Document:

exv10w1

 

Exhibit 10.1

PURCHASE AGREEMENT

     This PURCHASE AGREEMENT (this “Agreement”) is entered into this 25th day of July,
2007, by and among FIRST NIAGARA BANK, (“Seller”), having an address of 6950 South Transit Road,
Lockport, New York 14095 and LEGACY BANKS,
(“Purchaser”), having an address of 99 North Street, Pittsfield, Massachusetts 01202.

R E C I T A L S:

     A. Seller is a federal savings bank which operates a number of branches as set forth on
Exhibit A attached hereto (individually the “Branch”, or collectively the “Branches”).

     B. Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, certain
deposit liabilities, assets and real property associated with the Branches, all on the terms and
conditions set forth in this Agreement.

P R O V I S I O N S:

     NOW THEREFORE, in consideration of the mutual agreements, covenants, representations and
warranties contained herein, and in reliance thereon, Purchaser and Seller hereby agrees as
follows:

ARTICLE 1

CERTAIN DEFINITIONS

	 	1.1	 	Defined Terms. As used herein, the following terms shall have the following
meanings:

     “Accrued Interest” shall mean, as of any date, (a) with respect to the Deposit Account
Liabilities, the interest, dividends, fees, costs and other charges that have been accrued on but
not paid, credited, or charged to the Deposit Account Liabilities, and (b) with respect to the
Advance Lines and the Negative Deposits, interest, fees, premiums, consignment fees, costs and
other charges that have accrued on or been charged to the Advance Lines and the Negative Deposits
but not paid by the applicable borrower, or any guarantor, surety or other obligor therefor, or
otherwise collected by offset, recourse to collateral or otherwise.

     “Advance Lines” shall mean all overdraft lines of credit to Depositors listed on Schedule
1.1(a) hereto, plus any and all Accrued Interest thereon (to the extent such Accrued Interest
shall be outstanding and unpaid for ninety (90) days or less prior to the Closing Date), as of the
close of business on the Closing Date.

 

 

     “Bank Employees” shall mean the employees of Seller listed on Schedule 1.1(b) hereto,
but excluding such employees who shall leave Seller’s employ between the date hereof and the close
of business on the Closing Date, and including replacements of such employees made in the ordinary
course of business between the date hereof and the Closing Date and including any Person who fills
a vacant position at the Branch in the ordinary course of business between the date hereof and the
Closing Date to provide Branch services to Depositors.

     “Cash on Hand” shall mean the face amount of all cash on hand maintained at the Branches as of
the close of business on the Closing Date, including teller cash, vault cash, automated teller
machine (“ATM”) cash and petty cash.

     “Code” shall mean the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

     “Confidential Information” shall mean all Records (as defined below), and any other
information, trade secrets or know-how relating to the Seller, the Branches, the Purchased Assets
(as defined in Section 2.1), a customer of Seller or such customer’s Deposit Account and/or the
Property (as defined in Section 2.2) that is not and has not become ascertainable or obtainable
from public or published information.

     “Deposit Account” shall mean any accounts maintained by a customer at the Branches to which a
deposit liability is incurred by Seller as of the Closing Date. By way of reference, each of which
Deposit Accounts existing as of the date of this Agreement is listed on Schedule 1.1(c).

     “Deposit Account Liabilities” shall mean the total amount of all funds in the Deposit
Accounts, but excluding the Excluded Deposits.

     “Depositor” shall mean the holder of any Deposit Account.

     “Draft Closing Statement” shall mean a draft closing statement as of the close of business of
the fifth (5th) Business Day immediately preceding the Closing Date setting forth an
estimate of the Purchase Price (including all adjustments and prorations thereto).

     “Employee Pension Plan” shall mean any employee pension plan for which Seller serves as a
trustee, including but not limited to, employee pension benefit plans as defined in Section 3(2) of
ERISA, retirement plans qualified under the requirements of Section 401 (a) of the Code,
nonqualified deferred compensation plans, excess benefit plans and supplemental executive
retirement plans.

     “Encumbrances” shall mean all liens, security interests, claims, encumbrances, easements,
rights-of-way, encroachments, reservations, restrictions, covenants, conditions and any other
matters affecting title to the Real Property and Improvements.

     “Environmental Laws” shall mean all Federal, state or local laws, rules, regulations, codes,
ordinances, or by-laws, and any judicial or administrative

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interpretations thereof, including orders, decrees, judgments, rulings, directives or notices
of violation, that create duties, obligations or liabilities with respect to (a) human health or
(b) environmental pollution, impairment or disruption, including, without limitation, laws
governing the existence, use, storage, treatment, discharge, release, containment, transportation,
generation, manufacture, refinement, handling, production, disposal, or management of any Hazardous
Materials, or otherwise regulating or providing for the protection of the environment and further
including, without limitation, the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49
U.S.C. § 1801 et seq.), the Public Health Service Act (42 U.S.C. § 300 et
seq.), the Pollution Prevention Act (42 U.S.C. § 13101 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Safe
Drinking Water Act (21 U.S.C. § 349, 42 U.S.C. §§201, 300f), the Toxic Substances Control Act (15
U.S.C. §2601 et seq.), the Clean Water Act (33 U.S.C. § 1251 et
seq.), the Clean Air Act (42 U.S.C. §7401 et seq. ), and similar state and
local statutes, and all regulations adopted pursuant thereto.

     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended (11 U.S.C.
§ 1101 et seq.)

     “Excluded Deposits” shall mean (i) all Deposit Account Liabilities owned by affiliates of
Seller or employees of Seller (other than Transferred Employees), (ii) Deposit Account Liabilities
subject to a hold or similar legal process, (iii) deposits which have been reported as abandoned
property under the abandoned property laws of any jurisdiction, (iv) deposits required as
compensating balances with respect to loans or other extensions of credit not included in the
Purchased Assets, and (v) Deposit Account Liabilities constituting obligations of Seller
represented by certified checks drawn on Seller. The Excluded Deposits as of the date of this
Agreement are listed on the attached Schedule 1.1(d) and as will be updated as of the date
of the Draft Closing Statement.

     “Federal Funds Rate” means the near closing bid price for federal funds as quoted in the Wall
Street Journal for the date in question.

     “Final Approval Date” shall mean the date on which all Government Approvals have been received
by Purchaser and Seller, and shall include any applicable regulatory comment and waiting period
required by such Government Approvals.

     “FIRPTA Affidavit” shall mean affidavits pursuant to Section 1445 of the Code certifying to
the non-foreign entity status of Seller.

     “GAAP” shall have the meaning specified in Section 1.2.

     “Government Approvals” shall mean all approvals as may be required by applicable state and
federal law with respect to the transactions contemplated by this Agreement, including, without
limitation, those of the Office of Thrift Supervision

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(“OTS”), any State Banking authority, the Federal Deposit Insurance Corporation (“FDIC”) and any
other applicable state or federal regulatory agency.

     “Governmental Authorities” shall mean OTS, FDIC, and any other state or federal agencies,
authorities, bodies, boards, commissions, courts, instrumentalities, legislatures and offices of
any nature whatsoever of any government, quasi-governmental unit or political subdivision, whether
with a federal, state, county, district, municipality, city or otherwise.

     “Hazardous Materials” means (a) any “hazardous material”, “hazardous substance”, “hazardous
waste”, “oil”, “regulated substance”, “toxic substance” or words of similar import as defined under
any of the Environmental Laws, (b) asbestos in any form, (c) urea formaldehyde foam insulation, (d)
polychlorinated biphenyls, (e) radon gas, (f) flammable explosives, (g) radioactive materials, (h)
any chemical, contaminant, solvent, material, pollutant or substance that may be dangerous or
detrimental to any of the Branch, the environment or the health and safety of employees or other
occupants of any of the Branch, and (i) any substance, the generation, storage, transportation,
utilization, disposal, management, release or location of which, on, under or from any of the
Branch is prohibited or otherwise regulated pursuant to any of the Environmental Laws.

     “Improvements” shall mean all buildings, improvements, structures and fixtures now or
hereafter situated on the Real Property, including, but not limited to, those certain buildings
presently situated thereon.

     “IRA” shall mean an individual retirement account as specified in Section 408 and 408A of the
Code.

     “IRS” shall mean the Internal Revenue Service of the United States.

     “Knowledge” shall mean, with respect to Seller, the actual knowledge as of the date hereof,
without further investigation, of any of Seller’s executive officers, directors and agents and with
respect to Purchaser, the actual knowledge as of the date hereof, without further investigation, of
any of Purchaser’s executive officers, directors and agents. In no event shall this provision be
construed to create any personal liability upon the executive officers, directors or agents of
Seller or Purchaser, it being understood that such individuals shall have no personal liability
with respect to the representations, warranties and other terms of this Agreement.

     “Leased Property” shall mean the Greenville Branch, located at 11567 State Rt. 32 – Bryant’s
Supermarket.

     “Material Adverse Effect” shall mean any circumstance, change in or effect on the Purchased
Assets or the Assumed Liabilities that is materially adverse to the business, operation, results of
operations or the financial condition of the Branches; provided, however, that “Material Adverse
Effect” shall not include any circumstance, change in or

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effect on Seller or the Branches directly or indirectly arising out of or attributable to (a)
changes in general economic or political conditions, (b) changes in prevailing interest rates, (c)
any actions taken or omitted to be taken pursuant to this Agreement, (d) the announcement of the
transactions contemplated by this Agreement, or (e) the voluntary or involuntary termination of
employment of any Bank Employees.

     “Material Condition” shall mean, with respect to any Government Approval, a condition or
requirement that, individually or when aggregated with other conditions or requirements, would
reduce materially the benefits which Seller or Purchaser, as applicable, could reasonably have
expected to derive from consummation of the transaction contemplated by this Agreement and which
could not reasonably have been anticipated by the party adversely affected.

     “Negative Deposit” shall mean overdrafts in Deposit Accounts (that have been outstanding for
no more than 10 days prior to the Closing Date and have a negative balance no greater than
$2,500.00) that are not covered by Advance Lines, plus any and all Accrued Interest thereon, each
of which existing as of the date hereof is listed on Schedule 1.1(e).

     “Person” shall mean any individual, corporation, company, limited or general partnership,
trust or estate, joint venture, association or other entity.

     “Real Property” shall mean the parcel of owned real property on which any of the Branches is
located as more fully described in Schedule 1.1(f) annexed hereto, together with all
rights, privileges, interests, easements, hereditaments and appurtenances thereunto in any way
incident, appertaining or belonging, including, but not limited to all right, title and interest in
and to adjacent streets, alleys, rights of way and any adjacent strips or gores of real estate.

     “Records” shall mean all files, books, records, signature cards and deposit agreements solely
relating to the Branches and the Purchased Assets. Records shall include information in any form
whatsoever, including but not limited to, hard copy, computer floppy diskette, CD, CD-ROM drive,
information retained in electronic storage or other information storage means.

     “Safe Deposit Assets” shall mean all assets related to the safe deposit box business located
at the Branches as of the close of business on the Closing Date, all of which existing as of the
date hereof are listed on Schedule 1.1(g), except for those assets currently held for
delivery to the New York State Comptroller in accordance with the Abandoned Property Law of New
York State.

     “Safe Deposit Business” shall mean the safe deposit business conducted by Seller at the
Branches, including, but not limited to the Safe Deposit Assets, all of Seller’s rights and
benefits (other than fees due and collected prior to the Closing Date) under safe deposit lease
agreements, safe deposit box keys, combinations, signature cards and records pertaining thereto.

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     “Seller’s Marks” shall mean any logo, design, tradename, trademark or service mark used by
Seller.

     “Title Company” shall mean Sneeringer, Monahan, Provost & Redgrave Title Services Inc., or
such other reputable title insurance company as Purchaser may select.

     “Transfer Date” shall mean the first Business Day following the Closing Date.

     “Transferred Employees” shall mean all employees of Seller who accept offers of employment
from Purchaser as contemplated by Section 8.8(a).

     1.2 Accounting Terms. All accounting terms not otherwise defined herein shall have the
respective meanings assigned to them in accordance with “accounting principles generally applied in
the United States of America” consistently applied as are in effect from time to time in the United
States of America (“GAAP”).

ARTICLE 2

TRANSFER OF ASSETS AND PROPERTY; ASSUMPTION OF LIABILITY

     2.1 Assets. Subject to the terms and conditions of this Agreement, on the Closing Date, Seller
shall sell, convey, transfer, assign and deliver to Purchaser, and Purchaser agrees to purchase,
accept and receive from Seller, free and clear of all encumbrances, all of Seller’s right, title
and interest in and to: (a) all personal property, equipment, furniture, fixtures and inventory
located at the Branches as set forth on the attached Schedule 2.1, together with any
manufacturer’s warranties and maintenance or service agreements thereon which are in effect on the
Closing Date and are assignable to Purchaser (the “Equipment”), (b) the Deposit Account
Liabilities, (c) the Safe Deposit Business, (d) the Cash on Hand, (e) all of Seller’s rights with
respect to the contracts and relationships giving rise to the Deposit Accounts, (f) the Advance
Lines and the Negative Deposits, each as of the close of business on the Closing Date (g) all
contract rights of Seller to the service contracts set forth on the attached Schedule 2.1.1
(the “Service Contracts”), (h) all insurance premiums paid by Seller to the FDIC which are
allocated to insurance coverage for the Deposit Accounts following the Closing Date, to the extent
a proration or adjustment is made with respect thereto pursuant to Section 4.6, and (i) all of
Seller’s right, title and interest in and to all Records, as such Records may exist (collectively,
the items listed in (a) through (i) are referred to as the “Purchased Assets”).

     2.2 Real Property.

          (a) Subject to the terms and conditions of this Agreement, on the Closing Date, Seller shall
sell and convey to Purchaser, and Purchaser shall purchase, the Real Property, together with the
buildings, structures, improvements and fixtures located thereon, and all rights, privileges,
easements, licenses, hereditaments and other appurtenances of Seller relating thereto.

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          (b) Subject to the terms and conditions of this Agreement, on the Closing Date, Seller shall
assign to Purchaser, and Purchaser shall accept such assignment, the Leased Property. (Individually
the Real Property and Leased Property, collectively, the “Property”).

     2.3 Assets Not Transferred. Notwithstanding anything herein to the contrary, Seller is not
selling and transferring, and Purchaser is not purchasing or acquiring, any loans for which Seller
is the lender, or any tangible or intangible assets of Seller other than those specifically set
forth in Article 2.1 and 2.2.

     2.4 Assumption of Liabilities. Subject to the terms and conditions of this Agreement, from
the Closing Date and thereafter, Purchaser shall assume, discharge and be solely responsible and
liable for all liabilities and obligations with respect to the Deposit Accounts, the Safe Deposit
Business, the Advance Lines and the Negative Deposits, the Branches, the Service Contracts and the
Property, which collectively may be referred to herein as the “Assumed Liabilities”. At the
Closing, Seller and Purchaser shall execute an Assignment and Assumption Agreement with respect to
the Assumed Liabilities (the “Assignment and Assumption Agreement”) in the form of the attached
Exhibit C. All liabilities and obligations of Seller not expressly included in the Assumed
Liabilities are excluded from the transactions contemplated by this Agreement, including without
limitation, the following items:

(a) all liabilities associated with cashier’s checks or other official bank checks and traveler’s
checks issued by Seller;

     (b) all liabilities associated with accounts of Seller’s employees, officers and directors,
other than accounts of Transferred Employees;

     (c) certificate of deposit accounts and IRA certificates that (a) are subject to any order,
agreement or encumbrance that in any way restricts the payment of funds representing such account
on the order of the depositor, or (b) are “brokered deposits” (as that term is defined in 12 C.F.R.
section 337.6(a)(2));

     (d) all liabilities of Seller for violation of any terms of any contract or agreement relating
to the Assumed Liabilities, the Purchased Assets, and the Real Property prior to Closing; and

     (e) all liabilities and obligations of Seller relating to the Branches that are not expressly
included in the Assumed Liabilities.

     2.5 Disclaimer of Warranty. Except as otherwise set forth herein, THE PROPERTY AND THE
PURCHASED ASSETS ARE SOLD AND CONVEYED IN “AS IS”, “WHERE IS” CONDITION, WITHOUT RECOURSE OR ANY
WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO MERCHANTABILITY, FITNESS FOR PARTICULAR
PURPOSE,

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ENVIRONMENTAL CONDITION, COLLECTABILITY, OR FREEDOM FROM LIEN AND ENCUMBRANCES.

ARTICLE 3

PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE

     3.1 Purchase Price.

          (a) In consideration of Seller transferring to Purchaser the Property and the Purchased
Assets, Purchaser shall pay Seller an amount equal to the fair market value of the Real Property as
determined by third party appraisals obtained by the Purchaser from a member of MAI or equivalent
group and the depreciated book value of the Equipment (the “Assets and Property Purchase Price”),
subject to adjustment as described in the attached Schedule 3.1.

          (b) In consideration of Seller transferring to Purchaser the Cash on Hand, Purchaser shall pay
Seller an amount equal to the Cash on Hand.

          (c) The aggregate purchase price to be paid by Purchaser for the Purchased Assets and the
Property (the “Adjusted Purchase Price”) is an amount equal to the sum of (i) the Assets and
Property Purchase Price and (ii) the Cash on Hand (together, the “Purchase Price”), as may be
adjusted pursuant to Section 4.5 below.

     3.2 Consideration for Assumption of Assumed Liabilities. In consideration for the assumption
by Purchaser of the Assumed Liabilities, Seller shall pay to Purchaser at Closing an amount equal
to one hundred percent (100%) of the Deposit Account Liabilities,
less Purchaser’s deposit premium, as further set forth on the
attached Schedule 3.2 (representing a weighted
average deposit premium equal to 12.75% based upon the Deposit
Account Liabilities as of June 30, 2007).

     3.3 Allocation of Purchase Price.

          (a) The Purchase Price shall be allocated on an allocation schedule to be agreed upon by
Purchaser and Seller within thirty (30) days after the Closing Date.

          (b) Purchaser and Seller shall report the transaction contemplated by this Agreement
(including income tax reporting requirements imposed pursuant to Section 1060 of the Internal
Revenue Code of 1986, as amended (“Section 1060”) in accordance with the agreed upon allocation.
This allocation is intended to comply with the allocation method required by Section 1060.
Purchaser and Seller shall cooperate to comply with all substantive and procedural requirements of
Section 1060 and any regulations thereunder, and the allocation shall be adjusted if and to the
extent necessary

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to comply with the requirements of Section 1060. The parties shall: (i) each report the
federal, state and local and other tax consequences of the purchase and assumption contemplated
hereby (including the filing of Internal Revenue Service Form 8594) in a manner consistent with
such allocation schedule; and (ii) take no position in any tax filing, return, proceeding, audit or
otherwise which is inconsistent with such allocation. In the event any party hereto receives
notice of a tax audit with respect to the allocation of the Purchase price specified herein, such
party shall immediately notify the other party in writing as to the date and subject of such audit.

          (c) If any federal, state or local tax return report or filing by Purchaser or Seller relating
to the transactions contemplated hereby and filed on the basis of the allocation set forth on
Schedule 3.3 hereto, is challenged by the taxing authority with which such return, report or filing
was filed, the filing party shall assert and maintain, as commercially reasonable in such case, the
validity and correctness of such allocation during the audit thereof until the issuance by the
taxing authority of a “30 Day Letter”, or a determination of liability equivalent thereto, to such
party, whereupon such party shall, in its sole discretion, have the right to pay, compromise,
settle, dispute or otherwise deal with its alleged tax liability. If such a tax return, report or
filing is challenged as herein described, the party filing such return, report or filing shall
timely keep the other party reasonably apprised of its decisions and the current status and
progress of all administrative and judicial proceedings, if any, that are undertaken at the
election of the filing party.

ARTICLE 4

CLOSING; CALCULATIONS; PAYMENT; ADJUSTMENTS; TITLE

     4.1 Closing. Upon the terms and subject to the conditions of this Agreement, the purchase and
sale of the Purchased Assets and the Property, and the assignment and assumption of the Assumed
Liabilities, as set forth in Articles 2 and 3 above (the “Closing”), shall take place at the Albany
offices of Hodgson Russ, on the fifteenth (15) day following the Final Approval Date, unless a
Governmental Authority requires a thirty (30) day notice period after the Final Approval Date, in
which case the Closing shall take place and shall be effective as of the close of business on the
thirty-fifth (35th) day following the Final Approval Date or such other date as the
parties agree upon, it being the intent that the Closing shall occur on a Friday (the “Closing
Date”).

     4.2 Draft Closing Statement and Calculation of Deposit Accounts. On or prior to the close of
business on the second day immediately preceding the Closing Date, Seller shall provide to
Purchaser (i) the Draft Closing Statement and shall make available such work papers, schedules and
other supporting documentation and data as may be reasonably requested by Purchaser to enable it to
verify such documentation and determinations, and (ii) a list of all Deposit Accounts and a
calculation of the Deposit Accounts Liabilities as of the third business day preceding the Closing
Date. On or prior to the Closing Date, Purchaser shall evidence its acceptance of the Draft
Closing

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Statement for purposes of calculating and payment of the Estimated Payment Amount (as defined in
Section 4.3 below) by countersigning the Draft Closing Statement.

     4.3 Payment to Purchaser at Closing. On the Closing Date, Seller shall transfer to Purchaser,
by wire transfer of immediately available funds to an account designated by Purchaser, an amount
equal to the Deposit Accounts Liabilities, as set forth on the Draft Closing Statement, above
less the Adjusted Purchase Price (the “Estimated Payment Amount”).

     4.4 Delivery of Documents.

     (a) At Closing, the following shall be delivered to Purchaser, duly executed and
acknowledged where required:

               (i) In connection with the four (4) Branch premises owned by Seller, a Bargain and
Sale Deed with Covenants Against Grantor’s Acts and Lien Law Covenant in favor of Purchaser
for each of the four (4) parcels of Real Property, in recordable form, substantially in the
form of Exhibit B hereto, transferring title of the Real Property (collectively,
the “Deed”), and an appropriate Form TP-584 of the New York State Department of Taxation
and Finance (which shall also be signed by Purchaser); in connection with the Leased
Property, an Assignment and Assumption of Leases in the form annexed hereto as Exhibit
C hereto, and an Estoppel Certificate from each Lessor, setting forth that each lease
is unmodified and in full force and effect, or if the lease has been modified, setting
forth the modifications, the dates to which the rent and other charges under the lease have
been paid, and stating whether the Lessee is in default in the performance of any covenant,
agreement or condition contained in the lease, and if so, specifying each such default as
set forth in Exhibit D hereto.

               (ii) A Bill of Sale transferring the Purchased Assets to Purchaser (the “Bill of Sale”),
substantially in the form of Exhibit E, hereto;

               (iii) Such affidavits and documents as the Title Company shall reasonably require and are
customarily given by sellers in similar transactions, including but not limited to a title
affidavit for each of the four (4) parcels of Real Property;

               (iv) New York State Board of Real Property Services Real Property Transfer Report Form RP-5217
for each of the four (4) parcels of Real Property;

               (v) Statement – Real Estate Transfer Tax for the Property, to be paid by Seller at Closing;

               (vi) An assignment and assumption agreement with
respect to
the Assumed Liabilities in substantially the form of Exhibit F hereto (the “Assignment and
Assumption Agreement”);

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               (vii) A Secretary’s Certificate in substantially
the form of
Exhibit G hereto;

               (viii) An Officer’s Certificate in substantially the form of Exhibit H hereto;

               (ix) The Draft Closing Statement;

               (x) The resignation of Seller as trustee or custodian, as applicable, with respect to each IRA
included in the Deposit Account Liabilities and the designation of Purchaser as successor trustee
or custodian with respect thereto;

               (xi) The FIRPTA Affidavits in substantially the form of Exhibit I hereto;

               (xii) Physical possession of all Purchased Assets as are capable of physical delivery;

               (xiii) Possession of the Property, with keys and security codes for all
alarm systems;

               (xiv) Possession of all right, title and interest in (i) the Records, (ii) all signature
cards for the Deposit Accounts and all records of account in Seller’s possession with respect to
the Deposit Accounts, and (iii) all agreements, instruments, and other documents solely and
directly evidencing the Purchased Assets and Assumed Liabilities;

               (xv) Copy of written notice to the Office of Thrift Supervision for the transfer of the
Deposit Account Liabilities and Purchased Assets of the Branches to Seller.

               (xvi) Such other documents or Records as are necessary to effect the transactions contemplated
hereby as Purchaser shall reasonably request.

          (b) At the Closing, the following shall be executed and delivered to Seller:

               (i) the Assignment and Assumption Agreement;

               (ii) A Secretary’s Certificate in substantially the form of
Exhibit J hereto;

               (iii) An Officer’s Certificate in substantially the form of Exhibit 
K hereto;

               (iv) The Countersigned Draft Closing Statement; and

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               (v) Such other documents as are necessary to effect the transactions contemplated hereby as
Seller shall reasonably request.

     4.5 Adjustment of Estimated Payment Amount.

          (a) On or before 12:00 noon on the 15th day following the Closing Date, Seller shall deliver
to Purchaser a statement setting forth (i) the Purchase Price (including all adjustments and
prorations thereto) and each component thereof and (ii) the amount of Deposit Account Liabilities
(including Accrued Interest thereon) and each component thereof, transferred to Purchaser as of the
close of business on the Closing Date. Seller shall make available to Purchaser and/or its
representatives such work papers, schedules and other supporting data, Records and documentation as
may be reasonably requested by Purchaser to enable Purchaser to verify such determinations. Such
statement shall also set forth the amount by which the aggregate balance of the Deposit Account
Liabilities (including Accrued Interest thereon) transferred to Purchaser exceeded the Purchase
Price (including all adjustments and prorations thereto), calculated as of the close of business on
the Closing Date (the “Adjusted Payment Amount”). In the event Purchaser disagrees with or
disputes the calculation of the Adjusted Payment Amount, it shall notify Seller in writing not
later than five (5) Business Days after receipt of the statement. In the event the disagreement or
dispute cannot be resolved through discussions among the parties within the next five (5) Business
Days following sending of the notice, Purchaser or Seller will then have their CFO’s discuss and
attempt to resolve the issue. In the event a dispute still exits, Purchaser and Seller may pursue
any legal remedies available to it to contest the Adjusted Payment Amount.

