Document:

Exhibit 10.27

 

EXECUTION VERSION

 

 

ASSET PURCHASE AGREEMENT

 

 

among

 

 

JUMPTV INC.

 

 

and

 

 

JUMPTV USA INC.

 

 

and

 

 

XOS TECHNOLOGIES, INC.

 

 

dated as of July 15, 2007

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I
  PURCHASE AND SALE OF ASSETS

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Transferred Assets

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
  Excluded Assets

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  1.3

  	
  Assumed Liabilities

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  1.4

  	
  Excluded Liabilities

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  1.5

  	
  Transferred Contracts

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  
	
  1.6

  	
  Allocation

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  1.7

  	
  Transfer Taxes

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II
  PURCHASE PRICE AND CLOSING

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Purchase Price

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
  Working Capital Adjustment

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
  Closing

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Representations and Warranties of the Company

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
  Representations and Warranties of Parent and Purchaser

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  COVENANTS RELATING TO CONDUCT OF BUSINESS

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Covenants of the Company

  	
   

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
  Control of Other Party’s Business

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V
  ADDITIONAL AGREEMENTS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Access; Information and Records; Confidentiality

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
  Reasonable Best Efforts

  	
   

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
  Employees and Benefit Plans

  	
   

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
  Notification of Certain Matters

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
  Fees and Expenses

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
  Public Announcements

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  5.7

  	
  Carve-Out Financial Statements

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  5.8

  	
  Corporate Intellectual Property

  	
   

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  CONDITIONS PRECEDENT

  	
   

  	
  30

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Conditions to Each Party’s Obligation

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
  Additional Conditions to Obligations of Parent and Purchaser

  	
   

  	
  30

  

 

i

 

	
   

  	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
  Additional Conditions to Obligations of the Company

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII
  TERMINATION AND AMENDMENT

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Termination

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
  Effect of Termination

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
  Extension; Waiver

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  INDEMNIFICATION

  	
   

  	
  32

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Indemnification by the Company and Purchaser

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
  Indemnification Procedures

  	
   

  	
  33

  
	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
  Survival

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
  Limitations

  	
   

  	
  35

  
	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
  Resolution of Indemnification Disputes

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
  Treatment of Indemnification Payments

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX
  GENERAL PROVISIONS

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Notices

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
  Interpretation

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
  Counterparts; Facsimile Signatures

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
  Entire Agreement

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  9.5

  	
  No Third-Party Beneficiaries

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  9.6

  	
  Assignment

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  
	
  9.7

  	
  Amendment and Modification; No Waiver

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  9.8

  	
  Enforcement; Jurisdiction

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  9.9

  	
  Dispute Resolution

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  9.10

  	
  Waiver of Jury Trial

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  9.11

  	
  Company Disclosure Schedule

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  9.12

  	
  No Recourse

  	
   

  	
  40

  
	
   

  	
   

  	
   

  	
   

  
	
  9.13

  	
  Governing Law

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  9.14

  	
  Severability

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  9.15

  	
  Mutual Drafting

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  9.16

  	
  Time of the Essence; Computation of Time

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  9.17

  	
  Sole Remedy

  	
   

  	
  41

  
	
   

  	
   

  	
   

  	
   

  
	
  9.18

  	
  Definitions

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  9.19

  	
  Other Defined Terms

  	
   

  	
  46

  

 

ii

 

ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT,
dated as of July 15, 2007 (this “Agreement”),
among JUMPTV INC., a corporation incorporated under the laws of Canada (“Parent”), JUMPTV USA INC.,
a Delaware corporation and a direct wholly-owned subsidiary of Parent (“Purchaser”), and XOS TECHNOLOGIES, INC.,
a Delaware corporation (the “Company”).

 

W I T N E S S E T H:

 

WHEREAS, the Company owns and
operates the Business (as defined herein).

 

WHEREAS, the Company desires
to sell, assign and transfer to Purchaser, and Purchaser desires to acquire
from the Company, certain assets of the Business and assume certain liabilities
of the Business on the terms and conditions set forth in this Agreement.

 

WHEREAS, Parent, Purchaser
and the Company desire to make certain representations, warranties, covenants
and agreements in connection with the transactions contemplated hereby and also
to prescribe various conditions to the transactions contemplated hereby.

 

NOW, THEREFORE, in
consideration of the foregoing and the respective representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:

 

ARTICLE I

PURCHASE AND SALE OF
ASSETS

 

1.1                              Transferred
Assets

 

Upon the terms and subject to the conditions
set forth in this Agreement, at the closing of the transactions contemplated by
this Agreement (the “Closing”), the
Company shall sell, transfer, assign, convey and deliver to Purchaser, and
Purchaser shall acquire from the Company, all of the Company’s right, title and
interest in all assets and properties of the Company that are primarily used or
primarily held for use in the Business, as the same shall exist at the Closing
(collectively, the “Transferred Assets”),
free and clear of any Liens, other than Permitted Liens, including the
following:

 

(a)                                  all Intellectual
Property that is primarily used or held for use in the Business listed in
Schedule 1.1(a) (the “Business
Intellectual Property”);

 

(b)                                 subject to Section 1.5,
all contracts, agreements, and arrangements of the Company which are primarily
related to the operation of the Business and which are listed in Schedule 1.1(b) (excluding
the contracts set forth on Schedule 1.2(n), (collectively, the “Transferred Contracts”), for which
Purchaser assumes all of the Company’s liabilities and obligations thereunder;

 

(c)                                  all personal property
primarily used or primarily held for use in the operation of the Business,
listed in Schedule 1.1(c);

 

 

(d)                                 all franchises,
consents, marketing rights, permits, authorizations, approvals and other
licenses issued by governmental or regulatory bodies issued to the Company that
are primarily used in the operation of the Business to the extent their
transfer is permitted by law;

 

(e)                                  all of the Company’s
rights to income, royalties, damages and payments that are primarily related to
the Business due at or after Closing and all other rights with respect thereto
(including rights to damages and payments for past, present, or future
infringements or misappropriations of any Business Intellectual Property);

 

(f)                                    all causes of action,
demands, judgments, claims (but excluding insurance claims), indemnity rights
or other rights in which, in connection with or with respect to the Business,
the Company is or may be a claimant to the extent primarily related to the
Business;

 

(g)                                 all books and records
of the Company used in the operation of the Business relating primarily to the
Transferred Assets, including correspondence, production records, accounting
records, property records, mailing lists, customer and vendor lists,
Intellectual Property prosecution files and regulatory files (including master
files), excluding books and records in the possession of the Company’s
independent public accountant (including the work papers of such independent
public accountant) (the “Books and Records”);

 

(h)                                 all prepayments made
by the Company to the extent related to the operation of the Business;

 

(i)                                     all of the Business’s
accounts receivable and any other debts owing to the Company to the extent such
debts relate to the Business on the Closing Date, all of the Business’s prepaid
expenses, all of the Business’s advances and deposits (including security
deposits), all of the Business’s payments in transit to the Company, including
accounts receivable for which checks have been received by the Company for
deposit prior to the Closing Date and credit card payments made prior to the
Closing Date but not credited to the Company’s account prior to the Closing
Date;

 

(j)                                     all interest in and
to all telephone, telex and telephone facsimile numbers, domain names and other
directory listings used primarily in the operation of the Business; and

 

(k)                                  the assets described
in Schedule 1.1(k).

 

1.2                              Excluded
Assets

 

Notwithstanding the provisions of Section 1.1
above, the Transferred Assets do not include, and the Company does not hereby
transfer to Purchaser any of the following assets (hereinafter the “Excluded Assets”):

 

(a)                                  all contracts other
than the Transferred Contracts;

 

4

 

(b)                                 the consideration
delivered by Purchaser to the Company pursuant to this Agreement and all rights
of the Company under this Agreement;

 

(c)                                  the Benefit Plans and
any assets thereof;

 

(d)                                 the Company’s Income
Tax Returns and Income Tax records;

 

(e)                                  any books, records or
other information that are not related exclusively to the Business;

 

(f)                                    all policies of
insurance and fidelity, surety or similar bonds;

 

(g)                                 any refunds or
credits of Income Taxes (including any interest thereon) attributable to the
Company’s ownership of the Transferred Assets or operation of the Business
during periods or portions of periods ending prior to the Closing Date, or
arising from, relating to or involving any Excluded Liability;

 

(h)                                 the minute books,
stock books, corporate seals and other corporate records of the Company
relating to its organization and existence;

 

(i)                                     all (i) cash and
cash equivalents on hand, wherever located, including bank balances and bank
accounts, monies in possession of any banks, savings and loans or trust
companies and similar cash items on hand, and (ii) investment securities
and other short- and medium-term investments of the Company;

 

(j)                                     any governmental
licenses, permits and approvals issued to the Company, to the extent their transfer
is not permitted by law;

 

(k)                                  any books and records
that the Company or any of its Affiliates are required to retain pursuant to
any applicable statute, rule, regulation or ordinance or which relate to the
Excluded Assets or the Excluded Liabilities;

 

(l)                                     all Intellectual
Property owned by or held for use in the business of the Company, other than
the Business Intellectual Property;

 

(m)                               the Corporate
Intellectual Property; and

 

(n)                                 the assets described
in Schedule 1.2(n).

 

1.3                              Assumed
Liabilities

 

Assumption of Liabilities.  From and after the Closing Date, Purchaser
agrees to assume and to fully pay, discharge, satisfy and perform when due, all
Liabilities, other than Excluded Liabilities, to the extent arising out of or
related to the Business as currently or previously conducted by the Company,
its Affiliates and their respective predecessors, the Transferred Assets, the
Designated Employees or the other employees of the Business, whether now
existing or hereafter arising and whether arising out of occurrences, events or
incidents occurring before, on or after the Closing and whether primary or
secondary, direct or indirect, known or unknown, fixed or contingent (the “Assumed Liabilities”), including the following:

 

5

 

(a)                                  all trade accounts
payable, accrued liabilities and expenses to the extent relating to the
Business as of the Closing Date;

 

(b)                                 all of the
Liabilities of the Company and its Affiliates arising under or relating to the
Transferred Contracts;

 

(c)                                  all of the
Liabilities assumed by Purchaser pursuant to Section 5.3.;

 

(d)                                 All Taxes related to
the ownership of the Transferred Assets or the operation of the Business other
than (i) Income Taxes of the Company and (ii) the Company’s share of
Transfer Taxes pursuant to Section 1.7; and

 

(e)                                  all Liabilities
whether arising before, on or after the Closing with respect to all actions,
suits, proceedings, disputes, claims or investigations to the extent such
Liabilities relate to the Business or the Transferred Assets, at law, in equity
or otherwise.

 

Purchaser’s obligations under this Section 1.3
will not be subject to offset or reduction by reason of any actual or alleged
breach of any representation, warranty or covenant contained in this Agreement
or the Ancillary Agreements or any closing or other document contemplated by
this Agreement or the Ancillary Agreements, any right or alleged right of
indemnification hereunder or for any other reason.

 

1.4                              Excluded
Liabilities

 

Other than the Assumed Liabilities, Purchaser
shall not, by the execution, delivery and performance of this Agreement or
otherwise, assume or otherwise be responsible for any Liability of any nature
of the Company.  Notwithstanding any other
provision of this Agreement, the Company shall remain responsible for the
following liabilities and obligations of the Company (the “Excluded
Liabilities”):

 

(a)                                  all liabilities
exclusively arising out of or relating to the Excluded Assets, subject to Section 8.1(b)(ii);
and

 

(b)                                 Income Tax
Liabilities of the Company, and the Company’s share of Transfer Taxes set forth
in Section 1.7.

 

1.5                              Transferred
Contracts

 

Notwithstanding anything to the
contrary contained in this Agreement, to the extent that the sale, assignment,
lease, sublease, transfer, conveyance or delivery or attempted sale, lease,
sublease, assignment, transfer, conveyance or delivery to Purchaser, of any
asset that would be a Transferred Asset or any claim or right or any benefit
arising thereunder or resulting therefrom is prohibited by any applicable law
or would require any governmental or third party authorizations, approvals,
consents or waivers, and such authorizations, approvals, consents or waivers
shall not have been obtained prior to the Closing, the Closing shall proceed
and Purchaser shall pay the full Purchase Price at Closing, without the sale,
assignment, lease, sublease, transfer, conveyance or delivery of such asset,
and this Agreement shall not constitute a sale, assignment, sublease, transfer,
conveyance or delivery of such asset or an attempt thereof.  

 

6

 

In the event that the Closing
proceeds without the transfer, sublease or assignment of any such asset, then
following the Closing, the parties shall use reasonable efforts and cooperate
with each other to obtain promptly such authorizations, approvals, consents or
waivers; provided, however, that the Company shall not be
required to pay any consideration or compromise any rights not otherwise
required by this Agreement to be compromised for any such authorization,
approval, consent or waiver, other than filing, recordation or similar fees,
which shall be reimbursed by Purchaser. 
Pending such authorization, approval, consent or waiver, the parties
shall cooperate with each other in any mutually agreeable, reasonable and
lawful arrangements designed to provide to Purchaser the benefits of use of
such asset and to the Company, the benefits, including any indemnities, that
they would have obtained had the asset been conveyed to Purchaser at the
Closing.  To the extent that Purchaser is
provided the benefits pursuant to this Section 1.5 of any Transferred
Contract, Purchaser shall perform for the benefit of the other Persons that are
parties thereto the obligations of the Company, thereunder and pay, discharge
and satisfy any related liabilities that, but for the lack of an authorization,
approval, consent or waiver to assign such liabilities to Purchaser, would be
Assumed Liabilities.  Once authorization,
approval, consent or waiver for the sale, assignment, lease, sublease,
transfer, conveyance or delivery of any such asset not sold, assigned, leased,
subleased, transferred, conveyed or delivered at the Closing is obtained, the
Company, shall assign, lease, sublease, transfer, convey or deliver such asset
to Purchaser at no additional cost to Purchaser.  To the extent that any such asset cannot be
transferred or the full benefits of use of any such asset cannot be provided to
Purchaser following the Closing pursuant to this Section 1.5, then
Purchaser and the Company shall enter into such arrangements (including
leasing, subleasing, sublicensing or subcontracting) to provide to the parties
the economic (taking into account Tax costs and benefits) and operational
equivalent, to the extent permitted, of obtaining such authorization, approval,
consent or waiver and the performance by Purchaser of the obligations
thereunder.  The Company shall pay to
Purchaser promptly upon receipt thereof, all income, proceeds and other monies
received by the Company in connection with their use of any asset (net of any
Taxes and any other costs imposed upon the Company or in connection with the
arrangements under this Section 1.5. 
Except as set forth in this Section 1.5, Purchaser agrees that the
Company and its Affiliates shall not have any liability whatsoever (including
any liability under Article VIII) to Purchaser or its Affiliates arising
out of or relating to the failure to obtain any such authorizations, approvals,
consents or waivers that may be required in connection with the transactions
contemplated hereby or because of the termination of any license, lease,
contract, commitment, agreement or instrument as a result thereof.   To the extent any Transferred Contracts relate
both to the Business and to other businesses of the Company (“Shared Contracts”), at the Company’s request, with respect
to any Shared Contract, the Purchaser shall use commercially reasonable efforts
to obtain the agreement of the other party or parties to any Shared Contract to
enter into a separate agreement with the Company with respect to the matters
covered by such Shared Contract that relate to the business of the
Company.  Pending
such separate agreement, the parties shall cooperate with each other in any mutually
agreeable, reasonable and lawful arrangements designed to provide to the
Company the benefits of use of such Shared Contracts.  To the extent that any contract of the
Company is not a Transferred Contract and relates to the Business, at the
Purchaser’s request, the parties shall cooperate with each other in any
mutually agreeable, reasonable and lawful arrangements designed to provide
Purchaser with the benefits of use of such contract.

 

7

 

1.6                              Allocation

 

The allocation of the Purchase Price among
the Transferred Assets in accordance with Section 1060 of the Code and the
regulations thereunder, which allocation shall be binding upon the Company and
Purchaser, shall be agreed upon by the Company and Purchaser, each acting
reasonably, as soon as reasonably practicable after Closing.  Purchaser and the Company and their
respective Affiliates shall report, act and file Tax Returns (including, but
not limited to, IRS Form 8594) in all respects and for all purposes
consistent with such allocation.  The
Company shall timely and properly prepare, execute, file and deliver all such
documents, forms and other information as Purchaser may reasonably request to
give effect to such allocation. Neither Purchaser nor the Company shall take
any position (whether in audits, Tax Returns or otherwise) that is inconsistent
with such allocation unless required to do so by applicable law.

