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 EXECUTION VERSION      1      STOCK PURCHASE AGREEMENT   BY AND AMONG   TRUEBLUE, INC.,   AS THE PURCHASER,   STAFFING SOLUTIONS HOLDINGS, INC.,      AS THE COMPANY,       THE HOLDERS OF THE COMPANY’S    PREFERRED STOCK, COMMON STOCK,    PREFERRED WARRANTS AND COMMON WARRANTS,       AS THE SELLERS,       AND      THE SECURITYHOLDER REPRESENTATIVE      Dated as of June 1, 2014           

 

            Table of Contents   ARTICLE I SALE AND PURCHASE OF COMMON SHARES AND COMMON   WARRANTS; TREATMENT OF COMPANY STOCK OPTIONS AND   INCENTIVE BONUS PLAN; SALE AND PURCHASE OF PREFERRED   SHARES AND THE PREFERRED WARRANT ......................................................... 2   1.1 Sale and Purchase of Common Shares .......................................................................... 2   1.2 Sale and Purchase of Common Warrants ...................................................................... 2   1.3 Company Stock Options; Incentive Bonus Payments .................................................. 3   1.4 Aggregate Purchase Price for Common Shares and Common Warrants ...................... 3   1.5 Sale and Purchase of Preferred Shares and Preferred Warrant Shares.......................... 4   1.6 Escrow Account; Securityholder Expense Amount Holdback ...................................... 5   1.7 Estimated Purchase Price Adjustment .......................................................................... 6   1.8 Purchase Price Adjustment ........................................................................................... 7   1.9 2005 Earn-Out ............................................................................................................... 9   1.10 Transaction Tax Benefit .............................................................................................. 10   1.11 Securityholder Representative Instructions ................................................................ 10   ARTICLE II CLOSING AND TERMINATION .......................................................................... 11   2.1 Closing; Closing Date ................................................................................................. 11   2.2 Closing Deliveries ....................................................................................................... 11   2.3 Termination of the Agreement .................................................................................... 13   2.4 Procedure Upon Termination ...................................................................................... 14   2.5 Effect of Termination .................................................................................................. 14   2.6 Withholding ................................................................................................................ 15   ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY .................... 15   3.1 Status; Authority; Conflicts ......................................................................................... 15   3.2 Capitalization of the Company ................................................................................... 16   3.3 Subsidiaries ................................................................................................................. 17   3.4 Financial Information.................................................................................................. 17   3.5 Absence of Certain Changes ....................................................................................... 18   3.6 Assets .......................................................................................................................... 19   3.7 Contracts ..................................................................................................................... 20   3.8 Employee Benefit Matters .......................................................................................... 21   3.9 Intellectual Property .................................................................................................... 23   3.10 Insurance ..................................................................................................................... 25   3.11 Litigation ..................................................................................................................... 25   3.12 Operations in Conformity with Law ........................................................................... 25   3.13 Customers ................................................................................................................... 26   3.14 Taxes ........................................................................................................................... 26   3.15 Employee Matters ....................................................................................................... 28   3.16 Brokers ........................................................................................................................ 29   3.17 Environmental Matters................................................................................................ 30     

 

        ii      3.18 Disclaimer of Other Representations and Warranties ................................................. 30   ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS ............................... 31   4.1 Authority and Validity ................................................................................................. 31   4.2 No Violation ................................................................................................................ 31   4.3 Ownership of Common Shares and/or Preferred Shares ............................................ 31   4.4 Litigation ..................................................................................................................... 31   4.5 Disclaimer of Other Representations and Warranties ................................................. 32   ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER .......................... 32   5.1 Corporate Organization ............................................................................................... 32   5.2 Authority and Validity ................................................................................................. 32   5.3 No Violation ................................................................................................................ 32   5.4 Investment Intention ................................................................................................... 33   5.5 Financial Capability; Solvency ................................................................................... 33   5.6 Brokers ........................................................................................................................ 33   5.7 Litigation ..................................................................................................................... 33   5.8 Inspection; No Other Representations ........................................................................ 33   ARTICLE VI ADDITIONAL AGREEMENTS ........................................................................... 34   6.1 Further Assurances ...................................................................................................... 34   6.2 Confidentiality ............................................................................................................ 35   6.3 Publicity ...................................................................................................................... 35   6.4 Tax Matters ................................................................................................................. 35   6.5 Conduct of the Business Prior to the Closing ............................................................. 39   6.6 Pre-Closing Period Access to Information .................................................................. 40   6.7 Post-Closing Preservation of Records ........................................................................ 40   6.8 No Solicitation ............................................................................................................ 41   6.9 Director and Officer Indemnification and Insurance .................................................. 41   6.10 Joinder of Additional Common Holders ..................................................................... 42   6.11 Employment and Benefit Matters ............................................................................... 42   6.12 280G Matters .............................................................................................................. 43   6.13 [Release of Certain Seller Obligations ........................................................................ 43   ARTICLE VII CONDITIONS PRECEDENT .............................................................................. 44   7.1 Conditions to Each Party’s Obligation ........................................................................ 44   7.2 Conditions to Obligation of the Purchaser .................................................................. 44   7.3 Conditions to Obligation of Sellers ............................................................................. 45   ARTICLE VIII INDEMNIFICATION; CERTAIN REMEDIES .................................................. 46   8.1 Survival ....................................................................................................................... 46   8.2 Indemnification by the Sellers .................................................................................... 46   8.3 Indemnification by the Purchaser ............................................................................... 47     

 

        iii      8.4 Limitations on Indemnification ................................................................................... 47   8.5 Indemnification Procedures ........................................................................................ 48   8.6 Calculation of Losses .................................................................................................. 49   8.7 Tax Treatment of Indemnity Payments ....................................................................... 50   8.8 Exclusive Remedy; Release ........................................................................................ 50   ARTICLE IX GENERAL PROVISIONS ..................................................................................... 51   9.1 Expenses ..................................................................................................................... 51   9.2 Notices ........................................................................................................................ 51   9.3 Interpretation ............................................................................................................... 52   9.4 Counterparts ................................................................................................................ 52   9.5 Entire Agreement; Construction ................................................................................. 53   9.6 Amendment ................................................................................................................. 53   9.7 Waiver ......................................................................................................................... 53   9.8 Governing Law ........................................................................................................... 53   9.9 Securityholder Representative .................................................................................... 53   9.10 Severability ................................................................................................................. 57   9.11 Assignment ................................................................................................................. 57   9.12 No Third Party Beneficiaries ...................................................................................... 57   9.13 Enforcement of Agreement ......................................................................................... 58   9.14 Conflicts and Privilege ................................................................................................ 58   9.15 Electronic Execution and Delivery ............................................................................. 59      ANNEXES      Annex I Definitions      EXHIBITS      Exhibit A - Escrow Agreement   Exhibit B - Common Holder Joinder Agreement   Exhibit C - Target Net Working Capital Calculation           

 

            STOCK PURCHASE AGREEMENT   THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered into as of   June 1, 2014, by and among (i) TrueBlue, Inc., a Washington corporation (the “Purchaser”),   (ii) Staffing Solutions Holdings, Inc., a Delaware corporation (the “Company”), (iii) the holders   of common stock of the Company listed on Schedule 1.1 hereto under the heading “Common   Holders” and/or who become party to this Agreement after the date hereof as a result of the   exercise of Company Stock Options in accordance with Section 6.10 hereof (the “Common   Holders”), (iv) the holders of preferred stock of the Company listed on Schedule 1.1 hereto   under the heading “Preferred Holders” (the “Preferred Holders”), (v) the holders of common   warrants of the Company listed on Schedule 1.1 hereto under the heading “Common Warrant   Holders” (the “Common Warrant Holders”), (vi) the holder of preferred warrants of the   Company listed on Schedule 1.1 hereto under the heading “Preferred Warrant Holder” (the   “Preferred Warrant Holder”, and together with the Common Holders, the Preferred Holders,   and the Common Warrant Holders, the “Sellers” and each, a “Seller”) (vii) the Securityholder   Representative, and (viii) solely for the purposes of Section1.9 and the related definitions, Linda   Krier.  The Purchaser, the Company and each Seller are each referred to herein as a “Party” and   collectively as the “Parties.”  Capitalized terms used herein and not otherwise defined have the   meanings set forth on Annex I hereto.   RECITALS   WHEREAS, the Common Holders collectively own all of the issued and outstanding   shares of common stock, $0.001 par value per share (the “Common Stock”), of the Company   (collectively, the “Common Shares”);   WHEREAS, the Preferred Holders collectively own all of the issued and outstanding   shares of Class A Preferred Stock, $0.001 par value per share (the “Preferred Stock”), of the   Company (collectively, the “Preferred Shares”);    WHEREAS, the Preferred Warrant Holder owns all of the issued and outstanding   warrants for the purchase of Preferred Stock (the “Preferred Warrant”, and the shares of   Preferred Stock that are subject thereto, the “Preferred Warrant Shares”), of the Company;   WHEREAS, the Common Warrant Holders collectively own all of the issued and   outstanding warrants for the purchase of Common Stock (the “Common Warrants,” and the   shares of Common Stock that are subject thereto, the “Common Warrant Shares”), of the   Company; and   WHEREAS, the Preferred Holders desire to sell to the Purchaser, and the Purchaser   desires to acquire from the Preferred Holders, all of the issued and outstanding Preferred Shares,   and the Common Holders desire to sell to the Purchaser, and the Purchaser desires to acquire   from the Common Holders, all of the issued and outstanding Common Shares, the Preferred   Warrant Holder desires to sell to the Purchaser, and the Purchaser desires to acquire from the   Preferred Warrant Holder, the issued and outstanding Preferred Warrant, and the Common   Warrant Holders desire to sell to the Purchaser, and the Purchaser desires to acquire from the   Common Warrant Holders, all the issued and outstanding Common Warrants, in each case,     

 

             2   subject to the terms and conditions set forth herein, including the cancellation of the Company’s   stock options contemplated hereby.   AGREEMENTS   NOW, THEREFORE, in consideration of the premises and the mutual covenants,   representations and warranties contained herein and intending to be legally bound hereby, the   Parties hereto hereby agree as follows:   ARTICLE I      SALE AND PURCHASE OF COMMON SHARES AND COMMON WARRANTS;   TREATMENT OF COMPANY STOCK OPTIONS AND INCENTIVE BONUS PLAN;   SALE AND PURCHASE OF PREFERRED SHARES AND THE PREFERRED   WARRANT   1.1 Sale and Purchase of Common Shares.  On the terms and subject to the   conditions contained herein, at the Closing, each Common Holder shall sell to the Purchaser, and   the Purchaser shall purchase from such Common Holder, the number of Common Shares shown   opposite such Common Holder’s name, respectively, on Schedule 1.1 for a price per share equal   to the Per Share Common Consideration.  The Per Share Common Consideration to be received   at the Closing by each Common Holder in respect of all of the Common Shares held by such   Common Holder immediately prior to the Closing shall, pursuant to Section 1.6(c) and Section   2.2(c)(iii), be reduced by (A) such Common Holder’s Pro Rata Escrow Portion of the Escrow   Amounts in respect of such Common Shares, and (B) such Common Holder’s Pro Rata Escrow   Portion of the Securityholder Expense Amount in respect of such Common Shares.    1.2 Sale and Purchase of Common Warrants.  On the terms and subject to the   conditions contained herein, at the Closing, each Common Warrant Holder shall sell to the   Purchaser, and the Purchaser shall purchase from each such Common Warrant Holder, each   Common Warrant.  Thereafter, no Common Warrant Holder shall have any rights in respect   thereof other than the right to receive therefor an amount in cash at the Closing pursuant to   Section 2.2(c)(iv), amounts payable under Section 6.4(j) and Section 6.4(k) and a contingent   right to receive an amount out of the Escrow Fund and/or the Holdback Account, and the   Purchaser shall pay (or shall cause to be paid), pursuant to Section 1.6(c) and Section 2.2(c)(iv),   an amount in cash to such Common Warrant Holder (or for its benefit) equal to the product of (i)   the number of Common Warrant Shares pursuant to each such Common Warrant as of   immediately prior to the Closing and (ii) the excess, if any, of the Per Share Common   Consideration over the exercise price per share for each such Common Warrant Share (the   “Common Warrant Consideration”).  The Common Warrant Consideration to be received at the   Closing by each Common Warrant Holder in respect of all of the Common Warrant Shares held   by such Common Warrant Holder immediately prior to the Closing shall, pursuant to   Section 1.6(c) and Section 2.2(c)(iv), be reduced by (A) such Common Warrant Holder’s Pro   Rata Escrow Portion of the Escrow Amounts in respect of such Common Warrant Shares, and   (B) such Common Warrant Holder’s Pro Rata Escrow Portion of the Securityholder Expense   Amount in respect of such Common Warrant Shares.     

 

             3   1.3 Company Stock Options; Incentive Bonus Payments.     (a) Prior to the Closing, the Company and the Purchaser, as applicable, shall   take all action necessary to ensure that at the Closing, each outstanding and unexercised   Company Stock Option (whether vested and exercisable or unvested and un-exercisable) shall be   canceled, shall be of no further force and effect with no payment or other liability of the   Company and/or the Purchaser therefor or in respect thereof and shall cease to represent the right   to exercise any such Company Stock Option (whether by passage of time or otherwise) for any   shares of capital stock of the Company.  Thereafter, no holder of any such Company Stock   Option (each, an “Option Holder,” and collectively, the “Option Holders”) shall have any rights   in respect thereof.   (b) At the Closing, the Purchaser shall pay to the Company an amount equal   to the aggregate Incentive Bonus Payments pursuant to Section 2.2(c)(v).  All consideration to be   paid to Award Participants in respect of Awards pursuant to Section 2.2(c)(v) and/or   Section 1.5(e), subject to the following sentence, (i) shall be treated as compensation paid by the   Company as and when received by the Award Participants (which, for the avoidance of doubt,   shall be the Closing Date, with respect to consideration paid pursuant to Section 2.2(c)(v), and   when released from escrow (if at all), in the case of the Escrow Amounts) and otherwise when   payable pursuant to the terms of this Agreement, (ii) shall be made through the payroll systems   of the Company (or the applicable Subsidiary) at the time such payment is made and (iii) shall be   net of any required withholding Taxes.  The portion of the Securityholder Expense Amount   attributable to Incentive Bonus Payments shall be treated as compensation paid to the Award   Participants on the Closing Date when paid to the Securityholder Representative pursuant to   Section 1.6(b), and any applicable withholding Taxes with respect to such amount shall be   withheld from other payments received by the Award Participants at the Closing. For the   avoidance of doubt, any amounts released from the Holdback Account to the Award Participants   as contemplated in Section 9.9(g) shall have already been treated as compensation paid by the   Company (or the applicable Subsidiary), and shall not be subject to employment withholding   Taxes a second time.  From and after the Closing, the Purchaser, the Company and each Seller   hereby acknowledges and agrees that the Securityholder Representative shall be entitled to make   any and all determinations under the Incentive Bonus Plan as if the Securityholder   Representative was the Board (as defined in the Incentive Bonus Plan).  Any and all amounts   withheld from an Incentive Bonus Payment at Closing pursuant to Section 2.2(c)(v) and placed   into an Escrow Account and/or the Holdback Account, shall be available for use in satisfying any   obligations owed by the Sellers pursuant to terms of this Agreement to the same extent as if such   Award Participant was a Seller for such purposes.   1.4 Aggregate Purchase Price for Common Shares and Common Warrants.  The   aggregate purchase consideration to be paid hereunder to the Common Holders for the sale of the   Common Shares and to the Common Warrant Holders for the sale of the Common Warrants shall   equal the sum (if, but only if, such sum is a positive number) of: (a) the Aggregate Purchase   Price minus (b) the Aggregate Preferred Consideration (such sum, if, but only if, a positive   number, the “Common Consideration”).       

 

             4   1.5 Sale and Purchase of Preferred Shares and Preferred Warrant Shares.     (a) On the terms and subject to the conditions contained herein, at the   Closing, each Preferred Holder shall sell to the Purchaser, and the Purchaser shall purchase from   such Preferred Holder, the number of Preferred Shares shown opposite of such Preferred   Holder’s name on Schedule 1.1 for the consideration set forth in Section 1.5(b) below.   (b) At the Closing, the Purchaser shall pay to each Preferred Holder, in   respect of each Preferred Share held by such Preferred Holder immediately prior to the Closing,   an amount equal to the sum of (i) One Thousand Dollars ($1,000) per Preferred Share plus   (ii) the aggregate amount of all accrued and unpaid dividends thereon with respect to such   Preferred Share as of the Closing Date (with respect to each Preferred Share, the “Per Share   Preferred Consideration”; the sum of the Per Share Preferred Consideration to be paid to each   Preferred Holder in respect of all Preferred Shares held by such holder is such Preferred Holder’s   “Preferred Consideration”).  The Preferred Consideration to be received at the Closing by each   Preferred Holder in respect of each Preferred Share held by such Preferred Holder immediately   prior to the Closing shall, pursuant to Section 1.6(c) and Section 2.2(c)(i), be reduced by such   Preferred Holder’s Escrow Shortfall Pro Rata Portion of the Escrow Shortfall Amount (if any) in   respect of such Preferred Holder’s Preferred Shares.     (c) On the terms and subject to the conditions contained herein, at the   Closing, the Preferred Warrant Holder shall sell to the Purchaser, and the Purchaser shall   purchase from the Preferred Warrant Holder, the Preferred Warrant for the consideration set forth   in Section 1.5(d) below.   (d) At the Closing, the Purchaser shall pay to the Preferred Warrant Holder, an   amount equal to the Per Share Preferred Consideration minus the exercise price per share   pursuant to the Preferred Warrant (the “Preferred Warrant Consideration”, and, the aggregate   Preferred Warrant Consideration payable hereunder together with the aggregate Preferred   Consideration payable hereunder, the “Aggregate Preferred Consideration”).  The Preferred   Warrant Consideration to be received at the Closing by the Preferred Warrant Holder in respect   of each Preferred Warrant Share held by the Preferred Warrant Holder immediately prior to   Closing shall, pursuant to Section 1.6(c) and Section 2.2(c)(ii), be reduced by the Preferred   Warrant Holder’s Escrow Shortfall Pro Rata Portion of the Escrow Shortfall Amount (if any) in   respect of the Preferred Warrant Holder’s Preferred Warrant Shares.      (e) Notwithstanding anything herein to the contrary, subject to Section 1.9,   (A) if there was an Escrow Shortfall Amount, then any amounts payable to the Securityholders   (or Sellers, if applicable) under this Agreement (including Section 1.8, Section 1.10, Section 6.4   and ARTICLE VIII), and/or distributable to any Securityholder (or Seller, if applicable) out of   any Escrow Account or the Holdback Account, shall instead be paid to each Preferred Holder,   Preferred Warrant Holder and Award Participant, on a pro rata basis based on each such holder’s   or Award Participant’s Escrow Shortfall Pro Rata Portion, until such time as each Preferred   Holder has received the full amount of its respective Preferred Consideration, the Preferred   Warrant Holder has received the full amount of its Preferred Warrant Consideration and each   Award Participant has received the full amount of its Incentive Bonus Payment (with any   payment of any Incentive Bonus Payment to be paid to the Company for further payment to the     

 

             5   applicable Award Participant in accordance with Section 1.3(b)), and (B) all amounts owed to the   Preferred Holders, the Preferred Warrant Holder and the Award Participants pursuant to this   Section 1.5(e) shall be paid by the Purchaser, or distributed out of the Escrow Accounts or   Holdback Account, prior to any payment to be made to any Common Holder in respect of such   Common Holder’s Common Shares or any Common Warrant Holder in respect of such Common   Warrant Holder’s Common Warrants.   1.6 Escrow Account; Securityholder Expense Amount Holdback.   (a) At the Closing, the Purchaser shall deliver to U.S. Bank National   Association, as escrow agent (the “Escrow Agent”), under the escrow agreement dated the   Closing Date, by and among the Purchaser, the Securityholder Representative and the Escrow   Agent, substantially in the form of Exhibit A hereto (the “Escrow Agreement”), the Indemnity   Escrow Amount, the Net Working Capital Escrow Amount, and an amount equal to the Special   Escrow Amount.  The Indemnity Escrow Amount shall be held in an escrow account (the   “Indemnity Escrow Account”) in accordance with the terms of the Escrow Agreement and   released and paid on the fifteen (15) month anniversary of Closing Date (the “Escrow   Termination Date”) in accordance with the terms of the Escrow Agreement.  The Net Working   Capital Escrow Amount shall be held in an escrow account (the “Net Working Capital Escrow   Account”) in accordance with the terms of the Escrow Agreement and released and paid in   accordance with the terms of Section 1.8(e).  The Special Escrow Amount shall be held in an   escrow account (the “Special Escrow Account” and, together with the Indemnity Escrow   Account and the Net Working Capital Escrow Account, the “Escrow Accounts”) in accordance   with the terms of the Escrow Agreement and released and paid in accordance with the terms of   ARTICLE VIII and the Escrow Agreement.  The Escrow Agreement shall provide that the Net   Working Capital Escrow Account shall be used only in connection with any amount payable to   the Purchaser pursuant to Section 1.8(e)(i), that the Indemnity Escrow Account and the Special   Escrow Account shall be used to satisfy valid claims for Losses made by the Purchaser pursuant   and subject to ARTICLE VIII hereof.  All Parties hereto agree that except as otherwise required   pursuant to a “determination” within the meaning of Section 1313(a) of the Code: (i) the right of   the Sellers and Award Participants to the Escrow Amounts shall be treated as deferred contingent   purchase price eligible for installment treatment under Section 453 of the Code and any   corresponding provision of foreign, state or local Law, as appropriate, (ii) the Purchaser shall be   treated as the owner of the Escrow Accounts, and all interest and earnings earned from the   investment and reinvestment of the Escrow Amounts, or any portion thereof, shall be allocable to   the Purchaser pursuant to Section 468B(g) of the Code and Proposed Treasury Regulation   Section 1.468B-8, (iii) if and to the extent any amount of the Escrow Amounts is actually   distributed to the Sellers, interest may be imputed on such amount payable to the Sellers, as   required by Section 483 or 1274 of the Code and (iv) in no event shall the aggregate Escrow   Amounts released to the Sellers exceed $45,000,000.00.  Clause (iv) of the preceding sentence is   intended to ensure that the right of the Sellers to the Escrow Amounts and any interest and   earnings earned thereon is not treated as a contingent payment without a stated maximum selling   price under Section 453 of the Code and the Treasury Regulations promulgated thereunder.      (b) At the Closing, the Purchaser shall deliver to the Securityholder   Representative an amount equal to Five Hundred Thousand Dollars ($500,000) (the   “Securityholder Expense Amount”).  The Securityholder Expense Amount shall be held in an     

 

             6   account maintained by the Securityholder Representative (the “Holdback Account”) for the   Securityholder Representative to hold on behalf of the Sellers and Award Participants as a fund   for any out-of-pocket fees and expenses (including legal, accounting and other advisors’ fees and   expenses, if applicable) incurred by the Securityholder Representative in its capacity as the   Securityholder Representative, all in accordance with Section 9.9(g).  The Holdback Account    shall not be required to be invested, or be required to earn interest or other income.     (c) Notwithstanding anything to the contrary contained in this Agreement, the   provisions of Section 2.2(c)(iii) and Section 2.2(c)(iv) shall be applied in a manner such that the   Per Share Common Consideration and Common Warrant Consideration payable to each   Securityholder pursuant to such provisions shall be (X) reduced on a pro-rata basis amongst the   Securityholders in accordance with their respective Pro Rata Escrow Portions, and (Y) reduced   only until such time as either (i) the aggregate reductions pursuant to Section 2.2(c)(iii) and   Section 2.2(c)(iv) equal the sum of the Escrow Amounts plus the Securityholder Expense   Amount, or (ii) the Per Share Common Consideration and Common Warrant Consideration   payable to each Securityholder pursuant to such provisions has been reduced to zero (0);   provided, however, that for the purposes hereof, the reductions pursuant to Section 2.2(c)(iii) and   Section 2.2(c)(iv) shall first be made to fund the Escrow Amounts before any reductions are   deemed to fund the Securityholder Expense Amount.  Furthermore, notwithstanding anything to   the contrary contained in this Agreement, in the case, and only in the case, that the Per Share   Common Consideration and Common Warrant Consideration payable to each Securityholder   pursuant to the provisions of Section 2.2(c)(iii) and Section 2.2(c)(iv) has been reduced to zero   (0) and the aggregate amount of Per Share Common Consideration and Common Warrant   Consideration reduced pursuant to Section 2.2(c)(iii) and Section 2.2(c)(iv) is less than the   aggregate amount of the sum of the Escrow Amounts plus the Securityholder’s Expense Amount   (the amount of any such shortfall, the “Escrow Shortfall Amount”), then the provisions of   Section 2.2(c)(i), Section 2.2(c)(ii) and Section 2.2(c)(v) that reduce payments thereunder in   order to fund the Escrow Shortfall Amount shall apply on a pro-rata basis amongst the Preferred   Holders, Preferred Warrant Holder and the Award Participants in accordance with their respective   Escrow Shortfall Pro Rata Portions until such time as the aggregate amounts reduced pursuant to   Section 2.2(c)(i), Section 2.2(c)(ii) and Section 2.2(c)(v) equal the Escrow Shortfall Amount.   1.7 Estimated Purchase Price Adjustment.  No later than three (3) Business Days   prior to the anticipated Closing Date, the Company shall deliver to the Purchaser a statement (the   “Estimated Preliminary Statement”), prepared in good faith, setting forth an estimate of the   Closing Date Net Working Capital Amount (the “Estimated Closing Date Net Working Capital   Amount”) and the Estimated Target Net Working Capital Amount (including an updated   Exhibit C reflecting the same), Net Working Capital May and Estimated Net Working Capital   June.  If the Estimated Closing Date Net Working Capital Amount exceeds the Estimated Target   Net Working Capital Amount, the Initial Aggregate Purchase Price shall be increased dollar-for-   dollar by the amount of such excess and if the Estimated Closing Date Net Working Capital   Amount is less than the Estimated Target Net Working Capital Amount, the Initial Aggregate   Purchase Price shall be reduced dollar-for-dollar by the amount of such shortfall.  The amount   (either positive or negative) equal to the Estimated Closing Date Net Working Capital Amount   minus the Estimated Target Net Working Capital Amount shall be referred to herein as the   “Estimated Purchase Price Adjustment.”     