          (b) On or before 12:00 noon on the 30th day following the Closing Date, Seller shall pay to
Purchaser or Purchaser shall pay to Seller, as the case may be, by wire transfer of immediately
available funds, an amount equal to the difference between the Adjusted Payment Amount and the
Estimated Payment Amount, plus interest calculated using the Federal Funds Rate, as of the Closing
Date, on such amount from the Closing Date to, but excluding, the payment date. Any payment or
refund pursuant to this Section 4.5(b) shall be treated, for all purposes, as an adjustment to the
Purchase Price.

     4.6. Proration, Other Closing Date Adjustments.

          (a) Except as otherwise specifically provided in this Agreement, it is the intention of the
parties that Seller will operate the Branches and maintain the Deposit Account Liabilities for its
own account and own the Purchased Assets (and all rights associated therewith) until the close of
business on the Closing Date, and that Purchaser shall operate the Branches, own the Purchased
Assets and assume the Deposit Account Liabilities and other Assumed Liabilities (and all rights
associated therewith) for its own account from and after the close of business on the Closing Date.
Thus, except as otherwise specifically provided in this Agreement, items of income and expense
directly attributable to the operation of the Branches (which shall not include any general
overhead expenses of Seller) shall be prorated as of the close of business on the Closing Date, and
shall be settled between Seller and Purchaser as of the Closing Date or as of the

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date set forth under Section 4.5(a), whether or not such adjustment would normally be made as
of such time. Items of proration will be handled as an adjustment to the Purchase Price and not as
adjustments to the Estimated Payment Amount, unless otherwise agreed by the parties hereto.

          (b) For purposes of this Agreement, items of proration and other adjustments shall include,
without limitation: (i) telephone, electric, gas, water, and other utility services (to the extent
it is not possible to transfer such services into the name of Purchaser as of the Closing Date),
(ii) real estate and school taxes, and special assessments, if any (other than such real estate
transfer and school taxes and special assessments that arise as a result of the transactions
contemplated by this Agreement which shall be paid by Purchaser or by Seller in accordance with
Section 4.7 hereof); (iii) assessments, including without limitation, insurance premiums paid or
payable to the FDIC attributable to insurance coverage for the Deposit Account Liabilities for the
period from and after the Closing Date; (iv) payments due on the Leased Property and Service
Contracts, (v) fees for customary annual or periodic licenses or permits; (vi) prepaid real and
personal property taxes; and (vii) other prepaid items of income and expense, accrued or prepaid,
including without limitation, wages, salaries, agreed upon bonuses, employee insurance premiums, or
other payments to employees, taxes and other withheld amounts from employees, in each case as of
the close of business on the Closing Date, except that any penalties or excess charges resulting
solely from Seller’s inaction shall be borne entirely by Seller. Notwithstanding the foregoing, if
accurate arrangements cannot be made as of the Closing Date, or as of the date set forth under
Section 4.5(a), for any of the foregoing items of proration, the parties shall apportion the
charges for the foregoing items on the basis of the bill therefor for the most recent billing
period prior to the Closing Date.

          (c) In the event the net closing adjustments under this Section 4.6 are in favor of Seller,
such amount shall be added, dollar for dollar, to the Adjusted Purchase Price. In the event the
net closing adjustments are in favor of Purchaser, such amount shall be subtracted, dollar for
dollar, from the Adjusted Purchase Price.

          (d) The parties agree that Seller shall take a final read of all utilities on or about the
Closing Date, and Purchaser shall place the utilities in Purchaser’s name as of the Closing Date.

          (e) The parties agree that upon the expiration of the thirty (30) day period set forth in
Section 4.5(b) above, the prorations calculated by the parties pursuant to this Section 4.6 shall
be deemed agreed to and final for all purposes.

     4.7 Taxes.

          (a) Sales, Transfer and Use Taxes. Except as otherwise provided in this Agreement, any sales,
use, filing, recordation, or similar fees and taxes (collectively, “Taxes”), which are payable or
arise as a result of this Agreement or the consummation of the transactions contemplated hereby,
shall be paid by Purchaser on the Closing Date.

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Seller shall pay the costs of real estate transfer taxes, in accordance with applicable law,
which are payable as a result of the consummation of the transactions contemplated hereby. If such
Taxes are treated as a proration pursuant to Section 4.6, Seller agrees to remit such Taxes to the
proper authority on or before the date the same shall become due, accompanied by such tax returns
as may be required to be filed with such payment. Purchaser and Seller will reasonably cooperate
with the other in the preparation of any filings or returns.

     (b) Information Reports.

          (i) Seller will report to applicable taxing authorities and holders of Deposit Account
Liabilities transferred on the Closing Date, with respect to all periods through the close of
business on the Closing Date, all interest credited, withheld from and any early withdrawal
penalties imposed upon the Deposit Account Liabilities and Purchaser will report to the applicable
taxing authorities and holders of Deposit Account Liabilities, with respect to all periods
commencing after the Closing Date all such interest credited to, withheld from and early withdrawal
penalties imposed upon such Deposit Account Liabilities. Seller will continue backup withholding
and remittance through the close of business on the Closing Date. Any amounts required by any
governmental agencies to be withheld from any of the Deposit Account Liabilities through the close
of business on the Closing Date will be withheld by Seller in accordance with applicable law or
appropriate notice from any governmental agency and will be remitted by Seller to the appropriate
agency on or prior to the applicable due date. Any such withholding required to be made subsequent
to the Closing Date shall be withheld by Purchaser in accordance with applicable law or the
appropriate notice from any governmental agency and will be remitted by Purchaser to the
appropriate agency on or prior to the applicable due date.

          (ii) Unless otherwise agreed by the parties, Seller shall be responsible for delivering to
payees all Form 1099s with respect to information reporting and tax identification numbers required
to be delivered for all periods through the close of business on the Closing Date with respect to
the Deposit Account Liabilities, including the payment of Accrued Interest through the Closing
Date, and Purchaser shall be responsible for delivery to payees all such notices required to be
delivered for all periods following the Closing Date with respect to the Deposit Account
Liabilities. Purchaser and Seller shall, prior to the Closing Date, consult (and Seller shall
reasonably cooperate) to permit Purchaser timely to deliver notices required to be delivered after
the Closing Date.

     4.8 Title and Conveyance.

          (a) Upon payment of the Adjusted Purchase Price to Seller, as herein provided, Seller will
assign and convey to Purchaser good and marketable (or as expressly hereinafter provided,
insurable) title to the Real Property, if owned by Seller, free and clear of all Encumbrances,
except (i) easements for public utilities, applicable zoning ordinances and restrictions of record,
provided such items do not render title to the Real Property and Improvements unmarketable or the
Real Property and

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Improvements unusable as a branch bank as presently configured, and (ii) the Encumbrances listed in
Schedule 4.8 (a) attached hereto (collectively, the “Permitted Encumbrances”).

          (b) Seller agrees to furnish to Purchaser’s attorney, at Seller’s expense, within twenty (20)
days after the execution of this Agreement, the following:

               (i) fully guaranteed tax, title and United States District Court searches dated or redated
within 60 days of the date of this Agreement with local tax certificate for county, city and school
taxes and state and county searches under the Uniform Commercial Code for the Real Property; and

               (ii) a survey of the Real Property and the Improvements, dated subsequent to the effective
date of this Agreement, prepared in accordance with the Code of Practice of the New York State Land
Surveyors Association and certified at Sellers’ expense to Purchaser and the Title Company.

          (c) Within ten (10) business days following Purchaser’s receipt of the abstract and survey
referred in Section 4.8(b) above, Purchaser shall have the right to notify Seller in writing of any
objection to Seller’s title (other than Permitted Encumbrances) that if valid, would render title
unmarketable (the “Defect Notice”). Any matters affecting title not timely raised in Purchaser’s
Defect Notice shall be deemed Permitted Encumbrances. In the event that Purchaser shall raise
written objection to Seller’s title in Purchaser’s Defect Notice, which, if valid would render
title unmarketable, Seller shall make reasonable efforts to eliminate such title defect within
thirty (30) days’ receipt of Purchaser’s Defect Notice, but if Seller does not eliminate such
title defects, Purchaser’s only rights shall be to (i) cancel this Agreement by giving written
notice of such cancellation to Seller and all further obligations under this Agreement shall cease
or (ii) accept such title as Seller can convey without reduction in the Real Property Purchase
Price. Notwithstanding the foregoing, if Seller shall be able to cure Purchaser’s objection prior
to the date set for transfer of title, or if Purchaser secures a commitment for title insurance
from a New York licensed title insurance company at standard rates in face amount equal to the
Asset & Property Purchase Price, to insure marketability of title against the objection raised for
the benefit of Purchaser, then Purchaser shall accept insurable title, and Seller shall pay the
cost thereof, and in such event this Agreement shall remain and continue in full force and effect.
Notwithstanding the foregoing, Purchaser, at its option, may accept such title as Seller may be
able to convey, without reduction, credit or allowance against the Asset & Property Purchase Price.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF SELLER

     Seller represents and warrants to Purchaser as follows:

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     5.1 Organization. Seller is a federal savings bank, duly organized, validly existing under the
laws of the United States of America, and it has the requisite corporate power and authority to
accept and maintain the Deposit Account Liabilities and own, transfer and assign the Purchased
Assets and Assumed Liabilities to Purchaser and carry on its business.

     5.2 Authorization. Subject to obtaining all Governmental Approvals, Seller has taken all
necessary action to authorize the execution and delivery of this Agreement and Schedules hereto,
and any other documents or instruments executed pursuant hereto, the performance of all terms and
conditions hereof and thereof to be performed by Seller and the consummation of the transactions
contemplated hereby and thereby.

     5.3 No Violation. Subject to obtaining all Governmental Approvals, neither the execution,
delivery and performance of this Agreement or the other documents and instruments to be executed
and delivered by Seller pursuant hereto, nor the consummation by Seller of the transactions
contemplated hereby and thereby (a) will violate or conflict with (i) any applicable law or order
of any government entity, (ii) any judgment, decree, order, statute, law or regulation applicable
to Seller, or (iii) any agreement that Seller is a party to, or (b) will require any authorization,
consent approval, exemption or other action by nor notice to any government entity.

     5.4 Binding Agreement. This Agreement and the instruments and documents executed pursuant
hereto constitute, or when executed will constitute, the valid and binding agreement of Seller,
enforceable in accordance with its terms. The execution, delivery and performance of this Agreement
by Seller does not and will not violate any law, rule or regulation, conflict with, or result in a
breach of any provision or condition, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or result in the creation of any lien, charge,
encumbrance or claim upon any of the property of Seller pursuant to the terms of any indenture,
contract, mortgage, lien, trust, agreement or other instrument, order, judgment or decree to which
Seller is or will be a party, or which are, purport to be, or will be binding upon Seller or of its
property or assets.

     5.5 Title to Purchased Assets. Seller is the lawful owner of each of the Purchased Assets and
has the right to sell, convey, transfer, assign and deliver to Purchaser all of the Purchased
Assets free and clear of all mortgages, liens, encumbrances and security interests.

     5.6 Brokers and Finders Fee. Other than Sandler O’Neill + Partners, L.P., or as further set
forth below, no agent, broker, investment banker, consultant, representative or other person acting
on behalf of Seller or under the authority of Seller is or shall be entitled to any commission,
broker’s or finder’s fee or any other form of compensation or payment from Seller relating to this
Agreement or the transactions contemplated hereby other than the attorneys, accountants and tax or
financial advisors of Seller in connection with this Agreement and the transactions contemplated
hereby.

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     5.7 Non-Contravention. The execution and delivery of this Agreement and
any instruments or other documents executed pursuant hereto by Seller do not and, subject to the
receipt of all Government Approvals, the consummation of the transactions contemplated by this
Agreement, will not constitute (a) a material breach or violation of or default under any law,
rule, regulation, judgment, order, governmental permit or license of Seller or to which Seller is
subject, which breach, violation or default would have a Material Adverse Effect, or (b) a breach
or violation of or a default under the charter or bylaws of Seller or any material contract to
which Seller is a party or by which it is bound which breach, violation or default would prevent or
materially delay Seller from performing its obligations under this Agreement in all material
respects.

     5.8 Compliance with Law. The business and operations of Seller with respect to the Branches
and the Purchased Assets are being conducted in compliance with all applicable laws, rules and
regulations, ordinances, orders, permits and judgments (collectively, the “Laws”) of all
governmental authorities, other than those Laws of governmental authorities the penalty or
liability for the violation of which, if imposed or asserted, would not have a Material Adverse
Effect. Seller has not received any notice of any alleged or threatened claim, violation or
liability, which allegation or threat remains outstanding as of the date of this Agreement, under
any applicable law, rule and regulation, order, permit and judgment (collectively, the “Laws”) of a
governmental authority in connection with the operation and business of the Branches the penalty or
liability for the violation of which, if imposed or asserted, would have a Material Adverse Effect.

     5.9 Legal Proceedings. There are no actions, suits, or proceedings, whether civil, criminal
or administrative, pending against Seller as of the date of the Agreement or, to the Knowledge of
Seller, threatened as of the date of the Agreement against or affecting Seller, the Purchased
Assets or the Assumed Liabilities, (a) which would reasonably be expected to have a Material
Adverse Effect, or (b) which would prevent or materially delay Seller from being able to perform
their obligations under this Agreement in all material respects.

     5.10 Books and Records. To Sellers’ Knowledge, the Records of Seller pertaining to the
Branches and the Purchased Assets and the Assumed Liabilities are true and correct in all respects
and fairly reflect information regarding the Purchased Assets and the Assumed Liabilities necessary
for Purchaser to carry on the business of the Branches upon the Closing of the transaction. Such
Records have been properly kept and maintained and are in compliance in all material respects with
GAAP and all other applicable requirements.

     5.11 Certain Labor Matters. Except as may be set forth in Schedule 5.11, Seller is not a
party to any employment agreement, bonus, severance or similar agreement with any employee at the
Branches, except for employee benefit plans of general application. Seller is not a party to any
union, collective bargaining or similar agreement covering employees at the Branches, and there has
not been any written or oral communications to Seller from any labor union, labor relations board
or tribunal or any

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person or organization purporting to represent present or past employees of Seller at the Branches.

     5.12 Fiduciary Obligations. Other than in respect of IRA accounts held in the name of a
customer of the Branches, Seller has no trust or fiduciary relationship or obligations in respect
of any of the Deposit Account Liabilities or in respect of any other Assets.

     5.13 Agreements with Regulatory Authorities. Seller is not a party to any written order,
decree, agreement or memorandum of understanding with, or commitment letter or similar submission
to, any federal or state governmental agency or authority, which order, decree, agreement,
memorandum of understanding, commitment letter or submission either (i) could reasonably be
expected to prevent or impair the ability of Seller to perform their obligations under this
Agreement in any material respect or (ii) could impair the validity or consummation of this
Agreement or the transactions contemplated hereby.

     5.14 Limitations on and Disclaimer of Representations and Warranties and Purchaser’s Release
in Connection Therewith. Except as otherwise addressed in this Article 5, notwithstanding
anything to the contrary contained herein or in any other document or agreement delivered in
connection herewith:

          (a) Seller does not make any representations or warranties, express or implied, as to the
physical condition of the Real Property or Leased Property. The Real Property and Leased Property
is being sold and or assigned, as applicable, “AS IS”, “WHERE IS”, without recourse and with all
faults at the Closing Date.

          (b) Seller does not make any representations or warranty, express or implied, of any type or
nature with respect to the physical condition of the Branches which are being sold or assigned “AS
IS”, “WHERE IS” without recourse and with all faults, without any obligation on the part of Seller.
Seller has no Knowledge of any violation under any Environmental Law relating to the Property.
Except as otherwise expressly set forth in this Agreement, by closing this transaction, Purchaser
hereby releases and agrees to hold harmless Seller, and its officers, directors, shareholders,
representatives and agents, and waives any claims which Purchaser may now or hereafter have against
Seller relating to the physical condition of the Branches from and after the Closing, excluding
however, any and all liability for claims under Environmental Laws or with respect to the presence
of Hazardous Materials which exist or arise with respect to the Real Property during such time as
Seller owned or leased the Real Property.

          (c) (i) Within thirty (30) days after the date hereof, Purchaser may contract, at its expense,
for an initial environmental screening (which may be a phase I environmental report) of the Real
Property by an independent third party environmental engineer, but shall not have any right to do
any Phase II or other intrusive testing of the Real Property without Seller’s prior written
approval, which approval may be withheld by Seller in its sole and absolute discretion. If
Purchaser’s Phase I environmental report

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recommends a Phase II or other further testing, Purchaser shall provide Seller with a copy of such
report(s) and Seller prohibits Purchaser from conducting such report or testing or if any Phase II
reporting permitted by Seller evidences any violation of Environmental Law with respect to the Real
Property, then Purchaser shall have the right to terminate this Agreement by providing written
notice to Seller by no later than the later of the thirtieth (30th) day after the date
hereof, or the date Seller prohibits Purchaser from conducting a Phase II test, or the date on
which any Phase II environmental report evidences any violation of any Environmental Law with
respect to any Real Property. If Purchaser fails to terminate this Agreement within such period,
then Purchaser shall be deemed to have waived all environmental conditions with respect to the Real
Property.

               (ii) Purchaser shall instruct the independent third party environmental engineer to provide
both Purchaser and Seller with a copy of its environmental reports, subject to the maintenance of
the confidentiality of such reports. In the event that Seller does not receive the reports
described above within five (5) days of the date of such environmental report, Purchaser agrees
that it shall have no rights under this Section 5.13(c) and that Seller shall be released from any
liability or obligation under this Section 5.13(c).

          (d) Seller makes no representations or warranties to Purchaser as to whether, or the length of
time during which, any accounts relating to Deposit Account Liabilities will be maintained by the
owners of such Deposit Account Liabilities at the Branch after the Transfer Date.

          (e) Except as specifically provided for in this Agreement, Seller
disclaims and makes no representations or warranties whatsoever with respect to the Property, Bank
Employees, Purchased Assets or Assumed Liabilities, express or implied, including, without
limitation, any representations or warranties with respect to merchantability, fitness, title,
enforceability, collectibility, documentation or freedom from Liens (in whole or in part) and
disclaim any liability and responsibility for any negligent representation, warranty, statement or
information otherwise made or communicated, by oversight or information otherwise made or
communicated, by oversight or otherwise (orally or in writing), to Purchaser in connection with the
transactions contemplated hereby.

     5.15 Included Deposits. The deposit accounts listed on Schedule 1.1(c) constitutes a
substantially complete list of all deposit accounts (other than accounts relating to Excluded
Deposits) open at the Branches as of the date of this Agreement.

     5.16 Deposit Account Liabilities. All of the Deposit Account Liabilities were
originated and maintained and are in material compliance with all applicable federal, state and
local laws, rules, regulations, orders, judgments, injunctions, decrees and awards. None of the
Deposit Account Liabilities are brokered deposits. Seller has delivered to Purchaser a true and
correct copy of the current account forms for each of the types of deposit liabilities offered by
Seller out of the Branches.

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     5.17 Assumed Liabilities. The Deposit Account Liabilities to be assumed by
Purchaser are insured by the FDIC through the Deposit Insurance Fund to the extent permitted by
law, and all premiums and assessments required to be paid as of the date hereof in connection
therewith have been paid by Seller.

     5.18 Regulatory Matters. Seller has not received any indication from any governmental
authority that such governmental authority would oppose or refuse to grant or issue its consent or
approval, if required, with respect to the transactions contemplated hereby. Seller has no reason
to believe that it will not be able to obtain the Government Approvals.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser represents and warrants to Seller as follows:

     6.1 Organization. Purchaser is a Massachusetts state-chartered savings bank duly organized,
validly existing and in good standing under the laws of the Commonwealth of Massachusetts, and it
has the requisite corporate power and authority to own its assets and carry on its business, and,
after Closing, to own the Purchased Assets.

     6.2 Authorization. Subject to obtaining all Governmental Approvals, Purchaser has taken all
necessary action to authorize the execution and delivery of this Agreement and the Exhibits and
Schedules hereto, the performance by Purchaser of all terms and conditions hereof and thereof to be
performed by Purchaser and the consummation of the transactions contemplated hereby and thereby.

     6.3 No Violation. Subject to obtaining all Governmental Approvals, neither the execution,
delivery and performance of this Agreement or the other documents and instruments to be executed
and delivered by Purchaser pursuant hereto, nor the consummation by Purchaser of the transactions
contemplated hereby and thereby (a) will violate or conflict with (i) any applicable law or order
of any government entity, or (ii) any judgment, decree, order, statute, law or regulation
applicable to Purchaser, or (iii) any agreement that Purchaser is a party to or (b) will require
any authorization, consent approval, exemption or other action by nor notice to any government
entity.

     6.4 Binding Agreement. This Agreement is a valid and binding agreement of Purchaser
enforceable in accordance with its terms. Purchaser’s execution, delivery and performance of this
Agreement does not and will not violate any law, rule or regulation, conflict with, or result in a
breach of any provision or condition, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or result in the creation of any lien, charge,
encumbrance or claim upon any of the property

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of Purchaser pursuant to the terms of any indenture, contract, mortgage, lien, trust, agreement or
other instrument, order, judgment or decree to which Purchaser is or will be a party, or which are,
purport to be, or will be binding upon Purchaser or their property or assets.

     6.5 Brokers and Finders Fee. Except as disclosed in Schedule 6.5 hereto (“Purchaser’s
Broker”), no agent, broker, investment banker, consultant, representative or other person acting on
behalf of Purchaser or under the authority of Purchaser is or shall be entitled to any commission,
broker’s or finder’s fee or any other form of compensation or payment from Purchaser relating to
this Agreement or the transactions contemplated hereby other than the attorneys, accountants and
tax or financial advisors of the Purchaser in connection with this Agreement and the transactions
contemplated hereby. Purchaser shall be solely responsible for all costs, commissions, fees and
expenses associated with or incurred as a result of Purchaser’s Broker and its employees, agents
and representatives. Purchaser shall indemnify and hold Seller harmless from and against any claims
by, and all costs, commissions, fees and expenses payable to, Purchaser’s Broker and any other
broker claiming to have an agreement with Purchaser, in connection with the transactions
contemplated by this Agreement.

     6.6 Non-Contravention. The execution and delivery of this Agreement and any instruments or
other documents executed pursuant hereto by Purchaser do not and, subject to the receipt of all
Government Approvals, the consummation of the transactions contemplated by this Agreement, will not
constitute (a) a material breach or violation of or default under any law, rule, regulation,
judgment, order, governmental permit or license of Purchaser or to which Purchaser is subject,
which breach, violation or default would have a Material Adverse Effect, or (b) a breach or
violation of or a default under the charter or bylaws of Purchaser or to the Knowledge of
Purchaser, any material contract to which Purchaser is a party or by which it is bound which
breach, violation or default would prevent or materially delay Purchaser from performing its
obligations under this Agreement in all material respects.

     6.7 Legal Proceedings. There are no actions, suits, or proceedings, whether civil, criminal or
administrative, pending or, to the Knowledge of Purchaser threatened against or affecting Purchaser
that could prevent or materially delay Purchaser from performing its obligations under this
Agreement in all material respects.

     6.8. Agreements with Regulatory Authorities. Purchaser is not a party to any written order,
decree, agreement or memorandum of understanding with, or commitment letter or similar submission
to, any federal or state governmental agency or authority, that such authority is contemplating
issuing or requesting (or is considering the appropriateness of issuing or requesting) any such
order, decree, agreement, memorandum of understanding, commitment letter or submission, which
order, decree, agreement, memorandum of understanding, commitment letter or submission either (i)
could reasonably be expected to prevent or impair the ability of Purchaser to perform its
obligations under this Agreement in any material respect or (ii) could impair the validity or
consummation of this Agreement or the transactions contemplated hereby.

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     6.9 Regulatory Matters. Purchaser has not received any indication from any governmental
authority that such governmental authority would oppose or refuse to grant or issue its consent or
approval, if required, or non-objection with respect to the transactions contemplated hereby.
Purchaser has no reason to believe that it will not be able to obtain the Government Approvals.

ARTICLE 7

CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES

     7.1 Conditions Precedent to Purchaser’s Obligation The obligation of Purchaser to proceed
with Closing is subject to the satisfaction at or prior to Closing of the following conditions, any
one or more of which may be waived in writing in whole or in part by Purchaser (except as to the
condition described in Section 7.1(a)):

          (a) To the extent required by applicable law or regulation, all Government Approvals shall
have been obtained in writing and shall not contain any Material Condition affecting Purchaser, the
Purchased Assets, or the Deposit Accounts and any waiting periods mandated by the Government
Approvals shall have been satisfied, for the valid consummation of the transactions contemplated by
this Agreement shall have been satisfied, and all of the notices required to be given under Section
8.2 below shall have been given.

          (b) On the Closing Date, there shall be no injunction, writ, preliminary restraining order or
any order of any nature in effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein provided.

