Document:

Exhibit 10.1 2.4.15

Exhibit 10.1
THE PROGRESSIVE CORPORATION

2015 EQUITY INCENTIVE PLAN

SECTION 1.  Establishment; Definitions.

(a)The Progressive Corporation, an Ohio corporation (the “Company”), hereby establishes an incentive compensation plan for key employees, to be known as “The Progressive Corporation 2015 Equity Incentive Plan,” as set forth in this document.  The Plan permits the grant of Restricted Stock Units, Restricted Stock, Stock Options, Stock Appreciation Rights and Dividend Equivalents to key employees of the Company and its Subsidiaries and Affiliates.  The purpose of the Plan is to enable the Company to attract, retain, motivate and reward key employees of the Company and its Subsidiaries and Affiliates and strengthen the mutuality of interests between such key employees and the Company's shareholders by offering such key employees equity or equity-based incentives.

(b)For purposes of the Plan, the following terms shall have the meanings set forth below:

“10% Participant” has the meaning assigned to it in Section 8(b)(i).

“2010 Plan” means the Company’s 2010 Equity Incentive Plan, as amended from time to time.

“Affiliate” means any entity (other than the Company and its Subsidiaries) that the Company, directly or indirectly, controls, is controlled by or is under common control with, determined by the possession of the power to direct or cause the direction of management or policies of such entity (through ownership of securities, by contract or otherwise).

“Award” means any award of Restricted Stock Units, Restricted Stock, Stock Options, Stock Appreciation Rights or Dividend Equivalents under the Plan.

“Award Agreement” means a written or electronic agreement or grant certificate setting forth the terms and conditions applicable to an Award granted to a Participant under the Plan.

“Award Installment” means, (i) if an Award consists of multiple installments, each with a separate Vesting Date, Expiration Date and/or other unique term or condition, any one of such installments, or (ii) if the Award consists of a single installment, then the entire Award.

“Board” means the Board of Directors of the Company.

“Cause” means, unless otherwise determined by the Committee and stated in the Award Agreement for any Award:  a felony conviction of a Participant or the failure of a Participant to contest prosecution for a felony; a Participant’s willful misconduct or dishonesty, any of which, in the judgment of the Committee, is harmful to the business or reputation of the Company or any Subsidiary or Affiliate; or any material violation of any of the provisions of a Code of Conduct, or any confidentiality agreement, non-solicitation agreement, or other agreement between the Participant and the Company.

“Change in Control” means the happening of any of the following events:
(i)An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (1) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control:  (1) any acquisition directly from the Company, (2) any acquisition by the Company, (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (4) any acquisition by any entity pursuant to a transaction which complies with clauses (1), (2) and (3) of subsection (iii) of this definition); or 
(ii)A change in the composition of the Board such that the individuals who, as of the Plan Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that, for purposes of this definition, any individual who becomes a member of the Board subsequent to the Plan Effective Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be considered as a member of the Incumbent Board; or 
(iii)The consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries or sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or securities of another entity by the Company or any of its subsidiaries (a “Business Combination”), in each case, unless, following such Business Combination, (1) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then outstanding shares of common stock (or, for a noncorporate entity, equivalent securities) and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or, for a noncorporate entity, equivalent securities), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then outstanding shares of common stock (or, for a noncorporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors (or, for a noncorporate entity, equivalent body or committee) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or 
(iv)The approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.
In addition, in all cases the foregoing definition is intended to satisfy the definition of a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the Company’s assets, each, as applicable, as defined in, and determined in accordance with, Section 409A.

“Change in Control Price” means the Fair Market Value of the Stock on the New York Stock Exchange Composite Index on the last full trading day immediately preceding the occurrence of the Change in Control.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto, and all regulations promulgated thereunder.

“Code of Conduct” means the Company’s Code of Business Conduct and Ethics, Chief Executive Officer/Senior Financial Officers Code of Ethics, or any other Company code or standards of conduct applicable to the Participant from time to time. 

“Committee” means the Compensation Committee of the Board or a subcommittee of that committee.

“Company” means The Progressive Corporation, an Ohio corporation, or any successor corporation (which, following a Change in Control where the Company becomes a wholly-owned Affiliate of another Person, shall mean the ultimate parent entity of such Person (if such Person is not the ultimate parent entity)(the “New Company”)).

“Disability” means, unless otherwise provided in an Award Agreement, permanent and total disability as determined under the Company’s long-term disability plan applicable to the Participant.

“Disqualification Date” means the earliest date as of which the Participant engaged in any Disqualifying Activity, as determined by the Committee.

“Disqualifying Activity” means any of the following acts or activities:

(i)    directly or indirectly serving as a principal, shareholder, partner, director, officer, employee or agent of, or as a consultant or advisor or in any other capacity to, any business or entity which competes with the Company or its Subsidiaries or Affiliates in any business or activity then conducted by the Company or any of its Subsidiaries or Affiliates to any extent deemed material by the Committee, without the Company’s prior written consent; or

(ii)    any disclosure by the Participant, or any use by the Participant for his or her own benefit or for the benefit of any other person or entity (other than the Company or its Subsidiaries or Affiliates), of any confidential information or trade secret of the Company or any of its Subsidiaries or Affiliates without the prior written consent of the Company; or 

(iii)    any material violation of any of the provisions of any Code of Conduct or any agreement between the Participant and the Company, as determined by the Committee; or

(iv)    making any other disclosure or taking any other action which is determined by the Committee to be materially detrimental to the business, prospects or reputation of the Company or any of its Subsidiaries or Affiliates; or

(v)    the Participant fails, in any material respect, to perform his or her assigned responsibilities as an employee of the Company or any of its Subsidiaries or Affiliates, as determined by the Committee, after consulting with the Chief Executive Officer or the Chief Human Resources Officer.

The ownership of less than 2% of the outstanding voting securities of a publicly traded corporation which competes with the Company or any of its Subsidiaries or Affiliates shall not constitute a Disqualifying Activity.

“Dividend Equivalent” means an amount equal to a cash dividend paid or the fair market value of property distributed by the Company in respect of one share of Stock.

