Document:

Exhibit 10.10

 

Execution Copy

 

DATED 21st February, 2008

 

2020 GlobalGrowth Equities Limited

 

and

 

2020 Equity Partners Limited

 

 

INVESTMENT MANAGEMENT AGREEMENT

 

 

Deacons

5th Floor

Alexandra House

18 Chater Road

Central

Hong Kong

Fax : 28100431

Tel : 28259211

 

 

TABLE OF CONTENTS

 

	
Clause
    	
 
    	
Heading
    	
 
    	
Page Number
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1
    	
 
    	
INTERPRETATION
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
2
    	
 
    	
APPOINTMENT   OF THE INVESTMENT MANAGER
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
3
    	
 
    	
POWERS   AND DUTIES OF THE INVESTMENT MANAGER
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
4
    	
 
    	
AUTHORITY   OF THE INVESTMENT MANAGER
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
5
    	
 
    	
PAYMENT   OF FEES TO THE INVESTMENT MANAGER
    	
 
    	
7
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
6
    	
 
    	
EXPENSES
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
7
    	
 
    	
DUTY OF   CARE AND CONFLICTS OF INTEREST
    	
 
    	
11
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
8
    	
 
    	
EXCULPATION   AND INDEMNIFICATION OF THE INVESTMENT MANAGER
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
8A
    	
 
    	
EXCULPATION   AND INDEMNIFICATION OF THE ISSUER
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9
    	
 
    	
SERVICES   OF THE INVESTMENT MANAGER TO BE EXCLUSIVE
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
9A
    	
 
    	
IPO OF   THE ISSUER
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
10
    	
 
    	
TERMINATION
    	
 
    	
14
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
11
    	
 
    	
CONFIDENTIALITY   AND REPUTATION
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
12
    	
 
    	
NOTICES
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
13
    	
 
    	
MISCELLANEOUS   PROVISIONS
    	
 
    	
16
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
14
    	
 
    	
GOVERNING   LAW
    	
 
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
APPENDIX   A  
    	
 
    	
19
    
	
 
    	
 
    	
 
    
	
APPENDIX   B  
    	
 
    	
20
    
	
 
    	
 
    	
 
    
	
APPENDIX   C  
    	
 
    	
21
    
	
 
    	
 
    	
 
    
	
APPENDIX   D  
    	
 
    	
1
    

 

 

INVESTMENT MANAGEMENT AGREEMENT

 

DATED:                                         21st   February, 2008

 

PARTIES:

 

(1)                                  2020 GLOBALGROWTH EQUITIES LIMITED , a Cayman Islands exempted company whose registered office is at 4th Floor, Scotia Centre, P.O. Box 268, George Town, Grand Cayman KY1-1104, Cayman Islands (the “Issuer”); and

 

(2)                                  2020 Equity Partners Limited, a Cayman Islands exempted company whose registered office is at 4th Floor, Scotia Centre, P.O. Box 268, George Town, Grand Cayman KY1-1104, Cayman Islands and who is registered with the Cayman Islands Monetary Authority as an Excluded Person pursuant to the Securities Investment Business Law (2003 Revision) (the “Investment Manager”).

 

BACKGROUND

 

(A)                              The Issuer has been formed for the principal purpose of making direct or indirect investment in listed or unlisted securities, units, equity loan notes, other equity instruments or other types of investments (“Portfolio Investments”).

 

(B)                               The Investment Manager has received copies of investment agreements (“IAs”) entered into between the Issuer and each investor (“Investor”) in connection with the issue of Convertible Bonds by the Issuer and the Investment Manager notes terms and conditions thereof.

 

(C)                                The Issuer wishes to appoint the Investment Manager to provide such investment management services in connection with its Portfolio Investments on the terms and subject to the conditions hereinafter contained.

 

(D)                               The Investment Manager desires to render such services to the Issuer in consideration of receipt of the compensation specified in this Agreement.

 

(E)                                 An advisory committee will be established external to the governance structure of the Investment Manager or the Issuer in order to assist the Investment Manager in referring deals, investigating sector potential and provide guidance and advice on dealing with investee companies.  For the avoidance of doubt, the advisory committee will not have any role in the governance of the Investment Manager or the Issuer.

 

THE PARTIES HEREBY AGREE as follows:

 

1                                         Interpretation

 

1.1                                 Unless the context otherwise requires, capitalized terms used in this Agreement have the same meanings as in the Articles and the following terms shall have the following meanings:

 

“Agreement”  means this Investment Management Agreement, as amended and/or supplemented from time to time in accordance with Clause 15.3.

 

 

“Articles”  means the Articles of Association for the time being of the Issuer and any reference herein to an Article shall be taken to refer to the Articles unless otherwise specified.

 

“Banking Day” means a day (excluding Saturday and Sunday) on which banks are generally open for business in Hong Kong and Kuala Lumpur.

 

“Closing Day” means 30 June 2008.

 

“Conditions” means the terms and conditions attached to the certificate issued in respect of the Convertible Bonds; and “Condition” refers to the relative numbered paragraph of the Conditions.

 

“Convertible  Bonds” means such convertible bonds subject to the Conditions issued or to be issued by the Issuer pursuant to agreement(s) already entered and to be entered into by the Issuer with respective investors on or prior to the Closing Date; and “Convertible Bond” means any of them.

 

“Directors” means the directors of the Issuer.

 

“Duties and Charges” includes all stamp and other duties, taxes, governmental charges, brokerage, bank charges, transfer fees and registration fees.

 

“Equity Value” means the aggregate par value of the issued share capital and principal amount of other issued securities of the Issuer (including but not limited to any securities convertible into or exercisable or exchangeable for or that represent the right to receive share capital of the Issuer).

 

“Exchange Amount” has the same meaning as defined in Condition 8.2(a), which means, in relation to a Convertible Bond, an amount equivalent to 20% of the original principal amount of the Convertible Bond and such amount may decrease from time to time by such an amount subject to which the Underlying Exchange has taken place in stages;

 

“Investment Committee” means the investment committee of the Issuer constituted pursuant to the IAs.

 

“Investment Objective” means the investment objective as set out in Appendix A of this Agreement or as from time to time which may be amended or varied upon (i) until the IPO Date, the approval by the affirmative vote of holders holding not less than 80% of the aggregate principal amount of all Convertible Bonds issued and outstanding; or (ii) thereafter, such approval as may be required in accordance with rules of the Stock Exchange.

 

“IPO” means the proposed initial public offering of Shares in connection with the listing of the Shares on the Stock Exchange.

 

“IPO Date” means the date on which dealings in the Shares on the Stock Exchange commence.

 

“Keymen” means George Lu and Louis Koo or any replacement for either of them as may be approved by the Issuer. Nothing herein shall be construed as granting the Issuer

 

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the right to designate which employees or other advisors of the Investment Manager shall be responsible for providing specific services hereunder on a day-to-day basis.

 

“Laws” means the laws of the Cayman Islands (including delegated legislation and regulations of any competent authority) and any other applicable laws and regulations for the time being in force.

 

“Maturity Date” has the same meaning as defined in Condition 1.1, which means, the Banking Day immediately preceding the second anniversary of the date of issue of the first Convertible Bond issued and such expression (as the context requires) includes any extension of the original Maturity Date or the extended Maturity Date under Condition 1.2.

 

“NAV” means the net asset value of the Issuer as prescribed in Clause 5.2.3 of this Agreement.

 

“Nomination Committee” means the nomination committee of the Issuer.

 

“Policies and Guidelines” means the policies and guidelines as set out in Appendix A of this Agreement or as from time to time which may be amended or varied upon (i) until the IPO Date, the approval by the affirmative vote of holders holding not less than 80% of the aggregate principal amount of all Convertible Bonds issued and outstanding; or (ii) thereafter, such approval as may be required in accordance with rules of the Stock Exchange.

 

“Proceeds” means the proceeds from the issue of Convertible Bonds.

 

“Securities” means shares, debentures and other securities of any class issued by the Issuer.

 

“Share(s)” means the ordinary share(s) of US$0.10 each in the issued share capital of the Issuer existing on the date of this Agreement and all other (if any) stock or shares from time to time and for the time being ranking pari passu therewith and all other (if any) stock or shares in the capital of the Company resulting from any sub-division, consolidation or re-classification thereof.

 

“Stock Exchange” means the London Stock Exchange or, as the context may require, its main board for the listing of securities, or any other recognized stock exchange.

 

“Underlying Assets” means assets acquired by the Issuer using the Proceeds from the issue of Convertible Bonds prior to the IPO or assets as may be otherwise acquired by the Issuer upon and after the IPO.

 

“Underlying Exchange” means the underlying exchange pursuant to Condition 8.

 

1.2                                 Any reference to the Issuer or the Investment Manager includes a reference to its or their duly authorized advisers.

 

1.3                                 References to Clauses are to clauses of this Agreement.

 

1.4                                 The headings to the Clauses of this Agreement are for convenience only and shall not affect the construction or interpretation of this Agreement.

 

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2                                         Appointment of the Investment Manager

 

2.1                                 The Issuer hereby appoints the Investment Manager and the Investment Manager hereby agrees to provide the Issuer such investment management and advisory services in connection with the Issuer’s Portfolio Investments in accordance with the provisions of the Articles and the Laws in order to achieve the Investment Objective until its appointment shall be terminated in accordance with this Agreement.

 

2.2                                 The Directors shall notify the Investment Manager of all relevant corporate affairs of the Issuer (including but not limited to resolutions of the Directors, shareholders and holders of Convertible Bonds), changes to the investment policy of the Issuer and any other actions taken independently of the Investment Manager which may be relevant to the Investment Manager’s performance of its duties hereunder.

 

2.3                                 The Issuer may from time to time agree with the Investment Manager that the Investment Manager shall perform other services for the Issuer on such terms as to remuneration and otherwise as shall be mutually agreed.

 

2.4                                 The Investment Manager shall use its best endeavours to fulfil the Investment Objective but the Issuer acknowledges that Investment Manager does not guarantee that the Investment Objective will be achieved.

 

2.5                                 The Investment Manager shall have the right to elect the chairman of the Investment Committee and the Nomination Committee.

 

2.6                                 The Investment Manager intends to be constituted in accordance with Appendix B .

 

2.7                                 The Investment Manager undertakes that the Keymen shall remain as employees of the Investment Manager based upon the terms of the Letters of Appointment as set out in Appendix C of this Agreement until (i) the termination of this Agreement or (ii) the date falling after a period of 3 years after the IPO Date, whichever is shorter. Notwithstanding the above, the Investment Manager retains the exclusive right to determine which of its employees or other advisors shall be responsible for providing the specific services hereunder from time-to-time.

 

3                                         Powers and Duties of the Investment Manager

 

3.1                                 During the continuance of its appointment hereunder, the Investment Manager shall (subject always to the provisions of Clause 3.3) have duties, obligations, full power, authority and right to, either itself or wholly or in part through its advisers render such services as the Issuer may from time to time require in connection with the management of the affairs of the Issuer, and in particular (without limiting the generality of the foregoing), the Investment Manager shall:

 

3.1.1                        implement the investment strategy and policies of the Issuer and from time to time review such investment strategy and policies;

 

3.1.2                        identify, source, evaluate investment and divestment opportunities for the account of the Issuer;

 

3.1.3                        monitor, supervise and report to the Issuer on its investments and responding to enquiries from the Issuer or Investors regarding the investments of the  Issuer;

 

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3.1.4                        make recommendations to the Investment Committee on investment opportunities or divestment proposals which the Investment Manager has identified and evaluated, and provide such advice and support as the Investment Committee may request from time to time;

 

3.1.5                        carry out valuations of the Portfolio Investments as from time to time required;

 

3.1.6                        assist in the administration and redemption of the Convertible Bonds issued by the Issuer pursuant to the Conditions or otherwise generally in connection with the Issuer;

 

3.1.7                        liaise with third party service providers and intermediaries in connection with the implementation of investment and investment realisation decisions and the administration of the Issuer generally;

 

3.1.8                        assist in the filing of any reports or claiming of any taxation relief by Issuer and holders of the Convertible Bonds or such other securities as may be issued by the Issuer from time to time;

 

3.1.9                        assist in the preparation of tax returns in respect of the allocation of profits and losses of the Issuer and in obtaining any available tax benefits and tax deductions in respect of the Portfolio Investments, if required;

 

3.1.10                  provide regular reporting on the investment activities and financial information and accounts of the Issuer to the Investors including such information as the same is available to members of the Investment Committee and/or the Directors from time to time;

 

3.1.11                  provide to the Investors reporting on business and operational activities of the Underlying Assets and on financial information on the Underlying Assets to the extent the same is available to the Issuer;

 

3.1.12                  assess the financial position of the Issuer from time to time and, if required, (i) call for commitments from all Investors on a pro rata basis as set out in the IAs; or (ii) request for additional commitments from any one or more Investors if the outstanding commitment is insufficient or, at the Investment Manager’s discretion, the Investment Manager may approach other person(s) who are not Investors to co-invest with the Issuer in a Portfolio Investment, in the manner as the Investment Manager may think fit;

 

3.1.13                  manage the co-investment rights of Investors in accordance with the IAs.

 

3.1.14                  negotiate and conclude investments and divestments on behalf of the Issuer in accordance to instructions or authorizations of the Investment Committee;

 

3.1.15                  represent the Issuer at all board and shareholders’ meeting of the Issuer’s investee companies;

 

3.1.16                  on behalf of the Issuer, appoint the necessary accountants, solicitors and consultant to undertake due diligence of potential investments; and

 

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3.1.17                  assist in arranging the voluntary liquidation of the Issuer, and co-operating with the Issuer’s liquidators, if necessary.

 

3.2                                 The Investment Manager shall keep or cause to be kept for the Issuer such books, records and statements expressed in such currencies as may be necessary to give a complete record of all transactions carried out by the Investment Manager on behalf of the Issuer and such other books, records, statements, agreements and correspondences as may be required by the Laws and the Articles and as may be necessary to give a complete record of all other transactions carried out of the Investment Manager on behalf of the Issuer and shall:

 

3.2.1                        permit the Issuer and their employees and agents and the Auditors (if any) to inspect such books, records and statements at all reasonable times; and

 

3.2.2                        grant access to such books, records and statements to holders of the Convertible Bonds or such other securities as may be issued by the Issuer from time to time at normal working hours of the Issuer by giving a written notice of not less than 3 days subject to the execution of non-disclosure or confidentiality agreement with the issuer.

 

3.3                                 The Investment Manager shall have and is hereby granted the authority, power and right on behalf of and in the name of the Issuer but subject to the authorizations of the Directors and the decisions of the Investment Committee and in compliance with the Laws:-

 

3.3.1                        to issue orders and instructions with respect to the acquisition and disposition of the Portfolio Investments;

 

3.3.2                        to purchase (or otherwise acquire), sell (or otherwise dispose of) and invest in the Portfolio Investments, moneys and other assets for the account of the Issuer and effect foreign exchange transactions on behalf of the Issuer and for the account of the Issuer in connection with any such purchase, other acquisition, sale or other disposal or the protection of the value of Portfolio Investments;

 

3.3.3                        to enter into, make and perform all contracts, agreements and other undertakings as may in the opinion of the Investment Manager be necessary or advisable or incidental to the carrying out of the objectives of this Agreement in accordance with the rules, regulations and practices of relevant markets;  and

 

3.3.4                        to negotiate in accordance with the instructions of the Directors all borrowing arrangements of the Issuer and to supervise the implementation of such arrangements.

 

3.4                                 The Investment Manager warrants and represents that it:

 

3.4.1                        shall observe and comply with the Laws, the constitution of the Issuer, the Policies and Guidelines, provisions of the Conditions and all lawful resolutions of the Directors and other lawful orders and directions given to it from time to time by the Directors and all activities engaged in by the Investment Manager hereunder shall at all times be subject to the control of and review by the Directors and the Investment Manager shall and shall procure that any person

 

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firm or company to whom it delegates any of its functions hereunder shall give effect to all such decisions;

 

3.4.2                        does not require any licence or permit or has obtained all exemptions to fulfill its obligations under this Agreement; and

 

3.4.3                        shall hold licences if required in compliance with all applicable laws and regulations, as replaced, amended, modified or re-enacted from time to time to fulfil its obligations under this Agreement.

 

3.5                                 All rights of voting conferred by Portfolio Investments shall be exercised in such manner as the Investment Manager may determine and the Investment Manager may in its discretion refrain from the exercise of such voting rights.

 

3.6                                 The Investment Manager shall provide all necessary office facilities, equipment and personnel to enable it to carry out its functions hereunder and shall liaise with the Auditors and other agents of the Issuer as reasonably required so as to enable them to perform their respective duties and obligations.

 

4                                         Authority of the Investment Manager

 

4.1                                 In addition to the services of its own staff, the Investment Manager may arrange for and coordinate the services of other professionals and consultants.  The Investment Manager shall for the purposes of this Agreement be deemed to be an independent contractor and not an employee or dependent agent of the Issuer ; nor shall anything in this Agreement or any action taken pursuant to this Agreement be construed as creating a separate trust, joint venture, partnership or any like relationship among the parties of any kind on the part of the Issuer with respect to the Investment Manager or any of its affiliates.

 

4.2                                 In exercising its rights and duties under this Agreement the Investment Manager is authorised to act for and on behalf of the Issuer (but subject to any directions given by the Directors and subject to the terms of this Agreement and the provisions of the Articles) in the same manner and with the same force and effect as the Issuer might or could do.  Except as herein provided, the Investment Manager shall not have authority to act for or represent the Issuer in any way or otherwise be deemed an agent of the Issuer.

 

4.3                                 The authorities contained in this Agreement are continuing ones and shall remain in full force and effect until revoked by termination of this Agreement, but such revocation shall not affect any liability in any way resulting from transactions initiated prior to such revocation.

 

5                                         Payment of Fees to the Investment Manager

 

5.1                                 As consideration for its services under this Agreement, the Investment Manager shall be entitled to receive a management fee from the Issuer at the rate of 2 per cent. (2%) per annum calculated on the basis of (i) until the IPO, the aggregate principal sum of all the Convertible Bonds committed (not the amount called) which shall be adjusted according to the aggregate principal sum of Convertible Bonds issued and subscribed for in the event of default of any investors of the Convertible Bonds in paying up such commitment; and (ii) thereafter, the average month end NAV of the Issuer for each prevailing quarter.  The management fee shall be payable quarterly in advance on the first day of each calendar quarter.  As such, the management fee shall be calculated

 

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initially based on the average month end NAV of the Issuer for the preceding quarter and adjusted once the prevailing quarter average month end NAV is determined.  The management fee shall be pro-rated for any commencing period of less than a quarter, and shall be pro-rated and refunded for any terminating period of less than a quarter.  The first payment of such management fee shall be made on the signing of this Agreement.

 

5.2                                 In addition to the management fee payable to the Investment Manager pursuant to Clause 5.1, the Investment Manager shall be entitled to receive:

 

5.2.1                        if there is an IPO by the Maturity Date,

 

(a)          a performance fee of 20% calculated on the basis of any difference in the value of the NAV as at the IPO Date and the aggregate investment in Equity Value in the Issuer  (excluding the Exchange Amount) subject to a compounded hurdle rate of 8 per cent. (8%) per annum and the Catch-up (as defined hereunder), payable in cash within 30 days of the IPO or as otherwise agreed between the parties (an illustrative example is set out in Appendix D); and

 

5.2.2                        thereafter a performance fee is payable provided:-

 

(a)                                  at the first financial year end of the Issuer after the IPO Date, the NAV for that financial year end is greater than the NAV as at the IPO Date plus a compounded hurdle rate of 8% per annum;

 

and

 

(b)                                 for subsequent years, the relevant financial year end NAV (“NAVt”) is greater than the value of the NAV at which the last performance fee was payable (the “High Water Mark”) and is greater than a compounded hurdle rate of 8% per annum calculated against the NAV as at the IPO Date (“Hurdle”).

 

Subject to the fulfillment of the foregoing, the calculation on the performance fee is as follows:-

 

(i)         0% of the Gain/(Loss) (as defined below) if NAVt is at or below the Hurdle and at or below an 8% increase on the High Water Mark (“Hurdle Gain/(Loss)”);

 

(ii)          An amount (“Catch-up Amount”) up to 100% of the Full Catch Up above the Hurdle Gain/(Loss) where

 

	
Full   Catch-up
    	
 
    	
=
    	
 
    	
    2%             
    	
x   Gain/(Loss) Amount
    
	
 
    	
 
    	
 
    	
 
    	
Gain/(Loss)%
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
where   Gain/(Loss)
    	
 
    	
=
    	
 
    	
NAVt
    	
-
    	
High Water   Mark
    

 

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and Gain/(Loss)%                                                                        =                                         NAVt      -      High Water Mark  x  100%

High Water Mark

 

; and

 

(iii)                   An amount equal to 20% of the difference between NAVt and aggregate of the Hurdle Gain and the Full Catch-up,

 

payable in cash within 30 days after the end of the relevant financial year end or as otherwise agreed between the parties. An illustrative example for the performance fees calculated at and post IPO is set out in Appendix D.  Where there is any inconsistency in the interpretation of this provision and Appendix D, Appendix D “Calculation Using Percentages” shall prevail.

 

5.2.3                        if there is no IPO by the Maturity Date or upon termination of this Agreement, a performance fee of 20% calculated on the basis of the proceeds of sale of all Underlying Assets (excluding any Exchange Amount) less the original investment costs and all related costs and expenses of the Issuer, subject to a compounded hurdle rate of 8 per cent. (8%) per annum and the Catch-up (as defined above), payable in cash within 30 days after all Convertible Bonds issued and outstanding have been redeemed or converted and exchanged or the liquidation procedure of the Issuer has commenced or this Agreement has terminated (as the case may be), or as otherwise agreed between the parties.

 

5.2.4                        For the purpose of this Clause 5.2, the NAV shall exclude any Exchange Amount and shall comprise the aggregate of all assets of the Issuer less all liabilities of the Issuer calculated in accordance with such generally accepted valuation standards and with reference to applicable accounting standards as from time to time agreed between the Investment Manager and the Issuer and in accordance with guidelines as laid down by the Directors from time to time.

 

5.3                                 The fees prescribed in Clauses 5.1 and 5.2 shall be payable in US dollars.

 

5.4                                 The Investment Manager, and any advisers appointed pursuant to Clause 3.1 may retain 50% of the aggregate amount of shall not be required to, account to the Issuer for (i) any commission rebates, transaction fees, directors’ fees, monitoring fees, management consulting fees and other fees they may receive from any company in which the Issuer invests, (ii) any break-up or other fees that they may receive in connection with any proposed investment of the Issuer that is not consummated net of expenses incurred with respect to such proposed investment, and (iii) fees and commissions that they may receive from a third party other than the Issuer in respect of deal-sourcing, asset management or other services (collectively the “Transaction Fees”), and 50% of the Transaction Fees in each calendar quarter will be credited against the management fee payable by the Issuer pursuant to clause 5.1 above to reduce such management fee.

 

5.5                                 All payments to be made under this Agreement shall be made free and clear of and without deduction for or on account of tax unless the party making payment is required by law to make such a payment subject to the deduction or withholding of tax. In such

 

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case, the sum payable by that party in respect of which such deduction or withholding is required to be made shall be increased to the extent necessary to ensure that, after the making of such deduction or withholding, the recipient receives and retains (free from any liability in respect of any such deduction or withholding) a net sum equal to the sum which it would have received and so retained had no such deduction or withholding been made or required to be made.

 

5.6                                 Any party required to make any payment under this Agreement shall also pay any goods and services tax, value added tax or any tax of a similar nature to each of the foregoing which replaces the same or is levied in addition to it, if any, lawfully imposed on such payment.

 

5.7                                 In the event of any dispute arising as to the amount of the Investment Manager’s fees hereunder, the Investment Manager shall co-operate in making available substantiation of any Transaction Fees and any disputes shall be referred to the auditors of the Issuer for settlement, who shall be entitled to make such further or other adjustments as may in the circumstances appear to them to be appropriate and whose decision shall be regarded as the decision of an expert and not of an arbitrator and shall be binding and final upon the parties hereto.

 

6                                         Expenses

 

6.1                                 Subject to Clause 6.3, the Investment Manager shall pay the expenses incurred by it in connection with the performance of its services hereunder (other than those specified in Clause 6.3) unless the Issuer otherwise agrees in any particular case.

 

6.2                                 All remuneration and other sums payable to any person firm or company to whom the whole or any part of the Investment Manager’s functions hereunder shall be delegated under Clause 8 shall be paid by the Investment Manager.

 

6.3                                 Subject to the foregoing and so far as permitted by the Laws the Issuer undertakes to pay or reimburse the Investment Manager in respect of all the following out-of-pocket expenses incurred by it, in the performance of its duties including (without limitation):-

 

6.3.1                       all reasonable expenses of every nature of or incidental to deposits of cash made by the Issuer;

 

6.3.2                        any stamp and other duties, taxes, governmental charges, commissions brokerage, transfer fees, registration fees and other charges payable in respect of the acquisition, holding or realisation of any Portfolio Investment and any foreign exchange transactions carried out in connection therewith;

 

6.3.3                        all taxes and corporate fees payable by the Issuer to any Government or other authority or to any agency of such Government or authority whether in the Cayman Islands or elsewhere;

 

6.3.4                        all fees and expenses incurred in relation to the incorporation and initial organisation of the Issuer, the initial issue of Securities, the production, printing and distribution of any prospectuses or any placing or explanatory memorandum or any other similar document and the advertising and promotion generally of Securities;

 

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6.3.5                        all expenses incurred or to be incurred in the alteration or amendment of the Articles and or the Placing Memorandum including the costs of any meetings convened to sanction the same;

 

6.3.6                        the Investment Manager’s legal and professional expenses incurred in relation to the negotiation, preparation and settling of this Agreement and the proper performance of its duties hereunder (including but not limited to transactional expenses in relation to Portfolio Investments including aborted deals) and all legal and professional expenses necessarily incurred or to be incurred in the preparation of any documents amending the provisions of this Agreement;

 

6.3.7                        all audit fees of the Issuer and legal expenses in connection with the Issuer ‘s corporate existence, corporate and financial structure and relations with its shareholders and third parties and all other professional and other charges in respect of services rendered to the Issuer at the request of the Issuer;

 

6.3.8                        interest on and charges and expenses of the Issuer of arranging, and arising out of, all borrowings made by the Issuer; and

 

6.3.9                        all other expenses but so that the liability of the Issuer is limited to expenses authorised to be paid out of the assets of the Issuer by the Laws.

 

7                                         Duty of Care and Conflicts of Interest

 

7.1                                 In undertaking the services herein and all its duties and obligations in connection to the provision of the services herein, the Investment Manager shall exercise investment management expertise and professionalism which is standard in the level of industry.  The Investment Manager shall at all times act bona fide, diligently, honestly, transparently and ethically in all its dealings with the Issuer or with any other persons in respect of its discharge and or fulfilment of its duties and obligations herein.

 

7.2                                 The Investment Manager shall at all times use best efforts to protect the commercial and general interest of the Issuer in respect of all investments implemented and managed by it. The Investment Manager shall represent the Issuer to the exclusion of all other parties or interests (including its own interest) in the Portfolio Investments. The Investment Manager shall use its best efforts manage any conflict of interests in a fair manner.

 

7.3                                 The Investment Manager and the Issuer hereby agree and undertake and agree to procure each of their respective directors and officers shall, for the duration of this Agreement:

 

7.3.1                        abide by the Investment Objectives of the Issuer as notified to them;

 

7.3.2                        not without the prior written approval of the Issuer hold any interest (as defined below) in any company which:

 

7.3.2.1                                                   is in direct competition with a Portfolio Investment;

 

7.3.2.2                                                   may impair or may reasonably be thought by the Issuer to impair the ability of such person to act at all times in the best interests of the Issuer; or

 

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7.3.2.3                                                   requires or might reasonably be thought by the Issuer to require such person to disclose any confidential information relating to the Issuer in order to properly discharge his duties to or to further his interest in such investments.

 

For the purposes herein an “interest” shall include:-

 

·                  the holding of any position as director, officer, employee, consultant, partner, principal or agent;

 

·                  the direct and indirect control or ownership (whether jointly or alone) of any shares (or any voting rights attached to them) or debentures of any company; or

 

·                  the direct or indirect provision of any financial assistance.

 

7.4                                 Such individual whose interests are in conflict with the Issuer pursuant to clause 7.3 shall abstain from voting or decision-making in the Investment Committee and/or the Investment Manager in respect of such matter or Portfolio Investment.

 

8                                         Exculpation and Indemnification of the Investment Manager

 

8.1                                 The Investment Manager shall not be liable to the Issuer or any investor in the Issuer or otherwise for any error of judgment (not amounting to fraud, bad faith, negligence or wilful default) or for any loss suffered by the Issuer or any such investors in connection with the subject matter of this Agreement or in the course of the discharge of the Investment Manager’s functions hereunder (including in particular, but without limiting the foregoing, any loss suffered or incurred by the Issuer or any investor in the Issuer following upon or arising out of any estimation, determination or calculation made by the Investment Manager or any delay in the making or implementation of any such estimation, determination or calculation or in effecting payments or instructing the Issuer ‘s bankers to effect payments or in countermanding payment instructions or any loss or other disadvantage suffered or incurred by the Issuer or any investor in the Issuer following upon or arising out of any foreign exchange transactions or any delay in effecting or failure to effect foreign exchange transactions or the bankruptcy or insolvency of or failure to pay by foreign exchange dealers or any bank or other institution or country or governmental department or authority in which the moneys of the Issuer are from time to time invested or deposited or generally in relation to the purchase, holding or sale of any investments by the Issuer or any failure on the part of the Investment Manager to make necessary registrations of prospectuses or other similar documents or any action or omission taken or suffered by the Investment Manager in good faith in reliance on or in accordance with the opinion or advice of legal counsel, the Auditors or other competent professional advisors) howsoever any such loss may have occurred unless such loss arises from fraud, bad faith, wilful default or negligence by the Investment Manager in the course of its duties or by persons designated by it of its obligations or functions.

 

12

 

8.2                                 The Issuer hereby undertakes to hold harmless and indemnify the Investment Manager against all actions proceedings claims costs demands and expenses which may be brought against suffered or incurred by the Investment Manager in the course of its duties (other than due to fraud, bad faith, wilful default or negligence on the part of the Investment Manager or persons designated by it) including all legal professional and other expenses incurred by the Investment Manager or persons designated by it in the performance of its obligations or functions and including indemnity obligations owed by the Investment Manager to persons designated by it (except such as shall arise from fraud, bad faith, wilful default or negligence in the performance or non-performance of such obligations or functions) and in particular (but without limitation) this protection and indemnity shall extend to any such items aforesaid as shall arise as a result of any such loss suffered or incurred by the Issuer or any investor in the Issuer as is mentioned specifically in Clause 8.1 or any loss delay misdelivery or error in transmission of any cable, electronie or telegraphic communication or as a result of acting upon any forged document or signature but not tax on the overall income or profits of the Investment Manager.

 

8.3                                 Notwithstanding any other provision of this Agreement, the Investment Manager shall not be liable to the Issuer or any investor in the Issuer or otherwise for any taxation assessed upon or payable by the Issuer wheresoever the same may be assessed or imposed and whether directly or indirectly except for such taxation as shall be attributable to fraud, bad faith, wilful default or negligence in the performance or non-performance by the Investment Manager or persons designated by it of its obligations or functions.  The Issuer shall indemnify and keep indemnified the Investment Manager from and against all taxes not attributable to fraud, bad faith, wilful default or negligence as aforesaid (wheresoever and by whomsoever imposed) on profits or gains of the Issuer which may be assessed upon or become payable by the Investment Manager and against all costs claims demands actions and proceedings in connection therewith.

 

8.4                                 For the avoidance of doubt it is hereby agreed and declared that references to the Investment Manager in this Clause shall be deemed to include references to the officers, servants and directors of the Investment Manager.

 

8.5                                 Any indemnity expressly given to the Investment Manager in this Agreement is in addition to and without prejudice to any indemnity provided by the Laws and (unless Clause 10.3.2 applies) shall survive termination of this Agreement.

 

8.6                                 The Investment Manager shall send to the Issuer as soon as possible all claims, demands, summonses, writs and related documents which it receives from third parties and in respect of which it may be indemnified in this Agreement and shall give such assistance as the Issuer may reasonably require in defending or resisting the same and the Investment Manager shall not admit liability or offer any settlement without the written consent of the Issuer which may, if it so desires, take over the defence of any such actions or prosecute any such claim in the name of the Investment Manager.

 

8.7                                The Investment Manager shall be entitled to reply on and shall not incur any liability in respect of any act or omission in reliance upon Proper Instructions or upon any document reasonably believed in good faith to be authentic and not fraudulent but may require documents to be authenticated to its reasonable satisfaction.

 

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8A                                Exculpation and Indemnification of the Issuer

 

8A.1                       The Investment Manager hereby undertakes to hold harmless and indemnify the Issuer against all actions proceedings claims costs demands and expenses which may be brought against suffered or incurred by the Issuer in the course of its duties other than by reason of any fraud, bad faith, wilful default or negligence on the part of the Issuer or its officers or directors.

 

8A.2                       Notwithstanding any other provision of this Agreement, the Issuer shall not be liable to the Investment Manager for any taxation assessed upon or payable by the Investment Manager wheresoever the same may be assessed or imposed and whether directly or indirectly except for such taxation as shall be attributable to fraud, bad faith, wilful default or negligence by the Issuer or persons designated by it.

 

9                                         Services of the Investment Manager to be Exclusive

 

The services of the Investment Manager to the Issuer under this Agreement shall be exclusive only to the extent that the Investment Manager shall not render any similar services to any other entities as determined by the Directors to be in competition with the Issuer without the express consent of the Issuer, save for circumstances where the Investment Manager determines that a co-investment arrangement is appropriate pursuant to Clauses 3.1.12 and 3.1.13.

 

9A                                IPO of the Issuer

 

9A.1                       Prior to the IPO of the Issuer, both parties shall use their best endeavours to negotiate on and, if necessary, agree and amend any terms of this Agreement for compliance with the listing rules of the Stock Exchange.

 

9A.2                       This Agreement shall continue upon and after the IPO of the Issuer unless terminated pursuant to Clause 10 of this Agreement.  Upon the IPO of the Issuer, provisions of this Agreement shall be subject to the listing rules of the Stock Exchange, and to the extent that these are not consistent, the listing rules of the Stock Exchange shall prevail.

 

9A.3                       After the expiry of 3 years from the IPO, the Issuer or the Investment Manager shall be entitled to undertake a review of this Agreement and either party may terminate this Agreement without cause on six months notice in writing.

 

10                                  Termination

 

10.1                           Unless there is an IPO of the Issuer by the Maturity Day, this Agreement shall terminate as soon as all Convertible Bonds issued and outstanding have been redeemed or converted and exchanged or the liquidation procedure of the Issuer has commenced, whichever comes later.

 

10.2                           The Investment Manager shall be entitled to resign its appointment under this Agreement by notice in writing to the Issuer:

 

10.2.1                  at any time if the Issuer shall go into liquidation (except a voluntary liquidation for the purposes of reconstruction or amalgamation upon terms previously approved in writing by the Investment Manager) or be unable to pay its debts or commit an act of bankruptcy under the Laws, or if a receiver is appointed of any of the assets of Issuer or if some event having an equivalent effect occurs; or

 

14

 

10.2.2                  at any time if the Issuer shall commit any material breach of its obligations under this Agreement and, if such breach shall be capable of remedy, shall fail within 30 days of receipt of notice served by the Investment Manager requiring it to remedy such breach.

 

10.3                           The Issuer may without prior notice terminate the appointment of the Investment Manager at any time by giving notice in writing to the Investment Manager in any of the following events:-:

 

10.3.1                  at any time if the Investment Manager goes into liquidation or is unable to pay its debts or commits an act of bankruptcy under the Laws or if a receiver is appointed of any of the assets of the Investment Manager or if the Investment Manager shall cease to be authorized or permitted to act as such under the Laws or otherwise or if some event having an equivalent effect occurs;

 

10.3.2                  at any time if the Investment Manager shall commit any material breach of its obligations, covenants, terms and conditions under this Agreement unless such breach is cured within 30 days of written receipt of notice of such material breach served by the Issuer on the Investment Manager and requiring it to remedy such breach; or

 

10.3.3                  if the Investment Manager is convicted of fraud or other offences involving dishonesty.

 

10.4                           The appointment of the Investment Manager shall automatically terminate forthwith if the Investment Manager shall become or be deemed to become resident for tax purposes or carry on business in any jurisdiction (other than in any place or places as may from time to time be approved by the Directors for such purpose) in circumstances which cause the Issuer to become liable to pay any taxes which it would not otherwise be liable to pay.

 

10.5                           On termination of the appointment of the Investment Manager under the provisions of this Clause 10, the Investment Manager shall be entitled to receive all fees and other moneys accrued due up to the date of such termination (including but not limited to the management fee pursuant to Clause 5.1 and performance fee pursuant to Clause 5.2.2 of this Agreement) and costs necessarily incurred in giving effect to this clause and any other amounts that shall be agreed to by the Issuer and the Investment Manager.  Upon receipt of all amounts due to the Investment Manager under this Agreement, the Investment Manager shall deliver to the Issuer, or as it shall direct, all books of account, records, registers, correspondence, documents and assets relating to the affairs of or belonging to the Issuer in the possession of or under the control of the Investment Manager (which shall remain the exclusive property of the Issuer, as the case may be) and take all necessary steps to vest in the Issuer or any new Investment Manager any assets previously held in the name of or to the order of the Issuer and shall not, unless as of such date there are amounts owed by the Issuer to the Investment Manager, be entitled to any lien in respect of any of the foregoing.  Termination is without prejudice to transactions already initiated on the basis of advice under this Agreement which will be dealt with in accordance with the terms of the contract governing the transaction with the relevant counterparty.

 

15

 

	
11
    	
Confidentiality   and Reputation
    
	
 
    	
 
    
	
11.1
    	
Neither the   Issuer nor the Investment   Manager shall (except under compulsion of law), either before or after the   termination of this Agreement, disclose to any Person not authorized by the   other party to receive the same (except each of their respective Affiliates,   advisers, auditors or others as required by law, regulation or rule of   any governing regulatory or taxation body or authority) any confidential   information relating to such party or to the affairs of such party of which   the party disclosing the same shall have become possessed during the period   of this Agreement. Each party shall use all reasonable endeavors to prevent   any such disclosure as aforesaid.
    
	
 
    	
 
    
	
11.2
    	
Neither the   Issuer nor the Investment   Manager shall knowingly do or suffer any act or matter or thing which would   or might reasonably be expected to prejudice materially or bring into   disrepute the business or reputation of the other party.
    

 

	
12
    	
Notices
    
	
 
    	
 
    
	
12.1
    	
Any notice   given under this Agreement shall be in writing and shall be served by hand at   or by being sent by telex, fax or prepaid post to the principal office stated   in this Agreement or last notified to the sender by the addressee. Any such   notice shall be deemed duly served at the time of delivery (if delivered by   hand), at the time of receipt of confirmed answerback (if served by telex),   upon receipt (if sent by fax) or five days after the date of posting (if   served by prepaid post). Evidence that the notice was properly addressed,   stamped and put into the post shall be conclusive evidence of posting.
    
	
 
    	
 
    
	
12.2
    	
The Investment Manager shall not be under   any liability on account of anything done or suffered by the Investment   Manager in good faith in accordance with or in pursuance of any request or   advice of the Issuer. Whenever   pursuant to any provision of this Agreement any notice, instruction or other   communication is to be given by or on behalf of the Issuer to the Investment   Manager, the Investment Manager may accept as sufficient evidence thereof:
    
	
 
    	
 
    
	
 
    	
12.2.1                  a document signed or purporting to be signed on behalf of   the Issuer by such person or persons whose signature   the Investment Manager is for the time being authorised by the Issuer to accept; or
    
	
 
    	
 
    
	
 
    	
12.2.2                  a message by tested telex, facsimile or cable transmitted by the Issuer by such person or persons whose messages the Investment Manager is   for the time being authorised by the Issuer to accept;
    
	
 
    	
 
    
	
 
    	
and the Investment Manager shall not be   obliged to accept any document or message signed or transmitted or purporting   to be signed or transmitted by any other person.
    
	
 
    	
 
    
	
13
    	
Miscellaneous   Provisions
    
	
 
    	
 
    
	
13.1
    	
No failure   on the part of any party to exercise, and no delay on its part in exercising,   any right or remedy under this Agreement will operate as a waiver thereof,   nor will any single or partial exercise of any right or remedy preclude any   other or further exercise thereof or the exercise of any other right or   remedy. The rights and remedies provided in this Agreement are cumulative and   not exclusive of any rights or remedies provided by law.
    
