and Purchaser shall not be entitled to recover or seek any remedy under
this Agreement to the extent that Purchaser was fully compensated by the inclusion of the Losses as
a liability in the calculation of Net Asset Value (and thus the Adjustment Amount).




ARTICLE 9.

MISCELLANEOUS




          9.1 Notices.
All notices and other communications given or made pursuant hereto shall be in writing and
shall be deemed to have been duly given or made as of the date of receipt and shall be delivered
personally or mailed by registered or certified mail (postage prepaid, return receipt requested),
sent by overnight courier or sent by telecopy, to the



 32









 






applicable party at the following addresses
or telecopy numbers (or at such other address or telecopy number for a party as shall be specified
by like notice):




	 	 	 	 	 	 	 	 	 
	 	 	(a)	 	if to Seller:	 	Alan K. Sefton
	 

	 	 	 	 	 	 	 	2080 Wilkerson Road
	 

	 	 	 	 	 	 	 	Knoxville, Tennessee 37922
	 

	 	 	 	 	 	 	 	Telecopy No.: (865) 671-4308
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	with a copy to:	 	Bass, Berry & Sims PLC
	 

	 	 	 	 	 	 	 	900 South Gay Street
	 

	 	 	 	 	 	 	 	Suite 1700
	 

	 	 	 	 	 	 	 	Knoxville, Tennessee 37902
	 

	 	 	 	 	 	 	 	Attention: G. Mark Mamantov
	 

	 	 	 	 	 	 	 	Telecopy No.: (865) 521-6234
	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	if to Purchaser:	 	Federal Signal Corporation
	 

	 	 	 	 	 	 	 	1415 West 22nd Street
	 

	 	 	 	 	 	 	 	Oak Brook, Illinois 60523
	 

	 	 	 	 	 	 	 	Attention: John A. Gruber
	 

	 	 	 	 	 	 	 	Telecopy No.: (630) 954-2041
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	with a copy to:	 	Federal Signal Corporation
	 

	 	 	 	 	 	 	 	1415 West 22nd Street
	 

	 	 	 	 	 	 	 	Oak Brook, Illinois 60523
	 

	 	 	 	 	 	 	 	Attention: Jennifer Sherman,
	 

	 	 	 	 	 	 	 	General Counsel
	 

	 	 	 	 	 	 	 	Telecopy No.: (630) 954-2138
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	and:	 	Thompson Coburn LLP
	 

	 	 	 	 	 	 	 	One US Bank Plaza
	 

	 	 	 	 	 	 	 	Suite 3500
	 

	 	 	 	 	 	 	 	St. Louis, Missouri 63101
	 

	 	 	 	 	 	 	 	Attention: Robert M. LaRose
	 

	 	 	 	 	 	 	 	Telecopy No.: (314) 552-7068






          9.2 Certain Definitions; Interpretation.





     (a) For purposes of this Agreement, the following terms shall have the
following meanings:



 33









 






     (i) “Action” means any written claim, action or suit by or
before any Governmental Authority.




     (ii) “Adjustment Amount” means the amount by which the Net
Asset Value is greater or less than the Base NAV, such amount to be
determined as provided in Section 2.3.




     (iii) “Affiliate” of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, the first mentioned Person.




     (iv) “Affiliated Group” means any affiliated group within the
meaning of Section 1504(a) of the Code or any similar group defined under a
similar provision of state, local or foreign law.




     (v) “Applicable Rate” means the prime rate of interest in
effect as of the date of determination as stated in the “Money Rates”
section of The Wall Street Journal.




     (vi) “Base NAV” means an amount equal to the total assets of
the Company less the total liabilities of the Company all as shown in the
balance sheet as of May 31, 2007 included in the Interim Financial
Statements but (i) disregarding all cash shown as an asset of the
Company and (ii) adding back as an asset an amount equal to all
interest-bearing indebtedness of the Company shown therein as a liability.




     (vii) “Business Day” means a day that banks in Knoxville,
Tennessee are generally open for business.




     (viii) “Claims” means all disputes, claims, controversies,
demands, rights, obligations, liabilities, actions and causes of action of
every kind and nature, including any unknown, unsuspected or undisclosed
claims.




     (ix) “Closing Accounts” means the financial statements of the
Company (including a balance sheet as of the Closing Date and an income
statement from December 31, 2006 through the Closing Date), and the
statement of Net Asset Value.




