Document:

exv10w36

 

EXHIBIT 10.36

PURCHASE AND SALE AGREEMENT

     PURCHASE AND SALE AGREEMENT (the “Agreement”), dated as of December 9, 2005 by and
among HarbourVest VII Venture Ltd., a Bermuda corporation, HarbourVest Partners VII-Venture
Partnership Fund L.P., a Delaware limited partnership, and Dover Street VI L.P., a Delaware limited
partnership (each a “Buyer” and collectively, the “Buyers”), and Safeguard
Scientifics (Delaware), Inc., a Delaware corporation, Bonfield VII, Ltd. (formerly known as
Bonfield Insurance, Ltd.), a British Virgin Islands international business company, Safeguard Fund
Management, L.P., a Delaware limited partnership, SFINT, Inc., a Delaware corporation, TL Ventures
Management, L.P., a Delaware limited partnership, Bonfield Partners Capital, L.P., a Delaware
limited partnership, and Bonfield Fund Management, L.P., a Delaware limited partnership (each a
“Seller” and collectively, the “Sellers”).

     WHEREAS, each Seller listed on Exhibit A-1 hereto (each an “LP Interest Seller” and
collectively, the “LP Interest Sellers”) is a limited partner of the partnerships listed on
Exhibit A-1 hereto (the “LP Interest Partnerships”), and each such Seller is the legal and
beneficial owner of the applicable limited partnership interests in the LP Interest Partnerships,
as indicated on Exhibit A-1, requiring the holders of such interests to make contributions to the
capital of the LP Interest Partnerships in the aggregate amounts set forth on Exhibit A-1 hereto
under the column entitled “Aggregate Commitment” (each, an “LP Interest” and collectively,
the “LP Interests”); and

     WHEREAS, each Seller listed on Exhibit A-2 hereto (each an “Assigned Interest Seller”
and collectively, the “Assigned Interest Sellers”) is the assignee of certain economic
rights and obligations from the respective general partners of the partnerships listed on Exhibit
A-2 hereto (the “Assigned Interest Partnerships” and together with the LP Interest
Partnerships, the “Partnerships”), relating to such Assigned Interest Partnerships, in each
case as more specifically set forth on Exhibit A-2 (each, an “Economic Interest” and
collectively, the “Economic Interests”); and

     WHEREAS, each LP Interest Seller holds its LP Interests pursuant to the terms of the
applicable agreement and the amendments thereto listed on Exhibit C-1 hereto (each, as so amended,
a “LP Partnership Agreement” and collectively, the “LP Partnership Agreements”), by
and among the respective parties to such Partnership Agreements as general and limited partners;
and

     WHEREAS, each Assigned Interest Seller holds an Economic Interest in the applicable Assigned
Interest Partnership pursuant to the terms of the applicable agreement listed on Exhibit C-2 hereto
(each an “Assignment and Assumption Agreement” and collectively, the “Assignment and
Assumption Agreements”), by and among the respective parties to such Assignment and Assumption
Agreements as transferors and transferees; and

     WHEREAS, each of the Assigned Interest Partnership’s governing documents and the amendments
thereto is listed on Exhibit C-3 hereto (each, as so amended, an “Assigned Interest

 

 

Partnership Agreement” and collectively, the “Assigned Interest Partnership
Agreements” and together with the LP Partnership Agreements, the “Partnership
Agreements”); and

     WHEREAS, each Seller wishes to sell, assign, convey and transfer to the applicable Buyer: (a)
all of such Seller’s LP Interests in each of the LP Interest Partnerships, and (b) certain of such
Seller’s Economic Interests in the Assigned Interest Partnerships as more specifically set forth on
Exhibit A-2 (the “Assigned Interests”) (each of the interests described in clauses (a) and
(b) herein are referred to in this Agreement as a “Transferred Interest” and collectively
as, the “Transferred Interests”), and each Buyer wishes to purchase, obtain and acquire
from the applicable Seller the applicable Transferred Interests;

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the
receipt and sufficiency of which are hereby acknowledged, each Seller and each Buyer, severally and
not jointly, agrees as follows:

     1. Special Provision Regarding Buyers and Sellers.

     (a) For purposes of clarification, with respect to any representation, warranty, covenant or
agreement made by or for the benefit of a Buyer and any condition to an obligation of a Buyer, such
representation, warranty, covenant or agreement is being made only by or for the benefit, and such
condition to an obligation is only a condition to the obligation, of such Buyer with respect to the
Transferred Interests set forth opposite the name of such Buyer in Exhibits A-1 and A-2 and only to
or for the benefit of the Seller selling such Transferred Interest; and any and all obligations and
liabilities of the Buyers set forth herein shall be several and not joint. Notwithstanding the
foregoing, this provision shall not be construed to permit the purchase by the Buyers of less than
all of the Transferred Interests.

     (b) For purposes of clarification, with respect to any representation, warranty, covenant or
agreement made by or for the benefit of a Seller and any condition to an obligation of a Seller,
such representation, warranty, covenant or agreement is being made only by or for the benefit, and
such condition to an obligation is only a condition to the obligation, of such Seller with respect
to the Transferred Interests set forth opposite the name of such Seller in Exhibits A-1 and A-2 and
only to or for the benefit of the Buyer purchasing such Transferred Interest; and any and all
obligations and liabilities of the Sellers set forth herein shall be several and not joint.
Notwithstanding the foregoing, this provision shall not be construed to permit the sale by the
Sellers of less than all of the Transferred Interests.

     2. Sale and Purchase.

     (a) (i) Subject to the terms and conditions contained herein, the applicable Seller shall
sell, assign, convey and transfer to the applicable Buyer, its successors and assigns, all of its
right, title and interest in and to the applicable Transferred Interests, including, from and after
the Closing Date (as defined below), all allocations of profits and losses, and distributions of
cash or other property, in respect of the applicable Transferred Interests, and all other rights
otherwise accruing to such Seller by virtue of owning such Transferred Interests (collectively, the
“Sales” and each individually a “Sale”).

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     (ii) Notwithstanding the foregoing, the Assigned Interest shall not include: (x) any right to
receive carried interest from a Partnership or any obligation to return carried interest to a
Partnership; (y) any obligation to a Partnership, a General Partner or any other person or entity
with respect to (A) any Disgorgement Obligation (as defined below) or (B) any Clawback Obligation
(as defined below); and (z) Retained Section 1.6 Liability (defined below), retained by a Seller
and as set forth in the applicable Transfer Agreement.

          For purposes of this Agreement:

          “Clawback Obligation” means any requirements a Seller (or its predecessor in interest)
has or may have to contribute (directly or indirectly) to a General Partner (as defined below) or
any other person or entity such Seller’s share of any amount required to be contributed by such
General Partner to the applicable Partnership for purposes of the General Partner honoring its
obligations to the Partnership pursuant to Section 3.6 (c), (d) or (e) of the applicable
Partnership Agreement.

          “Disgorgement Obligation” means any liability to return (whether in cash, by deduction
from any capital account maintained by the Partnership in respect of the Transferred Interest, by
set off against one or more subsequent distributions by the Partnership in respect of the
Transferred Interest or otherwise) all or any lesser portion of any distribution (or deemed
distribution) made by the Partnership to the applicable Seller (or any of its predecessors in
interest) in respect of all or any portion of the Transferred Interest. For the avoidance of
doubt, any Disgorgement Obligation arising out of distributions made in respect of a Seller’s
interests in Arbinet-thexchange, Inc. (“Arbinet”) shall be considered an obligation of such
Seller.

          “Retained Section 1.6 Liability” means any Section 1.6 Liability (as defined below)
(a) relating to or arising out of any transaction in connection with which a Seller (or any of its
predecessors in interest) received (or was deemed to have received) proceeds from the Partnership
or (b) otherwise allocated to such Seller pursuant to the proviso contained in the definition of
Section 1.6 Liability. For the avoidance of doubt, any Section 1.6 Liability arising out of
distributions made in respect of a Seller’s interests in Arbinet shall be considered a Retained
Section 1.6 Liability of such Seller.

          “Section 1.6 Liability” means any liability pursuant to Section 1.6 or 1.6(a), as the
case may be, of the applicable Partnership Agreement, as to the Transferred Interest, to contribute
capital to the Partnership to satisfy the Partnership’s indemnification obligations; provided,
however, that any Section 1.6 Liability that is unable to be allocated as between a Seller and a
Buyer on the basis of the liability following the party that received the proceeds of the
underlying transaction, shall be allocated such that if the underlying event that gives rise to the
indemnification obligation has accrued (a) prior to the Effective Date, then the applicable Seller
shall be liable and (b) on or after the Effective Date, then the applicable Buyer shall be liable.

