Document:

Exhibit 4.9

Exhibit 4.9

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR UNDER ANY STATE
SECURITIES LAW AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNLESS (I) A REGISTRATION
STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (II)
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE.

$                    .00

KONA GRILL, INC.

FIRST AMENDED AND RESTATED PROMISSORY NOTE

April 7, 2009

Kona Grill, Inc., a Delaware corporation (the “Company”), the principal office of
which is located at 7150 East Camelback Road, Suite 220, Scottsdale, Arizona 85251, for value
received hereby promises to pay to                      (the “Holder”), the principal sum of
                     Dollars ($                    ), or such lesser amount as shall then be outstanding hereunder.
The principal amount hereof and any unpaid accrued interest hereon, as set forth below, shall be
due and payable (i) upon the occurrence of an Equity Funding Event (the “Maturity Date”);
or (ii) when declared due and payable by the Holder upon the occurrence of an Event of Default (as
defined below). Payment for all amounts due hereunder shall be made by mail to the registered
address of the Holder.

This First Amended and Restated Promissory Note (the “Note”) amends and restates the
Promissory Note in the original principal amount of $                     (the “Original Note”),
issued by Company to Holder pursuant to the terms of a Note and Warrant Purchase Agreement, dated
March 5, 2009, by and between Company and Holder. The issuance of the Original Note was effected
pursuant to a private offering of up to $1.5 million principal amount of notes issued by the
Company during March 2009 (the “Note Offering”).

The following is a statement of the rights of the Holder of this Note and the conditions to
which this Note is subject, and to which the Holder hereof, by the acceptance of this Note, agrees:

1. Definitions. As used in this Note, the following terms, unless the context
otherwise requires, have the following meanings:

(i) “Company” includes any corporation which shall succeed to or assume the
obligations of the Company under this Note.

(ii) “Equity Funding Event” shall mean the closing of an offering of equity
securities by the Company generating gross proceeds to the Company of at least $2.5 million.

(iii) “Holder,” when the context refers to a holder of this Note, shall mean
any person who shall at the time be the registered holder of this Note.

2. Stated Interest Rate . Except as provided in Section 3 below, the
principal balance outstanding hereunder from time to time shall bear interest at rate of ten
percent (10.0%) per annum (the “Stated Rate”).

3. Additional Interest Rate. The “Additional Interest Rate” shall be an
aggregate of sixteen percent (16%) per annum. The principal balance outstanding hereunder from
time to time shall bear interest at the Additional Interest Rate from and after the earlier of (a)
the date of the occurrence of an Event of Default (as
hereinafter defined) hereunder, until such Event of Default is timely cured; or (b) September
2, 2009, until all accrued interest and other amounts payable hereunder are paid in full.

 

 

 

4. Payments. This Note shall be payable as follows:

(a) Interest Payments. Monthly installments consisting of accrued interest on the
outstanding principal hereunder, commencing on April 30, 2009, and on the last day of each month
thereafter until the principal balance outstanding hereunder, together with all accrued interest
and other amounts payable hereunder, are paid in full.

(b) Final Payment. The principal balance outstanding hereunder, together with all
accrued interest and other amounts payable hereunder, if not sooner paid as provided herein shall
be due and payable on the Maturity Date.

5. Events of Default. If any of the events specified in this Section 5 shall
occur (each, an “Event of Default”), the Holder of this Note may, so long as such condition
exists, declare the entire principal and unpaid accrued interest hereon immediately due and
payable, by notice in writing to the Company:

(i) The Company has failed to pay interest under this Note when due and payable and
such default is not cured by the Company within thirty (30) days after the Holder has given
the Company written notice of such default; or

(ii) The Company has failed to pay the principal and all accrued, unpaid interest on
the Maturity Date; or

(iii) The institution by the Company of proceedings to be adjudicated as bankrupt or
insolvent, or the consent by it to institution of bankruptcy or insolvency proceedings
against it or the filing by it of a petition or answer or consent seeking reorganization or
release under the federal Bankruptcy Act, or any other applicable federal or state law, or
the consent by it to the filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee, or other similar official of the Company, or of any
substantial part of its property, or the making by it of an assignment for the benefit of
creditors, or the taking of corporate action by the Company in furtherance of any such
action; or

(iv) If, within sixty (60) days after the commencement of an action against the Company
(and service of process in connection therewith on the Company) seeking any bankruptcy,
insolvency, reorganization, liquidation, dissolution, or similar relief under any present or
future statute, law, or regulation, such action shall not have been dismissed or all orders
or proceedings thereunder affecting the operations or the business of the Company stayed, or
if the stay of any such order or proceeding shall thereafter be set aside, or if, within
sixty (60) days after the appointment without the consent or acquiescence of the Company of
any trustee, receiver, or liquidator of the Company or of all or any substantial part of the
properties of the Company, such appointment shall not have been vacated; or

(v) Any declared default of the Company under any Senior Indebtedness (as defined
below) that gives the holder thereof the right to accelerate such Senior Indebtedness, and
such Senior Indebtedness is in fact accelerated by the holder.

6. Subordination. The indebtedness evidenced by this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the
prior payment in full of all the Company’s Senior Indebtedness, as hereinafter defined.

6.1 Senior Indebtedness. As used in this Note, the term “Senior Indebtedness”
shall mean the principal of and unpaid accrued interest on: (i) all secured indebtedness of the
Company to banks, commercial finance lenders, insurance companies, or other financial institutions
regularly engaged in the business of lending money, which is for money borrowed by the Company, and
(ii) any such indebtedness or any debentures, notes, or
other evidence of indebtedness issued in exchange for or to refinance such Senior
Indebtedness, or any indebtedness arising from the satisfaction of such Senior Indebtedness by a
guarantor; provided, however, that the aggregate balance of all Senior Indebtedness
outstanding at any given time shall not exceed $25,000,000 in principal amount unless the Holder
consents in writing to an amount of Senior Indebtedness in excess of this amount.

 

 

 

6.2 Default on Senior Indebtedness. If there should occur any receivership,
insolvency, assignment for the benefit of creditors, bankruptcy, reorganization, or arrangements
with creditors (whether or not pursuant to bankruptcy or other insolvency laws), sale of all or
substantially all of the assets, dissolution, liquidation, or any other marshalling of the assets
and liabilities of the Company, or if this Note shall be declared due and payable upon the
occurrence of an event of default with respect to any Senior Indebtedness, then (i) no amount shall
be paid by the Company in respect of the principal of or interest on this Note at the time
outstanding, unless and until the principal of and interest on the Senior Indebtedness then
outstanding shall be paid in full, and (ii) no claim or proof of claim shall be filed with the
Company by or on behalf of the Holder of this Note that shall assert any right to receive any
payments in respect of the principal of and interest on this Note, except subject to the payment in
full of the principal of and interest on all of the Senior Indebtedness then outstanding.

6.3 Effect of Subordination. Subject to the rights, if any, of the holders of Senior
Indebtedness under this Section 6 to receive cash, securities, or other properties
otherwise payable or deliverable to the Holder of this Note, nothing contained in this Section
6 shall impair, as between the Company and the Holder, the obligation of the Company, subject
to the terms and conditions hereof, to pay to the Holder the principal hereof and interest hereon
as and when the same become due and payable, or shall prevent the Holder of this Note, upon default
hereunder, from exercising all rights, powers, and remedies otherwise provided herein or by
applicable law.

6.4 Subrogation. Subject to the payment in full of all Senior Indebtedness and until
this Note shall be paid in full, the Holder shall be subrogated to the rights of the holders of
Senior Indebtedness (to the extent of payments or distributions previously made to such holders of
Senior Indebtedness pursuant to the provisions of Section 6.2 above) to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness. No such payments or
distributions applicable to the Senior Indebtedness shall, as between the Company and its
creditors, other than the holders of Senior Indebtedness and the Holder, be deemed to be a payment
by the Company to or on account of this Note; and for the purpose of such subrogation, no payments
or distributions to the holders of Senior Indebtedness to which the Holder would be entitled except
for the provisions of this Section 6 shall, as between the Company and its creditors, other
than the holders of Senior Indebtedness and the Holder, be deemed to be a payment by the Company to
or on account of the Senior Indebtedness.

6.5 Undertaking. By its acceptance of this Note, the Holder agrees to execute and
deliver such documents as may be reasonably requested from time to time by the Company or the
lender of any Senior Indebtedness in order to implement the foregoing provisions of this
Section 6.

7. Prepayment. Upon prior written notice to the Holder, the Company may at any time
prepay in whole or in part, without penalty, the principal sum, plus accrued interest to date of
payment, of this Note.

8. Assignment. Neither the Company nor Holder may assign or transfer this Note
without the consent of the other party. Subject to the receipt of such consent (which shall not be
unreasonably withheld), and subject to the restrictions on transfer described in Section 10
below, the rights and obligations of the Company and the Holder of this Note shall be binding upon
and benefit the successors, assigns, heirs, administrators, and transferees of the parties.

9. Waiver and Amendment. Any provision of this Note may be amended, waived, or
modified upon the written consent of (a) the Company and Holder, and (b) Holders of at least a
majority of the aggregate principal amount of Notes issued in the Note Offering.

 

 

 

10. Transfer of This Note. In the event the Company and Holder consent to the
transfer of this Note as provided in Section 8, with respect to any offer, sale, or other
disposition of this Note, the Holder will give written notice to the Company prior thereto,
describing briefly the manner thereof, together with a written opinion of
such Holder’s counsel, to the effect that such offer, sale, or other distribution may be
effected without registration or qualification (under any federal or state law then in effect).
Promptly upon receiving such written notice and reasonably satisfactory opinion, if so requested,
the Company shall notify such Holder that such Holder may sell or otherwise dispose of this Note or
such securities, all in accordance with the terms of the notice delivered to the Company. If a
determination has been made pursuant to this Section 10 that the opinion of counsel for the
Holder is not reasonably satisfactory to the Company, the Company shall so notify the Holder
promptly after such determination has been made. Each Note thus transferred shall bear a legend as
to the applicable restrictions on transferability in order to ensure compliance with the Securities
Act, unless in the opinion of counsel for the Company such legend is not required.

11. Notices. Any notice, request, or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given on the date of service if
personally served on the party to whom such notice is to be given, on the date of transmittal of
service via telecopy to the party to whom notice is to be given (with a confirming copy delivered
within 24 hours thereafter), or on the third day after mailing if mailed to the party to whom
notice is to be given, by first class mail, registered or certified mail, postage prepaid, or via a
recognized overnight courier providing a receipt for delivery and properly addressed at the
respective addresses of the parties as set forth herein. Any party hereto may by notice so given
change its address for future notice hereunder.

12. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the state of Delaware, excluding that body of law relating to conflict of laws.

13. Heading; References. All headings used herein are used for convenience only and
shall not be used to construe or interpret this Note. Except where otherwise indicated, all
references herein to Sections refer to Sections hereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be issued this 7th day of April, 2009.

	 	 	 	 	 
	 	KONA GRILL, INC.

 	 
	 	By:  	 	 
	 	 	Mark S. Robinow, Chief Financial Officer 	 
	 	 	 	 
	 

	 	 	 	 	 
	Name of Holder:
	 	 	 	 
	Address:Exhibit 10(ppp)

Exhibit 10(ppp)

EXECUTION

 

ASSET PURCHASE AGREEMENT

BETWEEN

iSONIX LLC

AND

MISONIX, INC.

APRIL 7, 2009

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES 
	 	 	1	 
	 
	 	 	 	 
	1.1 Acquired Assets
	 	 	 1	 
	1.2 Excluded Assets
	 	 	 2	 
	1.3 Assumed Liabilities
	 	 	 3	 
	1.4 Excluded Liabilities
	 	 	 3	 
	 
	 	 	 	 
	ARTICLE II. CONSIDERATION; CLOSING
	 	 	5	 
	 
	 	 	 	 
	2.1 Consideration
	 	 	 5	 
	2.2 The Closing
	 	 	 5	 
	2.3 Deliveries at the Closing
	 	 	 5	 
	2.4 Certain Contracts and Intellectual Property
	 	 	 7	 
	2.5 Allocation of Consideration
	 	 	 7	 
	 
	 	 	 	 
	ARTICLE III. [INTENTIONALLY OMITTED]
	 	 	7	 
	 
	 	 	 	 
	ARTICLE IV. [INTENTIONALLY OMITTED]
	 	 	7	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE SELLER
	 	 	7	 
	 
	 	 	 	 
	5.1 Organization and Capitalization of the Seller
	 	 	 8	 
	5.2 Authorization of Transaction
	 	 	 8	 
	5.3 Non-contravention
	 	 	 8	 
	5.4 Profit and Loss Statements
	 	 	 8	 
	5.5 Subsequent Events
	 	 	 9	 
	5.6 Absence of Liabilities
	 	 	10	 
	5.7 Creditors; Bankruptcy, Etc.
	 	 	10	 
	5.8 Legal Compliance
	 	 	10	 
	5.9 Title to Assets
	 	 	11	 
	5.10 Inventory
	 	 	11	 
	5.11 Tax Matters
	 	 	12	 
	5.12 Intellectual Property
	 	 	12	 
	5.13 Contracts and Commitments
	 	 	13	 
	5.14 Insurance
	 	 	15	 
	5.15 Litigation
	 	 	15	 
	5.16 [Intentionally Omitted]
	 	 	15	 
	5.17 [Intentionally Omitted]
	 	 	15	 
	5.18 Environment and Safety
	 	 	16	 
	5.19 Customers and Suppliers
	 	 	16	 
	5.20 [Intentionally Omitted]
	 	 	17	 
	5.21 Accounts and Notes Payable
	 	 	17	 
	5.22 Warranties of Products and Services; Product Liability; Regulatory Compliance
	 	 	17	 
	5.23 [Intentionally Omitted]
	 	 	18	 
	5.24 Brokers
	 	 	18	 

