Exhibit
2.1




STOCK
PURCHASE AND SALE




AGREEMENT




BY
AND AMONG




HYALURON,
INC.,




SHAWN
KINNEY and WILLIAM A. CRIDER, JR. (as Sellers),




AND




ALBANY
MOLECULAR RESEARCH, INC. (as Buyer)




June
14, 2010





TABLE
OF CONTENTS




PageArticle
      I - DEFINITIONS; PURCHASE AND SALE
                  1Section
      1.1.
                  Definitions
                  1Section
      1.2.
                  Stock
      Purchase and Sale
                  7Section
      1.3.
                  Purchase
      Price; Payment of Escrow Amount, Calculation of
    Indebtedness
                  8Section
      1.4.
                  Delivery
      of Stock
                  8Section
      1.5.
                  Closing
                  8Section
      1.6.
                  Payment
      of Debt
                  8Section
      1.7.
                  Tax
      Treatment
                  9Section
      1.8.
                  Payment
      of Employee Bonuses
                  9Article II -
      REPRESENTATIONS AND WARRANTIES OF THE SELLERS
                  9Section
      2.1.
                  Seller’s
      Ownership of Stock
                  9Section
      2.2.
                  Authority
      of Seller
                  9Section
      2.3.
                  No
      Violation
                  10Section
      2.4.
                  Consents
      and Approvals
                  10Section
      2.5.
                  Litigation
                  10Section
      2.6.
                  Brokers’,
      Finders’ Fees, etc.
                  10Article III -
      REPRESENTATIONS AND WARRANTIES OF THE COMPANY
                  10Section
      3.1.
                  Corporate
      Organization; Authorization
                  11Section
      3.2.
                  No
      Violation
                  11Section
      3.3.
                  Consents
      and Approvals of Governmental Authorities
                  12Section
      3.4.
                  Capitalization
                  12Section
      3.5.
                  Subsidiaries
      and Affiliates
                  12Section
      3.6.
                  Financial
      Statements
                  13Section
      3.7.
                  Absence
      of Certain Changes
                  13Section
      3.8.
                  Title
      to Properties; Encumbrances
                  15Section
      3.9.
                  Intellectual
      Property
                  15Section
      3.10.
                  Material
      Contracts
                  17Section
      3.11.
                  Litigation;
      Compliance with Laws
                  18Section
      3.12.
                  Taxes
                  19Section
      3.13.
                  Benefit
      Plans; ERISA
                  21Section
      3.14.
                  Employees;
      Labor Relations
                  22Section
      3.15.
                  Environmental
      Matters
                  23Section
      3.16.
                  Brokers’,
      Finders’ Fees, etc.
                  24Section
      3.17.
                  Affiliate
      Transactions
                  24Section
      3.18.
                  Insurance
                  25Section
      3.19.
                  Bank
      Accounts
                  25Section
      3.20.
                  Regulatory
      Matters
                  25Section
      3.21.
                  Sufficiency
      of Assets
                  27








Section
      3.22.
                Intercompany
      Indebtedness
                27Section
      3.23.
                Absence
      of Undisclosed Liabilities
                27Section
      3.24.
                Privacy
      of Customer Information
                28Section
      3.25.
                Accounts
      Payable; Accounts Receivable
                28Section
      3.26.
                Customers,
      Distributors and Partners; Suppliers
                28Section
      3.27.
                Warranties
                29Section
      3.28.
                Illegal
      Payments
                29Section
      3.29.
                Solvency
                29Section
      3.30.
                Corporate
      Records
                29Section
      3.31.
                Business
      Relationships
                29Section
      3.32.
                Disclosure
                30Article IV -
      REPRESENTATIONS AND WARRANTIES OF THE BUYER
                30Section
      4.1.
                Organization
                30Section
      4.2.
                Authorization
                30Section
      4.3.
                No
      Violation
                30Section
      4.4.
                Consents
      and Approvals of Governmental Authorities
                31Section
      4.5.
                Brokers’,
      Finders’ Fees, etc
                31Section
      4.6.
                Litigation
                31Section
      4.7.
                Investment
      Representations
                31Article V -
      ADDITIONAL AGREEMENTS
                31Section
      5.1.
                Confidentiality
                31Section
      5.2.
                Mutual
      Efforts
                32Section
      5.3.
                Tax
      Matters
                34Section
      5.4.
                Further
      Assurances
                37Section
      5.5.
                Seller
      Releases
                37Article VI -
      CONDITIONS PRECEDENT TO BUYER’S OBLIGATIONS
                39Section
      6.1.
                Representations
      and Warranties
                39Section
      6.2.
                Performance
                39Section
      6.3.
                No
      Injunction
                39Section
      6.4.
                Corporate
      Authorization
                39Section
      6.5.
                Third
      Party Consent and Approvals
                40Section
      6.6.
                Escrow
      Agreement
                40Section
      6.7.
                No
      Material Adverse Effect
                40Section
      6.8.
                FIRPTA
      Certificate
                40Section
      6.9.
                Resignations
                40Section
      6.10.
                Transactions
      with Affiliates
                40Section
      6.11.
                Employment
      Agreements
                40Section
      6.12.
                Officer’s
      Certificate
                40Section
      6.13.
                Form
      8023
                41Section
      6.14.
                Waiver
      of Conditions
                41Article VII -
      CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS
                41Section
      7.1.
                Representations
      and Warranties
                41








Section
      7.2.
                Performance
                41Section
      7.3.
                No
      Injunction
                41Section
      7.4.
                Waiver
      of Conditions
                41Section
      7.5.
                Escrow
      Agreements
                41Article VIII
      - INDEMNIFICATION
                42Section
      8.1.
                Indemnification
      of the Sellers
                42Section
      8.2.
                Indemnification
      of the Buyer
                42Section
      8.3.
                Additional
      Indemnity Provisions
                42Section
      8.4.
                Defense
      of Third Party Claims
                45Section
      8.5.
                Representations
      and Warranties, etc.
                46Article IX -
      MISCELLANEOUS PROVISIONS
                46Section
      9.1.
                Amendment
      and Modification
                46Section
      9.2.
                Waiver
      of Compliance
                46Section
      9.3.
                Notices
                46Section
      9.4.
                Binding
      Nature; Assignment
                48Section
      9.5.
                Entire
      Agreement
                48Section
      9.6.
                Expenses
                48Section
      9.7.
                Press
      Releases and Announcements
                48Section
      9.8.
                Governing
      Law
                48Section
      9.9.
                Jurisdiction;
      Service of Process
                49Section
      9.10.
                Interpretation
                49Section
      9.11.
                Specific
      Performance
                49Section
      9.12.
                Severability
                49Section
      9.13.
                Counterparts
                49





STOCK
PURCHASE AND SALE AGREEMENT




THIS
STOCK PURCHASE AND SALE AGREEMENT (the “Agreement”) is made
and entered into as of the 14th day of June, 2010, by and among Hyaluron, Inc.,
a Massachusetts corporation (the “Company”), Shawn
Kinney and William A. Crider, Jr. (sometimes collectively referred to herein as
the “Sellers,”
and each, individually, as a “Seller”) and Albany
Molecular Research, Inc. (the “Buyer”).




RECITALS




A.           The
Sellers own all of the issued and outstanding shares of capital stock of the
Company (the “Stock”);
and




B.           Buyer
desires to purchase from each Seller, and each Seller desires to sell to Buyer,
the shares of Stock shown opposite of his respective name on Exhibit A
hereto;




NOW
THEREFORE, in consideration of the premises and of the mutual representations,
warranties and covenants which are to be made and performed by the respective
parties, it is agreed as follows:




Article I
-




DEFINITIONS; PURCHASE AND
SALE




Section
1.1.          Definitions .  The
following terms when used in this Agreement have the meanings set forth
below:




(a)             “Affiliate”
has the meaning set forth in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on the date of this
Agreement.




(b)             “AMRI”
means Albany Molecular Research, Inc., a Delawarecorporation.




(c)             “Business
Day” means any day on which banking institutions in New York, New York are open
for the purpose of transacting business.




(d)             “Buyer
Indemnified Parties” has the meaning set forth in Section
8.2.




(e)             “Claim”
has the meaning set forth in Section
8.3(c).




(f)             “Claim
Certificate” has the meaning set forth in Section
8.3(c).




(g)             “Closing”
has the meaning set forth in Section
1.5.




1




(h)             “Closing
Certificate” means the certificates delivered by the president of the Company
pursuant to Section
1.3(c).




(i)             
“Closing Date” has the meaning set forth in Section
1.5.




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




(k)             “Company
Services” means the custom manufacturing of products for third party commercial
customers in accordance with such customer’s specifications, and any other
related activity that the Company provides or performs, as applicable for such
customer.




(l)             “Confidential
Information” has the meaning set forth in Section
5.1(b).




(m)             “Confidentiality
Agreement” means the Confidentiality Agreement, dated September 14, 2009, by and
between the Company and AMRI.




(n)             “Contracts”
has the meaning set forth in Section
3.10.




(o)             “Copyrights”
has the meaning specified in the definition of “Intellectual
Property.”




(p)             “Customers”
has the meaning set forth in Section
3.26(a).




(q)             “Distributors”
has the meaning set forth in Section
3.26(a).




(r)             “Employee
Program” means (A) all employee benefit plans within the meaning of ERISA
Section 3(3), whether or not subject to ERISA; (B) all stock option plans, stock
purchase plans, bonus or incentive award plans, employment agreements, retention
agreements, change in control agreements, severance pay policies or agreements,
deferred compensation agreements, supplemental income arrangements, vacation
plans, and all other Employee Program, agreements, and arrangements (including
any informal arrangements) not described in (A) above; and (C) all plans or
arrangements providing compensation to directors.  In the case of an
Employee Program funded through a trust described in Code Section 401(a) or an
organization described in Code Section 501(c)(9), or any other funding vehicle,
each reference to such Employee Program shall include a reference to such trust,
organization or other vehicle.




(s)             “Enforceability
Exceptions” means (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, or other laws of general
application relating to or affecting the enforcement of creditors’ rights
generally, or (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.




(t)             “Environment”
means soil, sediment, surface waters, wetlands, groundwaters, drinking water
supplies, land, surface or subsurface strata, ambient air (including indoor
air), plant and animal life (including fish and all other aquatic life), and any
other environmental medium or natural resource.




2




(u)             “Environmental
Laws” mean all Laws relating to pollution, the protection of the Environment, or
any other environmental matters (including, without limitation, any Laws
relating to the use, storage, emission, discharge, handling, release or disposal
of any Hazardous Substance).




(v)             “Environmental
Permits” has the meaning set forth in Section
3.15(b).




(w)             “Environmental
Reports” mean any report, study, assessment, audit or other similar document or
material that addresses any issue of actual or potential non-compliance with,
actual or potential liability under or cost arising out of, or actual or
potential business impact in connection with any Environmental Law, concerning
the Company, or any property currently or formerly owned, leased, operated or
otherwise used by the Company.




(x)             “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.




(y)             “ERISA
Affiliate” means any entity that would have ever been considered a single
employer with the Company under ERISA Section 4001(b) or part of the same
“controlled group” as the Company for purposes of ERISA Section
302(d)(8)(C).




(z)             “Escrow
Agent” means Wells Fargo, N.A.




(aa)           “Escrow
Agreement” has the meaning set forth in Section
1.3(b).




(bb)          “Escrow
Amount” has the meaning set forth in Section
1.3(b).




(cc)           “FDA”
has the meaning set forth in Section
3.20(a).




(dd)          “FDCA”
has the meaning set forth in Section
3.20(b).




(ee)           “Financial
Statements” has the meaning set forth in Section 3.6(a).




(ff)            “GAAP”
means generally accepted accounting principles of the United States consistently
applied.




(gg)          “Governmental
Authority” shall mean any federal, state, commonwealth, municipal, county or
other governmental department, commission, body, organization, authority or
agency, or any court, in each case whether of the United States, any of its
possessions or territories, or of any foreign nation or
jurisdiction.




3




(hh)          “Hazardous
Substances” mean any substance or material regulated under any Environmental
Law, including (i) petroleum, asbestos or polychlorinated biphenyls, and (ii)
any waste, gas or other substance or material that is hazardous, toxic,
radioactive, explosive, or infectious, and any derivative or by-product
thereof.




(ii)             “Health
Care Law” has the meaning set forth in Section
3.20(f).




(jj)             “IRS”
means the United States Internal Revenue Service.




(kk)             “Indebtedness”
means without duplication, all obligations, contingent or otherwise, of the
Company (i) for borrowed money; (ii) evidenced by notes, bonds, debentures or
similar instruments; (iii) for the deferred purchase price of goods or services
(other than trade payables incurred in the ordinary course of business); (iv)
all liabilities under capitalized leases, conditional sale or other title
retention agreements (whether characterized as current liabilities or long-term
liabilities); (v) for reimbursement obligations, whether contingent or matured,
with respect to letters of credit (whether drawn or undrawn), bankers’
acceptances, surety bonds or interest rate cap agreements, interest rate swap
agreements, foreign currency exchange contracts or other hedging contracts; (vi)
in the nature of guarantees of the types of obligations described in (i)-(v)
above; (vii) for all accrued and unpaid interest on or any fees, premiums,
penalties or other amounts due with respect to any of the obligations described
in (i)-(vi) above; and (viii) all liabilities for reserves for any of the
foregoing.




(ll)             “Indebtedness
Amount” means aggregate amount of Indebtedness of the Company, as mutually
agreed by the Buyer and Sellers’ Representative prior to Closing in accordance
with the terms of Section 1.6
hereof.




(mm)         “Indemnified
Party” means any party making a claim for indemnification pursuant to Article
VIII.




(nn)          “Indemnifying
Party” means any party against whom a claim for indemnification is being made
pursuant to Article VIII.




(oo)          “Intellectual
Property” means any and all of the following: (i) patents, patent applications
of any kind, patent rights, inventions and invention disclosures (collectively
(“Patents”);
(ii) rights in registered and unregistered trademarks, logos, service marks and
trade names, and registrations and pending registration applications for any of
the foregoing (collectively, “Marks”); (iii)
registered and unregistered copyrights in both published and unpublished works
of authorship, including without limitation all compilations, databases and
computer programs, manuals and other documentation and all registrations and
applications for registration of any of the foregoing, and all derivatives,
translations, adaptations and combinations of the above (collectively, “Copyrights”); (iv)
internet domain names and related registrations; (v) rights in trade secrets,
know how and proprietary information, algorithms, data, designs, processes,
schematics, flow charts, models, strategies, prototypes, techniques, source
code, source code documentation, beta testing procedures and beta testing
results (collectively, “Trade Secrets”); and
(vi) any and all goodwill and other intellectual property rights and/or
proprietary rights relating to any of the foregoing.




4




(pp)          “Knowledge”
shall mean (i) in the case of the Company, the actual knowledge of any Seller,
any director, Paul Souza, Chris Paolillo, Andrea Wagner, Chris Phillips, Albert La
France, Eric Peterson and Suhe Chen,(ii) in the case of any
Seller, the actual knowledge of such Seller, and (iii) in the case of the Buyer,
the actual knowledge of Thomas D’Ambra, Mark Frost, Michael Williams and Junan
Gao.




(qq)          “Laws”
mean any common law or any code, law, ordinance, regulation, order
(administrative or other), treaty, decree, rule, statute, judgment or reporting
or licensing requirements, applicable to a Person or its assets, properties,
liabilities or business promulgated, interpreted or enforced by any Governmental
Authority.




(rr)            “Liens”
shall mean any and all liens, encumbrances, mortgages, charges, claims, pledges,
security interests, voting agreements or trusts, transfer restrictions or other
restrictions of any nature.




(ss)           “Loss”
and “Losses” have the meaning set forth in Section
8.3(b).




(tt)            “Marks”
has the meaning specified in the definition of “Intellectual
Property.”