“Eligible Persons” has the meaning assigned to it in Section 4.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Expiration Date” means the date upon which an Award, or any portion thereof, is scheduled to expire or terminate if not exercised or vested prior thereto, as determined by the Committee and set forth in the related Award Agreement. 

“Fair Market Value” means, as of any given date, the average of the high and low quoted selling price of the Stock on such date on the New York Stock Exchange or, if no such sale of the Stock occurs on the New York Stock Exchange on such date, then such mean price on the next succeeding day on which the Stock was traded on that Exchange.  If the Stock is no longer traded on the New York Stock Exchange, then the Fair Market Value of the Stock shall be determined by the Committee in good faith.

“Good Reason” means, on or after the date of a Change in Control, and subject to the notice and cure provisions contained in Section 11 below:

(i)     any significant diminution in the individual’s duties, position (including status, title and reporting requirements), authority, or responsibilities;  

(ii)     a decrease, as compared with the 6 months immediately preceding the Change in Control, in any of the Participant’s salary, rate of pay, cash bonus opportunity, allotted vacation time, the value of annual time-based and performance-based (if applicable) equity awards, or the prompt reimbursement of appropriate business expenses as set forth in the Company’s policies immediately prior to the Change in Control (or a reasonable replacement policy);  

(iii)     requiring the Participant to be based at an office location other than the location at which he or she was based immediately prior to the Change in Control if the change in office location would increase the Participant’s commute (using the most direct, commonly traveled route) by greater than 50 miles; or 

(iv)     denying the Participant the right to participate in savings, retirement and welfare benefit plans on the same basis (or a substantially similar basis) as is available to other similarly situated employees, subject to legal requirements (including ERISA requirements).

“Incentive Stock Option” means any Stock Option intended to be and designated as an “Incentive Stock Option”, which satisfies the requirements of Section 422 of the Code or any successor section thereto.

“Non-Employee Director” shall have the meaning set forth in Rule 16b-3(b)(3)(i) promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor definition adopted by the Commission.
    
“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

“Option Exercise Price” means the price at which a share of Stock may be purchased by a Participant pursuant to the exercise of an Option, as determined by the Committee and set forth in the related Option Award Agreement.

“Option Installment” means an Award Installment of Stock Options.

“Option Term” means the period commencing on the grant date of a Stock Option and terminating on the Expiration Date of such Option.

“Outside Director” shall have the meaning set forth in Section 162(m). 

“Participant” means any individual who received and holds an outstanding Award granted under the Plan.  

“Performance-Based Award” means any Award that by the terms of the related Award Agreement is subject to vesting, in whole or in part, upon the Committee’s certification of the achievement of Performance Goals established by or under the direction of the Committee and set forth in the related Award Agreement, which, unless otherwise determined by the Committee, shall be Awards intended to qualify as performance-based compensation under Section 162(m)(4)(C) of the Code (“Performance-Based Compensation”).

“Performance Goals” means the performance goals selected and established by the Committee with respect to any Performance-Based Award, which shall be based on objective criteria relating to one or more of the following measures: revenues; premiums (written, net, earned, per policy or per vehicle); expense levels; cost control or cost savings levels; combined ratio (target, weighted, variation from target, or cohort (expected lifetime combined ratio for a group of policies commencing during a specified time period)); return on shareholder equity, revenue or capital (including return on total capital or return on invested capital); policies in force; policy renewals; policy life expectancy; vehicles insured; drivers insured; earned car years; market share; physical damage earned car years; investment income; investment returns; net realized gains; net income; comprehensive income; shareholder equity; net book value per share; total shareholder return; or value of a share of Stock.
Performance Goals (i) may be measured company-wide or on the basis of a Subsidiary, a Significant Subsidiary, a segment, a business unit, a product line, a product, or any combination thereof, (ii) may reflect absolute performance or a relative comparison of performance to results in other periods, to a target, to a peer group of entities, to an index, or to another external measure, and (iii) may be measured on an aggregate or a per share basis.  With respect to investment performance, such Performance Goals may also (a) be measured by reference to a specific portion of a portfolio or assets under management and (b) reflect risk adjustment and/or the benefit of any state premium tax abatements attributable to the investment portfolio(s) or investment(s) that is the subject of such goals. 
At the time the Committee establishes Performance Goals for Performance-Based Awards (or otherwise within the time period permitted under Section 162(m), to the extent Performance-Based Awards to which the Performance Goals relate are intended to qualify as Performance-Based Compensation), the Committee may provide in the related Award Agreement for the exclusion from any one or more applicable periods of the impact of extraordinary, unusual and/or non-recurring items to the extent permitted by Section 162(m), including, without limitation, (u) any act of God or nature that adversely affects the Company’s business operations for a significant period of time, (v) any profit, loss or expense attributable to acquisitions or dispositions of stock, assets or any other portion of a business, (w) operating or financial results attributable to the operations of an entity or business acquired or disposed of by the Company, (x) gains or losses due to litigation or settlements, (y) all other items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence,  and (z) such other items as may be permitted by Section 162(m) of the Code and any amendments, revisions or successor provision thereto.  Unless expressly determined by the Committee at the time the Performance Goals for an Award are established and stated in the related Award Agreement, the satisfaction of any Performance Goals shall be determined by eliminating the impact of any change in accounting rules which becomes effective following the time such Performance Goal is established. 

“Plan” means The Progressive Corporation 2015 Equity Incentive Plan, as amended from time to time.

“Plan Effective Date” has the meaning specified in Section 15 of this Plan.

Qualified Retirement” means, unless otherwise determined by the Committee in any Award Agreement, any termination of a Participant’s employment with the Company or its Subsidiaries or Affiliates for any reason (including death, but excluding an involuntary termination for Cause) that (a) qualifies as a “separation from service” within the meaning of Section 409A, and (b) occurs on or after the first day of the calendar month in which both of the following conditions are scheduled to be satisfied:
        
(i)    the Participant is 55 years of age or older; and 

(ii)    the Participant has completed at least fifteen (15) years of service as an employee of the Company or its Subsidiaries or Affiliates.

