Document:

exv10w1

Exhibit 10.1

EXECUTION FINAL

ASSET PURCHASE AGREEMENT

BETWEEN

SPARTON MEDICAL SYSTEMS COLORADO, LLC

AND

DELPHI MEDICAL SYSTEMS, LLC

July 9, 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	1. CONVEYANCE OF THE ACQUIRED ASSETS:
	 	 	9	 
	 
	 	 	 	 
	1.1 Acquired Assets Transaction
	 	 	9	 
	1.2 Certain Excluded Assets
	 	 	9	 
	A. Third Party Assets
	 	 	9	 
	B. Insurance
	 	 	10	 
	C. Records
	 	 	10	 
	D. Claims
	 	 	10	 
	E. Tax Refunds
	 	 	10	 
	F. Personnel Records
	 	 	10	 
	G. Privileged Information and Materials
	 	 	10	 
	H. Inventory
	 	 	10	 
	I. Cash
	 	 	10	 
	J. Excluded Contracts/Lease
	 	 	10	 
	K. Receivables
	 	 	10	 
	L. Certain Licenses
	 	 	10	 
	M. Deposits
	 	 	11	 
	1.3 Post-Closing Asset Deliveries
	 	 	11	 
	1.4 No Assumption of Retained Liabilities by Purchaser
	 	 	11	 
	1.5 Assumed Liabilities
	 	 	12	 
	1.6 Non-Assignability
	 	 	12	 
	 
	 	 	 	 
	2. NONDISCLOSURE AGREEMENT; confidentiality:
	 	 	13	 
	 
	 	 	 	 
	3. PURCHASE PRICE:
	 	 	14	 
	 
	 	 	 	 
	3.1 Purchase Price for Acquired Assets
	 	 	14	 
	3.2 Holdback
	 	 	16	 
	3.3 Purchase Price Allocation
	 	 	16	 
	 
	 	 	 	 
	4. EMPLOYEE MATTERS:
	 	 	17	 
	 
	 	 	 	 
	4.1 Salaried Employees
	 	 	17	 
	4.2 Hourly Employees
	 	 	18	 
	4.3 Transferred Employees
	 	 	18	 
	A. Assumed Employee Accrual
	 	 	18	 
	B. Employee Benefit Plans
	 	 	19	 
	C. Severance
	 	 	19	 
	D. COBRA
	 	 	19	 
	E. WARN Act
	 	 	19	 
	F. Cooperation
	 	 	19	 
	 
	 	 	 	 
	5. [INTENTIONALLY OMITTED.]
	 	 	19	 
	 
	 	 	 	 
	6. REPRESENTATIONS AND WARRANTIES
	 	 	20	 

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	6.1 Warranties of Seller
	 	 	20	 
	A. Corporate Organization
	 	 	20	 
	B. Corporate Authority
	 	 	20	 
	C. No Conflict
	 	 	20	 
	D. No Joint Ventures
	 	 	20	 
	E. Title to Acquired Assets
	 	 	20	 
	F. Litigation
	 	 	21	 
	G. Compliance with Laws
	 	 	21	 
	H. Sufficiency of Assets
	 	 	21	 
	I. Financial Statements
	 	 	21	 
	J. [Intentionally Omitted.]
	 	 	21	 
	K. Absence of Certain Changes
	 	 	21	 
	L. Leased Real Property
	 	 	22	 
	M. Inventory
	 	 	22	 
	N. Intellectual Property
	 	 	22	 
	O. Employment and Labor Matters
	 	 	23	 
	P. Employee Benefits
	 	 	23	 
	Q. Contracts
	 	 	24	 
	R. Brokers
	 	 	25	 
	S. Licenses, Approvals, Other Authorizations
	 	 	25	 
	T. Environmental Matters
	 	 	25	 
	U. Taxes
	 	 	26	 
	V. Insurance
	 	 	27	 
	W. Product Warranty
	 	 	27	 
	X. Customers and Suppliers
	 	 	27	 
	Y. [Intentionally Omitted.]
	 	 	27	 
	Z. Accuracy of Information; Full Disclosure
	 	 	27	 
	AA. Certain Transactions
	 	 	28	 
	BB. Regulatory Compliance
	 	 	28	 
	CC. Survival
	 	 	29	 
	DD. Absence of Other Representations or Warranties
	 	 	29	 
	6.2 Warranties of Purchaser
	 	 	29	 
	A. Corporate Organization
	 	 	29	 
	B. Corporate Authority
	 	 	29	 
	C. No Conflicts
	 	 	29	 
	D. Consents and Approvals
	 	 	30	 
	E. Litigation
	 	 	30	 
	F. Brokers
	 	 	30	 
	G. Solvency
	 	 	30	 
	H. Availability of Funds
	 	 	30	 
	I. Compliance with Laws
	 	 	30	 
	J. Anti-Money Laundering
	 	 	30	 
	6.3 Fair Disclosure
	 	 	31	 
	6.4 Purchaser Acknowledgement
	 	 	31	 
	 
	 	 	 	 
	7. CONDITIONS TO CLOSING
	 	 	31	 
	 
	 	 	 	 
	7.1 Conditions to Obligations of Seller and Purchaser
	 	 	31	 
	A. No Law, Judgments, Etc
	 	 	31	 
	B. Excess Inventory
	 	 	31	 
	7.2 Conditions to Obligations of Purchaser
	 	 	31	 

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	A. Accuracy of Warranties
	 	 	32	 
	B. Performance of Covenants
	 	 	32	 
	C. Third Party Consents
	 	 	32	 
	D. UCC, Tax Lien and Judgment Search Results
	 	 	32	 
	E. Phase 1
	 	 	32	 
	F. New Road 18 Lease
	 	 	32	 
	G. No Material Adverse Effect
	 	 	32	 
	7.3 Conditions to Obligations of Seller
	 	 	32	 
	A. Accuracy of Warranties
	 	 	32	 
	B. Performance of Covenants
	 	 	33	 
	C. Payment of Purchase Price
	 	 	33	 
	D. Road 18 Lease Termination
	 	 	33	 
	E. No Material Adverse Effect
	 	 	33	 
	F. Delivery of Purchaser’s Certificate
	 	 	33	 
	 
	 	 	 	 
	8. CLOSING:
	 	 	33	 
	 
	 	 	 	 
	8.1 Closing Date
	 	 	33	 
	8.2 Ancillary Agreements
	 	 	33	 
	8.3 Miller Road Sublease
	 	 	33	 
	8.4 Seller’s Deliveries
	 	 	33	 
	8.5 Purchaser’s Deliveries
	 	 	34	 
	 
	 	 	 	 
	9. CERTAIN ADDITIONAL COVENANTS
	 	 	34	 
	 
	 	 	 	 
	9.1 Continued Operations
	 	 	34	 
	9.2 Registrations, Filings and Consents; Further Actions
	 	 	35	 
	9.3 Further Assurances
	 	 	35	 
	9.4 Indemnification
	 	 	37	 
	A. LIMITATIONS OF LIABILITY
	 	 	37	 
	B. Seller’s Agreement to Indemnify
	 	 	37	 
	C. Purchaser’s Agreement to Indemnify
	 	 	38	 
	D. Limitations on Agreements to Indemnify
	 	 	38	 
	E. Third Party Indemnification
	 	 	39	 
	F. Not Exclusive Indemnifications
	 	 	40	 
	9.5 Exclusivity
	 	 	40	 
	9.6 Connectivity
	 	 	40	 
	9.7 Sunrise Agreement
	 	 	41	 
	9.8 Storage
	 	 	41	 
	9.9 FDA Regulatory Compliance
	 	 	41	 
	9.10 Warranty Claims
	 	 	41	 
	9.11 Software and Electronic Records
	 	 	42	 
	 
	 	 	 	 
	10. TAX MATTERS
	 	 	43	 
	 
	 	 	 	 
	10.1 Seller Responsibilities
	 	 	43	 
	10.2 Purchaser Responsibilities
	 	 	43	 
	10.3 Mutual Assistance
	 	 	43	 
	 
	 	 	 	 
	11. TERMINATION
	 	 	43	 

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	12. MISCELLANEOUS
	 	 	44	 
	 
	 	 	 	 
	12.1 Notices
	 	 	44	 
	12.2 Bulk Sales Laws
	 	 	45	 
	12.3 Assignment
	 	 	45	 
	12.4 Entire Agreement
	 	 	45	 
	12.5 Waiver
	 	 	45	 
	12.6 Severability
	 	 	45	 
	12.7 Amendment
	 	 	46	 
	12.8 Expenses
	 	 	46	 
	12.9 Third Parties
	 	 	46	 
	12.10 Headings
	 	 	46	 
	12.11 Counterparts
	 	 	46	 
	12.12 Governing Law
	 	 	46	 
	12.13 Public Announcements
	 	 	46	 
	12.14 Venue and Retention of Jurisdiction
	 	 	46	 
	12.15 Risk of Loss
	 	 	46	 
	12.16 No Right of Setoff
	 	 	46	 
	12.17 Enforcement of Agreement
	 	 	47	 
	12.18 Dispute Resolution
	 	 	47	 
	12.19 Dollar Amounts
	 	 	47	 
	12.20 Jury Trial Waiver
	 	 	47	 

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ASSET PURCHASE AGREEMENT

     SPARTON MEDICAL SYSTEMS COLORADO, LLC, a Colorado limited liability company (“Sparton” or
“Purchaser”), and DELPHI MEDICAL SYSTEMS, LLC, a Delaware limited liability company (“Delphi” or
“Seller”), have entered into this Asset Purchase Agreement on July 9, 2010.

RECITAL:

     WHEREAS, the Seller desires to sell to Purchaser all of its right, title and interest in and
to the Acquired Assets (as defined below), and Purchaser desires to make such purchase subject to
the terms and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises, mutual promises, representations, warranties
and covenants contained in this Agreement and other good and valuable consideration, and intending
to be legally bound hereby, the Parties agree:

DEFINITIONS:

     The following terms, as used in this Agreement, have the following meanings whether used in
the singular or plural (other terms are defined in Sections or Schedules to which they pertain):

     “Acquired Assets” mean all of Seller’s right, title and interest in and to the assets owned by
or leased or licensed to the Seller and primarily used or held for use by Seller in connection with
the operation of the Business (other than the Excluded Assets), including the following:

     A. Equipment and Personal Property;

     B. Inventory;

     C. Contracts;

     D. Licenses;

     E. Owned Intellectual Property;

     F. Information Technology Assets;

     G. Books and Records; and

     H. The right to use the bailed Third Party Assets, but only to the extent of Seller’s
rights to use such bailed Third Party Assets.

     “Action” shall mean any action, suit, arbitration, inquiry, hearing, proceeding or
investigation by or before any court of competent jurisdiction, governmental or other regulatory or
administrative agency or commission or arbitral panel.

     “Additional Salaried Employees” has the meaning set forth in Section 4.1.C.

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     “Agreement” means this Asset Purchase Agreement, including all Schedules and Exhibits.

     “Allocation” has the meaning set forth in Section 3.3.A.

     “Ancillary Agreements” mean the Bill of Sale, the Assignment and Assumption Agreement, the
Transition Services Agreement, the Non-Competition Agreement, the Escrow Agreement and the Miller
Road Sublease.

     “Affiliate” (and, with a correlative meaning, “Affiliated”) shall mean, with respect to any
Person, any other Person that directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such first Person. As used in this
definition, “control” (including, with correlative meanings, “controlled by” and “under common
control with”) shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or partnership or
other ownership interests, by contract or otherwise).

     “Assumed Employee Accrual” has the meaning set forth in Section 4.3.A.

     “Assumed Liabilities” has the meaning set forth in Section 1.5.

     “Back-Up” has the meaning set forth in Section 9.11.

     “Base Inventory Value” has the meaning set forth in Section 3.1.B.

     “Baseline Report” has the meaning set forth in Section 3.1.D.

     “Books and Records” shall mean all of Seller’s books and records (or copies of relevant
portions thereof) primarily relating to the Acquired Assets, the Assumed Liabilities or the
operations of the Business as of the Closing Date, other than Tax Returns and related work papers
for taxable periods ending on or prior to the Closing Date.

     “Business” means the Seller’s contract manufacturing business conducted at the Facility,
pursuant to which Seller manufactures various products pursuant to the Customer Contracts.

     “Business Day” means any day other than a Saturday, a Sunday or a day on which banks in
Detroit, Michigan are authorized or obligated by law or executive order to close.

     “Closing” has the meaning set forth in Section 8.1.

     “Closing Date” means the date of Closing.

     “Confidential Information” has the meaning set forth in Section 2.2.

     “Consent” means any consent, approval, authorization, waiver, permit, agreement, license,
certificate, exemption, order, registration, declaration, filing or notice of, with or to any
Person, in each case required to permit the consummation of any of the transactions contemplated by
this Agreement.

     “Contracts” shall mean all existing contracts, leases, subleases, licenses, sublicenses and
similar binding agreements, commitments and arrangements of Seller primarily related to

2

 

the Business, whether written or oral, and all rights thereunder, including, without
limitation, the contracts set forth on Schedule 6.1.Q(i) hereto, the Supplier Contracts and
the Customer Contracts, and all contracts, leases, subleases, licenses, sublicenses and similar
binding agreements, commitments and arrangements of Seller primarily related to the Business,
whether written or oral, and all rights thereunder, arising from the conduct of the Business that
are entered into between the date of this Agreement and the Closing Date.

     “Customer Contracts” mean those purchase orders and supply agreements primarily related to the
Business pursuant to which Seller provides goods or services necessary for the manufacture or
assembly of goods to its customers, which are listed on Schedule B and are outstanding on
the Closing Date.

     “Data Maintenance Period” has the meaning set forth in Section 9.11.B.

     “Defending Party” has the meaning set forth in Section 12.18.

     “Demanding Party” has the meaning set forth in Section 12.18.

     “Disclosure Schedule(s)” has the meaning set forth in Section 9.3.C.

     “Divested Products Data” has the meaning set forth in Section 9.11.C.

     “Employee Benefit Plans” means savings, profit sharing, retirement, incentive, health, dental,
death, accident, disability, executive or deferred compensation, hospitalization, severance,
vacation, sick leave, fringe or welfare benefits, any employment or consulting contracts, “employee
benefit plans” (as defined in Section 3(3) of ERISA), employee manuals and written statements of
policies, practices or understandings relating to employment.

     “Environmental, Health and Safety Laws” shall mean all applicable statutes, laws, ordinances,
rules, regulations, codes, injunctions, judgments, orders and decrees thereunder: (a) of the United
States of America; (b) of any state or local governmental subdivision within the United States of
America; and (c) of any foreign nations (and all agencies, departments, courts or any other
subdivision of any of the foregoing, that has jurisdiction) concerning pollution or protection of
the environment, public health and safety or employee health and safety, including laws relating to
emissions, discharges, releases or threatened releases of pollutants, contaminants, petroleum or
petroleum-based materials or wastes, or chemical, industrial, Hazardous Substances or toxic
substances or wastes into ambient air, surface water, ground water or lands or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or chemical, industrial, Hazardous Substances or toxic
materials or wastes. Without limiting the generality of the foregoing, such Environmental, Health
and Safety Laws include, but are not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Resource Conservation and Recovery Act of 1976 and the
Occupational Safety and Health Act of 1970, each as amended.

     “Equipment” means all machinery and equipment owned by Seller and used primarily in the
Business, including, without limitation, as set forth on Schedule A, and all attachments
and accessories to such items, together with the Tooling.

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

3

 

     “Escrow Account” has the meaning set forth in Section 3.2.

     “Escrow Agreement” has the meaning set forth in Section 3.2.

     “Escrow Period” has the meaning set forth in Section 3.2.

     “Excess Inventory” shall mean any Inventory set forth on the Baseline Report that is remaining
on hand and for which no binding customer purchase order exists (or relates to the Inventory)
immediately prior to the expiration of the Excess Inventory Review Period, calculated as set forth
on Schedule 3.1.D.

     “Excess Inventory Objection Notice” has the meaning set forth in Section 3.1.D(iii).

     “Excess Inventory Review Period” shall mean the eighteen (18) month period following the
Closing.

     “Excluded Assets” means assets not included in the Acquired Assets, including as set forth in
Section 1.2.

     “Excluded Business” means all business of the Seller other than the Business, including,
without limitation, Seller’s design, development, manufacture, assembly, testing, distribution and
sale of portable oxygen concentrator products, infusion devices and remote monitoring systems.

     “Facility” means Seller’s manufacturing facilities located at 4300 Godding Hollow, Frederick,
Colorado 80504 and 7755 Miller Drive, Frederick, Colorado 80504, where Seller conducts the
Business, which facilities Seller leases pursuant to the Leases.

     “FDA” means the Federal Food and Drug Administration.

     “Final Excess Inventory Value” has the meaning set forth in Section 3.1.D.

     “Final Inventory Value” has the meaning set forth in Section 3.1.B.

     “Financial Statements” has the meaning set forth in Section 6.1.I.

     “Food and Drug Laws” means the Federal Food, Drug and Cosmetic Act of 1938, as amended, and
all similar state, local and foreign laws or ordinances.

     “Governmental Entity” means any United States federal, state or local, tribunal, legislative,
executive, governmental, quasi-governmental or regulatory authority, self-regulatory authority,
agency, department, commission, instrumentality or body having governmental authority with respect
to the transactions contemplated hereby, under applicable law.

     “Hazardous Substances” shall mean any substances, compounds, mixtures, wastes or materials
that are defined to be, that are regulated as or that are listed under any of the Environmental,
Health and Safety Laws. Without limiting the generality of the foregoing, Hazardous Substances
includes: (a) petroleum or petroleum products; (b) polychlorinated biphenyls; (c) asbestos
containing materials; and (d) urea formaldehyde.

     “Holdback” means an amount equal to twenty-five percent (25%) of the Purchase Price.

4

 

     “Indemnification Claim” has the meaning set forth in Section 9.4.E.

     “Information Technology Assets” means those information technology assets owned by Seller,
used primarily in the Business and set forth on Schedule A-1.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended.

     “Intellectual Property” shall mean all of the following, in any jurisdiction throughout the
world, to the extent owned by Seller and used or held for use by Seller primarily or exclusively in
or for the operation of the Business: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents, patent applications
and patent disclosures, together with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof; (b) all trademarks, service marks, trade dress,
logos, slogans, trade names, corporate names, Internet domain names and rights in telephone
numbers, together with all translations, adaptations, derivations and combinations thereof, and
including all goodwill associated therewith, and all applications, registrations and renewals in
connection therewith; (c) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith; (d) all mask works and all applications,
registrations and renewals in connection therewith; (e) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information and business and
marketing plans and proposals); (f) all computer software (including source code, executable code,
data, databases and related documentation); (g) all other proprietary rights; (h) all goodwill
associated with any of the foregoing; (i) all remedies against infringement of any of the
foregoing; and (j) all rights to protection of interests in any of the foregoing.