	
 
    	
 
    
	
13.2
    	
The   illegality, invalidity or unenforceability of any provision of this Agreement   under the law of any jurisdiction shall not affect its legality, validity or   enforceability under the law of any other jurisdiction nor the legality,   validity or enforceability of any other provision.
    

 

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13.3
    	
Any   provision of this Agreement may be amended only if the parties so agree in   writing and signed by both parties.
    
	
 
    	
 
    
	
13.4
    	
This   Agreement may be executed through the use of separate signature   pages and in any number of counterparts. Each of such counterparts   shall, for all purposes, constitute one agreement binding on all the parties,   notwithstanding that all the parties are not signatories to the same   counterpart.
    
	
 
    	
 
    
	
14
    	
Governing   Law
    
	
 
    	
 
    
	
14.1
    	
This   Agreement shall be governed by and construed in accordance with the laws of   the Cayman Islands.
    
	
 
    	
 
    
	
14.2
    	
The Issuer and the   Investment Manager hereby irrevocably submit to the non-exclusive   jurisdiction of the courts of the Cayman Islands for the settlement of any   dispute or difference arising between the parties hereto. Provided always   that any party shall be at liberty to take proceedings against the other   party in whatever other jurisdiction that other party may from time to time   be resident.
    

 

17

 

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

 

	
SIGNED by
    	
)
    	
 
    
	
for and on behalf of
    	
)
    	
 
    
	
2020 GlobalGrowth Equities
    	
)
    	
/s/ Louis   Koo
    
	
Limited
    	
)
    	
 
    
	
in the presence of: 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNED by
    	
)
    	
 
    
	
for and on behalf of
    	
)
    	
 
    
	
2020 Equity Partners
    	
)
    	
/s/ Louis   Koo
    
	
Limited
    	
)
    	
 
    
	
in the presence of: 
    	
 
    	
 
    

 

18

 

Appendix A

 

Investment Objective

 

The Investment Objective of the Issuer is to generate superior, long-term capital appreciation typically through privately negotiated equity and equity-related investments in companies which can be transformed from leading domestic enterprises into world class leaders. Target companies may be located within Greater China and other emerging markets, or may be companies located in other countries which will benefit from establishing operations in Greater China or other emerging markets. Investments will be effected using a broad variety of investment types and transaction structures, including but not limited to buyout investments, expansion stage, pre-IPO, restructurings, recapitalizations, and purchase of debt or publicly traded securities made in connection with or with a view to a contemplated privately negotiated transaction (including purchases of securities subsequent to a privately negotiated transaction in the same portfolio company).

 

Policies and Guidelines

 

No variation of the above investment objective shall be effective unless upon (i) until the IPO Date, the approval by the affirmative vote of the holders holding at less than 80% of the aggregate principal amount of all Convertible Bonds issued and outstanding; or (ii) thereafter, such approval as may be required in accordance with rules of the Stock Exchange.

 

All investment and divestment decisions of the Investment Manager are subject to the prior approval of the Investment Committee.

 

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Appendix B

 

Shareholding structure of the Investment Manager:

 

	
2020 International Capital Group Limited
    	
 
    	
60
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
George Lu
    	
 
    	
10
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
Louis Koo
    	
 
    	
10
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
Adrian Chan
    	
 
    	
10
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
Bill Sharp
    	
 
    	
3.4
    	
%
    
	
 
    	
 
    	
 
    	
 
    
	
2020 Advisors LLC
    	
 
    	
6.6
    	
%
    

 

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Appendix C

 

Letters of Appointment regarding Louis Koo and George Lu

 

THIS LETTER OF APPOINTMENT is dated                                                                 and is made

 

BETWEEN:-

 

(1)                                  2020 Equity Partners Limited of 4th Floor, Scotia Centre, P.O. Box 268, George Town, Grand Cayman KY1-1104, Cayman Islands (the “Employer”); and

 

(2)                                  Louis Koo (the “Employee”) of

 

RECITAL:-

 

1.                                       The Employer is the investment manager of 2020 GlobalGrowth Equities Limited (the “Fund”). The investment objectives of the Fund include generating superior, long-term capital appreciation typically through privately negotiated equity and equity related investments in companies which can be transformed from leading domestic enterprises into world class leaders.

 

2.                                       The Fund will issue convertible bonds (the “Bond”) to the subscriber(s) in accordance with an agreement dated 14 December 2007 (the “Convertible Bonds Agreement”) and subject to the terms and conditions (“Conditions”) of the certificate issued in respect of the Bonds.

 

3.                                       Under the Convertible Bonds Agreement, it is the parties’ intention for the Fund to be listed in the Stock Exchange (as defined below).

 

4.                                       It is set out in the Investment Management Agreement (as defined hereinafter) that the Employee shall remain in the employment of the Employer throughout the term of the Investment Management Agreement, or in the event of IPO of the Fund, such employment to continue for at least 3 years after the listing of the Fund on the Stock Exchange (as defined hereinafter).  The term of employment under this Agreement is specifically set out in Clause 2.2 hereof.

 

5.                                       The Employee is a person with the experience, skill and knowledge in managing investment for fund companies.

 

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NOW IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                      Definition

 

In this Letter of Appointment:-

 

“Associate” of a body corporate means a subsidiary or holding company of the body corporate;

 

“Convertible Bonds” means such convertible bonds subject to the Conditions issued pursuant to the Convertible Bond Agreement or to be issued by the Fund pursuant to agreement(s) to be entered into by the parties thereto on or prior to 30 June 2008;

 

“Investment Management Agreement” means the investment management agreement to be entered into between the Fund and the Employer pursuant to which the Employer shall manage all investment activities of the Fund subject to the terms and conditions therein contained;

 

“Stock Exchange” means the London Stock Exchange or, as the context may require, its main board for the listing of securities, or any other recognised stock exchange;

 

2.                                      Appointment and Duties

 

2.1                                 The Employer hereby agrees to appoint the Employee in accordance with the terms of this Letter of Appointment as the Managing Director of the Employer. Both the Employer and the Employee agree, acknowledge and take cognizance of the terms of the Investment Management Agreement.

 

2.2                                Subject to Clause 11, the Employee’s employment with the Employer shall commence on 7 February 2008 (or such other date as agreed) and shall continue until the earlier of (a) the expiration or termination of the Investment Management Agreement in accordance with the terms and the conditions therein contained; or (b) if there is IPO, 3 years after the listing of the Fund on the Stock Exchange; or (c) upon all Convertible Bonds issued and outstanding have been redeemed or exchanged; or (d) the liquidation procedure of the Fund has commenced (the “Fixed Term”). The employment of the employee may be renewed or extended after the Fixed Term for such period and at such terms as agreed between the Employer and the Employee.

 

2.3                                In the event that the Employee is not lawfully employable, nothing in this Letter of Appointment will be construed as requiring the Employee to commence employment or impose any obligation on the Employer to employ the Employee until such time as the Employee has obtained all the necessary clearances/licenses in relation to the Employee’s employment herein.

 

2.4                                The Employee will be responsible for the management of the Fund together with the Fund’s assets, on behalf of the Employer, being the investment manager of the Fund, in accordance with the relevant investment management agreement(s) 

 

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in force from time to time, and/or such other duties as designated by the Employer from time to time.

 

2.5                                For the avoidance of doubt, the Employee shall not be held personally liable for any loss sustained incurred or suffered by the Fund in the proper performance of the Employee’s duties hereunder (whether during the course of employment or after the termination thereof) except for any loss or damage caused as a result of fraud, wilful default, dishonesty, gross negligence or serious dereliction of duty on the part of the Employee.

 

2.6                                 The Employee shall:

 

(a)                                  faithfully and loyally serve the Employer to the best of his ability and use his best efforts to promote its interests;

 

(b)                                 truly and faithfully account for and deliver to the Employer all money, securities and things of value belong to the Employer which the Employee may from time to time receive for, for, from or on account of the Employer;

 

(c)                                  devote such time and attention to his duties as he reasonably considers necessary;

 

(d)                                 comply with the company policy or other rules and regulations (including office procedural manuals and confidentiality policy) in force from time to time (“Company Policy”);

 

(e)                                  not engage or be concerned or interested directly or indirectly in any other trade, business or occupation whatsoever which is in competition with the business of the Fund (save as the holder of investment of any securities which do not exceed 5% in nominal value of the issued share capital or stock of any class of any company quoted on a recognised stock exchange); and

 

(d)                                 reports to the board of the Employer in the discharge of his duties.

 

2.7                                The Employee shall disclose to the Employer in writing no later than the execution of this Letter of Appointment whether he or his immediate family members (i.e. spouse, parents and children) are engaged or interested in any capacity (whether as a director, shareholder, principal, partner, consultant, employee, independent contractor or otherwise) in any business or activity which are substantially similar to or compete with the business activities of the Fund and/or the Employer (“Business in Conflict”); and to give details of the same, if any. During his employment, the Employee shall disclose to the Employer in writing and seek prior written approval before he or his immediate family members engage or be interested in any capacity in any Business in Conflict.

 

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3.                                      Commitment of Employee

 

3.1                                The Employee is expected to carry out his duties during such times as are reasonably necessary to enable the Employee to complete the tasks or duties herein specified.

 

4.                                      Limitation of Authority

 

4.1                                Unless the Employer consents otherwise, the Employee has no authority to contract on behalf of the Employer or its Associates or to hold himself out as having any such authority. Any failure to observe this term will lead to immediate dismissal without compensation. Nothing in this Clause shall apply to any trading activities conducted by the Employee in respect of the Fund in accordance with the Fund’s investment management agreement in force from time to time or directions as may be issued by the Employer or its Associates from time to time.

 

5.                                      Remuneration

 

5.1                                The Employee will be remunerated with an annual basic salary of HK$10,000 (or such other amount as agreed between the Employer and the Employee) payable in arrears at the end of each month during the employment with the Employer.

 

6.                                     Annual Leave

 

6.1                                The Employee is entitled to 10 working days paid leave per leave year (1 January to 31 December). Annual leave shall be taken in accordance with the Company Policy.

 

7.                                     Other benefits

 

7.1                                The Employee will enjoy benefits that are awardable to full-time employees holding a similar position as varied by the Employer or its Associates from time to time. These benefits are awardable in accordance with the Company Policy.

 

8.                                     Expenses

 

8.1                                The Employer shall in accordance with Company Policy reimburse the Employee with all expenses reasonably and properly incurred by him in the reasonable and proper performance of his duties subject to production by the Employee of proper receipts in respect of the same and also to the Employee obtaining the approval(s) required by Company Policy from time to time.

 

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9.                                      Non-disclosure of Confidential Information

 

9.1                                The Employee shall not use, divulge or communicate to any person (other than with proper authority to do so) any of the Confidential Information of the Employer, either during or after termination of his employment with the Employer.  The Employee shall use his best endeavours to prevent the unauthorized disclosure or publication of such information and agree that he shall not copy the Confidential Information of the Employer belonging to the Employer nor remove the same from the Employer’s premises without the express written consent from the Employer.

 

9.2                                The provisions of Clause 9.1 shall apply mutatis mutandis in relation to the each of the Associates of the Employer and/or the Fund, to Confidential Information which the Employee may have received or obtained while in the service of the Employer and the Employee shall further upon the request of any such company enter into a separate agreement or undertaking with such company to the like effect.

 

9.3                                Confidential Information does not include any information which is known to the public or available in the public domain but shall include, without limitation, any and all information concerning (i) processes, formulas, trade secrets, innovations, inventions, improvements, research or development specifications, data and knowhow; (ii) marketing plans, business plans, strategies, forecasts, unpublished financial information, budgets, product plans and pricing; (iii) personnel information, including organizational structure, salary, identities and qualifications of employees; (iv) customer and suppler information, including identities, product sales and purchase history or forecasts and agreements; (v) any information parted to the Employee on the express basis that it is confidential; (vi) any other information which is not known to the public.

 

9.4                                 This Clause 9 shall survive termination of the employment of the  Employee.

 

10.                               Variation of Terms and Conditions

 

10.1                           This Letter of Appointment may be amended by the Employer and the Employee as they agreed in writing.

 

11.                              Termination

 

11.1                          Without prejudice to Clause 2, the Employer shall have the right to terminate the Employee’s employment forthwith without notice if the Employee:-

 

11.1.1                                is convicted of any criminal offence (other than offences under any road traffic legislation) and/or sentenced to any term of immediate or suspended imprisonment save for those offences which, in the reasonable opinion of the Employer, do not bring any disrepute or discredit to the Employer;

 

11.1.2                                commits any act of criminal breach of trust or dishonesty;

 

11.1.3                                is guilty of any serious misconduct in the performance of his duties;

 

25

 

11.1.4                                the Employee is in breach of any provisions of law, regulatory rules, codes or guidelines applicable to the employment; or

 

11.1.5                                ceases to have the necessary working visa and/or other licences/qualifications as may be required for him to carry out his duties under this Letter of Appointment.

 

11.2                          For the avoidance of doubt, unless the Employee’s employment is terminated by the Employer pursuant to Clause 11.1, the Employee shall not be held liable for any loss, damage, liability, charge, claim, cost or expense sustained, incurred or suffered by the Employer or its Associates, and the Fund arising out of the termination of the Employee’s employment herein.

 

12.                              Continuing Effect

 

12.1                          The expiration or termination of this Letter of Appointment howsoever arising shall not operate to affect this Clause or such other of the provisions hereof as are expressed to operate or have effect thereafter and shall be without prejudice to any other accrued rights or remedies of the Parties.

 

13.                              Agreement Prevails

 

13.1                          This Letter of Appointment supersedes all previous agreements and arrangements (if any) relating to the appointment of the Employee by the Employer and all such agreements and arrangements are hereby terminated by mutual consent.

 

13.2                          The Employee agree to execute and deliver all such further documents and instruments (including instruments or conveyance and waivers of moral rights) and do all acts and things as the Employer may, at any time, reasonabely require to effectively carry out or better evidence or perfect the full intent and meaning of this Letter of Appointment.

 

14.                              Notices

 

14.1                          Each communication under this Letter of Appointment shall be made in writing and may be made by letter or fax addressed to, in the case of the Employer, its registered office for the time being, and in the case of the Employee, his last known address.

 

14.2                          Every communication sent to the recipient Party shall be deemed to be received by the recipient Party (if sent by fax) on the next working day or (in any other case) when left at the address required by Clause 14.1 or 3 days after having been sent to the recipient Party by ordinary post.

 

26

 

15.                              Partial Invalidity

 

15.1                          If any one or more of the provisions contained in this Letter of Appointment shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired and this Letter of Appointment shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.

 

16.                              Remedies and Waivers

 

16.1                          No failure on the part of any Party hereto to exercise and no delay in exercising any right under this Letter of Appointment shall operate as a waiver thereof, nor will any single or partial exercise of any right under this Letter of Appointment preclude any other or further exercise thereof or of the exercise of any other right.  The rights and remedies provided in this Letter of Appointment are cumulative and not exclusive of any rights or remedies provided by law.

 

16.2                          Any waiver or consent given by any Party under this Letter of Appointment shall be in writing and may be given subject to such conditions as such Party may impose.  Any waiver or consent shall be effective only in the instance and for the purpose for which it is given.

 

17.                              Personal Data Policy

 

17.1                          The personal data the Employee has supplied for the purpose of employment is required for obtaining reference checks, for maintaining employee records, for assessing employee compensation and benefits, for training and development, for appraisal and for emergency purposes and such personal data may be forwarded to the Employer’s insurers, bankers, and medical practitioners providing medical services to employees, if applicable, and to any relevant service provider or any government authority (at the authority’s request).

 

18.                              Warranties

 

18.1                          The Employee hereby represents and warrants that he is free from any encumbrances or restrictions imposed by his current or former employer or any third party which may in any way prohibit him from performing services for the Employer under this Letter of Appointment.

 

18.2                          The Employee warrants that he has the relevant experience, skill and knowledge in managing investments for fund companies.

 

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19.                              Governing Law

 

19.1                          It is agreed that the terms and conditions of employment (including this Letter of Appointment) shall be governed by and construed in accordance with the laws of Hong Kong.

 

19.2                          The Parties further agree to submit irrevocably to the non-exclusive jurisdiction of the Courts of Hong Kong for the purposes of resolving any claim or proceedings relating to such terms and conditions of employment (including this Letter of Appointment).

 

20.                              Independent Legal Advice

 

20.1                          The Employee agrees that he has been advised by the Employer that he should obtain independent legal advice in connection with the terms of this Letter of Appointment. The Employee confirms that he has either obtained such advice or chosen not to do so and that he fully understands the terms and conditions set out herein and agree to be bound by them.

 

IN WITNESS whereof the Parties have executed this Letter of Appointment on the date first aforewritten.

 

 

	
SIGNED by
    	
)
    
	
duly authorised   for and on behalf of
    	
)
    
	
2020 Equity   Partners Limited
    	
)
    
	
in the presence   of -
    	
)
    
	
 
    	
)
    
	
 
    	
 
    
	
 
    	
 
    
	
SIGNED by
    	
)
    
	
Louis Koo
    	
)
    
	
in the presence   of :
    	
)
    
	
 
    	
)
    

 

28

 

THIS LETTER OF APPOINTMENT is dated                                                       and is made

 

BETWEEN:-

 

(2)                                  2020 Equity Partners Limited of 4th Floor, Scotia Centre, P.O. Box 268, George Town, Grand Cayman KY1-1104, Cayman Islands (the “Employer”); and

 

(2)                                  George Lu (the “Employee”) of

 

RECITAL:-

 

1.                                      The Employer is the investment manager of 2020 GlobalGrowth Equities Limited (the “Fund”). The investment objectives of the Fund include generating superior, long-term capital appreciation typically through privately negotiated equity and equity related investments in companies which can be transformed from leading domestic enterprises into world class leaders.

 

2.                                      The Fund will issue convertible bonds (the “Bond”) to the subscriber(s) in accordance with an agreement dated 14 December 2007 (the “Convertible Bonds Agreement”) and subject to the terms and conditions (“Conditions”) of the certificate issued in respect of the Bonds.

 

3.                                      Under the Convertible Bonds Agreement, it is the parties’ intention for the Fund to be listed in the Stock Exchange (as defined below).

 

4.                                      It is set out in the Investment Management Agreement (as defined hereinafter) that the Employee shall remain in the employment of the Employer throughout the term of the Investment Management Agreement, or in the event of IPO of the Fund, such employment to continue for at least 3 years after the listing of the  Fund on the Stock Exchange (as defined hereinafter).  The term of employment under this Agreement is specifically set out in Clause 2.2 hereof.

 

5.                                      The Employee is a person with the experience, skill and knowledge in managing investment for fund companies.

 

NOW IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                      Definition

 

In this Letter of Appointment:-

 

“Associate” of a body corporate means a subsidiary or holding company of the body corporate;

 

29

 

“Convertible Bonds” means such convertible bonds subject to the Conditions  issued pursuant to the Convertible Bond Agreement or to be issued by the Fund pursuant to agreement(s) to be entered into by the parties thereto on or prior to 30 June 2008;

 

“Investment Management Agreement” means the investment management agreement to be entered into between the Fund and the Employer pursuant to which the Employer shall manage all investment activities of the Fund subject to the terms and conditions therein contained;

 

“Stock Exchange” means the London Stock Exchange or, as the context may require, its main board for the listing of securities, or any other recognised stock exchange;

 

2.                                      Appointment and Duties

 

2.1                                 The Employer hereby agrees to appoint the Employee in accordance with the terms of this Letter of Appointment as the Managing Director of the Employer. Both the Employer and the Employee agree, acknowledge and take cognizance of the terms of the Investment Management Agreement.

 

2.2                                 Subject to Clause 11, the Employee’s employment with the Employer shall commence on 7 February 2008 (or such other date as agreed) and shall continue until the earlier of (a) the expiration or termination of the Investment Management Agreement in accordance with the terms and the conditions therein contained; or (b) if there is IPO, 3 years after the listing of the Fund on the Stock Exchange; or (c) upon all Convertible Bonds issued and outstanding have been redeemed or exchanged; or (d) the liquidation procedure of the Fund has commenced (the “Fixed Term”). The employment of the employee may be renewed or extended after the Fixed Term for such period and at such terms as agreed between the Employer and the Employee.

 

2.3                                 In the event that the Employee is not lawfully employable, nothing in this Letter of Appointment will be construed as requiring the Employee to commence employment or impose any obligation on the Employer to employ the Employee until such time as the Employee has obtained all the necessary clearances/licenses in relation to the Employee’s employment herein.

 

2.4                                The Employee will be responsible for the management of the Fund together with the Fund’s assets, on behalf of the Employer, being the investment manager of the Fund, in accordance with the relevant investment management agreement(s) in force from time to time, and/or such other duties as designated by the Employer from time to time.

 

2.5                                For the avoidance of doubt, the Employee shall not be held personally liable for any loss sustained incurred or suffered by the Fund in the proper performance of the Employee’s duties hereunder (whether during the course of employment or after the termination thereof) except for any loss or damage caused as a result of fraud, wilful default, dishonesty, gross negligence or serious dereliction of duty on the part of the Employee.

 

30

 

2.6                                 The Employee shall:

 

(a)                                  faithfully and loyally serve the Employer to the best of his ability and use his best efforts to promote its interests;

 

(b)                                 truly and faithfully account for and deliver to the Employer all money, securities and things of value belong to the Employer which the Employee may from time to time receive for, for, from or on account of the Employer;

 

(c)                                  devote such time and attention to his duties as he reasonably considers necessary;

 

(d)                                 comply with the company policy or other rules and regulations (including office procedural manuals and confidentiality policy) in force from time to time (“Company Policy”);

 

(e)                                  not engage or be concerned or interested directly or indirectly in any other trade, business or occupation whatsoever which is in competition with the business of the Fund (save as the holder of investment of any securities which do not exceed 5% in nominal value of the issued share capital or stock of any class of any company quoted on a recognised stock exchange); and

 

(d)                                 reports to the board of the Employer in the discharge of his duties.

 

2.7                                The Employee shall disclose to the Employer in writing no later than the execution of this Letter of Appointment whether he or his immediate family members (i.e. spouse, parents and children) are engaged or interested in any capacity (whether as a director, shareholder, principal, partner, consultant, employee, independent contractor or otherwise) in any business or activity which are substantially similar to or compete with the business activities of the Fund and/or the Employer (“Business in Conflict”); and to give details of the same, if any. During his employment, the Employee shall disclose to the Employer in writing and seek prior written approval before he or his immediate family members engage or be interested in any capacity in any Business in Conflict.

 

3.                                      Commitment of Employee

 

3.1                                 The Employee is expected to carry out his duties during such times as are reasonably necessary to enable the Employee to complete the tasks or duties herein specified.

 

4.                                      Limitation of Authority

 

4.1                                 Unless the Employer consents otherwise, the Employee has no authority to contract on behalf of the Employer or its Associates or to hold himself out as having any such authority. Any failure to observe this term will lead to immediate dismissal without compensation. Nothing in this Clause shall apply to any trading activities conducted by the Employee in respect of the Fund in accordance with

 

31

 

the Fund’s investment management agreement in force from time to time or directions as may be issued by the Employer or its Associates from time to time.

 

5.                                      Remuneration

 

5.1                                The Employee will be remunerated with an annual basic salary of HK$10,000 (or such other amount as agreed between the Employer and the Employee) payable in arrears at the end of each month during the employment with the Employer.

 

6.                                      Annual Leave

 

6.1                                The Employee is entitled to 10 working days paid leave per leave year (1 January to 31 December). Annual leave shall be taken in accordance with the Company Policy.

 

7.                                      Other benefits

 

7.1                                The Employee will enjoy benefits that are awardable to full-time employees holding a similar position as varied by the Employer or its Associates from time to time. These benefits are awardable in accordance with the Company Policy.

 

8.                                      Expenses

 

8.1                                 The Employer shall in accordance with Company Policy reimburse the Employee with all expenses reasonably and properly incurred by him in the reasonable and proper performance of his duties subject to production by the Employee of proper receipts in respect of the same and also to the Employee obtaining the approval(s) required by Company Policy from time to time.

 

9.                                      Non-disclosure of Confidential Information

 

9.1                                The Employee shall not use, divulge or communicate to any person (other than with proper authority to do so) any of the Confidential Information of the Employer, either during or after termination of his employment with the Employer.  The Employee shall use his best endeavours to prevent the unauthorized disclosure or publication of such information and agree that he shall not copy the Confidential Information of the Employer belonging to the Employer nor remove the same from the Employer’s premises without the express written consent from the Employer.

 

32

 

9.2                                The provisions of Clause 9.1 shall apply mutatis mutandis in relation to the each of the Associates of the Employer and/or the Fund, to Confidential Information which the Employee may have received or obtained while in the service of the Employer and the Employee shall further upon the request of any such company enter into a separate agreement or undertaking with such company to the like effect.

 

9.3                                 Confidential Information does not include any information which is known to the public or available in the public domain but shall include, without limitation, any and all information concerning (i) processes, formulas, trade secrets, innovations, inventions, improvements, research or development specifications, data and knowhow; (ii) marketing plans, business plans, strategies, forecasts, unpublished financial information, budgets, product plans and pricing; (iii) personnel information, including organizational structure, salary, identities and qualifications of employees; (iv) customer and suppler information, including identities, product sales and purchase history or forecasts and agreements; (v) any information parted to the Employee on the express basis that it is confidential; (vi) any other information which is not known to the public.

 

9.4                                 This Clause 9 shall survive termination of the employment of the Employee.

 

10.                               Variation of Terms and Conditions

 

10.1                           This Letter of Appointment may be amended by the Employer and the Employee as they agreed in writing.

 

11.                              Termination

 

11.1                           Without prejudice to Clause 2, the Employer shall have the right to terminate the Employee’s employment forthwith without notice if the Employee:-

 

11.1.1                                   is convicted of any criminal offence (other than offences under any road traffic legislation) and/or sentenced to any term of immediate or suspended imprisonment save for those offences which, in the reasonable opinion of the Employer, do not bring any disrepute or discredit to the Employer;

 

11.1.2                                   commits any act of criminal breach of trust or dishonesty;

 

11.1.3                                   is guilty of any serious misconduct in the performance of his duties;

 

11.1.4                                   the Employee is in breach of any provisions of law, regulatory rules, codes or guidelines applicable to the employment; or

 

11.1.5                                   ceases to have the necessary working visa and/or other licences/qualifications as may be required for him to carry out his duties under this Letter of Appointment.

 

33

 

11.2                           For the avoidance of doubt, unless the Employee’s employment is terminated by the Employer pursuant to Clause 11.1, the Employee shall not be held liable for any loss, damage, liability, charge, claim, cost or expense sustained, incurred or suffered by the Employer or its Associates, and the Fund arising out of the termination of the Employee’s employment herein.

 

12.                               Continuing Effect

 

12.1                           The expiration or termination of this Letter of Appointment howsoever arising shall not operate to affect this Clause or such other of the provisions hereof as are expressed to operate or have effect thereafter and shall be without prejudice to any other accrued rights or remedies of the Parties.

 

13.                               Agreement Prevails

 

13.1                           This Letter of Appointment supersedes all previous agreements and arrangements (if any) relating to the appointment of the Employee by the Employer and all such agreements and arrangements are hereby terminated by mutual consent.

 

13.2                           The Employee agree to execute and deliver all such further documents and instruments (including instruments or conveyance and waivers of moral rights) and do all acts and things as the Employer may, at any time, reasonabely require to effectively carry out or better evidence or perfect the full intent and meaning of this Letter of Appointment.

 

14.                              Notices

 

14.1                           Each communication under this Letter of Appointment shall be made in writing and may be made by letter or fax addressed to, in the case of the Employer, its registered office for the time being, and in the case of the Employee, his last known address.

 

14.2                           Every communication sent to the recipient Party shall be deemed to be received by the recipient Party (if sent by fax) on the next working day or (in any other case) when left at the address required by Clause 14.1 or 3 days after having been sent to the recipient Party by ordinary post.

 

15.                              Partial Invalidity

 

15.1                           If any one or more of the provisions contained in this Letter of Appointment shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired and this Letter of Appointment shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.

 

34

 

16.                              Remedies and Waivers

 

16.1                           No failure on the part of any Party hereto to exercise and no delay in exercising any right under this Letter of Appointment shall operate as a waiver thereof, nor will any single or partial exercise of any right under this Letter of Appointment preclude any other or further exercise thereof or of the exercise of any other right.  The rights and remedies provided in this Letter of Appointment are cumulative and not exclusive of any rights or remedies provided by law.

 

16.2                           Any waiver or consent given by any Party under this Letter of Appointment shall be in writing and may be given subject to such conditions as such Party may impose.  Any waiver or consent shall be effective only in the instance and for the purpose for which it is given.

 

17.                              Personal Data Policy

 

17.1                           The personal data the Employee has supplied for the purpose of employment is required for obtaining reference checks, for maintaining employee records, for assessing employee compensation and benefits, for training and development, for appraisal and for emergency purposes and such personal data may be forwarded to the Employer’s insurers, bankers, and medical practitioners providing medical services to employees, if applicable, and to any relevant service provider or any government authority (at the authority’s request).

 

18.                              Warranties

 

18.1                           The Employee hereby represents and warrants that he is free from any encumbrances or restrictions imposed by his current or former employer or any third party which may in any way prohibit him from performing services for the Employer under this Letter of Appointment.

 

18.2                           The Employee warrants that he has the relevant experience, skill and knowledge in managing investments for fund companies.

 

19.                              Governing Law

 

19.1                           It is agreed that the terms and conditions of employment (including this Letter of Appointment) shall be governed by and construed in accordance with the laws of Hong Kong.

 

19.2                          The Parties further agree to submit irrevocably to the non-exclusive jurisdiction of the Courts of Hong Kong for the purposes of resolving any claim or proceedings relating to such terms and conditions of employment (including this Letter of Appointment).

 

35

 

20.                              Independent Legal Advice

 

20.1                          The Employee agrees that he has been advised by the Employer that he should obtain independent legal advice in connection with the terms of this Letter of Appointment. The Employee confirms that he has either obtained such advice or chosen not to do so and that he fully understands the terms and conditions set out herein and agree to be bound by them.

 

IN WITNESS whereof the Parties have executed this Letter of Appointment on the date first aforewritten.

 

	
SIGNED by
    	
)
    	
 
    
	
duly authorised   for and on behalf of
    	
)
    	
 
    
	
2020 Equity   Partners Limited
    	
)
    	
 
    
	
in the presence   of -
    	
)
    	
 
    
	
 
    	
)
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
SIGNED by
    	
)
    	
 
    
	
George Lu
    	
)
    	
 
    
	
in the presence   of :
    	
)
    	
 
    
	
 
    	
)
    	
 
    

 

36

 

Appendix D - Performance Fee calculations (formulae)

 

Calculation of Performance Fee at IPO

 

	
Catchup
    	
 
    	
0.02
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Manager
    	
 
    	
0.2
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Hurdle
    	
 
    	
0.08
    	
 
    	
 
    	
 
    	
 
    	
 
    	
Investors
    	
 
    	
0.8
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Calculation using Percentages
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Y0 (IPO)
    	
 
    	
Y1
    	
 
    	
Y2
    	
 
    	
Y3
    	
 
    	
Y4
    	
 
    	
Y5
    	
 
    	
Y6
    	
 
    	
Y8
    	
 
    	
Y9
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gain/(Loss)
    	
 
    	
0.3
    	
 
    	
0.12
    	
 
    	
0.3
    	
 
    	
0.4
    	
 
    	
0.093
    	
 
    	
0.2
    	
 
    	
-0.13
    	
 
    	
0.08
    	
 
    	
0.22
    	
 
    
	
Hurdle   Gain/(Loss)
    	
 
    	
=IF(B8>$B$4,$B$4,B8)
    	
 
    	
=IF(C8>$B$4,$B$4,C8)
    	
 
    	
=IF(D8>$B$4,$B$4,D8)
    	
 
    	
=IF(E8>$B$4,$B$4,E8)
    	
 
    	
=IF(F8>$B$4,$B$4,F8)
    	
 
    	
=IF(G8>$B$4,$B$4,G8)
    	
 
    	
=IF(H8>$B$4,$B$4,H8)
    	
 
    	
=IF(I8>$B$4,$B$4,I8)
    	
 
    	
=IF(J8>$B$4,$B$4,J8)
    	
 
    
	
Post Hurdle
    	
 
    	
=IF(B8-$B$4>0,B8-$B$4,0)
    	
 
    	
=IF(C8-$B$4>0,C8-$B$4,0)
    	
 
    	
=IF(D8-$B$4>0,D8-$B$4,0)
    	
 
    	
=IF(E8-$B$4>0,E8-$B$4,0)
    	
 
    	
=IF(F8-$B$4>0,F8-$B$4,0)
    	
 
    	
=IF(G8-$B$4>0,G8-$B$4,0)
    	
 
    	
=IF(H8-$B$4>0,H8-$B$4,0)
    	
 
    	
=IF(I8-$B$4>0,I8-$B$4,0)
    	
 
    	
=IF(J8-$B$4>0,J8-$B$4,0)
    	
 
    
	
Post Catchup
    	
 
    	
=IF(B10-$B$3>0,(B10-$B$3),0)
    	
 
    	
=IF(C10-$B$3>0,(C10-$B$3),0)
    	
 
    	
=IF(D10-$B$3>0,(D10-$B$3),0)
    	
 
    	
=IF(E10-$B$3>0,(E10-$B$3),0)
    	
 
    	
=IF(F10-$B$3>0,(F10-$B$3),0)
    	
 
    	
=IF(G10-$B$3>0,(G10-$B$3),0)
    	
 
    	
=IF(H10-$B$3>0,(H10-$B$3),0)
    	
 
    	
=IF(I10-$B$3>0,(I10-$B$3),0)
    	
 
    	
=IF(J10-$B$3>0,(J10-$B$3),0)
    	
 
    
	
Manager   Share
    	
 
    	
=$F$3*B11
    	
 
    	
=$F$3*C11
    	
 
    	
=$F$3*D11
    	
 
    	
=$F$3*E11
    	
 
    	
=$F$3*F11
    	
 
    	
=$F$3*G11
    	
 
    	
=$F$3*H11
    	
 
    	
=$F$3*I11
    	
 
    	
=$F$3*J11
    	
 
    
	
Investors   Share
    	
 
    	
=$F$4*B11
    	
 
    	
=$F$4*C11
    	
 
    	
=$F$4*D11
    	
 
    	
=$F$4*E11
    	
 
    	
=$F$4*F11
    	
 
    	
=$F$4*G11
    	
 
    	
=$F$4*H11
    	
 
    	
=$F$4*I11
    	
 
    	
=$F$4*J11
    	
 
    
	
Shortfall
    	
 
    	
=IF(B11=0, “Yes”, “No”)
    	
 
    	
=IF(C11=0, “Yes”, “No”)
    	
 
    	
=IF(D11=0, “Yes”, “No”)
    	
 
    	
=IF(E11=0, “Yes”, “No”)
    	
 
    	
=IF(F11=0, “Yes”, “No”)
    	
 
    	
=IF(G11=0, “Yes”, “No”)
    	
 
    	
=IF(H11=0, “Yes”, “No”)
    	
 
    	
=IF(I11=0, “Yes”, “No”)
    	
 
    	
=IF(J11=0, “Yes”, “No”)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Overall
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager   share
    	
 
    	
=B12+B18
    	
 
    	
=C12+C18
    	
 
    	
=D12+D18
    	
 
    	
=E12+E18
    	
 
    	
=F12+F18
    	
 
    	
=G12+G18
    	
 
    	
=H12+H18
    	
 
    	
=I12+I18
    	
 
    	
=J12+J18
    	
 
    
	
of   which catchup
    	
 
    	
=IF(B10>$B$3,$B$3,B10)
    	
 
    	
=IF(C10>$B$3,$B$3,C10)
    	
 
    	
=IF(D10>$B$3,$B$3,D10)
    	
 
    	
=IF(E10>$B$3,$B$3,E10)
    	
 
    	
=IF(F10>$B$3,$B$3,F10)
    	
 
    	
=IF(G10>$B$3,$B$3,G10)
    	
 
    	
=IF(H10>$B$3,$B$3,H10)
    	
 
    	
=IF(I10>$B$3,$B$3,I10)
    	
 
    	
=IF(J10>$B$3,$B$3,J10)
    	
 
    
	
% of   total
    	
 
    	
=IF(B17+B20=0,0,B17/(B17+B20))
    	
 
    	
=IF(C17+C20=0,0,C17/(C17+C20))
    	
 
    	
=IF(D17+D20=0,0,D17/(D17+D20))
    	
 
    	
=IF(E17+E20=0,0,E17/(E17+E20))
    	
 
    	
=IF(F17+F20=0,0,F17/(F17+F20))
    	
 
    	
=IF(G17+G20=0,0,G17/(G17+G20))
    	
 
    	
=IF(H17+H20=0,0,H17/(H17+H20))
    	
 
    	
=IF(I17+I20=0,0,I17/(I17+I20))
    	
 
    	
=IF(J17+J20=0,0,J17/(J17+J20))
    	
 
    
	
Investors   share
    	
 
    	
=B13+B21
    	
 
    	
=C13+C21
    	
 
    	
=D13+D21
    	
 
    	
=E13+E21
    	
 
    	
=F13+F21
    	
 
    	
=G13+G21
    	
 
    	
=H13+H21
    	
 
    	
=I13+I21
    	
 
    	
=J13+J21
    	
 
    
	
of   which hurdle
    	
 
    	
=IF(B9>0,B9,0)
    	
 
    	
=IF(C9>0,C9,0)
    	
 
    	
=IF(D9>0,D9,0)
    	
 
    	
=IF(E9>0,E9,0)
    	
 
    	
=IF(F9>0,F9,0)
    	
 
    	
=IF(G9>0,G9,0)
    	
 
    	
=IF(H9>0,H9,0)
    	
 
    	
=IF(I9>0,I9,0)
    	
 
    	
=IF(J9>0,J9,0)
    	
 
    
	
% of   total
    	
 
    	
=IF(B20>0,1-B19,0)
    	
 
    	
=IF(C20>0,1-C19,0)
    	
 
    	
=IF(D20>0,1-D19,0)
    	
 
    	
=IF(E20>0,1-E19,0)
    	
 
    	
=IF(F20>0,1-F19,0)
    	
 
    	
=IF(G20>0,1-G19,0)
    	
 
    	
=IF(H20>0,1-H19,0)
    	
 
    	
=IF(I20>0,1-I19,0)
    	
 
    	
=IF(J20>0,1-J19,0)
    	
 
    

 

Calculation using Nominal Values

	
 
    	
 
    	
=B7
    	
 
    	
=C7
    	
 
    	
=D7
    	
 
    	
=E7
    	
 
    	
=F7
    	
 
    	
=G7
    	
 
    	
=H7
    	
 
    	
=I7
    	
 
    	
=J7
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Base/High Watermark
    	
 
    	
76.92
    	
 
    	
=IF(B17>0,B28,B27)
    	
 
    	
=IF(C17>0,C28,C27)
    	
 
    	
=IF(D17>0,D28,D27)
    	
 
    	
=IF(E17>0,E28,E27)
    	
 
    	
=IF(F17>0,F28,F27)
    	
 
    	
=IF(G17>0,G28,G27)
    	
 
    	
=IF(H17>0,H28,H27)
    	
 
    	
=IF(I17>0,I28,I27)
    	
 
    
	
NAV
    	
 
    	
=+B27*(1+B8)
    	
 
    	
=+C27*(1+C8)
    	
 
    	
=D27*(1+D8)
    	
 
    	
=E27*(1+E8)
    	
 
    	
=F27*(1+F8)
    	
 
    	
=G27*(1+G8)
    	
 
    	
=H27*(1+H8)
    	
 
    	
=I27*(1+I8)
    	
 
    	
=J27*(1+J8)
    	
 
    
	
Gain/(Loss)
    	
 
    	
=23.076
    	
 
    	
=C28-C27
    	
 
    	
=D28-D27
    	
 
    	
=E28-E27
    	
 
    	
=F28-F27
    	
 
    	
=G28-G27
    	
 
    	
=H28-H27
    	
 
    	
=I28-I27
    	
 
    	
=J28-J27
    	
 
    
	
Hurdle
    	
 
    	
=B27*(1+$B$4)
    	
 
    	
=C27*(1+$B$4)
    	
 
    	
=C30*(1+$B$4)
    	
 
    	
=D30*(1+$B$4)
    	
 
    	
=E30*(1+$B$4)
    	
 
    	
=F30*(1+$B$4)
    	
 
    	
=G30*(1+$B$4)
    	
 
    	
=H30*(1+$B$4)
    	
 
    	
=I30*(1+$B$4)
    	
 
    