“Qualified Retirement Date” means the date as of which a Participant’s employment with the Company or its Subsidiaries or Affiliates terminates pursuant to a Qualified Retirement.

“Qualified Retirement Eligibility Date” means the first day of the calendar month in which the Participant is scheduled to satisfy the age and years-of-service requirements for a Qualified Retirement.
“Restricted Stock” means shares of Stock granted pursuant to Section 7.

“Restricted Stock Unit” or “Unit” means the contractual right awarded pursuant to Section 6.

“Restriction Period” means the period commencing on the date of the Award and expiring on the date on which all restrictions thereon (including any delay in delivery of Stock imposed for purposes of Section 409A) have lapsed and all conditions to vesting of such Award have been satisfied.

“Section 16” means Section 16 of the Securities Exchange Act (or any successor provision) and the regulations promulgated thereunder. 

“Section 16 Participant” means an Eligible Person or Participant under the Plan who is then subject to Section 16.

“Section 162(m)” means Section 162(m) of the Code (or any successor provision) and the regulations and other guidance promulgated thereunder.

“Section 409A” means Section 409A of the Code (or any successor provision) and the regulations and other guidance promulgated thereunder.

“Significant Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 80% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Stock” means the Common Shares, $1.00 par value per share, of the Company.

“Stock Appreciation Right” means rights granted pursuant to Section 9.

“Stock Option” or “Option” means any option to purchase shares of Stock granted pursuant to Section 8.  

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Taxes” means, collectively, any federal, state, local or foreign withholding taxes due.
    
“Time-Based Award” means any Award that by the terms of the related Award Agreement is subject to vesting if the Participant remains employed by the Company or one of its Subsidiaries or Affiliates for a specified time period determined by or under the direction of the Committee and specified in the related Award Agreement, or earlier if the Committee so determines at the time of grant, including under circumstances in which the Participant’s Qualified Retirement Eligibility Date precedes the grant date or occurs during the Restriction Period, provided all other conditions to vesting have been met.

“Vesting Date” means the date on which the conditions to vesting of an Award Installment are satisfied and such Award Installment vests.

SECTION 2.  Administration.

(a)    The Plan shall be administered by the Committee.  The Committee shall consist of not less than two directors of the Company, all of whom shall be Non-Employee Directors and Outside Directors; provided, however, that, if at any time not all members are Non-Employee Directors and Outside Directors, all actions taken by the Committee shall nonetheless be valid for all purposes other than Section 162(m) of the Code or Section 16 of the Exchange Act, if applicable.  Because the provisions of this Plan are intended to ensure that no transaction under this Plan is subject to (and all such transactions will be exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act, a subcommittee of the Board or the Committee shall be established subject to such limitations as the Board deems appropriate to permit transactions pursuant to this Plan to be exempt (pursuant to Rule 16b-3 promulgated under the Exchange Act) from Section 16(b) of the Exchange Act.  Committee members shall be appointed by the Board and shall serve on the Committee at the pleasure of the Board.  The functions of the Committee specified in the Plan shall be exercised by the Board if and to the extent that no Committee exists which has the authority to so administer the Plan.

(b)    The Committee shall have full power to interpret and administer the Plan and full authority to select the Eligible Persons to whom Awards will be granted and to determine the type and amount of Awards to be granted to each Eligible Person, the consideration, if any, to be paid for such Awards, the timing of such Awards, the terms and conditions of Awards granted under the Plan and the terms and conditions of the related Award Agreements which will be entered into with Eligible Persons.  As to the selection of and grant of Awards to Eligible Persons who are not Section 16 Participants, the Committee shall have the power to delegate its authority and responsibilities to members of the Company’s management consistent with applicable law.  

(c)    The Committee shall have the authority, from time to time, to: adopt, alter, change and repeal such rules, regulations, guidelines and practices governing the Plan as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto); and to direct employees of the Company or other advisors to prepare such materials or perform such analyses as the Committee deems necessary or appropriate; and otherwise to supervise the administration of the Plan.  The Committee may consult with the Company’s management and retain consultants and advisors.

(d)Any interpretation and administration of the Plan by the Committee, and all actions (including discretionary actions) and determinations of the Committee, shall be final, binding and conclusive on the Company, its shareholders, Subsidiaries, Affiliates, all Participants in the Plan, their respective legal representatives, successors and assigns and all persons claiming under or through any of them; provided, however, notwithstanding the foregoing or the terms of any Award Agreement, following a Change in Control, any determination as to whether “Cause,” “Good Reason” or a “Disqualifying Activity” (or any terms of similar meaning applicable to an Award) exists shall be subject to de novo review by a court, arbitrator or other dispute resolution body, as applicable, in the event of a dispute. 

(e)No member of the Board or of the Committee shall incur any liability for any action taken or omitted, or any determination made, in good faith in connection with the Plan.

SECTION 3.  Stock Subject to the Plan.

(a)    Aggregate Stock Subject to the Plan.  Subject to adjustment as provided in Section 3(c) below, the total number of shares of Stock reserved and available for issuance pursuant to Awards under the Plan is (i) thirteen million (13,000,000), plus (ii) the number of shares remaining available for the granting of awards under the 2010 Plan at December 31, 2018, minus 100,000 shares of Stock or such greater number of shares as the Committee may determine prior to such date (which will remain in the 2010 Plan to satisfy dividend equivalent rights on awards outstanding under the 2010 Plan on such date and related to dividends and distributions to be paid after such date), plus (iii) any shares of Stock that relate to awards granted under the 2010 Plan that are outstanding as of December 31, 2018 and that subsequent to that date are cancelled, expired, forfeited or otherwise not issued (to the extent of such cancellation, expiration, forfeiture or lack of issuance).  Any Stock issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares. 

