Document:

ex4-1.htm

Exhibit 4.1

 

RIGHTS AGREEMENT

 

between

 

ENDEAVOR IP INC.,

 

and

 

VStock Transfer, LLC,

 

as Rights Agent,

 

Dated as of September 3, 2015

 

  

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TABLE OF CONTENTS

 

                      Page

                       

Section 1.                    Certain Definitions

                       

Section 2.                    Appointment of the Rights Agent

                       

Section 3.                    Issuance of Rights Certificates

                       

Section 4.                    Form of Rights Certificates

                       

Section 5.                    Countersignature and Registration

                       

Section 6.                    Transfer, Split-Up, Combination, and Exchange of Rights Certificates; Mutilated, Destroyed, Lost, or Stolen Rights Certificates

                       

Section 7.                    Exercise of Rights; Purchase Price; Expiration Date of Rights

                       

Section 8.                    Cancellation and Destruction of Rights Certificates

                       

Section 9.                    Reservation and Availability of Capital Stock

                       

Section 10.                    Preferred Shares Record Date

                       

Section 11.                    Adjustment of Purchase Price, Number and Kind of Shares, or Number of Rights

                       

Section 12.                    Certificate of Adjusted Purchase Price or Number of Shares

                       

Section 13.                    Consolidation, Merger, or Sale or Transfer of Assets or Earning Power

                       

Section 14.                    Fractional Rights and Fractional Shares

                       

Section 15.                    Rights of Action

                       

Section 16.                    Agreement of Rights Holders

                       

Section 17.                    Rights Certificate Holder Not Deemed a Stockholder

                       

Section 18.                    Concerning the Rights Agent

                       

Section 19.                    Merger or Consolidation or Change of Name of the Rights Agent

                     

Section 20.                    Duties of the Rights Agent

 

  

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TABLE OF CONTENTS

(Continued)

                       

Section 21.                    Change of the Rights Agent

                       

Section 22.                    Issuance of New Rights Certificates

                       

Section 23.                    Redemption and Termination

                       

Section 24.                    Exchange of Rights

                       

Section 25.                    Notice of Certain Events

                       

Section 26.                    Notices

                       

Section 27.                    Supplements and Amendments

                       

Section 28.                    Successors

                       

Section 29.                    Determinations and Actions by the Board of Directors

                       

Section 30.                    Benefits of this Agreement

                       

Section 31.                    Severability

                       

Section 32.                    Governing Law

                       

Section 33.                    Counterparts; Facsimiles and PDFs

                       

Section 34.                    Descriptive Headings

 

Exhibit A                       Form of Certificate of Designation, Preferences, and Rights

 

Exhibit B                       Form of Rights Certificate

 

Exhibit C                       Form of Summary of Rights to Purchase Preferred Stock

 

  

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RIGHTS AGREEMENT

 

RIGHTS AGREEMENT, dated as of  September 3, 2015  (this “Agreement”), between Endeavor IP Inc., a Nevada corporation (the “Company”), and VStock Transfer LLC, a California limited liability company (the “Rights Agent”).

 

RECITAL

 

WHEREAS, on  September 3, 2015  (the “Rights Dividend Declaration Date”), the Board of Directors of the Company authorized and declared a dividend distribution of one right (each, a “Right”) for each Common Share (as hereinafter defined) outstanding at the Close of Business (as hereinafter defined) on  September 3, 2015 (the “Record Date”), and further authorized and directed the issuance of one Right (as such number may hereinafter be adjusted pursuant hereto) with respect to each Common Share issued between the Record Date (whether originally issued or delivered from the Company’s treasury) and, except as otherwise provided in Section 22, the earlier of the Distribution Date and the Expiration Date (as such terms are hereinafter defined), each Right initially representing the right to purchase one one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and subject to the conditions hereinafter set forth.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows:

 

Section 1. Certain Definitions. For purposes of this Agreement, the following terms have the meanings indicated:

 

(a)          “Acquiring Person” shall mean any Person who or which, together with all Affiliates and Associates of such Person, shall be the Beneficial Owner of 15% or more of the Common Shares then outstanding, but shall not include an Exempt Person. Notwithstanding the foregoing:

 

(i)          any Person who becomes the Beneficial Owner of 15% or more of the Common Shares then outstanding as a result of a reduction in the number of Common Shares outstanding due to the repurchase of Common Shares by the Company shall not be deemed an “Acquiring Person” unless and until such Person acquires Beneficial Ownership of any additional Common Shares (other than as a result of a stock dividend, stock split, or similar transaction effected by the Company in which all registered holders of Common Shares are treated substantially equally) while the Beneficial Owner of 15% or more of the Common Shares then outstanding; and

 

(ii)         if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an Acquiring Person has become such inadvertently (including, without limitation, because (A) such Person was unaware that it Beneficially Owned a percentage of Common Shares that would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of the extent of its Beneficial Ownership of Common Shares but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement and had no intention of changing or influencing control of the Company), and such Person divests as promptly as practicable a sufficient number of Common Shares so that such Person is no longer the Beneficial Owner of 15% or more of the Common Shares then outstanding, then such Person shall not be deemed to be or ever to have been an “Acquiring Person” for any purposes of this Agreement as a result of such inadvertent acquisition; and

(iii)        if a Person would otherwise be deemed an “Acquiring Person” upon the execution of this Agreement, such Person (herein referred to as a “Grandfathered Stockholder”) shall not be deemed an “Acquiring Person” for purposes of this Agreement unless and until, subject to Section 1(a)(i) and Section 1(a)(ii) above, such Grandfathered Stockholder acquires Beneficial Ownership of additional Common Shares representing 2.0% of the Common Shares then outstanding (other than as provided below or as a result of a stock dividend, stock split, or similar transaction effected by the Company in which all registered holders of Common Shares are treated substantially equally) after execution of this Agreement and while the Beneficial Owner of 15% or more of the Common Shares then outstanding, in which case such Person shall no longer be deemed a Grandfathered Stockholder

  

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and shall be deemed an “Acquiring Person”; provided, however, that any Common Shares or options, rights or other securities convertible into Common Shares acquired by a Grandfathered Stockholder pursuant to any employee benefit plan of the Company or of any Subsidiary of the Company shall not be included in the calculation of additional Common Shares acquired by a Grandfathered Stockholder.

 

(b)          “Act” shall mean the Securities Act of 1933, as amended.

 

(c)          “Adjustment Shares” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(d)          “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement.

 

(e)          “Agreement” shall have the meaning set forth in the preamble hereto.

 

(f)          A Person shall be deemed the “Beneficial Owner” of, shall be deemed to have “ Beneficial Ownership ” of, and shall be deemed to “ beneficially own ,” any securities:

 

(i)          which such Person or any of such Person’s Affiliates or Associates beneficially owns, directly or indirectly (as determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Exchange Act as in effect on the date of this Agreement);

  

(ii)         which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement, or understanding (whether or not in writing) or upon the exercise of conversion rights, exchange rights, rights, warrants, or options, or otherwise; provided, however , that a Person shall not be deemed the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially own,” (A) securities tendered pursuant to a tender offer or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange, (B) securities issuable upon exercise of Rights at any time prior to the occurrence of a Triggering Event (as hereinafter defined), or (C) securities issuable upon exercise of Rights from and after the occurrence of a Triggering Event, which Rights were acquired by such Person or any of such Person’s Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof (the “Original Rights”) or pursuant to Section 11(i) or Section 11(p) hereof in connection with an adjustment made with respect to any Original Rights or  any Common Shares or options, rights or other securities convertible into Common Shares acquired by a Person pursuant to any employee benefit plan of the Company or of any Subsidiary of the Company or granted by the Board of Directors of the Company in repayment of an obligation of the Company or pursuant to a bonus to an employee, officer or director of the Company;

 

(iii)        which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of, including pursuant to any agreement, arrangement, or understanding (whether or not in writing); provided , however , that a Person shall not be deemed the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially own,” any security as a result of an agreement, arrangement, or understanding (whether or not in writing) to vote such security if such agreement, arrangement, or understanding: (A) arises solely from a revocable proxy (as such term is defined in Regulation 14A under the Exchange Act) given in response to a public proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the General Rules and Regulations under the Exchange Act, including the disclosure requirements of Schedule 14A thereunder, and (B) is not also then reportable by such Person on Schedule 13D under the Exchange Act (or any comparable or successor report); or

 

(iv)        which are beneficially owned, directly or indirectly, by any other Person (or any Affiliate or Associate thereof) with which such Person (or any of such Person’s Affiliates or Associates) has any agreement, arrangement, or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in the proviso to Section 1(f)(iii)), or disposing of any voting securities of the Company;

 

  

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provided, however, that nothing in this Section 1(f) shall cause a Person engaged in business as an underwriter of securities to be the “Beneficial Owner” of, to have “Beneficial Ownership” of, or to “beneficially own,” any securities acquired or which such Person has the right to acquire through such Person’s participation in good faith in a firm commitment underwriting until the expiration of 40 days after the date of such acquisition, and then only if such securities continue to be owned by such Person at such expiration of 40 days; and provided further, however , that any stockholder of the Company, with Affiliate(s), Associate(s), or other Person(s) who may be deemed representatives of it serving as director(s) of the Company, shall not be deemed to beneficially own securities held by such other Persons serving as director(s) of the Company to the extent such securities were issued by the Company to such director(s) in the ordinary course of business as compensation for their services as director(s) of the Company.

 

(g)          “Business Day” shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

 

(h)          “Articles of Incorporation” shall mean the Company’s Amended and Restated Articles of Incorporation, as such may be amended, modified, or restated from time to time.

 

(i)          “Close of Business” on any given date shall mean 5:00 p.m., New York, New York time, on such date; provided, however , that, if such date is not a Business Day, it shall mean 5:00 p.m., New York, New York time, on the next succeeding Business Day.

 

(j)          “Common Shares” shall mean the shares of common stock, par value $0.0001 per share, of the Company, except that “Common Shares ” when used with reference to any Person other than the Company shall mean the capital stock of such Person with the greatest voting power, or the equity securities or other equity interests having power to control or direct the management of such Person.

 

(k)          “Common Stock Equivalents” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(l)          “Company” shall have the meaning set forth in the preamble hereto, except as otherwise provided in Section 13(a) hereof.

 

(m)          “Current Market Price” shall have the meaning set forth in Section 11(d) hereof.

 

(n)          “Current Value” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(o)          “Distribution Date” shall have the meaning set forth in Section 3(a) hereof.

 

(p)          “Equivalent Preferred Shares” shall have the meaning set forth in Section 11(b) hereof.

 

(q)          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(r)          “Exchange Ratio” shall have the meaning set forth in Section 24(a) hereof.

 

(s)          “Exempt Person” shall mean (i) the Company, (ii) any Subsidiary of the Company, (iii) any employee benefit plan of the Company or of any Subsidiary of the Company, or (iv) any Person or entity organized, appointed, or established by the Company or any Subsidiary of the Company for or pursuant to the terms of any such employee benefit plan.

 

(t)          “Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(u)          “Final Expiration Date” shall have the meaning set forth in Section 7(a) hereof.

 

(v)         “Grandfathered Stockholder” shall have the meaning set forth in Section 1(a)(iii) hereof.

 

(w)          “Original Rights” shall have the meaning set forth in Section 1(f)(ii) hereof.

 

(x)          “Ownership Statement” shall have the meaning set forth in Section 3(a) hereof.

 

  

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(y)          “Person” shall mean any individual, firm, corporation, partnership, limited liability company, limited liability partnership, trust, syndicate, or other entity, and shall include any successor (by merger or otherwise) of such entity.

 

(z)          “Preferred Shares” shall mean shares of Series A Junior Participating Preferred Stock, par value $0.0001 per share, of the Company having the rights and preferences set forth in the Certificate of Designation attached to this Agreement as Exhibit A , and, to the extent that there are not a sufficient number of shares of Series A Junior Participating Preferred Stock authorized to permit the full exercise of the Rights, any other series of preferred stock of the Company designated for such purpose containing terms substantially similar to the terms of the Series A Junior Participating Preferred Stock.

 

(aa)         “Principal Party” shall have the meaning set forth in Section 13(b) hereof.

 

(bb)         “Purchase Price” shall have the meaning set forth in Section 7(b) hereof.

 

(cc)         “Record Date” shall have the meaning set forth in the recital to this Agreement.

 

(dd)         “Redemption Price” shall have the meaning set forth in Section 23(a) hereof.

 

(ee)         “Right” shall have the meaning set forth in the recital to this Agreement.

 

(ff)         “Rights Agent” shall have the meaning set forth in the preamble hereto, except as otherwise provided in Section 19 and Section 21 hereof.

 

(gg)         “Rights Certificate” shall have the meaning set forth in Section 3(a) hereof.

 

(hh)         “Rights Dividend Declaration Date” shall have the meaning set forth in the recital to this Agreement.

 

(ii)         “Section 11(a)(ii) Event” shall have the meaning set forth in Section 11(a)(ii) hereof.

 

(jj)         “Section 11(a)(ii) Trigger Date” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(kk)         “Section 13 Event” shall mean any event described in Section 13(a)(i), Section 13(a)(ii), or Section 13(a)(iii) hereof.

 

(ll)         “Shares Acquisition Date” shall mean the first date of public announcement (which, for purposes of this definition, shall include, without limitation, a report filed or amended pursuant to Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that an Acquiring Person has become such.

 

(mm)         “Spread” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(nn)         “Subsidiary” shall mean, with reference to any Person, any corporation or other entity of which an amount of voting securities (or other ownership interests having ordinary voting power) sufficient to elect or appoint at least a majority of the directors (or other persons performing similar functions) of such corporation or other entity is beneficially owned, directly or indirectly, by such Person, or otherwise controlled by such Person.

 

(oo)         “Substitution Period” shall have the meaning set forth in Section 11(a)(iii) hereof.

 

(pp)         “Summary of Rights” shall have the meaning set forth in Section 3(b) hereof.

 

(qq)         “Trading Day” shall have the meaning set forth in Section 11(d)(i) hereof.

 

(rr)         “Triggering Event” shall mean a Section 11(a)(ii) Event or any Section 13 Event.

 

(ss)         “Trust” shall have the meaning set forth in Section 24(f) hereof.

 

  

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(tt)         “Trust Agreement” shall have the meaning set forth in Section 24(f) hereof.

 

Section 2. Appointment of the Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company and the registered holders of the Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be the registered holders of the Common Shares) in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-rights agents as it may deem necessary or desirable.

Section 3. Issuance of Rights Certificates.

 

(a)          Until the earlier of (i) the Close of Business on the 10th day after the Shares Acquisition Date (or, if the 10th day after the Shares Acquisition Date occurs before the Record Date, the Close of Business on the Record Date) and (ii) the Close of Business on the 10th Business Day (or such later date as the Board of Directors of the Company may determine prior to the occurrence of a Section 11(a)(ii) Event) after the date of commencement by or on behalf of any Person (other than an Exempt Person) of a tender offer or exchange offer, if upon consummation thereof, such Person would become an Acquiring Person (the earlier of (i) and (ii) being herein referred to as the “Distribution Date”), (A) the Rights will be evidenced (subject to Section 3(b) and Section 3(c) hereof) by the certificates for the Common Shares registered in the names of the holders of the Common Shares (which certificates for Common Shares shall be deemed also to be certificates for Rights) or by the current ownership statements issued with respect to uncertificated Common Shares in lieu of such certificates (“Ownership Statements”) (which Ownership Statements shall be deemed also to be certificates for Rights) and not by separate certificates, and the registered holders of the Common Shares shall also be the registered holders of the associated Rights, and (B) the Rights will be transferable only in connection with the transfer of the underlying Common Shares (including a transfer to the Company); provided , however , that, if a tender offer or exchange offer is terminated prior to the occurrence of a Distribution Date, then no Distribution Date shall occur as a result of such tender offer or exchange offer. As soon as practicable after the Distribution Date, the Rights Agent will send, in accordance with Section 26 hereof, to each record holder of the Common Shares as of the Close of Business on the Distribution Date (other than an Acquiring Person or any Associate or Affiliate of an Acquiring Person), one or more rights certificates, in substantially the form of Exhibit B  hereto (the “Rights Certificates”), evidencing one Right for each Common Share so held, subject to adjustment as provided herein. In the event that an adjustment in the number of Rights per Common Share has been made pursuant to Section 11(i) or Section 11(p) hereof, at the time of distribution of the Rights Certificates, the Company shall not be required to issue Rights Certificates evidencing fractional Rights but may, in lieu thereof, make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Rights Certificates evidencing only whole numbers of Rights are distributed and cash is paid in lieu of any fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Rights Certificates.

 

(b)          As promptly as practicable following the Record Date, the Company shall send a copy of a Summary of Rights, in substantially the form attached hereto as Exhibit C  (the “Summary of Rights”), to each record holder of Common Shares as of the Close of Business on the Record Date in accordance with Section 26 hereof. With respect to Common Shares outstanding as of the Record Date, until the earlier of the Distribution Date and the Expiration Date, the Rights associated with such Common Shares will be evidenced by the certificate or Ownership Statement for such Common Shares registered in the names of the holders thereof, in each case together with the Summary of Rights. Until the earlier of the Distribution Date and the Expiration Date, the surrender for transfer of any certificate or Ownership Statement for Common Shares outstanding on the Record Date, with or without a copy of the Summary of Rights, shall also constitute the transfer of the Rights associated with the Common Shares evidenced by such certificate or Ownership Statement.

 

(c)          Rights shall be issued in respect of all Common Shares that are issued (whether originally issued or from the Company’s treasury) after the Record Date but prior to the earlier of the Distribution Date and the Expiration Date and, to the extent provided in Section 22 hereof, in respect of Common Shares issued after the Distribution Date. Certificates and Ownership Statements evidencing such Common Shares shall have printed or otherwise affixed to them the following legend:

 

  

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This [certificate/statement] also evidences and entitles the registered holder hereof to certain Rights as set forth in the Rights Agreement between Endeavor IP Inc. (the “Company”) and the Rights Agent there under dated as of September 3, 2015 (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this [certificate/statement]. The Company will mail to the registered holder of this [certificate/statement] a copy of the Rights Agreement, as in effect on the date of mailing, without charge, promptly after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights beneficially owned by any Person who is, was, or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement), whether currently beneficially owned by or on behalf of such Person or by any subsequent beneficial owner, may become null and void.

 

With respect to such certificates or Ownership Statements containing the foregoing legend, until the earlier of the Distribution Date and the Expiration Date, the Rights associated with the Common Shares evidenced by such certificates or Ownership Statements shall be evidenced by such certificates or Ownership Statements alone and the surrender for transfer of any certificate or Ownership Statement for Common Shares shall also constitute the transfer of the Rights associated with the Common Shares evidenced by such certificate or Ownership Statement. In the event the Company purchases or otherwise acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so that the Company shall not be entitled to exercise any Rights associated with such Common Shares that are no longer outstanding.

For the purposes of this Agreement, any Person or any of such Person’s Affiliates or Associates, who fails to timely file reports required under Sections 13 or 16 of the Act shall not be eligible to participate in the foregoing issuance of Rights.

 

Section 4. Form of Rights Certificates. The Rights Certificates (and the forms of election to purchase and of assignment and the certificates contained therein to be printed on the reverse thereof) shall each be substantially in the form attached hereto as Exhibit B  and may have such marks of identification or designation and such legends, summaries, or endorsements printed thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any stock exchange on which the Rights may from time to time be listed, or to conform to usage. Subject to the provisions of Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated as of the Record Date and on their face shall entitle the registered holders thereof to purchase such number of one one-hundredths of a Preferred Share as shall be set forth therein at the Purchase Price, but the amount and type of securities purchasable upon the exercise of each Right and the Purchase Price thereof shall be subject to adjustment as provided herein.

 

Section 5. Countersignature and Registration.

 

(a)          The Rights Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, or any Vice President, either manually or by facsimile signature, and shall have affixed thereto the Company’s seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. The Rights Certificates shall be countersigned by an authorized signatory of the Rights Agent, either manually or by facsimile signature, and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by an authorized signatory of the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by an authorized signatory of the Rights Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Rights Certificates had not ceased to be such officer of the Company; and any Rights Certificates may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Agreement any such person was not such an officer.

 

  

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(b)          Following the Distribution Date, the Rights Agent will keep, or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates, and the date of each of the Rights Certificates.

 

Section 6. Transfer, Split-Up, Combination, and Exchange of Rights Certificates; Mutilated, Destroyed, Lost, or Stolen Rights Certificates .

 

(a)          Subject to the provisions of Section 7(e) and Section 14 hereof, at any time after the Close of Business on the Distribution Date, and at or prior to the Close of Business on the Expiration Date, any Rights Certificate or Certificates (other than Rights Certificates evidencing Rights that have been redeemed or exchanged pursuant to Section 23 or Section 24 hereof) may be transferred, split-up, combined, or exchanged for another Rights Certificate or Certificates, entitling the registered holder to purchase a like number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares, other securities, cash, or other assets, as the case may be) as the Rights Certificate or Certificates surrendered then entitles such holder (or former holder in the case of a transfer) to purchase. Any registered holder desiring to transfer, split-up, combine, or exchange any Rights Certificate or Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Rights Certificate or Certificates to be transferred, split-up, combined, or exchanged, with the form of assignment and certificate contained therein duly executed, at the principal office or offices of the Rights Agent designated for such purpose. Neither the Rights Agent nor the Company shall be obligated to take any action whatsoever with respect to the transfer of any such surrendered Rights Certificate until the registered holder shall have completed and signed the certificate contained in the form of assignment on the reverse side of such Rights Certificate and shall have provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request. Thereupon the Rights Agent shall, subject to Section 7(e), Section 14, and Section 24 hereof, countersign and deliver to the Person entitled thereto a Rights Certificate or Rights Certificates, as the case may be, as so requested. The Company may require payment from a registered holder of a Rights Certificate of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer, split-up, combination, or exchange of Rights Certificates.

 

(b)          Upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction, or mutilation of a Rights Certificate, and, in case of loss, theft, or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate, if mutilated, the Company will execute and deliver a new Rights Certificate of like tenor to the Rights Agent for countersignature and delivery to the registered holder in lieu of the Rights Certificate so lost, stolen, destroyed, or mutilated.

 

Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.

 

(a)          Subject to Section 7(e) hereof, at any time after the Distribution Date the registered holder of any Rights Certificate may exercise the Rights evidenced thereby (except as otherwise provided herein including, without limitation, the restrictions on exercisability set forth in Section 9(c) and Section 11(a)(iii) hereof) in whole or in part upon surrender of the Rights Certificate, with the form of election to purchase and the certificate contained therein duly executed, to the Rights Agent at the principal office or offices of the Rights Agent designated for such purpose, together with payment of the aggregate Purchase Price with respect to the total number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares, other securities, cash, or other assets, as the case may be) as to which such surrendered Rights are then exercisable, at or prior to the earliest of (i) the Close of Business on September 3, 2025, (“Final Expiration Date”), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof, and (iii) the time at which the Rights are exchanged in full as provided in Section 24 hereof (the earliest of (i), (ii), and (iii) being herein referred to as the “Expiration Date”).

 

(b)          The purchase price for each one one-hundredth of a Preferred Share pursuant to the exercise of a Right initially shall be $.15, shall be subject to adjustment from time to time as provided in Section 11 and Section 13(a) hereof, and shall be payable in accordance with Section 7(c) hereof (such purchase price, as so adjusted, the “Purchase Price”).

 

  

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(c)          Upon receipt of a Rights Certificate evidencing exercisable Rights, with the form of election to purchase and the certificate contained therein duly executed, accompanied by payment, with respect to each Right so exercised, of the Purchase Price per one one-hundredth of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares, other securities, cash, or other assets, as the case may be) to be purchased as set forth below and an amount equal to any applicable transfer tax, the Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is the transfer agent for such shares) certificates for the total number of one one-hundredths of a Preferred Share to be purchased and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of Preferred Shares issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent depositary receipts evidencing such number of one one-hundredths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares evidenced by such receipts shall be deposited by the transfer agent with the depositary agent) and the Company will direct the depositary agent to comply with such request, (ii) requisition from the Company the amount of cash, if any, to be paid in lieu of fractional shares in accordance with Section 14 hereof, (iii) after receipt of such certificates or depositary receipts, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate. The payment of the Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii) hereof) shall be made in cash or by certified bank check or bank draft payable to the order of the Company. In the event that the Company is obligated to issue other securities (including Common Shares) of the Company, pay cash, or distribute other property pursuant to Section 11(a) hereof, the Company will make all arrangements necessary so that such other securities, cash, or other property are available for distribution by the Rights Agent, if and when appropriate. The Company reserves the right to require prior to the occurrence of a Triggering Event that, upon any exercise of Rights, a number of Rights be exercised so that only whole Preferred Shares would be issued.

 

(d)          In case the registered holder of any Rights Certificate shall exercise less than all the Rights evidenced thereby, a new Rights Certificate evidencing the Rights remaining unexercised shall be issued by the Rights Agent and delivered to, or upon the order of, the registered holder of such Rights Certificate, registered in such name or names as may be designated by such holder, subject to the provisions of Section 14 hereof.

 

(e)          Notwithstanding anything in this Agreement to the contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee after the Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or of any such Associate or Affiliate) who becomes a transferee prior to or concurrently with the Acquiring Person becoming such and receives such Rights pursuant to either (A) a transfer (whether or not for consideration) from the Acquiring Person (or any such Associate of Affiliate) to holders of equity interests in such Acquiring Person (or any such Associate or Affiliate) or to any Person with whom the Acquiring Person (or any such Associate of Affiliate) has any continuing agreement, arrangement, or understanding (whether or not in writing) regarding the transferred Rights or (B) a transfer that the Board of Directors of the Company, in its sole discretion, has determined is part of a plan, arrangement, or understanding (whether or not in writing) that has as a primary purpose or effect the avoidance of the provisions of this Section 7(e), shall become null and void without any further action and no holder of such Rights shall have any rights whatsoever with respect to such Rights, whether under any provision of this Agreement or otherwise. The Company shall use all reasonable efforts to ensure that the provisions of this Section 7(e) are complied with, but shall have no liability to any holder of Rights Certificates or any other Person as a result of its failure to make any determinations with respect to an Acquiring Person or any of its Affiliates, Associates, or transferees hereunder.

 

(f)          Notwithstanding anything in this Agreement to the contrary, neither the Rights Agent nor the Company shall be obligated to undertake any action with respect to a registered holder of a Rights Certificate upon the occurrence of any purported exercise as set forth in this Section 7 unless such registered holder shall have (i) completed and signed the certificate contained in the form of election to purchase set forth on the reverse side of the Rights Certificate surrendered for such exercise, and (ii) provided such additional evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the Company shall reasonably request.

 

  

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Section 8. Cancellation and Destruction of Rights Certificates. All Rights Certificates surrendered for the purpose of exercise, transfer, split-up, combination, or exchange shall, if surrendered to the Company or any of its agents, be delivered to the Rights Agent for cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver all cancelled Rights Certificates to the Company, or shall, at the written request of the Company, destroy such cancelled Rights Certificates, and in such case shall deliver a certificate of destruction thereof to the Company.

 

Section 9. Reservation and Availability of Capital Stock.

 

(a)          The Company covenants and agrees that it will cause to be reserved and kept available out of its authorized and unissued Preferred Shares, the number of Preferred Shares that will be sufficient to permit the exercise in full of all outstanding Rights in accordance with Section 7 hereof.

 

(b)          So long as the Preferred Shares (and, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) issuable and deliverable upon the exercise of the Rights may be listed on any national securities exchange or quoted on a quotation system, the Company shall use its best efforts to cause, from and after such time as the Rights become exercisable, all shares reserved for such issuance to be listed on such exchange or quoted on such quotation system, as the case may be, upon official notice of issuance upon such exercise.

 

(c)          The Company shall use its best efforts to (i) file, as soon as practicable following the earliest date after the first occurrence of a Section 11(a)(ii) Event on which the consideration to be delivered by the Company upon exercise of the Rights has been determined in accordance with Section 11(a) hereof, a registration statement on an appropriate form under the Act, with respect to the securities purchasable upon exercise of the Rights, (ii) cause such registration statement to become effective as soon as practicable after such filing, and (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Act) until the earlier of (A) the date as of which the Rights are no longer exercisable for such securities, and (B) the date of the expiration of the Rights. The Company will also take such action as may be appropriate under, or to ensure compliance with, the securities or “blue sky” laws of the various states in connection with the exercisability of the Rights. The Company may temporarily suspend, for a period of time not to exceed 90 days after the date set forth in clause (i) of the first sentence of this Section 9(c), the exercisability of the Rights in order to prepare and file such registration statement and permit it to become effective. Upon any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. In addition, if the Company shall determine that a registration statement is required following the Distribution Date, the Company similarly may temporarily suspend the exercisability of the Rights until such time as a registration statement has been declared effective. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction if the requisite qualification in such jurisdiction shall not have been obtained, or the exercise thereof shall not be permitted under applicable law, or a registration statement shall not have been declared effective.

