Document:

Exhibit 10.2

 

 

STOCK PURCHASE AGREEMENT

Dated as of February 5,
2010

 

Between

 

MF ACQUISITION CORP.

(a Delaware corporation),

 

and

 

MAC-GRAY CORPORATION

(a Delaware corporation)

 

 

SCHEDULES

 

	
  Schedule

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Organizational
  Information

  
	
  4.3

  	
   

  	
  Share
  Information

  
	
  4.4(b)

  	
   

  	
  Title

  
	
  4.5

  	
   

  	
  Conflicts
  and Violations

  
	
  4.6

  	
   

  	
  Consents
  and Approvals

  
	
  4.8

  	
   

  	
  Liabilities

  
	
  4.9

  	
   

  	
  Tax
  Matters

  
	
  4.9(b)

  	
   

  	
  Tax
  Returns

  
	
  4.10

  	
   

  	
  Real
  Property

  
	
  4.11

  	
   

  	
  Tangible
  Personal Property

  
	
  4.12(c)-(e)

  	
   

  	
  Intellectual
  Property

  
	
  4.13

  	
   

  	
  Compliance
  with Laws and Permits

  
	
  4.14

  	
   

  	
  Litigation

  
	
  4.15
  and 4.15(a)-(c)

  	
   

  	
  Labor
  Matters

  
	
  4.16

  	
   

  	
  Employee
  Benefit Plans

  
	
  4.17

  	
   

  	
  Transactions
  with Certain Persons

  
	
  4.18

  	
   

  	
  Insurance

  
	
  4.19

  	
   

  	
  Inventory

  
	
  4.20

  	
   

  	
  Accounts
  Receivable

  
	
  4.21

  	
   

  	
  Material
  Contracts

  
	
  4.22

  	
   

  	
  Suppliers
  and Customers

  
	
  4.23

  	
   

  	
  Bank
  Accounts; Powers of Attorney

  
	
  4.24

  	
   

  	
  Environmental
  Matters

  
	
  4.25

  	
   

  	
  Absence
  of Certain Changes

  
	
  4.27

  	
   

  	
  Product
  Warranties

  
	
  6.22

  	
   

  	
  IP
  Assignments

  
	
  9.4(f)

  	
   

  	
  Allocation
  of Purchase Price

  

 

 

EXHIBITS

 

	
  Exhibit

  	
   

  	
  Description

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Working
  Capital

  

 

 

STOCK PURCHASE AGREEMENT

 

THIS
STOCK PURCHASE AGREEMENT dated as of February 5, 2010 is between MF ACQUISITION CORP., a Delaware
corporation with a mailing address of 5070 Whitelaw Road, Guelph, Ontario
N1H6Z9 (“Buyer”) and MAC-GRAY CORPORATION, a Delaware corporation with an office located
at 404 Wyman Street, Suite 400, Waltham, Massachusetts 12451
(“Seller”).

 

RECITALS:

 

A.  Seller owns, as described on Schedule 4.3,
in the aggregate all of the issued and outstanding shares of Intirion Corporation,
a Delaware corporation (the “Corporation”) consisting of 1,000 shares of common
stock with a par value of $.01 per share (the “Shares”).

 

B.  Buyer desires to purchase and accept from
Seller the Shares, and Seller desires to sell and transfer to Buyer the Shares,
all upon the terms and conditions contained in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and
promises contained in this Agreement, and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, the
parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1           Defined Terms. 
As used in this Agreement, the following terms shall have the following
meanings:

 

(a)     “Accrued Vacation” shall mean the liability of
Mac-Gray Services related to the employees of the Business, each of which is
identified in Section 4.15(c), for accrued vacation, sick days and
personal days as of the Closing Date.

 

(b)    “Accounts Payable” shall mean (i) all bona fide
trade accounts payable (but expressly excluding Indebtedness) of the
Corporation as of the Closing Date, and (ii) all checks written on the
Corporation’s bank accounts on or prior to the Closing Date which have not
cleared as of the Closing Date.

 

(c)     “Accounts Receivable” shall mean all bona fide
accounts receivable of the Corporation (exclusive of any notes receivable and
any accounts receivable from Affiliates or Related Persons of Seller or the
Corporation).

 

(d)    “Accrued Liabilities” shall mean, other than Accounts
Payable and expenses accrued for any Income Tax Liability or any Indebtedness, (i) all
accrued expenses of the Corporation, including any liability to an Affiliate
related to the employees of the Business and (ii) all accrued expenses
under the Employee Benefit Plans or otherwise including (A) vacation, sick
pay, paid time off, personal days and severance benefits earned or incurred
through the Closing Date or upon and by reason of the Closing, whenever
payable, (B) short 

 

1

 

term disability benefits
earned or incurred through the Closing Date and (C) amounts payable to, or
for the benefit of, employees or consultants upon and by reason of the Closing,
whenever payable.

 

(e)     “Affiliate” shall mean, as to any Person, any other
Person which directly or indirectly controls, or is under common control with,
or is controlled by, such Person.  As
used in this definition, “control” (including, with its correlative meanings,
“controlled by” and “under common control with”) shall mean possession,
directly or indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities or partnership or other
ownership interests, by contract or otherwise). 
Without limiting the generality of the foregoing, the Corporation will
be an Affiliate of Buyer from and after the Closing.

 

(f)     “Affiliated Group” means any affiliated group within
the meaning of Code Section 1504(a) or any similar group defined
under a similar provision of state, local, or non-U.S. law.

 

(g)    “Agreement” shall mean, unless the context otherwise
requires, this Stock Purchase Agreement together with the Schedules and
Exhibits attached hereto, and the certificates and instruments to be executed
and delivered in connection herewith.

 

(h)    “Business” shall mean the development and distribution
of small space appliances including refrigerators, microwaves and electronic
safes and related repair and installation services, as currently conducted by
the Corporation; provided, however, that for the purposes of Article VI of
this Agreement, all references to the Business shall specifically exclude the
development, distribution, sale, lease and rental of laundry equipment.

 

(i)      “Cash” shall mean cash and cash equivalents of the
Corporation.

 

(j)      “Closing Date” shall mean the date on which the
Closing occurs, which date, unless the parties shall agree otherwise, shall be
no later than the third (3rd) business day after the satisfaction or waiver of
the conditions required to be satisfied prior to Closing.

 

(k)     “Closing Date Working Capital” shall mean the Working
Capital as of the close of business on the Closing Date.

 

(l)      “COBRA” shall mean the provisions of Part 6 of
Subtitle B of Title I of ERISA and Section 4980B of the Code and all
regulations thereunder.

 

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

 

(n)    “Contracts” shall mean (i) the Material Contracts
and (ii) the Minor Contracts.

 

(o)    “Discharged Indebtedness” shall mean the Indebtedness
of the Corporation, if any, to be satisfied by Buyer, upon Seller’s request, on
the Closing Date including, without limitation, all Indebtedness secured by any
Encumbrance on any asset owned by the Corporation.

 

2

 

(p)    “Disclosure Schedule” shall mean the document
delivered to Buyer by Seller on or before the execution and delivery of this
Agreement setting forth, among other things, items the disclosure of which are
required under Article 4 of this Agreement, either in response to an
express disclosure requirement contained in a provision of this Agreement
(e.g., Schedule 4.1) or as an exception to one or more of the
representations, warranties or covenants contained in this Agreement, each of
which exceptions shall specifically identify the relevant section of this
Agreement to which it relates or be reasonably clear that it is also relevant
to another section of this Agreement. 
Subject to the foregoing, the information set forth in the Disclosure
Schedule shall be organized by references to the sections of this Agreement to
which such information is responsive. 
All capitalized terms used in the Disclosure Schedule and not otherwise
defined therein shall have the same meanings as are ascribed to such terms in
this Agreement.

 

(q)    “Employee Benefit Plan” shall mean any (i) non
qualified deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (ii) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit Plan, (iii) qualified
defined benefit retirement plan or arrangement which is an Employee Pension
Benefit Plan (including any “multiemployer plan”, as defined in Section 3(37)
of ERISA), (iv) Employee Welfare Benefit Plan or fringe benefit plan or
program or (v) any similar plan, arrangement or program, in each case
which is maintained, administered or contributed to by the Corporation, or to
which covers any employee identified in Section 4.15(c) or any former
employee of the Business.

 

(r)     “Employee Pension Benefit Plan” shall have the meaning
set forth in ERISA Section 3(2).

 

(s)     “Employee Welfare Benefit Plan” shall have the meaning
set forth in ERISA Section 3(1).

 

(t)     “Encumbrance” shall mean any claim, lien, pledge,
option, charge, easement, security interest, right-of-way, encroachment,
reservation, restriction, encumbrance, or other right of any Person, or any
other restriction or limitation of any nature whatsoever.

 

(u)    “Enforceability Limitations” shall mean (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect relating to creditors’ rights and (ii) the discretion of the
appropriate court with respect to specific performance, injunctive relief or
other forms of equitable remedies.

 

(v)    “Environmental Claims” shall mean any written notice
of violation, written notice of potential or actual responsibility or
liability, or claim, suit, action, demand, directive or order (including those
for contribution and/or indemnity) by any Governmental Authority or other Person
for any damage (including, but not limited to, personal injury, tangible or
intangible property damage, natural resource damage, indirect or consequential
damages, investigative costs, removal, response or remediation costs, nuisance,
pollution, contamination or other adverse effects on the environment or for
fines, penalties or restrictions or conditions on environmental Permits)
resulting from or relating to (i) the presence of, a release or threatened
release into the environment of, or exposure to, any Hazardous Materials, (ii) the

 

3

 

generation, manufacture,
processing, distribution, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (iii) the violation, or alleged
violation, of any Environmental Laws or (iv) the non-compliance or alleged
non-compliance with any Environmental Laws.

 

(w)    “Environmental Laws” shall mean any applicable
statutes, ordinances or other written directives, published laws, any written,
published rules or regulations, orders, and any licenses, permits, orders,
judgments, notices or other requirements issued pursuant thereto, enacted,
promulgated or issued by any Governmental Authority in any jurisdiction, in
effect as of the Closing Date, relating to pollution or protection of public
health or the environment (including, but not limited to, any air, surface
water, groundwater, land surface or sub-surface strata, whether outside, inside
or under any structure), or to the identification, reporting, generation,
manufacture, processing, distribution, use, handling, treatment, storage,
disposal, transporting, presence, release or threatened release of, any
hazardous substances (including petroleum and its derivatives).

 

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

 

(y)    “ERISA Affiliate” shall mean a trade or business,
whether or not incorporated, which is deemed to be in common control or
affiliated with the Corporation within the meaning of Section 4001 of ERISA
or Sections 414(b), (c), (m), or (o) of the Code.

 

(z)     “Financial Statements” shall mean the compiled
financial statements of the Corporation for the fiscal years ended December 31,
2009, December 31, 2008, and December 31, 2007 (consisting of a balance
sheet and a statement of income and retained earnings).

 

(aa)   “GAAP” shall mean, with respect to all accounting
matters and issues, generally accepted accounting principles as in effect from
time to time in the United States applied (to the extent applicable) consistent
with the Corporation’s past practices.

 

(bb)  “Governmental Authority” shall mean any federal,
state, local or foreign government, or any political subdivision of any of the
foregoing, or any court, agency or other entity, body, organization or group,
exercising any executive, legislative, judicial, quasi-judicial, regulatory or
administrative function of government, or any supranational body.

 

(cc)   “Governmental Requirement” shall mean any published
law, statute, ordinance, directive or regulation of any Governmental Authority
in effect as of the date of this Agreement.

 

(dd)  “Hazardous Material” means any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous substance, petroleum
or petroleum-containing product as listed or regulated under any applicable
Environmental Law.

 

(ee)   “Income Tax Liability” shall mean liability for any
federal, state, local or foreign income, business and occupation or similar
Taxes payable by the Corporation, or with respect to the Business, to any
Governmental Authority attributable to the operations and activities of, or
otherwise incurred by or existing with respect to, the Corporation for any
period 

 

4

 

ending on or prior to the
Closing Date, including without limitation Taxes computed through the Closing
Date with respect to any partial year on a closing-of-the-books basis as if
such partial year ended at the close of business on the Closing Date.

 

(ff)    “Indebtedness” shall mean, with respect to any Person
(without duplication), (i) all obligations of such Person for borrowed
money, including without limitation all obligations for principal and interest,
and for prepayment and other penalties, fees, costs and charges of whatsoever
nature with respect thereto; (ii) all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person; (iii) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (other than
Accounts Payable and Accrued Liabilities); (iv) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien or security interest on
property owned or acquired by such Person whether or not the obligations
secured thereby have been assumed, with the amount of Indebtedness pursuant to
this clause (iv) being calculated by reference to the security and not the
primary obligation; (v) all capitalized lease obligations of such Person; (vi) all
obligations of such Person guaranteeing, or in effect guaranteeing, any
Indebtedness, dividend or other obligation of any other Person; (vii) all
obligations (including but not limited to reimbursement obligations) relating
to the issuance of letters of credit for the account of such Person; (viii) all
obligations arising out of foreign exchange contracts; (ix) all
obligations of the Corporation to fund, or pay any benefits under, any Employee
Benefit Plan, Employee Pension Benefit Plan or Employee Welfare Benefit Plan as
of the Closing Date or upon and by reason of the Closing (except to the extent
the same shall be counted as an Accrued Liability); and (x) all
obligations arising out of interest rate and currency swap agreements, cap,
floor and collar agreements, interest rate insurance, currency spot and forward
contracts and other agreements or arrangements designed to provide protection
against fluctuations in interest or currency exchange rates.

 

(gg)  “Indemnity Cap” shall mean generally a dollar amount
equal to $2 Million except that in the instance of indemnification obligations
arising out of Losses suffered from or arising out of any product defect claims
related to products sold on or prior to the Closing Date (exclusive of claims
limited solely to obligations under express product warranties related to
products sold, leased or rented by the Corporation on or prior to the Closing
Date of the nature described in Section 4.27(a), but not limited to
warranties related to products sold, leased or rented during the two-year
period preceding the date of this Agreement) such term shall mean a dollar
amount equal to fifty percent (50%) of the Purchase Price after adjustment for
the Final Purchase Price Closing Adjustment; provided, however, such caps shall
not be mutually exclusive of one another such that a $2 Million general
indemnity claim will apply against, and partially exhaust, the higher product
defect claims cap and a $2 Million product defect claim will, by itself,
otherwise fully exhaust the lower cap for general indemnities.

 

(hh)  “Independent Accountants” shall mean Grant Thorton
LLP, or any successor thereof.

 

(ii)     “Insurance” shall mean any fire, product liability,
automobile liability, general liability, worker’s compensation, medical
insurance stop-loss coverage or other form of insurance of the Business, and
any tail coverage purchased with respect thereto.

 

5

 

(jj)     “Intellectual Property” shall mean all intellectual
property used to conduct the Business including, without limitation, (i) all
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and re-examinations thereof, (ii) all
trademarks, service marks, trade dress, logos, trade names, and corporate names
(including, without limitation, the name “Intirion”, “MicroFridge”,  and “Safe Plug”), together with all
translations, adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (iii) all copyrightable works, all
copyrights, and all applications, registrations and renewals in connection
therewith, (iv) all trade secrets and confidential business information
(including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing and cost
information, and business and marketing plans and proposals), (v) all
computer software (including data and related documentation and including
software installed on hard disk drives) other than off-the-shelf computer
software subject to shrinkwrap or clickwrap licenses and (vi) all copies
and tangible embodiments of any of the foregoing (in whatever form or medium).

 

(kk)   “Inventory” shall mean all finished goods inventory
and service parts inventory of the Business.

 

(ll)     “Losses” shall mean all losses, liabilities,
deficiencies, damages (including without limitation encumbrances, fines, penalties,
claims, costs and expenses (including, without limitation all fines, penalties
and other amounts paid pursuant to a judgment, compromise or settlement), court
costs and reasonable legal and accounting fees and disbursements.

 

(mm) “Mac-Gray Services” shall mean Mac-Gray Services, Inc.,
a Delaware corporation.

 

(nn)  “Material Adverse Change” shall mean an effect that is
reasonably likely to be material and adverse to the Business, or to the assets,
financial condition or results of operations of the Corporation, but excluding
any such effect resulting from (i) general economic or securities or
financial market conditions, (ii) any occurrence or condition generally
affecting participants in the Business (including natural catastrophe events), (iii) any
change in law or regulations in any jurisdiction in which the Corporation does
business or any change in accounting principles required by GAAP and (iv) any
occurrence or condition arising out of the transactions contemplated by this
Agreement or the public announcement thereof (including any occurrence or
condition arising out of the identity of or facts relating to Buyer).

 

(oo)  “Material Contracts” shall mean the following written
contracts and oral contracts which are currently in effect and (a) to which
the Corporation is either a party or otherwise bound, (b) to which the
Corporation is or has been a beneficiary of within the past two (2) years,
or (c) which otherwise materially relate to the Business; provided,
however, for the purposes of subsections (b) and (c), contracts pursuant
to which Seller or Mac-Gray Services provides to the Corporation the benefit of
insurance policies, employee benefit plans 

 

6

 

or access to databases
and software, and contracts related exclusively to corporate headquarters
functions in the areas of IT, tax compliance, human resources, payroll,
accounting, finance and legal services shall be specifically excluded from such
definition:

 

(i)         any agreement (or group of related agreements with the
same Person or its Affiliates) under which the Corporation has created,
incurred or assumed any Indebtedness in excess of $10,000 or imposed an
Encumbrance on any of its assets, except where the Corporation’s obligations
and/or any such Encumbrance will be released at the Closing,

 

(ii)        any agreement for the lease of real property or
personal property providing for lease payments by the Corporation in excess of
$10,000 per year,

 

(iii)       any license or royalty agreement,

 

(iv)       any agreement relating to any Benefit Arrangement
maintained by the Corporation,

 

(v)        any employment, consulting, distributor, sales
representative or dealer agreement not cancelable by the Corporation without
penalty upon ninety (90) days or less written notice,

 

(vi)       any settlement agreement or other agreement in respect
of any past or present Proceeding,

 

(vii)      any confidentiality agreement, non-competition
agreement or agreement providing for indemnification by the Corporation, or

 

(viii)     any other agreement (or group of related agreements
with the same Person or its Affiliates) not cancelable by the Corporation
without penalty the performance of which will extend over a period of more than
one (1) year, involves consideration to the Corporation in excess of $20,000
or is anticipated to result in a payment by the Corporation exceeding $10,000.

