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EXHIBIT 10.1

 

EXECUTION VERSION

 

SECOND AMENDMENT TO FINANCING AGREEMENT

 

SECOND AMENDMENT, dated as of November 5, 2019
(this "Amendment"), to the Financing Agreement, dated as of January 31, 2018 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, including any replacement agreement therefor, the "Financing Agreement"),
by and among Harvard Bioscience, Inc., a Delaware corporation (the "Parent" or the "Borrowing Agent"),
each subsidiary of the Parent listed as a "Borrower" on the signature pages thereto (together with the Parent and each
other Person that executes a joinder agreement and becomes a "Borrower" thereunder, each a "Borrower"
and collectively, the "Borrowers"), the Guarantors (as defined therein) from time to time party thereto, the lenders
from time to time party thereto (each a "Lender" and collectively, the "Lenders"), Cerberus Business
Finance, LLC, a Delaware limited liability company, as collateral agent for the Lenders (in such capacity, together with its successors
and assigns in such capacity, the "Collateral Agent"), and PNC Bank, National Association, as administrative agent
for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Administrative Agent"
and together with the Collateral Agent, each an "Agent" and, collectively, the "Agents").

 

WHEREAS, the Loan Parties have requested, and
the Agents and the Required Lenders have agreed, subject to the terms and conditions set forth herein, to amend the Financing Agreement
on the terms and conditions set forth below.

 

NOW THEREFORE, in consideration of the premises
and other good and valuable consideration, the parties hereto hereby agree as follows:

 

1. Definitions.
All terms used herein that are defined in the Financing Agreement and not otherwise defined herein shall have the meanings assigned
to them in the Financing Agreement.

 

2. Amendments.

 

(a)         
New Definitions. Section 1.01 of the Financing Agreement is hereby amended by adding the following definitions,
in appropriate alphabetical order:

 

(i)              
"Second Amendment" means the Second Amendment to Financing Agreement, dated as of November 5, 2019, by
and among the Loan Parties, the Agents and the Required Lenders.

 

(ii)             
"Second Amendment Effective Date" means the 'Second Amendment Effective Date' as set forth in the Second
Amendment.

 

     

     

    

 

(b)         
Existing Definitions.

 

(i)                
Section 1.01 of the Financing Agreement is hereby amended by amending and restating the definition of "Applicable
Margin" in its entirety to read as follows:

 

"'Applicable Margin' means, as of
any date of determination, with respect to the interest rate of any Loan (or any portion thereof):

 

(a)       From
the Second Amendment Effective Date until November 15, 2019 (the "Initial Applicable Margin Period"), the relevant
Applicable Margin shall be set at Level III in the table below.

 

(b)       After
the Initial Applicable Margin Period, the relevant Applicable Margin shall be set at the respective level indicated below based
upon the Leverage Ratio set forth opposite thereto (giving effect to the calculation as required pursuant to the second proviso
contained in clause (vi) of the definition of "Consolidated EBITDA"), which ratio shall be calculated as of the end of
the most recent Fiscal Quarter of the Parent and its Subsidiaries for which quarterly financial statements and a certificate of
an Authorized Officer of the Parent are received by the Agents and the Lenders in accordance with Section 7.01(a)(ii) and Section
7.01(a)(iv):

 

	Level	Leverage Ratio	Reference Rate Loans	LIBOR Rate Loans
	I	Greater than or equal to 4.00:1.00	5.5%	7.00%
	II	Less than 4.00:1.00 and equal to or greater than 3.50:1:00	5.125%	6.625%
	III	Less than 3.50:1.00 and equal to or greater than 3.00:1.00	4.75%	6.25%
	IV	Less than 3.00:1:00	4.5%	6.00%

 

(c)       Subject
to clause (d) below, the adjustment of the Applicable Margin (if any) will occur 2 Business Days after the date the Administrative
Agent receives the quarterly financial statements and a certificate of an Authorized Officer of the Parent in accordance with Section
7.01(a)(ii) and Section 7.01(a)(iv).

 

(d)       Notwithstanding
the foregoing:

 

(i)       the
Applicable Margin shall be set at Level I in the table above, at the election of the Collateral Agent, (x) upon the occurrence
and during the continuation of a Default or Event of Default, or (y) if for any period, the Administrative Agent does not receive
the financial statements and certificates described in clause (c) above, for the period commencing on the date such financial statements
and certificate were required to be delivered through the date on which such financial statements and certificate are actually
received by the Administrative Agent and the Lenders; and

 

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(ii)       in
the event that any financial statement or certificate described in clause (c) above is inaccurate (regardless of whether this Agreement
or any Commitments are in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the
application of a higher Applicable Margin for any fiscal period, then the Applicable Margin for such fiscal period shall be adjusted
retroactively (to the effective date of the determination of the Applicable Margin that was based upon the delivery of such inaccurate
financial statement or certificate) to reflect the correct Applicable Margin, and the Borrowers shall promptly make payments to
the Agents and the Lenders to reflect such adjustment."

 

(ii)             
Section 1.01 of the Financing Agreement is hereby amended by amending and restating clauses (a) of the definition
of "Applicable Prepayment Premium" in its entirety to read as follows:

 

"(a) with respect to prepayments
of the Term Loans, an amount equal to (i) during the period of time from and after the Effective Date up to and including the date
that is the first anniversary of the Effective Date (the "First Period"), an amount equal to 3.00% times
the principal amount of any prepayment of the Term Loan on such date, (ii) after the First Period up to and including July
22, 2020 (the "Second Period"), an amount equal to 2.00% times the principal amount of any prepayment of
the Term Loan on such date, (iii) after the Second Period up to and including July 22, 2021 (the "Third Period"),
an amount equal to 1.00% times the principal amount of any prepayment of the Term Loan on such date and (iv) thereafter,
zero; and"

 

(iii)           
Section 1.01 of the Financing Agreement is hereby amended by amending and restating clause (b)(vi) of the definition
of "Consolidated EBITDA" in its entirety to read as follows:

 

"(vi)extraordinary or non-recurring
charges, expenses or losses; reasonably identifiable and factually supportable restructuring charges, costs and expenses (as set
forth in a certificate of an Authorized Officer of the Parent); severance costs; non-cash reserves in connection with the Transactions;
provided, that (A) the aggregate amount added back pursuant to this clause (vi) for any measurement period shall not exceed
15.0% of Consolidated EBITDA of the Parent and its Subsidiaries for such period (calculated before giving effect to any adjustment
pursuant to this clause (vi), including subclause (B) below) and (B) notwithstanding subclause (A), solely with respect to any
Fiscal Quarter ending September 30, 2019 through and including September 30, 2020, without duplication, any cash charges incurred
in respect of the items set forth in Schedule 1.01(G) may be added back in an aggregate amount not exceeding such amount specified
therein (or such other amount or higher respective thresholds as may be approved by the Collateral Agent in its Permitted Discretion);
provided, further, that notwithstanding anything contained herein to the contrary, solely with respect to the determination
of the Leverage Ratio in connection with the Applicable Margin, the adjustments pursuant to this subclause (B) shall not be used
in making such calculation,"

 

(iv)            
Section 1.01 of the Financing Agreement is hereby amended by amending the definition of "LIBOR" by replacing
the reference therein to "1.25%" with "1.75%".

 

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(v)              
Section 1.01 of the Financing Agreement is hereby amended by amending and restating the definition of "LIBOR
Rate" in its entirety to read as follows:

 

"'LIBOR Rate' means, (x)
for each Interest Period for each LIBOR Rate Loan that is a Term Loan, the greater of (a) the rate per annum determined by the
Administrative Agent (rounded upwards if necessary, to the next 1/100% of 1%) by dividing (i) LIBOR for such Interest Period
by (ii) 100% minus the Reserve Percentage and (b) 1.75% and (y) for each Interest Period for each LIBOR
Rate Loan that is a Revolving Loan, the rate per annum determined by the Administrative Agent (rounded upwards if necessary, to
the next 1/100% of 1%) by dividing (i) LIBOR for such Interest Period by (ii) 100% minus the Reserve
Percentage. The LIBOR Rate shall be adjusted on and as of the effective day of any change in the Reserve Percentage; provided,
however, that if the LIBOR Rate determined as provided above would be less than zero, such rate shall be deemed to be zero for
purposes of this Agreement."

 

(c)         
Section 7.03(a) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(a)Leverage Ratio.
Permit the Leverage Ratio of the Parent and its Subsidiaries for any period of four consecutive Fiscal Quarters of the Parent and
its Subsidiaries for which the last Fiscal Quarter ends on a date set forth below to be greater than the ratio set forth opposite
such date:

 

	Fiscal Quarter End	Leverage Ratio
	March 31, 2018	4.50:1.00
	June 30, 2018	4.50:1.00
	September 30, 2018	4.25:1.00
	December 31, 2018	4.00:1.00
	March 31, 2019	3.75:1.00
	June 30, 2019	3.75:1.00
	September 30, 2019	3.50:1.00
	December 31, 2019	3.50:1.00
	March 31, 2020	3.50:1.00
	June 30, 2020, and every Fiscal Quarter thereafter	3.25:1.00"

 

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(d)         
Section 7.03(b) of the Financing Agreement is hereby amended and restated in its entirety to read as follows:

 

"(b)Fixed Charge Coverage
Ratio. Permit the Fixed Charge Coverage Ratio of the Parent and its Subsidiaries for any period of four consecutive Fiscal
Quarters of the Parent and its Subsidiaries for which the last Fiscal Quarter ends on a date set forth below to be less than the
ratio set forth opposite such date:

 

	Fiscal Quarter End	Fixed Charge Coverage Ratio
	March 31, 2018	1.25:1.00
	June 30, 2018	1.25:1.00
	September 30, 2018	1.50:1.00
	December 31, 2018	1.50:1.00
	March 31, 2019	1.50:1.00
	June 30, 2019	1.50:1.00
	September 30, 2019	1.50:1.00
	December 31, 2019 and every Fiscal Quarter thereafter	1.25:1.00"

 

(e)         
Schedule 1.01(G) set forth in Annex A hereto shall be appended to the end of the Financing Agreement.

 

3. Financial
Covenants. The Loan Parties shall be permitted to calculate Consolidated EBITDA and the covenants set forth in Section 7.03
of the Financing Agreement for the Fiscal Quarter ended September 30, 2019, in accordance with the Financing Agreement as amended
by this Amendment.

 

4. Representations
and Warranties. Each Loan Party hereby represents and warrants to the Agents and the Lenders as follows:

 

(a)         
Organization, Good Standing, Etc. Each Loan Party and each of its Subsidiaries (i) is a corporation, limited company,
limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing under the
laws of the state or jurisdiction of its incorporation or organization, as applicable, (ii) has all requisite power and authority
to conduct its business as now conducted and as presently contemplated and to execute and deliver this Amendment, and to consummate
the transactions contemplated hereby and by the Financing Agreement, as amended hereby, and (iii) is duly qualified to do business
and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction
of its business makes such qualification necessary, except (solely for the purposes of this subclause (iii)) where the failure
to be so qualified or in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.

 

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(b)         
Authorization, Etc. The execution, delivery and performance by each Loan Party of this Amendment and the Financing
Agreement, as amended hereby, (i) have been duly authorized by all necessary corporate or other organizational action, (ii) do
not and will not contravene any of its Governing Documents or, in any material respect, any applicable Requirement of Law, (iii)
do not and will not conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under
any Material Contract, (iv) do not and will not result in or require the creation of any Lien (other than pursuant to any
Loan Document) upon or with respect to any of its properties, and (v) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable
to its operations or any of its properties.

 

(c)         
Governmental Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental
Authority is required in connection with the due execution, delivery and performance by any Loan Party of this Amendment and the
Financing Agreement, as amended hereby, other than (x) authorizations, approvals, notices, filings or other actions that have been
obtained and that are still in force and effect and (y) filing of this Amendment with the SEC following the execution hereof.

 

(d)         
Enforceability of Amendment. Each of this Amendment and the Financing Agreement, as amended hereby, is and each other
Loan Document to which any Loan Party is or will be a party, when delivered hereunder, will be a legal, valid and binding obligation
of such Person which is a party thereto, enforceable against such Person in accordance with its terms, except as enforceability
may be limited by applicable equitable principles or by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally.

 

5. Conditions
to Effectiveness. This Amendment shall become effective only upon satisfaction in full, in a manner satisfactory to the Collateral
Agent, of the following conditions precedent (the first date upon which all such conditions shall have been satisfied being herein
called the "Second Amendment Effective Date"):

 

(a)         
Delivery of Documents. The Collateral Agent shall have received this Amendment duly executed and delivered by the
Loan Parties, the Agents and the Lenders.

 

(b)         
Representations and Warranties. The representations and warranties contained in ARTICLE VI of the Financing Agreement
(as amended hereby) and in each other Loan Document, certificate or other writing delivered to any Secured Party pursuant hereto
or thereto on or prior to the Second Amendment Effective Date shall be true and correct in all material respects (except that such
materiality qualifier shall not be applicable any representations or warranties that already are qualified or modified as to "materiality"
or "Material Adverse Effect" in the text thereof, which representations and warranties shall be true and correct in all
respects subject to such qualification) on and as of the Second Amendment Effective Date as though made on and as of the Second
Amendment Effective Date, except to the extent that any such representation or warranty expressly relates solely to an earlier
date (in which case such representation or warranty shall be true and correct in all material respects (except that such materiality
qualifier shall not be applicable to any representations or warranties that already are qualified or modified as to "materiality"
or "Material Adverse Effect" in the text thereof, which representations and warranties shall be true and correct in all
respects subject to such qualification) on and as of such earlier date).

 

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(c)         
No Default or Event of Default. After giving effect to this Amendment, no Default or Event of Default shall have
occurred and be continuing on the Second Amendment Effective Date or would result from this Amendment becoming effective in accordance
with its terms.

 

(d)         
Payment of Fees, Etc. The Loan Parties shall have paid (i) an amendment fee to the Collateral Agent solely for its
own account, in an amount equal to $50,000, which fee shall be deemed earned in full on the Second Amendment Effective Date and
shall be non-refundable and (ii) all fees, costs and expenses then due and payable by the Loan Parties pursuant to the Loan Documents,
including, without limitation, the Fee Letter and Sections 2.06 and 12.04 of the Financing Agreement.

 

6. Continued
Effectiveness of the Financing Agreement and Other Loan Documents. Each Loan Party hereby (i) acknowledges and consents to
this Amendment, (ii) confirms and agrees that the Financing Agreement and each other Loan Document to which it is a party
is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that on and
after the Second Amendment Effective Date all references in any such Loan Document to "the Financing Agreement", the
"Agreement", "thereto", "thereof", "thereunder" or words of like import referring to the
Financing Agreement shall mean the Financing Agreement as amended by this Amendment, and (iii) confirms and agrees that to
the extent that any such Loan Document purports to assign or pledge to the Collateral Agent for the benefit of the Agents and the
Lenders, or to grant to the Collateral Agent for the benefit of the Agents and the Lenders a security interest in or Lien on, any
Collateral as security for the Obligations from time to time existing in respect of the Financing Agreement (as amended hereby)
and the other Loan Documents, such pledge, assignment and/or grant of the security interest or Lien is hereby ratified and confirmed
in all respects. This Amendment does not and shall not affect any of the obligations of the Loan Parties, other than as expressly
provided herein, including, without limitation, the Loan Parties' obligations to repay the Loans in accordance with the terms of
Financing Agreement, or the obligations of the Loan Parties under any Loan Document to which they are a party, all of which obligations
shall remain in full force and effect, and nothing herein contained shall be construed as a substitution or novation of the obligations
outstanding under the Financing Agreement or instruments securing the same. Nothing expressed or implied in this Amendment shall
be construed as a release or other discharge of any Loan Party under the Financing Agreement, or the other Loan Documents, as amended
hereby, from any of its obligations and liabilities as a "Borrower", "Guarantor" or "Loan Party"
thereunder. Except as expressly provided herein, the execution, delivery and effectiveness of this Amendment shall not operate
as a waiver of any right, power or remedy of the Agents or any Lender under the Financing Agreement or any other Loan Document,
nor constitute a waiver of any provision of the Financing Agreement or any other Loan Document.

 

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7. Miscellaneous.

 

(a)         
This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. Delivery
of an executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective as delivery of an original
executed counterpart of this Amendment.

 

(b)         
Section and paragraph headings herein are included for convenience of reference only and shall not constitute a part of
this Amendment for any other purpose.

 

(c)         
This Amendment shall be governed by, and construed in accordance with, the laws of the State of New York.

 

(d)         
Each Loan Party hereby acknowledges and agrees that this Amendment constitutes a "Loan Document" under the Financing
Agreement. Accordingly, it shall be an Event of Default under the Financing Agreement if (i) any representation or warranty made
by a Loan Party under or in connection with this Amendment shall have been incorrect in any material respect when made, or (ii)
any Loan Party shall fail to perform or comply with any covenant or agreement contained in this Amendment.

 

(e)         
Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.

 

[remainder of page intentionally left blank]

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed and delivered as of the date set forth on the first page hereof.

 

BORROWERS:

 

HARVARD BIOSCIENCE, INC.

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

DATA SCIENCES INTERNATIONAL, INC.

By: Harvard Bioscience, Inc., its sole shareholder

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

 

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

GUARANTORS:

 

HOEFER, INC.

By: Harvard Bioscience, Inc., its sole shareholder

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

WARNER INSTRUMENTS LLC

By: Harvard Bioscience, Inc., its sole member

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

TRIANGLE BIOSYSTEMS, INC.

By: Harvard Bioscience, Inc., its sole shareholder

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

HBIO DISTRIBUTION OLDCO, INC. 

By: Harvard Bioscience, Inc., its sole shareholder

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

COULBOURN INSTRUMENTS, LLC

 

By: HBIO Distribution Oldco, Inc., its sole member

By: Harvard Bioscience, Inc., its sole shareholder

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

BIOCHROM US, INC.

 

By: Harvard Bioscience, Inc., its sole shareholder

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

BIOCHROM LIMITED

 

		By:	/s/ James Green

Name: James Green

Title: Director

 

 

EALING SCIENTIFIC LIMITED /

LA COMPAGNIE SCIENTIFIQUE EALING LIMITÉE

 

By: Harvard Bioscience, Inc., its sole shareholder

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Chief Financial Officer

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

DATA SCIENCES UK (MN) LIMITED

By: Data Sciences International, Inc., its sole shareholder

 

		By:	/s/ Michael A. Rossi

Name: Michael A. Rossi

Title: Director

 

 

 

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

COLLATERAL AGENT:

CERBERUS BUSINESS FINANCE, LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title: Chief Executive Officer

 

 

 

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

LENDERS:

 

CERBERUS ASRS FUNDING LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title: Vice President

 

 

CERBERUS CAVALIERS LEVERED LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title: Vice President

 

 

CERBERUS ICQ OFFSHORE LEVERED LP

By: Cerberus ICQ Offshore GP LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

CERBERUS LOAN FUNDING XX L.P.

By: Cerberus LFGP XX, LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

CERBERUS LOAN FUNDING XXII L.P.

By: Cerberus LFGP XXII, LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

CERBERUS LOAN FUNDING XXIII L.P.

By: Cerberus LFGP XXIII, LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

CERBERUS LOAN FUNDING XXIV L.P.

By: Cerberus LFGP XXIV, LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

CERBERUS LOAN FUNDING XXV LP

By: Cerberus LFGP XXV, LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

CERBERUS LOAN FUNDING XXVI L.P.

By: Cerberus LFGP XXVI, LLC

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Senior Managing Director

 

 

CERBERUS N-1 FUNDING LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Vice President

 

 

CERBERUS ND LEVERED LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Vice President

 

 

CERBERUS OFFSHORE LEVERED III LP

By: COL III GP Inc.