 

1.7                              Transfer
Taxes

 

The Company and Purchaser shall each bear 50%
of all excise, sales (including bulk sales), use, transfer (including real
property transfer or gains), stamp, documentary, filing, recordation, income,
receipt and gains, and other Taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties, arising out of, in connection with, or attributable to the
transactions effected pursuant to this Agreement (“Transfer
Taxes”).  The Company and, to
the extent required, with the assistance of Purchaser shall prepare and file
all necessary documentation and Tax Returns with respect to such Transfer
Taxes.

 

ARTICLE II

PURCHASE PRICE AND
CLOSING

 

2.1                              Purchase
Price

 

Subject
to the terms and conditions of this Agreement (including any adjustment
pursuant to Section 2.2 or Article VIII), the aggregate consideration
for the Transferred Assets (“Purchase Price”)
shall be (i) $60,250,000 in cash plus (ii) the assumption of the
Assumed Liabilities.

 

2.2                              Working
Capital Adjustment

 

(a)                                  Not less than two
Business Days prior to the Closing Date, the Company will give to Parent, in
writing, a good faith estimate of the net value of (i) accounts
receivables (net of any allowances) and prepaid expenses included in the
Transferred Assets less (ii) the accounts payable and accrued expenses
included in the Assumed Liabilities as at the end of the day immediately
preceding the Closing Date (the “Estimated
Closing Working Capital”).  If
the Estimated Closing Working Capital exceeds the Closing Working Capital
Target, the cash portion of the Purchase Price payable on Closing will be
increased by the amount of the Estimated Closing Working Capital and if the
Estimated Closing Working Capital is less than the Closing Working Capital
Target, the cash portion of the Purchase Price payable on Closing will be
decreased by the amount of the Estimated Closing Working Capital (expressed as
an absolute value).

 

8

 

(b)                                 Promptly following
the Closing Date, but in no event later than 60 days after the Closing Date,
Parent shall prepare and submit to the Company a statement (the “Closing Date Statement”) setting forth, in
reasonable detail, Parent’s calculation of the proposed Final Closing Working
Capital (the “Proposed Final Closing Working
Capital”) which is prepared on a basis consistent with the balance
sheet included in the Financial Statements (the “Reference Balance Sheet”) and using the same accounting
methods, standards, policies, practices, classifications, estimations,
methodologies, assumptions and procedures as were used to prepare the Reference
Balance Sheet.

 

(c)                                  In the event the
Company disputes any aspect of the Proposed Final Closing Working Capital, the
Company shall notify Parent in writing of its objections within 30 days after
receipt of the Closing Date Statement and shall set forth, in writing and in
reasonable detail, the reasons for the Company’s objections.  If the Company fails to deliver a notice of
objections within 30 days after receipt of the Closing Date Statement, the
Company shall be deemed to have accepted the Closing Date Statement as prepared
by Parent in its entirety.  To the extent
the Company does not object in writing in accordance with and within the time
period contemplated by this Section 2.2(c), the Company shall be deemed to
have accepted Parent’s calculation and presentation in respect of the matter
and the matter shall not be considered to be in dispute.

 

(d)                                 The Company and
Parent shall endeavour in good faith to resolve any disputed matters within 30
days after receipt of the Company’s notice of objections.  If the Company and Parent are unable to
resolve the disputed matters, the Company and Parent shall refer the disputed
matters to Smart and Associates, LLP (the “Accounting
Firm”), and the determination of the Accounting Firm in respect of
the correctness of each matter remaining in dispute shall be conclusive and
binding on the Company and Parent and not subject to collateral attack for any
reason absent manifest error or fraud. 
The Accounting Firm shall prepare and deliver to the Company and Parent
a written report explaining its determination. 
The determination of the Accounting Firm shall be based solely on
written submissions by the Company and Parent and shall not be by independent
review.  The Closing Working Capital, as
finally determined pursuant to this Section 2.2 (whether by failure of
Parent to deliver notice of objection, by agreement of the Company and Parent
or by determination of the Accounting Firm), is referred to herein as the “Final Closing Working Capital”.

 

(e)                                  If the Final Closing
Working Capital exceeds the Estimated Closing Working Capital, Parent shall pay
to the Company the amount of such difference with simple interest thereon from
the Closing Date to the date of payment at a rate per annum equal to 8%.  If the Estimated Closing Working Capital
exceeds the Final Closing Working Capital, the Company shall pay to Parent the
amount of such difference with simple interest thereon from the Closing Date to
the date of payment at a rate per annum equal to 8%.  Such payment shall be made free of any
withholdings in immediately available funds not later than 10 Business Days
after the determination of the Final Closing Working Capital by wire transfer to
a bank account designated in writing to the party entitled to receive the
payment.

 

9

 

The
Company shall have no liability with respect to accounts receivable (including
the collectibility thereof) except as determined by this Section 2.2.  Any adjustment or non-adjustment to the
Purchase Price shall not form the basis for any claim for damages pursuant to
this Agreement.

 

(f)                                    Subject to any applicable privileges
(including the attorney-client privilege), the Company shall make available to
Parent and, upon request, to the Accounting Firm retained in accordance with Section 2.2(d),
the books, records, documents and work papers underlying the preparation of the
Closing Date Statement.  Subject to any
applicable privileges (including the attorney-client privilege), Parent shall
make available to the Company and, upon request, to the Accounting Firm
retained in accordance with Section 2.2(d) the books, records,
documents and work papers created or prepared by or for the Company in
connection with the review of the Closing Date Statement.

 

(g)                                 The fees, costs and expenses of the
Accounting Firm shall be paid by the party whose Closing Working Capital
calculation was different by the greater amount from that of the final
determination of the Accounting Firm.

 

2.3                               Closing

 

The closing will
take place at the offices of Dechert LLP, Cira Centre, 2929 Arch Street,
Philadelphia, Pennsylvania 19104, or at such other place as Purchaser and the
Company mutually agree in writing, at 10 a.m. local time on the second
Business Day after the satisfaction or waiver of each of the conditions
(excluding conditions that, by their terms, cannot be satisfied until the
Closing Date) set forth in Article VI, or such other date as Purchaser and
the Company mutually agree upon in writing (the “Closing Date”).
At the Closing, the following will occur: (a) Parent will cause Purchaser
to pay to the Company by wire transfer of immediately available funds the cash
portion of the Purchase Price, less $2,300,000 cash (the “Escrow
Amount”), which shall be delivered to the Escrow Agent in accordance
with the terms of the Escrow Agreement, (b) Purchaser will assume the
Assumed Liabilities from the Company and (c) the Company will assign and
transfer or will cause to be assigned and transferred to Purchaser good and
valid title in and to the Transferred Assets, free and clear of all Liens other
than Permitted Liens.  At the Closing,
there shall also be delivered to the Company and Purchaser the certificates and
other documents and instruments to be delivered pursuant to Article VI.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES

 

3.1                               Representations and
Warranties of the Company

 

Except as set forth in the Company Disclosure Schedule, the Company
represents and warrants to Parent and Purchaser as of the date hereof as
follows:

 

(a)                                  Organization and Authority of the
Company.

 

(i)         The Company has been duly
incorporated, is validly existing and is in good standing under the laws of the
State of Delaware, with the requisite corporate 

 

10

 

authority to own, operate or
lease the properties that it purports to own, operate or lease and to carry on
its business as now being conducted.  The
Company is duly qualified, licensed or admitted to do business and is in good
standing in the jurisdictions set forth on Schedule 3.1(a).  The Company has the full corporate power and
authority to enter into this Agreement and the Ancillary Agreements and to
perform its obligations hereunder and thereunder.  This Agreement has been and, on or prior to
Closing, each of the Ancillary Agreements will be, duly authorized, executed
and delivered by the Company and constitutes or will constitute when executed
and delivered a legal, valid and binding agreement of the Company, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights or debtors’ remedies
and to general equity principles.  No
other proceedings on the part of the Company or, except as described in
Schedule 3.1(a), its stockholders are necessary to authorize the Company’s
execution, delivery and performance of this Agreement and the Ancillary
Agreements.

 

(ii)        The authorized and issued capital stock of
the Company is as set forth in Schedule 3.1(a) and, except as set forth in
Schedule 3.1(a) all shares of capital stock are validly issued,
outstanding, fully paid and non-assessable. 
Except as set forth on Schedule 3.1(a), the Company does not own any
interest (other than in investment accounts) in any corporation, partnership,
joint venture or similar entity.

 

(b)                                 No Conflict. 
Neither the execution and delivery of this Agreement or any of the
Ancillary Agreements nor compliance by the Company with the terms and
provisions hereof or thereof will (a) violate any provision of the
certificate of incorporation or by-laws of the Company, (b) except with
respect to those items identified on Schedule 3.1(b), violate any law, statute,
regulation, judgment, injunction, order or decree of any Governmental Authority
to which the Company is subject except, in all cases, such violations that
would not prohibit or materially impair the Company’s ability to perform its
obligations under this Agreement or (c) except with respect to those items
identified on Schedule 3.1(b), result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or both, would
become a default) under any of the Transferred Contracts, or give to others any
rights of termination, amendment, acceleration or cancellation of any of the
Transferred Contracts, or result in the creation of any Lien on the any of the
Transferred Contracts except in any such case for any violations, conflicts,
breaches, defaults or other matters that would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect or prohibit
or materially impair the Company’s ability to perform its obligations under
this Agreement or any of the Ancillary Agreements.

 

(c)                                  Financial Statements. 
Schedule 3.1(c) sets forth the audited financial statements of the
Company as of December 31, 2006 and for the fiscal year ended December 31,
2006 (the “Balance Sheet Date”)
(the “Financial Statements”).  The Financial Statements have been prepared
in accordance with GAAP applied on a

 

11

 

consistent
basis throughout the periods indicated. 
The Financial Statements fairly present the financial condition and
operating results of the Company as of the dates, and for the periods,
indicated therein, all in accordance with GAAP consistently applied throughout
the periods indicated.  The revenue of
the Business for the five months ended May 31, 2007 was $2,450,754   and
the earnings before interest, taxes and depreciation of the Business for the
five months ended May 31, 2007 was $(2,698,049). 
Purchaser acknowledges that the foregoing revenue and earnings figures
have not been audited and were prepared for the internal management purposes of
the Company and the Business.  Purchaser
further acknowledges that Business was not conducted on a stand-alone basis as
a separate entity during the periods indicated in the Financial Statements and
for the period ending April 30, 2007. 
Other than as set forth in this Section 3.1(c), the Company makes
no representations with regard to the financial information of the Company
(including any estimates, projections, plans or budgets) or the financial
information of the Business.

 

(d)                                 Absence of Liabilities. 
There exist no Liabilities of the Business, whether accrued, absolute,
contingent or threatened, that are Assumed Liabilities and which would be
required to be reflected, reserved for or disclosed under GAAP on a balance
sheet of the Company except (i) as disclosed, reflected or reserved
against in the Financial Statements, (ii) for items set forth in or
arising out of the matters disclosed in the Schedules to this Agreement, (iii) for
Liabilities incurred in the ordinary course of business consistent with past
practice since the Balance Sheet Date, (iv) for liabilities and obligations
incurred in connection with this Agreement and the transactions contemplated
hereby, (v) liabilities or obligations that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect and (vi) Liabilities
listed on Schedule 3.1(d).

 

(e)                                  Absence of Certain Changes or Events. 
Except as set forth on Schedule 3.1(e) hereto or otherwise
disclosed in this Agreement, since the Balance Sheet Date, the Company has
conducted its business in the ordinary and usual course and has not, with
respect to the Business:  (i) sold,
assigned, pledged or otherwise transferred any assets that are material to the
Business as a whole (other than sales of goods or products in the ordinary
course of business); (ii) acquired an interest of in any Person or acquired the
assets or business of any Person or any division or line of business thereof; (iii) made
any capital expenditure or commitment for any capital expenditure in excess of
$100,000 individually or $500,000 in the aggregate; (iv) suffered any
destruction or other casualty loss not covered by insurance made available to
Parent; (v) except for increases in the ordinary course of business or
required under binding contracts or applicable law, increased the compensation
payable or to become payable by the Company to any of the employees of the
Company or increased or entered into, amended or terminated any bonus,
insurance, pension or other Benefit Plan, severance arrangement or obligation
or any other payment or arrangement made by the Company for or with any such
employees; (vi) terminated any employee whose duties related exclusively
to the Business; (vii) other than in the ordinary course of business,
cancelled or waived any rights with respect to any material debts or other
obligations owed to or

 

12

 

claims
held by the Company in respect of the Business (including the settlement of any
Proceeding); (viii) other than in the ordinary course of business,
accelerated or delayed collection of accounts receivable generated by the
Business or payment of accounts payable owing by Business in advance of or
beyond their regular due dates when the same otherwise would have been
collected or paid; (ix) other than in the ordinary course of business,
disposed of or permitted to lapse any rights to the use of any Intellectual
Property material to the Business or the operation of the Business, or disposed
of or disclosed to any Person other than representatives of Purchaser any material
trade secret, formula, process or know-how not theretofore a matter of public
knowledge; (x) in writing entered into, terminated, modified or in writing
agreed to terminate or modify, or received any written threat to terminate or
fail to renew, any Material Contract; or (xi) other
than in the ordinary course of business, entered into an agreement to do any of
the foregoing.  Since the Balance Sheet
Date, except as otherwise disclosed on the Schedules to this Agreement, no
Material Adverse Effect has occurred.

 

(f)                                    Title to Properties; Absence of Liens. 
Except as set forth in Schedule 3.1(f) or as otherwise provided in
this Agreement or the Ancillary Agreements, the Company owns, leases or has the
legal right to use all of the Transferred Assets (other than the Intellectual
Property, which is the subject of Section 3.1(l)) and has good title to
(or in the case of leased Transferred Assets, valid leasehold interest in) all
Transferred Assets (other than the subject and Intellectual Property, which is
the subject of Section 3.1(l)) free and clear of any Liens except for
Permitted Liens.  Except (i) as set
forth in Schedule 3.1(f) and (ii) for the Excluded Assets, the
Transferred Assets (including the Business Intellectual Property), together
with the rights granted to Purchaser pursuant to this Agreement and the
Ancillary Agreements and any other agreements to be entered into pursuant
hereto or thereto, will constitute on the Closing Date all of the assets
necessary to conduct the Business in substantially the same manner as the
Business is presently conducted.  Except
as reflected in the Financial Statements or as set forth in Schedule 3.1(f),
the tangible assets of the Transferred Assets, taken as a whole, are in good
and serviceable condition, subject to normal wear and tear and impairments of
value that, individually or in the aggregate, would not reasonably be expected
to be material, and are generally suitable for the uses for which they are
intended.

 

(g)                                 Litigation. 
Except as set forth on Schedule 3.1(g), there is no material Proceeding
or investigation pending, or, to the Company’s Knowledge, threatened, in equity
or otherwise, in, before, or by, any court or Governmental Authority against or
involving the Company, with respect to the Business or any of the Transferred
Assets or questioning or specifying to prevent or hinder the consummation of
the transactions contemplated by this Agreement.  Except as set forth on Schedule 3.1(g), there
are no material unsatisfied judgments or outstanding orders, injunctions,
decrees, stipulations or awards against the Company.

 

(h)                                 Compliance with Law. 
Except as set forth in Schedule 3.1(h), the Business is not being
conducted, and has not been conducted in the past 18 months, in violation of
any applicable laws, ordinances and regulations, except for possible violations

 

13

 

which
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.  Except as set
forth on Schedule 3.1(h), all governmental approvals, permits and licenses
required to conduct the Business have been obtained and are in full force and
effect and are being complied with in all material respects, except for such
which would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. 
Notwithstanding the foregoing, no representation or warranty is made
under this Section 3.1(h) in respect of any (i) employee benefit
matters which are addressed in Section 3.1(k) (as to which no
representation or warranty is made except as set forth in Section 3.1(k)),
(ii) intellectual property matters which are exclusively addressed in Section 3.1(l) (as
to which no representation or warranty is made except as set forth in Section 3.1(l))
(iii) matters relating to Taxes which are addressed in Section 3.1(o) (as
to which no representation or warranty is made except as set forth in Section 3.1(o))
and (iv) environmental matters which are addressed in Section 3.1(n) (as
to which no representation or warranty is made except as set forth in Section 3.1(n)).