          (c) No suit or other proceeding shall be pending or threatened before any court or
governmental agency seeking to restrain or prohibit or declare illegal, or seeking substantial
damages in connection with, the transactions contemplated by this Agreement.

          (d) Seller shall have complied in all material respects with each of the covenants and
agreements contained in this Agreement, which are required to be performed or complied with by
Seller on or prior to the Closing Date.

          (e) The representations and warranties made by Seller herein or in any certificate or other
document delivered pursuant to the provisions hereof or in connection with the transactions
contemplated hereby shall be true and correct in all material respects, on and as of the Closing
Date, with the same force and effect as though such representations and warranties had been made on
the Closing Date; provided, however, that the representations and warranties made by Seller herein
or in any certificate or other document delivered pursuant to the provisions hereof shall be,
except as otherwise set

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forth herein, deemed to be true and correct in all material respects on and as of the Closing
Date, with the same force and effect as though made on the Closing Date, unless the failure to be
so true and correct would have a Material Adverse Effect.

     (f) Purchaser shall have received the items to be delivered by Seller pursuant to
Section 4.4 hereof.

     7.2 Conditions Precedent to Sellers’ Obligation. The obligation of Seller to proceed with
Closing is subject to the satisfaction at or prior to Closing of the following conditions, any one
or more of which may be waived in writing in whole or in part by Seller (except as to the condition
described in Section 7.2(a)):

          (a) To the extent required by applicable law or regulation, all Government Approvals shall
have been obtained in writing and shall not contain any Material Condition affecting Seller, and
any waiting periods mandated by the Government Approvals shall have been satisfied, for the valid
consummation of the transactions contemplated by this Agreement shall have been satisfied, and all
of the notices required to be given under Section 8.2 shall have been given.

          (b) On the Closing Date, there shall be no injunction, writ, preliminary restraining order or
any order of any nature in effect issued by a court of competent jurisdiction directing that the
transactions provided for herein, or any of them, not be consummated as herein provided.

          (c) No suit or other proceeding shall be pending or threatened by any third party before any
court or governmental agency seeking to restrain or prohibit or declare illegal, or seeking
substantial damages in connection with, the transactions contemplated by this Agreement.

          (d) Purchaser shall have complied in all material respects with each of its covenants and
agreements contained in this Agreement which are required to be performed or complied with by it on
or prior to the Closing Date.

          (e) The representations and warranties made by Purchaser herein or in any certificate or other
document delivered pursuant to the provisions hereof or in connection with the transactions
contemplated hereby shall be true and correct in all material respects, on and as of the Closing
Date, with the same force and effect as though such representations and warranties had been made on
the Closing Date provided, however, that the representations and warranties of Purchaser herein or
in any certificate or other document delivered pursuant to the provisions hereof shall be deemed to
be true and correct in all material respects on and as of the Closing Date, with the same force and
effect as though made on the Closing Date, unless the failure to be so true and correct would have
a Material Adverse Effect on Purchaser’s ability to consummate the transactions contemplated by the
Agreement.

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     7.3 Subject to Section 9.1(d) of this Agreement, if Purchaser becomes aware, prior to Closing,
of a breach of any of Sellers’ representations, warranties or covenants made pursuant to this
Agreement or any agreement, certificate or document ancillary hereto and nevertheless proceeds to
Closing, such breach shall be deemed waived by Purchaser, shall not be subject to indemnification
pursuant to Article 8A of this Agreement and Purchaser shall have no rights or claims against
Seller with respect thereto.

ARTICLE 8

COVENANTS AND OTHER AGREEMENTS

     8.1 Publication and Government Approvals.

          (a) Within thirty (30) days of the execution of this Agreement, Purchaser shall publish a
notice of the transaction contemplated hereunder to the extent required by applicable federal
and/or state law.

          (b) Seller and Purchaser shall cooperate with each other to prepare and file all necessary
Government Approvals necessary or advisable to consummate the transactions contemplated by this
Agreement. Prior to submission to the applicable Governmental Authority, Seller and Purchaser agree
to allow the other party to review and comment upon any application or other materials proposed to
be submitted to a Governmental Authority.

          (c) Within twenty (20) days from the date of this Agreement, each party shall file for all
Government Approvals to be obtained by it. Seller and Purchaser shall provide all information and
documentation required to be submitted by it in connection with such Government Approvals or
otherwise.

          (d) Seller and Purchaser shall use diligent and commercially reasonable efforts to promptly
obtain all Government Approvals and to meet all appropriate legal and other requirements. Further,
Seller and Purchaser will keep the other apprised of the status of all Government Approvals and any
material communications, including, without limitation, the approval or denial of a Government
Approval, from a Governmental Agency relating to a Government Approval.

     8.2 Notices to Depositors.

          (a) The parties agree that within an agreed upon time frame following the receipt of all of
the Government Approvals, Seller shall prepare and deliver a letter in form and substance
satisfactory to Purchaser notifying all Depositors that Purchaser will assume the liability for the
Deposit Accounts on the Closing Date, subject to the satisfaction of the conditions to Closing
contained herein (“Seller’s Notice”). After Seller has delivered Seller’s Notice to all
Depositors, but prior to the Closing Date, Purchaser shall prepare and deliver a letter to all
Depositors, in form and substance satisfactory to Seller, setting out the details of Purchaser’s
assumption and administration

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of the Deposit Accounts after Closing (“Purchaser’s Letter”). Purchaser’s Letter also shall
(i) request that each Depositor cease writing checks or drafts against Seller’s Deposit Account
immediately following the Closing Date, and (ii) include check order forms, replacement checks
bearing Purchaser’s transit and routing number and any other documents to be signed by the account
holder to establish a similar account with Purchaser. Each party shall bear the cost of its own
mailing. Seller agrees to provide appropriate mailing lists and accompanying electronic data files
in order to facilitate the mailing of Purchaser’s Letter. Following the Final Approval Date,
Purchaser shall also be entitled to provide solely at its own expense such other notices or
communications to Depositors relating to the transactions contemplated hereby as may be required by
law; provided that the text of any such notice or communication and the timing of such notice or
communication which is provided prior to the Closing shall be approved in advance by Seller, which
approval shall not unreasonably be withheld or delayed.

          (b) Following the receipt of all of the Government Approvals,
Seller
will provide a notice to each owner of Safe Deposit Assets stating that Seller shall assign to
Purchaser the safe deposit agreements between Seller and each of such parties on the Closing Date.
After execution of this Agreement, Seller will deliver copies of all safe deposit box lease forms
currently used in connection with the Safe Deposit Assets to Purchaser.

          (c) Following the receipt of all Government Approvals, but no later than ten (10) days prior
to the Closing Date, Purchaser, at its expense, shall mail to each Depositor for which an ATM Card
was issued: (i) a letter prepared by Purchaser, and approved and reasonably satisfactory to Seller,
notifying the Depositor of the transfer of his or her account to Purchaser and requesting that the
Depositor cease use of his or her ATM card bearing Seller’s name as of the Closing Date; and (ii) a
replacement ATM card issued in the name of Purchaser and any other documents necessary for the ATM
card holder to use the replacement ATM card after the Closing Date. Purchaser acknowledges that
effective as of the close of business on the Closing Date, Seller shall invalidate the use of the
ATM cards issued by Seller to the Depositor.

     8.3 Deposit Accounts.

          (a) Purchaser agrees to open an account in the name of each Depositor in an amount equal to
the Deposit Account Liability for such Depositor’s Deposit Account, containing terms and conditions
the same as applicable to such Deposit Account prior to the assumption thereof by Purchaser
pursuant to this Agreement.

          (b) From the Closing Date and thereafter, Purchaser shall pay all properly drawn checks,
drafts and non-negotiable withdrawal orders timely presented to it by Depositors whose deposits or
accounts on which such items are drawn are Deposit Accounts. Payment of the foregoing shall be
made without regard to whether the items are drawn on the check or draft forms provided by Seller
or by Purchaser. Further,

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Purchaser shall, in all other respects, discharge the duties and obligations of Seller with respect
to the Deposit Account Liabilities.

          (c) If within the period ending eighteen (18) months from the Closing Date, a Depositor does
not accept Purchaser’s obligation to assume the liability of its Deposit Account and such Depositor
asserts a valid claim against Seller for all or a portion of such Deposit Account Liability,
Purchaser agrees on demand to provide to Seller funds sufficient to pay such claim. I forgot to
mention this one. Our liability to the depositor extends beyond 6 months (probably beyond 6
years).

     8.4 Safe Deposit Business. From and after the Closing Date, Purchaser shall perform and
discharge all of Seller’s liabilities with respect to the Safe Deposit Business, including, without
limitation, maintaining all necessary facilities and providing all necessary services for the use
of the safe deposit boxes by the renters thereof, in accordance with the terms and conditions of
the applicable agreements with Seller relating to such boxes, and Purchaser shall otherwise comply
with the New York State Banking Law relating to the Safe Deposit Business.

     8.5 Honor of Checks Post-Closing.

          (a) From and after the Closing Date, Purchaser shall (i) pay all properly drawn and presented
checks, negotiable orders of withdrawal, drafts, debits and other withdrawal orders presented to
Purchaser by Deposit Account Liability customers, whether drawn on checks, negotiable orders of
withdrawal, drafts, or other withdrawal order forms provided by Seller or by Purchaser and (ii) in
all other respects discharge, in the usual course of the banking business, all of the duties and
obligations of Seller with respect to the balances due and owing to the Customers who have Deposit
Account Liabilities. If any Depositor who has a Deposit Account Liability account draws checks,
drafts, or negotiable orders of withdrawal against the Deposit Account Liabilities, which are
presented or delivered to Seller not later than ninety (90) days after the Closing Date, Seller
shall use its commercially reasonable efforts to batch all such checks, drafts, negotiable orders
of withdrawal, or other withdrawal order forms and to deliver the same to Purchaser at Purchaser’s
sole expense. Purchaser acknowledges that any delay, failure, or inability on its part to comply
with the obligations imposed upon it as a depository institution under applicable federal or state
law, with regard to such checks, drafts, negotiable orders of withdrawal or other withdrawal orders
shall not result in any liability or obligation of Seller and shall not affect any of the rights of
Seller under this Agreement. Seller shall not be deemed to have made any representations or
warranties to Purchaser with respect to any such checks, drafts, negotiable orders of withdrawal or
other withdrawal orders and any such representations or warranties implied by law are hereby
disclaimed and are the responsibility of Purchaser, except that Seller shall be chargeable with the
warranties and representations implied by law with respect to any such check, draft, negotiable
orders of withdrawal order, or other withdrawal order, which is paid by Seller over the counter.

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          (b) Purchaser hereby acknowledges that if, after the Closing Date, any Depositor who has a
Deposit Account Liability, instead of accepting the obligation of Purchaser to pay the Deposit
Account Liabilities (including Accrued Interest thereon) shall demand payment from Seller for all
or any part of any such Deposit Account Liabilities (including Accrued interest thereon), Seller
shall not be liable or responsible for making such payment.

          (c) It is Seller’s intent to act in a commercially reasonable manner to ensure that all
Deposit Account Liability transactions will be referred to Purchaser; provided, however that, if,
after the Closing Date, Seller honors and pays any Deposit Liabilities which are presented to
Seller for payment, or pays any check, draft, negotiable order of withdrawal or other withdrawal
order, Purchaser shall upon demand by Seller reimburse Seller for such payment; provided, however,
that Seller shall reimburse Purchaser for any payments made by Purchaser to Seller under this
Section 8.5(c) as a result of Seller honoring and paying a fraudulent check, draft, negotiable
order of withdrawal or other withdrawal order.

     8.6 Seller’s Marks. Purchaser acknowledges that Seller is the owner of all right, title and
interest in and to the Seller Marks. Purchaser agrees that neither it nor any of its affiliates
will use the name “First Niagara Bank” or any similar name, or any of Seller’s Marks, in connection
with any business or activity engaged in by Purchaser or any of its affiliates.

     8.7 Records. Following the Closing, Purchaser shall promptly provide to Seller and their
agents and representative copies of any Records relating to the Branches as Seller reasonably
request, and shall allow Seller and their agents and representative to inspect and duplicate
Purchaser’s Records relating to the Branches, the Purchased Assets, the Property and/or a Deposit
Account.

     8.8 Employees and Employee Benefits.

          (a) Effective as of the Closing Date, Seller shall terminate all employees of the Branches.
After the Final Approval Date, Purchaser shall determine the Bank Employees to whom Purchaser will
offer employment upon terms and conditions described in subsection (b) below and subject to the
Closing. Purchaser may not interview or otherwise contact any Bank Employee regarding employment
with Purchaser until five (5) days after the public announcement of this transaction, and then only
with the permission of Seller. Nothing contained in this Agreement shall be construed as an
employment contract between Purchaser and any Transferred Employee.

          (b) Purchaser shall provide each Transferred Employee with the following:

               (i) Each Transferred Employee will be eligible to participate in any qualified profit sharing
plan/401(k) plan or plans of Purchaser, if he or she is eligible based on each plan’s eligibility
criteria as of the close of business on the Closing Date.

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Purchaser shall credit each Transferred Employee with the period of years of service with Seller,
its Affiliates and predecessors in determining eligibility to participate, vesting and level of
matching contributions in such plan or plans;

               (ii) Each Transferred Employee will be eligible to participate in the Purchaser’s employee
stock ownership plan, if he or she is eligible based on each such plan’s eligibility criteria as of
the close of business on the Closing Date. Purchaser shall credit each Transferred Employee with
the period of years of service with Seller, its Affiliates and predecessors in determining
eligibility to participate, vesting and eligibility to receive benefits (but not accrual of
benefits under any defined benefit plan) in Purchaser’s plan(s); provided, however, that such
crediting of service shall not operate to duplicate any benefit or the funding of any benefit for
any period of service;

               (iii) Each Transferred Employee will receive credit for years of service with Seller, its
Affiliates and predecessors for purposes of calculation of benefits and waiting period eligibility
and vesting in Purchaser’s non-retirement benefits programs, including but not limited to,
vacation, severance, leaves of absence, education assistance, sick leave, short and long-term
disability plans and other similar benefits;

               (iv) On the Closing Date, each Transferred Employee will become immediately eligible to
participate in the Purchaser’s health and welfare plans (if he or she is eligible based upon each
plan’s eligibility criteria as of the close of business on the Closing Date), including but not
limited to, medical, dental, life insurance and short and long-term disability plans. Purchaser
shall waive any pre-existing condition limitations with respect to such Transferred Employee and
his or her dependents, to the extent such pre-existing condition limitation can be waived under
Purchaser’s plans.

     8.9 Confidentiality. Except as required by applicable law or any Governmental Authority or as
necessary to carry out its obligations under Sections 8.1 and 8.2 of this Agreement, or by mutual
agreement, neither Seller nor Purchaser shall disclose any Confidential Information or the
existence of this Agreement or the transactions contemplated hereunder, and shall maintain all
Confidential Information and the existence of this Agreement and the transactions contemplated
hereunder in strict confidence in accordance with the procedures it uses to protect its own
information of a similar nature.

     8.10 Further Assurances. From time to time, at a party’s reasonable request, an other party
shall execute and deliver such further instruments of conveyance, transfer and assignment, and take
such other action as may be reasonably requested in order to complete and effect the transactions
contemplated herein.

     8.11 Conduct of Business. From the date hereof through the Closing Date, Seller shall (unless
Seller receives Purchaser’s prior written consent) (a) conduct its business relating to the
Purchased Assets and Assumed Liabilities in the usual, regular and ordinary course consistent with
law and past practice, (b) use commercially reasonable efforts, consistent with past practice, to
maintain and preserve intact its

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relationships generally with Seller’s Bank Employees and Depositors; provided,
however, that any salary increases with respect to Bank Employees shall be in the ordinary
course of business consistent with Seller’s past practices, (c) not intentionally take any action
which would adversely affect the ability of any party hereto to obtain any Government Approval or
to perform its covenants and agreements under this Agreement, which shall not be deemed to include
the providing of any submission or filing with any Government Authority, (d) perform, consistent
with law and past practice, their material obligations, commitments, and contracts relating to the
operation of the Branch except as modified in accordance with the terms of this Agreement, (e) not
modify or terminate any material contract obligations relating to the Branches, except in
accordance with their contractual terms and in accordance with customary and past practice, (f)
operate the Branches in material compliance with all current legal or statutory provisions, (g) not
dispose of any assets or liabilities of the Branches except in the ordinary course of business
consistent with past practice, (h) not materially alter any of Seller’s policies or practices of
the Branches between the date of this Agreement and the Closing Date with respect to the rates,
fees, charges, or level of services available at or to Depositors of the Branches except for such
alterations as may be instituted generally for similar branch offices of Seller and in accordance
with ordinary course of business consistent with past practice, and (i) not make any capital
expenditures in excess of $1,000 with respect to the Branches without Purchaser’s written consent,
which will not be unreasonably withheld; not enter into any employment or other contract with
employees, pay any bonuses, or amend any employee benefit, other than in the ordinary course
consistent with past practice provided, however that Seller shall be under no obligation to
advertise or promote new or substantially new customer services in the principal market area of, or
for the benefit of, the Branches; provided, further, that Seller shall pay interest on the Deposit
Account Liabilities at rates which are determined in the ordinary course of business consistent
with Seller’s past practices.

     8.12 Intentionally Omitted

     8.13 Nonsolicitation of Employees.

          (a) In consideration of the consummation of the transactions contemplated hereby, Seller and
its Affiliates agree that, for a period of one year following the Closing Date, they shall not,
directly or indirectly, solicit for employment, retain as an independent contractor or consultant,
induce to terminate employment with Purchaser, or otherwise interfere with Purchaser’s employment
relationship with any Transferred Employee; provided, however, that this Section
8.13 shall not apply(i) if any such employee has been terminated by Purchaser or any of its
Affiliates for any reason or (ii) if such employee is hired by Seller or any of its Affiliates as a
result of a general solicitation for employment in newspaper advertisements or other periodicals of
general circulation not specifically targeted to employees of Purchaser.

          (b) In consideration of the consummation of the transactions contemplated hereby, Purchaser
and its Affiliates agree that, for a period of one year following the Closing Date, they shall not,
directly or indirectly, solicit for employment, retain as an independent contractor or consultant,
induce to terminate employment with

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Seller, or otherwise interfere with Seller’s employment relationship with any of its employees;
provided, however, that this Section 8.13 shall not apply(i) if any such employee
has been terminated by Seller or any of its Affiliates for any reason or (ii) if such employee is
hired by Purchaser or any of its Affiliates as a result of a general solicitation for employment in
newspaper advertisements or other periodicals of general circulation not specifically targeted to
employees of Seller.

     8.14 Maintenance of Property.

          (a) Except as otherwise permitted or required hereunder, Seller shall operate the Property in
substantially the same manner as prior to entering into this Agreement and keep the Property in
substantially the same condition as on the date hereof, normal wear and tear excepted; provided,
however, that Seller shall have no obligation to make any capital repairs, capital expenditures or
capital improvements to the Property unless specifically required under this Agreement, except that
Seller shall maintain as currently maintained all building and mechanical systems in reasonably
satisfactory working order and otherwise in material compliance with applicable ordinances and
regulations. Notwithstanding the foregoing, Seller shall have an affirmative obligation hereunder
to disclose in writing to Purchaser any and all known structural defects or maintenance items that
are necessary to be conducted at the Real Property;

          (b) Seller shall not create, grant, accept or enter into a lease, use and occupancy
arrangement, easement, option to purchase, right of first refusal or other agreement with respect
to all or any portion of the Property without prior written notice to and consent of Purchaser, or
enter into any service contract or equipment lease that does not by its terms expire or that cannot
be canceled on or prior to the Closing Date (without expense to Purchaser); and

          (c) Seller shall maintain the Property in material compliance with all laws, statutes,
ordinances, rules, regulations, covenants and restrictions applicable thereto and shall promptly
notify Purchaser of all written notices of violations thereof received by Seller and the nature and
extent of the same; provided, however, Seller shall not be obligated to remedy any such violation.

     8.15 Access by Purchaser. Upon execution of this Agreement, Seller shall provide Purchaser
and its representatives, accountants and counsel, upon reasonable prior notice to Seller,
reasonable access during normal hours and upon reasonable notice to Seller to the Records and all
other documents and other information concerning the Branches, Purchased Assets and Assumed
liabilities as Purchaser may reasonably request; provided, however, that all communications shall
be directed to Paula Tomczak or such other persons as Paula Tomczak may designate. After the Final
Approval Date, Seller shall provide Purchaser and its representatives, accountants and counsel
reasonable access, during normal business hours and upon two (2) Business Days’ notice to Seller,
to the Branches, Bank Employees, depository records, and all other documents and other information
concerning the Branches, the Purchased Assets, the Assumed Liabilities and the Transferred
Employees as Purchaser may reasonably request; provided that all such

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requests must be to Paula Tomczak, or such other persons as Paula Tomczak may designate, in
writing, to Purchaser; and provided, further, that a representative of Seller shall be permitted to
be present at all times and provided, further, that with respect to information concerning Bank
Employees, Seller shall not be required to provide Purchaser any information other than information
concerning the name, position, date of hire and salary of the Bank Employees, and Seller shall not
be required to provide Purchaser with access to or copies of any personnel files or other
individualized employee files or documents, all of which shall remain the sole property of Seller;
provided further, however, that, after the receipt of all Government Approvals, Seller agrees to
make Transferred Employees available to be interviewed by Purchaser and to make personnel files for
any Transferred Employee available to Purchaser for review to the extent permitted by law and
authorized in writing by the Transferred Employee. Notwithstanding the foregoing, in no event shall
Seller be required to provide (a) any information which Seller, in its sole discretion deems
proprietary, including without limitation, Seller’s “credit scoring” system, branch or credit
practices, policies or procedures, or staffing models, (b) any information the provision of which
to Seller is prohibited by applicable law, (c) any information that is protected by the
attorney-client privilege, or (d) its or any of its Affiliates’ tax returns.

     8.16 Communications to Employees, Training.

          (a) At times mutually agreed to, Seller and Purchaser may make public announcement of the
transaction and file such documents with the Securities and Exchange Commission (“SEC”) in
accordance with applicable securities laws. Seller and Purchaser agree that no sooner than five
(5) days following the public announcement of the transaction, meetings may be held at the Branches
on such date and at such time as Purchaser and Seller shall mutually agree, to allow a
representatives of Seller and Purchaser to announce Purchaser’s proposed acquisition of the
Branches and Purchased Assets to the Bank Employees. Seller and Purchaser shall mutually agree as
to the date and time of such meeting, and the scope and content of all communications to the Bank
Employees. Except as specifically provided in Section 8.15 and in this Section 8.16, in no event
shall Purchaser contact any Bank Employee without the prior written consent of Paula Tomczak, which
consent may not be unreasonably withheld, except those Bank Employees designated in writing by
Seller to handle certain transition issues.

          (b) At times mutually agreed to by Seller and Purchaser following the initial announcement
described in Section 8.16(a), Purchaser shall be permitted to meet with the Bank Employees to
discuss employment opportunities with Purchaser, provided that representatives of Seller shall be
permitted to attend any such meeting. From and after October 1, 2007, Purchaser shall also be
permitted to conduct training sessions outside of normal business hours or at other times as Seller
may agree, with the Bank Employees and may, at Seller’s sole option, conduct such training seminars
at the Branches; provided that Purchaser shall schedule such training sessions in a manner which
does not unreasonably interfere with Seller’s normal business operations. Purchaser shall
reimburse the Bank Employees for reasonable transportation costs to and from the locations where
Purchaser shall train such employees and compensate the Bank

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Employees or reimburse Seller at the Bank applicable standard or overtime rates for the time
spent in such training. Purchaser shall be entitled to review the complete employee records and
files of any employee at the Branches.

     8.17 Delivery of Purchaser’s Check Forms. Following the Final Approval Date, but not less
than ten (10) days prior to the Closing Date, Purchaser shall, at its sole cost and expense, notify
by first class U.S. mail all Depositors, who have a Deposit Account Liability, in a form reasonably
acceptable to Seller, of Purchaser’s assumption of the Deposit Account Liabilities (other than
Excluded Deposits) (which shall include a notification to those Deposit Account Liability
Depositors whose accounts are then covered by any type of overdraft protection offered by Seller,
including but not limited to Advance Lines, that from and after the Closing Date all such overdraft
protection from Seller shall terminate) and Purchaser, at its sole cost and expense, shall furnish
each such Depositor with information on the delivery of new checks, deposit tickets, or other
similar instruments, which shall be appropriately encoded with Purchaser’s routing number. Within
a reasonable time as agreed to by the parties after execution of this Agreement, Seller shall
provide Purchaser with all necessary information for Purchaser to supply such checks, deposit
tickets or other similar instruments.

     8.18 Uncollected Checks Returned to Seller. From and after the Closing Date, Purchaser shall
promptly pay to Seller an amount equivalent to the amount of any checks, negotiable orders of
withdrawal, drafts, or any other withdrawal orders (net of the applicable deposit premium paid by
Purchaser with respect to the Deposit Account Liabilities represented by any such instrument)
(“Items”) credited as of the close of business on the Closing Date to any Deposit Account
Liabilities which are returned uncollected to Seller after the Closing Date and which shall include
an amount equivalent to holds placed upon such Deposit Account Liabilities for Items cashed by
Seller (net of the applicable deposit premium paid by Purchaser with respect to the Deposit Account
Liabilities represented by any such instrument), as of the close of business on the Closing Date
which Items are subsequently dishonored; provided, however, that if Seller shall have failed to
make or properly reflect in the information provided to Purchaser any provisional credit or hold on
any such Deposit Account Liabilities in respect of uncollected funds represented by any such Item,
Purchaser’s obligations under this Section 8.18 in respect of such Item shall be limited to the
amount of collected funds in such Deposit Account Liabilities.