 

(d)          The Company covenants and agrees that it will take all such action as may be necessary to ensure that all one one-hundredths of a Preferred Share (and, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) delivered upon exercise of the Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and nonassessable.

 

(e)          The Company further covenants and agrees that it will pay when due and payable any and all federal and state transfer taxes and charges that may be payable in respect of the issuance or delivery of the Rights Certificates and of any certificates for a number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) upon the exercise of Rights. The Company shall not, however, be required to pay any transfer tax that may be payable in respect of any transfer or delivery of Rights Certificates to a Person other than, or the issuance or delivery of a number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case

  

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may be) in a name other than that of the registered holder of the Rights Certificates evidencing Rights surrendered for exercise or to issue or deliver any certificates for a number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) in a name other than that of the registered holder upon the exercise of any Rights until such tax shall have been paid (any such tax being payable by the registered holder of such Rights Certificates at the time of surrender) or until it has been established to the Company’s satisfaction that no such tax is due.

 

Section 10. Preferred Shares Record Date. Each person in whose name any certificate for a number of one one-hundredths of a Preferred Share (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) is issued upon the exercise of Rights shall for all purposes be deemed to have become the holder of record of such fractional Preferred Shares (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) evidenced thereby on, and such certificate shall be dated, the date upon which the Rights Certificate evidencing such Rights was duly surrendered and payment of the Purchase Price (and all applicable transfer taxes) was made; provided , however , that, if the date of such surrender and payment is a date upon which the Preferred Shares (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) transfer books of the Company are closed, such Person shall be deemed to have become the record holder of such shares (fractional or otherwise) on, and such certificate shall be dated, the next succeeding Business Day on which the Preferred Shares (or, following the occurrence of a Triggering Event, Common Shares or other securities, as the case may be) transfer books of the Company are open. Prior to the exercise of the Rights evidenced thereby, the registered holder of a Rights Certificate shall not be entitled to any rights of a stockholder of the Company with respect to shares for which the Rights shall be exercisable, including, without limitation, the right to vote, to receive dividends or other distributions, or to exercise any preemptive rights, and shall not be entitled to receive any notice of any proceedings of the Company, except as provided herein.

 

Section 11. Adjustment of Purchase Price, Number and Kind of Shares, or Number of Rights. The Purchase Price, the number and kind of shares, or fractions thereof, purchasable upon exercise of each Right, and the number of Rights outstanding are subject to adjustment from time to time as provided in this Section 11.

 

(a)          (i)  In the event the Company shall at any time after the date of this Agreement (A) declare or pay a dividend on the Preferred Shares payable in Preferred Shares, (B) subdivide or split the outstanding Preferred Shares, (C) combine or consolidate the outstanding Preferred Shares into a smaller number of shares, or (D) issue any shares of its capital stock in a reclassification of the Preferred Shares (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing or surviving corporation), except as otherwise provided in this Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time of the record date for such dividend or of the effective date of such subdivision, split, combination, consolidation, or reclassification, and the number and kind of Preferred Shares (or other capital stock, as the case may be), issuable on such date, shall be proportionately adjusted so that the registered holder of any Right exercised after such time shall be entitled to receive, upon payment of the Purchase Price then in effect, the aggregate number and kind of Preferred Shares (or other capital stock, as the case may be), which, if such Right had been exercised immediately prior to such date (whether or not such Right was then exercisable) and at a time when the Preferred Share (or other capital stock, as the case may be) transfer books of the Company were open, such holder would have owned upon such exercise and been entitled to receive by virtue of such dividend, subdivision, split, combination, consolidation, or reclassification. If an event occurs that would require an adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be in addition to, and shall be made prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii)          In the event any Person shall become an Acquiring Person (a “Section 11(a)(ii) Event”), then, promptly following the occurrence of such Section 11(a)(ii) Event, proper provision shall be made so that each registered holder of a Right (except as provided below and in Section 7(e) hereof) shall thereafter have the right to receive, upon exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, in lieu of a number of one one-hundredths of a Preferred Share, such number of Common Shares of the Company as shall equal the result obtained by (A) multiplying the then current Purchase Price by the then number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (B) dividing that product (which, following such first occurrence, shall thereafter be referred to as the “Purchase Price” for each Right and for all purposes of this Agreement) by 50% of the Current Market Price per Common Share on the date of such first occurrence (such number of shares, the “Adjustment Shares”).

 

  

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(iii)         In the event that (A) the number of Common Shares authorized by the Company’s Articles of Incorporation, but which are not outstanding or reserved for issuance for purposes other than upon exercise of the Rights, are not sufficient to permit the exercise in full of the Rights in accordance with Section 11(a)(ii) hereof or (B) the Board of Directors of the Company otherwise shall determine to do so in its sole discretion, the Company, acting by resolution of the Board of Directors of the Company, shall (1) determine the value of the Adjustment Shares issuable upon the exercise of a Right (the “Current Value”), and (2) with respect to each Right (subject to Section 7(e) hereof), make adequate provision to substitute for the Adjustment Shares, upon the exercise of such Right and payment of the applicable Purchase Price, (u) cash, (v) a reduction in the Purchase Price, (w) Common Shares or other equity securities of the Company (including, without limitation, shares, or units of shares, of preferred stock, such as the Preferred Shares, which the Board of Directors of the Company has deemed to have essentially the same value or economic rights as Common Shares (such shares of preferred stock being referred to as “Common Stock Equivalents”)), (x) debt securities of the Company, (y) other assets, or (z) any combination of the foregoing, having an aggregate value equal to the Current Value, where such aggregate value has been determined by the Board of Directors of the Company based upon the advice of a nationally recognized investment banking firm selected by the Board of Directors of the Company; provided , however , that, if, under the circumstances set forth in clause (A) above, the Company shall not have made adequate provision to deliver value pursuant to clause (2) above within 30 days following the later of (I) the first occurrence of a Section 11(a)(ii) Event and (II) the date on which the Company’s right of redemption pursuant to Section 23(a) hereof expires (the later of (I) and (II) being referred to herein as the “Section 11(a)(ii) Trigger Date”), then the Company shall be obligated to deliver, upon the surrender for exercise of a Right and without requiring payment of the Purchase Price, Common Shares (to the extent available) and then, if necessary, cash, which shares and cash have an aggregate value equal to the Spread. For purposes of the preceding sentence, the term “Spread” shall mean the excess of the Current Value over the Purchase Price. If the Board of Directors of the Company determines in good faith that it is likely that sufficient additional Common Shares could be authorized for issuance upon exercise in full of the Rights, the 30-day period set forth above may be extended to the extent necessary, but not more than 90 days after the Section 11(a)(ii) Trigger Date, in order that the Company may seek stockholder approval for the authorization of such additional shares (such 30-day period, as it may be extended, is herein called the “Substitution Period”). To the extent that action is to be taken pursuant to the first or third sentences of this Section 11(a)(iii), the Company shall provide, subject to Section 7(e) hereof, that such action shall apply uniformly to all outstanding Rights, and the Company may suspend the exercisability of the Rights until the expiration of the Substitution Period in order to seek such stockholder approval for such authorization of additional shares or to decide the appropriate form of distribution to be made pursuant to such first sentence and to determine the value thereof. In the event of any such suspension, the Company shall issue a public announcement stating that the exercisability of the Rights has been temporarily suspended, as well as a public announcement at such time as the suspension is no longer in effect. For purposes of this Section 11(a)(iii), the value of each Adjustment Share shall be the Current Market Price per Common Share on the Section 11(a)(ii) Trigger Date and the per share or per unit value of any Common Stock Equivalent shall be deemed to equal the Current Market Price per Common Share on such date.

 

(b)          In case the Company shall fix a record date for the issuance of rights, options, or warrants to all registered holders of Preferred Shares entitling them to subscribe for or purchase (for a period expiring within 45 calendar days after such record date) Preferred Shares (or shares having the same rights, privileges, and preferences as the Preferred Shares (“Equivalent Preferred Shares ”)) or securities convertible into Preferred Shares or Equivalent Preferred Shares at a price per Preferred Share or Equivalent Preferred Share (or having a conversion price per share, if a security convertible into Preferred Shares or Equivalent Preferred Shares) less than the Current Market Price per Preferred Share on such record date, the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the number of Preferred Shares outstanding on such record date plus the number of Preferred Shares that the aggregate subscription or offering price of the total number of Preferred Shares or Equivalent Preferred Shares so to be offered (or the aggregate initial conversion price of the convertible securities so to be offered) would purchase at such Current Market Price, and the denominator of which shall be the number of Preferred Shares outstanding on such record date plus the number of additional Preferred Shares or Equivalent Preferred Shares to be offered for subscription or purchase (or into which the convertible securities so to be offered are initially convertible). In case such subscription price may be paid by delivery of consideration, part or all of which may be in a form other than cash, the value of such consideration shall be as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. Preferred Shares owned by or held for the account of the Company shall not be deemed outstanding for the purpose of

  

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any such computation. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such rights, options, or warrants are not so issued, the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed.

 

(c)          In case the Company shall fix a record date for a distribution to all registered holders of Preferred Shares (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing or surviving corporation) of cash (other than a regular periodic cash dividend out of the earnings or retained earnings of the Company), assets (other than a dividend payable in Preferred Shares, but including any dividend payable in stock other than Preferred Shares) or evidences of indebtedness, or of subscription rights or warrants (excluding those referred to in Section 11(b) hereof), the Purchase Price to be in effect after such record date shall be determined by multiplying the Purchase Price in effect immediately prior to such record date by a fraction, the numerator of which shall be the Current Market Price per Preferred Share on such record date, less the fair market value (as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes) of the portion of the cash, assets or evidences of indebtedness so to be distributed, or of such subscription rights or warrants applicable to a Preferred Share, and the denominator of which shall be such Current Market Price per Preferred Share. Such adjustments shall be made successively whenever such a record date is fixed, and in the event that such distribution is not so made, the Purchase Price shall be adjusted to be the Purchase Price that would then be in effect if such record date had not been fixed.

 

(d)          (i) For the purpose of any computation hereunder, other than computations made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per Common Share on any date shall be deemed to be the average of the daily closing prices per Common Share for the 30 consecutive Trading Days immediately prior to such date, and for purposes of computations made pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per Common Share on any date shall be deemed to be the average of the daily closing prices per Common Share for the 10 consecutive Trading Days immediately following such date; provided, however , that in the event that the Current Market Price per Common Share is determined during a period following the announcement by the issuer of such Common Share of (A) a dividend or distribution on such Common Shares payable in Common Shares or securities convertible into such Common Shares (other than the Rights), or (B) any subdivision, combination, or reclassification of such Common Shares, and the ex-dividend date for such dividend or distribution, or the record date for such subdivision, combination, or reclassification shall not have occurred prior to the commencement of the requisite 30-Trading Day or 10-Trading Day period, as set forth above, then, and in each such case, the Current Market Price shall be properly adjusted to take into account ex-dividend trading. The closing price for each day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NASDAQ Stock Market or, if the Common Shares are not listed or admitted to trading on the NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Common Shares are listed or admitted to trading or, if the Common Shares are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported on a quotation system then in use, or, if on any such date the Common Shares are not so quoted, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Common Shares selected by the Board of Directors of the Company. If on any such date the Common Shares are not publicly held and are not so listed, admitted to trading, or quoted, and no market maker is making a market in the Common Shares, the “Current Market Price” per Common Share shall mean the fair value per share on such date as determined in good faith by the Board of Directors of the Company, which determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. The term “Trading Day” shall mean a day on which the principal national securities exchange on which the Common Shares are listed or admitted to trading is open for the transaction of business or, if the Common Shares are not listed or admitted to trading on any national securities exchange, a Business Day.

 

(ii)          For the purpose of any computation hereunder, the “Current Market Price” per Preferred Share shall be determined in the same manner as set forth above for the Common Shares in Section 11(d)(i) hereof (other than the penultimate sentence thereof). If the Current Market Price per Preferred Share cannot be determined in the manner provided above or if the Preferred Shares are not publicly held or listed, admitted to trading, or quoted in a manner described in Section 11(d)(i) hereof, the Current Market Price per Preferred Share shall be

  

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conclusively deemed to be an amount equal to 100 (as such number may be appropriately adjusted for such events as stock splits, stock dividends, and recapitalizations with respect to the Common Shares occurring after the date of this Agreement) multiplied by the Current Market Price per Common Share. If neither the Common Shares nor the Preferred Shares are publicly held or listed, admitted to trading, or quoted, the “Current Market Price” per Preferred Share shall mean the fair value per share as determined in good faith by the Board of Directors of the Company, whose determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes. For all purposes of this Agreement, the Current Market Price of one one-hundredth of a Preferred Share shall be equal to the Current Market Price of one Preferred Share divided by 100.

 

(e)          Anything herein to the contrary notwithstanding, no adjustment in the Purchase Price shall be required unless such adjustment would require an increase or decrease of at least 1% in the Purchase Price; provided , however , that any adjustments which by reason of this Section 11(e) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 11 shall be made to the nearest cent or to the nearest ten-thousandth of a Common Share or other share or one-millionth of a Preferred Share, as the case may be. Notwithstanding the first sentence of this Section 11(e), any adjustment required by this Section 11 shall be made no later than the earlier of (i) three years from the date of the transaction that mandates such adjustment and (ii) the Expiration Date.

 

(f)          If as a result of an adjustment made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the registered holder of any Right thereafter exercised shall become entitled to receive any shares of capital stock other than Preferred Shares, thereafter the number of such other shares so receivable upon exercise of any Right and the Purchase Price thereof shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Preferred Shares contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k), and (m), and the provisions of Sections 7, 9, 10, 13, and 14 hereof with respect to the Preferred Shares shall apply on like terms to any such other shares.

 

(g)          All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of one one-hundredths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.

 

(h)          Unless the Company shall have exercised its election as provided in Section 11(i) hereof, upon each adjustment of the Purchase Price as a result of the calculations made in Section 11(b) and Section 11(c) hereof, each Right outstanding immediately prior to the making of such adjustment shall thereafter evidence the right to purchase, at the adjusted Purchase Price, that number of one one-hundredths of a Preferred Share (calculated to the nearest one-millionth) obtained by (i) multiplying (A) the number of one one-hundredths of a share covered by a Right immediately prior to this adjustment, by (B) the Purchase Price in effect immediately prior to such adjustment of the Purchase Price, and (ii) dividing the product so obtained by the Purchase Price in effect immediately after such adjustment of the Purchase Price.

 

(i)          The Company may elect on or after the date of any adjustment of the Purchase Price to adjust the number of Rights, in lieu of any adjustment in the number of one one-hundredths of a Preferred Share purchasable upon the exercise of a Right pursuant to Section 11(h) hereof. Each of the Rights outstanding after the adjustment in the number of Rights shall be exercisable for the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to such adjustment. Each Right held of record prior to such adjustment of the number of Rights shall become that number of Rights (calculated to the nearest one ten-thousandth) obtained by dividing the Purchase Price in effect immediately prior to adjustment of the Purchase Price by the Purchase Price in effect immediately after adjustment of the Purchase Price. The Company shall make a public announcement of its election to adjust the number of Rights, indicating the record date for the adjustment, and, if known at the time, the amount of the adjustment to be made. This record date may be the date on which the Purchase Price is adjusted or any day thereafter, but, if the Rights Certificates have been issued, shall be at least 10 days later than the date of the public announcement. If Rights Certificates have been issued, upon each adjustment of the number of Rights pursuant to this Section 11(i), the Company shall, as promptly as practicable, cause to be distributed to holders of record of Rights Certificates on such record date Rights Certificates evidencing, subject to Section 14 hereof, the additional Rights to which such holders shall be entitled as a result of such adjustment, or, at the option of the Company, shall cause to be distributed to such holders of record in substitution and replacement for the Rights Certificates held by such holders

  

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prior to the date of adjustment, and upon surrender thereof, if required by the Company, new Rights Certificates evidencing all the Rights to which such holders shall be entitled after such adjustment. Rights Certificates so to be distributed shall be issued, executed, and countersigned in the manner provided for herein (and may bear, at the option of the Company, the adjusted Purchase Price) and shall be registered in the names of the holders of record of Rights Certificates on the record date specified in the public announcement.

 

(j)          Irrespective of any adjustment or change in the Purchase Price or the number of one one-hundredths of a Preferred Share issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per one one-hundredth of a share and the number of one one-hundredths of a share that were expressed in the initial Rights Certificates issued hereunder.

 

(k)          Before taking any action that would cause an adjustment reducing the Purchase Price below the then stated value, if any, of the number of one one-hundredths of a Preferred Share issuable upon exercise of the Rights, the Company shall take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue, fully paid and nonassessable, such number of one one-hundredths of a Preferred Share at such adjusted Purchase Price.

 

(l)          In any case in which this Section 11 shall require that an adjustment in the Purchase Price be made effective as of a record date for a specified event, the Company may elect to defer until the occurrence of such event the issuance to the registered holder of any Right exercised after such record date of the number of one one-hundredths of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise over and above the number of one one-hundredths of a Preferred Share and other capital stock or securities of the Company, if any, issuable upon such exercise on the basis of the Purchase Price in effect prior to such adjustment; provided , however , that the Company shall deliver to such holder a due bill or other appropriate instrument evidencing such holder’s right to receive such additional shares (fractional or otherwise) or securities upon the occurrence of the event requiring such adjustment.

 

(m)          Anything in this Section 11 to the contrary notwithstanding, the Company shall be entitled to make such reductions in the Purchase Price, in addition to those adjustments expressly required by this Section 11, as and to the extent that in its good faith judgment the Board of Directors of the Company shall determine to be advisable in order that any (i) consolidation or subdivision of the Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less than the Current Market Price, (iii) issuance wholly for cash of Preferred Shares or securities that by their terms are convertible into or exchangeable for Preferred Shares, (iv) stock dividends, or (v) issuance of rights, options, or warrants referred to in this Section 11, hereafter made by the Company to registered holders of its Preferred Shares shall not be taxable to such stockholders.

 

(n)          The Company covenants and agrees that in the event that a Section 11(a)(ii) Event occurs and the Rights shall then be outstanding, it shall not, (i) consolidate with any other Person, (ii) merge with or into any other Person, or (iii) sell or otherwise transfer (or permit any Subsidiary to sell or otherwise transfer), in one transaction, or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole and calculated on the basis of the Company’s most recent regularly prepared financial statements) to any other Person or Persons, if (A) at the time of or immediately after such consolidation, merger, sale, or transfer there are any charter or bylaw provisions, rights, warrants, or other instruments or securities outstanding or agreements in effect that would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights or (B) prior to, simultaneously with, or immediately after such consolidation, merger, sale, or transfer the stockholders of the Person who constitutes, or would constitute, the “Principal Party” for purposes of Section 13(a) hereof shall have received a distribution of Rights previously owned by such Person or any of its Affiliates and Associates.

 

(o)          The Company covenants and agrees that in the event that a Section 11(a)(ii) Event occurs and the Rights shall then be outstanding, it will not, except as permitted by Section 23, Section 24, or Section 27 hereof, take (or permit any Subsidiary to take) any action if at the time such action is taken it is reasonably foreseeable that such action will diminish substantially or otherwise eliminate the benefits intended to be afforded by the Rights.

 

  

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(p)          Anything in this Agreement to the contrary notwithstanding, in the event that the Company shall at any time after the Rights Dividend Declaration Date and prior to the Distribution Date (i) declare or pay a dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivide or split the outstanding Common Shares, or (iii) combine or consolidate the outstanding Common Shares into a smaller number of shares, the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date (or issued or delivered on or after the Distribution Date pursuant to Section 22 hereof), shall be proportionately adjusted so that the number of Rights thereafter associated with each Common Share following any such event shall equal the result obtained by multiplying the number of Rights associated with each Common Share immediately prior to such event by a fraction, the numerator of which shall be the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of Common Shares outstanding immediately following the occurrence of such event.

  

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. Whenever an adjustment is made as provided in Section 11 or Section 13 hereof, the Company shall (a) promptly prepare a certificate setting forth such adjustment and a brief statement of the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and with each transfer agent for the Preferred Shares and the Common Shares, a copy of such certificate, and (c) if a Distribution Date has occurred, mail a brief summary thereof to each registered holder of a Rights Certificate in accordance with Section 26 hereof. The Rights Agent shall be fully protected in relying on any such certificate and on any adjustment therein contained.

 

Section 13. Consolidation, Merger, or Sale or Transfer of Assets or Earning Power.

 

(a)          In the event that, at any time after a Person has become an Acquiring Person, directly or indirectly,

 

(i)          the Company shall consolidate with, or merge with and into, any other Person, and the Company shall not be the continuing or surviving corporation or other entity of such consolidation or merger;

 

(ii)         any Person shall consolidate with, or merge with or into, the Company, and the Company shall be the continuing or surviving corporation of such consolidation or merger and, in connection with such consolidation or merger, all or part of the outstanding Common Shares shall be changed into or exchanged for stock or other securities of any other Person (or the Company) or cash or any other property; or

 

(iii)        the Company shall sell or otherwise transfer (or one or more of its Subsidiaries shall sell or otherwise transfer), in one transaction or a series of related transactions, assets or earning power aggregating 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole and calculated on the basis of the Company’s most recent regularly prepared financial statements) to any Person or Persons; then, and in each such case, proper provision shall be made so that: (A) each registered holder of a Right, except as provided in Section 7(e) hereof, shall thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price in accordance with the terms of this Agreement, such number of validly authorized and issued, fully paid, non-assessable and freely tradeable Common Shares of the Principal Party, not subject to any liens, encumbrances, rights of first refusal, or other adverse claims, as shall be equal to the result obtained by (1) multiplying the number of one one-hundredths of a Preferred Share for which a Right was exercisable immediately prior to the first occurrence of a Section 11(a)(ii) Event by the Purchase Price in effect immediately prior to such first occurrence of a Section 11(a)(ii) Event, and (2) dividing that product (which, following the first occurrence of a Section 13 Event, shall be referred to as the “Purchase Price” for each Right and for all purposes of this Agreement) by 50% of the Current Market Price per Common Share of such Principal Party on the date of consummation of such Section 13 Event; (B) such Principal Party shall thereafter be liable for, and shall assume, by virtue of such Section 13 Event, all the obligations and duties of the Company pursuant to this Agreement; (C) the term “Company” shall thereafter be deemed to refer to such Principal Party, it being specifically intended that the provisions of Section 11 hereof shall apply only to such Principal Party following the first occurrence of a Section 13 Event; (D) such Principal Party shall take such steps (including, but not limited to, the reservation of a sufficient number of Common Shares) in connection with the consummation of any such transaction as may be necessary to assure that the provisions hereof shall thereafter be applicable, as nearly as reasonably may be, in relation to its Common Shares thereafter deliverable upon the exercise of the Rights; and (E) the provisions of Section 11(a)(ii) hereof shall be of no effect with respect to events occurring at any time following the first occurrence of any Section 13 Event.

 

  

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(b)          “Principal Party” shall mean:

 

(i)          in the case of any transaction described in Section 13(a)(i) or Section 13(a)(ii) hereof, the Person that is the issuer of any securities into which Common Shares of the Company are converted, changed, or exchanged in such merger or consolidation, or if no securities are so issued, the Person that is the other party to such merger or consolidation; and

 

(ii)         in the case of any transaction described in Section 13(a)(iii) hereof, the Person that is the party receiving the greatest portion of the assets or earning power transferred pursuant to such transaction or transactions or, if each Person that is a party to such transaction or transactions receives the same portion of the assets or earning power transferred pursuant to such transaction or transactions or if the Person receiving the largest portion of the assets or earning power cannot be determined, whichever of such Persons is the issuer of Common Shares having the greatest aggregate value of shares outstanding; provided , however , that, in any such case, (A) if the Common Shares of such Person are not at such time and have not been continuously over the preceding 12-month period registered under Section 12 of the Exchange Act, and such Person is a direct or indirect Subsidiary of another Person the Common Shares of which are and have been so registered, “Principal Party” shall refer to such other Person; and (B) in case such Person is a Subsidiary, directly or indirectly, of more than one Person, the Common Shares of two or more of which are and have been so registered, “Principal Party” shall refer to whichever of such Persons is the issuer of the Common Shares having the greatest aggregate market value.

(c)          The Company shall not consummate a Section 13 Event unless the Principal Party shall have a sufficient number of authorized Common Shares that have not been issued or reserved for issuance to permit the exercise in full of the Rights in accordance with this Section 13 and unless prior thereto the Company and such Principal Party shall have executed and delivered to the Rights Agent a supplemental agreement confirming that the requirements of Section 13(a) and Section 13(b) hereof shall promptly be performed in accordance with their terms and further providing that, as soon as practicable after the date of any such Section 13 Event, the Principal Party will:

 

(i)          prepare and file a registration statement under the Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, and will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing and (B) remain effective (with a prospectus at all times meeting the requirements of the Act) until the Expiration Date;

 

(ii)         take all such other action as may be necessary to enable the Principal Party to issue the securities purchasable upon exercise of the Rights, including but not limited to the registration or qualification of such securities under all requisite securities laws of jurisdictions of the various states and the listing of such securities on such exchanges and trading markets as may be necessary or appropriate; and

 

(iii)        deliver to registered holders of the Rights historical financial statements for the Principal Party and each of its Affiliates that comply in all respects with the requirements for registration on Form 10 (or any successor form) under the Exchange Act.

 

The provisions of this Section 13 shall similarly apply to successive mergers or consolidations or sales or other transfers. In the event that a Section 13 Event shall occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights that have not theretofore been exercised shall thereafter become exercisable in the manner described in Section 13(a) hereof.

 

Section 14. Fractional Rights and Fractional Shares.

 

(a)          The Company shall not be required to issue fractions of Rights, except prior to the Distribution Date as provided in Section 11(p) hereof, or to distribute Rights Certificates that evidence fractional Rights. In lieu of such fractional Rights, the Company shall pay to the registered holders of the Rights Certificates with regard to which such fractional Rights would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Right. For purposes of this Section 14(a), the current market value of a whole Right shall be the closing price of the Rights for the Trading Day immediately prior to the date on which such fractional Rights would have been otherwise issuable. The closing price of the Rights for any Trading Day shall be the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in

  

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either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the NASDAQ Stock Market or, if the Rights are not listed or admitted to trading on the NASDAQ Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the Rights are listed or admitted to trading, or if the Rights are not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by a quotation system then in use or, if on any such date the Rights are not so quoted, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the Rights, selected by the Board of Directors of the Company. If on any such date the Rights are not publicly held and are not so listed, admitted to trading, or quoted, and no market maker is making a market in the Rights, the current market value of a Right shall mean the fair value of a Right on such date as determined in good faith by the Board of Directors of the Company, which determination shall be described in a statement filed with the Rights Agent and shall be conclusive for all purposes.

 

(b)          The Company shall not be required to issue fractions of Preferred Shares (other than fractions that are integral multiples of one one-hundredth of a Preferred Share) upon exercise of the Rights or to distribute certificates that evidence fractional Preferred Shares (other than fractions that are integral multiples of one one-hundredth of a Preferred Share). In lieu of fractional Preferred Shares that are not integral multiples of one one-hundredth of a Preferred Share, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one one-hundredth of a Preferred Share. For purposes of this Section 14(b), the current market value of one one-hundredth of a Preferred Share shall be one one-hundredth of the closing price of a Preferred Share or, if unavailable, the appropriate alternative price (in each case, as determined pursuant to Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of such exercise.

 

(c)          Following the occurrence of a Triggering Event, the Company shall not be required to issue fractions of Common Shares upon exercise of the Rights or to distribute certificates or Ownership Statements that evidence fractional Common Shares. In lieu of fractional Common Shares, the Company may pay to the registered holders of Rights Certificates at the time such Rights are exercised as herein provided an amount in cash equal to the same fraction of the current market value of one Common Share. For purposes of this Section 14(c), the current market value of one Common Share shall be the closing price of one Common Share or, if unavailable, the appropriate alternative price (in each case, as determined pursuant to Section 11(d)(i) hereof) on the Trading Day immediately prior to the date of such exercise.

