Exhibit 10.21


 


Execution Copy


 


PURCHASE AGREEMENT


 


by and among


 


BANCTEC, INC.,


 


DOCUDATA
SOLUTIONS, L.C.


 


and


 


THE SELLING
MEMBERS


 


Dated as of March 4,
2008


 

















 


TABLE OF CONTENTS


 


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I.

  	
  DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Certain Definitions

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  Terms Defined Elsewhere in this Agreement

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
   

  	
  Other Definitional and Interpretive Matters

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II.

  	
  SALE AND PURCHASE OF OWNERSHIP
  INTERESTS

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Sale and Purchase of Ownership Interest

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Purchase Price

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Payment of Closing Date Purchase Price

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Purchase Price Adjustment

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Post-Closing Payment

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Closing Date

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.7

  	
   

  	
  Deliveries Prior to the Closing Date

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.8

  	
   

  	
  Deliveries on the Closing Date

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.9

  	
   

  	
  Allocation of Purchase Price

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III.

  	
  REPRESENTATIONS AND WARRANTIES
  OF THE SELLING MEMBERS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Authorization of Agreement

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Conflicts; Consents of Third Parties

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Ownership and Transfer of Ownership Interest

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.4

  	
   

  	
  Litigation

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.5

  	
   

  	
  Financial Advisors

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV.

  	
  REPRESENTATIONS AND WARRANTIES
  RELATING TO THE COMPANY

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Organization and Good Standing

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Authorization of Agreement

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Conflicts: Consents of Third Parties

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Capitalization

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.5

  	
   

  	
  Company Records

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Financial Statements

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.7

  	
   

  	
  No Undisclosed Liabilities

  	
   

  	
  24

  



 


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TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.8

  	
   

  	
  Absence of Certain Developments

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.9

  	
   

  	
  Taxes

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.10

  	
   

  	
  Real Property

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.11

  	
   

  	
  Tangible Personal Property

  	
   

  	
  29

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.12

  	
   

  	
  Intellectual Property

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.13

  	
   

  	
  Material Contracts

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.14

  	
   

  	
  Employee Benefits Plans

  	
   

  	
  34

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.15

  	
   

  	
  Labor

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.16

  	
   

  	
  Litigation

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.17

  	
   

  	
  Compliance with Laws; Permits

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.18

  	
   

  	
  Environmental Matters

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.19

  	
   

  	
  Insurance

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.20

  	
   

  	
  Inventories

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.21

  	
   

  	
  Accounts and Notes Receivable and Payable

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.22

  	
   

  	
  Related Party Transactions

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.23

  	
   

  	
  Customers and Suppliers

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.24

  	
   

  	
  Product & Service Warranty;
  Product & Service Liability

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.25

  	
   

  	
  Banks; Power of Attorney

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.26

  	
   

  	
  Certain Payments

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.27

  	
   

  	
  Certain Governmental Matters

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.28

  	
   

  	
  Financial Advisors

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.29

  	
   

  	
  No Waiver of Representations and Warranties

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V.

  	
  REPRESENTATIONS AND WARRANTIES
  OF PURCHASER

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Organization and Good Standing

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Authorization of Agreement

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Conflicts; Consents of Third Parties

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  Litigation

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
   

  	
  Financial Advisors

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  Independent Investigation

  	
   

  	
  44

  



 


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TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.7

  	
   

  	
  Financing

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI.

  	
  COVENANTS

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Third Party Consents

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Governmental Body Consents and Approvals

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Further Assurances

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Publicity

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.5

  	
   

  	
  Use of Name

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.6

  	
   

  	
  Related-Party Transactions with Non-Management
  Affiliates

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.7

  	
   

  	
  Fees and Expenses

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.8

  	
   

  	
  Debt

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.9

  	
   

  	
  Tax Matters

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.10

  	
   

  	
  Indemnification Agreements

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.11

  	
   

  	
  Non-Competition; Non-Solicitation; Confidentiality

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII.

  	
  INDEMNIFICATION

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Indemnification

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Indemnification Procedures

  	
   

  	
  50

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Limitations on Indemnification

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Reduction of Promissory Note; Exclusive Remedy

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.6

  	
   

  	
  Limitation on Damages

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.7

  	
   

  	
  Exclusive Remedy

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.8

  	
   

  	
  Tax Treatment of Indemnity Payments

  	
   

  	
  53

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII. 

  	
  MISCELLANEOUS

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Expenses

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Member Representative

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Governing Law; Venue; Consent to Service of Process;
  Dispute Resolution

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Entire Agreement; Amendments and Waivers

  	
   

  	
  55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
   

  	
  Notices

  	
   

  	
  56

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
   

  	
  Severability

  	
   

  	
  57

  



 


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TABLE OF CONTENTS


(continued)


 


	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.7

  	
   

  	
  Binding Effect; Assignment

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.8

  	
   

  	
  Disclosure Schedule

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.9

  	
   

  	
  Non-Recourse

  	
   

  	
  57

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.10

  	
   

  	
  Counterparts

  	
   

  	
  58

  



 


	
  Exhibits

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  —

  	
   

  	
  Selling
  Member Information

  
	
  Exhibit B

  	
   

  	
  —

  	
   

  	
  Form of
  Promissory Note

  
	
  Exhibit C

  	
   

  	
  —

  	
   

  	
  Earn-Out
  Payment Table

  
	
  Exhibit D

  	
   

  	
  —

  	
   

  	
  Withholding
  Amounts

  



 


iv

















 


PURCHASE AGREEMENT


 


This PURCHASE AGREEMENT, dated
March 4, 2008 (the “Agreement”), by and among
BancTec, Inc., a Delaware corporation (“Purchaser”),
DocuData Solutions, L.C., a Texas limited liability company, (the “Company”)
and the members of the Company listed on the signature pages hereof under the
heading “Selling Members” (collectively, the “Selling
Members”).


 


W I T
N E S S E T H:


 


WHEREAS, the Selling Members together own one
hundred percent (100%) of the membership interests in the Company (the “Ownership
Interests”);


 


WHEREAS, the Selling Members desire to sell to
Purchaser, and Purchaser desires to purchase from the Selling Members, the
Ownership Interests for the purchase price and upon the terms and conditions
hereinafter set forth; and


 


WHEREAS, certain terms used in this Agreement
are defined in Section 1.1;


 


NOW, THEREFORE,
in consideration of the premises and the mutual covenants and agreements
hereinafter contained, the parties hereby agree as follows:


 


ARTICLE I.

DEFINITIONS


 


1.1           Certain
Definitions.  For purposes of this
Agreement, the following terms shall have the meanings specified in this Section 1.1:


 


“Affiliate” means, with respect
to any Person, any other Person that, directly or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such Person, and the term “control” (including the terms “controlled
by” and “under common control with”)
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.


 


“Business Day” means any day of
the year on which national banking institutions in New York are open to the
public for conducting business and are not required or authorized to close.


 


“Cash” means the amount of cash
and cash equivalents including bank deposits as reflected in bank statements,
and certificates of deposit, less restricted cash balances and less the amounts
of any unpaid checks, drafts and wire transfers issued on or prior to the date
of determination, calculated in accordance with GAAP on a basis consistent with
the preparation of the Financial Statements for the fiscal year ended December 31,
2007.


 


“Change of Control” means with
respect to Purchaser or the Company, respectively:


 


(A)          The consummation of a
merger or consolidation of Purchaser or the Company with or into another entity
or any sale or other corporate reorganization, if 


 

















 


Persons who were not direct or indirect holders of
Equity Securities of Purchaser or the Company immediately prior to such merger,
consolidation, sale or other reorganization own immediately after such merger,
consolidation, sale or other reorganization 50% or more of the voting power of
the outstanding Equity Securities of (i) the continuing or surviving
entity or (ii) any direct or indirect parent of such continuing or
surviving entity; or


 


(B)           The sale, transfer
or other disposition of all of substantially all of Purchaser’s or the Company’s
assets to Persons who are not direct or indirect holders of Equity Securities
of Purchaser or the Company immediately prior to such sale, transfer or other
disposition.


 


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


 


“Company Material Adverse Effect”
means any result, occurrence, change, event or effect that, individually or in
the aggregate with any other similar result, occurrence, change, or event,
would have a material adverse effect on (a) the business, assets,
properties, results of operations, or condition (financial or otherwise) of the
Company, or (b) the ability of the Selling Members to consummate the
transactions contemplated by this Agreement or perform their obligations under
this Agreement or the Selling Member Documents, but excluding any result,
occurrence, change, event or effect resulting from (i) the announcement or
pendency of transactions contemplated by this Agreement, including the loss of
employees, customers, or suppliers or cancellations or delays of orders placed
with the Company, (ii) conditions affecting the industry in which the
Company operates, general business or economic conditions or financial markets,
(iii) seasonal conditions affecting the Company, (iv) compliance by
the Company with the terms of, or the taking of any action contemplated by,
this Agreement, (v) changes in any Law applicable to the Company, (vi) changes
by the Company in its accounting methods, principles or practice, as required
by applicable Law, and (vii) any actions that the Purchaser has consented
to in writing.


 


“Company Transaction Expenses”
means, except as otherwise expressly set forth in this Agreement, the aggregate
amount of all out-of-pocket fees and expenses incurred, paid or to be paid by
the Company in connection with the process of selling the Company or otherwise
relating to the negotiation, preparation or execution of this Agreement or any
documents or agreements contemplated hereby or the performance or consummation
of the transactions contemplated hereby, including (i) any fees and
expenses associated with obtaining necessary or appropriate waivers, consents
or approvals of any Governmental Body or third parties on behalf of the
Company, (ii) any fees or expenses associated with obtaining the release
and termination of any Liens; (iii) all brokers’ or finders’ fees; and (iv) fees
and expenses of counsel, advisors, consultants, investment bankers,
accountants, and auditors and experts.


 


“Contract” means any contract,
agreement, indenture, note, bond, mortgage, loan, instrument, lease, license,
commitment or other arrangement, understanding, undertaking, commitment or
obligation, whether written or oral.


 


2

















 


“Disclosure Schedule” means the
disclosure schedules delivered by the Company and the Selling Members to
Purchaser concurrently with the execution and delivery of this Agreement.


 


“Environmental Costs and Liabilities”
means, with respect to any Person, all liabilities, obligations,
responsibilities, Remedial Actions, losses, damages (including punitive damages
and consequential damages) costs and expenses (including all reasonable fees,
disbursements and expenses of counsel, experts and consultants and costs of
investigation and feasibility studies), fines, penalties, sanctions and
interest incurred as a result of any claim or demand by any other Person or in
response to any violation of Environmental Law, whether known or unknown,
accrued or contingent, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute or otherwise, to the
extent based upon, related to, or arising under or pursuant to any
Environmental Law, Environmental Permit, Order or agreement with any
Governmental Body or other Person, which relates to any environmental, health
or safety condition or a Release or threatened Release of Hazardous Materials.


 


“Environmental Law” means any
Law, as now or hereafter in effect, in any way relating to the protection of
human health and safety, the environment or natural resources including the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq.), the Hazardous Materials Transportation
Act (49 U.S.C. App. § 1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.),
the Clean Water Act (33 U.S.C. § 1251 et seq.), the
Clean Air Act (42 U.S.C. § 7401 et seq.) the Toxic
Substances Control Act (15 U.S.C. § 2601 et seq.), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.),
and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.),
as each has been amended and the regulations promulgated pursuant thereto.


 


“Environmental Permit” means any
Permit required by Environmental Laws for the operation of the Company.


 


“ERISA” means the Employment
Retirement Income Security Act of 1974, as amended.


 


“Equity Securities” means (i) any
capital stock, limited liability company interest or other equity security, (ii) any
security directly or indirectly convertible into or exchangeable for any
capital stock, limited liability company interest or other equity security or
security containing any profit participation features, (iii) any warrants,
options or other rights, directly or indirectly, to subscribe for or to
purchase any capital stock, limited liability company interest, other equity
security or security containing any profit participation features or directly
or indirectly to subscribe for or to purchase any security directly or
indirectly convertible into or exchangeable for any capital stock, limited
liability company interest or other equity security or security containing
profit participation features, or (iv) any stock or equity appreciation
rights or other similar rights.


 


“GAAP” means generally accepted
accounting principles in the United States as of the date hereof, consistently
applied by Purchaser in accordance with Purchaser’s past practices.


 


3

















 


“Governmental Body” means any
government or governmental or regulatory body thereof, or political subdivision
thereof, whether federal, state, local or foreign, or any agency,
instrumentality or authority thereof, or any court or arbitrator (public or
private).


 


“Government Contract” means any
prime contract with a U.S. Governmental Body and any subcontract with a prime
contractor or higher tier subcontractor under a prime contract with a U.S.
Governmental Body.


 


“Hazardous Material” means any
substance, material or waste defined as “hazardous,” “toxic,” “pollutant,” “contaminant,”
“radioactive,” or
words of similar meaning or effect under any applicable Environmental Law,
including petroleum and its by-products, asbestos, polychlorinated biphenyls,
radon, mold and urea formaldehyde insulation.


 


“Indebtedness” of any Person
means, without duplication, (i) the principal, accreted value, accrued and
unpaid interest, prepayment and redemption premiums or penalties (if any),
unpaid fees or expenses and other monetary obligations in respect of (A) indebtedness
of such Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable; (ii) all obligations of such Person
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such Person and all obligations of such Person under any
title retention agreement (but excluding trade accounts payable and other
accrued current liabilities arising in the Ordinary Course of Business (other
than the current liability portion of any indebtedness for borrowed money)); (iii) all
obligations of such Person under leases required to be capitalized in
accordance with GAAP; (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker’s acceptance or
similar credit transaction; (v) all obligations of such Person under
interest rate or currency swap transactions (valued at the termination value
thereof); (vi) the liquidation value, accrued and unpaid dividends;
prepayment or redemption premiums and penalties (if any), unpaid fees or
expenses and other monetary obligations in respect of any redeemable preferred
stock of such Person; (vii) all obligations of the type referred to in
clauses (i) through (vi) of any Persons for the payment of which such
Person is responsible or liable, directly or indirectly, as obligor, guarantor,
surety or otherwise, including guarantees of such obligations; and (viii) all
obligations of the type referred to in clauses (i) through (vii) of
other Persons secured by (or for which the holder of such obligations has an
existing right, contingent or otherwise, to be secured by) any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person).


 


“Intellectual Property” means all
intellectual property rights owned or used by the Company arising from or in
respect of the following, whether protected, created or arising under the laws
of the United States or any other jurisdiction: (i) all patents and
applications therefore, including continuations, divisionals, continuations-in-part,
or reissues of patent applications and patents issuing thereon, and all similar
rights arising under the Laws of any jurisdiction (collectively, “Patents”),
(ii) all trademarks, service marks, trade names, service names, brand
names, trade dress rights, logos, Internet domain names and company names and
general intangibles of a like nature, together with the goodwill associated
with any of the foregoing, and all applications, registrations and renewals
thereof, (collectively, “Marks”), (iii) copyrights
and registrations and applications therefore, works of authorship and mask work
rights (collectively, 


 


4

















 


“Copyrights”), and (iv) discoveries,
concepts, ideas, research and development, know-how, formulae, inventions,
compositions, manufacturing and production processes and techniques, technical
data, procedures, designs, drawings, specifications, databases, and other
proprietary or confidential information, including customer lists, supplier
lists, pricing and cost information, and business and marketing plans and
proposals of the Company, in each case excluding any rights in respect of any
of the foregoing that comprise or are protected by Copyrights or Patents
(collectively, “Trade Secrets”), and (v) intellectual
property rights arising from or relating to Software and Technology.


 


“Intellectual Property Licenses”
means (i) any grant by the Company to another Person of any right to use
any of the Intellectual Property, and (ii) any grant by another Person to
the Company of a right to use such Person’s intellectual property rights
included in the Intellectual Property.


 


“IRS” means the Internal Revenue
Service.


 


“Knowledge” means, with respect
to any Person that is not an individual, the knowledge of such Person’s
directors and executive officers.


 


“Law” means
any federal, state or local law (including common law), statute, code,
ordinance, rule, regulation, Order or other requirement.


 


“Legal Proceeding” means any
judicial, administrative or arbitral actions, suits, mediation, investigation,
inquiry, proceedings or claims (including counterclaims) by or before a
Governmental Body.


 


“Liability” means any debt, loss,
damage, adverse claim, fines, penalties, liability or obligation (whether
direct or indirect, known or unknown, asserted or unasserted, absolute or
contingent, accrued or unaccrued, matured or unmatured, determined or
determinable, liquidated or unliquidated, or due or to become due, and whether
in contract, tort, strict liability or otherwise), and including all costs and
expenses relating thereto including all fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and costs of investigation).


 


“Lien” means any lien, pledge,
mortgage, deed of trust, security interest, claim, lease, charge, option, right
of first refusal, easement, servitude, proxy, voting trust or agreement,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.


 


“Order” means any order,
injunction, judgment, doctrine, decree, ruling, writ, assessment or arbitration
award of a Governmental Body.


 


“Ordinary Course of Business”
means the ordinary and usual course of day-to-day operations of the business of
the Company through the date hereof consistent with past practice.


 


“Permits” means any approvals,
authorizations, consents, licenses, permits or certificates of a Governmental
Body.


 


5














 


“Permitted Exceptions” means (i) all
defects, exceptions, restrictions, easements, rights of way and encumbrances
disclosed in policies of title insurance which have been delivered or made
available to Purchaser; (ii) statutory liens for current Taxes, assessments
or other governmental charges not yet delinquent or the amount or validity of which is being
contested in good faith by appropriate proceedings; (iii) purchase money
liens; (iv) Liens arising or incurred in the Ordinary Course of Business
that are not material to the business, operations and financial condition of
the Company; and (v) zoning, entitlement and other land use and
environmental regulations by any Governmental Body, provided that such
regulations have not been violated; (vi) utility easements, restrictive
covenants, defects and other irregularities in title, that, singularly or in
the aggregate, will not materially interfere with the ownership, use or
operation of the assets to which such matters relate; (vii) Liens created
by Purchaser or its successors or assigns; (viii) restrictions on transfer
created under applicable securities laws; and (ix) the Liens listed on Schedule
1.1(a).


 


“Person” means any individual,
corporation, limited liability company, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.


 


“Promissory Note” means that
promissory note of Purchaser in the aggregate principal amount of $3,000,000,
in the form attached hereto as Exhibit B, bearing
interest at a rate of 7% per annum, payable as follows:  (a) $1,000,000 of principal plus accrued
interest on the first anniversary of the Closing Date, (b) $1,000,000 of
principal plus accrued interest on the second anniversary of the Closing Date,
and (c) all remaining outstanding principal and accrued interest under the
Promissory Note on the third anniversary date of the Closing Date.