     8.19 Telephone Numbers. Seller shall, no later than five (5) days prior to the Closing Date,
change the billing address for all telephone numbers used at the Branches to Purchaser’s billing
address for all charges incurred subsequent to the Closing Date and shall cooperate with Purchaser
to help ensure that all telephone numbers used at the Branches are transferred to Purchaser.

     8.20 Signage. During the two day period immediately preceding the Closing Date, Seller shall
cooperate with any commercially reasonable request of Purchaser directed to accomplishing the
installation of signage of Purchaser’s choosing at the Branches prior to the Closing Date;
provided, however, that all such installations shall be at the sole cost and expense of Purchaser,
that such installation shall be performed in such

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a manner that does not significantly interfere with the normal business activities and
operations of the Branches, that Seller’s signage shall not be damaged, that such signage complies
with all applicable zoning and permitting laws and regulations, and that all such installed signage
shall be covered , but shall indicate Seller’s name and be in such a way as to be unreadable at all
times prior to the Closing; and provided further, however, that in the event that this Agreement is
terminated prior to the Closing for any reason, Purchaser shall promptly remove all signage that it
has installed or which otherwise contains Purchaser’s name and restore Seller’s signage to its
condition prior to Purchaser’s installation of its signage. After the Closing, Purchaser: (i)
shall, at its sole cost and expense, remove all of Seller’s existing signage at the Branches, and
(ii) may, at its sole cost and expense, install signage at the Branches of Purchaser’s choosing.

     8.21 Actions With Respect to IRA Deposit Account Liabilities.

          (a) On or before the Closing Date, Seller shall (i) resign as of the close of business on the
Closing Date as the trustee or custodian, as applicable, of each IRA included in the Assumed
Liabilities of which it is the trustee or custodian, (ii) to the extent permitted by the
documentation governing each such IRA and applicable law, appoint Purchaser as successor trustee or
custodian, as applicable, of each such IRA, and Purchaser hereby accepts each such trusteeship or
custodianship under the terms and conditions of Purchaser’s plan documents for its IRA, and assumes
all fiduciary and custodial obligations with respect thereto as of the close of business on the
Closing Date, and (iii) deliver to the IRA grantor of each such IRA such notice of the foregoing as
is required by the documentation governing each such IRA or applicable law. Purchaser shall be
solely responsible for delivering its IRA documents to the applicable IRA grantor, including but
not limited to a beneficiary designation form to be completed by the applicable IRA grantor;
provided, however, that in the event that an IRA grantor participant dies before such time as
Purchaser receives a properly completed beneficiary designation form, Seller shall make available
to Purchaser such information as may exist in Seller’s files regarding any beneficiary designation
it may have regarding such decedent. If, pursuant to the terms of the documentation governing any
such IRA or applicable law, (X) Seller is not permitted to appoint Purchaser as successor trustee
or custodian, or the IRA grantor named fiduciary objects in writing to such designation, or is
entitled to, and does, in fact, name a successor trustee or custodian other than Purchaser, or (Y)
such IRA includes assets which are not Deposit Account Liabilities and are not being transferred to
Purchaser or the assumption of such deposit liabilities included in such IRA would result in a loss
of qualification of such IRA under the Code or applicable IRS regulations, all deposit liabilities
of Seller held under such IRA shall be excluded from the Deposit Account Liabilities (such excluded
deposits liabilities being herein called the “Excluded IRA Deposits”). Upon appointment as a
successor custodian for such IRA Deposit Account Liabilities or as a successor trustee for such
IRAs, Purchaser shall perform the services and carry out the duties and obligations required of it
under the applicable plans, the Code and applicable Federal and state laws and regulations.

          (b) To the extent the Deposit Account Liabilities include certain IRAs that are required to
make certain periodic distributions to the IRA account owner (or

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beneficiary) either at the account owner’s or participant’s request or because the account
owner or participant has attained age 701/2, effective as of the Transfer Date, Purchaser agrees to
continue to make such periodic distributions in accordance with the reasonable distribution
instructions forwarded by Seller to Purchaser. Purchaser hereby assumes the obligation to pay each
minimum distribution required by federal law by December 31 of the calendar year in which the
Closing occurs and, in consideration thereof, Seller agrees not to withhold the amount of such
distributions from the aggregate amount of the Deposit Account Liabilities.

          (c) Prior to the Closing Date, Seller shall provide to Purchaser copies of all plan documents
and beneficiary designation forms in Seller’s possession with respect to the IRAs.

     8.22 Bulk Transfer Laws. Seller and Purchaser hereby waive compliance with any applicable
bulk transfer laws. If by reason of any applicable bulk sales law any claims are asserted by
creditors of Seller, such claims shall be the responsibility of Purchaser in the case of claims
arising under any of the Purchased Assets or Assumed Liabilities.

     8.23 Seller’s Statements to Depositors. Within five (5) Business Days after the Closing Date,
Seller, at its sole cost and expense, shall mail to each holder of a Deposit Account Liability a
final statement as of the close of business on the Closing Date, including the payment of Accrued
Interest thereon. Passbook information not posted to a Depositor passbook as of the Closing Date
shall be provided to Purchaser by written report or by such other means as the parties may agree
upon. Purchaser agrees to be responsible for posting all passbook entries reflected in such
reports.

     8.24 Equipment Conversion and Installation. Seller agrees to cooperate with Purchaser and its
agents in order to facilitate installation of teller and other operating equipment in the Branch,
provided that such installation shall be at Purchaser’s sole cost and expense and shall be planned
so as not to interfere significantly with Seller’s normal business activities, and provided
further, that if this Agreement is terminated, the removal of the equipment and the return of the
Branches to its previous condition shall be at the expense of the Purchaser.

     8.25 Post-Closing Settlement. Seller and Purchaser agree to cooperate to assure appropriate
settlement of point of sale debit card transactions relating to Deposit Account Liabilities settled
following the Closing Date. Following the Closing, Purchaser will make commercially reasonable
efforts to notify originators of Automated Clearing House (“ACH”) entries affecting Deposit Account
Liabilities of the transfers contemplated by this Agreement. Seller agrees to cooperate with
Purchaser in a commercially reasonable manner to assure prompt delivery and settlement of ACH
transactions received by Seller for debit or credit to Deposit Account Liabilities. Seller and
Purchaser agree to cooperate with respect to any other items relating to Deposit Account
Liabilities that come into Seller’s possession following the Closing Date.

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     8.26 Data Processing.

          (a) Seller and Purchaser shall convert account information as to Deposit Account Liabilities
to be effective the first business day following the Closing in accordance with the Data Processing
Conversion Plan that will be attached hereto as Schedule 8.26 within thirty (30) days of
the execution of this Agreement. Seller shall be responsible for services rendered to Seller by
outside third-parties in connection with the de-conversion of the Branches’ electronic data to a
format that can be utilized by Purchaser for and following the Closing of this Agreement, and
Purchaser shall be responsible for services rendered to Purchaser by outside third-parties in
connection with the conversion to Purchaser’s system. Schedule 8.26 lists the outside
third-parties referred to in this Section 8.26.

          (b) All tasks and obligations concerning the provision of data processing services to or for
the Branches after the Closing Date, other than those specifically set forth in, and to the extent
assumed by Seller pursuant to Schedule 8.26 hereof shall be performed solely and
exclusively by the Purchaser. Purchaser acknowledges its assumption of all such tasks and
obligations, and further acknowledges that any delay, failure or inability on its part to perform
such tasks or comply with such obligations, except as and to the extent attributable to any delay,
failure or inability on the part of Seller in performing those tasks or complying with those
obligations specifically set forth in, and to the extent assumed by Seller pursuant to,
Schedule 8.26 hereof shall not result in any liability or obligation of Seller and shall
not affect any of the rights of Seller under this Agreement.

     8.27 Deposit Histories.

          In case of any dispute with or inquiry by any Depositor whose Deposit Account Liability is
included in the Assumed Liabilities, which dispute or inquiry relates to the servicing of such
account by Seller prior to the date for which a deposit history has been provided to Purchaser,
Seller will provide Purchaser, where available and to the extent reasonably requested by Purchaser
and not already provided to Purchaser, information regarding the Deposit Account Liability and
copies of pertinent documents or instruments with respect to such dispute or inquiry so as to
permit Purchaser to respond to such Depositor within a period of time and in a manner which would
comply with standard banking practices and customs and all applicable laws.

     8.28 Post-Closing Cooperation Generally. Whether or not specifically addressed in this
Article 8, Seller and Purchaser agree to cooperate in a commercially reasonable manner to assure an
orderly transition of the Branches’ operations and the Purchased Assets from Seller to Purchaser.

          8.29 Nonsolicitation. For a period of one year following the Closing
Date, Seller shall not directly and willfully solicit any Depositor (which for purposes of this
Section 8.29 shall not include the owner of any Excluded Deposit), or seek to directly entice any
Depositor, through a solicitation targeted at such Depositor, to open accounts

-35-

 

or otherwise transact business with Seller. Notwithstanding the foregoing sentence, Seller and its
affiliates shall be permitted to (a) engage in advertising, solicitations or marketing campaigns,
programs or other efforts not primarily directed to or targeted at the Depositors, including
without limitation such campaigns, programs or efforts in connection with lending, deposit, safe
deposit, trust or other financial services relationships with such Depositors, (b) engage in other
lending, deposit, safe deposit, trust or other financial services relationships, (c) respond to
unsolicited inquiries, and (d) provide notices or communications relating to the transactions
contemplated hereby in accordance with the provisions hereof.

8.30 Forms. No later than the date of this Agreement, Seller will have provided Purchaser with
copies of the forms of signature cards, deposit account forms, Regulation E disclosures,
Truth-in-Savings disclosures, deposit account agreements, and IRA trust agreements and beneficiary
designations, as well as the forms of any other instruments or agreements presently in use at the
Branch in connection with the Deposit Account Liabilities. For purposes of this Section 8.30, all
referenced documents shall be the forms used by Seller as of the date of this Agreement for new
customers. Completed and executed forms of such documents for each respective depositor
maintaining an account included within the Deposit Account Liabilities shall be provided to
Purchaser on the Closing Date.

ARTICLE 8A

INDEMNITY

     8A.1 Seller Indemnity. Seller shall indemnify, hold harmless and defend Purchaser, its
affiliates, and their respective successors, permitted assigns, directors, shareholders, officers,
agents and employees from and against all claims, losses, liabilities, demands and obligations of
any nature whatsoever (including reasonable legal fees and expenses) (collectively, “Damages”)
which Purchaser or any of its affiliates or their respective successors, permitted assigns,
directors, shareholders, officers, agents or employees shall receive, suffer or incur, arising out
of or resulting from:

          (a) Any liability of Seller which is not an Assumed Liability;

          (b) The material breach of any representation or warranty made by Seller in this Agreement,
which breach has not been waived pursuant to Section 7.3 above; or

          (c) The material breach of any covenant or other agreement made by Seller in this Agreement,
which breach has not been waived pursuant to Section 7.3 above.

     8A.2 Purchaser Indemnity. Purchaser shall indemnify, hold harmless and defend Seller, their
affiliates and their respective successors, permitted assigns, directors, shareholders, officers,
agents and employees from and against all Damages which Seller or any of their affiliates or their
respective successors, permitted assigns, directors,

-36-

 

shareholders, officers, agents or employees shall receive, suffer or incur, arising out of or
resulting from:

          (a) Any liability of Purchaser or any Assumed Liability;

          (b) Any actions taken or omitted to be taken by Purchaser from and after the date of Closing
with respect to the Bank Employees, and any suits or proceedings commenced in connection therewith;

          (c) Any actions taken or omitted to be taken by Purchaser from or after the Closing Date and
relating to the Purchased Assets, Assumed Liabilities and the Transferred Employees, and any suits
or proceedings commenced in connection therewith (other than proceedings to prevent or limit the
consummation of the transactions contemplated by this Agreement);

          (d) The material breach of any representation or warranty made by Purchaser in this Agreement;

          (e) The material breach of any covenant or other agreement made by Purchaser in this
Agreement; or

          (f) Any claims arising under any of the Purchased Assets or Assumed Liabilities made by
creditors of Seller under any applicable bulk sales laws.

     8A.3 Indemnification Procedure. If a party entitled to indemnification hereunder
(“Indemnified Party”) is aware that a claim, demand or other circumstance exists that has given or
may reasonably be expected to give rise to a right of indemnification under this Article 8A
(whether or not the amount of the claim is then quantifiable), such Indemnified Party shall
promptly give written notice thereof, describing in reasonable detail the nature of the claim,
demand or circumstance, to the other party (“Indemnitor”), and the Indemnified Party will
thereafter keep the Indemnitor reasonably informed with respect thereto, provided that failure of
the Indemnified Party to give the Indemnitor prompt notice as provided herein shall not relieve the
Indemnitor of its obligations hereunder except to the extent, if any, that the Indemnitor’s rights
shall have been prejudiced or the Indemnitor’s liability shall have been materially increased
thereby; and provided, further, that with respect to representations and warranties contained in or
made pursuant to this Agreement notice must be given prior to the end of the nine (9) month
survival period set forth in Section 8A.6 below. In case any such action, suit or proceeding is
brought against an Indemnified Party, the Indemnitor shall be entitled to participate in (and, in
its discretion, to assume) the defense thereof with counsel reasonably satisfactory to the
Indemnified Party, provided, however, that the Indemnified Party shall be entitled to participate
in any such action, suit or proceeding with counsel of its own choice at the expense of the
Indemnitor if, in the good faith judgment of the Indemnified Party’s counsel, representation by the
Indemnitor’s counsel may present a conflict of interest or there may be defenses available to the
Indemnified Party which are different from or in addition to those available to the Indemnitor. In
no

-37-

 

event shall Indemnitor be liable for the fees and expenses of more than one counsel, separate
from its own counsel, for all Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the same allegations or
circumstances. The Indemnitor will not settle any claim, action, suit or proceeding which would
give rise to the Indemnitor’s liability under its indemnity unless such settlement includes as an
unconditional term thereof the giving by the claimant or plaintiff of a release of the Indemnified
Party, in form and substance reasonably satisfactory to the Indemnified Party and its counsel, from
all liability with respect to such claim, action, suit or proceeding. If the Indemnitor assumes
the defense of any claim, action, suit or proceeding as provided in this Section 8A.3, the
Indemnified Party shall be permitted to join in the defense thereof with counsel of its own
selection and at its own expense. If the Indemnitor shall not assume the defense of any claim,
action, suit or proceeding, the Indemnified Party may defend against such claim, action, suit or
proceeding in such manner as it may deem appropriate, provided that an Indemnified Party shall not
settle any claim, action, suit or proceeding which would give rise to the Indemnitor’s liability
under its indemnity without the prior written consent of the Indemnitor, which consent shall not be
unreasonably withheld.

     8A.4 Limitations on Liability. Notwithstanding anything to the contrary contained in this
Agreement, (i) no Indemnified Party shall be entitled to indemnification pursuant to Section 8A.1
or 8A.2 until its aggregate Damages for a single breach or series of related breaches shall be in
excess of 1% of the Purchase Price (the “Basket”), at which time such Indemnified Party shall be
entitled to indemnification for the full amount of its Damages to the extent such Damages exceed
the Basket, (ii) in no event shall the Damages payable by Seller or Purchaser (as the case may be),
as Indemnitors, in the aggregate exceed the Purchase Price and (iii) in no event shall any party be
entitled to any incidental, consequential, special, exemplary or punitive Damages.

     8A.5 General.

          (a) Each Indemnified Party shall be obligated in connection with any claim for indemnification
under this Article 8A to use all commercially reasonable efforts to obtain any insurance proceeds
available to such Indemnified Party with regard to the applicable claims. An Indemnified Party
shall not be entitled under this Agreement to multiple recovery for the same losses. The amount
which any Indemnitor is or may be required to pay to any Indemnified Party pursuant to this Article
8A shall be reduced (retroactively, if necessary) by any insurance proceeds or other amounts
actually recovered (net of any direct relevant collections costs) by or on behalf of such
Indemnified Party in reduction of the related Damages. If an Indemnified Party shall have received
the payment required by this Agreement from the Indemnitor in respect of Damages and shall
subsequently receive insurance proceeds or other amounts in respect of such Damages, then such
Indemnified Party shall promptly repay to the Indemnitor a sum equal to the amount of such
insurance proceeds or other amounts actually received (net of any direct relevant collection
costs).

-38-

 

          (b) In addition to the requirements of paragraph (a) above, each Indemnified Party shall be
obligated in connection with any claim for indemnification under this Article 8A to use all
commercially reasonable efforts to mitigate Damages upon and after becoming aware of any event
which could reasonably be expected to give rise to such Damages.

          (c) Subject to the rights of existing insurers of an Indemnified Party, an Indemnitor shall be
subrogated to any right of action which the Indemnified Party may have against any other Person
with respect to any matter giving rise to a claim for indemnification from such Indemnitor
hereunder.

          (d) Except for the parties’ rights to specific performance as described in Section 10.14, the
indemnification provided in this Article 8A shall be the exclusive post-Closing Date remedy
available to any Indemnified Party with respect to any breach of any representation, warranty,
covenant or agreement made by Purchaser or Seller in this Agreement.

          (e) All indemnification payments under this Article 8A shall be deemed adjustments to the
Purchase Price as defined in Section 3.1(c).

     8A.5. Survival. All representations, warranties and covenants contained in or made pursuant
to this Agreement shall survive the execution and delivery of the Agreement and shall continue in
full force and effect for a period of nine (9) months after the Closing Date and thereafter shall
terminate, except as to any claim with respect to a representation and warranty for which written
notice shall have been given prior to the end of such nine (9) month period; and provided, further,
that all covenants or agreements which by their terms are to be performed after the nine (9) month
anniversary of the Closing Date shall survive until fully discharged.

ARTICLE 9

TERMINATION

     9.1 Termination of Agreement. This Agreement may be terminated:

          (a) At any time prior to the Closing Date, by the mutual written consent of Seller and
Purchaser;

          (b) By either Purchaser or Seller if Closing has not taken place on or before February 15,
2008;

          (c) Upon written notice by either Purchaser or Seller immediately upon receipt by Purchaser or
Seller of notice from any government authority that Purchaser or Seller, as the case may be, has
been denied any Regulatory Approval by final order; and

-39-

 

          (d) By either Purchaser or Seller (provided that the terminating party is not then in material
breach of any representation, warranty, covenant or other agreement contained herein) if there
shall have been a material breach of any of the representations, warranties, covenants or other
agreements set forth in this Agreement on the part of the other party, which breach is not cured
within thirty (30) days following written notice to the party committing such breach, or which
breach, by its nature, cannot be cured prior to the Closing; provided, however, that Purchaser and
Seller shall not have the right to terminate this Agreement pursuant to this Section 9.1(d) unless
the breach of representation, warranty, covenant, or other agreement together with all other such
breaches would have a Material Adverse Effect.

     9.2 Effect of Termination. In the event of termination pursuant to Section 9.1(b), (c) or
(d), written notice thereof will be given by the terminating party to the other party, and the
transactions contemplated by this Agreement will be terminated, without further action by any party
hereto. If the transactions contemplated by this Agreement are terminated pursuant to Section 9.1:

          (a) Purchaser will return to Seller all documents and other material received from Seller or
their representatives relating to Confidential Information or the transactions contemplated hereby,
whether obtained before or after the execution hereof; and

          (b) All Confidential Information received by Purchaser will continue to be treated as
confidential and no disclosure thereof shall be made to any third party except as required by law.

          (c) In the event of termination of this Agreement pursuant to Section 9.1, this Agreement will
become void and of no effect with no liability hereunder on the part of any party hereto (or of any
directors, officers, employees, agents, legal and financial advisors or other representatives of
any party). Upon any termination, all filings, applications and other submissions made pursuant to
or prior to the execution of this Agreement will, to the extent practicable, be withdrawn from the
Governmental Authority or other person to which made.

          (d) If this Agreement is terminated, all obligations of the parties hereunder shall terminate,
except for the obligations set forth in Sections 8.6, 8.9, and Articles 9 and 10, which shall
survive the termination of this Agreement, and except that no such termination shall relieve any
party from liability for actual damages due to a willful breach of this Agreement.

          (e) If this Agreement is terminated due to 9.1(d), then the non-breaching party is to receive
reimbursement for actual, reasonable accountable expenses.

-40-

 

ARTICLE 10

GENERAL

     10.1 Publicity. Except for the notices required under Section 8.1 and 8.2 above, neither
party shall make any notice or disclosure to a third-party, nor make any press release concerning
the transactions contemplated by this Agreement, except to the extent that it is jointly planned
and coordinated by and among Purchaser and Seller. Except as may be required by law, no party
shall act unilaterally in this regard without prior written approval of every other party, such
approval not to be unreasonably withheld or delayed.

     10.2 Waivers. The waiver by any party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach.

     10.3 Binding Effect; Benefits. This Agreement shall inure to the benefit of the parties
hereto, and shall be binding upon the parties hereto and their respective successors, assigns,
heirs, executors, administrators and legal representatives. Nothing in this Agreement, express or
implied, is intended to confer on any Person other than the parties hereto, or their respective
successors, assigns, heirs, executors, administrators and legal representatives any rights,
remedies, obligations or liabilities under or by reason of this Agreement.

     10.4 Notices. All notices, requests, demands, elections and other communications which any
party to this Agreement may be required to give hereunder shall be in writing and shall be deemed
to have been duly given by mailing the same by certified mail, return receipt requested, to the
party to whom the same is so given or made. Such notice, request, demand, waiver, election or
other communication will be deemed to have been given as of the date received by the addressee.
Any notice may be given by a party’s attorney.

          (a) Notice to Seller. If to Seller, to:

First Niagara Bank

6950 S. Transit Road

PO Box 514

Lockport, NY 14095-0514

Attn: John R. Koelmel

-41-

 

With a required copy to:

First Niagara Bank

6950 South Transit Road

Lockport, New York 14095

Attn: General Counsel

          (b) Notice to Purchaser.

If to Purchaser, to:

Legacy Banks

99 North Street

P.O. Box 1148

Pittsfield, MA 01201-1148

Attn: J. Williar Dunlaevy

With a required copy to:

Legacy Banks

99 North Street

P.O. Box 1148

Pittsfield, MA 01202-1148

Attn: General Counsel

Or to such other address as such party shall have specified by notice to every other Party hereto.

     10.5 Entire Agreement; Amendments. This Agreement (including the Schedules hereto) and
documents delivered at Closing pursuant hereto and thereto constitute the entire agreement and
understanding between the parties hereto as to the matters set forth herein and therein and
supersede and revoke all prior agreements and understandings, oral and written, between the parties
hereto or thereto or otherwise with respect to the subject matter hereof or thereof. No change,
amendment, termination or attempted waiver of any of the provisions hereof or thereof shall be
binding upon any party unless set forth in an instrument in writing signed by the Party to be bound
or their respective successors in interest.

     10.6 Counterparts; Facsimile. This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when a counterpart has
been signed by each of the parties and delivered to each of the other parties, it being understood
that all parties need not sign the same counterpart. Such execution may be evidenced by the
execution and delivery of signature

-42-

 

pages by either party by facsimile transmission to the other, provided that the original executed
signature pages are contemporaneously delivered by such party to a reputable overnight courier
service for delivery to the other party.

     10.7 Headings. The article, section and other headings contained in this Agreement are for
reference purposes only and shall not be deemed to be a part of this Agreement or to affect the
meaning or interpretation of this Agreement.

     10.8 Construction. Within this Agreement, the singular shall include the plural and the
plural shall include the singular, and any gender shall include all other genders, all as the
meaning and the context of this Agreement shall require.

     10.9 Governing Law and Choice of Forum. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to conflicts of laws principles,
and the United States of America. The parties hereby agree to submit themselves to the exclusive
jurisdiction of any court of competent jurisdiction, state or federal, located in Erie County, New
York USA, and that such venue is convenient to the parties and proper for all purposes of this
Agreement.

     10.10 Cooperation. The parties hereto shall cooperate fully at their own expense, except as
otherwise provided in this Agreement, with each other and their respective counsel and accountants
in connection with all steps to be taken as part of their obligations under this Agreement.

     10.11 Severability. If any term, covenant, condition or provision of this Agreement or the
application thereof to any circumstance shall be invalid or unenforceable to any extent, the
remaining terms, covenants, conditions and provisions of this Agreement shall not be affected
thereby and each remaining term, covenant, condition and provision of this Agreement shall be valid
and shall be enforceable to the fullest extent permitted by law. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only as
broad as is enforceable.

     10.12 Assignment; Sale of Branches. Purchaser may not assign any of the rights, interests or
obligations hereunder (whether by operation of law or otherwise). Any attempted assignment by
Purchaser shall be null and void.

     10.13 Effect on Third Parties. Except as otherwise provided by law, neither the rights of
creditors and depositors of Seller, nor any liability or obligation or payment of money, nor any
claim or cause of action against Seller shall be in any manner released or impaired by this
Agreement or by the transactions contemplated hereunder, and the rights and obligations of all
creditors and depositors and of all other persons shall remain unimpaired, but Purchaser shall
succeed to all such obligations and liabilities which are included among the Assumed Liabilities
from and after the Closing Date and shall be liable from then and thereafter to pay, discharge, and
perform all such liabilities and obligations of Seller assumed pursuant to this Agreement and in
connection with the

-43-

 

transactions contemplated hereunder in the same manner as if Purchaser had itself incurred the
liabilities or obligations.