	
Full Catchup
    	
 
    	
=B30+(($B$3/B8)*B29)
    	
 
    	
=C30+(($B$3/C8)*C29)
    	
 
    	
=D30+(($B$3/D8)*D29)
    	
 
    	
=E30+(($B$3/E8)*E29)
    	
 
    	
=F30+(($B$3/F8)*F29)
    	
 
    	
=G30+(($B$3/G8)*G29)
    	
 
    	
=H30+(($B$3/H8)*H29)
    	
 
    	
=I30+(($B$3/I8)*I29)
    	
 
    	
=J30+(($B$3/J8)*J29)
    	
 
    
	
Catchup   achieved
    	
 
    	
=B30+((B18/B8)*B29)
    	
 
    	
=C30+((C18/C8)*C29)
    	
 
    	
=D30+((D18/D8)*D29)
    	
 
    	
=E30+((E18/E8)*E29)
    	
 
    	
=F30+((F18/F8)*F29)
    	
 
    	
=G30+((G18/G8)*G29)
    	
 
    	
=H30+((H18/H8)*H29)
    	
 
    	
=I30+((I18/I8)*I29)
    	
 
    	
=J30+((J18/J8)*J29)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Below the Catchup
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s   2%
    	
 
    	
=(B32-B30)
    	
 
    	
=(C32-C30)
    	
 
    	
=(D32-D30)
    	
 
    	
=(E32-E30)
    	
 
    	
=(F32-F30)
    	
 
    	
=(G32-G30)
    	
 
    	
=(H32-H30)
    	
 
    	
=(I32-I30)
    	
 
    	
=(J32-J30)
    	
 
    
	
Investors’   8%
    	
 
    	
=IF(B29>0,B29-B35-B39-B40,0)
    	
 
    	
=IF(C29>0,C29-C35-C39-C40,0)
    	
 
    	
=IF(D29>0,D29-D35-D39-D40,0)
    	
 
    	
=IF(E29>0,E29-E35-E39-E40,0)
    	
 
    	
=IF(F29>0,F29-F35-F39-F40,0)
    	
 
    	
=IF(G29>0,G29-G35-G39-G40,0)
    	
 
    	
=IF(H29>0,H29-H35-H39-H40,0)
    	
 
    	
=IF(I29>0,I29-I35-I39-I40,0)
    	
 
    	
=IF(J29>0,J29-J35-J39-J40,0)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Above the Catchup
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s   20%
    	
 
    	
=B12/B8*B29
    	
 
    	
=C12/C8*C29
    	
 
    	
=D12/D8*D29
    	
 
    	
=E12/E8*E29
    	
 
    	
=F12/F8*F29
    	
 
    	
=G12/G8*G29
    	
 
    	
=H12/H8*H29
    	
 
    	
=I12/I8*I29
    	
 
    	
=J12/J8*J29
    	
 
    
	
Investors’   80%
    	
 
    	
=B13/B8*B29
    	
 
    	
=C13/C8*C29
    	
 
    	
=D13/D8*D29
    	
 
    	
=E13/E8*E29
    	
 
    	
=F13/F8*F29
    	
 
    	
=G13/G8*G29
    	
 
    	
=H13/H8*H29
    	
 
    	
=I13/I8*I29
    	
 
    	
=J13/J8*J29
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s Profits
    	
 
    	
=B39+B35
    	
 
    	
=C39+C35
    	
 
    	
=D39+D35
    	
 
    	
=E39+E35
    	
 
    	
=F39+F35
    	
 
    	
=G39+G35
    	
 
    	
=H39+H35
    	
 
    	
=I39+I35
    	
 
    	
=J39+J35
    	
 
    
	
Investors’ Profits
    	
 
    	
=B40+B36
    	
 
    	
=C40+C36
    	
 
    	
=D40+D36
    	
 
    	
=E40+E36
    	
 
    	
=F40+F36
    	
 
    	
=G40+G36
    	
 
    	
=H40+H36
    	
 
    	
=I40+I36
    	
 
    	
=J40+J36
    	
 
    
	
Total Profits
    	
 
    	
=B43+B42
    	
 
    	
=C43+C42
    	
 
    	
=D43+D42
    	
 
    	
=E43+E42
    	
 
    	
=F43+F42
    	
 
    	
=G43+G42
    	
 
    	
=H43+H42
    	
 
    	
=I43+I42
    	
 
    	
=J43+J42
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s % Profits
    	
 
    	
=IF(B44>0,B42/B$44,0)
    	
 
    	
=IF(C44>0,C42/C$44,0)
    	
 
    	
=IF(D44>0,D42/D$44,0)
    	
 
    	
=IF(E44>0,E42/E$44,0)
    	
 
    	
=IF(F44>0,F42/F$44,0)
    	
 
    	
=IF(G44>0,G42/G$44,0)
    	
 
    	
=IF(H44>0,H42/H$44,0)
    	
 
    	
=IF(I44>0,I42/I$44,0)
    	
 
    	
=IF(J44>0,J42/J$44,0)
    	
 
    
	
Investors’ % Profits
    	
 
    	
=IF(B44>0,B43/B$44,0)
    	
 
    	
=IF(C44>0,C43/C$44,0)
    	
 
    	
=IF(D44>0,D43/D$44,0)
    	
 
    	
=IF(E44>0,E43/E$44,0)
    	
 
    	
=IF(F44>0,F43/F$44,0)
    	
 
    	
=IF(G44>0,G43/G$44,0)
    	
 
    	
=IF(H44>0,H43/H$44,0)
    	
 
    	
=IF(I44>0,I43/I$44,0)
    	
 
    	
=IF(J44>0,J43/J$44,0)
    	
 
    

 

 

 

Appendix D - Performance Fee calculations (values)

 

Calculation of Performance Fee at IPO and Post-IPO

 

	
Catchup
    	
 
    	
2
    	
%
    	
 
    	
 
    	
 
    	
 
    	
Manager
    	
 
    	
20
    	
%
    
	
Hurdle
    	
 
    	
8
    	
%
    	
 
    	
 
    	
 
    	
 
    	
Investors
    	
 
    	
80
    	
%
    

 

Calculation using Percentages

	
 
    	
 
    	
Y0 (IPO)
    	
 
    	
Y1
    	
 
    	
Y2
    	
 
    	
Y3
    	
 
    	
Y4
    	
 
    	
Y5
    	
 
    	
Y6
    	
 
    	
Y7
    	
 
    	
Y8
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Gain/(Loss)
    	
 
    	
30.0
    	
%
    	
12.0
    	
%
    	
30.0
    	
%
    	
40.0
    	
%
    	
9.3
    	
%
    	
20.0
    	
%
    	
-13.0
    	
%
    	
8.0
    	
%
    	
22.0
    	
%
    	
<- Assumption: High   Watermark is met, 8% hurdle is met
    	
 
    
	
Hurdle   Gain/(Loss)
    	
 
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
-13.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
<- Investors’ share   of hurdle, will not exceed 8%
    	
 
    
	
Post Hurdle
    	
 
    	
22.0
    	
%
    	
4.0
    	
%
    	
22.0
    	
%
    	
32.0
    	
%
    	
1.3
    	
%
    	
12.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
14.0
    	
%
    	
 
    	
 
    
	
Post Catchup
    	
 
    	
20.0
    	
%
    	
2.0
    	
%
    	
20.0
    	
%
    	
30.0
    	
%
    	
0.0
    	
%
    	
10.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
12.0
    	
%
    	
 
    	
 
    
	
Manager   share
    	
 
    	
4.0
    	
%
    	
0.4
    	
%
    	
4.0
    	
%
    	
6.0
    	
%
    	
0.0
    	
%
    	
2.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
2.4
    	
%
    	
 
    	
 
    
	
Investors   share
    	
 
    	
16.0
    	
%
    	
1.6
    	
%
    	
16.0
    	
%
    	
24.0
    	
%
    	
0.0
    	
%
    	
8.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
9.6
    	
%
    	
 
    	
 
    
	
Shortfall
    	
 
    	
No
    	
 
    	
No
    	
 
    	
No
    	
 
    	
No
    	
 
    	
Yes
    	
 
    	
No
    	
 
    	
Yes
    	
 
    	
Yes
    	
 
    	
No
    	
 
    	
<- No carry over of   any shortfall
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Overall
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager   share
    	
 
    	
6.0
    	
%
    	
2.4
    	
%
    	
6.0
    	
%
    	
8.0
    	
%
    	
1.3
    	
%
    	
4.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
4.4
    	
%
    	
 
    	
 
    
	
of   which catchup 
    	
 
    	
2.0
    	
%
    	
2.0
    	
%
    	
2.0
    	
%
    	
2.0
    	
%
    	
1.3
    	
%
    	
2.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
2.0
    	
%
    	
 
    	
 
    
	
% of   total
    	
 
    	
20.0
    	
%
    	
20.0
    	
%
    	
20.0
    	
%
    	
20.0
    	
%
    	
14.0
    	
%
    	
20.0
    	
%
    	
0.0
    	
%
    	
0.0
    	
%
    	
20.0
    	
%
    	
<- During shortfall   years, Manager share is less than 20%
    	
 
    
	
Investors   share
    	
 
    	
24.0
    	
%
    	
9.6
    	
%
    	
24.0
    	
%
    	
32.0
    	
%
    	
8.0
    	
%
    	
16.0
    	
%
    	
0.0
    	
%
    	
8.0
    	
%
    	
17.6
    	
%
    	
 
    	
 
    
	
of   which hurdle
    	
 
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
0.0
    	
%
    	
8.0
    	
%
    	
8.0
    	
%
    	
 
    	
 
    
	
% of   total
    	
 
    	
80.0
    	
%
    	
80.0
    	
%
    	
80.0
    	
%
    	
80.0
    	
%
    	
86.0
    	
%
    	
80.0
    	
%
    	
0.0
    	
%
    	
100.0
    	
%
    	
80.0
    	
%
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Calculation using Nominal Values
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
<- For illustrative   purposes only, excludes management fee and   performance fee for previous years
    	
 
    
	
 
    	
 
    	
Y0 (IPO)
    	
 
    	
Y1
    	
 
    	
Y2
    	
 
    	
Y3
    	
 
    	
Y4
    	
 
    	
Y5
    	
 
    	
Y6
    	
 
    	
Y7
    	
 
    	
Y8
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Base/High Watermart
    	
 
    	
76.92
    	
 
    	
100.00
    	
 
    	
112.00
    	
 
    	
145.59
    	
 
    	
203.83
    	
 
    	
222.79
    	
 
    	
267.35
    	
 
    	
267.35
    	
 
    	
267.35
    	
 
    	
<- High Watermark is   not reset for years where Manager is not paid
    	
 
    
	
NAV
    	
 
    	
100.00
    	
 
    	
112.00
    	
 
    	
145.59
    	
 
    	
203.83
    	
 
    	
222.79
    	
 
    	
267.35
    	
 
    	
232.59
    	
 
    	
288.73
    	
 
    	
326.16
    	
 
    	
 
    	
 
    
	
Gain/(Loss)
    	
 
    	
23.08
    	
 
    	
12.00
    	
 
    	
33.60
    	
 
    	
58.24
    	
 
    	
18.96
    	
 
    	
44.56
    	
 
    	
-34.75
    	
 
    	
21.39
    	
 
    	
58.82
    	
 
    	
 
    	
 
    
	
Hurdle
    	
 
    	
83.07
    	
 
    	
108.00
    	
 
    	
116.64
    	
 
    	
125.97
    	
 
    	
136.04
    	
 
    	
146.93
    	
 
    	
158.68
    	
 
    	
171.38
    	
 
    	
185.09
    	
 
    	
<- Hurdle is a   constant 8% compounded from IPO NAV
    	
 
    
	
Full Catchup
    	
 
    	
84.61
    	
 
    	
110.00
    	
 
    	
118.88
    	
 
    	
128.88
    	
 
    	
140.12
    	
 
    	
151.38
    	
 
    	
164.03
    	
 
    	
176.72
    	
 
    	
190.43
    	
 
    	
<- Calculated by   reference to 2% above the hurdle
    	
 
    
	
Catchup   achieved
    	
 
    	
84.61
    	
 
    	
110.00
    	
 
    	
118.88
    	
 
    	
128.88
    	
 
    	
138.69
    	
 
    	
151.38
    	
 
    	
158.68
    	
 
    	
171.38
    	
 
    	
190.43
    	
 
    	
<- Actual catchup   achieved can be less than the full 2%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Below the Catchup
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s   2%
    	
 
    	
1.54
    	
 
    	
2.00
    	
 
    	
2.24
    	
 
    	
2.91
    	
 
    	
2.65
    	
 
    	
4.46
    	
 
    	
0.00
    	
 
    	
0.00
    	
 
    	
5.35
    	
 
    	
<- Being the   difference between the hurdle and catchup
    	
 
    
	
Investors’   8%
    	
 
    	
6.15
    	
 
    	
8.00
    	
 
    	
8.96
    	
 
    	
11.65
    	
 
    	
16.31
    	
 
    	
17.82
    	
 
    	
0.00
    	
 
    	
21.39
    	
 
    	
21.39
    	
 
    	
<- Being the   difference between total profits and the sum of the post catchup profits and   the manager’s catchup
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Above the Catchup
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s   20%
    	
 
    	
3.08
    	
 
    	
0.40
    	
 
    	
4.48
    	
 
    	
8.74
    	
 
    	
0.00
    	
 
    	
4.46
    	
 
    	
0.00
    	
 
    	
0.00
    	
 
    	
6.42
    	
 
    	
<- Calculated by   reference to % share of post catchup profit
    	
 
    
	
Investors’   80%
    	
 
    	
12.31
    	
 
    	
1.60
    	
 
    	
17.92
    	
 
    	
34.94
    	
 
    	
0.00
    	
 
    	
17.82
    	
 
    	
0.00
    	
 
    	
0.00
    	
 
    	
25.67
    	
 
    	
<- Calculated by   reference to % share of post catchup profit
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s Profits
    	
 
    	
4.62
    	
 
    	
2.40
    	
 
    	
6.72
    	
 
    	
11.65
    	
 
    	
2.65
    	
 
    	
8.91
    	
 
    	
0.00
    	
 
    	
0.00
    	
 
    	
11.76
    	
 
    	
 
    	
 
    
	
Investors’ Profits
    	
 
    	
18.46
    	
 
    	
9.60
    	
 
    	
26.88
    	
 
    	
46.59
    	
 
    	
16.31
    	
 
    	
35.65
    	
 
    	
0.00
    	
 
    	
21.39
    	
 
    	
47.05
    	
 
    	
 
    	
 
    
	
Total Profits
    	
 
    	
23.08
    	
 
    	
12.00
    	
 
    	
33.60
    	
 
    	
58.24
    	
 
    	
18.96
    	
 
    	
44.56
    	
 
    	
0.00
    	
 
    	
21.39
    	
 
    	
58.82
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Manager’s % Profits
    	
 
    	
20
    	
%
    	
20
    	
%
    	
20
    	
%
    	
20
    	
%
    	
14
    	
%
    	
20
    	
%
    	
0
    	
%
    	
0
    	
%
    	
20
    	
%
    	
 
    	
 
    
	
Investors’ % Profits
    	
 
    	
80
    	
%
    	
80
    	
%
    	
80
    	
%
    	
80
    	
%
    	
86
    	
%
    	
80
    	
%
    	
0
    	
%
    	
100
    	
%
    	
80
    	
%Exhibit 10.11

 

Execution Version

 

UNIT PURCHASE AND REDEMPTION AGREEMENT

 

BY AND AMONG

 

2020 GLOBAL INVESTMENTS, LLC,

 

2020 GLOBALGROWTH EQUITIES LIMITED,

 

ACQUITY GROUP, L.L.C.,

 

AND

 

THE MEMBERS LISTED IN SCHEDULE A HERETO,

 

AND

 

(with respect to Section 12.10 and Article XIII only)

 

CHRISTOPHER DALTON,

 

PAUL WEINEWUTH,

 

MATT SCHMELTZ,

 

AND

 

SCOTT SPEAR

 

March 20, 2008

 

 

TABLE OF CONTENTS

 

	
ARTICLE I DEFINITIONS
    	
1
    
	
 
    	
 
    
	
ARTICLE II SALE AND   PURCHASE OF UNITS; CLOSING; REDEMPTION
    	
11
    
	
 
    	
 
    	
 
    
	
2.1
    	
Agreement to Sell and   Purchase
    	
11
    
	
 
    	
 
    	
 
    
	
2.2
    	
Purchase Price
    	
12
    
	
 
    	
 
    	
 
    
	
2.3
    	
Use of Proceeds
    	
12
    
	
 
    	
 
    	
 
    
	
2.4
    	
Redemption of Units Held by   the Members
    	
12
    
	
 
    	
 
    	
 
    
	
2.5
    	
Distribution Escrow
    	
15
    
	
 
    	
 
    	
 
    
	
2.6
    	
Closing
    	
21
    
	
 
    	
 
    	
 
    
	
2.7
    	
Closing Obligations
    	
22
    
	
 
    	
 
    	
 
    
	
2.8
    	
Member Representative
    	
24
    
	
 
    	
 
    	
 
    
	
2.9
    	
Certain Taxes and Fees
    	
24
    
	
 
    	
 
    	
 
    
	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
    	
25
    
	
 
    	
 
    	
 
    
	
3.1
    	
Organization and Good   Standing
    	
25
    
	
 
    	
 
    	
 
    
	
3.2
    	
Subsidiaries
    	
25
    
	
 
    	
 
    	
 
    
	
3.3
    	
Directors; Officers
    	
26
    
	
 
    	
 
    	
 
    
	
3.4
    	
Authority; No Conflict;   Consent
    	
26
    
	
 
    	
 
    	
 
    
	
3.5
    	
Capitalization
    	
27
    
	
 
    	
 
    	
 
    
	
3.6
    	
Financial Statements
    	
28
    
	
 
    	
 
    	
 
    
	
3.7
    	
Books and Records
    	
28
    
	
 
    	
 
    	
 
    
	
3.8
    	
Title to Properties; Liens
    	
29
    
	
 
    	
 
    	
 
    
	
3.9
    	
Taxes
    	
30
    
	
 
    	
 
    	
 
    
	
3.10
    	
No Material Adverse Change
    	
31
    
	
 
    	
 
    	
 
    
	
3.11
    	
Compliance with Legal   Requirements; Governmental Authorizations
    	
31
    
	
 
    	
 
    	
 
    
	
3.12
    	
Legal Proceedings; Orders
    	
32
    
	
 
    	
 
    	
 
    
	
3.13
    	
Absence of Certain Changes   and Events
    	
32
    
	
 
    	
 
    	
 
    
	
3.14
    	
Employee Benefits
    	
34
    
	
 
    	
 
    	
 
    
	
3.15
    	
Employees
    	
37
    
	
 
    	
 
    	
 
    
	
3.16
    	
Labor Relations; Compliance;   WARN Act
    	
38
    
	
 
    	
 
    	
 
    
	
3.17
    	
Intellectual Property
    	
38
    
	
 
    	
 
    	
 
    
	
3.18
    	
Contracts
    	
39
    
	
 
    	
 
    	
 
    
	
3.19
    	
Obligations to Related   Parties
    	
41
    
	
 
    	
 
    	
 
    
	
3.20
    	
Brokers or Finders
    	
41
    

 

 

TABLE OF CONTENTS

 

	
3.21
    	
Customers and Suppliers
    	
42
    
	
 
    	
 
    	
 
    
	
3.22
    	
No Undisclosed Liabilities
    	
42
    
	
 
    	
 
    	
 
    
	
3.23
    	
Obligations of Management
    	
42
    
	
 
    	
 
    	
 
    
	
3.24
    	
Registration Rights and   Voting Rights
    	
42
    
	
 
    	
 
    	
 
    
	
3.25
    	
Offering Valid
    	
43
    
	
 
    	
 
    	
 
    
	
3.26
    	
Full Disclosure
    	
43
    
	
 
    	
 
    	
 
    
	
3.27
    	
Real Property Holding   Corporation
    	
43
    
	
 
    	
 
    	
 
    
	
3.28
    	
Insurance
    	
43
    
	
 
    	
 
    	
 
    
	
3.29
    	
Executive Officers
    	
43
    
	
 
    	
 
    	
 
    
	
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MEMBERS
    	
44
    
	
 
    	
 
    	
 
    
	
4.1
    	
Authority; No Conflict
    	
44
    
	
 
    	
 
    	
 
    
	
4.2
    	
Redemption Units
    	
45
    
	
 
    	
 
    	
 
    
	
4.3
    	
Legal Proceedings
    	
45
    
	
 
    	
 
    	
 
    
	
4.4
    	
Brokers or Finders
    	
45
    
	
 
    	
 
    	
 
    
	
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND BUYER   PARENT
    	
45
    
	
 
    	
 
    	
 
    
	
5.1
    	
Organization and Good   Standing
    	
45
    
	
 
    	
 
    	
 
    
	
5.2
    	
Authority; No Conflict
    	
45
    
	
 
    	
 
    	
 
    
	
5.3
    	
Legal Proceedings
    	
46
    
	
 
    	
 
    	
 
    
	
5.4
    	
Brokers or Finders
    	
46
    
	
 
    	
 
    	
 
    
	
5.5
    	
Investment Representations
    	
46
    
	
 
    	
 
    	
 
    
	
5.6
    	
Financing
    	
46
    
	
 
    	
 
    	
 
    
	
5.7
    	
Access to Information
    	
47
    
	
 
    	
 
    	
 
    
	
5.8
    	
Buyer’s Investigation
    	
47
    
	
 
    	
 
    	
 
    
	
5.9
    	
Plant Closing and Mass Lay   Offs
    	
47
    
	
 
    	
 
    	
 
    
	
ARTICLE VI   [INTENTIONALLY OMITTED]
    	
48
    
	
 
    	
 
    
	
ARTICLE VII   [INTENTIONALLY OMITTED]
    	
48
    
	
 
    	
 
    
	
ARTICLE VIII COVENANTS   OF THE PARTIES
    	
48
    
	
 
    	
 
    	
 
    
	
8.1
    	
Required Approval
    	
48
    
	
 
    	
 
    	
 
    
	
8.2
    	
Further Assurances
    	
48
    
	
 
    	
 
    	
 
    
	
8.3
    	
No Press Releases; No Public   Announcements
    	
48
    
	
 
    	
 
    	
 
    
	
8.4
    	
Confidentiality
    	
49
    
	
 
    	
 
    	
 
    
	
8.5
    	
Books and Records
    	
49
    

 

ii

 

TABLE OF CONTENTS

 

	
ARTICLE IX CONDITIONS   PRECEDENT TO BUYER’S OBLIGATION TO CLOSE
    	
49
    
	
 
    	
 
    	
 
    
	
9.1
    	
Accuracy of Representations
    	
49
    
	
 
    	
 
    	
 
    
	
9.2
    	
Company’s and Members’   Performance
    	
50
    
	
 
    	
 
    	
 
    
	
9.3
    	
Consents
    	
50
    
	
 
    	
 
    	
 
    
	
9.4
    	
Additional Documents
    	
50
    
	
 
    	
 
    	
 
    
	
9.5
    	
No Proceedings
    	
50
    
	
 
    	
 
    	
 
    
	
9.6
    	
No Claim Regarding Unit   Ownership or Sale Proceeds
    	
50
    
	
 
    	
 
    	
 
    
	
9.7
    	
No Prohibition
    	
51
    
	
 
    	
 
    	
 
    
	
9.8
    	
Securities Exemptions
    	
51
    
	
 
    	
 
    	
 
    
	
ARTICLE X CONDITIONS   PRECEDENT TO THE MEMBERS’ AND THE COMPANY’S OBLIGATIONS TO CLOSE
    	
51
    
	
 
    	
 
    	
 
    
	
10.1
    	
Accuracy of Representations
    	
51
    
	
 
    	
 
    	
 
    
	
10.2
    	
Buyer’s Performance
    	
51
    
	
 
    	
 
    	
 
    
	
10.3
    	
Additional Documents
    	
51
    
	
 
    	
 
    	
 
    
	
10.4
    	
No Proceedings
    	
52
    
	
 
    	
 
    	
 
    
	
10.5
    	
No Prohibition
    	
52
    
	
 
    	
 
    	
 
    
	
ARTICLE XI [RESERVED]
    	
52
    
	
 
    	
 
    
	
ARTICLE XII   INDEMNIFICATION; REMEDIES
    	
52
    
	
 
    	
 
    	
 
    
	
12.1
    	
Survival and Time   Limitations
    	
52
    
	
 
    	
 
    	
 
    
	
12.2
    	
Indemnification and Payment   of Damages by Members
    	
53
    
	
 
    	
 
    	
 
    
	
12.3
    	
Indemnification and Payment   of Damages by Buyer and Buyer Parent
    	
54
    
	
 
    	
 
    	
 
    
	
12.4
    	
Limitations on Amount
    	
54
    
	
 
    	
 
    	
 
    
	
12.5
    	
Calculation of Damages
    	
55
    
	
 
    	
 
    	
 
    
	
12.6
    	
Procedure for   Indemnification — Third Party Claims
    	
56
    
	
 
    	
 
    	
 
    
	
12.7
    	
Procedure for   Indemnification — Other Claims
    	
58
    
	
 
    	
 
    	
 
    
	
12.8
    	
Sole Remedy
    	
58
    
	
 
    	
 
    	
 
    
	
12.9
    	
Member Representative
    	
58
    
	
 
    	
 
    	
 
    
	
12.10
    	
Guaranty
    	
58
    
	
 
    	
 
    	
 
    
	
ARTICLE XIII GENERAL   PROVISIONS
    	
59
    
	
 
    	
 
    	
 
    
	
13.1
    	
Expenses
    	
59
    
	
 
    	
 
    	
 
    
	
13.2
    	
Notices
    	
59
    
	
 
    	
 
    	
 
    
	
13.3
    	
Dispute Resolution
    	
60
    
	
 
    	
 
    	
 
    
	
13.4
    	
Waiver of Jury Trial
    	
61
    

 

iii

 

TABLE OF CONTENTS

 

	
13.5
    	
Waiver
    	
61
    
	
 
    	
 
    	
 
    
	
13.6
    	
Entire Agreement
    	
62
    
	
 
    	
 
    	
 
    
	
13.7
    	
Amendments
    	
62
    
	
 
    	
 
    	
 
    
	
13.8
    	
Disclosure Schedules
    	
62
    
	
 
    	
 
    	
 
    
	
13.9
    	
Third Party Beneficiaries
    	
62
    
	
 
    	
 
    	
 
    
	
13.10
    	
Assignment
    	
62
    
	
 
    	
 
    	
 
    
	
13.11
    	
Representation of the   Members Post-Closing
    	
63
    
	
 
    	
 
    	
 
    
	
13.12
    	
Severability
    	
63
    
	
 
    	
 
    	
 
    
	
13.13
    	
Section, Article and   Section Headings
    	
63
    
	
 
    	
 
    	
 
    
	
13.14
    	
Construction; Interpretation
    	
63
    
	
 
    	
 
    	
 
    
	
13.15
    	
Governing Law
    	
64
    
	
 
    	
 
    	
 
    
	
13.16
    	
Counterparts; Facsimile   Signatures
    	
64
    

 

iv

 

TABLE OF CONTENTS

 

Schedules

 

Schedule A — Schedule of Members

Schedule 2.5 — Sample of Calculation

Schedule 3.5(b) — Payment Obligations under Employee Equity Sharing Plan

Schedule 13.1 — Buyer’s Advisors

 

Exhibits

 

Exhibit A — Form of Third Amended and Restated Operating Agreement

Exhibit B — Form of Escrow Agreement

Exhibit C — Form of Unit Holders Agreement

Exhibit D — Form of Registration Rights Agreement

Exhibit E — Form of Management Agreement

Exhibit F — Form of Legal Opinion

Exhibit G — Form of Employment Agreement

Exhibit H — Form of Employee Confidentiality and Non-Competition Agreement

 

 

UNIT PURCHASE AND REDEMPTION AGREEMENT

 

This Unit Purchase and Redemption Agreement (this “Agreement”) is made as of March 20, 2008, by and among 2020 Global Investments, LLC, a Delaware limited liability company (“Buyer”), 2020 GlobalGrowth Equities Limited, a Cayman Islands exempted company (“Buyer Parent”), Acquity Group, L.L.C., a Delaware limited liability company (the “Company”), the entities or individuals listed on Schedule A attached hereto who are existing members of the Company (individually, a “Member,” and collectively, “Members”), and with respect to Section 12.10 and Article XIII only, Christopher Dalton, Paul Weinewuth, Matt Schmeltz and Scott Spear.

 

RECITALS

 

WHEREAS, all of the issued and outstanding membership interests in the Company on the date hereof immediately prior to the Closing (as defined below) are owned collectively by the Members as set forth on Schedule A hereto;

 

WHEREAS, the Company has authorized the sale and new issuance of membership interest in the Company equal to an aggregate of Nine Hundred Ten Thousand And One Hundred (910,100) Class A Units (the “New Units”);

 

WHEREAS, the Company desires to issue and sell the New Units to Buyer on the terms and conditions set forth herein;

 

WHEREAS, Buyer desires to purchase the New Units on the terms and conditions set forth herein, which will represent 70% of the outstanding membership interest in the Company on a fully-diluted basis after giving effect to the Redemption (as defined below);

 

WHEREAS, the Members have agreed to sell the Redemption Units (as defined below) to the Company in consideration of the Redemption Price and the Earnout Payments as such terms are defined below; and

 

WHEREAS, the Company will use a portion of the proceeds from the purchase and sale of the New Units to effectuate the Redemption.

 

AGREEMENT

 

NOW, THEREFORE, based on the recitals set forth above, the promises contained in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby confirmed, the parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I

Definitions

 

“2007 Audited Financial Statements” has the meaning set forth in Section 2.4(c) hereof.

 

“2007 Audited EBITDA” has the meaning set forth in Section 2.4(c) hereof.

 

 

“2007 Audited Sales” has the meaning set forth in Section 2.4(c) hereof.

 

“2008 Audited EBITDA” has the meaning set forth in Section 2.5 hereof.

 

“2008 Audited Financial Statements” has the meaning set forth in Section 2.5 hereof.

 

“2008 Audited Sales” has the meaning set forth in Section 2.5 hereof.

 

“2008 Earnout Payment” has the meaning set forth in Section 2.5 hereof.

 

“2008 Earnout Statement” has the meaning set forth in Section 2.5 hereof.

 

“2008 Pro-Forma Earnout Payment” has the meaning set forth in Section 2.5 hereof.

 

“2009 Audited EBITDA” has the meaning set forth in Section 2.5 hereof.

 

“2009 Audited Financial Statements” has the meaning set forth in Section 2.5 hereof.

 

“2009 Audited Sales” has the meaning set forth in Section 2.5 hereof.

 

“2009 Earnout Payment” has the meaning set forth in Section 2.5 hereof.

 

“2009 Earnout Statement” has the meaning set forth in Section 2.5 hereof.

 

“2020 Permitted Transfer” has the meaning set forth in Section 2.5(l) hereof.

 

“Actual EBITDA” has the meaning set forth in Section 2.4.

 

“Actual Sales” has the meaning set forth in Section 2.4.

 

“Advancement Amount” shall have the meaning set forth in Section 2.5 hereof.

 

“Agreement” has the meaning set forth in the introductory paragraph hereof.

 

“Affiliate” with respect to any Person, shall mean (i) any other Person which beneficially holds, directly or indirectly, or otherwise controls, fifty one percent (51%) or more of such Person’s outstanding securities (“Parent Affiliate”), (ii) any other Person, fifty one percent (51%) or more of which Person’s outstanding securities are beneficially held, directly or indirectly, or are otherwise controlled, by such Person (“Subsidiary Affiliate”) and (iii) any other Person, fifty one percent (51%) or more of which Person’s outstanding securities are beneficially held, directly or indirectly, or are otherwise controlled, by a Person described in (i) above (“Sister Affiliate”), and (iv) with respect to Buyer, (A) any Buyer Group Entity, (B) any general partner or managing member of any Buyer Group Entity and (C) any limited partner or other equity holder of any Buyer Group Entity that does not otherwise qualify as a Parent Affiliate of such Buyer Group Entity; provided that the transfer of any equity interests in the Company to such Person described in (C) of this subsection (iv) was solely for legitimate purposes related to the investment fund operations of the subject Buyer Group Entity (including but not limited to the natural termination of the Buyer Group Entity, a distribution for compliance with regulatory or tax reasons or a distribution to such limited partner or other equity holder of their entire interest

 

2

 

in the Buyer Group Entity’s portfolio); and further provided that, with respect to any transfer of equity interests in the Company to a Person described in (A), (B) or (C) of this subsection (iv), the transfer of equity interests to such Person shall not have caused (or be reasonably likely to cause) a material adverse change in the management or operations of the Company.

 

“Amended and Restated Operating Agreement” has the meaning set forth in Section 2.1(a).

 

“Arbitration Tribunal” has the meaning set forth in Section 13.3(b) hereof.

 

“Audit Cut-Off Date” has the meaning set forth in Section 2.5.

 

“Audited Balance Sheet” has the meaning set forth in Section 3.6(a) hereof.

 

“Audited Redemption Price” has the meaning set forth in Section 2.4 hereof.

 

“Audited Redemption Statement” has the meaning set forth in Section 2.4 hereof.

 

“Audited Financial Statements” has the meaning set forth in Section 3.6(a) hereof.

 

“Basis” shall mean any past or present fact, condition, activity, practice, plan, occurrence, event, action, failure to act, or transaction that forms or could reasonably form the basis for any specified consequence.

 

“Big Four Accounting Firm” has the meaning set forth in Section 2.5.

 

“Big Four Earnout Notice of Disagreement” has the meaning set forth in Section 2.5.

 

“Big Four Earnout Statement” has the meaning set forth in Section 2.5.

 

“Big Four Payment Amounts” has the meaning set forth in Section 2.5.

 

“Board” shall mean the governing body of the Company in the name of the Board of Directors or Board of Managers, equivalent to the governing body of a manager-managed limited liability company under the Delaware Limited Liability Company Act.

 

“Business Day” shall mean any day that is not a weekend or a holiday of the United States or the State of Illinois.

 

“Buyer” has the meaning set forth in the opening paragraph hereof.

 

“Buyer Group Entity” shall mean each of Buyer, Buyer Parent and any Parent Affiliate, Subsidiary Affiliate or Sister Affiliate of Buyer or Buyer Parent and any Buyer Affiliated Fund (including any Parent Affiliate, Subsidiary Affiliate and Sister Affiliate of a Buyer Affiliated Fund).

 

“Buyer Affiliated Fund” shall mean any private equity fund, venture capital fund or other entity now or hereafter existing that is controlled by (i) one or more general partners or managing

 

3

 

members of Buyer Parent or (ii) one or more general partners or managing members of any parent entity which has a controlling interest in Buyer Parent.

 

“Buyer Indemnified Persons” has the meaning set forth in Section 12.2 hereof.

 

“Buyer Parent” has the meaning in the Preamble above.

 

“Buyer’s Advisors” shall mean the counsel, accountants and financial advisors of Buyer and Buyer Parent as set forth in Schedule 13.1.

 

“Cap Amount” has the meaning set forth in Section 12.4(b) hereof.

 

“Change of Control Transaction” means (i) any consolidation or merger of the Company with or into any corporation or other entity or person, or any other reorganization, other than any such consolidation, merger or reorganization in which the members of the Company immediately prior to such consolidation, merger or reorganization, continue to hold at least a majority of the voting power of the surviving entity (or, if the surviving entity is a wholly-owned subsidiary, its parent) immediately after such consolidation, merger or reorganization in substantially the same proportion as their voting power of the Company immediately prior to such consolidation, merger or reorganization, (ii) any transaction or series of related transactions to which the Company or any member is a party, including any issuance of new equity by the Company, in which, in the aggregate, in excess of fifty percent (50%) of the Company’s voting power is transferred, directly or indirectly, or (iii) a sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company or (iv) any other transaction whereby a non-Affiliate of the Company, directly or indirectly, gains the power or authority to elect or replace a majority of the Board and such transaction is reasonably likely to materially adversely affect the operations or management of the Company.

 

“Closing” has the meaning set forth in Section 2.6 hereof.

 

“Closing Date” has the meaning set forth in Section 2.6 hereof.

 

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

 

“Company” has the meaning set forth in the introductory paragraph hereof.

 

“Company Accountants” has the meaning set forth in Section 2.4 hereof.

 

“Company Audit Election” has the meaning set forth in Section 2.5.

 

“Company Benefit Plans” has the meaning set forth in Section 3.14.

 

“Company’s Knowledge” shall mean the actual knowledge of (i) Christopher Dalton, (ii) Scott Spear, (iii) Paul Weinewuth, (iv) Matthew Schmeltz, (v) Ray Grady, or (vi) James Newman, after reasonable inquiry of applicable senior management of the Company regarding their respective area of primary responsibility.

 

“Consent” has the meaning set forth in Section 3.4(e) hereof.

 

4

 

“Contemplated Transactions” shall mean  all of the transactions contemplated by this Agreement and all other Operative Agreements, including but not limited to (a) the performance by Buyer, Buyer Parent, the Company and the Members of their respective covenants and obligations under this Agreement and all other Operative Agreements; (b) the sale and issuance of the New Units by the Company to Buyer; and (c) the Redemption of Redemption Units by the Company from the Members.

 

“Damages” has the meaning set forth in Section 12.2 hereof.

 

“Debt” shall mean with respect to any Person at any date, without duplication, (i) all obligations of such Person for borrowed money or in respect of loans or advances, (ii) all obligations of such Person upon which interest charges are customarily paid, (iii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iv) all obligations in respect of letters of credit, whether or not drawn, and bankers’ acceptances issued for the account of such Person, (v) all capitalized lease obligations of such Person including, without limitation, any lease termination payments or charges, (vi) any obligations of such Person for the deferred purchase price of goods and services, including any such obligations secured by a contractual lien, but excluding trade accounts payable and accrued expenses incurred in the ordinary course of business, (vii) all interest rate protection agreements of such Person, (viii) any accrued but unpaid interest or prepayment or other penalties upon any of the foregoing, and (ix) all guarantees (or arrangements having the economic effect of a guarantee) of such Person in connection with any of the foregoing.

 

“Demand” has the meaning set forth in Section 13.3(b) hereof.

 

“Determination Date” has the meaning set forth in Section 2.4 hereof.

 

“Disclosure Schedules” has the meaning set forth in Section 2.7(a)(ii) hereof.

 

“Disputed Items” has the meaning set forth in Section 2.4(c) hereof.

 

“Distribution Escrow” has the meaning set forth in Section 2.5(a).

 

“DOL” has the meaning set forth Section 3.14.

 

“EBITDA” has the meaning set forth in Section 2.5(i).

 

“Earnout Notice of Disagreement” has the meaning set forth in Section 2.5(b) hereof.

 

“Earnout Payment” has the meaning set forth in Section 2.5(a).

 

“Earnout Period” shall mean each of the twelve-month period ending on December 31, 2008 and December 31, 2009, respectively.

 

“Employment Agreements” has the meaning set forth in Sections 9.4(b).

 

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

 

5

 

“ERISA Affiliate” has the meaning set forth in Section 3.14(b)(viii).

 

“Escrow Agreement” has the meaning set forth in Section 2.5(a).

 

“Final Adjustment Amount” has the meaning set forth in Section 2.4(c)(ii) hereof.

 

“Final Determination” has the meaning set forth Section 12.5.

 

“Financial Statement Representations” has the meaning set forth Section 12.1.

 

“Firesale” has the meaning set forth in Section 2.5(l).

 

“Fraud” shall mean an act or omission made with scienter constituting a knowing misrepresentation of the truth, or intentional concealment of a material fact necessary to make a material statement made not misleading, made or concealed to induce another Person to act to his, her or its detriment.

 

“Fraud Claims” have the meaning set forth in Section 12.1(a) hereof.

 

“Fundamental Representations” has the meaning set forth in Section 12.1(a) hereof.

 

“GAAP” means United States generally accepted accounting principles applied on a basis consistent with the methodologies, practices and principles (including, without limitation, considerations of materiality) used in the preparation of the Company’s latest Audited Balance Sheet.

 

“Governmental Authorization” shall mean any approval, consent, license, permit, waiver, or other authorization issued, granted, given, or otherwise made available by or under the authority of any Governmental Body or pursuant to any Legal Requirement.

 

“Governmental Body” shall mean any (A) nation, state, county, city, town, district, or other jurisdiction of any nature; (B) federal, state, local, municipal, foreign, or other government; (C) governmental authority of any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal); (D) multi-national organization or body; or (E) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature.

 

“Guaranteed Obligations” has the meaning set forth in Section 12.10.

 

“Guarantor” has the meaning set forth in Section 12.10.