     (iii) Notwithstanding anything herein to the contrary, neither Buyer is hereby acquiring any
interest in EnerTech Capital Partners II, L.P.’s interest in Arbinet (the “Arbinet
Interest”) and Bonfield Partners Capital, L.P. (“Bonfield”) shall retain (a) the right
to receive any and all earnings and/or distributions on account of the Arbinet Interest and (b) the
obligation to make any payments relating to a Retained Section 1.6 Liability or a Disgorgement
Obligation in respect of the Arbinet Interest. HarbourVest VII Venture Ltd. (“HarbourVest
VII”) and Bonfield

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hereby agree to instruct EnerTech Management, L.P., the general partner of EnerTech Capital
Partners II, L.P., by joint letter of instruction, to make any and all payments of earnings,
proceeds, and/or distributions, of any kind or nature and in any form, directly to Bonfield. If
(a) any such payment or other distribution (whether in cash or other property) is made to any Buyer
in violation of this Section 2(a)(iii) or (b) any funds, securities, or other property is received
by any Buyer upon any disposition or other action with respect to any interest of Seller in Arbinet
as described herein, in violation of this Section, then such Buyer shall receive the same in trust
for such Seller’s benefit and shall forthwith remit same to Seller, in the form in which it was
received, together with such endorsements or documents as may be necessary to effectively negotiate
or transfer the same.

     (b) The purchase price (the “Purchase Price”) for a Transferred Interest shall be the
Purchase Price as of the Valuation Date, as certified by the Sellers, less any distributions,
capital account credits, or other payments (determined prior to the deduction of any withholding or
other taxes with respect thereto and as valued at the distribution date by the applicable general
partner or managing member of the Partnership (each, a “General Partner” and collectively,
the “General Partners”) it being agreed that the value of all “in kind” payments, dividends
or other distributions shall be the value assigned thereto as of the date of distribution by the
applicable Partnership or General Partner) made with respect to the Transferred Interest being
transferred and increased by any capital contributions made with respect to the Transferred
Interest being transferred, in each case after March 31, 2005 (the “Valuation Date”) and in
each case evidence reasonably satisfactory to the Buyer of such distribution, capital account
credit, other payment or capital contribution shall be delivered by the applicable Seller to the
applicable Buyer on or prior to the Closing Date. The aggregate Purchase Price for the Transferred
Interests (without giving effect to any adjustments for distributions or capital contributions) is
$18,792,966.00 plus the assumption by the applicable Buyers of the applicable Sellers’ obligation
to pay any unfunded capital commitments with respect to the Transferred Interests as certified by
the Sellers, as adjusted for any capital contributions made after the Valuation Date.

     (c) If a Purchase Price is adjusted, such adjustment shall be evidenced by a certificate in
the form of Exhibit B hereto (a “Price Adjustment Certificate”) duly executed by the
applicable Seller at the Closing (as defined below) of the purchase and sale of the applicable
Transferred Interest and the term “Purchase Price” as used herein shall be construed in such case
as a reference to the adjusted Purchase Price as stated in such Price Adjustment Certificate for
the applicable Transferred Interest. If no adjustment to the Purchase Price is necessary, such
Seller shall execute a Price Adjustment Certificate at the Closing stating the unadjusted Purchase
Price of the applicable Transferred Interest.

     (d) In furtherance of each Sale and effective the Closing Date for each Sale, each Seller
hereby assigns, delegates and transfers to the applicable Buyer all of its right, title and
interest in (i) with respect to the LP Interests each of the agreements, instruments and other
documents that are set forth in Exhibit C-1 hereto beneath the name of the relevant Partnership
(the “LP Constituent Documents”) with respect to the LP Interest being assigned at such
Closing; and (ii) with respect to the Economic Interests, Assigned Interests in each of the
agreements, instruments and other documents that are set forth in Exhibits C-2 and C-3 hereto
beneath the name of the relevant Partnership (the “Assigned Interest Constituent Documents”
and together with the LP Constituent Documents, the “Constituent Documents”) with respect
to the Economic Interests being assigned at such Closing.

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     3. Obligations Pending Closing.

     (a) Each Seller undertakes to forward to the applicable Buyer copies of all notices,
documents, or written communications relating to the Transferred Interests received at any time
after the date hereof (and whether before or after the Closing Date) by such Seller or any other
person on behalf of such Seller.

     (b) Each Seller agrees that from the date hereof, neither it, nor any person at its direction,
will agree or consent to any change to any of the Constituent Documents of any of the Partnerships
to which it is a party, including the Partnership Agreements or to any proposal which will or may
adversely affect or prejudice such Seller’s Transferred Interests other than (in any such case)
with the prior written approval of the Buyer purchasing such Transferred Interests.

     (c) Each Seller shall use its commercially reasonable efforts to comply with the requirements
of the applicable transfer provisions of the Partnerships’ respective Constituent Documents,
including providing the Partnerships or the General Partners thereof with such information as may
be reasonably required under the terms of the Constituent Documents of the relevant Partnership.

     4. Closing.

     (a) The closing of the sale and purchase of a Transferred Interest (a “Closing”) shall
take place at such place, date and time as agreed to by each Seller and each Buyer of such
Transferred Interest promptly after all of the closing conditions set forth in Section 7 with
respect to such Transferred Interest shall have been fulfilled (the “Closing Date”).

     (b) On each Closing Date, the applicable Seller will deliver to the applicable Buyer
(i) such assignments and other documents (including all approvals required by the
applicable Partnership to be delivered as a condition to such transfer and a transfer agreement
with respect to each Transferred Interest in such form as is mutually agreeable to the applicable
Seller and the applicable Buyer (each, a “Transfer Agreement” and collectively, the
“Transfer Agreements”), duly executed by the applicable Seller and the applicable General
Partner), as may be necessary to convey and vest in the applicable Buyer all right, title and
interest in and to the Transferred Interests free and clear of all liens, claims and encumbrances
other than obligations imposed upon the applicable Buyer under its constituent documents,
restrictions on subsequent transfers contained in the applicable Partnership Agreement and
restrictions imposed by Federal and state securities laws, and (ii) a Price Adjustment
Certificate for the applicable Transferred Interests duly executed by such Seller.

     (c) On each Closing Date, the applicable Buyer shall (i) duly execute Transfer
Agreements for the applicable Transferred Interests and (ii) pay the Purchase Price
applicable to such Transferred Interests, net of any amounts required to be withheld therefrom
under applicable law, to an account designated in writing by the applicable Seller.

     (d) From and after each Closing Date, the applicable Seller hereby agrees to promptly forward
to the applicable Buyer any correspondence, notices or distributions (in cash or otherwise)
received by the applicable Seller with respect to such Transferred Interests as have been
transferred pursuant to this Agreement.

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     5. Representations and Warranties of each Seller. Each Seller, severally and not
jointly, hereby represents and warrants to the applicable Buyer, as of the date hereof and as of
the Closing Date, that:

     (a) Such Seller is duly organized and validly existing or subsisting, as the case may be,
in its jurisdiction of incorporation, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly authorized by
all necessary action on the part of such Seller, and this Agreement has been duly executed and
delivered by such Seller and constitutes a legal, valid and binding obligation of such Seller
enforceable against such Seller in accordance with its terms.

     (b) Such Seller has full organizational power and authority to enter into this Agreement
and to assign each of its Transferred Interests to the applicable Buyer. The execution and
delivery of this Agreement by such Seller and the consummation of the transactions contemplated
by this Agreement by such Seller do not conflict with, violate any of the terms and provisions
of, or constitute a default (or any event which, with notice or lapse of time or both, would
constitute a default) under, the governing agreements of such Seller or any law, statute,
regulation, decree, judgment, license, order, agreement or other restriction applicable to such
Seller.

     (c) Subject to any transfer restrictions contained in the applicable Partnership
Agreements and any transfer restrictions imposed by the Federal and state securities laws, such
Seller owns all right, title and interest in and to each of the Transferred Interests, free and
clear of all claims, liens, pledges, charges, security interests, encumbrances, or rights of
any nature of any third party (each, an “Encumbrance”) and upon payment of the Purchase
Price with respect to a Transferred Interest by a Buyer as provided in this Agreement, such
Buyer will acquire marketable title to such Transferred Interest, free and clear of any such
Encumbrance, but subject to any obligations imposed on the applicable Buyer by its constituent
documents and any restrictions on subsequent transfers imposed pursuant to the Partnership
Agreements or Federal and state securities laws.

     (d) Each LP Interest held by an LP Interest Seller comprises the total interest of such
Seller in the applicable LP Interest Partnership. Each Economic Interest held by an Assigned
Interest Seller comprises the total interest of such Seller in the applicable Assigned Interest
Partnership as set forth on Exhibit A-2. The total capital commitment to each of the
Partnerships in respect of each Transferred Interest is the amount set forth on Exhibits A-1
and A-2, respectively, hereto under the heading “Commitment with Respect to the Transferred
Interest.” Except as reflected in the applicable Price Adjustment Certificate, (i)
each Seller has paid in full to each applicable Partnership when due with respect to the
applicable Transferred Interest the amount of such capital certified by the Sellers,
(ii) each Seller has an outstanding unfunded commitment to each applicable Partnership
with respect to the applicable Transferred Interest in the amount of such capital certified by
the Sellers, and (iii) the net asset value of each Transferred Interest as of the
applicable Valuation Date as reported by the applicable General Partner is the amount certified
by the Sellers. Such Seller is not in default under or in breach in any material respect of
any of the Constituent Documents of any of the Partnerships to which it is a party and has not
acted or omitted to act in such a way that, with notice or lapse of time or both, it would be
in default or in breach of any Constituent Document to which it is a party. Such LP Interest
Seller has not opted out of

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or otherwise been excused from any portfolio investment made by any of the LP Interest
Partnerships and has participated in its pro rata share of each portfolio
investment made by the respective LP Interest Partnerships.