(uu)          “Material
Adverse Effect” shall mean a material adverse effect on, or material adverse
change in, the business, assets, liabilities, condition (financial or other) and
results of operations of the Company, taken as a whole.  Material
Adverse Effect shall not include an effect or impact to the extent it results
from (A) changes in Laws of general applicability or of specific applicability
to companies in the same industry as the Company, (B) changes in GAAP, (C)
actions and omissions of the Company taken with the prior consent of Buyer in
contemplation of the transactions contemplated hereby, (D) conditions generally
affecting any industry in which the Company participates or from generally
prevailing conditions in United States or global financial markets or economies,
(E) any termination of, reduction in or similar negative impact on
relationships, contractual or otherwise, with any customers, suppliers,
distributors, partners or employees of the Company due to the announcement and
performance of this Agreement or the identity of the parties to this Agreement,
or the performance of this Agreement and the transactions contemplated hereby,
including compliance with the covenants set forth herein, (F) any outbreak or
escalation of hostilities or war or any act of terrorism, or (G) any failure by
the Company to meet its internal or published projections, budgets, plans or
forecasts of its revenues, earnings or other financial performance or results of
operations, in and of itself; provided, that with
regard to the foregoing subsections (A), (B), (D) and (F), any such effect,
impact, change, fact, event or occurrence shall, either alone or in combination,
be deemed to constitute, and shall be taken into account (including the effects
of any of the foregoing) in determining whether there has been or will be, a
“Material Adverse Effect” on or in respect of the Company if such effect,
impact, change, fact, event or occurrence has a disproportionate effect on the
Company, taken as a whole relative to similarly situated companies.




5




(vv)          “Multiemployer
Plan” means an employee pension or welfare benefit plan to which more than one
unaffiliated employer contributes and which is maintained pursuant to one or
more collective bargaining agreements.




(ww)         “Option”
with respect to any Person means any security, right, subscription, warrant,
option, “phantom” stock right or other contract that gives the right to (i)
purchase or otherwise receive or be issued any shares of capital stock or
ownership interest of such Person or any security of any kind convertible into
or exchangeable or exercisable for any shares of capital stock or ownership
interest of such Person or (ii) receive any benefits or rights similar to any
rights enjoyed by or accruing to the holder of shares of capital stock or
ownership interest of such Person, including any rights to participate in the
equity, income or election of directors or officers of such Person.




(xx)            “Partners”
has the meaning set forth in Section
3.26(a).




(yy)          “Patents”
has the meaning specified in the definition of “Intellectual
Property.”




(zz)            “Permitted
Liens” shall mean (i) statutory Liens for Taxes not yet due and payable or that
are being contested in good faith by appropriate proceedings and, in each case,
for which adequate reserves have been established in accordance with GAAP, (ii)
mechanics’, carriers’, workers’, repairers’ and other similar liens arising or
incurred in the ordinary course of business relating to obligations which are
not individually, or in the aggregate, material, and (iii) purchase money
security interests in respect of personal property arising or incurred in the
ordinary course of business.




(aaa)         “Person”
means a natural person, a partnership, a corporation, a company (limited
liability or otherwise), an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a Governmental Authority, or any
department, agency or subdivision thereof.




(bbb)        “Purchase
Price” has the meaning set forth in Section
1.3(a).




(ccc)         “Released
Causes of Action” has the meaning set forth in Section
5.5(a).




(ddd)        “Released
Parties” has the meaning set forth in Section
5.5(a).




(eee)         “Releasing
Parties” has the meaning set forth in Section
5.5(a).




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




(ggg)        “Seller’s
Fraction” means the percentage for each Seller as set forth on Exhibit
A.


6




(hhh)        
“Stock” has the meaning set forth in the Recitals.




(iii)             “Subsidiary”
means, with respect to any Person, any other Person of which more than 50% of
the securities or other ownership interests having by their terms ordinary
voting power to elect a majority of the board of directors or of other Persons
performing similar functions, or to receive more than 50% of the profits or
losses, of such other Person is directly or indirectly owned or controlled by
such Person, by one or more of such Person’s Subsidiaries (as defined in the
preceding clause) or by such Person and any one or more of such Person’s
Subsidiaries.




(jjj)             “Suppliers”
has the meaning set forth in Section
3.26(b).




(kkk)          “Taxes”
means any and all federal, state and local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including
without limitation those based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, estimated, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts.




(lll)             “Tax
Return” means any return, declaration, report, statement, information statement
or other document filed or required to be filed with respect to Taxes, including
any claims for refunds of Taxes, any information returns and any amendments or
supplements of, and any schedules or attachments to, any of the
foregoing.




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




(nnn)         “Trade
Secrets” has the meaning specified in the definition of “Intellectual
Property.”




(ooo)         “Transaction
Document” means this Agreement and each agreement, document, schedule,
certificate or other instrument executed or delivered in connection with this
Agreement.




Section
1.2.        Stock Purchase and
Sale .  Subject
to the terms and conditions set forth herein, and in reliance on the
representations and warranties of and covenants and agreements made by the
Sellers and the Company in this Agreement, at the Closing Buyer hereby agrees to
purchase and acquire from the Sellers, and each Seller hereby agrees to sell,
assign, transfer and deliver to the Buyer free and clear of all Liens, the
shares of Stock set forth opposite such Seller’s name on Exhibit A hereto
under “Seller Shares of Stock” for an aggregate cash purchase price equal to the
Purchase Price.




7


Section
1.3.         Purchase Price; Payment of Escrow
Amount, Calculation of Indebtedness




(a)             Purchase
Price.  The Buyer will pay the Sellers a total purchase price
of Twenty Three Million Seven Hundred Fifty Thousand dollars ($23,750,000) for
the Stock (the “Purchase
Price”).




(b)             Payment.  The
Purchase Price will be allocated among the Sellers pro rata in accordance with
each Seller’s Fraction.  At the Closing the Buyer shall pay the
Purchase Price by wire transfer to the Sellers, pro rata in accordance with each
Seller’s Fraction.  Simultaneous with the receipt by the Sellers of
the Purchase Price, the Sellers will cause $2,000,000 (the “Escrow Amount”) to be
paid to the Escrow Agent (and allocated pro rata to the Sellers in accordance
with each Seller’s Fraction) to be held in escrow in accordance with the terms
of an escrow agreement in the form attached hereto as Exhibit B (the “Escrow Agreement”)
until June 14, 2011 (such date, the “Termination
Date”).  The Escrow Amount shall serve as the primary source of
payment of the Sellers’ respective obligations under this Agreement and shall be
held, invested and distributed in accordance with the terms of the Escrow
Agreement.




(c)             Closing
Certificate.  Within three (3) Business Days prior to the
Closing Date, the president of the Company shall deliver to the Buyer the
Closing Certificate in the form annexed hereto as Exhibit C (the “Closing
Certificate”), which shall set forth all Indebtedness and the reasonable,
good faith estimate of the Indebtedness Amount, in each case as mutually agreed
to by the Buyer and the Sellers prior to Closing.




Section
1.4.         Delivery of Stock .  At
the Closing, each Seller will deliver to the Buyer the original certificates
executed for transfer to Buyer (or stock powers executed in blank) representing
the Stock being sold to Buyer by such Seller.




Section
1.5.         Closing .  The
closing of the transactions contemplated hereby (the “Closing”) shall take
place at 10:00 a.m. Eastern Time on the date first written above at the offices
of Goodwin Procter LLP, Boston, MA simultaneous with the execution and delivery
of this Agreement and the other documents referenced in Article VI below, or
such other date, time and place as the Buyer and the Sellers shall agree in
writing (the day on which the Closing actually takes place, the “Closing
Date”).




Section
1.6.         Payment of Debt .  Simultaneously
with and as a condition to the Closing, the Buyer shall pay the full principal
amount of, and all accrued and unpaid interest on, the Company’s Indebtedness
set forth on Schedule
1.6, such Indebtedness not to exceed $3,150,000 in the aggregate, in
accordance with any payoff letters provided by such lenders and obtain any
releases of any guarantees of the Sellers.




Section
1.7.         Tax Treatment .  For
federal income tax purposes, any payment to the Sellers of the Escrow Amount
will be treated as a payment of the deferred purchase price, eligible to be
taxed to the Sellers under the installment sale provisions of Section 453 of the
Code and any corresponding provision of foreign, state or local law, as
appropriate, and may be subject to imputation of interest under Section 483 or
Section 1274 of the Code.  Any interest and income arising from the
Escrow Amount will be paid to and included in the gross income of the
Sellers.  None of the Buyer, the Company or the Sellers shall take a
position in any Tax Return or examination or other administrative or judicial
proceeding (including any ruling request) relating to any Tax that is
inconsistent with such treatment.


8


Section
1.8.         Payment of Employee
Bonuses .  Prior
to the Closing, the Company authorized the payment of cash bonuses to certain
employees of the Company in the aggregate amount of $1,151,933.06 (the “Company Bonuses”), a
copy of which schedule has been provided to the Buyer by the
Company.  The Sellers and the Company agree that Sellers will fund
into the Company’s payroll account at the time of Closing $1,204,154.75, which
amount is equivalent to the amount of the Company Bonuses and any employer side
payroll Taxes payable by the Company on account of such Company Bonuses (such
amount in excess of the Company Bonuses, the “Bonus Tax
Amount”).  The Sellers agree to cause the Company to pay the
Company Bonuses (as reduced by any Taxes required to be withheld from such
Company Bonuses) at the time of Closing.  The parties agree that the
Company Bonuses will be treated for tax purposes as having been paid by the
Company during the period in which the Company was taxed as an S
corporation.




Article II
-




REPRESENTATIONS AND
WARRANTIES OF THE SELLERS




Each
Seller, severally and not jointly, hereby represents and warrants to the Buyer
as follows:




Section
2.1.         Seller’s Ownership of
Stock .  Such
Seller is the owner, beneficially and of record of, and has good and valid title
to and unrestricted power to vote and sell, all of the shares of Stock set forth
opposite his name on Exhibit A hereto free
and clear of any Lien.  At Closing such Seller will transfer good and
valid title to such shares of Stock to Buyer free and clear of any
Lien.




Section
2.2.         Authority of
Seller .  Such
Seller has the full right, capacity and power to enter into this Agreement and
all Transaction Documents executed and delivered by such Seller pursuant hereto
and to consummate the transactions contemplated herein and
therein.  This Agreement and all Transaction Documents executed and
delivered by such Seller pursuant hereto have been duly executed and delivered
by such Seller and constitute valid and binding obligations of such Seller,
enforceable against such Seller in accordance with their respective terms,
except (i) as the same may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to creditors’
rights generally and (ii) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be
brought.


9


Section
2.3.          No
Violation .  The
execution and delivery of this Agreement and all Transaction Documents executed
and delivered by such Seller pursuant hereto and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate or
result in a violation of, conflict with or constitute or result in a violation
of or default (whether after the giving of notice, lapse of time or both) under,
accelerate any obligation under, or give rise to a right of termination of, any
contract, agreement, obligation, permit, license or authorization to which such
Seller is a party or by which such Seller’s assets are bound; (ii) violate or
result in a violation of, or constitute a default (whether after the giving of
notice, lapse of time or both) under, any provision of any law, regulation or
rule, or any order of, or any restriction imposed by, any court or Governmental
Authority applicable to such Seller; or (iii) require from such Seller any
notice to, declaration or filing with, or consent or approval of, any
Governmental Authority or other third party.




Section
2.4.          Consents and
Approvals .  No
consent, approval or authorization of, or declaration, filing or registration
with, any Governmental Authority or third party is required to be made or
obtained by such Seller in connection with such Seller’s execution, delivery and
performance of this Agreement or the Transaction Documents or the consummation
of the transactions contemplated hereby or thereby.




Section
2.5.          Litigation .  There
are no actions, suits, proceedings or orders pending or, to any Seller’s
knowledge, threatened against or affecting such Seller, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
would adversely affect such Seller’s performance under this Agreement and the
Transaction Agreements to which such Seller is a party or the consummation of
the transactions contemplated hereby or thereby and to such Seller’s knowledge,
there is no basis known for any of the foregoing.




Section
2.6.          Brokers’, Finders’ Fees,
etc. Such
Seller has not employed any broker, finder, investment banker or financial
advisor (i) as to whom any such Seller may have any obligation to pay any
brokerage or finders’ fees, commissions or similar compensation in connection
with the transactions contemplated hereby, and (ii) who might be entitled to any
fee or commission from Buyer, the Company or any of their respective Affiliates
upon consummation of the transactions contemplated hereby.




Article III
-




REPRESENTATIONS AND
WARRANTIES OF THE COMPANY




Except as
set forth on the Disclosure Schedules, the Company hereby represents and
warrants to the Buyer the following.  The Disclosure Schedules shall
be arranged in schedules corresponding to the numbered and lettered sections and
subsections contained in this Article III, and the disclosures in any schedule
of the Disclosure Schedules shall qualify other sections and subsections in this
Article III to the extent it is readily apparent from a reading of the
disclosure that such disclosure is applicable to such other sections and
subsections.


10


Section
3.1.         Corporate Organization;
Authorization .




(a)             The
Company is duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and to own or
lease its property and assets.  The Company is duly qualified or
licensed to do business as a foreign company in good standing in each state and
territory of the United States and in each foreign jurisdiction (i) listed in
Schedule
3.1(a), and (ii) in which the conduct of its business or the ownership or
leasing of its property require such qualification, other than jurisdictions in
which the failure to so qualify would not reasonably be expected to have a
Material Adverse Effect.




(b)             The
Company has full corporate power and authority to execute and deliver this
Agreement and the Transaction Documents to which it is a party and to carry out
the transactions contemplated hereby and thereby.  The Board of
Directors and stockholders of the Company have taken all action required to
authorize the execution and delivery of this Agreement and all Transaction
Documents executed and delivered by the Company pursuant hereto, the performance
of its obligations hereunder and thereunder and the consummation of the
transactions contemplated hereby and thereby.  No other corporate
proceeding on the part of the Company is necessary to authorize the execution,
delivery and performance by the Company of this Agreement and all Transaction
Documents executed and delivered by the Company pursuant hereto.  This
Agreement and all Transaction Documents executed and delivered by the Company
pursuant hereto are valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms except (i) as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors’ rights generally
and (ii) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.




Section
3.2.          No
Violation .  The
execution and delivery of this Agreement and all Transaction Documents executed
and delivered by the Company pursuant hereto and the consummation of the
transactions contemplated hereby and thereby do not and will not (i) violate or
result in a violation of, conflict with or constitute or result in a violation
of or default (whether after the giving of notice, lapse of time or both) or
loss of benefit under any material contract or obligation to which the Company
is a party or by which its assets are bound, or any provision of the certificate
of incorporation or bylaws, or cause the creation of any Lien upon any of the
assets of the Company; (ii) materially violate, conflict with or result in a
violation of, or constitute a material default (whether after the giving of
notice, lapse of time or both) under, any provision of any law, regulation or
rule, or any order of, or any restriction imposed by, any court or Governmental
Authority applicable to the Company; or (iii) violate or result in a violation
of, or constitute a default (whether after the giving of notice, lapse of time
or both) under, accelerate any obligation under, or give rise to a right of
termination of, any material agreement, permit, license or authorization to
which the Company is a party or by which the Company is bound.




11


Section
3.3.         Consents and Approvals of
Governmental Authorities .  Except
as set forth on Schedule 3.3, the
Company is not required to submit any notice, report or other filing with any
Governmental Authority in connection with the execution or delivery by it of
this Agreement and the Transaction Documents to which the Company is a party or
the consummation of the transactions contemplated hereby or
thereby.  Except as set forth on Schedule 3.3, no
consent, approval or authorization of any governmental or regulatory authority
is required to be obtained by the Company in connection with its execution,
delivery and performance of this Agreement and the Transaction Documents to
which the Company is a party or the transactions contemplated hereby or
thereby.




Section
3.4.         Capitalization .  Schedule 3.4 sets
forth the authorized, issued and outstanding shares of capital stock of the
Company, as well as the name of the holders of record (and beneficially) of such
shares and the number of shares of capital stock of the Company owned of record
(and beneficially) by each such holder.  All issued and outstanding
shares of capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable and were offered, issued, sold and delivered in
compliance with applicable federal and state securities laws without giving rise
to preemptive rights of any kind.  Except as set forth on Schedule 3.4, there
are no other issued and outstanding shares of capital stock of the Company, or
securities or other rights convertible into or exchangeable or exercisable for
shares of capital stock of the Company, outstanding, and there are no
outstanding subscriptions, options, warrants, rights, contracts, agreements,
commitments, understandings or arrangements of any kind by which the Company is
bound to issue, sell, repurchase, redeem or otherwise acquire or retire any
additional shares of capital stock or other securities of the
Company.  None of the options, warrants, subscriptions, commitments,
agreements, arrangements or rights disclosed in Schedule 3.4 is
subject to accelerated vesting by reason of the transactions contemplated hereby
or any subsequent sale (or change in control) of the Company.  Except
as disclosed on Schedule 3.4, the
Company has not redeemed any shares of its capital stock in the past three (3)
years.  There are (i) no preemptive rights, rights of first refusal,
put or call rights or obligations or anti-dilution rights with respect to the
issuance, sale or redemption of the Company’s capital stock or any interests
therein; (ii) no rights to have the Company’s capital stock registered for sale
to the public in connection with the laws of any jurisdiction and (iii) no
documents, instruments or agreements relating to the voting of the Company’s
voting securities or restrictions on the transfer of the Company’s capital
stock.