Its: General Partner

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Vice President

 

 

    
[Second Amendment to Financing Agreement]

     

    

 

CERBERUS REDWOOD LEVERED A LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Vice President

 

 

CERBERUS SWC LEVERED II LLC

 

		By:	/s/ Daniel E. Wolf

Name: Daniel E. Wolf

Title:  Vice President

 

 

 

 

 

 

[Second Amendment to Financing Agreement]profire-midflowmembershi

                                                        EXECUTION VERSION        _________________________________________________________________                                                                                                                                           MEMBERSHIP INTEREST PURCHASE AGREEMENT                                  by and among                              PROFIRE ENERGY, INC.                                     as Buyer,                                        and                        DUSTIN BAKER AND BRANT BAKER,                                    as Sellers,                     with respect to all of the membership interests of                                                                    MIDFLOW SERVICES, LLC                                                                     Dated as of August 5, 2019          _________________________________________________________________    102596957.7 0059466-00008  

 

                            TABLE OF CONTENTS                                                                             Page   ARTICLE I CERTAIN DEFINITIONS ......................................................................................1        1.1   Certain Definitions ...................................................................................................1   ARTICLE II PURCHASE AND SALE OF MEMBERSHIP INTERESTS ..........................10        2.1   Purchase and Sale of Membership Interests ..........................................................10        2.2   Estimates ................................................................................................................11        2.3   Closing Consideration; Adjustment Amount; Escrow. ..........................................11        2.4   Closing ...................................................................................................................14   ARTICLE III CLOSING DELIVERABLES ............................................................................14        3.1   Closing Deliverables of Sellers ..............................................................................14        3.2   Closing Deliveries of Buyer...................................................................................16   ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS ........................16        4.1   Power of Seller .......................................................................................................16        4.2   Authorization; No Breach ......................................................................................16        4.3   Brokerage ...............................................................................................................17        4.4   Title to Membership Interests ................................................................................17        4.5   Investment. .............................................................................................................17        4.6   Disclosure ..............................................................................................................19   ARTICLE V REPRESENTATIONS AND WARRANTIES REGARDING THE        COMPANY .......................................................................................................................19        5.1   Organization and Power .........................................................................................19        5.2   Authorization; No Breach ......................................................................................20        5.3   Capitalization; Subsidiaries ...................................................................................20        5.4   Financial Statements ..............................................................................................21        5.5   Absence of Undisclosed Liabilities .......................................................................21        5.6   Accounts Receivable ..............................................................................................22        5.7   Accounts Payable ...................................................................................................22        5.8   No Material Adverse Change.................................................................................22        5.9   Absence of Certain Developments .........................................................................22        5.10  Leased Real Property. ............................................................................................25        5.11  Assets .....................................................................................................................26        5.12  Tax Matters ............................................................................................................26        5.13  Contracts ................................................................................................................29        5.14  Proprietary Rights ..................................................................................................31        5.15  Litigation ................................................................................................................32        5.16  Brokerage ...............................................................................................................32        5.17  Employees ..............................................................................................................32        5.18  Product and Service Warranties .............................................................................34        5.19  Employee Benefit Plans .........................................................................................34        5.20  Insurance ................................................................................................................36   102596957.7 0059466-00008             1   

 

      5.21  Compliance with Laws; Permits ............................................................................36        5.22  Environmental Matters...........................................................................................37        5.23  Customers ..............................................................................................................38        5.24  Affiliate Transactions .............................................................................................39        5.25  Bank Accounts; Powers of Attorney......................................................................39        5.26  Disclosures .............................................................................................................39   ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER ............................39        6.1   Organization and Corporate Power ........................................................................40        6.2   Authorization .........................................................................................................40        6.3   Governmental Authorities and Consents ...............................................................40        6.4   Brokerage ...............................................................................................................40        6.5   Litigation ................................................................................................................40        6.6   Acquisition for Investment ....................................................................................40        6.7   Valid Issuance ........................................................................................................40   ARTICLE VII COVENANTS ....................................................................................................40        7.1   Expenses ................................................................................................................40        7.2   Further Transfers; Transition Assistance ...............................................................41        7.3   Confidentiality .......................................................................................................41        7.4   Release and Waiver ................................................................................................41        7.5   Non-Competition and Non-Solicitation .................................................................42        7.6   Public Announcements ..........................................................................................44        7.7   Lock-Up .................................................................................................................44   ARTICLE VIII TAX MATTERS...............................................................................................45        8.1   Tax Indemnification ...............................................................................................45        8.2   Straddle Period .......................................................................................................45        8.3   Responsibility for Filing Pre-Closing Tax Returns ...............................................45        8.4   Responsibility for Filing Straddle Period Tax Returns ..........................................45        8.5   Transfer Taxes .......................................................................................................46        8.6   Cooperation on Tax Matters ..................................................................................46        8.7   Tax Sharing Agreements ........................................................................................46        8.8   Withholding ...........................................................................................................46   ARTICLE IX INDEMNIFICATION .........................................................................................47        9.1   Survival ..................................................................................................................47        9.2   Indemnification ......................................................................................................48        9.3   Materiality. .............................................................................................................49        9.4   Indemnification Procedures. ..................................................................................49        9.5   Waiver ....................................................................................................................50        9.6   Limitations on Indemnity. ......................................................................................50        9.7   Exclusive Remedy .................................................................................................51   ARTICLE X MISCELLANEOUS .............................................................................................51        10.1  Amendment and Waiver ........................................................................................51        10.2  Notices ...................................................................................................................52   102596957.7 0059466-00008             2   

 

      10.3  Assignment ............................................................................................................53        10.4  Severability ............................................................................................................53        10.5  Interpretation ..........................................................................................................54        10.6  Entire Agreement ...................................................................................................54        10.7  Counterparts ...........................................................................................................54        10.8  Governing Law ......................................................................................................54        10.9  Venue .....................................................................................................................54        10.10 No Strict Construction ...........................................................................................55        10.11 No Third-Party Beneficiaries .................................................................................55        10.12 Seller Representative .............................................................................................55        10.13 Disclosure Schedule ...............................................................................................56                                                         102596957.7 0059466-00008             3   

 

              MEMBERSHIP INTEREST PURCHASE AGREEMENT         THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is  made and entered into as of August 5, 2019 (the “Effective Date”), by and among: (i) Profire  Energy, Inc., a Nevada corporation (“Buyer”); (ii) Dustin Baker and Brant Baker (each,  individually, a “Seller” and, collectively, “Sellers”).  Buyer and Sellers are sometimes referred to  in this Agreement, individually, as a “Party” and, collectively, as the “Parties.”                                      Recitals:   A.    Sellers are the only members of Midflow Services, LLC, an Ohio limited liability        company (the “Company”).   B.    Upon the terms and subject to the conditions set forth herein, Buyer desires to acquire all        of the issued and outstanding units and membership interests of the Company, including       all membership, management, voting and economic interests attendant thereto (the       “Membership Interests”), from Sellers, and Sellers desire to transfer such Membership        Interests to Buyer; and                                    Agreement:         In consideration of the foregoing and the respective representations, mutual covenants,  agreements and understandings contained herein, and for other good and valuable consideration,  the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:                                    ARTICLE I                              CERTAIN DEFINITIONS   1.1   Certain Definitions.  For purposes of this Agreement, the following terms have the        meanings set forth below:         “Accounting Firm” has the meaning set forth in Section 2.3(b)(v).         “Adjustment Amount” has the meaning set forth in Section 2.3(b)(ii).         “Adjustment Statement” has the meaning set forth in Section 2.3(b)(iii).         “Affiliate” of any particular Person means any other Person controlling, controlled by or        under common control with such Person.  For purposes of this definition, “control”        (including the terms “controlling,” “controlled by” and “under common control with”)        means the power to direct, or cause the direction of, the acts, management and policies of        a Person, directly or indirectly, whether through the ownership of voting securities, by        contract or otherwise, and such “control” will be deemed to exist if any Person directly or        indirectly owns 10% or more of the voting capital stock or other ownership interests of        any other Person.      102596957.7 0059466-00008             1   

 

      “Affiliated Group” means any affiliated group within the meaning of Section 1504(a) of        the Code or any similar group defined under a similar provision of Law.         “Applicable Rate” means the prime rate quoted from time to time by The Wall Street        Journal, plus two percent (2%).         “Balance Sheet Date” means December 31, 2018.         “Brant Offer Letter” has the meaning set forth in Section 3.1(j).         “Business Day” means any day other than a Saturday, a Sunday or a day on which        commercial banks are closed for business in Salt Lake City, Utah.         “Buyer” has the meaning set forth in the introductory paragraph to this Agreement.         “Buyer Indemnified Parties” means Buyer and its Affiliates (including, following the        Closing, the Company) and their respective owners, shareholders, members, partners,        officers, directors, managers, employees, agents, representatives, successors and assigns.        “Buyer Stock” means the common stock of Buyer, $0.001 par value per share.           “Buyer Stock Closing Price” means the price per share of Buyer Stock traded on The        NASDAQ Stock Market as of the closing of trading on the last trading day of The        NASDAQ Stock Market immediately preceding the Effective Date, as calculated and        reported by The NASDAQ Stock Market.         “Closing” has the meaning set forth in Section 2.4.         “Closing Cash Amount” means the Estimated Closing Cash Amount, plus any positive        Adjustment Amount (if applicable), less any negative Adjustment Amount (if applicable).         “Closing Consideration” means the Closing Cash Amount, the Closing Stock        Consideration and the Escrow Amount.         “Closing Current Assets” means an amount, determined as of the Closing, equal to the        sum of the following current assets of the Company: (a) cash and cash equivalents; (b) all        Company Inventory; (c) accounts receivable, but excluding receivables from any of the        Company’s Affiliates, directors, employees, officers or shareholders and any of their        respective Affiliates; and (d) prepaid expenses of the Company, but only to the extent        that the Company actually receives the benefit or refund of such prepaid expenses        following the Closing and prior to the date of the Adjustment Statement.  The calculation        of Closing Current Assets will be determined (y) in accordance with GAAP and (z)        without giving effect to the transactions contemplated by this Agreement.         “Closing Current Liabilities” means an amount, determined as of the Closing, equal to        the sum of all of the current Liabilities of the Company, including: (a) accounts payable;        (b) accrued expenses; (c) accrued Taxes; and (d) the current portion of long-term        Liabilities.  The calculation of Closing Current Liabilities will be determined (y) in   102596957.7 0059466-00008             2   

 

      accordance with GAAP and (z) without giving effect to the transactions contemplated by       this Agreement.        “Closing Indebtedness” means the Indebtedness of the Company as of the Closing.         “Closing Net Working Capital” means an amount, determined as of the Closing, equal to:        (a) the Closing Current Assets, less (b) the Closing Current Liabilities.  For purposes of        calculating Closing Net Working Capital, Closing Current Assets and Closing Current        Liabilities will each be determined: (x) without duplication; (y) in accordance with        GAAP; and (z) without giving effect to the transactions contemplated by this Agreement.         “Closing Stock Consideration” means that number of shares of unregistered, restricted        Buyer Stock equal to: $1,020,000, divided by the Buyer Stock Closing Price.         “Code” means the Internal Revenue Code of 1986, as amended, and any reference to any        particular Code section shall be interpreted to include any revision of or successor to that        section regardless of how numbered or classified.         “Company Employees” has the meaning set forth in Section 5.17(a).         “Company Marks” means all trademarks, trade names, service marks and trade dress of        owned by the Company or used in the business of the Company, including any and all        rights in the names “Midflow Services, LLC,” “Midflow Services,” and any name or mark        similar thereto, together with all goodwill associated therewith, all translations,        adaptations, derivations and combinations of the foregoing, and all logos related to the        foregoing.         “Company Plan” has the meaning set forth in Section 5.19(a).         “Confidential Information” means all information of a confidential or proprietary nature        (whether or not specifically labeled or identified as “confidential” or “proprietary”), in        any form or medium, whether evidenced in writing, electronic data or otherwise, that        relates to the business, products, services and/or research and/or development of the        Company and/or its respective suppliers, distributors, customers, independent contractors        and/or other business relations.  Confidential Information includes, but is not limited to,        the following: (a) internal business information (including historical and projected        financial information and budgets and information relating to strategic and staffing plans        and practices, business, training, marketing, promotional and sales plans and practices,        cost, rate and pricing structures and accounting and business methods); (b) identities of,        individual requirements of, specific contractual arrangements with, and information        about, suppliers, distributors, customers, independent contractors or other business        relations and their confidential information; (c) trade secrets, know-how, compilations of        data and analyses, techniques, systems, formulae, recipes, research, records, reports,        manuals, documentation, models, data and data bases relating thereto; (d) inventions,        innovations, improvements, developments, methods, designs, analyses, drawings, reports        and all similar or related information (whether or not patentable); and (e) other       Proprietary Rights.    102596957.7 0059466-00008             3   

 

      “Contract” means any written or oral contract, agreement, commitment, franchise,        indenture, note, lease, deed, mortgage, purchase order, license, arrangement,        understanding or course of dealing.         “Disclosure Schedule” means the disclosure schedule delivered by Sellers to Buyer        concurrently with the execution and delivery of this Agreement, referred to in this        Agreement and dated as of the date of this Agreement.         “Dustin Offer Letter” has the meaning set forth in Section 3.1(i).         “Environment” means the components of the earth and includes ambient air, land, surface        and sub-surface strata, groundwater, surface water, all layers of the atmosphere, all        organic and inorganic matter and living organisms, and the interacting natural systems        that include such components.         “Environmental and Safety Laws” means all Laws and contractual obligations concerning        public health and safety, worker health and safety, and pollution or protection of the        Environment, including all those relating to the presence, use, production, generation,       handling, transportation, treatment, storage, disposal, distribution, labeling, testing,       processing, discharge, release, threatened release, reporting of, Remediation of, or       exposure to, any Hazardous Materials, now or hereafter in effect.        “Environmental Liabilities” means all present and future Liability relating to or arising        directly or indirectly out of past, present or future Environmental damage, contamination        or Remediation which arises from, relates to or was caused by the operation of the        Company’s business, the ownership of the Membership Interests or the ownership,        possession or control of the Company’s assets and properties prior to Closing, however        and by whomsoever caused, and whether caused by non-compliance with, violation of or        Liability under Environmental and Safety Laws.         “ERISA” has the meaning set forth in Section 5.19(a).         “ERISA Affiliate” has the meaning set forth in Section 5.19(a).         “Escrow Agent” means Citibank, N.A.         “Escrow Agreement” has the meaning set forth in Section 3.1(h).         “Escrow Amount” means $500,000.         “Estimated Closing Cash Amount” means an amount equal to $1,880,000, less the        Estimated Closing Indebtedness, less the amount by which the Target Net Working        Capital exceeds the Estimated Closing Net Working Capital (if applicable), plus the        amount by which the Estimated Closing Net Working Capital exceeds Target Net        Working Capital (if applicable).         “Estimated Closing Indebtedness” means Sellers’ good faith estimate and calculation of        Closing Indebtedness and each component thereof.   102596957.7 0059466-00008             4   

 

      “Estimated Closing Net Working Capital” means Sellers’ good faith estimate and        calculation of Closing Net Working Capital and each component thereof.        “Estimated Statement” has the meaning set forth in Section 2.2.         “Excluded Liabilities” means any Indebtedness, Liabilities (including but not limited to        Environmental Liabilities and Tax Liabilities) or obligations (including but not limited to        accounts payable arising prior to the Closing and workers compensation and employers        liability obligations with respect to the pre-Closing period) of any nature whatsoever of       the Company, its business or of any Seller, whether accrued, absolute, contingent or       otherwise, whether known or unknown, whether due or to become due, whether related to       the Company’s business, whether disclosed on the Disclosure Schedule attached hereto,       and regardless of when or by whom asserted: (a) arising out of facts, circumstances or       events that occurred or existed prior to the Closing; (b) for infringement or       misappropriation of any patent, trademark, copyright, moral right, confidential       information, trade secret, or other intellectual property or proprietary right of any other       Person occurring prior to or as a result of the Closing; (c) the occurrence or non-      occurrence of any event or circumstance prior to or as a result of the Closing which gives       rise to or results in, directly or indirectly, any breach of or default under any Contract at       any time; (d) with respect to any product manufactured or sold or service provided prior       to the Closing by or on behalf of the Company, any Seller, or any of their predecessors       and Affiliates, including any (i) product Liability or similar claim for death, personal       injury or damage to or loss of use of any property, (ii) actual or alleged tort, or defect in       design, manufacturing, material or workmanship, (iii) actual or alleged breach of any       express or implied warranty, (iv) failure to adequately package, label or warn of hazards,       and/or (v) mandatory or voluntary recall, retrofit, repair, safety notice or field campaign;       and/or (e) relating to the Company’s group health insurance plan or any other Company       Plan that is, or was at any time prior to the Closing, a multi-employer plan or multi-      employer welfare arrangement.        “Fundamental Representation” has the meaning set forth in Section 9.1(a)(ii).         “GAAP” means generally accepted accounting principles in the United States, as in effect        from time to time.         “Governing Documents” means the legal document(s) by which any Person (other than        an individual) establishes its legal existence or which govern its internal affairs, as        amended or restated from time to time.  For example, the “Governing Documents” of a        limited liability company would be its articles of organization and operating agreement,        or similar documents, and “Governing Documents” of a corporation would be its        certificate of incorporation and bylaws.         “Government” means any federal, national, foreign, provincial, state or local government,        administrative agency or commission, regulatory body, court or other Governmental        Authority or instrumentality.    102596957.7 0059466-00008             5   

 

      “Governmental Authority” means any foreign or domestic nation, state, province, or        other instrumentality or political subdivision thereof (including any county or city), court,        administrative agency, commission, regulatory body, and/or any entity exercising        executive, legislative, judicial, military, regulatory, administrative or governmental        functions thereof.         “Hazardous Materials” means: (a) any material, substance, chemical, waste, product,        derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether        naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or        identifiable with words of similar import or regulatory effect under Environmental and        Safety Laws; and (b) any petroleum or petroleum-derived products (including, without        limitation, gasoline and diesel fuel), radon, radioactive materials or wastes, asbestos        containing materials in any form, lead or lead containing materials, urea formaldehyde        foam insulation and polychlorinated biphenyls.         “Indebtedness” means, as to the Company, without duplication: (a) any indebtedness for        borrowed money of the Company, or any Liability of the Company issued or incurred in        substitution, exchange, extension or refinancing of any indebtedness for borrowed money        of any Person; (b) any Liability or payment obligation of the Company evidenced by any        note, bond, debenture, other debt security, letter of credit or similar instrument; (c) any        Liability of the Company for the deferred purchase price of assets, property or services,        contingent or otherwise, as obligor or otherwise (including, pursuant to any earn-out,        holdback, seller financing, deferred rent and other contingent or deferred consideration);        (d) any Contract by which the Company assures a creditor against loss (including in the        form of a Contract to repurchase or reimburse); (e) any indebtedness guaranteed in any        manner by the Company; (f) any Liabilities under leases that are required to be classified        as capitalized lease obligations in accordance with GAAP with respect to which the        Company has any Liability, contingently or otherwise, as obligor, guarantor or otherwise;        (g) any Liability secured by a Lien on the assets, properties or rights of the Company; (h)        any Liability of the Company pursuant to any interest rate, currency, or credit default       swap or other hedging arrangement; (i) any deferred revenue of the Company; and (j) all       principal, interest, fees, prepayment obligations, penalties, premiums, breakage,        termination, make-whole fees or other similar amounts payable with respect to any of the        foregoing; provided, that “Indebtedness” shall not include those Closing Current        Liabilities incurred by the Company in the Ordinary Course of Business and included in        the calculation of Closing Net Working Capital.         “Indemnitee” has the meaning set forth in Section 9.4(b).         “Indemnitor” has the meaning set forth in Section 9.4(b).         “Inventory” means all inventories of the Company owned by the Company and used in        the Ordinary Course of Business of the Company, including all finished goods, goods in       transit, work in process, samples, packaging materials, raw materials, containers,       production and shipping supplies on hand, subject to reserves for damage or       obsolescence, and excluding any obsolete, damaged, defective and excessive inventory    102596957.7 0059466-00008             6   