     (e) None of the Partnerships has made any distributions to any Seller since the applicable
Valuation Date, except as may be reflected in the Price Adjustment Certificate duly executed by
such Seller at the Closing.

     (f) No LP Interest Seller has taken any action with respect to any of the LP Interest
Partnerships or the LP Interests other than as a limited partner or member of the respective LP
Interest Partnerships in accordance with the respective Partnership Agreements and has not
waived any of its rights under the Constituent Documents to which it is a party that has or
would reasonably be expected to adversely affect its LP Interests. From and after the date of
the applicable Assignment and Assumption Agreement, no Assigned Interest Seller has taken any
action with respect to any of the Assigned Interest Partnerships or the Assigned Interests that
has or would reasonably be expected to adversely affect the value of its Assigned Interests.

     (g) In reliance on the representations and warranties made by the Buyers in Section 6
hereof, no consent, license, approval, order or authorization of, or registration, declaration
or filing with any governmental authority, agency, bureau, commission (each, a
“Governmental Authority”) or other person is required to be obtained (other than any
consents required under the applicable Partnership Agreement) by any Seller in connection with
the sale, assignment and transfer of any of the Transferred Interests.

     (h) No proceedings are pending or, to the knowledge of the Seller, threatened against or
affecting such Seller before any Governmental Authority, court, tribunal or similar entity
which, in the aggregate, would reasonably be expected to adversely affect any action taken or
to be taken by such Seller under this Agreement or any of the applicable Transfer Agreements to
be executed on the relevant Closing Date.

     (i) Except for SSG Capital Advisors, L.P., the commissions and expenses of which shall be
borne by the Sellers, the Sellers have not employed any finder, broker, agent or other
intermediary in connection with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby in such a manner as to give rise to a valid claim against the
Buyers for any commission. Such Seller will indemnify, severally and not jointly, the Buyers
and hold them harmless against and from any and all liabilities, expenses, costs, losses and
claims arising from any employment by the Sellers of, or services rendered to the Sellers by,
any finder, broker, agent or other intermediary in such connection (or any allegation of any
such employment or services).

     (j) The Sellers have delivered, or caused to be delivered, to the Buyers true and accurate
copies of all the Constituent Documents. Other than the agreements, instruments and other
documents listed on Exhibits C-1, C-2 and C-3, and this Agreement and the related transactional
documents none of the Sellers is a party to or bound by any contract, agreement, commitment or
waiver with respect to the Transferred Interests.

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     (k) Each Seller has evaluated the merits and risks of selling each of the Transferred
Interests on the terms set forth in this Agreement, and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and risks of such
sale, is aware of and has considered the financial risks and financial hazards of selling each
of the Transferred Interests on the terms set forth in this Agreement and is willing to forego
through such sales the potential for future economic gain that might be realized from each of
the Transferred Interests. Each Seller has had access to such information regarding the
business and finances of each of the Partnerships and General Partners and such other matters
with respect to each of the Partnerships and General Partners as a reasonable person would
consider in evaluating the transactions contemplated hereby, including, in particular, all
information necessary to determine the fair market value of each of the Transferred Interests.

     (l) Each Seller has been represented by, and had the assistance of, counsel in the conduct
of any due diligence, in the preparation and negotiation of this Agreement, the Transfer
Agreements and any related documentation and in connection with the consummation of the
transactions contemplated hereby. No representation or warranty by a Seller in this Agreement
and no statement made or contained in any certificate or instrument delivered, or to be
delivered, to the Buyer pursuant to this Agreement (including the Price Adjustment Certificates
and the Transfer Agreements) contains or will contain, as of the date such statement is made or
deemed made, any untrue statement of a material fact or omits or will omit, as of the date such
statement is made or deemed made, to state a material fact necessary to make such
representations, warranties or statements not misleading as of the date made or deemed made.

     (m) Each LP Interest Seller either (i) acquired the LP Interest at original issue
directly from the relevant LP Interest Partnership or (ii) acquired the LP Interest
from a general partner or limited partner of the Partnership prior to October 22, 2004. Each
Seller’s tax basis for U.S. federal income tax purposes, as of the last day of the
Partnership’s fiscal year prior to the fiscal year including the date hereof, with respect to
the Transferred Interest was the amount certified by the Seller. Each Seller shall furnish or
cause to be furnished to the Buyer, promptly after receipt, its Schedule K-1 to IRS Form 1065
for each Partnership for the fiscal year including the date hereof. In furtherance thereof,
each Seller hereby authorizes the General Partner to furnish directly to the Buyer copies of
such Seller’s Schedule K-1s for such fiscal year. For purposes of this paragraph, if the
Partnership furnishes to a Seller a statement in lieu of a Schedule K-1, “Schedule K-1” shall
mean such statement.

     (n) With respect to each Economic Interest (or predecessor interest of each Economic
Interest), either (i) the respective Assigned Interest Partnership will not be an “electing
investment partnership” within the meaning of Section 743(e)(6) of the Internal Revenue Code of
1986, as amended, (ii) no loss has been recognized by any transferor with respect to any
transfer of such Economic Interest (or predecessor interest), or (iii) to the extent any loss
was so recognized, such loss relates to a transfer which took place prior to October 22, 2004.

     6. Representations and Warranties of each Buyer. Each Buyer, severally and not
jointly, hereby represents and warrants to the applicable Seller, as of the date hereof and as of
the Closing Date, that:

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     (a) Such Buyer is duly organized and validly existing in its jurisdiction of organization,
the execution and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary action on the part
of such Buyer, and this Agreement has been duly executed and delivered by such Buyer and
constitutes a legal, valid and binding obligation of such Buyer enforceable against such Buyer
in accordance with its terms.

     (b) Such Buyer has full corporate or limited partnership power and authority, as the case
may be, to enter into this Agreement and to purchase the Transferred Interests from the
respective Sellers. The execution and delivery of this Agreement by such Buyer and the
consummation of the transactions contemplated by this Agreement by such Buyer do not conflict
with, violate any of the terms and provisions of, or constitute a default (or any event which,
with notice or lapse of time or both, would constitute a default) under, the governing
agreements of such Buyer or any law, statute, regulation, decree, judgment, license, order,
agreement or other restriction applicable to such Buyer.

     (c) No consent, license, approval, order or authorization of, or registration, declaration
or filing with any Governmental Authority or other person is required to be obtained (other
than any consents required under the applicable Partnership Agreement to be obtained by a
Seller or the applicable General Partner) by such Buyer in connection with the purchase,
assumption and transfer of any of the Transferred Interests.

     (d) No proceedings are pending or, to the knowledge of the such Buyer, threatened against
or affecting such Buyer before any Governmental Authority, court, tribunal or similar entity
which, in the aggregate, would reasonably be expected to adversely affect any action taken or
to be taken by such Buyer under this Agreement or any of the applicable Transfer Agreements to
be executed on the relevant Closing Date.

     (e) Such Buyer is acquiring the Transferred Interests being purchased by it for its own
account for investment, and not with a view to, or for resale in connection with, any
distribution thereof. Such Buyer agrees not to sell, hypothecate or otherwise dispose of any
of the Transferred Interests, purchased by it, except in accordance with the terms of the
respective Constituent Documents and unless such transfer has been registered under the
Securities Act of 1933, as amended (the “Act”), or an exemption from the registration
requirements of the Act is available.

     (f) Such Buyer is an “accredited investor” as defined in Rule 501(a) of Regulation D
promulgated under the Act.

     (g) Such Buyer is a “qualified purchaser” (as defined in the Investment Company Act of
1940, as amended).

     (h) Such Buyer has not employed any finder, broker, agent or other intermediary in
connection with the negotiation or consummation of this Agreement or any of the transactions
contemplated hereby in such a manner as to give rise to a valid claim against any Seller for
any commission. Such Buyer will indemnify, severally and not jointly, the Sellers and hold
them harmless against and from any and all liabilities, expenses, costs, losses and claims
arising from any employment by such Buyer of, or services rendered to such Buyer

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by, any finder, broker, agent or other intermediary in such connection (or any allegation
of any such employment or services).

     (i) Such Buyer has evaluated the merits and risks of purchasing the Transferred Interests
being purchased by it on the terms set forth in this Agreement, and has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and
risks of such purchase, is aware of and has considered the financial risks and financial
hazards of purchasing the Transferred Interests being purchased by it on the terms set forth in
this Agreement and is able to bear the economic risks of purchasing the Transferred Interests
being purchased by it, including the possibility of complete loss with respect thereto. Such
Buyer has had access to such information regarding the business and finances of each of the
applicable Partnerships and such other matters with respect to each of the applicable
Partnerships as a reasonable person would consider in evaluating the transactions contemplated
hereby, including, in particular, all information necessary to determine the fair market value
of each of the Transferred Interests.

     (j) Such Buyer has been represented by, and had the assistance of, counsel in the conduct
of any due diligence, in the preparation and negotiation of this Agreement, the Transfer
Agreements and any related documentation and in connection with the consummation of the
transactions contemplated hereby. No representation or warranty by a Buyer in this Agreement
and no statement made or contained in any certificate or instrument delivered, or to be
delivered, to a Seller pursuant to this Agreement contains or will contain, as of the date such
statement is made or deemed made, any untrue statement of a material fact or omits or will
omit, as of the date such statement is made or deemed made, to state a material fact necessary
to make such representations, warranties or statements not misleading as of the date made or
deemed made.