Section
3.5.         Subsidiaries and
Affiliates .  Except
as set forth on Schedule 3.4 or Schedule 3.5, the
Company does not own any capital stock or other equity securities of any other
corporation or has any other type of interest (whether ownership or other) in
any other corporation, partnership, limited liability company, joint venture or
other business organization or entity.  Except as set forth on Schedule 3.5, the
interests of the Company in any Person as set forth on Schedule 3.4 or Schedule 3.5 are
owned by the Company free and clear of all Liens with respect to the ownership
thereof.  The Company is not subject to any obligation or requirement
to make any investment (in the form of a loan or capital contribution) in any
Person, except as set forth on Schedule
3.5.


12


Section
3.6.         Financial
Statements .




(a)             The
Company has previously delivered to the Buyer and attached hereto in Schedule 3.6(a) an
accurate and complete copy of the audited balance sheet of the Company at
December 31, 2009, December 31, 2008 and December 31, 2007 (collectively, the
“Company Audited
Balance Sheets”) and the related audited statements of operations,
changes in stockholders’ equity and cash flows for the periods and years then
ended, together with a report thereon by the independent certified public
accountants of the Company (together with the Company Audited Balance Sheets,
the “Company Financial
Statements”).  The Company Financial Statements present fairly,
in all material respects, the financial position of the Company at the date
thereof, and the results of operations, changes in stockholders’ equity and cash
flows of the Company for the period indicated, were prepared in conformity with
GAAP and are consistent with the books and records of the
Company.  The audited and unaudited financial statements referred to
in this Section
3.6(a) and in Section 3.6(b) are
sometimes referred to as the “Financial
Statements.”




(b)             Set
forth on Schedule
3.6(b) is a true and correct copy of: (i) the unaudited balance sheet of
the Company at April 30, 2010 (the “Company Interim Balance
Sheet”) and the related unaudited statements of operations, changes in
stockholders’ equity and cash flows for the four (4) months then ended (together
with the Company Interim Balance Sheet, the “Company Interim Financial
Statements”).  The Company Interim Financial Statements present
fairly, in all material respects, the financial position of the Company, at the
date thereof, and the results of operations, changes in stockholders’ equity and
cash flows for the period indicated, were prepared in conformity with GAAP
(without footnotes) and are consistent with the books and records of the
Company, subject to normal or recurring year-end adjustments.




Section
3.7.          Absence of Certain
Changes .  Except
as set forth on Schedule 3.7, since
December 31, 2009 and through the date hereof, the Company has conducted its
business only in ordinary course and there has not been:




(a)             to
the Company’s Knowledge, any event or condition, or series of events or
conditions, whether or not arising in the ordinary course of business, which has
had or could reasonably be expected to have a Material Adverse
Effect;




(b)             except
for increases in the ordinary course of business and in accordance with past
practice, any general increase in the compensation of officers or employees of
the Company (including any such increase pursuant to any Benefit Plan) or any
increase in the compensation payable or to become payable to any officer or
employee of the Company;




(c)             any
change in accounting or Tax reporting, policies, practices or methods; any
change in any income Tax election; settlement or compromise of any material Tax
claim or liability; any binding agreement with a Governmental Authority relating
to Taxes; or the filing of any material amended Tax Return of the
Company;


13


(d)             (i)
any purchase, sale, transfer or other disposition (or agreement to purchase,
sell, transfer or dispose) of any fixed assets of the Company and occurring in
the ordinary course in excess of $50,000, (ii) any damage, destruction or loss
with respect to the property and assets of the Company, whether or not covered
by insurance, having a replacement value in excess of $50,000, or (iii) any
sale, assignment, transfer or other disposition of any of the Company’s patents,
trademarks, trade names, copyrights, licenses or other intangible
assets;




(e)             any
loans, advances or capital contributions, investments or obligations incurred by
the Company to or in any Person, or payment of any fees or expenses to a Seller
or any Affiliate of any Seller other than the advancement of travel and similar
expenses in the ordinary course of business;




(f)         
    any declaration, setting aside, making or paying of any
dividend or other distribution or payment in respect of its capital stock or any
direct or indirect redemption, purchase or other acquisition of any shares of
the capital stock or other securities of, or other ownership interest in, the
Company;




(g)             any
mortgage, lien or other encumbrance placed on any of the properties of the
Company, other than any Permitted Lien;




(h)             any
labor trouble or claim of unfair labor practices involving the
Company;




(i)    
         any resignation,
termination or removal of any officer or employee of the Company or material
loss of personnel of the Company or material change in the terms and conditions
of the employment of the Company’s officers or key personnel;




(j)       
      any payment or discharge of a material Lien
or liability of the Company which was not shown on the Audited Balance Sheet of
the Company or incurred in the ordinary course of business by the Company
thereafter;




(k)             any
contingent liability incurred by the Company as guarantor or otherwise with
respect to the obligations of others, other than the endorsement of checks and
entering into indemnification obligations with respect to Company Services in
the ordinary course of business (which are generally described in Schedule 3.7(k)),
or any cancellation of any material debt or claim owing to, or waiver of any
material right of, the Company, including any write-off or compromise of any
accounts receivable, other than in the ordinary course of business consistent
with past practice;




(l)           
  any amendment (other than in the ordinary course of business) or
termination of any material Contract to which the Company is a
party;




(m)            any
other material transaction entered into by the Company other than (i)
transactions entered into in the ordinary course of business consistent with
past practice, and (ii) the Letter of Intent by and between the Buyer and the
Company dated May 5, 2010, and all related transactions; and this
Agreement


14


(n)             any
agreement or understanding whether in writing or otherwise, for the Company to
take any of the actions specified in paragraphs (a) through (m)
above.




Section
3.8.         Title to Properties;
Encumbrances .




(a)        
     Schedule 3.8(a)
hereto lists all real properties and interests therein owned or leased by the
Company as of the date hereof.




(b)             Except
as set forth in Schedule 3.8(b), the
Company has good, valid and marketable title to each of its owned real
properties listed in Schedule 3.8(a), has
good, valid and marketable leasehold title to each of its leased real properties
listed in Schedule
3.8(a) and has good, valid and marketable title to all tangible personal
property shown as owned by the Company on its books and records, free and clear
of all Liens, except for Permitted Liens.




(c)             With
respect to each parcel of real property owned by the Company, (i) there are no
leases, subleases, licenses, or other agreements granting to any party or
parties the right of use or occupancy of any portion of the parcel of real
property; (ii) there are no pending or, to the Knowledge of the Company,
threatened condemnation proceedings against such parcel before any Governmental
Authority; (iii) there are no outstanding options or rights of first refusal to
purchase the parcel of real property, or any portion thereof; and (iv) there are
no parties (other than the Company) in possession of any such parcel of real
property; and




(d)             With
respect to real property leased or subleased by the Company, (i) each lease or
sublease is in full force and effect as of the date hereof and affords the
Company peaceful and undisturbed possession of the subject matter to the lease
or sublease; and (ii) the Company is not and, to the Knowledge of the Company,
no other party to such leases or subleases is in breach or default or has
repudiated any material provision thereof.




Section
3.9.         Intellectual
Property




(a) 
            Schedule 3.9(a)
contains a complete and accurate list of all (i) issued patents, patent
applications and other material Patents owned, used or held for use by the
Company in the operation of its business, (ii) registered and material
unregistered Marks owned, used or held for use by the Company in the operation
of its business, (iii) registered and material unregistered Copyrights owned,
used or held for use by the Company in the operation of its business (other than
commercial off the shelf software), (iv) licenses, sublicenses or other similar
agreements under which the Company is granted rights by a third party in such
third party’s Intellectual Property(“Licenses In”) (other
than commercial off the shelf software which is made available for a total cost
of less than $25,000), and (v) licenses, sublicenses or other similar agreements
under which the Company has granted rights to a third party in Intellectual
Property (“Licenses
Out”) (other than customer agreements entered into in the ordinary course
of business, substantially in the form of the Company’s form of customer
agreement, copies of which have been provided to the Buyer).   In
the case of any license, sublicense or other similar agreement disclosed
pursuant to the foregoing clauses (iv) or (v), Schedule 3.9(a) also
sets forth whether each such license, sublicense or other similar agreement is
exclusive or non-exclusive.




15


(b)             All
Patents, Marks and Copyrights owned by or exclusively licensed to the Company
that have been issued by, or registered or the subject of an application filed
with, as applicable, the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency anywhere in the world,
have been duly maintained (including the payment of maintenance fees) and are
not expired, cancelled or abandoned, except for such issuances, registrations or
applications that the Company has permitted to expire or has cancelled or
abandoned in its reasonable business judgment.  To the Knowledge of
the Company, such Patents, Marks and Copyrights are valid and
enforceable.




(c)             Except
as set forth on Schedule 3.9(c), the
Company exclusively owns or has adequate rights to use pursuant to license,
sublicense, agreement or permission, without payment to any other Person, all
Intellectual Property used in the operation of the business of the Company, as
presently conducted, except where the failure to have such rights would not
reasonably be expected to have a Material Adverse Effect on the
Company.




(d)             Except
as set forth on Schedule 3.9(d), (i)
neither the operation of the business, nor any activity by the Company, is
infringing upon or misappropriating any (A) Intellectual Property of any Person,
other than the rights of any Person under any Patent, and (B) to the Knowledge
of the Company, the rights of any Person under any Patent, (ii) except as set
forth on Schedule
3.11(a), as of the date of this Agreement, there are no pending, nor has
the Company received from any Person in the past twelve months any written
notice of any, charges, complaints, claims or other written assertions against
the Company or any of their employees of any infringement or misappropriation of
any Intellectual Property of any Person.




(e)             To
the Knowledge of the Company, there is no, nor has there been any, infringement
or misappropriation by any Person of any of the Intellectual Property owned by
or exclusively licensed to the Company or the Company’s rights therein or
thereto.




(f)      
       Except as set forth on Schedule 3.9(f) and
except for Licenses In and except for commercial off the shelf software, the
Company does not have any obligation to compensate any Person for the use of any
Intellectual Property. Other than pursuant to customer agreements entered into
in the ordinary course of business, substantially in the form of the Company’s
form of customer agreement, copies of which have been provided to the Buyer, the
Company has not entered into any agreement to indemnify any other Person against
any claim of infringement or misappropriation of any Intellectual
Property.


16


(g)             All
former and current employees, consultants and contractors of the Company who
have contributed to the development, improvement or discovery of any
Intellectual Property purported to be owned by the Company, or the subject
matter of such Intellectual Property, have executed written instruments with the
Company that assign to the Company all rights, title and interest in and to any
and all (A) inventions, improvements, discoveries, writings and other works of
authorship, and information relating to the business of the Company and (B)
Intellectual Property relating thereto.




(h)             The
Company has taken all commercially reasonable measures to protect the secrecy,
confidentiality and value of all material Trade Secrets included in the Company
Intellectual Property, including, without limitation, requiring each employee
and consultant of the Company and any other Person with access to such Trade
Secrets to execute a binding confidentiality agreement.




(i)         
    To the Knowledge of the Company, the Company Services,
as applicable, do not contain any “viruses,” “worms,” “time bombs,” “key-locks,”
or any other devices intentionally created that could disrupt or interfere with
the operation of the equipment, or the integrity of the data, information or
signals the Company Services, as applicable, produce in a manner adverse to the
Company or any customer of the Company.




(j)       
      To the Knowledge of the Company, the Company
has complied, in all material respects, with all applicable Laws and its
publicly available privacy policy (if any) relating to the collection, storage,
use and onward transfer of any and all personally identifiable information
collected by the Company or by third parties having authorized access to the
Company’s databases or other records.




Section
3.10.       Material
Contracts .  Schedule 3.10 lists
all agreements, contracts and commitments (or groups of related agreements,
contracts and commitments with the same party) (“Contracts”), to which
the Company is a party (i) which involves consideration to be paid or received
from and after the date hereof in excess of $50,000; (ii) with any Seller or
Affiliate thereof or any officer, employee or director of the Company; (iii)
which constitute or evidence Indebtedness; (iv) which constitute a guaranty; (v)
that is a collective bargaining agreement or other agreement with any labor
union, employment agreement or severance agreement; (vi) that is a partnership,
joint venture, limited liability company or other similar agreement; (vii)
entered into within the past three (3) years that relates to the acquisition or
sale of any business or Person or substantially all of the assets of any
business or Person (whether by merger, sale of stock, sale of assets or
otherwise); (viii) that evidences a license, distribution, development,
purchase, sale or service arrangement with respect to any Intellectual Property
(other than licenses for non-customized, off-the-shelf software products which
was purchased for a total cost of less than $25,000); (ix) that is a material
agency, sales representative, marketing or other similar Contract, including any
royalty arrangement; (x) that limits the freedom of the Company or any Affiliate
thereof to compete in any line of business or with any Person or in any area;
(xi) that is a lease, rental agreement, installment or conditional sale
agreement or other Contract or arrangement affecting the ownership, leasing of,
title to or any leasehold interest in, any real or material personal property;
(xii) that is not cancelable by the Company without penalty on not less than
ninety (90) days notice; (xiii) that is a Benefit Plan; (xiv) that involves any
Governmental Authority; (xv) relating to any redemption or repurchase of or
otherwise affecting or relating to any capital stock or other securities of the
Company; or (xvi) that requires payment to any Person, or has acceleration
provisions of any other term therein, that is triggered or related to the
transactions contemplated by this Agreement.  Each Contract set forth
on Schedule
3.10 is in full force and effect and is the legal, valid and binding
obligation of the Company, and to the Knowledge of the Company, of the other
parties thereto, and, to the Knowledge of the Company, each such Contract is
enforceable in accordance with its respective terms subject to the
Enforceability Exceptions; (ii) the Company has made available to the Buyer or
its counsel true and complete copies of all Contracts set forth on Schedule 3.10;
(iii) the Company has performed in all material respects all the
obligations required to be performed by it in connection with the Contracts as
of the date hereof and is not in material default or in receipt of any written
claim of material default under any such Contract; and (iv) to the Knowledge of
the Company, no such Contract has been materially breached or canceled by the
other party thereto and the Company has not received any written notice of any
material default thereunder, or any written notice or written threat to
terminate such Contract, from the other party thereto.


17


Section
3.11.       Litigation; Compliance with
Laws .




(a)             Except
as set forth on Schedule 3.11(a),
there is no litigation or governmental or administrative proceeding pending or,
to the Knowledge of the Company, threatened against the Company, or, as to
matters related to the Company, to the Knowledge of the Company, against any
officer, director, stockholder or key employee of the Company in their
respective capacities in such positions, nor, to the Knowledge of the Company,
is there any investigation pending or threatened, against any of the
foregoing.  There are no unsatisfied judgments or other orders against
the Company to which the Company is a named party.  Schedule 3.11(a)
includes a description of all litigation, claims, proceedings or, to the
Company’s Knowledge, investigations involving the Company or any of its
respective officers, directors, stockholders or key employees in connection with
the business of the Company occurring, arising or existing during the past three
(3) years.




(b)             The
Company is, and has been, in (i) compliance with its articles of organization
and bylaws and (ii) compliance with applicable Laws in all material
respects.




(c)             The
Company possesses and is in material compliance with all permits, licenses,
certificates, franchises and other authorizations necessary to conduct the
Company’s business as presently conducted and to use the real property currently
owned or leased by the Company.




(d)             Error! Reference source not
found. and Section 3.11(c) do
not apply to matters which are covered by Section 3.13 (Benefit
Plans; ERISA), Section
3.15 (Environmental Matters), Section 3.12 (Taxes),
Section 3.20
(Regulatory Matters), Section 3.28 (Illegal
Payments); and Section
3.24 (Privacy of Customer Information).




(e)             Except
as set forth in Schedule 3.11(e),
during the three (3) years preceding the date hereof, the Company has not
conducted any internal investigation for any actual or an alleged violation of
Law by the Company or any officer, director or agent of the Company acting in
his capacity as an officer, director or agent of the Company.