     “Inventory” means all raw materials, work-in-process, finished products, stores, stock,
supplies, packaging and spare parts owned by Seller, used primarily in the Business and existing as
of the Closing Date, whether on hand or in transit.

     “Knowledge” with respect to the Seller means the actual knowledge of the individuals listed on
Schedule 6.1 after reasonable investigation and reasonable inquiry of the appropriate
employees or other individuals having responsibility for such matters. “Knowledge” with respect to
Purchaser means the actual knowledge of the individuals listed on Schedule 6.2 after
reasonable investigation and reasonable inquiry of the appropriate employees or other individuals
having responsibility for such matters.

     “Laws” means laws, ordinances, codes, standards, administrative rulings or regulations of any
applicable federal, state, local or foreign governmental authority.

     “Lease(s)” means the lease(s) pursuant to which Seller leases the building located at 4300
Godding Hollow, Frederick, Colorado 80504 (the “Road 18 Lease”), and the lease for the building
located at 7755 Miller Drive, Frederick, Colorado 80504 (the “Miller Road Lease”).

     “Leased Real Property” shall have the meaning set forth in Section 6.1.L hereof.

     “Letter of Intent” shall have the meaning set forth in Section 9.5.

5

 

     “Licenses” shall mean those licenses, permits, authorizations, approvals, franchises, orders,
registrations, certificates, variances and similar rights issued by any Governmental Entity that
are primarily related to the Business.

     “Liabilities” means any liability or obligation of whatever kind or nature (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become due), including any Tax
liability.

     “Lien” means any lien (including tax liens and any statutory or common law liens, possessory
or otherwise), charge, pledge, security interest, conditional sale agreement or other title
retention agreement, lease, mortgage, security interest, option or other encumbrance (including the
filing of, or agreement to give, any financing statement under the Uniform Commercial Code of any
jurisdiction) and any monetary amounts which are secured by any Lien.

     “Manufactured”, as used in Sections 1.4.B and 1.4.C below, shall mean fully assembled with all
required testing completed.

     “Material Adverse Effect” or a “Material Adverse Change” means any change, development, effect
or event that has or could reasonably be expected to have a material adverse effect on the
business, assets, conditions (financial or otherwise), operating results or operations of the
Business or the Acquired Assets, taken as a whole, or to the ability of Seller to consummate timely
the transactions contemplated hereby, except any change or event resulting from, relating to or
arising out of: (i) any act or omission of Seller (excluding any act contemplated herein) taken
with the prior written consent of the Purchaser; (ii) national or international political or social
conditions, including the engagement by the United States in hostilities whether or not pursuant to
the declaration of a national emergency or war, or the occurrence of any military or terrorist
attack upon such country, or any of its territories, possessions or diplomatic or consular offices
or upon any military installation, equipment or personnel of any such countries; (iii) changes in
generally accepted accounting principles in the United States; (iv) any existing event, occurrence
or circumstances listed in any Schedule provided under Article 6 of this Agreement or the
Supplement or with respect to which the Purchaser has Knowledge; (v) any adverse change in or
effect on the Acquired Assets that is cured or for which an offer to cure has been made by Seller
to Purchaser’s reasonable satisfaction, before the earlier of: (a) the Closing Date; and (b) the
date on which this Agreement is terminated pursuant to Article 11; or (vi) any act of God or other
force majeure type event.

     “Material Contracts” has the meaning set forth in Section 6.1.Q.

     “Miller Road Sublease” has the meaning set forth in Section 8.3.

     “Most Recent Financial Statements” has the meaning set forth in Section 6.1.I.

     “Most Recent Fiscal Month End” has the meaning set forth in Section 6.1.I.

     “Most Recent Fiscal Year End” has the meaning set forth in Section 6.1.I.

     “New Road 18 Lease” has the meaning set forth in Section 7.2.F.

6

 

     “Non-Competition Agreement” shall mean the Non-Competition Agreement of Seller and its
Affiliates relating to previous and existing customers of the Business as described in such
agreement, in substantially the form attached hereto as Exhibit 8.4.D, to be executed and
delivered at the Closing.

     “Nondisclosure Agreement” means the nondisclosure and confidentiality letter agreement dated
October 29, 2009 executed by Sparton Corporation and Seller.

     “Notice” has the meaning set forth in Section 12.18.

     “Objection Notice” has the meaning set forth in Section 3.1.C(i).

     “OFAC” has the meaning set forth in Section 6.2.J.

     “Ordinary Course of Business” means the usual, regular and ordinary course of business
consistent with past custom and practice of Seller.

     “Organizational Documents” means: (i) the articles of incorporation and the bylaws of a
corporation; (ii) the partnership agreement and any statement of partnership of a general
partnership; (iii) the limited partnership agreement and the certificate of limited partnership of
a limited partnership; (iv) the articles or certificate of organization and the operating agreement
or other document intended to govern the structure and/or internal affairs of a limited liability
company; (v) any charter, agreement, indenture or similar document adopted or filed in connection
with the creation, formation or organization of a Person; and (vi) any amendment to the foregoing.

     “Owned Intellectual Property” means Intellectual Property that, as of the Closing Date, is:
(i) owned by Seller; and (ii) used primarily in the Business.

     “Party” or “Parties” means Purchaser and Seller.

     “Permitted Lien” means: (i) purchase money security interests arising in the Ordinary Course
of Business listed on Schedule 6.1.E; (ii) security interests relating to vendor tooling
arising in the Ordinary Course of Business; (iii) any Lien that may be created by or on behalf of
Purchaser; and (iv) in relation to Leased Real Property: (a) Liens relating to any current real
estate or ad valorem taxes or assessments not yet delinquent or being contested in good faith by
appropriate proceedings; (b) mechanic’s, materialmen’s, laborer’s and carrier’s liens and other
similar liens arising by operation of Law in the Ordinary Course of Business for obligations which
are not delinquent and which will be paid or discharged in the Ordinary Course of Business that
would not, individually or in the aggregate, materially impair the use or occupancy of the
Facility; and (c) matters which an ALTA survey would disclose.

     “Person” means an individual, a corporation, a partnership, a limited liability company, an
association, a trust or other entity or organization.

     “Personal Property” shall mean all of the tangible personal property of Seller, other than
Inventory used or held for use by Seller primarily in connection with the Business, whether or not
reflected in the Financial Statements, including, without limitation, all machinery, furniture,
fixtures, equipment, computer hardware, tools, dies and repair and replacement parts, except to the
extent disposed of in the Ordinary Course of Business prior to the Closing Date, and such
additional items as are acquired by Seller for use primarily in connection with the Business in

7

 

the Ordinary Course of Business prior to the Closing Date; provided, however, that the
Personal Property does not include Intellectual Property or Technical Documentation.

     “Purchase Price” has the meaning set forth in Section 3.1.A.

     “Purchaser” means Sparton Medical Systems Colorado, LLC, a Colorado limited liability company.

     “Purchaser Damages” has the meaning set forth in Section 9.4.B.

     “Purchaser MAE Certificate” has the meaning set forth in Section 8.5.D.

     “Restoration” has the meaning set forth in Section 9.11.

     “Retained Liabilities” means Seller’s Liabilities other than the Assumed Liabilities.

     “Sale” means the sale, transfer and assignment of the Acquired Assets from Seller to Purchaser
in accordance with this Agreement.

     “SDN List” has the meaning set forth in Section 6.2.J.

     “Seller” means Delphi Medical Systems, LLC, a Delaware limited liability company.

     “Seller Damages” has the meaning set forth in Section 9.4.C.

     “Sunrise Agreement” means that certain Development and Supply Agreement dated January 28, 2004
between Seller (as assignee of Delphi Medical Systems Corporation) and Sunrise Medical, Inc., as
amended.

     “Sunrise Data” has the meaning set forth in Section 9.11.B.

     “Supplement” has the meaning set forth in Section 9.3.C.

     “Supplier Contracts” mean all Seller purchase orders and supply agreements for goods or
services primarily related to the operation of the Business, and product warranty or service
agreements related to such purchase orders and supply agreements, which are listed on Schedule
C and are outstanding on the Closing Date.

     “Tax(es)” means any tax or similar governmental charge, impost or levy whatsoever (including,
without limitation, income, franchise, transfer taxes, use, gross receipts, goods and services
value added, employment, excise, ad valorem, property, withholding, payroll, social contribution,
customs duty, minimum or windfall profit taxes or transfer fees), together with any related
penalties, fines, additions to tax or interest, imposed by the United States or any state, county,
local or foreign government or subdivision or agency thereof.

     “Tax Returns” mean any return, declaration, report, claim for refund or information return or
statement, or any other similar filings related to Taxes, including any schedule or attachment
thereto.

     “Technical Documentation” means all documented technical information owned by the Seller that
is currently in the files of the Business or is used primarily in the Business.

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     “Third Party Assets” has the meaning set forth in Section 1.2.A.

     “Tooling” means all tooling, gauges, dies, fixtures, test and assembly fixtures, patterns,
casting patterns, cavities, molds, prototype tooling, engineering product testing tooling and
fixtures and similar items owned by Seller and used primarily in connection with the Business,
wherever located.

     “Transition Services Agreement” means the Transition Services Agreement between the Parties,
substantially in the form of Exhibit 8.4.C, to be executed and delivered at Closing. The
Transition Services Agreement shall provide, in part, that Sparton shall provide up to two hundred
(200) hours access after the Closing, on the terms set forth in the Transition Services Agreement,
to the Agile support system.

     “Transferred Employees” means the Transferred Salaried Employees, the Additional Salaried
Employees and the Transferred Hourly Employees.

     “Transferred Hourly Employees” means the hourly employees who are employed by Sellers in
connection with the Business, immediately prior to Closing and identified on Schedule
4.2.A.

     “Transferred Salaried Employees” means the salaried employees who are employed by Sellers in
connection with the Business, immediately prior to Closing and identified on Schedule
4.1.A.

     “USA Patriot Act” has the meaning set forth in Section 6.2.J.

     “Warranty Dispute” has the meaning set forth in Section 9.10.B.

     “Warranty Invoice” has the meaning set forth in Section 9.10.B.

1. CONVEYANCE OF THE ACQUIRED ASSETS:

     1.1 Acquired Assets Transaction. Upon the terms and subject to the conditions set
forth in this Agreement at Closing (unless otherwise expressly provided in this Agreement or the
Ancillary Agreements) Seller will sell, transfer, assign, convey and deliver to Purchaser, and
Purchaser will purchase, accept and acquire from Seller, the Acquired Assets, free and clear of all
Liens other than the Permitted Liens. Purchaser will take ownership of the Acquired Assets
wherever the same are located.

     1.2 Certain Excluded Assets. Notwithstanding anything to the contrary in this
Agreement or in any Ancillary Agreements, the following properties and assets of Seller will not be
included in the Acquired Assets:

     A. Third Party Assets. Any machinery, Equipment, Inventory, Tooling, dunnage
or containers owned by any third party, and the other items owned by any third party,
including the items listed on Schedule 1.2.A, and including third party bailed
assets (“Third Party Assets”); provided, that, to the extent the Seller has any rights
pertaining to such bailed Third Party Assets, those rights will be transferred as part of
the Acquired Assets.

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     B. Insurance. Insurance coverage and insurance policies relating to the
Acquired Assets or the Business or their development, manufacture or sale, including any and
all claims and rights thereunder and the proceeds thereof and all prepaid insurance
premiums.

     C. Records. Any Books and Records that Seller is required by Law to retain,
all Tax Returns of Seller for time periods prior to Closing, related work papers, and all
“Delphi” marked sales and promotional materials and brochures; provided, however, that
Seller shall provide reasonable access to Purchaser to such retained Books and Records and
other materials in connection with Seller’s operation of the Business after the Closing for
a period of eighteen (18) months.

     D. Claims. All claims, defenses, causes of action or claims of any kind
relating to either the Excluded Assets or Retained Liabilities, but only to the extent not
relating to the Business.

     E. Tax Refunds. All refunds, credits, prepayments or deferrals of or against
any Taxes that are not Assumed Liabilities.

     F. Personnel Records. All work histories, personnel and medical records of
employees and former employees of Seller who are not Transferred Employees for whom a record
exists at the time of Closing; provided, however, so far as legally
permissible under applicable data protection, medical confidentiality or similar Laws, the
Purchaser will be provided the originals of all personnel and medical records of any
employee hired by the Purchaser in compliance with applicable Laws. If any employee objects
to provision of personnel or medical records to Purchaser, the records will not be provided,
except to the extent the Parties mutually determine that provision of the records to such
Purchaser over the objections by the employee is permitted by applicable Law.

     G. Privileged Information and Materials. Information and materials protected
by the attorney-client privilege (or its equivalent in jurisdictions outside of the United
States).

     H. Inventory. All Inventory which will have been transferred or disposed of by
Seller prior to Closing in the Ordinary Course of Business.

     I. Cash. All cash, certificates of deposit, marketable securities, short-term
investments and other cash equivalents of Seller.

     J. Excluded Contracts/Lease. The Road 18 Lease, the Miller Road Lease and the
Sunrise Agreement.

     K. Receivables. All accounts receivable of Seller relating to the period prior
to Closing.

     L. Certain Licenses. Any and all Licenses and utilities that are
non-transferable or that are shared with other businesses of Seller or its Affiliates and
identified on Schedule 1.2.L.

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     M. Deposits. All deposits and prepayments related to the Leases or to
utilities for the Facility.

     1.3 Post-Closing Asset Deliveries. Subject to Section 1.2 above, should Seller or
Purchaser, in its reasonable discretion, determine after the Closing that any Acquired Assets
(including Books and Records) are still in the possession of Seller, Seller will promptly deliver
them to Purchaser at no cost to Purchaser. Should Seller or Purchaser, in its reasonable
discretion, determine after the Closing that books, records or other materials not included in the
Acquired Assets or otherwise constituting Excluded Assets were delivered to Purchaser, Purchaser
will promptly return them to Seller at no cost to Seller.

     1.4 No Assumption of Retained Liabilities by Purchaser. Purchaser will not assume or
have any responsibility for the Retained Liabilities. Seller shall retain and pay and perform when
due all of the Retained Liabilities. The Retained Liabilities shall include the following, other
than to the extent relating to a breach, action or inaction by Purchaser after Closing or any
Assumed Liabilities:

     A. All accounts payable of Seller relating to goods or services delivered during the
pre-Closing period;

     B. All Liabilities of Seller in respect of returns, recalls and warranty claims for
products Manufactured or sold by Seller prior to the Closing Date;

     C. All product liability and similar claims for injury to person (including death) or
property (real or personal) in connection with any products Manufactured or sold by Seller
prior to the Closing Date;

     D. All Liabilities for claims arising out of or relating to Seller’s employment
relationship with any employees of Seller or with contractors of Seller prior to the
Closing, whether or not hired by Purchaser, including, without limitation, any unemployment
compensation claims, worker’s compensation claims, commissions and claims for race, age, sex
and other forms of discrimination and harassment to the extent arising out of or relating to
actions or events occurring prior to the Closing;

     E. Other than as specifically set forth in Section 4.3.A, all Liabilities of Seller or
any of its Affiliates: (i) under any pension, profit sharing, savings, retirement, health,
medical, life, disability, dental, deferred compensation, stock option, commission, bonus,
incentive, severance pay, group insurance or other similar Employee Benefit Plans or
arrangements, or under any policies, handbooks, or custom or practice, collective bargaining
agreement or any employment or contractor or sales representative agreements, whether
express or implied, applicable to any of Seller’s employees at any time prior to the
Closing, and any assessments, fines, penalties or monetary damages arising out of the
operation of such plans prior to the Closing Date; and (ii) for any other compensation or
benefits, payable or in the future to be payable to any past or present employee or
independent contractor of Seller relating to the period prior to the Closing Date;

     F. All other Liabilities with respect to or arising out of Seller’s employment of any
of Seller’s employees or their termination by Seller whether prior to or after the Closing
Date;

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     G. All Liabilities arising out of any wrongful or unlawful violation or infringement by
Seller or any of its Affiliates of any Intellectual Property of any person or entity prior
to the Closing Date, including with respect to products manufactured or sold by Seller prior
to the Closing Date;

     H. All Liabilities arising out of claims alleging damage to the environment or similar
claims against Seller related to the use, occupation, ownership or operation by Seller of
the Leased Real Property prior to the Closing Date, including any Liabilities under any
Environmental, Health and Safety Laws;

     I. All Liabilities of Seller arising out of any Action arising out of or relating to
matters or events occurring prior to the Closing Date;

     J. All Liabilities of Seller in respect of the borrowing of money or issuance of any
note, bond, indenture, loan, credit agreement or other evidence of indebtedness, whether or
not disclosed in this Agreement or otherwise;

     K. All Liabilities of Seller arising out of, under or in connection with any of the
Excluded Assets;

     L. Except as expressly provided in Section 1.5, all other Liabilities of Seller arising
out of or relating to matters or events occurring prior to the Closing Date; and

     M. All Liabilities related to the Excluded Business.

     1.5 Assumed Liabilities. Purchaser will assume and have responsibility for the
Assumed Liabilities. For purposes of this Agreement, the term “Assumed Liabilities” means, other
than to the extent relating to a breach, action or inaction by Seller prior to Closing or any
Retained Liabilities: (i) liabilities specifically assumed by Purchaser under this Agreement or the
Ancillary Agreements; (ii) obligations arising post-Closing relating to Purchaser’s ownership or
use of the Acquired Assets; (iii) obligations arising post-Closing under the Contracts and Employee
Benefit Plans assigned to Purchaser pursuant to this Agreement; (iv) liabilities arising out of the
post-Closing conduct of the Business; and (v) liabilities arising post-Closing with respect to any
Transferred Employee or the Employee Benefit Plans.

     1.6 Non-Assignability. To the extent that any Contract or License included in the
Acquired Assets is not capable of being assigned to Purchaser at Closing, without the Consent of
the other party thereto, or if such assignment or attempted assignment would constitute a breach
thereof, this Agreement shall not constitute an assignment thereof, or an attempted assignment,
unless any such Consent is obtained. At Purchaser’s request, Seller will use commercially
reasonable efforts, which will not include the incurrence of any liability to the other party to
the Contract, to obtain such party’s Consent to the assignment. Purchaser will cooperate with
Seller in its efforts to obtain the Consents. Seller will have no liability to Purchaser in the
event that any Consent to assignment of any Contract is not obtained.

     A. In the event: (i) a Contract or License prohibits the assignment by Seller of its
rights and obligations thereunder; or (ii) Seller has not obtained the necessary Consents to
assignment from all parties prior to the Closing Date, during the eighteen (18) month period
commencing with Closing, Seller shall cooperate with Purchaser at no cost to Seller in any
reasonable and lawful arrangements designed to provide for Purchaser the benefits under such
Contracts or Licenses accruing after the Closing,

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including the enforcement for the benefit and at the expense of Purchaser of any rights
comparable to the rights previously enjoyed by Seller in connection with such Contracts or
Licenses.

