Document:

Registration Rights Agreement

 Exhibit 10.2 
  
 REGISTRATION RIGHTS AGREEMENT 
  

THIS REGISTRATION RIGHTS AGREEMENT, dated as of March 29, 2005, is made by and between Superior Galleries, Inc., a Delaware corporation (the
“Company”), and Stanford International Bank Limited (the “Investor”), as the holder of the Company’s Series E $1.00 Convertible Preferred Stock (the “Series E Preferred
Stock”), issued pursuant to that certain Series E Preferred Stock Purchase Agreement by and between the Company and such holder dated as of March 29, 2005 (the “Purchase Agreement”). Capitalized terms not defined
herein shall have the meanings ascribed to them in the Purchase Agreement. 
  
 RECITALS: 
  
 WHEREAS, the
Company desires to grant to the Investor the registration rights set forth herein with respect to the shares (the “Conversion Shares”) of Common Stock issuable upon conversion or exchange of the Series E Preferred Stock of
Common Stock (all the shares of the Series E Preferred Stock to be referred to herein as the “Securities”). 
  
 NOW, THEREFORE, the parties hereto mutually agree as follows: 
  
 Section 1. Certain Definitions. As used herein the term “Registrable Security” means the Conversion Shares until (i) all
Securities have been disposed of pursuant to the Registration Statement (as defined below), (ii) all Securities have been sold under circumstances under which all of the applicable conditions of Rule 144 (“Rule 144”) (or any
similar provision then in force) under the Securities Act of 1933, as amended (the “Securities Act”) are met, or (iii) such time as, in the opinion of counsel to the Company reasonably satisfactory to the Investor and upon
delivery to the Investor of such executed opinion, all Securities may be sold without any time, volume or manner limitations pursuant to Rule 144 (or any similar provision then in effect). In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be deemed to be made in the definition of “Registrable Security” as is appropriate in order to prevent any dilution or enlargement of
the rights granted pursuant to this Agreement. As used herein the term “Holder” means any Person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 9 hereof.
 
  
 Section 2. Restrictions on Transfer. The
Investor acknowledges and understands that prior to the registration of the Securities as provided herein, the Securities are “restricted securities” as defined in Rule 144. The Investor understands that no disposition or transfer of the
Securities may be made by the Investor in the absence of (i) an opinion of counsel to such Investor, in form and substance reasonably satisfactory to the Company, that such transfer may be made without registration under the Securities Act or (ii)
such registration. 
  
 With a view to making available to the
Investor the benefits of Rule 144 or any other similar rule or regulation of the Securities and Exchange Commission (the “Commission”) that may at any time permit the holders of the Securities to sell securities of the
Company to the public pursuant to Rule 144, the Company agrees to: 
  
 (a) comply with the provisions of paragraph (c)(1) of Rule 144; 

 (b) file with the Commission in a timely manner all reports and other documents required
to be filed with the Commission pursuant to Section 13 or 15(d) under the Exchange Act by companies subject to either of such sections, irrespective of whether the Company is then subject to such reporting requirements; and 
  
 (c) Upon request by any Holder or the Company’s
transfer agent, provide an opinion of counsel, which opinion shall be reasonably acceptable to the Holder and/or the Company’s transfer agent, that the such Holder has complied with the applicable conditions of Rule 144 (or any similar
provision then in force). 
  
 Section 3. Registration Rights
With Respect to the Registrable Securities. 
  
 (a) The Company agrees that it will prepare and file with the Commission, no later than March 31, 2006, a registration statement (on Form S-1 or SB-2, or other appropriate registration statement form) under the Securities Act (such
registration statement, including (a) all amendments and supplements thereto, (b) each prospectus contained therein, and (c) all exhibits thereto or incorporated by reference therein, the “Registration Statement”), in respect
of the Holders, so as to permit a resale of the Securities under the Act by the Holders as selling stockholders and not as underwriters. 
  
 The Company shall use diligent best efforts to cause the Registration Statement to become effective as soon as practical following the
filing of the Registration Statement. The number of shares designated in the Registration Statement to be registered shall include the Conversion Shares. The Registration Statement shall include appropriate language regarding reliance upon Rule 416
to the extent permitted by the Commission. The Company will notify the Holders and its transfer agent of the effectiveness of the Registration Statement within one (1) Trading Day (as defined below) of such event. As used herein “Trading
Day” shall mean any business day on which the market on which the Common Stock trades is open for business. 
  
 (b) The Company will maintain the Registration Statement or post-effective amendment filed under this Section 3 effective under the
Securities Act until the earlier of (i) the date that none of the Registrable Securities covered by such Registration Statement are or may become issued and outstanding, (ii) the date that all of the Registrable Securities have been sold pursuant to
such Registration Statement, (iii) the date all the Holders receive an opinion of counsel to the Company, which counsel shall be reasonably acceptable to the Holders, that the Registrable Securities may be sold under the provisions of Rule 144
without limitation as to volume, (iv) all Registrable Securities have been otherwise transferred to persons who may trade such shares without restriction under the Securities Act, and the Company has delivered a new certificate or other evidence of
ownership for such securities not bearing a restrictive legend, or (v) 3 years from the date on which the Registration Statement first became effective (the “Effective Date”). 
  

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 (c) All fees, disbursements and out-of-pocket expenses and costs incurred by the Company
in connection with the preparation and filing of the Registration Statement under subparagraph 3(a) and in complying with applicable securities and Blue Sky laws (including, without limitation, all attorneys’ fees of the Company and all other
fees and disbursements of the Company’s accountants, auditors and other independent professional service providers) shall be borne by the Company. The Company shall also reimburse the fees and expenses of counsel to the Holders incurred in
connection with such counsel’s review of the Registration Statement and advice concerning the Registration Statement and its filing subject to a cap of $10,000. The Holders shall bear the cost of underwriting and/or brokerage discounts, fees
and commissions, if any, applicable to the Registrable Securities being registered . The Holders and their counsel shall have a reasonable period, not to exceed ten (10) Trading Days, to review the proposed Registration Statement or any amendment
thereto, prior to filing with the Commission, and the Company shall provide the Holders with copies of any comment letters received from the Commission with respect thereto within two (2) Trading Days of receipt thereof. The Company shall qualify
any of the securities for sale in such states as the Holders reasonably designate and shall furnish indemnification in the manner provided in Section 6 hereof. However, the Company shall not be required to qualify in any state which will require an
escrow or other restriction relating to the Company and/or the Holders, or which will require the Company to qualify to do business in such state or require the Company to file therein any general consent to service of process. The Company at its
expense will supply the Investor with copies of the applicable Registration Statement and the prospectus included therein and other related documents in such quantities as may be reasonably requested by the Investor. 
  
 (d) The Company shall not be required by this Section 3 to
include the Registrable Securities in any Registration Statement which is to be filed if, in the opinion of counsel for both the Holders and the Company (or, should they not agree, in the opinion of another counsel experienced in securities law
matters acceptable to counsel for the Holders and the Company) the proposed offering or other transfer as to which such registration is requested is exempt from applicable federal and state securities laws and would result in all purchasers or
transferees obtaining securities which are not “restricted securities” as such term is defined in Rule 144. 
  
 (f) (e) The Company shall be precluded from including in any registration statement which it is required to file pursuant to this Section
3 any other securities apart from the Registrable Securities, except for the securities issuable upon conversion of the Company’s outstanding Series B $1.00 Convertible Preferred Stock or Series D $1.00 Convertible Preferred Stock and those
securities related to any qualified stock option plan approved by the Board of Directors of the Company, without the prior written consent of the Holders. 
  
 (f) If, at any time any Registrable Securities are not at the time covered by any effective Registration Statement, the Company shall
determine to register under the 

  

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Securities Act (including pursuant to a demand of any stockholder of the Company exercising registration rights) any of its shares of the Common Stock (other
than in connection with a merger or other business combination transaction that has been consented to in writing by holders of the Series E Preferred Stock, or pursuant to Form S-8 when such filing has been consented to in writing by holders of the
Series E Preferred Stock), it shall send to each Holder written notice of such determination and, if within twenty (20) days after receipt of such notice, such Holder shall so request in writing, the Company shall use its best efforts to include in
such registration statement all or any part of the Registrable Securities that such Holder requests to be registered. Notwithstanding the foregoing, if, in connection with any offering involving an underwriting of the Common Stock to by issued by
the Company, the managing underwriter shall impose a limitation on the number of shares of the Common Stock included in any such registration statement because, in such underwriter’s judgment, such limitation is necessary based on market
conditions: (a) if the registration statement is for a public offering of common stock on a “firm commitment” basis with gross proceeds to the Company of at least $15,000,000 (a “Qualified Public Offering”), the
Company may exclude, to the extent so advised by the underwriters, the Registrable Securities from the underwriting; provided, however, that if the underwriters do not entirely exclude the Registrable Securities from such Qualified
Public Offering, the Company shall be obligated to include in such registration statement, with respect to the requesting Holder, only an amount of Registrable Securities equal to the product of (i) the number of Registrable Securities that remain
available for registration after the underwriter’s cutback and (ii) such Holder’s percentage of ownership of all the Registrable Securities then outstanding (on an as-converted basis) (the “Registrable Percentage”);
and (b) if the registration statement is not for a Qualified Public Offering, the Company shall be obligated to include in such registration statement, with respect to the requesting Holder, only an amount of Registrable Securities equal to the
product of (i) the number of Registrable Securities that remain available for registration after the underwriter’s cutback and (ii) such Holder’s Registrable Percentage; provided, however, that the aggregate value of the Registrable
Securities to be included in such registration may not be so reduced to less than 20% of the total value of all securities included in such registration. If any Holder disapproves of the terms of any underwriting referred to in this paragraph, it
may elect to withdraw therefrom by written notice to the Company and the underwriter. No incidental right under this paragraph shall be construed to limit any registration required under the other provisions of this Agreement. 
  
 Section 4. Cooperation with Company. Each Holder will cooperate with
the Company in all respects in connection with this Agreement, including timely supplying all information reasonably requested by the Company (which shall include all information regarding such Holder and proposed manner of sale of the Registrable
Securities required to be disclosed in any Registration Statement) and executing and returning all documents reasonably requested in connection with the registration and sale of the Registrable Securities and entering into and performing its
obligations under any underwriting agreement, if the offering is an underwritten offering, in usual and customary form, with the managing underwriter or underwriters of such underwritten offering. Nothing in this Agreement shall obligate any Holder
to consent to be named as an underwriter in any Registration Statement. The obligation of the Company to 

  

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register the Registrable Securities shall be absolute and unconditional as to those Registrable Securities which the Commission will permit to be registered
without naming any Holder as underwriters. Any delay or delays caused by a Holder by failure to cooperate as required hereunder shall not constitute a Registration Default as to such Holder. 
  
 Section 5. Registration Procedures. If and whenever the Company is
required by any of the provisions of this Agreement to effect the registration of any of the Registrable Securities under the Securities Act, the Company shall (except as otherwise provided in this Agreement), as expeditiously as possible, subject
to the Holders’ assistance and cooperation as reasonably required with respect to each Registration Statement: 
  
 (a) (i) prepare and file with the Commission such amendments and supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act with respect to the sale or other disposition of all Registrable Securities covered by such Registration
Statement whenever any of the Holders shall desire to sell or otherwise dispose of the same (including prospectus supplements with respect to the sales of Registrable Securities from time to time in connection with a registration statement pursuant
to Rule 415 promulgated under the Securities Act) and (ii) take all lawful action such that each of (A) the Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (B) the prospectus forming part of the Registration Statement, and any
amendment or supplement thereto, does not at any time during the Registration Period include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading; 
  
 (b) (i) prior to the filing with the Commission of any Registration Statement (including any amendments thereto) and the distribution or delivery of any prospectus (including any supplements thereto), provide draft
copies thereof to the Holders as required by Section 3(c) and reflect in such documents all such comments as the Holders (and their counsel) reasonably may propose; (ii) furnish to each of the Holders such numbers of copies of a prospectus including
a preliminary prospectus or any amendment or supplement to any prospectus, as applicable, in conformity with the requirements of the Act, and such other documents, as any of the Holders may reasonably request in order to facilitate the public sale
or other disposition of the Registrable Securities owned by such Holder; and (iii) provide to the Holders copies of any comments and communications from the Commission relating to the Registration Statement, if lawful to do so; 
  
 (c) register and qualify the Registrable Securities covered
by the Registration Statement under such other securities or blue sky laws of such jurisdictions as any of the Holders shall reasonably request (subject to the limitations set forth in Section 3(c) above), and do any and all other acts and things
which may be necessary or advisable to enable such Holder to consummate the public sale or other disposition in such jurisdiction of the Registrable Securities owned by such Holder; 
  

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 (d) list such Registrable Securities on the markets where the Common Stock of the Company
is listed as of the Effective Date, if the listing of such Registrable Securities is then permitted under the rules of such markets; 
  
 (e) notify the Holders at any time when a prospectus relating thereto covered by the Registration Statement is required to be delivered
under the Securities Act, of the happening of any event of which it has knowledge as a result of which the prospectus included in the Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and the Company shall prepare and file a curative amendment under Section 5(a) as quickly as
reasonably possible and during such period, the Holders shall not make any sales of Registrable Securities pursuant to the Registration Statement; 
  
 (f) after becoming aware of such event, notify each of the Holders who holds Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance by the Commission of any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time and take all lawful action to effect the
withdrawal, rescission or removal of such stop order or other suspension; 
  
 (g) cooperate with the Holders to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant to the Registration Statement and enable such certificates for the
Registrable Securities to be in such denominations or amounts, as the case may be, as any of the Holders reasonably may request and registered in such names as any of the Holders may request; and, within three (3) Trading Days after a Registration
Statement which includes Registrable Securities is declared effective by the Commission, deliver and cause legal counsel selected by the Company to deliver to the transfer agent for the Registrable Securities (with copies to the Holders) an
appropriate instruction and, to the extent necessary, an opinion of such counsel; 
  
 (h) take all such other lawful actions reasonably necessary to expedite and facilitate the disposition by the Holders of their Registrable
Securities in accordance with the intended methods therefor provided in the prospectus which are customary for issuers to perform under the circumstances; 
  
 (i) in the event of an underwritten offering, promptly include or incorporate in a prospectus supplement or post-effective amendment to
the Registration Statement such information as the managers reasonably agree should be included therein and to which the Company does not reasonably object and make all required filings of such prospectus supplement or post-effective amendment as
soon as practicable after it is notified of the matters to be included or incorporated in such prospectus supplement or post-effective amendment; and 
  

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 (j) maintain a transfer agent and registrar for the Common Stock. 
  
 Section 6. Indemnification. 
  
 (a) To the maximum extent permitted by law, the Company
agrees to indemnify and hold harmless each of the Holders, each person, if any, who controls any of the Holders within the meaning of the Securities Act, and each director, officer, shareholder, employee, agent, representative, accountant or
attorney of the foregoing (each of such indemnified parties, a “Distributing Investor”) against any losses, claims, damages or liabilities, joint or several (which shall, for all purposes of this Agreement, include, but not
be limited to, all reasonable costs of defense and investigation and all reasonable attorneys’ fees and expenses), to which the Distributing Investor may become subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, or any related final prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the Company
will not be liable in any such case to the extent, and only to the extent, that any such loss, claim, damage or liability arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission made in such
Registration Statement, preliminary prospectus, final prospectus or amendment or supplement thereto in reliance upon, and in conformity with, written information furnished to the Company by the Distributing Investor, its counsel, or affiliates,
specifically for use in the preparation thereof or (ii) such Distributing Investor’s failure to deliver to the purchaser a copy of the most recent prospectus (including any amendments or supplements thereto). This indemnity agreement will be in
addition to any liability which the Company may otherwise have. 
  
 (b) To the maximum extent permitted by law, each Distributing Investor agrees that it will indemnify and hold harmless the Company, and each officer and director of the Company or person, if any, who controls the
Company within the meaning of the Securities Act, against any losses, claims, damages or liabilities (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys’ fees and expenses) to which the Company or any such officer, director or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, or any related final prospectus or amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement or alleged
untrue statement or omission 
  

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 or alleged omission was made in such Registration Statement, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished to the Company by such Distributing Investor, its counsel or affiliates, specifically for use in the preparation thereof. This indemnity agreement will be in addition to
any liability which the Distributing Investor may otherwise have under this Agreement. Notwithstanding anything to the contrary herein, the Distributing Investor shall be liable under this Section 6(b) for only that amount as does not exceed the net
proceeds to such Distributing Investor as a result of the sale of Registrable Securities pursuant to the Registration Statement. 
  
 (c) Promptly after receipt by an indemnified party under this Section 6 of notice of the commencement of any action against such
indemnified party, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 6, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve the indemnifying party from any liability which it may have to any indemnified party except to the extent the failure of the indemnified party to provide such written notification actually prejudices the ability
of the indemnifying party to defend such action. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to
the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, subject to the provisions herein stated and after notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 6 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not pursue the action to its final conclusion. The indemnified parties shall have the right to employ one or more separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel reasonably satisfactory to the indemnified party unless (i)
the employment of such counsel has been specifically authorized in writing by the indemnifying party, or (ii) the named parties to any such action (including any interpleaded parties) include both the indemnified party and the indemnifying
party and the indemnified party shall have been advised by its counsel that there may be one or more legal defenses available to the indemnifying party different from or in conflict with any legal defenses which may be available to the indemnified
party or any other indemnified party (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, that the indemnifying party shall, in
connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable only for the reasonable fees and expenses of one separate
firm of attorneys for the indemnified party, which firm shall be designated in writing by the indemnified party). No settlement of any action against an indemnified party shall be made without the prior written consent of the indemnified party,
which consent shall not be unreasonably withheld so long as such settlement includes a full release of claims against the indemnified party. 
  

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 All fees and expenses of the indemnified party (including reasonable costs of defense and
investigation in a manner not inconsistent with this Section and all reasonable attorneys’ fees and expenses) shall be paid to the indemnified party, as incurred, within ten (10) Trading Days of written notice thereof to the indemnifying party;
provided, that the indemnifying party may require such indemnified party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such indemnified party is not entitled to indemnification hereunder.

  
 Section 7. Contribution. In order to provide for just
and equitable contribution under the Securities Act in any case in which (i) the indemnified party makes a claim for indemnification pursuant to Section 6 hereof but is judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that the express provisions of Section 6 hereof provide for
indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of any indemnified party, then the Company and the applicable Distributing Investor shall contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (which shall, for all purposes of this Agreement, include, but not be limited to, all reasonable costs of defense and investigation and all reasonable attorneys’ fees and expenses), in either such case
(after contribution from others) on the basis of relative fault as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company on the one hand or the applicable Distributing Investor on the other hand, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or omission. The Company and the Distributing Investor agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 7. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities
(or actions in respect thereof) referred to above in this Section 7 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 
  
 Notwithstanding any other provision of this Section 7, in no event shall (i)
any of the Distributing Investors be required to undertake liability to any person under this Section 7 for any amounts in excess of the dollar amount of the proceeds received by such Distributing Investor from the sale of such Distributing
Investor’s Registrable Securities (after deducting any fees, discounts and commissions applicable thereto) pursuant to any Registration Statement under which such Registrable Securities are registered under the Securities Act and (ii) any
underwriter be required to undertake liability to any person hereunder for any amounts in excess 

  

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of the aggregate discount, commission or other compensation payable to such underwriter with respect to the Registrable Securities underwritten by it and
distributed pursuant to such Registration Statement. 
  
