Document:

ex101

LEASE AGREEMENT
LIBERTY PROPERTY LIMITED PARTNERSHIP 
Landlord
AND
ZULILY, INC. 
Tenant
AT
10 Emery Street 
Bethlehem, Pennsylvania  18018 

LEASE AGREEMENT
INDEX
	
		
	§     Section
	Page

	1. Basic Lease Terms and Definitions
	1

	2. Premises
	2

	3. Use
	2

	4. Term; Possession
	2

	5. Rent; Taxes
	2

	6. Operating Expenses
	3

	7. Utilities
	3

	8. Insurance; Waivers; Indemnification
	4

	9. Maintenance and Repairs
	5

	10. Compliance
	5

	11. Signs
	6

	12. Alterations
	6

	13. Mechanics’ Liens
	7

	14. Landlord’s Right of Entry
	7

	15. Damage by Fire or Other Casualty
	7

	16. Condemnation
	8

	17. Quiet Enjoyment
	8

	18. Assignment and Subletting
	9

	19. Subordination; Mortgagee’s Rights
	9

	20. Tenant’s Certificate; Financial Information
	10

	21. Surrender
	10

	22. Defaults - Remedies
	11

	23. Tenant’s Authority
	13

	24. Liability of Landlord
	14

	25. Miscellaneous
	14

	26. Notices
	15

	27. Security Deposit
	15

	28. Construction of the Building and the Tenant Improvements.
	15

	29. Options to Renew.
	18

	30. Parking.
	19

	31. Brokers.
	19

i

THIS LEASE AGREEMENT is made by and between LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership (“Landlord”), and ZULILY, INC., a corporation organized under the laws of Delaware (“Tenant”), and is dated as of the date on which this Lease has been fully executed by Landlord and Tenant.
1.Basic Lease Terms and Definitions.
(a)    Premises:  Consisting of that certain lot or plot of land located at 10 Emery Street, Bethlehem, Pennsylvania  18018 (the “Land”), as shown on Exhibit “A” attached hereto, and all improvements located or to be located thereon, including the Building.
(b)    Building:  That certain industrial building to be located on the Land containing approximately 800,250 rentable square feet.
    
(c)    Term:  Eighty-Six (86) months (plus any partial month from the Commencement Date until the first day of the next full calendar month during the Term).
(d)    Commencement Date:  The earlier of (i) December 31, 2014, or (ii) the date Tenant takes possession of the Premises for the conduct of Tenant’s business.
(e)    Expiration Date:  The last day of the Term.
(f)    Minimum Annual Rent:  Payable in monthly installments as follows:
	
			
	Month of Term
	Annual
	Monthly

	1-2
	------------
	$310,096.88

	3-14
	$3,721,162.50
	$310,096.88

	15-26
	$3,795,585.75
	$316,298.81

	27-38
	$3,871,497.47
	$322,624.79

	39-50
	$3,948,927.41
	$329,077.28

	51-62
	$4,027,905.96
	$335,658.83

	63-74
	$4,108,464.08
	$342,372.01

	75-86
	$4,190,633.36
	$349,219.45

*The foregoing notwithstanding, Minimum Annual Rent (but not Operating Expense payments) shall be abated for the first two full calendar months of the Term.  If this Lease or Tenant’s right to possess the Premises is terminated on account of a Tenant default, then Landlord shall be entitled to recover from Tenant (in addition to all other rights and remedies available to Landlord) the unamortized portion of all abated Minimum Annual Rent.  Landlord’s management and administrative fee shall not be reduced on account of any abatement in Minimum Annual Rent, and any Minimum Annual Rent abatement shall be disregarded for purposes of calculating any management and administrative fee based on a percentage of rental revenues.

(g)    Annual Operating Expenses:  $562,575.75, payable in monthly installments of $46,881.31, subject to adjustment as provided in this Lease. 
(h)    Tenant’s Share:  100.00% (also see Definitions).
(i)    Use:  Warehouse, distribution and storage, together with appurtenant offices and photography studio.
(j)    Security Deposit:  $0.00. 
(k)    Addresses For Notices:

1

	
						
	Landlord:
	Liberty Property Limited Partnership
	Tenant:
	zulily, inc.

	 
	74 West Broad Street, Suite 530
	 
	2601 Elliott Avenue, Suite 200

	 
	Bethlehem, PA  18018
	 
	Seattle, WA  98121

	 
	Attn:  Senior Vice President /City Manager
	 
	Attn: Bob Spieth

	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	With a copy to:

	 
	 
	 
	 
	zulily, inc.

	 
	 
	 
	 
	2601 Elliott Avenue, Suite 200

	 
	 
	 
	 
	Seattle, WA  98121

	 
	 
	 
	 
	Attn: General Counsel

(l)    Guarantor:  Not required. 
(m)    Additional Defined Terms:  See Rider 1 for the definitions of other capitalized terms.
(n)    Contents:  The following are attached to and made a part of this Lease:
Rider 1 – Additional Definitions    
Rider 2 – Maintenance and Repair Responsibilities    
Exhibits:    “A” – Plan showing Premises & Parking Area
“B” – Building Rules
“C” – Estoppel Certificate Form
“D” – Prohibited Uses
“E” – Base Building Plans
“F” – Base Building Specifications
“G” – Tenant Improvement Plans
“H” – Tenant Improvement Specifications
“I” – Manufacturer’s Warranties
“J” – Service Level Fees
“K” – Post Substantial Completion Work

2.    Premises.  Landlord leases to Tenant and Tenant leases from Landlord the Premises.  Tenant accepts the Premises and the Building “AS IS”, without relying on any representation, covenant or warranty by Landlord other than as expressly set forth in this Lease (including, without limitation, Section 28 of this Lease).  Prior to the Commencement Date, Tenant may, at Tenant’s sole cost and expense, cause the total rentable square footage of the Building to be measured by an architect approved by Landlord, such approval not to be unreasonably withheld, based on the applicable Building Owners and Managers Association external wall method of measurement.  Tenant shall provide Landlord with a copy of such determination and allow Landlord to review same.  If the actual measurement of the Building is less than the rentable square footage set forth in Section 1(b) above by an amount which is more than 1,000 rentable square feet, then (i) Tenant’s Minimum Annual Rent and Annual Operating Expense payments shall be recalculated based upon the per square foot amount payable from time to time hereunder, (ii) all other matters herein based on Tenant’s rentable square footage shall be adjusted accordingly, and (iii) Landlord and Tenant shall enter into a written amendment to this Lease setting forth the revised measurement, calculations, Minimum Annual Rent and Annual Operating Expenses.  If no measurement is timely made, then Landlord and Tenant stipulate and agree to the rentable square footage of the Building set forth in Section 1(b) above without regard to actual measurement.  Notwithstanding the foregoing, for purposes of such calculations and all other calculations made pursuant to this Lease that are based on the rentable square foot of the Building, the rentable square foot of the Building shall in no event be deemed to be greater than 800,250 rentable square feet for purposes of calculating Minimum Annual Rent and Annual Operating Expenses.
3.    Use.  Tenant shall occupy and use the Premises only for the Use specified in Section l above.  Tenant shall not use or permit the use of any portion of the Premises for outdoor storage or installations outside of the Building.  Notwithstanding anything to the contrary contained in this Lease, Tenant shall not use any portion of the Premises for any use set forth on Exhibit “D” attached hereto without the prior written consent of Landlord in its sole discretion.  Tenant shall have the exclusive right to use all parking and other areas on the Land and all easements benefitting the Land that are designed for use in common by all occupants of the Land and their respective employees, agents, customers, invitees and others, including without limitation any easements for access or other purposes benefiting the owners and occupants of the Land.
4.    Term; Possession.  The Term of this Lease shall commence on the Commencement Date and shall end on the Expiration Date, unless sooner terminated in accordance with this Lease.  Landlord shall not be liable for any loss or damage to Tenant resulting from any delay in delivering possession due to circumstances outside of Landlord’s reasonable control.   
5.    Rent; Taxes.  Tenant agrees to pay to Landlord, without demand, deduction or offset, Minimum Annual Rent and Annual Operating Expenses for the Term.  Tenant shall pay the Monthly Rent, in advance, on the first day of each calendar month during the Term, at Landlord’s address designated in Section 1 above unless Landlord designates otherwise; provided that Monthly Rent for the third full month shall be paid at the signing of this Lease.  Notwithstanding anything contained in this 

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Lease to the contrary, if the Commencement Date does not occur on the first day of a calendar month, then (i) the Monthly Rent for that partial calendar month (“Partial Month”) in which the Commencement Date occurs shall be appropriately prorated on a per diem basis at the rate of $11,899.27 per day and shall be paid by Tenant to Landlord on or before the Commencement Date, and (ii) Tenant shall not be responsible for paying Landlord monthly installments of Minimum Annual Rent for the Premises for the period (“Abatement Period”) commencing on the first day of the first full calendar month following the Partial Month and expiring on the last day of the second full calendar month following the Partial Month, as set forth in Section 1(f) of this Lease, provided, however, that Tenant shall be responsible for paying Landlord monthly installments of Annual Operating Expenses for the Premises in the amount of $46,881.31 (subject to adjustment as provided in this Lease) during such Abatement Period, as set forth in Section 1(g) of this Lease.  Tenant shall pay Landlord a service and handling charge equal to 5% of any Rent not paid within 5 days after the date due.  In addition, any Rent, including such charge, not paid within 5 days after the due date will bear interest at the Interest Rate from the date due to the date paid.  Notwithstanding the foregoing, with respect to the first two late payments in any 12 consecutive month period, no service and handling charge or interest shall be assessed if Landlord receives such late payment within 5 days after Tenant’s receipt of written notice from Landlord that such payment has not been timely received.  Tenant shall pay before delinquent all taxes or other charges levied or assessed upon, measured by, or arising from: (a) the conduct of Tenant’s business; (b) Tenant’s leasehold estate; or (c) Tenant’s property.  Additionally, Tenant shall pay to Landlord all sales, use, transaction privilege, or other excise tax that may at any time be levied or imposed upon, or measured by, any amount payable by Tenant under this Lease, excluding any inheritance, estate, succession, transfer, gift, income, franchise, corporate and/or excise taxes imposed upon Landlord.
6.    Operating Expenses.  The amount of the Annual Operating Expenses set forth in Section 1(g) above represents Tenant’s Share of the estimated Operating Expenses for the calendar year in which the Term commences, excluding the cost of electricity and gas that is separately metered to the Premises, and which shall be paid by Tenant directly to the respective utility provider, as set forth in Section 7 below.  Landlord may adjust such amount from time to time if the estimated Annual Operating Expenses increase or decrease; Landlord may also invoice Tenant separately from time to time for Tenant’s Share of any extraordinary or unanticipated Operating Expenses.  By April 30th of each year (and as soon as practical after the expiration or termination of this Lease or, at Landlord’s option, after a sale of the Premises), Landlord shall provide Tenant with a statement of Operating Expenses for the preceding calendar year or part thereof.  Within 30 days after delivery of the statement to Tenant, as the case may be, (i) Tenant shall pay to Landlord the amount of any deficiency then due from Tenant to Landlord, or (ii) Landlord shall credit Tenant’s account for any overpayment by Tenant (which credit shall be applied against Rent first due and owing under this Lease) except that in the event that the Term has expired or terminated other than for Tenant’s default Landlord shall pay Tenant for any such overpayment.  If Tenant does not give Landlord notice within 120 days after receiving Landlord’s statement that Tenant disagrees with the statement and specifying the items and amounts in dispute, Tenant shall be deemed to have waived the right to contest the statement.  During such 120 day period, Tenant shall be entitled, during regular business hours, after giving to Landlord at least 5 business days prior written notice, to inspect in Landlord’s business office all Landlord’s records necessary to satisfy itself that all charges set forth in the statement have been correctly allocated to Tenant, and to obtain an audit thereof on a non-contingent fee basis by an independent certified public accountant (selected by Tenant with Landlord’s written consent, which shall not be withheld unreasonably) to determine the accuracy of Landlord’s certification of the amount of Operating Expenses charged Tenant.  If it is determined that Tenant’s liability for Operating Expenses is less than ninety-five percent (95%) of that amount which Landlord previously certified to Tenant in such statement, Landlord shall pay to Tenant the reasonable cost of such audit and regardless of such percentage shall refund promptly to Tenant the amount of the Operating Expenses paid by Tenant which exceeds the amount for which Tenant actually is liable, as determined following such audit.  Except as set forth above, Tenant shall bear the total cost of any such audit.  Landlord’s and Tenant’s obligation to pay any overpayment or deficiency due the other pursuant to this Section shall survive the expiration or termination of this Lease.  
7.    Utilities.  Tenant shall pay for water, sewer, gas, electricity, heat, power, telephone, telecommunications, data and other communication services and any other utilities supplied to the Premises.  Except for utility services that are not separately metered to the Premises (the costs of which shall be included in Operating Expenses), Tenant shall obtain utility services in its own name and timely pay all charges directly to the provider providing such utility service.  Tenant shall obtain electric and gas service in its own name and timely pay all charges therefor directly to the utility company providing such services.  Except for the abatement expressly set forth in this Section below, Landlord shall not be responsible or liable for any interruption in such services, nor shall such interruption affect the continuation or validity of this Lease.  Landlord shall have the exclusive right to select, and, upon prior written notice to Tenant, to change, the companies providing such services to the Building or Premises, except that: (i) Tenant may select its own telecommunication and/or data services provider; and (ii) if, pursuant to Law, utility customers are permitted to determine the supplier of gas and electric services to the Premises, then Tenant shall have the exclusive right to select, and to change, the companies providing the supply of gas and electric services to the Premises.  Any wiring, cabling or other equipment necessary to connect Tenant’s telecommunications equipment shall be Tenant’s responsibility, and shall be installed in a manner approved by Landlord.  Notwithstanding the foregoing, in the event that any utility service is not 

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delivered for a period in excess of forty-eight (48) consecutive hours solely as a result of the negligence or willful misconduct of Landlord, and if Tenant is unable to reasonably use the Premises for the conduct of its business by reason thereof, Rent shall thereafter abate until the interrupted service is restored or Tenant conducts or is able to reasonably conduct business in the Premises.  Notwithstanding anything contained herein to the contrary, in the event that Tenant is unable to reasonably use the Premises for the conduct of its business by reason of any utility service not being delivered to the Premises, Landlord shall use commercially reasonable efforts, under the circumstances, to cause the interrupted utility service to the Premises to be restored as soon as reasonably practicable.
8.    Insurance; Waivers; Indemnification.
(a)    Landlord shall maintain insurance against loss or damage to the Building or the Premises with coverage for perils as set forth under the “Causes of Loss-Special Form” or equivalent property insurance policy in an amount equal to the full insurable replacement cost of the Building (excluding coverage of Tenant’s personal property and any Alterations by Tenant, but including coverage of the Landlord’s Work set forth in Section 28 below), and such other insurance, including rent loss coverage, as Landlord may reasonably deem appropriate or as any Mortgagee may require.
(b)    Tenant, at its expense, shall keep in effect commercial general liability insurance, including blanket contractual liability insurance, covering Tenant’s use of the Premises, with such coverages and limits of liability as Landlord may reasonably require, but not less than a $1,000,000.00 combined single limit with a $5,000,000.00 general aggregate limit (which general aggregate limit may be satisfied by an umbrella liability policy) for bodily injury or property damage; however, such limits shall not limit Tenant’s liability hereunder.  The policy shall name Landlord, Liberty Property Trust and any other associated or affiliated entity as their interests may appear and at Landlord’s request, any Mortgagee(s), as additional insureds, shall be written on an “occurrence” basis and not on a “claims made” basis and shall be endorsed to provide that it is primary to and not contributory to any policies carried by Landlord.  Tenant expressly agrees to (i) provide Landlord with at least 30 days prior written notice of any cancellation by Tenant of such policy or of any reduction by Tenant in the limits of liability of such policy below the required limits required to be maintained by Tenant hereunder, or (ii) notify Landlord in writing within 2 business days after Tenant’s receipt of notice of any cancellation by Tenant’s insurer of such policy or of any reduction by Tenant’s insurer in the limits of liability of such policy below the required limits required to be maintained by Tenant hereunder, all of which shall include a copy of the insurer’s notice to Tenant.  The insurer shall be authorized to issue such insurance, licensed to do business and admitted in the state in which the Premises is located and rated at least A VII in the most current edition of Best’s Insurance Reports.  Tenant shall deliver to Landlord on or before the Commencement Date or any earlier date on which Tenant accesses the Premises, and at least 30 days prior to the date of each policy renewal, a certificate of insurance evidencing such coverage.  
(c)    Landlord and Tenant each waive, and release each other from and against, all claims for recovery against the other for any loss or damage to the property of such party arising out of fire or other casualty coverable by a standard “Causes of Loss-Special Form” property insurance policy with, in the case of Tenant, such endorsements and additional coverages as are considered good business practice in Tenant’s business, even if such loss or damage shall be brought about by the fault or negligence of the other party or its Agents; provided, however, such waiver by Landlord shall not be effective with respect to Tenant’s liability described in Section 10(d) below.  This waiver and release is effective regardless of whether the releasing party actually maintains the insurance described above in this subsection and is not limited to the amount of insurance actually carried, or to the actual proceeds received after a loss.  Each party shall have its insurance company that issues its property coverage waive any rights of subrogation, and shall have the insurance company include an endorsement acknowledging this waiver, if necessary.  Tenant assumes all risk of damage to the property of (i) Tenant, or Tenant’s Agents in or about the Building or the Premises, and (ii) any other person whose property is used, leased or stored by Tenant in or about the Building or the Premises, including in each case any loss or damage caused by water leakage, fire, windstorm, explosion, theft, act of any other occupant of the Premises, or other cause.
(d)    Landlord and Tenant shall not be permitted to satisfy any of its insurance obligations set forth in this Lease through any self‐insurance or self-insured retention in excess of $25,000.00. 
(e)    Subject to subsection (c) above, and except to the extent caused by the negligence or willful misconduct of Landlord or its Agents, Tenant will indemnify, defend, and hold harmless Landlord and its Agents from and against any and all claims, actions, damages, liability and expense (including fees of attorneys, investigators and experts) which may be asserted against, imposed upon, or incurred by Landlord or its Agents and to the extent arising out of or in connection with loss of life, personal injury or damage to property in or about the Building or arising out of the occupancy or use of the Premises by Tenant 

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or its Agents or occasioned wholly or in part by any act or omission of Tenant or its Agents, whether prior to, during or after the Term.  Tenant’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease.
(f)    Subject to subsection (c) above, and except to the extent caused by the negligence or willful misconduct of Tenant or its Agents, Landlord will indemnify, defend, and hold harmless Tenant and its Agents from and against any and all claims, actions, damages, liability and expense (including fees of attorneys, investigators and experts) which may be asserted against, imposed upon, or incurred by Tenant or its Agents and to the extent arising out of or in connection with loss of life, personal injury or damage to property in or about the Premises occasioned wholly or in part by the negligence or willful misconduct of Landlord or its Agents, whether prior to, during or after the Term.  Landlord’s obligations pursuant to this Section shall survive the expiration or termination of this Lease.
9.    Maintenance and Repairs.
(a)    Maintenance obligations, and the responsibility for payment and fees associated with the performance of such Maintenance, shall be allocated between Landlord and Tenant in accordance with Rider 2 (which Rider 2 may be mutually amended from time to time by Landlord and Tenant in writing) and Exhibit “J”, except as otherwise set forth in this Section 9.
(b)    Notwithstanding anything contained in this Lease to the contrary, Tenant shall be solely responsible for all costs and expenses incurred by Landlord for any Alterations, repairs or other Maintenance made necessary because of (i) Tenant’s Alterations or installations, (ii) circumstances special or particular to Tenant, including Tenant’s special or particular use of the Premises, or (iii) the acts or omissions of Tenant or its Agents, in each case, to the extent not covered by applicable insurance proceeds paid to Landlord (Tenant being responsible for Landlord’s commercially reasonable deductible (not to exceed $25,000.00 per occurrence) notwithstanding the waiver of claims set forth in Section 8(c)).  Moreover, provided Tenant has been informed of the conditions of the applicable warranty, Tenant shall be solely responsible for all costs and expenses incurred by Landlord for any Maintenance that would have been covered by warranty but is no longer covered by warranty due to the failure on the part of Tenant or its Agents to observe the conditions of the applicable warranty.  Tenant agrees to pay to Landlord, within 30 days after being billed therefor, all costs and expenses for which Tenant is liable pursuant to this paragraph.
(c)    In the event of an emergency that constitutes an imminent danger to persons or property or materially interferes with Tenant’s business operations and which requires emergency repairs to the Building or the Premises which are Landlord’s responsibility under this Lease, Tenant shall, prior to making repairs, use diligent efforts to contact Landlord or any Building manager who Tenant has been notified to contact in the event of an emergency.  In the event Tenant is unable to contact Landlord or such Building manager and Landlord fails to commence such repairs within a commercially reasonable time under the circumstances, Tenant shall have the right, but not the obligation, to take such minimum action as is reasonably necessary under the circumstances to repair any portion or component of the Building or the Premises.  All work done in accordance herewith must be performed at a reasonable and competitive cost and expense (taking into account the circumstances of the emergency).  To the extent such work performed by Tenant is Landlord’s responsibility under this Lease, Landlord shall reimburse Tenant, within 30 days after Landlord’s receipt of a reasonably documented invoice therefor, for any reasonable sums paid or reasonable costs incurred by Tenant in repairing any portion or component of the Building or the Premises.     
10.    Compliance.  
(a)    Tenant will, at its expense, promptly comply with all Laws now or subsequently pertaining to Tenant’s specific use or manner of use or occupancy of the Premises (as opposed to Laws generally applicable to industrial buildings) or to Alterations made by Tenant or to the acts or omissions of Tenant or its Agents; provided, however, that Tenant shall not be obligated to correct any non-compliant condition that existed in the Premises or the Building prior to the earlier of the Commencement Date or the date of Substantial Completion (as defined below) of the Landlord’s Work, unless and to the extent caused by the acts or omissions of Tenant or its Agents.  Neither Tenant nor its Agents shall use the Premises in any manner that under any Law would require Landlord to make any Alteration to or in the Building or the Premises (without limiting the foregoing, Tenant shall not use the Premises in any manner that would cause the Premises to be deemed a “place of public accommodation” under the ADA if such use would require any such Alteration).  Tenant shall be responsible for compliance with the ADA, and any other Laws regarding accessibility, with respect to Tenant’s specific use or manner of use or occupancy of the Premises (as opposed to Laws generally applicable to industrial buildings) or to Alterations made by Tenant or to the acts or omissions of Tenant or its Agents; provided, however, that Tenant shall not be obligated to correct any non-compliant condition that existed in the Premises or the Building prior to the earlier of the Commencement Date or the date of Substantial Completion of the Landlord’s Work, unless and to the extent caused by the acts or omissions of Tenant or its Agents.   

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(b)    Tenant will comply, and will cause its Agents to comply, with the Building Rules.  Landlord may adopt and Tenant shall comply with reasonable rules and regulations to promote energy efficiency, sustainability and environmental standards for the Premises, as the same may be changed from time to time upon reasonable notice to Tenant.  Notwithstanding anything contained in this Lease to the contrary, any rules and regulations promulgated by Landlord shall (i) not conflict with the express terms of this Lease or materially increase the obligations or liabilities on Tenant; (ii) shall be uniformly applied, reasonable and not adversely affect in a material manner Tenant’s use of the Premises as herein permitted; and (iii) shall not materially increase the amounts to be paid by Tenant hereunder.
(c)    Tenant agrees not to do anything or fail to do anything which will increase the cost of Landlord’s insurance or which will prevent Landlord from procuring policies (including public liability) from companies and in a form satisfactory to Landlord.  If any breach of the preceding sentence by Tenant causes the rate of fire or other insurance to be increased, Tenant shall pay the amount of such increase as additional Rent within 30 days after being billed.
(d)    Tenant agrees that (i) no activity will be conducted on the Premises that will use or produce any Hazardous Materials, except for activities which are part of the ordinary course of Tenant’s business and are conducted in accordance with all Environmental Laws, including, the use of des minimis quantities of chemicals generally used in an office environment, such as toner for copiers and cleaning supplies (“Permitted Activities”); (ii) the Premises will not be used for storage of any Hazardous Materials, except for materials used in the Permitted Activities which are properly stored in a manner and location complying with all Environmental Laws; (iii) no portion of the Building or the Premises will be used by Tenant or Tenant’s Agents for disposal of Hazardous Materials; (iv) Tenant will make available to Landlord (in electronic form), upon Landlord’s request, copies of all Material Safety Data Sheets and other written information prepared by manufacturers, importers or suppliers of any chemical used, stored, consumed or otherwise located at the Premises at the time of such request; and (v) Tenant will immediately notify Landlord of any violation by Tenant or Tenant’s Agents of any Environmental Laws or the release or suspected release of Hazardous Materials in, under or about the Premises, and Tenant shall immediately deliver to Landlord a copy of any notice, filing or permit sent or received by Tenant with respect to the foregoing.  If at any time during or after the Term, any portion of the Premises is found to be contaminated by Tenant or Tenant’s Agents or subject to conditions prohibited in this Lease caused by Tenant or Tenant’s Agents, Tenant will indemnify, defend and hold Landlord harmless from all claims, demands, actions, liabilities, costs, expenses, attorneys’ fees, damages and obligations of any nature arising from or as a result thereof, and Landlord shall have the right to direct remediation activities, all of which shall be performed at Tenant’s cost.  Tenant’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease.  In no event shall Tenant have any liability or obligation to Landlord under this Section 10(d) with respect to any Hazardous materials or violation of Environmental Laws not caused by Tenant or its Agents.
(e)    If at any time during or after the Term, any portion of the Premises is found to be contaminated (i) from or as a result of any activity which occurred in or about the Premises prior to the Commencement Date of this Lease, unless and to the extent caused by the acts or omissions of Tenant or its Agents, or (ii) by Landlord or Landlord’s Agents, then Landlord will indemnify, defend and hold Tenant harmless from all claims, demands, actions, liabilities, costs, expenses, attorneys’ fees, damages and obligations of any nature arising from or as a result thereof and Landlord shall, at its sole cost and expense, perform all necessary remediation activities.  Landlord’s obligations pursuant to this subsection shall survive the expiration or termination of this Lease.  If at any time during the Term of this Lease, any portion of the Premises is found to contain Hazardous Materials in violation of Environmental Laws other than as a result of the acts or omissions of Tenant or its Agents, then Landlord will cause the performance of all necessary remediation activities required by Environmental Laws, at no cost to Tenant, unless and to the extent caused by the acts or omissions of Tenant or its Agents.
11.    Signs.  Tenant shall not place any signs on the Premises without the prior consent of Landlord (which consent shall not be unreasonably withheld, conditioned or delayed so long as such signage complies with all Laws), other than signs that are located wholly within the interior of the Building and not visible from the exterior of the Building.  Notwithstanding the foregoing, Tenant, at Tenant’s sole cost and expense, shall be allowed to affix its signage on the exterior of the Building, subject to (i) Tenant’s compliance with all Laws, and (ii) Landlord’s prior written approval of such signage (which approval shall not be unreasonably withheld, conditioned or delayed), including, without limitation, approval of its appearance, size, lighting, materials and location.  Tenant shall maintain all signs installed by Tenant in good condition. Tenant shall remove its signs at the termination of this Lease, shall repair any resulting damage, and shall restore the Premises to its condition existing prior to the installation of Tenant’s signs.
12.    Alterations.  Except for non-structural Alterations that (i) do not exceed $100,000.00 (excluding the costs of carpeting and painting the Premises) in the aggregate per project, (ii) are not visible from the exterior of the Premises, (iii) do not affect any Building System or the structural strength of the Building, (iv) do not require penetrations into the floor, ceiling or walls, 

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and (v) do not require work within the walls, below the floor or above the ceiling, Tenant shall not make or permit any Alterations in or to the Premises without first obtaining Landlord’s consent, which consent shall not be unreasonably withheld, conditioned or delayed.  With respect to any Alterations made by or on behalf of Tenant (whether or not the Alteration requires Landlord’s consent): (i) not less than 10 days prior to commencing any Alteration, Tenant shall deliver to Landlord the plans, specifications and necessary permits for the Alteration, together with certificates evidencing that Tenant’s contractors and subcontractors have adequate insurance coverage naming Landlord, Liberty Property Trust and any other associated or affiliated entity as their interests may appear as additional insureds; (ii) Tenant shall obtain Landlord’s prior written approval of any contractor or subcontractor; (iii) the Alteration shall be constructed with new materials, in a good and workmanlike manner, and in compliance with all Laws and the plans and specifications delivered to, and, if required above, approved by Landlord; (iv) the Alteration shall be performed in accordance with Landlord’s reasonable requirements relating to sustainability and energy efficiency; (v) Tenant shall pay Landlord all reasonable costs and expenses in connection with Landlord’s review of Tenant’s plans and specifications, and of any supervision or inspection of the construction Landlord deems necessary; and (vi) upon Landlord’s request Tenant shall, prior to commencing any Alteration, provide Landlord reasonable security against liens arising out of such construction.  Any Alteration by Tenant shall be the property of Tenant until the expiration or termination of this Lease; at that time without payment by Landlord the Alteration shall remain on the Premises and become the property of Landlord unless Landlord gives notice to Tenant to remove it, in which event Tenant will remove it (except that if, during the Term, Landlord notifies Tenant in writing that Tenant is not required to remove an Alteration at the expiration or termination of this Lease, then Tenant shall not be obligated to remove such Alteration at the expiration or termination of this Lease), will repair any resulting damage and will restore the Premises to the condition existing prior to Tenant’s Alteration.  At Tenant’s request prior to Tenant making any Alterations, Landlord will notify Tenant whether Tenant is required to remove the Alterations at the expiration or termination of this Lease.  Without Landlord’s approval, Tenant may install or remove its trade fixtures, furniture and equipment in and from the Building (including, without limitation, the installation of Tenant’s racking and/or conveyor system(s) in the Building by bolting same into the floor of the Building, provided, however, that Tenant agrees to (i) remove such system(s) at the expiration or earlier termination of this Lease, (ii) repair any damage resulting from such removal, and (iii) grind all bolts to below floor level and appropriately fill all holes to floor level), provided that the installation and removal of them will not affect any structural portion of the Premises, any Building System or any other equipment or facilities serving the Building or any occupant.
13.    Mechanics’ Liens.  Tenant promptly shall pay for any labor, services, materials, supplies or equipment furnished to Tenant in or about the Premises.  Tenant shall keep the Premises free from any liens arising out of any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to Tenant at Tenant’s request.  Tenant shall take all steps permitted by law in order to avoid the imposition of any such lien caused by Tenant or its Agents.   Should any such lien or notice of such lien, caused by Tenant or its Agents, be filed against the Premises, Tenant shall discharge the same by bonding or otherwise within 15 days after Tenant has notice that the lien or claim is filed regardless of the validity of such lien or claim.  Tenant, at Tenant’s sole cost and expense, shall have the right to contest, in good faith, any such lien or notice of such lien filed against the Premises or the Building, provided that (i) Tenant shall discharge the same by bonding or otherwise in accordance with the foregoing sentence, (ii) such contest by Tenant does not subject Landlord or the Premises to any fines, penalties and/or liability, and (iii) Tenant shall comply with all Laws.
14.    Landlord’s Right of Entry.  Tenant shall permit Landlord and its Agents to enter the Premises at all reasonable times following reasonable notice (except in an emergency) to inspect, Maintain, or make Alterations to the Building or the Premises, to verify that Tenant is performing its Maintenance obligations in accordance with this Lease, to exhibit the Premises for the purpose of sale or financing, and, during the last 10 months of the Term, to exhibit the Premises to any prospective tenant.  Landlord will make reasonable efforts not to inconvenience Tenant in exercising such rights, but Landlord shall not be liable for any interference with Tenant’s occupancy resulting from Landlord’s entry.
15.    Damage by Fire or Other Casualty.  If the Premises shall be damaged or destroyed by fire or other casualty, Tenant shall promptly notify Landlord, and Landlord, subject to the conditions set forth in this Section, shall repair such damage and restore the Premises to substantially the same condition in which they were immediately prior to such damage or destruction, but not including the repair, restoration or replacement of the fixtures, equipment, or Alterations installed by or on behalf of Tenant, except for Landlord’s Work.  Landlord shall notify Tenant, within 30 days after the date of the casualty, if Landlord anticipates that the restoration will take more than 180 days from the date of the casualty to complete, such notice to include Landlord’s reasonable estimate of the time required to complete such restoration; in such event, either Landlord or Tenant (unless the damage was caused by Tenant) may terminate this Lease effective as of the date of casualty by giving notice to the other within 10 days after Landlord’s notice.  If (i) Landlord notifies Tenant that such repair and restoration will take more than 180 days from the date of the casualty to complete and neither party terminates this Lease, or (ii) Landlord anticipates that such repair and restoration will take 180 days or less from the date of the casualty to complete, then Landlord shall commence such 

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repair and restoration (including, without limitation, the Landlord’s Work) as promptly as reasonably possible under the circumstances and shall diligently work to complete the repair and restoration, subject to delays caused by Tenant or its Agents or delays due to Force Majeure (as defined below).  Notwithstanding anything to the contrary contained in this Section, (a) in the event Landlord notifies Tenant that such repair and restoration will be completed within said 180 day time period, and such restoration is not, in fact, substantially completed within such 180 day time period, as such time period shall be extended for delays caused by Tenant or its Agents and/or delays due to Force Majeure, then Tenant (unless the damage was caused by Tenant) shall have the option to terminate this Lease on 30 days prior written notice by giving Landlord notice of such termination within 30 days after expiration of such 180 day time period, as such time period shall be extended for delays caused by Tenant or its Agents and/or delays due to Force Majeure, provided, however, that if Tenant gives such notice of termination pursuant to this paragraph and Landlord then substantially completes the restoration and repair within such 30 day time period, then Tenant’s notice of termination shall be deemed revoked and this Lease shall continue in full force and effect, and (b) in the event Landlord notifies Tenant that such repair and restoration will take more than 180 days from the date of the casualty to complete and neither party terminates this Lease, such notice to include Landlord’s reasonable estimate of the time required to complete such restoration, and such restoration is not in fact substantially completed within the time period set forth in Landlord’s notice, as such time period shall be extended for delays caused by Tenant or its Agents and/or delays due to Force Majeure, then Tenant (unless the damage was caused by Tenant) shall have the option to terminate this Lease on 30 days prior written notice by giving Landlord notice of such termination within 30 days after expiration of such time period, as such time period shall be extended for delays caused by Tenant or its Agents and/or delays due to Force Majeure, provided, however, that if Tenant gives such notice of termination pursuant to this paragraph and Landlord then substantially completes the restoration and repair within such 30 day time period, then Tenant’s notice of termination shall be deemed revoked and this Lease shall continue in full force and effect.  For purposes of the foregoing sentence only, substantial completion shall mean the Premises has been restored to substantially the same condition in which it was in immediately prior to such damage or destruction, including the Landlord’s Work, but excepting the repair, restoration or replacement of the fixtures, equipment, or Alterations installed by or on behalf of Tenant and incomplete items which do not adversely affect in a material way or materially interfere with Tenant’s use and occupancy of the Premises, which incomplete items shall be set forth on a punch list; provided, however, that substantial completion shall not be later than the date Tenant takes possession of the Premises for the conduct of its business, if earlier.  If a casualty occurs during the last 12 months of the Term, Landlord may terminate this Lease unless Tenant has the right to extend the Term for at least 3 more years and does so within 30 days after Landlord’s notice to terminate.  Moreover, Landlord may terminate this Lease if the loss is not covered by the terms of the insurance policies required to be maintained and actually maintained by Landlord under this Lease.  Notwithstanding the foregoing, Landlord shall have no right to terminate this Lease under the preceding sentence if the damage to the Premises is sufficiently minor in scope such that (i) Rent or any portion thereof would not be abated as a result thereof, or (ii) Landlord reasonably anticipates that less than 30 days will be required to restore any damage.  Tenant will receive an abatement of Minimum Annual Rent and Annual Operating Expenses to the extent the Premises are rendered untenantable as a result of the casualty.  In the event of a casualty, Tenant may elect, in its sole discretion, whether to restore, at its expense, any Alterations destroyed by such casualty and required to be removed at the end of the Term.
16.    Condemnation.  If (a) all of the Premises are Taken, (b) any part of the Building is Taken and the remainder is insufficient for the reasonable operation of Tenant’s business for the Use set forth in Section 1(i), as mutually agreed upon by Landlord and Tenant in good faith (provided, however, that if Landlord and Tenant cannot so mutually agree upon same, then Landlord and Tenant shall mutually agree upon and appoint an architect or engineer with at least ten (10) years of continuous experience with industrial buildings in the market area to determine whether the remainder of the Building is sufficient for the reasonable operation of Tenant’s business for the Use set forth in Section 1(i)), or (c) any of the Premises is Taken, and, in Landlord’s reasonable opinion, it would be impractical or the condemnation proceeds are insufficient to restore the remainder, then this Lease shall terminate as of the date the condemning authority takes possession.  If this Lease is not terminated, Landlord shall restore the Building to a condition as near as reasonably possible to the condition prior to the Taking, the Minimum Annual Rent shall be abated for the period of time all or a part of the Building is untenantable in proportion to the square foot area untenantable, and this Lease shall be amended appropriately.  The compensation awarded for a Taking shall belong to Landlord.  Except for any relocation and other benefits to which Tenant may be entitled, Tenant hereby assigns all claims against the condemning authority to Landlord, including, but not limited to, any claim relating to Tenant’s leasehold estate.  Although all damages in the event of any condemnation are to belong to the Landlord whether such damages are awarded as compensation for diminution in value of the leasehold or to the fee of the leased premises,  Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of any and all damage to Tenant's business by reason of the condemnation and for or on account of any cost or loss to which Tenant might be put in removing Tenant's merchandise, furniture, fixtures, leasehold improvements and equipment.