 


“Purchaser Material Adverse Effect”
means any result, occurrence, event or effect that, individually or in the aggregate
with any other similar result, occurrence, or event, would have a material
adverse effect on (a) the business, assets, properties, results of
operations, or condition (financial or otherwise) of the Purchaser or (b) the
ability of the Purchaser to consummate the transactions contemplated by this
Agreement or perform its obligations under this Agreement or the Purchaser
Documents, but excluding any result, occurrence, event or effect resulting from
(i) the announcement or pendency of transactions contemplated by this
Agreement, (ii) conditions affecting the industry in which the Purchaser
operates, general business or economic conditions or financial markets, (iii) compliance
by the Purchaser with the terms of, or the taking of any action contemplated
by, this Agreement, (iv) changes in any Law applicable to the Purchaser, (v) changes
by the Purchaser in its accounting methods, principles or practice, as required
by applicable Law, and (vi) any actions that the Selling Members have
consented to in writing.


 


“Release” means any release,
spill, emission, leaking, pumping, poring, injection, deposit, dumping,
emptying, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment, or into or out of any property.


 


“Remedial Action” means all
actions including any capital expenditures undertaken as required by
Environmental Laws to (i) clean up, remove, treat or in any other way
address any Hazardous Material; (ii) prevent the Release or threat of
Release, or minimize the further Release of any Hazardous Material so it does
not migrate or endanger or threaten to endanger public 


 


6

















 


health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and investigations
or post-remedial monitoring and care; or (iv) to correct a condition of
noncompliance with Environmental Laws.


 


“Software” means any and all (i) computer
programs, including any and all software implementations of algorithms, models
and methodologies, whether in source code or object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other
work product used to design, plan, organize and develop any of the foregoing,
screens, user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons, and (iv) all documentation including
user manuals and other training documentation related to any of the foregoing.


 


“Taxes”
means (i) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments, including all income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs duties, fees, assessments and charges of any kind
whatsoever, (ii) all interest, penalties, fines, additions to tax or
additional amounts imposed by any Taxing Authority in connection with any item
described in clause (i) and (iii) any transferee liability in respect
of any items described in clauses (i) or (ii) payable by reason of
Contract, assumption, transferee liability, operation of Law or otherwise.


 


“Taxing
Authority” means the IRS and any other Governmental Body
responsible for the administration of any Tax.


 


“Tax
Return” means any return, report or statement required to be
filed with respect to any Tax (including any elections, declarations, schedules
or attachments thereto, and any amendment thereof) including any information
return, claim for refund, amended return or declaration of estimated Tax, and
including, where permitted or required, combined, consolidated or unitary
returns for any group of entities that includes the Company, or any of their
Affiliates.


 


“Technology”
means, collectively, all designs, formulae, algorithms, procedures, methods,
techniques, ideas, know-how, research and development, technical data,
programs, subroutines, tools, materials, specifications, processes, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements, works of authorship and other similar materials,
and all recordings, graphs, drawings, reports, analyses, and other writings,
and other tangible embodiments of the foregoing, in any form whether or not
specifically listed herein, and all related technology, that are used in,
incorporated in, embodied in, displayed by or relate to, or are used by the
Company.


 


“WARN”
means the Worker Adjustment and Retraining Notification Act of 1988, as
amended.


 


1.2           Terms Defined Elsewhere in this
Agreement.  For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:


 


7

















 


	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Agreement

  	
   

  	
  Recitals

  
	
   

  	
   

  	
   

  
	
  Arbiter

  	
   

  	
  2.4(b)(iii)

  
	
   

  	
   

  	
   

  
	
  Balance Sheet

  	
   

  	
  4.6(a)

  
	
   

  	
   

  	
   

  
	
  Balance Sheet Date

  	
   

  	
  4.6(a)

  
	
   

  	
   

  	
   

  
	
  Basket

  	
   

  	
  7.4(a)

  
	
   

  	
   

  	
   

  
	
  Cap

  	
   

  	
  7.4(b)

  
	
   

  	
   

  	
   

  
	
  Cash Consideration

  	
   

  	
  2.2(a)

  
	
   

  	
   

  	
   

  
	
  Closing

  	
   

  	
  2.6

  
	
   

  	
   

  	
   

  
	
  Closing Balance Sheet

  	
   

  	
  2.4(b)(ii)

  
	
   

  	
   

  	
   

  
	
  Closing Date

  	
   

  	
  2.6

  
	
   

  	
   

  	
   

  
	
  Closing Date Purchase
  Price

  	
   

  	
  2.2

  
	
   

  	
   

  	
   

  
	
  Closing Working Capital

  	
   

  	
  2.4(b)(i)

  
	
   

  	
   

  	
   

  
	
  Closing Working Capital
  Statement

  	
   

  	
  2.4(b)(ii)

  
	
   

  	
   

  	
   

  
	
  COBRA

  	
   

  	
  4.14(p)

  
	
   

  	
   

  	
   

  
	
  Company

  	
   

  	
  Recitals

  
	
   

  	
   

  	
   

  
	
  Company Documents

  	
   

  	
  4.2

  
	
   

  	
   

  	
   

  
	
  Company Marks

  	
   

  	
  6.5

  
	
   

  	
   

  	
   

  
	
  Company Permits

  	
   

  	
  4.17(b)

  
	
   

  	
   

  	
   

  
	
  Company Plans

  	
   

  	
  4.14(a)

  
	
   

  	
   

  	
   

  
	
  Company Property

  	
   

  	
  4.10(a)

  
	
   

  	
   

  	
   

  
	
  Company Properties

  	
   

  	
  4.10(a)

  
	
   

  	
   

  	
   

  
	
  Copyrights

  	
   

  	
  1.1 (in Intellectual Property
  definition)

  
	
   

  	
   

  	
   

  
	
  Earn-Out Payments

  	
   

  	
  2.5

  



 


8

















 


	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Earn-Out Period

  	
   

  	
  2.5(d)

  
	
   

  	
   

  	
   

  
	
  Employees

  	
   

  	
  4.14(a)

  
	
   

  	
   

  	
   

  
	
  EBITDA

  	
   

  	
  2.5(a)(i)

  
	
   

  	
   

  	
   

  
	
  ERISA Affiliate

  	
   

  	
  4.14(a)

  
	
   

  	
   

  	
   

  
	
  Estimated Closing Balance
  Sheet

  	
   

  	
  2.4(a)(i)

  
	
   

  	
   

  	
   

  
	
  Estimated Closing Working
  Capital

  	
   

  	
  2.4(a)(i)

  
	
   

  	
   

  	
   

  
	
  Estimated Closing Working
  Capital Excess

  	
   

  	
  2.4(a)(ii)

  
	
   

  	
   

  	
   

  
	
  Estimated Closing Working
  Capital Shortfall

  	
   

  	
  2.4(a)(ii)

  
	
   

  	
   

  	
   

  
	
  Financial Statements

  	
   

  	
  4.6(a)

  
	
   

  	
   

  	
   

  
	
  Financing

  	
   

  	
  5.7

  
	
   

  	
   

  	
   

  
	
  Financing Commitment

  	
   

  	
  5.7

  
	
   

  	
   

  	
   

  
	
  FIRPTA Affidavit

  	
   

  	
  2.8(a)(xii)

  
	
   

  	
   

  	
   

  
	
  First Year

  	
   

  	
  2.5(a)(ii)

  
	
   

  	
   

  	
   

  
	
  Identified GAAP
  Adjustments

  	
   

  	
  2.4(b)(ii)

  
	
   

  	
   

  	
   

  
	
  Included Current Assets

  	
   

  	
  2.4(b)(i)

  
	
   

  	
   

  	
   

  
	
  Included Current
  Liabilities

  	
   

  	
  2.4(b)(i)

  
	
   

  	
   

  	
   

  
	
  Loss

  	
   

  	
  7.2(a)

  
	
   

  	
   

  	
   

  
	
  Losses

  	
   

  	
  7.2(a)

  
	
   

  	
   

  	
   

  
	
  Marks

  	
   

  	
  1.1 (in Intellectual Property
  definition)

  
	
   

  	
   

  	
   

  
	
  Material Contracts

  	
   

  	
  4.13(a)

  
	
   

  	
   

  	
   

  
	
  Maximum Earn-Out Amount

  	
   

  	
  2.5

  
	
   

  	
   

  	
   

  
	
  Member Representative

  	
   

  	
  8.2(a)

  
	
   

  	
   

  	
   

  
	
  Multiemployer Plan

  	
   

  	
  4.14(a)

  



 


9

















 


	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Note Reduction

  	
   

  	
  2.5(b)(iii)(B)

  
	
   

  	
   

  	
   

  
	
  Owned Property

  	
   

  	
  4.10(a)

  
	
   

  	
   

  	
   

  
	
  Owned Properties

  	
   

  	
  4.10(a)

  
	
   

  	
   

  	
   

  
	
  Ownership Interests

  	
   

  	
  Recitals

  
	
   

  	
   

  	
   

  
	
  PBGC

  	
   

  	
  4.14(i)

  
	
   

  	
   

  	
   

  
	
  Patents

  	
   

  	
  1.1 (in Intellectual Property
  definition)

  
	
   

  	
   

  	
   

  
	
  Personal Property Leases

  	
   

  	
  4.11(b)

  
	
   

  	
   

  	
   

  
	
  Purchase Price

  	
   

  	
  2.2

  
	
   

  	
   

  	
   

  
	
  Purchaser

  	
   

  	
  Recitals

  
	
   

  	
   

  	
   

  
	
  Purchaser Documents

  	
   

  	
  5.2

  
	
   

  	
   

  	
   

  
	
  Purchaser Indemnified
  Parties

  	
   

  	
  7.2(a)

  
	
   

  	
   

  	
   

  
	
  Real Property Lease

  	
   

  	
  4.10(a)

  
	
   

  	
   

  	
   

  
	
  Real Property Leases

  	
   

  	
  4.10(a)

  
	
   

  	
   

  	
   

  
	
  Restricted Capital
  Interests

  	
   

  	
  6.9(h)

  
	
   

  	
   

  	
   

  
	
  Revenue

  	
   

  	
  2.5(a)(iii)

  
	
   

  	
   

  	
   

  
	
  Related Persons

  	
   

  	
  4.22

  
	
   

  	
   

  	
   

  
	
  Second Year

  	
   

  	
  2.5(a)(iv)

  
	
   

  	
   

  	
   

  
	
  Selling Member Documents

  	
   

  	
  3.1

  
	
   

  	
   

  	
   

  
	
  Selling Member Indemnified
  Parties

  	
   

  	
  7.2(b)

  
	
   

  	
   

  	
   

  
	
  Selling Members

  	
   

  	
  Recitals

  
	
   

  	
   

  	
   

  
	
  Selling Member’s Portion

  	
   

  	
  2.5(b)(iii)

  
	
   

  	
   

  	
   

  
	
  Straddle Period

  	
   

  	
  6.9(b)

  
	
   

  	
   

  	
   

  
	
  Survival Period

  	
   

  	
  7.1

  



 


10

















 


	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Target Working Capital

  	
   

  	
  2.4(a)(ii)

  
	
   

  	
   

  	
   

  
	
  Tax Claim

  	
   

  	
  6.9(c)(i)

  
	
   

  	
   

  	
   

  
	
  Third Party Claim

  	
   

  	
  7.3(b)

  
	
   

  	
   

  	
   

  
	
  Title IV Plans

  	
   

  	
  4.14(a)

  
	
   

  	
   

  	
   

  
	
  Trade Secrets

  	
   

  	
  1.1 (in Intellectual Property definition)

  
	
   

  	
   

  	
   

  
	
  Unresolved Claims

  	
   

  	
  7.5(a)

  



 


1.3           Other
Definitional and Interpretive Matters.


 


(a)           Unless otherwise expressly provided,
for purposes of this Agreement, the following rules of interpretation
shall apply:


 


(i)            Calculation of Time Period.  When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in calculating
such period shall be excluded. If the last day of such period is a non-Business
Day, the period in question shall end on the next succeeding Business Day.


 


(ii)           Dollars.  Any reference in this Agreement to $ shall
mean U.S. dollars.


 


(iii)          Exhibits/Disclosure Schedule.  The Exhibits and Disclosure Schedule to this
Agreement are hereby incorporated and made a part hereof and are an integral
part of this Agreement.  The Exhibits and
Disclosure Schedule annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein.  Any capitalized terms used in
any Disclosure Schedule or Exhibit but not otherwise defined therein shall
be defined as set forth in this Agreement.


 


(iv)          Gender and Number.  Any reference in this Agreement to gender
shall include all genders, and words imparting the singular number only shall
include the plural and vice versa.


 


(v)           Headings.  The provision of a Table of Contents, the
division of this Agreement into Articles, Sections and other subdivisions and
the insertion of headings are for convenience of reference only and shall not
affect or be utilized in construing or interpreting this Agreement.  All references in this Agreement to any “Section”
are to the corresponding Section of this Agreement unless otherwise
specified.


 


11

















 


(vi)          Herein.  The words such as “herein,” “hereinafter,”
“hereof,” and “hereunder” refer to this Agreement as a whole and
not merely to a subdivision in which such words appear unless the context
otherwise requires.


 


(vii)         Including.  The word “including” or any variation
thereof means “including, without limitation” and shall not be
construed to limit any general statement that it follows to the specific or
similar items or matters immediately following it.


 


(b)           The parties hereto have participated
jointly in the negotiation and drafting of this Agreement and, in the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as jointly drafted by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement.


 


ARTICLE II.

SALE AND PURCHASE OF OWNERSHIP INTERESTS


 


2.1           Sale and Purchase of Ownership Interest.  Upon
the terms and subject to the conditions contained herein, on the Closing
Date, each Selling Member agrees to sell to Purchaser, free and clear of any
and all Liens (other than restrictions on transfer arising under federal and
state Securities laws), and Purchaser agrees to purchase from each Selling
Member, the Ownership Interest owned by such Selling Member set forth opposite
such Selling Member’s name on Exhibit A hereto.


 


2.2           Purchase Price. 
Purchaser will pay and deliver the following aggregate purchase price
(collectively, the “Purchase Price”):


 


(a)           To the
Selling Members, $21,000,000 in cash, less any Company Transaction Expenses unpaid and still
outstanding as of the Closing Date (collectively, the “Cash Consideration”);
plus


 


(b)           To Brian
Rathe only, and no other Selling Member, $3,000,000 by issuance of the Promissory Note; plus


 


(c)           To the
Selling Members, up to an aggregate of $3,000,000 in cash in two annual Earn-Out Payments pursuant to Section 2.5
below.


 


The Cash Consideration and the aggregate amount under the Promissory
Note are hereinafter referred to as the “Closing Date Purchase Price.”  The Closing Date Purchase Price is subject to
adjustment as provided in Section 2.4 below.


 


2.3           Payment of Closing Date Purchase Price.  On
the Closing Date, Purchaser shall (i) pay the Cash Consideration to
each of the Selling Members in accordance with the amounts set forth opposite
such Selling Members’ name on Exhibit A by wire transfer of
immediately available funds into accounts designated in writing by each of the
Selling Members not less than three Business Days prior to the Closing Date,
and (ii) execute and deliver the Promissory Note to Brian Rathe.


 


12

















 


2.4           Purchase
Price Adjustment.


 


(a)           Closing Date Purchase Price
Adjustment.


 


(i)            Not later than three Business Days
prior to the Closing Date, the Company shall prepare and provide Purchaser with
an estimated balance sheet of the Company as of the opening of business on the
Closing Date (the “Estimated Closing Balance Sheet”)
and a statement of the estimated Closing Working Capital (as defined in Section 2.4(b)(i) below),
derived from the Estimated Closing Balance Sheet (“Estimated Closing Working Capital”).
 The Estimated Closing Balance
Sheet and Estimated Closing Working Capital shall be prepared by the Company in
a manner and on a basis consistent with the preparation of the Financial
Statements for the fiscal year ended December 31, 2007.


 


(ii)           If Estimated Closing Working Capital
is less than Target Working Capital, then the Cash Consideration payable at
Closing will be decreased by the positive difference between Estimated Closing
Working Capital and Target Working Capital (the “Estimated Closing Working Capital
Shortfall”).  If
Estimated Closing Working Capital is greater than Target Working Capital, then
the Cash Consideration payable at Closing will be increased by the positive
difference between Estimated Closing Working Capital and Target Working Capital
(the “Estimated Closing Working Capital Excess”).  “Target Working Capital” shall be
$2,200,000.


 


(b)           Post-Closing Date Purchase Price
Adjustment.


 


(i)            Following the Closing, the Purchase
Price shall be adjusted as provided herein to reflect the difference between
Closing Working Capital and Estimated Closing Working Capital.  “Closing Working Capital” means (A) the
Included Current Assets of the Company, less (B) the Included Current
Liabilities of the Company, determined as of the close of business on February 29,
2008.  “Included Current Assets” means accounts receivable,
inventory, deposits and prepaid expenses, but excluding deferred tax assets and
receivables from any of the Company’s Affiliates, employees, officers or
Members, determined in accordance with GAAP and in a manner and on a basis
consistent with the preparation of the Financial Statements for the fiscal year
ended December 31, 2007.  “Included
Current Liabilities” means accounts payable, accrued
Taxes, bad debt accrual, and accrued expenses, but excluding payables to any of
the Company’s Affiliates, employees, officers or Members and the current
portion of long term Indebtedness, determined in accordance with GAAP and in a
manner and on a basis consistent with the preparation of the Financial
Statements for the fiscal year ended December 31, 2007.


 


(ii)           Within 90 days following the Closing
Date, Purchaser shall deliver to the Member Representative a balance
sheet of the Company as of the close of business on February 29, 2008 (the
“Closing
Balance Sheet”) audited by Purchaser and a statement of
Closing Working Capital derived from the Closing Balance Sheet (the “Closing
Working Capital Statement”), together with the worksheets
and data that support such balance sheet and working capital statement.  The Closing Balance Sheet 


 


13

















 


and the Closing Working Capital Statement shall be prepared in accordance with GAAP
consistently applied by Purchaser in determining its own financial statements,
including the GAAP Adjustments identified on Schedule 2.4(b)(i) (“Identified
GAAP Adjustments”), and in a manner and on a basis
consistent with the preparation of the Financial Statements for the fiscal year
ended December 31, 2007.  For
purposes of calculating the Purchase Price adjustment, if any, the following
will apply:  (A) the Identified GAAP
Adjustments shall be excluded and no adjustment shall be made to the Closing
Working Capital to reflect such Identified GAAP Adjustments; (B) the aggregate net adjustment,
if any, made to the Closing Working Capital resulting solely from the application
of GAAP shall not exceed $250,000; and (C) any adjustments made in order
to make the Closing Working Capital on a basis consistent with the preparation
of the Financial Statements for the fiscal year ended December 31, 2007,
shall not be included in deriving the $250,000 excluded amount of Section 2.4(b)(ii)(B).  By way of explanation of the above-stated
adjustment formula, Schedule 2.4(b)(ii) shows the calculation of
Purchase Price adjustments using the adjustment formula set forth above under
four hypothetical fact patterns.