 Section
8. Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) hand delivered, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by facsimile, addressed as set forth on the signature page hereto or to such other address
as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation
generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the first business day following the date of sending by reputable courier service, fully prepaid, addressed to such address, or (c)
upon actual receipt of such mailing, if mailed. Any party hereto may from time to time change its address or facsimile number for notices under this Section 8 by giving at least ten (10) days’ prior written notice of such changed address or
facsimile number to the other party hereto. 
  
 Section 9.
Assignment. This Agreement is binding upon and inures to the benefit of the parties hereto and their respective heirs, successors and permitted assigns. The registration rights granted to any Holder under this Agreement may be transferred as
set forth below (provided (1) the transferee is bound by the terms of this Agreement and (2) the Company is given written notice prior to such transfer) to: (i) any partner or affiliate of such Holder; (ii) in the case of an individual, any member
of the immediate family of such individual or any trust for the benefit of the individual or any such family member or members; or (iii) any other transferee which receives substantially all of the Registrable Securities (or the rights thereto) held
by such Holder. 
  
 Section 10. Additional Covenants of the
Company. For so long as it shall be required to maintain the effectiveness of the Registration Statement, it shall file all reports and information required to be filed by it with the Commission in a timely manner and take all such other action
so as to maintain such eligibility for the use of the applicable form. 
  
 Section 11. Counterparts/Facsimile. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when together shall constitute but one and the same instrument, and shall
become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. In lieu of the original, a facsimile transmission or copy of the original shall be as effective and enforceable as the original.

  
 Section 12. Remedies. The remedies provided in this
Agreement are cumulative and not exclusive of any other remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein 

  

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shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find
and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. 
  
 Section 13. Conflicting Agreements. The Company shall not enter into any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise prevents the Company from complying with all of its obligations hereunder. 
  
 Section 14. Headings. The headings in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation
of this Agreement. 
  
 Section 15. Governing Law. This
Agreement shall be governed by and construed in accordance with the laws of the State of Florida applicable to contracts made in Florida by persons domiciled in Miami and without regard to its principles of conflicts of laws. The Company and
the Holders agree to submit themselves to the in personam jurisdiction of the state and federal courts situated within the Southern District of the State of Florida with regard to any controversy arising out of or relating to this Agreement.
The non-prevailing party to any dispute hereunder shall pay the expenses of the prevailing party, including reasonable attorneys’ fees, in connection with any such dispute. 
  
 Section 16. Amendments, Waivers and Consents. Any provision in this Agreement to the contrary notwithstanding, (A)
changes in or additions to this Agreement may be made, (B) compliance with any covenant or provision herein set forth may be omitted or waived, or (C) approval or consent by the Holders may be obtained, only if the Company receives consent thereto
in writing from persons holding or having the right to acquire a majority of the Registrable Shares at the time such consent is given (on an as-converted, as exchanged basis). All Holders shall be bound by any amendment to this Agreement that is
approved by or consented to by such persons holding or having the right to acquire a majority of the Registrable Shares. 
  
 Section 17. Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or unenforceability of this Agreement in any other jurisdiction. 
  
 Section 18. Integration. This Agreement supersedes all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof. 
  
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 [SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT] 
  
 IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed, as of the date and year first above written. 
  

			
	SUPERIOR GALLERIES, INC.
		
	By:	 	 /s/ Silvano DiGenova

	 	 	Silvano DiGenova, Chairman & CEO
		
	Address:	 	Superior Galleries, Inc.
	 	 	9478 West Olympic Boulevard
	 	 	Beverly Hills, CA 90212
	 	 	Attention: President
	
	INVESTOR:
	
	STANFORD INTERNATIONAL BANK LIMITED
		
	By:	 	 /s/ James M. Davis

	Name:	 	James M. Davis
	Title:	 	Chief Financial Officer

					
			
	 	 	Address:	  	Stanford International Bank, Ltd..
	 	 	 	  	6075 Poplar Avenue
	 	 	 	  	Memphis, Tennessee 38119
	 	 	 	  	 Attention: James M. Davis,
                  Chief Financial Officer

	 	 	 	  	Telephone: (901) 537-1600
	 	 	 	  	Facsimile: (901) 680-5265
			
	 	 	With a copy to:	  	Stanford Financial Group
	 	 	 	  	5050 Westheimer
	 	 	 	  	Houston, Texas 77056
	 	 	 	  	Attention: Office of the General Counsel
	 	 	 	  	Telephone: (713) 964-5145
	 	 	 	  	Facsimile: (713) 964-5245

  

 12Purchase Agreement, dated March 30, 2005

 Exhibit 10.1 
  
 EXECUTION VERSION 
  
 PURCHASE AGREEMENT 
  
 by and between 
  
 INTERNATIONAL PAPER COMPANY 
  
 and 
  
 MOHAWK PAPER MILLS, INC. 
  
 Dated as of March 30, 2005 
  

  
 TABLE OF CONTENTS

  

					
	ARTICLE I - TRANSFER OF ASSETS AND LIABILITIES	  	1
			
	 SECTION 1.1
	  	ASSETS	  	1
			
	 Section 1.2
	  	Intercompany Liabilities	  	3
			
	 Section 1.3
	  	Purchase Price; Assumption of Liabilities	  	4
			
	 Section 1.4
	  	Closing	  	5
			
	 Section 1.5
	  	Deliveries by Seller	  	5
			
	 Section 1.6
	  	Deliveries by Buyer	  	6
			
	 Section 1.7
	  	Purchase Price Estimate	  	6
			
	 Section 1.8
	  	Preparation of Closing Date Statement	  	7
			
	 Section 1.9
	  	Post-Closing Purchase Price Adjustments; Allocation of Purchase Price	  	8
			
	 Section 1.10
	  	Apportionment of Real Estate Taxes; Transfer Taxes	  	9
			
	 ARTICLE II
	  	RELATED MATTERS	  	9
			
	 Section 2.1
	  	Books and Records of Seller	  	9
			
	 Section 2.2
	  	Employees and Employee Benefits	  	10
			
	 ARTICLE III
	  	REPRESENTATIONS AND WARRANTIES OF SELLER	  	14
			
	 Section 3.1
	  	Organization	  	14
			
	 Section 3.2
	  	Authorization	  	15
			
	 Section 3.3
	  	Assets Necessary to the Business	  	15
			
	 Section 3.4
	  	Title to Assets	  	16
			
	 Section 3.5
	  	Consents and Approvals; No Violations	  	16
			
	 Section 3.6
	  	Financial Statements	  	16
			
	 Section 3.7
	  	Absence of Undisclosed Liabilities	  	17

  

					
	 Section 3.8
	  	Absence of Material Adverse Effect	  	17
			
	 Section 3.9
	  	Title, Ownership and Related Matters	  	17
			
	 Section 3.10
	  	Leases	  	18
			
	 Section 3.11
	  	Intellectual Property	  	18
			
	 Section 3.12
	  	Litigation	  	19
			
	 Section 3.13
	  	Compliance with Applicable Law	  	19
			
	 Section 3.14
	  	Certain Contracts and Arrangements	  	19
			
	 Section 3.15
	  	Employee Benefit Plans; ERISA	  	20
			
	 Section 3.16
	  	Taxes	  	21
			
	 Section 3.17
	  	Environmental Laws and Regulations	  	21
			
	 Section 3.18
	  	Labor Matters	  	22
			
	 Section 3.19
	  	Inventory	  	22
			
	 Section 3.20
	  	Suppliers and Customers	  	23
			
	 Section 3.21
	  	Affiliate Transactions	  	23
			
	 Section 3.22
	  	Certain Fees	  	23
			
	 ARTICLE IV
	  	REPRESENTATIONS AND WARRANTIES OF BUYER	  	23
			
	 Section 4.1
	  	Organization and Authority of Buyer	  	23
			
	 Section 4.2
	  	Consents and Approvals; No Violations	  	24
			
	 Section 4.3
	  	Financing	  	24
			
	 Section 4.4
	  	Litigation	  	25
			
	 Section 4.5
	  	No Implied Representation	  	25
			
	 Section 4.6
	  	Interpretation of Representations and Warranties and Schedules	  	25
			
	 Section 4.7
	  	Certain Fees	  	25
			
	 ARTICLE V
	  	COVENANTS	  	25
			
	 Section 5.1
	  	Conduct of the Business	  	25
			
	 Section 5.2
	  	Access to Information	  	26

  

					
	 Section 5.3
	  	Consents	  	27
			
	 Section 5.4
	  	Commercially Reasonable Efforts	  	27
			
	 Section 5.5
	  	Public Announcements	  	28
			
	 Section 5.6
	  	Covenant to Satisfy Conditions	  	28
			
	 Section 5.7
	  	Title Commitments	  	28
			
	 Section 5.8
	  	Use of Packaging Material	  	28
			
	 Section 5.9
	  	Non-Competition	  	29
			
	 Section 5.10
	  	Supplemental Disclosure	  	30
			
	 ARTICLE VI
	  	CONDITIONS TO OBLIGATIONS OF THE PARTIES	  	30
			
	 Section 6.1
	  	Conditions to Each Party’s Obligation	  	30
			
	 Section 6.2
	  	Conditions to Obligations of Seller	  	30
			
	 Section 6.3
	  	Conditions to Obligations of Buyer	  	31
			
	 ARTICLE VII
	  	SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS	  	31
			
	 Section 7.1
	  	Survival of Representations	  	31
			
	 Section 7.2
	  	Seller’s Agreement to Indemnify	  	32
			
	 Section 7.3
	  	Buyer’s Agreement to Indemnify	  	33
			
	 Section 7.4
	  	Third Party Indemnification	  	34
			
	 Section 7.5
	  	Environmental Indemnity	  	35
			
	 Section 7.6
	  	Additional Procedures for Remedial Actions on the Owned Real Property or Leased Real Property	  	37
			
	 Section 7.7
	  	Exclusive Remedy for Environmental Matters; Indemnification by Buyer	  	39
			
	 Section 7.8
	  	Certain Tax Matters	  	39
			
	ARTICLE VIII	  	TERMINATION, AMENDMENT AND WAIVER	  	40
			
	 Section 8.1
	  	Termination of Agreement	  	40
			
	 Section 8.2
	  	Effect of Termination	  	40
			
	 Section 8.3
	  	Amendment, Extension and Waiver	  	40

  

					
	 ARTICLE IX
	  	MISCELLANEOUS	  	41
			
	 Section 9.1
	  	Fees and Expenses	  	41
			
	 Section 9.2
	  	Further Assurances	  	41
			
	 Section 9.3
	  	Counterparts	  	41
			
	 Section 9.4
	  	Notices	  	41
			
	 Section 9.5
	  	Severability	  	42
			
	 Section 9.6
	  	Binding Effect; Assignment	  	42
			
	 Section 9.7
	  	No Third Party Beneficiaries	  	43
			
	 Section 9.8
	  	Interpretation	  	43
			
	 Section 9.9
	  	Jurisdiction and Consent to Service	  	43
			
	 Section 9.10
	  	Entire Agreement	  	43
			
	 Section 9.11
	  	Law Governing	  	44

  

 EXHIBITS 
  

			
	 Exhibit A
	    	Bill of Sale
	 Exhibit B
	    	Limited Warranty Deeds
	 Exhibit C
	    	Trademark Assignment
	 Exhibit D
	    	Domain Name Assignment
	 Exhibit E
	    	Instrument of Assumption
	 Exhibit F
	    	Transition Services Agreement
	 Exhibit G
	    	License Agreement
	 Exhibit H
	    	Patent License Agreement

  
 SCHEDULES

  
 See the Table of Contents in respect of the Disclosure Schedules, which
follows the cover page thereof. 
  

 PAGE NUMBER REFERENCES FOR DEFINED TERMS 
  

			
	 Affected Employees
	  	10
	 affiliate
	  	43
	 affiliated
	  	43
	 Agreement
	  	1
	 Assets
	  	1
	 Assumed Liabilities
	  	4
	 Balance Sheets
	  	16
	 Basket Amount
	  	32
	 Bill of Sale
	  	2
	 Business
	  	1
	 Buyer
	  	1
	 Buyer Damages
	  	32
	 Buyer Indemnitees
	  	32
	 Buyer Plans
	  	11
	 Cases
	  	19
	 Claim
	  	34
	 Closing Date
	  	5
	 Closing Date Statement
	  	7
	 Closing Inventory
	  	7
	 COBRA
	  	13
	 Code
	  	5
	 Commitment Letter
	  	24
	 Competing Business
	  	29
	 Confidentiality Agreement
	  	26
	 Deferred Purchase Price
	  	8
	 Disclosure Schedules
	  	4
	 Domain Name Assignment
	  	3
	 Employee Release
	  	9
	 Environmental Laws
	  	21
	 ERISA
	  	11
	 Estimated Closing Inventory Amount
	  	6
	 Estimated Closing Purchase Price
	  	4
	 Excess Inventory
	  	6
	 Excluded Assets
	  	3
	 Excluded Liability
	  	4
	 Excluded Marks
	  	3
	 Fidelity
	  	28
	 Final Allocation
	  	9
	 Final Closing Purchase Price
	  	8
	 Final Excess Inventory Amount
	  	8
	 Final Statement
	  	8
	 Financial Statements
	  	16
	 Financing Source
	  	24
	 Fixed Amount
	  	4
	 GAAP
	  	17
	 Hazardous Substances
	  	22
	 HSP
	  	11
	 H-S-R Act
	  	16
	 Income Statements
	  	16
	 Income Tax
	  	21
	 Income Taxes
	  	21
	 Indemnity Period
	  	32
	 Independent Accounting Firm
	  	8
	 Instrument of Assumption
	  	4
	 Intellectual Property
	  	18
	 Inventory
	  	2
	 Inventory Count
	  	6
	 IRS
	  	9
	 Knowledge
	  	15
	 Leased Real Property
	  	1
	 Leases
	  	18
	 License Agreement
	  	5
	 Liens
	  	16
	 Limited Warranty Deeds
	  	2
	 Material Adverse Effect
	  	15
	 Non-Inventory Tangible Assets
	  	1
	 Non-Purchased Inventory
	  	3
	 Other Instruments
	  	3
	 Owned Real Property
	  	1
	 Patent License Agreement
	  	5
	 Permits
	  	2
	 Permitted Encumbrances
	  	17
	 person
	  	43
	 Plans
	  	20
	 Pre-Closing Tax Period
	  	3
	 Preliminary Allocation
	  	4
	 Purchase Price
	  	4
	 Purchased Inventory
	  	2
	 Regional Distribution Centers
	  	6
	 Remediation Standard
	  	37
	 Resolution Period
	  	8
	 Savings Plan
	  	11
	 Saybrook Subleases
	  	2
	 Seller
	  	1
	 Seller Damages
	  	33
	 Seller Indemnitees
	  	4
	 Seller Savings Plan
	  	11
	 SSP
	  	11
	 Tax Return
	  	21
	 Taxes
	  	21
	 Trademark Assignment
	  	2
	 Transferred Employee
	  	10
	 Transferred Employees
	  	10
	 Transition Services Agreement
	  	5
	 Vacation and Holiday Pay Amount
	  	4
	 Westfield Lease Agreement
	  	5

  

  
 PURCHASE AGREEMENT

  
 This PURCHASE AGREEMENT, dated as of March 30, 2005 (the
“Agreement”), is by and between International Paper Company, a New York corporation (“Seller”), and Mohawk Paper Mills, Inc., a New York corporation (“Buyer”). Capitalized terms used
herein shall have the meanings assigned to such terms in the text of this Agreement and the locations of such definitions are referenced following the table of contents. 
  
 WHEREAS, Seller is, among other things, engaged in the manufacturing, converting and selling of various premium fine and
specialty papers at Hamilton, Ohio, Saybrook, Ohio and Westfield, Massachusetts (hereinafter referred to collectively as the “Business”); 
  
 WHEREAS, it is the intention of the parties hereto to transfer to Buyer the Business by transferring to Buyer certain assets of Seller, as described
herein, and by the assumption by Buyer of certain obligations and liabilities to the extent set forth herein; and 
  
 WHEREAS, pursuant to the terms and conditions of this Agreement, Seller desires to sell or cause to be sold to Buyer, and Buyer desires to purchase from
Seller, the assets more fully described herein for consideration that includes the assumption by Buyer of certain obligations and liabilities. 
  
 NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants, agreements and conditions hereinafter set
forth, and intending to be legally bound hereby, the parties hereto agree as follows: 
  
 ARTICLE I 
 TRANSFER OF ASSETS AND LIABILITIES 
  

	Section 1.1	Assets 

  
 (a) Subject to the terms and conditions of this Agreement, at the Closing provided for in Section 1.4, Seller will sell, convey, assign, transfer and
deliver, or will cause to be sold, conveyed, assigned, transferred and delivered, to Buyer all of Seller’s right, title and interest in and to the assets of the Business (other than the Excluded Assets set forth in Section 1.1(c) hereof) owned
or leased directly or indirectly by Seller on the Closing Date and used exclusively or primarily in connection with the Business (collectively, the “Assets”), free and clear of any Liens, except for Permitted Encumbrances,
including, without limitation, the following: 
  
 (i) All fee real property owned by Seller and listed on Schedule 3.9 of the Disclosure Schedules hereto (the “Owned Real Property”) and all leasehold real property leased by Seller and listed on Schedule 3.10 of the
Disclosure Schedules hereto (collectively, the “Leased Real Property”); 
  
 (ii) All of Seller’s right, title and interest in and to the assets owned or leased by Seller, located at or on any Owned Real
Property or Leased Real Property and used exclusively or primarily in connection with the operations of the Business conducted thereat, of the following types (collectively, the “Non-Inventory Tangible Assets”): factories, plants,
buildings (together with appurtenances thereto and leasehold improvements), machinery, tools 

  

 
and equipment, automobiles, trucks and other motor vehicles, furniture and fixtures, computer hardware, computer software, service parts, packaging
materials, operating and storeroom materials, supplies and leases of personal property. The Non-Inventory Tangible Assets include but are not limited to those items set forth on Schedule 1.1(a)(ii) of the Disclosure Schedules, either individually or
by category descriptions; 
  
 (iii) All finished
goods, work-in-progress, raw materials (including pulp, starches and chemicals) and inventory purchased for resale of the Business (collectively, “Inventory”), other than the Non-Purchased Inventory (the Inventory, less the
Non-Purchased Inventory, is referred to herein as the “Purchased Inventory”); 
  
 (iv) Intentionally Omitted; 
  
 (v) All (A) patents, patent applications, trademarks, trademark applications, trade names, labels and other trade dress, copyrights,
domain names, research and marketing and other related data owned by Seller (or any of its affiliates), including without limitation those items listed on Schedule 3.11(a) of the Disclosure Schedules and all goodwill specifically associated
therewith, (B) transferable rights under the software licenses listed on Schedule 3.11(c) of the Disclosure Schedules and (C) know-how and trade secrets of Seller (including without limitation, recipes and formulae used to manufacture paper), but in
the case of each of (A), (B) and (C), only to the extent any such items of intellectual property are used exclusively in the Business and/or listed on Schedule 3.11(a) of the Disclosure Schedules, and excluding therefrom the Excluded Marks;

  
 (vi) All transferable licenses, permits,
authorizations, consents, approvals, orders, filings or registrations with any court or administrative or governmental authority held by Seller and listed on Schedule 1.1(a)(vi) of the Disclosure Schedules (collectively, the
“Permits”); 
  
 (vii) All
customer lists listed on Schedule 1.1(a)(vii) of the Disclosure Schedules; 
  
 (viii) All deposits, advance payments, prepaid items and expenses, rights of offset and credits and claims for refund listed on Schedule 1.1(a)(viii) of the Disclosure Schedules. 
  
