Document:

EX-10.4 CHANGE IN CONTROL SEVERANCE AGRMT/WELSH

 

Exhibit 10.4

CHANGE IN CONTROL SEVERANCE AGREEMENT

     THIS AGREEMENT is entered into as of this 3rd day of August, 2007, by and between Gevity HR,
Inc., a Florida corporation (the “Company”), and Garry Welsh (“Executive”).

WITNESSETH

     WHEREAS, the Company considers the establishment and maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of the Company and its
stockholders; and

     WHEREAS, the Company recognizes that, as is the case with many publicly held corporations, the
possibility of a change in control may arise and that such possibility may result in the departure
or distraction of management personnel to the detriment of the Company and its stockholders; and

     WHEREAS, the Board (as defined in Section 1) has determined that it is in the best interests
of the Company and its stockholders to secure Executive’s continued services and to ensure
Executive’s continued dedication to his duties in the event of any threat or occurrence of a Change
in Control (as defined in Section 1) of the Company; and

     WHEREAS, the Board has authorized the Company to enter into this Agreement.

     NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and
agreements herein contained, the Company and Executive hereby agree as follows:

     1. Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below:

     (a) “Board” means the Board of Directors of the Company.

     (b) “Bonus Amount” means the greater of (i) the average annual incentive bonus earned by
Executive from the Company (or its affiliates) during the last three (3) completed fiscal years of
the Company immediately preceding Executive’s Date of Termination (annualized in the event
Executive was not employed by the Company (or its affiliates) for the whole of any such fiscal
year), and (ii) the Executive’s target annual incentive bonus for the year in which the Date of
Termination occurs.

     (c) “Cause” means (i) the willful and continued failure of Executive to perform substantially
his duties with the Company (other than any such failure resulting from Executive’s incapacity due
to physical or mental illness or any such failure subsequent to Executive being delivered a Notice
of Termination without Cause by the Company or delivering a Notice of Termination for Good Reason
to the Company) after a written demand for substantial performance is delivered to Executive by the
Board which specifically identifies the manner in

 

 

which the Board believes that Executive has not substantially performed Executive’s duties, or
(ii) the willful engaging by Executive in illegal conduct or gross misconduct which is demonstrably
and materially injurious to the Company or its affiliates. For purpose of this paragraph (c), no
act or failure to act by Executive shall be considered “willful”, unless done or omitted to be done
by Executive in bad faith and without reasonable belief that Executive’s action or omission was in
the best interests of the Company or its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board, based upon the advice of
counsel for the Company or upon the instructions of the Company’s chief executive officer or
another senior officer of the Company shall be conclusively presumed to be done, or omitted to be
done, by Executive in good faith and in the best interests of the Company. Cause shall not exist
unless and until the Company has delivered to Executive a copy of a resolution duly adopted by
three-quarters (3/4) of the entire Board (excluding Executive if Executive is a Board member) at a
meeting of the Board called and held for such purpose (after reasonable notice to Executive and an
opportunity for Executive, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board an event set forth in clauses (i) or (ii) has occurred and
specifying the particulars thereof in detail.

     (d) “Change in Control” means the occurrence of any one of the following events:

     (i) individuals who, on the date hereof, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the Board, provided
that any person becoming a director subsequent to the date hereof, whose election or
nomination for election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of the proxy statement
of the Company in which such person is named as a nominee for director, without written
objection to such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to directors or as a result of any other
actual or threatened solicitation of proxies or consents by or on behalf of any person other
than the Board shall be deemed to be an Incumbent Director;

     (ii) any “person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of
the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing 25% or more
of the combined voting power of the Company’s then outstanding securities eligible to vote
for the election of the Board (the “Company Voting Securities”); provided, however, that the
event described in this paragraph (ii) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions: (A) by the Company or any Subsidiary, (B) by
any employee benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of
such securities, (D) pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii)), or (E) unless otherwise

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approved by the Board, pursuant to any acquisition by Executive or any group of persons
including Executive (or any entity controlled by Executive or any group of persons including
Executive);

     (iii) the consummation of a merger, consolidation, statutory share exchange or similar
form of corporate transaction involving the Company or any of its Subsidiaries that requires
the approval of the Company’s stockholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless immediately following such
Business Combination: (A) more than 50% of the total voting power of (x) the corporation
resulting from such Business Combination (the “Surviving Corporation”), or (y) if
applicable, the ultimate parent corporation that directly or indirectly has beneficial
ownership of 100% of the voting securities eligible to elect directors of the Surviving
Corporation (the “Parent Corporation”), is represented by Company Voting Securities that
were outstanding immediately prior to such Business Combination (or, if applicable, is
represented by shares into which such Company Voting Securities were converted pursuant to
such Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting Securities
among the holders thereof immediately prior to the Business Combination, (B) no person
(other than any employee benefit plan (or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner,
directly or indirectly, of 25% or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) following the consummation of the Business Combination were Incumbent
Directors at the time of the Board’s approval of the execution of the initial agreement
providing for such Business Combination (any Business Combination which satisfies all of the
criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”); or

     (iv) the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company or a sale of all or substantially all of the Company’s assets.

     Notwithstanding the foregoing, a Change in Control of the Company shall not be deemed to occur
solely because any person acquires beneficial ownership of more than 25% of the Company Voting
Securities as a result of the acquisition of Company Voting Securities by the Company which reduces
the number of Company Voting Securities outstanding; provided that, if after such acquisition by
the Company such person becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then occur.

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     (e) “Date of Termination” means (1) the effective date on which Executive’s employment by the
Company terminates as specified in a prior written notice by the Company or Executive, as the case
may be, to the other, delivered pursuant to Section 10 or (2) if Executive’s employment by the
Company terminates by reason of death, the date of death of Executive.

     (f) “Disability” means termination of Executive’s employment by the Company due to Executive’s
absence from Executive’s duties with the Company on a full-time basis for at least one hundred
eighty (180) consecutive days as a result of Executive’s incapacity due to physical or mental
illness.

     (g) “Good Reason” means, without Executive’s express written consent, the occurrence of any of
the following events after a Change in Control:

     (i) (A) any change in the duties or responsibilities (including reporting
responsibilities) of Executive that is inconsistent in any material and adverse respect with
Executive’s position(s), duties, responsibilities or status with the Company immediately
prior to such Change in Control (including any material and adverse diminution of such
duties or responsibilities) or (B) a material and adverse change in Executive’s titles or
offices (including, if applicable, membership on the Board) with the Company as in effect
immediately prior to such Change in Control;

     (ii) a reduction by the Company in Executive’s rate of annual base salary or annual
target bonus opportunity (including any material and adverse change in the formula for such
annual bonus target) as in effect immediately prior to such Change in Control or as the same
may be increased from time to time thereafter;

     (iii) any requirement of the Company that Executive (A) be based anywhere more than
fifty (50) miles from the office where Executive is located at the time of the Change in
Control or (B) travel on Company business to an extent substantially greater than the travel
obligations of Executive immediately prior to such Change in Control;

     (iv) the failure of the Company to (A) continue in effect any employee benefit plan,
compensation plan, welfare benefit plan or material fringe benefit plan in which Executive
is participating immediately prior to such Change in Control or the taking of any action by
the Company which would adversely affect Executive’s participation in or reduce Executive’s
benefits under any such plan, unless Executive is permitted to participate in other plans
providing Executive with substantially equivalent benefits in the aggregate (at
substantially equivalent cost with respect to welfare benefit plans), or (B) provide
Executive with paid vacation in accordance with the most favorable vacation policies of the
Company (and its affiliated companies) as in effect for Executive immediately prior to such
Change in Control, including the crediting of all service for which Executive had been
credited under such vacation policies prior to the Change in Control;

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     (v) any purported termination of Executive’s employment which is not effectuated
pursuant to Section 10(b) (and which will not constitute a termination hereunder); or

     (vi) the failure of the Company to obtain the assumption agreement from any successor
as contemplated in Section 9(b).

     An isolated, insubstantial and inadvertent action taken in good faith and which is remedied by
the Company within ten (10) days after receipt of notice thereof given by Executive shall not
constitute Good Reason. Executive’s right to terminate employment for Good Reason shall not be
affected by Executive’s incapacities due to mental or physical illness and Executive’s continued
employment shall not constitute consent to, or a waiver of rights with respect to, any event or
condition constituting Good Reason; provided, however, that Executive must provide notice of
termination of employment within ninety (90) days following Executive’s knowledge of an event
constituting Good Reason or such event shall not constitute Good Reason under this Agreement.

     (h) “Qualifying Termination” means a termination of Executive’s employment (i) by the Company
other than for Cause or (ii) by Executive for Good Reason. Termination of Executive’s employment
on account of death, Disability or Retirement shall not be treated as a Qualifying Termination.

     (i) “Retirement” means Executive’s mandatory retirement (not including any mandatory early
retirement) in accordance with the Company’s retirement policy generally applicable to its salaried
employees, as in effect immediately prior to the Change in Control, or in accordance with any
retirement arrangement established with respect to Executive with Executive’s written consent.

     (j) “Subsidiary” means any corporation or other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the total combined voting power of the then
outstanding securities or interests of such corporation or other entity entitled to vote generally
in the election of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% of the assets or liquidation or dissolution.

     (k) “Termination Period” means the period of time beginning with a Change in Control and
ending two (2) years following such Change in Control. Notwithstanding anything in this Agreement
to the contrary, if (i) Executive’s employment is terminated prior to a Change in Control for
reasons that would have constituted a Qualifying Termination if they had occurred following a
Change in Control; (ii) Executive reasonably demonstrates that such termination (or Good Reason
event) was at the request of a third party who had indicated an intention or taken steps reasonably
calculated to effect a Change in Control; and (iii) a Change in Control involving such third party
(or a party competing with such third party to effectuate a Change in Control) does occur, then for
purposes of this Agreement, the date immediately prior to the date of such termination of
employment or event constituting Good Reason shall be treated as a Change in

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Control. For purposes of determining the timing of payments and benefits to Executive under
Section 4, the date of the actual Change in Control shall be treated as Executive’s Date of
Termination under Section 1(e).

     2. Obligation of Executive. In the event of a tender or exchange offer, proxy
contest, or the execution of any agreement which, if consummated, would constitute a Change in
Control, Executive agrees not to voluntarily leave the employ of the Company, other than as a
result of Disability or an event which would constitute Good Reason if a Change in Control had
occurred, until the Change in Control occurs or, if earlier, such tender or exchange offer, proxy
contest, or agreement is terminated or abandoned.

     3. Term of Agreement. This Agreement shall be effective on the date hereof and shall
continue in effect until the Company shall have given three (3) years’ written notice of
cancellation; provided that, notwithstanding the delivery of any such notice, this Agreement shall
continue in effect for a period of two (2) years after a Change in Control, if such Change in
Control shall have occurred during the term of this Agreement. Notwithstanding anything in this
Section to the contrary, this Agreement shall terminate if Executive or the Company terminates
Executive’s employment prior to a Change in Control except as provided in Section l(k).

     4. Payments Upon Termination of Employment.

     (a) Qualifying Termination. If during the Termination Period the employment of
Executive shall terminate pursuant to a Qualifying Termination, then the Company shall provide to
Executive:

     (i) within five (5) days following the Date of Termination, a lump-sum cash amount
equal to the sum of (A) Executive’s base salary through the Date of Termination and any
bonus amounts which have become payable, to the extent no theretofore paid or deferred, and
(B) any accrued vacation pay, to the extent not theretofore paid; plus

     (ii) on the first business day which is six (6) months and one (1) day after Executive
separates from service (within the meaning of Section 409A of the Internal Revenue Code
(“Code”)), a lump sum cash amount equal to a pro rata portion of Executive’s annual bonus
for the fiscal year in which Executive’s Date of Termination occurs, which portion shall at
least be equal to (A) Executive’s Bonus Amount, multiplied by (B) a fraction, the numerator
of which is the number of days in the fiscal year in which the Date of Termination occurs
through the Date of Termination and the denominator of which is three hundred sixty-five
(365), and reduced by (C) any amounts paid from the Company’s annual incentive plan for the
fiscal year in which Executive’s Date of Termination occurs; plus

     (iii) on the first business day which is six (6) months and one (1) day after Executive
separates from service (within the meaning of Section 409A of the Code, a lump-sum cash
amount equal to (A) two (2) times Executive’s highest annual rate of base

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salary during the 12-month period immediately prior to Executive’s Date of Termination,
plus (B) two (2) times Executive’s Bonus Amount.

     (iv) in addition to the payments set forth in Sections 4 (a)(i), (ii) and (iii) as well
as Section 5, any stock incentives (as defined in the stock incentive plans maintained by
the Company) that have been awarded to Executive under the terms of the stock incentive
plans maintained by the Company shall fully vest upon the occurrence of a Change in Control,
as such term is defined in Section 1(d) with 50% substituted for 25% in Section 1(d)(ii)
(whether or not a Qualifying Termination has occurred) and all other terms and conditions of
any such stock incentive award shall remain in effect to the extent not inconsistent with
the provisions of this Section 4(a)(iv).

     (b) If during the Termination Period the employment of Executive shall terminate pursuant to a
Qualifying Termination, the Company shall continue to provide, for a period of one (1) year
following Executive’s Date of Termination, Executive (and Executive’s dependents, if applicable)
with the same level of medical, dental, accident, disability and term life insurance benefits upon
substantially the same terms and conditions (including contributions required by Executive for such
benefits) as existed immediately prior to Executive’s Date of Termination (or, if more favorable to
Executive, as such benefits and terms and conditions existed immediately prior to the Change in
Control); provided that, if Executive cannot continue to participate in the Company plans providing
such benefits, the Company shall otherwise provide such benefits on the same after-tax basis as if
continued participation had been permitted. Notwithstanding the foregoing, in the event Executive
becomes reemployed with another employer and becomes eligible to receive welfare benefits from such
employer, the welfare benefits described herein shall be secondary to such benefits during the
period of Executive’s eligibility, but only to the extent that the Company reimburses Executive for
any increased cost and provides any additional benefits necessary to give Executive the benefits
provided hereunder. Any medical or dental coverage provided under this Section 4(b) shall be in
addition to any rights Executive has under Part 6 of Title 1 of ERISA.

     (c) If during the Termination Period the employment of Executive shall terminate other than by
reason of a Qualifying Termination, then the Company shall pay to Executive within thirty (30) days
following the Date of Termination, a lump-sum cash amount equal to the sum of (1) Executive’s base
salary through the Date of Termination and any bonus amounts which have become payable, to the
extent not theretofore paid or deferred, and (2) any accrued vacation pay, in each case to the
extent not theretofore paid. The Company may make such additional payments, and provide such
additional benefits, to Executive as the Company and Executive may agree in writing.

     5. Certain Additional Payments by the Company.

     (a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment, award, benefit or distribution (or any acceleration of any payment,
award, benefit or distribution) by the Company (or any of its affiliated entities) or any

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entity which effectuates a Change in Control (or any of its affiliated entities) to or for the
benefit of Executive (whether pursuant to the terms of this Agreement or otherwise, but determined
without regard to any additional payments required under this Section 5) (the “Payments”) would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the “Code”), or any interest or penalties are incurred by Executive with respect to such excise
tax (such excise tax, together with any such interest and penalties, are hereinafter collectively
referred to as the “Excise Tax”), then the Company shall pay to Executive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by Executive of all taxes (including any
Excise Tax) imposed upon the Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

     (b) Subject to the provisions of Section 5(a), all determinations required to be made under
this Section 5, including whether and when a Gross-Up Payment is required, the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determinations, shall be
made by the public accounting firm that is retained by the Company as of the date immediately prior
to the Change in Control (the “Accounting Firm”) which shall provide detailed supporting
calculations both to the Company and Executive within fifteen (15) business days of the receipt of
notice from the Company or the Executive that there has been a Payment, or such earlier time as is
requested by the Company (collectively, the “Determination”). In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group effecting the Change
in Control, Executive may appoint another nationally recognized public accounting firm to make the
determinations required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by
the Company and the Company shall enter into any agreement requested by the Accounting Firm in
connection with the performance of the services hereunder. The Gross-up Payment under this Section
5 with respect to any Payments shall be made no later than thirty (30) days following such Payment;
provided, however, in no event shall such payment be made earlier than six (6) months and one (1)
day after Executive separates from service (within the meaning of Section 409A of the Code). If
the Accounting Firm determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that failure to report the
Excise Tax, if any, on Executive’s applicable federal income tax return will not result in the
imposition of a negligence or similar penalty. The Determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible that Gross-up Payments
which will not have been made by the Company should have been made (“Underpayment”) or Gross-up
Payments are made by the Company which should not have been made (“Overpayment”), consistent with
the calculations required to be made hereunder. In the event that the Executive thereafter is
required to make payment of any Excise Tax or additional Excise Tax, the Accounting Firm shall
determine the amount of the Underpayment that has occurred and any such Underpayment (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
Company to or for the benefit of Executive. In the event the amount of the Gross-up Payment
exceeds the amount necessary to reimburse the Executive for his Excise Tax, the Accounting Firm
shall determine

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the amount of the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid by
Executive (to the extent he has received a refund if the applicable Excise Tax has been paid to the
Internal Revenue Service) to or for the benefit of the Company. Executive shall cooperate, to the
extent his expenses are reimbursed by the Company, with any reasonable requests by the Company in
connection with any contests or disputes with the Internal Revenue Service in connection with the
Excise Tax.

     6. Withholding Taxes. The Company may withhold from all payments due to Executive (or
his beneficiary or estate) hereunder all taxes which, by applicable federal, state, local or other
law, the Company is required to withhold therefrom.

     7. Reimbursement of Expenses. If any contest or dispute shall arise under this
Agreement involving termination of Executive’s employment with the Company or involving the failure
or refusal of the Company to perform fully in accordance with the terms hereof, the Company shall
pay directly or reimburse Executive, on a current basis, for all reasonable legal fees and
expenses, if any, incurred by Executive in connection with such contest or dispute (regardless of
the result thereof), together with interest in an amount equal to the prime rate of the Chase
Manhattan Bank, N.A., from time to time in effect, but in no event higher than the maximum legal
rate permissible under applicable law, such interest to accrue from the date the Company receives
Executive’s statement for such fees and expenses through the date of payment thereof, regardless of
whether or not Executive’s claim is upheld by a court of competent jurisdiction/arbitration panel.
Any payments or reimbursement under this Section 7 shall be paid on the first business day which is
six (6) months and one (1) day after Executive has a “separation from service” under Section 409A
of the Code. To the extent fees, expenses or interest are incurred after such date, the Company
shall pay or reimburse such fees, expenses and interest pursuant to this Section 7 (to the extent
not previously paid or reimbursed) on the first business day of each month following such date.
However, no payments or reimbursements shall be made under this Section 7 after the third
anniversary of the date the last applicable statute of limitations has run with respect to the
claims which are the subject of the contest or dispute.

     8. Scope of Agreement. Nothing in this Agreement shall be deemed to entitle Executive
to continued employment with the Company or its Subsidiaries, and if Executive’s employment with
the Company shall terminate prior to a Change in Control, Executive shall have no further rights
under this Agreement (except as otherwise provided hereunder); provided, however, that any
termination of Executive’s employment during the Termination Period shall be subject to all of the
provisions of this Agreement.

     9. Successors: Binding Agreement.

     (a) This Agreement shall not be terminated by any Business Combination. In the event of any
Business Combination, the provisions of this Agreement shall be binding upon the Surviving
Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

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     (b) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company unconditionally to assume expressly and agree to perform this Agreements in the same manner
and to the same extent that the Company would be required to perform if no such succession had
taken place. As used in this Agreement, “Company” means the Company has hereinbefore defined, and
any successor to its business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise. Failure of the Company to obtain such assumption
prior to the effectiveness of any such succession that constitutes a Change in Control, shall be a
breach of this Agreement and shall constitute Good Reason hereunder and shall entitle Executive to
compensation and other benefits from the Company in the same amount and on the same terms as
Executive would be entitled hereunder if Executive’s employment were terminated following a Change
in Control by reason of a Qualifying Termination. For purposes of implementing the foregoing, the
date on which any such Business Combination becomes effective shall be deemed the date Good Reason
occurs, and shall be the Date of Termination if requested by Executive.

     (c) This Agreement is personal to the Executive and without the express prior written consent
of the Company shall not be assignable by the Executive otherwise than by will or the laws of
descent and distribution, and any such purported assignment shall be void. This Agreement shall
inure to the benefit of and be enforceable by Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive
shall die while any amounts would be payable to Executive hereunder had Executive continued to
live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to such person or persons appointed in writing by Executive to receive such
amounts or, if no person is so appointed, to Executive’s estate.

     10. Notice.

     (a) For purposes of this Agreement, all notices and other communications required or permitted
hereunder shall be in writing and shall be deemed to have been duly given when delivered or five
(5) days after deposit in the United States mail, certified and return receipt requested, postage
prepaid, addressed as follows:

If to the Executive:

Garry Welsh

11416 Cranebrook Court

Windermere, FL 34786

If to the Company:

Gevity HR, Inc.

