Exhibit 10.1




Exhibit 10.1


ASSET PURCHASE AGREEMENT




This Asset Purchase Agreement (this “Agreement”) is entered into as of October 31,
2011 by and between World Energy Solutions, Inc., a Delaware corporation (the “Buyer”), and
GSE Consulting, LP, a Texas limited partnership (the “Seller”).



This Agreement contemplates a transaction in which the Buyer will purchase substantially all
of the assets and assume none of the liabilities except as described below of the Seller.



Capitalized terms used in this Agreement shall have the meanings ascribed to them in
Article VII.



In consideration of the representations, warranties and covenants herein contained, the
Parties agree as follows.



ARTICLE I




THE ASSET PURCHASE





1.1 Purchase and Sale of Assets.



(a) Upon and subject to the terms and conditions of this Agreement, including, without
limitation, the payment obligations set forth in Section 1.4, the Buyer shall purchase from
the Seller, and the Seller shall sell, transfer, convey, assign and deliver to the Buyer, at the
Closing, for the consideration specified below in this Article I, all right, title and
interest in, to and under the Acquired Assets, including all right, title and interest in, to, and
under the Supplier Agreements.



(b) Notwithstanding the provisions of Section 1.1(a), the Acquired Assets shall not
include the Excluded Assets.




1.2 Assumption of Liabilities.



(a) Upon and subject to the terms and conditions of this Agreement, the Buyer shall assume and
become responsible for, from and after the Closing, only the Assumed Liabilities.



(b) Notwithstanding the terms of Section 1.2(a) or any other provision of this
Agreement to the contrary, the Buyer shall not assume or become responsible for, and the Seller
shall remain liable for, the Retained Liabilities.



1.3 Purchase Price. The Purchase Price to be paid in accordance with Section
1.4 by the Buyer for the Acquired Assets at the Closing will consist of:



(a) $5,400,000 in cash; and



(b) the issuance, within three (3) days following the Closing, of 1,000,000 Shares at the
NASDAQ Price.


 


 









 





Notwithstanding the foregoing, up to an additional $4,500,000 in cash will be paid to Seller
in accordance with the terms of Section 1.7 below.



1.4 Payment of Purchase Price. The Purchase Price to be paid by Buyer shall be
payable as set forth in this Section 1.4.




On the Closing Date, the Buyer shall pay the Purchase Price as follows:



(i) Buyer shall pay Three Million Eight Hundred Sixty-Nine Thousand Eight Hundred Seventy-One
Dollars and Thirty-Two Cents ($3,869,871.32) by wire transfer of immediately available funds to an
account designed in writing by the Seller;



(ii) Buyer shall pay One Million Five Hundred Thirty Thousand One Hundred Twenty-Eight Dollars
and Sixty-Eight Cents ($1,530,128.68) by wire transfer of immediately available funds to Encore
Bank for the purposes of paying Seller’s outstanding principal loan amount and interest; and



(iii) Buyer shall issue to Seller 1,000,000 Shares.



1.5 The Closing.



(a) The Closing shall take place remotely upon the execution and delivery of this Agreement by
all of the parties hereto. All transactions at the Closing shall be deemed to take place
simultaneously, and no transaction shall be deemed to have been completed and no documents or
certificates shall be deemed to have been delivered until all other transactions are completed and
all other documents and certificates are delivered.




(b) At the Closing:



(i) the Seller shall execute and deliver to the Buyer a bill of sale in substantially the form
attached hereto as Exhibit A (the “Bill of Sale”) in order to effect the sale,
transfer, conveyance and assignment to the Buyer of valid ownership of the Acquired Assets, save
and except for all right, title and interest in, to and under the Supplier Agreements;



(ii) each of Buyer and Seller shall execute and deliver to the other Party an instrument of
assignment and assumption agreement in substantially the form attached hereto as Exhibit B
with respect to all Assigned Contracts in order to effect the assumption by the Buyer of the
Assumed Liabilities arising out of any Assigned Contracts (the “Assignment and Assumption
Agreement”);



(iii) the Buyer shall pay to the Seller, payable by wire transfer or other delivery of
immediately available funds to an account designated by the Seller, the portion of the Purchase
Price set forth in Section 1.4(a)(i);


 


- 2 -









 





(iv) the Buyer shall pay to Encore Bank, payable by wire transfer or other delivery of
immediately available funds to an account designated by Encore Bank, the portion of the Purchase
Price set forth in Section 1.4(a)(ii); and



(v) the Buyer and the Seller shall execute and deliver to each other a cross-receipt
evidencing the transactions referred to above.



1.6 Allocation. The Buyer and the Seller agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets and the non-solicitation and
non-competition covenants set forth in Sections 4.4 and 4.5 for all purposes
(including financial accounting and tax purposes) in accordance with the allocation schedule
attached hereto as Schedule 1.6. Buyer and Seller agree to use the allocations determined
pursuant to this Section 1.6 for all tax purposes, including without limitation, those
matters subject to Section 1060 of the Code, and the Treasury regulations promulgated thereunder.
Buyer and Seller shall prepare and submit to the other for review their IRS Forms 8594 within
ninety (90) days after the Closing. Each party shall have thirty (30) days to complete its review.



1.7 Earnout. For clarification, the Earnout Payments below are individual payments
for each period, one of which is based on Annualized New Bookings and the other of which is based
upon Renewal Rate. The Earnout Payment for each applicable period shall be the amount
corresponding to the Annualized New Bookings or Renewal Rate, as the case may be, as set forth in
the applicable tables below. For example, if the Annualized New Bookings were $400,000 and the
Renewal Rate was 84%, each for the period from November 1, 2011 and October 31, 2012 the 2012
Earnout Payment shall be $250,000, representing $0 attainment for Annualized New Bookings below
$500,000 and $250,000 attainment for Renewal rate percentage achievement.



(a) 2011 Earnout. The Seller will be paid for Buyer, Seller or any Affiliate of Buyer
achieving Annualized New Bookings and Renewal Rate milestones based on the following (the “2011
Earnout Payment”):



	 	 	 	 	 	 	 
	 	 	Earnout for	 	 	 	 
	Amount of Annualized	 	Annualized	 	 	 	Earnout for Renewal
	New Bookings	 	New Bookings	 	Renewal Rate	 	Rates
	$50,000+
	 	$1,500,000
	 	10%+
	 	$500,000






The measurement period for the 2011 Earnout Payment will be from October 1, 2011 through December
31, 2011. Payment of all undisputed portions of the 2011 Earnout Period achieved shall be made on
or before January 31, 2012 by wire transfer or other delivery of immediately available funds to an
account designated by the Seller. For the avoidance of doubt, the calculation of the 2011 Earnout
Payment shall include Annualized New Bookings and Renewal Rate realized by Seller, Buyer or any
Affiliate of Buyer starting on October 1, 2011 through the Closing Date.


 


- 3 -









 





(b) 2012 Earnout. The Seller will be paid for Buyer or any Affiliate of Buyer
achieving Annualized New Bookings and Renewal Rate milestones based on the following (the “2012
Earnout Payment”):



	 	 	 	 	 	 	 
	 	 	Earnout for	 	 	 	 
	Amount of Annualized	 	Annualized	 	 	 	Earnout for Renewal
	New Bookings	 	New Bookings	 	Renewal Rate	 	Rates
	$0 – $499,999
	 	$0
	 	0% to 49.99%
	 	$0
	$500,000 – $999,999
	 	$500,000
	 	50%+
	 	$250,000
	$1,000,000
	 	$1,250,000	 	 	 	 






The measurement period for the 2012 Earnout Payment will be from November 1, 2011 through October
31, 2012. Payment of all undisputed portions of the 2012 Earnout Payment shall be made on or
before January 15, 2013 by wire transfer or other delivery of immediately available funds to an
account designated by the Seller.



(c) 2013 Earnout. The Seller will be paid for Buyer or any Affiliate of Buyer
achieving Annualized New Bookings and Renewal Rate milestones based on the following (the “2013
Earnout Payment,” and together with each of the 2011 Earnout Payments and the 2012 Earnout
Payments, each an “Earnout Payment,” and collectively, the “Earnout Payments”):



	 	 	 	 	 	 	 
	 	 	Earnout for	 	 	 	 
	Amount of Annualized	 	Annualized	 	 	 	Earnout for Renewal
	New Bookings	 	New Bookings	 	Renewal Rate	 	Rates
	$0 – $999,999
	 	$0
	 	0% to 49.99%
	 	$0
	$1,000,000+
	 	$750,000
	 	50%+
	 	$250,000






The measurement period for the 2013 Earnout Payment will be from November 1, 2012 through October
31, 2013. Payment of all undisputed portions of the 2013 Earnout Payment shall be made on or
before January 15, 2014 by wire transfer or other delivery of immediately available funds to an
account designated by the Seller.



The 2012 Earnout Payment and the 2013 Earnout Payment shall be paid on the applicable due dates
based on the earnout achieved plus accrued interest in the amount of four percent (4%) simple
annual interest calculated from the Closing Date only on the portion of the earnout achieved.




(d) For purposes of this Section 1.7:



(i) The calculation of Annualized New Bookings and Renewal Rate shall include all amounts due
and payable pursuant to the Supplier Agreements during the applicable measurement period, whether
or not such amounts are invoiced, and/or received by Buyer on or prior to the expiration of the
applicable measurement period;



(ii) At all times prior to the expiration of the measurement period for the 2013 Earnout
Payment, Buyer shall use Commercially Reasonable Efforts to (i) maintain the staffing levels,
marketing, billing, invoice, collection and relationship management procedures as conducted by
Seller in the Ordinary Course of Business immediately prior to the Closing Date, (ii) not
unreasonably delay any marketing initiatives, execution of new Supplier Agreements, or any response
to energy suppliers with respect to the Supplier Agreements, (iii) not modify, terminate, grant
concessions, or amend in any material way the payment terms of, or breach, any
Supplier Agreement, (iv) not divert any new or current customers or suppliers to any Affiliate
of Buyer or any third party to provide the services currently provided by Seller in the Ordinary
Course of Business, or (v) take any other act for the purposes, directly or indirectly, of
precluding Seller from receiving the full benefit of the Earnout Payments; and


 


- 4 -









 





(iii) For purposes of calculating the applicable Earnout Payments, in the event of a breach by
Buyer of its obligations under Section 1.7(d)(ii), Seller shall be deemed to have achieved
the Annualized New Bookings and Renewal Rate necessary to achieve the Earnout Payments with respect
to the measurement period affected by the events set forth in (A).



(e) As promptly as possible, but in no event later than each applicable payment date of each
Earnout Payment, the Buyer shall deliver to Seller a written statement setting forth Buyer’s
calculation of the applicable Earnout Payment together with reasonable documentation supporting the
calculation thereof (the “Earnout Statement”). Within thirty (30) days after receipt of
such Earnout Statement (the “Earnout Objection Period”), Seller must notify Buyer of any
objections to Buyer’s determinations of the applicable Earnout Payment, providing in reasonable
detail the basis for such objections. In the event that Seller does not timely or properly notify
Buyer within the Earnout Objection Period that Seller has any objections to such statements or
Buyer’s calculation of the applicable Earnout Payment shall be final and binding hereunder. In the
event that Seller does notify Buyer, within the Earnout Objection Period, that Seller has any such
objection, then Buyer and Seller shall attempt to resolve such disputed items. In the event Seller
and Buyer are unable to resolve the disputed items within thirty (30) days after receipt by Buyer
of Seller’s notice of dispute, the Parties’ respectively engaged independent certified public
accountants shall attempt to resolve the disputed items. In the event that such accounting firms
are unable to resolve such disputed items within sixty (60) days of Seller’s notice of dispute,
such disputed items shall be referred to such independent accounting firm as mutually agreed upon
by Buyer and Seller or, in the absence of such agreement such independent accounting firm as Seller
and Buyer’s respective accounting firms jointly appoint to finally resolve such disputed items
(provided that such firm has not within the preceding thirty-six (36) months had a, and does not
have a current or prospective, business relationship with Buyer or Seller, or any of their
respective Affiliates). The determination of such accounting firm shall be made as promptly as
possible and shall be final and binding upon the parties absent demonstrable error acknowledged by
such accounting firm; provided, however, that in no event shall the determination
of such accounting firm be less than the initial determination of the applicable Earnout Payment
calculated by Buyer set forth in the Earnout Statement. Seller and Buyer each shall be permitted
to submit such data and information to such accounting firm as such party deems appropriate. The
parties shall share responsibility for the out-of-pocket expenses and fees incurred in connection
with resolving such disputed items as follows: (A) if the accounting firm’s determination results
in additional amounts payable to Seller as Earnout Payment, Buyer will be responsible for all of
the fees and expenses of the accounting firm; and (B) if the accounting firm’s determination does
not result in additional amounts payable to Seller as Earnout Payment, Seller will be responsible
for all of the fees and expenses of the accounting firm. Any additional amounts payable to Seller
as an Earnout Payment determined by this Section 1.7(e) shall be made within three (3)
business days after the applicable Earnout Payment has been finally determined in accordance with
this Section 1.7(e) by wire transfer or other delivery of immediately available funds to an
account designated by the Seller.


 


- 5 -









 






1.8 Post Closing Adjustment.



(a) The calculation of the Purchase Price was based, in part, on the Expected Backlog in the
amount of $4,322, 812.00. “Expected Backlog” means the amounts expected to be received by
Buyer for the period (the “True Up Period”) commencing on November 1, 2011 and ending on
January 31, 2013 (the “True Up Date”) as commodity brokerage fees or otherwise pursuant to
the Supplier Agreements in force for completed procurements as of November 1, 2011 (the
“Backlog Contracts”) with respect to expected transactions between energy suppliers and end
users of energy (customers) assuming end users consume energy at projected levels. Within sixty
(60) days following the True Up Date, Buyer shall prepare and deliver to Seller a final
determination of the actual amounts payable to Buyer as commodity brokerage fees or otherwise
pursuant to the Backlog Contracts for the True Up Period (the “Final Backlog”) and, based
thereon, calculate the amount payable to Buyer or Seller, if any, pursuant to Section
1.8(c) (the “True Up Amount”). Seller shall deliver with the payment of the True Up
Amount such a written statement it has prepared to support each such determination and Seller shall
be entitled to review any working papers, trial balances and similar materials relating to such
statements prepared by or on behalf of Buyer (the “Backlog Statement”).