 (ix) All contracts and unfilled orders to which Seller is a
party listed on Schedule 1.3(b) of the Disclosure Schedules; and 
  
 (x) Seller’s books and records listed on Schedule 1.1(a)(x) of the Disclosure Schedules. 
  
 (b) Such sale, conveyance, assignment, transfer and delivery will be effected by delivery by Seller to Buyer of (i) a duly executed bill of sale,
substantially in the form of Exhibit A attached hereto (the “Bill of Sale”), (ii) limited warranty deeds with respect to the Owned Real Property, substantially in the forms attached hereto as Exhibit B (collectively,
the “Limited Warranty Deeds”), (iii) two (2) sublease agreements in respect of Seller’s interest in that portion of the Leased Real Property located in Saybrook, Ohio, in form and substance reasonably acceptable to Buyer and
Seller (collectively, the “Saybrook Subleases”), (iv) instruments of assignment assigning Seller’s interest in (A) the registered trademarks and trademark applications included in the Assets, substantially in the form of
Exhibit C attached hereto (the “Trademark Assignment”) and (B) the domain names included in the Assets, 

  

 2 

 
substantially in the form of Exhibit D attached hereto (the “Domain Name Assignment”) and (v) such other good and sufficient
instruments of conveyance, transfer and assignment, as shall be necessary to vest in Buyer good and valid title to the other Assets (collectively, the “Other Instruments”), free and clear of all Liens, except for Permitted
Encumbrances. 
  
 (c) Anything contained in Section 1.1(a) to the
contrary notwithstanding, there are expressly excluded from the assets and properties to be sold, conveyed, assigned, transferred and delivered the following assets (collectively, the “Excluded Assets”): 
  
 (i) The consideration delivered by Buyer to Seller pursuant
to this Agreement and cash or other cash equivalents (other than petty cash and other similar accounts and notes receivable and securities); 
  
 (ii) Any of Seller’s corporate franchises, certificates of incorporation (or other similar organizational documents), corporate
seals, minute books, and other corporate records; 
  
 (iii) All insurance policies and binders and all claims, refunds and credits from insurance policies or binders due or to become due with respect to such policies or binders; 
  
 (iv) All trusts, trust assets, trust accounts, reserves and insurance policies relating to or funding
Seller’s employee benefit plans, except as otherwise provided in Section 2.2; 
  
 (v) All Tax credits and refunds pertaining to the Business or the Assets that are attributable to (A) any taxable period ending on or
before the Closing Date and (B) for any taxable period that includes but does not end on the Closing Date, the portion thereof ending on the Closing Date (collectively, a “Pre-Closing Tax Period” ); 
  
 (vi) The trade name “International Paper”, the
trademarks and logos “International Paper”, “IP”, “Hammermill”, and “Park Avenue” and the “Tree in the Circle” design and any related trade dress, and the goodwill associated therewith (collectively,
the “Excluded Marks”); 
  
 (vii)
All accounts receivable and notes receivable of Seller or the Business; 
  
 (viii) any item of inventory described on Schedule 1.1(c)(viii) of the Disclosure Schedules (collectively, the “Non-Purchased Inventory”); 
  
 (ix) All claims, recoveries and judgments in favor of or for
the benefit of Seller or any of its affiliates relating to any Excluded Liabilities; and 
  
 (x) The assets set forth on Schedule 1.1(c)(x) of the Disclosure Schedules. 
  

	Section 1.2	Intercompany Liabilities 

  
 At (and effective immediately prior to) the Closing, Seller will cancel, settle or otherwise repay, and will cause its affiliates to cancel, settle or
otherwise repay, all of its or their liabilities and obligations to the Business, and neither Seller nor its affiliates shall have any responsibility for those liabilities. At (and effective immediately prior to) the Closing, Seller will cause the
Business to cancel, 

  

 3 

 
settle or otherwise repay all of its liabilities and obligations owed to Seller and its affiliates, and Buyer shall not have any responsibility for those
liabilities. 
  

	Section 1.3	Purchase Price; Assumption of Liabilities 

  
 (a) Subject to the terms and conditions of this Agreement, in reliance on Seller’s representations, warranties and agreements contained herein, and
in consideration of the sale, conveyance, assignment, transfer and delivery of the Assets and the Business, Buyer will deliver or cause to be delivered, payment by wire transfer to such bank account or bank accounts as shall be specified by Seller,
in immediately available funds, of $21,500,000 (the “Fixed Amount”), plus the Estimated Closing Inventory Amount, which amount shall be determined pursuant to Section 1.7, less the aggregate amount owing to Transferred Employees as
of the Closing Date with respect to accrued vacation and holiday pay (the “Vacation and Holiday Pay Amount”; the sum of the Fixed Amount and the Estimated Closing Inventory Amount, less the Vacation and Holiday Pay Amount, the
“Estimated Closing Purchase Price”). The Estimated Closing Purchase Price shall be adjusted pursuant to Section 1.9 to arrive at the Final Closing Purchase Price. The sum of the Final Closing Purchase Price and the Deferred Purchase
Price, which latter amount shall be determined pursuant to Section 1.9(b), is referred to as the “Purchase Price”. The Purchase Price, together with the assumption of the Assumed Liabilities, shall constitute full payment for the
sale, conveyance, assignment, transfer and delivery of the Assets and the Business. Schedule 1.3(a) of the Disclosure Schedules being delivered to Buyer herewith (the “Disclosure Schedules”) sets forth a preliminary allocation of
the Estimated Closing Purchase Price among the Assets in accordance with Section 1060 of the Code and the applicable Treasury Regulations (the “Preliminary Allocation”). 
  
 (b) At the Closing, Buyer will deliver to Seller an instrument of assumption substantially in the form of Exhibit E
attached hereto (the “Instrument of Assumption”), whereby Buyer will undertake, assume and agree to perform, pay and discharge when due, and hold the Seller and its directors, officers, employees, affiliates, controlling
persons, agents and representatives and their successors and assigns (collectively, the “Seller Indemnitees”) harmless from and indemnify the Seller Indemnitees, in accordance with Article VII, against, any and all liabilities and
obligations of Seller (i) in respect of accrued vacation and holiday pay owing to Transferred Employees and included in the Vacation and Holiday Pay Amount, (ii) in respect of all product returns and warranty claims exclusively relating to products
of the Business, (iii) listed on Schedule 1.3(b) of the Disclosure Schedules and (iv) in an amount less than $5,000 and that are exclusively related to the Business, whether or not or set forth on Schedule 1.3(b) of the Disclosure Schedules,
provided that this clause (iv) shall only apply to the extent that (A) the aggregate amount of such liabilities and obligations does not exceed $250,000 and (B) such liability does not relate to services or products received prior to the Closing
Date (collectively, the “Assumed Liabilities”). Any liability or obligation that is not an Assumed Liability is referred to herein as an “Excluded Liability”. 
  
 (c) Buyer will deliver, or cause to be delivered, payment of the Deferred
Purchase Price in five (5) equal installments on September 30, 2005, December 31, 2005, March 31, 2006, June 30, 2006 and September 30, 2006, by wire transfer of immediately available funds to such bank account or accounts as shall be specified by
Seller. If Buyer does not make timely payment of any installment of the Deferred Purchase Price in accordance with the foregoing sentence, Buyer shall pay interest on any overdue amounts at a rate of 12% per annum (or the highest rate permitted by
applicable law, if such rate is lower than 12% at any time such interest becomes 

  

 4 

 
payable) until such time as any overdue amounts, and any interest accrued thereon, is paid in full. 
  

	Section 1.4	Closing 

  
 The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place not later than 10:00 A.M., local time, at
the offices of Wiggin and Dana LLP, 400 Atlantic Street, Stamford, Connecticut on May 2, 2005, or at such other time or place as to which the parties shall agree. The effective time of the Closing shall be 11:59 p.m. on April 30, 2005 and
such date is sometimes referred to herein as the “Closing Date”. 
  

	Section 1.5	Deliveries by Seller 

  
 At the Closing, Seller will deliver or cause to be delivered to Buyer (unless delivered previously) the following: 
  
 (a) A duly executed Bill of Sale; 
  
 (b) Limited Warranty Deeds for the Owned Real Property; 
  
 (c) Duly executed counterparts of the Saybrook Subleases, together with duly
executed consents of the landlord thereto; 
  
 (d) The
officer’s certificate referred to in Section 6.3(c); 
  
 (e)
A certificate of Seller’s non-foreign status that complies with the requirements of Section 1445 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury Regulations promulgated thereunder; 
  
 (f) A duly executed counterpart of the Trademark Assignment; 
  
 (g) A duly executed counterpart of the Domain Name Assignment; 
  
 (h) A duly executed counterpart of the lease agreement, relating to
Seller’s converting facility located in Westfield, Massachusetts, in form and substance reasonably acceptable to Buyer and Seller (the “Westfield Lease Agreement”); 
  
 (i) A duly executed counterpart of the transition services agreement,
substantially in the form of Exhibit F attached hereto (the “Transition Services Agreement”); 
  
 (j) A duly executed counterpart of the license agreement, substantially in the form of Exhibit G attached hereto (the “License
Agreement”); 
  
 (k) A duly executed counterpart of the
patent license agreement, substantially in the form of Exhibit H attached hereto (the “Patent License Agreement”); and 
  
 (l) A standard form of title affidavit to be delivered to the Title Insurer in connection with the Owned Real Property. 
  

 5 

	Section 1.6	Deliveries by Buyer 

  
 At the Closing, Buyer will deliver or cause to be delivered to Seller (unless previously delivered) the following: 
  
 (a) The Estimated Closing Purchase Price referred to in Section 1.3(a);

  
 (b) A duly executed Instrument of Assumption; 
  
 (c) Duly executed counterparts of the Saybrook Subleases; 
  
 (d) The officer’s certificate referred to in Section 6.2(c); 

 
 (e) A duly executed counterpart of the Trademark Assignment; 

 
 (f) A duly executed counterpart of the Domain Name Assignment; 

 
 (g) A duly executed counterpart of the Lease Agreement; 
  
 (h) A duly executed counterpart of the Transition Services Agreement;

  
 (i) A duly executed counterpart of the License Agreement; and

  
 (j) A duly executed counterpart of the Patent License
Agreement. 
  

	Section 1.7	Inventory Valuation and Count 

  
 (a) Seller shall, not later than the two (2) business days prior to the Closing Date, deliver to Buyer a certificate, signed by an officer of Seller,
setting forth Seller’s good faith estimate of (i) the value of the Closing Inventory as of the opening of business on the Closing Date (the “Estimated Closing Inventory Amount”) and (ii) the value of the Excess Inventory as of
the opening of business on the Closing Date, in each case determined in accordance with the procedures set forth in Schedule 1.8(a) of the Disclosure Schedules and taking into account the provisions of Sections 1.7(c) and 1.9(b). 
  
 (b) No later than two (2) business days after the Closing Date, Seller and
Buyer shall jointly make a physical count of the Purchased Inventory as of the opening of business on the Closing Date and agree upon the results of such count (the “Inventory Count”). The Purchased Inventory shall consist of
Closing Inventory and Excess Inventory, and the amount thereof shall be based upon the Inventory Count. “Excess Inventory” shall mean any item of Purchased Inventory located at the Owned Real Property, the Leased Real Property or
one of Seller’s regional distribution centers in (i) Portland, Oregon, (ii) Ontario, California, (iii) Dallas, Texas, (iv) Westfield, Massachusetts or (v) Mount Holyoke, Massachusetts (collectively, the “Regional Distribution
Centers”), and in each case (A) for which there is more than one (1) year of stock, based on turnover for the twelve (12) month period ending on February 28, 2005 or (B) that was manufactured prior to March 1, 2003; provided,
however, that any item of Purchased Inventory manufactured pursuant to a special customer order or Seller’s “quick turn” program shall not be deemed Excess Inventory; and provided further, for the avoidance of doubt, that
(I) the Regional Distribution Center in Westfield, Massachusetts is a separate facility from the facility that will be the subject of the Westfield Lease Agreement, and (II) none of the 

  

 6 

 
inventory of Seller’s xpedx business located at any Regional Distribution Center shall be Purchased Inventory. “Closing Inventory”
shall mean any item of Purchased Inventory (A) that is located at the Owned Real Property, the Leased Real Property or one of the Regional Distribution Centers and is not Excess Inventory, (B) that is located at Seller’s facility in Westfield,
Massachusetts that will be the subject of the Westfield Lease Agreement or (C) that is located at a third party converting facility listed on Schedule 3.19 of the Disclosure Schedules. 
  
 (c) The value of Closing Inventory, for all purposes of this Agreement, (i) shall be reduced by $257,000 (which amount
represents the parties’ agreed upon allowance for product returns and product warranty claims in respect of the Purchased Inventory), (ii) shall be reduced by $600,000 (which amount represents the parties’ agreed upon allowance for
obsolete and slow-moving inventory located at Seller’s facilities in Westfield, Massachusetts), and (iii) shall, notwithstanding anything to the contrary in Schedule 1.8(a) of the Disclosure Schedules or otherwise, reflect a per ton value for
any NBHK pulp included among the raw materials that are part of the Purchased Inventory of $545.00. 
  

	Section 1.8	Preparation of Closing Date Statement 

  
 An unaudited statement (the “Closing Date Statement”) of the value of the Closing Inventory, the value of the Excess Inventory and the
Vacation and Holiday Pay Amount as of the opening of business on the Closing Date shall be prepared by Seller in the following manner: 
  
 (a) Within sixty (60) days after the Closing Date, Seller shall deliver to Buyer the Closing Date Statement, setting forth the value of the Closing
Inventory, the value of the Excess Inventory and the Vacation and Holiday Pay Amount as of the opening of business on the Closing Date, calculated in accordance with the procedures and accounting principles identified in Schedule 1.8(a) of the
Disclosure Schedules. The Closing Date Statement shall be accompanied by a report setting forth (A) the amount of any adjustment to the Estimated Closing Purchase Price to be paid and by whom pursuant to Section 1.9 and the basis therefor, and (B)
the amount of the Deferred Purchase Price. 
  
 (b) Following the
Closing, each of Buyer and Seller shall give the other party and any independent auditors and authorized representatives of such other party full access at all reasonable times to the properties, books, records and personnel of the Business for
purposes of preparing, reviewing and resolving any disputes concerning the Closing Date Statement. Buyer shall have thirty (30) days following the delivery to Buyer of the Closing Date Statement during which to notify Seller in writing of any
dispute of any item contained in the Closing Date Statement, which notice shall set forth in reasonable detail the basis for such dispute. If Buyer fails to notify Seller of any such dispute within such 30-day period, the Closing Date Statement
shall be deemed to be accepted by Buyer. In the event that Buyer shall so notify Seller of any dispute, Buyer and Seller shall cooperate in good faith to resolve such dispute as promptly as possible. 
  
 (c) Buyer agrees that it shall not propose adjustments to or dispute portions
of the Closing Date Statement prepared by Seller if such adjustments or disputes involve changes in or question the methodology or the practices of the Seller identified in Schedule 1.8(a) of the Disclosure Schedules. For the avoidance of doubt, it
is expressly agreed that no objection may be raised and no adjustment may be proposed to any entry or item contained in the Closing Date Statement except on grounds that such item or entry is not in accordance with the provisions of this Agreement
or the procedures or accounting principles identified in Schedule 1.8(a) of the Disclosure Schedules consistently applied. 
  

 7 

 (d) If Buyer and Seller are unable to resolve any such dispute within thirty (30) days of Buyer’s
delivery of the notice referred to in Section 1.8(b) above (the “Resolution Period”), then all amounts remaining in dispute shall be submitted to the New York, New York office of PricewaterhouseCoopers LLP (the “Independent
Accounting Firm”). Each party agrees to execute, if requested by the Independent Accounting Firm, a reasonable engagement letter. All fees and expenses relating to the work, if any, to be performed by the Independent Accounting Firm shall
be borne equally by Seller and Buyer. The Independent Accounting Firm shall act as an arbitrator to determine, based solely on presentations by Seller and Buyer, and not by independent review, only those issues still in dispute and shall be limited
to those adjustments, if any, that need be made for the Closing Date Statement to comply with the standards referred to in Section 1.8(a). The Independent Accounting Firm’s determination shall be requested to be made within thirty (30) days of
its engagement, shall be set forth in a written statement delivered to Seller and Buyer and shall be final, binding and conclusive. The “Final Statement” shall be (i) the Closing Date Statement in the event that the Buyer does not
deliver a notice of dispute in the 30-day period specified in Section 1.8(b) or accepts the Closing Date Statement or (ii) the Closing Date Statement, as modified by written resolution of any disputes by Buyer and Seller or by the Independent
Accounting Firm. The procedures set forth in this Section 1.8(d) are the sole remedy for any disputes with respect to matters set forth on or arising in connection with the Closing Date Statement. 
  

	Section 1.9	Post-Closing Purchase Price Adjustments; Allocation of Purchase Price 

  

(a) To the extent that the Fixed Amount, plus the value of the Closing Inventory, less the Vacation and Holiday Pay Amount, all determined by reference
to the Final Statement (such amount, the “Final Closing Purchase Price”) is less than the Estimated Closing Purchase Price, Seller shall pay such difference to Buyer within ten (10) days following the determination of the Final
Statement. To the extent that the Final Closing Purchase Price is greater than the Estimated Closing Purchase Price, Buyer shall pay such difference to Seller within ten (10) days following the determination of the Final Statement. 
  
 (b) The value of the Excess Inventory, as determined by reference to the
Final Statement, shall be the “Final Excess Inventory Amount”. The product of (i) the Final Excess Inventory Amount, and (ii) 0.50, shall equal the “Deferred Purchase Price”. 
  
 (c) Interest shall be paid on any amount payable pursuant to this Section 1.9
(but, subject to the provisions of Section 1.3(c), not on any outstanding amounts of Deferred Purchase Price) at the rate of 6% per annum from the Closing Date to the date such payment is made. Any amount paid by either Seller or Buyer pursuant to
this Section 1.9 shall be paid by wire transfer in immediately available funds to an account designated by the party entitled to receive such payment; provided, however, that if Buyer is to make a payment pursuant to Section 1.9(a) and Seller
is to make a payment pursuant to Section 1.9(b), such amounts shall be netted and the party with the net obligation shall deliver funds in accordance with this Section 1.9(c). 
  
 (d) In conjunction with the determination of the Final Statement, Seller and Buyer shall also negotiate in good faith to
agree as promptly as possible, but in any event within sixty (60) days after the determination of the Final Statement, upon an allocation of the Purchase Price to the Assets in accordance with Section 1060 of the Code, and the applicable Treasury
Regulations or applicable local law, starting with the preliminary allocation set forth in Schedule 1.2 of the Disclosure Schedules, and 

  

 8 

 
making the applicable changes thereto consistent with the Final Statement and the Final Closing Purchase Price (the “Final Allocation”).
Seller and Buyer (i) shall be bound by the allocations determined pursuant to this paragraph for purposes of determining any Taxes, (ii) shall prepare and file all Tax Returns in a manner consistent with such allocations, and (iii) shall take no
position inconsistent with such allocations in any Tax Return, any proceeding before any taxing authority or otherwise except as may be adjusted by subsequent agreement of the parties following an audit by the U.S. Internal Revenue Service (the
“IRS” ) or by Court decision. In the event that any such allocation is disputed by any taxing authority, the party receiving notice of such dispute shall promptly notify and consult with the other party hereto concerning resolution
of such dispute. 
  