     (x) “Confidentiality Agreement” means the Unilateral
Non-Disclosure Agreement dated December 18, 2006 between Purchaser and the
Company.




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




     (xii) “control” (including the terms “controlled by” and “under
common control with”) means the possession, direct or indirect, of the



 34









 






power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of stock, as trustee or executor, by contract
or credit arrangement or otherwise.




     (xiii) “ERISA” means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations promulgated
thereunder.




     (xiv) “Escrow Agent” means Associated Bank, N.A., a Wisconsin
corporation.




     (xv) “Escrow Agreement” means the Escrow Agreement in the form
attached hereto as Exhibit B.




     (xvi) “Escrow Amount” means £428,400.




     (xvii) “GAAP” means accounting principles generally accepted in
the United States of America.




     (xviii) “GBP” means British Pounds Sterling.




     (xix) “Governmental Authority” means any federal, state, local
or foreign governmental, regulatory or administrative agency or any court.




     (xx) “Governmental Order” means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
any Governmental Authority.




     (xxi) “Indebtedness for Borrowed Money” means, as to any
Person, (a) any liability of that Person (i) for borrowed money or arising
out of any extension of credit to or for the account of that Person,
including reimbursement or payment obligations respecting banker’s
acceptances, letters of credit, surety bonds or similar instruments, and
leases required to be accounted for as capital leases by GAAP, or (ii)
evidenced by bonds, debentures, notes or similar instruments, (b) any
liability secured by any Encumbrance upon any property of that Person, or
upon any revenues, income or profits of that Person therefrom, or (c) any
liability of the type described in the preceding clause (a) or (b) in
respect of which that Person has acquired assumed or incurred a liability by
means of a guarantee or similar arrangement.




     (xxii) “Intellectual Property” means (a) all inventions
(whether patentable or unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, patent applications, and patent
disclosures, together with all re-issuances, continuations-in-part,
revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, domain names, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations



 35









 






thereof including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets
and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data
and related documentation), (g) all other proprietary rights, and (h) all
copies and tangible embodiments thereof (in whatever form or medium).




     (xxiii) “IP Claim” means a claim which would be capable of
being made against Seller in respect of a breach of Section 4.9 or a Claim
arising out of the potential patent infringement referenced in item #1 on
Section 4.9(b) of the Disclosure Schedule.




     (xxiv) “Joint Issues Agreement” means the Joint Issues
Agreement dated as of the date hereof by and among Purchaser, Federal Signal
of Europe BV y CIA, SC, FS PIPS UK Limited and Seller in the form attached
hereto as Exhibit C.




     (xxv) “knowledge” means, (A) with respect to Seller, the actual
knowledge of Seller or the knowledge that Seller would have after reasonable
inquiry of the individual officers, employees or representatives of the
Company who are responsible for or otherwise have knowledge of the subject
matter of the inquiry, and (B) with respect to Purchaser, the actual
knowledge of John Gruber, Paul Henry, Brian Boettger, Mark Cassens, Michael
Wons, and Guy Wernet or the knowledge those individuals would have after
reasonable inquiry of the individual officers, employees or representatives
of Purchaser who are responsible for or otherwise have knowledge of the
subject matter of the inquiry.




     (xxvi) “Law” means any Governmental Order or any law, statute,
ordinance, rule or regulation of any Governmental Authority, or any binding
agreement with any Governmental Authority.




     (xxvii) “Most Recent Balance Sheet” means the balance sheet
contained in the Interim Financial Statements.




     (xxviii) “Net Asset Value” means, as of the Closing Date, the
amount (determined in US dollars) of the excess of the total assets of the
Company less the total liabilities of the Company.



 36









 






     (xxix) “Office Lease Amendment” means the First Amendment to
Office Lease in the form attached hereto as Exhibit D, which shall amend the
Office Lease dated as of January 2, 2007 between Sefton, L.L.C. and the
Company.




     (xxx) “Opinion” shall mean the opinion of counsel jointly
selected by Purchaser and Seller to the effect that (a) in respect of a
Third Party Claim, such claim could on the balance of probabilities be
successfully defended by Purchaser, the Company or its Affiliate(s), and
that the action requested by Seller is appropriate, or (b) where Seller is
requesting Purchaser to pursue a Third Party Recovery Right, that the Third
Party Recovery Right could, on the balance of probabilities, be successfully
pursued.