 

(d)          The registered holder of a Right by the acceptance of that Right expressly waives such holder’s right to receive any fractional Rights or any fractional shares upon exercise of a Right, except as permitted by this Section 14.

Section 15. Rights of Action. All rights of action in respect of this Agreement, excepting the rights of action given to the Rights Agent under Section 18 hereof, are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, of the Common Shares); and any registered holder of any Rights Certificate (and, prior to the Distribution Date, of the Common Shares), without the consent of the Rights Agent or of the registered holder of any other Rights Certificate (or, prior to the Distribution Date, of the Common Shares), may, on such first holder’s own behalf and for such first holder’s own benefit, enforce, and may institute and maintain any suit, action, or proceeding against the Company to enforce, or otherwise act in respect of, such first holder’s right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the registered holders of Rights, it is specifically acknowledged that the registered holders of Rights would not have an adequate remedy at law for any breach of this Agreement and shall be entitled to specific performance of the obligations hereunder and injunctive relief against actual or threatened violations of the obligations hereunder of any Person subject to this Agreement.

 

Section 16. Agreement of Rights Holders. Every registered holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other registered holder of a Right that:

 

(a)          prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of Common Shares;

 

  

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(b)          after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office or offices of the Rights Agent designated for such purposes, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates contained therein duly executed;

 

(c)          subject to Section 6(a) and Section 7(f) hereof, the Company and the Rights Agent may deem and treat the Person in whose name a Rights Certificate (or, prior to the Distribution Date, a Common Share certificate or Ownership Statement) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Rights Certificates or the Common Share certificate or Ownership Statement made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent, subject to the last sentence of Section 7(e) hereof, shall be required to be affected by any notice to the contrary; and

 

(d)          notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any registered holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree, or ruling issued by a court of competent jurisdiction or by a governmental, regulatory, or administrative agency or commission, or any statute, rule, regulation, or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided , however , that the Company must use its best efforts to have any such order, decree, or ruling lifted or otherwise overturned as soon as possible.

 

Section 17. Rights Certificate Holder Not Deemed a Stockholder. No registered holder, as such, of any Rights Certificate shall be entitled to vote, receive dividends, or be deemed for any purpose the registered holder of the number of one one-hundredths of a Preferred Share or any other securities of the Company that may at any time be issuable on the exercise of the Rights evidenced thereby, nor shall anything contained herein or in any Rights Certificate be construed to confer upon the registered holder of any Rights Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 25 hereof), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by such Rights Certificate shall have been exercised in accordance with the provisions hereof.

 

Section 18. Concerning the Rights Agent.

 

(a)          The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, reimbursement for its reasonable expenses and counsel fees and disbursements and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, or expense, incurred without negligence, bad faith, or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the costs and expenses of defending against any claim of liability in the premises.

 

(b)          The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered, or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for Common Shares or for other securities of the Company or an Ownership Statement, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to have been signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons.

 

Section 19. Merger or Consolidation or Change of Name of the Rights Agent.

 

(a)          Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the corporate trust, stock transfer, or other

  

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shareholder services business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto; but only if such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 21 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Rights Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of an authorized signatory of a predecessor Rights Agent and deliver such Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, an authorized signatory of any successor Rights Agent may countersign such Rights Certificates either in the name of the predecessor or in the name of the successor Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

 (b)          In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature of an authorized signatory under the Rights Agent’s prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, an authorized signatory of the Rights Agent may countersign such Rights Certificates either in the prior name of the Rights Agent or in the changed name of the Rights Agent; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.

 

Section 20. Duties of the Rights Agent. The Rights Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the registered holders of Rights Certificates, by their acceptance thereof, shall be bound:

 

(a)          The Rights Agent may consult with legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.

 

(b)          Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter (including, without limitation, the identity of any Acquiring Person and the determination of Current Market Price) be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.

 

(c)          The Rights Agent shall be liable hereunder only for its own negligence, bad faith, or willful misconduct.

 

(d)          The Rights Agent shall not be liable for or by reason of any of the statements of fact or recital contained in this Agreement or in the Rights Certificates and it shall not be required to verify the same (except as to a countersignature by one of its authorized signatories on such Rights Certificates), but all such statements and recital are and shall be deemed to have been made by the Company only.

 

(e)          The Rights Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution and delivery hereof by the Rights Agent) or in respect of the validity or execution of any Rights Certificate (except a countersignature by one of its authorized signatories on any such Rights Certificate); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Rights Certificate; nor shall it be responsible for any adjustment required under the provisions of Section 11, Section 13, or Section 24 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment (except with respect to the exercise of Rights evidenced by Rights Certificates after actual notice of any such adjustment); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any Common Shares or Preferred Shares to be issued pursuant to this Agreement or any Rights Certificate or as to whether any Common Shares or Preferred Shares will, when so issued, be validly authorized and issued, fully paid, and nonassessable.

 

  

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(f)          The Company agrees that it will perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.

 

(g)          The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer.

 

(h)          The Rights Agent and any stockholder, director, officer, or employee of the Rights Agent may buy, sell, or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not the Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.

 

(i)          The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect, or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect, or misconduct; provided , however , that reasonable care was exercised in the selection and continued employment thereof.

 

(j)          No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.

 

(k)          If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate contained in the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicates an affirmative response to clause 1 or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise or transfer without first consulting with the Company.

 

Section 21. Change of the Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon 30 days’ notice given to the Company in accordance with Section 26 hereof, and to each transfer agent of the Common Shares and Preferred Shares by registered or certified mail, and, if such resignation occurs after the Distribution Date, to the registered holders of the Rights Certificates in accordance with Section 26 hereof. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days’ notice given to the Rights Agent or successor Rights Agent, as the case may be, in accordance with Section 26 hereof, and to each transfer agent of the Common Shares and Preferred Shares by registered or certified mail, and, if such removal occurs after the Distribution Date, to the registered holders of the Rights Certificates in accordance with Section 26 hereof. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving proper notice of such removal or after it has been properly notified of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the registered holder of a Rights Certificate (who shall, with such notice, submit such holder’s Rights Certificate for inspection by the Company), then any registered holder of any Rights Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be (a) a legal business entity organized and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise corporate trust, stock transfer, or shareholder services powers and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $10 million or (b) an affiliate of a legal business entity described in clause (a) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties, and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act, or deed necessary for that purpose. Not later than the effective date of any such

  

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appointment, the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Common Shares and the Preferred Shares, and, if such appointment occurs after the Distribution Date, give notice thereof to the registered holders of the Rights Certificates in accordance with Section 26 hereof. Failure to give any notice provided for in this Section 21, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be.

 

Section 22. Issuance of New Rights Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights to the contrary, the Company may, at its option, issue new Rights Certificates evidencing Rights in such form as may be approved by the Board of Directors of the Company to reflect any adjustment or change in the Purchase Price and the number or kind or class of shares or other securities or property purchasable under the Rights Certificates made in accordance with the provisions of this Agreement. In addition, in connection with the issuance or sale of Common Shares following the Distribution Date and prior to the Expiration Date, the Company (a) shall, with respect to Common Shares so issued or sold pursuant to the exercise of stock options or under any employee plan or arrangement, granted or awarded as of the Distribution Date, or upon the exercise, conversion, or exchange of securities hereinafter issued by the Company, and (b) may, in any other case, if deemed necessary or appropriate by the Board of Directors of the Company, issue Rights Certificates evidencing the appropriate number of Rights in connection with such issuance or sale; provided , however , that (i) no such Rights Certificate shall be issued if, and to the extent that, the Company shall be advised by counsel that such issuance would create a significant risk of material adverse tax consequences to the Company or the Person to whom such Rights Certificate would be issued, and (ii) no such Rights Certificate shall be issued if, and to the extent that, appropriate adjustment shall otherwise have been made in lieu of the issuance thereof.

 

Section 23. Redemption and Termination.

 

(a)          The Board of Directors of the Company may, at its option, at any time prior to the earlier of (i) the occurrence of a Section 11(a)(ii) Event and (ii) the Final Expiration Date, direct the Company to, and if directed the Company shall, redeem all but not less than all of the then outstanding Rights at a redemption price of $0.0001 per Right, as such amount may be appropriately adjusted to reflect any stock split, stock dividend, or similar transaction occurring after the date hereof (such redemption price being hereinafter referred to as the “Redemption Price”). The Company may, at its option, pay the Redemption Price in cash, Common Shares (based on the Current Market Price of the Common Shares at the time of redemption) or any other form of consideration deemed appropriate by the Board of Directors of the Company.

 

(b)          Immediately upon the action of the Board of Directors of the Company directing the Company to redeem the Rights, evidence of which shall have been filed with the Rights Agent and without any further action and without any notice, the right to exercise the Rights will terminate and the only right thereafter of the registered holders of Rights shall be to receive the Redemption Price for each Right so held. Promptly after the action of the Board of Directors of the Company directing the Company to make the redemption of the Rights, the Company shall give notice of such redemption to the Rights Agent and the registered holders of the then outstanding Rights in accordance with Section 26 hereof. Any notice given in accordance with Section 26 hereof shall be deemed given whether or not the holder receives the notice. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made.

 

Section 24. Exchange of Rights.

 

(a)          The Board of Directors of the Company may, at its option, at any time after the occurrence of a Section 11(a)(ii) Event, direct the Company to, and if directed the Company shall, exchange all or part of the then outstanding and exercisable Rights (which shall not include Rights that have become void pursuant to the provisions of Section 7(e) hereof) for Common Shares at an exchange ratio of one Common Share per Right, appropriately adjusted to reflect any stock split, stock dividend, or similar transaction occurring after the date hereof (such exchange ratio being hereinafter referred to as the “Exchange Ratio ”). The exchange of the Rights by the Board of Directors of the Company may be made effective at such time, on such basis, and with such conditions as the Board of Directors of the Company in its sole discretion may establish. Notwithstanding the foregoing, the Board of Directors of the Company shall not be empowered to direct the Company to effect such exchange at any time after any Person (other than an Exempt Person), together with all Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or more of the Common Shares then outstanding.

 

  

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(b)          Immediately upon the action of the Board of Directors of the Company directing the Company to exchange any Rights pursuant to Section 24(a) hereof and without any further action and without any notice, the right to exercise such Rights shall terminate and the only right thereafter of a registered holder of such Rights shall be to receive that number of Common Shares equal to the number of such Rights held by such holder multiplied by the Exchange Ratio. The Company shall promptly give public notice of any such exchange; provided , however , that the failure to give, or any defect in, such notice shall not affect the validity of such exchange. The Company promptly shall give notice of any such exchange to all of the registered holders of such Rights in accordance with Section 26 hereof. Any notice given in accordance with Section 26 hereof shall be deemed given whether or not the holder receives the notice. Each such notice of exchange will state the method by which the exchange of the Common Shares for Rights will be effected and, in the event of any partial exchange, the number of Rights that will be exchanged. Any partial exchange shall be effected pro rata based on the number of Rights (other than Rights that have become void pursuant to the provisions of Section 7(e) hereof) held by each registered holder of Rights.

 

(c)          In any exchange pursuant to this Section 24, the Company, at its option, may substitute Preferred Shares (or Equivalent Preferred Shares, as such term is defined in Section 11(b) hereof) for Common Shares exchangeable for Rights, at the initial rate of one one-hundredth of a Preferred Share (or Equivalent Preferred Shares) for each Common Share, as appropriately adjusted to reflect stock splits, stock dividends, and other similar transactions after the date hereof.

 

(d)          In the event the number of Common Shares authorized by the Company’s Articles of Incorporation, but which are not outstanding or reserved for issuance for purposes other than upon exercise of the Rights, is not sufficient to permit any exchange of Rights as contemplated in accordance with this Section 24, the Company may take all such action as may be necessary to authorize additional Common Shares for issuance upon exchange of the Rights.

 

(e)          The Company shall not be required to issue fractions of Common Shares or to distribute certificates or Ownership Statements that evidence fractional Common Shares. In lieu of such fractional Common Shares, there shall be paid to the registered holders of the Rights Certificates with regard to which such fractional Common Shares would otherwise be issuable, an amount in cash equal to the same fraction of the current market value of a whole Common Share. For the purposes of this Section 24(e), the current market value of a whole Common Share shall be the closing price of a Common Share (as determined pursuant to the second sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange pursuant to this Section 24.

 

(f)          Prior to effecting an exchange pursuant to this Section 24, the Board of Directors of the Company may direct the Company to enter into a trust agreement in such form and with such terms as the Board of Directors of the Company shall then approve (the “Trust Agreement”). If the Board of Directors of the Company so directs, the Company shall enter into the Trust Agreement and shall issue to the trust created by such agreement (the “Trust”) all of the Common Shares, fractional Preferred Shares, or other securities, if any, issuable pursuant to the exchange, and all Persons entitled to receive such shares or other securities (and any dividends or distributions made thereon after the date on which such shares or other securities are deposited in the Trust) shall be entitled to receive such only from the Trust and solely upon compliance with the relevant terms and provisions of the Trust Agreement.

 

Section 25. Notice of Certain Events.

 

(a)          In case the Company shall propose, at any time after the Distribution Date, (i) to pay any dividend payable in stock of any class to the registered holders of Preferred Shares or to make any other distribution to the registered holders of Preferred Shares (other than a regular periodic cash dividend out of earnings or retained earnings of the Company), or (ii) to offer to the registered holders of Preferred Shares rights or warrants to subscribe for or to purchase any additional Preferred Shares or shares of stock of any class or any other securities, rights, or options, or (iii) to effect any reclassification of its Preferred Shares (other than a reclassification involving only the subdivision of outstanding Preferred Shares), or (iv) to effect any consolidation or merger into or with any other Person, or to effect any sale or other transfer (or to permit one or more of its Subsidiaries to effect any sale or other transfer), in one transaction or a series of related transactions, of 50% or more of the assets or earning power of the Company and its Subsidiaries (taken as a whole and calculated on the basis of the Company’s most recent regularly prepared financial statements) to any other Person or Persons, or (v) to effect the liquidation, dissolution, or winding up of the Company, then, in each such case, the Company shall give to each registered holder of a Rights Certificate, to

  

-25-

  

 

the extent feasible and in accordance with Section 26 hereof, a notice of such proposed action, which shall specify the record date for the purposes of such stock dividend, distribution of rights or warrants, or the date on which such reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, or winding up is to take place and the date of participation therein by the registered holders of the Preferred Shares, if any such date is to be fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least 20 days prior to the record date for determining registered holders of the Preferred Shares for purposes of such action, and in the case of any such other action, at least 20 days prior to the date of the taking of such proposed action or the date of participation therein by the registered holders of the Preferred Shares, whichever shall be the earlier.

 

(b)          In case a Section 11(a)(ii) Event shall occur, then, in any such case, (i) the Company shall as soon as practicable thereafter give to each registered holder of a Rights Certificate, to the extent feasible and in accordance with Section 26 hereof, a notice of the occurrence of such event, which shall specify the event and the consequences of the event to registered holders of Rights under Section 11(a)(ii) hereof, and (ii) all references in Section 25(a) to Preferred Shares shall be deemed thereafter to refer to Common Shares or, if appropriate, other securities.

 

Section 26. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the registered holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by (a) first-class mail, postage prepaid, (b) overnight delivery, or (c) courier or messenger service, in each case addressed (until another address is filed in writing by the Company with the Rights Agent) as follows:

 

Endeavor IP Inc.

140 Broadway, 46th Floor

New York, New York 10005

Attention: Franciscus Diaba

T: 212 858 7514

 

Subject to the provisions of Section 21 hereof, any notice or demand authorized by this Agreement to be given or made by the Company or by the registered holder of any Rights Certificate to or on the Rights Agent shall be sufficiently given or made if sent by (i) first-class mail, postage prepaid, (ii) overnight delivery, or (iii) courier or messenger service, in each case addressed (until another address is filed in writing by the Rights Agent with the Company) as follows:

 

VStock Transfer, LLC

77 Spruce Street, Suite 201

Cedarhurst, NY 11516

Attention: Yoel Goldfeder

Telephone: (212) 828-8436

 

Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the registered holder of any Rights Certificate (or, if prior to the Distribution Date, of the Common Shares) shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the registry books of the Rights Agent (or, if prior to the Distribution Date, of the transfer agent for the Common Shares).

 

Section 27. Supplements and Amendments. The Company may from time to time and the Rights Agent shall, if the Company so directs, supplement or amend any provision of this Agreement without the approval of any registered holders of the Rights to (a) cure any ambiguity, (b) correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, (c) shorten or lengthen any time period hereunder, or (d) make any other provisions with respect to the Rights that the Company may deem necessary or desirable; provided , however , that, from and after the occurrence of a Section 11(a)(ii) Event, no such supplement or amendment shall adversely affect the interests of the registered holders of Rights Certificates (other than an Acquiring Person or an Affiliate or Associate of an Acquiring Person or certain of their transferees). Upon the delivery of a certificate from an appropriate officer of the Company that states that the proposed supplement or amendment is in compliance with the terms of this Section 27, an authorized signatory of the Rights Agent shall execute such supplement or amendment; provided , that any supplement or amendment that does not amend Section 18, Section 19, Section 20, or Section 21 hereof in a manner adverse to the Rights Agent shall become effective immediately upon execution by the Company, whether or not also executed by the Rights Agent.

 

  

-26-

  

 

Section 28. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.

 

Section 29. Determinations and Actions by the Board of Directors. For all purposes of this Agreement, any calculation of the number of Common Shares or any other class of capital stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in effect on the date hereof. The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board of Directors of the Company or to the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (a) interpret the provisions of this Agreement and (b) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend this Agreement). All such actions, calculations, interpretations, and determinations that are done or made by the Board of Directors of the Company in good faith, shall be final, conclusive, and binding on the Company, the Rights Agent, the registered holders of the Rights, and all other parties.

 

Section 30. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent, and the registered holders of the Rights Certificates (and, prior to the Distribution Date, of the Common Shares) any legal or equitable right, remedy, or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent, and the registered holders of the Rights Certificates (and, prior to the Distribution Date, of the Common Shares).

 

Section 31. Severability. If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void, or unenforceable, the remainder of the terms, provisions, covenants, and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired, or invalidated; provided , however , that notwithstanding anything in this Agreement to the contrary, if any such term, provision, covenant, or restriction is held by such court or authority to be invalid, void, or unenforceable and the Board of Directors of the Company determines in its good faith judgment that severing the invalid language from this Agreement would adversely affect the purpose or effect of this Agreement, the right of redemption set forth in Section 23 hereof shall be reinstated and shall not expire until the Close of Business on the 10th day following the date of such determination by the Board of Directors of the Company.

 

Section 32. Governing Law. This Agreement, each Right, and each Rights Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Nevada and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts made and to be performed entirely within such State.

 

Section 33. Counterparts; Facsimiles and PDFs. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A facsimile or .pdf signature delivered electronically shall constitute an original signature for all purposes.

 

Section 34. Descriptive Headings. Descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

[The remainder of this page is intentionally left blank.]

 

  

-27-

  

 

 

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

 

	  	
ENDEAVOR IP INC.

	  	  
	  	
By:

	
/s/ Franciscus Diaba

	  	  	
Name: Franciscus Diaba

	  	  	
Title:  Chief Executive Officer 

 

	  	
VSTOCK TRANSFER, LLC

	  	  
	  	
By:

	
/s/ Yoel Goldfeder

	  	  	
Name: Yoel Goldfeder

	  	  	
Title:   Chief Executive Officer

 

 

SIGNATURE PAGE TO RIGHTS AGREEMENT

 

  

-28-

  

 

Exhibit A

CERTIFICATE OF DESIGNATION, PREFERENCES, AND

RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

of

ENDEAVOR IP, INC.

Pursuant to Section 78.1955 of the Nevada Revised Statutes

 

Endeavor IP, Inc., a corporation organized and existing under the General Corporation Law of the State of Nevada (the “Corporation”), in accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

 

By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock. Preferred Stock designated as Series A Junior Participating Preferred Stock (as hereinafter defined):

 

RESOLVED, that pursuant to the authority vested in the Board of Directors of the Corporation in accordance with the provisions of its Certificate of Incorporation, a series of Preferred Stock of the Corporation be and it hereby is created, and that the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations, and restrictions thereof are as follows:

 

Section 1. Designation and Amount. The shares of such series shall be designated as “Series A Junior Participating Preferred Stock” and the number of shares constituting such series shall be 750,000.

 

Section 2. Dividends and Distributions.

 

(a)          Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock, in preference to the holders of shares of Common Stock, par value $0.0001 per share, of the Corporation (the “Common Stock”), and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the last day of March, June, September, and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (i) $.01 or (ii) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after September 3, 2015 (the “Rights Dividend Declaration Date”) (A) declare any dividend on Common Stock payable in shares of Common Stock, (B) subdivide the outstanding Common Stock, or (C) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (ii) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

(b)          The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in Section 2(a) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided , that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01. per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.

 

  

A-1

Exhibit A

  

 

(c)          Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.

 

Section 3. Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights:

 

(a)          Subject to the provision for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

(b)          Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

 

(c)          (i)          If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a “default period”) that shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two directors.

 

     (ii)         During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to Section 3(c)(iii) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided , that such voting right shall not be exercised unless the holders of 10% in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two directors or, if such right is exercised at an annual meeting, to elect two directors. If the number that may be so elected at any special meeting does not amount to the required number, the holders of Preferred Stock shall have the right to make such increase in the number of directors as shall be necessary to permit the election by them of the required number. After the holders of Preferred Stock shall have exercised their right to elect directors in any default period and during the continuance of such period, the number of directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock.

 

 

A-2

Exhibit A

 

     (iii)        Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of a special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice President, or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this Section 3(c)(iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to such holder at such holder’s last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than 10% of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this Section 3(c)(iii), no such special meeting shall be called during the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders.

 

      (iv)        In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of directors until the holders of Preferred Stock shall have exercised their right to elect two directors voting as a class, after the exercise of which right (A) the directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (B) any vacancy in the Board of Directors may (except as provided in Section 3(c)(ii)) be filled by vote of a majority of the remaining directors theretofore elected by the holders of the class of stock that elected the director whose office shall have become vacant. References in this Section 3(c) to directors elected by the holders of a particular class of stock shall include directors elected by such directors to fill vacancies as provided in clause (B) of the foregoing sentence.

 

     (v)         Immediately upon the expiration of a default period, (A) the right of the holders of Preferred Stock as a class to elect directors shall cease, (B) the term of any directors elected by the holders of Preferred Stock as a class shall terminate, and (C) the number of directors shall be such number as may be provided for in the Certificate of Incorporation or Bylaws irrespective of any increase made pursuant to the provisions of Section 3(c)(ii) (such number being subject, however, to change thereafter in any manner provided by law or in the Certificate of Incorporation or Bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (B) and (C) in the preceding sentence may be filled by a majority of the remaining directors.

 

(d)          Except as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

 

Section 4. Certain Restrictions.

 

(a)          Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

 

     (i)          declare or pay dividends on, or make any other distributions on, any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock;

 

     (ii)         declare or pay dividends on, or make any other distributions on, any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution, or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

 

 

A-3

Exhibit A

 

   (iii)        redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock, provided , that the Corporation may at any time redeem, purchase, or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation, or winding up) to the Series A Junior Participating Preferred Stock; or

 

   (iv)        redeem or purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

 

(b)          The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under Section 4(a), purchase or otherwise acquire such shares at such time and in such manner.

 

Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designation creating a series of Preferred Stock or any similar stock, or as otherwise required by law.

Section 6. Liquidation, Dissolution, or Winding Up.

 

(a)          Upon any liquidation (voluntary or otherwise), dissolution, or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution, or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received an amount equal to $100 per share of Series A Participating Preferred Stock, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the “Series A Liquidation Preference”). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the “Common Adjustment”) equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in Section 4(c) below to reflect such events as stock splits, stock dividends, and recapitalizations with respect to the Common Stock) (such number in clause (ii), the “Adjustment Number”). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to one with respect to such Preferred Stock and Common Stock, on a per share basis, respectively.

 

(b)          In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock.

 

 

A-4

Exhibit A

 

(c)          In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination, or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash, or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash, or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Dividend Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

 

Section 8. No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable.

 

Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation’s Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise.

 

Section 10. Amendment. At any time when any shares of Series A Junior Participating Preferred Stock are outstanding, neither the Certificate of Incorporation of the Corporation nor this Certificate of Designation shall be amended in any manner that would materially alter or change the powers, preferences, or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class.

 

Section 11. Fractional Shares. The Series A Junior Participating Preferred Stock may be issued in fractions of a share that shall entitle the holder, in proportion to such holder’s fractional shares, to exercise voting rights, receive dividends, participate in distributions, and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock.

 

[The remainder of this page is intentionally left blank.]

 

 

A-5

Exhibit A

 

IN WITNESS WHEREOF, Endeavor IP, Inc. has caused this Certificate of Designation to be signed by the undersigned this 3rd day of September, 2015.

 

	  	
ENDEAVOR IP, INC.

	  	  
	  	
By:

	
/s/ Franciscus Diaba

	  	
Name: Franciscus Diaba

	  	
Title:  Chief Executive Officer and President

 

  

A-6

  

 

Exhibit B

FORM OF RIGHTS CERTIFICATE

 

	
Certificate No. R-

	
__________Rights

 

NOT EXERCISABLE AFTER SEPTEMBER 3, 2025 OR EARLIER IF REDEEMED OR EXCHANGED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.0001 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY BENEFICIALLY OWNED BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT BENEFICIAL OWNER, MAY BECOME NULL AND VOID.

 

Rights Certificate

 

Endeavor IP Inc.

 

This certifies that ________________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions, and conditions of the Rights Agreement, dated as of September 3, 2015  (the “ Rights Agreement ”), between Endeavor IP Inc., a Nevada corporation (the “ Company ”), and VStock Transfer, LLC, a limited liability company (the “ Rights Agent ”), to purchase from the Company at any time prior to 5:00 p.m., New York, New York time, on September 3, 2025 at the office or offices of the Rights Agent designated for such purpose, or its successors as Rights Agent, one one-hundredth of a fully paid, non-assessable share of Series A Junior Participating Preferred Stock of the Company (a “Preferred Share ”), at a purchase price of $.15 per one one-hundredth of a share (such purchase price, as may be adjusted, the “Purchase Price ”), upon presentation and surrender of this Rights Certificate with the Form of Election to Purchase and related Certificate duly executed. The number of Rights evidenced by this Rights Certificate (and the number of shares that may be purchased upon exercise thereof) set forth above, and the Purchase Price per share set forth above, are the number and Purchase Price as of September 3, 2015, based on the Preferred Shares as constituted at such date. At the discretion of the Board of Directors of the Company, the Purchase Price may be paid in Preferred Shares in a cashless exercise. The Company reserves the right to require prior to the occurrence of a Triggering Event (as such term is defined in the Rights Agreement) that a number of Rights be exercised so that only whole Preferred Shares will be issued.

 

Upon the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of an Acquiring Person (or of any such Associate or Affiliate), or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who, after such transfer, became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.

 

As provided in the Rights Agreement, the Purchase Price, the number and kind of Preferred Shares or other securities issuable upon exercise of a Right, and the number of Rights outstanding are subject to modification and adjustment upon the happening of certain events, including Triggering Events.

 

This Rights Certificate is subject to all of the terms, provisions, and conditions of the Rights Agreement, which terms, provisions, and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties, and immunities hereunder of the Rights Agent, the Company, and the holders of the Rights Certificates, which limitations of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent.

 

 

B-1

Exhibit B

 

This Rights Certificate, with or without other Rights Certificates, upon surrender at the principal office or offices of the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of one one-hundredths of a Preferred Share as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.

 

Subject to the provisions of the Rights Agreement, the Rights evidenced by this Rights Certificate may be redeemed by the Company at its option at a redemption price of $0.0001 per Right at any time prior to the earlier of (i) the Close of Business on the 10th day following the Shares Acquisition Date, and (ii) the occurrence of a Section 11(a)(ii) Event. In addition, under certain circumstances following the occurrence of a Section 11(a)(ii) Event but before any person acquires beneficial ownership of 50% or more of the Common Shares (as such term is defined in the Rights Agreement), the Rights may be exchanged, in whole or in part, for Common Shares, Preferred Shares, or shares of other preferred stock of the Company having essentially the same value or economic rights as such shares. Immediately upon the action of the Board of Directors of the Company authorizing any such redemption or exchange, and without any further action or any notice, the Rights (other than Rights that are not subject to such redemption or exchange) will terminate and the Rights will only enable holders to receive the redemption price or the shares issuable upon such exchange, as applicable.