	Section 1.10	Apportionment of Real Estate Taxes; Transfer Taxes 

  
 (a) At the Closing, Buyer and Seller shall apportion all real property, property, intangibles and other similar ad valorem Taxes paid or payable in
connection with any of the Assets, any and all rent paid or payable under any of the Leases and any and all utility bills paid or payable in connection with the operation of the Business, such apportionments to be made as of the Closing Date and (i)
in the case of real property, property, intangibles and other similar ad valorem Taxes, based upon the fiscal year for which the same are assessed and shall be apportioned in accordance with the principles of Section 164(d) of the Code, (ii)
in the case of rent, based upon the period for which the same is payable, and (iii) in the case of utilities, based upon meter readings as of the Closing Date. In the event that the applicable Tax bill, landlord rent statement or other information
reasonably necessary for computing any such apportionment is not available on the Closing Date, this provision shall be deemed to survive such Closing and such apportionment shall be made subsequent to such Closing, within thirty (30) days after
receipt by the parties of the applicable Tax bill, landlord rent statement or other information reasonably necessary for computing such apportionment. Seller shall not be responsible for any increased assessments resulting from the transactions
contemplated hereby. 
  
 (b) Seller on the one hand and Buyer on
the other hand, shall each pay fifty percent (50%) of the aggregate amount of all stamp, transfer, documentary sales, use, registration and other such Taxes incurred in connection with this Agreement and the transactions contemplated hereby, other
than in respect of the sale, conveyance and transfer of the Owned Real Property, which shall be paid by Seller. 
  
 ARTICLE II 
 RELATED MATTERS 
  

	Section 2.1	Books and Records of Seller 

  
 (a) Seller agrees to deliver, or cause to be delivered, to Buyer on or as soon as practicable after the Closing, all books and records of Seller
exclusively used or held for use in the conduct of the Business or pertaining to those Assets and Assumed Liabilities conveyed or assumed at the Closing (including, but not limited to, correspondence, memoranda, books of account, personnel and
payroll records, manufacturing, operational and inspection records and the like), other than books and records (i) relating to Taxes, (ii) relating to an employee’s individual personnel or payroll records, to the extent a release has not been
obtained from such employee authorizing Seller to release such documents and releasing Seller from any liability associated with the documents or the disclosure thereof (each such release, an “Employee Release”), or (iii) that are
inseparable from Seller’s other operations. Seller 

  

 9 

 
shall use commercially reasonable efforts to obtain Employee Releases from all employees of the Business. 
  
 (b) Any books and records relating to the Business that are not delivered to
Buyer hereunder, other than books and records relating to Taxes, will be preserved by Seller in accordance with the document retention policy of the Business as in effect on the date hereof (including any legal holds placed on books and records
relating to litigated matters) and will be made available (for review and copying) to Buyer and its authorized representatives upon reasonable notice during normal business hours, to the extent reasonably required by Buyer, except to the extent that
such books and records are subject to a legal privilege that, in the good faith judgment of Seller, may be lost or impaired by virtue of such disclosure and except to the extent an Employee Release has not been obtained from an employee. 

 
 (c) Buyer will preserve and make available (for review and copying) to
Seller and its authorized representatives upon reasonable notice during normal business hours the records transferred by Seller in accordance with the document retention policy of the Business as in effect on the date hereof (including any legal
holds placed on books and records relating to litigated matters) and, with respect to records that may be relevant to any actual Tax audits or proceedings, such additional period as is reasonably required by Seller; provided that Buyer shall
notify Seller prior to destroying any such record during such period. 
  

	Section 2.2	Employees and Employee Benefits 

  
 (a) Employment. Effective immediately following the Closing, Buyer shall offer to employ on an “at will” basis each person who is a full
time or part time employee of the Business immediately prior to the Closing (the “Affected Employees”), other than those employees listed on Schedule 2.2(a) of the Disclosure Schedules, on terms no less favorable in the aggregate
(including with respect to position, duties, responsibilities, compensation and location) than those provided on the date hereof to the Affected Employees, without regard, however, to any equity-based compensation or retiree life insurance or
retiree health benefits provided to such employees, and except as otherwise provided in Sections 2.2(f) and 2.2(g). Any such Affected Employee who shall have accepted such offer of employment shall be referred to herein as a “Transferred
Employee”, and all such employees collectively shall be referred to herein as the “Transferred Employees”. Seller shall, and shall cause its affiliates to, make available to Buyer such personnel information as Buyer may
from time to time lawfully request with respect to any Transferred Employee, including compensation and employment records, but only after obtaining an Employee Release from each such Transferred Employee. 
  
 (b) Substantially Equivalent Benefits. For a one (1) year period
following the Closing, Buyer shall provide each Transferred Employee with benefits that are at least substantially equivalent in the aggregate to the benefits provided to each such Transferred Employee immediately prior to the Closing without
regard, however, to any equity-based compensation or retiree life insurance or retiree health benefits provided to such employees; provided that Buyer, in providing such substantially equivalent benefits, shall not be required to assume,
provide or maintain any Plan or other particular plan or benefit that was provided to or maintained for Affected Employees prior to the Closing, except as otherwise required by an applicable collective bargaining agreement. 
  

 10 

 (c) Service Credit, Deductibles, and Preexisting Conditions. Buyer agrees that, for purposes of
all employee benefit plans (including, but not limited to, all “employee benefit plans” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and all policies and
employee fringe benefit programs, including vacation policies) of Buyer (such plans, programs, policies and arrangements, collectively, the “Buyer Plans”) in which the Transferred Employees may participate following the Closing,
credit will be given to the Transferred Employees for service previously credited with the Business prior to the Closing; provided, however, that such crediting of service does not result in a duplication of benefits; and provided
further, that such crediting of service need not be given for benefit accrual purposes under any Buyer Plan that is a “defined benefit plan” (as defined in Section 3(35) of ERISA) or a “defined contribution plan” (as defined
in Section 3(34) of ERISA). Transferred Employees shall also be given credit for any deductible or co-payment amounts paid in respect of the plan year in which the Closing occurs, to the extent that, following the Closing, they participate in any
corresponding Buyer Plan for which deductibles or co-payments are required. Buyer shall also cause each Buyer Plan to waive any pre-existing condition exclusion or restriction, any waiting period limitation, or any evidence of insurability
requirements for the Transferred Employees to the extent such exclusions, restrictions, limitations or requirements had been waived or satisfied under the terms of any corresponding Seller Plan immediately prior to the Closing. 
  
 (d) Savings Plan. As soon as practicable following the Closing Date:

  
 (i) Buyer shall provide Seller with such
documents and other information as Seller shall reasonably request to assure itself that The Mohawk Paper Mills Defined Contribution Savings Plan and the Mohawk Paper Mills, Inc. Hourly Savings Plan (collectively, the “Savings
Plans”) provide for the receipt of eligible rollover distributions (as such term is defined under Section 402 of the Code) from the Transferred Employees; 
  
 (ii) Buyer shall provide Seller with such documents and other information as Seller shall reasonably request
to assure itself that the Savings Plans and the trusts established in connection therewith are qualified and tax-exempt under Sections 401(a) and 501(a) of the Code, which shall be evidenced by a favorable determination letter issued by the IRS; and

  
 (iii) Seller shall provide Buyer with such
documents as Buyer shall reasonably request to assure itself that the accounts of the Transferred Employees under the International Paper Company Salaried Savings Plan (the “SSP”) and the International Paper Company Hourly Savings
Plan (the “HSP”) (each, a “Seller Savings Plan”), if distributed to such Transferred Employees, would be eligible rollover distributions. 
  
 Seller shall 100% vest or cause to be 100% vested, as of the Closing Date, the accounts under the SSP and HSP for each Transferred Employee,
and Seller shall contribute all contributions to the SSP and HSP with respect to each Transferred Employee (A) which are required to be made on or before the Closing Date under the SSP and HSP, and (B) which relate to service or employee salary
deferral contributions on or prior to the Closing Date, but are not required to be made on or prior to the Closing Date, under the SSP and HSP. Each Transferred Employee who is a participant in a Seller Savings Plan shall be given the opportunity to
“roll over” such account balance by way of an eligible rollover distribution to one of the Savings Plans, subject to and in accordance with the provisions of the Savings Plans and applicable law. Notwithstanding anything in this Agreement
to the contrary, each 

  

 11 

 
Transferred Employee who is eligible to participate in a Seller Savings Plan will become eligible to participate in one of the Savings Plans as soon as
reasonably practicable after the Closing Date, subject to and in accordance with the provisions of the Savings Plans and applicable law. 
  
 (e) Severance Pay. 
  
 (i) In the event that Buyer hires prior to the Closing Date, or has hired since December 14, 2004, any sales or specification
representative to service a geographic territory which overlaps with that of any sales or specification representative among the Affected Employees not offered employment pursuant to Section 2.2(a) (other than any individuals listed on Schedule
2.2(e)(i) of the Disclosure Schedules), then Buyer shall reimburse Seller for the amount of severance and benefits incurred by Seller under Seller’s severance plan, as set forth on Schedule 2.2(e)(ii) of the Disclosure Schedules, as a result of
Buyer’s failure to make such offer. Buyer will reimburse Seller for such amount within thirty (30) days of receipt of documentation from Seller of such amount. 
  
 (ii) In the event that any Transferred Employee is discharged by Buyer or any Subsidiary within one (1) year
after the Closing Date (other than for “cause” or because of such Transferred Employee’s voluntary termination or retirement), then Buyer shall treat such Transferred Employee, and shall be responsible for severance and benefits, in
accordance with Seller’s severance plan, as set forth on Schedule 2.2(e)(ii) of the Disclosure Schedules. Buyer will maintain such severance plan for at least one (1) year after the Closing Date. Buyer shall be responsible and assume all
liability for all notices or payments due to any Transferred Employee, and all notices, payments, assessments due to any government authority, pursuant to any applicable federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of employees by the Business after the Closing, including but not limited to the Worker Adjustment and Retraining Notification Act and any rules or regulations as have been issued in connection with the
foregoing. 
  
 (iii) In the event that Seller
pays severance and/or benefits to any Affected Employee who does not become a Transferred Employee, and Buyer thereafter hires such Affected Employee within one (1) year after the Closing Date, then Buyer shall notify Seller of such action and
reimburse Seller for the amount of severance and benefits incurred by Seller under (x) Seller’s severance plan, as set forth on Schedule 2.2(e)(ii) of the Disclosure Schedules or (y) as a result of effects bargaining for any Affected Employee
covered by a collective bargaining agreement. Buyer will reimburse Seller for such amount within thirty (30) days of receipt of documentation from Seller of such amount. 
  
 (f) Pre-Closing Claims. Except as otherwise provided in Section 2.2(g) with respect to sickness and disability
claims, Seller will remain responsible for all claims under the applicable Plans for health, accident, sickness, and disability benefits that are deemed incurred prior to the Closing Date by Affected Employees who become Transferred Employees or
that are incurred at any time by Affected Employees who do not become Transferred Employees. For all purposes under such Plans, such Transferred Employees will be considered to have terminated employment with Seller as of the Closing Date. For
purposes of this Agreement: (i) a claim for health benefits (including, without limitation, claims for medical, prescription drug and dental expenses) will be deemed to have been incurred on the date on which the related medical service or material
was rendered to or received by the 

  

 12 

 
Transferred Employee claiming such benefit, (ii) a claim for sickness or disability benefits based on an injury or illness occurring on or prior to the
Closing Date will be deemed to have been incurred prior to the Closing Date if, but only if, the claim relating to such injury is made within thirteen (13) months from the Closing Date, and (iii) in the case of any claim for benefits other than
health benefits and sickness and disability benefits (e.g., life insurance benefits), a claim will be deemed to have been incurred upon the occurrence of the event giving rise to such claims. As of the Closing, any Affected Employee who is
receiving benefits under Seller’s short-term disability program shall be deemed to be an employee of Seller until such time as such employee is no longer eligible for Seller’s short-term disability program. If at such time such Affected
Employee will be returning to work, such employee shall be offered employment by Buyer in accordance with the terms of Section 2.2(a) hereof. If at such time such employee will be eligible for long-term disability benefits or disability retirement,
such employee shall receive such benefits under Seller’s long-term disability program or pension plan. 
  
 (g) Disabled Employees. Seller will remain responsible for (i) all benefits payable to Affected Employees who, as of the close of business on the
day immediately preceding the Closing Date, were determined to be totally and permanently disabled in accordance with the applicable provisions of Seller’s health, accident, sickness, salary continuation, or short-term or long-term disability
benefits plans or programs, and (ii) all workers compensation claims based on an injury occurring on or prior to the Closing Date; provided that the workers compensation claim relating to such injury is made within thirteen (13) months after
the Closing Date. 
  
 (h) COBRA. The parties acknowledge
that the transactions provided for in this Agreement may result in obligations on the part of Seller or its affiliates and one or more of the Plans that is an employee welfare benefit plan (within the meaning of Section 3(1) of ERISA) to comply with
the health care continuation requirements of Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (“COBRA” ) or state law, as applicable. The parties expressly agree that Buyer and Buyer’s benefit plans shall
have no responsibility for compliance with such health care continuation requirements (i) for qualified beneficiaries who previously elected to receive continuation coverage under the Plans or who between the date of this Agreement and the Closing
Date elect to receive continuation coverage, or (ii) with respect to those employees or former employees of Seller or its affiliates who may become eligible to receive such continuation coverage on or prior to the Closing or in connection with the
transactions provided for in this Agreement. 
  
 (i) Retiree
Life and Health. Seller will provide retiree life insurance and health benefits as required under the provisions of any applicable Plan to any Affected Employee who was eligible for such benefits as of the close of business on the day
immediately preceding the Closing Date. 
  
 (j) No Right of
Employment. Nothing contained herein, expressed or implied, is intended to confer upon any Affected Employee or any other person any right to continued employment for any period by reason of this Agreement. Nothing contained herein is intended
to confer upon any Affected Employee or any other person any particular term or condition of employment. 
  
 (k) Indemnification. 
  
 (i) After the Closing Date, Buyer shall be responsible for, and shall indemnify and hold harmless Seller and its affiliates and their
officers, directors, employees, affiliates and agents and the fiduciaries (including plan administrators) of the health, welfare and other 

  

 13 

 
employee benefit plans maintained by Seller from and against any and all claims, losses, damages, costs and expenses (including, without limitation,
reasonable attorneys’ fees and expenses) and other liabilities and obligations relating to or arising out of (A) all vacation entitlement accrued but unpaid as of the Closing due to any Transferred Employees and taken into account in
determining the Final Closing Purchase Price, (B) the liabilities assumed by Buyer under this Section 2.2 (other than benefits accrued by the Transferred Employees prior to the Closing Date which are provided by Seller’s retirement plans) or
any failure by Buyer to comply with the provisions of this Section 2.2 and (C) any claims of, or damages or penalties brought by, any Transferred Employee, or any governmental entity on behalf of or concerning any Transferred Employee, with respect
to any act or failure to act by Buyer to the extent arising from the employment, discharge, layoff or termination of any Transferred Employee who becomes an employee of Buyer on or after the Closing Date. 
  
 (ii) After the Closing Date, Seller shall be responsible
for, and shall indemnify and hold harmless Buyer and its affiliates and their officers, directors, employees, affiliates and agents, and their respective fiduciaries (including plan administrators), of the health, welfare and other employee benefit
plans maintained by Buyer from and against, any and all claims, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) and other liabilities and obligations relating to or arising out of (A)
all compensation, pay and benefits due to any employee of the Business who does not become a Transferred Employee, (B) funding and/or paying any benefits under any of the Plans, including any termination benefits and other employee entitlements
accrued under such plans by or attributable to employees of Seller and/or any of its affiliates, (C) the liabilities retained by Seller under this Section 2.2 or any failure by Seller to comply with the provisions of this Section 2.2 and (D) any
claims of, or damages or penalties brought by, any employee of the Business, or any governmental entity on behalf of or concerning any such employee, with respect to any act or failure to act by Seller to the extent arising from the employment,
discharge, layoff or termination of such employee prior to the Closing. 
  
 (l) Collective Bargaining Agreements. Buyer shall, as of the Closing, assume the collective bargaining agreements in effect with respect to the Affected Employees who become Transferred Employees and the obligations relating thereto
and will recognize all accrued rights and all seniority dates under such agreements. To the extent that any provision of Sections 2.2(a) through (k) hereof conflict with provisions of any collective bargaining agreement assumed by Buyer pursuant to
this Section 2.2(l), the terms of such collective bargaining agreement shall govern and control. 
  
 ARTICLE III 
  
 REPRESENTATIONS AND WARRANTIES OF SELLER 
  
 Seller,
solely with respect to the Business, hereby represents and warrants to Buyer as follows: 
  

	Section 3.1	Organization 

  
 Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. Seller has all requisite corporate
power and corporate authority to own, lease and operate its properties and to carry on the Business as now being conducted, except where any such 

  

 14 

 
failure to be so organized and existing or to have such power and authority would not individually or in the aggregate have a Material Adverse Effect. Seller
is duly qualified or licensed to do business in each jurisdiction in which the property owned, leased or operated by Seller in the conduct of the Business or the nature of the Business makes such qualification necessary, except in any such
jurisdictions where the failure to be duly qualified or licensed would not, individually or in the aggregate, be reasonably likely to have a Material Adverse Effect. 
  
 As used in this Agreement, “Material Adverse Effect” means any change, effect or circumstance that has had,
or would reasonably be expected to have, individually or in the aggregate, a material adverse change in, or effect on, the assets, properties, liabilities, financial condition or results of operations of the Business, taken as a whole, that is so
substantial and adverse as to fundamentally impair the value to Buyer of the Business and does not arise from or relate to customers or suppliers of the Business or changes in the volumes or prices of sales or purchases by the Business;
provided that any such effect resulting from (1) any change in economic conditions generally or in the industries in which the Business operates which does not disproportionately impact the Business, (2) any continuation of an adverse trend
or condition, (3) any change in law, rule or regulation or GAAP (as defined in Section 3.6 and subject to the accounting principles set forth in Schedule 1.8 of the Disclosure Schedules) or interpretations thereof applicable to both Seller and
Buyer, (4) increases in energy, electricity, raw materials or other operating costs, (5) any change in the financial condition or results of operation of the Business resulting from the pending sale of the Business to Buyer or (6) the transactions
contemplated by this Agreement, shall not be considered when determining whether a Material Adverse Effect has occurred. 
  
 As used in this Agreement, “Knowledge” means the knowledge after reasonable inquiry of Ron Raley, Tom Cleaves, David Hauth, Vincent Young
or Tom Whittaker. 
  

	Section 3.2	Authorization 

  
 Seller has the corporate power and authority to execute and deliver this Agreement and consummate or cause to be consummated the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of Seller and no other corporate proceeding on the part of Seller is
necessary to authorize the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Seller and constitutes, and, when executed and
delivered, each of the other agreements, documents and instruments to be executed and delivered by Seller pursuant hereto will constitute, a valid and binding agreement of Seller enforceable against Seller in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization and other laws affecting the enforcement of creditors’ rights generally and by general principles of equity. 
  