     10.14 Specific Performance. The parties hereto acknowledge that
monetary damages could not adequately compensate either party hereto in the event of a breach of
this Agreement by the other and that the non-breaching party would suffer irreparable harm in the
event of such breach. Based on the foregoing,

          (a) in the event that Seller is in breach of this Agreement prior
to the
Closing, Purchaser may either bring an action for specific performance or terminate this Agreement
pursuant to Section 9.1(d) above as its sole remedy; and

          (b) in the event that Purchaser is in breach of this Agreement prior to
the Closing, Seller may terminate this Agreement pursuant to Section 9.1(d) above.

     10.15 Expenses. Except as otherwise provided herein, Seller and Purchaser shall each pay
their own out-of-pocket expenses in connection with this Agreement, including investment banking,
appraisal, accounting, consulting, professional and legal fees, if any, whether or not the
transactions contemplated by this Agreement are consummated.

[SIGNATURE PAGE FOLLOWS]

-44-

 

     IN WITNESS WHEREOF, intending to be legally bound hereby, the parties have caused this
Agreement to be signed as of the date first above written.

	 	 	 	 	 	 	 
	PURCHASER:	 	LEGACY BANKS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ J. Williar Dunlaevy 	 	 
	 

	 	 	 	J. Williar Dunlaevy 	 	 
	 

	 	 	 	Chairman & C.E.O. 	 	 
	 
	 	 	 	 	 	 
	SELLER:	 	FIRST NIAGARA BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
John R. Koelmel	 	 
	 

	 	Name:	 	John R. Koelmel 	 	 
	 

	 	Title:	 	President & C.E.O. 	 	 

-45-

 

LIST OF EXHIBITS

	 	 	 
	Exhibit A

	 	Branch Listing
	 
	 	 
	Exhibit B

	 	Bargain and Sale Deed
	 
	 	 
	Exhibit C

	 	Leased Property Assignment and Assumption Agreement
	 
	 	 
	Exhibit D

	 	Estoppel Certificate
	 
	 	 
	Exhibit E

	 	Bill of Sale
	 
	 	 
	Exhibit F

	 	Assignment and Assumption Agreement
	 
	 	 
	Exhibit G

	 	Seller’s Secretary Certificate
	 
	 	 
	Exhibit H

	 	Sellers’ Officer’s Certificate
	 
	 	 
	Exhibit I

	 	FIRPTA Affidavit
	 
	 	 
	Exhibit J

	 	Purchaser’s Secretary Certificate
	 
	 	 
	Exhibit K

	 	Purchaser’s Officer’s Certificate

LIST OF SCHEDULES

	 	 	 
	1.1(a)

	 	List of Advance Lines
	 
	 	 
	1.1(b)

	 	List of Bank Employees
	 
	 	 
	1.1(c)

	 	List of Deposit Accounts
	 
	 	 
	1.1(d)

	 	List of Excluded Deposits
	 
	 	 
	1.1(e)

	 	List of Negative Deposits
	 
	 	 
	1.1(f)

	 	Description of Real Property
	 
	 	 
	1.1(g)

	 	List of Safe Deposit Accounts
	 
	 	 
	2.1

	 	Equipment, Furniture, Fixtures and Inventory
	 
	 	 
	2.1.1

	 	Service Contracts
	 
	 	 
	3.1

	 	Assets and Property Purchase Price Adjustment
	 
	 	 
	3.2

	 	Deposit Premium Allocation

-46-

 

	 	 	 
	3.3

	 	Allocation of Purchase Price
	 
	 	 
	4.8(a)

	 	Permitted Encumbrances
	 
	 	 
	5.11

	 	Labor Matters
	 
	 	 
	6.5

	 	Fee arrangement of Purchaser

8.26 Conversion of Account Information

-47-exv10w1

 

Exhibit 10.1

STOCK PURCHASE AGREEMENT

FOR THE

PURCHASE AND SALE OF

ALL OUTSTANDING SHARES OF

CAPITAL STOCK OF

WATERS MEDICAL SYSTEMS, INC.

DATED AS OF JULY 24, 2007

BETWEEN

ZAREBA SYSTEMS, INC.

AND

HOLDING GC, INC.

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Preamble
	 	 	 	 	6	 
	Recita1s
	 	 	 	 	6	 
	ARTICLE I DEFINITIONS	 	 	6	 
	ARTICLE II PURCHASE AND SALE	 	 	10	 
	Section 2.01.
	 	Purchase and Sale	 	 	10	 
	Section 2.02.
	 	Closing	 	 	10	 
	Section 2.03.
	 	Post-Closing Adjustment	 	 	11	 
	Section 2.04.
	 	Procedure for Post-Closing Adjustment	 	 	11	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER	 	 	12	 
	Section 3.01.
	 	Ownership of Shares	 	 	13	 
	Section 3.02.
	 	Organization and Good Standing	 	 	13	 
	Section 3.03.
	 	Capitalization	 	 	13	 
	Section 3.04.
	 	No Other Agreements to Sell the Shares, Capital Stock or Assets	 	 	13	 
	Section 3.05.
	 	Authorization; Execution and Delivery	 	 	13	 
	Section 3.06.
	 	Governmental Approvals and Filings; Permits And Licenses	 	 	14	 
	Section 3.07.
	 	No Conflict	 	 	14	 
	Section 3.08.
	 	Certificate of Incorporation and Bylaws	 	 	15	 
	Section 3.09.
	 	Financial Statements	 	 	15	 
	Section 3.10.
	 	Interim Operations	 	 	15	 
	Section 3.11.
	 	Subsidiaries	 	 	16	 
	Section 3.12.
	 	Properties	 	 	16	 
	Section 3.13.
	 	Leased Property	 	 	16	 
	Section 3.14.
	 	Proprietary Rights	 	 	17	 
	Section 3.15.
	 	Contracts	 	 	17	 
	Section 3.16.
	 	Insurance	 	 	18	 
	Section 3.17.
	 	Employee Relations; Benefit Plans	 	 	19	 
	Section 3.18.
	 	Legal Proceedings	 	 	23	 
	Section 3.19.
	 	Brokers and Investment Advisers	 	 	23	 
	Section 3.20.
	 	Certain Tax Matters	 	 	23	 
	Section 3.21.
	 	Environmental Matters	 	 	24	 
	Section 3.22.
	 	Transactions with Affiliates	 	 	25	 
	Section 3.23.
	 	No Undisclosed Liabilities	 	 	26	 
	Section 3.24.
	 	Compliance with Laws	 	 	26	 
	Section 3.25.
	 	Title to Assets	 	 	26	 
	Section 3.26.
	 	Substantial Customers and Suppliers	 	 	26	 
	Section 3.27.
	 	Business Accounts	 	 	26	 
	Section 3.28.
	 	Establishment Registration	 	 	26	 
	Section 3.29.
	 	Medical Devices	 	 	27	 
	Section 3.30.
	 	Accounts Receivable	 	 	27	 
	Section 3.31.
	 	Inventory	 	 	28	 
	Section 3.32.
	 	Limitations Applicable to Representations and Warranties	 	 	28	 

2

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER	 	 	28	 
	Section 4.01.
	 	Organization and Good Standing	 	 	28	 
	Section 4.02.
	 	Authorization; Execution and Delivery	 	 	29	 
	Section 4.03.
	 	Consents and Approvals; No Violations	 	 	29	 
	Section 4.04.
	 	Purchase for Investment	 	 	29	 
	Section 4.05.
	 	Government Approvals and Filings	 	 	30	 
	Section 4.06.
	 	Brokers and Investment Advisers	 	 	30	 
	ARTICLE V COVENANTS OF SELLER TO BUYER	 	 	30	 
	Section 5.01.
	 	Regular Course of Business	 	 	30	 
	Section 5.02.
	 	No Default or Violations	 	 	31	 
	Section 5.03.
	 	Insurance	 	 	32	 
	Section 5.04.
	 	Certain Tax Matters	 	 	32	 
	Section 5.05.
	 	Notice of Changes	 	 	33	 
	Section 5.06.
	 	Consents	 	 	33	 
	Section 5.07.
	 	Access to Books and Records	 	 	33	 
	Section 5.08.
	 	No Shop	 	 	33	 
	Section 5.09.
	 	Confidentiality Agreements	 	 	34	 
	Section 5.10.
	 	Waters Employees Compensation	 	 	34	 
	Section 5.11.
	 	Accrued Liabilities	 	 	34	 
	Section 5.12.
	 	Non-Competition	 	 	35	 
	ARTICLE VI COVENANTS OF BUYER TO SELLER	 	 	36	 
	Section 6.01.
	 	Notice of Changes	 	 	36	 
	Section 6.02.
	 	Certain Tax Matters	 	 	36	 
	Section 6.03.
	 	No Continuation of Plans With Respect to Buyer, Waters or Their Respective Employees	 	 	36	 
	Section 6.04.
	 	Planned Dividend	 	 	37	 
	Section 6.05.
	 	Other Assets Used to Conduct Waters’ Business	 	 	37	 
	ARTICLE VII INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES	 	 	37	 
	Section 7.01.
	 	Special Indemnifications by Seller	 	 	38	 
	Section 7.02.
	 	General Indemnification by Seller	 	 	39	 
	Section 7.03.
	 	Procedure	 	 	40	 
	Section 7.04.
	 	Other Principles Applicable to Seller’s Indemnity Obligations 41	 	 	 	 
	ARTICLE VIII COVENANTS OF SELLER AND BUYER	 	 	41	 
	Section 8.01.
	 	Expenses	 	 	41	 
	Section 8.02.
	 	Public Announcements	 	 	41	 
	Section 8.03.
	 	Further Assurances	 	 	42	 
	Section 8.04.
	 	Mutual Assistance	 	 	42	 
	ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF BUYER	 	 	42	 
	Section 9.01.
	 	Representations and Warranties True	 	 	42	 
	Section 9.02.
	 	Performance of Covenants	 	 	43	 
	Section 9.03.
	 	No Restraints	 	 	43	 
	Section 9.04.
	 	Seller's Officer's Certificate	 	 	43	 
	Section 9.05.
	 	Opinion of Counsel	 	 	43	 
	Section 9.06.
	 	No Material Adverse Effect	 	 	43	 
	Section 9.07.
	 	Resignation of Directors and Officers	 	 	43	 
	Section 9.08.
	 	Agreement with Respect to Leased Property	 	 	43	 
	Section 9.09.
	 	Consents	 	 	44	 

3

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	Section 9.10.
	 	Device Listed with FDA	 	 	44	 
	Section 9.11.
	 	Proceedings	 	 	44	 
	Section 9.12.
	 	Domain Names; Patent	 	 	44	 
	ARTICLE X CONDITIONS TO SELLER’S OBLIGATIONS	 	 	44	 
	Section 10.01.
	 	Representations and Warranties True	 	 	45	 
	Section 10.02.
	 	Performance of Covenants	 	 	45	 
	Section 10.03.
	 	No Restraints	 	 	45	 
	Section 10.04.
	 	Buyer Officer's Certificate	 	 	45	 
	Section 10.05.
	 	Buyer Consents	 	 	45	 
	Section 10.06.
	 	Seller Consents	 	 	45	 
	Section 10.07.
	 	Opinion of Counsel	 	 	46	 
	Section 10.08.
	 	No Material Adverse Effect	 	 	46	 
	Section 10.09.
	 	Proceedings	 	 	46	 
	Section 10.10.
	 	Device Listed with FDA	 	 	46	 
	ARTICLE XI TERMINATION	 	 	46	 
	Section 11.01.
	 	Termination and Abandonment	 	 	46	 
	Section 11.02.
	 	Liability Upon Termination	 	 	47	 
	ARTICLE XII MISCELLANEOUS PROVISIONS	 	 	47	 
	Section 12.01.
	 	Amendment and Modification	 	 	47	 
	Section 12.02.
	 	Waiver of Compliance	 	 	47	 
	Section 12.03.
	 	Notices	 	 	47	 
	Section 12.04.
	 	Assignment	 	 	48	 
	Section 12.05.
	 	Governing Law	 	 	48	 
	Section 12.06.
	 	Parties in Interest	 	 	48	 
	Section 12.07.
	 	Counterparts	 	 	49	 
	Section 12.08.
	 	Interpretation	 	 	49	 
	Section 12.09.
	 	Entire Agreement	 	 	49	 
	 
	 	 	 	 	 	 
	Schedules
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibits
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit 3.01.
	 	Wells Fargo Release Letter	 	 	 	 
	 
	 	 	 	 	 	 
	Exhibit 9.04.
	 	Seller's Officer’s Certificate	 	 	 	 
	Exhibit 9.05.
	 	Opinion of Fredrikson & Byron, P. A	 	 	 	 
	Exhibit 9.11.
	 	Seller’s Secretary’s Certificate	 	 	 	 
	Exhibit 10.04.
	 	Buyer’s Officer’s Certificate	 	 	 	 
	Exhibit 10.07.
	 	Opinion of Abitbol & Cherry LLP	 	 	 	 
	Exhibit 10.09.
	 	Certificate of Buyer’s Authorized Officer	 	 	 	 

4

 

STOCK PURCHASE AGREEMENT

     This STOCK PURCHASE AGREEMENT (the “Agreement”), dated as of July 24, 2007, is entered by and
between Zareba Systems, Inc., a Minnesota corporation (the “Seller”), and Holding GC, Inc., a
Delaware corporation (“Buyer”).

WITNESSETH:

     WHEREAS, Seller is the record and beneficial owner of all of the issued and outstanding common
stock, par value $.01 per share (the “Shares”), of Waters Medical Systems, Inc., a Minnesota
corporation (“Waters”), and desires to sell the Shares to Buyer, and Buyer desires to purchase the
Shares from Seller upon the terms and subject to the conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the mutual benefits to be derived from this Agreement and
the representations, warranties, conditions and promises hereinafter contained, the parties hereto
hereby agree as follows:

ARTICLE I DEFINITIONS

The following terms, as used herein, shall have the following meanings:

“Accrued PTO” shall mean all accrued but unpaid hours of paid time off of the Waters Employees up
to and including the Closing Date.

“Adverse Rights” shall mean any and all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, pledges, encumbrances, security interests and adverse claims or
rights of any nature whatsoever.

“Affiliate” shall mean any person referred to under Item 404(a)(1)-(4) of Regulation S-K under the
Securities Act. “Affiliates” shall mean collectively every Affiliate of a party.

“Buyer” shall have the meaning set forth in the Preamble.

“Closing” shall mean the closing of the purchase and sale of the Shares hereunder.

“Closing Date” shall mean the date of the Closing.

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

“Common Stock” shall mean the shares of common stock, par value $.01 per share, of Waters.

“E+E” shall have the meaning set forth in Section 2.04(a) hereof.

5

 

“E+E Audited Balance Sheet” shall have the meaning set forth in Section 2.04(a) hereof.

“Employee Benefit Programs” shall mean together the Employee Pension Benefit Plans and the Employee
Welfare Benefit Plans.

“Employee Pension Benefit Plans” shall have the meaning set forth in Section 3.17(c) hereof.

“Employee Welfare Benefit Plans” shall have the meaning set forth in Section 3.17(c) hereof.

“Environmental Requirements” shall mean all applicable statutes, regulations, rules, ordinances,
codes, licenses, permits, orders, approvals, plans and authorizations of all governmental agencies,
departments, commissions, boards, bureaus or instrumentalities of the United States, states and
political subdivisions thereof relating to the protection of human health or the environment and
all applicable judicial and administrative and regulatory decrees, judgments and orders relating to
the protection of human health or the environment.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder.

“FDA” shall mean the United States Food and Drug Administration.

“Final Closing Balance Sheet” shall have the meaning set forth in section 2.04 hereof.

“Financial Statements” shall mean (i) Waters’ unaudited balance sheet as at June 30, 2006, its
unaudited statement of operations for the twelve-month period ending June 30, 2006, (ii) its
interim unaudited balance sheet as at March 31, 2007, its unaudited statement of operations for the
nine-month period ending on March 31, 2007, (iii) its unaudited balance sheet as at June 30, 2007,
and its unaudited statement of operations for the twelve-month period ending June 30, 2007, and
(iv) its unaudited balance sheet as at July 31, 2007, and its unaudited statement of operations for
the one-month period ending July 31, 2007.

“Hazardous Materials” shall mean any chemical substance: (A) the presence of which requires
investigation or remediation under existing common law or any federal, state or local statute,
regulation, ordinance, order, action or policy; (B) which is or becomes defined as a “hazardous
waste” or “hazardous substance” under any existing federal, state or local statute, regulation or
ordinance or amendments thereto including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act or the Resource Conservation and Recovery Act; (C) the
presence of which on adjacent properties constitutes a trespass by Seller or

6

 

Waters; (D) which contains gasoline, diesel fuel or other petroleum hydrocarbons; or (E) which
contains asbestos.

“Income Taxes” shall mean all federal, state, local and foreign income or gross receipts taxes,
alternative or add-on minimum taxes, together with any interest or penalty thereon.

“Insurance Policies” shall have the meaning set forth in Section 3.16 hereof.

“Intercompany Account” shall have the meaning set forth in Section 6.04 hereof.

“IRS” shall mean the United States Internal Revenue Service.

“Knowledge of Seller”, “knowledge of Waters”, “knowledge of Seller and/or Waters”, “to the
knowledge of Seller”, “to the knowledge of Waters”, “to the knowledge of Seller and/or Waters” or
the like means the actual personal knowledge of Messrs. Gerald W. Grabowski, Jeffrey Mathiesen or
Douglas E. King, but otherwise without inquiry or investigation.

“Leased Property” shall mean the real property located at 2112 15th Street, NW, Rochester,
Minnesota, currently leased by Seller.

“Loss” and “Losses” shall mean, in connection with an indemnity obligation of Seller, all losses,
damages, obligations, liabilities, fees and expenses (including, without limitation, amounts paid
in settlement, reasonable attorneys’ fees and costs of investigation) incurred by Buyer.

“Manufacturing Data” shall mean all designs, models, plans, electric and engineering plans and any
other related data used by Waters to manufacture or assemble a specific product.

“Material Adverse Effect” shall mean a material adverse effect on the business, assets, financial
condition or results of operations of Waters taken as a whole.

“Net Assets” shall mean Waters’ total assets (excluding cash and Intercompany Account) minus
Waters’ total current liabilities.

“Other Taxes” shall mean all taxes, charges, fees, customs duties, levies or other assessments
including, without limitation, property, transfer, occupation, service, license, payroll,
franchise, excise, withholding, ad valorem, severance, stamp, premium, windfall profit, employment
or other tax, governmental fee or like assessment or charge of any kind whatsoever, together with
any interest or penalty, other than Income Taxes and Sales and Use Taxes.

7

 

“Patent” shall mean the United States patent No. 5,963,335 filed with the United States Patent and
Trademark Office on June 24, 1998.

“Planned Dividend” shall have the meaning set forth in Section 6.04 hereof.

“Private Consents” shall have the meaning set forth in Section 3.07 hereof.

“Proprietary Rights” shall have the meaning set forth in Section 3.14 hereof.

“Purchase Price” shall have the meaning set forth in Section 2.01 hereof.

“Sales and Use Taxes” shall mean all sales and use taxes, together with any interest or penalty
thereon.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Seller” shall have the meaning set forth in the Preamble.

“Seller’s Closing Balance Sheet” shall mean have the meaning set forth in Section 2.04(a) hereof.

“Shares” shall have the meaning set forth in the first recital hereof.

“Special Environment Indemnity” shall have the meaning set forth in Section 7.01(d) hereof.

“Special ERISA Indemnity” shall have the meaning set forth in Section 7.01(b) hereof.

“Special Individual Threshold” shall mean with respect to the Special ERISA Indemnity and the
Special Environment Indemnity an individual Loss in an amount less than $5,000.00.

“Special Stock and Assets Indemnity” shall have the meaning set forth in Section 7.01(c) hereof.

“Special Tax Indemnity” shall have the meaning set forth in Section 7.01(a) hereof.

“Tail Insurance” shall have the meaning set forth in Section 5.03 hereof.

“Taxes” shall mean, collectively, Income Taxes, Sales and Use Taxes and Other Taxes.

8

 

“Tax Return” shall include any report, statement, form, return or other document or information
required to be supplied to a taxing authority in connection with Taxes.

“Third Party Claim” shall have the meaning set forth in Section 7.03(b) hereof.

“Waters” shall have the meaning set forth in the first recital hereof.

“Waters Employees” shall mean the employees listed on Schedule 1 only.

“Waters Employees Compensation Liabilities” shall mean the value of all Accrued PTO of Waters
Employees who accept employment by Buyer or Waters after the Closing Date.

“Wells Fargo” shall mean Wells Fargo Bank, National Association.

“Wells Fargo Release Letter” shall mean the letter of Wells Fargo, dated July 22, 2007, and agreed
to and executed by Seller, Zareba Security, Inc., Buyer and Buyer’s counsel.

ARTICLE II PURCHASE AND SALE

Section 2.01. Purchase and Sale.

     Subject to the terms and conditions of this Agreement, at the Closing, Seller shall sell,
transfer and deliver to Buyer, and Buyer shall purchase from Seller, the Shares free and clear of
any Adverse Rights, representing 100% of the issued and outstanding shares of capital stock of
Waters. The purchase price for the Shares shall be US$5,000,000 (the “Purchase Price”).

Section 2.02. Closing.

     (a) The Closing hereunder shall take place at the offices of Abitbol & Cherry LLP, 545 Fifth
Avenue, Suite 640, New York, New York on August 1, 2007, provided, that the conditions set
forth in Articles IX and X (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the fulfillment or waiver of those conditions as provided herein) shall
have been satisfied, or at such other time (not later than August 3, 2007) and place as Buyer and
Seller may agree.

     (b) At the Closing, Seller shall deliver to Buyer, free and clear of any Adverse Rights,
certificate #01 for the Shares, in genuine and unaltered form, duly endorsed or accompanied by
stock powers duly endorsed in blank, with any required transfer stamps affixed thereto.

     (c) The Purchase Price shall be paid, at the Closing, by Buyer to Seller in immediately
available funds by wire transfer in United

9

 

States dollars to an account designated by Seller by notice to Buyer not later than two business
days prior to the Closing Date.

     (d) At the Closing, Seller shall also deliver to Buyer the opinion, certificates, contracts,
documents and other instruments to be delivered under Article IX.

     (e) At the closing, Buyer shall deliver to Seller the documents to be delivered under Article
X, if any.

Section 2.03. Post-Closing Adjustment. Subsequent to the Closing Date and within
ten business days of Buyer’s and Seller’s receipt of the E+E Audited Balance Sheet or the Final
Closing Balance Sheet, as the case may be, Seller shall pay to Buyer a sum equal to the difference,
if any, between (i) $601,000.00 and (ii) the Net Assets set forth in Seller’s Closing Balance Sheet
or the Final Closing Balance Sheet, as the case may be; it being understood that no such payment
shall be due if the value of the Net Assets in either said Closing Balance Sheet is equal to or
greater than $575,000.00. This post-closing adjustment determined pursuant to this Section 2.03 and
Section 2.04 hereof shall be Buyer’s sole remedy respecting any matter relevant to the value of the
Net Assets.

Section 2.04. Procedure for Post-Closing Adjustment.

     (a) As promptly as practicable after the Closing Date and in no event later than September 15,
2007, Seller shall deliver to Buyer Waters’ unaudited balance sheet as at July 31, 2007 (the
“Seller’s Closing Balance Sheet”) and a certificate signed by Seller’s President setting forth
Seller’s calculation of the Net Assets based on such Seller’s Closing Balance Sheet. The Seller’s
Closing Balance Sheet shall (i) fairly present Waters’ financial position as at the close of
business on July 31, 2007, and (ii) have been prepared on a consistent basis with, and using
assumptions and methodologies consistent with those used in, Waters’ previous Financial Statements,
as the same were tested and concurred with by Esposito + Emr, Inc., Buyer’s independent certified
accountants (“E+E”) in connection with their audit of Waters’ balance sheet as at March 31, 2007
(the “E+E Audited Balance Sheet”).

     (b) Upon delivery of Seller’s Closing Balance Sheet, Seller shall permit E+E to review
Seller’s Closing Balance Sheet and shall make available to them all work papers, memoranda,
schedules, other documents and information used by Seller in preparing such Seller’s Closing
Balance Sheet. E+E shall verify that Seller’s Closing Balance Sheet was prepared on a basis
consistent with the E+E Audited Balance Sheet and using assumptions and methodologies consistent
with those used by Waters and tested and concurred with by E+E in the preparation of the E+E
Audited Balance Sheet. Notwithstanding the foregoing, if a line item appears on the Seller’s
Closing Balance Sheet for a liability, which did not exist

10

 

in the E+E Audited Balance Sheet, E+E shall be authorized to perform an audit with respect to
such new liability.

     (c) Buyer shall notify Seller if, pursuant to such review or audit, as the case may be, E+E
shall have determined that the Seller’s Closing Balance Sheet (A) was not prepared in accordance
with the parameters set forth in the second sentence of paragraph (b) above and (B) Waters’
departure from such parameters results in an overstatement of the Net Assets on the Seller’s
Closing Balance Sheet to an amount greater than $575,000.00 when they otherwise would have been
less than $575,000.00. If Seller does not agree with E+E’s determination and Buyer and Seller
cannot agree on a value of the Net Assets within 30 days of Buyer’s notification, Buyer shall
appoint a third independent certified accountants firm, reasonably acceptable by Seller, to make
its own determination whether, based on the documentation provided to E+E (and any other
information provided to E+E), Seller’s Closing Balance Sheet was prepared on a basis consistent
with the E+E Audited Balance Sheet and using assumptions and methodologies consistent with those
used by Waters and tested and concurred with by E+E in the preparation of the E+E Audited Balance
Sheet. Such determination shall be final (the “Final Closing Balance Sheet”) and binding upon both
parties. Buyer shall pay the fees and expenses of the third independent certified accountants
firm.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER

For the purpose of inducing Buyer to purchase the Shares and pay the Purchase Price, Seller hereby
represents and warrants to Buyer as follows:

Section 3.01. Ownership of Shares. Seller is the sole owner of the Shares. Seller
has good and marketable title to the Shares, free and clear of any and all Adverse Rights, except
for the lien of Wells Fargo, which lien shall be released on the Closing Date pursuant to the Wells
Fargo Release Letter. Upon consummation of the transactions contemplated by this Agreement, Buyer
will acquire good and marketable title to the Shares, free and clear of any and all Adverse Rights.