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17.    Quiet Enjoyment.  Landlord covenants that Tenant, so long as no default exists hereunder beyond any applicable notice and cure periods under this Lease, shall have quiet and peaceful possession of the Premises as against anyone claiming by or through Landlord, subject, however, to the terms of this Lease.
18.    Assignment and Subletting.
(a)    Except as provided in Section (b) below, Tenant shall not enter into nor permit any Transfer voluntarily or by operation of law, without the prior consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed.  Without limitation, Tenant agrees that Landlord’s consent shall not be considered unreasonably withheld if (i) Tenant proposes the Transfer to Landlord during the first four Lease Years of this Lease and the proposed transferee is an existing tenant of Landlord in Northampton County or Lehigh County in Pennsylvania, (ii) the business, business reputation or creditworthiness of the proposed transferee is unacceptable to Landlord, in the exercise of Landlord’s reasonable discretion, (iii) Tenant proposes the Transfer to Landlord during the first four Lease Years of this Lease and Landlord has comparable space available for lease by the proposed transferee in Northampton County or Lehigh County in Pennsylvania, or (iv) Tenant is in default under this Lease beyond any applicable notice and cure periods provided in this Lease or any act or omission has occurred which would constitute a default with the giving of notice and/or the passage of time.  A consent to one Transfer shall not be deemed to be a consent to any subsequent Transfer.  In no event shall any Transfer relieve Tenant from any obligation under this Lease.  Landlord’s acceptance of Rent from any person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a consent to any Transfer.  Any Transfer not in conformity with this Section 18 shall be void at the option of Landlord.
(b)    Landlord’s consent shall not be required in the event of any Transfer by Tenant to an Affiliate provided that (i) the Affiliate has a minimum net worth of at least $50,000,000.00 as of the date of the Transfer, (ii) Tenant provides Landlord notice of the Transfer at least 15 days prior to the effective date, together with current financial statements of the Affiliate certified by an executive officer of the Affiliate, and (iii) in the case of an assignment or sublease, Tenant delivers to Landlord an assumption agreement (in the event of an assignment), or a sublease agreement (in the event of a sublease), in each case, reasonably acceptable to Landlord executed by Tenant and the Affiliate, together with a certificate of insurance evidencing the Affiliate’s compliance with the insurance requirements of Tenant under this Lease.
(c)    The provisions of subsection (a) above notwithstanding, if Tenant proposes to Transfer all of the Premises (other than to an Affiliate), Landlord may terminate this Lease, either conditioned on execution of a new lease between Landlord and the proposed transferee or without that condition.  If Tenant proposes to enter into a Transfer of less than all of the Premises (other than to an Affiliate), Landlord may amend this Lease to remove the portion of the Premises to be transferred, either conditioned on execution of a new lease between Landlord and the proposed transferee or without that condition.  If this Lease is not so terminated or amended, Tenant shall pay to Landlord, immediately upon receipt, 50% of the excess of (i) all compensation received by Tenant for the Transfer, less the commercially reasonable costs incurred by Tenant in connection with such Transfer (including, without limitation, commercially reasonable and customary legal fees, brokerage commissions, tenant improvement allowances, marketing expense), over (ii) the Rent allocable to the Premises transferred. 
(d)    If Tenant requests Landlord’s consent to a Transfer, Tenant shall provide Landlord, at least 10 days prior to the proposed Transfer, current financial statements of the transferee certified by an executive officer of the transferee, a complete copy of the proposed Transfer documents, and any other information Landlord reasonably requests.  Immediately following any approved assignment or sublease, Tenant shall deliver to Landlord an assumption agreement  (in the event of an assignment), or a sublease agreement (in the event of a sublease), in each case, reasonably acceptable to Landlord executed by Tenant and the transferee, together with a certificate of insurance evidencing the transferee’s compliance with the insurance requirements of Tenant under this Lease.  Tenant agrees to reimburse Landlord for reasonable administrative and attorneys’ fees in connection with the processing and documentation of any Transfer for which Landlord’s consent is requested.
19.    Subordination; Mortgagee’s Rights.
(a)    Tenant accepts this Lease subject and subordinate to the lien of any Mortgage now or in the future affecting the Premises, provided that Tenant’s right of possession of the Premises shall not be disturbed by the Mortgagee so long as Tenant is not in default beyond any applicable notice and cure periods under this Lease.  This clause shall be self-operative, but within 10 days after request, Tenant shall execute and deliver any further instruments confirming the subordination of this Lease and any further instruments of attornment that the Mortgagee may reasonably request.  However, any Mortgagee may at any time subordinate its Mortgage to this Lease, without Tenant’s consent, by giving notice to Tenant, and this Lease shall then be deemed prior to such Mortgage without regard to their respective dates of execution and delivery; provided that such subordination shall not affect any Mortgagee’s rights with respect to condemnation awards, casualty insurance proceeds, intervening liens or 

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any right which shall arise between the recording of such Mortgage and the execution of this Lease.  Landlord represents to Tenant that no Mortgage affects the Premises as of the date of this Lease.  Upon receipt of Tenant’s written request, Landlord shall request and use commercially reasonable efforts to obtain a commercially reasonable non-disturbance agreement for Tenant from the holder of any future Mortgage affecting the Premises..
(b)    No Mortgagee shall be (i) liable for any act or omission of a prior landlord unless such act or omission continues after the Mortgagee takes title to the Premises, (ii) subject to any rental offsets or defenses against a prior landlord, (iii) bound by any amendment of this Lease made without its written consent (unless such amendment was made prior to the date on which Tenant was notified of such Mortgagee’s interest), or (iv) bound by payment of Monthly Rent more than one month in advance or liable for any other funds paid by Tenant to Landlord unless such funds actually have been transferred to the Mortgagee by Landlord.
(c)    The provisions of Sections 15 and 16 above notwithstanding, Landlord’s obligation to restore the Premises after a casualty or condemnation shall be subject to the consent and prior rights of any Mortgagee.
20.    Tenant’s Certificate; Financial Information.  Within 15 days after Landlord’s request from time to time, (a) Tenant shall execute, acknowledge and deliver to Landlord, for the benefit of Landlord, Mortgagee, any prospective Mortgagee, and any prospective purchaser of Landlord’s interest in the Premises, an estoppel certificate in the form of attached Exhibit “C” (or other form requested by Landlord), modified as necessary to accurately state the facts represented, and (b) Tenant shall furnish to Landlord, Landlord’s Mortgagee, prospective Mortgagee and/or prospective purchaser reasonably requested financial information, provided, however, if Tenant (or Tenant’s parent company with whom Tenant files consolidated financial statements) is a publicly traded entity, publicly available information of Tenant (or Tenant’s parent company with whom Tenant files consolidated financial statements) shall be sufficient.  Landlord agrees to keep any private financial information provided to it by Tenant confidential (except for disclosure to the parties listed in this subsection (b)), and any Mortgagee, prospective Mortgagee and/or prospective purchaser with which Landlord shares such information shall be informed by Landlord of the obligation to keep such information confidential.
21.    Surrender.
(a)    On the date on which this Lease expires or terminates, Tenant shall return possession of the Premises to Landlord in good condition, except for ordinary wear and tear, and except for casualty damage or other conditions that Tenant is not required to remedy under this Lease.  Prior to the expiration or termination of this Lease, Tenant shall remove from the Premises all furniture, fixtures, equipment, wiring and cabling, and all other personal property installed by Tenant or its assignees or subtenants.  Tenant shall repair any damage resulting from such removal and shall restore the Premises to good order and condition.  Any of Tenant’s personal property not removed as required shall be deemed abandoned, and Landlord, at Tenant’s expense, may remove, store, sell or otherwise dispose of such property in such manner as Landlord may see fit and/or Landlord may retain such property or sale proceeds as its property.  If Tenant does not return possession of the Premises to Landlord in the condition required under this Lease, Tenant shall pay Landlord all resulting damages Landlord may suffer.  Within ten (10) days after Landlord’s receipt of written request from Tenant, made not more than thirty-five (35) days prior to the expiration or earlier termination of this Lease, Landlord and Tenant will conduct a walk-through inspection of the Premises and then Landlord will provide Tenant with a comprehensive list of any restorations or repairs that Landlord requests Tenant to complete prior to the expiration or earlier termination of this Lease.  Tenant shall not be obligated to make restorations or repairs not included in such list or otherwise not the obligation of Tenant pursuant to the express terms and conditions of this Lease, excepting: (i) damage to the Premises caused by Tenant’s or its Agents’ removal of Alterations or of its furniture, fixtures, equipment, wiring and cabling or any other personal property installed by Tenant or its assignees or subtenants; (ii) damage caused after the date of such list; and (iii) any damage or defect caused by Tenant or its Agents to any structural portion of the Premises or any Building System that was not visibly observable during the walk-through because such item was located above the ceiling, below the floor or within the walls (provided, however, that Tenant’s obligations pursuant to this subsection (iii) shall only survive the expiration or termination of this Lease for a period of two (2) years following the expiration or termination of this Lease).  Notwithstanding the foregoing, in no event shall Tenant be relieved from any of Tenant’s continuing obligations pursuant to Section 10(d) of this Lease.
(b)    If Tenant remains in possession of the Premises after the expiration or termination of this Lease, Tenant’s occupancy of the Premises shall be that of a tenancy at will.  Tenant’s occupancy during any holdover period shall otherwise be subject to the provisions of this Lease (unless clearly inapplicable), except that the Monthly Rent for each of the first and second months of any holdover period shall be 125% of the Monthly Rent payable for the last full month immediately preceding the holdover, the Monthly Rent for each of the third and fourth months of any holdover period shall be 150% of the Monthly Rent 

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payable for the last full month immediately preceding the holdover, and the Monthly Rent for every month of the holdover period thereafter shall be 200% of the Monthly Rent payable for the last full month immediately preceding the holdover.  No holdover or payment by Tenant after the expiration or termination of this Lease shall operate to extend the Term or prevent Landlord from immediate recovery of possession of the Premises by summary proceedings or otherwise.  Any provision in this Lease to the contrary notwithstanding, any holdover by Tenant shall constitute a default on the part of Tenant under this Lease entitling Landlord to exercise, without obligation to provide Tenant any notice or cure period, all of the remedies available to Landlord in the event of a Tenant default, and Tenant shall be liable for all damages, including consequential damages, that Landlord suffers as a result of the holdover.  In the event Tenant’s renewal option set forth below has lapsed and any person or entity desires to lease any portion of the Premises after the Expiration Date and submits to Landlord a letter of intent or comparable proposal in connection therewith which Landlord desires to accept, Landlord shall endeavor to notify Tenant of the same (but Landlord shall not be obligated to provide Tenant with a copy of, or the contents of, such letter of intent or comparable proposal and this sentence shall not be deemed to grant Tenant any type of right of first offer or right of first refusal or the like).  Landlord shall advise Tenant in writing promptly after Landlord enters into a lease providing for occupancy of any portion of the Premises by a tenant after the Expiration Date (“Landlord’s New Lease Notice”).  Notwithstanding anything to the contrary herein contained, Tenant shall not be liable for any consequential damages as a result of a holdover unless such holdover continues for a period of more than 30 days after Tenant’s receipt of Landlord’s New Lease Notice.  (For example, (i) if Tenant receives Landlord’s New Lease Notice 30 or more days prior to the Expiration Date, then Tenant will be liable for consequential damages as a result of any holdover after the Expiration Date, and (ii) if Tenant receives Landlord’s New Lease Notice 15 days prior to the Expiration Date, then Tenant will be liable for consequential damages as a result of the holdover only if it holds over for more than 15 days after the Expiration Date).
22.    Defaults - Remedies.
(a)    It shall be an Event of Default:
(i)    If Tenant does not pay in full when due any and all Rent and, except as provided in Section 22(c) below, Tenant fails to cure such default on or before the date that is 5 business days after Landlord gives Tenant notice of default;
(ii)    If Tenant enters into or permits any Transfer in violation of Section 18 above and Tenant does not void such Transfer within 10 days after the date that Landlord notifies Tenant in writing that Tenant is in violation of Section 18;
(iii)    If Tenant fails to observe and perform or otherwise breaches any other provision of this Lease, and, except as provided in Section 22(c) below, Tenant fails to cure the default on or before the date that is 30 days after Landlord gives Tenant notice of default; provided, however, if the default cannot reasonably be cured within 30 days following Landlord’s giving of notice, Tenant shall be afforded additional reasonable time to cure the default if Tenant begins to cure the default within 30 days following Landlord’s notice and continues diligently in good faith to completely cure the default; or
(iv)    If Tenant becomes insolvent or makes a general assignment for the benefit of creditors or offers a settlement to creditors, or if a petition in bankruptcy or for reorganization or for an arrangement with creditors under any federal or state law is filed by or against Tenant, or a bill in equity or other proceeding for the appointment of a receiver for any of Tenant’s assets is commenced, or if any of the real or personal property of Tenant shall be levied upon; provided that any proceeding brought by anyone other than Landlord or Tenant under any bankruptcy, insolvency, receivership or similar law shall not constitute an Event of Default until such proceeding has continued unstayed for more than 60 consecutive days.
(b)    If an Event of Default occurs, Landlord shall have the following rights and remedies:
(i)    Landlord, without any obligation to do so, may elect to cure the default on behalf of Tenant, in which event Tenant shall reimburse Landlord upon demand for any sums paid or costs incurred by Landlord (together with an administrative fee of 10% thereof) in curing the default, plus interest at the Interest Rate from the respective dates of Landlord’s incurring such costs, which sums and costs together with interest at the Interest Rate shall be deemed additional Rent;
(ii)    Following 24 hours prior telephonic notice to Tenant, to enter and repossess the Premises lawfully, by breaking open locked doors if necessary and lawful, and remove all persons and all or any property, by action at law or otherwise in accordance with law, without being liable for prosecution or damages.  Landlord may, at Landlord’s option, make Alterations and repairs in order to relet the Premises and relet all or any part(s) of the Premises for Tenant’s account.  Tenant agrees to pay to Landlord on demand any deficiency (taking into account all costs incurred by Landlord) that may arise by reason of such 

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reletting.  In the event of reletting without termination of this Lease, Landlord may at any time thereafter elect to terminate this Lease for such previous breach;
(iii)    To accelerate the whole or any part of the Rent for the balance of the Term, and declare the same to be immediately due and payable (and, for purposes of acceleration of Annual Operating Expenses, the amount to be accelerated shall be based upon the assumption that Annual Operating Expenses for each Lease Year of the balance of the Term would be equal to the amount of Annual Operating Expenses which were payable by Tenant in the Lease Year immediately preceding the acceleration); provided, however, Tenant shall have the right, in any judicial proceedings brought to collect same, to assert a credit for the fair rental value of the Premises for the balance of the Term (which Landlord shall have the right to defend against), the burden of proving such credit to be on Tenant.  The fair rental value of the Premises shall be net of the costs which would be reasonably incurred by Landlord in re-leasing the Premises, including without limitation, reasonable demolition and fit-out costs, brokerage commissions and legal fees and expenses.  The accelerated amount determined to be payable to Landlord hereunder shall be reduced to present value at the rate of 6% per annum at the time of actual payment; 
(iv)    To terminate this Lease and the Term without any right on the part of Tenant to save the forfeiture by payment of any sum due or by other performance of any condition, term or covenant broken; and
(v)    Notwithstanding anything to the contrary in this Lease, Landlord shall use commercially reasonable efforts to relet the Premises in order to mitigate its damages hereunder.
(c)    Any provision to the contrary in this Section 22 notwithstanding: (i) Landlord shall not be required to give Tenant the notice and opportunity to cure provided in Section 22(a)(i) above for any default in the payment of Rent more than twice in any consecutive 12-month period, and thereafter during the balance of such consecutive 12-month period Landlord may declare an Event of Default for failure to pay Rent without affording Tenant any of the notice and cure rights provided under Section 22(a)(i) of this Lease; (ii) Landlord shall not be required to give such notice prior to exercising its rights under Section 22(b)(i) in the event of an emergency that constitutes an imminent danger to persons or property or which requires emergency repairs to the Premises; (iii) only an additional 10 business day notice to Tenant shall be required by Landlord prior to Landlord exercising its rights under Section 22(b) if Tenant fails to discharge any lien or claim in accordance with Section 13 during the 15 day cure period provided in Section 13; and (iv) if Tenant fails, during the 15 day time period provided in Section 20, to (A) execute, acknowledge and deliver to Landlord an estoppel certificate, or (B) furnish to Landlord, Landlord’s Mortgagee, prospective Mortgagee and/or prospective purchaser reasonably requested financial information (provided, however, if Tenant (or Tenant’s parent company with whom Tenant files consolidated financial statements) is a publicly traded entity, publicly available information of Tenant (or Tenant’s parent company with whom Tenant files consolidated financial statements) shall be sufficient), then Landlord shall only be required to give Tenant an additional 5 business day notice prior to Landlord exercising its rights under Section 22(b).
(d)    No waiver by Landlord of any breach by Tenant shall be a waiver of any subsequent breach, nor shall any forbearance by Landlord to seek a remedy for any breach by Tenant be a waiver by Landlord of any rights and remedies with respect to such or any subsequent breach.  Despite Landlord’s duty to mitigate in accordance with Section 22(b)(v), efforts by Landlord to mitigate the damages caused by Tenant’s default shall not constitute a waiver of Landlord’s right to recover damages hereunder.  No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy provided herein or by law unless it so expressly provides, but each shall be cumulative and in addition to every other right or remedy given herein or now or hereafter existing at law or in equity.  No payment by Tenant or receipt or acceptance by Landlord of a lesser amount than the total amount due Landlord under this Lease shall be deemed to be other than on account, nor shall any endorsement or statement on any check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of Rent due, or Landlord’s right to pursue any other available remedy.
(e)    If either party commences an action against the other party arising out of or in connection with this Lease, the prevailing party shall be entitled to have and recover from the other party attorneys’ fees, costs of suit, investigation expenses and discovery and other litigation costs, including costs of appeal.
(f)    Landlord and Tenant waive the right to a trial by jury in any action or proceeding based upon or related to, the subject matter of this Lease.
(g)    When this Lease and the Term or any extension thereof shall have been terminated on account of any monetary default or material non-monetary default (which includes, but is not limited to, any inability by Landlord to sell or refinance the 

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Premises due to Tenant’s failure to timely execute, acknowledge and deliver to Landlord an estoppel certificate as set forth in Section 20) by Tenant which has continued beyond any applicable notice and cure periods provided in this Lease, or when the Term or any extension thereof shall have expired, Tenant hereby authorizes any attorney of any court of record of the Commonwealth of Pennsylvania, upon an additional 10 business days prior written notice to Tenant, to appear for Tenant and for anyone claiming by, through or under Tenant and to confess judgment against all such parties, and in favor of Landlord, in ejectment and for the recovery of possession of the Premises, for which this Lease or a true and correct copy hereof shall be good and sufficient warrant.  AFTER THE ENTRY OF ANY SUCH JUDGMENT A WRIT OF POSSESSION MAY BE ISSUED IN ACCORDANCE WITH THE PENNSYLVANIA RULES OF CIVIL PROCEDURE.  If for any reason after such action shall have been commenced it shall be determined and possession of the Premises remain in or be restored to Tenant, Landlord shall have the right for the same default and upon any subsequent default(s) or upon the termination of this Lease or Tenant's right of possession as herein set forth, to again confess judgment as herein provided, for which this Lease or a true and correct copy hereof shall be good and sufficient warrant.
Initials on behalf of Tenant: /s/ D.C.
(h)    The warrant to confess judgment set forth above shall continue in full force and effect and be unaffected by amendments to this Lease or other agreements between Landlord and Tenant even if any such amendments or other agreements increase Tenant's obligations or expand the size of the Premises.
(i)    EXCEPT FOR NOTICES EXPRESSLY REQUIRED TO BE GIVEN TO TENANT UNDER THIS SECTION 22 AND/OR THE PENNSYLVANIA RULES OF CIVIL PROCEDURE, TENANT EXPRESSLY AND ABSOLUTELY KNOWINGLY AND EXPRESSLY WAIVES AND RELEASES (i) ANY RIGHT, INCLUDING, WITHOUT LIMITATION, UNDER ANY APPLICABLE STATUTE, WHICH TENANT MAY HAVE TO RECEIVE A NOTICE TO QUIT PRIOR TO LANDLORD COMMENCING AN ACTION FOR REPOSSESSION OF THE PREMISES, AND (ii) ANY PROCEDURAL ERRORS IN CONNECTION WITH THE ENTRY OF ANY SUCH JUDGMENT OR IN THE ISSUANCE OF ANY ONE OR MORE WRITS OF POSSESSION THEREON.
Initials on behalf of Tenant: /s/ D.C.
(j)    Notwithstanding anything to the contrary contained in this Section 22, Tenant does not hereby waive or relinquish its right, pursuant to the Pennsylvania Rules of Civil Procedure, to file a petition to strike and/or open a judgment confessed by Landlord hereunder.
(k)    Landlord shall not be in default under this Lease unless Landlord fails to commence performance of the obligations required of Landlord within thirty (30) days after receipt of written notice by Tenant to Landlord specifying that Landlord has failed to perform such obligation, provided, however, that if the nature of Landlord’s obligation is such that more than the specified cure period is required for performance, then Landlord shall not be in default if Landlord commences performance within the specified cure period and thereafter diligently prosecutes the same to completion.  In the event Landlord does not commence performance within the period provided herein, then in addition to any other rights of Tenant granted under this Lease, upon not less than five (5) days additional prior written notice from Tenant to Landlord after the end of the cure period that Tenant intends to perform the obligation on Landlord’s behalf, Tenant shall have the right, but not the obligation, to take such minimum action as is reasonably necessary under the circumstances to perform such obligation.  All work done in accordance herewith must be performed at a reasonable and competitive cost and expense (taking into account the circumstances of the obligation).  To the extent such work performed by Tenant is Landlord’s responsibility under this Lease, Landlord shall reimburse Tenant, within 30 days after Landlord’s receipt of a reasonably documented invoice therefor, for any reasonable sums paid or reasonable costs incurred by Tenant in curing the default.  If Landlord fails to reimburse Tenant within 30 days after Landlord’s receipt of a reasonably documented invoice therefor, for any reasonable sums paid or reasonable costs incurred by Tenant in curing Landlord’s default in accordance with the terms, conditions and provisions of this Section, then Tenant may bring an action for damages against Landlord to recover such costs, fees and expenses, together with interest thereon at Interest Rate, and reasonable attorney’s fees incurred by Tenant in bringing such action for damages.
23.    Tenant’s Authority.  Tenant represents and warrants to Landlord that:  (a) Tenant is duly formed, validly existing and in good standing under the laws of the state under which Tenant is organized, and qualified to do business in the state in which the Premises is located, and (b) the person(s) signing this Lease are duly authorized to execute and deliver this Lease on behalf of Tenant.

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24.    Liability of Landlord; Liability of Tenant.  
(a)    The word “Landlord” in this Lease includes the Landlord executing this Lease as well as its successors and assigns, each of which shall have the same rights, remedies, powers, authorities and privileges as it would have had it originally signed this Lease as Landlord.  Any such person or entity, whether or not named in this Lease, shall have no liability under this Lease after it ceases to hold title to the Premises except for obligations already accrued.  Tenant shall look solely to Landlord’s successor in interest for the performance of the covenants and obligations of the Landlord hereunder which subsequently accrue.  In no event shall Landlord be liable to Tenant for any loss of business or profits of Tenant or for consequential, punitive or special damages of any kind.  Neither any principal, shareholder, officer, director, partner, member or manager of Landlord nor any owner of the Premises, whether disclosed or undisclosed, shall have any personal liability with respect to any of the provisions of this Lease or the Premises; Tenant shall look solely to the equity of Landlord in the Premises (including, without limitation, rents, condemnation awards, insurance and sale proceeds) for the satisfaction of any claim by Tenant against Landlord.
(b)    The individual principals, shareholders, officers, directors, partners, members or managers of Tenant shall have absolutely no personal liability with respect to any provision of this Lease, or any obligation or liability arising therefrom or in connection therewith.  Landlord shall look solely to the assets of Tenant and its successors and assigns or to any insurance which Tenant is obligated to provide under the terms of this Lease for the satisfaction of any remedies of Landlord in the event of a breach by Tenant of any of its obligations thereunder.  Notwithstanding anything to the contrary contained in this Lease, Tenant shall not be liable for any loss of business or profits of Landlord or for consequential, punitive or special damages of any kind under this Lease, unless due to a holdover by Tenant pursuant to Section 21(b) or unless due to contamination of the Premises or the Building by Tenant or its Agents pursuant to Section 10(d).
25.    Miscellaneous.
(a)    The captions in this Lease are for convenience only, are not a part of this Lease and do not in any way define, limit, describe or amplify the terms of this Lease.
(b)    This Lease represents the entire agreement between the parties hereto and there are no collateral or oral agreements or understandings between Landlord and Tenant with respect to the Premises.  No rights, easements or licenses are acquired in the Premises or any land adjacent to the Premises by Tenant by implication or otherwise except as expressly set forth in this Lease.  This Lease shall not be modified in any manner except by an instrument in writing executed by the parties.  The masculine (or neuter) pronoun and the singular number shall include the masculine, feminine and neuter genders and the singular and plural number.  The word “including” followed by any specific item(s) is deemed to refer to examples rather than to be words of limitation.  The word “person” includes a natural person, a partnership, a corporation, a limited liability company, an association and any other form of business association or entity.  Both parties having participated fully and equally in the negotiation and preparation of this Lease, this Lease shall not be more strictly construed, nor any ambiguities in this Lease resolved, against either Landlord or Tenant.
(c)    Each covenant, agreement, obligation, term, condition or other provision contained in this Lease shall be deemed and construed as a separate and independent covenant of the party bound by, undertaking or making the same, not dependent on any other provision of this Lease unless otherwise expressly provided.  All of the terms and conditions set forth in this Lease shall apply throughout the Term unless otherwise expressly set forth herein.
(d)    If any provisions of this Lease shall be declared unenforceable in any respect, such unenforceability shall not affect any other provision of this Lease, and each such provision shall be deemed to be modified, if possible, in such a manner as to render it enforceable and to preserve to the extent possible the intent of the parties as set forth herein.  This Lease shall be construed and enforced in accordance with the laws of the state in which the Premises is located.
(e)    This Lease shall be binding upon and inure to the benefit of Landlord and Tenant and their respective heirs, personal representatives and permitted successors and assigns.  All persons liable for the obligations of Tenant under this Lease shall be jointly and severally liable for such obligations.
(f)    This Lease may be executed in counterparts, each of which shall constitute an original, but which, taken together, shall be one original agreement.  Any counterpart of this Lease may be executed and delivered by telephone facsimile transmission (or by similar electronic transmission (including, without limitation, e-mail) or by portable document format (including, without limitation, pdf)) and shall have the same force and effect as an original.

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(g)    Tenant shall not record this Lease or any memorandum thereof, or otherwise file this Lease with any governmental authority, without Landlord’s prior consent, except to the extent required to do so by Law.  If Tenant is so required to do so by Law, then: (i) Tenant shall promptly provide Landlord with written notice of any such obligation and a copy of any required filing; and (ii) Tenant shall only disclose those provisions, terms and conditions of this Lease that are required to be disclosed by Law and shall keep confidential all of the provisions, terms and conditions of this Lease not required to be disclosed by Law.
26.    Notices.  Any notice, consent or other communication under this Lease shall be in writing and addressed to Landlord or Tenant at their respective addresses specified in Section 1 above (or to such other address as either may designate by notice to the other) with a copy to any Mortgagee or other party designated by Landlord.  Each notice or other communication shall be deemed given if sent by prepaid overnight delivery service or by certified mail, return receipt requested, postage prepaid or in any other manner, with delivery in any case evidenced by a receipt, and shall be deemed to have been given on the day of actual delivery to the intended recipient or on the business day delivery is refused.  The giving of notice by Landlord’s attorneys, representatives and agents under this Section shall be deemed to be the acts of Landlord.
27.    Intentionally Omitted.  
28.    Construction of the Building and the Tenant Improvements.
(a)    The Building and all site work and other improvements to be constructed in connection therewith (including, without limitation, the lighting system, utility systems, life safety system and fire suppression system) (the “Base Building Work”) shall be constructed by Landlord in accordance with the base building plans (the “Base Building Plans”) attached hereto as Exhibit “E” and the outline specifications attached hereto as Exhibit “F” (the “Base Building Specifications”).  The interior improvements and any other modifications to the Building (the “Tenant Improvements” and, together with the Base building Work, collectively, the “Landlord’s Work”) shall be constructed by Landlord generally in accordance with the preliminary plans attached hereto as Exhibit “G” (the “Tenant Improvement Plans”) and the outline specifications attached hereto as Exhibit “H” (the “Tenant Improvement Specifications”); provided, however, that if the Tenant Improvement Plans and Tenant Improvement Specifications are not attached hereto upon full execution of this Lease by Landlord and Tenant, then Landlord and Tenant shall expeditiously, diligently and in good faith use their best efforts to cause the Tenant Improvement Plans and Tenant Improvement Specifications to be mutually agreed upon on or before September 3, 2014, which mutually agreed upon Tenant Improvement Plans and Tenant Improvement Specifications shall be automatically incorporated into and made a part of this Lease without necessity of further action.  
(b)    Promptly after Landlord and Tenant mutually agree upon the Tenant Improvement Plans and Tenant Improvement Specifications, Landlord, at Tenant’s sole cost and expense, shall cause its architect to prepare “Construction Drawings” consistent with the Tenant Improvement Plans and the Tenant Improvements Specifications, but excluding the Post Substantial Completion Work (as defined below), in sufficient detail to obtain all governmental permits and approvals required to complete the Tenant Improvements.  Upon completion of the Construction Drawings, Landlord shall deliver the Construction Drawings to Tenant.  The Construction Drawings shall be subject to Tenant’s approval, which approval shall not be unreasonably withheld, conditioned or delayed, and which approval shall be deemed granted if Tenant fails to give Tenant’s Notice (as hereinafter defined) to Landlord within five (5) business days after Tenant’s receipt of the Construction Drawings.  Following Tenant’s receipt of the Construction Drawings, Tenant shall have five (5) business days in which to review the Construction Drawings and to give to Landlord written notice (“Tenant’s Notice”) of Tenant’s approval of the Construction Drawings, or its approval noted with any reasonable comments and revisions, in each case, such approval(s) not to be unreasonably withheld, conditioned or delayed.  Landlord shall have three (3) business days after receipt of Tenant’s Notice to review the Construction Drawings, and any Tenant comments and revisions, and to provide Tenant with Landlord’s approval of the Construction Drawings, or its approval noted with any reasonable comments and revisions, in each case, such approval(s) not to be unreasonably withheld, conditioned or delayed.  This process, each party having three (3) business days to respond to the other’s comments, shall continue until the Construction Drawings have been approved by both parties, provided, however, that Landlord and Tenant shall expeditiously, diligently and in good faith use their best efforts to cause the Construction Drawings to be mutually agreed upon on or before October 13, 2014, which mutually agreed upon Construction Drawings shall hereinafter be referred to as the “Approved Tenant Improvement Documents” and shall be automatically incorporated into and made a part of this Lease without the necessity of further action.   The Approved Tenant Improvement Documents shall be used by Landlord in connection with Landlord’s construction of the Tenant Improvements.
(c)    Landlord shall have the right, from time to time, to make reasonable and non-material changes/field adjustments in and to the Base Building Documents and the Approved Tenant Improvement Documents to the extent that the same shall be 

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necessary or desirable in order to adjust to actual field conditions or to cause the Base Building Work or the Tenant Improvements to comply with any applicable requirements of public authorities and/or requirements of insurance bodies.  All such changes/field adjustments shall be noted on the applicable plans or documents.  Except for changes/field adjustments (which may be made immediately but confirmed by written change order), modifications to the Approved Tenant Improvement Documents must be made and accepted only in writing as follows: within 5 business days of receipt by Landlord of Tenant’s request to Landlord for a change order (which request, if not in writing, shall be made directly to Landlord’s construction representative in person or by telephone), Landlord shall advise Tenant in writing if it approves of the requested change, which shall not be unreasonably withheld, and, if so, provide Tenant with the following items: (i) a cover sheet summarizing the cost of the change and advising if such change order will increase project costs or result in delay of completion; (ii) itemization of the contractor’s costs (including line items per trade and unit costs); and (iii) architect drawings, if applicable.  If acceptable to Tenant, Tenant shall promptly sign the cover sheet and return it to Landlord by fax (with a copy thereof by overnight mail) and such documentation will constitute an amendment to this Lease.  The costs of any such change requested by Tenant and approved by Landlord shall be paid by Tenant to Landlord within 30 days after receipt of invoice therefor.
(d)    Prior to construction of the Tenant Improvements, Landlord shall obtain bids for the performance of the Tenant Improvements from at least three (3) contractors reasonably selected by Landlord.  Landlord shall provide Tenant with a copy of such bids and allow Tenant to review and comment on the bids and proposed construction contract.  Landlord, in Landlord’s commercially reasonable discretion, shall accept the lowest responsible and responsive bid.  
(e)    Landlord shall be responsible for obtaining all necessary building permits and other governmental permits and approvals necessary for construction of the Base Building Work and the Tenant Improvements.  Tenant shall cooperate with Landlord, at no cost to Tenant, in Landlord’s efforts to obtain such permits and other approvals.  All construction comprising the Tenant Improvements shall be commenced promptly after (i) Landlord has received all permits and approvals required by the governmental authorities having jurisdiction for the construction of the Tenant Improvements, and (ii) the Base Building Work has been completed to a degree that permits commencement of construction of the Tenant Improvements.  The Landlord’s Work shall be constructed by Landlord in a good and workmanlike manner and shall comply, at the time of Substantial Completion thereof, with (i) all Laws (including the ADA), and (ii) the Base Building Documents and the Approved Tenant Improvement Documents.  The Landlord’s Work, except for that portion of the Landlord’s Work set forth on Exhibit “K” attached hereto (the “Post Substantial Completion Work”) shall be Substantially Completed and ready for use and occupancy by Tenant on or before December 31, 2014, subject to Excusable Delays (as hereinafter defined).  As used in this Lease, “Substantial Completion” or “Substantially Complete” or “Substantially Completed” shall mean the date that: (i) Landlord has delivered to Tenant physical possession of, and access to, the Building; and (ii) Landlord has completed all of the Landlord’s Work (other than the Post Substantial Completion Work) in accordance with the Base Building Documents and the Approved Tenant Improvement Documents, subject only to incomplete minor items which do not adversely affect in a material way or materially interfere with Tenant’s use and occupancy of the Building, which incomplete items shall be set forth on the Punch List (as hereinafter defined).  Notwithstanding the foregoing, the time for Substantial Completion shall be extended for additional periods of time equal to the time lost by reason of Force Majeure and/or Tenant Delay (as hereinafter defined) (collectively, “Excusable Delays”).  
(f)    Landlord agrees to complete the Tenant Improvements, at Tenant’s sole cost and expense, equal to the aggregate of all reasonable costs, expenses and fees incurred by or on behalf of Landlord in connection therewith (the “Tenant’s Cost”), including without limitation (i) architectural, engineering and design costs, (ii) the cost charged to Landlord by Landlord’s general contractor and all subcontractors for performing the Tenant Improvements, and (iii) the cost to Landlord of performing directly any portion of the Tenant Improvements.  Landlord agrees to credit Tenant with an allowance (the “Tenant Allowance”) equal to the lesser of the Tenant’s Cost or $5,771,500.00.  Tenant agrees to pay to Landlord, within 10 days after being billed therefor, the excess (if any) of the Tenant’s Cost above the Tenant Allowance.  If the Tenant’s Costs are more than the Tenant Allowance, then, at Tenant’s option, Landlord will credit Tenant with an additional allowance for up to $800,000.00 (the “First Additional Allowance”) of the excess of the Tenant’s Costs above the Tenant Allowance, provided, however, that the First Additional Allowance shall be capitalized at the rate of 10% per annum, over the remainder of the initial Term of this Lease.  In such event, Minimum Annual Rent and the monthly installments thereof shall be increased by amendment to this Lease to reflect such capitalization.  (For example, if Tenant utilizes the entire $800,000.00, then Minimum Annual Rent shall increase each year by $80,000.00 per year.)  If the Tenant’s Costs are more than the sum of the Tenant Allowance plus the First Additional Allowance, then, at Tenant’s option, Landlord will credit Tenant with another additional allowance for up to $400,000.00 (the “Second Additional Allowance”) of the excess of the Tenant’s Costs above the sum of the Tenant Allowance plus the First Additional Allowance, provided, however, that the Second Additional Allowance, together with interest thereon at the rate of 8.5% per annum, shall be amortized over the remainder of the initial Term of this Lease.  In such event, Minimum Annual Rent and the monthly installments thereof shall be increased by amendment to this Lease to reflect such amortization.  (For example, 