	Section 3.3	Assets Necessary to the Business 

  
 Except as set forth on Schedule 3.3 of the Disclosure Schedules or for assets, services and supplies to be provided pursuant to the agreements to be
entered into between Buyer and Seller at the Closing and subject to the receipt from any third parties of any required consents to assignment, 

  

 15 

 
following the Closing, Buyer will have all assets necessary to permit Buyer to carry on the Business in substantially the same manner as presently conducted
by Seller. 
  

	Section 3.4	Title to Assets 

  
 Seller is the beneficial owner of the Assets other than the Assets leased from third parties, and has title to such Assets, free and clear of all Liens
except for Permitted Encumbrances. As used herein, the term “Lien” shall mean any pledge, mortgage, deed of trust, charge, claim, title imperfection, defect or objection, security interest, conditional or installment sales
agreement, encumbrance, easement, encroachment or third party right or restriction of any kind. 
  

	Section 3.5	Consents and Approvals; No Violations 

  
 (a) Except for applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “H-S-R Act”), or
antitrust or other regulatory laws of non-U.S. or other jurisdictions, and except as set forth on Schedule 3.5 of the Disclosure Schedules, there are no material governmental approvals or consents required for the execution, delivery or performance
of this Agreement or the consummation by Seller of the transactions contemplated hereby. 
  
 (b) Except as set forth on Schedule 3.5 of the Disclosure Schedules, the execution, delivery and performance of this Agreement by the Seller will not (i) conflict with or result in any breach or violation of any
provision of the certificate of incorporation or by-laws of Seller (ii) violate, conflict with or result in a default (or any event that, with notice or lapse of time or both, would constitute a default) under, or result in any termination,
cancellation or acceleration or give rise to any such right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any agreement set forth or required to be set forth on Schedule 3.10 or Schedule 3.14 of
the Disclosure Schedules; (iii) violate any order, injunction, decree, statute, rule or regulation applicable to Seller, or any of the assets or properties of the Business, or (iv) result in the creation or imposition of any Lien upon any of the
assets or properties of the Business, excluding from the foregoing clauses (ii), (iii) and (iv) such (1) requirements, conflicts, defaults, rights, Liens or violations that are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect and would not adversely affect, in any material respect, the ability of Seller to consummate the transactions contemplated by this Agreement or that become applicable as a result of the business or activities (other than the
Business) in which Buyer engages or proposes to be engaged or as a result of any acts or omissions by, or the status of or any facts pertaining to, Buyer, and (2) conflicts, defaults or violations arising in connection with the transfer or
assignment of agreements or contracts that require the consent of the other party or parties thereto to transfer or assignment. As used in this Section 3.5, references to Seller shall refer only to Seller in connection with the conduct of the
Business. 
  

	Section 3.6	Financial Statements 

  
 Attached as Schedule 3.6 of the Disclosure Schedules are the Business’ (i) unaudited combined balance sheets as of February 28, 2005, December 31,
2004 and December 31, 2003 (collectively, the “Balance Sheets”), and (ii) unaudited combined income statements for each of the years ended December 31, 2004 and 2003 and the two (2) month period ended February 28, 2005
(collectively, the “Income Statements” and together with the Balance Sheets, the “Financial Statements”), which have been extracted from the books and records of Seller, which books and records are the basis for the

  

 16 

 
preparation of Seller’s audited financial statements. Except as disclosed in the Financial Statements or on Schedule 3.6 of the Disclosure Schedules,
each Balance Sheet fairly presents, in all material respects, the financial position of the Business as of the date thereof, and each Income Statement fairly presents, in all material respects, the results of operations of the Business for the
period indicated and has been derived from the books and records of the Seller; provided, however, that the Financial Statements present such information in accordance with Seller’s historical practices and do not conform to U.S.
generally accepted accounting principles consistently applied (“GAAP”); provided, further, that all such accounting practices to the extent material and all deviations from historical practices with respect to the Financial
Statements, have been fairly disclosed to the Buyer by the Seller and subject to the accounting principles set forth in Schedule 1.8 of the Disclosure Schedules, consistently applied. The Business is an integral part of the Seller and, therefore,
the Financial Statements do not purport to be complete. 
  

	Section 3.7	Absence of Undisclosed Liabilities 

  
 Except (i) for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since February 28, 2005 that have
not had and are not reasonably likely to have a Material Adverse Effect and (ii) as listed on Schedule 3.7 of the Disclosure Schedules, since February 28, 2005, the Business has not incurred any liabilities or obligations (whether direct, indirect,
accrued or contingent) that would be required to be reflected or reserved against in a balance sheet of the Business prepared in accordance with the principles used in preparation of the Balance Sheet of February 28, 2005 referred to in Section 3.6.
The Business maintains no “off-balance sheet arrangements” within the meaning of Item 303 of Regulation S-K of the Securities and Exchange Commission. 
  

	Section 3.8	Absence of Material Adverse Effect 

  
 Except as set forth on Schedule 3.8 of the Disclosure Schedules or as otherwise contemplated by this Agreement, since February 28, 2005, there has not
been any Material Adverse Effect. 
  

	Section 3.9	Title, Ownership and Related Matters 

  
 Schedule 3.9 of the Disclosure Schedules contains a complete and correct list of all Owned Real Property, including the address and name of record title
owner thereof. Seller has fee simple title to the Owned Real Property, and the Owned Real Property is subject to no Liens, except for Permitted Encumbrances. As used herein, “Permitted Encumbrances” means (i) Liens for current Taxes
not yet due or Taxes being contested in good faith, (ii) mechanics’, materialmen’s, warehousemen’s and similar liens attaching by operation of law, incurred in the ordinary course of business and securing payments not delinquent or
payments which are being contested in good faith, provided that the party responsible for any such matter pursuant to Section 1.3(b) shall be responsible for such payment, (iii) with respect to the Owned Real Property, all matters of public record,
as of February 9, 2005, in the county in which the Owned Real Property is located, (iv) defects, irregularities or imperfections of title, easements, servitudes, permits, rights of way, flowage rights, restrictions, licenses, covenants, sidetrack
agreements, and zoning restrictions, if any, which do not materially detract from the value of the property subject thereto for the uses and purposes to which such property is currently employed or materially impair the operations of the Business,
and (v) with respect to the Owned Real Property, such other matters as are set forth on Schedule 3.9 of the Disclosure Schedules. 
  

 17 

	Section 3.10	Leases 

  
 Schedule 3.10 of the Disclosure Schedules lists, as of the date hereof, the address of and name of the landlord for each of the Leased Real Property and
all leases and subleases relating thereto (collectively, the “Leases”). True and complete copies of the Leases and all amendments and agreements relating thereto have been made available to Buyer. To the Knowledge of Seller, all of
the Leases are valid, binding and enforceable in accordance with their respective terms, and neither Seller nor, to the Knowledge of Seller, the other party to any Lease is in default under such Lease in any material respect. 
  

	Section 3.11	Intellectual Property 

  
 (a) Schedule 3.11(a) of the Disclosure Schedules sets forth all material patents, patent applications, trademark and service mark registrations and
applications for registrations thereof, registered copyrights and applications for registration thereof, Internet domain names and URLs, whether domestic or foreign, used or held for use primarily or exclusively in the Business as currently
conducted (collectively, the “Intellectual Property”). 
  
 (b) Seller or one of its affiliates has such ownership of, or other rights by license or other agreement to use, the Intellectual Property free and clear of all Liens and without obligation to pay any royalties or other fees with respect
thereto except for renewal fees, maintenance fees and like fees that will become due and payable to governmental agencies after the Closing Date to maintain the active status of the Intellectual Property. There are no pending proceedings or
litigation or, to the Knowledge of Seller, other adverse claims by any person against the use by the Seller (as it relates to the Business) of any Intellectual Property. The instruments of assignment to be delivered by Seller to Buyer (or parties
designated by Buyer) at the Closing, pursuant to which Seller will assign, or will cause to be assigned, all such Intellectual Property, will be duly executed, and, if required to be filed with a United States governmental authority, will be in form
suitable for such filing. 
  
 (c) Except as set forth in Schedule
3.11(c) of the Disclosure Schedules, the Seller is not a party to any material license or other agreement, whether as licensor, licensee, or otherwise with respect to any Intellectual Property. To the extent any Intellectual Property is used under
license in the Business by the Seller, no written notice of a material default has been sent or received by the Seller under any such license which remains uncured and the execution, delivery or performance of the Seller’s obligations hereunder
will not result in such a default. Each such license agreement is a valid and binding obligation of the Seller and, to the Knowledge of Seller, each of the other parties thereto, enforceable in accordance with the terms thereof. 
  
 (d) To the Knowledge of Seller, the operation of the Business as currently
conducted, including, without limitation, the manufacturing, marketing, licensing, sale or distribution of products, and the use of the Intellectual Property, does not infringe or misappropriate any intellectual property rights of any third parties.

  
 (e) Except as set forth in Schedule 3.11(e) of the Disclosure
Schedules, the Seller has not made any claim in writing of an infringement or misappropriation by any third party (including, without limitation, any employee or former employee of the Seller) of its rights to, or in connection with any Intellectual
Property, which claim is still pending. 
  

 18 

 (f) Except as set forth in Schedule 3.11(f) of the Disclosure Schedules, to the Knowledge of the Seller,
with respect to the Business there are no pending or threatened claims by any person of an infringement or misappropriation by the Seller of any intellectual property rights of any third party, or of the invalidity of any patent or registration of a
copyright, trademark, service mark, domain name, or trade name included in the Intellectual Property. To the Knowledge of the Seller, there is no valid basis for any such claims. 
  
 (g) Except as set forth in Schedule 3.11(g) of the Disclosure Schedules, there are no interferences or other contested
proceedings, either pending or, to the Knowledge of the Seller, threatened, in the United States Copyright Office, the United States Patent and Trademark Office, or any governmental authority (foreign or domestic) relating to any pending application
with respect to the Intellectual Property. 
  

	Section 3.12	Litigation 

  
 Except as set forth on Schedule 3.12 of the Disclosure Schedules, there are no actions, suits, administrative proceedings, arbitrations or other
proceedings (collectively, “Cases”) pending, or, to Seller’s Knowledge, threatened, against Seller, or any of its properties, assets and business operations, by or before any court, governmental or regulatory authority or by
any third party, in each case relating to the Business, or that are reasonably likely to adversely affect Seller’s performance under this Agreement or the consummation of the transactions contemplated herein. 
  

	Section 3.13	Compliance with Applicable Law 

  
 Since January 1, 2003, Seller has conducted the Business in compliance in all material respects with all applicable laws, ordinances, rules and
regulations of any federal, state, local or foreign governmental authority applicable to the Business (other than Environmental Laws, which are governed by Section 3.17). All Permits material to the Business are in full force and effect. 

 

	Section 3.14	Certain Contracts and Arrangements 

  
 Except as set forth on Schedule 3.14 of the Disclosure Schedules, Seller is not a party, in connection with the Business, to any written (a) collective
bargaining agreement; (b) employment or consulting agreement providing for annual payments in excess of $50,000; (c) indenture, mortgage, note, installment obligation, agreement or other instrument, in each case relating to the borrowing of money
(other than intercompany accounts, which shall be governed by Section 1.2 hereof), or the guaranty of any obligation for the borrowing of money, except any such agreement which is an Excluded Liability and which has an aggregate outstanding
principal amount not exceeding $50,000; (d) partnership, joint venture or other similar agreement or arrangement requiring the commitment of capital in excess of $50,000; (e) material license or other similar agreement (other than governmental
permits or licenses used in connection with the operation of the Business and off-the-shelf software licenses); (f) agency, sales representation, distribution or other similar agreement providing for annual payments by the Business in excess of
$50,000; (g) agreement for the purchase of supplies or materials other than agreements that are entered into in the ordinary course of business, and which are terminable without penalty and with respect to which annual payments will not exceed
$50,000 in the aggregate; (h) agreement for the sale of goods or services other than in the ordinary course of business providing for annual payments in excess of $50,000; or (i) agreement (except as otherwise set forth in (a) through 

  

 19 

 
(h) above or on the Disclosure Schedules), entered into other than in the ordinary course of business that is material to the Business taken as a whole.
Except as set forth on Schedule 3.14 of the Disclosure Schedules, all such agreements are valid, binding and enforceable in accordance with their terms and Seller is not in default under any of the aforesaid agreements. 
  

	Section 3.15	Employee Benefit Plans; ERISA 

  
 (a) Schedule 3.15(a) of the Disclosure Schedules lists all benefit and compensation plans and contracts including, but not limited to, “employee
benefit plans” within the meaning of Section 3(3) of ERISA, and deferred compensation, stock option, stock purchase, stock appreciation rights, stock-based incentive and bonus plans maintained or contributed to by Seller for the benefit of any
employee or former employees of the Business (collectively, the “Plans”). True and complete copies of all Plans, including, but not limited to, any trust instruments and insurance contracts forming a part of any Plans, and all
amendments thereto have been provided or made available to Buyer. 
  
 (b) Each of the Plans has been administered in accordance with its terms and in substantial compliance with applicable law (including, where applicable, ERISA and the Code), except where the failure to so administer such Plan could not
reasonably be expected to have a Material Adverse Effect. 
  
 (c)
Each of the Plans intended to be “qualified” within the meaning of Section 401(a) of the Code has been determined by the Internal Revenue Service to be so qualified, and Seller knows of no fact or set of circumstances that has adversely
affected, or is reasonably likely to affect adversely, the qualification of such Plan prior to the Closing. 
  
 (d) Except as set forth on Schedule 3.15(d) of the Disclosure Schedules, no Plan provides medical, surgical, hospitalization, death or similar benefits
(whether or not insured) for employees or former employees of the Business for periods extending beyond their termination of service (by retirement or otherwise), other than (i) coverage mandated by COBRA or other applicable similar law, (ii) death
benefits under any “pension plan,” as that term is defined in Section 3(2) of ERISA or (iii) benefits the full cost of which is borne by the current or former employee (or his beneficiary). 
  
 (e) There are no pending or, to the Knowledge of Seller, threatened claims
(other than routine claims for benefits) by, on behalf of or against any of the Plans or any trusts related thereto except for those claims that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect.

  
 (f) Neither Seller nor any of its affiliates has incurred, and
to the Knowledge of Seller, no event has occurred and no condition or circumstance exists that is reasonably likely to result, directly or indirectly, in, any unsatisfied liability (including, without limitation, any indirect, contingent or
secondary liability) of Seller or any such affiliate under Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA arising in connection with any employee pension benefit plan covered or previously covered by Title IV of ERISA or such
sections of the Code or ERISA. 
  
 (g) No Plan is a
“multiemployer plan” (as defined in Section 4001(a)(3) of ERISA). 
  

 20 

	Section 3.16	Taxes 

  
 (a) Except as set forth on Schedule 3.16 of the Disclosure Schedules, (i) for all periods through and including the Closing Date, Seller has timely filed
or caused to be filed with the appropriate taxing authorities all Tax Returns due on or prior to the Closing Date and required to be filed by it or with respect to the Business and the Assets, except for such failures to file that are not,
individually or in the aggregate, reasonably likely to result in a Material Adverse Effect, and such Tax Returns are true, correct and complete in all material respects, (ii) all material Taxes due by or with respect to the Business and the Assets
on or prior to the Closing Date have been timely paid or are being contested in good faith, (iii) Seller has withheld and paid all material Taxes related to the Business and required to be withheld with respect to amounts owing to any employee,
creditor, independent contractor or other third party, (iv) none of the Assets is subject to any Liens (other than Permitted Encumbrances) as a result of a failure to pay any Tax, and (v) none of the Assets is “tax-exempt use property”
within the meaning of Section 168(h) of the Code. 
  
 (b) As used
in this Agreement: 
  
 “Income Tax” or
“Income Taxes” shall mean all Taxes based upon, measured by, or calculated with respect to (i) gross or net income or gross or net receipts of profits (including, but not limited to, any capital gains, minimum taxes and any Taxes on
items of tax preference, but not including sales, use, goods and services, real or personal property transfer or other similar Taxes), (ii) multiple bases (including, but not limited to, corporate franchise, doing business or occupation Taxes) if
one or more of the bases upon which such Tax may be based upon, measured by, or calculated with respect to, is described in (i) above, or (iii) withholding taxes measured by, or calculated with respect to, any payments or distributions (other than
wages). 
  
 “Taxes” shall mean all taxes, levies,
charges or fees including, without limitation, income, corporation, gross receipts, transfer, excise, property, sales, use, value-added, goods and services, license, payroll, withholding, social security and franchise or other governmental taxes or
charges, imposed by the United States or any state, county, local or foreign government, and such term shall include any interest, penalties or additional tax attributable thereto. 
  
 “Tax Return” shall mean any report, return (including any information return) or statement required to be
supplied to a taxing authority in connection with Taxes including, without limitation, any amendments thereto. 
  

	Section 3.17	Environmental Laws and Regulations 

  
 (a) Except as set forth on Schedule 3.17 of the Disclosure Schedules, Seller is in material compliance with all federal, state, local and foreign laws and
regulations in effect on the date hereof and applicable to it in the conduct of the Business relating to protection of the environment (collectively, “Environmental Laws”), except for any non-compliance which is not, individually or
in the aggregate, reasonably likely to have a Material Adverse Effect, which compliance includes, but is not limited to, the possession by Seller of material permits and other governmental authorizations required under applicable Environmental Laws,
and compliance with the terms and conditions thereof. 
  
 (b)
Except as set forth on Schedule 3.17 of the Disclosure Schedules, to the Knowledge of Seller, there have been no releases (except for releases in accordance with valid environmental permits) 

  

 21 

 
of any “Hazardous Substances” (which term shall mean collectively contaminants; pollutants, toxic, radioactive or hazardous waste,
chemicals, substances, materials and constituents; petroleum and petroleum products; polychlorinated biphenyls; medical waste; infectious waste; asbestos; and urea formaldehyde) into the soil, surface water or ground water at any of the properties
of Seller to be transferred pursuant to this Agreement, which condition remains uncured, and which requires remedial action pursuant to any Environmental Laws and no soil, air, surface water or ground water contamination exists at any of the
properties of Seller to be transferred pursuant to this Agreement except, in each case, for releases or contaminations that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect. 
  
 (c) Except as set forth on Schedule 3.17 of the Disclosure Schedules, within
the last two (2) years, Seller has not received written notice of, and is not, to the Knowledge of Seller, the subject of, any actions, causes of action, claims, investigations, demands or notices by any person alleging liability under or
noncompliance with any Environmental Law relating to the Owned Real Property or Leased Real Property or the Business that are, individually or in the aggregate, reasonably likely to have a Material Adverse Effect. 
  
 (d) Except as set forth on Schedule 3.17 of the Disclosure Schedule, to the
Knowledge of Seller, neither the Seller nor the Business has disposed of, or arranged for the disposal of, any Hazardous Substances at any location, which disposal or arrangement could give rise to any liability under any Environmental Law.

  
 (e) The representations and warranties contained in this
Section 3.17 are the sole and exclusive representations and warranties relating to environmental matters contained in this Agreement. As used in this Section 3.17, references to Seller shall refer only to Seller in connection with the conduct of the
Business. 
  