 

             7   1.8 Purchase Price Adjustment.   (a) The Purchaser shall deliver, or cause to be delivered, to the Securityholder   Representative, as soon as practicable, but in no event more than sixty (60) days after the Closing   Date, (i) a consolidated balance sheet of the Company and its Subsidiaries as of 12:01 a.m.   Chicago time on the Closing Date audited by Deloitte (the “Closing Balance Sheet”), with the   costs and expenses of such audit to be paid by Purchaser, and (ii) a preliminary statement in the   same form as the Estimated Preliminary Statement (the “Preliminary Statement”) setting forth   the calculation of the Closing Date Net Working Capital Amount as derived from the Closing   Balance Sheet, and the Target Net Working Capital Amount (including an updated Exhibit C   reflecting the same), Net Working Capital May and Net Working Capital June, in the case of   each of clauses (i) and (ii), along with reasonable supporting detail to evidence the calculations   of such amounts.  The Closing Balance Sheet and related statements of income, retained earnings   and cash flows, the Preliminary Statement, the Closing Date Net Working Capital Amount and   all of the calculations and amounts set forth therein shall be prepared in good faith and in   accordance with the Agreed Accounting Principles.    (b) The Securityholder Representative shall have sixty (60) days to review the   Preliminary Statement from the date of its receipt thereof (the “Review Period”).  During the   Review Period, the Securityholder Representative shall have reasonable access during normal   business hours to the books and records and personnel and advisors of the Company and its   Subsidiaries to the extent required in connection with such review.  If the Securityholder   Representative objects to any aspect of the Preliminary Statement, the Securityholder   Representative must deliver a written notice of such objection (the “Objection Notice”) to the   Purchaser on or prior to the expiration of the Review Period.  If the Securityholder   Representative delivers an Objection Notice to the Purchaser prior to the expiration of the   Review Period as provided in this Section 1.8(b), the Purchaser and the Securityholder   Representative shall, for a period of thirty (30) days thereafter (the “Resolution Period”),   attempt in good faith to resolve the matters contained therein, and any written resolution, signed   by each of the Purchaser and the Securityholder Representative, as to any such matter shall be   final, binding, conclusive and non-appealable for all purposes hereunder.  In the event the   Securityholder Representative does not deliver an Objection Notice to the Purchaser as provided   in this Section 1.8(b) prior to the expiration of the Review Period, the Sellers and Award   Recipients shall be deemed to have agreed to the Preliminary Statement in its entirety, which   Preliminary Statement or undisputed portions thereof (as the case may be) shall be final, binding,   conclusive and non-appealable for all purposes hereunder.     (c) If, at the conclusion of the Resolution Period, the Purchaser and the   Securityholder Representative have not reached an agreement with respect to all disputed matters   contained in the Objection Notice, then within ten (10) Business Days thereafter, the Purchaser   and the Securityholder Representative shall submit for resolution those of such matters   remaining in dispute to KPMG, or if such firm is unavailable or unwilling to so serve, to a   mutually acceptable nationally recognized independent accounting firm (the “Neutral   Arbitrator”).  The Neutral Arbitrator shall act as an arbitrator to resolve (based solely on the   written presentations of the Purchaser and the Securityholder Representative and not by   independent review) only those matters submitted to it in accordance with the first sentence of   this Section 1.8(c).  The Purchaser and the Securityholder Representative shall direct the Neutral     

 

             8   Arbitrator to render a resolution of all such disputed matters within sixty (60) days after its   engagement or such other period agreed upon in writing by the Purchaser and the Securityholder   Representative.  The resolution of the Neutral Arbitrator shall be set forth in a written statement   delivered to each of the Parties and shall be final, binding, conclusive and non-appealable for all   purposes hereunder.  The Preliminary Statement, once modified and/or agreed to in accordance   with Section 1.8(b) and/or this Section 1.8(c), shall become the “Final Statement.”     (d) The Securityholder Representative shall, solely out of the Holdback   Account, pay a portion of the fees and expenses of the Neutral Arbitrator equal to 100%   multiplied by a fraction, the numerator of which is the amount of disputed amounts submitted to   the Neutral Arbitrator that are resolved in favor of Purchaser (that being the difference between   the Neutral Arbitrator’s determination and the Securityholder Representative’s determination)   and the denominator of which is the total amount of disputed amounts submitted to the Neutral   Arbitrator (that being the sum total by which the Purchaser’s determination and the   Securityholder Representative’s determination differ from the determination of the Neutral   Arbitrator).  The Purchaser shall pay that portion of the fees and expenses of the Neutral   Arbitrator that the Securityholder Representative, on behalf of the Sellers, is not required to pay   hereunder.  Except as provided in the preceding sentence, all other costs and expenses incurred   by the Parties in connection with resolving any dispute hereunder before the Neutral Arbitrator   shall be borne by the Party incurring such cost and expense.    (e) Amounts payable pursuant to the determination of the Closing Date Net   Working Capital Amount and the Target Net Working Capital Amount on the Final Statement   shall be paid and/or disbursed as follows:   (i) If the Working Capital True-Up Amount is negative, then the   Securityholder Representative and the Purchaser shall promptly, within three (3) Business Days   after the date on which the Preliminary Statement becomes the Final Statement, execute and   deliver a written instruction to the Escrow Agent to effectuate (A) disbursement to the Purchaser   of (1) the lesser of the absolute value of the Working Capital True-Up Amount and the amount in   the Net Working Capital Escrow Account from the Net Working Capital Escrow Account and (2)   if the funds then contained in the Net Working Capital Escrow Account are less than the absolute   value of the Working Capital True-Up Amount, then such difference from the Indemnity Escrow   Account, and (B) if, after giving effect to the distributions made pursuant to clause (A)(1), any   funds then remain in the Net Working Capital Escrow Account, disbursement of such remaining   funds to the Securityholders, as instructed by the Securityholder Representative in accordance   with Section 1.11 (subject to the prior application and satisfaction in full of the provisions of   Section 1.5(e)), by wire transfer of immediately available funds to the account designated in   writing by each such Securityholder, in each case in accordance with the terms of the Escrow   Agreement.     (ii) If the Working Capital True-Up Amount is positive, then the   Purchaser shall pay to the Securityholders, as instructed by the Securityholder Representative in   accordance with Section 1.11 (subject to the prior application and satisfaction in full of the   provisions of Section 1.5(e) and Section 1.9), by wire transfer of immediately available funds to   the account designated in writing by each such Securityholder, in each case within three (3)   Business Days after the date on which the Preliminary Statement becomes the Final Statement,     

 

             9   the absolute value of the Working Capital True-Up Amount.  In addition, the Securityholder   Representative and the Purchaser shall promptly, within three (3) Business Days after the date on   which the Preliminary Statement becomes the Final Statement, execute and deliver a written   instruction to the Escrow Agent to effectuate disbursement of the funds then contained in the Net   Working Capital Escrow Account to the Securityholders, as instructed by the Securityholder   Representative in accordance with Section 1.11 (subject to the prior application and satisfaction   in full of the provisions of Section 1.5(e)), by wire transfer of immediately available funds to the   account designated in writing by each such Securityholder, in each case in accordance with the   terms of the Escrow Agreement.   1.9 2005 Earn-Out.     (a) If, at any time at or after the Closing, the terms of the 2005 Earn-Out have   been satisfied, then (i) the 2005 Sellers (in proportion to their respective “2005 Earn-Out   Percentages” as set forth on Schedule 1.9) shall receive the 2005 Earn-Out Amount out of, and   only out of, any subsequent (i.e., after the date the terms of the 2005 Earn-Out have been   satisfied) (x) release of cash out of the Escrow Accounts and/or Holdback Account that would   otherwise be payable to any Seller or Award Participant, and/or (y) payment owed by the   Purchaser to the Sellers and/or Award Participants pursuant to the terms of this Agreement (the   releases and payments described in clause (x) and (y), the “Subsequent Payments”), and (iii)   notwithstanding anything else to the contrary contained in this Agreement (including Section   1.5(e)), the 2005 Sellers shall be entitled to receive all Subsequent Payments until the 2005 Earn-   Out Amount has been paid in full.  For the avoidance of doubt, no Seller shall receive any further   payments of consideration hereunder after the 2005 Earn-Out has been satisfied until the full   2005 Earn-Out Amount has been paid.  The 2005 Sellers acknowledge and agree that, for the   purposes of determining whether the terms of the 2005 Earn-Out have been satisfied, the   Majority Stockholder Entity shall not be deemed to have received (1) any portion of the Escrow   Amounts unless and until such Escrow Amounts are actually distributed from the Escrow   Accounts and thereafter received by the Majority Stockholder Entity or (2) any portion of the   Securityholder Expense Amount unless and until such portion of the Securityholder Expense   Amount is actually distributed by the Securityholder Representative from the Holdback Account   pursuant to Section 9.9(g) and thereafter received by the Majority Stockholder Entity, provided   that, in each case, to the extent the Majority Stockholder Entity is to receive any payment   described in (1) or (2) above and instead directs any amounts payable thereunder to any other   Person, and such amounts are received by such Person, such amounts shall be deemed received   by the Majority Stockholder Entity.  The Purchaser and the Stockholders Representative agree   that all disbursements under the Escrow Agreement shall be made in accordance with the terms   of this Agreement.  Within a reasonable time, and in any case within ten (10) Business Days of a   written request from the Farrington Trust with respect to reasonable requests with respect to   information regarding the calculation of the 2005 Earn-Out, the Securityholder Representative   shall provide to the Farrington Trust reasonable responses to such reasonable requests.    (b) The Farrington Trusts each hereby represent and warrant to the Released   Parties, as of the date hereof and as of the Closing, that they are the sole beneficiaries of the   rights that Hugh Farrington and the Farrington Trust No. 1 had pursuant to the 2005 SPA and the   2005 Earn-Out.  Each 2005 Seller hereby represents and warrants, severally and not jointly, to   the Released Parties, as of the date hereof and as of the Closing, that no such 2005 Seller has     

 

             10   sold, transferred or otherwise assigned any of its rights under the 2005 SPA and/or 2005 Earn-   Out.   (c) In consideration for the provisions contained in Section 1.9(a), effective as   of the Closing, each of the 2005 Sellers, on behalf of themselves and their respective   predecessors and Affiliates (collectively, “Seller Releasing Parties”) hereby irrevocably release,   waive and discharge the Company, the 2005 Companies, each of their respective Subsidiaries   and each of their respective stockholders, managers, directors, officers, employees and Affiliates   (including the Majority Stockholder Entity) (collectively, the “Seller Released Persons”) from   any and all liabilities and obligations then existing to such Seller Releasing Party with respect to   the 2005 Earn-Out (other than as provided herein), and such Seller Releasing Party shall not seek   to recover any such amounts in connection therewith or thereunder from any of the Seller   Released Persons; provided, however, that nothing in this Section 1.9(c) shall operate to release   any rights under Section 1.9(a).  Effective as of the Closing, (i) the Company, on behalf of itself   and its Subsidiaries (including the 2005 Companies) (collectively, “Company Releasing   Parties”) hereby irrevocably release, waive and discharge the Farrington Trusts and their   respective trustees and beneficiaries (collectively, the “Company Released Persons”) from any   and all liabilities and obligations then existing to such Company Releasing Party (other than as   provided herein) and (ii) the Company and the Majority Stockholder Entity, on behalf of   themselves and each of their respective Subsidiaries and each of their respective stockholders,   managers, directors, officers, employees and Affiliates (including the 2005 Companies)   (collectively, “2005 Releasing Parties”), hereby irrevocably release, waive and discharge the   2005 Sellers and their respective trustees, beneficiaries and Affiliates (collectively, the “2005   Released Persons”) from any and all liabilities and obligations then existing to such 2005   Releasing Party with respect to the 2005 SPA (other than as provided herein); provided, however,   that nothing in this Section 1.9(c) shall operate to release any rights under Section 1.9(a).    Without limiting the foregoing, the indemnification obligations of, and any requirement to post   letters of credit by, the Farrington Trusts, the estate of Hugh Farrington, Michael Miles, the   Farrington Trust No 1, the Michael Miles Grantor Retained Annuity Trust No 1, Linda Krier,   Lorree Lynch or their successors and assigns (the “Stockholders”) under (i) the 2005 SPA and   (ii) that certain letter agreement, dated June 17, 2005, among Staffing Solutions Holdings, Inc.,   Seaton Acquisition Corp., certain of the Stockholders, Seaton Corp., SMX Corp. and   PeopleScout, Inc. or (iii) otherwise in respect of the Company and its Subsidiaries, shall   terminate effective as of the Closing.   1.10 Transaction Tax Benefit.  In addition to any other amounts to which the   Securityholders are entitled under this Agreement, on or before October 15, 2015, Purchaser shall   pay to the Securityholder Representative for payment to the Securityholders an amount equal to   the Transaction Tax Benefit.     1.11 Securityholder Representative Instructions.  At any time that any payments are   due by Purchaser under this Agreement after the Closing, or are to be distributed from any   Escrow Account, to any Seller, Award Participant or 2005 Seller, the Securityholder   Representative will provide the Purchaser with information with respect to whether the   provisions of Section 1.5(e) and/or Section 1.9(a) are then in effect and details regarding how   such payments and/or distributions are to be made to such Seller, Award Participant or 2005   Seller, as the case may be.        

 

             11      ARTICLE II      CLOSING AND TERMINATION   2.1 Closing; Closing Date.  Subject to the terms and conditions of this Agreement,   the closing of the Transactions (the “Closing”) shall take place at 10:00 a.m., Boston time, at the   offices of Goodwin Procter LLP, 53 State Street, Boston, MA 02109, no later than two (2)   Business Days following the satisfaction or waiver of all conditions precedent specified under   ARTICLE VII hereof (except for those conditions that by their terms are to be satisfied at the   Closing but subject to the satisfaction or waiver of such conditions and provided that the Closing   will occur no earlier than June 30, 2014), or on such other date, place and time as the Purchaser   and the Securityholder Representative may agree in writing (such date on which the Closing   occurs, the “Closing Date”).  The Closing shall be deemed to be effective immediately after    12:01 a.m. Chicago time on the Closing Date.   2.2 Closing Deliveries.   (a) At the Closing, the Company shall deliver or cause to be delivered to the   Purchaser:   (i) an officer’s certificate, dated as of the Closing Date, duly executed   by an authorized officer of the Company, relating to the satisfaction of the Closing conditions set   for in Section 7.2(a) and Section 7.2(b);    (ii) a good standing certificate for the Company from the Secretary of   State of the State of Delaware dated as of a date within five (5) Business Days of the Closing   Date; and   (iii) good standing certificates, or their legal equivalent, for each of the   Subsidiaries from each of their respective jurisdictions of organization dated as of a date within   five (5) Business Days of the Closing Date.     (b) At Closing, each Seller and/or the Securityholder Representative, as the   case may be, shall deliver or cause to be delivered to the Purchaser:   (i) the original certificate(s) representing the Preferred Shares held by   such Preferred Holder, together with duly executed stock powers in proper form for each   Preferred Share owned by such Preferred Holder or an affidavit of loss attesting to the loss or   destruction of original certificate(s);   (ii) the original certificate(s) representing the Common Shares held by   such Common Holder, together with duly executed stock powers in proper form for each   Common Share owned by such Common Holder or an affidavit of loss attesting to the loss or   destruction of original certificate(s); and   (iii) the Escrow Agreement, duly executed by the Securityholder   Representative.       

 

             12   (c) At the Closing and subject to the provisions of Section 1.6(c), as   applicable, the Purchaser shall deliver (or cause to be delivered) or shall pay (or cause to be paid)   by wire transfer of immediately available funds pursuant to written instructions delivered to the   Purchaser prior to Closing, as the case may be:   (i) to each Preferred Holder, prior to any payment pursuant to   Section 2.2(c)(iii), Section 2.2(c)(iv) or Section 2.2(c)(v) below, cash in an amount equal to the   aggregate Preferred Consideration due to such Preferred Holder pursuant to Section 1.5(b),   minus the product of (A) the Escrow Shortfall Amount (if any), multiplied by (B) such Preferred   Holder’s Escrow Shortfall Pro Rata Portion;    (ii) to the Preferred Warrant Holder, prior to any payment pursuant to   Section 2.2(c)(iii), Section 2.2(c)(iv) or Section 2.2(c)(v) below, cash in an amount equal to the   aggregate Preferred Warrant Consideration due to such Preferred Warrant Holder pursuant to   Section 1.5(d), minus the product of (A) the Escrow Shortfall Amount (if any), multiplied by (B)   the Preferred Warrant Holder’s Escrow Shortfall Pro Rata Portion;    (iii) to each Common Holder, cash in an amount equal to (A) the   product of (y) the aggregate number of Common Shares held by such Common Holder   immediately prior to Closing, multiplied by (z) the Per Share Common Consideration, minus (B)   the product of (y) the Escrow Amounts, multiplied by (z) such Common Holder’s Pro Rata   Escrow Portion, minus (C) the product of (y) the Securityholder Expense Amount, multiplied by   (z) such Common Holder’s Pro Rata Escrow Portion;   (iv) to each Common Warrant Holder, cash in an amount equal to (A)   the Common Warrant Consideration for each Common Warrant held by such Common Warrant   Holder immediately prior to Closing, minus (B) the product of (y) the Escrow Amounts,   multiplied by (z) such Common Warrant Holder’s Pro Rata Escrow Portion, and minus (C) the   product of (y) the Securityholder Expense Amount, multiplied by (z) such Common Warrant   Holder’s Pro Rata Escrow Portion;   (v) to the Company for further distribution to each Award Participant   in accordance with Section 1.3(b), cash in an amount equal to the Incentive Bonus Payment   owed to such Award Participant minus the product of (A) the Escrow Shortfall Amount (if any),   multiplied by (B) such Award Participant’s Escrow Shortfall Pro Rata Portion;   (vi) to the Escrow Agent, the Escrow Amounts;   (vii) to the Securityholder Representative, the Securityholder Expense   Amount;   (viii) to each Person owed Indebtedness, cash in an amount equal to the   Indebtedness owed to such Person as specified in a payoff letter received from such Person or   Persons within three (3) Business Days prior to the Closing Date;   (ix) to each Person or Persons owed any Selling Expenses, cash in an   amount equal to the Selling Expenses owed to such Person or Persons as directed by the   Securityholder Representative within three (3) Business Days prior to the Closing Date;     

 

             13   (x) to the Securityholder Representative, an officer’s certificate, dated   as of the Closing Date, duly executed by an authorized officer of the Purchaser, relating to the   satisfaction of the Closing conditions set forth in Section 7.3(a) and Section 7.3(b); and    (xi) to the Securityholder Representative, the Escrow Agreement, duly   executed by a duly authorized officer of the Purchaser.   (d) At least three (3) days prior to the Closing Date, the Securityholder   Representative will deliver to Purchaser a schedule setting forth:   (i) for each Preferred Holder, such Preferred Holder’s (A) aggregate   Preferred Consideration, (B) Escrow Shortfall Pro Rata Portion (if applicable), and (C) cash to be   delivered in accordance with Section 2.2(c)(i);    (ii) for each Preferred Warrant Holder, such Preferred Warrant   Holder’s (A) aggregate Preferred Warrant Consideration, (B) Escrow Shortfall Pro Rata Portion   (if applicable), and (C) cash to be delivered in accordance with Section 2.2(c)(ii);    (iii) for each Common Holder, such Common Holder’s (A) aggregate   Per Share Common Consideration, (B) Pro Rata Escrow Portion, and (C) cash to be delivered in   accordance with Section 2.2(c)(iii);   (iv) for each Common Warrant Holder, such Common Warrant   Holder’s (A) aggregate Per Share Common Consideration, (B) Pro Rata Escrow Portion, and   (C) cash to be delivered in accordance with Section2.2(c)(iv); and   (v) for each Award Participant, (A), the Incentive Bonus Payment   owed to such Award Participant, (B) such Award Participant’s Escrow Shortfall Pro Rata Portion   (if applicable), and (C) cash to be delivered in accordance with Section 2.2(c)(v).      2.3 Termination of the Agreement.  This Agreement may be terminated prior to   Closing as follows:   (a) at the election of the Securityholder Representative or the Purchaser on or   after the close of business on September 1, 2014 (the “Termination Date”), if the Closing shall   not have occurred by the close of business on such date; provided, however, that the terminating   Party is not in breach in any material respect of any of its obligations hereunder or the cause of   the failure of the Closing to occur on or before the Termination Date; or   (b) by mutual written consent of the Securityholder Representative and the   Purchaser; or   (c) by either the Purchaser or the Securityholder Representative if a   Governmental Entity shall have (i) issued a non-appealable final judgment, order, injunction,   decree or ruling (“Order”) or taken any other action; or (ii) enacted, enforced or deemed   applicable to the Transactions a Law in final form, in each case having the effect of permanently   restraining, enjoining, prohibiting or making illegal the consummation of the Transactions; or     

 

             14   (d) by the Purchaser, (i) upon a breach of any representation, warranty,   covenant or agreement of the Company or the Sellers set forth in this Agreement such that the   conditions set forth in Section 7.2(a) or Section 7.2(b) would not be satisfied (a “Seller   Terminating Breach”); provided, however, that if such Seller Terminating Breach is curable   prior to the expiration of thirty (30) days from the date of written notice to the Securityholder   Representative of its occurrence through the exercise of commercially reasonable efforts, and for   so long as the Company or the applicable Seller continues to exercise such commercially   reasonable efforts, the Purchaser may not terminate this Agreement under this Section 2.3(d)   until the expiration of such thirty (30) day period without such Seller Terminating Breach having   been cured (but in no event shall the preceding proviso be deemed to extend the date set forth in   Section 2.3(a)); or (ii) if satisfaction of any of the conditions set forth in Section 7.2 is or   becomes impossible (other than through the failure of the Purchaser to comply with its   obligations under this Agreement); provided, further, that the Purchaser shall not be entitled to   terminate this Agreement pursuant to this clause Section 2.3(d) at any time during which the   Purchaser would be unable to satisfy the conditions in Section 7.3(a) or Section 7.3(b) hereof; or   (e) by the Securityholder Representative, (i) upon a breach of any   representation, warranty, covenant or agreement of the Purchaser set forth in this Agreement   such that the conditions set forth in Section 7.3(a) or Section 7.3(b) would not be satisfied (a   “Purchaser Terminating Breach”); provided, however, that if such Purchaser Terminating   Breach is curable prior to the expiration of thirty (30) days from notice to the Purchaser of its   occurrence through the exercise of the Purchaser’s commercially reasonable efforts, and for so   long as the Purchaser continues to exercise such commercially reasonable efforts, the   Securityholder Representative may not terminate this Agreement under this Section 2.3(e) until   the expiration of such thirty (30) day period without such Purchaser Terminating Breach having   been cured (but in no event shall the preceding proviso be deemed to extend the date set forth in   Section 2.3(a)); or (ii) if satisfaction of any of the conditions set forth in Section 7.3 is or   becomes impossible (other than through the failure of the Company or any Seller to comply with   its obligations under this Agreement); provided, further that the Securityholder Representative   shall not be entitled to terminate this Agreement pursuant to this Section 2.3(e) at any time   during which the Company would be unable to satisfy the conditions in Section 7.2(a) or   Section 7.2(b) hereof.    2.4 Procedure Upon Termination.  In the event of termination of this Agreement by   the Securityholder Representative or the Purchaser, or both, pursuant to Section 2.3 hereof,   written notice thereof shall forthwith be given to the other Party or Parties, and this Agreement   shall terminate, and the Transactions shall be abandoned, without further action by any Party.   2.5 Effect of Termination.  In the event that this Agreement is validly terminated in   accordance with Section 2.3 and Section 2.4, then, subject to the provisions of this Section 2.5,   the Company, the Sellers, the Securityholder Representative and the Purchaser shall be relieved   of their respective duties and obligations arising under this Agreement after the date of such   termination, and such termination shall be without liability to the Company, the Sellers, the   Securityholder Representative or the Purchaser; provided, however, that no such termination   shall relieve any Party hereto from liability for any willful and material breach of this Agreement   by such Party prior to the date of termination; provided, further, that the obligations of the     

 

             15   Parties set forth in this Section 2.5 and in Section 6.2, Section 6.3 and ARTICLE IX hereof shall   survive any such termination and shall be enforceable hereunder.   2.6 Withholding.  After prior consultation with the Securityholder Representative   (provided that no such consultation shall be required with respect to income and employment tax   withholding on payments treated as compensation for applicable income Tax purposes), the   Purchaser and the Company shall be entitled to deduct and withhold from any payment to be   made under this Agreement all Taxes that the Purchaser or the Company, as the case may be, is   required to deduct and withhold with respect to such payment under the Code (or any provision   of other applicable Law).  Taxes withheld pursuant to this Section 2.6 by the Purchaser or the   Company will be (i) timely remitted by the Purchaser or the Company, as the case may be, to the   appropriate Governmental Entity and (ii) to the extent so remitted, treated for all purposes of this   Agreement as having been paid to the Person in respect of which such deduction and   withholding was made.   ARTICLE III      REPRESENTATIONS AND WARRANTIES OF THE COMPANY   Subject to the exceptions disclosed in the disclosure schedule delivered by the   Company to the Purchaser on the date hereof (the “Disclosure Schedule”), the Company   represents and warrants to the Purchaser as follows, in each case as of the date hereof (unless   otherwise specifically set forth herein) and as of the Closing:   3.1 Status; Authority; Conflicts.   (a) The Company is a corporation duly organized, validly existing and in   good standing under the laws of the State of Delaware, has all requisite corporate power and   authority to carry on its business as now conducted and to own or lease and operate its properties   and assets, and is duly qualified to do business as a foreign entity under the laws of each   jurisdiction where such qualification is necessary, except where the failure to be so qualified   would not reasonably be expected to be material.     (b) The Company has all requisite corporate power and authority to enter into   the Transaction Documents to which it is a party and to carry out its obligations under such   Transaction Documents.  The execution and delivery of the Transaction Documents to which the   Company is a party and the performance by the Company of its obligations thereunder have been   duly and validly authorized by the Company and no other proceedings on the part of the   Company are necessary to authorize the Transaction Documents to which the Company is a party   or the performance by the Company of its obligations thereunder.  This Agreement and the other   Transaction Documents to which the Company is a party have been duly and validly executed   and delivered by the Company, and assuming the due execution and delivery by each of the other   Parties, constitute the valid and binding agreement of the Company enforceable against the   Company in accordance with the terms and conditions hereof and thereof, subject to applicable   bankruptcy, insolvency, reorganization, moratorium, liquidation, fraudulent conveyance and   other similar Laws and principles of equity affecting creditors’ rights and remedies generally (the   “General Enforceability Exceptions”).     

 

             16   (c) Except as set forth on Schedule 3.1(c), the execution and delivery of this   Agreement by the Company and the other Transaction Documents to which the Company is a   party and the consummation and performance by the Company of its obligations thereunder    shall not (i) result in a violation or breach of any provision of the Governing Documents of the   Company or any Subsidiary; (ii) result in a violation or breach of any provision of any Law or   Order applicable to the Company or any of its Subsidiaries, (iii) require the Consent of or notice   to any Person under, conflict with, result in a violation or breach of, constitute a default under or   result in the acceleration of any Material Contract or (iv) result in the creation or imposition of   any Lien other than a Permitted Lien on any properties or assets of the Company or any of the   Subsidiaries, except in the cases of clauses (ii) and (iii), where the violation, breach, conflict,   default, acceleration or failure to give notice would not reasonably be expected to be material or   where the violation, breach, conflict, default, acceleration or failure relates to any facts that are   particular to the Purchaser and/or its Subsidiaries and/or any of their respective assets or   liabilities.  No consent, approval, Permit, Order, declaration or filing with, or notice to, any   Governmental Entity is required by or with respect to the Company or any of its Subsidiaries in   connection with the execution and delivery of this Agreement and the consummation of the   Transactions, except for such filings as may be required under the HSR Act and as set forth on   Schedule 3.1(c) and/or such consents, approvals, Permits, Orders, declarations, filings or notices   that, in the aggregate, would not reasonably be expected to be material and/or such consents,   approvals, Permits, Orders, declarations, filings or notices that relate to any facts that are   particular to the Purchaser and/or its Subsidiaries and/or any of their respective assets or   liabilities.     3.2 Capitalization of the Company.  The authorized capital stock of the Company   consists of (i) 70,000 shares of Preferred Stock, of which, all 70,000 shares have been designated   as redeemable preferred stock, par value $0.001 per share, of which, as of the date of this   Agreement, 62,373.639 shares are issued and outstanding and 1,270.927 shares have been   reserved for issuance as Preferred Warrant Shares upon the exercise of the Preferred Warrants,   and (ii) 37,000,000 shares of Common Stock, of which 34,235,302 shares are issued and   outstanding, 724,344 shares have been reserved for issuance as Common Warrant Shares upon   the exercise of the Common Warrants and 351,836.9 shares have been reserved for issuance as   upon the exercise of the Company Stock Options, and as of the date of this Agreement, such   shares of capital stock are held of record by the Persons listed on Schedule 1.1.  All of the issued   and outstanding shares of capital stock of the Company have been duly authorized and validly   issued, and are fully paid and nonassessable.  Except for the Company Stock Options, the   Common Warrant Shares, the Preferred Warrant Shares, all of which are set forth on   Schedule 3.2(i), and except as otherwise set forth on Schedule 3.2(ii), there are no outstanding   subscriptions, options, warrants, commitments, preemptive rights, deferred compensation rights,   agreements, arrangements or commitments of any kind to which the Company is a party relating   to the issuance of, or outstanding securities convertible into or exercisable or exchangeable for,   any shares of capital stock of the Company or which restrict the transfer of any such shares.    Except as provided in the Amended and Restated Certificate of Incorporation of the Company as   currently in effect (as amended, the “Company Charter”) and as otherwise set forth on   Schedule 3.2(iii), there are no outstanding contractual obligations of the Company to repurchase,   redeem or otherwise acquire any shares of capital stock or other equity interests or any other   securities of the Company.       