 

(pp)  “Minor Contracts” shall mean any contract or other
agreement (other than the Material Contracts), whether written or oral, to
which the Corporation is a party or by which the Corporation is bound.

 

(qq)  “Non-Competition Period” shall mean the period
beginning with the Closing Date and ending on the earlier of (a) a
Qualified Sale of the Seller, or (b) the fourth (4th) anniversary of the Closing Date.

 

(rr)    “Other Current Assets” shall mean all current assets
of the Corporation, to the extent such assets are reflected on, as applicable,
the Closing Certificate or the Closing Date Financial Report, other than Cash,
Accounts Receivable, Inventory, prepaid taxes and prepaid expenses solely
relating to any Income Tax Liability, to the extent reflected on or estimated
to be reflected on the Closing Date Financial Report.

 

7

 

(ss)      “Owned Tangible Personal Property” shall mean all
Tangible Personal Property owned by the Corporation.

 

(tt)       “Permits” shall mean all permits, licenses, consents,
franchises, approvals and other authorizations required from any Governmental
Authority or other Person in connection with the operation of the Business and
necessary to conduct the Business as presently conducted.

 

(uu)     “Permitted Encumbrances” shall mean (i) liens
which will be removed by payment of Indebtedness reflected on the Closing Date
Financial Report in the amounts reflected on the Closing Date Financial Report;
(ii) other liens which are removed on or prior to the Closing Date; (iii) liens
for Taxes or governmental assessments, charges or claims the payment of which
is not yet due, or for Taxes the validity of which is being contested in good
faith by appropriate proceedings and which are specifically disclosed on the
Disclosure Schedule; (iv) statutory liens of landlords and liens of
carriers, warehousemen, mechanics, materialmen and other similar Persons and
other liens imposed by law incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith; (v) liens relating to
deposits made in the ordinary course of business in connection with workers’
compensation, unemployment insurance and other types of social security or to
secure the performance of leases, trade contracts or other similar agreements;
and (vi) liens securing executory obligations under any lease that
constitutes an “operating lease” under GAAP.

 

(vv)     “Person” shall mean any Governmental Authority,
individual, association, joint venture, partnership, corporation, limited
liability company, trust or other entity.

 

(ww)    “Proceeding” shall mean any claim, demand, action,
suit, litigation, dispute, order, writ, injunction, judgment, assessment,
decree, grievance, arbitral action, investigation or other similar proceeding.

 

(xx)      “Prohibited Transaction” shall have the
meaning set forth in ERISA Section 406 and Code Section 4975.

 

(yy)     “Purchase Price” shall mean the purchase
price for the Shares which shall be equal to $8,500,000, as increased or
decreased by the Working Capital Adjustment.

 

(zz)      “Qualified Sale of the Seller” shall mean
any merger, sale of equity, business combination or similar transaction
pursuant to which (a) the stockholders of Seller immediately prior to such
transaction own less than fifty percent (50%) of the outstanding equity
interests of Seller after the consummation of such transaction and (b) the
acquirer in such transaction has been, directly or indirectly, actively engaged
in the development and/or distribution of small refrigerators and/or small
microwaves prior to the acquisition of Seller.

 

(aaa)    “Real Property” shall mean all real property
owned or leased by the Corporation or in which the Corporation otherwise has
any interest, together with (i) all buildings and improvements located
thereon and (ii) all rights, privileges, interests, easements,
hereditaments and appurtenances thereunto in any way incident, appertaining or
belonging thereto.

 

8

 

(bbb)   “Related Person” shall mean (i) any shareholder,
director or officer or any other direct or indirect beneficial owner (but
excluding mere holders of options to purchase shares) of the Corporation, (ii) any
spouse, child, sibling or parent of any such shareholder, director or officer
or other beneficial owner, or (iii) any limited liability company,
partnership, corporation, trust or other entity in which any individual
encompassed by the foregoing (i) or (ii) has a substantial and
material interest as a member, partner, shareholder, trustee or otherwise;
provided, however, that no Person shall be deemed a Related Person for the
purposes of this Agreement solely by reason of ownership of an equity interest
in Seller.

 

(ccc)    “Representative” shall mean any officer, director,
principal, attorney, accountant, agent, employee or other representative of any
Person.

 

(ddd)   “Tangible Personal Property” shall mean all tangible
personal property (other than Inventory) owned or leased by the Corporation or
in which the Corporation has any interest including, without limitation, show
equipment, production and processing equipment, warehouse equipment, computer
hardware, furniture and fixtures, transportation equipment, leasehold
improvements, supplies and other tangible assets, together with any
transferable manufacturer or vendor warranties related thereto.

 

(eee)    “Tax” shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance,
startup, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), health, unemployment,
disability, real property, personal property, intangible property, sales, use,
transfer, registration, value added, goods and services, alternative or add-on
minimum, estimated, or other tax or similar obligation of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not.

 

(fff)      “Tax Return” shall mean any return, declaration,
report, claim for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and any amendment thereof.

 

(ggg)   “Threshold Amount” shall mean a dollar amount
equal to two percent (2%) of the Purchase Price after adjustment for the Final Purchase Price Closing Adjustment.

 

(hhh)   “Working Capital” shall mean (i) the sum of (A) the
Cash, (B) the Accounts Receivable, (C) the Inventory and (D) the
Other Current Assets minus (ii) the sum of (A) the Accounts Payable, (B) the
current portion of Accrued Liabilities (including $400,000 as the current
portion of reserve for warranty), and (C) Accrued Vacation, calculated in
a manner consistent with Exhibit 1.1.

 

(iii)      “Working Capital Adjustment” shall mean (i) if
the Closing Date Working Capital is equal to or greater than $4,851,000, the
amount, expressed as a positive number, by which the Closing Date Working
Capital exceeds $4,951,000 or (ii) if the Closing Date Working Capital is
less than $4,851,000, the amount, expressed as a negative number, by which the
Closing Date Working Capital is less than $4,751,000.

 

9

 

1.2           Other Defined Terms.  The following
terms shall have the meanings defined for such terms in the Sections set forth
below:

 

	
  Term

  	
   

  	
  Section

  
	
   

  	
   

  	
   

  
	
  Benefit
  Arrangements

  	
   

  	
  4.16(k)

  
	
  Buyer

  	
   

  	
  Introduction

  
	
  Buyer
  Indemnified Party

  	
   

  	
  9.1(b)

  
	
  Casualty

  	
   

  	
  10.2

  
	
  Casualty
  Amount

  	
   

  	
  10.2

  
	
  Closing

  	
   

  	
  3.1

  
	
  Closing
  Cash Payment

  	
   

  	
  2.4(b)

  
	
  Closing
  Certificate

  	
   

  	
  2.3(a)

  
	
  Closing
  Date Financial Report

  	
   

  	
  2.3(c)

  
	
  Closing
  Purchase Price Reconciliation

  	
   

  	
  2.5

  
	
  Confidential
  Information

  	
   

  	
  6.10

  
	
  Corporation

  	
   

  	
  Recitals

  
	
  Current
  Employer

  	
   

  	
  6.20(a)

  
	
  Distributor
  Agreement

  	
   

  	
  6.19

  
	
  Employee
  Plans

  	
   

  	
  4.16(a)

  
	
  Final
  Purchase Price Closing Adjustment

  	
   

  	
  2.3(c)

  
	
  Indemnified
  Party

  	
   

  	
  9.1(e)(i)

  
	
  Indemnifying
  Party

  	
   

  	
  9.1(e)(i)

  
	
  Laundry
  Product Sales Agreement

  	
   

  	
  6.16

  
	
  Material
  Customer

  	
   

  	
  4.22

  
	
  Material
  Supplier

  	
   

  	
  4.22

  
	
  Offered
  Employees

  	
   

  	
  6.20(a)

  
	
  Pension
  Plans

  	
   

  	
  4.16(a)

  
	
  Preliminary
  Purchase Price Closing Adjustment

  	
   

  	
  2.3(a)

  
	
  Section 338(h)(10) Election

  	
   

  	
  9.4(c)

  
	
  Seller

  	
   

  	
  Introduction

  
	
  Seller
  Affiliated Group

  	
   

  	
  4.9(c)

  
	
  Seller
  Indemnified Party

  	
   

  	
  9.1(d)

  
	
  Shares

  	
   

  	
  Recitals

  
	
  Straddle
  Period

  	
   

  	
  9.1(c)(iii)

  
	
  Sublease

  	
   

  	
  6.18

  
	
  Transferred
  Employees

  	
   

  	
  6.20(a)

  
	
  Transition
  Services Agreement

  	
   

  	
  6.17

  
	
  Welfare
  Plans

  	
   

  	
  4.16(a)

  

 

1.3           Construction of Accounting Terms. 
Except as otherwise expressly provided, as used in Article 1 of
this Agreement, Accounts Payable, Accounts Receivable, Accrued Liabilities,
Income Tax Liability, Indebtedness, Inventory, Other Current Assets and Working
Capital of Seller and the components thereof and the adjustments based thereon
shall mean the amounts determined in accordance with GAAP consistently applied
in the historical books and records of the Corporation.

 

10

 

1.4           Usage of Terms.  Except where
the context otherwise requires, words importing the singular number shall
include the plural number and vice versa. 
Use of the word “including” shall mean “including, without limitation”.

 

1.5           References to Articles, Sections, Exhibits and
Schedules.  All references in this Agreement to Articles,
Sections (and other subdivisions), Exhibits and Schedules refer to the
corresponding Articles, Sections (and other subdivisions), Exhibits and
Schedules of or attached to this Agreement, unless the context expressly, or by
necessary implication, otherwise requires.

 

1.6           No Double Counting.  The parties
agree that for purposes of the calculations, adjustments and payments set forth
in Article II, no provisions in this Agreement, including without
limitation those set forth in this Article I and/or Article II, are
intended to result in any item or amount being counted more than once.

 

ARTICLE
II

PURCHASE AND SALE OF SHARES

 

2.1           Sale of Shares.  Subject to
the terms and conditions contained in this Agreement, on the Closing Date
Seller shall sell, convey, transfer, assign, and deliver to Buyer, and Buyer
shall acquire from Seller, all of the Shares, free and clear of any
Encumbrances other than Permitted Encumbrances.

 

2.2           Purchase Price.  As
consideration for the sale, conveyance, transfer, assignment and delivery of
the Shares, Buyer shall pay to Seller an amount equal to the Purchase
Price.  Such consideration shall be paid
and be subject to adjustment in accordance with Sections 2.4 and 2.5.

 

2.3           Closing Certificate; Preliminary Purchase Price
Closing Adjustment; Physical Inventory; Audit; Closing Date Financial Report;
Final Purchase Price Closing Adjustment.

 

(a)     Closing Certificate; Preliminary Purchase Price
Closing Adjustment.  On the day prior to the Closing Date, Seller
shall cause to be prepared in good faith under the direction of the President
or the Chief Financial Officer of the Corporation and shall deliver to Buyer a
certificate (the “Closing Certificate”) containing a pro forma estimate of the
Closing Date Working Capital, the Working Capital Adjustment, the Indebtedness
of the Corporation on the Closing Date and the adjustment to the Purchase Price
based thereon (the “Preliminary Purchase Price Closing Adjustment”) which
Closing Certificate and Preliminary Purchase Price Closing Adjustment shall be
used for purposes of the Closing and determining payments to be made by Buyer
on the Closing Date pursuant to Section 2.4, unless Buyer objects to the
Closing Certificate and Preliminary Purchase Price Closing Adjustment as
facially unreasonable in light of the most recent financials of the Corporation
(which objection must be made prior to the Closing).

 

(b)    Physical Inventory.  On February 2,
2010, the Corporation conducted a physical inventory at which representatives
of each of Buyer and Seller were present, the results of which the Corporation
provided to each of Buyer and Seller and which shall be used 

 

11

 

to determine the amount
of Inventory as of the Closing Date and which shall be used in the preparation
of the Closing Certificate, Final Purchase Price Closing Adjustment and the
Closing Date Financial Report.  With
respect to any Inventory of the Corporation located at any premises not owned
or leased by the Corporation or otherwise not included in the physical
inventories referred to above, (i) for purposes of the Preliminary
Purchase Price Closing Adjustment, Seller shall provide to Buyer in writing a
good faith estimate as to the amount of such Inventory prior to the Closing
Date and (ii) for purposes of the Final Purchase Price Closing Adjustment,
Seller shall obtain from each Person who is in possession of any such Inventory
written certification as to the amount of such Inventory as of the Closing
Date.

 

(c)     Audit; Closing Date Financial Report. 
As promptly as possible after the Closing and in any event no later than
sixty (60) days after the Closing, Buyer shall cause to be prepared (i) an
audited balance sheet of the Corporation as of the Closing Date in accordance
with GAAP and (ii) a supplemental report setting forth the Closing Date
Working Capital, the Working Capital Adjustment, the Indebtedness on the
Closing Date and the definitive adjustment to the Purchase Price based on said
audited balance sheet (the “Final Purchase Price Closing Adjustment”),
(collectively the “Closing Date Financial Report”).  Any third-party expenses or fees incurred in
preparing the Closing Date Financial Report and the Final Purchase Price
Closing Adjustment shall be borne by Buyer. 
Seller shall have thirty (30) days after delivery to Seller to review
the Closing Date Financial Report.  In
connection with such review, Buyer shall provide Seller with reasonably
requested access to all books, records, and workpapers of the Corporation used
in the preparation of the Closing Date Financial Report.  If Seller does not object, or otherwise fails
to respond, to the Closing Date Financial Report within thirty (30) days after
delivery to Seller, such Closing Date Financial Report shall automatically
become final and conclusive.  In the
event that Seller objects to the Closing Date Financial Report within such
30-day period, Seller and Buyer shall promptly meet and endeavor to reach
agreement as to the content of the Closing Date Financial Report.  If Seller and Buyer agree on the content of
the Closing Date Financial Report, such Closing Date Financial Report shall
become final and conclusive.  If Seller
and Buyer are unable to reach agreement within thirty (30) days after the
delivery of such objection to the Closing Date Financial Report, then the
Independent Accountants shall promptly be retained to undertake a determination
of the Closing Date Financial Report, which determination shall be made as
quickly as possible.  Only disputed item(s) shall
be submitted to the Independent Accountants for review.  In resolving any disputed item, the
Independent Accountants may not assign a value to such item greater than the
greatest value for such item claimed by either party or less than the lowest
value for such item claimed by either party, in each case as presented to the
Independent Accountants.  Such
determination of the Independent Accountants shall be final and binding on
Seller and Buyer, and all expenses of the Independent Accountants shall be
borne by the party whose items in dispute are found to be in the greatest
aggregate error (in absolute dollar terms). 
The Purchase Price and the payments required to be made after the
Closing Date pursuant to Section 2.5 shall be finally determined on the
basis of the Closing Date Financial Report and the Final Purchase Price Closing
Adjustment as adjusted by any determinations described in this Section 2.3(c).

 

2.4           Payments by Buyer.  Buyer shall
pay to Seller the purchase consideration set forth in Section 2.3 as
follows:

 

12

 

(a)     At the Closing, Buyer shall pay off the Discharged
Indebtedness, if any.

 

(b)    At the Closing, Buyer shall pay to Seller the Closing
Cash Payment.  The Closing Cash Payment
shall be paid on the Closing Date in cash by wire transfer of immediately
available funds to an account designated by Seller to Buyer in writing not less
than two (2) business days prior to the Closing Date.  “Closing Cash Payment” means an amount equal
to (i) the Purchase Price (as adjusted by the Preliminary Purchase Price
Closing Adjustment), minus (ii) the amount of the estimated (per Section 2.3(a))
Indebtedness of the Corporation, if any, on the Closing Date (including,
without limitation, the Discharged Indebtedness).

 

2.5           Final Purchase Price Closing Adjustment. 
Within five (5) business days after determination of the Final
Purchase Price Closing Adjustment, Buyer or Seller, as the case may be, shall
pay to the other by wire transfer of immediately available funds to an account
designated by the receiving party in writing the amount by which the Purchase
Price, as adjusted by the Final Purchase Price Closing Adjustment, is greater
or less than the Purchase Price, as adjusted by the Preliminary Purchase Price
Closing Adjustment (such difference being the “Closing Purchase Price
Reconciliation”).  If the Closing
Purchase Price Reconciliation is positive, Buyer shall promptly pay such
difference to Seller.  If the Closing
Purchase Price Reconciliation is negative, Seller shall promptly pay such
difference to Buyer.  If Buyer or Seller
fail to pay any amount owing pursuant to this Section 2.5, then the amount
so owing shall be payable on demand and interest shall accrue on the unpaid
amount from the date due until paid at a rate equal to the lower of (i) ten
percent (10%) per annum or (ii) the highest rate permitted by law.

 

2.6           Taxes.  All transfer,
documentary, sales, use, stamp, registration and other similar Taxes imposed by
reason of the transfer of the Shares pursuant to this Agreement and any
deficiency, interest or penalty with respect to such Taxes shall be borne
equally between the Buyer and the Seller.

