Document:

Securities Purchase Agreement (as corrected)

 Exhibit 10.19 
 SECURITIES PURCHASE AGREEMENT 
 This Securities Purchase Agreement (this
“Agreement”) is dated as of August 13, 2007, between Active Power, Inc., a Delaware corporation (the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and
assigns, a “Purchaser” and collectively the “Purchasers”). 
 WHEREAS, subject to the terms and conditions
set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully described in this Agreement. 
 NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: 
 ARTICLE I. 
 DEFINITIONS 
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1: 
 “Action” shall have the meaning ascribed to such term in
Section 3.1(j). 
 “Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. 
 “Board of Directors” means the board of directors of the Company. 
 “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law
or other governmental action to close. 
 “Closing” means the closing of the purchase and sale of the Shares
pursuant to Section 2.1. 
 “Closing Date” means the Trading Day when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Shares have been
satisfied or waived. 
 “Commission” means the Securities and Exchange Commission. 
  

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 “Common Stock” means the common stock of the Company, par value $0.001
per share, together with the associated Rights, and any other class of securities into which such securities may hereafter be reclassified or changed into. 
 “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock. 
 “Company Counsel” means Andrews Kurth LLP, with offices located at 111 Congress Avenue, Suite 1700, Austin, TX 78701.

 “Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 “Effective Date” means the date that the initial Registration Statement filed by the Company pursuant to
the Registration Rights Agreement is first declared effective by the Commission. 
 “Evaluation Date” shall
have the meaning ascribed to such term in Section 3.1(r). 
 “Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
 “Exempt Issuance” means
the issuance of (a) shares of Common Stock or options to employees, officers, directors of the Company or others providing services to the Company pursuant to the Company’s 2000 Stock Incentive Plan, as amended (the “Stock Incentive
Plan”), or pursuant to any stock or option plan or agreement duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established
for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of such securities, and (c) securities issued pursuant to acquisitions or
strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person which is, itself or through its subsidiaries, and in good faith judgment of the Board of
Directors, an operating company in a business synergistic with the business of the Company and in which the Company receives benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities. 
 “FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002. 
  

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 “GAAP” shall have the meaning ascribed to such term in
Section 3.1(h). 
 “Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 “Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c). 
 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other
restriction. 
 “Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b). 
 “Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m). 
 “Per Share Purchase Price” equals $1.40, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. 
 “Permitted Lien” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance
with GAAP; (ii) any statutory Lien arising in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent; (iii) any minor imperfection of title or similar Lien which individually or in
the aggregate with other such Liens does not materially impair the value of the property subject to such Lien or the use of such property in the conduct of the Company’s business; and (iv) a security interest in all the Company’s
properties’ assets given in favor of Silicon Valley Bank. 
 “Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal
investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
 “Purchaser
Party” shall have the meaning ascribed to such term in Section 4.8. 
 “Registration Rights
Agreement” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit A attached hereto. 
  

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 “Registration Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares. 
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). 
 “Rights” shall mean the Company’s preferred share purchase rights pursuant to that certain Rights Agreement dated December 13, 2001, as amended or restated from time to time. 
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
 “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h). 
 “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 
 “Shares” means the shares of Common Stock issued or issuable to each Purchaser pursuant to this Agreement. 
 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares
of Common Stock). 
 “Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for
Shares purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds. 
 “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a), and shall, where applicable,
include any subsidiary of the Company formed or acquired after the date hereof. 
 “Trading Day” means a day
on which the New York Stock Exchange is open for trading. 
 “Trading Market” means the following markets or
exchanges on which the Common Stock is listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, or the New York Stock Exchange.

 “Transaction Documents” means this Agreement, the Registration Rights Agreement and any other documents or
agreements executed in connection with the transactions contemplated hereunder. 
  

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 “Transfer Agent”
means American Stock Transfer & Trust Company, the current transfer agent of the Company, with a mailing address of 6201 15th Avenue, 3rd Floor, Brooklyn, NY 11219 and a facsimile number of 718-921-8327, and any successor transfer agent of the Company. 
 ARTICLE II. 
 PURCHASE AND SALE 
 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate number of 10,000,000 of Shares (equal to $14,000,000.00 divided by the Per Share
Purchase Price), in the individual amounts specified on each Purchaser’s signature page. Each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to its Subscription Amount and the
Company shall deliver to each Purchaser its respective Shares, and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS or such other location as the parties shall mutually agree. 
 2.2
Deliveries. 
 (a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each
Purchaser the following: 
 (i) this Agreement duly executed by the Company; 
 (ii) a legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto; 
 (iii) a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, a
certificate evidencing a number of Shares equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase Price, registered in the name of such Purchaser; 
 (iv) the Registration Rights Agreement duly executed by the Company; 
 (v) copies of good standing certificates for the Company as of a recent date and certificates of qualification as a foreign corporation
for the Company in the State of Texas as of a recent date; and 
 (vi) a certificate from the Company’s transfer agent as
of a recent date certifying the number of shares of Common Stock outstanding. 
 (b) On or prior to the Closing Date, each
Purchaser shall deliver or cause to be delivered to the Company the following: 
 (i) this Agreement duly executed by such
Purchaser; 
  

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 (ii) such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company; and 
 (iii) the Registration Rights Agreement duly executed by such Purchaser.

 2.3 Closing Conditions. 
 (a) The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met: 
 (i) the accuracy when made and on the Closing Date of the representations and warranties of the Purchasers contained herein; 

(ii) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have
been performed; and 
 (iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 (b) The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following
conditions being met: 
 (i) the accuracy when made and on the Closing Date of the representations and warranties of the
Company contained herein; 
 (ii) all obligations, covenants and agreements of the Company required to be performed at or
prior to the Closing Date shall have been performed; 
 (iii) the delivery by the Company of the items set forth in
Section 2.2(a) of this Agreement; 
 (iv) there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and 
 (v) from the date hereof to the Closing Date, trading in the Common Stock shall not have been
suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the Closing), and, at any time prior to the
Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading
Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase the Shares at the Closing. 
  

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 ARTICLE III. 
 REPRESENTATIONS AND WARRANTIES 
 3.1 Representations and Warranties of the Company. Except as set
forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties to each Purchaser: 
 (a)
Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a) of the Disclosure Schedules. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each
Subsidiary free and clear of any Liens other than Permitted Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. If the Company has no subsidiaries, then all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded. 
 (b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business, or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to
perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. 
 (c)
Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder
and thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and 

  

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thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with
the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Shares and the consummation by the Company of the other transactions contemplated hereby and thereby
do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or
constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which
the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents,
other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement, (iii) application(s) to each applicable Trading Market for the listing of the Shares
for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required
Approvals”). 
  

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 (f) Issuance of the Shares. The Shares are duly authorized and, when issued and
paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction
Documents. 
 (g) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g) of the
Disclosure Schedules, which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. The Company has not issued any capital stock since its
most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options or issuance of restricted stock under the Company’s Stock Incentive Plan and pursuant to the conversion or exercise of
Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Shares, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which
the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Shares will not obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Shares. Other than that certain Second Amended and Restated Investors’ Right
dated November 23, 1999 (filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-1 with respect to its initial public offering), there are no stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. 
 (h) SEC Reports; Financial Statements. Other than the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2006 (the “2006 10-K”), which was not timely filed, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. Except to the extent corrected by subsequent SEC Reports or amendments to 

  

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a prior SEC Report, including the restatement of certain prior year financial information as set forth in the 2006 10-K, as of their respective dates, the
SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. As corrected and restated in the 2006 10-K, the financial statements of the
Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. As corrected and restated by the
2006 10-K, such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise
specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its
consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. 
 (i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed except as disclosed on Schedule 3.1(i) hereto, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company
has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance
of the Shares contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that
this representation is made. 
 (j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory
authority 

  

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(federal, state, county, local or foreign) (collectively, an “Action”) not already disclosed in the SEC Reports which (i) adversely
affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Shares or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.
Except as disclosed in the SEC Reports, there has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 
 (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company which could reasonably be expected to result in a Material Adverse Effect. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer
does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating
to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 (l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that
it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws
applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect. 
 (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. 
  

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 (n) Title to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for
Permitted Liens. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance. 
 (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,
trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or
otherwise) that any of the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. 
 (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of
the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than for (i) payment of salary or consulting fees
for services rendered, (ii) reimbursement for expenses incurred on behalf 

  

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of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company or the issuance of Common
Stock under the Company’s employee stock purchase plan. 
 (r) Sarbanes-Oxley; Internal Accounting Controls. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed
periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of
the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the
Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. 
 (s) Certain Fees. Except for fees payable to RBC Capital Markets, no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf
of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. 
 (t) Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the Shares by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Shares hereunder does not contravene the rules and regulations of the
Trading Market. 
 (u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after
receipt of payment for the Shares, will not be or be an Affiliate of, an 

  

 13 

 
“investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act of 1940, as amended. 
 (v) Registration Rights. Other
than each of the Purchasers, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company. 
 (w) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. 
 (x) Application of Takeover Protections. The Company and the Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Shares and the Purchasers’ ownership of the Shares. 
 (y) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public
information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of
this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which
they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof. 
  

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 (z) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would cause this offering of the Shares to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated. 
 (aa) Solvency. Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the
receipt by the Company of the proceeds from the sale of the Shares hereunder, (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and
other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for at least the next 12 months, as now conducted and as proposed to
be conducted, including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of
the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when
such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no
knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(aa)
of the Disclosure Schedules sets forth as of the date thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement,
“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other
contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness. 
 (bb) Tax Status. Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income 

  

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and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been
asserted or threatened against the Company or any Subsidiary. 
 (cc) No General Solicitation. Neither the Company nor
any person acting on behalf of the Company has offered or sold any of the Shares by any form of general solicitation or general advertising. The Company has offered the Shares for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act. 
 (dd) Foreign Corrupt Practices. Neither the
Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended. 
 (ee) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee) of
the Disclosure Schedule. To the knowledge and belief of the Company, such accounting firm (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial
statements to be included in the Company’s Annual Report on Form 10-K for the year ending December 31, 2007. 
 (ff)
No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the independent auditing firms and outside counsel formerly
or presently employed by the Company which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents, and the Company is current with respect to any fees owed to its independent auditing firm
and outside counsel. 
 (gg) Acknowledgment Regarding Purchasers’ Purchase of Shares. The Company acknowledges and
agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting
as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Shares. The Company further represents to each Purchaser that the Company’s decision to
enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 
  

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 (hh) Acknowledgement Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.12 hereof), it is understood and acknowledged by the Company (i) that none of the Purchasers have been asked by the Company to agree, nor has any
Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Shares for any specified term; (ii) that past or
future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded securities; (iii) that any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a
“short” position in the Common Stock; and (iv) that each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further
understands and acknowledges that (a) one or more Purchasers may engage in hedging activities at various times during the period that the Shares are outstanding, and (b) such hedging activities (if any) could reduce the value of the
existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the
Transaction Documents. 
 (ii) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its
behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Shares, (ii) sold, bid
for, purchased, or, paid any compensation for soliciting purchases of, any of the Shares, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the
case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Shares. 
 (jj) U.S. Real Property Holding Corporation. The Company is not, nor has ever been, a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Purchaser’s request. 
 (kk) Off Balance Sheet Arrangements. There
is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that is required to be disclosed by the Company in its Exchange Act filings and is not so disclosed or that otherwise
would be reasonably likely to have a Material Adverse Effect. 
 (ll) Investment Company Status. The Company is not,
and upon consummation of the sale of the Securities will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal
underwriter” for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended. 
  

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 3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows: 
 (a)
Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and
to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the
transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser,
and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law. 
 (b) Own Account. Such Purchaser understands that the Shares are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other
persons to distribute or regarding the distribution of such Shares (this representation and warranty not limiting such Purchaser’s right to sell the Shares pursuant to the Registration Statement or otherwise in compliance with applicable
federal and state securities laws) in violation of the Securities Act or any applicable state securities law. Such Purchaser is acquiring the Shares hereunder in the ordinary course of its business. 
 (c) Purchaser Status. At the time such Purchaser was offered the Shares, it was, and at the date hereof it is either: (i) an
“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the Exchange Act. 
 (d) Experience of Such
Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective
investment in the Shares, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Shares and, at the present time, is able to afford a complete loss of such investment.

  

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 (e) General Solicitation. Such Purchaser is not purchasing the Shares as a result
of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general
advertisement. 
 (f) Short Sales and Confidentiality Prior To The Date Hereof. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, directly or indirectly executed any purchases or sales, including Short Sales, of the
securities of the Company during the period commencing from the time that such Purchaser was first contacted by the Company or any other Person representing the Company concerning the terms of the transactions contemplated hereunder until the date
hereof (“Discussion Time”). Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase the Shares covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this transaction). 
 ARTICLE IV. 
 OTHER AGREEMENTS OF THE PARTIES 
 4.1
Transfer Restrictions. The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Shares other than pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. As a condition of
transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement. 
 (a) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Shares in the
following form: 
 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE 

  

 19 

 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY
SUCH SECURITIES. 
 The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide
margin agreement with a registered broker-dealer or grant a security interest in some or all of the Shares to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be
bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Shares to the pledgees or secured parties. Such a pledge or transfer
would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Shares may reasonably request in connection with a pledge or transfer of the Shares, including, if the Shares are subject
to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend
the list of Selling Stockholders thereunder. 
 (b) Certificates evidencing the Shares shall not contain any legend (including
the legend set forth in Section 4.1(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Shares
pursuant to Rule 144, or (iii) if such Shares are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued
by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder. The Company agrees
that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a
certificate representing Shares, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such Shares that is free from all
restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer 

  

 20 

 
Agent that enlarge the restrictions on transfer set forth in this Section. Certificates for Shares subject to legend removal hereunder shall be transmitted
by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. 
 (c) In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated
damages and not as a penalty, for each $1,000 of Shares (based on the volume weighted average price of the Common Stock on the date such Shares are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to
Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend.
Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Shares as required by the Transaction Documents, and such Purchaser shall have the right to
pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 
 (d) Each Purchaser, severally and not jointly with the other Purchasers, agrees that such Purchaser will sell any Shares pursuant to either the registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if Shares are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding. 
 4.2 Furnishing of Information. Until the earliest of the time that no Purchaser owns Shares, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act. As long as any Purchaser owns Shares, if the
Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Shares
under Rule 144. The Company further covenants that it will take such further action as any holder of Shares may reasonably request, to the extent required from time to time to enable such Person to sell such Shares without registration under the
Securities Act within the requirements of the exemption provided by Rule 144. 
 4.3 Integration. The Company shall not sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Shares in a manner that would require the registration
under the Securities Act of the sale of the Shares to the Purchasers or that would be integrated with the offer or sale of the Shares to the Purchasers for purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 
  

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 4.4 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. (New York City time) on
the Trading Day immediately following the date hereof, issue a press release disclosing the material terms of the transactions contemplated hereby, and by the fourth Trading Day following the date hereof, file a Current Report on Form 8-K, filing
the Transaction Documents as exhibits thereto. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall
issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior
written consent of such Purchaser, except (i) as required by federal securities law in connection with (A) any registration statement contemplated by the Registration Rights Agreement and (B) the filing of final Transaction Documents
(including signature pages thereto) with the Commission and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii). 
 4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under the Rights or any other control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or
similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Shares under the Transaction Documents
or under any other agreement between the Company and the Purchasers. 
 4.6 Non-Public Information. Except with respect to the
material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any
information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. 
 4.7 Use
of Proceeds. Except as set forth on Schedule 4.7 of the Disclosure Schedules, the Company shall use the net proceeds from the sale of the Shares hereunder for working capital purposes and shall not use such proceeds for (a) the
satisfaction of any portion of the Company’s debt (other than payment of trade payables in the ordinary course of the Company’s business and prior practices), (b) the redemption of any Common Stock or Common Stock Equivalents or
(c) the settlement of any outstanding litigation. 
  

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 4.8 Indemnification of Purchasers. Subject to the provisions of this Section 4.8, the Company
will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title
or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees
(and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of reasonable investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action
instituted against a Purchaser in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any
violations by the Purchaser of state or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to
the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to
the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action
there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable
fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. 
 4.9 Listing of Common Stock. The
Company hereby agrees to use best efforts to maintain the listing of the Common Stock on a Trading Market, and as soon as reasonably practicable following the Closing (but not later than the earlier of the Effective Date and the first anniversary of
the Closing Date) to list all of the Shares on such Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Shares, and will take
such other action as is necessary to cause all of the Shares to be listed on such other Trading Market as promptly as 

  

 23 

 
possible. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply
in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. 
 4.10
Equal Treatment of Purchasers. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the
Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Shares or otherwise. 
 4.11 Subsequent Equity Sales. 
 (a) From the date hereof until 90 days after the Effective Date, neither the Company nor any Subsidiary shall issue shares of Common Stock or Common Stock Equivalents; provided, however, the 90 day period set forth in this
Section 4.11 shall be extended for the number of Trading Days during such period in which (i) trading in the Common Stock is suspended by any Trading Market, or (ii) following the Effective Date, the Registration Statement is not
effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Shares. 
 (b) From the date hereof until the earlier of (i) two (2) years after the Effective Date or (ii) such time as the Purchaser’s collectively hold less than 10% of the Securities issued pursuant to this Agreement, the
Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion, exercise or exchange rate or other price that is
based upon and/or varies with the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to
being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to any right to collect damages. 
 (c) Notwithstanding the
foregoing, this Section 4.11 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 
  

 24 

 4.12 Short Sales and Confidentiality After The Date Hereof. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it have executed or will execute any Short Sales during the period commencing at the Discussion Time and ending
at the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4, such Purchaser has maintained and will maintain the confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules. Each Purchaser severally and not jointly with any other Purchaser, understands and acknowledges, and agrees, to act in a manner that will not violate the positions of the Commission as set forth
in Item 65, Section A, of the Manual of Publicly Available Telephone Interpretations, dated July 1997, compiled by the Office of Chief Counsel, Division of Corporation Finance. Notwithstanding the foregoing, no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced as described in
Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have
no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Shares covered by this Agreement. 
 4.13 Delivery of Shares After Closing.
The Company shall deliver, or cause to be delivered, the respective Shares purchased by each Purchaser to such Purchaser within 3 Trading Days of the Closing Date. 
 4.14 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Shares as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The
Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Shares for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws
of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser. 
 4.15 Capital
Changes. Until the one year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in
interest of the Shares. 
 4.16 Participation in Future Financing. 
 (a) From the date hereof until the date that is the 12 month anniversary of the Effective Date, upon any issuance by the Company or any of
its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration (a “Subsequent Financing”), each Purchaser shall have the right to participate in the Subsequent Financing up to an amount equal to 30% of the Subsequent
Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. 
  