 

“Independent Accounting Firm” has the meaning set forth in Section 2.4(c).

 

“Intellectual Property” shall mean the Company’s:

 

(i)            trademarks, service marks, trade dress, trade names, corporate names, Internet domain names, and rights in telephone numbers, together with all translations, adaptations, derivations, and combinations thereof and including all goodwill associated therewith, and all applications, registrations, and renewals in connection therewith;

 

6

 

(ii)           inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereto, and all patents, patent applications, and patent disclosures, together with all reissuances, continuations, continuations-in-part, revisions, extensions, and reexaminations thereof;

 

(iii)          copyrightable works and copyrights in both published works and unpublished works, including related registrations and applications;

 

(iv)          trade secrets and confidential and unique business information (including unique ideas, research and development, know-how, business and marketing plans and proposals, formulae, compositions, assembly processes and techniques, manufacturing processes and techniques, production processes and techniques, technical data, designs, drawings, specifications, customer and supplier information, including customer and supplier identities, contact information, pricing and cost information);

 

(v)           computer software (including source code, executable code, data, databases, and related documentation);

 

(vi)          owned and protectable material advertising and promotional materials;

 

(vii)         rights in and to all names, titles and unique slogans, phrases or logos used in its business;

 

(viii)        websites, or portions thereof, owned or operated by or on behalf of the Company in connection with its business, (including all internet domain leases and domain names relating to its business), as well as all the rights in and to the use of HTML or other content incorporated on any such websites or portion thereof relating to its business, and all information contained in and rights to the “visitor” data base for those sites;

 

(ix)           goodwill associated therewith;

 

(x)            other proprietary rights; and

 

(xi)           copies and tangible embodiments of the foregoing (in whatever form or medium).

 

“IRS” has the meaning set forth Section 3.14.

 

“Leases” has the meaning set forth Section 3.8(a)(ii).

 

“Leased Real Property” has the meaning set forth in Section 3.8(a)(i).

 

“Legal Requirement” shall mean any federal, state, local, municipal, foreign, international, multinational, or other administrative order, constitution, law, ordinance, principle of common law, regulation, statute, or treaty.

 

“Liability” shall mean with respect to any Person, any liability or obligation of such Person of any kind, character or description, whether known or unknown, and whether absolute, accrued, due, contingent or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

 

“Licensed Intellectual Property Assets” shall mean any Intellectual Property licensed from a third party to the Company or licensed from the Company to a third party.

 

7

 

“Lien” shall mean any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

 

“MAE” shall mean any state of facts, change, effect, event or occurrence that has been, is or could reasonably be expected to be material and adverse to the (i) financial condition, (ii) business, (iii) results of operations, (iv) assets, (v) liabilities, (vi) operations of the Company or the ability of the Company to consummate the Contemplated Transactions, but excluding any effect or change arising from a) the announcement or pendency of the transactions contemplated by this Agreement, b) changes in general conditions in the industry in which the Company participates after the date of this Agreement that do not disproportionately effect the Company, and c) any state of facts, change, effect, event or occurrence arising in connection with any “act of God” including natural disasters and earthquakes, hostilities, acts of war, sabotage or terrorism or military actions or any escalation or material worsening of any such hostilities (it being understood that for purposes of analyzing whether any state of facts, change, effect, development, event or occurrence constitutes a “MAE” under this definition, the parties agree that (A) the analysis of materiality shall not be limited to a long-term perspective and (B) each of the terms contained in (i) through (vi) above are intended to be separate and distinct).

 

“Management Agreement” has the meaning set forth in Section 2.7.

 

“Management Change” means such time that a majority of Christopher Dalton, Paul Weinewuth, Matt Schmeltz, Scott Spear, Ray Grady and Jim Newman no longer serve as Executive Vice Presidents (or more senior officers of the Company) or have their duties and responsibilities materially diminished or reduced by the Company which diminution or reduction has not been cured by the Company after receipt of written notice to the Company by such person specifying in detail the basis for such assertion.

 

“Material Contract” has the meaning set forth Section 3.18.

 

“Material Customers” has the meaning set forth in Section 3.20.

 

“Material Suppliers” has the meaning set forth in Section 3.20.

 

“Maximum Payout Amounts” has the meaning set forth in Section 2.5.

 

“Member” or “Members” has the meaning set forth in introductory paragraph hereof.

 

“Member Group” has the meaning set forth in Section 13.11.

 

“Member Indemnified Persons” has the meaning set forth in Section 12.3 hereof.

 

“Member Representative” has the meaning set forth in Section 2.9 hereof.

 

“New Units” has the meaning set forth in the Recitals.

 

“Notice of Disagreement” has the meaning set forth in Section 2.4 hereof.

 

8

 

“Operative Agreements” has the meaning set forth in Section 3.4(a) hereof.

 

“Options” has the meaning set forth in Section 3.8.

 

“Order” shall mean any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Body or by any arbitrator.

 

“Ordinary Course of Business:” an action taken by a Person shall be deemed to have been taken in the Ordinary Course of Business if:

 

(i)            such action is recurring in nature and consistent with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person; and

 

(ii)           such action is not required to be authorized by the board of directors of such Person (or by any Person or group of Persons exercising similar authority) and is not required to be specifically authorized by the parent company (if any) of such Person.

 

“Organizational Documents” shall mean any charter or similar document adopted or filed in connection with the creation, formation or organization of a Person, and any amendments thereto.

 

“Owned Intellectual Property Assets” shall mean Intellectual Property owned by the Company.

 

“Payment Amount” has the meaning set forth in Section 2.4(b) in the Payment Formula.

 

“Payment Formula” shall mean the Payment Formula as defined and set forth in Section 2.4(b).

 

“PBGC” has the meaning set forth Section 3.14.

 

“Permitted Liens” shall mean, collectively, (i) Liens that are disclosed in Section (a) of the Disclosure Schedules, (ii) Liens for Taxes, levies, duties or other governmental charges of any kind which are not yet delinquent or are being contested in good faith by appropriate proceedings, (iii) Liens for carriers, contractors, warehousemen, mechanics, materialmen, laborers, employees, suppliers or other similar Persons arising by operations of law, (iv) Liens relating to Deposits made in the Ordinary course of Business in connection with workers’ compensation, unemployment insurance and other types of social security or to secure the performance of leases, trade contracts or other similar agreements, (v) in the case of real property, any matters, restrictions, covenants, conditions, limitation, rights, rights of way, encumbrances, encroachments, reservations, easements, agreements and other matters of record, such state of facts of which an accurate survey or inspection of the property would reveal, (vi) Liens securing the obligators of the Company under secured indebtedness of the Company, if any, which will be released at Closing, and (vii) Liens on assets that are leased or Intellectual Property that is licensed in the Ordinary Course of Business.

 

9

 

“Person” shall mean any natural person, corporation, general partnership, limited partnership, limited liability company or partnership, proprietorship, other business organization, trust, union, association or Governmental Body.

 

“Pre-Closing Tax Periods” has the meaning set forth in Section 2.7(d) hereof.

 

“Prior Adjusted Payout Amount” has the meaning set forth in Section 2.5.

 

“Privacy Laws” shall mean all applicable federal and state privacy, confidentiality, consumer protection, advertising, electronic mail and data security laws and regulations to which customer data and information that the Company collects in conducting its business is subject.

 

“Proceeding” shall mean any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative, investigative, or informal) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Body or arbitrator.

 

“Purchase Price” has the meaning set forth in Section 2.2.

 

“Qualified Member Representative” means the Person that is then serving as the Member Representative provided that there has occurred a Management Change (it being understood that if there has not been a Management Change, there shall be no Qualified Member Representative).

 

“Qualified Plan” has the meaning set forth Section 3.14.

 

“Records” has the meaning set forth Section 8.5.

 

“Redemption” has the meaning set forth in Section 2.4.

 

“Redemption Percentage” has the meaning set forth in Section 2.4(a).

 

“Redemption Price” has the meaning set forth in Section 2.4.

 

“Redemption Units” has the meaning set forth in Section 2.4.

 

“Reorganization” has the meaning set forth in Section 2.5(l).

 

“Registration Rights Agreement” has the meaning set forth in Section 2.7.

 

“Sales” has the meaning set forth in Section 2.5.

 

“Securities Act” shall mean the Securities Act of 1933 of the United States, as amended.

 

“Statutory Representations” has the meaning set forth in Section 12.1(a) hereof.

 

“Subsequent Audit of Financial Statements” has the meaning set forth in Section 2.5(n) hereof.

 

10

 

“Subsidiary” shall mean any Person with respect to which a specified Person (or Subsidiary thereof) owns a majority of the common stock or has the power to vote or direct the voting of sufficient securities to elect a majority of the directors or other governing body.

 

“Target EBITDA” has the meaning set forth in Section 2.4.

 

“Target Payout” has the meaning set forth in Section 2.4.

 

“Target Sales” has the meaning set forth in Section 2.4.

 

“Taxes” shall mean all federal, state, local, foreign and other governmental net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties, or other taxes of any kind whatever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, and the term “Tax”   shall mean any one of the foregoing Taxes.

 

“Tax Return” shall mean all reports, returns, information returns, declarations, statements, and other documents required to be filed in respect of Taxes.

 

“Third Party Claim” has the meaning set forth in Section 12.6(a) hereof.

 

“Third Party Contributor” has the meaning set forth in Section 12.5(a) hereof.

 

“Threshold” has the meaning set forth in Section 12.4(a) hereof.

 

“UNCITRAL” has the meaning set forth in Section 13.3(b) hereof.

 

“Unit Holders Agreement” has the meaning set forth in Section 2.7 hereof.

 

“US$” shall mean US dollar, the lawful currency of the United States.

 

“WARN Act” has the meaning set forth Section 3.16.

 

ARTICLE II
 Sale and Purchase of Units; Closing; Redemption

 

2.1           Agreement to Sell and Purchase.  The Company has authorized the sale and issuance to Buyer of the New Units.  The New Units have the rights, preferences, privileges and restrictions set forth in the Third Amended and Restated Operating Agreement of the Company dated as of the date hereof, in the form attached hereto as Exhibit A (the “Amended and Restated Operating Agreement”).

 

(b)           Subject to the terms and conditions of this Agreement, at the Closing, the Company shall sell and issue to Buyer the New Units, which New Units, when paid for, shall be validly issued, fully paid and non-assessable.

 

11

 

2.2           Purchase Price.  The total purchase price for the New Units (the “Purchase Price”) shall be US$49,000,000, which shall be paid at the Closing in cash by wire transfer of immediately available funds to the Company.

 

2.3           Use of Proceeds.  The Company shall apply the proceeds from the sale of the New Units for (i) the Redemption (defined below) and (ii) for company growth and other general working capital purposes.

 

2.4           Redemption of Units Held by the Members.

 

(a)           On the Closing Date, immediately following the purchase and sale of the New Units as provided herein, and upon the terms and subject to the conditions herein, and in reliance upon the Earnout Payments to be paid in accordance with the terms hereof, the Company shall redeem, and each Member hereby agrees to sell, transfer and convey to the Company, such number of Class A Units as set forth opposite the name of such Member in the column entitled “Membership Interests Redeemed” on Schedule A attached hereto (the “Redemption”), equal in the aggregate to 780,089 Class A Units (the “Redemption Units”), and the Company shall pay to the Members an aggregate amount equal to the Redemption Price (defined below) for the Redemption Units.  The Redemption Price shall be paid to the Members on a pro rata basis with each Member receiving an amount equal to the product of such Member’s respective Redemption Percentage (set forth on Schedule A) times the Redemption Price.  The Redemption Price shall be paid by the Company at the Closing in cash by wire transfer of immediately available funds to the accounts designated by the Members reasonably in advance of the Closing, and shall be subject to adjustment, up or down, as provided in Section 2.4(c) hereof.  Immediately following the Redemption, each Member shall have the number of Class A Units of the Company set forth in the last column entitled “Class A Units Owned Following the Redemption” opposite such Member’s name on Schedule A hereto.

 

(b)           The “Redemption Price” shall equal US$23,860,190, being the Audited Redemption Price, and shall be subject to adjustment, up or down, following the Closing in accordance with Section 2.4(c) and Section 2.5(n) hereof and shall be calculated in accordance with the formula set forth below (the “Payment Formula”).  For purposes of calculating the Redemption Price:

 

(i)            “Target Payout” shall equal US$21,000,000;

 

(ii)           “Target Sales” shall equal US$48,800,000;

 

(iii)          “Target EBITDA” shall equal US$5,800,000;

 

(iv)          “Actual EBITDA” shall equal US$6,687,398, being the 2007 Audited EBITDA, and shall be subject to adjustment as provided in Section 2.4(c) hereof.

 

(v)           “Actual Sales” shall equal US$54,216,770, being the 2007 Audited Sales, and shall be subject to adjustment as provided in Section 2.4(c) hereof.

 

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Payment Formula

 

A.

 

if Actual EBITDA divided by Target EBITDA is equal to or greater than 50%, then the Payment Formula shall be as follows:

 

Actual Sales ÷Target Sales × .4 = X
 Actual EBITDA ÷ Target EBITDA × .6 = Y
 (X+Y) = Z
 Target Payout × Z = Payment Amount

 

B.

 

if Actual EBITDA divided by Target EBITDA is less than 50%, then the Payment Formula shall be as follows:

 

Actual EBITDA ÷ Target EBITDA = X

 

Target Payout × X = Payment Amount

 

A sample of how such calculations shall work is set forth in Schedule 2.5 attached hereto.

 

(c)                                  Redemption Price Adjustment.

 

(i)                                     Mowery & Schoenfeld, LLC (the “Company Accountants”) has prepared and the Company has delivered prior to Closing an audited balance sheet of the Company as of December 31, 2007 and a related audited statement of income and cash flow for the fiscal year then ended, together with the report thereon of the Company Accountants (collectively, the “2007 Audited Financial Statements”).  The 2007 Audited Financial Statements were prepared in accordance with GAAP.  The Company has delivered to Buyer and the Members prior to Closing  a written statement (the “Audited Redemption Statement”), certified in writing by the Company Accountants, showing (a) the Sales and EBITDA as of the year ending December 31, 2007 as derived from the 2007 Audited Financial Statements (respectively, the “2007 Audited Sales” and “2007 Audited EBITDA”) and (b) the applicable Redemption Price and Payment Amount to be paid at Closing using the Payment Formula with Actual Sales equal to the 2007 Audited Sales and Actual EBITDA equal to the 2007 Audited EBITDA (the “Audited Redemption Price”), subject to adjustment after Closing pursuant to the following section.

 

(ii)                                  If Buyer disagrees with the Audited Redemption Price on the Audited Redemption Statement, such party shall notify the Company of such disagreement in writing within twenty (20) Business Days after the Closing (such notice herein the “Notice of Disagreement”), which notice shall specify in reasonable detail the items in dispute (“Disputed Items”) and the bases for the disagreement regarding such items. Failure of Buyer to provide the

 

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Company with the Notice of Disagreement within the twenty (20) Business Day period shall be deemed to be acceptance of the Audited Redemption Price.  Further, any matter not specifically set forth in the Notice of Disagreement as a Disputed Item shall be deemed final and agreed, subject to Section 2.5(n) (Subsequent Audit of Financial Statements).  Buyer, Members and the Company shall use reasonable efforts to cooperate in good faith for a period of fifteen (15) calendar days after the Company’s receipt of the Notice of Disagreement (or such longer period as the parties may mutually agree upon in writing) to resolve the specific disagreements raised with respect to the Disputed Items. During any such period of dispute, the parties and their accountants shall have reasonable access to all of the working papers of the Company and the Company Accountants relating to the Disputed Items.  If, at the end of such period, the parties do not resolve such disagreements, the parties shall promptly select a mutually acceptable independent accounting firm of recognized standing to review the calculation of the Audited Redemption Price and to resolve any remaining disagreements regarding the Disputed Items; provided, however that the Independent Accounting Firm’s analysis and decision shall be limited to the Disputed Items and bases set forth in the Notice of Disagreement.  If the parties cannot agree upon an accounting firm, they shall choose an accounting firm by lot from those national accounting firms having no material relationship to any of the parties or their Affiliates (the firm agreed to in the preceding sentence, or if not agreed to, as selected under this sentence shall be referred to as the “Independent Accounting Firm”). The determination by such Independent Accounting Firm shall be final, binding and conclusive on the Company (including the Members) and Buyer and judgment may be entered thereon in a court of competent jurisdiction. The parties shall make their respective submissions to the Independent Accounting Firm within thirty (30) calendar days after selecting such Independent Accounting Firm pursuant to this Section. The parties shall use reasonable efforts to cause such Independent Accounting Firm to make its determination within thirty (30) calendar days after accepting its selection. The fees and expenses of such Independent Accounting Firm shall be paid by the Company; provided that 30% of such cost shall be paid by the Members by a dollar for dollar reduction in the Audited Redemption Price.  The Audited Redemption Price, as adjusted by the Independent Accounting Firm (including the reduction corresponding to the 30% of the cost of the Independent Accounting Firm) or as otherwise adjusted or agreed to by the parties pursuant to this Section 2.4(c), is referred to as the “Final Adjustment Amount.”  Within five (5) days following the date of receipt of such determination by the Independent Accounting Firm or the date the parties otherwise agree upon the Final Adjustment Amount (either such date, the “Determination Date”), the parties shall take the following action:

 

(A)                              in the event that the Final Adjustment Amount is greater than the Audited Redemption Price, the Company shall distribute to the Members the difference (pro rata as to each member in accordance with his or its Redemption Percentage);

 

(B)                                in the event that the Final Adjustment Amount is less than the Audited Redemption Price, the Members (pro rata as to each Member in accordance with their Redemption Percentage) shall repay to the Company an amount equal to the difference between the Final Adjustment Amount and the Audited Redemption Price.

 

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2.5                                 Distribution Escrow.

 

(a)                                  Concurrently with the payment of the Redemption Price at Closing, the Company shall cause US$21,000,000 to be placed into an interest bearing escrow account (the “Distribution Escrow”), which shall be released in accordance with this Section 2.5 and in accordance with the Escrow Agreement attached hereto as Exhibit B (the “Escrow Agreement”).  All payments that are made to the Members pursuant to this Section 2.5 (including payments released to the Members from the Distribution Escrow) are referred to herein as “Earnout Payments.” The Earnout Payments shall be treated as a distribution from the Company to the Members.

 

(b)                                 2008 Earnout Payment.

 

(i)                                     As soon as is reasonably practicable following the completion of the 2008 calendar year, the Company Accountants shall prepare an audited balance sheet of the Company as of December 31, 2008 and a related audited statement of income and cash flow for the fiscal year then ended, together with the report thereon of the Company Accountants (collectively, the “2008 Audited Financial Statements”).  The 2008 Audited Financial Statements shall be prepared in accordance with GAAP in a manner consistent with the preparation of the Audited Financial Statements.  Within five (5) Business Days following completion of the 2008 Audited Financial Statements, the Company shall deliver to Buyer and the Member Representative a written statement (the “2008 Earnout Statement”), certified in writing by the Company Accountants and, provided that there has not been a Management Change, also approved by the Chief Financial Officer of the Company after consultation with the other members of the Company’s management team (provided that the Chief Financial Officer is a Member or a member of a Member), showing the Sales and EBITDA as of the year ending December 31, 2008 as derived from the 2008 Audited Financial Statements.  If the Chief Financial Officer is not a Member or a member of a Member, the majority of the Members must have approved the 2008 Earnout Statement. If Buyer or the Qualified Member Representative (if any) disagree with the 2008 Earnout Statement, they shall notify the Company of such disagreement in writing within twenty (20) Business Days after receipt of the 2008 Earnout Statement (such notice herein the “Earnout Notice of Disagreement”), which notice shall specify in reasonable detail the Disputed Items and the bases for the disagreement regarding such items, and the parties shall follow the procedures set forth in Section 2.5(d) hereof to resolve the specific disagreements.  If no Earnout Notice of Disagreement is provided within the applicable time period, the 2008 Earnout Statement shall be final as calculated by the Company.  The Sales and EBITDA as of the year ending December 31, 2008 that are finally determined shall be referred to herein, respectively, as the “2008 Audited Sales” and “2008 Audited EBITDA”.  Promptly following such final determination of the 2008 Audited Sales and the 2008 Audited EBITDA, the Company shall distribute to the Members the 2008 Earnout Payment, calculated as set forth below.

 

(ii)                                  The “2008 Earnout Payment” shall equal the Payment Amount obtained by using the Payment Formula.  For purposes of calculating the 2008 Earnout Payment:

 

(i)                                     “Target Payout” shall equal US$12,600,000;

 

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(ii)                                  “Target Sales” shall equal US$73,600,000;

 

(iii)                               “Target EBITDA” shall equal US$9,600,000;

 

(iv)                              “Actual EBITDA” shall equal the 2008 Audited EBITDA; and

 

(v)                                 “Actual Sales” shall equal the 2008 Audited Sales.

 

(iii)                               Catch-up — If (xx) the 2008 Pro-Forma Earnout Payment is less than the Target Payout for 2008 and (yy) the 2009 Earnout Payment equals or exceeds the Target Payout for 2009, then, at the time of the payment of the 2009 Earnout Payment, the Company shall also distribute to the Members an additional payment equal to the difference between the Target Payout for 2008 and the 2008 Pro-Forma Earnout Payment.  For purposes herein, the “2008 Pro-Forma Earnout Payment” shall equal the sum of (i) the 2008 Earnout Payment plus (ii) the amount of any reduction in the 2008 Earnout Payment pursuant to Section 2.5(d) in respect of fees paid to the Independent Accounting Firm plus (iii) the amount of any offset against the 2008 Earnout Payment pursuant to and in accordance with Section 2.5(j).

 

(c)                                  2009 Earnout Payment.

 

(i)                                     As soon as is reasonably practicable following the completion of the 2009 calendar year, the Company Accountants shall prepare an audited balance sheet of the Company as of December 31, 2009 and a related audited statement of income and cash flow for the fiscal year then ended, together with the report thereon of the Company Accountants (collectively, the “2009 Audited Financial Statements”).  The 2009 Audited Financial Statements shall be prepared in accordance with GAAP in a manner consistent with the preparation of the Audited Financial Statements.  Within five (5) Business Days following completion of the 2009 Audited Financial Statements, the Company shall deliver to Buyer and Members a written statement (the “2009 Earnout Statement”), certified in writing by the Company Accountants and, provided that there has not been a Management Change, also approved by the Chief Financial Officer of the Company after consultation with the other members of the Company’s management team (provided that the Chief Financial Officer is a Member or a member of a Member), showing the Sales and EBITDA as of the year ending December 31, 2009 as derived from the 2009 Audited Financial Statements.  If the Chief Financial Officer is not a Member or a member of a Member, the majority of the Members must have approved the 2009 Earnout Statement. If Buyer or the Qualified Member Representative (if any) disagree with the 2009 Earnout Statement, they shall notify the Company of such disagreement in writing within twenty (20) Business Days after receipt of the 2009 Earnout Statement (such notice herein the “Earnout Notice of Disagreement”), which notice shall specify in reasonable detail the specific bases for the disagreement, and the parties shall follow the procedures set forth in Section 2.5(d) hereof to resolve the specific disagreements.  If no Earnout Notice of Disagreement is provided within the applicable time period, the 2009 Earnout Statement shall be final as calculated by the Company.  Further, any matters not specifically set forth in the Earnout Notice of Disagreement shall be deemed final and agreed, subject to Section 2.5(n) (Subsequent Audit of Financial Statements).  The Sales and EBITDA as of the year ending December 31, 2009 that are finally determined shall be referred to herein, respectively, as the “2009 Audited Sales” and “2009 Audited EBITDA”.  Promptly following such final determination of the 2009 Audited Sales and the 2009

 

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Audited EBITDA, the Company shall distribute to the Members the 2009 Earnout Payment, calculated as set forth below.

 

(ii)                                  The “2009 Earnout Payment” shall equal the Payment Amount obtained by using the Payment Formula.  For purposes of calculating the 2009 Earnout Payment:

 

(ii)                                  “Target Payout” shall equal US$8,400,000;

 

(iii)                               “Target Sales” shall equal US$110,000,000;

 

(iv)                              “Target EBITDA” shall equal US$14,400,000;

 

(v)                                 “Actual EBITDA” shall equal the 2009 Audited EBITDA; and

 

(vi)                              “Actual Sales” shall equal the 2009 Audited Sales.

 

(d)                                 Resolution of Earnout Disagreement.  In the event a party delivers an Earnout Notice of Disagreement, the parties shall use reasonable efforts and cooperate in good faith for a period of fifteen (15) calendar days after the Company’s receipt of the Earnout Notice of Disagreement (or such longer period as the parties may mutually agree upon in writing) to resolve the Disputed Items identified in the Earnout Notice of Disagreement with respect to the applicable Earnout Statement.  During any such period of dispute, the parties and their accountants shall have reasonable access to all of the working papers of the Company and the Company Accountants relating to the Disputed Items.  If, at the end of such period, the parties do not resolve such disagreements, the parties shall within three (3) Business Days of the end of such period or as promptly as practicable thereafter if it is not reasonably possible to provide such notice within three (3) Business Days, select an Independent Accounting Firm to make such determination regarding the Disputed Items.  In the event the Company has elected to cause a Subsequent Audit of Financial Statements pursuant to Section 2.5(n) hereof and the parties shall also be selecting an Independent Accounting Firm for purposes of this Section 2.5(d) in connection with the resolution of an Earnout Notice of Disagreement for the 2009 Earnout Statement, the parties shall use the Big Four Accounting Firm so chosen under Section 2.5(n) as the Independent Accounting Firm for such 2009 Notice of Disagreement to the extent reasonably practicable; and further provided that payment of the 2009 Earnout Payment in accordance with the procedures set forth in Section 2.5(c) and this Section 2.5(d) shall not be delayed as a result of the election to cause a Subsequent Audit of Financial Statements.  The determination by the Independent Accounting Firm shall be final, binding and conclusive on the Company (including the Members) and Buyer and judgment may be entered thereon in a court of competent jurisdiction. The parties shall make their respective submissions to the Independent Accounting Firm regarding the Disputed Items within thirty (30) calendar days after selecting such firm pursuant to this Section. The parties shall use reasonable efforts to cause such Independent Accounting Firm to make its determination within thirty (30) calendar days after accepting its selection. The fees and expenses of such Independent Accounting Firm shall be paid by the Company; provided that 30% of such fees and expenses shall be paid by the Members by a dollar for dollar reduction in the Adjustment.  Within five (5) calendar days following the date of receipt of such determination by the Independent Accounting Firm or the date the parties

 

17

 

otherwise agree upon the applicable Earnout Payment, the Company shall distribute the applicable Earnout Payment to the Members.

 

(e)                                  Amount Paid From Distribution Escrow.   If, and to the extent, an Earnout Payment exceeds the applicable Target Payout, the amount of any such excess shall be paid by the Company and not from the Distribution Escrow, subject to the Maximum Payout Amount (defined below).  If, and to the extent, an Earnout Payment is less than the applicable Target Payout, the amount of any such deficiency shall be distributed to the Company from the Distribution Escrow.

 

(f)                                    Maximum Payout Amount.  The maximum aggregate amount (“Maximum Payout Amounts”) that the Company shall pay to the Members (in respect of the sum of the Redemption Price, the 2008 Earnout Payment (including any catch-up payment) and the 2009 Earnout Payment, including any adjustments pursuant to Section 2.5(d) (Resolution of Earnout Disagreement) (including any applicable reduction in Payout Amounts for the Members 30% portion of fees to an Independent Accounting Firm) and Section 2.5(n) (Subsequent Audit of Financial Statements)) shall be US$49,000,000.  At such time that an aggregate amount of Payment Amounts reaches US$49,000,000, no further Payment Amounts shall be made to the Members.   The parties acknowledge and agree that the Company may (but is not required to) declare a special dividend to the Members of the Company if the Company overachieves such that the aggregate Payment Amounts would have exceeded US$49,000,000 if this payout limitations was not in place.  All Payment Amounts shall have priority over other distributions to be made by the Company in the manner set forth in the Amended and Restated Operating Agreement.

 

(g)                                 Force Majeure. The Parties acknowledge and agree that in the event of a force majeure event during the Earnout Period, all calculations shall be adjusted to account for such event so that the Members are not adversely affected by such force majeure event.

 

(h)                                 Sales.  All calculations of “Sales” shall be based upon gross revenue of the Company and determined in accordance with GAAP.

 

(i)                                     EBITDA.  All calculations of “EBITDA” and the components of which EBITDA is comprised shall be determined in accordance with GAAP but shall include as an add back all (i) legal, accounting and out-of-pocket fees and expenses of the Members and the Company that were incurred or paid by the Company in 2007 for this transaction with the Buyer subject to a cap of US$200,000 (which amount includes US$75,000 of the retainer that has already been paid to William Blair & Company in 2007 by the Company), (ii) any fees or expenses of the Company incurred or paid by the Company in 2008 or 2009 for this transaction with Buyer, including but not limited to any charges, Taxes and fees of any kind incurred pursuant to Section 2.9  of this Agreement, (iii) all direct and indirect expenses as determined in good faith by the Board of Directors incurred in connection with the pursuit of a New Venture (as defined in the Operating Agreement) and which New Venture both the Advisory Member (as defined in the Operating Agreement) and the holders of seventy-five percent (75%) of the Units then held by all Members have not approved as set forth in Section 8.11(b)(ii) of the Operating Agreement, and (iv) fees or expenses paid or incurred by the Company as required by Buyer or Buyer Parent in connection with or as a result of the transactions contemplated herein, including but not limited

 

18

 

to fees of the Buyer’s Advisors, any management fee and key-man insurance premiums and any fees for the Independent Accounting Firm following a Notice of Disagreement or Earnout Notice of Disagreement; provided, however, that any contingent fees (as opposed to any retainer paid in 2007 and any cost reimbursements) payable to investment bankers, including William Blair & Company, as a result of the consummation of the Contemplated Transactions, will be paid directly by the Members and will not be an add back for calculating EBITDA; and further provided that to the extent any interest earned on the funds held in the Distribution Escrow is distributed to the Members, such interest so distributed to the Members shall not be included in the determination of EBITDA to the extent it otherwise would be so included as earnings of the Company.  All transaction expenses that are added back to the determination of EBITDA pursuant to this Section 2.5(i) other than those categories that are specifically identified above shall be subject to the reasonable approval of Buyer.

 

(j)                                     Offset.  Earnout Payments to be made to Members may, at the election of Buyer, be subject to offset against any amounts due to Buyer pursuant to Article XII (Indemnification; Remedies) and the Company agrees to distribute any such offset amount on behalf of the Members to Buyer.  For purposes of this Section 2.5(j), amounts shall be “due” pursuant to Article XII only upon a Final Determination (as defined in Section 12.5(b)); provided further, for the avoidance of doubt, no Earnout Payment otherwise due to the Members shall be withheld or delayed because of the pendency of an indemnification claim.  In addition, Earnout Payments to be made to the Members may, at the election of Buyer or the Company, be subject to offset against any amounts due to the Company from the Members pursuant to Section 2.5(d) (Resolution of Earnout Disagreement).

 

(k)                                  Operation of the Business During the Earnout Period.  The Company, the Members, Buyer and Buyer Parent covenant and agree to use, and to cause their respective Affiliates and permitted transferees to use, their commercially reasonable efforts to maximize the Sales and EBITDA of the Company, taken as a whole during the Earnout Period.

 

(l)                                     Earnout Acceleration.  The Company shall cause all remaining funds in the Distribution Escrow to be released and paid to the Members by wire transfer of immediately available funds if a Change of Control Transaction occurs prior to the termination of the Earnout Period, other than (A) such transaction in which the operations of the Company remain as a standalone business, George Lu remains on the Board of the Company and the Members are entitled to designate a member of the Board of the Company, and there is not a Management Change, and the consideration received or to be received in connection with such transaction is not cash, cash equivalents or publicly traded securities (a “Reorganization”), (B) such transaction in which the sale is for an aggregate value of less than US$25,000,000 (a “Firesale”), or (C) such transaction which is a transfer of the Buyer’s or Buyer Parent’s direct or indirect equity ownership in the Company to any Affiliate of Buyer and provided further that such transfer to an Affiliate does not cause a material change in the business, operations or management of the Company (a “2020 Permitted Transfer”).

 

(m)                               Delay in Earnout Payment.  The Company agrees to use commercially reasonable efforts to cause the 2008 Audited Financial Statements and the 2009 Audited Financial Statements to be prepared within 60 days following the completion of the applicable calendar year.  In the event that (x) there has been a Management Change and (y) the 2008 Audited

 

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Financial Statements or the 2009 Audited Financial Statements, as applicable, have not been prepared within such 60 day period (subject to the Board Certification Letter discussed below), the Company will advance to the Members an amount equal to 90% of the applicable Payment Amount based on the unaudited financial statements for such period (the “Advancement Amount”).  Following the completion of the applicable Audited Financial Statements, the Company shall calculate the Earnout Payment as provided in Section 2.5(b) or Section 2.5(c), as applicable, and shall reduce the amount of any Earnout Payment by the applicable Advancement Amount.  In the event that the Advancement Amount exceeds the applicable Earnout Payment (as may be finally determined pursuant to Section 2.5(d)), the Members shall promptly pay such excess to the Company.  Notwithstanding the foregoing provisions of this clause (m), in the event the Company delivers to the Member Representative a letter within 10 days following the expiration of such 60 day period signed by a majority of the members of the Board of Directors of the Company attesting that the delay in the preparation of the applicable audited financial statements is either (yy) in the interest of the Company or (zz) a result of actions (or inactions) outside of the control of the Company, then the Company shall not be obligated to pay the Advancement Amount unless the applicable audited financial statements are not completed within 90 days following the completion of the applicable calendar year.

 

(n)                                 Subsequent Audit of Financial Statements.  The parties agree to allow for the following additional review of financial statements with respect to the actual Sales and EBITDA results for 2007, 2008 and 2009:

 

(i)                                     Upon the election by a majority of the members of the Board of Directors of the Company (“Company Audit Election”), with a notice of such election delivered to the Buyer and the Member Representative following the delivery to Buyer of the 2009 Audited Financial Statements, the Company will engage one of Pricewaterhouse Coopers, Deloitte Touche Tohmatsu, Earnst & Young or KPMG (or any successor entity of such four accounting firms), with which neither Buyer no Members has or previously had a material relationship (such firm that is so engaged shall be referred to herein as the “Big Four Accounting Firm”) to perform an audit of the 2007 Audited Financial Statements, 2008 Audited Financial Statements and 2009 Audited Financial Statements (“Subsequent Audit of Financial Statements”) and shall instruct such firm to complete such audit as soon as is reasonably practicable.  If the 2009 Audited Financial Statements are completed prior to March 31, 2010 and a Company Audit Election subsequently is made, the Company will use best efforts to cause the Big Four Accounting Firm to complete such audit prior to October 1, 2010, with the objective that any disagreement as to the results of such audit be resolved by no later than December 31, 2010 (the “Audit Cut-Off Date”).  If the 2009 Audited Financial Statements are completed on or after March 31, 2010 and a Company Audit Election subsequently is made, the Company will use best efforts to cause the Big Four Accounting Firm to complete such audit before the later of (yy) such date that is 180 days after the receipt by the Company of the 2009 Audited Financial Statements and (zz) October 1, 2010.  If there has been a Management Change prior to the completion of the 2009 Audited Financial Statements, the Company shall use commercially reasonably efforts to cause the 2009 Audited Financial Statements to be prepared and delivered as soon as reasonably practicable.  The fees and expenses of the Big Four Accounting Firm to complete such audit shall be paid for by the Company.  Within five (5) Business Days following completion of such audit, the Company shall deliver to Buyer and the Member Representative a written statement (the “Big Four Earnout Statement”), certified in writing by the Big Four Accounting Firm, showing the

 

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Sales and EBITDA as of the year ending December 31 for each applicable year end and the resulting Payment Amounts based on the Payment Formula provided above for each such period (including any catch-up payment that may be applicable under Section 2.5(b)(iii)) (the “Big Four Payment Amounts”).  If either Buyer or the Member Representative disagrees with the Big Four Earnout Statement (and corresponding Big Four Payment Amounts), such party shall notify the Company of such disagreement in writing, specifying in detail the bases for the disagreement, within fifteen (15) Business Days after receipt of the Big Four Earnout Statement (such notice herein the “Big Four Earnout Notice of Disagreement”), which notice shall specify in reasonable detail the Disputed Items and the bases for such dispute, and the parties shall follow the procedures set forth in Section 2.5(d) hereof to resolve the Disputed Items (provided that the Big Four Earnout Notice of Disagreement shall be deemed to be an “Earnout Notice of Disagreement” for purposes of applying the procedures in Section 2.5(d)) and provided that the fees and expenses of the Independent Accounting Firm shall be fully paid by the Company with no reduction related thereto to be made to any amounts owed to the Members.  If no Big Four Earnout Notice of Disagreement is provided within the applicable time period, the Big Four Earnout Statement shall be final as calculated by the Big Four Accounting Firm.  Within five (5) days following the date that the Big Four Earnout Statement (and corresponding Big Four Payment Amounts) are finally determined, the parties shall take the following action:

 

(A)                              in the event that the Big Four Payment Amount for any one year is greater than the Payment Amount previously made for such year (as adjusted for any applicable offset pursuant to Section 2.5(j)) and for that portion of the fees of the Independent Accounting Firm for which the Members are responsible in accordance with Section 2.5(d) which has not been previously applied in calculation of such Payment Amount (the “Prior Adjusted Payout Amount”), and subject to Section 2.5(f) (Maximum Payout Amount), the Company shall distribute to the Members the difference (pro rata as to each member in accordance with their Redemption Percentage); and

 

(B)                                in the event that the Big Four Payment Amount for a particular year is less than the Prior Adjusted Payout Amount for such year, the Members shall repay to the Company an amount equal to such difference (pro rata as to each Member in accordance with their Redemption Percentage).

 

(ii)                                  If the Company does not exercise its right to cause a Big Four Accounting Firm to perform the audit as set forth in this Section 2.5(n), such right is waived and the 2007 Audited Financial Statements, 2008 Audited Financial Statements or 2009 Audited Financial Statements shall be deemed final and not subject to any further review or adjustment with respect to the Audited Redemption Price or any Earnout Payment.

 

2.6                                 Closing.

 

The consummation of the purchase of the New Units from the Company by Buyer, the issuance of the New Units from the Company to Buyer, and the Redemption provided for in this Agreement (the “Closing”) shall take place at the offices of the Buyer’s counsel, Foley & Lardner LLP, 111 Huntington Avenue, Boston, Massachusetts, at 10:00 a.m. (local time) on the later of (i) March 20, 2008 or (ii) the date that is three (3) Business Days following the date on which all of the conditions set forth in Articles IX and X of this Agreement have been satisfied or

 

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waived, or at such other time and place as the parties hereto may agree. The Closing may be conducted by facsimile.  The date on which the Closing actually takes place is referred to herein as the “Closing Date.”

 

2.7                                 Closing Obligations.

 

At the Closing:

 

(a)                                  Members and/or the Company, as applicable, shall deliver or cause to be delivered to Buyer :

 

(i)                                     the Disclosure Schedules delivered by the parties concurrently with the execution and delivery of this Agreement (the “Disclosure Schedules”);

 

(ii)                                  an officer’s certificate executed by the President and Chief Executive Officer of the Company as to the accuracy of the representations and warranties of the Company and that as to the Company’s conditions specified in Sections 9.2 and 9.3 have been satisfied as of the date of the Closing;

 

(iii)                               [reserved];

 

(iv)                              copies of the resolutions of the governing body of the Company and each Member that is not a natural person authorizing the execution, delivery and performance of this Agreement and all related documents and agreements, certified as of the Closing Date by an officer of the Company and each such Member, respectively, as being true and correct copies of the originals thereof subject to no modifications or amendments;

 

(v)                                 certificates, dated within ten days prior to the Closing Date, of the Secretary of State or other comparable officer of each jurisdiction in which the Company and each Subsidiary is organized or the nature of its business requires it to be qualified to due business in, establishing that the Company and each Subsidiary is in existence and otherwise is in good standing to transact business in such jurisdiction;

 

(vi)                              financial statements of the Company for the fiscal year ended December 31, 2007 as have been audited by the Company Accountants;

 

(vii)                           an executed copy of the Unit Holders Agreement among the Company, Buyer and any holders of Units to be effective immediately after the Closing in the form attached hereto as Exhibit C (the “Unit Holders Agreement”);

 

(viii)                        an executed copy of the Registration Rights Agreement among the Company, Buyer and any holders of Units to be effective immediately after the Closing in the form attached hereto as Exhibit D (the “Registration Rights Agreement”);

 

(ix)                                an executed copy of the Management Agreement between the Company and Buyer to be effective immediately after the Closing in the form attached hereto as Exhibit E (the “Management Agreement”);

 

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(x)            [reserved];

 

(xi)           an executed copy of the Amended and Restated Operating Agreement;

 

(xii)          a legal opinion issued by special transaction counsel to the Company in form and substance reasonably acceptable to Buyer in substantially the form attached here to as Exhibit F;

 

(xiii)         a correct and complete copy of the Directors and Officers’ insurance policy on terms reasonably acceptable to Buyer;

 

(xiv)        executed copies of the Employment Agreements between the Company and Christopher Dalton, Paul Weinewuth, Matt Schmeltz, Scott Spear, Ray Grady, Mark Joseph, Jim Newman, Andy Peebler, Jon Borg-Breen and Jay Dettling  substantially in the forms set forth in Exhibit G (the “Employment Agreements”); and

 

(xv)         the documents contemplated by Section 9.4.