	Section 3.18	Labor Matters 

  
 Except as set forth on Schedule 3.18 of the Disclosure Schedules, (i) there is no material labor strike, dispute, slowdown, stoppage or lockout ongoing,
or to the Knowledge of Seller threatened, against or affecting the Business; (ii) there is no unfair labor practice charge or complaint against the Seller (relating to the Business) pending (for which written notice has been provided) or, to the
Knowledge of Seller, threatened before the National Labor Relations Board or any similar foreign agency, and, to the Knowledge of Seller, no facts exist which are reasonably likely to lead to such a charge or complaint, and (iii) to the Knowledge of
Seller, Seller has not received written notice of the intent of any federal, state or foreign governmental authority responsible for the enforcement of labor or employment laws to conduct an investigation with respect to or relating to the Business
and no such investigation is in progress; other than, with respect to clauses (ii) and (iii), such charges, complaints or investigations that are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect. 

 

	Section 3.19	Inventory 

  
 (a) Except as set forth on Schedule 3.19 of the Disclosure Schedules, all of the Purchased Inventory is in the physical possession of Seller or in transit
to or from a customer or supplier of the 

  

 22 

 
Business and none of the Purchased Inventory has been pledged as collateral or otherwise is subject to any Lien (other than any Lien imposed as a matter of
law) or is held on consignment from others. 
  
 (b) All Purchased
Inventory was acquired or produced in the ordinary course of business. All Purchased Inventory is good and merchantable and of a quality presently useable and salable in the ordinary course of business; provided, however, that the age of any
item of inventory or the amount of any category of inventory in stock shall not be considered in determining whether such inventory is good, merchantable, useable or saleable. 
  
 (c) All Purchased Inventory is, and on the Closing Date will be, valued on Seller’s books at the lower of Seller’s
cost and market value. 
  

	Section 3.20	Suppliers and Customers 

  
 Schedule 3.20 of the Disclosure Schedules sets forth the top ten (10) suppliers and customers of the Business, by dollar volume, for the twelve (12)
months ended December 31, 2004. To the Knowledge of Seller, the relationships of Seller with each such supplier and customer are good commercial working relationships, and except as set forth on Schedule 3.20 of the Disclosure Schedule, no such
supplier or customer has terminated, or threatened in writing to terminate, its relationship with Seller. 
  

	Section 3.21	Affiliate Transactions 

  
 Except as set forth on Schedule 3.21 of the Disclosure Schedules, neither Seller nor any affiliate of Seller possesses, directly or indirectly, any
financial interest in any Person which is a client, supplier, customer, lessor or lessee of the Business. 
  

	Section 3.22	Certain Fees 

  
 Neither Seller nor any of its affiliates has employed any financial advisor or finder or incurred any liability for any financial advisory or
finders’ fees in connection with this Agreement or the transactions contemplated hereby. 
  
 ARTICLE IV 
 REPRESENTATIONS AND WARRANTIES OF BUYER 
  
 Buyer hereby represents and warrants to Seller as follows: 
  

	Section 4.1	Organization and Authority of Buyer 

  
 (a) Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. Buyer has the corporate power
and corporate authority to execute and deliver this Agreement and consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Buyer and no other corporate proceeding on the part of Buyer is necessary to authorize the execution, delivery and performance of this Agreement or the consummation of the transactions contemplated hereby.

  

 23 

 (b) This Agreement has been duly executed and delivered by Buyer and constitutes, and when executed and
delivered each of the other agreements, documents and instruments to be executed and delivered by Buyer pursuant hereto will constitute, a valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, moratorium, reorganization and other laws affecting the enforcement of creditors’ rights generally and by general principals of equity. 
  

	Section 4.2	Consents and Approvals; No Violations 

  
 (a) Except for applicable requirements of the H-S-R Act, or antitrust or other regulatory laws of non-U.S. or other jurisdictions, there are no material
governmental approvals or consents required for the execution, delivery or performance of this Agreement nor the consummation by Buyer of the transactions contemplated hereby. 
  
 (b) The execution, delivery and performance of this Agreement by Buyer will not (i) conflict with or result in any breach or
violation of any provision of the certificate of incorporation or by-laws of Buyer; (ii) violate, conflict with or result in a default (or any event that, with notice or lapse of time or both, would constitute a default) under, or result in any
termination, cancellation or acceleration, or give rise to any such right of termination, cancellation or acceleration under, any of the terms, conditions or provisions of any note, mortgage, other evidence of indebtedness, guarantee, license,
agreement, lease or other instrument or obligation to which Buyer is a party or by which Buyer or any of its assets is subject or by which any of them is bound; (iii) violate any order, injunction, decree, statute, rule or regulation applicable to
Buyer, or any of the assets or properties of the Business; or (iv) result in the creation or imposition of any Lien upon any of the assets or properties of Buyer, excluding from the foregoing clauses (ii), (iii) and (iv) such requirements,
conflicts, defaults, rights, Liens or violations that would not adversely affect, in any material respect, the ability of Buyer to consummate the transactions contemplated by this Agreement. 
  

	Section 4.3	Financing 

  
 Buyer has obtained a commitment for financing from Manufacturers and Traders Trust Company (the “Financing Source”) for the transactions
contemplated hereby, subject to the satisfaction of the terms and conditions set forth in the related commitment letter (the “Commitment Letter”), a true and complete copy of which has been provided to Seller. If and when such
financing is provided to Buyer pursuant to such Commitment Letter, such financing will provide Buyer with sufficient immediately available funds at the Closing to pay the Purchase Price, to provide the Business with sufficient working capital and to
pay any other amounts payable to Seller by Buyer pursuant to this Agreement and to effect the transactions contemplated hereby. Buyer has no knowledge of any facts or circumstances that are reasonably likely to result in (i) any of the conditions
set forth in the Commitment Letter not being satisfied to the extent such conditions can be satisfied by, or are under the control of, Buyer, or (ii) the funding contemplated in the Commitment Letter not being made available to Buyer on a timely
basis in order to consummate the transactions contemplated by this Agreement. 
  

 24 

	Section 4.4	Litigation 

  
 There are no Cases pending against Buyer that are reasonably likely to adversely affect Buyer’s performance under this Agreement or the consummation
of the transactions contemplated herein. 
  

	Section 4.5	No Implied Representation 

  
 Notwithstanding anything contained in Article III or any other provision of this Agreement or the Disclosure Schedules, Buyer acknowledges and agrees that
Seller is making no representation or warranty whatsoever, express or implied, beyond those expressly given in this Agreement, including any implied warranty of merchantability or suitability as to the properties or assets of the Business and it is
understood that, except as otherwise provided in Article III, Buyer acknowledges that the Business is being sold “as is” and “where is”. In addition, Buyer acknowledges and agrees that any cost estimates, projections and
predictions contained or referred to in the materials that have been provided to Buyer are not and shall not be deemed to be representations or warranties of Seller. 
  

	Section 4.6	Interpretation of Representations and Warranties and Schedules 

  
 Buyer acknowledges and agrees that the specification of any dollar amount in the representations and warranties contained in this Agreement or the
inclusion of any specific item in the Disclosure Schedules is not intended to imply that such amounts or higher or lower amounts, or the items so included or other items, are or are not material, and neither party shall use the fact of the setting
of such amounts or the fact of inclusion of any such item in the Disclosure Schedules in any dispute or controversy between the parties as to whether any obligation, item or matter not described herein or included in a schedule is or is not
material. 
  

	Section 4.7	Certain Fees 

  
 Buyer has not employed any financial advisor or finder or incurred any liability for any financial advisory or finders’ fees in connection with this
Agreement or the transactions contemplated hereby. 
  
 ARTICLE V

 COVENANTS 
  

	Section 5.1	Conduct of the Business 

  
 Seller agrees that, during the period from the date of this Agreement to the Closing Date, except (i) as set forth on Schedule 5.1 of the Disclosure
Schedules, (ii) as otherwise contemplated by this Agreement or (iii) as consented to by Buyer (which consent shall not be unreasonably withheld, conditioned or delayed): 
  
 (a) Seller shall use commercially reasonable efforts to conduct the Business in the ordinary course consistent with past
practice (which past practices include, without limitation, periodic cash sweeps from the Business); and 
  
 (b) Seller shall not, with respect to the Business, (i) sell, dispose or transfer any of its properties or assets (including without limitation by way of
lease, contingent sale or similar 

  

 25 

 
arrangement) except for (A) sale of inventory that would otherwise become Purchased Inventory, in the ordinary course of business consistent with past
practice, and (B) sale of inventory that would otherwise become Non-Purchased Inventory; (ii) purchase a material amount of properties or assets, except in the ordinary course of business, consistent with past practice; (iii) increase in any manner
the compensation of any of the officers or other key employees of the Business, except for such increases as are granted in the ordinary course of business in accordance with its customary practices (which shall include normal periodic performance
reviews and related compensation and benefit increases) or in accordance with the terms of any employment contract or collective bargaining agreement as currently in effect; (iv) adopt, grant, extend or increase the rate or terms of any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made to, for or with any such officers or employees of the Business, except increases required by any applicable law, rule or regulation or by the terms of any employment
contract or collective bargaining agreement; (v) make any change in any of its present accounting methods and practices, except as required by changes in GAAP, subject to the accounting principles set forth in Schedule 1.8 of the Disclosure
Schedules; (vi) subject any of the Assets to any Lien (other than Permitted Encumbrances); (vii) enter into any new rebate, debit back or other similar arrangement, or amend in any material respect any such arrangement existing on the date hereof,
other than by terminating any such arrangement at or prior to the Closing; (viii) amend any lease that is or will be related to any Saybrook Sublease or (ix) enter into any agreement to do any of the foregoing. 
  

	Section 5.2	Access to Information 

  
 (a) Between the date of this Agreement and the Closing Date, Seller shall, subject to any restrictions as to confidentiality applicable to Seller, and
except to the extent that such books and records are subject to a legal privilege that, in the good faith judgment of Seller, may be lost or impaired by virtue of such disclosure, (i) give Buyer and its authorized representatives reasonable access
to all books, records, offices and other facilities and properties of the Business; (ii) permit Buyer and its authorized representatives (including, without limitation, any financial institution proposing to provide any portion of the financing
referred to in Section 4.3) to make such inspections thereof as any of them may reasonably request; and (iii) cause the officers of Seller to furnish Buyer and its authorized representatives with such financial and operating data and other
information with respect to the Business as any of them may from time to time reasonably request; provided, however, that (A) any such investigation shall be conducted during normal business hours under the supervision of Seller’s
personnel and in such a manner as to maintain the confidentiality of this Agreement and the transactions contemplated hereby and not interfere unreasonably with the operations of the Business and (B) Buyer shall comply with all applicable laws in
the course of conducting its investigation, including, without limitation, applicable labor and employment laws. 
  
 (b) All information concerning the Business furnished or provided by Seller or its affiliates to Buyer or its representatives (whether furnished before or
after the date of this Agreement) shall be held subject to the confidentiality letter between Seller and Buyer, dated as of April 26, 2004 (the “Confidentiality Agreement”). Notwithstanding anything to the contrary contained in this
Agreement, neither Seller nor any affiliate of Seller shall have any obligation to make available or provide to Buyer or its representatives a copy of (i) any Tax Return filed by Seller, or any of its affiliates, or any related materials or (ii) an
employee’s individual personnel or payroll records, to the extent an Employee Release has not been obtained from such employee. 
  

 26 

	Section 5.3	Consents 

  
 (a) Each of Seller and Buyer shall cooperate, and use its commercially reasonable efforts, to make all filings and obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities and other third parties necessary to consummate the transactions contemplated by this Agreement. In addition to the foregoing, Buyer agrees to use commercially
reasonable efforts to provide such assurances as to financial capability, resources and creditworthiness as may be reasonably requested by any third party whose consent or approval is sought hereunder. Notwithstanding the foregoing, nothing herein
shall obligate or be construed to obligate Seller or Buyer to make any payment to any third party in order to obtain the consent or approval of such third party or to transfer any contract, license or permit in violation of its terms. 
  
 (b) With respect to any agreements for which any required consent or approval
is not obtained prior to the Closing (it being understood and agreed that this provision will not be deemed a waiver of any condition set forth in Article VI), (i) Seller and Buyer shall each use commercially reasonable efforts to obtain any such
consent or approval after the Closing until either such consent or approval has been obtained or Seller determines in good faith that such consent cannot reasonably be obtained and (ii) Seller shall use its commercially reasonable efforts to provide
Buyer with the same benefits arising under such agreements, including performance by Seller (or Buyer, if applicable) as agent, if legally and commercially feasible; provided that Buyer (or Seller, if applicable) shall provide Seller (or
Buyer, if applicable) with such access to the premises, books and records and personnel as is reasonably necessary to enable Seller (or Buyer, if applicable) to perform its obligations under such agreements and Buyer shall pay or satisfy the
corresponding liabilities for the enjoyment of such benefits to the extent Buyer would have been responsible therefor if such consent or approval had been obtained. 
  
 (c) Seller and Buyer shall file any additional information requested by any governmental authority as soon as reasonably
possible after receipt of any request for additional information. The parties hereto will coordinate and cooperate with one another in exchanging such information and providing such reasonable assistance as may be requested in connection with such
filings. 
  
 (d) In the event that any governmental authority
challenges the proposed transaction for any reason, the parties agree to take any action (consistent with their obligations under Section 5.3(a)) reasonably necessary to vigorously defend, lift, mitigate or rescind the effect of any actual or
reasonably anticipated litigation or administrative proceeding adversely affecting this Agreement or the transactions contemplated hereby, including, without limitation, promptly appealing any adverse court or administrative order or injunction.

  

	Section 5.4	Commercially Reasonable Efforts 

  
 Except as otherwise set forth in this Article V, each of Seller and Buyer shall cooperate, and use its commercially reasonable efforts to (a) take, or
cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate the transactions contemplated by this Agreement, and (b) obtain such estoppel certificates
and lien waivers in respect of the Leased Real Property as the Financing Source may reasonably request. 
  

 27 

	Section 5.5	Public Announcements 

  
 Prior to the Closing, except as otherwise agreed to by the parties, no party shall issue any report, statement or press release or otherwise make any
public statements with respect to this Agreement and the transactions contemplated hereby, except (i) to the extent reasonably required in connection with the operation of the Business and in a manner consistent with prior public releases by Buyer
or Seller, as the case may be, or (ii) as in the reasonable judgment of such party may be required by law or in connection with the obligations of a publicly held company under applicable laws and the listing standards of any stock exchange on which
its securities are traded, in which case Seller and Buyer will use commercially reasonable efforts to consult with each other with respect to the issuance of a report, statement or press release as to the language of any such report, statement or
press release. 
  

	Section 5.6	Covenant to Satisfy Conditions 

  
 Seller will use its commercially reasonable efforts to ensure that the conditions set forth in Article VI hereof are satisfied, insofar as such matters
are within the control of Seller, and Buyer will use its commercially reasonable efforts to ensure that the conditions set forth in Article VI hereof are satisfied, insofar as such matters are within the control of Buyer. Seller and Buyer further
covenant and agree, with respect to a threatened or pending preliminary or permanent injunction or other order, decree or ruling or statute, rule, regulation or executive order that would adversely affect the ability of the parties hereto to
consummate the transactions contemplated hereby, to use all commercially reasonable efforts to prevent or lift the entry, enactment or promulgation thereof, as the case may be. 
  

	Section 5.7	Title Commitments 

  
 Seller shall obtain from First American Title Insurance Company (“Title Insurer”) and deliver to Buyer a commitment for a title insurance
policy for each parcel of Owned Real Property. In the event Buyer elects to purchase title insurance with respect to any Owned Real Property on, prior to, or within sixty (60) days after the Closing, such policies shall be purchased from Title
Insurer. The commitment, any search fees, any policies of title insurance and other title costs or charges shall be at Buyer’s expense, payable at Closing. 
  

	Section 5.8	Use of Packaging Material 

  
 (a) Notwithstanding anything contained in this Agreement to the contrary, Buyer shall be entitled for a period of six (6) months following the Closing
Date to package and sell products of the Business in any packaging material included in the Assets transferred to Buyer under this Agreement, notwithstanding that such packaging material contains one or more Excluded Marks. At the end of such
period, Buyer agrees that it will destroy or return to Seller any remaining packaging material containing any Excluded Marks; provided, however, that Buyer may continue to sell, indefinitely, Purchased Inventory or inventory of the
Business manufactured and wrapped within three months after the Closing utilizing packaging materials included in the Assets transferred to Buyer containing one or more Excluded Marks; provided further, that the foregoing shall in no way
limit Buyer’s right to thereafter use the mark “Via” as long as it does so without reference to “Hammermill”. 
  
 (b) Notwithstanding anything contained in this Agreement to the contrary, Seller shall be entitled for a period of six (6) months following the Closing
Date to package and sell products in the Strathmore Opaque line, notwithstanding that such packaging material contains the “Strathmore” mark 

  

 28 

 
included among the Assets. At the end of such period, Seller agrees that it will destroy any remaining packaging material containing “Strathmore”
marks, and will repackage any inventory so as to remove any reference to “Strathmore”. 
  

	Section 5.9	Non-Competition 

  
 (a) In consideration of the purchase of the Business by Buyer, Seller agrees that from the Closing Date until three (3) years after the Closing Date,
Seller shall not, and shall cause its affiliates (other than Carter Holt Harvey Limited) not to, within any jurisdiction in which the Business is doing business as of the Closing Date, directly or indirectly own, manage, operate, control or
participate in the ownership, management, operation or control of any business manufacturing or converting premium fine papers of the type manufactured or converted by the Business as of the Closing Date and competitive with that conducted by the
Business as of the Closing Date (a “Competing Business”). 
  
 (b) It is the desire and intent of the parties to this Agreement that the provisions of this Section 5.9 shall be enforced to the fullest extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If any particular provisions or portion of this Section 5.9 shall be adjudicated to be invalid or unenforceable, this Section 5.9 shall be deemed amended to delete therefrom such provision or portion
adjudicated to be invalid or unenforceable, such amendment to apply only with respect to the operation of such section in the particular jurisdiction in which such adjudication is made. 
  
 (c) The parties recognize that the performance of the obligations under this Section 5.9 by Seller is special, unique and
extraordinary in character, and that in the event of the breach by Seller of the terms and conditions of this Section 5.9, Buyer shall be entitled, if it so elects, to obtain damages for any breach of this Section 5.9, or to enforce the specific
performance thereof by Seller or to enjoin Seller from violating the provisions of this Section 5.9. 
  
 (d) From and after the Closing Date, Seller shall not, and shall cause its affiliates not to, for a period of three (3) years after the Closing Date,
knowingly solicit for employment any employee of the Buyer; provided, however, that this Section 5.9(d) shall not preclude Seller or its Affiliates from soliciting for employment or hiring any such employee who (i) responds to a general
solicitation through a public medium or general or mass mailing by or on behalf of Seller or any of its affiliates that is not targeted at employees of Buyer or (ii) contacts Seller or its affiliates directly on such individual’s own
initiative. 
  