     B. To the extent that Purchaser is provided the benefits under a Contract or License as
set forth in Section 1.6.A, Purchaser will perform, on behalf of Seller, the obligations of
Seller (including payment obligations) under or in connection with such Contracts and
Licenses. If Purchaser fails to perform to the extent required under this Section 1.6.B,
Seller, after providing fifteen (15) days prior written notice or such other notice period
as is reasonable under the circumstances, which notice period will not be less than any cure
period provided in the underlying Contract or License, without waiving any rights or
remedies that it may have under this Agreement or applicable Laws, may suspend its
performance under Section 1.6.A with respect to the Contract or License that is the subject
of such failure to perform unless and until such situation is remedied; or Seller may
perform in a reasonable manner at Purchaser’s sole cost and expense, in which case Purchaser
will reimburse Seller’s reasonable costs of such performance without mark-up, immediately
upon receipt of an invoice.

     C. Seller will have no liability to Purchaser arising out of the provision of the
benefits of any Contract or License under this Section 1.6 other than for gross negligence
or willful misconduct and will have no Liability for actions taken under this Section 1.6 in
connection with the request or direction of Purchaser. Purchaser will reimburse Seller and
will hold Seller harmless from and against all Liabilities incurred or asserted as a result
of Seller’s post-Closing direct or indirect performance, requested by Purchaser under this
Section 1.6, under management or ownership of any non-assignable Contract or License, other
than arising in connection with Seller’s gross negligence or willful misconduct.

2. NONDISCLOSURE AGREEMENT; CONFIDENTIALITY:

     2.1 Effective as of the Closing, each of Purchaser and Sparton Corporation will be deemed to
be released of its obligations arising under the Nondisclosure Agreement with respect only to
Evaluation Material related to the Acquired Assets; provided, however, from and after the Closing,
Paragraph 7 of the Nondisclosure Agreement shall remain in full force and effect with respect to
any persons not hired by Purchaser pursuant to the terms of this Agreement.

     2.2 From and after the Closing, Seller shall, and shall cause its Affiliates to, hold in
strict confidence and not use to the detriment of Purchaser, any non-public, confidential or
proprietary information with respect to this Agreement, the Business and the Acquired Assets (the
“Confidential Information”). Confidential Information does not include information that: (i) is or
has become generally available to the public other than as a result of improper disclosure by
Seller or Seller’s Affiliates; or (ii) Seller or any of Seller’s Affiliates is required by Law to
disclose, provided that Seller shall endeavor to give Purchaser such notice as may be reasonable
under the circumstances so that Purchaser may attempt to obtain a protective order.

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3. PURCHASE PRICE:

     3.1 Purchase Price for Acquired Assets:

     A. Subject to the terms and conditions of this Agreement, the aggregate purchase price
for the Acquired Assets will be $8,000,000 (the “Purchase Price”). The Purchase Price,
reduced by the amount of the Assumed Employee Accrual as provided under Section 4.3.A below,
and reduced by the Holdback, will be paid by Purchaser on the Closing Date as set forth
herein.

     B. The Purchase Price shall be adjusted downward dollar-for-dollar by the amount by
which the total value of all Inventory acquired by Purchaser hereunder, as calculated in
accordance with Schedule 3.1.C (the “Final Inventory Value”), is less than Ten
Million Dollars ($10,000,000) (the “Base Inventory Value”) and the Purchase Price shall be
adjusted upward Fifty Cents ($.50) for each dollar by the amount by which the Final
Inventory Value is greater than the Base Inventory Value.

     C. As promptly as practicable following the Closing Date, Purchaser shall prepare a
calculation of the Final Inventory Value as of the Closing Date, based on a physical count
of Inventory that was conducted by Seller from June 18, 2010 to June 24, 2010. The Final
Inventory Value shall be determined in accordance with generally accepted accounting
principles, valued on a first in, first out basis and consistent with the valuation
principles and practices identified in Schedule 3.1.C. The Final Inventory Value will
reflect reserves for excess and obsolete Inventory that are consistent with the reserves for
excess and obsolete Inventory determined in accordance with the valuation principles and
practices identified in Schedule 3.1.C. Purchaser shall deliver the Final Inventory Value to
Seller promptly upon completion of such calculation.

     (i) Within thirty (30) days after receiving the Final Inventory Value from
Purchaser, Seller shall deliver to Purchaser a detailed statement describing
Seller’s objections, if any, to the Final Inventory Value, or stating that Seller
has no objections to the Final Inventory Value. If Seller has no objections to the
Final Inventory Value, the Final Inventory Value shall become final and binding upon
the parties. If Seller delivers to Purchaser within such thirty (30) day period a
statement of Seller’s objections to the Final Inventory Value (the “Objection
Notice”), the Parties will endeavor to reconcile any differences and agree upon an
adjusted Final Inventory Value. If the Parties are unable to agree upon an adjusted
Final Inventory Value within thirty (30) days following Purchaser’s receipt of
Seller’s Objection Notice, at the request of either Party the outstanding matters
shall be submitted for resolution to Plante Moran or, if either Party is utilizing
the services of Plante Moran, such other accounting firm as the Parties mutually
agree. Each of the Parties shall bear one-half (1/2) of the fees and expenses of
the accounting firm. Such accounting firm’s scope of review shall be limited to
only those items of disagreement specified in Seller’s Objection Notice and any
items described by Purchaser in response to Seller’s Objection Notice. Such
accounting firm shall make a final determination of the issues in dispute and
prepare an adjusted Final Inventory Value as promptly as practicable, but in no
event more than forty-five (45) days after engagement, and both Parties agree to
cooperate fully with such accounting firm. The adjusted Final Inventory Value
prepared by such accounting firm shall be final and binding upon the Parties.

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     (ii) If the Final Inventory Value as determined above is less than the Base
Inventory Value, Purchaser shall, at Seller’s option, deduct the shortfall amount
from the Holdback or Seller shall pay such shortfall amount in immediately available
funds, in each case within five (5) days following final determination of the Final
Inventory Value. If the Final Inventory Value as determined above is greater than
the Base Inventory Value, Purchaser shall pay Seller fifty percent (50%) of the
difference in immediately available funds within five (5) days following
determination of the Final Inventory Value.

    D. Within thirty (30) days after the expiration of the Excess Inventory Review Period,
Purchaser shall deliver a calculation of the Excess Inventory in accordance with
Schedule 3.1.D (the “Final Excess Inventory Value”), together with a representation
that such Final Excess Inventory Value is true and correct. The baseline for the
determination of the amount of Excess Inventory shall be calculated in accordance with the
valuation principles and practices set forth on Schedule 3.1.C and shall be the
amount of Inventory on hand as of July 31, 2010, less the amount of Inventory necessary to
fulfill the most current customer forecasts as provided by each customer of the Business, as
agreed upon by the Parties (the “Baseline Report”).

     (i) During the Excess Inventory Review Period, Purchaser shall use best efforts
to enforce the terms and conditions of any Contract with customers relating to
Inventory, including terms and conditions relating to Inventory repurchase, stagnant
Inventory and the current term of the Contract. Further, during the Excess Inventory
Review Period, Purchaser shall not enter into any amendment to any Contract or
revise or compromise the terms of any Contract relating to Inventory, including
terms and conditions relating to Inventory repurchase, stagnant Inventory or
acceleration of termination of a Contract, to the detriment of Seller.

     (ii) During the Excess Inventory Review Period, Purchaser shall provide to
Seller a quarterly report by part number in a format consistent with the Baseline
Report, indicating the beginning Inventory balance, actual usage, quarterly
Inventory balance and rolling twelve (12) month forecast. Purchaser shall provide
Seller or its designee with reasonable access to review the Excess Inventory from
Closing until expiration of the Excess Inventory Review Period, with prior written
notice and during normal business hours or as otherwise agreed by the Parties, to
review the books, records and Inventory relating to the Baseline Report, at Seller’s
cost. Seller’s review and activities at the Facility shall not unreasonably
interfere with any ongoing production at the Facility.

     (iii) Within thirty (30) days after receiving the Final Excess Inventory Value
from Purchaser, Seller shall deliver to Purchaser a detailed statement describing
Seller’s objections, if any, to the Final Excess Inventory Value, or stating that
Seller has no objections to the Final Excess Inventory Value. If Seller has no
objections to the Final Excess Inventory Value, the Final Excess Inventory Value
shall become final and binding upon the Parties. If Seller delivers to Purchaser
within such thirty (30) day period a statement of Seller’s objections to the Final
Excess Inventory Value (the “Excess Inventory Objection Notice”), the Parties will
endeavor to reconcile any differences and agree upon an adjusted Final Excess
Inventory Value. If the Parties are unable to agree upon an adjusted Final Excess
Inventory Value within thirty (30) days

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following Purchaser’s receipt of Seller’s Excess Inventory Objection Notice, at
the request of either Party the outstanding matters shall be submitted for
resolution in accordance with the provisions of Section 3.1.C(i).

     (iv) If the Final Excess Inventory Value as determined above is zero, Purchaser
shall pay Seller, in immediately available funds, the amount of One Hundred Thousand
Dollars ($100,000) within five (5) days following final determination of the Final
Excess Inventory Value. If the Final Excess Inventory Value as determined above is
more than zero but is less than One Hundred Thousand Dollars ($100,000), Purchaser
shall pay Seller, in immediately available funds, the difference between the Final
Excess Inventory Value and One Hundred Thousand Dollars ($100,000) within five (5)
days following final determination of the Final Excess Inventory Value. If the
Final Excess Inventory Value as determined above is greater than One Hundred
Thousand Dollars ($100,000), Seller shall pay Purchaser (or, at Seller’s option,
Purchaser may deduct from the Holdback) the amount of the Final Excess Inventory
Value, up to a maximum of Two Million Dollars ($2,000,000) within five (5) days
following determination of the Final Excess Inventory Value. Further, if, during
the six (6) month period following expiration of the Excess Inventory Review Period,
Purchaser receives a payment from any customer related to Excess Inventory included
in the Final Excess Inventory Value for which Seller has paid Purchaser, then
Purchaser shall remit such payment to Seller.

     (v) Purchaser will not scrap or otherwise dispose of any Excess Inventory
included in the Final Excess Inventory Value for which Seller has paid Purchaser,
other than sale to the applicable customer without Seller’s prior written consent.
Seller shall have the option, at any time during the six (6) month period following
expiration of the Excess Inventory Review Period, to take ownership and possession
of any Excess Inventory included in the Final Excess Inventory Value for which
Seller has paid Purchaser. Purchaser shall permit Seller to store any such Excess
Inventory owned by Seller at the Facility for a reasonable period of time and will
provide Seller with reasonable access to the Facility to remove any such Excess
Inventory.

     3.2 Holdback. Subject to the terms and conditions herein, at the Closing, Purchaser
shall deposit the Holdback in an interest bearing account (the “Escrow Account”) pursuant to an
Escrow Agreement substantially in the form of Exhibit 3.2 hereto (the “Escrow Agreement”),
for a period of eighteen (18) months after the Closing Date (the “Escrow Period”); provided,
however, for purposes of Section 3.1.D, the Escrow Period shall continue for an additional thirty
(30) day period. The Holdback shall be distributed in accordance with the terms of the Escrow
Agreement.

     3.3 Purchase Price Allocation:

     A. Within sixty (60) days after the final determination of the Purchase Price pursuant
to Sections 3.1.B and 3.1.C above, the Parties agree to allocate the aggregate of the
Purchase Price and the Assumed Liabilities (and all other capitalized costs) among the
Acquired Assets and the other agreements provided for herein for all purposes (including
financial accounting and tax purposes) (the “Allocation”).

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     B. Purchaser and Seller will each report the federal, state and local income Tax
consequences of the Sale in a manner consistent with the Allocation, including, if
applicable, the preparation and filing of Forms 8594 under Section 1060 of the Internal
Revenue Code (or any successor form or successor provision of any future Tax law) with their
respective federal income Tax returns for the taxable year that includes the Closing Date,
and none of the Parties will take any position inconsistent with the Allocation unless
required under applicable law. Seller will provide Purchaser and Purchaser will provide
Seller with a copy of any information required to be furnished to the Secretary of Treasury
under Internal Revenue Code Section 1060.

     C. To the extent that Seller makes any payments relating to the Business prior to, on
or following the Closing Date with respect to any Acquired Assets as to which title passed
to Purchaser on such Closing Date, and as to items in Section 3.3.D below relating to
periods following such Closing Date for which the Purchaser will receive benefit, the
Purchaser shall reimburse Seller on a per diem basis within thirty (30) days of receipt of
evidence of payment reasonably satisfactory to Purchaser. If Seller receives any payment
from a customer post-Closing relating to a period after the Closing, Seller shall
immediately remit payment to Purchaser.

     D. To the extent Purchaser makes any payment relating to the Business following the
Closing Date with respect to any Acquired Assets as to which title passed to Purchaser on
such Closing Date, and as to items listed below relating to periods on or prior to such
Closing Date for which Seller received a benefit, Seller shall, at Seller’s option,
reimburse Purchaser or permit Purchaser to deduct from the Holdback on a per diem basis
within thirty (30) days of receipt of evidence of payment reasonably satisfactory to Seller,
in each case for the following: personal and other ad valorem taxes, including certain
personal property taxes, in accordance with local customs; and payments, charges and local
taxes due pursuant to any permit, commitment or other binding arrangements to which Seller
is a party or is obligated and which is being assumed by Purchaser pursuant to this
Agreement. If Purchaser receives any payment from a customer post-Closing relating to a
period prior to the Closing, Purchaser shall immediately remit payment to Seller.

     E. All payments by Purchaser to Seller, or by Seller to Purchaser, as the case may be,
under this Agreement shall be accomplished, at the option of the recipient, by a certified
or cashier’s check or wire transfer to the account specified by the recipient.

4. EMPLOYEE MATTERS:

     4.1 Salaried Employees:

     A. Effective as of the Closing, Purchaser will offer employment to all current salaried
employees, which employees are listed on Schedule 4.1.A (the “Transferred Salaried
Employees”), with such new employment to commence (if accepted, whether by reporting to work
or otherwise) with effect from the Closing. Seller will cooperate in encouraging any such
employees to accept employment with Purchaser and will allow Purchaser reasonable access to
such employees.

     B. For all Transferred Salaried Employees, Purchaser’s offer of employment will be on
the same terms, at the same level of compensation and with the same benefits

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in place immediately prior to the Closing; provided, however, that after December 31,
2010 the benefits will be provided under Purchaser’s Employee Benefit Plans.

     C. Effective as of Closing, Purchaser will offer employment to the salaried employees
of Seller’s Affiliate, Delphi Corporation, listed on the attached Schedule 4.1.C
(the “Additional Salaried Employees”), with such new employment to commence (if accepted,
whether by reporting to work or otherwise) with effect from the Closing. Seller will
cooperate in encouraging such employees to accept employment with Purchaser and will allow
Purchaser reasonable access to such employees. For the Additional Salaried Employees,
Purchaser’s offer of employment will be on the same terms and at the same level of
compensation in place immediately prior to the Closing and with benefits that are
substantially similar in the aggregate to those in place immediately prior to the Closing,
which benefits will be provided under the Employee Benefit Plans of Purchaser’s Affiliate,
Sparton Corporation.

     D. For all Transferred Salaried Employees and the Additional Salaried Employees,
Purchaser will maintain the requisite level of compensation and benefits for a minimum of
twelve (12) months following the Closing Date; provided, however, that with respect to
Transferred Salaried Employees, after December 31, 2010, benefits will be provided under
Purchaser’s Employee Benefit Plans, which provide substantially similar benefits to Seller’s
Employee Benefit Plans. To the extent that Purchaser separates any Transferred Salaried
Employee or Additional Salaried Employee during the twelve (12) month period following the
Closing Date under circumstances that would render the Transferred Salaried Employee or
Additional Salaried Employee eligible for severance benefits had such separation occurred at
Seller, Purchaser will provide such separated Transferred Salaried Employees or Additional
Salaried Employees the severance benefits provided for under the terms of Purchaser’s
severance plan applicable at Closing, a summary of which Purchaser has delivered to Seller,
taking into account the Transferred Salaried Employee’s or the Additional Salaried
Employee’s combined Seller and Purchaser service.

     4.2 Hourly Employees:

     A. Effective as of the Closing, Purchaser will offer employment to all current hourly
employees, which employees are listed on Schedule 4.2.A (the “Transferred Hourly
Employees” and together with the Transferred Salaried Employees and the Additional Salaried
Employees, the “Transferred Employees”) with such new employment to commence (if accepted,
whether by reporting to work or otherwise) with effect from the Closing. Seller will
cooperate in encouraging any such employees to accept employment with Purchaser and will
allow Purchaser reasonable access to such employees.

     B. For all Transferred Hourly Employees, Purchaser’s offer of employment will be on the
same terms, at the same level of compensation and with the same benefits in place
immediately prior to Closing; provided, however, that after December 31, 2010 the benefits
will be provided under Purchaser’s Employee Benefit Plans.

     4.3 Transferred Employees:

     A. Assumed Employee Accrual. Purchaser will be responsible for the amount of
all accrued and unutilized vacation pay and any profit sharing or incentive

18

 

compensation of Transferred Employees due for the calendar year in which the Closing
occurs and the Purchase Price will be reduced on a pro-rata basis using the number of days
worked by the Transferred Employees for Seller (the “Assumed Employee Accrual”).

     B. Employee Benefit Plans. Seller currently maintains the Employee Benefit
Plans listed on Schedule 4.3.B. Purchaser agrees, effective as of the Closing Date,
to assume sponsorship of the Employee Benefit Plans listed on Schedule 4.3.B,
including all obligations of the sponsor to contribute to and administer such Employee
Benefit Plans, and shall, immediately following the Closing Date, amend each of the Employee
Benefit Plans listed on Schedule 4.3.B to remove all references to Seller as the
plan sponsor, and identify Purchaser as the plan sponsor. Notwithstanding the preceding
sentence, Seller shall retain all Liabilities with respect to such plans for the period
prior to the Closing Date and Purchaser shall assume all Liabilities with respect to such
plans for the period after the Closing Date. The Parties agree to perform all acts
necessary or required to consummate the assumption by Purchaser of the Employee Benefit
Plans on Schedule 4.3.B, including, but not limited to, the making of all required
filings with the Internal Revenue Service and the Department of Labor, if any, and the
receipt of all necessary notices and approvals from Governmental Entities, if any. The
Parties shall provide each other with such records and information as may be necessary or
appropriate to carry out their obligations under this section or for the purposes of
administration of such Employee Benefit Plans and shall cooperate in the filing of all
documents required for the Purchaser to assume sponsorship of the Employee Benefit Plans
listed on Schedule 4.3.B, if any. The Parties agree that if the insurers insuring
the transferred Employee Benefit Plans do not agree to the assignment of the insurance
contracts insuring such plans or require a material increase in pricing in order to agree to
the assignment, Purchaser shall obtain substantially similar insurance coverage as provided
under Seller’s Employee Benefit Plans.