 

(i)                                     Contracts. 
Except as set forth on Schedule 3.1(i), and except for this Agreement,
there are no agreements, understandings, instruments, contracts or proposed
transactions related to or involving the Business or the Transferred Assets to
which the Company is a party or by which it is bound (i) that involve
obligations (contingent or otherwise) of, or payments to, the Company in excess
of $250,000 during any twelve month period except those contracts which may be
terminated without penalty (ii) under which the Company has directly or
indirectly guaranteed or incurred indebtedness in excess of $250,000, (iii) that
limit or purport to limit the ability of the Company to compete in any line of
business or with any person, (iv) any partnership, joint venture or
similar arrangement, or (v) that are otherwise material to the operation
of the Business (collectively, “Material
Contracts”).  Each Material
Contract is valid and is in full force and effect in accordance with the terms
of such Material Contract, subject to bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general equity
principles.  Except as set forth in
Schedule 3.1(i)(vi), the senior executives of the Company listed in Schedule
9.18(y)(i) do not have actual knowledge of any default or any written or
oral notification of default or written or oral claim of default under any Material
Contract, or that would result in the creation of a Lien on any of the
Transferred Assets, other than such defaults, claims or events the effect of
which would not have a Material Adverse Effect. The Company has previously made
available to Purchaser a true, correct and complete copy of each Material
Contract.

 

(j)                                     Consents and Approvals. 
The execution, delivery and performance of this Agreement and the
Ancillary Agreements by the Company, do not and will not require any consent,
approval, authorization or other action by, or filing with or notification to,
any Governmental Authority, except (a) as set forth on Schedule 3.1(j), (b) for
the notification requirements of the HSR Act, if applicable, (c) for
filings, consents and approvals or clearances (including those required under
any

 

14

 

non-United
States antitrust or investment laws) where the failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not prevent or materially delay the consummation by the Company of the
transactions contemplated by this Agreement and (d) as may be necessary as
a result of facts or circumstances relating solely to Purchaser or Parent.

 

(k)                                  Employee Matters.

 

(i)         Schedule 3.1(k) sets
forth the name, title, date of hire, current annual salary and bonus potential,
if applicable, for each officer, employee, consultant and independent
contractor of the Company who is a Designated Employee or whose duties as to
the date hereof relate exclusively to the Business. Schedule 3.1(k) also
lists all contracts providing for a commitment of employment or consulting
services (and provides a description of all such oral agreements) to which the
Company is a party, and which relate to the Business, including those which
contain (i) severance, bonus or other provisions triggered by the Closing
or the termination of such contract or (ii) obligations continuing beyond
the termination of employment, and true, correct and complete copies of all
such written agreements have been made available to Purchaser.

 

(ii)        There is no strike, labor dispute or union
organization activities pending or, to the Company’s Knowledge, threatened,
involving the Business, or its employees, and none of the employees of the
Business are represented by any union for purposes of collective bargaining

 

(iii)       Set forth on Schedule 3.1(k) is a true
and complete list of each (i) “employee benefit plan” (as defined in Section
3(3) of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”)
(excluding any plan as described in Section 3(37)(A) of ERISA (a “Multiemployer Plan”))), and (ii) all
other material retirement, supplemental retirement, stock purchase, stock
ownership, stock option, deferred compensation, excess benefit, profit sharing,
bonus, incentive, severance, termination, change in control, paid time off,
welfare or other employee fringe benefit plan, program or arrangement
(excluding any Multiemployer Plan), maintained, contributed to, or required to
be contributed to by the Company or any entity that is considered a single
employer with the Company under Section 414 of the Code (an “ERISA Affiliate”) or under which the
Company or any ERISA Affiliate has any liability (all within the United States)
(the “Benefit Plans”).

 

(iv)       As applicable with respect to each Benefit
Plan, the Company has made available to Parent, true and complete copies of (i) each
Benefit Plan document, including all amendments thereto, (ii) all trust
documents, investment management contracts, custodial agreements and insurance
contracts relating thereto, (iii) the current summary plan description and
each summary of material modifications thereto.

 

15

 

(l)                                     Intellectual Property.

 

(i)         The Company owns and has
good title to, or possesses sufficient legal rights to use the Business
Intellectual Property that is used in the conduct of the Business as now
conducted.  All of the Business
Intellectual Property that consists of registered trademarks, registered
copyrights and patents, and applications for registration or issuance of any of
the foregoing, is listed in Schedule 3.1(l). 
The Business Intellectual Property set forth in Schedule 3.1(l) is
held by the Company free and clear of any Liens other than Permitted Liens.

 

(ii)        All patents, registered trademarks and
registered copyrights owned by the Company and included in the Business
Intellectual Property are subsisting and, to the knowledge of the Company,
valid.  The Company has taken all
appropriate steps, made all filings and paid all fees in respect of the
prosecution, maintenance and registration of the items of Business Intellectual
Property set forth in Schedule 3.1(l), except to the extent the Company has
determined in its reasonable business judgment that the prosecution or
maintenance of such item(s) is of no material value to the Business.

 

(iii)       To the Knowledge of the Company, the conduct
of the Business by the Company as presently conducted does not infringe any
Intellectual Property of any other Person. 
The Company has not received any written notice alleging that the
conduct of the Business by the Company has infringed any Intellectual Property
of any other Person, or that otherwise questions the validity, title or ownership
of any of the Business Intellectual Property. 
To the Knowledge of the Company, no other Person is infringing or
misappropriating, or has infringed or misappropriated any of the Business
Intellectual Property.

 

(iv)       The Company has obtained and possesses
licenses to use the software programs present on the computers and other
software-enabled electronic devices that it owns or leases or that it otherwise
uses in connection with the conduct of the Business, except where the failure
to possess such license(s) would not reasonably be expected to result in a
Material Adverse Effect.

 

(v)        All agreements pursuant to which any Company
Intellectual Property that is material to the operations of the Business is
licensed to the Company are listed on Schedule 3.1(l).  Except as set forth on Schedule 3.1(l), the
Company has not breached any such license in any material respect nor, to the
Company’s Knowledge, has any other party thereto.

 

(vi)       The Company has taken reasonable commercial
measures to maintain the secrecy of the Business Intellectual Property that is
considered to be trade secrets or confidential information.  Each employee of and contractor to the
Company involved in the development of the Business Intellectual Property has
signed a confidentiality and non-disclosure agreement in substantially the form
provided to Parent and, to the Knowledge of the Company, there have not been
any breaches of such confidentiality and non-disclosure agreements.

 

16

 

To the Knowledge of the
Company, its employment of any of its employees or the retainer of any
consultant does not violate any non-disclosure or non-competition agreement
between any employee or consultant and a third party.

 

(vii)      The representations contained in this Section 3.1(l) shall
be the exclusive representations and warranties of the Company with respect to
Intellectual Property matters.

 

(m)          Brokers and Finders.  Except for the
retention of Bear, Stearns & Co. Inc., the fees and expenses of which
will be paid by the Company in accordance with Section 5.5, the Company
has not employed any broker, finder or investment banker or incurred any
liability for any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement.

 

(n)                                 Environmental and Safety Laws. 
Except as could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect (a) the Business is in compliance
with all Environmental Laws; (b) the Company has not had any release, or
to the Company’s knowledge, threatened release of any pollutant, contaminant or
toxic or hazardous material, substance or waste, or petroleum or any fraction
thereof, (each a “Hazardous Substance”)
on, upon, or from any site currently or heretofore owned, leased or otherwise
used by the Company with respect to the Business which requires investigation,
remediation or other response action by the Company under applicable
Environmental Laws; and (c) to the Knowledge of the Company, there have
been no Hazardous Substances generated by the Company with respect to the
Business that have been disposed of or come to be located at any site that has
been included in any published U.S. federal, state or local “superfund” site
list or any other similar list of hazardous or toxic waste sites published by
any Governmental Authority in the United States or any proposed list of sites
or any site which could reasonably be expected to result in liability to the
Company, nor has the Company received any request for information request for
information, demand or claim from a Governmental Authority or third party with
respect to any such disposal or other disposition of such Hazardous Substances
with respect to the Business.  The
Company has made available to the Parent true and complete copies of all
material environmental, reports, permits, pending permit applications,
engineering studies, and environmental studies or assessments in its possession
with respect to the Business. For purposes of this Section 3.1(n), “Environmental Laws” means any law,
regulation, or other applicable requirement relating to (a) releases or
threatened release of Hazardous Substances; (b)  pollution or protection
of employee health or safety, public health or the environment; or (c) the
manufacture, handling, transport, use, treatment, storage, or disposal of
Hazardous Substances; including any permit, license or registration applicable
thereto in effect as of the date hereof. 
The representations contained in this section shall be the exclusive
representations and warranties with respect to environmental and safety
matters.

 

(o)                                 Taxes.  The Company has
filed or caused to be filed in a timely manner (within any applicable extension
periods) all Tax Returns with respect to the Business, all

 

17

 

of
which were true and correct in all material respects when filed.  Other than with respect to Tax Returns
relating to Income Taxes, no Tax Return of the Company with respect to the
Business is currently the subject of an extension of time to file such Tax
Return.  The Company has timely paid or
caused to be paid all Taxes with respect to the Business, whether or not shown
or required to be shown on such Tax Returns (except for Taxes not yet due or owing).  The Company has not waived the statute of
limitations with respect to any material amount of Taxes or agreed to any
extension of time with respect to any material amount of Tax assessment or
deficiency with respect to the Business. 
As of the date hereof, there are not any pending or, to the Knowledge of
the Company, threatened in writing any audits, examinations, investigations or
other proceedings in respect of Taxes with respect to the Business.  There are no Liens for Taxes upon the
Transferred Assets other than Permitted Liens. 
The Company has never been a member of an affiliated group of
corporations filing a consolidated federal income tax return (or similar
consolidated or combined return in another jurisdiction) other than a group of
which the Company was the common parent). 
The Company has no liability for Taxes of any Person under Treasury
Regulations section 1.1502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract (including a Tax allocation
or sharing agreement) or otherwise.  The
Company has withheld and paid over all material Taxes that it was required to
withhold from amounts owing to any employee, creditor or third party and has
complied in all material respects with all applicable laws, rules and
regulations relating to the withholding and payment of Taxes with respect to
the Business.  The representations
contained in this Section 3.1(o) shall be the exclusive
representations and warranties with respect to Tax matters.

 

(p)                                 Real Property. 
The Company does not own any real property.  Schedule 3.1(p) contains a list of each
parcel of real property leased by the Company in connection with the Business
(as lessor or lessee).  Each lease set
forth in Schedule 3.1(p) is valid and is in full force and effect in
accordance with the terms of such lease, subject to bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights or debtors’ remedies
and to general equity principles.  The
Company has not breached any such lease in any material respect nor, to the
Company’s Knowledge, has any other party thereto.  The Company has not received any written
notice that any other party to any such lease intend to cancel, withdraw,
modify or amend such lease whether by reason of the transactions contemplated
by this Agreement or otherwise.  The
Company has previously made available to Purchaser a true, correct and complete
copy of each lease listed on Schedule 3.1(p).

 

(q)                                 Accounts Receivable. 
Subject to any allowances set forth in the Financial Statements, the
accounts receivable relating to the Business shown in the Financial Statements,
(i) arose in the ordinary course of business, and (ii) represented, as
of the Balance Sheet Date, bona fide claims against debtors for sales, leases,
licenses and other charges.  All accounts
receivable of the Company 

 

18

 

relating
to the Business arising after the Balance Sheet Date arose in the ordinary
course of business.  Notwithstanding the
foregoing it is understood that Company makes no representation as to
collectability with respect to any account receivable.

 

(r)                                    Insurance. 
Schedule 3.1(r) sets forth all insurance policies of the Company
relating to the Transferred Assets.  The
Company has paid all premiums on such policies as they relate to the
Business.  To the Knowledge of the
Company, except as set forth on Schedule 3.1(r), during the last year, the
Company has not made any claims against such policies as they relate to the
Business and there are no pending claims against such policies as they relate
to the Business.

 

(s)                                  Suppliers, Advertisers and Customers. 
Schedule 3.1(s) contains a list of the ten largest suppliers, ten
largest advertisers and ten largest customers of the Business based on revenue
or expense for the fiscal year ending December 31, 2006.  Except as set forth on Schedule 3.1(s), the
senior executives of the Company listed in Schedule 9.18(y)(i) do not have
actual knowledge of any written or oral notification from any of the suppliers,
advertisers or customers set forth on Schedule 3.1(s) that it intends to
terminate its relationship with the Company.

 

(t)                                    Privacy Policies. 
To the Company’s Knowledge, since January 1, 2006, the Company has
not received any written complaints from customers regarding alleged material
violations of the Company’s privacy policy by the Business with respect to
personally identifiable information.

 

(u)                                 Questionable Payments. 
To the Company’s Knowledge, since January 1, 2006, the Business has
not: (i) engaged in any activity constituting a material violation of the
United States Foreign Corrupt Practices Act of 1977 or any other similar
provision of applicable law; or (ii) made any material political
contributions which would not be lawful under the laws of the United States or
the foreign country in which such payments were made.

 

(v)                                 Related Party Transactions. 
To the Company’s Knowledge, as of the date hereof, and other than in the
ordinary course of business, the Business does not owe any material amount to
any of the Company’s Affiliates and none of the Company’s Affiliates is
involved in any material business arrangement with the Business (other than in
the capacity as an employee).

 

3.2                               Representations and
Warranties of Parent and Purchaser

 

Each of Parent and Purchaser represents and warrants, jointly and
severally, as of the date hereof to the Company as follows:

 

(a)                                  Organization and Authority of Parent
and Purchaser.  Each of Parent and Purchaser has been duly
incorporated, is validly existing and, with respect to jurisdictions in which
such concept is recognized, is in good standing under the laws of its
jurisdiction of incorporation, with the requisite corporate power and authority
to own, operate or lease the properties that it purports to own, operate or

 

19

 

lease
and to carry on its business as now being conducted.  Each of Parent and Purchaser has the full corporate
power and authority to enter into this Agreement and, as applicable, the
Ancillary Agreements and to perform its obligations hereunder and
thereunder.  This Agreement has been and,
on or prior to Closing, each of the Ancillary Agreements will be, duly
authorized, executed and delivered by Parent and Purchaser, as applicable, and
constitutes a legal, valid and binding agreement of Parent and Purchaser, as
applicable, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors’ rights or debtors’
remedies and to general equity principles, and no other proceedings on the part
of either Parent or Purchaser are necessary to authorize this Agreement and the
Ancillary Agreements and the consummation of the transactions contemplated
hereby and thereby.

 

(b)                                 No Conflict. 
Neither the execution and delivery of this Agreement or any of the
Ancillary Agreements nor compliance by Parent or Purchaser with the terms and
provisions hereof or thereof will violate (a) any provision of the
articles of incorporation, certificate of incorporation or by-laws or other
similar organizational document of either Parent or Purchaser; (b) any
law, statute or regulation or, any judgment, injunction, order or decree of any
Governmental Authority to which either Parent or Purchaser is subject except,
in all cases, such violations that would not prohibit or materially impair
Parent’s or Purchaser’s ability to perform its obligations under this
Agreement, or (c) to Parent’s Knowledge, result in any breach of, or
constitute a default (or event which with the giving of notice or lapse of
time, or both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any encumbrance on either Parent or Purchaser except in any such
case for any violations, conflicts, breaches, defaults or other matters that
would not prohibit or materially impair either Parent’s or Purchaser’s ability
to perform its obligations under this Agreement.

 

(c)                                  Consents and Approvals. 
The execution, delivery and performance of this Agreement and the
Ancillary Agreements by Parent and Purchaser do not and will not require any
material consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority, except (a) for the
notification requirements of the HSR Act, if applicable or (b) where the
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not prevent or materially delay the
consummation by Parent and Purchaser of the transactions contemplated by this
Agreement or as may be necessary as a result of facts or circumstances relating
solely to the Company.