 

             17   3.3 Subsidiaries.   (a) Except as set forth on Schedule 3.3(a)(i), all of the outstanding shares of   capital stock of, or other equity interests in, each of the Subsidiaries (y) have been validly issued   and are fully paid and non-assessable and (z) are free and clear of any and all Liens other than   Permitted Liens.  Except as set forth on Schedule 3.3(a)(ii), all of the outstanding shares of   capital stock (or equity interests of entities other than corporations) of each of the Subsidiaries   are beneficially owned, directly or indirectly, by the Company.  There are not outstanding, (i) any   options, warrants, or other rights to purchase from any Subsidiary any shares of capital stock (or   equity interests of entities other than corporations) of any Subsidiary, (ii) any securities   convertible into or exchangeable for shares of capital stock (or equity interests of entities other   than corporations) of any Subsidiary, or (iii) any other commitments of any kind for the issuance   of shares of capital stock (or equity interests of entities other than corporations) or options,   warrants, or other securities of any Subsidiary.     (b) Schedule 3.3(b) sets forth a true and complete list of each Subsidiary and   such Subsidiary’s legal form, jurisdiction of incorporation or organization, the names of such   Subsidiary’s beneficial owners, and the number of outstanding shares of capital stock (or equity   interests of entities other than corporations) held by such Subsidiary’s beneficial owners.  Except   for the Subsidiaries, the Company does not own any capital stock of, or other equity interest in,   or any interest convertible into, or exercisable or exchangeable for, any capital stock of, or other   equity interest in, any other Person.   (c) Each Subsidiary is duly organized, validly existing and in good standing   under the laws of its applicable jurisdiction as set forth on Schedule 3.3(b), has all requisite   power and authority to carry on its business as now conducted and to own or lease and operate its   properties and assets, and is duly qualified to do business as a foreign entity under the laws of   each jurisdiction where such qualification is necessary, except where the failure to be so   qualified would not reasonably be expected to be material.   3.4 Financial Information.     (a) Schedule 3.4(a) contains complete copies of the audited consolidated   balance sheets of the Company and its Subsidiaries as at December 29, 2013 and December 30,   2012, and consolidated statements of income and retained earnings, stockholders’ equity and   cash flows for the years then ended (collectively, the “Audited Financial Statements”) and the   unaudited consolidated balance sheet of the Company and its Subsidiaries at April 27, 2014 and   consolidated statements of income and cash flows for the four (4)-month period then ended   (collectively, the “Interim Financial Statements” and, together with the Audited Financial   Statements, the “Financial Statements”).     (b) The Financial Statements have been prepared in accordance with GAAP   applied on a consistent basis throughout the period involved, subject, in the case of the Interim   Financial Statements, to normal and recurring year-end adjustments and the absence of notes.    The Financial Statements are based on the books and records of the Company and its   Subsidiaries, and present fairly, in all material respects, the consolidated financial condition of   the Company and its Subsidiaries, as of the date thereof and for the period covered thereby.       

 

             18   (c) Except as set forth on Schedule 3.4(c), neither the Company nor any of its   Subsidiaries has any material liabilities that would be required to be reflected or reserved against   on a consolidated balance sheet of the Company prepared in accordance with GAAP, except (a)   those that are adequately reflected or reserved against on the consolidated balance sheet dated   December 29, 2013 included in the Audited Financial Statements, (b) those that have been   incurred in the Ordinary Course of Business consistent with past practice since such date and (c)   Selling Expenses that are being paid at Closing.      3.5 Absence of Certain Changes.  Except as set forth on Schedule 3.5, and   Schedule 6.5 for certain actions that may be taken after the date hereof, since   December 29, 2013, the Company has not undergone any change in the condition (financial or   otherwise), assets, liabilities, Indebtedness, Liens or capitalization, so as to cause a Material   Adverse Effect, and neither the Company nor any of its Subsidiaries has:    (a) Acquired or disposed of any assets or properties in any transaction with   any Affiliate or, except in the Ordinary Course of Business, acquired, disposed of or leased any   assets or properties in any transaction with any other Person, including the making of any   material capital expenditures;   (b) Adopted any amendment of its Governing Documents; split, combined or   reclassified any of its shares of capital stock or other equity interests; issued or sold any shares of   capital stock or other equity interests; granted any options, warrants or other rights to purchase or   obtain any shares of capital stock or other equity interests; declared or paid any dividends or   distributions on or in respect of its capital stock or other equity interests or redeemed, purchased   or acquired any of its own shares of capital stock or other equity interests;     (c) Granted to any salaried employee or any class of other employees any   increase in compensation in any form (including any material increase in value of any benefits),   any increase in eligibility to earn compensation in any form (including bonus or other incentive   compensation), or any right to severance or termination pay, or entered into any employment   agreement with any employee, except in the Ordinary Course of Business and except as required   by applicable Law;   (d) Adopted or materially amended any Benefit Plan, except as required by   applicable Law;   (e) Suffered any strike or other labor trouble with employees or been the   subject of any effort to reorganize the Company’s or any of its Subsidiaries’ workforce, or any   part thereof, into a bargaining unit;   (f) Incurred, assumed or guaranteed any Indebtedness in an aggregate amount   exceeding Two Hundred Fifty Thousand Dollars ($250,000), except unsecured current   obligations and liabilities incurred in the Ordinary Course of Business and draws on the   revolving line of credit in the Ordinary Course of Business or incurred any Lien other than any   Permitted Lien;   (g) Amended, changed, or terminated, or suffered any amendment, change, or   termination of, any Material Contract;      

 

             19   (h) Adopted a material change in any method of accounting or accounting   practice, except as required by GAAP;    (i) Canceled or compromised any material claim or waived or released any   material right or instituted, settled, or agreed to settle any Legal Proceeding;    (j) Adopted any plan of merger, consolidation, reorganization, liquidation or   dissolution or filed a petition in bankruptcy under any provisions of any bankruptcy, insolvency   or reorganization Law or consented to the filing of any bankruptcy or similar petition against it   under any similar Law;   (k) Acquired by merger or consolidation with, or by purchase of a substantial   portion of the assets or stock of, or by any other manner, any business or any Person or any   division thereof;   (l) Entered into a new line of business or abandoned or discontinued any   existing lines of business;    (m) Made, changed or rescinded any material Tax election, amended any   material Tax Return, changed a method of accounting for Tax purposes, entered into a Tax   “closing agreement,” or agreed to an extension of a statute of limitations with respect to a   material amount of Taxes (other than as a result of customary extensions to file Tax Returns); or   (n) Agreed or committed to do any of the foregoing.   3.6 Assets.   (a) Neither the Company nor any of its Subsidiaries own any real property.    Schedule 3.6(a) sets forth all lease agreements, including all amendments and supplements   thereto, to which the Company or any of its Subsidiaries are bound as parties with respect to any   Leased Real Property (the “Real Property Leases”).  All Real Property Leases are valid, binding   and in full force and effect and are enforceable, subject to the General Enforceability Exceptions,   against the Company or one of its Subsidiaries, as the case may be, and, to the Knowledge of the   Company, the other party thereto, in accordance with their terms.     (b) The Company and/or its Subsidiaries own title to, or have valid leasehold   or license interests in, all of the real property and tangible and intangible personal properties   utilized by the Company and/or its Subsidiaries in the ownership or operation of their respective   businesses and such properties are sufficient for the continued conduct of the such businesses   after the Closing in substantially the same manner as conducted prior to the Closing and   constitute all of the rights, property and assets necessary to conduct such businesses as currently   conducted. All of the tangible personal properties are in good operating condition and repair   (subject to normal wear and tear) and are adequate for the uses to which they are being put.     (c) Except as set forth on Schedule 3.6(c), no Liens (other than Permitted   Liens) exist on any of the Company’s or its Subsidiaries’ assets, properties, or the Leased Real   Property.       

 

             20   (d) All Personal Property Leases are valid, binding, and in full force and   effect and are enforceable against the Company or one of its Subsidiaries, subject to the General   Enforceability Exceptions, as the case may be, and, to the Knowledge of the Company, the other   party thereto, in accordance with their terms.  To the Knowledge of the Company, there are no   defaults existing under any of the Personal Property Leases on the part of any party thereto.   3.7 Contracts.   (a) Schedule 3.7(a) lists each of the following Contracts, including all   amendments and supplements thereto, of the Company and/or its Subsidiaries, (together with all   Real Property Leases listed on Schedule 3.6(a), collectively, the “Material Contracts”):   (i) Each Contract (other than any vendor contracts under MSP   arrangements entered into in the Ordinary Course of Business) that, by its terms, expressly   requires payments by the Company or any of its Subsidiaries in excess of Two Hundred and Fifty   Thousand Dollars ($250,000) during calendar year 2014 or expressly requires such payments in   any calendar year commencing on or after January 1, 2015 and that cannot be cancelled by the   Company or such Subsidiary without penalty or without more than thirty (30) days’ notice;   (ii) Each Contract whereby the Company or any of its Subsidiaries   generated revenues in excess of One Million Dollars ($1,000,000) (or, in the case of OWM   arrangements (determined on a site-by-site basis), Three Million Dollars ($3,000,000)) during   the twelve (12)-month period ended March 30, 2014;   (iii) All Contracts that relate to the sale of any of the Company’s or its   Subsidiaries’ assets, other than in the Ordinary Course of Business, for consideration in excess of   One Hundred Thousand Dollars ($100,000);   (iv) All Contracts that relate to the acquisition of any business, a   material amount of stock or assets of any other Person or any real property (whether by merger,   sale of stock, sale of assets or otherwise), in each case (A) excluding the acquisition of assets   made in the Ordinary Course of Business, and (B) involving amounts in excess of One Hundred   Thousand Dollars ($100,000);    (v) Except for Contracts relating to trade receivables, all Contracts   relating to Indebtedness in each case having an outstanding principal balance in excess of Fifty   Thousand Dollars ($50,000);   (vi) All collective bargaining agreements or Contracts with any labor   organization, union or association to which the Company or any of its Subsidiaries is a party or is   otherwise subject to;    (vii) All Contracts with any officer, director, equity holder, or Affiliate   of any Seller, in each case, other than employment related arrangements;    (viii) All Contracts containing covenants of the Company or any of the   Subsidiaries not to compete in any line of business or with any Person in any geographical area;     

 

             21   (ix) All material licenses, sublicenses and other agreements set forth on   Schedule 3.9(d);    (x) Each Contract either (A) for (x) the employment of any executive   officer of the Company, or (y) an individual employee of the Company or any of its subsidiaries   whose annual base salary exceeds One Hundred and Fifty Thousand Dollars ($150,000) on a full   time basis, in each case with respect to (x) and (y), that is not terminable by the Company or any   Subsidiary party thereto without the payment of severance as required by the express terms of   such Contract solely to the extent such terms provide severance in an amount greater than any   statutory severance required pursuant to applicable Law, or (B) that provides for any retention,   change in control, or other similar payments triggered by the Transactions;   (xi) All Contracts with independent contractors or consultants (or   similar arrangements) who receive more than One Hundred Thousand Dollars ($100,000) or   more per annum from the Company or any of its Subsidiaries for services performed and which   Contract cannot be cancelled by the Company or such Subsidiary without penalty or without   more than thirty (30) days’ notice; and   (xii) All Contracts providing for the material indemnification of any   Person by the Company or any Subsidiary, other than Contracts entered into in the Ordinary   Course of Business.   (b) The Company has delivered or made available to the Purchaser true and   correct copies of all Material Contracts. Except as set forth on Schedule 3.7(b), all Material   Contracts are valid, binding, and in full force, and are enforceable against the Company or one of   its Subsidiaries, as the case may be, and, to the Knowledge of the Company, the other parties   thereto, in accordance with their terms, subject to the General Enforceability Exceptions.  Except   as set forth on Schedule 3.7(b), neither the Company nor any of its Subsidiaries, as the case may   be, is (with or without the lapse of time or the giving of notice, or both) in material breach or   default in any respect under any Material Contract, and, to the Knowledge of the Company, no   other party to any Material Contract is (with or without the lapse of time or the giving of notice,   or both) in breach or default in any respect thereunder. Neither the Company, nor to the   Knowledge of the Company any other party thereto, has exercised, or expressed a clear intent to   exercise, any termination rights with respect to any of the Material Contracts.     3.8 Employee Benefit Matters.     (a) Schedule 3.8(a) sets forth a list of each material employee benefit plan,   within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as   amended (“ERISA”), and each other material plan, program or arrangement providing   compensation or benefits to current or former directors, officers, or employees (or dependents or   beneficiaries thereof) and (i) which is sponsored, maintained, contributed to, or required to be   contributed to by the Company or an any of its Subsidiaries,  or (ii) under which the Company   has any material obligation or liability (the “Benefit Plans”).  With respect to each Benefit Plan,   the Company has made available to the Purchaser (if applicable to such Benefit Plan):  (A) all   material documents embodying or governing such Benefit Plan, and any funding medium for the   Benefit Plan (including trust agreements); (B) the most recent IRS determination or opinion     

 

             22   letter with respect to such Benefit Plan under Code Section 401(a); (C) the most recently filed   IRS Forms 5500; (D) the summary plan description; and (E) any material notices, inquiries or   other communications from a Governmental Entity.   (b) Except as set forth on Schedule 3.8(b), (i) each Benefit Plan intended to be   qualified under Section 401(a) of the Code has received a favorable determination or opinion   letter from the IRS regarding its qualification thereunder or may rely on an opinion letter issued   by the IRS with respect to a prototype plan adopted in accordance with the requirements for such   reliance and nothing has occurred that would reasonably be expected to cause the revocation of   such determination letter or the unavailability of reliance on such opinion letter, (ii) each Benefit   Plan has been administered in accordance with its terms and requirements of applicable law in all   material respects, and (iii) neither any Benefit Plan nor any other benefit plan maintained or   contributed to by the Company or any ERISA Affiliate within the last six (6) years is subject to   Title IV of ERISA or Section 412 of the Code or is a “multiemployer plan,” as defined in   Section 3(37) of ERISA.    (c) Except as set forth on Schedule 3.8(c), and other than as required under   Section 4980B of the Code or other applicable Law, no Benefit Plan provides benefits in the   nature of health, life or disability insurance following retirement or other termination of   employment (other than death or disability benefits when death or disability occurs during   employment).   (d) Except as set forth on Schedule 3.8(d), (i) there is no pending, or to the   Knowledge of the Company, threatened in writing, litigation or other formal proceedings (other   than routine claims for benefits) relating to a Benefit Plan, and (ii) to the Knowledge of the   Company, no Benefit Plan has within the three (3) years prior to the date hereof been the subject   of an examination or audit by a Governmental Entity.   (e) Except as set forth on Schedule 3.8(e), the execution and delivery of this   Agreement (alone or in conjunction with any other event, including any termination of   employment on or in connection with the Closing) will not (i) entitle any employee to any   compensation or benefit payment (including severance or payments as defined in Section 280G   of the Code), (ii) accelerate the vesting (except potentially in connection with the cancellation of   the Company Stock Options pursuant to Section 1.3(a)) or trigger any material payment or   funding of any compensation or benefit under any Benefit Plan, (iii) result in any material breach   or violation of, or default under, or limit the Company’s or any Subsidiary’s right to amend,   modify or terminate, any Benefit Plan, or (iv) result in the forgiveness of any indebtedness of any   employee. The Company and its Subsidiaries have no commitment or obligation and have not   made any representations to any employee, officer, director, independent contractor or   consultant, whether or not legally binding, to adopt, amend or modify any Benefit Plan or any   collective bargaining agreement, in connection with the consummation of the Transactions or   otherwise.   (f) Neither the Company nor any of its ERISA Affiliates has (i) incurred, or   reasonably expects to incur, either directly or indirectly, any material liability under Title I or   Title IV of ERISA or related provisions of the Code or foreign Law relating to employee benefit   plans; (ii) failed to timely pay premiums to the Pension Benefit Guaranty Corporation; (iii)     

 

             23   withdrawn from any pension plan subject to Title IV of ERISA; (iv) engaged in any transaction   which would give rise to liability under Section 4069 or Section 4212(c) of ERISA; or (v)   engaged in any nonexempt prohibited transaction under Section 406 or ERISA or Code Section   4975 that would reasonably be expected to result in any material liability to the Company.   (g) None of the Company nor any of its Subsidiaries has any obligation to   pay, gross up, or otherwise indemnify any individual for any Taxes imposed under Code Section   409A or Code Section 4999.     (h) To the Knowledge of the Company, the Company and its ERISA Affiliates   is classifying, and has for the past four (4) years classified, all individuals who perform services   for them correctly under each Benefit Plan, ERISA, the Code, and all other applicable Laws as   common law employees, independent contractors or leased employees.    (i) Except as set forth on Schedule 3.8(i), neither the Company nor any   Affiliate has sponsored, maintained, contributed to or been required to contribute to, or has any   liability under, any employee benefit plan that is subject to the laws of a foreign jurisdiction.   3.9 Intellectual Property.   (a) Schedule 3.9(a) sets forth a complete and accurate list of all patents,   registered trademarks, registered copyrights and domain names, and applications for any of the   foregoing, that are owned by the Company or any of its Subsidiaries.   (b) The Company or a Subsidiary of the Company is the owner of, or has the   right to use, all Intellectual Property, as is necessary in connection with the business of the   Company and its Subsidiaries as currently conducted.  Each item of Intellectual Property owned,   licensed or used by the Company or a Subsidiary of the Company immediately prior to the   Closing will be owned, licensed or available for use by the Company immediately following the   Closing.  Each item of Intellectual Property owned by the Company and its Subsidiaries is, to the   Knowledge of the Company, valid and enforceable and otherwise fully complies with all Laws   applicable to the enforceability thereof.   (c) Neither the Company nor any of its Subsidiaries is a party to any suit,   action or proceeding that involves a claim of infringement, unauthorized use, or violation of any   Intellectual Property used or owned by any Person against the Company or its Subsidiaries, or   challenging the ownership, use, validity or enforceability of any Intellectual Property owned or   used by the Company or its Subsidiaries.     (d) Schedule 3.9(d) sets forth a complete and accurate list of all licenses,   sublicenses and other agreements to which the Company and/or its Subsidiaries are a party   (i) granting any other Person the right to use the Intellectual Property, or (ii) pursuant to which   the Company or its Subsidiaries are authorized to use any third party Intellectual Property, which   are used by the Company or its Subsidiaries in the business of the Company as currently   conducted, other than commercial off-the-shelf software.  With respect to each item of identified   in Schedule 3.9(d):  (i) to the Knowledge of the Company, such item is not subject to any Order;   (ii) to the Knowledge of the Company, no Proceeding is pending or is threatened or anticipated   that challenges the legality, validity or enforceability of such item; and (iii) the Company has not     

 

             24   granted any sublicense or similar right with respect to such item, except as permitted by the   terms of such license or agreement.   (e) The Company and each Subsidiary of the Company has taken   commercially reasonable and prudent action to maintain and protect each item of Intellectual   Property that it owns, licenses or uses, including reasonable security measures to protect the   confidentiality of any trade secrets.     (f) The Company and each of its Subsidiaries has not violated or infringed   upon or otherwise come into conflict with any Intellectual Property other than patents of third   parties, and to the Knowledge of the Company and each of its Subsidiaries, has not violated or   infringed upon or otherwise come into conflict with any patents of third parties.  The Company   and each of its Subsidiaries has not received any written notice alleging any such violation,   infringement or other conflict.  To the Knowledge of the Company, no third party has infringed   upon or otherwise come into conflict with any Intellectual Property of the Company or its   Subsidiaries.    (g) No software in any of the Company or its Subsidiaries’ products or   services contains, incorporates, links or calls to or otherwise uses any software (in source or   object code form) licensed from another party under a license commonly referred to as an open   source, free software, copyleft or community source code license (including any library or code   licensed under the GNU General Public License, GNU Lesser General Public License, Apache   Software License, Common Public License, Common Development and Distribution License,   Eclipse Public License, Mozilla Public License or any other public source code license   arrangement, collectively “Open Source Software”) in a manner that obligates the Company or   any Subsidiary to disclose, make available, offer or deliver any other portion of the source code   of any Product or component thereof to any third party other than such Open Source Software.    (h) All present employees, contractors, and consultants of the Company and   its Subsidiaries who have materially contributed to the conception, development, authoring,   creation, or reduction to practice of any Intellectual Property used in the Company’s or its   Subsidiaries’ operations have executed agreements that assign all right, title, and interest in such   Intellectual Property to the Company or its Subsidiaries and protect the confidentiality of all   trade secrets of the Company and its subsidiaries.  To the Knowledge of the Company and its   Subsidiaries, no present or former employee, director, officer, or contractor of the Company or   its subsidiaries is, as a result of or in the course of such employee’s, director’s, officer’s, or   contractor’s engagement by the Company, in default or breach of any material term of any   employment agreement, non-disclosure agreement, assignment or invention agreement, or   similar agreement with the Company.   (i) Except as set forth in Schedule 3.9(i) of the Company Disclosure   Schedule, the Company and each of its Subsidiaries has not disclosed, delivered or licensed to   any Person, agreed to disclose, deliver or license to any Person, or permitted the disclosure or   delivery to any escrow agent or other Person of, any source code owned by the Company or its   Subsidiaries (“Source Code”).  To the Knowledge of the Company, no event has occurred, and   no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or     

 

             25   would reasonably be expected to, result in the disclosure, delivery or license by the Company, it   Subsidiaries or any Person then acting on its behalf to any Person of any Source Code.   (j) To the Knowledge of the Company, the Company and its subsidiaries are   in compliance with the terms of all Contracts relating to data privacy, security or breach   notification (including provisions that impose conditions or restrictions on the collection, use,   disclosure, transmission, destruction, maintenance, storage or safeguarding of personally   identifiable information (as defined in NIST Special Publication 800-122) (“PII”).  The   Company and its Subsidiaries use commercially reasonable measure to protect the integrity and   security of PII in their possession, custody or control.   (k) Within the last two (2) years, neither the Company or its Subsidiaries has   received any written notice of any claim or action relating to the Company or its Subsidiaries’   information privacy or data security practices, including with respect to the access, disclosure or   use of personal information maintained by or on behalf of the Company or its Subsidiaries, and   to the Company’s Knowledge no Person  has threatened any such claim or action.   (l) Within the last two (2) years, and except as set forth on Schedule 3.9(l),   neither the Company nor any of its Subsidiaries has experienced any loss, damage, or   unauthorized access, disclosure, use or breach of security of any PII in the Company’s or its   Subsidiaries’ possession, custody or control, or otherwise held or processed on its behalf.   3.10 Insurance.  Schedule 3.10 sets forth a list, as of the date hereof, of all material   insurance policies maintained by the Company and/or its Subsidiaries (collectively, the   “Insurance Policies”), true and correct copies of which have been made available to the   Purchaser.  Such Insurance Policies are in full force and effect. All premiums due on such   Insurance Policies have been paid.  Neither the Company nor any of its Subsidiaries has received   any written notice of cancellation of, premium increase with respect to or alteration of coverage   under any of such Insurance Policies. All such Insurance Policies (a) are valid and binding in   accordance with their terms; and (b) have not been subject to any lapse in coverage.  There are   no claims related to the business of the Company or its Subsidiaries pending under any such   Insurance Policies as to which coverage has been denied or in respect of which there is an   outstanding reservation of rights.  None of the Company or any of the Subsidiaries is in default   under, or has otherwise failed to comply with, in any material respect, any provision contained in   any such Insurance Policy.  To the Knowledge of the Company, the Insurance Policies are   reasonably sufficient for the operation of the businesses of the Company and its Subsidiaries as   currently conducted.    3.11 Litigation.  Except as set forth on Schedule 3.11, there are no Legal Proceedings   pending or, to the Knowledge of the Company, threatened by or against the Company or any of   its Subsidiaries.  Neither the Company nor any of its Subsidiaries is subject to any Order of any   Governmental Authority that, individually or in the aggregate, would be material.   3.12 Operations in Conformity with Law.   (a) Except as set forth on Schedule 3.12, the Company and its Subsidiaries are   in compliance in all material respects with all applicable Laws.       