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if Tenant utilizes the entire $400,000.00, then Minimum Annual Rent shall increase each year by $76,015.13 per year.)  Landlord shall have no further obligations to pay for any costs incurred in connection with the Tenant Improvements.
(g)    At the time of completion of the Landlord’s Work, Landlord, in consultation with Tenant, shall generate a punch list of all asserted incomplete work items in the Landlord’s Work (the “Punch List”).  Landlord shall complete all items on the Punch List within a commercially reasonable time following the date of the generation of the Punch List, unless the nature of the incomplete work item listed therein is such that a longer period of time is required to repair or correct the same or unless due to Force Majeure or Tenant Delay.
(h)    For purposes hereof, “Force Majeure” shall mean time actually lost by Landlord or Landlord’s contractors, subcontractors or suppliers due to governmental restrictions, limitations and delays (including, without limitation, delays in the issuance of any governmental permit, license and/or approval required to complete the Landlord’s Work), scarcity, unavailability or delay in obtaining fuel or materials, war or other national emergency, accidents, floods, defective materials, fire damage or other casualties, adverse weather conditions which reasonably prevent Landlord from pursuing construction activities in a normal manner, or any other cause similar or dissimilar to the foregoing beyond the reasonable control of Landlord or Landlord’s contractors, subcontractors or suppliers.
(i)    For purposes hereof, the terms “Tenant Delay” or “Delay caused by Tenant” shall mean delay in completion of construction of the Landlord’s Work caused by: (A) delay (beyond the time frames set forth in subsection (b) above) by Tenant in submission or approval of the Construction Drawings; (B) the interference of Tenant with the Landlord’s Work; or (C) any subsequent changes, modifications, or alterations requested by Tenant or its Agents to any of the plans and specifications of the Landlord’s Work, which reasonably cause delay in the completion thereof. 
(j)    For purposes of determining a Tenant Delay, the term Tenant shall include Tenant’s contractors, agents and employees.  Landlord shall promptly provide Tenant with written notice of any Tenant Delay and then again provide Tenant with written notice that Tenant has cured such Tenant Delay if and when Tenant cures same.  In the event that Landlord has made a reasonable request for a certain approval or item to be provided by Tenant by a certain date (which, except in an emergency and as otherwise expressly set forth hereunder, shall never be less than 24 hours) and Tenant fails to reply or provide said item by said date, no further written notice need be provided by Landlord in the event that Tenant fails to meet such deadline in order for Landlord to claim a Tenant Delay.  
(k)    If the date of Substantial Completion of the Landlord’s Work is delayed by Tenant or its Agents, the Landlord’s Work shall be deemed to be Substantially Complete on the date that the Landlord’s Work would have been Substantially Completed but for such delays.
(l)    Tenant and its Agents shall have the right, at Tenant’s own risk, expense and responsibility, at all reasonable times prior to the Commencement Date but on or after November 1, 2014, to enter the Building for the sole and exclusive purpose of taking measurements and installing its furnishings, fixtures and equipment (including, without limitation, its telecommunication and/or data wiring and/or cabling), provided that (i) Tenant does not interfere with or delay the Landlord’s Work, (ii) Tenant uses contractors and workers compatible with the contractors and workers engaged by Landlord, (iii) the Building may be legally occupied by Tenant and its Agents for such purpose, and (iv) Tenant obtains Landlord’s prior consent, which consent shall not be unreasonably withheld, conditioned or delayed.  If Tenant and its Agents enter the Building prior to the Commencement Date pursuant to the foregoing sentence, then Tenant shall abide by the terms and conditions of this Lease as if the Term of this Lease had already commenced, except that Tenant shall have no obligation to pay the Minimum Annual Rent or Annual Operating Expenses or any portion thereof until the Commencement Date.  Such entry by Tenant and its Agents prior to the Commencement Date in accordance with the first sentence of this paragraph shall not constitute possession of the Premises for the conduct of Tenant’s business for purposes of Section 1(d) of this Lease.
(m)    Landlord guarantees, for a period of one (1) year following the Commencement Date, (i) the Tenant Improvements against defective workmanship and/or materials or non-compliance with the Approved Tenant Improvement Documents, and (ii) that the Building, including the roof, roof membrane, flashing, floors, walls, doors, dock doors and all other mechanical systems, are and shall be in good, operable condition.  Landlord agrees, during said one-year period at its sole cost and expense, to (i) repair or replace any defective item occasioned by defective workmanship and/or materials or non-compliance with the Approved Tenant Improvement Documents, and (ii) make all necessary repairs to keep the Building, including the roof, floors, walls, doors, dock doors and all other mechanical systems in good, operable condition.  Landlord agrees, upon Tenant’s reasonable prior request, to jointly inspect the Premises with a representative of Tenant at any time during the one year guaranty period.  In addition to the general warranty set forth above, Landlord covenants and agrees to obtain, and enforce for Tenant’s 

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benefit, manufacturer's warranties with respect to the Tenant Improvements, as set forth in Exhibit “I” attached hereto and incorporated herein by reference.  Notwithstanding anything in this paragraph to the contrary, in no event shall Landlord be obligated to make repairs or replacements to items due to (i) Tenant’s failure to properly maintain any portions of the Building or the Premises or any systems contained thereon that Tenant is required to maintain pursuant to this Lease, or (ii) any act or omission of Tenant or its Agent.
(n)    Landlord acknowledges that the construction of the Tenant Improvements is to be administered on an “open book” arrangement relative to the cost of the Tenant Improvements.  Landlord shall keep full and detailed accounts and exercise such controls as may be reasonably necessary for proper financial management, using accounting and control systems in accordance with sound accounting principles, consistently applied.  Tenant shall be permitted to review Landlord's records relating to the cost of construction of the Tenant Improvements.
(o)    “Tenant’s Construction Representative” for purposes of the Landlord’s Work shall be John Appert.  “Landlord’s Construction Representative” for purposes of Landlord’s Work shall be Mike Alderman.  Tenant and Landlord acknowledge and agree that Tenant’s Construction Representative and Landlord’s Construction Representative shall have full power and authority to act on their respective behalf and any action taken by either of them shall be fully binding upon Tenant or Landlord, respectively, for purposes of the Landlord’s Work.
(p)    Landlord shall pay any initial fee, tap-in fee, impact fee, connection fee or similar fee charged for initially bringing and connecting utilities, including water and sewer lines, to the Building for general industrial uses and purposes (excluding customer deposits or administrative type of connection fees), but only to the extent Tenant elects the power service type and design set forth in Exhibit “E” and Exhibit “F” attached hereto as of the date hereof. 
(q)    Tenant acknowledges and agrees that (i) the Post Substantial Completion Work will not be substantially completed by the date of Substantial Completion, and (ii) the date of Substantial Completion is not contingent upon the substantial completion of the Post Substantial Completion Work.  Landlord will proceed with diligence to complete the Post Substantial Completion Work within a commercially reasonable time under circumstances, subject to (i) Tenant selections of scope and design items relating to the Post-Substantial Completion Work, (ii) accommodations for order lead times of materials relating to the Post-Substantial Completion Work, (iii) accommodations for permitting (by municipal and utility providers) relating to the Post-Substantial Completion Work, (iv) Tenant coordination and/or completion of the installation of Tenant’s trade fixtures, and (v) Excusable Delays.  
29.    Options to Renew.
(a)    Provided that Landlord has not given Tenant notice of monetary default or material non-monetary default more than three (3) times in the immediately preceding 12 month period, that there then exists no Event of Default by Tenant under this Lease, nor any event that with the giving of notice and/or the passage of time would constitute an Event of Default, and that Tenant and/or its Affiliate is/are the sole occupant(s) of the Premises, Tenant shall have the right and option to extend the Term of this Lease for four (4) additional periods of sixty (60) months each, exercisable by giving Landlord prior written notice, on or before that date that is ten (10) months prior to the then current Expiration Date, of Tenant’s election to extend the Term of this Lease; it being agreed that time is of the essence and that this option is personal to Tenant and any assignee or sublessee to whom Tenant is permitted to transfer this Lease without Landlord’s consent pursuant to Section 18(b), and is non-transferable to any other assignee or sublessee (regardless of whether any such assignment or sublease was made with or without Landlord’s consent) or other party.
(b)    Such extensions shall be under the same terms and conditions as provided in this Lease except as follows:
(i)    each additional term shall begin on the day after the then current Expiration Date and thereafter the Expiration Date shall be deemed to be the date that is five (5) years after the then current Expiration;
(ii)    there shall be only three (3) further options to extend following the first renewal, two (2) further options to extend following the second renewal, one (1) further option to extend following the third renewal and no further options to extend after the fourth renewal; and
(iii)    the Minimum Annual Rent for each year of the additional period shall be equal to the greater of (i) the Minimum Annual Rent payable in the immediately preceding Lease Year, or (ii) 95% of the fair market rental value of the Premises and annual increases in fair market rental value (collectively, the “FMR”) applicable at the time Tenant exercises such option (but in no event prior to the date that is ten (10) months before the then current Expiration Date).  In determining the fair market rental value of the Premises and fair market annual increases in such rental value, Landlord shall take into account and make appropriate adjustments to reflect current market terms, conditions and concessions for similar renewal transactions in similar 

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industrial buildings that are then generally available in the market area (and taking into account whether such terms, conditions and concessions are being made available by Landlord) at the time Tenant exercises such option (but in no event prior to the date that is ten (10) months before the then current Expiration Date).
(c)    Unless Landlord accepts as Tenant’s Minimum Annual Rent obligation for each year of an additional period an amount equal to the Minimum Annual Rent payable in the immediately preceding Lease Year (the “Prior Rent Alternative”), within fifteen (15) days after Landlord receives notice of Tenant’s exercise of the option to extend the Term of this Lease, but in no event prior to the date that is ten (10) months before the then current Expiration Date, Landlord will give notice to Tenant (the “Rent Notice”) of Landlord’s opinion of the FMR and comparing the FMR to the Minimum Annual Rent payable in the immediately preceding Lease Year.  If Tenant does not respond to the Rent Notice within fifteen (15) days after receiving it, Landlord’s opinion of the FMR shall be deemed accepted as the Minimum Annual Rent due for each Lease Year of the additional period.  If, during such fifteen (15) day period, Tenant gives Landlord notice that Tenant contests Landlord’s determination of the FMR (an “Objection Notice”), which notice must contain therein Tenant’s opinion of the FMR, the parties will attempt to arrive at a mutually agreeable Minimum Annual Rent for each Lease Year of the additional period, which, in no event, shall be less than the Prior Rent Alternative.  When the parties come to an agreement, they will both execute an amendment to this Lease establishing the Minimum Annual Rent for each Lease Year of the additional period.
(d)    If Landlord and Tenant cannot agree as to the FMR within fifteen (15) days after Landlord’s receipt of the Objection Notice, the FMR shall be determined by appraisal.  Within ten (10) days after the expiration of such fifteen (15) day period, Landlord and Tenant shall give written notice to the other setting forth the name and address of an appraiser designated by the party giving notice.  All appraisers selected shall be members of the American Institute of Real Estate Appraisers and shall have had at least ten (10) years continuous experience in the business of appraising industrial buildings in the market area.  If either party shall fail to give notice of such designation within the time period provided, then the party who has designated its appraiser (the “Designating Party”) shall notify the other party (the “Non-Designating Party”) in writing that the Non-Designating Party has an additional ten (10) days to give notice of its designation, otherwise the appraiser, if any, designated by the Designating Party shall conclusively determine the FMR.  If two appraisers have been designated, such appraisers shall attempt to agree upon the FMR.  If the two appraisers do not agree on the FMR within twenty (20) days of their designation, the two appraisers shall designate a third appraiser.  If the two appraisers shall fail to agree upon the identity of a third appraiser within five (5) business days following the end of such twenty (20) day period, then either Landlord or Tenant may apply to the American Arbitration Association, or any successor thereto having jurisdiction, for the settlement of the dispute as to the designation of the third appraiser and the American Arbitration Association shall designate a third appraiser in accordance with the Real Estate Valuation Arbitration Rules of the American Arbitration Association.  The three appraisers shall conduct such hearings as they may deem appropriate, shall make their determination of the FMR in writing and shall give notice to Landlord and Tenant of such determination within twenty (20) days after the appointment of the third appraiser.  If the three appraisers cannot agree upon the FMR, each appraiser shall submit in writing to Landlord and Tenant the FMR as determined by such appraiser.  The FMR for the purposes of this paragraph shall be equal to the arithmetic average of the two closest determinations of FMR submitted by the appraisers.  Each party shall pay its own fees and expenses in connection with any appraiser selected by such party under this paragraph, and the parties shall share equally all other expenses and fees of the arbitration, including the fees and expenses charged by the third appraiser.  The FMR as determined in accordance with the provisions of this Section shall be final and binding upon Landlord and Tenant.  Notwithstanding anything contained in this Section to the contrary, in no event shall Tenant’s Minimum Annual Rent obligation for each year of the additional period be an amount that is less than the Prior Rent Alternative.
30.    Parking.  Tenant shall have the exclusive right, at Tenant’s sole risk and responsibility, to use all of the parking spaces in that certain parking area of the Premises delineated on Exhibit “A” attached hereto as the “Parking Area”.  Landlord shall have no obligation to police usage of the Parking Area or to enforce Tenant’s exclusive rights with respect thereto.
31.    Brokers.  The parties agree that they have dealt with no brokers in connection with this Lease, except for Proventure, whose commission shall be paid by Landlord pursuant to separate agreement.  Each party agrees to indemnify and hold the other harmless from any and all claims for commissions or fees in connection with the Premises and this Lease from any other real estate brokers or agents with whom they may have dealt.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES ON FOLLOWING PAGE]

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Landlord and Tenant have executed this Lease on the respective date(s) set forth below.
	
					
	 
	 
	Landlord:
	 
	 

	 
	 
	LIBERTY PROPERTY LIMITED PARTNERSHIP

	 
	 
	By: Liberty Property Trust, its sole general partner

	Date signed:
	 
	 
	 
	 

	September 8, 2014
	By:
	/s/ Robert Kiel    

	 
	 
	 
	Name: Robert Kiel

	 
	 
	 
	Title: Senior Vice President and City Manager

	 
	 
	 
	 
	 

	 
	 
	By:
	/s/ George J. Alburger Jr.    

	 
	 
	 
	Name: George J. Alburger Jr.

	 
	 
	 
	Title: Chief Financial Officer

	 
	 
	 
	 
	 

	Date signed:
	 
	Tenant:
	 
	 

	September 5, 2014
	ZULILY, INC.

	 
	 
	 
	 

	Attest/Witness:
	 
	 

	/s/ Marcia Cardona
	By:
	/s/ Darrell Cavens    

	Name: Marcia Cardona
	 
	Name: Darrell Cavens

	Title: Executive Assistant
	 
	Title: Chief Executive Officer

20

Rider 1 to Lease Agreement
(Multi-Tenant Industrial)
ADDITIONAL DEFINITIONS 

“ADA” means the Americans With Disabilities Act of 1990 (42 U.S.C. § 1201 et seq.), as amended and supplemented from time to time.
“Affiliate” means (i) any entity controlling, controlled by, or under common control of, Tenant, (ii) any successor to Tenant by merger, consolidation or reorganization, and (iii) any purchaser of all or substantially all of the assets of Tenant as a going concern.
“Agents” of a party means such party’s employees, agents, representatives, contractors, licensees or invitees.
“Alteration” means any addition, alteration or improvement to the Building or the Premises, as the case may be.
“Building Rules” means the rules and regulations attached to this Lease as Exhibit “B” as they may be amended from time to time.
“Building Systems” means any electrical, mechanical, plumbing, heating, ventilating, air conditioning, sprinkler, life safety or security systems serving the Building.
“Environmental Laws” means all present or future federal, state or local laws, ordinances, rules or regulations (including the rules and regulations of the federal Environmental Protection Agency and comparable state agency) relating to the protection of human health or the environment.
“Event of Default” means a default described in Section 22(a) of this Lease.
“Hazardous Materials” means pollutants, contaminants, toxic or hazardous wastes or other materials the removal of which is required or the use, treatment, storage or disposal of which is regulated, restricted, or prohibited by any Environmental Law.
“Interest Rate” means interest at the rate of 11⁄2% per month.
“Laws” means all laws, ordinances, rules, orders, regulations, guidelines and other requirements of federal, state or local governmental authorities or of any private association or contained in any restrictive covenants or other declarations or agreements, now or subsequently pertaining to the Premises or the use and occupation of the Premises. 
“Lease Year” means the period from the Commencement Date through the succeeding 12 full calendar months (including for the first Lease Year any partial month from the Commencement Date until the first day of the first full calendar month) and each successive 12-month period thereafter during the Term.
“Maintain” or “Maintenance” means to provide such maintenance, repair and, to the extent necessary and appropriate, replacement, as may be needed to keep the subject property in good condition and repair.  Maintenance also includes utilizing such Building or Building Systems-performance assessment tools or optimizing practices that Landlord in its discretion reasonably deems necessary or appropriate for planning, designing, installing, testing, operating and maintaining the Building, Building Systems and the Premises in a sustainable, energy efficient manner and providing a safe and comfortable work environment, with a view toward achieving improved overall performance and minimizing impact on the environment.
“Monthly Rent” means the monthly installment of Minimum Annual Rent plus the monthly installment of estimated Annual Operating Expenses payable by Tenant under this Lease.
“Mortgage” means any mortgage, deed of trust or other lien or encumbrance on Landlord’s interest in the Premises or any portion thereof, including without limitation any ground or master lease if Landlord’s interest is or becomes a leasehold estate.

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“Mortgagee” means the holder of any Mortgage, including any ground or master lessor if Landlord’s interest is or becomes a leasehold estate. 
“Operating Expenses” means all costs, fees, charges and expenses incurred or charged by Landlord in connection with the ownership, operation, maintenance and repair of, and services provided to, the Premises, including, but not limited to: (i) the charges at standard retail rates for any utilities provided by Landlord pursuant to Section 7 of this Lease; (ii) the cost of insurance carried by Landlord pursuant to Section 8 of this Lease together with the cost of any commercially reasonable deductible (not to exceed $25,000.00 per occurrence) paid by Landlord in connection with an insured loss; (iii) Landlord’s cost to Maintain the Premises, subject to the provisions of subsection (b) of Rider 2 of this Lease; (iv) to the extent not otherwise payable by Tenant pursuant to Section 5 of this Lease, all levies, taxes (including real estate taxes, sales taxes and gross receipt taxes), assessments, liens, license and permit fees, together with the reasonable cost of contesting any of the foregoing (provided that (i) the Operating Expenses reflect the savings resulting from such contest, and (ii) real estate taxes are contested on a contingency basis), which are applicable to the Term, and which are imposed by any authority or under any Law, or pursuant to any recorded covenants or agreements, upon or with respect to the Premises, or any improvements thereto, or directly upon this Lease or the Rent or upon amounts payable by any subtenants or other occupants of the Premises, or against Landlord because of Landlord’s estate or interest in the Premises; (v) the annual amortization (over their estimated economic useful life) of the costs of improvements or replacements that would be classified as a capital expenditure under generally accepted accounting principles consistently applied; (vi) a management fee equal to two percent (2%) of the sum of all Minimum Annual Rent from the Premises; (vii) a property service fee covering employees of and vehicles owned by Landlord providing repair, maintenance and related services to the Premises, and equipment, tools and materials used in connection with and other costs related to such services, all of which shall be consistent with (A) the service level set forth in Rider 2 of this Lease, and (B) the property service fee associated with such service level as set forth in Exhibit “J” to the Lease; and (viii) costs to process the certification or re-certification of the Building pursuant to any applicable environmental or energy rating/bench marking system (such as Energy Star or LEED) including applying, reporting, and tracking costs and related reasonable consultant’s fees associated therewith.  The foregoing notwithstanding, Operating Expenses will not include:  (i) depreciation on the Building (including, without limitation, on the Building Systems and equipment); (ii) financing and refinancing costs (except as provided above), interest on debt or amortization payments on any mortgage, or rental under any ground or underlying lease; (iii) leasing and/or brokerage commissions, advertising expenses, tenant improvements or other costs directly related to the leasing of the Premises; (iv) federal, state, or local income taxes, franchise, gift, transfer, excise, estate, succession, inheritance, excess profits or corporate capital stock tax imposed or assessed upon Landlord, unless such tax or any similar tax is levied or assessed in lieu of all or any part of any taxes includable in Operating Expenses above; (v) depreciation and amortization; (vi) expenses incurred by Landlord to prepare, renovate, repaint, redecorate or perform any other work in any space leased to an existing tenant or prospective tenant of the Building; (vii) expenses incurred by Landlord for repairs or other work occasioned by fire, windstorm, or other insurable casualty or condemnation, to the extent of insurance proceeds (or to the extent of insurance proceeds Landlord would have received if Landlord had maintained the insurance required to be maintained by Landlord hereunder) or condemnation proceeds received by Landlord; (viii) expenses incurred by Landlord to lease space to new tenants or to retain existing tenants, including leasing commissions, advertising and promotional expenditures; (ix) expenses incurred by Landlord to resolve disputes or to enforce or negotiate lease terms with prospective or existing tenants; (x) interest, principal, points and fees, amortization or other costs associated with any debt, and rent payable under any lease to which this Lease is subject, and all costs and expenses associated with any such debt or lease and any ground lease rent, irrespective of whether this Lease is subject or subordinate thereto; (xi) costs of alterations, repairs, capital improvements, equipment replacement and other items which under generally accepted accounting principles are properly classified as capital expenditures, except that the annual amortization of these costs over their estimated economic useful life shall be included to the extent otherwise expressly permitted in this Lease; (xii) expenses for the replacement of any item covered under warranty, to the extent of the warranty; (xiii) costs to correct any penalty or fine incurred by Landlord due to Landlord’s violation of any federal, state or local law or regulation and any interest or penalties due for late payment by Landlord of any of the Operating Expenses; (xiv) costs arising from the negligence or willful misconduct of Landlord or its Agents; (xv) expenses for any item or service which Tenant pays directly to a third party or separately reimburses to Landlord (other than as an Operating Expense) and expenses incurred by Landlord to the extent the same are reimbursable or reimbursed (other than as an Operating Expense) from any other tenants, occupants of the property, or third parties; (xvi) expenses for any item or service not provided to Tenant but exclusively to certain other tenants in the Building; (xvii) salaries of (a) employees above the grade of building superintendent or building manager, and (b) employees to the extent their time is not spent directly in the operation of the Premises; (xviii) Landlord’s general corporate overhead and administrative expenses; (xix) reserves; (xx) fees paid to Affiliates of Landlord to the extent that such fees exceed the customary amount charged for the service provided, (xxi) costs incurred to remediate Hazardous Materials from the Premises, unless and to the extent caused by the acts or omissions of Tenant or its Agents; (xxii) the cost of sculptures, paintings and other objects of art; (xxiii) political and charitable donations attributable to the Premises; (xxiv) any bad debt loss, rent loss or reserves for bad debt or rent loss; (xxv) expenses for the defense of the Landlord’s title to all or any part of the Building or the Land; or (xxvi) costs of correcting any latent defects or design defects 

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in the original construction, materials or equipment in the Building provided that for the purposes of this clause conditions (not occasioned by design or construction defects) resulting from ordinary wear and tear and use shall not be deemed defects.  If Landlord elects to prepay real estate taxes during any discount period, Tenant shall be entitled to any benefit actually realized by Landlord with respect to any such prepayment, provided, however, that the foregoing shall not impose any obligation upon Landlord to prepay real estate taxes.  If and to the extent Landlord actually receives, and actually realizes savings from, any tax rebates, tax abatements, tax incentives or the like with respect to the levies, taxes, assessments, liens, fees and costs for which Tenant shall have paid or shall be obligated to pay Tenant’s Share pursuant to subsection (e) of the first sentence of this paragraph and Section 5 of the Lease, then Tenant shall be entitled to any such benefit (via a pass through to Tenant) after deduction of Landlord's commercially reasonable, out-of-pocket costs, if any, of obtaining any such benefit; provided, however, that the foregoing shall not impose any obligation upon Landlord to pursue any such benefit.  If Landlord elects not to contest real estate taxes or assessments now or subsequently pertaining to the Premises, then Tenant, at Tenant’s sole cost and expense, shall have the right, upon prior written notice to Landlord, to contest such real estate taxes or assessments, in good faith, provided that such contest by Tenant does not (i) subject Landlord or the Premises to any fines, penalties, liens and/or liability, or (ii) result in the rescission of the tax abatement resulting from the LERTA program.  Landlord shall have the right to directly perform (by itself or through an affiliate) any services provided under this Lease provided that the Landlord’s charges included in Operating Expenses for any such services shall not exceed competitive market rates for comparable services.  Landlord shall not be entitled to collect more than 100% of the actual Building Operating Expenses (without duplication) in any year.

“Rent” means the Minimum Annual Rent, Annual Operating Expenses and any other amounts payable by Tenant to Landlord under this Lease.
“Taken” or “Taking” means acquisition by a public authority having the power of eminent domain by condemnation or conveyance in lieu of condemnation.
“Tenant’s Share” means the percentage obtained by dividing the rentable square feet of the Premises by the rentable square feet of the Building, as set forth in Section 1 of this Lease.
“Transfer” means (i) any assignment, transfer, pledge or other encumbrance of all or a portion of Tenant’s interest in this Lease, (ii) any sublease, license or concession of all or a portion of Tenant’s interest in the Premises, or (iii) any transfer of a controlling interest in Tenant

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Rider 2 to Lease Agreement
MAINTENANCE AND REPAIR RESPONSIBILITIES

Maintenance obligations, and the responsibility for payment associated with the performance of such Maintenance, shall be allocated between Landlord and Tenant in accordance with this Rider 2, except as otherwise set forth in Section 9 of this Lease.  
(a)    Landlord’s Obligation to Maintain at Landlord’s Expense.  Landlord, at Landlord’s sole expense, without reimbursement from Tenant, shall (a) Maintain (i) the Building footings, foundations, structural steel columns, girders and the structural aspects of the floor slab and the floor slab’s sub base, and (ii) the main utility lines to the point of connection into the Building (e.g., main electricity and water/sewer service to the Building), and (b) replace, to the extent necessary and appropriate, the Building roof and roof membrane and structural components of the exterior walls; in each case, unless (A) the costs of such Maintenance or replacement would have been covered by warranty but is no longer covered by warranty due to the acts or omissions of Tenant or its Agents, or (B) such Maintenance or replacement is required due to the acts or omissions of Tenant or its Agents, in which event, Tenant agrees to pay to Landlord, within 30 days after being billed therefor, any and all costs incurred by Landlord in performing such Maintenance or replacement.
(b)    Landlord’s Obligation to Maintain at Tenant’s Expense.  Landlord shall Maintain, as an Operating Expense, the following: (i) the Building roof and exterior walls (including, without limitation, exterior façade painting and caulk repair) (except that replacement of the Building roof and structural components of the exterior walls, shall be performed by Landlord, at Landlord’s sole expense, as set forth in subsection (a) above); (ii) the irrigation systems, storm water facilities and detention ponds; and (iii) the driveways, sidewalks, parking, loading and landscaped areas (including, without limitation, fencing (if any), asphalt/concrete and snow and ice removal from sidewalks.  In addition to the foregoing, Landlord shall, as an Operating Expense, be responsible for the following: exterior pest control; exterior window cleaning; exterior stair systems; and sanitary lift stations.  If Tenant becomes aware of any condition that is Landlord’s responsibility to repair under this subsection or subsection (a) above, then Tenant shall promptly notify Landlord in writing of the condition.  Moreover, regardless of who bears responsibility for repair, Tenant shall immediately notify Landlord in writing if Tenant becomes aware of any areas of water intrusion or mold growth in or about the Premises.
(c)    Supplemental Service.  If Tenant requests, and if Landlord is able to furnish, any service or maintenance over and above the scope of services or maintenance required to be provided by Landlord under this Lease, then Tenant shall pay to Landlord, within 10 days after being billed therefor, Landlord’s charge for such supplemental service or maintenance (together with a supplemental service fee of 10% thereof).
(d)    Tenant’s Obligation to Maintain at Tenant’s Expense.  Except as otherwise expressly provided in subsections (a) and (b) above, Tenant shall Maintain, at its sole expense, the following: (i) the Building Systems (including, without limitation, exterior lighting); and (ii) the Building and all fixtures and equipment in the Building (including, without limitation, the wearing surface of the floor slab and the floor slab’s edges and caulking, all dock equipment (including dock doors, levelers, bumpers, dock shelters, ramps and dock lights) and all telephone, telecommunications, data and other communication lines); ordinary wear and tear excepted.  In addition to the foregoing, Tenant, at its sole cost, shall be responsible for the following: security; interior pest control; interior window cleaning; janitorial; trash and recyclables collection services (including dumpsters); office/warehouse lighting (including all bulbs and ballasts); and ceiling tiles.  Tenant shall perform each of its Maintenance obligations (i) with a service provider and a service agreement reasonably acceptable to Landlord and, if applicable, in accordance with any manufacturer’s recommendations and/or warranty requirements, and (ii) provide Landlord with documentation evidencing the satisfactory payment and completion (or results) of any such Maintenance.  All Maintenance by Tenant shall utilize materials and equipment which are comparable to those originally used in constructing the Building.  Tenant, upon receipt and any Landlord request, shall provide Landlord with copies of all written information (including, without limitation, agreements, contracts, records, reports, certificates, invoices and receipts) relating to any Tenant Maintenance hereunder.  Tenant, at its sole expense, will be solely responsible for ensuring that any Maintenance affecting the Building roof is performed in a manner that does not violate the Building’s roof warranty, and Tenant shall be solely responsible for any costs or expenses that are not covered by such warranty.  Notwithstanding the foregoing, if a capital replacement of any heating, ventilation and air conditioning system, or other Building System, equipment or fixture exclusively serving the Premises is required during the Term of this Lease (other than as a result of the acts or omissions of Tenant or its Agents), then Landlord shall replace such system, equipment or fixture exclusively serving the Premises, using Building standard materials, and the cost thereof shall be paid by Landlord and thereafter the cost thereof shall be amortized, at the rate of 10% per annum, over the estimated useful life thereof, and Tenant shall be responsible for paying Landlord, as additional Rent hereunder (in equal monthly installments on the first day of each month during the remaining Term or any extended Term of this Lease), that portion of the 

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costs for such replacement which is attributable to the portion of the useful life of such replacement which falls within the then remaining term or any extended Term of this Lease.
(e)    Tenant’s Failure to Maintain.  If Tenant fails to Maintain the Premises in accordance with this Lease, then Landlord, subject to Tenant’s notice and cure rights expressly provided in this Lease, shall have the rights and remedies set forth in Section 22 of this Lease; provided, however, that in the case of a condition that Landlord reasonably believes poses an imminent threat to life, safety or damage to property, Landlord may take immediate action to correct such failure, and Tenant shall pay to Landlord, within 10 days after being billed therefor, any and all reasonable costs incurred by Landlord in connection with such correction, together with an administrative fee of 10% of such costs.

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EXHIBIT “A”
PLAN SHOWING PREMISES

A-1

EXHIBIT “B”
BUILDING RULES
1.Any sidewalks, lobbies, passages and stairways shall not be obstructed or used by Tenant for any purpose other than ingress and egress from and to the Premises.  Landlord shall in all cases retain the right to control or prevent access by all persons whose presence, in the judgment of Landlord, shall be prejudicial to the safety, peace or character of the Premises.
2.    The toilet rooms, toilets, urinals, sinks, faucets, plumbing or other service apparatus of any kind shall not be used for any purposes other than those for which they were installed, and no sweepings, rubbish, rags, ashes, chemicals or other refuse or injurious substances shall be placed therein or used in connection therewith or left in any lobbies, passages, elevators or stairways.
3.    Tenant shall not impair in any way the fire safety system and shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord, any governmental agency or any insurance company insuring the Building, including without limitation the insurer’s Red Tag Permit System, Hot Work Permit System and all other fire protection impairment procedures.  No person shall go on the roof without Landlord’s prior written permission.
4.    Skylights, windows, doors and transoms shall not be covered or obstructed by Tenant, and Tenant shall not install any window covering which would affect the exterior appearance of the Building, except as approved in writing by Landlord.  Tenant shall not remove, without Landlord’s prior written consent, any shades, blinds or curtains in the Premises.
5.    Without Landlord’s prior written consent, Tenant shall not hang, install, mount, suspend or attach anything from or to any sprinkler, plumbing, utility or other lines.  If Tenant hangs, installs, mounts, suspends or attaches anything from or to any doors, windows, walls, floors or ceilings, Tenant shall spackle and sand all holes and repair any damage caused thereby or by the removal thereof at or prior to the expiration or termination of the Lease.  If Tenant elects to seal the floor, Tenant shall seal the entire unfinished floor area within the Premises.  
6.    Tenant shall not change any locks or place additional locks upon any doors.
7.    Tenant shall not use or keep in the Building any matter having an offensive odor or which may negatively affect the indoor air quality of the Building, or any explosive or highly flammable material; nor shall any animals other than service animals in the company of their handlers be brought into or kept in or about the Premises.
8.    If Tenant desires to introduce electrical, signaling, telegraphic, telephonic, protective alarm or other wires, apparatus or devices, Landlord shall direct where and how the same are to be placed, and except as so directed, no installation boring or cutting shall be permitted.  Landlord shall have the right to prevent and to cut off the transmission of excessive or dangerous current of electricity or annoyances into or through the Building or the Premises and to require the changing of wiring connections or layout at Tenant’s expense, to the extent that Landlord may deem necessary, and further to require compliance with such reasonable rules as Landlord may establish relating thereto, and in the event of non-compliance with the requirements or rules, Landlord shall have the right immediately to cut wiring or to do what it considers necessary to remove the danger, annoyance or electrical interference with apparatus in any part of the Building.  All wires installed by Tenant must be clearly tagged at the distributing boards and junction boxes and elsewhere where required by Landlord, with the number of the office to which said wires lead, and the purpose for which the wires respectively are used, together with the name of the concern, if any, operating same.
9.    Tenant shall not place weights anywhere beyond the safe carrying capacity of the Building.
10.    The use of rooms as sleeping quarters is strictly prohibited at all times.
11.    Tenant shall comply with all parking regulations promulgated by Landlord from time to time for the orderly use of the vehicle parking areas, including without limitation the following: Parking shall be limited to automobiles, passenger or equivalent vans, motorcycles, light four wheel pickup trucks and (in designated areas) bicycles.  No vehicles shall be left in the parking lot overnight without Landlord’s prior written approval.  Parked vehicles shall not be used for vending or any other business or other activity while parked in the parking areas, except that Tenant shall be permitted to have food trucks on the Premises to serve food to its employees and contractors.  Vehicles shall be parked only in striped parking spaces, except for loading and unloading, which shall occur solely in zones marked for such purpose, and be so conducted as to not unreasonably 

B-1

interfere with traffic flow within the Premises.  Employee and tenant vehicles shall not be parked in spaces marked for visitor parking or other specific use.  All vehicles entering or parking in the parking areas shall do so at owner’s sole risk and Landlord assumes no responsibility for any damage, destruction, vandalism or theft.  Tenant shall cooperate with Landlord in any measures implemented by Landlord to control abuse of the parking areas, including without limitation access control programs, tenant and guest vehicle identification programs, and validated parking programs, provided that no such validated parking program shall result in Tenant being charged for spaces to which it has a right to free use under its Lease.  Each vehicle owner shall promptly respond to any sounding vehicle alarm or horn, and failure to do so may result in temporary or permanent exclusion of such vehicle from the parking areas.  Any vehicle which violates the parking regulations may be cited, towed at the expense of the owner, temporarily or permanently excluded from the parking areas, or subject to other lawful consequence.
12.    If Landlord designates the Building as a non-smoking building, Tenant and its Agents shall not smoke in the Building or at the Building entrances and exits or in any other areas around the Building designated by Landlord as non-smoking areas.
13.    If at Tenant’s request, Landlord consents to Tenant having a dumpster at the Premises, Tenant shall locate the dumpster in the area designated by Landlord and shall keep and maintain the dumpster clean and painted with lids and doors in good working order and, at Landlord’s request, locked.
14.    Tenant shall provide Landlord with a written identification of any vendors engaged by Tenant to perform services for Tenant at the Premises (examples: cleaners, security guards/monitors, trash haulers, telecommunications installers/maintenance).
15.    Tenant shall comply with any move-in/move-out rules provided by Landlord.
16.    Tenant shall comply with the following additional sustainability requirements:
a.    Tenant shall provide, within ten (10) days after Landlord’s request from time to time, reasonably requested energy and water consumption data and related information in connection with Tenant’s use of the Premises and all construction, maintenance, repairs, cleaning, trash disposal and recycling relating to the Premises performed by or on behalf of Tenant – all to be used for purposes of monitoring and improving building efficiencies.
b.    Low/No VOC Paint.  Tenant shall use only interior paints and coatings (including primers) meeting the environmental requirements of the current Green SealTM Environmental Standard For Paints And Coatings – GS-11.
c.    Green Cleaning Products.  All cleaning products used in the Premises must be certified under the current Green SealTM Environmental Standard for Industrial and Institutional Cleaners – GS-37.
d.    Recycling.  The following items must be recycled according to local capabilities, guidelines and regulations:  (i) Paper; (ii) Cardboard; (iii) Plastics; (iv) Aluminum Cans/Metals; and (v) Glass.
17.    Tenant shall cause all of Tenant’s Agents to comply with these Building Rules.
18.    Landlord reserves the right to rescind, suspend or modify any rules or regulations, either on a temporary or permanent basis, and to make such other rules and regulations as, in Landlord’s reasonable judgment, may from time to time be needed for the safety, care, maintenance, operation and cleanliness of the Premises.  Notice of any action by Landlord referred to in this section, given to Tenant, shall have the same force and effect as if originally made a part of the foregoing Lease.  New rules or regulations will not, however, be unreasonably inconsistent with the proper and rightful enjoyment of the Premises by Tenant under the Lease.