     7. Closing Conditions.

     (a) The obligation of each Seller and the respective Buyers to sell and purchase a Transferred
Interest is subject to the consent required under the applicable Constituent Documents and to the
compliance with or waiver of any and all transfer restrictions applicable to such Transferred
Interests, including rights of first refusal, rights of pre-emption, or similar rights contained in
the applicable Partnership Agreements or any other Constituent Document. Such consent, compliance
or waiver shall be evidenced by due execution of each of the Transfer Agreements on the Closing
Date by the applicable General Partner and the Seller. Each Seller shall use its commercially
reasonable efforts to obtain the consent of, and certification as to compliance or waiver from, the
applicable General Partner.

     (b) The obligation of a Seller to sell a Transferred Interest is subject to: (i) such
Seller’s receipt of the applicable Purchase Price for such Transferred Interest; (ii) the receipt
by the other Sellers of the applicable Purchase Price for each other Transferred Interest subject
to this Agreement; and (iii) receipt by the Sellers of all documents, certificates and information
required to be provided by the Buyers that are necessary to (A) consummate the transactions
contemplated hereby and (B) obtain the consent, certification or waivers from the applicable
General Partners.

-10-

 

     8. Indemnification.

     (a) Each Seller, severally and not jointly, shall, and hereby does, indemnify, defend and hold
each respective Buyer and its successors and assigns harmless from and against any loss, liability,
cost or expense (including any tax, fee and other governmental charge) (collectively,
“Loss”) imposed upon or incurred by such Buyer or any such person resulting from or arising
out of (i) such Seller’s ownership of the Transferred Interests prior to the applicable
Closing Date, including the return (whether such return shall be effected by repayment or by
deduction from or set-off against any subsequent distribution to the Buyer’s capital account or
otherwise) by such Buyer of all or any part of any direct or indirect distribution made by any of
the Partnerships to the Seller (or its predecessor in interest), (ii) any Retained Section
1.6 Liability, (iii) any breach by such Seller of any of its obligations, representations
or warranties set forth in this Agreement, the Constituent Documents, the applicable Transfer
Agreements or any other document delivered in connection therewith or herewith or (iv) any
tax, fee or other governmental charge attributable to the ownership or sale by such Seller of the
Transferred Interests (including any deductions from any distributions made by a Partnership to
such Buyer, or any payment by a Partnership otherwise chargeable to the such Buyer relating to
withholding tax deductions or other payments of taxes attributable to the ownership by such Seller
of any of the Partnership Interests); provided, however, that no indemnification is provided in
this Section 8(a) with respect to (x) any Loss imposed upon or incurred by the Buyers of interests
in the TL III Funds (whether directly or indirectly) resulting from or arising out of the
Traffic.com Litigation, and (y) any claim for which indemnity is provided under Section 8(c)
hereof. In no event shall this indemnity be construed to include any obligation of a Seller to
indemnify a Buyer for any indirect, incidental, special or consequential damages.

     (b) Each of Safeguard Scientifics (Delaware), Inc., Safeguard Fund Management L.P., and SFINT,
Inc., jointly and severally, shall, and hereby does, indemnify, defend and hold each of the Buyers
and its respective successors and assigns harmless from and against such Buyer’s pro rata share of
any Direct Loss incurred by TL Ventures III L.P., TL Ventures III Offshore, L.P. and TL Ventures
III Interfund, L.P. (the “TL III Funds”) in connection with the Traffic.com Litigation.
For purposes of this Section 8(b), (i) “Direct Loss” shall mean any direct out-of-pocket
payment made by the respective TL III Funds in connection with the Traffic.com Litigation, whether
for indemnity, contribution, or satisfaction or any judgment, award or settlement of such
litigation, including expenses relating thereto that is not reimbursed or reimbursable by insurance
or otherwise; and (ii) “Traffic.com Litigation” shall refer to that certain law suit
captioned “Santa Fe Technologies, Inc. v. Mark Nash, Jerry Musnitsky, Harvey G. Dollar, Argus
Networks, Inc., TL Ventures LLC, Mark J. DeNino, Michael D. Burns and David J. Jannetta,”
originally pending before the State of New Mexico, Second Judicial District Court in the County of
Bernalillo, New Mexico, Case No. CV 99-07715 and any appeals therefrom and related suits among one
or more of the same parties arising from the same precipitating facts. Each Buyer’s pro rata share
of any such Direct Loss shall be equal to its proportionate percentage interest in the applicable
TL III Funds, as more specifically set forth on Exhibits A-1 and A-2 hereof.

     (c) With respect to the Economic Interests acquired by Buyers hereunder, in the event any
Partnership or any General Partner of any Partnership is precluded from making any distribution to
the applicable Buyer on the same basis on which it makes any such distribution to limited partners
of such Partnership (with such Transferee being deemed to have an original

-11-

 

capital commitment to the Partnership in an amount equal to the Capital Commitment with
respect to such Economic Interest), all Sellers of Economic Interests, jointly and severally,
shall, and hereby do, agree to indemnify and pay over to the applicable Buyer the amount of any
such distribution to which such Buyer would have been entitled had it held a limited partnership
interest in the applicable Partnership (the amount of such distribution being the “LP
Equivalent Amount”); provided, however, that Sellers shall, upon satisfying the obligations
provided in this Section 8(c), be subrogated to the rights of such Buyer with respect to any
subsequent recovery by such Buyer of any such amounts paid by Sellers, whether as a result of a
return by the General Partner and subsequent distribution to limited partners of amounts required
to be paid by the general partner disgorgement provisions of the applicable Partnership Agreement,
or otherwise, and each Buyer hereby agrees to pay over to Sellers the amount of any such subsequent
proceeds received, to the extent that receipt of such proceeds by such Buyer would result in its
having received more than the aggregate amount to which such Buyer would have been entitled had it
held a limited partnership interest in the applicable Partnership from and after the Closing Date
(after giving effect to the provisions of Section 2(a)(iii) hereof),
provided in no event shall such Buyer be required to pay over an amount exceeding the LP Equivalent
Amount. In no event shall the indemnity provided in this Section 8(c) be construed to include any
obligation of a Seller to indemnify a Buyer for any indirect, incidental, special or consequential
damages.

     (d) Each Buyer, severally and not jointly, shall, and hereby does, indemnify, defend and hold
the respective Seller and its successor and assigns harmless from and against any Loss imposed upon
or incurred by such Seller with respect to the Transferred Interest, which results from or arises
out of (i) such Buyer’s ownership of the Transferred Interests after the applicable Closing
Date (including for any Section 1.6 Liability other than the Retained Section 1.6 Liability), other
than to the extent any Seller is responsible therefor under Section 8(a), (b) or (c) hereof, and
(ii) a breach by such Buyer of any of its obligations, representations or warranties set
forth in this Agreement, the Transfer Agreements to which it is a party or any other document
delivered by such Buyer in connection herewith. In no event shall this indemnity be construed to
include any obligation of a Buyer to indemnify a Seller for any indirect, special or consequential
damages

     9. Termination.

     (a) This Agreement may be terminated by the mutual consent of the Sellers and the Buyers.

     (b) This Agreement may be terminated by either a Seller or a Buyer in whole and not in part if
(i) the applicable General Partner has not consented to the transfer of any such
Transferred Interest; (ii) with respect to the LP Interests, the applicable General Partner
has not agreed to admit the Buyer to each applicable LP Interest Partnership as a limited partner
in good standing; or (iii) any transfer restrictions (including rights of first refusal,
rights of preemption and similar rights) relating to such Transferred Interest have not been waived
or complied with, in any case, by 5:00 p.m. Eastern Standard Time on December 31, 2005.

     10. Miscellaneous

     (a) Each party hereto shall bear its own expenses incurred in connection with this Agreement
and the transactions contemplated hereby. Notwithstanding the terms of any of the

-12-

 

Constituent Documents, the Seller will pay all transfer fees and other costs or expenses
incurred by the General Partners or the Partnerships in connection with the transactions
contemplated hereby.

     (b) This Agreement shall be governed in all respects, including validity, construction,
interpretation and effect, by the laws of the State of Delaware, without giving effect to its
principles or rules of conflict of laws to the extent such principles or rules would require or
permit the application of the laws of another jurisdiction. The parties agree that the State of
Delaware has a substantial relationship to this transaction.

     (c) All notices and other communications shall be in writing and shall be delivered or mailed,
(i) if to the Buyer, to HarbourVest Partners, One Financial Center, Boston, Massachusetts
02111, Attn: Fred Maynard and (ii) if to the Sellers, c/o Safeguard Scientifics, Inc., 800
The Safeguard Building, 435 Devon Park Drive, Wayne, Pennsylvania 19087, Attn: Christopher Davis.

     (d) This Agreement may be executed simultaneously in two or more identical counterparts, each
of which shall be deemed an original, and all of which shall constitute one and the same
instrument.

     (e) This Agreement, the Transfer Agreements and the Price Adjustment Certificate shall
constitute the entire agreement and supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof.

     (f) The terms and conditions of this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of the parties hereto. This Agreement may not be assigned by any
party without the prior written consent of the other party hereto (which consent shall not be
unreasonably withheld, delayed or conditioned).

     (g) Each party hereto agrees to execute and deliver to the other party such further
instruments and to take such further actions as the other party may reasonably deem necessary to
fully effectuate the intent and purposes of this Agreement.