 

ARTICLE
III

CLOSING

 

3.1           Closing.  The closing
of the transactions contemplated by this Agreement (“Closing”) shall be held at
10:00 a.m. local time on the Closing Date at the offices of Goodwin
Procter LLP, Exchange Place, 53 State Street, Boston, Massachusetts 02109, or
any other place as Buyer and Seller mutually agree in writing.  The Closing shall be effective as of the
close of business on the Closing Date.

 

3.2           Conveyances at Closing.

 

(a)     Instruments and Possession. 
Upon the terms and conditions contained in this Agreement, on the
Closing Date, Seller shall deliver to Buyer (i) a stock power executed by
Seller conveying in the aggregate all of the Shares, together with the complete
corporate minute book maintained by the Corporation up to the Closing Date
(including, as necessary, appropriate ratifying resolutions), (ii) such
other instruments as shall be reasonably requested 

 

13

 

by Buyer to vest in Buyer
title in and to the Shares in accordance with the provisions of this Agreement
and (iii) such other documents and agreements as are contemplated by this
Agreement.

 

(b)    Form of Instruments. 
All of such instruments shall be in form and substance, and shall be
executed and delivered in a manner, reasonably satisfactory to Buyer and
Seller, but shall not diminish the status of title to the Shares required to be
delivered by Seller pursuant to this Agreement.

 

3.3           Certificates and Other Documents. 
Each of Buyer and Seller shall deliver or cause to be delivered the
certificates and other documents and items described in Articles 6, 7 and 8 of
this Agreement.

 

ARTICLE
IV

REPRESENTATIONS AND WARRANTIES

OF SELLER

 

Seller
represents and warrants to Buyer as follows:

 

4.1           Organization and Authority of the Corporation to
Conduct Business.  The Corporation is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.  Schedule 4.1 sets
forth the jurisdiction of organization of the Corporation and each jurisdiction
where it is qualified to do business. 
The Corporation is duly qualified and in good standing in each
jurisdiction where it is required to be qualified and where the failure to
qualify could reasonably be expected to have a material adverse effect on the
Business, financial condition or operations of the Corporation.  Except as disclosed on Schedule 4.1,
the Corporation has no Affiliates. 
Except as specifically disclosed on Schedule 4.1, no Affiliate of
the Corporation owns or has any interest in any of the assets used in the
Business.  The Corporation has full
corporate power and authority to conduct its business as it is presently being
conducted and to own and lease its properties and assets.  The Corporation has no stock or other equity
interest in any other Person.

 

4.2           Power and Authority; Binding Effect. 
Seller has all necessary power and authority and has taken all action
necessary to authorize, execute and deliver this Agreement, to consummate the
transactions contemplated by this Agreement, and to perform its obligations
under this Agreement.  This Agreement has
been duly executed and delivered by Seller and shall, upon delivery of a
counterpart signature by Buyer, constitute a legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms,
except as such enforcement may be limited by the Enforceability Limitations.

 

4.3           Authorized and Issued Shares. 
The authorized capitalization of the Corporation consists solely of
3,000 shares of common stock with a par value of $.01 per share, of which only
the Shares are issued and outstanding. 
Seller owns all of the Shares. 
All of the Shares are duly authorized, validly issued, fully paid and
nonassessable.  Except as set forth on Schedule
4.3, there are not now outstanding any other shares, phantom shares or
other securities, or any options, warrants or any rights related to the Shares
or to any other shares, phantom shares or 

 

14

 

other securities
of the Corporation.  Except for this
Agreement and as set forth in Schedule 4.3, there are no agreements of
any kind obligating the Corporation, conditionally or otherwise, to issue or
sell any new share of capital stock or any instrument convertible into or
exchangeable for any capital stock of the Corporation, or to redeem, repurchase
or sell any shares of the Corporation’s capital stock. Except as set forth in Schedule
4.3, there are no voting agreements, voting trusts, buy-sell agreements,
options or right of first purchase agreements relating to the Shares.

 

4.4           Title to Shares and Assets.

 

(a)     Seller has good title to the Shares, free and clear of
all Encumbrances other than Permitted Encumbrances, and at the Closing will
have full legal right and power to sell, assign and transfer title to the
Shares to Buyer pursuant to this Agreement free and clear of all Encumbrances
other than Permitted Encumbrances.

 

(b)    Except as set forth in Schedule 4.4(b) and
except for Permitted Encumbrances, the Corporation has good title to all of its
Owned Tangible Personal Property, free and clear of all Encumbrances.

 

4.5           No Conflict or Violation. 
The execution and delivery of this Agreement, the consummation of the
transactions contemplated by this Agreement, and the fulfillment of the terms
of this Agreement, do not and will not result in or constitute (i) a
violation of or conflict with any provision of the organizational or other
governing documents of the Corporation, (ii) except as set forth on Schedule
4.5, a breach of, a loss of rights under, or an event, occurrence,
condition or act which is or, with the giving of notice or the lapse of time,
would become, a material default under, or result in the acceleration of any
material obligations under, any term or provision of, any Material Contract, (iii) a
violation by Seller or the Corporation of any statute, rule, regulation,
ordinance, by-law, code, order, judgment, writ, injunction, decree or award
applicable to Seller or the Corporation which could reasonably be expected to
result in a penalty in excess of $1,000 or a loss of privilege, which loss
could reasonably be expected to result in a material adverse effect on the
Corporation or (iv) an imposition of any Encumbrance (other than a
Permitted Encumbrance) on the Shares or on the assets of the Corporation.

 

4.6           Consents and Approvals.  Except as
otherwise set forth on Schedule 4.6, no consent, approval or authorization
of, or declaration, filing or registration with, any Person is required to be
made or obtained by Seller or the Corporation in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement.

 

4.7           No Proceedings.  There is no
Proceeding pending or, to the knowledge of Seller, that have been threatened in
writing or clearly threatened orally in a communication to an officer of the
Corporation against, relating to or affecting in any adverse manner the
transactions contemplated by this Agreement.

 

4.8           Financial Statements; Unknown Liabilities.

 

(a)     The Corporation has delivered to Buyer the Financial
Statements.  The Financial Statements
fairly present in all material respects the financial condition and the 

 

15

 

results of operations of
the Corporation as of their respective dates and for the periods then ended in
accordance with GAAP as applied by the Corporation on a consistent basis.  The books and records of the Corporation from
which the Financial Statements were prepared fairly reflect in all material
respects the assets, liabilities and operations of the Corporation, and the
Financial Statements conform in all material respects thereto.

 

(b)    There are, and as of the Closing Date there will be,
no liabilities or obligations of any nature, whether absolute, accrued,
contingent, known, unknown, matured, unmatured or otherwise, and whether or not
required to be disclosed or provided for in financial statements in accordance
with GAAP, of the Corporation except (i) liabilities and obligations
reflected or reserved for in the Financial Statements with respect to the
fiscal year ended December 31, 2009; (ii) liabilities and obligations
incurred between January 1, 2010 and the Closing Date in the ordinary
course of business of the Corporation (none of which results from, arises out
of or relates to any breach of contract, breach of contractual warranty, tort,
infringement or violation of law); (iii) liabilities arising solely under
express product warranties related to products sold, leased or rented on or
prior to the Closing Date; (iv) all liabilities included in the Closing
Date Working Capital, and (v) other liabilities disclosed in this
Agreement.

 

4.9           Tax Matters.

 

(a)        Except as set forth on Schedule 4.9,
(i) the Corporation has filed or had filed on its behalf all Tax Returns
that it was required to file, (ii) all Taxes required to have been
withheld in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party have been withheld, (iii) all
Taxes required to have been paid by the Corporation (whether or not shown on
any Tax Return) have been paid, (iv) the Corporation is not currently the
beneficiary of any extension of time within which to file any Tax Return, and (v) no
notice has been received by the Corporation and no claim has been made within
the last five (5) years by any Governmental Authority in any jurisdiction
where the Corporation does not file Tax Returns that the Corporation may be
subject to taxation by that jurisdiction. 
There are no Encumbrances on any of the assets of the Corporation that
arose in connection with any failure (or alleged failure) to pay any Tax.

 

(b)        There is no dispute or claim concerning
any Tax liability of the Corporation either (i) claimed or raised by any
Governmental Authority in writing or (ii) as to which the Corporation has
knowledge.  Schedule 4.9 (b) lists
all federal, state, local, and foreign Tax Returns filed with respect to the
Corporation for any taxable period ending on or after December 31, 2005,
indicates those Tax Returns which have been audited, and indicates those Tax
Returns that currently are the subject of audit.

 

(c)        The Corporation has not been a member of
an Affiliated Group filing a consolidated federal income Tax Return other than
a group the common parent of which is Seller (“Seller Affiliated Group”).  Seller has filed a consolidated federal
income Tax Return with the Corporation for the taxable year immediately
preceding the current taxable year and is eligible to make a Code Section 338(h)(10) election.

 

16

 

(d)        Seller Affiliated Group has filed all
income Tax Returns that it was required to file for each taxable period during
which the Corporation was a member of the group.  All income Taxes owed by Seller Affiliated
Group (whether or not shown on any Tax Return) have been paid for each taxable
period during which the Corporation was a member of the group.

 

(e)        Seller does not expect any authority to
assess any additional income Taxes against Seller Affiliated Group for any
taxable period during which the Corporation was a member of the group.  There is no dispute or claim concerning any
income Tax liability of Seller Affiliated Group for any taxable period during
which the Corporation was a member of the group claimed or raised by any
Governmental Authority in writing. 
Seller Affiliated Group has not waived any statute of limitations in
respect of any income Taxes or agreed to any extension of time with respect to
an income Tax assessment or deficiency for any taxable period during which the
Corporation was a member of the group.

 

(f)         The Corporation has no liability for the
Taxes of any Person other than the Corporation (i) under Treas. Reg.
§1.1502-6 (or any similar provision of state, local or non-U.S. law), (ii) as
a transferee or successor, (iii) by contract, or (iv) otherwise.

 

(g)        Seller’s representations and warranties
set forth in this Section 4.9 shall constitute Seller’s only
representations and warranties regarding Taxes.

 

4.10         Real Property.  Schedule
4.10 contains a true, complete and correct list of the Real Property leased
by the Corporation.  The Corporation does
not own and has never owned any real property. 
Except as set forth on Schedule 4.10, (a) the Corporation
enjoys peaceful and undisturbed possession of the Real Property pursuant to the
lease described on Schedule 4.10, (b) the lease described on Schedule
4.10 is not in default and is in full force, and (c) to Seller’s
knowledge, none of the Real Property is subject to any Encumbrance which in any
material respect interferes with or impairs the present and continued use
thereof in the usual and normal conduct of the Business.  There are no repairs or replacements
exceeding $5,000 which are currently contemplated by the Corporation or which,
to Seller’s knowledge, should be made in order to maintain the Real Property in
a reasonable state of repair.

 

4.11         Tangible Personal Property.  Schedule
4.11 sets forth (a) a depreciation list of each item of Tangible
Personal Property owned by the Corporation, and (b) a list of each item of
Tangible Personal Property leased by the Corporation in each case having a
value in excess of $5,000.  There is no
material tangible personal property used in the operation of the Business other
than the Tangible Personal Property set forth on Schedule 4.11.  Except as set forth on Schedule 4.11,
the Owned Tangible Personal Property is free and clear of any Encumbrances
(other than Permitted Encumbrances). 
Except as set forth on Schedule 4.11, all of the Tangible
Personal Property is located at the Real Property and there is no tangible
personal property (excluding employee personal effects not reflected on the
Financial Statements) located at the Real Property which is not owned or leased
by the Corporation.  Except as set forth
in Schedule 4.11, the Tangible Personal Property currently used in the
Business is, taken as a whole, in reasonable working order and is reasonably
adequate for its intended use, ordinary wear and tear and normal repairs and
replacements excepted.  Except as
disclosed on Schedule 4.11, there are no repairs or replacements
exceeding $10,000 in the aggregate for all Tangible Personal Property which are
currently contemplated by Seller or the Corporation.

 

17

 

4.12         Intellectual Property.

 

(a)     (i) There is no intellectual property used in or,
to Seller’s knowledge, necessary to conduct the Business other than the
Intellectual Property owned by the Corporation, off-the-shelf computer software
and Intellectual Property identified on Schedule 4.12(d) as not
being so owned, (ii) other than computer software, each item of
Intellectual Property owned or used by the Corporation immediately prior to the
Closing Date will be owned or available for use by the Corporation on
substantially similar terms and conditions immediately subsequent to the
Closing Date and (iii) the Corporation has taken reasonable commercial
actions to maintain and protect each item of Intellectual Property used in the
Business.

 

(b)    Except as set forth on Schedule 4.12(b), (i) the
Corporation has not interfered with, infringed upon or misappropriated the
trade secrets or copyrights of any third party or, to Seller’s knowledge, the
patent or trademark rights of any third party, and in the last three (3) years
the Corporation has not received any written charge, complaint, claim, demand or
notice alleging any such interference, infringement, misappropriation or
violation (including any claim that the Corporation must license or refrain
from using any intangible property rights of any third party) and (ii) to
Seller’s knowledge, no third party has interfered with, infringed upon or
misappropriated any of the Intellectual Property owned by the Corporation.

 

(c)     Schedule 4.12(c) identifies each patent and registered trademark
and registered copyright which has been issued to the Corporation with respect
to any of the Intellectual Property owned by the Corporation or used in the
Business, identifies each pending patent application or application for
copyright or trademark registration which the Corporation has made with respect
to any of the Intellectual Property owned by the Corporation or used in the
Business, and identifies each license or other agreement which the Corporation
has granted to any third party with respect to any of the Intellectual Property
owned by the Corporation.  Seller has delivered
or made available to Buyer correct and complete copies of all such patents,
registrations, applications, licenses and agreements (as amended to date) and
have made available to Buyer correct and complete copies of all other material
written documentation evidencing ownership and prosecution histories (if
applicable) of each such patent and patent application.  Schedule 4.12(c) also identifies
each trade name or unregistered trademark used by the Corporation.  Except as set forth on Schedule 4.12(c),
with respect to each item of Intellectual Property required to be identified in
Schedule 4.12(c):  (i) Seller
has no knowledge of any reason why the Corporation would be unable to register
with the United States Patent and Trademark Office each item which is an
unregistered trademark, (ii) the Corporation possesses all right, title
and interest in and to the item, free and clear of any Encumbrances (other than
Permitted Encumbrances) or licenses, (iii) the item is not subject to any
outstanding injunction, judgment, order, decree, ruling, or charge, (iv) no
Proceeding is pending or, to the knowledge of Seller, threatened in writing
which challenges the legality, validity, enforceability, use or ownership of
the item and (v) other than routine indemnities given to distributors,
sales representatives, dealers and customers, the Corporation does not have any
current obligations to indemnify any Person for or against any interference,
infringement, misappropriation, or other conflict with respect to the item.

 

18

 

(d)    Schedule 4.12(d) identifies each item of Intellectual Property
that any third party owns and that the Corporation uses pursuant to license,
sublicense or other agreement, other than off-the-shelf computer software.  Seller has delivered to Buyer correct and
complete copies of all such licenses, sublicenses and other agreements (as
amended to date).  Except as set forth on
Schedule 4.12(d), with respect to each item of Intellectual Property
required to be identified in Schedule 4.12(d):  (i) the license, sublicense or other
agreement covering the item is enforceable, except as may be limited by
Enforceability Limitations, (ii) immediately following the Closing, the
license, sublicense or other agreement will continue to be enforceable on
substantially similar terms and conditions as existed immediately prior to the
Closing, except as may be limited by Enforceability Limitations, (iii) neither
the Corporation nor, to the knowledge of Seller, any other party to the
license, sublicense or other agreement is in material breach or material
default, and no event has occurred which, with notice or lapse of time, would
constitute a material breach or material default or permit early termination,
modification or acceleration thereunder, (iv) neither the Corporation nor,
to the knowledge of Seller, any other party to the license, sublicense or other
agreement has repudiated any material provision thereof, (v) to the
knowledge of Seller, the underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment, order, decree, ruling or
charge, (vi) no Proceeding is pending or, to the knowledge of Seller,
threatened which challenges the legality, validity, enforceability or use of
the underlying item of Intellectual Property by the Corporation and (vii) the
Corporation has not granted any sublicense or similar right with respect to the
license, sublicense or other agreement.

 

(e)     Except as set forth on Schedule 4.12(e), Buyer’s
use of the Intellectual Property will not interfere with, infringe upon,
misappropriate, or otherwise come into conflict with, the trade secrets or
copyrights of any third party or, to Seller’s knowledge, the patent or
trademark rights of any third party as a result of the continued operation of
the Business.

 

4.13         Compliance with Laws and Permits. 
Except as set forth on Schedule 4.13, the conduct of the Business
is in compliance in all material respects with all applicable Governmental
Requirements and Permits.  Except as set
forth on Schedule 4.13, the Corporation has not received any written
notice to the effect that, or, to Seller’s knowledge, otherwise been advised
that, the Corporation is not in compliance in all material respects with any
applicable Governmental Requirement and there are, to Seller’s knowledge, no
presently existing facts, circumstances or events which, with notice or lapse
of time, would result in material violations of any applicable Governmental
Requirement or Permits.  Schedule 4.13
identifies all material Permits issued to the Corporation and currently in
effect.  Except as set forth on Schedule
4.13, the Permits constitute all permits, consents, licenses, franchises,
authorizations and approvals used in the operation of and necessary to conduct the
Business as presently conducted.  All of
the Permits are valid and in full force and effect, no violations have been
experienced, noted or recorded, and no Proceeding is pending or, to the
knowledge of Seller, threatened to revoke or limit any of the Permits.