Section 3.02. Organization and Good Standing. (a) Each of Seller and Waters is a
corporation duly organized, validly existing and in good standing under the laws of the State of
Minnesota. Seller has all requisite corporate power and authority to own and hold the Shares.
Waters has all requisite corporate power and authority to own, lease and operate the assets it
purports to own, lease or operate and to carry on its business as it is now being conducted.

     (b) Waters is qualified to do business in the State of Minnesota and every other jurisdiction
in which the nature of business transacted by it or the character of the assets owned or leased by
it requires such licensing or qualification, except where the failure to be so licensed or
qualified would not have a Material Adverse Effect.

11

 

Section 3.03. Capitalization. Waters’ authorized capital stock consists of
50,000,000 shares of Common Stock of which 1,000 shares are issued and outstanding and are owned by
Seller. All of the Shares have been duly authorized and validly issued, and are fully paid and
non-assessable. There are no outstanding securities convertible into or exchangeable for, or any
outstanding warrants, calls, options or other agreements or commitments for the issuance, sale or
delivery of, any shares of Waters’ capital stock or any securities so convertible or exchangeable.

Section 3.04. No Other Agreements to Sell the Shares, Capital Stock or Assets.
Neither Seller or Waters is a party to any legal obligation or arrangement, absolute or contingent,
to any other person or entity to sell any of Waters’ assets, shares of capital stock or the Shares
or any part thereof, other than sales of inventory in the ordinary course of Waters’ business, or
to sell or place any restriction on the transfer of any of the Shares, or to effect any merger,
consolidation or other reorganization of Waters or to enter into any agreement with respect
thereto.

Section 3.05. Authorization, Execution and Delivery. The execution, delivery and
performance by Seller of this Agreement and the consummation of the transactions contemplated
hereby are within Seller’s corporate powers and have been duly authorized by all necessary
corporate action on Seller’s part. No approval of Seller’s shareholders is required to consummate
the transactions contemplated hereby and, with respect to Seller, to perform its obligations
hereunder. This Agreement constitutes a legal, valid and binding obligation of Seller, enforceable
against it in accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent transfer or other similar laws affecting the enforcement of
creditors’ rights in general or by general principles of equity.

Section 3.06. Governmental Approvals and Filings; Permits and Licenses. (a) Except
as set forth in Schedule 3.06 (a), no consent or approval of, authorization or permit from,
declaration or notification to, or filing with, any governmental or regulatory authority or agency
is required in order (i) to permit Seller to execute and deliver this Agreement, to perform its
obligations under this Agreement and to consummate the transactions contemplated hereby, (ii) to
prevent the termination of any right, privilege, license or agreement of Waters, or to prevent any
loss to Waters, by reason of the Closing of the transactions contemplated by this Agreement or
(iii) to allow Waters to conduct its business following the Closing as currently conducted.

     (b) Schedule 3.6 (b) sets forth all of the Federal, state, and local or other governmental
permits, licenses and similar authorizations given or granted to Seller and/or Waters, in effect on
the date hereof and required for Waters to operate its business as currently conducted. With
respect to such permits, licenses and similar authorizations required to be assigned to Buyer,
Seller is not aware of any reason why Seller should not be able to obtain any

12

 

required consent, approval, authorization or permit for assignment to Buyer. Seller or Waters has
complied in all material respects with all conditions or requirements imposed by such permits and
licenses, and neither Seller or Waters has received any notice of cancellation or termination of,
nor, to the knowledge of Seller, no governmental or regulatory authority or agency intends to
cancel or terminate, any of such permits and licenses.

Section 3.07. No Conflict. Except for the obtaining of such consents and waivers as
are specifically contemplated by this Agreement or are listed and described in Schedule 3.07 to
this Agreement (the “Private Consents”), none of the execution, delivery or performance of this
Agreement by Seller, or the consummation by Seller of the transactions contemplated hereby does or
will (a) conflict with or result in a breach of any of the terms, conditions or provisions of the
Certificate of Incorporation or Bylaws of Seller or Waters; (b) conflict with, result in a breach,
violation of, or default (or an event which with notice or lapse of time or both would become a
default) under, or give any third party any right to terminate, modify, cancel or accelerate the
performance required by, any of the terms, conditions or provisions of, or require the consent of
any third party to, any note, bond, mortgage, indenture, deed of trust, license, permit, loan
agreement, lease, sublease or other material agreement or obligation to which Seller or Waters is a
party, or by which any of them is bound or to which any of their assets may be subject; (c) give
rise to a declaration or imposition of any Adverse Rights of any nature whatsoever upon the Shares
or any Adverse Rights upon any of the assets of Waters; (d) violate or conflict with any writ,
injunction, order, arbitration award, judgment or decree applicable to Seller or Waters or to which
any of their assets is subject; (e) violate or conflict with any rule or regulation applicable to
Seller or Waters; or (f) have an adverse effect on any of the permits, licenses or other
authorizations listed on Schedule 3.6(b).

Section 3.08. Certificate of Incorporation and Bylaws. Seller has delivered to
Buyer copies of Waters’ Certificate of Incorporation and Bylaws, including all amendments thereto,
which are complete and correct copies of such instruments as presently in effect.

Section 3.09. Financial Statements. Seller has heretofore furnished Buyer with the
Financial Statements. The Financial Statements:

     (a) are accurate, complete and have been prepared in accordance with the books and records of
Waters and have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved;

     (b) the balance sheets contained in the Financial Statements present fairly the financial
position of Waters as of the respective dates thereof; and

13

 

     (c) the statements of operations contained in the Financial Statements present fairly the
results of operations of Waters for the respective periods indicated therein.

Section 3.10. Interim Operations. Except as set forth in Schedule 3.10, since March
31, 2007, Waters’ business has been conducted in the ordinary course in a manner consistent with
past practice and there has not been: (a) to the knowledge of Seller, any event that constitutes or
is reasonably likely to result in a Material Adverse Effect; (b) any declaration or payment of any
dividends by Waters except the Planned Dividend; (c) any sale or transfer by Waters of any assets,
except sales of inventory in the ordinary course of business and transactions reflected in the
Intercompany Account, or any cancellation of any debts or c1aims; (d) any mortgage, pledge or
subjection to any lien, charge or encumbrance of any kind on any assets of Waters; (e) any material
modification, amendment or termination of any material contract or agreement to which Waters is a
party; (f) any increase in, or commitment to increase, the compensation payable or to become
payable to any Waters’ Employee or any officer, director, or other agent of Waters or any bonus
paid to or similar arrangement made with any such person; or (g) any material alteration in the
accounting practices or principles applicable to the Financial Statements. The elimination of the
Intercompany Account and the payment of the Planned Dividend shall not create any obligation or
liability of any nature whatsoever on Buyer.

Section 3.11. Subsidiaries. Waters does not have any subsidiaries.

Section 3.12. Properties. Waters does not own any real property.

Section 3.13. Leased Properties. (a) Waters does not formally lease any real
property, but Waters uses with permission of Seller the Leased Property and Waters’ books and
records reflect that Waters bears the full cost of the lease respecting the Leased Property with
the same effect as if Waters was the lessee of the Leased Property.

     (b) The Leased Property constitutes all the real estate necessary for the operation of Waters’
business as presently conducted; provided, however, that Buyer understands that
certain administrative functions are provided by Seller from Seller’s principal executive office.
Seller has a valid leasehold interest in the Leased Property. A true, complete and correct copy of
the lease agreement currently understood by the landlord, Seller and Waters to be in effect with
respect to the Leased Property has been delivered to Buyer. The lease with respect to the Leased
Property is in full force and effect and is valid and enforceable in accordance with its terms
against the parties thereto, except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent transfer or other similar laws affecting the enforcement of creditors’
rights in general or by general principles of equity. All payment for rent and additional rent due
under such lease has been duly and timely paid in accordance with the terms of such

14

 

lease and all other material obligations of Seller thereunder have been satisfied in accordance
with the terms thereof. Neither Seller or Waters is in default with respect to any material term
or condition of such lease, nor, to the knowledge of Seller, has any event occurred which through
the passage of time or the giving of notice, or both, would constitute a default thereunder by
Seller or Waters or would cause the acceleration of any obligation of Seller or Waters with respect
to the Leased Property, affect or result in the questioning of the rights of Seller or Waters to
the continued possession of the Leased Property or create a lien or encumbrance upon Seller’s
and/or Waters’ leasehold interest in the Leased Property. Seller shall cooperate with Buyer to (i)
obtain from the Leased Property’s landlord consent to the assignment of the lease to Buyer or (ii)
consent to a sublease of the Leased Property from Seller to Buyer.

     (c) Neither Seller or Waters has received any written notice that Seller or Waters is in
violation of any building code, zoning ordinance or similar law or regulation applicable to the
Leased Property, and, to the knowledge of Seller, there is no present plan, study or effort by any
governmental authority or agency or any private party or entity which in any way affects or would
affect the continuation of Waters’ current use of and activities on the Leased Property.

     (d) The Leased Property is in good condition, ordinary wear and tear excepted, and has been
maintained by Seller or Waters materially in accordance with the terms and conditions of the lease
therefor. To Seller’s knowledge, no repair, whether structural or other, needs to be performed to
permit Waters lawfully to conduct its business in the Leased Property.

Section 3.14. Proprietary Rights. Set forth in Schedule 3.14 is a list and brief
description or identification of all Proprietary Rights of Waters. Except as set forth in Schedule
3.14, (a) Waters owns or possesses adequate licenses or other valid rights to use all (i) United
States patents, trademarks, trade names, trade secrets, copyrights, service marks and applications
therefor, and domain names and (ii) all computer and electronic processing programs and software
which are currently used by Waters in its business (the assets described in clauses (i) and (ii)
are hereinafter referred to as the “Proprietary Rights”); (b) the validity of the Proprietary
Rights and of Waters’ title thereto (x) is not being questioned in any litigation or dispute to
which Seller, Waters or any subsidiary of Seller is a party, nor, to the knowledge of Seller, is
any such litigation or dispute threatened, and (ii) has not been questioned in any litigation or
dispute to which Seller, Waters or any such subsidiary was a party. The consummation on the
Closing Date by Seller of the transactions contemplated hereby will not result in the loss by
Waters or impairment in Waters’ hands of any of the rights referred in clause (i) above.

15

 

Section 3.15. Contracts. (a) Schedule 3.15 sets forth a true and correct list of
all material written contracts to which Waters is a party as of the date hereof, excluding all
contracts respecting the sale of products. Seller has delivered or made available to Buyer true
and complete copies of each contract listed in Schedule 3.15. All contracts listed in such
Schedule 3.15 are in full force and effect and are valid and binding in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer
or other similar laws affecting the enforcement of creditors’ rights in general or by general
principles of equity.

     (b) Except as set forth in one of the contracts listed in Schedule 3.15, neither Waters or
Seller for the account of Waters is a party to any (w) contracts for the purchase of materials,
commodities, supplies, other personal property or real property, the receipt of services or the
sale of products each in excess of $5,000 other than in the ordinary course of business; (x) joint
venture or similar contract or agreement; (y) mortgage, indenture, security agreement, note, loan
agreement, guarantee or other agreement or instrument involving Waters relating to indebtedness
other than the Credit and Security Agreement with Wells Fargo, dated as of September 7, 2004, and
any amendment thereto (as amended, the “Credit Agreement”), which Credit Agreement upon the consent
of Wells Fargo shall not be applicable after the Closing Date in any respect to Waters, the Shares
and Waters’ assets; or (z) other material agreements not made in the ordinary course of business.

     (c) Waters has in all material respects performed all obligations to be performed by it to
date, and, to the knowledge of Seller, no event has occurred which constitutes a violation or
breach of, or a default (or event which with the passage of time or the giving of notice or both
would constitute a default) by Waters, under any such contracts. To the knowledge of Seller, no
event has occurred which constitutes a violation or breach of, or a default (or event which with
the passage of time or the giving of notice or both would constitute a default) under any such
contract by any third party thereto, and, to the knowledge of Seller, each such third party has in
all material respects performed all material obligations required to be performed by such third
party to date thereunder.

     (d) Waters has good and marketable title or otherwise has the right to use each item of
personal property (including customer lists) now used by it in the operation of its business or the
use of which is necessary for the performance of any material contract to which it is a party.

Section 3.16. Insurance. Schedule 3.16 contains a true and complete list of all
current insurance policies pursuant to which Waters or its assets are and will be insured through
the Closing Date, specifying the insurer, amount of coverage, and type of insurance (the “Insurance
Policies”). The Insurance Policies are outstanding

16

 

and in force, and all premiums due under such Policies have been paid. Buyer acknowledges that
none of the Insurance Policies will be in force with respect to Waters, its business, assets or
operations upon consummation of the transactions contemplated hereby.

Section 3.17. Employee Relations; Benefit Plans. (a) Except as set forth in
Schedule 3.17(a), (i) with respect to the Waters Employees, Seller and Waters are in material
compliance with all applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours; (ii) with respect to the Waters Employees, neither
Seller or Waters has received in the six (6) months prior to the date of this Agreement a
complaint, demand letter or charge issued by a federal, state or local agency which alleges a
violation by Seller or Waters of any federal, state or local civil rights laws, or any federal,
state or local law or regulation respecting employment and employment practices, terms and
conditions of employment, wages and hours, including the Title VII of the Civil Rights Act of 1964,
the Civil Rights Act of 1991, the Americans with Disabilities Act, the Age Discrimination in
Employment Act, as amended, the Employee Retirement Income Security Act of 1974, Fair Labor
Standards Act, as amended, the National Labor Relations Act, as amended, the Occupational Safety
and Health Act, as amended, or the Vocational Rehabilitation Act of 1973, as amended; (iii) no
collective bargaining agreement covers any of the Waters Employees in connection with their
employment therewith, nor is any being negotiated by Seller or Waters, nor with respect to the
Waters Employees are there any organizational campaigns, pending petitions or, to the knowledge of
Seller, activities seeking recognition of a collective bargaining unit; (iv) with respect to the
Waters Employees, there is no unfair labor practice complaint against Seller or Waters pending
before the National Labor Relations Board or any comparable state, local or foreign agency; and (v)
with respect to the Waters Employees, there is no labor strike, dispute, slowdown, stoppage or
organizational effort pending or, to the knowledge of Seller, any labor strike, dispute, slowdown,
stoppage or organizational effort threatened against Seller or Waters.

     (b) Schedule 3.17(b) contains a true and complete list of all written employment contracts
(including severance arrangements or any other arrangements under which the Waters Employees will
be entitled to receive payment, or accelerate any payment due, from Seller or Waters as a result of
the transactions contemplated by this Agreement). None of the Waters Employees are employees of
Waters, but are employed by Seller. The Waters Employees are all of the employees of Seller whose
duties principally involve the Waters business. Except as set forth in such Schedule 3.17(b), to
Seller’s knowledge, no such employee intends to terminate his or her employment relationship with
Waters.

     (c) Schedule 3.17(c) contains a true and complete list of all “employee pension benefit
plans”, as defined in Section 3(2) of ERISA which are established, maintained or contributed to by
Seller

17

 

or Waters with respect to any of the Waters Employees (the “Employee Pension Benefit Plans”), all
“employee welfare benefit plans”, as defined in Section 3(1) of ERISA, which are established,
maintained or contributed to by Seller or Waters with respect to the Waters Employees (the
“Employee Welfare Benefit Plans”), and each employment, severance or other similar contract,
arrangement or policy and each plan or arrangement (written or oral) providing for insurance
coverage (including any self-insured arrangements), workers’ compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation or other forms of
incentive compensation, post-retirement insurance, compensation or benefit which are established,
maintained or contributed to by Seller or Waters with respect to the Waters Employees. Except as
set forth in Schedule 3.17(c), none of the Employee Benefit Programs to constitutes a
“multiemployer plan”, as defined in Section 3(37) of ERISA (a “Multiemployer Plan”). There is no
liability, direct or indirect, fixed or contingent, against Waters for any Employee Benefit Program
with respect to any “leased employees” as defined in Section 414(n) of the Code. Each Employee
Benefit Program is correctly categorized within Schedule 3.17(c) as an Employee Pension Benefit
Plan or an Employee Welfare Benefit Plan, as appropriate. With respect to each Employee Benefit
Program, to the extent applicable to such program, Schedule 3.17(c) contains a true and complete
list of (and Seller has, or before the Closing will have, delivered to Buyer true and materially
complete copies of):

     (i) the most recent IRS determination letter;

     (ii) the most recent Annual Report (Form 5500 Series) and accompanying schedules, as filed
pursuant to applicable law;

     (iii) the Summary Plan Description (as currently in effect) distributed to the Waters
Employees;

     (iv) the most recent trustee reports, financial statements, actuarial reports or audit reports
prepared in connection therewith;

     (v) material written communications distributed to the Waters Employees during the six months
prior to the date of this Agreement that modify the summary plan description;

     (vi) written interpretations of such Employee Benefit Programs prepared by or at the request
of Seller or Waters; and

     (vii) the most recent documents (including plan, related trust and insurance contracts and any
amendment thereto) governing the Employee Benefit Programs.

     (d) Each of the Employee Benefit Programs materially complies currently, and has complied in
the past, both as to form and operation, with the terms of such plans and with the applicable
provisions of ERISA, the Code and other applicable federal laws. Except as otherwise set forth in
Schedule 3.17(d), all necessary governmental approvals for the Employee Benefit Programs have been
obtained and a favorable determination as to the qualification under Section 401(a) of the Code, as
amended, of each of the Employee Pension Benefit Plans and each amendment thereto has been made by
the IRS, and a recognition of exemption from federal income

18

 

taxation under Section 501(a) of the Code of each of the funded Employee Welfare Benefit Plans has
been made by the IRS, and, to the knowledge of Seller, nothing has occurred since the date of such
determination or recognition letter that would adversely affect such qualification or exemption.

     (e) There are no civil or criminal actions, suits or claims pending or, to the knowledge of
Seller, threatened or which, to the knowledge of Seller, could reasonably be expected to be
asserted against Waters in connection with any of the Employee Benefit Programs or against any
administrator, party in interest or fiduciary thereof. To the knowledge of Seller, none of the
Employee Pension Benefit Plans or Employee Welfare Benefit Plans or any fiduciary thereof has been
the direct or indirect subject of an audit investigation or examination by any governmental or
quasi-governmental agency.

     (f) To the knowledge of Seller, no “accumulated funding deficiency” (as defined in
Section 412 of the Code) currently exists with respect to any Employee Pension Benefit Plan.

     (g) To the knowledge of Seller, no “reportable event” (as defined in Section 4043{b) of ERISA)
has occurred or is continuing with respect to any Employee Pension Benefit Plan.

     (h) To the knowledge of Seller, no “prohibited transaction” (within the meaning of Section 406
of ERISA or Section 4975 of the Code) has occurred with respect to any Employee Pension Benefit
Plan or Employee Welfare Benefit Plan.

     (i) With respect to the Waters Employees, neither Seller nor Waters has (A) ceased operations
at a facility so as to become subject to the provisions of Section 4068 (f) of ERISA; (B) withdrawn
as a substantial employer so as to become subject to the provisions of Section 4063 of ERISA; (C)
ceased making contributions on or before the date of this Agreement to any Employee Pension Benefit
Plan subject to the provisions of Section 4064(a) of ERISA to which such entity made (or was
obligated to make) contributions during any of the five years prior to the date of this Agreement;
(D) incurred or caused to occur a complete withdrawal (within the meaning of Section 4203 of ERISA)
or a partial withdrawal (within the meaning of Section 4205 of ERISA) from a Multiemployer Plan so
as to incur withdrawal liability under Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under Section 4207 or 4208 of ERISA); or (E) been a party to
any transaction or agreement with respect to which the provisions of Section 4204 of ERISA were
applicable.

     (j) To the knowledge of Seller, no notice of intent to terminate an Employee Pension Benefit
Plan has been filed nor has any such Plan been terminated pursuant to the provisions of Section
4041 of ERISA.

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     (k) The Pension Benefit Guaranty Corporation (the “PBGC”) has not instituted proceedings to
terminate (or appoint a trustee to administer) an Employee Pension Benefit Plan and, to the
knowledge of Seller, no event has occurred or condition exists which might constitute grounds under
the provisions of Section 4042 of ERISA for the termination of (or the appointment of a trustee to
administer) any such Plan.

     (l) To the knowledge of Seller, nothing done or omitted to be done and no transaction or
holding of any asset under or in connection with any Employee Benefit Program has or will make
Waters, or any officer or director of Waters, subject to any liability under Title I of ERISA or
liable for any tax pursuant to Section 4972 or Sections 4975 through 4980, inclusive, of the Code.

     (m) Except as identified in Schedule 3.17(m), or as otherwise mandated by law or any Employee
Pension Benefit Plan, no Employee Benefit Program provides post-retirement health, medical or death
benefits for retired employees of Waters. No action has been taken by Waters that would prevent
Buyer from amending or terminating any Employee Benefit Program in respect of any active Waters
Employee, other than any limitations imposed under the terms of a collective bargaining agreement.

     (n) Except as disclosed on Schedule 3.17(n), to the knowledge of Seller, all Employee Benefit
Programs established, maintained or contributed to by Seller or Waters with respect to the Waters
Employees have been maintained, in form and in operation, in compliance with the continuation
coverage provisions set forth in Sections 162(k) and 4980B of the Code and any applicable state
laws or regulations.

Section 3.18. Legal Proceedings. Except as set forth on Schedule 3.18, neither
Seller nor Waters is the subject of or a party to, or has received any written notice of, any legal
action, suit, arbitration or other proceeding or investigation (including any such legal action,
suit, arbitration or other proceeding or investigation relating to products liability claims) which
is pending or threatened before any court or administrative agency, and there are no outstanding
orders, judgments, consent decrees, stipulations or similar obligations by or with any court,
administrative agency or other governmental authority binding on Waters. Except as set forth on
such Schedule 3.18, none of Waters, nor any of its officers, directors or employees has been
permanently or temporarily enjoined by any order, judgment or decree of any court or any
governmental authority from engaging in or continuing any conduct or practice in connection with
Waters’ business.

Section 3.19. Brokers and Investment Advisers. No broker, finder or investment
adviser has acted directly or indirectly as such for, or is entitled to any compensation from,
Seller, Waters or any subsidiary of Seller in connection with this Agreement or the transactions
contemplated hereby.

20

 

Section 3.20. Certain Tax Matters. (a) (i) Each of Seller and Waters (or Seller on
behalf of Waters) has timely filed or will timely file prior to the Closing Date all Tax Returns
required to be filed prior to the Closing Date; (ii) the Tax Returns of Waters which were or will
be due prior to the Closing Date are, to the extent already filed, and if not yet filed, will be,
accurate and complete for all taxable periods ending on or before the Closing Date and accurately
set forth or will accurately set forth all items to the extent required by the Code or treasury
regulations thereunder or by applicable state, local or foreign tax laws, regulations or rules to
be reflected or included in such returns; (iii)(A) Seller, Waters and any affiliates of Seller (as
defined in Section 1504(a) of the Code), have timely paid, will timely pay or timely accrue on the
books and records of Waters prior to the Closing Date all Taxes (other than Income Taxes) payable
for all periods ending on or before the Closing Date, (B) for all periods beginning before and
ending after the Closing Date, all Taxes payable (or that will become payable) by Waters
attributable to the portion of the period ending as of the Closing Date have been timely paid or
will be timely paid by Seller or, other than Income Taxes, will be timely accrued on the books and
records of Waters prior to the Closing, and (C) the Tax Returns of Seller and its affiliates (as
defined in Section 1504(a) of the Code) which were due prior to the Closing Date are accurate and
complete for all relevant taxable periods and accurately set forth all items to the extent required
by the Code or treasury regulations thereunder or by applicable state, local or foreign tax laws,
regulations or rules to be reflected or included in such Tax Returns; (iv) there are no liens for
Taxes upon any assets of Waters; and (v) there is no action, suit, proceeding, investigation, audit
or claim now proposed or pending against or with respect to Seller and its Affiliates in respect of
any Tax for which Waters is liable, except as provided in Schedule 3.20, and any such action, suit,
proceeding, investigation, audit or claim is being contested in good faith through appropriate
proceedings.

     (b) There are no outstanding agreements or waivers extending the statutory period of
limitation applicable to any Tax Returns required to be filed with respect to Waters and neither
Seller nor Waters has requested any extension of time within which to file any Tax Return.