18


(f)             During
the past three (3) years, the Company has not entered into or been subject to
any judgment, consent decree, compliance order or administrative order with
respect to any aspect of the business, affairs, properties or assets of the
Company or received any request for information, notice, demand letter,
administrative inquiry or formal or informal complaint or claim from any
regulatory agency with respect to any aspect of the business, affairs,
properties or assets of the Company.




Section
3.12.       Taxes .




(a)             All
federal, state, local, and foreign Tax Returns required to be filed by or on
behalf of the Company have been duly and timely filed.  All such Tax
Returns are correct and complete in all material respects and were prepared in
substantial compliance with all applicable Laws.  All Taxes due and
owing by the Company (whether or not shown on any Tax Return) have been paid in
full.  Adequate provision has been made in the Company Financial
Statements and the Company Interim Financial Statements (subject to normal year
end adjustments), in accordance with GAAP, for all Taxes of the Company that are
not yet due and payable, other than on Taxes related to the transactions
contemplated by this Agreement.  Except as set forth on Schedule 3.12(a), the
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return.  The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency (other than as a result of filing a Tax Return
by its extended due date).  No claim has ever been made or threatened
by a Governmental Authority in a jurisdiction where the Company does not file
Tax Returns claiming that the Company is or may be subject to taxation by that
jurisdiction.  There are no Liens for Taxes (other than Taxes not yet
due and payable) upon any of the assets of the Company.  The Company
is and always has been an accrual method taxpayer.  The Company will
not be required to include any item of income in, or exclude any deduction from,
taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of any (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date, (ii) installment sale or open
transaction disposition made on or prior to the Closing Date, or (iii) prepaid
amount received on or prior to the Closing Date, (iv) “closing agreement” as
defined in Section 7121 of the Code (or any corresponding or similar provision
of state, local, or foreign income tax law) of which the Company is a party
executed on or prior to the Closing Date, or (v) election under Section 108(i)
of the Code (or any similar provision of any state, local, or foreign
law).




(b)             The
Company has withheld and paid all material amounts of Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee or independent contractor.


19


(c)             No
Governmental Authority has proposed (tentatively or definitely), asserted or
assessed or, to the Knowledge of the Company, threatened to propose or assert or
assess any deficiency, assessment or claim for Taxes with respect to the Company
and, to the Knowledge of the Company, there is no basis for any such proposal,
assertion or assessment.  The Company has delivered or made available
to Buyer correct and complete copies of all Tax Returns, examination reports,
and statements of deficiencies assessed against or agreed to by the Company
filed or received since January 1, 2000.




(d)             The
Company does not have, and has never had, any interest in any trust,
partnership, corporation, LLC, or other business entity, other than Hyaluron
LLC, a Delaware limited liability company (“Hyaluron LLC”), which
is wholly owned by the Company and which the Company is in the process of
dissolving.  Hyaluron LLC is and has been at all times since its
formation a disregarded entity for U.S. federal and applicable state income tax
purposes.  Hyaluron LLC does not have, and has never had, any assets
and does not engage, and has never engaged, in any activities.




(e)             The
Company (A) has not ever been a member of an Affiliated Group filing a combined,
consolidated, or unitary Tax Return or (B) has no liability for the Taxes of any
Person under Treasury Regulation § 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.




(f)          
   The Company is not nor has been a party to any Tax sharing
agreement or arrangement.




(g)             Neither
the Company nor the Sellers are foreign persons within the meaning of Code
Section 1445.




(h)             There
is no contract, agreement, plan or arrangement covering any employee of the
Company which could give rise to the payment by the Company of any amount that
would not be deductible by reason of Code Section 280G or Code
Section 162(m).




(i)        
     Neither the Company nor any of its Subsidiaries
has entered into a “reportable transaction” that has given rise to a disclosure
obligation under Section 6011 of the Code and the Treasury Regulations
promulgated thereunder and that has not been disclosed in the relevant Tax
Return of the Company or the relevant Subsidiary.




(j)       
      The Company has not ever been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Code.




(k)     
        The Company has not ever
distributed stock, or has had its own stock distributed, in a transaction that
was purported or intended to be governed in whole or in part by Section 355 or
Section 361 of the Code.




(l)     
        The Company (and any
predecessor) has been a validly electing S corporation within the meaning of
Sections 1361 and 1362 of the Code at all times during its
existence.  If a §338(h)(10) Election is made in accordance with Section 5.2(a)
hereof, the Company will be an S corporation up to and including the Closing
Date, and if no such election is made, the Company will be an S Corporation up
to and including the day before the Closing Date (such applicable date is
referred to herein as the “Effective Tax Closing
Date”).


20


(m)             If
a §338(h)(10) Election is made in accordance with Section 5.2(a)
hereof, the Company will not be liable for any Tax under Section 1374 of the
Code or any comparable built-in gains tax payable to The Commonwealth of
Massachusetts (“MA
Gains Tax”) in connection with the deemed sale of the Company’s assets
caused by such election.  The Company has not, in the past 10 years,
(A) acquired assets from another corporation in a transaction in which the
Company’s, or any qualified subchapter S subsidiary of the Company’s, Tax basis
for the acquired assets was determined, in whole or in part, by reference to the
Tax basis of the acquired assets (or any other property) in the hands of the
transferor or (B) acquired the stock of any corporation that is a qualified
subchapter S subsidiary.




Section
3.13.       Benefit Plans;
ERISA .




(a)             Schedule 3.13(a) sets
forth a list of every Employee Program that is sponsored, maintained or
contributed to by the Company or an ERISA Affiliate.




(b)             Each
Employee Program that has been intended to qualify under Section 401(a) or
501(c)(9) of the Code has received a favorable determination or approval letter
from the IRS regarding its qualification under such section and has, in fact, to
the Company’s Knowledge, been qualified under the applicable section of the Code
from the effective date of such Employee Program through and including the
Closing Date.  To the Company’s Knowledge, no event or omission has
occurred that would cause any Employee Program to lose its tax
qualification.  Each asset held under any Employee Program may be
liquidated or terminated without the imposition of any redemption fee, surrender
charge or comparable liability.  No partial termination (within the
meaning of Section 411(d)(3) of the Code) has occurred with respect to any
Employee Program.




(c)             With
respect to each Employee Program, there has been no (i) “prohibited transaction”
as defined in Section 406 of ERISA or Code Section 4975, (ii) failure to comply
with any provision of ERISA, the Code, applicable securities laws, other
applicable Law, or any agreement, or (iii)  non-deductible
contribution, which, in the case of any of (i), (ii), or (iii), could subject
the Company or any ERISA Affiliate or the Buyer to any material liability either
directly or indirectly.  No litigation or governmental administrative
proceeding (or investigation) or other proceeding (other than those relating to
routine claims for benefits) is pending or, to the Company’s Knowledge,
threatened with respect to any Employee Program.  All payments and/or
contributions required to have been made with respect to all Employee Programs,
for all periods prior to the Closing Date, have been made.




(d)             Neither
the Company nor any ERISA Affiliate has ever maintained an Employee Program that
is or was subject to Title IV of ERISA.  Neither the Company nor any
Affiliate has ever maintained a Multiemployer Plan.  None of the
Employee Programs has ever provided any post-employment non-pension benefits
(other than as required by part 6 of subtitle B of title I of ERISA) or has ever
promised to provide such post-termination benefits.


21


(e)             With
respect to each current Employee Program, complete and correct copies of the
following documents (if applicable to such Employee Program) have previously
been delivered to Buyer:  (i) all documents embodying or governing
such Employee Program, and any funding medium for the Employee Program
(including, without limitation, trust agreements) as they may have been amended
to the date hereof; (ii) the most recent IRS determination or approval letter
with respect to any Employee Program qualified under Code Section 401(a) or
501(c)(9), and any applications for determination or approval subsequently filed
with the IRS; (iii) the most recently filed IRS Forms 5500, with all applicable
schedules and accountants’ opinions attached thereto; (iv) the most recent
actuarial valuation reports completed with respect to such Employee Program; (v)
the summary plan description for such Employee Program (or other descriptions of
such Employee Program provided to employees) and all modifications thereto; (vi)
any insurance policy (including any fiduciary liability insurance policy or
fidelity bond) related to such Employee Program; (vii) any registration
statement or other filing made pursuant to any federal or state securities law
and (viii) all material correspondence to and from any state or federal agency
within the last three years with respect to such Employee Program.




(f)        
     To the Knowledge of the Company, there is no
Employee Program or other contract between the Company or any Affiliate and any
“service provider” (as such term is defined in Section 409A of the Code and the
regulations and IRS guidance thereunder) that provides for the deferral of
compensation that is not in compliance in all material respects with Section
409A of the Code.




(g)             Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby could (either alone or in conjunction with any
other event) (i) result in, or cause the accelerated vesting payment, funding or
delivery of, or increase the amount or value of, any payment or benefit to any
employee, officer, director or other service provider of the Company or any of
its Affiliates; or (ii) limit the right of the Company or any of its Affiliates
to amend, merge, terminate or receive a reversion of assets from any Employee
Program or related trust.




Section
3.14. Employees;
Labor Relations.




(a)           The
Company has made available to the Buyer a complete list of the name of each
officer and employee of the Company, together with each such person’s position
or function, annual base salary or wages and any incentive or bonus arrangement
with respect to such person.  The Company is not delinquent in
payments to any of its employees for any wages, salaries, commissions, bonuses
or other direct compensation for any services performed for the Company or
amounts required to be reimbursed to such employees.  No labor union
or any representative thereof represents, or to the Knowledge of the Company has
made any attempt to organize or represent, employees of the
Company.  To the Company’s Knowledge, there are no unfair labor
practice charges, pending claims or actions with respect to unfair labor
practice charges, pending grievance proceedings or adverse decisions of a Trial
Examiner of the National Labor Relations Board against the
Company.  There are no strikes or lockouts or work stoppages or
slowdowns pending or, to the Knowledge of the Company, threatened against the
Company.  Except as set forth on Schedule 3.14(a), no
officer or key employee of the Company, to the Knowledge of the Company, has any
plan or intention to terminate his or her employment.


22


(b)           Except
as set forth on Schedule 3.14(a), (i)
the Company is in compliance in all material respects with all applicable Laws
and regulations respecting labor, employment, fair employment practices, work
place safety and health, terms and conditions of employment, wages and hours;
(ii) the Company is not delinquent in any payments to any employee for any
wages, salaries, commissions, bonuses, fees or other direct compensation due
with respect to any services performed for it or amounts required to be
reimbursed to such employees or Contingent Workers; (iii) there are no, and
within the last three years there have been no, formal or informal grievances,
complaints or charges with respect to employment or labor matters (including
allegations of employment discrimination, retaliation or unfair labor practices)
pending or threatened against the Company in any judicial, regulatory or
administrative forum, under any private dispute resolution procedure or
internally; (iv) none of the employment policies or practices of the Company is
currently being audited or investigated or, to the Knowledge of the Company,
subject to imminent audit or investigation by any Governmental Authority; (v)
none of the Company or, to the Knowledge of the Company, any of its officers or
senior managers, is, or within the last three years has been, subject to any
order, decree, injunction or judgment by any Governmental Authority or private
settlement contract in respect of any labor or employment matters; (vi) the
Company is in material compliance with the requirements of the Immigration
Reform Control Act of 1986; and (vii) all employees are employed at-will and no
employee is subject to any contract with the Company.




Section
3.15. Environmental
Matters.




(a)             To
the Knowledge of the Company, the Company is and has been, in compliance in all
material respects with all applicable Environmental Laws.




(b)             Except
as set forth on Schedule 3.15, the
Company possesses and is in compliance in all material respects with all
material permits, licenses, approvals, registrations, certificates, franchises
and other authorizations required under Environmental Laws to conduct the
Company’s business (“Environmental
Permits”).  Except as set forth on Schedule 3.15, to the
Knowledge of the Company all Environmental Permits are in full force and
effect.




(c)             Except
as set forth on Schedule 3.15, the
Company has not received any request for information, complaint, demand,
administrative inquiry, notice of claim, notice of responsibility, notice of
violation, notice of intent to bring a “citizens suit” under any Environmental
Laws, or other such written notification under an Environmental Law indicating
that it is or may be liable or held responsible under Environmental Laws, and
there is no civil, administrative, or criminal proceeding pending or to the
Knowledge of the Company threatened against the Company under any Environmental
Laws.


23


(d)             Except
as set forth on Schedule 3.15, the
operations of the Company have not resulted in any material release (which is
defined as an amount or concentration in excess of any amount or concentration
prescribed, permitted, or required to be reported under Environmental Laws or
that requires any investigation, remediation, or other response action pursuant
to any Environmental Laws) of Hazardous Substances on (i) any real property now
or formerly owned, operated or leased by the Company or (ii) any other property
to which the Company has transported or disposed of, or allowed or arranged for
any third party to transport or dispose of, wastes.




(e)             Except
as set forth on Schedule 3.15, the
Company does not own or operate any underground storage tanks regulated under
Environmental Laws.  Except as set forth on Schedule 3.15, to the
Knowledge of the Company, no polychlorinated biphenyls (“PCBs”) or equipment
containing PCBs are present at any real property now owned, operated or leased
by the Company.




(f)             The
Company has made available to the Buyer or its counsel true and complete copies
of all Environmental Reports that are in the possession or control of the
Company.




Section
3.16.  Brokers’, Finders’ Fees,
etc. The
Company has not employed any broker, finder, investment banker or financial
advisor (i) as to whom the Company may have any obligation to pay any brokerage
or finders’ fees, commissions or similar compensation in connection with the
transactions contemplated hereby, and (ii) who might be entitled to any fee or
commission from Buyer, the Company or any of their respective Affiliates upon
consummation of the transactions contemplated hereby.




Section 3.17. Affiliate
Transactions .  Except
as disclosed on Schedule 3.17,
neither the Sellers nor any present employee, officer or director of the Company
or any person related by blood or marriage to any of the foregoing or any entity
in which any such person owns any outstanding equity interest in the Company, is
a party to any agreement, lease, loan, contract, commitment or transaction with
the Company or which is pertaining to the business of the Company or has any
interest in any property, real or personal or mixed, tangible or intangible,
used in or pertaining to the business of the Company.  No stockholder,
director, officer or employee of the Company, or to the Knowledge of the Company
any of their respective spouses or family members, owns directly or indirectly,
on an individual or joint basis, any interest in, or serves as an officer or
director or in another similar capacity of, any competitor, customer or supplier
of the Company, or any organization which has a contract or agreement with the
Company.


24


Section
3.18. 
Insurance .  Schedule 3.18
contains a true and complete list (including the names and addresses of the
insurers, the expiration dates thereof, and a brief description of the interests
insured thereby) of all liability, property, workers’ compensation, directors’
and officers’ liability and other insurance policies currently in effect that
insure the business, operations or employees of the Company or affect or relate
to the ownership, use or operation of any of the assets or properties of the
Company and that have been issued to the Company. The insurance coverage
provided by the policies described herein will not terminate or lapse by reason
of the transactions contemplated by this Agreement or the other Transaction
Documents.  Each policy listed on Schedule 3.18 is
valid and binding and in full force and effect, no premiums due thereunder have
not been paid and the Company has not received any notice of cancellation or
termination in respect of any such policy or is in default
thereunder.  Schedule 3.18 sets
forth a complete and accurate list of all claims in excess of $25,000 made by
the Company under the policies and binders described on Schedule 3.18 since
January 1, 2007.  Except as set forth in the Disclosure Schedules,
such insurance policies are sufficient for compliance with all legal
requirements and material contracts to which the Company is a party or by which
the Company is bound  Other than in connection with renewals in the
ordinary course of business, since December 31, 2006, the Company has not
received (i) any refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (ii) any notice of cancellation or any
other indication that any insurance policy is no longer in full force or effect
or will not be renewed or that the issuer of any policy is not willing or able
to perform its obligations thereunder.




Section
3.19. Bank Accounts .  Schedule 3.19 sets
forth (a) a true and complete list of the names and locations of all banks,
trust companies, securities brokers and other financial institutions at which
the Company has an account or safe deposit box or maintains a banking,
custodial, trading or other similar relationship; and (b) a true and complete
list and description of each such account, box and relationship, indicating in
each case the account number and the names of the respective officers,
employees, agents or other similar representatives of the Company having
signatory power with respect thereto.