 

4.14         Litigation.  Except as set
forth on Schedule 4.14, there is no Proceeding pending or, to the
knowledge of Seller, currently threatened in writing which is (a) a
Proceeding against or relating to the Shares, (b) a Proceeding involving
the Corporation or its properties, assets or business or (c) a Proceeding
relating to the Business and against or relating to any shareholder, member,
director, officer or employee of the Corporation.

 

19

 

4.15         Labor Matters.

 

(a)     Schedule 4.15 identifies for each current employee of the
Corporation and for each employee identified in Section 4.15(c), if any,
his or her name, position or job title, his or her base compensation and bonus
compensation earned in the fiscal year of the Corporation ending December 31,
2009, and his or her current base compensation. 
Except as set forth on Schedule 4.15(a): (i) the Corporation
does not have any obligations under any written or oral labor agreement,
collective bargaining agreement or other agreement with any labor organization
or employee group, (ii) the Corporation is not currently engaged in any
unfair labor practice and there is no unfair labor practice charge or other
employee-related or employment-related complaint against the Corporation
pending or, to the knowledge of Seller, threatened before any Governmental
Authority, (iii) there is currently no labor strike, labor disturbance,
slowdown, work stoppage or other material labor dispute or arbitration
pending or, to the knowledge of Seller, threatened against the Corporation and
no material grievance currently being asserted, (iv) the Corporation has
not experienced a labor strike, labor disturbance, slowdown, work stoppage or
other material labor dispute at any time preceding the date of this Agreement
and (v) there is no organizational campaign being conducted or, to the
knowledge of Seller, contemplated and there is no pending or, to the knowledge
of Seller, threatened petition before any Governmental Authority or other
dispute as to the representation of any employees of the Corporation.

 

(b)    The Corporation has not terminated the employment of
any employee during the past ninety (90) days, excluding voluntary resignation
and termination for cause.  Except as set
forth on Schedule 4.15(b), there is not currently any employee on
disability leave or otherwise not active.

 

(c)     Schedule 4.15(c) identifies each employee of the Corporation or
an Affiliate of the Corporation that in connection with his or her employment
primarily provides services to the Corporation.

 

(d)     Seller’s representations and warranties set forth in
this Section 4.15 and Section 4.16 shall constitute Seller’s only
representations and warranties regarding labor and employment matters.

 

4.16         Employee Benefit Plans.  With respect
to the Employee Benefit Plans of the Corporation:

 

(a)     Schedule 4.16 sets forth a list identifying each Employee Pension
Benefit Plan (the “Pension Plans”) and a list identifying each Employee Welfare
Benefit Plan (the “Welfare Plans”) (in each case with a brief summary of each
plan) in which the employees identified in Section 4.15(c) participate.  Collectively, the Pension Plans and the
Welfare Plans shall hereafter be referred to as the “Employee Plans”.

 

(b)    The Corporation is not the plan sponsor of any of the
Employee Plans.

 

(c)     Each Employee Plan has been maintained in material
compliance with its terms and the requirements prescribed by any and all
statutes, orders, rules and regulations, including but not limited to,
ERISA and the Code, which are applicable to such Employee Plan.

 

20

 

(d)    Seller has delivered or caused to be delivered to
Buyer the latest determination letters (or opinion letters) of the Internal Revenue
Service relating to each Pension Plan.

 

(e)     There are no pending or, to the knowledge of Seller,
threatened (i) claims, suits or other proceedings by any employees, former
employees or plan participants or the beneficiaries, spouses or representatives
of any of them, other than ordinary and usual claims for benefits by
participants or beneficiaries, or (ii) suits, investigations or other
proceedings by any federal, state, local or other governmental agency or
authority, of or against any Employee Plan, the assets held thereunder, the
trustee of any such assets, or the Corporation relating to any of the Employee
Plans.

 

(f)     Neither the Corporation nor an Affiliate has engaged (i) in
any transaction or acted or failed to act in a manner that violates the
fiduciary requirements of Section 404 of ERISA, or (ii) in any
Prohibited Transaction with respect to any Employee Plans.

 

(g)    The Corporation has no obligation to contribute to any
Employee Plan.

 

(h)    Neither the Corporation nor any ERISA Affiliate has ever
maintained, adopted or established, contributed or been required to contribute
to, or otherwise participate in or been required to participate in any “multiemployer
plan” (as defined in Section 3(37) of ERISA).

 

(i)      No Employee Plan provides benefits, including without
limitation, any severance or other post-employment benefit, salary
continuation, termination, death, disability, or health or medical benefits
(whether or not insured), life insurance or similar benefit with respect to
current or former employees (or their spouses or dependents) of the Business
beyond their retirement or other termination of service other than (i) coverage
mandated by applicable law, (ii) death, disability or retirement benefits
under any Pension Plan, or (iii) benefits, the full cost of which is borne
by the current or former employee (or his or her beneficiary).

 

(j)      The Corporation or an Affiliate has complied with, and
satisfied, in all material respects, the requirements of COBRA with respect to
each Employee Plan that is subject to the requirements of COBRA.  Each Employee Plan which is a group health
plan, within the meaning of Section 9832(a) of the Code, has complied
with and satisfied the applicable requirements of Sections 9801 and 9802 of the
Code in all material respects.

 

(k)     Schedule 4.16 contains a list identifying each employment,
severance or similar contract, arrangement or policy and each plan or
arrangement providing for insurance coverage (including, without limitation,
any self-insured arrangements), workers’ compensation, disability benefits,
supplemental employment benefits, vacation benefits, retirement benefits,
deferred compensation, bonuses, profit-sharing, stock options, stock
appreciation rights or other forms of incentive compensation or post-retirement
compensation or benefit for any employee or former employee of the Business
which (i) is not an Employee Plan, (ii) has been entered into or
maintained, as the case may be, by the Corporation or an Affiliate and
(directly or indirectly) any employee or former employee of the Business.  Such contracts, plans and arrangements are
hereinafter referred to collectively as the “Benefit 

 

21

 

Arrangements”.  True and complete copies or descriptions of
the Benefit Arrangements have been delivered to Buyer.  Each Benefit Arrangement has been maintained
in material compliance with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such
Benefit Arrangements.

 

(l)      There is no contract, agreement, plan or arrangement
covering any employee or former employee of the Business that, individually or
in aggregate, could give rise to the payment by the Corporation or an
Affiliate, directly or indirectly, of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.

 

4.17         Transactions with Certain Persons. 
Except as set forth on Schedule 4.17, or as otherwise disclosed
in this Agreement, no Related Person is presently or at any time during the
past one (1) year has been a party to any transaction with the Corporation
including, without limitation, any contract, agreement or other arrangement (i) providing
for the furnishing of services to or by, (ii) providing for the rental or
sale of real or personal property to or from or (iii) otherwise requiring
payments to or from such Related Person. 
Except as set forth on Schedule 4.17, all Related Person transactions
have been and are on an arms-length basis providing for substantially the same
payment and performance terms as would reasonably be expected to be negotiated
with an independent third party.  Except
as set forth on Schedule 4.17, there is no outstanding amount in excess
of $1,000 owing (including, without limitation, pursuant to any advance, note
or other indebtedness instrument) from the Corporation to any Related Person
identified on Schedule 4.17 or from any Related Person identified on Schedule
4.17 to the Corporation.

 

4.18         Insurance.  Schedule
4.18 contains a complete and accurate list of all current policies or
binders of Insurance (showing as to each policy or binder the carrier, policy
number, coverage limits, expiration dates, annual premiums, deductibles and a
general description of the type of coverage provided and policy exclusions)
maintained by Seller relating to properties, assets and personnel of the
Corporation.  Except as set forth on Schedule
4.18, all of the Insurance is “occurrence” based insurance.  The Insurance is in full force and effect and
sufficient for compliance in all material respects with all requirements of
applicable law and of all contracts to which the Corporation is a party.  The Corporation is not in material default
under any of the Insurance, and the Corporation has not failed to give any
notice with respect to or to present any material claim under any of the
Insurance in a due and timely manner.  No
written notice of cancellation, termination, reduction in coverage or increase
in premium (other than reductions in coverage or increases in premiums in the
ordinary course) has been received with respect to any of the Insurance, and
all premiums with respect to any of the Insurance have been timely paid.  The Corporation has not experienced claims in
excess of current coverage of the Insurance. 
Except as disclosed on Schedule 4.18, there will be no
retrospective insurance premiums or charges or any other similar adjustment on
or with respect to any of the Insurance for any period or occurrence through
the Closing Date.

 

4.19         Inventory.  Except as set
forth on Schedule 4.19, (a) all of the Inventory is owned by the
Corporation free and clear of any Encumbrances (other than Permitted
Encumbrances) and is located at the Real Property, (b) none of the
Inventory is on consignment, (c) the Inventory as reflected in the
Financial Statements has been valued in a manner consistent with past practices
and procedures (including, without limitation, the method of computing overhead

 

22

 

and other indirect
expenses to be applied to inventory) and in accordance with GAAP and (d) all
inventory located at the Real Property is owned by the Corporation and is not
held by the Corporation (on consignment or otherwise) for or on behalf of any
other Person.  Except for damaged,
obsolete, or excess Inventory, all of the Inventory owned by the Corporation is
usable and saleable in the ordinary course of business.

 

4.20         Accounts Receivable.  All of the
Accounts Receivable of the Corporation are bona fide receivables, are reflected
on the books and records of the Corporation, arose in the ordinary course of
the Business and the Seller has no knowledge that such receivables will not, in
the aggregate, be collected in the ordinary course of business consistent with
past collection practices at their full face value net of reserves for doubtful
accounts as reflected on the Closing Date Financial Report.  Except for Permitted Encumbrances or as set
forth on Schedule 4.20, the Accounts Receivable are free and clear of
Encumbrances, there is no right of offset against any of the Accounts
Receivable, and no agreement for deduction or discount has been made with
respect to any of the Accounts Receivable other than ordinary course trade
discounts.

 

4.21         Material Contracts.  Schedule
4.21 contains a true and correct list or description of the Material
Contracts.  True and correct copies of
the Material Contracts have been delivered to Buyer.  Each of the Material Contracts is enforceable
against the Corporation and, to the knowledge of Seller, each other party
thereto, in accordance with its terms, except as such enforcement may be
limited by Enforceability Limitations. 
Neither the Corporation nor, to the knowledge of Seller, any other party
to any Material Contract, is in material default thereunder or in material
breach thereof, and the Corporation has not during the past two (2) years
obtained or granted any material waiver of or under any provision of any
Material Contract except for routine waivers granted or sought in the ordinary
course of the Business.  There exists no
event, occurrence, condition or act which constitutes or, with the giving of
notice, the lapse of time or the happening of any future event or condition,
would become a material default by the Corporation or, to the knowledge of
Seller, any other party under any Material Contracts.  Seller does not know of a threatened default
under any Material Contracts.

 

4.22         Suppliers and Customers.  Schedule
4.22 contains a list of the five (5) largest suppliers (each, a “Material
Supplier”) and twenty (20) largest customers (each, a “Material Customer”) of
the Business for the fiscal year ending December 31, 2008 and the
eleven-month period ended November 30, 2009.  Except as set forth on Schedule 4.22,
there has been no recent material change in terms with any of the suppliers or
customers described in this Section 4.22 other than regular and ordinary
course pricing adjustments consistent with past practices.  Except as set forth on Schedule 4.22,
to the knowledge of Seller, none of the suppliers or customers set forth on Schedule
4.22 has informed the Corporation that it intends to terminate its
relationship with the Corporation, and Seller is not aware of any such supplier
or customer that intends to terminate such relationship or of any material
problem or dispute with any such supplier or customer.  Seller has no knowledge of any material
adverse change in relationship with any Material Supplier or Material Customer
since January 1, 2009.  To Seller’s
knowledge, there has been no communication between Seller and any such Material
Supplier or Material Customer indicating that any such Material Supplier or
Material Customer would terminate its relationship with the Corporation or
materially decrease its business with the Corporation as a result of the
consummation of the sale of the Shares contemplated by this Agreement.

 

23

 

4.23         Bank Accounts; Powers of Attorney.  Schedule
4.23, contains a true, complete and correct list of all bank accounts and
safe deposit boxes maintained by the Corporation and all persons entitled to
draw thereon, to withdraw therefrom or with access thereto, a description of
all lock box arrangements for the Corporation and a description of all powers
of attorney granted by the Corporation.

 

4.24         Environmental Matters.

 

(a)           Except as set forth on Schedule 4.24, the
Corporation and its assets, properties and operations are now and at all times
prior to the Closing Date have been in compliance in all material respects with
all applicable Environmental Laws and are not currently the subject of any
Environmental Claims.  Neither the
Corporation nor Seller has received any written notices from any Governmental
Authority respecting Environmental Laws as they may relate to the Corporation
or the Business.

 

(b)           Seller’s representations and warranties set forth in
this Section 4.24 shall constitute Seller’s only representations and
warranties regarding environmental matters.

 

4.25         Absence of Certain Changes. 
Except as set forth on Schedule 4.25, since October 31,
2009, there has not been:

 

(a)     any Material Adverse Change;

 

(b)    any increase in excess of three percent (3%) in the
compensation of any officer or employee;

 

(c)     any sale or transfer by the Corporation of any
tangible or intangible asset having a value at the time of disposition greater
than $10,000 or $20,000 in the aggregate for all such assets, any mortgage or
pledge or creation of any Encumbrance relating to any such asset, any lease of
real property or equipment, or any cancellation of any debt owed to or claim of
the Corporation, except in the ordinary course of business;

 

(d)    any other material transaction not in the ordinary
course of the Business or not otherwise consistent with the Corporation’s past
practices involving consideration in excess of $25,000;

 

(e)     any material non-seasonal increase or reduction in the
backlog or orders of the Business, any acceleration of sales into a current
period or deferral of sales into a future period or any change in pricing or discounts
offered to customers of the Business; or

 

(f)     any material change in accounting methods or
principles.

 

4.26         No Brokers.  Seller has
not entered into any agreement, arrangement or understanding with any Person
which will result in the obligation to pay any finder’s fee, brokerage
commission or similar payment in connection with the transactions contemplated
by this Agreement.

 

24

 

4.27         Products; Product Warranties.

 

(a)     A form of each product warranty relating to products
manufactured or sold by the Corporation or any predecessor of the Corporation
at any time during the two-year period preceding the date of this Agreement is
attached to or set forth on Schedule 4.27, and neither the Corporation
nor any predecessor of the Corporation has sold any products or services which
are subject to an extended warranty of the Corporation beyond ten (10) years
and which warranty has not yet expired.

 

(b)    Except as set forth on Schedule 4.27, Seller
has no knowledge of any facts or circumstances which would reasonably be
expected to result in claims under express product warranties related to
products sold, leased or rented by the Corporation or any predecessor of the
Corporation on or prior to the Closing Date in excess of $468,550 per year.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF
BUYER

 

Buyer
hereby represents and warrants to Seller as follows:

 

5.1           Organization and Good Standing. 
Buyer is a Delaware corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware.  Buyer has full power and authority to conduct
its business as presently being conducted and to own and lease its properties
and assets.

 

5.2           Authority; Authorization; Binding Effect. 
Buyer has all necessary power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement and
to perform its obligations under this Agreement.  Copies of all resolutions of the board of
directors of Buyer with respect to the transactions contemplated by this
Agreement, certified by the Secretary or an Assistant Secretary of Buyer, in
form reasonably satisfactory to counsel for Seller, have been delivered to
Seller.  This Agreement has been duly
executed and delivered by Buyer and shall, upon delivery of a counterpart
signature by Seller, constitute a legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as such
enforcement may be limited by Enforceability Limitations.

 

5.3           No Conflict or Violation. 
The execution and delivery of this Agreement, the consummation of the
transactions contemplated by this Agreement and the performance by Buyer of its
obligations under this Agreement, do not and will not result in or constitute (i) a
violation of or a conflict with any provision of the certificate of
incorporation or by-laws of Buyer, (ii) a breach of, a loss of rights
under, or an event, occurrence, condition or act which is or, with the giving
of notice, the lapse of time or the happening of any future event or condition,
would become, a material default under, any term or provision of any contract,
agreement, indebtedness, lease, commitment, license, franchise, permit,
authorization or concession to which Buyer is a party or (iii) a violation
by Buyer of any statute, rule, regulation, ordinance, by-law, code, order,
judgment, writ, injunction, decree or award.

 

5.4           Consents and Approvals.  No consent,
approval or authorization of, or declaration, filing or registration with, any
Person is required to be made or obtained by Buyer in 

 

25

 

connection with
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated by this Agreement.

 

5.5           No Proceedings.  There is no
Proceeding pending or, to the knowledge of Buyer, threatened in writing
against, relating to or affecting in any adverse manner the transactions
contemplated by this Agreement.

 

5.6           No Brokers.  Buyer has not
entered into any agreement, arrangement or understanding with any Person which
will result in the obligation to pay any finder’s fee, brokerage commission or
similar payment in connection with the transactions contemplated by this
Agreement.

 

ARTICLE VI

COVENANTS AND CONDUCT OF

THE PARTIES THROUGH CLOSING

 

Seller,
on the one hand, and Buyer on the other hand, each covenant and agree with the
other as follows:

 

6.1           [Reserved]

 

6.2           [Reserved]

 

6.3           [Reserved]

 

6.4           [Reserved]

 

6.5           [Reserved]

 

6.6           [Reserved]

 

6.7           [Reserved]

 

6.8           Non-Competition.  Seller agrees
that during the Non-Competition Period, it shall not, directly or indirectly,
for its own account or as agent, employee, officer, director, trustee,
consultant, member, partner, stockholder or equity owner of any corporation or
any other entity, or member of any firm or otherwise, engage or attempt to
engage in the business of developing or distributing small refrigerators or
small microwaves anywhere in the United States, provided, however, Seller may
own securities constituting less than three percent (3%) of any class of
securities of a public company engaged or attempting to engage in such business
without otherwise being deemed to have breached any provision of this
Agreement.