     (xxxi) “Permit” means any permit, franchise, authorization, or
other license or approval issued or granted by any Governmental Authority.




     (xxxii) “Person” means an individual, corporation, partnership,
limited liability company, joint stock company, association, trust,
unincorporated organization, entity or Governmental Authority (or any
department, agency, or political subdivision thereof).




     (xxxiii) “Prohibited Area” means any country or state or other
territorial area in which the Restricted Products and/or Restricted Services
were supplied by the Company during the period of 2 years prior to Closing.




     (xxxiv) “Purchaser Ancillary Agreements” means the Escrow
Agreement, the Joint Issues Agreement and the Sefton Employment Letter.




     (xxxv) “Purchaser Material Adverse Effect” means any material
adverse change in or material adverse effect on the business, results of
operations or financial condition of Purchaser or on the ability of
Purchaser to perform its obligations under this Agreement and any ancillary
agreements or on the ability of Purchaser to consummate the purchase of the
Shares and the other transactions contemplated hereby.




     (xxxvi) “Restricted Products” means (a) all products which are
manufactured, produced, distributed or sold by the Company as of the Closing
Date (including without limitation automated license plate recognition
systems); (b) the following products not manufactured, produced, distributed
or sold by the Company as of the Closing Date (but which Seller acknowledges
that Purchaser may wish the Company to manufacture, produce and/or sell
during the term of the covenant set forth in Section 6.5): red light traffic
cameras, general surveillance cameras, facial recognition processing
products, speed detection enforcement



 37









 






cameras and police vehicle mounted
cameras and all related software; and (c) any other products which are of a
type similar to or competing with any of the products referred to in (a)
and/or (b) above.




     (xxxvii) “Restricted Services” means all services which are
supplied by the Company as of the Closing Date relating to the supply of
automated license plate recognition systems; (b) the following services not
provided by the Company as of the Closing Date (but which Seller
acknowledges that Purchaser may wish the Company to manufacture, produce
and/or sell during the term of the covenant set forth in Section 6.5):
services relating to red light traffic cameras, general surveillance
cameras, facial recognition processing products, speed detection enforcement
cameras, police vehicle mounted cameras and remote construction speed
enforcement back office procedures and all related software services; and
(c) any other services which are of a type similar to or competing with any
of the services referred to in (a) and/or (b) above.




     (xxxviii) “Securities Act” means the Securities Act of 1933, as
amended.




     (xxxix) “Sefton Employment Letter” means the letter in the form
attached hereto as Exhibit E.




     (xl) “Seller Ancillary Agreements” means the Escrow Agreement,
the Joint Issues Agreement and the Sefton Employment Letter.




     (xli) “Seller Material Adverse Effect” means any material
adverse change in or material adverse effect on the business, results of
operations or financial condition of the Company.




     (xlii) “Subsidiary” of a Person means any corporation or other
legal entity of which such Person (either alone or through or together with
any other Subsidiary or Subsidiaries) is the general partner or managing
entity or of which at least a majority of the stock or other equity
interests the holders of which are generally entitled to vote for the
election of the board of directors or others performing similar functions of
such corporation or other legal entity is directly or indirectly owned or
controlled by such Person (either alone or through or together with any
other Subsidiary or Subsidiaries).




     (xliii) “Taxes” shall mean any and all taxes, fees, levies or
other assessments, including, without limitation, federal, state, local or
foreign income, gross receipts, excise, real or personal property, sales,
withholding, social security, occupation, use, service, service use, value
added, license, net worth, payroll franchise or similar taxes, imposed by
any Taxing Authority, together with any interest, penalties or additions to
Tax and additional amounts imposed with respect thereto.



 38









 






     (xliv) “Taxing Authority” shall mean any Governmental Authority
responsible for the imposition or collection of any Taxes.




     (xlv) “Tax Return” shall mean any report, return, document,
declaration or other information or filing required to be supplied to any
Taxing Authority or jurisdiction (foreign or domestic) with respect to
Taxes.




     (xlvi) “Third Party IP Claim” means any claim by a third party
against the Company and/or Purchaser that may give rise to an IP Claim.