     C. Severance. Other than as stated in this Agreement, Purchaser will assume
all obligations and liabilities relating to any claims for severance, termination (actual or
constructive), redundancy or other payments or benefits by Transferred Employees arising
from the transactions contemplated under this Agreement.

     D. COBRA. Purchaser will assume all obligations relating to compliance with
the continuation health care coverage requirements of IRC Section 4980B and Sections 601
through 608 of ERISA regarding qualifying events in regard to Transferred Employees that
accept Purchaser’s offer of employment and any M&A qualified beneficiaries pursuant to 29
C.F.R §54.4980B-9, arising from the transactions contemplated under this Agreement.

     E. WARN Act. Purchaser will assume all obligations and liabilities relating to
WARN Act or other similar notice Laws, if any, by Transferred Employees arising from the
transactions contemplated under this Agreement or Purchaser’s actions.

     F. Cooperation. Seller and Purchaser will provide each other with such records
and information as may be reasonably necessary, appropriate and permitted under applicable
Law to carry out their obligations under this Section 4.3.

5. [INTENTIONALLY OMITTED.]

19

 

6. REPRESENTATIONS AND WARRANTIES:

     6.1 Warranties of Seller. Seller hereby represents and warrants to Purchaser that the
following representations and warranties are true and correct as of the date hereof and will,
unless specifically applicable as of the date hereof, be true and correct as of the Closing (as
though made then and as though the Closing Date was substituted for the date of this Agreement
throughout this Section 6.1):

     A. Corporate Organization. Seller is a limited liability company, duly
organized and validly existing under the Laws of the State of Delaware, is duly qualified as
a foreign limited liability company in Colorado and such other jurisdictions as its conduct
of the Business requires, and has the corporate power and authority to carry on the Business
as it is currently being conducted.

     B. Corporate Authority. Seller has the requisite limited liability company
power and authority to perform its obligations under this Agreement and each Ancillary
Agreement, to execute and perform in accordance with this Agreement, and, assuming due
authorization, execution and delivery by Purchaser, this Agreement shall constitute a valid
and binding obligation of Seller enforceable against Seller in accordance with its terms.
The execution and delivery of this Agreement and the Ancillary Agreements, the performance
of Seller’s obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by all necessary
proceedings on the part of Seller.

     C. No Conflict. Except as set forth on Schedule 6.1.C, the execution,
delivery and performance by Seller of this Agreement and the Ancillary Agreements, the
consummation of the transactions contemplated hereby and thereby by Seller and the
compliance with the terms of this Agreement and the Ancillary Agreements by Seller do not:
(a) conflict with, result in a breach of any provision of, constitute a default under,
result in the modification or cancellation of or give rise to any right of termination or
acceleration in respect of any Contract to which Seller is a party and that primarily
relates to the Business or the Acquired Assets; (b) result in the creation of any Lien upon,
or any person obtaining the right to acquire any of the Acquired Assets; (c) violate or
conflict with any Law to which Seller or any of the Acquired Assets is subject; (d) require
Seller to obtain any authorization, consent, order, permit or approval of, or to deliver any
notice to, or filing, registration or qualification with, any Governmental Entity; or (e)
conflict with or result in any breach of any of the provisions of Seller’s Organizational
Documents; in each case except as would not have a Material Adverse Effect.

     D. No Joint Ventures. There are no corporations, partnerships, joint ventures,
limited liability companies or other entities in which Seller, directly or indirectly, has
an interest and through which any part of the Business is conducted.

     E. Title to Acquired Assets. Seller warrants that, as of the date of delivery
of the Acquired Assets, Seller will have good, valid and marketable right, title and
interest to the Acquired Assets and the Acquired Assets will be sold, assigned, transferred
or delivered, as the case may be, free and clear of any Lien other than the Permitted Liens.

20

 

     F. Litigation. Schedule 6.1.F sets forth a true and complete
description of all pending Actions against Seller or any of its Affiliates involving the
Business, existing at any time during the nine (9) month period immediately preceding the
date of this Agreement of which Seller has Knowledge. Except as disclosed on Schedule
6.1.F hereto, there is no Action (including, without limitation, any workers
compensation claims) pending or, to Seller’s Knowledge, threatened against Seller with
respect to the Business or any of the Acquired Assets. Except as disclosed on Schedule
6.1.F hereto, there are no judgments or outstanding orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency, or by
arbitration) against Seller that are reasonably likely to interfere with the conduct of the
Business as presently conducted or prevent or materially delay the transactions contemplated
in this Agreement.

     G. Compliance with Laws. Except as set forth on Schedule 6.1.G, to
Seller’s Knowledge, Seller has, with respect to the Business and the Acquired Assets,
complied with all applicable Laws, except where noncompliance would not have a Material
Adverse Effect, and, to Seller’s Knowledge, no Action has been filed or commenced against
Seller alleging any failure so to comply, except where the failure to comply would not have
a Material Adverse Effect. The representations and warranties relating to Environmental
Matters, including Environmental Health and Safety Laws and related Licenses, are
exclusively set forth in Section 6.1.T.

     H. Sufficiency of Assets. The Acquired Assets, together with the Excluded
Assets, comprise all of the assets, rights and properties used or held for use by Seller
primarily in connection with the Business. The Acquired Assets, together with the Excluded
Assets, are all of the assets, rights and properties necessary to operate the Business at
the Facility in all material respects as the Business is presently conducted by Seller.

     I. Financial Statements. Schedule 6.1.I hereto contains true and
complete copies of the following internally prepared and unaudited pro forma financial
statements (collectively, the “Financial Statements”): (a) the balance sheets and related
statements of income of the Business for the fiscal year ended December 31, 2009 (the “Most
Recent Fiscal Year End”); and (b) the balance sheet and related statements of income of the
Business (the “Most Recent Financial Statements”) as of and for the four (4) month period
ended April 30, 2010 (the “Most Recent Fiscal Month End”). All Financial Statements are in
accordance with the books and records of Seller, and such books and records of Seller are
true and complete in all material respects. Each of the balance sheets included in the
Financial Statements fairly presents in all material respects the financial position of the
Business as of its date, and each of the related statements of income included within the
Financial Statements fairly presents in all material respects the results of operations of
the Business for the respective periods then ended.

     J. [Intentionally Omitted.]

     K. Absence of Certain Changes. Except as disclosed on Schedule 6.1.K
hereto, or as set forth in the management presentation presented to Purchaser on April 20,
2010, or as otherwise contemplated or expressly permitted by this Agreement, since the Most
Recent Fiscal Year End: (i) there has not been any Material Adverse

21

 

Change with respect to the Business; and (ii) Seller has conducted the Business only in the
Ordinary Course of Business.

     L. Leased Real Property. Schedule 6.1.L hereto sets forth the address
of each parcel of real property leased by Seller in connection with the Business (the
“Leased Real Property”) and a true and complete list of all Leases for each such Leased Real
Property (including the date and name of the parties to such Lease document). Seller does
not own any real property used in connection with the Business. Seller has delivered to
Purchaser a true and complete copy of the Road 18 Lease. With respect to the Road 18 Lease:
(a) such Lease is legal, valid, binding, enforceable and in full force and effect; (b) the
transactions contemplated by this Agreement require the consent of the other party to such
Lease; (c) Seller’s possession and quiet enjoyment of the Leased Real Property under such
Lease has not been disturbed and there are, as of the date hereof, no disputes with respect
to such Lease; (d) none of Seller or, to Seller’s Knowledge, any other party to the Lease is
in breach or default under such Lease, and, to Seller’s Knowledge, no event has occurred or
circumstance exists that, with the delivery of notice, the passage of time or both, would
constitute such a breach or default, or permit the termination, modification or acceleration
of rent under such Lease; (e) Seller has not subleased, licensed or otherwise granted any
Person the right to use or occupy such Leased Real Property or any portion thereof; and (f)
Seller has not collaterally assigned or granted any other Lien in such Lease or any interest
therein, which assignment or Lien will not be released at Closing.

     M. Inventory. The Inventory, whether or not reflected in the Financial
Statements, consists of a quality and quantity usable and, with respect to finished goods,
saleable, in the Ordinary Course of Business and, to Seller’s Knowledge, none of the
Inventories is damaged. Except as set forth on Schedule 6.1.M, the Inventory has
been purchased or acquired by Seller in the Ordinary Course of Business and is valued
according to generally accepted accounting principles, on a first in, first out basis and
consistent with the valuation principles and practices listed in Schedule 3.1.C.

     N. Intellectual Property:

     (i) Except as disclosed in Schedule 6.1.N (and for the subject matter
addressed in Section 6.1.N(ii)), Seller owns or possesses, or has the right to use
pursuant to a valid and enforceable written license, sublicense, agreement or
permission, all Intellectual Property necessary for the operation of the Business as
presently conducted and as presently proposed to be conducted, including, without
limitation, all Intellectual Property used in any service, product, technology or
process: (x) currently being used, manufactured, published or marketed by Seller; or
(y) currently under development for possible future manufacturing, publication,
marketing or other use by Seller. To Seller’s Knowledge, except as set forth on
Schedule 6.1.N, each item of Intellectual Property owned or used by Seller
in connection with the Business immediately prior to the Closing will be owned or
available for use by Purchaser on identical terms and conditions immediately
subsequent to the Closing. Seller has taken all action reasonably necessary to
maintain and protect each item of Intellectual Property that is included within the
Acquired Assets.

     (ii) Seller has not knowingly interfered with, infringed upon, misappropriated
or otherwise come into conflict with any Intellectual Property

22

 

rights of third parties. Within the period of five (5) years prior to the
Closing, Seller has received no charge, complaint, claim, demand or notice alleging
any such interference, infringement, misappropriation or violation, including any
claim that Seller must license or refrain from using any Intellectual Property
rights of any third party. To Seller’s Knowledge, no third party has interfered
with, infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of Seller used in connection with the Business.

     (iii) Schedule 6.1.N hereto identifies each United States and foreign
patent or registration and each United States and foreign pending patent application
or application for registration that is included in the Acquired Assets, and
identifies each license, sublicense, agreement or other permission that Seller has
granted to any third party with respect to any Intellectual Property used in
connection with the Business (together with any exceptions). Seller has delivered
to Purchaser true and complete copies of all such patents, registrations,
applications, licenses, sublicenses, agreements and permissions (as amended to date)
and all other written documentation evidencing ownership and prosecution (if
applicable) of each such item.

     (iv) Schedule 6.1.N hereto identifies each item of intellectual
property (other than items of intellectual property provided pursuant to Customer
Contracts) that any third party owns and that Seller uses in connection with the
Business pursuant to license, sublicense, agreement or permission. Seller has
delivered to Purchaser true and complete copies of all such licenses, sublicenses,
agreements and permissions (as amended to date).

     O. Employment and Labor Matters. Seller is not a party to or subject to any
collective bargaining agreement or other agreement with a labor union in connection with the
Business. No representation petition respecting the employees of Seller has been filed with
the National Labor Relations Board and, to the Knowledge of Seller, there is no current
effort to organize the employees of Seller into any collective bargaining unit or any
solicitation of them to join any labor organization. Except as set forth on Schedule
6.1.O, to Seller’s Knowledge, Seller is in compliance with all applicable Laws
respecting employment and employment practices, occupational safety and health standards,
terms and conditions of employment and wages and hours, except where noncompliance would not
have a Material Adverse Effect.

     P. Employee Benefits:

     (i) Schedule 4.3.B hereto lists all Employee Benefit Plans that are
sponsored by Seller and in which any employees of Seller in connection with the
Business, other than the Additional Salaried Employees, participate.

     (ii) As to Employee Benefit Plans sponsored by Seller that are intended to be
tax-qualified “employee pension benefit plans” as defined in Section 3(2) of ERISA,
such plans sponsored by Seller are tax qualified under Section 401(a) of the Code,
are not currently under examination by, nor are any matters pending before, the
Internal Revenue Service, the Employee Benefits Security Administration or any
quasi-government agency, are not subject to any claim, suit or arbitration (other
than routine claims for benefits), are not subject to the minimum funding standards
of Code Section 412, are in compliance with and

23

 

have been administered in accordance with their terms and in compliance with
all applicable requirements of law, including, but not limited to, the Code and
ERISA, and there have been no prohibited transactions as defined in Code Section
4975 or ERISA Section 406 with respect to such plans that could subject Seller or
its Affiliates to a tax or penalty under Code Section 4975 or ERISA Section 502(i).

     (iii) Seller has not incurred any Liability under Title IV of ERISA that has or
could, after the Closing Date, become a Lien upon any of the Acquired Assets
pursuant to ERISA Section 4068.

     (iv) Seller is not and has never been required to contribute to any
“multiemployer plan”, as such term is defined in Section 4001(a)(3) of ERISA, in
which employees of Seller in connection with the Business participate.

     (v) Except as set forth in Schedule 4.3.B, no Employee Benefit Plan
provides medical, surgical, hospitalization, death or similar benefits (whether or
not insured) for employees for periods extending beyond their retirement or other
termination of service, other than: (x) coverage mandated by applicable law; or (y)
death benefits under any pension plan.

     (vi) For the purposes of Schedule 4.3.B, Seller shall include all
trades or businesses under common control with Seller as provided in the regulations
under Code Section 414(c).

     Q. Contracts:

     (i) Schedule 6.1.Q(i) hereto lists, as of the dates set forth therein,
the following Contracts to which Seller is a party and that primarily relate to the
Business, other than Employee Benefit Plans (collectively, the “Material
Contracts”):

     (a) Any Contract for the lease of personal property to or from any
Person providing for lease payments in excess of $50,000 per annum;

     (b) Any Contract for the purchase or sale of raw materials,
commodities, supplies, products or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over
a period of more than one (1) year, provide for discounts or allowances or
involve consideration in excess of $50,000;

     (c) Any Contract concerning a partnership or joint venture;

     (d) Any Contract under which Seller has created, incurred, assumed or
guaranteed any indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $50,000 or under which it has imposed a Lien on any
of the Acquired Assets;

     (e) Any Contract concerning non-competition;

24

 

     (f) Any Contract with an Affiliate;

     (g) Any Contract for the employment or other engagement of any
individual on a full-time, part-time, consulting or other basis providing
annual compensation in excess of $50,000;

     (h) Any sales representative or agency Contract, brokers Contract or
dealer Contract, or other Contract relating to the sale or distribution of
products or services of the Business by other Persons;

     (i) Any Contract under which Seller has advanced or loaned any Person
amounts in the aggregate exceeding $50,000; or

     (j) Any other Contract not otherwise included above, the performance of
which involves consideration in excess of $50,000 per annum or $300,000 in
the aggregate prior to expiration of such Contract.

     (ii) Seller has delivered to Purchaser a true and complete copy of each written
Material Contract and a summary of each oral Material Contract assumed or deemed
assumed by Purchaser (all as amended to date) listed on Schedule 6.1.Q(i).
Seller acknowledges and agrees that inclusion of a Material Contract in the data
room made available to Purchaser for purposes of its due diligence activities is
sufficient to constitute delivery under this Section 6.1.Q(ii). With respect to
each such Material Contract, except as set forth on Schedule 6.1.Q(ii): (a)
the Material Contract is legal, valid, binding and enforceable on Seller and, to
Seller’s Knowledge, on each other party thereto, and is in full force and effect;
(b) Seller is not and, to Seller’s Knowledge, no other party to a Material Contract
is in material breach or default, or has alleged a material breach or default, in
each case that has not been cured or otherwise resolved, and to Seller’s Knowledge
no event has occurred that with notice or lapse of time would constitute a material
breach or default, or permit termination, modification or acceleration, under the
Material Contract, except as set forth on Schedule 6.1.Q(ii); and (c) Seller
has not, and to Seller’s Knowledge no other party has, repudiated any provision of
the Material Contract.

     R. Brokers. Seller has employed no finder, broker, agent or other intermediary
in connection with the negotiation or consummation of this Agreement or any of the
transactions contemplated hereby for which Purchaser would be liable.

     S. Licenses, Approvals, Other Authorizations. Except as set forth on
Schedule 6.1.S, Seller possesses or has been granted all Licenses necessary for the
conduct of the Business as presently conducted, except where the failure to have such
Licenses would not have a Material Adverse Effect. Except as noted on Schedule
6.1.S hereto, all such Licenses are in full force and effect. Except as noted on
Schedule 6.1.S hereto, no proceeding is pending or, to Seller’s Knowledge,
threatened seeking the revocation or limitation of any License.

     T. Environmental Matters. Except as set forth in Schedule 6.1.T
hereto:

     (i) The Business has been conducted by Seller, and the condition of the
Acquired Assets and the Leased Real Property is, in compliance with all

25

 

Environmental, Health and Safety Laws, except where the failure to comply would
not have a Material Adverse Effect;

     (ii) Without limiting the generality of the foregoing, Seller has obtained,
currently possesses and is and has been in material compliance with, all terms and
conditions of all permits, licenses and other authorizations that are required
pursuant to Environmental, Health and Safety Laws for the occupation of the Leased
Real Property, the ownership and use of the Acquired Assets and otherwise for the
conduct of the Business, all of which permits, licenses and authorizations are
listed on Schedule 6.1.T;

     (iii) Seller has not received any written notice, report or other information
suggesting that the operation of the Business or condition of the Acquired Assets or
the Leased Real Property is in actual or alleged violation of any of the
Environmental, Health and Safety Laws or that it has any Liabilities or potential
Liabilities in connection with the Business (including any investigatory, remedial
or corrective obligations) relating to its Leased Real Property;

     (iv) To Seller’s Knowledge, none of the following exists at, on, in or under
any portion of the Leased Real Property: (a) underground storage tanks; (b)
asbestos-containing material in any form or condition; (c) polychlorinated
biphenyls; or (d) landfills or surface impoundments; and

     (v) To Seller’s Knowledge, and except as may be contained in the Lease(s),
Seller has not, in connection with the Business, either expressly or by operation of
law, assumed or undertaken any Liability, including, without limitation, any
obligation for corrective or remedial action of any other Person relating to
Environmental, Health and Safety Laws.

     U. Taxes:

     (i) None of the Acquired Assets is or at the Closing Date will be encumbered by
any Liens arising out of any unpaid Taxes (except for Taxes that are not yet due and
payable) and there are no grounds for the assertion or assessment of any Liens
against any of the Acquired Assets in respect of any Taxes (other than Liens for
Taxes, if payment thereof is not yet due).