 

6.9           Non-Solicitation. 
Seller agrees that, during the Non-Competition Period, it shall not,
directly or indirectly, for its own account or as agent, employee, officer,
director, trustee, consultant, partner, stockholder or equity owner of any
corporation or any other entity:  (a) employ or solicit the employment of any
person identified in Section 4.15(c) or who was 

 

26

 

otherwise employed
by the Corporation at the Closing Date or at any time during the six (6) month
period preceding the Closing Date, except that Seller shall be free to employ
or solicit the employment of any such person whose employment with the
Corporation has terminated for any reason (without any interference from
Seller) and who has no longer been employed by the Corporation for six (6) months
from the date of such employee’s termination, (b) canvass or solicit
business in competition with the Business from any person or entity who during
the six (6) month period preceding the Closing Date shall have been a
customer of the Corporation, (c) willfully dissuade or discourage any
person or entity from using, employing or conducting business with the
Corporation, or (d) intentionally disrupt or interfere with, or seek to
disrupt or interfere with, the business or contractual relationship between the
Corporation and any supplier who during the six-month period
preceding the Closing Date shall have supplied components, materials or
services to the Corporation; provided, however, that nothing in this Section 6.09
shall restrict any party from performing its obligations or enforcing its
rights under the Distributor Agreement (as defined below).

 

6.10         Confidentiality.  Seller has had access to, and has gained
knowledge with respect to the Business, including without limitation trade secrets,
financial results and information, processes and techniques, technical
production and cost data, methods of doing business and information concerning
customers and suppliers, and other valuable and confidential information
relating to the Business (the “Confidential Information”).  Seller acknowledges that unauthorized
disclosure or misuse of the Confidential Information, whether before or after
the Closing, will cause irreparable damage to the Corporation and Buyer
subsequent to the Closing.  The parties
also agree that covenants by Seller not to make unauthorized disclosures of the
Confidential Information are essential to the growth and stability of the
business of the Corporation and Buyer. 
Accordingly, Seller agrees that it will not use or disclose any
Confidential Information obtained in the course of its past connection with the
Business, other than (a) information generally available to the public
through sources other than Seller, (b) to defend or participate in the defense of actions as
to which the indemnification provisions of Section 9.1(b), or in
connection with Tax reporting and related Tax matters associated with the
Corporation, or (c) as required by law, the rules or regulations of
any applicable securities exchange, or order of a court of competent
jurisdiction.

 

6.11         Equitable
Remedies/Reasonableness of Limitations. 
Seller acknowledges that (a) a remedy at law for its failure to
comply with the applicable covenants contained in Sections 6.8, 6.9 and 6.10 of
this Agreement may be inadequate and (b) Buyer shall be entitled to seek
from a court having jurisdiction specific performance, an injunction, a
restraining order or any other equitable relief in order to enforce any such
provision.  The right to seek such equitable
relief shall be in addition to any other remedy to which Buyer is entitled
under applicable law (including, but not limited to, monetary damages).  Seller represents and warrants that it has
had an opportunity to consult with counsel regarding this Agreement, has fully
and completely reviewed this Agreement with such counsel and fully understands
the contents hereof.  Seller agrees that
the territorial, time and other limitations contained in Sections 6.8 and 6.9
of this Agreement are reasonable and properly required for the adequate
protection of the business and affairs of Buyer, and in the event that any one
or more of such territorial, time or other limitations is found to be
unreasonable by a court of competent jurisdiction, Seller agrees to submit to
the reduction of said territorial, time or other limitations to such an area,
period or otherwise as the court may determine to be reasonable.  In the event that any limitation under this 

 

27

 

Agreement is found to be unreasonable or otherwise invalid in any
jurisdiction, in whole or in part, Seller acknowledges and agrees that such
limitation shall remain and be valid in all other jurisdictions.

 

6.12         Repayment of Employee Advances. 
On or prior to the Closing Date, Seller shall cause all outstanding
employee advances to be repaid to the Corporation in full, other than ordinary
course travel advances in amounts consistent with past practice.

 

6.13         Termination of Related Person Arrangements. 
All agreements and other arrangements, whether oral or written, with
Related Persons which are disclosed pursuant to Section 4.3 or 4.17
(including, but not limited to, all agreements requiring future payments for
technology or services) shall be terminated on or prior to the Closing Date,
except to the extent the continuation thereof is specifically consented to by
Buyer in writing.

 

6.14         Satisfaction of Indebtedness. 
On or prior to the Closing Date, Seller shall cause the Corporation to
pay, or cause to be paid as Discharged Indebtedness, all Indebtedness capable
of being paid at Closing or to otherwise obtain a release of all liability of
the Corporation with respect thereto satisfactory in form and substance to
Buyer.

 

6.15         Distribution of Cash.  On or prior
to the Closing Date, to the extent practical (i.e, after making accommodation
for outstanding checks), Seller shall cause the Corporation to distribute to
Seller all Cash of the Corporation.

 

6.16         Commercial Laundry Product Sales
Agreement.  On the Closing Date, Seller shall cause Mac-Gray
Services to execute and deliver to the Corporation the commercial laundry
product sales agreement in the form agreed to by Buyer and Seller (the “Laundry
Product Sales Agreement”).

 

6.17         Transition Services Agreement. 
On the Closing Date, Seller shall execute and deliver the transition
services agreement in the form agreed to by Buyer and Seller (the “Transition
Services Agreement”).

 

6.18         Sublease.  On the
Closing Date, Seller shall execute and deliver the sublease agreement in the
form agreed to by Buyer and Seller (the “Sublease”).

 

6.19         Distributor Agreement. 
On the Closing Date, Seller shall cause Mac-Gray Services to execute and
deliver the academic distributor agreement in the form agreed to by Buyer and
Seller (the “Distributor Agreement”).

 

6.20         Post-Closing Employment.

 

(a)        As of the Closing Date, each of the
employees of the Seller and each of its Subsidiaries (as applicable, the “Current
Employer”) set forth on Schedule 4.15 and available to work as of the
Closing Date (the “Offered Employees”) and all such employees who accept such
offer of employment being referred to herein as the “Transferred Employees”)
shall be offered employment by Buyer, the Corporation or one of their
respective Affiliates (the “Employer”) pursuant to a letter in the form agreed
to by Buyer and Seller.  Any employee of
the Current Employer who is unavailable to work as of the Closing Date but who
will become 

 

28

 

available by or
before April 1, 2010 shall be offered employment and included as an
Offered Employee and, to the extent such offer is accepted, as a Transferred
Employee. The Current Employer shall terminate the employment of each of the
Transferred Employees effective as of the Closing, or at such later date on or
before April 1, 2010, as applicable. 
Seller makes no representation as to whether any Offered Employee will
accept employment with the Employer.  For
a period of equal to no less than the lesser of (i) twelve (12) months
following the Closing Date, or (ii) the applicable Transferred Employee’s
employment with Buyer, the Corporation or one of their respective Affiliates,
the Employer shall provide each Transferred Employee with compensation and
benefits which, in the aggregate, are comparable to the compensation and
benefits historically offered to such Transferred Employee by Seller, and each
Transferred Employee shall be entitled to carryover his or her unused vacation,
sick leave and personal days to the extent the liability therefore is included
in Accrued Vacation.

 

(b)        As of the Closing Date or such later date
on or before April 1, 2010, as applicable, Employer shall cause
Transferred Employees to be eligible to participate in all employee plans and
benefit arrangements of Employer in which similarly situated employees of
Employer are generally eligible to participate in accordance with the then
prevailing terms of such employee plans and benefit arrangements, provided
that (i) for purposes of any length of service requirements, waiting
periods or vesting periods (but not for purposes of the rate of benefit
accrual) in any such plan for which a Transferred Employee may be eligible
after the Closing Date, Employer shall ensure that service by such Transferred
Employee with the Current Employer shall be deemed to have been service with
Employer, and (ii) all Transferred Employees and their spouses and
dependents who are covered under the Current Employer’s health plan at the time
of the Closing shall be covered immediately after the Closing Date (and shall
not be excluded from coverage on account of any pre-existing condition) under a
group health plan of the Employer.

 

(c)        Subject to applicable law (including any
privacy laws), the Current Employer shall provide promptly to the Employer, at
the Employer’s request, any information or copies of personnel records
(including addresses, dates of birth, dates of hire and dependent information)
relating to the Transferred Employees or relating to the service of Transferred
Employees with the Current Employer prior to the Closing Date.  The Current Employer and the Employer shall
each cooperate with the other and shall provide to the other such
documentation, information and assistance as is reasonably necessary to effect
the provisions of this Section 6.20.

 

(d)        The provisions of this Section 6.20
are solely for the benefit of the parties to this Agreement, and no current or
former employee or any other individual associated therewith shall be regarded
for any purpose as a third-party beneficiary of this Agreement and nothing
herein shall be construed as an amendment to any Employee Benefit Plan or to
any Employee Pension Benefit Plan or any Employee Welfare Benefit Plan of
Employer for any purpose.  Nothing herein
shall in any manner be construed to otherwise limit the at-will status of each
Transferred Employee.

 

6.21         Material Contracts Assignment. 
On the Closing Date, Seller shall, and shall cause Mac-Gray Services to,
assign to Buyer its rights to the Material Contracts specifically 

 

29

 

identified for assignment on Schedule 4.21
which materially relate to the Business but with respect to which the
Corporation is not the contracting party.

 

6.22         IP Assignments. 
On or before the Closing Date, the intellectual property identified on Schedule
6.22 shall be assigned to the Corporation.

 

ARTICLE VII

CONDITIONS TO SELLER’S
OBLIGATIONS

 

The
obligation of Seller to consummate the transactions contemplated by this
Agreement, is subject, in the discretion of Seller, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions (any of which,
in Seller’s absolute and sole discretion, may be waived in writing in whole or
in part without impairing or affecting any right of indemnification or other
right or remedy under this Agreement):

 

7.1           Representations, Warranties and Covenants. 
All representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects at and as of the Closing
Date, except as and to the extent that the facts and conditions upon which such
representations and warranties are based are expressly required or permitted to
be changed by the terms of this Agreement, and Buyer shall have performed in
all material respects all agreements and covenants required by this Agreement
to be performed by it prior to or at the Closing Date.

 

7.2           No Proceedings.  No Proceeding
shall be pending, threatened or anticipated against Buyer or Seller seeking to
enjoin, or adversely affecting, the consummation of the transactions
contemplated by this Agreement.

 

7.3           Closing Certificate.  Buyer shall
have furnished Seller with a certificate of an officer of Buyer, in form and
substance reasonably satisfactory to Seller, to evidence compliance with the
conditions set forth in Sections 7.1 and 7.2.

 

7.4           Laundry Product Sales Agreement. 
Buyer shall have executed and delivered the Laundry Product Sales
Agreement.

 

7.5           Transition Services Agreement. 
Buyer shall have executed and delivered the Transition Services Agreement.

 

7.6           Sublease.  Buyer shall
have executed and delivered the Sublease.

 

7.7           Distributor Agreement.  Buyer shall
have executed and delivered the Distributor Agreement.

 

7.8           Post-Closing Employment.  Buyer shall
have made the offers of employment described in Section 6.20.

 

30

 

ARTICLE VIII

CONDITIONS TO BUYER’S OBLIGATIONS

 

The
obligation of Buyer to consummate the transactions contemplated by this
Agreement, is subject, in the discretion of Buyer, to the satisfaction, on or
prior to the Closing Date, of each of the following conditions (any of which,
in Buyer’s absolute and sole discretion, may be waived in writing in whole or
in part without impairing or affecting any right of indemnification or other
right or remedy under this Agreement except as provided herein):

 

8.1           Representations, Warranties and Covenants. 
All representations and warranties of Seller contained in this Agreement
shall be true and correct in all material respects at and as of the Closing
Date, except as and to the extent that the facts and conditions upon which such
representations and warranties are based are expressly required or permitted to
be changed by the terms of this Agreement and Seller shall have performed or
caused to be performed in all material respects all agreements and covenants
required by this Agreement to be performed or caused to be performed by it
prior to or at the Closing Date.

 

8.2           No Proceedings.  No Proceeding
shall be pending, threatened or anticipated against Buyer or Seller seeking to
enjoin, or adversely affecting, the transactions contemplated by this
Agreement.

 

8.3           No Material Adverse Change. 
No Material Adverse Change of the Corporation or the Business shall have
occurred.

 

8.4           Closing Certificate.  Seller shall
have furnished or caused to be furnished to Buyer a certificate or certificates
in form reasonably satisfactory to Buyer to evidence compliance with the
conditions set forth in Sections 8.1, 8.2 and 8.3.

 

8.5           Employment Agreement.  James Russo
shall have executed and delivered to the Corporation his employment agreement
in the form presented to him by Buyer.

 

8.6           Laundry Product Sales Agreement. 
Mac-Gray Services, shall have executed and delivered the Laundry
Products Sales Agreement.

 

8.7           Transition Services Agreement. 
Seller shall have executed and delivered the Transition Services
Agreement.

 

8.8           Material Contracts Assignment. 
Seller and Mac-Gray Services, Inc. shall have made the contract
assignments described in Section 6.21.

 

8.9           Sublease.  Seller shall
have executed and delivered the Sublease.

 

8.10         Distributor Agreement.  Mac-Gray
Services shall have executed and delivered the Distributor Agreement.

 

8.11         IP Assignments.  The
intellectual property identified on Schedule 6.22 shall have been
assigned to the Corporation.

 

31

 

8.12         Sanyo Visit.  Buyer shall have interviewed Sanyo personnel
and been satisfied with the results thereof.

 

8.13         No Casualty.  Buyer shall not have elected to terminate
this Agreement in accordance with any of Section 10.2.

 

ARTICLE
IX

COVENANTS AND CONDUCT OF

THE PARTIES AFTER CLOSING

 

9.1           Survival and Indemnifications.

 

(a)        Survival of Representations,
Warranties, Covenants and Agreements. 
All representations and warranties contained in this Agreement shall
survive the Closing for a period of fifteen (15) months following the Closing
Date; except that the representations and warranties in Section 4.4
(Title to Shares and Assets) shall survive the Closing indefinitely, the
representations and warranties made in Section 4.9 (Taxes) shall survive
the Closing for a period of six (6) years, and the representations and
warranties made in Section 4.24 (Environmental) shall survive the Closing
for a period of five (5) years.  All
of the representations and warranties contained in this Agreement shall in no
respect be limited or diminished by any past or future inspection,
investigation, examination or possession on the part of Buyer or Seller.  All covenants and agreements contained in
this Agreement (including, without limitation, the obligation of Seller to convey
the Shares to Buyer free and clear of any Encumbrance (other than Permitted
Encumbrances) and the indemnification obligations of Seller and Buyer set forth
in this Section 9.1) shall survive the Closing Date until fully performed
or discharged.

 

(b)        Indemnification by Seller.  Seller hereby agrees to defend indemnify and
hold harmless Buyer and its Affiliates and the directors, officers and
employees of Buyer and their Affiliates (each a “Buyer Indemnified Party”),
from, against and in respect of the following:

 

(i)            any and all Losses suffered or
incurred by any Buyer Indemnified Party by reason of any breached or untrue
representation or warranty of Seller contained in Article VI of this
Agreement;

 

(ii)           any and all Losses suffered or
incurred by any Buyer Indemnified Party by reason of the nonfulfillment of any
covenant or agreement by Seller contained in this Agreement; and

 

(iii)          provided Buyer makes a claim within
fifteen (15) months from the Closing Date, any and all Losses suffered or
incurred by any Buyer Indemnified Party by reason of any activities,
liabilities or obligations of the Corporation arising prior to the Closing
other than with respect to (A) liabilities of the Corporation included in
Closing Date Working Capital and (B) liabilities arising solely as a
result of express product warranty obligations related to products sold, leased
or rented on or prior to the Closing.

 

32

 

Notwithstanding
anything to the contrary contained in this Agreement, except for a claim under Section 9.1(b)(i) relating
to a breach in respect of Section 4.4 (Title to Shares and Assets) and any
claim arising from fraud on the part of Seller, Seller shall (a) have no
liability under Sections 9.1(b)(i), or (b)(iii) until the Losses suffered
or incurred with respect thereto exceed, in the aggregate, the Threshold
Amount, in which case Seller shall indemnify the Buyer Indemnified Party for
all such Losses beginning with the first dollar thereof, and (b) have no
liability under Sections 9.1(b)(i), or (b)(iii) in an amount in excess of
the Indemnity Cap.

 

Indemnification
by the Seller pursuant to this Section 9.1(b) shall be limited to the
amount of any liability or damage that remains after deducting therefrom any
insurance proceeds (net of retrospective premium payment or prospective premium
increases) and any indemnity, contribution or other similar payment actually
received by Buyer Indemnified Parties from any third party with respect
thereto.  Seller shall not have any
liability under any provision of this Agreement or otherwise for any indirect,
consequential or punitive damages.  Any
liability for indemnification under this Section 9.1(b) shall be
determined without duplication of recovery by reason of the state of facts
giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.

 

(c)        Tax Indemnification.

 

(i)            Seller agrees to be responsible for
and to indemnify and hold the Buyer Indemnified Parties harmless from and
against any and all Taxes that may be imposed upon or assessed against the
Corporation or Buyer or the assets of the Corporation (A) based on income
of the Corporation attributable to any period ending on or prior to the Closing
Date, or (B) based on operations of the Corporation on or prior to the
Closing Date, and shall be responsible for the Income Tax Liability.

 

(ii)           Any claim for indemnity under this Section 9.1(c) may
be made at any time prior to the six (6) year anniversary of the Closing Date
without the application of any threshold or indemnity cap.