     (h) All representations and warranties contained in this Agreement shall survive the Closing
and shall not merge into any instrument of assignment or conveyance delivered by the Seller. All
statements contained in any certificate or other instrument executed and delivered by or on behalf
of the Seller pursuant to this Agreement or in connection with the transaction contemplated by this
Agreement shall be considered representations and warranties by the Seller to the Buyer with the
same force and effect as if contained in this Agreement.

     (i) Any term or provision of this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

-13-

 

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

	 	 	 	 	 	 	 	 	 	 	 
	 	 	BUYERS:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	HARBOURVEST VII VENTURE LTD.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ John M. Begg	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: John M. Begg	 	 
	 	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	HARBOURVEST PARTNERS VII-VENTURE	 	 
	 	 	PARTNERSHIP FUND L.P.	 	 
	 	 	By:	 	HarbourVest VII-Venture Partnership Associates LLC
	 	 	 	 	Its General Partner	 	 
	 	 	By:	 	HarbourVest Partners, LLC	 	 
	 	 	 	 	Its Managing Member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ John M. Begg	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: John M. Begg	 	 
	 	 	 	 	Title: Managing Director	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	DOVER STREET VI L.P.	 	 
	 	 	By:	 	Dover VI Associates L.P., its general	 	 
	 	 	partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Dover VI Associates LLC, its general	 	 
	 	 	 	 	partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	HarbourVest Partners, LLC, its	 	 
	 	 	 	 	 	 	managing member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ John M. Begg	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: John M. Begg	 	 
	 	 	 	 	Title: Managing Director	 	 

 

 

	 	 	 	 	 	 	 
	 	 	SELLERS:	 	 
	 
	 	 	 	 	 	 
	 	 	SAFEGUARD SCIENTIFICS (DELAWARE),
INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Davis	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Davis	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	BONFIELD FUND MANAGEMENT L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Bonfield VII, Ltd., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Davis	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Davis	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	BONFIELD VII, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Davis	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Davis	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	BONFIELD PARTNERS CAPITAL L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Bonfield VII, Ltd., its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Davis	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Davis	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 
	 	 	SAFEGUARD FUND MANAGEMENT L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Safeguard Fund Management, Inc.,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Davis	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Christopher J. Davis	 	 
	 

	 	 	 	Title: Vice President and Treasurer	 	 

-15-

 

	 	 	 	 	 	 	 	 	 
	 	 	SFINT, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Christopher J. Davis	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Christopher J. Davis	 	 
	 	 	 	 	Title: Vice President and Treasurer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	TL VENTURES MANAGEMENT, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Safeguard Fund Management L.P.,	 	 
	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	Safeguard Fund Management, Inc.,	 	 
	 	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Christopher J. Davis	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Name: Christopher J. Davis	 	 
	 	 	 	 	Title: Vice President and Treasurer	 	 

-16-

 

Exhibit A-1

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Commitment with	 	 
	 	 	 	 	 	 	Respect to the	 	Percentage of
	Partnership	 	Seller	 	Buyer	 	Transferred Interest	 	Partnership
	Radnor Venture

Partners, LP1

	 	Safeguard
Scientifics
(Delaware), Inc.
	 	HarbourVest VII
Venture Ltd.
	 	$	3,250,000	 	 	 	9.911626	%
	 

	 	 	 	Dover Street VI L.P.
	 	$	1,250,000	 	 	 	3.812164	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Technology Leaders
L.P.

	 	Bonfield VII, Ltd.
	 	Dover Street VI L.P.
	 	$	2,000,000	 	 	 	7.065127	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Technology Leaders
II, L.P.

	 	Bonfield VII, Ltd.
	 	HarbourVest VII
Venture Ltd.
	 	$	4,992,306	 	 	 	7.996042	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures III LP

	 	SFINT, Inc.
	 	HarbourVest VII
Venture Ltd.
	 	$	250,000	 	 	 	0.108839	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures III
Interfund L.P.

	 	Safeguard
Scientifics
(Delaware), Inc.
	 	HarbourVest VII
Venture Ltd.
	 	$	742,500	 	 	 	9.899868	%
	 

	 	 	 	Dover Street VI L.P.
	 	$	617,500	 	 	 	8.233224	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	EnerTech Capital
Partners, L.P.

	 	Bonfield Partners
Capital, L.P.
	 	HarbourVest VII
Venture Ltd.
	 	$	2,500,000	 	 	 	4.433169	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	EnerTech Capital
Partners II, L.P.

	 	Bonfield Fund
Management, L.P.
	 	Dover Street VI L.P.
	 	$	10,000,000	 	 	 	4.411223	%

 

			
	1	 	If the general partner of Radnor Venture
Partners, LP (“RVP”) does not get unanimous consent of the
limited partners of RVP, the Buyers’ interests in RVP will be that of a
statutory assignee.

A-1

 

Exhibit A-2

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Commitment with	 	 
	 	 	 	 	 	 	Respect to the	 	 
	 	 	 	 	 	 	Transferred	 	Percentage of
	Partnership	 	Seller	 	Buyer	 	Interest	 	Partnership
	TL Ventures III L.P.

	 	Safeguard
Scientifics
(Delaware), Inc.
	 	HarbourVest VII
Venture Ltd.
	 	$	1,516,000	 	 	 	0.660000	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures III L.P.

	 	Safeguard Fund
Management, L.P.
	 	HarbourVest VII
Venture Ltd.
	 	$	7,000,000	 	 	 	3.047493	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures III L.P.

	 	Safeguard
Scientifics
(Delaware), Inc.
	 	HarbourVest VII
Venture Ltd.
	 	$	15,321	 	 	 	0.006670	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures III
Offshore L.P.

	 	Safeguard
Scientifics
(Delaware), Inc.
	 	Dover Street VI L.P.
	 	$	317,333	 	 	 	0.659999	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures IV L.P.

	 	Safeguard
Management Fund
L.P.
	 	HarbourVest VII
Venture Ltd.
	 	$	499,450	 	 	 	0.198020	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures IV L.P.

	 	Safeguard
Management Fund
L.P.
	 	HarbourVest VII
Venture Ltd.
	 	$	10,000,000	 	 	 	3.964757	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	TL Ventures V L.P.

	 	TL Ventures
Management L.P.
	 	HarbourVest
Partners
VII-Venture
Partnership Fund
L.P.
	 	$	25,000,000	 	 	 	3.710019	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	EnerTech Capital
Partners,
L.P.2

	 	Bonfield Partners
Capital, L.P.
	 	HarbourVest VII
Venture Ltd.
	 	$	547,505	 	 	 	0.970873	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	EnerTech Capital
Partners,
L.P.3

	 	Bonfield Partners
Capital, L.P.
	 	HarbourVest VII
Venture Ltd.
	 	$	862.07	 	 	 	0.001529	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	EnerTech Capital
Partners II, L.P.

	 	Bonfield Fund
Management, L.P.
	 	Dover Street VI L.P.
	 	$	317,220	 	 	 	0.139933	%

 

			
	2	 	 Interest formerly held in EnerTech Management
L.P.
	 
	3	 	 Interest formerly held in EnerTech Management
Company L.P.

A-2

 

 

The following exhibits have been omitted pursuant to Item 601(b)(2) of Reg. S-K:

	 	 	 
	Exhibit B-1

	 	Price Adjustment Certificate
	Exhibit C-1

	 	LP Interest Documents
	Exhibit C-2

	 	Assignment and Assumption Agreements
	Exhibit C-3

	 	Assigned Interest Documents

The Company agrees to furnish supplementally a copy of any omitted exhibit to the Commission upon
request.<PAGE>

                                                                   EXHIBIT 10(I)

                                CHANGE IN CONTROL
                              EMPLOYMENT AGREEMENT

     AGREEMENT by and between P.H. Glatfelter Company (the "Company"), and
George H. Glatfelter II (the "Employee"), dated as of the 20th day of December,
2005.

     The Board of Directors of the Company (the "Board") has determined that it
is in the best interests of the Company and its shareholders to assure that the
Company and its subsidiaries will have the continued dedication of the Employee,
notwithstanding the possibility, threat, or occurrence of a Change in Control
(as defined below) of the Company. The Board believes it is imperative to
diminish the inevitable distraction of the Employee by virtue of the personal
uncertainties and risks created by a threatened or pending Change in Control, to
encourage the Employee's full attention and dedication to the Company currently
and in the event of any threatened or pending Change in Control, and to provide
the Employee with compensation arrangements upon a Change in Control that
provide the Employee with individual financial security and which are
competitive with those of other comparably situated companies and, in order to
accomplish these objectives, the Board has authorized the Company to enter into
this Agreement.

     NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as
follows:

     1. EFFECTIVE DATE.

          (a) The "Effective Date" shall be the first date during the "Change in
Control Period" (as defined in Section 1(b)) on which a Change in Control
occurs. Anything in this Agreement to the contrary notwithstanding, if the
Employee's employment with the Company is terminated prior to the date on which
a Change in Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has

<PAGE>

taken steps reasonably calculated to effect a Change in Control or (ii)
otherwise arose in connection with or anticipation of a Change in Control, then
for all purposes of this Agreement the "Effective Date" shall mean the date
immediately prior to the date of such termination.