 (e) Notwithstanding the foregoing provisions of
this Section 5.9, the following shall not be prohibited by this Section 5.9: (i) the distribution and sale of products by Seller’s xpedx distribution business, even if such products may be competitive with those of the Business; (ii) the
manufacture, distribution and sale of Seller’s Strathmore Premium Opaque line of products, subject to the provisions of Section 5.8(b) hereof; (iii) the acquisition and subsequent ownership by Seller of any business or entity that derives less
than 20% of its revenue from any Competing Business; (iv) the acquisition and subsequent ownership by Seller within two (2) years of the Closing Date of any business or entity that derives between 20% and 50% of its revenue from any Competing
Business, provided that Seller divests such Competing Business within one (1) year of its acquisition; (v) ownership of securities of 10% or less of any class of securities of a public 

  

 29 

 
company; and (vi) conduct of any business relating to digital watermarking, including, without limitation, the use of U.S. Patent No. 6,334,678 in connection
therewith. 
  

	Section 5.10	Supplemental Disclosure 

  
 Seller shall have the right from time to time prior to the Closing to supplement or amend its Disclosure Schedules (other than Schedule 3.7 or 3.8 of the
Disclosure Schedules) with respect to any matter occurring after the date hereof that, if such matter had occurred prior to the date hereof, would have been required to be set forth or described in such Disclosure Schedules. Any such supplemental or
amended disclosure shall be deemed to have cured any breach of any representation or warranty made in this Agreement for purposes of Article VII, but will not be deemed to have cured any such breach made in this Agreement nor to have been disclosed
as of the date of this Agreement for purposes of determining whether or not the conditions set forth in Article VI hereof have been satisfied. 
  
 ARTICLE VI 
 CONDITIONS TO OBLIGATIONS OF THE
PARTIES 
  

	Section 6.1	Conditions to Each Party’s Obligation 

  
 The respective obligation of each party to consummate the transactions contemplated herein is subject to the satisfaction at or prior to the Closing of
the following conditions precedent: 
  
 (a) No statute, rule or
regulation shall have been enacted, entered, promulgated or enforced by any court or any federal or state governmental authority that prohibits or materially restricts the consummation of the transactions contemplated hereby; 
  
 (b) There shall not be in effect any judgment, order, injunction or decree of
any court of competent jurisdiction enjoining the consummation of the transactions contemplated hereby; and 
  
 (c) Any waiting periods applicable to the transactions contemplated by this Agreement under applicable antitrust or trade regulation laws and regulations
shall have expired or been terminated, and all governmental authorizations or approvals required in connection with the transactions contemplated by this Agreement shall have been obtained or given (except such consents, approvals or other actions
that may be required to novate, assign or transfer any contract or agreement with any government or government authority). 
  

	Section 6.2	Conditions to Obligations of Seller 

  
 The obligations of Seller to consummate the transactions contemplated hereby are further subject to the satisfaction (or waiver in writing) at or prior to
the Closing of the following conditions: 
  
 (a) The
representations and warranties of Buyer contained in Article IV of this Agreement shall be true and correct in all material respects at the date hereof and as of the Closing as if made at and as of such time, except for changes permitted or
contemplated hereby and except for representations that are as of a specific date (which representations shall be true and correct in all 

  

 30 

 
material respects as of such date) and except where all such failures would not, in the aggregate, have a material adverse effect on Buyer or its ability to
consummate the transactions contemplated hereby; 
  
 (b) Buyer
shall have performed in all material respects their obligations under this Agreement required to be performed by them at or prior to the Closing pursuant to the terms hereof; 
  
 (c) Buyer shall have delivered to Seller a certificate as to the satisfaction of the conditions set forth in Sections 6.2(a)
and 6.2(b), dated as of the Closing and executed by an officer of Buyer; and 
  
 (d) Buyer shall have delivered to Seller or its affiliates those items set forth in Section 1.6. 
  

	Section 6.3	Conditions to Obligations of Buyer 

  
 The obligations of Buyer to consummate the transactions contemplated hereby are further subject to the satisfaction (or waiver in writing) at or prior to
the Closing of the following conditions: 
  
 (a) The
representations and warranties of Seller contained in Article III of this Agreement shall be true and correct at the date hereof and as of the Closing as if made at and as of such time, except for changes permitted or contemplated hereby and except
for representations that are as of a specific date (which representations shall be true and correct in all material respects as of such date), and except where all such failures would not, in the aggregate, have a Material Adverse Effect;

  
 (b) Seller shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to the Closing pursuant to the terms hereof; 
  
 (c) Seller shall have delivered to Buyer a certificate as to the satisfaction of the conditions contained in Sections 6.3(a) and 6.3(b), dated as of the
Closing and executed by an officer of Seller; 
  
 (d) Seller or
its affiliates shall have delivered to Buyer those items set forth in Section 1.5; 
  
 (e) Buyer shall have received the proceeds of the financings described in the Commitment Letter; provided, however, that this Section 6.3(e) shall be of no force or effect if Buyer does not receive such
proceeds (i) for any reason not stated as a condition in such Commitment Letter or (ii) if the actions or inactions of Buyer results in the failure of Buyer to receive such proceeds; and 
  
 (f) Seller shall have delivered to Buyer the consents set forth on Schedule 6.3(f) of the Disclosure Schedules. 

 
 ARTICLE VII 
 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATIONS 
  

	Section 7.1	Survival of Representations 

  
 Except for the representations and warranties contained in Section 3.17 which shall survive for the time period set forth in Section 7.5, the
representations and warranties contained in Section 3.16 which shall survive until termination of the applicable statute of limitations and the representations and 

  

 31 

 
warranties set forth in Sections 3.1, 3.2, 3.4 and 4.1 which shall survive forever, all representations and warranties made in this Agreement shall survive
the Closing hereunder for a period of eighteen (18) months after the Closing Date (in each case, the “Indemnity Period”). Notwithstanding the foregoing, except as set forth in Section 8.2, no representation or warranty shall survive
any termination of this Agreement. The parties agree that no claims or causes of action may be brought against Seller, Buyer or any of their respective directors, officers, employees, affiliates, controlling persons, agents or representatives based
upon, directly or indirectly, any of the representations and warranties contained in this Agreement after the applicable Indemnity Period or, except as provided in Section 8.2, any termination of this Agreement. For purposes of this Article VII, the
provisions of Section 5.1 shall be treated as a representation and warranty. This Section 7.1 shall not limit any covenant or agreement of the parties that contemplates performance after the Closing. 
  

	Section 7.2	Seller’s Agreement to Indemnify 

  
 (a) Subject to the terms and conditions set forth herein, from and after the Closing, Seller shall indemnify and hold harmless Buyer and its directors,
officers, employees, affiliates, controlling persons, agents and representatives, and their respective successors and assigns (collectively, the “Buyer Indemnitees”), from and against all liability, demands, claims, actions or
causes of action, assessments, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) but expressly excluding indirect, consequential, incidental, special, exemplary or punitive damages
(collectively, the “Buyer Damages”) asserted against or incurred by any Buyer Indemnitee as a result of or arising out of (i) the Excluded Liabilities, (ii) a breach of any representation or warranty contained in Article III of this
Agreement (other than Section 3.17, which is covered by the separate indemnity provisions of Section 7.5, and other than Section 3.19(c), the sole remedy for the breach of which is provided by Section 1.9), without giving effect to any
“materiality” or “Material Adverse Effect” qualification or (iii) a breach of any agreement or covenant of Seller in this Agreement. Buyer agrees that, except as contemplated by the immediately preceding sentence or in the case
of fraud, the indemnification provided in this Section 7.2 is the exclusive remedy for a breach by Seller of any representation or warranty contained in Article III or Section 5.1 of this Agreement. 
  
 (b) Except with respect to the representations and warranties contained in
Section 3.1, 3.2, 3.4, 3.16 and 3.22, Seller’s obligations to indemnify Buyer Indemnitees pursuant to Section 7.2(a) hereof are subject to the following limitations: 
  
 (i) No indemnification shall be made by Seller with respect to any claim made (a) pursuant to Section
7.2(a)(ii) or (iii) unless the amount of such claim exceeds $5,000 and (b) pursuant to Section 7.2(a)(ii) unless the aggregate amount of Buyer Damages under all claims made pursuant to Section 7.2(a)(ii) exceeds $250,000 (the “Basket
Amount”) and, in such event, indemnification shall be made by Seller only to the extent Buyer Damages exceed in the aggregate an amount equal to the Basket Amount; 
  
 (ii) In no event shall Seller’s aggregate obligation to indemnify Buyer Indemnitees pursuant to Section
7.2(a)(ii) or (iii), together with any indemnification paid pursuant to any other provisions of this Agreement (other than Section 7.5), exceed an amount equal to ten million seven hundred fifty thousand dollars ($10,750,000); 
  

 32 

 (iii) The amount of any Buyer Damages shall be reduced by any amount received by a Buyer
Indemnitee with respect thereto under any third party insurance coverage or from any other party alleged to be responsible therefor. If a Buyer Indemnitee makes a claim for indemnification under this Section 7.2, Buyer Indemnitees shall use
commercially reasonable efforts to collect any amounts available under such insurance coverage and from such other party alleged to have responsibility. If a Buyer Indemnitee receives an amount under insurance coverage or from such other party with
respect to Buyer Damages at any time subsequent to any indemnification provided by Seller pursuant to this Section 7.2, then such Buyer Indemnitee shall promptly reimburse Seller for any payment made or expense incurred by Seller in connection with
providing such indemnification up to such amount received by Buyer Indemnitee, but net of any expenses incurred by such Buyer Indemnitee in collecting such amount; and 
  
 (iv) Seller shall be obligated to indemnify Buyer Indemnitees only for those claims giving rise to Buyer
Damages as to which Buyer Indemnitees have given Seller written notice thereof prior to the end of the Indemnity Period, in the event that the Indemnity Period applies to such Buyer Damages. Any written notice delivered by a Buyer Indemnitee to
Seller with respect to Buyer Damages shall set forth, with as much specificity as is reasonably practicable, the basis of the claim for Buyer Damages and, to the extent reasonably practicable, a reasonable estimate of the amount thereof. 

 

	Section 7.3	Buyer’s Agreement to Indemnify 

  
 (a) Subject to the terms and conditions set forth herein, from and after the Closing, Buyer shall indemnify and hold harmless the Seller Indemnitees, from
and against all liability, demands, claims, actions or causes of action, assessments, losses, damages, costs and expenses (including, without limitation, reasonable attorneys’ fees and expenses) but expressly excluding indirect, consequential,
incidental, special, exemplary or punitive damages (collectively, the “Seller Damages”) asserted against or incurred by any Seller Indemnitee as a result of or arising out of (i) the Assumed Liabilities, (ii) a breach of any
representation or warranty contained in Article IV of this Agreement, (iii) a breach of any agreement or covenant of Buyer contained herein or (iv) the use, operation or ownership of any of the Assets after Closing. Seller agrees that the
indemnification provided in this Section 7.3 is the exclusive remedy for a breach by Buyer of any representation or warranty contained in Article IV of this Agreement. 
  
 (b) Except with respect to the representations and warranties contained in Sections 4.1 and 4.7, Buyer’s obligations to
indemnify Seller Indemnitees pursuant to Section 7.3(a) hereof are subject to the following limitations: 
  
 (i) No indemnification shall be made by Buyer with respect to any claim made (a) pursuant to Section 7.3(a)(ii) or (iii) unless the amount
of such claim exceeds $5,000 and (b) pursuant to Section 7.3(a)(ii) unless the aggregate amount of Seller Damages under all claims made pursuant to Section 7.3(a)(ii) exceeds the Basket Amount and, in such event, indemnification shall be made by
Buyer only to the extent Seller Damages exceed in the aggregate an amount equal to the Basket Amount; 
  

 33 

 (ii) In no event shall Buyer’s aggregate obligation to indemnify Seller Indemnitees
pursuant to Section 7.3(a)(ii) and (iii), together with any indemnification paid pursuant to any other provisions of this Agreement, exceed an amount equal to ten million seven hundred fifty thousand dollars ($10,750,000); provided, however,
that the foregoing shall not apply to any claim made under Section 7.3(a)(iii) relating to any failure by Buyer to pay any portion of the Purchase Price in accordance with the terms hereof; 
  
 (iii) The amount of any Seller Damages shall be reduced by
any amount received by a Seller Indemnitee with respect thereto under any third party insurance coverage or from any other party alleged to be responsible therefor. If a Seller Indemnitee makes a claim for indemnification under this Section 7.3,
Seller Indemnitees shall use commercially reasonable efforts to collect any amounts available under such insurance coverage and from such other party alleged to have responsibility. If a Seller Indemnitee receives an amount under insurance coverage
or from such other party with respect to Seller Damages at any time subsequent to any indemnification provided by Buyer pursuant to this Section 7.3, then such Seller Indemnitee shall promptly reimburse Buyer for any payment made or expense incurred
by Buyer in connection with providing such indemnification up to such amount received by the Seller Indemnitee, but net of any expenses incurred by such Seller Indemnitee in collecting such amount; and 
  
 (iv) Buyer shall be obligated to indemnify the Seller
Indemnitees only for those claims giving rise to Seller Damages as to which the Seller Indemnitees have given Buyer written notice thereof prior to the end of the Indemnity Period, in the event that the Indemnity Period applies to such Seller
Damages. Any written notice delivered by a Seller Indemnitee to Buyer with respect to Seller Damages shall set forth, with as much specificity as is reasonably practicable, the basis of the claim for Seller Damages and, to the extent reasonably
practicable, a reasonable estimate of the amount thereof. 
  

	Section 7.4	Third Party Indemnification 

  
 The obligations of any indemnifying party to indemnify any indemnified party under this Article VII with respect to Buyer Damages or Seller Damages, as
the case may be, resulting from the assertion of liability by third parties (a “Claim”), will be subject to the following terms and conditions: 
  

(a) Any party against whom any Claim is asserted will give the party required to provide indemnity hereunder written notice of any such Claim promptly
after learning of such Claim, and the indemnifying party may at its option undertake the defense thereof by representatives of its own choosing. Failure to give prompt notice of a Claim hereunder shall not affect the indemnifying party’s
obligations under this Article VII, except to the extent that the indemnifying party is actually prejudiced by such failure to give prompt notice. If the indemnifying party, within thirty (30) days after notice of any such Claim, fails to assume the
defense of such Claim, the indemnified party against whom such claim has been made will (upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such claim on behalf of and for the account
and risk, and at the expense, of the indemnifying party, subject to the right of the indemnifying party to assume the defense of such Claim at any time prior to settlement, compromise or final determination thereof; provided, however,
that (i) the indemnifying party shall permit the indemnified party to participate in 

  

 34 

 
such defense, compromise or settlement through counsel chosen by such indemnified party, provided that the fees and expenses of such counsel shall be borne
by such indemnified party and (ii) the indemnifying party shall be entitled to assume the defense of such action only to the extent the indemnifying party acknowledges its indemnity obligation; and, provided further, that the
indemnifying party shall not be entitled to assume control of such defense, compromise or settlement and shall pay the fees and expenses of counsel retained by the indemnified party if (A) the claim for indemnification relates to or arises in
connection with any criminal proceeding, action, indictment, allegation or investigation; (B) the claim seeks an injunction or equitable relief against the indemnified party; (C) the indemnified party has been advised in writing by counsel that a
reasonable likelihood exists of a conflict of interest between the indemnifying party and the indemnified party; or (E) upon petition by the indemnified party, the appropriate court rules that the indemnifying party failed or is failing to
vigorously prosecute or defend such claim. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event it shall waive any right to indemnity therefor by the
indemnifying party for such claim unless the indemnifying party shall have consented to such payment or settlement. 
  
 (b) Anything in this Section 7.4 to the contrary notwithstanding, the indemnifying party shall not enter into any settlement or compromise of any action,
suit or proceeding or consent to the entry of any judgment without the prior written consent of the indemnified party, which consent shall not be unreasonably withheld, conditioned or delayed, unless such settlement, compromise or consent provides
for (i) a remedy consisting solely of monetary damages to be borne exclusively by the indemnifying party, and (ii) an unconditional release of the indemnified party in respect of claims underlying such settlement, compromise or consent. 

 

	Section 7.5	Environmental Indemnity 

  
 (a) Seller shall indemnify, defend and hold harmless Buyer Indemnitees from and against any Buyer Damages incurred or suffered by Buyer Indemnitees (i) as
a result of or arising out of a breach of any representation or warranty set forth in Section 3.17 (without regard to any qualifications therein as to “materiality” or “Material Adverse Effect”); (ii) as a consequence of any
investigation, remediation or containment of Hazardous Substances that are present or released on or before the Closing at, on, under or about any of the Owned Real Property or any Leased Real Property; (iii) in connection with claims or proceedings
by employees and/or third parties in respect of personal injury or property damage as a result of Hazardous Substances that were present or released, on or before the Closing, at, on, under or migrating from, any of the Owned Real Property or Leased
Real Property; (iv) in connection with violations by Seller (in respect of the Business) of any applicable Environmental Law (including any permits, licenses or other authorizations issued pursuant to such applicable Environmental Law) prior to the
Closing; and (v) as a consequence of any off-site disposal of any Hazardous Substance by Seller in the conduct of the Business. 
  
 (b) Seller’s obligation to indemnify, defend and hold harmless Buyer Indemnitees for the matters addressed in Section 7.5(a) shall be limited to
those matters as to which Buyer provides Seller with written notice (such notice to be in conformance with other relevant provisions of this Agreement and to contain, to the extent available, reasonable details of the claim for which indemnity is
sought) within two (2) years after Closing, except that, solely with respect to Buyer Damages suffered as a result of the disposal or arrangement for disposal of any Hazardous Substances by Seller or the Business prior to the Closing Date at
locations other than the Owned Real Property or the Leased Real 

  

 35 

 
Property, Buyer may provide notice of such claim at any time prior to sixty (60) days following the expiration of any applicable statute of limitations.

  
 (c) With respect to claims to defend, indemnify and hold
harmless Buyer Indemnitees that are described by Section 7.5(a), to the extent such claims involve the containment or remediation of Hazardous Substances at the Owned Real Property or the Leased Real Property: 
  
 (i) Seller shall only be required to defend, indemnify and
hold harmless Buyer Indemnitees to the extent that: (A) investigation, containment or remediation of the Hazardous Substances is required pursuant to an applicable Environmental Law that is in effect as of and is enforceable as of the Closing; (B)
the Remediation Standards that must be met in order to satisfy the requirements of the applicable Environmental Law (1) are no more stringent than the Remediation Standards that were in effect as of and were enforceable as of the Closing Date under
the applicable Environmental Law that is the source of the obligation to conduct a remediation, or, where no such Remediation Standards had been promulgated and were enforceable as of the Closing Date, Remediation Standards that were applied, within
one (1) year prior to the Closing Date, on a case-by-case basis, to properties that are most similar to the property that is subject to a remediation and (2) are those Remediation Standards that would be the least stringent Remediation Standards,
taking into account that the normal operating condition at the affected facility shall be maintained at all times, that would be applicable given the use of the property as of the day before the Closing Date; and (C) such investigation, containment
and/or remediation is conducted using reasonably cost effective methods, taking into account that the normal operating condition at the affected facility shall be maintained at all times, for investigation, remediation and/or containment consistent
with applicable Environmental Law. To the extent that the Buyer Damages incurred in connection with an investigation, containment or remediation are in excess of the Buyer Damages that would be incurred for an investigation, containment or
remediation meeting the conditions set forth in this Section 7.5(c), Seller shall have no obligation to indemnify any Buyer Indemnitees for such excess Buyer Damages. If Seller is undertaking remedial action, Seller shall not be responsible for any
effect the remediation has upon the business or operations of Buyer (including, without limitation, business interruptions or lost profits). 
  