(b) For purposes of this Section 1.8:



(i) The Final Backlog shall include all amounts due and payable pursuant to the Backlog
Contracts during the True Up Period, whether or not such amounts are invoiced by Buyer on or prior
to the True Up Date;



(ii) At all times during the True Up Date Period, Buyer shall use Commercially Reasonable
Efforts to (i) maintain the billing, invoice, collection and relationship management procedures as
conducted by Seller in the Ordinary Course of Business immediately prior to the Closing Date, (ii)
shall not unreasonably delay of any collection activities, the submission of any invoice, or any
response to energy suppliers with respect to the Backlog Contracts, and (iii) shall not modify,
terminate, grant concessions, or amend in any material way the payment terms of any Backlog
Contract; and



(iii) For purposes of calculating the True Up Amount, in the event of a breach by Buyer of its
obligations under Section 1.8(b)(ii), Seller shall be deemed to have achieved the Expected
Backlog with respect to any Backlog Contract affected by the events set forth in (A).



(c) Within thirty (30) days after receipt of such statements and schedules (the “Backlog
Objection Period”), Seller must notify Buyer of any objections to Buyer’s determinations of the
Final Backlog and True Up Amount, providing in reasonable detail the basis for such objections. In
the event that Seller does not timely or properly notify Buyer within the Backlog Objection Period
that Seller has any objections to such statements or Buyer’s calculation of the final True Up
Amount, then the Final Backlog and True Up Amount shall be final and binding hereunder. In the
event that Seller does notify Buyer, within the Backlog Objection Period, that Seller has any such
objection, then Buyer and Seller shall attempt to resolve such disputed items. In the event Seller
and Buyer are



 


- 6 -









 






unable to resolve the disputed items within thirty (30) days after receipt by Buyer
of Seller’s notice of dispute, the parties’ respectively engaged independent certified public accountants shall attempt to resolve the
disputed items. In the event that such accounting firms are unable to resolve such disputed items
within sixty (60) days of Seller’s notice of dispute, such disputed items shall be referred to such
independent accounting firm as mutually agreed upon by Buyer and Seller or, in the absence of such
agreement such independent accounting firm as Seller and Buyer’s respective accounting firms
jointly appoint to finally resolve such disputed items (provided that such firm has not within the
preceding thirty-six (36) months had a, and does not have a current or prospective, business
relationship with Buyer or Seller, or any of their respective Affiliates. The determination of
such accounting firm shall be made as promptly as possible and shall be final and binding upon the
parties absent demonstrable error acknowledged by such accounting firm. Seller and Buyer each shall
be permitted to submit such data and information to such accounting firm as such party deems
appropriate. The parties shall share responsibility for the out-of-pocket expenses and fees
incurred in connection with resolving such disputed items as follows: (A) if the accounting firm’s
determination results in additional amounts payable to Seller as True Up Amount, Buyer will be
responsible for all of the fees and expenses of the accounting firm; and (B) if the accounting
firm’s determination does not result in additional amounts payable to Seller as True Up Amount,
Seller will be responsible for all of the fees and expenses of the accounting firm.



(d) If the Final Backlog for the True Up Period is less than $4,106,671, representing 95% of
the Expected Backlog, then Buyer shall retain from the amounts payable to Seller as the 2013
Earnout Payment, an amount equal to the difference between (i) $4,106,671 of the Expected Backlog
and (ii) the Final Backlog. For illustrative purposes only, if the Expected Backlog is $4,322,812
and the Final Backlog is $4,020,215 then Buyer shall retain $86,456 [($4,322,812 * .93) -
$4,020,215] of the amounts to be paid as earned under the 2013 Earnout Payment. If the Final
Backlog received is greater than $4,538,953, representing 105% of Expected Backlog, then Buyer
would remit to Seller, within three (3) business days of Buyer’s determination of the Final
Backlog, by wire transfer or other delivery of immediately available funds to an account designated
by the Seller, an amount equal to the difference between (i) the Final Backlog and (ii) 105% of the
Expected Backlog on or prior to April 30, 2013, net of any commissions due to referral partners or
employees. For illustrative purposes only, if the Expected Backlog is $4,322,812 and the Final
Backlog is $4,625,409, representing 107% of the Expected Backlog, then Buyer shall remit to Seller
$86,456 [$4,625,409 — ($4,322,812 * 1.07)].



1.9 Further Assurances. At any time and from time to time after the Closing, at the
reasonable request of a Party and without further consideration, the other Party shall execute and
deliver such other instruments of sale, transfer, conveyance and assignment and take such actions
as the applicable Party may reasonably request to more effectively transfer, convey and assign to
the Buyer, to confirm the Buyer’s rights to, title in and ownership of, the Acquired Assets and to
place the Buyer in actual possession and operating control thereof, and to confirm Buyer’s
assumption of the Assumed Liabilities.



1.10 Withholding. Notwithstanding any other provision of this Agreement, the Buyer
shall be entitled to deduct and withhold from the payments to be made pursuant to this Agreement
such amounts as it reasonably determines after consultation with its Tax advisors that it is
required to deduct and withhold with respect to the making of such payments under the Code or any
other applicable provision of law and to collect Forms W-8 or W-9, as applicable, or similar
information from the Seller, the Partners and any other recipients of payments hereunder. To
the extent that amounts are so withheld by the Buyer, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the recipient in respect of which such
deduction and withholding was made by the Buyer.


 


- 7 -









 





ARTICLE II




REPRESENTATIONS AND WARRANTIES OF THE SELLER




The Seller represents and warrants to the Buyer that, except as set forth in the Disclosure
Schedule, the statements contained in this Article II are true and correct as of the
Closing, except to the extent such representations and warranties are specifically made as of a
particular date (in which case such representations and warranties were true and correct as of such
date). The Disclosure Schedule shall be arranged in sections and subsections corresponding to the
numbered and lettered sections and subsections contained in this Article II. With respect to each
such disclosure of the Disclosure Schedule, notwithstanding any reference to a specific section,
all such information shall be deemed to qualify all other sections, where applicable, and not just
such section.



2.1 Organization, Qualification and Corporate Power. The Seller is a limited
partnership duly organized, validly existing and in corporate and tax good standing under the laws
of the State of Texas. The Seller is duly qualified to conduct business and is in good standing
(including tax good standing) under the laws of each jurisdiction listed in Section 2.1 of
the Disclosure Schedule, which jurisdictions constitute the only jurisdictions in which the nature
of the Seller’s businesses or the ownership or leasing of its properties requires such
qualification, except where the failure to be so qualified, authorized or in good standing would
not reasonably be expected to have a Seller Material Adverse Effect. The Seller has all requisite
power and authority to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. The Seller has furnished to the Buyer complete and accurate
copies of its organizational and operating documents and agreements (including without limitation
its limited partnership agreement) and the Seller is not in default under or in violation of any
provision of such documents and agreements, except where such default or violation would not
reasonably be expected to have a Seller Material Adverse Effect.



2.2 Capitalization. GSE Consulting GP, LLC, Glenwood Energy Partners, Ltd., and Gulf
States Energy, Inc. (the “Partners”) constitute all of the partners of the Seller. There
are no options, warrants or other instruments giving any party the right to acquire any equity
interest in the Seller. There are no outstanding agreements or commitments to which the Seller is
a party or which are binding upon the Seller providing for the redemption of any of its partnership
interests.




2.3 Authorization of Transaction.



(a) The Seller has all requisite power and authority to execute and deliver this Agreement and
the Ancillary Agreements and to perform its obligations hereunder and thereunder. The execution
and delivery by the Seller of this Agreement and the Ancillary Agreements, the performance by the
Seller of this Agreement and the Ancillary Agreements and
the consummation by the Seller of the transactions contemplated hereby and thereby have been
duly and validly authorized by all necessary action on the part of the Seller and its Partners.


 


- 8 -









 





(b) This Agreement has been duly and validly executed and delivered by the Seller and
constitutes, and each of the Ancillary Agreements, upon its execution and delivery by the Seller
who are party thereto, will constitute, a valid and binding obligation of the Seller who are party
thereto, enforceable against the Seller who is party thereto in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity).



2.4 Noncontravention. Except as set forth on Schedule 2.4, neither the
execution and delivery by the Seller of this Agreement or the Ancillary Agreements to which they
are party, nor the consummation by the Seller of the transactions contemplated hereby or thereby,
will (a) conflict with or violate any provision of the organizational and operational documents and
agreement of the Seller (including without limitation its limited liability agreement), (b) require
on the part of the Seller any notice to or filing with, or any permit, authorization, consent or
approval of, any Governmental Entity, (c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the acceleration of
obligations under, create in any party the right to terminate, modify or cancel, or require any
notice, consent or waiver under, any contract or instrument to which the Seller is a party or by
which the Seller is bound or to which any of their respective assets is subject, (d) result in the
imposition of any Security Interest upon any assets of the Seller or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Seller or any of its properties
or assets, except, in each case of (a) through (c), where such breach or violation would not
reasonably be expected to have a Seller Material Adverse Effect.



2.5 Subsidiaries. Seller has no Subsidiaries. The Seller does not control directly
or indirectly or have any direct or indirect equity participation or similar interest in any
corporation, partnership, limited liability company, joint venture, trust or other business
association or entity.



2.6 Financial Statements. The Financial Statements have been prepared in a consistent,
reasonable, complete and accurate manner throughout the periods covered and fairly present in all
material respects the financial condition of the Company for the periods covered thereby,
consistent with the books and records of the Seller, except that the unaudited interim financial
statements are subject to normal and recurring year-end adjustments which will not be material in
amount or effect and do not include footnotes. Except as set forth in the Financial Statements,
the Company has no material liabilities or obligations, contingent or otherwise, other than (i)
liabilities incurred in the ordinary course of business subsequent to September 30, 2011, (ii)
obligations under contracts and commitments incurred in the Ordinary Course of Business and (iii)
any other liabilities and obligations of a type or nature, which, in all such cases, individually
and in the aggregate would not have a Seller Material Adverse Effect.



2.7 Absence of Certain Changes. Since December 31, 2010, there has occurred no event
or development which, individually or in the aggregate, has had, or could reasonably be expected to
have in the future, a Seller Material Adverse Effect.


 


- 9 -









 






2.8 Tax Matters.



(a) The Seller has properly filed on a timely basis all material Tax Returns that it is and
was required to file, and all such Tax Returns were true, correct and complete in all material
respects. All material Taxes that the Seller is or was required by law to withhold or collect have
been withheld or collected and, to the extent required, have been properly paid on a timely basis
to the appropriate Governmental Entity. The Seller has complied with all information reporting and
back-up withholding requirements in all material respects, including maintenance of the required
records with respect thereto, in connection with amounts paid to any employee, independent
contractor, creditor or other third party, except where such non-compliance would not reasonably be
expected to have a Seller Material Adverse Effect.



(b) No examination or audit of any Tax Return of the Seller by any Governmental Entity is
currently in progress or, to the Knowledge of the Seller, threatened or contemplated. Section
2.8(b) of the Disclosure Schedule sets forth each jurisdiction (other than United States
federal) in which the Seller files, or is required to file or has been required to file a material
Tax Return or is or has been liable for material Taxes on a “nexus” basis. The Seller has not been
informed by any jurisdiction that the jurisdiction believes that the Seller was required to file
any Tax Return that was not filed.



(c) The Seller is, and has been since its inception, a limited partnership validly classified
and treated as a partnership for federal income tax purposes and has been validly treated in a
similar manner for purposes of the income Tax laws of all states in which it has been subject to
taxation.



(d) Except as set forth in Section 2.8(d) of the Disclosure Schedules, the Seller has
delivered or made available to the Buyer (i) complete and correct copies of all Tax Returns of the
Seller relating to Taxes for all Taxable periods for which the applicable statute of limitations
has not yet expired and (ii) complete and correct copies of all private letter rulings, revenue
agent reports, information document requests, notices of assessment, notices of proposed
deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements,
pending ruling requests and any similar documents submitted by, received by or agreed to by or on
behalf of the Seller relating to Taxes for all Taxable periods for which the applicable statute of
limitations has not yet expired.



(e) The Seller has not (i) waived any statute of limitations with respect to Taxes or agreed
to extend the period for assessment or collection of any Taxes, (ii) requested any extension of
time within which to file any Tax Return, which Tax Return has not yet been filed, or (iii)
executed or filed any power of attorney relating to Taxes with any Governmental Entity.




(f) The Seller is not a party to any litigation regarding Taxes.



(g) There are no Security Interests with respect to Taxes upon any of the Acquired Assets,
other than with respect to Taxes not yet due and payable. There is no basis for the assertion of
any claim relating or attributable to Taxes.


 


- 10 -









 





(h) None of the Acquired Assets is “tax exempt use property” within the meaning of Section
168(h) of the Code.




(i) The Seller is not bound by any Tax indemnity, Tax sharing or Tax allocation agreement.




(j) The Seller is not a “foreign person” within the meaning of Section 1445 of the Code.




2.9 Ownership and Condition of Assets.



(a) The Seller is the true and lawful owner, and has good title to, all of the Acquired
Assets, free and clear of all Security Interests, except as set forth in Section 2.9(a) of
the Disclosure Schedule. Except as set forth on Schedule 2.9(a), upon the Closing, the
Buyer will become the true and lawful owner of, and will receive good title to, the Acquired
Assets, free and clear of all Security Interests.



(b) The Acquired Assets are sufficient for the conduct of the Seller’s businesses as presently
conducted and constitute all assets used by the Seller in such businesses. Each tangible Acquired
Asset is free from material defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear and tear) and is
suitable for the purposes for which it presently is used.



(c) Section 2.9(c) of the Disclosure Schedule lists individually all Acquired Assets
of a tangible nature (other than inventories) whose book value exceeds $5,000.



2.10 Owned Real Property. The Seller does not own and has never owned any real
property.



2.11 Real Property Leases. Section 2.11 of the Disclosure Schedule lists all
Leases. The Seller has delivered to the Buyer complete and accurate copies of the Leases. With
respect to each Lease:



(a) such Lease is legal, valid, binding, enforceable and in full force and effect, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing (regardless of
whether enforcement is sought in a proceeding at law or in equity);



(b) such Lease is assignable by the Seller to the Buyer solely with the consent or approval of
the Landlord and upon such assignment such Lease will continue to be legal, valid, binding,
enforceable and in full force and effect immediately following the Closing in accordance with the
terms thereof as in effect immediately prior to the Closing, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity);



(c) neither the Seller nor, to the Knowledge of the Seller, any other party, is in breach or
violation of, or default under, any such Lease, and no event has occurred, is pending or, to the
Knowledge of the Seller, is threatened, which, after the giving of notice, with lapse of
time, or otherwise, would constitute a breach or default by the Seller or, to the Knowledge of
the Seller, any other party under such Lease;


 


- 11 -









 






(d) there are no disputes, oral agreements or forbearance programs in effect as to such Lease;



(e) The Seller has not assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold; and



(f) to the Knowledge of the Seller, all facilities leased or subleased thereunder are supplied
with utilities and other services adequate for the operation of said facilities.