9000 Town Center Parkway

Bradenton, FL 34202

Attn: Chief Administrative Officer

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herewith, except that notices of change of address shall be effective only upon receipt.

     (b) A written notice of Executive’s Date of Termination by the Company or Executive, as the
case may be, to the other, shall (i) indicate the specific termination provision in this Agreement
relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s employment under the
provision so indicated and (iii) specify the termination date (which date shall be not less than
fifteen (15) (thirty (30), if termination is by the Company for Disability) nor more than sixty
(60) days after the giving of such notice). The failure by Executive or the Company to set forth
in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause
shall not waive any right of Executive or the Company hereunder or preclude Executive or the
Company from asserting such fact or circumstance in enforcing Executive’s or the Company’s rights
hereunder.

     11. Full Settlement; Resolution of Disputes. The Company’s obligation to make any
payments provided for in this Agreement and otherwise to perform its obligations hereunder shall be
in lieu and in full settlement of all other severance payments to Executive under any other
severance or employment agreement between Executive and the Company, and any severance plan of the
Company. The Company’s obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have against Executive or
others. In no event shall Executive be obligated to seek other employment or take other action by
way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement
and, except as provided in Section 4(b), such amounts shall not be reduced whether or not Executive
obtains other employment.

     12. Employment with Subsidiaries. Employment with the Company for purposes of this
Agreement shall include employment with any Subsidiary.

     13. Survival. The respective obligations and benefits afforded to the Company and
Executive as provided in Sections 4 (to the extent that payments or benefits are owed as a result
of a termination of employment that occurs during the term of this Agreement), 5 (to the extent
that Payments are made to Executive as a result of a Change in Control that occurs during the term
of this Agreement), 6, 7, 9(c) and 11 shall survive the termination of this Agreement.

     14. GOVERNING LAW. THE INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF FLORIDA WITHOUT REGARD TO THE PRINCIPLE OF CONFLICTS OF LAWS.

     15. Severability. The invalidity, illegality or unenforceability of any provision of
this Agreement shall not affect the validity, legality or enforceability of any other provision of
this Agreement, which other provisions shall remain in full force and effect. If the effect of a
final

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and unappealable holding or finding that any such provision is either invalid, illegal or
unenforceable is to modify to the Executive’s detriment, reduce or eliminate any compensation,
reimbursement, payment, allowance or other benefit to the Executive intended by the Company and
Executive in entering into this Agreement, the Company shall promptly negotiate and enter into an
agreement with the Executive containing alternative provisions (reasonably acceptable to the
Executive) that will restore to the Executive (to the extent legally permissible) substantially the
same economic, substantive and income tax benefits the Executive would have enjoyed had any such
provision of this Agreement been upheld as valid, legal and enforceable.

     16. Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed to be an original and all of which together shall constitute one and the same instrument.

     17. Miscellaneous.

     (a) No provision of this Agreement may be modified or waived unless such modification or
waiver is agreed to in writing and signed by Executive and by a duly authorized officer of the
Company. No waiver by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be performed by such other
party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.

     (b) Failure by Executive or the Company to insist upon strict compliance with any provision of
this Agreement or to assert any right Executive or the Company may have hereunder, including
without limitation, the right of Executive to terminate employment for Good Reason, shall not be
deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

     (c) Except as otherwise specifically provided herein, the rights of, and benefits payable to,
Executive, his estate or his beneficiaries pursuant to this Agreement are in addition to any rights
of, or benefits payable to, Executive, his estate or his beneficiaries under any other employee
benefit plan or compensation program of the Company.

     (d) If any amounts which are required or determined to be paid or payable or reimbursed or
reimbursable to the Executive under this Agreement (or, following a Change in Control, under any
other plan, agreement, policy or arrangement with the Company) are not so paid promptly at the
times provided hereon or therein, such amounts shall accrue interest at an annual percentage rate
of ten percent (10%) from the date such amounts were required or determined to have been paid or
payable or reimbursed or reimbursable to the Executive until such amounts and any interest accrued
thereon are finally and fully paid; provided, however, that in no event shall the amount of
interest contracted for, charged or received hereunder exceed the maximum non-usurious amount of
interest allowed by applicable law.

12

 

     (e) The Executive acknowledges receipt of a copy of this Agreement (together with any
attachments hereto), which has been executed in duplicate and agrees that, with respect to the
subject matter hereof, this is the entire agreement with the Company. This Agreement replaces and
supercedes the Change in Control Severance Agreement between the parties dated the 16th day of
February 2001. Any other oral or any written representations, understandings or agreements with the
Company or any of its officers or representatives covering the same subject matter which are in
conflict with this Agreement hereby are merged into and superseded by the provisions of this
Agreement. Notwithstanding anything to the contrary in this Agreement, any payments made or
benefits provided under this Agreement shall be an offset to the payments and/or benefits otherwise
payable under any other agreement between Executive and the Company.

     (f) To the extent this Agreement is subject to Section 409A of the Code, Executive and the
Company intend all payments under this Agreement to comply with the requirements of such section,
and this Agreement shall, to the extent practical, be operated and administered to effectuate such
intent. To the extent necessary to avoid adverse tax consequences under Section 409A of the Code,
the timing of any payment under this Agreement shall be delayed by six months and one day in a
manner consistent with § 409A(a)(2)(B)(i) of the Code.

     (g) If the Company engages in a sale of substantially all its assets and Executive is offered
comparable employment with the buyer of such assets, the Company and the buyer shall specify in
writing at the time of the sale whether Executive has a termination of employment in connection
with the sale; provided, however, (i) the buyer must accept assignment of this Agreement in order
for the Company to agree that no termination of employment has occurred, (ii) if the buyer and the
Company fail to specify whether a termination of employment has occurred, Executive shall be
treated as having terminated employment and (iii) any determination of whether a termination of
employment has occurred shall be made in accordance with Treas. Reg. 1.409A-1(h)(4).

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized
officer of the Company and Executive has executed this Agreement as of the day and year first above
written.

	 	 	 	 	 
	 	GEVITY HR, Inc.

 	 
	 	/s/ Edwin E. Hightower, Jr.
 	 
	 	Name:  	Edwin E. Hightower, Jr. 	 
	 	Title:  	Vice President and General Counsel 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ Garry Welsh
 	 
	 	Garry Welsh 	 
	 	 	 
	 

13EX-10.23 Share Purchase Agreement

 

EXHIBIT 10.23

	 	 	 	 
	 	 	 	Share Purchase Agreement

	 
	 	 	 

	 	 	 	 

	 
	 	 	 

	 	 	 	By and Among:

	 
	 	 	 

	 	 	 	Sunair Services Corporation;

	 
	 	 	 

	 	 	 	Net2Room.com Pte Ltd.; and

	 
	 	 	 

	 	 	 	Percipia, Inc.

 

 

This SHARE PURCHASE AGREEMENT is entered into this 12th July 2007 by and among:

	 	 	 
	(1)	 	 

	 	 	 
	Name	 	Sunair Services Corporation (“Seller”)

	Address and	 	595 South Federal Highway, Suite 500

	Notice Details	 	Boca Raton, FL 33432

	 	 	Facsimile No: (561) 955-7333

	 	 	Attention: John J. Hayes, President and Chief Executive Officer

	 	 	 
	(2)	 	 

	 	 	 
	Name	 	Net2Room.com Pte. Ltd. or its designee (“Purchaser”)

	Address and	 	1100 Business Center Circle, Suite 100

	Notice Details	 	Newbury Park, CA 91320

	 	 	Facsimile No.: (818) 575-2610

	 	 	Attention: Dongsik Benjamin Park, Director

	 	 	 
	(3)	 	 

	 	 	 
	Name	 	Percipia, Inc. (“Company”)

	Address and	 	858 Morrison Road

	Notice Details	 	Gahanna, OH 43230

	 	 	Facsimile No: (614) 856-1139

	 	 	Attention: Kesavan Haridas, President

RECITALS

	A.	 	Seller is the registered holder and beneficial owner of the Sale Shares (as the term is
hereinafter defined).
	 
	B.	 	Seller has advanced the Sunair Loan (as the term is hereinafter defined) to the Company.
	 
	C.	 	The Sale Shares comprise all of the issued shares in the Company.
	 
	D.	 	Seller has agreed to sell the Sale Shares to Purchaser and Purchaser shall cause the Company
immediately following the Closing to make full payment and satisfaction of the Sunair Loan
upon the terms and conditions set forth in this Agreement.

1

 

AGREED TERMS

	1.	 	DEFINITIONS AND INTERPRETATION

     1.1 In this Agreement where the context so admits the following words and expressions shall
have the following meanings:

	 	 	 
	“Act”
	 	the Florida Business Corporation Act;

	 
	 	 

	“Affiliates”
	 	in relation to any Party:

	 	 	 	 	 
	 	 	(a)
	 	a Related Party in which the Party beneficially
owns not less than 50% of the Shares;

	 
	 	 	 	 

	 	 	(b)
	 	a Related Party or entity or person in which
the Party is beneficially owned by not less than
50% by the Related Party or entity;

	 
	 	 	 	 

	 	 	(c)
	 	a company, entity or person, wherein the Party
controls the composition of the board of directors
of the company, entity, or person either
beneficially or by agreement, or

	 
	 	 	 	 

	 	 	(d)
	 	a company, entity or person that controls the
board of directors of the Party either beneficially
or by agreement.

	 	 	 
	 	 	Notwithstanding the foregoing, the definition of
Affiliate shall not include Coconut Palm Capital
Investors II, Ltd. and its Affiliates.

	 
	 	 

	“Agreement”
	 	this Share Purchase Agreement;

	 
	 	 

	“Applicable Law”
	 	any statute, law, regulation, ordinance, rule,
judgment, order, decree, governmental approval,
concession, grant, franchise, license, directive,
guideline, policy, requirement or other
governmental restriction or any similar form of
decision of, or determination by, or any
interpretation or administration of any of the
foregoing by, any Government Authority;

	 
	 	 

	“Articles of
Incorporation”
	 	the Articles of Incorporation or other charter
document of the Group Company;

	 
	 	 

	“Auditor”
	 	John Gerlach & Company LLP or an independent
accounting firm of recognized national or regional
standing mutually selected by Seller and the
Purchaser;

2

 

	 	 	 
	“Business”
	 	the research, development, marketing, distribution,
sales and service of telecommunications software
and systems principally for hotels and industries
with comparable telecommunications characteristics
and such other business conducted by any Group
Company as of the Closing;

	 
	 	 

	“Business Day”
	 	a day that is not a Saturday or a Sunday, public
holiday or bank holiday in Singapore or the State
of Florida, USA;

	 
	 	 

	“Closing”
	 	Closing of the Share Sale and payment of the
Consideration pursuant to the terms of this
Agreement;

	 
	 	 

	“Closing Conditions”
	 	the conditions specified in Section 4.1;

	 
	 	 

	“Closing Date”
	 	31st July 2007, or the date on which all the
Closing Conditions are satisfied or waived or such
later date as the Parties may agree, in any case
not later than 15th August 2007;

	 
	 	 

	“Closing Date Debt”
	 	the amount of the aggregate debt for borrowed money
(excluding current liabilities, such as liabilities
associated with personal property leases) of the
Group outstanding as of 31st July 2007, excluding
the Sunair Loan;

	 
	 	 

	“Code”
	 	the Internal Revenue Code of 1986, as amended;

	 
	 	 

	“Company Intellectual

Property”
	 	any and all Intellectual Property Rights owned by
any of the Group Companies or which any of the
Group Companies has the right to use pursuant to
any written license, sublicense, agreement or
permission, that have been used by any of the Group
Companies in any Company Products or are used by
any of the Group Companies or useful in, related to, or arise out of the operation or conduct of the
Business;

	 
	 	 

	“Company Products”
	 	the products and service offerings of any Group
Company described in Schedule 7.7.1;

	 
	 	 

	“Company Financial

Statements”
	 	the meaning ascribed to it under Clause 3.1 of
Schedule 7;

	 
	 	 

	“Consideration”
	 	the total consideration for the Share Sale as set
out in Section 3;

3

 

	 	 	 
	“Copyrights”
	 	all copyrights, published or unpublished, copyright
registrations and applications therefor and all
other rights corresponding thereto throughout the
world;

	 
	 	 

	“Designs”
	 	all industrial designs and any registrations and
applications therefor throughout the world;

	 
	 	 

	“Encumbrance”
	 	any form of legal, equitable or security interests,
including but not limited to any mortgage,
assignment of receivables, debenture, lien, charge,
pledge, title retention, right to acquire, security
interest, hypothecation, options, rights of first
refusal, any preference arrangement (including
title transfers and retention arrangements or
otherwise) and any other encumbrance or condition
whatsoever or any other arrangements having similar
effect;

	 
	 	 

	“GAAP”
	 	generally accepted accounting principles in the
United States, consistently applied in accordance
with the Company’s historical practice;

	 	 	 	 	 
	“Government Authority”
	 	(a)
	 	a government, government department or any
political subdivision of government; or

	 
	 	 	 	 

	 	 	(b)
	 	a governmental or semi-government entity
exercising executive, legislative, judicial,
regulatory or administrative functions or authority
of or pertaining to government.

	 	 	 
	“Group”
	 	the Company and PNI;

	 
	 	 

	“Group Company”
	 	the Company or PNI;

4

 

	 	 	 
	“Intellectual
Property Rights”
	 	any and all of the following and any and all rights
in, arising out of, or associated therewith:

	 	 	 	 	 
	 	 	(a)
	 	Patents;

	 
	 	 	 	 

	 	 	(b)
	 	Trade Secrets;

	 
	 	 	 	 

	 	 	(c)
	 	Copyrights;

	 
	 	 	 	 

	 	 	(d)
	 	Designs;

	 
	 	 	 	 

	 	 	(e)
	 	Trademarks;

	 
	 	 	 	 

	 	 	(f)
	 	Software;

	 
	 	 	 	 

	 	 	(g)
	 	moral rights, publicity rights, mask
works and any other proprietary, intellectual or
industrial proprietary rights of any kind or nature
that do not compromise or are not protected by the
Patents, Trade Secrets, Copyrights or Trademarks;
and

	 
	 	 	 	 

	 	 	(h)
	 	any similar, corresponding or equivalent
rights to any of the foregoing anywhere in the
world;

	 	 	 
	“Key Employees”
	 	the employees of the Group Companies whose names
are listed in Schedule 4.1.2;

	 
	 	 

	“Knowledge”
	 	with respect to any matter in question, the
collective actual knowledge of such matter of, John
J. Hayes, Chief Executive Officer of Seller, Edward
Carriero, Chief Financial Officer of Seller,
Kesavan Haridas, Chief Executive Officer of the
Company, Veera Murugappan, Treasurer, Secretary and
Controller of the Company, and Christopher Farrar,
President of PNI. Each such person shall also be
deemed to have actual knowledge of all books and
records of the Group, and of matters as such
persons could be expected to discover or otherwise
become aware in the course of inquiring with each
other and existing management of Seller or any
Group Company concerning the existence of such
matter wherever “Knowledge” is specifically
referred to in the Warranties;

5

 

	 	 	 
	“Lien”
	 	any lien, encumbrance, pledge, mortgage, deed of
trust, security interest, lease, charge, option,
right of first refusal, easement, servitude,
transfer restriction, or adverse claim or right of
any kind or character;

	 
	 	 

	“Losses”
	 	any and all claims, allegations, losses, costs,
expenses, liabilities, judgments, expenses, fines,
awards, penalties, sanctions or other damages
(including any settlement costs, reasonable
attorneys’ fees and costs of investigation and
preparation, and interest on any cash
disbursements);

	 
	 	 

	“Management Service

Agreement”
	 	the management service agreements entered into by
the Key Employees in accordance with Section 4.1.2;

	 
	 	 

	“Material Adverse

Effect”
	 	any event, change in, or effect that is materially
adverse to the business, assets, liabilities,
capitalization, condition (financial or other), or
results of operations of the Group Companies, other
than any change or effect arising out of or
resulting from (a) economic factors generally
affecting the industries or markets in which the
Group Companies operate, which conditions do not
affect the Group Companies in a disproportionate
manner; or (b) the direct effect of the public
announcement or pendency of the transactions
contemplated hereby; provided, however, that with
respect to clause (b) of this sentence, Seller or
the Company shall bear the burden of proof in any
proceeding with regard to establishing that any
event, change or effect is attributable to or
results from the direct effect of the public
announcement or pendency of the transactions
contemplated hereby;

	 
	 	 

	“Party”
	 	a Party to this Agreement, and together “Parties”;

	 
	 	 

	“Patents”
	 	all United States and foreign issued patents and
utility models and applications herefore and all
reissues, divisionals, re-examinations, renewals,
extensions, provisionals, and continuations
thereof, and all equivalent or similar rights
anywhere in the world in inventions and discoveries
including invention disclosures;

	 
	 	 

	“PNI”
	 	Percipia Networks, Inc., a wholly-owned subsidiary
of the Company;

6

 

	 	 	 
	“Related Party”
	 	in relation to each Party, means the following:

	 	 	 	 	 
	 	 	(a)
	 	its holding company, its subsidiary, or a
subsidiary of the holding company of that Party;
and

	 
	 	 	 	 

	 	 	(b)
	 	any company in the equity share capital of
which it is directly or indirectly interested so as
to exercise or control the exercise of fifty
percent (50%) or more of the voting power at
general meetings, or to control the composition of
a majority of the board of directors and any other
company which is a subsidiary of any such company.

	 	 	 
	 	 	Notwithstanding the foregoing, the definition of
Related Party shall not include Coconut Palm
Capital Investors II, Ltd., and its Affiliates;

	 
	 	 

	“Sale Shares”
	 	100% of the issued and paid up shares in the
Company, being 1,000 Shares of common stock as of
Closing;

	 
	 	 

	“Shares”
	 	the shares of common stock in the capital of the
Company defined in, and having the rights set out
in, the Articles of Incorporation;

	 
	 	 

	“Share Sale”
	 	the sale and purchase of the entire legal and
beneficial interest in the Sale Shares in
accordance with this Agreement;

	 
	 	 

	“Stock Option Plan”
	 	the Percipia 2001 Stock Option Plan;

	 
	 	 

	“Software”
	 	any and all (a) computer programs, including any
and all software implementations of algorithms,
models and methodologies, whether in source code or
object code, and (b) databases and compilations,
including any and all data and collections of data,
whether machine readable or otherwise;

	 
	 	 

	“Sunair Loan”
	 	an amount equal to Two Million Nine Hundred Sixty
Nine Thousand Eight Hundred Thirty Six Dollars
(US$2,969,836), being the total moneys advanced by
Sunair to the Company as at the Closing Date;

7

 

	 	 	 
	“Tax”
	 	(a) all federal, state, local, foreign and
other net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise,
profits, license, lease, service, service use,
withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property,
windfall profits, alternative minimum, estimated,
customs, duties or other taxes, fees, assessments
or charges of any kind whatsoever, together with
any interest and any penalties, additions to tax or
additional amounts with respect thereto;

	 
	 	 

	 	 	(b) any liability for payment of amounts
described in clause (a) whether as a result of
transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group
for any period, or otherwise through operation of
law; and

	 
	 	 

	 	 	(c) any liability for the payment of amounts
described in (a) or (b) as a result of any tax
sharing, tax indemnity or tax allocation agreement
or any other express or implied agreement to
indemnify any other person;

	 
	 	 

	“Tax Return”
	 	any return, declaration, report, statement,
information statement and other document required
to be filed with respect to Taxes, including any
claims for refunds of Taxes and any amendments or
supplements of any of the foregoing;

	 
	 	 

	“Third Party Claim”
	 	any claim or allegation of Losses by any person
that is not a Party or an Affiliate of a Party;

	 
	 	 

	“Trademarks”
	 	all rights in World Wide Web addresses and domain
names and applications and registrations therefor;
all trade names, logos, symbols, registered and
common law trademarks and service marks,
intent-to-use applications, and other applications
and registrations therefor and all goodwill
associated therewith throughout the world;

8

 

	 	 	 
	“Trade Secrets”
	 	all data bases, source codes, methodologies,
manuals, artwork, advertising manuals, trade
secrets and all financial, accounting marketing and
technical information, customer and supplier lists,
know-how, technology, operating procedures and
other information, confidential or proprietary
information, used by or relating to any Group
Company and its transactions and affairs;

	 
	 	 

	“Transaction

Documents”
	 	this Agreement any other agreement or document to
which the Seller, any Group Company and/or
Purchaser are or will be a party, as contemplated
by this Agreement.