Section 3.20. Regulatory
Matters .  Except
as disclosed in Schedule
3.20:




(a)           To
the Knowledge of the Company, the Company has not, in the previous five (5)
years, received any written notification from any U.S. Governmental Authority
that regulates the Company Services that the Company is not in compliance in all
material respects with all Laws promulgated, interpreted or enforced by such
Governmental Authority applicable to the provision of the Company Services and
the Company’s activities, including, without limitation product testing, custom
manufacturing, labeling, and storage (including any Laws applicable to the
Company Services administered by the United States Food and Drug Administration
(“FDA”), the
applicable requirements of the Public Health Service Act, the Federal Food,
Drug, and Cosmetic Act (“FDCA”), and
implementing FDA regulations, including, but not limited to, regulations
relating to registration, listing,  labeling and manufacturing
requirements, and similar Laws from other jurisdictions, all to the extent
applicable to any Company Service).




(b)           The
Company has not received any written communication in the previous two years
from any non-U.S. Governmental Authority regarding any Company Services not
being in compliance with the Laws of such Governmental Authority.  The
Company is not and has not been subject to any obligation or requirement arising
under any consent decree, consent agreement, or warning letter issued by or
entered into with the FDA or any other Governmental Authority or other notice,
response or commitment made to the FDA or any other Governmental
Authority.


25


(c)           The
Company has made available to Buyer for inspection at the Company’s office true,
correct and complete copies of all of the following which the Company has in its
possession:  (i) all written customer complaints relating to any
Company Services, and all adverse event reports filed with the FDA within the
last five (5) years, and all comparable adverse event reports from outside the
United States, (ii) all warning letters, untitled letters, regulatory letters,
notices of inspectional observations (Form FDA 483s), establishment inspection
reports (EIRs) or similar notices, or other correspondence relating to any
Company Service or the Company’s compliance with Laws from the FDA or any other
Governmental Authority and all of the Company’s responses thereto within the
last five (5) years; (iii) all correspondence, meeting notes or minutes, or
related documents concerning material communications between the FDA or any
other Governmental Authority and the Company within the last five (5) years;
(iv) all management review reports and management/executive meeting minutes
within the last five (5) years; (v) all written reports of Good Manufacturing
Practices audits of the Company and their suppliers in the Company’s possession
or control, including any documents related to audits or reviews conducted by a
customer of the Company within the last five (5) years.




(d)           Since
January 1, 2005, to the Company’s Knowledge, no product produced by the Company
has been associated with or related to a recall, field notification, field
correction or removal, or safety alert (whether voluntary or otherwise), and no
proceedings have occurred (whether completed or pending) seeking to recall,
correct or remove, issue a field notification or safety alert, re-label,
suspend, detain, seize, or enjoin the production of, any product where such
action is associated with or related to a product produced by the
Company.  To the Company’s Knowledge, there are no facts or
circumstances that are reasonably likely to cause any recall, field
notification, field correction or removal, safety alert, relabeling, suspension,
detention, seizure, or injunction related to any product where such action may
be associated with or related to any of the Company’s Services.




(e)      
     The Company has not introduced or caused to be
introduced into commercial distribution any products which upon their shipment
by the Company were known by the Company to be adulterated or
misbranded.




(f)             Neither
the Company nor, to the Knowledge of the Company, any director,
officer,  employee, or agent specifically authorized to act on behalf
of the Company thereof, has committed any act, made any statement or failed to
make any statement that would reasonably be expected to provide a basis for the
FDA to invoke its policy with respect to “Fraud, Untrue Statements of Material
Facts, Bribery, and Illegal Gratuities,” as set forth in 56 Fed. Reg. 46191
(Sept. 10, 1991) and any amendments thereto, or, to the Knowledge of the
Company, for any other Governmental Authority to take action against the Company
for any similar integrity issue.  Neither the Company nor, to the
Knowledge of the Company, any director, officer, or employee thereof, has
engaged in any activity prohibited under U.S. federal or state or foreign
criminal or civil health care laws (including without limitation the U.S.
federal Anti-Kickback Statute, Stark Law, False Claims Act, Health Insurance
Portability and Accountability Act, and any comparable state laws), or the
regulations promulgated pursuant to such laws (each, a “Health Care
Law”).  There is no civil, criminal, administrative or other
proceeding, notice or demand pending, received or, to the Knowledge of the
Company, threatened against the Company, any director, officer, or employee
thereof, that relates to an alleged violation of any Health Care
Law.  Neither the Company nor, to the Knowledge of the Company, any
director, officer, or employee thereof, has been convicted of any crime or
engaged in any conduct for which debarment is mandated by 21 U.S.C. sec. 335a(a)
or any similar Law or authorized by 21 U.S.C. sec. 335a(b) or any similar
Law.  There are no consent decrees (including plea agreements) or
similar actions to which the Company or, to the Knowledge of the Company, any
director, officer, or employee thereof, are bound or which relate to Company
Services.  No claims, actions, proceedings, or, to the Knowledge of
the Company, investigations that would reasonably be expected to result in
disqualification, debarment, penalty or exclusion are pending, or, to the
Knowledge of the Company, threatened against the Company or any of its
directors, officers, or employees.


26


(g)             To
the Knowledge of the Company, (i) there are no investigations, audits, actions,
inquiries, notices, or other proceedings pending, or threatened, with respect to
a violation by the Company of any Health Care Law, the Public Health Service
Act, the FDCA, or any similar Law that reasonably would be expected to result in
administrative, civil, or criminal liability, and (ii) there are no facts or
circumstances existing that would reasonably be expected to serve as a basis for
such an investigation, audit, action, inquiry, notice, or other
proceeding.




(h)             To
the Knowledge of the Company is in material compliance with all applicable FDA
import and export requirements, including, without limitation, import-for-export
requirements, export notifications or authorizations and record keeping
requirements.




Section 3.21. Sufficiency of
Assets .  Except
as set forth on Schedule 3.21, the
assets of the Company include all assets used or held for use in the conduct of
the business as currently conducted by the Company and such assets are
sufficient to permit the Company to conduct such business.  All
material tangible assets of the Company required for conducting the Company’s
business are in good condition and repair (ordinary wear and tear
excepted).




Section 3.22. Intercompany
Indebtedness .  Schedule 3.22
describes all Indebtedness owed by the Company to any other Subsidiary, Seller
or other Affiliate of Seller or the Company indicating in each case the
aggregate principal amount of such Indebtedness and the name of the obligor and
obligee in respect of such Indebtedness.




Section 3.23. Absence of Undisclosed
Liabilities .  To
the Knowledge of the Company, the Company has no material liabilities or
obligations of any nature, whether accrued, absolute, contingent, asserted,
unasserted or otherwise, except liabilities or obligations (i) expressly stated
in the Company Interim Balance Sheet, (ii) incurred in the ordinary course of
business or (iii) as set forth in Schedule
3.23.


27


Section 3.24. Privacy of Customer
Information .  Except
as otherwise set forth on Schedule 3.24, the
Company has not (A) collected or used any personally identifiable information
from any third parties, and (B) in connection with any collection or use of
personally identifiable information described on Schedule 3.24, to its
Knowledge, failed to comply in all material respects with all applicable Laws in
all relevant jurisdictions and its respective publicly available privacy policy
(if any) relating to the collection, storage, use and onward transfer of all
personally identifiable information collected by the Company or by third parties
having authorized access to the Company’s databases or other
records.




Section 3.25. Accounts Payable; Accounts
Receivable .




(a)             All
accounts payable of the Company arose in bona fide arm’s length transactions in
the ordinary course of business and no such account payable is delinquent in its
payment.  Since December 31, 2009, the Company has paid its accounts
payable in the ordinary course of its business and in a manner which is
consistent with its past practices.  The Company does not have any
account payable to any person which is affiliated with it or any of its
directors, officers, employees or stockholders.




(b)             All
of the accounts receivable of the Company are valid and enforceable claims, are
subject to no set-off or counterclaim (except for the Company’s right to apply
payments previously received and booked as deferred revenue against such
accounts receivable), and are, to the Knowledge of the Company, collectible in
the normal course of business, after deducting the reserve for doubtful accounts
stated in the Company Interim Balance Sheet, which reserve is in accordance with
GAAP.  Since December 31, 2009, the Company has collected its accounts
receivable in the ordinary course of its business and in a manner which is
consistent with past practices and has not accelerated any such
collections.  The Company does not have any accounts receivable or
loans receivable from any person which is affiliated with it or any of its
directors, officers, employees or stockholders.




Section 3.26. Customers,
Distributors and Partners; Suppliers .




(a) Schedule
3.26(a) sets forth the name of each customer and distributor of the
Company who accounted for more than five percent (5%) of the revenues of the
Company (on a consolidated basis) for each of the two most recent fiscal years
(the “Customers” and “Distributors”,
respectively) together with the names of any persons or entities with which the
Company has a material strategic partnership or similar relationship (“Partners”). Except as
set forth on Schedule 3.26(a), since December 31, 2009, no Customer, Distributor
or Partner of the Company has canceled or otherwise terminated its relationship
with the Company or materially decreased its usage or purchase of the services
or products of the Company.




(b)             Schedule 3.26(b)
lists the name and address of each vendor, supplier, service provider and other
similar business relation of the Company (collectively, “Suppliers”) from whom
the Company purchased greater than $25,000 in goods and/or services over the
course of the 12 months ending December 31, 2009 or the four (4) months ended
April 30, 2010, the amounts owing to each such Person, and whether such amounts
are past due.  The Company has not received any notice from any such
Person to the effect that, and the Company has no Knowledge that, any Supplier
will stop, materially decrease the rate of, or materially change the terms
(other than in the ordinary course of business) (whether related to payment,
price or otherwise) with respect to, supplying materials, products or services
to the Company (whether as a result of the consummation of the transactions
contemplated by this Agreement, the Transaction Documents or otherwise), nor to
the Knowledge of the Company does any Supplier have any plan or intention to do
any of the foregoing.


28


Section
3.27. Warranties .  Schedule 3.27 sets
forth a summary of the terms of the Company’s product and service warranties and
guarantees on any Company Services.  There are no existing nor, to the
Knowledge of the Company, threatened, claims against the Company relating to any
sources or work performed by the Company, product liability, warranty or other
similar claims against the Company alleging that any Company Service is
defective or fails to meet any of the Company’s product or service
warranties.  To the Knowledge of the Company, there are (a) no
inherent defects or systemic or chronic problems in the performance of any
Company Service and (b) no liabilities for warranty or other claims or returns
with respect to any Company Service relating to any such defects or problems
which would reasonably be expected to have a Material Adverse
Effect.




Section 3.28. Illegal Payments .  To
the Knowledge of the Company, neither the Company nor any officer or employee of
the Company have ever offered, made or received on behalf of the Company any
illegal payment or contribution of any kind, including, without limitation,
payments, gifts or gratuities, to any person, entity, or United States or
foreign national, state or local government officials, employees or agents or
candidates therefor or other persons in the past five (5) years.




Section
3.29. Solvency .  The
Company has not: (a) made a general assignment for the benefit of creditors; (b)
filed any voluntary petition in bankruptcy or suffered the filing of any
involuntary petition by its creditors; (c) suffered the appointment of a
receiver to take possession of all, or substantially all, of its assets; (d)
suffered the attachment or other judicial seizure of all, or substantially all,
of its assets; (e) admitted in writing its inability to pay its debts as they
come due; or (f) made an offer of settlement, extension or composition to its
creditors generally.




Section 3.30. Corporate Records .  The
corporate record books of the Company accurately reflect all corporate action
taken by its respective stockholders and board of directors and committees in
all material respects.  The copies of the corporate records of the
Company, as delivered to the Buyer, are true and complete copies of the
originals of such documents.




Section 3.31. Business
Relationships .  To
the Knowledge of the Company, within the past five years the Company does not
have a customer or supplier or other business relationship with, or is a party
to any contract or agreement with, any Person that appears on the Specially
Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Controls in the United States Department of the Treasury, or in the Annexes to
the United States Executive Order 13224 – Blocking Property and Prohibiting
Transactions with Person Who Commit, Threaten to Commit, or Support
Terrorism.


29


Section
3.32. Disclosure .  Neither
any of the directors, President, CFO or VP of Business Development of the
Company has been: (a) subject to voluntary or involuntary petition under the
federal bankruptcy laws or any state insolvency law or the appointment of a
receiver, fiscal agent or similar officer by a court for his or her business or
property or that of any partnership of which he or she was a general partner or
any corporation or business association of which he or she was an executive
officer; (b) convicted in a criminal proceeding or named as a subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses) or been otherwise accused of any act of moral turpitude; (c) the
subject of any order, judgment, or decree (not subsequently reversed, suspended
or vacated) of any court of competent jurisdiction permanently or temporarily
enjoining him or her from, or otherwise imposing limits or conditions on his or
her ability to engage in any securities, investment advisory, banking, insurance
or other type of business or acting as an officer or director of a public
company; (d) found by a court of competent jurisdiction in a civil action or by
the Securities and Exchange Commission (“SEC”) or the
Commodity Futures Trading Commission to have violated any federal or state
commodities, securities or unfair trade practices law, which judgment or finding
has not been subsequently reversed, suspended, or vacated; or (e) has engaged in
other conduct that would be required to be disclosed in a prospectus under Item
401(f) of SEC Regulation S-K.




Section 3.33.  No Other
Reps.Other than the
representations and warranties expressly set forth in this Agreement, neither of
the Sellers nor the Company has made any representations or warranties in
connection with this Agreement or the transactions hereunder.




Article IV
-




REPRESENTATIONS AND
WARRANTIES OF THE BUYER




The Buyer
hereby represents and warrants to the Sellers as follows:




Section 4.1.Organization .  The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the state of Delaware.




Section 4.2.  
 Authorization .  The
Buyer has full corporate power and authority to enter into this Agreement and to
carry out the transactions contemplated hereby.  The Buyer has taken
all corporate action required to authorize the execution and delivery of this
Agreement, the performance of the Buyer’s obligations hereunder and the
consummation of the transactions contemplated hereby.  No other
corporate action on the part of the Buyer are necessary to authorize the
execution, delivery and performance by the Buyer of this
Agreement.  This Agreement is a valid and binding agreement of the
Buyer, enforceable against it in accordance with its terms except (a) as the
same may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to creditors’ rights generally
and (b) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.




Section 4.3.  
No
Violation .  Neither
the execution and delivery of this Agreement by the Buyer nor the performance by
the Buyer of its obligations hereunder will violate any provisions of the
limited partnership agreement of the Buyer, or violate, or be in conflict with,
or allow the termination of, or constitute a default under, or cause the
acceleration of the maturity of, or create a lien under, any material debt or
obligation pursuant to any material agreement or commitment to which the Buyer
is a party or by which the Buyer is bound, or, to the Knowledge of the Buyer,
violate any statute or law or any judgment, decree, order, regulation or rule of
any court or governmental authority to which the Buyer is subject.




30


Section 4.4.  
Consents and Approvals of
Governmental Authorities .  Except
as set forth in Schedule 4.4, for
consents, approvals or authorizations which if not received or declarations,
filings or registrations which if not made, would not impede the consummation of
the transactions contemplated by this Agreement by the Buyer in any material
respect, no consent, approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority is required to be
made or obtained by the Buyer in connection with the execution and delivery of
this Agreement by the Buyer or the performance by the Buyer of its obligations
hereunder.




Section 4.5.  
Brokers’, Finders’ Fees,
etc .  Except
for BroadOak Capital Partners LLC, the Buyer has not employed any broker,
finder, investment banker or financial advisor as to whom the Buyer, the Company
or any Seller may have any obligation to pay any brokerage or finders’ fees,
commissions or similar compensation in connection with the transactions
contemplated hereby.




Section
4.6.  
Litigation .  There
is no action, proceeding or investigation pending or threatened against the
Buyer, which, if adversely determined, would adversely affect the Buyer’s
performance under this Agreement.




Section
4.7.Investment
Representations .  The
Buyer is acquiring the Stock for its own account for investment purposes only
and not with a view to or for sale in connection with any distribution thereof
with in the meaning of the Securities Act or any applicable state securities
law.  The Buyer acknowledges and agrees (i) that it has had the
opportunity to discuss the Company’s business, management and financial affairs
with the Company’s management, to review the information made available by the
Company, to visit and inspect the Company facilities, to obtain from the Company
any additional information (financial or otherwise) requested by it, and to
review the information set forth in this Agreement and the Disclosure Schedules,
and (ii) that the Stock may not be transferred or sold unless the Stock is
registered under the Securities Act and any applicable state securities laws or
unless an applicable exemption from the registration requirements under such
laws is available.