 

No fractional Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions that are integral multiples of one one-hundredth of a Preferred Share, which may, at the election of the Company, be evidenced by depositary receipts), but in lieu thereof a cash payment may be made, as provided in the Rights Agreement.

 

No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of Preferred Shares or of any other securities of the Company that may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give consent to or withhold consent from any corporate action, or, to receive notice of meetings or other actions affecting stockholders (except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Rights evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.

 

This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by an authorized signatory of the Rights Agent.

 

B-2

Exhibit B

WITNESS the facsimile signature of the proper officers of the Company and its corporate seal.

 

Dated as of __________ _____, 20___.

 

	  	
Endeavor IP Inc.

	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

 

	
Countersigned:

	  
	  	  
	
VStock Transfer, LLC

	  
	  	  
	
By:

	  	  
	
Authorized Signature

	  

 

 

B-3

Exhibit B

 

[Form of Reverse Side of Rights Certificate]

 

FORM OF ASSIGNMENT

 

(To be executed by the registered holder if such

holder desires to transfer the Rights Certificate.)

 

FOR VALUE RECEIVED ____________________________ hereby sells, assigns and transfers unto ___________

	
  

 

	
(Please print name and address of transferee)

 

	
  

 

	  

(Please spell out and include in numerals the

number of Rights being transferred by this Assignment)

 

of the Rights evidenced by this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint _________________________ Attorney, to transfer the number of Rights indicated above on the books of the within named Company, with full power of substitution.

 

Dated: ________________, ______

 

	  	  
	  	
Signature

 

Medallion Signature Guaranteed:

 

 

B-4

Exhibit B

 

Certificate

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1)         the Rights evidenced by this Rights Certificate [   ] are [   ] are not being sold, assigned, and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); and

 

(2)         after due inquiry and to the best knowledge of the undersigned, he, she, or it [   ] did [   ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was, or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

 

	
Dated:  ________________, ______

	  
	  	
Signature

 

Medallion Signature Guaranteed:

 

NOTICE

 

The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

 

B-5

Exhibit B

 

[Form of Reverse Side of Rights Certificate-continued]

FORM OF ELECTION TO PURCHASE

 

(To be executed by the registered holder if such holder desires to

exercise any or all Rights evidenced by the Rights Certificate.)

	
  

	
 

	  	
To:

	
[INSERT NAME OF COMPANY]:

 

The undersigned hereby irrevocably elects to exercise _______________________ (____________) Rights evidenced by this Rights Certificate to purchase the Preferred Shares issuable upon the exercise of the Rights (or such other securities of the Company or of any other person that may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to or that such shares be credited to the book-entry account of:

 

	  
	
(Please print social security or other identifying number)

 

	  
	  
	
(Please print name and address)

 

If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance of such Rights shall be registered in the name of and delivered to:

 

	  
	
(Please print social security or other identifying number)

 

	  
	  
	
(Please print name and address)

 

Dated: ________________, ______

 

	  	  
	  	
Signature

 

Medallion Signature Guaranteed:

 

 

B-6

Exhibit B

 

Certificate

 

The undersigned hereby certifies by checking the appropriate boxes that:

 

(1)         the Rights evidenced by this Rights Certificate [   ] are [   ] are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement); and

 

(2)         after due inquiry and to the best knowledge of the undersigned, he, she, or it [   ] did [   ] did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.

 

	
Dated:  ________________, ______

	  
	  	
Signature

 

Medallion Signature Guaranteed:

 

NOTICE

 

The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.

 

 

B-7

 

 

Exhibit C

UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS, WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY BENEFICIALLY OWNED BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT BENEFICIAL OWNER, MAY BECOME NULL AND VOID.

 

FORM OF SUMMARY OF RIGHTS

TO PURCHASE PREFERRED STOCK

 

On  September 3, 2015 , the Board of Directors of Endeavor IP Inc., a Nevada corporation (the “Company”), declared a dividend distribution of one right (each, a “Right”) for each outstanding share of common stock, par value $0.0001, of the Company (the “Common Shares”). The dividend is payable to holders of record as of the close of business on September 3, 2015 (the “Record Date”).

 

The following is a summary description of the Rights. This summary is intended to provide a general description only and is subject to the detailed terms and conditions of the Rights Agreement (the “Rights Agreement”), dated as of September 3, 2015 , by and between the Company and VStock Transfer, LLC, as rights agent (the “Rights Agent”).

 

1.         Issuance of Rights

 

Each holder of Common Shares as of the Record Date will receive a dividend of one Right per Common Share. One Right will also be issued together with each Common Share issued by the Company after the Record Date and prior to the Distribution Date (as defined in Section 2 below), and in certain circumstances, after the Distribution Date. New certificates (or, if uncertificated, ownership statements in lieu thereof) for Common Shares issued after the Record Date will contain a notation incorporating the Rights Agreement by reference.

 

Until the Distribution Date:

	
  

	
 

	
o  

	
the Rights will not be exercisable;

	
  

	
 

	
o  

	
the Rights will be evidenced by the certificates for Common Shares (or by the ownership statements issued with respect to uncertificated Common Shares) and not by separate rights certificates; and

	
  

	
 

	
o  

	
the Rights will be transferable by, and only in connection with, the transfer of Common Shares.

 

2.           Distribution Date; Beneficial Ownership

 

The Rights are not exercisable until the Distribution Date. As of and after the Distribution Date, the Rights will separate from the Common Shares and each Right will become exercisable to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $0.0001 per share, of the Company (each whole share, a “Preferred Share”) at a purchase price of $.15 (such purchase price, as may be adjusted, the “Purchase Price”). At the discretion of the Board of Directors of the Company, the purchase price may be paid in Preferred Shares in a cashless exercise. This portion of a Preferred Share would give the holder thereof approximately the same dividend, voting, and liquidation rights as would one Common Share.

 

The “Distribution Date” is the earlier of:

	
o  

	
ten days following a public announcement that a person has become an “Acquiring Person” by acquiring beneficial ownership of 15% or more of the outstanding Common Shares then outstanding (or, in the case of a person that had beneficial ownership of 15% or more of the outstanding Common Shares on the date the Rights Agreement was executed, by obtaining beneficial ownership of additional Common Shares representing 2.0% of the Common Shares then outstanding other than as a result of repurchases of Common Shares by the Company or certain inadvertent acquisitions, and provided that Common Shares acquired pursuant to employee benefit plans shall not be included in the calculation of such additional Common Shares; and

  

C-1

  

Exhibit C

 

	
o  

	
ten business days (or such later date as the Board of Directors of the Company shall determine prior to the time a person becomes an Acquiring Person) after the commencement of a tender offer or exchange offer by or on behalf of any person (other than the Company or certain related entities) that, if completed, would result in such person becoming an Acquiring Person.

 

A person will be deemed to “beneficially own” any Common Shares if such person or any affiliated or associated person of such person:

	
  

	
 

	
o  

	
is considered a “beneficial owner” of the Common Shares under Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended and as in effect on the date of the Rights Agreement;

	
  

	
 

	
o  

	
has the right to acquire the Common Shares, either immediately or in the future, pursuant to any agreement, arrangement, or understanding (other than a customary underwriting agreement relating to a bona fide public offering of the Common Shares) or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise, except that a person will not be deemed to be a beneficial owner of (a) Common Shares tendered pursuant to a tender offer or exchange offer by or on behalf of such person or any affiliated or associated persons of such person until the tendered Common Shares are accepted for purchase or exchange, (b) securities issuable upon exercise of a Right before the occurrence of a Triggering Event (as defined in Section 5 below),  (c) securities issuable upon exercise of a Right after the occurrence of a Triggering Event if the Rights are originally issued Rights or were issued in connection with an adjustment to originally issued Rights or (d) securities issued pursuant to repayment of debt, an employee benefit plan or as a bonus to an employee, officer or director of the Company;

	
o  

	
has the right to vote or dispose of the Common Shares pursuant to any agreement, arrangement, or understanding (other than a right to vote arising from the granting of a revocable proxy or consent that is not also then reportable on a Schedule 13D); or

	
  

	
 

	
o  

	
has an agreement, arrangement, or understanding with another person who beneficially owns Common Shares and the agreement, arrangement, or understanding is for the purpose of acquiring, holding, voting, or disposing of any securities of the Company (other than customary underwriting agreements relating to a bona fide public offering of Common Shares or a right to vote arising from the granting of a revocable proxy or consent that is not also then reportable on a Schedule 13D).

	
  

	
 

3.         Issuance of Rights Certificates

 

As soon as practicable after the Distribution Date, the Rights Agent will mail rights certificates to holders of record of the Common Shares as of the close of business on the Distribution Date and, thereafter, the separate rights certificates alone will evidence the Rights.

	
  

	
 

4.         Expiration of Rights

 

The Rights will expire on the earliest of (a) 5:00 p.m., Eastern time, on  September 3, 2025, (b) the time at which the Rights are redeemed (as described in Section 6 below), and (c) the time at which the Rights are exchanged in full (as described in Section 7 below).

	
  

	
 

5.         Change of Exercise of Rights Following Certain Events

 

The following described events are referred to as “Triggering Events.”

 

(a)          Flip-In Event. In the event that a person becomes an Acquiring Person, each holder of a Right will thereafter have the right to receive, upon exercise, Common Shares (or, in certain circumstances, other securities, cash, or other assets of the Company) having a value equal to two times the Purchase Price. Notwithstanding any of the foregoing, following the occurrence of a person becoming an Acquiring Person, all Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person (or by certain related parties) will be null and void. However, Rights are not exercisable following the occurrence of a

  

C-2

  

Exhibit C

 

person becoming an Acquiring Person until such time as the Rights are no longer redeemable by the Company as set forth below. At the discretion of the Board of Directors of the Company, the Purchase Price may be in Preferred Shares permitting a cashless exercise.

 

For example, at a purchase price of $.15 per Right, following the occurrence of a person becoming an Acquiring Person, each Right not owned by the Acquiring Person (or by certain related parties) would entitle its holder to purchase $0.30 worth of Common Shares (or other consideration, as noted above) for $.15. Assuming that the Common Shares have a per share value of $.02  at such time, the holder of each valid Right would be entitled to purchase 10 Common Shares for $.15.

 

(b)          Flip-Over Events. In the event that, at any time after a person has become an Acquiring Person, (i) the Company engages in a merger or other business combination transaction in which the Company is not the continuing or surviving corporation or other entity, (ii) the Company engages in a merger or other business combination transaction in which the Company is the continuing or surviving corporation and the Common Shares of the Company are changed or exchanged, or (iii) 50% or more of the Company’s assets or earning power is sold or transferred, each holder of a Right (except Rights that have previously been voided as set forth above) shall thereafter have the right to receive, upon exercise, common shares of the acquiring company having a value equal to two times the Purchase Price.

	
  

	
 

6.         Redemption

 

At any time a person becomes an Acquiring Person (as defined in the Rights Agreement)], the Board of Directors of the Company may direct the Company to redeem the Rights in whole, but not in part, at a price of $0.0001 per Right (payable in cash, Common Shares, or other consideration deemed appropriate by the Board of Directors of the Company). Immediately upon the action of the Board of Directors of the Company directing the Company to redeem the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the $0.0001 redemption price.

	
  

	
 

7.         Exchange of Rights

 

At any time after a person becomes an Acquiring Person but before any person acquires beneficial ownership of 50% or more of the outstanding Common Shares, the Board of Directors of the Company may direct the Company to exchange the Rights (other than Rights owned by such person or certain related parties, which will have become void), in whole or in part, at an exchange ratio of one Common Share per Right (subject to adjustment). The Company may substitute Preferred Shares (or shares of a class or series of the Company’s preferred stock having equivalent rights, preferences, and privileges) for Common Shares at an initial rate of one one-hundredth of a Preferred Share (or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences, and privileges) per Common Share. Immediately upon the action of the Board of Directors of the Company directing the Company to exchange the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the number of Common Shares (or one one-hundredth of a Preferred Share or of a share of a class or series of the Company’s preferred stock having equivalent rights, preferences, and privileges) equal to the number of Rights held by such holder multiplied by the exchange ratio.

 

8.         Adjustments to Prevent Dilution; Fractional Shares

 

The Board of Directors of the Company may adjust the Purchase Price, the number of Preferred Shares or other securities or assets issuable upon exercise of a Right, and the number of Rights outstanding to prevent dilution that may occur (a) in the event of a stock dividend on, or a subdivision, combination, or reclassification of, the Preferred Shares, (b) in the event of a stock dividend on, or a subdivision or combination of, the Common Shares, (c) if holders of the Preferred Shares are granted certain rights, options, or warrants to subscribe for Preferred Shares or convertible securities at less than the current market price of the Preferred Shares, or (d) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends) or of subscription rights or warrants (other than those referred to above).

 

With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments amount to at least 1% of the Purchase Price. No fractional Preferred Shares will be issued (other than fractions that are integral multiples of one one-hundredth of a Preferred Share), and in lieu thereof, an adjustment in cash may be made based on the market price of the Preferred Shares on the last trading date prior to the date of exercise.

 

  

C-3

  

Exhibit C

 

9.           No Stockholder Rights Prior to Exercise; Tax Considerations

 

Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to stockholders or to the Company, stockholders may, depending upon the circumstances, recognize taxable income in the event that the Rights become exercisable for Common Shares (or other consideration) of the Company or for common shares of the acquiring company or in the event of the redemption of the Rights as set forth in Section 6 above.

	
  

	
 

10.       Amendment of Rights Agreement

 

The Company may supplement or amend any provision of the Rights Agreement in order to (a) cure any ambiguity, (b) correct or supplement any provision contained in the Rights Agreement that may be defective or inconsistent with other provisions of the Rights Agreement, (c) shorten or lengthen any time period under the Rights Agreement, or (d) make any other provisions with respect to the Rights that the Company deems necessary or desirable; provided , however , that no supplement or amendment made after a person becomes an Acquiring Person may adversely affect the interests of the registered holders of rights certificates (other than an Acquiring Person or any affiliated or associated person of an Acquiring Person or certain of their transferees).

 

The Company has filed a copy of the Rights Agreement with the Securities and Exchange Commission as an exhibit to a Form 8-K filed on September 9, 2015. In addition, a copy of the Rights Agreement is available free of charge from the Company. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement.

 

 

C-4Exhibit 10.1

 

 

 

Membership Interest Purchase
Agreement

 

By and Among

 

Versar, Inc.

 

Johnson Controls Federal
Systems, Inc.

 

And

 

Johnson Controls, Inc.

 

September 4, 2015

 

 

 

     

     

    

 

Table of Contents

 

	 	 	Page
	 	 	 
	Article I DEFINITIONS	1
	 	 
	Article II SALE AND PURCHASE	8
	2.1	Sale and Purchase	8
	2.2	Purchase Price; Payment	8
	2.3	Closing	9
	2.4	Estimated Closing Statement; Closing Statement	10
	2.5	Post-Closing Purchase Price Adjustment	11
	 	 	 
	Article III CONDITIONS PRECEDENT TO CLOSING	12
	3.1	Conditions Precedent to the Buyer’s Obligations	12
	3.2	Conditions Precedent to the Sellers’ Obligations	14
	 	 	 
	Article IV REPRESENTATIONS AND WARRANTIES REGARDING EACH SELLER	15
	4.1	Organization and Authority	16
	4.2	Membership Interest Ownership	16
	4.3	No Conflicts	16
	4.4	Litigation	16
	4.5	No Brokers’ Fees	16
	4.6	No Other Representations and Warranties	16
	 	 	 
	Article V REPRESENTATIONS AND WARRANTIES REGARDING COMPANY	17
	5.1	Organization, Qualification and Corporate Power	17
	5.2	Capitalization	17
	5.3	No Conflicts	17
	5.4	Financial Statements	18
	5.5	Absence of Certain Changes	18
	5.6	Title to and Sufficiency of Assets	19
	5.7	Real Property	20
	5.8	Contracts	20
	5.9	Intellectual Property	24
	5.10	Tax	25
	5.11	Legal Compliance	25
	5.12	Litigation	25
	5.13	Environmental	25
	5.14	Employees; Subcontractors	26
	5.15	Employee Benefits	27
	5.16	Customers and Suppliers	27
	5.17	Transactions with Related Persons	27
	5.18	Insurance	27
	5.19	No Brokers’ Fees	27
	5.20	No Other Representations and Warranties	28

 

    	 	i	 

     

    

 

	Article VI REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER	28
	6.1	Organization and Authority	28
	6.2	No Conflicts	28
	6.3	Litigation	28
	6.4	No Brokers’ Fees	28
	6.5	Investment Purpose	28
	 	 	 
	Article VII INDEMNIFICATION	29
	7.1	Indemnification by the Sellers	29
	7.2	Indemnification by the Buyer	30
	7.3	Survival and Time Limitations	30
	7.4	Limitations on Indemnification by the Sellers	30
	7.5	Third-Party Claims	32
	7.6	Tax Claims	33
	7.7	Exclusive Remedy	33
	7.8	Other Indemnification Matters	33
	 	 	 
	Article VIII TAX MATTERS	33
	8.1	Tax Periods Ending on or Before the Closing Date	33
	8.2	Tax Periods Beginning Before and Ending After the Closing Date	34
	8.3	Tax Refunds	35
	8.4	Tax Contests and Cooperation	35
	8.5	Certain Taxes	36
	8.6	Tax Matters	36
	8.7	Allocation of Purchase Price	36
	8.8	Overlap	37
	 	 	 
	Article IX PRE-CLOSING COVENANTS OF COMPANY AND SELLERS	37
	9.1	Conduct of the Business of Company in the Ordinary Course	37
	9.2	No Negotiation	37
	 	 	 
	Article X COVENANTS	38
	10.1	Use of Company Name	38
	10.2	Press Releases and Public Announcements	38
	10.3	Confidentiality	38
	10.4	Litigation Support	38
	10.5	Books and Records	39
	10.6	Non-Solicitation of Employees	39
	10.7	Restrictions on Certain Activities	40
	10.8	Financing	40
	 	 	 
	Article XI TERMINATION	40
	11.1	Termination Rights	40
	11.2	Consequences of Termination	41
	 	 	 
	Article XII MISCELLANEOUS	41
	12.1	Further Assurances	41
	12.2	No Third-Party Beneficiaries	41

 

    	 	ii	 

     

    

 

	12.3	Entire Agreement	41
	12.4	Successors and Assigns	42
	12.5	Counterparts	42
	12.6	Notices	42
	12.7	Resolution of Disputes	43
	12.8	Governing Law	44
	12.9	Amendments and Waivers	44
	12.10	Severability	44
	12.11	Disclosure Schedules	44
	12.12	Updates to the Disclosure Schedules	45
	12.13	Construction	45
	12.14	Specific Performance	45
	12.15	Time Is of the Essence	46
	12.16	Sellers’ Representative	46
	12.17	Legal Representation	47

 

    	 	iii	 

     

    

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This Membership
Interest Purchase Agreement (this “Agreement”)
is entered into as of September 4, 2015 (the “Effective Date”), by and among Versar, Inc., a Delaware
corporation (the “Buyer”), Johnson Controls
Federal Systems, Inc., a Delaware corporation (“JCFS”),
and Johnson Controls, Inc., a Wisconsin corporation (“Johnson
Controls” and together with JCFS, collectively, the “Sellers”
and each a “Seller”).

 

STATEMENT OF PURPOSE

 

The Sellers collectively
own all of the outstanding membership interests of Johnson Controls Security Systems, L.L.C., a Florida limited liability company
(“Company”). The Buyer has agreed, at
the Closing, to purchase from the Sellers, and the Sellers have agreed, at the Closing, to sell to the Buyer, all of the outstanding
membership interests of Company for the consideration and on the terms and subject to the conditions set forth in this Agreement.

 

Article
I

DEFINITIONS

 

“Adjusted
Closing Payment” is defined in Section 2.5.

 

“Affiliate”
means, with respect to a specified Person, any other Person that directly or indirectly controls, is controlled by or is under
common control with, such specified Person. The term “control” means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities,
by contract or otherwise.

 

“Affiliated
Group” means an affiliated group as defined in Code §1504 but including any partnership which would be
included if such partnership were a corporation (or any analogous combined, consolidated or unitary group defined under state or
local income Tax Law).

 

“Agreement”
is defined in the opening paragraph.

 

“Acquisition
Transaction” is defined in Section 9.2.

 

“Assets”
is defined in Section 5.6.

 

“Association”
is defined in Section 12.7.

 

“Base
Amount” is defined in Section 2.2(a).

 

“Business
Day” means any day that is not a Saturday, Sunday or any other day on which banks are required or authorized
by law to be closed in Milwaukee, Wisconsin.

 

“Buyer”
is defined in the opening paragraph.

 

“Buyer
Indemnified Party” is defined in Section 7.1(a).

 

     

     

    

 

“California
Lease Assignment” is defined in Section 3.1(g)(viii).

 

“Cap”
is defined in Section 7.4(a).

 

“Cash”
means (a) Company’s actual cash (bank) balances (net of any bank overdrafts), as adjusted for any deposits in transit, any
outstanding checks and any other proper reconciling items, plus (b) cash equivalents (including marketable securities and short-term
investments) of Company.

 

“Closing”
is defined in Section 2.3.

 

“Closing
Date” is defined in Section 2.3.

 

“Closing
Statement” is defined in Section 2.4(b).

 

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

 

“Company”
is defined in the Statement of Purpose.

 

“Confidentiality
Agreement” is defined in Section 10.3.

 

“Consent”
means any consent, approval, authorization, permission or waiver.

 

“Consents/Notices”
means the consents from, and the notices sent to, the parties as identified on Schedule 3.1(d).

 

“Contingent
Amount” is defined in Section 2.2(a).

 

“Contract”
means any contract, lease, license or other agreement.

 

“Current
Assets” means the current assets of Company designated as billed accounts receivable, less accounts receivable allowance,
plus unbilled accounts receivable, plus other current assets, determined in accordance with GAAP (applied using the same GAAP accounting
methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation
methodologies that were used in the calculation of the Interim Balance Sheet), except as otherwise set forth on Schedule 2.4.

 

“Current
Government Contract” means any prime contract, subcontract, purchase order, task order, delivery order, teaming agreement,
joint venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement, letter contract or other similar
arrangement of any kind, that is active in performance as of the Effective Date or the time immediately prior to the Closing between
Company, on the one hand, and: (i) any Governmental Body; (ii) any prime contractor of a Governmental Body in its capacity
as a prime contractor; or (iii) any subcontractor at any tier with respect to any contract of a type described in clauses (i)
or (ii) above, on the other hand. A task, purchase or delivery order under a Current Government Contract shall not constitute
a separate Current Government Contract, for purposes of this definition, but shall be part of the Current Government Contract to
which it relates.

 

    	 	- 2 -	 

     

    

 

“Current
Liabilities” means the current liabilities of Company designated as accounts payable, accrued wages, accrued commission
and bonus, accrued benefits, unearned billings and other current liabilities, determined in accordance with GAAP (applied using
the same GAAP accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and
valuation and estimation methodologies that were used in the calculation of the Interim Balance Sheet), except as otherwise set
forth on Schedule 2.4.

 

“Deductible”
is defined in Section 7.4(a).

 

“Disclosure
Schedules” or “Schedule” is defined in Section 12.11.

 

“Disclosure
Supplement” is defined in Section 12.12.

 

“Dispute
Notice” is defined in Section 2.4(c).

 

“Disputing
Parties” is defined in Section 12.7.

 

“Effective
Date” is defined in the opening paragraph.

 

“Employee
Benefit Plan” means any of the following maintained for any of Company’s current or former executives,
officers or other employees: (a) Employee Pension Benefit Plan, (b) Employee Welfare Benefit Plan or (c) other equity-based plan
or arrangement or other retirement, deferred compensation, severance, bonus, profit-sharing or incentive plan or arrangement.

 

“Employee
Pension Benefit Plan” has the meaning set forth in ERISA § 3(2).

 

“Employee
Welfare Benefit Plan” has the meaning set forth in ERISA § 3(1).

 

“Encumbrance”
means any lien, mortgage, pledge, encumbrance, charge, security interest, adverse claim, community property interest, equitable
interest, option, warrant, right of first refusal, easement, profit, license, servitude, right of way, covenant or zoning restriction.

 

“Environmental
Law” means all Laws relating to the environment, natural resources, pollutants, contaminants, wastes or chemicals,
including but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601 et
seq., the Hazardous Substances Transportation Act, 49 U.S.C. Section 5101 et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401
et seq., the Emergency Planning Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq., the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.

 

“Equity
Interests” means, with respect to Company, any and all interests, participations, rights in or other equivalents
of Company’s membership interests or other equivalent equity or ownership interests and any rights, warrants or options exchangeable
or exercisable for or convertible into such membership interests or other equity or ownership interests.

 

    	 	- 3 -	 

     

    

 

“ERISA”
means the Employee Retirement Income Security Act of 1974.

 

“Estimated
Cash” is defined in Section 2.4(a).

 

“Estimated
Closing Payment” is defined in Section 2.2(b).

 

“Estimated
Closing Statement” is defined in Section 2.4(a).

 

“Estimated
Indebtedness” is defined in Section 2.4(a).

 

“Estimated
Working Capital” is defined in Section 2.4(a).

 

“Federal
Client” is defined in Section 10.7.

 

“Financial
Statements” is defined in Section 5.4.

 

“Fundamental
Representation” is defined in Section 7.3.

 

“GAAP”
means generally accepted accounting principles in the United States as set forth in pronouncements of the Financial Accounting
Standards Board (and its predecessors) and the American Institute of Certified Public Accountants and, unless otherwise specified,
as in effect on the date hereof or, with respect to any financial statements, the date such financial statements were prepared.

 

“Government
Bid” means any proposal or offer, solicited or unsolicited made by Company prior to the Closing Date which, if accepted,
would result in a Current Government Contract. A Government Bid: (i) includes any proposal or offer made by Company that has been
accepted by a Governmental Body but has not resulted in a Current Government Contract prior to the Closing Date; and (ii) does
not include any proposal or offer made by Company that has been accepted and has resulted in a Current Government Contract prior
to the Closing Date.

 

“Government
Contract” means any prime contract, subcontract, purchase order, task order, delivery order, teaming agreement, joint
venture agreement, strategic alliance agreement, basic ordering agreement, pricing agreement, letter contract or other similar
arrangement of any kind, that is active in performance as of the Effective Date or the time immediately prior to the Closing, or
that has otherwise not been closed out and released with no further liability to the Company, or that has or had been active in
performance at any time in the seven (7) year period prior to the Closing Date, between Company, on the one hand, and: (i) any
Governmental Body; (ii) any prime contractor of a Governmental Body in its capacity as a prime contractor; or (iii) any
subcontractor at any tier with respect to any contract of a type described in clauses (i) or (ii) above, on the other
hand. A task, purchase or delivery order under a Government Contract shall not constitute a separate Government Contract, for purposes
of this definition, but shall be part of the Government Contract to which it relates.

 

“Governmental
Body” means any federal, state or local government or quasi-governmental authority or any department, agency,
subdivision, court or other tribunal of any of the foregoing, in each case within the United States.

 

    	 	- 4 -	 

     

    

 

“Hazardous
Substance” means any hazardous material, substance or waste that is regulated by any Governmental Body.

 

“Imperial”
is defined in Section 5.19.

 

“Indebtedness”
means as to any Person at any time: (a) obligations of such Person for borrowed money; (b) obligations of such Person evidenced
by bonds, notes, debentures or other similar instruments; (c) capitalized lease obligations of such Person; and (d) indebtedness
or other obligations of others guaranteed by such Person.

 

“Indemnified
Party” is defined in Section 7.5(a).

 

“Indemnifying
Party” is defined in Section 7.5(a).

 

“Intellectual
Property” means: (a) patents, patent applications and patent disclosures, together with reissuances, continuations,
continuations-in-part, revisions, extensions and reexaminations thereof; (b) trademarks, service marks, trade dress, logos, trade
names and corporate names, together with translations, adaptations, derivations and combinations thereof and including goodwill
associated therewith, and applications, registrations and renewals in connection therewith; (c) copyrights, and applications, registrations
and renewals in connection therewith; (d) trade secrets; and (e) internet domain names.

 

“Interim
Balance Sheet” is defined in Section 5.4.

 

“Interim
Balance Sheet Date” means the date of the Interim Balance Sheet.

 

“JCFS”
is defined in the opening paragraph.

 

“Johnson
Controls” is defined in the opening paragraph.