 25 

 (b) At least 5 Trading Days prior to the closing of the Subsequent Financing, the Company
shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional
notice, a “Subsequent Financing Notice”). Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than 1 Trading Day after such request,
deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person
or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment. 
 (c) Any Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time) on the 5th Trading Day after the Purchaser has received the Pre-Notice that
the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent
Financing Notice. If the Company receives no notice from a Purchaser as of such 5th Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate. 
 (d) If
by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their
willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the Participation Maximum of the Subsequent Financing, then the Company may effect the remaining portion of such
Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.
 (e) If by 5:30 p.m. (New York City time) on the 5th Trading Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than
the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the
Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers
participating under this Section 4.16. 
 (f) The Company must provide the Purchasers with a second Subsequent
Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.16, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms
set forth in such Subsequent Financing Notice within 60 Trading Days after the date of the initial Subsequent Financing Notice. 
  

 26 

 (g) Notwithstanding the foregoing, this Section 4.16 shall not apply in respect of
(i) an Exempt Issuance or (ii) an underwritten public offering of Common Stock. 
 ARTICLE V. 
 MISCELLANEOUS 
 5.1 Termination. This
Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before August 14, 2007; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 
 5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement; provided, that the Company shall reimburse
Steelhead Investments Ltd. (or its designee(s)) for up to $5,000 for its reasonable legal fees and disbursements incurred in connection with the transactions contemplated by this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes
and other taxes and duties levied in connection with the delivery of any Shares to the Purchasers. 
 5.3 Entire Agreement. The
Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 
 5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the 2nd Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto. 
 5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the Purchasers of at least 67% of the Shares still held by the Purchasers or, in the case of a 

  

 27 

 
waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such right. 
 5.6 Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and
no rules of strict construction will be applied against any party. 
 5.7 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger or
otherwise by operation of law). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Shares, provided such transferee agrees in writing to be bound, with respect to the
transferred Shares, by the provisions of the Transaction Documents that apply to the “Purchasers.” 
 5.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.8. 
 5.9 Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an
inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 
  

 28 

 5.10 Survival. The representations and warranties contained herein shall survive the Closing and
the delivery of the Shares. 
 5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the
event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” or “.tif” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf
such signature is executed) with the same force and effect as if such facsimile or “.pdf” or “.tif” signature page were an original thereof. 
 5.12 Severability. 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 shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable
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. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
 5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any
of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 
 5.14 Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall
issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance
of such replacement Shares. 
 5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason
of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
  

 29 

 5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any
Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred. 
 5.17 Independent Nature of Purchasers’ Obligations and
Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the
obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser
to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience
only, Purchasers and their respective counsel have chosen to communicate with the Company through FWS. FWS does not represent all of the Purchasers but only RBC Capital Markets, who has acted as placement agent to the transaction. The Company has
elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. 
 5.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial
liquidated damages or other amounts are due and payable shall have been canceled. 
 5.19 Saturdays, Sundays, Holidays. If the last or
appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day. 
  

 30 

 5.20 Construction. The parties agree that each of them and/or their respective counsel has
reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the
Transaction Documents or any amendments hereto. 
 5.21 Waiver of Jury Trial. In any action, suit or proceeding in any jurisdiction
brought by any party against any other party, the parties each knowingly and intentionally, to the greatest extent permitted by applicable law, hereby absolutely, unconditionally, irrevocably and expressly waives forever trial by jury. 

(Signature Pages Follow) 
  

 31 

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

											
	ACTIVE POWER, INC.	 		 	Address for Notice:
				
	By:	 	/s/ Jim Clishem	 		 	Active Power, Inc.
		 	Name:	 	Jim Clishem	 		 	2128 W. Braker Lane, BK 12
		 	Title:	 	President and CEO	 		 	Austin, Texas 78758
		 		 		 		 	Fax:	 	(512) 836-4511
		 		 		 		 	Attn:	 	Chief Financial Officer
					
		 		 		 		 	With a copy to (which shall not constitute notice):
					
		 		 		 		 	Andrews Kurth LLP
		 		 		 		 	111 Congress Avenue, Suite 1700
		 		 		 		 	Austin, Texas 78701
		 		 		 		 	Fax:	 	(512) 320-9292
		 		 		 		 	Attn:	 	J. Matthew Lyons

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES FOR PURCHASERS FOLLOW] 
 [Signature Page to Active Power 2007 PIPE
Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: SF Capital Partners Ltd. 
 Signature of Authorized Signatory of Purchaser: /s/ Brian H. Davidson 
 Name of Authorized Signatory: Brian H.
Davidson 
 Title of Authorized Signatory: Managing Director 
 Email Address of Purchaser: Bdavidson@sf-capital.com 
 Fax Number of Purchaser: 414-294-7700 
 Telephone Number of Purchaser: 414-294-7000 
 Address for Notice of Purchaser:
c/o Stark Offshore Management LLC 
 3600 South Lake Drive 
 St. Francis, WI 53235 
 Address for Delivery of Shares for Purchaser (if not same as address for notice): 
 M&I Wealth Management Investment Coordination Department 
 Attention: Jamie Race 
 11270 W. Park Place, Suite 400 
 Milwaukee, WI 53224 
 Subscription Amount: $1,540,000.00

 Shares: 1,100,000 
  
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Southport Energy Alternatives Fund, L.P. 
 Signature of Authorized Signatory of Purchaser: /s/ Anthony Grammalva 
 Name of Authorized Signatory: Anthony
Grammalva 
 Title of Authorized Signatory: CEO Sound Energy Partners, Inc., its Investment Manager 
 Email Address of Purchaser: SNegulic@secm.com 
 Fax Number of Purchaser:
203-254-4509 
 Telephone Number of Purchaser: 203-254-4500 
 Address for Notice of Purchaser: c/o Sound Energy Partners, Inc. 
 354 Pequot Ave. 
 Southport, CT 06590 
 Address for Delivery of Shares for
Purchaser (if not same as address for notice): 
 Morgan Stanley 
 c/o Swaine Napier 
 2000 Westchester Ave.

 Purchase, NY 10577 
 Subscription Amount:
$837,060 
 Shares: 597,900 
 EIN Number: [PROVIDE THIS UNDER
SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Southport Energy Alternatives SPV Offshore Fund, Inc. 
 Signature of Authorized Signatory of Purchaser: /s/ Anthony Giammalva 
 Name of Authorized Signatory: Anthony Giammalva 
 Title of Authorized Signatory: CEO – Sound Energy Partners, Inc. – it’s Investment
Advisor 
 Email Address of Purchaser: SNegulic@secm.com 
 Fax
Number of Purchaser: 203-254-4509 
 Telephone Number of Purchaser: 203-254-4500 
 Address for Notice of Purchaser: c/o Sound Energy Partners, Inc. 
 354 Pequot Avenue 
 Southport, CT 06890 
 Address for Delivery of Shares for
Purchaser (if not same as address for notice): 
 Morgan Stanley 
 c/o Swaine Napier 
 2000 Westchester Avenue

 Purchase, NY 10577 
 Subscription Amount:
$633,220 
 Shares: 452,300 
 EIN Number: [PROVIDE THIS UNDER
SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Southport Energy Alternatives SPV Fund, LP 
 Signature of Authorized Signatory of Purchaser: /s/ Anthony Giammalva 
 Name of Authorized Signatory: Anthony Giammalva 
 Title of Authorized Signatory: CEO Sound Energy Partners, Inc. – its Investment Manager

 Email Address of Purchaser: SNegulic@secm.com 
 Fax Number of
Purchaser: 203-254-4509 
 Telephone Number of Purchaser: 203-254-4500 
 Address for Notice of Purchaser: c/o Sound Energy Partners, Inc. 
 354 Pequot Avenue 
 Southport, CT 06890 
 Address for Delivery of Shares for
Purchaser (if not same as address for notice): 
 Morgan Stanley 
 c/o Swaine Napier 
 2000 Westchester Avenue

 Purchase, NY 10577 
 Subscription Amount:
$979,720 
 Shares: 699,800 
 EIN Number: [PROVIDE THIS UNDER
SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: UBS O’Connor LLC F/B/O: O’Connor Pipes Corporate Strategies Master Limited 
 Signature of Authorized Signatory of Purchaser: /s/ Andy Martin 
 Name
of Authorized Signatory: Andy Martin 
 Title of Authorized Signatory: Executive Director 
 Email Address of Purchaser: DL-ubsoc-corpact@ubs.com 
 Fax Number of Purchaser: 312-525-6271 
 Telephone Number of Purchaser: 312-525-5839 
 Address for Notice of Purchaser:
c/o UBS O’ Connor LLOC 
 Attn: Rob Murray 
 One North Wacker Drive, 32nd Floor 
 Chicago, IL 60606 
 Address for Delivery of Shares for Purchaser (if not same as address for notice): 
 Same as above

 Subscription Amount: $770,000 
 Shares: 550,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Rho Management Trust IV 
 Signature of Authorized Signatory of Purchaser: /s/ Jeffrey I. Martin 
 Name of Authorized Signatory: Jeffrey I.
Martin 
 Title of Authorized Signatory: Attorney-in-fact 
 Email
Address of Purchaser: JMARTIN@Rho.com 
 Fax Number of Purchaser: 212-751-3613 
 Telephone Number of Purchaser: 212-751-6677 
 Address for Notice of
Purchaser: 152 West 57th Street, 23rd Floor 

 New York, NY 10019 
 Address for Delivery of
Shares for Purchaser (if not same as address for notice): 
 Same as above 
 Subscription Amount: $840,000 
 Shares: 600,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Steelhead Investments Ltd. 
 Signature of Authorized Signatory of Purchaser: /s/ J. Baker Gentry, Jr. 
 Name of Authorized Signatory: J. Baker
Gentry, Jr. 
 Title of Authorized Signatory: Authorized Signatory 
 Email Address of Purchaser: legal@hbk.com 
 Fax Number of Purchaser: 214-758-1207 
 Telephone Number of Purchaser: 214-758-6107 
 Address for Notice of Purchaser: c/o HBK Services LLC 
 300 Crescent Court, Suite 700 
 Dallas, TX
75201 
 Address for Delivery of Shares for Purchaser (if not same as address for notice): 
 Same as above. 
 Subscription Amount: $6,720,000 

Shares: 4,800,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Parworld Environmental Opportunities Fund (Registered Holder: Parworld Environmental Opportunities)

 Signature of Authorized Signatory of Purchaser: /s/ Bruce Jenkyn-Jones 
 Name of Authorized Signatory: Bruce Jenkyn-Jones 
 Title of Authorized Signatory: Director of Investments 
 Email Address of Purchaser: b.jenkyn-jones@impax.co.uk. 
 Fax Number of
Purchaser: +44(0)2074371245 
 Telephone Number of Purchaser: +44(0)2074322612 
 Address for Notice of Purchaser: c/o Impax Asset Management Ltd. (Attn: Debbie Vanderkolk) 
 Broughton
House, 6-8 Sackville Street 
 London W1S 3DG, UK 
 Address for Delivery of Shares for Purchaser (if not same as address for notice): 
 BNP Paribas Securities Services Luxembourg

 33, Rue de GASPERICH 
 Howald-Hesperange 
 L-2085 Luxembourg 
 Subscription Amount: $630,000.00 
 Shares: 450,000 
 EIN
Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Impax Environmental Markets (Ireland) Fund (Registered Holder: RBC Dexia Investor Services Bank)

 Signature of Authorized Signatory of Purchaser: /s/ Bruce Jenkyn-Jones 
 Name of Authorized Signatory: Bruce Jenkyn-Jones 
 Title of Authorized Signatory: Director of Investments 
 Email Address of Purchaser: b.jenkyn-jones@impax.co.uk. 
 Fax Number of
Purchaser: +44(0)2074371245 
 Telephone Number of Purchaser: +44(0)2074322612 
 Address for Notice of Purchaser: c/o Impax Asset Management Ltd. (Attn: Debbie Vanderkolk) 
 Broughton
House, 6-8 Sackville Street 
 London W1S 3DG, UK 
 Address for Delivery of Shares for Purchaser (if not same as address for notice): 
 Brown Brothers Harriman 
 140 Broadway, Ground Floor 
 New York, NY
10006 
 Attn: Trade Processing Dept. 
 Ralph Firneno, For Deposit To Account 8050056 
 Subscription Amount: $560,000.00 
 Shares: 400,000 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement] 

 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities
Purchase Agreement] 

 [PURCHASER SIGNATURE PAGES TO ACPW SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser: Impax Environmental Markets PLC (Registered Holder: Nortrust Nominees Limited Account: IEM01)

 Signature of Authorized Signatory of Purchaser: /s/ Bruce Jenkyn-Jones 
 Name of Authorized Signatory: Bruce Jenkyn-Jones 
 Title of Authorized Signatory: Director of Investments 
 Email Address of Purchaser: b.jenkyn-jones@impax.co.uk. 
 Fax Number of
Purchaser: +44(0)2074371245 
 Telephone Number of Purchaser: +44(0)2074322612 
 Address for Notice of Purchaser: c/o Cavendish Administration (Attn: Russell Scott) 
 145-157 St Johns
Street 
 London EC1V 4RU, UK 
 Address for
Delivery of Shares for Purchaser (if not same as address for notice): 
 Same as above. 
 Subscription Amount: $490,000.00 
 Shares: 350,000 
 EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 
 [SIGNATURE PAGES CONTINUE] 
 [Signature Page to Active Power 2007 PIPE Securities Purchase Agreement]Asset Purchase Agreement

 Exhibit 10.37 
 ** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. 
 EXECUTION VERSION 
 ASSET PURCHASE AGREEMENT 
 BY AND AMONG 
 KHOF ACQUISITIONS,
INC., 
 SOLO CUP COMPANY, 
 SF HOLDINGS GROUP, INC., 
 AND 
 SOLO CUP OPERATING CORPORATION 
 September 7, 2007 

 TABLE OF CONTENTS 
  

							
	 	  	 	  	 	  	Page
	1.	  	Definitions	  	1
			
	2.	  	Purchase and Sale of Acquired Assets; Assumption of Assumed Liabilities	  	1
		  	(a)	  	Purchase and Sale of Assets	  	1
		  	(b)	  	Assumption of Liabilities	  	1
		  	(c)	  	Preliminary Purchase Price	  	1
		  	(d)	  	The Closing	  	1
		  	(e)	  	Deliveries at the Closing	  	2
		  	(f)	  	Preparation of Working Capital Statement	  	2
		  	(g)	  	Adjustment to Preliminary Purchase Price	  	3
		  	(h)	  	Allocation	  	4
			
	3.	  	Representations and Warranties of the Solo Parties	  	4
		  	(a)	  	Organization of the Solo Parties	  	4
		  	(b)	  	Authorization of Transaction	  	4
		  	(c)	  	Noncontravention	  	4
		  	(d)	  	Brokers’ Fees	  	5
		  	(e)	  	Assets	  	5
		  	(f)	  	CEGI	  	5
		  	(g)	  	Financial Statements	  	6
		  	(h)	  	Events Subsequent to Most Recent Fiscal Month End	  	6
		  	(i)	  	Legal Compliance	  	8
		  	(j)	  	Tax Matters	  	8
		  	(k)	  	Real Property	  	8
		  	(l)	  	Intellectual Property	  	9
		  	(m)	  	Contracts	  	10
		  	(n)	  	Insurance	  	11
		  	(o)	  	Litigation	  	11
		  	(p)	  	Employee Benefits	  	11
		  	(q)	  	Environmental, Health, and Safety Matters	  	12
		  	(r)	  	Employees	  	13
		  	(s)	  	Licenses and Permits	  	13
		  	(t)	  	Customers and Suppliers	  	13
		  	(u)	  	Affiliate Relationships	  	14
		  	(v)	  	Disclaimer of other Representations and Warranties	  	14
			
	4.	  	Representations and Warranties of the Buyer	  	15
		  	(a)	  	Organization of the Buyer	  	15
		  	(b)	  	Authorization of Transaction	  	15
		  	(c)	  	Noncontravention	  	15
		  	(d)	  	Brokers’ Fees	  	15
		  	(e)	  	Financing	  	15

  

 i 

							
	 	  	 	  	 	  	Page
	5.	  	Pre-Closing Covenants	  	16
		  	(a)	  	General	  	16
		  	(b)	  	Notices and Consents	  	16
		  	(c)	  	Operation of Business	  	16
		  	(d)	  	Access	  	16
		  	(e)	  	Notice of Developments	  	17
		  	(f)	  	Exclusivity	  	17
		  	(g)	  	Collective Bargaining Agreements; Multiemployer Plan	  	17
		  	(h)	  	Intercompany Accounts of CEGI	  	17
		  	(i)	  	Financing Related Cooperation	  	18
			
	6.	  	Post-Closing Covenants	  	18
		  	(a)	  	General	  	18
		  	(b)	  	Litigation Support	  	19
		  	(c)	  	Transition	  	19
		  	(d)	  	Covenant Not to Compete	  	20
		  	(e)	  	Multiemployer Plan; Bond	  	21
		  	(f)	  	COBRA and WARN Obligations	  	21
		  	(g)	  	Assumption of Employer Responsibilities	  	21
		  	(h)	  	Non-Solicitation of Division Employees Non-Solicitation by the Solo Parties	  	22
		  	(i)	  	Non-Solicitation by the Buyer	  	22
		  	(j)	  	Mail and Other Communications	  	22
		  	(k)	  	Collection of Accounts Receivable	  	23
		  	(l)	  	Confidentiality	  	23
			
	7.	  	Conditions to Obligation to Close	  	23
		  	(a)	  	Conditions to Obligation of the Buyer	  	23
		  	(b)	  	Conditions to Obligation of the Solo Parties	  	24
			
	8.	  	Remedies for Breaches of this Agreement	  	25
		  	(a)	  	Survival of the Solo Parties’ Representations, Warranties, and Covenants	  	25
		  	(b)	  	Survival of the Buyer’s Representations and Warranties	  	26
		  	(c)	  	Indemnification Provisions for Benefit of the Buyer	  	26
		  	(d)	  	Indemnification Provisions for Benefit of the Solo Parties	  	28
		  	(e)	  	Matters Involving Third Parties	  	29
		  	(f)	  	Determination of Adverse Consequences	  	30
		  	(g)	  	Exclusive Remedy	  	30
		  	(h)	  	Environmental Remedies	  	30
			