 

      and any other items of inventory that are not useable or saleable in the Ordinary Course        of Business of the Company within ninety (90) days following the Closing.         “Knowledge” and terms of similar import mean, with respect to the Company or Sellers,        the actual or constructive knowledge of any Seller or any director or officer of the        Company or any Subsidiary of the Company, assuming reasonable inquiry as to the        matter to which such knowledge relates, and taking into consideration all facts of which        such Persons, in the reasonably prudent exercise of their duties, should be aware.         “Latest Balance Sheet” has the meaning set forth in Section 5.4(a).         “Laws” means any statute, law, ordinance, regulation, rule, code, order, constitution,        treaty, common law, judgment, decree, other requirement or rule of law of any        Governmental Authority.         “Lease” means all leases, subleases, licenses, concessions or other Contracts pursuant to        which the Company is granted or obtains any right or interest with respect to real or        tangible personal property.         “Leased Real Property” means all land, together with all buildings, structures,        improvements, and fixtures located thereon, including all electrical, mechanical,        plumbing and other building systems, fire protection, security and surveillance systems,        telecommunications, computer, wiring, and cable installations, utility installations, water       distribution systems and landscaping, together with all easements and other rights and        interests appurtenant thereto (including air, oil, gas, mineral, and water rights) that is        subject to any Lease to which the Company is a party, as a tenant or lessee.        “Liability” or “Liabilities” includes, without limitation, liabilities, debts, commitments or        other obligations of any nature, whether known or unknown, absolute, accrued,        contingent, liquidated, unliquidated, due or to become due, or otherwise.         “Lien” or “Liens” means any lien (statutory or otherwise), hypothecation, encumbrance,        claim, Liability, security interest, interest, mortgage, deed of trust, land contract, pledge,       restriction, charge, instrument, license, preference, priority, security agreement,       easement, covenant, encroachment, option, purchase right, reservation, irregularity,       deficiency, default, defect, adverse claim, right of recovery, Tax (including foreign,       federal, state and local Tax), order of any Governmental Authority, of any kind or nature,       including (a) any conditional sale or other title retention agreement and any lease having       substantially the same effect as any of the foregoing or (b) any assignment or deposit       arrangement in the nature of a security device, whether secured or unsecured, choate or       inchoate, filed or unfiled, scheduled or unscheduled, noticed or unnoticed, recorded or       unrecorded, contingent or non-contingent, material or non-material, known or unknown.        “Loss” or “Losses” means any loss, Liability, demand, claim, action, cause of action,        cost, damage, diminution in value, deficiency, Tax, penalty, fine or expense, whether or        not arising out of third party claims (including interest, penalties, reasonable attorneys’        fees and expenses and all amounts paid in investigation, defense or settlement of any of        the foregoing and the enforcement of any rights hereunder).   102596957.7 0059466-00008             7   

 

      “Material Adverse Effect” means any effect or change that is or could be materially        adverse to the business, assets, condition (financial or otherwise), operating results,        operations or prospects of the Company or to the ability of Sellers to timely consummate       the transactions contemplated hereby (regardless of whether or not such adverse effect or       change can be or has been cured at any time or whether Buyer has knowledge of such       effect or change on the Effective Date).        “Material Customer” has the meaning set forth in Section 5.23.         “Material Supplier” has the meaning set forth in Section 5.23.         “Non-Ordinary Course Liabilities” means Liabilities not incurred in the Ordinary Course        of Business of the Company as of the Closing, including: (a) any Liability for severance       and other compensation provided or payable to employees or consultants of the Company       in connection with the transactions contemplated by this Agreement; (b) any transaction       fees and expenses, if any, to be paid by the Company on behalf of any Seller in       connection with the transactions contemplated by this Agreement, including financial       advisory fees, legal fees and expenses, broker and finder fees and expenses of       accountants; (c) any Liability (including increase in obligations) of the Company arising       under any Contract or arrangement to which the Company is party arising in whole or in       part from the transactions contemplated by this Agreement; (d) any unsatisfied obligation       for “withdrawal liability” to a “multiemployer plan” as such terms are defined under       ERISA of the Company; (e) any Liability, whether contingent or otherwise, owed by the       Company to any Person under any non-competition, consulting or similar arrangements;       and (f) any change-of-control or similar payment or increased cost of any Seller or the       Company which is triggered in whole or in part by the transactions contemplated by this       Agreement.        “Notice of Disagreement” has the meaning set forth in Section 2.3(b)(iii).         “Ordinary Course of Business” means the ordinary course of business of the Company,        consistent with past practice and the practices of others engaged in a similar line of       business as the Company, including with regard to nature, frequency and magnitude.        “Payoff Letters” has the meaning set forth in Section 3.1(e).         “Person” means any individual, sole proprietorship, partnership, joint venture, trust,        unincorporated association, corporation, limited liability company, entity or        Governmental Authority.         “Pre-Closing Tax Period” has the meaning set forth in Section 8.1.         “Proprietary Rights” means all of the following which are owned by, issued to, held,        licensed or used by the Company or otherwise used in the business of the Company: (a)        U.S. and foreign patents, patent applications, patent disclosures, patent rights and        inventions (whether or not patentable and whether or not reduced to practice); (b)        trademarks, trade names, service marks and trade dress (including any and all rights in       the Company Marks), together with all goodwill associated therewith, all translations,   102596957.7 0059466-00008             8   

 

      adaptations, derivations and combinations of the foregoing, and all logos related to the        foregoing; (c) copyrights and copyrighted works; (d) internet domain names; and (e) all        registrations and applications related to any of the foregoing; (f) the right to obtain        renewals, extensions, substitutions, continuations, continuations-in-part, divisions, re-       issues, re-examinations or similar legal protections for any of the foregoing; (g) trade        secrets and other Confidential Information, including ideas, know-how, related processes        and techniques, research and development information, drawings, specifications, designs,        plans, proposals and technical data and manuals; (h) computer software and website        content (including data, object code, source code and related documentation, whether       stored locally or hosted by a third party); and (i) all other intangible properties and rights        relating to the Company or its business.         “Pro Rata Share” means (i) with respect to Dustin Baker, 80%; and (ii) with respect to        Brant Baker, 20%.         “Purchase Price” means an aggregate amount equal to: (i) Closing Consideration, as        adjusted by the Adjustment Amount, plus (ii) the amount of the Liabilities of the       Company.        “Remediation” means any investigation, monitoring, maintenance of engineering or        institutional controls, removal, corrective action, response action, mitigation, treatment,       decontamination or cleanup of Hazardous Materials, waste material, radioactive material,       pollution or contamination present or alleged to be present in the Environment, soil,       sediment, groundwater, surface water or other environmental medium or the indoor       environment.        “Securities Laws” means the U.S. Securities Act of 1933, the U.S. Securities and        Exchange Act of 1934, or any other federal, state or local laws relating to the offer,        issuance, transfer, sale, resale or other distribution of securities or regulations        promulgated thereunder.         “Seller Indemnified Parties” means each Seller and their respective successors and        assigns.         “Seller Representative” has the meaning set forth in Section 10.12(a).         “Straddle Period” has the meaning set forth in Section 8.2.         “Subsidiary” means, with respect to any Person, any corporation, partnership, limited        liability company, association or other business entity of which: (a) if a corporation, a        majority of the total voting power of shares of stock entitled (irrespective of whether, at        the time, stock of any other class or classes of such corporation shall have or might have        voting power by reason of the happening of any contingency) to vote in the election of        directors, managers or trustees thereof is at the time owned or controlled, directly or        indirectly, by that Person or one or more of the other Subsidiaries of that Person or a        combination thereof; or (b) if a partnership, limited liability company, association or        other business entity, either (i) a majority of the partnership, membership or other similar        ownership interest thereof is at the time owned or controlled, directly or indirectly, by   102596957.7 0059466-00008             9   

 

      that Person or one or more Subsidiaries of that Person or a combination thereof, or        (ii) such Person is a general partner, manager or director of such partnership, limited        liability company, association or other entity.         “Target Net Working Capital” means $600,000.00.         “Tax” or “Taxes” means any federal, state, local or foreign income, gross receipts,        license, payroll, employment, excise, severance, stamp, occupation, premium, property        (including general and special real estate taxes and assessments, special service area        charges, tax increment financing, charges, payments in lieu of taxes and similar charges        and assessments), windfall profits, environmental (including tax under Code Section        59A), customs duties, capital stock, franchise, margin, profits, withholding, foreign or        domestic withholding, social security (or similar), unemployment, disability, real        property, personal property, sales, use, transfer, registration, value added, alternative or        add-on minimum, estimated, escheat or unclaimed property, or other tax, governmental        fee, governmental assessment or governmental charge of any kind whatsoever, whether        computed on a separate or consolidated, unitary or combined basis or in any other        manner including any interest, penalties or additions to Tax or additional amounts with        respect to the foregoing whether disputed or not.         “Tax Returns” means returns, declarations, reports, claims for refund, information returns        or other documents (including any related or supporting schedules, statements or        information) filed or required to be filed in connection with the determination,        assessment or collection of Taxes of any party or the administration of any Laws relating        to any Taxes.         “Third Party Claim” has the meaning set forth in Section 9.4(b).         “Transfer Taxes” means any sales, use, goods and services, harmonized sales, stock        transfer, real property transfer, transfer, stamp, registration, documentary, recording or        similar Tax incurred in connection with the transactions contemplated hereby, together       with any interest, penalties or additions to such Tax or additional amounts with respect       thereto, whether disputed or not.        “Willful Breach” means any willful or intentional breach or violation of any of the        representations, warranties, covenants or obligations set forth in this Agreement.                                    ARTICLE II                PURCHASE AND SALE OF MEMBERSHIP INTERESTS   2.1   Purchase and Sale of Membership Interests.  Upon the terms and subject to the        satisfaction or waiver of the conditions of this Agreement, at the Closing, Buyer shall        purchase, acquire and accept from each Seller, and each Seller shall sell, transfer, assign        and deliver to Buyer, all of the Membership Interests owned by such Seller, free and clear       of all Liens, which Membership Interests will collectively constitute as of the Closing all       of the outstanding membership interests or other limited liability company interests of the       Company.   102596957.7 0059466-00008             10   

 

2.2   Estimates.  At least three (3) Business Days prior to the Effective Date, Sellers shall        deliver to Buyer a written statement (the “Estimated Statement”) setting forth Sellers’        good faith estimation and calculation of each of the following amounts as of the Closing:        (a) the Estimated Closing Net Working Capital and each component thereof; (b) the        Estimated Closing Indebtedness; and (c) the Estimated Closing Cash Amount.  Sellers        shall provide Buyer supporting documentation and explanation for the estimates,        assumptions and calculations reflected on the Estimated Statement upon request.   2.3   Closing Consideration; Adjustment Amount; Escrow.           (a)   Estimated Closing Consideration.  In exchange for all of the Membership              Interests, at Closing, Buyer shall deliver the Closing Consideration as follows:               (i)   Buyer shall deliver each Seller such Seller’s Pro Rata Share of the              Estimated Closing Cash Amount, by wire transfer of immediately available funds              to a U.S. bank account designated by such Seller in writing not less than three (3)              Business Days prior to the Effective Date.  The Estimated Closing Cash Amount              is subject to the adjustments contemplated by Section 2.3(b).               (ii)  Buyer shall deliver to each Seller such Seller’s Pro Rata Share of the             Closing Stock Consideration, bearing such restrictive legends as may be required             by applicable Law, The NASDAQ Stock Market rules and this Agreement.  In the              event the calculation of the total number of shares of Buyer Stock included in the              Closing Stock Consideration or the calculation of any Seller’s Pro Rata Share              thereof results in any fractional shares of Buyer Stock, Buyer shall have the              option to deliver cash in lieu of such fractional shares of Buyer Stock, in an              amount equal to the Buyer Stock Closing Price, multiplied by such fractional              share of Buyer Stock, by wire transfer of immediately available funds to the U.S.              bank account designated by such Seller pursuant to Section 2.3(a)(i).               (iii) Buyer shall deliver the Escrow Amount to the Escrow Agent, by wire              transfer of immediately available funds to a U.S. bank account designated by the              Escrow Agent not less than three (3) Business Days prior to the Effective Date.         (b)   Working Capital and Other Adjustment to the Closing Cash Amount.               (i)   Following the Closing, in accordance with this Section 2.3(b), the Closing                    Cash Amount shall be: (A) reduced by the amount, if any, by which the                   Estimated Closing Net Working Capital exceeds the Closing Net Working                   Capital; or (B) increased by the amount, if any, by which the Closing Net                    Working Capital exceeds the Estimated Closing Net Working Capital.               (ii)  Without duplication of any adjustment made pursuant to Section 2.3(b)(i),                    the Closing Cash Amount shall be further: (A) decreased, dollar for dollar,                    by the amount of any Closing Indebtedness not included in the calculation                    of the Estimated Closing Indebtedness and the Estimated Closing Cash                    Amount; and (B) without duplication of any decrease under clause (A),                    decreased, dollar for dollar, by the amount of any Excluded Liabilities and   102596957.7 0059466-00008             11   

 

                  Non-Ordinary Course Liabilities.  The net amount of all sums that increase                    or decrease the Closing Cash Amount as contemplated by Section 2.3(b)(i)                    and this Section 2.3(b)(ii), as finally determined pursuant to this Section                    2.3(b), is referred to herein as the “Adjustment Amount.”               (iii) Within ninety (90) days following the Closing, Buyer will prepare and                    deliver to the Seller Representative a statement (the “Adjustment                    Statement”) setting forth its good faith calculation of: (A) the Closing Net                    Working Capital; (B) the Excluded Liabilities and the Non-Ordinary                   Course Liabilities, if any; (C) the Closing Indebtedness, if any; and (D) the                    Adjustment Amount.  The Adjustment Statement and the calculation of                    the Adjustment Amount set forth therein shall become final and binding                    upon the Parties on the thirtieth (30th) day following delivery thereof by                    Buyer, unless the Seller Representative gives written notice of its                    disagreement (a “Notice of Disagreement”) to Buyer prior to such date.                     During such period, the Seller Representative shall have reasonable                   access, upon reasonable prior notice and during normal business hours, to                   those books and records of the Company relevant to the calculation of the                   Adjustment Amount, solely for purposes reasonably related to Seller’s                   verification of the amounts and calculations set forth in the Adjustment                   Statement.  Any Notice of Disagreement shall specify in reasonable detail:                   (V) the nature and amount of any disagreement so asserted; (W) Sellers’                   calculation of the Closing Net Working Capital; (X) Sellers’ calculation of                   the Excluded Liabilities and the Non-Ordinary Course Liabilities; (Y)                   Seller’s calculation of the Closing Indebtedness; and (Z) Sellers’                   calculation of the Adjustment Amount.              (iv)  If a timely Notice of Disagreement is received by Buyer, then the                   Adjustment Statement and the calculation of the Adjustment Amount set                   forth therein shall become final and binding upon the Parties on the earlier                   of: (A) the date Buyer and the Seller Representative resolve in writing any                   differences they have with respect to any matter specified in the Notice of                   Disagreement; or (B) the date any matters properly in dispute are finally                   resolved in writing by the Accounting Firm pursuant to Section 2.3(b)(v).                     During the thirty (30) days immediately following the delivery of a Notice                   of Disagreement, Buyer and the Seller Representative shall consult in                   good faith to resolve in writing any differences they may have with respect                   to any matter specified in the Notice of Disagreement.  During such                   period, Buyer shall have full access to the work papers of Sellers and the                   Seller Representative prepared in connection with the Notice of                   Disagreement.              (v)   At the end of such thirty (30) day negotiation period described in Section                    2.3(b)(iv), at the request of any Party, any and all matters which remain in                    dispute and which were included in the Notice of Disagreement shall be                    submitted to the Salt Lake City, Utah office of BDO USA, LLP (the                   “Accounting Firm”) for binding resolution.  The fees and expenses of the   102596957.7 0059466-00008             12   

 

                  Accounting Firm shall be borne by Buyer, on the one hand, and Sellers, on                    the other hand, in the proportion that the aggregate dollar amount of items                   submitted to the Accounting Firm that are unsuccessfully disputed by                   Buyer and the Seller Representative, as applicable, bears to the aggregate                   dollar amount of all items submitted to the Accounting Firm.  The                   Accounting Firm shall determine and report in writing to Buyer and the                   Seller Representative as to the resolution of all disputed matters submitted                   to the Accounting Firm and the effect of such determinations on the                   Adjustment Statement within ten (10) Business Days after such                   submission or such longer period as the Accounting Firm may reasonably                    require, and such determinations shall be final, conclusive and binding as                   to the Parties.  In resolving any disputed item, the Accounting Firm, acting                   in the capacity of an expert and not as an arbitrator: (A) shall limit its                   review to matters specifically set forth in the Notice of Disagreement as a                    disputed item; and (B) shall not assign a value to any item greater than the                    greatest value for such item claimed by any Party or less than the smallest                    value for such item claimed by any other Party in the Adjustment                    Statement or in the Notice of Disagreement.  Buyer and the Seller                    Representative shall each furnish to the Accounting Firm such work                    papers and other documents and information relating to the disputed                    issues, and will provide interviews and answer questions, as the                    Accounting Firm may reasonably request in connection with its                    determination of such disputed items.               (vi)  If the Adjustment Amount is an increase to the Closing Cash Amount,                    Buyer will make (or cause to be made) a payment to each Seller an                    amount equal to such Seller’s Pro Rata Share of the Adjustment Amount,                    by wire transfer or delivery of other immediately available funds to the                    U.S. bank account designated by such Seller pursuant to Section 2.3(a)(i),                    within five (5) Business Days of the final determination of the Adjustment                    Amount.  Notwithstanding the foregoing, Buyer shall be entitled to                    withhold and set off any amount due to Sellers pursuant to this Section                    2.3(b)(vi) against any amount Buyer reasonably believes is due to any of                    the Buyer Indemnified Parties from any Seller pursuant to this Agreement.               (vii) If the Adjustment Amount is a decrease to the Closing Cash Amount,                    Sellers will make (or cause to be made) payment of the Adjustment                    Amount to Buyer by wire transfer or delivery of other immediately                    available funds, to an account designated by Buyer to the Seller                    Representative, within five (5) Business Days of the final determination of                    the Adjustment Amount.  Buyer shall also have the right (but not the                    obligation) to withhold any other amount due from Buyer to Sellers and                    set off such amount against any amount due from Sellers to Buyer                    pursuant to this Section 2.3(b)(vii).               (viii) Any payments required under this Section 2.3(b) shall accrue interest at                    the Applicable Rate per annum from the Effective Date until paid.   102596957.7 0059466-00008             13   

 

      (c)   Escrow.  The Escrow Agent will hold the Escrow Amount pursuant to the Escrow              Agreement to secure and be available on a non-exclusive basis for the payment of              the Liabilities of any Seller arising out of or relating to this Agreement (including,              but not limited to, any Losses to which any Buyer Indemnified Party may be              entitled pursuant to Section 9.2(a)).   2.4   Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”)        shall take place on the Effective Date at the offices of Buyer at 312 South 1250 West,        Lindon, Utah 84042 or by exchange of documents by electronic transmission, by a        notification method permitted pursuant to Section 10.2; provided, that the Closing shall        be deemed effective as of the opening of business on the Effective Date.                                    ARTICLE III                            CLOSING DELIVERABLES   3.1   Closing Deliverables of Sellers.  At the Closing, Sellers shall deliver (or cause to be        delivered) to Buyer:         (a)   assignments of the Membership Interests held by each Seller, duly endorsed by              such Seller in blank and sufficient to transfer the Membership Interests and any              certificates representing such Membership Interests to Buyer free and clear of all              Liens, together with any original certificates representing such Membership              Interests;         (b)   all legally binding consents, approvals, authorizations and waivers from any              Governmental Authority or any other Person that are: (i) necessary for             consummation of the transactions contemplated hereby by the Company and any             Seller; or (ii) required pursuant to any Contract of the Company, including,             without limitation, (A) to avoid and breach of or default under such Contract as a             result of the transactions contemplated by this Agreement (with or without the             giving of notice, the passage of time or both), or (B) necessary for such Contract             to remain in full force and effect following the Closing, without any modification             to the terms or conditions of such Contract (with or without the giving of notice,             the passage of time or both), or (C) in connection with any assignment of any             such Contract to, or merger of the Company with or into, Buyer or is Affiliates as             of or promptly following the Closing;        (c)   a certificate, duly executed by Sellers as members  of the Company, certifying as             to: (i) the most recent Articles of Organization of the Company and any             amendments thereto (certified as of a recent date by the Ohio Secretary of State);             (ii) a good standing certificate for the Company, issued on, or not more than three             (3) days before, the Effective Date by the Ohio Secretary of State; and (iii) the             most recent operating agreement or limited liability company agreement of the             Company and any amendments thereto;    102596957.7 0059466-00008             14   

 