	 
	 	 

	“US$” or “$”
	 	United States dollars, the lawful currency of the
United States of America;

	 
	 	 

	“Wachovia”
	 	Wachovia Bank, National Association;

	 
	 	 

	“Wachovia Credit”
	 	the credit arrangement extended to Seller under the
Credit Agreement, Pledge Agreement and Security
Agreement all dated 7 June 2005, as amended, and
executed among Seller, the subsidiaries-guarantors
and lenders named therein and Wachovia Bank,
National Association;

	 
	 	 

	“Warranties”
	 	the representations, warranties and undertakings
contained or referred to in this Agreement and the
Schedules and Exhibits attached hereto, and as more
specifically set forth in Section 7 and Schedule 7;

	 
	 	 

	“Working Capital”
	 	the current assets of the Company (excluding Tax
benefits, if any) reduced by the current
liabilities of the Company (excluding Tax
liabilities) as of 31st July 2007, in each case
determined in accordance with GAAP; provided,

	 	 	 	 	 
	 	 	(a)
	 	that any items included in the Closing Date
Debt shall not be included in Working Capital;

9

 

	 	 	 	 	 
	 	 	(b)
	 	accounts receivables in dispute or outstanding
for greater than 180 days as of 31st July 2007shall
not be included in Working Capital (unless actually
received as of the date the Actual Working Capital
is finally determined pursuant to Section 3.3); and

	 
	 	 	 	 

	 	 	(c)
	 	inventory in the pre-determined amount of Sixty
Thousand Dollars (US$60,000) that has not been sold
or used for greater than 180 days prior to 31st
July 2007, unless such Inventory has been otherwise
accepted by Purchaser in writing as valid
inventory, shall have been appropriately reflected
in the Working Capital of the Company as obsolete,
and such inventory shall have been at cost for this
purpose (unless actually sold or used as of the
Actual Working Capital Statement is finally
determined pursuant to Section 3.3).

     1.2 Any references, express or implied, to statutes or statutory provisions shall be construed
as references to those statutes or provisions as respectively amended or re-enacted or as their
application is modified from time to time by other provisions (whether before or after the date
hereof) and shall include any statutes or provisions of which they are re-enactments (whether with
or without modification) and any orders, regulations, instruments or other subordinate legislation
under the relevant statute or statutory provision. References to sections of consolidating
legislation shall wherever necessary or appropriate in the context be construed as including
references to the sections of the previous legislation from which the consolidating legislation has
been prepared.

     1.3 Except as otherwise expressly provided in this Agreement, references in this Agreement to
Sections are to sections in this Agreement and references to Clauses are to clauses of the
Schedules and Exhibits. The Schedules and Exhibits to this Agreement shall be deemed to form part
of this Agreement.

     1.4 Unless the context clearly indicates otherwise, (a) words of any gender include each other
gender, (b) words using the singular number include the plural, and vice versa, (c) the terms
“hereof,” “herein,” “hereby,” and derivate or similar words refer to this Agreement as a whole and
not to any particular section, (d) the words “include,” “includes” and “including” when used herein
shall be deemed in each case to be followed by the words “without limitation,” and (e) references
to “person” include any individual, corporation, limited or general partnership, association,
proprietorship, limited liability company, joint venture, trust, other business organization or
Government Authority. The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.

	2.	 	SHARE SALE AND REPAYMENT OF SUNAIR LOAN

     2.1 At Closing, the Seller shall sell to Purchaser the entire legal and beneficial interest in
the Sale Shares (a) free from all Encumbrances and (b) together with all rights attaching to them,
including all rights to any dividend or other distribution declared, made or paid after the Closing
Date.

     2.2 Immediately following the Closing on the Closing Date, Purchaser shall cause the Company
to pay in full in cash to Seller the remaining balance, if any, under the Sunair Loan in accordance
with the payment schedule set forth in Section 5.3.1 and Section 5.3.2 below. If the

10

 

Company does not have sufficient cash available to make such payment, Purchaser shall
contribute to or loan to the Company an amount in cash sufficient to make such payment immediately
following the Closing.

     2.3 Seller waives any restrictions on transfer which may exist in relation to the Sale Shares,
whether under the Articles of Incorporation or By-Laws of the Company or otherwise.

	3.	 	CONSIDERATION

     3.1 Consideration. The aggregate maximum consideration (the “Consideration”)
to be paid by Purchaser for the Sale Shares shall be, subject to Sections 3.2, 3.3 and 3.4 hereof,
Three Million Seven Hundred Thousand Dollars (US$3,700,000), (i) minus the Closing Date Debt; (ii)
as applicable, plus that amount by which Working Capital is greater than zero as of 31st July 2007
or minus that amount by which Working Capital is less than zero as of 31st July 2007; and (iii)
minus the balance of the Sunair Loan to be repaid by the Company pursuant to Section 2.2 hereof.
The Consideration shall be subject to a holdback in the amount of Seven Hundred Fifty Thousand
Dollars (US$750,000) to be placed in an escrow account as set forth in Section 8.8 hereof. The
Consideration shall be paid by Purchaser as follows:

          3.1.1 A deposit of One Million Two Hundred Thousand Dollars (US$1,200,000) (the
“Deposit”) shall be paid by wire transfer of immediately available funds to Akerman
Senterfitt, counsel for Seller, upon execution of this Agreement, to be held in an interest-bearing
trust account on behalf of the Parties until the Closing, at which time it shall be applied toward
the Consideration and paid in accordance with Section 5.3.1 below. The Deposit shall be
non-refundable to the Purchaser; provided, however, if the Closing does not occur
on or before 15th August 2007 for any reason other than the breach by Purchaser of its payment
obligations under Section 5.3, the Deposit, plus any accrued interest, shall be refunded to
Purchaser.

          3.1.2 The balance of the Consideration shall be paid in accordance with Section Section 5.3.3
below.

     3.2 Closing Date Working Capital.

          3.2.1 Attached hereto as Schedule 3.2 is a statement prepared by the Company and agreed to by
the Purchaser estimating as of 31 May 2007 (as if the Closing had occurred as of the end of
business on such date) the items set forth in (i) — (ii) of Section 3.1 above (the
“Preliminary Statement”).

          3.2.2 At least three (3) Business Days prior to Closing Date, the Company shall deliver (a) an
estimated balance sheet as of Closing Date and (b) a calculation of the estimated Working Capital
of the Company as of the Closing Date reflected in a statement in substantially the form, and
applying the accounting methodology set forth in the Preliminary Statement, as set forth on
Schedule 3.2. (the “Estimated Closing Date Working Capital Statement”).

          3.2.3 Within 120 days following the Closing Date, Purchaser shall deliver to Seller a
calculation of the actual Working Capital of the Company as of the Closing Date (the “Actual
Closing Date Working Capital Statement”) which shall be reflected in a certificate

11

 

substantially in the form, and applying the accounting methodology set forth in the
Preliminary Statement, as set forth on Schedule 3.2.

     3.3 Upon delivery of the Actual Closing Date Working Capital Statement, Purchaser will provide
Seller and its accountants and other advisors access to the books and records and employees of the
Company (including any work papers used to prepare the Actual Closing Date Working Capital
Statement) to the extent reasonably related to the Seller’s evaluation of the Actual Closing Date
Working Capital Statement or the resolution of any dispute with respect thereto. If the Seller
disagrees with the calculation of the Actual Closing Date Working Capital Statement, it shall
notify Purchaser of such disagreement in writing, setting forth in reasonable detail the
particulars of such disagreement, within thirty (30) days after its receipt of the Actual Closing
Date Working Capital Statement. In the event that the Seller does not provide such a notice of
disagreement within such thirty (30) day period, the Seller shall be deemed to have accepted the
Actual Closing Date Working Capital Statement, which shall be final, binding and conclusive for all
purposes hereunder. In the event any such notice of disagreement is timely provided, Seller and
the Purchaser shall use commercially reasonable efforts for a period of thirty (30) days (or such
longer period as they may mutually agree) to resolve any disagreements with respect to the
calculation of the Actual Closing Date Working Capital Statement. If, at the end of such period,
they are unable to resolve such disagreements, then the Auditor shall resolve any remaining
disagreements. The Auditor shall determine as promptly as practicable, but in any event within
thirty (30) days of the date on which such dispute is referred to the Auditor, whether the Actual
Closing Date Working Capital Statement was prepared in accordance with the Agreement and whether
and to what extent, if any, the Actual Closing Date Working Capital Statement requires adjustment.
The determination of the Auditor shall be final, conclusive and binding on the Parties. In the
event that the Auditor’s determination of the Actual Closing Date Working Capital Statement is
higher by more than seven percent (7%) from the Actual Closing Date Working Capital Statement
originally submitted by the Purchaser, then Purchaser shall pay all costs and expenses of the
Auditor. Otherwise, Seller shall pay all costs and expenses of the Auditor.

     3.4 Adjustments. Subject to this Section 3, the Consideration shall be adjusted to
reflect any difference between the Actual Closing Date Working Capital Statement and the Estimated
Closing Date Working Capital Statement. Upon final determination of Actual Closing Date Working
Capital as provided in Section 3.3 above, (A) if Actual Closing Date Working Capital Statement is
greater than the Estimated Closing Date Working Capital Statement, the Consideration shall be
increased by the amount that the Actual Closing Date Working Capital Statement exceeds the
Estimated Closing Date Working Capital Statement and Purchaser shall promptly, but no later than
fifteen (15) Business Days after such final determination, pay to Seller the amount of such
difference, together with interest thereon, from the Closing Date to the date of payment thereof,
as set forth in Section 8.6 below, and (B) if Actual Closing Date Working Capital Statement is less
than Estimated Closing Date Working Capital Statement, the Consideration shall be decreased by the
amount that the Estimated Closing Date Working Capital Statement exceeds the Actual Closing Date
Working Capital Statement and Seller shall promptly, but no later than fifteen (15) Business Days
after such final determination, pay to Purchaser the amount of such difference, together with
interest thereon, from the Closing Date to the date of payment thereof as set forth in Section 8.6
below.

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	4.	 	CONDITIONS TO CLOSING

     4.1 The obligations of Purchaser under this Agreement are subject to the satisfaction, at or
before Closing, of all of the following conditions precedent, unless waived in writing by
Purchaser:

          4.1.1 the Warranties of Seller and the Group contained in this Agreement or in any statement,
Exhibit, Schedule, certificate or document delivered by Seller or a Group Company under this
Agreement shall be true, correct and complete on and as of the date when made and at all times
prior to the Closing, shall be deemed to be made again at the Closing, and shall then be true,
correct and complete as of the Closing;

          4.1.2 each of the Key Employees shall have entered into a Management Service Agreement with
the Company prior to the Closing Date on terms mutually agreed by Purchaser and Seller;

          4.1.3 a release of all obligations of the Group Companies related to the Wachovia Credit and
covenant by Seller to file the pertinent UCC statements within five (5) Business Days of the
Closing;

          4.1.4 the Company shall have adopted resolutions to:

               (a) approve the Share Sale;

               (b) effect the termination of the Stock Option Plan; and

               (c) ratify the reduction of the Company’s issued share capital from 167,218 shares of common
stock to 1,000 shares of common stock.

          4.1.5 Seller shall have adopted such board resolutions, shareholders’ resolutions or approvals
of Seller as are necessary to approve this Agreement and the Transaction Documents;

          4.1.6 Seller and the Group shall have performed, satisfied and complied with all covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by
them before the Closing;

          4.1.7 the Company shall have obtained the required consents under Schedule 7.8.1 hereof;

          4.1.8 there shall not have been a Material Adverse Effect;

          4.1.9 Seller shall have delivered to Purchaser the certificate representing the Sale Shares
free and clear of all Encumbrances accompanied by a stock power duly executed in blank;

          4.1.10 No temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory restraint or

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provision alleging infringement or other violation by, challenging the validity,
enforceability or the Group Company’s rights to use and exploit any Company Intellectual Property
currently embodied or proposed to be embodied in the Company Products or utilized in any Group
Company-designed or modified development tools or design environments shall be in effect.

          4.1.11 The Company and PNI shall have provided Purchaser with a certificate executed on behalf
of the Company and PNI by each respective party’s Chief Executive Officer and Chief Financial
Officer or Controller to the effect that, as of the Closing Date, all conditions set forth in this
Section 4.1 have been satisfied;

          4.1.12 Seller shall have provided Purchaser with a certificate executed on behalf of the
Seller by Seller’s Chief Executive Officer and Treasurer to the effect that, as of the Closing
Date, all conditions set forth in this Section 4.1 have been satisfied;

          4.1.13 The Company and PNI shall have provided Purchaser duly executed resignations and
release of each of the officers and directors of each company; and

          4.1.14 Counsel of the Company shall have executed and delivered to Purchaser an opinion as to
(a) the validity of the reduction of the Company’s issued share capital, and (b) the validity and
enforceability of the Agreement and the Transaction Documents in the form attached hereto as
Exhibit A.

     4.2 The obligations of Seller under this Agreement are subject to the satisfaction, at or
before Closing, of all of the following conditions precedent, unless waived in writing by Seller:

          4.2.1 the Warranties of Purchaser contained in this Agreement or in any statement, Exhibit,
Schedule, certificate or document delivered by Purchaser under this Agreement shall be true,
correct and complete on and as of the date when made and at all times prior to the Closing, shall
be deemed to be made again at the Closing, and shall then be true, correct and complete as of the
Closing;

          4.2.2 Purchaser adopting resolutions to authorize the transactions contemplated by this
Agreement; and

          4.2.3 Purchaser shall have performed, satisfied and complied with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied with by Purchaser
before the Closing.

	5.	 	CLOSING

     5.1 Subject to the provisions of Section 4, Closing shall take place on the Closing Date at a
venue to be agreed between the Parties when all of the events described in this Section 5 shall
occur.

     5.2 At Closing, Seller and the Group shall deliver to the Purchaser:

          5.2.1 the duly executed transfer of all of the Sale Shares in favor of the Purchaser together
with the original share certificate in relation to the Sale Shares;

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          5.2.2 written confirmation that to Seller’s and the Group’s Knowledge there is no matter or
thing which is a breach of any of the Warranties or which might otherwise constitute a Material
Adverse Effect for purposes of Section 4.1.9;

          5.2.3 letters of resignation and release of the Directors and officers of the Company and PNI
to take effect from Closing;

          5.2.4 such board resolutions, shareholders’ resolutions or approvals of the Company as are
necessary to:

               (a) approve the Share Sale;

               (b) effect the termination of the Stock Option Plan;

               (c) ratify the reduction of the Company’s issued share capital from 167,218 shares of common
stock to 1,000 shares of common stock; and

               (d) approve this Agreement and the Transaction Documents.

          5.2.5 the release of all obligations of the Group Companies related to the Wachovia Credit
and, within five (5) Business Days from the Closing Date, the UCC statements filed in relation to
said release;

          5.2.6 the Management Service Agreement of each of the Key Employees;

          5.2.7 the opinion of the Seller’s and Company’s legal counsel;

          5.2.8 the required consents under Schedule 7.8.1 hereof;

          5.2.9 such board resolutions or approvals of Seller as are necessary to approve this Agreement
and the Transaction Documents; and

          5.2.10 the pay-off letter evidencing full and final satisfaction of the Sunair Loan.

     5.3 On the Closing Date, Purchaser shall pay the Consideration as follows:

          5.3.1 authorize Akerman Senterfitt to release (i) Seven Hundred Fifty Thousand Dollars
(US$750,000) of the Deposit to fund an Escrow Account (as defined in Section 8.8 hereof) and (ii)
Four Hundred Fifty Thousand Dollars (US$450,000) of the Deposit, plus any interest accrued thereon,
to pay to Seller, to a bank account designated by Seller, which payment shall be deemed to be in
partial satisfaction of the Company’s obligations under the Sunair Loan;

          5.3.2 cause the Company to repay the remaining balance of the Sunair Loan to Seller by wire
transfer to a bank account designated by Seller, which payment shall be deemed to be in full
satisfaction of the Company’s obligations under the Sunair Loan;

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          5.3.3 pay to Wachovia, on behalf of Seller, by wire transfer of immediately available funds,
to a bank account designated by Wachovia, an amount equal to the Consideration (net of the Sunair
Loan) minus the amount paid in Section 5.3.1(i);

          5.3.4 execute the transfer of the Sale Shares;

          5.3.5 do such things or acts as may be reasonably required to facilitate transfer of the Sale
Shares to Purchaser’s name; and

          5.3.6 deliver such board resolutions or approvals as are necessary to approve this Agreement
and the Transaction Documents.

     5.4 Notwithstanding anything in this Agreement to the contrary, this Agreement and the
obligations of the Parties hereunder may be terminated on or prior to Closing as follows:

          5.4.1 By the Company and the Seller (i) in the event the transactions contemplated by this
Agreement have been prohibited or enjoined by reason of any final, unappealable judgment, decree or
order entered or issued by a court of competent jurisdiction in litigation or proceedings involving
any of the Parties hereto that was not entered at the request or with the support of the Company or
the Seller and if the Company and the Seller shall have used reasonable efforts to prevent the
entry of such order; (ii) in the event Purchaser breaches a representation or warranty of Purchaser
contained in this Agreement which has not been cured and is not capable of being cured prior to the
earlier of (A) the expiration of thirty (30) days after notice of such breach is given by the
Company or the Seller to Purchaser and (B) 15th August 2007 (the “Termination Date”); or
(iii) if Purchaser fails to perform in any material respect any of its covenants contained in this
Agreement required to be performed prior to the Closing and does not cure such failure prior to the
earlier of (A) thirty (30) days after written notice of such failure is given in writing to Seller
by the Company or the Seller and (B) the Termination Date.

          5.4.2 By Purchaser (i) in the event the transactions contemplated by this Agreement have been
prohibited or enjoined by reason of any final, unappealable judgment, decree or order entered or
issued by a court of competent jurisdiction in litigation or proceedings involving any of the
Parties hereto that was not entered at the request or with the support of Purchaser and if
Purchaser shall have used reasonable efforts to prevent the entry of such order; or (ii) in the
event, in the reasonable judgment of Purchaser, the Company or the Seller breaches a representation
or warranty of the Company or the Seller, respectively, contained in this Agreement which has not
been cured and is not capable of being cured prior to the earlier of (A) expiration of thirty (30)
days after written notice of such breach is given by Purchaser to the Company or the Seller and (B)
the Termination Date; (iii) if the Company or the Seller fails to perform in any material respect
any of their respective covenants contained in this Agreement required to be performed by the
Company or the Seller prior to the Closing and the Company or the Seller, as the case may be, does
not cure such failure prior to the earlier of (A) thirty (30) days after written notice of such
failure is given in writing to the Company or the Seller by Purchaser, and (B) the Termination
Date; or (iv) pursuant to Section 9.4.

          5.4.3 Purchaser, the Company and Seller may terminate this Agreement by mutual consent in
writing.

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     5.5 In the event of termination pursuant to Section 5.4, this Agreement shall cease to be of
any effect except Sections 10, 11 and 13 which shall remain in force, and save in respect of claims
arising out of any antecedent breach of this Agreement.

	6.	 	RESTRICTIONS ON THE SELLER

     6.1 Neither Seller nor any of its Affiliates shall in any Relevant Capacity during the
Restricted Period:

          6.1.1 engage, be employed or be interested directly or indirectly through any Affiliate in any
business which competes with the Business (other than as a holder of not more than 1% of the issued
shares or debentures of any company listed on any stock exchange);

          6.1.2 carry on for its own account either alone or in partnership or be concerned as a
director in any company engaged or about to be engaged in any business which competes with the
Business;

          6.1.3 assist with technical or professional advice any person, firm or company engaged or
about to be engaged in any business which competes with the Business;

          6.1.4 solicit, in competition with the Business, any person, firm or company, who was a
customer of the Group; or

          6.1.5 employ, solicit for employment, recommend for employment, any person employed by any of
the Group Companies or influence any person to terminate his or her relationship with any of the
Group Companies.

     Notwithstanding the foregoing, nothing herein shall be deemed to prohibit Telecom FM Ltd. from
engaging in the business of design and sales of least cost routing products and services in the
area of Fixed/Mobile/VOIP integration at the edge of the network, primarily to mobile phone
operators.

     6.2 The following terms shall have the following meanings respectively in this Section 6:

          6.2.1 “Relevant Capacity” means for its own account or for that of any person, firm or
company (other than the Purchaser and/or any of the Group Companies) or in any other manner whether
through the medium of any company controlled by it (for which purpose there shall be aggregated
with its shareholding or ability to exercise control the shares held or control exercised by any
person connected with the Seller) or as principal, partner, director, employee, consultant or
agent; and

          6.2.2 “Restricted Period” means two (2) years commencing on the Closing Date;
provided, however, that with respect to Telecom FM Ltd., the Restricted Period means the earlier of
two (2) years from the Closing Date and the date Seller no longer owns more than 50% of the voting
securities of Telecom FM Ltd.

17

 

     6.3 Each Party shall procure that all its Related Parties shall be bound by and observe the
provisions of this Section 6 as if they were parties covenanting with the Purchaser on the same
terms.