2.12 Intellectual Property.




(a) There are no Seller Registrations.




(b) Seller has no Patent Rights.



(c) Protection Measures. Seller has complied with all applicable contractual and legal
requirements pertaining to information privacy and security. No complaint relating to an improper
use or disclosure of, or a breach in the security of, any such information has been made or, to the
knowledge of the Seller, threatened against the Seller. To the knowledge of the Seller, there has
been no: (i) unauthorized disclosure of any third party proprietary or confidential information in
the possession, custody or control of the Seller or (ii) breach of the Seller’s security procedures
wherein confidential information has been disclosed to a third person.




2.13 Contracts.



(a) Section 2.13 of the Disclosure Schedule lists the following agreements (written or
oral) to which the Seller is a party as of the date of this Agreement:



(i) any agreement (or group of related agreements) for the lease of personal property from or
to third parties providing for lease payments in excess of $5,000 per annum or having a remaining
term longer than three months;



(ii) any agreement (or group of related agreements) for the purchase or sale of products or
for the furnishing or receipt of services (A) which calls for performance over a period of more
than one year, (B) which involves more than the sum of $5,000, or (C) in which the Seller has
granted manufacturing rights, “most favored nation” pricing provisions or marketing or distribution
rights relating to any products or territory or has agreed to purchase a minimum quantity of goods
or services or has agreed to purchase goods or services exclusively from a certain party;



(iii) any agreement concerning the establishment or operation of a partnership, joint venture
or limited liability company;


 


- 12 -









 





(iv) any agreement (or group of related agreements) under which it has created, incurred,
assumed or guaranteed (or may create, incur, assume or guarantee) indebtedness (including
capitalized lease obligations) involving more than $5,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or intangible;



(v) any agreement for the disposition of any significant portion of the assets or business of
the Seller (other than sales of products in the Ordinary Course of Business) or any agreement for
the acquisition of the assets or business of any other entity (other than purchases of inventory or
components in the Ordinary Course of Business);




(vi) any agreement concerning exclusivity or confidentiality;




(vii) any employment or consulting agreement;




(viii) any agreement involving any current or former officer or partner of the Seller;



(ix) any agreement which contains any provisions requiring the Seller to indemnify any other
party (excluding indemnities contained in agreements for the purchase, sale or license of products
entered into in the Ordinary Course of Business);



(x) any agreement under which the Seller is restricted from selling, licensing or otherwise
distributing any of its technology or products, or providing services to, customers or potential
customers or any class of customers, in any geographic area, during any period of time or any
segment of the market or line of business;



(xi) any agreement which would entitle any third party to receive a license or any other right
to intellectual property of the Buyer or any of the Buyer’s Affiliates following the Closing; and



(xii) any other agreement (or group of related agreements) either involving more than $5,000
or not entered into in the Ordinary Course of Business.



(b) The Seller has delivered to the Buyer a complete and accurate copy of each agreement
listed in Section 2.13 of the Disclosure Schedule. With respect to each agreement so
listed: (i) the agreement is legal, valid, binding and enforceable and in full force and effect,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in equity); (ii) for those
agreements to which the Seller is a party, the agreement is assignable by the Seller to the Buyer
without the consent or approval of any party (except as set forth in Section 2.4 of the
Disclosure Schedule) and as of the Closing will continue to be legal, valid, binding and
enforceable and in full force and effect immediately following the Closing in accordance with the
terms thereof as in effect immediately prior to the Closing, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles of equity, including principles
of
commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity); and (iii) neither the Seller nor, to the Knowledge of
the Seller, any other party, is in breach or violation of, or default under, any such agreement,
and no event has occurred, is pending or, to the Knowledge of the Seller, is threatened, which,
after the giving of notice, with lapse of time, or otherwise, would constitute a breach or default
by the Seller or, to the Knowledge of the Seller, any other party under such agreement.


 


- 13 -









 





2.14 Insurance. Section 2.14 of the Disclosure Schedule lists each insurance
policy (including fire, theft, casualty, comprehensive general liability, workers compensation,
business interruption, environmental, product liability, errors and omissions, professional
liability and automobile insurance policies and bond and surety arrangements) to which the Seller
is a party, all of which are in full force and effect. There is no material claim pending under
any such policy as to which coverage has been questioned, denied or disputed by the underwriter of
such policy. All premiums due and payable under all such policies have been paid, neither the
Seller nor the Buyer will be liable for retroactive premiums or similar payments, and the Seller is
otherwise in compliance in all material respects with the terms of such policies. The Seller has
no Knowledge of any threatened termination of, or premium increase with respect to, any such
policy. Seller’s insurance is adequate in terms of scope and coverage to pay all claims arising or
made prior to the Closing.



2.15 Litigation. There is no Legal Proceeding that is pending or to the Knowledge of
Seller, has been threatened in writing against the Seller, which (a) seeks either damages or
equitable relief in any way relating to the Seller or its business or (b) in any manner challenges
or seeks to prevent, enjoin, alter or delay the transactions contemplated by this Agreement. There
are no judgments, orders or decrees outstanding against the Seller.



2.16 Warranties. No product or service manufactured, sold, leased, licensed or
delivered by the Seller is subject to any guaranty, warranty, right of return, right of credit or
other indemnity other than third-party manufacturers’ warranties for which the Seller has no
liability.




2.17 Employees.



(a) Section 2.17 of the Disclosure Schedule contains a list of all employees of the
Seller, along with the position and the annual rate of compensation of each such person.
Section 2.17 of the Disclosure Schedule contains a list of all employees of the Seller who
are a party to a non-competition agreement with the Seller; copies of such agreements have
previously been delivered to the Buyer. Section 2.17 of the Disclosure Schedule contains a
list of all employees of the Seller who are not citizens of the United States. To the knowledge of
the Seller, no key employee or group of employees has any plans to terminate employment with the
Seller (other than for the purpose of accepting employment with the Buyer following the Closing) or
not to accept employment with the Buyer. The Seller is in compliance with all applicable laws
relating to the hiring and employment of employees, except where such non-compliance would not
reasonably be expected to have a Seller Material Adverse Effect.



(b) The Seller is not a party to or bound by any collective bargaining agreement, nor has any
of them experienced any strikes, grievances, claims of unfair labor practices or other collective
bargaining disputes. The Seller has no Knowledge of any
organizational effort made or threatened, either currently or within the past two years, by or
on behalf of any labor union with respect to employees of the Seller.


 


- 14 -









 






2.18 Employee Benefits.



(a) Section 2.18 of the Disclosure Schedule contains a complete and accurate list of
all Seller Plans.



(b) Each Seller Plan has been administered in all material respects in accordance with its
terms and each of the Seller and the ERISA Affiliates has in all material respects met its
obligations with respect to each Seller Plan and has made all required contributions thereto. To
the Knowledge of Seller, the Seller, each ERISA Affiliate and each Seller Plan are in compliance in
all material respects with the currently applicable provisions of ERISA and the Code and the
regulations thereunder (including Section 4980 B of the Code, Subtitle K, Chapter 100 of the Code
and Sections 601 through 608 and Section 701 et seq. of ERISA). All filings and reports as to each
Seller Plan required to have been submitted to the Internal Revenue Service or to the United States
Department of Labor have been duly submitted. No Seller Plan has assets that include securities
issued by the Seller or any ERISA Affiliate.



(c) There are no Legal Proceedings (except claims for benefits payable in the normal operation
of the Seller Plans and proceedings with respect to qualified domestic relations orders) against or
involving any Seller Plan or asserting any rights or claims to benefits under any Seller Plan that
could give rise to any material liability.



(d) All the Seller Plans that are intended to be qualified under Section 401(a) of the Code
have received determination letters from the Internal Revenue Service to the effect that such
Seller Plans are qualified and the plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of the Code, no such determination
letter has been revoked and revocation has not been threatened, and no such Seller Plan has been
amended since the date of its most recent determination letter or application therefor in any
respect, and no act or omission has occurred, that would adversely affect its qualification or
materially increase its cost. Each Seller Plan that is required to satisfy Section 401(k)(3) or
Section 401(m)(2) of the Code has been tested for compliance with, and satisfies the requirements
of Section 401(k)(3) and Section 401(m)(2) of the Code for each plan year ending prior to the
Closing Date.



(e) Neither the Seller nor any ERISA Affiliate has ever maintained an Employee Benefit Plan
subject to Section 412 of the Code or Title IV of ERISA.



(f) At no time has the Seller or any ERISA Affiliate been obligated to contribute to any
“multiemployer plan” (as defined in Section 4001(a)(3) of ERISA).



(g) There are no unfunded obligations under any Seller Plan providing benefits after
termination of employment to any employee of the Seller (or to any beneficiary of any such
employee), including but not limited to retiree health coverage and deferred compensation, but
excluding continuation of health coverage required to be continued under Section 4980B of the Code
or other applicable law and insurance conversion privileges under
state law. The assets of each Seller Plan which is funded are reported at their fair market
value on the books and records of such Seller Plan.


 


- 15 -









 





(h) No act or omission has occurred and no condition exists with respect to any Seller Plan
that would subject the Seller or any ERISA Affiliate to (i) any material fine, penalty, tax or
liability of any kind imposed under ERISA or the Code or (ii) any contractual indemnification or
contribution obligation protecting any fiduciary, insurer or service provider with respect to any
Seller Plan.



(i) No Seller Plan is funded by, associated with or related to a “voluntary employee’s
beneficiary association” within the meaning of Section 501(c)(9) of the Code.



(j) Section 2.18(j) of the Disclosure Schedule discloses each: (i) agreement with any
stockholder, director, executive officer or other key employee of the Seller (A) the benefits of
which are contingent, or the terms of which are altered, upon the occurrence of a transaction
involving the Seller of the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing severance benefits or
other benefits after the termination of employment of such director, executive officer or key
employee; (ii) agreement, plan or arrangement under which any person may receive payments from the
Seller that may be subject to the tax imposed by Section 4999 of the Code or included in the
determination of such person’s “parachute payment” under Section 280G of the Code; and (iii)
agreement or plan binding the Seller, including any stock option plan, stock appreciation right
plan, restricted stock plan, stock purchase plan, severance benefit plan or Seller Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the transactions contemplated by
this Agreement.



(k) Section 2.18(k) of the Disclosure Schedule sets forth the policy of the Seller
with respect to accrued vacation, accrued sick time and earned time off and the amount of such
liabilities as of the date hereof.



(l) Each Seller Plan that is a “nonqualified deferred compensation plan” (as defined in Code
Section 409A(d)(1)) has been operated since January 1, 2005 in good faith compliance with Code
Section 409A and IRS Notice 2005-1. No Seller Plan that is a “nonqualified deferred compensation
plan” has been materially modified (as determined under Notice 2005-1) after October 3, 2004. No
event has occurred that would be treated by Code Section 409A(b) as a transfer of property for
purposes of Code Section 83. No stock option or equity unit option granted under any Seller Plan
has an exercise price that has been or may be less than the fair market value of the underlying
stock or equity units (as the case may be) as of the date such option was granted or has any
feature for the deferral of compensation other than the deferral of recognition of income until the
later of exercise or disposition of such option.


 


- 16 -









 






2.19 Environmental Matters.



(a) The Seller has complied with all applicable Environmental Laws, except where such
non-compliance would not reasonably be expected to have a Seller Material Adverse
Effect. There is no pending or, to the Knowledge of the Seller, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or investigation,
inquiry or information request by any Governmental Entity, relating to any Environmental Law
involving the Seller.



(b) The Seller is not a party to or bound by any court order, administrative order, consent
order or other agreement with any Governmental Entity entered into in connection with any legal
obligation or liability arising under any Environmental Law.



2.20 Legal Compliance. The Seller has, at all times, conducted its business in
compliance with each applicable law (including rules and regulations thereunder) of any federal,
state, local or foreign government, or any Governmental Entity, except where such non-compliance
would not reasonably be expected to have a Seller Material Adverse Effect. The Seller has not
received any notice or communication from any Governmental Entity alleging noncompliance with any
applicable law, rule or regulation.



2.21 Customers. Section 2.21 of the Disclosure Schedule sets forth a list of
each customer that accounted for more than 10% of the consolidated revenues of the Seller during
the last full fiscal year or the interim period through the September 30, 2011 and the amount of
revenues accounted for by such customer during each such period.



2.22 Permits. Section 2.22 of the Disclosure Schedule sets forth a list of
all Permits issued to or held by the Seller. Each such Permit is in full force and effect; the
Seller is in compliance with the terms of each such Permit, except where such non-compliance would
not reasonably be expected to have a Seller Material Adverse Effect; and, to the Knowledge of the
Seller, no suspension or cancellation of such Permit is threatened.



2.23 Certain Business Relationships With Affiliates. No Affiliate of the Seller (a)
owns any property or right, tangible or intangible, which is material to the operation of the
business of the Seller, (b) has any claim or cause of action against the Seller, or (c) owes any
money to, or is owed any money by, the Seller



2.24 Brokers’ Fees. The Seller has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions contemplated by this
Agreement.



2.25 Books and Records. The books and records of the Seller accurately reflect the
assets, liabilities, business, financial condition and results of operations of the Seller and have
been maintained in accordance with reasonable business and bookkeeping practices. Section
2.25 of the Disclosure Schedule contains a list of the transferred bank accounts of the Seller
and the names of persons having signature authority with respect thereto or access thereto.