 

i

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	5.25 [Intentionally Omitted]
	 	 	18	 
	5.26 Solvency
	 	 	18	 
	5.27 [Intentionally Omitted]
	 	 	18	 
	5.28 Disclosure
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF BUYER
	 	 	18	 
	 
	 	 	 	 
	6.1 Organization
	 	 	18	 
	6.2 Authorization of Transaction
	 	 	18	 
	6.3 No Restrictions Against Purchase of Assets
	 	 	19	 
	6.4 Brokers
	 	 	19	 
	6.5 Consents
	 	 	19	 
	6.6 Litigation
	 	 	19	 
	 
	 	 	 	 
	ARTICLE VII. [INTENTIONALLY OMITTED]
	 	 	20	 
	 
	 	 	 	 
	ARTICLE VIII. INDEMNIFICATION
	 	 	20	 
	 
	 	 	 	 
	8.1 Survival
	 	 	20	 
	8.2 Indemnification
	 	 	20	 
	8.3 Indemnification Procedures
	 	 	21	 
	8.4 Exclusive Remedy
	 	 	23	 
	8.5 Parent Guaranty
	 	 	23	 
	 
	 	 	 	 
	ARTICLE IX. ADDITIONAL AGREEMENTS
	 	 	24	 
	 
	 	 	 	 
	9.1 Transaction Expenses
	 	 	24	 
	9.2 Efforts to Consummate; Further Assurances
	 	 	24	 
	9.3 Confidentiality
	 	 	24	 
	9.4 Non-Disparagement
	 	 	27	 
	9.5 Broker’s Fees
	 	 	28	 
	9.6 Non-Compete
	 	 	28	 
	9.7 Cooperation
	 	 	29	 
	9.8 [Intentionally Omitted]
	 	 	29	 
	9.9 Payment of Assumed and Excluded Liabilities
	 	 	29	 
	9.10 Product Liability Insurance
	 	 	29	 
	 
	 	 	 	 
	ARTICLE X. [INTENTIONALLY OMITTED]
	 	 	29	 
	 
	 	 	 	 
	ARTICLE XI. DEFINITIONS
	 	 	29	 
	 
	 	 	 	 
	ARTICLE XII. MISCELLANEOUS
	 	 	36	 
	 
	 	 	 	 
	12.1 No Third Party Beneficiaries
	 	 	36	 
	12.2 Entire Agreement
	 	 	36	 
	12.3 Successors and Assigns
	 	 	36	 
	12.4 Counterparts
	 	 	36	 
	12.5 Headings
	 	 	36	 
	12.6 Right of Set Off
	 	 	36	 
	12.7 Notices
	 	 	37	 
	12.8 Governing Law
	 	 	38	 

 

ii

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	12.9 Amendments and Waivers
	 	 	38	 
	12.10 Incorporation of Exhibits and Schedules
	 	 	38	 
	12.11 Construction
	 	 	38	 
	12.12 Independence of Covenants and Representations and Warranties
	 	 	39	 
	12.13 Remedies
	 	 	39	 
	12.14 Knowledge Attributable to the Seller
	 	 	39	 
	12.15 Severability
	 	 	39	 
	12.16 Waiver of Jury Trial
	 	 	40	 
	12.17 [Intentionally Omitted]
	 	 	40	 
	12.18 Jurisdiction
	 	 	40	 
	12.19 Mutual Drafting
	 	 	40	 
	 
	 	 	 	 
	Exhibit A Bill of Sale
	 	 	 	 
	Exhibit B Undertaking and Assumption of Liabilities
	 	 	 	 
	Exhibit C Statement of Allocation
	 	 	 	 
	Exhibit D Intellectual Property License Agreement
	 	 	 	 
	Exhibit E Patent Assignment
	 	 	 	 
	Exhibit F Non-Competition Agreement
	 	 	 	 
	Exhibit G Transition and Manufacturing Services Agreement
	 	 	 	 

 

iii

 

This ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of April 7, 2009, between
iSONIX LLC, a Delaware limited liability company (the “Buyer”), MISONIX, INC., a New York
corporation (the “Seller”), and, solely for purposes of Section 8.5, Sonics &
Materials, Inc., a Delaware corporation and the sole member of the Buyer (“Parent”).

WITNESSETH:

WHEREAS, the Seller manufactures, promotes and sells ultrasonic liquid processors
(sonicators), ultrasonic soldering instruments, ultrasonic cleaners, and all related accessories,
generally known as the Seller’s ultrasonics laboratory products line (the “Business”).

WHEREAS, the Buyer desires to purchase from the Seller certain assets owned or leased or used
by the Seller in connection with the Business, and to assume certain Liabilities of the Seller
specified herein, and the Seller desires to sell such assets in exchange for cash and the
assumption of such specified Liabilities.

NOW, THEREFORE, in consideration of these premises, the mutual promises herein made, and the
representations, warranties, and covenants herein contained, the Parties hereto agree as follows:

ARTICLE I.

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

1.1 Acquired Assets.

On and subject to the terms and conditions of this Agreement, at the Closing, the Buyer shall
purchase from the Seller, and the Seller shall sell, transfer, assign, convey and deliver to the
Buyer, all right, title and interest of the Seller in and to all of the tangible and intangible
assets, business, goodwill and rights of the Seller used in, arising out of, or related to, the
Business, other than the Excluded Assets (all such assets, business, goodwill and rights being
purchased hereunder are collectively referred to as the “Acquired Assets”), as the same
shall exist immediately prior to the Closing, free and clear of all Liens (other than Permitted
Liens), including, without limitation, the following (to the extent used in, arising out of, or
related to, the Business):

(a) raw materials, components, and supplies, work-in-process, processed or finished goods and
other items of inventory, and all packaging, wrapping, shipping containers and other parts,
wherever located, specifically including any inventory held by third parties for demonstration
purposes or on consignment;

(b) all machinery, equipment, tooling, dies and molds (whether located at the facilities of
the Seller or at other locations), furniture, fixtures, leasehold improvements, vehicles and other
tangible personal property listed on Schedule 1.1(b);

(c) all Intellectual Property set forth on Schedule 1.1(c), the goodwill associated
therewith, licenses and sublicenses granted or obtained with respect thereto, and rights
thereunder, remedies against infringements thereof, and rights to protection of interests therein
under the Laws of all jurisdictions, and all rights granted to the Buyer under the Intellectual
Property License Agreement (the “Ultrasonics Intellectual Property”), subject to the
limitations set forth in Section 2.4;

 

 

 

(d) to the extent that the same are assignable, agreements, contracts, unfulfilled sales
orders with customers listed on Schedule 1.1(d), unfulfilled purchase orders entered into
with suppliers listed on Schedule 1.1(d), licenses, commitments, plans, instruments,
arrangements, understandings and proposals, documents and leases (whether of real or personal
property) (including, without limitation, any such agreements, contracts, licenses, commitments,
documents and leases listed on Schedule 5.13), including all amendments and supplements
thereto (collectively, the “Contracts”), subject to the limitations set forth in
Section 2.4;

(e) all payments, deposits (including, without limitation, customer deposits or prepayments on
unfulfilled sales orders) and prepaid expenses set forth on Schedule 1.1(e);

(f) all claims, choses-in-action, warranties, refunds, rights of recovery, rights of set-off
and rights of recoupment set forth on Schedule 1.1(f);

(g) [intentionally omitted];

(h) to the extent that the same are assignable, all Permits, including those Permits which are
listed on Schedule 5.8;

(i) all rights to receive mail, email, faxes and other communications addressed to the Seller
and relating to the Business (including communications from customers, suppliers, distributors,
agents and others and payments with respect to the Acquired Assets), all of which shall be
forwarded to the Buyer;

(j) all records, files, documents and correspondence, lists, drawings, specifications, bill of
materials, studies, reports, advertising and promotional materials, and other printed or written
materials, relating to the Business, including all electronic and printed copies of each of the
foregoing;

(k) rights to the name “Misonix” granted by the Intellectual Property License Agreement;

(l) the domain names listed on Schedule 1.1(l); and

(m) all other Assets included on Schedule 1.1(m).

1.2 Excluded Assets.

Any assets of the Seller that are not Acquired Assets (the “Excluded Assets”) are
retained by the Seller.

 

2

 

1.3 Assumed Liabilities.

On and subject to the terms and conditions of this Agreement, the Seller shall transfer to the
Buyer, and the Buyer shall assume and discharge or perform when due in accordance with
the terms thereof, only the following Liabilities of the Seller, and no other Liabilities of
the Seller (collectively, the “Assumed Liabilities”):

(a) all obligations of the Seller under the Contracts, sales orders, purchase orders and other
agreements included in the Acquired Assets either (i) to furnish goods, services, and other
non-Cash benefits to another party after the Closing or (ii) to pay for goods, services, and other
non-Cash benefits that another party will furnish after the Closing (but not including any
obligation or Liability arising out of or in connection with any breach of any such Contract, sales
order, purchase order or other agreement occurring as of or prior to the Closing or, without the
Buyer’s written consent, any Contract that was required to be listed on Schedule 5.13 but
was not so listed); and

(b) all obligations of the Seller under the warranties described on Schedule 5.22(c).

1.4 Excluded Liabilities.

Notwithstanding anything to the contrary contained in this Agreement, except for the Assumed
Liabilities, the Buyer shall not assume or be liable for any of the Liabilities of the Seller or
the Business (the “Excluded Liabilities”), which Excluded Liabilities shall include,
without limitation, the following:

(a) any of the Liabilities of the Seller under this Agreement;

(b) any of the Liabilities of the Seller for expenses, Taxes or fees incident to or arising
out of the negotiation, preparation, approval or authorization of this Agreement, the other
Documents or the consummation (or preparation for the consummation) of the transactions
contemplated hereby or thereby (including all attorneys’ and accountants’ fees, and brokerage fees
incurred by or imposed upon the Seller or its Affiliates;

(c) any of the Liabilities of the Seller arising out of (i) the conduct of the Business prior
to the Closing or (ii) any other business of the Seller, including without limitation, any accounts
payable, short-term indebtedness, Funded Indebtedness or other similar obligations;

(d) any Liability of the Seller under any agreement, contract, commitment, document, license
or lease, and any Liability of the Seller under any Contract or Permit to the extent arising out of
a breach or alleged breach thereof that occurred as of or prior to the Closing;

(e) any Liability of the Seller with respect to any income Taxes or any other Taxes, in each
case for any period, including any Liability for unpaid Taxes of any Person as a transferee,
successor by contract or otherwise, and including any claim against the Buyer arising as a result
of such Liability of the Seller, whether due to the failure by Seller to provide a tax good
standing or clearance certificate in connection with the transactions contemplated by this
Agreement or otherwise;

 

3

 

(f) any Liability, to the extent such Liability results from or arises out of events, facts or
circumstances occurring or existing on or prior to the Closing, notwithstanding that the date on
which any action or claim is commenced or made is after the Closing and irrespective of whether
such Liability attaches to the Buyer or the Seller in the first instance, (i) that arises by
reason of any violation or alleged violation of any Law or any requirement of any Governmental
Authority, (ii) that arises under any Environmental and Safety Requirements with respect to the
ownership or operation by the Seller of the Business or (iii) that arises by reason of any breach
or alleged breach by the Seller of any agreement, contract, lease, license, commitment, instrument,
judgment, order or decree;

(g) any Liabilities for which the Buyer may become liable as a result of or in connection with
the failure to fully and properly comply with any bulk sales or transfers Laws arising out of the
Seller’s failure to pay any Excluded Liabilities;

(h) any Liabilities arising out of the injury to or death of any Person or animal or damage to
or destruction of any property, whether based on negligence, breach of warranty, strict liability,
enterprise liability or any other legal or equitable theory arising from or related to products (or
parts of components thereof) manufactured, sold, distributed or otherwise disposed of or for
services performed by the Seller, to the extent any of such Liabilities result from or arise out of
events, facts or circumstances occurring or existing on or prior to the Closing, notwithstanding
that the date on which any action or claim is commenced or made is after the Closing;

(i) any Liabilities relating to any legal action or Proceeding to the extent arising out of or
in connection with (i) the Seller’s conduct of the Business prior to the Closing or (ii) any other
conduct of the Seller or the Seller’s officers, directors, employees, shareholders, consultants,
agents or advisors in their capacities as such, whether or not disclosed on the Schedules hereto;

(j) any Liabilities of the Seller for pay in lieu of notice and severance pay;

(k) any Liabilities for bonuses or like payments to any director, officer, employee,
shareholder or Affiliate of the Seller for the period ending on or prior to the Closing, other than
normal salary payments or salary accruals in the Ordinary Course of Business which are properly
included as accrued expenses;

(l) any Liabilities relating to any Employee Benefit Plan of the Seller;

(m) any Liability for claims for worker’s compensation, injury, disability or death based on
an event occurring prior to the Closing Date;

(n) any Liabilities which relate to assets of the Seller that are not Acquired Assets;

(o) any Liabilities of the Seller to any Affiliate of the Seller; and

(p) any Liability of the Seller that the Seller became responsible for as a successor either
de jure or de facto of another Person.

The Seller hereby expressly acknowledges that it is retaining the Excluded Liabilities, and
the Seller shall pay, discharge and perform all such Excluded Liabilities promptly when due.

 

4

 

ARTICLE II.