     (ii) To Seller’s Knowledge, no issue has been raised by any taxing authority in
connection with an audit or examination of any Tax Return in connection with the
Business, that if raised with regard to any other Tax Return not so audited or
examined, would reasonably be expected to result in a proposed deficiency with
respect to the period covered by such other Tax Return. No taxing authority in a
jurisdiction where Seller does not file Tax Returns has made a claim, assertion or
threat that Seller is or may be subject to taxation in such jurisdiction in
connection with the Business.

     (iii) All Taxes that Seller has been required to collect or withhold for in
connection with the Business, including, but not limited to, any employee,
independent contractor, creditor, stockholder or other party, have been duly
withheld or collected and, to the extent required, have been paid to the proper
taxing authority. Seller has not received any reports or other written assertions

26

 

by agents of any taxing authority of any deficiencies or other Liabilities for
Taxes in connection with the Business with respect to taxable periods for which the
limitations period has not run. Seller has not waived any statute of limitations in
respect of Taxes in connection with the Business or agreed to any extension of time
with respect to a Tax assessment or deficiency in connection with the Business.

     (iv) Seller is not a “foreign person” within the meaning of Code Section
1445(f)(3).

     V. Insurance. Schedule 6.1.V contains a complete and correct list, in
all material respects, of all material policies of insurance covering the Acquired Assets
(other than the Excluded Assets), indicating for each policy the carrier, risks insured, the
amount of coverage, deductible, expiration date and any material pending claims under such
policies.

     W. Product Warranty. The representations and warranties of Seller under this
Section 6.1.W are subject to the limitation stated under Seller’s indemnification
obligations under Section 9.4.B(ii) below. Seller does not design any products for its
customers in connection with the Business. Schedule 6.1.W hereto: (i) lists each
Material Contract with a customer pursuant to which Seller delivers an express warranty on
the products sold by Seller in connection with the Business; and (ii) sets forth Seller’s
standard terms and conditions of sale (containing applicable guaranty, warranty and
indemnity provisions). No product manufactured, sold or delivered by Seller in connection
with the Business is subject to any guaranty, express warranty or other indemnity beyond
that which is contained in the applicable customer contract or the standard terms and
conditions of sale set forth in Schedule 6.1.W hereto. To Seller’s Knowledge,
Seller is not a party to any Action against Seller arising out of any injury to individuals
or property as a result of the ownership, possession or use of any product manufactured,
sold or delivered by Seller in connection with the Business.

     X. Customers and Suppliers. Schedule 6.1.X hereto lists the current
customers of the Business and sets forth opposite the name of each such customer the
approximate dollar amount and approximate percentage of net sales of the Business
attributable to such customer during the most recent fiscal year. Schedule 6.1.X
hereto lists the ten (10) largest suppliers to the Business (based upon dollar amount of
purchases by Seller) and sets forth opposite the name of each such supplier the approximate
dollar amount of purchases attributable to such supplier during the most recent fiscal year.
No supplier of the Business has indicated in writing to Seller that it will stop, or
materially decrease the rate of, supplying materials, products or services to the Business
and no customer of the Business has indicated in writing to Seller that it will stop, or
materially decrease the rate of, purchasing materials, products or services from the
Business.

     Y. [Intentionally Omitted.]

     Z. Accuracy of Information; Full Disclosure. No representation or warranty of
Seller contained in this Agreement contains any untrue statement of a material fact or, to
Seller’s Knowledge, omits to state a material fact required to be stated therein or
necessary to make the statements made, in the context in which made,

27

 

not false or misleading, which, in each case, has or could reasonably be expected to
have, a Material Adverse Effect.

     AA. Certain Transactions. All purchases and sales or other transactions, if
any, between Seller, on the one hand, and any officer, director or employee thereof or
Affiliate thereof, on the other hand, since Seller’s purchase of the Business have been made
on the basis of prevailing market rates and terms such that, from the perspective of Seller,
all such transactions have been made on terms no less favorable than those which, to
Seller’s Knowledge, would have been available from unrelated third parties. Except as set
forth on Schedule 6.1.AA, neither any officer, director nor employee of Seller, nor
any spouse, child or other relative of any of such persons, owns, or has any interest,
directly or indirectly, in any of the real or personal property owned by or leased to Seller
primarily related to the Business or any Intellectual Property owned or licensed by Seller
and primarily related to the Business.

     BB. Regulatory Compliance:

     (i) Since Seller’s purchase of the Business, Seller has not received any
adverse written notice from the FDA or any other Governmental Entity: (a) regarding
its manufacturing operations, the Business or the Acquired Assets; (b) alleging any
violation of any Law by Seller which, in the case of either clause (a) or (b),
individually or in the aggregate has had or would have a Material Adverse Effect.

     (ii) Except as described in Schedule 6.1.BB, no License of Seller has
been denied, placed on hold, withdrawn, suspended or discontinued by Seller as a
result of any action by the FDA or any other similar Governmental Entity, or in the
United States or outside the United States (whether voluntarily or otherwise), in
each case since Seller’s purchase of the Business. No proceedings in the United
States or outside of the United States of which Seller has Knowledge (whether
completed or pending) seeking the withdrawal, suspension or seizure of any License
of Seller are pending against Seller, nor have any such proceedings been pending at
any prior time, in each case which has had or would have a Material Adverse Effect
on Seller or the Acquired Assets.

     (iii) Except for instances that have not had and would not have a Material
Adverse Effect: (a) to the Knowledge of Seller, since Seller’s purchase of the
Business, no officer, employee or agent of Seller has made an untrue statement of a
material fact or fraudulent statement to the FDA or any other Governmental Entity,
failed to disclose a material fact required to be disclosed to the FDA or any other
Governmental Entity or committed an act, made a statement or failed to make a
statement that, at the time such disclosure was made, could reasonably be expected
to provide a basis for the FDA or any other Governmental Entity to invoke with
respect to Seller its policy respecting “Fraud, Untrue Statements of Material Facts,
Bribery, and Illegal Gratuities”, set forth in 56 Fed. Reg. 46191 (September 10,
1991) or any similar policy; and (b) neither has, to the Knowledge of Seller, any
officer, employee or agent of Seller, been convicted of any crime or engaged in any
conduct for which debarment is mandated by 21 U.S.C. Section 335a(a) or any similar
Law or permitted by 21 U.S.C. Section 335a(b) or any similar Law.

28

 

     (iv) Seller has not received any written notice since its purchase of the
Business that the FDA or any other Governmental Entity has commenced, or overtly
threatened to initiate, any action to enjoin production or clinical evaluation of
any product included within the Acquired Assets.

     (v) The representations and warranties relating to Environmental Matters,
including Environmental Health and Safety Laws and Environmental Licenses, are
exclusively set forth in Section 6.1.T.

     CC. Survival. Each of the foregoing representations and warranties will
survive the Closing Date for a period of eighteen (18) months following Closing Date;
provided, however, the representations and warranties in Sections 6.1 A, B, C and E shall
survive the Closing indefinitely.

     DD. Absence of Other Representations or Warranties. Except for the warranties
expressly set forth in this Agreement and the Ancillary Agreements, Seller makes no
representations or warranties, express or implied, with respect to the Acquired Assets or
the Business. For the avoidance of doubt, no warranty or representation is given on the
contents of the documents provided in due diligence, on any other documents or other
information not contained in this Agreement or the Ancillary Agreements, all of which were
produced only for information purposes.

     6.2 Warranties of Purchaser. Purchaser hereby represents and warrants to Seller that
the following representations and warranties are true and correct as of the date hereof and will be
true and correct as of the Closing (as though made then and as though the Closing Date was
substituted for the date of this Agreement throughout this Section 6.2):

     A. Corporate Organization. Purchaser is a limited liability company, duly
organized, validly existing and in good standing under the Laws of the State of Colorado, is
duly qualified as a foreign limited liability company in such jurisdictions as the conduct
of its business requires, and has the power and authority to carry on its business as it is
now being conducted.

     B. Corporate Authority. Purchaser has the requisite limited liability company
authority to perform its obligations under this Agreement and each Ancillary Agreement, to
execute and perform in accordance with this Agreement, and, assuming due authorization,
execution and delivery by Seller, this Agreement constitutes a valid and binding obligation
of Purchaser enforceable against Purchaser in accordance with its terms. The execution and
delivery of this Agreement and the Ancillary Agreements, the performance of Purchaser’s
obligations hereunder and thereunder and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary proceedings on the
part of Purchaser.

     C. No Conflicts. The execution, delivery and performance by Purchaser of this
Agreement and the Ancillary Agreements, the consummation of the transactions contemplated
hereby and thereby, and the compliance with the terms of this Agreement and the Ancillary
Agreements by Purchaser do not violate, conflict with or result in a breach of Purchaser’s
Organizational Documents, or of any other agreement to which Purchaser is a party of by
which it is bound, except as would not, individually or in the aggregate, have a material
adverse effect on Purchaser’s ability to consummate the transactions contemplated by this
Agreement.

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     D. Consents and Approvals. Other than as set forth on Schedule 6.2.D,
no consent, approval or authorization of any non-governmental third party and no consent,
approval, authorization or declaration of or filing or registration with any foreign,
federal, state or local governmental or regulatory authority is required to be made or
obtained by Purchaser in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

     E. Litigation. There is no litigation, equitable or legal, administrative,
arbitrative or other proceedings pending, or to the Knowledge of Purchaser, threatened
against or affecting Purchaser which could reasonably be expected to result in the issuance
of an order restraining, enjoining or otherwise prohibiting Purchaser from consummating the
transactions contemplated by this Agreement.

     F. Brokers. Purchaser has employed no finder, broker, agent or other
intermediary in connection with the negotiation or consummation of this Agreement or any of
the transactions contemplated hereby for which Seller would be liable.

     G. Solvency. Upon the consummation of the transactions contemplated by this
Agreement: (i) Purchaser will not be insolvent; (ii) Purchaser will not be left with
unreasonably small capital; (iii) Purchaser will not have incurred debts beyond its ability
to pay such debts as they mature; and (iv) the capital of Purchaser will not be impaired.

     H. Availability of Funds. Purchaser has or will have available, at or prior to
Closing, sufficient cash in immediately available funds to pay the Purchase Price and all
costs, fees and expenses necessary to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements.

     I. Compliance with Laws. To Purchaser’s Knowledge, Purchaser is in compliance
with all Laws applicable to it, except with respect to those violations that could not
reasonably be expected to result in the issuance of an order outstanding restraining,
enjoining or otherwise prohibiting Purchaser from consummating the transactions contemplated
by this Agreement.

     J. Anti-Money Laundering. To Purchaser’s Knowledge, Purchaser is in compliance
with: (i) all applicable provisions of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law
107-57) (“USA Patriot Act”), as amended, and all regulations issued pursuant to it; (ii)
Executive Order No. 13224 on Terrorist Financing, Effective September 24, 2001, and relating
to Blocking Property and Prohibited Transactions with Persons Who Commit, Threaten to
Commit, or Support Terrorism; (iii) the International Emergency Economic Power Act (50
U.S.C. 1701 et seq.), and any applicable implementing regulations; (iv) the Trading with the
Enemies Act (50 U.S.C. 50 et seq.), and any applicable implementing regulations; and (v) all
applicable legal requirements relating to anti-money laundering, anti-terrorism and economic
sanctions in the jurisdictions in which Purchaser operates or does business. Neither the
Purchaser nor any of its directors, officers or Affiliates is identified on the United
States Treasury Department Office of Foreign Asset Control’s (“OFAC”) list of “Specially
Designated Nationals and Blocked Persons” (the “SDN List”) or otherwise the target of an
economic sanctions program administered by OFAC, and Purchaser is not affiliated in any way
with, or providing financial or material support to, any such persons or entities.
Purchaser agrees that should it, or any of its directors, officers or Affiliates be named at

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any time in the future on the SDN List, or any other similar list maintained by the
U.S. Government, Purchaser shall inform the Seller in writing immediately.

     6.3 Fair Disclosure. Any matter fairly disclosed in any Schedule to this Agreement
will be deemed an exception for all other representations and warranties contained in this
Agreement whether or not such other representations or warranties contain a reference to such other
Schedule, but only to the extent the relevance of such matter to such other representation and
warranty is reasonably apparent.

     6.4 Purchaser Acknowledgement:

     A. Purchaser agrees that, other than as specifically represented or warranted by Seller
under Section 6.1 of this Agreement, which shall be deemed to control in the event of a
conflict between Section 6.1 and this Section 6.4: (i) Seller neither represents nor
warrants that any of the Acquired Assets will operate satisfactorily or that any of the
Acquired Assets comply with any applicable Laws; (ii) Purchaser accepts the entire risk and
responsibility of taking any necessary action (including performing inspections and
undertaking physical modifications) to make the Acquired Assets operate safely and
satisfactorily after Closing in Purchaser’s plant, and comply with any applicable Laws;
(iii) Seller shall have no liability or responsibility for the condition, yield and/or
operation of the Acquired Assets after transfer to Purchaser; and (iv) Purchaser is
purchasing the Acquired Assets based solely upon its own inspection, evaluation, review and
analysis, and Purchaser assumes the entire risk associated with such inspection, evaluation,
review and analysis being incomplete or inaccurate.

     B. Purchaser acknowledges and agrees that, if the Closing occurs notwithstanding the
existence of a breach of any of Seller’s representations and warranties of which Purchaser
has Knowledge on or prior to such Closing, Purchaser is prohibited from bringing a claim
against Seller, including an indemnification claim, related to any such breach.

7. CONDITIONS TO CLOSING:

     7.1 Conditions to Obligations of Seller and Purchaser. The respective obligations of
each Party to effect the transactions contemplated by this Agreement will be subject to the
satisfaction or waiver at or prior to the Closing Date (or such earlier time as is indicated below)
of the following conditions precedent:

     A. No Law, Judgments, Etc. No provisions of any applicable Law and no
judgment, injunction (preliminary or permanent), order or decree that prohibits, makes
illegal or enjoins the consummation of the transactions contemplated by this Agreement will
be in effect.

     B. Excess Inventory. Prior to the Closing, the Parties shall have agreed upon
the Baseline Report.

     7.2 Conditions to Obligations of Purchaser. The obligation of Purchaser to consummate
the transactions contemplated by this Agreement will be subject to the fulfillment at or prior to
the Closing of the following conditions (any one or more of which may be waived in whole or in part
by Purchaser):

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     A. Accuracy of Warranties. Disregarding the Supplement for purposes of this
Section 7.2.A, the representations and warranties of Seller contained in this Agreement will
be true and correct in all material respects and as of the Closing Date as if made on such
date (except for representations and warranties that speak as of a specific date or time,
which will be true and correct only as of such date or time), except where such
representation and warranties are qualified by the terms “material”, which shall be true and
correct in all respects as of the Closing Date (except for representations and warranties
that speak as of a specific date or time, which will be true and correct only as of such
date or time).

     B. Performance of Covenants. Each of the Ancillary Agreements to which Seller
is a party will have been executed and delivered by Seller to Purchaser, and all other
agreements and transactions contemplated hereby or in this Agreement or any Ancillary
Agreement to be performed by Seller on or before the Closing will have been performed in all
material respects.

     C. Third Party Consents. The parties shall have received consents to transfer
the Material Contracts and Licenses listed on Schedule 7.2.C, which shall be in full
force and effect as of the Closing Date.

     D. UCC, Tax Lien and Judgment Search Results. Seller shall have delivered to
Purchaser a report, in standard form and substance and otherwise in form and substance
reasonably satisfactory to Purchaser, as to the results of an examination of financing
statements filed under the Uniform Commercial Code, and tax lien and judgment records, in
each office in each such jurisdiction in which Seller is qualified to do business.

     E. Phase 1. Purchaser shall have obtained a Phase 1 environmental site
assessment of the Leased Real Property, in a form substantially conforming with ASTM 1527
and reasonably acceptable to Purchaser, and any further investigations to resolve any
Recognized Environmental Conditions disclosed in the Phase 1 environmental site assessment.

     F. New Road 18 Lease. Concurrently with the Closing, the landlord under the
facility subject to the Road 18 Lease shall have entered into a new lease with Purchaser
(the “New Road 18 Lease”), reasonably acceptable to Purchaser, to lease the portion of the
Facility subject to the Road 18 Lease to Purchaser after the Closing.

     G. No Material Adverse Effect. Since the date of this Agreement, no Material
Adverse Effect shall have occurred and be continuing at Closing.

     7.3 Conditions to Obligations of Seller. Except as otherwise permitted by this
Agreement, the obligation of Seller to consummate the transactions contemplated by this Agreement
will be subject to the fulfillment at or prior to the Closing of the following conditions (any one
or more of which may be waived in whole or in part by Seller):

     A. Accuracy of Warranties. The representations and warranties of Purchaser
contained in this Agreement will be true and correct in all material respects at and as of
the Closing Date if made on such date (except for representations and warranties that speak
as of a specific date or time, which will be true and correct only as of such date or time),
except where such representations and warranties are qualified by

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the terms “material”, which shall be true and correct in all respects at and as of the
Closing Date (except for representations and warranties that speak as of a specific date or
time, which will be true and correct only as of such date or time).

     B. Performance of Covenants. Each of the Ancillary Agreements to which
Purchaser is a party will have been executed and delivered by Purchaser to Seller, and all
other agreements and transactions contemplated hereby or in any Ancillary Agreement to be
performed by Purchaser on or before the Closing will have been performed in all material
respects.

     C. Payment of Purchase Price. Purchaser shall have paid the Purchase Price
called for by Section 3.1, including by funding the Holdback.

     D. Road 18 Lease Termination. The landlord under the portion of the Facility
subject to the Road 18 Lease shall have executed and delivered to Seller a document
reasonably acceptable to Seller terminating the Road 18 Lease effective at Closing and
releasing Seller from all claims in connection with such termination.

     E. No Material Adverse Effect. Since the date of this Agreement, no Material
Adverse Effect shall have occurred and be continuing at Closing.

     F. Delivery of Purchaser’s Certificate. Purchaser shall have delivered the
Purchaser MAE Certificate.

8. CLOSING:

     8.1 Closing Date. Subject to the satisfaction of the conditions set forth in this
Agreement, the closing (the “Closing”) of the transactions contemplated hereby will take place at
the offices of Seller on August 6, 2010 or the first day thereafter that the conditions set forth
in Article 7 have been satisfied or waived (other than conditions which by their nature can be
satisfied only at the Closing), or on such other date or at such other time as the Parties may
agree, but in no event later than August 15, 2010. The Closing shall be deemed effective as of
12:01 a.m. on the Closing Date.