 


(iii)          Acceptance of Statements; Dispute
Procedures.  The Closing Balance
Sheet and the Closing Working Capital Statement (and the computation of Closing
Working Capital indicated thereon) delivered by Purchaser to the Member Representative,
with a copy to Mr. Britt Kauffman, shall be conclusive and binding upon
the parties unless the Member Representative, within 20 days after delivery to
the Member Representative of the Closing Balance Sheet and the Closing Working
Capital Statement, notifies Purchaser in writing that the Member Representative
disputes any of the amounts set forth therein, specifying the nature of the
dispute, the basis therefore and the Selling Members’ calculation of any such
amount in dispute.  The parties shall in
good faith attempt to resolve any dispute and, if the parties so resolve all
disputes, the Closing Balance Sheet and the Closing Working Capital Statement
(and the computation of Closing Working Capital indicated thereon), as amended
to the extent necessary to reflect the resolution of the dispute, shall be
conclusive and binding on the parties. 
If the parties do not reach agreement in resolving the dispute within 20
days after notice is given by the Member Representative to Purchaser pursuant
to the second preceding sentence, the parties shall submit the dispute to KBA
Group LLP or, if such firm is unwilling to act, to another nationally
recognized independent accounting firm which is mutually agreeable to the
parties (the “Arbiter”) for resolution.  If the parties cannot agree on the
independent accounting firm to act as Arbiter, the parties shall request the
American Arbitration Association to appoint such a firm, and such appointment
shall be conclusive and binding on the parties. 
Promptly, but no later than 20 days after acceptance of his or her
appointment as Arbiter, the Arbiter shall determine (it being understood that
in making such determination, the Arbiter shall be functioning as an expert and
not as an arbitrator), based solely on written submissions by Purchaser and the
Member Representative, and not by independent review, only those issues in
dispute and shall render a written report as to the resolution of the dispute
and the resulting computation of the Closing Working Capital which shall be
conclusive and binding on the parties, notwithstanding the provisions of Section 8.3(a).  All proceedings conducted by the Arbiter
shall take place in Dallas, Texas.  In
resolving any disputed item, the Arbiter (x) shall be bound by the
provisions of this Section 2.4 and (y) may not assign a 


 


14

















 


value to any item greater
than the greatest value for such items claimed by either party or less than the
smallest value for such items claimed by either party.  The fees, costs and expenses of the Arbiter
shall be allocated to and borne by Purchaser and the Selling Members based on
the inverse of the percentage that the Arbiter’s determination (before such
allocation) bears to the total amount of the total items in dispute as
originally submitted to the Arbiter.  For
example, should the items in dispute total in amount to $1,000 and the Arbiter
awards $600 in favor of the Selling Members’ position, 60% of the costs of its
review would be borne by Purchaser and 40% of the costs would be borne by the
Selling Members.


 


(iv)          Payment.  Upon final determination of Closing Working
Capital as provided in Sections
2.4(b)(i) and (ii) above, (A) if Closing Working
Capital is greater than Estimated Closing Working Capital, the Purchase Price
shall be increased by the excess of Closing Working Capital over Estimated
Closing Working Capital and Purchaser shall promptly, but no later than five
business days after such final determination, pay the amount of such difference
in cash, together with interest thereon from the Closing Date to the date of
payment thereof, to the Selling Members, in accordance with the percentages set
forth opposite each Selling Member’s name on Exhibit A, by wire
transfer of immediately available funds to the accounts specified pursuant to Section 2.3,
and (B) if Closing Working Capital is less than Estimated Closing Working
Capital, the Purchase Price shall be decreased by the excess of Estimated
Closing Working Capital over Closing Working Capital and the Selling Members
shall promptly, but no later than five business days after such final
determination, pay to Purchaser the amount of such difference, together with
interest thereon from the Closing Date to the date of payment thereof, in
accordance with this Section 2.4(b)(vi).  Interest payable pursuant to this section
shall be determined pursuant to Section 2.4(b)(v) below.


 


(v)           Interest.  For the purposes of this Section 2.4(b),
interest shall be simple
interest payable at the “prime” rate, as announced by The Wall Street Journal,
Eastern Edition, from time to time to be in effect, calculated based on a 365
day year and the actual number of days elapsed.


 


(vi)          Recoupment Against Promissory Note.  Any payment to be made by any of the Selling
Members to Purchaser pursuant to Section 2.4(b)(iv) above will
be made as a reduction in the outstanding principal under the Promissory Note
in accordance with the procedures set forth in Section 7.5(a).


 


2.5           Post-Closing Payment. 
Subject and pursuant to the following provisions of this Section 2.5,
Purchaser shall pay up to an aggregate of $3,000,000 (the “Maximum
Earn-Out Amount”) to the Selling Members as additional
purchase consideration (the “Earn-Out Payments”).


 


(a)           Definitions.  As used in this Section 2.5, the
following terms shall have the following meanings:


 


15














 


(i)            “EBITDA”
shall mean the gross earnings before interest, taxes, depreciation and
amortization charges. For purposes of this EBITDA definition, taxes shall be
limited to the same types of income, franchise and margin taxes Purchaser
customarily uses in calculating EBITDA.


 


(ii)           “First Year”
shall mean the 12 month period following the Closing Date.


 


(iii)          “Revenue” shall
mean the gross revenue, net of any sales discounts, of the Company determined
in accordance with GAAP, excluding the revenue from any newly acquired
business(es), if any, during the two year Earn-Out measurement period set forth
in Section 2.5(c).


 


(iv)          “Second Year”
shall mean the second 12 month period following the Closing Date.


 


(b)           Payments.


 


(i)            Payment Date. First
Year Earn-Out Payments are due 30 days after the first anniversary of the
Closing Date. Second Year Earn-Out Payments are due 30 days after the second
anniversary of the Closing Date.


 


(ii)           Maximum Earn-Out
Amount. Notwithstanding any provisions of this Section 2.5 to
the contrary, the maximum Earn-Out Payment over the two year period is $3
million regardless of actual performance against the target Revenue and EBITDA.


 


(iii)          Distributions. Each
Selling Member hereby directs Purchaser to pay on behalf of such Selling Member,
the aggregate amount of any Earn-Out Payment due to such Selling Member, as
calculated by multiplying (x) the percentage set forth on Exhibit A
under the column titled “Earn-Out Percentage” opposite the name of such Selling
Member by (y) the aggregate amount of such Earn-out Payment (the “Selling
Member’s Portion”) as follows:


 


(A)          In the event the
Promissory Note has been reduced as a result of any Purchase Price adjustment
pursuant to either Section 2.4(b)(vi) or an indemnification
obligation pursuant to Section 7.5(a) (a “Note
Reduction”), Purchaser shall (i) pro rata pay each
Selling Member’s Portion to Brian Rathe until such time as the aggregate amount
of all Note Reduction(s), if any, have been paid in full, and (ii) thereafter,
pay the residual amount of each the Selling Member’s Portion, if any, to the
respective Selling Member. In no event shall Purchaser pay Brian Rathe on
behalf of any Selling Member pursuant to this Section 2.5(b)(A) an
aggregate amount greater than the aggregate amount of all Note Reductions multiplied
by the percentage set forth on Exhibit A under the column
titled “Earn-Out Percentage” opposite the name of such Selling Member.”


 


16

















 


(B)           If no Note Reduction
remains outstanding and unpaid at the time of any Earn-Out Payment, then
Purchaser shall pay each Selling Member’s Portion to the respective Selling
Member.


 


(C)           Each payment of any
Earn-Out Payment pursuant to this Section 2.5(b) will be made
by check delivered to the addresses specified on Exhibit A or
otherwise as specified to Purchaser in writing by the appropriate Selling
Member.


 


(c)           Calculation
of Earn-Out Payments. Annual aggregate Earn-Out Payments will be calculated
by using the Earn-Out Payment Table attached hereto as Exhibit C,
as follows:


 


(i)            First Year. The
total Earn-Out Payment due the Selling Members will be the sum of the amounts
(reading left to right) beginning with the left most column located on the
horizontal axis, adjacent to the EBITDA margin earned for the First Year, up to
and including the intersection with the vertical axis corresponding to the
Revenue amount attained by the Company. For
avoidance of doubt, no Earn-Out Payment is due to Selling Members if the
Company’s EBITDA margin is less than the 20% or Revenue is less than $20.4
million.


 


(ii)           Second Year. The total Earn-Out Payment due the Selling Members will be the
sum of the amounts (reading left to right) located on the horizontal axis,
adjacent to the EBITDA margin earned for the Second Year, beginning with the
Revenue Attained column immediately to the right of the column corresponding to
the First Year Revenue attainment, and extending to the right up to and
including the intersection with the vertical axis corresponding to the Revenue
amount attained by the Company for the Second Year. For avoidance of doubt, no Earn-Out Payment is due to Selling Members if
the Company’s EBITDA margin is less than 22% regardless of Revenue attainment
level.


 


(iii)          Only that portion of
Second Year Revenue that exceeds First Year Revenue attainment is eligible for
inclusion in the Second Year Earn-Out Payment calculation.


 


(iv)          First
Year EBITDA rate does not change if Revenue exceeds $24 million.


 


(v)           Actual results will be rounded up or down to the nearest one decimal
point.


 


(vi)          Claw Back. In the event Company does not achieve its First Year Revenue
goal of $24 million, Company may make up the shortfall in Second Year but at
the 22% EBITDA rate.


 


(vii)         Transfers In and Out.
No Revenue or expenses resulting from acquisitions of other businesses will be
included in the Earn-Out Payment calculation. No Revenue increases or
reductions resulting from transfers into or out of Company’s business unit by
Purchaser, or expense increases or reductions due to Purchaser’s 


 


17

















 


assumption of any
portion of the Company’s infrastructure will be included in the Earn- Out
Payment calculation.


 


(viii)        Acceptance of
Calculations; Dispute Procedures. The calculations of the Earn-Out Payments
delivered by Purchaser to the Member Representative, with a copy to Mr. Britt
Kauffman, shall be conclusive and binding upon the parties unless the Member
Representative, within 20 days after delivery to the Member Representative of
the calculation of the applicable Earn-Out Payment, notifies Purchaser in
writing that the Member Representative disputes any of the amounts set forth
therein, specifying the nature of the dispute, the basis therefore and the
Selling Members’ calculation of any such amount in dispute. The parties shall
in good faith attempt to resolve any dispute and, if the parties so resolve all
disputes, the calculation of the Earn-Out Payment, as amended to the extent
necessary to reflect the resolution of the dispute, shall be conclusive and
binding on the parties. If the parties do not reach agreement in resolving the
dispute within 20 days after notice is given by the Member Representative to
Purchaser pursuant to the second preceding sentence, the parties shall submit
the dispute to the Arbiter for resolution. If the parties cannot agree on the
independent accounting firm to act as Arbiter, the parties shall request the
American Arbitration Association to appoint such a firm, and such appointment
shall be conclusive and binding on the parties. Promptly, but no later than 20
days after acceptance of his or her appointment as Arbiter, the Arbiter shall
determine (it being understood that in making such determination, the Arbiter
shall be functioning as an expert and not as an arbitrator), based solely on
written submissions by Purchaser and the Member Representative, and not by
independent review, only those issues in dispute and shall render a written
report as to the resolution of the dispute and the resulting calculation of the
Earn-Out Payment which shall be conclusive and binding on the parties,
notwithstanding the provisions of Section 8.3(a). All proceedings
conducted by the Arbiter shall take place in Dallas, Texas. In resolving any
disputed item, the Arbiter (x) shall be bound by the provisions of this Section 2.5
and (y) may not assign a value to any item greater than the greatest value
for such items claimed by either party or less than the smallest value for such
items claimed by either party. The fees, costs and expenses of the Arbiter
shall be allocated to and borne by Purchaser and the Selling Members based on
the inverse of the percentage that the Arbiter’s determination (before such
allocation) bears to the total amount of the total items in dispute as
originally submitted to the Arbiter. For example, should the items in dispute
total in amount to $1,000 and the Arbiter awards $600 in favor of the Selling
Members’ position, 60% of the costs of its review would be borne by Purchaser
and 40% of the costs would be borne by the Selling Members.


 


(d)           Operation of the Company. For a two year period following the Closing
Date (the “Earn-Out Period”), Purchaser
shall operate the Company as a separate division or subsidiary of Purchaser. Purchaser
shall employ Brian Rathe subject to that certain Employment Agreement between Mr. Rathe
and Purchaser and/or Company, as applicable, dated February 29, 2008. During
the Earn-Out Period, Purchaser shall maintain a separate set of financial
statements for the Company calculated on a basis consistent with the Company’s
Financial Statements for the fiscal year ended December 31, 2007, as
adjusted by Purchaser for GAAP.


 


18

















 


(e)           Change of Control. In the event of a Change of Control of the Company
or Purchaser prior to the end of the Earn-Out Period, Purchaser will
require that the acquirer in the Change of Control transaction assume the
obligations under this Section 2.5.


 


2.6           Closing Date. The
consummation of the sale and purchase of the Ownership Interests provided for
in Section 2.1 (the “Closing”) shall take place at
the offices of BancTec, Inc., 2701 E. Grauwyler Rd., Irving, Texas 75061
(or at such other place as the parties may designate in writing) at 10:00 a.m.
(Dallas, Texas time) on the date of this Agreement (the “Closing Date”).


 


2.7           Deliveries
Prior to the Closing Date. Not later than three Business Days prior to the
Closing Date, the Company shall deliver to Purchaser:


 


(a)           The
pay-off letters in respect of Indebtedness to be repaid as of the Closing and
the certificate setting forth an estimate of Indebtedness, pursuant to Section 6.8.


 


2.8           Deliveries
on the Closing Date.


 


(a)           Deliveries
by the Selling Members. At the Closing on the Closing Date, subject to
payment and delivery of the Closing Date Purchase Price by Purchaser, some or
all of the Selling Members, as applicable, shall deliver or cause the Company
to deliver, as applicable, to Purchaser:


 


(i)            An
executed copy of this Agreement.


 


(ii)           All right, title and
interest in and to the Ownership Interests.


 


(iii)          An
executed copy of that certain Employment Agreement to be entered into as of the
Closing Date by and between Purchaser and Brian Rathe.


 


(iv)          Executed
copies of those certain employment offer letters from the Company to each of
Marguerite Glasgow, Karen Roselle, and James William Holder.


 


(v)           Executed copies of Non-Competition Agreements from each of Brian
Rathe, Marguerite Glasgow, Karen Roselle, and James William Holder.


 


(vi)          Executed
copies of Letters of Resignation from each of Brian L. Rathe,
Stuart A. Rathe and John Britton Kauffman.


 


(vii)         Copies
of resolutions, certified by the Secretary of the Company as to the
authorization of this Agreement and all of the transactions contemplated
hereby.


 


(viii)        Copies of the releases
from Affiliates of the Company, pursuant to Section 6.6.


 


(ix)           The pay-off letters or final invoices in respect of Company Transaction
Expenses and the certificate setting forth an estimate of Company Transaction
Expenses, pursuant to Section 6.7.


 


19

















 


(x)            (A) A Certificate of Existence dated not
more than ten Business Days prior to the Closing Date with respect to
the Company issued by the Secretary of State of the State of Texas, (B) a
Certificate of Account Status dated not more than ten Business Days prior to
the Closing Date with respect to the Company issued by the Comptroller of
Public Accounts of the State of Texas, and (C) a Certificate of Good
Standing (or equivalent) dated not more than ten Business Days prior to the
Closing Date with respect to the Company for each state in which the Company is
qualified to do business as a foreign entity;


 


(xi)           All instruments and documents necessary to release any and all Liens
other than Permitted Exceptions, including appropriate UCC financing statement
amendments (termination statements);


 


(xii)          Affidavits of
non-foreign status from each of the Selling Members that complies with Section 1445
of the Code (a “FIRPTA Affidavit”);


 


(xiii)         An
executed copy of the completed lease termination arrangement regarding the
Lease Agreement for 8130 Carpenter Freeway, Dallas, Texas.


 


(xiv)        An
executed amendment to the Lease Agreement for 7777 Carpenter Freeway, Dallas,
Texas, revising the termination date to February 28, 2013.


 


(xv)         Executed
copy of a Limited Liability Company Authorization Resolution regarding accounts
at Texas Capital Bank and any other bank accounts.


 


(xvi)        Signature
Authorization Cards executed by Brian Rathe for each bank account held by Company.


 


(b)           Deliveries
by Purchaser. At the Closing, Purchaser shall deliver to the Selling
Members:


 


(i)            Payment of the
Purchase Price in accordance with Section 2.3;


 


(ii)           An executed copy of
this Agreement;


 


(iii)          A fully executed
Promissory Note;


 


(iv)          An
executed copy of that certain Employment Agreement to be entered into as of the
Closing Date, by and between Purchaser and Brian Rathe;


 


(v)           Copies of resolutions, certified by the Secretary of Purchaser as to the
authorization of this Agreement and all of the transactions contemplated
hereby; and


 


(vi)          A Certificate of Good
Standing dated not more than ten Business Days prior to the Closing Date with
respect to the Purchaser issued by the Secretary of State of the State of
Delaware.


 


20

















 


2.9           Allocation of Purchase Price. The
Company and each of the Selling Members acknowledge that Purchaser will use
Houlihan Lokey Howard & Zukin (“Houlihan”) to after- Closing perform
an independent valuation of the assets of the Company, which shall be used to
allocate the Purchase Price for federal income tax and other purposes. The
Company, each Selling Member and Purchaser will cooperate in good faith with
Houlihan and each other to attempt to reach a valuation and allocation that is
agreed to by all parties. If the Selling Members and Purchaser agree regarding
such valuation and allocation (the “Agreed Allocation”), the Selling Members
and Purchaser shall report the transactions contemplated hereby to all Taxing
Authorities on all Tax Returns filed by the parties in a manner consistent with
such Agreed Allocation; otherwise, the Selling Members, on one hand, and
Purchaser, on the other hand, may each
use their own valuation and allocation as each believes to be true and correct.
If any allocation or valuation is disputed by any Government Body, the party
receiving notice of such dispute will promptly notify the other party. If the
Agreed Allocation is disputed by any Government Body, in addition to the
notification specified in the immediately preceding sentence, the parties will
use their reasonable best efforts to sustain the Agreed Allocation. The
Company, the Selling Members and the Purchaser will share information and
cooperate to the extent reasonably necessary to permit the transactions
contemplated by this Agreement to be properly and timely, and to the extent
possible, consistently reported. Purchaser shall be responsible for all
expenses arising out of the services of Houlihan.


 


ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE SELLING MEMBERS


 


Each Selling Member,
severally and not jointly, hereby represents and warrants to Purchaser that:


 


3.1           Authorization of Agreement. Such
Selling Member has all requisite power, authority
and legal capacity to execute and deliver this Agreement and each other
agreement, document, or instrument or certificate contemplated by this
Agreement or to be executed by such Selling Member in connection with the
consummation of the transactions contemplated by this Agreement (the “Selling
Member Documents”), and to consummate the transactions
contemplated hereby and thereby. This Agreement has been, and each of the
Selling Member Documents will be at or prior to the Closing, duly and validly
executed and delivered by such Selling Member and (assuming due authorization,
execution and delivery by Purchaser) this Agreement constitutes, and each of
the Selling Member Documents when so executed and delivered will constitute,
legal, valid and binding obligations of such Selling Member, enforceable against
such Selling Member in accordance with its terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to the enforcement of creditors’ rights generally and (ii) general
equitable principles.