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EXHIBIT “C”
TENANT ESTOPPEL CERTIFICATE
Please refer to the documents described in Schedule 1 hereto, (the “Lease Documents”) including the “Lease” therein described; all defined terms in this Certificate shall have the same meanings as set forth in the Lease unless otherwise expressly set forth herein.  The undersigned Tenant hereby certifies that it is the tenant under the Lease.  Tenant hereby further acknowledges that it has been advised that the Lease may be collaterally assigned in connection with a proposed financing secured by the Premises and/or may be assigned in connection with a sale of the Premises and certifies both to Landlord and to any and all prospective mortgagees and purchasers of the Premises, including any trustee on behalf of any holders of notes or other similar instruments, any holders from time to time of such notes or other instruments, and their respective successors and assigns (the “Beneficiaries”) that as of the date hereof:
1.    The information set forth in attached Schedule 1 is true and correct.
2.    Tenant is in occupancy of the Premises and the Lease is in full force and effect, and, except by such writings as are identified on Schedule l, has not been modified, assigned, supplemented or amended since its original execution, nor are there any other agreements between Landlord and Tenant concerning the Premises, whether oral or written.
3.    To Tenant’s actual, present knowledge, after due inquiry of Tenant’s facility manager for the Building, all conditions and agreements under the Lease to be satisfied or performed by Landlord have been satisfied and performed.
4.    Tenant is not in default under the Lease Documents, Tenant has not received any notice of default under the Lease Documents, and, to Tenant’s knowledge, there are no events which have occurred that, with the giving of notice and/or the passage of time, would result in a default by Tenant under the Lease Documents.
5.    Tenant has not paid any Rent due under the Lease more than 30 days in advance of the date due under the Lease and Tenant has no rights of setoff, counterclaim, concession or other rights of diminution of any Rent due and payable under the Lease except as set forth in Schedule 1.
6.    To Tenant’s actual, present knowledge, after due inquiry of Tenant’s facility manager for the Building, there are no uncured defaults on the part of Landlord under the Lease Documents.  Tenant has not sent any notice of default under the Lease Documents to Landlord, and, to Tenant’s knowledge, there are no events which have occurred that, with the giving of notice and/or the passage of time, would result in a default by Landlord thereunder, and that at the present time Tenant has no claim against Landlord under the Lease Documents.
7.    Except as expressly set forth in Part G of Schedule 1, there are no provisions for any, and Tenant has no, options with respect to all or any portion of the Premises.
8.    No action, voluntary or involuntary, is pending against Tenant under federal or state bankruptcy or insolvency law.
9.    The undersigned has the authority to execute and deliver this Certificate on behalf of Tenant and acknowledges that all Beneficiaries will rely upon this Certificate in purchasing the Premises or extending credit to Landlord or its successors in interest.
10.    This Certificate shall be binding upon the successors, assigns and representatives of Tenant and any party claiming through or under Tenant and shall inure to the benefit of all Beneficiaries.
IN WITNESS WHEREOF, Tenant has executed this Certificate this ____ day of __________, 2____.
	
					
	 
	 
	Name of Tenant

	 
	 
	 
	 
	 

	 
	 
	By: 
	 
	 

	 
	 
	Title:
	 

C-1

SCHEDULE 1 TO TENANT ESTOPPEL CERTIFICATE
Lease Documents, Lease Terms and Current Status
A.    Date of Lease: 
B.    Parties:
1.    Landlord:
2.    Tenant:
C.    Premises:
D.    Modifications, Assignments, Supplements or Amendments to Lease:

E.    Commencement Date:
F.    Expiration of Current Term:
G.    Option Rights:
H.    Security Deposit Paid to Landlord: $
I.    Current Minimum Annual Rent: $
J.    Current Annual Operating Expenses: $
K.    Current Total Rent: $
L.    Square Feet Demised:

C-2

EXHIBIT “D”
PROHIBITED USES
The following uses are prohibited in or about the Premises:
	
					
	1.
	Automobile/truck maintenance, repair or fueling, except for ancillary mobile refueling and repair work as is required

	 
	for trucks used in any tenant’s warehouse and distribution business;

	2.
	Battery manufacturing or reclamation;

	3.
	Ceramics and jewelry manufacturing or finishing, except for the assembly of finished ceramics and jewelry

	 
	components;

	4.
	Chemical (organic or inorganic) manufacturing;

	5.
	Drum recycling;

	6.
	Dry cleaning;

	7.
	Manufacturing, storage and use of explosives.  For purposes hereof, “explosives” shall mean an explosive material,

	 
	such as TNT, ammunition and/or fireworks;

	8.
	Hazardous Materials, except for (a) storage and distribution of products containing Hazardous Materials, such as,

	 
	perfumes, colognes, fragrances, aerosol cans and building materials, and (b) activities which are incidental to the

	 
	ordinary course of any tenant’s business, kept in reasonable quantities for such incidental activities, and are conducted

	 
	in accordance with all Environmental Laws;

	9.
	Leather production, tanning or finishing;

	10.
	Hospitals; and the processing, treatment or storage of bio-hazardous waste in the Building, other than the storage of

	 
	minimal quantities of such materials, which storage is incidental to the ordinary course of another tenant’s business

	 
	and are stored in accordance with all Environmental Laws;

	11.
	Metal shredding, recycling or reclamation;

	12.
	Metal smelting and refining;

	13.
	Mining;

	14.
	Paint, pigment and coating operations, other than (a) storage and distribution of same, and (b) the minimal use of such

	 
	materials that are prudently used by other tenants in the usual and ordinary course of such other tenants’ business and

	 
	are conducted in accordance with all Environmental Laws;

	15.
	Petroleum refining;

	16.
	Tire and rubber manufacturing; storage of tires in the Building with the exception that a de minimus number of spare

	 
	tires for trucks may be retained;

	17.
	Above-ground and/or underground fuel storage tanks (except for two (2) above-ground fuel tanks not in excess of 1,000

	 
	gallons each).  Landlord acknowledges that Landlord or any other tenant shall be responsible, at Landlord’s or such

	 
	other tenant’s sole cost and expense, for (a) obtaining all permits and approvals required for such fuel tanks, and (b)

	 
	all compliance relating to or arising out of the use or presence of such fuel tanks;

	18.
	Bulk Commercial storage of coffee beans, cocoa beans or powder, fresh fruits or vegetables not packaged for retail

	 
	consumption; and

	19.
	Residential use or occupancy.

D-1

EXHIBIT “E”
BASE BUILDING PLANS
The following drawings, prepared by Allied Construction and its design consultants are incorporated in this Lease by reference:

E-1
PHDATA 4990846_23

EXHIBIT “F”
BASE BUILDING SPECIFICATIONS
LIBERTY PROPERTY TRUST OUTLINE SPECIFICATIONS
800,000 Square Foot Warehouse Building 
Lehigh Valley Industrial Park VII, Lots 3, 4 and 5
Bethlehem, Pennsylvania

Division 1 – General Requirements

1-1    A temporary field office, temporary utilities through Certificate of Occupancy and miscellaneous field expenses associated with the work are included.

1-2    Field engineering and full-time field supervision of the work included.

1-3    Quality control testing for concrete compression testing, testing of FF and FL and steel inspections, will be by the Owner.

1-4    Other specific testing, such as soils testing, etc., that may be required by site conditions or at the Owner’s request, will be by the Owner.

1-5    Builder’s Risk insurance will be by the Owner.
1-6    Provide general liability insurance.
1-7    Provide professional liability insurance (Lloyds BRIT WRAP policy). 
1-8    Provide necessary project scheduling via Primavera P6.
1-9    Provide temporary sanitary facilities during construction period. 
1-10    Provide separate dumpsters for both recycled and landfill waste. 
1-11    Provide for jobsite progress cleanup and final cleaning.
1-12    Provide design services including architectural, structural and MEP disciplines including CA services.

1-13    Provide safety program and oversight including establishment of a designated PA/OSHA Consultation Site.

F-1

1-14    Assist the Owner’s Project Administrator by providing product and recycling data for LEED/USBGC certification requirements.

1-15    Provide site specific project reimbursable cost items such as LAN service, cellular phones, plan & spec reproduction, mailing & shipping costs and shop drawing & submittals.
1-16    Provide construction layout & surveying. 
1-17    Provide temporary protection.

Division 2 – Site Work
2-1    Site improvements will be as shown on the T&M Associates drawings dated 05/22/2012 listed in our attached Exhibit ‘A’ and will include all trench work for electric, gas, phone, water and sewer, and provide sewer connection.
2-2    Site clearing and grubbing of the site as required to install the proposed building, paving, landscaping and utility services. Work includes demolition of the Combo Mill basement including the foundations and walls.

2-3    Soil erosion and control measures will be as required by state and local ordinances.

2-4    Paving for truck traffic will consist of 6.5” 4,000 psi unreinforced concrete. The concrete will also have 3/4” smooth dowels at all cold joints.

2-5    Pedestrian walkways will be four (4) inches thick, reinforced concrete with a broom finish.

2-6    6.5” 4,000 psi reinforced concrete truck aprons will be provided on the perimeter of the building at all loading docks. Aprons will be installed with a brush finish. The concrete will also have 3/4” smooth dowels at all cold joints.

2-7    Landscape work will be by others. Stabilization will be completed by Contractor and included in base site number.

2-8    Contractor to provide the cut and fill analysis for the site.

2-9    Fire hydrant locations will be provided around the building adjacent to the exit stairs or as required by local code.

Division 3 – Concrete
3-1    A continuous concrete strip footing will be provided around the building perimeter under the building foundation wall.

3-2    Concrete footings will be provided under each interior column.

3-3    The floor slab will be a seven (7)-inch thick, 4,000 psi, non-reinforced concrete slab-on- grade finished installed on a 6”stone base to FF 50 FL 35.  Control joints will be “Soff- Cut” throughout the SOG.  Forming for 80 dock levelers and column isolations are included.  The concrete slab will be sealed with L&M Sealhard (one coat).  Joints will not be filled.

F-2

3-4    Diamond Dowels will be placed on 18” OC in the concrete slab and will be installed at all construction joints.

3-5    Exterior perimeter walls will be reinforced concrete tilt-wall construction. These panels will be articulated with an arrangement of horizontal chamfer strips to provide an aesthetically pleasing pattern around the entire building.  All vertical joints will also be chamfered.

3-6    Tilt panels shall be 9.25” thick with 4,000 psi concrete and reinforcing in accordance with the baseline structural design.

3-7    Two (2) drive-in ramps with retaining wall on one side will be provided.

3-8    Galvanized metal stairs with handrails at the dock exit doors will be provided.

Division 4 – Masonry

4-1    Masonry walls, 16’ –0’ @ electrical and mechanical rooms.
Division 5 – Metals

5-1    A structural steel frame consisting of steel columns, open web joists, open trusses and white metal roofing deck will be provided throughout the building. Bay size is based on a 54’ x 54’ grid. Clear height is 36’-0”. Speed Bays shall be 60’0” deep. Structural bracing and expansion joints will be provided as required.

5-2    Miscellaneous metals such as track guards and pit angles will be provided at each loading door.

5-3    A ship ladder will be provided for access to the roof and bollards will be provided at the sprinkler risers, sprinkler test drains, and electrical panels.

Division 6 – Wood & Plastic
6-1    Roof carpentry will include FSC Certified treated wood-blocking at the gutters and around all roof penetrations. Stainless steel anchors will be used to avoid corrosion.

6-2    Plywood backing sheets will be provided for all utility backing panels.

Division 7 – Thermal & Moisture Protection
7-1    The roofing system will be a Firestone fully adhered, reinforced .60-mil EPDM (Elastomeric Membrane) with all necessary accessories, flashings, adhesives and mastics. Roof to meet FM Global 1-90 requirements.

7-2    Insulation of the roof will be 3.25” polyisocyanurate rigid insulation with an R factor of 20.1 to meet current energy codes.

7-3    The roofing system will have a “Red-Shield” 15-year labor and 20-year “membrane” warranty.

7-4    Install 24 gauge Kynar finished 10” gutter system with 8”x8” Kynar finished downspouts.

F-3

		
	7-5
	Two full width expansion joints are included (1,100 total LF). 

7-6    Roof hatch will be provided.

7-7    All joints between the concrete tilt-wall panels will be caulked on the exterior as well as the interior surfaces and will have a backer rod inside the joint.

7-8    Thermax (or similar) perimeter wall insulation to meet the current energy codes is included in the base bid.

Division 8 – Doors & Windows
8-1    An insulated aluminum glass entry system, consisting of double doors with a transom, will be provided at the building office entrance.  The aluminum framing system will receive a clear aluminum finish and the glazing will be tinted. Assume two (2) main office entrances with a pair of 3’0” x 7’0” medium stile aluminum doors with 10” bottom rails with 1” tinted insulated glass.

8-2    Insulated hollow metal doors (18 each) set in hollow metal frames will be provided at all exterior locations. Include transom windows above.

8-3    Eighty (80) 9’ x 10’ manual overhead steel doors will be provided. All overhead doors will be 24-gauge steel front and back panels mounted on a full 2” vertical track, insulated (R value of 17), and will include two lites and weather seal.

8-4    Two (2) 12’ x 14’ overhead steel doors will be provided for drive-in access.  Doors will be 24 gauge front and back panels, insulated (R value of 17), chain hoist, 2” vertical track with two lites and weather seal.

8-5    All egress doors will receive commercial grade hardware and be ADA compliant.

8-6    8’-4” x 8’-4” aluminum and glass window units will be provided at the perimeter walls of the office area, with two intermediate vertical and two intermediate horizontal mullions shall be included, QTY of 12.

8-7    5’ x 5’ clerestory windows in tilt walls will be provided, QTY of 80 (location above dock positions)

Division 9 – Finishes
9-1    Exterior tilt-up walls:

		
	A.
	Surface Preparation:   Power wash entire area to remove debris, dirt and all

contaminants that could impair adhesion.
		
	B.
	Painting:

		
	1st Coat:
	Apply one (1) coat Modac Smooth Waterproofer Smooth, applied at a rate of 60-80 s.f. per gallon.

		
	2nd Coat:
	Apply one (1) coat Conflex Medium Texture, applied at a rate of 70-90 s.f. per gallon.

Colors to be selected.

F-4

		
	C.
	Patching Material:    Concrete Based  Patching Compound (Knife Grade,

Textured White)

9-2    Paint all bollards, exterior railings and hollow metal doors and frames.

Division 10 – Specialties
10-2    Fire extinguishers (60 each) will be provided as required by code.
Division 11 – Equipment
11-1    Eighty (80) 45,000 lb. 7’ x 8’ (Rite Hite Genisys ML987 or McGuire MP 7845) mechanical dock levelers with weather seals will be provided at the overhead doors. 

11-2    Eighty (80) truck dock bumpers, dock seals, and dock lights will be provided at all overhead doors (except the drive-in bays).  Dock seals will be constructed with 40 oz. vinyl with 40 oz. hypalon armor pleats with 8” exposure, and will have fully adjustable head curtains.

Division 12 – Furnishings

Not applicable.

Division 13 – Special Construction

Not applicable.

Division 14 – Conveying Systems

Not applicable.

Division 15 – Mechanical

Plumbing

15-1    Water main will be flanged into the mechanical room 1’0” AFF by the site contractor and as coordinated with Fire Protection vendor.

15-2    A double-check/backflow preventor will be provided on the domestic water main and fire main.  Equipment will comply with local Water Authority.

15-3    Sanitary and water line to be provided for offices, running the full length of the building in the base plumbing proposal.  Sanitary to be installed in an “H” style pattern. Sanitary lines will be 6” PVC.  Water lines to be 3” insulated stainless steel piping loop.  Work includes backflow preventer, floor drain and 40 cleanouts.

F-5

15-4    Domestic hose bibs provided on each side of building, QTY of 4.

15-5    Downspouts will be provided on the building connected to the underground stormwater system. Also, tie-in outside sprinkler pipes to storm water piping.

HVAC

15-6    Eight (8) direct gas-fired unit heaters (rooftop-mounted, Cambridge S1200) will be provided in the warehouse areas to provide 50° measured 5’ from the floor at zero degrees temperature outside.  The units will have a temperature averaging, setback system control. Gas piping to be installed inside the building and not on the roof.  The units will also include the following:  mounting curbs, rain hoods, discharge duct, directional elbows, integral –non-fused disconnect switches, remote control stations and remote space sensors.

Fire Protection

15-7    Closed loop ESFR sprinkler system with K-22 heads throughout the entire facility, with a fire pump and auxiliary jockey pump to maintain flow and pressure. System will comply with new FM Global guidelines for sprinkler systems in storage facilities.

15-8    The sprinkler system will extend through the entire warehouse and incidental office areas and be equipped with required check valves, risers, flow switches, valve tampers and fire department connections.

15-9    Sprinkler system is based on adequate water supply being available from the municipality.  No separate fire tank is included.  If sprinkler system utilizes a fire pump, and we have included hose stations one (1) per every 10,000 s.f. of floor space, taking the connections off the system where the hose station is located (80 locations included).

15-10    Include a 10” DIP fire loop around the exterior of the building.

Division 16 – Electrical

16-1    The building will have one (1) 3,000-amp, 480/277 volt, three-phase service. Electric layout for two (2) tenants and one (1) house meter.

16-2    Power and control wiring for HVAC equipment will be provided.

16-3    Exit and emergency lights will be installed per building code.  Emergency lighting on columns is included.

16-4    T-5 HO fluorescent lighting fixtures with motion sensors will be provided in the warehouse areas and will be coordinated with the sprinkler system. The lighting layout will provide an average of 30 FC, 3’ off the floor prior to racking installation and 35 FC at the column bay adjacent to the loading docks. These fixtures will be installed using a 5’ cord, plug and receptacle arrangement to allow adjustment.

16-5    A fire alarm system will be provided per code and LPT specifications.  Simplex Grinnell is basis of design for proposal.

F-6

16-6    Eighty (80) dock lights (FL40P) will be provided at dock doors with lamps.  Dedicated dock lighting receptacles are included.

16-7    Power for fire pump, sprinkler and electrical room connections are included.

16-8    Site lighting will consist of LED wall pack and pole lighting fixtures as required.

Division 17 – Design

17-1    Architectural and structural engineering services required of the Design-Builder hereunder will be provided by appropriately registered design professionals under agreements with the Design-Builder. Mechanical, electrical, plumbing and fire protection engineering services will be provided by appropriately registered design professionals employed by or under agreements with the Subcontractors responsible for applicable portions of the Project. The delegation of such duties by the Design-Builder to such design professionals shall not relieve the Design-Builder of its full responsibility and liability for the design and construction of the Project as provided in the Contract Documents.
17-2    Structural design data: 
Roof Load
Live load    25 lbs./ft.
Roof and deck    8 lbs./ft.
Mechanical allowance    6 lbs./ft.
Bar joists    3 lbs./ft.

Total to joist    42 lbs./ft.
Beams or joist girders    3 lbs./ft.

Total to beams or joist girders    44 lbs./ft.
Basic Design Wind Load 70 mph Exposure C

Allowable Soil Bearing – 4,000 lbs./ft. Modulus of subgrade reaction – K-100 pci
Seismic Zone – 1 (or per local code) Clear Height
Finish floor to joist girders – 36’-0” measured at the first bay from outside wall.

Building Floor Area
Slab on grade – 800,000 square feet

F-7

F-8

EXHIBIT “G”
TENANT IMPROVEMENT PLANS

Additional plans to be added to this section through the Tenant review and approval and permitting process.

G-1

EXHIBIT “H”
TENANT IMPROVEMENT SPECIFICATIONS
	
		
	Item
	Description

	1
	Landlord will add 2 drive in doors on north side of building.

	2
	Modifications to the Base building loading dock specifications (including but not limited to: relocation of docks to the North wall (75); upgrades to dock equipment; Trailer restraints on all dock doors; loading lamps; etc...)

	3
	Landlord will paint all interior tilt-up walls white with a water base, acrylic, latex "semi-gloss" finish.

	4
	Landlord will complete floor striping of racking and aisle locations throughout the building.

	5
	Landlord will provide Security and IT infrastructure.

	6
	Landlord will construct a Guard Shack on premises.

	7
	Landlord will install an 8' high perimeter chain link fence surrounding the truck court.

	8
	Landlord will provide (2) motorized / powered truck access gates.

	9
	Landlord will complete floor sealing and fill all field floor joints with MM80.  All column base and perimeter wall-to-floor joints shall be caulked with an elastic or semi-elastic caulking material.

	10
	Landlord will install Power distribution and connection for forklift battery chargers.

	11
	Landlord will provide active ventilation to the warehouse in excess of the Base Building Specifications

	12
	Landlord will install a Building Management System to control building ventilation.

	13
	Landlord will install Large Diameter Fans in warehouse.

	14
	Landlord will provide warehouse cooling and air destratification in addition to ventilation provided above.

	15
	Landlord will provide additional power (utility service/transformer).

	16
	Landlord will provide additional power distribution to workstations and MHE in the warehouse.

	17
	Landlord will install exterior LED lighting and provide necessary FC requirements for proposed parking layout.

	18
	Landlord shall provide a Floor Scrubber Clean-out connected to the domestic sanitary sewer system.

	19
	Landlord will construct office area, breakroom and restroom facilities.

	20
	Landlord to provide a fenced exterior employee smoking / break area with protective weather awning.

	21
	Landlord to provide (887) Car Parking Spaces (including striping, and code required landscaping and lighting).

H-1

EXHIBIT “I”
MANUFACTURER’S WARRANTIES

		
	1.
	A one year general construction warranty is included to cover all materials, equipment and workmanship on all aspects of the base building construction from the date of shell substantial completion.

Manufacturer and Subcontractors guaranties and warranties shall be concurrent with that of the Developer from the date of Certificate of Occupancy

		
	2.
	Provide the following warranties on this project from the applicable manufacturer or supplier:

		
	a.
	Caulking: 1 year for material and workmanship.

		
	b.
	Roof: Roofing work will be warranted by the manufacturer for 15 years on labor and material.   

		
	c.
	HVAC: 1 year for material and workmanship

		
	d.
	Plumbing: 1 Year for material and workmanship

		
	e.
	Lighting: 90 Days on Lamps and Ballast

		
	f.
	Electric: 1 Year on all electrical installations

		
	g.
	Dock Levelers: 1 year for material and workmanship

		
	h.
	Fire Protection: 1 year for material and workmanship.

		
	i.
	Landscaping and tree stock: 1 year for material and installation

I-1

EXHIBIT “J”
SERVICE LEVEL FEES

This Lease will operate as a Service Level 3

Overview and Cost:

	
			
	 
	Description
	Annual $ per SF

	Service Level 1 (SL1)
	Single Tenant/Tenant Performing (Hands-off model)
	$0.03

	Service Level 2 (SL2)
	Single Tenant/LL Performing Base Package
	$0.07

	Service Level 3 (SL3)
	Standard Service Package
	$0.09

	Service Level 4 (SL4)
	Enhanced Service Package
	$0.12

Descriptions:
	
	
	SL1: Services where Tenant desires to self-perform all repair and maintenance obligations. (Single-Tenant Only)

	SL2: Services  where Tenant desires to self-perform all repair and maintenance obligations, except Roof R&M and Base Building Fire/Life Safety R&M/Testing/Inspections. (Single-Tenant Only)

	SL3: Services where Tenant maintains elements inside the Premises and/or exclusively serving the Premises and LL maintains exterior & common area elements of the building. (Single-Tenant or Multi-Tenant)

	SL4: Services where LL assumes additional responsibility to maintain certain interior elements that serve the Tenant's Premises. (Single-Tenant or Multi-Tenant)

J-1

J-2

EXHIBIT “K”
POST SUBSTANTIAL COMPLETION WORK

1.    scope elements and specifications relating to the electrical service to the Building
2.    items to be installed in conjunction with or following the installation of the Tenant’s trade fixtures (racking, conveyors, mezzanines, forklift equipment, etc...):  nominally to include lights, sprinklers and electrical (distribution panels, transformers, circuits and power “drops”) 

K-1EX10.1 Asset Purchase Agreement

Exhibit 10.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

by and among

MORTGAGE RESOURCE CENTER, INC. (D/B/A ALLREGS),
GLENN FORD

AND
ELLIE MAE, INC.,

dated as of August 7, 2014

TABLE OF CONTENTS

ARTICLE I PURCHASE AND SALE
		
	Section 1.1
	Transfer of Purchased Assets

		
	Section 1.2
	Excluded Assets

		
	Section 1.3
	Assumed Liabilities

		
	Section 1.4
	Excluded Liabilities

		
	Section 1.5
	Transfer of Omitted Assets

		
	Section 1.6
	Purchase Price Proceeds; Certain Directed Payments

		
	Section 1.7
	Adjustment to Initial Purchase Price Proceeds

		
	Section 1.8
	Escrow Funds

		
	Section 1.9
	Allocation of Purchase Price Proceeds for Purchased Assets

		
	Section 1.10
	Withholding

ARTICLE II CLOSING
		
	Section 2.1
	Closing

		
	Section 2.2
	Closing Deliveries

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER
		
	Section 3.1
	Authority and Binding Effect

		
	Section 3.2
	Organization; Capitalization

		
	Section 3.3
	Subsidiaries

		
	Section 3.4
	No Violations

		
	Section 3.5
	Consents and Approvals

		
	Section 3.6
	Financial Statements; Books and Records

		
	Section 3.7
	Absence of Changes.  Except as otherwise disclosed to Purchaser on the Company Disclosure Schedule:

		
	Section 3.8
	Title to Assets; Leased Property and Related Matters

		
	Section 3.9
	[Reserved]

		
	Section 3.10
	Litigation

		
	Section 3.11
	Compliance With Laws; Foreign Corrupt Practices Act

		
	Section 3.12
	Permits

		
	Section 3.13
	Environmental Matters

		
	Section 3.14
	Material Contracts

		
	Section 3.15
	Intellectual Property

		
	Section 3.16
	Information Technology.

		
	Section 3.17
	Privacy and Personal Data.

		
	Section 3.18
	Tax Matters

		
	Section 3.19
	Employee Benefit Plans

		
	Section 3.20
	Insurance

		
	Section 3.21
	Transactions with Directors, Officers and Affiliates

		
	Section 3.22
	Labor and Employment

		
	Section 3.23
	Customers and Suppliers

		
	Section 3.24
	Brokers

		
	Section 3.25
	Full Disclosure

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER
		
	Section 4.1
	Authority and Binding Effect

		
	Section 4.2
	Organization

		
	Section 4.3
	No Violations

		
	Section 4.4
	Consents and Approvals

		
	Section 4.5
	Litigation

		
	Section 4.6
	Brokers.

		
	Section 4.7
	Sufficiency of Funds..

		
	Section 4.8
	Independent Investigation..

ARTICLE V GENERAL COVENANTS
		
	Section 5.1
	Access to Information

		
	Section 5.2
	Operation of the Business

		
	Section 5.3
	Confidentiality

		
	Section 5.4
	Consents and Approvals

		
	Section 5.5
	Further Action

		
	Section 5.6
	Press Releases

		
	Section 5.7
	Tax Matters

		
	Section 5.8
	Employee Matters

		
	Section 5.9
	Non-Compete; Non-Solicitation

		
	Section 5.10
	Post-Closing Consents; Nonassignable Contracts

		
	Section 5.11
	Reserved

		
	Section 5.12
	Name Change

		
	Section 5.13
	Supplement to Company Disclosure Schedule.

ARTICLE VI CLOSING CONDITIONS
		
	Section 6.1
	Conditions to Purchaser’s Obligations.

		
	Section 6.2
	Conditions to Obligations of the Company and the Stockholder.

ARTICLE VII INDEMNIFICATION
		
	Section 7.1
	Survival of Representations and Warranties and Covenants

		
	Section 7.2
	Obligation to Indemnify

		
	Section 7.3
	Satisfaction of Claims.

		
	Section 7.4
	Indemnification Procedures

		
	Section 7.5
	Subrogation

		
	Section 7.6
	Indemnification Payments

		
	Section 7.7
	Remedies Exclusive

ARTICLE VIII TERMINATION
		
	Section 8.1
	Right of Termination

		
	Section 8.2
	Effect of Termination

ARTICLE IX MISCELLANEOUS
		
	Section 9.1
	Notices

		
	Section 9.2
	Fees and Expenses

		
	Section 9.3
	Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury

		
	Section 9.4
	Attorneys’ Fees

		
	Section 9.5
	Entire Agreement

		
	Section 9.6
	Waivers and Amendments; Non Contractual Remedies; Preservation of Remedies

		
	Section 9.7
	Severability

		
	Section 9.8
	Binding Effect; Assignment

		
	Section 9.9
	Interpretation

		
	Section 9.10
	No Third Party Beneficiaries

		
	Section 9.11
	Counterparts

		
	Section 9.12
	Headings

		
	Section 9.13
	Further Assurances

Annexes

Annex A        Definitions; Cross References

Exhibits

Exhibit A        Sample Closing Net Working Capital Calculation
Exhibit B        Forms of Assignment and Assumption Agreement
Exhibit C        Form of Escrow Agreement
Exhibit D        Form Bill of Sale 
Exhibit E        Form Third Party Consent

Schedules

Schedule 1.1(a) – Assigned Contracts
Schedule 1.1(b) – Equipment
Schedule 1.1(c)(i) – Assigned Intellectual Property
Schedule 1.1(c)(ii) – Licensed Intellectual Property
Schedule 1.1(f) – Leased Real Property
Schedule 1.1(g) – Personal Property Leases
Schedule 1.1(i) – Prepaid Expenses
Schedule 1.1(l) – Permits
Schedule 1.2(f) – Certain Excluded Assets
Schedule 1.6(a)(i) – Company’s Allocation of Purchase Price Proceeds
Company Disclosure Schedule
Schedule 1.9(a) – Allocation of Purchase Price

ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of August 7, 2014, is made by and among MORTGAGE RESOURCE CENTER, INC. (D/B/A ALLREGS), a Minnesota corporation (the “Company”), Glenn Ford, in his individual capacity (the “Stockholder”), and Ellie Mae, Inc., a Delaware corporation (the “Purchaser”). Purchaser, the Company and the Stockholder are each referred to herein as a “Party” and collectively as the “Parties.”  Capitalized terms used herein without definition shall have the meanings specified in Annex A below. 
WHEREAS, subject to the terms and conditions of this Agreement, the Company wishes to sell the Purchased Assets and transfer the Assumed Liabilities to Purchaser, and Purchaser wishes to purchase the Purchased Assets and assume the Assumed Liabilities from the Company; and
WHEREAS, the board of directors of the Company has unanimously approved and declared advisable this Agreement and the transactions contemplated herein upon the terms and subject to the terms and conditions of this Agreement; 
NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, and covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged and intending to be legally bound hereby, the Parties hereby covenant and agree as follows:
ARTICLE I
PURCHASE AND SALE
Section 1.1    Transfer of Purchased Assets.  Subject to the terms and conditions of this Agreement, at the Closing, the Company shall sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase, accept and acquire from the Company, all of the Company’s right, title, and interest in, to and under all of the assets, rights, claims and contracts related to the Business (collectively, the “Purchased Assets”), free and clear of all Liens (other than Permitted Liens), including without limitation, the following: 
(a)    Subject to Section 5.10, all Assigned Contracts, including without limitation as set forth on Schedule 1.1(a), including all rights to assert claims and take other actions in respect of breaches or other violations of such Assigned Contracts;
(b)    all Equipment, including without limitation as set forth on Schedule 1.1(b);
(c)    all Intellectual Property Rights and Technology owned by the Company and related to or used in the Business, including without limitation as set forth on Schedule 1.1(c)(i), and all goodwill associated with any of the foregoing, together with the right to sue or otherwise recover for any past, present, or future infringements, dilutions, misappropriations or other violations thereof (collectively, the “Assigned Intellectual Property”) and all rights under the Assigned Contracts relating to Intellectual Property Rights and Technology licensed to the Company and related to or used in the operation of the Business, including without limitation as set forth on Schedule 1.1(c)(ii) (collectively, “Licensed Intellectual Property”);
(d)    all goodwill associated with the Business;
(e)    all Accounts Receivable;
(f)    the Real Property Lease and tenant improvements related to the Leased Real Property, as set forth on Schedule 1.1(f);  
(g)    the personal property leases, if any, set forth on Schedule 1.1(g) (the “Personal Property Leases” and together with the Real Property Lease, the “Leases”);
(h)    all Books and Records (except as set forth in Section 1.2(d), below); 
(i)    all prepaid expenses, security deposits and advance payments related to the Business (other than Excluded Assets), except for prepaid insurance and as specifically set forth on Schedule 1.1(i) (the “Prepaid Expenses”);
(j)    except to the extent relating solely to the Excluded Assets or Excluded Liabilities, all of the Company’s rights, claims, causes of action, rights of indemnity, warranty rights, rights of contribution, rights of recovery and any 

    

other similar rights against employees, third parties or other Persons, in each case possessed by the Company and related to the Business;
(k)    intentionally omitted;
(l)    to the extent transferable, all Permits held by the Company that are required or necessary for the lawful ownership or operation of the Business or the Purchased Assets (other than Retained Permits), including without limitation as set forth on Schedule 1.1(l); and
(m)    all other rights and assets not described above which are used or held for use in the Business, which are not an Excluded Asset.
Section 1.2    Excluded Assets.  Notwithstanding the provisions of Section 1.1, the Company is not selling, transferring, conveying, assigning or delivering to Purchaser, and Purchaser is not purchasing, accepting or acquiring from the Company, any right, title, or interest of the Company in, to or under any asset, right, claim or contract set forth below (collectively, the “Excluded Assets”):
(a)    all cash (including, cash deposits), petty cash and cash equivalents;
(b)    any outstanding loans made to a director or officer of the Company; 
(c)    all rights of the Company arising under this Agreement (including the Purchase Price Proceeds), the Other Agreements or from the consummation of the Transactions contemplated hereby or thereby;
(d)    Retained Permits;
(e)    all minute books and other corporate or comparable records having to do with the organization and capitalization of the Company; 
(f)    all Benefits Plans; and
(g)     all insurance policies and rights to recovery under such insurance policies and rights to refunds for prepaid insurance.

Section 1.3    Assumed Liabilities.  Subject to the terms and conditions of this Agreement, at the Closing, Purchaser shall assume, and shall pay, perform, satisfy and discharge (or cause to be paid, performed, satisfied and discharged) when due, the following Liabilities of the Company related to the Purchased Assets, but excluding the Excluded Liabilities (collectively, the “Assumed Liabilities”):
(a)    all Liabilities to be paid, performed, satisfied or discharged under the Assigned Contracts arising after the Closing Date (other than with respect to any Assigned Contract not assigned at Closing, for which Purchaser shall assume, if and when assigned, all Liabilities to be paid, performed, satisfied or discharged under such Assigned Contract after the date such Assigned Contract is transferred pursuant to Section 5.10), and excluding such Liabilities that were otherwise required to have been paid, performed, satisfied or discharged prior to the Closing Date (or in the case of any Assigned Contract not assigned at Closing, on or prior to the date such Assigned Contract is transferred pursuant to Section 5.10); 
(b)    all trade accounts payable, accrued operating expenses and deferred revenues related solely to the Business accrued in the ordinary course of business consistent with past practice, and in the case of trade accounts payable and accrued operating expenses, to the extent incorporated into Closing Net Working Capital (the “Accounts Payable and Accrued Expenses”); 
(c)    all Liabilities with respect to the employment of Transferred Employees by Purchaser incurred after the Closing Date, excluding any Liabilities to Transferred Employees which become due and payable solely as a result of the transactions contemplated hereby; and
(d)    all other Liabilities arising out of Purchaser’s ownership or operation of the Business and Purchased Assets on or after the Closing Date, except to the extent such Liabilities would otherwise constitute Excluded Liabilities 

    

(provided, that this Section 1.3(d) shall not preclude or limit Purchaser’s right to indemnification arising out of any breach of a representation or warranty of the Company or the Stockholder hereunder).