     8.2 Ancillary Agreements. At the Closing, the Parties will execute and deliver each
of the Ancillary Agreements.

     8.3 Miller Road Sublease. At the Closing, the Parties will execute and deliver a
sublease for the Miller Road facility (the “Miller Road Sublease”), with a term beginning on the
Closing Date and ending on June 30, 2011 and providing for termination on thirty (30) days notice,
and containing such other reasonable and customary terms and conditions as are applicable for a
facility sublease and reasonably acceptable to both Seller and Purchaser.

     8.4 Seller’s Deliveries. At the Closing, Seller will deliver to Purchaser the
following, in proper form for recording where appropriate:

     A. Duly executed Assignment and Assumption Agreement, substantially in the form set
forth in Exhibit 8.4.A, for the Licenses and the Contracts.

     B. Duly executed Bill of Sale, substantially in the form set forth in Exhibit
8.4.B, for the Acquired Assets.

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     C. Duly executed Transition Services Agreement, substantially in the form set forth in
Exhibit 8.4.C.

     D. Duly executed Non-Competition Agreement, substantially in the form set forth in
Exhibit 8.4.D.

     E. An officer’s certificate, dated as of the Closing Date, executed on behalf of
Seller, certifying that the conditions specified in Article 7 have been fulfilled.

     F. A certificate, dated as of the Closing Date, executed on behalf of Seller by a
Secretary or an Assistant Secretary, certifying: (i) a true and correct copy of Seller’s
Organizational Documents; (ii) a true and correct copy of the resolutions of the appropriate
Seller management group authorizing the execution, delivery and performance of this
Agreement and any Ancillary Agreement to which Seller is a party and the consummation of the
transactions contemplated hereby and thereby; and (iii) a true and correct copy of a good
standing certificate, dated as of a recent date, from any state in which Seller is qualified
to do business.

     8.5 Purchaser’s Deliveries. At the Closing, Purchaser will deliver to Seller, in
proper form for recording where appropriate:

     A. The Purchase Price as set forth in Section 3.1, including the funding of the
Holdback.

     B. An officer’s certificate, dated as of the Closing Date, executed on behalf of
Purchaser, certifying that the conditions specified in Article 7 have been fulfilled.

     C. A certificate, dated as of the Closing Date, executed on behalf of the Purchaser by
its Secretary or an Assistant Secretary, certifying: (i) a true and correct copy of
Purchaser’s Organizational Documents; and (ii) a true and correct copy of the resolutions of
the Purchaser’s board authorizing the execution, delivery and performance of this Agreement
by Purchaser and the consummation of the transactions contemplated hereby.

     D. If true, a certificate dated as of the Closing Date, executed on behalf of
Purchaser, certifying that, to Purchaser’s Knowledge, no Material Adverse Effect shall have
occurred as of the date of Closing (the “Purchaser MAE Certificate”).

9. CERTAIN ADDITIONAL COVENANTS:

     9.1 Continued Operations. Except: (i) as otherwise provided in this Agreement; (ii)
for any changes that may be required under applicable Laws; or (iii) as disclosed on Schedule
9.1, until the Closing, Seller will continue to operate the Business in the Ordinary Course of
Business and use commercially reasonable efforts to maintain and preserve its relationships with
customers, suppliers, employees and others having business relationships with the Business. Except
as required by this Agreement, or as disclosed on Schedule 9.1, from and after the date of
this Agreement and until Closing Seller, with respect to the Business, will refrain from doing any
of the following without the consent of Purchaser (which consent will not be unreasonably withheld
or delayed):

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     A. Sell or otherwise dispose of Acquired Assets having a value exceeding $10,000,
excluding sales of Inventory and sales of receivables to financial institutions or credit
collection agencies, in each case in the Ordinary Course of Business;

     B. Incur, assume or guarantee any debt obligation that would become an Assumed
Liability;

     C. Incur any Lien on any Acquired Assets, in each case, other than Permitted Liens;

     D. Increase the cash compensation of the Transferred Employees or enter into, adopt,
terminate, modify or amend any Employee Benefit Plan outside the Ordinary Course of
Business;

     E. Make any material change in the accounting methods or practices followed by the
Business (other than such changes that are: (i) required by Law; (ii) made in conformance
with GAAP; or (iii) required in connection with the preparation of the Financial
Statements);

     F. Initiate, terminate or make any material amendment to a Material Contract outside
the Ordinary Course of Business;

     G. Fail to maintain insurance in a manner consistent with Seller’s past practice;

     H. Make any capital investment exceeding $10,000;

     I. Delay, accelerate or postpone payment or receipt of accounts payable and/or accounts
receivable outside the Ordinary Course of Business;

     J. Enter into any loan or Contract with an Affiliate; or

     K. Agree or commit to do any of the foregoing.

     9.2 Registrations, Filings and Consents; Further Actions. Upon the terms and subject
to the conditions of this Agreement, each of the Parties will use commercially reasonable efforts
to take, or cause to be taken, all appropriate actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement and the Ancillary Agreements as promptly
as practicable including, without limitation, using their reasonable best efforts to cause the
satisfaction of all conditions to Closing.

     9.3 Further Assurances:

     A. If at any time after the Closing any further action is necessary or desirable to
carry out the purposes of this Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instructions and documents) as any
other Party reasonably may request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under this Agreement).

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     B. Purchaser will, from time to time, at the cost of and reasonable request of Seller,
cooperate fully with Seller in providing Seller and its Affiliates (as appropriate) (to the
extent possible through Transferred Employees) with technical assistance and information in
respect to any claims brought against Seller and its Affiliates involving the conduct of the
Business prior to Closing, including consultation and/or the appearance(s) of such persons
on a reasonable basis as expert or fact witnesses in trials or administrative proceedings.
Seller will reimburse Purchaser and its Affiliates for reasonable, actual direct
out-of-pocket costs (travel, employee time, hotels, etc.) of providing such services. In
particular, Purchaser, for itself and on behalf of its Affiliates, agrees to: (i) retain all
documents required to be maintained by Law; (ii) make available their documents and records
in connection with any pursuit, contest or defense, including documents that may be
considered to be “confidential” or subject to trade secret protection (except that: (a) no
documents or records protected by the attorney client privilege in favor of Purchaser and
its Affiliates must be made available if making these documents or records available would
cause the loss of this privilege (in any case, however, Purchaser must notify Seller of the
existence of such privileged documents); and (b) Seller and its Affiliates will agree to
keep confidential documents and records that are confidential or are subject to trade secret
protection); (iii) promptly respond to discovery requests in connection with such claim,
understanding and acknowledging that the requirements of discovery in connection with
litigation require timely responses to interrogatories, requests to produce and depositions
and also understanding and acknowledging that any delays in connection with responses to
discovery may result in sanctions; (iv) make available, as may be reasonably necessary and
upon reasonable advance notice and for reasonable periods so as not to interfere
unreasonably with Purchaser’s business (in its reasonable discretion), engineers,
technicians or other knowledgeable individuals to assist Seller and its Affiliates in
connection with such claim, including investigation into claims and occurrences described in
this section and preparing for and giving factual and expert testimony at depositions, court
proceedings, inquiries, hearings and trial; and (v) make available facilities and exemplar
parts for the sole and limited use of assisting Seller and its Affiliates in the contest or
defense.

     C. Between the date hereof and the Closing, Seller will give prompt notice in writing
to Purchaser of: (i) any information that, to Seller’s Knowledge, indicates that any
representation or warranty of Seller contained herein was not true and correct in all
material respects as of the date hereof or will not be true and correct in all material
respects as of the Closing Date; (ii) the occurrence of any event that will, to Seller’s
Knowledge, result, or is reasonably likely to result, in a Material Adverse Effect or in the
failure to satisfy a condition to Closing specified in this Agreement; and (iii) any notice
or other written communication received by Seller from any third Person alleging that the
consent of such third Person is required in connection with the transactions contemplated by
this Agreement. Further, no later than seven (7) Business Days prior to the Closing Date,
Seller may deliver to Purchaser a supplement (the “Supplement”) to any Schedule provided
under Article 6 of this Agreement (each a “Disclosure Schedule” and collectively, the
“Disclosure Schedules”) solely with respect to any such events, facts or conditions
occurring or arising after the date of this Agreement, and not resulting from Seller’s
failure to comply with the terms of this Agreement, or breach as of the date hereof of any
representation or warranty made herein.

     D. Between the date hereof and the Closing, Purchaser will give prompt notice in
writing to Seller of: (i) any information that, to Purchaser’s Knowledge, indicates that any
representation or warranty of Purchaser contained herein was not true and

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correct in all material respects as of the date hereof or will not be true and correct
in all material respects as of the Closing Date; (ii) the occurrence of any event that will,
to Purchaser’s Knowledge, result, or is reasonably likely to result, in the failure to
satisfy a condition to Closing specified in this Agreement; and (iii) any notice or other
written communication received by Purchaser from any third Person alleging that the consent
of such third Person is required in connection with the transactions contemplated by this
Agreement.

     E. Between the date of this Agreement and the Closing Date, Seller shall, during
ordinary business hours: (i) give to Purchaser and its authorized representatives reasonable
access to all Books and Records, plants, offices and other facilities and properties of
Seller primarily related to the Business; (ii) permit Purchaser to make such inspections
thereof as Purchaser may reasonably request; and (iii) cause Seller’s officers, employees
and advisors to use commercially reasonable efforts to furnish Purchaser with such financial
and operating data and other information with respect to the Business and the Acquired
Assets as Purchaser may from time to time reasonably request. Any such inspection or
investigation shall be conducted in such a manner as not to interfere unreasonably with the
operation of the Business, the Excluded Businesses or the businesses of Seller’s Affiliates.

     9.4 Indemnification:

     A. LIMITATIONS OF LIABILITY. SUBJECT TO SECTION 9.4.E, NEITHER PARTY
UNDERTAKES ANY LIABILITY FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL, EXEMPLARY, INDIRECT OR
PUNITIVE DAMAGES. SELLER WILL NOT BE LIABLE FOR ANY, AND PURCHASER ASSUMES LIABILITY FOR
ALL, PERSONAL INJURY AND PROPERTY DAMAGE CONNECTED WITH PURCHASER’S INVESTIGATION AND
EXAMINATION OF THE ACQUIRED ASSETS, THE HANDLING, TRANSPORTATION, POSSESSION, PROCESSING,
FURTHER MANUFACTURE OR OTHER USE OR RESALE OF ANY OF THE ACQUIRED ASSETS AFTER THE CLOSING
DATE, WHETHER SUCH ACQUIRED ASSETS ARE USED OR RESOLD ALONE OR IN COMBINATION WITH OTHER
ASSETS OR MATERIALS; AND PURCHASER ACKNOWLEDGES THAT THE ACQUIRED ASSETS ARE BEING SOLD IN
THEIR PRESENT STATE AND CONDITION, “AS IS, WHERE IS”, SUBJECT TO THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN SECTION 6.1, WITH ALL FAULTS, AND PURCHASER IS PURCHASING AND
ACQUIRING SUCH ACQUIRED ASSETS ON THAT BASIS PURSUANT TO PURCHASER’S OWN INVESTIGATION AND
EXAMINATION AFTER HAVING BEEN PROVIDED WITH AN ADEQUATE OPPORTUNITY AND ACCESS TO SUCH
ACQUIRED ASSETS TO COMPLETE SUCH INVESTIGATION.

     B. Seller’s Agreement to Indemnify. If the Closing occurs and Purchaser makes
a written claim for indemnification against Seller in accordance with the procedures set
forth in this Section 9.4, then, from and after the Closing, Seller agrees to indemnify and
hold harmless Purchaser and its Affiliates, each of their respective shareholders,
directors, officers, employees and agents, and each of the heirs, executors, successors and
assigns from and against all liabilities, claims, assessments, losses, judgments,
settlements, damages, costs and expenses (including, without limitation, reasonable
professional fees and expenses) (collectively, the “Purchaser Damages”) incurred by
Purchaser as a result of or arising out of: (i) the Retained Liabilities and Excluded
Assets; (ii) a breach of any representation or covenant of Seller

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contained in this Agreement; or (iii) a breach of any covenant to be performed by
Seller under this Agreement.

     C. Purchaser’s Agreement to Indemnify. If the Closing occurs and Seller makes
a written claim for indemnification against Purchaser in accordance with the procedures set
forth in this Section 9.4, then, from and after the Closing, Purchaser shall indemnify and
hold harmless Seller and its Affiliates, each of their respective members, shareholders,
directors, officers, employees and agents, and each of their heirs, executors, successors
and assigns from and against all liabilities, claims, assessments, losses, judgments,
settlements, damages, costs and expenses (including, without limitation, reasonable
professional fees and expenses) (collectively, the “Seller Damages”) incurred by Seller as a
result of or arising out of: (i) the Assumed Liabilities; (ii) a breach of any
representation or warranty of Purchaser contained in this Agreement; (iii) a breach of any
covenant to be performed by Purchaser under this Agreement; (iv) the operation of the
Business or the use, operation or ownership of any of the Acquired Assets after the Closing
(other than with respect to any Retained Liabilities); or (v) any warranty, product
liability or other claims related to or arising from Purchaser’s operation of the Business
after the Closing Date (other than with respect to any Retained Liabilities).

     D. Limitations on Agreements to Indemnify. The obligations of the Parties to
indemnify the other pursuant to this Section 9.4 are subject to the following limitations:

     (i) SUBJECT TO SECTION 9.4.E, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR SPECIAL OR EXEMPLARY DAMAGES, OR FOR LOST PROFITS OR BUSINESS
INTERRUPTION LOSSES IN CONNECTION WITH THIS AGREEMENT OR ANY ACTIONS OR OMISSION OF
EITHER PARTY UNDER THIS AGREEMENT, EVEN IF ADVISED OF THE LIKELIHOOD OF SUCH LOSSES.

     (ii) Each Party agrees that, from and after the Closing, the indemnification
provided in this Section 9.4 is the exclusive remedy for a breach by the other Party
of any representation, warranty, agreement or covenant contained in this Agreement,
and that there shall be no other remedy for any breach by a Party in respect of any
claim for monetary damages arising out of or under this Agreement.

     (iii) In calculating amounts payable to an indemnified party, the amount of any
indemnified Purchaser Damages or Seller Damages, as the case may be, shall be
determined without duplication of any other damages for which a claim has been made
or could be made under any other representation, warranty or covenant included
herein.

     (iv) Any written notice delivered by an indemnified party to an indemnifying
party seeking indemnification pursuant to this Agreement shall set forth, with as
much specificity as is reasonably practicable, the basis of the claim, the sections
of this Agreement which form the basis for the claim, and, to the extent reasonably
practicable, a reasonable estimate of the amount of the Purchaser Damages or Seller
Damages, as the case may be, that have been or may be sustained by such indemnified
party.

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     (v) Notwithstanding any other provision of this Agreement, in no event shall an
indemnified party be entitled to indemnification pursuant to this Agreement to the
extent any Purchaser Damages or Seller Damages, as the case may be, were
attributable to the indemnified party’s own gross negligence or willful misconduct.

     (vi) No indemnifying party shall be liable to an indemnified party until the
amount of all indemnifiable damages of such indemnified party in the aggregate
exceeds $25,000, after which point, other than as limited below, the indemnifying
party will be obligated to the indemnified party for all damages.

     (vii) Notwithstanding anything to the contrary contained herein, except with
respect to fraud, intentional misrepresentations and the representations and
warranties contained in Sections 6.1 A, B, C and E, in no event will Seller be
obligated to indemnify Purchaser for Purchaser Damages (or any indemnifiable
damages) that, in the aggregate, exceed fifty percent (50%) of the Purchase Price.
For the avoidance of doubt, except as set forth herein, Seller’s obligations to
indemnify Purchaser for Purchaser Damages are capped at fifty percent (50%) of the
Purchase Price.

     (viii) The obligation of any Party to indemnify the other pursuant to the terms
of this Section 9.4 shall apply only to the extent the Party seeking indemnification
notifies the other Party of such damages in writing on or before the later of: (a)
eighteen (18) months after the Closing Date; or (b) sixty (60) days after the
applicable Party first learns about the claim for which indemnification is sought
under this Section 9.4.

     (ix) To the extent an indemnifying party makes any indemnification payment
pursuant this Section 9.4 for which the indemnified party has a right to recover
against a third party (including an insurance company but specifically excluding
situations that are self insured, including through any captive insurance company),
the indemnifying party shall be subrogated to the right of the indemnified party to
seek and obtain recovery from such third party.

     (x) No party shall be liable to an indemnified party for consequential,
punitive or special damages, unless such damages are included in third party
indemnification claims pursuant to Section 9.4.E below and the indemnified party is
liable to a third party claimant for such damages.

     E. Third Party Indemnification. The obligations of any indemnifying party to
indemnify any indemnified party under Section 9.4 with respect to Purchaser Damages or
Seller Damages, as the case may be, resulting from the assertion of liability by third
parties (including Governmental Entities) (an “Indemnification Claim”), shall be subject to
the following terms and conditions, and the limitations of the first sentence of Section
9.4.A and Section 9.4.D(i) shall not apply to any such Indemnification Claims:

     (i) Any party against whom any Indemnification Claim is asserted shall give the
party required to provide indemnity hereunder written notice of any such
Indemnification Claim promptly after learning of such Indemnification Claim (with
such notice satisfying the requirements of Section 12.1), and to the extent such
matter involves a third party claim, the indemnifying party may, at its option,

39

 

undertake the defense thereof by representatives of its own choosing and shall
provide written notice of any such undertaking to the indemnified party; provided
that the indemnifying party shall demonstrate to the reasonable satisfaction of the
indemnified party its financial capability to undertake the defense. Failure to
give prompt written notice of an Indemnification Claim hereunder shall not affect
the indemnifying party’s obligations under this Section 9.4, except to the extent
that the indemnifying party is actually prejudiced by such failure to give prompt
written notice. The indemnified party, at the indemnifying party’s expense, shall,
and shall cause its employees and representatives to, reasonably cooperate with the
indemnifying party in connection with the settlement or defense of such
Indemnification Claim and shall provide the indemnifying party with all available
information and documents concerning such Indemnification Claim. If the indemnifying
party, within thirty (30) days after written notice of any such Indemnification
Claim, fails to assume the defense of such Indemnification Claim, the indemnified
party against whom such claim has been made shall (upon further written notice to
the indemnifying party) have the right to undertake the defense, compromise or
settlement of such claim on behalf of and for the account and risk, and at the
expense, of the indemnifying party.

     (ii) Anything in this Section 9.4 to the contrary notwithstanding: (i) the
indemnified party shall not settle a claim for which it is indemnified without the
prior written consent of the indemnifying party, which consent shall not be
unreasonably withheld, conditioned or delayed; and (ii) the indemnifying party shall
not enter into any settlement or compromise of any action, suit or proceeding, or
consent to the entry of any judgment for relief, without the prior written consent
of the indemnified party, which consent shall not be unreasonably withheld,
conditioned or delayed.