     6.4 If Seller or any Affiliate of Seller breaches, or threatens to commit a breach of, any of
the provisions of Section 6 (the “Restrictive Covenants”), Purchaser shall have the
following rights and remedies, each of which rights and remedies shall be independent of the others
and severally enforceable, and each of which is in addition to, and not in lieu of, any other
rights and remedies available to Purchaser at law or in equity:

          6.4.1 Seller agrees that any breach or threatened breach of the Restrictive Covenants would
cause irreparable injury to Purchaser and that money damages would not provide an adequate remedy
to Purchaser. Accordingly, in addition to any other rights or remedies, Purchaser shall be
entitled to have the Restrictive Covenants specifically enforced by any court of competent
jurisdiction, and to injunctive relief to enforce the terms of the Restrictive Covenants and to
restrain such Seller or Affiliate from any violation thereof.

          6.4.2 The right and remedy to require the Seller to account for and pay over to Purchaser all
compensation, profits, monies, accruals, increments or other benefits derived or received by the
Seller as the result of any transactions constituting a breach of the Restrictive Covenants.

     6.5 While the restrictions contained in this Section 6 are considered by the Parties to be
reasonable in all the circumstances, it is recognized that restrictions of the nature in question
may fail for technical reasons and accordingly it is hereby agreed and declared that if any of such
restrictions shall be adjudged to be void as going beyond what is reasonable in all the
circumstances for the protection of the interests of the Purchaser but would be valid if part of
the wording thereof were deleted or the periods thereof reduced or the range of activities or area
dealt with thereby reduced in scope the said restriction shall apply with such modifications as may
be necessary to make it valid and effective.

	7.	 	WARRANTIES

     7.1 The Group and Seller Warranties. The Group and Seller, jointly and severally,
represents, warrants and undertakes to and with the Purchaser that each of the statements set out
in Schedule 7 is now and will at Closing be true and accurate in all respects.

     7.2 The Group and Seller acknowledge that the Purchaser has entered into this Agreement in
reliance upon the Warranties.

     7.3 Each of the Warranties shall be separate and independent and save as expressly provided to
the contrary, shall not be limited by reference to or inference from any other Warranty or any
other term of this Agreement.

     7.4 The Group and Seller shall procure that (save only as may be necessary to give effect to
this Agreement) neither it nor any Group Company shall do, allow or procure any act or omission
before Closing which would constitute a breach of any of the Warranties if they were

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given at Closing or which would make any of the Warranties inaccurate or misleading if they
were so given.

     7.5 The Group and Seller agree to disclose promptly to the Purchaser in writing immediately
upon becoming aware of the same, any matter, event or circumstance (including any omission to act)
which may arise or become known to him after the date of this Agreement and before Closing which:

          7.5.1 constitutes a material breach of or is materially inconsistent with any of the
Warranties; or

          7.5.2 has, or is likely to have, a Material Adverse Effect on the financial position or
prospects of any Group Company.

     7.6 The Group and Seller shall give to the Purchaser both before and after Closing all such
information and documentation relating to the Company and the Group Companies as the Purchaser
shall reasonably request to enable it to satisfy itself as to the accuracy and due observance of
the Warranties.

     7.7 Purchaser Warranties. The Purchaser represents, warrants and undertakes to and
with the Company and Seller that each of the statements set out in Schedule 7A is now and will at
Closing be true and accurate in all material respects.

	8.	 	INDEMNIFICATION PROCEDURE

     8.1 Indemnification.

          8.1.1 The Seller agrees to indemnify and hold Purchaser and its respective directors,
officers, employees, Affiliates, stockholders, agents, attorneys, representatives, successors and
permitted assigns harmless from and against any Claims incurred or suffered by Purchaser arising
out of or resulting from (i) any breach of a representation or warranty by Seller or a Group
Company, or any nonfulfillment of any covenant or agreement by Seller or a Group Company of this
Agreement, (ii) any liabilities for Taxes incurred by the Group on or prior to the Closing Date,
including the Additional Tax Liabilities (as set forth in Section 8.8 below).

          8.1.2 The Purchaser agrees to indemnify and hold Seller and its respective directors,
officers, employees, Affiliates, stockholders, agents, attorneys, representatives, successors and
permitted assigns harmless from and against any Claims incurred or suffered by Seller arising out
of or resulting from any breach of a representation or warranty by Purchaser, or any nonfulfillment
of any covenant or agreement by Purchaser of this Agreement.

     8.2 Claim. A claim for indemnification for any matter not involving a Third Party
Claim may be asserted by a party hereto by written notice to the other.

     8.3 Third Party Claim. If any legal proceeding or Third Party Claim shall be
instituted or asserted by a party entitled to indemnification hereunder (the “Indemnitee”),
Indemnitee shall notify the party obligated to indemnify the Indemnitee (the “Indemnitor”)
in writing of said Third Party Claim. The failure of the Indemnitee to give reasonably prompt

19

 

notice thereof Claim shall not release, waive or otherwise affect Indemnitor’s obligations
with respect thereto except to the extent that the Indemnitor is prejudiced as a result of such
failure. Indemnitor shall have the right, at its expense, to be represented by counsel of its
choice, and to defend against, negotiate, settle or otherwise deal with any Third Party Claim. If
Indemnitee elects to defend against, negotiate, settle or otherwise deal with any Third Party
Claim, it shall do so at its own expense and shall within 30 days notify Indemnitor whether or not
it shall do so. If Indemnitor elects not to defend against, negotiate, settle or otherwise deal
with any Third Party Claim, Indemnitee may defend against, negotiate, settle or otherwise deal with
such Third Party Claim, and Indemnitor shall promptly, and in any event within 20 days after demand
therefor, reimburse the Indemnitee for the reasonable costs and expenses of such defense, including
attorneys’ fees and other Losses incurred by Indemnitee in connection therewith. If Indemnitor
shall assume the defense of any Third Party Claim, Indemnitee may participate, at its own expense,
in the defense of such Third Party Claim; provided, however, that Indemnitee shall be entitled to
participate in any such defense with separate counsel at the expense of Indemnitor if, (i) so
requested by Indemnitor or (ii) in the reasonable mutual opinion of counsel to Indemnitee and
Indemnitor, a conflict or potential conflict exists between the Indemnitee and the Indemnitor that
would make such separate representation advisable. The Parties hereto agree to cooperate fully
with each other in connection with the defense, negotiation or settlement of any such Third Party
Claim, and the Party assuming the defense of any Third Party Claim shall keep the other Party
reasonably informed at all times of the progress and development of its defense of and compromise
efforts with respect thereto shall furnish the other Party with copies of all relevant pleadings,
correspondence and other documents. Notwithstanding anything herein to the contrary, neither
Indemnitor nor Indemnitee shall, without the written consent of the other, settle or compromise any
Third Party Claim or permit a default or consent to entry of any judgment unless (i) the claimant
and such Party provide to the other Party an unqualified release from all liability in respect of
the Third Party Claim and (ii) the settlement, compromise, or judgment involves only the payment of
money damages by the Indemnitor and does not impose an injunction or other equitable relief on the
Indemnitee or impose any restrictions on the operation of the business of the Company, Purchaser or
its Affiliates.

     8.4 Decision, Judgment or Settlement. After any final decision, judgment or award
shall have been rendered by a Government Authority of competent jurisdiction and the expiration of
the time in which to appeal therefrom, or a settlement shall have been consummated, or the
Indemnitor and the Indemnitee shall have arrived at a mutually binding agreement with respect to a
Third Party Claim hereunder, the Indemnitee shall forward to Indemnitor notice of any Losses and
other sums due and owing by the Indemnitor pursuant to this Agreement with respect to such matter.

     8.5 Limits on Liability:

          8.5.1 The liabilities of Seller or Purchaser under the Warranties shall cease twelve 12 months
after Closing Date except: (i) all representations and warranties of Seller contained in Clause 4
of Schedule 7 (“Tax and Tax Returns”), Clause 7.8 of Schedule 7 (“Creation”), and
Clause 13 of Schedule 7 (“Employee Benefit Plans”), (ii) those relating to or arising from
the Wachovia Credit, and (iii) Seller’s obligation to indemnify the Purchaser for any Losses based
upon or related to fraud, criminal wrongdoing, willful misconduct or knowing misrepresentation of
Seller or any Group Company, shall survive until expiration of the

20

 

applicable statute of limitations; and (iv) matters which have been the subject of a written
claim against Losses with reasonable supporting evidence (where available to the Indemnitee) made
before such date by the Indemnitee to the Indemnitor, which shall survive until final resolution of
such claim.

          8.5.2 Seller shall not have any obligation to indemnify Purchaser unless the Losses are
provided in writing with supporting evidence (where available to Purchaser) and the amount of
liability of the Seller to the Purchaser in respect of any one Claim exceeds US$5,000 (the
“Minimum Claim Amount”), in which event the Seller shall be liable for the full amount of
the Claim, provided, however, there shall be no liability for any Claims until the
aggregate of all Claims exceeds US$40,000 (the “Threshold”), after which time Purchaser may
recover Claims from the first dollar, but, subject to Section 8.5.3, in no event including any
Claims which are under the Minimum Claim Amount.

          8.5.3 The aggregate amount of the Seller’ liability for all Losses under this Agreement shall
be limited to an amount equal to the Consideration; provided, however,
notwithstanding the provisions of Section 8.5.2, any Losses arising from or relating to the (a)
Capitalization-related Warranties (Clause 2 of Schedule 7 “Capital Structure”), (b)
Tax-related Warranties (Clause 4 of Schedule 7 “Tax and Tax Returns”), (c) Employee-related
Warranties (Clause 13 of Schedule 7 “Employee Benefit Plans”); (d) the Wachovia Credit, (e)
the Closing Date Debt, or (f) fraud, criminal wrongdoing, willful misconduct or knowing
misrepresentation of the Company or Seller shall be subject to indemnification in full, on a
first-dollar basis, without regard to the Threshold or the Minimum Claim Amount.

          8.5.4 In determining whether a representation or warranty has been breached for purposes of
indemnification under this Section 8, the word “material” and “Material Adverse Effect” (or
variations thereof) shall be disregarded, and the phrase “resulting in Losses in excess of $5,000
individually or $40,000 in the aggregate” (or substantially similar variations thereof) shall, as a
measure of materiality, also be disregarded.

     8.6 Interest. Any amount due and payable under Section 3.4 and this Section 8 shall
accrue interest from and after the date due until paid in full at the “prime” rate, as announced by
The Wall Street Journal, Eastern Edition, in effect as of the date payment first became due,
calculated based on a 365 day year and the actual number of days elapsed.

     8.7 Insurance. Any indemnified party may elect, but shall not be obligated, to
recover under any insurance policies for any Losses. The Parties hereto agree that if such
election is made by an indemnified party, any such indemnity payments made hereunder shall be
reduced by the net amount any insurance payments actually received by Purchaser or the Company
under any insurance policies.

     8.8 Holdback. Seven Hundred Fifty Thousand Dollars (US$750,000) of the Deposit (the
“Holdback Funds”), shall be placed in an interest-bearing escrow account (the “Escrow
Account”) with Wells Fargo Bank, N.A. or another financial institution acceptable to the
Parties in accordance with the terms of an escrow agreement to be agreed upon by the Parties, for
making any payments, interest, penalties, or Losses related to failure of the Group (i) to pay any
state income tax, sales tax, tangible personal property tax, and franchise tax or other Taxes or
(ii)

21

 

to make certain Tax filings when due or payable or arising with respect to periods ending on
or prior to the Closing Date or (iii) to qualify to do business or register with any state or local
taxing authority in any jurisdiction which the Group was required prior to the Closing to be so
qualified or registered, whether or not disclosed on Schedules 7.3.2, 7.4.1, 7.4.2 and 7.4.3 and
for paying the reasonable fees and expenses in excess of Ten Thousand Dollars (US$10,000) incurred
by Purchaser in connection with its tax advisors’ review and counsel as set forth in this Section
8.8 (the “Additional Tax Liabilities”). Subject to Section 8.8.1 and 8.8.2, the Company
shall pay and satisfy the Additional Tax Liabilities from the Holdback Funds. For avoidance of
doubt, the Company shall only be required to pay Taxes from the Holdback Funds those amounts for
which Seller is responsible pursuant to Section 12.1.1 to the extent those amounts are specifically
identified as Additional Tax Liabilities. With respect to the Additional Tax Liabilities, Seller
shall: (i) keep Purchaser reasonably informed and consult seriously and in good faith with
Purchaser and its tax advisors with respect to any issue relating to such Additional Tax
Liabilities, (ii) provide Purchaser with copies of all correspondence, notices and other written
materials received from any Government Authority and otherwise keep Purchaser and its tax advisors
advised of significant developments in any claim with respect to such Additional Tax Liabilities
and of significant communications involving representatives of the applicable Government Authority,
(iii) provide Purchaser with a copy of any written submission to be sent to a Government Authority
relating to Additional Tax Liability prior to the submission thereof, give diligent and good faith
consideration to any comments or suggested revisions that Purchaser or its tax advisors may have
with respect thereto and obtain the consent of Purchaser or its tax advisors prior to the
submission thereof; and (iv) provide timely written notice to the Company to make payments to a
Government Authority from the Holdback Funds (which payment shall be made by the Company within 10
Business Days of receiving such notice) along with any documentation and correspondence therewith,
to satisfy any Additional Tax Liability.

          8.8.1 Notwithstanding any provision hereof to the contrary, Seller is and shall remain liable
for the Additional Tax Liabilities in the event that Escrow Account is insufficient to fully
satisfy the Additional Tax Liabilities. Seller shall pay when due any such amounts in excess of the
Holdback Funds and shall indemnify, defend and hold harmless the Group Company from any such
Additional Tax Liabilities as provided in Section 12.  

          8.8.2 Notwithstanding any provision hereof to the contrary, Seller shall not, without the
written consent of Purchaser, settle or compromise any claim for Additional Tax Liabilities from
any Government Authority or permit a default or consent to entry of any judgment related to the
Additional Tax Liabilities unless (i) the Government Authority releases the Group Company from all
liability in respect of such claim and (ii) the settlement, compromise, or judgment
involves only monetary payment by Seller and does not impose an injunction or other equitable
relief on the Group Company or impose any restrictions on the operation, ownership of the business
or use of assets of the Group Company or its Affiliates.

          8.8.3 Following determination by Seller and Purchaser, with the advice of Berenfeld and the
tax advisors for Purchaser, that any and all claims in connection with Additional Tax Liabilities
have been satisfied in full, any remaining amounts in the Escrow Account shall be paid to an
account designated by Seller, provided that forty-five percent (45%) of any interest earned in the
Escrow Account shall be paid to Purchaser.

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	9.	 	CONDUCT OF BUSINESS PRIOR TO CLOSING

     9.1 Affirmative Covenants. During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or Closing, the Group agrees:

          9.1.1 to carry on its business in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted;

          9.1.2 to timely pay its debts and taxes and to timely file all tax returns when due and to pay
or perform all other obligations when due;

          9.1.3 to use all reasonable efforts consistent with past practice and policies to preserve
intact each of the Group Companies’ current business organizations, keep available the services of
its current officers and Key Employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it;

          9.1.4 maintain its properties and facilities, including those held under leases, in as good
working order and condition as at present, ordinary wear and tear excepted;

          9.1.5 keep in full force and effect present insurance policies or other comparable insurance
coverage; and

          9.1.6 perform its obligations under its Material Contracts and comply with the terms and
conditions of all licenses, permits and all applicable laws, rules, regulations and consent orders;

all with the goal of preserving unimpaired each of the Group Companies’ goodwill and ongoing
businesses through Closing. The Company shall promptly notify Purchaser of any event or occurrence
or emergency not in the ordinary course of business of any Group Company, and any material event
directly involving any Group Company.

     9.2 Negative Covenants. Except as expressly contemplated by this Agreement or as set
forth on Schedule 9.2, the Group shall not:

          9.2.1 Enter into any commitment or transaction not in the ordinary course of business, or any
commitment or transaction of the type described in Clause 3.3.7 of Schedule 7;

          9.2.2 Sell, transfer, license, abandon, let lapse, disclose, misuse, misappropriate, diminish,
destroy or otherwise dispose of or encumber the Company Intellectual Property in any manner (other
than licensing of the Company Intellectual Property in the ordinary course of business) or assert
or threaten to assert any rights with respect to the Company Intellectual Property against any
third party;

          9.2.3 Enter into or amend any Material Contracts pursuant to which any other party is granted
marketing, distribution or similar rights of any type or scope with respect to any Company Products
other than in the ordinary course of business consistent with past practices;

23

 

          9.2.4 Amend or otherwise modify (or agree to do so), except in the ordinary course of
business, or violate the terms of, any of the Material Contracts set forth or described in any of
the Schedules;

          9.2.5 Declare or pay any dividends on or make any other distributions (whether in cash, stock
or property) in respect of any of its capital stock or other securities;

          9.2.6 Split, combine or reclassify any of its capital stock or other securities, issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for,
shares of capital stock or other securities of any Group Company;

          9.2.7 Issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or
purchase or propose the purchase of, any shares of its capital stock or securities convertible
into, or subscriptions, rights, warrants or options to acquire, or other agreements or commitments
of any character obligating it to sell or issue any such shares or other convertible securities;

          9.2.8 Cause or permit any amendments to the Articles of Incorporation or Bylaws of any of the
Group Companies or other organizational or governing documents of any of the Group Companies;

          9.2.9 Acquire or agree to acquire any business or any corporation, partnership, association or
other business organization or division thereof by merging or consolidating with, or by purchasing
a substantial portion of the assets of any such person, or by any other manner;

          9.2.10 Acquire or agree to acquire any assets other than in the ordinary course of the
Company’s business consistent with past practice;

          9.2.11 Sell, lease, license, transfer, dispose of or encumber any of its owned or controlled
properties or assets, or cause or permit the termination or lapse of any leases or licenses with
respect to any of its leased or licensed properties or assets, except in the ordinary course of the
Company’s business consistent with past practices;

          9.2.12 Incur any indebtedness for borrowed money, other than pursuant to the terms of
agreements in existence on the date hereof, or guarantee or agree to act as a surety for any
indebtedness;

          9.2.13 Adopt any new or amend any existing severance, termination, indemnification, special
bonus, special remuneration, fringe benefits or other similar policies, agreements or arrangements
or increase the compensation or rate of compensation to any of Group Company’s employees;

          9.2.14 Revalue any Company assets or properties, including writing down the value of inventory
or writing off notes or accounts receivable other than in the ordinary course of business;

          9.2.15 Pay, discharge or satisfy any claim, liability or obligation (whether absolute,
accrued, asserted or unasserted, contingent or otherwise) in an amount in excess of US$5,000
individually or US$40,000 in the aggregate, other than the payment, discharge or

24

 

satisfaction in the ordinary course of business of liabilities reflected or reserved against
in the Company Financial Statements (or the notes thereto);

          9.2.16 Make or change any election in respect of Taxes, file an amended Tax Return or claim
for refund of Taxes, adopt or change any accounting method in respect of Taxes, enter into any
agreement with respect to Taxes with any Government Authority, settle any claim or assessment in
respect of Taxes, or consent to any extension or waiver of the limitation period applicable to any
claim or assessment in respect of Taxes;

          9.2.17 Enter into any strategic alliance or joint marketing arrangement or agreement; or

          9.2.18 Take, or agree to take any other action that could be reasonably expected to cause a
Material Adverse Effect or would prevent the Seller or any of the Group Companies from performing
or cause Seller or any of the Group Companies not to perform its covenants or obligations hereunder
or under any Transaction documents.

     9.3 No Solicitation. Until the earlier of the Closing Date and the date this
Agreement is terminated, the Group and Seller will not, nor will any Group Company or Seller permit
any of the Group Companies’ officers, directors, agents, representatives or Affiliates (any of the
foregoing, a “Company Representative”) to, directly or indirectly, take any of the
following actions with any party other than Purchaser:

          9.3.1 Solicit, initiate, entertain, or encourage any proposals or offers from, or conduct
discussions with or engage in negotiations with, any person relating to any possible acquisition of
any Group Company (whether by way of merger, purchase of assets or capital stock, or otherwise),
any portion of any Group Company’s capital stock or assets or any equity interest in the Group;

          9.3.2 Provide information with respect to the Group or its business to any person other than
Purchaser, or otherwise cooperate with, facilitate or encourage any effort or attempt by any such
person with regard to any possible acquisition of any Group Company (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise), any portion of any Group Company’s
capital stock or assets or any equity interest in any Group Company;

          9.3.3 Enter into any agreement or understanding with any person other than Purchaser,
providing for the acquisition of any Group Company (whether by way of merger, purchase of capital
stock, purchase of assets or otherwise), any portion of any Group Company’s or assets or any equity
interest in any Group Company; or

          9.3.4 Make or authorize any statement, recommendation or solicitation in support of any
possible acquisition of any Group Company (whether by way of merger, purchase of capital stock,
purchase of assets or otherwise), any portion of any Group Company’s capital stock or assets or any
equity interest in any Group Company by any person other than Purchaser; provided,
however, that nothing in Sections 9.3.1 to 9.3.4 shall limit the Company or PNI’s ability
to sell or license Company Products in the ordinary course of business consistent with past
practices. The taking of any action described in Sections 9.3.1 through 9.3.4 above by the

25

 

Seller or the Company, any of the Group Companies shall be deemed a material breach by the
Seller and the Company of this Agreement. Seller and the Company shall immediately cease and cause
to be terminated any such contacts, negotiations or activities with third parties relating to any
such transaction or proposed transaction. In addition to the foregoing, if Seller, the Company or
any of the Group Companies receive any offer or proposal relating to any such transaction or
proposed transaction at any time prior to the earlier of Closing or the termination of this
Agreement, the Company or Seller shall immediately notify Purchaser thereof, including the specific
material terms of such offer or proposal.