 


3.2           Conflicts;
Consents of Third Parties.


 


(a)           The execution and delivery by such Selling
Member of this Agreement and the
Selling Member Documents, the consummation of the transactions contemplated
hereby and thereby, and the compliance by such Selling Member with the
provisions hereof and thereof will not conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination or cancellation under any
provision of: 


 


21

















 


(i) any Contract to which any Selling
Member is a party or by which any of the properties or assets of such Selling
Member are bound; or (ii) conflict with or violate any Permit, Order or
Law to which any Selling Member is subject or by which any of the properties or
assets of such Selling Member are bound.


 


(b)           No consent, waiver, approval, Order, Permit
or authorization of, or declaration or filing with, or notification to, any
Person or Governmental Body is required on the part of such Selling Member in
connection with the execution and delivery of this Agreement, the Selling Member Documents, the compliance by
such Selling Member with any of the provisions hereof, or the consummation of
the transactions contemplated hereby.


 


3.3           Ownership
and Transfer of Ownership Interest. Such Selling Member owns, or will own
at time of transfer, the Ownership Interest indicated as being owned by such
Selling Member on Exhibit A, free and clear of any and all Liens
and other restrictions on transfer (other than any restrictions under state or
federal securities law and as set forth in the Regulations of the Company). Such
Selling Member has, or shall have, the power and authority to sell, transfer,
assign and deliver his or her Ownership Interest as provided in this Agreement
and such delivery will convey to Purchaser good and marketable title to such
Ownership Interest at time of transfer, except for any restrictions under
applicable securities laws, Liens created by Purchaser and the restrictions
contained in the Regulations of the Company.


 


3.4           Litigation. Except as set forth in Schedule 3.4,
there is no Legal Proceeding pending or, to the Knowledge of such Selling
Member, threatened against such Selling Member or to which such Selling Member
is otherwise a party relating to this Agreement, the Selling Member Documents
or the transactions contemplated hereby or thereby.


 


3.5           Financial
Advisors. Except as set
forth on Schedule 3.5, no Person has acted, directly or indirectly, as a
broker, finder or financial advisor for such Selling Member in connection with
the transactions contemplated by this Agreement and no Person is or will be
entitled to any fee or commission or like payment in respect thereof.


 


ARTICLE IV.

REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY


 


The Selling Members,
jointly and severally, hereby represent and warrant to Purchaser that:


 


4.1           Organization
and Good Standing. The
Company is a limited liability company organized, validly existing and in good
standing under the laws of the State of Texas and has full limited liability
company power and authority to own, lease and operate its properties and to
carry on its business. Except as set forth on Schedule 4.1, the Company
is qualified or authorized to do business as a foreign entity and is in good
standing under the laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its business or
the ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing
would not have a Company Material Adverse Effect.


 


22

















 


4.2           Authorization
of Agreement. The Company has full limited liability company power and
authority to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by the Company in connection with the transactions contemplated by
this Agreement (the “Company Documents”),
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Company of this Agreement and each of
the Company Documents, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized and approved by all necessary
limited liability company action on the part of the Company. This Agreement has
been, and each of the Company Documents will be at or prior to the Closing,
duly and validly executed and delivered by the Company and (assuming due
authorization, execution and delivery by Purchaser) this Agreement constitutes,
and each of the Company Documents when so executed and delivered will
constitute, legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to the enforcement of creditors’ rights generally and (ii) general
equitable principles.


 


4.3           Conflicts:
Consents of Third Parties.


 


(a)           Except as
set forth in Schedule 4.3(a), the execution and delivery by the Company
of this Agreement and the Company Documents, the consummation of the
transactions contemplated hereby and thereby, and the compliance by the Company
with the provisions hereof and thereof will not (i) conflict with or
violate the articles of organization or regulations of the Company, (ii) conflict
with or result in any violation or breach of, conflict with or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or create, increase or accelerate any rights or
entitlements of any Person under, or result in the creation of any Liens upon
any of the properties or assets of Company under any Material Contract, (iii) conflict
with or violate any Permit, Order or Law to which the Company is subject or by
which any of the properties or assets of the Company are bound.


 


(b)           Except as
set forth on Schedule 4.3(b), no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or notification to,
any Person or Governmental Body is required on the part of the Company in
connection with (i) the execution and delivery of this Agreement or the
Company Documents, respectively, the compliance by the Company with any of the
provisions hereof and thereof, or the consummation of the transactions
contemplated hereby or thereby, or (ii) the continuing validity and
effectiveness immediately following the Closing of any Permit or Contract of
the Company.


 


4.4           Capitalization. All of the Ownership Interests are owned of
record by the Selling Members in the respective amounts as set forth on Exhibit A.


 


4.5           Company
Records. The Company has delivered or made available to Purchaser true,
correct and complete copies of the articles of organization (certified by the
Secretary of State of the State of Texas) and regulations (certified by the
secretary, assistant secretary or other appropriate officer) of the Company in
each case as amended and in effect on the due date hereof, including all
amendments thereto.


 


23

















 


4.6           Financial
Statements.


 


(a)           The Company has
delivered or made available to Purchaser copies of (i) the unaudited
balance sheets of the Company as of December 31, 2007, 2006, and 2005 and
the related unaudited statements of income and of cash flows of the Company for
the years then ended (such unaudited statements are referred to herein as the “Financial
Statements”). Each of the Financial Statements is
complete and correct in all material respects, has been prepared in accordance
with revenue recognition policies consistently applied in all material respects
throughout the periods presented, and presents fairly in all material respects
the financial position, results of operations and cash flows of the Company as
at the dates and for the periods indicated therein. The unaudited balance sheet
of the Company as of January 31, 2008 is referred to herein as the “Balance
Sheet” and January 31, 2008 is referred to herein as
the “Balance Sheet Date.”


 


(b)           All
books, records and accounts of the Company are accurate and complete in all
material respects and are maintained in all material respects in accordance
with good business practice and all applicable Laws. The Company maintains
systems of internal accounting controls sufficient to provide reasonable assurances
that:  (i) transactions are executed
in accordance with management’s general or specific authorization; (ii) transactions
are recorded as necessary to permit the preparation of financials statements; (iii) transactions
are recorded as necessary to maintain accountability for assets; and (iv) access
to assets is permitted only in accordance with management’s general or specific
authorization.


 


(c)           The
financial projections and business plan provided by the Company to Purchaser
prior to the date hereof were prepared by the Company’s management, in light of
its experience and perception of historical trends, current conditions and
future developments, on a reasonable basis reflecting in all material respects
management’s best estimates, assumptions and judgments regarding the future
financial performance of the Company in light of the facts and circumstances
known to management at the time such projections and plan were prepared.


 


4.7           No
Undisclosed Liabilities. Except as set forth on Schedule 4.7, the
Company has no Indebtedness or Liabilities (whether or not required under GAAP
to be reflected on a balance sheet or the notes thereto) other than those (i) specifically
reflected on and fully reserved against in the Balance Sheet, (ii) incurred
in the Ordinary Course of Business since the Balance Sheet Date or (iii) that
are immaterial to the Company.


 


4.8           Absence
of Certain Developments. Except as expressly contemplated by this Agreement
or as set forth on Schedule 4.8, since the Balance Sheet Date (a) the
Company has conducted its business only in the Ordinary Course of Business and (b) there
has not been any event, change, occurrence or circumstance that, individually
or in the aggregate with any such events, changes, occurrences or
circumstances, has had or could reasonably be expected to have a Company
Material Adverse Effect. Without limiting the generality of the foregoing,
since the Balance Sheet Date:


 


(i)            there has not been any
damage, destruction or loss, whether or not covered by insurance, with respect
to the property and assets of the Company having a replacement cost of more
than $50,000 for any single loss or for all such losses;


 


24

















 


(ii)           there has not been any
declaration, setting aside or payment of any dividend or other distribution in
respect of any Ownership Interest of the Company or any repurchase, redemption
or other acquisition by the Company of any outstanding securities of, or other
ownership interest in, the Company;


 


(iii)          except in the Ordinary
Course of Business consistent with past practice, the Company has not awarded
or paid any bonuses to employees of the Company with respect to the fiscal year
ended December 31, 2007, except to the extent accrued on the Balance
Sheet, or entered into any employment, deferred compensation, severance or
similar agreement (nor amended any such agreement) or agreed to increase the
compensation payable or to become payable by it to any of the Company’s
officers, employees, agents or representatives or agreed to increase the
coverage or benefits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick leave,
deferred compensation, bonus or other incentive compensation, insurance,
pension or other employee benefit plan, payment or arrangement made to, for or
with such officers, employees, agents or representatives;


 


(iv)          there
has not been any change by the Company in accounting or Tax reporting
principles, methods or policies;


 


(v)           the Company has not made or rescinded any election relating to Taxes
or settled or compromised any claim relating to Taxes;


 


(vi)          the Company has not entered into any transaction or Contract other than
in the Ordinary Course of Business;


 


(vii)         the
Company has not failed to promptly pay and discharge current liabilities except
where disputed in good faith by appropriate proceedings;


 


(viii)        the
Company has not made any loans, advances or capital contributions to, or
investments in, any Person or paid any fees or expenses to any Selling Member
or any officer, partner, member or Affiliate of any Selling Member;


 


(ix)           the
Company has not (A) mortgaged, pledged or subjected to any Lien any of its
assets, or (B) acquired any assets or sold, assigned, transferred,
conveyed, leased or otherwise disposed of any assets of the Company, except, in
the case of clause (B), for assets acquired, sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the Ordinary Course of Business;


 


(x)            the Company has not discharged or satisfied
any Lien, or paid any Liability, except in the Ordinary Course of
Business;


 


(xi)           the
Company has not canceled or compromised any debt or claim or amended, canceled,
terminated, relinquished, waived or released any Contract or right except in
the Ordinary Course of Business and which, in the aggregate, would not be
material to the Company taken as a whole;


 


25














 


(xii)          the
Company has not made or committed to make any capital expenditures or capital
additions or betterments in excess of $25,000 individually or $50,000 in the
aggregate;


 


(xiii)         the Company has not
issued, created, incurred, assumed, guaranteed, endorsed or otherwise become
liable or responsible with respect to (whether directly, contingently, or
otherwise) any Indebtedness in an amount in excess of $25,000 in the aggregate;


 


(xiv)        the Company has not
granted any license or sublicense of any rights under or with respect to any
Intellectual Property except in the Ordinary Course of Business;


 


(xv)         the Company has not
instituted or settled any Legal Proceeding resulting in a loss of revenue in
excess of $25,000 in the aggregate; and


 


(xvi)        none of the Selling
Members or the Company has agreed, committed, arranged or entered into any
understanding to do anything set forth in this Section 4.8.


 


4.9           Taxes.


 


(a)           (i) Except as set forth on Schedule
4.9(a), all Tax Returns required to be filed by or on behalf of the Company have been duly and timely filed
with the appropriate Taxing Authority in all jurisdictions in which such Tax
Returns are required to be filed (after giving effect to any valid extensions
of time in which to make such filings), and all such Tax Returns are true,
complete and correct in all material respects; and (ii) all Taxes payable
by or on behalf of the Company have been fully and timely paid. With respect to
any period for which Tax Returns have not yet been filed or for which Taxes are
not yet due or owing, the Company has made due and sufficient accruals for such
Taxes in the Financial Statements and its books and records. All required
estimated Tax payments sufficient to avoid any underpayment penalties or
interest have been made by or on behalf of the Company.


 


(b)           The Company has complied in all material
respects with all applicable Laws
relating to the payment and withholding of Taxes and has duly and timely
withheld and paid over to the appropriate Taxing Authority all amounts required
to be so withheld and paid under all applicable Laws.


 


(c)           The Company has delivered or made available
complete copies of (i) all federal,
state, local and foreign income, sales and use or franchise Tax Returns of the
Company relating to the taxable periods since 2004 and (ii) any audit
report issued within the last three years relating to any Taxes due from or
with respect to the Company.


 


(d)           Schedule 4.9(d) lists (i) all
material types of Taxes paid, and all types of Tax Returns filed by or on behalf of Company and (ii) all of the
jurisdictions that impose such Taxes or with respect to which the Company has a
duty to file such Tax Returns. No claim has been made by a Taxing Authority in
a jurisdiction where the Company does not file Tax Returns such that it is or
may be subject to taxation by that jurisdiction.


 


26

















 


(e)           Except as set forth Schedule 4.9(e),
all deficiencies asserted or assessments made
as a result of any examinations by any Taxing Authority of the Tax Returns of,
or including, the Company have been fully paid, and there are no other audits
or investigations by any Taxing Authority in progress, nor has any of the
Selling Members or the Company received any notice from any Taxing Authority
that it intends to conduct such an audit or investigation. No issue has been
raised by a Taxing Authority in any prior examination of the Company which, by
application of the same or similar principles, could reasonably be expected to
result in a proposed deficiency for any subsequent taxable period.


 


(f)            Neither the Company nor any other Person on
their behalf has (i) filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section 341(f)(4) of
the Code) owned by the Company, (ii) agreed to or is required to make any
adjustments pursuant to Section 481(a) of the Code or any similar
provision of Law or has any knowledge that any Taxing Authority has proposed
any such adjustment, or has any application pending with any Taxing Authority
requesting permission for any changes in accounting methods that relate to the
Company, (iii) executed or entered into a closing agreement pursuant to Section 7121
of the Code or any similar provision of Law with respect to the Company, (iv) requested
any extension of time within which to file any Tax Return, which Tax Return has
since not been filed, (v) granted any extension for the assessment or
collection of Taxes, which Taxes have not since been paid, or (vi) granted
to any Person any power of attorney that is currently in force with respect to
any Tax matter.


 


(g)           No property owned by the Company is (i) property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954,
as amended and in effect immediately prior to the enactment of the Tax Reform
Act of 1986, (ii) “tax-exempt use property” within the meaning of Section 168(h)(1) of
the Code or (iii) “tax-exempt bond financed property” within the meaning
of Section 168(g) of the Code, (iv) “limited use property”
within the meaning of Rev. Proc. 76-30, (v) subject to Section 168(g)(1)(A) of
the Code, or (vi) subject to any provision of state, local or foreign Law
comparable to any of the provisions listed above.


 


(h)           No
Selling Member is a foreign person within the meaning of Section 1445 of
the Code.


 


(i)            The
Company is not a party to any tax sharing, allocation, indemnity or similar
agreement or arrangement (whether or not written) pursuant to which it will
have any obligation to make any payments after the Closing.


 


(j)            There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be deductible by
Purchaser, the Company or any of their respective Affiliates by reason of Section 280G
of the Code.


 


(k)           The
Company is not subject to any private letter ruling of the IRS or comparable
rulings of any Taxing Authority.


 


27

















 


(l)            There
are no liens as a result of any unpaid Taxes upon any of the assets of the
Company other than Permitted Exceptions.


 


(m)          There is
no taxable income of the Company that will be required under applicable Tax Law
to be reported by the Purchaser or any of its Affiliates, including the Company
for a taxable period beginning after the Closing Date which taxable income was
realized (and reflects economic income) arising prior to the Closing Date.


 


(n)           The Company has never had a permanent
establishment in any country other than the United States, or has
engaged in a trade or business in any country other than the United States that
subjected it to tax in such country.


 


(o)           The Company has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to
substantial understatement of federal income tax within the meaning of Section 6662
of the Code.


 


4.10         Real
Property.


 


(a)           Schedule 4.10(a) sets forth a complete list of (i) all
real property and interests in real property, including improvements
thereon and easements appurtenant thereto owned in fee by the Company
(individually, an “Owned Property”
and collectively, the “Owned  Properties”), (ii) all
real property and interests in real property leased by the Company
(individually, a “Real Property Lease”
and collectively, the “Real Property Leases”
and, together with the Owned Properties, being referred to herein individually
as a “Company Property” and collectively
as the “Company Properties”) as lessee
or lessor, including a description of each such Real Property Lease (including
the name of the third party lessor or lessee and the date of the lease or
sublease and all amendments thereto). The Company has good and marketable fee
title to all Owned Property, free and clear of all Liens of any nature
whatsoever, except (A) those Liens set forth on Schedule 4.10(a) and
(B) Permitted Exceptions. The Company Properties constitute all interests
in real property currently used, occupied or currently held for use in
connection with the business of the Company and which are necessary for the
continued operation of the business of the Company as the business is currently
conducted. All of the Company Properties and buildings, fixtures and
improvements thereon (i) are in good operating condition without
structural defects, and all mechanical and other systems located thereon are in
good operating condition, and no condition exists requiring material repairs,
alterations or corrections and (ii) are suitable, sufficient and
appropriate in all respects for their current and contemplated uses. To the
Knowledge of the Company and the Selling Members, none of the improvements
located on the Company Properties constitute a legal non-conforming use or
otherwise require any special dispensation, variance or special permit under
any Laws. The Company has delivered or made available to Purchaser true,
correct and complete copies of (i) all deeds, title reports and surveys
for the Owned Properties and (ii) the Real Property Leases, together with
all amendments, modifications or supplements, if any, thereto. The Company
Properties are not subject to any leases, rights of first refusal, options to
purchase or rights of occupancy, except the Real Property Leases set forth on Schedule
4.10(a).


 


28

















 


(b)           The Company has a valid, binding and
enforceable leasehold interest under each of the Real Property Leases
under which it is a lessee, free and clear of all Liens other than Permitted
Exceptions. Each of the Real Property Leases is in full force and effect. The
Company is not in default under any Real Property Lease, and no event has
occurred and no circumstance exists which, if not remedied, and whether with or
without notice or the passage of time or both, would result in such a default. The
Company has not received or given any written notice of any default or event
that with notice or lapse of time, or both, would constitute a default by the
Company under any of the Real Property Leases and, to the Knowledge of the
Company and the Selling Members, no other party is in default thereof, and no
party to any Real Property Lease has exercised any termination rights with respect
thereto.


 


(c)           The
Company has all certificates of occupancy and Permits of any Governmental Body
necessary or useful for the current use and operation of each Company Property,
and the Company has fully complied with all material conditions of the Permits
applicable to them. No default or violation, or event that with the lapse of
time or giving of notice or both would become a default or violation, has
occurred in the due observance of any Permit.


 


(d)           There
does not exist any actual or, to the Knowledge of the Company and the Selling
Members, threatened or contemplated condemnation or eminent domain proceedings
that affect any Company Property or any part thereof, and none of the Company,
or any Selling Member has received any notice, oral or written, of the
intention of any Governmental Body or other Person to take or use all or any
part thereof.


 


(e)           None
of the Selling Members or the Company has received any written notice from any
insurance company that has issued a policy with respect to any Company Property
requiring performance of any structural or other repairs or alterations to such
Company Property.


 


(f)            The Company does not own, hold, is obligated
under or is a party to, any option, right of first refusal or other
contractual right to purchase, acquire, sell, assign or dispose of any real
estate or any portion thereof or interest therein.