      (d)   one or more certificates of each Seller and the Company complying with Treasury              Regulations Section 1.1445-2, establishing that the purchase of the Membership              Interest is exempt from withholding under Section 1445 of the Code;         (e)   with respect to each Lien affecting the Membership Interests or any of the assets              or properties of the Company, and each item of Closing Indebtedness or Non-             Ordinary Course Liabilities, of whatever nature, either: (i) evidence satisfactory to              Buyer and its counsel of the payoff, satisfaction, discharge and the effective              release of such Lien, item of Closing Indebtedness and/or Non-Ordinary Course             Liabilities; or (ii) an effective payoff and release letter with respect to such Lien,             item of Closing Indebtedness and/or Non-Ordinary Course Liabilities that are not             released and discharged prior to the Closing (collectively, the “Payoff Letters”),              which Payoff Letters shall each (A) be in a form satisfactory to Buyer and its              counsel, (B) be executed by the holders of such Lien, item of Closing             Indebtedness and/or Non-Ordinary Course Liabilities in favor of the Company              and Buyer, (C) set forth the outstanding balance of such Lien, item of Closing              Indebtedness and/or Non-Ordinary Course Liabilities subject to such Payoff              Letter as of the Effective Date that is not subject to adjustment or recalculation if             paid on the Effective Date, (D) provide payment and wire transfer instructions              applicable thereto, and (E) provide for the full and final payment, satisfaction,              release and discharge of such Lien, item of Closing Indebtedness and/or Non-             Ordinary Course Liabilities subject to such Payoff Letter and authorize the              Company and Buyer to file terminations (including UCC termination statements)              with respect to such Liens upon delivery of the payments required pursuant to the              applicable Payoff Letter;         (f)   written resignations of each manager and officer of the Company, effective as of              or prior to the Closing;         (g)   the original books of account, minute books, minutes and other records of the              Company, the official seal, if any, of the Company and such other documents,              records, keys and other items as shall be reasonably necessary for the operation of              the business of the Company;          (h)   counterparts to an Escrow Agreement in the form attached hereto as Exhibit              3.1(h) (the “Escrow Agreement”), duly executed by the Seller Representative and              the Escrow Agent;         (i)   an at-will employment offer letter in the form attached hereto as Exhibit 3.1(i)              (the “Dustin Offer Letter”), duly executed by Dustin Baker; and         (j)   a counterpart to an at-will employment offer letter in the form attached hereto as             Exhibit 3.1(j) (the “Brant Offer Letter”), duly executed by Brant Baker.         All actions to be taken and deliveries to be made by Sellers in connection with the        consummation of the transactions contemplated hereby, and all certificates, instruments        and other documents required to effect the transactions contemplated hereby, each as    102596957.7 0059466-00008             15   

 

      reasonably requested by Buyer, shall be reasonably satisfactory in form and substance to        Buyer.  The timely delivery of each of the items identified in this Section 3.1 is a        condition precedent to the obligation of Buyer to proceed with the Closing, and may be        waived only if, and to the extent, expressly set forth in writing signed by Buyer        specifying in reasonable detail the provision being waived.   3.2   Closing Deliveries of Buyer.  At the Closing, Buyer shall deliver (or cause to be        delivered):         (a)   the Closing Consideration, pursuant to Section 2.3(a); and         (b)   a counterpart to the Escrow Agreement, duly executed by Buyer;         (c)   a counterpart to the Dustin Offer Letter, duly executed by the Company to              become effective immediately following the Closing; and         (d)   a counterpart to the Brant Offer Letter, duly executed by the Company to become              effective immediately following the Closing.         All actions to be taken and deliveries to be made by Buyer in connection with the        consummation of the transactions contemplated hereby, and all documents required to be        delivered by Buyer to effect the transactions contemplated hereby, each as reasonably        requested by the Seller Representative, shall be reasonably satisfactory in form and        substance to the Seller Representative.  The timely delivery of each of the items        identified in this Section 3.2 is a condition precedent to the obligation of Sellers to        proceed with the Closing, and may be waived only if, and to the extent, expressly set        forth in writing signed by the Seller Representative specifying in reasonable detail the       provision being waived.                                    ARTICLE IV                REPRESENTATIONS AND WARRANTIES OF SELLERS   As an inducement to Buyer to enter into this Agreement and consummate the transactions  contemplated hereby, each Seller hereby severally, but not jointly, represents and warrants to  Buyer that all of the following representations and warranties in this ARTICLE IV are true and  correct as of the Effective Date and as of the Closing with respect to such Seller:   4.1   Power of Sellers.  Such Seller has all requisite power, authority and capacity to execute        and deliver this Agreement and to consummate the transactions contemplated hereby.     4.2   Authorization; No Breach.  The execution, delivery and performance of this Agreement        and the other agreements to be executed and delivered by such Seller pursuant to this        Agreement, and the consummation of the transactions contemplated hereby and thereby,        have been duly and validly authorized by all requisite action on the part of such Seller,        and no other action on the part of such Seller are necessary to authorize the execution,        delivery or performance of this Agreement or the other agreements contemplated hereby.        This Agreement, and the other agreements contemplated hereby to be executed and   102596957.7 0059466-00008             16   

 

      delivered by such Seller, constitute valid and binding obligations of such Seller,        enforceable against such Seller in accordance with their respective terms, except to the        extent such enforceability may be limited by bankruptcy, insolvency or similar laws, or        by general principles of equity, applicable to creditors’ rights generally.  The execution,        delivery and performance of this Agreement and the other agreements contemplated       hereby to be executed and delivered by such Seller, and the consummation of the       transactions contemplated hereby and thereby, do not and shall not: (a) conflict with,       result in any breach or violation of, constitute a default under, give any third party the       right to terminate or to accelerate any obligation under, or require any authorization,       consent, approval, exemption, notice or other action under, the provisions of any Contract       to which such Seller is a party, or by which such Seller or the Membership Interests of       such Seller are bound or affected, or any Law to which such Seller or the Membership       Interests of such Seller are subject; (b) result in the creation of any Lien of any kind upon       or with respect to any of the Membership Interests of such Seller; or (c) require any       authorization, consent, approval, exemption from or other action by, or notice to or filing        with, any Governmental Authority.     4.3   Brokerage.  There are no claims against such Seller, and such Seller has no Liability, for        brokerage commissions, finders’ fees or similar compensation in connection with the        transactions contemplated by this Agreement based on any Contract or arrangement made        by or on behalf of such Seller.   4.4   Title to Membership Interests.  Such Seller is the holder of record and beneficially owns        all of the Membership Interests set forth with respect to such Seller in Section 5.3 of the        Disclosure Schedule, and collectively Sellers are the holders of record and beneficially        own all of the Membership Interests.  Such Seller has good, valid and marketable title to        all of the Membership Interests of such Seller and such Membership Interests shall be, as        of the Closing, free and clear of all Liens.  Such Seller is not a party to, and the        Membership Interests of such Seller are not subject to, any: (a) convertible securities,        calls, preemptive rights, options, warrants, purchase rights, rights of refusal, or other        Contracts or commitments (other than this Agreement) that would require such Seller or        any other Person to sell, transfer or otherwise dispose of the Membership Interests of       such Seller, or prohibit or conflict with such Seller’s obligations under this Agreement; or        (b) proxies, voting rights, shareholder agreements or other Contracts or understandings        with respect to the voting or transfer of the Membership Interests of such Seller.   4.5   Investment.           (a)   Such Seller has been advised that the shares of Buyer Stock included in the              Closing Stock Consideration have not been registered under Securities Laws.               Such Seller acknowledges that the shares of Buyer Stock included in the Closing              Stock Consideration are being issued pursuant to a specific exemption from the              registration requirements of applicable Securities Laws, and that Buyer’s reliance              on such exemption depends, in part, on such Seller’s representations and              warranties set forth in this Section 4.5.    102596957.7 0059466-00008             17   

 

      (b)   Such Seller acknowledges and understands that no portion of the shares of Buyer              Stock included in the Closing Stock Consideration can be offered, sold, resold,              transferred or distributed: (i) unless or until such shares of Buyer Stock included              in the Closing Stock Consideration are registered under applicable Securities              Laws, or exemptions from such registration requirements are available and              complied with as to such offer, sale, resale, transfer or distribution; (ii) until the              expiration of the twelve (12)-month lock up provided in Section 7.7; and (iii)              except in compliance with all Securities Laws.         (c)   Such Seller acknowledges and understands that: (i) the receipt of the shares of              Buyer Stock included in the Closing Stock Consideration is a long-term              investment; (ii) such Seller must bear the economic risk of investment in such              shares of Buyer Stock for an indefinite period of time; and (iii) such Seller may              not be able to liquidate its investment in such shares of Buyer Stock in the event             of an emergency or pledge any of such shares of Buyer Stock as collateral for              loans or other obligations.         (d)   Such Seller is entering into this Agreement and will receive the shares of Buyer              Stock included in the Closing Stock Consideration for such Seller’s own account              for investment, not as a nominee or agent, and not with a view to, or for resale in              connection with, any distribution thereof.  Such Seller does not have any contract,              undertaking, agreement or arrangement with any Person to sell, transfer or grant             participation to such Person or to any third Person in or to, any of such shares of             Buyer Stock.        (e)   Such Seller is familiar with and understands the business, operations and             prospects of Buyer.  Such Seller acknowledges that Buyer has: (i) provided such             Seller access to the public filings of Buyer and to all information in Buyer’s             possession relating to the shares of Buyer Stock included in the Closing Stock             Consideration, Buyer and its business; (ii) made the directors, officers and             representatives of Buyer available for interview by such Seller; (iii) provided to             such Seller the opportunity to ask questions and receive answers concerning the             terms and conditions of the issuance of the shares of Buyer Stock included in the             Closing Stock Consideration as set forth in this Agreement; and (iv) furnished             such Seller with all documents and other information required for or otherwise             requested by such Seller to make an informed decision with respect to entering             into this Agreement and investment in such shares of Buyer Stock.        (f)   Such Seller has such knowledge and experience in financial and business matters             that such Seller is capable of evaluating the merits and risks of such Seller’s             investment in the shares of Buyer Stock included in the Closing Stock             Consideration.  Such Seller has obtained, to the extent such Seller deems             necessary, his own professional advice with respect to the risks inherent in the             investment in the such shares of Buyer Stock, and the suitability of an investment             in such shares of Buyer Stock in light of such Seller’s financial condition and             investment needs.  An investment in such shares of Buyer Stock is suitable for             such Seller based upon such Seller’s investment objectives and financial needs.     102596957.7 0059466-00008             18   

 

      (g)   Such Seller acknowledges that such Seller’s investment in the shares of Buyer              Stock included in the Closing Stock Consideration is a speculative investment that              has limited liquidity, involves a high degree of risk and is subject to the risk of              complete loss.  Such Seller is in a financial position to hold such shares of Buyer              Stock for an indefinite period without impairing such Seller’s financial condition              and is able to bear the economic risk and withstand a complete loss of such              Seller’s investment in such shares of Buyer Stock.  Such Seller has adequate              means for providing for such Seller’s current financial needs and contingencies              and has no need for liquidity of investment with respect to such shares of Buyer              Stock.         (h)   Such Seller is a resident of the state set forth with respect to such Seller on              Section 5.3 of the Disclosure Schedule.   4.6   Disclosure.  No representation or warranty set forth in this ARTICLE IV contains any        untrue statement of a material fact or omits a material fact necessary to make the        statements contained herein, in light of the circumstances in which they were made, not        misleading.                                    ARTICLE V        REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY   As an inducement to Buyer to enter into this Agreement and consummate the transactions  contemplated hereby, Sellers hereby represent and warrant to Buyer that all of the following  representations and warranties in this ARTICLE V are true and correct as of the Effective Date  and as of the Closing:   5.1   Organization and Power.  The Company is a limited liability company duly organized,        validly existing and in good standing under the laws of the State of Ohio.  The Company       has obtained and currently maintains all qualifications to do business as a foreign limited       liability company in all other jurisdictions in which the character of the Company’s        properties or the nature of the Company’s activities require it to be so qualified, except        where the failure to obtain or maintain such qualification would not have a Material        Adverse Effect.  All jurisdictions where the Company is qualified to do business are set        forth on Section 5.1 of the Disclosure Schedule.  The Company has all requisite power        and authority and all authorizations, licenses and permits necessary to own and operate its        assets and to conduct its business as now conducted and as proposed to be conducted.         The copies of the Company’s Governing Documents, which have been furnished to        Buyer, are correct and complete.  The books of account, member ledgers, minute books        and other records of the Company are accurate, up to date and complete, and have been        maintained in accordance with prudent business practices and all applicable Laws.  The        Company is not in default under or in breach or violation of any provision of its        Governing Documents or any currently effective resolution or other action adopted by the        Company’s board of directors or shareholders.  Section 5.1 of the Disclosure Schedule        lists the current directors and officers of the Company.    102596957.7 0059466-00008             19   

 

 5.2   Authorization; No Breach.  No actions on the part of the Company, whether by the         shareholders, directors or otherwise, are necessary to approve and authorize the         execution, delivery and performance of this Agreement and the other agreements         contemplated hereby, or the consummation of the transactions contemplated hereby and         thereby.  Except as set forth on Section 5.2 of the Disclosure Schedule, neither the         execution and delivery of this Agreement nor any of the other agreements contemplated         hereby, nor the consummation of the transactions contemplated hereby or thereby, will,        directly or indirectly (with or without notice, lapse of time or both): (a) conflict with or        result in any breach of, constitute a default under, give any third party the right to        terminate or to accelerate any Liability or other obligation under, result in the amendment         or modification of any term or condition of, or require any authorization, consent,         approval, exemption, notice or other action under the provisions of the Governing         Documents of the Company, or under the provisions of any Contract by which the         Company or any of its assets are bound or affected, or under any license, permit,         certificate, accreditation or other authorization of the Company, or under any Law to         which the Company is subject; (b) result in the creation of any Lien of any kind upon any         of the Membership Interests or any of the Company’s properties, assets or rights; or (c)         require any authorization, consent, approval, exemption or other action by, or notice to or         filing with, any Governmental Authority.  Other than as set forth on Section 5.2 of the         Disclosure Schedule, no notice to, filing with, or consent of, any Person is necessary in         connection with, and no “change of control” provision in any Contract is triggered by, the         execution, delivery or performance of this Agreement and the other agreements         contemplated hereby, nor the consummation of the transactions contemplated hereby or         thereby.  All notices, filings and consents listed on Section 5.2 of the Disclosure Schedule         have been given, made and obtained, and are in full force and effect.   5.3   Capitalization; Subsidiaries.            (a)   All of the Membership Interests are owned, of record and beneficially, by Sellers               as set forth on Section 5.3 of the Disclosure Schedule.  The Membership Interests               are denominated in uncertificated units, and are the only membership, limited               liability company, capital, economic or other interests that have been issued by               the Company and, upon transfer of the Membership Interests to Buyer pursuant to               this Agreement, Buyer shall be admitted as the sole member of the Company and               shall hold all of the Membership Interests.  All of the Membership Interests have               been duly authorized and validly issued, and are fully paid and non-assessable.                There are no: (i) outstanding obligations, options, warrants, convertible or              exchangeable securities or other rights, agreements or commitments (contingent              or otherwise) relating to any interest in the Company (including any membership,              limited liability company, equity, capital, economic or other interests) or that              could require the Company to issue or sell or otherwise cause to become              outstanding any such interests; (ii) outstanding obligations of the Company to              repurchase, redeem or otherwise acquire any Membership Interests or other              interest in the Company (including any membership, limited liability company,              equity, capital, economic or other interests) in the Company or to make any              investment (in the form of a loan, capital contribution or otherwise) in any other              Person; (iii) voting trusts, shareholder agreements, preemptive rights, rights of    102596957.7 0059466-00008             20    

 

             first refusal, restrictions on transfer, proxies or other agreements or              understandings in effect with respect to the Membership Interests or other interest              in the Company (including any membership, limited liability company, equity,               capital, economic or other interests) or the voting or transfer thereof; (iv)               outstanding or authorized appreciation rights, phantom equity, profit participation               or similar rights with respect to the Company, the Membership Interests or other               interest in the Company (including any membership, limited liability company,               equity, capital, economic or other interests); or (v) certificates or other negotiable               instruments that were issued or granted by the Company to represent or evidence              the Membership Interests.         (b)   The Company does not have any Subsidiaries.  The Company does not own or               hold the right to acquire any shares of stock or any other security or interest in any               other Person, and does not have any obligation to make any investment in any               Person.    5.4   Financial Statements.  Section 5.4 of the Disclosure Schedule sets forth the following         financial statements of the Company (the “Financial Statements”):          (a)   the unaudited balance sheet of the Company as of June 30, 2019 (the “Latest               Balance Sheet”), and the related statements of income, members’ equity and cash               flows (or the equivalents) for the interim period then ended; and          (b)   the unaudited balance sheet of the Company as of December 31, 2016, 2017 and               2018, and the related statements of income, members’ equity and cash flows (or               the equivalents) for the years then ended.          Each of the Financial Statements (including in all cases the notes thereto) is accurate and        complete, is consistent with the books and records of the Company (which, in turn, are        accurate and complete), presents fairly the financial condition, material transactions and        results of operations of the Company as of the respective dates thereof and the operating        results of the Company for the periods covered thereby, and have been prepared in        accordance with the accounting methods and practices of the Company, consistently        applied, in the Ordinary Course of Business and in a manner consistent with the        preparation of the Company’s Tax Returns.  The Company does not have any material        off-balance sheet Liabilities or financing arrangements.   5.5   Absence of Undisclosed Liabilities.  Except as set forth on Section 5.5 of the Disclosure         Schedule, the Company does not have, nor will it have as of the Closing, any Liabilities         (whether accrued, absolute, contingent, un-liquidated or otherwise, whether due or to         become due, and regardless of when or by whom asserted) at or as of the Closing or         arising out of transactions entered into at or prior to the Closing, or arising out of any         action or inaction at or prior to the Closing, or to the Knowledge of Sellers, any facts or         circumstances existing at or prior to the Closing, including Taxes with respect to or based         upon periods, transactions or events occurring on or before the Closing, except: (a)         obligations under Contracts described on Section 5.13(a) of the Disclosure Schedule (but         not Liabilities for breach or violation of any such Contract occurring on or prior to the    102596957.7 0059466-00008             21    

 

       Closing); (b) Liabilities reflected on the Latest Balance Sheet; and (c) Liabilities which         have arisen after the date of the Latest Balance Sheet in the Ordinary Course of Business         (none of which is a Liability for breach of any Contract, breach of warranty, tort, product         liability, infringement, claim or lawsuit).    5.6   Accounts Receivable.  Section 5.6 of the Disclosure Schedule provides an accurate and         complete breakdown and aging of all accounts receivable, notes receivable and other         receivables of the Company as of the Closing.  Except as set forth in Section 5.6 of the         Disclosure Schedule, all accounts and notes receivable of the Company reflected on the        Latest Balance Sheet and all accounts and notes receivable to be reflected on the        Adjustment Statement and to be taken into account in the calculation of Closing Net        Working Capital (net of allowances for doubtful accounts as reflected thereon and as        determined in accordance with GAAP) are valid, currently due and payable receivables         arising in the Ordinary Course of Business and are and shall be current and collectible at         the aggregate recorded amount therefor as shown on the Latest Balance Sheet and on the         Adjustment Statement, as the case may be (net of allowances for doubtful accounts as         reflected thereon and as determined in accordance with GAAP).  Since the Balance Sheet         Date, except as set forth in Section 5.6 of the Disclosure Schedule, the Company has not         changed the manner or timing for issuance of invoices or the collection of debts or         receivables.  No Person has any Liens on such receivables or any part thereof, and no        agreement for deduction, credit, free goods, discount or other deferred price or quantity        adjustment has been made, offered or promised with respect to any such receivables.   5.7   Accounts Payable.  Section 5.7 of the Disclosure Schedule sets forth a list of all accounts         payable of the Company as of the date of this Agreement, together with the name of each         payee, the date each such payment is due, and the nature of the transaction in which such         payable was incurred (if other than a trade account payable incurred in the Ordinary         Course of Business).  Since the Balance Sheet Date, Company has paid its creditors and        suppliers substantially within the times agreed with such creditors, except where charges        are being disputed in good faith.     5.8   No Material Adverse Change.  From the Balance Sheet Date through the date of this         Agreement, to the Knowledge of Sellers there has not occurred or existed any change,         event, fact, circumstance or effect that has had a Material Adverse Effect or that would,         individually or in the aggregate, reasonably be expected to have a Material Adverse         Effect.  Since the Balance Sheet Date, the Company has conducted its business only in         the Ordinary Course of Business.    5.9   Absence of Certain Developments.  Except as set forth on Section 5.9 of the Disclosure         Schedule, since the Balance Sheet Date, the Company has not:          (a)   (i) issued, sold, transferred, pledged, disposed of or suffered any Lien on any of               its the Membership Interests or other interest in the Company (including any               membership, limited liability company, equity, capital, economic or other               interests) or any securities or rights convertible, exchangeable or exercisable into               such interests; (ii) granted any options, warrants or other rights to purchase or               obtain any such interests; (iii) split, combined, subdivided, reclassified or    102596957.7 0059466-00008             22    