Article V
-




ADDITIONAL
AGREEMENTS




Section 5.1.  
Confidentiality .




(a)             The
Buyer and each other party to the Confidentiality Agreement acknowledge that the
Confidentiality Agreement shall terminate immediately upon
Closing.


31


(b)             Upon
Closing, each Seller shall treat and hold as confidential any information
concerning the Company, including any notes, analyses, compilations, studies,
forecasts, interpretations or other documents that are derived from, contain,
reflect or are based upon any such information (the “Confidential
Information”), refrain from using any of the Confidential Information,
and deliver promptly to Buyer, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession or under its control, provided, however, that each Seller may share
certain information with its advisors in connection with the determination of
their Taxes attributable to the Company and the Transactions contemplated hereby
and to enforce the provisions of this Agreement.  Notwithstanding the
foregoing, Confidential Information shall not include information that is
generally available to the public other than as a result of a breach of this
Section
5.1(b)Error!
Reference source not found. or other act or omission of any
Seller.  In the event that any Seller is requested or required to
produce information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process to disclose any
Confidential Information, such Person shall notify the Buyer promptly of the
request or requirement so that the Buyer may seek an appropriate protective
order or waive compliance with the provisions of this Section
5.1(b).  If, in the absence of a protective order or the
receipt of a waiver hereunder, any Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, such Person may disclose the Confidential Information to
the tribunal; provided, that such
disclosing Person shall use its reasonable efforts to obtain, at the request of
Buyer, an order or other assurance that confidential treatment shall be accorded
to such portion of the Confidential Information required to be disclosed as
Buyer shall designate.




Section 5.2.  
Mutual
Efforts .




(a)             Section 338(h)(10)
Election.




(i)           At
the election of Buyer made by written notice to the Sellers not later than 190
days after the Closing Date, the Sellers and Buyer shall join in making an
election under Section 338(h)(10) of the Code (and any corresponding elections
under state, local or foreign tax law) (collectively, a “§338(h)(10)
Election”) with respect to Buyer’s purchase from the Sellers of the
Stock, in which event the Sellers shall include any income, gain, loss,
deduction, or other Tax item resulting from the §338(h)(10) Election on their
Tax Returns to the extent required by applicable Law.




(ii)           Sellers
shall deliver to the Buyer, on the Closing Date, a completed (but undated) and
properly executed IRS Form 8023 and any similar forms under applicable state,
local, or foreign Tax law, prepared to the reasonable satisfaction of the Buyer
(collectively, the “Forms”).  In
the event Buyer makes the §338(h)(10) Election, Buyer shall duly and timely file
the Forms as prescribed by Treasury Regulation §1.338(h)(10)-1 or the
corresponding provisions of applicable state, local or foreign Tax
law.


32


(iii)           If
Buyer determines that §338(h)(10) Election will be made: (A) as soon as
practicable, but no later than 190 days after the Closing Date, Buyer shall
provide Sellers with IRS Form 8883 including the calculation and allocation of
the Purchase Price (including the Company’s liabilities and any other relevant
items) and information which describes the methodology on which the Purchase
Price allocation is based, all of which will be prepared by Buyer in a manner
consistent with Sections 338 and 1060 of the Code and regulations thereunder and
in compliance with any other provisions of applicable Law; (B) Form 8883 shall
be timely filed by each party as required by Law; (C) Buyer, the Company and
each Seller shall report the allocation of the Purchase Price for Tax purposes
(including the Company’s liabilities and any other relevant items and any
adjustments thereto) and file its Tax Returns (including the Form 8883) in a
manner consistent with such allocation; and (D) neither of the Sellers shall
take, and Buyer shall cause the Company not to take, any position in any Tax
Return, during any examination of any Tax Return, in any refund claim or in any
administrative or judicial proceeding that is inconsistent with the §338(h)(10)
Election or the asset values and allocation as determined for IRS Form 8883
purposes in accordance with this Agreement, unless otherwise required by
Law.




(b)             Purchase Price Adjustment
Related to Section 338(h)(10) Election.  If Buyer elects to
make the §338(h)(10) Election referred to in Section 5.2(a) above,
Buyer shall, as condition precedent to the filing of the §338(h)(10) Election,
pay to the Sellers the “Incremental Seller Tax
Amount,” pro rata in accordance with each Seller’s Fraction (as further
adjusted for each Seller for the state income tax rate applicable to such
Seller) on or before the date on which the Buyer files the §338(h)(10)
Election.  The “Incremental Seller Tax
Amount” means, the sum of (i) the additional legal and accounting fees
incurred by the Sellers solely attributable to the making of the §338(h)(10)
Election and the preparation of Tax Returns consistent with a §338(h)(10)
Election (including, without limitation, any amount incurred by the Sellers to
engage the Company’s current accountants to calculate the Incremental Seller Tax
Amount) any such amounts subsequently incurred in connection with any audit of
any Tax Returns and any appeals of any determinations), all as reasonably
approved by Buyer and (ii) the excess, if any, of (x) the Sellers’ actual Taxes
from the transactions contemplated by this Agreement (including, without
limitation, the Taxes incurred by the Sellers on account of the payment to the
Sellers under the first sentence of this Section 5.2(b)), and
(y) the amount of Taxes the Sellers would have incurred from the transactions
contemplated by this Agreement if no §338(h)(10) Election had been made. Sellers
may engage the Company’s current accountants to calculate the amount of the
Incremental Seller Tax Amount, which calculation may be submitted to Buyer for
its review.  The Incremental Seller Tax Amount shall be calculated
while taking into account the amount and character of any income and gain using
the highest marginal income Tax rates applicable to individuals for the year of
the sale (including for state income Tax purposes, the highest marginal income
Tax rate applicable to each such Seller), assuming that the entire gain
resulting from the sale will be recognized in the year that includes the Closing
Date (i.e., the installment method under Code §453 shall not apply), and without
taking into account any losses arising outside of the Company that otherwise may
be available to a Seller; provided, however, for purposes
of clarity, any gain or loss on the deemed liquidation of the Company under Code
§331 shall be taken into account in calculating the Sellers' actual
Tax.  If the §338(h)(10) Election is disallowed by the Internal
Revenue Service or is otherwise ineffective as a result of a breach of the
representation in Section 3.12(l)
hereof, each Seller shall promptly return to Buyer the amount paid to such
Seller under this Section
5.2(b).


33


(c)             Failure to Make §338(h)(10)
Election.  Except as set forth in the last sentence of Section 5.2(b), in no
event shall Sellers be obligated in any way to indemnify Buyer under any
provisions of this Agreement for any Losses resulting from any disallowance by
the Internal Revenue Service of the §338(h)(10) Election or in the event the
§338(h)(10) Election is ineffective as a result of a breach of the
representation in Section 3.12(l)
hereof, provided that the foregoing shall not relieve the Sellers from their
respective obligations under Sections 5.2 and
5.3 hereof,
including, but not limited to, their obligation to cooperate with Buyer pursuant
to Section
5.3(e) hereof.




Section
5.3.  
Tax
Matters .  The
following provisions shall govern the allocation of responsibility as among the
Buyer, each Seller, as applicable, and the Company, as applicable, for certain
tax matters following the Closing Date.




(a)             Tax
Indemnification.  Shawn Kinney, in his capacity as a Seller
hereunder (“Kinney”), shall
indemnify (subject to the limitations set forth in this Section 5.3(a) and in
Sections 5.3(j)
and 5.3(k)) the
Buyer Indemnified Parties and hold them harmless from and against, any
Loss,  to the extent the Buyer Indemnified Parties are not indemnified
against such Loss pursuant to Section 8.2 hereof,
which is attributable to, without duplication,  (i) all Taxes (or the
non-payment thereof) of the Company for all taxable periods ending on or before
the Closing Date and the portion through the end of the Closing Date for any
taxable period that includes (but does not end on) the Closing Date (“Pre-Closing Tax
Period”), excluding, however, any Taxes imposed on the Company or any of
its Subsidiaries resulting from the making of the §338(h)(10) Election (other
than any Taxes imposed under Section 1374 of the Code (or any MA Gains Tax )),
(ii) all Taxes of any member of an affiliated, consolidated, combined or unitary
group of which the Company (or any predecessor of the foregoing) is or was a
member on or prior to the Closing Date, (iii) Taxes of any person (other than
the Company and its Subsidiaries) imposed on the Company or any of its
Subsidiaries as a transferee or successor, by contract or pursuant to any law,
rule or regulation, which Taxes relate to an event or transaction occurring
before the Closing Date, and (iv) any breach of the representations in Section 3.12 to the
extent not recovered pursuant to Section 8.2
hereof.  By way of clarification, and for the avoidance of doubt, any
Losses that are covered by (x) the provisions of Section 5.3(a)(i),
(ii) or (iii) above and (y) also result from a breach of any of the
representations in Section 3.12, shall
first be indemnified under the provisions of Section 8.2, after
giving effect to the Threshold (to the extent then available), before any such
Losses, or any portion thereof in excess of the Threshold that is not
indemnified under Section 8.2, are
required to be indemnified by Kinney under this Section
5.3(a).


34


(b)             Payroll Tax
Indemnification.  The Sellers shall indemnify Buyer, severally
and not jointly, pro rata in accordance with each Seller’s Fraction, for (i) the
amount of any and all employer side payroll Taxes payable by the Company as a
result of the payment of the Company Bonuses, to the extent of any such employer
side payroll Taxes not funded by Sellers at Closing pursuant to Section 1.8 hereof,
and (ii) the amount of any withholding taxes payable by the Company as a result
of the payment of the Company Bonuses; provided, however, the Sellers
shall have no obligation to indemnify Buyer pursuant to this Section 5.3(b)(ii) if
Buyer causes the Company to pay less than the Bonus Tax Amount (as set forth in
Section 1.8 of
this Agreement) or less than the withholding amounts relating to the Company
Bonuses designated by the Company in its books and records as of the
Closing.




(c)             Straddle
Period.  In the case of any taxable period that includes (but
does not end on) the Effective Tax Closing Date (a “Straddle Period”),
the amount of Taxes that is allocable to the Pre-Closing Tax Period shall (i) in
the case of Taxes that are imposed on a periodic basis (such as real property
taxes), be deemed to be the amount of such Taxes for the entire period (or in
the case of such Taxes determined on an arrears basis, the amount of such Taxes
for the immediately preceding period) multiplied by a fraction the numerator of
which is the number of calendar days in the Straddle Period ending on (and
including) the Effective Tax Closing Date and the denominator of which is the
number of calendar days in the entire relevant Straddle Period and (ii) in the
case of Taxes that are not described in clause (i) above (such as income Taxes,
Taxes imposed in connection with any sale or other transfer or assignment of
property, and payroll and similar Taxes), be deemed to be equal to the amount
that would have been payable if the taxable year or period of the Company ended
at the end of the Effective Tax Closing Date; provided, that, in
determining such amount, exemptions, allowances or deductions that are
calculated on a periodic basis, such as the deduction for depreciation, shall be
taken into account on a pro-rated basis in the manner described in clause (i)
above.




(d)             Payment of Certain Company
Level Taxes.  Buyer shall provide or pay, as and when due, all
necessary funds for the Company to pay any state, local or foreign Taxes imposed
on the Company as a result of the §338(h)(10) Election other than any MA Gains
Tax, including, without limitation, any interest or penalties payable in respect
thereof.


35




(e)             Cooperation on Tax
Matters.  The Sellers shall cause the Company’s current
accountants to prepare in a timely manner (and in accordance with applicable
Law) the federal and state income Tax Returns for the Company for all taxable
years ending on or before the Closing Date.  For purposes thereof, the
Buyer shall provide the Sellers with access to the books, records and
accountants of the Company.  The Sellers shall provide the Buyer with
copies of such Tax Returns at least fifty (50) days prior to their respective
due dates (as such due date may be extended).  The Buyer shall review
such returns and provide any proposed revisions to the Sellers at least
twenty-five (25) days prior to the due date of such returns and the Sellers will
reflect any changes to such Tax Returns provided by the Buyer (unless (i) such
change would have an adverse effect on the Sellers or (ii) Buyer's proposed
changes are not in compliance with applicable Law) that relate to the Taxes
imposed on the Company or any of its Subsidiaries attributable to the making of
the §338(h)(10) Election (except for under Section 1374 of the Code (or any MA
Gains Tax)).The
Buyer, the Company and the Sellers shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with any audit,
litigation or other proceeding with respect to Taxes.  Such
cooperation shall include the retention and (upon the other party’s request) the
provision of records and information that are reasonably relevant to any such
audit, litigation or other proceeding or matter and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The Company and the Sellers agree (A) to
retain all books and records with respect to Tax matters pertinent to the
Company relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by
Buyer or the Sellers, any extensions thereof) of the respective taxable periods,
and to abide by all record retention agreements entered into with any taxing
authority, and (B) to give the other party reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the
other party so requests, the Company or the Sellers, as the case may be, shall
allow the other party to take possession of such books and records.




(f)             Tax Sharing
Agreements.  All tax-sharing agreements or similar agreements
with respect to or involving the Company shall be terminated as of the Closing
Date and, after the Closing Date, the Company shall not be bound thereby or have
any liability thereunder.




(g)             Transfer
Taxes.  Each party hereto will pay, and will indemnify and hold
the other parties hereto harmless against, any real property transfer Tax, stamp
Tax, stock transfer Tax, or other similar Tax imposed under applicable Law on
such first party as a result of the transactions contemplated by this Agreement
(collectively, “Transfer Taxes”), and
any penalties or interest with respect to such Transfer Taxes.




(h)             S Corporation
Status.  The Sellers and the Company shall not revoke the
Company’s election to be taxed as an S corporation within the meaning of
Sections 1361 and 1362 of the Code.  Neither the Sellers, the Buyer,
nor the Company shall take or allow any action (other than the sale of the
Company’s stock pursuant to this Agreement) that would result in the termination
of the Company’s status as a validly electing S corporation within the meaning
of Sections 1361 and 1362 of the Code.




(i)             No Code Section 338(g)
Election.  Neither Buyer, the Company, nor any of their
Affiliates shall make an election under Code Section 338(g) with respect to the
transactions contemplated by this Agreement.




(j)             Conflicts.         Notwithstanding
anything herein to the contrary, but subject to the provisions of Section 5.3(k),
Kinney’s liability for Losses of any Buyer Indemnified Parties under Section 5.3(a) shall
be limited to Kinney’s Seller’s Fraction of the Purchase Price (the “Kinney Proceeds”)
less any amounts paid by Kinney pursuant to Section
8.2.  In the event any Buyer Indemnified Party is able to seek
indemnification from Kinney pursuant to this Section 5.3 without first seeking
indemnification pursuant to Section 8.2, then the liability of Kinney shall be
limited as follows: Kinney shall have no liability under Section 5.3 (A) for any
individual Loss of $5,000 or less, and (B) until the aggregate of all Losses
claimed by the Buyer Indemnified Parties pursuant to Section 5.3 and Section 8.2
exceeds the Threshold, whereupon the total amount of such Losses exceeding the
Threshold shall be recoverable by the Buyer Indemnified Parties in accordance
with the terms hereof.


36


(k)             Kinney’s Liability
Cap.  In no event shall Kinney’s liability for Losses pursuant
to any Section of this Agreement in the aggregate exceed the Kinney
Proceeds.




Section
5.4.          Further
Assurances .  After
the Closing, each party hereto shall cooperate with the others, and execute and
deliver, or cause to be executed and delivered, all such other instruments,
including instruments of conveyance, assignment and transfer, and use
commercially reasonable efforts to take all such other actions as may be
reasonably requested by the other parties hereto from time to time, consistent
with the terms of this Agreement, to effectuate the purposes and provisions of
this Agreement.




Section
5.5.          Seller Releases .