 

(b)           Buyer shall deliver or cause to be delivered to the Company:

 

(i)            by wire transfer of immediately available funds to the account of the Company of the Purchase Price;

 

(ii)           a certificate delivered by a manager of Buyer as to the accuracy of the representations and warranties of Buyer and Buyer Parent;

 

(iii)          a copy of the resolutions of the governing body of Buyer authorizing the execution, delivery and performance of this Agreement and all related documents and agreements, certified as of the Closing Date by an officer of Buyer as being true and correct copies of the originals thereof subject to no modifications or amendments;

 

(iv)          an executed copy of the Unit Holders’ Agreement;

 

(v)           an executed copy of the Registration Rights Agreement;

 

(vi)          an executed copy of the Management Agreement;

 

(vii)         an executed copy of the Amended and Restated Operating Agreement; and

 

(viii)        the documents contemplated by Section 10.4.

 

(c)           Closing Deliveries Relating to Redemption.

 

(d)           At the Closing, the Company, Buyer and Members, as applicable, shall deliver, or shall have caused to be delivered to the other applicable parties, as a condition to the consummation of the Redemption, the following:

 

(i)            The Amended and Restated Operating Agreement executed by the Company, Members and Buyer;

 

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(ii)           This Agreement, executed by the Company, Members and Buyer;

 

(iii)          The Unit Holders’ Agreement, executed by the Company, Members and Buyer;

 

(iv)          The Registration Right Agreement, executed by the Company, Members and Buyer;

 

(v)           Wire transfers of the Redemption Price, as adjusted pursuant to Section 2.4(b), in immediately available funds by the Company to the Members, all as set forth on Schedule A; and

 

(vi)          A “Non-Foreign Person Affidavit”, with respect to each Member, as provided pursuant to Section 1445 of the Code.

 

(e)           General Administration of Tax Matters.  Buyer, Buyer Parent, the Company and the Member Representative shall cooperate fully, as and to the extent reasonably requested, in connection with any preparation, audit, litigation or other matter or proceeding with respect to Taxes and Tax Returns. The Company agrees to retain all books and records with respect to Tax matters pertinent to the Company relating to the periods prior to Closing (the “Pre-Closing Tax Periods”) until the expiration of any applicable statute of limitations or extensions thereof.

 

2.8           Member Representative.

 

Each Member hereby constitutes and appoints Acquity Holdings, LLC (the “Member Representative”)  to act as its representative for all purposes set forth under this Agreement, and the Member Representative hereby accepts such appointment. The Member Representative shall have the authority to act on behalf of, and to bind, each Member for all purposes of the provisions set forth under this Agreement. Without limiting the generality of the foregoing, each Member hereby irrevocably constitutes and appoints, with full power of substitution, the Member Representative as its true and lawful attorney-in-fact, with full power and authority in its name, place and stead, to execute, certify, acknowledge, deliver, file and record all agreements, certificates, instruments and other documents and any amendment thereto, which the Member Representative deems necessary or appropriate in connection with Members’ obligations under this Agreement. Each Member’s appointment of the Member Representative as its attorney-in-fact shall be deemed to be a power coupled with an interest and shall survive the incompetency, bankruptcy or dissolution of the Member giving such power. No new representative may be appointed or substituted without the prior written consent of the then current Member Representative.

 

2.9           Certain Taxes and Fees.

 

All transfer, documentary, sales, use, stamp, registration and other such Taxes (other than income taxes), and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement shall be paid by the Company when due, and each party will, at the Company’s expense, file (or if required by applicable law, join the other party in filing) all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges.

 

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ARTICLE III
 Representations and Warranties of the Company

 

For the purposes of this Article III, the “Company” shall be deemed to refer to the Company and each Subsidiary of the Company, unless the context clearly requires otherwise. The Company represents and warrants to Buyer as of the date of this Agreement as follows:

 

3.1           Organization and Good Standing.

 

(a)           The Company is a limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware with full limited liability company power and authority to conduct its business as it is now being conducted, to own or use the properties and assets that it purports to own or use, and to perform all its obligations under the contracts to which it is a party. The Company has delivered to Buyer or Buyer Parent copies of its Organizational Documents and operating agreement, as currently in effect.

 

(b)           Except as set forth in Section 3.1(b) of the Disclosure Schedules, the Company is duly qualified to do business as a foreign limited liability company and is in good standing as a foreign limited liability company in all jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so qualified does not have and would not reasonably be expected to have a MAE.

 

3.2           Subsidiaries.

 

(a)           Section 3.2(a) of the Disclosure Schedules lists the name, type of entity and state of organization of each Subsidiary of the Company (and each Subsidiary of such Subsidiaries). Each Subsidiary is an entity duly organized, validly existing and in good standing under the laws of its state of organization and has full power and authority to conduct its business as and to the extent now conducted and to own, use and lease its assets and property. Each Subsidiary is duly qualified to do business as a foreign corporation or limited liability company and is in good standing in all jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except where the failure to be so qualified does not have and would not reasonably be expected to have a MAE.  The Company, prior to the execution of this Agreement, has delivered to Buyer or Buyer Parent true and complete copies of the governing documents of each of the Company’s Subsidiaries.

 

(b)           The Company is the sole record and beneficial owner of all outstanding equity interests in each Subsidiary, and except as set forth in Section 3.2(b) of the Disclosure Schedules, there are no outstanding options, warrants, profits interests, rights (including conversion or preemptive rights and rights of first refusal) or any other rights or securities convertible into or exchangeable for equity interest in the Company, or agreements of any kind for the purchase or acquisition from any Subsidiary of any of its securities.  The Company is not a participant in any joint venture, partnership, limited liability company or similar arrangement.  Except as set forth on Section 3.2(b) of the Disclosure Schedules, since its inception, the Company has not consolidated or merged with, acquired all or substantially all of the assets of, or acquired the 

 

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stock of or any interest in any corporation, partnership, limited liability company or other business entity.

 

3.3           Directors; Officers.

 

The name of each manager (or director or similar position) and officer of the Company and its Subsidiaries on the date hereof, and the position with the Company and its Subsidiaries, are listed in Section 3.3 of the Disclosure Schedules.

 

3.4           Authority; No Conflict; Consent.

 

(a)           The Company has all requisite limited liability power and authority to execute and deliver this Agreement, the Escrow Agreement, the Amended and Restated Operating Agreement, the Registration Rights Agreement, the Unit Holders’ Agreement, the Employment Agreements and the Management Fee Agreement (collectively with this Agreement, the “Operative Agreements”), to issue and sell the New Units, and to carry out the provisions of this Agreement and all other Operative Agreements.

 

(b)           All limited liability company actions on the part of the Company, its officers, managers and members necessary for the authorization of this Agreement and all other Operative Agreements, the performance of all obligations of the Company hereunder and thereunder at the Closing, the authorization, sale, issuance and delivery of the New Units pursuant hereto and the authorization of the Redemption have been taken.

 

(c)           This Agreement and all other Operative Agreements to which the Company is a party constitute legal, valid, and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors, and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(d)           Except as set forth in Section 3.4(d) of the Disclosure Schedules or such contraventions, conflicts, violations or the like as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates, neither the execution and delivery of this Agreement and all other Operative Agreements to which the Company is a party nor the consummation or performance of any of the Contemplated Transactions, shall, directly or indirectly, in any material respect (with or without notice or lapse of time):

 

(i)            contravene, conflict with, or result in a violation of (A) any provision of the certificate of formation or operating agreement of the Company, or (B) any resolution adopted by the board of managers or the members of the Company;

 

(ii)           contravene, conflict with, or result in a violation of, or give any Governmental Body the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which the Company, or any of the assets owned or used by the Company, may be subject;

 

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(iii)          contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company;

 

(iv)          contravene, conflict with, or result in a violation of any of the terms or requirements of any material contract to which the Company is a party, or give the other parties to any contract the right to revoke, withdraw, suspend, cancel, terminate, or modify any such contract; or

 

(v)           result in the imposition or creation of a Lien (except for any Permitted Lien) upon or with respect to the New Units or any of the assets owned or used by the Company other than any Lien that may arise under this Agreement or the Operative Agreements.

 

(e)           Except as set forth in Section 3.4(d) of the Disclosure Schedules, the Company is not and shall not be required to give any notice to or obtain any approval, consent, ratification, waiver, or other authorization (including any Governmental Authorization) (each, a “Consent”) from any Person in connection with the execution and delivery of this Agreement and all other Operative Agreements or the consummation or performance of any of the Contemplated Transactions other than such notice, approval, consent, ratification or waiver as would be required solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates.

 

(f)            Except as set forth on Section 3.4(f) of the Disclosure Schedules, the Company has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could have a MAE on the Company and believes it can obtain, without undue burden or expense, any similar authority for the conduct of its business as planned to be conducted.

 

3.5           Capitalization.

 

(a)           The capitalization of the Company and the authorized and outstanding capital securities of the Company as of immediately prior to the Closing consist of (i) 2,080,228 Class A Units duly authorized, of which 1,093,628 Class A Units are validly issued and outstanding, fully paid and nonassessable, and owned beneficially and of record by the Persons set forth on Schedule A attached hereto, and (ii) 300,000 Class B Units duly authorized and reserved under the Company’s 2001 Unit Option and Restricted Unit Award Plan, of which 76,500 units are validly issued and outstanding as of immediately prior to the Closing, fully paid and nonassessable, and owned beneficially and of record by the Persons set forth on Schedule A attached hereto.

 

(b)           Under the Company’s existing Employee Equity Sharing Plan, 150,000 Equity Sharing Units are duly authorized and reserved, of which 69,321 Equity Sharing Units have been issued which are outstanding as of immediately prior to the Closing. All of the 69,321 Equity Sharing Units shall be cancelled upon the Closing in exchange for the payments listed in Schedule 3.5(b) hereto.

 

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(c)           Under the Company’s existing 2001 Unit Option and Restricted Unit Award Plan, 76,500 Class B Units have been issued which are outstanding as of immediately prior to the Closing.

 

(d)           The New Units, when issued, sold and delivered in accordance with the terms and for the consideration set forth in this Agreement, will be validly issued, fully paid and non-assessable and free of restrictions on transfer other than restrictions on transfer under the Operative Agreements, applicable state and federal securities laws, and liens or encumbrances created by or imposed by Buyer.  The New Units will be issued in compliance with all applicable federal and state securities laws.

 

(e)           Except as set forth in Section 3.5(e) of the Disclosure Schedules and as set forth in the Audited Balance Sheet, Company has not accrued, declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its membership interests.

 

(f)            Other than this Agreement and all other Operative Agreements and as set forth in Section 3.5(f) of the Disclosure Schedules, there are no contracts relating to the issuance, sale, voting, redemption, purchase or transfer of any equity securities or other securities (including warrants and options) of the Company and of any Subsidiary.

 

3.6           Financial Statements.

 

(a)           Attached hereto as Exhibit 3.6(a) are the audited balance sheet of the Company as of December 31, 2007 (the “Audited Balance Sheet”), and the related audited statement of income and cash flow for the fiscal year then ended, together with the report thereon of Mowery & Schoenfeld, LLC, certified public accountants (collectively, the “Audited Financial Statements”).

 

(b)           The Audited Financial Statements and notes thereto are, in all material respects, true, complete and correct, and fairly present in all material respects the financial condition and the results of operations and cash flow of the Company at the respective dates of and for the periods referred to therein. Except as set forth in the notes thereto and as disclosed in Section 3.6(b) of the Disclosure Schedules, the Audited Financial Statements have been prepared in accordance with GAAP and reflect the consistent application of such accounting principles throughout the periods involved. The Audited Financial Statements have been prepared based on the books and records of the Company.

 

3.7           Books and Records.

 

The books of account, minute books, unit record books, and other records of the Company, all of which have been made available to Buyer or Buyer Parent, are accurate in all material respects at the Closing, and all of those books and records are in the possession of the Company.

 

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3.8           Title to Properties; Liens.

 

(a)           Section 3.8(a) of the Disclosure Schedules sets forth a complete and correct list of:

 

(i)            all real property which is leased by the Company (the “Leased Real Property”), including (A) the street address of each parcel of Leased Real Property, (B) the identity of the lessor, lessee and current occupant (if different from lessee) of each parcel of Leased Real Property, (C) the current rental period and rental payment amount pertaining to each parcel of Leased Real Property, (D) the current use of each parcel of Leased Real Property, and (E) all security deposits paid by the Company with respect to each parcel of Leased Real Property;

 

(ii)           all Leases relating to the Leased Real Property to which the Company or any of its Subsidiaries is a party (the “Leases”), and any and all ancillary documents directly pertaining thereto (including all amendments, modifications, supplements, exhibits, schedules, addenda and restatements thereto and thereof and all Consents, including Consents for alterations, assignments and sublets, documents recording variations, memoranda of lease, options and rights of expansion, extension, first refusal and first offer and evidence of commencement dates and expiration dates); and

 

(iii)          With respect to each Lease relating to the Real Property, the Company has not exercised or given any notice of exercise, and, to the Company’s Knowledge, no lessor or lessee has exercised or received any notice of exercise by a lessor or lessee of, any option, right of first offer or right of first refusal contained in any such Lease, including any such option or right pertaining to purchase, expansion, renewal, extension or relocation (collectively, “Options”).  The Company has the right to exercise any Options contained in the Leases pertaining to the Leased Real Property on the terms and conditions contained therein and upon due exercise would be entitled to enjoy the full benefit of such Options with respect thereto.

 

(b)           The Company has not leased (as lessor) any parcel or any portion of any parcel of Leased Real Property to any other Person and no other Person has any rights to the use, occupancy or enjoyment thereof pursuant to any Lease or other Contract, and the Company has not assigned its interest under any Lease listed in Section 3.8(a) of the Disclosure Schedules to any third party.

 

(c)           The rental set forth in each Lease of the Leased Real Property is the actual rental being paid, and there are no separate agreements or understandings, written, or with respect to any material term, oral, with respect thereto to which the Company is a party.

 

(d)           The Company does not own any real estate.

 

(e)           Except as set forth on Section 3.8(e) of the Disclosure Schedules, the Company owns all the properties and assets (whether real, personal, or mixed and whether tangible or intangible) that it purports to own, including all of the properties and assets reflected in the Audited Financial Statements (except for any such properties or assets which are leased as listed in Section 3.8(e)(i) of the Disclosure Schedules and except for assets and personal property sold since the date of the Audited Financial Statements in the Ordinary Course of Business), and all of 

 

29

 

the properties and assets purchased or otherwise acquired by the Company since the date of the Audited Financial Statements. Except as set forth on Section 3.8(e)(ii) of the Disclosure Schedules, the Company has good and marketable title to its properties and assets and to its leasehold estates.  Except as set forth in Section 3.8(e)(iii) of the Disclosure Schedules and except for Permitted Liens, all properties and assets that the Company owns are free and clear of all mortgages, deeds of trust, liens, loans and encumbrances, except for statutory liens for the payment of current Taxes that are not yet delinquent and encumbrances and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets.  With respect to the property and assets it leases, the Company is in compliance with such leases in all material respects and, to the Company’s Knowledge, holds a valid leasehold interest free of any liens, claims or encumbrances other than those of the lessors of such property or assets. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company are in good operating condition and repair, normal wear and tear excluded, and are reasonably fit and usable for the purposes for which they are being used.

 

3.9           Taxes.

 

(a)           All Federal income Tax Returns and all other material Tax Returns required to be filed by the Company (as opposed to its Members) have been accurately prepared in all material respects and timely filed and all material Taxes required to have been paid by the Company for the period covered thereby (whether or not reflected on such Tax Returns) have been paid.  All material Taxes required to be withheld by the Company, including, but not limited to, Taxes arising as a result of payments or distributions (or amounts allocable) to employees of the Company, have been collected and withheld, and have been either paid to the respective Governmental Bodies, set aside in accounts for such purpose, or accrued, reserved against, and entered upon the books and records of the Company.

 

(b)           Except as set forth in Section 3.9 of the Disclosure Schedules, (i) No federal, state, local or foreign audits or other administrative proceedings or court proceedings are presently pending with regard to any Taxes or Tax Returns of the Company (as opposed to any Member), and the Company has not received a written notice of any pending or proposed claims, audits or proceedings with respect to Taxes, (ii) the Company has not received any written notice of deficiency or assessment from any Governmental Body for any amount of Tax that has not been fully settled or satisfied, and (iii) no claim has been made in writing by any Governmental Bodies in a jurisdiction where the Company does not file Tax Returns that it is, or may be, subject to taxation by that jurisdiction. Except as set forth in Section 3.9 of the Disclosure Schedules, since inception, the Company has not received any written claim or assertion from an authority in a jurisdiction where the Company does not file Tax Returns that the Company is, was, or may be, subject to taxation by such jurisdiction and to the Company’s Knowledge after consultation with the Company’s accountants, no basis for any such assertion exists in any jurisdiction in which Company does not file a Tax Return.  The Company has not and has never had, a permanent establishment or other presence for Tax purposes in any foreign country, as determined pursuant to applicable foreign law and any applicable Tax treaty or convention between the United States and such foreign country.

 

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(c)           There are no Tax Liens upon any property of the Company or the New Units, except for Liens for current Taxes not yet due and payable.

 

(d)           The Company has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency.

 

(e)           The Company is not (nor has ever been) a party to any Tax sharing or Tax allocation contract. The Company has no actual or potential liability for any Tax obligation of any taxpayer (including without limitation any affiliated group of corporations or other entities that included the Company during a prior period) other than Company.

 

(f)            The Company has delivered to Buyer or Buyer Parent correct and complete copies of all federal income Tax Returns of the Company, and any examination reports, and statements of deficiencies assessed against or agreed to by the Company, for tax years since 2004.

 

(g)           The Company has disclosed on its Federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of Federal income tax within the meaning of Section 6662 of the Code.  The Company has not entered into in any “listed transaction” within the meaning of Section 6707A(c)(2) of the Code.  The Company has not take any position on its Federal Income Tax Returns which would subject the Company to the application of the anti-abuse rules contained in Treasury Regulations Section 1.701-2.

 

(h)           At all times since its inception, the Company has been classified as a partnership for federal and state income Tax purposes.  Since its inception the Company has not elected (i) out of the provisions of Subchapter K of Subtitle A of the Internal Revenue Code 1986, as amended, or corresponding provisions of any state law or (ii) to be classified as any entity other than a partnership for federal and state income Tax.

 

3.10         No Material Adverse Change.

 

From the date of the most recent Audited Balance Sheet, there has not been any change in the financial condition, business operations, liabilities, assets or prospects of the Company, which, taken as a whole, would result in a MAE and, to the Company’s Knowledge, no event has occurred or circumstance exists that will likely result in a MAE.

 

3.11         Compliance with Legal Requirements; Governmental Authorizations.

 

(a)           Except as set forth in Section 3.11(a) of the Disclosure Schedules, the Company is, and at all times since December 31, 2004, has been, in material compliance with each Legal Requirement that is or was applicable to it or to the conduct or operation of its business or the ownership or use of any of its assets, except where any such non-compliance has been remedied or waived and except where the failure to so comply would not reasonably be expected to result in a MAE.

 

(b)           Except as set forth in Section 3.11(b) of the Disclosure Schedules, the Company has not received, at any time since December 31, 2004, any written notice from any Governmental Body regarding (i) any material actual, alleged, possible, or potential violation of, or failure to comply with, any Legal Requirement, or (ii) any material actual, alleged, possible, 

 

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or potential obligation on the part of the Company to undertake, or to bear all or any portion of the cost of, any remedial action of any nature, in each case the failure of which to satisfy or meet would reasonably be expect to result in a MAE.

 

3.12         Legal Proceedings; Orders.

 

(a)           Except as set forth in Section 3.12(a) of the Disclosure Schedules, there is no pending Proceeding:

 

(i)            that has been commenced by the Company or against the Company or that, to the Company’s Knowledge, otherwise relates to or may affect the business of, or any of the assets owned or used by, the Company or any change in the current ownership of the Company; or

 

(ii)           that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions, other than such Proceedings or challenges as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates.

 

To the Company’s Knowledge, (1) no such Proceeding has been threatened, and (2) no event has occurred or circumstance exists that may give rise to or serve as a Basis for the commencement of any such Proceeding that would reasonably be expected to have a MAE, except as set forth in Section 3.12(a) of the Disclosure Schedules. The Company has delivered to Buyer or Buyer Parent copies of all pleadings, correspondence, and other documents relating to each Proceeding listed in Section 3.12(a) of the Disclosure Schedules.

 

(b)           Except as set forth in Section 3.12(b) of the Disclosure Schedules:

 

(i)            there is no Order to which the Company, or any of the assets owned or used by the Company, is currently subject; and

 

(ii)           to the Company’s Knowledge, no officer, director, agent, or employee of the Company is subject to any Order that prohibits such officer, director, agent, or employee from engaging in or continuing any conduct, activity, or practice relating to the business of the Company.

 

(c)           Except as set forth in Section 3.12 (c) of the Disclosure Schedules, to the Company’s Knowledge, there is no Proceeding against or threatened against the Company or any basis therefor known by the Company involving the prior employment of any of the Company’s employees, their use in connection with the Company’s business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers.

 

3.13         Absence of Certain Changes and Events.

 

Except as related to the Contemplated Transactions or as set forth in Section 3.13 of the Disclosure Schedules, since the date of the Audited Balance Sheet, the Company has conducted

 

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its business only in the Ordinary Course of Business, and to the Company’s Knowledge, since the date of the Audited Balance Sheet, there has not been:

 

(a)                                  any change in the assets, liabilities, financial condition or operating results of the Company, except changes in the ordinary course of business and any changes that have not been, in the aggregate, materially adverse;

 

(b)                                 any damage to or destruction or loss of any asset or property of the Company, whether or not covered by insurance, materially and adversely affecting the financial condition, business operations, liabilities or assets of the Company;

 

(c)                                  any material change, except in the ordinary course of business, in the contingent obligations of the Company by way of guaranty, endorsement, indemnity, warranty or otherwise;

 

(d)                                 any waiver by the Company of a valuable right or of a material Debt owed to it;

 

(e)                                  any material change in any compensation arrangement or agreement with any employee, officer, manager, director or Member except as may be provided under any Operative Agreement;

 

(f)                                    any resignation or termination of any officer, key employee or group of employees of the Company;

 

(g)                                 any labor organization activity against the Company;

 

(h)                                 any sale, assignment, or exclusive license or transfer of any Intellectual Property or other material assets of the Company;

 

(i)                                     any change to the ownership interest in the Company, or any declaration, setting aside or payment or other distribution in respect to any of the Company’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any of such stock by the Company any loans or guarantees made by the Company to or for the benefit of its employees, officers or directors, or any members of their immediate families, other than travel advances and other advances made in the Ordinary Course of Business;

 

(j)                                     any material change in any material agreement to which the Company is a party or by which it is bound;

 

(k)                                  any mortgage, pledge, transfer of a security interest in, or lien, created by the Company, with respect to any of its material properties or assets, except liens for taxes not yet due or payable and liens that arise in the ordinary course of business and do not materially impair the Company’s ownership or use of such property or assets;

 

(l)                                     any other event or condition of any character that, either individually or cumulatively, has had or would reasonably be likely to have a MAE on the Company; or

 

(m)                               any contractual commitment by the Company to do any of the acts described in subsection (a) through (l) above.

 

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3.14                           Employee Benefits.

 

(a)                                  Section 3.14(a) of the Disclosure Schedules contains a true and complete list of all employee, bonus, commission, incentive, compensation or other retirement, fringe or benefit plans of the Company (“Company Benefit Plans”). Except as set forth in Section 3.14(a) of the Disclosure Schedules, the Company has maintained, administered and performed all of its obligations under all Company Benefit Plans and has been in material compliance with all Legal Requirements applicable to all Company Benefit Plans, except for any failure so to comply that would not reasonably be expected to have a MAE.  All contributions and other payments required to be made by the Company to any Company Benefit Plan with respect to any period ending before or at or including the Closing Date have been made or reserves adequate for such contributions or other payments have been or shall be set aside therefor and have been or shall be reflected in the Audited Financial Statements in accordance with GAAP.

 

(b)                                 The Company has delivered to Buyer or Buyer Parent, or has made available for Buyer or Buyer Parent to review true and correct copies of:

 

(i)                                     all documents that set forth the terms of each Company Benefit Plan and of any related trust, including (A) all plan descriptions and summary plan descriptions of Company Benefit Plans for which the Company is required to prepare, file, and distribute plan descriptions and summary plan descriptions, and (B) all summaries and descriptions furnished to participants and beneficiaries regarding Company Benefit Plans for which a plan description or summary plan description is not required;

 

(ii)                                  the most recent annual reports (Form 5500) filed with the Employee Benefits Security Administration with respect to such Company Benefit Plan, including all schedules thereto and financial statements with attached opinions of independent accountants, if required;

 

(iii)                               the most recent actuarial report and financial statement relating to such Company Benefit Plan, if such report or statement is required with respect to such Company Benefit Plan;

 

(iv)                              the most recent determination letter or opinion letter, if any, issued by the United States Internal Revenue Service with respect to such Company Benefit Plan and any pending request for such a determination letter or opinion letter;

 

(v)                                 all personnel, payroll, and employment manuals and policies;

 

(vi)                              all registration statements filed with respect to any Company Benefit Plan;

 

(vii)                           all insurance policies purchased by or to provide benefits under any Company Benefit Plan;

 

(viii)                        all notices that were given by the Company, any trade or business of the Company which is or at any time within the six (6) year period preceding the date of this Agreement would have been treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (“ERISA Affiliate”) or any Company Benefit Plan to the United States Internal

 

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Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury (collectively, the “IRS”), United States Department of Labor (the “DOL”), the Pension Benefit Guaranty Corporation (“PBGC”), or any participant or beneficiary, pursuant to statute, within the three years preceding the date of this Agreement, including notices that are expressly mentioned elsewhere in this Section 3.14;

 

(ix)                                all notices that were given by the IRS, DOL, or PBGC to the Company, any ERISA Affiliate of the Company, or any Company Benefit Plan within the three years preceding the date of this Agreement; and

 

(x)                                   the results of all tests performed with respect to the last three plan years of any Company Benefit Plan that is qualified under .Section 401(a) of the Code (“Qualified Plan”) for the purpose of confirming compliance with the requirements of Sections 401(a), 401(k), 401(m), 410(b), 411, 415, or 416 of the Code.

 

(c)                                  Except for any formal written qualification requirement with respect to which the remedial amendment period set forth in Section 401(b) of the Code, and any regulations, rulings or other IRS releases thereunder, has not expired, (i) each Qualified Plan that is not a master or prototype plan has received or has filed for a favorable determination letter from the IRS and is qualified in form and operation under Section 401(a) of the Code, and each trust for each such Qualified Plan is exempt from federal income tax under Section 501(a) of the Code, and (ii) each Qualified Plan that is a master or prototype plan is (A) entitled to rely on the opinion letter issued by the IRS to the sponsor of such plan or has received or has filed for a favorable determination letter from the IRS and (B) is qualified in form and operation under Section 401(a) of the Code, and each trust for each such Qualified Plan is exempt from federal income tax under Section 501(a) of the Code and (iii) no event has occurred or circumstance exists that gives rise to disqualification or loss of tax-exempt status of any such Qualified Plan or trust.

 

(d)                                 Neither the Company nor any ERISA Affiliate has ever sponsored, contributed to, had an obligation to contribute to or otherwise participated in any Company Benefit Plan that is (i) subject to Title IV of ERISA or Section 412 of the Code, including any “multiemployer plan” (as defined in Section 3(37) of ERISA);(ii) a “voluntary employee’s beneficiary association” within the meaning of Section 501(c)(9) of the Code; (iii) a “welfare benefit fund” within the meaning of Section 419 of the Code; (iv) a “qualified asset account” within the meaning of Section 419A of the Code (v) any multiple employer plan (as defined in Section 3(40) of ERISA or Section 413(c) lf the Code; or (vi) any Company Benefit Plan established or maintained outside of the United States primarily for the benefit of individuals substantially all of whom are nonresident aliens.  None of the assets of the Company is, or may reasonably be expected to become, the subject of a Lien arising under ERISA or Section 412(n) of the Code.

 

(e)                                  No Company Benefit Plan or any related trust or other funding medium thereunder or any fiduciary thereof has been the subject of an audit, investigation or examination by a governmental or quasi-governmental agency, and, to the Company’s knowledge, no such audit, investigation, or examination is threatened.  All reports, returns, and similar documents with respect to each Company Benefit Plan required to be filed with any governmental agency or distributed to any participant have been duly and timely filed or distributed.

 

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(f)                                    No contributions pursuant to the Company Benefit Plans have been made in such amounts as would not be deductible under Section 404 of the Code.

 

(g)                                 Each Company Benefit Plan which is a “nonqualified deferred compensation plan” (within the meaning of Section 409A of the Code) has been operated in compliance with Section 409A of the Code and any applicable rules, regulations and guidance issued in connection with Section 409A of the Code.

 

(h)                                 No Company Benefit Plan or any trust created under one of the Company Benefit Plans or any trustee, administrator or sponsor thereof (including the Company and any ERISA Affiliate), has engaged in a “prohibited transaction” as that term is defined in Section 4975(c)(1) of the Code, which could subject the Company Benefit Plan, trust, trustee, administrator or sponsor thereof, or any party dealing with the Company Benefit Plan or any such trust to the tax or penalty on prohibited transactions imposed by said Section 4975, nor has any fiduciary of any Company Benefit Plan acted in a manner which constitutes, or has constituted, a breach of its fiduciary duty, as set forth in ERISA.

 

(i)                                     Except as provided in Section 3.14(i) of the Disclosure Schedules, the Company or any ERISA Affiliate, as the case may be, may terminate any or all of the Company Benefit Plans, or may cease contributions to any or all of the Company Benefit Plans, without incurring any liability or obligation, except for (i) the obligation to fund benefits which accrued as of the date of any such termination or cessation of contributions; and (ii) obligations which may apply to the Company or any ERISA Affiliate in connection with the requirements of ERISA, the Code or such plan arising out of any such termination.

 

(j)                                     With respect to the Company Benefit Plans, no event has occurred and there exists no condition or set of circumstances in connection with which the Company or Buyer could be subject to any material liability (other than for routine benefit liabilities) under the terms of, or with respect to, such Company Plans under all Legal Requirements, whether directly or indirectly (pursuant to any indemnification agreement or otherwise).

 

(k)                                  None of the Company Benefit Plans, or any trust created thereunder, now holds or has ever held as assets any stock or securities issued by the Company or any ERISA Affiliate.

 

(l)                                     Except as may be required by COBRA or applicable to state law, no Company Benefit Plan provides for or continues medical or health benefits, or life insurance or other death benefits (through insurance or otherwise) for any employee or any dependent or beneficiary of any employee after such employee’s retirement or other termination of employment, and there has been no communication to any employee that could reasonably be expected to promise or guarantee such benefits.  For this purpose, “COBRA” means the health care continuation provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, Section 4980B of the Code Title I Part 6 of ERISA and any similar state group health plan continuation law, together with all regulations promulgated thereunder.

 

(m)                               The consummation of the transactions contemplated by this Agreement will not entitle any individual to severance pay, and will not accelerate the time of payment or vesting, or increase the amount of compensation due to any individual.

 

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(n)                                 Neither the Company nor any ERISA Affiliate has, and has never had; any “leased employee” within the meaning of Section 414(n) of the Code and the Company has not paid compensation to any individual who the Company treated as an independent contractor.

 

(o)                                 The Company is not a party to any contract, agreement, or arrangement which provides for the payment of compensation for which the Company would not be entitled to claim a deduction for federal income tax purposes.

 

3.15                           Employees.

 

(a)                                  Section 3.15(a) of the Disclosure Schedules contains a complete and accurate list of the following information for each current employee, director or manager of the Company as of the date of this Agreement, including each employee on leave of absence or layoff status: name; job title, current compensation, bonus eligibility and, if any, accrued vacation and sick leave time. In addition, Section 3.15(a) of the Disclosure Schedules lists all subcontractors of the Company who perform full-time services on Company projects.

 

(b)                                 To the Company’s Knowledge, no employee or director of the Company is a party to, or is otherwise bound by, any agreement or arrangement, including any confidentiality, noncompetition, or proprietary rights agreement, between such employee or director/manager and any other Person other than the Company or its Affiliates that in any way adversely affects or shall affect (i) the performance of his duties as an employee or director/manager of the Company, or (ii) the ability of the Company to conduct its business. To the Company’s Knowledge, no officer or other key employee of the Company has the present intention to terminate his employment with the Company, nor does the Company have a present intention to terminate the employment of any officer, key employee or group of employees.  Except as set forth in Section 3.15(b) of the Disclosure Schedules, or as otherwise provided by applicable state law, the employment of all employees of the Company is terminable at will by the Company without any penalty or severance obligations incurred by the Company.

 

(c)                                  To the Company’s Knowledge, no employee of the Company, nor any consultant with whom the Company has contracted, is in violation of any term of any employment contract (if any), proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company; and the continued employment by the Company of its present employees, and the performance of the Company’s contracts with its independent contractors, will not result in any such violation.  The Company has not received any notice alleging that any such violation has occurred.  There are no actions pending or, to the Company’s Knowledge, threatened, by any former or current employee concerning such person’s employment by the Company.

 

(d)                                 Except as set forth on Section 3.15(d) of the Disclosure Schedules, the Company is not delinquent in payments to any of its employees, directors/managers, consultants, or independent contractors for any wages, salaries, commissions, bonuses or other direct compensation for any service performed for the Company to the date hereof or amounts required to be reimbursed to such employees, consultants, or independent contractors.

 

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(e)                                  Except as set forth on Section 3.15(e) of the Disclosure Schedules, each current employee of the Company, and each former employee who was hired by the Company in the past two (2) years, has executed and delivered to the Company an agreement in form and substance substantially similar to the form of the Employee Confidentiality and Non-Competition Agreement attached as Exhibit H.

 

3.16                           Labor Relations; Compliance; WARN Act.

 

(a)                                  Except as set forth in Section 3.16(a) of the Disclosure Schedules, since its inception, the Company has not been nor is it a party to any collective bargaining or other labor contract.  Except as set forth in Section 3.16(a) of the Disclosure Schedules, since its inception, there has not been, there is not presently pending or existing, and to the Company’s Knowledge, there is not threatened, (i) any strike, slowdown, picketing, work stoppage, or employee grievance process, (ii) any Proceeding against or affecting the Company relating to the alleged violation of any Legal Requirement pertaining to labor relations or employment matters, including any charge or complaint filed by an employee or union with the National Labor Relations Board, the Equal Employment Opportunity Commission, or any comparable Governmental Body, organizational activity, or other labor or employment dispute against or affecting the Company or its premises, or (iii) any application for certification of a collective bargaining agent. No event has occurred or circumstance exists that could provide the Basis for any work stoppage or other labor dispute.  There is no lockout of any employees by the Company, and no such action is contemplated by the Company.

 

(b)                                 Except as set forth in Section 3.16(b) of the Disclosure Schedules, the Company has complied in all material respects with all Legal Requirements relating to employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining, the payment of social security and similar taxes, occupational safety and health, and plant closing.  The Company is not liable for the payment of any compensation, damages, Taxes, fines, penalties, or other amounts, however designated, for failure to comply with any of the foregoing Legal Requirements.

 

(c)                                  Since the inception of the Company, no office closing or layoff of employees has been implemented that could implicate the Worker Adjustment and Retraining Notification Act of 1988, as amended (the “WARN Act”), or any similar foreign, state or local law, regulation or ordinance.

 

3.17                           Intellectual Property.

 

(a)                                  Section 3.17(a)(i) of the Disclosure Schedules contains a complete and accurate list and summary description of all of the Owned Intellectual Property Assets and Licensed Intellectual Property of the Company, including patents, trademarks and copyrights, and all contracts relating to such Owned Intellectual Property Assets and Licensed Intellectual Property Assets to which the Company is a party or by which the Company is bound (other than licenses by the Company of “off the shelf” or other commonly available software programs with a value of less than US$5,000 under which the Company is the licensee).  The Company owns all right, title, and interest in each of the Owned Intellectual Property Assets, free and clear of all Liens.  To the Company’s Knowledge, no Owned Intellectual Property is infringed upon or has been

 

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threatened in any way.  To the Company’s Knowledge, none of the subject matter of any of the Owned Intellectual Property infringes or is alleged to infringe any patent, trademark, copyright or other right of any other Person.  Except as set forth on Section 3.17(a)(ii) of the Disclosure Schedules, the Company has the right to use all Owned Intellectual Property Assets and Licensed Intellectual Property Assets as are necessary to enable the Company to conduct, and to continue to conduct after the Closing, all phases of the business except as would not constitute a MAE, and such use does not and has not, to the Company’s Knowledge, conflicted with, infringed upon or otherwise violated any rights of any other Person.  Except as set forth on Section 3.17(a)(iii) of the Disclosure Schedules, there have been no interference actions or other judicial, arbitration or other adversary proceedings concerning the Intellectual Property assets of the Company.  To the Company’s Knowledge, none of the Intellectual Property assets of the Company has been used, divulged or appropriated for the benefit of any past or present employees of the Company or any other Person, or to the detriment of the Company.

 

(b)                                 Section 3.17(b) of the Disclosure Schedules contains a complete and accurate list of all third party software licenses of the Company (other than licenses by the Company of “off the shelf” or other commonly available software programs with a value of less than US$5,000 under which the Company is the licensee), each of which shall continue in full force and effect following the Closing without the payment of any additional fee.  Such third party software licenses are fully-paid up and are sufficient to conduct the Company’s business as presently being conducted.  The Company is not presently using, and has not in the past used, any unlicensed copies of any third-party software in the operation of its business except public domain software, nor has the Company failed to properly license and pay for any software used in the operation of its business.

 

3.18                           Contracts.

 

Section 3.18 of the Disclosure Schedules contains a complete and accurate list, and the Company has delivered or made available to Buyer or Buyer Parent true and complete copies, of each written:

 

(a)                                  contract that involves current or required future performance of services or delivery of goods or materials by the Company of an amount or value in excess of US$50,000 per year (other than purchase orders, in which case a form thereof has been supplied);

 

(b)                                 contract that involves current or required future performance of services or delivery of goods or materials to the Company of an amount or value in excess of US$50,000 per year;

 

(c)                                  contract that was not entered into in the Ordinary Course of Business and that involves current or future expenditures or receipts of the Company in excess of US$10,000 per year;

 

(d)                                 lease, rental or occupancy agreement, license (other than with respect to Intellectual Property), installment and conditional sales agreement, and other contract which the Company is a party 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

 

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and conditional sales agreements having a value per item or aggregate payments of less than US$10,000 with terms of less than one year);

 

(e)                                  current contracts involving the transfer or license of any Intellectual Property or software to or from the Company (other than licenses by the Company of “off the shelf” or other standard products);

 

(f)                                    contracts containing provisions restricting the development, manufacture or distribution of the Company’s products or services;

 

(g)                                 except as qualified in Section 3.18 of the Disclosure Schedules, material contracts containing current indemnification obligations by the Company;

 

(h)                                 contracts relating to any indebtedness for money borrowed or any other liabilities (other than trade payables incurred in the Ordinary Course of Business) individually in excess of US$20,000 or, in the case of indebtedness and/or liabilities individually less than US$20,000 per year, in excess of US$50,000 per year in the aggregate;

 

(i)                                     contracts relating to any outstanding loans or advances to any Person, other than ordinary advances for travel or other business expenses;

 

(j)                                     joint venture, partnership, and other contract (however named) other than employment agreements involving a sharing of benefit plans (not including, however, any Company Benefit Plans), profits, losses, costs, or liabilities by the Company with any other Person;

 

(k)                                  contract providing for payments to or by any Person based on sales, purchases, or profits (other than direct payments for goods) in excess of US$25,000 per year;

 

(l)                                     contract providing for web site hosting services with any Person;

 

(m)                               material warranty, guaranty, and or other similar undertaking with respect to contractual performance extended by the Company other than in the Ordinary Course of Business, which has not expired according to its terms; and

 

(n)                                 amendment, supplement, and modification (whether oral or written) in respect of any of the foregoing.