 

“Knowledge”
means actual knowledge as of the Closing Date. The Sellers’ Knowledge means the actual knowledge as of the Closing Date
of Lee R. Guill, James Procaccini, Joseph Williams, Botio Mandov, Robert Buckley, Laura Farnham, Michael Harrington, Shirley L.
Afable, Janice C. Stein, Amit Reizes, Steven W. Keane and Francisco Vasquez.

 

“Law”
means any federal, state or local law, statute, ordinance, regulation, rule, constitution or treaty of any Governmental Body.

 

“Lease”
is defined in Section 5.7(b).

 

“Leased
Real Property” is defined in Section 5.7(b).

 

“License”
is defined in Section 5.9(c).

 

    	 	- 5 -	 

     

    

 

“Loss”
means any loss, damage, penalty, fine, cost or settlement payment, but shall not include any punitive, speculative, exemplary,
lost profit, diminution of value, consequential, special or indirect damages of any nature whatsoever, except to the extent such
damages are a component of damages awarded against an Indemnified Party in connection with a Third Party Claim; provided, however,
the foregoing limitation shall not prohibit or preclude recovery by an Indemnified Party for lost profits, as a component of direct
damages, on any Material Contracts that are active and funded as of the Closing Date to the extent arising from a breach of the
representations and warranties contained in Section 5.8 and to the extent proven by such Indemnified Party.

 

“Maryland
Lease Assignment” is defined in Section 3.1(g)(ix).

 

“Massachusetts
Lease Assignment” is defined in Section 3.1(g)(vii).

 

“Material
Adverse Effect” means a violation, inaccuracy, breach, default,
failure to comply, change in circumstance, loss, effect, fact, agreement, arrangement, commitment, understanding or obligation
which, as a result of the occurrence or existence thereof, has had, or could reasonably be expected to have, a material adverse
effect on the business, operations, properties, financial condition, assets or results of operations of Company taken as a whole
or that has had, or could reasonably be expected to have, a material adverse effect on the ability of the Sellers to perform their
respective obligations under this Agreement or any of the Transaction Documents or to consummate the Transactions. However, a Material
Adverse Effect, when used with respect to Company, does not include a material adverse effect or impact on the business, operations,
properties, financial condition, assets or results of operations of Company that is caused by (i) one or more downturns in the
economy, the securities markets, the financing markets or the credit markets in general which does not disproportionately affect
Company relative to other industry participants, (ii) one or more downturns in the industries in which Company operates which does
not disproportionately affect Company relative to other industry participants, (iii) the public announcement or pendency of this
Agreement or the transactions contemplated by this Agreement, or (iv) one or more acts of terrorism.

 

“Material
Contracts” is defined in Section 5.8.

 

“Membership
Interests” is defined in Section 2.1.

 

“Multiemployer
Plan” has the meaning set forth in ERISA § 3(37).

 

“Non-Party
Affiliates” is defined in Section 7.4(e).

 

“Objection
Period” is defined in Section 2.4(c).

 

“Order”
means any order, award, settlement, decision, injunction, judgment, ruling, decree, charge, writ, subpoena or verdict entered,
issued, made or rendered by any Governmental Body or arbitrator.

 

“Organizational
Documents” means (a) any certificate of formation, articles of organization or articles of incorporation and
any limited liability company agreement, operating agreement or bylaws, (b) any documents comparable to those described in clause
(a) as may be applicable pursuant to any Law and (c) any amendment or modification to any of the foregoing.

 

“Party”
means the Buyer or any Seller and “Parties” means collectively, the Buyer and the Sellers.

 

    	 	- 6 -	 

     

    

 

“Permit”
means any permit or license issued by any Governmental Body.

 

“Permitted
Encumbrance” means (a) any mechanic’s, materialmen’s or similar statutory lien incurred in the
ordinary course of business for monies not yet due, (b) any lien of third parties other than the Sellers on real estate or other
property for Taxes, assessments, governmental charges or levies not yet due or delinquent, (c) any purchase money lien or lien
securing rental payments under capital lease arrangements to the extent related to the assets purchased or leased, (d) any easement,
right-of-way, zoning restriction, license, existing building restriction, covenant, ordinance, easement of roads, privilege, or
right of public service companies, reservation or restriction on use and other similar encumbrances relating to real property and
all other matters that might be revealed on a current survey or that would have been filed and appear in the public real estate
records that do not prohibit or materially impair the current use, occupancy or marketability of title of the property subject
thereto and (e) any lien to secure performance of statutory obligations, surety or appeal bonds, performance bonds or bids.

 

“Person”
means any individual, corporation, limited liability company, partnership, sole proprietorship, joint venture, trust, estate, association,
organization, labor union, Governmental Body or other entity.

 

“Pre-Closing
Taxes” is defined in Section 8.2(a).

 

“Proceeding”
means any lawsuit, litigation or arbitration (in each case, whether civil, criminal or administrative) pending by or before any
Governmental Body or arbitrator.

 

“Pro
Rata Share” means, (i) with respect to Johnson Controls, fifty percent (50%), and (b) with respect to JCFS,
fifty percent (50%).

 

“Purchase
Price” is defined in Section 2.2(a).

 

“Representative”
means, with respect to a particular Person, any director, manager, officer, employee, agent, consultant, advisor or other representative
of such Person, including legal counsel, accountants and financial advisors.

 

“Resolution
Accountants” is defined in Section 2.4(d).

 

“Restricted
Activities” is defined in Section 10.7.

 

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

 

“Seller”
or “Sellers” is defined in the opening
paragraph.

 

“Sellers’
Representative” is defined in Section 12.16.

 

“Settlement
Offer” is defined in Section 2.4(d).

 

“Specific
Client” is defined in Section 10.7.]

 

“Straddle
Period Tax Returns” is defined in Section 8.2(a).

 

    	 	- 7 -	 

     

    

 

“Straddle
Statement” is defined in Section 8.2(a).

 

“Subsequently
Disclosed Matter” is defined in Section 12.12.

 

“Survival
Date” means October 31, 2016.

 

“Target
Working Capital” is defined in Section 2.2(b)(i).

 

“Tax”
means any federal, state or local income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, general service, alternative or add-on minimum, estimated or other tax
and shall include any interest or penalty thereon.

 

“Tax
Return” means any return, declaration, report, claim for refund, or information return or statement relating
to Taxes, including any form, schedule or attachment thereto and any amendment or supplement thereof.

 

“Termination
Date” is defined in Section 11.1(e).

 

“Third-Party
Claim” is defined in Section 7.5(a).

 

“Transaction
Documents” means this Agreement and all other written agreements, documents and certificates contemplated
by this Agreement or otherwise delivered in connection with the Closing of the Transactions.

 

“Transactions”
means the transactions contemplated by the Transaction Documents.

 

“TSA”
is defined in Section 3.1(g)(v).

 

“Working
Capital” means the (i) Current Assets of Company as of the Closing Date, less (ii) the Current Liabilities
of Company as of the Closing Date, calculated in accordance with the procedures set forth in Schedule 2.4.

 

Article
II

SALE AND PURCHASE

 

2.1           Sale
and Purchase. Subject to the terms and conditions of this Agreement, at the Closing, the Buyer shall purchase from each
Seller, and each Seller shall sell and deliver to the Buyer, all of the issued and outstanding membership interests of Company
owned by such Seller and set forth next to such Seller’s name on Schedule 4.2 hereto (collectively, the “Membership
Interests”) for the consideration specified, below.

 

2.2           Purchase
Price; Payment at Closing. 

 

(a)           The
aggregate purchase price for the Membership Interests is Twenty Million Forty-Six Thousand Three Hundred Dollars ($20,046,300),
comprised of Ten Million Five Hundred Forty-Six Thousand Three Hundred Dollars ($10,546,300) (the “Base
Amount”), and Nine Million Five Hundred Thousand Dollars ($9,500,000) (the “Contingent Amount”),
as adjusted pursuant to Section 2.2(b) and Section 2.5 (the “Purchase
Price”). For the avoidance of doubt, for purposes of this Agreement, the term Purchase Price shall only include
that portion of the Contingent Amount that is actually paid to the Sellers.

 

    	 	- 8 -	 

     

    

 

(b)          Subject
to the terms and conditions of this Agreement, at the Closing, the Buyer shall pay to the Sellers, by wire transfers of immediately
available funds allocated among the Sellers in accordance with the wire instructions provided by the Sellers’ Representative
to the Buyer, an amount equal to:

 

(i)          the
Base Amount, (1) less the amount, if any, by which the Estimated Working Capital as reflected on the Estimated Closing Statement
is less than One Million Two Hundred Fifty Thousand Dollars ($1,250,000) (the “Target Working Capital”),
(2) plus the amount, if any, by which the Estimated Working Capital as reflected on the Estimated Closing Statement is more
than the Target Working Capital; plus

 

(ii)         the
Estimated Cash; less

 

(iii)        the
Estimated Indebtedness;

 

(collectively,
the “Estimated Closing Payment”).

 

(c)          Subject
to the terms and conditions of this Agreement, at the Closing, the Buyer shall pay to the lenders of Company, for and on behalf
of Company, by wire transfers of immediately available funds to the accounts designated by such lenders, of cash in the amounts
required to pay off the Indebtedness of Company to such lenders in full as of the Closing, as evidenced by payoff letters executed
by such lenders and delivered to the Buyer on or before the Closing Date.

 

(d)          After
the Closing, the Sellers will be eligible to receive from the Buyer, and the Buyer will be obligated to pay the Sellers, the Contingent
Amount, in accordance with the terms and conditions set forth on Schedule 2.2(d).

 

2.3           Closing.
The closing of the Transactions (the “Closing”)
shall be deemed effective as of 11:59 p.m. local time: (i) on September
30, 2015 (assuming all the conditions set forth in Article III have been fulfilled or waived in accordance herewith), (ii)
if such conditions have not been fulfilled or waived as of such date, then three (3) Business Days after the last condition to
be fulfilled or waived of the conditions set forth in Article III (other than those conditions that, by their terms, are
to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions) has been fulfilled or waived in
accordance herewith, or (iii) at such other time and/or place as the Sellers’ Representative and the Buyer shall mutually
agree (the “Closing Date”).

 

    	 	- 9 -	 

     

    

 

2.4           Estimated
Closing Statement; Closing Statement. 

 

(a)           For
purposes of determining the Estimated Closing Payment payable by the Buyer at the Closing, not less than five (5) business days
prior to the Closing Date, the Sellers shall cause to be prepared and delivered to the Buyer a reasonably detailed statement (the
“Estimated Closing Statement”) which shall include: (i) an estimated balance sheet of Company as of the
Closing Date, prepared in a manner consistent with the preparation of the Interim Balance Sheet and in accordance with GAAP (applied
using the same GAAP accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments
and valuation and estimation methodologies that were used in the calculation of the Interim Balance Sheet), except as otherwise
set forth on Schedule 2.4 hereto; (ii) the Sellers’ estimate of the Working Capital as of the Closing Date (the “Estimated
Working Capital”); (iii) the Sellers’ estimate of the Cash held by Company as of the Closing Date (the “Estimated
Cash”); (iv) the Sellers’ estimate of the Indebtedness of Company as of the Closing Date (the “Estimated
Indebtedness”); and (v) a calculation by the Sellers’ of the Estimated Closing Payment based upon the information
reflected on the Estimated Statement. The Estimated Closing Payment shall, subject to the Buyer’s approval (which approval
shall not be unreasonably withheld), be the amount payable by the Buyer at the Closing under Section 2.2(b), above.
The Buyer shall be given access to the books and records on which the Estimated Closing Statement is based as is reasonably requested
by Buyer and the opportunity to consult with the Sellers for the purpose of confirming or disputing the Estimated Closing Statement
and the determination of the Estimated Closing Payment.

 

(b)           Within
one hundred twenty-five (125) calendar days after the Closing, the Buyer shall prepare and deliver to the Sellers’ Representative
a statement (the “Closing Statement”)
which shall include: (i) a balance sheet of Company as of the Closing Date, prepared in a manner consistent with the preparation
of the Interim Balance Sheet and in accordance with GAAP (applied using the same GAAP accounting methods, practices, principles,
policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in
the calculation of the Interim Balance Sheet), except as otherwise set forth on Schedule 2.4 hereto; (ii) the Buyer’s
calculation of the Working Capital as of the Closing Date; (iii) the Buyer’s calculation of Cash as of the Closing Date;
and (iv) the Buyer’s calculation of Company’s Indebtedness as of the Closing Date.

 

(c)           The
Sellers’ Representative shall have a period of forty-five (45) calendar days after its receipt of the Closing Statement
(such forty-five (45) calendar day period, the “Objection
Period”) to review the same and the Buyer’s calculation of the Purchase Price and its components and
to notify the Buyer in writing of any disputes regarding the same (such written notice, a “Dispute
Notice”). As part of such review, the Sellers’ Representative and its advisors shall have such access
to the Buyer’s and/or Company’s books and records on which the Closing Statement is based as is reasonably requested.
Unless the Sellers’ Representative delivers a Dispute Notice to the Buyer within the Objection Period, the Buyer’s
determination of the Purchase Price and its components shall be conclusive and binding upon all of the Parties.

 

    	 	- 10 -	 

     

    

 

(d)          If
the Sellers’ Representative delivers a Dispute Notice within the Objection Period, the Sellers’ Representative and
the Buyer shall negotiate in good faith to resolve any such disagreements. If, after a period of twenty (20) calendar days following
the date on which such Dispute Notice is delivered, the Sellers’ Representative and the Buyer have not resolved each such
disagreement, then either the Sellers’ Representative or the Buyer shall be entitled to submit such disagreements to McGladrey
LLP (the “Resolution Accountants”) so
long as such submitting Party provides prior written notice of such submission to the nonsubmitting Party. Within ten (10) Business
Days after receipt of such written notice, the Sellers’ Representative and the Buyer shall each deliver to the Resolution
Accountant a written settlement offer setting forth their respective calculations of the Purchase Price and its components (each,
a “Settlement Offer”); provided, however,
that neither the Buyer nor the Sellers’ Representative may submit a Settlement Offer that contains a proposal as to any component
of the Purchase Price that, in the case of a proposal by the Buyer, is more adverse to the Sellers as compared to the Closing Statement,
or, in the case of a proposal by the Sellers’ Representative, is more adverse to the Buyer as compared to the Dispute Notice.
The scope of the disputes to be resolved by the Resolution Accountants shall be limited to whether any of the disputed items were
properly calculated in accordance with the terms of this Agreement. The Buyer shall cause Company to grant to the Resolution Accountants
reasonable access to Company’s books and records and each submitting Party shall grant to the Resolution Accountants reasonable
access to such Party’s work papers. The Resolution Accountants shall, acting as experts and not as arbitrators, resolve the
disagreements and render a written report on the resolved disputed issues (and only on those disputed issues) within thirty (30)
Business Days after the date on which they are engaged or as soon thereafter as possible. The resolution of the dispute by the
Resolution Accountants shall be binding upon the Parties. The cost of the services of the Resolution Accountants shall be borne
by the Buyer or the Sellers, based on whose Settlement Offer differs the most from the Purchase Price and its components as finally
determined by the Resolution Accountants. If both Settlement Offers differ equally, such cost shall be borne half by the Buyer
and half by the Sellers.

 

2.5          Post-Closing
Purchase Price Adjustment.

 

(a)          The
adjusted Purchase Price (excluding the Contingent Amount) (the “Adjusted
Closing Payment”) shall be an amount equal to the Base Amount:

 

(i)          less the
amount by which the Working Capital as finally determined pursuant to Section 2.4(c) or  Section 2.4(d) is less
than the Target Working Capital, or plus the
amount by which the Working Capital as finally determined pursuant to Section 2.4(c) or Section 2.4(d)
exceeds the Target Working Capital;

 

(ii)         plus
the Cash of Company as finally determined pursuant to Section 2.4(c) or Section 2.4(d); and

 

(iii)        less
the Indebtedness of Company as finally determined pursuant to Section 2.4(c) or Section 2.4(d).

 

(b)          Within
ten (10) Business Days after the final determination of the Adjusted Closing Payment: (i) if the Adjusted Closing Payment exceeds
the Estimated Closing Payment, the Buyer shall pay to the Sellers’ Representative, by wire transfer of immediately available
funds to the bank account designated by the Sellers’ Representative, the amount of such excess; or (ii) if the Adjusted Closing
Payment is less than the Estimated Closing Payment, the Sellers, severally (in accordance with their Pro Rata Shares), shall pay
to the Buyer, by wire transfer of immediately available funds to a bank account designated by the Buyer, the amount of such deficit.

 

    	 	- 11 -	 

     

    

 

Article
III

CONDITIONS PRECEDENT TO CLOSING

 

3.1         Conditions
Precedent to the Buyer’s Obligations. The obligation of the Buyer to purchase the Membership Interests and to consummate
the Transactions is subject to the satisfaction as of the Closing of each of the following conditions:

 

(a)          Each
of the representations and warranties of the Sellers set forth in this Agreement shall have been true and correct in all respects
as of the date hereof and shall be true and correct in all respects on and as of the Closing Date as though made on and as of the
Closing Date, except for such inaccuracies of representations and warranties which, individually or in the aggregate, do not constitute
and could not reasonably be expected to have a Material Adverse Effect (and except that those representations and warranties which
address matters as of or for a particular date or time period shall remain so true and correct only as of such date or for such
time period).

 

(b)          The
Sellers shall have performed in all material respects each of the respective covenants of the Sellers contained in this Agreement
required to be performed by the Sellers on or prior to the Closing Date.

 

(c)          The
Sellers shall have delivered to the Buyer a certificate dated the Closing Date and signed by the Sellers stating that the conditions
set forth in Section 3.1(a) and Section 3.1(b), above, have been satisfied as of the Closing Date, and
that all intercompany accounts payable and accounts receivable between the Company and either Seller (or any of their Affiliates)
have been satisfied in full or cancelled. The statements contained in such certificate or certificates shall be a warranty of the
Sellers which shall survive the Closing for the period provided in Article VII, below.

 

(d)          The
Consents/Notices listed on Schedule 3.1(d) attached hereto, in a form reasonably
satisfactory to the Buyer, shall have been received by the Buyer on or prior to the Closing Date.

 

(e)          On
the Closing Date, there shall not be effective or continuing against the Buyer, the Sellers or Company any Proceeding wherein a
ruling has been or reasonably could be issued by a Governmental Body that would (i) prevent consummation of the purchase and sale
of the Membership Interests, (ii) cause the purchase and sale of the Membership Interests to be rescinded following the Closing,
(iii) affect adversely in any material respect the right of the Buyer to own the Membership Interests, or (iv) affect Company’s
ability to conduct its business after the Closing Date in any material respect. In the event any such Proceeding is effective or
continuing on what otherwise would have been the Closing Date, the Buyer shall have the right, by written notice to the Sellers’
Representative delivered within two (2) calendar days of such originally scheduled Closing Date, to extend the Closing Date for
a reasonable period not to exceed fifteen (15) calendar days after such originally scheduled Closing Date to allow a ruling to
be issued in such Proceeding; provided, that the Closing Date shall not extend beyond the date when a ruling satisfying any of
subsections (i)-(iv), above, would no longer reasonably be issued.

 

    	 	- 12 -	 

     

    

 

(f)          Between
the date hereof and the Closing Date, there shall have been no change in the business of Company that has had, or could reasonably
be expected to have, a Material Adverse Effect.

 

(g)          The
Sellers shall have delivered (or caused Company to have delivered) to the Buyer each of the following:

 

(i)          Assignment
of the Membership Interests, executed by each of the Sellers, or such other good and sufficient instruments of transfer as the
Buyer reasonably deems necessary or appropriate to vest in the Buyer all right, title and interest in and to the Membership Interests.

 

(ii)         Duly
executed resignations of such managers and officers of Company as the Buyer shall have requested in writing to the Sellers’
Representative not less than three (3) Business Days prior to the Closing Date.

 

(iii)        A
good standing certificate (or comparable certificate) for Company issued by the Secretary of State (or comparable Governmental
Body) of the jurisdiction of organization for Company and each of the states identified in Schedule 5.11 within a reasonable
period of time prior to the Closing Date.

 

(iv)        (A)         A
certificate from an officer of JCFS, in a form reasonably satisfactory to the Buyer, attaching and certifying as to the resolutions
of the Board of Directors of JCFS authorizing the execution of this Agreement and all Transaction Documents and the taking of any
and all actions deemed necessary or advisable to consummate the Transactions.

 

(B)         A
certificate from an officer of Johnson Controls, in a form reasonably satisfactory to the Buyer, attaching and certifying as to the
approvals authorizing the execution of this Agreement and all Transaction Documents and the taking of any and all actions deemed
necessary or advisable to consummate the Transactions.

 

(C) The original
Organizational Documents of Company and the original minutes and other records of the meetings (including any actions taken by
written consent or otherwise without a meeting) of the members and managers of Company.

 

(v)         A
transition services agreement by and among the Buyer, Company and the Sellers, in the form attached hereto as Exhibit 3.1(g)(v),
duly executed by Johnson Controls and JCFS, and incorporating, in all material respects, the terms and conditions set forth on
Schedule 3.1(g)(v) (the “TSA”).

 

(vi)        [Intentionally
Omitted.]

 

(vii)       An
assignment and assumption of lease by and among Johnson Controls and Company, in the form attached hereto Exhibit 3.1(g)(vii),
duly executed by Johnson Controls and Company, regarding that certain Lease Agreement dated December 16, 2011 by and between 23
Norfolk Avenue, LLC and Johnson Controls, as amended by that certain first amendment (which was mistakenly titled “Third
Amendment”) dated June 17, 2013, as amended by that certain Second Amendment to Lease dated November 20, 2014 (the “Massachusetts
Lease Assignment”).

 

    	 	- 13 -	 

     

    

 

(viii)      An
assignment and assumption of lease by and among Johnson Controls and Company, in the form attached hereto Exhibit 3.1(g)(viii),
duly executed by Johnson Controls and Company, regarding that certain Air Commercial Real Estate Association Standard Industrial/Commercial
Multi-Tenant Lease-Gross dated November 5, 2010 by and between Johnson Controls and Copperwood Partners, L.P., as amended by that
certain First Amendment dated May 21, 2012, as further amended by that certain Second Amendment to Standard Form Industrial Lease
dated October 16, 2014 (the “California Lease Assignment”).

 

(ix)         An
assignment and assumption of lease by and among Johnson Controls and Company, in the form attached hereto Exhibit 3.1(g)(ix),
duly executed by Johnson Controls and Company, regarding that certain Lease dated March 22, 2010 by and between Johnson Controls
and Nazario Family L.L.C., as modified by that certain letter dated September 23, 2014 from Johnson Controls to Nazario Family
L.L.C. (the “Maryland Lease Assignment”).

 

(x)          A
Fleet Management Services Agreement by and between Company and Lease Plan U.S.A., Inc. and related Master Vehicle Lease Agreement,
Fleet Management Services Agreement Schedule of Fees, and Exhibit X “Vehicles on Services,” in the form attached hereto
Exhibit 3.1(g)(x), duly executed by Company and Lease Plan U.S.A.

 

(h)          The
Buyer shall have failed to obtain the financing it needs in order to consummate the Transactions and to fund the working capital
requirements of the Company after the Closing as a result of Bank of America, N.A.’s failure to provide financing to Buyer
in accordance with Schedule 3.1(h).

 

In the event that any of the foregoing
conditions to Closing shall not have been satisfied as of the Closing Date and the Buyer elects to consummate the Transactions
despite such failure, the Buyer shall be deemed to have fully waived the satisfaction of such conditions.

 

3.2           Conditions
Precedent to the Sellers’ Obligations. The obligation of the Sellers to sell the Membership Interests and to consummate
the Transactions is subject to the satisfaction as of the Closing of each of the following conditions:

 

(a)          Each
of the representations and warranties of the Buyer made in this Agreement shall have been true and correct in all material respects
as of the date hereof and shall be true and correct in all material respects on and as of the Closing Date as though made on and
as of the Closing Date (except that those representations and warranties which address matters as of or for a particular date or
time period shall remain so true and correct only as of such date or for such time period).

 

(b)          The
Buyer shall have performed in all material respects each of the covenants of the Buyer contained in this Agreement required to
be performed by it on or prior to the Closing Date.

 

    	 	- 14 -	 

     

    

 

(c)          The
Buyer shall have delivered to the Sellers a certificate dated the Closing Date and signed by an authorized officer of the Buyer
stating that each of the conditions set forth in Section 3.2(a) and Section 3.2(b), above, has been satisfied
as of the Closing Date. The statements contained in such certificate shall be a warranty of the Buyer which shall survive the Closing
for the period provided in Article VII, below.

 

(d)          On
the Closing Date, there shall not be effective or continuing against the Buyer, any Seller or Company any Proceeding wherein a
ruling has been or reasonably could be issued by a Governmental Body that would (i) prevent consummation of the purchase
and sale of the Membership Interests, (ii) cause the purchase and sale of the Membership Interests to be rescinded following
the Closing, or (iii) affect adversely in any material respect the right of the Sellers to sell the Membership Interests
and to receive the full Purchase Price therefor. In the event any such Proceeding is effective or continuing on what otherwise
would have been the Closing Date, the Sellers shall have the right, by written notice to the Buyer delivered within two (2) calendar
days of such originally scheduled Closing Date, to extend the Closing Date for a reasonable period not to exceed fifteen (15)
calendar days after such originally scheduled Closing Date to allow a ruling to be issued in such Proceeding; provided, that the
Closing Date shall not extend beyond the date when a ruling satisfying any of subsections (i)-(iii), above, would no longer reasonably
be issued.

 

(e)          The
Buyer shall have delivered to the Sellers, or to the lenders of Company, as applicable, the following:

 

(i)          The
Estimated Closing Payment and the Estimated Indebtedness in the manner specified in Section 2.2, above.

 

(ii)         A
certificate from an officer of the Buyer, in a form reasonably satisfactory to the Sellers, setting forth the resolutions of the
Board of Directors of the Buyer authorizing the execution of this Agreement and all Transaction Documents to which the Buyer is
a party and the taking of any and all actions deemed necessary or advisable to consummate the Transactions.

 

(iii)        A
good standing certificate for the Buyer issued by the Secretary of State of the State of Delaware within a reasonable period of
time prior to the Closing Date.

 

(iv)        The
TSA, duly executed by the Buyer.

 

In the event that any of the foregoing
conditions to Closing shall not have been satisfied as of the Closing Date and the Sellers elect to consummate the Transactions
despite such failure, the Sellers shall be deemed to have fully waived the satisfaction of such conditions.

 

Article
IV

REPRESENTATIONS AND WARRANTIES REGARDING EACH SELLER

 

Except as set forth
in the Disclosure Schedules, each Seller severally, but not jointly, makes the following representations and warranties as of the
date hereof and as of the Closing Date (except that those representations and warranties which address matters as of or for a particular
date or time period shall remain so true and correct only as of such date or for such time period). No representation or warranty
shall be qualified or otherwise affected by any fact or item disclosed on any Disclosure Schedule unless disclosed on a Disclosure
Schedule that references the section in Article IV or Article V that it qualifies or otherwise affects; provided,
however, any disclosure set forth in any particular section of the Disclosure Schedules shall be deemed to be disclosed
for any other section of the Disclosure Schedules to the extent that its relevance or applicability to such other section of the
Disclosure Schedules is reasonably apparent.

 

    	 	- 15 -	 

     

    

 

4.1          Organization
and Authority. Such Seller is duly incorporated, validly existing and in good standing under the Laws of the State of its
incorporation. Such Seller has full corporate power and authority to execute and deliver the Transaction Documents to which such
Seller is a party and to perform such Seller’s obligations thereunder. The execution and delivery by such Seller of each
Transaction Document to which it is a party and the performance by such Seller of the Transactions have been duly approved by all
requisite corporate action on the part of such Seller. Each Transaction Document to which such Seller is a party constitutes the
valid and legally binding obligation of such Seller, enforceable against such Seller in accordance with the terms of such Transaction
Document.

 

4.2          Membership
Interest Ownership. Such Seller owns of record and beneficially the number of the Membership Interests set forth next to
such Seller’s name on Schedule 4.2, free and clear of any Encumbrance or restriction on transfer (other than any restriction
under any securities Law). No Seller is a party to (a) any option, warrant, purchase right, right of first refusal, call, put or
other Contract (other than this Agreement) that could require such Seller to sell, transfer or otherwise dispose of any Membership
Interests or (b) any voting trust, proxy or other Contract relating to the voting of any Membership Interests.