	9.	  	Termination	  	30
		  	(a)	  	Termination of Agreement	  	30
		  	(b)	  	Effect of Termination	  	31
			
	10.	  	Miscellaneous	  	31
		  	(a)	  	Press Releases and Public Announcements	  	31
		  	(b)	  	No Third-Party Beneficiaries	  	31
		  	(c)	  	Entire Agreement	  	31

  

 ii 

							
	 	  	 	  	 	  	Page
		  	 (d)
	  	Succession and Assignment	  	32
		  	 (e)
	  	Counterparts	  	32
		  	 (f)
	  	Headings	  	32
		  	 (g)
	  	Notices	  	32
		  	 (h)
	  	Governing Law	  	33
		  	 (i)
	  	Amendments and Waivers	  	33
		  	 (j)
	  	Severability	  	33
		  	 (k)
	  	Expenses	  	33
		  	 (l)
	  	Construction	  	33
		  	 (m)
	  	Incorporation of Exhibits and Schedules	  	33
		  	 (n)
	  	Tax Matters	  	33
		  	 (o)
	  	Employee Benefits Matters	  	34
		  	 (p)
	  	Bulk Transfer Laws	  	36
		  	 (q)
	  	Arbitration	  	36

  

 iii 

							
	APPENDIX A—Defined Terms	  	A-1
	EXHIBIT A—Forms of Assignments	  	

					
		  	A-1	  	Form of Conveyance and Bill of Sale
		  	A-2	  	Form of Trademark Assignment
		  	A-3	  	Form of Patent Assignment
		  	A-4	  	Special Warranty Deed – Appleton
		  	A-5	  	Special Warranty Deed – Oshkosh
		  	A-6	  	Assignment and Assumption – Appleton Lease
		  	A-7	  	Assignment and Assumption – Indianapolis Leases

							
	 EXHIBIT B—Form of Assumption

	 EXHIBIT C—Working Capital Schedule

	 EXHIBIT D—Allocation Schedule

	 EXHIBIT E—Financial Statements

	 EXHIBIT F—Form of Transition Agreement

	 Disclosure Schedule

  

 iv 

 ASSET PURCHASE AGREEMENT 
 This Asset Purchase Agreement (this “Agreement”) is entered into on September 7, 2007, by and among KHOF Acquisitions, Inc., a
Delaware corporation (the “Buyer”); Solo Cup Company, a Delaware corporation (“Solo Cup”); SF Holdings Group, Inc., a Delaware corporation (“SF Holdings”); and Solo Cup Operating Corporation, a
Delaware corporation (“SCOC” and, together with Solo Cup and SF Holdings, the “Solo Parties”). The Buyer and the Solo Parties are referred to collectively herein as the “Parties.” 
 This Agreement contemplates a transaction in which the Buyer will purchase substantially all of the assets (and assume substantially all of the
liabilities) of the Hoffmaster Division currently owned and operated by the Solo Parties (the “Division”) in return for cash. 
 Now, therefore, in consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and covenants herein contained, the Parties agree as follows. 
 1. DEFINITIONS. 
 For purposes of this
Agreement, capitalized terms and variations thereof have the meanings specified or referenced in APPENDIX A. 
 2.
PURCHASE AND SALE OF ACQUIRED ASSETS; ASSUMPTION OF ASSUMED LIABILITIES. 
 (a) Purchase and Sale of Assets. On and subject to the
terms and conditions of this Agreement, the Buyer agrees to purchase from the Solo Parties free and clear of all Security Interests (other than Permitted Security Interests), and the Solo Parties agree to sell, transfer, convey, and deliver to the
Buyer free and clear of all Security Interests (other than Permitted Security Interests), all of the Acquired Assets at the Closing for the consideration specified below in this Section 2. 
 (b) Assumption of Liabilities. On and subject to the terms and conditions of this Agreement, the Buyer agrees to assume and become responsible for
all of the Assumed Liabilities at the Closing. Notwithstanding the foregoing, the Buyer will not assume or have any responsibility with respect to any obligations or liabilities that are Excluded Liabilities and the Solo Parties shall pay, perform,
and discharge all Excluded Liabilities. 
 (c) Preliminary Purchase Price. The Buyer agrees to pay to the Solo Parties at the Closing
$170,000,000 (the “Preliminary Purchase Price”) by delivery of cash in the amount of the Preliminary Purchase Price payable by wire transfer or delivery of other immediately available funds. The Preliminary Purchase Price shall be
allocated among the Solo Parties as set forth in Section 2(c) of the Disclosure Schedule. The Preliminary Purchase Price will be subject to post-Closing Adjustment as set forth below in this Section 2. 
 (d) The Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices
of Bell, Boyd & Lloyd LLP in Chicago, Illinois, commencing at 9:00 a.m. local time on the second business day following the satisfaction or 

  

 1 

 
waiver of all conditions to the obligations of the Parties to consummate the transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as the Parties may mutually determine (the “Closing Date”). 
 (e) Deliveries at the Closing. At the Closing, (i) the Solo Parties will deliver to the Buyer the various certificates, instruments, and documents referred to in Section 7(a) below; (ii) the
Buyer will deliver to the Solo Parties the various certificates, instruments, and documents referred to in Section 7(b) below; (iii) the Solo Parties will execute, acknowledge (if appropriate), and deliver to the Buyer (A) assignments
(including real property and intellectual property transfer documents) in the forms attached hereto as EXHIBITS A-1 through A-7 and (B) such other instruments of sale, transfer, conveyance, and assignment as the
Buyer and its counsel reasonably may request; (iv) the Buyer will execute, acknowledge (if appropriate), and deliver to the Solo Parties (A) an assumption in the form attached hereto as EXHIBIT B and (B) such
other instruments of assumption as the Solo Parties and their counsel reasonably may request; and (v) the Buyer will deliver to the Solo Parties the consideration specified in Section 2(c) above. 
 (f) Preparation of Working Capital Statement 
 (i) Within 45 days after the Closing Date, the Buyer will prepare and deliver to the Solo Parties a draft working capital statement, which will include a calculation of the Net Working Capital as of the Closing Date
(the “Draft Working Capital Statement”) for the Division as of the close of business on the Closing Date (determined on a pro forma basis as though the Parties had not consummated the transactions contemplated by this Agreement).
The Buyer will prepare the Draft Working Capital Statement on the same basis and using the same principles, practices, methods, and assumptions utilized in determining the Estimated Net Working Capital (as set forth in EXHIBIT
C), in accordance with the schedule set forth in EXHIBIT C attached hereto. 
 (ii) Unless the Solo
Parties deliver written objections to the Draft Working Capital Statement in reasonable detail containing all objections and the basis thereof to the Buyer within 30 days after receiving the Draft Working Capital Statement and the calculation of the
Net Working Capital contained therein, the Solo Parties shall be deemed to have accepted and agreed to the Draft Working Capital Statement. The Buyer and the Solo Parties will use reasonable efforts to resolve any such objections themselves and any
resolution by them of such objections shall be final, conclusive and binding. If the Parties do not obtain a final resolution within 15 days after the Buyer has received the statement of objections, however, the Buyer and the Solo Parties will
mutually select an independent accounting firm mutually acceptable to them to resolve any remaining objections. If the Buyer and the Solo Parties are unable to agree on the choice of an accounting firm, they will select a nationally-recognized
accounting firm by lot (after excluding their respective regular outside accounting firms). The determination of any accounting firm so selected will be set forth in writing and will be final, conclusive, and binding upon the Parties. The accounting
firm shall not assign a value to any of the remaining items in dispute that is greater than the greatest value or lower than the lowest value assigned by the Buyer and the Solo Parties. The accounting firm review will be limited solely to the items
in the statement of objections that are still in dispute between 

  

 2 

 
the parties and presentations by Buyer and the Solo Parties, and not by independent review. The accounting firm shall render its written decision, upon which
a judgment may be entered in any court having jurisdiction thereof, within 45 days after its selection pursuant to this Section 2(f)(ii). The Buyer will revise and promptly deliver to the Solo Parties the Draft Working Capital Statement as
appropriate to reflect the resolution of any objections thereto pursuant to this Section 2(f)(ii), which shall include the calculation of the finally determined Net Working Capital amount. The “Working Capital Statement” shall
mean the Draft Working Capital Statement together with the revisions thereto, if any, pursuant to this Section 2(f)(ii). 
 (iii) In the event the Parties submit any unresolved objections to an accounting firm for resolution as provided in Section 2(f)(ii) above, the Buyer and the Solo Parties will share responsibility for the fees and expenses of the
accounting firm as follows: 
 (A) if the accounting firm resolves all of the remaining objections in favor of the Buyer (the
Net Working Capital so determined is referred to herein as the “Low Value”), the Solo Parties will be responsible for all of the fees and expenses of the accounting firm; 
 (B) if the accounting firm resolves all of the remaining objections in favor of the Solo Parties (the Net Working Capital so determined is
referred to herein as the “High Value”), the Buyer will be responsible for all of the fees and expenses of the accounting firm; and 
 (C) if the accounting firm resolves some of the remaining objections in favor of the Buyer and the rest of the remaining objections in favor of the Solo Parties (the Net Working Capital so determined is referred to
herein as the “Actual Value”), the Solo Parties will be responsible for that fraction of the fees and expenses of the accounting firm equal to a quotient equal to (x) the difference between the High Value and the Actual Value
divided by (y) the difference between the High Value and the Low Value, and the Buyer will be responsible for the remainder of the fees and expenses. 
 (iv) The Buyer will make the work papers and back-up materials used in preparing the Draft Working Capital Statement, and the books, records, and financial staff of the Division, available to the Solo Parties and
their accountants and other representatives at reasonable times and upon reasonable notice at any time during (A) the preparation by the Buyer of the Draft Working Capital Statement, (B) the review by the Solo Parties of the Draft Working
Capital Statement, and (C) the resolution by the Parties of any objections thereto. 
 (g) Adjustment to Preliminary Purchase
Price. The Preliminary Purchase Price will be adjusted as follows: 
 (i) If the Net Working Capital exceeds, by an amount
in excess of $500,000, the Estimated Net Working Capital, the Buyer will pay to the Solo Parties an amount equal to the difference between (A) such excess minus (B) $500,000, by wire transfer or 

  

 3 

 
delivery of other immediately available funds within three business days after the date on which the Net Working Capital is finally determined pursuant to
Section 2(f) above. This additional amount shall be allocated among the Solo Parties in accordance with Section 2(c) of the Disclosure Schedule. In the event that the Net Working Capital exceeds the Estimated Net Working Capital by an
amount of $500,000 or less, no adjustment to the Preliminary Purchase Price shall be made. 
 (ii) If the Estimated Net
Working Capital exceeds, by an amount in excess of $500,000, the Net Working Capital, the Solo Parties will pay to the Buyer an amount equal to the difference between (A) such excess minus (B) $500,000, by wire transfer or delivery of
other immediately available funds within three business days after the date on which the Net Working Capital is finally determined pursuant to Section 2(f) above. In the event that the Estimated Net Working Capital exceeds the Net Working
Capital by an amount of $500,000 or less, no adjustment to the Preliminary Purchase Price shall be made. 
 The Preliminary Purchase Price as
so adjusted is referred to herein as the “Purchase Price.” 
 (h) Allocation. The Parties agree to allocate the
Purchase Price (and all other capitalizable costs) among the Acquired Assets for all purposes (including financial accounting and tax purposes) in accordance with the allocation schedule attached hereto as EXHIBIT D.

 3. REPRESENTATIONS AND WARRANTIES OF THE SOLO PARTIES. 
 The Solo Parties represent and warrant, jointly and severally, to the Buyer that the statements contained in this Section 3 are correct and complete,
except as set forth in the disclosure schedule accompanying this Agreement (the “Disclosure Schedule”). The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this
Section 3. 
 (a) Organization of the Solo Parties. Each of the Solo Parties and CEGI (Hong Kong) Limited
(“CEGI”) is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation (or, in the case of CEGI, has a status equivalent to the foregoing under applicable Hong Kong
law). 
 (b) Authorization of Transaction. Each of the Solo Parties has full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to perform its obligations hereunder. Assuming due authorization, execution and delivery by the Buyer, this Agreement constitutes the valid and legally binding obligation of each of the Solo
Parties, enforceable in accordance with its terms and conditions. 
 (c) Noncontravention. Except as set forth in Section 3(c) of
the Disclosure Schedule, neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby (including the assignments and assumptions referred to in Section 2 above), will (i) violate
any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which any of the Solo Parties or CEGI is subject or any provision of the
charter or 

  

 4 

 
bylaws of any of the Solo Parties or CEGI or (ii) violate, result in a breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which any of the Solo Parties or CEGI is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security Interest other than a Permitted Security Interest upon any of its assets), including the Material Contracts and the Customer and Supplier Agreements, except with respect
to clause (ii) where the violation, breach, default, acceleration, termination, modification, cancellation, failure to give notice, or Security Interest would not be material to the Division. None of the Solo Parties needs to give any notice
to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency or third party in order for the Parties to consummate the transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above), except (A) for compliance with the Hart-Scott-Rodino Act, (B) where the failure to give notice, to file, or to obtain any authorization, consent, or approval would not be material to the
Division, and (C) as disclosed in Section 3(c) of the Disclosure Schedule. 
 (d) Brokers’ Fees. The Solo Parties have
no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Buyer could become liable or obligated. Except as set forth in Section 3(d)
of the Disclosure Schedule, none of the Solo Parties has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement. 
 (e) Assets. (i) Except as disclosed in Section 3(e) of the Disclosure Schedule, the Solo Parties have good title to, or a valid
leasehold interest in, the material tangible assets they used in the conduct of the business of the Division, (ii) the Acquired Assets include all assets reasonably required for the continued conduct of the Division by Buyer as the Division is
currently being conducted, and (iii) all material tangible personal property included in the Acquired Assets is in good operating condition and repair (except for ordinary wear and tear), free from defects (except such defects as do not
materially interfere with the value thereof or the use thereof in the conduct of normal operations). 
 (f) CEGI. For purposes of this
Section 3(f), the terms “capital stock” and “shares” shall be deemed to include such other form of equity ownership as are appropriate for CEGI. Section 3(f) of the Disclosure Schedule sets forth for CEGI (i) its
jurisdiction of incorporation or organization, (ii) the number of authorized shares of each class of its capital stock, (iii) the number of issued and outstanding shares of each class of its capital stock, the names of the holders thereof,
and the number of shares held by each such holder, (iv) the number of shares of its capital stock held in treasury, and (v) its directors and officers or, as appropriate, managers. CEGI is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have a Material Adverse Effect. CEGI has full corporate power and authority to carry on the businesses in which
it is engaged and to own and use the properties owned and used by it. All of the issued and outstanding shares of capital stock of CEGI have been duly authorized and are validly issued, fully paid, and nonassessable. SF Holdings holds of record and
owns beneficially all of the outstanding shares of CEGI. Other than the outstanding shares of CEGI, the Acquired Assets do not include any shares of capital stock or equity interests in or of any Person. 
  

 5 

 (g) Financial Statements. Attached hereto as EXHIBIT E are the following
financial statements (collectively the “Financial Statements”), which reflect the financial condition and results of operations of the Division on a pro forma basis, as “carved out” from the consolidated financial
statements of Solo Cup: (i) an unaudited consolidated balance sheet as of December 31, 2004 for the Division; (ii) audited consolidated balance sheets, statements of income, and statements of cash flow as of and for the fiscal years
ended January 1, 2006 and December 31, 2006 for the Division; and (iii) an unaudited consolidated balance sheet, statement of income, and statement of cash flow (the “Most Recent Financial Statements”) as of and for
the twenty-six week period ended July 1, 2007 (the “Most Recent Fiscal Month End”) for the Division. Except as set forth in Section 3(g) of the Disclosure Schedule, the Financial Statements (including the notes thereto)
have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby and present fairly, in all material respects, the financial condition of the Division as of such dates and the results of operations of
the Division for such periods; provided, however, that the Financial Statements include allocations of overhead and other items that are not reflective of the Division as a “stand-alone” entity, and that the Most Recent Financial
Statements are subject to normal year-end adjustments and lack footnotes and other customary presentation items. 
 (h) Events Subsequent
to Most Recent Fiscal Year End. Except as disclosed in Section 3(h) of the Disclosure Schedule, since the Most Recent Fiscal Year End with respect to the Division, the Acquired Assets, or the Assumed Liabilities, there has not been any:

 (i) Material Adverse Effect; 
 (ii) amendment to the organizational documents of CEGI; 
 (iii) issuance or sale of any
shares of capital stock of CEGI, or of any securities convertible or exchangeable into such shares; 
 (iv) redemption, split,
combination, or reclassification of the capital stock of CEGI; 
 (v) incurrence of any Indebtedness; 
 (vi) material settlement agreement entered into by the Solo Parties with respect to infringement or alleged infringement by the Solo
Parties of any Intellectual Property; 
 (vii) abandonment or invalidation by any Solo Party of any material Intellectual
Property used primarily in the Division; 
 (viii) (A) increase in any manner in the rate of compensation or benefits of any
Division Employees, except as may be required under the CBAs or any existing employment agreements (including any actions taken pursuant to any “effects bargaining” at any of the facilities covered by a CBA) or such increases as are
granted in the Ordinary Course of Business, (B) payment or agreement to pay any pension, 

  

 6 

 
retirement allowance, or other employee benefit not required by any Employee Benefit Plan to any Division Employee, whether past or present, other than in
the Ordinary Course of Business, or (C) entering into, adoption, amendment, or termination of any employment, bonus, severance, or retirement contract or collective bargaining agreement or adoption of any employee benefit plan or collective
bargaining agreement, other than in the Ordinary Course of Business; 
 (ix) (A) except for (x) sales of inventory in the
Ordinary Course of Business and (y) leases entered into in the Ordinary Course of Business, any sale, lease, transfer, or other disposition of any Division Real Property or assets of the Division or (B) creation of any Security Interest
(other than a Permitted Security Interest) on any material property or assets of the Division; 
 (x) termination or amendment
of, or entry into, any Material Contract; 
 (xi) acquisition of any business or Person, by merger or consolidation, purchase
of substantial assets or equity interests, or by any other manner, in a single transaction or a series of related transactions, or enter into any contract, letter of intent, or similar arrangement with respect to the foregoing; 
 (xii) commitment to make any capital expenditure in excess of $500,000 individually or $1,000,000 in the aggregate or otherwise acquire
any assets or properties (other than supplies or inventory in the Ordinary Course of Business) or entering into of any contract, letter of intent, or similar arrangement with respect to the foregoing; 
 (xiii) write-off as uncollectible of any notes or accounts receivable, except write-offs in the Ordinary Course of Business charged to
applicable reserves; 
 (xiv) payment, discharge, settlement, waiver, cancellation, or satisfaction of any material claims,
liabilities or obligations (contingent or otherwise), other than payments, discharges, settlements, waivers, cancellations, or satisfactions in the Ordinary Course of Business to the extent reflected or reserved against in the Financial Statements
for the fiscal year ended December 31, 2006 or the Most Recent Financial Statements; 
 (xv) change in accounting methods
of the Solo Parties relating to the business of the Division; 
 (xvi) plan, announcement, or implementation of any reduction
in force, lay-off, early retirement program, severance program, or other program or effort concerning the termination of employment of any Division Employees (other than in the Ordinary Course of Business) or entry into negotiations for the purpose
of making any amendments to any collective bargaining agreement; 
 (xvii) entry into any transaction with an Affiliate that
is not disclosed on Section 3(u) of the Disclosure Schedule pursuant to Section 3(u); 
 (xviii) loans, advances, or
capital contributions to, or investments in, any other Person (including Division Employees) by the Solo Parties other than (A) loans, advances, or capital contributions by the Solo Parties to CEGI or (B) advances for travel and other
normal business expenses in the Ordinary Course of Business; 
  