     9.4 Supplementation and Amendment of Schedules. From time to time prior to the
Closing, Seller and the Company shall have the right to supplement or amend the Schedules with
respect to any matter hereafter arising or discovered after the delivery of the Schedules pursuant
to this Agreement (the “Supplemental Material”). No Supplemental Material shall have any
effect on the satisfaction of the condition to closing set forth in Section 4.1.1. If the
Supplemental Material discloses facts that would constitute (in the absence of any amendment to the
Schedules for such Supplemental Material) a breach of the Seller or Company’s Warranties hereunder
and such breach would have a Material Adverse Effect, Seller and the Company shall have 15 days to
cure any such breach, and if not cured within such 15-day period, the Purchaser may terminate this
Agreement by delivering a termination notice to Seller and the Company within 10 days after
expiration of the 15-day cure period. The termination notice must specify the representation or
warranty breached, identify the specific facts in the Supplemental Material that constitute the
breach, and describe why the breach would have a Material Adverse Effect. If the Agreement shall
not have been terminated during such 10-day period, the Purchaser shall have waived the right to
terminate the Agreement based on such Supplemental Material.

	10.	 	CONFIDENTIALITY

     10.1 Each Party undertakes that it will not (except as required by law or regulation and
disclosures required by the Securities and Exchange Commission and the American Stock Exchange or
their equivalent offices in Japan or Korea, in which case the disclosing party shall provide the
other party prior notice of any disclosure and provide the other party an opportunity to review and
comment on such disclosure) make any announcement in connection with this Agreement unless all the
other Parties have given their consent to such announcement (which consent may not be unreasonably
withheld or delayed and may be given either generally or in a specific case or cases and may be
subject to conditions).

     10.2 Each Party undertakes that it shall treat as strictly confidential all information
received or obtained by it or its Related Parties, employees, agents or advisers as a result of
entering into or performing this Agreement including information relating to the provisions of this
Agreement, the negotiations leading up to this Agreement, the subject matter of this Agreement or
the business or affairs of the other Parties, and that it will not at any time hereafter make use
of or disclose or divulge to any person any such information and shall use its best endeavors to
prevent the publication or disclosure of any such information.

     10.3 The restrictions contained in Sections 10.1 and 10.2 shall not apply so as to prevent any
Party from making any disclosure required by law or regulation or from making any disclosure to any
professional advisor for purposes of obtaining advice (provided always that the

26

 

provisions of this Section 10 shall apply to and such Party shall procure that they apply to
and are observed in relation to, the use or disclosure by such professional advisor of the
information provided) nor shall the restrictions apply in respect of any information which comes
into the public domain otherwise than by a breach of this Section 10 by any Party.

	11.	 	COSTS

     11.1 Each Party shall pay its own costs incidental to this Agreement and the Transaction
Documents; provided, however, that Seller acknowledges that it has engaged the
services of Berenfeld, Spritzer, Shechter, & Sheerm, Certified Public Accountants
(“Berenfeld”), to render advice and consulting services related to the Additional Tax
Liabilities and all fees, expenses and disbursements incurred by Berenfeld and those of any other
legal or other professional advisors engaged by Seller or the Group prior to the Closing Date in
connection with the Additional Tax Liabilities shall be Seller’s sole responsibility; and
provided, further, that the fees and expenses associated with the Escrow Account
shall be borne equally by Purchaser and the Seller.

	12.	 	TAXES.

     12.1 Indemnification.

          12.1.1 Seller shall be responsible for and shall indemnify and hold harmless Purchaser and its
Affiliates against all Taxes (i) of Seller, or any consolidated, combined or unitary group of which
Seller was, is or will be a member, (ii) of the Company or any consolidated, combined or unitary
group of which Company was, is or will be a member, and (iii) of the Group Company for all Tax
years or Tax periods ending on or before the Closing Date or, with respect to a Straddle Period, to
the extent apportioned to the period ending on or before the Closing Date under Section 12.1.3.

          12.1.2 Purchaser shall be responsible for and shall indemnify and hold harmless Seller and its
Affiliates against all Taxes of the Company for all Tax years or Tax periods ending after the
Closing Date or, with respect to a Straddle Period, to the extent apportioned to the period after
the Closing Date under Section 12.1.3.

          12.1.3 For the sole purpose of appropriately apportioning any Taxes relating to a Tax year or
Tax period that begins before and ends after the Closing Date (a “Straddle Period”), such
apportionment shall be made assuming that the Company had a taxable year that ended at the close of
business on the Closing Date. In the case of property Taxes and similar Taxes which apply ratably
to a taxable period, the amount of Taxes allocable to the portion of the Straddle Period ending on
the Closing Date shall equal the Tax for the period multiplied by a fraction, the numerator of
which shall be the number of days in the period up to and including the Closing Date, and the
denominator of which shall be the total number of days in the period.

     12.2 Filing Responsibility.

          12.2.1 Seller shall timely prepare and file, or cause to be timely prepared and filed, all Tax
Returns of the Company for all Tax periods ending on or prior to the Closing Date and timely pay,
or cause to be paid, when due, all Taxes relating to such returns. As required by

27

 

the Code, Seller shall include the income of the Company on Seller’s consolidated federal and
relevant state income tax returns for all periods through the end of the Closing Date and pay any
federal and relevant state income taxes attributable to such income. Purchaser and the Company
shall furnish Tax information to Seller for inclusion in Seller’s federal consolidated and combined
income tax returns for the period which includes the Closing Date in accordance with Company’s past
custom and practice. The income of the Company shall be apportioned to the period up to and
including the Closing Date the period after the Closing Date by closing the books of the Company as
of the end of the Closing Date.

          12.2.2 Purchaser shall timely prepare and file, or cause to be timely prepared and filed, all
Tax Returns of the Company for Straddle Periods, and timely pay, or cause to be paid, when due, all
Taxes relating to such returns. Purchaser shall provide, or cause to be provided, to Seller a
substantially final draft of each such Tax Return with respect to which Seller may be responsible
for the payment of any Tax at least 30 days prior to the due date, giving effect to extensions
thereto, for filing such Tax Return, for review by Seller. Seller shall notify Purchaser of any
reasonable objections Seller may have to any items set forth in such draft Tax Return and Purchaser
and Seller agree to consult and resolve in good faith any such objection and to mutually consent to
the filing of such Tax Return.

     12.3 Certain Tax Matters. Seller acknowledges that Purchaser has indicated its
intention to make an election under Section 338(h)(10) of the Code and its state equivalent, if
any. Seller agrees that Purchaser, in its discretion, shall make such election; provided, however,
that such election shall be made no later than the due date for such election. When such election
is made by Purchaser:

          12.3.1 Purchaser shall be authorized to complete Form 8023 and Seller and Purchaser shall
mutually agree and complete Form 8883;

          12.3.2 Seller shall sign such completed Form 8023 prior to the filing of its short year tax
return and shall attach a signed copy of Form 8023 to the short year tax return of the Company;

          12.3.3 Purchaser shall notify Seller of the allocation of the Consideration among the assets
(including intangible assets) of the Company prior to the due date for such election; and

     12.4 Cooperation. After the Closing, Purchaser and Seller shall cooperate and
promptly make available or cause to be made available to the other, as reasonably requested, and to
any taxing authority, all information, records or documents relating to Tax liabilities and
potential Tax liabilities relating to the Company for all periods prior to or including the Closing
Date and shall preserve all such information, records and documents until the expiration of any
applicable statute of limitations or extensions thereof. Purchaser shall prepare and provide to
Seller any Tax information packages reasonably requested by Seller for Seller’s use in preparing
Seller’s or the Company’s Tax Returns. Such Tax information packages shall be completed by
Purchaser and provided to Seller within 30 days after Seller’s request therefor. Each party shall
bear its own expenses in complying with the foregoing provisions. Purchaser shall retain and make
available to Seller during normal business hours and upon reasonable notice all records and

28

 

other information which may be relevant to any such Tax liabilities. Purchaser shall cause
the Group’s personnel to provide Seller reasonable assistance in researching records and other
information of any Group Company which may be relevant to any such tax return, document, audit or
examination, proceeding or determination.

     12.5 Refunds or Credits. Purchaser shall promptly pay to Seller, without right of
offset, any refunds or credits of Taxes which the Company receives with respect to Tax periods that
ended on or before the Closing Date or with respect to Straddle Periods to the extent apportioned
to the period that ends at the close of the Closing Date under Section 12.1.3, except for refunds
or credits due to the carryback of an item arising in a Tax Period that ends after the Closing Date
with respect to a Straddle Period apportioned to the period after the Closing Date. For purposes
of this Section 12.5, the term “refund” shall include a reduction in Taxes and the use of an
overpayment of Taxes as an audit or other Tax offset and receipt of a refund shall occur upon the
filing of a return or an adjustment thereto using such reduction, overpayment or offset, or upon
the receipt of cash. Upon the reasonable request of Seller, Purchaser shall prepare and file, or
cause to be prepared and filed at Seller’s expense, all claims for refunds relating to such Taxes;
provided, however, that Purchaser shall not be required to file such claims for refund to the
extent Purchaser determines in its reasonable discretion that such claims for refund would have an
adverse impact on Purchaser or to the extent the claims for refund relate to a carryback of an
item. Purchaser shall be entitled to all other refunds and credits of Taxes; provided, however, it
will not allow the amendment of any Tax Return relating to any Taxes for a period (or portion
thereof) ending on or prior to the Closing Date, except with respect to the carryback of an item to
a period ending on or prior to the Closing Date that would not increase Seller’s tax liability
herewith, without the prior written consent of Seller.

     12.6 Timing Differences. Purchaser agrees that if as a result of any audit adjustment
(or adjustment in any other audit, examination, contest, litigation or other proceeding by or
against any taxing authority (a “Tax Proceeding”)) made with respect to any Tax Item that
relates to or affects any Tax for which Seller is responsible under Section 12.1, Purchaser or any
of its Affiliates, including the Company, receives a tax benefit, then Purchaser will pay to Seller
the amount of such tax benefit when such tax benefit is actually utilized by Purchaser or such
Affiliate. “Tax Item” means any item of income, gain, loss, deduction, credit, recapture
of credit or any other item that increases or decreases Taxes paid or payable. If as a result of
the foregoing audit adjustment Purchaser incurs any additional Tax, then Seller will pay to
Purchaser the amount of such additional Tax within fifteen calendar days of the due date for making
payment of such additional Tax.

     12.7 Contests. Whenever any taxing authority asserts a claim, makes an assessment, or
otherwise disputes the amount of Taxes for which Seller is or may be liable under this Agreement,
Purchaser shall, if informed of such an assertion, promptly inform Seller, and Seller shall have
the right to participate in any resulting proceedings. Purchaser shall keep Seller reasonably
informed and consult seriously and in good faith with Seller and its tax advisors with respect to
any issue relating to such disputed amount of Taxes, and shall give serious and good faith
consideration to any comments or suggested revisions that Seller or its tax advisors may have with
respect to any written submission by Purchaser to any taxing authority with respect thereto.
Purchaser will not settle any such claim, assessment or dispute to the extent such proceedings or
determinations affect the amount of Taxes for which Seller may be liable under

29

 

this Agreement without the consent of Seller, which consent will not be unreasonably withheld
or delayed.

     12.8 Further Assistance. The Group and Seller shall each use its commercially
reasonable efforts, and shall cooperate with Purchaser, duly execute and deliver any and all such
further instruments and documents and take such further action as Purchaser may reasonably deem
desirable to obtain the full benefits of the Company Intellectual Property Rights contemplated by
this Agreement, including securing all consents and approvals necessary to appropriate for the
transfer of such Intellectual Property Rights to Purchaser, obtaining any assignment of inventions,
and preparing or cooperate with Purchaser in filing any forms or other documents required to be
filed with the United States Patent and Trademark Office, United States Copyright Office, or any
filings in any foreign jurisdiction or under any international treaty, required to secure, transfer
or protect Purchaser’s rights in the Intellectual Property Rights.

	13.	 	GENERAL PROVISIONS

     13.1 Notices. All notices required hereunder or pertaining hereto shall be in writing
and shall be deemed delivered and effective upon either (i) 5 days after deposit in the U.S. mail,
postage prepaid, (ii) personal delivery, (iii) electronic confirmation of a telecopy transmission
received in its entirety at the applicable telecopy number, after which the notice will be sent
within two (2) Business Days by recognized express courier service or (iv) the earliest of
delivery, refusal of the addressee to accept delivery or failure of delivery after at least one (1)
attempt during normal business hours, in each case as such events are recorded in the ordinary
business records of a recognized delivery service, with all charges prepaid or charged to the
sender’s account, to the applicable address set forth at the beginning of this Agreement or at such
addresses as may be specified in writing in by the Parties.

     13.2 Counterparts. This Agreement may be executed by facsimile signature and
counterparts, each of which shall constitute an original, but all of which, when taken together,
shall constitute but one instrument. This Agreement shall become effective when one or more
counterparts have been signed by each Party hereto and delivered to the other Parties.

     13.3 Entire Agreement; Assignment. This Agreement, the Schedules, Exhibit and the
Transaction Documents referenced herein: (a) constitute the entire agreement among the Parties with
respect to the respective subject matters hereof and thereof and supersede in their entirety any
prior or contemporaneous oral or written discussions, negotiations, agreements or understandings
between or among the Parties with respect to such subject matter (other than the Non-Disclosure
Agreement dated 29 January 2007 executed by the Company and Purchaser which shall continue in
accordance with the terms thereof); (b) are not intended to and shall not confer upon any other
person any rights or remedies hereunder; and (c) may not be assigned by operation of law or
otherwise without the prior written consent of each other Party hereto, and any purported
assignment in violation of this requirement shall be null and void ab initio; provided,
however, that Purchaser shall have the right to assign all of its rights and obligations
under this Agreement and the Transaction Documents to any affiliate, including Net2Room USA, Inc.,
a California corporation, provided that Purchaser shall remain liable for the due observance and
performance of any such obligations assigned to or assumed by such assignee.

30

 

     13.4 Disclosure Schedules. Any matter disclosed in any of the Schedules shall be
deemed to have been disclosed on every other clause of the Schedule that refers to such Schedule by
cross reference so long as the nature of the matter disclosed is obvious from a fair reading of the
Schedule on which the matter is disclosed. The due diligence review of the Company by Purchaser
shall in no way affect or alter the Warranties made by Seller or any Group Company.

     13.5 Severability. If any provision of this Agreement or the application thereof
becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable,
the remainder of this Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably to effect the
express intent of the Parties hereto. The Parties further agree that any such void or
unenforceable provision of this Agreement shall be deemed replaced with a valid and enforceable
provision that will achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.

     13.6 Remedies; Exercise of Rights. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive
of any other remedy available to such Party hereunder or at law or in equity, and the exercise by
any Party of any one remedy at any time will not preclude the exercise of any other remedy at the
same time, at another time, or in different circumstances. No failure or delay by any Party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof (or failure to exercise) preclude any other, further or fuller
exercise thereof or the exercise of any other right, power or privilege.

     13.7 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida, without giving effect to its conflicts or choice of law
principles.

     13.8 Jurisdiction and Venue. Any action, suit or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this Agreement, any of
the Transaction Documents, or the transactions contemplated hereby and thereby shall be brought
exclusively in the federal or state courts located in the State of Florida and each Party hereto
hereby unconditionally and irrevocably submits and consents to the exclusive jurisdiction of such
courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding
and hereby unconditionally and irrevocably waives, to the fullest extent permitted by law, any
objection which such Party may now or hereafter have to the laying of venue in any such court or
that any such suit, action or proceeding which is brought in any such court has been brought in an
inconvenient forum. Without limiting the generality of the foregoing, each Party hereto agrees
that service of process on such Party as provided in Section 13.1 shall be deemed effective service
of process on such Party. In addition to any damages or other recovery to which a Party may be
entitled hereunder or at law or in equity (including any right to recover Losses), the prevailing
Party in any action to enforce this Agreement or to seek any right or remedy available hereunder or
at law or in equity shall be entitled to reasonable attorney’s fees and costs incurred in
connection with such action and any related appeals therefrom.

     13.9 Specific Performance. The Parties acknowledge and agree that any failure of any
Party to perform its agreements and obligations hereunder or contemplated hereby will cause

31

 

irreparable injury to the other Parties, for which damages, even if available, will not
provide an adequate remedy. Accordingly, each Party hereby consents to the issuance of injunctive
relief by any court of competent jurisdiction to compel performance of such Party’s obligations and
to the granting by any court of the remedy of specific performance of its obligations hereunder.

     13.10 Rules of Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement and each of the Transaction Documents. In the event an ambiguity or
question of intent or interpretation arises, this Agreement and the applicable Transaction
Documents shall be construed as if drafted jointly by the Parties and no presumption or burden of
proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provisions
hereof or thereof. Accordingly, each Party understands and agrees that the common law principles
of construing ambiguities against the drafter shall have no application to this Agreement or any of
the Transaction Documents. Each Party hereto acknowledges and agrees that such Party has had a
full and complete opportunity to review this Agreement and each of the Transaction Documents, to
make suggestions or changes to their terms and to seek independent legal and other advice in
connection herewith and therewith.

[Signature page follows]

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     IN WITNESS WHEREOF, the Parties have executed this Share Purchase Agreement as an agreement on
the date first written above.

	 	 	 	 	 
	SELLER

SUNAIR SERVICES CORPORATION

 	 
	By:  	/s/ John J. Hayes
 	 
	 	Name:  	John J. Hayes 	 
	 	Position: 	President and Chief Executive Officer 	 
	 
	PURCHASER

NET2ROOM.COM PTE. LTD.

 	 
	By:  	/s/ Gregory Karl Rutledge
 	 
	 	Name:  	Gregory Karl Rutledge 	 
	 	Position:  	Director 	 
	 
	COMPANY

PERCIPIA, INC.

 	 
	By:  	/s/ Kesavan Haridas
 	 
	 	Name:  	Kesavan Haridas 	 
	 	Position:  	President 	 
	 

33

 

Schedule 7

REPRESENTATIONS AND WARRANTIES OF SELLER AND THE GROUP 

Seller and each of the Group Companies hereby represents and warrants to Purchaser as follows
(capitalized terms used herein but not otherwise defined shall have the same meaning ascribed to
them in the Agreement):

	1.	 	Organization, Qualification and Authority.
	 
	1.1	 	Organization. The Company and its only subsidiary, Percipia Networks, Inc., an Ohio
corporation (“PNI”), each is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. The Company and PNI each
has the corporate power to own its properties and to carry on its business as now being
conducted. Each of the Company and PNI is duly qualified to do business and is in good
standing in each jurisdiction in which it is required to be so qualified, except for those
qualifications where the failure to so qualify would not result in Losses in the amount of
$10,000 individually or $25,000 in the aggregate. The Company has delivered to Purchaser true
and correct copies of the Amended and Restated Articles of Incorporation of the Company and
PNI and the By-Laws of the Company and PNI, each as amended to date and currently in effect,
as well as a Certificates of Good Standing issued by the Secretary of State of the state of
Ohio. Each of the Company and PNI is not in violation of any of the provisions of its
Articles of Incorporation or By-Laws or equivalent organizational and governing documents.
	 
	1.2	 	Qualification. Schedule 7.1.2 sets forth (i) each jurisdiction in which the Company
and PNI is qualified, registered, licensed or admitted to do business, (ii) each other
jurisdiction in which each of the Company and PNI owns or leases properties or has employees
or engages independent contractors, and (iii) the officers and directors of the Company and of
PNI as of the date hereof.
	 
	1.3	 	Authority. The Company and Seller each has full corporate power and authority to
execute and deliver this Agreement and the Transaction Documents, to observe and perform its
obligations hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Transaction Documents by
the Company and Seller, the observance and performance of the Company’s obligations hereunder
and thereunder and the consummation of the transactions contemplated hereby and thereby have
been duly and validly authorized by all necessary corporate action on the part of the Company
and Seller, and no further or other action of the Company or its Board of Directors or Seller
and its Board of Directors is required with respect to the foregoing. This Agreement has been
(and each Transaction Document upon the execution and delivery thereof will be) duly and
validly executed and delivered by the Company and Seller, and each constitutes (or will
constitute upon execution and delivery) a legal, valid and binding obligation of the Company
and Seller, enforceable against the Company and Seller in accordance with its respective
terms, except as enforceability may be limited by principles of public policy and subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies.