CONSIDERATION; CLOSING

2.1 Consideration.

The consideration to be paid by the Buyer for the Acquired Assets (the
“Consideration”), shall consist of:

(a) an aggregate of $3,500,000 (the “Cash Closing Payment”), which shall be payable at
Closing by wire transfer of immediately available U.S. funds to the Seller, in accordance with the
written payment instructions furnished by the Seller to the Buyer prior to the Closing Date (the
“Direct Cash Payment”); plus

(b) the assumption of the Assumed Liabilities.

2.2 The Closing.

The closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place at the offices of Siller Wilk LLP, 675 Third Avenue, New York, New York 10017. The date
on which the Closing occurs shall be referred to as the “Closing Date.”

2.3 Deliveries at the Closing.

(a) At the Closing, the Seller shall deliver to the Buyer or cause to be delivered to the
Buyer, as applicable:

(i) a counterpart of an assignment, assumption and bill of sale agreement (the
“Bill of Sale”), in the form of Exhibit A duly executed by the Seller;

(ii) a counterpart of the intellectual property license agreement (the
“Intellectual Property License Agreement”), in the form of Exhibit D hereto,
duly executed by the Seller;

(iii) a counterpart of the patent assignment (the “Patent Assignment”), in the
form of Exhibit E hereto, duly executed by the Seller;

(iv) such other duly executed instruments of sale, transfer, conveyance and assignment
and assumption, as the Buyer or its counsel may reasonably request, in form reasonably
satisfactory to the Seller, to effectuate the transfer of the Acquired Assets to the Buyer
(the “Other Assignment Documents”);

(v) a counterpart of the Non-Competition Agreement between the Buyer and Ronald Manna,
in the form of Exhibit F (the “Non-Competition Agreement”), duly executed by
the parties thereto other than the Buyer;

(vi) copies of all consents listed on Schedule 5.3;

 

5

 

(vii) certified copies of the Fundamental Documents of the Seller and the authorizing
resolutions and incumbency certificates of the Seller for this Agreement and the Documents;

(viii) certificates from the Secretary or similar authority of the State or other
jurisdiction of formation to the effect that the Seller is in existence in such jurisdiction
and filed all reports due and paid all fees, taxes and penalties owed to the Secretary or
similar authority of the State or other jurisdiction of formation of the Seller, dated as of
a date not more than twenty (20) days prior to the Closing Date;

(ix) a counterpart of a transition and manufacturing services agreement, in the form
attached as Exhibit G (the “Transition and Manufacturing Services
Agreement”), duly executed by the Seller;

(x) evidence satisfactory to the Buyer of the Seller’s payment in full of all payables
listed on Schedule 5.21; and

(xi) evidence satisfactory to the Buyer of the Seller’s purchase of the product
liability insurance required by Section 9.10.

(b) At the Closing, the Buyer shall deliver or cause to be delivered to the Seller:

(i) confirmations of the wire transfers of immediately available funds required by the
terms and conditions of Section 2.1(a);

(ii) a counterpart of the Bill of Sale, duly executed by the Buyer;

(iii) an executed Undertaking and Assumption of Liabilities (the “Undertaking and
Assumption of Liabilities”), in the form of Exhibit B, duly executed by the
Buyer;

(iv) a counterpart of the Intellectual Property License Agreement, duly executed by the
Buyer;

(v) a counterpart of the Patent Assignment, duly executed by the Buyer;

(vi) a counterpart of the Non-Competition Agreement, duly executed by the Buyer;

(vii) certified copies of the Fundamental Documents of the Buyer, and the authorizing
resolutions and incumbency certificates of the Buyer for this Agreement and the Documents;

(viii) certificates from the Secretary or similar authority of the State or other
jurisdiction of formation to the effect that the Buyer is in existence in such jurisdiction
and filed all reports due and paid all fees, taxes and penalties owed to the Secretary or
similar authority of the State or other jurisdiction of formation of the Buyer, dated as of
a date not more than twenty (20) days prior to the Closing Date;

 

6

 

(ix) a certificate from the Secretary of State or similar authority of each State or
other jurisdiction in which the Buyer is qualified to do business to the effect that the
Buyer is in good standing in such state or jurisdiction, dated as of a date not more than
twenty (20) days prior to the Closing Date; and

(x) a counterpart of the Transition and Manufacturing Services Agreement, duly executed
by the Buyer.

2.4 Certain Contracts and Intellectual Property.

Notwithstanding any other provision of this Agreement to the contrary, to the extent that the
assignment by the Seller of any Contract or Intellectual Property to be assigned hereunder shall
require the consent or approval of another party thereto, this Agreement shall not constitute an
assignment or attempted assignment thereof or an assumption by the Buyer of the Seller’s
obligations thereunder if such assignment or attempted assignment would, without the consent of
such other party, constitute a breach thereof. The Seller shall use its reasonable commercial
efforts to obtain the written consent or approval to the assignment to the Buyer of each such
Contract or Intellectual Property with respect to which such consent is required for such
assignment. If such consent or assignment is obtained after the Closing, such Contract shall
automatically be deemed to be included as a Contract under Section 1.1(d). Until such
consent or approval is obtained, each Party agrees to cooperate with the other Parties in any
reasonable arrangement necessary or desirable to provide to the Buyer the benefits of the Contract
or Intellectual Property. All profits, losses, income and expenses attributable to the
performance, maintenance and enforcement of such Contracts after the Closing Date shall be borne
by, and be solely for the account of, Buyer.

2.5 Allocation of Consideration.

The Consideration shall be allocated among the Acquired Assets acquired from the Seller and
the non-competition provisions contained in Section 9.6 as determined by the Buyer and the
Seller and consistent with the principles set forth in Code Section 1060. Such allocation shall be
set forth in a statement (the “Statement of Allocation”) attached hereto as Exhibit
C. None of the Parties shall take any action inconsistent with the Statement of Allocation
prepared in accordance with this Section 2.5.

ARTICLE III.

[INTENTIONALLY OMITTED]

ARTICLE IV.

[INTENTIONALLY OMITTED]

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE SELLER

As a material inducement to the Buyer to enter into and perform its obligations under this
Agreement, the Seller represents and warrants to the Buyer as set forth below.

 

7

 

5.1 Organization and Capitalization of the Seller.

The Seller is a corporation duly organized, validly existing and in good standing under the
Laws of the State of New York. The Seller is qualified to do business in every jurisdiction in
which the failure to so qualify could have a Material Adverse Effect on the Seller or the Business.
Schedule 5.1(a) lists all of the jurisdictions in which the Seller is qualified to do
business as a foreign corporation. Schedule 5.1(a) sets forth all names under which the
Seller or, to the Knowledge of the Seller, any predecessor or former owner of the Business, has
conducted the Business.

5.2 Authorization of Transaction.

The Seller has all requisite power and authority, and all licenses, Permits and authorizations
necessary, to own and operate the Business and to carry on the Business as now conducted. The
Seller has all requisite power and authority to execute and deliver each Document to which it is a
party and any and all instruments necessary or appropriate in order to effectuate fully the terms
and conditions of each such Document and all related transactions and to perform its obligations
under each such Document. The execution, delivery and performance of each Document to which the
Seller is a party has been duly and validly authorized by all necessary action on the part of the
Seller, and each Document to which the Seller is a party has been duly executed and delivered by
the Seller and constitutes the valid and legally binding obligation of the Seller, enforceable
against the Seller in accordance with its terms and conditions, subject to applicable bankruptcy
and insolvency Laws and statutes.

5.3 Non-contravention.

Neither the execution, delivery and performance of the Documents nor the consummation of the
transactions contemplated by the Documents by the Seller, will (a) violate any Law to which the
Seller, the Business or the Acquired Assets is subject, (b) violate any provision of the
Fundamental Documents of the Seller, (c) except as disclosed on Schedule 5.3, conflict
with, result in a breach of, constitute a default (or an event which with notice, lapse of time or
both would constitute a default) under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice under, any of the
Contracts or Intellectual Property or any contract, agreement, instrument, lease, license, Permit,
order, decree, authorization or other document to which the Seller is a party or by which any of
its assets is bound, (d) result in the imposition of any Lien upon any of the Acquired Assets
(other than Liens in favor of lenders to the Buyer under credit arrangements entered into by the
Buyer), or (e) cause the Buyer to become subject to, or to become liable for the payment of, any
Tax. The Seller is not required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any Governmental Authority or any consent or approval of any
other Person in order for the Parties to consummate the transactions contemplated by the Documents
or in order for the Buyer to conduct the Business as conducted (or contemplated to be conducted) in
the ordinary course following the Closing.

5.4 Profit and Loss Statements.

(a) Schedule 5.4 contains Profit and Loss Statements of the Business for Seller’s
fiscal years ended June 30, 2006, 2007 and 2008 and for the six months ended December 31, 2008 (the
“Business Profit and Loss Statements”).

(b) The Business Profit and Loss Statements are true, correct and complete in all Material
respects.

 

8

 

5.5 Subsequent Events.

Since June 30, 2008, except for matters specifically relating to the transactions contemplated
by this Agreement, the Seller has operated the Business in the Ordinary Course of Business and the
Business has not suffered any Material Adverse Change. Without limiting the generality of the
foregoing, since June 30, 2008, except as set forth on Schedule 5.5:

(a) no party (including the Seller) has accelerated, terminated, modified or canceled any
agreement, contract, document, lease, or license (or series of related agreements, contracts,
leases, and licenses) related to or affecting the Business involving more than $10,000 per annum to
which the Seller is a party or by which the Seller is bound or which is otherwise Material to the
Seller or the Business and, to the Knowledge of the Seller, no party intends to take any such
action;

(b) the Seller has not experienced any damage, destruction, or loss (whether or not covered by
insurance) to any of the Acquired Assets;

(c) the Seller has not entered into any contract, lease, or license (or series of related
contracts, leases, and licenses) related to or affecting the Business;

(d) [intentionally omitted];

(e) [intentionally omitted];

(f) there has not been any other Material occurrence, event, incident, action, failure to act
or transaction outside the Ordinary Course of Business involving the Business;

(g) the Seller has not sold, leased, transferred, or assigned any of the assets of the
Business, tangible or intangible, other than for a fair consideration in the Ordinary Course of
Business;

(h) the Seller has not made any capital expenditure (or series of related capital
expenditures) in connection with the Business either involving more than $10,000 in the aggregate
or outside the Ordinary Course of Business;

(i) except in connection with bona fide disputes, the Seller has not delayed or postponed the
payment of any accounts payable or commissions or any other Liability of the Business or agreed or
negotiated with any Person to extend the payment date of any accounts payable or commissions or any
other Liability of the Business;

(j) the Seller has not cancelled, compromised, waived, or released any right or claim (or
series of related rights and claims) in connection with or affecting the Business;

(k) the Seller has not granted any license or sublicense of any rights under or with respect
to the Ultrasonics Intellectual Property;

 

9

 

(l) the Seller has not entered into any employment contract or collective bargaining
agreement, written or oral, in connection with or affecting the Business or modified the terms of
any existing such contract or agreement;

(m) [intentionally omitted];

(n) the Seller has maintained the inventory of the Business at levels commensurate with sales
experience and otherwise within the Ordinary Course of Business;

(o) the Seller has not written down the value of any Acquired Asset on its books or records,
except for depreciation and amortization taken in the Ordinary Course of Business; and

(p) the Seller has not committed to do any of the foregoing.

5.6 Absence of Liabilities.

Except as set forth on Schedule 5.6, (a) the Seller has no Funded Indebtedness, and
(b) the Seller has no Liabilities in connection with the Business, and (c) the Seller has no
Liabilities which are or may be secured by a Lien on any of the Acquired Assets.

5.7 Creditors; Bankruptcy, Etc.

The Seller is not involved in any Proceeding by or against the Seller as a debtor in any court
under the United States Bankruptcy Code or any other insolvency or debtors’ relief act, whether
foreign, international, provincial, state, local or federal, or for the appointment of a trustee,
receiver, liquidator, assignee, sequestrator or other similar official of the Seller or for a
substantial part of the property of the Seller.

5.8 Legal Compliance.

In its conduct of the Business, the Seller has complied, and is in compliance in all Material
respects, with all applicable Laws, Environmental and Safety Requirements, Orders and Permits, and
no Proceeding is pending or, to the Knowledge of the Seller, threatened, alleging any failure to so
comply. Schedule 5.8 sets forth a list of all Permits under which the Seller is operating
or bound except where the failure to have any such Permit would not have a Material Adverse Effect.
Such Permits (a) constitute all Permits used or required in the conduct of the Business as
presently conducted, (b) are in full force and effect, (c) are assignable by Seller, (d) have not
been violated in any respect and (e) are not subject to any pending or, to the Knowledge of the
Seller, threatened Proceeding seeking their revocation or limitation. Upon the Seller’s delivering
any required notices and obtaining any necessary consents as specifically set forth in Schedule
5.8, the Permits will continue in full force and effect on substantially identical terms for
the benefit of the Buyer following the consummation of the transactions contemplated hereby and by
the other Documents, without any further action by any of the Parties.

 

10

 

5.9 Title to Assets.

(a) Except as set forth on Schedule 5.9(a), (i) the Seller has good and marketable
title, free and clear of all Liens (other than Permitted Liens), to all of the Acquired Assets, and
(ii)
with the exception of the Excluded Assets and inventory or other assets previously disposed of
in the Ordinary Course of Business, the Acquired Assets include all assets, properties and
interests in properties previously or presently used by or necessary for the conduct of the
Business by the Seller and, immediately after the Closing, the Buyer, in the Ordinary Course of
Business. Except as set forth on Schedule 5.9(a), no other Person owns any asset that is
or has been used by, related to and/or necessary for the conduct of the Business.