 

             26   (b) All Permits required for the Company and its Subsidiaries to conduct their   business have been obtained and are valid and in full force and effect, except where the failure to   obtain such Permits would not reasonably be expected to be material. No event has occurred that,   with or without notice or lapse of time or both, would reasonably be expected to result in the   revocation, suspension, lapse or limitation of any material Permit.    3.13 Customers.   (a) Schedule 3.13 lists each of the top fifty (50) customers of the Company   and its Subsidiaries (which, in the case of OWM arrangements, shall be determined on a site-by-   site basis, and in the case of other arrangements, by individual contract) by billings, on a   consolidated basis, during the fiscal year ended December 29, 2013 (each, a “Significant   Customer”) and the percentage of total revenues of the Company and its Subsidiaries such   Significant Customer represented during such period. Neither the Company nor any of its   Subsidiaries has granted any Significant Customer any regularly recurring rebates, discounts,   refunds, sign-on bonuses or similar adjustments in price at any time during the past twelve (12)   months other than contained in the Material Contract with such Significant Customer.     (b) Neither the Company nor any of its Subsidiaries has received any written   notice, or, to the Knowledge of the Company, oral notice, from any Significant Customer that   such Significant Customer will not continue as a customer of the Company or any of its   Subsidiaries after the Closing or that such customer intends to terminate or materially and   adversely modify existing Contracts with the Company or any of its Subsidiaries, as applicable.    To the Knowledge of the Company, no Significant Customer of the Company or its Subsidiaries   has asserted a claim that remains outstanding for indemnification arising from any services   provided to any such Significant Customer.   3.14 Taxes.     (a) Except as set forth on Schedule 3.14:   (i) the Company and its Subsidiaries have duly and timely filed (or   obtained extensions as to) all Tax Returns that are required to have been filed by them, and all   such Tax Returns are true, correct and complete in all material respects;    (ii) the Company and its Subsidiaries have paid all Taxes that are due   and payable by the Company or any Subsidiary (whether or not such Taxes were reflected on any   Tax Returns);    (iii) (A) neither the Company nor any of its Subsidiaries is a party to   any action or proceeding by any Tax Authority or other governmental authority for assessment or   collection of Taxes from the Company or such Subsidiary, and (B) neither the Company nor any   Subsidiary has granted any waiver of any statute of limitation with respect to, or any extension of   a period for the assessment of, any Tax; and    (iv) (A) during the three years immediately prior to the date hereof,   neither the Company nor any of its Subsidiaries has been audited by any Tax Authority or other   governmental authority with respect to the Tax Returns of the Company or such Subsidiary and     

 

             27   neither the Company nor any Subsidiary has received any written notice of deficiency or   assessment of additional Taxes for which it would be liable, or any written notice of an intention   to commence a Tax audit, (B) no deficiency assessment or proposed adjustment of the Taxes for   which the Company or any of its Subsidiaries would be liable is pending, and (C) no Tax   Authority or other governmental authority in a jurisdiction where the Company or any   Subsidiary does not file Tax Returns has made any written claim that the Company or such   Subsidiary, as applicable, is or may be subject to Tax in that jurisdiction;   (v) each of the Company and its Subsidiaries has complied in all   material respects with applicable Laws relating to the payment and withholding of any Taxes   required to be withheld from any payment to an employee, creditor or other third party;    (vi) there are no liens for Taxes on any of the assets of the Company or   any of its Subsidiaries other than Liens for taxes not yet due and payable;   (vii) (A) none of the Company or any Subsidiary has liability for Taxes   of any other Person as a result of being or ceasing to be a member of any “affiliated group” of   corporations within the meaning of Section 1504 of the Code (or any similar affiliated,   combined, consolidated or unitary group or arrangement for group relief for state, local, or   foreign Tax purposes), (B) neither the Company nor any Subsidiary has liability for Taxes of any   other Person arising under contract, by operation of law, by reason of being a successor or   transferee, or otherwise, and (C) neither the Company nor any Subsidiary is a party to or bound   by any contract, agreement or other arrangement regarding the sharing or allocation of liability   for Taxes or payment of Taxes, in each case, other than in respect of a group the common parent   of which is the Company;   (viii) neither the Company nor any Subsidiary will be required to include   any item of income in, or exclude any item of deduction from, income for any Tax period (or   portion thereof) ending after the Closing Date as a result of any: (A) change in method of   accounting for a Tax period ending on or prior to the Closing Date; (B) installment sale or open   transaction disposition made on or prior to the Closing Date; (C) prepaid amount received on or   prior to the Closing Date; or (D) agreement with a Tax Authority entered into on or prior to the   Closing Date;   (ix) neither the Company nor any Subsidiary is participating or has   participated in a “listed transaction” within the meaning of Section 6707A(c)(2) of the Code and   Treasury Regulation Section 1.6011-4(b)(2);   (x) in connection with the consummation of the Transaction, no   payment or benefit has been, will be, or may be made or provided under this Agreement, under   any arrangement contemplated by this Agreement, or under any agreement or arrangement to   which the Company or any Subsidiary is a party that, either alone or together with any other   payments or benefits, constitutes or would constitute a “parachute payment” within the meaning   of Code Section 280G(b)(2).  None of the Company, any Subsidiary, the Purchaser, or any   affiliate of the Purchaser will be obligated to pay or reimburse any Person for any Taxes imposed   under Code Section 4999 as a result of the consummation of the Transaction, either alone or in   connection with any other event;     

 

             28   (xi) each outstanding share of Company stock is property that is   “substantially vested” under Code Section 83 and Treasury Regulation Section 1.83-3(b).  Each   election made under Code Section 83(b) with respect to the issuance of any Company Share was   timely and valid, and each such election is currently in effect and has not been revoked,   terminated, or declared invalid;   (xii) to the Knowledge of the Company, neither the Company nor any of   its Subsidiaries is engaged in or has ever been engaged in a trade or business through a   “permanent establishment” within the meaning of an applicable income Tax treaty in any country   other than the country in which the Company or such Subsidiary, as the case may be, is formed   or organized; and   (xiii) neither the Company nor any Subsidiary has been either a   “distributing corporation” or a “controlled corporation” within the respective meanings of such   terms under Code Section 355(a)(1)(A) in a distribution of stock qualifying under Code Section   355 (A) in the two years before the date of this Agreement or (B) in a distribution that could   otherwise constitute part of a “plan” or “series of related transactions” within the meaning of   Code Section 355(e) in conjunction with the transactions contemplated by this Agreement.   (b) Notwithstanding anything to the contrary in this Agreement, the Company   makes no representations and warranties with respect to the amount, validity or usability of its   net operating losses, Tax basis in its assets, Tax credits, or other Tax attributes for taxable   periods beginning after the Closing Date.   (c) Except for certain representations in Section 3.8 related to Taxes, the   representations and warranties set forth in this Section 3.14 shall constitute the sole and only   representations and warranties by the Company with respect to Taxes.   3.15 Employee Matters.   (a) Except as set forth on Schedule 3.15(a)(i), the Company and each of its   Subsidiaries (or any predecessor entity, if applicable) is, and during the last four (4) years, has   been in compliance with all then applicable Laws with respect to employment, including   termination of employment, WARN and any similar state or local “mass layoff” or “plant   closing” Law, hiring, discrimination, civil rights, terms and conditions of employment, wages,   hours, and safety and health, workers’ compensation, common law employee status and the   collection and payment of withholding and social security taxes and any similar tax, collective   bargaining, and employment practices, and has not engaged in any unfair labor practice, except   where such non-compliance, taken as whole, is not material.  There has been no “mass layoff” or   “plant closing” (as defined by WARN) with respect to the Company or any of its Subsidiaries   within the six (6) months before the Closing Date.  During the last four (4) years the Company   and each of its Subsidiaries (or any predecessor entity, if applicable) has withheld all amounts   required by law or by agreement to be withheld from the wages, salaries, and other payments to   its employees, including any common law employees, and to the Knowledge of the Company is   not liable for any arrears of wages (including commissions, bonuses, or other compensation), or   any taxes or any penalty for failure to comply with any of the foregoing (or, if any arrears,   penalty, or interest were assessed against the Company or any of its Subsidiaries regarding the     

 

             29   foregoing, it has been fully satisfied).  To the Knowledge of the Company, neither the Company   nor any of its Subsidiaries is liable for any payment to any trust or other fund or to any   governmental or administrative authority with respect to unemployment compensation benefits,   workers’ compensation benefits, social security, social benefits, or other benefits or obligations   for any current or former employees, including any common law employees (other than routine   payments to be made in the Ordinary Course of Business).  Except as set forth on   Schedule 3.15(a)(ii), there are no pending claims against any the Company or any of its   Subsidiaries under any workers’ compensation plan or policy or for long-term disability and   there are no complaints, charges or claims pending or, to the Knowledge of the Company,   threatened between the Company or any of its Subsidiaries and any current or former employee,   which claims have or could reasonably be expected to result in an action, suit, proceeding, claim,   arbitration, or investigation before any Governmental Entity, including claims for compensation,   severance benefits, vacation time, vacation pay, or pension benefits, or any other complaint,   charge or claim pending in any court or administrative agency from any current or former   employee or any other person arising out of the Company or any of its Subsidiaries’ status as an   employer or purported employer, or as an entity which engages independent contractors or   consultants, or any workplace practices or policies whether in the form of claims for   discrimination, harassment, unfair labor practices, grievances, wage and hour violations,   wrongful discharge, based on, arising out of, in connection with, or otherwise relating to the   employment or termination of employment of or failure to employ any individual or otherwise.    To the Knowledge of the Company, no current or former employee of the Company or any of its   Subsidiaries is, or has in the past two (2) years been, in violation of any material term of any   noncompetition agreement or any restrictive covenant to a former employer relating to the right   of such current or former employee to be employed by the Company or any of its Subsidiaries or   to the use of trade secrets or proprietary information of others.   (b) Neither the Company nor any of its Subsidiaries is subject to any labor   strike, lockout, dispute, slow down, stoppage or similar labor dispute with respect to any current   or former employees.  Except as set forth on Schedule 3.15(b), neither the Company nor any of   its Subsidiaries has received during the three years immediately prior to the date hereof any   written notice of, and to the Knowledge of the Company there is not threatened, any labor or   civil rights dispute, controversy, arbitration, or grievance or any other unfair labor practice,   proceeding or breach of contract claim or action with respect to claims of, or obligations to, any   current or former employees.    (c) Except as set forth on Schedule 3.15(c), (i) there is no collective   bargaining or similar agreement with any union, labor organization, works council, or similar   representative covering any employee of the Company or any of its Subsidiaries, (ii) no petition   for certification or election of any such representative is existing or pending or, to the   Knowledge of the Company, threatened to be brought or filed with respect to any employee of   the Company or any of its Subsidiaries, and (iii) no such representative has sought certification   or recognition with respect to any such employee and there is no organizing activity, to the   Knowledge of the Company, pending or threatened by any such representative or group of   employees.   3.16 Brokers.  Except as set forth on Schedule 3.16, all negotiations relating to this   Agreement and the Transactions have been carried on without the intervention of any Person     

 

             30   acting on behalf of the Company in such manner as to give rise to any valid claim against the   Company or the Purchaser for any brokerage or finder’s commission, fee, or similar   compensation.   3.17 Environmental Matters.      (a) The Company and its Subsidiaries are, and have at all times been, in   compliance in all material respects with all applicable Environmental Laws, including obtaining,   maintaining in good standing, and complying with all Environmental Permits. No action or   proceeding is pending or, to the Knowledge of the Company, threatened to revoke, modify, or   terminate any such Environmental Permit.    (b) Neither the Company nor any of its Subsidiaries is the subject of any   outstanding written Order or Contract with any Governmental Entity with respect to (i)   Environmental Laws, (ii) Remedial Action, or (iii) any Release or threatened Release of a   Hazardous Material.   (c) No claim has been made in the past three (3) years or is pending or, to the   Knowledge of the Company, threatened against the Company or any of its Subsidiaries alleging   that the Company or any of its Subsidiaries is in violation of any Environmental Law or   Environmental Permit has any liability under any Environmental Law.    (d) To the Knowledge of the Company, no facts, circumstances, or conditions   exist with respect to the Leased Real Property that would reasonably be expected to result in the   Company or any of its Subsidiaries incurring Environmental Costs and Liabilities.    (e) To the Knowledge of the Company, there are no investigations of the   Company or any of its Subsidiaries, or, to the Knowledge of the Company, its or their respective,   currently or previously owned, operated, or leased property pending or threatened that could lead   to the imposition of any unbudgeted Environmental Costs and Liabilities to the Company or any   of its Subsidiaries under Environmental Law.   3.18 Disclaimer of Other Representations and Warranties.   (a) NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES,   REPRESENTATIVES, EMPLOYEES, DIRECTORS, OFFICERS OR SELLERS HAS MADE,   AND SHALL NOT BE DEEMED TO HAVE MADE, ANY REPRESENTATIONS OR   WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING   TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR THE BUSINESS OF THE   COMPANY OR ANY OF ITS SUBSIDIARIES OR OTHERWISE IN CONNECTION WITH   THE TRANSACTION, OTHER THAN THOSE REPRESENTATIONS AND WARRANTIES   EXPRESSLY SET FORTH IN THIS ARTICLE III OR AS A SELLER IN ARTICLE IV.   (b) Without limiting the generality of the foregoing, neither the Company, any   Seller or any other Person (including any representative, employee, officer, director or   stockholder of the Company or any of its Subsidiaries) has made, and shall not be deemed to   have made, any express or implied representation or warranty, either written or oral, in the   materials relating to the business of the Company and its Subsidiaries made available to the     

 

             31   Purchaser, including due diligence materials, or in any presentation of the business of the   Company and its Subsidiaries by management of the Company or others in connection with the   Transaction, and no statement contained in any of such materials or made in any such   presentation shall be deemed a representation or warranty hereunder.  It is understood that any   cost estimates, projections or other predictions, any data, any financial information or any   memoranda or offering materials or presentations, including any offering memorandum or   similar materials made available by the Company and its representatives, are not and shall not be   deemed to be or to include representations or warranties of the Company.   ARTICLE IV      REPRESENTATIONS AND WARRANTIES OF SELLERS   Each of the Sellers, solely as to itself, hereby represents and warrants to the Purchaser as   follows, in each case as of the date hereof and as of the Closing:   4.1 Authority and Validity.  Such Seller has the power and authority to execute and   deliver this Agreement and the other Transaction Documents to which it is a party and to   consummate the Transactions that are required of such Seller pursuant to such Transaction   Documents.  This Agreement has been duly and validly executed and delivered by such Seller   and (assuming due authorization, execution and delivery by the other Parties hereto) constitutes a   valid and binding obligation of such Seller, enforceable against such Seller in accordance with its   terms, except as may be limited by the General Enforceability Exceptions.   4.2 No Violation.  The execution, delivery and performance of such Seller of this   Agreement and any other Transaction Document executed by such Seller does not, and the   consummation of the Transactions by such Seller that are requires of such Seller pursuant to such   Transaction Documents, shall not, conflict with, or result in any violation of or default (with or   without notice or lapse of time, or both) under, or give rise to a right of termination or   cancellation under, any provision of (a) the Governing Documents of such Seller if such Seller is   an entity, (b) any Laws or Orders applicable to such Seller; or (c) any Contract to which such   Seller is a party or by which such Seller is bound or to which any of such Seller’s properties or   assets is subject, other than, in the case of clauses (b) and (c), such conflicts, violations, defaults,   terminations or cancellations that would not reasonably be expected to impair or delay such   Seller’s ability to consummate the Transactions required of such Seller pursuant to the   Transaction Documents to which such Seller is a party.   4.3 Ownership of Common Shares and/or Preferred Shares.  Each such Seller is the   legal and beneficial owner of the Common Shares, Preferred Shares, Common Warrant Shares   and/or Preferred Warrant Shares set forth opposite his, her or its name on Schedule 1.1, free and   clear of all Liens.  Except as set forth on Schedule 4.3, such Seller is not party to any   stockholders agreements, voting agreements, voting trust agreements, joint venture agreements,   or registration rights agreements with respect to the Common Shares, Preferred Shares, Common   Warrant Shares and/or Preferred Warrant Shares.    4.4 Litigation.  There are no Legal Proceedings pending that relate to this Agreement   or the Transactions or, to the actual knowledge of such Seller after due inquiry, threatened,     

 

             32   against or affecting such Seller or any of its Affiliates that challenges the validity or   enforceability of this Agreement or seeks to enjoin or prohibit consummation of, or seek other   material equitable relief with respect to, the Transaction or that would reasonably be expected to   impair or delay the such Seller’s ability to consummate the Transactions required of such Seller   pursuant to the Transaction Documents to which such Seller is a party.   4.5 Disclaimer of Other Representations and Warranties.  SUCH SELLER HAS   NOT MADE, AND SHALL NOT BE DEEMED TO HAVE MADE, ANY   REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE   WHATSOEVER RELATING TO SUCH SELLER OR TO THE COMPANY OR ANY OF ITS   SUBSIDIARIES OR THE BUSINESS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES   OR OTHERWISE IN CONNECTION WITH THE TRANSACTION, OTHER THAN THOSE   REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS ARTICLE IV.   ARTICLE V      REPRESENTATIONS AND WARRANTIES OF PURCHASER   The Purchaser hereby represents and warrants to the Company and each Seller as   follows, in each case as of the date hereof and as of the Closing Date:   5.1 Corporate Organization.  The Purchaser is a corporation duly incorporated and   validly existing under the Laws of State of Washington.  The Purchaser has all requisite   corporate power and authority to own or lease all of its properties and assets and to carry on its   business as it is now being conducted.  The Purchaser is duly qualified to do business in each   jurisdiction in which the nature of its business or the ownership of its properties makes such   qualification necessary, except for where such failures to be so qualified would not, individually   or in the aggregate, reasonably be expected to delay or impair the Purchaser’s abilities to   consummate the Transactions.   5.2 Authority and Validity.  The Purchaser has all requisite power and authority to   execute and deliver this Agreement and to consummate the Transactions.  The execution and   delivery of this Agreement and the consummation of the Transactions have been duly and validly   authorized by the Purchaser, and no other proceedings on the part of the Purchaser are necessary   to approve this Agreement or to consummate the Transactions.  This Agreement has been duly   and validly executed and delivered by the Purchaser and (assuming due authorization, execution   and delivery by the Company and Sellers) constitutes a valid and binding obligation of each of   the Purchaser, enforceable against the Purchaser in accordance with its terms, except as may be   limited by the General Enforceability Exceptions.     5.3 No Violation.  The execution, delivery and performance by the Purchaser of this   Agreement does not, and the consummation of the Transactions by the Purchaser shall not,   conflict with, or result in any violation of or default (with or without notice or lapse of time, or   both) under, or give rise to a right of termination or cancellation under, any provision of (a) the   Governing Documents of the Purchaser; (b) any applicable Laws or applicable Orders; (c) any   Contract to which the Purchaser is a party or by which the Purchaser is bound or to which any of   the Purchaser’s properties or assets is subject; or (d) any of the Permits granted by a     

 

             33   Governmental Entity to the Purchaser, other than, in the case of clauses (b), (c) and (d), such   conflicts, violations, defaults, terminations or cancellations that would not reasonably be   expected to impair or delay the Purchaser’s ability to consummate the Transactions.   5.4 Investment Intention.  The Purchaser is acquiring the Preferred Shares, the   Common Shares, the Preferred Warrant Shares and the Common Warrant Shares being sold   hereunder for its own account, for investment purposes only and not with a view to the   distribution (as such term is used in Section 2(11) of the Securities Act of 1933, as amended (the   “Securities Act”) thereof.  The Purchaser understands that neither the Preferred Shares, the   Common Shares, the Preferred Warrant Shares nor the Common Warrant Shares being sold   hereunder have been registered under the Securities Act and cannot be sold unless subsequently   registered under the Securities Act or an exemption from such registration is available.  The   Purchaser is an “accredited investor” as defined in Rule 501(a) of the Securities Act.     5.5 Financial Capability; Solvency.  The Purchaser shall have as of the Closing Date   sufficient funds to be able to pay full Enterprise Value and any expenses incurred by the   Purchaser in connection with the Transactions.  The Purchaser has not incurred any obligation,   commitment, restriction or liability of any kind that would impair or adversely affect such   resources and capabilities.  No transfer of property is being made and no obligation is being   incurred in connection with the Transactions with the intent to hinder, delay or defraud either   present or future creditors of the Purchaser, the Company or any of their respective subsidiaries.    Immediately after giving effect to the Transactions, the Purchaser and its subsidiaries (including   the Company and its Subsidiaries) shall be Solvent.  As used herein, “Solvent” means, with   respect to any Person, that (a) the assets of such Person, at a present fair saleable valuation,   exceeds the sum of its debts (including contingent and unliquidated debts); (b) the present fair   saleable value of the assets of such Person exceeds the amount that shall be required to pay such   Person’s probable liability on its existing debts as they become absolute and matured; (c) such   Person has adequate capital to carry on its business; and (d) such Person does not intend or   believe it shall incur debts beyond its ability to pay as such debts mature.   5.6 Brokers.  All negotiations relating to this Agreement and the Transactions have   been carried on without the intervention of any Person acting on behalf of the Purchaser in such   manner as to give rise to any valid claim against the Company, any of its Subsidiaries or any   Seller for any brokerage or finder’s commission, fee, or similar compensation.   5.7 Litigation.  There are no Legal Proceedings pending that relate to this Agreement   or the Transactions or, to the knowledge of the Purchaser, threatened, against or affecting the   Purchaser or any of its Affiliates that challenges the validity or enforceability of this Agreement   or seeks to enjoin or prohibit consummation of, or seek other material equitable relief with   respect to, the Transaction or that would reasonably be expected to impair or delay the   Purchaser’s ability to consummate the Transactions.   5.8 Inspection; No Other Representations.  The Purchaser is an informed and   sophisticated Person, and has engaged expert advisors experienced in the evaluation and   acquisition of companies such as the Company and its Subsidiaries as contemplated hereunder.    The Purchaser acknowledges that neither the Company, nor any of its Subsidiaries nor any Seller   nor any other Person (including any representative, employee, officer, director or stockholder of     

 

             34   the Company or any of its Subsidiaries) makes, or has made, any representation or warranty with   respect to (i) any projections, estimates or budgets delivered to or made available to the   Purchaser of future revenues, future results of operations (or any component thereof), future cash   flows or future financial condition (or any component thereof) of the Company and its   Subsidiaries or the future business and operations of the Company and its Subsidiaries (including   any future sales of any of the Company’s Subsidiaries’ products) or (ii) any other information or   documents made available to the Purchaser or its counsel, accountants or advisors with respect to   the Company, its Subsidiaries or any of their respective businesses, assets, liabilities or   operations, except with respect to the Company as expressly set forth in ARTICLE III, or except   with respect to any Seller as expressly set forth in ARTICLE IV.  The Purchaser acknowledges   and agrees that the representations and warranties set forth in this Agreement (as qualified by the   Schedules) supersede, replace and nullify in every respect the data set forth in any other   document, material or statement, whether written or oral, made available to the Purchaser.   ARTICLE VI      ADDITIONAL AGREEMENTS   6.1 Further Assurances.  Subject to the terms hereof, during the period from the date   of this Agreement until the Closing or the earlier termination of this Agreement (the “Pre-   Closing Period”), the Company and the Purchaser shall each use their respective commercially   reasonable efforts to (a) take, or cause to be taken, all actions, and do, or cause to be done, and to   assist and cooperate with the other Parties in doing, all things necessary, proper or advisable to   consummate and make effective the Transactions as promptly as practicable; (b) obtain from any   Governmental Entity or any other third party any Consents or Orders required to be obtained or   made by the Company or the Purchaser in connection with the authorization, execution and   delivery of this Agreement, the other Transaction Documents and the consummation of the   Transactions, including those set forth on Schedule 3.1(c); (c) as promptly as practicable, make   all necessary filings, and thereafter make and cooperate with the other Party with respect to any   other required submissions, with respect to this Agreement and the Transactions required under   (i) any applicable U.S. federal or state or foreign securities Laws, (ii) the HSR Act and any   related governmental request thereunder (it being agreed that the Company and the Purchaser   shall use commercially reasonable efforts, within three (3) Business Days after the execution of   this Agreement, to make the necessary filing with the appropriate Governmental Entity in   accordance with the HSR Act and to seek early termination with respect thereto) and any similar   non-US competition notifications that the Company and the Purchaser mutually agree are   reasonably necessary, (iii) any other applicable Law; and (d) execute or deliver any additional   instruments reasonably necessary to consummate the Transactions in accordance with the terms   hereof.  The Company and the Purchaser shall cooperate with each other in connection with the   making of all such filings.  For the avoidance of doubt, (A) the failure to obtain any Consent or   Order set forth on Schedule 3.1(c) shall not serve as the basis for the Purchaser to terminate this   Agreement pursuant to Section 2.3 or to seek indemnification under ARTICLE III provided,   however, that the Company used commercially reasonable efforts to obtain such Consent or   Order pursuant to this Section 6.1, (B) the failure to obtain any Consent or Order set forth on   Schedule 3.1(c) shall not serve as the basis for the Company or the Securityholder   Representative to terminate this Agreement pursuant to Section 2.3 or to seek indemnification   under ARTICLE III provided, however, that the Purchaser used commercially reasonable efforts     

 

             35   to obtain such Consent or Order pursuant to this Section 6.1 and (C) notwithstanding the   foregoing, nothing in this Agreement shall require, or be construed to require, the Purchaser or   any of its Affiliates to agree to (1) sell, hold, divest, discontinue or limit, before or after the   Closing Date, any assets, businesses or interests of the Purchaser, the Company or any of their   respective Affiliates; (2) any conditions relating to, or changes or restrictions in, the operations of   any such assets, businesses or interests that, in either case, would reasonably be expected to   adversely impact the economic or business benefits to the Purchaser of the Transactions; or   (3) any material modification or waiver of the terms and conditions of this Agreement.     6.2 Confidentiality.  The Purchaser acknowledges that the information provided to it   in connection with this Agreement and the Transactions is subject to the terms of the letter   agreement by and among the Company and the Purchaser dated February 6, 2014 (the “Non-   Disclosure and Confidentiality Agreement”), the terms of which are incorporated herein by   reference.  Effective upon, and only upon, the Closing, the Non-Disclosure and Confidentiality   Agreement shall terminate.  In the event that this Agreement terminates pursuant to Section 2.3,   however, the Non-Disclosure and Confidentiality Agreement shall continue in full force and   effect in accordance with its terms.   6.3 Publicity.  The Parties hereto shall, and shall cause each of their respective   Affiliates and representatives to, maintain the confidentiality of this Agreement and shall not, and   shall cause each of their respective Affiliates not to, issue or cause the publication of any press   release or other public announcement with respect to this Agreement or the Transactions without   the prior written consent of the Securityholder Representative and the Purchaser, which consent   shall not be unreasonably withheld; provided, however, that (i) upon the execution of this   Agreement and upon the Closing, the Securityholder Representative and the Purchaser shall   release a mutually agreed upon joint press release, (ii) a Party may, without the prior consent of   the Purchaser and the Securityholder Representative, issue or cause publication of any such press   release or public announcement, or make any filings with the Securities and Exchange   Commission or other Governmental Entity, to the extent that such party reasonably determines,   after consultation with outside legal counsel, such action to be required by Law or by the rules of   any applicable stock exchange or self-regulatory organization, in which event such Party shall   use its commercially reasonable efforts to consult with the Purchaser and the Securityholder   Representative and allow reasonable time to comment on such press release or public   announcement in advance of its issuance and (iii) nothing in this Section 6.3 shall prohibit any   institutional Seller from disclosing any information relating to the Transactions to any investor or   limited partner of such Seller to the extent such disclosure is made in the ordinary course of such   Seller’s business.   6.4 Tax Matters.     (a) Subject to the terms and conditions of this Agreement, including   Section 6.4(b), each Seller (including each Joining Common Holder) (in proportion to their   respective Pro Rata Portions, severally and not jointly) shall indemnify and hold harmless the   Purchaser Indemnified Parties from and against any and all Losses incurred with respect to or   attributable to (i) all Taxes (or the non-payment thereof) imposed on the Company or any of its   Subsidiaries for all taxable periods ending on or before the Closing Date and the portion through the   end of the Closing Date for any taxable period that includes (but does not end on) the Closing Date (a     

 