 

            recapitalized any of its such interests; (iv) declared, set aside or paid any dividend              or distribution; or (v) redeemed, purchased or otherwise acquired any such              interest;         (b)   amended, modified, restated or amended and restated any of its Governing              Documents;         (c)   adopted a plan or agreement of liquidation, dissolution, restructuring, merger,              consolidation, recapitalization or other reorganization;         (d)   made any distributions or other payments to Sellers or to any Affiliate of the              Company or Sellers, except the payment of guaranteed payments and benefits              with respect to services rendered by Sellers to the Company in the Ordinary              Course of Business;         (e)   (i) paid any accounts payable other than in the Ordinary Course of Business, or              (ii) delayed or postponed the payment of any accounts payable or commissions or              any other Liability, or (iii) agreed or negotiated with any party to extend the              payment date of any trade or accounts payable or commission or any other              Liability, or (iv) accelerated the collection of (or discounted) any accounts or              notes receivable (whether billed or unbilled) or accelerated any deferred revenue,              or (v) otherwise taken any actions or omitted to take any actions with the intent or              the purpose of increasing Closing Net Working Capital or satisfying the Target              Net Working Capital as of the Closing;         (f)   delayed issuing any checks or payments;         (g)   paid or refinanced any Liability, other than in the Ordinary Course of Business;         (h)   mortgaged, pledged or subjected to any Lien, any of its properties, assets or              rights;         (i)   sold, leased, assigned or transferred any of its tangible assets, except in the              Ordinary Course of Business, or canceled without fair consideration any debts or              claims owing to or held by it;         (j)   (i) sold, assigned, licensed, sublicensed, transferred or encumbered any              Proprietary Rights or other intangible assets, or (ii) disclosed any proprietary              Confidential Information to any Person (other than Buyer and Buyer’s              representatives, agents, attorneys and accountants), or (iii) abandoned or              permitted to lapse any Proprietary Rights;          (k)   (i) made or granted any bonus, or any wage, salary or compensation increase, to              any employee or independent contractor, or any group of employees or              independent contractors, except as required by pre-existing contracts or, in the              case of non-officer employees, consistent with past practice, or (ii) made or              granted any increase in any employee benefit plan or arrangement, or (iii)              amended or terminated any existing employee benefit plan or arrangement or   102596957.7 0059466-00008             23   

 

            adopted any new employee benefit plan or arrangement, or (iv) entered into,              modified or terminated any collective bargaining agreement or relationship;        (l)   incurred any Indebtedness or incurred or become subject to any material Liability,             except current Liabilities incurred in the Ordinary Course of Business and             Liabilities under Contracts entered into in the Ordinary Course of Business (none              of which is a Liability for breach of any Contract, breach of warranty, tort,              product liability, infringement, claim or lawsuit);        (m)   made any loans or advances to, or guarantees for the benefit of, any Person;        (n)   made any write down in the value of its inventory or work in process, or made             any write off of any accounts receivables;        (o)   suffered any extraordinary Losses or waived any material rights or claims,             whether or not in the Ordinary Course of Business;        (p)   suffered any damage, destruction or casualty loss to its tangible assets in excess of             $10,000, whether or not covered by insurance;        (q)   made any capital expenditures or commitments in excess of $10,000 in the             aggregate;        (r)   reduced or delayed any budgeted or planned capital expenditures;        (s)   made any change in any method of accounting or accounting policies;        (t)   engaged in any promotional sale, discount, rebate, price reduction or other activity             that has, or would reasonably be expected to have, the effect of accelerating to             pre-Closing periods revenues that otherwise would be expected to occur in post-            Closing periods;        (u)   instituted or permitted any material change in the conduct of the Company’s             business, or any change in its method of purchase, sale, lease, management,             marketing, promotion or operation;        (v)   entered into, amended or terminated any material Contract, or any license or             permit issued by any Governmental Authority;        (w)   taken any other action or entered into any other transaction other than in the             Ordinary Course of Business;        (x)   entered into any other material transaction, whether or not in the Ordinary Course             of Business, or materially changed any business practice;        (y)   entered into any Contract, or made any offer or commitment, to do any of the             foregoing.    102596957.7 0059466-00008             24   

 

5.10  Leased Real Property.          (a)   The Company does not own, and has never owned, any real property.  The Leased              Real Property comprises all of the real property owned, occupied or otherwise              used or intended to be used for, and necessary to operate, the business of the              Company as currently conducted and as proposed to be conducted.         (b)   Section 5.10 of the Disclosure Schedule sets forth: (i) a list of the address and              legal description of each parcel of Leased Real Property; (ii) the Lease with              respect to each parcel of Leased Real Property; and (iii) the identity and contact              information of each other party to each such Lease.  Sellers have delivered to              Buyer copies of each Lease with respect to the Leased Real Property, and each of              the following documents in the possession or under the control of the Company,              Sellers or their respective Affiliates with respect to all or any portion of the              Leased Real Property: (1) environmental site assessments; (2) geotechnical,             engineering or similar studies or assessments; (3) documents, information,              reports, assessments, photographs or recordings concerning or relating to the              condition of such Leased Real Property; and (4) title insurance policies, permits,             warranties, guaranties, opinions, abstracts, plats and surveys.         (c)   Except as expressly set forth on Section 5.10 of the Disclosure Schedule, with              respect to each parcel of Leased Real Property:               (i)   the Lease applicable to such Leased Real Property is legal, valid, binding,                    enforceable and in full force and effect;               (ii)  the transactions contemplated by this Agreement do not require the                    consent of any other party to any Lease applicable to such Leased Real                    Property, will not result in a breach of or default under such Lease, and                   will not otherwise cause such Lease to cease to be legal, valid, binding,                   enforceable and in full force and effect following the Closing on terms and                   conditions that are identical to those in effect prior to the Closing;              (iii) the Company’s possession and quiet enjoyment of such Leased Real                   Property and under the Lease applicable thereto has not been disturbed,                   and there are no disputes with respect to such Leased Real Property or                    Leases;               (iv)  neither the Company nor, to the Knowledge of Sellers, any other party to a                    Lease applicable to such Leased Real Property is in breach or default                    under such Lease, and no event has occurred or circumstance exists which,                   with the delivery of notice, the passage of time or both, could reasonably                   be expected to constitute such a breach or default, or permit the                   termination, modification or acceleration of rent under such Lease;              (v)   the Company has not subleased, assigned, licensed or otherwise granted                   any Person the right to use, occupy or otherwise possess such Leased Real                   Property or any portion thereof;   102596957.7 0059466-00008             25   

 

            (vi)  such Leased Real Property has direct vehicular access to a public street, or                    has vehicular access to a public street via a valid easement or license, and                    has parking for the employees, contractors and invitees of the Company,                    in each case sufficient for the operation of the Leased Real Property as                    currently operated  by the Company;               (vii) the utilities (including electricity, gas, water, telephone, internet, etc.),                    improvements, buildings and building systems (including electrical                    systems, plumbing, drainage, HVAC, communications, fire alarms and                    suppression, etc.) serving such Leased Real Property are, in each case,                    sufficient for the operation of the Leased Real Property as currently                    operated  by the Company;               (viii) no security deposit or portion thereof deposited with respect to a Lease                    applicable to such Leased Real Property has been applied in respect of a                    breach or default under such Lease which has not been re-deposited in                    full;               (ix)  the Company has not pledged, mortgaged or otherwise granted a Lien with                    respect to any portion of such Leased Real Property; and               (x)   there are no condemnation, rezoning or taking actions pending or, to the                    Knowledge of Sellers, threatened, with respect to any Leased Real                    Property.         (d)   The current use of the Leased Real Property does not violate any Laws,              instrument of record or Contract affecting the Leased Real Property, and there is              no violation of any covenant, condition, restriction, easement, agreement or order              of any Governmental Authority having jurisdiction over the Leased Real Property              that affects the use or occupancy thereof.   5.11  Assets.  The Company has good and marketable title to, a valid license to use, or a valid        leasehold interest in, free and clear of all Liens, all tangible assets used or useful in or        necessary to conduct the Company’s business (including but not limited to all materials,        inventory, tools, machinery, equipment, vehicles, office equipment, computers, spare and        replacement parts, and supplies).  Each such tangible asset has been maintained in        accordance with normal industry practice, is in good operating condition and repair        (subject to normal wear and tear), and is suitable for the purposes for which it is currently        used and, to the Knowledge of Sellers, each such tangible asset is free from defects.         Section 5.11 of the Disclosure Schedule sets forth a list of the Company’s material        tangible assets.   5.12  Tax Matters.         (a)   The Company has filed on a timely basis all Tax Returns required to have been             filed by the Company.  All such Tax Returns are correct and complete in all              respects.  All Taxes required to have been paid by the Company (whether or not              shown on any Tax Return) have been paid in full on a timely basis.  No claim has   102596957.7 0059466-00008             26   

 

            ever been made to the Company by a Governmental Authority in a jurisdiction              where the Company does not file Tax Returns that the Company is or may be              subject to taxation by that jurisdiction.  The Company has not requested or              obtained any extension of time within which to file any Tax Return, which Tax              Return has not since been filed, except for automatic extensions of time to file              which did not require the affirmative consent of the applicable Governmental              Authority and are not currently due (as extended).  There are no Liens on any of              the assets of the Company that arose in connection with any failure (or alleged              failure) to pay any Tax.           (b)   The Company has withheld or collected and timely paid over to the proper             Governmental Authority all Taxes (including sales and use and employment             Taxes) required by Law to have been withheld or collected and paid in connection              with any amounts paid, distributed or owing to any Company employee, vendor,              independent contractor, creditor, shareholder, or other third party, and all IRS              Forms W-2, 1095C and 1099 (and similar state, local and foreign forms) required              with respect thereto have been properly completed and timely filed.  The             Company has properly requested, received, and retained all necessary exemption             certificates and other documentation supporting any claimed exemption with             respect to sales or use Taxes.        (c)   There is no audit or other proceeding pending or threatened with regard to any             Tax Liability or Tax Return of the Company.        (d)   The Company has not waived any statute of limitations in respect of Taxes or             agreed to any extension of time with respect to a Tax assessment or deficiency.        (e)   No power of attorney has been granted by the Company with respect to any Tax              matter relating to the Company.         (f)   The Company is not a party to any Contract, plan or arrangement requiring it to              make payments to any Person that would be a “parachute payment” (within the              meaning of Section 280G of the Code) as a result of any event connected with the             acquisition of the Company by Buyer or any other transaction contemplated by             this Agreement.  The Company has not been a United States real property holding             corporation within the meaning of Section 897(c)(2) of the Code at any time             during the five-year period ending on the Effective Date.        (g)   The Company is not and has not been a party to any Tax allocation, Tax sharing             or similar agreement or arrangement.  Company has not been a member of an             Affiliated Group filing a consolidated federal Tax Return.  The Company does not             have, and has not had a relationship to any other Person which would cause it to             have, any Liability for Taxes owing by any other Person, including as a transferee             or successor, by contract or otherwise.        (h)   The Company: (i) is not a party to any joint venture, partnership or other             agreement or arrangement which is treated as a partnership for federal income    102596957.7 0059466-00008             27   

 

            Tax purposes; and (ii) does not own any ownership interest in an entity that is              treated as an entity disregarded as separate from its owner for federal Tax              purposes, or as to which an election pursuant to Treasury Regulation Section             301.7701-3 has been made.        (i)   The unpaid Taxes of the Company: (i) did not, as of the date of the Latest Balance              Sheet, exceed the reserve for Tax Liability (rather than any reserve for deferred              Taxes established to reflect timing differences between book and Tax income) set              forth on the face of the Latest Balance Sheet (rather than in any notes thereto);              and (ii) do not exceed that reserve as adjusted for the passage of time through the              Closing in accordance with the past custom and practice of the Company in filing              its Tax Returns.  Since the date of the Latest Balance Sheet, the Company has not              incurred any liability for Taxes arising from “extraordinary gains or losses,” as              that term is used in GAAP.         (j)   The Company will not be required to include any item of income in, or exclude              any item of deduction from, taxable income for any taxable period (or portion             thereof) ending after the Closing as a result of any:                    (i)   change in method of accounting for a taxable period ending on or                         prior to the Effective Date;                    (ii)  “closing agreement” as described in Section 7121 of the Code (or                         any corresponding or similar provision of state, local or foreign                         income Tax law) executed on or prior to the Effective Date;                    (iii) intercompany transaction or excess loss account described in                         Treasury Regulations under Section 1502 of the Code (or any                         corresponding or similar provision of state, local or foreign income                         Tax law) made on or prior to the Effective Date;                    (iv)  installment sale or open transaction disposition made on or prior to                         the Effective Date; or                    (v)   prepaid amount received on or prior to the Effective Date.         (k)   The Company has not distributed stock or securities of another Person, or has had              its equity or securities distributed by another Person, in a transaction that was              purported or intended to be governed in whole or in part by Section 355 of the              Code or Section 361 of the Code.         (l)   The Company (and any predecessor of the Company) is and has at all times since              its organization been taxed as a partnership within the meaning of the Code, and              will continue to be taxed as a partnership within the meaning of the Code at all              times up to the time of Closing.         (m)   In the past 5 years, the Company has not: (i) acquired assets from another             corporation in a transaction in which the Company’s Tax basis for the acquired   102596957.7 0059466-00008             28   

 

            assets was determined, in whole or in part, by reference to the Tax basis of the              acquired assets (or any other property) in the hands of the transferor; or (ii)              acquired the stock of any corporation that is or was a qualified subchapter S              subsidiary.   5.13  Contracts.           (a)   Section 5.13(a) of the Disclosure Schedule sets forth an accurate and complete list              of each of the following written Contracts, and a true, correct and complete              written description of each of the following oral or other unwritten Contracts, to              which the Company is a party or which affects the Company or its business,              properties, assets or rights (each such Contract, a “Material Contract”):               (i)   Contracts to which any Seller, any Affiliate of the Company or any Seller,                    or any of their current or former officers or directors, is a party;               (ii)  Contracts for the acquisition of any Person or any business unit or assets                    thereof, or the disposition of any assets of the Company, other than                    Contracts pursuant to which the applicable acquisition or disposition has                    been consummated and in respect to which the Company has not had any                    continuing obligations since;               (iii) Contracts granting any Person any preferential right to purchase, license,                    exercise or acquire any properties, assets or rights of the Company;               (iv)  Contracts relating to any Indebtedness, or the making of any loans by the                    Company to any Person;               (v)   Contracts relating to the ownership of or investment in any Person,                    including investments in joint ventures and minority equity investments;               (vi)  any settlement, conciliation or similar Contract pursuant to which the                    Company will have any performance obligations after the Closing;               (vii) Contracts requiring capital expenditures after the date of this Agreement;               (viii) Contracts for the employment or engagement of any director, officer,                    employee, independent contractor or other Person on a full-time, part-                   time, consulting or other basis, including those (A) providing for the                    payment of any cash or other compensation or benefits upon the                    consummation of the transactions contemplated hereby or upon                    termination of employment or engagement, or (c) containing noncompete,                    nonsolicitiation, nondisclosure, confidentiality provisions or other                    restrictive covenants;               (ix)  Contracts relating to the development, assignment, transfer, enforcement                    or licensing of Proprietary Rights, excluding licenses for unmodified “off                    the shelf”, commercially available software applications with an   102596957.7 0059466-00008             29   

 

                  acquisition cost and/or aggregate annual license and maintenance fee of                    less than $1,000;                (x)   Leases and all other Contracts relating to the lease, license, use or                    occupancy of real property, equipment, vehicles, other personal property                    or fixtures;               (xi)  Contracts restricting or purporting to restrict the Company, or any or any                   other Person for the benefit of the Company, from: (A) engaging in any                    line of business or competing with any Person; (B) engaging in any                   activity in any geographical area; or (C) soliciting any Person to enter into                   a business or employment relationship or entering into such a relationship                   with any Person;              (xii) Contracts which require payment of consideration, or delivery of assets,                    goods, materials or services: (A) to the Company in an amount in excess                    of $5,000 per year; or (B) by the Company;               (xiii) Contracts that obligate the Company to comply with an exclusivity or                    “most favored nations” clause;               (xiv) Contracts requiring the Company to purchase all or substantially all of its                    requirements of any product or service from any Person, that contain                    minimum purchase requirements provisions, or that require the Company                    to conduct business on an exclusive basis with any Person;               (xv)  Contracts with any Governmental Authority;               (xvi) Contracts that are entered into outside of the Ordinary Course of Business                    or are otherwise material to the Company; and               (xvii) Contracts committing the Company to enter into any of the foregoing.                             (b)   Except as specifically disclosed on Section 5.13(b) of the Disclosure Schedule: (i)              the Company, and, to the Knowledge of Sellers, the other party thereto, have              performed all obligations required to be performed by such Person under each of              the Material Contracts; (ii) there is no breach of or default under such Contract or              any event which, upon giving of notice or lapse of time or both, would constitute              a breach or default under such Material Contract by the Company or, to the              Knowledge of Sellers, by the other party thereto; (iii) there is no anticipated              breach by any party to any Material Contract; (iv) the Company, and, to the              Knowledge of Sellers, the other party to such Material Contract, has not assigned,              delegated or otherwise transferred to any Person any of its rights, title or interest              under any Material Contract; (v) to the Knowledge of Sellers each Material              Contract is legal, valid, binding, enforceable and in full force and effect, and will              continue as such following the consummation of the transactions contemplated              hereby (subject only to bankruptcy, moratorium and similar Laws and subject to   102596957.7 0059466-00008             30   

 

            the application of specific performance and other equitable principles); and (vi)              the transactions contemplated by this Agreement shall not impair the rights of the              Company under, or cause a breach or default of, any Material Contract or cause             any additional fees or royalties to be due thereunder.        (c)   Buyer has been supplied with a true and correct copy of all written contracts, and             a true, correct and complete written description of all oral and other unwritten             Contracts, which are referred to on Section 5.13(a) of the Disclosure Schedule,              together with all amendments, exhibits, attachments, waivers or other changes              thereto.   5.14  Proprietary Rights.  The Company owns or has the valid right to use all Proprietary        Rights necessary for the operation of the Company’s business as currently conducted and        as proposed to be conducted.  Section 5.14 of the Disclosure Schedule sets forth a        complete and correct list of: (a) all patented or registered Proprietary Rights and pending        patent applications or other applications for registration of Proprietary Rights; (b) all        trade names used by the Company; (c) all licenses, consents, Contracts or arrangements        to which the Company is a party, either as licensee or licensor, concerning Proprietary        Rights or part thereof; and (d) all Company Marks, and any other material unregistered        trademarks and copyrights that are either owned by the Company or used or held by the        Company or any of its Affiliates in the conduct of the Company’s business (pursuant to        license agreement or otherwise, in such case identifying the owner and title of the        agreement pursuant to which the Proprietary Right is used).  Such Proprietary Rights        comprise all of the intellectual property rights necessary or desirable for the conduct of        the Company’s business as currently conducted and as currently proposed to be        conducted.  Except as set forth in Section 5.14 of the Disclosure Schedule:         (a)   To the Knowledge of Sellers the Company owns and possesses exclusively all              right, title and interest in, to and under the Proprietary Rights, free and clear of all              Liens, and no claim by any third party contesting the validity, enforceability, use,             registration or ownership of any of the Proprietary Rights has been made, is             currently outstanding or, to the Knowledge of Sellers, is threatened;        (b)   The Company has not transferred ownership of or granted any license of or other             right to use or authorized the retention of any rights to use any Proprietary Rights              to any other Person;         (c)   No loss or expiration of any part of Proprietary Rights has occurred, is pending or,             to the Knowledge of Sellers, threatened or reasonably foreseeable;        (d)   Neither the Company nor any Seller has received any notice of, and to the             Knowledge of Sellers, there are no facts which indicate a likelihood of, any             infringement or misappropriation by, or conflict with, any third party with respect             to the Proprietary Rights, including any demand or request that the Company             license rights from a third party;    102596957.7 0059466-00008             31   

 