 

(iii)          Whenever it is necessary to determine
the liability for Taxes for a Straddle Period for any purpose under this
Agreement, (1) the amount of any Taxes based on or measured by income,
receipts or payroll of the Corporation for the pre-Closing period shall be
determined based on an interim closing of the books as of the close of business
on the Closing Date and (2) the amount of other Taxes of the Corporation
for a Straddle Period that relates to the pre-Closing period shall be deemed to
be the amount of such Tax for the entire taxable period multiplied by a
fraction the numerator of which is the number of days in the taxable period
ending on and including the Closing Date and the denominator of which is the
number of days in such Straddle Period.  “Straddle
Period” means any Tax period that includes but does not end on the Closing
Date.

 

(d)        Indemnification by Buyer.  Buyer hereby agrees to indemnify and hold
harmless Seller and its Affiliates (each, a “Seller Indemnified Party”) from,
against, and in respect of:

 

33

 

(i)            any and all Losses suffered or
incurred by any Seller Indemnified Party resulting from any breached or untrue
representation or warranty by Buyer contained in this Agreement;

 

(ii)           any and all Losses suffered or
incurred by any of them by reason of the nonfulfillment of any covenant or
agreement by Buyer contained in this Agreement; and

 

(iii)          any and all Losses suffered or incurred
by any Seller Indemnified Party by reason of any activities, liabilities or
obligations of the Corporation (A) included in Closing Date Working
Capital or (B) arising solely under express product warranties for
products sold, leased or rented by the Corporation.

 

Indemnification by the Buyer pursuant to this Section 9.1(d) shall
be limited to the amount of any liability or damage that remains after
deducting therefrom any insurance proceeds (net of retrospective premium
payment or prospective premium increases) and any indemnity, contribution or
other similar payment actually received by Seller Indemnified Parties from any
third party with respect thereto.  Buyer
shall not have any liability under any provision of this Agreement or otherwise
for any indirect, consequential or punitive damages.  Any liability for indemnification under this Section 9.1(d) shall
be determined without duplication of recovery by reason of the state of facts
giving rise to such liability constituting a breach of more than one representation,
warranty, covenant or agreement.

 

(e)        Notification and Defense of Claims or
Actions.

 

(i)            As used in this Section 9.1,
any Person seeking indemnification pursuant to this Section 9.1 is
referred to as an “indemnified party” and any Person from whom indemnification
is sought pursuant to this Section 9.1 is referred to as an “indemnifying
party.”  An indemnified party which
proposes to assert the right to be indemnified under this Section 9.1
shall submit to the indemnifying party a written demand for indemnification
within fifteen (15) business days of becoming aware of such potential claim
setting forth in summary form the facts as then known which form the basis for
the claim for indemnification; provided, however, that the failure to
give such notice will not affect such claim of indemnification except to the
extent of actual prejudice to the indemnifying party.  With respect to claims based on actions by
third parties, an indemnified party shall, within fifteen (15) business days
after the receipt of notice of the commencement of any Proceeding against it in
respect of which a claim for indemnification is to be made against an
indemnifying party, notify the indemnifying party in writing of the
commencement of such Proceeding, enclosing a copy of all papers served; provided,
however, that the failure to so notify the indemnifying party of any such
Proceeding shall not relieve the indemnifying party from any liability which it
may have to the indemnified party, except to the extent that the indemnifying
party is prejudiced thereby.  Thereafter,
the indemnified party shall deliver to the indemnifying party, within fifteen
(15) business days after receipt by the indemnified party, copies of all
further notices relating to such claim.

 

34

 

(ii)           If a third-party claim is made for
which a Buyer Indemnified Party is entitled to indemnification pursuant to Section 9.1(b),
then Seller shall have the right, by providing notice to the Buyer Indemnified
Party within fifteen (15) days of its receipt of the notice required pursuant
to Section 9.1(e)(i), to direct, through counsel of its own choosing, the
defense or settlement of any such claim at its own expense (unless Seller is
also a Person against whom the third-party claim is made and the relevant Buyer
Indemnified Party determines in good faith that joint representation would be
adverse to Buyer Indemnified Party’s interests); provided, that Seller shall
acknowledge in writing and without qualification its indemnification
obligations hereunder with respect to such third-party claim, except that
Seller may qualify its acceptance (which qualification does not alter the
indemnification obligations hereunder) in the event there is a later reasonable
determination that the facts upon which the third-party claim is based relate
to actions taken by the Buyer, the operation of the Business following Closing,
or actions taken by the Corporation following Closing so long as Seller agrees
to tender defense of such third-party claim back to the Buyer Indemnified Party
within fifteen (15) days of such determination (or at such other time as Buyer
shall agree, in good faith cooperation with the Seller, with respect to the
transition of such defense so as to not in any manner prejudice Buyer).  If Seller elects to assume the defense of any
such claim, Seller shall consult with the Buyer Indemnified Party for the
purpose of allowing the Buyer Indemnified Party to participate in such defense,
but in such case the participation expenses of the Buyer Indemnified Party
shall be paid by the Buyer Indemnified Party. 
A Buyer Indemnified Party shall provide and shall cause the Corporation
to provide, as applicable, Seller and counsel with access to its records and
personnel relating to any such claim, assertion, event or proceeding during
normal business hours and shall otherwise cooperate with Seller in the defense
or settlement thereof, and Seller shall reimburse Buyer Indemnified Party for
all its reasonable out-of-pocket expenses in connection therewith.  If Seller elects to direct the defense of any
such claim, Buyer Indemnified Party shall not pay, or permit to be paid, any
part of any claim or demand arising from such asserted liability unless Seller
consents in writing to such payment or unless Seller, subject to the last
sentence of this Section 9.1(e)(ii), withdraws from the defense of such
asserted liability or unless a final judgment from which no appeal may be taken
by or on behalf of Seller is entered against Buyer Indemnified Party for such
liability.  Seller shall not admit any
liability with respect to, or settle, compromise or discharge any such claim
without the Buyer Indemnified Party’s prior written consent (which consent
shall not be unreasonably withheld or delayed); provided, however,
that the Buyer Indemnified Party shall agree to any settlement, compromise or
discharge of any such claim that (i) Seller may recommend, (ii) by
its terms obligates Seller to pay the full amount of the liability in
connection with such claim, (iii) releases the Buyer Indemnified Party
completely in connection with such claim, and (iv) contains no sanction or
restriction upon the future activities or business of the Buyer Indemnified
Party or requires the Buyer Indemnified Party to take any action other than
ministerial actions related to the dismissal of any proceedings related to such
claim.  If the Seller fails to defend or
if, after commencing or undertaking any such defense, the Seller fails to prosecute
or withdraws from such defense, Buyer Indemnified Party shall have the right to
undertake the defense or settlement thereof, at Seller’s expense.  If the Buyer Indemnified Party assumes the
defense of any such claim pursuant to this Section 

 

35

 

9.1(e)(ii) following
Seller’s failure to defend such claim, then Buyer may defend such claim in a
manner as it may deem appropriate (including, but not limited to, settling or
otherwise resolving such claim, after giving prior written notice of such
settlement or resolution to Seller, on such terms as Buyer may deem appropriate
and are not reasonably objected to by Seller).

 

(iii)          If a third-party claim is made for
which a Seller Indemnified Party is entitled to indemnification pursuant to Section 9.1(d),
then Buyer shall have the right, by providing notice to the Buyer Indemnified
Party within fifteen (15) days of its receipt of the notice required pursuant
to Section 9.1(e)(i), to direct, through counsel of its own choosing, the
defense or settlement of any such claim at its own expense (unless Buyer is
also a Person against whom the third-party claim is made and the relevant
Seller Indemnified Party determines in good faith that joint representation
would be adverse to Seller Indemnified Party’s interests) provided, that Buyer
shall acknowledge in writing and without qualification its indemnification
obligations hereunder with respect to such third-party claim, except that Buyer
may qualify its acceptance (which qualification does not alter the indemnification
obligations hereunder) in the event there is a later determination that the
facts upon which the third-party claim is based relate to actions taken by the
Seller or the operation of the Business prior to Closing, so long as Buyer
agrees to tender defense of such third-party claim back to the Seller
Indemnified Party within fifteen (15) days of such determination (or at such
other time as Seller shall agree, in good faith cooperation with Buyer, with
respect to the transition of such defense so as to not in any manner prejudice
Seller).  If Buyer elects to assume the
defense of any such claim, Buyer shall consult with the Seller Indemnified
Party for the purposes of allowing the Seller Indemnified Party to participate
in such defense, but in such case the participation expenses of the Seller
Indemnified Party shall be paid by the Seller Indemnified Party.  A Seller Indemnified Party shall provide
Buyer and counsel with access to its records and personnel relating to any such
claim, assertion, event or proceeding during normal business hours and shall
otherwise cooperate with Buyer in the defense or settlement thereof, and Buyer
shall reimburse the Seller Indemnified Party for all the reasonable
out-of-pocket expenses in connection therewith. 
If Buyer elects to direct the defense of any such claim or proceeding,
the Seller Indemnified Party shall not pay, or permit to be paid, any part of
any claim or demand arising from such asserted liability, unless Buyer consents
in writing to such payment or unless Buyer, subject to the last sentence of
this Section 9.1(e)(iii), withdraws from the defense of such asserted
liability, or unless a final judgment from which no appeal may be taken by or
on behalf of Buyer is entered against the Seller Indemnified Party for such
liability.  Buyer shall not admit any
liability with respect to, or settle, compromise or discharge any such claim
without the Seller Indemnified Party’s prior written consent (which consent
shall not be unreasonably withheld or delayed); provided, however,
that the Seller Indemnified Party shall agree to any settlement, compromise or
discharge of any such claim that (i) Buyer may recommend, (ii) by its
terms obligates Buyer to pay the full amount of the liability in connection
with such claim, (iii) releases the Seller Indemnified Party completely in
connection with such claim, and (iv) contains no sanction or restriction
upon the future activities or business of the Seller Indemnified Party or
requires the Seller Indemnified Party to take any action other than ministerial
actions related to the dismissal of any proceedings related to such claim. If
Buyer fails to defend or if, after commencing or 

 

36

 

undertaking any such
defense, Buyer fails to prosecute or withdraws from such defense, the Seller
Indemnified Party shall have the right to undertake the defense or settlement
thereof, at Buyer’s expense.  If the
Seller Indemnified Party assumes the defense of any such claim or proceeding
pursuant to this Section 9.1(e)(iii) following Buyer’s failure to
defend such claim, then Buyer may defend such claim in a manner as it may deem
appropriate (including, but not limited to, settling or otherwise resolving
such claim, after giving prior written notice of such settlement or resolution
to Buyer, on such terms as Seller may deem appropriate and are not reasonably
objected to by Buyer).

 

(iv)          Sole Remedy.  Except for claims of fraud, the sole remedy
of the parties for any and all claims against the other parties with respect to
the transactions contemplated in this Agreement shall be a claim for
indemnification under this Article IX on the terms and subject to the
conditions of this Agreement.

 

9.2           Use of Corporate Name or Trade
Name.  After the Closing, Seller will
not use or refer to the name “Intirion” or any trade name included within the
Intellectual Property, or any derivative or variation thereof or any name
similar thereto.

 

9.3           Access to Records and Personnel.  For a period of six (6) years after the
Closing Date, Seller and their Representatives shall have reasonable access to
all of the books and records, if any, relating to the Business or otherwise to
the affairs and activities of the Corporation prior to the Closing Date.  Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours.  Seller shall be solely responsible for any
costs and expenses incurred by them pursuant to this Section 9.3.  If Buyer shall desire to dispose of any of
such books and records prior to the expiration of such six-year period, Buyer
shall, prior to such disposition, give Seller a reasonable opportunity, at
Seller’s expense, to segregate and remove such books and records as Seller may
select.

 

9.4           Tax Procedures

 

(a)           Responsibility
for Filing Tax Returns for Periods through the Closing Date.  Seller shall
include the income of the Corporation (including any deferred items
triggered into income by Treas. Reg. § 1.1502-13 and any excess loss
account taken into income under Treas. Reg. § 1.1502-19) on Seller’s
consolidated federal income Tax Returns for all periods through the Closing
Date and pay any federal income Taxes attributable to such income.  For taxable periods ending on or before the
Closing Date, Seller shall cause the Corporation to join in Seller’s
consolidated or unitary federal income tax returns and, in jurisdictions
requiring separate reporting from Seller, to file separate company state and
local income Tax Returns.  All such Tax
Returns shall be prepared and filed in a manner consistent with past practice,
except as required by change and applicable law.  Buyer shall cause the Corporation to file
income Tax Returns for all periods other than periods ending on or before the
Closing Date.  Buyer shall provide Seller
with a copy of any Tax Return to be prepared and filed by Buyer under this
paragraph that relate, in whole or in part, to any pre-Closing period at least
twenty (20) days prior to the due date for filing such Tax Return.  Seller shall have the right to review and
approve such Tax Return until ten (10) days prior to the date for filing
thereof, which approval shall not be unreasonably withheld.  Buyer shall revise any such Tax Return
(including amendments, as applicable) as reasonably requested by Seller with
respect to any matters for which Seller has an 

 

37

 

indemnity obligation under Article IX.   If Seller does not consent, or otherwise
provide specific objections, within such time period then the subject Tax
Return shall be considered approved.

 

(b)        Tax Refunds.  Buyer shall pay to the Seller any and all Tax
refunds (whether paid to the Corporation or applied against the Corporation’s
Taxes) (including interest received thereon) that relate to periods ending on
or before the Closing, including the portion of any Straddle Periods ending on
the Closing Date, within fifteen (15) days after the Corporation receives such
refunds.  Notwithstanding the foregoing,
Buyer and the Corporation shall be entitled to retain for its or their own
account any Tax refund received after the Closing Date (including interest
received thereon) to the extent such Tax refund is reflected as an Accounts
Receivable or Other Current Asset on the Closing Date Financial Report and is
included in the Closing Date Working Capital.

 

(c)        Tax Overpayments.  To the extent the Tax liability of the
Corporation for the portion of any Straddle Period that ends on and including
the Closing Date is less than the Tax payments made by the Corporation and/or
Seller on or before the Closing Date with respect to such period, Buyer shall
promptly pay the amount of any such overpayment to the Seller.

 

(d)        Tax Cooperation, Tax
Audits. After the Closing Date, the Buyer and the Seller shall, and shall
cause their respective Affiliates to, cooperate in the preparation of all Tax
Returns and shall provide, or cause to be provided, to the requesting party any
records or other information requested by such party in connection therewith as
well as access to, and the cooperation of, the auditors of Buyer and
Seller.  A party shall be reimbursed for
reasonable out-of-pocket expenses incurred with respect to such requests.  Each party shall cooperate with the other in
connection with any Tax investigation, audit, or other proceeding; provided,
however, that each party shall comply with the provisions of Article IX,
dealing with Indemnification; and further provided, that Seller shall not
permit any Encumbrance to be created or to continue upon any property or assets
of the Corporation or take any action (without the consent of the Buyer) that
would have the effect of increasing any Taxes with respect to any post-Closing
Date Tax Return.  Subject to such
limitations, Seller shall have the right to control, in its reasonable
judgment, any Tax investigation, examination, audit, litigation, or other
proceeding relating to any period ending on or before the Closing Date,
including the portion of any Straddle Period ending on the Closing Date, of the
Corporation, and any issue arising in a Tax investigation, examination, audit,
litigation, or other proceeding that could give rise to an indemnity obligation
by the Seller under Article IX provided, that (i) Seller keeps Buyer
informed regarding the progress and substantive aspects of such pre-Closing
Date Tax proceeding, (ii) Buyer is entitled to participate in such
pre-Closing Date Tax proceeding, and (iii) Seller shall not compromise or
settle any such pre-Closing Date Tax proceeding without obtaining Buyer’s prior
written consent, which shall not be unreasonably withheld.

 

(e)        Section 338(h)(10) Election.  Seller shall join with Buyer in making an
election under Section 338(h)(10) of the Code (and any corresponding
election under state, local, and foreign tax law) (collectively, a “Section 338(h)(10) Election”)
with respect to the Shares to be acquired by Buyer under this Agreement.  Buyer will prepare and timely file with the
appropriate taxing authorities any forms used to make the Section 338(h)(10) Election.  

 

38

 

Seller and Buyer shall each sign at or prior to Closing all federal and
state forms used to make a Section 338(h)(10) Election requiring
their signature.  The Corporation shall
include any income, gain, loss, deduction, or other tax item resulting from the
Section 338(h)(10) Election on its Tax Returns to the extent required
by applicable law.  Seller shall pay (or
reimburse Buyer within fifteen (15) days after payment by Buyer or the
Corporation) any Tax imposed on the Corporation attributable to the making of
the Section 338(h)(10) Election (including, but not limited to, any
Tax imposed under Treas. Reg. § 1.338(h)(10)-1(d)(4), and any state, local or
foreign Tax imposed on the Corporation’s gain), and Seller shall indemnify,
defend, and hold harmless Buyer, the Corporation, and each of their respective
successors, assigns, and Affiliates from and against any liability arising out
of any failure to pay any such Tax except to the extent such tax is accrued on
the Closing Date Financial Report and deducted in the determination of the
Closing Date Working Capital.

 

(f)         Allocation
of Purchase Price.  Buyer,
Seller, and the Corporation agree that the Purchase Price and the liabilities
of the Corporation (plus other relevant items) will be allocated to the assets
of the Corporation for all Tax purposes as shown on the Allocation Schedule
attached hereto as Schedule 9.4(f) in a manner consistent with Sections
338 and 1060 of the Code and the regulations thereunder.  Buyer, Seller, and the Corporation shall file
all Tax Returns (including any amended returns and claims for refund) and
information reports in a manner consistent with such allocation.  The Allocation Schedule shall be revised to
reflect any adjustments to the Purchase Price.