             36   “Pre-Closing Tax Period”), including, for avoidance of doubt, the Company portion of any   employment Taxes associated with any payments in connection with the Transactions, (ii) all Taxes   of any member of an affiliated, consolidated, combined or unitary group of which the Company or   any of its Subsidiaries (or any predecessor of the foregoing) is or was a member prior to the Closing   Date, including pursuant to Treasury Regulation Section 1.1502-6 or any analogous or similar state,   local or foreign law, (iii) Taxes of any Person imposed on the Company or any of its Subsidiaries as   a transferee or successor, by contract or pursuant to any law, rule or regulation, which Taxes relate   solely to an event or transaction occurring on or before the Closing; (iv) any breach of any of the   representations made by the Company in Section 3.14; and (v) Included Payroll Taxes; except, in   each such case, to the extent such Taxes constitute or are related to an Excluded Item.  Each   Purchaser Indemnified Party’s remedies for Losses with respect to Taxes shall be limited to   Taxes arising in any taxable period (or portion thereof) of the Company and/or its Subsidiaries   ending on or before the Closing Date, except with respect to Losses arising from breaches of   representations and warranties set forth in Section 3.14(a)(vii), Section 3.14(a)(viii), or   Section 3.14(a)(xiii).   (b) Notwithstanding anything herein to the contrary, the Purchaser, on the one   hand, and the Sellers (in proportion to their respective Pro Rata Portions, severally and not   jointly), on the other hand, shall each pay, when due, one half of all transfer, documentary, sales,   use, stamp, registration and other similar Taxes, and all conveyance fees, recording charges and   other fees and charges (including any penalties and interest) incurred in connection with the   consummation of the Transactions and shall, at its own expense, file all necessary Tax Returns   and other documentation with respect to such Taxes, fees and charges.   (c) The Securityholder Representative shall cause to be prepared all income,   franchise or other similar Tax Returns of the Company and its Subsidiaries for all Tax periods   ending on or before the Closing Date and any other Tax Returns of the Company or any of its   Subsidiaries for all Tax periods ending on or before the Closing Date if the Sellers may be   obligated to indemnify the Purchaser for Taxes covered by such Tax Returns under this   Agreement (“Pre-Closing Tax Returns”).  Such Tax Returns shall be prepared in a manner   consistent with past practice, except as otherwise required by applicable Law; provided,   however, that (i) all items accruing on the Closing Date shall be allocated to the Company’s   taxable period ending on the Closing Date pursuant to Treasury Regulations Section 1.1502-   76(b)(1)(ii)(A)(1) (and not pursuant to the “next day” rule under Treasury Regulations Section   1.1502-76(b)(1)(ii)(B) or pursuant to the ratable allocation method under Treasury Regulations   Section 1.1502-76(b)(2)(ii) or 1.1502-76(b)(2)(iii)), (ii) no election to waive a carryback of net   operating losses under Section 172(b)(3) of the Code shall be made and (iii) all Transaction    Deductions shall, to the maximum extent permitted by Law, be deducted on the Company’s   income Tax Returns for the taxable period ending on the Closing Date.  The Securityholder   Representative shall provide the Purchaser drafts of the Pre-Closing Tax Returns, together with   work papers containing detail reasonably sufficient to substantiate the deductibility of the   Transaction Deductions,  at least forty-five (45) days prior to the filing of such Tax Returns.  The   Purchaser shall provide written notice to the Securityholder Representative of its disagreement   with any items in any such Pre-Closing Tax Return within fifteen (15) days of its receipt of such   Pre-Closing Income Tax Return, and if the Purchaser fails to provide such notice, the Purchaser   shall timely file or cause to be timely filed all such Tax Returns of the Company and each of its   Subsidiaries as prepared by the Securityholder Representative.  In the event of a dispute with     

 

             37   respect to any Pre-Closing Tax Returns, such dispute will be referred to and resolved by the   Neutral Arbitrator, in which case the Purchaser will timely file or cause to be timely filed all such   Tax Returns reflecting such final resolution.  The Purchaser shall prepare or cause to be prepared   any Tax Returns of the Company and any of its Subsidiaries for all Tax periods that begin on or   before and end after the Closing Date (all such Tax Returns, the “Straddle Returns”).  Such   Straddle Returns shall be prepared in a manner consistent with past practice, except as otherwise   required by applicable Law.  In respect of Straddle Returns or in respect of Tax Returns for Pre-   Closing Tax Periods that the Purchaser is preparing (the “Purchaser Prepared Pre-Closing   Returns”), the Purchaser shall provide drafts of such Straddle Returns and/or such Purchaser   Prepared Pre-Closing Returns, as applicable, to the Securityholder Representative at least forty-   five (45) days prior to the due date for filing such Straddle Returns and/or such Purchaser   Prepared Pre-Closing Returns, as applicable, and the Securityholder Representative shall have   thirty (30) days to review and approve such draft Straddle Returns and/or such draft Purchaser   Prepared Pre-Closing Returns, as the case may be.  The Securityholder Representative and the   Purchaser shall negotiate in good faith to resolve any disputes over such Straddle Returns and/or   such Purchaser Prepared Pre-Closing Returns, as applicable, for the following fifteen (15) days.    Any disputes over Straddle Returns and/or Purchaser Prepared Pre-Closing Returns, as the case   may be, that cannot be resolved through negotiations between the Purchaser and the   Securityholder Representative shall be taken to the Neutral Arbitrator.  The determination of the   Neutral Arbitrator shall be binding on the Parties, and the Purchaser will file or cause to be filed   any such Straddle Return reflecting such final resolution.  The costs of the Neutral Arbitrator   shall be borne fifty percent (50%) by the Purchaser and fifty percent (50%) by the Sellers (in   proportion to their respective Pro Rata Portions, severally and not jointly).     (d) The Securityholder Representative shall have the right to control and the   Purchaser shall have the right to participate (at its own expense) in any audit, litigation or other   proceeding with respect to Taxes and Tax Returns of the Company or any of its Subsidiaries for   any Tax period ending on or prior to the Closing Date (a “Pre-Closing Tax Contest”); provided,   however, that the Securityholder Representative shall keep the Purchaser reasonably informed of   the details and status of such Pre-Closing Tax Contest (including providing the Purchaser with   copies of all written correspondence regarding such matter), and the Securityholder   Representative shall not settle or compromise any such Pre-Closing Tax Contest without the   Purchaser’s prior written consent (not to be unreasonably withheld, conditioned or delayed) if   such settlement or compromise could have the effect of increasing a Tax liability of the   Company or its Subsidiaries that is not indemnified by the Securityholders under this Agreement.   The Purchaser shall provide the Securityholder Representative with prompt notice of any written   inquiries by a Taxing Authority relating to a Pre-Closing Tax Contest within five (5) days of the   receipt of such notice.  Purchaser and the Securityholder Representative (if it so elects) shall   jointly control any audit, litigation or other proceeding with respect to Taxes and Tax Returns of   the Company or any of its Subsidiaries for any Straddle Period.  Purchaser shall control  any Pre-   Closing Tax Contest that the Securityholder Representative has elected not to control and any   contest with respect to a Straddle Period that the Securityholder Representative has elected not to   jointly control, provided, in each such case, that (x) the Securityholder Representative shall have   the right to participate (at its own expense) in any such matter and (y) the Purchaser shall keep   the Securityholder Representative reasonably informed of the details and status of such matter   (including providing the Securityholder Representative with copies of all written correspondence   regarding such matter). The Purchaser shall not settle any such proceedings without the prior     

 

             38   written consent of the Securityholder Representative (which consent shall not to be unreasonably   withheld, conditioned or delayed) if such settlement, adjustment, or compromise would have the   effect of increasing a Tax liability that the Securityholders are required to indemnify under this   Agreement.      (e) The Securityholder Representative and the Purchaser shall cooperate fully,   as and to the extent reasonably requested by the other Party, in connection with the filing of any   Tax Returns for the Company and its Subsidiaries, the filing and prosecution of any Tax claims,   and any audit, litigation or other proceeding with respect to Taxes of the Company or any of its   Subsidiaries.  Such cooperation shall include making employees available on a mutually   convenient basis to provide assistance in the preparation of the Pre-Closing Tax Returns and   additional information and explanation of any material provided hereunder.   (f) Without the prior written consent of the Securityholder Representative,   neither the Purchaser, the Company nor any of their respective Affiliates shall make or change   any Tax election, adopt or change any accounting method, file or amend any Tax Return,   surrender any right to claim a refund of Taxes or take any other action if such election, adoption,   change, amendment,  surrender or action could have the effect of increasing the Tax liability that   the Sellers are required to indemnify under this Agreement or reduce the amount of any refund to   which the Securityholders would otherwise be entitled pursuant to Section 6.4(j) of this   Agreement.   (g) For the portion of the Closing Date after the time of Closing, other than   actions expressly contemplated hereby, the Purchaser shall cause the Company and its   Subsidiaries to carry on its business only in the ordinary course in the same manner as heretofore   conducted.    (h) The Purchaser, the Company and their respective Affiliates shall cause the   Tax year of the Company and its Subsidiaries to end at the end of the day on the Closing Date for   federal and applicable state, local and foreign income Tax purposes, to the extent permitted under   applicable Law.  If applicable Law does not permit the Company or any of its Subsidiaries to close   its taxable year on the Closing Date or in any case in which a Tax is assessed with respect to a   taxable period that includes the Closing Date (but does not end on that day) (a “Straddle Period”),   the Taxes, if any, attributable to the portion of the Straddle Period that is a Pre-Closing Tax Period   shall be allocated (including for purposes of Sections 6.4(a) and Section 6.4(j))  as follows: (i) the   amount of any Taxes based on or measured by income or receipts, sales or use taxes, employment   taxes, or withholding taxes of the Company and its Subsidiaries for the Pre-Closing Tax Period shall   be determined based on an interim closing of the books as of the close of business on the Closing   Date, and (ii) the amount of any other Taxes of the Company and its Subsidiaries for a Straddle   Period that relates to the Pre-Closing Tax 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 the Closing Date and the denominator of which is the number of days in   such Straddle Period.  The Purchaser and its Subsidiaries, including the Company, shall file   consolidated U.S. federal income Tax Returns for all taxable periods after the Closing Date.     (i) Neither the Purchaser nor any of its Affiliates shall make an election under   Section 338 of the Code (or any comparable provision of foreign, state or local Law) in respect   of the Transactions.     

 

             39   (j) Any refunds for Taxes (including any interest in respect thereof) actually   received by the Purchaser, the Company or any of their respective Affiliates, related to, or   resulting or arising, directly or indirectly from any Taxes of the Company or its Subsidiaries for a   taxable period (or portion thereof) ending on or before the Closing Date shall be property of the   Securityholders (subject to the prior application and satisfaction in full of the provisions of   Section 1.5(e)) in accordance with their respective Pro Rata Escrow Portions, except to the extent   any such refund was taken into account in the determination of the Closing Date Net Working   Capital Amount.  The Purchaser shall pay to the Securityholders (subject to the prior application   and satisfaction in full of the provisions of Section 1.5(e)) in accordance with their respective Pro   Rata Escrow Portions, any such refund actually received (net of all reasonable out-of-pocket   expenses (including any Taxes imposed on such refund)) within fifteen (15) days after receipt   thereof.  The Purchaser, the Company and their respective Affiliates shall, if the Securityholder   Representative so requests, cause the Company or any of its Subsidiaries, at the expense of the   Securityholders (in proportion to its respective Pro Rata Escrow Portion, severally and not   jointly), to file for and use their reasonable best efforts to obtain any Tax refund to which   Securityholders would be entitled under this Section 6.4(j).  The Purchaser shall, upon request,   permit the Securityholder Representative to participate in the prosecution of any such refund   claim at the expense of the Securityholders (in proportion to its respective Pro Rata Escrow   Portion, severally and not jointly).  The Purchaser shall elect to receive all refunds in cash if such   election could cause such refunds to be subject to this Section 6.4(j).   (k) The indemnification provided for in this Section 6.4 shall be the sole   remedy for any claim in respect of Taxes, including any claim arising out of or relating to a   breach of Section 3.14. In the event of a conflict between the provisions of this Section 6.4, on   the one hand, and the provisions of ARTICLE VIII, on the other, the provisions of this   Section 6.4 shall control.   (l) Either (i) the Company shall provide the Purchaser on the Closing Date   with a certificate in accordance with Treasury Regulations Section 1.1445-2(c)(3) certifying that   the Company is not a United States real property holding corporation within the meaning of   Section 897(c)(2) of the Code or (ii) each Seller will provide the Purchaser on the Closing Date   with a certificate in accordance with Treasury Regulations Section 1.1445-2(b)(2) certifying that   such Seller is not a foreign person within the meaning of Section 1445 of the Code.   (m) Purchaser or the Company, as applicable, shall pay to the Securityholders   (subject to the prior application and satisfaction in full of the provisions of Section 1.5(e)) in   accordance with their respective Pro Rata Escrow Portions, by wire transfer of immediately   available funds, an amount, in cash, equal to the Post-Closing Transaction Tax Benefits on   October 15 of the taxable year following the taxable year in which the expenses relating to the   relevant Post-Closing Transaction Deductions are paid. For purposes of this Agreement, “Post-   Closing Transaction Tax Benefits” shall mean the product of (i) an amount equal to the Post-   Closing Transaction Deductions for the relevant taxable year and (ii) an assumed income tax rate   of thirty-five percent (35%).     6.5 Conduct of the Business Prior to the Closing.  Except as set forth on   Schedule 6.5, during the Pre-Closing Period, the Company shall, and shall cause its Subsidiaries   to, conduct their respective businesses in the Ordinary Course of Business, except as required by     

 

             40   Law or as otherwise expressly contemplated by this Agreement, and use commercially   reasonable efforts to preserve substantially intact its business and all of its material assets and   properties, attempt to keep available the services of its current officers and significant   employees, and maintain in all material respects its current relations and goodwill with vendors,   customer base and other Persons having material business relationships with the Company and/or   its Subsidiaries.  During the Pre-Closing Period, except as consented to in writing by the   Purchaser (which consent shall not be unreasonably withheld or delayed), the Company shall   not, and shall not permit any of its Subsidiaries to, take any action that would cause any of the   changes, events or conditions described in Section 3.5 to occur.   6.6 Pre-Closing Period Access to Information.   (a) Subject to Section 6.6(b), except as required pursuant to any   confidentiality agreement or similar Contract between the Company or any of its Subsidiaries   and a third Person or pursuant to applicable Law (in which case the Company shall provide the   Purchaser with a description of such information or materials being withheld and shall use   commercially reasonable efforts to obtain permission to disclose such information to the   Purchaser or to its legal counsel on a confidential basis), during the Pre-Closing Period, the   Company shall: (i) provide the Purchaser and its representatives (including any Person who is   considering providing financing to the Purchaser to finance all or any portion of the Enterprise   Value that is subject to a written confidentiality agreement with customary restrictions on use and   disclosure of information with respect to the Company and its Subsidiaries, and their respective   representatives) with reasonable access, upon reasonable prior notice and during normal business   hours at mutually convenient times, to the officers, employees, agents and accountants of the   Company and its Subsidiaries and their assets and properties and books and records; and   (ii) furnish the Purchaser and such other Persons with all such information and data (including   copies of Contracts, Benefit Plans and other books and records) concerning the business and   operations of the Company and its Subsidiaries as the Purchaser or any of such other Persons   reasonably may request in connection with such investigation.     (b) Any such access and/or investigation by the Purchaser and its   representatives shall not unreasonably interfere with any of the businesses or operations of the   Company or its Subsidiaries.  Neither the Purchaser nor any of its representatives shall have any   contact whatsoever, prior to the Closing Date, with respect to the Company or any of its   Subsidiaries or the Transactions with any agent, broker, partner, lessor, vendor, customer,   supplier, employee or consultant of the Company or any of its Subsidiaries, except in   consultation with the Company and then only with the express prior approval of the Company.    All requests by the Purchaser for access or information shall be submitted or directed exclusively   to an individual or individuals to be designated by the Company.   6.7 Post-Closing Preservation of Records.  In order to facilitate the resolution of any   claims made against or incurred by the Company and/or any of its Subsidiaries prior to the   Closing, or for any other reasonable purpose, for a period of seven (7) years after the Closing   Date, the Purchaser shall:     

 

             41   (a) retain the books and records (including personnel files) of the Company   and its Subsidiaries relating to periods prior to the Closing in a manner reasonably consistent   with the prior practices of the Company and such Subsidiaries; and   (b) upon reasonable prior notice (including notice of the purpose thereof),   afford the Securityholder Representative reasonable access (including the right to make   photocopies), during normal business hours at mutually convenient times, to such books and   records.  Any such access shall not unreasonably interfere with any of the businesses or   operations of the Company or its Subsidiaries.     6.8 No Solicitation.  From the date hereof until the earlier of the termination of this   Agreement pursuant to Section 2.3 or the Closing, each Common Holder and the Company shall,   and shall cause the Company and its Subsidiaries and each of their respective directors, officers,   partners, members, managers, trustees, employees, agents and advisors (collectively, the   “Company Representatives”) to cease any and all existing activities, discussions or negotiations   with any Person other than the Purchaser with respect to, and to deal exclusively with the   Purchaser and its designated Affiliates and representatives regarding, any and all acquisitions of,   and investments in, the Company and its Subsidiaries, whether by way of merger, consolidation   or other business combination with any other Person, purchase or exchange of equity interests,   purchase of assets or otherwise (an “Alternative Transaction”) and, without the prior consent of   the Purchaser, the Common Holders and the Company shall not, and shall cause the Company’s   Subsidiaries and the Company Representatives not to:   (a) solicit, initiate or otherwise engage in any negotiations, discussions or   other communications with any other Person relating to any Alternative Transaction;   (b) provide information or documentation to any other Person with respect to   the Company or any of its Subsidiaries or any of their respective businesses or assets in respect   of any Alternative Transaction; or   (c) enter into any Contract (or approve the entry into any Contract) with any   other Person in respect of any Alternative Transaction.   6.9 Director and Officer Indemnification and Insurance.   (a) The Purchaser agrees that all rights to indemnification, advancement of   expenses and exculpation by the Company and its Subsidiaries now existing in favor of each   Person who is now, or has been at any time prior to the date hereof or who becomes prior to the   Closing Date, an officer, director, or manager, as applicable, of the Company or any of its   Subsidiaries, as provided in the Governing Documents of the Company or such Subsidiary, in   each case as in effect on the date of this Agreement, or pursuant to any other Contract in effect   on the date hereof and disclosed to the Purchaser in accordance with Section 3.7(a)(xii) shall   survive the Closing Date and shall continue in full force and effect in accordance with their   respective terms for at least six (6) years after the Closing Date.   (b) Prior to or at the Closing, the Company shall obtain and fully pay for a   “tail” insurance policy with respect to the directors’ and officers’ insurance policy in effect   immediately prior to the Closing with a claims period of six (6) years from the Closing Date with     

 

             42   at least the same coverage and amounts, and containing terms and conditions that are not less   advantageous to the directors, officers and managers of the Company, in each case with respect   to claims arising out of or relating to events that occurred on or prior to the Closing Date   (including in connection with the Transactions).  The Company shall pay all premium payments   for such directors’ and officers’ liability “tail” insurance coverage prior to or at the Closing, and,   to the extent such premium payments remain unpaid after the Closing, they shall be treated as   Selling Expenses.  During the term of such directors’ and officers’ liability “tail” insurance   policy, the Purchaser shall not (and shall cause the Company not to) take any action following   the Closing to cause such policy to be cancelled or any provision therein to be amended,   modified or waived; provided, however, that neither the Purchaser, the Company nor any   Affiliate thereof shall be obligated to pay any premiums or amounts in respect thereof unless   such amounts were included as Selling Expenses.   (c) The obligations of the Purchaser and the Company under this Section 6.9   shall not be terminated or modified in such a manner as to adversely affect any director, officer   or manager to whom this Section 6.9 applies without the consent of such affected director, officer   or manager (it being expressly agreed that the directors, officers and managers to whom this   Section 6.9 applies shall be third-party beneficiaries of this Section 6.9, each of whom may   enforce the provisions of this Section 6.9).   (d) In the event the Purchaser, the Company or any Subsidiary of the   Company or any of their respective successors or assigns (i) consolidates with or merges into any   other Person and shall not be the continuing or surviving corporation or entity in such   consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any   Person, then, and in either such case, proper provision shall be made so that the successors and   assigns of the Purchaser, the Company or such Subsidiary, as the case may be, shall assume all of   the obligations set forth in this Section 6.9.   6.10 Joinder of Additional Common Holders.  In the event any holder of Company   Stock Options exercises any such Company Stock Option for shares of Common Stock between   the date hereof and the Closing, the Company shall promptly notify the Purchaser of such   exercise and shall require each such Person (each, a “Joining Common Holder”) to become   party to this Agreement as a “Common Holder” and a “Seller” in order to receive payment   hereunder in accordance with Section 1.4 by executing a Joinder Agreement in the form attached   hereto as Exhibit B (each, a “Joinder Agreement”) setting forth all of the shares of Common   Stock held by such Joining Common Holder.  The Parties agree that any such Joining Common   Holder shall become and constitute a “Common Holder” and a “Seller” for all purposes of this   Agreement, including for purposes of the sale of Common Shares held thereby at the Closing in   accordance with this Agreement.  Prior to the Closing, the Company shall update Schedule 1.1   hereto to reflect the Common Shares owned by all Joining Common Holders.   6.11 Employment and Benefit Matters.  For the period commencing on the Closing   Date and ending on the one year anniversary of the Closing Date, the Purchaser agrees to   maintain the compensation and benefit levels, including base salary, annual cash incentive   opportunities, retirement benefits, and health and welfare benefits for the Company Employees at   levels that are, in the aggregate, comparable to those in effect for the Company Employees   immediately prior to the Closing; provided that the foregoing will not be interpreted to in any     

 

             43   way restrict the Purchaser’s discretion to terminate the employment of any Company Employees   or otherwise modify the terms of employment with any particular Company Employees after the   Closing.  The Purchaser shall treat, and cause the applicable benefit plans to treat, the service of   the Company Employees with the Company (or any Subsidiary of the Company) attributable to   any period before the Closing Date as service rendered to the Purchaser or any Subsidiary of the   Purchaser for purposes of eligibility and vesting under the Purchaser’s vacation program, health   or welfare plan(s) maintained by the Purchaser, and the Purchaser’s defined contribution plans,   except where credit would result in duplication of benefits.  Without limiting the foregoing, to   the extent that any Company Employee participates in any health or other group welfare benefit   plan of the Purchaser following the Closing Date, the Purchaser shall cause any eligibility   waiting periods under any health or similar welfare plan of the Purchaser to be waived with   respect to the Company Employees and their eligible dependents, to the extent satisfied under the   corresponding plan in which the Company Employee participated immediately prior to the   Closing Date.     6.12 280G Matters.  The Company shall obtain and deliver to the Purchaser, prior to   soliciting the vote of the Company’s stockholders with respect to the 280G Proposal, a parachute   payment waiver (each, a “Parachute Payment Waiver”) from each Person who is or reasonably   could be, with respect to the Company, a “disqualified individual” (within the meaning of   Section 280G of the Code), as determined immediately prior to the initiation of the Stockholder   solicitation required by this Section 6.12, and who reasonably might otherwise receive, have   received or have the right or entitlement to receive an excess parachute payment under Section   280G of the Code.  Prior to the Closing, the Company shall solicit the vote of the Stockholders in   accordance with the terms of Section 280G(b)(5)(B) of the Code (the “280G Proposal”) so as to   render, if an affirmative vote is obtained, the parachute payment provisions of Section 280G of   the Code inapplicable to any and all payments and benefits provided pursuant to contracts or   arrangements that, in the absence of the executed Parachute Payment Waivers by the affected   Persons under the immediately preceding paragraph, might otherwise reasonably result,   separately or in the aggregate, in the payment of any amount or the provision of any benefit that   would not be deductible by reason of Section 280G of the Code, with such stockholder approval   to be solicited in a manner that is intended to satisfy all applicable requirements of such Section   280G(b)(5)(B) of the Code, including Q-7 of Section 1.280G-1 of the Treasury Regulations. The   documentation constituting the 280G Proposal shall be subject to the Purchaser’s prior review   and approval, which shall not be unreasonably withheld or delayed.   6.13 Release of Certain Seller Obligations.  The Purchaser shall use commercially   reasonable efforts to cause each of Michael Miles Revocable Trust, Michael Miles 2004 Gift   Trust, Farrington Trust No. 2 Non-GST Exempt and Farrington Trust No. 2 GST Exempt   (collectively, the “LoC Released Parties”) to be unconditionally released in full from any   liability or obligation in respect of that certain letter of credit issued February 14, 2013 in favor   of Seaton LLC by Bank of America, N.A. (the “Letter of Credit”).  The Purchaser shall   indemnify and hold harmless, pursuant to the terms of ARTICLE VIII, LoC Released Parties   from and against any Losses suffered or incurred by it in connection with the Letter of Credit   from and after the Closing.  The Purchaser shall not, and shall not permit any of its Affiliates   (including the Companies and its Subsidiaries) to, renew, extend, amend or supplement the   Letter of Credit or without providing evidence to the LoC Released Parties that the LoC     

 

             44   Released Parties have been unconditionally released in full from any liability or obligation in   respect of the Letter of Credit.     ARTICLE VII      CONDITIONS PRECEDENT   7.1 Conditions to Each Party’s Obligation.  The respective obligation of each Party   to effect the Transactions is subject to the satisfaction at or prior to Closing of the following   conditions:   (a) HSR Act; Other Approvals and Consents.  Any waiting period applicable   to the consummation of the Transactions under the HSR Act shall have expired or been   terminated and all other consents, approvals, Orders or authorizations of, or registrations,   declarations or filings with, any Governmental Entity required to consummate the Transactions   shall have been filed, made or obtained, except for such consents, approvals, Orders or   authorizations that involve an insignificant amount of assets and that do not provide for any   penalties or fines due to the failure to receive such consents, approvals, Orders or authorizations.   (b) No Injunctions or Restraints; Illegality.  No Order issued by any court or   agency of competent jurisdiction or other legal restraint or prohibition preventing the   consummation of the Transactions shall be in effect; provided, however, the Parties hereto shall,   subject to the terms of this Agreement, use their commercially reasonable efforts to have any   such Order vacated or lifted.  No statute, rule, regulation, or Order shall have been enacted,   entered, promulgated or enforced by any Governmental Entity that prohibits, restricts or makes   illegal the consummation of the Transactions.   7.2 Conditions to Obligation of the Purchaser.  The obligation of the Purchaser to   effect the Transactions is subject to the satisfaction, or waiver by the Purchaser, at or prior to   Closing, of the following conditions:    (a) Representations and Warranties.  The representations and warranties of   the Company and each Seller set forth in this Agreement shall be true and correct in all respects,   at and as of the date hereof and as of the Closing Date as though made on and as of the Closing   Date (except to the extent such representations and warranties specifically speak as of another   date, in which case such representations and warranties shall be so true and correct as of such   specific date), except where the failure of such representations and warranties to be true and   correct would not reasonably be expected to have, either individually or in the aggregate, a   Material Adverse Effect (it being understood that, for purposes of determining the accuracy of   such representations and warranties, all “Material Adverse Effect” qualifications and other   materiality qualifications and similar qualifications contained in such representations and   warranties shall be disregarded).   (b) Performance of Covenants and Agreements.  The Company and each   Seller shall have performed all covenants and agreements required to be performed by it under   this Agreement in all material respects at or prior to the Closing Date.     