The actual or deemed reinvestment of dividends, other distributions or Dividend Equivalents in additional Stock, Restricted Stock or Restricted Stock Units, as applicable, shall only be permissible if, at the time of such actual or deemed reinvestment, sufficient shares of Stock are available under this Section 3 for such reinvestment (taking into account the then outstanding and previously granted Awards, subject to Sections 3(b) and (c) below, including shares reserved in accordance with Section 5(b)(v)).  If an Award provides for the reinvestment of Dividend Equivalents but Dividend Equivalents cannot be reinvested in additional Stock, Restricted Stock or Restricted Stock Units, as applicable, due to the operation of this Section 3(a), then the Committee may determine alternative mechanism(s) to credit the value of those Dividend Equivalents to the Participant or may discontinue the crediting of such Dividend Equivalents on a prospective basis only.

(b)    Forfeiture or Termination of Awards or Stock.  If all or any portion of an Award granted hereunder is forfeited or otherwise terminates or expires without the delivery of Stock, then the Stock that is subject to or reserved for the portion of the Award that is forfeited, terminated or expired shall again be available for issuance in connection with future Awards under the Plan as set forth in Section 3(a), except to the extent the Participant who had been awarded such forfeited, expired or terminated Award (or portion thereof) has theretofore received a benefit of ownership with respect to the Stock covered by such Award (or portion thereof).  For purposes hereof, (i) a Participant shall not be deemed to have received a benefit of ownership with respect to an Award by the exercise of voting rights or the accumulation of dividends, other distributions or Dividend Equivalents which are not realized due to the expiration, forfeiture or termination of the related Award without delivery of such Stock to the Participant, and (ii) a Participant shall be deemed to have received a benefit of ownership with respect to any shares of Stock withheld to pay an Option Exercise Price or strike price/base value or to satisfy applicable Taxes in connection with an exercise or vesting of all or any portion of an Award.  The number of shares of Stock available for grant under the Plan shall not be reduced by shares subject to Awards granted upon the assumption of or in substitution for awards granted by a business or entity that is merged into or acquired by (or whose assets are acquired by) the Company.

(c)    Adjustment.  In the event of any merger, reorganization, consolidation, recapitalization (including, without limitation, extraordinary cash dividends), share dividend, share split, reverse share split, spin-off, stock rights offering, liquidation, acquisition of property or shares, combination of shares or other similar event affecting the Company, the Committee shall make such substitution(s) or adjustment(s) as it deems appropriate and equitable to prevent dilution or enlargement of rights of Participants under the Plan to: (i) the aggregate number and kind of shares of Stock or other security(ies) reserved for issuance under the Plan (including any shares of Stock currently authorized by the 2010 Plan and that increase the authorized shares under the Plan pursuant to Section 3(a)); (ii) the various maximum limitations on the number of shares of Stock or Units that may be subject to Awards set forth in Section 3(d) granted to any Participant during any calendar year or other period; (iii) the number and kind of shares of Stock or other securities subject to then outstanding Awards granted under the Plan; (iv) the Option Exercise Price of any outstanding Stock Option and strike price/base value of any outstanding Stock Appreciation Right; and (v) any vesting criteria (including Performance Goals) applicable to any outstanding Award under the relevant Award Agreement; provided, in each case, that no such adjustment authorized under this Section 3(c) shall be made to the extent that such adjustment would cause an Award to be subject to adverse tax consequences to the Participant under Section 409A.  Notwithstanding the foregoing, the Committee may provide that the number of shares of Stock with respect to any Award shall always be a whole number, and for the payment of fractional shares to be paid out in cash.  Any adjustment or substitutions made under this Section 3(c) need not be the same for all Participants.

(d)    Limitations on Awards.  No Eligible Person may be granted Awards under the Plan with respect to an aggregate of more than 1,500,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) during any calendar year.  In addition, no Eligible Person may be granted Options and Stock Appreciation Rights with respect to an aggregate of more than 3,000,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) under the Plan.  Any dividends, other distributions or Dividend Equivalents that may be payable with respect to an Award will be disregarded for purposes of determining compliance with this Section 3(d).  Subject to the preceding sentence, with respect to Performance-Based Awards that stipulate a target number of Units or shares and that may vest at, below or above such target, the maximum number of shares of Stock issuable under such Award shall be used for purposes of determining compliance with this Section 3(d).

SECTION 4.  Eligibility.

Officers and other key employees of the Company and its Subsidiaries and of any of its Affiliates that are designated by the Committee as a participating employer under the Plan (but excluding members of the Committee and any other person who serves only as a director) who are responsible for or contribute to the management, growth or profitability of the business of the Company or its Subsidiaries or Affiliates (“Eligible Persons”) are eligible to be granted Awards under the Plan.

SECTION 5.  Terms and Conditions Applicable to all Awards.

(a)    Grant.  Subject to the terms and conditions of the Plan, Awards may be awarded to Eligible Persons at any time and from time to time as determined by the Committee.  The Committee shall determine the Eligible Persons to whom, and the time or times at which, grants of Awards will be made, the nature of each Award, the number of shares of Stock, Restricted Stock Units or other interests that are covered by or subject to such Award, the requirements for the vesting of such Award and any other restrictions applicable thereto, and the other terms and conditions of such Awards, in addition to those set forth in Section 5(b) and in the following Sections that apply to each specific type of Award.  In the event of any inconsistency between this Section 5 and any of the following Sections that apply to a specific type of Award, the provisions of the Section applying to that specific type of Award will control.  

(b)    Terms and Conditions.  Awards made under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:  

(i)    The purchase price for the Award, if any, shall be determined by the Committee at the time of grant.

(ii)    Awards must be accepted by executing the related Award Agreement, delivering an executed copy of such Award Agreement to the Company and paying whatever price (if any) is required.  An Eligible Person who receives an Award shall not have any rights with respect to such Award unless and until such Eligible Person has executed and delivered to the Company the applicable Award Agreement, in the form approved from time to time by the Committee, and has otherwise complied with the applicable terms and conditions of such Award Agreement.  In the Company’s discretion, the execution and delivery of such Award Agreement may be accomplished electronically or by other legally acceptable means.

(iii)     An Eligible Person may be granted a Time-Based Award or a Performance-Based Award, or a combination thereof.  The Committee may provide for the lapse of the restrictions and conditions to vesting in Award Installments, as set forth in the related Award Agreement.  The terms and conditions of Awards need not be the same with respect to each Participant.