 7 

 (xix) cancellation or material reduction of any insurance coverage other than with
respect to any Employee Benefit Plan in the Ordinary Course of Business; or 
 (xx) agreement in writing to take any of the
foregoing actions. 
 (i) Legal Compliance. Each of the Solo Parties has, with respect to the operation of the Division, complied with
all applicable laws (including rules, regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and charges thereunder) of federal, state, local, and foreign governments (and all agencies thereof), except where the failure to
comply would not be material to the Division. Except as disclosed in Section 3(i) of the Disclosure Schedule, none of the Solo Parties has received written notice alleging the failure to comply with any legal requirement applicable to the
Division, which failure to comply would be material to the Division. 
 (j) Tax Matters. Except as set forth in Section 3(j) of
the Disclosure Schedule: 
 (i) Each of the Solo Parties has filed all Income Tax Returns that it was required, with respect
to the Division, to file, and has paid all Income Taxes shown thereon as owing, except where the failure to file Income Tax Returns or to pay Income Taxes would not have a Material Adverse Effect. 
 (ii) None of the Solo Parties has waived any statute of limitations in respect of Income Taxes relating to the Division or agreed to any
extension of time with respect to an Income Tax assessment or deficiency relating to the Division. 
 (iii) None of the Solo
Parties is a party to any Income Tax allocation or sharing agreement with respect to the Division. 
 (iv) To the Knowledge of
the Solo Parties, none of the Solo Parties has been a member of an Affiliated Group filing a consolidated federal Income Tax Return (other than a group the common parent of which was SF Holdings or one of its Affiliates). 
 (k) Real Property. 
 (i) Section 3(k)(i) of the Disclosure Schedule lists all real property, the use of which is substantially devoted to the operation of the Division (collectively, the “Division Real Property”), that is owned by the Solo
Parties. With respect to each such parcel of Division Real Property, except as disclosed in Section 3(k)(i) of the Disclosure Schedule: 
 (A) the identified owner has good, valid, and marketable fee title to the parcel of Division Real Property, free and clear of any Security Interest, easement, covenant, or other restriction, except for installments of
general real estate taxes and special assessments not yet due and payable, recorded easements, covenants, and other restrictions, and utility easements, building restrictions, zoning restrictions, and non-monetary defects in title that do not
interfere in any material respect with the use, occupancy, or operation of such parcel of real property; 
  

 8 

 (B) there are no leases, subleases, licenses, concessions, or other agreements granting
to any party or parties the right of use or occupancy of any portion of the parcel of Division Real Property; and 
 (C) there
are no outstanding options, rights of first refusal, or other contractual right to purchase the parcel of Division Real Property, or any portion thereof or interest therein. 
 (ii) Section 3(k)(ii) of the Disclosure Schedule lists all Division Real Property that is leased or subleased to any of the Solo
Parties. The Solo Parties have delivered to the Buyer correct and complete copies of the leases and subleases listed in Section 3(k)(ii) of the Disclosure Schedule. Each lease and sublease listed in Section 3(k)(ii) of the Disclosure
Schedule is valid, binding, enforceable in accordance with its terms, and in full force and effect, except where the invalidity, nonbinding nature, unenforceability, or ineffectiveness would not be material to the Division. All rent and other sums
and charges payable by the Solo Parties as tenant thereunder are current, no written notice of default or termination under any lease is outstanding, no termination event or condition or uncured material default on the part of the Solo Parties or,
to the Knowledge of the Solo Parties, the landlord, exists under any lease, and to the Knowledge of the Solo Parties, no event has occurred and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a
default or termination event or condition. 
 (l) Intellectual Property. 
 (i) Section 3(l)(i) of the Disclosure Schedule identifies each patent or registration which has been issued to any of the Solo
Parties with respect to any of its Intellectual Property used primarily in the operation of the Division, identifies each pending patent application or application for registration which any of the Solo Parties has made with respect to any of its
Intellectual Property used primarily in the operation of the Division, and identifies all material unregistered Intellectual Property owned by the Solo Parties and used primarily in the operation of the Division (all Intellectual Property identified
in Section 3(l)(i) of the Disclosure Schedule is collectively the “Owned Intellectual Property”). 
 (ii) Section 3(l)(ii) of the Disclosure Schedule identifies each material license, agreement, or other permission which any of the Solo Parties has granted to any third party or been granted by any third party with respect to any
Intellectual Property used primarily in the operation of the Division (collectively, the “Licensed Intellectual Property”) 
 (iii) All material Intellectual Property necessary for the operation of the Division as currently operated is Owned Intellectual Property owned by the Solo Parties free and clear of all liens or Licensed Intellectual
Property used by the Solo Parties pursuant to valid written licenses, agreements, or other permissions. The Solo Parties have made available to the Buyer copies of all such patents, registrations, applications, licenses, agreements, and permissions
described above. 
  

 9 

 (iv) Upon the Closing, the Buyer will own all right, title, and interest in and to all
Owned Intellectual Property and will have a valid written license, agreement, or other permission to use all Licensed Intellectual Property on the same terms and conditions as the Solo Parties enjoyed immediately prior to such Closing, which rights
are sufficient to operate the Division as operated as of the date hereof. The operation of the Division as currently operated does not infringe or otherwise violate any trademark rights of any third party and, to the Knowledge of the Solo Parties,
the operation of the Division as currently operated does not infringe or otherwise violate any other Intellectual Property rights of any third party. 
 (m) Contracts. Section 3(m) of the Disclosure Schedule lists all written contracts and other written agreements (other than agreements with customers and suppliers) to which any of the Solo Parties is a
party, and by which any of their assets or properties used in the operation of the Division are bound, (i) the performance of which will involve consideration (whether in form of payment to or receipt by the Solo Parties) in excess of $500,000,
(ii) pursuant to which any of the Solo Parties are committed to make a capital expenditure in excess of $250,000 that is not reflected in the capital expenditure budget for the Division, (iii) that place any limitation on the method of
conducting or scope of the business of the Division, including agreements containing covenants not to compete or that contain “most-favored-nations” provisions, (iv) involving any partnership, joint venture, strategic alliance, joint
development, or similar agreements, (v) financing documents, loan agreements, security agreements, or agreements providing for the guarantee of the obligations of any party (other than a Solo Party) or other contracts, agreements, or
instruments evidencing Indebtedness, including surety bonds, performance bonds, and letters of credit, (vi) relating to the issuance or ownership of any equity securities, or securities convertible into or exchangeable for equity securities, of
CEGI, (vii) relating to acquisitions or dispositions of all or a material portion of the assets of the Division other than in the Ordinary Course of Business, (viii) acquisition or disposition contracts relating to any Acquired Assets or
the Division and pursuant to which any Solo Party has any continuing obligations (including indemnification obligations, earn-out payments, and potential liability under any purchase price adjustments), (ix) with any labor union or association
relating to any current or former Division Employee or collective bargaining agreements, (x) relating to any licensed material Intellectual Property involving payments in excess of $250,000 per year (excluding “off-the-shelf”
software), (xi) except for employment relationships, compensation, and benefits paid in the Ordinary Course of Business or as set forth on Section 3(u) of the Disclosure Schedule, are contracts with (A) any Solo Party or any Affiliate
of any of the Solo Parties or (B) any current or former officer or director of a Solo Party or CEGI, or (xii) entered into since December 31, 2005 involving any resolution or settlement of any actual or threatened litigation,
arbitration, claim or other dispute with a value of greater than $500,000. The Solo Parties have delivered or made available to the Buyer a correct and complete copy of each such contract or other agreement (as amended to date) (collectively, the
“Material Contracts”) and the Customer and Supplier Agreements (as defined in Section 3(t)). All of the Material Contracts and the Customer and Supplier Agreements are enforceable by the Solo Party that is a party thereto in
accordance with the terms thereof except to the extent that such enforceability (A) may be limited by bankruptcy, insolvency, reorganization, moratorium, or other similar laws relating to creditors’ rights 

  

 10 

 
generally, and (B) is subject to general principles of equity. None of the Solo Parties is in breach or default under (and to the Knowledge of the Solo
Parties no event has occurred that would constitute a breach or default under) any Material Contract or any Customer and Supplier Agreement nor, to the Knowledge of the Solo Parties, is any other party to any of the Material Contracts or Customer
and Supplier Agreements in default thereunder, excluding, however, in each instance, any breach or default that would not be material to the Division. 
 (n) Insurance. Except as set forth in Section 3(n) of the Disclosure Schedule, with respect to each insurance policy (including policies providing property, casualty, liability, and workers’
compensation coverage) covering the employees, operations, or facilities of the Division: (i) such policy is legal, valid, binding, enforceable, and in full force and effect; (ii) none of the Solo Parties is in breach or default (including
with respect to the payment of premiums); and (iii) no party to the policy has repudiated any provision thereof. The employees, operations, and facilities of the Division have been covered during the past three years by insurance in scope and
amount customary and reasonable for the business in which it has engaged during such period. 
 (o) Litigation. Section 3(o) of
the Disclosure Schedule sets forth each instance in which any of the Solo Parties, with respect to the operation of the Division or CEGI, (i) is subject to any outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party to any action, suit, proceeding, hearing, or investigation of, in, or before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction, except in the case of clause (ii) where the action,
suit, proceeding, hearing, or investigation would not be material to the Division. 
 (p) Employee Benefits. 
 (i) Section 3(p)(i) of the Disclosure Schedule lists each Employee Benefit Plan that any of the Solo Parties maintains or to which
any of the Solo Parties contributes with respect to Division Employees. 
 (A) Except as identified in Section 3(p)(i)(A)
of the Disclosure Schedule, each such Employee Benefit Plan (and each related trust, insurance contract, or fund) has been maintained, funded. and administered in accordance with the terms of such Employee Benefit Plan and complies in form and in
operation in all material respects with the applicable requirements of ERISA and the Code. 
 (B) Except as identified in
Section 3(p)(i)(B) of the Disclosure Schedule, all contributions (including all employer contributions and employee salary reduction contributions) which are due have been made to each such Employee Benefit Plan which is an Employee Pension
Benefit Plan. All premiums or other payments which are due have been paid with respect to each such Employee Benefit Plan which is an Employee Welfare Benefit Plan. 
 (C) Except as identified in Section 3(p)(i)(C) of the Disclosure Schedule, each such Employee Benefit Plan which is intended to meet
the 

  

 11 

 
requirements of a “qualified plan” under Code section 401(a) has received a determination letter from the Internal Revenue Service to the effect
that it meets the requirements of Code section 401(a) and to the Knowledge of the Solo Parties, there are no facts and circumstances that could reasonably be expected to result in the loss of such qualification. 
 (D) Except as identified in Section 3(p)(i)(D) of the Disclosure Schedule, as of the last day of the most recent prior plan year, the
market value of assets under each such Employee Benefit Plan which is an Employee Pension Benefit Plan (other than any Multiemployer Plan) equaled or exceeded the present value of liabilities thereunder (determined in accordance with then current
funding assumptions). 
 (E) Except as identified in Section 3(p)(i)(E) of the Disclosure Schedule, the Solo Parties have
delivered or made available to the Buyer correct and complete copies of the plan documents and summary plan descriptions, the most recent determination letter received from the Internal Revenue Service, the most recent annual report (IRS Form 5500),
and all related trust agreements, insurance contracts, and other funding arrangements which implement each such Employee Benefit Plan. 
 (ii) Except as identified in Section 3(p)(ii) of the Disclosure Schedule, with respect to each Employee Benefit Plan that any of the Solo Parties or any ERISA Affiliate maintains or has maintained, since
February 22, 2004, or to which any of them contributes, or has been required to contribute, since February 22, 2004, in each case with respect to Division Employees, none of the Solo Parties has incurred any liability to the PBGC (other
than ordinary course PBGC premium payments) or otherwise under Title IV of ERISA (including any withdrawal liability) with respect to any such Employee Benefit Plan which is an Employee Pension Benefit Plan. 
 (iii) Except as identified in Section 3(p)(iii) of the Disclosure Schedule, no action, suit, proceeding, hearing, or investigation
with respect to the administration or the investment of the assets of any such Employee Benefit Plan (other than routine claims for benefits) is pending or to the Knowledge of the Solo Parties is threatened, except where the action, suit,
proceeding, hearing, or investigation would not be material to the operation of the Division. 
 (q) Environmental, Health, and Safety
Matters. 
 (i) Except as identified in Section 3(q)(i) of the Disclosure Schedule, the Division and all of its
operations are, and have been for the preceding three years, in material compliance with all Environmental, Health, and Safety Requirements, except for such noncompliance as would not be material to the operation of the Division. The Solo Parties
have all material permits and authorizations required under or pursuant to Environmental, Health, and Safety Requirements, and have operated the Division since February 22, 2004 in material compliance with all such permits and authorizations.

  

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 (ii) Except as identified in Section 3(q)(ii) of the Disclosure Schedule, the Solo
Parties have not received any written notice, suit, claim, proceeding, report, or other information regarding any actual or potential material violation of Environmental, Health, and Safety Requirements with respect to the current or, to the
Knowledge of the Solo Parties, former operations of the Division, or regarding any material liabilities or potential material liabilities (whether accrued, absolute, contingent, unliquidated, or otherwise), including liabilities relating to any
investigatory, remedial, or corrective obligations, relating to the operation of the Division or the Division Real Property arising under Environmental, Health, and Safety Requirements, which would be material to the Division. 
 (iii) Except as identified in Section 3(q)(iii) of the Disclosure Schedule, to the Knowledge of the Solo Parties, no release, spill,
escape, or disposal of any toxic, hazardous, or dangerous substance has occurred on or from any Division Real Property in a manner that could be reasonably anticipated to require any investigation or remedial action under or pursuant to any
Environmental, Health, and Safety Requirement. 
 (iv) This Section 3(q) contains the sole and exclusive representations
and warranties of the Solo Parties with respect to any environmental, health, or safety matters, including without limitation any arising under any Environmental, Health, and Safety Requirements. 
 (r) Employees. Except as disclosed in Section 3(r) of the Disclosure Schedule, (i) no Division Employee is covered by any collective
bargaining agreement; (ii) none of the Solo Parties has, with respect to the Division, experienced any strikes, walk-outs, work stoppages, slowdowns, or lockouts since February 22, 2004, nor, to the Knowledge of the Solo Parties, is any
such action threatened; (iii) none of the Solo Parties has, with respect to the Division, committed any unfair labor practice; (iv) the Solo Parties, with respect to the Division and current and former Division Employees, are operating the
Division in compliance in all material respects with all Labor Laws; (v) there is no pending or, to the Knowledge of the Solo Parties, threatened, organizing effort or demand for recognition or certification or attempt to organize the Division
Employees; and (vi) during the past 30 days and immediately prior to the Closing Date, the Solo Parties have not terminated (other than for cause) the employment of more than 15 Division Employees. 
 (s) Licenses and Permits. Except as disclosed in Section 3(s) of the Disclosure Schedule, the Solo Parties possess all licenses and permits
necessary to operate the Division, except for any such licenses and permits, the failure of the Solo Parties to possess which, would not be material to the Division. 
 (t) Customers and Suppliers. 
 (i) Section 3(t)(i) of the Disclosure Schedule
sets forth the names of the ten largest customers of the Division measured by dollar value for the twelve calendar months ended December 31, 2006 and the total sales in dollars for each such customer from January 1, 2007 through
June 30, 2007 (collectively, the “Top Customers”). As of the date of this Agreement, (A) none of the customers listed on Section 3(t)(i) of the 

  

 13 

 
Disclosure Schedule has, since January 1, 2007, notified any Solo Party in writing that it is (x) canceling or terminating its relationship with
the Division, (y) materially and adversely modifying its relationship with the Division or (z) materially limiting its purchases from the Division and (B) there are no material disputes pending between any Solo Party, on the one hand,
and any customer listed on Section 3(t)(i) of the Disclosure Schedule, on the other hand. 
 (ii) Section 3(t)(ii)
of the Disclosure Schedule sets forth the names of the ten largest suppliers of the Division measured by dollar value for the twelve calendar months ended December 31, 2006 (collectively, the “Top Suppliers”). As of the date of
this Agreement, (A) none of the suppliers listed on Section 3(t)(ii) of the Disclosure Schedule has, since January 1, 2007, notified any Solo Party in writing that it is (x) canceling or terminating its relationship with the
Division, (y) materially and adversely modifying its relationship with the Division or (z) materially limiting its sales to the Division and (B) there are no material disputes pending between any Solo Party, on the one hand, and any
supplier listed on Section 3(t)(ii) of the Disclosure Schedule, on the other hand. 
 (iii) The written agreements
between one of the Solo Parties, on the one hand, and one of the Top Customers or Top Suppliers, on the other hand, are collectively referred to as the “Customer and Supplier Agreements.” 
 (u) Affiliate Relationships. Except as set forth on Section 3(u) of the Disclosure Schedule, no Solo Party or any Affiliate of a Solo Party
nor any officer or director of any Solo Party possesses, directly or indirectly, any financial interest in, or is a director, officer, or employee of, any Person that is a Top Supplier or Top Customer or a competitor of the Division identified in
Section 3(u) of the Disclosure Schedule or a lessor or lessee identified in Section 3(k)(ii) of the Disclosure Schedule. Ownership of five percent (5%) or less of any class of securities of a company whose securities are registered
under the Securities Exchange Act of 1934, as amended, shall not be deemed to be a financial interest for purposes of this Section 3(u). 
 (v) Disclaimer of other Representations and Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 3, THE SOLO PARTIES MAKE NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, IN RESPECT OF ANY OF THEIR
ASSETS (INCLUDING, WITHOUT LIMITATION, THE ACQUIRED ASSETS), LIABILITIES OR OPERATIONS, INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY
EXPRESSLY DISCLAIMED. BUYER HEREBY ACKNOWLEDGES AND AGREES THAT, EXCEPT TO THE EXTENT SPECIFICALLY SET FORTH IN THIS SECTION 3, THE BUYER IS PURCHASING THE ACQUIRED ASSETS ON AN “AS-IS, WHERE-IS” BASIS. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING, EXCEPT AS SET FORTH HEREIN, THE SOLO PARTIES MAKE NO REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN THE ACQUIRED ASSETS OR ANY LIABILITIES OTHER THAN THE ASSUMED LIABILITIES, AND NONE SHALL BE IMPLIED AT LAW OR IN
EQUITY. 
  