(b) Except as set forth on Schedule 5.9(b), the machinery, equipment and other
tangible assets included in the Acquired Assets are in good working order and condition (reasonable
wear and tear excepted) in the Ordinary Course of Business (subject to routine maintenance and
repair for similar assets of like age), fit for the use for which the Seller has been using them,
and usable in the Ordinary Course of the Business. The Seller owns or leases under valid leases
all machinery, equipment and other tangible assets necessary for the conduct of the Business as
conducted as of the date hereof.

(c) Schedule 5.9(c) contains a true and complete listing of all Material tangible
assets included in the Acquired Assets, other than inventory. Schedule 5.9(c) specifies
the locations of the Material tangible assets included in the Acquired Assets, other than
inventory. At all times during which the Seller owned such tangible assets, none of such tangible
assets was located (or, in the case of the vehicles, garaged) at any location other than the
locations set forth on Schedule 5.9(c), except for (i) periods in which such tangible
assets were in transit in the Ordinary Course of Business or stored in a warehouse, and (ii)
periods in which such tangible assets were being repaired off premises in the Ordinary Course of
Business.

5.10 Inventory.

(a) Schedule 5.10 summarizes the inventory value of the Business as of June 30, 2006,
June 30, 2007, June 30, 2008, December 31, 2008, and the most recent month end. Except for the
Wells’ Lien, the Seller owns all of the inventory of the Business free and clear of all Liens,
subject only to Permitted Liens. The inventory of the Business consists of raw materials,
work-in-process, finished goods and packaging as set forth on Schedule 5.10.

(b) The finished goods of the Business are fit for the purpose for which they were
manufactured and do not contain slow-moving, obsolete, damaged or defective inventory in excess of
historical percentage levels. For purposes of this Agreement, “slow-moving” means any item of
finished goods the sale of which by the Seller has taken or is likely to take in excess of that
experienced by the Seller in the Ordinary Course of Business. Since June 30, 2008, the finished
goods of the Business have been purchased or manufactured in the Ordinary Course of Business
consistent with sales of the Business and reasonably anticipated requirements of the Seller and its
customers.

(c) The raw materials and work-in-process of the Business consist of a quality and quantity
usable in the Ordinary Course of Business. Since June 30, 2008, the raw materials and
work-in-process of the Business have been purchased or manufactured in the Ordinary Course of
Business consistent with sales of the Business and reasonably anticipated requirements of the
Seller and its customers.

 

11

 

5.11 Tax Matters.

(a) Except as set forth on Schedule 5.11(a), the Seller and each other entity included
in any consolidated, combined or unitary Tax Return or in any group filing in which the Seller is
or has been a member (a “Seller Tax Group”), (A) have timely paid all income and other
material Taxes required to be paid by them through the date hereof (whether or not such Taxes are
shown on any Tax Return) and (B) have filed or caused to be filed in a timely manner (within any
applicable extension periods) all income and other material Tax Returns required to be filed by
them with the appropriate Governmental Authorities in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns are true, correct and complete in all respects.
In the past five (5) years, no claim has been made by an authority in a jurisdiction where the
Seller does not file Tax Returns that the Seller is or may be subject to taxation by that
jurisdiction.

(b) Except as set forth on Schedule 5.11(b):

(i) no Liens have been filed and the Seller has not been notified by the Internal
Revenue Service or any other taxing authority that any issues have been raised (and are
currently pending) by the Internal Revenue Service or such other taxing authority in
connection with the Seller or any Tax Return of the Seller;

(ii) except as set forth on Schedule 5.11(b)(ii), there are no pending Tax
audits of the Seller nor any of its Tax Returns; and

(iii) except as set forth on Schedule 5.11(b)(iii), no unresolved deficiencies
or additions to Taxes have been proposed, asserted or assessed against the Seller.

5.12 Intellectual Property.

(a) Schedule 5.12(a) identifies (i) all (A) registered patents and patent
applications, (B) trademark and service mark registrations and applications therefor, (C) Material
unregistered trademarks and service marks, (D) copyright registrations and applications therefor,
and (E) registered trade names and assumed names, developed by, or on behalf of, or owned by, the
Seller, used in connection with the Business, and (ii) each license, agreement or other permission
which the Seller has granted to any third party with respect to any Ultrasonics Intellectual
Property (“Licensed Intellectual Property”).

(b) Except as set forth on Schedule 5.12(b),

(i) to the Knowledge of the Seller, the Seller has not interfered with, infringed upon,
misappropriated or otherwise come into conflict with any Intellectual Property rights of
third parties or committed any acts of unfair competition in its conduct of the Business,
and the Seller has not received any charge, complaint, claim, demand or notice alleging any
such interference, infringement, misappropriation, conflict or act of unfair competition;

 

12

 

(ii) the Seller owns, has the right to use, sell, license and dispose of, and has the
right to bring actions for the infringement of, and, where necessary, has made timely
and proper application for, all Intellectual Property (other than the Licensed
Intellectual Property) necessary or required for the conduct of the Business as currently
conducted and as proposed to be conducted and, to the Knowledge of the Seller, such rights
to use, sell, license, dispose of and bring actions are exclusive with respect to such
Intellectual Property other than fees and payments with respect to Licensed Intellectual
Property identified on Schedule 5.12(a);

(iii) there are no royalties, honoraria, fees or other payments payable by the Seller
to any Person by reason of the ownership, use, license, sale or disposition of the
Intellectual Property used in the Business;

(iv) no activity, service or procedure currently conducted or proposed to be conducted
by the Seller in the Business violates or will violate any agreement related to the Business
governing the use of Intellectual Property;

(v) to the Knowledge of the Seller, no patent, formulation, invention, device,
application or principle nor any Law exists that would have or could reasonably be expected
to have a Material Adverse Effect on the Business;

(vi) the Seller has not sent to any third party in the past five (5) years or otherwise
communicated to another Person any charge, complaint, claim, demand or notice asserting
infringement or misappropriation of, or other conflict with, any Intellectual Property right
of the Seller by such other Person or any acts of unfair competition by such other Person,
nor, to the Knowledge of the Seller, is any such infringement, misappropriation, conflict or
act of unfair competition occurring or threatened; and

(vii) the Seller has taken reasonable and practicable steps (including, without
limitation, entering into confidentiality and nondisclosure agreements with all officers,
directors, managers, members and employees of, and consultants to, the Seller with access to
or knowledge of the Intellectual Property) designed to safeguard and maintain the secrecy
and confidentiality of, and its proprietary rights in, all Intellectual Property.

5.13 Contracts and Commitments.

Schedule 5.13 lists all of the following contracts or other arrangements (written or
oral) related to the Business to which the Seller is a party or by which it or its assets are
bound:

(a) contracts relating to the manufacture, purchase, distribution, marketing or sales of the
Seller’s or any other Person’s products or services (other than purchase and sales orders entered
into in the Ordinary Course of Business consistent with past practices and the performance of which
by the parties thereto is reasonably expected to be substantially completed within sixty (60) days
of the execution thereof), including all volume rebate agreements, “bill and hold” or other similar
arrangements, and all contracts which designate the Seller as an exclusive manufacturer or supplier
of any product or service;

 

13

 

(b) contracts, agreements or arrangements for the employment of any officer, individual
employee, or other Person on a full-time, part-time, consulting or other basis
(excluding oral, at-will employment arrangements the generic terms of which are described on
an aggregate basis (i.e., ranges of wages of salary, typical benefits, etc.) on Schedule
5.13);

(c) instruments, agreements or indentures relating to Funded Indebtedness or to the
mortgaging, pledging or otherwise placing a Lien on any asset or group of assets of the Seller;

(d) guarantees of any obligation for borrowed money or otherwise;

(e) agreements with respect to the lending or investing of funds;

(f) leases or agreements under which the Seller is the lessee, sublessee, occupant, holder or
operator of any real or personal property owned by any other party;

(g) leases or agreements under which the Seller is the lessor or sublessor of or permits any
third party to occupy, hold or operate any real or personal property owned or controlled by the
Seller;

(h) assignments, licenses, indemnifications or agreements with respect to any form of
intangible property, including, without limitation, any Intellectual Property or confidential
information;

(i) contracts or groups of related contracts with the same party for the purchase or sale of
products or services, including all purchase orders and sales orders;

(j) research and development agreements;

(k) any contracts containing covenants not to compete or similar provisions (A) binding on the
Seller, (B) restricting other Persons for the benefit of the Seller or (C) which otherwise restrict
competition granted by the Seller in favor of a third party;

(l) contracts which contain a “most favored customer” or similar provision;

(m) contracts under which the amount payable by the Seller is dependent on the revenues or
income or similar measure of the Business (or any part thereof), or under which the Seller is
obligated to pay royalties, commissions or similar payments to any Person;

(n) marketing, agency, advertising, sales representative, broker, subscription, list
management, printing, distribution, fulfillment or similar contracts; or

(o) other agreements or instruments which are otherwise Material to the Business, and which
are not listed in the foregoing clauses of this Section 5.13;

(collectively, the “Material Contracts”).

 

14

 

Each Material Contract is valid and enforceable against the Seller and the other parties
thereto, subject to applicable bankruptcy and insolvency Laws and statutes. Except as specifically
disclosed on Schedule 5.13, the Seller has performed in all respects all obligations
required to be performed by it and is not in default under or in breach of nor in receipt of any
claim of default or breach under any Material Contract; and no event has occurred which with
the passage of time or the giving of notice or both would result in a default or breach under any
such Material Contract. No other party to any Material Contract is in default under or in breach
of such Material Contract and no event has occurred which with the passage of time or giving of
notice or both would result in a default or breach under any such Material Contract. Except as
disclosed on Schedule 5.13, each Material Contract is assignable by the Seller. The
unfulfilled sales orders with customers listed on Schedule 1.1(d) and the unfulfilled
purchase orders entered into with suppliers listed on Schedule 1.1(d) are assignable by the
Seller. The Seller has supplied the Buyer with (i) a true, correct and complete copy of each
Material Contract, together with all amendments, waivers or other changes thereto, and (ii) a
reasonably complete description of all material terms of all oral agreements covered by this
Section 5.13 to which the Seller is a party.

5.14 Insurance.

The Seller maintains insurance coverage of a type and amount customary for entities of similar
size engaged in similar lines of business. All of Seller’s current insurance policies are in full
force and effect and the Seller is not in default with respect to its obligations under any of such
insurance policies. The Seller has not received any notification of cancellation or modification
of any of such insurance policies or that any claim outstanding is expected to cause a Material
increase in the Seller’s insurance rates. To the Knowledge of the Seller, there are no facts or
circumstances which exist that might relieve any insurer under such insurance policies of its
obligations to satisfy in full claims thereunder.

5.15 Litigation.

Except as set forth on Schedule 5.15, there are no Proceedings pending or, to the
Seller’s Knowledge, threatened against the Seller and, to the Knowledge of the Seller, except as
set forth on Schedule 5.15, there is no Basis for any of the foregoing. None of the
Proceedings listed on Schedule 5.15 could have a Material Adverse Effect on the Seller or
the Business. Schedule 5.15 also sets forth all Proceedings involving the Seller during
the last five (5) years which (i) alleged criminal conduct by the Seller, (ii) resulted in the
Seller or its Affiliates paying or receiving an amount in excess of $25,000 in connection with the
adjudication or compromise of such matter or (iii) had, or could reasonably be expected to have, a
Material Adverse Effect on the Seller or the Business. All materials provided to the Buyer
relating to any matters described on Schedule 5.15 are true, correct and complete.
Schedule 5.15 identifies the pending Proceedings that are covered by insurance policies
and/or the defense of which has been assumed by the insurance carrier and sets forth the applicable
insurance carrier and insurance policy. Such insurance carriers have not delivered any
reservations of rights or indicated any objections or reservations whatsoever with respect to such
insurance carriers’ obligation to provide a defense against the claims asserted in such Proceedings
and to pay the amounts of damages or settlement amounts arising from the claims of such
Proceedings.

5.16 [Intentionally Omitted].

5.17 [Intentionally Omitted].

 

15

 

5.18 Environment and Safety.

The Seller has complied with, and the Business and the Acquired Assets are in compliance with,
all Environmental and Safety Requirements. Schedule 5.18 contains a list of all Permits
required under all Environmental and Safety Requirements for the operation of the Business, and the
ownership, operation or occupation of the Acquired Assets. The Seller has accurately prepared and
timely filed with the appropriate Governmental Authorities all reports, notifications, and filings
required pursuant to Environmental and Safety Requirements for the operation of the Business and
the ownership, operation or occupation of the Acquired Assets. The Seller has not received any
notice or other information regarding any actual or alleged violation of, any actual or potential
Liability under, or any corrective or remedial obligation under, any Environmental and Safety
Requirements with respect to the Business or the Acquired Assets.

5.19 Customers and Suppliers.

(a) Schedule 5.19(a) lists the ten (10) largest customers (and total sales, in
dollars, to each such customer) and the ten (10) largest suppliers (and total purchases, in
dollars, from each such supplier) of the Business during the Seller’s fiscal years ended June 30,
2007 and June 30, 2008, and for the six (6) months ended December 31, 2008. Except as set forth on
Schedule 5.19(a), no such customer or supplier of the Business has terminated, reduced or
materially modified its business (including as a result of engaging in business with foreign
suppliers) with the Seller since June 30, 2006. No changes have occurred to the customer base
other than in the Ordinary Course of Business. Except as set forth on Schedule 5.19(a),
the Seller has not received any notice or otherwise has any reason to believe (other than because
of the current economic conditions), that any of the customers or suppliers listed on Schedule
5.19(a) intends, or is reasonably likely, to terminate, reduce or materially modify its
business (including as a result of engaging in business with foreign suppliers) with the Seller.