(iv)    Notwithstanding anything to the contrary contained herein, the Committee may reduce the amount of, or eliminate in full, the amount of Stock, Units or other interests that are subject to any Performance-Based Award at, or at any time prior to, the Committee’s certification of the vesting of such Award.  The Committee may treat individual Participants differently for these purposes.  Any such determination by the Committee shall be final and binding on each Participant who is affected thereby. 

(v)    Performance-Based Awards will vest and all restrictions thereon will terminate upon the certification by the Committee of the achievement of the specified Performance Goals, provided all other conditions to vesting have been met.  In the Committee’s discretion, Performance-Based Awards may (A) stipulate that an Award will vest only in its entirety upon the satisfaction of the specified Performance Goals, (B) stipulate a portion of the Award that will vest either in whole or in part, depending on the level of achievement in comparison to the specified Performance Goals, pursuant to a formula, calculation or other objective mechanism approved by the Committee at the time of the Award, or (C) stipulate a target number of shares of Stock or Units (the “Target”) that may vest in part, in whole or up to a specified multiple of the Target, depending on the level of achievement in comparison to the specified Performance Goals pursuant to a formula, calculation or other objective mechanism approved by the Committee at the time of the Award.  In the case of any Award authorized under clause (C) of the previous sentence, a number of shares of Stock equal to the maximum possible number of shares of Stock that may be delivered to the Participant under such Award will be reserved by the Company until such time as the applicable multiple of the Target has been determined by the Committee, even if the certification of achievement of results does not occur at that time due to additional Performance Goals that must be met prior to vesting, or if the actual exercise, vesting or delivery of Stock does not occur at that time due to any delay in delivery imposed for purposes of Section 409A.  If, or to the extent that, Performance-Based Awards do not vest under the applicable Performance Goals on or before the Expiration Date established by the Committee for such Award, such Award will be forfeited automatically. 

(vi)    Subject to the provisions of this Plan and the related Award Agreement, during the Restriction Period, the Participant who has received such Award shall not be permitted to sell, transfer, pledge, assign or otherwise encumber such Award or the Stock, Units or other interests which are subject to such Award, other than by will or by the laws of descent and distribution.

(vii)    Any Participant who is then eligible to participate in The Progressive Corporation Executive Deferred Compensation Plan or any other deferral plan hereafter adopted or maintained by the Company (in each case, a “Deferral Plan”) may elect to defer each Award granted to him or her under this Plan, subject to and in accordance with the terms of the applicable Deferral Plan and in compliance with the requirements of Section 409A.

SECTION 6.  Restricted Stock Units.

(a)    Grant.  Subject to the terms and conditions of the Plan, Restricted Stock Units may be awarded to Eligible Persons at any time and from time to time as shall be determined by the Committee.  

(b)    Terms and Conditions.  In addition to the terms and conditions set forth in Section 5, Restricted Stock Units awarded under the Plan shall be subject to the following terms and conditions and any Award Agreement providing for the grant of Restricted Stock Units shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:

(i)    No instruments or certificates evidencing such Units will be issued, but record thereof will be maintained by the Company or its designee.

(ii)    The Participant shall not have the right to vote the shares of Stock represented by the Restricted Stock Units prior to the vesting of such Units and the delivery of any shares of Stock due in respect of such vesting event.  

(iii)    The Participant shall not have the right to receive any dividends, other distributions or Dividend Equivalents, as applicable, in respect of the shares of Stock represented by the Restricted Stock Units prior to the delivery of such shares of Stock.  At the discretion of the Committee determined at the time of the Award, subject to the provisions of Section 3(a) of the Plan, the Participant may be credited with Dividend Equivalents with respect to each dividend or other distribution for which a record date occurs during the Restriction Period and for the payment of such Dividend Equivalents in cash or the reinvestment of such Dividend Equivalents in additional Units.  ).  The Committee may provide that any dividends, other distributions or Dividend Equivalents, whether payable in cash or shares of Stock, shall not be paid or distributed immediately, but shall remain subject to all the terms and conditions regarding vesting, restrictions and forfeiture that apply to the Restricted Stock Units to which such dividends, other distributions or Dividend Equivalents relate.

(iv)    Upon the satisfaction of all conditions to vesting of, and the lapse of the Restriction Period applicable to, all or part of an Award of Restricted Stock Units, as set forth in this Plan and the applicable Award Agreement, (A) the Company shall deliver to the Participant one share of Stock in exchange for each such vested Restricted Stock Unit and any Restricted Stock Units relating to the reinvestment of related Dividend Equivalents, and (B) the applicable Restricted Stock Units shall be cancelled, and the shares of Stock so delivered shall not be subject to any further restrictions or limitations pursuant to this Plan.  Unless determined otherwise by the Committee at any time prior to the applicable delivery date, each fractional Restricted Stock Unit shall vest and be settled in an equal fraction of a share of Stock.

SECTION 7.  Restricted Stock.

(a)    Grant.  Subject to the terms and conditions of the Plan, Restricted Stock may be awarded to Eligible Persons at any time and from time to time as shall be determined by the Committee.  

(b)    Terms and Conditions.  In addition to the terms and conditions set forth in Section 5, Restricted Stock awarded under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:

(i)    The purchase price for shares of Restricted Stock shall be determined by the Committee at the time of grant and may be equal to their par value or zero.

(ii)    Each Participant receiving a Restricted Stock Award shall be issued a stock certificate in respect of such shares of Restricted Stock.  Such certificate shall be registered in the name of such Participant, and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.  The stock certificate evidencing such shares of Restricted Stock shall be held in custody by the Company, or its designee, until the conditions to the vesting of such Award have been satisfied and all other restrictions thereon shall have lapsed.   Notwithstanding the foregoing, in the discretion of the Company, any shares of Restricted Stock awarded to any Eligible Person may be issued and held in book entry form.  In such event, no stock certificates evidencing such shares will be issued and the applicable restrictions will be noted in the records of the Company’s transfer agent and in the book entry system.