 

             45   (c) Legal Proceedings.  No action or proceeding by or before any   Governmental Entity shall have been instituted or threatened (and not subsequently settled,   dismissed or otherwise terminated) that is reasonably expected to restrain, prohibit or invalidate   the Transactions.   (d) Closing Deliverables.  The Company shall have delivered or caused to be   delivered to the Purchaser the deliverables set forth in Section 2.2(a) and each Seller and/or the   Securityholder Representative shall have delivered or caused to be delivered to the Purchaser the   deliverables set forth in  Section 2.2(b).    (e) Joinder of Additional Common Holders.  The Company shall have   delivered or caused to be delivered to the Purchaser the Joinder Agreements.   (f) Payoff Letters.  Payoff letters in customary form satisfactory to the   Purchaser (specifying effectiveness and release of any security interests upon receipt of payment)   with respect to all payments relating to any Indebtedness shall have been executed by each of the   Persons to whom such amounts are owed as of the Closing and delivered to the Company and the   Purchaser.   7.3 Conditions to Obligation of Sellers.  The obligation of each Seller to effect the   Transactions is subject to the satisfaction, or waiver by the Securityholder Representative, at or   prior to Closing, of the following conditions:   (a) Representations and Warranties.  The representations and warranties of   the Purchaser set forth in this Agreement shall be true and correct in all respects, at and as of the   date hereof and as of the Closing Date as though made on and as of the Closing Date (except to   the extent such representations and warranties specifically speak as of another date, in which   case such representations and warranties shall be so true and correct as of such specific date),   except where the failure of such representations and warranties to be true and correct would not   reasonably be expected to have, individually or in the aggregate, a material and adverse effect on   the Purchaser’s ability to consummate the Transactions.   (b) Performance of Covenants and Agreements of the Purchaser.  The   Purchaser shall have performed all covenants and agreements required to be performed by it   under this Agreement in all material respects at or prior to the Closing Date.   (c) Legal Proceedings.  No action or proceeding by or before any   Governmental Entity shall have been instituted or threatened (and not subsequently settled,   dismissed or otherwise terminated) that is reasonably expected to restrain, prohibit or invalidate   the Transactions.   (d) Closing Deliverables and Actions.  The Purchaser shall have delivered or   caused to be delivered to the Sellers and such other Persons referred to in Section 2.2(c) the   deliverables set forth in such Section 2.2(c).     

 

             46   ARTICLE VIII      INDEMNIFICATION; CERTAIN REMEDIES   8.1 Survival.  The representations and warranties contained in this Agreement (other   than the Fundamental Representations), shall survive until the Escrow Termination Date,   provided, however, that any claim that is properly asserted in writing with respect to any such   representation or warranty pursuant to this ARTICLE VIII prior to the Escrow Termination Date   shall survive until such claim is finally resolved and satisfied.  The Fundamental Representations   shall survive until the third (3rd) anniversary of the Closing Date, provided, however, that any   claim that is properly asserted with respect to a breach of any Fundamental Representation   pursuant to this ARTICLE VIII prior to the third (3rd) anniversary of the Closing Date shall   survive until such claim is finally resolved and satisfied.  All covenants and other agreements   contained in this Agreement shall survive the Closing in accordance with their respective terms.    8.2 Indemnification by the Sellers.   (a) After the Closing and subject to Section 8.4 and the other provisions of   this ARTICLE VIII, each Seller (including each Joining Common Holder), severally and not   jointly, shall indemnify, defend and hold harmless, and agrees to reimburse the Purchaser and its   directors, officers, employees and stockholders (collectively, the “Purchaser Indemnified   Parties”), from and against any and all losses, liabilities, obligations, damages and expenses   (individually, a “Loss” and, collectively, “Losses”) of a Purchaser Indemnified Party based upon   or resulting from:   (i) any breach of any of the representations or warranties made by the   Company in ARTICLE III of this Agreement;    (ii) any breach of or failure to perform, on or prior to the Closing, any   covenant or agreement made by the Company in this Agreement;   (iii) any breach of any of the representations or warranties made by   such Seller in ARTICLE IV of this Agreement;   (iv) any breach of or failure to perform any covenant or agreement   made by such Seller in this Agreement, other than Section 6.4;    (v) any breach of or failure to perform any covenant or agreement   made by such Seller in Section 6.4; and   (vi) the matters identified on Schedule 1.6(a) hereto (such matters, the   “Special Indemnity Matters”).   (b) The Purchaser Indemnified Parties shall take, and the Purchaser shall   cause the Company and their respective Affiliates to take, all reasonable steps to mitigate any   Loss upon becoming aware of any event that would reasonably be expected to, or does, give rise   thereto.     

 

             47   8.3 Indemnification by the Purchaser.   (a) After the Closing and subject to Section 8.4 and the other provisions of   this ARTICLE VIII, the Purchaser hereby agrees to reimburse, defend, indemnify and hold each   Seller and their respective directors, officers, employees, stockholders, members and partners, as   applicable (collectively, the “Securityholder Indemnified Parties”), harmless from and against   any and all Losses of a Securityholder Indemnified Party based upon or resulting from:   (i) any breach of any of the representations or warranties made by the   Purchaser  in this Agreement; and   (ii) any breach of or failure to perform any covenant or agreement   made by the Purchaser  in this Agreement.   8.4 Limitations on Indemnification.   (a) Notwithstanding the provisions of this ARTICLE VIII, except to the extent   such Losses arise out of a breach of a Company Fundamental Representation, no Seller shall   have any indemnification obligations for Losses under Section 8.2(a)(i): (i) unless and until the   aggregate amount of all such Losses actually incurred by the Purchaser Indemnified Parties   under Section 8.2(a)(i) exceeds an amount equal to Two Million Two Hundred Fifty Thousand   Dollars ($2,250,000) (the “Basket Amount”), from and after which time the Sellers shall be   liable only for the amount that exceeds the Basket Amount; (ii) unless and until the aggregate   amount of such Losses actually incurred by the Purchaser Indemnified Parties under   Section 8.2(a)(i) for any claim relating to any single matter or series or group of related matters   exceeds Seventy-Five Thousand Dollars ($75,000.00) (a “Qualifying Claim”) and only   Qualifying Claims, and only the amount of any Qualifying Claim in excess of Seventy-Five   Thousand Dollars ($75,000.00), shall be applied toward the satisfaction of the Basket Amount;   and(iii) except to the extent such Losses arise out of a breach of a Company Fundamental   Representation, in no event shall the aggregate indemnification to be paid by the Sellers under   Section 8.2(a)(i) exceed the amount then available in the Indemnity Escrow Account.    Notwithstanding anything to the contrary contained herein: (A) except to the extend such Losses   arise out of a breach of a Company Fundamental Representation, the Purchaser Indemnified   Parties’ sole recourse with respect to indemnifiable claims for Losses under Section 8.2(a)(i)   shall be to the amount then available in the Indemnity Escrow Account; (B) no Purchaser   Indemnified Party may make a claim against the Indemnity Escrow Account for any Losses other   than Losses that are subject to indemnification pursuant to Section 6.4, Section 8.2(a)(i),   Section 8.2(a)(ii) and/or Section 8.2(a)(v); and (C) the Purchaser Indemnified Parties’ sole   recourse with respect to indemnifiable claims under Section 8.2(a)(vi) and/or with respect to any   Special Indemnity Matter shall be a right to recover Special Losses from the amount then   available in the Special Escrow Account and no Purchaser Indemnified Party may make a claim   against the Special Escrow Account for any Losses other than Special Losses.  Furthermore, the   Purchaser Indemnified Parties acknowledge and agree that in no event shall the aggregate   liability of any Seller (including any Joining Common Holder) under this Agreement exceed the   aggregate Consideration Received by such Seller.     

 

             48   (b) No Seller shall be required to indemnify any Purchaser Indemnified Party   and the Purchaser shall not be required to indemnify any Securityholder Indemnified Party to the   extent of any Losses that a court of competent jurisdiction shall have determined by final and   non-appealable judgment to have resulted from the bad faith, gross negligence or willful   misconduct of the Party seeking indemnification.   (c) Notwithstanding anything to the contrary contained in this Agreement, and   subject in each case to the limitations in this ARTICLE VIII, the term “severally and not jointly”   as used in Section 6.4(a) and Section 8.2 means that each Seller’s respective liability for Losses   shall be limited as follows:    (i) with respect to indemnification claims made by a Purchaser   Indemnified Party pursuant to Section 8.2(a)(iii), Section 8.2(a)(iv) or Section 8.2(a)(v) against a   particular Seller, the breaching Seller shall be solely liable for all such Losses (if any); and   (ii) with respect to indemnification claims made by a Purchaser   Indemnified Party pursuant to Section 6.4, Section 8.2(a)(i), Section 8.2(a)(ii) and/or   Section 8.2(a)(v), indemnification shall first be provided by the funds then remaining in the   Indemnity Escrow Account; provided, however, in the case where a Purchaser Indemnified Party   has incurred Losses pursuant to Section 6.4, Section 8.2(a)(i) (but only with respect to a breach   of a Company Fundamental Representation), Section 8.2(a)(ii) and/or Section 8.2(a)(v) that   exceed the amount then available in the Indemnity Escrow Account, then each Seller shall only   be responsible for its respective Pro Rata Portion of the amount by which such Losses exceed the   amount then available in the Indemnity Escrow Account.   (d) Notwithstanding anything to the contrary contained in this Agreement, no   breach of any representation, warranty, covenant or agreement contained herein shall give rise to   any right on the part of any Purchaser Indemnified Party or any Securityholder Indemnified   Party, after the consummation of the Transactions, to rescind this Agreement or the   consummation of the Transactions.   8.5 Indemnification Procedures.   (a) In the event that indemnification may be sought under this ARTICLE VIII   (an “Indemnification Claim”) in connection with (i) any action, suit or proceeding that may be   instituted or (ii) any claim that may be asserted, in any such case, by any Person not a party to   this Agreement, the Party seeking indemnification hereunder (the “Indemnified Party”) shall   promptly cause written notice of the assertion of such Indemnification Claim to be delivered to   the Party from whom indemnification hereunder is sought (the “Indemnifying Party”) prior to   the expiration of the applicable survival period set forth in Section 8.1; provided, however, that   no delay on the part of the Indemnified Party in giving any such notice shall relieve the   Indemnifying Party of any indemnification obligation hereunder unless (and then solely to the   extent that) the Indemnifying Party is prejudiced by such delay.  The Indemnified Party shall   have the right to be represented by counsel of its choice and to defend against, negotiate, settle or   otherwise deal with any Indemnification Claim and, if the Indemnified Party elects to defend   against, negotiate, settle or otherwise deal with any Indemnification Claim, it shall within thirty   (30) days (or sooner, if the nature of the Indemnification Claim so requires) (the “Dispute     

 

             49   Period”) notify the Indemnified Party of its intent to do so.  If the Indemnified Party within the   Dispute Period elects not to defend against, negotiate, settle or otherwise deal with any   Indemnification Claim, the Indemnifying Party may defend against, negotiate, settle or otherwise   deal with such Indemnification Claim using counsel of its choice, which must be reasonably   satisfactory to the Indemnified Party.  If the Indemnified Party assumes the defense of any   Indemnification Claim, the Indemnifying Party may participate, at its own expense, in the   defense of such Indemnification Claim.  The Parties hereto agree to cooperate fully with each   other in connection with the defense, negotiation or settlement of any such Indemnification   Claim.  Notwithstanding anything in this Section 8.5 to the contrary, neither the Indemnifying   Party nor the Indemnified Party shall, without the written consent of the other Party, not to be   unreasonably withheld, settle or compromise any Indemnification Claim or permit a default or   consent to entry of any judgment.  The Parties hereto agree that the Purchaser shall, reasonably   and in good faith, defend the Special Indemnity Matters upon, and subject to, the terms of this   Section 8.5 and that the Purchaser shall not settle any Special Indemnity Matter unless pursuant   to an Approved Settlement Agreement and that the Securityholder Representative shall have the   right to participate, at the Seller’s expense, in the defense of such Special Indemnity Matters.    (b) In the event that an Indemnified Party has any claim against an   Indemnifying Party hereunder, but which such claim does not involve an action, suit, proceeding   or claim by a third party not party to this Agreement, which such Indemnified Party determines   to assert, then such Indemnified Party shall assert such Indemnification Claim by sending written   notice to the Indemnifying Party describing in reasonable detail the nature of such claim and the   Indemnified Party’s estimate of the amount of Losses attributable to such claim.   (c) After any final and non-appealable decision, judgment or award shall have   been rendered by a Governmental Entity of competent jurisdiction, or a settlement or arbitration   shall have been consummated, or the Indemnified Party and the Indemnifying Party shall have   arrived at a mutually binding agreement (any such event a “Final Determination”) with respect   to any Indemnification Claim hereunder, then the Indemnifying Party shall pay any amount so   determined to such Indemnified Party.   8.6 Calculation of Losses.   (a) The amount of any Losses for which indemnification is provided under   this ARTICLE VIII or Section 6.4 shall (i) be net of any amounts actually recovered or   recoverable by the Indemnified Party under insurance policies or otherwise with respect to such   Losses and each Indemnified Party will use commercially reasonable efforts to collect and/or   recover any such amounts, and (ii) be reduced by the product of (x) the portion of any such Loss   that constitutes a deductible payment for U.S. federal income Tax purposes and (y) an income tax   rate of thirty-five percent (35%).  Any reduction to an indemnity payment under this Section   8.6(a) shall not apply with respect to Special Losses (payments in respect of which shall be   subject to the Special Loss Tax Benefit).     (b)   For the purposes hereof, if any Purchaser Indemnified Party, the   Company or any of its or their Affiliates (each, a “Special Loss Party,” and collectively, the   “Special Loss Parties”) receives any Special Loss Offset at any time after a distribution has been   made from the Special Indemnity Escrow, and such Special Loss Offset had not already been     

 

             50   used to offset Special Losses, then such Special Loss Party shall, and the Purchaser and the   Company shall cause such Special Loss Party to, pay the amount of such Special Loss Offset to   the Securityholders (subject to the prior application and satisfaction in full of the provisions of   Section 1.5(e)) in the same manner as amounts would then be paid to such Securityholders under   the Escrow Agreement had such Special Loss Offset been an amount of Special Indemnity   Escrow returned to such Securityholders pursuant to the terms of the Escrow Agreement.        (c) Notwithstanding anything to the contrary elsewhere in this Agreement, no   Party shall, in any event, be liable to any other Person for any Losses pursuant to this   ARTICLE VIII or Section 6.4 to the extent such Losses constitute, include or relate to any   consequential, incidental, indirect, special or punitive damages, including loss of future revenue,   income or profits, diminution of value or loss of business reputation or opportunity or a multiple   of revenue, income, profits or any other amount.   (d) Notwithstanding anything to the contrary elsewhere in this Agreement, the   Purchaser Indemnified Parties are not entitled to indemnification pursuant to this ARTICLE VIII   or Section 6.4 to the extent that any matter, amount, item of other fact for which they are seeking   indemnification hereunder is an Excluded Item.    (e) For the purposes of determining the amount of Losses  for which   indemnification is provided under this ARTICLE VIII (and, for the avoidance of doubt, not for   determining whether a breach of any representation or warranty set forth in ARTICLE III or   ARTICLE IV has occurred), all qualifications and limitations as to materiality, Material Adverse   Effect and words of similar import in ARTICLE III and ARTICLE IV shall be disregarded,   except in each case (i) with respect to the representations and warranties in Section 3.4(b), the   lead in to Section 3.5 and Section 3.13(b), and (ii) to the extent “material” is used to qualify the   subject matter of a representation or warranty (e.g., “material” contract) rather than the nature of   an occurrence (e.g., “material” violation or “in all material respects”).   8.7 Tax Treatment of Indemnity Payments.  The Parties agree to treat any indemnity   payment made pursuant to this ARTICLE VIII or Section 6.4 as an adjustment to the purchase   price for federal, state, local and foreign income Tax purposes.   8.8 Exclusive Remedy; Release.  The Parties agree that after the Closing, the   exclusive remedies of the Purchaser Indemnified Parties and the Securityholder Indemnified   Parties for any Losses based upon, arising out of or otherwise in respect of the matters set forth   in this Agreement and the Transaction Documents are the indemnification obligations of the   Parties set forth in this ARTICLE VIII or Section 6.4.  The Purchaser hereby acknowledges and   agrees that prior to the Closing, the Purchaser shall have no right or remedy to take any action in   respect of, and the Company and the Sellers shall have no liability to the Purchaser in respect of,   any breach by the Company or the Sellers, as applicable, of any representations or warranties   contained herein or any failure to comply with any of the covenants, conditions or agreements   contained herein, except (i) to terminate this Agreement pursuant to Section 2.3 hereof, in which   event, the Company and the Sellers shall thereupon only have liability with respect thereto as   provided for in Section 2.5 or (ii) to seek specific performance pursuant to Section 9.13 for   injunctive relief.  To the maximum extent permitted by applicable Law, each Party, on behalf of   itself and, as applicable, each Purchaser Indemnified Party and each Seller Indemnified Party,     

 

             51   hereby waives all other rights and remedies with respect to any matter in any way relating to this   Agreement or arising in connection herewith, whether under Law or otherwise.  Notwithstanding   anything to the contrary herein, the existence of this ARTICLE VIII or Section 6.4 and of the   rights and restrictions set forth therein and elsewhere in this Agreement do not limit any legal   remedy against any Party hereto to the extent such Party has committed actual fraud against the   Party seeking such legal remedy.   ARTICLE IX      GENERAL PROVISIONS   9.1 Expenses.  Except as otherwise expressly provided herein (including Section 6.1   and Section 6.4 hereof), all costs and expenses, including fees and disbursements of counsel,   financial advisors and accountants, incurred in connection with this Agreement and the   Transactions shall be paid by the party incurring such costs and expenses, whether or not the   Closing shall have occurred; provided, however, that the Purchaser shall pay  any filing or other   similar fees payable in connection with any filings or submissions under the HSR Act and any   comparable foreign Laws.    9.2 Notices.  All notices, requests, demands and other communications made under or   by reasons of this Agreement shall be in writing and shall be given by hand delivery, certified or   registered mail, return receipt requested, facsimile or next day courier to the affected Party at the   address set forth below.  Such notices shall be deemed given (a) at the time personally delivered,   if delivered by hand with receipt acknowledged; (b) at the time received, if sent by certified or   registered mail; (c) upon issuance by the transmitting machine of a confirmation slip that the   number of pages constituting the notice has been transmitted without error, if sent by facsimile;   and (d) the first day after timely delivery to the courier, if sent by next day courier specifying   next day delivery:   (i) if to the Purchaser and, following Closing, the Company:   TrueBlue, Inc.   1015 A Street   Tacoma, WA 98401   Attn: General Counsel   Tel:  (253) 680-8210   Fax:  (253) 502-5792      with a copy (which shall not constitute notice) to:      K&L Gates LLP   925 Fourth Avenue, Suite 2900   Seattle, WA 98104   Attn.: Kristy Harlan and Josh Gaul    Tel.: (206) 623-7580   Fax: (206) 623-7022        

 

             52   (ii) if to any Seller, to the Securityholder Representative at the address   provided below.   (iii) if, prior to Closing, to the Company and, after the Closing, to the   Securityholder Representative:   Leeds Equity Partners, LLC   350 Park Avenue, 23rd Floor   New York, NY 10022   Attn.: Carter Harned   Tel.: (212) 835-2050   Fax: (212) 835-2020      with a copy (which shall not constitute notice) to:      Goodwin|Procter LLP   53 State Street   Boston, MA 02109   Attn:  James M. Curley, Esq.   Tel:  (617) 570-8186   Fax: (617) 523-1231      9.3 Interpretation.  When a reference is made in this Agreement to “Sections,”   “Exhibits” or Annexes, such reference shall be to a section of, or an exhibit of, this Agreement   unless otherwise indicated.  When a reference is made in this Agreement to “Schedule,” such   reference shall be to a section of the Disclosure Schedules unless otherwise indicated.  The table   of contents and headings contained in this Agreement are for reference purposes only and shall   not affect in any way the meaning or interpretation of this Agreement.  Whenever the words   “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be   followed by the words “without limitation.”  The words “herein,” “hereof,” “hereby,” “hereto”   and "hereunder" refer to this Agreement as a whole. The terms defined in the singular have a   comparable meaning when used in the plural, and vice versa, and references herein to any gender   includes each other gender.  The Company and the Sellers may, at their option, include in the   Disclosure Schedule items that are not material in order to avoid any misunderstanding, and such   inclusion, or any references to dollar amounts, shall not be deemed to be an acknowledgement or   representation that such items are material, to establish any standard of materiality or to define   further the meaning of such terms for purposes of this Agreement.  Information disclosed on a   particular Disclosure Schedule shall be deemed a disclosure on each other Disclosure Schedule   to the extent the relevance of such disclosure to such other Disclosure Schedule is reasonably   apparent from the face of such disclosure.     9.4 Counterparts.  This Agreement may be executed in two or more counterparts,   including by electronic transmission, all of which shall be considered one and the same   agreement and shall become effective when counterparts have been signed by each of the Parties   and delivered to the other Parties.     

 

             53   9.5 Entire Agreement; Construction.  This Agreement (including the Disclosure   Schedules, annexes and exhibits hereto and the other agreements and instruments referred to   herein) constitutes the entire agreement and supersedes all prior agreements and understandings,   both written and oral, among the Parties with respect to the subject matter hereof and thereof.   The Parties have participated jointly in the negotiation and drafting of this Agreement.  In the   event an ambiguity or question of intent or interpretation arises, this Agreement shall be   construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise   favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this   Agreement.   9.6 Amendment.  This Agreement may not be amended except by an instrument in   writing signed by the Purchaser and the Securityholder Representative and, with respect to   Section 1.9 and terms directly (on their face) related thereto, the Farrington Trusts.   9.7 Waiver.  The Purchaser may, with respect to the Sellers and/or Vested Option   Holders, and the Securityholder Representative may, with respect to the Purchaser, (a) extend the   time for the performance of any of its obligations or other acts; (b) waive any inaccuracies in its   representations and warranties contained herein or in any document delivered pursuant hereto; or   (c) waive compliance with any of its agreements or conditions contained herein, except in each   case with respect to Section 1.9 and terms directly (on their face) related thereto.  Any such   extension or waiver shall be valid if set forth in an instrument in writing.   9.8 Governing Law.  This Agreement shall be governed by, and construed in   accordance with, the Laws of the State of Delaware.  All legal proceedings arising out of or   relating to this Agreement shall be heard and determined exclusively in any Delaware federal   court; provided, however, that if such federal court does not have jurisdiction over such legal   proceeding, such legal proceeding shall be heard and determined exclusively in any Delaware   state court.  Consistent with the preceding sentence, the Parties hereto hereby: (a) submit to the   exclusive jurisdiction of any federal or state court sitting in the State of Delaware for the purpose   of any legal proceeding arising out of or relating to this Agreement brought by any party hereto;   (b) agree that service of process shall be validly effected by sending notice in accordance with   Section 9.2; and (c) irrevocably waive, and agree not to assert by way of motion, defense, or   otherwise, in any such legal proceeding, any claim that it is not subject personally to the   jurisdiction of the above-named courts, that its property is exempt or immune from attachment or   execution, that the legal proceeding is brought in an inconvenient forum, that the venue of the   legal proceeding is improper, or that this Agreement or the Transactions  may not be enforced in   or by any of the above-named courts   9.9 Securityholder Representative.   (a) By the execution and delivery of this Agreement, each of the Sellers   (including each Joining Common Holder) hereby irrevocably constitutes Leeds Equity   Partners IV, L.P. (the “Securityholder Representative”) as the true and lawful agent and attorney   in fact of such Sellers with full power of substitution to act jointly in the name, place and stead of   such Sellers with respect to the transfer of Common Shares owned by the Common Holders,   Preferred Shares owned by the Preferred Holders, Common Warrants of the Common Warrant   Holders and the Preferred Warrant of the Preferred Warrant Holder, each in accordance with the     

 

             54   terms of this Agreement.  Without limiting the generality of the foregoing, the Securityholder   Representative shall have full power and authority (but not the obligation) to take all actions   under this Agreement and the Escrow Agreement that are to be taken by the Securityholder   Representative.  The Securityholder Representative may take any and all actions that it believes   are reasonably necessary or appropriate under this Agreement and the Escrow Agreement,   including executing the Escrow Agreement as the Securityholder Representative, giving and   receiving any notice or instruction permitted or required under this Agreement or the Escrow   Agreement by the Securityholder Representative, interpreting all of the terms and provisions of   this Agreement and the Escrow Agreement, authorizing payments to be made with respect hereto   or thereto, obtaining reimbursement as provided for herein for all out-of-pocket fees and   expenses and other obligations of or incurred by the Securityholder Representative in connection   with this Agreement and the Escrow Agreement, defending all Indemnification Claims against   the Escrow Fund pursuant to ARTICLE VIII and all disputes pursuant to Section 1.7 or   Section 1.8 hereof, consenting to, compromising or settling all Indemnification Claims or   disputes pursuant to Section 1.7 or Section 1.8 or Losses or Special Losses claimed by any   Purchaser Indemnified Party pursuant to ARTICLE VIII hereof, conducting negotiations with the   Purchaser and its agents regarding such claims or disputes, dealing with the Purchaser and the   Escrow Agent under this Agreement, taking any all other actions specified in or contemplated by   this Agreement and the Escrow Agreement, and engaging counsel, accountants or other   representatives in connection with the foregoing matters.  Without limiting the generality of the   foregoing, except as provided in the following sentence, the Securityholder Representative shall   have the full power and authority to interpret all the terms and provisions of this Agreement and   the Escrow Agreement and to consent to any amendment hereof or thereof in its capacity as the   Securityholder Representative.  Notwithstanding anything to the contrary herein, the   Securityholder Representative shall have no rights to (i) amend, alter or waive, or interpret in a   way that is not consistent with this Agreement and such interpretation is adverse to the   Farrington Trusts, any provision of Section 1.9 or any terms directly (on their face) related   thereto or (ii) amend, alter or waive any other provisions of this Agreement, or interpret terms of   any other provisions of this Agreement in a way that is not consistent with this Agreement and   such interpretation is adverse to the Farrington Trusts, if such amendment, alteration, waiver or   interpretation increases any obligations or liabilities of the Farrington Trusts or diminish any   rights of the Farrington Trusts.  From time to time, but in any event once every calendar quarter,   the Securityholder Representative shall have a conference call with the Farrington Trusts and/or   their representatives and during such call shall provide responses and information as to   reasonable questions and requests from such Persons as to matters related to this Agreement,   including without limitation Indemnification Claims and the 2005 Earn-Out.    (b) The Securityholder Representative shall have the authority (but not the   obligation) to:   (i) Receive all notices or documents given or to be given to the   Securityholder Representative pursuant hereto or pursuant to the Escrow Agreement or in   connection herewith or therewith and to receive and accept services of legal process in   connection with any suit or proceeding arising under this Agreement or the Escrow Agreement;   (ii) Engage counsel, and such accountants and other advisors and incur   such other expenses in connection with this Agreement, the Escrow Agreement and the     

 