Section 1.4    Excluded Liabilities.  Notwithstanding anything to the contrary in this Agreement, the Assumed Liabilities will exclude any other Liability whatsoever not expressly assumed by Purchaser under Section 1.3, including, but not limited to, the following Liabilities (collectively, the “Excluded Liabilities”):
(a)    all Liabilities of the Company arising under this Agreement, the Other Agreements or from the consummation of the Transactions contemplated hereby or thereby, including, without limitation any Transaction Expenses of the Company;
(b)    all Liabilities required to be paid, performed, satisfied or discharged under the Assigned Contracts prior to the Closing Date (or with respect to any Assigned Contracts not assigned at Closing, all Liabilities required to be paid, performed, satisfied or discharged under such Assigned Contract prior to the date such Assigned Contract is transferred pursuant to Section 5.10), and any Liability for the Company’s failure to so perform or satisfy such Liabilities, including any breach of such Assigned Contract with respect to an event or period on or prior to the Closing Date (or in the case of any Assigned Contracts not assigned at Closing, on or prior to the date such Assigned Contract is transferred pursuant to Section 5.10);
(c)    all Liabilities arising out of or related to the Excluded Assets, and unless specifically assumed as Purchased Assets or Assumed Liabilities, all Liabilities resulting from or arising out of the conduct of the Business prior to the Closing;
(d)    all Liabilities arising out of or related to or in respect of any employment or services performed by any individual (i) for periods on or prior to the Closing Date, (ii) which become due and payable solely as a result of the transactions contemplated hereby (including any change of control or similar bonus), and (iii) with respect to employees or other persons who do not continue employment or service with Purchaser following the Closing Date, for periods on or after the Closing Date, including but not limited to, workers compensation claims, except to the extent such Liabilities are included in Accounts Payable and Accrued Expenses included in Closing Net Working Capital;
(e)    any Liabilities for unused vacation time to which any Transferred Employee is entitled as of immediately prior to the Closing Date unless such amount is reflected as a liability in the Closing Net Working Capital Amount; 
(f)    except as provided in Section 5.7, any Liabilities of the Company or the Stockholder, or otherwise imposed on the Purchased Assets or with respect to the Business, for any Pre-Closing Tax Period in respect of any Tax, including without limitation (i) any Liability of the Company or the Stockholder for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise and (ii) any Transfer Taxes; 
(g)    all Existing Environmental Liabilities; 
(h)    all Liabilities arising out of or related to the ownership or other interests of any security holder of any the Company, including with respect to any operating agreement, voting agreement, tax sharing agreement, option or rights agreement, or other arrangement or agreement among such persons and/or their Affiliates; and
		
	(i)
	all Indebtedness of the Company. 

Section 1.5    Transfer of Omitted Assets.  Except as otherwise provided in Section 5.10, following the Closing, to the extent not previously sold, transferred, conveyed, assigned or otherwise delivered to Purchaser at Closing pursuant to Section 1.1, the Company shall, upon request from Purchaser, sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase (for no additional consideration), accept and acquire from the Company all of the Company’s right, title and interest in, to and under any asset related to the Business (other than the Excluded Assets) (without the requirement that the asset in question be scheduled, if applicable) and all associated Liabilities arising after the date of such transfer (collectively, the “Omitted Assets”).  The Parties acknowledge and agree that any Omitted Asset required by this Section 1.5 to be transferred by the Company, on the one hand, and acquired by Purchaser, on the other hand, shall for all purposes of this Agreement be deemed to have been an “Assigned Contract” or asset subject to such other applicable category described in Section 1.1, as applicable (without regard to the schedule referred to in such definition, if applicable) and a “Purchased Asset”, and shall be deemed to have been included in the applicable schedule as of the date hereof for purposes of Article III  or Article VII. 

    

Section 1.6    Purchase Price Proceeds; Certain Directed Payments.  Upon the terms and subject to the conditions of this Agreement, in consideration for the transfer of the Purchased Assets to Purchaser, in each case pursuant to this Article I, Purchaser shall:
(a)    pay to the Company, as allocated pursuant to Schedule 1.6(a), the “Initial Purchase Price Proceeds” of (i) Thirty Million Dollars ($30,000,000) in cash, minus (ii) the Estimated Net Working Capital Deficit, if applicable, plus (iii) the Estimated Net Working Capital Excess, if applicable, minus (iv) Three Million Dollars ($3,000,000) in cash to be held by the Escrow Agent as the Escrow Funds (as defined below), minus (v) the Estimated Closing Debt Amount, if any, to be repaid at Closing, and minus (vi) the Estimated Subscription Amount.  Any adjustments to the Initial Purchase Price Proceeds shall be made in accordance with Section 1.7 below (the Initial Purchase Price Proceeds, as so adjusted the “Purchase Price Proceeds”).  All payments to the Company will be paid by wire transfer of immediately available funds to the applicable account set forth on Schedule 1.6(a); 
In calculating the Initial Purchase Price Proceeds, “Estimated Net Working Capital Deficit” means the amount by which Estimated Closing Net Working Capital is less than the Base Net Working Capital, if applicable, and “Estimated Net Working Capital Excess” means the amount by which Estimated Closing Net Working Capital is greater than the Base Net Working Capital, if applicable.

Section 1.7    Adjustment to Initial Purchase Price Proceeds. 
(a)    No later than ninety (90) Business Days following the Closing Date, Purchaser shall prepare and deliver to the Company its calculation of the Purchase Price Proceeds, including the Closing Net Working Capital, Closing Debt Amount and Subscription Amount, such calculation to be based on the Books and Records and other Business information then available, and with respect to Closing Net Working Capital, consistent with the example calculation set forth on Exhibit A (the “Closing Date Schedule”).  The Company shall provide reasonable assistance to Purchaser in connection with preparation of the Closing Date Schedule, including by providing reasonable access to books and records of the Company. Purchaser shall deliver to the Company all reasonably requested relevant backup materials, in detail reasonably requested by the Company, together with a certification, signed by Purchaser’s chief financial officer, and confirming that such calculations have been prepared in good faith consistent with the example set forth on Exhibit A, concurrently with the delivery of such calculation.  As provided in Section 1.6 hereof, purchase price payable hereunder shall be adjusted, dollar for dollar, up or down, as appropriate, to the extent that Purchase Price Proceeds, as finally determined pursuant to this Section 1.7 either (x) exceeds the Initial Purchase Price Proceeds, or (y) is less than the Initial Purchase Price Proceeds, as applicable.  
(b)    If the Company disputes the calculation of any component of the Purchase Price Proceeds set forth in the Closing Date Schedule, then the Company may deliver a written notice (a “Dispute Notice”) to Purchaser at any time during the thirty (30) calendar day period commencing upon receipt by the Company of the Closing Date Schedule (the “Review Period”).  The Dispute Notice shall set forth in reasonable detail the basis for any dispute as well as the Company’s calculation of the disputed component, which shall be done in good faith consistent, in the case of Closing Net Working Capital, with the example calculation set forth on Exhibit A.  If the Company does not deliver a Dispute Notice prior to the expiration of the Review Period, then Purchaser’s determination of the Purchase Price Proceeds set forth in the Closing Date Schedule shall be deemed final and binding on the Company and Purchaser for all purposes of this Agreement.
(c)    If the Company delivers a Dispute Notice to Purchaser prior to the expiration of the Review Period, then the Company and Purchaser shall use commercially reasonable efforts to reach agreement on each component of Purchase Price Proceeds that is in dispute.  If the Company and Purchaser are unable to reach agreement on the final resolution of each component of Purchase Price Proceeds that is in dispute within thirty (30) calendar days after the end of the Review Period, then either Party shall have the right to refer such dispute to a mutually agreed independent accountant of nationally recognized reputation for resolution (the “Neutral Party”).  In connection with the resolution of any such dispute by the Neutral Party: (i) the Company and Purchaser shall have a reasonable opportunity to meet with the Neutral Party to provide their views as to any issues with respect to the calculation of any component of Purchase Price Proceeds that are unresolved from the Dispute Notice; (ii) the Neutral Party, acting as an expert and not as an arbitrator, shall determine Purchase Price Proceeds consistent with the example set forth on Exhibit A (and perform any necessary calculations in connection therewith) within thirty (30) calendar days of such referral, and upon reaching such determination shall deliver a copy of its calculations (the “Expert Calculations”) to the Company and Purchaser; and (iii) Purchase Price Proceeds, as determined by the Neutral Party shall, absent fraud or manifest error, be binding upon the Parties.  In performing the Expert Calculations, the Neutral Party (i) shall be limited to addressing any particular disputes referred to in the Dispute Notice and (ii) such calculation shall, with respect to any disputed item, be no greater than the higher amount calculated by the Company or Purchaser, and no less than the lower amount calculated by the Company or Purchaser, as the case may be.  The Expert Calculations shall reflect in detail the differences, if any, between Purchase Price 

    

Proceeds reflected therein and Purchase Price Proceeds set forth in the Closing Date Schedule.  If such a review is conducted, then the Party (i.e., Purchaser, on the one hand, or the Company, on the other hand) whose last proposed offer for the settlement of the items in dispute, taken as a whole, was farther away from the final determination by the Neutral Party pursuant to the preceding sentence, shall pay all fees and expenses associated with such review.
(d)    No later than twenty (20) Business Days following the final determination of Purchase Price Proceeds pursuant to Sections 1.7(b) and 1.7(c) (the “Adjustment Payment Date”):
(i)    if the Purchase Price Proceeds, as finally determined pursuant to Sections 1.7(b) and 1.7(c), exceeds the Initial Purchase Price Proceeds, then Purchaser shall, on or prior to the Adjustment Payment Date, pay to the Company the amount of such difference; and
(ii)    if the Purchase Price Proceeds, as finally determined pursuant to Sections 1.7(b) and 1.7(c), is less than the Initial Purchase Price Proceeds, then either the Company or the Stockholder shall, on or prior to the Adjustment Payment Date, pay to Purchaser, the amount of such difference.
(e)    All payments described in this Section 1.7 shall be made by wire transfer of immediately available funds to the account or accounts previously specified in writing by the recipient Party.
Section 1.8    Escrow FundsAt the Closing, Purchaser shall deposit Three Million Dollars ($3,000,000) (the “Escrow Funds”) from the Purchase Price to be held by the Escrow Agent for a period of eighteen (18) months from the Closing Date (the “Escrow Expiration Date”) with the Escrow Agent pursuant to the Escrow Agreement in order to efficiently administer certain matters contemplated hereby following the Closing, including but not limited to the defense or settlement of any claims for which the Purchaser Indemnitees (as defined below) may be entitled to indemnification pursuant to Article VII.  
Section 1.9    Allocation of Purchase Price Proceeds for Purchased Assets.
(a)    The Purchase Price Proceeds (plus Assumed Liabilities, to the extent properly taken into account for federal income tax purposes) shall be allocated among the Purchased Assets and the covenant not to compete contained in this Agreement in accordance with Section 1060 of the Code and the Treasury Regulations thereunder (and any similar provisions of state, local or foreign law, as appropriate) (the “Allocation”).  The Allocation shall be delivered by Purchaser to the Company within ninety (90) calendar days after the final determination of Purchase Price Proceeds pursuant to Sections 1.7(b) and 1.7(c) for the Company’s approval, which approval shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Allocation should be prepared in accordance with the principles set forth on Schedule 1.9(a) (the “Allocation”).  
(b)    The Allocation shall be revised to appropriately take into account any payments made pursuant to Section 1.7 (to the extent necessary), Article VII or any other provisions of the Agreement, and Purchaser shall deliver to the Company an amended Allocation reflecting such revision. 
(c)    The Company and Purchaser (each a “Tax Filing Party”) shall file all Tax Returns (including IRS Form 8594) consistent with the Allocation (as may be amended pursuant to Section 1.9(b)). Each Tax Filing Party shall prepare and file its Tax Returns consistently with the Allocation; provided, however, that nothing contained herein shall prevent a Tax Filing Party from settling any proposed deficiency or adjustment by any Governmental Authority based upon or arising out of the Allocation, and no Tax Filing Party shall be required to litigate before any court any proposed deficiency or adjustment by any Governmental Authority challenging such Allocation.  
Section 1.1    Withholding.   Purchaser shall be entitled to deduct and withhold from any consideration otherwise payable pursuant to this Agreement such amounts as Purchaser may be required to deduct and withhold with respect to the making of such payment under the Code, or any provision of applicable Tax law.  To the extent that amounts are so withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Person in respect of which such deduction and withholding was made. 
ARTICLE II
CLOSING
Section 2.1    Closing.  The closing (the “Closing”) of the transactions contemplated by this Agreement and the other Documents (the “Transactions”) shall take place as soon as practicable hereafter, but in any event within five (5) Business Days, upon the satisfaction or (or to the extent permitted) waiver of the latest to occur of the conditions to the Closing set forth in 

    

Article VI hereof (other than the conditions to be satisfied at the Closing) or such other date as shall be mutually agreeable to the Parties hereto (the “Closing Date”).
Section 2.2    Closing Deliveries.  At the Closing, unless waived (to the extent such conditions can be waived), each Party hereto shall deliver to the appropriate Persons each of the documents, certificates, instruments or evidences of satisfaction of conditions required to be delivered by such Party as a condition to the Closing pursuant to Article VI. 
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER
Each of the Company and the Stockholder hereby jointly and severally represent and warrant to Purchaser that the statements contained in this Article III are true and correct, except as set forth in the schedules provided by the Company to Purchaser (the “Company Disclosure Schedule”), in each case as of the date of this Agreement and as of the Closing.
Section 3.1    Authority and Binding Effect.  The Company and the Stockholder have all requisite power and authority to execute and deliver this Agreement and the Other Agreements to be executed and delivered by, or on behalf of, such Party, and to consummate the Transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and the Other Agreements have been, at a meeting duly called and held (or pursuant to a unanimous written consent in lieu thereof), duly and validly unanimously approved by the board of directors of the Company, and this Agreement and the transactions contemplated hereby have been unanimously adopted and approved by all of the voting stockholders of the Company. No additional other corporate proceedings on the part of the Company is necessary in connection with the execution, delivery and performance of this Agreement or the Other Agreements.  This Agreement has been duly executed and delivered by each of the Company and the Stockholder and this Agreement is (and the Other Agreements when executed and delivered will be) a legal, valid and binding obligation of each of the Company and the Stockholder enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and to general principles of equity.
Section 3.2    Organization; Capitalization.  
(a)    The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Minnesota and has all requisite corporate power and authority to own its properties and carry on the Business as it is now being conducted, and, in each case, is duly licensed or qualified to do business and is in good standing as a corporation in each jurisdiction in which the nature of the Business or ownership of its properties makes such qualification necessary, except where any failure to be so qualified and in good standing could not reasonably be expected to have or result in a Material Adverse Effect. The Company has made available to Purchaser correct and complete copies of its Organization Documents, which documents reflect all amendments made thereto at any time on or prior to the date hereof.  The Company is not in material default under or in violation of any material provision of its Organization Documents. 
(b)    The authorized capital stock of the Company consists of (i) 500,000 shares of Class A Voting Common Stock, of which 500 shares are issued and outstanding as of the date hereof, and 500,000 shares of Class B Non-Voting Common Stock, of which 5,000 shares are issued and outstanding as of the date hereof (the “Company Common Stock”).  As of the date hereof, the Company Common Stock is held by the Persons listed in Schedule 3.2(b) of the Company Disclosure Schedule, which further sets forth for each such Person the number of shares of Company Common Stock held by such Person and the number of the applicable stock certificates representing such shares.  All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Company’s Organizational Documents, or any agreement to which the Company is a party or by which it is bound. All outstanding shares of Company Common Stock were issued in compliance with Applicable Law, including federal and state securities laws. There are no outstanding shares of Company Common Stock that constitute unvested restricted stock or that are otherwise subject to a repurchase or redemption right.  There are no declared or accrued but unpaid dividends with respect to any shares of Company Common Stock.  The Company has no other capital stock authorized, issued or outstanding, and no options, warrants or other securities convertible into or exercisable for shares of Company Common Stock.
Section 3.3    Subsidiaries.  The Company does not own or has not owned any Subsidiary (currently in existence or otherwise), or any other interest or right to any interest in any other Person.
Section 3.4    No Violations.  Except as set forth on Schedule 3.4, the execution and delivery of this Agreement and the Other Agreements by each of the Company and the Stockholder, and the performance and consummation of the Transactions contemplated hereby and thereby by the Company and the Stockholder, does not (a) conflict with or violate any provision of the 

    

Company’s Organizational Documents, (b) conflict with, or result in the breach of, or constitute a violation of or default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of the Company or the Business under, any Contract or the loss of any benefit to which the Company is entitled under any Contract, (c) violate or result in a breach of or constitute a default under any Applicable Law to which the Company or the assets or operation of the Business is subject or (d) give rise to any preferential purchase right, right of first refusal, Lien of any nature, or similar rights upon or with respect to any of the property or other assets now or hereafter owned by the Company. 
Section 3.5    Consents and Approvals.  Except as set forth on Schedule 3.4, no notice to, declaration or filing with, or Consent of any Person is required by or with respect to the Company or the Business in connection with the execution and delivery by the Company and the Stockholder of this Agreement, and the consummation of the Transactions contemplated hereby in accordance with the terms hereof or the assignment of the Assigned Contracts to Purchaser.
Section 3.6    Financial Statements; Books and Records.
(a)    The Company has delivered to Purchaser true and complete copies of the following financial statements, copies of which are attached in Schedule 3.6(a) of the Company Disclosure Schedule: (i) the audited balance sheet of the Company as of December 31, 2012 and December 31, 2013, and the related audited statements of income, retained earnings and cash flows of the Company for the twelve (12) months then ended, and (ii) the unaudited balance sheet of the Company as of June 30, 2014, and the related unaudited statements of income, retained earnings and cash flows for the six (6)] months then ended (together, the “Financial Statements”).  The Financial Statements are true, accurate and correct in all material respects, have been prepared in accordance with GAAP consistently applied and consistent with the books and records of the Company and present fairly in all material respects the financial condition of the Business and results of the operations and cash flows of the Business at and for the periods presented.
(b)    The books of account and other financial records of the Company have been kept accurately in the ordinary course of business consistent with past practice and Applicable Law in all material respects, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects.  The Company has established and maintains a system of internal accounting controls suitable for a privately held company of its size and sufficient to provide reasonable assurance, in all material respects (i) that receipts and expenditures of the Company are being executed and made only in accordance with appropriate authorizations of management and the board of directors of the Company, (ii) that transactions are recorded as necessary to permit preparation of financial statements for external purposes in conformity with GAAP, (iii) regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company that could reasonably be expected to be material to the Company, (iv) that the amount recorded for assets on the books and records of the Company are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any difference and (v) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis. 
(c)    Since December 31, 2011, there has been no material change in any accounting controls, policies, principles, methods or practices, including any change with respect to reserves (whether for bad debts, contingent liabilities or otherwise), of the Company, other than (i) write-downs or write-offs in the value of assets as required under GAAP or (ii) such adjustments as may be required by under GAAP as a result of the consummation of the Transactions contemplated by this Agreement.
(d)    The Company does not have any liability or obligation of any kind whatsoever relating to the Business, whether accrued, contingent, absolute, determined, determinable or otherwise, other than Liabilities of the Business that have been incurred by the Company after December 31, 2013 in the ordinary course of business consistent with past practice and that have not been incurred as a result of the breach of any Contract, the violation of any Applicable Law or the commission of any tort.
(e)    The Accounts Receivable represent bona fide claims against debtors for sales, services performed or other charges arising on or before the respective dates of recording thereof.  All Accounts Receivable have been billed in accordance with the past practice and custom of the Company consistently applied and are collectible in the ordinary course of business consistent with past practice. 
(f)    The Company has paid all trade accounts payables related to the Business (which, pursuant to their stated terms, were required to be paid in the ordinary course of business prior to the Closing Date).

    

Section 3.7    Absence of Changes.  Except as otherwise disclosed to Purchaser on the Company Disclosure Schedule:  
(d)    Since December 31, 2013, the Company has conducted the Business in all material respects in the ordinary course of business consistent with past practice.
(e)    From December 31, 2013 through the date of this Agreement, there has not been any Material Adverse Effect or any events, changes, effects or developments that have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 
(f)    From December 31, 2013 through the date of this Agreement, the Company has not taken any action to (nor has there occurred any action to):
(i)    amend the Organizational Documents (whether by merger, consolidation or otherwise) of the Company;
(ii)    split, combine or reclassify any capital stock of the Company, or declare, set aside or pay any dividend or other distribution (other than cash dividends or cash distributions) in respect of any securities of the Company, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any such securities (other than redemptions of non-voting securities for cash);
(iii)    issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of capital stock or any other security the Company, or amend any term of any security of the Company (whether by merger, consolidation or otherwise);
(iv)    acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses related to the Business, other than acquisitions in the ordinary course of business consistent with past practice;
(v)    sell, lease, license or otherwise transfer, or create or incur any Liens (other than Permitted Liens) on, any of the Purchased Assets, other than sales or licenses of products or services in the ordinary course of business consistent with past practice;
(vi)    except in the ordinary course of business consistent with past practice and except for distributions to stockholders, make any payment in respect of any obligation to any officer, director, stockholder, Affiliate or Related Person of any amount;
(vii)    (A) enter into any Contract that would be a Material Contract (other than Contracts entered into in the standard form(s) made available to Purchaser), (B) modify, amend or terminate any Material Contract in any material respect (other than completion, non-renewal, or expiration of any Material Contract in accordance with its existing terms) or (C) waive, release or assign any of the material rights or claims of the Company thereunder;
(viii)    enter into any Contract that limits or otherwise restricts in any material respect the Business or any of the Purchased Assets or that would reasonably be expected to, after the Closing Date, limit or restrict in any material respect Purchaser or any of its Affiliates, from engaging or competing in any line of business, at any location or with any Person;
(ix)    materially change the accounting policies or procedures related to the Business or the Company;
(x)    other than in the ordinary course of business under agreements, or written policies which have been made available to Purchaser: (A) grant or increase any severance or termination pay to (or amend any existing arrangement with) any Business Employee, (B) pay any bonuses or increase the rates of base compensation, bonus compensation, commissions or other compensation or benefits payable or to become payable to any Business Employee, (C) increase benefits payable to any Business Employee under any existing severance or termination pay policies or employment agreements, (D) enter into any employment, deferred compensation or other agreement or offer (or amend any such existing agreement or offer) with any Business Employee or (E) establish, adopt or amend (except as required by Applicable Law) any collective bargaining, bonus, commission, profit-sharing, thrift, pension, retirement, deferred 

    

compensation, compensation, option, restricted unit or interest or other benefit plan or arrangement covering any Business Employee;
(xi)    commence, settle, or offer or propose to settle, any Proceeding involving the Business, Purchased Assets or Assumed Liabilities;
(i)    make, change or revoke any Tax election; change an annual accounting period; adopt or change any accounting method with respect to Taxes; file any amended Tax Return; enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any Tax; settle or compromise any claim, notice, audit report or assessment in respect of Taxes; or consent to any extension or waiver of the limitation period applicable to any claim or assessment with respect to Taxes; in each case to the extent such action could affect the conduct of the Business or otherwise affect Purchaser; 
(ii)    make any capital expenditure related to the Business in excess of $250,000 individually; 
(iii)    take any action that would, individually or in conjunction with any other action, require notice to any current or former employee under the WARN Act or any Other WARN Laws;
(iv)    enter into any arrangement the result of which is the loss, expiration or termination of any license or right under or to any Licensed Intellectual Property, except in the ordinary course of business consistent with past practice which is not material to the Business; or
(v)    agree or commit to any of the foregoing. 
Section 3.8    Title to Assets; Leased Property and Related Matters.
(a)    The Company has good and valid title to, or, in the case solely of the Leased Real Property and Personal Property Leases, the Company has a valid right to use such Leased Real Property and Personal Property Leases, all of the Purchased Assets, free and clear of all Liens, except for Permitted Liens. The Stockholder does not have any right, title, and interest in (other than solely in his capacity as a stockholder of the Company), to or under any assets, rights, claims and contracts related to the Business, including any assets which would constitute Purchased Assets pursuant to Section 1.1 if the Stockholder were substituted for the Company therein. 
(b)    The Purchased Assets constitute all of the properties, rights and interests necessary to conduct the Business in substantially the same manner as conducted by the Company prior to the Closing.
(c)    The Company does not own any real property. 
(d)    Schedule 3.8(d) of the Company Disclosure Schedule sets forth a list of all real property leased by the Company (the “Leased Real Property”).  Accurate and complete copies of all leases relating to Leased Real Property (the “Real Property Leases”) have been made available to Purchaser.  With respect to each Real Property Lease: 
(i)    The Company has a valid and enforceable leasehold interest to the leasehold estate in the Leased Real Property granted to the Company pursuant to such Real Property Lease, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity; 
(ii)    such Real Property Lease has been authorized and executed by the Company, and represent the entire agreement with each landlord with respect to each parcel of Leased Real Property leased thereby; 
(iii)    the Company is not in material default under such Real Property Lease, nor, to the Company’s knowledge, has any event occurred which, with notice or the passage of time, or both, would give rise to such a default by the Company;
(iv)    to the Company’s knowledge, the landlord identified in such Real Property Lease is not in material default under such Real Property Lease, nor, to the Company’s knowledge, has any event occurred which, with notice or the passage of time, or both, would give rise to such a default by such landlord; and

    

(v)    the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in such Real Property Lease.
(e)    The Company has not received any written notice from any Person that it is in violation of any zoning, use, health, traffic, fire safety, occupancy, building, regulation, ordinance or other Applicable Law relating to the Leased Real Property.
(f)    To the Company’s knowledge, there are no pending or threatened condemnation proceedings, lawsuits, administrative actions or investigations, or other legal proceedings with respect to any Leased Real Property and/or impacting the operations thereon.
(g)    Except with respect to leased personal property held pursuant to a Personal Property Lease, the Company has good title to all of its tangible personal property and assets, free and clear of any Liens, other than Permitted Liens.  
Section 3.9    [Reserved]
Section 3.10    Litigation.  Except as set forth on Schedule 3.10 of the Company Disclosure Schedule, there has not been since December 31, 2010, nor is there presently, any pending Proceeding, or to the Company’s knowledge, threatened Proceeding, that: (a) relates to the Business, Purchased Assets, Assumed Liabilities or any Person whose liability the Company has or may have retained or assumed, either contractually or by operation of law; or (b) challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions contemplated by this Agreement.  To the Company’s knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists, that will, or that would reasonably be expected to, give rise to or serve as a basis for the commencement of any such Proceeding.  Neither the Company nor any of the Purchased Assets or Assumed Liabilities is subject to any outstanding writ, order, judgment, injunction or decree of any Governmental Authority relating to the Business or any of the Purchased Assets.  To the Company’s knowledge, no officer of the Company and no employee of the Company is subject to any writ, order, writ, judgment, injunction or decree that prohibits such officer or employee from engaging in or continuing any conduct, activity or practice relating to the Business.
Section 3.11    Compliance With Laws; Foreign Corrupt Practices Act.  The Company is not (and never has been) in default or violation of, or to the Company’s knowledge, under investigation with respect to or threatened to be charged with, or given notice of any violation of, in any material respect, any Applicable Law applicable to the Business or by which any of the Purchased Assets is bound.  The Company has not, and to Company’s knowledge, no officer, agent, employee or other Person acting on behalf of the Company or the Business has, directly or indirectly: (a) made any unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity and related in any way to the Business; (b) made any unlawful payment to any foreign or domestic government official or employee, foreign or domestic political parties or campaigns, official of any public international organization, or official of any state-owned enterprise; (c) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (d) made any bribe, payoff, influence payment, kickback or other similar unlawful payment.
Section 3.12    Permits.  Schedule 3.12 of the Company Disclosure Schedule sets forth an accurate and complete list of all Permits which have been issued to the Company related to the Business and are currently in effect (the “Company Permits”).  Each Company Permit is valid and in full force and effect, and the Company is not in default in any material respect thereunder. There is no investigation or proceeding pending or, to the Company’s knowledge, threatened that would reasonably be expected to result in the termination, revocation, suspension or restriction of, or the loss of any benefit to which the Company would obtain from, any Company Permit or the imposition of any fine, penalty or other sanctions for violation of any Applicable Law relating to any Company Permit, and none of the Company Permits will be terminated or impaired or become terminable or impaired, in whole or in part, as a result of the Transactions contemplated by this Agreement. The Company Permits constitute all of the Permits required to conduct the Business as presently conducted by the Company.
Section 3.13    Environmental Matters.  
(a)    The Company is and, for the previous five (5) years, has been in material compliance with all Environmental Laws as to the Business and the Purchased Assets
(b)    To the Company’s knowledge, no Hazardous Materials have been Released or have otherwise come to be located at or under the Leased Real Property in a quantity or manner that has resulted in contamination of the soil, groundwater, surface water or structures that requires investigation, removal, remediation or other response action under 

    

applicable Environmental Laws or could reasonably be expected to result in the assertion of an Environmental Claim against the Company. 
(c)    The Company has not generated, treated, stored, Released, transported or arranged for transportation or disposal of any Hazardous Material at any Leased Real Property or otherwise in connection with the Business except in material compliance with Environmental Laws, in a manner and quantity reasonably necessary for the conduct of the Business, and in a manner that would not reasonably be expected to result in the assertion of an Environmental Claim against the Company or the Business.
(d)    The Company has not received any written notice of alleged, actual or potential responsibility or liability for, or any inquiry or investigation regarding: (i) the violation of any Environmental Laws or Environmental Permits; (ii) the presence, Release or threatened Release, generation, transportation, or disposal of any Hazardous Materials at the Real Property, or any other location; or (iii) injury or damage to any Person, property, or natural resource as a result of exposure to or the presence, Release, threatened Release, or discharge of any Hazardous Materials.  To the Company’s knowledge, no Environmental Claim regarding any such matters is pending or threatened.
Section 3.14    Material Contracts.
(a)    Except as listed on Schedule 3.14(a) of the Company Disclosure Schedule, with respect to the Business or any of the Purchased Assets or Assumed Liabilities, the Company is not a party to (each, a “Material Contract”):
(i)    any Contract that involves the purchase or sale of goods or services with a value, or involving payments by or to the Company, of more than $50,000 per year;
(ii)    any employment agreement with a Person providing services to the Company or the Business;
(iii)    any note, mortgage, indenture or other obligation or agreement or other instrument for or relating to Indebtedness (other than capitalized lease obligations entered into in the ordinary course with aggregate obligations of not less than $25,000), or any guarantee of third party obligations, or any lien securing such indebtedness or obligations;
(iv)    any collective bargaining agreement with any labor unions or associations representing employees;
(v)    any Contract pursuant to which any Intellectual Property Rights or Technology that is currently being used by the Company is or has been licensed, sold, assigned or otherwise conveyed or provided to the Company (other than license terms for Open Source Software and Contracts for non-customized software that (A)  is so licensed solely in executable or object code form pursuant to a nonexclusive, internal use software license, (B) is not incorporated into, or used directly in the development, manufacturing or distribution of, the Company’s products or services and (C) is generally available on standard terms for either (y) annual payments by the Business of $25,000 or less or (z) aggregate payments by the Business of $50,000 or less (“Standard Software”));
(vi)    any Contract pursuant to which any Assigned Intellectual Property or Licensed Intellectual Property is or has been licensed (whether or not such license is currently exercisable), sold, assigned or otherwise conveyed or provided to a third party by the Company or pursuant to which the Company has agreed not to enforce any Intellectual Property Right owned by or exclusively licensed to the Company against any third party, in each case, except for Contracts granting non-exclusive licenses entered into in the ordinary course of business consistent with past practice;
(vii)    any material distributor, original equipment manufacturer, reseller, value added reseller, sales, agency or manufacturer’s representative Contract;
(viii)    any material limited liability company, joint venture or partnership agreement, or any sharing of revenues, profits, losses, costs or liabilities or any other similar Contract;
(ix)    except Contracts related to Open Source Software, any Contract imposing any restriction on the Company’s right or ability, or, after the Closing Date, the right or ability of Purchaser or any of its Affiliates (A) to compete in any line of business or with any Person, to offer or sell any products or services, or to partner with any third 

    

party, in any area or which would so limit the freedom of Purchaser or any of its Affiliates after the Closing Date (including granting exclusive rights or rights of first refusal to license, market, sell or deliver any of the products or services offered by the Company or any related Technology or Intellectual Property Right), (B) to acquire any product or other asset or any services from any other Person, to sell any product or other asset to or perform any services for any other Person or to transact business or deal in any other manner with any other Person or (C) develop or distribute any Technology;
(x)    any Contract providing for “most favored nation” terms, including such terms for pricing;    
(xi)    any Contract in which the Company has the exclusive right to publish content of a third party; 
(xii)    any Contract which provides for an outstanding loan or advance (excluding advances for travel and entertainment expenses made in accordance with customary policies for such advances), in any amount and to any manager, officer, director or employee of the Company or any trustee, beneficiary, or Affiliate of the Company; 
(xiii)    any settlement or release agreement or other agreement, except Open Source Software contracts, pursuant to which the Company has relinquished or agreed not to enforce the rights of the Company or which imposes any obligations or liabilities on the Company in a Proceeding, pending or threatened;
(xiv)    any Personal Property Lease;
(xv)    any Contract relating to cleanup, abatement, monitoring or other actions in connection with any Liability related to Environmental Laws; 
(xvi)    any Contract with a Governmental Authority; or
(xvii)    any other Contract not made in the ordinary course of business that is material to the Business.        
(b)    The Company has made available to Purchaser accurate and complete copies of all written Contracts identified in Schedule 3.14(a) of the Company Disclosure Schedule, including all amendments thereto, but excluding those customer Contracts that were entered into by the customer accepting one or more of Company’s standard click-through agreements in the form made available to Purchaser, which Contracts are valid and binding on the applicable customer. Schedule 3.14(a) of the Company Disclosure Schedule provides an accurate description of the terms of each Contract identified in Schedule 3.14(a) of the Company Disclosure Schedule that is not in written form.  Except as set forth on Schedule 3.14(b), all of the Material Contracts are in full force and effect and constitute legal and binding obligations of the Company and the party thereto, as the case may be.  Neither the Company nor, to the Company’s knowledge, any other party is in breach of or default under, and no event has occurred which with notice or lapse of time, or both, would become a breach of or default under, any Material Contract.  Except as set forth on Schedule 3.14(b), neither the Company, nor to the Company’s knowledge, any other party, has received notice from any party of its or any other party’s intention to cancel, not renew or otherwise terminate any Material Contract, and there are no facts or circumstances that would reasonably be expected to result in an violation of any provision of, or the failure to perform any act which would constitute a breach of, or default under, any Material Contract.

    

Section 3.15    Intellectual Property.  
(a)    Schedule 3.15(a) of the Company Disclosure Schedule accurately identifies and describes as of the date of this Agreement each product and service developed, marketed, licensed, sold, performed, distributed or otherwise made available as part of the conduct of the Business, including any product or service currently under development by the Company for the Business.
(b)    Schedule 3.15(b) of the Company Disclosure Schedule accurately identifies as of the date of this Agreement (i) each item of Registered IP in which the Company has or purports to have an ownership interest of any nature (whether exclusively, jointly with another Person, or otherwise), (ii) the jurisdiction in which such item of Registered IP has been registered or filed and the applicable application, registration, or serial or other similar identification number, (iii) any other Person that has an ownership interest in such item of Registered IP and the nature of such ownership interest and (iv) all unregistered trademarks used in connection with the Business.  The Company has provided Purchaser with complete and accurate copies of all applications, correspondence, and other material, non-privileged documents related to each such item of Registered IP.
(c)    Schedule 3.15(c) of the Company Disclosure Schedule accurately identifies as of the date of this Agreement (i) all Intellectual Property Rights or Technology licensed, sold, assigned or otherwise conveyed or provided to the Company and used in the Business (other than Standard Software and licenses received from customers in the ordinary course of business in connection with the Company providing services to such customers under agreements which do not deviate materially from the Company’s standard form customer agreements), (ii) the corresponding Contract or Contracts pursuant to which any such Licensed Intellectual Property is licensed to the Company, and (iii) whether such license or licenses granted to the Company is or are, as the case may be, exclusive or nonexclusive.  No Person who has licensed Licensed Intellectual Property to the Company has any ownership rights or exclusive license rights to derivative works or improvements made by the Company related to such Licensed Intellectual Property.
(d)    Schedule 3.15(d) of the Company Disclosure Schedule accurately identifies as of the date of this Agreement each Contract pursuant to which any Person has been granted any license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in, any Company IP, except licenses granted to the Company’s customers in the ordinary course of business under agreements which do not materially deviate from the Company’s standard form customer agreements.  Except for those Contracts identified on Schedule 3.15(d), the Company is not bound by, and no Company IP is subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of the Company to use, assert, enforce, or otherwise exploit any Company IP anywhere in the world.  The Company has not transferred ownership of (whether a whole or partial interest), or granted any exclusive right to use, any Technology or Intellectual Property Right to any Person.
(e)    The Company has made available to Purchaser an accurate and complete copy of each of the following standard forms of Company IP Contract used by the Company at any time and when such form was used (if such form is no longer used as of the date of this Agreement) (other than forms of Company IP Contracts (1) where all such Company IP Contracts on such form have been terminated and under which the Company has no further financial or other material obligations, except for indemnification obligations that may survive such termination but that do not materially deviate from the current Company forms which have been made available to Purchaser, or (2) under which the Company’s material rights and obligations do not materially deviate from the current Company forms which have been made available to Purchaser and which do not contain restrictions on the ability of the Company to compete in any line of business): (i) end user or sales agreement or purchase order acknowledgement form, (ii) terms of service (if applicable), (iii) development, consulting or independent contractor agreement containing any assignment or license of Technology or Intellectual Property Rights, or (iv) content publishing agreements. The Company has made available to the Purchaser a complete and accurate copy of any such Company IP Contract that deviates in any material respect from the corresponding standard form agreement provided to Purchaser. 
 