 14 

 4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. 
 The Buyer represents and warrants to the Solo Parties that the statements contained in this Section 4 are correct and complete as of the date of this
Agreement and will be correct and complete as of the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 4), except as set forth in the Disclosure Schedule.
The Disclosure Schedule will be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Section 4. 
 (a) Organization of the Buyer. The Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 
 (b) Authorization of Transaction. The Buyer has full power and authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. Assuming due authorization, execution and delivery by the Solo Parties, this Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its
terms and conditions. 
 (c) Noncontravention. Neither the execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments and assumptions referred to in Section 2 above), will (i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the Buyer is subject or any provision of its charter or bylaws, (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its
assets is subject. The Buyer does not need to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order for the Parties to consummate the transactions contemplated
by this Agreement (including the assignments and assumptions referred to in Section 2 above), except (A) for compliance with the Hart-Scott-Rodino Act and (B) where the failure to give notice, to file, or to obtain any authorization,
consent, or approval would not have a material adverse effect on the ability of the Parties to consummate the transactions contemplated by this Agreement. 
 (d) Brokers’ Fees. The Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Solo
Parties could become liable or obligated. 
 (e) Financing. The Buyer has delivered to the Solo Parties a true and complete copy of
(i) an executed equity commitment letter dated as of the date hereof from Kohlberg Management VI, LLC in favor of the Buyer (the “Equity Commitment Letter”), and (ii) an executed commitment letter dated as of the date
hereof (together with the exhibits and attachments thereto, the “Debt Financing Documents”) from National City Bank (the “Lender”), each of which is in form and substance reasonably satisfactory to the Solo Parties.
Subject to the funding of the funds set forth in the Debt Financing Documents (the “Debt Financing”) and the Equity Commitment Letter, in each case, in accordance with and subject to their terms and 

  

 15 

 
conditions, the Buyer will have the funds necessary to pay in full in cash at Closing all of the amounts required to be paid by it under Section 2
hereof and all its fees and expenses required in order to consummate the transactions contemplated by this Agreement. 
 5. PRE-CLOSING
COVENANTS. 
 The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing. 

(a) General. Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the closing conditions set forth in Section 7 below). 
 (b) Notices and Consents. The Solo Parties shall seek to obtain each of the third party consents listed on Section 5(b) of the
Disclosure Schedule (collectively, the “Required Consents”). In addition, the Solo Parties will give any notices to third parties, and the Solo Parties will use their reasonable best efforts to obtain, any other third party consents
that the Buyer reasonably may request in connection with the matters referred to in Section 3(c) above. Each of the Parties will give any notices to, make any filings with, and use its reasonable best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection with the matters referred to in Section 3(c) and Section 4(c) above. Without limiting the generality of the foregoing, each of the Parties will file any
Notification and Report Forms and related material that it may be required to file with the Federal Trade Commission and the Antitrust Division of the United States Department of Justice under the Hart-Scott-Rodino Act as soon as practicable after
the execution of this Agreement, will use its reasonable best efforts to obtain a waiver from the applicable waiting period, and will make any further filings pursuant thereto that may be necessary, proper, or advisable in connection therewith.

 (c) Operation of Business. With respect to the operation of the Division, none of the Solo Parties will engage in any practice,
take any action, or enter into any transaction that would result in a breach of the representations made in Section 3(h) hereof, if such action was taken after the date hereof, and the Solo Parties shall conduct the business of the Division
within the Ordinary Course of Business, including the use of their commercially reasonable efforts to maintain their relationships with customers, suppliers, agents, and employees of the Division. The Solo Parties shall use commercially reasonable
efforts to maintain and protect the Owned Intellectual Property and the Licensed Intellectual Property. 
 (d) Access. The Solo
Parties will permit representatives of the Buyer to have full access at all reasonable times, and in a manner so as not to interfere with the normal business operations of the Division and the Solo Parties, to all premises, properties, personnel,
books, records, contracts, and documents of or pertaining to the business and operations of the Division. The Buyer hereby acknowledges and agrees that any Confidential Information it receives from any of the Solo Parties in the course of the
reviews contemplated by this Section 5(d) shall be subject to the terms and conditions of those certain confidentiality agreements, dated as of February 8, 2007 and July 10, 2007, by and between the Buyer and Solo Cup Company (the
“Confidentiality Agreements”), which Confidentiality Agreements shall automatically terminate as to any Confidential Information related solely to the Division if the Closing occurs. 
  

 16 

 (e) Notice of Developments. 
 (i) The Solo Parties will give prompt written notice to the Buyer of any development or discovery (of which its senior officers become
aware) causing a breach of any of their representations and warranties listed in Section 8(a)(ii) and 8(a)(iii) below. If (x) the Buyer would have the right to terminate this Agreement pursuant to Section 9(a)(ii) below by reason of
any development or discovery, and (y) the Solo Parties inform the Buyer in writing that they are unable to deliver the certificate required by Section 7(a)(iv) with respect to the condition set forth in Section 7(a)(i) due to such
development or discovery, and (z) the Buyer nevertheless elects to proceed with the Closing, then the Solo Parties shall have no liability to the Buyer under Article 8 of this Agreement or otherwise with respect to such development or
discovery. 
 (ii) Each Party will give prompt written notice to the other Party of any material adverse development causing a
breach of any of its own representations and warranties listed in Section 8(a)(i) below and Section 4 above. No disclosure by any Party pursuant to this Section 5(e)(ii), however, shall be deemed to amend or supplement the Disclosure
Schedule or to prevent or cure any misrepresentation or breach of warranty. 
 (f) Exclusivity. From and after the date hereof through
the Closing Date, the Solo Parties will not solicit, initiate, or encourage the submission of any proposal or offer from any Person relating to the acquisition of all or substantially all of the assets of the Division. 
 (g) Collective Bargaining Agreements; Multiemployer Plan. The Buyer and, with respect to clauses (i), (ii), and (iv) of this
Section 5(g), the Solo Parties, shall (i) obtain any consent required for the Buyer to become a party to each of the collective bargaining agreements covering Division Employees, as identified on Section 5(g) of the Disclosure
Schedule (collectively, the “CBAs”) on the same terms as in effect on the date hereof; (ii) obtain any consent required for Buyer to become a party to the Multiemployer Plan covering Division Employees under which Buyer shall
have an obligation to contribute to the Multiemployer Plan substantially the same number of contribution base units for which the Solo Parties had an obligation to contribute prior to the Closing Date; (iii) obtain, and be prepared to post at
the time required by section 4204 of ERISA, a Bond in the Required Bond Amount with respect to the Multiemployer Plan covering Division Employees, in accordance with section 4204 of ERISA, to the extent that this requirement is not waived by such
Multiemployer Plan; and (iv) comply in all material respects with the requirements of section 4204 of ERISA. The Buyer shall have provided copies of such materials to the Solo Parties or their counsel. The Buyer and the Solo Parties agree to
cooperate in good faith. 
 (h) Intercompany Accounts of CEGI. Immediately prior to Closing, the Solo Parties will cause any
intercompany indebtedness or other payables owed (i) by CEGI to any Solo Party or its Affiliates (other than CEGI) or (ii) by any Solo Party or any of its Affiliates (other than CEGI) to CEGI in each case to be settled, cancelled or
terminated in full. 
  

 17 

 (i) Financing Related Cooperation. The Solo Parties agree to provide, and will cause the
appropriate officers, employees, and advisors of the Division to provide, upon the reasonable request of the Buyer, and at the Buyer’s sole cost and expense, all reasonable cooperation in connection with the arrangement of the Debt Financing in
connection with the transactions contemplated by this Agreement, including (i) participation in meetings, presentations, road shows, drafting sessions, and due diligence sessions, (ii) furnishing the Buyer and its Affiliates and its
financing sources with financial and other pertinent information regarding the Division as may be reasonably requested by the Buyer, (iii) cooperating with the marketing efforts of the Buyer and its financing sources for any debt to be raised
to complete the transactions contemplated by this Agreement, (iv) facilitating the pledging of collateral, and (v) providing and executing documents as may be reasonably requested by the Buyer, including a certificate of the chief
financial officer (or similar official) of CEGI with respect to solvency matters, comfort letters of accountants, and legal opinions as are customary for transactions of the type contemplated by this Agreement and as may be reasonably requested by
the Buyer. In no event shall any Solo Party be required to pay any commitment or similar fee or incur any other liability in connection with the Debt Financing. 
 (j) Establishment of Buyer Employee Benefit Plans. Notwithstanding anything else contained herein to the contrary, the Buyer agrees to use commercially reasonable efforts to establish and implement
Employee Benefits Plans for the benefit of the Division Employees hired by the Buyer as of the Closing Date (collectively, the “Transferred Employees”), in order to provide the Transferred Employees with coverage under Employee
Welfare Benefit Plans substantially similar to the coverage provided to the Transferred Employees under the Employee Benefit Plans sponsored and maintained by the Solo Parties as of the Closing. Consistent with the foregoing, Buyer agrees to take
commercially reasonable action as may be reasonably required under the circumstances to cause the establishment and implementation of such arrangements immediately after the Closing, but which shall in no event become effective later than
November 1, 2007, including, but not limited to, the engagement of service providers, adoption of Employee Benefit Plan documents and ancillary instruments, implementation of the required administrative processes and procedures, and preparation
of the required employee communications. Upon the Solo Parties’ reasonable request, the Buyer agrees to provide the Solo Parties with pertinent information as to the Buyer’s progress in establishing and implementing Employee Benefit Plans
as required by this Section 5(j). The Solo Parties agree to cooperate and provide reasonable assistance to the Buyer to accomplish the actions in the preceding sentence.  
 6. POST-CLOSING COVENANTS. 
 The
Parties agree as follows with respect to the period following the Closing. 
 (a) General. In case at any time after the Closing any
further action is necessary or desirable to carry out the purposes of this Agreement, each of the Parties will take such further action (including the execution and delivery of such further instruments and documents) as the other Party reasonably
may request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification therefor under Section 8 below). 
  

 18 

 (b) Litigation Support. In the event and for so long as any Party actively is contesting or
defending against any action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving the Division, the other Party will cooperate with the contesting or defending Party and its counsel in
the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the contesting or defending
Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 8 below). 
 (c)
Transition. 
 (i) During the Non-Compete Period (as defined in Section 6(d)), none of the Solo Parties will take any action that
is designed or intended to have the effect of discouraging any lessor, licensor, customer, supplier, or other business associate of any of the Division and the Division Subsidiaries from maintaining the same business relationships with the Buyer and
the Division Subsidiaries after the Closing as it maintained with the Division and the Division Subsidiaries prior to the Closing. 
 (ii) The
Buyer and the Solo Parties agree to furnish or cause to be furnished to each other, and each at their own expense, as promptly as practicable, such information (including access to books and records) and assistance, including making employees
available on a mutually convenient basis to provide additional information and explanations of any material provided, relating to the Division, the Acquired Assets and the Assumed Liabilities as is reasonably necessary for the filing of any Income
Tax Return and elections in respect thereof, for the preparation for any audit, and for the prosecution or defense of any claim, suit, or proceeding relating to any adjustment or proposed adjustment with respect to any Income Tax. 
 (iii) Notwithstanding anything contained herein to the contrary, for the period beginning as of the Closing Date and ending on October 31, 2007 (the
“Benefits Transition Period”), upon the Buyer’s written request, the Solo Parties shall permit the Transferred Employees to continue active participation solely in the Employee Benefit Plans set forth on Section 6(c)(iii)
of the Disclosure Schedule (collectively, the “Solo Plans”), to the extent set forth in such written request. The Solo Parties agree to amend the Solo Plans as required to facilitate the continued Solo Plan participation by the
Transferred Employees, and further agree to use commercially reasonable efforts to obtain the approval and consent of the applicable insurers and service providers as required for the Transferred Employees’ continued participation. The Parties
agree that notwithstanding the Transferred Employees’ continued active participation in the Solo Plans during the Benefits Transition Period, at no time during such period shall the Transferred Employees be deemed as common law nor leased
employees of the Solo Parties as of and after the Closing Date. Neither shall the Solo Parties have any liability 

  

 19 

 
whatsoever for the cost of the Transferred Employees’ coverage under the Solo Plans nor for any claims or administrative expenses attributable to the
Transferred Employees’ participation in the Solo Plans during the Benefits Transition Period, provided that the Solo Parties shall act in good faith and provide the level of services as in effect immediately prior to the Closing Date.
Nor shall the Solo Parties have any liability for COBRA continuation coverage for any Transferred Employees who terminate employment with the Buyer during the Benefit Transition Period. As a condition of the Transferred Employees’ continued
participation in the Solo Plans during the Benefits Transition Period, the Buyer agrees (y) to comply with the indemnification requirements of Section 8(d)(iii) hereof as well as the terms and conditions of the Transition Services
Agreement by and between the Buyer and the Solo Parties, and (z) to deposit with a mutually agreeable escrow agent a cash lump sum amount equal to the claims paid in connection with the Solo Plans, in which the Transferred Employees continue to
participate after the Closing Date, for the first six months of the 2007 calendar year, annualized and prorated based upon the number of days in the Benefit Transition Period multiplied by 1.15 (the “Transition Benefits Escrow
Amount”). Within a reasonable period of time following the end of the Benefits Transition Period, after which the Solo Parties determine in good faith that all pending claims under the Solo Plans in connection with the Transferred Employees
have been properly submitted and paid, but in no event later than January 31, 2008, the Solo Parties shall return the remaining Transition Benefits Escrow Amount to the Buyer. For the avoidance of doubt, nothing in the Section 6(c)(iii)
shall relieve the Buyer from complying with the terms and conditions of the CBAs expressly assumed by the Buyer under this Agreement, nor the terms of this Agreement as they relate to the CBAs and the liability thereunder, as of and after the
Closing. 
 (d) Covenant Not to Compete. 
 (i) In consideration of and as an inducement to the Buyer to enter into this Agreement and to consummate the transactions contemplated hereby, for a period of two years from and after the Closing Date (the
“Non-Compete Period”), the Solo Parties agree that they will not, and will cause their controlled Affiliates not to, engage, directly or indirectly, whether as a partner, stockholder, member, principal, agent, or consultant, in any
business involving the sale of napkins (excluding napkins contained in cutlery or “take-away” packets), table covers, tray covers, doilies, placemats, coasters, fluted bake cups, Mylar balloons, party favors, or other tissue-based products
in or throughout North America (the “Competing Business”); provided, however, that no owner of less than 5% of the outstanding stock of any publicly traded corporation shall be deemed to engage solely by reason thereof in any
such business and provided further that the activity described in Section 6(d) of the Disclosure Schedule shall not be deemed to violate this Section 6(d). The covenant set forth in this Section 6(d) excludes all other
businesses of the Solo Parties other than the Competing Business. 
 (ii) If any Solo Party breaches the provisions of Section 6(d)(i)
(the “Restrictive Covenant”), the Buyer shall have the right and remedy without regard 

  

 20 

 
to any other available remedy to (x) have the Restrictive Covenant specifically enforced by any court of competent jurisdiction and (y) have issued
an injunction restraining any such breach; it being agreed that any breach of the Restrictive Covenant would cause irreparable and material loss and damage to the Buyer, the amount of which cannot be readily determined and as to which it will not
have an adequate remedy at law or in damages. 
 (iii) It is the desire and intent of the Parties that the Restrictive Covenant will be
enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any Restrictive Covenant or any portion thereof shall be adjudicated to be invalid or
unenforceable, such Restrictive Covenant shall be deemed amended to the extent necessary in order that such provision be valid and enforceable, such amendment to apply only with respect to the operation of such Restrictive Covenant in the particular
jurisdiction in which such adjudication is made. 
 (e) Multiemployer Plan; Bond. Throughout the Multiemployer Plan Period, the Buyer
shall (i) make the contributions required by section 4204(a)(1)(A) of ERISA to such Multiemployer Plan pursuant to the terms of the CBAs; (ii) pay any withdrawal liability properly assessed to Buyer by such Multiemployer Plan;
(iii) maintain in full force and effect each Bond, in the Required Bond Amount; and (iv) comply in all material respects with the requirements of section 4204 of ERISA. Subject to Section 8(d)(i) of this Agreement, in the event that
the Buyer breaches one or more of the covenants set forth in clauses (i) and (ii) of this Section 6(e), the Solo Parties will be secondarily liable for any withdrawal liability they would have had to any such Multiemployer Plan with
respect to the operations of the Division (but for section 4204 of ERISA). Notwithstanding the foregoing, nothing in this Section 6(e) shall prohibit Buyer from effecting a consolidation, shut down, or reduction in force that would result in a
withdrawal liability, subject to Section 8(c)(iii). 
 (f) COBRA and WARN Obligations. Buyer covenants to the Solo Parties that
it will hire such of the Division Employees so as to not result in the Solo Parties being subject to an obligation to issue WARN notices, provided that the Solo Parties are not in breach of the representation set forth in Section 3(r)(vi) of
this Agreement. Buyer further covenants that, subject to Section 6(c)(iii), Buyer shall offer group health plan coverages (excluding retiree medical coverage) comparable in the aggregate to those currently offered by the Solo Parties to such
Division Employees and shall be primarily responsible for providing such Division Employees who become employees of the Buyer after the Closing, whose “qualifying event,” within the meaning of section 4980B(f) of the Code, occurs after the
Closing Date (and such employees’ “qualified beneficiaries” within the meaning of section 4980B(f) of the Code) with continuation of group health coverage required by section 4980B(f) of the Code. Buyer will notify the Solo Parties of
any Division Employee not hired by the Buyer within five calendar days after the Closing Date. The Solo Parties will be responsible for providing Division Employees and their “qualified beneficiaries” who do not become employees of the
Buyer with continuation of group health care coverage required under section 4980B(f) of the Code. 
 (g) Assumption of Employer
Responsibilities. With respect to the Transferred Employees (as defined in Section 6(c)(iii)), (i) Buyer shall assume on the Closing Date all 