(b) Without limiting the foregoing, except as set forth on Schedule 5.19(b)(i), in the
six (6) months preceding the Closing Date, the Seller has not engaged in rebate, discount, advance
sale programs, volume discounts, or other programs or arrangements (such as arrangements to sell to
customers products or services in excess of such customers’ reasonably foreseeable requirements)
with customers of the Business which would reasonably be expected to result in such customers
reducing, temporarily or permanently, their purchases of products or services from the Buyer after
the Closing. Schedule 5.19(b)(ii) identifies all “bill and hold” or consignment
arrangements entered into with customers.

(c) Other than as set forth on Schedule 5.19(c), since June 30, 2008, the Seller has
not offered, become bound by and/or become a party to any trade deals, trade promotions or
programs, trade refunds or cooperative programs or any consumer promotions and programs (including,
without limitation, premiums and rebate programs and cooperative advertising programs) with respect
to the Business, except in the Ordinary Course of Business.

(d) Except as disclosed on Schedule 1.1(e), the Seller has no payments, deposits
(including, without limitation, customer deposits or prepayments on unfulfilled sales orders) or
prepaid expenses in connection with the Business.

 

16

 

5.20 [Intentionally Omitted].

5.21 Accounts and Notes Payable.

Except as set forth by vendor on Schedule 5.21, all accounts payable and notes payable
by the Seller to third parties arose in the Ordinary Course of Business, and there is no such
account payable or note payable more than ninety (90) days past due.

5.22 Warranties of Products and Services; Product Liability; Regulatory Compliance.

(a) Except as set forth on Schedule 5.22(a) hereto, all finished goods manufactured
and held in the inventory of the Business at the Closing (including, without limitation, all
documentation furnished in connection therewith) are free from any significant defects and conform
in all respects with all customary and reasonable standards for products of such type, with all
applicable contractual commitments and with all express and implied warranties, and the Seller has
no Liability (and, to the Knowledge of the Seller, there is no reasonable Basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand against
it giving rise to any Liability) for replacement or repair thereof or other damages in connection
therewith.

(b) Except as set forth on Schedule 5.22(b) hereto, all raw materials and
work-in-process held in the inventory of the Business at the Closing (including, without
limitation, all documentation furnished in connection therewith) are free from any significant
defects and conform in all respects with all customary and reasonable standards for products of
such type, with all applicable contractual commitments and with all express and implied warranties.

(c) Except as set forth on Schedule 5.22(c) hereto, Seller has not given any
guarantee, warranty or other indemnity in respect of any of the products manufactured, sold,
distributed, used, delivered or held in inventory and services provided by the Seller in connection
with the Business (including, without limitation, all documentation furnished in connection
therewith) except warranties made in the Ordinary Course of Business and in the form of Seller’s
standard written warranty, a copy of which is attached to Schedule 5.22(c), and except for
warranties, express or implied, as required by law.

(d) Except as disclosed on Schedule 5.22(d), all warranty claims related to the
Business that have been received prior to the Closing have been resolved.

(e) Except as set forth on Schedule 5.22(e) (which lists all violations and/or warning
letters or notices from any Governmental Authority), since January 1, 2007, no Governmental
Authority regulating the Business has commenced, or to the Knowledge of the Seller, threatened to
commence, any investigation or proceeding relating to the Business. The Seller has not been
responsible for, subject to, assumed or become aware or otherwise been notified of, (and to the
Knowledge of the Seller there is no reasonable Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand against it which would
reasonably be expected to give rise to Liability), arising out of any injury to people, animals or
property as a result of or in connection with the ownership, possession, consumption or use of any
product manufactured, sold or distributed or any service provided by the Seller in connection with
the Business.

 

17

 

5.23 [Intentionally Omitted].

5.24 Brokers.

Except as disclosed on Schedule 5.24, there is no agent, broker, investment banker,
Person or firm who or which has acted on behalf, or under the authority, of the Seller or will be
entitled to any fee or commission directly or indirectly from the Buyer (as a result of the actions
of the Seller) or the Seller, in connection with any of the transactions contemplated hereby.

5.25 [Intentionally Omitted].

5.26 Solvency.

The Seller is currently solvent and the Seller will not be rendered insolvent by any of the
transactions contemplated hereby.

5.27 [Intentionally Omitted].

5.28 Disclosure.

No representation or warranty of the Seller in this Agreement (including the Schedules
attached hereto) misstates a Material fact or omits to state a Material fact necessary to make the
statements herein or therein, in light of the circumstances in which they were made, not
misleading.

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF BUYER

As a material inducement to the Seller to enter into and perform its obligations under this
Agreement, the Buyer represents and warrants to the Seller as follows:

6.1 Organization.

The Buyer is a limited liability company duly formed, validly existing and in good standing
under the Laws of the State of Delaware.

6.2 Authorization of Transaction.

The Buyer has full power and authority to execute and deliver each Document to which it is a
party and any and all instruments necessary or appropriate in order to effectuate fully the terms
and conditions of the Documents and all related transactions and to perform its obligations under
the Documents. Each Document to which the Buyer is a party has been duly authorized by all
necessary limited liability company action on the part of the Buyer and has been duly executed and
delivered by the Buyer, and constitutes the valid and legally binding obligation of the Buyer,
enforceable against the Buyer in accordance with its terms and conditions, subject to applicable
bankruptcy and insolvency Laws and statutes. The execution, delivery and performance by Buyer of
this Agreement and the Documents and the performance by Buyer of the transactions contemplated
hereby and thereby will not (a) violate any provision of Buyer’s
Fundamental Documents, (b) violate any Law, rule, regulation or governmental order applicable
to Buyer, or (c) result in a violation or any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under any note, contract, lease,
permit or other instrument or obligation to which Buyer is a party or under which any of its assets
are bound.

 

18

 

6.3 No Restrictions Against Purchase of Assets.

Neither the execution, delivery and performance of the Documents nor the consummation of the
transactions contemplated thereby, nor compliance by the Buyer with any of the provisions thereof,
will (i) violate, conflict with, or result in a Material breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would constitute a default)
under any of the terms, conditions or provisions of the Fundamental Documents of the Buyer, or
under any note, bond, mortgage, indenture, deed of trust, or other agreement by which the Buyer is
bound, or by which the Buyer or any of its properties or assets may be bound or affected, or (ii)
violate any Law applicable to the Buyer or any of its properties or assets. No consent or approval
by, notice to, or registration with, any Governmental Authority is required on the part of the
Buyer in connection with the execution and delivery of this Agreement or the consummation by the
Buyer of the transactions contemplated hereby.

6.4 Brokers.

No broker, investment banker or finder is entitled to any fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on behalf of the Buyer.

6.5 Consents.

No consent or waiver of, or filing with, any person or entity (governmental or otherwise) is
required to be obtained in order for Buyer to execute, deliver or perform any of its obligations
under this Agreement or any of the Documents.

6.6 Litigation

There is no legal action, arbitration or administrative or governmental proceeding or
investigation in which Buyer has been served or provided with formal notice, nor, to Buyer’s
knowledge, are any of the foregoing filed, issued or threatened, which would reasonably be expected
to have a Material Adverse Effect on the consummation of the transactions contemplated by this
Agreement or materially limit Buyer’s ability to perform any of its obligations under this
Agreement or any of the Documents.

 

19

 

ARTICLE VII.

[INTENTIONALLY OMITTED]

ARTICLE VIII.

INDEMNIFICATION

8.1 Survival.

The representations, warranties, covenants and other agreements set forth in this Agreement or
in any certificate or other writing delivered in connection with this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby; provided,
however, that any claim for Adverse Consequences arising out of or with respect to the
inaccuracy of any such representation or the breach of any such warranty must be asserted in
writing by notice given to the other party on or before the eighteen month anniversary of the
Closing Date, failing which any such claim shall be waived and extinguished, excluding,
however, claims for Adverse Consequences relating to any inaccuracy of representations
and/or breach of warranties contained in the Buyer Core Representations or the Seller Core
Representations, as the case may be, which may be asserted until the expiration of the applicable
statute of limitations with respect to such matters. For the avoidance of doubt, if a notice
period applies to a claim for indemnification for a breach of representations and/or warranties,
then if and to the extent that any Person entitled to indemnification submits a notice or claim
prior to the expiration of such notice period, the indemnification obligations of the indemnifying
party with respect to such claim shall include Adverse Consequences which the indemnified party
suffers after the expiration of the notice period. No right of the Buyer Group for indemnification
hereunder shall be affected by any examination made for or on behalf of the Buyer, the knowledge of
any of the Buyer’s officers, directors, shareholders, employees or agents, or the acceptance by the
Buyer of any certificate or opinion.

8.2 Indemnification.

(a) Seller Indemnification. From and after the Closing, the Seller shall indemnify,
defend and hold harmless the Buyer and its successors, assigns, officers and directors
(collectively, the “Buyer Group”) against any Adverse Consequences that any member of the
Buyer Group may suffer, sustain or become subject to as the result of, or arising from or in
connection with:

(i) the breach by Seller of any representation or warranty contained in
Article V hereof or in any other Document or in any exhibit, schedule or attachment
thereto or in any certificate delivered by Seller in connection therewith;

(ii) any Excluded Liability; or

(iii) any breach by Seller of any covenant or agreement contained in this Agreement,
any other Document or in any exhibit, schedule or attachment hereto or thereto or in any
certificate delivered by the Seller in connection herewith or therewith.

(b) Buyer Indemnification. From and after the Closing, the Buyer shall indemnify,
defend and hold harmless the Seller and its successors, assigns, officers and directors
(collectively, the “Seller Group”) against any Adverse Consequences that any member of the
Seller Group may suffer, sustain or become subject to as the result of, arising from or in
connection with:

(i) a breach of any representation, warranty, covenant or agreement by the Buyer
contained in this Agreement, any other Document or in any exhibit, schedule or
attachment hereto or thereto or in any certificate delivered by the Buyer in connection
herewith or therewith; or

(ii) any Assumed Liability.

 

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(c) Limits on Indemnification. Anything in Section 8.2(a) to the contrary
notwithstanding, the Buyer Group or the Seller Group, as the case may be, shall not have the right
to be indemnified under Section 8.2(a)(i) or Section 8.2(b)(i) (x) unless and until
the Buyer Group, or the Seller Group, as the case may be, (or any member thereof) shall have
incurred on a cumulative basis Adverse Consequences from breaches of the Seller’s or the Buyer’s,
as the case may be, representations and warranties (other than the Seller Core Representations) in
an amount exceeding $50,000 (the “Basket”), in which case the right to be indemnified shall
apply to the extent of all such Adverse Consequences in excess of the Basket or (y) for Adverse
Consequences from breaches of the Seller’s or the Buyer’s, as the case may be, representations and
warranties that exceed $1,000,000 in the aggregate (the “Cap”); provided, however, that in
no event shall the Basket or the Cap apply with respect to the Seller Core Representations, willful
breaches of any representations and warranties, or fraud.

8.3 Indemnification Procedures.

(a) If any third party shall notify any Party to this Agreement (the “Indemnified
Party”) with respect to any matter (a “Third Party Claim”) which may give rise to a
claim for indemnification against any other Party to this Agreement (the “Indemnifying
Party”) under Section 8.2, then, subject to Section 8.3(d) below, the
Indemnified Party shall notify in writing each Indemnifying Party thereof promptly and provide
specific details of the matter; provided, however, that no reasonable delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying
Party from any Liability or obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced by the delay. Any Indemnifying Party will have the right
to defend the Indemnified Party against the Third Party Claim with counsel of its choice (or
counsel selected by any insurer providing defense) reasonably satisfactory to the Indemnified Party
so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15)
days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying
Party will indemnify the Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim, (B) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and fulfill its
indemnification obligations hereunder, (C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief (unless any insurer providing defense also is
defending such claims for equitable relief to the good faith reasonable satisfaction of the
Indemnified Party), (D) settlement of, or an adverse judgment with respect to, the Third Party
Claim is not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of the Indemnified
Party, and (E) the Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently. The Indemnified Party may participate in the defense of such claim with co-counsel of
its

 

21

 

choice
to the extent that the Indemnified Party believes in its sole discretion that such matter shall affect its ongoing business; provided, however, that the fees and
expenses of the Indemnified Party’s counsel shall be at the expense of the Indemnified Party unless
(A) the Indemnifying Party has agreed in writing to pay such fees and expenses, (B) the
Indemnifying Party has failed to assume the defense and employ counsel as provided herein or (C) a
claim shall have been brought or asserted against the Indemnifying Party as well as the Indemnified
Party, and such Indemnified Party shall have been advised in writing by counsel that there may be
one or more factual or legal defenses available to it that are in conflict with those available to
the Indemnifying Party, in which case such co-counsel shall be at the expense of the Indemnifying
Party; provided, however, that the Indemnifying Party will not be required to pay
the fees and expenses of more than one separate principal counsel (and any appropriate local
counsel) for all Indemnified Parties. Subject to the preceding sentence, if the Indemnifying
Party’s insurer is engaged in the defense of a claim, the Indemnified Party shall attempt, in good
faith, to use reasonable efforts, in connection with any participation by the Indemnified Party in
the defense of such claim, not to materially interfere with the insurer’s defense of the claim.
If, within such 15-day period, the Indemnifying Party does not assume the defense of such matter or
fails to defend the matter in the manner set forth above, the Indemnified Party may defend against
the matter in any manner that it reasonably may deem appropriate and may consent to the entry of
any judgment with respect to the matter or enter into any settlement with respect to such matter
without the consent of the Indemnifying Party and the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the costs of defending against such claim
(including reasonable attorneys’ fees and expenses) and the Indemnifying Party will remain
responsible for any Adverse Consequences the Indemnified Party may suffer to the extent resulting
from, arising out of, relating to, or caused by the claim to the fullest extent provided herein;
provided, however, that such claim shall not be compromised or settled without the
written consent of the Indemnifying Party, which consent shall not be unreasonably withheld. If
the Indemnified Party assumes the defense of the claim, then the Indemnified Party shall keep the
Indemnifying Party reasonably informed of the progress of any such defense, compromise or
settlement. The Indemnifying Party shall be liable for any settlement of the claim effected
pursuant to this Section 8.3, and for any final judgment, if the Indemnified Party is
entitled to indemnification from the Indemnifying Party under the terms of this Article
VIII.