 


- 17 -









 





2.26 Government Contracts. The Seller has not been suspended or debarred from bidding
on contracts or subcontracts with any Governmental Entity; no such suspension or debarment has been
threatened or initiated; and the consummation of the transactions contemplated by this Agreement
will not result in any such suspension or debarment of the Seller or the Buyer (assuming that no
such suspension or debarment will result solely from the identity of the Buyer). The Seller has
not been or is now being audited or investigated by the United
States Government Accounting Office, the United States Department of Defense or any of its
agencies, the Defense Contract Audit Agency, the contracting or auditing function of any
Governmental Entity with which it is contracting, the United States Department of Justice, the
Inspector General of the United States Governmental Entity, or any prime contractor with a
Governmental Entity; nor, to the Knowledge of the Seller, has any such audit or investigation been
threatened. To the Knowledge of the Seller, there is no valid basis for (i) the suspension or
debarment of the Seller from bidding on contracts or subcontracts with any Governmental Entity or
(ii) any claim (including any claim for return of funds to the Government) pursuant to an audit or
investigation by any of the entities named in the foregoing sentence. The Seller has no
agreements, contracts or commitments which require it to obtain or maintain a security clearance
with any Governmental Entity.




2.27 Securities Laws.



(a) The Seller has been furnished all of the materials relating to the Buyer, and its payment
of the Purchase Price, that have been requested and each of them has been afforded an opportunity
to ask questions of, and receive answers from, management of the Buyer in connection with the
payment of the Purchase Price. The Seller and the Selling Parties have not been furnished with any
oral or written representation in connection with the payment of the Purchase Price by or on behalf
of the Buyer that each of them has relied on that is not contained in this Agreement.



(b) Each of the Seller and the Seller Parties: (i) is an “accredited investor” as defined in
Rule 501 of Regulation D under the Securities Act of 1933, as amended (the “Securities
Act”); (ii) has obtained, in its judgment, sufficient information to evaluate the merits and
risks of the payment of the Purchase Price with securities of the Buyer; (iii) has sufficient
knowledge and experience in financial and business matters to evaluate the merits and risks
associated with such payment of the Purchase Price with securities of the Buyer and to make an
informed investment decision with respect thereto, and (iv) has consulted with his or its own
advisors with respect to the receipt of securities as part of the Purchase Price.



(c) The securities being acquired hereunder are being acquired for each of the Seller and the
Seller Parties’ own account for investment and not for the benefit or account of any other person
and not with a view to, or in connection with, any unlawful resale or distribution thereof. Each
of the Seller and the Seller Parties fully understands and agrees that it must bear the economic
risk of the investment in securities received hereunder for an indefinite period of time because,
among other reasons, such securities received hereunder have not been registered under the
Securities Act or under the securities laws of any states, and, therefore, the securities are
“restricted securities” and cannot be resold, pledged, assigned or otherwise disposed of unless
they are subsequently registered under the Securities Act, amended and under the applicable
securities laws of such states or an exemption from such registration is otherwise available. Each
of the Seller and the Seller Parties understands that the Buyer is not under any obligation to
register such securities on the Seller and the Seller Parties’ behalf or to assist such Seller and
Seller Parties in complying with any exemption from registration under the Securities Act or
applicable state securities laws.



(d) Each of the Seller and the Seller Parties intends that the applicable state securities law
will apply to its receipt of the securities hereunder. Each of the Seller and the Seller Parties
meets all suitability standards imposed by the state securities laws relating to the receipt of the
securities as part of the Purchase Price hereunder without registering any of the Buyer’s
securities under the securities laws of such state.


 


- 18 -









 





ARTICLE III




REPRESENTATIONS AND WARRANTIES OF THE BUYER




The Buyer represents and warrants to the Seller that the statements contained in this
Article III are true and correct as of the date of this Agreement.



3.1 Organization and Corporate Power. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware. The Buyer has all
requisite corporate power and authority to carry on the businesses in which it is engaged and to
own and use the properties owned and used by it.



3.2 Authorization of the Transaction. The Buyer has all requisite power and authority
to execute and deliver this Agreement and the Ancillary Agreements and to perform its obligations
hereunder and thereunder. The execution and delivery by the Buyer of this Agreement and the
Ancillary Agreements and the consummation by the Buyer of the transactions contemplated hereby and
thereby have been duly and validly authorized by all necessary corporate action on the part of the
Buyer. This Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a valid and binding obligation of the Buyer, enforceable against it in accordance with
its terms.



3.3 Equity Consideration. The Shares to be issued to Buyer under this Agreement have
been duly and validly authorized by the Buyer. The shares have not been registered with the SEC
pursuant to the Securities Act, and the Buyer has no intention of effecting any such registration




3.4 Buyer SEC Documents; No Undisclosed Liabilities.



(a) Buyer has filed all reports, schedules, forms, statements and other documents (including
exhibits and other information incorporated therein) with the SEC required to be filed by Buyer
since January 1, 2010 (such documents, the “Buyer SEC Documents”). As of their respective
dates, the Buyer SEC Documents complied in all material respects with the requirements of the
Securities Act or the Securities and Exchange Act of 1934, as amended, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such Buyer SEC Documents,
and, as of their respective dates, none of the Buyer SEC Documents contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Buyer included in the Buyer SEC Documents complied as
to form in all material respects with applicable accounting requirements and the published rules
and regulations of the SEC with
respect thereto as of their respective dates, were prepared in accordance with GAAP (except,
in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes thereto) and fairly
presented in all material respects the financial position of Buyer and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).


 


- 19 -









 





(b) Except as set forth in the most recent financial statements included in the Buyer SEC
Documents filed by Buyer and publicly available prior to the date of this Agreement or for
liabilities incurred in connection with this Agreement or in the ordinary course of business since
the date of the most recent financial statements included in the Buyer SEC Documents, Buyer has no
liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that
would be required by GAAP to be reflected in, or reserved against or otherwise described in the
consolidated balance sheet of Buyer (including the notes thereto) which, individually or in the
aggregate, have had or would reasonably be expected to have a Buyer Material Adverse Effect.



3.5 Noncontravention. Neither the execution and delivery by the Buyer of this
Agreement or the Ancillary Agreements, nor the consummation by the Buyer of the transactions
contemplated hereby or thereby, will (a) conflict with or violate any provision of the Certificate
of Incorporation or by-laws of the Buyer, (b) require on the part of the Buyer any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, (c) conflict with, result
in breach of, constitute (with or without due notice or lapse of time or both) a default under,
result in the acceleration of obligations under, create in any party any right to terminate, modify
or cancel, or require any notice, consent or waiver under, any contract or instrument to which the
Buyer is a party or by which it is bound or to which any of its assets is subject, or (d) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to the Buyer or any of
its properties or assets, except, in each case of (a) through (d), where such breach or violation
would not reasonably be expected to have a Buyer Material Adverse Effect.



ARTICLE IV




POST-CLOSING COVENANTS





4.1 Governmental and Third-Party Notices and Consents.



(a) Each Party shall use its Commercially Reasonable Efforts to obtain, at its expense, all
waivers, permits, consents, approvals or other authorizations from Governmental Entities, and to
effect all registrations, filings and notices with or to Governmental Entities, as may be required
for such Party to consummate the transactions contemplated by this Agreement and to otherwise
comply with all applicable laws and regulations in connection with the consummation of the
transactions contemplated by this Agreement.



(b) Each Party shall for a period of one hundred eighty (180) days use its Commercially
Reasonable Efforts to obtain all such waivers, consents or approvals from third
parties, and to give all such notices to third parties, as listed or are required to be listed
in the Disclosure Schedule.


 


- 20 -









 





(c) If (i) any of the Assigned Contracts or other assets or rights constituting Acquired
Assets may not be assigned and transferred by the Seller to the Buyer (as a result of either the
provisions thereof or applicable law) without the consent or approval of a third party, (ii) the
Seller, after using its Commercially Reasonable Efforts, is unable to obtain such consent or
approval prior to the Closing and (iii) the Closing occurs nevertheless, then (A) such Assigned
Contracts and/or other assets or rights shall not be assigned and transferred by the Seller to the
Buyer at the Closing and the Buyer shall not assume the Seller’s liabilities or obligations with
respect thereto at the Closing, (B) the Seller shall continue to use its Commercially Reasonable
Efforts for one hundred and eighty (180) days to obtain the necessary consent or approval as soon
as practicable after the Closing, (C) upon the obtaining of such consent or approval, the Buyer and
the Seller shall execute such further instruments of conveyance (in substantially the form executed
at the Closing) as may be necessary to assign and transfer such Assigned Contracts and/or other
assets or rights (and the associated liabilities and obligations of the Seller) to the Buyer, and
(D) from and after the Closing until the assignment of each such Assigned Contract pursuant to
clause (C) above, the Buyer shall perform and fulfill, on a subcontractor basis, the obligations of
the Seller to be performed under such Assigned Contract, and the Seller shall promptly remit to the
Buyer all payments received by it under such Assigned Contract for services performed during such
period.



4.2 Collection of Supplier Agreement Revenues. Following the Closing, the Seller
will direct all suppliers making payments pursuant to the Supplier Agreements for which Seller has
not obtained consent to assignment to remit payment directly to a lockbox in the name of Buyer that
has been established with Silicon Valley Bank pursuant to a lockbox arrangement (the “Supplier
Agreement Lockbox”). The Seller agrees that it will forward promptly to the Supplier Agreement
Lockbox any monies, checks or instruments received by the Seller after the Closing Date (a)
pursuant to Supplier Agreements and (b) related to items earned, invoiced or to be invoiced after
November 1, 2011. The Seller shall grant to the Buyer a power of attorney to endorse and cash any
checks or instruments payable or endorsed to the Seller or its order which are received by the
Buyer pursuant to Supplier Agreements.



4.3 Proprietary Information. From and after the Closing Date, the Seller shall not
disclose or make use of (except to pursue and/or enforce its rights, under this Agreement or the
Ancillary Agreements), and shall use its best efforts to cause all of its Affiliates not to
disclose or make use of, any knowledge, information or documents of a confidential nature or not
generally known to the public with respect to Acquired Assets, the Seller’s business or the Buyer
or its business (including the financial information, technical information or data relating to the
Seller’s products and names of customers of the Seller), except to the extent (a) is known to the
public and did not become so known through any violation of a legal obligation on the part of the
Seller; (c) is required to be disclosed under the provisions of any applicable law, or by any
stock exchange or similar body; or (d) is required to be disclosed by a rule or order of any court
of competent jurisdiction. Notwithstanding the foregoing, Buyer acknowledges and agrees that the
Seller, and their owners, have developed relationships with the customers of the business of Seller
and each Seller Parties, and their owners may maintain such relationships for the purpose of
commercial activities that do not violate Sections 4.5.


 


- 21 -









 





4.4 Solicitation and Hiring. For a period of five (5) years after the Closing Date,
none of the Seller or the Partners (collectively the “Seller Parties”) shall, either
directly or indirectly (including through an Affiliate), (a) solicit or attempt to induce any
Restricted Employee to terminate his employment with the Buyer or any subsidiary of the Buyer,
except for general solicitations not directed at such employee or (b) hire or attempt to hire any
Restricted Employee; provided, that this clause (b) shall not apply to any individual whose
employment with the Buyer or a subsidiary of the Buyer has been terminated for a period of six
months or longer. The Seller, at the expense of Buyer, shall enforce, for the benefit of the
Buyer, all confidentiality, non-solicitation and non-hiring assignments and similar agreements
between the Seller and any other party which are not Assigned Contracts.




4.5 Non-Competition.



(a) During the Restricted Period, and, except as provided in Section 4.5(b) below,
each of the Seller Parties and each Owner shall not, either directly or indirectly as a owner,
partner, officer, employee, director, investor, lender, consultant, independent contractor or
otherwise, shall not engage in the business of soliciting bids from multiple suppliers to obtain
natural gas and electricity contracts in for end users. Each Seller Party shall enforce, for the
benefit of the Buyer, all non-competition and similar agreements between the Seller and any other
party which are not Assigned Contracts. Notwithstanding anything contained in this Agreement to
the contrary, in no event shall any Seller Party or Owner (i) have any obligation to ensure
compliance by any other Seller Party or Owner with this Section 4.5 or (ii) have any
liability whatsoever for the breach of this Section 4.5 by any other Seller Party or Owner.



(b) It is understood by the parties that (i) Great Lakes Energy Company and its subsidiaries
and Affiliates (collectively, “GLC”) is in the business of acting as a sole source
representative for a single supplier at any point in time to obtain natural gas and electricity
contracts for commercial and residential customers in any states where the sale of natural gas or
electricity has been “deregulated” including, without limitation, Illinois, Ohio, Pennsylvania,
Maryland, New York, New Jersey, Massachusetts and Maine and (ii) Branded Retail Energy Company and
its subsidiaries and Affiliates (together, “BREC”) is in the business of acting as a sole
source representative for a single supplier at any point in time to obtain natural gas and
electricity contracts in connection with university affinity programs including, without
limitation, University of Texas, Texas A&M University, Southern Methodist University, Baylor
University and University of Illinois. Notwithstanding the foregoing, (i) the conduct of the
business of GLC and BREC by any of Seller Parties or Owner or (ii) the ownership or operation of a
retail electricity provider (“REP”) or energy services company (“ESCO”) by GLC,
BREC or any of the Seller Parties or Owner, will not be deemed to violate Section 4.5.
Furthermore, it is hereby agreed by the parties that, until such time as GLC or any of its
successors or assigns become a REP or an ESCO, Seller Parties shall cause GLC to pay to Buyer the
lesser of (i) 50% of the millage fee paid, net of any commissions due to referral partners, or (ii)
$0.002, for each and every kwh purchased by customers of GLC who purchase in excess of 500,000 kwh
per year/per customer. At such time as GLC or its successors or assigns becomes an REP or an ESCO,
such payment obligation shall cease as of the date of the beginning of operations of the REP or
ESCO.


 


- 22 -









 





(c) Each Seller Party and Owner agrees that the duration and geographic scope of the
non-competition provision set forth in this Section 4.5 are reasonable. In the event
that any court determines that the duration or the geographic scope, or both, are unreasonable
and that such provision is to that extent unenforceable, the Parties agree that the provision shall
remain in full force and effect for the greatest time period and in the greatest area that would
not render it unenforceable. The Parties intend that this non-competition provision shall be
deemed to be a series of separate covenants, one for each and every county of each and every state
of the United States of America and each and every political subdivision of each and every country
outside the United States of America where this provision is intended to be effective.



(d) Except as related to GLC and BREC as provided above, the Seller Parties shall, and shall
use their best efforts to cause their Affiliates to, refer all inquiries regarding the business,
products and services of the Seller to the Buyer.