(a)             For
and in consideration of the amount to be paid to each Seller under this
Agreement, and the additional covenants and promises set forth in this
Agreement, effective as of the Closing and subject to the payment of the
Purchase Price and the Company’s Indebtedness at Closing, each Seller, on behalf
of itself and its assigns, heirs, beneficiaries, creditors, representatives,
agents and Affiliates (the “Releasing Parties”),
hereby fully, finally and irrevocably releases, acquits and forever discharges
the Company, the Buyer, and the officers, directors, partners, general partners,
limited partners, managing directors, members, stockholders, trustees,
shareholders, representatives, employees, principals, agents, Affiliates,
parents, subsidiaries, joint ventures, predecessors, successors, assigns,
beneficiaries, heirs, executors, personal or legal representatives, insurers and
attorneys of any of them (collectively, the “Released Parties”)
from any and all commitments, actions, debts, claims, counterclaims, suits,
causes of action, damages, demands, liabilities, obligations, costs, expenses,
Losses and compensation of every kind and nature whatsoever, past, present, or
future, at law or in equity, whether known or unknown, contingent or otherwise,
which such Releasing Parties, or any of them, had, has, or may have had at any
time in the past until and including the Closing Date against the Released
Parties, or any of them, including but not limited to any claims which relate to
or arise out of such Releasing Party’s relationship with the Company or its
rights or status as a stockholder, officer or director of the Company
(collectively, “Released Causes of
Action”); provided, however, that the
Released Causes of Action shall not include any rights and claims of any
Releasing Party arising from or in connection with (i) this Agreement or any
Transaction Document, in each case to the extent arising after the Closing, (ii)
if applicable, any unpaid salary, bonuses, reimbursements and employee benefits
earned by, or otherwise vested in, such Seller as an employee of the Company and
owed by the Company as of the Closing Date, or (iii) subject to Section 5.5(b) any
matter for which a Seller is entitled to indemnification from the Company under
the provisions of the Company’s Articles of Organization and By-Laws of the
Company, as amended to date.  In executing this Agreement, each Seller
acknowledges that it has been informed that the Company may from time to time
enter into agreements for additional types of financing, including without
limitation recapitalizations, mergers and initial public offerings of capital
stock of the Company, and also may pursue acquisitions or enter into agreements
for the sale of the Company or all or a portion of the Company’s assets, which
may result in or reflect an increase in equity value or enterprise value, and
that any and all claims arising from or relating to such transactions or such
increases in equity value or enterprise value (without limitation) are
encompassed within the scope of this release, and that the sole exceptions to
the scope of this release are for claims arising after the Closing Date directly
under this Agreement in accordance with its terms.


37


(b)             Each
Seller hereby acknowledges and agrees that if, following the Closing and prior
to the end of the applicable survival period set forth below, any claim is made
against a Seller, which Seller would be entitled to indemnification under the
provisions of the Company’s Articles of Organization or by-laws, as amended to
date, and such claim is also a matter for which the Buyer is entitled to
indemnification pursuant to Section 8.2 of this
Agreement in respect of any Losses (a “Loss Payment”), then
such Seller shall have no rights against the Company, the Buyer or any director,
officer or employee thereof (in their capacity as such), whether by reason of
contribution, indemnification, subrogation or otherwise, in respect of any such
Loss Payment, and shall not take any action against the Company or any such
person with respect thereto.




(c)             Each
Seller hereby represents to the Released Parties that as of the Closing Date
such Seller (i) has not assigned any Causes of Action or possible Causes of
Action against any Released Party, (ii) fully intends to release all Released
Causes of Action against the Released Parties including, without limitation,
unknown and contingent Causes of Action (other than those specifically reserved
above), and (iii) has consulted with counsel with respect to the execution and
delivery of this general release and has been fully apprised of the consequences
hereof.  Furthermore, each Seller further agrees not to institute any
litigation, lawsuit, claim or action against any Released Party with respect to
the released Causes of Action.




(d)             For
a period of six (6) years following the Closing Date, the Company shall not, and
the Buyer shall not cause the Company to, modify, amend or replace any provision
concerning the elimination of liability and/or indemnification of directors and
officers of the Company under the Company’s Articles of Organization or By-Laws,
as amended and in effect on the Closing Date, in any manner that would be
materially less favorable to the beneficiaries thereof as compared to the rights
of such beneficiaries under such organizational documents as of the date
hereof.




(e)             For
and in consideration of each of the Sellers entering into this Agreement, and
the additional covenants and promises set forth in this Agreement, effective as
of the Closing, the Company, on behalf of itself and its assigns, heirs,
beneficiaries, creditors, representatives, agents and Affiliates (the “Company Releasing
Parties”), hereby fully, finally and irrevocably releases, acquits and
forever discharges each of the Sellers and Max Harrell and their respective
assigns, beneficiaries, heirs, executors, personal or legal representatives,
insurers and attorneys of any of them (collectively, the “Seller Released
Parties”) from any and all commitments, actions, debts, claims,
counterclaims, suits, causes of action, damages, demands, liabilities,
obligations, costs, expenses, Losses and compensation of every kind and nature
whatsoever, past, present, or future, at law or in equity, whether known or
unknown, contingent or otherwise, which such Company Releasing Parties, or any
of them, had, has, or may have had at any time in the past until and including
the Closing Date against the Seller Released Parties, or any of them
(collectively, “Company Released Causes of
Action”); provided, however, that the
Company Released Causes of Action shall not include any rights and claims
against any Seller arising from or in connection with this Agreement or any
Transaction Document executed by such Seller, including, without limitation, any
rights to indemnification under this Agreement.


38




Article VI
-




CONDITIONS PRECEDENT TO
BUYER’S OBLIGATIONS




The
obligations of the Buyer under this Agreement shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions (any
of which may be waived only by a specific writing executed by the
Buyer):




Section
6.1.          Representations and
Warranties .  Each
representation and warranty of each Seller and the Company set forth in this
Agreement (and the Schedules) (i) that is qualified as to “materiality” (or as
to “Material Adverse Effect”) will be true and correct in all respects, and (ii)
that is not qualified as to “materiality” (or as to “Material Adverse Effect”)
will be true and correct in all material respects, in each case as of the
Closing (except for any such representations or warranties that were made as of
a specific date, which representations and warranties will have been true and
correct as of such date), and the Buyer shall have received at the
Closing a certificate, dated the Closing Date, signed by the president of
the Company to such effect with respect to the Company’s representations and
warranties, and, only in the event the Closing Date occurs on a date following
the date hereof, a certificate, dated the Closing Date, signed by each
Seller to such effect with respect to the Seller’s representations and
warranties.




Section
6.2.          Performance .  The
Sellers and the Company shall have performed and complied, in all material
respects, with all agreements, obligations and conditions required to be
performed or complied with by them on or prior to the Closing; and the Buyer
shall have received at the Closing a certificate, dated the Closing Date,
signed by the president of the Company to such effect with respect to the
Company, and, solely in the event the Closing Date occurs on a date following
the date hereof, a certificate, dated the Closing Date, signed by each
Seller to such effect with respect to such Seller.




Section
6.3.          No Injunction .  There
shall not be in effect any preliminary or permanent injunction or other order
issued by any state or federal court which prevents the consummation of the
transactions contemplated hereby.




Section
6.4.          Corporate
Authorization .  All
corporate action necessary to authorize (i) the execution, delivery and
performance by the Company of this Agreement and (ii) the consummation of the
transactions contemplated hereby shall have been obtained by the
Company.


39


Section
6.5.          Third Party Consent and
Approvals .  The
consents and approvals of third parties listed on Schedule 6.5 shall
have been obtained and the Buyer shall have received evidence reasonably
acceptable to the Buyer that such approvals, consents and filings have been made
or obtained, as appropriate.




Section
6.6.          Escrow Agreement .  The
Buyer shall have received from the Escrow Agent and each Seller a duly executed
counterpart to the Escrow Agreement.




Section
6.7.          No Material Adverse
Effect .Since December
31, 2009, there will not have occurred, nor will any event have occurred or
failed to occur that could reasonably be expected to cause or result in, any
Material Adverse Effect. The Buyer shall have received at the Closing a
certificate, dated the Closing Date, signed by the president of the Company
stating that to his Knowledge no such event has occurred.




Section
6.8.          FIRPTA
Certificate .  The
Sellers shall each have furnished the Buyer with a certificate meeting the
requirement of Treasury Regulations Section 1.1445-2(b)(2)(i).




Section
6.9.          Resignations .  The
Buyer shall have received resignations from all directors and officers of the
Company effective as of the Closing Date.




Section
6.10.        Transactions with
Affiliates .  Except
as set forth on Schedule 6.10 and
except as contemplated by this Agreement, the Sellers and the Company shall
cause all agreements and accounts between any Seller or any Affiliate of any
Seller (other than the Company), on the one hand, and the Company, on the other
hand, to be terminated or settled at or prior to the Closing; and the Buyer
shall have received evidence reasonably acceptable to the Buyer of each such
termination or settlement.




Section
6.11.        Employment
Agreements .  Each
individual listed on Schedule 6.11 who is
offered employment with the Buyer or continued employment with the Company with
Buyer’s approval will have executed an offer letter and/or employment agreement
in the form provided by the Buyer, will not have taken any action or expressed
any intent to terminate or modify such acceptance, and will have in place all
certifications, clearances and authorizations required to perform the duties of
the specified position.




Section
6.12.        Officer’s
Certificate .  Buyer
will have received a certificate executed by an officer of the Company
certifying: (a) the names of the officers of the Company authorized to sign this
Agreement and the Transaction Documents, together with the true signatures of
such officers; (b) evidence that the stockholders and Board of Directors of the
Company have duly authorized the transactions contemplated by this Agreement and
the Transaction Documents and authorized appropriate officers of the Company to
execute and deliver this Agreement and the Transaction Documents executed by the
Company pursuant hereto, and to consummate the transactions contemplated hereby;
(c) the effectiveness, and setting forth a copy certified by the Secretary of
the Commonwealth of the Massachusetts, of the Articles of Organization of the
Company as amended to date, and (d) certificates issued by the Secretary of
State of the Commonwealth of the Massachusetts stating that the Company has
legal existence and is in good standing in such jurisdiction.


40


Section
6.13.        Form
8023 .  The
Buyer shall have received from Sellers an completed and properly executed Form
8023,in accordance with the terms of Section 5.2(a)(ii) of
the Agreement.




Section
6.14.        Waiver of
Conditions .  Notwithstanding
the failure of any one or more of the foregoing conditions, the Buyer may
proceed with the Closing without satisfaction, in whole or in part, of any one
or more of such conditions and without written waiver.  To the extent
that the Buyer proceeds with the Closing with Knowledge that any such conditions
were not satisfied or any such representations and warranties were breached, the
Buyer shall be deemed to have waived for all purposes any rights or remedies it
may have against the Company and the Sellers by reason of the failure of any
such conditions or the breach of any such representations.




Article VII
-




CONDITIONS PRECEDENT TO
THE


OBLIGATIONS OF THE
SELLERS




The
obligations of the Sellers under this Agreement shall be subject to the
satisfaction, on or before the Closing, of each of the following conditions (any
of which may be waived only by a specific writing executed by the Sellers’
Representative):




Section
7.1.          Representations and
Warranties .  The
representations and warranties of the Buyer contained herein shall be true and
accurate in all material respects as of the Closing; and the Sellers shall have
received at the Closing a certificate, dated the Closing Date, signed by an
officer of the Buyer to such effect.




Section
7.2.          Performance .  The
Buyer shall have performed and complied with, in all material respects, all
agreements, obligations and conditions required by this Agreement to be
performed or complied with by it on or prior to the Closing and the Sellers
shall have received at the Closing a certificate, dated the Closing Date, signed
by an officer of the Buyer to such effect.




Section
7.3.          No Injunction .  There
shall not be in effect any preliminary or permanent injunction or other order
issued by any state or federal court which prevents the consummation of the
transactions contemplated hereby.




Section
7.4.          Waiver of
Conditions .  Notwithstanding
the failure of any one or more of the foregoing conditions, the Sellers may
proceed with the Closing without satisfaction, in whole or in part, of any one
or more of such conditions and without written waiver.  To the extent
that the Sellers proceed with the Closing with Knowledge of the Sellers that any
such conditions were not satisfied or any such representations and warranties
were breached, the Sellers shall be deemed to have waived for all purposes any
rights or remedies they may have against the Buyer by reason of the failure of
any such conditions or the breach of any such representations.




Section
7.5.          Escrow Agreements .  The
Sellers shall have received from the Escrow Agent and the Buyer a duly executed
counterpart to the Escrow Agreement.


41




Article VIII
-




INDEMNIFICATION




Section
8.1.         Indemnification of the
Sellers .  After
the Closing, the Buyer shall indemnify and hold harmless the Sellers and their
respective directors, officers, employees, agents, Affiliates, successors, and
assigns (collectively, the “Seller Indemnified
Parties”) from and against any and all Losses arising out of, related to
or incurred with respect to (i) any breach of any or all of the Buyer’s
representations and warranties in this Agreement or any certificate delivered at
the Closing, (ii) the breach or nonperformance of any covenant or obligation to
be performed by the Buyer hereunder or under any agreement executed in
connection herewith, or (iii) any cost or liability relating to Buyer’s
engagement of BroadOak Capital Partners LLC.




Section
8.2.         Indemnification of the
Buyer .  After
the Closing, each Seller, severally and not jointly, shall indemnify and hold
harmless the Buyer and its Affiliates (collectively, the “Buyer Indemnified
Parties”) from and against any and all Losses arising out of, related to
or incurred with respect to (i) any breach of any representation or warranty
made by such Seller in this Agreement or in any Schedule or certificate
delivered at the Closing, (ii) on a pro-rata basis in accordance with such
Seller’s Fraction, with respect to any breach of any representation or warranty
made by the Company in this Agreement or in any Schedule or certificate
delivered at the Closing, or (iii) the breach or nonperformance of any covenant
or obligation to be performed by such Seller hereunder.  From and
after the Closing, the liability of the Sellers under this Agreement shall be
limited as follows: (x) except in connection with fraud or any Key Rep, the
Sellers shall have no liability under Sections 8.2(i) and
8.2(ii) for any
individual Loss of $5,000 or less, and (B) until the aggregate of all Losses
claimed by the Buyer Indemnified Parties pursuant to Sections 8.2(i) and
8.2(ii) exceeds
One Hundred Thousand dollars ($100,000) (the “Threshold”),
whereupon the total amount of such Losses exceeding the Threshold shall be
recoverable by the Buyer Indemnified Parties in accordance with the terms
hereof; and (y) except in connection with fraud, the Tax Rep, or any Key Rep,
the aggregate liability of the Sellers after Closing for all Losses claimed by
the Buyer Indemnified Parties pursuant to Sections 8.2(i) and
8.2(ii) shall
not exceed the Escrow Amount.  From and after the Closing, in the
absence of fraud, (A) the aggregate liability of each Seller under this
Agreement for Losses claimed by the Buyer Indemnified Parties relating to any
breach by the Company of the Tax Rep shall not exceed the sum of (x) such
Seller’s portion of the then unapplied Escrow Amount plus (y) $500,000.00, and
(B) the aggregate liability of each Seller under this Agreement for Losses
claimed by the Buyer Indemnified Parties for Losses relating to any breach by
such Seller of any Key Rep shall not exceed such Seller’s portion of the
Purchase Price.




Section
8.3.         Additional Indemnity
Provisions .  After
the Closing, the indemnification obligations of the Buyer and the Sellers
hereunder shall be subject to the following terms and conditions:




(a)             Except
in connection with fraud or the breach of any covenant contained in Section 5.1(b) and
except as provided in Section 5.3(a), after
the Closing, the sole recourse and exclusive remedy of the Buyer and the Sellers
against each other arising out of this Agreement shall be to assert a claim for
indemnification under the indemnification provisions of this Article VIII and
the remedies provided in Section
9.11.


42


(b)             The
term “Loss” or
“Losses” shall
mean any and all liabilities, claims, obligations, judgments, liens, penalties,
fines, losses, damages (other than punitive damages) and reasonable costs and
expenses, including but not limited to, reasonable attorneys’ fees and
accounting fees and other expert fees (and other expenses related to litigation
or other proceedings) and related disbursements.  In no event shall
any punitive, special, consequential or incidental damages, including loss of
future revenue or income, business interruption, cost of capital or loss of
business reputation, profits or opportunity or diminution in value be included
in the determination as to whether any Loss has occurred or as to the amount of
any Loss incurred, unless such damages are awarded to a third party and such
Indemnified Party is entitled to indemnification under this Article VIII with
respect to such award.