(b) If an Indemnified Party’s notice of indemnification does not relate to a claim or the
commencement of an action or proceeding by a third party, the Indemnifying Party shall have thirty
(30) days after receipt of such notice to object to the subject matter and the amount of the claim
for indemnification set forth in such notice by delivering written notice thereof to the
Indemnified Party. If the Indemnifying Party does not so object within such 30-day period, it
shall be conclusively deemed to have agreed to the matters set forth in such notice of
indemnification.

(c) The Parties recognize and acknowledge that a breach by any Party of this
Article VIII may cause irreparable and material loss and damage to the other Party as to
which the other Party may not have an adequate remedy at law or in damages. Accordingly, each
Party acknowledges and agrees that the issuance of an injunction or other equitable remedy may be
an appropriate remedy for any such breach.

 

22

 

(d) An Indemnified Party shall notify each Indemnifying Party promptly upon such Indemnified
Party’s becoming aware of any matter which may give rise to a claim by such
Indemnified Party for indemnification against an Indemnifying Party under Section 8.2
not covered by Section 8.3(a) above; provided, however, that no delay on
the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any Liability or obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is prejudiced by the delay.

(e) If the Indemnifying Party objects in writing to any claim for indemnification made by the
Indemnified Party in any written notice of a claim (an “Objection Notice”), then the
Indemnifying Party and the Indemnified Party shall attempt in good faith to agree upon the rights
of the respective parties with respect to each of such claims, and the parties shall each provide
information (as reasonably requested) to the other related to the issues set forth in the Objection
Notice. If the Indemnified Party and the Indemnifying Party so agree, a memorandum setting forth
such agreement shall be prepared and signed by both parties and, in the case of indemnification by
Seller, the amount agreed upon by the parties shall be paid to Buyer by wire transfer of
immediately available funds in New York, New York, and in the case of indemnification by Buyer,
such amount shall be paid to Seller by wire transfer of immediately available funds in Connecticut.

(f) The amount of any Adverse Consequences for which indemnification is provided pursuant to
this Article VIII shall be net of (i) any amounts recovered by the Indemnified Party pursuant to
any indemnification agreement with any third party and (ii) any insurance proceeds or other cash
receipts or sources of reimbursement received as an offset against such Adverse Consequences.

(g) The representations and warranties of the parties contained herein shall survive the
Closing until the earlier of (a) the applicable Survival Date or (b) the transfer by or on behalf
of Buyer of all or substantially all of the Business, in a stand-alone transaction, to any Person
not affiliated with Buyer. For the avoidance of doubt, the representations and warranties of the
parties contained herein shall survive a sale of all or substantially all of the Parent’s business
(whether by merger, sale of stock or assets, recapitalization or otherwise). Any claim under this
Agreement with respect to a breach of a representation and warranty must be asserted by a Claim
Notice delivered prior to 5:00 P.M., Eastern Time, on the applicable Survival Date and, if such a
notice is given, the survival period for such representation and warranty shall continue until the
claim is fully resolved.

8.4 Exclusive Remedy.

The provisions set forth in this Article VIII shall be the exclusive remedy for any claims
brought by either party against the other party relating to the subject matter set forth in this
Agreement whether brought pursuant to the provisions of this Article VIII or otherwise, except (i)
for any right of the parties to specific performance of the terms of this Agreement, and (ii) in
the case of fraud or willful misconduct.

8.5 Parent Guaranty.

Parent, as the sole member of the Buyer, hereby agrees to unconditionally, irrevocably and
absolutely guaranty to the Seller the prompt and complete payment of all amounts owing to
the Seller by the Buyer pursuant to this Article VIII, and all other obligations of the Buyer
under this Agreement.

 

23

 

ARTICLE IX.

ADDITIONAL AGREEMENTS

9.1 Transaction Expenses.

(a) The Buyer and the Seller shall each pay all of their respective expenses in connection
with the transactions contemplated hereby, including, without limitation, all attorneys’ fees and
expenses and accountants’ fees and expenses.

(b) In no event shall the Buyer be liable for any income, capital gain, franchise or other
similar Tax arising or imposed as a result of the transactions contemplated herein, and the Seller
shall pay all transfer, stamp (including documentary stamp Taxes, if any) and other similar Taxes
or governmental charges with respect to the transactions herein contemplated. Any sales or use or
other registration or other transfer Taxes imposed on the sale of the Acquired Assets at the
Closing shall be borne by the Seller.

9.2 Efforts to Consummate; Further Assurances.

Subject to the terms and conditions herein provided, the Parties shall do or cause to be done
all such acts and things as may be necessary, proper or advisable, consistent with all applicable
Laws, to consummate and make effective the transactions contemplated hereby as soon as reasonably
practicable. Each of the Parties agrees that it will from time to time on or after the Closing
promptly do, execute, acknowledge and deliver and will cause to be done, executed, acknowledged and
delivered, all such further acts, deeds, certificates, bills of sale, assignments, transfers,
conveyances, powers of attorney and other documents as may be reasonably requested by any of the
other Parties for better assigning, transferring, granting, conveying and conferring right, title
and interest to the Buyer of the Acquired Assets and for the better assumption by the Buyer of the
Assumed Liabilities. Without limiting the generality of the foregoing, the Parties agree to
cooperate with each other and to provide each other with all information and documentation
reasonably necessary to permit the preparation and filing of all federal, foreign, international,
state, provincial, local, and other Tax returns and Tax elections with respect to the Business.

9.3 Confidentiality.

(a) As used in this Section 9.3, the term “Confidential Information” includes
any and all of the following information of the Seller or the Buyer that has been or may hereafter
be disclosed in any form, whether in writing, orally, electronically or otherwise, or otherwise
made available by observation, inspection or otherwise by either party or its Representatives
(collectively, a “Disclosing Party”) to the other party or its Representatives
(collectively, a “Receiving Party”):

(i) all information that is a trade secret under applicable trade secret or other Law;

 

24

 

(ii) all information concerning product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings, samples,
inventions and ideas, past, current and planned research and development, current and
planned manufacturing or distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans, computer
hardware, software and computer software and database technologies, systems, structures and
architectures;

(iii) all information concerning the business and affairs of the Disclosing Party
(including, but not limited to, historical and current financial statements, financial
projections and budgets, Tax Returns and accountants’ materials, historical, current and
projected sales, capital spending budgets and plans, business plans, strategic plans,
marketing and advertising plans, publications, client and customer lists and files,
contracts, the names and backgrounds of key personnel and personnel training techniques and
materials, however documented), and all information obtained from review of the Disclosing
Party’s documents or property or discussions with the Disclosing Party regardless of the
form of the communication; and

(iv) all notes, analyses, compilations, studies, summaries and other material prepared
by the Receiving Party to the extent containing or based, in whole or in part, upon any
information included in the foregoing.

(b) Any trade secrets of a Disclosing Party shall also be entitled to all of the protections
and benefits under applicable trade secret Law and any other applicable Law. If any information
that a Disclosing Party deems to be a trade secret is found by a court of competent jurisdiction
not to be a trade secret for purposes of this Section 9.3, such information shall still be
considered Confidential Information of that Disclosing Party for purposes of this Section
9.3 to the extent included within the definition. In the case of trade secrets, each of the
Buyer and the Seller hereby waives any requirement that the other party submit proof of the
economic value of any trade secret or post a bond or other security.

(c) (i) Each Receiving Party acknowledges the confidential and proprietary nature
of the Confidential Information of the Disclosing Party and agrees that such Confidential
Information (A) shall be kept confidential by the Receiving Party; (B) shall not be used for
any reason or purpose other than to evaluate and consummate the transactions contemplated
hereunder; and (C) without limiting the foregoing, shall not be disclosed by the Receiving
Party to any Person, except in each case as otherwise expressly permitted by the terms of
this Agreement or with the prior written consent of an authorized representative of the
Seller with respect to Confidential Information of the Seller (each, a “Seller
Contact”) or an authorized representative of the Buyer with respect to Confidential
Information of the Buyer (each, a “Buyer Contact”). Each of the Buyer and the
Seller shall disclose the Confidential Information of the other party only to its
Representatives who require such material for the purpose of evaluating the transactions
contemplated hereunder and are informed by the Buyer or the Seller, as the case may be, of
the obligations of this Section 9.3 with respect to such information. Each of the
Buyer
and the Seller shall (D) enforce the terms of this Section 9.3 as to its
respective Representatives; (E) take such action to the extent necessary to cause its
Representatives to comply with the terms and conditions of this Section 9.3; and
(vi) be responsible and liable for any breach of the provisions of this Section 9.3
by it or its Representatives.

 

25

 

(ii) Unless and until this Agreement is terminated, the Seller shall maintain as
confidential any Confidential Information (including for this purpose any information of the
Seller of the type referred to in Sections 9.3(a)(i), (ii) and
(iii), whether or not disclosed to the Buyer) of the Seller relating to any of the
Acquired Assets or the Assumed Liabilities. Notwithstanding the preceding sentence, the
Seller may use any Confidential Information of the Seller before the Closing in the Ordinary
Course of Business in connection with the transactions permitted by Section 8.3.

(d) From and after the Closing, the provisions of Section 9.3(a) above shall not apply
to or restrict in any manner the Buyer’s use of any Confidential Information of the Seller relating
to the Business or any of the Acquired Assets or the Assumed Liabilities.

(e) Sections 9.3(a) and (b) do not apply to that part of the Confidential
Information of a Disclosing Party that a Receiving Party demonstrates (i) was, is or becomes
generally available to the public other than as a result of a breach of this Section 9.3 by
the Receiving Party or its Representatives; (ii) was or is developed by the Receiving Party
independently of and without reference to any Confidential Information of the Disclosing Party; or
(iii) was, is or becomes available to the Receiving Party on a nonconfidential basis from a third
party not bound by a confidentiality agreement or any legal, fiduciary or other obligation
restricting disclosure. The Seller shall not disclose any Confidential Information of the Seller
relating to any of the Acquired Assets or the Assumed Liabilities in reliance on the exceptions in
clauses (ii) or (iii) above, subject to any SEC disclosure obligations of Seller, including but not
limited to those disclosure obligations resulting from the consummation of this Agreement and/or
any other Documents.

(f) If a Receiving Party becomes compelled in any Proceeding or is requested by a Governmental
Authority having regulatory jurisdiction over the contemplated transactions to make any disclosure
that is prohibited or otherwise constrained by this Section 9.3, that Receiving Party shall
provide the Disclosing Party with prompt notice of such compulsion or request so that it may seek
an appropriate protective order or other appropriate remedy or waive compliance with the provisions
of this Section 9.3. In the absence of a protective order or other remedy, the Receiving
Party may disclose that portion (and only that portion) of the Confidential Information of the
Disclosing Party that, based upon advice of the Receiving Party’s counsel, the Receiving Party is
legally compelled to disclose or that has been requested by such Governmental Authority,
provided, however, that the Receiving Party shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded by any Person to whom any
Confidential Information is so disclosed. The provisions of this Section 9.3(f) do not
apply to any Proceedings between the parties to this Agreement.

 

26

 

(g) If this Agreement is terminated, each Receiving Party shall (a) destroy all Confidential
Information of the Disclosing Party prepared or generated by the Receiving Party without retaining
a copy of any such material; (b) promptly deliver to the Disclosing Party all
other Confidential Information of the Disclosing Party, together with all copies thereof, in
the possession, custody or control of the Receiving Party or, alternatively, with the written
consent of a Seller Contact or a Buyer Contact (whichever represents the Disclosing Party) destroy
all such Confidential Information; and (c) certify all such destruction in writing to the
Disclosing Party, provided, however, that the Receiving Party may retain a list
that contains general descriptions of the information it has returned or destroyed to facilitate
the resolution of any controversies after the Disclosing Party’s Confidential Information is
returned.

(h) The Disclosing Party is not waiving, and will not be deemed to have waived or diminished,
any of its attorney work product protections, attorney-client privileges or similar protections and
privileges as a result of disclosing its Confidential Information (including Confidential
Information related to pending or threatened litigation) to the Receiving Party, regardless of
whether the Disclosing Party has asserted, or is or may be entitled to assert, such privileges and
protections. The Parties (i) share a common legal and commercial interest in all of the Disclosing
Party’s Confidential Information that is subject to such privileges and protections; (ii) are or
may become joint defendants in Proceedings to which the Disclosing Party’s Confidential Information
covered by such protections and privileges relates; (iii) intend that such privileges and
protections remain intact should either party become subject to any actual or threatened Proceeding
to which the Disclosing Party’s Confidential Information covered by such protections and privileges
relates; and (iv) intend that after the Closing the Receiving Party shall have the right to assert
such protections and privileges. No Receiving Party shall admit, claim or contend, in Proceedings
involving either party or otherwise, that any Disclosing Party waived any of its attorney
work-product protections, attorney-client privileges or similar protections and privileges with
respect to any information, documents or other material not disclosed to a Receiving Party due to
the Disclosing Party disclosing its Confidential Information (including Confidential Information
related to pending or threatened litigation) to the Receiving Party.