             55   transactions contemplated hereby and thereby as the Securityholder Representative may in its   sole discretion deem appropriate; and   (iii) After the Closing, take such action as the Securityholder   Representative may in its sole discretion deem appropriate in respect of: (i) waiving any   inaccuracies in the representations or warranties of the Purchaser, or any breach of a covenant or   agreement by the Purchaser, in each case contained in this Agreement or in any document   delivered by the Purchaser pursuant hereto; (ii) such other action as the Securityholder   Representative is authorized to take under this Agreement or the Escrow Agreement;   (iii) receiving all documents or certificates and making all determinations, in its capacity as the   Securityholder Representative, required under this Agreement or the Escrow Agreement; and   (iv) taking all such actions as may be necessary to carry out any of the transactions contemplated   by this Agreement and the Escrow Agreement, including the defense and/or settlement of any   claims for which indemnification is sought pursuant to ARTICLE VIII and any waiver of any   obligation of the Purchaser.   (c) Notwithstanding any provision herein to the contrary, the Securityholder   Representative shall have no duties to the Sellers or have any liability to the Sellers with respect   to any action taken, decision made or instruction given by the Securityholder Representative in   connection with the Escrow Agreement or this Agreement if taken in accordance with the terms   of this Agreement.   (d) The Sellers, severally and not jointly based on their respective Pro Rata   Portions, shall indemnify and hold harmless the Securityholder Representative  against any loss,   liability or expense incurred by the Securityholder Representative or any of its Affiliates and any   of their respective partners, directors, officers, employees, agents, stockholders, consultants,   attorneys, accountants, advisors, brokers, representatives or controlling persons, in each case   relating to the Securityholder Representative’s conduct as the Securityholder Representative,   other than losses, liabilities or expenses resulting from the Securityholder Representative’s gross   negligence or willful misconduct in connection with its performance under this Agreement and   the Escrow Agreement.  This indemnification shall survive the termination of this Agreement.    The costs of such indemnification (including the costs and expenses of enforcing this right of   indemnification) shall be first deducted from the Securityholder Expense Amount and shall   thereafter be individual obligations of the Sellers in proportion to their respective Pro Rata   Portions of such costs, which obligations may be satisfied as contemplated by Section 9.9(g).    The Securityholder Representative may, in all questions arising under this Agreement, rely on the   advice of counsel and for anything done, omitted or suffered in good faith by the Securityholder   Representative in accordance with such advice, the Securityholder Representative shall not be   liable to the Sellers or the Escrow Agent or any other person.  In no event shall the   Securityholder Representative be liable hereunder or in connection herewith for (i) any indirect,   punitive, special or consequential damages or (ii) any amounts other than those that are satisfied   out of the Holdback Account.    (e) In the performance of its duties hereunder, the Securityholder   Representative shall be entitled to (i) rely upon any document or instrument reasonably believed   to be genuine, accurate as to content and signed by any Seller or any Party hereunder and     

 

             56   (ii) assume that any Person purporting to give any notice in accordance with the provisions   hereof has been duly authorized to do so.   (f) The Securityholder Representative is authorized, in its sole discretion, to   comply with final, nonappealable orders or decisions issued or process entered by any court of   competent jurisdiction or arbitrator with respect to the Escrow Funds.  If any portion of the   Escrow Funds is disbursed to the Securityholder Representative and is at any time attached,   garnished or levied upon under any court order, or in case the payment, assignment, transfer,   conveyance or delivery of any such property shall be stayed or enjoined by any court order, or in   case any order, judgment or decree shall be made or entered by any court affecting such property   or any part thereof, then and in any such event, the Securityholder Representative is authorized,   in its sole discretion, but in good faith, to rely upon and comply with any such order, writ,   judgment or decree that it is advised by legal counsel selected by it is binding upon it without the   need for appeal or other action; and if the Securityholder Representative complies with any such   order, writ, judgment or decree, it shall not be liable to any Seller or to any other Person by   reason of such compliance even though such order, writ, judgment or decree may be   subsequently reversed, modified, annulled set aside or vacated.   (g) The Securityholder Expense Amount shall be withheld from amounts   otherwise payable to the Sellers and Award Participants pursuant to this Agreement at the   Closing and contributed by the Purchaser on behalf of the Sellers and Award Participants to the   Holdback Account as provided in Section 1.6(c) and Section 2.2(c)(i) through Section 2.2(c)(v)   for the Securityholder Representative to hold on behalf of the Sellers and Award Participants as a   fund for any reasonable out-of-pocket fees and expenses (including legal, accounting and other   advisors’ fees and expenses, if applicable) incurred by the Securityholder Representative in its   capacity as the Securityholder Representative and as a fund, at the sole discretion of the   Securityholder Representative, to pay any amounts owing to a Purchaser Indemnified Party,   subject to the provisions of ARTICLE VIII hereof, pursuant to Section 1.8, Section 6.4,   Section 8.2(a)(i), Section 8.2(a)(ii), Section 8.2(a)(v) and/or Section 8.2(a)(vi).  Notwithstanding   anything to the contrary contained in this Section9.9, with respect to any out-of-pocket fees and   expenses (including legal, accounting and other advisors’ fees and expenses, if applicable)   incurred by the Securityholder Representative in its capacity as the Securityholder   Representative, the Securityholder Representative shall be entitled, in its sole discretion, to have   each Seller pay such Sellers’s respective Pro Rata Portion of any reasonable out-of-pocket fees   and expenses (including legal, accounting and other advisors’ fees and expenses, if applicable)   incurred by the Securityholder Representative in its capacity as the Securityholder   Representative; provided, however, that (i) the Securityholder Representative must first exhaust   any amounts remaining in the Holdback Account, (ii) the Securityholder Representative shall   first provide to the Sellers an accounting of all of its expenses and the reasons for a request for   the additional funds.  The Securityholder Representative acknowledges and agrees that in no   event shall the aggregate liability of any Seller (including any Joining Common Holder) under   this Agreement, including any amounts paid under this Section 9.9, exceed the aggregate   Consideration Received by such Seller.  Subject to Section 1.9, at the discretion of the   Securityholder Representative, the Securityholder Representative shall distribute (or cause to be   distributed) any amounts remaining in the Holdback Account to the Sellers or Award Participants   (in the case of the amounts distributed with respect to Incentive Bonus Payments, to the     

 

             57   Company for further distribution to the Award Participants in accordance with Section 1.3(b)) in   the following order:    (i) First, if any amounts have been withheld from the Preferred   Holders, the Preferred Warrant Holder and/or the Award Participants pursuant to   Section 2.2(c)(i), Section 2.2(c)(ii) and/or Section 2.2(c)(v) in order to fund the Escrow Shortfall   Amount, then to the Preferred Holders, the Preferred Warrant Holder and the Award Participants   who were subject to such withholding on a pro rata basis in accordance with the Escrow Shortfall   Pro Rata Portion of each such Preferred Holder, the Preferred Warrant Holder and each such   Award Participant until such time as each such Preferred Holder, the Preferred Warrant Holder   and such Award Participant has, when taken together with any prior distribution such holder has   received pursuant to the terms of the Escrow Agreement (if any) been returned, the entire amount   of the Escrow Shortfall Amount that was withheld from such Party pursuant to the terms of   Section 2.2(c)(i), Section 2.2(c)(ii) and/or Section 2.2(c)(v); and   (ii) Thereafter, to the Securityholders (subject to the prior application   and satisfaction in full of the provisions of Section 1.5(e)) in accordance with their respective Pro   Rata Escrow Portions.   (h) The appointment of the Securityholder Representative hereunder is   irrevocable and any action taken by the Securityholder Representative pursuant to the authority   granted in this Section 9.9 shall be effective and absolutely binding as the action of the   Securityholder Representative under this Agreement or the Escrow Agreement.   9.10 Severability.  Any term or provision of this Agreement that is invalid or   unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such   invalidity or unenforceability without rendering invalid or unenforceable the remaining terms   and provisions of this Agreement or affecting the validity or enforceability of any of the terms or   provisions of this Agreement in any other jurisdiction.  If any provision of this Agreement is so   broad as to be unenforceable, the provision shall be interpreted to be only so broad as is   enforceable.   9.11 Assignment.  Neither this Agreement nor any of the rights, interests or obligations   hereunder shall be assigned by any of the Parties hereto (whether by operation of law or   otherwise) without the prior written consent of the Purchaser and the Securityholder   Representative.  Subject to the preceding sentence, this Agreement shall be binding upon, inure   to the benefit of and be enforceable by the Parties and their respective, heirs, successors and   permitted assigns.   9.12 No Third Party Beneficiaries.  Except as otherwise specifically set forth herein   (including Section 8.2 and Section 8.3), this Agreement is for the sole benefit of the Parties   hereto and their permitted assigns, and nothing herein expressed or implied shall give or be   construed to give any Person, other than the Parties hereto and such permitted assigns, any legal   or equitable rights hereunder.  All references herein to the enforceability of agreements with third   Parties, the existence or non-existence of third party rights, the absence of breaches or defaults   by third parties, or similar matters or statements, are intended only to allocate rights and risks   among the Parties hereto and are not intended to be admissions against interests, give rise to any     

 

             58   inference or proof of accuracy, be admissible against any Party hereto by any third party or give   rise to any claim or benefit to any third party.   9.13 Enforcement of Agreement.  The Parties hereto agree that irreparable damage   would occur if any of the provisions of this Agreement was not performed in accordance with its   specific terms or was otherwise breached.  It is accordingly agreed that the Parties shall be   entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce   specifically the terms and provisions hereof, this being in addition to (a) any other remedy to   which they are entitled hereunder, at law or in equity, prior to the Closing, or (b) any other   remedy to which they are entitled hereunder after the Closing.    9.14  Conflicts and Privilege.  It is acknowledged by each of the Parties hereto that the   Securityholder Representative and the Majority Stockholder Entity has retained Goodwin Procter   LLP (“Goodwin”) to act as their counsel and as counsel to the Company in connection with the   transactions contemplated hereby.  The Purchaser and the Company hereby agree that, in the   event that a dispute arises after the Closing between any Purchaser Indemnified Party on the one   hand, and the Securityholder Representative and/or the Majority Stockholder Entity on the other   hand, with respect to the Transactions, Goodwin may represent the Securityholder   Representative and the Majority Stockholder Entity in such dispute even though the interests of   the Securityholder Representative and the Majority Stockholder Entity may be directly adverse   to the Purchaser Indemnified Parties (including the Company and each of its Subsidiaries), and   even though Goodwin may have represented the Company and/or its Subsidiaries in a matter   substantially related to such dispute, or may be handling ongoing matters for the Company   and/or its Subsidiaries.  The Purchaser and the Company further agree, and agree to cause all of   the Company’s Subsidiaries to agree, that, as to all communications, in any form whatsoever,   (x) among Goodwin, the Company, the Subsidiaries of the Company, the Securityholder   Representative and/or any Seller before Closing that relate in any way to the Transactions and   (y) Goodwin, the Securityholder Representative and/or any Seller after Closing (collectively, (x)   and (y), the “Communications”), the attorney-client privilege and the expectation of client   confidence belongs to the Securityholder Representative and the Majority Stockholder Entity and   may be controlled only by the Securityholder Representative and the Majority Stockholder Entity   and shall not pass to or be claimed by the Purchaser or any Purchaser Indemnified Party   (including the Company and any Subsidiary of the Company).  In connection with the foregoing,   Purchaser hereby irrevocably waives and agrees not to assert, and agrees to cause the Company   and the Company’s Subsidiaries to irrevocably waive and not to assert, any conflict of interest   arising from or in connection with (a) Goodwin’s representation of the Company and/or the   Company’s Subsidiaries prior to the Closing with respect to the Transactions and (b) Goodwin’s   representation of the Stockholder Representative and the Majority Stockholder Entity prior to   and after the Closing.  To the extent that files or other materials maintained by Goodwin   constitute property of its clients that are or relate to Communications, only the Stockholder   Representative and the Majority Stockholder Entity shall hold such property rights and Goodwin   shall have no duty to reveal or disclose any such files or other materials or any Communications   by reason of any attorney-client relationship between Goodwin, on the one hand, and Purchaser,   the Company or the Company’s Subsidiaries, on the other hand.  Purchaser agrees that it will   not, and that it will cause the Company and the Company’s Subsidiaries not to, (i) access or use   the Communications, including by way of review of any electronic data, communications or   other information, or by seeking to have the Securityholder Representative or Majority     

 

             59   Stockholder Entity waive the attorney-client or other privilege, or by otherwise asserting that   Purchaser, the Company or any Company Subsidiary has the right to waive the attorney-client or   other privilege or (ii) seek to obtain the Communications from Goodwin.   9.15 Electronic Execution and Delivery.  A facsimile, electronic or other reproduction   of this Agreement may be executed by one or more Parties to this Agreement, and an executed   copy of this Agreement may be delivered by one or more Parties to this Agreement by facsimile   or other electronic transmission pursuant to which the signature of or on behalf of such Party can   be seen, and such execution and delivery shall be considered valid, binding and effective for all   purposes.  At the request of any Party to this Agreement, all Parties to this Agreement agree to   execute an original of this Agreement as well as any facsimile, electronic or other reproduction   of this Agreement.   [Signatures on Next Page]     

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

    

 

            Annex I   Definitions   In addition to any other definitions contained in this Agreement, the following words,   terms and phrases shall have the following meanings when used in this Agreement.   “2005 Companies” means Seaton, LLC (f/k/a Seaton Corp.), SMX, LLC (f/k/a SMX   Corp.) and PeopleScout, Inc.   “2005 Earn-Out” means the 2005 Earn-Out Amount that would be owed by the 2005   Companies to the 2005 Sellers pursuant to Section 2.4 of the 2005 SPA if the Majority   Stockholder Entity achieves a Return Multiple (as defined in the 2005 SPA) equal to or greater   than 2.0 at any time.        “2005 Earn-Out Amount” means Nine Million Two Hundred Seventy Thousand Dollars   ($9,275,000).      “2005 Earn-Out Percentages” means the percentages set forth on Schedule 1.9(a).      “2005 SPA” means that certain Stock Purchase Agreement, date as of June 17, 2005 (as   amended and/or amended and restated from time to time), by and among Staffing Solutions   Holdings, Inc., Seaton Acquisition Corp., Hugh Farrington, individually, the Farrington Trust   No. 1, Michael Miles, individually and as the Stockholders’ representative, the Michael Miles   Grantor Retained Annuity Trust No. 1, Linda Krier, individually, Loree Lynch, individually,   Seaton, LLC (f/k/a Seaton Corp.), SMX, LLC (f/k/a SMX Corp.) and PeopleScout, Inc.      “2005 Sellers” means Michael Miles Revocable Trust, Michael Miles 2004 Gift Trust, the   Farrington Trusts, Linda Krier and Loree Lynch.      “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly   through one or more intermediaries, controls, or is controlled by, or is under common control   with, such Person, and the term “control” (including the terms “controlled by” and “under   common control with”) means the possession, directly or indirectly, of the power to direct or   cause the direction of the management and policies of such Person, whether through ownership   of voting securities, by contract or otherwise.      “Aggregate Preferred Consideration” is defined in Section 1.5(d) of this Agreement.   “Aggregate Purchase Price” is defined in the definition of “Purchase Price.”   “Agreed Accounting Principles” means GAAP applied on a basis consistent with the   methodologies, practices, principles, and policies used by the Company in the preparation of its   consolidated audited balance sheet dated December 29, 2013 and its consolidated unaudited   balance sheet dated March 30, 2014.   “Agreement” is defined in the Preamble of this Agreement.     

 

            “Alternative Transaction” is defined in Section 6.8 of this Agreement.   “Approved Settlement Agreement” is defined in the definition of “Special Losses.”   “Audited Financial Statements” is defined in Section 3.4 of this Agreement.   “Award” means each Award (as defined in the Incentive Bonus Plan) outstanding under   the Incentive Bonus Plan as of immediately prior to the Closing.   “Award Participant” means each Participant (as defined in the Incentive Bonus Plan)   who is entitled to an Award in connection with the Transactions.    “Award Participant Pro Rata Portion” means, with respect to each Award Participant,   the quotient obtained by dividing (x) the Incentive Bonus Payment received by such participant    pursuant to this Agreement, by (y) aggregate Incentive Bonus Payments received by all such   participants pursuant to this Agreement.  For the avoidance of doubt, the aggregate Award   Participant Pro Rata Portion shall always equal one hundred percent (100%).    “Basket Amount” is defined in Section 8.4(a) of this Agreement.   “Benefit Plan” is defined in Section 3.8(a) of this Agreement.   “Business Day” means any day of the year on which national banking institutions in New   York are opened to the public for conducting business and are not required or authorized to close.     “Cash” means all cash and cash equivalents of the Company and its Subsidiaries on a   consolidated basis other than WM Restricted Cash, in each case, in accordance with the Agreed   Accounting Principles.    “Closing” is defined in Section 2.1 of this Agreement.   “Closing Balance Sheet” is defined in Section 1.8(a) of this Agreement.   “Closing Date” is defined in Section 2.1 of this Agreement.   “Closing Date Net Working Capital Amount” means the amount by which (i) Current   Assets plus Cash exceeds (ii) Current Liabilities and checks outstanding that are not otherwise   taken into account in the determination of Cash, in each case, determined as of 12:01 a.m.   Chicago time on the Closing Date and in accordance with the Agreed Accounting Principles.    “Code” means the Internal Revenue Code of 1986, as amended.   “Common Consideration” is defined in Section 1.4 of this Agreement.   “Common Holder” is defined in Preamble of this Agreement.   “Common Shares” is defined in the Recitals of this Agreement.   “Common Stock” is defined in the Recitals of this Agreement.     

 

            “Common Warrant Consideration” is defined in Section 1.2 of this Agreement.   “Common Warrant Holders” is defined in the Preamble of this Agreement.   “Common Warrant Shares” is defined in the Recitals of this Agreement.   “Common Warrants” is defined in the Recitals of this Agreement.   “Communications” is defined in Section9.14 of this Agreement.   “Company” is defined in Preamble of this Agreement.   “Company Charter” is defined in Section 3.2 of this Agreement.   “Company Employees” means the corporate, administrative and managerial employees   of the Company.  Company Employees specifically excludes all temporary employees, part-time   employees and other employees (commonly referred to as “associates”) staffed at a customer or a   client of the Company other than in a full-time supervisory or managerial role (commonly   referred to as a member of the “site management team”).   “Company Fundamental Representations” means the representations and warranties   contained in Section 3.1(a) (Status), Section 3.1(b) (Authority), Section 3.2 (Capitalization of the   Company), Section 3.3 (Subsidiaries) and Section 3.16 (Brokers).   “Company Released Persons” is defined in Section 1.9(c).   “Company Releasing Parties” is defined in Section 1.9(c).   “Company Representatives” is defined in Section 6.8 of this Agreement.   “Company Stock Options” means each stock option, stock equivalent right or other right   to Common Stock granted under the Stock Plan.   “Consent” means any approval, consent, ratification, permission, waiver or authorization   from any Person other than a Governmental Entity.   “Consideration Received” means, with respect to each Seller, the sum of the Preferred   Consideration, Preferred Warrant Consideration, Common Consideration and Common Warrant   Consideration actually received by such Seller pursuant to the terms of this Agreement.   “Contract” means any agreement, contract, obligation, promise, commitment or   undertaking that is or purports to be legally binding.   “Current Assets” means the aggregate amount of all current assets of the Company and   its Subsidiaries listed as categories of current assets on Schedule 1.8, on a consolidated basis and   in accordance with the Agreed Accounting Principles.   “Current Liabilities” means the aggregate amount of all current liabilities of the   Company and its Subsidiaries listed as categories of current liabilities on Schedule 1.8, on a     

 

            consolidated basis and in accordance with the Agreed Accounting Principles; provided, however,   that Current Liabilities shall not include any Indebtedness, Selling Expenses or other liabilities   either paid on or prior to the Closing Date by or on behalf of the Company, or any other   Excluded Items.    “Disclosure Schedule” is defined in ARTICLE III of this Agreement.   “Dispute Period” is defined in Section 8.5(a) of this Agreement   “Enterprise Value” is defined in the definition of “Purchase Price.”   “Environmental Costs and Liabilities” means, with respect to any Person, all liabilities,   obligations, responsibilities, Remedial Actions, losses, damages (including natural resource   damages), obligations to pay damages to third parties, costs and expenses (including all   reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of   investigation and feasibility studies), fines, penalties, sanctions and interest that arise out of any   violation of Environmental Law (including claims under common law for personal injury or   property damage) or a Release of Hazardous Materials.    “Environmental Law” means any Law relating to the protection of human health and   safety, the environment, or natural resources, including the Comprehensive Environmental   Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials   Transportation Act (49 U.S.C. App. § 1801 et seq.), the Resource Conservation and Recovery   Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act   (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the   Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. § 136 et seq.), and the   Occupational Safety and Health Act (29 U.S.C. § 651 et seq.), as each has been or may be   amended and the regulations promulgated pursuant thereto.   “Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure,   exemption, decision or other action required under or issued, granted, given, authorized by or   made pursuant to Environmental Law.   “ERISA” is defined in Section 3.8(a) of this Agreement.   “ERISA Affiliate” means any entity that would have ever been considered a single   employer with the Company under Section 4001(b) of ERISA or part of the same “controlled   group” as the Company for purposes of Section 302(d)(3) of ERISA.   “Escrow Accounts” is defined in Section 1.6(a) of this Agreement.   “Escrow Agent” is defined in Section 1.6(a) of this Agreement.   “Escrow Agreement” is defined in Section 1.6(a) of this Agreement.   “Escrow Amounts” means, together, the Indemnity Escrow Amount, the Special   Indemnity Escrow Amount, and the Net Working Capital Escrow Amount.     

 

            “Escrow Fund” has the meaning assigned to such term in the Escrow Agreement.      “Escrow Shortfall Amount” is defined in Section 1.6(c) of this Agreement.   “Escrow Termination Date” is defined in Section 1.6(a) of this Agreement.   “Escrow Shortfall Pro Rata Portion” means, with respect to each (i) Preferred Holder   and the Preferred Warrant Holder, an amount equal to such holder’s Preferred Pro Rata Portion   multiplied by 93.327%, and (ii) each Award Participant, such participant’s Award Participant Pro   Rata Share multiplied by 6.673%.  For the avoidance of doubt, the aggregate Escrow Shortfall   Pro Rata Portion shall always equal one hundred percent (100%).   “Estimated Target Net Working Capital Amount” means an amount equal to (i) the sum   of Five Hundred Seventy-Seven Million Eighty-Nine Thousand One Hundred Sixty-Six Dollars   ($577,089,166.00), Net Working Capital May and Estimated Net Working Capital June, divided   by (ii) twelve (12), minus (iii) Three Million Five Hundred Thousand Dollars ($3,500,000).  An   example, for purposes of clarity, of the calculation of the Estimated Target Net Working Capital   Amount is attached as Exhibit C.   “Estimated Net Working Capital June” means the amount by which (i) Current Assets   exceeds (ii) Current Liabilities, in each case, determined as of the close of business on   June 29, 2014, estimated in good faith by the Company.    “Estimated Closing Date Net Working Capital Amount” is defined in Section 1.7 of this   Agreement.   “Estimated Preliminary Statement” is defined in Section 1.7 of this Agreement.   “Estimated Purchase Price Adjustment” is defined in Section 1.7 of this Agreement.   “Excluded Item” means (i) any liability of the Company or any of its Subsidiaries   resulting from any action taken on the Closing Date by or on behalf of the Purchaser or any of its   Affiliates, including in connection with any equity or debt financing sourced by the Purchaser or   any of its Affiliates, (ii) any liability that is otherwise allocated to, or the obligation of, the   Purchaser or any of its Affiliates pursuant to the terms of this Agreement, (iii) any liability of the   Company or any of its Subsidiaries that is included in the Final Statement as a Current Liability   in determining the Closing Date Net Working Capital Amount, or (iv) the Incentive Bonus   Payments.   “Farrington Trusts” means the Farrington Trust No. 2 Non-GST Exempt and the   Farrington Trust No. 2 GST Exempt.   “Final Determination” is defined in Section 8.5(c) of this Agreement.   “Final Statement” is defined in Section 1.8(c) of this Agreement.   “Financial Statements” is defined in Section 3.4 of this Agreement.     

 

            “Fundamental Representations” means the Company Fundamental Representations, the   Purchaser Fundamental Representations and the Seller Fundamental Representations.   “GAAP” means generally accepted accounting principles in the United States,   consistently applied.   “General Enforceability Exceptions” is defined in Section 3.1(b) of this Agreement.   “Goodwin” is defined in Section9.14 of this Agreement.   “Governing Documents” means with respect to any particular entity, (i) if a corporation,   the articles or certificate of incorporation and the bylaws (or similar organizational documents   for any entity organized or existing in any non-U.S. jurisdiction), (ii) if a limited partnership, the   limited partnership agreement and the articles or certificate of limited partnership (or similar   organizational documents for any entity organized or existing in any non-U.S. jurisdiction),   (iii) if a limited liability company, the articles of organization or certificate of formation and the   limited liability company agreement or operating agreement (or similar organizational   documents for any entity organized or existing in any non-U.S. jurisdiction), (iv) if any other   type of entity (including any non-U.S. entity), the formation or organizational documents and the   governing documents, (v) all equityholders’ agreements, voting agreements, voting trust   agreements, joint venture agreements, or registration rights agreements, and (vi) any amendment   or supplement to any of the foregoing.   “Governmental Entity” means any federal, state, local or foreign government or political   subdivision thereof, or any agency or instrumentality of such government or political   subdivision, or any arbitrator, court or tribunal of competent jurisdiction.   “Hazardous Material” means any substance, material, or waste that is regulated,   classified, or otherwise characterized under or pursuant to any Environmental Law as   “hazardous,” “toxic,” “pollutant,” “contaminant,” “radioactive,” or words of similar meaning or   effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, and   urea formaldehyde insulation.   “Holdback Account” is defined in Section 1.6(b) of this Agreement.   “HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as   amended.   “Incentive Bonus Payments” means the payments (if any), as determined by the Board   (as defined in the Incentive Bonus Plan), owed by the Company to the Award Participants under   the Awards in connection with the Transactions.   “Incentive Bonus Plan” means the Staffing Solutions Holdings, Inc. 2013 Management   Incentive Plan.    “Included Payroll Taxes” means the aggregate amount of the employer’s share of payroll   taxes payable by the Company and its Subsidiaries as a result of the Incentive Bonus Payments;   provided that such amount shall not include (i) the amount of any social security taxes payable in     

 

            respect of any employee whose compensation subject to social security taxes will be greater than   the maximum amount subject to social security taxes for the applicable taxable year without   regard to the Incentive Bonus Payments and (ii) with respect to any employee whose   compensation subject to social security taxes will be greater than the maximum amount subject   to social security taxes for the applicable taxable year as a result of taking into account the   Incentive Bonus Payments, an amount of social security taxes attributable to the incremental   Incentive Bonus Payments for such taxable year from the amount of such employee’s other   compensation subject to social security taxes up to the social security cap.  To the extent that any   state payroll taxes “phase out” in a manner similar to U.S. federal social security taxes, the   principles of the foregoing proviso shall be applied.   “Indebtedness” means, without duplication, and determined as of 12:01 a.m. Chicago   time on the Closing Date,  (a) a Contract under which the Company or any of its Subsidiaries has   borrowed any money from, or issued or is subject to any loan agreement, credit agreement,   promissory note, bond or debenture to any Person, (b) a Contract under which any of the   Company or its Subsidiaries has directly or indirectly guaranteed indebtedness for borrowed   money of any other Person (other than endorsements for the purpose of collection in the   Ordinary Course of Business), or (c) any credit agreement, promissory note, bond or debenture   issued to any Person by the Company or any of its Subsidiaries.  “Indebtedness” shall not, and   shall not be deemed to, include any letters of credit or any Excluded Item.   “Indemnification Claim” is defined in Section 8.5(a) of this Agreement.   “Indemnified Party” is defined in Section 8.5(a) of this Agreement.   “Indemnifying Party” is defined in Section 8.5(a) of this Agreement.   “Indemnity Escrow Amount” is defined on Schedule 1.6(a).   “Indemnity Escrow Account” is defined in Section 1.6(a) of this Agreement.   “Initial Aggregate Purchase Price” is defined in the definition of “Purchase Price.”   “Insurance Policies” is defined in Section 3.10 of this Agreement.   “Intellectual Property” means all intellectual property rights arising from or in respect of   the following:  (i) all patents and applications therefor, including continuations, divisionals,   continuations-in-part, or reissues of patent applications, and patents issuing thereon; (ii) all   trademarks, service marks, trade names, service names, brand names, trade dress rights, logos,   internet domain names and corporate names, together with the goodwill associated with any of   the foregoing, and all applications, registrations and renewals thereof; (iii) copyrights and   registrations and applications therefor, works of authorship and mask work rights; (iv) trade   secrets and all other confidential information, know-how, inventions, proprietary processes,   formulae, models, and methodologies; and (v) rights of publicity.    “Interim Financial Statements” is defined in Section 3.4 of this Agreement.   “IRS” means the United States Internal Revenue Service.     