 

ARTICLE X

MISCELLANEOUS

 

10.1         Further Assurances; Information.  Both before and after the Closing Date, each
party will cooperate in good faith with each other party and will take all
appropriate action and execute any agreement, instrument or other writing of
any kind which may be reasonably necessary or advisable to carry out and
confirm the transactions contemplated by this Agreement.

 

10.2         [Reserved]

 

10.3         [Reserved]

 

10.4         Notices.  Unless otherwise provided in this Agreement,
any agreement, notice, request, instruction or other communication to be given
hereunder by any party to the other shall be in writing and (i) delivered
personally (such delivered notice to be effective on the date it is delivered),
(ii) mailed by certified mail, postage prepaid (such mailed notice to be
effective three (3) business days after the date it is mailed), (iii) deposited
with a reputable overnight courier service (such couriered notice to be
effective one (1) business day after the date it is sent by courier), or (iv) sent
by facsimile transmission (such facsimile notice to be effective on the date
that confirmation of such facsimile transmission is received if received before
5:00 p.m. of the applicable time zone of the recipient or on the next
business day if received after 5:00 p.m.), with a confirmation sent by way
of one of the above methods, as follows:

 

If to
Seller addressed to:

 

39

 

	
   

  	
  Mac-Gray
  Corporation

  
	
   

  	
  404
  Wyman Street

  
	
   

  	
  Suite 400

  
	
   

  	
  Waltham,
  Massachusetts 02451

  
	
   

  	
  Attn:

  	
  Philip
  Emma, Executive Vice President Operations

  Linda Serafini, General Counsel

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (781) 487-7600

  
	
   

  	
  Facsimile:
  (781) 290-5358

  
	
   

  	
  E-mail:

  	
  pemma@macgray.com

  lserafini@macgray.com

  
				

 

With a
copy to:

 

	
   

  	
  Goodwin Procter LLP

  
	
   

  	
  Exchange Place

  
	
   

  	
  53 State Street

  
	
   

  	
  Boston,
  Massachusetts  02109

  
	
   

  	
  Attn:

  	
  Robert
  P. Whalen, Jr., Esq.

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (617) 570-1000

  
	
   

  	
  Facsimile:
  (617) 523-1231

  
	
   

  	
  E-mail:

  	
  rwhalen@goodwinprocter.com

  
				

 

If to Buyer, addressed to:

 

	
   

  	
  Danby Products, Inc.

  
	
   

  	
  5070 Whitelaw Road

  
	
   

  	
  Guelph, Ontario N1H6Z9

  
	
   

  	
  Attn:

  	
  James
  E. Lightfoot, President

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (519) 837-0920 Ext. 248

  
	
   

  	
  Facsimile:
  (519) 837-9320

  
	
   

  	
  E-mail:

  	
  jlightfoot@danby.com

  
				

 

With a copy to:

 

	
   

  	
  Hodgson Russ LLP

  
	
   

  	
  The Guaranty Building

  
	
   

  	
  140 Pearl Street, Suite 100

  
	
   

  	
  Buffalo, New York
  14202-4040

  
	
   

  	
  Attn:

  	
  Thomas
  W. Nelson, Esq.

  Brad A. Birmingham, Esq.

  
	
   

  	
   

  
	
   

  	
  Telephone:
  (716) 856-4000

  
	
   

  	
  Facsimile:
  (716) 849-0349

  
	
   

  	
  E-mail:

  	
  tnelson@hodgsonruss.com
 bbirming@hodgsonruss.com

  
				

 

40

 

Any party may designate in a writing to any
other party any other address to which, and any other Person to whom or which,
a copy of any such notice, request, instruction or other communication should
be sent.

 

10.5         Knowledge.  For the purposes of this Agreement, “knowledge”,
“information” or “belief” shall mean the knowledge, information, or belief, as
appropriate to the context of the statement in which the term is used, of James
Russo, Philip Emma, Neil MacLellan, Michael Shea, and Linda Serafini or the
knowledge, information or belief which any such individuals would have after
reasonable inquiry, including inquiry of those executive, management, or
supervisory employees under their direct supervision.

 

10.6         Public Statements.  Buyer and Seller agree to cooperate, both
prior to and after the Closing, in issuing any press releases or otherwise
making public statements with respect to the transactions contemplated by this
Agreement (including any statements to employees of the Corporation) and no press
release or other public statements shall be issued without the joint consent of
Buyer and Seller, except such release or statement as may be required
by law or the rules or regulations of any applicable securities exchange

 

10.7         Choice of Law.  This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the
laws of the State of Delaware without regard to principles of conflicts of law,
except that, with respect to matters of law concerning the internal corporate
affairs of any corporate entity which is a party to or the subject of this
Agreement, the law of the jurisdiction under which the respective entity was
organized shall govern.

 

10.8         Expenses.  Except as otherwise provided in this
Agreement and except to the extent reflected on the Closing Date Financial
Report under Accounts Payable or Accrued Liabilities, Seller shall pay all
legal, accounting and other expenses of Seller incident to this Agreement and
Buyer shall pay all legal, accounting and other expenses of Buyer incident to
this Agreement.  Except as otherwise
provided in this Agreement, nothing contained in this Agreement shall be
interpreted or construed to require Buyer to directly or indirectly pay, assume
or be liable for any of the foregoing expenses of Seller.

 

10.9         Titles.  The headings of the articles and sections of
this Agreement are inserted for convenience of reference only, and shall not
affect the meaning or interpretation of this Agreement.

 

10.10       Waiver.  No failure of any party to this Agreement to
require, and no delay by any party to this Agreement in requiring, any other
party to comply with any provision of this Agreement shall constitute a waiver
of the right to require such compliance. 
No failure of any party to this Agreement to exercise, and no delay by
any party to this Agreement in exercising, any right or remedy under this
Agreement shall constitute a waiver of such right or remedy.  No waiver by any party to this Agreement of any
right or remedy under this Agreement shall be effective unless made in
writing.  Any waiver by any party to this
Agreement of any right or 

 

41

 

remedy under this
Agreement shall be limited to the specific instance and shall not constitute a
waiver of such right or remedy in the future.

 

10.11       Effective; Binding.  This Agreement shall be effective upon the
due execution hereof by each party to this Agreement.  Upon becoming effective, this Agreement shall
be binding upon each party to this Agreement and upon each successor and
assignee of each party to this Agreement and shall inure to the benefit of, and
be enforceable by, each party to this Agreement and each successor and assignee
of each party to this Agreement; provided, however, that, except as
provided for in the immediately following sentence, no party to this Agreement
shall assign any right or obligation arising pursuant to this Agreement without
first obtaining the written consent of the other parties.  Buyer may assign all or a portion of its
rights and obligations under this Agreement to one or more Affiliates of Buyer,
provided that Buyer shall remain liable hereunder notwithstanding any such
assignment.

 

10.12       Entire Agreement.  This Agreement, together with the
Non-Disclosure Agreement between the Seller and Buyer dated June 3, 2008,
as amended by letter agreement dated July 17, 2008, contains the entire
agreement between the parties to this Agreement with respect to the subject
matter of this Agreement and supersedes each course of conduct previously
pursued, accepted or acquiesced in, and each written or oral agreement and
representation previously made, by the parties to this Agreement with respect
to the subject matter of this Agreement.

 

10.13       Modification.  No course of performance or other conduct
hereafter pursued, accepted or acquiesced in, and no oral agreement or
representation made in the future, by any party to this Agreement, whether or
not relied or acted upon, and no usage of trade, whether or not relied or acted
upon, shall modify or terminate this Agreement, impair or otherwise affect any
obligation of any party pursuant to this Agreement or otherwise operate as a
waiver of any such right or remedy.  No
modification of this Agreement or waiver of any such right or remedy shall be
effective unless made in writing duly executed by the parties to this
Agreement.

 

10.14       Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same instrument.  Any party may execute this Agreement by
facsimile signature and the other party shall be entitled to rely on such
facsimile signature as evidence that this Agreement has been duly executed by
such party.  Any party executing this
Agreement by facsimile signature shall immediately forward to the other party
an original signature page by overnight mail.

 

10.15       Consent to Jurisdiction.  Each party to this Agreement hereby (i) consents
to the jurisdiction of the United States District Court for the District of
Delaware located in Wilmington or, if such court does not have jurisdiction
over such matter, the applicable state court located in New Castle County,
Delaware, (ii) irrevocably agrees that all actions or proceedings arising
out of or relating to this Agreement shall be litigated in such court and (iii) consents
to personal jurisdiction within the County of New Castle, State of
Delaware.  Each party to this Agreement
accepts for itself and in connection with its properties, generally and
unconditionally, the exclusive jurisdiction and venue of the aforesaid courts
and waives any defense of lack of personal jurisdiction or inconvenient forum
or any similar defense, and irrevocably agrees to be bound by any non-appealable
judgment rendered thereby in connection with this Agreement.

 

42

 

[Signatures to appear on the
following page]

 

43

 

IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed on the day and year indicated at the beginning of this
Agreement.

 

 

	
   

  	
  MF
  ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James E. Lightfoot

  
	
   

  	
   

  	
  Name:
  

  	
  James
  E. Lightfoot

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAC-GRAY
  CORPORATION  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael J. Shea

  
	
   

  	
   

  	
  Name:
  

  	
  Michael
  J. Shea 

  
	
   

  	
   

  	
  Title:

  	
  Executive
  VP, CFO and Treasurer

  

 

 

GUARANTY

 

Danby
Products, Inc., the parent of Buyer (“Guarantor”), hereby unconditionally
and irrevocably guarantees to Seller, and Seller’s respective heirs, successors
and assigns, the performance of all obligations of Buyer under the foregoing
Agreement.  Guarantor hereby (a) waives
all notices of default, (b) waives all suretyship and similar defenses, (c) consents
to any extensions of time, changes in the manner of payment or performance and
other indulgences which may be granted to Buyer, and (d) and consents to
any and all amendments and modifications to the foregoing Agreement, all
without notice to Guarantor.

 

Guarantor hereby
represents and warrants to Seller that:

 

(a) Guarantor is a
Delaware corporation, duly organized, validly existing and in good standing
under the laws of the state of Delaware; and

 

(b) Guarantor
has all necessary power and authority to execute and deliver this Guaranty and
to perform its obligations under this Guaranty. 
This Guaranty has been duly executed and delivered by Guarantor and
shall constitute a legal, valid and binding obligation of Guarantor,
enforceable against Guarantor in accordance with its terms.

 

 

	
   

  	
  DANBY
  PRODUCTS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  James E. Lightfoot

  
	
   

  	
   

  	
  Name:
  

  	
  James
  E. Lightfoot

  
	
   

  	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:
  February 5, 2010ex4_1.htm

    
      

    

    Exhibit
4.1

     

    THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION.

     

    WARRANT
TO PURCHASE STOCK

     

    
      	
              Company:

            	
              PROCERA
      NETWORKS, INC., a Nevada
corporation

            

    

    
      	
              Number
      of Shares:

            	
              500,000

            

    

    
      	
              Class
      of Stock:

            	
              Common

            

    

    
      	
              Warrant
      Price:

            	
              $.40
      per share

            

    

    
      	
              Issue
      Date:

            	
              December
      10, 2009

            

    

    
      	
              Expiration
      Date:

            	
              The
      seventh (7th)
      anniversary after the Issue Date

            

    

    
      	
              Credit
      Facility:

            	
              This
      Warrant is issued in connection with the Advances referenced in the Loan
      and Security Agreement, dated of even date herewith, between Company and
      Silicon Valley Bank (as the same may from time to time be amended,
      modified, supplemented or restated, the “Loan
      Agreement”)

            

    

    

    THIS
WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK
(Silicon Valley Bank, together with any registered holder from time to time of
this Warrant or any holder of the shares issuable or issued upon exercise of
this Warrant, “Holder”) is entitled to purchase the number of fully paid and
nonassessable shares of the class of securities (the “Shares”) of the Company at
the Warrant Price, all as set forth above and as adjusted pursuant to Article 2
of this Warrant, subject to the provisions and upon the terms and conditions set
forth in this Warrant.

     

    ARTICLE
1

    EXERCISE

     

    1.1           Method of
Exercise.  Holder may exercise this Warrant by delivering a
duly executed Notice of Exercise in substantially the form attached as Appendix
1 to the principal office of the Company.  Unless Holder is exercising
the conversion right set forth in Article 1.2, Holder shall also deliver to the
Company a check, wire transfer (to an account designated by the Company), or
other form of payment acceptable to the Company for the aggregate Warrant Price
for the Shares being purchased.

     

    1.2           Conversion
Right.  In lieu of exercising this Warrant as specified in
Article 1.1, Holder may from time to time convert this Warrant, in whole or in
part, into a number of Shares determined by dividing (a) the aggregate fair
market value of the Shares or other securities otherwise issuable upon exercise
of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair
market value of one Share.  The fair market value of the Shares shall
be determined pursuant to Article 1.3.

     

    1.3           Fair Market
Value.  If the Company’s common stock is traded in a public
market and the Shares are common stock, the fair market value of each Share
shall be the closing price of a Share reported for the business day immediately
before Holder delivers its Notice of Exercise to the Company (or in the instance
where the Warrant is exercised immediately prior to the effectiveness of the
Company’s initial public offering, the “price to public” per share price
specified in the final prospectus relating to such offering).  If the
Company’s common stock is traded in a public market and the Shares are preferred
stock, the fair market value of a Share shall be the closing price of a share of
the Company’s common stock reported for the business day immediately before
Holder delivers its Notice of Exercise to the Company (or, in the instance where
the Warrant is exercised immediately prior to the effectiveness of the Company’s
initial public offering, the initial “price to public” per share price specified
in the final prospectus relating to such offering), in both cases,
multiplied  by the number of shares of the Company’s common stock into
which a Share is convertible.  If the Company’s common stock is not
traded in a public market, the Board of Directors of the Company shall determine
fair market value in its reasonable good faith judgment.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.4           Delivery of Certificate and
New Warrant.  Promptly after Holder exercises or converts this
Warrant and, if applicable, the Company receives payment of the aggregate
Warrant Price, the Company shall deliver to Holder certificates for the Shares
acquired and, if this Warrant has not been fully exercised or converted and has
not expired, a new Warrant representing the Shares not so acquired.

     

    1.5           Replacement of
Warrants.  On receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation or surrender and cancellation of this Warrant, the Company shall
execute and deliver, in lieu of this Warrant, a new warrant of like
tenor.

     

    1.6           Treatment of Warrant Upon
Acquisition of Company.

     

    1.6.1        “Acquisition”.  For
the purpose of this Warrant, “Acquisition” means any sale, license, or other
disposition of all or substantially all of the assets of the Company, or any
reorganization, consolidation, or merger of the Company where the holders of the
Company’s securities before the transaction beneficially own less than 50% of
the outstanding voting securities of the surviving entity after the
transaction.

     

    1.6.2        Treatment of Warrant at
Acquisition.

     

    (A)          Upon
the written request of the Company, Holder agrees that, in the event of an
Acquisition that is not an asset sale and in which the sole consideration is
cash, either (c) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (d) if Holder elects not to exercise the
Warrant, this Warrant will expire upon the consummation of such
Acquisition.  The Company shall provide Holder with written notice of
its request relating to the foregoing (together with such reasonable information
as Holder may request in connection with such contemplated Acquisition giving
rise to such notice), which is to be delivered to Holder not less than ten (10)
days prior to the closing of the proposed Acquisition.

     

    (B)      
    Upon the written request of the Company, Holder agrees
that, in the event of an Acquisition that is an “arms length” sale of all or
substantially all of the Company’s assets (and only its assets) to a third party
that is not an Affiliate (as defined below) of the Company (a “True Asset
Sale”), either (e) Holder shall exercise its conversion or purchase right under
this Warrant and such exercise will be deemed effective immediately prior to the
consummation of such Acquisition or (f) if Holder elects not to exercise the
Warrant, this Warrant will continue until the Expiration Date if the Company
continues as a going concern following the closing of any such True Asset
Sale.  The Company shall provide Holder with written notice of its
request relating to the foregoing (together with such reasonable information as
Holder may request in connection with such contemplated Acquisition giving rise
to such notice), which is to be delivered to Holder not less than ten (10) days
prior to the closing of the proposed Acquisition.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    (C)           Upon
the closing of any Acquisition other than those particularly described in
subsections (A) and (B) above, the successor entity shall assume the obligations
of this Warrant, and this Warrant shall be exercisable for the same securities,
cash, and property as would be payable for the Shares issuable upon exercise of
the unexercised portion of this Warrant as if such Shares were outstanding on
the record date for the Acquisition and subsequent closing.  The
Warrant Price and/or number of Shares shall be adjusted
accordingly.

     

    As used
herein “Affiliate” shall mean any person or entity that owns or controls
directly or indirectly ten (10) percent or more of the stock of Company, any
person or entity that controls or is controlled by or is under common control
with such persons or entities, and each of such person’s or entity’s officers,
directors, joint venturers or partners, as applicable.

     

    ARTICLE
2

    ADJUSTMENTS TO THE
SHARES

     

    2.1           Stock Dividends, Splits,
Etc.  If the Company declares or pays a dividend on the Shares
payable in common stock, or other securities, then upon exercise of this
Warrant, for each Share acquired, Holder shall receive, without cost to Holder,
the total number and kind of securities to which Holder would have been entitled
had Holder owned the Shares of record as of the date the dividend
occurred.  If the Company subdivides the Shares by reclassification or
otherwise into a greater number of shares or takes any other action which
increases the amount of stock into which the Shares are convertible, the number
of shares purchasable hereunder shall be proportionately increased and the
Warrant Price shall be proportionately decreased.  If the outstanding
shares are combined or consolidated, by reclassification or otherwise, into a
lesser number of shares, the Warrant Price shall be proportionately increased
and the number of Shares shall be proportionately decreased.