  

 21 

 
liabilities of the Solo Parties to such Division Employees for wages, incentive compensation, vacations, perquisites, worker’s compensation benefits,
statutory benefits, and entitlement including, without limitation, all obligations to such Division Employees under applicable federal, state, or local law that have accrued on or prior to the Closing Date solely to the extent such amounts have been
included and are set forth in reasonable detail in the Working Capital Statement or as set forth in Section 6(g)(i) of the Disclosure Schedule and (ii) the Solo Parties shall retain all liabilities to the Transferred Employees and any
Division Employees who are not Transferred Employees for wages, incentive compensation, vacations, perquisites, worker’s compensation benefits, statutory benefits, and entitlement including, without limitation, all obligations to the
Transferred Employees and any Division Employees who are not Transferred Employees under applicable federal, state, or local law that have accrued on or prior to the Closing Date to the extent such amounts have not been included in the Working
Capital Statement or set forth in Section 6(g)(i) of the Disclosure Schedule; provided, however, that the Buyer will only assume vacations to the extent that the Division Employees authorize a transfer of such accrued vacations
from the Solo Parties to the Buyer. 
 (h) Non-Solicitation of Division Employees Non-Solicitation by the Solo Parties. For a period
of 18 months from the Closing Date, the Solo Parties, including their Affiliates, may not, without the prior written consent of the Buyer, directly or indirectly solicit any salaried or management Transferred Employee who is actively providing
services to the Division as of the Closing Date (collectively, the “Covered Division Employees”). Notwithstanding anything to the contrary in this Section 6(h), general employment solicitations made via broadly disseminated
media, such as radio, internet, or newspaper advertisements, shall not be deemed to violate this Section 6(h), provided that such solicitations are not specifically targeted at Covered Division Employees. 
 (i) Non-Solicitation by the Buyer. For a period of 18 months from the Closing Date, the Buyer, including its Affiliates, may not, without the
prior written consent of the Solo Parties, directly or indirectly solicit any salaried or management employee of the Solo Parties who is actively providing services to the Solo Parties as of the Closing Date or any other employee with whom the Buyer
or its Affiliates came into contact as part of the process leading to the execution of this Agreement (collectively, the “Covered Solo Employees”). Notwithstanding anything to the contrary in this Section 6(i), general
employment solicitations made via broadly disseminated media, such as radio, internet, or newspaper advertisements, shall not be deemed to violate this Section 6(i), provided that such solicitations are not specifically targeted at Covered Solo
Employees. 
 (j) Mail and Other Communications. The Solo Parties agree that at any time and from time to time after the Closing, the
Buyer and its Affiliates shall have the right and authority to open all mail and other communications, in all formats (both tangible and intangible) (collectively, “Mail”), including service of process, received by the Buyer or its
Affiliates pertaining to the Division, even if addressed to the Solo Parties or any of their Affiliates, for processing or forwarding to the Solo Parties. The Solo Parties further agree to promptly forward to the Buyer all Mail pertaining to the
Division received by the Solo Parties or any of their Affiliates at any time and from time to time after the Closing. 
  

 22 

 (k) Collection of Accounts Receivable. The Solo Parties agree that, from and after the Closing,
the Buyer shall have the right and authority to collect for the Buyer’s own account or for the account of its Affiliates all accounts receivable relating to the Division. The Buyer and its Affiliates shall have the right to endorse with the
name of the Solo Parties and their Affiliates on any checks received on account of any such accounts receivable. The Solo Parties agree to promptly transfer and deliver to the Buyer, any cash or property that the Solo Parties and their Affiliates
may receive in respect of any such accounts receivable. 
 (l) Confidentiality. Except as otherwise provided in this Agreement, after
the Closing, no Solo Party shall disclose to third persons any information concerning the operation of the Division and the transfer of the Acquired Assets hereunder, which information was disclosed to and transferred, assigned, licensed, or
otherwise made available to Buyer or its Affiliates. Without limitation, this obligation of confidentiality shall apply to information related to the products, business plans, strategies, technologies, and future business relationships of the
Division. This obligation of confidentiality shall not apply to the extent any such information (i) is or becomes part of the public domain through no fault of the Solo Parties (but only after and only to the extent that it is published or
otherwise becomes part of the public domain); (ii) after the Closing, comes into the possession of the Solo Parties from a third person, other than Buyer or its Affiliates, who was not, to the Solo Parties’ Knowledge, under a continuing
obligation of confidence to the disclosing party; (iii) is disclosed to advisors to the Solo Parties in connection with the preparation of financial statements or internal reports or documents, (iv) is disclosed to governmental or
regulatory authorities to the extent deemed necessary or appropriate in the reasonable judgment of the Solo Parties; or (v) is disclosed by the Solo Parties pursuant to any judicial compulsion, provided that Buyer is notified at the time such
judicial action is initiated. 
 7. CONDITIONS TO OBLIGATION TO CLOSE . 
 (a) Conditions to Obligation of the Buyer. The obligation of the Buyer to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions: 
 (i) subject to Section 5(e) hereof, the
representations and warranties set forth in Section 3 above shall be true and correct on the date hereof and on the Closing Date as though made on such date without regard to any materiality or Material Adverse Effect qualifiers, except to the
extent that failures of such representations and warranties, individually or in the aggregate, to be so true and correct do not or would not have, individually or in the aggregate, a Material Adverse Effect; provided, however that the
representations and warranties contained in Sections 3.1(f) (Subsidiaries) and 3.1(h) (No Material Adverse Effect) shall be true and correct as of the date hereof and as of the Closing Date as if made at and as of such date. 
 (ii) the Solo Parties shall have performed and complied with all of their pre-closing covenants under Section 5 of this Agreement in
all material respects through the Closing; 
  

 23 

 (iii) there shall not be any injunction, judgment, order, decree, ruling, or charge in
effect preventing consummation of any of the transactions contemplated by this Agreement; 
 (iv) the Solo Parties shall have
delivered to the Buyer a certificate to the effect that each of the conditions specified above in Section 7(a)(i)-(iii) is satisfied in all respects; 
 (v) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated; 
 (vi) the relevant Solo Parties shall have executed and delivered to Buyer the transitional agreement in form
and substance as set forth in EXHIBIT F attached hereto (the “Transition Services Agreement”) and the same shall be in full force and effect; 
 (vii) all actions to be taken by the Solo Parties in connection with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the transactions contemplated hereby shall have been taken or obtained; 
 (viii) Buyer shall have obtained the Debt Financing described in Section 4(e) on substantially the terms as contemplated by the Debt Financing Documents, provided that any failure of the Buyer to obtain
the Debt Financing is not due to the Lender refusing to provide the Debt Financing because of (A) a competing offering, placement, or arrangement or any debt securities or bank financing by or on behalf of the Buyer or any affiliate thereof or
(B) the failure of Buyer or any of its affiliates to subordinate management fees; 
 (ix) the Required Consents shall
have been obtained; and 
 (x) the consent, if any, required for Buyer to become a party to each of the CBAs on terms no less
favorable than those in effect as of the date hereof shall have been obtained. 
 The Buyer may waive any condition specified in this
Section 7(a) if it executes a writing so stating at or prior to the Closing. 
 (b) Conditions to Obligation of the Solo Parties.
The obligation of the Solo Parties to consummate the transactions to be performed by them in connection with the Closing is subject to satisfaction of the following conditions: 
 (i) the representations and warranties set forth in Section 4 above shall be true and correct in all material respects at and as of
the Closing Date; 
 (ii) the Buyer shall have performed and complied with all of its pre-closing covenants under
Section 5 of this Agreement in all material respects through the Closing; 
  

 24 

 (iii) there shall not be any injunction, judgment, order, decree, ruling, or charge in
effect preventing consummation of any of the transactions contemplated by this Agreement; 
 (iv) the Buyer shall have
delivered to the Solo Parties a certificate to the effect that each of the conditions specified above in Section 7(b)(i)-(iii) is satisfied in all respects; 
 (v) all applicable waiting periods (and any extensions thereof) under the Hart-Scott-Rodino Act shall have expired or otherwise been
terminated; 
 (vi) the Buyer shall have executed and delivered to the Solo Parties the Transition Services Agreement and the
same shall be in full force and effect; 
 (vii) all actions to be taken by the Buyer in connection with consummation of the
transactions contemplated hereby and all certificates, instruments, and other documents required to effect the transactions contemplated hereby shall have been taken or obtained; and 
 (viii) the Buyer shall have agreed in writing to assume each of the CBAs, effective as of the Closing on terms no less favorable to Buyer
than those in existence on the date hereof. 
 The Solo Parties may waive any condition specified in this Section 7(b) if they execute a writing so
stating at or prior to the Closing. 
 8. REMEDIES FOR BREACHES OF THIS AGREEMENT. 
 (a) Survival of the Solo Parties’ Representations, Warranties, and Covenants. The representations and warranties of the Solo Parties contained
in Section 3 of this Agreement, the covenants set forth in Sections 5 and 6 of this Agreement, and the other agreements set forth herein shall survive the Closing and continue in full force and effect as follows: 
 (i) The representations and warranties contained in Sections 3(a) (Organization of Solo Parties), 3(b) (Authorization of Transaction),
3(d) (Brokers’ Fees), and 3(f) (Subsidiaries) and the indemnity set forth in Section 8(c)(ii) shall survive the Closing and continue in full force and effect forever thereafter (subject to any applicable statutes of limitations).

 (ii) The representations and warranties contained in Sections 3(j) (Tax Matters) and 3(p) (Employee Benefits) shall survive
the Closing and continue in full force and effect during the period ending on the date of expiration of the applicable statute of limitations. 
 (iii) The representations and warranties contained in Section 3 (other than those referenced in Sections 8(a)(i) and 8(a)(ii) above) and the covenants of the Solo Parties set forth in Section 5 shall survive
for a period of one year after the Closing. 
  

 25 

 (iv) The covenants of the Solo Parties set forth in Section 6 shall survive the
Closing and continue in full force and effect for the periods specified therein. 
 (b) Survival of the Buyer’s Representations and
Warranties. The representations and warranties of the Buyer contained in Section 4 of this Agreement shall survive the Closing and continue in full force and effect as follows: 
 (i) The representations and warranties contained in Sections 4(a) (Organization of the Buyer), 4(b) (Authorization of Transaction), 4(d)
(Brokers’ Fees), and 4(e) (Financing) shall survive the Closing and continue in full force and effect forever thereafter (subject to any applicable statutes of limitations). 
 (ii) The representations and warranties contained in Section 4(c) (Noncontravention) shall survive the Closing and continue in full
force and effect for a period of one year after the Closing. 
 (iii) The covenants of the Buyer set forth in Section 6
shall survive the Closing and continue in full force and effect for the periods specified therein. 
 (c) Indemnification Provisions for
Benefit of the Buyer. 
 (i) In the event that the Solo Parties breach any of their representations, warranties, and
covenants contained in this Agreement and if there is an applicable survival period pursuant to Section 8(a) above, provided that the Buyer makes a written claim for indemnification against the Solo Parties pursuant to Section 10(g) below
within such survival period, then the Solo Parties, jointly and severally, agree to indemnify the Buyer from and against the entirety of any Adverse Consequences the Buyer shall suffer by the breach; provided, however, that the Solo Parties
shall not have any obligation to indemnify the Buyer from and against any Adverse Consequences caused by the breach of any representation or warranty (determined without regard to any materiality or Material Adverse Effect qualifiers) of the Solo
Parties listed in Sections 8(a)(ii) and 8(a)(iii) above (whether or not notice of such breach was provided pursuant to Section 5(e)) until the Buyer has suffered Adverse Consequences by reason of all such breaches in excess of $4,000,000 (the
“Basket”) (after which point the Solo Parties will be obligated only to indemnify the Buyer from and against such Adverse Consequences in excess of the Basket), and provided further that, with respect to breaches of the
representations or warranties listed in Sections 8(a)(ii) and 8(a)(iii), the maximum amount of Adverse Consequences of the Buyer for which the Solo Parties may be liable under this Section 8(c)(i) shall not exceed an aggregate ceiling of
$10,000,000 (the “Cap”) (after which point the Solo Parties will have no obligation to indemnify the Buyer under this Section 8(c)(i) with respect to breaches of the representations and warranties identified in Sections
8(a)(ii) and 8(a)(iii) from and against such Adverse Consequences in excess of the Cap). Breaches of the covenants and breaches of the representations or warranties listed in Section 8(a)(i) shall not be subject to the Basket or the Cap.

 (ii) The Solo Parties, jointly and severally, agree to indemnify the Buyer from and against the entirety of any Adverse
Consequences the Buyer shall suffer in respect of 

  

 26 

 
any Excluded Liability (including any liability of the Solo Parties that becomes a liability of the Buyer under any bulk transfer law of any jurisdiction,
under any common law doctrine of de facto merger or successor liability, or otherwise by operation of law). 
 (iii)

 (A) Notwithstanding the above provisions of this Section 8(c) and anything contained in this Agreement to the
contrary, the Solo Parties agree to jointly and severally indemnify and hold Buyer harmless from and against the imposition of partial withdrawal liability, as such term is defined under section 4205 of ERISA, imposed by PACE Industry
Union-Management Pension Fund (“PIUMPF”) on Buyer [**]. The indemnity obligations of the Solo Parties pursuant to this Section 8(c)(iii) shall be subject to neither the Basket nor the Cap. In addition, Section 8(e) and the
first and last sentences of Section 8(f) shall not apply to the indemnity obligations of the Solo Parties pursuant to this Section 8(c)(iii). The foregoing limitations on the amount of the Solo Parties’ indemnification obligation
shall be applied notwithstanding the actual amount of the assessment. 
 (B) In the event withdrawal liability is imposed by
PIUMPF on the Buyer for a complete withdrawal under Section 4203 of ERISA that is triggered by or results from any action of Buyer [**] the Solo Parties shall jointly and severally indemnify the Buyer from such portion of such liability,
subject to the Maximum Withdrawal Indemnification. For the avoidance of doubt, the liability of the Solo Parties under this Section 8(c)(iii) shall not in the aggregate exceed the Maximum Withdrawal Indemnification. 
 ** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and
Exchange Commission. 
  

 27 

 (C) Buyer agrees that, as a condition precedent to the Solo Parties’ indemnification
obligation under this Section 8(c)(iii): (x) Buyer shall notify the Solo Parties in writing within thirty business days of Buyer’s receipt of a withdrawal liability assessment from PIUMPF [**] or of Buyer’s receipt of written
notification from PIUMPF that a withdrawal liability assessment [**]; (y) the Solo Parties are allowed an opportunity to review the accuracy of the withdrawal liability assessment information in Buyer’s possession, including the underlying
assumptions, amount, timing, and form of payment including access to information provided to Buyer by PIUMPF for underlying data as it relates to the assessment and the Solo Parties’ responsibilities hereunder, prior to Buyer responding to
PIUMPF; (z) Buyer will cooperate with the Solo Parties to dispute the amount of any such assessment provided that Buyer shall have the sole discretion to enter into an agreement with PIUMPF regarding the amount of the withdrawal liability; and
(aa) in the event the Solo Parties’ indemnification obligation arises under this Section 8(c)(iii), Buyer shall provide the Solo Parties with documentation evidencing Buyer’s remittance of payment to PIUMPF [**]. In the event the Solo
Parties’ indemnification obligation under this Section 8(c)(iii) arises, such obligation shall be satisfied by the Solo Parties pursuant to the methodology applicable to Buyer as established by PIUMPF or as agreed to between Buyer and
PIUMPF; provided, however, that the Solo Parties’ reimbursement obligation shall be satisfied in the form of reimbursement to Buyer for the allocable amount that Buyer has remitted to PIUMPF [**], within three business days after Buyer
has provided the Solo Parties with documentation evidencing Buyer’s remittance of such payment to PIUMPF. 
 (D) The
indemnification obligation of the Solo Parties under this Section 8(c)(iii) shall not apply to any assertion or claim of a right to contribution related solely to the imposition of withdrawal liability on a facility [**]. Any such PIUMPF
assessment shall be the obligation of Buyer without a right of contribution from the Solo Parties. The Solo Parties’ indemnification obligation under this Section 8(c)(iii) shall apply to any event [**] that occurs during the five years
commencing with the date of the Closing provided written notice if such event has been provided to the Solo Parties by Buyer within such five year period. Notwithstanding the foregoing, the Solo Parties shall continue to be secondarily liable to
PIUMPF under Section 4204 of ERISA. 
 (d) Indemnification Provisions for Benefit of the Solo Parties. 
 (i) In the event the Buyer breaches any of its representations, warranties, and covenants contained in this Agreement, and, if there is an
applicable survival period pursuant to Section 8(b) above, provided that the Solo Parties make a written claim for indemnification against the Buyer pursuant to Section 10(g) below within the applicable survival period, then the Buyer
agrees to indemnify the Solo Parties from and against the entirety of any Adverse Consequences the Solo Parties shall suffer through and after the 
 **
Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. 
  

 28 

 
date of the claim for indemnification caused proximately by the breach. With respect to any breach by the Buyer of Section 6(e) of this Agreement during
the Multiemployer Plan Period, with respect to any Multiemployer Plan covering Division Employees, in the event that the Solo Parties become secondarily liable to any such Multiemployer Plan for any withdrawal liability the Solo Parties would have
had pursuant to section 4204 of ERISA (but for such section), the survival period shall be the period beginning on the Closing Date and ending on the last day of the applicable Multiemployer Plan Period. 
 (ii) The Buyer agrees to indemnify the Solo Parties from and against the entirety of any Adverse Consequences the Solo Parties shall
suffer in respect of any Assumed Liability. 
 (iii) The Buyer agrees to indemnify the Solo Parties from and against the
entirety of any Adverse Consequences the Solo Parties shall suffer in respect of the Transferred Employees’ participation in Employee Benefit Plans sponsored by the Solo Parties during the Benefits Transition Period as set forth in
Section 6(c)(iii), provided that (y) the Solo Parties act in good faith and provide the same level of service as in effect prior to the Closing Date, and (z) the Solo Parties do not suffer such Adverse Consequences due to the
gross negligence or willful misconduct of any of the Solo Parties. 
 (e) Matters Involving Third Parties. 
 (i) If any third party shall notify any Party (the “Indemnified Party”) with respect to any matter (a “Third
Party Claim”) which may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 8, then the Indemnified Party shall promptly (and in any event within five business
days after receiving notice of the Third Party Claim) notify the Indemnifying Party thereof in writing (the “Third Party Claim Notice”). 
 (ii) The Indemnifying Party will have the right at any time within 30 days following its receipt of a Third Party Claim Notice to assume and thereafter conduct the defense of the Third Party Claim with counsel of its
choice; provided, however, that the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (not to be
withheld unreasonably) unless the judgment or proposed settlement provides solely for the payment of money damages and does not impose an injunction or other equitable relief and the Indemnified Party receives an unconditional release with respect
to such claim or settlement. 
 (iii) Unless and until the Indemnifying Party assumes the defense of the Third Party Claim as
provided in Section 8(e)(ii) above, however, the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate. 
 (iv) In no event will the Indemnified Party consent to the entry of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party (not to be withheld unreasonably). 
  