          (b) The "Change in Control Period" is the period commencing on the
date hereof and ending on the second December 31 immediately following such
date; provided, however, that commencing on the first December 31 immediately
following the date hereof, and on each annual anniversary of such December 31
(such December 31 and each annual anniversary thereof is hereinafter referred to
as the "Renewal Date"), the Change in Control Period shall be automatically
extended so as to terminate two years from such Renewal Date, unless at least 60
days prior to the Renewal Date the Company shall give notice that the Change in
Control Period shall not be so extended.

     2. CHANGE IN CONTROL. For the purpose of this Agreement, a "Change in
Control" shall mean:

          (a) The acquisition, directly or indirectly, other than from the
Company, by any person, entity or "group" (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), excluding, for this purpose, the Company, its subsidiaries, any
employee benefit plan of the Company or its subsidiaries, and any purchaser or
group of purchasers who are descendants of, or entities controlled by
descendants of, P.H. Glatfelter which acquires beneficial ownership of voting
securities of the Company) (a "Third Party") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally in the election of directors; or

                                       2

<PAGE>

          (b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Directors") cease in any twelve (12) month period for any reason to
constitute at least a majority of the Board, provided that any person becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the Incumbent Directors who are directors at the time of such vote
shall be, for purposes of this Agreement, an Incumbent Director; or

          (c) Consummation of (i) a reorganization, merger or consolidation, in
each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation (other
than the acquiror) do not, immediately thereafter, beneficially own more than
50% of the combined voting power of the reorganized, merged or consolidated
company's then outstanding voting securities entitled to vote generally in the
election of directors, or (ii) a liquidation or dissolution of the Company or
the sale of all or substantially all (but not less than 40% of the gross fair
market value) of the assets of the Company (whether such assets are held
directly or indirectly) to a Third Party.

     Notwithstanding the foregoing, an event shall not constitute a Change in
Control hereunder unless the event also satisfies the definition of a change in
the ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, under Section 409A(a)(2)(A)(v)
of the Internal Revenue Code and the regulatory guidance issued thereunder.

     3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the Employee in
its employ, and the Employee hereby agrees to remain in the employ of the
Company, for the period commencing on the Effective Date and ending on the
second anniversary of such date (the "Employment Period").

                                       3

<PAGE>

     4. TERMS OF EMPLOYMENT.

          (a) POSITION AND DUTIES.

               (i) During the Employment Period,

                    (A) the Employee's position (including status, offices,
titles and reporting requirements), authority, duties and responsibilities shall
be at least commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day period
immediately preceding the Effective Date and

                    (B) the Employee's services shall be performed at the
location where the Employee was employed immediately preceding the Effective
Date or any office or location less than forty (40) miles from such location.

               (ii) During the Employment Period, excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Employee hereunder, to use the Employee's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Employee to

                    (A) serve on corporate, civic or charitable boards or
committees,

                    (B) deliver lectures, fulfill speaking engagements or teach
at educational institutions, and

                    (C) manage personal investments, so long as such activities
do not significantly interfere with the performance of the Employee's
responsibilities as an employee of the Company in accordance with this
Agreement. It is

                                       4

<PAGE>

expressly understood and agreed that to the extent that any such activities have
been conducted by the Employee prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in nature and
scope thereto) subsequent to the Effective Date shall not thereafter be deemed
to interfere with the performance of the Employee's responsibilities to the
Company.

               (iii) During the Employment Period, the Employee shall be subject
to, and shall comply with, the Company's policies regarding sexual harassment,
insider trading, confidentiality, non-disclosure, non-competition,
non-disparagement, substance abuse, and conflicts of interest and any other
written policy of the Company, the violation of which could result in
termination of employment.

          (b) COMPENSATION.

               (i) Base Salary. During the Employment Period, the Employee shall
receive a base salary ("Base Salary") at a monthly rate at least equal to the
highest monthly base salary paid or payable to the Employee by the Company
during the twelve-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Base Salary shall be
reviewed at least annually and shall be increased at any time and from time to
time as shall be substantially consistent with increases in base salary awarded
in the ordinary course of business to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions). Any increase in Base Salary shall not serve to limit or reduce any
other obligation to the Employee under this Agreement. Base Salary shall not be
reduced after any such increase.

               (ii) Annual Bonus. In addition to Base Salary, the Employee shall
be awarded, for each fiscal year ending during the Employment Period, an annual
bonus (an

                                       5

<PAGE>

"Annual Bonus"), either pursuant to the Company's Management Incentive Plan or
otherwise, in cash at least equal to the target bonus paid or payable to the
Employee under the Company's Management Incentive Plan for the last full fiscal
year preceding the fiscal year in which the Effective Date occurs.

               (iii) Incentive, Savings and Retirement Plans. In addition to
Base Salary and Annual Bonus payable as hereinabove provided, the Employee shall
be entitled to participate during the Employment Period in all incentive,
savings and retirement plans, practices, policies and programs applicable to
other key employees of the Company and its subsidiaries (including the 2005
Long-Term Incentive Plan). Such plans, practices, policies and programs, in the
aggregate, shall provide the Employee with compensation, benefits and reward
opportunities at least as favorable as the most favorable of such compensation,
benefits and reward opportunities provided by the Company to the Employee under
such plans, practices, policies and programs as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more favorable to
the Employee, as provided at any time thereafter with respect to other key
employees of the Company and its subsidiaries in the same salary grade (or, if
there are no salary grades, to other key employees of the Company and its
subsidiaries in comparable positions).

               (iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental, disability,
salary continuance, employee life, group life, accidental death and travel
accident insurance plans and programs), at least as favorable as the most
favorable of such plans, practices, policies and programs of the Company and its
subsidiaries in effect at any time

                                       6

<PAGE>

during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Employee and/or the Employee's family, as in effect at any time
thereafter with respect to other key employees of the Company and its
subsidiaries in the same salary grade (or, if there are no salary grades, to
other key employees of the Company and its subsidiaries in comparable
positions).

               (v) Expenses. During the Employment Period, the Employee shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Employee in accordance with the most favorable policies,
practices and procedures of the Company and its subsidiaries in effect at any
time during the 90-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect at any time thereafter with respect
to other key employees of the Company and its subsidiaries in the same salary
grade (or, if there are no salary grades, to other key employees of the Company
and its subsidiaries in comparable positions).

               (vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits in accordance with the most favorable
plans, practices, programs and policies of the Company and its subsidiaries in
effect at any time during the 90-day period immediately preceding the Effective
Date or, if more favorable to the Employee, as in effect at any time thereafter
with respect to other key employees of the Company and its subsidiaries in the
same salary grade (or, if there are no salary grades, to other key employees of
the Company and its subsidiaries in comparable positions).

               (vii) Vacation. During the Employment Period, the Employee shall
be entitled to paid holidays and vacation in accordance with the most favorable
plans, policies, programs and practices of the Company and its subsidiaries as
in effect at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the

                                       7

<PAGE>

Employee, as in effect at any time thereafter with respect to other key
employees of the Company and its subsidiaries in the same salary grade (or, if
there are no salary grades, to other key employees of the Company and its
subsidiaries in comparable positions).

     5. TERMINATION.

          (a) DEATH OR DISABILITY. This Agreement shall terminate automatically
upon the Employee's death. If the Company determines in good faith that the
Disability of the Employee has occurred (pursuant to the definition of
"Disability" set forth below), it may give to the Employee written notice of its
intention to terminate, or its intention to cause its subsidiary to terminate,
the Employee's employment. In such event, the Employee's employment with the
Company shall terminate effective on the 30th day after receipt of such notice
by the Employee (the "Disability Effective Date"), provided that, within 30 days
after such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement, a
"Disability" shall occur if the Employee has been unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment for at least 26 consecutive weeks and such impairment is
expected to result in death or to last for a continuous period of not less than
12 months. The Employee must be determined to suffer from a Disability by a
physician selected by the Company or its insurers and acceptable to the Employee
or the Employee's legal representative (such agreement as to acceptability not
to be withheld unreasonably).

          (b) CAUSE. The Company may terminate the Employee's employment for
"Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
personal dishonesty taken by the Employee and intended to result in substantial
personal enrichment of the Employee at the expense of the Company, (ii) repeated
violations by the Employee of the Employee's obligations under Section 4(a) of
this Agreement which are demonstrably willful

                                       8

<PAGE>

and deliberate on the Employee's part and which are not remedied in a reasonable
period of time after receipt of written notice from the Company, (iii) violation
by the Employee of any of the Company's policies, including, but not limited to,
policies regarding sexual harassment, insider trading, confidentiality,
non-disclosure, non-competition, non-disparagement, substance abuse and
conflicts of interest and any other written policy of the Company, which
violation could result in the termination of the Employee's employment; or (iv)
the conviction of the Employee of a felony.