4.6 Tax Matters.



(a) All transfer taxes, deed excise stamps and similar charges related to the sale of the
Acquired Assets contemplated by this Agreement shall be paid by the Seller.



(b) Tax liabilities (other than Income Taxes) attributable to the business of Seller through
the Closing Date shall be borne by the Seller.



(c) All Taxes attributable to the conduct of the business of Seller subsequent to the Closing
shall be borne by the Buyer.



(d) All real property taxes, personal property taxes, and similar ad valorem obligations
levied with respect to the Acquired Assets, and all rents, utilities and other charges against the
Seller with respect to the Acquired Assets, for a taxable period that includes (but does not end
on) the Closing Date shall be apportioned between the Buyer and the Seller as of the Closing Date
based upon (i) the number of days of such taxable period included in any tax period (or portion
thereof) ending on or before the close of business on the Closing Date (the “Pre-Closing Tax
Period”) and (ii) the number of days of such taxable period included in any tax period (or
portion thereof) beginning after the Closing Date (the “Post-Closing Tax Period”). The
Seller shall be liable for all such Taxes relating to the Pre-Closing Tax Period, and the Buyer
shall be liable for all such Taxes relating to the Post-Closing Tax Period.



(e) If either party pays any Taxes to be borne by the other party under this Section
4.6, the other party shall promptly reimburse such paying party for the Taxes paid. If, in
preparing Tax returns or payments after the Closing, it appears to the Buyer that the Seller will
be asked to pay additional Taxes, the Buyer shall so notify the Seller, and provide the Seller a
reasonable opportunity to review and comment upon any related Tax Returns prior to filing them and
paying the Tax. If either party receives any refunds or credits which are the property of the
other party under this Section 4.6, such party shall promptly pay the amount of such
refunds or credits to the other party.



(f) The Buyer shall make available to the Seller and its representatives all records and
materials reasonably required by the Seller to prepare, pursue or contest any Tax matters related
to taxable periods (or portions thereof) ending on or before the Closing Date and shall provide
reasonable cooperation to the Seller in such case. The Seller shall make available to the Buyer
and its representatives all records and materials reasonably required by the Buyer to
prepare, pursue or contest any Tax matters arising after the Closing which have factual
reference to the Pre-Closing Tax Period and shall provide reasonable cooperation to the Buyer in
such case.


 


- 23 -









 






4.7 Sharing of Data.



(a) The Seller shall have the right for a period of seven years following the Closing Date to
have reasonable access to such books, records and accounts, including financial and tax
information, correspondence, production records, employment records and other records that are
transferred to the Buyer pursuant to the terms of this Agreement for the limited purposes of
concluding its involvement in the business conducted by the Seller prior to the Closing Date and
for complying with its obligations under applicable securities, tax, environmental, employment or
other laws and regulations. The Buyer shall have the right for a period of seven years following
the Closing Date to have reasonable access to those books, records and accounts, including
financial and accounting records (including the work papers of the Seller’s independent
accountants), tax records, correspondence, production records, employment records and other records
that are retained by the Seller pursuant to the terms of this Agreement to the extent that any of
the foregoing is needed by the Buyer for the purpose of conducting the business of the Seller after
the Closing and complying with its obligations under applicable securities, tax, environmental,
employment or other laws and regulations. Neither the Buyer nor the Seller shall destroy any such
books, records or accounts retained by it without first providing the other Party with the
opportunity to obtain or copy such books, records, or accounts at such other Party’s expense.



(b) Seller will cooperate with the Buyer’s auditors and Seller’s auditors to produce the
financial information and statements necessary so that Buyer may comply with its federal, state and
regulatory reporting requirements. Seller will respond to any reasonable requests made by the
Buyer, the Buyer’s auditors or the Seller’s auditors promptly. Promptly upon request by the Buyer
made at any time following the Closing Date, the Seller shall authorize the release to the Buyer of
all files pertaining to the Seller, the Acquired Assets or the business or operations of the Seller
held by any federal, state, county or local authorities, agencies or instrumentalities. Seller
understands that Buyer will suffer harm if it does not meet regulatory requirements regarding
reporting of this transaction.



4.8 Use of Name. No Seller Party shall use, or permit any Affiliate to use, the name
GSE Consulting or any name reasonably similar thereto after the Closing Date, other than for the
purpose of Seller fulfilling its obligations under this Agreement.



4.9 Collection of Accounts Receivable. Following the Closing Seller agrees that it
shall forward promptly to the Buyer any monies, checks or instruments received by the Seller after
the Closing Date with respect to the accounts receivable purchased by the Buyer from the Seller
pursuant to this Agreement. The Seller shall provide to the Buyer such reasonable assistance as
the Buyer may request with respect to the collection of any such accounts receivable, provided the
Buyer pays the reasonable out-of-pocket expenses of the Seller and its officers, directors and
employees incurred in providing such assistance. The Seller hereby grants to the Buyer a power of
attorney to endorse and cash any checks or instruments payable or endorsed to
the Seller or its order which are received by the Buyer and which relate to accounts
receivable purchased by the Buyer from the Seller.


 


- 24 -









 





4.10 Employees. Effective as of the Closing, the Seller shall terminate the
employment of each of its employees. The Buyer shall be permitted to offer employment to each such
employee, terminable at the will of the Buyer. The Seller hereby consents to the hiring of any
such employees by the Buyer and waives, with respect to the employment by the Buyer of such
employees, any claims or rights the Seller may have against the Buyer or any such employee under
any non-competition, confidentiality or employment agreement.



4.11 Conditional Registration. If, as of the date that is six (6) months after the
date of issuance of any of the Shares to the Share Recipients, Buyer’s counsel reasonably
determines that any of such Shares may not be resold by a Share Recipient without restriction by
the volume limitations under Rule 144 of the Securities Act, then with respect to such Shares held
by Share Recipients, Buyer shall, upon receipt of a written request from any Share Recipient (the
“Registration Request”) received no later than the date that is one (1) year after the date of
issuance of any of the Shares to the Share Recipients:



(a) subject to receipt of necessary information from the Share Recipients after prompt request
from the Buyer to the Share Recipients to provide required Share Recipient information, prepare and
file with the SEC, within 90 days after Buyer’s receipt of the Registration Request, a
registration statement (the “Registration Statement”) to enable the resale of the Shares by the
Share Recipients;



(b) subject to receipt of necessary information from the Share Recipients after prompt request
from the Buyer to the Share Recipients to provide required Share Recipients information, use its
commercially reasonable efforts to cause the Registration Statement to become effective within 90
days after the Settlement Date; provided, however, that if the Buyer has an outstanding
confidential treatment request (“CTR”) application on file with the SEC as of the date the SEC
provides notice that it has not further comments, then the Buyer shall use its commercially
reasonable efforts to clear the CTR with the SEC and shall submit a request for acceleration of
effectiveness of the Registration Statement within two business days following clearance of the CTR
by the SEC;



(c) use commercially reasonable efforts to prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus related thereto (the “Prospectus”)
used in connection therewith as may be necessary to keep the Registration Statement current,
effective and free from any material misstatement or omission to state a material fact for a period
not exceeding, with respect to each Share Recipient’s Shares, until the earlier of (i) the date on
which the Share Recipient may sell all Shares then held by the Share Recipient without restriction
by the volume limitations of Rule 144 of the Securities Act, or (ii) such time as all Shares
purchased by such Share Recipients pursuant to this Agreement have been sold pursuant to a
registration statement;


 


- 25 -









 





(d) comply with any prospectus publication requirement then applicable to it and furnish to
each Share Recipient with respect to the Shares registered under the Registration Statement such
number of copies of the Registration Statement, Prospectuses (and preliminary
Prospectuses) in conformity with the requirements of the Securities Act and such other
documents as such Share Recipient may reasonably request, in order to facilitate the public sale or
other disposition of all or any of the Shares by such Share Recipient; provided, however, that the
obligation of the Buyer to deliver copies of Prospectuses (or preliminary Prospectuses) to the
Share Recipient shall be subject to the receipt by the Buyer of reasonable assurances from the
Share Recipient that the Share Recipient will comply with the applicable provisions of the
Securities Act and of such other securities or blue sky laws as may be applicable in connection
with any use of such Prospectuses (or preliminary Prospectuses);



(e) file documents required of the Buyer for normal blue sky clearance in states specified in
writing by the Share Recipient and use its commercially reasonable efforts to maintain such blue
sky qualifications during the period the Buyer is required to maintain the effectiveness of the
Registration Statement pursuant to Section 4.11(c); provided, however, that the Buyer shall
not be required to qualify to do business or consent to service of process in any jurisdiction in
which it is not now so qualified or has not so consented; and



(f) advise the Share Recipient, promptly after it shall receive notice or obtain knowledge of
the issuance of any stop order by the SEC delaying or suspending the effectiveness of the
Registration Statement or of the initiation or threat of any proceeding for that purpose; and it
will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or
to obtain its withdrawal at the earliest possible moment if such stop order should be issued; and



If the Buyer receives notification from the SEC that a Share Recipient whose Shares are subject to
the Registration Statement is deemed an underwriter, then the period by which the Buyer is
obligated to submit an acceleration request to the SEC shall be extended to the earlier of (i) the
45th day after such SEC notification, or (ii) 120 days after the initial filing of the Registration
Statement with the SEC.



ARTICLE V




INDEMNIFICATION




5.1 Indemnification by the Seller. The Seller shall indemnify Buyer, and its
officers, directors and Affiliates (each an “Buyer Indemnified Party”) in respect of, and
hold each Buyer Indemnified Party harmless against, Damages incurred or suffered by such Buyer
Indemnified Party resulting from, relating to or constituting:



(a) any breach, as of the date of this Agreement, of any representation or warranty of the
Seller contained in this Agreement, any Ancillary Agreement or any other agreement or instrument
furnished by the Seller to the Buyer pursuant to this Agreement;



(b) any failure to perform any covenant or agreement of any Seller Party contained in this
Agreement, any Ancillary Agreement or any agreement or instrument furnished by any Seller Party to
the Buyer pursuant to this Agreement;



(c) any Retained Liabilities; or



(d) the failure of the Buyer and the Seller, in connection with the sale of the Acquired
Assets by the Seller to the Buyer pursuant to this Agreement, to comply with, and obtain for the
Buyer the benefits afforded by compliance with, any applicable bulk transfers laws.


 


- 26 -









 





5.2 Indemnification by the Buyer. The Buyer shall indemnify the Seller and its
officers, directors and Affiliates (each an “Seller Indemnified Party”) in respect of, and
hold it harmless each Seller Indemnified Party harmless against, any and all Damages incurred or
suffered by such Seller Indemnified Party resulting from, relating to or constituting:



(a) any breach, as of the date of this Agreement, of any representation or warranty of the
Buyer contained in this Agreement, any Ancillary Agreement or any other agreement or instrument
furnished by the Buyer to the Seller pursuant to this Agreement;



(b) any failure to perform any covenant or agreement of the Buyer contained in this Agreement,
any Ancillary Agreement or any other agreement or instrument furnished by the Buyer to the Seller
pursuant to this Agreement;




(c) operation of the business and the Acquired Assets after the Closing Date; or




(d) any Assumed Liabilities.




5.3 Indemnification Procedure.



(a) In the event that any Legal Proceedings shall be instituted or that any claim or demand
(“Claim”) shall be asserted by any Person in respect of which payment may be sought under
Section 5.1 and 5.2 hereof (regardless of the limitations set forth in Section
5.5), the Indemnified Party shall reasonably and promptly cause written notice of the assertion
of any Claim of which it has knowledge which is covered by this indemnity to be forwarded to the
Indemnifying Party. The Indemnifying Party shall have the right, at its sole option and expense,
to be represented by counsel of its choice, which must be reasonably satisfactory to the
Indemnified Party, and to defend against, negotiate, settle or otherwise deal with any Claim which
relates to any Damages indemnified against hereunder. If the Indemnifying Party elects to defend
against, negotiate, settle or otherwise deal with any Claim which relates to any Damages
indemnified against hereunder, it shall within thirty (30) days (or sooner, if the nature of the
Claim so requires) notify the Indemnified Party of its intent to do so. If the Indemnifying Party
elects not to defend against, negotiate, settle or otherwise deal with any Claim which relates to
any Damages indemnified against hereunder, the Indemnified Party may defend against, negotiate,
settle or otherwise deal with such Claim. If the Indemnifying Party shall assume the defense of
any Claim, the Indemnified Party may participate, at his or its own expense, in the defense of such
Claim; provided, however, that such Indemnified Party shall be entitled to
participate in any such defense with separate counsel at the expense of the Indemnifying Party if
(i) so requested by the Indemnifying Party to participate or (ii) in the reasonable opinion of
counsel to the Indemnified Party a conflict or potential conflict exists between the Indemnified
Party and the Indemnifying Party that would make such separate representation advisable; and
provided, further, that



 


- 27 -









 






the Indemnifying Party shall not be required to pay for
more than one such counsel for all indemnified parties in connection with any Claim. The parties hereto agree to
cooperate fully with each other in connection with the defense, negotiation or settlement of any
such Claim. Notwithstanding anything in this Section 5.3 to the contrary, neither the
Indemnifying Party nor the Indemnified Party shall, without the written consent of the other party,
settle or compromise any indemnifiable Claim or permit a default or consent to entry of any
judgment unless the claimant and such party provide to such other party an unqualified release from
all liability in respect of the indemnifiable Claim. Notwithstanding the foregoing, if a
settlement offer solely for money damages is made by the applicable third party claimant, and the
Indemnifying Party notifies the Indemnified Party in writing of the Indemnifying Party’s
willingness to accept the settlement offer and, subject to the applicable limitations of
Section 5.5, pay the amount called for by such offer, and the Indemnified Party declines to
accept such offer, the Indemnified Party may continue to contest such indemnifiable Claim, free of
any participation by the Indemnifying Party, and the amount of any ultimate liability with respect
to such indemnifiable Claim that the Indemnifying Party has an obligation to pay hereunder shall be
limited to the lesser of (A) the amount of the settlement offer that the Indemnified Party declined
to accept plus the Damages of the Indemnified Party relating to such indemnifiable Claim through
the date of its rejection of the settlement offer or (B) the aggregate Damages of the Indemnified
Party with respect to such indemnifiable Claim. If the Indemnifying Party makes any payment on any
indemnifiable Claim, the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance benefits or other Claims of the
Indemnified Party with respect to such indemnifiable Claim.