 (ii) If the costs of an investigation, containment or remediation at any of the Owned Real Property or Leased Real Property that is
subject to an indemnity by Seller hereunder are increased due to an act or omission (after the Closing) by a person other than Seller, a subsidiary of Seller, or an agent, representative or contractor of Seller, Seller shall not be responsible for
any such increase in costs incurred. Seller shall not be responsible for any increased costs or increased Buyer Damages under this subsection to the extent they arise by reason of (i) the voluntary closure of operations at any Owned Real Property or
Leased Real Property or (ii) a material change in use of any of such property from the use of such property as of the Closing. 
  
 (iii) No indemnification shall be made by Seller with respect to any claim unless the amount of such claim exceeds $25,000; in such event,
indemnification shall be made by Seller for the full amount of such claim. 
  

 36 

 (iv) In no event shall Seller’s aggregate obligation to indemnify Buyer Indemnitees
pursuant to Section 7.5(a), together with any indemnification paid pursuant to any other provisions of this Agreement, exceed an amount equal to 50% of the Purchase Price. 
  
 (d) Notwithstanding any other provision of this Agreement, if a Buyer Indemnitee has a claim pursuant to Section 7.5(a)(iv)
of this Agreement, Seller shall be obligated to indemnify, defend and hold harmless said Buyer Indemnitee with respect to any claims for fines or penalties arising out of said noncompliance and costs or Buyer Damages arising out of any expenditures
made or actions taken by said Buyer Indemnitee after the Closing to achieve or maintain compliance with applicable Environmental Laws at any Owned Real Property or Leased Real Property, but only to the extent that such expenditures or actions do not
exceed $1,500,000 in the aggregate. The foregoing sentence shall not be interpreted to preclude Buyer Indemnitees from defense and indemnification with respect to the investigation and remediation of Hazardous Substances that are present, on or
before the Closing, in any environmental media at, on, under or migrating from, Owned Real Property or Leased Real Property, as otherwise authorized pursuant to this Agreement. 
  
 (e) Notwithstanding anything to the contrary herein, with respect to claims arising pursuant to Section 7.5, Seller shall
not be obligated to indemnify Buyer Indemnitees for the costs and expenses associated with Buyer Indemnitees’ overseeing of Seller’s performance of its defense and indemnity obligations, including, but not limited to, the costs and
expenses of overseeing of Seller’s legal counsel, consultants, or employees, and Seller shall not be obligated to indemnify Buyer Indemnitees for any costs or expenses of Buyer Indemnitees for management and employee time costs. 
  
 (f) To the extent that Buyer Indemnitees make a claim, pursuant to Section
7.2, for breach of the representation set forth in Section 3.17, the provisions of this Section 7.5 shall apply exclusively to such claim. 
  
 (g) Claims brought pursuant to this Section 7.5 that constitute “Claims” as defined in Section 7.4, shall be subject to the procedures for
indemnification set forth in Section 7.4 if such claims are third party claims. Claims that involve or also involve the investigation, containment and/or remediation of Hazardous Substances at the Owned Real Property or Leased Real Property shall
also be subject to the procedures of Section 7.6. 
  
 (h) For
purposes of this Agreement, the term “Remediation Standard” means a numerical standard (whether resulting from an enacted statute, promulgated regulation, guidance or policy document issued by a regulatory agency, or developed on a
case-by-case basis through a risk assessment or other methodology authorized pursuant to an applicable Environmental Law and acceptable to the applicable governmental authority), that defines the concentrations of Hazardous Substances that may be
permitted to remain in any environmental media after an investigation, remediation or containment of a release of Hazardous Substances. 
  

	Section 7.6	Additional Procedures for Remedial Actions on the Owned Real Property or Leased Real Property 

  
 (a) Seller shall have the right to control the management of an investigation, containment or remediation of Hazardous
Substances at any Owned Real Property or Leased Real Property that is 

  

 37 

 
subject to indemnification pursuant to this Agreement. Buyer hereby grants Seller reasonable continued access to any Owned Real Property or Leased Real
Property consistent with such right to control the management of an investigation, containment or remediation. Seller must notify Buyer, within forty-five (45) days of receipt of notice of Buyer’s claim for indemnification for such matter, that
(i) it intends to undertake such responsibility or (ii) more information is needed from Buyer before Seller can reasonably determine that Buyer’s claim is subject to indemnification pursuant to this Agreement. Buyer shall promptly respond to
such requests for information (to the extent such information is reasonably available to Buyer) and, within thirty (30) days of receipt of such information, Seller shall notify Buyer as to whether it shall undertake the investigation, containment
and/or remediation. Prior to a determination by Seller that it will undertake investigation, containment and/or remediation pursuant to this Section 7.6, Buyer shall take only those actions necessary to comply with applicable Environmental Laws and
the requirements of governmental authorities or address conditions that pose an immediate and acute environmental or health risk. 
  
 (b) In undertaking an investigation, containment and/or remediation pursuant to this Section 7.6, Seller shall retain a qualified independent
environmental consultant, which consultant shall be subject to Buyer’s approval (such approval not to be unreasonably withheld, conditioned or delayed). Seller shall undertake such investigation, containment and/or remediation in a prompt and
expeditious fashion in accordance with applicable Environmental Laws and shall not cause, through its own inaction, any undue delay in obtaining written notice from the appropriate regulatory body that no further investigation, containment or
remediation is necessary with respect to the matter that is the subject of the indemnification claim, or, if no regulatory body is involved in such matter, a good faith determination from its independent environmental consultant that no further
investigation, containment or remediation is required to bring the property that is the subject of the remedial action into conformance with applicable Environmental Laws. Seller shall comply with all applicable laws, including all applicable
Environmental Laws, with respect to its performance pursuant to this Section 7.6. In the event that Seller undertakes the performance of an investigation, containment and/or remediation pursuant to this Section 7.6, Seller shall have primary
responsibility to interact and negotiate with any governmental authorities having jurisdiction over such investigation, containment and/or remediation. Seller shall promptly provide copies to Buyer of all notices, correspondence, draft reports,
submissions, work plans, and final reports and shall give Buyer a reasonable opportunity (at Buyer’s own expense) to comment on any submissions Seller intends to deliver or submit to the appropriate regulatory body prior to such submission.
Buyer may, at its own expense, hire its own consultants, attorneys or other professionals to monitor the investigation, containment and/or remediation, including any field work undertaken by Seller, and Seller shall provide Buyer with copies of the
results of all such field work. Notwithstanding the above, Buyer shall not take any actions that shall unreasonably interfere with Seller’s performance of the investigation, remediation and/or containment. Seller shall undertake any such work
required herein in a manner designed to minimize any disruption, to the extent reasonably possible, with the conduct of operations at the applicable property. Buyer shall allow Seller reasonable access to conduct any of the work contemplated herein
and shall fully cooperate with Seller in the performance of the investigation, remediation or containment, including, but not limited to, providing Seller with reasonable access to employees and documents as Seller reasonably deems necessary.

  
 (c) If Seller declines to undertake the performance of an
investigation, containment and/or remediation hereunder, Buyer shall be entitled to control the investigation, containment and/or remediation. Buyer shall promptly provide copies to Seller of all notices, correspondence, draft reports, 

  

 38 

 
submissions, work plans, and final reports and shall give Seller a reasonable opportunity (at Seller’s own expense) to comment on any submissions Buyer
intends to deliver or submit to the appropriate regulatory body prior to such submission. Seller may, at its own expense, hire its own consultants, attorneys or other professionals to monitor the investigation containment and/or remediation,
including any field work undertaken by Buyer, and Buyer shall provide Seller with copies of the results of all such field work. Notwithstanding the above, Seller shall not take any actions that shall unreasonably interfere with Buyer’s
performance of the investigation, containment and/or remediation. Seller’s decision to allow Buyer to undertake any such investigation, containment and/or remediation hereunder shall not limit or affect Seller’s obligation to indemnify
Buyer for such investigation, containment and/or remediation as otherwise provided in this Agreement. 
  

	Section 7.7	Exclusive Remedy for Environmental Matters; Indemnification by Buyer 

  

Notwithstanding anything to the contrary in this Agreement, Buyer Indemnitees hereby agree that their sole and exclusive remedy against Seller, with
respect to any and all matters arising under or related to Environmental Law or Hazardous Substances and with respect to the Business, the Owned Real Property or the Leased Real Property, shall be the indemnity set forth in Section 7.5. Except with
respect to the remedy referred to in the preceding sentence, the Buyer Indemnitees hereby waive, to the fullest extent permitted under applicable law, and forever release Seller (with respect to the Business), the Owned Real Property or the Leased
Real Property from, any and all Claims or Seller Damages arising under Environmental Laws or relating to Hazardous Substances or the environment. 
  

	Section 7.8	Certain Tax Matters 

  
 (a) Tax Indemnification. 
  
 (i) Notwithstanding anything in this Agreement to the contrary, Seller shall indemnify and hold harmless the Buyer Indemnities from and
against any liability for Taxes (other than Buyer’s share of Transfer Taxes pursuant to Section 1.10) relating to the Assets attributable to any Pre-Closing Tax Period. 
  
 (ii) Buyer shall indemnify and hold harmless the Seller Indemnities from and against any liability for Taxes
(other than Seller’s share of Transfer Taxes pursuant to Section 1.10) relating to the Assets attributable to any taxable period that is not a Pre-Closing Tax Period. 
  
 (iii) To the extent that an indemnification obligation pursuant to this Section 7.8 may overlap with any
other indemnification obligation pursuant to this Article VII, the provisions of this Section 7.8 shall govern and control. 
  
 (iv) The parties hereto agree that any payments made pursuant to the indemnification provisions hereof are intended to be deemed to be an
adjustment to the Purchase Price; provided, however, that to the extent that any taxing authority successfully characterizes, in a final determination, that any indemnification payments shall be deemed to be income to the party
receiving such payments, then the party making such payments shall pay an additional amount to the party receiving such payments to cover appropriate Taxes thereon. 
  

 39 

 (b) Survival of Tax Provisions. Any claim to be made pursuant to this Section 7.8 must be made
before the expiration (with valid extensions) of the applicable statutes of limitations related to the Taxes at issue plus sixty (60) days. Notwithstanding any provision to the contrary, the representations and warranties contained in Section 3.16
shall survive until sixty (60) days after the expiration of the applicable statute of limitations. 
  
 ARTICLE VIII 
 TERMINATION, AMENDMENT AND WAIVER 
  

	Section 8.1	Termination of Agreement 

  
 This Agreement may be terminated: 
  
 (a) At any time prior to the Closing, by Buyer, if there has been a material violation or breach by Seller of any of the covenants, representations or
warranties contained in this Agreement that has not been waived in writing and remains uncured thirty (30) days after notice thereof by Buyer to Seller, or if there has been a material failure of satisfaction of a condition to the obligations of
Buyer hereunder that has not been waived in writing; 
  
 (b) At
any time prior to the Closing, by Seller, if there has been a material violation or breach by Buyer of any of the covenants, representations or warranties contained in this Agreement that has not been waived in writing and remains uncured thirty
(30) days after notice thereof by Seller to Buyer, or if there has been a material failure of satisfaction of a condition to the obligations of Seller hereunder that has not been waived in writing; 
  
 (c) At any time prior to the Closing, by mutual written agreement of Seller
and Buyer; or 
  
 (d) By either party hereto, if the Closing shall
not have occurred on or before May 2, 2005. 
  

	Section 8.2	Effect of Termination 

  
 In the event of termination of this Agreement by Buyer or Seller as provided above in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability on the part of Buyer or Seller (or their respective officers or directors), except (a) based upon obligations set forth in Section 9.1 hereof, and (b) that (i) Buyer shall thereupon promptly return or destroy (and cause its
agents and representatives to return or destroy) to Seller all documents (and copies thereof) furnished to Buyer by Seller, and (ii) Buyer shall continue to adhere to the Confidentiality Agreement. Notwithstanding the foregoing, termination of this
Agreement pursuant to Section 8.1(a) or (b) shall not in any way limit or restrict the rights and remedies of any party hereto against any other party hereto that has violated or breached any of the representations, warranties, agreements or other
provisions of this Agreement prior to termination hereof. 
  

	Section 8.3	Amendment, Extension and Waiver 

  
 At any time prior to the Closing Date, the parties hereto may (a) amend this Agreement, (b) extend the time for the performance of any of the obligations
or other acts of the parties hereto, (c) waive any inaccuracies in the representations and warranties contained herein or in any document 

  

 40 

 
delivered pursuant hereto and/or (d) waive compliance with any of the agreements or conditions contained herein. This Agreement may not be amended, except by
an instrument in writing signed on behalf of all of the parties hereto. Any agreement on the part of a party hereto to any extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. 

 
 ARTICLE IX 
 MISCELLANEOUS 
  

	Section 9.1	Fees and Expenses 

  
 Whether or not the transactions contemplated herein are consummated pursuant hereto, except as otherwise provided herein, each of Seller, on the one hand,
and Buyer, on the other hand, shall pay all fees and expenses incurred by, or on behalf of, such party in connection with, or in anticipation of, this Agreement and the consummation of the transactions contemplated hereby. Each of Seller, on the one
hand, and Buyer, on the other hand, shall indemnify and hold harmless the other party from and against any and all claims or liabilities for financial advisory and finders’ fees incurred by reason of any action taken by such party or otherwise
arising out of the transactions contemplated by this Agreement by any person claiming to have been engaged by such party. 
  

	Section 9.2	Further Assurances 

  
 From time to time after the Closing Date, at the request of the other party hereto and at the expense of the party so requesting, each of the parties
hereto shall execute and deliver to such requesting party such documents and take such other action as such requesting party may reasonably request in order to consummate more effectively the transactions contemplated hereby. 
  

	Section 9.3	Counterparts 

  
 This Agreement may be executed simultaneously in counterparts, each of which will be deemed an original but all of which together will constitute one and
the same instrument. 
  

	Section 9.4	Notices 

  
 All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and may be
given by any of the following methods: (a) personal delivery; (b) registered or certified U.S. mail, postage prepaid, return receipt requested; (c) confirmed facsimile transmission; or (d) nationally recognized overnight delivery service. Notices
shall be sent to the appropriate party at its address given below (or at such other address or facsimile number for such party as shall be specified by notice given hereunder): 
  

	 	(a)	If to Seller to: 

  
 International Paper Company 
 400
Atlantic Street 
 Stamford, Connecticut 06921 
 Fax No.: (203) 541-8222 
 Attention: General Counsel 
  

 41 

 with a copy to: 
  

Wiggin and Dana LLP 
 400 Atlantic Street

 Stamford, Connecticut 06901 
 Fax No.: (203) 363-7676 
 Attention: William A. Perrone, Esq. 
  

	 	(b)	If to Buyer to: 

  
 Mohawk Paper Mills, Inc. 
 465
Saratoga Street 
 Cohoes, NY 12047 
 Fax No.: (518) 237-7394 
 Attention: Thomas D. O’Connor, Jr. 
  
 with a copy to: 
  
 White & Case LLP 
 1155 Avenue of the
Americas 
 New York, NY 10036 
 Fax No.: (212) 354-8113 
 Attention: Anthony F. Kahn, Esq. 
  
 All such notices, requests, demands, waivers and communications shall be deemed received (i) in the case of personal or
facsimile delivery, upon actual receipt thereof by the addressee, (ii) in the case of overnight delivery, on the business day following delivery to the overnight delivery service, or (iii) in the case of U.S. mail, upon receipt of the return
receipt. 
  

	Section 9.5	Severability 

  
 Should any provision of this Agreement for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability
of any of the other provisions of this Agreement, which remaining provisions shall remain in full force and effect and the application of such invalid or unenforceable provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall be valid and enforced to the fullest extent permitted by law so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party hereto.

  

	Section 9.6	Binding Effect; Assignment 

  
 This Agreement and all of the provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, including, without limitation, by operation of law, by any party hereto without the prior written
consent of the other parties hereto; provided, however, that Buyer may assign its rights, but not its obligations, hereunder to the Financing Source for itself and as agent for the other secured parties 

  

 42 

 
pursuant to Buyer’s primary senior secured credit facility or, at any time thereafter, to the creditors party to Buyer’s primary senior secured
credit facility. 
  

	Section 9.7	No Third Party Beneficiaries 

  
 Except as provided in Section 9.6 and Article VII, this Agreement is solely for the benefit of Seller, and its successors and permitted assigns, with
respect to the obligations of Buyer under this Agreement, and for the benefit of Buyer and its successors and permitted assigns, with respect to the obligations of Seller under this Agreement, and this Agreement shall not be deemed to confer upon or
give to any other third party (including, without limitation, any employees of the Business) any remedy, claim, liability, reimbursement, cause of action or other right. 
  

	Section 9.8	Interpretation 

  
 (a) The article and section headings and the table of contents contained in this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or interpretation of this Agreement. 
  
 (b) As used in this Agreement, the term “person” shall mean and include an individual, a partnership, a limited liability company, a
joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof or any other entity. 
  
 (c) As used in this Agreement, an “affiliate” of, or a person “affiliated” with, a specified person, is a person that
directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. 
  

	Section 9.9	Jurisdiction and Consent to Service 

  
 Each of Seller and Buyer (a) agree that any suit, action or proceeding arising out of or relating to this Agreement shall be brought solely in a federal
or state court located in the State of New York; (b) consents to the exclusive jurisdiction of each such court in any suit, action or proceeding relating to or arising out of this Agreement; (c) waives any objection that it may have to the laying of
venue in any such suit, action or proceeding in any such court; and (d) agrees that service of any court paper may be made in such manner as may be provided under applicable laws or court rules governing service of process. 
  

	Section 9.10	Entire Agreement 

  
 (a) This Agreement, the Confidentiality Agreement and the Disclosure Schedules and the exhibits, ancillary agreements and other writings referred to
herein or delivered pursuant hereto that form a part hereof constitute the entire agreement among the parties with respect to their subject matter and supersede all other prior agreements and understandings, both written and oral, between the
parties or any of them with respect to their subject matter (including any proposal letter, letter of intent or memorandum of understanding). 
  
 (b) Except (i) as specifically provided for herein or the Transition Services Agreement or (ii) as otherwise agreed to in writing by Seller and Buyer, at
the Closing, all data processing, accounting, insurance, banking, human resources, legal, communications and other products or services provided to 

  

 43 

 
the Business by Seller or any of its affiliates, including any agreements or understandings (written or oral) with respect thereto, will terminate.

  

	Section 9.11	Law Governing 

  
 This Agreement will be governed by, and construed and enforced in accordance with, the laws of the State of New York (regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws thereof) as to all matters, including but not limited to matters of validity, construction, effect, performance and remedies. 
  
 {Remainder of page intentionally left blank} 
  

 44 

 IN WITNESS WHEREOF, each party hereto has caused this Agreement to be executed by its duly authorized
officer as of the date first above written. 
  

			
	 INTERNATIONAL PAPER COMPANY

	
	By: C. Cato Ealy, Senior Vice-President, Corporate Development
		
	By:	 	/s/    TRACY EVANS        
	 Name:
	 	Tracy Evans
	 Title:
	 	Attorney-in-fact
	
	 MOHAWK PAPER MILLS, INC.

		
	By:	 	/s/    THOMAS D. O’CONNOR,
JR.        
	 Name:
	 	Thomas D. O’Connor, Jr.
	 Title:
	 	Chairman and Chief Executive Officer

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