 

(d)                                 Financial Advisors. 
No agent, broker, investment banker, financial advisor or other firm or
Person is or will be entitled to any broker’s or finder’s fee or any other
similar commission or fee in connection with any of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent or Purchaser.

 

20

 

(e)                                  Available Funds.  As of the date hereof, Parent has and, as of
the Closing, Parent and Purchaser will have immediately available funds
necessary to pay the cash portion of the Purchase Price and to pay all of
Parent’s and Purchaser’s fees and expenses related to the transactions
contemplated by this Agreement.

 

(f)                                    Disclosure;
Investigation.  Parent and Purchaser acknowledge and agree
that the Company has not made, does not make and specifically negates and
disclaims any representations, warranties, promises, covenants, agreements or
guarantees of any kind or character whatsoever, whether express or implied,
oral or written, past, present, or future, of, as to, concerning or with
respect to, except as (and solely to the extent) specifically set forth in this
Agreement: (i) the nature, quality or condition (financial or otherwise)
of the business of the Company or the assets of the Company; (ii) the
suitability of the assets of the Company for any and all activities and uses
that Parent may conduct therewith or thereon; (iii) the compliance of or
by the Company or its operations with any past, existing or future laws, rules,
ordinances or regulations of any applicable Governmental Authority; (iv) the
manner or quality of the construction or materials, if any, incorporated into
the assets of the Company; (v) the manner, quality, state of repair or
lack of repair of the assets of the Company; and (vi) any other matter
with respect to the physical or other condition of the assets of the
Company.  Parent and Purchaser
acknowledge and agree that the Company makes no representations or warranties
regarding the future performance of the Company, or any estimates, projections,
plans or budgets or similar information furnished to Parent by or on behalf of
the Company, including the information referred to in the Confidential
Information Memorandum and the XOS Technologies, Inc. Consolidated
Operating Model provided to Parent.  THE
COMPANY HEREBY DISCLAIMS ANY REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS,
AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER WHETHER EXPRESS,
IMPLIED OR OTHERWISE REGARDING THE MERCHANTABILITY, MARKETABILITY OR FUTURE
PROFITABILITY OF THE BUSINESS OR THE TRANSFERRED ASSETS.

 

(g)                                 Parent and Purchaser
acknowledge and agree that each of them (i) has made or waived the
opportunity to make its own inquiry and investigation into, and, based thereon,
has formed an independent judgment concerning the Company, (ii) has been
furnished with or given adequate access to such information about the Company
as it has requested and (iii) will not assert any claim against the
Company, or any of its directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or their
respective heirs, successors, and assigns (“Company
Parties”) or hold the Company, or any such Company Parties, liable
for any inaccuracies, misstatements or omissions with respect to information
(other than, as to the Company only, the representations and warranties of the
Company contained in this Agreement as provided in this Agreement) furnished by
the Company or Company Parties concerning the Company, the business of the
Company or the assets of the Company.

 

21

 

ARTICLE IV

COVENANTS RELATING TO CONDUCT OF BUSINESS

 

4.1                               Covenants
of the Company

 

During the
period from the date of this Agreement and continuing until Closing, the
Company agrees as to itself with respect to the Business that (except as
expressly contemplated or permitted by this Agreement, including those actions (A) contemplated
in the Company Disclosure Schedule, (B) contemplated in this Article IV,
or (C) as required by a Governmental Authority or by applicable law, rule or
regulation, or to the extent that Parent shall otherwise consent in writing
(which consent not to be unreasonably delayed or withheld)), the Company shall
conduct the Business in the ordinary course and consistent with past practice
in all material respects and shall not do any of the following:

 

(a)                                  create or allow to
remain in place any Lien on any of the Transferred Assets other than Permitted
Liens or incur or guarantee any material indebtedness for borrowed money except
with respect to the incurrence of indebtedness to the extent permitted by the
Company’s existing credit facility and any amendment thereof;

 

(b)                                 enter into any lease
of real or personal property or any renewals thereof involving a rental
obligation exceeding $60,000 per annum per any such lease, and $150,000 per
annum in the aggregate;

 

(c)                                  except for increases
as may be required by applicable law or any contracts or agreements existing as
of the date hereof, increase the rate of compensation or the benefits payable
to any of the officers, employees or contractors of the Company in excess of 5%
of such officer’s existing compensation or benefits;

 

(d)                                 enter into, amend or
terminate any bonus, insurance, pension or other Benefit Plan, or except in the
ordinary course, consistent with past practices, any severance arrangement or
obligation for or with any of its employees;

 

(e)                                  make any new
commitment or increase any previous commitment for capital expenditures for the
Business in an amount exceeding $10,000 per any such capital expenditure, and
$100,000 in the aggregate;  provided
that any commitment identified on Schedule 4.1 shall not require the consent or
approval of Parent;

 

(f)                                    enter into any
contract that would constitute a Material Contract, terminate, or assign any
Material Contract, waive or permit the loss of any right of substantial value,
cancel any debt or claim, or voluntarily suffer any extraordinary loss and
except in the ordinary course, consistent with past practice, amend or modify
any Material Contract;

 

(g)                                 sell, assign,
transfer, license or convey any Business Intellectual Property, except for
licenses of Business Intellectual Property granted in the normal course of
business;

 

22

 

(h)                                 sell, transfer, lease
or otherwise dispose of any material part of the Transferred Assets other than
in the ordinary course of business;

 

(i)                                     acquire any other
business or Person or otherwise purchase any assets with an aggregate value in
excess of $50,000;

 

(j)                                     enter into or
materially modify any material agreement or arrangement with any Affiliate, the
directors, officers or employees of the Business or their family members or any
of their respective Affiliates; or

 

(k)                                  enter into any
contract, agreement, commitment or arrangement with respect to any of the
foregoing.

 

4.2                               Control
of Other Party’s Business

 

Nothing
contained in this Agreement shall be deemed to give Parent, directly or
indirectly, the right to control or direct the Company’s operations prior to
Closing.  Nothing contained in this
Agreement shall be deemed to give the Company, directly or indirectly, the
right to control or direct Parent’s operations prior to Closing.  Prior to Closing, each of the Company and
Parent shall exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision over its respective operations.

 

ARTICLE V

ADDITIONAL AGREEMENTS

 

5.1                               Access;
Information and Records; Confidentiality

 

(a)                                  During the period
commencing on the date hereof and ending on the Closing Date, the Company
shall, upon reasonable request and notice of Parent, and at Parent’s expense,
afford to Parent, its counsel, accountants and other authorized representatives
reasonable access during normal business hours to its properties, senior
management and Books and Records.

 

(b)                                 Without the prior
written consent of the Company, which consent may be withheld in the Company’s
sole discretion, Parent shall not contact any suppliers to, employees (except
pursuant to Section 5.1(a)) or customers of, or Governmental Authorities
with jurisdiction over, the Company in connection with or pertaining to any
subject matter of this Agreement.

 

(c)                                  Without the prior
written consent of the Company, which consent may be withheld in the Company’s
sole discretion, Parent shall not, nor will it permit any of its counsel,
financial advisors and other representatives or Affiliates to, conduct any
invasive environmental sampling or testing, including of soil, sediment,
groundwater or surface water or ambient air, or initiate contact with any
Governmental Authorities with jurisdiction over the Company in connection with
or pertaining to the environmental condition or compliance of the Company.

 

(d)                                 Parent will hold, and
will cause its respective directors, officers, employees, accountants, counsel,
financial advisors and other representatives and Affiliates to 

 

23

 

hold, any non-public information in
confidence in accordance with the provisions of the letter dated February 22,
2007, between the Company and Parent (the “Confidentiality
Agreement”).

 

(e)                                  It is expressly
understood by the parties hereto that, notwithstanding the provisions of this Section 5.1,
the Company, in its sole discretion, may deny or restrict any access (i) involving
possible breaches of applicable confidentiality agreements with third parties,
environmental reviews the written work plan for which had not been previously
approved by the Company in its sole discretion, or possible waivers of any
applicable attorney-client privileges; (ii) to any processes, know-how,
operating instructions or other proprietary knowledge of the Company; or (iii) in
the event Parent or Purchaser is in breach of this Agreement.  It is further understood that the Company
shall be under no obligation to grant Parent or Purchaser or its
representatives any access if such access would, under the circumstances,
interfere with the Company’s operations, activities or employees, or if such
access would, in the judgment of the Company, violate applicable antitrust or
similar laws.  In an effort to prevent
any interference or disruption caused by such access, the Company may, at its
sole discretion, reasonably limit the number of individuals and the number of
visits to its facilities.  Parent shall
coordinate all such access with a Company employee who will be identified to
Parent promptly after the execution of this Agreement, and shall not directly
or indirectly contact any other employee of the Company without the prior
approval of the designated employee.

 

(f)                                    To the extent related
to a Tax that is Assumed Liability hereunder, the Company shall retain all
relevant records with respect to each Tax Return filed prior to Closing Date
for a period of six years from the date such Tax Return was filed.

 

5.2                               Reasonable
Best Efforts

 

(a)                                  Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use its
reasonable best efforts to take, or cause to be taken, all actions and to do,
or cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement, including
using its reasonable best efforts (i) to obtain any other consents or
approvals as are necessary in connection with the consummation of the
transactions contemplated hereby, (ii) to effect all registrations and
filings as are necessary or desirable in connection with the consummation of
the transactions contemplated hereby, (iii) to defend any lawsuits or
other legal proceedings, whether judicial or administrative, whether brought by
private parties or Governmental Authorities or officials, challenging this
Agreement or the consummation of the transactions contemplated hereby, and (iv) to
furnish to each other such information and assistance and to consult with
respect to the terms of any registration, filing, application or undertaking as
may be reasonably requested in connection with the foregoing and (v) to
ensure that the conditions of Closing for the benefit of the other party set
out in this Agreement have been performed or satisfied prior to Closing.

 

24

 

(b)                                 Notwithstanding the
foregoing or any other provision of this Agreement, nothing in this Section 5.2
shall limit a party’s right to terminate this Agreement pursuant to Section 7.1(b) or
7.1(c) so long as such party has up to then complied in all respects with
its obligations under this Section 5.2.

 

(c)                                  If applicable, the
Company and Parent shall duly file with the FTC and the Antitrust Division the
notification and report form (the “HSR Filing”)
required under the HSR Act with respect to the transactions contemplated hereby
no later than the seventh Business Day following the date hereof.  If applicable, the HSR Filing shall be in
substantial compliance with the requirements of the HSR Act.  Each party shall cooperate with the other
party to the extent necessary to assist the other party in the preparation of
its HSR Filing, to request early termination of the waiting period required by
the HSR Act and, if requested, to promptly amend or furnish additional
information thereunder, if applicable. 
Each of the Company and Parent shall as promptly as practicable comply
with the laws and regulations of any other Governmental Authority that are
applicable to any of the transactions contemplated by this Agreement and the
Ancillary Agreements and pursuant to which any consent, approval, order or
authorization of, or registration, declaration or filing with, such
Governmental Authority is necessary. 
Parent and the Company shall furnish to each other all such information
as is necessary to prepare any such registration, declaration or filing.  Parent and the Company shall keep each other
apprised of the status of any communications with, and any inquiries or
requests for additional information from, any Governmental Authority with
respect to the transactions contemplated by this Agreement and the Ancillary
Agreements.

 

(d)                                 Each of the Company
and Parent agrees that it will, if necessary to enable the Company and Parent
to consummate the transactions contemplated by this Agreement and the Ancillary
Agreements, defend against any suits, actions or proceedings, judicial or
administrative, challenging this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby, including by
seeking to vacate or reverse any temporary restraining order, preliminary
injunction or other legal restraint or prohibition entered or imposed by any
court or other Governmental Authority that is not yet final and nonappealable; provided,
that (i) the Company shall not be under any such obligation to defend
against any such actions or proceedings commenced by any Governmental Authority
in respect of the antitrust, competition, merger control or similar laws, rules or
regulations, and (ii) Parent agrees that it shall make an offer to and
enter into an agreement with the FTC, the Antitrust Division and/or any other
Governmental Authority to divest, and to hold separate pending such
divestiture, any and all assets and operations of the Business (and/or
approximately equivalent assets or businesses of Parent) as are necessary to
prevent the commencement of any action or proceeding seeking, and/or prevent
the entry of, or effect the dissolution of, a decree, restraining or other
order and/or preliminary or permanent injunction preventing the consummation,
in whole or in part, of the transactions contemplated by this Agreement and to
permit the Company and Parent to otherwise fully consummate the transactions 

 

25

 

contemplated by this Agreement and the
Ancillary Agreements and the Closing and the purchase and sale of the
Transferred Assets pursuant hereto.

 

5.3                               Employees
and Benefit Plans

 

(a)                                  Subject to the
Closing, Purchaser agrees to offer employment effective as of the Closing Date
on terms substantially similar in the aggregate to those existing as of the
Closing Date to those employees whose names are set forth on Schedule 5.3 (the “Designated Employees”), including
group health plans which do not exclude or limit the coverage of such
Designated Employees on account of waiting periods or pre-existing conditions,
and which have in all material respects substantially similar coverage and
benefits.  Purchaser shall also be
responsible for perpetuating the group health plan continuation coverages
pursuant to Section 4980B of the Code and Sections 601 through 609 of
ERISA for all Designated Employees and their eligible dependants and shall
cover such Designated Employees under Purchaser’s own group health plan to
accommodate this requirement.  Purchaser
shall indemnify and hold the Company harmless for any liability the Company
incurs at any time after the Closing under the provisions of Section 4980B
of the Code or Sections 601 through 609 of ERISA with respect to any individual
who was an employee of the Company relating to the Business prior to the
Closing, or a dependent or spouse of any such employee, and who had or has a “qualifying
event” (within the meaning of Section 4980B(f)(3) of the Code)
before, on or after the Closing. In extending such offers, Purchaser shall recognize, to the
extent consistent with the preceding sentence, the prior service rendered to
the Company by the respective Designated Employees for the purposes of
eligibility to participate, vesting and entitlement to benefit, but not for the
purpose of benefit accrual (except with respect to any severance or vacation
plan or arrangement established by the Purchaser), under any ERISA benefit
plans of Purchaser.  Nothing in this
Agreement, however, will obligate Purchaser to provide for any severance
arrangement or plan, post-employment welfare benefits, or any other plan,
arrangement or program providing benefits beyond an employee’s active service
with Purchaser except as may be required by law or as set forth in this Section 5.3(a) and
5.3(c) below.

 

(b)                                 Purchaser shall not
assume and shall not have any duty to continue or maintain in effect any of the
Benefit Plans.

 

(c)                                  Purchaser shall assume all responsibility
of all costs, expenses, claims or Liabilities relating to employees of the
Business regardless of when incurred, including all costs concerning
employment, termination, separation, severance, or any employee benefits
(except for benefits accrued under any Company qualified defined contribution
plan), unpaid compensation, unpaid medical, dental or other welfare claims or
any obligations for unpaid wages, bonus, or other unpaid employee compensation
of any nature. Additionally Purchaser shall be responsible for any such costs,
expenses, claims or Liabilities associated with the severance, on or within 90
days of Closing, of employees of the Business who are not Designated
Employees.  Such costs, expenses, claims
and Liabilities shall also include any obligations incurred by any of the
Company to its employees under 

 

26

 

ERISA
and Consolidated Omnibus Budget Reconciliation Act.  The Purchaser shall be liable for any and all
payments required under the Worker Adjustment and Retraining Notification Act
with respect to the Designated employees and to employees whose duties as of
the date hereof relate exclusively to the Business whose employment is
terminated between the date hereof and the date which is 90 days after Closing.

 

(d)                                 In connection with
the transactions contemplated by this Agreement, Parent intends to offer to the
Designated Employees who accept Purchaser’s offer of employment retention
warrants to acquire up to an aggregate of 3,000,000 common shares of Parent
with an exercise price equal to the volume-weighted average trading price of
such shares for the five trading day period ending on the trading day
immediately prior to closing and such other terms and conditions (including
vesting provisions) as may be determined by the Purchaser (the “Employee Retention Warrants”).  The
Company will assist Parent in determining how to allocate the Employee
Retention Warrants amongst the Designated Employees.  Issuance of the
Employee Retention Warrants will be subject to the approval of the Toronto
Stock Exchange

 

5.4                               Notification
of Certain Matters

 

Each party
shall give prompt notice to the other party of any of the following which
occurs, or of which it becomes aware, following the date hereof: (i) any
notice of, or other communication relating to, a default or event that, with
notice or lapse of time or both, would become a default under any contract
disclosed (or required to be disclosed) in any Schedule (including the Company
Disclosure Schedule) to this Agreement; (ii) the occurrence or existence
of any fact, circumstance or event which is not otherwise disclosed in the
Schedules to this Agreement and would reasonably be expected to result in (A) any
representation or warranty made by such party in this Agreement to be untrue or
inaccurate in any material respect, and (B) the failure of any condition
precedent to either party’s obligations or (C) or a Material Adverse
Effect.