(f)    The Company exclusively owns all right, title, and interest to and in the Company IP free and clear of any lien (statutory or other) or security interest.  
(g)    Schedule 3.15(g) of the Company Disclosure Schedule contains a complete and accurate list of all Contracts pursuant to which the Company is obligated to pay royalties, fees, commissions, and other amounts (other than sales commissions paid to employees according to any of the Company’s standard commissions plan) for the manufacture, sale, or distribution of any Company Product or the use of any Company IP or Licensed Intellectual Property.  

    

(h)    To the Company’s knowledge, all Company IP is valid and enforceable.  The Company has made all filings and payments and taken all other actions required to be made or taken to maintain Registered IP in full force and effect by the applicable deadline and otherwise in accordance with all Applicable Laws.  No interference, opposition, reissue, reexamination, or other Proceeding is or since December 31, 2009, has been pending or, to the Company’s knowledge, threatened, in which the scope, validity, or enforceability of any Company IP is being, has been, or could reasonably be expected to be contested or challenged.  Each item of Registered IP is in compliance with all legal requirements and all filings, payments, and other actions required to be made or taken to maintain such item of Registered IP in full force and effect have been made by the applicable deadline.  No application for a patent or a material copyright, mask work, or trademark registration or any other type of material Registered IP filed by or on behalf of the Company at any time since December 31, 2009, has been abandoned, allowed to lapse, or rejected, except to the extent such Registered IP is no longer used in or otherwise material to the Business.  The Company has not engaged in patent or copyright misuse or any fraud or inequitable conduct in connection with any Company IP.  To the Company’s knowledge, no trademark or trade name owned, used, or applied for the Company and related to the Business conflicts or interferes with any trademark or trade name owned, used, and applied for by any other Person.  To the Company’s knowledge, no event or circumstance (including a failure to exercise adequate quality controls and an assignment in gross without the accompanying goodwill) has occurred or exists that has resulted in, or could reasonably be expected to result in, the abandonment of any material trademark related to the Business (whether registered or unregistered) owned, used, or applied for by the Company.  Schedule 3.15(h) of the Company Disclosure Schedule sets forth a detailed listing with respect to each item of Registered IP and all actions, filings and payment obligations due to be made to any Governmental Body within twelve (12) months following the Effective Date.  
(i)    To the Company’s Knowledge, except as set forth on Schedule 3.15(i),  no Person has infringed, misappropriated, or otherwise violated, and no Person is currently infringing, misappropriating, or otherwise violating, any Company IP.  Schedule 3.15(i) of the Company Disclosure Schedule accurately provides a brief description of the current status of any actual, alleged, or suspected infringement or misappropriation of any Company IP.
(j)    Neither the execution, delivery, or performance of this Agreement nor the consummation of any of the Transactions or agreements contemplated by this Agreement will, with or without notice or the lapse of time, result in, or give any other Person the right or option to cause or declare:  (i) a loss of, or Lien on, any Company IP; (ii) a breach of, termination of, or acceleration or modification of any right or obligation under any Contract listed or required to be listed in Schedules 3.15(c) or 3.15(d) of the Company Disclosure Schedule; (iii) the release, disclosure, or delivery of any Company IP by or to any escrow agent or other Person; or (iv) the grant, assignment, or transfer to any other Person of any license or other right or interest under, to, or in any Company IP.
(k)    The Company IP and the Licensed Intellectual Property constitute all Intellectual Property Rights and Technology used in or necessary for the conduct of the Business as presently conducted, including the design, manufacture, license and sale of all products and services currently under development or in production.  
(l)    The Company has not infringed, misappropriated, or otherwise violated any Intellectual Property Right of any other Person.  No infringement, misappropriation, or similar claim or Proceeding related to the Business is pending or threatened in writing against the Company or, to the Company’s knowledge, against any Person who may be entitled to be indemnified or reimbursed by the Company with respect to such claim or Proceeding.  The Company has not received any notice or other communication (in writing or otherwise) relating to any actual, alleged, or suspected infringement, misappropriation or violation of any Intellectual Property Right of another Person.
(m)    None of the software related to the Business, and owned or developed by the Company, that is marketed, distributed, licensed, sold, or otherwise made available to any Person by the Company (collectively, “Company Software”) nor, to the Company’s knowledge, any third party software that the Company uses in the Business and that is marketed, distributed, licensed, sold, or otherwise made available to any Person by the Company, (i) contains any bug, defect, or error that materially and adversely affects the use, functionality, or performance of the Company Software or any product or system containing or used in conjunction with the Company Software or (ii) fails to comply in any material respect with any applicable warranty or other contractual commitment to third parties relating to the use, functionality, or performance of such Company Software or any product or system containing or used in conjunction with such Company Software.
(n)    No Company Software contains any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” “worm,” “spyware” or “adware” (as such terms are commonly understood in the software industry) or any other code designed or intended to have, or capable of performing or facilitating, any of the following functions: (i) disrupting, disabling, harming, or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is stored or installed or (ii) compromising the privacy or data security of a user or 

    

damaging or destroying any data or file without the user’s consent (collectively, “Malicious Code”).  The Company implements industry standard measures designed to prevent the introduction of Malicious Code into Company Software, including firewall protections and regular virus scans.
(o)    No source code for any Company Software has been delivered, licensed, or made available to any escrow agent or other Person who (i) is not, as of the date of this Agreement, an employee of the Company, or (ii) was not at the time of such access either an employee or a contractor with a contract providing for such contractor to keep Company information confidential and acknowledging that all work developed would be owned by the Company.  The Company does not have any duty or obligation (whether present, contingent, or otherwise) to deliver, license, or make available the source code for any Company Software to any escrow agent or other Person.  No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, license, or disclosure of any source code for any Company Software to any other Person who is not, as of the date of this Agreement, an employee of the Company.
(p)    Each Person who is or was an employee of the Company and who is or was involved in the creation or development of any Company IP has received a copy of Seller’s Employee Handbook and signed an Acknowledgement Form as provided therein substantially in the form which has been made available to the Purchaser.  No current or former stockholder, officer, director, employee or contractor of the Company has any claim, right (whether or not currently exercisable), or ownership interest in any Company IP.  To the Company’s knowledge, no employee of the Company is (i) bound by or otherwise subject to any Contract restricting him or her from performing his duties for the Company or (ii) in breach of any Contract with any former employer or other Person concerning Intellectual Property Rights or confidentiality due to his or her activities as an employee of the Company.
(q)    Except to the extent required in connection with the use of the open source software set forth in Schedule 3.15(q), no Company Software is subject to any “copyleft” or other obligation or condition (including any obligation or condition under any “open source” license such as the GNU Public License, Lesser GNU Public License, or Mozilla Public License) that (i) requires, or conditions the use or distribution of such Company Software or portion thereof on, (A) the disclosure, licensing, or distribution of any source code for any portion of such Company Software or (B) the granting to licensees of the right to make derivative works or other modifications to such Company Software or portions thereof or (ii) otherwise imposes any limitation, restriction, or condition on the right or ability of the Company to use, distribute or charge for any Company Software.  The Company’s representations in this Section 3.15(q) are the only representations and warranties the Company is making with respect to the existence of rights and obligations imposed by licenses for open source software used by the Company (“Open Source Software”) and all other representations and warranties in this Section 3.15 and in Sections 3.4, 3.5, and 3.14, shall be deemed to expressly exclude Open Source Software.
(r)    No funding, facilities, or personnel of any Governmental Authority or any public or private university, college, or other educational or research institution were used, directly or indirectly, to develop or create, in whole or in part, any Company IP.
(s)    The Company is not and has never been a member or promoter of, or a contributor to, any industry standards body or similar organization that could require or obligate the Company to grant or offer to any other Person any license or right to any Company IP.
(t)    The Company has not received or logged any product warranty claims regarding any Company Product since December 31, 2009. 
Section 3.16    Information Technology.
(a)    All devices, software, computers and network systems and their configuration that are used to access, create, update, delete, read, view, transform, transfer, store and communicate information used by the Company in the conduct of the Business as well as the information itself (“IT Systems”) are owned by, or licensed or leased to, the Company.  Copies or details of all material licenses and leases relating to the IT Systems have been made available to Purchaser. The Company is the legal and beneficial owner of, or has a contractual right to use the IT Systems free from Liens, except for Permitted Liens, and has not, in the twelve (12) months prior to the date of this Agreement, received written notice from a third party alleging that the Company is in default under licenses or leases relating to the IT Systems.
(a)    The IT Systems have been satisfactorily maintained and supported and the Company has reasonable and appropriate maintenance and support agreements in respect of the IT Systems, and none of them will be terminable as a result of the execution or completion of this Agreement.

    

(b)    The IT Systems will have adequate capability and capacity for all of the processing and other functions required by the Company immediately following the Closing Date.
(c)    The Company has in effect disaster recovery plans which are reasonable for the Business and which have been made available to Purchaser, procedures and facilities for its business and has taken all reasonable steps to safeguard the security and the integrity of its IT Systems.  To the Company’s knowledge, in the past twenty four months there have been no unauthorized intrusions or breaches of the security with respect to the IT Systems.  The Company has implemented those security patches or upgrades that are generally available for the IT Systems which are material to the IT Systems and the Business.
(d)    The Company implements industry standard measures designed to prevent the introduction of Malicious Code into its IT Systems, including firewall protections and regular virus scans and for taking and storing on-site and off-site back-up copies of Software, Customer Data and Personal Data.
Section 3.17    Privacy and Personal Data.  
(a)    The Company is, and has at all times since December 31, 2009, been, in material compliance with (i) all Applicable Laws and industry standards; and (ii) all Contracts (or portions thereof) related to the Business between the Company and vendors, marketing affiliates, and other customers and business partners, that are applicable to the use and disclosure of Personal Data (such Contracts being hereinafter referred to as “Privacy Agreements”).  The Company has delivered to Purchaser accurate and complete copies of all of the Privacy Agreements of the Company.
(b)    The Privacy Agreements and all publicly posted privacy statements or notices do not require the delivery of any notice to or consent from any Person, or prohibit the transfer of Personal Data collected and in the possession or control of the Company to Purchaser, in connection with the execution, delivery, or performance of this Agreement or the consummation of any of the Transactions contemplated by this Agreement.  
(c)    The Company has confidentiality agreements in place with all Affiliates, vendors or other Persons whose relationship with the Company involves the collection, use, disclosure, storage, or processing of Personal Data on behalf of the Company, which agreements require such Persons to protect such Personal Data in a manner consistent with the Company’s obligations in the Privacy Agreements and in compliance with Applicable Laws.  
(d)    Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the Transactions contemplated by this Agreement will result in any violation of any Privacy Agreements or any Applicable Law pertaining to privacy, or Personal Data.
(e)    The Company has reasonable safeguards in place to protect Personal Data in the Company’s possession or control from unauthorized access by third Persons, including the Company’s employees and contractors.  
(f)    To the Company’s knowledge, no Person has made any illegal or unauthorized use of Personal Data that was collected by or on behalf of the Company and is in the possession or control of the Company.  
(g)    Except as set forth on Schedule 3.17(g), the Company is not bound by any Contract or other obligation than prohibits the Company from using Personal Data, or other information if such information has been de-identified.
Section 3.18    Tax Matters.  
(a)    The Company is a validly electing S corporation for U.S. federal income tax purposes.  The Company has timely filed (taking into account any extensions of time for such filings that have been properly and timely requested by the Company) all Tax Returns that were required to be filed.  All such Tax Returns are complete and accurate in all material respects.  All Taxes owed by the Company (whether or not shown on any Tax Return) have been paid.  All Taxes that the Company has been required to collect or withhold have been collected or withheld and, to the extent required by law, have been timely paid to the proper Governmental Authority.  Except as set forth on Schedule 3.18(a), no written claim has ever been made by a Governmental Authority in a jurisdiction in which the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction.  
(b)    There are no Liens on any of the Purchased Assets for Taxes (other than statutory liens for current Taxes not yet due and payable).  

    

(c)    No deficiencies for Taxes of the Company has been claimed, proposed or assessed by any Governmental Authority which deficiencies remain unpaid or unresolved. There are no pending or, to Company’s knowledge, threatened audits, investigations, disputes, notices of deficiency, claims or other Proceedings for or relating to any liability for Taxes of the Company. There have been no audits of the Company’s Tax Returns by the relevant Governmental Authorities at any time during the last three (3) tax years. The Company has not been notified in writing that any Governmental Authority intends to audit the Company’s Tax Returns for any other period. No waiver or extension of a statute of limitations relating to Taxes is in effect with respect to the Company. 
(d)    Since December 31, 2013, the Company has not incurred any liability for Taxes outside the ordinary course of business or otherwise inconsistent with past practice.
(e)    No Purchased Asset (i) is property required to be treated as owned by another person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) constitutes “tax-exempt use property” within the meaning of Section 168(h) of the Code, (iii) is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iv) secures any debt the interest of which is tax-exempt under Section 103(a) of the Code or (v) is subject to a 467 rental agreement as defined in Section 467 of the Code. 
(f)    The Company is not a party to any Tax sharing, indemnity, allocation, or similar agreements. 
Section 3.19    Employee Benefit Plans.
(a)    Schedule 3.19(a)(i) of the Company Disclosure Schedule identifies each “employee benefit plan” (as defined in Section 3(3) of ERISA) which covers any Business Employee and any bonus, deferred or incentive compensation, retirement, profit sharing, equity-based, Code Section 125 cafeteria plan or flexible benefit arrangement, employment, consulting, change in control or severance plan, arrangement, agreement or program, and material fringe benefit plan, arrangement, agreement or program, whether or not subject to ERISA, whether formal or informal, oral or written, legally binding or not, maintained or contributed to for the benefit of any Business Employee by the Company or any ERISA Affiliate or under which the Company or any ERISA Affiliate has any present or future Liability with respect to any Business Employee (collectively, the “Benefit Plans”).  Schedule 3.19(a)(ii) of the Company Disclosure Schedule sets forth a list of each Business Employee as of the date hereof, and such Business Employee’s leave, sick pay or vacation benefit (earned or unearned).
(b)    The Company (i) has complied in all material respects with all applicable laws and regulations relating to the Benefit Plans, including but not limited to ERISA, and (ii) have administered each Benefit Plan in all material respects in compliance with Applicable Laws in accordance with its terms.  The Company has not made any commitments to increase benefits under any Benefit Plan or to otherwise amend any Benefit Plan.
(c)    Except as set forth on Schedule 3.19(c) of the Company Disclosure Schedule, no leased employee (within the meaning of Section 414(n) or (o) of the Code) as of the date hereof performs any material services for the Company with respect to the Business.
(d)    Each Benefit Plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and which is intended to be qualified under Code Section 401(a) (a “Pension Plan”) has received from the IRS a favorable determination letter or may rely upon any opinion letter for a prototype or volume submitter plan.  To the Company’s knowledge, no event has occurred since the date of the most recent determination or opinion letter (other than the effective date of certain amendments to the Code the remedial amendment period for which has not expired) that would reasonably be expected to adversely affect the qualified status of any such Benefit Plan.  No Benefit Plan is a “defined benefit plan” as defined in Section 3(35) of ERISA.
(e)    The Company nor any ERISA Affiliate or any trustee or agent of any Benefit Plan has been or is currently engaged in any prohibited transactions as defined by Section 406 of ERISA or Section 4975 of the Code for which an exemption is not applicable which could subject the Company, any ERISA Affiliate or any trustee or agent of any Benefit Plan to the Tax or penalty imposed by Section 4975 of the Code or Section 502 of ERISA.
(f)    The Company nor any ERISA Affiliate has been or is currently party to any (A) “multi‐employer plan,” as that term is defined in Section 3(37) of ERISA, (B) “multiple employer plan” (within the meaning of Section 413(c) of the Code), (C) “pension plan” within the meaning of Section 3(2) of ERISA that is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, or (D) multiple employer welfare arrangement (within the meaning of Section 3(40) of ERISA.

    

(g)    With respect to each Benefit Plan, there are no actions, suits or claims (other than routine claims for benefits in the ordinary course) pending or, to Company’s knowledge, threatened against any Benefit Plan, the Company, any ERISA Affiliate or any trustee or agent of any Benefit Plan.
(h)    With respect to each Benefit Plan to which the Company or any ERISA Affiliate is a party which constitutes a group health plan subject to Section 4980B of the Code, each such Benefit Plan complies, and in each case has complied, in all material respects, with all applicable requirements of Section 4980B of the Code.
(i)    Full payment has been made of all amounts which the Company or any ERISA Affiliate was required to have paid as a contribution to any Benefit Plan as of the last day of the most recent fiscal year of each of the Benefit Plans ended prior to the date of this Agreement. 
(j)    No Benefit Plan other than a Pension Plan provides benefits to any individual after termination of employment, other than as required by Applicable Law.
(k)    Except as set forth on Schedule 3.19(k) of the Company Disclosure Schedule, the consummation of the Transactions contemplated by this Agreement will not (i) entitle any current or former director, employee, contractor or consultant of the Business to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of, compensation due to any such director, employee, contractor or consultant, or result in the payment of any other benefits to any Person or the forgiveness of any Indebtedness of any Person, (iii) result in any prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available or (iv) result (either alone or in conjunction with any other event) in the payment or series of payments by the Company or any of its Affiliates to any Person of an “excess parachute payment” within the meaning of Section 280G of the Code.    
(l)    Schedule 3.19(l) of the Company Disclosure Schedule sets forth each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code).  Except as set forth on Schedule 3.19(l), each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has at all times been operated, administered and documented in compliance with Section 409A of the Code.
Section 3.20    Insurance.  The Company maintains policies of fire and casualty, liability and other forms of insurance in such amounts, with such deductibles and against such risks and losses, as set forth in Schedule 3.20 of the Company Disclosure Schedule.  All policies described or required to be set forth in Schedule 3.20 of the Company Disclosure Schedule are in full force and effect, and the Company is not in default, whether as to payment of premium or otherwise, in any material respect under the terms of any such policy.  Excluding insurance policies that have expired and been replaced in the ordinary course of business consistent with past practice, no insurance policy has been cancelled within the last three (3) years and no threat has been made to cancel any insurance policy of the Company during such period.  Since January 1, 2009, there has been no claim by the Company in excess of $25,000 under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights.  
Section 3.21    Transactions with Directors, Officers and Affiliates.  No Affiliate, employee, officer, director or any of their “immediate family” (as such terms are respectively defined in Rule 12b-2 and Rule 16a-1 of the Securities Exchange Act of 1934, as amended) of the Company (each of the foregoing, a “Related Person”), other than in its capacity as an officer, director or employee of the Company (a) is involved, directly or indirectly, in any material business arrangement or other material relationship with the Company (whether written or oral) related to the Business or the Purchased Assets or (b) directly or indirectly owns, or otherwise has any right, title, interest in, to or under, any material property or right, tangible or intangible, that is used in the Business.
Section 3.22    Labor and Employment.  
(a)    Schedule 3.22(a)(i) of the Company Disclosure Schedule lists each Business Employee as of the date hereof and such Business Employee’s (i) employment status (i.e., full time, part time, temporary, casual, seasonal, etc.), (ii) employment authorization or work visa status, to the extent required for employment authorization and/or verification purposes in the applicable jurisdiction and permitted by applicable laws, (iii) date of hire and service dates, (iv) current wages, salaries or hourly rate of pay, benefits (both statutory and nonstatutory), vacation entitlement, commissions and bonus opportunity (whether monetary or otherwise), (v) other material compensation paid or payable since the beginning of the most recently completed fiscal year, (vi) for any benefit that takes into account length of service to the Company, the date upon which each such term of employment with the Company became effective and (vii) location of current employment.  The Company has made available to Purchaser copies of all written agreements between the Company and any employee of the Company.  The employment of all 

    

employees of the Company is terminable at will.  Except as otherwise indicated in Schedule 3.22(a)(ii) of the Company Disclosure Schedule, no Business Employee has indicated in writing (including electronic mail) to the Company that he or she will cancel or otherwise terminate their relationship with the Company and none of the Business Employees set forth on Schedule 3.22(a)(i) of the Company Disclosure Schedule has otherwise indicated to the Company that he or she will cancel or otherwise terminate their relationship with the Company.
(b)    The Company is not party or subject to a labor union or collective bargaining agreement in connection with the Business, and no such labor union or collective bargaining agreement is being negotiated.  The Company has no obligation to negotiate any such labor union or collective bargaining agreement. To Company’s knowledge, there is no activity involving any current or former employee seeking to certify a collective bargaining unit or engaging in any other labor organizational activity.
(c)    No labor dispute, request for representation, picket, work slow-down, strike, work stoppage or any action or arbitration has occurred or is occurring or, to Company’s knowledge, has been threatened that involve any current or former employee within three years prior to the date hereof.  No event has occurred or circumstance exists that may provide the basis of any work stoppage or other labor dispute in connection with the Business.
(d)    The Company is not the subject of any claim which is pending or, to Company’s knowledge, threatened, asserting that the Company has, in connection with the Business, committed an unfair labor practice (within the meaning of the National Labor Relations Act or applicable state or foreign statutes) or seeking to compel the Company to bargain with any labor organization as to wages with conditions of employment.
(e)    The Company has complied with each, and is not in violation of any, law relating to anti-discrimination and equal employment opportunities in connection with the Business.  There are, and have been within the last five years, no violations of any other law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits of any current or former employee or other Person in connection with the Business.  The Company has filed all reports, information and notices required within the last five years under any law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits of any current or former employee or other Person in connection with the Business, and will timely file prior to Closing all such reports, information and notices required by any law to be given prior to Closing.
(f)    The Company has paid or properly accrued all wages and compensation due to current or former employees, including all vacations or vacation pay, holidays or holiday pay, sick days or sick pay, and bonuses. 
(g)    The Company is not a party to any Contract which restricts the Company from relocating, closing or terminating any of its operations or facilities or any portion thereof.  The Company has not since January 1, 2010 effectuated a “plant closing” (as defined in the WARN Act) or a “mass lay-off” (as defined in the WARN Act), in either case affecting any site of employment or facility of the Company, except in accordance with the WARN Act.  The consummation of the Transactions contemplated by this Agreement will not create liability for any act by the Company on or prior to the Closing under the WARN Act or any other law respecting reductions in force or the impact on employees of plant closings or sales of businesses.
(h)    The Company has complied and is in compliance with the requirements of the Immigration Reform and Control Act of 1986. The Company Disclosure Schedule sets forth a true and complete list of all Business Employees working in the United States who are not U.S. citizens and a description of the legal status under which each such Business Employee is permitted to work in the United States.  All Business Employees who are performing services for the Company in the United States are legally able to work in the United States and will be able to continue to work in the Business in the United States following the consummation of the Transactions contemplated by this Agreement. 
(i)    Each Person providing services to the Company that has been characterized as a consultant or independent contractor and not as an employee has been properly characterized as such and the Company does not have any liability or obligations, including under or on account of any Benefit Plan, arising out of the hiring or retention of Persons to provide services to the Company and treating such Persons as consultants or independent contractors and not as employees of the Company.
Section 3.23    Customers and Suppliers.  Schedule 3.23 of the Company Disclosure Schedule sets forth, with respect to the Business during the last full fiscal year, a list of (a) the dollar amount derived from each of the 20 largest (based on dollar amounts purchased) customers of the Company, (b) the dollar amount purchased from the 20 largest (based on dollar amounts purchased or revenue shared) suppliers of the Company, including suppliers of Intellectual Property Rights or Technology that is 

    

currently being used by, or incorporated into products or services of, the Company, and (c) any third parties from whom the Company licenses content to publish as part of the Company’s products and services on an exclusive basis (“Exclusive Content Providers”). The Company has provided Purchaser with complete and accurate copies of each contract pursuant to which the Company licenses content from a third party to publish as part of the Company’s products and services (“Content Providers”). Except as set forth on Schedule 3.23, the Company has no knowledge of, and has not received written notice of the intention of: (i) any of such customers, suppliers or Exclusive Content Providers (or other material Content Providers) to cease doing business or reduce in any material respect the business transacted with the Company or to terminate or modify any agreements with the Company (whether upon consummation of the Transactions contemplated hereby or otherwise); or (ii) any Governmental Authority, customer, supplier or Exclusive Content Providers (or other material Content Providers) to cease doing business or reduce in any material respect the business transacted between such parties or modify any agreement between such parties, which may adversely impact the Business or Purchased Assets.
Section 3.24    Brokers.  Except for Berkery Noyes & Co., LLC (for which the Company is obligated to pay and which is an Excluded Liability), there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of, or is entitled to any fee or commission from the Company in connection with the Transactions contemplated by this Agreement.
Section 3.25    Full Disclosure.  This Agreement, including the Company Disclosure Schedule, and any certificate, instrument or other document required to be delivered pursuant to this Agreement by the Company or the Stockholder, does not contain, on the part of the Company or the Stockholder, any untrue statement of a material fact, and does not omit, on the part of the Company or the Stockholder, to state any material fact necessary to make the statements contained herein or therein not misleading.  
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Company and the Stockholder that the statements contained in this Article IV are true and correct as of the date of this Agreement.
Section 4.1    Authority and Binding Effect.  Purchaser has the corporate power and authority to execute and deliver this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of Purchaser, pursuant to this Agreement and to carry out the Transactions contemplated hereby and thereby.  The execution, delivery and performance of this Agreement and the Other Agreements have been duly and validly authorized by the board of directors of Purchaser, and no additional other corporate proceedings on the part of either Purchaser is necessary in connection with the execution, delivery and performance of this Agreement or the Other Agreements.  This Agreement has been duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery of this Agreement by the Company and the Stockholder, this Agreement constitutes a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.
Section 4.2    Organization.  Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Purchaser is duly licensed or qualified to do business as a foreign corporation under the laws of any other jurisdiction in which the character of its properties or in which the transaction of its business makes such qualification necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, have a material adverse effect on the ability on either Purchaser to perform its obligations under this Agreement.
Section 4.3    No Violations.  The execution and delivery of this Agreement and the Other Agreements and the performance and consummation of the Transactions contemplated hereby and thereby by Purchaser will not (a) conflict with or violate any provision of the certificate of incorporation, by-laws or other organizational documents of Purchaser, (b) conflict with, or result in the breach of, or constitute a violation of or default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of Purchaser under, any material Contract to which Purchaser is party or to which any of its assets is subject or (c) to the knowledge of Purchaser, violate or result in a breach of or constitute a default under any Applicable Law to which Purchaser is subject or by which Purchaser or any of their assets is bound or affected, except for any conflict, breach, default, termination, cancellation, acceleration, loss or violation which, individually or in the aggregate, would not materially impair Purchaser’s ability to perform its obligations hereunder and is not reasonably likely to prohibit or materially delay the performance of this Agreement by Purchaser.

    

Section 4.4    Consents and Approvals.  The execution, delivery and performance of this Agreement by Purchaser and the consummation by Purchaser of the Transactions contemplated hereby in accordance with the terms hereof will not require Purchaser to make any filing with, or notification to or obtain any Consent from any Person, except (a) where failure to obtain such Consent, or to make such filing or notification, would not have a material adverse effect on the ability of Purchaser to perform their obligations under this Agreement and (b) as may be necessary as a result of any facts or circumstances relating solely to the Company.
Section 4.5    Litigation.  There is no Proceeding pending or, to the knowledge of Purchaser, threatened in writing, against Purchaser, and Purchaser is not subject to any outstanding order, writ, judgment, injunction or decree of any Governmental Authority that, in either case, would, individually or in the aggregate, (a) delay, hinder or prevent the consummation of the Transactions contemplated by this Agreement by Purchaser or (b) have a material adverse effect on the ability of either Purchaser to perform their obligations under this Agreement.
Section 4.6    Brokers. There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of, or is entitled to any fee or commission from Purchaser or its Affiliates in connection with the Transactions contemplated by this Agreement.
Section 4.7    Sufficiency of Funds. Purchaser has sufficient cash on hand or other sources of available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.
Section 4.8    Independent Investigation.  Purchaser acknowledges that, except as expressly set forth herein or as set forth in any certificate, instrument or other document required to be delivered by Company or the Stockholder hereunder, the Company and the Stockholder have not made, and hereby expressly disclaims and negates, any projections, representation or warranty, express or implied and relating to the Company, the Business or Purchased Assets, including any representation or warranty regarding any information, data, or other materials (written or oral) furnished to Purchaser by or on behalf of the Company including those documents in the Company’s electronic datasite. Notwithstanding the foregoing, nothing in this Section 4.8 shall limit Purchaser’s ability to recover Losses resulting from or arising out of fraud or intentional misrepresentation of the Company, the Stockholder or their Representatives or Affiliates on their behalf. 
ARTICLE V
GENERAL COVENANTS
Section 5.1    Access to Information.  From and after the date hereof until the earlier to occur of the proper termination of this Agreement pursuant to Section 8.1 and the Closing (the “Pre-Closing Period”), the Company shall, and shall cause its Representatives to, (i) afford to the Purchaser and its Representatives access, upon reasonable notice during normal business hours, to the offices, properties, books and records, employees, customers, suppliers, accountants and other advisors of the Company and the Business, and (ii) furnish to the Representatives of the Purchaser the financial statements and reports regularly prepared for the management of the Business and such additional information regarding the Business as the Purchaser may from time to time reasonably request.  Without limiting the generality of anything contained in this Section 5.1, during the Pre-Closing Period, the Company shall ensure that the Company’s officers confer and consult regularly with the Purchaser and the Purchaser’s Representatives concerning operational and financial matters and otherwise report regularly to the Purchaser concerning the status of the Business.  The Company and the Stockholder agree that no investigation by the Purchaser or its Representatives shall affect or limit the scope of the representations and warranties of the Company and the Stockholder or limit the liability of the Company or the Stockholder for any breach of such representations and warranties.  
Section 5.2    Operation of the Business.  Unless the Company obtains the prior written consent of the Purchaser, which consent will not be unreasonably withheld, and except for the matters set forth on Schedule 5.2 of the Company Disclosure Schedule attached hereto or for any matter which is expressly required or permitted by any Document, during the Pre-Closing Period, the Company shall:
(a)    conduct the Business in all material respects only in the ordinary course of business consistent with past practices;
(b)    use commercially reasonable efforts to preserve intact the current business operation, keep available the services of the current officers, consultants and employees and maintain relations and good will with all suppliers, customers, landlords, creditors, employees and other Persons having business relationships with the Company and the Business;

    

(c)    not dispose of any assets used in the Business except for the sale of inventory in the ordinary course of business consistent with past practices;
(d)    not form any Subsidiary or acquire any equity interest or other interest in any Person;
(e)    (i) other than in the ordinary course of business consistent with past practice, enter into any Contract that is or would constitute a Material Contract, or (ii) amend or prematurely terminate, or waive any material right or remedy under, any Material Contract;
(f)    not take any action inconsistent with the terms of this Agreement;
(g)    other than in the ordinary course of business and consistent with past practices, not acquire, lease or license any right or other asset from any other Person;
(h)    except for payments related to the development of the new version of Market Clarity consistent with the budget that has been made available to Purchaser, not make any capital expenditure which, when added to all other capital expenditures made on behalf of the Business since the Balance Sheet Date, exceeds $25,000 in the aggregate;
(i)    not (A) lend money to any Person, (B) incur or guarantee any Indebtedness (except that the Company may make routine borrowings in the ordinary course of business consistent with past practices under the Company’s existing lines of credit), or (C) grant or suffer the imposition of any Encumbrance on any asset of used in the Business, other than Permitted Encumbrances;
(j)    not (A) establish, adopt or amend any Benefit Plan, employee agreement or consulting agreement, (B) pay any bonus or make any profit sharing payment, cash incentive payment or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers, consultants or employees, or (C) hire any new employee, except for any new employee hired in the ordinary course of business whose aggregate annual compensation is not expected to exceed $100,000;
(k)    not change any method of accounting or accounting practice in any material respect;
(l)    not, except as otherwise permitted by Section 5.7, make or change any material Tax election, settle or compromise any claim, notice, audit report or assessment in respect of Taxes, change any annual Tax accounting period, adopt or change any method of Tax accounting, file any amended Tax Return, enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any Tax, surrender any right to claim a Tax refund, or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;
(m)    not commence or settle any Proceeding related to the Business in which the Company seeks injunctive relief, specific performance or damages in excess of $10,000;
(n)    not settle any Proceeding related to the Business which may require a payment by the Company in excess of $10,000, or impose any limitations on the Company’s ability to conduct its business, or admit any violation of Applicable Law;
(o)    not, other than as contemplated by this Agreement, enter into any Contract with a related party;
(p)    not enter into any material transaction or take any other material action outside the ordinary course of business consistent with past practices, except for the Transactions; and
(q)    not authorize, or enter into any legally binding commitment to take, any action with respect to any of the foregoing
Section 5.3    Confidentiality.  
(a)    Each Receiving Party (as defined below) acknowledges the confidential and proprietary nature of the Confidential Information of the Disclosing Party (as defined below) and shall hold, and shall cause their respective Affiliates and respective past, present and future directors, managers, officers, employees, independent contractors, agents, advisors or consultants (collectively, “Representatives”) to hold, in confidence and not disclose or release such Confidential Information 

    

without the prior written consent of the Disclosing Party; provided that the Disclosing Party may disclose, or may permit disclosure of, Confidential Information (i) to its respective Representatives who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Disclosing Party and in respect of whose failure to comply with such obligations, the Disclosing Party will be responsible or (ii) if the Disclosing Party or any of its respective Affiliates or Representatives are compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of independent legal counsel, by other requirements of Applicable Law.  
(b)    As used in this Agreement, the term “Confidential Information” includes all secret, confidential or proprietary technical, economic, environmental, operational, financial, and/or other business information, data or material, whether provided in written, oral, graphic, video, computer, electronic or other form, including, provided pursuant to this Agreement or generated pursuant to this Agreement by one Party (the “Disclosing Party”) to the other Party (the “Receiving Party”), including but not limited to, information relating to the Disclosing Party’s existing or proposed business, and without limitation, all notes, analyses, compilations, studies, interpretations or other documents whether in tangible form or on electronic or other data storage media, prepared by the Receiving Party and its Representatives, which contain, reflect or are based on, in whole or in part, Confidential Information furnished to the Receiving Party or its Representatives by the Disclosing Party or any to its Representatives, and any other materials that have not been made available by the Disclosing Party to the general public.  For purposes of this Section 5.3, all information related to the Business and the Purchased Assets that is known to the Company and constitutes Confidential Information prior to Closing, shall, following the Closing in all events, be deemed to be Confidential Information of Purchaser provided to the Company, including: (i) ideas and concepts for existing products, processes and services; (ii) specifications for products, equipment and processes; (iii) engineering drawings and graphs; (iv) technical, research and engineering data; (v) service and operation manuals; (vi) quality assurance policies, procedures and specifications; (vii) evaluation and/or validation studies; (viii) pending patent applications; (ix) all other know-how, methodology, procedures, techniques and trade secrets related to research, engineering, development and manufacturing; and (x) business information, including marketing and development plans, forecasts, research and development agreements, and customer and vendor information.  Notwithstanding the foregoing sentence, Confidential Information shall not include any information or materials that:
(i)    were already known to the Receiving Party (other than under an obligation of confidentiality), at the time of disclosure by the Disclosing Party;
(ii)    were generally available to the public or otherwise part of the public domain at the time of disclosure thereof to the Receiving Party; or
(iii)    became generally available to the public or otherwise part of the public domain after disclosure or development thereof, as the case may be, and other than through any act or omission of the Receiving Party in breach of the Receiving Party’s confidentiality obligations under this Agreement.
Section 5.4    Consents and Approvals.  During the Pre-Closing Period, subject to the terms and conditions herein provided, the Company and the Stockholder, on the one hand, and the Purchaser, on the other hand, shall use commercially reasonable efforts to consummate and make effective as promptly as practicable after the date hereof the Transactions, and shall cooperate with the other in connection with the foregoing, including using commercially reasonable efforts (i) to give all notices and obtain all waivers, consents and approvals from third parties to Material Contracts necessary for the consummation of the Transactions, (ii) to obtain all consents, approvals and authorizations that are required to be obtained under any Applicable Law and to effect all necessary registrations, filings, notices, and submissions of information requested or required by any Governmental Authority in connection with the Transactions, (iii) to provide such information and communications to any Governmental Authority as it may request, (iv) to lift, rescind or prevent the enactment of any Order or Law adversely affecting the ability of the parties hereto to consummate the Transactions, (v) to effect all necessary registrations and filings and submissions of information required or requested by Governmental Authorities (“Governmental Filings”), and (vi) to fulfill all conditions to this Agreement.
Section 5.5    Further Action.  Each of the Parties hereto shall execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and consummate and make effective the Transactions contemplated by this Agreement.
Section 5.6    Press Releases.  Each of the Parties will, and will cause each of their Affiliates and Representatives to, maintain the confidentiality of this Agreement and will not, and will cause each of their Affiliates and Representatives not to, issue or cause the publication of any press release or other public announcement with respect to this Agreement or the Transactions contemplated hereby without the prior written consent of the other Party, not to be unreasonably withheld. 