 


4.11         Tangible
Personal Property.


 


(a)           The
Company has good and marketable title to all of the items of tangible personal
property owned by the Company and used in the Company’s business (except as
sold or disposed of in the Ordinary Course of Business and not in violation of
this Agreement), free and clear of any and all Liens, other than the Permitted
Exceptions. All such items of tangible personal property which, individually or
in the aggregate, are material to the operation of the business of the Company
are in good condition and in a state of good maintenance and repair (ordinary
wear and tear excepted) and are suitable for the purposes used.


 


(b)           Schedule 4.11(b) sets forth all
leases of personal property (“Personal
Property Leases”)
used in the business of the Company or to which the Company is a party or by
which the properties or assets of the Company is bound. All of the items of
personal property under the Personal Property Leases are in good condition and
repair (ordinary wear and tear 


 


29

















 


excepted) and are suitable for the purposes used,
and such property is in all material respects in the condition required of such
property by the terms of the lease applicable thereto during the term of the
lease. The Company has delivered or made available to Purchaser true, correct
and complete copies of the Personal Property Leases, together with all
amendments, modifications or supplements thereto.


 


(c)           The Company has a valid and enforceable
leasehold interest under each of the Personal Property Leases under
which it is a lessee. Each of the Personal Property Leases is in full force and
effect and the Company has not received or given any written notice of any
default or event that with notice or lapse of time, or both, would constitute a
default by the Company under any of the Personal Property Leases and, to the
Knowledge of the Company and the Selling Members, no other party is in default
thereof, and no party to the Personal Property Leases has exercised any
termination rights with respect thereto.


 


4.12         Intellectual
Property.


 


(a)           Schedule
4.12(a) sets forth an
accurate and complete list of all registered or applications filed for Patents,
Marks and Copyrights owned or used by the Company, including the jurisdictions
in which each such item of Intellectual Property has been issued or registered
or in which any such application for such issuance and registration has been
filed.


 


(b)           Except as disclosed in Schedule 4.12(b),
the Company is the sole and exclusive
owner of all right, title and interest in and to all of the Patents, Marks and
Copyrights used by the Company, in each case free and clear of all Liens or obligations
to others. The Company is the sole and exclusive owner of, or has valid and
continuing rights to use, sell or license, as the case may be, all other
Intellectual Property used, sold or licensed by the Company in their businesses
as presently conducted and as currently proposed to be conducted, free and
clear of all Liens or obligations to others (except for those specified
licenses included in Schedule 4.12(e)).


 


(c)           To
the Knowledge of the Company and the Selling Members, the Intellectual Property
owned, used, practiced or otherwise commercially exploited by the Company, the
development, manufacturing, licensing, marketing, importation, offer for sale,
sale or use of the Products or Technology in connection with the business as
presently conducted, and, to the Knowledge of the Company and the Selling
Members, the Company’s present business practices and methods, do not infringe,
violate or constitute an unauthorized use or misappropriation of any Patent,
Copyright, Mark, Trade Secret or other similar right, of any Person (including
pursuant to any non-disclosure agreements or obligations to which the Company
or any of its present or former employees is a party, and including any
intellectual property that might exist with respect to open software or other
intellectual property publicly available for certain types of use). The
Intellectual Property owned by or licensed to the Company includes all of the
intellectual property rights used by the Company to conduct their business in
the manner in which such business is currently being conducted.


 


(d)           Except
with respect to licenses of commercial off-the-shelf Software, and except
pursuant to the Intellectual Property Licenses listed in Schedule 4.12(d),
the Company is not required, obligated, or under any liability whatsoever, to
make any payments by way of 


 


30

















 


royalties, fees or otherwise or provide any other
consideration of any kind, to any owner or licensor of, or other claimant to,
any Intellectual Property, or any other Person, with respect to the use thereof
or in connection with the conduct of the business of the Company as currently
conducted.


 


(e)           Schedule 4.12(e) sets forth a
complete and accurate list of all Contracts to which the Company is a party (i) granting
any Intellectual Property Licenses, (ii) containing a covenant not to
compete or otherwise limiting its ability to use or exploit fully any of the
Intellectual Property or (iii) containing an agreement to indemnify any
other Person against any claim of infringement, violation, misappropriation or
unauthorized use of any Intellectual Property. The Company has delivered or
made available to Purchaser true, correct and complete copies of each Contract set forth on Schedule 4.12(e), together with
all amendments, modifications or supplements thereto.


 


(f)            Each of
the Intellectual Property Licenses is in full force and effect and is the
legal, valid and binding obligation of the Company, enforceable against them in
accordance with its terms. The Company is not in default under any Intellectual
Property License, nor, to the Knowledge of the Company and the Selling Members,
is any other party to any Intellectual Property License in default thereunder,
and no event has occurred that with the lapse of time or the giving of notice
or both would constitute a default thereunder. No party to any of the
Intellectual Property Licenses has exercised any termination rights with
respect thereto.


 


(g)           The Company has taken adequate security
measures to protect the secrecy, confidentiality and value of all the
Trade Secrets of the Company, including invention disclosures, not the subject
of any patents owned or patent applications filed by the Company, which
measures are consistent with best practices in the industry in which the
Company operates.


 


(h)           As of the date hereof, the Company is not the
subject of any pending or, to the Knowledge of the Company and the
Selling Members, threatened Legal Proceedings which involve a claim of
infringement, misappropriation, unauthorized use, or violation of any
intellectual property rights by any Person against the Company or challenging
the ownership, use, validity or enforceability of any material Intellectual
Property. The Company has not received notice of any such threatened claim and,
to the Knowledge of the Company and the Selling Members, there are no facts or
circumstances that would form the basis for any claim of infringement,
unauthorized use, misappropriation or violation of any intellectual property
rights by any Person against the Company, or challenging the ownership, use,
validity or enforceability of any material Intellectual Property. All of the
Company’s rights in and to material Intellectual Property are valid and
enforceable.


 


(i)            To
the Knowledge of the Company and the Selling Members, no Person is infringing,
violating, misusing or misappropriating any material Intellectual Property of
the Company, and no such claims have been made against any Person by the
Company.


 


(j)            There
are no Orders to which the Company is a party or by which the Company is bound
which restrict, in any material respect, the right to use any of the
Intellectual Property.


 


31

















 


(k)           The
consummation of the transactions contemplated hereby will not result in the
loss or impairment of Purchaser’s right to own or use any of the Intellectual
Property.


 


(l)            No present or former employee has any right,
title, or interest, directly or indirectly, in whole or in part, in any
material Intellectual Property owned or used by the Company. To the Knowledge
of the Company and the Selling Members, no employee, consultant or independent
contractor of the Company is, as a result of or in the course of such employee’s,
consultant’s or independent contractor’s engagement by the Company, in default
or breach of any material term of any employment agreement, non-disclosure
agreement, assignment of invention agreement or similar agreement.


 


(m)          Schedule
4.12(m) sets forth a complete and accurate list of (i) all Software
that is owned exclusively by the Company that is material to the operation of
the business of the Company and (ii) all Software that is used by the
Company in the business of the Company that is not exclusively owned by the
Company, excluding Software available on reasonable terms through commercial
distributors or in consumer retail stores for a license fee of no more than
$1,000.


 


(n)           No open
source software or freeware has been incorporated into the products of the
Company that would in any way limit the ability to make, use or sell any such
product or that would diminish or transfer the rights of ownership in any
Intellectual Property or Software of the Company to a third party.


 


4.13         Material
Contracts.


 


(a)           Schedule 4.13(a) sets
forth all of the following Contracts to which the Company is a party or by
which its material assets or properties are bound (collectively, the “Material
Contracts”):


 


(i)            Contracts
with any Selling Member or Affiliate thereof or any current or former officer,
member or Affiliate of the Company;


 


(ii)           Contracts
with any labor union or association representing any employee of the Company;


 


(iii)          Contracts
for the sale of any of the assets of the Company other than in the Ordinary
Course of Business or for the grant to any Person of any preferential rights to
purchase any of its assets;


 


(iv)          Contracts
for joint ventures, strategic alliances, partnerships, licensing arrangements,
or sharing of profits or proprietary information;


 


(v)           Contracts containing covenants of the Company not to compete in any
line of business or with any Person in any geographical area or not to solicit
or hire any person with respect to employment or covenants of any other Person
not to compete with the Company in any line of business or in any geographical
area or not to solicit or hire any person with respect to employment;


 


32

















 


(vi)          Contracts
relating to the acquisition (by merger, purchase of stock or assets or
otherwise) by the Company of any operating business or material assets or the
capital stock of any other Person;


 


(vii)         Contracts relating to the
incurrence, assumption or guarantee of any Indebtedness or imposing a Lien on
any of the assets of the Company, including indentures, guarantees, loan or
credit agreements, sale and leaseback agreements, purchase money obligations
incurred in connection with the acquisition of property, mortgages, pledge
agreements, security agreements, or conditional sale or title retention
agreements;


 


(viii)        purchase
Contracts giving rise to Liabilities of the Company in excess of $50,000;


 


(ix)           all Contracts providing for payments by or to the Company in excess
of $50,000 during the term thereof;


 


(x)            all Contracts obligating the Company to
provide or obtain products or services for a period of one year or more
or requiring the Company to purchase or sell a stated portion of its
requirements or outputs that are not cancelable without penalty or further
payment on 30 or less days’ notice;


 


(xi)           Contracts
under which the Company has made advances or loans to any other Person;


 


(xii)          Contracts
providing for severance, retention, change in control or other similar
payments;


 


(xiii)         Contracts
for the employment of any individual on a full-time, part- time or consulting
or other basis;


 


(xiv)        material management
Contracts and Contracts with independent contractors or consultants (or similar
arrangements) that are not cancelable without penalty or further payment on 30
or less days’ notice;


 


(xv)         outstanding
Contracts of guaranty, surety or indemnification, direct or indirect, by the
Company;


 


(xvi)        Contracts (or group of
related Contracts) which involve the expenditure of more than $50,000 in the
aggregate or require performance by any party more than one year from the date hereof;
and


 


(xvii)       Contracts
that are otherwise material to the Company.


 


(b)           Each of
the Material Contracts is in full force and effect and is the legal, valid and
binding obligation of the Company which is a party thereto, and of the other
parties thereto, and to the Knowledge of the executive officers of the Company,
enforceable against each of the other parties in accordance with its terms, and
upon consummation of the transactions 


 


33

















 


contemplated
by this Agreement, shall, except as otherwise stated in Schedule 4.13(b),
continue without penalty or other adverse consequence in full force and effect
immediately following the Closing Date. Except as set forth in Schedule
4.13(b), the Company is not in default under any Material Contract, nor, to
the Knowledge of the Company or the Selling Members, is any other party to any
Material Contract in breach of or default thereunder. Except as set forth in Schedule
4.13(b), to the Knowledge of the Company and the Selling Members, no party
to any of the Material Contracts has exercised any termination rights with
respect thereto and no party has given notice of any significant dispute with
respect to any Material Contract. The Company has delivered or made available to
Purchaser true, correct and complete copies of all of the Material Contracts,
together with all amendments, modifications or supplements thereto.


 


4.14         Employee
Benefits Plans.


 


(a)           Schedule
4.14(a) sets forth a
correct and complete list of: (i) all “employee benefit plans” (as defined
in Section 3(3) of ERISA), and all other employee benefit plans,
programs, agreements, policies, arrangements or payroll practices, including
bonus plans, employment, consulting or other compensation agreements,
collective bargaining agreements, incentive, equity or equity-based
compensation, or deferred compensation arrangements, change in control,
termination or severance plans or arrangements, stock purchase, severance pay,
sick leave, vacation pay, salary continuation for disability, hospitalization,
medical insurance, life insurance and scholarship plans and programs maintained
by the Company or under which the Company contributed or is obligated to
contribute thereunder for current or former employees of the Company (the “Employees”)
(collectively, the “Company Plans”), and (ii) all
“employee pension plans” (as defined in Section 3(2) of ERISA,
subject to Title IV of ERISA or Section 412 of the Code, maintained by the
Company or any of its Affiliates and any trade or business (whether or not
incorporated) that is or has ever been under common control, or that is or has
ever been treated as a single employer, with any of them under Section 414(b),
(c), (m) or (o) of the Code (each, an “ERISA Affiliate”)
or under which the Company or any ERISA Affiliate contributed or has ever been
obligated to contribute thereunder (the “Title IV Plans”). Schedule  4.14(a) sets forth
each Company Plan and Title IV Plan that is a “multiemployer plan” (as defined
in Section 3(37) of ERISA (a “Multiemployer Plan”)), or is or
has been subject to Sections 4063 or 4064 of ERISA.


 


(b)           Correct
and complete copies of the following documents, with respect to each of the
Company Plans (other than a Multiemployer Plan), have been made available or
delivered to Purchaser by the Company, to the extent applicable: (i) any
plans, all amendments thereto and related trust documents, insurance contracts
or other funding arrangements, and amendments thereto; (ii) the most
recent Forms 5500 and all schedules thereto and the most recent actuarial
report, if any; (iii) the most recent IRS determination letter; (iv) summary
plan descriptions; (v) written communications to employees relating to the
Company Plans; and (vi) written descriptions of all non-written agreements
relating to the Company Plans.


 


(c)           The
Company Plans have been maintained in all material respects in accordance with
their terms and with all provisions of ERISA, the Code (including rules and
regulations thereunder) and other applicable Federal and state Laws and
regulations, and neither the Company nor, to the knowledge of the Company and
the Selling Members, any “party in interest” or “disqualified person” with
respect to the Company Plans has engaged in a non-


 


34

















 


exempt “prohibited transaction” within the meaning
of Section 4975 of the Code or Section 406 of ERISA. To the knowledge
of the Company and the Selling Members, no fiduciary has any liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the administration or investment of the assets of any Company Plan.


 


(d)           The Company Plans intended to qualify under Section 401
of the Code are maintained in the form of a prototype plan that has
received an opinion letter from the IRS, and nothing has occurred with respect
to the operation of the Company Plans that could reasonably be expected to
result in the loss of tax-qualified status under Section 401 of the Code
or the imposition of any liability, penalty or tax under ERISA or the Code.


 


(e)           Each Company Plan that is intended to meet
the requirements for tax- favored treatment under Subchapter B of
Chapter 1 of Subtitle A of the Code meets such requirements.


 


(f)            Neither
the Company nor any ERISA Affiliate has withdrawn in a complete or partial
withdrawal from any Multiemployer Plan prior to the Closing Date, nor has any
of them incurred any liability due to the termination or reorganization of a
Multiemployer Plan. Purchaser will not have (i) any obligation to make any
contribution to any Multiemployer Plan or (ii) any withdrawal liability
from any Multiemployer Plan under Section 4201 of ERISA, which it would
not have had but for the consummation of the transactions contemplated by this
Agreement.


 


(g)           Schedule 4.14(g) sets forth on a plan by plan basis, the
present value of benefits payable presently or in the future to
Employees under each unfunded Company Plan.


 


(h)           All
contributions (including all employer contributions and employee salary
reduction contributions) required to have been made under any of the Company
Plans (including workers compensation) or Title IV Plans or by Law (without
regard to any waivers granted under Section 412 of the Code), to any funds
or trusts established thereunder or in connection therewith have been made by
the due date thereof (including any valid extension), and all contributions for
any period ending on or before the Closing Date that are not yet due will have
been paid or sufficient accruals for such contributions and other payments are
duly and fully provided for on the Balance Sheet or Schedule 4.7. No
accumulated funding deficiencies exist in any of the Company Plans or Title IV
Plans subject to Section 412 of the Code.


 


(i)            There
is no “amount of unfunded benefit liabilities” (as defined in Section 4001(a)(18)
of ERISA) in any of the Title IV Plans. Each of the Title IV Plans are fully
funded in accordance with the actuarial assumptions used by the Pension Benefit
Guaranty Corporation (“PBGC”)
to determine the level of funding required in the event of the termination of a
Title IV Plan and the “benefit liabilities” (as defined in Section 4001(a)(16)
of ERISA) of such Title IV Plan using such PBGC assumptions do not exceed the
assets of such Title IV Plan.


 


(j)            There has been no “reportable event” (as
defined in Section 4043 of ERISA) with respect to the Title IV
Plans that would require the giving of notice or any event requiring disclosure
under Section 4041(c)(3)(C) or 4063(a) of ERISA.


 


35














 


(k)                                  Neither the Company nor any ERISA Affiliate
has terminated any Title IV Plan, or incurred any outstanding liability under Section 4062
of ERISA to the PBGC or to a trustee appointed under Section 4042 of
ERISA.  All premiums due the PBGC with
respect to the Title IV Plans have been paid.


 


(l)                                     No
liability under any Company Plan or Title IV Plan has been funded nor has any
such obligation been satisfied with the purchase of a contract from an
insurance company that is not rated AA by Standard & Poor’s Corporation
or the equivalent by any other nationally recognized rating agency.


 


(m)                               None
of the Company, any ERISA Affiliate nor any organization to which the Company
or any ERISA Affiliate is a successor or parent corporation within the meaning
of Section 4069(b) of ERISA has engaged in any transaction within the
meaning of Section 4069 or 4212(c) of ERISA.


 


(n)                                 There are no pending actions, claims or
lawsuits that, to the Knowledge of the executive officers of the Company, have
been threatened, asserted or, filed against the Company Plans, the assets of
any of the trusts under the Company Plans or the sponsor or administrator of
any of the Company Plans, or against any fiduciary of the Company Plans with
respect to the operation of any of the Company Plans (other than routine
benefit claims), nor does the Company or the Selling Members have any Knowledge
of facts that could form the basis for any such claim or lawsuit.


 


(o)                                 There is no material violation of ERISA or
the Code with respect to the filing of applicable reports, documents and
notices regarding the Company Plans with the Secretary of Labor or the
Secretary of the Treasury or the furnishing of such documents to the
participants in or beneficiaries of the Company Plans.  All amendments and actions required to bring
the Company Plans into conformity in all material respects with all of the
applicable provisions of the Code, ERISA and other applicable Laws have been
made or taken or the time for taking such actions or making such amendments has
not expired.  Any bonding required of the
Company with respect to the Company Plans in accordance with applicable
provisions of ERISA has been obtained and is in full force and effect.


 


(p)                                 None of the Company Plans provides for
post-employment life or health insurance, benefits or coverage for any
participant or any beneficiary of a participant, except as may be required
under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and at the expense of the
participant or the participant’s beneficiary. 
Each of the Company and any ERISA Affiliate which maintains a “group
health plan” within the meaning Section 5000(b)(1) of the Code has
complied with the notice and continuation requirements of Section 4980B of
the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and the
regulations thereunder.


 


(q)                                 Except
as set forth on Schedule 4.14(q), neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment becoming
due to any Employee, (ii) increase any benefits otherwise payable under
any Company Plan or Title IV Plan or (iii) result in the acceleration of
the time of payment or vesting of any such benefits under any Company Plan or
Title IV Plan.


 


36

















 


(r)                                    The Company has no contract, plan or
commitment, whether legally binding or not, to create any additional Company
Plan or to modify any existing Company Plan, except as to comply with
applicable Law or the provisions of the current Company Plan.


 


(s)                                  Except
as set forth on Schedule 4.14(s), no stock or other security issued by
the Company forms or has formed a material part of the assets of any Company
Plan.