 

5.5                               Fees
and Expenses

 

Except as
otherwise provided herein, all Expenses (as defined below) incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such Expenses. 
As used in this Agreement, “Expenses”
includes all out-of-pocket expenses (including all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a party
hereto and its Affiliates) incurred by a party or on its behalf in connection
with or related to the authorization, preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated hereby,
including the preparation of any filing required by the HSR Act and all matters
related to the transactions contemplated hereby.

 

5.6                               Public
Announcements

 

Unless
otherwise required by applicable law or by obligations pursuant to any listing
agreement with or rules of any securities exchange or as required in
response to any request from 

 

27

 

securities regulatory authority, neither
party shall issue any press release or otherwise make any public statement with
respect to this Agreement or the transactions contemplated hereby without the
prior written consent of the other party (not to be unreasonably withheld or
delayed).

 

5.7                               Carve-Out
Financial Statements

 

Purchaser
shall prepare, and the Company shall use its commercially reasonable efforts to
cooperate with Purchaser in the preparation of, audited “carve-out” financial
statements (consisting of a balance sheet, income statement, a statement of
retained earnings and a cash flow statement) for the Business for the year
ended December 31, 2006 and unaudited (but auditor reviewed) financial
statements (consisting of a balance sheet, income statement, a statement of
retained earnings and a cash flow statement) for the year ended December 31,
2005, and the six months ended June 30, 2007 (the “Carve-Out
Statements”), such Carve-Out Statements being due by Purchaser by
the 80th day following the Closing
Date.  All fees and expenses of the
Company and its auditors incurred in connection with the preparation of the
Carve-Out Statements shall be for the Purchaser’s account.

 

5.8                               Noncompetition.

 

(a)                                  Company agrees that,
during the one-year period immediately following the Closing, Company shall
not, engage or have any ownership interest in any firm, corporation,
partnership, proprietorship or other business entity that engages in a business
in direct competition with the Business as being conducted on the date hereof
(a “Competing Business”), so long as Purchaser, or any subsidiary of Purchaser,
remains engaged in the Business; provided, however, that it shall
not be a violation of this Section 5.8 for Company (i) to own,
directly or indirectly, solely as an investment, securities of any Person that
are traded on a national securities exchange or the Nasdaq Stock Market (or a
recognized securities exchange outside the U.S.) if Company (x) is not a
controlling Person or a member of a group that controls such Person and (y) does
not, directly or indirectly, own more than 10% or more of the voting securities
of such Person, (ii) to directly or indirectly acquire any Person,
provided that not more than 25% of the revenues of such acquired Person for the
twelve months preceding the acquisition were derived from the Competing
Business and provided that the Company disposes of such Competing Business
within eighteen months after the closing date of such acquisition, (iii) to
provide web based content directly to customers of the Coaching Business, or (iv) to
continue operating existing lines of business, other than the Business, or any
of the Excluded Assets.  As used herein “Coaching
Business” means the business of developing, selling, marketing, supporting and
providing professional services with respect to digital video products and
software designed for use by professional, collegiate and other amateur sports
organizations and media companies to capture, edit, analyze, archive, compile,
research, present and view video, audio, statistics and data for sports
training, scouting, recruiting and instructing including but not limited to
football, basketball, baseball, auto racing and hockey.  The Coaching
Business also provides playbook management, simulation products, performance
analysis tools and design and technology equipment and services for professional,
collegiate and other amateur sports teams.

 

28

 

(b)                                 Purchaser and Parent
agree that, during the one-year period immediately following the Closing,
Purchaser, Parent and their Affiliates shall not, engage or have any ownership
interest in any firm, corporation, partnership, proprietorship or other
business entity that engages in a business in direct competition with the
Coaching Business (including use of the Shared Intellectual Property) in
competition with the Coaching Business as being conducted on the date hereof (a
“Coaching Business Competitor”), so long as the Company, or any
subsidiary of the Company, remains engaged in the Coaching Business; provided,
however, that it shall not be a violation of this Section 5.8 for
Purchaser, Parent or any of its Affiliates (i) to own, directly or
indirectly, solely as an investment, securities of any Person that are traded
on a national securities exchange or the Nasdaq Stock Market (or a recognized
securities exchange outside the U.S.) if Company or any of its Affiliates (x) is
not a controlling Person or a member of a group that controls such Person and (y) does
not, directly or indirectly, own more than 10% or more of the voting securities
of such Person, (ii) to directly or indirectly acquire any Person,
provided that not more than 25% of the revenues of such acquired Person for the
twelve months preceding the acquisition were derived from the Coaching Business
Competitor and provided that Purchaser or Parent disposes of such Coaching
Business Competitor within eighteen months after the closing date of such
acquisition, or (iii) to continue operating existing lines of business,
other than the Coaching Business, or any of the Transferred Assets.

 

5.9                               Corporate
Intellectual Property

 

Purchaser
hereby acknowledges and agrees that nothing in this Agreement grants or shall
be deemed to grant to Purchaser the right to use or any interest in the name “XOS
Technologies,” “XOS” or any trademark, trade name, service mark or other
similar mark or similar right which is a derivative of the name “XOS”
(collectively referred to as the “Corporate Intellectual
Property”).  The prohibitions in this Section 5.8 shall
apply to any and all uses whatsoever of the Corporate Intellectual Property
including, the use of the Corporate Intellectual Property on any stationery or
invoices, or identifying signs on any properties of the Business, which
identify or in any way make use of the Corporate Intellectual Property. 
Neither Purchaser nor any of its Affiliates shall use any signs or stationery,
purchase order forms, packaging or other similar paper goods or supplies,
advertising and promotional materials, product, training and service literature
and materials, or computer programs or like materials (collectively, the “Specified Supplies”) that include the words “XOS” or contain
any trademarks, trade names, service marks or corporate or business names,
derived from or including the words “XOS” (in logotype design or any other
style or design) in whole or in part; provided, however, that, to
the extent any Specified Supplies include the words “XOS” or contain any such
trademarks, trade names, service marks or corporate or business names,
Purchaser may, for a period of 45 days after the Closing Date, use such
Specified Supplies after first clearly indicating on such Specified Supplies
that the Business is no longer affiliated with the Company.  Purchaser
shall not reorder, produce or reproduce any Specified Supplies that include the
words “XOS” or contain any such trademarks, trade names, service marks or
corporate or business names.

 

29

 

5.10                        Silicon
Valley Bank Loan

 

The Company shall use a portion of the Purchase Price to repay,
concurrently with Closing, all outstanding amounts owning to Silicon Valley
Bank pursuant to the Loan and Security Agreement dated as of June 14, 2006
and shall use its commercially reasonable efforts to ensure that all Liens on
the Transferred Assets arising out of such agreement shall be released at or as
soon as reasonably practically following Closing.

 

ARTICLE VI

CONDITIONS PRECEDENT

 

6.1                               Conditions
to Each Party’s Obligation

 

The
obligations of the Company, Parent and Purchaser to consummate the purchase and
sale of the Transferred Assets are subject to the satisfaction or waiver on or
prior to the Closing Date of the following conditions:

 

(a)                                  No Injunctions or
Restraints; Illegality.  No federal, state,
local or foreign law, statute, regulation, code, ordinance or decree shall have
been adopted or promulgated, and no temporary restraining order, preliminary or
permanent injunction or other order issued by a court or other Governmental
Authority of competent jurisdiction shall be in effect, having the effect of making
the transactions contemplated hereby illegal or otherwise prohibiting
consummation of the transactions contemplatively; provided, however, that the
provisions of this Section 6.1(a) shall not be available to any party
whose failure to fulfill its obligations pursuant to Section 5.2 shall
have been the cause of, or shall have resulted in, such order or injunction and
provided, further, that the parties invoking this condition shall have used
their reasonable best efforts to have such injunction, order or decree vacated
or denied.

 

6.2                               Additional
Conditions to Obligations of Parent and Purchaser

 

The
obligations of Parent and Purchaser to consummate the purchase and sale of the
Transferred Assets are subject to the satisfaction of, or waiver by Parent, on
or prior to the Closing Date of the following additional conditions:

 

(a)                                  Representations and
Warranties.  Each of the representations and warranties of
the Company contained in this Agreement shall be true and correct when made,
except
for breaches and inaccuracies which would not have a Material Adverse Effect.

 

(b)                                 Ancillary Agreements.  Purchaser shall have received copies of each
of the Ancillary Agreements executed by the Company (and the Escrow Agent, in
the case of the Escrow Agreement).

 

(c)                                  Antitrust Approval. The waiting period
required by the HSR Act, if applicable and any extensions thereof obtained by
request or other action of the FTC and/or the Antitrust Division, shall have
expired or been terminated by the FTC and the Antitrust Division.

 

30

 

6.3                               Additional
Conditions to Obligations of the Company

 

The
obligations of the Company to consummate the purchase and sale the Transferred
Assets are subject to the satisfaction of, or waiver by the Company of, on or
prior to the Closing Date, the following additional conditions:

 

(a)                                  Representations and
Warranties.  Each of the representations and warranties of
Parent and Purchaser contained in this Agreement shall be true and correct when
made  except
for breaches and inaccuracies which would not have a Material Adverse Effect.

 

(b)                                 Ancillary Agreements.  The Company shall have received copies of
each of the Ancillary Agreements executed by Purchaser (and the Escrow Agent,
in the case of the Escrow Agreement).

 

(c)                                  Antitrust Approval. The waiting period
required by the HSR Act, if applicable, and any extensions thereof obtained by
request or other action of the FTC and/or the Antitrust Division, shall have
expired or been terminated by the FTC and the Antitrust Division.

 

ARTICLE VII

TERMINATION AND AMENDMENT

 

7.1                               Termination

 

This Agreement
may only be terminated as provided in this Section 7.1.  This Agreement may be terminated at any time
prior to Closing, by action taken or authorized by the Board of Directors of
the terminating party or parties:

 

(a)                                  by written agreement
of Parent and the Company;

 

(b)                                 by either Parent or
the Company, by giving written notice of such termination to the other party,
if the Closing shall not have occurred on or prior to September 30, 2007,
provided that the right to terminate under this Section 7.1(b) shall
not be available to a party whose failure to perform any obligation under this
Agreement is the cause of Closing not having occurred on or prior to such date;

 

(c)                                  by either the Company
or Parent if any court of competent jurisdiction or other competent
Governmental Authority, shall have issued a statute, rule, regulation, order,
decree or injunction or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by this
Agreement and such statute, rule, regulation, order, decree or injunction or
other action shall have become final and nonappealable; or

 

(d)                                 by a party that is
not in breach of its obligations under this Agreement, by giving written notice
of such termination to the other party, if there has been a breach by such
other party of any representation, warranty or covenant in this Agreement,
which breach is or would be the sole cause of any of the failure of any of the
conditions in Article VI to be satisfied, provided, however, that if such
breach or

 

31

 

failure to perform is curable, the
non-breaching party may not terminate this Agreement under this Section 7.1(d) unless
the breaching party has failed to cure such breach or failure to perform within
30 days of receiving written notice of such breach or failure to perform from
the non-breaching party; provided, further, that the preceding proviso shall
not in any event be deemed to extend the date set forth in Section 7.1(b).

 

7.2                               Effect
of Termination

 

In the event
of termination of this Agreement by either party as provided in Section 7.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Purchaser or the Company or their respective
officers or directors except for Section 5.4, this Section 7.2 and Article IX;
provided, however, that nothing in this Section 7.2 shall relieve any
party from liability for the willful breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement.

 

7.3                               Extension;
Waiver

 

At any time
prior to Closing, each party hereto may (A) extend the time for the
performance of any of the obligations or other acts of the other party, (B) waive
any inaccuracies in the representations and warranties of the other party
contained herein or in any document, certificate or writing delivered pursuant
hereto or (C) waive compliance by the other party with any of the
agreements or conditions contained herein. 
Any agreement on the part of either party hereto to any such extension
or waiver shall be valid only if set forth in an instrument in writing signed
on behalf of such party.  The failure of
a party to assert any of its rights hereunder shall not constitute a waiver of
such rights, and no single or partial exercise of any right, remedy, power or
privilege shall preclude any other or further exercise thereof by any
party.  The waiver by any party of any
breach of this Agreement, or the failure of any party to require the
performance or satisfaction of any term or obligation of this Agreement, shall
not prevent subsequent enforcement of such term or obligation or be deemed a
waiver of any subsequent breach.

 

ARTICLE VIII

INDEMNIFICATION

 

8.1                               Indemnification
by the Company and Purchaser.

 

(a)                                  Indemnification by
the Company.  Subject to the terms and conditions of this
Agreement, the Company will indemnify, defend and hold harmless Parent and
Purchaser, their Affiliates and their respective officers, directors,
shareholders, employees, agents, successors and assigns (collectively, the “Purchaser Indemnified Parties”) against and
in respect of any Damages suffered or incurred by any Purchaser Indemnified
Party based upon, arising out of or otherwise in respect of any of the
following:

 

(i)                  any breach of any representation or warranty of the Company in this
Agreement;

 

32

 

(ii)               any
nonfulfillment or failure to comply with any covenant of the Company in this
Agreement;

 

(iii)            the
Excluded Liabilities.

 

(b)                                 Indemnification by
Parent and Purchaser.  Subject to the
terms and conditions of this Agreement, Parent and Purchaser will jointly and
severally indemnify and hold harmless the Company and its Affiliates and their
respective officers, directors, shareholders, employees, agents, successors and
assigns (collectively, the “Company
Indemnified Parties”) against and in respect of any Damages suffered
or incurred by any Company Indemnified Party based upon, arising out of or
otherwise in respect of any of the following:

 

(i)                  any breach of any representation or warranty of Parent or Purchaser
in this Agreement;

 

(ii)               any
nonfulfillment or failure to comply with any covenant of Parent or Purchaser in
this Agreement;

 

(iii)            the
Assumed Liabilities; or

 

(iv)           Purchaser’s
share of Transfer Taxes set forth in Section 1.7.

 

(v)              the
ownership or operation of the Transferred Assets or the Business or actions
taken by or on behalf of Purchaser after the Closing Date.

 

(c)                                  For the purposes of
this Article VIII, references to the terms “material” and “materially” and
Material Adverse Effect limitations in the representations and warranties of
the parties in this Agreement shall be considered when determining the
existence of a breach of such representation or warranty but ignored for the
purposes of determining damages once such breach is determined.

 

8.2                               Indemnification
Procedures.

 

(a)                                  If a claim for
Damages (a “Claim”) is proposed to
be made by a party entitled to indemnification hereunder (the “Indemnified Party”) against the party from
whom indemnification is claimed (the “Indemnifying
Party”), the Indemnified Party will give notice (a “Claim Notice”) to the Indemnifying Party as
soon as practicable after the Indemnified Party becomes aware of any fact,
condition or event which may give rise to Damages for which indemnification may
be sought under this Article VIII.

 

(b)                                 If any Person
commences any action or proceeding with respect to any matter as to which any
of the Purchaser Indemnified Parties intends to seek indemnification under Section 8.1(a),
or with respect to any matter as to which any of the Company Indemnified
Parties intends to seek indemnification under Section 8.1(b), the
Indemnified Party will promptly notify the Indemnifying Party of the existence
of such claim or the commencement of such action or proceeding (and in any
event within ten (10) Business Days after the service of any summons

 

33

 

or citation). 
The failure of any Indemnified Party to give timely notice hereunder
will not affect rights to indemnification hereunder, except to the extent that
the Indemnifying Party demonstrates actual damage or prejudice caused by such
failure.  Notwithstanding the foregoing,
a Claim Notice that relates to a representation or warranty that is subject to
the survival period set forth in Section 8.3 must be made within such
survival period, whether or not the Indemnifying Party is prejudiced by any
failure to give a Claim Notice relating thereto.  A Claim Notice must describe in reasonable
detail the nature of the Claim, including an estimate of the amount of Damages
that have been or may be suffered or incurred by the Indemnified Party attributable
to such Claim (to the extent reasonably ascertainable at such time), the basis
of the Indemnified Party’s request for indemnification under this Agreement and
all information in the Indemnified Party’s possession relating to such Claim.