       (e)   None of the Proprietary Rights nor the Company has infringed, misappropriated               or otherwise come into conflict with any rights of any third parties, and Sellers               have no Knowledge of any infringement, misappropriation or conflict which will               occur as a result of the continued operation of the Company’s business as               currently conducted or as currently proposed to be conducted;         (f)   To the Knowledge of Sellers neither the Company, nor Sellers, nor their              respective Affiliates has disclosed any of the Company’s trade secrets or              Confidential Information to any third party other than pursuant to a written, valid              and binding confidentiality agreement in favor of the Company; and         (g)   The Company has executed all appropriate Contracts with current and past              employees, contractors and agents to assign to the Company all of their right, title              and interest in any Proprietary Rights and has furnished Buyer with true and              correct copies of all such Contracts.     5.15  Litigation.  Except as set forth on Section 5.15 of the Disclosure Schedule, there are no         and, during the five (5) years preceding the Effective Date, there have not been any,         actions, suits, proceedings, orders or investigations pending or, to the Knowledge of         Sellers, threatened against or affecting the Company, its business or assets, or the         Membership Interests, whether at law or in equity, or before or by any Governmental         Authority (including any actions, suits, proceedings, orders or investigations with respect         to the transactions contemplated by this Agreement, or any condemnation, expropriation         or other proceeding in eminent domain affecting any real property or any portion        thereof), and there is no reasonable basis for any of the foregoing.  The Company is not         subject to any grievance or arbitration proceedings under collective bargaining        agreements or otherwise, or any governmental investigations or inquiries.  Neither the         Company, nor Sellers, nor any of their respective Affiliates have received any opinion or         memorandum or advice from legal counsel to the effect that the Company is exposed,         from a legal standpoint, to any material Liabilities.    5.16  Brokerage.  There are no claims, and the Company has no Liability, for brokerage         commissions, finders’ fees or similar compensation in connection with the transactions         contemplated by this Agreement based on any arrangement or agreement made by or on         behalf of the Company, Sellers or their respective Affiliates.   5.17  Employees.            (a)   Section 5.17(a) of the Disclosure Schedule lists all of the employees of the               Company (the “Company Employees”), together with each Company Employee’s               title, date of hire, leave status, current salary, bonus or incentive compensation               eligibility, and any accrued paid leave (including, without limitation, under any               policy of the Company relating to vacation, personal time off or otherwise).                Except as set forth on Section 5.17(a) of the Disclosure Schedule: (i) the               Company does not have a written employment, consulting or similar Contract               with any manager, Company Employee, independent contractor, agent, consultant               or professional adviser of the Company; (ii) there are no severance payments,    102596957.7 0059466-00008             32    

 

            change-in-control payments or similar payments which are or could become              payable by the Company or any other Person to any manager, Company              Employee, independent contractor, agent, consultant or professional adviser of the              Company under the terms of any oral or written Contract or any Law, custom,              trade or practice; (iii) there are no other material Contracts, oral or written,              between the Company and any such person relating to such person’s employment              or engagement; and (iv) to the Knowledge of Sellers, no officer or management              level or technical employee or independent contractor of the Company has any              plans to terminate his, her or their employment, engagement or relationship with              the Company.         (b)   Except as set forth on Section 5.17(b) of the Disclosure Schedule:                     (i)   the Company is not a party to any collective bargaining agreement                          or any other labor-related agreements with any labor union or                         bargaining unit applicable to employees of the Company, nor is                         any such agreement currently being negotiated;                    (ii)  no labor organization or group of employees has filed any                         representation petition or made any written or oral demand for                         recognition;                    (iii) to the Knowledge of Sellers, no union organizing or decertification                         efforts are pending or threatened, and no other question concerning                         representation exists;                    (iv)  no labor strike, work stoppage, slowdown, or other material labor                         dispute has occurred at any time, and none is pending or, to the                         Knowledge of Sellers, threatened;                    (v)   there are no charges against the Company pending or, to the                         Knowledge of Sellers, threatened in writing before the Equal                         Employment Opportunity Commission or any state, local or                         foreign agency responsible for the prevention of unlawful                         employment practices; and                    (vi)  there is no unfair labor practice charge or complaint against the                         Company pending or, to the Knowledge of Sellers, threatened                         before the National Labor Relations Board or any comparable                         state, local or foreign agency.        (c)   With respect to the transaction contemplated by this Agreement, any notice             required under any Law has been given.  Within the past two (2) years, the             Company has not implemented any plant closing or layoff of employees that             could implicate the Worker Adjustment and Retraining Notification Act of 1988,             as amended, or any similar foreign, state, or local law, regulation, or ordinance.    102596957.7 0059466-00008             33   

 

       (d)   Section 5.17(d) of the Disclosure Schedule sets forth a list of all Persons who are               performing or have performed services for the Company as an independent               contractor, leased employee, temporary employee or consultant and who are not               treated by the Company for all Tax purposes as regular employees.   5.18  Product and Service Warranties.  Except as expressly set forth in the Material Contracts         listed on Section 5.13(a) of the Disclosure Schedule, the Company has not made any         express warranties or guarantees with respect to the products provided or services         rendered by or on behalf of the Company in connection with its business.  To the         Knowledge of Sellers each product provided and service rendered by or on behalf of the         Company has been in conformity in all material respects with all applicable contractual         commitments and all express, implied or statutory warranties, and the Company does not         have any material Liability for replacement, repair or re-performance thereof or other         damages in connection therewith, subject only to the reserve for warranty claims (if any)         set forth on the Latest Balance Sheet and included as a Closing Current Liability in the         calculation of the final Adjustment Amount.    5.19  Employee Benefit Plans.          (a)   Section 5.19 of the Disclosure Schedule contains a true and complete list of: (i)               each deferred compensation, incentive compensation, and equity compensation               plan or agreement; (ii) each severance or termination pay, medical, surgical,               hospitalization, life insurance and other “welfare” plan, fund or program (within               the meaning of Section 3(1) of the Employee Retirement Income Security Act of               1974, as amended (“ERISA”)); (iii) each profit-sharing or other “pension” plan,               fund or program (within the meaning of Section 3(2) of ERISA); (iv) each              employment agreement providing deferred compensation, severance or              termination benefits; and (v) each other employee benefit plan, fund, program or               agreement; in each case as to items (i) through (v) foregoing, that is sponsored,               maintained or contributed to by the Company and, solely with respect to clause              (iii), by any trade or business, whether or not incorporated, that together with the              Company would be deemed a “single employer” within the meaning of Section              4001(b) of ERISA (an “ERISA Affiliate”), or to which the Company or an ERISA               Affiliate is party, that, in each such case, is for the benefit of any employee or               former employee of the Company (each, a “Company Plan”), or with respect to a               Company Plan described in clause (iii), maintained or which the Company or an               ERISA Affiliate has contributed within the past five (5) years.          (b)   Each Company Plan (and each related trust, insurance contract or fund) has been               maintained, funded and administered in accordance with its terms and in               compliance with all applicable Laws, including, without limitation, ERISA, the               Health Insurance Portability and Accountability Act, the Patient Protection and               Affordable Care Act, the Pension Protection Act of 2006 and the Code.  With               respect to each Company Plan, all required payments, premiums, contributions,               distributions or reimbursements for all periods ending prior to or as of the               Effective Date have been made or properly accrued.  Each Company Plan that is               intended to be a “qualified plan” under Section 401(a) of the Code has received a    102596957.7 0059466-00008             34    

 

            favorable determination letter from the IRS dated in 2007 or later covering all              applicable requirements of the Code, other than those for which the remedial              amendment period under Section 401(b) of the Code has not expired, and nothing              has occurred that could adversely affect the qualification of such Company Plan.         (c)   With respect to each Company Plan, the Company has provided Buyer with true              and complete copies of the following (as applicable): (i) the annual report on IRS             Form 5500 as filed for the last three (3) years (including all schedules and             attachments), if required; (ii) the summary plan description and any summaries of             material modification; (iii) the plan document and all amendments thereto; (iv) all             trust agreements, insurance contracts, investment policies and similar instruments;             (v) any determination letter issued by the IRS; and (vi) nondiscrimination and             elective contribution testing and supporting materials for the most recent plan             year for each Company Plan required to undertake such testing.        (d)   No Company Plan provides post-employment or post-termination medical or life             or other welfare or welfare-type benefits, other than as required by COBRA.  The             Company and the ERISA Affiliates have complied and are in compliance with the             requirements of COBRA.  No Company Plan that is a medical or health plan: (i)             is being administered as a “grandfathered health plan” within the meaning of             DOL Regulation §2590.715-1251; or (ii) is a self-insured plan whether or not             covered by a “stop-loss” insurance policy.        (e)   Neither the Company nor any ERISA Affiliate maintains, sponsors, contributes             to, or has any Liability under or with respect to any: (i) “defined benefit plan” (as             defined in Section 3(35) of ERISA); (ii) “multiemployer plan” (as defined in             Section 3(37) or 4001(a)(3) of ERISA); (iii) “multiple employer plan” (as defined             in Section 210 of ERISA or Section 413(c) of the Code); or (iv) “multiple             employer welfare arrangement” (as defined in Section 3(40) of ERISA).  The             Company does not have any Liability as a consequence of at any time being             considered a single employer under Section 414 of the Code with any other             Person.  No Company Plan is subject to any tax under Section 512 of the Code.        (f)   With respect to each Company Plan: (i) there have been no prohibited transactions             as defined in Section 406 of ERISA or Section 4975 of the Code; (ii) no fiduciary             (as defined in Section 3(21) of ERISA) has any Liability for breach of fiduciary             duty or any other failure to act or comply in connection with the administration or             investment of the assets of such plans; and (iii) no actions, audits, investigations,             proceedings, suits or claims (other than routine claims for benefits) are pending or             threatened, and there are no facts that would give rise to or could reasonably be             expected to give rise to any such actions, audits, investigations, proceedings, suits             or claims.        (g)   Each Company Plan that contains, is or forms part of a “non-qualified deferred             compensation plan” within the meaning of Section 409A of the Code complies in             form and has been operated in compliance with the requirements of Section 409A             of the Code and the guidance issued thereunder.  The Company has no obligation   102596957.7 0059466-00008             35   

 

            to gross-up, indemnify or otherwise reimburse any Person for any Tax incurred by              such Person pursuant to any applicable federal, state or local Law related to the              collection or payment of Taxes.         (h)   The Company has, for purposes of each Company Plan, correctly classified those              individuals performing services for the Company as common law employees,              leased employees, independent contractors or agents.        (i)   The transactions contemplated by this Agreement will not cause the acceleration             of vesting in, or payment of, any benefits under any Company Plan or any other              agreement and will not otherwise accelerate or increase any Liability under any              Company Plan.   5.20  Insurance.  The Company is insured by policies of insurance maintained by the Company        in amounts and scope of coverage as set forth in Section 5.20 of the Disclosure Schedule.         Each insurance policy of the Company is in full force and effect and all premiums are        currently paid in accordance with the terms of such policy or accrued.  Neither the       Company, nor Sellers, nor their respective Affiliates, has received any notice that any        such insurance policy will be cancelled or will not be renewed, nor has the Company, nor        Sellers, nor their respective Affiliates received any written notice that cancellation or        non-renewal is threatened nor any written notice that any material modification of the        terms of policy of insurance will be or is threatened to be required as a condition of        renewal.  The Company has at all times maintained such insurance coverage required        pursuant to then-applicable Law or pursuant to Contract to which the Company is or was        then a party or by which the Company or any of its assets are or were then bound or        affected.  The Company does not have any self-insurance or co-insurance programs.   5.21  Compliance with Laws; Permits.  Except as set forth on Section 5.21 of the Disclosure        Schedule:         (a)   The Company has complied and is in compliance with all applicable Laws, and no              notices have been received by, and no claims have been filed against, the              Company alleging a violation of any such Laws;         (b)   The Company has held, and currently holds, all permits, licenses, certificates,              accreditations or other authorizations of Governmental Authorities required for              the conduct of its business (including, without limitation, those required under              Environmental and Safety Laws), and Section 5.21 of the Disclosure Schedule              sets forth a list of all of such permits, licenses, certificates, accreditations and             other authorizations.  The Company is in compliance with all terms and             conditions of any such required permits, licenses, accreditations and             authorizations.  The Company has not received any notice or citation for             noncompliance with any of its permits, licenses, accreditations and authorizations,             and there exists no condition, situation or circumstance, nor has there existed such             a condition, situation or circumstance, which, after notice or lapse of time, or             both, would constitute noncompliance with or give rise to future material Liability    102596957.7 0059466-00008             36   

 

             with regard to any of the foregoing permits, licenses, accreditations and               authorizations.          (c)   Each employee, contractor and agent of the Company (and each employee and               subcontractor of such contractors or agents) has held, and currently holds, all               permits, licenses, certificates, accreditations or other authorizations of              Governmental Authorities required for the performance of any services by such              employee, contractor or agent on behalf of the Company.  To the Knowledge of              Sellers, each such employee, contractor and agent of the Company (and each              employee or subcontractor of such contractors or agents) is in compliance with all              terms and conditions of any such required permits, licenses, accreditations and              authorizations.         (d)   No officer, manager, employee, consultant, advisor, agent or representative of the              Company has been authorized to make or receive, and has not made or received,              directly or indirectly, any bribe, kickback payment or other illegal payment,              whether in cash or in kind, at any time.   5.22  Environmental Matters.  Except as set forth on Section 5.22 of the Disclosure Schedule:           (a)   The Company and its predecessors have complied and are in compliance with all              Environmental and Safety Laws;         (b)   Without limiting the generality of the foregoing, the Company and its Affiliates               have obtained and complied with, and are in compliance with, all permits,              licenses, accreditations and authorizations that are required pursuant to              Environmental and Safety Laws for the occupation of their facilities and the              operation of the Company’s business; and a list of all such permits, licenses,              accreditations and authorizations is set forth on Section 5.21 of the Disclosure               Schedule.          (c)   Neither the Company nor any of its predecessors or Affiliates has received any               oral or written notice, report or other information regarding any alleged or actual               violation of, or Liability under, Environmental and Safety Laws, including any               Remediation, investigatory, remedial or corrective obligations arising under               Environmental and Safety Laws, and no basis exists for any such Liability;          (d)   None of the following exists or has existed at any property or facility owned,               leased, licensed or operated by the Company: (i) underground storage tanks; (ii)               above-ground storage tanks, (iii) asbestos-containing material in any form or               condition, (iv) materials or equipment containing polychlorinated biphenyls; or               (v) landfills, surface impoundments, underground injection wells or disposal               areas.          (e)   Neither the Company, nor any of its predecessors or Affiliates with respect to               which the Company may be deemed a successor or have any Liability under               Environmental and Safety Laws, has treated, stored, disposed of, arranged for or               permitted the disposal of, transported, handled, released, or exposed any Person    102596957.7 0059466-00008             37    

 

            to, any Hazardous Materials, or owned, leased, licensed or operated any property             or facility, and no such property or facility owned, leased, licensed or operated by             the Company or its predecessors is contaminated by any such Hazardous             Materials or substance, in a manner that has given or would give rise to any             Liabilities or investigative, corrective or remedial obligations pursuant to any             applicable Environmental and Safety Laws.        (f)   No facts, events or conditions relating to the past or present facilities, properties             or operations of the Company, or its predecessors or Affiliates, will prevent,             hinder or limit the Company’s continued compliance with Environmental and             Safety Laws, give rise to any investigatory, Remediation or corrective obligations             pursuant to Environmental and Safety Laws, or give rise to any other Liabilities             (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to             Environmental and Safety Laws, including any relating to onsite or offsite             releases or threatened releases of Hazardous Materials, substances or wastes,             personal injury, property damage or natural resources damage.        (g)   Neither this Agreement nor the consummation of the transactions contemplated             hereby will result in any obligations for site investigation or cleanup, or             notification to or consent of Governmental Authorities or third parties, pursuant to              any of the so-called “transaction-triggered” or “property transfer” Environmental              and Safety Laws.         (h)   Neither the Company, nor any of its predecessors or Affiliates with respect to              which the Company may be deemed a successor or have any Liability under              Environmental and Safety Laws, has, either expressly or by operation of law,              assumed or undertaken any Liability, including any obligation for Remediation, of              any other Person relating to Environmental and Safety Laws.         (i)   Sellers have furnished to Buyer all environmental audits, reports, correspondence              to or from Governmental Authorities and other material environmental documents              relating to the past or current operations or facilities of the Company, and those of              its predecessors or Affiliates with respect to which the Company may be deemed              a successor or have any Liability under Environmental and Safety Laws, which              are in the possession or under the reasonable control of the Company, Sellers or              their respective Affiliates.   5.23  Customers and Suppliers.  Section 5.23 of the Disclosure Schedule accurately sets forth a        list of the top ten (10) (a) customers of the Company (each, a “Material Customer”) and        (b) suppliers or vendors of the Company (each, a “Material Supplier”), determined and        organized in descending order by volume of sales or purchases (as applicable) for the        fiscal years ended December 31, 2018 and the interim period ended as of date of the        Latest Balance Sheet.  Except as set forth on Section 5.23 of the Disclosure Schedule,        neither the Company, nor Sellers, nor their respective Affiliates has received any        indication from any Material Customer or any Material Supplier to the effect, and neither        the Company, nor Sellers, nor their respective Affiliates has any reason to believe, that        such Material Customer or Material Supplier will terminate or not renew any Contract   102596957.7 0059466-00008             38   

 

       with the Company, or stop, or materially decrease the rate of, buying or supplying        products or services from or to the Company.   5.24  Affiliate Transactions.  Except as set forth on Section 5.24 of the Disclosure Schedule:           (a)   No Seller, nor any officer, manager, employee or Affiliate of the Company or any               Seller, nor any individual related by blood, marriage or adoption to any such               individuals, nor any other Person in which any such Person holds a legal or               beneficial interest: (i) owns any direct or indirect legal or beneficial interest in the               Company; (ii) is a party to any Contract, transaction or arrangement to which the               Company is also a party; or (iii) has any direct or indirect legal or beneficial               interest in any property, asset or right owned or used by the Company (including               any Proprietary Rights).          (b)   Section 5.24 of the Disclosure Schedule sets forth each individual employed or               engaged by the Company that is related by blood, marriage or adoption to any               Seller or any officer, manager, or Affiliate of the Company or any Seller.            (c)   Section 5.24 of the Disclosure Schedule sets forth a description of each of the               services provided to the Company by any Seller or any of their respective               Affiliates and the cost and other material terms thereof.    5.25  Bank Accounts; Powers of Attorney.  Section 5.25 of the Disclosure Schedule sets forth a         true, correct and complete list of the names and locations of all banks and other financial        institutions at which the Company maintains an account or safe deposit box, the names of        all Persons authorized to withdraw therefrom or that have access thereto and the names of         all Persons holding powers of attorney from the Company as of the date of this         Agreement.    5.26  Disclosures.  Neither this Agreement, nor any of the schedules, exhibits or certificates         attached hereto or delivered in connection herewith contain any untrue statement of a        material fact or omit a material fact necessary to make the statements contained herein or         therein, in light of the circumstances in which they were made, not misleading.  There is         no event, circumstance or other fact which has not been disclosed to Buyer in this         Agreement and the schedules attached hereto which has had or would reasonably be         expected to have a Material Adverse Effect.                                     ARTICLE VI                  REPRESENTATIONS AND WARRANTIES OF BUYER    As an inducement to Sellers to enter into this Agreement and consummate the transactions   contemplated hereby, Buyer hereby represents and warrants to Sellers that all of the following   representations and warranties in this ARTICLE VI are true and correct as of the date of this   Agreement and as of the Closing:     102596957.7 0059466-00008             39    

 

 6.1   Organization and Corporate Power.  Buyer is a corporation duly formed and validly         existing under the laws of the State of Nevada, with full corporate power and authority to         enter into this Agreement and to perform its obligations hereunder.    6.2   Authorization.  The execution, delivery and performance of this Agreement and the other         agreements contemplated hereby to be executed and delivered by Buyer and the         consummation of the transactions contemplated hereby and thereby have been duly and         validly authorized by all requisite corporate action on the part of Buyer, and at the         Closing no other corporate proceedings on the part of Buyer will be necessary to         authorize the execution, delivery or performance of this Agreement or the other         agreements contemplated hereby.  This Agreement, and the other agreements         contemplated hereby to be executed and delivered by Buyer, constitute valid and binding         obligations of Buyer, enforceable against Buyer in accordance with their respective         terms, except to the extent such enforceability may be limited by bankruptcy, insolvency        or similar laws, or by general principles of equity, applicable to creditors’ rights        generally.   6.3   Governmental Authorities and Consents.  No consent, approval or authorization of any         Governmental Authority or other third party is required to be obtained by Buyer in         connection with the execution and delivery of this Agreement or the consummation of the        transactions contemplated hereby.   6.4   Brokerage.  There are no claims for brokerage commissions, finders’ fees or similar         compensation in connection with the transactions contemplated by this Agreement based         on any arrangement or agreement made by or on behalf of Buyer.    6.5   Litigation.  There are no actions, suits, proceedings, orders or investigations pending or,         to the knowledge of Buyer, threatened against or affecting Buyer at law or in equity, or         before or by any Governmental Authority which would adversely affect Buyer’s         performance under this Agreement or the consummation of the transactions contemplated         hereby.    6.6   Acquisition for Investment.  Buyer is not acquiring the Membership Interests with a view         to, or for sale in connection with, any distribution thereof within the meaning of the         Securities Act.    6.7   Valid Issuance.  The shares of Buyer Stock issued as Closing Stock Consideration         pursuant to this Agreement will be, as of the Closing, validly issued, fully-paid and non-        assessable share of Buyer Stock.                                    ARTICLE VII                                   COVENANTS    7.1   Expenses.  Each Party hereto shall pay all of its own costs and expenses (including         attorneys’, accountants’ and investment bankers’ fees and other out-of-pocket expenses)         in connection with the negotiation and execution of this Agreement, the performance of         its obligations hereunder and the consummation of the transactions contemplated hereby;    102596957.7 0059466-00008             40    