    

Notwithstanding the foregoing, either Party may, without the prior consent of the other Party, issue or cause publication of any such press release or public announcement to the extent that it reasonably determines, after consultation with outside legal counsel, such action to be required by Applicable Law or by the rules of any applicable securities exchange or self-regulatory organization, in which event such Party will use its commercially reasonable efforts to allow the other Party reasonable time to comment on such press release or public announcement in advance of its issuance. In addition, this Section 5.6 shall not prevent Purchaser from issuing any statement or communication that is reasonably necessary in response to a public statement or announcement made by any third Person with respect to the transactions contemplated by this Agreement.
Section 5.7    Tax Matters.    
(a)    The Company shall pay all Transfer Taxes and shall timely file or cause to be filed all necessary Tax Returns with respect to Transfer Taxes, if any.  Purchaser shall cooperate with the Company as reasonably necessary in preparing and filing all Tax Returns and other documentation relating to such Transfer Taxes as may be required by Applicable Law.
(b)    Following the Closing, Purchaser, on the one hand, and the Company and the Stockholder, on the other hand, agree to furnish or cause to be furnished to the other, upon request, as promptly as practicable, such information and assistance relating to the Purchased Assets, including, without limitation, access to books and records, as is reasonably necessary for the filing of all Tax Returns by Purchaser, the Company or the Stockholder, the making of any election relating to Taxes, the preparation for any audit by any Governmental Authority and the prosecution or defense of any claim, suit or Proceeding relating to any Tax.  Each of Purchaser, on the one hand, and the Company and the Stockholder, on the other hand, shall retain all books and records with respect to Taxes pertaining to the Purchased Assets for a period of at least seven (7) years following the Closing Date.  Purchaser and the Company and the Stockholder shall cooperate fully with each other in the conduct of any audit, litigation or other proceeding relating to Taxes. 
(c)    Each of the Company and the Stockholder shall promptly notify Purchaser in writing upon receipt by them of notice of any pending or threatened Tax audits or assessments relating to the income, properties, sales or operations of the Company. 
Section 5.8    Employee Matters.
(a)    Offers of Employment.  Prior to or on the Closing Date, Purchaser shall offer employment commencing on the Closing Date to substantially all of the Business Employees.  Business Employees to whom Purchaser has offered employment, who accept such offer and who commence employment with Purchaser on the Closing Date are referred to hereunder as “Transferred Employees.” Prior to and following the Closing Date, Purchaser and the Company will reasonably cooperate to coordinate the transfer of Transferred Employees and the termination of employment of the Transferred Employees with the Company or its Affiliates. 
(b)    Service Credit. With respect to any employee benefit plan maintained by Purchaser or an Affiliate of Purchaser  for the benefit of any Transferred Employee, effective as of the Closing, Purchaser shall, or shall cause its Affiliate to, waive any waiting periods or actively at work requirements and recognize all service of the Transferred Employees with the Company, as if such service were with Purchaser, for vesting, eligibility and accrual purposes; provided, however, such service shall not be recognized for benefit accrual purposes with respect to any defined benefit plan or equity plan (including, for the avoidance of doubt, in connection with any employer-match program under Purchaser’s 401(k) Plan) or to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding Benefit Plan.
(c)    401(k) Plan. The Company shall take all necessary actions to allow Transferred Employees to (i) roll over any associated loan notes to the extent permitted under the 401(k) plan maintained by the Company (the “Company 401(k) Plan”) and the 401(k) plan maintained by Purchaser (the “Purchaser 401(k) Plan”) and (ii) permit Transferred Employees to continue to make loan repayments to the Company 401(k) Plan for at least 60 days following the Closing Date.  Purchaser shall use commercially reasonable efforts to permit each such Transferred Employee who has received an eligible rollover distribution (as defined in Section 402(c)(4) of the Code) from the Company 401(k) Plan to roll such eligible rollover distribution (including within a reasonable period of time following the Closing Date an opportunity to roll over any associated loans, if applicable), into an account under a 401(k) plan maintained by Purchaser or an Affiliate of Purchaser.  
(d)    Benefit Plans. Effective as of the Closing, the Transferred Employees shall cease active participation in the Benefit Plans and the Purchaser shall coordinate the enrollment of all Transferred Employees into benefit plans of Purchaser. Purchaser will or will cause its Affiliate, as applicable, to (1) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to Transferred Employees 

    

under Purchasers medical plan (Aetna) that such employees may be eligible to participate in after the Closing Date and (2) to the extent that a Transferred Employee can provide to Purchaser or its medical plan provider (Aetna) evidence sufficient to demonstrate he or she has paid deductibles prior to the Closing Date under the Company’s medical plan, provide each Transferred Employee with credit for such deductibles paid prior to the Closing Date in satisfying any applicable deductible or out-of-pocket requirements for the plan year during which the Closing Date occurs under Purchasers medical plan that such employees are eligible to participate in after the Closing Date.  The Company shall remain liable for all eligible claims for benefits under the Benefit Plans that are incurred by the Employees prior to the Closing Date. For purposes of this Agreement, the following claims shall be deemed to be incurred as follows: (i) life, accidental death and dismemberment, short-term disability, and workers’ compensation insurance benefits, on the event giving rise to such benefits; (ii) medical, vision, dental, and prescription drug benefits, on the date the applicable services, materials or supplies were provided; and (iii) long-term disability benefits, on the eligibility date determined by the long-term disability insurance carrier for the plan in which the applicable Employee participates.
(e)    Continuous Employment. Purchaser and the Company intend that the transactions contemplated by this Agreement should not constitute a separation, termination or severance of employment of any Employee who accepts an employment offer by Purchaser that is consistent with the requirements herein, and that each such Employee will have continuous employment immediately before and immediately after the Closing. Notwithstanding the foregoing, the Company shall be liable and hold Purchaser harmless for any claims relating to the employment of any Transferred Employee incurred prior to or in connection with the Closing other than any unlawful hiring practices of Purchaser.  The Company shall be liable for and shall pay all accrued retirement and sale of company bonuses payable to Employees under existing agreements with such Employees.  Purchaser shall be liable and hold the Company harmless for any claims relating to the employment of any Transferred Employee incurred following the Closing.
(f)    Vacation.  Each Transferred Employee shall have the option of: (i)  receiving credit or rolling over their accrued but unused vacation time to Purchaser, in which case Purchaser shall assume liability for all accrued but unused vacation time to which such Transferred Employee is entitled as of immediately prior to the Closing Date to the extent permitted by Law or otherwise consented to by the Transferred Employee and each such Transferred Employee shall be entitled to use such accrued vacation in accordance with the terms of Purchaser’s vacation or paid time off policy, or (ii) being paid in cash (by the Company) an amount equal to the accrued but unused vacation time to which such Transferred Employee is entitled pursuant to the Company’s vacation time policy immediately prior to the Closing Date. Notwithstanding the above, the Accrued Vacation Amount assumed by Purchaser under subsection (i) above shall be a component of the Closing Net Working Capital.  
(g)    Bonus, Incentive and Other Compensation. The Company agrees that it shall be responsible for paying all amounts of salaries, commissions, bonuses, incentive and other cash compensation that are earned prior to the Closing Date or as a result of the transactions contemplated hereby and that such amounts shall be paid by the Company to Business Employees on or after the Closing Date. Notwithstanding the foregoing, any retention payments to Business Employees to be made by the Company shall be made pursuant to the terms of the agreements between the Company and each such Business Employee with respect to such retention payments.
(h)    COBRA Coverage.  Notwithstanding any other provision of this Agreement, Purchaser acknowledges that it will be considered a successor employer to the Company with respect to the obligation to provide continuation of health care coverage under the federal law commonly known as COBRA to those qualified beneficiaries (including covered employees) formerly covered under the Company’s group health plans whose rights to obtain COBRA coverage arose on or before the Closing Date, but only if the Company (including all employers treated as employed by a single employer with the Company under Section 414(t) of the Code) terminates all group health plan coverage on or after the Closing Date and before the COBRA continuation period expires with respect to such qualified beneficiaries.  Purchaser’s obligation to provide such coverage shall arise at the termination of the last group health plan offered by the Company and all employers treated as employed by a single employer with the Company.  The Company expects to terminate all group health plans on or before the last day of the month in which the Closing Date occurs.  Purchaser acknowledges that its COBRA obligations include providing notice to all qualified beneficiaries whose loss of coverage is associated with the termination of employment of covered employees in connection with the transaction contemplated by this Agreement. 
(i)    WARN Act.  The Company agrees to provide any required notice under the WARN Act, and any similar statute, and otherwise to comply with any such statute with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or similar event (including as a result of the consummation of the Transactions contemplated by this Agreement or this Agreement) affecting current or former employees and occurring at or prior to the Closing.  In the event as a result of actions or inactions of the Company, Purchaser incurs liabilities and obligations under the WARN Act or any other similar state 

    

laws, including, without limitation, penalties, fines and other costs, the Company shall fully indemnify Purchaser for such liabilities and obligations with respect thereto.
(j)    No Rights Conferred on Personnel.  Nothing in this Section 5.8, expressed or implied, shall confer upon any partner, principal, employee, director, officer or former partner, principal, employee, officer or director of the Company or its Affiliates or related entities (including, without limitation, the Transferred Employees and Business Employees) any rights or remedies (including, without limitation, any right to employment or continued employment for any specified period) of any nature or kind whatsoever, under or by reason of this Section 5.8. It is expressly agreed that the provisions of this Section 5.8 are not intended to be for the benefit of or otherwise be enforceable by, any third party, including, without limitation, any Transferred Employees or Business Employees.  No provision of this Section 5.8 shall create any rights in any such persons in respect of any benefits that may be provided under any Benefit Plan or any plan or arrangement which may be established or maintained by Purchaser, shall be construed to establish, amend, or modify an Benefit Plan or any other benefit plan, program, agreement or arrangement nor shall require the Company, Purchaser or any Affiliate of the Company or Purchaser to continue or amend any particular benefit plan and any such plan may be amended or terminated in accordance with its terms and applicable law.
Section 5.9    Non-Compete; Non-Solicitation. 
(a)    Each of the Company and the Stockholder acknowledge and agree on behalf of itself, or himself, and its, or his, Affiliates (each a “Restricted Party” and, collectively, the “Restricted Parties”) as follows:
(vi)    the covenants in this Section 5.9, including the scope of the covenants as to time, geography and activity, are reasonable and necessary to protect and preserve Purchaser’s and its Affiliates’ legitimate business interests and are not broader than necessary to protect Purchaser’s and its Affiliates’ interests;
(vii)    Purchaser and/or its Affiliates would be irreparably damaged if any Restricted Party were to breach its obligations under this Section 5.9; 
(viii)    Purchaser has been materially induced by the Restricted Parties to enter into this Agreement by the covenants set forth in this Section 5.9, and Purchaser would not have taken such action if the Restricted Parties had not covenanted as provided in this Section 5.9; 
(ix)    the covenants in this Section 5.9 constitute independent covenants that shall not be affected by performance or nonperformance of any other provision of this Agreement by Purchaser; and
(x)    as part of the Transactions contemplated herein, Purchaser is purchasing the goodwill related to the Business, will carry on the Business conducted by the Company prior to the Closing, and in order to protect the value of the goodwill related to the Business, and as a condition to entering into this Agreement, the Restricted Parties have agreed to the restrictive covenants set forth in this Section 5.9.
(b)    For a period of five (5) years after the Closing Date, each Restricted Party will not, and will cause its current and future Affiliates not to, directly or indirectly, whether by itself or through an agent, employee or otherwise, or in association with any Person or entity, own, share in the earnings of, invest in the stock, bonds or other securities of, manage, operate, finance (whether as a lender, investor or otherwise), control, participate in the ownership, management, operation, or control of, be employed by, associated with, or in any manner be connected with, lend money to, render services or advice to, be engaged or employed by, or take part in, or, consult or advise, any other Person or entity that is engaged in the marketing, distribution or selling of any products or provisions of services that constitute any aspect of the Business (each, a “Competing Activity”) or in the development of any such products or capabilities which constitute a Competing Activity anywhere in the Territory.  
(c)    No Restricted Party will be in violation of this Section 5.9: solely by reason of investing in stock, bonds or other securities of any Person or entity engaged in a Competing Activity (but without otherwise participating in such Competing Activity), if: (i) such stock, bonds or other securities are listed on any national securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934 or any successor law; and (ii) such investment does not exceed, in the case of any class of the capital stock of any one issuer, one percent (1.0%) of the issued and outstanding shares or such capital stock, or, in the case of bonds or other securities, one percent (1.0%) of the aggregate principal amount thereof issued and outstanding.
(d)    For a period of five (5) years from the Closing Date: 

    

(i)    Each Restricted Party will not (and shall not permit any of its Affiliates to), directly or indirectly, solicit or otherwise attempt to induce any employee or independent contractor of Purchaser or its Affiliates (including, without limitation, the Transferred Employees) to terminate his or her employment or relationship, as applicable, with Purchaser or its Affiliates, to work with or for the Company or the Stockholder or their Affiliates in competition with the Business; provided, however, that this Section 5.9 shall not (A) prohibit general solicitations of or advertisement for employment by the Company or the Stockholder or their Affiliates if they are not specifically directed at employees or independent contractors of Purchaser or its Affiliates, or (B) prevent any Restricted Party from interviewing or hiring any employee or independent contractor of Purchaser who responds to such general solicitation of or advertisement for employment; and  
(ii)    Each Restricted Party will not, and will cause its current and future Affiliates not to, directly or indirectly cause or induce, or attempt to cause or induce, any then-existing customer, supplier, licensee, licensor, or franchisee or other business relation of Purchaser or its Affiliates, to cease doing business with Purchaser or its Affiliates, or in any way interfere with the relationship between Purchaser and its Affiliates and their customers, suppliers, licensees, licensors, franchisees or other business relations.  
(e)    If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Section 5.9 is invalid or unenforceable, then the court or tribunal will have the power to reduce the scope, duration, or geographic area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.
(f)    If any Restricted Party breaches any of its covenants, duties or obligations set forth in this Section 5.9, Purchaser and its Affiliates would encounter extreme difficulty in attempting to prove the actual amount of damages suffered by them as a result of such breach and would not be reasonably or adequately compensated in damages in any action at law.  In addition to any other remedy Purchaser or its Affiliates may have at law, in equity, by statute or otherwise, if any Restricted Party breaches this Section 5.9, then Purchaser and its Affiliates will be entitled to seek and receive temporary, preliminary and permanent injunctive and other equitable relief from any governmental body of competent jurisdiction to enforce any of their rights under this Section 5.9 or otherwise to prevent violation of this Section 5.9, without the necessity of proving the amount of any actual damage resulting therefrom.  No remedy conferred by any of the specific provisions of this Section 5.9 is intended to be exclusive of any other remedy that is otherwise available at law, in equity, by statute or otherwise.  In any action, suit or other proceeding instituted, concerning or arising out of this Section 5.9, the prevailing Party will recover all of such Party’s costs and reasonable attorneys’ fees.
Section 5.10    Post-Closing Consents; Nonassignable Contracts. 
(a)    Notwithstanding anything to the contrary in this Agreement, to the extent that any Assigned Contract is not capable of being transferred by the Company to Purchaser pursuant to this Agreement without the consent, approval or authorization of a third party, and such consent, approval or authorization is not obtained prior to the Closing, or if such transfer or attempted transfer would constitute a breach or a violation of the Assigned Contract or any Applicable Law (each a “Specified Consent”), nothing in this Agreement shall constitute an assignment or transfer or an attempted assignment or transfer thereof; provided, however, that, subject to the satisfaction or waiver of the closing conditions contained in Article VI and Purchaser’s election to close notwithstanding that a specific third party consent set forth on Schedule 3.4 has not been obtained by the Company, Purchaser waives all recourse against the Company including, without limitation, any adjustment to the Purchase Price on account thereof, solely resulting from the failure of the Company to obtain such specific third party consent. 
(b)    In the event that any such Specified Consent is not obtained on or prior to the Closing Date, each of the Company, the Stockholder and Purchaser shall use commercially reasonable efforts to: (i) obtain the Specified Consent (in a form which is acceptable to Purchaser); (ii) provide Purchaser all of the benefits of the applicable Assigned Contract; (iii) cooperate in any reasonable and lawful arrangement designed to provide such benefit to Purchaser, including accepting direction as Purchaser shall request of the Company and the Stockholder; (iv) keep Purchaser fully informed in a timely manner as to all developments regarding the Specified Consent and Assigned Contract, including promptly providing with copies of all material correspondence, drafts and other material communications regarding same; and (v) enforce at the request of Purchaser at Purchaser’s sole cost and expense, any rights of the Company arising from any such Assigned Contract.  Notwithstanding the foregoing, the Parties acknowledge and agree that in connection with obtaining the Specified Consent Purchaser shall not be required to: (i) divest any of its respective businesses or assets, including any part of the Purchased Assets acquired pursuant to the terms and conditions of this Agreement and the Other Agreements; (ii) take or agree to take any other action or agree to any 

    

limitation that could reasonably be expected to have an adverse effect on the business, operations, assets, liabilities, condition (financial or otherwise), results of operations or prospects of Purchaser or its Affiliates; or (iii) pay any funds or accept any material modification to the Assigned Contract.
(c)    Once a Specified Consent is obtained, the applicable Assigned Contract shall be deemed to have been automatically assigned and transferred to Purchaser on the terms set forth in this Agreement, as specified in Article I.    
Section 5.11    Reserved.   
Section 5.12    Name Change.  Immediately upon the Closing, the Company agrees to cease using, and transfer to Purchaser all of its rights to use, “AllRegs”, “Mortgage Resource Center, Inc.” or any other name which is confusingly similar thereto, or which would prevent or interfere with the Purchaser qualifying to do business in the any jurisdiction under such names.
Section 5.13    Supplement to Company Disclosure Schedule.  From time to time prior to the Closing, the Company shall have the right, but not the obligation, to supplement or amend the Company Disclosure Schedule hereto with respect to any matter hereafter arising or of which it becomes aware after the date hereof (each a “Schedule Supplement”). Any disclosure in any such Schedule Supplement shall not be deemed to have cured any inaccuracy in or breach of any representation or warranty contained in this Agreement, including for purposes of the indemnification or termination rights contained in this Agreement or of determining whether or not the conditions set forth in Section 6.1(b) have been satisfied; provided, however, that if the Company discloses in a Schedule Supplement that, following the date hereof, the Company first learned, or was first given notice, that a material customer, supplier or Content Provider wishes to cease doing business or reduce in any material respect, or otherwise terminate or modify its relationship, with the Company (a “Partner Disclosure”), Purchaser shall have until the earlier of ten (10) days following the receipt of such Partner Disclosure to either accept or reject the Partner Disclosure.  If Purchaser fails to act within such period, it shall be deemed to have accepted such Partner Disclosure, and such Partner Disclosure shall be deemed to have cured any breach of any representation or warranty made in this Agreement relating to such Partner Disclosure (but not, for purposes of clarification, any breach of any representation or warranty relating to the underlying cause of such customer, supplier or Content Provider electing to modify its relationship with the Company) .  If Purchaser rejects the Partner Disclosure, the Agreement shall be terminable at the option of Company or Purchaser.
Section 5.14    No Solicitation. From the date hereof until the earlier of the termination of this Agreement pursuant to its terms and the Closing Date, the Company and the Stockholder will not, and will cause their officers, directors, employees, financial advisors, representatives, agents and Affiliates, as applicable, not to, directly or indirectly, take any action to solicit, initiate, seek, entertain, encourage, support, assist, participate in any negotiations or communications regarding, or cooperate with any inquiry, proposal or offer from, or furnish any information to, any third party regarding any merger, recapitalization or consolidation with or involving the Company or any acquisition of stock or right to acquire stock (including any conversion right) or acquisition or exclusive license of any assets of the Company or any financing transaction (including the filing of a registration statement with the SEC) or any other similar transaction the consummation of which would interfere with the Company’s ability to consummate the transactions contemplated hereby (an “Acquisition Transaction”).  Upon execution of this Agreement, the Company and the Stockholder will, and will cause their officers, directors, employees, financial advisors, representatives, agents and Affiliates, as applicable, to, immediately cease and cause to be terminated any existing direct or indirect discussions with any Person (other than Purchaser) that are in respect of an Acquisition Transaction.  From the date hereof until the earlier of the termination of this Agreement pursuant to its terms and the Closing Date, the Company and the Stockholder will, and will cause their officers, directors, employees, financial advisors, representatives, agents and Affiliates, as applicable, to, promptly (and in no event later than 24 hours after receipt thereof) notify Purchaser orally and in writing of any proposal for, or inquiry respecting, any Acquisition Transaction or any request for nonpublic information in connection with such proposal or inquiry, or for access to the properties, books, or records of the Company by any person or entity that informs the Company that it is considering making, or has made, such a proposal or inquiry.  Such notice will indicate the identity of the person or entity making the proposal or inquiry and the terms and conditions of such proposal or inquiry in reasonable detail.  The Company will keep Purchaser informed on a reasonably current basis (and, in any event, within 24 hours) of the status and details of any material modifications to any such proposal, offer or request.

ARTICLE VI
CLOSING CONDITIONS

    

Section 6.1    Conditions to Purchaser’s Obligations.  The obligation of the Purchaser to consummate the Transactions to be consummated at the Closing is subject to the satisfaction of the following conditions unless waived in writing (to the extent such conditions can be waived) by the Purchaser:
(r)    Performance of Obligations of the Company and the Stockholder.  The Company and the Stockholder shall have performed and complied in all material respects with all agreements and obligations to be performed and complied with by it under this Agreement prior to or at the Closing, and the Company shall have supplied the Purchaser with certificate(s), dated as of the Closing Date, signed by an authorized officer of the Company to such effect.
(s)    Representations and Warranties.  The representations and warranties of the Company and the Stockholder set forth in this Agreement and the Disclosure Schedule that are qualified by reference to materiality or Material Adverse Effect shall be true and correct, and each of the other representations and warranties made by the Company and the Stockholder set forth in this Agreement will be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except in any case that representations and warranties that expressly speak as of a specified date or time need only be true and correct or true and correct in all material respects, as applicable, as of such specified date or time).
(t)    Closing Documents.  The Purchaser shall have received copies of each of the following documents to which the Company or the Stockholder is a party, duly executed by the Company or the Stockholder, and each such document shall be in full force and effect:
(i)    executed counterparts to the Escrow Agreement and each of the Other Agreements to which the Company is a party, duly executed by the Company or the Stockholder, as the case may be; 
(ii)    a certificate, dated as of the Closing Date, duly executed by an authorized officer of the Company, certifying that (A) the Organizational Documents of the Company attached to the certificate are true and complete, (B) such Organizational Documents have been in full force and effect in the form attached from and after the date of the adoption of the resolutions referred to in clause (C) below and no amendment to such Organizational Documents has occurred since the date of the last amendment annexed thereto, if any, (C) the resolutions adopted by the board of directors and all of the voting Stockholders of the Company authorizing the execution, delivery and performance of this Agreement, attached to the certificate, were duly adopted at a duly convened meeting thereof, at which a quorum was present and acting throughout or by unanimous written consent, remain in full force and effect, and have not been amended, rescinded or modified, except to the extent attached thereto, and; (D) the closing conditions in Section 6.1(a) and (b) have been satisfied; 
(iii)    At least three (3) Business Days prior to the Closing, a certificate, duly executed by an authorized officer of the Company, setting forth a good faith estimate (including calculations with reasonable detail) of the amount of (i) Closing Net Working Capital (the “Estimated Closing Net Working Capital”), (ii) Closing Debt Amount (the “Estimated Closing Debt Amount”), and (iii) Subscription Amount (the “Estimated Subscription Amount”). The Estimated Subscription Amount set forth a complete itemization of (i) each customer Contract providing for a subscription renewal or anniversary date following the Closing for which cash has been received relating to the renewal by the Company prior to Closing (each, a “Renewing Contract”), (ii) the amount of such cash received by the Company for each Renewing Contract, and (iii) any Contracts between the Company and a customer for the provision by the Company of educational and/or business practices professional services which are ongoing as of the Closing Date (“Existing Professional Service Contracts”), together with calculations showing (A) the aggregate amount collected from customers to deliver all obligations under such Existing Professional Service Contracts following the Closing where the cash payment relating to such Existing Professional Service Contract was collected by the Company prior to the Closing, (B) the sales commission already paid out by the Company in connection with such Existing Professional Service Contract, (C) the total hours to be performed under such Existing Professional Service Contract, and (D) the number of hours remaining to be performed after the Closing pursuant to such Existing Professional Service Contract. 
(iv)    a signed offer letter regarding employment from (i) each of the Key Employees in the forms agreed to between Purchaser and Seller as of the date hereof, and (ii) at least 90% of all other employees of the Company in a form satisfactory to Purchaser; 
(v)    a signed non-compete agreement from each of the Key Employees in the forms agreed to between Purchaser and Seller as of the date hereof; 

    

(vi)    UCC-3 termination statements and any other documents necessary to terminate any Lien (other than Permitted Liens) on any of the Purchased Assets (to the extent necessary);  
(vii)    a certificate of good standing in respect of the Company, dated as of a date that is not more than three (3) Business Days prior to the Closing Date;
(viii)    a duly executed certificate prepared in accordance with Treasury Regulation Section 1.1445-2(b)(2) certifying the Company’s non-foreign status; 
(ix)    subject to Section 5.10, assignment and assumption agreements, solely to the extent applicable, in substantially the form(s) attached hereto as Exhibit B (the “Assignment and Assumption Agreements”), as are necessary to effect the assignment to Purchaser of all rights of the Company in and to the Assigned Contracts (including without limitation the Licensed Intellectual Property), Leases and Assigned Intellectual Property; and
(x)    such other documents and instruments as Purchaser may reasonably request to effect or evidence the Transactions contemplated by this Agreement, including any conveyance documents that are necessary to vest in Purchaser good and valid title or ownership rights to the Purchased Assets and valid contract or other rights in the Purchased Assets that are contractual rights.
(u)    No Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred any Material Adverse Effect with respect to the Business, and no event, change, development or worsening thereof shall have occurred or circumstance or condition shall exist that, in combination with any other event, change, development or worsening thereof or circumstance or condition, has had or would reasonably be expected to have a Material Adverse Effect with respect to the Business. 
(v)    No Proceedings.  No Person shall have commenced or threatened to commence any Proceeding challenging or seeking the recovery of any damages in connection with the Transactions.
(w)    Required Consents.  Purchaser shall have received written consents to assignment of certain Assigned Contracts from the Company to Purchaser, in the form attached as Exhibit E, from all of the third parties listed on Schedule 6.1(g).
(x)    Financial Statements.  The Company shall have produced and delivered to Purchaser accurate monthly financial statements for the Business (i) for the month of July 2014 by August 15, 2014, and (ii) for the month of August 2014 by September 9, 2014, and in each case Purchaser shall have confirmed in its reasonable discretion that such financial statements were prepared in accordance with GAAP applied on a consistent basis. 

Section 6.2    Conditions to Obligations of the Company and the Stockholder. The obligation of the Company and the Stockholder to consummate the Transactions to be consummated at the Closing is subject to the satisfaction of the following conditions unless waived in writing (to the extent such conditions can be waived) by the Company:
(c)    Performance of Obligations of the Purchaser.  The Purchaser shall have performed and complied in all material respects with all agreements and obligations to be performed and complied with by it under this Agreement prior to or at the Closing, and the Purchaser shall have supplied the Company with a certificate, dated as of the Closing Date, signed by an officer of the Purchaser, to such effect.
(d)    Officer’s Certificate of the Purchaser.  The Company shall have received a certificate dated as of the Closing Date, signed by an officer of the Purchaser and certifying:
(i)    as to the genuineness of the resolutions of the board of directors of the Purchaser authorizing the execution, delivery and performance by the Purchaser of each of the Documents to which the Purchaser is a party; and
(ii)    such other matters as the Company may reasonably request.

(e)    Representations and Warranties. 

    

(i)    The representations and warranties of the Purchaser set forth in this Agreement and the Disclosure Schedule that are qualified by reference to materiality or Material Adverse Effect shall be true and correct, and each of the other representations and warranties made by Purchaser set forth in this Agreement will be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except in any case that representations and warranties that expressly speak as of a specified date or time need only be true and correct or true and correct in all material respects, as applicable, as of such specified date or time); and
(ii)    the Company shall have received a certificate dated as of the Closing Date, signed by an authorized officer of the Purchaser, as to the satisfaction of the condition set forth in clause (i).
(f)     Closing Documents.  The Company shall have each received copies of each of the following documents to which it is a party duly executed by the Purchaser, and each such documents shall be in full force and effect:
(i)    the Initial Purchase Price Proceeds to the Company in accordance with Section 1.6(a);
(ii)    executed counterparts to the Escrow Agreement and each of the Other Agreements to which Purchaser is a party, duly executed by Purchaser; and
(iii)    such other documents and instruments as may be reasonably necessary to effect or evidence the Transactions contemplated by this Agreement.
ARTICLE VII
INDEMNIFICATION
Section 7.1    Survival of Representations and Warranties and Covenants.  The representations, warranties and covenants of the Parties contained in this Agreement shall survive the Closing for the applicable period set forth in this Section 7.1, and any and all claims and causes of action for indemnification under this Article VII arising out of the inaccuracy or breach of any representation, warranty or covenant of a Party must be made prior to the termination of the applicable survival period.  The Parties agree that all of the representations, warranties and covenants of the Parties contained in this Agreement and any and all claims and causes of action for indemnification under this Article VII shall survive as follows:
(g)        The respective representations and warranties of the Parties set forth in Sections 3.1 (Authority and Binding Effect), 3.2 (Organization), 3.8(a) and (g) (Title to Assets), 3.13 (Environmental Matters), 3.25 (Brokers) (together, the “Company Fundamental Representations”), and 4.1 (Authority and Binding Effect), 4.2 (Organization), and 4.6 (Brokers) shall survive the Closing indefinitely;
(h)    The representations and warranties of the Company and the Stockholder set forth in Section 3.18 (Tax Matters) and Section 3.19 (Employee Benefit Plans) shall survive until sixty (60) calendar days after the expiration of the applicable statute of limitations;
(i)    The representations and warranties of the Company and the Stockholder set forth in Section 3.15 (Intellectual Property), Section 3.16 (Information Technology) and Section 3.17 (Privacy and Personal Data) shall survive until December 15, 2016;  
(j)    All other representations and warranties of the Parties shall survive until the eighteenth (18th) month anniversary of the Closing Date; 
(k)    All covenants, agreements and obligations shall survive indefinitely; and
(l)    In the event of any fraudulent, intentional misrepresentation or willful breach of any representations or warranties of the Company or the Stockholder set forth in this Agreement, or in any agreement, document, certificate or other instrument delivered by the Company or the Stockholder under or pursuant to this Agreement or in connection with the transactions contemplated hereby, such representations and warranties shall survive the Closing and shall remain in full force and effect in perpetuity and without limitation, regardless of any investigation or disclosure made by or on behalf of any of the parties hereto.  

    

(m)    In the event of any fraudulent, intentional misrepresentation or willful breach of any representations or warranties of the Purchaser set forth in this Agreement, or in any agreement, document, certificate or other instrument delivered by Purchaser under or pursuant to this Agreement or in connection with the transactions contemplated hereby, such representations and warranties shall survive the Closing and shall remain in full force and effect in perpetuity and without limitation, regardless of any investigation or disclosure made by or on behalf of any of the parties hereto.  

Notwithstanding the foregoing (i) any obligation to indemnify, defend and hold harmless pursuant to Section 7.2 shall not terminate with respect to any item as to which the Indemnified Party shall have, before the expiration of the applicable survival period, previously made a claim by delivering a written notice of such claim (stating in reasonable detail the basis of such claim) to the Indemnifying Party in accordance with Section 7.6 and (ii) this Section 7.1 shall not limit any covenant or agreement of the Parties which contemplates performance after the Closing.
Section 7.2    Obligation to Indemnify
(g)    Indemnification by the Company and the Stockholder.  Subject to the limitations set forth in this Article VII, each of the Company and the Stockholder agree to jointly and severally indemnify, defend and hold harmless Purchaser and its directors, managers officers, employees, Affiliates, successors, permitted assigns, agents and representatives (collectively, the “Purchaser Indemnitees”), from and against all Losses resulting from or related to: 
(vi)    any breach or inaccuracy of any of the representations and warranties of the Company and the Stockholder contained in this Agreement, any Other Agreement or in any certificate delivered herein;
(vii)    any non-compliance with or breach of any covenant or agreement of the Company and the Stockholder contained in this Agreement or any Other Agreement; 
(viii)    any Excluded Assets or Excluded Liability; and
(ix)    any reasonable costs and expenses of enforcement to recover Losses due to the Purchaser Indemnitees under this Article VII. 

(h)    Company Basket. Except for Losses resulting from or related to: (i) fraud, intentional misrepresentation or willful breach, (ii) breach or inaccuracy of any of the Company Fundamental Representations, or (iii) the matters set forth in Sections 7.2(a)(ii)-(iv), as applicable, which, in each such case shall be indemnified in its entirety, the Purchaser Indemnitees shall not be entitled to recover for any Losses arising under this Agreement unless and until the aggregate amount of all Losses for which Purchaser Indemnitees are otherwise entitled to indemnification pursuant to this Agreement exceeds an amount equal to $125,000 (the “Company Basket”). If, at any time, the aggregate amount for which the Purchaser Indemnitees are entitled to indemnification pursuant to this Agreement exceeds the Company Basket, then the Purchaser Indemnitees shall be entitled to recover the amount in its entirety from the first dollar of Loss, regardless of such Company Basket.      
(i)    Indemnification Cap. The maximum liability for indemnification for Losses pursuant to this Article VII shall equal $3,000,000 (the “Cap”), except that if total Losses pursuant to this Article VII exceed $3,000,000 and such excess Losses result from the breach or inaccuracy of the representations and warranties set forth in Section 3.15 (Intellectual Property) (“IP Losses”), then the Cap shall increase to a total of $5,500,000, with the additional $2,500,000 being available solely to cover liability for indemnification for such IP Losses.  Notwithstanding the above, the Cap shall not apply to Losses resulting from (i) fraud, intentional misrepresentation or willful breach, (ii) breach or inaccuracy of any of the Company Fundamental Representations, or (iii) the matters set forth in Sections 7.2(a)(ii)-(iv), as applicable, which Losses shall be indemnified in their entirety up to the Purchase Price.  
(j)    Indemnification by Purchaser.  Subject to the limitations set forth in this Article VII, Purchaser agrees to indemnify, defend and hold harmless the Company, the Stockholder and their directors, managers officers, employees, Affiliates, successors, permitted assigns, agents and representatives (collectively, the “Company Indemnitees”), from and against all Losses resulting from or related to: 
(i)    any breach or inaccuracy of any of the representations and warranties of Purchaser contained in this Agreement, any Other Agreement or in any certificate delivered herein;

    

(ii)    any non-compliance with or breach of any covenant or agreement of Purchaser contained in this Agreement or any Other Agreement; 
(iii)    any Assumed Liability; and
(iv)    any reasonable costs and expenses of enforcement to recover Losses due to the Purchaser Indemnitees under this Article VII. 