(a) After any final judgment or award shall have been rendered by a Governmental Body of
competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or the Indemnified Party and the Indemnifying Party shall have arrived
at a mutually binding agreement with respect to a Claim hereunder, the Indemnified Party shall
forward to the Indemnifying Party notice of any sums due and owing by the Indemnifying Party
pursuant to this Agreement with respect to such matter.



5.4 Survival of Representations and Warranties. The representations and warranties of
the Parties shall survive the Closing of this Agreement for a period of eighteen (18) months except
that (i) the representations and warranties set forth in Sections 2.1, 2.3,
3.1 and 3.2 shall survive the closing without limitation and (ii) the
representations and warranties set forth in Sections 2.8, 2.12, 2.18, and
2.19 shall survive until 30 days following expiration of the statute of limitations
applicable to the matters referred to within each such section. The rights to indemnification set
forth in this Article V will not be affected by (i) any investigation conducted by or on behalf of
an Indemnified Party or any knowledge acquired (or capable of being acquired) by an Indemnified
Party, whether before or after the date of this Agreement or the Closing Date, with respect to the
inaccuracy or noncompliance with any representation, warranty, covenant or obligation which is the
subject of indemnification under this Agreement or (ii) any waiver by an Indemnified Party of any
closing condition relating to the accuracy of any representations and warranties or the performance
of or compliance with agreements and covenants.


 


- 28 -









 





5.5 Any Claim not made by a Buyer Indemnified Party with regards to Section 5.1(a) or
a Seller Indemnified Party with regards to Section 5.2(a) on or prior to that date will be
irrevocably and unconditionally released and waived.




5.6 Certain Limitations on Indemnification.



(a) Notwithstanding the provisions of this Article V, neither Seller nor Buyer shall
have any indemnification obligations for Damages pursuant to Section 5.1(a) or
5.2(a), unless the aggregate amount of all such Damages finally determined for which such
party would be liable, but for this paragraph (a) exceeds $50,000 (the “Basket”), and in
such event, the Indemnifying Party shall then be required to pay the total amount of such Damages
in excess of the Basket, subject to the Cap and other limitations.



(b) None of the Seller or the Buyer shall be required to indemnify, any Person for Damages
pursuant to Section 5.1(a) or 5.2(a) for an aggregate amount of all such Damages
exceeding $2,500,000 (the “Cap”).



(c) Notwithstanding anything to the contrary elsewhere in this Agreement, no party shall, in
any event, be liable to any other Person for any consequential, incidental, indirect, special or
punitive damages of such other Person, including loss of future revenue, income or profits,
diminution of value or loss of business reputation or opportunity relating to the breach or alleged
breach hereof, except for Third Party Actions for consequential damages.



(d) No representation or warranty of Seller contained herein shall be deemed untrue or
incorrect, and Seller shall not be deemed to have breached a representation or warranty, as a
consequence of the existence of any fact, circumstance or event of which is disclosed in response
to another representation or warranty contained in this Agreement.



(e) Buyer shall not make any claim for indemnification under this Article V in respect
of any calculation of amounts that is taken into account in the calculation of any adjustment to
the Purchase Price pursuant to Section 1.8, and the payment of the True Up Amount shall be
the exclusive remedy of Buyer with respect to the Expected Backlog.




5.7 Exclusive Remedy.



(a) Except with respect to claims based on fraud, after the Closing, the rights of the
Indemnified Parties under this Article V shall be the exclusive remedy of the Indemnified
Parties with respect to claims resulting from or relating to any misrepresentation, breach of
warranty or failure to perform any covenant or agreement contained in this Agreement.



5.8 Treatment of Indemnity Payments. Any payments made to a Buyer Indemnified Party
or Seller Indemnified Party, as applicable, pursuant to this Article V shall be treated as
an adjustment to the Purchase Price for tax purposes.



ARTICLE VI




Intentionally Omitted.


 


- 29 -









 





ARTICLE VII

DEFINITIONS




For purposes of this Agreement, each of the following terms shall have the meaning set forth
below.



“2011 Earnout Payment” has the meaning set forth in Section 1.7(a) of this
Agreement.



“2012 Earnout Payment” has the meaning set forth in Section 1.7(b) of this
Agreement.



“2013 Earnout Payment” has the meaning set forth in Section 1.7(c) of this
Agreement.



“Acquired Assets” shall mean all of the assets, properties and rights of the Seller
existing as of the Closing, except for the Excluded Assets, including (except to the extent
included in the definition of Excluded Assets):



(a) all trade and other accounts receivable and notes and loans receivable that are payable to
the Seller, and all rights to unbilled amounts for products delivered or services provided,
together with any security held by the Seller for the payment thereof;



(b) all computers, machinery, equipment, tools and tooling, furniture, fixtures, supplies,
leasehold improvements, motor vehicles and other tangible personal property;



(c) all leaseholds and subleaseholds in real property, and easements, rights-of-way and other
appurtenants thereto;




(d) all Intellectual Property;




(e) all rights under Assigned Contracts;



(f) all claims, prepayments, deposits, refunds, causes of action, chooses in action, rights of
recovery, rights of setoff and rights of recoupment;



(g) all books, records, accounts, ledgers, files, documents, correspondence, lists (including
customer and prospect lists), employment records, manufacturing and procedural manuals,
Intellectual Property records, sales and promotional materials, studies, reports and other printed
or written materials;



(h) all insurance policies of the Seller, as well as all proceeds which may be payable
thereunder; and



(i) all rights of the Seller in and with respect to the assets associated with its Employee
Benefit Plans.



“Affiliate” shall mean any affiliate, as defined in Rule 12b-2 under the Securities
Exchange Act of 1934. For purposes of the obligation, representations and warranties of Seller and
the Seller Parties shall not be considered an Affiliate.



“Agreement” shall have the meaning set forth in the first paragraph of this Agreement.


 


- 30 -









 





“Ancillary Agreements” shall mean the Bill of Sale and the Assignment and Assumption
Agreement.



“Annualized New Bookings” shall mean the aggregate One Year Dollar Value of all New
Customer Supply Contracts.



“Assigned Contracts” shall mean the contracts listed on Section 2.13 of the
Disclosure Schedule (except for those vendor contracts that are specifically indicated as
excluded).



“Assignment and Assumption Agreement” has the meaning set forth in Section
1.5(b)(ii) of this Agreement.



“Assumed Liabilities” shall mean (a) all obligations of the Seller arising after the
Closing under the Assigned Contracts other than arising out of any breach, act or omission by the
Seller prior to the Closing under any Assigned Contract, and (b) any liability for Taxes in
accordance with Section 4.6(d).



“Backlog Contract” has the meaning set forth in Section 1.8(a) of this
Agreement.



“Backlog Objection Period” has the meaning set forth in Section 1.8(a) of this
Agreement.



“Backlog Statement” has the meaning set forth in Section 1.8(c) of this
Agreement.




“Basket” has the meaning set forth in Section 5.5(a) of this Agreement.



“Bill of Sale” has the meaning set forth in Section 1.5(b)(i) of this
Agreement.




“BREC” has the meaning set forth in Section 4.5(b) of this Agreement.




“Buyer” shall have the meaning set forth in the first paragraph of this Agreement.



“Buyer Indemnified Party” has the meaning set forth in Section 5.1 of this
Agreement.



“Buyer Materials Adverse Effect” shall mean a material adverse effect on any of the
Assets or on the business, operations, property, financial condition, results of operations or cash
flow of Buyer or the business of Buyer. For the avoidance of doubt, the parties agree that the
terms “material”, “materially” or “materiality” as used in this Agreement with an initial lower
case “m” shall have their respective customary and ordinary meanings, without regard to the meaning
ascribed to Buyer or Seller Material Adverse Effect.



“Buyer SEC Documents” has the meaning set forth in Section 3.4(a) of this
Agreement.




“Cap” has the meaning set forth in Section 5.5(b) of this Agreement.



“CERCLA” shall mean the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.


 


- 31 -









 





“Change of Control Transaction” shall mean (A) the liquidation, dissolution or winding
up of the Buyer; (B) the acquisition of the Buyer by another entity by means of any transaction or
series of related transactions (including, without limitation, any reorganization, merger or
consolidation) that results in the transfer of fifty percent (50%) or more of the outstanding
voting power of the Buyer; (C) a sale of all or substantially all of the assets of the Buyer, (D)
any Person or group of related persons for purposes of Section 13(d) of the Exchange Act (a
“Group”) (other than any Person or Group who owns or has the right to acquire Buyer’s
common stock on the date hereof) shall become the beneficial owner (within the meaning of Section
13(d) of the Exchange Act), directly or indirectly, of common stock of the Buyer representing more
than 40% of the aggregate outstanding voting power of the Buyer and such Person or Group actually
has the power to vote such common stock in any election, or (E) a majority of the board of
directors of the Buyer shall consist of Persons who was not (i) a member of the board of directors
on the First Closing Date, or (ii) nominated for election or elected to the board of directors of
the Buyer with the affirmative vote of a majority of the members of the board of directors on the
First Closing Date; that occurs prior to the expiration of the measurement period for the 2013
Earnout Payment.




“Claim” has the meaning set forth in Section 5.3(a) of this Agreement.




“CLG” has the meaning set forth in Section 4.5(b) of this Agreement.




“Closing” or “Closing Date” shall mean the date of this Agreement.



“Commercially Reasonable Efforts” shall mean commercially reasonable efforts, but
shall not include Seller paying any amount, incurring or retaining any liability, giving any
concessions, or agreeing to remain secondarily liable, except as may be required under (i) the
Lease Agreement by and between 1225 North Loop Investments, Inc, and GSE Consulting, LP, dated as
of October 2006, and/or (ii) the Office Lease by and between GC Museum Partners, LP and GSE
Consulting, LP dates as of June 25, 2009.



“Customer Supply Contract” means a contract entered into between an end user of energy
(customer) and an energy supplier which provides for payment of fees to Buyer, Seller, and/or any
Affiliate of Buyer pursuant to a Supplier Agreement.




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




“CTR” has the meaning set forth in Section 4.11(b) of this Agreement.



“Damages” shall mean any and all debts, obligations and other liabilities (whether
absolute, accrued, contingent, fixed or otherwise, or whether known or unknown, or due or to become
due or otherwise), diminution in value, monetary damages, fines, fees, penalties, interest
obligations, deficiencies, losses and expenses (including amounts paid in settlement, interest,
court costs, costs of investigators, fees and expenses of attorneys, accountants, financial
advisors and other experts, and other expenses of litigation).



“Disclosure Schedule” shall mean the disclosure schedule provided by the Seller to the
Buyer on the date hereof and attached to this Agreement.


 


- 32 -









 





“Documentation” shall mean printed, visual or electronic materials, reports, white
papers, documentation, specifications, designs, flow charts, code listings, instructions, user
manuals, frequently asked questions, release notes, recall notices, error logs, diagnostic reports,
marketing materials, packaging, labeling, service manuals and other information describing the use,
operation, installation, configuration, features, functionality, pricing, marketing or correction
of a product, whether or not provided to end user.



“Earnout Payment(s)” has the meaning set forth in Section 1.7(c) of this
Agreement.



“Earnout Objection Period” has the meaning set forth in Section 1.7(e) of this
Agreement.



“Earnout Statement” has the meaning set forth in Section 1.7(e) of this
Agreement.



“Employee Benefit Plan” shall mean any “employee pension benefit plan” (as defined in
Section 3(2) of ERISA), any “employee welfare benefit plan” (as defined in Section 3(1) of ERISA),
and any other written or oral plan, agreement or arrangement involving direct or indirect
compensation, including insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock appreciation or other
forms of incentive compensation or post-retirement compensation.




“Encore Bank” shall mean Encore Bank, N.A.



“Environmental Law” shall mean any federal, state or local law, statute, rule, order,
directive, judgment, Permit or regulation or the common law relating to the environment,
occupational health and safety, or exposure of persons or property to Materials of Environmental
Concern, including any statute, regulation, administrative decision or order pertaining to: (i)
the presence of or the treatment, storage, disposal, generation, transportation, handling,
distribution, manufacture, processing, use, import, export, labeling, recycling, registration,
investigation or remediation of Materials of Environmental Concern or documentation related to the
foregoing; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the
release, threatened release, or accidental release into the environment, the workplace or other
areas of Materials of Environmental Concern, including emissions, discharges, injections, spills,
escapes or dumping of Materials of Environmental Concern; (v) transfer of interests in or control
of real property which may be contaminated; (vi) community or worker right-to-know disclosures with
respect to Materials of Environmental Concern; (vii) the protection of wild life, marine life and
wetlands, and endangered and threatened species; (viii) storage tanks, vessels, containers,
abandoned or discarded barrels and other closed receptacles; and (ix) health and safety of
employees and other persons. As used above, the term “release” shall have the meaning set forth in
CERCLA.




“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended.



“ERISA Affiliate” shall mean any entity which is, or at any applicable time was, a
member of (1) a controlled group of corporations (as defined in Section 414(b) of the Code), (2) a
group of trades or businesses under common control (as defined in Section 414(c) of the Code),
or (3) an affiliated service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or included the Seller.


 


- 33 -









 






“ESCO” has the meaning set forth in Section 4.5(b) of this Agreement.




“Excluded Assets” shall mean the following assets of the Seller:




(a) all cash, short-term investments, deposits, bank accounts and other similar assets;



(b) the governing documents, qualifications to conduct business as a foreign limited liability
company, arrangements with registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, membership or security transfer books and other
documents relating to the organization and existence of the Seller as a limited liability company;




(c) all rights relating to refunds, recovery or recoupment of Taxes;




(d) all Permits;




(e) any of the rights of the Seller under this Agreement or under the Ancillary Agreements;




(f) prepayments by Seller on insurance policies not assumed;




(g) those assets listed on Schedule 1.1(b) attached hereto.



“Expected Backlog” has the meaning set forth in Section 1.8(a) of this
Agreement.




“Final Backlog” has the meaning set forth in Section 1.8(a) of this Agreement.




“Financial Statements” shall mean:



(a) the balance sheets and statements of income, of the Seller as of the end of and for each
of the years ended December 31, 2009 and December 31, 2010; and



(b) the Most Recent Balance Sheet and the unaudited statements of income, for the nine (9)
months ended as of the Most Recent Balance Sheet Date.