          (c) GOOD REASON. The Employee's employment may be terminated by the
Employee for Good Reason. For purposes of this Agreement, "Good Reason" means

               (i) the assignment to the Employee of any duties inconsistent in
any respect with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities;

               (ii) any failure by the Company to comply with any of the
provisions of Section 4(b) of this Agreement;

               (iii) the Company's requiring the Employee to be based at any
office or location other than that described in Section 4(a)(i)(B) hereof,
except for travel reasonably required in the performance of the Employee's
responsibilities;

               (iv) any purported termination by the Company of the Employee's
employment otherwise than as expressly permitted by this Agreement; or

               (v) any failure by the Company to comply with and satisfy Section
11(c) of this Agreement;

                                       9

<PAGE>

provided that within fifteen (15) days after the occurrence of any of the events
listed in clauses (i), (ii), (iii), (iv) or (v) above the Employee delivers
written notice to the Company of his intention to terminate for Good Reason
specifying in reasonable detail the facts and circumstances claimed to give rise
to the Employee's right to terminate his employment for Good Reason and the
Company shall not have cured such facts and circumstances within thirty (30)
days after delivery of such notice by the Employee to the Company (unless the
Company shall have waived its right to cure by written notice to the Employee),
and provided further that within fifteen (15) days after the expiration of such
thirty (30) day period or the date of receipt of such waiver notice, if earlier,
the Employee delivers a Notice of Termination to the Company under Section 5(d)
based on the same Good Reason specified in the notice of intent to terminate
delivered to the Company under this Section 5(c).

     For purposes of this Section 5(c), any good faith determination of "Good
Reason" made by the Employee shall be conclusive.

          (d) NOTICE OF TERMINATION. Any termination by the Company for Cause or
by the Employee for Good Reason shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 14(b) of this
Agreement. For purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Employee's
employment under the provision so indicated and (iii) if the Date of Termination
(as defined below) is other than the date of receipt of such notice, specifies
the termination date (which date shall be not more than fifteen (15) days after
the giving of such notice). The failure by the Employee to set forth in the
Notice of Termination any fact or circumstance which contributes to

                                       10

<PAGE>

a showing of Good Reason shall not waive any right of the Employee hereunder or
preclude the Employee from asserting such fact or circumstance in enforcing his
rights hereunder.

          (e) DATE OF TERMINATION. "Date of Termination" means the date of
receipt of the Notice of Termination or any later date specified therein as
permitted by Section 5(d), as the case may be; provided, however, that (i) if
the Employee's employment is terminated by the Company or a subsidiary of the
Company other than for Cause or Disability, the Date of Termination shall be the
date on which the Company or such subsidiary notifies the Employee of such
termination and (ii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of death of the
Employee or the Disability Effective Date, as the case may be.

     6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.

          (a) DEATH. If the Employee's employment is terminated during the
Employment Period by reason of the Employee's death, this Agreement shall
terminate without further obligations to the Employee's legal representatives
under this Agreement, other than those obligations accrued or earned and vested
(if applicable) by the Employee as of the Date of Termination, including, for
this purpose (i) the Employee's full Base Salary through the Date of Termination
at the rate in effect on the Date of Termination, (ii) any compensation
previously deferred by the Employee (together with any accrued interest thereon)
and not yet paid by the Company and any accrued vacation pay not yet paid by the
Company (such amounts are hereinafter referred to as "Accrued Obligations"). All
such Accrued Obligations shall be paid to the Employee's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days after the Date of
Termination.

          (b) DISABILITY. If the Employee's employment is terminated during the
Employment Period by reason of the Employee's Disability, this Agreement shall
terminate

                                       11

<PAGE>

without further obligations to the Employee, other than Accrued Obligations. All
such Accrued Obligations shall be paid to the Employee in a lump sum in cash
within 30 days after the Date of Termination.

          (c) TERMINATION FOR CAUSE; TERMINATION BY EMPLOYEE OTHER THAN FOR GOOD
REASON. If, during the Employment Period, the Employee's employment is
terminated for Cause or the Employee terminates employment other than for Good
Reason, this Agreement shall terminate without further obligations to the
Employee, other than Accrued Obligations. All such Accrued Obligations shall be
paid to the Employee in a lump sum in cash within 30 days after the Date of
Termination.

          (d) TERMINATION FOR GOOD REASON; TERMINATION BY THE COMPANY OTHER THAN
FOR CAUSE, DISABILITY OR DEATH. If, during the Employment Period, the Company
terminates the Employee's employment other than for Cause, Disability, or death,
or if the Employee terminates his employment for Good Reason:

               (i) the Company shall pay as a severance benefit to the Employee
in a lump sum in cash (less applicable withholdings) the aggregate of the
following amounts:

                    (A) to the extent not theretofore paid, the Employee's Base
Salary through the Date of Termination; and

                    (B) the product of the Annual Bonus paid to the Employee for
the last full fiscal year before the Date of Termination and a fraction, the
numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365; and

                    (C) the product of (x) three and (y) the sum of (1) the
Employee's annual Base Salary at the highest rate in effect at any time during
the period

                                       12

<PAGE>

beginning 90 days before the Effective Date through the Date of Termination and
(2) the Annual Bonus paid to the Employee for the last full fiscal year before
the Date of Termination; and

                    (D) any accrued vacation pay not yet paid by the Company.

               Payment of the lump amount described in this clause (i) shall be
made within 30 days after the Date of Termination, provided however, that if the
Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, payment shall be made within 30 days following the
date which is six (6) months following the Employee's separation from service
following a Notice of Termination (or, if earlier, the Employee's death) if the
Company reasonably determines that the aggregate amount of (1) payments under
clauses (i) and (iii) of this Section 6(d), (2) the cash payment, if any, in
lieu of providing certain welfare benefits described in clause (ii) of this
Section 6(d), (3) the Gross-up Payment, if any, under Section 9 of this
Agreement, and (4) payments, if any, under any other Company-provided separation
pay arrangement, represent the payment of non-qualified deferred compensation
subject to the requirements of Section 409A of the Code.

               (ii) for a period of three years after the Date of Termination,
or such longer period as any plan, program, practice or policy may provide, the
Company shall continue group medical, prescription, dental, disability, salary
continuance, group life, accidental death and dismemberment and travel accident
insurance benefits to the Employee and/or the Employee's family at levels
substantially equal to those which would have been provided to them in
accordance with the Company's plans, programs, practices and policies with
respect to such benefits if the Employee's employment had not been terminated,
in accordance with the most favorable plans, practices, programs or policies of
the Company and its subsidiaries in effect during the 90-day period immediately
preceding the Date of Termination or, if more

                                       13

<PAGE>

favorable to the Employee, as in effect at any time thereafter with respect to
other key employees in the same salary grade (or, if there are no salary grades,
to other key employees of the Company and its subsidiaries in comparable
positions) and their families; provided, however, that the Company may, at its
election, pay to the Employee an amount in cash equal to the Company's cost of
providing any of such benefits for such period, in lieu of continuing to provide
the benefits. For purposes of eligibility for post-retirement benefits pursuant
to such plans, practices, programs and policies and for purposes of health
benefit continuation coverage pursuant to Section 601 et seq of ERISA ("COBRA"),
the Employee shall be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such period.

               (iii) in the event that the Employee has not, as of the Date of
Termination, earned sufficient vesting service to have earned (A) a
nonforfeitable interest in his matching contribution account under the P.H.
Glatfelter Company 401(k) Retirement Savings Plan (the "401(k) Plan"), and (B) a
nonforfeitable interest in his accrued benefit under the terms of the P.H.
Glatfelter Company Retirement Plan for Salaried Employees (the "Retirement
Plan") and, if applicable, the Restoration Pension (the "Restoration Pension")
or the Final Average Compensation Pension (the "FAC Pension") under the terms of
the P.H. Glatfelter Supplemental Early Retirement Plan and/or the Management
Incentive Plan Adjustment Supplement (the "MIP Adjustment Supplement") under the
P.H. Glatfelter Company Supplemental Management Pension Plan (or any successors
to those plans), the Company shall pay to the Employee a lump sum in cash (less
applicable withholdings) in an amount equal to the sum of:

                    (A) the Employee's unvested matching contribution account
under the 401(k) Plan, valued as of the Date of Termination; and

                                       14
<PAGE>

                    (B) the actuarial present value of the Employee's unvested
normal retirement pension under the Retirement Plan and, as applicable, the
Restoration Pension, the FAC Pension and the MIP Adjustment Supplement, based on
the Employee's accrued benefit under those plans as of the Date of Termination,
as determined by the Company's actuary utilizing actuarial equivalency factors
for determining single sum amounts under the terms of the Retirement Plan.

          Payment of the lump sum amount described in this clause (iii) shall be
made within 30 days after the Date of Termination, provided however, that if the
Employee is a "specified employee" within the meaning of Section
409A(a)(2)(B)(i) of the Code, payment shall be made within 30 days following the
date which is six (6) months following the Employee's separation from service
following a Notice of Termination (or, if earlier, the Employee's death) if the
Company reasonably determines that the aggregate amount of (1) payments under
clauses (i) and (iii) of this Section 6(d), (2) the cash payment, if any, in
lieu of providing certain welfare benefits described in clause (ii) of this
Section 6(d), (3) the Gross-Up Payment, if any, under Section 9 of this
Agreement, and (4) payments, if any, under any other Company-provided separation
pay arrangement, represent the payment of non-qualified deferred compensation
subject to the requirements of Section 409A of the Code.

          In the event that the Employee should return to employment with the
Company and acquire a vested, nonforfeitable interest in any of the plans with
respect to which the payment in this subsection (iii) is determined, the
Employee shall return an amount equal to the payment made under this subsection,
within 30 days of demand by the Company.