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	1.4	 	No Conflict. Except as set forth on Schedule 7.1.4, the execution and delivery of
this Agreement and the Transaction Documents by the Group and Seller do not, and the
consummation of any of the transactions contemplated hereby and thereby will not, conflict
with, or result in any violation of, or default under (with or without notice or lapse of
time, or both), or give rise to a right of termination, cancellation or acceleration of any
obligation or loss of any benefit under (any such event or consequence, a “Conflict”):

	 	1.4.1	 	any provision of the Articles of Incorporation, By-Laws or similar
organizational or governing documents of any Group Company or the Seller;
	 
	 	1.4.2	 	any mortgage, indenture, lease, contract or other agreement or instrument to
which any Group Company or the Seller or any of its respective subsidiary is a party or
by which any of their respective assets or businesses are bound; or
	 
	 	1.4.3	 	Any Applicable Law.

	1.5	 	No Consents by Government Authority Required. Except as set forth on Schedule 7.1.5,
no consent, waiver, approval, order or authorization of, or registration, declaration or
filing with any Government Authority is required by or with respect to the Company in
connection with the execution and delivery of this Agreement or any Transaction Document or
the consummation of the transactions contemplated hereby or thereby.
	 
	2.	 	Capital Structure.
	 
	2.1	 	Authorized and Outstanding Capital Stock. Schedule 7.2.1 describes the authorized,
subscribed and issued capital stock of the Company and PNI as of the date of this Agreement.
Seller owns all of the issued and outstanding capital stock of the Company, and the Company
owns all of the issued and outstanding shares of capital stock of PNI.
	 
	2.2	 	Status of Outstanding Capital Stock. All outstanding shares of the capital stock of
the Company and PNI are duly authorized, validly issued, fully paid and non-assessable, were
not issued in violation of any preemptive or similar rights, and were issued in accordance
with all applicable federal, state and foreign securities and other laws. As of the Closing
Date, all outstanding shares of the capital stock of the Company and PNI were issued, and are
free and clear of all Liens other than restrictions on transfer imposed by federal or state
securities or other law, and are not subject to preemptive rights or rights of first refusal
created by statute, the Articles of Incorporation and/or By-Laws of the Company or PNI. None
of the Seller, Company or PNI is a party to any oral or written agreement, arrangement or
other commitment that directly or indirectly grants or creates any right of negotiation, right
of first refusal, right of first or last offer or similar arrangement in connection with the
Sale Shares or any shares of PNI or the other transactions contemplated hereby. Neither the
Company nor PNI is a party to any arrangement, agreement or instrument pursuant to which the
Company or PNI may elect to satisfy its obligations by issuing capital stock or other
securities.

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	2.3	 	Options. There are no options or other rights to purchase similar securities of any
capital stock of the Company or PNI (the “Options”). PNI does not have a stock option plan or
any similar equity incentive plan for its employees, officers, directors, or consultants. The
Company’s Stock Option Plan will be terminated as of the Closing and the terms of such Stock
Option Plan provides for the termination thereof without the consent or approval of any
holders of Options or otherwise, and such action will not result in liability of the Company
or Purchaser. The Company has provided Purchaser true and correct copies of the Stock Option
Plan and all agreements and arrangements related to or issued under said plan, in each case as
amended to date and in effect. There are currently no pending or contemplated amendments,
modifications or supplements to the Stock Option Plan or any such agreements or arrangements
except as otherwise required in the Agreement.
	 
	2.4	 	Warrants. There are no warrants or similar rights or securities exercisable to
acquire any Group Company capital stock (the “Warrants”).
	 
	2.5	 	No Other Derivative Securities or Rights. There are no oral or written options,
warrants, puts, calls, preemptive rights, rights of first or last refusal, rights of
negotiation, commitments, transactions, arrangements, understandings or agreements of any
character to which the Company or PNI is a party or by which it is bound to issue, deliver,
sell, purchase, repurchase or redeem, or cause to be issued, delivered, sold, purchased,
repurchased or redeemed, any shares of Company capital stock, PNI capital stock or other
securities or obligating the Company or PNI to grant, extend, accelerate the vesting of,
change the price of, otherwise amend or enter into any such option, warrant, put, call, right,
commitment, transaction, arrangement, understanding or agreement.
	 
	2.6	 	No Outstanding Debt Securities. Neither the Company nor PNI has any authorized or
issued debt securities or other instruments of indebtedness outstanding.
	 
	2.7	 	No Distributions. Neither the Company nor PNI has declared, set aside, made or paid
any dividend or other distribution in respect of the capital stock of the Company or of PNI or
repurchased, redeemed or otherwise acquired any outstanding securities of, or other ownership
interests in, the Company or PNI, including any cash distribution, within the last 12 months.
	 
	2.8	 	Employee Bonus Arrangements. Except as set forth on Schedule 7.2.8, neither the
Company nor PNI has oral or written arrangements, agreements or understandings (including the
Stock Option Plan) pursuant to which the Company or PNI or any successor thereto or acquirer
thereof is or may become obligated to make any compensatory, bonus, severance or other
payments to past or current employees, consultants, agents or representatives of the Company
or PNI as a result of this Agreement or any of the transactions contemplated hereby.
	 
	2.9	 	Subsidiaries. Other than PNI, the Company has no subsidiaries or any equity or
ownership interest, whether direct or indirect, in, or loans to, any corporation, partnership,
limited liability company, joint venture or other business entity. The
Company is not obligated to make, nor bound by any agreement or obligation to make, any
investment in or capital contribution in or on behalf of any other entity.

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	3.	 	Financials.
	 
	3.1	 	Company Financial Statements. Schedule 7.3.1 sets forth (i) a consolidated balance
sheet of the Group as of 30 September 2006 (the “Balance Sheet Date”) based on audited figures
used for Seller’s consolidated balance sheet as of Balance Sheet Date, and the related
consolidated income statement of the Group for its fiscal year ended 30 September 2006 and
(ii) the unaudited consolidated balance sheet of the Group as of 31 May 2007, and the related
unaudited consolidated income statement for the Group for the year to date ended 31 May 2007
(collectively the “Company Financials”). The Company Financials (i) are in accordance with
the books and records of the Person to which they relate (ii) are complete and correct in all
material respects and (c) have been prepared in accordance with GAAP consistently applied for
the periods presented, except as to the unaudited Company Financials, for the omission of
notes thereto and normal year-end audit adjustments, which to the Seller’s or Company’s
Knowledge will not be material individually or in the aggregate. The Company Financials
present fairly the financial condition and operating results of the Company as of the dates
and during the periods indicated therein, subject to normal year-end adjustments, which to the
Company’s or Seller’s Knowledge will not be material in amount or significance in the
aggregate.
	 
	3.2	 	No Undisclosed Liabilities. Except as set forth in Schedule 7.3.2, as of the date
hereof and the Effective Date, the Group does not have any (i) liability, indebtedness,
obligation, expense, claim, deficiency, guaranty or endorsement of any type, whether accrued,
absolute, contingent, matured, or unmatured (“Liabilities”) that would be required to be
reflected in financial statements in accordance with GAAP that are not disclosed on the
Company’s Financials, or, (ii) to the Company’s Knowledge, any Liabilities that would not be
required to be reflected, in reasonable detail, in financial statements in accordance with
GAAP, other than Liabilities that would not be in excess of US$5,000 individually or US$10,000
in the aggregate.
	 
	3.3	 	No Changes. Since the Balance Sheet Date, the Group has conducted its business in
the ordinary course and consistent with past practices and that:

	 	3.3.1	 	there has been no interruption or alteration in the nature, scope or manner of
the business of the Group which business has been carried on lawfully and in the
ordinary and usual course of business so as to maintain the Group as a going concern;
	 
	 	3.3.2	 	there has been no material adverse change in the customer relations of the
said business or in the financial condition or the position, assets or liabilities of
the said business of the Group as compared with the position disclosed by the Company
Financials and there has been no damage, destruction or loss (whether or not covered by
insurance) affecting the said business or its assets;

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	 	3.3.3	 	no significant single customer or customers accounting for more than 20% of
the Group’s total revenue for the accounting period ending on 31 March 2007 has
indicated that it is likely to (a) cease trading with or supply to the Group or (b)
reduce substantially its trading with or supplies to the Group or (c) terminated its
relationship with the Group for cause;
	 
	 	3.3.4	 	the Group has continued to pay its creditors in the ordinary course of
business;
	 
	 	3.3.5	 	the Group has not repaid any loan capital in whole or in part (other than
indebtedness to its bankers) nor has it become bound or liable to be called upon to
repay prematurely any loan capital or borrowed monies;
	 
	 	3.3.6	 	None of the Group Companies has cancelled, waived, released or discontinued
any rights, debts or claims;
	 
	 	3.3.7	 	Except for equipment purchases (i) made for the purpose of resale to single
customer or (ii) not exceeding US$30,000 in a single contract even if reflected in the
unaudited consolidated balance sheet of the Group as at 31 May, 2007 , none
of the Group Companies has incurred any capital expenditure under a single contract (or
made any capital commitment under a single contract) of an amount in excess of
US$10,000 in any single purchase or disposed of any capital expenditure or fixed assets
having a value of more than US$20,000 in aggregate;
	 
	 	3.3.8	 	except as set forth on Schedule 7.3.3.8, none of the Group Companies has hired
or dismissed any employee earning an annual rate of remuneration, including fringe
benefits, in excess of US$40,000;
	 
	 	3.3.9	 	except as set forth on Schedule 7.3.3.9, none of the Group Companies has
incurred or become subject to any liability or obligation (absolute or contingent)
except current liabilities and obligations, in each case incurred under contracts
entered into in the ordinary course of business and consistent with past practice,
which increased the nature or amount of liabilities or obligations disclosed in the
Company Financial Statements; and
	 
	 	3.3.10	 	except as set forth on Schedule 7.3.3.10, no changes have occurred in the assets and
liabilities (actual or contingent) shown in the Company Financial Statements and the
Company has not discharged or satisfied any Lien or any other obligation or liability
(absolute or contingent) other than assets reflected and liabilities disclosed in the
Company Financial Statements as at the Balance Sheet Date and assets acquired or
disposed of or current liabilities incurred since the Balance Sheet Date in the
ordinary course of business.

	4.	 	Tax and Tax Returns. All references to the Company in this Section 4 shall mean (i)
the Company and PNI or (ii) the Company or PNI, as the case may be.

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	4.1	 	Timely Filing. Except as set forth on Schedule 7.4.1, the Company has timely filed
all Tax Returns they are required to have filed. All Tax Returns filed by the Company are
true, correct and complete in all materials respects and no such Tax Return contains, or was
required to contain (in order to avoid a penalty, and determined without regard to the
effect of post-filing disclosure), a disclosure statement under Section 6662 of the Code.
Except as set forth on Schedule 7.4.1, to the extent the Company did not file a Tax Return
in any jurisdiction or for any specific period, the Company did so because it had no
liability for Taxes in that jurisdiction or for that time period, as the case may be. The
Company has and will maintain through the Closing Date adequate records to substantiate its
profits and losses reflected in each of its Tax Returns since 2001.
	 
	4.2	 	Taxes Paid. Except as set forth on Schedule 7.4.2, the Company has timely paid all
Taxes that have become due or payable (whether or not shown on a Tax Return) and except as set
forth on Schedule 7.4.2 have adequately reserved in the Company Financials in accordance with
GAAP for all Taxes (whether or not shown on any Tax Return) that have accrued but are not yet
due or payable as of the date thereof. No Taxes have been incurred after the date of the
Company Financials other than in the ordinary course of the Company’s business. Except as set
forth on Schedule 7.4.2, the Company has no present or contingent liability for Taxes, other
than Taxes reflected on the Company Financials or incurred in the ordinary course of business
since the date of the Current Balance Sheet in amounts consistent with prior years adjusted to
reflect changes in operating results of the Company. The Company does not know of any basis
for the assertion by a taxing authority of a Tax deficiency against the Company. Schedule
7.4.2 sets forth all material elections made or deemed made with respect to Taxes of the
Company for all taxable periods beginning on or after 1 January 2001. The Company has not
engaged in any “reportable transactions” as defined in Treas. Reg. § 1.6011-4.
	 
	4.3	 	No Audit or Claim. No claim for assessment or collection of Taxes is presently being
asserted against the Company, there is presently no pending audit, examination, refund claim,
litigation, proceeding, proposed adjustment or matter in controversy with respect to any Taxes
of or with respect to the Company, and the Company does not have Knowledge that any such
action or proceeding is being contemplated. Schedule 7.4.3 sets forth (x) all material claims
for Taxes that have been asserted against the Company since 1 January 2001 of the Company and
(y) all other claims for Taxes that have been asserted against the Company with respect to any
period commencing on or after 1 January 2001. The Company is not a party to or bound by any
closing or other agreement with any Government Authority with respect to Taxes.
	 
	4.4	 	Real Property Holding Corporation. The Company is not nor has it been a United
States real property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii).
	 
	4.5	 	Affiliated Group. The Company has not been a member of any affiliated group filing a
consolidated federal income Tax Return or a member of a combined, consolidated or unitary
group for state, local or foreign Tax purposes (other than a group the common parent of which
has at all times been the Seller) or has any liability for the Taxes of any other person
(other than an entity that is a member of the consolidated group of corporations that has at
all times had the Company as its common Purchaser) under
Treas. Reg. § 1.1502-6 (or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.

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	4.6	 	Change in Accounting Method. The Company has not agreed to nor is it required to
make any adjustment pursuant to Section 481(a) of the Code by reason of a change in accounting
method, and the Company has no Knowledge that the Internal Revenue Service has proposed any
such adjustment or a change in any accounting method used by the Company. The Company uses
the accrual method of accounting for federal income tax purposes. The Company has not taken
any action inconsistent with its practices in prior years that would have the effect of
deferring a liability for Taxes from a period prior to Closing to a period following Closing.
	 
	4.7	 	Tax-Exempt Use Property. None of the assets of the Company (a) is “tax-exempt use
property” within the meaning of Section 168(h) of the Code, (b) is property which is required
to be treated as being owned by any other person pursuant to the so-called “safe harbor lease”
provisions of former Section 168(f)(8) of the Code; or (c) directly or indirectly secures any
debt the interest on which is tax exempt under Section 103(a) of the Code.
	 
	4.8	 	Jurisdiction Outside the United States. Schedule 7.4.8 sets forth whether it is
engaged in business, has permanent establishment (as defined in an applicable tax treaty
between the United States and such other jurisdiction) or is otherwise subject to Tax in a
jurisdiction other than the United States, and identifies such jurisdiction.
	 
	4.9	 	Waiver; Power of Attorney. The Company is not subject to any waiver or extension of
the statute of limitations applicable to the assessment or collection of any Tax. No power of
attorney or similar grant of authority is in place with respect to the Company.
	 
	4.10	 	Parachute Payments. The Company is not (and will not as of the Closing Date be) a
party to any agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in connection with this Agreement or any change of control of
the Company, in the payment of any “excess parachute payments” within the meaning of Section
280G of the Code.
	 
	4.11	 	Section 341(f) Election. The Company does not have in effect an election under
Section 341(f) of the Code.
	 
	4.12	 	No Liens. There are no Tax Liens on any assets of the Company, other than Liens for
Taxes not yet due and payable.
	 
	4.13	 	No Distribution. In the past three years, the Company has not distributed stock of
another person, or has had its stock distributed by another person, in a transaction purported
or intended to be governed in whole or in part by Section 355 or 361 of the Code;
	 
	4.14	 	No Joint Venture or Partnership. Except as provided in Schedule 7.4.14, the Company
is not a party to any joint venture, partnership or other arrangement or contract that could
be treated as a partnership for federal income tax purposes. Schedule 7.4.2 sets forth all
elections pursuant to Treas. Reg. § 301.7701-3 that have been made by business entities in
which the Company or any subsidiary owns an equity interest;

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	4.15	 	Passive Investment. The Company is not, has not been, nor has it owned (whether
directly or indirectly) an interest in, a passive foreign investment company within the
meaning of Section 1297 of the Code. The Company is not, nor at any time has it been,
impacted by (x) the dual consolidated loss provisions of the Section 1503(d) of the Code, (y)
the overall foreign loss provisions of Section 904(f) of the Code or (z) the
recharacterization provisions of Section 952(c)(2) of the Code.
	 
	4.16	 	No Deferred Compensation Plans. The Company does not have any deferred compensation
plans that are not in compliance with Section 409A of the Code, or could give rise to an
imposition of penalty on the recipient of such compensation pursuant to Section 409A of the
Code.
	 
	5.	 	Restrictions on Business Activities. Except as set forth on Schedule 7.5, there is
no agreement (non-compete or otherwise), commitment, judgment, injunction, order or decree to
which the Company or PNI is a party or otherwise binding upon the Company or PNI which has the
effect of materially prohibiting or impairing any business practice or activities of the
Company or PNI, any lease, licenses or acquisition of any assets or property (tangible or
intangible) by any of the Group Companies or the conduct of the Business as currently
conducted.
	 
	6.	 	Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment.
	 
	6.1	 	No Fee Interest. None of the Group Companies owns a fee interest in any real
property, nor has it ever owned a fee interest in any real property since its inception.
Schedule 7.6.1 sets forth a list of all real property currently leased by the Company, the
name of the lessor, the date of the lease and each amendment thereto and the aggregate annual
rental and/or other fees payable under any such lease. All such current real property leases
are in full force and effect, are valid and effective in accordance with their respective
terms, and there are no existing defaults or events of default (or events which with notice or
lapse of time, or both, would constitute a default) by the Company thereunder, or to the
Knowledge of Seller and the Company, by any other party thereto. PNI does not own or lease
any real or personal property.
	 
	6.2	 	Leased Properties and Assets. The Group has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of its tangible properties
and assets, real, personal and mixed, used or held for use in its business. Except as set
forth on Schedule 7.6.2, all such owned properties and assets are free and clear of any Liens,
except (i) as reflected in the Company Financials, (ii) Liens for Taxes not yet due and
payable and (iii) such imperfections of title and encumbrances, if any, which are not material
in character, amount or extent, and which do not materially detract from the value, or
materially interfere with the present use, of the property subject thereto or affected
thereby. Immediately after the Closing Date, the Group will be entitled to the continued
possession and use of the personal property leased by any of the Group
Companies, for the terms specified in such leases and for purposes consistent with the past
practices of the Group.

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	6.3	 	Equipment. All equipment (the “Equipment”) owned or leased by the Group, taken as a
whole, (i) is adequate for the conduct of the business of the Group as currently conducted,
(ii) is in good operating condition, subject only to normal wear and tear for the age and
usage of such respective Equipment, and (iii) complies with all applicable laws and
regulations relating to such Equipment and the use thereof by the Group.
	 
	7.	 	Intellectual Property.
	 
	7.1	 	Company Products. Schedule 7.7.1 contains a complete and accurate list by name of
all products and service offerings sold, licensed or otherwise made commercially available by
the Group as of the date hereof and information regarding any products or service offerings
currently under development by the Group (collectively, “Company Products”).
	 
	7.2	 	Scope of Intellectual Property. Schedule 7.7.2 lists:

	 	7.2.1	 	The patents and pending patents of the Company and any subsidiaries, including
country, identifying each patent by title, patent registration or application number,
date of issue, date acquired, status, and nature of patent;
	 
	 	7.2.2	 	The registered and pending applications for trademarks, trade dress and
service marks, and any common law trademarks, trade dress or service marks claimed by
Company or any subsidiary, identifying each trademark, trade dress or service mark by
including country or state where registered, application and/or registration number,
date of registration and/or application, expiration date, and status;
	 
	 	7.2.3	 	The copyrighted works (both registered copyrights and works in which the
Company or any subsidiary claims a copyright interest), including the nature of the
work, date of first publication, and country of registration and registration number
(if applicable), issued by or pending before any court, tribunal (including the United
States Patent and Trademark Office (the “PTO”) or equivalent authority anywhere
in the world and any actions that must be taken by the Company in relation thereto in
the next one hundred eighty (180) days after the Closing Date, including the payment of
any registration, maintenance or renewal fees or the filing of any responses,
documents, affidavits of use, incontestability filings, applications or certificates
for the purposes of obtaining, maintaining, perfecting, preserving or renewing any
Company Intellectual Property; and
	 
	 	7.2.4	 	The Intellectual Property of any Group Company that has not been registered or
with respect to which registration has not been sought.

	7.3	 	Rights from Third Parties. The Group has obtained from each third party who, at the
request or the direction of any of the Group Companies, developed or otherwise created
any Company Intellectual Property, a written assignment transferring to the Company or PNI
all rights, title and interest in and to all such Company Intellectual Property.