“Force Majeure Event” shall mean a (i) fire, flood, earthquake, hurricane, elements of
nature or acts of God; (ii) wars (declared and undeclared), acts of terrorism, sabotage, riots,
civil disorders, rebellions or revolutions; or (iii) acts of any governmental authority with
respect to any of the foregoing, and provided that such default or delay cannot reasonably be
circumvented by the non-performing Party through the use of commercially reasonable alternate
sources, workaround plans or other commercially reasonable means



“GAAP” shall mean United States generally accepted accounting principles.


 


- 34 -









 





“Governmental Entity” shall mean any court, arbitrational tribunal, administrative
agency or commission or other governmental or regulatory authority or agency.



“Indemnified Party” shall mean the Buyer Indemnified Party or the Seller Indemnified
Party, as applicable.



“Indemnifying Party” shall mean the party from whom indemnification is sought by a
Buyer Indemnified Party or Seller Indemnified Party, as applicable.




“Intellectual Property” shall mean the following subsisting throughout the world:




(a) Patent Rights;




(b) Trademarks and all goodwill in the Trademarks;



(c) copyrights, designs, data and database rights and registrations and applications for
registration thereof, including moral rights of authors;



(d) mask works and registrations and applications for registration thereof and any other
rights in semiconductor topologies under the laws of any jurisdiction;



(e) inventions, invention disclosures, statutory invention registrations, trade secrets and
confidential business information, know-how, manufacturing and product processes and techniques,
research and development information, financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and information, whether
patentable or nonpatentable, whether copyrightable or noncopyrightable and whether or not reduced
to practice; and



(f) other proprietary rights relating to any of the foregoing (including remedies against
infringement thereof and rights of protection of interest therein under the laws of all
jurisdictions).



“Intellectual Property Registrations” means Patent Rights, registered Trademarks,
registered copyrights and designs, mask work registrations and applications for each of the
foregoing.



“Knowledge of Seller” shall mean the (i) actual knowledge of Justin Helms, Jason
Helms, Jeremiah Collins, Byron Biggs, and Brian Dafferner, or (ii) if a reasonable prudent
individual similarly situated to the persons listed in clause (i) could reasonably be expected to
discover or otherwise become aware of that fact or matter in the course of conducting a reasonably
comprehensive investigation regarding the accuracy of any representation or warranty in this
Agreement.



“Lease” shall mean any lease or sublease pursuant to which the Seller leases or
subleases from another party any real property.



“Legal Proceeding” shall mean any action, suit, proceeding, claim, arbitration or
investigation before any Governmental Entity or before any arbitrator.


 


- 35 -









 





“Materials of Environmental Concern” shall mean any: pollutants, contaminants or
hazardous substances (as such terms are defined under CERCLA), pesticides (as such term is defined
under the Federal Insecticide, Fungicide and Rodenticide Act), solid wastes and hazardous wastes
(as such terms are defined under the Resource Conservation and Recovery Act), chemicals, other
hazardous, radioactive or toxic materials, oil, petroleum and petroleum products (and fractions
thereof), or any other material (or article containing such material) listed or subject to
regulation under any law, statute, rule, regulation, order, Permit, or directive due to its
potential, directly or indirectly, to harm the environment or the health of humans or other living
beings.



“Most Recent Balance Sheet” shall mean the unaudited consolidated balance sheet of the
Seller as of the Most Recent Balance Sheet Date.




“Most Recent Balance Sheet Date” shall mean September 30, 2011.



“NASDAQ Price” shall mean the consolidated closing bid price of XWES common stock at
the time this Agreement is executed. If this Agreement is executed before 4PM Eastern Standard
Time, the NASDAQ Price will be the consolidated closing bid price for the business day prior to the
date this Agreement is executed. If this Agreement is executed after 4PM Eastern Standard Time, the
NASDAQ Price will be the consolidated closing bid price on the date this Agreement is executed.



“New Customer Supply Contract” shall mean any new Customer Supply Contract entered
into by Seller, Buyer, or any Affiliate of Buyer during the applicable measurement period covering
a meter that was not the subject of a Customer Supply Contract that expired immediately prior to
the effective date of such new Customer Supply Contract (such Customer Supply Contract is not a
renewal of a Customer Supply Contract).



“One Year Dollar Value” shall mean the projected amount payable to Buyer, Seller, or
any Affiliate of Buyer, pursuant to the applicable Supplier Agreement based on one year of energy
usage of the customer at the time of execution of the applicable Customer Supply Contract, whether
by upfront fees, residual payments or otherwise, during the measurement period for the applicable
Earnout Payment. The projections for the One Year Dollar Value shall be based on the data in the
Customer Supply Contract and any applicable fee addendum, deal confirm or other document that
conveys the parameters of the specific customer-supplier relationship and Buyer’s, Seller’s, or any
Affiliate of Buyer’s, commission rate.



“Ordinary Course of Business” shall mean the ordinary course of business consistent
with past custom and practice (including with respect to frequency and amount).




“Owner” shall mean Justin Helms, Jason Helms, Jeremiah Collins, and Byron Biggs.




“Parties” shall mean the Buyer and the Seller.




“Partners” shall have the meaning set forth in Section 2.2 of this Agreement.



“Patent Rights” shall mean all patents, patent applications, utility models, design
registrations and certificates of invention and other governmental grants for the protection of
inventions or industrial designs (including all related continuations, continuations-in-part,
divisionals, reissues and reexaminations).


 


- 36 -









 





“Permits” shall mean all permits, licenses, registrations, certificates, orders,
approvals, franchises, variances and similar rights issued by or obtained from any Governmental
Entity (including those issued or required under Environmental Laws and those relating to the
occupancy or use of owned or leased real property).



“Person” shall mean any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust, unincorporated organization, or
other entity, or any governmental agency, and any officer, department, commission, board, bureau,
or instrumentality thereof.



“Post-Closing Tax Period” has the meaning set forth in Section 4.6(d) of this
Agreement.



“Pre-Closing Tax Period” has the meaning set forth in Section 4.6(d) of this
Agreement.



“Prospectus” has the meaning set forth in Section 4.11(c) of this
Agreement.



“Purchase Price” shall mean the purchase price to be paid by the Buyer for the
Acquired Assets.



“Registration Statement” has the meaning set forth in Section 4.11(a) of this
Agreement.



“Registration Request” has the meaning set forth in Section 4.11 of this
Agreement.



“Renewal Rate” shall mean as the percent of the One Year Dollar Value of Customer
Supply Contracts entered into by Buyer, Seller, and/or any Affiliate of Buyer, during the
applicable measurement period that are not New Customer Contracts (such Customer Supply Contracts
are a renewal of a prior Customer Supply Contract covering such meters) divided by the One Year Dollar
Value of all expiring Customer Supply Contracts during the applicable measurement period other than
those Customer Supply Contracts set forth on Schedule 1.7.




“REP” has the meaning set forth in Section 4.5(b) of this Agreement.



“Restricted Employee” shall mean any person who either (i) was an employee of the
Buyer on either the date of this Agreement or the Closing Date or (ii) was an employee of the
Seller on either the date of this Agreement or the Closing Date and received an employment offer
from the Buyer within five business days following the Closing Date.



“Restricted Period” shall mean the period commencing upon the Closing Date and ending
on the earlier to occur of (i) thirty (30) days following delivery of written notice to Buyer of
the failure of Buyer to make any payment when due in accordance with Sections 1.7 or
1.8, and failure to cure such non-payment within such thirty (30) day period, (ii) the
occurrence of Change of Control Transaction that results in Buyer’s inability to achieve the 2013
Earnout Payment due to successor party’s failure to comply with the provisions of Section
1.7(d)(ii), or (ii) the fifth (5th) anniversary of the Closing Date.


 


- 37 -









 





“Retained Liabilities” shall mean any and all liabilities or obligations (whether
known or unknown, absolute or contingent, liquidated or unliquidated, due or to become due and
accrued or unaccrued, and whether claims with respect thereto are asserted before or after the
Closing) of the Seller which are not Assumed Liabilities. The Retained Liabilities shall include,
without limitation, all liabilities and obligations of the Seller:



(a) for income, transfer, sales, use or other Taxes arising in connection with the
consummation of the transactions contemplated by this Agreement (including any income Taxes arising
as a result of (i) the transfer by the Seller to the Buyer of the Acquired Assets, (ii) any deemed
transfer by a subsidiary of the Seller of its assets pursuant to an election under Section
338(h)(10) of the Code, (iii) the Seller having an “excess loss account” (within the meaning of
Treasury Regulation §1.1502-19) in the stock of any Subsidiary of the Seller, or (iv) the Seller
having deferred gain on any “deferred intercompany transaction” (within the meaning of Treasury
Regulation §1.1502-13));



(b) for costs and expenses incurred in connection with this Agreement or the consummation of
the transactions contemplated by this Agreement;




(c) under this Agreement or the Ancillary Agreements;



(d) for any Taxes, including deferred taxes or taxes measured by income of the Seller earned
prior to the Closing, any liabilities for federal or state income tax and FICA taxes of employees
of the Seller which the Seller is legally obligated to withhold, any liabilities of the Seller for
employer FICA and unemployment taxes incurred, and any liabilities of the Seller for sales, use or
excise taxes or customs and duties;



(e) under any agreements, contracts, leases or licenses which are listed on Schedule
1.1(b);



(f) arising prior to the Closing under the Assigned Contracts, and all liabilities for any
breach, act or omission by the Seller prior to the Closing under any Assigned Contract;



(g) arising out of events, conduct or conditions existing or occurring prior to the Closing
that constitute a violation of or non-compliance with any law, rule or regulation (including
Environmental Laws), any judgment, decree or order of any Governmental Entity, or any Permit or
that give rise to liabilities or obligations with respect to Materials of Environmental Concern;



(h) to pay severance benefits (if any) to any employee of the Seller whose employment is
terminated (or treated as terminated) in connection with the consummation of the transactions
contemplated by this Agreement, all liabilities resulting from the termination of employment of
employees of the Seller prior to, the Closing that arose under any federal or state law or under
any Employee Benefit Plan established or maintained by the Seller;



(i) to indemnify any person or entity by reason of the fact that such person or entity was a
director, officer, employee, or agent of the Seller or was serving at the request of the Seller as
a partner, trustee, director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such indemnification is pursuant to any statute,
charter document, bylaw, agreement, or otherwise);


 


- 38 -









 





(j) injury to or death of persons or damage to or destruction of property occurring prior to
the Closing (including any workers compensation claim);



(k) for medical, dental and disability (both long-term and short-term benefits), whether
insured or self-insured, owed to employees or former employees of the Seller based upon (A)
exposure to conditions in existence prior to the Closing or (B) disabilities existing prior to the
Closing (including any such disabilities which may have been aggravated following the Closing);




(l) for benefits under any Seller Plan;



(m) for any retrospective premium increases under any Seller Plan assumed by Buyer that
relates to periods before and including the Closing; and




(n) for the misclassification of employees as independent contractors.




“SEC” the Securities and Exchange Commission.



“Securities Act” has the meaning set forth in Section 2.26(b) of this
Agreement.



“Security Interest” shall mean any mortgage, pledge, security interest, encumbrance,
charge or other lien (whether arising by contract or by operation of law), other than (i)
mechanic’s, materialmen’s, and similar liens, (ii) liens arising under worker’s compensation,
unemployment insurance, social security, retirement, and similar legislation and (iii) liens on
goods in transit incurred pursuant to documentary letters of credit, in each case arising in the
Ordinary Course of Business of the Seller and not material to the Seller.




“Seller” shall have the meaning set forth in the first paragraph of this Agreement.



“Seller Indemnified Party” has the meaning set forth in Section 5.2 of this
Agreement.



“Seller Material Adverse Effect” shall mean a material adverse effect on any of the
Assets or on the business, operations, property, financial condition, results of operations or cash
flow of Seller or the business of Seller. For the avoidance of doubt, the parties agree that the
terms “material”, “materially” or “materiality” as used in this Agreement with an initial lower
case “m” shall have their respective customary and ordinary meanings, without regard to the meaning
ascribed to a Buyer or Seller Material Adverse Effect.



“Seller Parties” shall have the meaning set forth in Section 4.4 of this
Agreement.



“Seller Plan” shall mean any Employee Benefit Plan maintained, or contributed to, by
the Seller or any ERISA Affiliate.



“Seller Registrations” shall mean Intellectual Property Registrations that are
registered or filed in the name of the Seller, alone or jointly with others.


 


- 39 -









 





“Share Recipients” will mean those Persons issued Shares pursuant to the terms of the
Agreement



“Shares” will mean any shares of the Buyer’s common stock issued to the Seller or
Seller’s designees pursuant to the terms of this Agreement.




“Silicon Valley Bank” shall mean Silicon Valley Bank, National Association.



“Subsidiary” shall mean any corporation, partnership, trust, limited liability company
or other non-corporate business enterprise in which the Seller (or another Subsidiary) holds stock
or other ownership interests representing (a) more than 50% of the voting power of all outstanding
stock or ownership interests of such entity or (b) the right to receive more than 50% of the net
assets of such entity available for distribution to the holders of outstanding stock or ownership
interests upon a liquidation or dissolution of such entity.



“Supplier Agreement Lockbox” has the meaning set forth in Section 4.2of this
Agreement.



“Supplier Agreements” shall mean those agreements by and between Seller, Buyer, and/or
any Affiliate of Buyer, and energy suppliers pursuant to which Seller, Buyer, and/or any Affiliate
of Buyer, is to be paid commodity brokerage fees with respect to transactions between energy
suppliers and end users of energy (customers).



“Taxes” shall mean any and all taxes, charges, fees, duties, contributions, levies or
other similar assessments or liabilities in the nature of a tax, including, without limitation,
income, gross receipts, corporation, ad valorem, premium, value-added, net worth, capital stock,
capital gains, documentary, recapture, alternative or add-on minimum, disability, estimated,
registration, recording, excise, real property, personal property, sales, use, license, lease,
service, service use, transfer, withholding, employment, unemployment, insurance, social security,
national insurance, business license, business organization, environmental, workers compensation,
payroll, profits, severance, stamp, occupation, windfall profits, customs duties, franchise and
other taxes of any kind whatsoever imposed by the United States of America or any state, local or
foreign government, or any agency or political subdivision thereof, and any interest, fines,
penalties, assessments or additions to tax imposed with respect to such items or any contest or
dispute thereof.



“Tax Returns” shall mean any and all reports, returns, declarations, or statements
relating to Taxes, including any schedule or attachment thereto and any related or supporting work
papers or information with respect to any of the foregoing, including any amendment thereof.