     (xlvii) “Third Party IP Recovery Right” means any right to
which Purchaser or the Company is or becomes entitled (whether by way of
payment, discount, credit, set off, counterclaim or otherwise) to recover
from any third party any sum in respect of any Loss which is or may be the
subject of an IP Claim.




     (xlviii) “Third Party Recovery Right” means any right to which
Purchaser or the Company becomes entitled (whether by way of payment,
discount, credit, set off, counterclaim or otherwise) to recover from any
third party any sum in respect of any Loss which is or may be the
subject to a Claim.




     (b) When a reference is made in this Agreement to Articles, Sections, or
Disclosure Schedule, such reference is to an Article or a Section of, or Disclosure
Schedule to, this Agreement, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement. Whenever the
words “include,” “includes” or “including” are used in this Agreement, they shall be
understood to be followed by the words “without limitation.” All references to “£”
or “pounds sterling” in this Agreement shall be to the lawful currency of the United
Kingdom. All references to “$” or “dollars” in this Agreement shall be to the
lawful currency of the United States of America.



          9.3 Severability.
If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially adverse to either
party. Upon a determination that any term or other provision is invalid, illegal or incapable of
being enforced, Seller and Purchaser shall negotiate in good faith to modify this Agreement so as
to effect their original intent as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum extent possible.




          9.4 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, including all exhibits and schedules attached hereto, the Joint Issues
Agreement and the other agreements referenced herein, constitute the entire agreement and supersede
any and all other



 39









 






prior agreements and undertakings (including the Confidentiality Agreement), both
written and oral, between the parties hereto, or either of them, with respect to the subject matter
hereof and does not, and is not intended to, confer upon any Person other than the parties hereto
and those Persons identified in Section 6.9 and 6.10 any rights or remedies hereunder.




          9.5 Amendment; Waiver.
This Agreement may be amended only in a writing signed by both parties hereto. Any waiver of
rights hereunder must be set forth in writing. A waiver of any breach or failure to enforce any of
the terms or conditions of this Agreement shall not in any way affect, limit or waive either
party’s rights at any time to enforce strict compliance thereafter with every term or condition of
this Agreement.




          9.6 Binding Effect; Assignment.
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives, successors and permitted assigns.
Notwithstanding the foregoing, this Agreement shall not be assigned by either party hereto by
operation of law or otherwise without the express written consent of the other party.




          9.7 Disclosure Schedule.
The disclosure schedule attached hereto (the “Disclosure Schedule”) shall be construed
with and as an integral part of this Agreement to the same extent as if the same had been set forth
verbatim herein. Any matter disclosed pursuant to the Disclosure Schedule shall not be deemed to
be an admission or representation as to the materiality of the item so disclosed.




          9.8 Governing Law; Jurisdiction.
This Agreement shall be governed by and construed in accordance with, the laws of the State of
Illinois (except to the extent that the laws of Tennessee mandatorily apply to the sale of stock in
a Tennessee corporation) without regard to the conflicts of laws provisions thereof. Each of the
parties hereby irrevocably and unconditionally agrees not to commence any litigation relating
hereto except in the federal courts of the United States of America or the state courts of a state
of the United States of America. Each of the parties further agrees that any service of process,
summons, notice or document by U.S. registered mail to his or its respective address set forth in
Section 9.1 shall be effective service of process for any litigation brought against him or it in
any such court. Each of the parties hereto hereby irrevocably and unconditionally waives any right
he or it may have to trial by jury in connection with any litigation arising out of or relating to
this Agreement, the transactions contemplated hereby or any of the other transactions contemplated
hereby.




          9.9 Construction.
The language used in this Agreement is the language chosen by the parties to express their
mutual intent, and no rule of strict construction shall be applied against either party.




          9.10 Counterparts.
This Agreement may be executed simultaneously in one or more counterparts (including by
facsimile or electronic .pdf submission), and by the different parties in separate counterparts,
each of which when executed shall be deemed to be an original, but all of which shall constitute
one and the same agreement.




          9.11 Enforcement.
The parties hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in



 40









 






accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties hereto shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement, this being in addition to any other remedy to which they
are entitled at Law or in equity.




[Remainder of page intentionally left blank; signature page follows]




 41









 




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




	 	 	 	 	 
	 	 	FEDERAL SIGNAL CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 
	 	 	Alan K. Sefton







 42