 

Each of the foregoing is referred to in this Agreement as a “Material Contract” and any exceptions to any of the following sentences in this paragraph are set forth in Section 3.18 of the Disclosure Schedules. Each Material Contract is legal, valid and binding on, and enforceable against, the Company and, to the Company’s Knowledge, each other party thereto. Each Material Contract will continue to be legal, valid, binding, enforceable and in full force and effect in accordance with its terms following the consummation of the Contemplated Transactions on terms not materially more adverse to the Company than the terms in effect on the date of this Agreement, other than such changes, contraventions, conflicts, breaches, violations or the like as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates. The Company has performed in all material

 

40

 

respects all obligations required to be performed by it under each Material Contract and, to the Company’s Knowledge, each other party to each Material Contract has performed in all material respects all obligations required to be performed by it under such Material Contract. The Company has not, in any material respect, violated, breached or defaulted under, nor has it received notice of, any material violation, acceleration or breach of or default under (or any condition which with the passage of time or the giving of notice or both would cause such a material violation, acceleration of or default under), any Material Contract and, to the Company’s Knowledge, no other party to a Material Contract has violated, breached or defaulted under any Material Contract in any material respect.  There are no renegotiations of or outstanding rights to renegotiate any material amounts paid or payable to the Company under any current or completed contract, agreement, commitment or understanding with any Person and to the Company’s knowledge, no Person has made a demand for such renegotiation. The contracts, agreements, commitments or understandings relating to the provision of services or products by the Company pursuant to any Material Contract have been entered into in the Ordinary Course of Business and have been entered into without the commission of any act alone or in concert with any other Person, or any consideration having been paid or promised, that is or would be in violation of any law.

 

3.19                           Obligations to Related Parties.

 

Except as set forth in Section 3.19 of the Disclosure Schedules, there are no obligations of the Company to officers, managers, Members, or employees of the Company other than (a) for payment of compensation for services rendered, (b) reimbursement for reasonable expenses incurred on behalf of the Company and (c) for other standard employee benefits made generally available to all similarly situated employees (including equity incentive agreements outstanding under any equity incentive plan approved by the members or managers of the Company).  None of the officers, managers, or, to the Company’s knowledge, key employees or Members of the Company or any members of their immediate families, is indebted to the Company or has any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation that competes with the Company, other than passive investments in publicly traded companies (representing less than 1% of such company) which may compete with the Company.  No officer, director or Member, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company (other than this Agreement and all other Operative Agreements and such contracts as relate to any such person’s ownership of securities of the Company).

 

3.20                           Brokers or Finders.

 

Except as set forth in Section 3.20 of the Disclosure Schedules, the Company and its representatives have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with the Operative Agreements and the Contemplated Transactions.

 

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3.21                           Customers and Suppliers.

 

(a)                                  Section 3.21 of the Disclosure Schedules sets forth a true and complete list by dollar volume of sales made or services provided in the aggregate by the Company or for the Company for the one-year period ended December 31, 2006 and the 12-month period ended December 31, 2007, to the 10 largest customers for each such time period (such customers for the 12-month period ended December 31, 2007, the “Material Customers”) and from the 10 largest suppliers for each such time period (such suppliers for the 12-month period ended December 31, 2007, the “Material Suppliers”).  Except as set forth in Section 3.21 of the Disclosure Schedules, none of the Material Customers or Material Suppliers has: (a) notified the Company that such Person intends or, to the Company’s Knowledge, has threatened to terminate or not to extend or renew its business relationship with the Company in calendar year 2007 or thereafter except in the Ordinary Course of Business as the Company completes specific contract assignments or (b) changed, or requested a change to, the material terms of any contract. Since the date of the Audited Balance Sheet, there has been no material adverse change in the business relationship of the Company with any of the Material Customers or Material Suppliers.

 

(b)                                 The Company has used, handled, collected, maintained, and safeguarded customer data and information in accordance with the Privacy Laws and has complied with its obligations under the Privacy Laws, and the products of the Company marketed, developed, or in development by Company have not resulted, in any material respect, in the direct or indirect loss, destruction, deletion, or alteration of any customer data.

 

3.22                           No Undisclosed Liabilities.

 

Except as disclosed in Section 3.22 of the Disclosure Schedules or incurred in connection with the Contemplated Transactions, the Company has no material Liability except for (i) Liabilities reflected or reserved against in the Audited Financial Statements (or the notes thereto) and (ii) current liabilities incurred by the Company since the date of the Audited Financial Statements in the Ordinary Course of Business.

 

3.23                           Obligations of Management.

 

Each officer and key employee of the Company is currently devoting substantially all of his or her business time to the conduct of the business of the Company.  The Company is not aware that any officer or key employee of the Company has current plans to work less than full time at the Company in the two years after the Closing.  No officer or key employee is currently working or, to the Company’s knowledge, plans to work for a competitive enterprise, whether or not such officer or key employee is or will be compensated by such enterprise.

 

3.24                           Registration Rights and Voting Rights.

 

Except as required pursuant to the Registration Rights Agreement, the Company is presently not under any obligation, and has not granted any rights, to register under the Securities Act, any of the Company’s presently outstanding securities or any of its securities that may hereafter be issued.  To the Company’s knowledge, except as contemplated in the Unit Holders Agreement or the other Operative Agreements, no Member of the Company has entered into any agreement with respect to the voting of membership interests of the Company.

 

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3.25                           Offering Valid.

 

Assuming the accuracy of the representations and warranties of Buyer and Buyer Parent contained in Article V hereof, the offer, sale and issuance of the New Units will be exempt from the registration requirements of the Securities Act, and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws.  Neither the Company nor any agent on its behalf has solicited or will solicit any offers to sell or has offered to sell or will offer to sell all or any part of the New Units to any person or persons so as to bring the sale of such New Units by the Company within the registration provisions of the Securities Act or any state securities laws.

 

3.26                           Full Disclosure.

 

The Company has provided Buyer or Buyer Parent with all information reasonably requested by Buyer or Buyer Parent in connection with its decision to purchase the New Units.  No representation or warranty or other statement made by the Company or the Members in this Agreement, the Disclosure Schedules, or the certificates delivered pursuant to Section 2.7(a)(ii) contains any untrue statement or omits to state a material fact necessary to make any statement of material fact made, in light of the circumstances in which it was made, not misleading.

 

3.27                           Real Property Holding Corporation.

 

The Company is not a real property holding corporation within the meaning of Code Section 897(c)(2) and any regulations promulgated thereunder.

 

3.28                           Insurance.

 

The Company has general commercial, product liability, fire and casualty insurance policies with coverage consistent with past practices of the Company.  Section 3.28(a) of the Disclosure Schedules lists all insurance policies maintained by the Company and identifies for each such policy the following information:  underwriter, coverage type, expiration date, coverage amount and deductible.  All such policies are in full force and effect and all premiums have been paid.  Section 3.28(a) of the Disclosure Schedules also describes any self-insurance programs currently maintained by the Company with respect to health or welfare plans.  Section 3.28(b) of the Disclosure Schedules also sets forth a description of all claims pending under such insurance policies.

 

3.29                           Executive Officers.

 

To the Company’s Knowledge, no executive officer or person nominated to become an executive officer or manager of the Company (i) has been convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding minor traffic violations) or (ii) is or has been subject to any judgment or order of, the subject of any pending civil or administrative action by the Securities and Exchange Commission or any self-regulatory organization.

 

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ARTICLE IV
 Representations and Warranties of Members

 

Each Member, severally and not jointly, represents and warrants to Buyer, with respect to such Member only, as of the date of this Agreement as follows:

 

4.1                                 Authority; No Conflict.

 

(a)                                  Such Member has the right, power, authority, and capacity to execute and deliver this Agreement and all other Operative Agreements to which it is a party and to perform its obligations under this Agreement and all other Operative Agreements to which it is a party. This Agreement and all other Operative Agreements to which it is a party constitute legal, valid, and binding obligations of such Member, enforceable against such Member in accordance with their terms, except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(b)                                 Except as set forth in Section 4.1(b) of the Disclosure Schedules, such Member is not and will not be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of this Agreement and all other Operative Agreements to which it is a party or the consummation or performance of any of the Contemplated Transactions, other than such notices or consents as would be required solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates.

 

(c)                                  Except for such contraventions, conflicts, violations or the like as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates, neither the execution and delivery of the this Agreement and all other Operative Agreements to which it is a party nor the consummation or performance of any of the Contemplated Transactions, will, directly or indirectly (with or without notice or lapse of time):

 

(i)                                     contravene, conflict with, or result in a violation of (A) any provision of any governing document of such Member, or (B) any resolution adopted by the governing body or security holders of such Member;

 

(ii)                                  to the actual knowledge of such Member, contravene, conflict with, or result in a violation of, or give any Governmental Body the right to challenge, any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which such Member, or any of its assets, may be subject; or

 

(iii)                               result in the imposition or creation of a Lien upon or with respect to the Redemption Units sold hereunder by such Member or the assets of the Company.

 

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4.2                                 Redemption Units.

 

Such Member owns, beneficially and of record, all of the Redemption Units set forth opposite such Member’s name on Schedule A attached hereto, free and clear of all Liens. Except as set forth in Section 4.2 of the Disclosure Schedules, such Member is not a party (i) to any voting trust, proxy, or other agreement or understanding with respect to the voting of any of the Redemption Units; or (ii) to any option, warrant, right, contract, call, put or other agreement or commitment providing for the disposition or acquisition of the Redemption Units (other than this Agreement).

 

4.3                                 Legal Proceedings.

 

Except as set forth in Section 4.3 of the Disclosure Schedules, there is no pending Proceeding (or to the knowledge of such Member, threatened Proceeding) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions, other than such Proceedings or challenges as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates.

 

4.4                                 Brokers or Finders.

 

Except as set forth in Section 4.4 of the Disclosure Schedules which fees shall be borne entirely by the Members, such Member and its agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with the Operative Agreements and the Contemplated Transactions.

 

ARTICLE V
 Representations and Warranties of Buyer and Buyer Parent

 

Buyer and Buyer Parent, jointly and severally, represent and warrant to the Company as of the date of this Agreement as follows:

 

5.1                                 Organization and Good Standing.

 

Buyer is a Delaware limited liability company duly organized, validly existing, and in good standing under the laws of the State of Delaware, Buyer Parent is an exempted company duly organized, validly existing, and in good standing under the laws of the Cayman Islands, and each of Buyer and Buyer Parent have full corporate power and authority to conduct their business as it is now being conducted, and to own or use the properties and assets that they purport to own or use.

 

5.2                                 Authority; No Conflict.

 

(a)                                  Buyer and Buyer Parent have the right, power, authority, and capacity to execute and deliver the Operative Agreements to which each is a party and to perform their obligations under the Operative Agreements to which each is a party. The Operative Agreements to which each is a party constitute legal, valid, and binding obligations of Buyer and Buyer Parent, enforceable against them in accordance with their terms, except as limited by (i) bankruptcy,

 

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insolvency, reorganization, moratorium and other similar laws of general application affecting the rights and remedies of creditors and (ii) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law).

 

(b)                                 Buyer and Buyer Parent are not and will not be required to give any notice to or obtain any Consent from any Person in connection with the execution and delivery of the Operative Agreements to which either is a party or the consummation or performance of any of the Contemplated Transactions.

 

(c)                                  Neither the execution and delivery of the Operative Agreements to which either is a party nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time):

 

(i)                                     contravene, conflict with, or result in a violation of (A) any provision of any governing document of Buyer of Buyer Parent, or (B) any resolution adopted by the governing body or security holders of Buyer or Buyer Parent; or

 

(ii)                                  contravene, conflict with, or result in a violation of, or give any Governmental Body the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under any Legal Requirement or any Order to which Buyer, Buyer Parent, or any of their assets, may be subject, other than such contraventions, conflicts or violations as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of the Company and the Members.

 

5.3                                 Legal Proceedings.

 

There is no pending Proceeding (or to the knowledge of Buyer, threatened Proceeding) that challenges, or that may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the Contemplated Transactions.

 

5.4                                 Brokers or Finders.

 

Buyer, Buyer Parent and their agents have incurred no obligation or liability, contingent or otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with the Operative Agreements to which they are a party and the Contemplated Transactions.

 

5.5                                 Investment Representations.

 

Each of Buyer and Buyer Parent is an “accredited investor” as defined in Rule 501 of Regulation D of the Securities Act.  Buyer will acquire the New Units for its own account, for investment and not with a view to the distribution or resale thereof within the meaning of the Securities Act, nor with any present intention of selling or distributing the same.

 

5.6                                 Financing.

 

Buyer has sufficient cash and/or available credit facilities to pay the Purchase Price and to make any other necessary payment of fees and expenses in connection with the consummation

 

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of the Contemplated Transactions, and as of immediately prior to Closing, the value of Buyer’s assets exceeds its liabilities and the value of Buyer Parent’s assets exceeds its liabilities.

 

5.7                                 Access to Information.

 

Buyer and Buyer Parent and their representatives have received or been given access to all of the information described or referred to in the Operative Agreements and all other information requested by them.  Buyer, Buyer Parent and their representatives have been afforded the opportunity to meet with, ask questions of and receive answers from the management of the Company in connection with the determination by Buyer to enter into the Operative Agreements and consummate the Contemplated Transactions, and all such questions have been answered to the full satisfaction of Buyer and Buyer Parent.

 

5.8                                 Buyer’s Investigation.

 

(a)                                  Buyer and Buyer Parent acknowledge and agree that they are consummating the Contemplated Transactions without any representation or warranty, express or implied, by any Person, except for the representations and warranties of the Company expressly set forth in Article III hereof and the representations and warranties of each Member expressly set forth in Article IV hereof, or as and to the extent required by this Agreement to be set forth in the Disclosure Schedules.

 

(b)                                 Buyer and Buyer Parent acknowledge that they are relying on their own investigation and analysis in entering into the Contemplated Transactions.  Buyer and Buyer Parent are knowledgeable about the industries in which the Company operates, is capable of evaluating the merits and risks of the Contemplated Transactions, and are able to bear the substantial economic risk of such investment for an indefinite period of time.  Buyer and Buyer Parent have fully reviewed this Agreement, the Disclosure Schedules, the materials referenced therein and the materials in the “data room” relating to the Contemplated Transactions.

 

(c)                                  In connection with Buyer’s and Buyer Parent’s investigation of the Company, Buyer and Buyer Parent have received from or on behalf of the Company certain projections, including projected statements of operating revenues and income from operations of the Company and certain business plan information of the Company.  Buyer and Buyer Parent acknowledge that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans and that Buyer and Buyer Parent are familiar with such uncertainties, and that Buyer and Buyer Parent are taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections and forecasts).

 

5.9                                 Plant Closing and Mass Lay Offs.

 

Buyer and Buyer Parent do not presently intend to cause a plant closing or reduction in workforce of current employees of the Company such that such plant closing or reduction in workforce would, in the aggregate, implicate the WARN Act, or any applicable and similar foreign, state or local law, regulation or ordinance.

 

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ARTICLE VI
 [Intentionally Omitted]

 

ARTICLE VII
 [Intentionally Omitted]

 

ARTICLE VIII
 Covenants of the Parties

 

8.1                                 Required Approval.

 

Each of the parties will use commercially reasonable efforts, in good faith, to take, or cause to be taken, or do, or cause to be done, all things necessary, proper or advisable to satisfy all conditions to the obligations of the parties under this Agreement over which it has control or influence and to cause the Contemplated Transactions to be consummated on or prior to the Closing Date in accordance with the terms hereof, including without limitation by using commercially reasonable efforts to:  (i) obtain any required consents, approvals or authorizations of any Governmental Body or other third party, (ii) vigorously contest and resist all actual or threatened lawsuits or other Proceedings, including without limitation actions and proceedings by or on behalf of a Governmental Body, challenging this Agreement or the consummation of the Contemplated Transactions, (iii) vacate, lift, reverse or overturn any injunction or restraining order or other Order adversely affecting the ability of the parties to consummate the Contemplated Transactions in accordance with the terms hereof, and (iv) effect all necessary registrations and filings and submissions of information required or requested by any Governmental Body with respect to the transactions contemplated hereby; provided, however, that no party hereto shall have any obligation to expend any funds or to incur any other obligation in connection with the consummation of the Contemplated Transactions (including, by way of illustration only, any payment in connection with obtaining the required Consents) other than normal out-of-pocket expenses (such as fees and expenses of counsel and accountants) reasonably necessary to consummate such transactions. Each of the parties will cooperate fully with each other party and their respective officers, directors, employees, agents, counsel and other designees in connection with using such efforts, satisfying such conditions and causing the Closing to occur in accordance with the terms hereof.

 

8.2                                 Further Assurances.

 

After the Closing, the parties hereto agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be reasonably necessary or desirable (including obtaining third party consents) to effectuate the consummation of the Contemplated Transactions.

 

8.3                                 No Press Releases; No Public Announcements.

 

No party to this transaction shall disclose the occurrence of this transaction without the prior written consent of Buyer to anyone other than (a) its advisors on a need to know basis and (b) third parties whose consent or approval is required as a condition to the consummation of this Agreement.

 

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8.4                                 Confidentiality.

 

Between the date of this Agreement and the Closing Date, the parties shall maintain in confidence, and shall cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, and not use to the detriment of another party any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the Contemplated Transactions, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any filing or obtaining any consent or approval required for the consummation of the Contemplated Transactions, or (c) the furnishing or use of such information is required by legal proceedings. The provisions of this Section 8.4 shall survive the Closing and shall govern the confidentiality obligations of the parties hereto thereafter.  Notwithstanding the foregoing, the parties may use such confidential information in any litigation over the Agreement.

 

8.5                                 Books and Records.

 

From and after the Closing, the Company shall provide Buyer and the Members and their representatives with reasonable access, for any reasonable business purpose, during normal business hours, to all books and records of the Company’s business, including, but not limited to, accounting and Tax records, sales and purchase documents (“Records”) pertaining or relating to the period on or prior to the Closing Date. These rights shall be in addition to what is set forth in the Amended and Restated Operating Agreement.

 

ARTICLE IX
 Conditions Precedent to Buyer’s Obligation to Close

 

Buyer’s obligation to purchase the New Units and to take the other actions required to be taken by Buyer at the Closing are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by Buyer in whole or in part):

 

9.1                                 Accuracy of Representations.

 

(a)                                  Members’ and the Company’s representations and warranties in this Agreement to the extent not qualified by materiality or MAE must be accurate in all material respects as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date), in each case after taking into account all disclosures set forth in the Disclosure Schedules.

 

(b)                                 Members’ and the Company’s representations and warranties in this Agreement to the extent qualified by materiality or MAE must be accurate in all respects as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date), in each case after taking into account all disclosures set forth in the Disclosure Schedules.

 

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9.2                                 Company’s and Members’ Performance.

 

Each of the covenants, agreements and obligations that the Company or Members are required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been duly performed and complied with in all material respects.

 

9.3                                 Consents.

 

Each of the Consents identified in Section 3.4(d) or 4.1(b) of the Disclosure Schedules must have been obtained.

 

9.4                                 Additional Documents.

 

Each of the following documents and instruments must have been delivered to Buyer or Buyer Parent on or prior to the Closing:

 

(a)                                  resignation letter from the sole member of the Company’s Board: Acquity Holdings, L.L.C.;

 

(b)                                 employment agreements in mutually agreeable forms with the following employees of the Company:  Christopher Dalton, Paul Weinewuth, Matt Schmeltz, Scott Spear; Ray Grady, Mark Joseph, Jim Newman, Andy Peebler, Jon Borg-Breen and Jay Dettling (the “Employment Agreements”);

 

(c)                                  the documents set forth in Section 2.7(a); and

 

(d)                                 such other documents as Buyer may reasonably request for the purpose of (i) evidencing the satisfaction of any condition referred to in this Article IX, or (ii) otherwise facilitating the consummation or performance of any of the Contemplated Transactions.

 

9.5                                 No Proceedings.

 

Since the date of this Agreement, there must not have been commenced or threatened against Buyer or Buyer Parent any Proceeding (a) involving any challenge to, or seeking Damages or other relief in connection with, any of the Contemplated Transactions, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Contemplated Transactions.

 

9.6                                 No Claim Regarding Unit Ownership or Sale Proceeds.

 

Except as contemplated by this Agreement, there must not have been made or threatened by any Person any claim asserting that such Person (a) is the holder or the beneficial owner of, or has the right to acquire or to obtain beneficial ownership of, any unit of, or any other voting, equity, or ownership interest in, the Company, (b) is entitled to all or any portion of the Purchase Price payable for the New Units, or (c) is entitled to all or any portion of the Redemption Price or Earnout Payment.

 

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9.7                                 No Prohibition.

 

Neither the consummation nor the performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause Buyer or Buyer Parent to suffer any material adverse consequence under any applicable Legal Requirement or Order.

 

9.8                                 Securities Exemptions.

 

Buyer must be reasonably satisfied, in good faith, with the exemptions under the Securities Act and the applicable Blue Sky laws with respect to the issuance by the Company of the New Units.

 

ARTICLE X
 Conditions Precedent to the Members’ and the Company’s Obligations to Close

 

The Members’ and the Company’s obligations to sell the New Units and to take the other actions required to be taken by the Members and the Company at the Closing are subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by the Member Representative or the Company, in whole or in part):

 

10.1                           Accuracy of Representations.

 

(a)                                  Each of Buyer’s and Buyer Parent’s representations and warranties in this Agreement to the extent not qualified by materiality or MAE must have been accurate in all material respects as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date).

 

(b)                                 Each of Buyer’s and Buyer Parent’s representations and warranties in this Agreement to the extent qualified by materiality or MAE must have been accurate in all respects as of the Closing Date (except to the extent such representations and warranties relate to an earlier date, in which case as of such earlier date).

 

10.2                           Buyer’s Performance.

 

Each of the covenants and obligations that Buyer or Buyer Parent is required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects.

 

10.3                           Additional Documents.

 

Each of the following documents and instruments must have been delivered to the Company or the Member Representative on or prior to the Closing:

 

(a)                                  the documents set forth in Section 2.7(b);

 

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(b)           such documents as the Member Representative may reasonably request for the purpose of (i) evidencing the satisfaction of any condition referred to in this Article X, or (ii) otherwise facilitating the consummation of any of the Contemplated Transactions; and

 

10.4         No Proceedings.

 

Since the date of this Agreement, there must not have been commenced or threatened against any Member any Proceeding (a) involving any challenge to, or seeking Damages or other relief in connection with, any of the Contemplated Transactions, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the Contemplated Transactions.

 

10.5         No Prohibition.

 

Neither the consummation nor the performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time), materially contravene, or conflict with, or result in a material violation of, or cause any Member to suffer any material adverse consequence under any applicable Legal Requirement or Order, other than such contraventions, conflicts or violations as would occur solely as a result of the identity or the legal or regulatory status, or the ownership or capitalization, of Buyer or any of its Affiliates.

 

ARTICLE XI
  [Reserved]

 

ARTICLE XII
 Indemnification; Remedies

 

12.1         Survival and Time Limitations.

 

(a)           (i)            Except as provided below, all representations and warranties in this Agreement (as modified or qualified by the Disclosure Schedules), the Disclosure Schedules, any agreement, certificate, document or written instrument delivered in connection with the Closing, or any other Operative Agreement shall, unless otherwise noted in this Section 12.1, survive the Closing for a period of 18 months after the Closing Date.

 

(ii)           The representations and warranties made by the Company as to financial statements (as set forth in Section 3.6) (the “Financial Statement Representations”) shall survive the Closing until the later of (yy) the Audit Cut-Off Date and (zz) fifteen (15) Business Days after receipt of the Big Four Earnout Statement, if any.

 

(iii)          The representations and warranties made (i) by the Company as to (A) limited liability company existence, power and authority (as set forth in Section 3.1(a)), (B) non-contravention (as set forth in Section 3.4(d)), (C) capitalization (as set forth in Section 3.5), and (D) brokers and finders (as set forth in Section 3.20), and (ii) by Members as to (A) power and authority (as set forth in Section 4.1(a)), (B) non-contravention (solely with respect to the governing documents and resolutions, as set forth in Section 4.1(c)(i)), and (C) the ownership of the Redemption Units (as set forth in Section 4.2) (collectively, all of clause (i) and clause (ii), the “Fundamental Representations”) shall survive the Closing indefinitely.

 

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(iv)          Any claims based upon a breach of any representation or warranty herein that arises from the Members’ or the Company’s Fraud (“Fraud Claims”) shall survive indefinitely.

 

(v)           The representations and warranties made by the Company in this Agreement relating to Taxes (as set forth in Section 3.9) and Employee Benefit Plans (as set forth in Section 3.14) (collectively, the “Statutory Representations”) shall survive until the applicable statute of limitations has expired for claims based on such matters (including any extensions thereof).

 

Notwithstanding the limitations set forth above, representations and warranties shall survive beyond the above dates with respect to any breach thereof for which notice shall have been duly given as required under this Agreement prior to the applicable expiration date until the claims identified in such notice shall have been resolved in full or waived but only to the extent of such claims.

 

(b)           The covenants and agreements contained in this Agreement shall survive the Closing and remain in effect indefinitely unless a specified period is otherwise set forth in this Agreement (in which event such specified period will control).

 

(c)           The waiver of any condition default or breach or of the performance of or compliance with any covenant or agreement shall preclude any claim for indemnification under this Article XII.

 

12.2         Indemnification and Payment of Damages by Members.

 

Except as otherwise set forth in this Article XII, the Members, severally and jointly, shall indemnify and hold harmless (i) Buyer for, and shall pay to Buyer, the amount of any loss, liability, claim, damage or expense (including reasonable costs of investigation and defense and reasonable attorneys’ fees) but, subject to Section 12.4(d), specifically excluding claims by any indemnified Person hereunder for any incidental, consequential, special, punitive, exemplary or otherwise not actual damages, claims in the nature of lost profits, multiple of profits or multiple of cash flow and claims for any diminution in value of property or equity, (collectively, “Damages”), incurred or suffered by the Company, and (ii) Buyer, Buyer Parent and their respective officers, directors, employees and agents (individually a “Buyer Indemnified Person” and collectively, the “Buyer Indemnified Persons”) for, and shall pay to each Buyer Indemnified Person, the amount of any Damages directly incurred by such Buyer Indemnified Person solely as a result of any Third Party Claim brought directly against such Buyer Indemnified Person; and, in the case of clauses (i) and (ii) of this paragraph, arising from or in connection with:

 

(a)           any breach of any representation or warranty made by the Company or Members in this Agreement, the Disclosure Schedules, or any certificate delivered pursuant to Section 2.7(a) hereof;

 

(b)           any breach by the Company or any Member of any covenant or obligation of the Company or any Member in this Agreement (other than Sections 9.5, 9.6, 9.7, and 9.8);  or

 

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(c)           any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with any Member or the Company (or any Person acting on their behalf) in connection with any of the Contemplated Transactions.

 

12.3         Indemnification and Payment of Damages by Buyer and Buyer Parent.

 

Buyer and Buyer Parent jointly and severally shall indemnify and hold harmless (i) the Members for, and shall pay to the Members, any Damages incurred or suffered by the Members, and (ii) the Members and each of their respective officers, directors, employees and agents (collectively, the “Member Indemnified Persons”) for, and shall pay to each Member Indemnified Person, the amount of any Damages directly incurred by such Member Indemnified Person solely as a result of any Third Party Claim brought directly against such Member Indemnified Person; and in the case of clauses (i) and (ii) of this paragraph, arising from or in connection with:

 

(a)           any breach of any representation or warranty made by Buyer or Buyer Parent in this Agreement, or any certificate delivered pursuant to Section 2.7(b)(ii) hereof;

 

(b)           any breach by Buyer or Buyer Parent of any covenant or obligation (other than Sections 10.4 and 10.5) of Buyer or Buyer Parent in this Agreement; or

 

(c)           any claim by any Person for brokerage or finder’s fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with Buyer or Buyer Parent (or any Person acting on its behalf) in connection with any of the Contemplated Transactions.

 

12.4         Limitations on Amount.

 

(a)           Except with respect to any claim based on a breach of any Financial Statement Representation, Fundamental Representation, Statutory Representation or a Fraud Claim, the Members shall have no liability with respect to any matters described in Section 12.2, and Buyer and Buyer Parent shall have no liability with respect to any matters described in Section 12.3, until the total amount of all Damages with respect to such matters exceeds US$420,000 (the “Threshold”), and then only for the amount of Damages in excess of the Threshold.  There shall be no Threshold for Damages with respect to a breach of any Financial Statement Representation, Fundamental Representation, Statutory Representation or Fraud Claim.

 

(b)           (i)            With respect to any claim that is not based on a breach of any Financial Statement Representation, Fundamental Representation, Statutory Representation or a Fraud Claim, the maximum aggregate amount of Damages that Members shall collectively be obligated to pay to Buyer, Buyer Parent, and the Buyer Indemnified Persons under Section 12.2, and maximum amount of Damages that Buyer and Buyer Parent shall be obligated to pay the Member Indemnified Persons under Section 12.3, shall be limited to US$6,300,000 (the “Cap Amount”).

 

(ii)           With respect to any claim that is based on a breach of a Financial Statement Representation or a breach of Section 3.14 (Employee Benefits), the maximum

 

54

 

aggregate amount of Damages that the Members shall collectively be obligated to pay to Buyer, Buyer Parent and Buyer Indemnified Persons under Section 12.2(a) shall be limited to US$10,500,000.

 

(iii)          With respect to any claim that is based on a breach of Section 3.9 (Taxes), or a breach of a Fundamental Representation or a Fraud Claim, the maximum aggregate amount of Damages that the Members shall collectively be obligated to pay to Buyer, Buyer Parent and the Buyer Indemnified Persons under Section 12.2(a) shall be limited to the amount actually received by all Members under this Agreement, (subject to adjustment as additional amounts are received); provided, however, that Buyer may seek payment from the Company for any amount of Damages in excess of the cap provided for in this sentence with respect to the breach of a Fundamental Representation or a Fraud Claim, to the extent such funds are available from the Company to be distributed to the Buyer without violating applicable law.

 

(iv)          Damages arising from a breach of any Financial Statement Representation, Statutory Representation, Fundamental Representation or Fraud Claim shall be excluded for purposes of calculating Damages applicable to the Cap Amount for purposes of Section 12.4(b)(i).

 

(c)

 

(i)            With respect to the representations and warranties set forth in Article IV and the certificate delivered pursuant to Section 2.7(a), no individual Member shall have any liability with respect to a breach by any other Member of such representations and warranties.

 

(ii)           In addition, the maximum aggregate amount of Damages that any one Member shall be obligated to pay to Buyer, Buyer Parent and the Buyer Indemnified Persons shall be limited to the product of the amount actually received by all Members under this Agreement (subject to adjustment as additional amounts are received) and such Member’s Redemption Percentage listed on Schedule A attached hereto.

 

(d)           In addition to the other limitations, deductions and restrictions set forth in Sections 12.4 and 12.5 hereof, with respect to Damages to the Company claimed by Buyer under Section 12.2, the Parties agree that every $1 of Damages of the Company shall equate to 70 cents of Damages to the Buyer.  For the avoidance of doubt, the parties agree that the indirect nature of such Damages to Buyer as provided in this Section 12.4(d) shall not cause such Damages to be characterized as incidental, consequential, special, punitive, exemplary or otherwise not actual damages, claims in the nature of lost profits, multiple of profits or multiple of cash flow and claims for any diminution in value of property or equity.

 

12.5         Calculation of Damages.

 

(a)           The amount of any and all Damages for which indemnification is provided pursuant to Sections 12.2 and 12.3 of this Agreement shall be (i) increased to take account of any net Tax cost incurred by the indemnified party arising from the receipt of indemnity payments hereunder, and (ii) reduced to take account of any net Tax benefit actually received and reasonably expected to be realized by the indemnified party in any Tax year arising from the incurrence or payment of any such Damages.  For purposes of computing the amount of any such

 

55

 

Tax cost, the indemnified party shall be deemed to recognize all other items of income, gain, loss, deduction or credit before recognizing any item arising from the receipt of any indemnity payment hereunder.

 

(b)           Upon a final determination of an indemnification claim whereby such final determination is by reason of (a) the mutual agreement of the indemnifying party and the indemnified party, or (b) a settlement agreement entered into in a manner consistent with this Section 12 or (c) a final arbitration award pursuant to Section 13.3 (each a “Final Determination”), then, subject to the limitations set forth in Sections 12.4 and 12.5, the amount of the Damages in connection with such Final Determination shall be paid by the indemnifying party by wire transfer of immediately available funds to an account designated by the indemnifying party if not subject to offset as provided in Section 2.5(j).

 

(c)           The amount of any Damages for which indemnification is paid shall be deemed to be an adjustment to the Purchase Price, and the Members, Buyer, Buyer Parent, and the Company agree to treat (and agree to cause each of their Affiliates to treat) any indemnify payment made pursuant to Article XII of this Agreement as an adjustment to the Purchase Price for federal, state, local and foreign Tax purposes.

 

(d)           The amount of any and all Damages for which indemnification is provided pursuant to Sections 12.2 and 12.3 of this Agreement shall be reduced by an amount equal to 70% of any amounts actually received by the Company under any applicable insurance policies.  In the event that any claim for indemnification asserted under Section 12.2 or 12.3 of this Agreement is, or may be, the subject of insurance coverage of the Company or other right to indemnification or contribution from any third party (a “Third Party Contributor”), each of the Company and the indemnified party agrees to promptly notify the applicable insurance carrier of such claim and tender defense thereof to such carrier, and shall also promptly notify any potential Third Party Contributor.  The Company and each indemnified party agrees to pursue, at the sole cost and expense of the indemnifying party, such claims diligently and to reasonably cooperate, at the sole cost and expense of the indemnifying party, with each such insurance carrier and Third Party Contributor, and the indemnified party agrees to make no claim for indemnification under either Section 12.2 or 12.3, as the case may be, for a period of six months after such claim for insurance or contribution is made. If insurance coverage or contribution claim is denied (in whole or in part), or if no resolution of an insurance or contribution claim shall have occurred within such six month period, the indemnified party may proceed for indemnification under Section 12.2 or 12.3 of this Agreement, as the case may be, and such indemnifying party shall be subrogated to the rights of the indemnified party against such insurance carrier or Third Party Contributor.  The survival periods in Section 12.1 shall be tolled during the six month period set forth in this Section 12.5(d).

 

12.6         Procedure for Indemnification — Third Party Claims.

 

(a)           Promptly after receipt by an indemnified party under Section 12.2 or Section 12.3 of notice of the commencement of any Proceeding against it by an independent third party (a “Third Party Claim”), such indemnified party shall, if a claim is to be made against an indemnifying party under such Section, give notice to the indemnifying party of the commencement of such claim. The failure to notify the indemnifying party shall not relieve the

 

56

 

indemnifying party of any liability that it may have to any indemnified party, except to the extent that the defense of such action is materially prejudiced by the indemnified party’s failure to give such notice. Notice shall describe the Proceeding in reasonable detail and indicate the estimated amount, if reasonably practicable, of the Damages that have been or may be sustained by the indemnified party.  For the avoidance of doubt, notwithstanding anything to the contrary in this Article XII, no indemnification shall be required under this Agreement for a Proceeding or other claim brought by a Buyer Indemnified Person or an Affiliate of a Buyer Indemnified Person against another Buyer Indemnified Person or an Affiliate of a Buyer Indemnified Person, or for a Proceeding or other claim brought by a Member Indemnified Person or an Affiliate of a Member Indemnified Person against another Member Indemnified Person or an Affiliate of a Member Indemnified Person.

 

(b)           The indemnifying party shall be entitled to assume the defense of such Third Party Claim with counsel reasonably satisfactory to the indemnified party. After notice given within twenty days after receipt of notice of such Third Party Claim of its election to assume the defense of such Third Party Claim, the indemnifying party shall not be liable to the indemnified party under this Article XII for any fees of other counsel with respect to the defense of such Third Party Claim subsequently incurred by the indemnified party in connection with the defense of such Third Party Claim, unless the employment of separate counsel was (i) authorized by the indemnifying party in writing, (ii) advisable in the written opinion of counsel to the indemnified party because of the existence of an actual conflict of interest that would make it inappropriate for the same counsel to represent both the indemnified party and the indemnifying party, or (iii) necessitated by the failure of the indemnifying party to pursue diligently the defense of such Third Party Claim and as a result the indemnified party is at substantial risk of having a default judgment entered against it.  If separate counsel is retained pursuant to clause (iii), the indemnified Party may control the defense of such Third Party Claim; provided, however that the indemnified Party may not settle such Third Party Claim without the prior written consent of the indemnifying Party, which consent will not be unreasonably withheld.

 

(c)           If the indemnifying party assumes the defense of a Third Party Claim, the indemnifying party may not enter into any compromise or settlement of such claims without the prior written consent of the indemnified party, provided, however, that such consent shall not be required if settlement or compromise involves only the payment of Damages by the indemnifying party and includes a complete and irrevocable general release of the indemnified party by all Persons who brought such Third Party Claim.

 

(d)           The indemnified party shall provide the indemnifying party with all reasonably available information, assistance and authority to enable the indemnifying party to affect such defenses or settlement and the indemnifying party will reimburse the indemnified party for all out of pocket expenses incurred in providing such information. Upon the indemnifying party’s payment of any amounts due in respect of such Third Party Claim, the indemnified party will, to the extent of any payment hereunder, assign or cause to be assigned to the indemnifying party the claims and counter claims of the indemnified party, if any, against such third parties in respect of which such payment is made.

 

57

 

12.7         Procedure for Indemnification — Other Claims.

 

A claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the party from whom indemnification is sought. The failure to notify the indemnifying party shall not relieve the indemnifying party of any liability that it may have to any indemnified party, except to the extent that the defense of such action is materially prejudiced by the indemnified party’s failure to give such notice. Notice shall describe in reasonable detail the basis for the claim and indicate the estimated amount, if reasonably practicable, of the Damages that have been or may be sustained by the indemnified party.

 

12.8         Sole Remedy.

 

Upon and after the Closing, the provisions of Article XII of this Agreement and the Offset right of Buyer in Section 2.5 hereof shall represent the sole and exclusive remedy available to any party to this Agreement for any Damages relating to any representation or warranty contained herein or a certificate delivered hereunder or for any breach by any other party of any covenant or agreement required to be performed prior to the Closing contained herein or under a certificate delivered hereunder, and, except with respect to acts of Fraud (which are expressly not waived), each party hereby unconditionally waives any other rights that it may have at law or in equity for any misstatement or omission by any other party from any representation or warranty contained herein or a certificate delivered hereunder or for any breach by any other party of any covenant or agreement required to be performed prior to the Closing contained herein or under a certificate delivered hereunder. The limitation set forth herein shall not limit any claims or remedies available to Buyer in connection with any breach of Sections 8.2 and 8.4.

 

12.9         Member Representative.

 

The Member Representative shall act on behalf of, and have authority to negotiate, settle and bring any and all claims made against or by the Members for all purposes of this Article XII, except where a claim is made against an individual Member (in which case such Member shall act on his own behalf).

 

12.10       Guaranty.

 

Each of Christopher Dalton, Paul Weinewuth, Matt Schmeltz and Scott Spear (each a “Guarantor”), jointly and severally, absolutely and unconditionally guarantees and agrees to be liable for the full and indefeasible payment and performance when due of all obligations of any kind, nature and description under this Agreement of Acquity Holdings, LLC (all of which are collectively referred to herein as the “Guaranteed Obligations”) to Buyer and its assignees and successors in interest subject to any caps or limitations applicable hereunder to Acquity Holdings, LLC.  This Guarantee is a guaranty of payment and not of collection.  Each Guarantor agrees that Buyer and its assignees and successors in interest need not attempt to collect any Guaranteed Obligations from Acquity Holdings, LLC, but may require such Guarantor to make immediate payment of all of the Guaranteed Obligations to Buyer or and its assignees and successors in interest.

 

58

 

ARTICLE XIII
 General Provisions

 

13.1                           Expenses.

 

The Company will reimburse Buyer and Buyer Parent for all reasonable due diligence fees and expenses of Buyer’s Advisors incurred by Buyer and Buyer Parent in connection with the Contemplated Transactions, including but not limited to reasonable legal fees of Buyer’s and Buyer Parent’s counsel, payable by check or wire transfer of immediately available funds at the Closing.