(i) This Section 9.3 is intended to supersede, and terminate in its entirety, the
Confidentiality Agreement.

(j) The provisions of this Section 9.3 shall survive for a period of twelve (12)
months from the date of this Agreement.

9.4 Non-Disparagement.

The Seller shall cause its Representatives not to make any statements, observations or
opinions or communicate any information (whether oral or written) that disparages or is likely in
any way to harm the reputation of the Business or the Buyer and its Affiliates or that is
inconsistent with the purpose and intent of the Documents. The Buyer shall cause its
Representatives not to make any statements, observations or opinions or communicate any information
(whether oral or written) that disparages or is likely in any way to harm the reputation of the
Seller or its Affiliates or that is inconsistent with the purpose and intent of the Documents.

 

27

 

9.5 Broker’s Fees.

Each of the Parties shall be responsible for, and shall hold each of the other Parties
harmless against, any fees or commissions for which such Party is liable to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.

9.6 Non-Compete.

(a) During the Non-Compete Period, the Seller and its Subsidiaries shall not (i) directly or
indirectly, own, purchase, organize or take preparatory steps for the organization of, or (ii)
build, design, finance, acquire, lease, operate, manage, invest in, work or consult for or
otherwise affiliate with, or (iii) serve as a partner, employee, consultant, officer, director,
manager, agent, associate, investor, or otherwise for any business in competition with or otherwise
similar to the Business or the Buyer’s liquid processing business in (x) the States of New York,
Connecticut or New Jersey, (y) in any other state of the United States of America or any other
country in the world from which the Buyer derives at least five percent (5%) of its gross revenues
prior to the end of the Non-Compete Period, or (z) within 360 miles of any of the Seller’s
manufacturing facilities or the manufacturing facilities of any of the Seller’s Subsidiaries ((x),
(y), and (z) the “Restricted Territories”). Ownership by the Seller, as a passive
investment, of less than 1% of the outstanding shares of ownership interest of any corporation
listed on a national securities exchange will not constitute a breach of this Section 9.6.

(b) During the Non-Compete Period, the Seller and its Subsidiaries shall not divert or attempt
to divert any or all of the Business of Buyer’s or any of Buyer’s Affiliate’s customers or
suppliers from Buyer or its Affiliates in violation of this Agreement or applicable Law (including
any applicable trade secrets law).

(c) The Seller acknowledges that the Buyer has required that the Seller make the agreements in
this Section 9.6 as a condition to the Buyer’s consummation of the transactions
contemplated by this Agreement. The Seller acknowledges that the restrictions and agreements
contained in this Section 9.6 are reasonable (including with respect to duration,
geographical area and scope) and necessary to protect the legitimate interests of the Buyer,
including the preservation of the Business, and that violation or breach of this Section
9.6 will cause substantial and irreparable harm to the Buyer that would not be quantifiable and
for which no adequate remedy would exist at Law.

(d) If, at the time of enforcement of this Section 9.6, a court holds that the
restrictions stated herein are unreasonable under the circumstances then existing, the Parties
agree that the maximum period, scope or geographical area reasonable under such circumstances shall
be substituted for the stated period, scope or area so as to protect the Buyer to the greatest
extent possible under applicable Law from improper competition. The Parties hereto acknowledge
that money damages would be an inadequate remedy for any breach of this Section 9.6 and
that the Buyer would be irreparably damaged if any Party were to breach the covenants set forth in
this Section 9.6. Therefore, in the event of a breach or threatened breach of this
Section 9.6, the Buyer or its successors or assigns may, in addition to other rights and
remedies existing in their favor, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent any violations of,
the provisions of this Section 9.6 (without posting a bond or other security) or require
the breaching party (the “Breaching Party”) to account for and pay over to the Buyer all
compensation, profits, moneys, accruals, increments
or other benefits derived from or received as a result of any transactions constituting a
breach of the covenants contained herein in this Section 9.6, if and when final judgment of
a count of competent jurisdiction is so entered against such Breaching Party.

(e) The Buyer shall also enter into the Non-Competition Agreements with the individuals party
thereto.

 

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9.7 Cooperation.

Following the Closing, the Seller and the Buyer will cooperate with each other with regard to
collections from customers of the Business, and the Seller will keep the Buyer reasonably informed
of its collection efforts with regard to customers of the Business with regard to pre-closing
accounts receivable that are more than sixty (60) days past due, in order to maintain good
relations with customers of the Business.

9.8 [Intentionally Omitted].

9.9 Payment of Assumed and Excluded Liabilities.

(a) The Buyer shall, after the Closing, promptly pay to the appropriate Person any Assumed
Liabilities related to the Business (i) which become due and payable after the Closing, or (ii)
which were due and payable on the Closing Date; and

(b) The Seller shall, after the Closing, promptly pay to the appropriate Person any Excluded
Liabilities related to the Business (i) which become due and payable after the Closing, or (ii)
which were due and payable on the Closing Date.

9.10 Product Liability Insurance.

The Seller shall maintain in force for three (3) years following the Closing product liability
insurance insuring Seller with respect to products of the Business sold prior to the Closing,
naming the Buyer as a named insured and meeting the other requirements set forth on Schedule
9.10.

ARTICLE X.

[Intentionally Omitted]

ARTICLE XI.

DEFINITIONS

In addition to the words and terms defined elsewhere in this Agreement, the following words
and terms shall have the following meanings, respectively, unless the context clearly requires
otherwise:

“Acquired Assets” has the meaning assigned to such term in Section 1.1.

“Adverse Consequences” means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees,
rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes,
Liens, losses, lost profits, diminution in value, expenses, and fees, including court costs and
reasonable attorneys’ fees and expenses (whether such attorneys’ fees and expenses arise out of a
dispute or claim among the Parties or out of a dispute involving third parties).

 

29

 

“Affiliate” of a Person shall means (i) any other Person directly, or indirectly
through one or more intermediaries, controlling, controlled by or under common control with such
Person, or (ii) any officer, director, or manager of such Person. The term “control”
includes, without limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

“Agreement” has the meaning assigned to such term in the preamble of this Agreement.

“Assumed Liabilities” has the meaning assigned to such term in Section 1.3.

“Basis” means any past or present fact, situation, circumstance, status, condition,
activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that
forms or could form the basis for any specified consequence.

“Basket” has the meaning assigned to such term in Section 8.2(c).

“Bill of Sale” has the meaning assigned to such term in Section 2.3(a).

“Breaching Party” has the meaning assigned to such term in Section 9.6(d).

“Business” has the meaning set forth in the recitals to this Agreement.

“Business Day” means any day except Saturday, Sunday or any day on which banks are
generally not open for business in the cities of New York, New York.

“Business Profit and Loss Statements” has the meaning assigned to such term in
Section 5.4(a).

“Buyer” has the meaning assigned to such term in the preamble of this Agreement.

“Buyer Contact” has the meaning assigned to such term in Section 9.3(c).

“Buyer Core Representations” means Section 6.1 (Organization), Section
6.2 (Authorization of Transaction), and Section 6.4 (Brokers).

“Buyer Group” has the meaning assigned to such term in Section 8.2(a).

“Cap” has the meaning assigned to such term in Section 8.2(c).

“Cash Closing Payment” had the meaning assigned to such term in Section
2.1(a).

“Closing” has the meaning assigned to such term in Section 2.2.

 

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“Closing Date” has the meaning assigned to such term in Section 2.2.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated thereunder.

“Confidential Information” has the meaning assigned to such term in Section
9.3(a).

“Confidentiality Agreement” means that Confidentiality Agreement, dated February 17,
2006, by and between the Parent and the Seller.

“Consideration” has the meaning assigned to such term in Section 2.1.

“Contracts” has the meaning assigned to such term in Section 1.1(d).

“Direct Cash Payment” has the meaning assigned to such term in Section 2.1(a).

“Disclosing Party” has the meaning assigned to such term in Section 9.3(a).

“Documents” means this Agreement, the Bill of Sale, the Undertaking and Assumption of
Liabilities, the Intellectual Property License Agreement, the Non-Competition Agreement, the Patent
Assignment, the Transition and Manufacturing Services Agreement and the Other Assignment Documents.

“Employee Benefit Plan” means all the employee benefit, fringe benefit, supplemental
unemployment benefit, bonus, incentive, profit sharing, termination, change of control, pension,
retirement, stock option, stock purchase, stock appreciation, health, welfare, medical, dental,
disability, life insurance and similar plans, programs, arrangements or practices relating to the
current or former employees, officers or directors of the Seller maintained, sponsored or funded by
the Seller, whether written or oral, funded or unfunded, insured or self-insured, registered or
unregistered under which the Seller may have any liability contingent or otherwise and other
similar health and benefit plans established pursuant to statute.

“Environmental and Safety Requirements” means any and all Laws, Orders, contractual
obligations and all common law concerning public health and safety, worker health and safety,
pollution, or protection of the environment, including, without limitation, all those relating to
the presence, use, production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened release, control, or
cleanup of any hazardous materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, including, but not limited to, the Solid Waste
Disposal Act, as amended, 42 U.S.C. §§ 6901, et seq., the Clean Air Act, as amended,
42 U.S.C. §§ 7401 et seq., the Federal Water Pollution Control Act, as amended, 33 U.S.C.
§§ 1251 et seq., Oil Pollution Act of 1990, 33 U.S.C. §§ 270 et seq., The Federal
Food Drug and Cosmetic Act 21 U.S.C. § 301 et seq., the Emergency Planning and Community
Right-to-Know Act, as amended, 42 U.S.C. §§ 11001 et seq., the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended, 42 U.S.C. §§ 9601 et seq., the
Hazardous Materials Transportation Uniform Safety Act, as amended, 49 U.S.C. §§ 1804 et
seq., the
Occupational Safety and Health Act of 1970, as amended, and the rules and regulations
promulgated thereunder.

 

31

 

“Excluded Assets” has the meaning assigned to such term in Section 1.2.

“Excluded Liabilities” has the meaning assigned to such term in Section 1.4.

“Fundamental Documents” means the documents by which any Person (other than an
individual) establishes its legal existence or which govern its internal affairs, including,
without limitation, as applicable, articles or certificate of incorporation, memorandum, memorandum
of association, articles of association, articles of organization, certificate of formation,
partnership agreement, by-laws, and/or operating or limited liability company agreement.

“Funded Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any kind, (b) all
obligations of such Person evidenced by (or which customarily would be evidenced by) bonds,
debentures, notes or similar instruments, (c) all reimbursement obligations of such Person with
respect to letters of credit and similar instruments, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property or assets purchased by
such Person, (e) all obligations of such Person incurred, issued or assumed as the deferred
purchase price of property or services other than accounts payable incurred and paid on terms
customary in the business of such Person (it being understood that the “deferred purchase price” in
connection with any purchase of property or assets shall include only that portion of the purchase
price which shall be deferred beyond the date on which the purchase is actually consummated), (f)
all obligations secured by (or for which the holder of such Funded Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the obligations secured thereby have been assumed, (g) all obligations of
such Person under forward sales, futures, options or other similar hedging arrangements (including
interest rate hedging or protection agreements), (h) all obligations of such Person to purchase or
otherwise pay for merchandise, materials, supplies, services or other property regardless of
whether delivery of such merchandise, materials, supplies, service or other property is ever made
or tendered, (i) all guaranties by such Person of obligations of others and (j) all capitalized
lease obligations of such Person.

“Governmental Authority” means any court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, international, provincial, federal,
state, county or local.

“Indemnified Party” has the meaning assigned to such term in Section 8.3(a).

“Indemnifying Party” has the meaning assigned to such term in Section 8.3(a).

“Intellectual Property” means (a) all inventions, all improvements thereto and all
patents, patent applications, and patent disclosures, together with all reissuances, continuations,
continuations-in-part, divisions, revisions, extensions, and reexaminations thereof, (b) registered
and unregistered trademarks, service marks, trade dress, trade styles, logos, trade names, and
corporate names, including all goodwill associated therewith, and all applications, registrations,
and renewals in connection therewith, (c) all copyrightable works and copyrights and all
applications, registrations and renewals in connection therewith, (d) all trade secrets,
customer lists, supplier lists, pricing and cost information, business and marketing plans and
other confidential business information, (e) all computer programs and related software, (f) all
know-how, binding processes and other manufacturing processes, (g) all other proprietary rights
(including product and part names and numbers, model names and numbers and “style” and tooling),
(h) all domain names, url’s, and registrations in respect thereof and (i) all copies and tangible
embodiments thereof.

 

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“Intellectual Property License Agreement” has the meaning assigned to such term in
Section 2.3(a).

“Knowledge of the Seller” has the meaning assigned to such term in Section
12.14.

“Law” means any constitution, law, statute, common law, treaty, rule, directive,
requirement or regulation or Order of any Governmental Authority, including any laws, rules or
regulations relating to import-export and customs services rules or regulations.

“Liability” means any liability or obligation, whether known or unknown, asserted or
unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether
due or to become due, regardless of when asserted.

“Licensed Intellectual Property” has the meaning assigned to such term in
Section 5.12(a).

“Lien” means any security interest, pledge, bailment (in the nature of a pledge or for
purposes of security), mortgage, deed of trust, the grant of a power to confess judgment,
conditional sales and title retention agreement (including any lease in the nature thereof),
charge, encumbrance, easement, right of way, reservation, restriction, cloud on or defect in title,
right of first refusal or first offer, equity, encroachment, burden, option, or other similar
arrangement or interest in real or personal property, including statutory liens, trusts, deemed
trusts or other encumbrances.

“Material” means in excess of $25,000 per event or $50,000 in the aggregate as to a
series of related events.