 


(t)                                    Any individual who performs services for the
Company (other than through a contract with an organization other than
such individual) and who is not treated as an employee of the Company for
Federal income tax purposes by the Company is not an employee for such
purposes.


 


4.15                           Labor.


 


(a)                                  Except
as set forth on Schedule 4.15(a), the Company is not a party to any labor or collective bargaining agreement and
there are no labor or collective bargaining agreements which pertain to
employees of the Company.  The Company
has delivered or otherwise made available to Purchaser true, correct and
complete copies of the labor or collective bargaining agreements listed on Schedule
4.15(a), together with all amendments, modifications or supplements
thereto.


 


(b)                                 Except
as set forth on Schedule 4.15(b), no Employees are represented by any labor organization.  No labor organization or group of Employees
has made a pending demand for recognition, and there are no representation
proceedings or petitions seeking a representation proceeding presently pending
or, to the Knowledge of the Company or the Selling Members, threatened to be
brought or filed, with the National Labor Relations Board or other labor
relations tribunal.  There is no
organizing activity involving the Company pending or, to the Knowledge of the
Company or the Selling Members, threatened by any labor organization or group
of Employees.


 


(c)                                  There
are no (i) strikes, work stoppages, slowdowns, lockouts or arbitrations or (ii) material grievances
or other labor disputes pending or, to the Knowledge of the Company or the
Selling Members, threatened against or involving the Company.  There are no unfair labor practice charges,
grievances or complaints pending or, to the Knowledge of the Company or the
Selling Members, threatened by or on behalf of any Employee or group of
Employees.


 


(d)                                 There
are no complaints, charges or claims against the Company pending or, to Knowledge of the Company or the
Selling Members, threatened in writing that could be brought or filed, with any
Governmental Body based on, arising out of, in connection with or otherwise
relating to the employment or termination of employment of or failure to
employ, any individual.  The Company is
in compliance with all Laws relating to the employment of labor, including all
such Laws relating to wages, hours, WARN and any similar state or local “mass
layoff” or “plant closing” Law, collective bargaining, discrimination, civil
rights, safety and health, workers’ compensation and the collection and payment
of withholding and/or social security taxes and any similar tax, where the
failure to so comply would have a Company 


 


37

















 


Material
Adverse Effect.  There has been no “mass
layoff’ or “plant closing” (as defined by WARN) with respect to the Company
within the six (6) months prior to Closing.


 


4.16                           Litigation.  Except as set forth in Schedule 4.16,
there is no Legal Proceeding pending or, to the Knowledge of the executive
officers of the Company or the Selling Members, threatened against the Company
(or to the Knowledge of the executive officers of the Company or the Selling
Members, pending or threatened, against any of the officers or employees of the
Company with respect to their business activities on behalf of the Company), or
to which the Company is otherwise a party before any Governmental Body; nor to
the Knowledge of the executive officers of the Company nor the Selling Members
is there any reasonable basis for any such Legal Proceedings.  Except as set forth on Schedule 4.16,
the Company is not subject to any written Order, and the Company is not in
breach or violation of any written Order. 
Except as set forth on Schedule 4.16, the Company is not engaged
in any legal action to recover monies due it or for damages sustained by it. 
There are no Legal Proceedings pending or, to the Knowledge of the
Company or the Selling Members, threatened against the Company or to which the
Company is otherwise a party relating to this Agreement or, any Company
Document or the transactions contemplated hereby or thereby.


 


4.17                           Compliance
with Laws; Permits.


 


(a)                                  The Company is in compliance in all material
respects with all Laws applicable to its business, operations or assets.  The Company has not received any written
notice of or been charged in writing with the violation of any Laws, which
notice or charge is pending as of the date of this Agreement.  To the Knowledge of the Company or the
Selling Members, the Company is not under investigation with respect to the
violation of any Laws and there are no facts or circumstances which could form
the basis of any such violation.


 


(b)                                 Schedule 4.17 contains a list of all Permits which are
required for the operation of the business of the Company as presently
conducted and as presently intended to be conducted (“Company Permits”), other than
those the failure of which to possess is immaterial.  The Company currently has all Permits which
are required for the operation of the business as presently conducted, other
than those the failure of which to possess is immaterial.  The Company is not in default or violation,
and no event has occurred which, with notice or the lapse of time or both,
would constitute a default or violation, in any material respect of any term,
condition or provision of any Company Permit, and to the Knowledge of the
Company or the Selling Members, there are no facts or circumstances which could
form the basis for any such default or violation.  There are no Legal Proceedings pending or, to
the Knowledge of the Company or the Selling Members, threatened, relating to
the suspension, revocation or modification of any Company Permit.  None of the Company Permits will be impaired
or in any way adversely affected by the consummation of the transactions
contemplated by this Agreement.


 


4.18                           Environmental
Matters.  Except as set forth on Schedule
4.18 hereto:


 


(a)                                  the operations of the Company are and have
been in compliance with all applicable Environmental Laws (which compliance
includes obtaining, maintaining in good standing and complying with all
Environmental Permits), except where the failure to be in 


 


38

















 


compliance
with Environmental Laws would not reasonably be expected to have a Company
Material Adverse Effect.  No action or
proceeding is pending or, to the Knowledge of the Company or the Selling
Members, threatened in writing to revoke, modify or terminate any such
Environmental Permit, and, to the Knowledge of the Company or the Selling
Members, no facts, circumstances or conditions currently exist that could
adversely affect such continued compliance with Environmental Laws and
Environmental Permits or require currently unbudgeted capital expenditures to
achieve or maintain such continued compliance with Environmental Laws and
Environmental Permits;


 


(b)                                 the Company is not the subject of any
outstanding written Order or Contract with any Governmental Body or
Person with respect to (i) Environmental Laws, (ii) Remedial Action
or (iii) any Release or threatened Release of a Hazardous Material;


 


(c)                                  no claim has been made or is pending, or to
the Knowledge of the Company or the Selling Members, threatened against the
Company alleging that the Company may be in violation of any Environmental Law
or Environmental Permit, or may have any liability under any Environmental Law;


 


(d)                                 to the Knowledge of the Company or the
Selling Members, no facts, circumstances or conditions exist with respect to
the Company or any property currently or formerly owned, operated or leased by
the Company or any property to which the Company arranged for the disposal or
treatment of Hazardous Materials that could reasonably be expected to result in
the Company incurring unbudgeted Environmental Costs and Liabilities;


 


(e)                                  there are no investigations of the business,
operations, or currently or, to the Knowledge of the Company or the Selling
Members, previously owned, operated or leased property of the Company pending
or, to the Knowledge of the Company or the Selling Members, threatened that
could lead to the imposition of any Environmental Costs and Liabilities or
Liens under Environmental Law;


 


(f)                                    the
transactions contemplated hereunder do not require the consent of or filings
with any Governmental Body with jurisdiction over the Company with respect to
environmental matters, and none of the Owned Property or Real Property Leases
is located in New Jersey, Indiana or Connecticut;


 


(g)                                 there is not located at any of the properties
currently or (while owned, operated or leased by the Company) previously owned,
operated or leased by the Company any (i) underground storage tanks, (ii) landfill,
(iii) surface impoundment, (iii) asbestos-containing material or (iv) equipment
containing polychlorinated biphenyls; and


 


(h)                                 the Company has provided to Purchaser all
environmentally related audits, studies, reports, analyses, and results of
investigations that have been performed with respect to the currently or
previously owned, leased or operated properties of the Company.


 


4.19                           Insurance.  In the best good faith opinion of the
executive officers of the Company, the Company has insurance policies in full
force and effect (a) for such amounts as are sufficient for all agreements
to which the Company is a party or by which it is bound, and (b) which are
in such amounts, with such deductibles and against such risks and losses, as
are 


 


39

















 


reasonable for the
business, assets and properties of the Company. 
Set forth in Schedule 4.19 is a list of all insurance policies
and all fidelity bonds held by or applicable to the Company setting forth, in
respect of each such policy, the policy name, policy number, carrier, term,
type and amount of coverage, annual premium and a description of any
retroactive premium adjustments or other loss- sharing arrangements.  Except as set forth on Schedule 4.19,
no event relating to the Company has occurred which could reasonably be
expected to result in a retroactive upward adjustment in premiums under any
such insurance policies or which could reasonably be expected to result in a
prospective upward adjustment in such premiums. 
Except as set forth on Schedule 4.19, and excluding insurance
policies that have expired and been replaced in the Ordinary Course of
Business, no insurance policy has been cancelled within the last two years and,
to the Knowledge of the Company or the Selling Members, no written threat has
been made to cancel any insurance policy of the Company during such
period.  Except as noted on Schedule
4.19, all such insurance will remain in full force and effect immediately following the
consummation of the transactions contemplated hereby.  No event has occurred, including the failure
by the Company to give any notice or information or the Company giving any
inaccurate or erroneous notice or information, which limits or impairs the
rights of the Company under any such insurance policies.


 


4.20                           Inventories.  To the knowledge of the Company and the
Selling Members, the inventories of the Company are in good and merchantable
condition for the purpose for which they were procured or manufactured, and are
generally usable and of a quantity and quality saleable in the Ordinary Course
of Business.


 


4.21                           Accounts
and Notes Receivable and Payable.


 


(a)                                  Except as set forth on Schedule 4.21,
all accounts and notes receivable of the Company (i) have arisen from bona
fide transactions in the Ordinary Course of Business consistent with past
practice and are payable on ordinary trade terms, (ii) reflected on the
Balance Sheet are good and collectible at the aggregate recorded amounts
thereof, and (iii) arising after the Balance Sheet Date are good and
collectible at the aggregate recorded amounts thereof.  Except as set forth on Schedule 4.21,
none of the accounts or the notes receivable of the Company (i) are
subject to any setoffs or counterclaims or (ii) represent obligations for
goods sold on consignment, on approval or on a sale-or-return basis or subject
to any other repurchase or return arrangement.


 


(b)                                 Except as set forth on Schedule 4.21,
all accounts payable of the Company reflected in the Balance Sheet or arising
after the date thereof are the result of bona fide transactions in the Ordinary
Course of Business and have been paid or are not yet due and payable.


 


4.22                           Related
Party Transactions.  Except as set
forth in Schedule 4.22, to the Knowledge of the executive officers of
the Company and the Selling Members, no employee, officer, manager, or member
of the Company, or any member of his or her immediate family, or any of their
respective Affiliates (“Related Persons”)
is engaged in any transaction valued at $10,000 or more whereby such party (i) owes
any amount to the Company nor does the Company owe any amount to, or has the
Company committed to make any loan or extend or guarantee credit to or for the
benefit of, any Related Person, (ii) is involved in any business 


 


40

















 


arrangement or other
relationship with the Company (whether written or oral), (iii) owns any
property or right, tangible or intangible, that is used by the Company, (iv) has
any claim or cause of action against the Company or (v) owns any direct or
indirect interest of any kind in, or controls or is an officer, employee or
partner of, or consultant to, or lender to or borrower from or has the right to
participate in the profits of, any Person which is a competitor, supplier,
customer, landlord, tenant, creditor or debtor of the Company.


 


4.23                           Customers
and Suppliers.


 


(a)                                  Schedule 4.23 sets forth a list of the ten (10) largest
customers and the ten (10) largest suppliers of the Company, as
measured by the dollar amount of purchases therefrom or thereby, during each of
the fiscal years ended December 31, 2006 and December 31, 2007,
showing the approximate total sales by the Company to each such customer and
the approximate total purchases by the Company from each such supplier, during
such period.


 


(b)                                 Since
December 31, 2007, no customer or supplier listed on Schedule 4.23 has terminated its relationship with the
Company or materially reduced or changed the pricing or other terms of its
business with the Company and, to the Knowledge of the Company, no customer or
supplier listed on Schedule 4.23 has notified the Company that it
intends to terminate or materially reduce or change the pricing or other terms
of its business with the Company.


 


4.24                           Product &
Service Warranty; Product & Service Liability.


 


(a)                                  Except
as set forth on Schedule 4.24, to the Knowledge of the Company and the Selling Members: (i) each
product manufactured, sold or delivered by the Company in conducting its
business has been in conformity with all product specifications all express
warranties and all applicable Laws; and (ii) each service is performed in
a good workmanlike manner by employees with the requisite skill and experience,
and in accordance with the applicable specifications, service level agreement
and/or statement of work.  Except as set
forth on Schedule 4.24, the Company has no liability for replacement or
repair of any such products and services or other damages in connection therewith
or any other customer or product obligations not reserved against on the
Balance Sheet.  Except as set forth on Schedule
4.24, the Company has not sold any products or delivered any services that
included a warranty for a period of longer than one year.


 


(b)                                 The
Company has no material liability arising out of any injury to individuals or property as a result of the
ownership, possession, or use of any product designed, manufactured, assembled,
repaired, maintained, delivered, sold or installed, or services rendered, by or
on behalf of the Company.  The Company
has not committed any act or failed to commit any act, which would result in,
and there has been no occurrence which would give rise to or form the basis of,
any product liability or liability for breach of warranty (whether covered by
insurance or not) on the part of the Company with respect to products designed,
manufactured, assembled, repaired, maintained, delivered, sold or installed or
services rendered by or an behalf of the Company.


 


41

















 


4.25                           Banks;
Power of Attorney.  Schedule 4.25
contains a complete and correct list of the names and locations of all banks in
which the Company has accounts or safe deposit boxes and the names of all
persons authorized to draw thereon or to have access thereto.  Except as set forth on Schedule 4.25,
no person holds a power of attorney to act on behalf of the Company.


 


4.26                           Certain
Payments.  None of the Company or any
Selling Member nor, to the Knowledge of the Company or the Selling Members, any
officer, employee, or other Person associated with or acting on behalf of any
of them, has directly or indirectly (a) made any contribution, gift,
bribe, rebate, payoff, influence payment, kickback, or other payment to any
Person, private or public, regardless of form, whether in money, property, or
services (i) to obtain favorable treatment in securing business for the
Company, (ii) to pay for favorable treatment for business secured by the
Company, (iii) to obtain special concessions or for special concessions
already obtained, for or in respect of the Company, or (iv) in violation
of any Law, or (b) established or maintained any fund or asset with
respect to the Company that has not been recorded in the books and records of
the Company.


 


4.27                           Certain Governmental Matters. 
Except as set forth on Schedule 4.27, the Company has not
received from any U.S. Governmental Body or any prime contractor or
subcontractor from a U.S. Governmental Body any special, preferential or
advantageous treatment in the award of a Government Contract, or in any other
manner, including as a “small business concern,” “small disadvantaged business”
(or “minority-owned business”), “women-owned” concern, or any other socially
and economically disadvantaged classification, as defined in the Small Business
Act (15 U.S.C. Sec. 631, et. seq.), the Federal Property and Administrative
Services Act (41 U.S.C. Sec. 252), section 7102 of the Federal Acquisition
Streamlining Act of 1994 (Public Law 103-355), 10 U.S.C. Sec 2323, Executive
Order 12138, May 18, 1979, or regulations implementing these requirements,
including the Federal Acquisition Regulations.


 


4.28                           Financial Advisors. 
Except as set forth on Schedule 4.28, no Person has acted,
directly or indirectly, as a broker, finder or financial advisor for the
Selling Members or the Company in connection with the transactions contemplated
by this Agreement and no Person is or will be entitled to any fee or commission
or like payment in respect thereof.


 


4.29                           No Waiver of Representations and Warranties. 
Because Purchaser has agreed to limit its rights to those specifically
set forth in this Agreement, and to disclaim any extra- contractual
representations and warranties or claims, the Selling Members have agreed that
Purchaser’s rights to indemnification for the express representations and
warranties set forth herein are part of the basis of the bargain contemplated
by this Agreement.


 


ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF PURCHASER


 


Purchaser hereby represents and warrants to each of
the Selling Members that:


 


5.1                                 Organization and Good Standing. 
Purchaser is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own, lease and operate properties and carry on
its business.  Purchaser is qualified or
authorized to do business as a foreign corporation and is in good 


 


42

















 


standing
under the laws of each jurisdiction in which it owns or leases real property
and each other jurisdiction in which the conduct of its business or the
ownership of its properties requires such qualification or authorization,
except where the failure to be so qualified, authorized or in good standing
would not have a Purchaser Material Adverse Effect.


 


5.2                                 Authorization of Agreement. 
Purchaser has full corporate power and authority to execute and
deliver this Agreement and each other agreement, document, instrument or
certificate contemplated by this Agreement or to be executed by Purchaser in
connection with the consummation of the transactions contemplated hereby and
thereby (the “Purchaser Documents”), and to
consummate the transactions contemplated hereby and thereby.  The execution, delivery and performance by
Purchaser of this Agreement and each Purchaser Document, and the consummation
of the transactions contemplated hereby and thereby, have been duly authorized
and approved by all necessary corporate action on behalf of Purchaser.  This Agreement has been, and each Purchaser
Document will be at or prior to the Closing, duly executed and delivered by
Purchaser and (assuming the due authorization, execution and delivery by the
other parties hereto and thereto) this Agreement constitutes, and each
Purchaser Document when so executed and delivered will constitute, the legal,
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its respective terms, subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar Laws affecting or
relating to the enforcement of creditors’ rights generally and (ii) general
equitable principles.


 


5.3                                 Conflicts; Consents of Third Parties.


 


(a)                                  Except
as set forth on Schedule 5.3 hereto, the execution and delivery by
Purchaser of this Agreement and the Purchaser Documents, the consummation of
the transactions contemplated hereby and thereby, and the compliance by
Purchaser with the provisions hereof and thereof will not (i) conflict
with or violate the certificate of incorporation or bylaws of Purchaser, (ii) conflict
with or result in any violation or breach of, conflict with or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or create, increase or accelerate the rights or
entitlements of any Person under, any Contract to which Purchaser is a party or
by which any of the properties or assets of Purchaser are bound; (iii) conflict
with or violate any Permit, Order or Law to which Purchaser is subject or by
which any of the properties or assets of Purchaser are bound.


 


(b)                                 No
consent, waiver, approval, Order, Permit or authorization of, or declaration or
filing with, or notification to, any Person or Governmental Body is required on
the part of Purchaser in connection with the execution and delivery of this
Agreement or the Purchaser Documents or the compliance by Purchaser with any of
the provisions hereof or thereof.


 


5.4                                 Litigation.  There are no Legal Proceedings
pending or, to the Knowledge of Purchaser, threatened against Purchaser or to
which Purchaser is otherwise a party relating to this Agreement, the Purchaser
Documents or the transactions contemplated hereby and thereby.


 


43

















 


5.5                                 Financial Advisors.  No
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for Purchaser in connection with the transactions contemplated by this
Agreement and no Person is entitled to any fee or commission or like payment in
respect thereof.