 

13.2                           Notices.

 

All notices, consents, waivers, and other communications under this Agreement must be in writing and shall be deemed to have been duly given when (a) delivered by hand, (b) sent by facsimile (against receipt therefor), provided that a copy is mailed by registered mail, return receipt requested, or (c) received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a party may designate by notice to the other parties) in the manner provided below:

 

If to Members:

Members Representative:

Acquity Holdings, L.L.C.

Three Hawthorn Parkway

Suite 150

Vernon Hills, IL 60061

Facsimile: (847) 247-8960

Attn: Keith Schoenfeld

 

With copies to:

Christopher J. Dalton, Manager

Acquity Holdings, L.L.C.

500 West Madison Street, Suite 2200
 Chicago, IL 60661

and

McGuireWoods LLP

Suite 4100

77 West Wacker Drive

Chicago, IL 60601-1818

Facsimile: 312.698.4585

Attn: Scott L. Glickson

 

If to Buyer or Buyer Parent:

2020 Global Investments, LLC

c/o 2020 GlobalGrowth Equities Limited

1503 Ruttonjee House

 

59

 

11 Duddell Street

Hong Kong

Facsimile: (852) 3106 4706

Attn: Louis Koo, Authorized Person

 

With copies to:

Foley & Lardner LLP

111 Huntington Avenue, Floor 26

Boston, MA 02199

Facsimile: 617.342.4001

Attn: David W. Kantaros

 

13.3                           Dispute Resolution.

 

Except as provided in Sections 2.4 and 2.5, the parties hereby agree that, in order to obtain prompt and expeditious resolution of disputes under this Agreement, each claim, dispute or controversy of whatever nature, arising out of, in connection with, or in relation to the interpretation, performance or breach of this Agreement and all other Operative Agreements, including, without limitation, any claim based on contract, tort or statute, or the alleged breach hereof or thereof, shall first be attempted to be resolved in good faith by a representative of Buyer and the Member Representative. Except as provided in Sections 2.4 and 2.5, in the event that the controversy is not resolved within thirty (30) days, the parties shall proceed to binding arbitration pursuant to the following procedures:

 

(a)                                  Any party may send another party written notice identifying the matter in dispute and invoking the procedures of this Section 13.3. Within fifteen (15) Business Days thereafter, each party involved in the dispute shall meet at a location mutually agreed by the parties, for the purpose of determining whether they can resolve the dispute themselves by written agreement.

 

(b)                                 If such parties fail to resolve the dispute by written agreement, the dispute shall, at the request of either party upon written notice to that effect to the other party (a “Demand”), be finally settled by binding arbitration in accordance with the rules for commercial arbitration of the United Nations Commission on International Trade Law  (“UNCITRAL”) then in effect, except as modified herein.  The Arbitration Tribunal shall be composed of either (x) one (1) arbitrator if the parties can reach agreement on the appointment of such arbitrator or (y) three (3) arbitrators if no agreement can be reached on the appointment of a single arbitrator (in either case, the “Arbitration Tribunal”). If the Arbitration Tribunal is to be composed of a panel of three arbitrators, such arbitrators shall be appointed as follows:

 

(i)                                     Each party shall select one arbitrator in accordance with the applicable rules of UNCITRAL within fifteen (15) days of its receipt of the Demand, or, if such party to the dispute fails to make such selection within such fifteen (15) days of the receipt of the Demand, the UNCITRAL shall make such appointment within five days thereafter.

 

(ii)                                  Within five days of their appointment, the two arbitrators thus appointed shall select the third arbitrator, who shall act as chairman of the panel.  If the two 

 

60

 

arbitrators fail to agree on a third arbitrator within five days of their selection, the UNCITRAL shall make such appointment within five days thereafter.

 

(iii)                               Notwithstanding anything contained in the UNCITRAL rules to the contrary, any selection of arbitrators to be made by UNCITRAL pursuant to this Section 13.3 shall be made by the Director General of the London Court of International Arbitration.

 

(c)                                  Within 90 days of the selection of the Arbitration Tribunal, the parties involved in the dispute shall meet with the Arbitration Tribunal in Brussels, or such other location as mutually agreed by the parties, at a place and time designated by such Arbitration Tribunal after consultation with such parties and present their respective positions on the dispute.  Each party shall have no longer than five days to present its position, and the decision of the Arbitration Tribunal shall be made in writing no more than thirty days following the end of the proceeding and shall set forth in writing the grounds or basis of the Arbitration Tribunal’s decision.   The language to be used in all proceedings before the Arbitration Tribunal shall be English and all documents and testimony shall be in or translated to English.

 

(d)                                 The award of the Arbitration Tribunal shall be a final and binding determination of the dispute and shall be final and binding on all the parties involved in the arbitration proceeding.  Such arbitration award shall be fully enforceable in any court of competent jurisdiction and may be confirmed and reduced to judgment in any court of  competent jurisdiction over such parties.

 

(e)                                  The non-prevailing party (as determined by the Arbitration Tribunal) shall pay the Arbitration Tribunal’s fees and expenses and shall pay the reasonable attorneys’ fees and expenses incurred by the prevailing party (as determined by the Arbitration Tribunal) in connection with such arbitration proceeding.  If the prevailing party must seek enforcement of any arbitration award made by the Arbitration Tribunal in a court of competent jurisdiction, the non-prevailing party shall pay all of the reasonable attorneys’ fees and expenses incurred by the prevailing party in connection with such enforcement.

 

13.4                           Waiver of Jury Trial.

 

(a)                                  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS OR ENFORCING ANY ARBITRATION AWARD PURSUANT TO SECTION 13.3 OF THIS AGREEMENT.

 

13.5                           Waiver.

 

The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement shall operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege shall preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in 

 

61

 

this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party shall be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party shall be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

 

13.6                           Entire Agreement.

 

This Agreement supersedes all prior agreements, written or oral, between the parties with respect to its subject matter and constitutes (along with the Disclosure Schedules, the Exhibits, and the other Operative Agreements) a complete and exclusive statement of the terms (including, without limitation, representations, warranties, covenants and conditions) of the agreement between the parties with respect to its subject matter.

 

13.7                           Amendments.

 

This Agreement may be amended, modified or supplemented only by written agreement of (a) the Company, (b) Buyer, and (c) the Members owning a majority of the Redemption Units as of the Closing.  Any amendment shall be binding on all parties hereto. However, no amendment expanding the indemnification obligations or affecting the restrictions and limitations thereon with respect to any Member shall be effective against such Member without his or its consent.

 

13.8                           Disclosure Schedules.

 

(a)                                  The disclosures in any Section of the Disclosure Schedules shall be deemed to be disclosures in other Sections of the Disclosure Schedules, where applicability to such other sections are reasonably apparent, whether or not a specific cross reference is made in such other  Section of the Disclosure Schedules.

 

(b)                                 Inclusion of an item in the Disclosure Schedules is not necessarily intended to indicate such item is material or is above a certain threshold. Items may be included for the sake of completeness only.

 

13.9                           Third Party Beneficiaries.

 

Nothing expressed or referred to in this Agreement shall be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and permitted assigns.

 

13.10                     Assignment.

 

This Agreement and the rights and obligations hereunder shall not be assignable by any party hereto without the prior written consent of the Company, Buyer, and the Members owning a majority of the Redemption Units as of the Closing. Notwithstanding the foregoing, Buyer may 

 

62

 

assign this Agreement and all of its rights and obligations to a Person pursuant to a 2020 Permitted Transfer.  Further, notwithstanding the foregoing, Buyer acknowledges that the obligations of each Member hereunder are personal to Buyer and that each Member’s obligations thereunder may not be assigned or otherwise transferred by each Member without the prior written consent of Buyer.  Any instrument purporting to make an assignment in violation of this Section shall be null and void.

 

13.11                     Representation of the Members Post-Closing.

 

Each of the parties to this Agreement hereby agrees, on its own behalf and on behalf of its directors, members, partners, officers, employees and Affiliates, that McGuireWoods LLP may serve as counsel to each and any of the Members, the Member Representative and their respective Affiliates (individually and collectively, “Member Group”), on the one hand, and the Company, on the other hand, in connection with the negotiation, preparation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, and that, following consummation of the transactions contemplated hereby, McGuireWoods LLP (or any successor) may serve as counsel to any member of the Member Group or any director, member, partner, officer, employee or Affiliate of Member Group, in connection with any litigation, claim or obligation arising out of or relating to this Agreement or the transactions contemplated by this Agreement notwithstanding such representation, and each of the parties hereto hereby consents thereto and waives any conflict of interest arising therefrom, and each of such parties shall cause any Affiliate thereof to consent to waive any conflict of interest arising from such representation.

 

13.12                     Severability.

 

If any provision of this Agreement is held invalid or unenforceable pursuant to the proceedings under Section 13.3, the other provisions of this Agreement shall remain in full force and effect.  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.

 

13.13                     Section, Article and Section Headings.

 

The headings of Sections and Articles in this Agreement and Sections of the Disclosure Schedules are provided for convenience only and shall not affect their respective construction or interpretation.

 

13.14                     Construction; Interpretation.

 

(a)                                  All words used in this Agreement shall be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” shall be construed to mean including without limitation.

 

(b)                                 No provision of this Agreement shall be interpreted in favor of, or against, any party hereto by reason of the fact such party or its counsel participated in the drafting thereof.

 

63

 

13.15                     Governing Law.

 

This Agreement shall be governed by the internal laws of the State of Delaware without regard to its conflict of laws principles.

 

13.16                     Counterparts; Facsimile Signatures.

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original copy of this Agreement and all of which, when taken together, shall be deemed to constitute one and the same agreement.  A facsimile copy of this Agreement or any counterpart thereof shall be deemed an original.

 

[Rest of Page Intentionally Left Blank —

 

Signature Pages Follow]

 

64

 

Signature Page to Unit Purchase and Redemption Agreement

 

 

IN WITNESS WHEREOF, the parties have executed and delivered this Unit Purchase  and Redemption Agreement as of the date first written above.

 

 

	
BUYER:
    	
BUYER PARENT:
    
	
 
    	
 
    
	
2020 GLOBAL INVESTMENTS, LLC
    	
2020 GLOBALGROWTH EQUITIES   LIMITED
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ George Lu
    	
 
    	
/s/ Adrian Chan
    
	
Name: George Lu  
    	
Name: Adrian Chan
    
	
Title: Manager
    	
Title: Director
    
	
 
    	
 
    
	
 
    	
 
    
	
THE COMPANY:
    	
MEMBER REPRESENTATIVE:
    
	
 
    	
 
    
	
ACQUITY GROUP, L.L.C.
    	
ACQUITY HOLDINGS, L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Christopher J. Dalton
    	
 
    	
/s/ Christopher J. Dalton
    
	
Name: Christopher J. Dalton
    	
Name: Christopher J. Dalton
    
	
Title: President & Chief Executive   Officer
    	
Title: Manager and Authorized Person
    
	
 
    	
 
    
	
 
    	
 
    
	
MEMBER:
    	
 
    
	
 
    	
MEMBER:  
    
	
ACQUITY HOLDINGS, L.L.C.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Christopher J. Dalton
    	
 
    	
/s/ Raymond Grady
    
	
Name: Christopher J. Dalton
    	
RAYMOND GRADY
    
	
Title: Manager and Authorized Person
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
MEMBER:  
    	
MEMBER:  
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Mark R.Joseph
    	
 
    	
/s/ James D. Newman
    
	
MARK R. JOSEPH
    	
JAMES D. NEWMAN
    

 

 

 

Signature Page to Unit Purchase and Redemption Agreement

 

 

	
MEMBER:
    	
MEMBER:
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Andrew A. Peebler
    	
 
    	
/s/ Jonathan E. Borg-Breen
    
	
ANDREW A. PEEBLER
    	
JONATHAN E. BORG-BREEN
    
	
 
    	
 
    
	
 
    	
 
    
	
MEMBER:  
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Jay D. Dettling
    	
 
    	
 
    
	
JAY D. DETTLING
    	
 
    

 

 

WITH RESPECT TO SECTION 12.10 AND ARTICLE XIII ONLY:

 

 

	
/s/ Christopher J.   Dalton
    	
 
    	
/s/ Paul D. Weinewuth
    
	
CHRISTOPHER J. DALTON
    	
PAUL D. WEINEWUTH
    
	
 
    	
 
    
	
 
    	
 
    
	
/s/ Matthew T. Schmeltz
    	
 
    	
/s/ Scott A. Spear
    
	
MATTHEW T. SCHMELTZ
    	
SCOTT A. SPEAR
    

 

 

Schedule A

SCHEDULE OF MEMBERS

 

	
Name and Address of Member
    	
 
    	
Membership
   Interests Owned
   Prior to Closing
    	
 
    	
Membership
   Interests
   Redeemed
    (Class A
   Units)*
    	
 
    	
Redemption
   Percentage
    	
 
    	
Class A Units
   Owned
   Following the
   Redemption
    	
 
    
	
Acquity Holdings, LLC  
    Attn: Keith   A. Schoenfeld  
    Three   Hawthorn Parkway, Suite 150  
    Vernon   Hills, Illinois 60061
    	
 
    	
1,000,000  Class A
    	
 
    	
666,671
    	
 
    	
85.46
    	
%
    	
333,329
    	
 
    
	
Ray Grady  
    3444 N. Hamilton Ave.  
    Chicago, IL 60618
    	
 
    	
58,889 Class A  11,500 Class B
    	
 
    	
46,926
    	
 
    	
6.02
    	
%
    	
23,463
    	
 
    
	
James Newman  
    577 Prairie Ave.  
    Glen Ellyn, IL 60137
    	
 
    	
19,739 Class A  5,000 Class B
    	
 
    	
16,493
    	
 
    	
2.11
    	
%
    	
8,246
    	
 
    
	
Mark Joseph  
    2229 W. School Street  
    Chicago, IL 60618
    	
 
    	
2,500 Class  20,000 Class B
    	
 
    	
15,000
    	
 
    	
1.92
    	
%
    	
7,500
    	
 
    
	
Andy Peebler  
    21 Hawaii Drive  
    Aliso Viejo, CA 92656
    	
 
    	
12,500 Class A  15,000 Class B
    	
 
    	
18,333
    	
 
    	
2.35
    	
%
    	
9,167
    	
 
    
	
Jon Borg-Breen  
    500 W. Barry #4E  
    Chicago, IL 60657
    	
 
    	
12,500 Class B
    	
 
    	
8,333
    	
 
    	
1.07
    	
%
    	
4,167
    	
 
    
	
Jay Dettling  
    9411 Drake Ave  
    Evanston, IL 60203
    	
 
    	
12,500 Class B
    	
 
    	
8,333
    	
 
    	
1.07
    	
%
    	
4,167
    	
 
    
	
TOTAL
    	
 
    	
1,170,128
    	
 
    	
780,089
    	
 
    	
100
    	
%
    	
**390,039
    	
 
    

 

*  After giving effect to the conversion of Class B Units to Class A Units as of immediately prior to the Closing.

 

 

**  After giving effect to the issuance of new 910,100 Class A Units to 2020 Global Investments, LLC and after giving effect to the Redemption, 390,039 Class A Units represent 30% ownership interest in the Company.

 

 

Schedule 2.5

 

Sample Calculation

 

(omitted in original)

 

 

Schedule 3.5(b)

 

Payment Obligations Under Employee Equity Sharing Plan

 

(omitted in original)

 

 

Schedule 13.1

 

Buyer’s Advisors

 

Foley & Lardner LLP

 

 

ACQUITY GROUP, LLC AND SUBSIDIARY

Chicago, Illinois

 

AUDITED REDEMPTION STATEMENT

 

DECEMBER 31, 2007

 

(See independent auditors’ report)

 

 

ACQUITY GROUP, LLC

AND SUBSIDIARY

 

Chicago, Illinois

 

AUDITED REDEMPTION STATEMENT

December 31, 2007

 

T ABLE OF CONTENTS

 

	
INDEPENDENT AUDITORS’   REPORT
    	
1
    
	
 
    	
 
    
	
AUDITED REDEMPTION   STATEMENT
    	
2
    
	
NOTES TO THE AUDITED   REDEMPTION STATEMENT
    	
3
    

 

 

INDEPENDENT AUDITOR’S REPORT

 

The Members

Acquity Group, LLC and Subsidiary

Chicago, Illinois

 

We have audited the accompanying Audited Redemption Statement of Acquity Group, LLC and Subsidiary for the year ended December 31,2007. This statement is the responsibility of the management of Acquity Group, LLC and Subsidiary. Our responsibility is to express an opinion on this statement based on our audit.

 

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Audited Redemption Statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the accompanying Audited Redemption Statement referred to above presents fairly, in all material respects, the 2007 Audited Sales and 2007 Audited EBITDA of Acquity Group, LLC and Subsidiary and the Redemption Price related thereto, for the year ended December 31, 2007, as described in Note 1.

 

This report is intended solely for the information and use of the members of Acquity Group, LLC and Subsidiary and the Board of Directors and management of 2020 Global Investments, LLC and 2020 GlobalGrowth Equities Limited and should not be used for any other purpose.

 

 

	
 
    	
Mowery &   Schoenfeld LLC
    
	
 
    	
 
    
	
March 18,   2008
    	
 
    
	
Vernon   Hills, Illinois
    	
 
    

 

 

ACQUITY GROUP, LLC AND SUBSIDIARY

AUDITED REDEMPTION STATEMENT

FOR THE YEAR ENDED DECEMBER 31,2007

 

	
Revenue
    	
 
    	
$
    	
54,216,770
    	
 
    	
 
    	
 
    
	
Cost of revenue earned
    	
 
    	
33,069,020
    	
 
    	
 
    	
 
    
	
Gross profit
    	
 
    	
 
    	
 
    	
$
    	
21,147,750
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Operating expenses
    	
 
    	
 
    	
 
    	
15,450,630
    	
 
    
	
Income from operations
    	
 
    	
 
    	
 
    	
5,697,120
    	
 
    
	
Other expense
    	
 
    	
 
    	
 
    	
343,637
    	
 
    
	
Income before provision for taxes
    	
 
    	
 
    	
 
    	
5,353,483
    	
 
    
	
Provision for taxes
    	
 
    	
 
    	
 
    	
51,207
    	
 
    
	
Net income
    	
 
    	
 
    	
 
    	
$
    	
5,302,276
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2007 Audited EBITDA (Section 2.4 (c))
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Net income
    	
 
    	
 
    	
 
    	
$
    	
5,302,276
    	
 
    
	
Interest expense
    	
 
    	
 
    	
 
    	
343,637
    	
 
    
	
Taxes
    	
 
    	
 
    	
 
    	
51,207
    	
 
    
	
Depreciation and amortization
    	
 
    	
 
    	
 
    	
916,903
    	
 
    
	
Transaction expenses as defined in Section 2.5(i)
    	
 
    	
 
    	
 
    	
73,375
    	
 
    
	
2007 Audited EBITDA pursuant to Section 2.4 (c)
    	
 
    	
 
    	
 
    	
$
    	
6,687,398
    	
 
    

 

Audited Redemption Price pursuant to Section 2.4(c)(i) of the Unit Purchase and Redemption Agreement

 

	
 
    	
 
    	
Amount
    	
 
    	
Ratio
    	
 
    	
Weighting
    	
 
    	
Percent
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2007 Audited Sales
    	
 
    	
$
    	
54,216,770
    	
 
    	
111.0999
    	
%
    	
40
    	
%
    	
44.4400
    	
%
    
	
Target Sales
    	
 
    	
$
    	
48,800,000
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2007 Audited EBITDA
    	
 
    	
$
    	
6,687,398
    	
 
    	
115.3000
    	
%
    	
60
    	
%
    	
69.1800
    	
%
    
	
Target EBITDA
    	
 
    	
$
    	
5,800,000
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Target Payout Percent
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
113.6200
    	
%
    
	
Target Payout
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
$
    	
21,000,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Redemption Price and Payment Amount pursuant to Section 2.4 (c)
    	
 
    	
$
    	
23,860,190
    	
 
    

 

See Accompanying Note to Statement.

 

 

ACQUITY GROUP, LLC AND SUBSIDIARY

NOTE TO AUDITED REDEMPTION STATEMENT

YEAR ENDED DECEMBER 31,2007

 

NOTE 1-BASIS OF PRESENTATION

 

In March 2008, Acquity Group, LLC and its Members entered into a Unit Purchase and Redemption Agreement (the “Agreement”) with 2020 Global Investments, LLC and 2020 GlobalGrowth Equities Limited whereby 2020 Global Investments, LLC purchased 910,100 newly issued Class A Units of Acquity Group, LLC for $49,000,000 and Acquity Group, LLC immediately redeemed 780,089 outstanding Class A Units from existing members at a targeted Redemption Price, as defined, of $42,000,000.

 

The target Redemption Price for the Class A Units is payable in three annual installments beginning in 2008 with target payouts of$21,000,000 in 2008, $12,600,000 in 2009 and $8,400,000 in 2010. The target Redemption Price payments are adjustable upward or downward pursuant to the Agreement based upon the ratio and weighting of Audited Sales to Target Sales and Audited EBITDA to Target EBITDA for the years ending December 31, 2007, 2008 and 2009. The maximum Redemption Price for the Class A Units redeemed is $49,000,000.

 

 

Schedule 3.5(b)

 

Payment Obligations Under Employee Equity Sharing Plan

 

(See attached.)

 

 

EESP Account Summary

 

Aimone, Greg

 

	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Available
   Phantom
   Units
    	
 
    	
Phantom Units
   Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,500
    	
 
    	
659.12
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
32,600
    	
 
    	
 
    	
 
    	
$
    	
35,487
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Bailey, Tony

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
749
    	
 
    	
246.69
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
12,201
    	
 
    	
 
    	
 
    	
$
    	
13,282
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Balleisen, Gray

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,500
    	
 
    	
659.12
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
32,600
    	
 
    	
 
    	
 
    	
$
    	
35,487
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Borg-Breen, Jon

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
11,811
    	
 
    	
1,705.34
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
5,961
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
17,672
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
83,346
    	
 
    	
 
    	
 
    	
$
    	
91,816
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Crosby, Tammy

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
1,700
    	
 
    	
531.60
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
26,293
    	
 
    	
 
    	
 
    	
$
    	
28,621
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

 

EESP Account Summary

 

Dettling, Jay

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
6,001
    	
 
    	
1,748.25
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
86,469
    	
 
    	
 
    	
 
    	
$
    	
94,126
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Dizonno, Mike

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,222
    	
 
    	
695.09
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
34,379
    	
 
    	
 
    	
 
    	
$
    	
37,424
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

	
EESP Account Summary
    

 

Doohan, Kevin

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
3,345
    	
 
    	
937.43
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
46,365
    	
 
    	
 
    	
 
    	
$
    	
50,471
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Gallego, Davin

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,288
    	
 
    	
712.78
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
35,254
    	
 
    	
 
    	
 
    	
$
    	
38,376
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Gillam, Sharon

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
3,375
    	
 
    	
589.24
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
1,500
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
9,300
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
29,144
    	
 
    	
 
    	
 
    	
$
    	
31,725
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

 

EESP Account Summary

 

Hauca, Chris

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
10,594
    	
 
    	
1,650.46
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
4,925
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
30,535
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
81,632
    	
 
    	
 
    	
 
    	
$
    	
88,861
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Holley, Kyle

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
350
    	
 
    	
0.00
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
350
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
2,216
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Jackson, Karen

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Phantom
   Units
    	
 
    	
Phantom Units
   Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
4,847
    	
 
    	
1,398.66
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
69,178
    	
 
    	
 
    	
 
    	
$
    	
75,304
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Lemanis, Peter

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Phantom
   Units
    	
 
    	
Phantom Units
   Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
350
    	
 
    	
0.00
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
350
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
2,216
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

McMahon, Paul

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,096
    	
 
    	
474.91
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
600
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
2,958
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
23,489
    	
 
    	
 
    	
 
    	
$
    	
25,569
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

 

EESP Account Summary

Mellick, Corey

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
7,500
    	
 
    	
1,977.36
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
97,800
    	
 
    	
 
    	
 
    	
$
    	
106,461
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

Naughten, Steve

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
3,624
    	
 
    	
0.00
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
3,624
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
21,134
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
$
    	
—
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Neiweem, Dan

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
648
    	
 
    	
213.42
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
10,556
    	
 
    	
 
    	
 
    	
$
    	
11,491
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Nichols, Douglas

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
6,334
    	
 
    	
1,075.88
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
2,895
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
17,949
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
53,213
    	
 
    	
 
    	
 
    	
$
    	
57,925
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Partlow Bruce

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,500
    	
 
    	
659.12
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
32,600
    	
 
    	
 
    	
 
    	
$
    	
35,487
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

 

EESP Account Summary

 

Rooney, Chris

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
6,394
    	
 
    	
1,057.11
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
2,572
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
11,466
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
52,285
    	
 
    	
 
    	
 
    	
$
    	
56,915
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Schwartz, Todd

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,500
    	
 
    	
678.81
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
33,475
    	
 
    	
 
    	
 
    	
$
    	
36,439
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Stenstorm, John

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
11,514
    	
 
    	
1,695.52
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
5,697
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
35,321
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
83,861
    	
 
    	
 
    	
 
    	
$
    	
91,287
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Waller, Mitchell

 

	
 
    	
 
    	
 
    	
 
    	
Available
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
Phantom
    	
 
    	
Phantom Units
    	
 
    
	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Units
    	
 
    	
Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
286
    	
 
    	
94.20
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
0
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
—
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
4,659
    	
 
    	
 
    	
 
    	
$
    	
5,072
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

 

EESP Account Summary

 

Walsh, Chris

 

	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Available
   Phantom
   Units
    	
 
    	
Phantom Units
   Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
1,483
    	
 
    	
248.01
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
730
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
3,599
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
12,266
    	
 
    	
 
    	
 
    	
$
    	
13,353
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

EESP Account Summary

 

Wydra, Brian

 

	
Initial Unit Value
    	
 
    	
Total
    	
 
    	
Available
   Phantom
   Units
    	
 
    	
Phantom Units
   Value
    	
 
    
	
Current Unit Value
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Units Granted
    	
 
    	
2,637
    	
 
    	
333.97
    	
 
    	
 
    	
 
    
	
Units Redeemed
    	
 
    	
1,623
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Redeemed
    	
 
    	
$
    	
8,001
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Value of Unit Grant (Not Redeemed)
    	
 
    	
$
    	
16,518
    	
 
    	
 
    	
 
    	
$
    	
17,981
    	
 
    
	
Vest Date
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
										

 

 

Schedule 13.1

 

Buyer’s Advisors

 

Foley & Lardner LLP

 

 

Exhibit A

 

Form of Third Amended and Restated Operating Agreement

 

(omitted in original)

 

 

Exhibit B

 

Form of Escrow Agreement

 

(omitted in original)

 

 

Exhibit C

 

Form of Unit Holders Agreement

 

(omitted in original)

 

 

Exhibit D

 

Form of Registration Rights Agreement

 

(omitted in original)

 

 

Exhibit E

 

Form of Management Agreement

 

(omitted in original)

 

 

Exhibit F

 

Form of Legal Opinion

 

(omitted in original)

 

 

Exhibit G

 

Form of Employment Agreement

 

 

ACQUITY GROUP, LLC

 

EMPLOYMENT AGREEMENT

 

AGREEMENT made as of [                 ], by and between [                 ] (the “Employee”) and Acquity Group, LLC, a Delaware limited liability company, with a principal place of business at 500 West Madison Street, Suite 2200, Chicago, IL 60661 (the “Company”).

 

WHEREAS, the Company believes it to be to its advantage to ensure that the Employee continues to render services to the Company as hereinafter provided.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in consideration of the mutual covenants and obligations herein contained, the parties hereto agree as follows:

 

1.                                      Position and Responsibilities.  During the term of this Agreement, the Employee agrees to serve as [                 ].  The Employee shall at all times report to, and his activities shall at all times be subject to the direction and control of, the Chief Executive Officer, and to the extent contemplated by the Operating Agreement (as defined below), the Board of Directors of the Company (the “Board”), and the Employee shall exercise such powers and comply with and perform, faithfully and to the best of his ability, such directions and duties in relation to the business and affairs of the Company as may from time to time be vested in or requested of him by the Board, which directions and duties are commensurate with Employee’s position and title and the provisions of the Company’s Third Amended and Restated Operating Agreement, as amended from time to time (the “Operating Agreement”).  During the term of employment hereunder, the Employee agrees to devote his full business time and attention to the business of the Company.  The Employee shall not engage in any other business activity or serve on the board of directors in any enterprise, firm, corporation, trust or other business entity other than the Company without the prior written approval of the Board; provided, however, that, subject to the terms of the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement (described in Section 5 below), nothing herein shall prevent (a) the Employee from serving on any civic, charitable, not-for-profit or similar board, (b) the Employee from continuing to serve on the board of any corporation or other for-profit enterprise on which Employee is serving as of the date hereof or from serving on the board of such an enterprise as may be approved by the Board after the date hereof, or (c) management by the Employee of his personal affairs and investments or ownership by the Employee of an equity interest in any business entity, provided such activities do not interfere significantly with the performance by Employee of his duties as contemplated by this Agreement.

 

 

2.                                      Compensation:  Salary, Bonuses, Equity Participation and Other Benefits.  During the term of the Employee’s employment (or as otherwise specifically stated herein), the Company shall pay the Employee the following compensation, including the following salary, bonus and other fringe benefits:

 

(A)                               Salary.  In consideration of the services to be rendered by the Employee to the Company, the Company will pay to the Employee a monthly salary at a rate of not less than $[          ] (the Employee’s “base rate”).  Following the end of each calendar year (or earlier in the discretion of the Board or its Compensation Committee), Employee’s base rate shall be subject to review and increase by the Board (or its Compensation Committee) and any increased amount shall become the “base rate.”  In considering such potential increases, the Board shall consider market competitive compensation levels, any changes to the size or scope of the Company’s business or Employee’s duties and responsibilities, the Company’s and Employee’s performance, and such other factors that the Board considers relevant.  Salary shall be payable in conformity with the Company’s customary practices for executive compensation as such practices shall be established or modified from time to time.  Salary payments shall be subject to all applicable federal and state withholding, payroll and other taxes.

 

(B)                               Employee Benefits; Fringe Benefits; Expenses.  The Employee shall be eligible to participate, subject to the terms and conditions thereof, in all benefit plans, incentive plans and programs, including bonus programs and equity incentive plans as may be in effect from time to time, and in such other plans and programs as the Board (or its Compensation Committee) may determine.  The Employee shall be entitled to vacation in accordance with Company practices.  The Employee shall be reimbursed by the Company, on terms and conditions that are substantially similar to those that apply to other similarly situated executives, for reasonable out-of-pocket expenses for entertainment, travel, meals, lodging and similar items which are consistent with the Company’s expense reimbursement policy as in effect from time to time.

 

(C)                               Performance Based Bonus.  The Employee shall be entitled to receive performance based annual incentive bonuses from the Company for each fiscal year ending during the Term in accordance with the Company’s annual bonus plan as established by the Board (or the Compensation Committee thereof) in its sole discretion.  In establishing the annual bonus plan, the Board (or the Compensation Committee thereof) shall consider past practices of the Company in setting “target” bonus opportunity and “target” performance goals, market competitive compensation levels, any changes to the size or scope of the Company’s business or Employee’s duties and responsibilities, the Company’s and Employee’s performance expectations, and such other factors that the Board considers relevant.

 

3.                                      Term.  The term of this Agreement shall commence on the date first above written and shall terminate on the earlier to occur of (i) the third anniversary of this Agreement, (ii) the death, physical incapacity or mental incompetence of the Employee, or (iii) the occurrence of any of the circumstances described in Section 4 hereof (the “Expiration Date”).  For the purposes of this Agreement, the Employee shall be deemed to have suffered physical incapacity or mental incompetence if the Employee is unable to perform his duties hereunder for any 180 

 

2

 

work days out of any 365-day period of if the Employee suffers physical incapacity and mental incompetence as such terms are defined under the Company’s standard disability insurance policy in effect from time to time for management employees of the Company.  After the third anniversary of the date hereof, such employment may be extended, subject to earlier termination, upon mutual agreement between the Company and Employee.

 

4.                                      Termination.  The Employee’s term of employment under this Agreement may be terminated pursuant to clause (iii) of the first sentence of Section 3 as follows:

 

(A)                               At the Employee’s Option:

 

(i)                                     Generally:  The Employee may terminate his employment, with or without cause, at any time upon at least thirty (30) days’ advance written notice to the Company.  In the event of termination at the Employee’s option, the Employee shall be entitled to no severance or other termination benefits after the expiration of the thirty-day period referred to above; provided that Employee shall be entitled to receive vested benefits or other post-employment payments in accordance with applicable employee benefit plans.

 

(ii)                                  For Changed Circumstances:  Subject to the Company’s right to terminate the Employee pursuant to Sections 4(B) and 4(C) below, the Employee may terminate his employment hereunder upon the occurrence of “Changed Circumstances,” as hereinafter defined, upon written notice to the Company.  For the purposes of this Section 4(A), “Changed Circumstances” shall mean a reduction in Employee’s base rate or other material failure to pay the compensation and benefits required under Section 2 without Employee’s consent, a breach of this Agreement by the Company or of the Operating Agreement by the Company or the 2020 Member (as defined in the Operating Agreement) which results in a material adverse change in the nature, scope or status of the Employee’s position, authorities or duties from those in effect in accordance with Section 1; or a material breach of the obligations to make payments or cause the Company to make payments that are due to Employee under Section 2.5 (Distribution Escrow) or Section 12.3 (Indemnification and Payment of Damages by Buyer and Buyer Parent) of the Unit Purchase Agreement (as defined in the Operating Agreement) by the Buyer (as defined in the Unit Purchase Agreement) or the 2020 Member; provided that the occurrence of any of the foregoing events shall constitute Changed Circumstances only if the Company, Buyer or 2020 Member, as applicable, fails to cure such event within 30 days (or such longer period for cure as may be applicable under the Unit Purchase Agreement) after receipt from the Employee of written notice of such occurrence.  In the event that the Employee terminates his employment pursuant to this Section 4(A)(ii), the Employee shall be entitled to severance payments from the Company as determined in accordance with Section 4(C) below.

 

(B)                               At the election of the Company for Cause.  The Company may, immediately and unilaterally, terminate the Employee’s employment hereunder “for cause” at any time during the term of this Agreement without any prior written notice to the Employee (except as otherwise specifically identified in clause (v) of this paragraph 4(B) below).  Termination of the Employee’s employment by the Company 

 

3

 

shall constitute a termination “for cause” under this Section 4(B) if such termination is for one or more of the following causes, as found by the Board by a resolution duly adopted by a majority of its members, excluding the Employee:

 

(i)                                     willful misconduct, gross negligence, dishonesty, or breach of fiduciary duty in connection with the performance of his duties under, or a material breach of the terms of this Agreement or the other agreements executed in connection herewith;

 

(ii)                                  the commission by the Employee of an act of fraud, theft or embezzlement, or deliberate disregard of the rules or policies of the Company or the commission by the Employee of any other action with the intent to injure materially the Company;

 

(iii)                               acts of moral turpitude by the Employee which materially adversely affect the business or reputation of the Company or the Employee’s ability to perform his duties hereunder and represent the Company;

 

(iv)                              the conviction of or plea of nolo contendere by the Employee to a felony (other than a traffic offense); or

 

(v)                                 a material breach of the obligations of Employee to make payments under Section 2.5 (Distribution Escrow) or Section 12.2 (Indemnification and Payment of Damages by Members) of the Unit Purchase Agreement that are due to the Company, the Buyer, or the 2020 Member or their assignees; provided that the occurrence of such material breach shall constitute cause only if Employee fails to cure such event within 30 days (or such longer period for cure as may be applicable under the Unit Purchase Agreement) after receipt from the Company, the Buyer, or the 2020 Member or their assignees of written notice of such occurrence.

 

In the event of a termination “for cause” pursuant to the provisions of clauses (i) through (v) above, inclusive, the Employee shall be entitled to no severance or other termination benefits except as required by law.

 

(C)                               At the Election of the Company for Reasons Other than for Cause.  The Company may immediately and unilaterally, terminate the Employee’s employment hereunder at any time during the term of this Agreement without cause by giving at least thirty (30) days’ advance written notice to the Employee of the Company’s election to terminate.  In the event the Company exercises its right to terminate the Employee under this Section 4(C), and subject to compliance with the Employee of the provisions of the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement, the Company agrees to pay the Employee a severance or termination payment equal to (i) the greater of the number of months (not greater than twelve (12)) remaining in the term as of immediately prior to the termination of employment, or six (6) months (the “Cash Portion of Severance”) multiplied by the Employee’s then current base rate (excluding any reduction thereof in violation of this Agreement), (ii) if any specific bonus arrangement is then in effect, the portion of any such bonus then earned by (but unpaid 

 

4

 

to) the Employee for the fiscal year in which termination occurs as determined in good faith by the Board, and (iii) medical and other health insurance benefits for the Severance Payment Period (as defined below) as provided for in Section 2(B) hereof.  The Cash Portion of Severance shall be payable over the number of months determined under clause (i) above (the “Severance Payment Period”) in conformity with the Company’s customary practices for executive compensation, the performance bonus shall be paid at the time and in the manner that performance bonuses are paid to the similarly situated executives, and the medical and other health insurance benefits shall be payable on a monthly basis during the Severance Payment Period.  All such severance benefits shall be subject to all applicable federal and state withholding, payroll and other taxes.  Except as expressly set forth in this Section 4(C), the Company shall not have any further obligations to the Employee under this Employment Agreement in the event of Employee’s termination under this Section 4(C), except such further obligations as may be imposed by law.

 

(D)                               Benefits if Agreement Terminated Due to Disability.  In the event the employment terminates pursuant to clause (ii) of the first sentence of Section 3 due to the physical incapacity or mental incompetence of the Employee, the Company shall pay the Employee an amount equal to (i) six months salary at the then current base rate, less (ii) any amounts recovered by the Employee under any health and disability insurance programs available through the Company.  The provisions of this Section 4(D) shall survive the termination of this Agreement by reason of the physical incapacity or mental incompetence of the Employee.

 

5.                                      Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement.  Simultaneously with the execution of this Agreement, and as a condition to the execution of this Agreement by the Company, the Employee agrees to sign the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement in the form attached hereto as Exhibit A.

 

6.                                      Consent and Waiver by Third Parties.  The Employee hereby represents and warrants that he has obtained all waivers and/or consents from third parties which are necessary to enable him to enjoy employment with the Company on the terms and conditions set forth herein and to execute and perform this Agreement without being in conflict with any other agreement, obligation or understanding with any such third party.  The Employee represents that he is not bound by any agreement or any other existing or previous business relationship which conflicts with, or may conflict with, the performance of his obligations hereunder or prevent the full performance of his duties and obligations hereunder.

 

7.                                      Governing Law.  This Agreement, the employment relationship contemplated herein and any claim arising from such relationship, whether or not arising under this Agreement, shall be governed by and construed in accordance with the internal laws of the state of Illinois and this Agreement shall be deemed to be performable in Illinois.

 

8.                                      Severability.  In case any one or more of the provisions contained in this Agreement or the other agreements executed in connection with the transactions contemplated hereby for any reason shall be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or 

 

5

 

such other agreements, but this Agreement or such other agreements, as the case may be, shall be construed and reformed to the maximum extent permitted by law.

 

9.                                      Waivers and Modifications.  This Agreement may be modified, and the rights, remedies and obligations contained in any provision hereof may be waived, only in accordance with this Section 9.  No waiver by either party of any breach by the other or any provision hereof shall be deemed to be a waiver of any later or other breach thereof or as a waiver of any other provision of this Agreement.  This Agreement sets forth all of the terms of the understandings between the parties with reference to the subject matter set forth herein and may not be waived, changed, discharged or terminated orally or by any course of dealing between the parties, but only by an instrument in writing signed by the party against whom any waiver, change, discharge or termination is sought.  No modification or waiver by the Company shall be effective without the consent of at least a majority of the members of the Board (excluding the Employee) then in office at the time of such modification or waiver.

 

10.                               Assignment.  The Employee acknowledges that the services to be rendered by him hereunder are unique and personal in nature.  Accordingly, the Employee may not assign any of his rights or delegate any of his duties or obligations under this Agreement.  The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company.

 

11.                               Acknowledgments.  The Employee hereby acknowledges and recognizes that the enforcement of any of the provisions in this Agreement and the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement may potentially interfere with the Employee’s ability to pursue a proper livelihood.  The Employee represents that he is knowledgeable about the business of the Company and further represents that he is capable of pursuing a career in other industries to earn a proper livelihood.  The Employee recognizes and agrees that the enforcement of the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement is necessary to ensure the preservation, protection and continuity of the business, trade secrets and goodwill of the Company.  The Employee agrees that, due to the proprietary nature of the Company’s business, the restrictions set forth in the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement are reasonable as to time and scope.  The foregoing shall not prohibit the Employee from employment with any company by which the Employee has been employed in the past so long as his activities with any such company do not otherwise constitute a breach of the Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement.