“Trademarks” shall mean all registered trademarks and service marks, logos, Internet
domain names, corporate names and doing business designations and all registrations and
applications for registration of the foregoing, common law trademarks and service marks and trade
dress.



“True Up Amount” shall have the meaning set forth in Section 1.8(a) of this
Agreement.



“True Up Date” shall have the meaning set forth in Section 1.8(a) of this
Agreement.


“True Up Period” shall have the meaning set forth in Section 1.8(a) of this
Agreement.



 


- 40 -









 






ARTICLE VIII

MISCELLANEOUS




8.1 Press Releases and Announcements. No Party shall issue any press release or
public announcement relating to the subject matter of this Agreement without the prior written
approval of the other Party; provided, however, that either Party may make any
public disclosure it believes in good faith is required by applicable law, regulation or stock
market rule, provided that the other Party the ability to review and give its reasonable approval.



8.2 No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the Parties and their respective successors and permitted
assigns.



8.3 Entire Agreement. This Agreement (including the documents referred to herein)
constitutes the entire agreement between the Parties and supersedes any prior understandings,
agreements, or representations by or between the Parties, written or oral, with respect to the
subject matter hereof, including, without limitation, that certain letter of intent dated August
18, 2011; provided that the Confidentiality Agreement dated March 22, 2011 between the Buyer and
the Seller shall remain in effect in accordance with its terms.



8.4 Succession and Assignment. This Agreement shall be binding upon and inure to the
benefit of the Parties named herein and their respective successors and permitted assigns. The
Buyer may not assign either this Agreement or any of its rights, interests, or obligations
hereunder without the prior written approval of the Seller, provided that the Buyer may assign some
or all of its rights and interests, but not its obligations, hereunder to one or more Affiliates of
the Buyer. The Seller may not assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the Seller, provided that the Seller
may assign some or all of its rights, interests, but not its obligations hereunder without the
prior written approval of the Buyer. Any attempted assignment in contravention of this provision
shall be void.



8.5 Counterparts and Facsimile Signature. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which together shall
constitute one and the same instrument. This Agreement may be executed by facsimile signature or
electronic signature.



8.6 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement.


 


- 41 -









 





8.7 Notices. All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly delivered four business days after it is sent by registered or
certified mail, return receipt requested, postage prepaid, or one business day after it is sent for
next business day delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:



	 	 	 
	If to any Seller Party:

	 	Copy to:
	 
	 	 
	GSE Consulting, LP

	 	Wick Phillips Gould & Martin, LLP
	1225 North Loop West, Suite 1100

	 	100 Throckmorton Street, Suite 550
	Houston, TX 77008

	 	Fort Worth, Texas 76102
	 

	 	Attn: David Drez
	 
	 	 
	If to the Buyer:

	 	Copy to:
	 
	 	 
	World Energy Solutions, Inc.

	 	Jeff Swaim, Esq.
	446 Main Street

	 	Mirick O’Connell
	Worcester, MA 01608

	 	100 Front Street
	Attn: General Counsel

	 	Worcester, MA 01608






Any Party may give any notice, request, demand, claim, or other communication hereunder using
any other means (including personal delivery, expedited courier, messenger service, telecopy,
telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it actually is received by
the party for whom it is intended. Each Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.



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



8.9 Amendments and Waivers. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by each of the Buyer and the Seller. No
waiver by any Party of any right or remedy hereunder shall be valid unless the same shall be in
writing and signed by the Party giving such waiver. No waiver by any Party with respect to any
default, misrepresentation, or breach of warranty or covenant hereunder shall be deemed to extend
to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder
or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.



8.10 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to limit the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a term or provision that
is valid and enforceable
and that comes closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified.


 


- 42 -









 





8.11 Expenses. Except as set forth in Article V, each Party shall bear its own costs
and expenses (including legal fees and expenses) incurred in connection with this Agreement and the
transactions contemplated hereby.



8.12 Proration. After Closing, Buyer shall be solely responsible for all amounts due
(i) as rent under the Leases, (ii) utility charges with respect to the business of Seller. Each
Seller shall use its commercially reasonable efforts to have meters for electricity, telephone, gas
and water read as of the close of business on the calendar day before the Closing Date or the
opening of business on the Closing Date and for bills to be rendered to such Seller based upon such
readings. To the extent such meter readings are not used as the basis for calculating all such
charges, the electricity, telephone, gas and water utility charges shall be pro-rated as of the
opening of business on the Closing Date between Sellers and Buyer.



8.13 Submission to Jurisdiction. Each Party (a) submits to the jurisdiction of any
state or federal court sitting in the State of Delaware in any action or proceeding arising out of
or relating to this Agreement or the Ancillary Agreements, (b) agrees that all claims in respect of
such action or proceeding may be heard and determined in any such court, (c) waives any claim of
inconvenient forum or other challenge to venue in such court, (d) agrees not to bring any action or
proceeding arising out of or relating to this Agreement or the Ancillary Agreements in any other
court and (e) waives any right it may have to a trial by jury with respect to any action or
proceeding arising out of or relating to this Agreement or the Ancillary Agreements. Each party
agrees to accept service of any summons, complaint or other initial pleading made in the manner
provided for the giving of notices in Section 8.7, provided that nothing in this
Section 8.13 shall affect the right of either Party to serve such summons, complaint or
other initial pleading in any other manner permitted by law.




8.14 Construction.



(a) The language used in this Agreement shall be deemed to be the language chosen by the
Parties to express their mutual intent, and no rule of strict construction shall be applied against
any Party.



(b) Any reference to any federal, state, local, or foreign statute or law shall be deemed also
to refer to all rules and regulations promulgated thereunder, unless the context requires
otherwise.



(c) Any reference herein to “including” shall be interpreted as “including without
limitation”.



(d) Any reference to any Article, Section or paragraph shall be deemed to refer to an Article,
Section or paragraph of this Agreement, unless the context clearly indicates otherwise.


 


- 43 -









 





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



	 	 	 	 	 
	 	Buyer:


World Energy Solutions, Inc.

 	 
	 	By:  	/s/
Philip V. Adams	 
	 	 	Philip V. Adams, President and COO 	 
	 
	 	Seller:


GSE Consulting, LP
 	 
	 	By:  	GSE Consulting GP, LLC, its General Partner
 	 
	 	 	By: Glenwood Energy Partners, Ltd. and 	 
	 	 	       Gulf States Energy, Inc., its Members 	 
	 
	 	Glenwood Energy Partners, Ltd.

By: Glenwood Energy Partners GP, LLC

 	 
	 	By:  	/s/
Byron G. Biggs	 
	 	 	Name:  	Byron G. Biggs 	 
	 	 	Title:  	President 	 
	 
	 	Gulf States Energy, Inc.

 	 
	 	By:  	/s/
Jason Helms	 
	 	 	Name: 	Jason Helms	 
	 	 	Title:  	President	 
	 
	 	Solely for purposes of Sections 4.4, 4.5 and 5.1:


Partner:


GSE Consulting GP, LLC
 	 
	 	By:  	Glenwood Energy Partners, Ltd. and
 	 
	 	 	Gulf States Energy, Inc., its Members 	 



 


 









 





	 	 	 	 	 
	 	Glenwood Energy Partners, Ltd.

By: Glenwood Energy Partners GP, LLC

 	 
	 	By:  	/s/
Byron G. Biggs	 
	 	 	Name:  	Byron G. Biggs	 
	 	 	Title:  	President 	 
	 
	 	Gulf States Energy, Inc.

 	 
	 	By:  	/s/
Jason Helms	 
	 	 	Name:  	Jason Helms	 
	 	 	Title:  	President	 



 


- 2 -









 





	 	 	 	 	 
	 

	 	Solely for purposes of Section 4.5:	 	 
	 
	 	 	 	 
	 

	 	/s/ Byron Biggs 

Byron Biggs
	 	 
	 
	 	 	 	 
	 

	 	/s/ Jeremiah Collins 

Jeremiah Collins
	 	 
	 
	 	 	 	 
	 

	 	/s/ Justin Helms 

Justin Helms
	 	 
	 
	 	 	 	 
	 

	 	/s/ Jason Helms 

Jason Helms
	 	 





 


- 3 -









 





Exhibits




	 	 	 
	Exhibit A -

	 	Bill of Sale
	Exhibit B -

	 	Assignment and Assumption Agreement
	 
	 	 
	Schedules
	 	 
	 
	 	 
	Schedule 1.1(b) -

	 	Excluded Asset
	Schedule 1.6 -

	 	Allocation of Purchase Price
	Schedule 1.7

	 	Renewal Rate
	Disclosure Schedule
	 	 







 


 











 




GENERAL BILL OF SALE




REFERENCE is made to the Asset Purchase Agreement dated of even date herewith (the
“Agreement”) by and among World Energy Solutions, Inc., a Delaware Corporation (the “Buyer”), and
GSE Consulting, L.P., a Texas limited partnership (the “Seller”). Capitalized terms not otherwise
defined herein shall have the meaning given to them in the Agreement.



FOR VALUE RECEIVED pursuant to the Agreement, Seller, for itself and its successors and
assigns, does hereby sell, convey, assign, transfer and deliver to and vest in Buyer and its
successors and assigns all right, title and interest in and to all of the Acquired Assets
(collectively, the “Assets”).



Nothing contained in this General Bill of Sale shall supersede, modify, limit, eliminate or
otherwise affect any of the representations and warranties, covenants, agreements or indemnities
set forth in the Agreement. This General Bill of Sale is executed and delivered pursuant to the
terms of the Agreement, and nothing herein shall be construed to modify, terminate or merge any
rights any party thereto may have pursuant to the terms thereof. In the event of any inconsistency
or conflict between the terms of the Agreement and the terms of this General Bill of Sale, the
terms of the Agreement shall prevail.



This General Bill of Sale shall be governed by and construed in accordance with the laws of
the State of Delaware without regard to its conflict of laws provisions.



IN WITNESS WHEREOF, Seller
has executed this General Bill of Sale as an instrument under seal as
of this 31st day of
October, 2011.



	 	 	 	 	 
	 	GSE Consulting, LP
 	 
	 	   By: GSE Consulting GP, LLC, its
General Partner	 
	 	 	By: Glenwood Energy Partners, Ltd. and 	 
	 	 	Gulf States Energy, Inc., its Members 	 
	 
	 	Glenwood Energy Partners, Ltd.

   By: Glenwood Energy Partners GP, LLC

 	 
	 	By:  	/s/
Byron G. Biggs	 
	 	 	Name:  	Byron G. Biggs 	 
	 	 	Title:  	President 	 
	 
	 	Gulf States Energy, Inc.

 	 
	 	By:  	/s/
Jason Helms	 
	 	 	Name: 	Jason Helms	 
	 	 	Title:  	President	 




 














 




ASSIGNMENT AND ASSUMPTION OF CONTRACTS




This Assignment and Assumption of Contracts (this “Assignment”) dated as of October 31, 2011
(the “Effective Date”) is by and between GSE Consulting, L.P. (“Assignor”) and World Energy
Solutions, Inc. (“Assignee”).



RECITALS




Assignor, as seller, and Assignee, as buyer, are parties to an Asset Purchase Agreement dated
as of October 31, 2011 (the “Purchase Agreement”). Capitalized terms used but not defined in this
Assignment have the meanings ascribed in the Purchase Agreement.



Assignor desires to assign all of its right, title and interest in and to all of the contracts
set forth on Schedule 1 attached to this Assignment (collectively, the “Contracts”) to
Assignee and Assignee desires to acquire all of Assignor’s right, title and interest in and to the
Contracts.



TERMS OF AGREEMENT




For and in consideration of the recitals set forth above, and the covenants and agreements set
forth below and other valuable consideration, the receipt of which is hereby acknowledged, Assignor
and Assignee agree as follows:




1. Assignment. Assignor hereby assigns, sets over and transfers to
Assignee all of Assignor’s right, title and interest in the Contracts. Assignor
hereby represents that the Contracts previously delivered to Assignee are complete,
accurate and true copies of the Contracts, including all amendments.




2. Acceptance and Assumption. In accordance with and subject to the
terms of the Purchase Agreement, Assignee hereby (a) purchases and accepts the
assignment, transfer and conveyance, to the extent that such are legally assignable
and necessary consents to assignment have been obtained, of each Seller’s right,
title and interests in, under and to the Contracts; (b) assumes, undertakes and
agrees, subject to valid claims and defenses, to pay, satisfy, perform or discharge
in accordance with the terms thereof all obligations and liabilities of any kind
arising out of, or required to be performed under, such Contracts from and after
the Closing; and (c) assumes, undertakes and agrees to pay, satisfy, perform or
discharge in accordance with the terms thereof all of the Assumed Liabilities.




3. Purchase Agreement. Nothing in this Agreement shall limit,
diminish, alter or impair the rights of the parties under the Purchase Agreement,
particularly with respect to Non-Assignable Assets.


 


1









 






4. Binding Effect. The provisions of this Assignment are binding on
and inure to the benefit of Assignor, its successors and assigns, and Assignee, its
successors and assigns.




5. Headings. The section headings used in this Assignment are for
reference and convenience only and shall not be used in the interpretation of this
Assignment.




6. Counterparts. This Assignment may be signed in several
counterparts, each of which is an original, but all of which constitute a single
instrument.



[signature page follows]


 


2









 





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


	 	 	 	 	 
	 	Assignor:



 	 
	 	GSE Consulting, LP
 	 
	 	   By: GSE Consulting GP, LLC, its
General Partner	 
	 	 	By: Glenwood Energy Partners, Ltd. and 	 
	 	 	Gulf States Energy, Inc., its Members 	 
	 
	 	Glenwood Energy Partners, Ltd.

   By: Glenwood Energy Partners GP, LLC

 	 
	 	By:  	/s/
Byron G. Biggs	 
	 	 	Name:  	Byron G. Biggs 	 
	 	 	Title:  	President 	 
	 
	 	Gulf States Energy, Inc.

 	 
	 	By:  	/s/
Jason Helms	 
	 	 	Name: 	Jason Helms	 
	 	 	Title:  	President	 
	 	


Assignee:




	 	World Energy Solutions, Inc.

 	 
	 	By:  	/s/
Philip V. Adams	 
	 	 	Philip V. Adams,
President and COO	 





 


 









 







SCHEDULE I




CONTRACTS





	1.	 	All Assigned Contracts