 

4.3          No
Conflicts. Except as set forth on Schedule 4.3, neither the execution and delivery of this Agreement nor the performance
of the Transactions will, directly or indirectly, with or without notice or lapse of time (a) violate any Organizational Document
of such Seller, (b) violate any Law to which such Seller is subject, or (c) require any material consent, authorization, approval,
exemption or other action by, or any filing, registration or qualification with, any Person.

 

4.4          Litigation.
There is no Proceeding pending or, to the Knowledge of such Seller, threatened, against such Seller relating to or affecting the
Transactions.

 

4.5          No
Brokers’ Fees. Such Seller has no liability for any fee, commission or payment to any broker, finder or agent with
respect to the Transactions for which the Buyer or Company could be liable.

 

4.6          No
Other Representations and Warranties. Except for the representations and warranties expressly set forth in this Article
IV, each as qualified by the Disclosure Schedules, none of the Sellers, Company or any other Person has made or makes any other
representation or warranty whatsoever, express or implied, either written or oral or at law or in equity, with respect to the Sellers,
including, but not limited to, any representation or warranty as to the accuracy or completeness of any information regarding the
Sellers.

 

    	 	- 16 -	 

     

    

 

Article
V

REPRESENTATIONS AND WARRANTIES REGARDING COMPANY

 

Except as set forth
in the Disclosure Schedules, each Seller jointly and severally makes the following representations and warranties as of the date
hereof and as of the Closing Date (except that those representations and warranties which address matters as of or for a particular
date or time period shall remain so true and correct only as of such date or for such time period). No representation or warranty
shall be qualified or otherwise affected by any fact or item disclosed on any Disclosure Schedule unless disclosed on a Disclosure
Schedule that references the section in Article IV or Article V that it qualifies or otherwise affects; provided,
however, any disclosure set forth in any particular section of the Disclosure Schedules shall be deemed to be disclosed
for any other section of the Disclosure Schedules to the extent that its relevance or applicability to such other section of the
Disclosure Schedules is reasonably apparent.

 

5.1          Organization,
Qualification and Corporate Power; Records. Company is a limited liability company duly organized, validly existing and
in good standing under the Laws of the State of Florida. Company has full limited liability company power and authority to conduct
the businesses in which it is engaged and to own and use the properties and assets that it purports to own or use. Company has
delivered to the Buyer correct and complete copies of the Organizational Documents of Company and the minutes and other records
of the meetings (including any actions taken by written consent or otherwise without a meeting) of the members and managers of
Company. Company is duly qualified to do business and is in good standing as a foreign limited liability company in each jurisdiction
listed on Schedule 5.1, which jurisdictions constitute as of the time immediately prior to the Closing the only jurisdictions
in which the character of the properties it owns, operates or leases or the nature of its activities makes such qualification necessary.
The minute books and other records of the meetings of Company are accurate and complete in all material respects. Set forth on
Schedule 5.1 is a correct and complete list of the managers and officers of Company as of the Closing Date.

 

5.2          Capitalization.
The Membership Interests constitute all of the issued and outstanding membership interests of Company. All of the Membership Interests
are validly issued in accordance with Company’s operating agreement and applicable Law, and Company’s operating agreement
does not require, and the Sellers are not otherwise obligated to make, any payments with respect to the Membership Interests or
additional contributions to Company by reason of the Sellers’ ownership of membership interests of Company or their status
as a member of Company, and Company does not have any claim therefor. There are no outstanding securities convertible into or exchangeable
for Equity Interests of Company or any options, warrants, purchase rights, subscription rights, conversion rights, exchange rights,
calls, puts, rights of first refusal or other Contracts that could require Company to issue, sell or otherwise cause to become
outstanding or to acquire, repurchase or redeem Equity Interests of Company. Company does not own, directly or indirectly, any
capital stock or other equity or ownership interest of any Person (whether or not such entity is disregarded for Tax purposes).
Company does not have any right to acquire, directly or indirectly, any outstanding capital stock of, or equity interest in, any
Person.

 

5.3          No
Conflicts. Except as set forth on Schedule 5.3, neither the execution and delivery of this Agreement by either Seller
nor the performance of the Transactions will, directly or indirectly, with or without notice or lapse of time: (a) violate any
Organizational Document of Company; (b) violate any Law to which Company or any asset owned or used by Company is subject; or (c)
violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of or give any Person the
right to accelerate the maturity or performance of, or to cancel, terminate, modify or exercise any remedy under, any Material
Contract.

 

    	 	- 17 -	 

     

    

 

5.4          Financial
Statements.

 

(a)          Attached
as Schedule 5.4(a) are the following financial statements (collectively, the “Financial Statements”):
(i) the unaudited balance sheets of Company as of September 30, 2013 and September 30, 2014, and unaudited statements of income
and cash flow for the fiscal years ended September 30, 2013 and September 30, 2014; and (ii) an unaudited balance sheet (the “Interim
Balance Sheet”) of Company as of July 31, 2015, and an unaudited statement of income for the ten (10) month period
then ended. The Financial Statements have been prepared in accordance with GAAP, and present fairly in accordance with GAAP the
financial condition and results of operations of Company as of the year-to-date dates and for the relevant periods set forth therein;
provided, however, that the financial statements described in clause (i) above lack notes and the financial statements
described in clause (ii) above are subject to normal, recurring year-end adjustments and lack notes.

 

(b)          Company’s
books and records are complete and correct in all material respects with respect to the financial matters included in the Financial
Statements.

 

(c)          Company
is not a guarantor of any financial or performance obligations of any other Person. No current or former member of Company has
any claim against Company, and Company has no obligations to any current or former member of Company, or any of their Affiliates,
except as provided in any Transaction Document or as set forth on Schedule 5.4(c).

 

(d)          Company
has not entered into any off balance sheet financial arrangements, including any transaction involving a hedge or derivative financial
instrument.

 

(e)          Except
as set forth on Schedule 5.4(e), all accounts receivable of Company (i) represent monies due for goods sold and delivered
or services rendered in each case in the ordinary course of business and (iii) to the Sellers’ Knowledge, are not subject
to any valid claim for refund or adjustment or any valid defense or right of set-off. To the Sellers’ Knowledge, there are
no current disputes regarding the collectability of any such accounts receivable.

 

(f)          Schedule
5.4(f) provides accurate information with respect to each account maintained by or for the benefit of Company at any bank or
other financial institution including the name of the bank or financial institution, the account number and the names of the Persons
with signature authority over such accounts.

 

5.5          Absence
of Certain Changes. Except as set forth on Schedule 5.5, since January 31, 2015, Company has not:

 

(a)          sold,
leased, transferred or assigned any asset with a value in excess of $100,000, other than for fair consideration in the ordinary
course of business;

 

    	 	- 18 -	 

     

    

 

(b)          experienced
any damage, destruction or loss (whether or not covered by insurance) to its property or assets in excess of $500,000;

 

(c)          entered
into any Contract involving the scheduled payment or receipt of more than $500,000 in any twelve (12) month period, and no Person
has accelerated, terminated, modified or canceled any Contract involving scheduled payments or receipts of more than $500,000 in
any twelve (12) month period, to which Company is a party;

 

(d)          had
a material Encumbrance (other than any Permitted Encumbrance) imposed upon any asset of Company;

 

(e)          issued,
created, incurred or assumed any Indebtedness involving more than $500,000;

 

(f)          canceled,
compromised, waived or released any right or claim or any Indebtedness owed to it, in any case involving more than $500,000;

 

(g)          issued,
granted, sold or otherwise disposed of any of its Equity Interests or declared, set aside, made or paid any dividend or distribution
with respect to its Equity Interests (except for distributions of cash to the Sellers) or redeemed, purchased or otherwise acquired
any Equity Interests of Company or amended any of its Organizational Documents;

 

(h)          granted
any increase in the compensation of any of its managers or officers, except in the ordinary course of business, or entered into
any employment, severance or bonus agreement with any of its employees, managers or officers;

 

(i)          made
a material change in its financial or tax accounting methods, principles or practices;

 

(j)          made
any capital expenditure outside the ordinary course of business or made any single capital expenditure in excess of $100,000
or capital expenditures exceeding $500,000 in the aggregate;

 

(k)          entered
into any material transaction or taken any other material action, in each case, outside the ordinary course of business or inconsistent
with its past practices, other than entering into this Agreement;

 

(l)          entered
into any Contract containing any material covenant that purports to restrict the business activity of Company or limit the freedom
of Company to engage in any line of business or to compete with any Person; or

 

(m)          agreed
or committed to any of the foregoing.

 

5.6          Title
to and Sufficiency of Assets. Except as set forth on Schedule 5.6, Company has good and marketable title to every
material asset shown on the Interim Balance Sheet or acquired by Company after the Interim Balance Sheet Date (the “Assets”),
free and clear of any Encumbrances except Permitted Encumbrances, except for properties and assets disposed of in the ordinary
course of business since the Interim Balance Sheet Date. Except as set forth on Schedule 5.6, the Assets, properties or
assets which Company has a valid leasehold interest, and any properties or assets which Company has the lawful right to use together
include all of the material tangible and intangible property and assets necessary for the continued conduct of Company’s
business after the Closing in substantially the same manner as conducted prior to the Closing.

 

    	 	- 19 -	 

     

    

 

5.7          Real
Property.

 

(a)          Company
does not, and has not, owned any real property.

 

(b)          Schedule
5.7(b) lists all of the material real property leased, subleased or otherwise occupied or used by Company (the “Leased
Real Property”). For each item of Leased Real Property, Schedule 5.7(b) lists the lease, sublease, or other
Contract pursuant to which Company holds a legal interest in, or has a right to occupy or use, the Leased Real Property and all
material amendments, renewals, or extensions thereto (each, a “Lease”).

 

(c)          Company
does not use real property in its business in any material respects other than the Leased Real Property. Company is not a sublessor
of, and has not assigned any lease covering, any material item of Leased Real Property. To the Sellers’ Knowledge, the Leased
Real Property complies in all material respects with all material Laws, including zoning requirements, and Company has not received
any written notifications from any Governmental Body requiring improvements to the Leased Real Property. Company is not a party
to or bound by any Contract (including any option) for the purchase or sale of any real property interest or any Contract for the
lease to or from Company of any real property interest not currently in possession of Company.

 

5.8          Contracts.

 

(a)          Schedule
5.8(a) lists the following Contracts to which Company is a party (collectively, the “Material Contracts”):

 

(i)          each
Contract that involves the delivery or receipt of a material amount of products or services that was not entered into in the ordinary
course of business;

 

(ii)         each
lease, rental or occupancy agreement, license, installment and conditional sale agreement, and other Contract materially affecting
the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property (except personal
property leases and installment and conditional sales agreements having a value per item or aggregate scheduled payments of less
than $10,000 in any twelve (12) month period and with terms of less than one year; but expressly including all leases for vehicles);

 

(iii)        each
joint venture, partnership or Contract involving a sharing of profits, losses, costs or liabilities with any other Person;

 

(iv)        each
Contract containing any material covenant that purports to restrict the business activity of Company or limit the freedom of Company
to engage in any line of business or to compete with any Person;

 

    	 	- 20 -	 

     

    

 

(v)         each
power of attorney;

 

(vi)        each
Contract between or among Company on the one hand and any Seller or any Affiliate of any Seller (other than Company) on the other
hand;

 

(vii)       each
settlement agreement that has continuing effect after the Closing;

 

(viii)      each
Current Government Contract (except for task orders, delivery orders and purchase orders pursuant to each Current Government Contract);

 

(ix)         each
Contract for Indebtedness.

 

(b)          Each
Contract (including the Material Contracts), with respect to Company, is legal, valid, binding, enforceable, in full force and
effect and will continue to be so on the same terms immediately after the Closing Date. Company has provided Buyer complete
and correct copies of all written Material Contracts (including any and all amendments and other modifications to such Contracts)
and a written description of the services to be provided and prices to be paid (if any) of all non-written Material Contracts.
Schedule 5.8(b) sets forth a list of all services (by general category) provided to Company by the Sellers or their Affiliates
that are necessary and critical for the continued conduct of Company’s business after the Closing in substantially the same
manner as conducted prior to the Closing.

 

(c)          There
exists no breach, default or violation on the part of Company or, to the Sellers’ Knowledge, on the part of any other party
to any Contract of Company (including the Material Contracts) nor has Company received written or, to the Sellers’ Knowledge,
oral notice of any breach, default or violation to any Contract of Company (including the Material Contracts). Company has not
received written or, to the Sellers’ Knowledge, oral notice of an intention by any party to any Material Contract that provides
for a continuing obligation by any party thereto on the date hereof to terminate such Material Contract or amend the terms thereof,
other than modifications in the ordinary course of business that do not adversely affect Company. Notwithstanding anything to the
contrary contained in this Section 5.8(c), the Sellers are not making any representations or guarantee that a party to a
Material Contract will not terminate or amend the terms of such Material Contract after the Effective Date or the Closing. Company
has not waived any material rights under any Material Contract. To the Sellers’ Knowledge, no event has occurred which either
entitles, or would, with notice or lapse of time or both, entitle any party to any Material Contract (other than Company) to declare
breach, default or violation under any such Material Contract or to accelerate, or which does accelerate, the maturity of any Indebtedness
of Company under any such Material Contract.

 

(d)          (i)          Schedule
5.8(d)(i) lists Company’s project charge codes as of the Effective Date and the time immediately prior to the Closing
with respect to each Current Government Contract, and with respect to each such charge code, Schedule 5.8(d)(i) accurately
lists: (A) the customer; (B) the customer’s contract number corresponding to the charge code; (C) the customer’s
order number; (D) Company’s internal project charge code number; (E) the corresponding project name; (F) the
end date; (G) inception to May 31, 2015 funding; (H) inception to May 31, 2015 revenue received; (I) the contract’s
ceiling; (J) payments due as of thirty (30) days or more prior to the date of this Agreement for work previously performed
and billed; and (K) subcontractors who accounted for more than one-third (1/3) of the total contract billings during the period
January 1, 2015 to May 31, 2015. Schedule 5.8(d)(i) also indicates the basis for billing with respect to the charge codes
that represent fixed price task orders.

 

    	 	- 21 -	 

     

    

 

(ii)         Schedule
5.8(d)(ii) lists all Government Bids as of August 11, 2015, including task order bids under Current Government Contracts, submitted
by Company and for which no award has been made thirty (30) days or more prior to August 11, 2015, and with respect to each
such Government Bid, Schedule 5.8(d)(ii) accurately lists: (A) the customer agency and title; (B) the request
for proposal (RFP) number or, if such Government Bid is for a task order under a prime contract or GSA schedule, the applicable
prime contract or GSA schedule number, (C) the date of proposal submission; (D) the expected award date, if known; (E) the
estimated period of performance; and (F) the estimated value based on the proposal, if any. All Government Bids listed on
Schedule 5.8(d)(ii): were submitted in the ordinary course of business; were based on assumptions believed by the management
of Company to be reasonable; and, to the Sellers’ Knowledge, (x) as of the date of such Government Bid, were capable of performance
by Company in accordance with the terms and conditions of such Government Bid without a financial loss to Company (based on Company’s
then current overhead and indirect charges) and (y) no material change has occurred since the date of such Government Bid that
could reasonably be expected to cause a material financial loss to Company (based on Company’s overhead and indirect charges
as of the Effective Date and the time immediately prior to the Closing) as a result of performance by Company in accordance with
the terms and conditions of such Government Bid.

 

(e)          Except
as set forth on Schedule 5.8(e), (i) the Company has not, since September 30, 2014, received written notification of
significant performance deficiencies that could reasonably be expected to result in material claims against the Company (or any
successors in interest) by a Governmental Body, a prime contractor or a higher-tier subcontractor in excess of $250,000 individually
or $500,000 in the aggregate; (ii) to the Sellers’ Knowledge, the Current Government Contracts are not as of the Effective
Date or the time immediately prior to the Closing the subject of bid or award protest proceedings; and (iii) no Person has
notified Company in writing or, to the Sellers’ Knowledge, orally that any Governmental Body, prime contractor or higher-tier
subcontractor under a Current Government Contract intends to seek Company’s agreement to lower rates under any of
the Current Government Contracts or Government Bids, including but not limited to any task order under any Government Bids.

 

(f)          Except
as set forth on Schedule 5.8(f): (i) no termination for default, cure notice or show cause notice, or similar notice,
either in writing or, to Company’s Knowledge, orally, has been issued or threatened and remains unresolved with respect to
any Government Contract or Government Bid; (ii) no written past performance evaluation received by Company with respect
to any such Government Contract has set forth a default or other failure to perform thereunder or termination or default thereof;
and (iii) all invoices and claims (including requests for progress payments and provisional costs payments) submitted under each
Government Contract were current, accurate and complete in all material respects as of their submission date.

 

    	 	- 22 -	 

     

    

 

(g)          (i)          Neither
Company nor any of Company’s managers or officers as of the time immediately prior to the Closing has, since November 1,
2001, been, or is as of the time immediately prior to the Closing, debarred, suspended, proposed for suspension or debarment from
bidding on any Government Contract, declared non-responsible or ineligible, or otherwise excluded from participation in the award
of any Government Contract or for any reason been listed on the List of Parties Excluded from Federal Procurement and Non-procurement
Programs. To the Sellers’ Knowledge, none of Company’s employees is, as of the time immediately prior to the Closing,
suspended or debarred. No debarment, suspension or exclusion proceeding has, since November 1, 2001, been initiated or, to the
Sellers’ Knowledge, threatened in writing against Company.

 

(ii)         Except
as set forth on Schedule 5.8(g)(ii), since January 1, 2008: (A) Company has not undergone and, to the Sellers’
Knowledge, is not undergoing any audit, inspection, survey or examination of records by any Governmental Body relating to any Government
Contract; (B) Company has not received written or, to the Sellers’ Knowledge, oral notice of, and Company has not undergone
any investigation or review relating to any Government Contract; (C) no such audit, review, inspection, investigation, survey
or examination of records is, to the Sellers’ Knowledge, threatened; (D) Company has not received any official written notice
that it is or was being specifically audited or investigated by any Governmental Body; and (E) Company has not received any written
or, to the Sellers’ Knowledge, oral notice that any audit, review, inspection, investigation, survey or examination of records
described in this section, has revealed any fact, occurrence or practice which could reasonably be expected to cause Company to
incur a loss in excess of $50,000.

 

(iii)        Company
has not, at any time during the last seven (7) years, made any written voluntary disclosure of any violation of Federal criminal
law involving fraud, conflict of interest, bribery, or gratuity violations found in Title 18 U.S.C. or a violation of the civil
False Claims Act (31 U.S.C. 3729-3733) or disclosure required by Federal Acquisition Regulation (FAR) 52.203.13 to any Governmental
Body or other customer or prime contractor or higher-tier subcontractor related to any suspected, alleged or possible violation
of a contract requirement, any apparent or alleged irregularity, misstatement or omission arising under or relating to a Government
Contract or Government Bid, or any violation of law or regulation.

 

(iv)        As
of the Effective Date and the time immediately prior to the Closing, no Current Government Contract (which is funded as of the
Effective Date or the time immediately prior to the Closing) has incurred or, to the Sellers’ Knowledge, projects losses
or cost overruns as of the Effective Date or the time immediately prior to the Closing, based on Company’s overhead and indirect
charges as of the Effective Date or the time immediately prior to the Closing, in an amount exceeding $10,000 per individually
funded order (task order, delivery order, etc.) over the remaining period of performance for such Current Government Contract.
As of the Effective Date and the time immediately prior to the Closing, all submissions, if any, required to be made to the Defense
Contract Audit Agency (DCAA) by Company, including with respect to any indirect rates, have been made and were complete and correct
in all material respects.

 

    	 	- 23 -	 

     

    

 

(v)         
(A) No written claims, or claims threatened in writing, have been received by Company during the last seven (7) years with
respect to express warranties and guaranties contained in Government Contracts on products or services provided by Company; (B) no
such claims have been made against Company in the past seven (7) years; and (C)  no amendment has been made to any written
warranty or guaranty contained in any Government Contract that would reasonably be expected to result in Company incurring a loss
in excess of $50,000, individually or in the aggregate. Except in connection with any Government Contract involving the Federal
Aviation Administration, all service warranty obligations of Company are performed by employees of Company.

 

5.9          Intellectual
Property.

 

(a)          Company
owns or has the right to use all Intellectual Property necessary for the operation of the business of Company as conducted as of
the time immediately prior to the Closing. To the Sellers’ Knowledge, Company is not violating or infringing upon any Intellectual
Property of any Person.

 

(b)          Schedule
5.9(b) identifies each active patent or registration (including copyright, trademark and servicemark) that has been issued
to Company with respect to any of its Intellectual Property, identifies each active patent application or application for registration
that Company has made with respect to any of its Intellectual Property, and identifies each material license, agreement or other
permission that Company has granted to any Person with respect to any Intellectual Property owned by Company. With respect to each
item of Intellectual Property listed in Schedule 5.9(b): (i) Company possesses all right, title and interest in and to the
item, free and clear of any Encumbrance other than Permitted Encumbrances and (ii) no Proceeding is pending or, to the Sellers’
Knowledge, is threatened, that challenges the legality, validity, enforceability, use or ownership of such item.

 

(c)          Schedule
5.9(c) identifies each material item of Intellectual Property that any Person other than Company owns and that Company uses
pursuant to license (excluding shrink-wrap, click-wrap, click-through or other similar licenses with respect to off-the-shelf or
generally available personal computer software), agreement or permission (a “License”). With respect
to each item of Intellectual Property required to be identified in Schedule 5.9(c): (i) to the Sellers’ Knowledge,
no Proceeding is pending or is threatened that challenges the legality, validity or enforceability of such item and (ii) Company
has not granted any sublicense or similar right with respect to the License relating to such item. Company has paid all fees, costs
and expenses required to be paid by it prior to the Closing Date with respect to each material item of Intellectual Property that
any Person other than Company owns and that Company uses pursuant to license, agreement or permission.

 

(d)          Notwithstanding
the representations or warranties in any other Section in this Agreement, this Section 5.9 constitutes the Sellers’
sole and exclusive representations and warranties covering intellectual property matters.

 

    	 	- 24 -	 

     

    

 

5.10       Tax.
Company has timely filed or timely caused to be filed, on or prior to the Closing Date, all Tax Returns which are required to
be filed by or with respect to Company on or prior to the Closing Date (including applicable extensions). All Taxes of Company
that have come due and are required to be paid by it through the time immediately prior to the Closing have been paid in full
or adequate provision in accordance with GAAP has been made therefore by the establishment of reserves. All deposits required
by Law to be made by Company as of the time immediately prior to the Closing with respect to employees and other withholding Taxes
have been duly made. There are no Encumbrances on any of the assets of Company that arose in connection with, or otherwise relate
to, any failure (or alleged failure) to pay any Tax. Except as set forth on Schedule 5.10, no deficiency for any Tax or
claim for additional Taxes that has not been settled or otherwise disposed of has been asserted or assessed against Company in
writing. Except as set forth on Schedule 5.10, Company has not granted any waiver of any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to Tax assessment or deficiency. Company has not been a United States
real property holding corporation within the meaning of Code § 897(c)(2) during the applicable period specified in Code §
897(c)(1)(A)(ii). Company is not a party to any Tax allocation, sharing, reimbursement or similar agreement. Company has not been
a member of any Affiliated Group filing a consolidated Tax Return (other than a group the common parent of which is Johnson Controls).
Company has no any liability for Taxes of any Person (other than Company) under Treasury Regulation § 1.1502-6 (or any similar
provision of any other Law), as a transferee or successor, or by any Contract principally addressing Taxes. Notwithstanding the
representations and warranties in any other Section in this Agreement, this Section 5.10 constitutes the Sellers’
sole and exclusive representations and warranties with respect to any tax matters.

 

5.11       Legal
Compliance. Company is in compliance with all applicable Laws and Permits. Schedule 5.11 contains a complete and
accurate list of each material Permit held by Company. To the Sellers’ Knowledge, each Permit listed on Schedule 5.11
is valid and in full force and effect.

 

5.12       Litigation.
Except as set forth on Schedule 5.12, there is no Proceeding pending or, to the Sellers’ Knowledge, threatened, against
Company affecting any of its properties or assets or alleging any failure by Company to comply with any Law or Permit. There is
no outstanding Order to which Company is subject.

 

5.13       Environmental.
To the Sellers’ Knowledge:

 

(a)          Company
is in material compliance with all Environmental Laws;

 

(b)          Company
has obtained, and is in material compliance with, all Permits that are required pursuant to any Environmental Law for the current
operation of its business;

 

(c)          Company
has not received any written notice or report regarding any actual or alleged violation of any Environmental Law, or any liabilities
or potential liabilities, including any investigatory, remedial or corrective obligations, relating to it or its facilities arising
under any Environmental Law;

 

(d)          Company
has not treated, stored, disposed of, transported, handled or released any Hazardous Substance in a manner that has given rise
to any liability of Company; and

 

(e)          Company
has not, either expressly or by operation of law, assumed or undertaken any liability, including any obligation for corrective
or remedial action, of any other Person relating to any Environmental Law.

 

    	 	- 25 -	 

     

    

 

All Permits described in Section 5.13(b)
above are set forth on Schedule 5.11. Notwithstanding the representations or warranties in any other Section in this
Agreement, this Section 5.13 constitutes the Sellers’ sole and exclusive representations and warranties with respect
to environmental matters.

 

5.14       Employees;
Subcontractors.

 

(a)          Schedule
5.14(a) sets forth the name, job title and current salary with respect to each employee of Company as of the Effective Date.
Schedule 5.14(a) lists any employment, severance or bonus agreements with any employee who is listed thereon. Company has
provided Buyer complete and correct copies of all such agreements. Company is not a party to or bound by any collective bargaining
agreement. Company is not as of the time immediately prior to the Closing experiencing any strike, slowdown, picketing or work
stoppage. There is no lockout of any employees by Company as of the time immediately prior to the Closing. To the Sellers’
Knowledge, there is no organizational effort being made or threatened by or on behalf of any labor union with respect to employees
of Company as of the time immediately prior to the Closing. Schedule 5.14(a) identifies each employee of Company who is
not fully available to perform work because of disability or other leave and sets forth the nature of such leave (STD, LTD or
workers compensation related injury) and, to the Sellers’ Knowledge, the anticipated date of return to full service. To
the Sellers’ Knowledge: (i) the consummation of the transactions contemplated by this Agreement will not have a material
adverse effect on Company’s labor relations, and (ii) none of Company’s employees with an annual base salary in excess
of $75,000 has indicated (orally or in writing), at any time within the ninety (90) days prior to the date hereof, an intent to
terminate his or her employment with Company.

 

(b)          Schedule
5.14(b) contains a correct and complete list of all subcontractors (excluding attorneys and accountants) used by Company as
of August 6, 2015, specifying, with respect to each project for which Company has engaged such subcontractor, the name of the subcontractor,
description of services provided, fees Company is obligated to pay to such subcontractor pursuant to any Contract in effect between
Company and such subcontractor, the amount invoiced to Company by such subcontractor as of August 6, 2015 and the amount yet to
be submitted by such subcontractor to Company for payment by Company as of August 6, 2015 pursuant to such Contract. Each subcontractor
required to be so listed has the requisite authorizations required to provide the services such subcontractor provides the Company.
Company has not treated any Person as an independent contractor or subcontractor who should have been treated as a common-law
employee. Other than the subcontractors described on Schedule 5.14(b), who may be considered independent contractors, Company
does not have any independent contractors.

 

(c)          None
of the Company’s Contracts requires the Company to provide any minimum benefits under the Service Contract Act, 41 U.S.C.
§ 351 et seq. to any current Company employees, except for those current Company employees listed on Schedule 5.14(c).

 

(d)          None
of the Company’s Contracts requires the Company to provide any minimum benefits under the Davis Bacon Act, 40 U.S.C. §
3141 to any current Company employees.

 

    	 	- 26 -	 

     

    

 

5.15       Employee
Benefits. Company participates in the Employee Benefit Plans set forth on Schedule 5.15, each of which is maintained
by Johnson Controls. Company does not participate in, or otherwise maintain, any Employee Benefit Plans other than as listed on
Schedule 5.15. Company has provided Buyer summaries of the Employee Benefit Plans identified as Items 2(a), (b), (c) and
(d) on Schedule 5.15, which summaries contain an accurate description of all of the material terms thereof. All such plans
will be terminated as of or prior to the Closing, at the Sellers’ sole cost and expense.