 

(c)                                  The Indemnifying
Party will be entitled at any time to participate in the defense of any such
Claim, action, or proceeding with counsel of its own choice, and the parties
agree to cooperate fully with one another in connection with the defense and/or
settlement thereof.  Subject to Section 8.2(d),
the Indemnifying Party may elect to assume and control the defense of any
Claim, action or proceeding with counsel selected by the Indemnifying
Party.  If the Indemnifying Party assumes
such defense, the Indemnified Party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood that the
Indemnifying Party shall control such defense.

 

(d)                                 If the Indemnifying
Party fails to assume the defense of any Claim within 15 days following
delivery to the Indemnifying Party of the Claims Notice or fails to diligently
and continuously defend such Claim, (i) the Indemnifying Party will no
longer have the right to control such defense; (ii) the Indemnified Party
will control the defense of the Claim actively and diligently; and (iii) the
Indemnifying Party will cooperate with the Indemnified Party in such defense
and make available to the Indemnified Party, at the Indemnifying Party’s
expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control
relating thereto as is reasonably requested by the Indemnified Party.

 

(e)                                  Any party conducting
the defense of a Claim will keep the other party advised as to the current
status and progress thereof.  The
Indemnified Party will not make any offer of settlement with respect to any
Claim if the Indemnifying Party has undertaken the defense of such Claim.  If the Indemnifying Party has not undertaken
the defense of such claim (other than with respect to any Claim or proceeding
for which the Indemnifying Party is not entitled to defend pursuant to (c) above),
the Indemnified Party agrees not to make any offer of settlement with respect to
such Claim without first having provided 15 days’ advance written notice
thereof to the Indemnifying Party and having obtained the written approval of
the Indemnifying Party which approval will not be unreasonably conditioned,
delayed or withheld.  In the event the
Indemnifying Party undertakes the defense of any such Claim, action, or
proceeding, any settlement or compromise of any

 

34

 

such Claim, action, or proceeding will
require the written approval of the Indemnified Party which consent will not be
unreasonably conditioned, delayed or withheld.

 

8.3                               Survival.

 

With the
exception of the representations and warranties contained in Sections 3.1(a),
3.2(a), 3.2(d), which will survive the Closing without limitation as to time,
all representations and warranties and covenants (to the extent such covenants
relate to the performance of obligations prior to Closing) contained in this
Agreement will survive the Closing for a period of one year and will continue in
full force and effect after the Closing only for such period, at which time
they shall terminate, are void, and of no further force or effect; provided,
however, that Claims relating to a breach of the representations and warranties
contained in Section 3.1(o) and Section 3.1(m) shall
survive until the expiration of the applicable statute of limitations.  No indemnification will be payable for any
Claim for Damages pursuant to Section 8.1(a)(i) or Section 8.1(b)(i) with
respect to any inaccuracy or breach of any representation or warranty after
termination of the applicable survival period specified in this Section 8.3
except with respect to Claims made prior to such termination pursuant to Section 8.2
but not then resolved (such representation or warranty surviving with respect
to such Claim until resolution of such Claim). 
No party hereto shall be deemed to have breached any representation,
warranty, or covenant prior to Closing contained herein if the senior executives
of the other party (identified for the Parent or Purchaser on Schedule 9.18(y)(ii) or
for the Company on Schedule 9.18(y)(i)) had actual knowledge prior to the
execution and delivery of this Agreement of the breach of, or inaccuracy in,
such representation or warranty.

 

8.4                               Limitations.

 

The rights to
indemnification under Section 8.1 are subject to the following
limitations:

 

(a)                                  the Company shall not
have liability under Sections 8.1(a)(i) or Section 8.1(a)(ii) until
the aggregate amount of Damages of the Purchaser Indemnified Parties attributable
to indemnification claims for which a Claim Notice was properly delivered to
the Company pursuant to Section 8.3 exceeds $480,000 (the “Basket Amount”), in which case the
Purchaser Indemnified Parties shall be entitled to Damages in an amount up to
the Escrow Amount in the aggregate; provided, however, that that no individual
claim for payment of Damages may be made under Section 8.1(a)(i) or Section 8.1(a)(ii) unless
such claim is an amount of $15,000 or greater.

 

(b)                                 The amount of any
Damages for which indemnification is provided under Section 8.1 shall be
net of (i) any amounts recovered by the Indemnified Party pursuant to any
indemnification by or indemnification agreement with any third party, (ii) any
insurance proceeds or other cash receipts or sources of reimbursement received
as an offset against such Damages (each source named in clauses (i) and
(ii), a “Collateral Source”), (iii) an
amount equal to the present value of the Tax benefit, if any, available to or
taken by the Indemnified Party attributable to such Damages and (iv) any
specific accruals or reserves (or overstatement of liabilities in respect of
actual liability) included in the Financial Statements.  The parties

 

35

 

shall take and shall cause their Affiliates
to take all reasonable steps to seek recovery from all Collateral Sources and
to mitigate any Damages upon becoming aware of any event that would reasonably
be expected to, or does, give rise thereto, including incurring costs only to
the minimum extent necessary to remedy a breach that gives rise to the
Damages.  The parties acknowledge and
agree that no right of subrogation shall accrue or inure to the benefit of any
Collateral Source hereunder.  The
Indemnifying Party may require an Indemnified Party to assign the rights to
seek recovery pursuant to the preceding sentence; provided, that the
Indemnifying Party will then be responsible for pursuing such recovery at its
own expense.  If the amount to be netted
hereunder from any payment required under Section 8.2 is determined after
payment by the Indemnifying Party of any amount otherwise required to be paid
to an Indemnified Party to this Article VIII, the Indemnified Party shall
repay to the Indemnifying Party, promptly after such determination, any amount
that the Indemnifying Party would not have had to pay pursuant to this Article VIII
had such determination been made at the time of such payment.

 

8.5                               Resolution
of Indemnification Disputes.

 

If an
Indemnifying Party disputes or contests the basis or amount of any Claim set
forth in a Claim Notice delivered by an Indemnified Party in accordance with
the provisions of Article VIII, the dispute will be resolved in accordance
with Section 9.9.

 

8.6                               Treatment
of Indemnification Payments.

 

For all
purposes hereunder, any indemnification payments made pursuant to Article VIII
of this Agreement will be treated as an adjustment to the Purchase Price.

 

ARTICLE IX

GENERAL PROVISIONS

 

9.1                               Notices

 

All notices
and other communications hereunder shall be in writing and shall be deemed duly
given (A) on the date of delivery if delivered personally or by facsimile,
upon confirmation of receipt, (B) on the first Business Day following the
date of dispatch if delivered by a recognized next-day courier service or (C) on
the fifth Business Day following the date of mailing if delivered by registered
or certified first-class mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as
set forth below, or pursuant to such other instructions as may be designated in
writing by the party to receive such notice:

 

(a)                                  if to Parent or
Purchaser, to:

 

36

 

	
  JumpTV Inc.

  
	
  463 King Street West, Third Floor

  
	
  Toronto, Ontario M5V 1K7

  
	
   

  
	
  Fax:

  	
  (416)
  849-3701

  
	
  Attention:

  	
  Sonia
  Keshwar, General Counsel

  

 

with
a copy to:

 

	
  Goodmans LLP

  
	
  250 Yonge Street

  
	
  Suite 2400

  
	
  Toronto, Ontario M5B 2M6

  
	
   

  
	
  Fax:

  	
  (416)
  979-1234

  
	
  Attention:

  	
  Avi
  Greenspoon/Michael Partridge

  

 

(b)                                 if to the Company to:

 

	
  XOS TECHNOLOGIES, INC.

  
	
  601 Codisco Way

  
	
  Sanford, FL 32771

  
	
   

  
	
  Fax:

  	
   

  
	
  Attention:  Chief Executive
  Officer

  

 

with
a copy to:

 

	
  Dechert LLP

  
	
  Cira Centre

  
	
  2929 Arch Street

  
	
  Philadelphia, Pennsylvania 19104

  
	
   

  
	
  Fax:   (215) 994-2222

  
	
  Attention:   Ian A. Hartman, Esq.

  

 

9.2                               Interpretation

 

References in
this Agreement to any gender include references to all genders, and references
to the singular include references to the plural and vice versa.  The words “include”,
“includes” and “including”
when used in this Agreement shall be deemed to be followed by the phrase “without limitation”. 
Unless the context otherwise requires, references in this Agreement to
Articles, Sections, Exhibits and Schedules shall be deemed references to
Articles and Sections of, and Exhibits and Schedules to, this Agreement.  Unless the context otherwise requires, the
words “hereof”, “hereby”
and “herein” and words of similar meaning
when used in this Agreement refer to this Agreement in its entirety and not to
any particular Article, Section or provision of this Agreement.  The table of contents and headings contained
in this Agreement

 

37

 

are for reference purposes only and shall not
affect in any way the meaning or interpretation of this Agreement.

 

9.3                               Counterparts;
Facsimile Signatures

 

This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, and all of which together shall be deemed to be one and the
same instrument.  This Agreement, any and
all agreements and instruments executed and delivered in accordance herewith,
along with any amendments hereto or thereto, to the extent signed and delivered
by means of a facsimile machine or other means of electronic transmission,
shall be treated in all manner and respects and for all purposes as an original
signature, agreement or instrument and shall be considered to have the same
binding legal effect as if it were the original signed version thereof
delivered in person.

 

9.4                               Entire
Agreement

 

This Agreement
(including any Schedules, Exhibits or annexes hereto, the documents referred to
herein and the Company Disclosure Schedule) constitutes the entire agreement
among all the parties hereto and supersedes all prior agreements,
understandings, oral and written, among all the parties with respect to the
subject matter hereof. Parent and Purchaser hereby release and forever
discharge the Company Parties of and from any and all damages, losses,
injuries, penalties, fines, forfeitures, assessments, claims, suits,
proceedings, investigations, actions, demands, causes of action, judgments,
awards, taxes, charges, costs and expenses of any nature (including
Liabilities) in law or in equity of any nature whatsoever, known or unknown,
suspected or unsuspected, it may have, ever had, now has or shall have against
the Company Parties to and including the date of execution of this Agreement by
Parent and Purchaser including, but not limited to, all claims arising out of,
related to or in connection with any sale process for the Business or other
assets of the Company and any discussions, negotiations, correspondence,
understandings or agreements between or with Parent, Purchaser, or the Company
and their respective representatives and Affiliates relating to any such sale
process (including those described in the letter dated July 15, 2007, from
Pedley Zielke Gordiner & Pence, PLLC to Justin Lancer on Behalf of
Bear Sterns).

 

9.5                               No
Third-Party Beneficiaries

 

This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns. 
Nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person other than the parties hereto or their respective successors
and assigns, any rights, remedies or liabilities under or by reason of this
Agreement other than Article VIII (which is intended to be for the benefit
of Persons covered thereby and may be enforced by such Persons).

 

9.6                               Assignment

 

Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto, in whole or in part (whether by
operation of law or otherwise), without the prior written consent of the other
parties, and any attempt to make any such assignment without such consent shall
be null and void, provided that no consent shall be

 

38

 

required for the assignment of Purchaser’s
rights, interests and obligations to another Affiliate of Parent.  Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.

 

9.7                               Amendment
and Modification; No Waiver

 

This Agreement
may only be amended or modified in writing, signed by the Company and Parent,
at any time prior to the Closing with respect to any of the terms contained
herein. At any time prior to the Closing, either the Company or Parent may (i) extend
the time for the performance of any of the obligations or other acts of the
other party hereto, (ii) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions of the other party contained herein. 
Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument executed by the
party granting such extension or waiver. 
No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.

 

9.8                               Enforcement;
Jurisdiction

 

The parties
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were 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 of this Agreement in any court of the
United States located in Manhattan, the City of New York, State of New York,
this being in addition to any other remedy to which they are entitled at law or
in equity subject to the terms hereof. 
In addition, each of the parties hereto (A) consents to submit
itself to the personal jurisdiction of the federal courts of the United States located
in the City of New York, State of New York located in such district in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (B) agrees that it will not attempt to
deny or defeat such personal jurisdiction or venue by motion or other request
for leave from any such court and (C) agrees that it will not bring any
Proceeding relating to this Agreement or any of the transactions contemplated
by this Agreement in any court other than such courts sitting in Manhattan, the
City of New York, State of New York.

 

9.9                               Dispute
Resolution.

 

Should the parties be unable to resolve any
dispute under this Agreement (including any dispute between an Indemnifying
Party and an Indemnified Party under Article IX), such dispute shall be
decided by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association then pertaining.  The award(s) rendered by the arbitrators
in accordance with this provision shall be final and judgment may be entered
upon it in accordance with applicable law in any court having jurisdiction
thereof.  All arbitration proceedings or
hearings shall be conducted in Manhattan, the City of New York, State of New
York, utilizing New York law.  The
parties may join any other party in the arbitration proceedings that they
determine is necessary to reach a complete adjudication of any disputes arising
under this Article IX.  The

 

39

 

failure of either the Indemnifying Party and
the Indemnified Party to comply with the provisions of the foregoing shall be
in contravention of the parties’ express intention to implement this
alternative means of dispute resolution, shall constitute a breach of these
provisions, and the parties expressly stipulate that any court having
jurisdiction over the parties shall be empowered to immediately enjoin any
proceeding commenced in contravention of this Section 9.9 and the party
failing to comply with these provisions shall reimburse the other parties for
all costs and expenses (including legal fees) incurred in enforcing these
provisions.  Nothing in this Section 9.9
shall prevent a party from seeking an injunction or other equitable remedy
pursuant to Section 9.8.

 

9.10                        Waiver
of Jury Trial

 

THE PARTIES
HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY, WHETHER NOW
EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR
OTHERWISE.  THE PARTIES AGREE THAT ANY OF
THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES
IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING WHATSOEVER BETWEEN
THEM RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY SHALL
INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING
WITHOUT A JURY.

 

9.11                        Company
Disclosure Schedule

 

The inclusion
of any matter on any schedule to this Agreement shall be deemed to qualify each
representation and warranty to which it specifically relates and any other
representation and warranty where it is reasonably apparent that the disclosure
is included to apply to such other representation and warranty, but inclusion
thereon shall expressly not be deemed to constitute an admission by the Company
or the Parent or Purchaser or otherwise imply that any such matter is material,
has a Material Adverse Effect or creates a measure for, or further defines the meaning
of, materiality or Material Adverse Effect and their correlative terms for the
purposes of this Agreement.  No
disclosure on a schedule relating to a possible breach or violation of any
contract or law shall be construed as an admission or indication that a breach
or violation exists or has actually occurred.

 

9.12                        No
Recourse

 

No past,
present or future director, officer, employee, incorporator, member, partner,
stockholder, Affiliate, agent, attorney or representative of the Company or any
of their Affiliates shall have any liability for any obligations or liabilities
of the Company under this Agreement of or for any claim based on, in respect
of, or by reason of, the transactions contemplated hereby and thereby or the
operation of the Company.

 

40

 

9.13                        Governing
Law

 

This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the State of New York, without regard to principles
of conflicts of laws.

 

9.14                        Severability

 

The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
or enforceability of the other provisions hereof.  If any provision of this Agreement, or the
application thereof to any Person or any circumstance, is found to be invalid
or unenforceable in any jurisdiction, (A) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid or enforceable, such provision and (B) the remainder of this
Agreement and the application of such provision to other persons or
circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.

 

9.15                        Mutual Drafting

 

The parties hereto have been represented by counsel who have carefully
negotiated the provisions hereof.  As a
consequence, the parties do not intend that the presumptions of any laws or rules relating
to the interpretation of contracts against the drafter of any particular clause
should be applied to this Agreement and therefore waive their effects.

 

9.16                        Time of the Essence;
Computation of Time

 

Time is of the essence for each and every provision of this Agreement.  Whenever the last day for the exercise of any
privilege or the discharge or any duty hereunder shall fall upon a day that is
not a Business Day, the party having such privilege or duty may exercise such
privilege or discharge such duty on the next succeeding day which is a regular
Business Day.