 

       provided, that Sellers shall pay all such costs and expenses incurred by or billed to the         Company (other than any such costs and expenses incurred by Profire).  Without limiting         the foregoing, each Party shall pay its own expenses incurred in connection with its         efforts to satisfy the conditions to the other Party’s obligation to consummate the         transactions contemplated hereby.      7.2   Further Transfers; Transition Assistance.  Each Party agrees that from time to time after         the Closing, it will execute and deliver (or cause its Affiliates to execute and deliver)         such further instruments, and take (or cause its Affiliates to take) such other action, as         may be reasonably necessary to consummate the transactions contemplated by this         Agreement and vest Buyer with full title to all Membership Interests and all assets,         properties, privileges, rights, approvals and immunities of the Company and its business,         or to effect the other purposes of this Agreement.  Each Seller agrees that subsequent to        the Closing it shall (and shall cause its Affiliates to) refer all customer inquiries with        respect to the Company and its business to the Company.  Each of the Parties will use its        best efforts to take all actions and to do all things necessary, proper or advisable in order        to consummate and make effective the transactions contemplated by this Agreement        (including satisfaction, but not waiver, of the covenants and conditions set forth in this        Agreement).   7.3   Confidentiality.  Each Seller shall (and shall cause its Affiliates to) treat as strictly         confidential and hold as such all of the Confidential Information, refrain from using or         disclosing any of the Confidential Information except pursuant to this Agreement, and         deliver promptly to Buyer or destroy, at the request and option of Buyer, all tangible         embodiments (and all tangible or electronic copies) of the Confidential Information that         are in his, her or its possession.  In the event that any Seller or their Affiliates is required         pursuant to a subpoena or a demand for the production of information or documents in         any legal proceeding, interrogatory, subpoena, civil investigative demand, or similar         process to disclose any Confidential Information, such Seller: (i) shall promptly notify         Buyer of such requirement; (ii) shall cooperate with Buyer and the Company to contest         such disclosure or seek an appropriate protective order; and (iii) only thereafter, may         disclose only so much of such Confidential Information as such Seller or its Affiliates, in         the good faith opinion of their legal counsel, are legally compelled to disclose pursuant         thereto or else stand liable for contempt; provided, however, that the disclosing Seller and         its Affiliates shall use their best efforts to obtain, at the request and expense of Buyer, an         order or other assurance that confidential treatment will be accorded to any such         Confidential Information disclosed pursuant to this Section 7.3.  The foregoing         provisions shall not apply to any Confidential Information that is generally available to         the public immediately prior to the time of disclosure, unless such Confidential         Information is so available due to the actions of Sellers or their Affiliates in violation of         the terms of this Agreement or any other Contract with respect to such Confidential         Information.    7.4   Release and Waiver.  As a material inducement to Buyer to enter into this Agreement,         effective as of the Closing, each Seller, on behalf of itself and its Affiliates, agrees not to         sue and fully releases and discharges the Buyer Indemnified Parties with respect to and         from any and all Losses, Liens, Liabilities (including employment contracts), covenants    102596957.7 0059466-00008             41    

 

      or proceedings of whatever kind or nature in law, equity or otherwise, whether now        known or unknown, suspected or alleged, contingent or absolute, all of which such Seller        or its Affiliates now owns or holds or has at any time owned or held against any of the        Buyer Indemnified Parties, including those arising out of or relating in any way to: (a)        matters or circumstances occurring or existing prior to or as of the Closing; (b) the       employment or engagement of any Seller with the Company prior to or as of the Closing,        including the commencement, renewal, termination and/or separation of such        employment at any time or for any reason; and (c) the purchase, acquisition, ownership,        sale, transfer or other disposition of the Membership Interests; provided, that nothing in        this Section 7.4 will be deemed to constitute a release or waiver by any Seller of any right        to enforce any obligation of Buyer under this Agreement.  It is the intention of each       Seller that such release be effective as a bar to each and every claim, demand and cause        of action hereinabove specified.  In furtherance of this intention, each Seller hereby        expressly waives any and all rights and benefits conferred upon such Seller or its        Affiliates by the provisions of Law and expressly consents that this release will be given        full force and effect according to each and all of its express terms and provisions,        including those related to unknown and unsuspected claims, demands and causes of        action, if any.   7.5   Non-Competition and Non-Solicitation.           (a)   For the period commencing with Closing and ending on the date three (3) years              after the Effective Date, each Seller shall not, and shall cause its Affiliates not to,              for any reason whatsoever, directly or indirectly, for itself, himself or herself, or              on behalf of or in conjunction with any other Person, take any of the following              actions or engage in any of the following conduct anywhere in the United States              or Canada:               (i)   engage as an equity holder, officer, director, owner, partner, joint venturer,                    or in a managerial capacity, whether as an employee, independent                    contractor, consultant or advisor, in any business selling any products or                    the Company, Buyer or their Affiliates; provided, that the restrictions set                    forth in this Section 7.5(a)(i) shall not prohibit Dustin Baker from owning                    or holding a passive, minority equity interest in Last Arrow                    Manufacturing, so long as Dustin Baker does not actively participate in the                    management, direction or activities of Last Arrow Manufacturing and                    complies with all of his obligations set forth in Section 7.3 and this                    Section 7.5;               (ii)  sell, offer, design, market, install, service or provide products or services                    in competition with those currently sold, offered, designed, marketed,                    serviced or contemplated by the Company, Buyer or their Affiliates, or                   call upon for the purpose of soliciting or selling, offering or providing                   products or services in competition with those currently offered or                    contemplated by the Company, Buyer or their Affiliates, to any Person                    who is at that time, or has been within the five (5) year period immediately    102596957.7 0059466-00008             42   

 

                  preceding the Closing, a customer or prospective customer of the                   Company, Buyer or their Affiliates; or              (iii) (A) induce or attempt to induce any employee or independent contractor                   of the Company, Buyer or their Affiliates, to terminate or diminish its                   employment or engagement with such entity, or in any way interfere with                   the relationship between the Company, Buyer or their Affiliates and any                   such employee or independent contractor thereof, (B) hire or engage any                   Person who was an employee or independent contractor of the Company,                   Buyer or their Affiliates, at any time during the one (1) year period                   immediately preceding the Closing or thereafter, or (C) induce or attempt                   to induce any customer, supplier, vendor, service provider, employee,                   independent contractor, licensee, licensor, lessor or other business relation                   of the Company, Buyer or their Affiliates, to cease or reduce its business                   with the Company, Buyer or their Affiliates or their respective businesses,                   or in any way interfere with the relationship between the Company, Buyer                   or their Affiliates and any such customer, supplier, vendor, service                   provider, employee, independent contractor, licensee, licensor, lessor or                   other business relation (including making any negative statements or                   communications about the Company, Buyer or their Affiliates or their                   respective businesses).              The Parties intend that the covenants contained in this Section 7.5(a) shall be              deemed to be a series of separate covenants, one for each state of the United             States and each province of Canada and, except for geographic coverage, each              such separate covenant shall be identical in terms to the covenant contained in this              Section 7.5(a).         (b)   Each Party acknowledges and agrees that the foregoing covenants in this Section              7.5 impose a reasonable restraint on Sellers and their Affiliates in light of the              activities and business of Buyer and the Company on the date of the execution of             this Agreement.        (c)   All of the covenants in this Section 7.5 shall be construed as an agreement              independent of any other provision in this Agreement, and the existence of any              claim or cause of action of any Seller Indemnified Party against Buyer or the              Company, whether predicated on this Agreement or otherwise, shall not constitute              a defense to the enforcement by Buyer of such covenants.  It is understood by the              Parties that the covenants contained in this Section 7.5 are essential elements of              this Agreement and that, but for the agreement of Sellers and their Affiliates to              comply with such covenants, Buyer would not have agreed to enter into this              Agreement.  Each Seller and Buyer have independently consulted with their              respective counsel and have been advised concerning the reasonableness and              propriety of such covenants with specific regard to the nature of the Company’s              business and the business conducted by Buyer.  Each Seller hereby agrees that all              covenants contained in this Section 7.5 are material, reasonable and valid, and              voluntarily, knowingly and irrevocably waives all defenses to the strict   102596957.7 0059466-00008             43   

 

            enforcement hereof by Buyer.  The covenants in this Section 7.5 are severable and              separate, and the unenforceability of any specific covenant in any jurisdiction             shall not affect the enforceability of such covenant in any other jurisdiction, or the             provisions of any other covenant.  Moreover, in the event any court of competent             jurisdiction shall determine that the scope, time or territorial restrictions set forth             are unreasonable o unenforceable as written, then it is the intention of the Parties             that such restrictions be enforced to the fullest extent which the court deems             reasonable and enforceable, and the Agreement shall thereby be reformed.  The             covenants contained in this Section 7.5 shall not be affected by any breach of any              other provision hereof by any Party.         (d)   Because of the difficulty of measuring economic losses to Buyer as a result of a              breach of the foregoing covenants in this Section 7.5, and because of the              immediate and irreparable damage that could be caused to Buyer for which Buyer             would have no other adequate remedy, each Seller agrees that the foregoing             covenant may be enforced by Buyer in the event of any actual or threatened             breach by any Seller or its Affiliates, by an injunction, restraining order, specific             performance and other equitable remedies, without the requirement of posting a             bond or other security, and in addition to, but not in lieu of, any other available              remedies pursuant to this Agreement, by statute or at law (including monetary              damages).   7.6   Public Announcements.  Buyer and the Seller Representative shall communicate with        each other and cooperate with each other prior to any public disclosure of the transactions        contemplated by this Agreement.  Each Party agrees not to (and agrees to cause its agents        and representatives not to) issue any press release or make any other public        announcement relating to this Agreement or the transactions contemplated by this        Agreement without the prior written approval of Buyer and the Seller Representative;        provided, that Buyer and its Affiliates may disclose this Agreement and the transactions        contemplated hereby to the extent required by applicable Laws (including Securities        Laws) and The NASDAQ Stock Market rules.   7.7   Lock-Up.  Each Seller covenants and agrees, for a period of twelve (12) months        immediately following the Effective Date (the “Lock Up Period”), not to, directly or        indirectly, sell, offer, transfer, assign, exchange, dispose of or otherwise distribute, or       grant any legal or beneficial interest in, grant any option or right with respect to, any       shares of Buyer Stock received pursuant to this Agreement, or any other securities       received in any stock split, stock dividend, conversion, exchange or recapitalization of       such Buyer Stock.  Sellers’ acknowledge and agree that each certificate issued with       respect to any shares of Buyer Stock received pursuant to this Agreement will bear a       restrictive legend and stop-transfer instructions in accordance with the provisions of this       Section 7.7 and the other restrictions on transfer imposed by applicable Laws.  Following        the end of the Lock Up Period, upon the request of Sellers, Buyer will reasonably        cooperate with Sellers to remove from any certificate issued with respect to any shares of        Buyer Stock received pursuant to this Agreement any restrictive legend evidencing the        restrictions imposed pursuant to this Section 7.7.    102596957.7 0059466-00008             44   

 

                                 ARTICLE VIII                                   TAX MATTERS    8.1   Tax Indemnification.  Each Seller shall jointly and severally, up to such Seller’s Pro Rata         Share of such Losses, indemnify the Buyer Indemnified Parties and hold them harmless         from and against any Losses attributable to: (a) all Taxes (or the non-payment thereof) of         the Company for all taxable periods ending on or before the Effective Date and the         portion through the Effective Date for any taxable period that includes (but does not end         on) the Effective Date (“Pre-Closing Tax Period”), including, without limitation, any Tax         imposed under Section 1374 of the Code; (b) all Taxes of any member of an affiliated,         consolidated, combined or unitary group of which the Company or any of its         predecessors is or was a member on or prior to the Closing, including pursuant to        Treasury Regulation Section 1.1502-6 or any analogous or similar state, local, or foreign        Law; and (c) any and all Taxes of any Person (other than the Company) imposed on the        Company as a transferee or successor, by contract or pursuant to any Law, which Taxes        relate to an event or transaction occurring before the Closing.   8.2   Straddle Period.  In the case of any taxable period that includes (but does not end on) the         Effective Date (a “Straddle Period”), the amount of any Taxes for the Pre-Closing Tax         Period that are based on or measured by income or receipts of the Company or that are         imposed on other activities that can be assigned to a specific date shall be determined        based on an interim closing of the books as of the Closing (and for such purpose, the        taxable period of any partnership or other pass-through entity in which the Company        holds a beneficial interest shall be deemed to terminate at such time), and the amount of        other Taxes of the Company for a Straddle Period that relates to the Pre-Closing Tax        Period shall be deemed to be the amount of such Tax for the entire taxable period        multiplied by a fraction, the numerator of which is the number of days in the taxable        period ending on the Effective Date, and the denominator of which is the number of days        in such Straddle Period.   8.3   Responsibility for Filing Pre-Closing Tax Returns.  Sellers shall at their cost prepare or         cause to be prepared, and timely file or cause to be timely filed, all Tax Returns of the         Company with respect to any Pre-Closing Tax Period.  Any such Tax Return shall be        prepared in a manner consistent with prior practices of the Company and the terms of this        Agreement, except as required by Law.  The Seller Representative shall deliver to Buyer        a draft copy of each such Tax Return so as to afford Buyer a reasonable opportunity to        review and comment on such Tax Return (not less than thirty (30) days prior to the        applicable filing deadline in the case of any income tax return), and Sellers shall make all        changes reasonably requested by Buyer and based on Law.  Sellers shall not amend any        such Tax Returns without the written consent of Buyer, not to be unreasonably withheld.    8.4   Responsibility for Filing Straddle Period Tax Returns.  Buyer shall at its cost prepare or         cause to be prepared, and timely file or cause to be timely filed, all Tax Returns of the         Company with respect to any Straddle Period.  Any such Tax Return shall be prepared in         a manner consistent with prior practices of the Company and the terms of this         Agreement, except as required by Law.  Buyer shall deliver to the Seller Representative a    102596957.7 0059466-00008             45    

 

       draft copy of each such Tax Return so as to afford the Seller Representative a reasonable         opportunity to review and comment on such Tax Return (not less than thirty (30) days         prior to the applicable filing deadline in the case of any income tax return), and make all         changes reasonably requested by the Seller Representative.  Buyer shall not amend any         such Tax Returns without the written consent of the Seller Representative, not to be         unreasonably withheld.    8.5   Transfer Taxes.  All Transfer Taxes incurred in connection with the transactions         contemplated by this Agreement shall be paid by the Party incurring such Taxes under         applicable Law when due.  The responsible Party shall, at its own expense, file all         necessary Tax Returns and other documentation with respect to all such Transfer Taxes.          The filing Party shall deliver to the other Parties a draft copy of each such Tax Return so         as to afford the other Parties a reasonable opportunity to review and comment on such         Tax Return, and make all changes reasonably requested by the other Parties.      8.6   Cooperation on Tax Matters.          (a)   Each Seller, the Company and Buyer shall cooperate as and to the extent              reasonably requested by any Party hereto in connection with the preparation and               filing of Tax Returns as provided herein and any audit, litigation or other              proceeding with respect to Taxes related to the Company.  Such cooperation shall              include the provision of records and information which are reasonably relevant to              any such Tax Return, audit, litigation or other proceeding and making employees              available on a mutually convenient basis to provide additional information and              explanation of any material provided hereunder.         (b)   Buyer and Sellers further agree, upon request, to use reasonable efforts to obtain              any certificate or other document from any Governmental Authority or any other              Person as may be necessary to mitigate, reduce or eliminate any Tax that could be              imposed.         (c)   Buyer and Sellers further agree, upon request, to provide any other Party with all              information that such Party may be required to report pursuant to Section 6043 of              the Code and all Treasury Regulations promulgated thereunder.   8.7   Tax Sharing Agreements.  All tax-sharing agreements or similar agreements with respect         to or involving the Company shall be terminated as of the Closing and, after the Closing,         the Company shall not be bound thereby or have any liability thereunder.    8.8   Withholding.  Buyer shall have the right to withhold any amount payable to Sellers under         this Agreement as is required by Law and, to the extent such amounts are paid over to the         applicable taxing authority and the Seller Representative is given notice of such         withholding, all such amount shall be treated as paid to Sellers under this Agreement.     102596957.7 0059466-00008             46    

 

                                 ARTICLE IX                                INDEMNIFICATION   9.1   Survival.           (a)   Survival of Representations and Warranties.  The representations and warranties              in this Agreement and the schedules and exhibits attached hereto or in any writing              delivered by any Party to any of the other Parties in connection with this              Agreement shall survive the Closing as follows:               (i)   the representations and warranties in Section 5.12 (Tax Matters), Section                    5.17 (Employees), Section 5.19 (Employee Benefit Plans) and Section                    5.22 (Environmental Matters) shall terminate on the later of (A) the five                    (5) year anniversary of the Effective Date or (B) the date when the                    applicable statutes of limitations with respect to the Liabilities in question                    expire (giving effect to any extensions or waivers thereof), plus sixty (60)                    days;               (ii)  the representations and warranties in Section 4.1 (Power of Sellers),                    Section 4.2 (Authorization; No Breach), Section 4.3 (Brokerage), Section                    4.4 (Title to Membership Interests), Section 4.5 (Investment), Section 5.1                    (Organization and Power), Section 5.2 (Authorization; No Breach),                    Section 5.3 (Capitalization; Subsidiaries), the first sentence of Section                    5.11 (Assets), Section 5.16 (Brokerage), Section 6.1 (Organization and                    Corporate Power), Section 6.2 (Authorization), and Section 6.4                    (Brokerage) (each of the foregoing, a “Fundamental Representation”) shall                    not terminate; and               (iii) all other representations and warranties in this Agreement and the                    schedules attached hereto or in any writing delivered by any Party to any                    other Party in connection with this Agreement shall terminate eighteen                    (18) months following the Closing;               provided, that any representation or warranty in respect of which indemnity may              be sought under Section 9.2, and the indemnity with respect thereto, shall survive              the time at which it would otherwise terminate pursuant to this Section 9.1 if              notice of the inaccuracy or breach or potential inaccuracy or breach thereof giving              rise to such right or alleged right of indemnity shall have been given to the Party              against whom such indemnity may be sought prior to such time.  The              representations and warranties in this Agreement and the schedules attached              hereto or in any writing delivered by any Party to any other Party in connection              with this Agreement shall survive for the periods set forth in this Section 9.1 and              shall in no event be affected by any investigation, inquiry or examination made              for or on behalf of any Party, or the knowledge of any Party’s officers, directors,              shareholders, employees or agents, as applicable, or the acceptance by any Party              of any certificate or opinion hereunder.  There shall be no limitation on the time   102596957.7 0059466-00008             47   