 


5.6                                 Independent Investigation. 
Purchaser is knowledgeable in the business of owning and
operating the business and facilities of the type owned and operated by the
Company and in the acquisition and disposition of companies.  In making the decision to enter into this
Agreement and consummate the transactions contemplated hereby, Purchaser has
relied solely on its own independent due diligence investigations and inspection
of the assets of the Company, and the representations, warranties, covenants
and undertakings of the Company and the Selling Members in this Agreement.  PURCHASER ACKNOWLEDGES
THAT EXCEPT AS EXPRESSLY SET OUT IN THIS AGREEMENT, THE COMPANY AND THE SELLING
MEMBERS DO NOT MAKE ANY REPRESENTATION, COVENANT OR WARRANTY, EXPRESS, IMPLIED
OR STATUTORY, AS TO ANY FUTURE BUSINESS OR EVENT.


 


5.7                                 Financing.  Schedule 5.7 sets forth
complete and correct copies of a commitment letter and related terms
sheets from GE Capital (collectively, the “Financing Commitment”)
for the debt financing to be used in
connection with the transactions contemplated hereby (the “Financing”).
  The amount of the Financing
together with equity financing to be provided by Purchaser, will provide
sufficient funds for Purchaser to consummate the transactions contemplated by
this Agreement.


 


ARTICLE VI.

COVENANTS


 


6.1                                 Third
Party Consents.  The Selling Members
and the Company shall use their commercially reasonable efforts to obtain or provide,
as applicable, at the earliest practicable date all consents, waivers,
approvals, and notices referred to in Sections 3.2(b) and 4.3(b) (except
for such matters covered by Section 6.2) that were not obtained or
provided prior to the Closing.  All such
consents, waivers, approvals and notices shall be in writing and in form and
substance satisfactory to Purchaser, and executed counterparts of such
consents, waivers and approvals shall be delivered to Purchaser promptly after
receipt thereof, and copies of such notices shall be delivered to Purchaser
promptly after the making thereof.


 


6.2                                 Governmental
Body Consents and Approvals.  Each of
Purchaser, the Selling Members and the Company shall use its commercially
reasonable efforts to obtain at the earliest practical date all consents,
waivers, approvals, Orders, Permits, authorizations and declarations from, make
all filings with, and provide all notices to, all Governmental Bodies which are
required to consummate, or in connection with, the transactions contemplated by
this Agreement.  Each party will promptly
inform the other of any material communication and requests for information
from any governmental authority regarding any of the transactions contemplated hereby
and will make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, appropriate response to any such
communication.


 


6.3                                 Further Assurances.  Upon
the terms and subject to the conditions contained in this Agreement, each party
agrees following the Closing (a) to use all commercially reasonable 


 


44

















 


efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, (b) to sign any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder, and (c) to
reasonably cooperate with the other party in connection with the
foregoing.  Each party will promptly
inform the other of any material communication and requests for information
from any governmental authority regarding any of the transactions contemplated
hereby and will make, or cause to be made, as soon as reasonably practicable
and after consultation with the other party, appropriate response to any such
communication.


 


6.4                                 Publicity.


 


(a)                                  None
of the Purchaser, Selling Members or the Company shall issue any press release
or public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party hereto, which approval will not be unreasonably withheld or delayed,
unless, in the sole judgment of Purchaser, disclosure is otherwise required by
applicable Law or by the applicable rules of any stock exchange on which Purchaser or its Affiliates lists securities,
provided that, to the extent required by applicable Law, the party
intending to make such release shall use its commercially reasonable efforts
consistent with such applicable Law to consult with the other party with
respect to the text thereof.


 


(b)                                 Each
of Purchaser, the Selling Members and the Company agrees that the terms of this Agreement shall not be
disclosed or otherwise made available to the public and that copies of this
Agreement shall not be publicly filed or otherwise made available to the
public, except where such disclosure, availability or filing is required by
applicable Law and only to the extent required by such Law.  In the event that such disclosure,
availability or filing is required by applicable Law, each of Purchaser, the
Company and the Selling Members (as applicable) agrees to use its commercially
reasonable efforts to obtain “confidential treatment” of this Agreement with
the SEC (or the equivalent treatment by any other Governmental Body) and to
redact such terms of this Agreement the other party shall request.


 


6.5                                 Use
of Name.  The Selling Members hereby
agree that upon the Closing, Purchaser and the Company shall have the sole
right to the use of the name “DocuData” or similar names and any service marks,
trademarks, trade names, d/b/a names, fictitious names, identifying symbols,
logos, emblems, signs or insignia related thereto or containing or comprising
the foregoing, or otherwise used in the business of the Company, including any
name or mark confusingly similar thereto and the Marks listed on Schedule
4.12(a) (collectively, the “Company Marks”).   The Selling Members shall not, and shall not
permit their respective Affiliates to, use such name or any variation or
simulation thereof or any of the Company Marks. 
Each of the Selling Members shall, and shall cause each its Affiliates
to, immediately after the Closing, cease to hold itself out as having any
affiliation with the Company or any of its Affiliates.


 


6.6                                 Related-Party
Transactions with Non-Management Affiliates.  On or prior to the Closing Date, the Company shall (a) terminate all Contracts with
any of the Selling Members or their respective Affiliates (other than (i) those
Contracts set forth on Schedule 6.6, (ii) Contracts


 


45














 


between
the Company and its respective officers and employees, and (iii) Contracts
the continuation of which Purchaser has approved in writing) and (b) deliver
releases executed by such Affiliates with whom the Company has terminated such
Contracts pursuant to this Section 6.6 providing that no further
payments are due, or may become due, under or in respect of any such terminated
Contacts.


 


6.7                                 Fees
and Expenses.  No later than three
Business Days prior to the Closing Date, the
Company shall deliver to Purchaser (i) pay-off letters or final invoices
in respect of the Company Transaction Expenses from third-party service
providers to whom payments are required to be made by the Company, and (ii) a
certificate of the Company setting forth an estimate of the unpaid balance of
all Company Transaction Expenses as of the close of business on the day
immediately preceding the Closing.  On
the Closing Date prior to the Closing, the Company shall deliver to Purchaser a
certificate of the Company setting forth the unpaid balance of all Company
Transaction Expenses as of the close of business on the day immediately
preceding the Closing.  The Company shall
pay and discharge all such Company Transaction Expenses at or prior to the
Closing.  All pay-off letters or final invoices
shall provide that the amounts set forth therein represent payment in full for
all fees and expenses payable by the Company in connection with the
transactions contemplated by this Agreement.


 


6.8                                 Debt.  No later than one Business Day prior to the
Closing Date, the Company shall provide Purchaser with (i) a certificate
of the Company setting forth an estimate of the balance of all Indebtedness of
the Company as of the close of business on the day immediately preceding the
Closing Date and (ii) customary pay-off letters from all holders of
Indebtedness to be repaid as of or prior to the Closing.  The Company shall also make arrangements
reasonably satisfactory to Purchaser for such holders to provide to Purchaser
recordable form mortgage and lien releases, canceled notes and other documents
reasonably requested by Purchaser prior to the Closing such that all Liens on
the assets or properties of the Company that are not Permitted Exceptions shall
be satisfied, terminated and discharged on or prior to the Closing Date.  On the Closing Date prior to the Closing, the
Company shall deliver to Purchaser a certificate of the Company setting forth
all Indebtedness of the Company as of the close of business on the day immediately
preceding the Closing Date.


 


6.9                                 Tax
Matters.


 


(a)                                  Filing
of Tax Returns; Payment of Taxes.


 


(i)                                     Following
the Closing, the Member Representative shall cause to be prepared and duly
filed all Tax Returns required to be filed by or with respect to the Company
for all taxable years and periods ending on or before the Closing Date, and
shall pay or cause to be paid all Taxes shown due thereon.  All such Tax Returns shall be prepared in a
manner consistent with the Company’s prior practice.  The Member Representative shall provide
Purchaser with copies of such completed Tax Returns at least twenty days prior
to the due date for filing thereof, or such lesser period as may be necessary
to allow the Company to timely file such Tax Returns, along with supporting
workpapers, if any, for Purchaser’s review; provided, however,
Purchaser’s approval shall not be required with respect to any such Tax
Returns.  The Selling Members shall be
entitled to any Tax refunds related to taxable years and periods ending on or
before the 


 


46

















 


Closing Date, including the portion of a Straddle
Period that is deemed to end on the Closing Date pursuant to Section 6.9(b).  The Selling Members shall not be responsible
for Taxes occurring after the Closing Date.


 


(ii)                                  Following
the Closing, Purchaser shall cause to be
prepared and duly filed all Tax Returns required to be filed by or with respect
to the Company for all Taxable years and periods ending after the Closing Date,
and shall pay or cause to be paid all Taxes shown due thereon.  All such Tax Returns for a Straddle Period
shall be prepared in a manner consistent with prior practice of the
Company.  Purchaser shall provide the
Member Representative with copies of such completed Straddle Period Tax Returns
at least twenty days prior to the due date for filing thereof, along with
supporting workpapers, for the Member Representative’s review; provided,
however, the Member Representative’s approval shall not be required with
respect to any such Tax Returns.


 


(b)                                 Straddle
Period Tax Allocation.  The Company
will, unless prohibited by applicable law, close the taxable period of the
Company as of the close of business on the Closing Date.  If applicable law does not permit the Company
to close its taxable year on the Closing Date or in any case in which a Tax is
assessed with respect to a taxable period which includes the Closing Date (but
does not begin or end on that day) (a “Straddle Period”), the Taxes, if
any, attributable to a Straddle Period shall be allocated (i) to the
Selling Members for the period up to and including the close of business on the
Closing Date (except that the Members shall not be responsible for Taxes to the
extent of any reserve or accrual for Taxes on the Closing Balance Sheet that
are included in the Closing Working Capital described in Section 2.4(b)(i)),
and (ii) to Purchaser for the period subsequent to the Closing Date.  Any allocation of income or deductions
required to determine any Taxes attributable to a Straddle Period shall be made
by means of a closing of the books and records of the Company as of the close
of the Closing Date, provided that exemptions, allowances or deductions
that are calculated on an annual basis (including, but not limited to,
depreciation and amortization deductions) shall be allocated between the period
ending on the Closing Date and the period after the Closing Date in proportion
to the number of days in each such period. 
Property or ad valorem Taxes however shall be apportioned by assuming
that an equal portion of such Tax for the entire Straddle Period is allocable
to each day in such Straddle Period.


 


(c)                                  Tax
Audits.


 


(i)                                     If
notice of any Legal Proceeding with respect to Taxes of the Company (a “Tax Claim”) shall be received by
either party for which the other party may reasonably be expected to be liable,
the notified party shall notify such other party in writing of such Tax Claim; provided,
however, that the failure of the notified party to give the other party
notice as provided herein shall not relieve such failing party of its
obligations under this Section 6.9 except to the extent that the
other party is actually and materially prejudiced thereby.


 


(ii)                                  Purchaser
shall have the right, but not the obligation, at the expense of the Selling
Members, to represent the interests of the Company in any Tax Claim; provided,
that with respect to a Tax Claim subject to indemnification by the Selling
Members in that it relates exclusively to taxable periods ending on or before
the 


 


47

















 


Closing Date, the Member Representative shall have the
right to participate in such Tax Claim and Purchaser shall not settle such
claim without the consent of the Selling Members, which consent shall not be
unreasonably withheld.


 


(d)                                 Transfer
Taxes.  Purchaser shall be liable for
and shall pay (and shall indemnify and hold harmless the Selling Member
Indemnified Parties against) all sales, use, stamp, documentary, filing,
recording, transfer or similar fees or taxes or governmental charges as levied
by any Governmental Body including any interest and penalties) in connection
with the transactions contemplated by this Agreement.


 


(e)                                  Disputes.  Any dispute as to any matter covered hereby
shall be resolved by an independent accounting firm mutually acceptable to the
Selling Members and the Purchaser.  The
fees and expenses of such accounting firm shall be borne equally by the Selling
Members, on the one hand, and the Purchaser on the other.  If any dispute with respect to a Tax Return
is not resolved prior to the due date of such Tax Return, such Tax Return shall
be filed in the manner which the party responsible for preparing such Tax
Return deems correct.


 


(f)                                    Deductions.  The parties hereto agree that the
compensation deduction relating to the purchase of Membership Interests
pursuant to this Agreement, along with all other deductions of the Company occurring on the Closing Date, shall be
reported on the final federal income Tax Return of the Company for the taxable
period ending on the Closing Date and shall be for the benefit of Brian Rathe
and Stuart Rathe.


 


(g)                                 Consistent
Actions.  Without the prior written
consent of the Member Representative,
which consent shall not be unreasonably withheld or delayed, the Purchaser
shall not with respect to the Company make or change any election, change an
annual accounting period, adopt or change any accounting method, file any
amended Tax Return, enter into any closing agreement, consent to any extension
or waiver of the limitation period applicable to any Tax claim or assessment,
or take any other similar action relating to the filing of any Tax Return or
the payment of any Tax relating to a Company with respect to a taxable period
ending on or before the Closing Date (including the portion of any Straddle
Period ending on the Closing Date pursuant to Section 6.9(b)).


 


(h)                                 Restricted
Capital Interests.  The capital
interests of certain of the Selling Members
have been treated by the Company as restricted capital interests (the “Restricted  Capital Interests”)
that will vest in connection with the sale and purchase contemplated in this
Agreement.  In accordance therewith,
Company will pay applicable FICA, unemployment taxes and withholding taxes
associated with the vesting of Selling Members’ Restricted Capital
Interests.  Pre-Closing, Company shall
accrue such taxes and report them on the Closing Balance Sheet.  On the Closing Date, Purchaser will withhold
from the Purchase Price paid to each of the Selling Members of the Restricted
Capital Interests and transfer to the Company to fund the employee share of
payroll taxes relating to the Selling Members’ Restricted Capital Interests in
accordance with the amounts set forth on Exhibit D.  On the Closing Date, the Company shall
deposit the funds transferred from Purchaser with the applicable tax authority
in satisfaction of the employee share of the payroll taxes attributable to the
vesting of Selling Members’ Restricted Capital Interests.  Post Closing, Purchaser will cause the
Company to timely prepare and file all 


 


48

















 


payroll tax returns and information statements of the Company with
respect to the vesting of Selling Members’ Restricted Capital Interests and
deposit of the applicable payroll taxes.


 


6.10                           Indemnification
Agreements.  The Indemnification
Agreements currently in place between the Company and each of the Selling
Members shall remain in full force and effect and shall not be cancelled or
terminated by the Purchaser or the Company following the Closing.


 


6.11                           Non-Competition;
Non-Solicitation; Confidentiality. 
The Selling Members identified
in Section 2.9(a)(iv) shall execute Restrictive
Covenants Agreements with the Company regarding matters of non-competition, non-solicitation and confidentiality.


 


ARTICLE VII.

INDEMNIFICATION


 


7.1                                 Survival
of Representations and Warranties. 
The representations and warranties of the parties contained in this Agreement, any certificate delivered
pursuant hereto or any Selling Member Document, Company Document or Purchaser
Document shall survive the Closing through
and including the first anniversary of the Closing Date (the “Survival
Period”);  provided,
however, that any obligations under Sections 7.2(a) and 7.2(b) shall
not terminate with respect to any Losses as to which the Person to be
indemnified shall have given notice (stating in reasonable detail the basis of
the claim for indemnification) to the indemnifying party in accordance with Section 7.3(a) before
the termination of the Survival Period.


 


7.2                                 Indemnification.


 


(a)                                  Subject
to limitations set forth in this Article VII, the Selling Members
hereby agree, jointly and severally (except with respect to Section 7.2(a)(ii),
to which the Selling Members agree severally, but not jointly), to indemnify
and hold Purchaser, the Company, and their respective directors, officers,
employees, Affiliates, members, agents, attorneys, representatives, successors
and assigns (collectively, the “Purchaser Indemnified Parties”)  harmless
from and against, and pay to the applicable Purchaser Indemnified Parties the
amount of, any and all losses, liabilities, claims, obligations, deficiencies,
demands, judgments, damages (including incidental and consequential damages),
interest, fines, penalties, claims, suits, actions, causes of action,
assessments, awards, costs and expenses (including costs of investigation and
defense and attorneys’ and other professionals’ fees), or any diminution in
value, whether or not involving a third party claim (individually, a “Loss”
and, collectively, “Losses”):


 


(i)                                     based upon, attributable to or resulting from
the failure of any of the representations or warranties made by the Selling
Members in this Agreement (other than in Article III) or in any
Selling Member Document or Company Document to be true and correct in all
respects at and as of the date hereof and at and as of the Closing Date;


 


(ii)                                  based upon, attributable to or resulting from
the failure of any of the representations and warranties made by each Selling
Member in Article III to be true and correct in all respects as of the date hereof and
at and as of the Closing Date;


 


(iii)                               based upon, attributable to or resulting from
the breach of any covenant or other agreement on the part of the Selling
Members or (prior to the Closing) 


 


49

















 


the Company under this
Agreement or any Selling Member Document or Company Document;


 


(iv)                              imposed under or pursuant to any
Environmental Laws (including any loss of use of Company Property or any
tangible personal property of the Company) arising from or related to any
condition, act or omission by the Company or any predecessor thereof or related
to the operations of the Company or any predecessor thereof at any real
property currently or formerly owned, operated or leased by the Company or any
predecessor thereof, whether known or unknown, accrued or contingent, to the
extent existing on or prior to the Closing Date, including any Environmental
Costs and Liabilities and any liabilities imposed pursuant to common law
associated with a Release of Hazardous Materials; and


 


(v)                                 arising from or related to any fees,
commissions, or like payments by any Person having acted or claiming to
have acted, directly or indirectly, as a broker, finder or financial advisor
for the Selling Members or the Company in connection with the transactions
contemplated by this Agreement.


 


(b)                                 Subject to limitations set forth in this Article VII,
Purchaser hereby agrees to indemnify and hold the Selling Members and
their respective Affiliates, members, agents, attorneys, representatives,
successors and permitted assigns (collectively, the “Selling Member Indemnified Parties”)
harmless from and against, and pay to the applicable Selling Member Indemnified
Parties the amount of any and all Losses:


 


(i)                                     based
upon, attributable to or resulting from the failure of any of the
representations or warranties made by Purchaser in this Agreement or in any
Purchaser Document to be true and correct in all respects at the date hereof
and as of the Closing Date; and


 


(ii)                                  based
upon, attributable to or resulting from the breach of any covenant or other
agreement on the part of Purchaser under this Agreement or any Purchaser
Document.


 


(c)                                  The right to indemnification or any other
remedy based on representations, warranties, covenants and agreements in
this Agreement, or any Selling Member Documents, Company Document or Purchaser
Document shall not be affected by any investigation conducted at any time, or
any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of, or compliance with, any
such representations, warranty, covenant or agreements.  The waiver of any condition based on the
accuracy of any such representation or warranty, or on the performance of or
compliance with any such covenant or agreement, will not affect the right to
indemnification or any other remedy based on such representations, warranties,
covenants and agreements.


 


7.3                                 Indemnification
Procedures.


 


(a)                                  A claim for indemnification for any matter
not involving a third party claim may be asserted by notice to the party
from whom indemnification is sought; provided,  


 


50

















 


however,
that failure to so notify the indemnifying shall not preclude the indemnified
party from any indemnification which it may claim in accordance with this Article VII.