(iii)    As a condition of any Restricted Stock Award, the Participant shall deliver to the Company a stock power, endorsed in blank, relating to the Stock covered by such Award, or make such other arrangements with respect thereto as the Committee may require.  

(iv)    Except as provided otherwise in the Plan or the applicable Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock awarded, all of the rights of a shareholder of the Company, including the right to vote the Stock and the right to receive any dividends or other distributions (in the form of cash or Dividend Equivalents).  The Committee may provide that any dividends, other distributions or Dividend Equivalents, whether payable in cash or shares of Stock, shall not be paid or distributed immediately, but shall remain subject to all the terms and conditions regarding vesting, restrictions and forfeiture that apply to the shares of Restricted Stock to which such dividends, other distributions or Dividend Equivalents relate.

SECTION 8.    Stock Options.

(a)    Grant.  Subject to the terms and conditions of the Plan, Stock Options may be granted to Eligible Persons at any time and from time to time, as shall be determined by the Committee.  Stock Options granted under the Plan may be either of two types, which shall be indicated in the related Award Agreement: Incentive Stock Options or Non-Qualified Stock Options.  Subject to Section 8(c) hereof, the Committee shall have the authority to grant to any Eligible Person Incentive Stock Options, Non-Qualified Stock Options or a combination thereof.

(b)    Terms and Conditions.  In addition to the terms and conditions set forth in Section 5, Stock Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable:

(i)    The Option Exercise Price per share of Stock purchasable under a Non-Qualified Stock Option shall be determined by the Committee at the time of grant and shall not be less than 100% of the Fair Market Value of the Stock on the date of grant.  The Option Exercise Price per share of Stock purchasable under an Incentive Stock Option shall be determined by the Committee at the time of grant and shall be not less than 100% of the Fair Market Value of the Stock at the date of grant (or 110% of the Fair Market Value of the Stock at the date of grant in the case of an Eligible Person who at the date of grant owns shares possessing more than ten percent of the total combined voting power of all classes of stock of the Company or its parent or subsidiary corporations (as determined under Section 424(d), (e) and (f) of the Code) (a “10% Participant”)).

(ii)    The Option Term shall be determined by the Committee at the time of grant and may not exceed ten (10) years from the date the Option is granted (or, with respect to Incentive Stock Options, five (5) years in the case of a 10% Participant).

(iii)    Stock Options shall be exercisable at such time or times, in one or more installments,  and subject to such terms and conditions (which may include, without limitation, the achievement of one or more Performance Goals) as shall be determined by the Committee at grant.

(iv)    Subject to whatever installment exercise provisions apply with respect to such Stock Option, and any other conditions to vesting, Stock Options may be exercised in whole or in part, at any time during the Option Term, by giving to the Company or its designee written or other appropriate notice of exercise specifying the number of shares of Stock to be purchased.  Such notice shall be accompanied by payment in full of the Option Exercise Price of the shares of Stock for which the Stock Option is exercised and Taxes due upon such exercise, in cash or by check or by such other instrument or arrangement as the Committee may approve at or after grant (which may, to the extent permitted by applicable law, include payment through the delivery of irrevocable instructions to a broker to deliver promptly to the Company the amount of sales proceeds of shares of Stock otherwise deliverable upon such exercise of the Option as is necessary to pay the Option Exercise Price and Taxes due upon such exercise).  Subject to the following two sentences, unless otherwise determined by the Committee, at or after grant, payment, in full or in part, of the Option Exercise Price of Incentive Stock Options and Non-Qualified Stock Options and Taxes may be made in the form of unrestricted Stock which is then owned by the Participant and which has a value equal to the Fair Market Value equal to such Option Exercise Price and Taxes.  Notwithstanding the foregoing, the specific details of any such delivery of Stock by a Section 16 Participant shall be approved in advance by the Committee.

No Stock shall be issued pursuant to an exercise of an Option until full payment of the Option Exercise Price and Taxes due on such exercise has been made therefor. A Participant shall not have rights to dividends, other distributions or Dividend Equivalents or any other rights of a shareholder with respect to any Stock subject to an Option unless and until the Participant has given written notice of exercise, has paid in full for such shares, has given, if requested, the representation described in Section 14(a) and such shares have been issued to the Participant.

(v)    All vested Stock Options shall be exercisable, during the Participant's lifetime, only by the Participant or, subject to Section 8(c) and the terms of the applicable Award Agreement, by the Participant's authorized legal representative if the Participant is unable to exercise an Option as a result of the Participant's Disability. 

(c)    Incentive Stock Options.  Notwithstanding Section 4, only employees of the Company or a Subsidiary shall be eligible to receive Incentive Stock Options.  Notwithstanding Section 5(b)(vi), an Incentive Stock Option shall be exercisable by (i) a Participant's authorized legal representative (if the Participant is unable to exercise the Incentive Stock Option as a result of the Participant's Disability) only if, and to the extent, permitted by Section 422 of the Code and Section 16 of the Exchange Act and the rules and regulations promulgated thereunder and (ii) by the Participant's estate, in the case of death, or authorized legal representative, in the case of Disability, no later than 10 years from the date the Incentive Stock Option was granted (or 5 years in the case of a 10% Participant) (in addition to any other restrictions or limitations which may apply).  Anything in the Plan to the contrary notwithstanding, no term or provision of the Plan relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the Participant(s) affected, to disqualify any Incentive Stock Option under such Section 422 or any successor Section thereto.

SECTION 9.  Stock Appreciation Rights. 

(a)    Grant.  Stock Appreciation Rights may be granted alone, in addition to or in tandem with other Awards granted under the Plan or cash awards made outside of the Plan.  In the case of an Award of Stock Appreciation Rights relating to an Award of Non-Qualified Stock Options, such rights may be granted either at or after the time of the grant of the related Non-Qualified Stock Options.  In the case of Incentive Stock Options, such rights may be granted in tandem with Incentive Stock Options only at the time of the grant of such Incentive Stock Options and exercised only when the Fair Market Value of the Stock subject to the Incentive Stock Option exceeds its Option Exercise Price.