     F. Not Exclusive Indemnifications. Other than with respect to fraud or
intentional misconduct, the indemnifications in this Section 9.4 are the exclusive
indemnifications to be given by the Parties, except for any indemnifications provided for in
the Ancillary Agreements, which shall govern and control any indemnifications given under
each applicable Ancillary Agreement.

     9.5 Exclusivity. Seller and Sparton Corporation are parties to a certain Letter of
Intent dated April 15, 2010, as amended (the “Letter of Intent”). The Letter of Intent provides,
among other things, that Seller will refrain from taking certain actions, as more specifically set
forth in Section 12 of the Letter of Intent, during the Exclusivity Period (as defined in the
Letter of Intent). Section 12 of the Letter of Intent shall survive the execution of this
Agreement in accordance with its terms; provided, however, that the Exclusivity Period is hereby
amended to end August 13, 2010.

     9.6 Connectivity. The Parties acknowledge that phone and data connectivity for the
Miller Road portion of the Facility is provided through the Road 18 portion of the Facility.
Pursuant to the Transition Services Agreement, during the ninety (90) day period after Closing,
Seller will provide phone and data services to Purchaser in accordance with the terms of the
Transition Services Agreement. During such ninety (90) day period, Purchaser will use commercially
reasonable efforts to contract with an alternative provider of phone and data services and install
such services at the Road 18 portion of the Facility. Once such alternative phone and data service
has commenced, at Seller’s reasonable request and with prior written notice, Purchaser will provide
phone connectivity and service (so long as Purchaser leases the

40

 

Road 18 portion of the Facility) to the Miller Road portion of the Facility (no greater than
in accordance with the current usage) for the duration of the Miller Road Lease, even if the Miller
Road Sublease has expired or been terminated, at Purchaser’s cost reimbursed by Seller without
mark-up. Additionally, Purchaser will ensure the availability (capacity) of voice ports equal to
the number of ports being utilized on the Closing Date. Seller shall cooperate as reasonably
requested by Purchaser in order to provide such services.

     9.7 Sunrise Agreement. In order to allow Seller to perform its remaining obligations
under the Sunrise Agreement, which is an Excluded Asset, Seller will issue and Purchaser will
accept a Seller purchase order for the manufacture of a specified number of products for sale by
Seller to Sunrise as a final build out of all Sunrise products, including warranty and service
parts. Pricing for the products will be consistent with the pricing contemplated in the Financial
Statements. Seller shall indemnify and hold harmless Purchaser in connection with any loss,
liability or claim incurred by Purchaser in connection with Purchaser’s obligations or actions
under this Section 9.7, other than arising from Purchaser’s breach of the terms of the Seller
purchase order or Purchaser’s gross negligence or intentional misconduct. Provided that Purchaser
procures Inventory in accordance with the terms of Schedule 9.7, and that Purchaser
provides best efforts to perform all of its obligations under the Seller purchase order, then
Seller will purchase from Purchaser any remaining inventory related to the Sunrise products upon
receipt of Purchaser’s invoice.

     9.8 Storage. Following the Closing Date and until August 31, 2010, Purchaser will
permit Seller to store assets listed on Schedule 9.8 related to the Excluded Business at
the Facility at no cost to Seller. During such period, Purchaser will provide Seller with
reasonable access to the Facility on prior written notice and during normal business hours or as
otherwise agreed by Purchaser to inspect any such assets, to prepare for the removal of such assets
and to remove such assets. Purchaser shall exercise a reasonable standard of care with respect to
the storage of Seller’s assets. Seller shall indemnify and hold harmless Purchaser for any loss,
liability or claim incurred by Purchaser in connection with this Section 9.8, and; provided that
Purchaser meets its obligations as set forth herein, Purchaser shall have no liability for loss or
damage to said assets. Seller’s activities at the Facility shall not unreasonably interfere with
any ongoing production at the Facility.

     9.9 FDA Regulatory Compliance. Following the Closing, Purchaser will timely register
as a manufacturing facility as required by applicable Law. From and after the Closing Date,
Purchaser shall be responsible for compliance with the FDA Quality System Regulations, 21 C.F.R.
Part 820, for the all products manufactured at the Facility following Closing and all Inventory.

     9.10 Warranty Claims:

     A. Following the Closing Date, in the event that Purchaser (with respect to products
sold prior to the Closing) or Seller, or any of Seller’s Affiliates, agree or are required,
pursuant to applicable Contracts or by a Governmental Entity or by Law, to provide one or
more replacement products or repairs to customers in connection with recalls or warranty
claims by such customers, Purchaser shall supply repairs or replacement products to Seller
for a total aggregate purchase price equal to Purchaser’s cost of repairing or producing
such products or shall provide such repairs or replacement products to the applicable
customer. Seller or its Affiliates shall notify Purchaser in writing of its requirements
for repairs or replacement products as such requirements arise and Purchaser shall deliver
the required number of repairs or replacement

41

 

Products to Seller after customary component lead time after receipt of such written
notice. The Parties shall cooperate in communicating with customers regarding any warranty
claims.

     B. In the event that Purchaser provides repairs or replacement products directly to a
customer under Section 9.10.A with respect to products sold prior to the Closing, within
thirty (30) days after the delivery of the repairs or the replacement products, Purchaser
shall deliver an invoice to Seller for Purchaser’s cost of repairing or replacing such
products (the “Warranty Invoice”). Each Warranty Invoice shall contain a reasonable
explanation of the basis for Purchaser’s agreement to repair or replace the subject
products. Within thirty (30) days of receiving a Warranty Invoice, Seller shall reimburse
Purchaser for the total aggregate purchase price equal to Purchaser’s cost of repairing or
producing such products as set forth on the Warranty Invoice, if Seller agrees that such
repairs or replacements were required by Contract, by a Governmental Entity or by Law, or
shall deliver a written notice to Purchaser that Seller disputes the Warranty Invoice and
the basis for such dispute, including that such repairs or replacements were not required by
Contract, by a Governmental Entity or by Law (a “Warranty Dispute”). All Warranty Disputes
shall be resolved in accordance with Section 12.18 of this Agreement and Seller shall have
the right to withhold the disputed portion of the Warranty Invoice until the Warranty
Dispute has been finally resolved. For the avoidance of doubt, Purchaser acknowledges that
Seller shall have no obligation to reimburse Purchaser for repairs or replacements that
Seller would not be required to provide under applicable Contracts, by Governmental Entity
or by Law.

     9.11 Software and Electronic Records:

     A. Immediately prior to the Closing and otherwise as set forth in Sections 9.11.B and
9.11.C, Seller will back-up all of the data, including attachments, housed in Seller’s AGILE
system located at the Facility (the “Back-Up”), which Back-Up will be retained by Seller.
Additionally, Seller shall have the right, during the twelve (12) month period following the
Closing, to restore the data and attachments included in the Back-Up to the AGILE system
located at the Facility, but only in a non-production environment (the “Restoration”).
During such twelve (12) month period, Purchaser will retain the infrastructure capacity
necessary to enable the Restoration and will provide Seller with temporary network and
application access as necessary to enable the Restoration. Seller will be responsible for
any costs associated with the Restoration.

     B. For the period after Closing until thirty (30) days after the expiration of the
Sunrise Agreement (the “Data Maintenance Period”), Purchaser will maintain all data,
including attachments, related to the Sunrise Agreement and the products manufactured by
Seller under the Sunrise Agreement (the “Sunrise Data”) in the AGILE system located at the
Facility. The Sunrise Data will be restricted to allow access to only Seller and those
employees of Purchaser that need access to perform their obligations under Section 9.7, and
no modifications are permitted without the prior written consent of Seller (i.e., only
Seller will be able modify the Sunrise Data). During the Data Maintenance Period, Purchaser
will provide Delphi with access to the Sunrise Data and the AGILE system located at the
facility for purposes of reviewing and modifying the Sunrise Data. Within thirty (30) days
of the expiration of the Data Maintenance Period, Seller will back-up the Sunrise Data,
which back-up will be retained by Seller. Following such back-up, the Sunrise Data will be
deemed part of the Back-Up and subject to Section 9.11.A.

42

 

     C. With respect to any data, including attachments, in the AGILE system located at the
Facility related to the Excluded Business (the “Divested Products Data”), Purchaser will
restrict access to only Seller and those employees of Purchaser that need access to perform
their obligations under this Section 9.11.C, and no modifications are permitted without the
prior written consent of Seller (i.e., only Seller will be able to modify the Divested
Products Data and Purchaser will be able to view the Divested Products Data only to perform
the deletion set forth herein) and will not delete any such Divested Products Data during
the Data Maintenance Period. Within thirty (30) days of the expiration of the Data
Maintenance Period, Purchaser will run data deletion scripts provided by Seller to delete
the Sunrise Data and the Divested Products Data from the AGILE system. Purchaser will
provide Seller with access to the AGILE system to confirm deletion as provided herein.

10. TAX MATTERS:

     10.1 Seller Responsibilities. Seller shall file any Tax Returns and pay any Taxes
which may be required by any federal, state, local or foreign tax authorities or governmental
agencies by reason of business conducted by Seller on or prior to the Closing Date, including real
property and ad valorem taxes for periods prior to the Closing Date.

     10.2 Purchaser Responsibilities. Purchaser shall file any Tax Returns and pay any
Taxes which may be required by any federal, state, local or foreign tax authorities or governmental
agencies by reason of business conducted by Purchaser after the Closing Date, including real
property and ad valorem taxes for periods after the Closing Date. All United States or foreign,
national, state or local sales taxes, documentary and stamp taxes, transfer taxes, registration
taxes, use taxes, gross receipts taxes, registration duties and all charges for filing and
recording documents in connection with the transfer of the Acquired Assets shall be borne by
Purchaser. In addition, Purchaser shall be responsible for all intellectual property filing and
recording fees, as well as any permit, transfer and filing fees required in order to obtain
governmental approvals and consents relating to the transactions contemplated by this Agreement or
any Ancillary Agreement.

     10.3 Mutual Assistance. Without affecting the foregoing responsibilities, Seller and
Purchaser shall provide reasonable assistance during normal business hours to one another to
resolve any Tax issues which may relate to their respective business activities utilizing the
Acquired Assets and personnel. Such assistance may include, without limitation, access to relevant
business records and personnel in connection with: (i) the preparation and filing of Tax Returns,
elections, consents, certifications and claims for refunds; (ii) the determination of liability for
Taxes; and (iii) the response to tax audits, examination and other proceedings.

11. TERMINATION:

     11.1 This Agreement may be terminated at any time prior to the Closing:

     A. By either Party by mutual written consent;

     B. By Seller upon written notice to Purchaser if Purchaser is in material breach of any
representation, warranty or covenant herein (and Seller is not then in material breach of
any representation, warranty or covenant) and such breach: (i) is not cured within thirty
(30) days after written notice thereof; or (ii) is incapable of being cured;

43

 

     C. By Purchaser upon written notice to Seller if Seller is in material breach
(excluding for purposes of such determination any disclosures contained in the Supplement)
of any representation, warranty or covenant herein (and Purchaser is not then in material
breach of any representation, warranty or covenant and such breach: (i) is not cured within
thirty (30) days after written notice thereof; or (ii) is incapable of being cured);

     D. By either Party if a federal, state or foreign court or governmental, regulatory or
administrative agency or commission shall have issued an order, decree or ruling or taken
any other action restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby and such order, decree, ruling or other action shall have become final
and non-appealable; provided, however, that the Party seeking to terminate this Agreement
pursuant to this Section 11.1.D shall have complied with Section 9.2, and with respect to
other matters not covered by Section 9.2, shall have used commercially reasonable efforts to
remove such injunction order or decree;

     E. Provided that the terminating Party is not in material breach of any representation,
warranty or covenant, by either Party if the Closing shall not have occurred by August 15,
2010; and

     F. By either Party if the Closing shall not have occurred by September 15, 2010.

     11.2 In the event of termination of this Agreement as provided in this Article 11, this
Agreement shall forthwith become void and there shall be no liability or obligation on the part of
the Parties, except: (i) as set forth in Article 12 to the extent applicable to such surviving
sections each of which, to the extent applicable, shall survive termination of this Agreement; and
(ii) that nothing herein shall relieve any Party from liability for any willful or intentional
breach of any provision hereof prior to termination. No termination of this Agreement shall affect
the obligations of the parties contained in the Nondisclosure Agreement or this Article 11, all of
which obligations shall survive termination of this Agreement in accordance with their terms.

12. MISCELLANEOUS:

     12.1 Notices. All notices, requests, consents or other communications permitted or
required under this Agreement will be in writing and will be deemed to have been given when
personally delivered, or when sent if sent via facsimile (with receipt confirmed), or on the first
(1st) Business Day after sent by reputable overnight carrier, or on the third
(3rd) Business Day after sent by registered or certified first class mail (with receipt
confirmed), to the following:

	 	 	 

	If to Seller:

	 	DELPHI MEDICAL SYSTEMS, LLC
	 

	 	5725 Delphi Drive
	 

	 	Troy, Michigan 48098
	 

	 	Attn: Executive Director of Mergers & Acquisitions
	 

	 	Fax No.: 248-813-2648
	 
	 	 
	With a copy to:

	 	DELPHI AUTOMOTIVE SYSTEMS, LLC
	 

	 	5725 Delphi Drive
	 

	 	Troy, Michigan 48098
	 

	 	Attn: Deputy General Counsel
	 

	 	Fax No.: 248-813-3445

44

 

	 	 	 

	If to Purchaser:

	 	SPARTON MEDICAL SYSTEMS COLORADO, LLC
	 

	 	425 N. Martingale Road, Suite 2050
	 

	 	Schaumburg, Illinois 60173
	 

	 	Attn: Cary B. Wood and Michael Osborne
	 

	 	Fax No.: (847) 762-5820
	 
	 	 
	With a copy to:

	 	BODMAN LLP
	 

	 	6TH Floor at Ford Field
	 

	 	1901 St. Antoine Street
	 

	 	Detroit, MI 48226
	 

	 	Attn: Joseph J. Shannon
	 

	 	Fax No.: 313-393-7579

provided, however, if a Party will have designated a different addressee by notice,
then to the last addressee so designated.

     12.2 Bulk Sales Laws. Seller and Purchaser hereby waive compliance by Seller with the
provisions of the bulk sales law of any state or foreign jurisdiction.

     12.3 Assignment. This Agreement will be binding and inure to the benefit of the
successors and assigns of each of the Parties, but no rights, obligations, duties or liabilities of
any Party may be assigned without the prior written consent of the other, which will not be
unreasonably withheld; provided, however, that Purchaser may assign its rights, obligations, duties
or liabilities to any Affiliate without the prior consent of Seller, but such assignment will not
relieve Purchaser of its duties, obligations or liabilities hereunder should such assignee fail to
perform.

     12.4 Entire Agreement. This Agreement, together with the Ancillary Agreements,
represents the entire agreement and understanding between the Parties with respect to the
transactions contemplated herein. This Agreement supersedes all prior agreements, understandings,
arrangements, covenants, representations or warranties, written or oral, by any officer, employee
or representative of either Party dealing with the subject matter hereof.

     12.5 Waiver. Any waiver by Seller or Purchaser of any breach or of a failure to
comply with any provision of this Agreement: (i) will be valid only if set forth in a written
instrument signed by the Party to be bound; and (ii) will not constitute, or be construed as, a
continuing waiver of such provision, or a waiver of any other breach of, or failure to comply with,
any provision of this Agreement. At any time prior to the Closing Date, the Parties may: (a) extend
the time for the performance of any of the obligations or other acts of the other Parties hereto;
(b) waive any inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Except as otherwise expressly provided herein, any agreement on the
part of a Party to any such extension or waiver will be valid only if set forth in an instrument in
writing signed on behalf of such Party.

     12.6 Severability. Should any provision, or any portion thereof, of this Agreement
for any reason be held invalid or unenforceable, such decision will not affect the validity or
enforceability of any of the other provisions, or portions thereof, of this Agreement, which other
provisions, and portions, will remain in full force and effect, and the application of such invalid
or unenforceable provision, or portion thereof, to persons or circumstances other than those as to

45

 

which it is held invalid or unenforceable will be valid and be enforced to the fullest extent
permitted by Law.

     12.7 Amendment. This Agreement may be amended, modified or supplemented only upon the
execution and delivery of a written agreement by duly authorized representatives or officers of the
Parties

     12.8 Expenses. Each Party will be responsible for its own expenses incurred in
connection with the preparation and negotiation of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated hereby.

     12.9 Third Parties. Nothing contained in this Agreement, express or implied, is
intended to or will be construed to confer upon or give to any person, firm, corporation,
association, labor union or trust (other than the Parties and their respective permitted successors
and assigns), any claims, rights or remedies under or by reason of this Agreement.

     12.10 Headings. The headings contained in this Agreement are inserted for convenience
only and will not be deemed to constitute a part of this Agreement.

     12.11 Counterparts. More than one counterpart of this Agreement may be executed by
the Parties, and each fully executed counterpart will be deemed an original.

     12.12 Governing Law. This Agreement will be construed and enforced in accordance with
the laws of the State of Michigan, without giving effect to rules governing the conflict of laws.

     12.13 Public Announcements. Seller may inform its parent company’s employees of the
existence of this Agreement and the transactions contemplated hereby. Seller and Purchaser will
coordinate and consult with each other on communications with Seller’s employees, customers and
suppliers regarding the existence of this Agreement and the transactions contemplated hereby.
Seller and Purchaser will consult with each other before issuing any press releases with respect to
this Agreement or the transactions contemplated hereby, and will not issue any press release
without mutual consent (not to be unreasonably withheld), except as may be required by Law and then
only with such prior consultation. Notwithstanding the foregoing, Seller or Purchaser may make any
public filing contemplated in this Agreement without the need for prior consultation; provided,
however, to the extent practicable, Seller or Purchaser will provide a copy of such public filing
to the other Party prior to its filing.

     12.14 Venue and Retention of Jurisdiction. The Purchaser and Seller irrevocably and
unconditionally consent to submit to the jurisdiction of the appropriate federal or state courts in
the State of Michigan for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby, including the Ancillary Agreements and agree not to commence any
litigation relating thereto except in the appropriate federal or state courts in the State of
Michigan.

     12.15 Risk of Loss. Prior to Closing, all risk of loss, damage or destruction to all
or any part of the Acquired Assets will be borne exclusively by the Seller.

     12.16 No Right of Setoff. Unless specifically set forth herein, neither Party nor any
of its Affiliates may deduct from, set off, holdback or otherwise reduce in any manner whatsoever

46

 

any amount owed by it under this Agreement or any Ancillary Agreement against any amounts owed
to it under this Agreement or any Ancillary Agreement or any other agreement between the Parties or
any of their Affiliates.