 29 

 (f) Determination of Adverse Consequences. The Parties shall make appropriate adjustments for
liabilities to the extent accrued on the Working Capital Statement (so as to directly reduce the Purchase Price), tax benefits as and when actually received arising from facts and circumstances giving rise to Adverse Consequences, and insurance
proceeds actually received with respect to Adverse Consequences for purposes of this Section 8. All indemnification payments under this Section 8 shall be deemed adjustments to the Purchase Price. Each Party shall use commercially
reasonable efforts to mitigate any claim asserted under this Section 8; provided, however, that under no circumstances will any Party be under a duty to instigate litigation proceedings in connection with such mitigation efforts.

 (g) Exclusive Remedy. Except in the case of fraud, or with respect to any equitable remedy to which a party may be entitled with
respect to any claims or causes of action arising from the breach of any covenants or agreements of a party hereto that is to be performed subsequent to the Closing, the Buyer and the Solo Parties acknowledge and agree that the foregoing
indemnification provisions in this Section 8 shall be the exclusive remedy of the Buyer and the Solo Parties with respect to the Division, the Division Subsidiaries, and the transactions contemplated by this Agreement. 
 (h) Environmental Remedies. Without limiting the generality of Section 8(g), above, the Buyer understands and agrees that its right to
indemnification under Section 8(c) for breach of the representations and warranties contained in Section 3(q) shall constitute its sole and exclusive remedy against the Solo Parties with respect to any environmental, health, or safety
matter relating to the past, current or future facilities, properties or operations of the Division, the Division Subsidiaries, and all of their respective predecessors or Affiliates, including without limitation any such matter arising under any
Environmental, Health, and Safety Requirements. Aside from such right to indemnification, the Buyer hereby waives any right, whether arising at law or in equity, to seek contribution, cost recovery, damages, or any other recourse or remedy from the
Solo Parties, and hereby releases the Solo Parties from any claim, demand or liability, with respect to any such environmental, health, or safety matter (including without limitation any arising under any Environmental, Health, and Safety
Requirements and including without limitation any arising under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), any analogous state law, or the common law. 
 9. TERMINATION. 
 (a) Termination
of Agreement. The Parties may terminate this Agreement as provided below: 
 (i) the Buyer and the Solo Parties may
terminate this Agreement by mutual written consent at any time prior to the Closing; 
 (ii) the Buyer may terminate this
Agreement by giving written notice to the Solo Parties at any time prior to the Closing in the event (A) the Solo Parties have within the then previous five business days given the Buyer any notice pursuant to Section 5(e)(i) and
(ii) above and (B) the development that is the subject of the notice has had a Material Adverse Effect; 
  

 30 

 (iii) the Buyer may terminate this Agreement by giving written notice to the Solo Parties
at any time prior to the Closing (A) in the event the Solo Parties have breached any representation, warranty, or covenant contained in this Agreement in any material respect, and such breach would cause the condition set forth in
Section 7(a)(i) to not be satisfied, the Buyer has notified the Solo Parties of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach or (B) if the Closing shall not have occurred on or
before October 15, 2007, by reason of the failure of any condition precedent under Section 7(a) hereof (unless the failure results primarily from the Buyer itself breaching any representation, warranty, or covenant contained in this
Agreement); and 
 (iv) the Solo Parties may terminate this Agreement by giving written notice to the Buyer at any time prior
to the Closing (A) in the event the Buyer has breached any material representation, warranty, or covenant contained in this Agreement in any material respect, the Solo Parties have notified the Buyer of the breach, and the breach has continued
without cure for a period of 30 days after the notice of breach or (B) if the Closing shall not have occurred on or before October 15, 2007, by reason of the failure of any condition precedent under Section 7(b) hereof (unless the
failure results primarily from the Solo Parties breaching any representation, warranty, or covenant contained in this Agreement). 
 (b)
Effect of Termination. If any Party terminates this Agreement pursuant to Section 9(a) above, all rights and obligations of the Parties hereunder shall terminate without any liability of any Party to the other Party (except for any
liability of any Party then in willful breach); provided, however, that the confidentiality provisions contained in Section 5(d) above shall survive termination. 
 10. MISCELLANEOUS. 
 (a) Press
Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the other Party; provided, however, that any
Party may make any public disclosure it believes in good faith is required by applicable law or any listing or trading agreement concerning its publicly-traded securities (in which case the disclosing Party will use its reasonable best efforts to
advise the other Party prior to making the disclosure). 
 (b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns. For the avoidance of doubt, no Division Employees, former Division Employees, or Transferred Employees shall be third party
beneficiaries of this Agreement nor shall any such employee have any rights pursuant to this Agreement. 
 (c) Entire Agreement. This
Agreement (including the Exhibits and Disclosure Schedule referred to herein), together with the Confidentiality Agreement and the Equity Commitment Letter, constitutes the entire agreement between the Parties and supersedes any prior
understandings, agreements, or representations by or between the Parties, written or oral, to the extent they related in any way to the subject matter hereof. 
  

 31 

 (d) Succession and Assignment. This Agreement shall be binding upon and inure to the benefit of
the Parties named herein and their respective successors and permitted assigns. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party. 
 (e) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together
will constitute one and the same instrument. 
 (f) Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation of this Agreement. 
 (g) Notices. All notices,
requests, demands, claims, and other communications hereunder will be in writing. Any notice, request, demand, claim, or other communication hereunder shall be deemed duly given if (and then two business days after) it is sent by registered or
certified mail, return receipt requested, postage prepaid, and addressed to the intended recipient as set forth below: 
  

					
	If to the Solo Parties:
		 	SF Holdings Group, Inc.
		 	c/o Solo Cup Company
		 	1700 Old Deerfield Road
		 	Highland Park, IL 60035
		 	Attn:	 	General Counsel
		
	Copy to:	 	Bell, Boyd & Lloyd LLP
		 	70 West Madison Street
		 	Suite 3100
		 	Chicago, IL 60602
		 	Attn:	 	J. Craig Walker
		 		 	David P. Glatz
		
	If to the Buyer:	 	
		 	c/o Kohlberg & Company
		 	111 Radio Circle
		 	Mt. Kisco, New York 10549
		 	Facsimile No.: (914) 241-7476
		 	Attn:	 	Gordon Woodward
		 		 	Seth Hollander
		
	Copy to:	 	Paul, Weiss, Rifkind, Wharton & Garrison LLP
		 	1285 Avenue of the Americas
		 	New York, New York 10019-6064
		 	Facsimile No.: (212) 492-0570
		 	Attention:	 	Angelo Bonvino

  

 32 

 Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the
address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed
to have been duly given unless and until it actually is received by the intended recipient. Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other
Party notice in the manner herein set forth. 
 (h) Governing Law. This Agreement shall be governed by and construed in accordance
with the domestic laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware. 
 (i) Amendments and Waivers. No amendment of any provision of this Agreement shall be valid unless
the same shall be in writing and signed by the Buyer and the Solo Parties. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence. 
 (j) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction. 
 (k) Expenses. Each of the Solo Parties, on the one hand, and the Buyer, on the other hand, will bear its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby; provided, however, that the Solo Parties, jointly and severally, will be solely liable for retention or stay bonuses or similar payments
to any Person as a result of the consummation of the transactions contemplated by this Agreement. 
 (l) Construction. The Parties
have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or
burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires otherwise. The word “including” shall mean including without limitation. 
 (m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof. 
 (n) Tax Matters. 
 (i)
Any agreement between the Solo Parties (other than the Division Subsidiaries) and any of the Division Subsidiaries regarding allocation or payment of taxes or amounts in lieu of taxes shall be deemed terminated at and as of the Closing. 

 

 33 

 (ii) The Solo Parties will be responsible for the preparation and filing of all tax
returns for the Division and the Division Subsidiaries for all periods as to which tax returns are due after the Closing Date (including the consolidated, unitary, and combined tax returns of the Solo Parties that include the operations of the
Division and the Division Subsidiaries) for any period ending on or before the Closing Date. The Solo Parties will make all payments required with respect to any such tax return. 
 (iii) The Buyer will be responsible for the preparation and filing of all tax returns for the Division and the Division Subsidiaries for
all periods as to which tax returns are due after the Closing Date (other than (x) for taxes with respect to periods for which the consolidated, unitary, and combined tax returns of the Solo Parties will include the operations of the Division
and the Division Subsidiaries and (y) tax returns described above in Section 10(n)(ii)). The Buyer will make all payments required with respect to any such tax return; provided, however, that the Solo Parties will reimburse the
Buyer concurrently therewith to the extent any payment the Buyer is making relates to the operations of any of the Division and the Division Subsidiaries for any period ending on or before the Closing Date. 
 (iv) For purposes of this Agreement, in the case of any taxes of the Division and the Division Subsidiaries that are payable with respect
to any tax period that begins before and ends after the Closing Date (a “Straddle Period”), the portion of any such taxes that are allocable to the portion of the Straddle Period ending on the Closing Date shall: (i) in the
case of taxes that are either (1) based upon or related to income or receipts, or (2) imposed in connection with any sale, transfer, or assignment or any deemed sale, transfer, or assignment of property (real or personal, tangible, or
intangible), be deemed equal to the amount that would be payable if the tax year or period ended on the Closing Date; and (ii) in the case of all other taxes, be deemed to be the amount of such taxes for the entire Straddle Period (or, in the
case of such taxes determined on an arrears basis, the amount of such taxes for the immediately preceding tax period) multiplied by a fraction the numerator of which is the number of calendar days in the portion of the Straddle Period ending on the
Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period. 
 (v) The Solo
Parties shall have furnished the Buyer with a certificate stating that the Solo Parties are not “foreign” persons within the meaning of section 1445 of the Code, which certificate shall set forth all information required by, and otherwise
be executed in accordance with, Treasury Regulation section 1.1445-2(b)(2). 
 (o) Employee Benefits Matters. 
 (i) The Buyer will become a contributing employer to the Multiemployer Plan and will adopt and assume at and as of the Closing each of the
Employee Benefit Plans (excluding any retiree medical plan or arrangement) that the Solo Parties maintain with respect to any Division Employee (including each trust, insurance contract, annuity contract, or other funding arrangement that the Solo
Parties have established with respect thereto) which are exclusive to the Division (collectively, the “Exclusive Plans”). The Buyer will ensure that the Transferred Employees are credited with their employment 

  

 34 

 
with any of the Solo Parties prior to the Closing Date the same as employment with any of the Buyer and its Affiliates from and after the Closing Date for
purposes of eligibility, vesting, and benefit accrual (except as would result in a duplication of benefits) under the employee benefit plans of Buyer. The Solo Parties will transfer (or cause the appropriate plan administrator through the trustee,
if any, to transfer) to the Buyer (or applicable trustee) at and as of the Closing all of the corresponding assets associated with the Exclusive Plans and at that time the Buyer shall assume all liabilities associated with such Division Employees
with respect to such Exclusive Plans. With respect to each Multiemployer Plan, the Parties shall take all actions necessary to comply with the requirements of ERISA section 4204. The Solo Parties shall indemnify and hold Buyer harmless for all
operational errors associated with the administration of the Exclusive Plans prior to the Closing. 
 (ii) For each Employee
Benefit Plan that is not exclusive to the Division (collectively, the “Shared Plans”), the Solo Parties agree to permit each Transferred Employee to effect a “direct rollover” (within the meaning of section 401(a)(31) of
the Code) of his or her account balances under any Shared Plan of the Solo Parties that is a defined contribution plan intended to qualify under section 401(a) of the Code, including a qualified cash or deferred arrangement under section 401(k) of
the Code (the “Solo 401(k) Plan”) if such rollover is elected in accordance with applicable law by such Transferred Employee. The Buyer agrees to establish a defined contribution plan that includes a qualified cash or deferred
arrangement within the meaning of section 401(k) of the Code (the “Buyer 401(k) Plan”) to accept a direct rollover to the Buyer 401(k) Plan of such Transferred Employee’s account balances under the Seller 401(k) Plan if such
rollover is elected in accordance with applicable law by such Transferred Employee. 
 (iii) Pursuant to Section 5(j),
and subject to Section 6(c)(iii), as of the Closing Date or November 1, 2007, the Buyer shall cause each Transferred Employee to be credited under the Buyer’s Flexible Spending Account Plan (“Buyer’s FSA”) with
amounts available for reimbursement between the Closing Date and December 31, 2007 equal to such amounts as were credited under the Solo Parties’ Flexible Spending Account (“Solo FSA”) with respect to such Transferred
Employee immediately prior to the Closing Date. The Buyer shall give effect under the Buyer’s FSA to calendar year 2007 elections made by the Transferred Employees with respect to the Solo FSA. 
 (iv) Pursuant to Section 5(j), and subject to Section 6(c)(iii), as of the Closing Date or November 1, 2007, the Buyer
shall cause each Transferred Employee to be credited under the Buyer’s Major Medical Plan (“Buyer’s Medical Plan”) with the amount of the Transferred Employees’ co-pays, deductibles and similar cost-sharing amounts
paid under the Solo Parties’ Major Medical Plan (“Solo Medical Plan”) as a condition of the Transferred Employees’ entitlement to medial coverage between January 1, 2007 and the Closing Date. The Buyer shall also give
effect under the Buyer’s Medical Plan to calendar year 2007 elections made by the Transferred Employees with respect to the Solo Medical Plan. Buyer shall cause any pre-existing condition limitation exclusions and any other limitations or
exclusions applicable to the Transferred Employees under Buyer’s Medical Plan to be waived. 
  

 35 

 (p) Bulk Transfer Laws. Without limiting its right to indemnity under Article 8, the Buyer
acknowledges that the Solo Parties will not comply with the provisions of any bulk transfer laws of any jurisdiction in connection with the transactions contemplated by this Agreement. 
 (q) Arbitration. Any controversy or claim arising out of, relating to, or in connection with this Agreement or any related agreement shall be
settled by arbitration in accordance with the following provisions: 
 (i) The agreement of the Parties to arbitrate covers
all disputes of every kind relating to or arising out of this Agreement, any related agreement, or any of the transactions contemplated hereby, including the interpretation, breach, termination, or validity hereof or thereof, except that any Party
may apply to any court of competent jurisdiction for emergency or provisional relief in order to prevent irreparable harm to such Party pending the appointment of the arbitrators hereunder, including a temporary restraining order, preliminary
injunction, or other similar relief, in connection with any matter for which equitable relief is specifically provided in this Agreement or any other related agreement. Disputes include actions for breach of contract with respect to this Agreement
or the related agreements, as well as any claim based upon tort or any other causes of action relating to the negotiation, execution, delivery, or performance of this Agreement or to the transactions contemplated hereby, such as claims based upon an
allegation of fraud or misrepresentation and claims based upon a federal or state statute. In addition, the arbitrators selected according to the procedures set forth below shall determine the arbitrability of any matter covered by this
Section 10(q), and their decision shall be final and binding on the Parties. 
 (ii) The forum for the arbitration shall
be Chicago, Illinois. 
 (iii) The governing law for the arbitration shall be the law of the State of Delaware, without
reference to its conflicts of laws provisions. 
 (iv) There shall be three arbitrators, unless the Parties are able to agree
on a single arbitrator. In the absence of such agreement within ten days after the initiation of an arbitration proceeding, the Solo Parties shall select one arbitrator and the Buyer shall select one arbitrator, and those two arbitrators shall then
select, within ten days, a third arbitrator. If those two arbitrators are unable to select a third arbitrator within such ten-day period, a third arbitrator shall be appointed from the commercial panel of the American Arbitration Association in
accordance with the selection rules of the American Arbitration Association. The decision in writing of at least two of the three arbitrators shall be final and binding upon the Parties, unless the arbitrators shall have committed a gross and
manifest error with respect to applicable law, in which case a party may appeal such error to the Federal District Court for the Northern District of Illinois. The Parties submit to the exclusive jurisdiction of such court in connection with any
such appeal, and waive any and all objections to such jurisdiction that it may have under the laws of the United States or of any state. 
  

 36 

 (v) The rules of arbitration shall be the Commercial Arbitration Rules of the American
Arbitration Association, as modified by any other instructions that the Parties may agree upon at the time. If there is any conflict between those Rules and the provisions of this section, the provisions of this section shall prevail. 
 (vi) The arbitrators’ decision shall be in writing and shall provide a reasoned basis, including all relevant findings of fact and
conclusions of law, for the resolution of each dispute and for any award. 
 (vii) Each Party to any arbitration pursuant to
this Section 10(q) shall pay the fees and expenses of the arbitrator selected by such Party, and shall share equally the fees and expenses of the American Arbitration Association and the third arbitrator contemplated by Section 10(q)(iv).

 (viii) The arbitrators shall have power and authority to award any remedy or judgment that could be awarded by a court of
law in Illinois. The award rendered by arbitration shall be final and binding upon the Parties, and judgment upon the award may be entered in any court of competent jurisdiction in the United States. Notwithstanding the foregoing, the arbitrators
shall have no authority to award any remedy or judgment that is expressly proscribed by this Agreement. 
 ***[Signature page follows.]***

  

 37 

 IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the date first above written.

  

			
	KHOF ACQUISITIONS, INC.
		
	By:	 	 /s/ Seth H. Hollander

	Print Name:	 	Seth H. Hollander
	Title:	 	Vice President
	
	SOLO CUP COMPANY
		
	By:	 	 /s/ Robert M. Korzenski

	Print Name:	 	Robert M. Korzenski
	Title:	 	Chief Executive Officer and President
	
	SF HOLDINGS GROUP, INC.
		