Section 3.21. Environmental Matters. Except as set forth on Schedule 3.21,:

     (a) neither Seller or Waters has engaged in or permitted any operations or activities upon, or
any use or occupancy of the Leased Property, or any portion thereof, for the purpose of or in any
way involving the handling, manufacture, treatment, storage, use, generation, release, discharge,
refining, dumping or disposal of any Hazardous Materials (whether legal or illegal, accidental or
intentional) on, under, in or about the Leased Property, or transported any Hazardous Materials to,
from or across the Leased Property, nor are any Hazardous Materials presently constructed,

21

 

deposited, stored, or otherwise located on, under, in or about the Leased Property, nor, to the
knowledge of Seller, have any Hazardous Materials migrated from the Leased Property upon or beneath
other properties, nor, to the knowledge of Seller, have any Hazardous Materials migrated or
threatened to migrate from other properties upon, about or beneath the Leased Property;

     (b) neither Seller nor Waters has constructed, placed, deposited, stored, disposed of or
located on the Leased Property any asbestos in any form which has become or threatens to become
friable, and, to the knowledge of Seller, no third party has constructed, placed, deposited,
stored, disposed of or located on the Leased Property any asbestos in any form which has become or
threatens to become friable;

     (c) to the knowledge of Seller, no underground treatment or storage tanks, sumps, or water,
gas or oil wells or piping appurtenant to any of the above are or have ever been located on the
Leased Property;

     (d) neither Seller or Waters has at or from the Leased Property engaged in any release,
discharge, dumping or disposal of polychlorinated biphenyls (PCBs) nor are there any transformers,
capacitors, ballasts or other equipment which contains dielectric fluid containing PCBs at levels
in excess of fifty parts per million (50 ppm);

     (e) neither Seller nor Waters has constructed, placed, deposited, stored, disposed of or
located on the Leased Property any insulating material containing urea formaldehyde and, to the
knowledge of Seller, no third party has constructed, placed, deposited, stored, disposed of or
located on the Leased Property any insulating material containing urea formaldehyde; and

     (f) neither Seller or Waters has received notice or other communication concerning any alleged
violation of Environmental Requirements respecting the Leased Property or Waters business, whether
or not corrected to the satisfaction of the appropriate authority, nor notice or other
communication concerning alleged liability for environmental damages in connection with the Leased
Property, and there exists no writ, injunction, decree, order or judgment outstanding, nor any
lawsuit, claim, proceeding, citation, directive, summons or investigation, pending or, to the
knowledge of Seller, threatened, relating to the ownership, use, maintenance or operation of the
Leased Property by Seller or Waters, or from alleged violation of any Environmental Requirements
applicable to the Lease Property or Waters business, or from the suspected presence of Hazardous
Material on the Leased Property.

Section 3.22. Transactions with Affiliates. (a) Except as set forth on Schedule
3.22, Waters is not indebted, directly or indirectly, to any Affiliate, other than for salaries for
services rendered or reimbursable business expenses incurred in the ordinary course of business,
nor is any such Affiliate (or member of the immediate

22

 

family of such Affiliate) indebted to Waters, except for advances made to Waters Employees in the
ordinary course of business in order to meet reimbursable business expenses and transactions
reflected in the Intercompany Account in the ordinary course of business.

     (b) Except as set forth on Schedule 3.22, Waters is not a party to any contract, lease,
agreement or other arrangement with any Affiliate (or any member of the immediate family of any
Affiliate).

Section 3.23. No Undisclosed Liabilities. Waters does not have any indebtedness for
money borrowed. Waters has not incurred any undisclosed liabilities or obligations of any nature,
other than in the ordinary course of business, whether absolute, accrued, contingent or otherwise,
and whether due or to become due which have not been disclosed to Buyer in this Agreement, the
Financial Statements or the Schedules attached hereto and which remain undischarged.

Section 3.24. Compliance with Laws. Except as set forth on Schedule 3.24, to the
knowledge of Seller, Waters is not in violation of or in default under, and, to the knowledge of
Seller, there does not exist any basis for any claim of violation of or default under, any
judgment, decree, or order, or any law, rule or regulation, including, without limitation, those
relating to insurance, usury, health, fire and safety (including the Occupational Health and Safety
Act), environmental protection, waste disposal and pollution control.

Section 3.25. Title to Assets. Waters has and, upon consummation of the
transactions contemplated hereby, Waters shall continue to have, good and marketable title to all
of Waters’ assets appearing in the Financial Statements or Waters’ other books and records free and
clear of any Adverse Rights.

Section 3.26. Substantial Customers and Suppliers. Schedule 3.26(a) hereto lists
Waters’ ten largest customers, on the basis of revenues for goods sold for the last two
twelve-month periods. Schedule 3.26(b) hereto lists Waters’ ten largest suppliers, on the basis of
cost of goods or services purchased for the last two twelve-month periods. Except as disclosed in
Schedule 3.26(c), to the knowledge of Seller, no customer or supplier listed in Schedule 3.26 (a)
or Schedule 3.26 (b) hereto, has threatened to cease or materially reduce such purchases, use,
sales or provision of services after the date hereof.

Section 3.27. Business Accounts. Waters does not maintain any account or safe
deposit box with banks, trust companies, securities brokers and other financial institutions.
Waters has no powers of attorney or comparable delegations of authority outstanding.

Section 3.28. Establishment Registration. Schedule 3.28 contains the full
application and correspondence file with the FDA

23

 

maintained by Seller and/or Waters respecting the establishment registration of the Leased
Property. The Leased Property is duly registered with an active status with the FDA as a
manufacturer, repackager/relabeller, initial distributor, contract manufacturer “establishment”, as
such term is defined in 21 CFR 807. To the knowledge of Seller, no events have occurred or are
continuing with respect to Waters, which could reasonably be foreseen to adversely affect the
status of such registration.

Section 3.29. Medical Devices. (a) Schedule 3.29 contains the complete premarket
notification and correspondence file with the FDA maintained by Seller and/or Waters respecting
Waters’ RM3 device. The RM3 device is duly listed with an active status with the FDA under 21 CFR
876.5880. Waters owns or has the unrestricted right to use the Manufacturing Data required to
enable it to manufacture or have manufactured for it the RM3 device (including all accessories
thereto) and/or their respective components in their respective current forms or configurations.

     (b) Waters owns or has the unrestricted right to use the Manufacturing Data required to enable
it to manufacture or have manufactured for it Water’s OXICOM device (including all accessories
thereto) and/or their respective components in their respective current forms or configurations.

     (c) In developing the specifications for the manufacture of the devices referred in paragraphs
(a) and (b) above, to the knowledge of Seller and Waters, neither Seller or Waters infringed any
patent, copyrights or other similar rights of any third party.

     (d) Waters warrants to its customers the devices referred in paragraphs (a) and (b) above
manufactured or sold by Waters are free from defects in materials and workmanship when properly
installed and used for a period of one year from the date of shipment from the factory. Seller has
made available to Buyer Sellers and Water’s information respecting product warranty claims made by
third parties respecting the devices referred in paragraphs (a) and (b) above.

Section 3.30. Accounts Receivable. Except as set forth in Schedule 3.30, Waters’
accounts receivable reflected on Seller’s balance sheet as at June 30, 2007 (i) arose from bona
fide sales transactions in the ordinary course of business and are payable pursuant to the
applicable terms of sale, (ii) are legal, valid and binding obligations of the respective debtors
enforceable in accordance with their terms, (iii) are not subject to any valid set-off or
counterclaim, (iv) do not represent obligations for goods sold on consignment, on approval or on a
sale-or-return basis or subject to any other repurchase or return arrangement, (v) are collectible
in the ordinary course of business consistent with past practice in the aggregate recorded amounts
thereof, net of any applicable reserve reflected in said balance sheet, and (vi) are not the
subject of any actions or proceedings brought by or on behalf of Waters; provided,
however, that neither Seller or Waters

24

 

represent or warrant the collectibility of Waters accounts receivable.

Section 3.31. Inventory. All inventory of Waters reflected on the balance sheet
included in Seller’s balance sheet as at June 30, 2007 consists of a quality and quantity usable
and salable in the ordinary course of business consistent with past practices. All items included
in the inventory of Waters are its property, will be free and clear of any Adverse Rights at
Closing, are not held by Waters on consignment from others and conform in all material respects to
all standards applicable to such inventory or its use or sale imposed by governmental or regulatory
authorities. Without limiting its obligations under Section 2.03 hereof, Seller does not represent
or warrant that the inventory of Waters will have a value of any particular minimum amount on the
Closing Date, as the same may be affected by purchases and sales made in the ordinary course of
business between June 30, 2007 and the Closing Date.

Section 3.32. Limitations Applicable to Representations and Warranties. THE
REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN ARTICLE III HEREOF ARE EXCLUSIVE AND IN LIEU
OF ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND WHATSOEVER FROM SELLER AND SELLER WILL NOT
BE DEEMED TO HAVE MADE ANY OTHER REPRESENTATION OR WARRANTY.

Buyer acknowledges and agrees that Seller and Waters have not made any (and make no) representation
or warranty (in this Agreement or otherwise) with respect to any projections, estimates, budgets or
other predictions with respect to the properties, assets or business of Waters, including with
respect to future revenues, results of operations, cash flows, financial condition, business, or
operations, and Buyer acknowledges and agrees that it is not relying on any such projections,
estimates, budgets or other predictions of Seller or Waters.

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

For the purpose of inducing Seller to sell the Shares pursuant to this Agreement, Buyer hereby
represents and warrants to Seller as follows:

Section 4.01. Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and operate the properties it purports to
own, lease or operate and to carry on its business as it is now being conducted. Buyer has
delivered to Seller copies of Buyer’s Certificate of Incorporation and By-Laws, and all amendments
thereto, which are complete and correct copies of such instruments as presently in effect.

Section 4.02. Authorization; Execution and Delivery. Buyer has all requisite
corporate power and authority to execute, deliver and perform its obligations under this Agreement
and to consummate the

25

 

transactions contemplated hereby. The execution, delivery and performance of this Agreement by
Buyer and the consummation by it of the transactions contemplated hereby have been duly authorized
by all requisite corporate action of Buyer, and this Agreement is a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, fraudulent transfer or other similar laws
affecting the enforcement of creditors’ rights in general or by general principles of equity.

Section 4.03. Consents and Approvals; No Violations. Except for the obtaining of
such consents and waivers as are specifically contemplated by this Agreement, none of the
execution, delivery or performance of this Agreement by Buyer, nor the consummation by Buyer of the
transactions contemplated hereby will (a) conflict with or result in a breach of the Certificate of
Incorporation or By-Laws of Buyer; (b) require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or regulatory authority; (c) result in a
default (or an event which with notice or lapse of time or both would become a default), or give to
any third party any right of termination, cancellation, amendment or acceleration under, or result
in the creation of a lien or encumbrance on any of the assets of Buyer pursuant to, any note,
license, agreement or other instrument or obligation to which Buyer is a party or by which Buyer or
any of its assets is bound or affected; or (d) violate or conflict with any order, writ,
injunction, decree, statute, rule or regulation applicable to Buyer or any of its assets, other
than such defaults, rights of termination, cancellation, amendment or acceleration, such liens and
encumbrances and such consents and approvals the failure to obtain which, in the aggregate, would
not have a material adverse effect on the business, assets, financial condition, results of
operations or prospects of the business of Buyer.

Section 4.04. Purchase for Investment. Buyer, acknowledging that the Shares in the
hands of Seller are restricted securities within the meaning of the Securities Act and the rules
and regulations promulgated thereunder, is acquiring the Shares solely for its own account and with
no view to making any distribution thereof.

Section 4.05. Government Approvals and Filings. As of the Closing Date, neither the
execution and delivery of this Agreement nor the consummation of the transactions contemplated
hereby by Buyer will require Buyer to obtain any approval or consent of, or any authorization or
permit from, or any filing or registration with, any governmental or regulatory authority which
will not have been obtained.

Section 4.06. Brokers and Investment Advisers. No broker, finder or investment
adviser has acted directly or indirectly as such for, or is entitled to any compensation from,
Buyer in connection with this Agreement or the transactions contemplated hereby except Natixis
Pramex International Corp., whose fees for services in connection with such transactions will be
paid by Buyer.

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ARTICLE V COVENANTS OF SELLER TO BUYER

Section 5.01. Regular Course of Business. Except as otherwise consented to in
writing by Buyer or as expressly contemplated by this Agreement (including the Schedules attached
hereto), prior to the Closing, Seller shall cause Waters to carry on its business in the ordinary
course of business and in a manner consistent with past practices. Except as expressly
contemplated by this Agreement, or as consented to in writing by Buyer, from the date hereof
through the Closing, Seller shall not permit or cause Waters to:

     (a) amend its Articles of Incorporation or Bylaws;

     (b) issue, sell or deliver, agree to issue, sell or deliver, or authorize the issuance, sale
or delivery of, any shares of any class of its capital stock or any securities convertible into or
exchangeable for any such shares or convertible into securities in turn so exchangeable or
convertible, or any warrants, calls, options or other rights calling for the issuance, sale or
delivery of any such shares or convertible or exchangeable securities or redeem or call or commit
for redemption, purchase or other acquisition any shares of its capital stock or other securities;

     (c) (i) borrow or agree to borrow any funds or mortgage or pledge any of its assets, tangible
or intangible, (ii) voluntarily assume or guarantee the obligations of any other person or incur
any liability (fixed or contingent), (iii) cancel or agree to cancel any debts or claims, (iv)
lease, license, sell or transfer any of its assets (other than inventory in the ordinary course of
business), properties or rights or (v) make, or permit any amendment or termination of, any
contract, agreement, license or other right to which it is a party;

     (d) increase the compensation payable or to become payable to the Waters Employees or any of
Waters’ officers, directors, or agents, enter into any new arrangements for any severance or
termination or bonus pay with any such persons, enter into any employment contract not terminable
at will with any employee or make any loan to or engage in any transaction with any officer or
director of Seller or Waters, or any employee of Seller or any Waters Employee;

     (e) except as required by law, enter into or make any material change in any Employee Benefit
Program;

     (f) acquire control or ownership of any other corporation, association, joint venture,
partnership, business trust or other business entity, or acquire control or ownership of all or a
material portion of the assets of any of the foregoing, or merge, consolidate or otherwise combine
with any other corporation or enter into any agreement providing for any of the foregoing;

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     (g) declare or pay any dividend in kind or make any other distribution in kind to its
shareholders, except the Planned Dividend;

     (h) make any material alteration in the accounting principles or practices of Waters;

     (i) make any capital expenditure or commitment for additions to property, plant or equipment;

     (j) enter into any lease of real property or personal property;

     (k) sell or transfer any interest in or grant any other right to use or have access to any
customer list of Waters or Proprietary Rights or any permits or licenses of Waters; or

     (1) fail to maintain its business organization and goodwill intact or fail to use its best
efforts to maintain its relationship with suppliers, customers, creditors, employees and others
having business relationships with it.

Section 5.02. No Default or Violation. Except as otherwise consented to in writing
by Buyer, Seller shall use reasonable efforts to cause Waters to not:

     (a) violate, or commit a material breach of or a default under, any material contract,
agreement, lease, license, mortgage or commitment to which Waters is a party or to which any of
Waters’ assets may be subject, or

     (b) commit a material violation of any applicable order, judgment, statute, rule or regulation
or any other requirement of any governmental body or court, relating to its business.

Section 5.03. Insurance. Except as otherwise consented to in writing by Buyer,
Seller shall, or shall cause Waters to, maintain in full force and effect prior to the Closing all
the Insurance Policies currently in force. For a period of two years after the Closing, Seller will
maintain in full force and effect insurance policies substantially equivalent to those currently in
force insuring against the risks addressed by the Insurance Policies with respect to events that
occur solely prior to the Closing Date (the “Tail Insurance”). Waters will be named an additional
insured under such Tail Insurance.

Section 5.04. Certain Tax Matters. (a) Seller shall prepare and shall timely file
all federal Tax Returns with respect to Income Taxes and consolidated or combined state Tax
Returns, if any, which are required to be filed for taxable periods ending on or prior to the
Closing Date and shall timely pay in full all Income Taxes shown on such Tax Returns to be due with
respect to such periods. Seller shall include the operations of Waters through the Closing Date in
its consolidated Tax Returns and in consolidated or combined state Tax Returns with respect to
Income Taxes, if any. Seller shall also prepare and shall

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timely file all Tax Returns with respect to Sales and Use Taxes and Other Taxes, if any, which are
required to be filed for taxable periods ending on or prior to the Closing Date and shall timely
pay in full all Taxes shown on such Tax Returns to be due with respect to such periods.

     (b) Seller shall be responsible for initiating any claim for a refund, filing any amended Tax
Return, contest, resolve, defend against any assessment, notice of deficiency or other adjustment
or proposed adjustment or in respect of Waters with respect to any Tax Returns for any taxable
period ending on or prior to the Closing Date, paying any amount shown as due thereon and taking
any other actions necessary to contest, resolve or defend against any assessment, notice of
deficiency or other adjustment or proposed adjustment which are required as a result of any
examination of such Tax Returns by applicable Federal, state, local or other taxing authorities for
such taxable years; provided, however, that Seller shall consult with Buyer prior
to filing any amended Tax Returns or taking any such actions and, to the extent such Tax Returns or
actions are in the sole judgment of Buyer reasonably likely to have a Material Adverse Effect
post-closing, Seller shall use reasonable efforts to not take any position that would cause such a
Material Adverse Effect.

Section 5.05. Notice of Changes. Seller shall promptly notify Buyer in writing of
(a) any event known to Seller or Waters occurring subsequent to the date of this Agreement which
would render any representation or warranty of Seller contained in this Agreement or any document
or instrument delivered in accordance herewith, including the Schedules attached hereto, if made on
or as of the date of such event or the Closing Date, untrue or inaccurate in any material respect
and (b) any event known to Seller or Waters that constitutes or is reasonably likely to result in a
Material Adverse Effect.

Section 5.06. Consents. Prior to the Closing Date, Seller shall use its best
efforts to obtain the Private Consents contemplated by Section 3.07 hereof.

Section 5.07. Access to Books and Records. Seller shall afford to Buyer and its
accountants, counsel and other representatives reasonable access throughout the period prior to the
Closing Date to the Leased Property and all of the assets, books, contracts, and records of Waters.
Such access shall be afforded Buyer and such representatives during regular business hours after
reasonable notice to Seller. Seller shall cooperate with Buyer and shall provide Buyer with access
to the Leased Property and Waters Employees upon reasonable notice and during regular business
hours. On the Closing Date, Seller will deliver or make available to Buyer at the offices of Waters
all of Waters’ books and records, including Waters’ corporate minute book, and if, at any time
after the Closing, Seller discovers in its possession or under its control any other books and
records of Waters, it will forthwith

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deliver such books and records to Buyer, which are not maintained at Seller’s principal place of
business.

Section 5.08. No Shop. Seller (a) shall not solicit, encourage, cooperate with or
furnish information as to any proposal, bid, agreement or arrangement, or accept, or agree to
accept any such proposal, bid, agreement or arrangement to acquire Waters or any substantial part
of its capital stock or assets from the date of this Agreement to the earlier of the termination of
this Agreement or the Closing Date and (b) shall inform Buyer of the terms of any unsolicited offer
(including the identity of the offeror) to acquire Waters or a substantial part of its capital
stock or assets during such period.

Section 5.09. Confidentiality Agreements. Seller shall execute and deliver
documents satisfactory to Buyer pursuant to which Seller shall assign to Buyer all of Seller’s
rights under all confidentiality agreements executed by third parties in connection with the
proposed sale of Waters. Seller shall further provide Buyer with a list of all the potential
buyers of Waters (together with their legal or financial advisors) that received confidential
information thereunder. If so requested by Buyer, Seller shall request any person or entity on
such list and designated by Buyer to return or destroy all such confidential information in
accordance with and subject to the limitations of the applicable confidentiality agreement.

Section 5.10. Waters Employees Compensation. Buyer understands and agrees that
effective on the Closing Date, Seller will terminate the employment of all Waters Employees
employed by Seller. On July 27, 2007, Seller shall pay for the account of Waters all compensation
due and payable to Waters Employees up to and including such date (less all appropriate
withholdings) for base salary, bonus, paid time off or other benefit or incentive compensation.
Seller shall use reasonable efforts to cause Waters to accrue on its books and records all
compensation due to Waters Employees for the period from July 27, 2007 through the Closing Date,
but not due and payable on or before the Closing Date, including paid time off; provided,
however, that it is understood and agreed that Seller shall be solely liable for any
incentive compensation owed or promised to Douglas E. King pursuant to Seller’s offer of employment
to Mr. King dated June 29, 2006, and no amount thereof shall be included in Waters Employees
Compensation Liabilities. On or before August 11, 2007, Seller shall pay (less all appropriate
withholdings) all compensation due to Waters Employees for the period July 27, 2007, through the
Closing Date, including any Accrued PTO to Waters Employees who do not accept employment by Buyer
or Waters after the Closing Date as provided in Section 8.03(b) hereof. Buyer shall cause Waters
to pay the Waters Employees Compensation Liabilities as they become due and payable.

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Section 5.11. Accrued Liabilities. From the date hereof through the Closing Date,
Seller shall pay for the account of Waters, or shall cause Waters to pay all amounts to suppliers,
vendors, consultants, experts, other contractors and creditors as may be due such creditors prior
to the Closing Date pursuant to the terms and conditions of the obligations to such creditors as
reflected on the books and records of Seller and/or Waters. To the extent, any portion of such
amounts or indebtedness is not due and payable pursuant to the terms and conditions of the
obligations to such creditors on or prior to the Closing Date, but such amounts or indebtedness is
accrued on the books and records of Waters, Buyer shall use commercially reasonable efforts to
cause Waters to pay the same after Closing in accordance with such terms and conditions.
Notwithstanding anything herein to the contrary, Waters and Buyer will have no recourse against
Seller with respect to such amounts which are accrued on the books and records of Waters in
accordance with generally accepted accounting principles and on a consistent basis with previous
Financial Statements.

Section 5.12. Non-Competition. (a) Seller shall not, for a period of five years
from the Closing Date, either alone or in conjunction with any other person or entity, or directly
or indirectly through its present or future Affiliates:

     (i) solicit, entice, persuade, induce, request or otherwise cause any Waters Employee to
refrain from rendering services to Waters or to terminate his or her relationship, whether
employment, contractual or otherwise, with Waters or Buyer, unless such Waters Employee (A) resigns
voluntarily (without any solicitation from Seller or any of its Affiliates) or (B) is terminated by
Waters after the Closing Date;

     (ii) induce or attempt to cause (A) any client, customer or supplier of Waters to terminate or
materially reduce its business with Waters or (B) any agent or consultant of Waters to resign or
sever a relationship with Waters;

     (iii) in any manner utilize or disclose (unless compelled by judicial or administrative
process) to any person, firm, corporation, association or other entity, any confidential and
proprietary information of Waters, including, but not limited to, any confidential information with
respect to any of Waters’ customers (past, existing or prospective), commercial partners, methods
of distribution, production costs, pricing and marketing strategies, new product information,
employees, financial information, or technical processes, which are not generally known to the
public or recognized as standard practice in the industry in which Waters is engaged, the
disclosure of which Seller knows or should reasonably know will be materially damaging to Waters
except for such disclosures; or

     (iv) own, manage, operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as a partner, principal, agent, representative,
consultant or otherwise with, any business, firm, person, partnership, corporation or other entity
that is in a business competing with the businesses of Waters, Buyer or any Affiliate of Buyer in
any jurisdiction.

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     (b) The parties hereto recognize that the laws and public policies of the various states of
the United States may differ as to the validity and enforceability of covenants similar to those
set forth in this Section. It is the intention of the parties that the provisions of this Section
be enforced to the fullest extent permissible under the laws and policies of each jurisdiction in
which enforcement may be sought, and that the unenforceability (or the modification to conform to
such laws or policies) of any provisions of this Section shall not render unenforceable, or impair,
the remainder of the provisions of this Section. Accordingly, if any provision of this Section
shall be determined to be invalid or unenforceable, such invalidity or unenforceability shall be
deemed to apply only with respect to the operation of such provision in the particular jurisdiction
in which such determination is made and not with respect to any other provision or jurisdiction.

     (c) The parties hereto acknowledge and agree that any remedy at law for any breach of the
provisions of this Section would be inadequate, and Seller hereby consents to the granting by any
court of an injunction or other equitable relief, without the necessity of actual monetary loss
being proved, in order that the breach or threatened breach of such provisions may be effectively
restrained.

ARTICLE VI COVENANTS OF BUYER TO SELLER

Section 6.01. Notice of Changes. The Buyer shall promptly notify Seller in writing
of any event known to Buyer, which would render any representation or warranty of Buyer contained
in this Agreement, if made on or as of the date of such event or the Closing Date, untrue or
inaccurate in any material respect.

Section 6.02. Certain Tax Matters. Buyer covenants that, without the prior written
consent of Seller, neither Buyer nor Waters will file any amended Tax Return or claim for a refund
or raise any issue in connection with the examination of any Tax Return for Waters with respect to
any taxable period ending on or before the Closing Date. Buyer shall cause Waters to promptly
notify Seller of the commencement of any such examination by any federal or state taxing authority
of which it has notice.

Section 6.03. No Continuation of Plans With Respect to Buyer, Waters or Their
Respective Employees. (a) Buyer understands and agrees that effective on the Closing Date,
Seller will terminate the employment of all Waters Employees employed by Seller and upon such
termination, subject to the terms and conditions of such plans, Waters Employees will have no
further right to participate under any Employee Pension Benefit Plans, Employee Welfare Benefit
Plans, any other incentive compensation plan or other employee benefit plan or Multiemployer Plan
maintained by Seller and/or Waters or with respect to which Seller and/or Waters participated prior
to the Closing Date.

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     (b) Buyer understands and agrees that after the Closing Date, no employee of Waters, Buyer or
any Affiliate of either of them will have any right to participate under any Employee Pension
Benefit Plans, Employee Welfare Benefit Plans, any other incentive compensation plan or other
employee benefit plan or Multiemployer Plan maintained by Seller and/or Waters prior to or after
the Closing Date, with respect to which Waters participated prior to the Closing Date or with
respect to which Seller and/or its Affiliates may participate after the Closing Date.