     12.17 Enforcement of Agreement. The Parties hereto agree that irreparable damage
would occur in the event that any provision of this Agreement was not performed in accordance with
its specific terms or were otherwise breached. It is accordingly agreed that the Parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to all other remedies
available at law or in equity.

     12.18 Dispute Resolution. Seller and Purchaser will, in the first instance, attempt
to settle any and all claims or disputes arising in connection with this Agreement or any Ancillary
Agreement by good faith negotiations by senior management of each party. If the dispute is not
resolved by senior management within thirty (30) days after delivery of a written request for such
negotiation by either party to the other, either party may make a written demand (the “Demanding
Party”) for formal dispute resolution (the “Notice”) and specify therein in reasonable detail the
nature of the dispute. Within fifteen (15) Business Days after receipt of the Notice, the receiving
party (the “Defending Party”) will submit to the other a written response. The Notice and the
response will include: (i) a statement of the respective party’s position and a summary of
arguments supporting that position; and (ii) the name and title of the executive who will represent
that party and of any other person who will accompany the executive to meetings of the parties.
Within fifteen (15) Business Days after such written notification, the executives (and others named
in the Notice or response) will meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to attempt to resolve the dispute. All reasonable requests
for information made by one party to the other will be honored promptly. All negotiations pursuant
to this Section 12.18 are confidential and will be treated as compromise and settlement
negotiations for purposes of applicable rules of evidence. In any case, the Parties agree not to
commence any litigation actions until the expiration of ninety (90) days after the date of the
Notice, and all such actions are subject to Section 12.14 above.

     12.19 Dollar Amounts. All amounts referenced in this Agreement are in US dollars.

     12.20 Jury Trial Waiver. THE PARTIES HERETO ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY
JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THIS RIGHT MAY BE WAIVED. THE PARTIES EACH HEREBY
KNOWINGLY, VOLUNTARILY AND WITHOUT COERCION, WAIVE ALL RIGHTS TO A TRIAL BY JURY OF ALL DISPUTES
ARISING OUT OF OR IN RELATION TO THIS AGREEMENT OR ANY OF THE ANCILLARY AGREEMENTS. NO PARTY SHALL
BE DEEMED TO HAVE RELINQUISHED THE BENEFIT OF THIS WAIVER OF JURY TRIAL UNLESS SUCH RELINQUISHMENT
IS IN A WRITTEN INSTRUMENT SIGNED BY THE PARTY TO WHICH SUCH RELINQUISHMENT WILL BE CHARGED.

47

 

     IN WITNESS WHEREOF, the Parties have caused this Asset Purchase Agreement to be executed by
their duly authorized officers.

	 	 	 	 	 
	 	SPARTON MEDICAL SYSTEMS COLORADO, LLC	 
	 
	 	By:	Sparton Corporation, Its Sole Member
	 
	 	By:	/s/ Michael Osborne
 	 
	 	 	Michael Osborne 	 
	 	 	Its: Senior Vice President 	 
	 
	 	DELPHI MEDICAL SYSTEMS, LLC	 
	 
	 	By:	/s/
Fred J. Bellar	 
	 	 	Fred J. Bellar 	 
	 	 	Its: Attorney-in-Fact 

48

 

	 	 	 	 	 

SCHEDULES

	 	 	 

	Schedule A
	 	Machinery and Equipment

	Schedule A-1
	 	Information Technology Assets

	Schedule B
	 	List of Customer Contracts

	Schedule C
	 	List of Supplier Contracts

	Schedule 1.2.A
	 	Third Party Assets

	Schedule 1.2.L
	 	Certain Licenses

	Schedule 3.1.C
	 	Inventory Valuation Principals and Practices

	Schedule 3.1.D
	 	Final Excess Inventory Value

	Schedule 4.1.A
	 	Transferred Salaried Employees

	Schedule 4.1.C
	 	Additional Salaried Employees

	Schedule 4.2.A
	 	Transferred Hourly Employees

	Schedule 4.3.B
	 	Employee Benefit Plans

	Schedule 6.1
	 	Seller’s Knowledge

	Schedule 6.1.C
	 	No Conflict

	Schedule 6.1.E
	 	Permitted Lien

	Schedule 6.1.F
	 	Litigation

	Schedule 6.1.G
	 	Compliance with Laws

	Schedule 6.1.I
	 	Financial Statements

	Schedule 6.1.K
	 	Absence of Certain Changes

	Schedule 6.1.L
	 	Leased Real Property

	Schedule 6.1.M
	 	Inventory

	Schedule 6.1.N
	 	Intellectual Property

	Schedule 6.1.O
	 	Employment and Labor Matters

	Schedule 6.1.Q(i)
	 	Material Contracts

	Schedule 6.1.Q(ii)
	 	Exceptions to Material Contracts

	Schedule 6.1.S
	 	Licenses, Approvals & Other Authorizations

	Schedule 6.1.T
	 	Environmental Matters

	Schedule 6.1.V
	 	Insurance

	Schedule 6.1.W
	 	Product Warranty

	Schedule 6.1.X
	 	Customers & Suppliers

	Schedule 6.1.AA
	 	Certain Transactions

	Schedule 6.1.BB
	 	Regulatory Compliance

	Schedule 6.2
	 	Purchaser’s Knowledge

	Schedule 6.2.D
	 	Consents & Approvals

	Schedule 7.2.C
	 	Required Third Party Consents

	Schedule 9.1
	 	Continued Operations

	Schedule 9.7
	 	Sunrise Agreement

	Schedule 9.8
	 	Storage

EXHIBITS

	 	 	 

	Exhibit 3.2
	 	Escrow Agreement

	Exhibit 8.4.A
	 	Assignment and Assumption Agreement

	Exhibit 8.4.B
	 	Bill of Sale

	Exhibit 8.4.C
	 	Transition Services Agreement

	Exhibit 8.4.D
	 	Non-Competition Agreement

49Exhibit 10.1

EXHIBIT 10.1

EXECUTION COPY

[CSS]

NINTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT

This NINTH AMENDMENT (this “Amendment”), dated as of July 6, 2010, is among CSS
FUNDING LLC, a Delaware limited liability company, as seller (the “Seller”), CSS
INDUSTRIES, INC., a Delaware corporation (“CSS”), as initial servicer (in such capacity,
together with its successors and permitted assigns in such capacity, the “Servicer”), the
Sub-Servicers party hereto, MARKET STREET FUNDING LLC (f/k/a Market Street Funding Corporation), a
Delaware limited liability company (together with its successors and permitted assigns, the
“Issuer”), and PNC BANK, NATIONAL ASSOCIATION, a national banking association
(“PNC”), as administrator (in such capacity, together with its successors and assigns in
such capacity, the “Administrator”).

RECITALS

1. The Seller, the Servicer, the Issuer and the Administrator are parties to the Receivables
Purchase Agreement, dated as of April 30, 2001 (as amended, supplemented or otherwise modified from
time to time, the “Agreement”).

2. The Seller, the Servicer, the Issuer and the Administrator desire to amend the Agreement as
hereinafter set forth.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

SECTION 1. Amendments to the Agreement.

1.1 The definition of “Concentration Percentage” set forth in Exhibit I to the
Agreement is hereby amended and restated in its entirety as follows:

“Concentration Percentage” means for any: (a) Group A Obligor (i) other than
Wal-Mart Stores, Inc. or Target Corporation, or any of their respective Affiliates (and, (x)
to the extent Wal-Mart Stores, Inc. fails to maintain a rating of at least “AA-” from
Standard and Poor’s and “Aa3” by Moody’s on its long-term senior unsecured and
uncredit-enhanced debt securities but remains a Group A Obligor, Wal-Mart Stores, Inc. or
any Affiliate thereof, and (y) to the extent that, on any date of determination, the
aggregate Outstanding Balance of all Delinquent Receivables of Target Corporation is greater
than 25% of the aggregate Outstanding Balance of all Pool Receivables of Target Corporation
but Target Corporation remains a Group A Obligor, Target Corporation or any Affiliate
thereof), 16.00%, and (ii) that is Wal-Mart Stores, Inc. or any Affiliate thereof (to the
extent Wal-Mart Stores, Inc. maintains a rating of at least “AA-” from Standard & Poor’s and
“Aa3” by Moody’s on its long-term senior unsecured and uncredit-enhanced debt securities)
30.00%, and (iii) that is Target Corporation or any Affiliate thereof (to the extent on any
date of determination, the aggregate Outstanding Balance of all Delinquent Receivables of
Target Corporation is less than or equal to 25% of the aggregate Outstanding Balance of all
Pool Receivables of Target Corporation) 22.00%, (b) Group B Obligor, 16.00%, (c) Group C
Obligor, 8.00% and (d) Group D Obligor, 4.00%.

1.2 The definition of “Concentration Reserve Percentage” set forth in Exhibit I to
the Agreement is hereby amended and restated in its entirety as follows:

 

 

 

“Concentration Reserve Percentage” means, at any time, the largest of: (a) the sum of
the five largest Group D Obligor Percentages at such time, (b) the sum of the three largest
Group C Obligor Percentages at such time, (c) the sum of the two largest Group B Obligor
Percentages at such time and (d) the largest Group A Obligor Percentage at such time;
provided that if such Obligor is Wal-Mart Stores, Inc. or any Affiliate thereof, its
Group A Obligor Percentage shall not exceed 16% for the purposes of calculating the
Concentration Reserve Percentage.

1.3 The definition of “Dilution Reserve Percentage” set forth in Exhibit I of the
Agreement is hereby amended by replacing the number “2” where it appears therein with “2.25”.

1.4 Clause (a) of the definition of “Facility Termination Date” set forth in
Exhibit I to the Agreement is hereby amended by deleting “July 6, 2010” where it appears
therein and substituting “July 5, 2011” therefor.

1.5 The definition of “Loss Reserve Percentage” set forth in Exhibit I of the
Agreement is hereby amended by replacing the number “2” where it appears therein with “2.25”.

1.6 The definition of “Purchase Limit” set forth in Exhibit I to the Agreement is
hereby amended and restated in its entirety as follows:

“Purchase Limit” means (a) $60,000,000 for the period from July 6, 2010
until January 31, 2011 and (b) for the period from February 1, 2011 through
the Facility Termination Date, $15,000,000, in each case as such amount may
be reduced pursuant to Section 1.1(b) of the Agreement. References
to the unused portion of the Purchase Limit shall mean, at any time, the
Purchase Limit minus the then outstanding Capital.

1.7 Section 3(c) of Exhibit IV of the Agreement is hereby amended and
restated in its entirety as follows:

(c) Notwithstanding anything to the contrary set forth in the limited liability
company of the Seller, the Seller shall at all times have at least one Independent
Member and not less than one member of each Independent Member’s Board of Directors
shall be an individual who (A) has (1) prior experience as an independent director
for a corporation or limited liability company whose charter documents required the
unanimous consent of all Independent Directors thereof before such corporation or
limited liability company could consent to the institution of bankruptcy or
insolvency proceedings against it or could file a petition seeking relief under any
applicable federal or state law relating to bankruptcy and (2) at least three years
of employment experience with AMACAR Group, L.L.C., Lord Securities Corporation,
Global Securitization Services LLC or one or more other nationally recognized
entities that provide, in the ordinary course of their respective businesses,
advisory, management or placement services to issuers of securitization or
structured finance instruments, agreements or securities (each, a
“Securitization Management Provider”), (B) is employed by a Securitization
Management Provider, (C) is reasonably acceptable to the Administrator as evidenced
in a writing executed by the Administrator and (D) is not, and has not been for a
period of five years prior to his or her appointment as an Independent Director of
the Independent Member: (1) a stockholder (whether direct, indirect or beneficial),
customer, affiliate, associate, advisor or supplier of CSS or any of its respective
Affiliates, (2) a director, officer, employee, partner, manager, attorney,
affiliate, associate or consultant of CSS or any of its Affiliates (CSS and its
Affiliates other than the Seller being hereinafter referred to as the “Parent
Group”), (3) a person related to any person referred to in clauses (1)
or (2) above, (4) a person or other entity controlling or under common
control

 

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with any such stockholder, partner, manager, customer, supplier, employee, officer
or director or (5) a trustee, conservator or receiver for any member of the Parent
Group (such an individual meeting the requirements set forth above, the
“Independent Director”). It being understood that, as used in this
paragraph (c), “control” means the possession directly or indirectly of the
power to direct or cause the direction of management policies or activities of a
person or entity whether through ownership of voting securities, by contract or
otherwise. The limited liability company agreement of the Seller shall provide: (i)
that the Seller shall not approve, or take any other action to cause the filing of,
a voluntary bankruptcy petition with respect to the Seller unless the Independent
Member (as defined in the operating agreement of the Seller) shall approve the
taking of such action in writing before the taking of such action, (ii) that the
provisions described in clause (i) cannot be amended without the prior written
consent of the Independent Member and (iii) the provisions described in clauses
(i) and (ii) may not be amended without the prior written consent of
the Agent;

1.8 Section 3(m) of Exhibit IV of the Agreement is hereby amended by deleting
the word “and” where it appears following the semi-colon at the conclusion thereof.

1.9 Section 3(n) of Exhibit IV of the Agreement is hereby amended by
replacing the punctuation mark “.” at the conclusion thereof with “; and”.

1.10 Section 3 of Exhibit IV of the Agreement is hereby amended to add the
following as clause (o) immediately after clause (n) thereof:

(o) At all times that this Agreement is in effect, the Seller will provide for not less
than ten (10) Business Days’ prior written notice to the Administrator of any removal,
replacement or appointment of any director that is to serve as an Independent Director of
the Independent Member, such notice to include the identity of the proposed replacement
Independent Director, together with a certification that such replacement satisfies the
requirements for an Independent Director set forth in this Agreement and the limited
liability company agreement of the Seller.

1.11 Clause (k) of Exhibit V of the Receivables Purchase Agreement is hereby
amended by replacing the punctuation mark “.” at the conclusion thereof with “; or”.

1.12 Exhibit V of the Receivables Purchase Agreement is hereby amended to add the
following as clause (l) immediately after clause (k) thereof:

(l) (i) the Seller shall fail to perform or observe any covenant or agreement set
forth in Sections 3(c) or 3(o) of Exhibit IV or (ii) any
Person shall be appointed or replaced as an Independent Director of the Seller
without prior written consent of the Administrator.

SECTION 2. Conditions to Effectiveness.

This Amendment shall become effective as of the date hereof, provided that the Facility
Termination Date or a Termination Event or Unmatured Termination Event has not occurred and subject
to the condition precedent that the Administrator shall have received the following, each duly
executed and dated as of the date hereof (or such other date satisfactory to the Administrator), in
form and substance satisfactory to the Administrator:

(a) counterparts of this Amendment (whether by facsimile or otherwise) executed by each
of the parties hereto; and

 

-3-

 

(b) such other documents and instruments as the Administrator may reasonably request.

SECTION 3. Representations and Warranties; Covenants.

Each of the Seller, the Servicer and each Sub-Servicer, as applicable, hereby represents and
warrants to the Issuer and the Administrator as follows:

(a) Representations and Warranties. The representations and warranties
contained in Exhibit III of the Agreement are true and correct as of the date hereof
(unless stated to relate solely to an earlier date, in which case such representations or
warranties were true and correct as of such earlier date).

(b) Enforceability. The execution and delivery by each of the Seller, the
Servicer and each Sub-Servicer of this Amendment, and the performance of each of its
obligations under this Amendment and the Agreement, as amended hereby, are within each of
its organizational powers and have been duly authorized by all necessary action on each of
its parts. This Amendment and the Agreement, as amended hereby, are each of the Seller’s,
the Servicer’s and each Sub-Servicer’s valid and legally binding obligations, enforceable in
accordance with its terms.

(c) No Default. Immediately after giving effect to this Amendment and the
transactions contemplated hereby, no Termination Event or Unmatured Termination Event exists
or shall exist.

SECTION 4. Effect of Amendment; Ratification. Except as specifically amended hereby,
the Agreement is hereby ratified and confirmed in all respects, and all of its provisions shall
remain in full force and effect. After this Amendment becomes effective, all references in the
Agreement (or in any other Transaction Document) to “the Receivables Purchase Agreement”, “this
Agreement”, “hereof”, “herein”, or words of similar effect, in each case referring to the
Agreement, shall be deemed to be references to the Agreement as amended hereby. This Amendment
shall not be deemed to expressly or impliedly waive, amend, or supplement any provision of the
Agreement other than as specifically set forth herein.

SECTION 5. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, and each counterpart shall be
deemed to be an original, and all such counterparts shall together constitute but one and the same
instrument.

SECTION 6. Governing Law; Jurisdiction. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
OTHERWISE APPLICABLE CONFLICTS OF LAW PRINCIPLES (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW
YORK GENERAL OBLIGATIONS LAWS). ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK; AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE PARTIES HERETO IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS,
THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY

 

-4-

 

DOCUMENT RELATED HERETO. EACH OF THE PARTIES HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH SERVICE MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW YORK LAW.

SECTION 7. Section Headings. The various headings of this Amendment are inserted for
convenience only and shall not affect the meaning or interpretation of this Amendment or the
Agreement or any provision hereof or thereof.

SECTION 8. Successors and Assigns. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and assigns.

[SIGNATURE PAGES TO FOLLOW]

 

-5-

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date first written
above.

	 	 	 	 	 	 	 
	 	 	CSS FUNDING LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Vincent A. Paccapaniccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Vincent A. Paccapaniccia
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CSS INDUSTRIES, INC.
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Vincent A. Paccapaniccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Vincent A. Paccapaniccia
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President — Finance
	 

	 	 	 	 	 	 

 

-6-

 

	 	 	 	 	 	 	 
	 	 	BERWICK OFFRAY LLC
	 	 	(f/k/a Berwick Industries LLC),
	 	 	as a Subservicer
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Vincent A. Paccapaniccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Vincent A. Paccapaniccia
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	CLEO INC,
	 	 	as a Subservicer
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Vincent A. Paccapaniccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Vincent A. Paccapaniccia
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	LION RIBBON COMPANY, INC.,
	 	 	as a Subservicer
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Vincent A. Paccapaniccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Vincent A. Paccapaniccia
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PAPER MAGIC GROUP, INC.
	 	 	(f/k/a The Paper Magic Group, Inc.),
	 	 	as a Subservicer
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Vincent A. Paccapaniccia
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Vincent A. Paccapaniccia
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 

 

-7-

 

	 	 	 	 	 	 	 
	 	 	MARKET STREET FUNDING LLC
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Doris J. Hearn
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Doris J. Hearn
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 

 

-8-

 

	 	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION,
	 	 	as Administrator
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Robyn A. Reeher
	 	 	 	 	 
	 

	 	 	 	Name:
	 	Robyn A. Reeher
	 

	 	 	 	 	 	 
	 

	 	 	 	Title:
	 	Vice President
	 

	 	 	 	 	 	 

 

-9-

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