 

5.16       Customers
and Suppliers. With respect to the eight (8) month period ended May 31, 2015, Schedule 5.16 lists (a) the ten (10)
largest (by revenue received by Company) customers of Company during such period (showing the approximate dollar volume for each)
and (b) the ten (10) largest (by amounts paid by Company) suppliers of Company during such period (showing the approximate revenue
payments for each). Since January 1, 2015, no such customer or supplier has terminated its relationship with Company, and, to the
Sellers’ Knowledge, Company has not received any notice from any such customer or supplier of its intent to terminate its
relationship with Company or to decrease such customer’s usage of Company’s services or products or such supplier’s
supply of services or products. Company has not received any written notice from, and the Sellers have no Knowledge, that any customer
or supplier as of the Effective Date or the time immediately prior to the Closing intends to materially alter its business relationship
with Company. Notwithstanding anything to the contrary contained in this Section 5.16, the Sellers are not making any representations
or guarantee that any such customer or supplier will not terminate its relationship with Company or decrease such customer’s
usage of Company’s services or products or such supplier’s supply of services or products or materially alter its business
relationship with Company after the Closing.

 

5.17       Transactions
with Related Persons. Except as set forth on Schedule 5.17, no equity holder, officer, employee or manager of Company
(a) owns any interest in any material asset used in the business of Company or (b) is a party to any material Contract with Company.

 

5.18       Insurance.
Schedule 5.18 sets forth the principle insurance program summary to which Company is a party, covered or otherwise the beneficiary
of coverage as of the Closing Date. Johnson Controls maintains, and has maintained, policies of insurance covering such risk and
events, including personal injury, property damage and general liability, in amounts that are required by Company’s Contracts.
Johnson Controls has not received written notice of termination or cancellation of any such policy, except those commonly received
prior to any such renewal. Solely with respect to Company or its employees, there are no claims pending under any of such policies
as to which coverage has been questioned, denied or disputed by the insurers of such policies or in respect of which such insurers
have reserved their rights.

 

5.19       No
Brokers’ Fees. Except for Company’s obligations to Imperial Capital, LLC (“Imperial”),
Company does not have any liability for any fee, commission or payment to any broker, finder or agent with respect to the Transactions.

 

    	 	- 27 -	 

     

    

 

5.20       No
Other Representations and Warranties. Except for the representations and warranties expressly set forth in this Article
V, each as qualified by the Disclosure Schedules, none of the Sellers, Company or any other Person has made or makes any other
representation or warranty whatsoever, express or implied, either written or oral or at law or in equity, with respect to (a) Company
or its businesses, including, but not limited to, any representation or warranty as to the accuracy or completeness of any information
regarding Company or its businesses furnished or made available to the Buyer and its Representatives (including the Confidential
Information Memorandum prepared by Imperial and any information, documents or material made available to the Buyer in the data
room, management presentations or in any other form in expectation of the Transactions), (b) the operations, assets, prospects,
financial condition, future revenue, profitability or success of Company or its assets, or (c) any other matter whatsoever (other
than as set forth in Article IV).

 

Article
VI

REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER

 

The Buyer represents
and warrants to the Sellers, as of the date hereof and as of the Closing Date, as follows:

 

6.1          Organization
and Authority. The Buyer is a corporation duly incorporated or formed, validly existing and in good standing under the
Laws of the State of Delaware. The Buyer has full corporate power and authority to execute and deliver the Transaction Documents
to which it is a party and to perform its obligations thereunder. The execution and delivery by the Buyer of each Transaction
Document to which it is a party and the performance by the Buyer of the Transactions have been duly approved by all requisite
corporate action of the Buyer. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable
against the Buyer in accordance with the terms of this Agreement. Upon the execution and delivery by the Buyer of each Transaction
Document to which it is a party, such Transaction Document shall constitute the valid and legally binding obligation of the Buyer,
enforceable against the Buyer in accordance with the terms of such Transaction Document.

 

6.2          No
Conflicts. Neither the execution and delivery of this Agreement nor the performance of the Transactions will, directly
or indirectly, with or without notice or lapse of time (a) violate any Law to which the Buyer is subject, (b) violate any Organizational
Document of the Buyer or (c) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration
of or give any Person the right to accelerate the maturity or performance of, or to cancel, terminate, modify or exercise any remedy
under, any material Contract to which the Buyer is a party.

 

6.3          Litigation.
There is no Proceeding pending or, to the Knowledge of the Buyer, threatened, against the Buyer relating to or affecting the Transactions.

 

6.4          No
Brokers’ Fees. The Buyer has no liability for any fee, commission or payment to any broker, finder or agent with
respect to the Transactions for which any Seller could be liable.

 

6.5          Investment
Purpose. The Buyer has such knowledge and experience in financial and business matters that it is capable of evaluating
the merits and risks of its purchase of the Membership Interests. The Buyer confirms that the Sellers have made available to the
Buyer the opportunity to ask questions of the Sellers and the officers and management employees of Company and to acquire additional
information about the business and financial condition of Company. Buyer is acquiring the Membership Interests purchased hereunder
for its own account and not with a view to distribution of such Membership Interests in violation of the Securities Act.

 

    	 	- 28 -	 

     

    

 

Article
VII

INDEMNIFICATION

 

7.1          Indemnification
by the Sellers.

 

(a)          Subject
to the terms and conditions of this Article VII, each Seller, severally based on such Seller’s individual breach and
not jointly with any other Seller, shall indemnify and hold harmless the Buyer, Company and their successors and permitted assigns
(collectively, the “Buyer Indemnified Parties”) for all Losses relating to or arising from: (i) any breach
or inaccuracy of any representation or warranty made by such Seller in the Transaction Documents (other than in Article V
of this Agreement); and (ii) any breach of any covenant or agreement of such Seller in the Transaction Documents.

 

(b)          Subject
to the terms and conditions of this Article VII, the Sellers, jointly and severally, shall indemnify and hold harmless the
Buyer Indemnified Parties for all Losses relating to or arising from:

 

(i)          any
breach or inaccuracy of any representation or warranty made by the Sellers in Article V of this Agreement;

 

(ii)         any
Employee Benefit Plan of Johnson Controls;

 

(iii)        any
employee claims against Company or any of its officers or managers based solely on or arising solely out of incidents or matters
on or prior to the Closing Date, including any claims based on or arising out of allegations of wrongful termination, sexual harassment
or violations of any federal, state or local statute relating to discrimination on the basis of gender, race, age, disability,
sexual preference or other protected status;

 

(iv)        any:

 

(A)         unallowable
costs or any other audit disallowances made after the Closing Date but pertaining to invoices issued by Company for work performed
prior to the Closing Date or to binding proposals or contract pricing submitted prior to the Closing Date (but only to the extent
Company or Buyer is actually required to reimburse or repay any such costs or disallowances);

 

(B)         breach
or violation of the Service Contract Act, 41 U.S.C. § 351 et seq., arising from or relating to any act or omission on or prior
to the Closing Date;

 

(C)         breach
or violation of the Davis Bacon Act, 40 U.S.C. § 3141 et seq., arising from or relating to any act or omission on or prior
to the Closing Date;

 

    	 	- 29 -	 

     

    

 

(v)         Taxes
(or the nonpayment thereof) of Company with respect to all taxable periods ending on or before the Closing Date and the portion
through the end of the Closing Date for any taxable period that includes but does not end on the Closing Date;

 

(vi)        Taxes
of any Person for which Company is liable relating to a period prior to the Closing under Reg. section 1.1502-6 (or any similar
provision of state, local or non-U.S. Law); and

 

(vii)       Taxes
of any Person (other than Company) imposed on Company as a transferee, successor, by contract, or pursuant to any Law, rule or
regulation that relates to an event or transaction at or prior to the Closing.

 

7.2          Indemnification
by the Buyer. Subject to the terms and conditions of this Article VII, the Buyer shall indemnify and hold harmless
the Sellers and their successors and permitted assigns for all Losses relating to or arising from: (a) any breach or inaccuracy
of any representation or warranty made by the Buyer in the Transaction Documents; or (b) any breach of any covenant or agreement
of the Buyer or Company (following the Closing) in the Transaction Documents.

 

7.3          Survival
and Time Limitations. All representations, warranties, covenants and agreements of the Parties in this Agreement shall
survive the Closing. The Sellers shall have no liability with respect to any claim under this Agreement unless the Buyer notifies
the Sellers’ Representative of such a claim on or before the Survival Date; provided, however, that: (1) (a)
any claim relating to Section 5.10 (Tax) may only be made prior to the seven (7) year anniversary
of the Closing Date; and (b) any claim relating to Section 4.1 (Organization and Authority), Section 4.2
(Membership Interest Ownership), the first two sentences of Section 5.1 (Organization, Qualification and Corporate
Power) or Section 5.2 (Capitalization) (each such representation in clause (1)(b), a “Fundamental
Representation”), or (2) (a) any covenant or agreement set forth in Section 7.1(b)(iv) – (vii) may
only be made prior to the seven (7) year anniversary of the Closing Date; and (b) any covenant or agreement (other than a covenant
or agreement set forth in Section 7.1(b)(iv) – (vii)) may only be made prior to the five (5) year anniversary of
the Closing Date. The Buyer shall have no liability with respect to any claim under this Agreement unless the Sellers’ Representative
notifies the Buyer in writing of such a claim on or before the Survival Date; provided, however, that any claim
relating to Section 6.1 (Organization and Authority) or any covenant or agreement may be made at any time prior
to the five (5) year anniversary of the Closing Date. If the Buyer or the Sellers’ Representative, as applicable, provides
proper notice of a claim within the applicable time period set forth above, liability for such claim shall continue until such
claim is resolved.

 

7.4          Limitations
on Indemnification by the Sellers.

 

(a)          The
Buyer Indemnified Parties shall not be entitled to be indemnified for Losses with respect to the matters described in Section
7.1(a)(i) and Section 7.1(b)(i) unless the aggregate of all the Sellers’ indemnification obligations to the Buyer
Indemnified Parties exceeds One Hundred Five Thousand Dollars ($105,000.00) (the “Deductible”). Except
with respect to claims under Section 7.1(a)(i) or Section 7.1(b)(i) for a breach of the Fundamental Representations,
the Sellers’ maximum aggregate liability with respect to the matters described in Section 7.1(a)(i) and Section
7.1(b)(i) shall (1) if the Sellers do not receive any portion of the Contingent Amount, be limited to One Million Five Hundred
Seventy Five Thousand Dollars ($1,575,000), or (2) if the Sellers do receive any portion of the Contingent Amount, be limited to
Two Million Seven Hundred Thousand Dollars ($2,700,000) (each, the “Cap”). The Sellers’ maximum
aggregate liability with respect to (i) claims under Section 7.1(a)(i) or Section 7.1(b)(i) for a breach of the Fundamental
Representations, (ii) claims under Section 7.1(a)(ii) or Sections 7.1(b)(ii) – (vii) and (iii) any other liability or
other Losses arising under this Agreement shall be limited to an amount equal to the Purchase Price.

 

    	 	- 30 -	 

     

    

 

(b)          The
Sellers shall have no liability for any Loss to the extent such Loss: (i) has been recovered by any Indemnified Party under any
policy of insurance or from a third party, or could have been recovered, but the non-recovery is the result of failure to exercise
commercially reasonable efforts to obtain recovery; (ii) results in any Tax benefit to the Indemnified Party or Company (with respect
to any period following the Closing); (iii) is accounted for in the adjustment to the Purchase Price as provided in Section
2.5 or any reserve reflected on the Financial Statements or the Closing Statement; (iv) relates to Taxes for any Tax period
(or portion of any Straddle Tax Period) beginning after the Closing Date; or (v) represents or constitutes punitive, incidental,
consequential, indirect or special damages (except to the extent that a third party has obtained a final and nonappealable judgment
therefor and the Sellers are obligated to provide indemnification hereunder for the amounts owed under such judgement). Each Indemnified
Party shall take, and cause its Affiliates to take, commercially reasonable steps to mitigate any Loss upon becoming aware of any
event or circumstance that would reasonably be expected to, or does, give rise thereto.

 

(c)          All
representations and warranties set forth in the Transaction Documents are contractual in nature only and subject to the sole and
exclusive remedies set forth herein. No Person is asserting the trust of any representation and warranty set forth in the Transaction
Documents. Instead, the Parties have agreed that should any representations and warranties of any Party prove untrue, the other
Parties shall have the specific rights and remedies herein specified as the exclusive remedy therefore, but that no other rights,
remedies or causes of action (whether in law or in equity or whether in contract or in tort) are permitted to any Party hereto
as a result of the untruth of any such representation and warranty.

 

(d)          Except
for the representations and warranties contained in Article IV and Article V of this Agreement, (i) no Seller or
Affiliate of a Seller has made any representation or warranty, expressed or implied, as to such Seller, Company or their respective
businesses, (ii) the Buyer has not relied upon, and will not assert that it has relied upon, any information regarding a Seller,
Company or their respective businesses that is not set forth in Article IV and Article V of this Agreement, and (iii)
no Seller has or will be subject to any liability to Buyer or any other Person resulting from their use of or reliance on, any
such information or any information, documents or material made available to Buyer in any form in expectation of, or in connection
with, the Transactions.

 

(e)          All
claims or causes of action (whether in contract or in tort, in law or equity) that may be based upon, arise out of or relate to
the Transaction Documents, or the negotiation, execution or performance of the Transaction Documents (including any representation
or warranty, whether written or oral, made in or in connection with this Agreement or as an inducement to enter into this Agreement),
may be made only against the entities that are expressly identified as Parties hereto and their successors. No Person who is not
a named Party to this Agreement, including, without limitation, any director, manager, officer, employee, incorporator, member,
partner, stockholder, Affiliate, agent, attorney or representative of any named Party to this Agreement, but expressly excluding
successors to the Parties (“Non-Party Affiliates”), shall have any liability (whether in contract or
in tort, in law or in equity, or based upon any theory that seeks to impose liability of an entity party against its owners and
Affiliates) for any obligations or liabilities arising under, in connection with or related to the Transaction Documents or for
any claim based on, in respect of, or by reason of the Transaction Documents or their negotiation or execution; and each Party
hereto waives and releases all such liabilities, claims and obligations against any such Non-Party Affiliates. Non-Party Affiliates
are expressly intended as third party beneficiaries of this provision of this Agreement.

 

    	 	- 31 -	 

     

    

 

7.5         Third-Party
Claims.

 

(a)          If
a third party initiates a claim, demand, dispute, lawsuit or arbitration (a “Third-Party Claim”) against
any Person (the “Indemnified Party”) with respect to any matter that the Indemnified Party might make
a claim for indemnification against any Party (the “Indemnifying Party”) under this Article VII,
then the Indemnified Party must promptly notify the Indemnifying Party (or the Sellers’ Representative, in the case of the
Sellers) in writing of the existence of such Third-Party Claim and must deliver copies of any documents served on the Indemnified
Party with respect to the Third-Party Claim; provided, however, that any failure to notify the Indemnifying Party
or deliver copies shall not relieve the Indemnifying Party from any obligation hereunder unless and solely to the extent that the
Indemnifying Party is actually prejudiced by such failure.

 

(b)          Upon
receipt of the notice described in Section 7.5(a), the Indemnifying Party shall have the right to defend the Indemnified
Party against the Third-Party Claim. The Indemnifying Party shall keep the Indemnified Party apprised of all material developments,
including settlement offers, with respect to the Third-Party Claim and permit the Indemnified Party to participate in the defense
of the Third-Party Claim. So long as the Indemnifying Party is conducting the defense of the Third-Party Claim in an active and
diligent manner, the Indemnifying Party shall not be responsible for any attorneys’ fees or other expenses incurred by the
Indemnified Party regarding its participation in the defense of the Third-Party Claim. If the Indemnifying Party exercises its
right to defend under this Section 7.5(b), the Indemnifying Party shall not consent to the entry of any judgment or enter
into any settlement with respect to such Third-Party Claim without the prior written consent of the Indemnified Party (such consent
not to be unreasonably withheld); provided, however, that the Indemnifying Party may settle any Third-Party Claim without the consent
of the Indemnified Party so long as such settlement only involves the payment of monetary damages, the Indemnifying Party specifically
agrees to pay such monetary damages in full, and such settlement unconditionally releases the Indemnified Party from all liabilities
with respect to such Third-Party Claim.

 

(c)          If
the Indemnifying Party declines to exercise its right to defend under Section 7.5(b), the Indemnified Party (i) shall defend
against the Third-Party Claim in a reasonable manner and (ii) shall keep the Indemnifying Party apprised of all material developments
(including settlement offers) with respect to the Third-Party Claim.

 

    	 	- 32 -	 

     

    

 

(d)          After
any indemnification payment is made to any Indemnified Party pursuant to this Article VII, the Indemnifying Party shall,
to the extent of such payment, be subrogated to all rights (if any) of such Indemnified Party against any third party in connection
with the Losses to which such payment relates. Without limiting the generality of the preceding sentence, any Indemnified Party
receiving an indemnification payment pursuant to the preceding sentence shall execute, upon the written request of the Indemnifying
Party, any instrument reasonably necessary to evidence such subrogation rights.

 

(e)          The
Indemnified Party shall cooperate with and make available to the Indemnifying Party such assistance, personnel, witnesses and materials
as the Indemnifying Party may reasonably request with respect to any indemnifiable matter hereunder, including any Third Party
Claim.

 

7.6          Tax
Claims. Notwithstanding any other provision of this Agreement, the control of any claim, assertion, event or proceeding
in respect of Taxes of Company shall be governed exclusively by Article VIII hereof.

 

7.7          Exclusive
Remedy. The sole remedy of the Parties for any and all claims with respect to the transactions contemplated by the Transaction
Documents shall be the indemnity set forth in this Article VII, and neither the Buyer nor the Sellers will have any other
entitlement, remedy or recourse, whether in contract, tort or otherwise, against the other Parties with respect to the transactions
contemplated by the Transaction Documents, all of such remedies, entitlements and recourse being expressly waived by the Parties
hereto to the fullest extent permitted by Law.

 

7.8          Other
Indemnification Matters. All indemnification payments under this Article VII or Article VIII, below, shall
be deemed adjustments to the Purchase Price. Each Seller expressly waives any right to seek contribution from Company with respect
to all or any part of such Seller’s indemnification obligations under this Agreement.

 

Article
VIII

TAX MATTERS

 

The following provisions
shall govern the allocation of responsibility as between the Buyer and the Sellers for certain Tax matters following the Closing
Date:

 

8.1          Tax
Periods Ending on or Before the Closing Date. Company, at the direction and control of the Sellers’ Representative
or its agent, shall timely prepare and file, or cause to be timely prepared and filed, all Tax Returns for Company for all Tax
periods ending on or prior to the Closing Date that are due to be filed after the Closing Date. The Sellers, jointly and severally
shall pay, or cause to be paid, all Taxes due with respect to such Tax Returns, but only to the extent such Taxes are not accounted
for in the adjustment to the Purchase Price as provided in Section 2.2 or Section 2.5 or in any reserve reflected
on the Financial Statements or the Closing Statement, and all fees, costs and expenses, if any, reasonably incurred by Company
or Buyer in connection with the preparation and filing of such Tax Returns of Company (but not any consolidated Tax Return of Buyer).

 

    	 	- 33 -	 

     

    

 

8.2         Tax
Periods Beginning Before and Ending After the Closing Date.

 

(a)          Seller’s
Representative or its agent shall timely prepare and file all Tax Returns for Company for Tax periods that begin before the Closing
Date and end after the Closing Date (the “Straddle Period Tax Returns”) in a manner consistent with prior
practice of Company (including any elections, that have been made or not made, by Company and as are in effect at the time of Closing
or would be in effect at such time if not for the actions taken by the Buyer or Company after the Closing). The Sellers’
Representative shall provide the Buyer with copies of any Straddle Period Tax Returns at least forty-five (45) days prior to the
due date thereof (giving effect to any extensions thereto), accompanied by a statement (the “Straddle Statement”)
setting forth and calculating in reasonable detail the Taxes that relate to the portion of such Taxable period ending on the Closing
Date (the “Pre-Closing Taxes”). The amount of any Pre-Closing Taxes with respect to a Straddle Period
Tax Return shall be determined based on the amount that would be payable if the relevant Taxable period ended on the Closing Date
(i.e., an interim closing of the books). All determinations necessary to give effect to the foregoing allocations shall be made
in a manner consistent with prior practice of Company (including any elections that have been made or not made by Company, and
as are in effect at the time of Closing or would be in effect at such time if not for the actions taken by the Buyer or Company
after the Closing).

 

(b)          If,
within five (5) days after the receipt of a Straddle Period Tax Return and Straddle Statement, the Buyer (i) notifies the Sellers’
Representative that it disputes the manner of preparation of the Straddle Period Tax Return or the Pre-Closing Taxes calculated
in the Straddle Statement and (ii) provides the Sellers’ Representative a statement setting forth in reasonable detail its
computation of the Pre-Closing Taxes and its proposed adjustments to the Straddle Period Tax Return and Straddle Statement, the
Buyer and the Sellers’ Representative shall then attempt to resolve their disagreement within five (5) calendar days following
the Buyer’s notification of the Sellers’ Representative of such disagreement. If the Buyer and the Sellers’ Representative
are not able to resolve their disagreement, the dispute shall be submitted to the Resolution Accountants identified in Section
2.4(d). The Resolution Accountants shall resolve the disagreement within thirty (30) calendar days after the date on which
they are engaged or as soon as possible thereafter. The determination of the amount of Pre-Closing Taxes by the Resolution Accountants
shall be binding on the Parties. The cost of the services of the Resolution Accountants shall be allocated by the Resolution Accountants
between the Buyer and the Sellers in the same proportion that the aggregate amount of such resolved disputed items so submitted
to the Resolution Accountants that is unsuccessfully disputed by each such Party (as finally determined by the Resolution Accountants)
bears to the total amount of such resolved disputed items so submitted. Upon the final determination of the calculation by the
Resolution Accountants, as the case may be, the Sellers, (on a several basis, based on their Pro Rata Shares, but not joint basis),
shall pay to the Buyer, not later than five (5) Business Days after the calculation is finally determined by the Resolution Accountants,
an amount equal to the Pre-Closing Taxes (as finally determined by the Resolution Accountants) with respect to such Straddle Period
Tax Return.

 

    	 	- 34 -	 

     

    

 

 

 

8.3           Tax
Refunds. Any Tax refunds that are received by the Buyer or Company, and any amounts credited against any Tax of the Buyer
or Company to which the Buyer or Company become entitled, that relate to Tax periods of Company either (i) ending on or before
the Closing Date or (ii) beginning before and ending after the Closing Date to the extent such refunds or credits relate to the
portion of such Tax periods ending on the Closing Date, shall be for the account of the Sellers. The Buyer shall, and shall cause
Company to, cooperate, as reasonably requested by the Sellers, in obtaining any Tax refund described in the preceding sentence
that Sellers believe should be available, including, but not limited to, by filing appropriate forms with the applicable Governmental
Body. The Buyer shall pay over to the Sellers any such refunds or amounts of any such credit, net of reasonable fees or expenses
incurred by the Buyer or Company in obtaining such refund or credit, within five Business Days after receipt or entitlement thereto.
The Buyer shall use its best efforts to obtain any such refunds or credits.

 

8.4          Tax
Contests and Cooperation.

 

(a)          The
Buyer and the Sellers shall cooperate, as and to the extent reasonably requested by the other Party, in connection with the filing
and preparation of any Tax Return or any audit or other proceeding that relates to Taxes of Company. The Buyer shall deliver a
written notice to the Sellers promptly following the receipt by the Buyer of any notice of any inquiry, demand, claim or notice
of commencement of a claim, proposed adjustment, assessment, audit, examination or other administrative or court proceeding with
respect to Taxes of Company relating to any pre-Closing period or any Straddle Period. Such cooperation shall include the retention
and (upon the other Party’s request) the provision of records and information that are reasonably relevant to any such proceeding
and making employees available on a mutually convenient basis to provide additional information and explanation of any material
provided hereunder. The Buyer and the Sellers shall retain all books and records with respect to Tax matters pertinent to Company
relating to any Tax period beginning before the Closing Date until thirty (30) calendar days after the expiration of the statute
or period of limitations of the respective Tax periods. The Buyer and the Sellers agree, upon request, to use commercially reasonable
efforts to obtain any certificate or other document from any Governmental Body or any other Person as may be necessary or appropriate
to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to the Transactions).

 

(b)          In
the case of an audit or administrative or judicial proceeding that relates to Taxes of Company for any pre-Closing period, the
Sellers shall have the right at their expense to be present in and control the conduct of such audit or proceeding. The Buyer may
also be present in any such audit or proceeding and, if the Sellers do not assume the defense of any such audit or proceeding,
the Buyer may defend the same in such manner as it may deem appropriate, including settling such audit or proceeding after giving
ten (10) calendar days’ prior written notice to the Sellers setting forth the terms and conditions of settlement and obtaining
the written consent of the Sellers, which consent may not be unreasonably withheld, conditioned or delayed.

 

(c)          With
respect to a proposed adjustment for which both the Sellers and the Buyer or Company could be liable (e.g., Taxes imposed for a
Straddle Period), (A) the Sellers and the Buyer each may participate in the audit or proceeding, and (B) the audit or proceeding
shall be controlled by that Party that would bear the burden of the greater portion of the sum of the adjustment and any corresponding
adjustments that may reasonably be anticipated for future Tax periods. The principle set forth in the preceding sentence shall
govern also for purposes of deciding any issue that must be decided jointly (in particular, choice of judicial forum) in situations
in which separate issues are otherwise controlled hereunder by the Buyer and the Sellers.

 

    	 	- 35 -	 

     

    

 

(d)          Notwithstanding
the foregoing provisions, the Parties to this Agreement shall endeavor to agree on a joint representative or representatives in
any proceeding in which each is entitled to and desires to be represented.

 

(e)          Except
as specifically provided above, neither the Buyer nor the Sellers shall enter into any compromise or agree to settle any claim
pursuant to any Tax audit or proceeding that would adversely affect the other Party for such year or a subsequent year without
reimbursing the other Party for such adverse effect or without obtaining the written consent of the other Party, which consent
may not be unreasonably withheld, conditioned or delayed.

 

8.5           Certain
Taxes. All transfer (including real estate transfer), documentary, sales, use, stamp, registration and other such Taxes
and fees (including any penalties and interest) incurred as a result of the consummation of this Agreement or the Transactions
(other than Seller income Taxes) shall be paid by the Buyer when due. The Buyer shall, at its own expense, file all necessary Tax
Returns and other documentation with respect to all such transfer, documentary, sales, use, stamp, registration and other Taxes
and fees (other than Seller income Taxes). If required by applicable Law, the Sellers shall join in the execution of any such Tax
Returns and other documentation.

 

8.6          Tax
Matters.

 

(a)          Without
the prior written consent of the Sellers, neither the Buyer nor Company (or any Affiliate thereof) shall: (i) file, re-file, supplement,
or amend any Tax Return of Company for any Tax period ending on or before the Closing Date, (ii) voluntarily approach any taxing
authority regarding any Taxes or Tax Returns of Company that were originally due on or before the Closing Date, (iii) take any
action relating to Taxes or that could create a Tax liability in a pre-Closing Tax period or a Straddle Period (other than as expressly
contemplated by this Agreement) that is outside the ordinary course of business, or (iv) carryback any net operating losses to
a Tax period (or portion thereof) ending on or before the Closing Date.

 

(b)          The
Parties acknowledge that there will be a number of compensation payments to employees and service providers of Company with respect
to the Transactions that will occur or be accrued on or before the Closing Date, and the Parties agree that (i) all deductions
attributable to such amounts shall be reported on Tax Returns for Taxable periods ending on or before the Closing Date pursuant
to Section 8.1 or if applicable with respect to Tax Returns filed pursuant to Section 8.2, the portion of the Straddle
Period ending on the Closing Date and (ii) no Party shall take, or cause any of its Affiliates to take, any position that is inconsistent
with the foregoing.

 

8.7           Allocation
of Purchase Price. The relative value of the assets of Company for purposes of the Sellers and the Buyer determining their
Tax consequences arising from the sale and purchase of the Membership Interests shall be determined in accordance with the methodology
set forth in Schedule 8.7.  The Sellers and the Buyer will follow and use such allocation methodology in all income
Tax Returns, filings or other related reports made by them.

 

    	 	- 36 -	 

     

    

 

8.8          Overlap.
To the extent that any obligation or responsibility pursuant to Article VII may overlap with an obligation or responsibility
pursuant to this Article VIII, the provisions of this Article VIII shall govern.