Section 6.04. Planned Dividend. Buyer understands that the Financial Statements and
Seller’s and Water’s respective books and records reflect an intercompany account of material size
and amount (the “Intercompany Account”). The Intercompany Account currently represents, and it is
expected that on the Closing Date will continue to represent, amounts due and owing by Seller to
Waters. Among other things, the Intercompany Account evidences payments by Seller of liabilities
of Waters or liabilities attributed to Waters by Seller and arising in the ordinary course of
Waters’ business, such as, without limitation, compensation of Waters Employees, rent respecting
the Leased Premises. Buyer understands and agrees that on or before the Closing Date, the Board of
Directors of Waters shall declare as a dividend or other distribution to Seller, all of Waters’
rights against Seller with respect to the Intercompany Account as it may exist on the Closing Date
(the “Planned Dividend”). Such dividend will extinguish the Intercompany Account. On or before
the Closing Date, Buyer will have completed such due diligence as it desires to perform respecting
the Intercompany Account.

Section 6.05. Other Assets Used to Conduct Waters’ Business. Buyer understands that
assets and resources of Seller, including employees other than the Waters Employees, have been and
will continue to be used prior to the Closing Date in the ordinary course of business to support
Waters’ business. Buyer acknowledges and agrees the Waters assets are not all of the assets
necessary to conduct Waters’ business after the Closing Date in the manner conducted prior to the
Closing Date and that Waters does not own or have rights to such assets and resources. On or
before the Closing Date, Buyer will have completed such due diligence as it desires to perform
respecting the nature and extent of the assets and resources of Seller used to support Waters’
business.

ARTICLE VII INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS AND WARRANTIES

Section 7.01. Special Indemnification by Seller. (a) Special Tax Indemnity.
Seller shall be liable for, and shall hold Buyer harmless from and against any and all Taxes for
any taxable period or portion thereof ending on or before the Closing Date (other than Taxes
respecting the Waters Employees Compensation Liabilities) which are due or payable by Waters with
respect to the participation by Waters in the filing of any Tax Returns which include Waters in a
consolidated return, a combined return, or a

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return subject to a “group relief” or any similar concept. The indemnity provided under this
Section 7.01(a) shall hereinafter be referred to as the “Special Tax Indemnity”.

     (b) Special ERISA Indemnity. Subject to the Special Individual Threshold, Seller
hereby indemnifies and holds harmless Buyer from and against the full amount of any Loss, which
Buyer may incur or suffer as a result of any “employee pension benefit plan”, as defined in Section
3(2) of ERISA applicable to any Waters Employee, any “employee welfare benefit plan”, as defined in
Section 3(1) of ERISA applicable to any Waters Employee, or any other incentive compensation plan
or other employee benefit plan applicable to any Waters Employee established, maintained or
contributed to by (i) any corporation which prior to the Closing Date is a member of a controlled
group of corporations with Waters within the meaning of Section 414(b) of the Code, (ii) a trade or
business (including a sole proprietorship, partnership, trust, estate or corporation) which is
under common control with Waters prior to the Closing Date within the meaning of Section 414(c) of
the Code or (iii) a member of an affiliated service group with Waters prior to the Closing Date
within the meaning of Sections 414(m) or (o) of the Code (the “Special ERISA Indemnity”). The
Special ERISA Indemnity does not apply to any expense incurred by Buyer or Waters with respect to
any “employee pension benefit plan”, any “employee welfare benefit plan”, or any other incentive
compensation plan or other employee benefit plan applicable to any Waters Employee established,
maintained or contributed to by Buyer or Waters after the Closing Date unless such expense is a
result of an inaccuracy of one of Seller’s representations and warranties set forth in Sections
3.17(c) through 3.17(n).

     (c) Special Stock and Assets Indemnity. Seller hereby indemnifies and holds harmless
Buyer from and against any and all Losses which Buyer may incur or suffer as a result of the
inaccuracy of the representations and warranties of Seller with respect to (i) the ownership of the
Shares contained in Section 3.01 hereof, (ii) the capitalization of Waters contained in Section
3.03 hereof, (iii) the establishment registration and device listings contained in Sections 3.28
and 3.29 hereof, and (iv) the non-competition covenant contained in Section 5.12 hereof (the
“Special Stock and Assets Indemnity”).

     (d) Special Environment Indemnity. Subject to the Special Individual Threshold, Seller
hereby indemnifies and holds harmless Buyer from and against any and all Losses arising from the
inaccuracy of the representations and warranties of Seller contained in Section 3.21 hereof (the
“Special Environment Indemnity”).

     (e) Terms of Special Indemnities. The Special Tax Indemnity shall survive until 30
days after the expiration of the relevant statute of limitations. The Special ERISA Indemnity, the
Special Stock and Assets Indemnity and the Special Environment Indemnity shall survive
indefinitely. Buyer shall be fully indemnified for

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all amounts required to be paid by Seller beginning with the first dollar of such amounts and
regardless of the aggregate amount thereof and any amounts paid under any such Special Indemnity
shall not be counted in calculating the maximum of $1,000,000 of indemnification payable pursuant
to Section 7.02 hereof.

Section 7.02. General Indemnification by Seller. (a) Seller hereby indemnifies and
holds harmless Buyer from and against any and all Losses, which Buyer may incur or suffer as a
result of:

     (i) the inaccuracy of any representation or warranty made by Seller pursuant to this Agreement
or any document or instrument delivered in connection herewith, including the Schedules attached
hereto (other than those referred to in Section 7.01 hereof); or

     (ii) the breach of any covenant, agreement or obligation of Seller contained in this Agreement
or any document or instrument delivered in connection herewith;

provided, however, that Seller’s liability hereunder shall not exceed $1,000,000 in
the aggregate and Seller shall be liable to Buyer hereunder only with respect to an individual Loss
that is greater than $20,000, in which case Seller shall pay Buyer the full amount of the Loss,
subject to the ceiling set forth above.

     (b) Notwithstanding any other provision of this Agreement, Seller shall not be required to
indemnify Buyer against, and Losses shall not include, product warranty claims not involving
personal injury or property damage arising under written warranties provided by Seller or Waters
with respect to products of Waters’ business. All product warranty claims not involving personal
injury or property damage arising under such written warranties accrued on the books and records of
Waters as of the Closing Date and arising or asserted thereafter shall be the expense of Waters,
without any recourse to Seller.

Section 7.03. Procedure. (a) Whenever any claim for indemnification by Buyer shall
arise under this Article VII, which is not a Third Party Claim, Buyer shall promptly provide notice
to Seller of the claim and the facts constituting the basis for such claim.

     (b) Within ten (10) business days after receipt by Buyer of written notice of the assertion of
a claim by a third party in respect of which indemnity may be sought under or pursuant to this
Article VII (a “Third Party Claim”), Buyer shall notify Seller in writing of the assertion thereof;
provided, however, that failure to give such notification shall not affect the
indemnification provided hereunder, except to the extent Seller shall have been actually prejudiced
as a result of such failure. After such notification to Seller, Buyer shall deliver to Seller
copies of any court papers within ten (10) days after Buyer’s receipt thereof, and copies of all
notices and documents within twenty (20) days after Buyer’s receipt thereof.

     (c) (i) If a Third Party Claim is made against Buyer, Seller may elect, subject to
the condition set forth herein, to assume the defense thereof with representatives chosen by it and
satisfactory to Buyer in Buyer’s reasonable judgment; provided, however, that

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(x) Seller shall first acknowledge in writing to Buyer Seller’s obligation to indemnify Buyer in
respect of the Third Party Claim, (y) such counsel shall not, except with the prior written consent
of Buyer, which consent shall not be unreasonably withheld, also be counsel to Seller with respect
to such claim in the same or related action or proceeding, and (z) Seller shall pay all costs and
expenses incurred in connection with such defense and shall take all steps necessary in the defense
or settlement of the Third Party Claim. In connection therewith, Buyer shall cooperate fully, but
at the expense of Seller, to make available to Seller all pertinent information and witnesses under
Buyer’s control and take such other steps as in the opinion of counsel for Seller are necessary and
reasonable to enable Seller to conduct such defense.

          (ii) Should Seller promptly after receipt of the notice referred to in paragraph (i) above
fail to assume the control of the defense of the Third Party Claim or fail to answer the notice of
Buyer referred to in paragraph (b) above, Buyer shall be entitled to defend, compromise and settle
such Third Party Claim as it may appear advisable, in Buyer’s sole discretion, and such settlement
or any other final determination of the Third Party Claim shall be binding upon Seller as to the
amount of the Losses. The final, nonappealable determination of any such Third Party Claim,
including all related costs and expenses, shall be binding and conclusive upon the parties as to
the amount of the Losses.

     (d) Notwithstanding anything herein to the contrary, Buyer shall have the right, exercisable
in Buyer’s sole discretion, to control the defense of any Third Party Claim seeking an amount in
the aggregate in excess of Seller’s indemnification ceiling set forth in Section 7.02 hereof, and
to compromise and settle such Third Party Claim with Seller’s consent, which consent shall not be
unreasonably delayed or withheld.

     (e) Payment of all undisputed Losses pursuant to this Article VII shall be made by Seller in
cash within thirty (30) days of demand therefor. If Seller disputes its indemnity obligation for
Losses claimed by Buyer under this Article VII, Seller shall pay Buyer within thirty (30) days
after the dispute respecting such indemnity obligation is resolved by a settlement agreement or by
a nonappealable judgment, as the case may be. Any amounts which were due to Buyer but not paid
until the subsequent resolution of any such dispute shall accrue interest at the interest rate for
legal judgments from the date which is thirty (30) days after the date of Buyer’s demand.

     (f) For purposes of this Article VII, the term “Buyer” shall include Buyer, Waters (as it may
exist after the Closing Date), their Affiliates and their respective directors, officers, employees
and agents.

Section 7.04. Other Principles Applicable to Seller’s Indemnity Obligations.
Notwithstanding anything to the contrary set forth in Section 7.01, SELLER SHALL NOT BE LIABLE FOR
ANY INCIDENTAL OR

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CONSEQUENTIAL DAMAGES OR FOR LOST PROFITS OF ANY KIND WITH RESPECT TO ANY CLAIM OF BUYER UNDER THIS
AGREEMENT EXCEPT FOR ANY SUCH DAMAGES OR LOST PROFITS THAT ARE THIRD PARTY CLAIMS.

ARTICLE VIII COVENANTS OF SELLER AND BUYER

Section 8.01. Expenses. Each party hereto shall bear its own expenses incurred in
connection with this Agreement or any transaction contemplated hereby.

Section 8.02. Public Announcements. (a) Seller and Buyer, recognizing that each may
have independent obligations with respect to the dissemination of material information to its
respective shareholders and the public, agree that, to the maximum extent feasible consistent with
such obligations, they will confer with each other prior to the issuance of, and agree on the form
and substance of, any reports, statements or releases pertaining to this Agreement or any
transaction contemplated hereby.

     (b) On the Closing Date, Seller and Buyer shall send a joint notice to all customers having an
outstanding account receivable in the books and records of Waters on such Closing Date instructing
said customers to make payment to Waters or to wire funds to Waters’ bank account.

Section 8.03. Further Assurances. (a) Seller and Buyer agree to execute and deliver
such instruments and take such other actions as any of them may reasonably require in order to
carry out the intent of this Agreement.

     (b) After the Closing, Seller shall remit to Waters within five days of receipt any payment
intended to be made to Waters whether pursuant to a Waters account receivable or otherwise;
provided, however, that it is understood and agreed that Seller shall be entitled
to retain from any such payment an amount equal in the aggregate to the sum of (i) all compensation
and payroll taxes owed or with respect to Waters Employees for the period from July 27, 2007 to the
Closing Date and (ii) any Accrued PTO with respect to Waters Employees who do not accept employment
by Waters or Buyer after the Closing Date.

Section 8.04. Mutual Assistance. Subsequent to the Closing Date, Buyer and Waters
on the one hand, and Seller, on the other hand, agree to furnish or cause to be furnished to each
other, upon request, as promptly as practicable, such information (including access to books and
records) and assistance relating to Waters as is reasonably necessary for the filing of any return,
for the preparation of any audit, and for the prosecution or defense of any claim, suit or
proceeding. Buyer and Waters, on the one hand, and Seller, on the other hand, shall, until the
expiration of the applicable statute of limitations period, cooperate with each other in the
conduct of any audit or other proceedings involving Waters for any Tax purposes and shall each
execute and deliver such powers

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of attorney and other documents as are necessary to carry out the intent, and accomplish the
purposes, of this Section 8.04.

ARTICLE IX CONDITIONS TO THE OBLIGATIONS OF BUYER

The obligations under this Agreement of Buyer to consummate the transactions contemplated hereby
shall be subject to the satisfaction, or to the waiver by it in the manner contemplated by Section
12.02 hereof, on or before the Closing Date, of the following conditions:

Section 9.01. Representations and Warranties True. Seller’s representations and
warranties contained in this Agreement and the Schedules attached hereto shall be true and accurate
in all material respects as of the date when made and as of the Closing Date.

Section 9.02. Performance of Covenants. Seller shall have performed and complied in
all material respects with each and every covenant, agreement and condition required by this
Agreement or any document or instrument delivered in connection herewith to be performed or
complied with by it on or prior to the Closing Date.

Section 9.03. No Restraints. No preliminary or permanent injunction or other order
of any court or administrative agency nor any statute, rule or regulation enacted or promulgated by
any governmental authority shall be in effect which restrains or prohibits any transaction
contemplated hereby or affects Waters’ assets.

Section 9.04. Seller’s Officer’s Certificate. Seller shall have furnished Buyer
with a certificate signed by its President, substantially in the form of Exhibit 9.04 attached
hereto, to the effect that Seller’s representations and warranties contained in this Agreement and
the Schedules attached hereto are true and correct and that each of Seller and Waters has performed
or complied in all material respects with all terms, covenants and provisions of this Agreement
required to be performed or complied with by it on or prior to the Closing Date.

Section 9.05. Opinion of Counsel. Buyer shall have received an opinion from
Fredrikson & Byron, P. A., counsel to Seller, dated the Closing Date, substantially in the form of
Exhibit 9.05 hereto.

Section 9.06. No Material Adverse Effect. There shall not have occurred, nor shall
there exist, any event or set of circumstances not otherwise disclosed in this Agreement or the
Schedules attached hereto which constitutes or is reasonably likely to result in a Material Adverse
Effect.

Section 9.07. Resignation of Directors and Officers. All directors and officers of
Waters shall have executed and Seller shall have delivered to Buyer their written resignation,
effective as of the Closing Date.

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Section 9.08. Agreement With Respect to the Leased Property. The leasehold interest
in the Leased Property shall have been assigned to Buyer or Waters or a sublease agreement with
Seller shall have been entered for the Leased Property, such sublease to be on terms and conditions
identical to those of the existing lease agreement for said Leased Property. Seller shall deliver
to Buyer the agreement or consent of the landlord of the Leased Property to such assignment or
sublease, which agreement or consent shall not contain terms and conditions stricter than in the
existing lease agreement. The Leased Property shall in any event remain registered in the
Establishment Database of the FDA.

Section 9.09. Consents. The Private Consents and all other consents, approvals and
actions of, filings with and notices to any governmental or regulatory authority necessary to
permit Seller to perform its obligations under this Agreement and to consummate the transactions
contemplated hereby (i) shall have been duly obtained, made or given, (ii) shall be in form and
substance reasonably satisfactory to Buyer, (iii) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (iv) shall be in full force and effect. Seller
shall have executed, and shall cause Zareba Security, Inc. to execute, the Wells Fargo Release
Letter and shall deliver the same on or prior to the Closing Date.

Section 9.10. Device Listed with FDA. On the Closing Date, Waters’ RM3 device shall
be registered on the FDA’s Device Listing Database with an active status.

Section 9.11. Proceedings. All requisite corporate action and proceedings of Seller
in connection with the transactions contemplated hereby shall be satisfactory in form and substance
to Buyer and its counsel, and Buyer and its counsel shall have received a certificate from Seller’s
secretary, substantially in the form of Exhibit 9.11 attached hereto, with copies of all documents
identified therein, including without limitation records of requisite corporate action and
proceedings.

Section 9.12. Domain Names; Patent. (a) Seller shall have executed and delivered to
Buyer assignments by Seller to Waters of the following domain names: wtrs.com, watersinc.com,
watersinst.com and watersmed.com, in form suitable for recording with the relevant registrar.

     (b) Seller shall have executed and delivered to Buyer an assignment, in form suitable for
recording, of the Patent if the Patent is not registered in Water’s name on or before the Closing
Date.

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ARTICLE X CONDITIONS TO SELLER’S OBLIGATIONS

The obligations of Seller under this Agreement to consummate the transactions contemplated hereby
shall be subject to the satisfaction, or to the waiver by it in the manner contemplated by Section
12.02 hereof, on or before the Closing Date, of the following conditions:

Section 10.01. Representations and Warranties True. Buyer’s representations and
warranties contained in this Agreement shall be true and accurate in all material respects as of
the date when made and as of the Closing Date.

Section 10.02. Performance of Covenants. Buyer shall have performed and complied in
all material respects with each and every covenant, agreement and condition required by this
Agreement to be performed or complied with by it on or prior to the Closing Date.

Section 10.03. No Restraints. No preliminary or permanent injunction or other order
of any court or administrative agency nor any statute, rule or regulation enacted or promulgated by
any governmental authority shall be in effect which restrains or prohibits any transaction
contemplated hereby or affects Waters’ assets.

Section 10.04. Buyer Officer’s Certificate. Buyer shall have furnished Seller with
a certificate of its principal officer, substantially in the form of Exhibit 10.04 attached hereto,
to the effect that Buyer’s representations and warranties contained in this Agreement are true and
correct in all material respects at and as of the Closing as though such representations and
warranties were made on the date thereof and that Buyer has performed or complied in all material
respects with all terms, covenants and provisions of this Agreement required to be performed or
complied with by it on or prior to the Closing Date.

Section 10.05. Buyer Consents. All consents, approvals and actions of, filings with
and notices to any governmental or regulatory authority necessary to permit Buyer to perform its
obligations under this Agreement and to consummate the transactions contemplated hereby (i) shall
have been duly obtained, made or given, (ii) shall be in form and substance reasonably satisfactory
to Seller, (iii) shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (iv) shall be in full force and effect.

Section 10.06. Seller Consents. Seller shall have obtained the Private Consents and
all other consents, approvals and actions of, filings with and notices to any governmental or
regulatory authority necessary to permit Seller to perform its obligations under this Agreement and
to consummate the transactions contemplated hereby (i) shall have been duly obtained, made or
given, (ii) shall be in form and substance reasonably satisfactory to Seller, (iii) shall not be
subject to the satisfaction of any condition that has not been satisfied or waived and (iv) shall
be in full force and effect. Buyer shall have executed, and shall

40

 

cause its counsel to execute, the Wells Fargo Release Letter and shall deliver the same on or prior
to the Closing Date.

Section 10.07. Opinion of Counsel. Seller shall have received an opinion from
Abitbol & Cherry, LLP, counsel to Buyer, dated the Closing Date, substantially in the form of
Exhibit 10.07 attached hereto.

Section 10.08. No Material Adverse Effect. There shall not have occurred, nor shall
there exist, any event or set of circumstances not otherwise disclosed in this Agreement or the
Schedules attached hereto which constitutes or is reasonably likely to result in a Material Adverse
Effect.

Section 10.09. Proceedings. All requisite corporate action and proceedings of Buyer
in connection with the transactions contemplated hereby shall be satisfactory in form and substance
to Seller and its counsel, and Seller and its counsel shall have received a certificate from an
authorized officer of Buyer, substantially in the form of Exhibit 10.09 attached hereto, with
copies of all documents identified therein, including without limitation records of requisite
corporate action and proceedings.

Section 10.10. Device Listed with FDA. On the Closing Date, Waters’ RM3 device
shall be registered on the FDA’s Device Listing Database with an active status and, if it is not,
such event shall not have occurred at the request of Seller or Waters.

ARTICLE XI TERMINATION

Section 11.01. Termination and Abandonment. This Agreement may be terminated and
the transactions contemplated hereby may be abandoned before the Closing Date:

     (a) by Buyer if there has been a material misrepresentation or material breach on the part of
Seller in the representations, warranties and covenants set forth herein or in any document or
instrument delivered pursuant hereto (including the Schedules), or if immediately preceding the
Closing, there has been any failure on the part of Seller to comply with its material obligations
hereunder; or

     (b) by Seller if there has been a material misrepresentation or material breach on the part of
Buyer in the representations, warranties and covenants set forth herein or in any document or
instrument delivered by it pursuant hereto, or if immediately preceding the Closing, there has been
any failure on the part of Buyer to comply with its material obligations hereunder; or

     (c) by Buyer or Seller if an injunction is issued by a court of competent jurisdiction against
Seller and /or Waters and enjoining the Closing of the transactions contemplated hereby on or
before the Closing Date; or

     (d) by Buyer or Seller if the conditions to the terminating party’s obligations to close are
not satisfied or waived on or before August 3, 2007.

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Section 11.02. Liability Upon Termination. In the event of termination or
abandonment of this Agreement, neither Buyer nor Seller shall have any liability or further
obligation under this Agreement to the other, except that any covenant intended to survive the
termination of this Agreement shall survive any such termination or abandonment in accordance with
the terms thereof. If this Agreement is terminated or abandoned as aforesaid, NEITHER PARTY SHALL
BE LIABLE TO THE OTHER FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OR
LOST PROFITS IN CONNECTION WITH ANY SUCH TERMINATION OR ABANDONMENT OF THIS AGREEMENT, REGARDLESS
OF THE FORM IN WHICH ANY LEGAL OR EQUITABLE ACTION MAY BE BROUGHT AGAINST SUCH PARTY (SUCH AS,
CONTRACT, NEGLIGENCE OR OTHERWISE) EVEN IF SUCH PARTY HAS BEEN INFORMED OF THE POSSIBILITY THEREOF.

ARTICLE XII MISCELLANEOUS PROVISIONS

Section 12.01. Amendment and Modification. To the fullest extent provided by
applicable law, this Agreement may be amended, modified and supplemented with respect to any of the
terms contained herein by an appropriate written instrument executed by an authorized
representative of each of the parties at any time prior to or following the Closing.

Section 12.02. Waiver of Compliance. To the fullest extent permitted by applicable
law, each of Seller and Buyer may by an instrument in writing executed by their respective
authorized representatives extend the time for or waive performance of any of the obligations of
the other to it or waive compliance by the other with any of the covenants for its benefit, or
waive any of the conditions to its obligations, contained herein. No such extension of time or
waiver shall operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

Section 12.03. Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have been duly given
when delivered by hand or when mailed by overnight courier, postage prepaid, or when given by
facsimile transmission (promptly confirmed in writing), as follows:

If to Seller, to:

Zareba Systems, Inc.

13705 26th Ave. N, Suite 102

Minneapolis, MN 55441

Facsimile: 763-509-7450

Attention: Mr. Gerald W. Grabowski

With copy to:

Fredrikson & Byron, P. A.

Suite 4000, 200 South 6 St.

Minneapolis, MN 55402

Facsimile: 612-492-7077

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Attention: John A. Grimstad, Esq.

or to such other person or address as Seller shall designate in writing, such writing to be
delivered to the Buyer in the manner provided in this Section 12.03;

If to Buyer, to:

Holding GC, Inc.

c/o Natixis Pramex International Corp.

1251 Avenue of the Americas, 34th Floor

New York, New York 10020

Facsimile: (212) 583-4929

Attention: Mr. Georges-Antoine Lopez

With a copy to:

Abitbol & Cherry, LLP

545 Fifth Avenue, Suite 640

New York, New York 10017

Facsimile: (212) 682-7174

Attention: Pierre N. Abitbol, Esq.

or to such other person or address as Buyer shall designate in writing, such writing to be
delivered to Seller in the manner provided in this Section 12.03.

Section 12.04. Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior written consent of the
other party.

Section 12.05. Governing Law. This Agreement and the legal relations among the
parties hereto shall be governed by and construed in accordance with the laws of the State of
Delaware, without reference to conflict of laws provisions.

Section 12.06. Parties in Interest. Nothing expressed or implied in this Agreement
is intended or shall be construed to confer upon or give to any person, firm or corporation other
than the parties hereto any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby.

Section 12.07. Counterparts. This Agreement may be executed simultaneously in two
(2) counterparts and by the respective parties on separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.

Section 12.08. Interpretation. The headings of sections and articles of this
Agreement are inserted for convenience of reference only and shall not constitute a part hereof.
All

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references herein to Sections and Articles are to sections and articles of this Agreement, unless
otherwise indicated. This Agreement has been jointly prepared by the parties hereto and the terms
hereof shall not be construed in favor of or against any party on account of its participation in
such preparation.

Section 12.09. Entire Agreement. This Agreement and all documents and instruments
delivered pursuant hereto, including the Schedules, contain the entire understanding of the parties
hereto in respect of the subject matter contained herein and therein. There are no restrictions,
promises, representations, warranties, covenants or undertakings other than those expressly set
forth or referred to herein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.

[signature page is next]

44

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the
date and year first written above.

	 	 	 	 	 	 	 	 	 
	ZAREBA SYSTEMS, INC.	 	HOLDING GC, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/Gerald W. Grabowski
	 	 
	 	By:
	 	/s/Georges-Antoine Lopez
	 

	 	Gerald W. Grabowski,
	 	 	 	 	 	Georges-Antoine Lopez,
	 

	 	President and CEO
	 	 	 	 	 	President

45

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