 


(b)                                 In the event that any Legal Proceedings shall
be instituted or that any claim or demand shall be asserted by any third
party in respect of which indemnification may be sought under Section 7.2
(a “Third Party Claim”), the indemnified party shall
promptly cause written notice of the assertion of any Third Party Claim of
which it has knowledge which is covered by this indemnity to be forwarded to
the indemnifying party.  The failure of
the indemnified party to give reasonably prompt notice of any Third Party Claim
shall not release, waive or otherwise affect the indemnifying party’s
obligations with respect thereto except to
the extent that the indemnifying party can demonstrate actual loss and
prejudice as a result of such failure. 
Subject to the provisions of this Section 7.3, the
indemnifying party shall have the right, at its sole expense, to be represented
by counsel of its choice, which must be reasonably satisfactory to the
indemnified party, and to defend against, negotiate, settle or otherwise deal
with any Third Party Claim which relates to any Losses indemnified against
hereunder; provided that the indemnifying party shall have acknowledged in
writing to the indemnified party its unqualified obligation to indemnify the
indemnified party as provided hereunder. 
If the indemnifying party elects to defend against, negotiate, settle or otherwise deal with any Third Party Claim
which relates to any Losses indemnified by it hereunder, it shall within five
days of the indemnified party’s written notice of the assertion of such Third
Party Claim (or sooner, if the nature of the Third Party Claim so requires)
notify the indemnified party of its intent to do so; provided, that the
indemnifying party must conduct the defense of the Third Party Claim actively
and diligently thereafter in order to preserve its rights in this regard.  If the indemnifying party elects not to
defend against, negotiate, settle or otherwise deal with any Third Party Claim
which relates to any Losses indemnified against hereunder, fails to notify the
indemnified party of its election as herein provided or contests its obligation
to indemnify the indemnified party for such Losses under this Agreement, the
indemnified party may defend against, negotiate, settle or otherwise deal with
such Third Party Claim.  If the
indemnified party defends any Third Party Claim, then the indemnifying party
shall reimburse the indemnified party for the expenses of defending such Third
Party Claim upon submission of periodic bills. 
If the indemnifying party shall assume the defense of any Third Party
Claim, the indemnified party may participate, at his or its own expense, in the
defense of such Third Party Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if (i) so
requested by the indemnifying party to participate or (ii) in the
reasonable opinion of counsel to the indemnified party, a conflict or potential
conflict exists between the indemnified party and the indemnifying party that
would make such separate representation advisable; and provided,
further, that the indemnifying party shall not be required to pay for more
than one such counsel for all indemnified parties in connection with any Third
Party Claim.  The parties hereto agree to
provide reasonable access to the other to such documents and information as may
be reasonably requested in connection with the defense, negotiation or
settlement of any such Third Party Claim. 
Notwithstanding anything in this Section 7.3 to the
contrary, neither the indemnifying party nor the indemnified party shall,
without the written consent of the other party, settle or compromise any Third
Party Claim or permit a default or consent to entry of any judgment unless the
claimant or claimants and such party provide to such other party an unqualified
release from all liability in respect of the Third Party Claim.  If the indemnifying party makes any payment
on any Third Party Claim, the indemnifying party shall be subrogated, to the
extent of such payment, to all rights and remedies 


 


51

















 


of the indemnified party to any insurance benefits or other claims of
the indemnified party with respect to such Third Party Claim.


 


(c)                                  After
any final decision, judgment or award shall have been rendered by a Governmental Body of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the indemnified party and the indemnifying
party shall have arrived at a mutually binding agreement, in each case with
respect to an Third Party Claim hereunder, the indemnified party shall forward
to the indemnifying party notice of any sums due and owing by the indemnifying
party pursuant to this Agreement with respect to such matter and the
indemnifying party shall, subject to the limitations set forth in Section 7.4,
pay all of such remaining sums so due and owing to the indemnified party in
accordance with Section 7.5 (in the case of Purchaser Indemnified
Parties), or by wire transfer of immediately available funds within five
Business Days after the date of such notice (in the case of Selling Member
Indemnified Parties).


 


7.4                                 Limitations
on Indemnification.


 


(a)                                  An indemnifying party shall not have any
liability under Section 7.2(a) or Section 7.2(b) unless
and until the amount of any individual Loss exceeds $25,000 and the aggregate
amount of all Losses incurred by the indemnified parties and indemnifiable
thereunder exceeds $150,000 (the “Basket”).  In such event, the indemnifying party shall
be required to pay the entire amount of all such Losses.


 


(b)                                 Notwithstanding anything contained herein to
the contrary, neither the Selling Members, on the one hand, nor Purchaser, on
the other hand, shall be required to indemnify any Person under Section 7.2(a) or
7.2(b) for an aggregate amount of Losses exceeding $3,000,000 (the “Cap”).


 


(c)                                  the amount of Losses required to be paid
pursuant to this Article VII shall be reduced to the extent of any
Tax benefits or insurance proceeds directly or indirectly received by or
available to the indemnified party;


 


(d)                                 Notwithstanding anything contained herein to
the contrary, in no event shall any Purchaser Indemnified Party be entitled to
recover with respect to a breach by the Selling Members of any representation,
warranty, covenant, or agreement if the Purchaser Indemnified Parties had
Knowledge thereof at or before the Closing.


 


(e)                                  The Selling Members shall have no right of
contribution or other recourse against the Company or its respective officers,
employees, Affiliates, agents, attorneys, representatives, assigns or
successors for any Third Party Claims asserted by Purchaser Indemnified
Parties, it being acknowledged and agreed that the covenants and agreements of
the Company are solely for the benefit of the Purchaser Indemnified Parties.


 


7.5                                 Reduction
of Promissory Note; Exclusive Remedy.


 


(a)                                  Any
payment the Selling Members are obligated to make to any Purchaser Indemnified Parties pursuant to this Article VII
shall be paid by reducing the amount due to the Selling Members under the
Promissory Note by such amount.  Within
five Business Days after 


 


52

















 


the
date notice of any sums due and owing is given to the Selling Members by the
applicable Purchaser Indemnified Party, the Member Representative shall return
the Promissory Note to the Purchaser for cancellation and the Purchaser shall
issue a new Promissory Note reflecting such revised amount due.  On the first anniversary of the Closing Date,
the Purchaser shall pay the first installment due under the Promissory Note (to
the extent not reduced to pay Purchaser for any indemnification claim) to the
Member Representative, except that the Purchaser shall retain an amount (up to
the total amount then due under the Promissory Note) equal to the amount of
claims for indemnification under this Article VII asserted prior to
such first anniversary but not yet resolved (“Unresolved
Claims”).   The amount
retained by the Purchaser for Unresolved Claims shall be paid by the Purchaser
(to the extent not utilized to pay Purchaser for any such claims resolved in
favor of Purchaser) upon their resolution in accordance with this Article VII
and the terms of the Promissory Note.


 


(b)                                 PURCHASER ACKNOWLEDGES AND AGREES THAT THE SOLE AND EXCLUSIVE REMEDY
AVAILABLE TO PURCHASER OR THE PURCHASER INDEMNIFIED PARTIES IN RESPECT OF ANY
LOSSES PURSUANT TO THIS AGREEMENT
OR OTHERWISE RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
SHALL BE TO CLAIM AGAINST THE PROMISSORY NOTE.


 


7.6                                 Limitation
on Damages.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT, IN NO EVENT SHALL ANY PARTY BE
LIABLE TO ANY OTHER PARTY, OR TO ANY INDEMNIFIED PARTY, UNDER THIS AGREEMENT OR
OTHERWISE FOR ANY EXEMPLARY, PUNITIVE, REMOTE, SPECULATIVE, CONSEQUENTIAL,
SPECIAL OR INCIDENTAL DAMAGES OR LOSS OF PROFITS, AND NO CLAIM SHALL BE MADE OR
AWARDED AGAINST THE PROMISSORY NOTES, OR AGAINST ANY PARTY, FOR ANY SUCH
DAMAGES OR LOSS OF PROFITS.


 


7.7                                 Exclusive Remedy.  AS
BETWEEN THE PURCHASER INDEMNIFIED PARTIES AND THE SELLING MEMBER INDEMNIFIED
PARTIES, AFTER CLOSING (A) THE PROVISIONS SET FORTH IN THIS ARTICLE VII
WILL BE THE SOLE AND EXCLUSIVE RIGHTS, OBLIGATIONS AND REMEDIES OF THE PARTIES
WITH RESPECT TO THIS AGREEMENT, THE EVENTS GIVING RISE THERETO AND THE
TRANSACTIONS PROVIDED FOR HEREIN OR CONTEMPLATED HEREBY AND (B) NO PARTY
NOR ANY OF ITS HEIRS, SUCCESSORS OR ASSIGNS SHALL HAVE ANY RIGHTS AGAINST ANY
OTHER PARTY OR ITS AFFILIATES OTHER THAN AS IS EXPRESSLY PROVIDED IN THIS ARTICLE
VII.


 


7.8                                 Tax Treatment of Indemnity Payments.  The
Selling Members and the Purchaser agree to treat any indemnity payment made
pursuant to this Article VII as an adjustment to the Purchase Price
for all income tax purposes.  If,
notwithstanding the treatment required by the preceding sentence, any
indemnification payment under this Article VII is determined to be
taxable to the party receiving such payment by any Taxing Authority, the paying
party shall also indemnify, subject to the limitations set forth in this Article VII,
the party receiving such payment for any Taxes incurred by reason of the
receipt of such payment and any Losses incurred by the party receiving such
payment in connection with such Taxes (or any asserted 


 


53

















 


deficiency, claim, demand, action, suit, proceeding, judgment or
assessment, including the defense or settlement thereof, relating to such
Taxes).  The prior sentence is applicable
only if the paying party approves the determination by the Taxing Authority,
which approval shall not be unreasonably withheld or delayed.


 


ARTICLE VIII.

MISCELLANEOUS


 


8.1                                 Expenses.  Except as otherwise provided
in this Agreement, the Company and the Selling Members and Purchaser shall each
bear its or their own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby.


 


8.2                                 Member
Representative.


 


(a)                                  Each
Selling Member hereby irrevocably appoints Brian Rathe (the “Member
Representative”) as such Selling Member’s representative,
attorney-in-fact and agent, with full power of substitution to act in the name,
place and stead of such Selling Member with respect to the transfer of such
Selling Member’s Ownership Interest to Purchaser in accordance with the terms
and provisions of this Agreement and to act on behalf of such Selling Member in
any amendment of or litigation, mediation or arbitration involving this
Agreement and to do or refrain from doing all such further acts and things, and to execute all such
documents, as such Member Representative shall deem necessary or appropriate in
conjunction with any of the transactions contemplated by this Agreement,
including the power:


 


(i)                                     to
take all action necessary or desirable in connection with the waiver of any
condition to the obligations of the Selling Members to consummate the
transactions contemplated by this Agreement;


 


(ii)                                  to
negotiate, execute and deliver all ancillary agreements, statements,
certificates, statements, notices, approvals, extensions, waivers,
undertakings, amendments and other documents required or permitted to be given
in connection with the consummation of the transactions contemplated by this
Agreement (it being understood that such Selling Member shall execute and
deliver any such documents which the Member Representative agrees to execute);


 


(iii)                               to
give and receive all notices and communications to be given or received under
this Agreement and to receive service of process in connection with the any
claims under this Agreement, including service of process in connection with
arbitration; and


 


(iv)                              to
take all actions which under this Agreement may be taken by the Selling Members
including settlement of all claims and amounts, and to do or refrain from doing
any further act or deed on behalf of the Selling Member which the Member
Representative deems necessary or appropriate in his sole discretion relating
to the subject matter of this Agreement as fully and completely as such Selling
Member could do if personally present.


 


54

















 


(b)                                 If
Brian Rathe becomes unable to serve as Member Representative, such other Person
or Persons as may be designated by a majority of the Selling Members, shall
succeed as the Member Representative provided however, such designated
successor’s rights, authority and obligations shall be limited to the nature
and scope of those set forth in this Section 8.2.  In no event shall Selling Members or any
Member Representative other than Brian Rathe have any right, authority or
obligation to execute the Company management and leadership responsibilities as
set forth in Section 2.5(d). 
Purchaser reserves the right and responsibility, in its sole discretion,
to: (i) appoint any and all managers and leaders of the Company; and (ii) assume
all duties of Brian Rathe other than those specified in Section 8.2(a)(i)-(iv).


 


8.3                                 Governing
Law; Venue; Consent to Service of Process; Dispute Resolution.


 


(a)                                  This Agreement shall be governed by, enforced
in accordance with, and interpreted under, the Laws of the State of
Texas, without reference to applicable principles of conflicts of Laws.


 


(b)                                 Venue for any proceeding to enforce or
interpret any provision in this Agreement or over any dispute arising
out of or relating to this Agreement or any of the transactions contemplated
hereby shall be in the state or federal courts located in Dallas County, Texas,
and the parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located in Dallas County,
Texas.  Each party hereby irrevocably
agrees that all claims in respect of such dispute or any suit, action
proceeding related thereto may be heard and determined in such courts.  The parties hereby irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any such dispute brought in such court
or any defense of inconvenient forum for the maintenance of such dispute.  Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law.


 


(c)                                  Each of the parties hereto hereby consents to
process being served by any party to this Agreement in any suit, action
or proceeding by delivery of a copy thereof in accordance with the provisions
of Section 8.5.


 


(d)                                 In the event a dispute arises between the
parties in relation to this Agreement, or out of this Agreement, and the
dispute is not resolved by negotiation or the provisions of Section 2.4(b)(iii),
the parties agree to submit the dispute to mediation.  The parties further agree that their good
faith participation in non-binding mediation is a condition precedent to any
party pursuing any other available remedy in relation to the dispute.  Any party to the dispute may give written
notice to the other party of a desire to commence mediation, and a mediation
session must take place within 30 days after the date that such notice is
given.  Any such mediation shall be
conducted by JAMS Resolution Center, 8401 North Central Expressway, Suite 610,
Dallas, Texas 75225 (214-744-5267).  The
parties further agree to share equally the costs of the mediation, which costs
will not include costs incurred by a party for representation by counsel at the
mediation.


 


8.4                                 Entire
Agreement; Amendments and Waivers. 
This Agreement (including the schedules and exhibits hereto), the
Selling Member Documents and the Purchaser Documents 


 


55

















 


represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought.  No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein..  The waiver by any party hereto of a breach of
any provision of this Agreement shall not operate or be construed as a further
or continuing waiver of such breach or as a waiver of any other or subsequent
breach.  No failure on the part of any
party to exercise, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of such right, power or remedy by such party preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy.  All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by law.


 


8.5                                 Notices.  All notices and other communications under
this Agreement shall be in writing and shall be deemed given (i) when
delivered personally by hand (with written confirmation of receipt), (ii) when
sent by facsimile (with written confirmation of transmission) or (iii) one
Business Day following the day sent by overnight courier (with written confirmation
of receipt), in each case at the following addresses and facsimile numbers (or
to such other address or facsimile number as a party may have specified by
notice given to the other party pursuant to this provision):


 


If to any Selling Member,
to such Selling Member’s address as set forth on Exhibit A hereto.


 


With a copy to:


 


Gardere Wynne Sewell LLP

1601 Elm Street, Suite 3000

Dallas, Texas 75201

Facsimile: (214) 999-3924

Attention: Katherine Seaborn


 


If to Purchaser, to:


 


BancTec, Inc.

2701 East Grauwyler Rd.

Irving, Texas 75061

Facsimile: (972) 821-4448

Attention: J. Coley Clark


 


With a copy to:


 


56

















 


BancTec, Inc.

2701 East Grauwyler Rd.

Irving, Texas 75061

Facsimile: (972) 821-4831

Attention: Corporate Counsel


 


8.6                                 Severability.  If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any law or
public policy, all other terms or 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 any party.  Upon
such determination that any term or other provision is invalid, illegal, or
incapable of being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated to the greatest
extent possible.


 


8.7                                 Binding Effect; Assignment.  This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, successors and permitted assigns.  Nothing in this Agreement shall create or be
deemed to create any third party beneficiary rights in any person or entity not
a party to this Agreement except as provided below.  No assignment of this Agreement or of any
rights or obligations hereunder may be made by either the Selling Members or
Purchaser (by operation of law or otherwise) without the prior written consent
of the other parties hereto and any attempted assignment without the required
consents shall be void; provided, however, that Purchaser may
assign this Agreement and any or all rights or obligations hereunder (including
Purchaser’s rights to purchase the Ownership Interest and Purchaser’s rights to
seek indemnification hereunder) to any Affiliate of Purchaser, any Person from
which it has borrowed money or any Person to which Purchaser or any of its
Affiliates proposes to sell all or substantially all of the assets relating to
the business.  Upon any such permitted
assignment, the references in this Agreement to Purchaser shall also apply to
any such assignee unless the context otherwise requires.


 


8.8                                 Disclosure
Schedule.  The information in the
Disclosure Schedule constitutes (a) exceptions or qualifications to
particular representations, warranties, covenants and obligations of the
Selling Members and the Company as set forth in this Agreement or (b) descriptions
or lists of assets and liabilities and other items referred to in this
Agreement.  Any matter or information
listed or set forth in a particular section or portion of the Disclosure
Schedule shall be deemed to apply to and qualify the particular Section or
subsection of the Agreement to which it corresponds in number and each other Section or
subsection of the Agreement to the extent that it is reasonably apparent that such information is relevant to such
other Section or subsection of the Agreement, without regard to whether
such other Section or subsection is qualified by a reference to the
Disclosure Schedule.


 


8.9                                 Non-Recourse. 
Except in the case of intentional misconduct or gross negligence, no
past, present or future director, officer, employee, incorporator, member,
partner, Affiliate, agent, attorney or representative of Purchaser shall have
any liability for any obligations or liabilities of Purchaser under this
Agreement or for any claim based on, in respect of, or by reason of, the
transactions contemplated hereby.  Except
in the case of intentional misconduct or 


 


57

















 


gross negligence, no past, present or future director, officer,
employee, incorporator, Affiliate, agent, attorney or representative of the
Company shall have any liability for any obligations or liabilities of the
Company under this Agreement or for any claim based on, in respect of, or by
reason of, the transactions contemplated hereby.


 


8.10                           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.


 


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58

















 


IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers thereunto duly
authorized, as of the date first written above.


 


	
   

  	
  BANCTEC,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Coley
  Clark

  
	
   

  	
   

  	
  J. Coley Clark

  
	
   

  	
   

  	
  Chairman and
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOCUDATA
  SOLUTIONS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian Rathe

  
	
   

  	
   

  	
  Brian Rathe

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SELLING
  MEMBERS:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Brian Rathe

  
	
   

  	
  Brian Rathe,
  individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Stuart Rathe

  
	
   

  	
  Stuart Rathe,
  individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Marguerite
  Glasgow

  
	
   

  	
  Marguerite
  Glasgow, individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Karen
  Roselle

  
	
   

  	
  Karen Roselle,
  individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ James
  William Holder

  
	
   

  	
  James William
  Holder, individually

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ John Britton
  Kauffman

  
	
   

  	
  John Britton
  Kauffman, individually

  
				



 


SIGNATURE PAGE TO
PURCHASE AGREEMENT