 

12.                               Entire Agreement.  This Agreement constitutes the entire understanding of the parties relating to the subject matter hereof and supersedes and cancels all agreements, written or oral, made prior to the date hereof between the Employee and the Company relating to employment, salary, bonus, or other compensation of any description, equity participation, pension, post-retirement benefits, severance or other remuneration.  The Employee specifically waives any claim to any accrued salary or deferred compensation from the date of Employee’s employment with the Company to the date hereof, other than the Employee’s right to received his normal compensation for the current pay period.  Notwithstanding the foregoing, nothing in this Agreement shall supercede or otherwise affect rights and obligations of the Company or Employee under the Operating Agreement, Unit Purchase Agreement, or the Unit Holders’ Agreement.

 

6

 

13.                               Notices.  All notices hereunder shall be in writing and shall be delivered in person or mailed by certified or registered mail, return receipt requested, addressed as follows:

 

If to the Company, to:

 

Chairman of the Board of Managers

Acquity Group, LLC

500 West Madison Street

Suite 2200

Chicago, IL 60661

 

If to the Employee, at the Employee’s address set forth on the signature page hereto.

 

14.                               Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

 

15.                               Section Headings.  The descriptive section headings herein have been inserted for convenience only and shall not be deemed to define, limit, or otherwise affect the construction of any provision hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

7

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement as of the date first above written as an instrument under seal.

 

	
ACQUITY   GROUP, LLC
    	
 
    	
EMPLOYEE:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Print   Name
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Signature
    
	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Street   Address
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
City   State Zip Code
    
					

 

8

 

Schedule I

 

Key Man Life Insurance Policy

 

Insured Name:

 

Owner:                       Acquity Group LLC

 

Issue Date:

 

Policy Date:

 

Policy Number:

 

Maximum Annual Premium Amount:

 

1

 

EXHIBIT A

 

ACQUITY GROUP, LLC

 

NONDISCLOSURE, CONFIDENTIALITY, ASSIGNMENT AND NONCOMPETITION AGREEMENT

 

THIS NONDISCLOSURE CONFIDENTIALITY AND ASSIGNMENT AGREEMENT (this “Agreement”) is made as of [         ] by and between Acquity Group, LLC, an Illinois corporation with a principal place of business at 500 West Madison Street, Suite 2200, Chicago, IL 60661 (collectively with any predecessors, successors, and assignees, the “Company”), and the undersigned employee (“I” or “me”).

 

In consideration of my employment or continued employment by the Company and in keeping with Section 5 of my Employment Agreement with the Company which references this Agreement, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, I hereby agree as follows:

 

1.             DEFINITIONS.

 

(A)          “Affiliate” means any direct or indirect subsidiary of the Company.

 

(B)          “Confidential Information” means any and all confidential and/or proprietary knowledge, data or information concerning the business, business relationships and financial affairs of the Company or its Affiliates whether or not in writing and whether or not labeled or identified as confidential or proprietary. By way of illustration, but not limitation, Confidential Information includes: (a) Inventions and (b) research and development activities of the Company or its Affiliates, services and marketing plans, business plans, budgets and unpublished financial statements, licenses, prices and costs, customer and supplier information and information disclosed to the Company or its Affiliates or to me by third parties of a proprietary or confidential nature or under an obligation of confidence. Confidential Information is contained in various media, including without limitation, patent applications, computer programs in object and/or source code, flow charts and other program documentation, manuals, plans, drawings, designs, technical specifications, laboratory notebooks, supplier and customer lists, internal financial data and other documents and records of the Company or its Affiliates.

 

(C)          “Inventions” means all ideas, concepts, discoveries, inventions, developments, improvements, formulations, products, processes, know-how, designs, formulas, methods, developmental or experimental work, clinical data, original works of authorship, software programs, software and systems documentation, trade secrets, technical data, or licenses to use (whether or not patentable or registrable under copyright or similar statutes), that are or were made, conceived, devised, invented, developed or reduced to practice or tangible medium by me, either alone or jointly with others (a) during any period that I am employed or engaged by the Company, whether or not during normal working hours or on the premises of the Company, which relate, directly or indirectly, to the business of the Company or its Affiliates or (b) which arise out of, or are incidental to, my employment or engagement by with the Company.

 

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(D)          “Prior Inventions” means any inventions made, conceived, devised, invented, developed or first reduced to practice by me, under my direction or jointly with others prior to the date of this Agreement and which do not constitute Inventions within the meaning of Section 1.4 above.

 

(E)           “Third Party Information” means any confidential or proprietary information received by the Company or its Affiliates from third parties.

 

2.             CONFIDENTIALITY.

 

(A)          Recognition of the Company’s Rights. I understand that the Company continually obtains and develops valuable Confidential Information which may or has become known to me in connection with my employment or any prior engagement by the Company. I acknowledge that all Confidential Information is and shall remain the exclusive property of the Company or the third party providing such Confidential Information to myself, the Company, or the Company’s Affiliates.

 

(B)          Nondisclosure of Confidential Information. I agree that during the term of my employment and thereafter, I will hold in strictest confidence and will not disclose, use, lecture upon, publish or otherwise make available to any third party (other than personnel of the Company or its Affiliates who need to know such information in connection with their work for the Company), any Confidential Information of the Company, except as such disclosure, use or publication may be required in connection with my work for the Company, or as expressly authorized in writing by an executive officer of the Company. I agree that I shall use such Confidential Information only in the performance of my duties for the Company and in accordance with any Company policies with respect to the protection of Confidential Information. I agree not to use such Confidential Information for my own benefit or for the benefit of any other person or business entity.

 

(C)          Third Party Information. In addition, I understand that the Company has received and in the future will receive Third Party Information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes. During the term of my employment with the Company and thereafter, I will hold Third Party Information in the strictest confidence and will not disclose to anyone (other than personnel of the Company or its Affiliates who need to know such information in connection with their work for the Company) or use any Third Party Information, except as such disclosure or use may be required in connection with my work for the Company, or as expressly authorized in writing by an officer of the Company.

 

(D)          Exceptions. My obligations under Sections 2.2 and 2.3 hereof shall not apply to the extent that certain Confidential Information: (a) is or becomes generally known within the Company’s industry through no fault of mine; (b) was known to me at the time it was disclosed as evidenced by my written records at the time of disclosure; (c) is lawfully and in good faith made available to me by a third party who did not derive it from the Company or the Company’s Affiliates and who imposes no obligation of confidence to me, the Company, or the Company’s Affiliates; or (d) is required to be disclosed by a governmental authority or by order of a court of competent jurisdiction, provided that such disclosure is subject to all applicable governmental or judicial protection available for like material and reasonable advance notice is given to the Company.

 

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(E)           Protection and Return of Confidential Information. I agree to exercise all reasonable precautions to protect the integrity and confidentiality of Confidential Information in my possession and not to remove any materials containing Confidential Information from the premises of the Company, except to the extent necessary to my employment or unless expressly authorized in writing by an executive officer of the Company. Upon the termination of my employment, or at any time upon the Company’s request, I shall return immediately to the Company any and all notes, memoranda, specifications, devices, formulas and documents, together with copies thereof, and any other material containing or disclosing any Confidential Information of the Company or Third Party Information then in my possession or under my control.

 

3.             ASSIGNMENT OF INVENTIONS.

 

(A)          Ownership of Inventions. I acknowledge that all Inventions already existing at the date of this Agreement or which arise after the date of this Agreement, belong to and are the absolute property of the Company and will not be used by me for any purpose other than carrying out my duties as an employee of the Company.

 

(B)          Assignment of Inventions; Enforcement of Rights. Subject to Section 3.1, I hereby assign and agree to assign in the future to the Company all of my right, title and interest to any and all Inventions and any and all related patent rights, copyrights and applications and registrations therefor. I also agree to assign all my right, title and interest in and to any particular Inventions to a third party as directed by the Company. During and after my employment with the Company, I shall cooperate with the Company, at the Company’s expense, in obtaining proprietary protection for the Inventions and I shall execute all documents which the Company shall reasonably request in order to perfect the Company’s rights in the Inventions. I hereby appoint the Company my attorney to execute and deliver any such documents on my behalf in the event I should fail or refuse to do so within a reasonable period following the Company’s request. I understand that, to the extent this Agreement shall be construed in accordance with the laws of any country or state which limits the assignability to the Company of certain employee inventions, this Agreement shall be interpreted not to apply to any such invention which a court rules or the Company agrees is subject to such limitation.

 

(C)          Works for Hire. I acknowledge that all original works of authorship made by me (solely or jointly with others) within the scope of my employment or any prior engagement by the Company, which are protectible by copyright are intended to be “works made for hire”, as that term is defined in Section 101 of the United States Copyright Act of 1976 (the “Act”), and shall be the property of the Company and the Company shall be the sole author within the meaning of the Act. If the copyright to any such copyrightable work shall not be the property of the Company by operation of law, I will, without further consideration, assign to the Company all of my right, title and interest in such copyrightable work and will cooperate with the Company and its designees, at the Company’s expense, to secure, maintain and defend for the Company’s benefit copyrights and any extensions and renewals thereof on any and all such work. I hereby waive all claims to moral rights in any Inventions.

 

(D)          Records. I agree to keep and maintain adequate and current records (in the form of notes, sketches, drawings and in any other form that may be required by the Company) of all Inventions made by me during the period of my employment or any prior

 

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engagement by the Company, which records shall be available to and remain the sole property of the Company at all times.

 

(E)           Obligation to Keep Company Informed. During the period of my employment, and for six (6) months after termination of my employment with the Company, I agree to promptly disclose to the Company fully and in writing all Inventions authored, conceived or reduced to practice by me, either alone or jointly with others. In addition, I will promptly disclose to the Company all patent applications filed by me or on my behalf within a year after termination of employment.

 

(F)           Prior Inventions. I further represent that the attached Schedule A contains a complete list of all Prior Inventions. Such Prior Inventions are considered to be my property or the property of third parties and are not assigned to the Company hereunder. If there is no such Schedule A attached hereto, I represent that there are no such Prior Inventions. If I am claiming any Prior Inventions on Schedule A, I agree that, if in the course of my employment or any prior engagement by the Company, I incorporate any Prior Invention into a Company product, process or machine, the Company shall automatically be granted and shall have a non-exclusive, royalty-free, irrevocable, transferable, perpetual, world-wide license (with rights to sublicense) to make, have made, modify, use and sell such Prior Invention as part of, or in connection with, such product, process or machine. Notwithstanding the foregoing, I agree that I will not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions without the Company’s prior written consent.

 

4.             OTHER AGREEMENTS.

 

(A)          No Conflicting Obligations. I hereby represent to the Company that, except as identified on Schedule B, I am not bound by any agreement or any other previous or existing business relationship which conflicts with or prevents the full performance of my duties and obligations to the Company (including my duties and obligations under this or any other agreement with the Company) during my employment. I agree I will not enter into, any agreement either written or oral that conflicts with this Agreement.

 

(B)          No Improper Use of Information of Prior Employers or Others. ,I understand that the Company does not desire to acquire from me any trade secrets, know-how or confidential business information I may have acquired from others. Therefore, I agree during my employment with the Company, I will not improperly use or disclose any proprietary information or trade secrets of any former or concurrent employer, or any other person or entity with whom I have an agreement or to whom I owe a duty to keep such information in confidence. Those persons or entities with whom I have such agreements or to whom I owe such a duty are identified on Schedule B.

 

5.             NON-COMPETITION. I agree that while I am employed by the Company and for a period of twenty-four (24) months after termination or cessation of such employment for any reason, I shall not, without the Company’s prior written consent, directly or indirectly, as a principal, employee, consultant, partner, or stockholder of, or in any other capacity with, any business enterprise (other than in my capacity as a holder of not more than 1 % of the combined voting power of the outstanding stock of a publicly held company) (a) engage in direct or indirect competition with the Company or its Affiliates, (b) conduct a business of the type or character engaged in by the Company or its Affiliates at the time of termination or cessation of my employment that

 

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offers similar goods and/or services as the Company or its Affiliates, or (c) develop products or services competitive with those of the Company or its Affiliates.

 

6.             GENERAL NON-SOLICITATION. I agree that during my employment with the Company and for a period of twenty-four (24) months after the termination or cessation of such employment for any reason, I shall not solicit, divert or take away, or attempt to divert or take away, the business or patronage of any of the clients, customers or accounts, or prospective clients, customers or accounts, of the Company or its Affiliates which were contacted, solicited or served by me while employed by the Company or any Affiliate. For the purposes of this Agreement, “clients, customers or accounts” shall include any persons for which the Company or an Affiliate has provided services during the twenty-four month period immediately preceding the date on which the determination of “client, customer or account” status is being determined, if such determination is being made during my employment or the twenty-four month period ending on my last day of employment if the determination is being made after my last pay of employment. This twenty-four-month look-back period is referred to as the “24-month reference period”. For the purposes of this Agreement, prospective clients, customers or accounts shall include any persons which the Company or an Affiliate has specifically identified as potential clients, customers or accounts in any of its business plans, account lists, or proposals, adopted or otherwise utilized during the 24-month reference period, which business plans, account lists and proposals shall have been made available to me.

 

7.             NON-SOLICITATION OF EMPLOYEES AND CONSULTANTS. I agree that during my employment and for a period of twenty-four (24) months after the termination or cessation of my employment for any reason, I shall not directly or indirectly hire, recruit, or solicit any employee, independent contractor or consultant of the Company or its Affiliates, or induce or attempt to induce any employee independent contractor or consultant of the Company or its Affiliates to discontinue his or her relationship with the Company or its Affiliates.

 

8.             NOTICE OF SUBSEQUENT EMPLOYMENT OR ENGAGEMENT. I shall, for a period of twenty-four (24) months after the termination or cessation of my employment with the Company, notify the Company of any change of address, and of any subsequent employment or engagement (stating the name and address of the employer and the nature of the position) or any other business activity which employment, engagement or business activity is of the type or character engaged in by the Company or its Affiliates at the time of termination or cessation of my employment.

 

9.             GENERAL.

 

(A)          Assignment; Successors and Assigns. This Agreement may not :be assigned by either party except that the Company may assign this Agreement to any Affiliate or in connection with the merger, consolidation or sale of all or substantially all of its business or assets. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and other legal representatives and, to the extent that any assignment hereof is permitted hereunder, their assignees.

 

(B)          Entire Agreement. The obligations pursuant to Sections 2 and 3 of this Agreement shall apply to any time during which I was previously employed or engaged, or am in the future employed or engaged by the Company or any Affiliate if no other agreement

 

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governs nondisclosure and assignment of inventions during such period. This Agreement supersedes all prior agreements, written or oral, with respect to the subject matter of this Agreement.

 

(C)          Severability. In the event that any one or more of the provisions contained herein shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and all other provisions shall remain in full force and effect. If any of the provisions of this Agreement is held to be excessively broad, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law. I agree that should I violate any obligation imposed on me in this Agreement, I shall continue to be bound by the obligation until a period equal to the term of such obligation without violation of such obligation.

 

(D)          Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing and signed by the party to be charged. No delay or omission by the Company in exercising any right under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by the Company on any occasion if effective only in that instance and will not be construed as a bar to or waiver of any right on any other occasion.

 

(E)           Employment. I understand that this Agreement does not constitute a contract of employment or create an obligation on the part of the Company to continue my employment with the Company. I understand that my obligations under this Agreement shall not be affected by any change in my position, title or function with, or compensation, by the Company. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement.

 

(F)           Legal and Equitable Remedies. I acknowledge that (a) the business of the Company and its Affiliates is global in scope and its services may be marketed and sold throughout the world; (b) the Company and its Affiliates compete with other businesses that are or could be located in any part of the world; (c) the Company has required that I make the covenants contained in this Agreement as a condition to my employment; and (d) the restrictions contained in this Agreement are necessary for the protection of the business and goodwill of the Company and its Affiliates and are reasonable for such purpose. I agree that any breach of this Agreement by me will cause irreparable damage to the Company and its Affiliates and that in the event of such breach, the Company shall be entitled, in addition to monetary damages and to any other remedies available to the Company under this Agreement and at law, to equitable relief, including injunctive relief, and to payment by myself of all costs  incurred by the Company in enforcing of the provisions of this Agreement, including reasonable attorneys’ fees. I agree that should I violate any obligation imposed on me in this Agreement, I shall continue to be bound by the obligation until a period equal to the term of such obligation has expired without violation of such obligation.

 

(G)          Governing Law. This Agreement shall be construed as a sealed instrument and shall in all events and for all purposes be governed by, and construed in accordance with, the laws of the State of Illinois without regard to any choice of law principle that would dictate the application of the laws of another jurisdiction. Any action, suit or other legal proceeding which I may commence to resolve any matter arising under or relating to any provision of this Agreement shall be commenced only in a court of the State of Illinois (or, if appropriate, a federal court located within the State of Illinois), and I hereby consent to

 

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the jurisdiction of such court with respect to any action, suit or proceeding commenced in such court by the Company.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Nondisclosure, Confidentiality, Assignment and Noncompetition Agreement as of the date first above written as an instrument under seal.

 

 

	
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Exhibit H

 

Form of Employee Confidentiality and Non-Competition Agreement

 

 

EMPLOYEE CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

 

In consideration of being employed by Acquity Group, LLC., the undersigned (“Employee”) hereby agrees as follows:

 

1.                                       COMPETITIVE ACTIVITIES

 

(a)           No Competitive Activities During Employment.  Employee realizes that, as an employee, Employee has certain fiduciary and other obligations to Acquity Group, LLC. and its affiliated entities (including, but not limited to Acquity Group, Inc., Acquity Holding, LLC, and Symplexeon, LLC) (collectively, the “Company”).  Accordingly, for so long as Employee is employed or otherwise retained or compensated in any way by the Company, Employee shall not, directly or indirectly, render services to, assist, participate in the affairs of, or otherwise be connected with any person or entity (other than the Company) which is engaged in, or is planning to engage in, any business that is in any respect competitive with the business of the Company, in any capacity (whether as an employee, investor, officer, director, partner, member, manager, shareholder, lender, consultant or otherwise), including but not limited to any capacity that would:

 

(i)            utilize Employee’s services with respect to such business or with respect to the sales or offering of products or services similar to those which the Company provides, offers or plans to provide or offer, irrespective of where Employee renders such services; or

 

(ii)           reasonably be expected to utilize in any way any Confidential Information (as defined in Section 2) acquired by Employee during the course of his/her employment with the Company (whether acquired preceding, on or following the date hereof).

 

(b)           No Competitive Activities Post-Employment with Company Competitor.  Employee will not for one year after termination of his/her employment, in any form or manner, directly or indirectly, on his/her own behalf or in combination with others, become interested in (as an individual, partner, stockholder, director, officer, principal, agent, independent contractor, employee, trustee, lender of money, or in any other relation or capacity whatsoever), or solicit or attempt to solicit or provide services similar to the Company for, any of the Company’s existing clients at the time of the termination of my employment with Company, past clients with whom the Company worked with during his/her employment with Company, or potential clients with whom the Company had begun discussions prior to the termination of his/her employment with Company.

 

(c)           Exception.  Nothing contained in this Section 1 shall prohibit or prevent Employee from owning securities in companies listed on a national securities exchange or traded on a national over-the-counter market, in an amount which does not exceed 5% of the outstanding securities of any such companies.

 

2.                                       PROTECTION OF CONFIDENTIAL INFORMATION

 

(a)           Confidential Information.  For purposes of this Agreement, “Confidential Information” means all information that is not generally known and gives the Company a 

 

 

competitive advantage over others who do not know or use it, which Employee obtains from the Company, or learns, discovers, develops, conceives, or creates while employed or otherwise retained by the Company, and which relates to the business or assets of the Company.  The term “Confidential Information” includes, but is not limited to, inventions, ideas, computer programs, protocols, designs, processes, techniques, research and development information; identities of clients and referral sources; financial data and information; business plans, strategies and processes; pricing and contract terms; client and referral source preferences and requirements; and any other information of the Company that the Company shares with Employee or that Employee should know, by virtue of Employee’s position or the circumstances under which Employee learned it, should be kept confidential.  Confidential Information also includes information obtained by the Company in confidence from its clients, referral sources, partners, vendors and other third parties.

 

(b)           No Disclosure.  Employee acknowledges that the Company has a compelling business interest in preventing unfair competition stemming from the use or disclosure of its Confidential Information.  Employee therefore agrees that Employee will not disclose to others in any manner, use for Employee’s own benefit or for the benefit of anyone other than the Company, any Confidential Information, and Employee shall take all reasonable measures, in accordance with policies established by the Company, to protect Confidential Information from any accidental, unauthorized, or inappropriate use or disclosure.  Employee’s obligations under this Section 2 shall continue for so long as Employee is employed or otherwise retained or compensated by the Company, and shall continue thereafter for two (2) years, and in addition, with respect to Confidential Information constituting a trade secret within the meaning of the Uniform Trade Secrets Act, for so long as such Confidential Information remains a trade secret.

 

(c)           The Company’s Ownership of Confidential Information and Intellectual Property.  Employee further agrees that all files, records, documents, data, specification, equipment, software, hardware and similar items, whether maintained in hard copy or on line relating, to the Company’s business, whether prepared by Employee or others, and whether constituting Confidential Information or Intellectual Property (as defined below), are and shall remain exclusively the property of the Company, and that they shall not be removed from the premises or, if kept on-line, from the computer systems of the Company, without the express prior written consent of President of the Company.

 

3.             NO SOLICITATION OF EMPLOYEES.  Employee recognizes that the Company’s employees are unique and valuable resources of the Company who have knowledge of and access to Confidential Information and trade secrets of the Company, and who have been trained by the Company, and that the Employee’s employment requires Employee to have access to and interaction with the Company’s other employees.  Employee further acknowledges that other employees of the Company have certain legal obligations, arising in contract and otherwise, to the Company which include the obligations not to unfairly compete with the Company and not to disclose or use for the benefit of others any Confidential Information or trade secrets of the Company.  Accordingly, Employee agrees that for so long as Employee remains employed or otherwise retained or compensated by the Company and for a period of two (2) years thereafter, Employee shall not, directly or indirectly, recruit or solicit any employee, or group of employees, of the Company to terminate employment with the Company, or to become employed by or 

 

 

contract with Employee or any other person or entity.  Employee will further not interfere in the relationship between the Company and any such employees.

 

4.             NO SOLICITATION OF CLIENTS OR REFERRAL SOURCES.  Employee acknowledges that in the course of being employed or otherwise retained or compensated by the Company, Employee will have access to Confidential Information regarding the identity, preferences and requirements of the Company’s clients and referral sources.  Employee further acknowledges that Employee is prohibited from unfairly competing with the Company by using or disclosing to or for the benefit of others any such information of the Company.  Accordingly, Employee agrees that for so long as Employee remains employed or otherwise retained or compensated by the Company and for a period of two (2) years thereafter, Employee shall not, directly or indirectly, induce or solicit any client or referral source of the Company to terminate such client’s or referral source’s relationship or arrangement with the Company, nor will Employee solicit, market to or recruit any client or referral source of the Company on behalf of Employee or any other person or entity that competes with, or that provides services or products similar to those provided by, the Company.

 

5.             ASSIGNMENT OF INTELLECTUAL PROPERTY

 

(a)           Original Development.  All work that Employee performs for or on behalf of the Company and its clients or referral sources, and all work product that Employee develops or produces, including but not limited to software, documentation, memoranda, ideas, designs, inventions, and processes (“Intellectual Property”), will not, to the knowledge of Employee, infringe or violate any patent, copyright, trade secret, or other property right of any other third party.

 

(b)           Disclosure.  Employee will promptly disclose to the Company all Intellectual Property that is developed within the scope of Employee’s employment with or other retention by the Company or that relates directly to, or involves the use of, any Confidential Information, including but not limited to all software, all concepts, ideas, and designs, and all documentation, manuals, policies, protocols, and other documents or writings.  Employee understands that prompt disclosure is necessary to allow the Company to secure any patent, copyright or trademark protection that may be available to the Company.

 

(c)           Assignment.  Employee hereby assigns to the Company all of Employee’s right, title and interest (including but not limited to all patent, trademark, copyright and trade secret rights) in and to all Intellectual Property prepared, made or conceived in whole or in part by Employee within the scope of Employee’s employment with or retention by the Company or that relate directly to, or involve the use of, Confidential Information.  Employee agrees to execute all documents reasonably requested by the Company to further evidence the foregoing assignment and to provide all reasonable assistance to the Company in perfecting or protecting any or all of the Company’s rights in the Intellectual Property.

 

(i)            Prior Intellectual Property Not Assigned.  The above assignment does not apply to an invention for which no equipment, supplies, facility or trade secret of the Company were used and which were developed entirely on Employee’s own time (“Prior Intellectual Property”), unless (a) the invention relates (i) to the business of the Company, or (ii) the 

 

 

Company’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by Employee for the Company.  Employee agrees, however, that the Company has the right to any improvements made upon the Prior Intellectual Property during and subsequent to his/her employment if said improvements (i) relate at the time of conception or reduction to practice to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (ii) result from any work performed by Employee for the Company.

 

(ii)           Disclosure of Prior Intellectual Property.  Employee represents that Employee has indicated on the signature page of this Agreement all inventions, expressions of ideas, or other Intellectual Property possibly related to the Company’s business and created prior to Employee’s employment by the Company in which Employee has any right, title or interest that Employee does not assign to the Company.  If Employee does not have any such inventions, expressions of ideas or work product to indicate, Employee will write “none” on the signature page.

 

(d)           Scope of Rights.  The Company’s rights hereunder shall not be limited to this country but shall extend to any country in the world and shall attach to all Intellectual Property and Confidential Information notwithstanding that it is perfected, improved, reduced to specific form or used after Employee has left the Company’s employment.

 

6.             RETURN OF CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY.  Upon termination of Employee’s employment with the Company for any reason, or at any time upon request of the Company, Employee agrees to promptly deliver to the Company all materials of any nature that are in Employee’s possession or control and that constitute or contain Confidential Information or Intellectual Property, or that are otherwise the property of the Company or of any client, referral source, partner or vendor, including, but not limited to, writings, designs, documents, records, data, memoranda, tapes and disks containing software, computer source code listings, routines, file layouts, record layouts, system design information, models, manuals, documentation, and notes.

 

7.             INTENT; SEPARATE COVENANTS.  Employee agrees that the covenants contained in this Agreement are reasonable in light of the nature of the Company’s business and Employee’s role in the business of the Company.  The covenants contained in this Agreement shall be construed as a series of separate and severable covenants.  If any covenant contained in this Agreement is determined, by any court of competent jurisdiction, to be unenforceable or unreasonable, Employee agrees that such covenants may and shall be modified by such court, but only to the extent necessary to eliminate those restrictions determined to be unenforceable or unreasonable.  Nothing contained in this Section or elsewhere in this Agreement is intended to or shall modify or reduce in any way Employee’s obligations to comply, while employed or thereafter, with applicable laws relating to trade secrets, Confidential Information, or unfair competition.

 

8.             REMEDIES.  Employee acknowledges and agrees that Employee’s breach of any provision of Section 1, 2, 3, 4, 5 or 6 of this Agreement is likely to cause irrevocable harm to the Company, for which there may be an inadequate remedy at law and which the ascertainment of damages would be difficult.  Accordingly, in the event of a breach by Employee of any term of

 

 

this Agreement, the Company shall be entitled, in addition to and without having to prove the inadequacy of other remedies at law (including, without limitation, damages for prior breaches hereof), to specific performance of this Agreement, as well as injunctive relief (without being required to post bond or other security).

 

9.             MISCELLANEOUS.

 

(a)           Binding on Successors; Modification.  The provisions of this Agreement shall inure to the benefit of and be binding upon the heirs, personal representatives, successors and assigns of the parties.  This Agreement supersedes all earlier agreements between the Company and Employee which deal with the subject matter of this Agreement, if any, and may not be modified in whole or in part except by a statement in writing signed by Employee and an officer of the Company.

 

(b)           Choice of Law; Forum Selection.  This Agreement and the enforcement hereof shall be governed and controlled in all respects by the laws of the State of Illinois.  Any claim or dispute arising under this Agreement shall be adjudicated by a court of competent jurisdiction in the State of Illinois.

 

10.           ACKNOWLEDGEMENT

 

By signing this Agreement:

 

(a)           Employee understand that Employee has a legal commitment to abide by the above obligations;

 

(b)           Employee certifies that Employee has read and understand this Agreement;

 

(c)           Employee recognizes that any violation of this Agreement may be cause for disciplinary action, including, but not limited to, termination of employment and legal action;

 

(d)           Employee acknowledges that this Agreement is not a representation or agreement as to continued or guaranteed employment or any minimum or specified term or length of employment.  Employee’s employment with the Company is terminable at-will.

 

 

	
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EMPLOYEE CONFIDENTIALITY AGREEMENT

 

In consideration of being employed by Acquity Group, Inc., the undersigned (“Employee”) hereby agrees as follows:

 

1.                                       COMPETITIVE ACTIVITIES

 

(a)           No Competitive Activities. Employee realizes that, as an employee, Employee has certain fiduciary and other obligations to Acquity Group, Inc. and its affiliated entities (including, but not limited to Acquity Group, LLC, Acquity Holding, LLC, and Symplexeon, LLC) (collectively, the “Company”). Accordingly, for so long as Employee is employed or otherwise retained or compensated in any way by the Company, Employee shall not, directly or indirectly, render services to, assist, participate in the affairs of, or otherwise be connected with any person or entity (other than the Company) which is engaged in, or is planning to engage in, any business that is in any respect competitive with the business of the Company, in any capacity (whether as an employee, investor, officer, director, partner, member, manager, shareholder, lender, consultant or otherwise), including but not limited to any capacity that would:

 

(i)            utilize Employee’s services with respect to such business or with respect to the sales or offering of products or services similar to those which the Company provides, offers or plans to provide or offer, irrespective of where Employee renders such services; or

 

(ii)           reasonably be expected to utilize in any way any Confidential Information (as defined in Section 2) acquired by Employee during the course of his/her employment with the Company (whether acquired preceding, on or following the date hereof).

 

(b)           Exception. Nothing contained in this Section 1 shall prohibit or prevent Employee from owning securities in companies listed on a national securities exchange or traded on a national over-the-counter market, in an amount which does not exceed 5% of the outstanding securities of any such companies.

 

2.             PROTECTION OF CONFIDENTIAL INFORMATION

 

(a)           Confidential Information. For purposes of this Agreement, “Confidential Information” means all information that is not generally known and gives the Company a competitive advantage over others who do not know or use it, which Employee obtains from the Company, or learns, discovers, develops, conceives, or creates while employed or otherwise retained by the Company, and which relates to the business or assets of the Company. The term “Confidential Information” includes, but is not limited to, inventions, ideas, computer programs, protocols, designs, processes, techniques, research and development information; identities of clients and referral sources; financial data and information; business plans, strategies and processes; pricing and contract terms; client and referral source preferences and requirements; and any other information of the Company that the Company shares with Employee or that Employee should know, by virtue of Employee’s position or the circumstances under which Employee learned it, should be kept confidential. Confidential Information also includes

 

 

information obtained by the Company in confidence from its clients, referral sources, partners, vendors and other third parties.

 

(b)           No Disclosure. Employee acknowledges that the Company has a compelling business interest in preventing unfair competition stemming from the use or disclosure of its Confidential Information. Employee therefore agrees that Employee will not disclose to others in any manner, use for Employee’s own benefit or for the benefit of anyone other than the Company, any Confidential Information, and Employee shall take all reasonable measures, in accordance with policies established by the Company, to protect Confidential Information from any accidental, unauthorized, or inappropriate use or disclosure. Employee’s obligations under this Section 2 shall continue for so long as Employee is employed or otherwise retained or compensated by the Company, and shall continue thereafter for two (2) years, and in addition, with respect to Confidential Information constituting a trade secret within the meaning of the Uniform Trade Secrets Act, for so long as such Confidential Information remains a trade secret.

 

(c)           The Company’s Ownership of Confidential Information and Intellectual Property. Employee further agrees that all files, records, documents, data, specification, equipment, software, hardware and similar items, whether maintained in hard copy or on line relating, to the Company’s business, whether prepared by Employee or others, and whether constituting Confidential Information or Intellectual Property (as defined below), are and shall remain exclusively the property of the Company, and that they shall not be removed from the premises or, if kept on-line, from the computer systems of the Company, without the express prior written consent of the President of the Company.

 

3.             NO SOLICITATION OF EMPLOYEES. Employee recognizes that the Company’s employees are unique and valuable resources of the Company who have knowledge of and access to Confidential Information and trade secrets of the Company, and who have been trained by the Company, and that the Employee’s employment requires Employee to have access to and interaction with the Company’s other employees. Employee further acknowledges that other employees of the Company have certain legal obligations, arising in contract and otherwise, to the Company which include the obligations not to unfairly compete with the Company and not to disclose or use for the benefit of others any Confidential Information or trade secrets of the Company. Accordingly, Employee agrees that for so long as Employee remains employed or otherwise retained or compensated by the Company and for a period of two (2) years thereafter, Employee shall not, directly or indirectly, recruit or solicit any employee, or group of employees, of the Company to terminate employment with the Company, or to become employed by or contract with Employee or any other person or entity. Employee will fuliher not interfere in the relationship between the Company and any such employees.

 

4.             NO SOLICITATION OF CLIENTS OR REFERRAL SOURCES. Employee acknowledges that in the course of being employed or otherwise retained or compensated by the Company, Employee will have access to Confidential Information regarding the identity, preferences and requirements of the Company’s clients and referral sources. Employee further acknowledges that Employee is prohibited from unfairly competing with the Company by using or disclosing to or for the benefit of others any such information of the Company. Accordingly, Employee agrees that for so long as Employee remains employed or otherwise retained or compensated by the Company and for a period of two (2) years thereafter, Employee shall not,

 

 

directly or indirectly, induce or solicit any client or referral source of the Company to terminate such client’s or referral source’s relationship or arrangement with the Company, nor will Employee solicit, market to or recruit any client or referral source of the Company on behalf of Employee or any other person or entity that competes with, or that provides services or products similar to those provided by, the Company.

 

5.             ASSIGNMENT OF INTELLECTUAL PROPERTY

 

(a)           Original Development. All work that Employee performs for or on behalf of the Company and its clients or referral sources, and all work product that Employee develops or produces, including but not limited to software, documentation, memoranda, ideas, designs, inventions, and processes (“Intellectual Property”), will not, to the knowledge of Employee, infringe or violate any patent, copyright, trade secret, or other property right of any other third party.

 

(b)           Disclosure. Employee will promptly disclose to the Company all Intellectual Property that is developed within the scope of Employee’s employment with or other retention by the Company or that relates directly to, or involves the use of, any Confidential Information, including but not limited to all software, all concepts, ideas, and designs, and all documentation, manuals, policies, protocols, and other documents or writings. Employee understands that prompt disclosure is necessary to allow the Company to secure any patent, copyright or trademark protection that may be available to the Company.

 

(c)           Assignment. Employee hereby assigns to the Company all of Employee’s right, title and interest (including but not limited to all patent, trademark, copyright and trade secret rights) in and to all Intellectual Property prepared, made or conceived in whole or in part by Employee within the scope of Employee’s employment with or retention by the Company or that relate directly to, or involve the use of, Confidential Information. Employee agrees to execute all documents reasonably requested by the Company to further evidence the foregoing assignment and to provide all reasonable assistance to the Company in perfecting or protecting any or all of the Company’s rights in the Intellectual Property.

 

(i)            Application of Cali fomi a Labor Code Section 2870. Notwithstanding the foregoing, pursuant to California Labor Code Section 2870, Employee acknowledges receipt of notice that this assignment does not apply to an invention for which no equipment, supplies, facility or trade secret of the Company were used and which were developed entirely on Employee’s own time (“Prior Intellectual Property”), unless (a) the invention relates (i) to the business of the Company, or (ii) the Company’s actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by Employee for the Company. Employee agrees, however, that the Company has the right to any improvements made upon the Prior Intellectual Property during and subsequent to his/her employment if said improvements (i) relate at the time of conception or reduction to practice to the Company’s business, or actual or demonstrably anticipated research or development of the Company, or (ii) result from any work performed by Employee for the Company.

 

(ii)           Prior Intellectual Property Not Assigned. Employee represents that Employee has indicated on the signature page of this Agreement all inventions, expressions of

 

 

ideas, or other Intellectual Property possibly related to the Company’s business and created prior to Employee’s employment by the Company in which Employee has any right, title or interest that Employee does not assign to the Company. If Employee does not have any such inventions, expressions of ideas or work product to indicate, Employee will write “none” on the signature page.

 

(d)           Scope of Rights. The Company’s rights hereunder shall not be limited to this country but shall extend to any country in the world and shall attach to all Intellectual Property and Confidential Information notwithstanding that it is perfected, improved, reduced to specific form or used after Employee has left the Company’s employment.

 

6.             RETURN OF CONFIDENTIAL INFORMATION AND INTELLECTUAL PROPERTY. Upon termination of Employee’s employment with the Company for any reason, or at any time upon request of the Company, Employee agrees to promptly deliver to the Company all materials of any nature that are in Employee’s possession or control and that constitute or contain Confidential Information or Intellectual Property, or that are otherwise the property of the Company or of any client, referral source, partner or vendor, including, but not limited to, writings, designs, documents, records, data, memoranda, tapes and disks containing software, computer source code listings, routines, file layouts, record layouts, system design information, models, manuals, documentation, and notes.

 

7.             INTENT; SEPARATE COVENANTS. Employee agrees that the covenants contained in this Agreement are reasonable in light of the nature of the Company’s business and Employee’s role in the business of the Company. The covenants contained in this Agreement shall be construed as a series of separate and severable covenants. If any covenant contained in this Agreement is determined, by any court of competent jurisdiction, to be unenforceable or unreasonable, Employee agrees that such covenants may and shall be modified by such court, but only to the extent necessary to eliminate those restrictions determined to be unenforceable or unreasonable. Nothing contained in this Section or elsewhere in this Agreement is intended to or shall modify or reduce in any way Employee’s obligations to comply, while employed or thereafter, with applicable laws relating to trade secrets, Confidential Information, or unfair competition.

 

8.             REMEDIES. Employee acknowledges and agrees that Employee’s breach of any provision of Section 1,2,3,4,5 or 6 of this Agreement is likely to cause irrevocable harm to the Company, for which there may be an inadequate remedy at law and which the ascertainment of damages would be difficult. Accordingly, in the event of a breach by Employee of any term of this Agreement, the Company shall be entitled, in addition to and without having to prove the inadequacy of other remedies at law (including, without limitation, damages for prior breaches hereof), to specific performance of this Agreement, as well as injunctive relief (without being required to post bond or other security).

 

9.             MISCELLANEOUS.

 

(a)           Binding on Successors; Modification. The provisions of this Agreement shall inure to the benefit of and be binding upon the heirs, personal representatives, successors and assigns of the parties. This Agreement supersedes all earlier agreements between the Company

 

 

and Employee which deal with the subject matter of this Agreement, if any, and may not be modified in whole or in part except by a statement in writing signed by Employee and an officer of the Company.

 

(b)           Choice of Law; Forum Selection. This Agreement and the enforcement hereof shall be governed and controlled in all respects by the laws of the State of California. Any claim or dispute arising under this Agreement shall be adjudicated by arbitration in accordance with the Mutual Agreement to Arbitrate. If the parties have not executed the Mutual Agreement to Arbitrate, or such agreement is determined to be unenforceable, the parties agree that any disputes arising under this Agreement, as well as any disputes between the parties, including but not limited to claims of discrimination, wrongful termination, unfair competition and/or compensation disputes, shall only be brought in either the United States District Court for Northern District of Illinois, Eastern Division or the Circuit Court for Cook County (“authorized courts”). For this purpose, the Employee consents to personal jurisdiction in the authorized courts in any such action and waives any improper venue or forum non conveniens objection to the conduct of any proceeding in any such court.

 

10.           ACKNOWLEDGEMENT

 

By signing this Agreement:

 

(a)           Employee understand that Employee has a legal commitment to abide by the above obligations;

 

(b)           Employee certifies that Employee has read and understand this Agreement;

 

(c)           Employee recognizes that any violation of this Agreement may be cause for disciplinary action, including, but not limited to, termination of employment and legal action;

 

(d)           Employee acknowledges that this Agreement is not a representation or agreement as to continued or guaranteed employment or any minimum or specified term or length of employment. Employee’s employment with the Company is terminable at-will.

 

	
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Prior Intellectual Property

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