     

    2.2           Reclassification, Exchange,
Combinations or Substitution.  Upon any reclassification,
exchange, substitution, or other event that results in a change of the number
and/or class of the securities issuable upon exercise or conversion of this
Warrant, Holder shall be entitled to receive, upon exercise or conversion of
this Warrant, the number and kind of securities and property that Holder would
have received for the Shares if this Warrant had been exercised immediately
before such reclassification, exchange, substitution, or other
event.  Such an event shall include any automatic conversion of the
outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company’s Articles or
Certificate (as applicable) of Incorporation upon the closing of a registered
public offering of the Company’s common stock.  The Company or its
successor shall promptly issue to Holder an amendment to this Warrant setting
forth the number and kind of such new securities or other property issuable upon
exercise or conversion of this Warrant as a result of such reclassification,
exchange, substitution or other event that results in a change of the number
and/or class of securities issuable upon exercise or conversion of this
Warrant.  The amendment to this Warrant shall provide for adjustments
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Article 2 including, without limitation, adjustments to the
Warrant Price and to the number of securities or property issuable upon exercise
of the new Warrant.  The provisions of this Article 2.2 shall
similarly apply to successive reclassifications, exchanges, substitutions, or
other events.

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    2.3           Certain
Adjustments.  The Warrant Price and number of Shares issuable
upon exercise of this Warrant are subject to adjustment from time to time as set
forth in this Section 2.3.  Upon each such adjustment of the Warrant
Price pursuant to this Section 2.3, the Holder shall thereafter prior to the
Expiration Date be entitled to purchase, at the Warrant Price resulting from
such adjustment, the number of Shares obtained by multiplying the Warrant Price
in effect immediately prior to such adjustment by the number of Shares issuable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Warrant Price resulting from such
adjustment.

     

    (a)           If
the Company, at any time while this Warrant is outstanding, (i) shall pay a
stock dividend (except scheduled dividends paid on outstanding preferred stock
as of the date hereof which contain a stated dividend rate) or otherwise make a
distribution or distributions to all the holders of Common Stock or on any other
class of capital stock payable in shares of Common Stock, (ii) subdivide
outstanding shares of Common Stock into a larger number of shares or (iii)
combine outstanding shares of Common Stock into a smaller number of shares, the
Warrant Price shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if any)
outstanding before such event and of which the denominator shall be the number
of shares of Common Stock (excluding treasury shares, if any) outstanding after
such event.  In such event, the number of Warrant shares issuable
under this Warrant shall be equitably adjusted to reflect such event (i.e., in
the event of 2:1 stock split of the Common Stock, the number of Warrant shares
shall be increased to twice the number available for purchase prior to the
record date for such stock split).  Any adjustment made pursuant to
this Section shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in the case of a
subdivision or combination, and shall apply to successive subdivisions and
combinations.

     

    (b)           In
case of any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, then the Holder shall have the right thereafter to exercise
this Warrant only into the shares of stock and other securities and property
receivable upon or deemed to be held by holders of Common Stock following such
reclassification or share exchange, and the Holder shall be entitled upon such
event to receive such amount of securities or property equal to the amount of
Shares such Holder would have been entitled to had such Holder exercised this
Warrant immediately prior to such reclassification or share
exchange.  The terms of any such reclassification or share exchange
shall include such terms so as to continue to give to the Holder the right to
receive the securities or property set forth in this Section 2.3(b) upon any
exercise following any such reclassification or share exchange.

     

    (c)           For
the purposes of this Section 2.3, the following clauses shall also be
applicable:

     

    (i)            Record
Date.  In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in Common Stock or in securities convertible or
exchangeable into shares of Common Stock, or (B) to subscribe for or purchase
Common Stock or securities convertible or exchangeable into shares of Common
Stock, then such record date shall be deemed to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (ii)            Treasury
Shares.  The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Company, and the disposition of any such shares shall be considered an issue
or sale of Common Stock.

     

    (d)           All
calculations under this Section 2.3 shall be made to the nearest cent or the
nearest 1/100th of a share, as the case may be.

     

    2.4           No
Impairment.  The Company shall not, by amendment of its
Articles or Certificate (as applicable) of Incorporation or through a
reorganization, transfer of assets, consolidation, merger, dissolution, issue,
or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed under
this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such
action as may be necessary or appropriate to protect Holder’s rights under this
Article against impairment.

     

    2.5           Fractional
Shares.  No fractional Shares shall be issuable upon exercise
or conversion of this Warrant and the number of Shares to be issued shall be
rounded down to the nearest whole Share.  If a fractional share
interest arises upon any exercise or conversion of the Warrant, the Company
shall eliminate such fractional share interest by paying Holder the amount
computed by multiplying the fractional interest by the fair market value of a
full Share.

     

    2.6           Certificate as to
Adjustments.  Upon each adjustment of the Warrant Price, the
Company shall promptly notify Holder in writing, and, at the Company’s expense,
promptly compute such adjustment, and furnish Holder with a certificate of its
Chief Financial Officer setting forth such adjustment and the facts upon which
such adjustment is based.  The Company shall, upon written request,
furnish Holder a certificate setting forth the Warrant Price in effect upon the
date thereof and the series of adjustments leading to such Warrant
Price.

     

    ARTICLE
3

    REPRESENTATIONS AND
COVENANTS OF THE COMPANY

     

    3.1           Representations and
Warranties.  The Company represents and warrants to Holder as
follows:

     

    (a)           The
initial Warrant Price referenced on the first page of this Warrant is not
greater than the fair market value of the Shares as of the date of this
Warrant.

     

    (b)           All
Shares which may be issued upon the exercise of the purchase right represented
by this Warrant, and all securities, if any, issuable upon conversion of the
Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable, and free of any liens and encumbrances except for restrictions on
transfer provided for herein or under applicable federal and state securities
laws.

     

    3.2           Notice of Certain
Events.  If the Company proposes at any time (g) to declare any
dividend or distribution upon any of its stock, whether in cash, property,
stock, or other securities and whether or not a regular cash dividend; (h) to
offer for sale any shares of the Company’s capital stock (or other securities
convertible into such capital stock), other than (i) pursuant to the Company’s
stock option or other compensatory plans, (ii) in connection with commercial
credit arrangements or equipment financings, or (iii) in connection with
strategic transactions for purposes other than capital raising; (i) to effect
any reclassification or recapitalization of any of its stock; (j) to merge or
consolidate with or into any other corporation, or sell, lease, license, or
convey all or substantially all of its assets, or to liquidate, dissolve or wind
up; or (k) offer holders of registration rights the opportunity to participate
in an underwritten public offering of the Company’s securities for cash, then,
in connection with each such event, the Company shall give Holder: 1. at least
10 days prior written notice of the date on which a record will be taken for
such dividend, distribution, or subscription rights (and specifying the date on
which the holders of common stock will be entitled thereto) or for determining
rights to vote, if any, in respect of the matters referred to in (a) and (b)
above; 2. in the case of the matters referred to in (c) and (d) above at least
10 days prior written notice of the date when the same will take place (and
specifying the date on which the holders of common stock will be entitled to
exchange their common stock for securities or other property deliverable upon
the occurrence of such event); and 3. in the case of the matter referred to in
(e) above, the same notice as is given to the holders of such registration
rights.  Company will also provide information requested by Holder
reasonably necessary to enable Holder to comply with Holder’s accounting or
reporting requirements.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    3.3           No Shareholder
Rights.  Except as provided in this Warrant, Holder will not
have any rights as a shareholder of the Company until the exercise of this
Warrant.

     

    ARTICLE
4

    REPRESENTATIONS, WARRANTIES
OF HOLDER

     

    Holder
represents and warrants to the Company as follows:

     

    4.1           Purchase for Own
Account.  This Warrant and the securities to be acquired upon
exercise of this Warrant by Holder will be acquired for investment for Holder’s
account, not as a nominee or agent, and not with a view to the public resale or
distribution within the meaning of the Act.  Holder also represents
that Holder has not been formed for the specific purpose of acquiring this
Warrant or the Shares.

     

    4.2           Disclosure of
Information.  Holder has received or has had full access to all
the information it considers necessary or appropriate to make an informed
investment decision with respect to the acquisition of this Warrant and its
underlying securities.  Holder further has had an opportunity to ask
questions and receive answers from the Company regarding the terms and
conditions of the offering of this Warrant and its underlying securities and to
obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to Holder or to which Holder has
access.

     

    4.3           Investment
Experience.  Holder understands that the purchase of this
Warrant and its underlying securities involves substantial
risk.  Holder has experience as an investor in securities of companies
in the development stage and acknowledges that Holder can bear the economic risk
of such Holder’s investment in this Warrant and its underlying securities and
has such knowledge and experience in financial or business matters that Holder
is capable of evaluating the merits and risks of its investment in this Warrant
and its underlying securities and/or has a preexisting personal or business
relationship with the Company and certain of its officers, directors or
controlling persons of a nature and duration that enables Holder to be aware of
the character, business acumen and financial circumstances of such
persons.

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    4.4           Accredited Investor
Status.  Holder is an “accredited investor” within the meaning
of Regulation D promulgated under the Act.

     

    4.5           The
Act.  Holder understands that this Warrant and the Shares
issuable upon exercise or conversion hereof have not been registered under the
Act in reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of Holder’s investment intent as
expressed herein.  Holder understands that this Warrant and the Shares
issued upon any exercise or conversion hereof must be held indefinitely unless
subsequently registered under the Act and qualified under applicable state
securities laws, or unless exemption from such registration and qualification
are otherwise available.

     

    ARTICLE
5

    MISCELLANEOUS

     

    5.1           Term.  This
Warrant is exercisable in whole or in part at any time and from time to time on
or before the Expiration Date.

     

    5.2           Legends.  This
Warrant and the Shares (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) shall be imprinted with a legend in
substantially the following form:

     

    THIS
WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
STATE AND, EXCEPT AND PURSUANT TO THE PROVISIONS OF ARTICLE 5 BELOW, MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAW OR, IN THE OPINION
OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE
SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM
REGISTRATION.

     

    5.3           Compliance with Securities
Laws on Transfer.  This Warrant and the Shares issuable upon
exercise of this Warrant (and the securities issuable, directly or indirectly,
upon conversion of the Shares, if any) may not be transferred or assigned in
whole or in part without compliance with applicable federal and state securities
laws by the transferor and the transferee (including, without limitation, the
delivery of investment representation letters and legal opinions reasonably
satisfactory to the Company, as reasonably requested by the
Company).  The Company shall not require Silicon Valley Bank (“Bank”) to provide an opinion
of counsel if the transfer is to Bank’s parent company, SVB Financial Group
(formerly Silicon Valley Bancshares), or any other affiliate of
Bank.  Additionally, the Company shall also not require an opinion of
counsel if there is no material question as to the availability of current
information as referenced in Rule 144(c), Holder represents that it has complied
with Rule 144(d) and (e) in reasonable detail, the selling broker represents
that it has complied with Rule 144(f), and the Company is provided with a copy
of Holder’s notice of proposed sale.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    5.4           Transfer
Procedure.  After receipt by Bank of the executed Warrant, Bank
will transfer all of this Warrant to SVB Financial Group by execution of an
Assignment substantially in the form of Appendix 2.  Subject to the
provisions of Article 5.3 and upon providing the Company with written notice,
SVB Financial Group and any subsequent Holder may transfer all or part of this
Warrant or the Shares issuable upon exercise of this Warrant (or the Shares
issuable directly or indirectly, upon conversion of the Shares, if any) to any
transferee, provided, however, in connection with any such transfer, SVB
Financial Group or any subsequent Holder will give the Company notice of the
portion of the Warrant being transferred with the name, address and taxpayer
identification number of the transferee and Holder will surrender this Warrant
to the Company for reissuance to the transferee(s) (and Holder if
applicable).  The Company may refuse to transfer this Warrant or the
Shares to any person who directly competes with the Company, unless, in either
case, the stock of the Company is publicly traded.

     

    5.5           Notices.  All
notices and other communications from the Company to Holder, or vice versa,
shall be deemed delivered and effective when given personally or mailed by
first-class registered or certified mail, postage prepaid, at such address as
may have been furnished to the Company or Holder, as the case may (or on the
first business day after transmission by facsimile) be, in writing by the
Company or such Holder from time to time.  Effective upon receipt of
the fully executed Warrant and the initial transfer described in Article 5.4
above, all notices to Holder shall be addressed as follows until the Company
receives notice of a change of address in connection with a transfer or
otherwise:

     

    SVB
Financial Group

    Attn:
Treasury Department

    3003
Tasman Drive, HA 200

    Santa
Clara, CA 95054

    Telephone:
408-654-7400

    Facsimile:
408-496-2405

     

    Notice to
the Company shall be addressed as follows until Holder receives notice of a
change in address:

    

    Procera
Networks, Inc.

    100
Cooper Court

    Los
Gatos, California  95032

    Attn:
Charles Constanti, VP and CFO

    Telephone:
(408) 890-7066

    Facsimile:
(408) 354-7279

     

    5.6           Waiver.  This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought.

     

    5.7           Attorneys’
Fees.  In the event of any dispute between the parties
concerning the terms and provisions of this Warrant, the party prevailing in
such dispute shall be entitled to collect from the other party all costs
incurred in such dispute, including reasonable attorneys’ fees.

     

    5.8           Automatic Conversion upon
Expiration.  In the event that, upon the Expiration Date, the
fair market value of one Share (or other security issuable upon the exercise
hereof) as determined in accordance with Section 1.3 above is greater than the
Warrant Price in effect on such date, then this Warrant shall automatically be
deemed on and as of such date to be converted pursuant to Section 1.2 above as
to all Shares (or such other securities) for which it shall not previously have
been exercised or converted, and the Company shall promptly deliver a
certificate representing the Shares (or such other securities) issued upon such
conversion to Holder.

     

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    5.9           Counterparts.  This
Warrant may be executed in counterparts, all of which together shall constitute
one and the same agreement.

     

    5.10         Governing
Law.  This Warrant shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
its principles regarding conflicts of law.

     

    [Signature
page follows.]

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    “COMPANY”

     

    PROCERA
NETWORKS, INC.

     

    
    

     

    
      	By:	  /s/ Charles Constanti	 

    

    Name:
Charles Constanti

    Title:  VP
& CFO

     

    

    “HOLDER”

     

    SILICON
VALLEY BANK

     

    
    

     

    
      	By:	  /s/ Megan Willard	 

    

    Name:
Megan Willard

    Title:
VP

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    APPENDIX
1

     

    NOTICE OF
EXERCISE

     

    1.        
    Holder elects to purchase ___________ shares of the
Common Stock of Procera Networks, Inc. pursuant to the terms of the attached
Warrant, and tenders payment of the purchase price of the shares in
full.

     

    [or]

     

    1.        
    Holder elects to convert the attached Warrant into
Shares/cash [strike one] in the manner specified in the Warrant.  This
conversion is exercised for _____________________ of the Shares covered by the
Warrant.

     

    [Strike
paragraph that does not apply.]

     

    2.        
    Please issue a certificate or certificates representing
the shares in the name specified below:

     

    
      	 
      	 
      	 
      
	 
      	
                       
      Holders Name

            	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 	 	 
	 
      	
                       
      (Address)

            	 
      

    

     

    3.        
    By its execution below and for the benefit of the
Company, Holder hereby restates each of the representations and warranties in
Article 4 of the Warrant as the date hereof.

     

    
      	 
      	
              HOLDER:

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 	 	 	 
	 	 	 	 
	 
      	
              By:

            	 
      	 
      
	 	 	 	 
	 
      	
              Name:

            	 
      	 
      
	 	 	 	 
	 
      	
              Title:

            	 
      	 
      
	 	 	 	 
	 
      	
              (Date):
      

            	 
      	 
      

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    APPENDIX
2

     

    ASSIGNMENT

     

    For value
received, Silicon Valley Bank hereby sells, assigns and transfers
unto

     

    
      	 
      	
              Name:

            	
              SVB
      Financial Group

            
	 
      	
              Address:

            	
              3003
      Tasman Drive (HA-200)

            
	 
      	
               

            	

              Santa
      Clara, CA 95054

            
	 
      	
              Tax
      ID:

            	
              91-1962278

            

    

     

    that
certain Warrant to Purchase Stock issued by Procera Networks, Inc. (the
“Company”), on December 10, 2009 (the “Warrant”) together with all rights, title
and interest therein.

    

    
      	 
      	 	 
      	
              SILICON
      VALLEY BANK

            
	 
      	 	 
      	 
      	 
      	 
      
	 
      	 	 
      	 
      	 
      	 
      
	 
      	 	 
      	
              By:
      

            	 
      	 
      
	 
      	 	 
      	
              Name:

            	 
      
	 
      	 	 
      	
              Title:

            	 
      
	
              Date:

            	 	 
      	 
      	 
      	 
      

    

    

    

    By its
execution below, and for the benefit of the Company, SVB Financial Group makes
each of the representations and warranties set forth in Article 4 of the Warrant
and agrees to all other provisions of the Warrant as of the date
hereof.

     

    
      	 
      	 	 
      	
              SVB
      FINANCIAL GROUP

            
	 
      	 	 
      	 
      	 
      	 
      
	 
      	 	 
      	 
      	 
      	 
      
	 
      	 	 
      	
              By:
      

            	 
      	 
      
	 
      	 	 
      	
              Name:

            	 
      
	 
      	 	 
      	
              Title:

            	 
      
	
              Date:

            	 	 
      	 
      	 
      	 
      

    

     

     

    12

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