 

            “Joinder Agreement” is defined in Section 6.10 of this Agreement.   “Joining Common Holder” is defined in Section 6.10 of this Agreement.   “Knowledge of the Company” means the actual knowledge of Patrick Beharelle,   Christopher Averill, Carl Schweihs, Joan Davison or, solely with respect to Section 3.8,   Section 3.9(h) and Section 3.15, Patricia Ayala, in each case after due inquiry.    “Law” means any and all statutes, laws, ordinances, rules, regulations, Orders, permits,   codes, treaties, constitutions, case law and other rules of law enacted, promulgated or issued by   any Governmental Entity.   “Leased Real Property” means all real property leased by the Company and/or its   Subsidiaries.   “Legal Proceeding” means any action, claim (including any cross-claim or counter-   claim), suit, litigation, arbitration, proceeding (including any civil, criminal, administrative,   investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation   commenced, brought, conducted or heard by or before, or otherwise involving, any court or other   Governmental Entity or any arbitrator or arbitration panel.   “Letter of Credit” is defined in Section 6.13 of this Agreement.   “Lien” means any mortgage, pledge, security interest, encumbrance, lien (statutory or   other), claim, charge, community property interest, condition, equitable interest, option,   easement, encroachment, right of way, right of first refusal or conditional sale agreement.   “LoC Released Parties” is defined in Section 6.13 of this Agreement.   “Loss” is defined in Section 8.2(a) of this Agreement.   “Majority Stockholder Entity” means Leeds Equity Partners IV, L.P. (f/k/a Leeds Weld   Equity Partners IV, L.P.).   “Material Adverse Effect” means, with respect to the Company and its Subsidiaries the   occurrence or existence of an event, condition, change, effect, or development that, individually   or in the aggregate, has or would reasonably expected to have an effect that is material and   adverse on the financial condition, business or results of operations of the Company and its   Subsidiaries, on a consolidated basis, or on the ability of the Sellers to consummate the   Transactions; provided, however, that “Material Adverse Effect” shall not include any event,   occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to:   (i) any changes, conditions or effects in the  economies or securities or financial markets in   general anywhere in the world in which the Company and/or its Subsidiaries currently conducts   business; (ii) changes, conditions or effects that affect the industries in which the Company   operates; (iii) any change, effect or circumstance resulting from an action required or specifically   permitted by this Agreement; (iv) any matter disclosed in the Disclosure Schedules solely to the   extent and scope of such disclosure; (v) the effect of any changes in applicable Laws or   accounting rules, including GAAP; (vi) any change, effect or circumstance resulting from the     

 

            announcement of this Agreement; or (vii) conditions caused by acts of terrorism or war (whether   or not declared) or any natural or man-made disaster or other acts of God; provided further,   however, that any event, occurrence, fact, condition or change referred to in clauses (i), (ii), (v) or   (vii) immediately above shall be taken into account in determining whether a Material Adverse   Effect has occurred or would reasonably be expected to occur to the extent that such event,   occurrence, fact, condition or change has a disproportionate adverse effect on the Company and   its Subsidiaries, on a consolidated basis, compared to other similarly sized participants in the   industries in which the Company and its Subsidiaries conduct their businesses.   “Material Contract” is defined in Section 3.7(a) of this Agreement.   “MSP” means managed service provider.    “Net Working Capital Escrow Amount” is defined on Schedule 1.6(a).   “Net Working Capital Escrow Account” is defined in Section 1.6(a) of this Agreement.   “Net Working Capital June” means the amount by which (i) Current Assets exceeds (ii)   Current Liabilities, in each case, determined as of the close of business on June 29, 2014.   “Net Working Capital May” means the amount by which (i) Current Assets exceeds (ii)   Current Liabilities, in each case, determined as of the close of business on May 25, 2014.   “Neutral Arbitrator” is defined in Section 1.8(c) of this Agreement.   “Non-Disclosure and Confidentiality Agreement” is defined in Section 6.2 of this   Agreement.   “Objection Notice” is defined in Section 1.8(b) of this Agreement.   “Open Source Software” is defined in Section 3.9(g) of this Agreement.   “Option Holder” is defined in Section 1.3(a) of this Agreement.   “Order” is defined in Section 2.3(c) of this Agreement.   “Ordinary Course of Business” means the ordinary and usual course of normal day-to-   day operations of the Company and its Subsidiaries consistent with past practice.   “OWM” means onsite workforce management.   “Parties” is defined in the Preamble of this Agreement.   “Permits” means all permits, licenses, franchises, approvals, authorizations, consents,   registrations or certificates required to be obtained from Governmental Entities.   “Permitted Liens” means (i) liens for Taxes not yet due and payable or that are being   contested in good faith by appropriate procedures; (ii) mechanics, carriers’, workmen’s,   repairmen’s or other like liens arising or incurred in the Ordinary Course of Business;     

 

            (iii) easements, rights of way, zoning ordinances and other similar encumbrances affecting the   Real Property Leases; (iv) liens arising under original purchase price conditional sales contracts   and equipment leases with third parties entered into in the Ordinary Course of Business or   (v) other immaterial imperfections of title or Liens.   “Permitted Representation” is defined in Section 9.14 of this Agreement.   “Per Share Common Consideration” means the quotient obtained by dividing (i) the   Common Consideration by (ii) the sum of (a) the aggregate number of Common Shares issued   and outstanding as of immediately prior to Closing, plus (b) the number of shares of Common   Stock that are subject to the Common Warrants.   “Per Share Preferred Consideration” is defined in Section 1.5(b) of this Agreement.   “Person” means any individual, corporation, partnership, limited liability company, firm,   joint venture, association, joint-stock company, trust, unincorporated organization, Governmental   Entity or other entity.   “Personal Property Leases” means all leases of tangible personal property to which the   Company or any of its Subsidiaries is a party.   “PII” is defined in Section 3.9(j) of this Agreement.   “Post-Closing Transaction Deductions” means any payments in respect of Incentive   Bonus Payments after the Closing (including Included Payroll Taxes) in accordance with and in   satisfaction of Section 1.5(e) and whether out of any Escrow Account or otherwise pursuant to   the terms of this Agreement.    “Pre-Closing Period” is defined in Section 6.1 of this Agreement.   “Pre-Closing Tax Contest” is defined in Section 6.4(d) of this Agreement.   “Pre-Closing Tax Period” is defined in Section 6.4(a) of this Agreement.   “Pre-Closing Tax Returns” is defined in Section 6.4(c) of this Agreement.   “Preferred Consideration” is defined in Section 1.5(b) of this Agreement.   “Preferred Holders” is defined in the Preamble of this Agreement.   “Preferred Pro Rata Portion” means, with respect to each Preferred Holder and the   Preferred Warrant Holder, the quotient obtained by dividing (x) the Aggregate Preferred   Consideration received by such holder pursuant to this Agreement, by (y) Aggregate Preferred    Consideration received by all such holders pursuant to this Agreement.  For the avoidance of   doubt, the aggregate Preferred Pro Rata Portion shall always equal one hundred percent (100%).   “Preferred Shares” is defined in the Recitals of this Agreement.   “Preferred Stock” is defined in the Recitals of this Agreement.     

 

            “Preferred Warrant Consideration” is defined in Section 1.5(d) of this Agreement.   “Preferred Warrant Holder” is defined in the Preamble of this Agreement.   “Preferred Warrant Shares” is defined in the Recitals of this Agreement.   “Preferred Warrant” is defined in the Recitals of this Agreement.   “Preliminary Statement” is defined in Section 1.8(a) of this Agreement.   “Pro Rata Escrow Portion” means, with respect to each Securityholder, the quotient   obtained by dividing (x) in the case of a Common Holder, the number of Common Shares held   by such Common Holder, and in the case of a Common Warrant Holder, the number of Common   Warrant Shares issuable pursuant to such Common Warrant Holder’s Common Warrant(s) by (y)   the sum of (i) the number of Common Shares held by all Common Holders party to this   Agreement (including Joining Common Holders) plus (ii) the aggregate number of Common   Warrant Shares held by all Common Warrant Holders. For the avoidance of doubt, the aggregate   Pro Rata Escrow Portion shall always equal one hundred percent (100%).   “Pro Rata Portion” means, with respect to each Seller (and Award Recipient), the   quotient obtained by dividing (x) the aggregate Consideration Received by such Seller pursuant   to this Agreement plus the Incentive Bonus Payment received by any Award Recipient, by (y) the   sum of the aggregate Consideration Received by all Sellers pursuant to this Agreement plus the   aggregate Incentive Bonus Payments received by all Award Participants.  For the avoidance of   doubt, the aggregate Pro Rata Portion shall always equal one hundred percent (100%).   “Purchase Price” means an amount in cash equal to the sum of: (a) Three Hundred and   Ten Million Dollars ($310,000,000) (the “Enterprise Value”); plus or minus (b) the Estimated   Purchase Price Adjustment; minus (c) the Indebtedness; minus (d) the Incentive Bonus   Payments; minus (e) the Selling Expenses; plus (f) the aggregate exercise prices of all of the   Common Warrant Shares and the aggregate exercise prices of all of the Preferred Warrant Shares   (the sum of the foregoing clauses (a) through (f), the “Initial Aggregate Purchase Price”).  The   Initial Aggregate Purchase Price shall be subject to further adjustment pursuant to Section 1.8 (as   finally adjusted, the “Aggregate Purchase Price”).     “Purchaser” is defined in the Preamble of this Agreement.   “Purchaser Fundamental Representations” means the representations and warranties   contained in Section 5.1 (Corporate Organization), Section 5.2 (Authority and Validity), Section   5.4 (Investment Intention), Section 5.5 (Financial Capability; Solvency), Section 5.6 (Brokers),   Section 5.7 (Litigation) and Section 5.8 (Inspection; No Other Representations).   “Purchaser Indemnified Parties” is defined in Section 8.2(a) of this Agreement.   “Purchaser Prepared Pre-Closing Returns” is defined in Section 6.4(c) of this   Agreement   “Purchaser Terminating Breach” is defined in Section 2.3(e) of this Agreement.     

 

            “Qualifying Claim” is defined in Section 8.4(a) of this Agreement.   “Real Property Leases” is defined in Section 3.6(a) of this Agreement.   “Release” means any release, spill, emission, leaking, pumping, pouring, injection,   deposit, dumping, emptying, disposal, discharge, dispersal, leaching, or migration into the indoor   or outdoor environment or into or out of any property.   “Remedial Action” means all actions, including any capital expenditures, undertaken to   (i) clean up, remove, treat, or in any other way address any Hazardous Material; (ii) prevent the   Release or threat of Release or minimize the further Release of any Hazardous Material so it   does not migrate or endanger or threaten to endanger public health or welfare or the indoor or   outdoor environment; (iii) perform pre-remedial studies and investigations or post-remedial   monitoring and care; or (iv) to correct a condition of noncompliance with Environmental Laws.   “Resolution Period” is defined in Section 1.8(b) of this Agreement.   “Review Period” is defined in Section 1.8(b) of this Agreement.   “Securities Act” is defined in Section 5.4 of this Agreement.   “Securityholder Expense Amount” is defined in Section 1.6(b) of this Agreement.   “Securityholder Indemnified Parties” is defined in Section 8.3(a) of this Agreement.   “Securityholder Representative” is defined in Section 9.9(a) of this Agreement.   “Securityholders” means the Common Holders and the Common Warrant Holders.   “Seller” is defined in Preamble of this Agreement.   “Seller Fundamental Representations” means the representations and warranties   contained in ARTICLE IV.   “Seller Released Persons” is defined in Section 1.9(c).   “Seller Releasing Parties” is defined in Section 1.9(c).   “Seller Terminating Breach” is defined in Section 2.3(d) of this Agreement.   “Selling Expenses” means the unpaid obligations of the Company for all legal and other   expenses incurred in connection with the Transactions determined as of 12:01 a.m. Chicago time   on the Closing Date (including any fees and expenses of (i) Goodwin and (ii) certain other   advisors of the Company); provided, however, that in no event shall Selling Expenses include, or   be deemed to include, any Excluded Items; provided, further, however, that any Selling Expenses   that would not otherwise be due until the Closing (e.g., success based fees and/or expenses) will   be deemed to be incurred and unpaid as of 12:01 a.m. Chicago time on the Closing Date.    “Significant Customer” is defined in Section 3.13(a) of this Agreement.     

 

            “Solvent” is defined in Section 5.5 of this Agreement.   “Source Code” is defined in Section 3.9(i) of this Agreement.   “Special Escrow Account” is defined in Section 1.6(a) of this Agreement.   “Special Escrow Amount” s defined on Schedule 1.6(a).   “Special Indemnity Escrow Period” is defined on Schedule 1.6(a).   “Special Indemnity Matters” is defined in Section 8.2(a)(vi) of this Agreement.   “Special Losses” means monetary damages paid by the Company or any of its   Subsidiaries to any plaintiff in any Special Indemnity Matter pursuant to either a (i) final, non-   appealable decision of a court of competent jurisdiction, or (ii) a final, binding settlement   agreement that settles any Special Indemnity Matter and fully releases the Company and its   Subsidiaries from any further liability with respect to such Special Indemnity matter and is   otherwise on terms that are reasonably satisfactory to the Securityholder Representative (an   “Approved Settlement Agreement”); provided, however, that Special Losses shall be reduced   and offset by any and all Special Loss Offsets.   “Special Loss Offset” means, regardless of when received, any and all (i) amounts   contributed, paid, reimbursed or assumed by a third-party co-defendant in the Special Indemnity   Matter associated with the defense, settlement and/or judgment costs and/or expenses associated   with any Special Indemnity Matter that would otherwise be owed by, or due from, any Special   Loss Party, (ii) other economic value provided by a third-party co-defendant in the Special   Indemnity Matter to any Special Loss Party that is intended as a partial or full offset to any   Special Loss Party’s liability in connection with any Special Indemnity Matter, and/or (iii)   Special Loss Tax Benefits.   “Special Loss Party” has is defined in Section 8.6(b).   “Special Loss Tax Benefits” means thirty-five percent (35%) of all Special Losses to the   extent deductible or resulting in the equivalent of a deduction through a reduction in net income.     “Stock Plan” means the Staffing Solutions Holdings, Inc. 2005 Stock-Based Incentive   Compensation Plan.   “Straddle Period” defined in Section 6.4(h) of this Agreement.   “Straddle Returns” is defined in Section 6.4(c) of this Agreement.   “Subsequent Payments” is defined in Section 1.9(a).   “Subsidiaries” means (i) the entities set forth on Schedule 3.3(b) and (ii) all other   Persons in which the Company, directly or indirectly, owns a controlling equity interest.     

 

            “Target Net Working Capital Amount” means an amount equal to (i) the sum of Five   Hundred Seventy-Seven Million Eighty-Nine Thousand One Hundred Sixty-Six Dollars   ($577,089,166.00), the Net Working Capital May and the Net Working Capital June, divided by   (ii) twelve (12), minus (iii) Three Million Five Hundred Thousand Dollars ($3,500,000).     “Tax” means any tax (including any income tax, gross receipts, license, payroll,   employment, excise, severance, stamp, occupation, premium, windfall profits, capital stock,   franchise, profits, capital gains tax, value-added tax, sales tax, property tax, withholding tax,   social security (or similar) or unemployment, disability, levy, assessment, tariff, duty (including   any customs duty), deficiency, or other fee, and any related charge or amount (including any fine,   penalty, interest, or addition to tax)), imposed, assessed, or collected by or under the authority of   any Taxing Authority.     “Tax Authority” and “Taxing Authority” mean any U.S. or non-U.S. federal, national,   state, provincial, county, or municipal or other local government, any subdivision, agency,   commission, or authority thereof, or any quasi-governmental body exercising any taxing   authority or any other authority exercising Tax regulatory authority.     “Tax Return” or “Tax Returns” means any return, declaration, report, claim for refund,   information return or statement or other document relating to Taxes that is filed or required to be   filed with any Taxing Authority, including any schedule or attachment thereto, and including any   amendments.     “Termination Date” is defined in Section 2.3(a) of this Agreement.   “Transactions” means the transactions contemplated by this Agreement.   “Transaction Deductions” means the sum of (i) any and all payments made in respect of   Incentive Bonus Payments (including the Company portion of any employment Taxes), at the   Closing as contemplated by this Agreement and any other compensatory payments made by the   Company or any of its Subsidiaries at Closing in connection with the Transactions (including the   Company portion of any employment Taxes); (ii) any and all deductible amounts resulting from   the exercise of Company Stock Options in connection with the transactions contemplated by this   Agreement; (iii)  any and all payments in respect of Common Stock as contemplated by this   Agreement that results in a deduction to the Company pursuant to Section 421(b) of the Code   (including the Company portion of any employment Taxes); (iv) the deductible portion of all   Selling Expenses and all capitalized costs that become deductible due to the repayment of   Indebtedness at the Closing or as contemplated by this Agreement; and (v) 70% of all success-   based fees paid by the Company, in each case to the extent such amounts are deductible on the   U.S. federal income Tax Return of the Company for the Tax period ending as of the Closing   Date.  For purposes of this Agreement, the parties agree that 70% of success-based fees paid by   the Company shall be deductible under Rev. Proc. 2011-29 and shall be Transaction Deductions.    The Securityholder Representative’s determination of the amount of each such item that is   deductible shall be conclusive for purposes of this Agreement, provided that the Securityholder   Representative shall determine the deductibility of any such amounts in good faith and in   consultation with the Company’s tax return preparers and tax counsel, and shall not determine     

 

            that an amount is deductible if the Company’s tax return preparer certifies that it does not believe   a deduction is more likely than not to be available.   “Transaction Documents” means this Agreement and the other documents and   certificates contemplated hereby, including the Escrow Agreement.   “Transaction Tax Benefit” means an amount equal to thirty-five percent (35%)   multiplied by the lesser of (a) the U.S. federal net operating loss carryforward of the Company to   Tax periods beginning after the Closing Date, and (b) the Transaction Deductions.   “WARN” means the Worker Adjustment and Retraining Notification Act of 1988, as   amended, and any similar state or local Law.   “WM Restricted Cash” means the balance of account 1022 on the Company’s   December 29, 2013 consolidated balance sheet included as part of the Audited Financial   Statements.       “Working Capital True-Up Amount” means the amount equal to (i) the Closing Date Net   Working Capital Amount as stated on the Final Statement, minus (ii) the Target Net Working   Capital Amount as stated on the Final Statement, minus (iii) the Estimated Purchase Price   Adjustment (which, in accordance with Section 1.7, may be either a positive or negative   number).exhibit_10-01.htm

  

  

  

 

 

 

Exhibit 10.01

 

 

 

July 22, 2014

 

 

 

 

Raymond Cook

 

Dear Raymond:

Silicon Image, Inc. (the “Company”) is pleased to extend our offer to you in the position of Chief Financial Officer, reporting to Camillo Martino, CEO.  The terms of our offer and the benefits currently provided by the Company are as follows:

 

	
1.  

	
Your compensation package is comprised of the following items:

	
1.1.  

	
Your starting monthly base salary will be $27,084.00 (annualized at $325,000.00/year) and will be subject to annual review. This salary will be paid to you on a semi-monthly basis on the company’s regularly scheduled pay dates of the 15th and last day of each month.

	
1.2.  

	
In addition, you will be eligible for a $50,000 Relocation allowance, payable upon submission of receipts for reimbursable expenses.

	
1.3.  

	
You will also be eligible to participate in the Company’s Bonus Plan as approved by the Board of Directors at the bonus target rate of 75% of your annual base salary. Your participation in future incentive compensation plans will be according to the terms approved by our Board of Directors. Any bonus payments are subject to change at the final discretion of the Compensation Committee of the Company’s Board of Directors.

	
1.4.  

	
You will be eligible to participate in the other employee benefit plans and executive compensation programs maintained by the Company applicable to other employees and key executives of the company, including stock purchase, incentive or other bonus plans, life, disability, health, accident and other insurance programs.

	
1.5.  

	
A recommendation will be made to the Board of Directors to approve a grant to you, contingent on you accepting your new role as CFO, of time-based restricted stock units (“TRSUs”) in the amount of 50,000 under which you will be issued shares of the Company’s common stock at a future date. Provided you are still employed by Silicon Image, such TRSUs shall become vested with respect to twenty-five percent (25%) of the total number of shares on each anniversary of the Grant Date, until fully vested.

 

	
1.6.  

	
Additionally, a recommendation will be made to the Board of Directors to approve a grant to you, contingent on you accepting your new role, of performance-based restricted stock units (“PRSUs”) in the amount of 100,000 under which you will be issued shares of the Company’s common stock at a future date.  Provided you are still employed by Silicon Image, the PRSUs shall vest annually over a three-year period as follows, provided performance metrics are met:

	
Ø 

	
 12/31/2014 = 16,279

	
Ø

	
 12/31/2015 = 27,906

	
Ø

	
 12/31/2016 = 27,906

	
Ø 

	
 12/31/2017 = 27,906

However, the grant of such restricted stock units by the Company is subject to the Board’s approval and this promise to recommend such approval is not a promise of compensation, and is not intended to create any obligation on the part of the Company. You will be required to hold the shares for one year from the date of vesting.  Further details on the Company’s Equity Incentive plan and on any specific grant to you will be provided upon approval of such grant by the Board.

 

 

 

 

  

  

  

 

 

 

	
1.7.  

	
Management will also recommend that the Board of Directors approve a grant to you of stock options in the amount of 100,000 shares of the Company’s Common Stock.  If approved, the grant date for such grant of stock options shall be the first 15th day of the calendar month after the latter of the date that the grant is approved by the Board or your start date with the Company (the “Stock Grant Date”).  The exercise price for such grant shall be the closing price of the Company’s common stock on such Stock Grant Date. Provided you continue to provide services to the Company, such options shall become vested and exercisable with respect to one fourth (1/4) of the total number of shares (rounded to the nearest whole share) on the one year anniversary of the Grant Date, and thereafter, on the 15th day of each succeeding month, the options shall become vested and exercisable with respect to an additional one forty-eighth (1/48) of the total number of shares (rounded to the nearest whole share) until such time as the option is vested and exercisable with respect to all of the shares. However, the grant of such stock options by the Company is subject to the Board’s approval.  There can be no assurance that the Board will approve the grant and the promise to recommend such approval is not a promise of compensation and is not intended to create any obligation on the part of the Company.  Further details on the Company’s Equity Incentive Plan and on any specific stock option grant to you will be provided upon approval of such stock option grant by the Board.

	
2.  

	
As an employee of the Company you will have access to certain Company confidential information and you may, during the course of your employment, develop certain information or inventions which will be the property of the Company.  During the period that you render services to the Company, you agree to not engage in any employment, business or activity that is in any way competitive with the business or proposed business of the Company.  You will disclose to the Company in writing any other gainful employment, business or activity that you are currently associated with or participate in that competes with the Company.  To protect the interest of the Company, you will need to sign the Company’s standard “Employee Inventions and Confidentiality Agreement” as a condition of your employment.  We wish to impress upon you that we do not wish you to bring any confidential or proprietary material of any former employer or to violate any other obligations you may have to your former employer.  You represent that your signing of this offer letter, agreement(s) concerning stock options/RSU’s granted to you under the Plan (as defined below) and the Company’s Employee Invention Assignment and Confidentiality Agreement as well as your commencement of employment with the Company will not violate any agreement currently in place between yourself and current or past employers.

	
3.  

	
This offer of employment is made to you in confidence, and we ask that you not disclose its terms to anyone outside your immediate family.  If you do disclose any of its terms to such a family member, please caution him or her that such information is confidential and must not be disclosed to anyone.

	
4.  

	
While we look forward to a long and profitable relationship, should you decide to accept our offer, you will be an at-will employee of the Company, which means the employment relationship can be terminated by either of us for any reason or no reason, at any time and without cause or prior notice. Any statements or representations to the contrary (and, indeed, any statements contradicting any provision in this letter) should be regarded by you as ineffective.  Further, your participation in any stock option or benefit program is not to be regarded as assuring you of continuing employment for any particular period of time.

	
5.  

	
Please note that because of employer regulations adopted in the Immigration Reform and Control Act of 1986, within three business days of starting your new position you will need to present documentation confirming your identity and demonstrating that you have the legal right to work in the United States.  If you have questions about this requirement, which applies to U.S. citizens and non-U.S. citizens alike, you may contact our Human Resource department.

	
6.  

	
Please also note that due to United States export control laws, the Company may need to make inquiries into your citizenship if you will have probable or actual contact with certain technology and/or source code.  Should the Company determine that you will have probable or actual contact with certain technology and/or source code, and should you be a citizen of an embargoed country under United States export control laws; this may have a material effect on the terms and conditions of your employment with the Company.

 

 

 

 

  

  

  

 

 

 

	
7.  

	
You and the Company agree to submit to mandatory and exclusive binding arbitration any controversy or claim arising out of, or relating to, this Agreement or any breach hereof, provided, however, that the parties retain their right to, and shall not be prohibited, limited or in any other way restricted from, seeking or obtaining injunctive relief from a court having jurisdiction over the parties for any alleged violation of the Employee Invention Assignment and Confidentiality Agreement.  Such arbitration shall be conducted through JAMS in the State of California, Santa Clara County, before a single arbitrator, in accordance with the JAMS Employment Arbitration Rules and Procedures in effect at that time.  The arbitrator must decide all disputes in accordance with California law and shall have power to decide all matters, including arbitrability.  You will bear only those costs of arbitration you would otherwise bear had you brought a covered claim in court.  When the arbitrator has issued a decision, judgment on that decision may be entered in any court having jurisdiction thereof.  We each understand and agree that we are waiving a trial by jury.  However, this arbitration provision shall not affect your right to file an administrative claim before any government agency where, as a matter of law, the parties may not restrict the Employee’s ability to file an administrative claim with said agency (by way of example, claims before the Equal Employment Opportunity Commission and the National Labor Relations Board).  Otherwise, the parties agree that arbitration shall be the exclusive remedy for administrative claims.

	
8.  

	
This offer is contingent on approval by the Silicon Image Board of Directors and/or its Compensation Committee.  This offer is also contingent on the completion of a background check, in form and substance reasonably satisfactory to the Company.  You hereby agree to cooperate with the Company in the conduct of this background check and acknowledge that your start date will be delayed until its completion.  A delay of your start date may delay the grant date of any equity awards approved the Board as provided above.

This offer will remain valid until noon on July 25, 2014.  If you decide to accept our offer please sign the enclosed copy of this letter in the space indicated and return it to me. Your signature will acknowledge that you have read, understood and agreed to the terms and conditions of this offer.  Should you have anything else that you wish to discuss, please do not hesitate to call me directly at (650) 766-2624.

 

Raymond, I look forward to you joining Silicon Image, Inc. and developing a strong working relationship with you in your new role.

Sincerely,

Nancy Hauge

Vice President, Human Resources

Silicon Image, Inc.

 

 

 

  

  

  

 

 

 

 

My signature below indicates that I have read and do understand the terms and conditions of this offer and further indicates my acceptance of those terms and conditions. I further acknowledge that no other commitments or representations were made to me as part of my employment offer except as specifically set forth herein.

 

_______________________________                                                                               ____________________

Raymond Cook                                                                                                  Date

 

Enc:

2nd original copy of offer letter

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