 

9.17                        Sole Remedy

 

The parties hereto acknowledge and agree that, from and after Closing,
the remedies provided for in this Agreement shall be the parties’ sole and
exclusive remedy with respect to the subject matter of this Agreement, except
in the event of fraud.  In furtherance of
the foregoing, the parties hereby waive and release, to the fullest extent
permitted by applicable law, any and all other rights, claims and causes of
action (including rights of contribution), if any known or unknown, foreseen or
unforeseen, which exist or may arise in the future, that it may have against
the Company or any of its Affiliates, or Parent or any of its Affiliates, as
the case may be, arising under or based upon any national, federal, state or
local statute, law, ordinance, rule regulation or judicial decision
(including any such statute, law, ordinance, rule, regulation or judicial
decision relating to environmental matters, or warranty of title, in rem
entitlements, or arising under or based upon any securities law, common law or
otherwise).  This Section 9.17 shall
survive Closing.

 

41

 

9.18                        Definitions

 

As used in this Agreement:

 

(a)                                  “Affiliate”
shall mean, with respect to any Person, any other Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such Person.

 

(b)                                 “Ancillary
Agreements” means, collectively, the Assignment and Assumption Agreement,
the Bill of Sale, the Escrow Agreement, the Transition Services Agreement and
the Intellectual Property Assignment Agreement.

 

(c)                                  “Antitrust
Division” shall mean the Antitrust Division of the United States
Department of Justice.

 

(d)                                 “Assignment
and Assumption Agreement” means an assignment and assumption
agreement to be entered into on Closing between the Company and Purchaser in
substantially the form attached as Schedule 9.18(c).

 

(e)                                  “Bill
of Sale” means a bill of sale to be entered into on Closing between
the Company and Purchaser in substantially the form attached as Schedule
9.18(e).

 

(f)                                    “Board
of Directors” means the board of directors of any specified Person
and any committees thereof.

 

(g)                                 “Books
and Records” shall mean all agreements, documents, books, records
and files, including records and files stored on computer disks or tapes or any
other storage medium relating to the business of the Company.

 

(h)                                 “Business”
means the business of maintaining a network of official sports team websites as
currently conducted by the Company, including developing and hosting websites,
distributing video and editorial content, providing a platform for data
management, delivering live and archived video of games and events, offering
the sale of team based merchandise, conducting auctions for memorabilia,
providing ticketing and donor management solutions, enabling distribution of
content to wireless providers and managing the entire online fan relationship
and experience.

 

(i)                                     “Business
Day” means any day other than (i) a Saturday or Sunday or (ii) a
day on which banks are authorized to close in New York City, New York or
Toronto, Canada.

 

(j)                                     “Closing
Working Capital Target” means $(550,000), it being understood that
this represents a negative working capital balance.

 

(k)                                  “Code”
means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

 

42

 

(l)                                     “Company
Disclosure Schedule” means the disclosure schedule being delivered
by the Company to the Parent on the date hereof.

 

(m)                               “Damages”
means all actual damages, losses, injuries, penalties, fines, forfeitures,
assessments, claims, suits, proceedings, investigations, actions, demands,
causes of action, judgments, awards, taxes, charges, costs and expenses of any
nature (including court costs, reasonable attorneys’, accountants’, consultants’
and experts’ fees, charges, Liabilities and other costs and expenses incident
to any proceedings or investigation or the defense of any claim (whether or not
litigation has commenced)), but specifically excluding any consequential,
unforeseen, special, incidental, indirect or punitive damages, lost profits,
opportunity costs, diminution in value or similar items and any liability
retained or assumed hereunder.

 

(n)                                 “dollars”
or “$”shall mean United States
dollars.

 

(o)                                 “Escrow
Agent” means Silicon Valley Bank.

 

(p)                                 “Escrow
Agreement” means an escrow agreement to be entered into on Closing
among the Company, Purchaser and the Escrow Agent in substantially the form
attached as Schedule 9.18(p).

 

(q)                                 “FTC”
shall mean the Federal Trade Commission.

 

(r)                                    “GAAP”
means United States generally accepted accounting principles.

 

(s)                                  “Governmental
Authority” shall mean any United States or foreign supranational,
national, federal, state, county, provincial or municipal authority or other
political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

 

(t)                                    “HSR
Act” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

 

(u)                                 “Income Taxes” shall mean Taxes determined on the
basis of net income.

 

(v)                                 “Income Tax Returns” shall mean Tax Returns related to
Income Taxes.

 

(w)                               “Intellectual
Property” means patents, trademarks and the associated goodwill,
service marks and the associated goodwill, tradenames, domain name
registrations, copyrights and any applications for any of the foregoing, trade
secrets, computer software programs and applications, in both source code and
object code form, information, know-how and proprietary rights and processes.

 

(x)                                   “Intellectual
Property Assignment Agreement” an intellectual property assignment
agreement to be entered into on Closing between the Company and Purchaser in
substantially the form attached as Schedule 9.18(x).

 

43

 

(y)                                 “Knowledge”
shall mean, in the case of the Company, the actual knowledge, after reasonable
inquiry, of the senior executives of the Company listed in Schedule 9.18(y)(i),
and, in the case of Parent or Purchaser, the actual knowledge, after reasonable
inquiry, of the senior executives of Parent listed in Schedule 9.18(y)(ii).

 

(z)                                   “Liabilities”
means all indebtedness, obligations, claims, and other liabilities (whether
absolute, accrued, contingent, asserted, unasserted, fixed or otherwise, or
whether due or that may become due).

 

(aa)                            “Liens”
shall mean any liens, charges, encumbrances, security interests, options or
rights of first offer or refusal, pledges, mortgages, adverse claims of any
kind.

 

(bb)                          “Material
Adverse Effect” means any effect, event, change, condition or
occurrence that is, individually or together with any other effects, events,
changes or conditions, materially adverse to the assets, liabilities, condition
(financial or otherwise) or results of operations of the Business taken as a
whole; provided,  however,
that none of the following shall be deemed, either alone or in combination, to
constitute, and none of the following shall be taken into account in
determining whether there has been or will be, a Material Adverse Effect: (a) any
failure by the Company to meet any internal or published projections,
forecasts, or revenue or earnings predictions for any period ending on or after
the date of this Agreement (it being understood that the underlying cause of
such failure to meet projections, forecasts or predictions may be taken into
account); (b) any adverse effect, event or occurrence to the extent
attributable to the announcement or pendency of the transactions contemplated
by this Agreement (including any cancellations of or delays in customer orders,
any reduction in sales, any disruption in supplier, distributor, partner or
similar relationships or any loss of employees); (c) any adverse effect,
event or occurrence attributable to conditions affecting (i) the
industries in which the Company participates; or (ii) the U.S. economy,
provided that, in either case, the Company is not disproportionately affected; (d) any
adverse effect, event or occurrence resulting from or relating to compliance
with the terms of, or the taking of any action required or permitted by, this
Agreement; (e) any adverse effect, event or occurrence arising from or
relating to any change in accounting requirements or principles or any change
in applicable laws, rules or regulations or the interpretation or
enforcement thereof; (f) the effect of any effect, event or occurrence
arising in connection with natural disasters or acts of nature, hostilities,
acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing or underway as of the date hereof; (g) any
adverse effect, event or occurrence arising from or relating to actions
required to be taken under applicable laws, rules, regulations, contracts or
agreements;  (h) the effect of any
action taken by Parent or its Affiliates with respect to the transactions
contemplated hereby or the financing thereof or with respect to the Company; or
(i) any Permitted Liens.  References
in this Agreement to dollar amount thresholds shall not be deemed to be
evidence of a Material Adverse Effect or materiality.

 

44

 

(cc)                            “Permitted
Liens” shall mean, collectively, (i)  Liens for Taxes not yet
payable or the validity of which are being contested in good faith by
appropriate proceedings and for which adequate reserves are reflected in the
Financial Statements to the extent required by GAAP, (ii) mechanics’,
workmen’s, repairmen’s, warehousemen’s, processor’s, landlord’s, carrier’s,
maritime, materialmen’s or other like Liens, including all statutory Liens
arising or incurred in the ordinary course of business, (iii)  Liens
arising in connection with worker’s compensation, unemployment insurance, old
age pensions and social security benefits which are not overdue or are being
contested in good faith by appropriate proceedings and for which provision for
the payment of such Liens has been reflected in the Financial Statements to the
extent required by GAAP, (iv) any imperfection of title, easements,
encroachments, covenants, rights of way, defects, irregularities or
encumbrances on title or similar Lien which does not and would not reasonably
be expected to impair in any material respect the operations of the Business, (v) customary
rights of set off, revocation, refund or chargeback, (vi) Liens arising by
operation of law on insurance policies and proceeds thereof to secure premiums
thereunder, (vii) Liens to secure capital lease obligations to the extent
the incurrence of such obligations does not violate this Agreement, (viii) any
Liens incurred pursuant to equipment leases in the ordinary course of business,
and (ix) Liens incurred pursuant to actions of Parent or its Affiliates.

 

(dd)                          “Person”
means an individual, corporation, limited liability company, partnership,
association, trust, unincorporated organization, other entity or group.

 

(ee)                            “Proceeding”
shall mean any action, suit, dispute, litigation, proceeding, hearing or claim
before any Governmental Authority, at law or in equity.

 

(ff)                                “Tax
Liability” means any Liability of the Company for (i) Taxes for
any period prior to the Closing, (ii) Taxes arising in connection with the
consummation of the transactions contemplated by this Agreement (including, but
not limited to, any income, gains, receipts, sales, transfer or other Taxes
arising because the Company is transferring the Transferred Assets), (iii) any
unpaid Taxes of any Person under Treasury Regulation §1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise.

 

(gg)                          “Tax
Returns” shall mean all returns, reports, declarations, statements,
information returns and other documents, required to be filed with respect to
Taxes, including any amendments thereto and application for loss carryback
refunds, and any schedule or attachment thereto.

 

(hh)                          “Taxes”
means any federal, state, county, local or foreign taxes, charges, fees,
levies, or other assessments, including all net income, gross income, sales or
use, ad valorem, transfer, gains, profits, excise, franchise, real or personal
property, gross receipt, production, business or occupation, disability,
employment, unemployment, premium, windfall profits, environmental, capital
stock, registration, alternative or add-on, payroll, license, estimated, stamp,
custom duties, severance or withholding taxes or charges entity or any other
taxes or charges of any nature whatsoever imposed by a Governmental Authority,

 

45

 

including any
obligation to indemnify or otherwise assume or succeed to the tax liability of
any Person, and includes any interest and penalties (civil or criminal) on or
additions to any such taxes and any expenses incurred in connection with the
determination, settlement or litigation of any tax liability.

 

(ii)                                  “the
other party” means, (i) with respect to the Company, Parent and
Purchaser and (ii) with respect to Parent or Purchaser, the Company.

 

(jj)                                  “Transition
Services Agreement” means a transition services agreement to be
entered into on Closing between the Company and Purchaser in a form to be
agreed between the Company and Purchaser, each acting reasonably.

 

9.19                        Other Defined Terms

 

The following terms are defined elsewhere in
the text of this Agreement and, unless otherwise indicated, shall have such
meaning throughout this Agreement.

 

	
  Accounting
  Firm

  	
   

  	
  9

  
	
  Agreement

  	
   

  	
  3

  
	
  Assumed
  Liabilities

  	
   

  	
  5

  
	
  Balance
  Sheet Date

  	
   

  	
  11

  
	
  Basket
  Amount

  	
   

  	
  35

  
	
  Benefit
  Plans

  	
   

  	
  15

  
	
  Books
  and Records

  	
   

  	
  4

  
	
  Business
  Intellectual Property

  	
   

  	
  3

  
	
  Carve-Out
  Statements

  	
   

  	
  28

  
	
  Claim

  	
   

  	
  33

  
	
  Claim
  Notice

  	
   

  	
  33

  
	
  Closing

  	
   

  	
  3

  
	
  Closing
  Date

  	
   

  	
  10

  
	
  Closing
  Date Statement

  	
   

  	
  9

  
	
  Collateral
  Source

  	
   

  	
  35

  
	
  Company

  	
   

  	
  3

  
	
  Company
  Indemnified Parties

  	
   

  	
  33

  
	
  Company
  Parties

  	
   

  	
  21

  
	
  Confidentiality
  Agreement

  	
   

  	
  24

  
	
  Designated
  Employees

  	
   

  	
  26

  
	
  Environmental
  Laws

  	
   

  	
  17

  
	
  ERISA

  	
   

  	
  15

  
	
  ERISA
  Affiliate

  	
   

  	
  15

  
	
  Escrow
  Amount

  	
   

  	
  10

  
	
  Estimated
  Closing Working Capital

  	
   

  	
  8

  
	
  Excluded
  Assets

  	
   

  	
  4

  
	
  Excluded
  Liabilities

  	
   

  	
  6

  
	
  Expenses

  	
   

  	
  27

  
	
  Final
  Closing Working Capital

  	
   

  	
  9

  
	
  Financial
  Statements

  	
   

  	
  11

  
	
  Hazardous
  Substance

  	
   

  	
  17

  
	
  hereby

  	
   

  	
  37

  
	
  herein

  	
   

  	
  37

  
	
  hereof

  	
   

  	
  37

  
	
  include

  	
   

  	
  37

  
	
  includes

  	
   

  	
  37

  
	
  including

  	
   

  	
  37

  
	
  Indemnified
  Party

  	
   

  	
  33

  
	
  Indemnifying
  Party

  	
   

  	
  33

  
	
  Material
  Contracts

  	
   

  	
  14

  
	
  Multiemployer
  Plan

  	
   

  	
  15

  
	
  Parent

  	
   

  	
  3

  
	
  Proposed
  Final Closing Working Capital

  	
   

  	
  9

  
	
  Purchase
  Price

  	
   

  	
  8

  
	
  Purchaser

  	
   

  	
  3

  
	
  Purchaser
  Indemnified Parties

  	
   

  	
  32

  
	
  Reference
  Balance Sheet

  	
   

  	
  9

  
	
  Transfer
  Taxes

  	
   

  	
  8

  
	
  Transferred
  Assets

  	
   

  	
  3

  
	
  Transferred
  Contracts

  	
   

  	
  3

  
	
  without
  limitation

  	
   

  	
  37

  

 

46

 

IN
WITNESS WHEREOF, Parent, Purchaser and the
Company have caused this Agreement to be signed by their respective officers
thereunto duly authorized, all as of the day and year first above written.

 

	
   

  	
  JUMPTV INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ G. Scott Paterson

  
	
   

  	
   

  	
  Name: G. Scott Paterson

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JUMPTV USA INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ G. Scott Paterson

  
	
   

  	
   

  	
  Name: G. Scott Paterson

  
	
   

  	
   

  	
  Title: CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XOS TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Rubey

  
	
   

  	
   

  	
  Name: Richard Rubey

  
	
   

  	
   

  	
  Title: CEOExhibit 10.1

 

CHASE CORPORATION

NON-QUALIFIED RETIREMENT SAVINGS PLAN

FOR THE BOARD OF DIRECTORS

 

As amended and restated effective January 1,
2009

 

ARTICLE I

PURPOSE

 

The purpose of the Chase Corporation Non-Qualified Retirement Savings
Plan for the Board of Directors (the “Plan”) is to provide specified benefits
to Directors who contribute materially to the continued growth, development and
future business success the Company. This Plan shall be unfunded for tax
purposes and for purposes of Title I of ERISA.

 

The Plan was originally effective as of January 1, 1997.  The Plan is amended and restated effective January 1,
2009. The Plan has been operated in good faith compliance with Section 409A
of the Code since January 1, 2005. 
The Plan is intended to satisfy the requirements of Section 409A of
the Code and the regulations thereunder.

 

ARTICLE II

DEFINITIONS

 

The following words and phrases as used herein shall have the following
meanings:

 

2.1           “Administrator” or “Plan Administrator” means the
individual or individuals appointed by the Company to administer the Plan.

 

2.2           “Annual Deferral Amount” means that
portion of a Participant’s Director Fees that such Participant defers in
accordance with Article IV for any Plan Year, without regard to whether
such amounts are withheld and credited during such Plan Year.