 

            within which notice of a claim based on fraud or Willful Breach on the part of any              Party may be made.         (b)   Survival of Covenants.  Each covenant or agreement in this Agreement and the              schedules attached hereto or in any agreement, certificate, instrument or writing              delivered by any Party to any other Party in connection with this Agreement shall              survive the Closing and be enforceable until such covenant or agreement has been              fully performed.   9.2   Indemnification.           (a)   Indemnification for Benefit of Buyer.  Each Seller shall indemnify, defend and              save and hold each of the Buyer Indemnified Parties harmless against, and pay on              behalf of or reimburse each of the Buyer Indemnified Parties as and when              incurred for any Losses which any of the Buyer Indemnified Parties may suffer,              sustain or become subject to, as a result of, in connection with, relating or              incidental to, or by virtue of:               (i)   any breach or inaccuracy of any representation or warranty of any Seller                    under this Agreement or any of the schedules attached hereto (including                    the Disclosure Schedule), or in any of the agreements, certificates or other                    instruments or documents furnished to Buyer by any Seller or the                    Company or their Affiliates pursuant to this Agreement;               (ii)  any nonfulfillment, nonperformance or breach of any covenant or                    agreement by any Seller or their Affiliates (including, prior to the Closing,                    the Company) under this Agreement, any of the schedules attached hereto                    (including, without limitation, the Disclosure Schedule), or in any of the                    agreements, certificates or other instruments or documents furnished to                    Buyer by any Seller, the Company or their Affiliates pursuant to this                    Agreement;               (iii) to the extent the following items are not included in the calculation of the                    final Closing Cash Amount, without duplication: (A) any Closing                    Indebtedness; (B) any Non-Ordinary Course Liabilities; and (C) any                    Excluded Liabilities; and               (iv)  those facts, circumstances, events, occurrences or matters set forth on                    Exhibit 9.2(a)(iv).               Each Seller shall be jointly and severally liable to the Buyer Indemnified Parties              for any and all Losses subject to indemnification pursuant to this Section 9.2(a) up              to such Seller’s Pro Rata Share of such Losses; provided, however, that a Seller              shall not be liable to Buyer or the Buyer Indemnified Parties to the extent (but              only to the extent) of those Losses subject to indemnification pursuant to this              Section 9.2(a) that result solely and directly from (A) breach or inaccuracy of any              representation or warranty made by and with respect to another Seller pursuant to              ARTICLE IV, or (B) nonfulfillment or breach by another Seller of any covenant   102596957.7 0059466-00008             48   

 

            on the part of such other Seller pursuant to Sections 7.3, 7.4, 7.5 or 7.7; provided,              further, that each Seller shall be fully liable to Buyer and the Buyer Indemnified             Parties to the extent of those of those Losses subject to indemnification pursuant             to this Section 9.2(a) that arise in connection with, relating or incidental to, or by              virtue of (X) breach or inaccuracy of any representation or warranty made by and              with respect to such Seller pursuant to ARTICLE IV, or (Y) nonfulfillment or              breach by such Seller of any covenant on the part of such Seller pursuant to              Sections 7.3, 7.4, 7.5 or 7.7, or (Z) fraud, intentional misrepresentation,              intentional breach, willful misconduct or criminal activity on the part of such              Seller.         (b)   Indemnification for Benefit of Sellers.  Buyer shall indemnify the Seller              Indemnified Parties and save and hold each of them harmless against, and pay on              behalf of or reimburse each of the Seller Indemnified Parties as and when              incurred for any Losses which any of the Seller Indemnified Parties may suffer,              sustain or become subject to, as a result of, in connection with, relating or              incidental to, or by virtue of:               (i)   any breach of any representation or warranty of Buyer under this                   Agreement, any of the schedules attached hereto, or in any of the                    agreements, certificates or other instruments or documents furnished to                    Sellers by Buyer pursuant to this Agreement; and               (ii)  any nonfulfillment or breach of any covenant or agreement by Buyer                    under this Agreement or any of the schedules attached hereto or in any of                   the agreements, certificates or other instruments or documents furnished to                    Sellers by Buyer pursuant to this Agreement.   9.3   Materiality.  For purposes of determining any breach or inaccuracy of a representation or        warranty and the calculation of Losses arising in connection therewith under this        ARTICLE IX, each representation and warranty contained in this Agreement or in any of        the agreements, certificates or other instruments or documents furnished pursuant to this        Agreement, shall be read and interpreted without regard and without giving effect to any       qualification as to materiality, Material Adverse Effect or other similar qualification        contained in or otherwise applicable to such representation or warranty.   9.4   Indemnification Procedures.         (a)   Manner of Payment.  Any indemnification of the Buyer Indemnified Parties or              Seller Indemnified Parties pursuant to Section 9.2 shall be effected by wire              transfer of immediately available funds from Sellers or Buyer, as the case may be,              to an account designated by Buyer or the Seller Representative, as the case may              be, within ten (10) days after the determination thereof.  Any such              indemnification payments shall include interest at the Applicable Rate, calculated              on the basis of the actual number of days elapsed over 360, from the date any              such Loss is suffered or sustained to the date of payment.  Any amounts that              Buyer reasonably believes are owing from any Seller pursuant to Section 9.2(a)   102596957.7 0059466-00008             49   

 

            may, at the option of Buyer, be paid from the Escrow Amount in accordance with              the Escrow Agreement, or as a set off against any Adjustment Amount (as set              forth in Section 2.3(b)(vi)), if any, or other amount then due and owing from              Buyer to Sellers, or as a set off against any Buyer Stock delivered as part of the              Closing Stock Consideration or otherwise held by Sellers, and shall otherwise be              paid directly by Sellers, jointly and severally, in accordance with the terms of this              Section 9.4.  All indemnification payments under this Section 9.4 shall be treated              for Tax purposes as adjustments to the Purchase Price, unless otherwise required              by applicable Law.           (b)   Defense of Third Party Claims.  Any Party making a claim for indemnification              under Section 9.2 (an “Indemnitee”) shall notify the indemnifying Party (or              Parties) (each, an “Indemnitor”) of the claim in writing promptly after receiving              written notice of any action, lawsuit, proceeding, investigation or other claim             against it by a third party that is not an Affiliate of the Indemnitee (each, a “Third              Party Claim”), describing the Third Party Claim, the basis therefor and the              amount thereof (if known and quantifiable); provided, that the failure to so notify              any Indemnitor shall not relieve the Indemnitor of its obligations hereunder              except to the extent (and only to the extent) that such failure shall have caused the              damages for which the Indemnitor is obligated to be greater than such damages              would have been had the Indemnitee given the Indemnitor prompt notice of such              Third Party Claim hereunder.  Any Indemnitor shall be entitled to participate in              the defense of such action, lawsuit, proceeding, investigation or other claim              giving rise to an Indemnitee’s claim for indemnification at such Indemnitor’s sole              cost and expense; provided, that the Indemnitee shall at all times retain control of              the defense of such Third Party Claim.   9.5   Waiver.  Each Seller hereby agrees that such Seller and its Affiliates shall not make any        claim for indemnification hereunder against the Company by reason of the fact that such        Seller, its Affiliates, or one or more of their respective employees, agents or        representatives was a member, manager, director, officer, employee or agent of the        Company or was serving at the request of the Company as a partner, trustee, manager,        director, officer, employee or agent of another entity (whether such claim is for        judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses        or otherwise) with respect to any claim, action, lawsuit, proceeding, investigation brought        by any Buyer Indemnified Party against such Seller, and each Seller hereby        acknowledges and agrees that such Seller shall have no claims or right to contribution or        indemnity from the Company with respect to any amounts paid by such Seller pursuant to        Section 9.2.   9.6   Limitations on Indemnity.         (a)   Basket.  No claim for indemnification shall be made by the Buyer Indemnified              Parties pursuant to Section 9.2(a)(i) or by the Seller Indemnified Parties pursuant              to Section 9.2(b)(i) with respect to an individual item of Losses subject to              indemnification unless and to the extent that the aggregate of all such Losses              incurred by the Buyer Indemnified Parties or the Seller Indemnified Parties,   102596957.7 0059466-00008             50   

 

             respectively, under this Agreement shall be in excess of $50,000, whereupon               Sellers and Buyer, as the case may be, shall be liable for all such Losses from the               first dollar.          (b)   Cap.  The maximum aggregate liability of Buyer for Losses pursuant to Section               9.2(b)(i), on the one hand, or Sellers for Losses pursuant to Section 9.2(a)(i), on               the other hand, under this Agreement shall be $1,880,000.          (c)   Exceptions.  Notwithstanding the foregoing, the limitations set forth in this               Section 9.6 shall not apply to Losses: (i) arising as a result of, in connection with,               relating or incidental to or by virtue of fraud, intentional misrepresentation,               intentional breach, willful misconduct, criminal activity or the breach or              inaccuracy of any Fundamental Representation; or (ii) the breach or inaccuracy of              the representations and warranties set forth in the second sentence of Section 5.6               or in Sections 5.12, 5.17, 5.19 or 5.22; or (iii) subject to indemnification pursuant               to Sections 9.2(a)(ii), 9.2(a)(iii), 9.2(a)(iv) and 9.2(b)(ii).    9.7   Exclusive Remedy.  The Parties acknowledge and agree that their sole and exclusive   remedy with respect to any claim relating to the subject matter of this Agreement shall be   pursuant to the indemnification provisions of this ARTICLE IX, except for claims involving: (a)   fraud, intentional misrepresentation or Willful Breach of any covenant, in which case the Parties   shall have all rights and remedies available under this Agreement, at law, in equity or by statute  (which remedies shall be cumulative, and not alternative or exclusive); and/or (b) nonfulfillment  or breach of any covenant or agreement under this Agreement, or in any agreement or other  agreement, certificate or instrument furnished pursuant to this Agreement, in which case the  Parties shall be entitled to seek equitable relief (including an injunctive relief or specific  performance), without the requirement of posting a bond or other security, in addition to all other  rights and remedies available in accordance with this Agreement.  Sellers acknowledge and agree  that the covenants of each Seller set forth in this Agreement are unique and valuable to Buyer  and that Buyer will not have a sufficient remedy at law, and shall be entitled to seek specific  enforcement of such covenants, in the event of any actual or threatened nonperformance or  breach of such covenants by any Seller.                                     ARTICLE X                                 MISCELLANEOUS    10.1  Amendment and Waiver.  This Agreement may be amended, and any provision of this         Agreement may be waived; provided, that: (a) any such amendment or waiver shall be         binding upon Sellers only if set forth in a writing executed by the Seller Representative         and referring specifically to the provision alleged to have been amended or waived; and         (b) any such amendment or waiver shall be binding upon Buyer only if set forth in a         writing executed by Buyer and referring specifically to the provision alleged to have been         amended or waived.  No course of dealing between or among the Parties shall be deemed         effective to modify, amend or discharge any part of this Agreement or any rights or         obligations of any Party under or by reason of this Agreement, and a waiver of any     102596957.7 0059466-00008             51    

 

      provision by any Party on one occasion shall not be deemed to be a waiver of the same or        any other breach on a future occasion.   10.2  Notices.  All notices, demands and other communications to be given or delivered under        or by reason of the provisions of this Agreement shall be in writing and, shall be deemed        to have been given as of the earlier of: (a) when personally delivered, or sent by facsimile        (with hard copy to follow); (b) one (1) day following dispatch by reputable overnight        express courier, charges prepaid; (c) three (3) days following mailing by U.S. certified or        registered mail, postage prepaid and return receipt requested; or (d) when sent by email.         Unless another address is specified in by notice given pursuant to this Section 10.2, all        notices, demands and communications to the Parties shall be sent to the addresses        indicated below:               Notices to any or all of Sellers or the Seller Representative:                             Dustin B. Baker              10774 Township Road 506              Shreve, Ohio 44676              Email: dbaker@midflowservices.com                            Brant Baker              389 Marshall Heights Drive                          Wexford, PA 15090             Email: bbaker@midflowservices.com                                                     with a copy (which shall not constitute notice to Sellers or the Seller              Representative) to:                            Critchfield, Critchfield & Johnston, Ltd.              138 East Jackson Street              Millersburg, Ohio 44654              Attn:   Garrett M. Roach              Facsimile No.:(330)674-4469              Email: roach@ccj.com                Notices to Buyer:               Profire Energy, Inc.              321 South 1250 West              Lindon, UT 84042              Attn:       Todd Fugal              Facsimile No.: (801) 785-5545              Email:     tfugal@profireenergy.com                  102596957.7 0059466-00008             52   

 

            with a copy (which shall not constitute notice to Buyer) to:                             Stoel Rives LLP              201 S.  Main Street, Suite 1100              Salt Lake City, UT 84111              Attn:       Samuel P.  Gardiner              Facsimile No.: (801) 578-6999              Email:     sam.gardiner@stoel.com                10.3  Assignment.           (a)   This Agreement and all of the provisions hereof shall be binding upon and inure              to the benefit of the Parties and their respective successors and permitted assigns,              except that neither this Agreement nor any of the rights, interests or obligations             hereunder may be assigned or delegated by any Seller without the prior written             consent of Buyer.  Buyer may assign its rights, interests or obligations under this             Agreement only to the extent set forth in Section 10.3(b) below.         (b)   Buyer may assign in whole or in part its rights and obligations pursuant to this              Agreement (including the right to purchase the Membership Interests) and all              other agreements, documents and instruments executed and/or delivered in              connection herewith to one or more of its Affiliates, and Buyer may, in its sole              discretion, direct Sellers to convey the Membership Interests, in whole or in part,              to one or more of Buyer’s Affiliates.  Buyer may assign this Agreement, all other              agreements, documents and instruments executed and/or delivered in connection              herewith, and its rights and obligations hereunder and thereunder, in connection              with a merger or consolidation involving Buyer or in connection with a sale of              stock (or other ownership interests) or assets of Buyer or other disposition of all              or any portion of Buyer’s business.  Buyer may assign any or all of its rights              pursuant to this Agreement, including its rights to indemnification, and all other              agreements, documents and instruments executed and/or delivered in connection              herewith, to any of its lender(s) as collateral security.   10.4  Severability.  Whenever possible, each provision of this Agreement shall be interpreted in        such manner as to be effective and valid under applicable Law, but if any provision of       this Agreement or the application of any such provision to any Person or circumstance        shall be held to be prohibited by or invalid, illegal or unenforceable under applicable Law        in any respect by a court of competent jurisdiction, such provision shall be ineffective        only to the extent of such prohibition, invalidity, illegality or unenforceability, without        invalidating the remainder of such provision or the remaining provisions of this        Agreement.  Furthermore, in lieu of such prohibited, illegal, invalid or unenforceable        provision, there shall be added automatically as a part of this Agreement a permissible,        legal, valid and enforceable provision as similar in terms to such illegal, invalid, or        unenforceable provision as is possible, permissible and consistent with the intentions of        the Parties as set forth in this Agreement.    102596957.7 0059466-00008             53   

 

10.5  Interpretation.  The headings and captions used in this Agreement and the table of        contents to this Agreement are for reference purposes only, and shall not affect in any        way the meaning or interpretation of this Agreement.  Any capitalized term used in any        schedule or exhibit attached hereto, and not otherwise defined therein, shall have the        meaning set forth in this Agreement.  The use of the word “including” herein shall mean        “including without limitation.” The Parties hereto intend that each representation,        warranty and covenant contained herein shall have independent significance.  If any Party        has breached any representation, warranty or covenant contained herein in any respect,        the fact that there exists another representation, warranty or covenant relating to the same        subject matter (regardless of the relative levels of specificity) which such Party has not        breached shall not detract from or mitigate the fact that such Party is in breach of the first        representation, warranty or covenant.   10.6  Entire Agreement.  This Agreement and the agreements and documents referred to herein        contain the entire agreement and understanding between the Parties hereto with respect to        the subject matter hereof and supersede all prior agreements and understandings, whether        written or oral, relating to such subject matter in any way.   10.7  Counterparts.  This Agreement may be executed in one or more counterparts, each of        which will be deemed an original, and all of which together will be deemed to be one and        the same instrument binding upon the Parties, notwithstanding the fact that all of the        Parties are not signatory to the original or the same counterpart.  Counterparts to this        Agreement and the other agreements, certificates and instruments delivered pursuant        hereto may be signed, transmitted and delivered electronically, by email in portable        document format (.pdf) or by other electronic means which create or preserve a        retrievable image of an original signature, and such counterparts shall be deemed        originals for all purposes.   10.8  Governing Law.  THIS AGREEMENT AND ALL QUESTIONS OR DISPUTES        CONCERNING THE CONSTRUCTION, VALIDITY, INTERPRETATION AND        ENFORCEABILITY OF THIS AGREEMENT AND THE SCHEDULES ATTACHED        HERETO, AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS        AGREEMENT, SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE        STATE OF UTAH, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR        CONFLICT OF LAW RULES OR PROVISIONS.   10.9  Venue.  The Parties hereby agree that any action, suit or proceeding arising out of or        related to this Agreement shall be conducted only in the courts of the United States or the        State of Utah located in Salt Lake County, Utah.  Each Party hereby voluntarily,        knowingly and irrevocably consents and submits to the exclusive personal jurisdiction of        and venue of such courts located in Salt Lake County, Utah.  Each Party agrees to accept        service of any summons, complaint or other initial pleading made in the manner provided        for the giving of notices in Section 10.2.  Nothing contained in this Section 10.9 shall be        construed to limit or preclude a Party from bringing any action in any court of competent        jurisdiction for injunctive or other provisional relief to compel any other Party to comply        with its obligations under this Agreement or any other agreement between or among the        Parties at any time.   102596957.7 0059466-00008             54   

 

 10.10 No Strict Construction.  Notwithstanding the fact that this Agreement may have been         drafted and prepared by or on behalf of one of the Parties, the Parties confirm that they         and their respective counsel have reviewed, negotiated and adopted this Agreement as the         joint agreement and understanding of the Parties, and the language used in this         Agreement shall be deemed to be the language chosen by the Parties hereto to express         their mutual intent, and no rule of strict construction shall be applied against any Person.    10.11 No Third-Party Beneficiaries.  This Agreement is for the sole benefit of the Parties hereto         and their permitted assigns and nothing herein expressed or implied, shall give or be         construed to give any Person, other than the Parties hereto and such permitted assigns,        any legal or equitable rights hereunder.   10.12 Seller Representative.            (a)   Designation.  Dustin B. Baker (the “Seller Representative”) is hereby designated               by Sellers to serve as the representative of Sellers with respect to the matters               expressly set forth in this Agreement to be performed by the Seller               Representative.          (b)   Authority.  Each Seller, by the execution of this Agreement, hereby knowingly,               voluntarily and irrevocably appoints the Seller Representative as the agent, proxy               and attorney-in-fact for such Seller for all purposes of this Agreement, with the               full power and authority on such Seller’s behalf to: (i) consummate the               transactions contemplated herein; (ii) execute and deliver to Buyer any               confirmatory assignments with respect to the Membership Interests and such               further instruments of transfer as Buyer shall reasonably request; (iii) pay such              Seller’s expenses incurred in connection with the negotiation and performance of              this Agreement (whether incurred on or after the date hereof); (iv) disburse any              funds received hereunder to such Seller; (v) execute and deliver any amendment              or waiver hereto; (vi) take all other actions to be taken by or on behalf of such              Seller in connection herewith; (vii) negotiate, settle, compromise and otherwise              handle adjustments to the Closing Consideration as set forth in Section 2.3(b) and               all claims for indemnification made by any of the Buyer Indemnified Parties               pursuant to Section 9.2 hereof; and (viii) do each and every act and exercise any               and all rights which such Seller is permitted or required to do or exercise under              this Agreement.  Each Seller acknowledges and agrees that such agency and               proxy are coupled with an interest, are therefore irrevocable without the consent               of the Seller Representative and shall survive the death, incapacity, bankruptcy,               dissolution or liquidation of such Seller.          (c)   Exculpation.  Neither the Seller Representative nor any agent employed by it shall               incur any Liability to any Seller by virtue of the failure or refusal of the Seller               Representative for any reason to consummate the transactions contemplated              hereby or relating to the performance of its other duties hereunder, except for               actions or omissions constituting fraud or bad faith.     102596957.7 0059466-00008             55    

 

10.13 Disclosure Schedule.  Nothing disclosed in the Disclosure Schedule shall qualify or        create an exception to a representation or warranty made in this Agreement unless such        disclosure identifies the exception with reasonable particularity and describes the relevant        facts in reasonable detail.  Without limiting the generality of the foregoing, the mere        listing (or inclusion of a copy) of a Contract, document or other item shall not qualify or        disclose an exception to a representation or warranty made in this Agreement, unless the        representation or warranty has to do with the existence of the document or other item        itself.  No qualifications or exceptions to any representations or warranties disclosed on        one Section of the Disclosure Schedule shall apply to any other representations or       warranties made in this Agreement unless (and then only to the extent that) such        qualification or exception is disclosed as provided herein on each such other applicable       Section of the Disclosure Schedule or the applicability of such disclosure is readily        apparent as a qualification or an exception to such other representation or warranty.  The        Disclosure Schedule is hereby incorporated in and made a part of this Agreement as if set        forth in full herein.    102596957.7 0059466-00008             56   

 

Brenton W. Hatch CEO

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