“Material Adverse Change” means, with respect to any Person, any material adverse
change in the business, operations, assets (including levels of working capital and components
thereof), condition (financial or otherwise), operating results, Liabilities, customer, supplier or
employee relations or business prospects of such Person or any material casualty loss or damage to
the assets of such Person, whether or not covered by insurance.

“Material Adverse Effect” means an adverse effect in excess of $25,000 per event or
$50,000 in the aggregate as to a series of related events on the financial condition, assets,
liabilities, or results of operations of the Business.

“Material Contracts” has the meaning assigned to such term in Section 5.13.

“Non-Compete Period” means five (5) years from the Closing Date.

 

33

 

“Non-Competition Agreement” has the meaning assigned to such term in Section
2.3(a).

“Objection Notice” has the meaning assigned to such term in Section 8.3(e).

“Orders” means judgments, writs, decrees, compliance agreements, injunctions or orders
of and Governmental Authority or arbitrator.

“Ordinary Course of Business” means the ordinary course of business consistent with
the past custom and practice of the Seller and its Affiliates (including with respect to quantity
and frequency).

“Other Assignment Documents” has the meaning assigned to such term in Section
2.3(a).

“Parent” has the meaning assigned to such term in the preamble of this Agreement.

“Parties” means the Buyer and the Seller.

“Patent Assignment” has the meaning assigned to such term in Section 2.3(a).

“Permits” means all permits, licenses, authorizations, registrations, franchises,
approvals, certificates, variances and similar rights obtained, or required to be obtained, from
any Governmental Authority or from any standard setting or safety certification body or other
similar entity, including, without limitation, any requisite occupational licenses, certificates of
competency and manufacturing certifications.

“Permitted Liens” means (i) Liens for Taxes not yet due and payable or being contested
in good faith by appropriate proceedings and for which there are adequate reserves on the books,
(ii) workers or unemployment compensation Liens arising in the Ordinary Course of Business, and
(iii) mechanic’s, materialman’s, supplier’s, vendor’s or similar Liens arising in the Ordinary
Course of Business securing amounts that are not delinquent.

“Person” shall be construed broadly and shall include an individual, a partnership, a
limited partnership, a corporation, a limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated organization, or a Governmental Authority (or
any department, agency, or political subdivision thereof).

“Proceeding” means any action, suit, proceeding, complaint, charge, hearing, inquiry
or investigation before or by a Governmental Authority or arbitrator.

“Receiving Party” has the meaning assigned to such term in Section 9.3(a).

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

“Restricted Territories” has the meaning assigned to such term in Section
9.6(a).

“SEC” means the United States Securities and Exchange Commission.

 

34

 

“Seller” has the meaning assigned to such term in the preamble of this Agreement.

“Seller Contact” has the meaning assigned to such term in Section 9.3(c).

“Seller Core Representations” means Section 5.1 (Organization and
Capitalization of the Seller), Section 5.2 (Authorization of Transaction), Section
5.3 (Non-Contravention), Section 5.9(a) (Title to Assets), Section 5.11 (Tax
Matters), and Section 5.24 (Brokers).

“Seller Group” has the meaning assigned to such term in Section 8.2(b).

“Seller Tax Group” has the meaning assigned to such term in Section 5.11(a).

“Statement of Allocation” has the meaning assigned to such term in Section
2.5.

“Subsidiary” means any corporation with respect to which a specified Person (or a
Subsidiary thereof) has the power to vote or direct the voting of sufficient securities to elect a
majority of the directors.

“Tax” or “Taxes” means any and all United States or foreign, federal, state,
local or other taxes of any kind (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any Governmental Authority,
including taxes on or with respect to income, franchises, windfall or other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, unemployment, social security,
workers’ compensation or net worth, and taxes in the nature of excise, withholding, ad valorem or
value added.

“Tax Return” means 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.

“Third Party Claim” has the meaning assigned to such term in Section 8.3(a).

“Transition and Manufacturing Services Agreement” has the meaning assigned to such
term in Section 2.3(a).

“Ultrasonics Intellectual Property” has the meaning assigned to such term in
Section 1.1(c).

“Undertaking and Assumption of Liabilities” has the meaning assigned to such term in
Section 2.3(b).

“Wells’ Lien” means those Liens arising under that certain Credit and Security
Agreement, dated December 29, 2006, as amended, by and among the Seller, Acoustic Marketing
Research, Inc. d/b/a Sonora Medical Systems and Hearing Innovations Incorporated and Wells Fargo
Bank, National Association, acting through its Wells Fargo Business Credit operating division.

 

35

 

ARTICLE XII.

MISCELLANEOUS

12.1 No Third Party Beneficiaries.

Except as expressly set forth in Section 8.2, this Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective successors and
permitted assigns, personal representatives, heirs and estates, as the case may be.

12.2 Entire Agreement.

This Agreement and the other Documents referred to herein constitute the entire agreement
among the Parties and supersede any prior correspondence or documents evidencing negotiations
between the Parties, whether written or oral, and all understandings, agreements or representations
by or among the Parties, written or oral, that may have related in any way to the subject matter of
any Document including, without limitation, the Confidentiality Agreement.

12.3 Successors and Assigns.

This Agreement shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. No Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written approval of the other
Parties; provided, however, that the Buyer may (i) assign any or all of its rights
and interests hereunder to one or more of its Affiliates; (ii) designate one or more of its
Affiliates to perform its obligations hereunder; (iii) assign any or all of its rights hereunder in
connection with a sale of all or substantially all of the business of the Parent (whether by
merger, sale of stock or assets, recapitalization or otherwise); and/or (iv) assign its rights
hereunder to any lenders or financing sources. Notwithstanding the foregoing or anything else
contained herein, if Buyer performs any of the aforementioned assignments or designations set forth
in (i), (ii), (iii) and/or (iv), Buyer shall continue to remain liable for its obligations under
this Agreement and/or any other Documents.

12.4 Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument. Legal delivery of
this Agreement may be made by telecopy or by electronic mail (pdf format).

12.5 Headings.

The section headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this Agreement.

12.6 Right of Set Off.

In the event of a breach by the Seller of the provisions of any Document, the Buyer is hereby
authorized to set off and apply any and all amounts at any time held by the Buyer or its Affiliates
on behalf of the Seller and any and all indebtedness or monetary obligations at any time owing by
the Buyer or its Affiliates to the Seller against any and all of the obligations of the Seller now
or hereafter existing under the Documents.

 

36

 

12.7 Notices.

Any written notice to be given hereunder shall be given in writing and shall be deemed given:
(a) when received if given in person, (b) on the date of transmission if sent by facsimile, e-mail
or other wire transmission (receipt confirmed), (c) three (3) days after being deposited in the
U.S. mail, certified or registered mail, postage prepaid, and (d) if sent by an internationally
recognized overnight delivery service, the second day following the date given to such overnight
delivery service (specified for overnight delivery). All notices shall be addressed as follows (or
at such other address or telecopy numbers for a party as shall be specified by like notice):

If to the Seller:

MISONIX, INC.

1938 New Highway

Farmingdale, New York 11735

Attention: Michael A. McManus, Jr.

Telephone: 631-694-9555

Telecopy: 631-694-9412

E-Mail: mmcmanus@misonix.com

with a copy to:

Siller Wilk LLP

675 Third Avenue

New York, New York 10017

Attention: Joel I. Frank, Esq.

Telephone: 212-421-2233

Telecopy: 212-752-6380

E-Mail: jfrank@sillerwilk.com

If to the Buyer:

Sonics & Materials, Inc.

53 Church Hill Road

Newtown, Connecticut 06470

Attention: Robert S. Soloff, President

Telephone: (203) 270-4600

Telecopy: (203) 270-4610

E-Mail: rsoloff@sonics.com

and

Attention: Lauren H. Soloff

Executive Vice President

Telephone: (203) 270-4600

Telecopy: (203) 270-4610

E-Mail: lsoloff@sonics.com

 

37

 

with a copy to:

Finn Dixon & Herling LLP

177 Broad Street, 15th Floor

Stamford, Connecticut 06901-2048

Attention: Jon T. Hirschoff, Esq.

Telephone: (203) 325-5000

Telecopy: (203) 325-5001

E-Mail: jhirschoff@fdh.com

Any Party may send any notice, request, demand, claim or other communication hereunder to the
intended recipient at the address set forth above using any other means, but no such notice,
request, demand, claim or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.

12.8 Governing Law.

This Agreement will be governed by and construed in accordance with the laws of the State of
New York without regard to conflicts of laws principles that would require the application of any
other law.

12.9 Amendments and Waivers.

No amendment or waiver of any provision of this Agreement shall be valid unless the same shall
be in writing and signed by (i) the Buyer and (ii) the Seller. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or
not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.

12.10 Incorporation of Exhibits and Schedules.

The Exhibits, Schedules and other attachments identified in this Agreement are part of this
Agreement as if set forth in full herein.

12.11 Construction.

If any payment is required to be made or other action is required to be taken pursuant to this
Agreement on a day which is not a Business Day, then such payment or action shall be made or taken
on the next Business Day. Any reference in this Agreement to any statute or any section thereof
shall, unless otherwise expressly stated, be deemed to be a reference to such statute or section as
amended, restated or re-enacted from time to time.

 

38

 

12.12 Independence of Covenants and Representations and Warranties.

All covenants hereunder shall be given independent effect so that if a certain action or
condition constitutes a default under a certain covenant, the fact that such action or condition is
permitted by another covenant shall not affect the occurrence of such default, unless expressly
permitted under an exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular representation or
warranty proves to be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will not affect the
incorrectness of or a breach of a representation and warranty hereunder.

12.13 Remedies.

Except as otherwise provided herein or in the other Documents, the Parties shall each have and
retain all other rights and remedies existing in their favor at law or equity, including, without
limitation, any actions for specific performance and/or injunctive or other equitable relief to
enforce or prevent any violations of the provisions of this Agreement. Without limiting the
generality of the foregoing, the Seller hereby agrees that if the Seller fails to convey the
Acquired Assets to the Buyer in accordance with the provisions of this Agreement, the Buyer’s
remedy at law may be inadequate. In such event, the Buyer shall have the right, in addition to all
other rights and remedies it may have, to specific performance of the obligations of the Seller to
convey the Acquired Assets.

12.14 Knowledge Attributable to the Seller.

Whenever any statement herein or in any schedule, exhibit, certificate or other document
delivered to any Party pursuant to this Agreement is made “to the Knowledge of the Seller”
or containing words of similar intent or effect, the Knowledge of the Seller will be deemed to
include, without limitation, the knowledge of any of Michael McManus, Richard Zaremba and Frank
Napoli. The Seller shall be required to examine all relevant documents and to make due inquiries
of each of its directors and officers and each of its other management employees (including general
managers), and agents who would likely have knowledge of the relevant facts or circumstances.

12.15 Severability.

It is the desire and intent of the Parties that the provisions of this Agreement be enforced
to the fullest extent permissible under the laws and public policies applied in each jurisdiction
in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall
be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the
remaining provisions of this Agreement or affecting the validity or enforceability of this
Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

 

39

 

12.16 Waiver of Jury Trial.

NO PARTY TO THIS AGREEMENT OR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF A
PARTY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER LITIGATION
PROCEDURE BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER AGREEMENTS OR THE
DEALINGS OR THE RELATIONSHIP BETWEEN THE PARTIES. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH
ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
OR HAS NOT BEEN WAIVED. THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES
HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS. NO PARTY HERETO HAS IN ANY WAY
AGREED WITH OR REPRESENTED TO ANY OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION WILL NOT
BE FULLY ENFORCED IN ALL INSTANCES.

12.17 [Intentionally Omitted].

12.18 Jurisdiction

(a) Each of the Parties hereby irrevocably and unconditionally submits, for itself, and its
property, to the nonexclusive jurisdiction of any New York State court or any Connecticut State
court or any federal court of the United States of America sitting in Nassau or Westchester
Counties in the State of New York and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or for recognition or enforcement of any
judgment, and each of the Parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined in any such New York
State or Connecticut State court or, to the extent permitted by law, in such federal court. Each
of the Parties agrees that a final judgment in any such action or proceeding, if not appealed,
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.

(b) Each of the Parties irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection that it may now or hereafter have to the laying of
venue of any suit, action or proceeding arising out of or relating to the Agreement in any court
referred to in Section 12.18(a) above. Each of the Parties irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.

(c) Each of the Parties irrevocably consents to service of process in the manner provided for
notices in Section 12.7. Nothing in this Agreement will affect the right of a Party to
serve process in any other manner permitted by law.

12.19 Mutual Drafting

This Agreement and the Documents are the mutual product of Buyer and Seller, each provision of
this Agreement and of the Documents have been subject to mutual consultation, negotiation and
drafting, and the language of this Agreement and the Documents shall therefore
be interpreted without reference to which party prepared this Agreement, the Documents or any
portion hereof or thereof.

 

40

 

IN WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement as of the date
first above written.

	 	 	 	 	 	 	 	 	 
	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	iSONIX LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lauren H. Soloff 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lauren H. Soloff 	 	 
	 

	 	 	 	Title:
	 	 
President
	 	 
	 

	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	MISONIX, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael A. McManus 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Michael A. McManus	 	 
	 

	 	 	 	Title:	 	Pres
& CEO 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SOLELY FOR PURPOSES OF SECTION 8.5:	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	SONICS & MATERIALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lauren H. Soloff 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Lauren H. Soloff 	 	 
	 

	 	 	 	Title:	 	Executive
Vice President 	 	 
	 
	 	 	 	 	Address:	 	 
	 	 	 	 	53 Church Hill Road	 	 
	 	 	 	 	Newtown, Connecticut 06470

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