 

2.3           “Beneficiary” means
one or more persons, trusts, estates or other entities designated by the
Participant to receive benefits payable under the Plan upon the death of a
Participant.

 

2.4           “Change in Control” means any “change
in control event” as defined in accordance with Section 409A of the Code
and regulations thereunder.

 

2.5           “Company” means Chase
Corporation., a corporation organized under the laws of the Commonwealth of
Massachusetts, or any successor corporation.

 

2.6           “Deferral Election Agreement”
means the written deferral election agreement, on such form as may be
prescribed by the Administrator, executed and filed by a Participant prior to
the beginning of the first period for which the Participant’s Director
Compensation is to be deferred pursuant to the Plan.

 

2.7           “Director” means an
individual who is a member of the Board and who is not an officer or employee
of the Company or a subsidiary.

 

2.8           “Director  Fees”
means the cash portion of the amount paid to a Director by the Company for
serving as a member of the Board, including without limitation retainer fees,
Board meeting fees, committee meeting fees and fees for serving as chairman of
a committee.

 

1

 

2.9           “Investment Fund” means the fund or
funds in which a Participant’s Plan Account are deemed invested.

 

2.10         “Participant” means
each individual who participates in the Plan, as provided in Section 4.01
of the Plan.

 

2.11         “Plan” means the Chase
Corporation Non-Qualified Retirement Savings Plan for the Board of Directors,
as amended from time to time.

 

2.12         “Plan
Account” means a bookkeeping record of each Participant’s Annual
Deferral Amount, together with earnings and losses pursuant to Section 5.2
hereof.

 

2.13         “Plan Year” means the
calendar year; provided that the last Plan Year with respect to a Director who
ceases to be a Participant during a calendar year, shall begin on the first day
of such calendar year and end on the day such Director ceases to be a
Participant.

 

2.14         “Separation
from Service” means a Participant’s cessation of service as a
Board member, for any reason, provided the cessation of service is a good-faith
and complete termination of the Participant’s relationship with the Company
within the meaning of Section 409A of the Code.  If, at the time the Participant’s service as
a Board member end, the Participant begins providing services to the Company as
an employee or consultant, the Participant shall not incur a Separation from
Service under the terms of the Plan until the Participant has a separation from
service from the Company as an employee within the meaning of Section 409A
of the Code.

 

2.15         “Unforeseeable
Emergency” means a severe financial hardship to the Participant
resulting from (i) an illness or accident of the Participant or the
Participant’s spouse or dependent (as defined in Section 152 of the Code
without regard to Sections 152(b)(1), (b)(2) and (d)(1)(B)) or Beneficiary
under the Plan; (ii) loss of the Participant’s property due to casualty or
(iii) other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant.

 

2.16         “Valuation  Date” means the date on which
the amount of a Participant’s Plan Account is determined as provided in Article V
of the Plan.

 

ARTICLE III

ELIGIBILITY

 

3.1           Eligibility.  Each Director shall be eligible to become a
Participant on the date the individual is first elected to become a
Director.  Each Director who was a Participant
in the Plan as of December 31, 2008 shall continue in participation
hereunder on January 1. 2009.

 

ARTICLE IV

ELECTIONS TO DEFER/PARTICIPANT ACCOUNTS

 

4.1           Initial
Election to Defer Compensation. 
In the first year a Director is elected to the Board, such Director may
elect to defer all or any part of his Director Fees by executing and returning
to the Company a Deferral Election Agreement within the first thirty (30) days
after 

 

2

 

being elected to the Board.  Such
Deferral Election Agreement shall be effective with respect to Director Fees
paid to the Director by the Company for services provided by the Director after
the first day of the calendar month following the date of the Director’s
deferral election.  The Deferral Election
Agreement in effect as of the last day of the thirty (30) days election period
shall be irrevocable for the remainder of the Plan Year to which it applies,
except as provided in Section 6.4.

 

4.2           Annual
Elections to Defer Compensation. 
A Director may elect to defer all or any part of his Director Fees for
the following year by executing and returning to the Company a Deferral
Election Agreement prior to the beginning of each Plan Year.  As of the first day of the Plan Year for
which the election is made, the Participant’s deferral election shall be
irrevocable except as provided in Section 6.4.

 

4.3           Deferral
Election Agreements.  All
Deferral Election Agreements shall be made in the form and manner and within
such time period as the Administrator shall prescribe in order to be effective.

 

ARTICLE V

ACCOUNTS

 

5.1           Plan Accounts.  Director Fees deferred by a Participant under
the Plan shall be credited to the Participant’s Plan Account as soon as
practicable after the amounts would have otherwise been paid to the
Participant.

 

5.2           Investment of Accounts.  Amounts credited to a Participant’s Plan
Account shall reflect the investment experience of the Investment Funds
selected by the Participant.  The
Participant may make an initial investment election in whole increments at the
time the Participant elects to participate in the Plan.  The Administrator may permit changes in the Investment Funds at
whatever frequency it deems appropriate and within whatever limitations are
applicable to any Investment Fund.  If a
Participant makes an investment selection, the Plan Administrator may follow
such investment selection but shall not be legally bound to do so and no
provision of this Plan will require the Company to actually invest any amounts
in such investment options or otherwise.

 

5.3           Accounts are for
Recordkeeping Purposes Only. 
Plan Accounts are solely a device for determining the amount of benefits
accumulated by a Participant under the Plan, and shall not constitute or imply
an obligation on the part of the Company to fund such benefits.

 

5.4           Vesting.  A Participant shall be fully
vested at all times in his Plan Account in this Plan.

 

ARTICLE VI

DISTRIBUTION OF A PARTICIPANT’S PLAN ACCOUNT

 

6.1           Distribution
Event.  Upon a Participant’s
Separation from Service for any reason, the Participant, or his Beneficiary in
the event of his death, shall be entitled to payment of the amount accumulated
in the Participant’s Plan Account.

 

3

 

6.2           Manner
of Distribution.  A
Participant, at the time he makes an initial deferral election under Article III
of the Plan, shall elect the form of distribution with respect to his Plan
Account.  Such election shall be made in
such form and manner as the Administrator may prescribe.  The election shall specify whether
distributions shall be made in a single lump sum or in annual installments over
five (5) or ten (10) years.  In
the absence of a distribution election, payment shall be made in a single lump
sum.

 

If payment is to be made in a lump sum, payment shall be made within
ninety (90) days following the Participant’s Separation from Service.  The lump sum payment shall equal the balance
of the Participant’s Plan Account as of the Valuation Date immediately preceding
the distribution date.

 

If payment is to be made in annual installments, the first annual
payment shall be made within ninety (90) days following the Participant’s
Separation from Service.

 

6.3           Death
of a Participant.  In the
event of a Participant’s death prior to receiving all payments due under this Article VI,
the balance of the Participant’s Plan Account shall be paid to the Participant’s
Beneficiary in a lump sum within ninety (90) days of the Participant’s death.

 

6.4           Unforeseeable
Emergency.  The
Administrator may, in its sole discretion, distribute amounts to a Participant
from the Participant’s Plan Account to satisfy an Unforeseeable Emergency.  The amount of any distribution on account of
an Unforeseeable Emergency must be limited to the amount needed to satisfy the
emergency, which may include amounts necessary to pay any federal, state, local
or foreign taxes or penalties reasonably anticipated to result from the
distribution.  A Participant’s deferral
election pursuant to Section 3.1 for a Plan Year may be canceled in their
entirety to satisfy an Unforeseeable Emergency. 
Distribution may not be allowed to the extent that the hardship may be
relieved through reimbursement or compensation by insurance or otherwise, by
liquidation of the Participant’s assets (to the extent such liquidation would
not itself cause a severe financial hardship) or by cessation of deferrals
under the Plan.  In no event shall the
need to pay college tuition or the purchase of a home qualify as an
Unforeseeable Emergency.  Notwithstanding
any form of payment election made by a Participant, any distribution made
pursuant to an Unforeseeable Emergency shall be paid in a lump sum within
thirty (30) days of determination by the Administrator.

 

6.5           Change
of Form of Payment. 
No change in a Participant’s payment election shall be valid unless it
is made in accordance with this Section 6.05.  Any change in a Participant’s payment
election with respect to his Plan Account may not take effect until at least
twelve (12) months after the date on which the election is made in a Deferral
Election Agreement executed and filed with the Company and the first payment
with respect to which the election is made must be deferred for a period of not
less than five (5) years from the date such payment would otherwise have
been made.

 

6.6           Change
in Control Payment. 
Notwithstanding any other provision of this Plan, each Participant (or
any Beneficiary thereof entitled to receive payment hereunder), including
Participants receiving installment payments under the Plan, shall be entitled
to receive a lump 

 

4

 

sum payment of all amounts accumulated in the Participant’s Plan
Account.  Such payment shall be made not
more than sixty (60) days following the Change in Control.

 

ARTICLE VII

ADMINISTRATION

 

7.1           Duties
of the Plan Administrator. 
The Plan shall be administered by the Administrator in accordance with
its terms and purposes.  The Plan
Administrator shall determine the amount and manner of payment of the benefits
due to or on behalf of each Participant from the Plan and shall cause them to
be paid by the Company accordingly.

 

7.2           Finality
of Decisions.  The
Administrator is expressly granted, without intending any limitation, the
discretion to construe the terms of the Plan and to determine eligibility for
benefits hereunder.  The decisions made
by and the actions taken by the Administrator in the administration of the Plan
shall be final and conclusive on all persons, and neither the Plan Administrator
nor the Company shall be subject to individual liability with respect to the
Plan.

 

7.3           Claims
Procedure.

 

(a)           Application for
Benefits.  The Plan Administrator
shall furnish to each Participant information about the benefits to which he or
she is entitled under the Plan.  The Plan
Administrator may require any person claiming benefits under the Plan to submit
a written application, together with such documents, evidence, and information
as it considers necessary to process the claim.

 

Any request for benefits by a Participant or Beneficiary will be filed
in writing with the Plan Administrator. 
Within a reasonable period after receipt of a claim, the Plan
Administrator will provide written notice to any claimant whose claim has been
wholly or partly denied, including:  (a) the
reasons for the denial, (b) the Plan provisions on which the denial is
based, (c) any additional material or information necessary to perfect the
claim and the reasons it is necessary, and (d) the Plan’s claims review
procedure.

 

(b)           Action on
Application.  Within ninety
(90) days after receipt of an application and all necessary documents and
information, the Plan Administrator shall furnish the claimant with a written
notice of its decision.  If the
Administrator denies the claim in whole or in part, the notice will set forth (1) specific
reasons for the denial, with specific reference to Plan provisions upon which
the denial is based; (2) a description of any additional information or
material necessary to process the application with an explanation why such
material or information is necessary; and (3) an explanation of the Plan’s
claim review procedure.  If special
circumstances require an extension of time for processing the claim, the Plan
Administrator shall furnish the claimant written notice of the extension before
the end of the initial ninety (90)-day period. 
In no event shall the extension exceed a period of ninety (90) days
from the end of the initial period.  The
notice shall explain the circumstances requiring an extension of time and the
date by which the Plan Administrator expects to render a decision.

 

(c)           Claim Review.  The claimant who does not agree with the
decision rendered on his application may request that the Plan Administrator
review the decision.  The request must be
made within sixty (60) days after the claimant receives the decision, or
if the application has 

 

5

 

neither been approved nor denied within the ninety (90)-day period
specified in subsection (b), then the request must be made within sixty
(60) days after expiration of the ninety (90)-day period.   Each request for review must be in writing
and addressed to the Plan Administrator. Concurrently with filing the request
for review, or within the sixty (60) days request period, the claimant may
submit in writing to the Plan Administrator a statement of the issues raised by
his appeal and supporting arguments and comments.  During the pendency of his appeal, the
claimant may inspect all documents which are reasonably pertinent to his case,
upon reasonable notice to the Plan Administrator.  However, under no circumstance shall the Plan
Administrator be required to disclose to any claimant information concerning
any person other than the Participant whose benefit is being claimed, to the
extent such information is normally treated as confidential. The Plan
Administrator will render its decision on review promptly and in writing and
will include specific reasons for the decision and references to the plan
provision on which the decision is based, within sixty (60) days following
receipt of the claimant’s request for review. 
If special circumstances require an extension of time, the Plan
Administrator shall render a decision as soon as possible, but not later than
one hundred and twenty (120) days after receipt of the request for
review.  If an extension is required, the
Plan Administrator shall furnish to the claimant written notice of the
extension, including an explanation of the circumstances requiring the
extension, before the extension period begins.

 

ARTICLE VIII

MISCELLANEOUS

 

8.1           Designation
of Beneficiary.  Each
Participant may designate a Beneficiary in such form and manner and within such
time periods as the Administrator may prescribe.  A Participant can change his beneficiary
designation at any time, provided that each beneficiary designation shall
revoke the most recent designation and the last designation received by the
Administrator while the Participant is alive shall be given effect.  If there is no valid beneficiary designation
in effect at the time of the Participant’s death or in the event the
Beneficiary does not survive the Participant, the Participant’s estate will be
deemed the Beneficiary and will be entitled to receive payment.  If a Participant designates his spouse as a
Beneficiary, such beneficiary designation automatically shall become null and
void on the date the Administrator receives notice of the Participant’s divorce
or legal separation.

 

8.2           Amendments/Termination.  The Company reserves the right to make from
time to time amendments to or terminate this Plan , provided that no such
amendment or termination shall reduce any benefits earned under the terms of
this Plan prior to the date of termination or amendment.  The Company may elect to terminate the
Plan within thirty (30) days preceding or the twelve (12) months
following a Change in Control, subject to the provisions of Section 409A
of the Code.  For the purpose of the
immediately preceding sentence, the Plan shall be treated as terminated only if
substantially similar arrangements sponsored by the Company are terminated, so
that all Participants in the Plan and all participants under substantially
similar arrangements are required to receive all amounts deferred under the
terminated arrangements within twelve (12) months of the date of
termination of the arrangements. 
Notwithstanding the foregoing, the Company may amend this Plan at any
time, without the consent of Participants or their Beneficiary to the extent
necessary or desirable to comply with Section 409A of the Code to avoid
taxation under Section 409A of the Code, even if such amendment divests a
Participant or 

 

6

 

Beneficiary
of rights to which the Participant or Beneficiary would otherwise have been
entitled under the Plan.

 

8.3           Rights
Unsecured.  No person
shall have any right, other than the right of an unsecured general creditor,
against the Company with respect to the benefits payable hereunder, or which may
be payable hereunder, to any Participant, surviving spouse or beneficiary
hereunder.  The Plan shall be operated at
all times as an unfunded plan as required under ERISA.  Any funds set aside by the Company for the
purpose of meeting its obligations under the Plan, including any amounts held
by a trustee, shall continue for all purposes to be part of the general assets
of the Company and shall be available to its general creditors in the event of
the Company’s bankruptcy or insolvency. 
The Company’s obligation under this Plan shall be that of an unfounded
and unsecured promise to pay money in the future.

 

8.4           Nonassignability.  The benefits payable under this Plan shall
not be subject to alienation, assignment, garnishment, execution or levy of any
kind and any attempt to cause any benefits to he so subjected shall not be
recognized, except to the extent required by applicable law.

 

8.5           Entire
Agreement; Successors. 
This Plan, including any subsequently adopted amendments, shall
constitute the entire agreement or contract between the Company and any
Participant regarding the Plan.  There
are no covenants, promises, agreements, conditions or understandings, either
oral or written, between the Company and any Participant relating to the
subject matter hereof, other than those set forth in this Plan.  This Plan and any amendment shall be binding
on the parties hereto and their respective heirs, administrators, trustees,
successors and assigns, and on all designated beneficiaries of the Participant.

 

8.6           Successor
Company.  In the event of
the dissolution, merger, consolidation or reorganization of the Company,
provision may be made by which a successor to all or a major portion of the
Company’s property or business shall continue this Plan, and the successor shall
have all of the powers, duties and responsibilities of the Company under this
Plan.

 

8.7           Governing
Law. To the extent not governed by federal law, this Plan shall
be construed and enforced in accordance with, and governed by, the laws of the
Commonwealth of Massachusetts.

 

IN WITNESS WHEREOF,
Chase Corporation has caused this instrument to be executed in its name and on
its behalf this 24th day of December, 2008.

 

	
   

  	
  CHASE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

7

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