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	7.4	 	No Misrepresentation. None of the Group Companies has materially misrepresented, or
failed to disclose, any material facts or circumstances in any application for any Company
Intellectual Property that would constitute fraud or a material misrepresentation with respect
to such application or that would otherwise materially affect the validity of enforceability
of any Company Intellectual Property.
	 
	7.5	 	Fully Transferable. All Company Intellectual Property is fully transferable,
assignable or licensable, as applicable, without condition or restriction and without payment
of any kind to any third party.
	 
	7.6	 	No Third Party Ownership. Neither the Company nor PNI has received any notice or
claim, whether written or oral, challenging or questioning the Company’s or PNI’s ownership in
any Company Intellectual Property that is owned by the Company (or written notice of any claim
challenging or questioning the ownership in any licensed Company Intellectual Property of the
owner thereof) or suggesting that any third party has any claim of legal or beneficial
ownership with respect thereto nor, to the Company’s Knowledge, is there a reasonable basis
for any such claim. Neither the Group Company’s use of any Company Intellectual Property nor
the production and sale of the Company Products infringes the intellectual property or other
rights of others.
	 
	7.7	 	No Liens, Pledge or License. Except as set forth on Schedule 7.7.7, none of the
Group Companies has created any encumbrance or granted any license or other right in or to any
Company Intellectual Property in favor of any third party other than pursuant to customer
agreements entered into in the ordinary course of business.
	 
	7.8	 	Creation. Except as disclosed in Schedule 7.7.8, all Intellectual Property Rights
embodied in, associated or used in connection with the Company Products, including in any
earlier versions or developments thereof, were created solely by either: (i) employees of the
Company or PNI acting within the scope of their employment, all of whom have assigned in
writing all rights, title and interest in and to such Intellectual Property Rights to the
Company or PNI; or (ii) by third parties who have assigned, or agreed to assign, in writing
all right, title and interest in and to such Intellectual Property Rights to the Company or
PNI.
	 
	7.9	 	Nature of Intellectual Property. The Company Intellectual Property constitutes all
Intellectual Property Rights used in or necessary in the operation or conduct of the Company’s
business as currently conducted, including the design, development, promotion, sale, license,
manufacture, import, export, use or distribution of any and all Company Products. The Group
has, and upon Closing will have, the right to use, all Company Intellectual Property for all
such uses, including, pursuant to valid licenses, all software development tools, library
functions, compilers and all other third-party software and other items that are used in the
design, development, promotion, sale, license, manufacture, import, export, use or
distribution of the Company Products.

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	7.10	 	Improvements. Schedule 7.7.10 contains a list of all improvements made by the any
Group Company with respect to any licensed Intellectual Property Rights. No person who has
licensed any Intellectual Property Rights to any of the Group Companies has ownership,
beneficial, license or other rights to improvements made by the Company with respect to such
Intellectual Property. The Company is, and upon consummation of the transactions contemplated
under the Agreement will be, entitled to freely use and exploit any and all such improvements.
	 
	7.11	 	No Notice of Infringement. None of the Group Companies has received any notice,
whether written or oral, or claim from any person claiming that the operation of the business
of Company or PNI as currently conducted or that any Company Product infringes,
misappropriates, violates, dilutes or constitutes the unauthorized use of any valid or
enforceable right of any third party, including any Intellectual Property Right of any third
party.
	 
	7.12	 	No Threatened Litigation. No Company Intellectual Property or Company Product has
been or is subject to any actual or, to the Company’s Knowledge, threatened litigation,
proceeding (including any proceeding in the PTO or any corresponding foreign office or agency)
or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in
any manner the Company or PNI’s use, transfer or licensing thereof or that may affect the
validity, use or enforceability thereof. There is no decree, order, judgment, agreement,
stipulation or arbitral award which obligates the Company or PNI to grant licenses or
ownership interest in any future Intellectual Property Right related to the operation or
conduct of the business of the Company or PNI or the Company Products.
	 
	7.13	 	Licenses to Intellectual Property. Schedule 7.7.13 lists all contracts, licenses and
agreements to which any Group Company is a party with respect to any Intellectual Property
Rights (including any Company Intellectual Property) including software which the Company or
PNI has licensed from any third party which is used by the Company in the Company Products or
otherwise in its business but excluding off-the-shelf software licensed to the Company or PNI.
Neither the Company nor PNI is in breach of, nor has the Company or PNI failed to perform
under, any of the foregoing contracts, licenses or agreements and, to the Company’s Knowledge,
no third party to any such contract, license or agreement is in breach thereof or has failed
to perform thereunder.
	 
	7.14	 	No Disputes. There is no outstanding or, to the Knowledge of the Company,
threatened, dispute or disagreement of which the Company is aware with respect to any
contract, license or agreement between any Group Company and any third party related to the
Company Intellectual Property.
	 
	7.15	 	No Infringement by Third Parties. The Company has no Knowledge that any third party
is infringing, misappropriating, diluting or violating any Company Intellectual Property and
no such claims have been brought against any third party by any Group Company.

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	7.16	 	No Adverse Consequences. Neither the execution or performance of this Agreement or
the Transaction Documents nor the consummation of the transactions contemplated
hereby will result in: (a) any Group Company granting (or becoming obligated to license,
transfer or grant) to any third party any Company Intellectual Property; (b) any Group
Company being bound by, or subject to, any non-compete, non-solicitation or other
restriction on the operation or scope of its business; (c) the loss or impairment of, or
give rise to any right of any third party to terminate or alter, any of the Group Company’s
rights or interest in any Intellectual Property Rights; or (d) any Group Company or
Purchaser being obligated to pay any penalties any royalties, license fees or other amounts
to any third party in excess of those paid or payable by any Group Company in the absence of
this Agreement or the Transaction Documents.
	 
	7.17	 	Licenses, Permits and Approvals. To the Knowledge of the Company, the Group has
obtained, and Schedule 7.7.17 sets forth, all export license, permits or approvals necessary
or appropriate for the manufacture, marketing, license and distribution of the Company
Products outside the United States.
	 
	7.18	 	No Funding by Governmental Entities. No university, college, other educational
institution, research center or other Government Authority currently has or will have any
right to receive any royalty or other payment with respect to any Company Intellectual
Property or Company Product (or the commercialization thereof).
	 
	7.19	 	No Viruses. The Company Products do not contain any viruses, Trojan horses, worms or
other software routines or hardware components designed to permit unauthorized access, to
disable, erase or otherwise harm software, hardware or data.
	 
	7.20	 	Specifications. Each Company Product conforms in all material respects to the
specifications, documentation, contractual obligations or other information provided by any
Group Company or any of its representatives to customers of any Group Company. The Company
Products comply in all material respects with all Applicable Laws. To the extent that Company
Products (including new versions or releases thereof) have been launched commercially, the
Company has fully disclosed to Purchaser the material technical problems or concerns
associated with such Company Products known to the Company that do or may be expected to
affect the performance of such Company Products and the action plans of the Company to correct
such problems and concerns, all as set forth on Schedule 7.7.20. The Company has taken
commercially reasonable actions necessary to document all Company Products and in particular
has annotated the code and provided explanatory error messages, such that competent
programmers with a reasonable understanding of the product can resolve problems and extend
Product functionality.
	 
	8.	 	Agreements, Contracts and Commitments.
	 
	8.1	 	Material Contracts. Schedule 7.8.1 sets forth all contracts (a) which by their terms
seek to limit or define those activities in which the Company or PNI is permitted or required
to engage, (b) which, except for standard form agreements with customers as to which no
material changes have been made (other than changes to choice of law, venue, or payment
terms), copies of which have been provided to Purchaser, involve the payment by the Company of
US$5,000 individually or US$40,000 in the aggregate within a 12

12

 

	 	 	month period, or (d) which are otherwise material to the
business or operations of the Company (collectively, the
“Material Contracts”). Schedule 7.8.1 separately sets forth
those Material Contracts which require any consent, approval
or waiver by the other parties thereto in connection with this
Agreement, any Transaction Documents, or the consummation of
the transactions contemplated hereby or thereby. Except as
set forth in Schedule 7.8.1, the Company and PNI does not
have, is not a party to nor is it bound by:

	 	8.1.1	 	any collective bargaining agreements;
	 
	 	8.1.2	 	any agreements or arrangements that contain any severance pay or
post-employment liabilities or obligations;
	 
	 	8.1.3	 	any bonus, deferred compensation, pension, profit sharing or retirement plans,
or any other employee benefit plans or arrangements;
	 
	 	8.1.4	 	any arrangement by which the Company or PNI is obligated to pay or has a right
to receive royalties or other payment based on use of any Company Product or Company
Intellectual Property, including in each such case the respective amount thereof;
	 
	 	8.1.5	 	any employment or consulting agreement, contract or commitment with an
employee or individual consultant or salesperson or consulting or sales agreement,
contract or commitment with a firm or other organization;
	 
	 	8.1.6	 	any agreement or plan (including, any stock option plan, stock appreciation
rights plan or stock purchase plan) any of the benefits of which will be increased, or
the vesting of benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the Transaction Documents or the value
of any of the benefits of which will be calculated on the basis of any of the
transactions contemplated hereby or thereby;
	 
	 	8.1.7	 	any fidelity or surety bond or completion bond;
	 
	 	8.1.8	 	any lease of real or personal property involving future payments in excess of
US$5,000 individually or US$40,000 in the aggregate;
	 
	 	8.1.9	 	any agreement of indemnification involving amounts in excess of US$5,000
individually or US$40,000 in the aggregate or any guaranty or suretyship;
	 
	 	8.1.10	 	any agreement, contract or commitment containing any covenant limiting the freedom of
the Company to engage in any line of business or to compete with any person;
	 
	 	8.1.11	 	any agreement, contract or commitment relating to future capital expenditures or
involving future payments in excess of US$5,000 individually or US$40,000 in the
aggregate;

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	 	8.1.12	 	any agreement, arrangement, right, contract or commitment relating to the disposition
or acquisition of assets, properties or any interest in any business enterprise, in
each case outside of the ordinary course of the Company’s business;
	 
	 	8.1.13	 	any mortgage, indenture, loan or credit agreement, security agreement or other
agreement or instrument relating to the borrowing of money or extension of credit,
including guaranties or instruments of surety referred to in subparagraph (vi) above;
	 
	 	8.1.14	 	any purchase order or contract for the purchase of raw materials or the provision of
services involving US$40,000 or more, other than purchases in the ordinary course of
business;
	 
	 	8.1.15	 	any construction contracts involving amounts in excess of US$5,000 individually or
US$40,000 in the aggregate;
	 
	 	8.1.16	 	any distribution, joint marketing, licensing or development agreement involving
amounts in excess of US$5,000 individually or US$40,000 in the aggregate;
	 
	 	8.1.17	 	any insurance policies; or
	 
	 	8.1.18	 	any other agreement, contract or commitment that involves or could result in
aggregate payments to or by the Company of US$40,000 or more or is not cancelable by
the Company without penalty within ninety (90) days or that otherwise is not entered
into in the ordinary course of business.

	8.2	 	No Breach or Violation. Neither the Company nor PNI has breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted under, any of
the terms or conditions of any Material Contract to which it is a party or by which it or its
assets or properties are or may be bound. Each Material Contract is in full force and effect
and is not subject to any breach, default or violation thereunder of which the Company or PNI
has Knowledge by any party obligated to the Company or PNI pursuant thereto. The Company has
obtained, or will obtain prior to the Closing, all necessary consents, waivers and approvals
of parties to any Material Contract as are required or prudent to obtain in connection with
the Agreement and the other transactions contemplated hereby and by the Transaction Documents
(the “Requisite Consents”).
	 
	8.3	 	Interested Party Transactions. No officer, director, or, to the Knowledge of the
Company, any employee or stockholder of any Group Company (nor any ancestor, sibling,
descendant or spouse of any of such persons, or any trust, partnership or corporation in which
any of such persons has a direct or indirect interest), has any direct or indirect interest
in: (a) any entity which furnished or sold, or furnishes or sells, services or products that
any Group Company furnishes or sells, or proposes to furnish or sell, or (b) any entity that
purchases from or sells or furnishes any goods or services to any Group Company, or (c) any
Material Contract; provided, however, that ownership of no more than 2 percent (2 %) of the
outstanding voting stock of a publicly traded
corporation shall not be deemed an “interest in any entity” for purposes of this Clause 8.3.
Except for the Sunair Loan, no Group Company is indebted to any officer, director,
employee, consultant or stockholder of any Group Company (except for amounts due pursuant to
written employment agreements and reimbursement of business expenses), and no such person is
indebted to any Group Company.

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	8.4	 	Company Authorizations. Schedule 7.8.4 lists each consent, license, permit,
approval, grant or other authorization issued to any Group Company by a Government Authority
(a) pursuant to which any Group Company currently operates or holds any interest in any of its
assets or properties or (b) which is required for the operation of its business (including the
design, development, manufacture, sale, promotion, export, import, distribution or provision
of the Company Products) or the holding of any such interest (collectively, “Company
Authorizations”). All Company Authorizations are in full force and effect and constitute all
Company Authorizations required to permit any Group Company to operate or conduct the Group’s
business substantially as currently conducted or to hold any interest in the Group’s assets or
properties. The Group has complied in all material respects with all terms and conditions of
the Company Authorizations, and the same will not be subject to suspension, modification,
revocation or non-renewal as a result of this Agreement, any Transaction Document, or the
transactions contemplated hereby or thereby. The Group has taken commercially reasonable
measures to ensure that its employees, consultants, agents and representatives have complied
with the requirements of all Company Authorizations and the Company is not aware of any past
or current material violation of any Company Authorization.
	 
	9.	 	Litigation. Except as set forth in Schedule 7.9, there is no action, suit, claim,
proceeding, arbitration or investigation of any nature pending, or to the Company’s Knowledge,
threatened, by, against or involving any Group Company, its assets or properties or any of its
officers, directors, employees or agents in their capacity as such, nor, to the Knowledge of
Company, is there any basis therefor. No Governmental Authority or third party has at any
time challenged or questioned the legal right of the Company or PNI to design, develop,
promote, sell, license, manufacture, import, export, use, distribute or provide any Company
Products.
	 
	10.	 	Accounts Receivable.
	 
	10.1	 	List. Schedule 7.10.1 sets forth a list of all accounts receivable of the Group
(“Accounts Receivable”) as of the most recent full calendar month immediately preceding the
Closing Date, along with the date of the invoice.
	 
	10.2	 	Ordinary Course. All Accounts Receivable of the Group arose in the ordinary course
of business and are carried at values determined in accordance with GAAP consistently applied.
Except as set forth on Schedule 7.10.2 no person has given the Company notice of any disputes
regarding, and except for the Wachovia Credit no person has any Lien on, any of such Accounts
Receivable and no request or agreement for material deduction or discount has been made with
respect to any of such Accounts Receivable.

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	10.3	 	Minute Books. The Company has made available to Purchaser all minute records
reflecting all corporate actions taken by Company and PNI since the Company’s and PNI’s
inception that are currently in the Company’s or PNI’s possession (the “Minutes). The Minutes
provide a summary that is accurate in all material respects of all meetings of directors (or
committees thereof) and stockholders of the Company and PNI and include copies of all board
and stockholder actions by written consent since its incorporation. A list of any matters
requiring the approval of the Company’s or PNI’s Board of Directors or stockholders as to
which minutes of meeting or resolutions are missing is set forth in Schedule 7.10.3, and all
such matters have been duly approved by the Company’s or PNI’s Board of Directors and/or
stockholders, as applicable, by ratification or other means pursuant to properly noticed
meetings or valid waivers of notice by requisite written consent.
	 
	11.	 	Environmental Matters.
	 
	11.1	 	Hazardous Material. No underground storage tanks and no amount of Hazardous
Materials are present, either as a result of any Group Company’s use or occupation of any real
property or, to the Company’s Knowledge as a result of any actions of any third party or
otherwise, in each case in, on or under any property, including the land and the improvements,
ground water and surface water thereof, that any Group Company has at any time owned,
operated, occupied or leased. For purposes of this Agreement, “Hazardous Material” means any
substance that has been designated by any Government Authority or by applicable federal, state
or local law to be a pollutant or contaminant or infectious or radioactive, toxic, hazardous
or otherwise a danger to health or the environment, including, PCBs, asbestos, petroleum,
urea-formaldehyde, methylene chloride and all substances listed as hazardous substances
pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, or defined as a hazardous waste pursuant to the United States Resource
Conservation and Recovery Act of 1976, as amended, and the regulations promulgated pursuant to
said laws.
	 
	11.2	 	Hazardous Materials Activities. The Group has not transported, stored, used,
manufactured, disposed of, released or exposed its employees or others to Hazardous Materials
in violation of any law in effect on or before the Closing Date, nor has the Group disposed
of, transported, sold, or manufactured any product containing a Hazardous Material
(collectively, “Hazardous Materials Activities”) in violation of any rule, regulation, treaty
or statute promulgated by any Government Authority in effect prior to or as of the date hereof
to prohibit, regulate or control Hazardous Materials or any Hazardous Material Activity.
	 
	11.3	 	Permits. The Group currently holds all environmental approvals, permits, licenses,
clearances and consents (“Environmental Permits”) necessary for the conduct of the Group’s
Hazardous Material Activities, if any, and other businesses of Company as such activities and
businesses are currently being conducted. All such Environmental Permits are in full force
and effect and none of the Group Companies has received no notice that it is in violation
thereof (or that there are any investigations or inquiries pending with
respect thereto) or that any such Environmental Permits might be terminated or not renewed
upon their scheduled expiration.

16

 

	11.4	 	Environmental Liabilities. No material action, proceeding, revocation proceeding,
amendment procedure, writ, injunction, investigation or claim is pending, or to Company’s
Knowledge, threatened concerning any Environmental Permit, Hazardous Material or any Hazardous
Materials Activity of or relating to the Group. The Company is not aware of any fact or
circumstance which could involve any of the Group Companies in any material environmental
litigation or investigation or impose upon the Company (or the surviving entity as the
successor to the Company) any material environmental liability, whether for its actual
activities, as a potentially responsible party, or otherwise.
	 
	11.5	 	Capital Expenditures. The Company is not aware of any capital expenditures which are
required or recommended for it to comply with any applicable Environmental Laws.
	 
	12.	 	Brokers’ and Finders’ Fees; Third Party Expenses. Neither Seller nor the Company has
incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’
fees or agents’ commissions or any similar charges in connection with this Agreement, any
Transaction Document or any transaction contemplated hereby or thereby.
	 
	13.	 	Employee Benefit Plans.
	 
	13.1	 	Definitions. For purposes of these Warranties, the following terms have the
respective meanings set forth below:

	 	13.1.1	 	“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
and codified in Section 4980B of the Code and Section 601 et. seq. of ERISA;
	 
	 	13.1.2	 	“Company Employee Plan” means any plan, program, policy, practice, contract,
agreement or other arrangement providing for compensation, severance, termination pay,
deferred compensation, performance awards, stock or stock-related awards, fringe
benefits or other employee benefits or remuneration of any kind, whether written or
unwritten, funded or unfunded, including, each “employee benefit plan,” within the
meaning of Section 3(3) of ERISA, or any International Employee Plan, which is
maintained, contributed to, or required to be contributed to, by the Company or any
ERISA Affiliate for the benefit of any Employee (as defined below), or with respect to
which the Company has or may have any liability or obligation;
	 
	 	13.1.3	 	“Employee” means any current, former, or retired employee, officer, consultant or
director of the Company or any ERISA Affiliate;
	 
	 	13.1.4	 	“Employee Agreement “ means each management, employment, severance, consulting,
relocation, repatriation, expatriation, visa, work permit or other agreement, contract
or understanding between the Company or any ERISA
Affiliate and any Employee with respect to which the Company has or may have any
obligation;

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	 	13.1.5	 	“ERISA Affiliate” means any person or entity under common control with the Company,
or is a member of an affiliated service group that includes the Company, within the
meaning of Section 414(b), (c) or (m) of the Code and the regulations thereunder;
	 
	 	13.1.6	 	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended;
	 
	 	13.1.7	 	“FMLA” means the Family Medical Leave Act of 1993, as amended;
	 
	 	13.1.8	 	“International Employee Plan” means each Company Employee Plan that has been adopted
or maintained by the Company or any ERISA Affiliate, whether informally or formally, or
with respect to which the Company or any ERISA Affiliate will or may have any
liability, for the benefit of Employees who perform services outside the United States;
	 
	 	13.1.9	 	“IRS” means the Internal Revenue Service;
	 
	 	13.1.10	 	“Multiemployer Plan” means any “Pension Plan” (as defined below) which is a
“multiemployer plan,” as defined in Section 3(37) of ERISA; and
	 
	 	13.1.11	 	“Pension Plan” means each Company Employee Plan, which is an “employee pension
benefit plan,” within the meaning of Section 3(2) of ERISA.