Stock Appreciation Rights issued in tandem with Stock Options ("Tandem SARs") shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option, subject to such provisions as the Committee may specify at grant if a Stock Appreciation Right is granted with respect to less than the full number of shares of Stock subject to the related Stock Option.

All vested Stock Appreciation Rights granted hereunder shall be exercised in accordance with the procedures established by the Committee for such purpose.  Upon such exercise, the Participant shall be entitled to receive an amount determined in the manner prescribed in Section 9(b)(ii) and the applicable Award Agreement.

(b)    Terms and Conditions.  In addition to the terms and conditions set forth in Section 5, Stock Appreciation Rights granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:

(i)     Tandem SARs shall be exercisable only at such time or times and to the extent that the Stock Options to which they relate shall be exercisable in accordance with the provisions of Section 8 and this Section 9, and Stock Appreciation Rights granted separately ("Freestanding SARs") shall be exercisable as the Committee shall determine.

(ii)    Upon the exercise of a Stock Appreciation Right, a Participant shall be entitled to receive an amount in cash or shares of Stock, as determined by the Committee at the time of grant, equal in value to the excess of the Fair Market Value of one share of Stock on the date of exercise of the Stock Appreciation Right over (A) the Option Exercise Price specified in the related Stock Option in the case of Tandem SARs, which price shall be fixed no later than the date of grant of the Tandem SARs, or (B) the price per share specified in the related Award Agreement in the case of Freestanding SARs, which price shall be fixed at the date of grant and shall be not less than the Fair Market Value of the Stock on the date of grant, multiplied by the number of shares of Stock in respect of which the Stock Appreciation Right shall have been exercised.  The Committee shall have the right to approve or refuse to approve any election by the Participant to receive cash, in whole or in part, upon exercise of the Stock Appreciation Right.  When payment is to be made in Stock, the number of shares of Stock to be paid shall be calculated on the basis of the Fair Market Value of the Stock on the date of exercise.  Notwithstanding the foregoing, the Committee may unilaterally limit the appreciation in value of any Stock Appreciation Right at any time prior to exercise.

(iii)    Upon the exercise of a Tandem SAR, the related Stock Option must also be exercised at the same time.

(iv)    Stock Appreciation Rights shall be exercisable, during the Participant's lifetime, only by the vested Participant or by the Participant's authorized legal representative if the Participant is unable to exercise a Stock Appreciation Right as a result of the Participant's Disability.

 
SECTION 10.  Termination of Employment; Disqualifying Activity.

(a)    Termination of Employment.  Unless otherwise determined by the Committee at or after the time of grant of an Award, upon a termination of a Participant’s employment, all outstanding Awards held by such Participant, whether then vested or unvested, shall be terminated and forfeited automatically.   Subject to Section 10(b), the Committee may provide for exceptions to this general rule with respect to any Award, including in the case of a Participant’s death, Disability or Qualified Retirement. 