(c)             In
the event that any party to this Agreement desires to make any claim for
indemnification pursuant to this Article VIII, the party making such claim (a
“Claim”) shall
promptly deliver on or prior to the date upon which the applicable
representations and warranties or covenants expire pursuant to the terms of this
Agreement, a certificate signed by the party making the claim or an officer of
the party making the claim (the “Claim Certificate”)
to the Sellers and the Escrow Agent (if making a claim against the Escrow
Amount) or the Buyer, whichever is applicable, which Claim Certificate shall (i)
state the occurrence giving rise to the claim and that the Loss or liability has
been incurred or is anticipated; (ii) specify the Section of this Agreement
under which such claim is made; and (iii) specify in reasonable detail each
individual item of Loss or other claim, including the amount of such Loss to the
extent reasonably ascertainable and the date such Loss or liability was incurred
or is anticipated.  The party making the claim shall state only what
is required in subsections (i)—(iii) above and shall not admit or deny the
validity of the facts or circumstances out of which such claim
arose.




(d)             Any
payments made as indemnification under Section 8.1, Section 8.2 or Section 5.3(a) shall,
to the extent permitted by applicable Law, be considered adjustments to the
Purchase Price.




(e)             The
words “material,” “in all material respects,” “Material Adverse Effect” or words
of similar import (collectively, “Materiality
Qualifiers”) that qualify any representation, warranty or covenant in
this Agreement shall be disregarded when calculating Losses under this Agreement
(including for the purposes of determining whether the Threshold
applies).  For the avoidance of doubt, Materiality Qualifiers will be
taken into account in determining whether a breach of this Agreement has
occurred but will not limit the amount of Losses that can be recovered by a
party to this Agreement in connection with any such breach.




(f)             Notwithstanding
anything in this Article VIII to the contrary, Buyer Indemnified Parties shall
have no right or entitlement to indemnification for Losses incurred by such
Buyer Indemnified Parties pursuant to Section 8.2, and
Buyer Indemnified Parties shall be deemed to have waived and released any claims
for such Losses, if Buyer had Knowledge of the particular misrepresentation or
breach of warranty at or prior to the Closing.


43


(g)             Notwithstanding
anything in this Article VIII to the contrary, Buyer Indemnified Parties shall
have no right or entitlement to indemnification for Losses incurred by such
Buyer Indemnified Parties pursuant to Section 8.2 for any
Losses relating to any matter arising under the provisions of this Agreement to
the extent that any such Buyer Indemnified Party or its successors and assigns
had already recovered Losses with respect to the same matter pursuant to any
other provision of this Agreement, and such Buyer Indemnified Party and its
successors and assigns shall be deemed to have waived and released any claims
for such Losses and shall not be entitled to assert any such claim for
indemnification for such Losses.




(h)             The
amount of any Loss taken into account for all purposes under this Article VIII
shall be reduced by (i) any reserves, accruals or liabilities set forth, in the
case of the Company, on the Financial Statements and on the books and records of
the Company, and (ii) any amounts actually recovered by the Indemnified Parties
under any insurance policies net of any increase in premiums related to such
Loss.




(i)             The
amount of any Loss for which indemnification is provided shall be determined net
of the value of any actual cash Tax benefit realized from the incurrence or
payment of any such Loss.




(j)             Notwithstanding
anything to the contrary set forth in this Agreement, (i) the parties hereto
shall take all commercially reasonable steps (to the extend then available or
possible) to mitigate all Losses upon and after becoming aware of any event that
could reasonably be expected to give rise to such Losses.


44


Section
8.4.         Defense of Third Party
Claims .




(a)             After
the Closing, in the case of any third party claim (a “Third Party Claim”),
if within ten (10) days after receiving the Claim the Indemnifying Party gives
written notice to the Indemnified Party stating that the Indemnifying Party
would be liable under the provisions hereof for indemnity in the amount of such
claim if such claim were valid and that the Indemnifying Party disputes and
intends to defend against such claim, liability or expense at the Indemnifying
Party’s own cost and expense, then counsel for the defense shall be selected by
the Indemnifying Party (subject to the consent of such Indemnified Party which
consent shall not be unreasonably withheld) and such Indemnifying Party shall
not be required to make any payment to the Indemnified Party with respect to
such claim, liability or expense as long as the Indemnifying Party is conducting
a good faith and diligent defense at its own expense; provided, however, that the
assumption of defense of any such matters by the Indemnifying Party shall relate
solely to the claim, liability or expense that is subject or potentially subject
to indemnification.  If the Indemnifying Party assumes such defense in
accordance with the preceding sentence, it shall have the right, with the
consent of such Indemnified Party, which consent shall not be unreasonably
withheld, to settle all indemnifiable matters related to claims by third parties
which are susceptible to being settled solely by payment of money by the
Indemnifying Party pursuant to a settlement which includes a complete release of
such Indemnified Party.  The Indemnifying Party shall keep such
Indemnified Party apprised of the status of the claim, liability or expense and
any resulting suit, proceeding or enforcement action, shall furnish such
Indemnified Party with all documents and information that such Indemnified Party
shall reasonably request and shall consult with such Indemnified Party prior to
acting on major matters, including settlement
discussions.  Notwithstanding anything herein stated, such Indemnified
Party shall at all times have the right to fully participate in such defense at
its own expense directly or through counsel; provided, however, if it is
likely that the parties to the action or proceeding may include both the
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate under applicable standards of
professional conduct, the reasonable expense of separate counsel for such
Indemnified Party shall be paid by the Indemnifying Party provided that such
Indemnifying Party shall be obligated to pay for only one counsel for the
Indemnified Party in any jurisdiction.  If no such notice of intent to
dispute and defend is timely given by the Indemnifying Party, or if such
diligent good faith defense is not being or ceases to be conducted, such
Indemnified Party may undertake the defense of (with counsel selected by such
Indemnified Party), and shall have the right to compromise or settle, such
claim, liability or expense (exercising reasonable business judgment), all at
the expense of the Indemnifying Party.  If such claim, liability or
expense is one that by its nature cannot be defended solely by the Indemnifying
Party, then such Indemnified Party shall make available all information and
assistance that the Indemnifying Party may reasonably request and shall
cooperate with the Indemnifying Party in such defense.




(b)             Notwithstanding
anything to the contrary in this Section 8.4, should
any Claim hereunder involve a situation where the Indemnified Party reasonably
anticipates that part of the Claim will be borne by it and part of the Claim
will be borne by the Indemnifying Party due to the existence of the limitation
amounts in Section
8.2, the parties shall jointly consult as to any such Claim, and the
Indemnified Party shall have the right to assume the sole defense thereof by
representatives chosen by it and shall be entitled to control any settlement or
compromise of such claim; provided that (i) the
Indemnifying Party shall be entitled to participate in the defense of such claim
and to employ counsel (not reasonably objected to by the Indemnified Party) at
its own expense to assist in the handling of such and (ii) any settlement of
such claim remains subject to the prior written consent of the Indemnifying
Party with respect to any terms of any settlement (which consent shall not be
unreasonably withheld or delayed).


45


Section
8.5.          Representations and Warranties,
etc. All
representations, warranties, covenants, and agreements of each Seller, the
Company and the Buyer made in this Agreement shall be deemed to have been relied
upon by the party or parties to whom they are made, and shall survive the
Closing regardless of any investigation on the part of such party or its
representatives, with each party reserving all of its rights hereunder in
connection with any breach or alleged breach, subject to the following
provisions of this Section 8.5 with
respect to the expiration of certain representations and
warranties.  The respective representations and warranties of the
parties contained herein shall survive the Closing and shall expire and
terminate on the Termination Date, except for (a) claims for the breach of any
representation or warranty herein made pursuant to Article VIII on or prior to
the expiration date of such representation or warranty, which claims shall
survive until the liability is finally determined; (b) the representations and
warranties contained in Section 3.15
(Environmental Matters) (the “Environmental Rep”),
the representations and warranties contained in Section 3.20
(Regulatory Matters) (the “Regulatory Rep”),
which shall survive the Closing and shall expire two (2) years following the
Closing Date; (c) the representations and warranties contained in Section 3.12
(the “Tax Rep”), which representations and warranties shall survive the Closing
and shall expire on the date sixty (60) days after the expiration of the
applicable statute of limitations (including any extensions thereof); and (d)
Section 2.1
(Sellers’ Ownership of Stock) and Section 2.2
(Authority of Sellers) (the “Key Reps”), each of
which Key Reps shall survive the Closing and shall expire on the date sixty (60)
days after the expiration of the applicable statute of limitations (including
any extensions thereof).  Thereafter, no party shall be under any
liability whatsoever with respect to any such representation or warranty; provided, however, that claims
for fraud may be made at any time notwithstanding the fact that any
representation or warranty relating thereto may have already expired pursuant to
the terms of this Section
8.5.  The covenants and agreements contained herein to be
performed or complied with after the Closing shall survive in accordance with
their respective terms or, absent a specific term, indefinitely.




Article IX
-




MISCELLANEOUS
PROVISIONS




Section
9.1.          Amendment and
Modification .  This
Agreement may be amended, modified and supplemented only by written agreement of
each of the parties hereto.




Section
9.2.         Waiver of
Compliance .  The
rights and remedies of the Parties to this Agreement are cumulative and not
alternative.  Neither the failure nor any delay by any Party in
exercising any right, power, or privilege under this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right, power, or
privilege.  To the maximum extent permitted by applicable Law, (a) no
claim or right arising out of this Agreement or the documents referred to in
this Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such Party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement.




Section
9.3.          Notices .  All
notices, requests, consents and other communications hereunder shall be deemed
given:  (i) when delivered if delivered personally (including by
courier); (ii) on the third day after mailing, if mailed, postage prepaid, by
registered or certified mail (return receipt requested); (iii) on the day after
mailing if sent by a nationally recognized overnight delivery service which
maintains records of the time, place, and recipient of delivery; or (iv) upon
receipt of a confirmed transmission, if sent by telex, telecopy or facsimile
transmission, in each case to the parties at the following addresses or to other
such addresses as may be furnished in writing by one party to the
others:


46


if to
Shawn Kinney:




6 Dairy
Farm Lane


Wayland,
MA 01778





with a
copy to:




Posternak
Blankstein & Lund LLP


800
Boylston Street


Boston,
MA  02199-8004


Telecopier:  (617)
722-4954


Attention:  Donald
H. Siegel, P.C.





if to
William A. Crider, Jr.:




3010
Stillmore Highway


Metter,
GA 30439





with a
copy to:




Troutman
Sanders LLP


600
Peachtree Street, Suite 5200


Atlanta,
GA  30308


Telecopier:  (404)
962-6514


Attention:  Richard
H. Brody




if to the
Buyer to:




Albany
Molecular Research, Inc.


21
Corporate Circle


PO Box
15098


Albany,
NY 12212


Telecopier:  (212)
835-2020


Attention:  Thomas
E. D’Ambra, Ph.D.




with a
copy to:




Goodwin
Procter LLP


53 State
Street


Boston,
MA 02109


Telecopier:  (617)
523-1231


Attention:  John
M. Mutkoski


47


Section
9.4.          Binding Nature;
Assignment .  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto without prior written consent of the other
parties; provided, however, that the
Buyer may assign this Agreement and any or all rights or obligations hereunder
(including, without limitation, the Buyer’s rights to seek indemnification
hereunder) to (i) any Affiliate of the Buyer or (ii) following Closing, any
successor in interest to Buyer (including any assignee of all or part of the
stock acquired hereunder); provided that no such
assignment shall relieve the Buyer of any obligation hereunder.  Upon
any such assignment by the Buyer, the references in this Agreement to the Buyer
shall also apply to any such assignee unless the context otherwise
requires.  Nothing contained herein, express or implied, is intended
to confer on any Person other than the parties hereto or their successors and
permitted assigns, any rights, claims, benefits, remedies, obligations or
liabilities under or by reason of this Agreement.




Section
9.5.          Entire Agreement .  This
Agreement, along with the Schedules and Exhibits hereto, embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein; provided, however, that this
provision shall in no way limit a party’s rights against any other party in
connection with fraud.




Section
9.6.          Expenses .  Except
as otherwise expressly provided herein,  each of the Buyer, the
Company and each Seller will pay its own costs and expenses in connection with
the negotiation of this Agreement, the performance of its and their obligations
hereunder, and the consummation of the transactions contemplated herein (the
“Transaction
Expenses”); provided that all
sales taxes, transfer and notarial fees and taxes and the like, if any, arising
from the transactions contemplated hereby shall be paid by on a pro-rata basis
by the party who/that owes such Taxes.




Section
9.7.          Press Releases and
Announcements .  No
press release related to this Agreement or the transactions contemplated herein,
or other public announcement or announcement to the employees, customers, or
suppliers of the Company, will be issued without the joint approval of the Buyer
and each of the Sellers, except as otherwise required by law, in each case not
to be unreasonably withheld, conditioned or delayed.




Section
9.8.          Governing Law .  This
Agreement and the legal relations between the parties hereto shall be governed
by and construed in accordance with the laws of the State of Delaware without
giving effect to any law or rule that would cause the laws of any jurisdiction
other than the State of Delaware to be applied.


48


Section
9.9.          Jurisdiction; Service of
Process .  Each
party to this Agreement, by its execution hereof, hereby (a) irrevocably submits
to the exclusive jurisdiction of the state courts of The Commonwealth of
Massachusetts or the United States District Court for the Eastern District of
Massachusetts for the purpose of any and all actions, suits or proceedings
arising in whole or in part out of, related to, based upon or in connection with
this Agreement or the subject matter hereof, (b) waives to the extent not
prohibited by applicable Law, and agrees not to assert, by way of motion, as a
defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that any such action brought in
one of the above-named courts should be dismissed on grounds of forum non
conveniens, should be transferred to any court other than one of the above-named
courts, or should be stayed by reason of the pendency of some other proceeding
in any other court other than one of the above-named courts, or that this
Agreement or the subject matter hereof may not be enforced in or by such court,
and (c) agrees not to commence any such action other than before one of the
above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such action to any court other
than one of the above-named courts whether on the grounds of inconvenient forum
or otherwise.  Each party hereby (x) consents to service of process in
any such action in any manner permitted by Delaware law; (y) agrees that service
of process made in accordance with clause (x) or made by registered or certified
mail, return receipt requested, at its address specified pursuant to Section 9.3 hereof,
will constitute good and valid service of process in any such action; and (z)
waives and agrees not to assert (by way of motion, as a defense, or otherwise)
in any such action any claim that service of process made in accordance with
clause (x) or (y) does not constitute good and valid service of
process.




Section
9.10.        Interpretation .  All
references to immediately available funds or dollar amounts contained in this
Agreement shall mean United States dollars.  The headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.  The parties
acknowledge and agree that (i) each party and its counsel have reviewed the
terms and provisions of this Agreement and have contributed to its revision,
(ii) the normal rule of construction, to the effect that any ambiguities are
resolved against the drafting party, shall not be employed in the interpretation
of it, and (iii) the terms and provisions of this Agreement shall be constructed
fairly as to all parties hereto and not in favor or against any party,
regardless of which party was generally responsible for the preparation of this
Agreement.  All references to Schedules and Exhibits refer to the
Schedules and Exhibits of this Agreement, unless otherwise expressly
provided.  The term “including” means “including without
limitation.”




Section
9.11.        Specific
Performance .  Each
of the parties hereto acknowledges and agrees that the other parties hereto
would be irreparably damaged in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  Accordingly, each of the parties hereto agrees
that, in addition to any other remedy to which such party may be entitled at law
or in equity, they each shall be entitled to an injunction or injunctions to
prevent breaches of the provisions of this Agreement and to enforce specifically
this Agreement, the terms and provisions hereof.




Section
9.12.        Severability .  If
any provision of this Agreement or the application of any such provision to any
person or circumstance shall be held invalid, illegal or unenforceable in any
respect by a court of competent jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.  The
parties further agree to replace any such invalid or unenforceable provisions of
this Agreement with valid and enforceable provisions which will achieve, to the
extent possible, the economic, business and other purposes of the invalid or
unenforceable provisions.




Section
9.13.        Counterparts .  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same
instrument.  Any such counterpart may be executed by facsimile
signature with only verbal confirmation, and when so executed and delivered
shall be deemed an original and such counterpart(s) together shall constitute
only one original.




[The
balance of this page intentionally left blank]


49


IN
WITNESS WHEREOF, the parties have executed this Stock Purchase and Sale
Agreement as of the date first written above.




COMPANY:HYALURON,
      INC.By:
                /s/ Shawn D. KinneyShawn
      D. KinneyPresidentSELLERS:/s/ Shawn D. KinneyShawn
      D. Kinney/s/ William A. Crider,
  Jr.William
      A. Crider, Jr.BUYER:ALBANY
      MOLECULAR RESEARCH, INC.By:
                /s/ Michael P. WilliamsMichael
      P. WilliamsCorporate
      Secretary


50