               (iv) If the Employee is, as of the Date of Termination, a
participant in the P.H. Glatfelter Company Supplemental Management Pension Plan
(the "SMPP") with at least five years of vesting service (as measured for
purposes of the Retirement

                                       15

<PAGE>

Plan), then the Company shall be obligated to contribute funds, to the extent it
has not already done so, to the Trust serving as a funding vehicle for that plan
(the P.H. Glatfelter Company Nonqualified Plans Master Trust) as follows:

                    (A) If the Employee is a participant in the MIP Adjustment
Supplement under the SMPP, the Company shall fund the Trust with sufficient
assets to pay the Employee's accrued benefit under the MIP Adjustment Supplement
within five days of the Date of Termination.

                    (B) If the Employee is eligible to elect to receive the
Early Retirement Supplement under the SMPP, the Company shall fund the Trust
with sufficient assets to pay the Employee's accrued benefit under the Early
Retirement Supplement, within five days following the later to occur of (1) the
Date of Termination or (2) the benefit commencement date with respect to the
Employee's Early Retirement Supplement.

The Company shall have no obligation under this Section 6(d) unless the Employee
executes and delivers to the Company a valid general release agreement in a form
reasonably acceptable to the Company in which the Employee releases the Company
from any and all possible liability, including, without limitation, any and all
liability based on the Employee's employment or the termination of his
employment; provided, however, that nothing in such release shall include any
release of the Company's indemnification obligations to or for the benefit of
the Employee.

               (v) If the Employee has previously deferred compensation under a
plan or arrangement not described above which has not yet been paid by the
Company, the Employee's right to payment of such compensation shall be
considered vested and nonforfeitable as of the Date of Termination. Such
deferred compensation shall be paid to the Employee in accordance with the terms
of the deferred compensation plan or arrangement subject to the applicable
requirements of Code Section 409A.

                                       16

<PAGE>

               (vi) Notwithstanding the foregoing, any payment to an Employee
under this Section 6(d) or Section 9 of this Agreement which is determined by
the Company to constitute the payment of non-qualified deferred compensation as
defined in Section 409A of the Code shall be paid in accordance with the
requirements and limitations of Section 409A of the Code and the regulatory
guidance thereunder.

     7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any benefit, bonus,
incentive or other plans, programs, policies or practices provided by the
Company or its subsidiaries and for which the Employee may qualify, nor shall
anything herein limit or otherwise affect such rights as the Employee may have
under any stock option, restricted stock, restricted stock unit, performance
share or other agreements with the Company or any of its subsidiaries. Amounts
which are vested benefits or which the Employee is otherwise entitled to receive
under any plan, policy, practice or program of the Company or any of its
subsidiaries at or subsequent to the Date of Termination shall be payable in
accordance with such plan, policy, practice or program.

     8. FULL SETTLEMENT. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company may have against the Employee or
others. In no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Employee under any of the provisions of this Agreement.

     9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

          (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the

                                       17

<PAGE>

terms of this Agreement or otherwise) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties with respect to such excise
tax (such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Employee
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Employee of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax, imposed upon the Gross-Up Payment, the Employee retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payment.

          (b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether a Gross-Up Payment
is required and the amount of such Gross-Up Payment, shall be made by a firm of
independent accountants selected by the Audit Committee of the Board, which firm
may, if consistent with applicable securities laws, be the firm of independent
accountants engaged to audit the Company's financial statements (the "Accounting
Firm") which shall provide detailed supporting calculations both to the Company
and the Employee within 15 business days after the Date of Termination or such
earlier time as is requested by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Section 9(b), shall be paid to the Employee
within five days of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by the Employee, it
shall furnish the Employee with an opinion that he has substantial authority not
to report any Excise Tax on his federal income tax return. Any determination by
the Accounting Firm shall be binding upon the Company and the Employee. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that a Gross-Up Payment

                                       18

<PAGE>

which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 9(c) and the Employee thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Employee.

          (c) The Employee shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Employee knows of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Employee shall not pay such claim
prior to the expiration of the thirty-day period following the date on which it
gives such notice to the Company (or such shorter period ending on the date that
any payment of taxes with respect to such claim is due). If the Company notifies
the Employee in writing prior to the expiration of such period that it desires
to contest such claim, the Employee shall:

               (i) give the Company any information reasonably requested by the
Company relating to such claim,

               (ii) take such action in connection with contesting such claim as
the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

               (iii) cooperate with the Company in good faith in order
effectively to contest such claim,

                                       19

<PAGE>

               (iv) permit the Company to participate in any proceedings
relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, if in compliance
with applicable securities laws, either direct the Employee to pay the tax
claimed and sue for a refund or contest the claim in any permissible manner, and
the Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Employee to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Employee, on an interest-free
basis, and shall indemnify and hold the Employee harmless, on an after-tax
basis, from any Excise Tax or income tax, including interest or penalties with
respect thereto, imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Employee with respect to which such contested amount is
claimed to be due is limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with respect to
which a Gross-Up Payment would be payable hereunder and the Employee shall be
entitled to settle or contest, as

                                       20

<PAGE>

the case may be, any other issue raised by the Internal Revenue Service or any
other taxing authority.

          (d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 9(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon after
taxes applicable thereto). If, after the receipt by the Employee of an amount
advanced by the Company pursuant to Section 9(c), a determination is made that
the Employee shall not be entitled to any refund with respect to such claim and
the Company does not notify the Employee in writing of its intent to contest
such denial of refund prior to the expiration of thirty days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

     10. CONFIDENTIAL INFORMATION. The Employee shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its subsidiaries, and their
respective businesses, which shall have been obtained by the Employee during the
Employee's employment by the Company or any of its subsidiaries and which shall
not be or become public knowledge (other than by acts by the Employee or his
representatives in violation of this Agreement). After termination of the
Employee's employment with the Company, the Employee shall not, without the
prior written consent of the Company, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 10 constitute a basis for deferring or withholding any amounts
otherwise payable to the Employee under this Agreement.

                                       21

<PAGE>

     11. SUCCESSORS.

          (a) This Agreement is personal to the Employee and without the prior
written consent of the Company shall not be assignable by the Employee otherwise
than by will or the laws of descent and distribution. This Agreement shall inure
to the benefit of and be enforceable by the Employee's legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

          (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company (whether such
assets are held directly or indirectly) to assume expressly and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

     12. ARBITRATION. Any controversy or claim arising out of or relating to
this Agreement, or any breach hereof, shall be settled in accordance with the
terms of this Section 12. All claims by the Employee for benefits under this
Agreement shall first be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Employee in writing within thirty (30) days and shall
set forth the specific reasons for the denial and the specific provisions of
this Agreement relied upon. The Board shall afford a reasonable opportunity to
the Employee for a review of the decision denying a claim and shall further
allow the Employee to appeal to the Board a decision of the Board within thirty
(30) days after notification by the Board that the Employee's claim has

                                       22

<PAGE>

been denied. Any further dispute, controversy or claim arising out of or
relating to this Agreement, or the interpretation or alleged breach hereof,
shall be settled by arbitration in accordance with Employment Dispute Resolution
Rules of the American Arbitration Association (or such other rules as may be
agreed upon by the Employee and the Company). The place of the arbitration shall
be Philadelphia, Pennsylvania and judgment upon the award rendered by the
arbitrator(s) may be entered by any court having jurisdiction thereof. Such an
award shall be binding and conclusive upon the parties hereto.

     13. LEGAL EXPENSES. The Company agrees to reimburse the Employee, to the
full extent permitted by law, for all costs and expenses (including without
limitation reasonable attorneys' fees) which the Employee may reasonably incur
as a result of any contest of the validity or enforceability of, or the
Company's liability under, any provision of this Agreement, plus in each case
interest at the applicable Federal rate provided for in Section 7872(f)(2) of
the Code; provided, however, that such payment shall be made only if the
Employee prevails on at least one material issue.

     14. MISCELLANEOUS.

          (a) This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania without reference to
principles of conflict of laws. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect. This Agreement may not
be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

          (b) Any notices required or permitted to be given hereunder shall be
sufficient if in writing, and if delivered by hand, or sent by registered or
certified mail, return receipt requested, or overnight delivery using a national
courier service, or by facsimile or electronic transmission, with confirmation
as to receipt, to the Company at the address set forth

                                       23

<PAGE>

below and to the Employee at the address set forth in the personnel records of
the Company, or such other address as either party may from time to time
designate in writing to the other, and shall be deemed given as of the date of
the delivery or mailing:

          P.H. Glatfelter Company
          96 South George Street
          York, PA 17401
          Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          (d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

          (e) The Employee's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision hereof.

          (f) This Agreement contains the entire understanding of the Company
and the Employee with respect to the subject matter hereof and supersedes all
other agreements or understandings between the Company and the Employee relating
to the subject matter hereof, but only during the Employment Period.

                                       24

<PAGE>

     IN WITNESS WHEREOF, the Employee has hereunto set his hand and, pursuant to
the authorization from its Board of Directors, the Company has caused these
presents to be executed in its name and on its behalf, all as of the day and
year first above written.

                                        /s/ George H. Glatfelter II
                                        ----------------------------------------
                                        George H. Glatfelter II

                                        P.H. GLATFELTER COMPANY

                                        By /s/ Jeffery Norton
                                           -------------------------------------
                                           Vice President, General Counsel
                                           and Corporate Secretary

                                       25

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