(k)    Other Limitations:
(i)    Payments by an Indemnifying Party pursuant to this Article VII in respect of any Loss shall be limited to the amount of any Losses that remain after deducting therefrom any insurance proceeds actually received and directly related to such Losses, net of the cost of recovery and any premium increases relating to or resulting from such claim. The Indemnified Party shall use its commercially reasonable efforts to recover under applicable insurance policies for any Losses. 
(ii)    Payments by an Indemnifying Party in respect of any Loss shall be reduced by an amount equal to any Tax benefit actually realized in the year in which the Loss was incurred as a direct result of such Loss by the Indemnified Party, net of any income taxes payable by Purchaser as a result of payments by the Indemnifying Party.
Section 7.3    Satisfaction of Claims.  Except for Losses resulting from or arising out of: (i) fraud, intentional misrepresentation or willful breach, or (ii) any Excluded Liability, claims made by the Purchaser Indemnitees for indemnification under this Article VII shall be satisfied first from any Escrow Funds held by Escrow Agent and, only if applicable pursuant to Section 7.2(c), then directly from the Company and the Stockholder, jointly and severally. 
Section 7.4    Indemnification Procedures. Any Purchaser Indemnitee making a claim for indemnification pursuant to this Article VII (an “Indemnified Party”) must give the other Party or Parties from whom indemnification is sought (an “Indemnifying Party”) written notice of such claim (a “Claim Notice”) promptly after the Indemnified Party receives any written notice of any Proceeding against or involving the Indemnified Party by a Governmental Authority or other third party, or otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification (“Claim”); provided that the failure to notify or delay in notifying an Indemnifying Party will not relieve the Indemnifying Party of its obligations pursuant to this Article VII, except to the extent (and only to the extent) that such failure actually harms the Indemnifying Party.  Such Claim Notice must contain a description of the Claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known or reasonably ascertainable at such time; provided that such amount or estimated amount shall not be conclusive of the final amount, if any, of such Claim).  Notwithstanding the foregoing, any claim for a breach of a representation or warranty or covenant must be delivered prior to the expiration of the applicable survival term. The Company shall have thirty (30) days after receipt of a Claim to deliver to Purchaser a written objection to the Claim specifying, in reasonable detail, any objections to the Claim or the amount of Losses set forth therein.  If the Company fails to deliver such written objection within thirty (30) days after receipt of the Claim, then the Company and the Stockholder shall be deemed to agree that the Indemnified Party is entitled to receive all of the Losses specified in such Claim (which deemed agreement shall be deemed final, binding and conclusive with respect to all of the Indemnifying Parties). 
(h)    With respect to the defense of any Claim against or involving an Indemnified Party in which a Governmental Authority or other third party (“Third Party Claim”) in question seeks recovery of a sum of money or other remedy for which a Claim Notice is provided (i) the Indemnifying Party shall have the right to participate in, and subject to Section 7.4(c), control the defense of each Claim at the Indemnifying Party’s cost and expense, and (ii) the Indemnified Party shall fully cooperate with the Indemnifying Party and provide access to any and all applicable documents and other information and Persons reasonably requested by the Indemnifying Party; provided that the Indemnified Party shall have no obligation to disclose any documents or other information to the extent such disclosure in the Indemnified Party’s reasonable judgment may adversely affect the attorney-client privilege or work product protections related to such documents or other information.
(i)    Notwithstanding Section 7.4(b), if the Indemnifying Party assumes the defense of the Claim, the Indemnified Party will be entitled to participate in the defense of such Claim and to employ counsel of its choice for such purpose at its own expense; provided that the Indemnifying Party will bear the reasonable fees and expenses of such separate counsel incurred prior to the date upon which the Indemnifying Party assumes control of such defense; provided, further, that the Indemnifying Party will not be entitled to assume control of the defense of such claim, if:

    

(iii)    the Indemnifying Party fails to elect in writing to assume the defense of the Claim pursuant to Section 7.4(b) within twenty (20) calendar days of receipt of the applicable Claim Notice;
(iv)    a conflict of interest exists or could reasonably be expected to arise which, under applicable principles of legal ethics, could reasonably be expected to prohibit a single legal counsel from representing both the Indemnified Party and the Indemnifying Party in such Proceeding; 
(v)    a court of competent jurisdiction rules that the Indemnifying Party has failed or is failing to prosecute or defend vigorously such claim; 
(vi)    such claim relates to a monetary amount greater than the Cap; and
(vii)    such claim relates to Taxes of the Indemnified Party;

provided, further, that, in each case, if the Indemnified Party compromises or settles any such Claim without the prior written consent of the Indemnifying Party (which may not be unreasonably withheld or delayed), then such compromise or settlement shall not be deemed to be conclusive evidence of the amount of Losses suffered by the Indemnified Parties relating to such claim.  
(j)        In the event that the Indemnifying Party assumes the defense of such claim, the Indemnified Party will cooperate with and make available to the Indemnifying Party such assistance, personnel, witnesses and materials as the Indemnifying Party may reasonably request.  Regardless of which Party defends such claim, the other Party shall have the right at its expense to participate in the defense assisted by counsel of its own choosing.
(k)    Without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld or delayed), the Indemnifying Party shall not enter into any settlement of any Claim for which the Indemnifying Party has assumed the defense pursuant to Section 7.4 hereof if (i) pursuant to or as a result of such settlement, such settlement would result in any liability on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder, (ii) the settlement involves anything other than monetary damages, or (iii) the settlement would reasonable be expected to have an adverse impact on the business or reputation of Purchaser or any of its Affiliates.  If a firm offer is made to settle such claim where such settlement involves only monetary payment and a full release of Purchaser, which offer the Indemnifying Party is permitted to settle under this Section 7.4, and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnified Party to that effect.  If the Indemnified Party objects to such firm offer within ten (10) calendar days after its receipt of such notice, the Indemnified Party may continue to contest or defend such claim and, in such event, the maximum liability of the Indemnifying Party as to such claim shall not exceed such amount of such settlement offer payable by the Indemnifying Party hereunder, plus other Losses paid or incurred by the Indemnified Party up to the point such notice had been delivered to the Indemnified Party.
Section 7.5    Subrogation.  After any indemnification payment is made to the Indemnified Party pursuant to this Article VII (whether by offset or otherwise), the Indemnifying Party shall, to the extent of such payment, be subrogated to all rights (if any) of the Indemnified Party against any third party in connection with the Losses to which such payment relates.  Without limiting the generality of the preceding sentence, any Indemnified Party receiving an indemnification payment pursuant to the preceding sentence (whether by offset or otherwise) shall execute, upon the written request of the Indemnifying Party, any instrument reasonably necessary to evidence such subrogation rights.
Section 7.6    Indemnification Payments.  Any payment under this Article VII shall be treated as an adjustment to the Purchase Price Proceeds for all Tax purposes and reported as such by Purchaser and the Company and the Stockholder on their respective Tax Returns (except to the extent otherwise required by Applicable Law) and shall be made by wire transfer of immediately available funds to such account or accounts as the Indemnified Party shall designate to the Indemnifying Party in writing. 
Section 7.7    Remedies Exclusive.  From and after the Closing, absent fraud, intentional misrepresentation or willful breach, the rights of the Parties to indemnification under this Article VII shall be the exclusive remedies of the Parties subsequent to the Closing Date with respect to the recovery of any money damages any Purchaser Indemnitee may incur arising from or relating to this Agreement or the Transactions contemplated hereby (it being understood that nothing in this Section 7.7 or elsewhere in this Agreement shall limit the Parties’ rights to specific performance or other equitable remedies with respect to the covenants referred to in this Agreement or to be performed after the Closing).  Subject to the preceding sentence, to the maximum extent permitted by Applicable Law, the Parties hereby waive all other rights and remedies with respect to the recovery of money 

    

damages in any way relating to this Agreement or arising in connection herewith, whether under any laws, at common law or otherwise. 
Section 7.8    Investigation. The right to indemnification based on representations, warranties, covenants and obligations in this Agreement will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation.  The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification based on such representations, warranties, covenants and obligations.
ARTICLE VIII
TERMINATION
Section 8.1    Right of Termination.  This Agreement may be terminated at any time prior to the Closing by:
(l)    the mutual written consent of the Purchaser and the Company; 
(m)    the Purchaser if (i) any of the Company and the Stockholder’s representations and warranties contained in this Agreement shall be inaccurate as of the date of this Agreement, or shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 6.1(b) would not be satisfied, or (ii) any of the Company and the Stockholder’s covenants contained in this Agreement to be performed on or prior to the Closing shall have been breached such that the condition set forth in Section 6.1(a) would not be satisfied; provided, however, that if an inaccuracy in any of the Company and the Stockholder’s representations and warranties as of a date subsequent to the date of this Agreement or a breach of a covenant by the Company or the Stockholder is curable by such Party, and such Party is continuing to exercise commercially reasonable efforts to cure such inaccuracy or breach, then the Purchaser may not terminate this Agreement under this Section 8.1(b) on account of such inaccuracy or breach unless such inaccuracy or breach is not cured within thirty (30) days of the date upon which the Purchaser notifies the Company of the Purchaser’s intention to terminate this Agreement under this Section 8.1(b); provided further, however, that the Purchaser shall not have the right to terminate this Agreement pursuant to this Section 8.1(b) if the Purchaser is then in material breach of its covenants or agreements in this Agreement;
(n)     the Company if (i) any of the Purchaser’s representations and warranties contained in this Agreement shall be inaccurate as of the date of this Agreement, or shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 6.2(c) would not be satisfied, or (ii) any of the Purchaser’s covenants contained in this Agreement shall have been breached such that the condition set forth in Section 6.2(a) would not be satisfied; provided, however, that if an inaccuracy in any of the Purchaser’s representations and warranties as of a date subsequent to the date of this Agreement or a breach of a covenant by the Purchaser is curable by the Purchaser, and the Purchaser is continuing to exercise commercially reasonable efforts to cure such inaccuracy or breach, then the Company may not terminate this Agreement under this Section 8.1(c) on account of such inaccuracy or breach unless such inaccuracy or breach is not cured within thirty (30) days of the date upon which the Company notifies the Purchaser of the Company’s intention to terminate this Agreement under this Section 8.1(c); provided further, however, that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.1(c) if the Company or the Stockholder is then in material breach of its covenants or agreements in this Agreement; 
(o)    the Company or the Purchaser if the Closing shall not have been consummated within ninety (90) days from the date of this Agreement (or such later date as the Parties may agree in writing) (the “Outside Closing Date”); provided, however, that no Party shall be entitled to terminate this Agreement pursuant to this Section 8.1(d) if such Party’s breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Closing Date; and
(p)    Any termination pursuant to this Section 8.1 shall be effected by written notice from the Party or Parties so terminating to the other Parties hereto, which notice shall specify the Section of this Agreement pursuant to which this Agreement is being terminated.
Section 8.2    Effect of Termination.  In the event of termination of this Agreement pursuant to Section 8.1: (i) the provisions of Section 5.3 (Confidentiality), Section 5.6 (Press Releases), Article VIII (Termination) and Article IX (Miscellaneous) shall continue in full force and effect; and (ii) no Party hereto or any of its shareholders, members, partners, officers, directors, employees or Representatives shall have any liability or obligation to any other Party to this Agreement, except 

    

for any losses arising by reason of or resulting from any material breach of any representation, warranty, covenant or agreement contained in this Agreement occurring prior to the proper termination of this Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1    Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally (by courier, overnight mail or otherwise), telegraphed, telexed, sent by facsimile transmission or e-mail or sent by certified or registered mail, postage prepaid and return receipt requested, or by express mail. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or e-mail (which is confirmed) or, if mailed, three (3) Business Days after the date of deposit in the United States mails, as follows:
If to the Company and/or to the Stockholder:
Mortgage Resource Center, Inc.
2600 Eagan Woods Drive, Suite 220
Eagan, MN 55121
Attn: Jeffrey H. Hoerster
Email: jhoerster@allregs.com

And to:

Glenn Ford
20953 Negril Ct
Lutz, FL 33558-5120
Email: gford@allregs.com

With a concurrent copy to:
Stinson Leonard Street LLP
150 South 5th Street, Suite 2300
Minneapolis, MN 55402
Email: david.ezrilov@stinsonleonard.com

If to Purchaser:
Ellie Mae, Inc.
4155 Hopyard Road, Suite 200
Pleasanton, CA 94588
Attn: President & COO
Email: jonathan.corr@elliemae.com

With a concurrent copy to:
Ellie Mae, Inc.
4155 Hopyard Road, Suite 200
Pleasanton, CA 94588
Attn: General Counsel
Email: elisa.lee@elliemae.com

Any Party may, by notice given in accordance with this Section 9.1 to the other Parties, designate another address or person for receipt of notices hereunder; provided that notice of such a change shall be effective upon receipt.
Section 9.2    Fees and Expenses.  Purchaser, on one hand, and the Company, on the other hand, shall pay the costs, fees and expenses incident to their respective negotiation, preparation, execution, delivery and performance of this Agreement and the Transactions contemplated hereby, including the fees and expenses of its counsel, accountants and other Representatives (“Transaction Expenses”).

    

Section 9.3    Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury.  
(d)    This Agreement (including any claim or controversy arising out of or relating to this Agreement) shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to conflicts of laws principles that would result in the application of the law of any other state.

(e)    Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court located in Delaware, or, if no such state court has proper jurisdiction, the Federal court of the United States of America, sitting in Delaware and any appellate court from any thereof, in any actions arising out of or relating to this Agreement and any Transactions contemplated hereby for recognition or enforcement of any judgment relating thereto, and each of them hereby irrevocably and unconditionally (i) agrees not to commence any such action except in such courts, (ii) agrees that any claim in respect of any such action may be heard and determined in the Court of Chancery of the State of Delaware, and the appellate courts thereof or the United States District Court for the District of Delaware, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action in the state or federal courts located in any such Court of Chancery of the State of Delaware or Federal court and (iv) waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action in the state or federal courts located in any such Court of Chancery of the State of Delaware or Federal court.  Each of the Parties hereto agrees that a final judgment in any such action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Each Party irrevocably consents to service of process in the manner provided for notices in Section 9.1.  Nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by Applicable Law.
(f)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY OR THE COMPANY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.3.
Section 9.4    Attorneys’ Fees.  If any Proceeding is brought by one Party against another Party, the Party succeeding or prevailing in whole shall be entitled to recover its reasonable attorneys’ fees and other costs incurred in that action or Proceeding, in addition to any other relief to which it may be entitled.  In all other Proceedings, each Party shall pay its own fees and expenses.
Section 9.5    Entire Agreement.  This Agreement and the Other Agreements (including any additional agreements contemplated hereby or thereby and the Company Disclosure Schedule) contain the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements, written or oral, with respect thereto other than the Confidentiality Agreement, which shall survive and remain in full force and effect according to its terms.
Section 9.6    Waivers and Amendments; Non Contractual Remedies; Preservation of Remedies.  This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Company and Purchaser or, in the case of a waiver, by the Party waiving compliance.  No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power or privilege, or any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. Subject to Section 7.7 (Remedies Exclusive), the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have at law or in equity.
Section 9.7    Severability.  If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the 

    

remaining portion thereof) or the application of such provision to any other Persons or circumstances.  Upon such determination that any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transactions contemplated hereby are fulfilled to the extent possible.
Section 9.8    Binding Effect; Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties and its successors, permitted assigns and legal representatives. Neither this Agreement, nor any right hereunder, may be assigned by the Company (in whole or in part) without the prior written consent of the other Party.  Notwithstanding the foregoing, Purchaser may, without the consent of the Company, assign this Agreement or any portion of its rights, interests or obligations hereunder to any wholly-owned (directly or indirectly) Subsidiary of Purchaser or any other third party, provided that no such assignment shall release Purchaser from its obligations hereunder.
Section 9.9    Interpretation.  For purposes of this Agreement, the words “hereof,” “herein,” “hereby” and other words of similar import refer to this Agreement as a whole unless otherwise indicated. Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate.  All terms defined herein in the singular shall have the same meaning when used in the plural; all terms defined herein in the plural shall have the same meaning when used in the singular.  With regard to each and every term and condition of this Agreement, the Parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the Parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which Party actually prepared, drafted or requested any term or condition of this Agreement.  All references herein to Annexes, Exhibits, Articles, Sections, subsections, paragraphs, subparagraphs and clauses shall be deemed references to such parts of this Agreement, unless the context shall otherwise require.  All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.  The words “include” and “including” and variations thereof shall not be deemed terms of limitation, but rather shall be deemed to be followed by the words “without limitation.”  The term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or”.  All financial accounting terms not specifically defined herein shall be construed in accordance with GAAP.  The term “dollars” and “$” means United States dollars.
Section 9.10    No Third Party Beneficiaries.  Nothing in this Agreement is intended or shall be construed to give any Person, other than the Parties, their successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.
Section 9.11    Counterparts.  This Agreement may be executed in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.  The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement. 
Section 9.12    Headings.  The headings in this Agreement are for reference only, and shall not affect the interpretation of this Agreement.
Section 9.13    Further Assurances.  From time to time, as and when requested by any Party, each of the Parties hereto shall, and shall cause its respective Affiliates to, at such Party’s expense except as otherwise expressly provided in this Agreement, execute such documents and other instruments and take such further actions as may be reasonably required to carry out the provisions hereof and the Other Agreements and consummate and evidence the Transactions contemplated hereby and thereby, including executing and delivering or causing to be executed and delivered to the other Party such assignments, deeds, bills of sale, assumption agreements, consents and other instruments of transfer or assumption as the other Party or its counsel may reasonably request as necessary for such purpose (it being understood that any such assignment, deed, bill of sale, assumption agreement, consent or other instrument of transfer or assumption shall not provide for any representations, warranties, liabilities that are not provided for in this Agreement).
[Signature Pages Follow]

    

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.
	
		
	 
	THE COMPANY:

MORTGAGE RESOURCE CENTER, INC. (DBA ALLREGS)

By: /s/ Jeffrey Hoerster        
Name:  Jeffrey Hoerster
Title: President

	 
	

THE STOCKHOLDER:

Glenn Ford, in his individual capacity

By:/s/ Glenn Ford                  

	
		
	

	PURCHASER:

ELLIE MAE, INC.

By: /s/ Sigmund Anderman                 
Name:  Sigmund Anderman
Title:  Chief Executive Officer

[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

    

ANNEX A
DEFINITIONS; CROSS REFERENCES

A.1    Definitions.  When used in this Agreement, the following terms have the meanings set forth below:

“Accounts Receivable” means all indebtedness or other obligations owed to the Company arising in connection with the sale of goods or the rendering of services by the Company related to the Business, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper or general intangible or any promissory notes relating thereto.
“Affiliate” or “Affiliates” of any particular Person means any other Person or Persons controlling, controlled by, or under common control with such particular Person, where “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.
“Applicable Law” means any applicable decree, final determination, injunction, judgment, law, order, ordinance, regulation, rule, statute or writ of any Governmental Authority. 
“Assigned Contracts” means all Contracts related to the Business, including but not limited to the Material Contracts and Leases. 
“Assumed Vacation Amount” shall mean an amount equal to the aggregate liability for accrued but unused vacation time of the Transferred Employees assumed by Purchaser pursuant to Section 5.8(h). 
“Base Net Working Capital” means $0.00.
“Bill of Sale” means the Bill of Sale, in a form attached hereto as Exhibit D.
“Books and Records” means: (i) all current customer or current client lists related to the Business; (ii) all current customer and current client records related to the Business; (iii) all current pricing lists related to the Business; (iv) all current inventory costs support data related to the Business; and (v) all books and records or documents relating to Taxes imposed on the Purchased Assets or with respect to the Business; (vi) any other books of accounts, general, financial, tax and personnel records, files, invoices and correspondence related to the Business; provided, however, that the Company may retain (a) a copy of any such books and records to the extent necessary for Tax, regulatory, accounting or litigation; (b) a copy of any such books and records to the extent such books and records relate, but not exclusively, to the Business.
“Business” means the business and operations, as conducted by the Company, of the provision of: mortgage industry solutions for underwriting guidelines, FHA guidelines, mortgage training and education, federal and state compliance, policies and procedures and related or similar products and services.
“Business Day” means any day other than a Saturday or a Sunday or a day on which banks located in New York, New York generally are authorized or required by Applicable Law to close.
“Business Employee” means any individual employed (either directly or indirectly) by the Company whose primary responsibilities are related to the performance of services relating to the Purchased Assets or Assumed Liabilities.
“Business Employee Expenses” shall mean all salary, wages, overtime, employee benefits, sick pay, vacation pay, severance pay, bonuses, profit sharing and any other expenses related to any Business Employee. 
“Closing Debt Amount” means the aggregate amount of Indebtedness of the Company outstanding as of the close of business on the Closing Date. 
“Closing Net Working Capital” means (i) the aggregate amount, without duplication, of all current assets of the Company, as of the Closing, as determined in accordance with GAAP, minus (ii) all current liabilities of the Company (including the Accrued Vacation Amount and all Liabilities arising in connection with the transactions contemplated hereby), as of the Closing, as determined in accordance with GAAP; provided, however, that current assets shall not include any cash or cash equivalents, and current liabilities shall not include any deferred revenue. For the avoidance of doubt, Closing Net Working Capital shall be calculated consistent with the example calculation set forth on Exhibit A.

    

 “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended. 
“Code” means the Internal Revenue Code of 1986, as amended.
“Company IP” means all Intellectual Property Rights and Technology owned or purported to be owned by the Company and related to the Business, including without limitation all Assigned Intellectual Property.
“Company IP Contract” means any Contract related to the Business to which the Company is party, or by which the Company is bound, that contains any assignment or license of, or covenant not to assert or enforce, any Intellectual Property Right, or that otherwise relates to, any Company IP, or Intellectual Property Rights developed by, with, or for the Company.
“Company Product” means any product or service related to the Business and owned, developed, marketed, distributed, licensed, or otherwise made available to any Person by the Company prior to or as of the date hereof.
“Confidentiality Agreement” means the letter agreement, dated April 25, 2014, between Purchaser and Mortgage Resource Center, Inc. (dba AllRegs). 
“Consent” means any consent, approval, license, permit, waiver, order or authorization of, or registration, declaration or filing with, any Person.
“Contract” means any written contract, commitment, agreement, arrangement, note, bond, mortgage, lease or other agreement legally binding on any Party.
 “Environmental Claim” means any investigation, notice, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, Proceeding, or claim (whether administrative, judicial, quasi-judicial or private in nature) arising (i) pursuant to or in connection with any actual or alleged violation of the Company, or liability of the Company under, any Environmental Law or (ii) in connection with any abatement, removal, remedial, corrective, or other response action involving a Hazardous Material, Environmental Law, or any actual damage, injury, threat or harm to health, safety, property, natural resources, or the environment.
“Environmental Laws” means all Applicable Laws (including all Permits, licenses or other authorizations issued pursuant thereto and the common law) with respect to the environment, including all Applicable Laws concerning pollution, or protection of human health, the environment and natural resources and those Applicable Laws relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, testing, processing, discharge, Release, or cleanup of or exposure to Hazardous Materials, pollutants, contaminants, substances or wastes.
“Equipment” means all personal property of the Company used in connection with the Business, including without limitation all machinery, equipment, replacement and component parts, spare parts, furniture, fixtures, office and other supplies, data processing equipment and peripheral equipment, vehicles, any advertising, promotional and media materials, training materials, trade show materials and videos and other similar personal property.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations issued thereunder.  
“ERISA Affiliate” means any trade or business which is or has been treated as a single employer with the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code.
“Escrow Agent” means U.S. Bank, National Association.
“Escrow Agreement” means that certain Escrow Agreement by and among Escrow Agent, Purchaser and the Company in the form attached hereto as Exhibit C. 
“Existing Environmental Liability” shall mean any Liability arising out of or relating to: (i) any violation of any Environmental Law or any Permit, order or other binding requirement issued thereunder; (ii) any Release, threatened Release, or exposure to any Hazardous Materials; (iii)  any environmental investigation, remediation, removal, clean-up or monitoring required under Environmental Laws (whether conducted by the Purchaser, a Governmental Authority, or other Person) or (iv) the use, generation, storage, transportation, treatment, sale or other off-site disposal of Hazardous Materials, in each case, to the extent arising out of or relating to the ownership or operation of the Business, the Purchased Assets, the Real Property, or any 

    

property current or formerly owned or leased by the Company or used or occupied in connection with the Business, at any time prior to the Closing Date.  
“GAAP” means generally accepted accounting principles of the United States, as applied from time to time.
“Governmental Authority” means any federal, state, provincial or local governmental body or administrative agency, or any court of competent jurisdiction, department, political subdivision or other governmental authority or instrumentality, in each case, whether domestic or foreign.
“Hazardous Materials” means any material, substance or waste that is listed, classified, regulated, characterized or otherwise defined as “hazardous,” “toxic,” “radioactive,” a “pollutant,” or “contaminant,” (or words of similar intent or meaning) under applicable Environmental Law, including but not limited to petroleum, petroleum products or by-products, asbestos or asbestos-containing material, urea formaldehyde insulation, toxic mold, polychlorinated biphenyls, flammable or explosive substances, or pesticides.
“Indebtedness” means the following liabilities and obligations of the Company (without duplication): (i) any indebtedness, (and any PIK or deferred interest and any prepayment premiums with respect thereto) for money borrowed or advances, including that evidenced by notes, bonds, indentures, debentures or other instruments; (ii) any outstanding obligations under capital leases and purchase money obligations; (iii) any amounts owed with respect to drawn letters of credit; (iv) any reimbursement obligations, foreign exchange contracts and arrangements designed to provide protection against fluctuations in interest or currency exchange rates, including amounts payable to unwind such contracts or arrangements; (v) any termination or break fee related to a swap agreement; (vi) accrued but unpaid interest on any obligation described in clauses (i) through (iv) above; (vii) any outstanding guarantees of obligations of the type described in clauses (i) through (vi) above; and (viii) any liabilities and obligations related to termination fees, prepayment penalties, break fees and the like in connection on any obligation described in clauses (i) through (v) above.
“Intellectual Property Rights” means and includes all (a) United States and foreign patents and patent applications and disclosures relating thereto (and any patents that issue as a result of those patent applications), and any renewals, reissues, reexaminations, extensions, continuations, continuations-in-part, divisions and substitutions relating to any of the patents and patent applications, as well as all related foreign patent and patent applications that are counterparts to such patents and patent applications, (b) United States and foreign trademarks, trade names, service marks, service names, trade dress, logos, slogans, 800 numbers and corporate names, whether registered or unregistered, and the goodwill associated therewith, together with any registrations and applications for registration thereof, (c) rights in works of authorship including any United States and foreign copyrights and rights under copyrights, whether registered or unregistered, including moral rights, and any registrations and applications for registration thereof, (d) rights in databases and data collections (including knowledge databases, customer lists and customer databases) under the laws of the United States or any other jurisdiction, whether registered or unregistered, and any applications for registration therefor; (e) trade secrets and other rights in know-how and confidential or proprietary information (including any business plans, designs, technical data, customer data, financial information, pricing and cost information, bills of material, or other similar information), (f) URL and domain name registrations, (g) inventions (whether or not patentable) and improvements thereto, (h) all claims and causes of action arising out of or related to infringement or misappropriation of any of the foregoing and (i) other proprietary or intellectual property rights now known or hereafter recognized in any jurisdiction worldwide.  
“Key Employees” means Jeff Hoerster, Dan Thoms, Frank Preese and Anita Burke. 
“knowledge” with respect to the Company, means the knowledge of Glenn Ford and each of the Key Employees and Tony Fu, after reasonable or due inquiry.
“Liability” or “Liabilities” means any indebtedness, or direct or indirect liability, commitment or other obligation, whether fixed or unfixed, known or unknown, asserted or unasserted, secured or unsecured, matured or unmatured, accrued, incurred, absolute, contingent or otherwise.
“Liens” means any security interest, mortgage, pledge, conditional sale agreement, security title, claim, right of first refusal, right of first offer, preemptive right, equity, covenant, condition, restriction, right, reservation, declaration, lease, sublease, tenancy, concession, license, occupancy agreement, other right to occupy of any kind, option, easement, right of way or other matter of any nature whatsoever (including matters shown on a survey) affecting any Real Property (or portion thereof) or title thereto, whether or not of record or other encumbrance, restriction or charge of any nature, lien (including any lien for Taxes other 

    

than statutory liens for current Taxes not yet due and payable), or charge of any kind (including, any conditional sale or other title retention agreement or lease in the nature thereof).
“Loss” or “Losses” means, with respect to any Person, any Liability, demand, claim, action, cause of action, cost, damage, loss of value, deficiency, Tax, penalty, fine or other loss or expense, whether or not arising out of a Third Party Claim, including, without limitation, all interest, penalties, reasonable attorneys’ fees and expenses and reasonable amounts paid or incurred in connection with any action, demand, Proceeding, investigation or claim and any amounts paid in settlement thereof, against or affecting such Person; provided, however, the term Loss or Losses shall exclude any punitive damages (except to the extent awarded to a third party). 
“made available” shall mean posted to the IntraLinks virtual dataroom for the transaction at least three (3) Business Days prior to the date of this Agreement. 
“Material Adverse Effect” means any change, event, effect, condition, circumstance, state of facts or development that (i) has had or could reasonably be expected to have a material adverse effect on the business, properties, assets, condition (financial or otherwise), liabilities or results of operations of the Company or the Business or (ii) would be reasonably expected to prevent or materially delay the ability of the Company or the Stockholder to complete the Transactions contemplated by this Agreement or perform its obligations under this Agreement; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, to the extent resulting from: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Business operates; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof or any change in prevailing interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required by this Agreement; (vi) any changes in applicable Laws; (vii) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Seller; (viii) any natural or man-made disaster or acts of God; provided, that any condition or change set forth in (i), (ii), (iii), (vi) and (vi) above shall not be excluded from the definition of Material Adverse Effect if it materially and disproportionately affects the Business; and provided, further that the failure to meet any internal or published projections, forecasts or revenue or earnings predictions (but not the underlying cause of such failure) shall not alone constitute a Material Adverse Effect.
“Organizational Documents” means the articles of incorporation and bylaws (or equivalent governing document) of the Company, as amended.
“Other Agreements” means the Bill of Sale and Assignment and Assumption Agreements and any other certificates, agreements, and other documents and instruments required to be delivered hereunder or thereunder, including the Company Disclosure Schedule.
“Permits” means all permits, licenses, franchises, certificates, approvals and other authorizations issued by any Governmental Authority.
“Permitted Liens” means: (i) liens for Taxes, assessments and other governmental fees or other charges that are being disputed in good faith by appropriate proceedings as of the Closing Date (and for which an adequate reserve has been established in accordance with GAAP); (ii) mechanics, workers, subcontractors, materialmen, warehousemen, carriers and other similar inchoate statutory Liens arising or incurred in the ordinary course of business consistent with past practice for amounts which are not delinquent or that are being disputed in good faith; (iii) zoning, entitlement, building and other land use and similar laws or regulations imposed by any Governmental Authority having jurisdiction over such parcel which are not violated by the current use and operation thereof; (iv) easements, covenants, conditions, restrictions and other similar matters of record with respect to any parcel or real property that would not materially impair the use or occupancy of such parcel in the operation of the Business; (v) non-exclusive licenses of Intellectual Property Rights entered into in the ordinary course of business consistent with past practice; and (vi) statutory landlord Liens of the lessor under the Leases.  
“Person” means and includes an individual, a partnership, a joint venture, a limited liability company, a corporation, a trust, an unincorporated organization, a group, or any Governmental Authority, or any other entity.
“Personal Data” means a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank account information and other financial information, customer or account numbers, account access codes and passwords, or any other piece of information that allows the identification of such natural person or enables access to such person’s financial information.

    

 “Proceeding” means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative or appellate proceeding), hearing or audit commenced, brought, conducted or heard by, or otherwise before any court or other Governmental Authority or any other Person.
 “Real Property” means, collectively, the Owned Real Property and the Leased Real Property.
“Registered IP” means Company IP that is registered, filed, or issued under the authority of any Governmental Authority, including all patents, registered copyrights, registered trademarks, and domain names, and all applications for any of the foregoing.
“Release” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching, exhausting or migration into or through the indoor or outdoor environment, including into or through soil, ground water or surface water.
“Retained Permits” means all Permits held by the Company that are required or necessary for the lawful ownership or operation of the Business or the Purchased Assets, but are also required or necessary for the lawful ownership or operation of the Business post-Closing, as set forth on Schedule 3.12.
 “Subscription Amount” means an amount equal to the sum of (i) any subscription revenue received prior to the Closing relating to any Renewing Contract, plus (ii) the following formula: (A) the aggregate amount collected from customers to deliver obligations for Existing Professional Service Contract following the Closing where the cash payment relating to such Existing Professional Service Contract Obligations was collected by the Company prior to the Closing, less (B) the sales commission already paid out by the Company in connection with such obligations, divided by (C) the total hours to be performed under such Existing Professional Service Contracts, multiplied by (D) the number of hours remaining to be performed after the Closing pursuant to such Existing Professional Service Contracts.
“Subsidiary” or “Subsidiaries” of the Parties or of any Person means any corporation, partnership, limited liability company, association, trust, joint venture or other entity or organization of which such Person, either alone or through or together with any other Subsidiary, owns, directly or indirectly, more than 25% of the stock or other equity interests, the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, limited liability company, association, trust, joint venture or other entity or organization.
“Tax” or “Taxes” means any and all taxes, charges, fees, levies, tariffs, duties, liabilities, impositions or other assessments in the nature of a tax (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including, without limitation, any federal, state, local or foreign income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, net worth, escheat, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, recording, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, including under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Tax Law), or as a transferee or successor, by contract, or otherwise.
 “Tax Return” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Technology” means and includes diagrams, inventions (whether or not patentable), invention disclosures, know-how, methods, network configurations and architectures, proprietary information, protocols, schematics, design information, build instructions, tooling requirements, manufacturing processes, specifications, technical data, software code (in any form, including source code and executable or object code, binaries and library files), build scripts, test scripts, algorithms, APIs, subroutines, techniques, user interfaces, URLs, domain names, web sites, works of authorship, documentation (including instruction manuals, samples, studies, and summaries), databases and data collections, any other forms of technology, in each case whether or not embodied in any tangible form and including all tangible embodiments of any of the foregoing.
“Territory” means each state of the United States of America and its territories, including but not limited to Puerto Rico.
“Transfer Taxes” means any and all transfer, documentary, sales, use, gross receipts, stamp, registration, value added, recording and other similar Taxes and fees (including any penalties and interest) incurred in connection with the purchase and sale 

    

of the Purchased Assets (including any real property or leasehold interest transfer or gains tax and any similar Tax) or any other transaction contemplated by this Agreement.
“Treasury Regulation” means the regulations promulgated under the Code.
“WARN Act” means the Worker Adjustment and Retraining Notification Act of 1988.
A.2    Cross References.  The following terms are defined in the following Sections of this Agreement:  

	
		
	Term
	Section

	Accounts Payable and Accrued Expenses   
	1.3(b)

	Adjustment Payment Date   
	1.7(d)

	Agreement   
	Preamble

	Allocation   
	1.9(a)

	Assigned Intellectual Property   
	1.1(c)

	Assignment and Assumption Agreements   
	6.1(c)(xi)

	Assumed Liabilities   
	1.3

	Base Net Working Capital   
	1.6(a)

	Benefit Plans   
	3.19(a)

	Claim   
	7.5(a)

	Claim Notice   
	7.5(a)

	Closing   
	2.1

	Closing Date   
	2.1

	Closing Date Schedule   
	1.7(a)

	Company Basket   
	7.3

	Company Disclosure Schedule   
	Article III

	Company Permits   
	3.12

	Company Software   
	3.15(m)

	Competing Activity   
	5.9(b)

	Confidential Information   
	5.3(b)

	Continuation Coverage   
	5.8(c)

	Disclosing Party   
	5.3(b)

	Dispute Notice   
	1.7(b)

	Environmental Permits   
	3.13(a)

	Excluded Assets   
	1.2

	Excluded Liabilities   
	1.4

	Existing Professional Service Contracts   
	3.6(f)

	Existing Professional Service Contract Obligations   
	3.6(f)

	Renewing Contract   
	3.6(f)

	Escrow Expiration Date   
	1.8(a)

	Escrow Funds   
	1.8(a)

	Expert Calculations   
	1.7(c)

	Governmental Filings   
	5.4

	Indemnifying Party   
	7.5(a)

	Initial Purchase Price Proceeds   
	1.6(a)

    

	
		
	Term
	Section

	IT Systems   
	3.16

	Leased Real Property   
	3.8(e)

	Leases   
	1.1(h)

	Licensed Intellectual Property   
	1.1(c)

	Malicious Code   
	3.15(n)

	Material Contract   
	3.14(a)

	Net Working Capital Deficiency Amount   
	1.7(d)(ii)

	Neutral Party   
	1.7(c)

	Omitted Assets   
	1.5

	Outside Closing Date   
	8.1(d)

	Owned Real Property   
	3.8(c)

	Party/Parties   
	Preamble

	Pension Plan   
	3.19(d)

	Personal Property Leases   
	1.1(h)

	Pre-Closing Period   
	5.1

	Prepaid Expenses   
	1.1(k)

	Privacy Agreements   
	3.17(a)

	Purchase Price Proceeds   
	1.6(a)

	Purchased Assets   
	1.1

	Purchaser   
	Preamble

	Purchaser Indemnitees   
	7.2(a)

	Real Property Leases   
	3.8(e)

	Receiving Party   
	5.3(b)

	Related Person   
	3.21

	Renewing Contract   
	3.6(f)

	Representatives   
	5.3(a)

	Restricted Party/Parties   
	5.9(a)

	Review Period   
	1.7(b)

	Specified Consent   
	5.10(a)

	Standard Software   
	3.14(a)(v)

	Tax Filing Party   
	1.9(c)

	Third Party Claim   
	7.5(b)

	Transactions   
	2.1

	Transferred Employees   
	5.8(a)

    

Exhibit A
SAMPLE CLOSING NET WORKING CAPITAL CALCULATION 

    

Exhibit B
FORMS OF ASSIGNMENT AND ASSUMPTION AGREEMENT

    

Exhibit C
FORM OF ESCROW AGREEMENT

    

Exhibit D
FORM BILL OF SALE

    

Exhibit E
FORM THIRD PARTY CONSENT

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