 

Article
IX

PRE-CLOSING COVENANTS OF COMPANY AND SELLERS

 

9.1          Conduct
of the Business of Company in the Ordinary Course. From the date hereof until the Closing, the Sellers shall, and shall
cause Company, to use commercially reasonable efforts to carry on the business of Company in the ordinary course consistent with
past business practices except as may otherwise be set forth herein. The Sellers shall, and shall cause Company, to use commercially
reasonable efforts to preserve the goodwill and organization of Company’s business, preserve its relationship with its employees
and its relationships with suppliers, customers and others having material business relations with Company. The Sellers shall not,
and shall cause Company to not, from the date hereof until the Closing, without the prior written consent of the Buyer (which consent
shall not be unreasonably withheld, conditioned or delayed) (x) take any action that would cause the representations or warranties
set forth in Section 5.5 not to be true as of the Closing Date, (y) grant any increase in the compensation of any of
employees of Company, except in the ordinary course of business, or (z) accelerate, terminate, modify or cancel any Contract to
which Company is a party involving the scheduled payment or receipt of more than $500,000 in any twelve (12) month period. From
the date hereof until the Closing: each Seller shall use commercially reasonable efforts to cause the conditions to the obligations
of the Buyer set forth in Section 3.1 to be satisfied; provided, that (i) such conditions are within the control of a Seller;
and (ii) that a Seller is not obligated to incur any material liability or obligation as a result thereof.

 

9.2          No
Negotiation. Until the earlier of the Closing or the termination of this Agreement pursuant to Article XI, below,
none of the Sellers shall, and the Sellers shall cause Company to not, directly or indirectly, solicit, initiate, encourage or
enter into any discussions or negotiations with, or provide any assistance or information to, or enter into any agreement with,
any Person or group of Persons (other than the Buyer) concerning any acquisition, directly or indirectly, of the Membership Interests,
or any merger, consolidation, recapitalization, liquidation, dissolution or similar transaction involving, or any purchase of all
or a substantial portion of the assets of, Company (each of the foregoing being referred to herein as an “Acquisition Transaction”);
provided, however, that the receipt of an unsolicited proposal for an Acquisition Transaction from any Person without any solicitation,
initiation, encouragement, assistance or participation after the date of this Agreement by the Sellers or Company and without entering
into any discussions or negotiations with respect to any such unsolicited proposal, will not constitute a violation hereof. This
Section 9.2 shall not prevent Imperial from responding to inquiries received from time to time from Persons who submitted
proposals to Imperial and/or the Sellers regarding an Acquisition Transaction as part of the process conducted by Imperial on behalf
of Company and the Sellers by advising such Persons that Company has entered into a definitive agreement with Buyer and that the
Sellers and Company cannot further discuss such Person’s proposal while this Agreement is in effect.

 

    	 	- 37 -	 

     

    

 

Article
X

COVENANTS

 

10.1       Use
of Company Name. After the Closing, neither the Buyer nor Company nor any Affiliate of the Buyer or Company shall make
any use of any name, mark, trade name, trademark, service mark or domain name incorporating “Johnson Controls,” “JCI”
or any letters, words or phrases confusingly similar to any of the foregoing. Concurrently with the Closing, Buyer shall cause
Company to change its corporate name to a new name bearing no resemblance to its current name. Notwithstanding the foregoing, but
subject to compliance with the obligations of Buyer under this Section 10.1, Sellers expressly authorize Company to continue
using the name “Johnson Controls Security Systems, L.L.C.” (and the variant “JCSS”) until such time as
the cognizant Government contracting officer approves and executes an agreement to recognize the contractor’s change of a
name. Such authorized use shall be limited to the following purposes: (i) performance under Government Contracts existing on the
Closing Date; (ii) executing amendments to Government Contracts existing on the Closing Date; (iii) executing Government Contracts
awarded after the Closing Date based on proposals submitted under the name of “Johnson Controls Security Systems, L.L.C.”
prior to the Closing Date; (iv) invoicing for materials delivered and services performed under Government Contracts awarded in
the name “Johnson Controls Security Systems, L.L.C.”; and (v) making disclosures about the transactions contemplated
by this Agreement; provided, that, in each case Buyer shall cause Company to, and Company shall, take all actions to submit the
documentation required to effect a name change to the cognizant government contracting officer for each Government Contract pursuant
to FAR 42.12 promptly (and in no event later than five (5) Business Days) after the Closing.

 

10.2       Press
Releases and Public Announcements. From and after the date hereof and from and after the Closing Date, no Party nor any
Affiliate thereof 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 Buyer and the Sellers’ Representative (which approval will not be unreasonably
withheld, delayed or conditioned), except as set forth on Schedule 10.2.

 

10.3       Confidentiality.
The terms of this Agreement and all confidential information disclosed by the Parties, whether before or after the Closing Date,
in connection with the Transactions, shall be kept confidential by such Persons in accordance with the confidentiality agreement
between Johnson Controls and the Buyer (the “Confidentiality Agreement”).

 

10.4       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 that existed on or prior to the Closing Date involving Company, each of the other Parties
will reasonably cooperate with such Party and such Party’s counsel in the contest or defense, make available their personnel,
and provide such testimony and access to their books and records as shall be reasonably necessary in connection with the contest
or defense, all at the sole cost and expense of the contesting or defending Party. This provision shall be inapplicable to any
direct claims between Sellers, on the one hand, and Company or Buyer, on the other hand.

 

    	 	- 38 -	 

     

    

 

10.5       Books
and Records.

 

(a)          For
two (2) years after Closing (or, with respect to Tax matters, until the later expiration of the any relevant statute of limitations),
each Party agrees that it will reasonably cooperate with and make available (or cause to be made available) to the other Parties,
during normal business hours, all books and records, information and employees (without substantial disruption of employment) retained,
remaining in existence or continuing to be employed after the Closing Date which are required in connection with any Tax inquiry,
audit, or dispute or any litigation or investigation. The Party requesting any such books and records, information or employees
shall bear all of the costs and expenses reasonably incurred in connection with providing such books and records, information or
employees. All information received pursuant to this Section 10.5 shall be kept confidential pursuant to Section 10.3
(which shall continue to apply to this extent following the Closing Date) by the Party receiving it. This provision shall be inapplicable
to any direct claims between Sellers, on the one hand, and Company or Buyer, on the other hand.

 

(b)          The
Sellers covenant and agree to take commercially reasonable actions to obtain the consent of Company’s accountants to the
inclusion of information regarding Company in appropriate filings with the United States Securities and Exchange Commission. The
Sellers further covenant and agree to cooperate with, and provide reasonable support to Buyer and Company (upon reasonable advance
written request by the Buyer and at the Buyer’s cost and expense, provided that neither Seller shall charge Buyer for its
employees’ time) as required to complete an audit of Company or in connection with any audit conducted by the Defense Contract
Audit Agency, in each case, for periods ending before or including the Closing Date.

 

(c)          The
Sellers covenant and agree to furnish Buyer with: (y) an unaudited balance sheet of Company as of August 31, 2015, and an unaudited
statement of income for the eleven (11) month period then ended; and (z) such other financial and operating data relating to the
Company’s business that the Sellers and/or Company produce in the ordinary course of business as Buyer may reasonably request
from time to time. For the avoidance of doubt, except for the representations and warranties expressly set forth in this Article
V, each as qualified by the Disclosure Schedules, none of the Sellers, Company or any other Person has made or makes any other
representation or warranty whatsoever, express or implied, either written or oral or at law or in equity, with respect to any information
provided pursuant to this Section 10.5(c).

 

(d)          The
Buyer and the Sellers covenant and agree to the additional actions set forth on Schedule 10.5(d).

 

10.6       Non-Solicitation
of Employees. Each Seller covenants and agrees that, except for general non-targeted solicitation or advertisements in
newspapers, online or through an employment agency, it will not, at any time prior to the second anniversary of the Closing Date,
directly or indirectly solicit to employ or cause to be solicited for employment any of the employees of Company as of the Closing
Date.

 

    	 	- 39 -	 

     

    

 

10.7       Restrictions
on Certain Activities.

 

(a)          Each
Seller covenants and agrees to refrain, during the five (5) year period following the Closing Date, in any manner, either directly,
indirectly, individually, in partnership, jointly or in conjunction with any Person, from (x) engaging in the Restricted Activities
for any Specific Client; (y) developing capabilities to perform the Restricted Activities for any Specific Client; or (z) obtaining
or otherwise having an equity interest in any Person whose main business is to engage in the Restricted Activities for any Federal
Client; provided, that nothing in subsection (z) shall prohibit the continued ownership by the Sellers (directly or indirectly)
of Johnson Controls Building Automation Systems, LLC.

 

(b)          For
purposes of this Agreement:

 

“Restricted
Activities” means the business of security planning and assessment, engineering and design, and systems integration,
installation, upgrade and maintenance, including, without limitation, network design and support, information assurance, access
control, building and perimeter intrusion detection and assessment, CCTV/surveillance, video management and analytics, smart cards,
biometrics and ID management, active shooter detection, and barricades, gates and fencing.

 

“Federal
Client” means any department, agency, subdivision or other instrumentality of the United States government.

 

“Specific
Client” or “Specific Clients” means the specific organization(s) set forth on Schedule
10.7.

 

(c)          If
a Specific Client solicits either Seller to provide the Restricted Activities, such Seller shall (i) notify Buyer in writing of
such opportunity; and (ii) refer such Specific Client to Company and/or Buyer for the performance of such Restricted Activities.

 

10.8       Financing.
Following the Effective Date, Buyer shall use commercially reasonable efforts to obtain financing in order to consummate the Transactions
and to fund the working capital requirements of Company after the Closing.

 

Article
XI

TERMINATION

 

11.1       Termination
Rights. This Agreement may, by notice given prior to or at the Closing, be terminated:

 

(a)          (i) By
the Buyer if any of the conditions set forth in Section 3.1, above, have not been satisfied as of September 30, 2015 or
if satisfaction of any such condition is or becomes impossible (other than through the failure of the Buyer to comply with its
obligations under this Agreement) and if such breach, failure or misrepresentation is of a character that is capable of being cured,
such breach, failure or misrepresentation has not been cured by the Sellers within three (3) calendar days after written notice
thereof from the Buyer, and the Buyer has not waived such condition; or (ii) by the Sellers’ Representative if any of
the conditions set forth in Section 3.2, above, have not been satisfied as of September 30, 2015 or if satisfaction
of any such condition is or becomes impossible (other than through the failure of the Sellers to comply with their obligations
under this Agreement) and if such breach, failure or misrepresentation is of the character that is capable of being cured, such
breach, failure or misrepresentation has not been cured by the Buyer within three (3) calendar days after written notice thereof
from the Sellers’ Representative, and the Sellers’ Representative has not waived such condition;

 

    	 	- 40 -	 

     

    

 

(b)          By
the Buyer in accordance with Section 12.12, below;

 

(c)          By
mutual written consent of the Buyer and the Sellers’ Representative;

 

(d)          By
the Sellers’ Representative if the Closing has not occurred on or before September 30, 2015, because the condition set forth
in Section 3.1(h) is not satisfied; or

 

(e)          By
either the Buyer or the Sellers’ Representative if the Closing has not occurred (other than as a result of the failure of
any Party seeking to terminate this Agreement to comply with such Party’s obligations under this Agreement) on or before
October 31, 2015 (the “Termination Date”), or such later date as the Parties may agree upon in writing
or as a Party may establish under Section 3.1(e) or Section 3.2(d), above.

 

11.2       Consequences
of Termination. In the event of any permitted termination of this Agreement by a Party pursuant to Section 11.1,
above, this Agreement shall become void and of no effect and there will be no liability or obligation on the part of any Party
except pursuant to Section 10.2 and Article XII (except for Section 12.11 and Section 12.12), which
shall survive the termination of this Agreement, and provided further, that each Party shall remain liable to the other Parties
for any liability arising out of a willful and intentional breach of this Agreement by such Party prior to such termination.

 

Article
XII

MISCELLANEOUS

 

12.1       Further
Assurances. Each Party agrees to furnish upon request to any other Party such further information, to execute and deliver
to any other Party such other documents, and to do such other acts and things, all as any other Party may reasonably request (and
at the expense of such requesting Party) for the purpose of carrying out the intent of the Transaction Documents.

 

12.2       No
Third-Party Beneficiaries. Except for Section 7.4(e), this Agreement does not confer any rights or remedies upon
any Person other than the Parties and their respective successors and permitted assigns and, as expressly set forth in this Agreement,
any Indemnified Party.

 

12.3       Entire
Agreement. The Transaction Documents (together with the Confidentiality Agreement) constitute the entire agreement among
the Parties with respect to the subject matter of the Transaction Documents and supersede all prior agreements (whether written
or oral and whether express or implied) among any Parties to the extent related to the subject matter of the Transaction Documents
(including any letter of intent). The provisions of this Section 12.3 and the limited remedies provided in Article VII
were specifically bargained for between the Sellers and Buyer and were taken into account by the Sellers and Buyer in arriving
at the Purchase Price. The Sellers have specifically relied upon the provisions of this Section 12.3 and the limited remedies
provided in Article VII in agreeing to the Purchase Price and in agreeing to provide the specific representations and warranties
set forth herein.

 

    	 	- 41 -	 

     

    

 

12.4       Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors
and permitted assigns. No Party may assign, delegate or otherwise transfer (whether by operation of law or otherwise) any of such
Party’s rights, interests or obligations in this Agreement without the prior written approval of the Buyer and the Sellers.

 

12.5       Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

 

12.6       Notices.
Any notice pursuant to this Agreement must be in writing and shall be deemed effectively given to another Party on the earliest
of the date: (a) three Business Days after such notice is sent by registered U.S. mail, return receipt requested; (b) one Business
Day after receipt of confirmation if such notice is sent by facsimile or email; (c) one Business Day after delivery of such notice
into the custody and control of an overnight courier service for next day delivery; or (d) on the date of delivery of such notice
in person; in each case to the appropriate address below (or to such other address as a Party may designate by notice to the other
Parties):

 

If to the Sellers’ Representative
or any other Seller:

 

c/o Johnson Controls, Inc.

5757 North Green Bay Road

Milwaukee, WI 53201

Attention: Laura Farnham,

Vice President
and General Manager, BE Security & Fire North America

Facsimile: 414-524-7083

Email: laura.farnham@jci.com

 

with a copy to:

 

c/o Johnson Controls, Inc.

5757 North Green Bay Road

Milwaukee, WI 53201

Attention: Brian J. Cadwallader,
Esq.

General Counsel

Facsimile: 414-524-3000

Email: brian.j.cadwallader@jci.com

 

    	 	- 42 -	 

     

    

 

and

 

Godfrey & Kahn, S.C.

780 N. Water Street

Milwaukee, WI 53202

Attention: Danielle M. Machata,
Esq.

Facsimile: 414-273-5198

E-mail: dmachata@gklaw.com

 

If to the Buyer:

 

Versar, Inc.

6850 Versar Center

Springfield, VA 22151

Attention: James D. Villa, Esq.

Facsimile: 703-997-6588

E-mail: jvilla@versar.com 

 

with a copy to:

 

Rees Broome, PC

1900 Gallows Road, Seventh
Floor

Tysons Corner, VA 22182

Attention: David J. Charles,
Esq.

Fax no.: 703-848-2530

E-mail: dcharles@reesbroome.com

 

12.7       Resolution
of Disputes. The Buyer and the Sellers’ Representative (the “Disputing Parties”) shall
attempt to resolve any dispute arising under the Transaction Documents through direct negotiation with each other. If any such
dispute is not resolved within twenty (20) calendar days after a demand for direct negotiation, any Disputing Party may then seek
relief by initiating arbitration, which shall be binding pursuant to the Commercial Arbitration Rules of the American Arbitration
Association (the “Association”); provided, that the foregoing shall not apply to any disputes relating
to Sections 2.4(d) or Section 8.2(b). The following rules shall apply to such arbitration: (a) any Disputing Party
shall have the right to have counsel represent it at the arbitration hearing and in pre-arbitration proceedings; (b) each Disputing
Party shall be permitted to conduct discovery in accordance with the Federal Rules of Civil Procedure; (c) the arbitrator(s) shall
have the authority to resolve any discovery disputes and to invoke an action to cease further discovery; (d) each Disputing Party
to any arbitration proceeding shall have the right to have a written transcript made of the arbitration proceedings; and (e) each
Disputing Party shall have the right to file post-arbitration briefs, which shall be considered by the arbitrator(s). The place
of arbitration shall be Milwaukee, Wisconsin. Arbitration may be commenced at any time by any Disputing Party upon notice to the
other. A single arbitrator (or a panel of three arbitrators if the aggregate amount in dispute exceeds $250,000 and any Disputing
Party elects to have such dispute resolved by such three person panel) shall be selected by the joint agreement of the Disputing
Parties, but if they do not so agree within twenty (20) calendar days after the date of the notice referred to above, the selection
of the arbitrator(s) shall be made pursuant to the rules from the panels of the arbitrators maintained by the Association. The
arbitrator(s) shall use best efforts to render a decision within 120 calendar days of appointment. Any award rendered by the arbitrator(s)
shall be conclusive and binding upon the Disputing Parties; provided, however, that any such award shall be accompanied
by a written opinion of the arbitrator(s) giving the reasons for the award. This provision for arbitration shall be specifically
enforceable by the Disputing Parties and the decision of the arbitrator(s) in accordance herewith shall be final and binding and
there shall be no right of appeal therefrom. Judgment upon the award rendered by the arbitrator(s) may be entered by any court
having jurisdiction thereof. The costs and expenses of arbitration including attorneys’ fees and expenses of the arbitrator(s)
shall be apportioned between the Parties as the arbitrator(s) may assess.

 

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12.8       Governing
Law. This Agreement and all other Transaction Documents (unless otherwise stated therein) shall be governed by the Laws
of the State of Wisconsin without giving effect to any choice or conflict of Law principles of any jurisdiction that would result
in the application of the Laws of any other jurisdiction.

 

12.9       Amendments
and Waivers. No amendment of any provision of this Agreement shall be valid unless the amendment is in writing and signed
by the Buyer and the Sellers’ Representative. No waiver of any provision of this Agreement shall be valid unless the waiver
is in writing and signed by the waiving Parties. The failure of a Party at any time to require performance of any provision of
this Agreement shall not affect such Party’s rights at a later time to enforce such provision. No waiver by any Party of
any breach of this Agreement shall be deemed to extend to any other breach hereunder or affect in any way any rights arising by
virtue of any other breach.

 

12.10     Severability.
Any provision of this Agreement that is determined by any court of competent jurisdiction to be invalid or unenforceable shall
not affect the validity or enforceability of any other provision hereof or the invalid or unenforceable provision in any other
situation or in any other jurisdiction. Any provision of this Agreement held invalid or unenforceable only in part or degree shall
remain in full force and effect to the extent not held invalid or unenforceable.

 

12.11     Disclosure
Schedules. The disclosure schedules are a series of schedules (individually, a “Schedule” and
collectively, the “Disclosure Schedules”) corresponding to the sections contained in Article IV
and Article V and containing the information required to be disclosed pursuant to, and certain exceptions to, the representations
and warranties in such Articles. Matters set forth in the Disclosure Schedules are not necessarily limited to matters required
by the Agreement to be reflected in the Disclosure Schedules. Such additional matters are set forth for informational purposes,
and the Disclosure Schedules may not necessarily include other matters of a similar nature. Nothing in the Agreement or in the
Disclosure Schedules constitutes an admission that any information disclosed, set forth or incorporated by reference in the Disclosure
Schedules or in the Agreement is material or is otherwise required by the terms of the Agreement to be so disclosed, set forth
or incorporated by reference. Any disclosure set forth in any particular section of the Disclosure Schedules shall be deemed to
be disclosed for any other section of the Disclosure Schedules to the extent that its relevance or applicability to such other
section of the Disclosure Schedules is reasonably apparent.

 

    	 	- 44 -	 

     

    

 

12.12     Updates
to the Disclosure Schedules. The Sellers and Company shall have the right to supplement the Disclosure Schedules at any
time or times after the date of this Agreement, but prior to the Closing, by delivering one or more supplements (each, a “Disclosure
Supplement”) to the Buyer in accordance with the procedures set forth in this Section 12.12; provided, however,
that if the Disclosure Supplement is delivered to the Buyer at any time during the two (2) Business Days immediately preceding
the Closing Date, or on the Closing Date, the Buyer, in its sole discretion, may choose to delay the Closing and defer the Closing
Date for a period of up to five (5) Business Days so it may fully consider the matters disclosed in such Disclosure Supplement.
Any matter set forth in a Disclosure Supplement is referred to herein as a “Subsequently Disclosed Matter.”
To the extent any Subsequently Disclosed Matter has caused, or could reasonably be expected to cause, Losses to the Buyer Indemnified
Parties in an amount equal to or less than Five Hundred Thousand Dollars ($500,000) (individually or in the aggregate), Buyer shall
have the obligation to consummate the Transaction, but the Subsequently Disclosed Matter will not amend or supplement the Disclosure
Schedules or qualify any of the warranties or representations of the Sellers made in this Agreement, or will be deemed to cure
any breach of any such warranties or representations, and the Buyer Indemnified Parties will be entitled to indemnification from
the Sellers for any breach of representations and warranties in Articles IV or V in accordance with Article VII.
To the extent any Subsequently Disclosed Matter has caused, or could reasonably be expected to cause, Losses to the Buyer Indemnified
Parties in an amount greater than Five Hundred Thousand Dollars ($500,000) (individually or in the aggregate), the Buyer shall
have the right to terminate this Agreement by written notice to the Sellers’ Representative within five (5) Business Days
after receipt of any Disclosure Supplement which includes such Subsequently Disclosed Matter.

 

12.13     Construction.
The Article and Section headings in this Agreement are inserted for convenience only and are not intended to affect the interpretation
of this Agreement. Any reference in this Agreement to any Article or Section refers to the corresponding Article or Section of
this Agreement. Any reference in this Agreement to any Schedule or exhibit refers to the corresponding Schedule or exhibit attached
to this Agreement and all such Schedules and exhibits are incorporated herein by reference. 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 provision in this Agreement. Unless the context requires otherwise, any reference to any Law shall be
deemed also to refer to all amendments thereto, in each case as in effect as of the date hereof. All accounting terms not specifically
defined in this Agreement shall be construed in accordance with GAAP. The word “or” in this Agreement is disjunctive
but not necessarily exclusive. All words in this Agreement shall be construed to be of such gender or number as the circumstances
require. References in this Agreement to time periods in terms of a certain number of days mean calendar days unless expressly
stated herein to be Business Days.

 

12.14     Specific
Performance. Each Party acknowledges that the other Parties would be damaged irreparably and would have no adequate remedy
of law if any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached. Accordingly,
each Party agrees that the other Parties shall be entitled to an injunction to prevent any breach of any provision of this Agreement
and to enforce specifically any provision of this Agreement, in addition to any other remedy to which they may be entitled and
without having to prove the inadequacy of any other remedy they may have at law or in equity and without being required to post
bond or other security.

 

    	 	- 45 -	 

     

    

 

12.15     Time
Is of the Essence. Time is of the essence with respect to all time periods and dates set forth herein.

 

12.16     Sellers’
Representative.

 

(a)          Each
Seller, on behalf of such Seller and such Seller’s successors, heirs and permitted assigns, hereby irrevocably appoints Johnson
Controls as the “Sellers’ Representative” as such Seller’s agent and attorney-in-fact for all purposes
set forth in this Agreement, including the full power and authority to (i) perform the Transactions to be performed by a Seller
under this Agreement, (ii) disburse any funds received hereunder to Sellers, (iii) execute and deliver on behalf of each Seller
any amendment or waiver under this Agreement and to agree to resolution of all claims hereunder, (iv) retain legal counsel and
other professional services, at the expense of Sellers, in connection with the performance by the Sellers’ Representative
of this Agreement, (v) give and receive notices on behalf of the Sellers, (vi) make, dispute, and settle all claims under this
Agreement, including, without limitation, claims relating to the purchase price, adjustments and indemnification claims, (vii)
pay (or seek reimbursement) on behalf of the Sellers any amounts due by them to Buyer, any indemnitee or the Sellers’ Representative
(other than indemnification claims under Section 7.1(a)) and (viii) interpret the terms of this Agreement and any other
agreement entered into in connection therewith.

 

(b)          The
Sellers’ Representative shall have no liability to any Seller for any act done or omitted under this Agreement as the Sellers’
Representative while acting in good faith and not in a manner constituting wanton misconduct, and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith.

 

(c)          The
Sellers’ Representative shall receive no compensation for services as the Sellers’ Representative; provided,
however, that the Sellers shall reimburse the Sellers’ Representative for its out-of-pocket costs and expenses in
connection with performing its duties and obligations hereunder. If the Sellers’ Representative resigns or is otherwise unable
or unwilling to serve in such capacity, the Sellers’ Representative shall appoint a new Person to serve as the Sellers’
Representative and shall provide prompt written notice thereof to Buyer. Until such notice is received, Buyer shall be entitled
to rely on the actions and statements of the previous the Sellers’ Representative. The power and authority granted hereunder
shall be exclusive.

 

(d)          The
appointment of the Sellers’ Representative as the attorney-in-fact for each Seller as set forth in this Section 12.16
and all authority hereby conferred are granted and conferred in consideration of the interest of the other Sellers, is therefore
coupled with an interest and is and shall be irrevocable and shall neither be terminated nor otherwise affected by any act of any
Seller or by operation of law, whether by the death, dissolution, liquidation, incapacity or incompetence of such Seller or by
the occurrence of any other event. If, after the execution of this Agreement, any Seller dissolves or liquidates, the Sellers’
Representative is nevertheless authorized, empowered and directed to act in accordance with this Section 12.16 as if such
dissolution or liquidation had not occurred and regardless of notice thereof. Each Seller agrees to execute such documents as may
be necessary and to give such instructions to its representatives as may be necessary so that its successors shall remain subject
to this Agreement and carry out the full intent and purposes hereof.

 

    	 	- 46 -	 

     

    

 

12.17      Legal
Representation. The Buyer agrees, on its own behalf and on behalf of the other Buyer Indemnified Parties, that, following
the date hereof and following the Closing, Godfrey & Kahn, S.C. may serve as counsel to the Sellers, or any of their officers,
directors or Affiliates in connection with any matters related to this Agreement and the Transactions, including any litigation,
claim or obligation arising out of or relating to this Agreement or the Transactions notwithstanding any representation by Godfrey
& Kahn, S.C. prior to the date hereof and prior to the Closing Date. The Buyer (on behalf of itself and Company) hereby (a)
waives any claim they have or may have that Godfrey & Kahn, S.C. has a conflict of interest or is otherwise prohibited from
engaging in such representation and (b) agrees that, in the event that a dispute arises after the date hereof and/or after the
Closing between the Buyer or Company, on the one hand, and the Sellers or any of the Sellers’ Affiliates, on the other hand,
Godfrey & Kahn, S.C. may represent the Sellers or any of the Sellers’ Affiliates in such dispute even though the interests
of such person(s) may be directly adverse to the Buyer or Company (following the Closing) and even though Godfrey & Kahn,
S.C. may have represented Company in a matter substantially related to such dispute. The Buyer (on behalf of itself and Company)
further agrees that, as to all communications prior to the date hereof and prior to the Closing Date among Godfrey & Kahn,
S.C. and Company and the Sellers or Sellers’ Affiliates and representatives, that relate in any way to the Transactions,
the attorney-client privilege and the expectation of client confidence belongs to the Sellers and may be controlled by the Sellers
and shall not pass to or be claimed by the Buyer or Company (following the Closing).

 

[Signature pages follow]

 

    	 	- 47 -	 

     

    

 

The Parties have executed
and delivered this Membership Interest Purchase Agreement as of the date first written above.

 

	 	BUYER:
	 	 
	 	VERSAR, INC.
	 	 
	 	By: 	/s/ Anthony L. Otten
	 	Name: Anthony L. Otten
	 	Title: Chief Executive Officer

 

	 	SELLERS:
	 	 
	 	JOHNSON CONTROLS FEDERAL SYSTEMS, INC.
	 	 
	 	By:	/s/ Laura Farnham
	 	Name: Laura Farnham
	 	Title: Authorized Signatory and VP & GM, BE
	 	Security & Fire North America
	 	 
	 	JOHNSON CONTROLS, INC.
	 	 
	 	By:	/s/ Laura Farnham
	 	Name: Laura Farnham
	 	Title: Authorized Signatory and VP & GM, BE
	 	Security & Fire North America

 

[Signature Page
to Membership Interest Purchase Agreement]

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