	By:	 	 /s/ Robert M. Korzenski

	Print Name:	 	Robert M. Korzenski
	Title:	 	Chief Executive Officer and President
	
	SOLO CUP OPERATING CORPORATION
		
	By:	 	 /s/ Robert M. Korzenski

	Print Name:	 	Robert M. Korzenski
	Title:	 	Chief Executive Officer and President

 Signature Page to Asset Purchase Agreement 
  

 38 

 APPENDIX A 
 Defined Terms 
 “Acquired Assets” means all of the right,
title, and interest that the Solo Parties possess in and to all of the assets constituting or that are used or held for use primarily or exclusively by the Division, including all of its (a) real property, leaseholds and subleaseholds
therein, improvements, fixtures, and fittings thereon, and easements, rights-of-way, and other appurtenants thereto (such as appurtenant rights in and to public streets), (b) tangible personal property (such as machinery, equipment, inventories
of raw materials and supplies, manufactured and purchased parts, goods in process and finished goods, furniture, automobiles, trucks, tractors, trailers, tools, jigs, and dies), (c) Intellectual Property, goodwill associated therewith, licenses
and sublicenses granted and obtained with respect thereto, and rights thereunder, remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions, (d) leases, subleases, and rights
thereunder, (e) agreements, contracts, indentures, mortgages, instruments, Security Interests, guaranties, other similar arrangements, and rights thereunder, (f) accounts, notes, and other receivables, (g) securities (including the
capital stock in CEGI (Hong Kong) Limited), (h) claims, deposits, prepayments, refunds, causes of action, choses in action, rights of recovery, rights of set off, and rights of recoupment (including any such item relating to the payment of
taxes), (i) franchises, approvals, permits, licenses, orders, registrations, certificates, variances, and similar rights obtained from governments and governmental agencies, (j) books, records, ledgers, files (including personnel files),
documents, correspondence, lists, plats, architectural plans, drawings, and specifications, creative materials, advertising and promotional materials, studies, reports, and other printed or written materials, and (k) rights in and with respect
to the assets associated with its Exclusive Plans and, solely with respect to the Division Employees who will be employed by the Buyer after Closing, rights in and with respect to the assets associated with the Shared Plans; provided,
however, that the Acquired Assets shall not include (i) the corporate charter, qualifications to conduct business as a foreign corporation, arrangements with registered agents relating to foreign qualifications, taxpayer and other
identification numbers, seals, minute books, stock transfer books, blank stock certificates, and other documents relating to the organization, maintenance, and existence of any of the Solo Parties as a corporation, (ii) any Cash, (iii) any
rights to any work product produced by any artist or designer employed by the Solo Parties, but only to the extent that such work product is not owned by a Solo Party, (iv) any of the rights of the Solo Parties under this Agreement, or
(v) any assets of the Solo Parties not used primarily or exclusively in the operation of the Division. 
 “Actual
Value” has the meaning set forth in Section 2(f)(iii)(C). 
 “Adverse Consequences” means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, liabilities, obligations, taxes, liens, losses, expenses, and fees, including
court costs and reasonable attorneys’ fees and expenses. 
 [**] 
 ** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. 
  

 A-1 

 “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under
the Securities Exchange Act. 
 “Affiliated Group” means any affiliated group within the meaning of Code section 1504.

 “Agreement” has the meaning set forth in the preface above. 
 “Assumed Liabilities” means all liabilities and obligations of the Solo Parties to the extent that they relate to the operation of the
Division (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due), including (a) all liabilities of the Solo
Parties for one-half of any transfer, sales, use, and other non-income taxes arising in connection with the consummation of the transactions contemplated hereby, (b) all liabilities and obligations of the Solo Parties that relate to the
operation of the Division under the agreements, contracts, leases, licenses, and other arrangements referred to in the definition of Acquired Assets, (c) all liabilities and obligations of any of the Solo Parties under the Exclusive Plans and,
solely with respect to the Division Employees who will be employed by the Buyer after Closing, all liabilities and obligations, to the extent included as current liabilities on the Working Capital Statement, of any of the Solo Parties under the
Shared Plans, (d) all liabilities and obligations of any of the Solo Parties that relate to the operation of the Division with respect to environmental matters, including without limitation those arising under Environmental, Health, and Safety
Requirements, (e) subject to Buyer’s right to indemnity under Section 8(c)(iii), any withdrawal liability assessed under Title IV of ERISA associated with the Multiemployer Plan covering current and former Division Employees,
(f) to the extent required by the Buyer or its financing sources, the costs of any environmental consultants engaged by the Solo Parties to perform environmental consulting and to conduct Phase I reports with respect to the Division Real
Property, and (g) all other liabilities and obligations of the Solo Parties that relate to the operation of the Division as set forth in the Disclosure Schedule; provided, however, that the Assumed Liabilities shall not include any
Excluded Liabilities. 
 “Basket” has the meaning set forth in Section 8(c)(i). 
 “Benefits Transition Period” has the meaning set forth in Section 6(c)(iii). 
 “Bond” means a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of ERISA, or an amount
held in escrow by a bank or similar financial institution satisfactory to the applicable Multiemployer Plan, which bond or escrow shall be paid to such Multiemployer Plan if the Buyer withdraws from such Multiemployer Plan, or fails to make a
contribution to such Multiemployer Plan when due, at any time during the Multiemployer Plan Period, in accordance with section 4204 of ERISA. 
 “Buyer” has the meaning set forth in the preface above. 
 “Buyer 401(k) Plan” has the meaning set
forth in Section 10(o)(ii). 
 “Buyer’s FSA” has the meaning set forth in Section 10(o)(iii). 
 “Buyer’s Medical Plan” has the meaning set forth in Section 10(o)(iv). 
  

 A-2 

 “Cap” has the meaning set forth in Section 8(c)(i). 
 “Cash” means cash and cash equivalents (including marketable securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements. 
 “CBAs” has the meaning set forth in
Section 5(g). 
 “CEGI” has the meaning set forth in Section 3(a). 
 “CERCLA” has the meaning set forth in Section 8(h). 
 “Closing” has the meaning set forth in Section 2(d). 
 “Closing Date”
has the meaning set forth in Section 2(d). 
 “COBRA” means the requirements of Part 6 of Subtitle B of Title I of
ERISA and Code section 4980B and of any similar state law. 
 “Code” means the Internal Revenue Code of 1986, as amended.

 “Competing Business” has the meaning set forth in Section 6(d)(i). 
 “Confidential Information” has the meaning ascribed to the terms “Evaluation Material” and “Confidential Material”
pursuant to the Confidentiality Agreements. 
 “Confidentiality Agreements” has the meaning set forth in Section 5(d).

 “Covered Division Employees” has the meaning set forth in Section 6(h). 
 “Covered Solo Employees” has the meaning set forth in Section 6(i). 
 “Customer and Supplier Agreements” has the meaning set forth in Section 3(t)(iii). 
 “Debt Financing” has the meaning set forth in Section 4(e). 
 “Debt Financing Documents” has the meaning set forth in Section 4(e). 
 “Deferred Intercompany Transaction” has the meaning set forth in Reg. section 1.1502-13. 
 “Disclosure Schedule” has the meaning set forth in Section 3. 
 “Division” has the meaning set forth in the preface above. 
 “Division Employee” means any employee of any of the Solo Parties who devotes substantially all of his or her working time to the
Division. 
 “Division Real Property” has the meaning set forth in Section 3(k)(i). 
  

 A-3 

 “Draft Working Capital Statement” has the meaning set forth in Section 2(f)(i).

 “Employee Benefit Plan” means any “employee benefit plan” (as such term is defined in ERISA section 3(3)) and
any other material employee benefit plan, program or arrangement of any kind that covers or relates to any current or former Division Employee. 
 “Employee Pension Benefit Plan” has the meaning set forth in ERISA section 3(2). 
 “Employee Welfare
Benefit Plan” has the meaning set forth in ERISA section 3(1). 
 “Environmental, Health, and Safety Requirements”
shall mean all federal, state, local and foreign statutes, regulations, and ordinances concerning public health and safety, worker health and safety, and pollution or protection of the environment, including without limitation all those relating to
the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or
wastes, as such requirements are enacted and in effect on or prior to the Closing Date. 
 “Equity Commitment Letter” has
the meaning set forth in Section 4(e). 
 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended. 
 “ERISA Affiliate” means each entity which is, or at any applicable time was, a member of (A) a controlled
group of corporations (as defined in section 414(b) of the Code), (B) a group of trades or businesses under common control (as defined in section 414(c) of the Code), or (C) an affiliated service group (as defined in section 414(m) of the
Code or the regulations under Section 414(o) of the Code), any of which includes or included the Solo Parties. 
 “ERISA
Affiliate Liability” means any liability of the Solo Parties that arises under or relates to any employee benefit plan or arrangement that is subject to Title IV of ERISA, section 302 of ERISA, section 412 of the Code, COBRA, or any other
statute or regulation that imposes liability on a so-called “controlled group” basis with or without reference to any provision of section 414 of the Code or section 4001 of ERISA, including by reason of the Solo Parties’ affiliation
with any of its ERISA Affiliates or the Buyer being deemed a successor to any ERISA Affiliate of the Solo Parties, which has been maintained, sponsored, or contributed to by any ERISA Affiliate of the Solo Parties, other than any liability
(i) with respect to the Exclusive Plans that are expressly assumed by the Buyer pursuant to Section 10(o) of this Agreement, and (ii) expressly assumed by the Buyer with respect to the Multiemployer Plan to which Buyer will become a
contributing employer pursuant to Section 10(o) of this Agreement. 
 “Estimated Net Working Capital” means
$60,500,000. 
 “Excess Loss Account” has the meaning set forth in Reg. section 1.1502-19. 
 “Excluded Liabilities” means (i) any liability of the Solo Parties for taxes (with respect to the Division or otherwise) for
periods prior to the Closing, (ii) any liability of the Solo Parties for any Income Taxes arising because the Solo Parties are transferring the Acquired Assets, because any of the Solo Parties has an Excess Loss Account in the stock of any of
the Division 

  

 A-4 

 
Subsidiaries, or because any of the Solo Parties has deferred gain on any Deferred Intercompany Transaction, (iii) any liability or obligation of the
Solo Parties under this Agreement, (iv) any liability or obligation of the Solo Parties related to assets of the Solo Parties that are not Acquired Assets or any liability or obligation of the Solo Parties related to former operations of the
Division or the operation of the businesses of the Solo Parties other than the Division, (v) Indebtedness, (vi) any change of control, retention, severance, or stay bonuses payable to any Person as a result of the consummation of the
transactions contemplated by this Agreement, (vii) all liabilities of the Solo Parties for one-half of any transfer, sales, use, and other non-income taxes arising in connection with the consummation of the transactions contemplated hereby,
(viii) the costs associated with the audit of the Financial Statements conducted by KPMG LLP, (ix) any ERISA Affiliate Liability, and (x) any liability or obligation of any Party in connection with the engagement of Goldman,
Sachs & Co. by the Solo Parties or any Affiliate thereof in connection with the transactions contemplated hereunder. 
 “Exclusive Plans” has the meaning set forth in Section 10(o)(i). 
 “Financial Statements”
has the meaning set forth in Section 3(g). 
 “GAAP” means United States generally accepted accounting principles as in
effect from time to time. 
 “Hart-Scott-Rodino Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended. 
 “High Value” has the meaning set forth in Section 2(f)(iii)(B). 
 “Income Tax” means any federal, state, local, or foreign income tax, including any interest, penalty, or addition thereto, whether
disputed or not. 
 “Income Tax Return” means any return, declaration, report, claim for refund, or information return or
statement relating to Income Taxes, including any schedule or attachment thereto. 
 “Indebtedness” means (i) amounts
owing as deferred purchase price for property or services, including all seller notes and “earn-out” payments, (ii) indebtedness for borrowed money or indebtedness evidenced by any note, bond, debenture, mortgage, or other debt
instrument or debt security, (iii) obligations under any interest rate, currency, or other hedging agreement, (iv) obligations under any performance bond or letter of credit, but only to the extent drawn or called, (v) all capitalized
lease obligations as determined under GAAP, and (vi) guarantees with respect to any indebtedness of any other Person of a type described in clauses (i) through (vi) above. 
 “Indemnified Party” has the meaning set forth in Section 8(e). 
 “Indemnifying Party” has the meaning set forth in Section 8(e). 
 “Intellectual Property” means all of the following, as they exist anywhere in the world: (a) trademarks, service marks, trade
dress, trade names, brand names, designs, logos, or 

  

 A-5 

 
corporate names, whether registered or unregistered, and all goodwill related thereto; (b) copyrights and mask works; (c) patents, inventions,
designs, improvements and other patent rights (including any divisions, continuations, continuations-in-part, reissues, reexaminations, or interferences thereof); (d) trade secrets, know-how, processes, procedures, databases, confidential
business information and other proprietary information and rights (whether or not patentable or subject to copyright, mask work, or trade secret protection); (e) domain names, Internet addresses and other computer identifiers; (f) any
other similar type of proprietary or intellectual property right; and (g) all applications and registrations for any of the foregoing, including all renewals and extensions thereof. 
 “Knowledge” means actual knowledge without independent investigation. With respect to the Solo Parties, “Knowledge” means the
actual knowledge, without independent investigation, of any of Robert Korzenski, Jeffrey Cunningham, Jennifer Terreau, or Gregory Stickelmaier, assuming the reasonable discharge of such person’s professional responsibilities. 
 “Labor Laws” means any and all applicable foreign, federal, state, and local Legal Requirements relating to employment, employment
standards, employment of minors, employment discrimination, health and safety, labor relations, withholding, wages and hours, workplace safety, insurance and/or pay equity. 
 “Legal Requirement” means any federal, state, local, municipal, foreign, international, multinational, or other constitution, law,
ordinance, principle of common law, code, regulation, statute, or treaty. 
 “Lender” has the meaning set forth in
Section 4(e). 
 “Licensed Intellectual Property” has the meaning set forth in Section 3(l)(ii). 
 “Low Value” has the meaning set forth in Section 2(f)(iii)(A). 
 “Mail” has the meaning set forth in Section 6(j). 
 “Material Contracts” has the meaning set forth in Section 3(m). 
 “Material
Adverse Effect” means any change or effect that is materially adverse to the assets, properties, business, operations, liabilities, results of operations, or financial condition of the Division, other than as a result of (i) changes
generally adversely affecting the United States economy or the disposable tableware products industry that do not disproportionately affect the Division relative to other businesses in the disposable tableware products industry,
(ii) performance by the Solo Parties of their obligations under this Agreement, (iii) the announcement or pendency of the transactions contemplated by this Agreement, (iv) war or the outbreak of hostilities, terrorist attacks, or
similar events, in each case that do not disproportionately affect the Division relative to other businesses in the disposable tableware products industry, or (v) changes in applicable law or accounting principles. 
 “Maximum Withdrawal Indemnification” has the meaning set forth in Section 8(c)(iii)(A). 
  

 A-6 

 “Most Recent Financial Statements” has the meaning set forth in Section 3(g).

 “Most Recent Fiscal Month End” has the meaning set forth in Section 3(g). 
 “Most Recent Fiscal Year End” means the fiscal year ended December 31, 2006. 
 “Multiemployer Plan” has the meaning set forth in ERISA section 3(37). 
 “Multiemployer Plan Period” means, with respect to each Multiemployer Plan covering Division Employees, the period of five plan years
commencing with the first plan year beginning after the Closing Date. 
 “Net Working Capital” means the difference between
the amount of current assets and the amount of current liabilities of the Division as of the Closing Date, determined in accordance with EXHIBIT C. 
 “Non-Compete Period” has the meaning set forth in Section 6(d)(i). 
 “Ordinary
Course of Business” means the ordinary course of business of the Division consistent with past custom and practice (including with respect to quantity and frequency). 
 “Owned Intellectual Property” has the meaning set forth in Section 3(l)(i). 
 “Party” or “Parties” has the meaning set forth in the preface to this Agreement. 
 “PBGC” means the Pension Benefit Guaranty Corporation. 
 “Person” means an individual, a partnership, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof). 
 “PIUMPF” has the meaning set forth in Section 8(c)(iii)(A).

 “Preliminary Purchase Price” has the meaning set forth in Section 2(c). 
 “Purchase Price” has the meaning set forth in Section 2(g). 
 “Reportable Event” has the meaning set forth in ERISA section 4043. 
 “Required Bond Amount” means, with respect to each Bond, the greater of (a) the average annual contribution required to be made by
the Solo Parties with respect to the Division under the applicable Multiemployer Plan for the three plan years preceding the plan year in which the Closing occurs, or (b) the annual contribution that the Solo Parties were required to make with
respect to the Division under the applicable Multiemployer Plan for the last plan year before the plan year in which the Closing occurs, in accordance with section 4204 of ERISA, provided that such amount shall not exceed $[**]. 

“Required Consents” has the meaning set forth in Section 5(b). 
 ** Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission. 
  

 A-7 

 “Restrictive Covenant” has the meaning set forth in Section 6(d)(ii). 

“SCOC” has the meaning set forth in the preface above. 
 “Securities Exchange Act” means the Securities Exchange Act of 1934, as amended. 
 “Security Interest” means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) mechanic’s, materialmen’s, and similar liens, (b) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (c) purchase money liens and liens securing rental payments under capital lease arrangements, and (d) other statutory liens arising in
the Ordinary Course of Business and not incurred in connection with Indebtedness and do not materially affect the use of, or diminish the value of, any Acquired Asset (the Security Interests referred to in clauses (a) – (d) are
referred to herein as “Permitted Security Interests.” 
 “SF Holdings” has the meaning set forth in the
preface above. 
 “Shared Plans” has the meaning set forth in Section 10(o)(ii). 
 “Solo 401(k) Plan” has the meaning set forth in Section 10(o)(ii). 
 “Solo Cup” has the meaning set forth in the preface above. 
 “Solo FSA” has the meaning set forth in Section 10(o)(iii). 
 “Solo Medical Plan” has the meaning set forth in Section 10(o)(iv). 
 “Solo Parties” has the meaning set forth in the preface to this Agreement. 
 “Solo Plans” has the meaning set forth in Section 6(c)(iii). 
 “Straddle Period” has the meaning set forth in Section 10(n)(iv). 
 “Subsidiary” means any corporation or other entity with respect to which a specified Person (or a Subsidiary thereof) owns a majority of
the common stock or other form of equity, as appropriate, or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors. 
 “Third Party Claim” has the meaning set forth in Section 8(e). 
 “Third Party
Claim Notice” has the meaning set forth in Section 8(e). 
 “Top Customers” has the meaning set forth in
Section 3(t)(i). 
 “Top Suppliers” has the meaning set forth in Section 3(t)(ii). 
 “Transferred Employees” has the meaning set forth in Section 5(j). 
 “Transition Benefits Escrow Amount” has the meaning set forth in Section 6(c)(iii). 
  

 A-8 

 “Transition Services Agreement” has the meaning set forth in Section 7(a)(vi).

 “WARN” means the Worker Adjustment and Retaining Notification Act, 29 U.S.C. section 2101 et seq., its related
regulations, and any and all comparable and applicable state laws regarding plant closings and mass layoffs. 
 “Working Capital
Statement” has the meaning set forth in Section 2(f)(ii). 
  

 A-9

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