	13.2	 	Employee Plans. Schedule 7.13.2 contains an accurate and complete list of each known
Company Employee Plan which is or has been maintained or created by the Company. Each Company
Employee Plan has at all times been in material compliance with all Applicable Laws. The
Company has no, and to the Knowledge of the Company, no ERISA Affiliate has any, plan or
commitment, whether legally binding or not, to establish any new Company Employee Plan or
Employee Agreement, to modify any Company Employee Plan or Employee Agreement (except to the
extent required by law or to conform any such Company Employee Plan or Employee Agreement to
the requirements of any Applicable Law, in each case as previously disclosed to Purchaser in
writing, or as required by this Agreement), or to adopt or enter into any Company Employee
Plan or Employee Agreement.
	 
	13.3	 	Employee List. Schedule 7.13.3 sets forth, individually and by work base or
location, the name of each current officer, employee, consultant/sub-contractor, together with
such person’s position or function, monthly base salary or compensation and any incentive,
severance or bonus arrangements with respect to such person. Entering into this Agreement and
the Transaction Documents and completing the transactions contemplated hereby and thereby will
not result in any payment or increased payment becoming due from the Company or PNI to any
current or former officer, director, or employee of, or consultant to, the Company or PNI, and
to the Knowledge of the Company no employee or consultant of the Company or PNI has made any
threat, or otherwise revealed an

18

 

	 	 	intent, to terminate such employee’s or consultant’s relationship with the Company or PNI
for any reason, including because of the consummation of the transactions contemplated by
this Agreement or the Transaction Documents. Neither the Company nor PNI is a party to any
agreement for the provision of labor from any outside agency. Since the Company’s and PNI’s
date of incorporation, there have been no claims by employees of such outside agencies, if
any, with regard to employees assigned to work for the Company or PNI, and no claims by any
Government Authority with regard to such employees. Except as disclosed on Schedule 7.13.3,
all employees of the Company and PNI are employed at will.
	 
	13.4	 	Labor Related Claims. There have been no federal or state claims based on sex,
sexual or other harassment, age, disability, race or other discrimination or common law
claims, including claims of wrongful termination, by any employees of the Company or PNI or by
any of the employees performing work for the Company or PNI but provided by an outside
employment agency, and there are no facts or circumstances Known to the Company or PNI that
could reasonably be expected to give rise to such complaint or claim. The Company and PNI (a)
has at all times complied with all Applicable Law related to employment, (b) has not received
any notice of any claim that it has not complied in any material respect with any Applicable
Law relating to employment, including any provisions thereof relating to wages, hours,
collective bargaining, the payment of Social Security and similar taxes, equal employment
opportunity, employment discrimination, the Worker Adjustment and Retraining Notification Act
(the “WARN Act”, employee safety, and (c) has not received any notice of any claim that it is
liable for any arrearages of wages or any taxes or penalties for failure to comply with any of
the foregoing.
	 
	13.5	 	Policies and Handbook. Neither the Company nor PNI has any written policies and/or
employee handbooks or manuals except those for which true and correct copies have been
provided to Purchaser.
	 
	13.6	 	Employee Plan Compliance. The Company and its ERISA Affiliates (a) have performed in
all material respects all obligations required to be performed by them under each Company
Employee Plan, (b) are not in default or violation of any Company Employee Plan, and (c) have
no Knowledge of any default or violation by any other party to any Company Employee Plan. In
addition:

	 	13.6.1	 	Each Company Employee Plan has been established and maintained in all material
respects in accordance with its terms and in compliance with all Applicable Law,
including ERISA and the Code;
	 
	 	13.6.2	 	Any Company Employee Plan intended to be qualified under Section 401(a) of the Code
(a) has either applied for, prior to the expiration of the requisite period under
applicable Treasury Regulations or IRS pronouncements, or obtained a favorable
determination, notification, advisory and/or opinion letter, as applicable, as to its
qualified status from the IRS or still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for such letter and to
make any amendments necessary to
obtain a favorable determination, and (b) incorporates or has been amended to
incorporate all provisions required to comply with the Tax Reform Act of 1986 and
subsequent legislation;

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	 	13.6.3	 	For each Company Employee Plan that is intended to be qualified under Section 401(a)
of the Code, there has been no event, condition or circumstance that has adversely
affected, or reasonably could be expected to adversely affect, such qualified status;
	 
	 	13.6.4	 	No “prohibited transaction,” within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has
occurred with respect to any Company Employee Plan;
	 
	 	13.6.5	 	There are no actions, suits or claims pending, or, to the Knowledge of the Company,
threatened (other than routine claims for benefits) against any Company Employee Plan
or against the assets of any Company Employee Plan;
	 
	 	13.6.6	 	Each Company Employee Plan can be amended, terminated or otherwise discontinued after
the Effective Time in accordance with its terms, without liability to Purchaser, the
Company or any ERISA Affiliate (other than ordinary administrative expenses or
administrative, legal and filing expenses in connection with amendment, termination or
discontinuance);
	 
	 	13.6.7	 	There are no audits, inquiries or proceedings pending or, to the Knowledge of the
Company or any ERISA Affiliates, threatened by the IRS or DOL, or any other Government
Authority with respect to any Company Employee Plan;
	 
	 	13.6.8	 	The Company is not subject to any penalty or tax with respect to any Company Employee
Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code; and
	 
	 	13.6.9	 	The Company has timely made all contributions and other payments required by and due
under the terms of each Company Employee Plan for which the Company is or may be
obligated to pay.

	13.7	 	No Pension or Welfare Plans. Except as set forth in Schedule 7.13.7, neither the
Company nor PNI has and has not ever maintained, established, sponsored, participated in, or
contributed to:

	 	13.7.1	 	Any Pension Plan which is subject to Title IV of ERISA or Section 412 of the Code;
	 
	 	13.7.2	 	Any Multiemployer Plan;
	 
	 	13.7.3	 	Any “multiple employer plan” as defined in ERISA or the Code; or
	 
	 	13.7.4	 	Any “funded welfare plan” within the meaning of Section 419 of the Code.

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	13.8	 	No Post-Employment Obligations. Except as set forth in Schedule 7.13.8, no Company
Employee Plan provides, or reflects or represents any liability to provide, life insurance,
medical or other employee benefits to any Employee upon his or her retirement or termination
of employment for any reason, except as may be required by COBRA or other applicable statute,
and neither the Company nor PNI has represented, promised or contracted (whether orally or in
writing) to any Employee (either individually or to Employees as a group) or any other person
that such Employee(s) or other person would be provided life insurance, medical or other
employee welfare benefits upon retirement or termination of employment, except to the extent
required by statute.
	 
	13.9	 	Health Care Compliance. Neither the Company nor PNI has violated any of the health
care continuation requirements of COBRA, the requirements of FMLA, the requirements of the
Health Insurance Portability and Accountability Act of 1996, the requirements of the Women’s
Health and Cancer Rights Act of 1998, the requirements of the Newborns’ and Mothers’ Health
Protection Act of 1996, or any amendment to each such act, or any similar provisions of state
law applicable to its Employees.
	 
	13.10	 	Past Acquisitions. Neither the Company nor PNI is currently obligated to provide an
Employee with any compensation or benefits pursuant to an agreement (e.g., an acquisition
agreement) with a former employer of such Employee.
	 
	13.11	 	Effect of Transaction. Except as set forth in Schedule 7.13.11:

	 	13.11.1	 	The execution of this Agreement and the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event under any
Company Employee Plan, Employee Agreement, trust or loan that will or may result in any
payment (whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits, obligation to fund benefits
or other change in benefits with respect to any Employee;
	 
	 	13.11.2	 	No payment or benefit which will or may be made by the Company, its ERISA Affiliates
or Purchaser or any of its respective affiliates with respect to any Employee will be
characterized as a “parachute payment,” within the meaning of Section 280G(b)(2) of the
Code;
	 
	 	13.11.3	 	With respect to any insurance policy which provides, or has provided, funding for
benefits under any Company Employee Plan, (a) there is and will be no liability of the
Surviving Entity, the Company, Purchaser or any of their respective subsidiaries in the
nature of a retroactive or retrospective rate adjustment, loss sharing arrangement, or
actual or contingent liability as of or immediately after the Closing Date, nor would
there be any such liability if such insurance policy were terminated as of the Closing
Date, and (b) no insurance company issuing any such policy is in receivership,
conservatorship, bankruptcy, liquidation, or similar proceeding, and; to the Knowledge
of the Company, no such proceedings with respect to any insurer are imminent.

21

 

	13.12	 	Employment Matters. Except as set forth in Schedule 7.13.12, the Group (i) is in
compliance in all material respects with all Applicable Law respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each case, with respect
to its Employees and independent contractors; (ii) has withheld and reported all amounts
required by law or by agreement to be withheld and reported from the wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or any employment,
withholding, payroll or other similar taxes or any penalty for failure to comply with any of
the foregoing; and (iv) is not liable for any payment to any trust or other fund or to any
governmental or administrative authority, with respect to unemployment compensation benefits,
social security or other benefits for Employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no pending or
threatened claims or actions against any Group Company under any worker’s compensation policy
or long-term disability policy. Neither the Company nor any ERISA Affiliate has direct or
indirect liability with respect to any misclassification of any person as an independent
contractor rather than as an Employee, or with respect to any Employee leased from another
employer.
	 
	13.13	 	Labor. No work stoppage or labor strike against the Company or an ERISA Affiliate
is pending or threatened. No Group Company is involved in or, to the Knowledge of the
Company, threatened with, any labor dispute, grievance, or litigation relating to labor,
safety or discrimination matters involving any Employee, including charges of unfair labor
practices or discrimination complaints, which, if adversely determined, would, individually or
in the aggregate, result in material liability to any Group Company. The Group has not
engaged in any unfair labor practices within the meaning of the National Labor Relations Act.
No Group Company is currently, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to its Employees and no
collective bargaining agreement or union contract is being negotiated by any Group Company.
The Group has not incurred any material liability or material obligation under the Warn Act or
any similar state or local law which remains unsatisfied. Schedule 7.13.13 includes a list of
all Employees who have been terminated by any Group Company and who have not executed a
release in favor of the Company or PNI for all claims in connection with such termination, and
the general reason for termination, since 6 August 2004.
	 
	13.14	 	International Employee Plan. Except as set forth on Schedule 7.13.14, none of the
Group Companies currently has, nor has it ever had, the obligation to maintain, establish,
sponsor, participate in, or contribute to any employee benefit plan mandated by a government
other than the United States or governed by the laws of any government other than the United
States.
	 
	14.	 	Compliance with Laws. The Group has complied in all material respects with, and has
not received any notices of violation with respect to, any applicable federal, state or local
statute, law, ordinance, rule or regulation, domestic or foreign (“Applicable Law”). In
particular, the Group is in compliance with all Applicable Laws with respect to the design,
development, promotion, sale, license, manufacture, import, export, use, distribution or
provision of the Company Products. The Group has not received any communication from any
Government Authority or other person that alleges that it is or

22

 

	 	 	was not in compliance with any Applicable Law, nor is the Company aware of any reasonable
basis for such claim. The Group has taken adequate and sufficient measures to ensure that
its agents have complied with all Applicable Laws with respect to the design, development,
promotion, sale, license, manufacture, import, export, use, distribution or provision of the
Company Products, and the Group is not aware of any violation by any of its current or
former agents of such Applicable Laws.
	 
	15.	 	Warranties; Indemnities. There are no warranty or indemnity claims pending or
threatened against any Group Company. All forms of Warranty Obligations of the Group are
listed on Schedule 7.15, and true and correct copies thereof have been delivered to Purchaser
prior to the execution of this Agreement. There have not been any deviations from the
Warranty Obligations, and salespersons, Employees and agents of any Group are not authorized
to undertake obligations to any customer or other person in excess of or materially different
from such Warranty Obligations. For purposes of this Agreement, the term “Warranty
Obligations” shall refer to all forms of written warranties, guarantees and written warranty
policies of any Group Company in respect of any of the Company Products which are currently in
effect.
	 
	16.	 	Software Development Agreements. No Group Company has materially violated, nor is it
in material violation of, nor will this Agreement, any Transaction Document, the observance
and performance of the terms hereof or thereof or the consummation of the transactions
contemplated hereby or thereby cause any violation of, any terms or provisions of any
agreement under which any Group Company has an obligation to develop, supply or distribute
software to or for any third party, excluding end-user licenses for object code executed in
the ordinary course of business, nor is any Group Company under any obligation to deliver
source code or any confidential or proprietary information to any third party.
	 
	17.	 	Representations Complete. None of the representations or warranties made by the
Seller or any of the Group Companies in this Agreement (taken together with any of the
Exhibits or Schedules), and none of the statements of, by or regarding the Seller or any Group
Company made in any Schedule, Exhibit or certificate furnished by the Seller or any Group
Company pursuant to this Agreement or any Transaction Document contains or will contain any
untrue statement of a material fact, or omit to state any material fact necessary in order to
make the statements contained herein or therein (to the extent such statements are of, by or
regarding the Seller or any Group Company) not misleading.
	 
	18.	 	Insurance. All insurance policies of the Group are listed on Schedule 7.18. There
is no claim pending under any such policies as to which coverage has been questioned, denied
or disputed by the underwriters of or obligors on such policies. All premiums due and payable
under all such policies have been timely paid and the Group is otherwise in compliance with
the terms of such policies. The Company has no Knowledge of any threatened termination of, or
premium increase with respect to, any of such policies, or that any underwriter or carrier
would not renew each such policy on substantially comparable terms as currently in effect.

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	19.	 	Foreign Corrupt Practices Act. Neither the Company, nor to the Knowledge of the
Company, any agent, employee or other person associated with or acting on behalf of the
Company or PNI has, directly or indirectly, used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to political activity,
made any unlawful payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate funds, violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate,
payoff, influence payment, kickback or other similar unlawful payment.
	 
	20.	 	Complete Copies of Materials. The Group has delivered or made available copies of
each document in its possession that has been requested by Purchaser in connection with
Purchaser’s legal, accounting and business review of the Company.
	 
	21.	 	Board Approval. The Board of Directors of each of Seller and the Company (a) has
approved this Agreement, the Loan Assignment Agreement, the Transaction Documents, and the
transactions contemplated hereby and thereby.
	 
	22.	 	Customers and Suppliers. No customer which individually accounted for more than US
$100,000 of the Company’s consolidated gross revenues during the 12-month period preceding the
date hereof, and no supplier of the Company or PNI has canceled or otherwise terminated, or
made any written threat to the Company or PNI to cancel or otherwise terminate its
relationship with the Company or PNI, or has decreased materially its services or supplies to
the Company or PNI, in the case of any such supplier, or its usage of the services or products
of the Company or PNI, in the case of such customer and, to the Knowledge of the Company, no
such supplier or customer intends to cancel or otherwise terminate its relationship with the
Company or PNI or to decrease materially its services or supplies to the Company or PNI or its
usage of the services or products of the Company or PNI, as the case may be. Neither the
Company nor PNI has breached any agreement with, or engaged in any fraudulent conduct with
respect to, any customer or supplier of the Company or PNI.
	 
	23.	 	Export Control Laws. The Company and PNI has conducted its export transactions at
all times in strict compliance with applicable provisions of all export control laws and
regulations, including but not limited to the Export Administration Act and implementing
Export Administration Regulations. Without limiting the foregoing, the Company represents and
warrants that (a) the Company and PNI each has obtained all export licenses and other
approvals required for its exports of products, software and technologies from the United
States; (b) the Company and PNI is in compliance with the terms of all applicable export
licenses or other approvals; (c) there are no pending or threatened, claims against the
Company or PNI with respect to such export licenses or other approvals; (d) to the Company’s
Knowledge, there are no actions, conditions or circumstances pertaining to the Company’s or
PNI’s export transactions that may give rise to any future claims; and (e) no consents or
approvals for the transfer of export licenses by reason of the transactions contemplated under
the Agreement are required, or such consents and approvals can be obtained expeditiously
without material cost.

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	24.	 	Banks and Brokerage Accounts. Schedule 7.24 sets forth: (a) a true and complete list
of the names and locations of all banks, trust companies, securities brokers and other
financial institutions at which any Group Company has an account or safety deposit box or
maintains a banking, custodial, trading or other similar relationship; (b) true and complete
list and description of each such account, safety deposit box and relationship, indicating in
each case the account number, the names of the respective officers, employees, agents or other
similar representatives of the Group Company having signatory power with respect thereto and
the current balances in such accounts or safety deposit boxes; and (c) a list of each
debenture, note, and other evidence of indebtedness, stock, security (including rights to
purchase and derivative securities or rights), interests in joint ventures and general and
limited partnerships, mortgage loans and other investment or portfolio assets owned of record
or beneficially by any Group Company, the legal name of the record and beneficial owner
thereof, the location of the certificates, if any, therefor, the maturity date, if any, and
any stock or bond powers or other authority for transfer granted with respect thereto.
	 
	25.	 	Takeover Statutes. No “fair price,” “moratorium,” “control share acquisition,” or
other or similar anti-takeover statutes or regulations enacted or promulgated under federal,
state or foreign law is applicable with respect to the Group in connection with the
transaction contemplated by this Agreement or the Transaction Documents.

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Schedule 7A

REPRESENTATIONS AND WARRANTIES OF PURCHASER 

	 	 	The Purchaser represents, warrants and undertakes to the Seller as follows:
	 
	7A.1	 	Corporate Organization. Purchaser has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its incorporation and
has the corporate power and authority to own or lease its properties and to conduct its
business as it is now being conducted. Purchaser is duly licensed or qualified and in good
standing as a foreign corporation in each jurisdiction in which its ownership of property or
the character of its activities is such as to require it to be so licensed or qualified,
except where failure to be so licensed or qualified would not have a material adverse effect
on the ability of Purchaser to enter into this Agreement or consummate the transactions
contemplated hereby.
	 
	7A.2	 	Due Authorization. Purchaser has all requisite corporate power and authority to
execute and deliver this Agreement and to perform all obligations to be performed by it
hereunder. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and approved by the
Board of Directors of Purchaser, and no other corporate proceeding on the part of Purchaser is
necessary to authorize this Agreement. This Agreement has been duly and validly executed and
delivered by Purchaser and constitutes a legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights generally and subject, as to enforceability, to general principles of
equity.
	 
	7A.3	 	No Conflict. The execution and delivery of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby does not and will not violate any
provision of, or result in the breach of any Applicable Law, the certificate of incorporation,
bylaws, as amended, or other organizational documents of Purchaser, or any agreement,
indenture or other instrument to which Purchaser is a party or by which Purchaser may be
bound, or of any order, judgment or decree applicable to Purchaser, or terminate or result in
the termination of any such agreement, indenture or instrument, except to the extent that the
occurrence of the foregoing would not have a material adverse effect on the ability of
Purchaser to enter into and perform their respective obligations under this Agreement.
	 
	7A.4	 	Litigation and Proceedings. There are no lawsuits, actions, suits, claims or other
proceedings at law or in equity, or, to the knowledge of Purchaser, investigations, pending
before or by any Governmental Authority or, to the knowledge of Purchaser, threatened, against
Purchaser which, if determined adversely, could reasonably be expected to have a material
adverse effect on the ability of Purchaser to enter into and perform its obligations under
this Agreement. There is no unsatisfied judgment or any
open injunction binding upon Purchaser which could reasonably be expected to have a material
adverse effect on the ability of Purchaser to enter into and perform their respective
obligations under this Agreement.

1

 

	7A.5	 	Governmental Authorities; Consents. Assuming the truth and completeness of the
representations and warranties of Seller and each of the Group Companies contained in this
Agreement, no consent, approval or authorization of, or designation, declaration or filing
with, any governmental authority or other third party is required on the part of Purchaser
with respect to Purchaser’s execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
	 
	7A.6	 	Financial Ability. Purchaser has cash on hand and/or undrawn amounts under existing
credit facilities necessary to consummate the transactions contemplated by this Agreement,
including, without limitation, the ability to pay the Consideration at Closing.
	 
	7A.7	 	Brokers’ Fees. No broker, finder, investment banker or other Person is entitled to
any brokerage fee, finders’ fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by Purchaser or any of its
Affiliates.
	 
	7A.8	 	Acquisition of Sale Shares for Investment. Purchaser has such knowledge and
experience in financial and business matters that it is capable of evaluating the merits and
risks of its participation in this Agreement. Purchaser confirms that Seller and the Company
has made available to Purchaser and Purchaser’s agents the opportunity to ask questions of the
officers and management employees of the Group as well as access to the documents, information
and records of the Group and to acquire additional information about the business and
financial condition of the Group, and Purchaser confirms that it has made an independent
investigation, analysis and evaluation of the Group and their respective properties, assets,
business, financial condition, documents, information and records. Purchaser is acquiring the
Sale Shares for investment and not with a view toward or for sale in connection with any
distribution thereof, or with any present intention of distributing or selling the Sale
Shares. Purchaser understands and agrees that the Sale Shares may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of without registration under
the Securities Act of 1933, as amended, except pursuant to an exemption from such registration
available under such Act, and without compliance with state, local and foreign securities
laws, in each case, to the extent applicable.

2

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