(b)    Disqualifying Activity.  If the Committee determines that the Participant has engaged or is engaging in any Disqualifying Activity, then:
(i)     if the Vesting Date of any Award Installment under an Award then held by the Participant is scheduled to occur after the date of the Committee’s determination that the Participant has engaged in a Disqualifying Activity (or with respect to vested Stock Options and Stock Appreciation Rights, such Award Installment has not been exercised by the Participant), then each such Award Installment shall terminate immediately upon the date of the Committee’s determination, and all related Awards (and rights to shares of Stock, Units, Stock Options, Stock Appreciation Rights or Dividend Equivalents thereunder) shall be forfeited automatically at that time; and
(ii)     if the Vesting Date of any Award Installment occurred (or with respect to vested Stock Options and Stock Appreciation Rights, such Award Installment was exercised by the Participant) after the Disqualification Date but prior to the date of the Committee’s determination with respect thereto, such Award Installment shall be deemed to have automatically terminated and forfeited as of the Disqualification Date. Accordingly, promptly upon the Company’s demand, the Participant shall transfer or pay to the Company all shares of Stock (or, if such Stock has been sold or otherwise transferred by the Participant, an equivalent number of shares of Stock or, at the Company’s election, the value thereof as of the applicable Vesting Date or exercise date) or other proceeds received or deferred by the Participant in connection with such vesting (or exercise) event(s), and the Participant will be entitled to no consideration in connection therewith.  If such shares of Stock or other proceeds are not transferred or paid to the Company promptly upon such demand, then the Company will have the right to recover from the Participant all such shares or other proceeds, plus the costs and expenses incurred by the Company in recovering such shares or other proceeds from the Participant and enforcing its rights hereunder, including, without limitation, reasonable attorneys’ fees and court costs, plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from the applicable Vesting Date (or exercise date).
Any determination by the Committee hereunder, which may act upon the recommendation of the Chief Executive Officer or other senior officer of the Company, that the Participant has engaged or is engaging in any Disqualifying Activity, and as to the Disqualification Date, shall be final and conclusive.  
SECTION 11.  Change In Control Provisions.
Unless otherwise provided in the applicable Award Agreement, and subject to Section 3(c), notwithstanding any other provision of this Plan to the contrary, upon a Change in Control, the following provisions shall apply with respect to all Awards outstanding immediately prior to a Change in Control:
(a)    Alternative Awards.  No cancellation, acceleration of exercisability or vesting, lapse of any Restriction Period or settlement or other payment shall occur with respect to any outstanding Award upon a Change in Control if the Committee reasonably determines, in good faith, prior to the Change in Control, that such outstanding Awards shall be honored or assumed, or new rights substituted therefor (such honored, assumed, or substituted Award being hereinafter referred to as an “Alternative Award”) by the Company or the New Company, as applicable, provided that any Alternative Award must: 
(i) provide for rights, terms and conditions that are substantially identical to, and not less favorable than, the rights, terms and conditions applicable under the Award being substituted for the Alternative Award, including, but not limited to, an identical or better exercise or vesting schedule; 
(ii) have substantially equivalent economic value to such Award (determined at the time of the Change in Control by the Committee in its good faith, sole discretion); 
(iii) have terms and conditions which provide that if the Participant’s employment or service is involuntarily terminated without Cause by the Company or the New Company, as applicable, or constructively terminated for Good Reason by the Participant, any conditions on a Participant’s rights under, or any restrictions on transfer or exercisability applicable to, each such Alternative Award shall be waived or shall lapse, as the case may be, consistent with the provisions of Section 11(c) below; and
(v) not subject the Participant to the assessment of taxes or penalties under Section 409A. 
Subject to clause (v) above, with respect to any Alternative Award for a Performance-Based Award, the Committee will have the discretion to provide in the Alternative Award (x) for the same Performance Goals as in the original Award Agreement, (y) for different Performance Goals than are in the original Award Agreement, or (z) that the Performance Goals in the original Award Agreement shall be considered to be achieved and to determine at what level they shall be deemed to have been achieved (for example, at Target or at a multiple of Target based on the level of achievement through the date of the Change in Control) with the Award being converted into a Time-Based Award that will vest at the end of the performance period stated in the original Award Agreement.  The determination whether the conditions of this Section 11(a) are satisfied shall be made by the Committee, as constituted immediately before the Change in Control, in its sole discretion.
(b)    Accelerated Vesting and Payout.  In the event Section 11(a) does not apply, upon a Change in Control: (i) all outstanding Options and Stock Appreciation Rights shall become vested and exercisable immediately prior to the Change in Control; (ii) all outstanding unvested Restricted Stock and Restricted Stock Unit Awards shall become vested immediately prior to the Change in Control; and (iii) the Committee (as constituted prior to the Change in Control) shall provide that in connection with the Change in Control (A) each Option and Stock Appreciation Right shall be cancelled in exchange for an amount (payable in accordance with the following sentence) equal to the excess, if any, of the Fair Market Value of a share of Stock on the date of the Change in Control over the Option Exercise Price for such Option or the base value/strike price applicable to such Stock Appreciation Right and (B) each Restricted Stock and Restricted Stock Unit Award shall be cancelled in exchange for an amount (payable in accordance with the following sentence) equal to the Change in Control Price multiplied by the number of shares of Stock covered by such Award, with any Performance-Based Awards deemed to have been earned in full at the higher of Target or a multiple of Target (determined by reference to the Award Agreement) based on the level of achievement through the date of the Change in Control, if such level of achievement is determinable by the Committee at the time of the Change in Control.  Payment of any amounts calculated in accordance with this Section 11(b) shall be made in cash or, if determined by the Committee (as constituted prior to the Change in Control), in shares of the stock of the New Company having an aggregate fair market value (determined by such Committee in good faith) equal to such amount or in a combination of such shares of stock and cash.  All amounts payable hereunder shall be payable in full, as soon as reasonably practicable, but in no event later than 10 business days, following the Change in Control.
(c)    Termination Following Change in Control.  Notwithstanding the provisions of subsection (a) above, if on the date of or during the twenty-four (24)-month period following a Change in Control, either (a) the Company or the New Company, as applicable, terminates the Participant’s employment other than for Cause, or (b) the Participant terminates his or her employment for Good Reason (as stated in a written notice to the Company or the New Company, as applicable, which must be provided within 30 days after the occurrence of the event(s) giving rise to such Good Reason, and must set forth such Good Reason in reasonable detail and the expected date of termination, which shall be not more than 30 days after the date of such notice), and the Company or the New Company, as applicable, fails to cure the event(s) giving rise to the claim of Good Reason within such 30-day period, then upon the occurrence of such termination, (A) all outstanding Options and Stock Appreciation Rights held by such Participant shall become vested and exercisable immediately upon such termination and (B) all outstanding unvested Restricted Stock and Restricted Stock Unit Awards shall become vested immediately upon such termination.  For purposes of this Section 11(d), with respect to any Performance-Based Awards, such Awards shall be considered to be earned in full at the higher of Target (if applicable) or a multiple of Target (determined by reference to the Award Agreement) based on the level of achievement as of the date of the termination, if such level of achievement is determinable at the time of the termination.

(d)    Section 409A.  Notwithstanding the foregoing provisions of Section 11, in connection with the payment to a Participant of any Award Installment subject to Section 409A, solely to the extent that any Award Installment has been deferred pursuant to the terms of the Company’s Executive Deferred Compensation Plan as currently in effect or as hereinafter amended (or any successor or similar deferral plan), Sections 11(a), (b) and (c) hereof shall have no effect on the payment date(s) or form(s) of payment of such Award Installment pursuant to such deferred compensation plan (and any elections made by such Participant pursuant to such plan). 

SECTION 12.  Amendments and Termination.

(a)    The Board or the Committee (if permitted by applicable law), at any time, may amend, supplement, alter or discontinue the Plan, but, except as otherwise expressly provided in the Plan (including Sections 3 and 11), no such amendment, supplement, alteration or discontinuation shall be made which would impair the rights of a Participant under an Award theretofore granted, without the Participant's consent.  The Company shall submit to the shareholders of the Company for their approval any amendments to the Plan which are required to be approved by shareholders by the rules and regulations of any governmental authority or any stock exchange upon which the Stock is then traded or by Section 162(m).

(a)Subject to changes in law or other legal requirements that would permit otherwise, the Plan may not be amended without the approval of the shareholders, to (i) increase the total number of shares of Stock that may be issued under the Plan or to any Participant during any calendar year (except for adjustments pursuant to Section 3(c)), (ii) permit the granting of Stock Options or Stock Appreciation Rights with an exercise price lower than those specified in Section 8(b)(i) and 9(b)(ii) (except for adjustments pursuant to Section 11(a), if applicable), (iii) modify the Plan’s eligibility requirements, (iv) change the Performance Goals as defined in Section 1(b) (except for adjustments permitted under Section 3(c)), or (v) increase the total number of shares of Stock that may be the subject of Stock Options and Stock Appreciation Rights granted to any Eligible Person under Section 3(d) (except for adjustments pursuant to Section 3(c)).  

(c)    Subject to Sections 3(c), 11and 12(d), as applicable, the Committee, at any time, may amend the terms of any outstanding Award, but, except as otherwise expressly provided by the Plan, no such amendment shall be made which would: (i) impair the rights of a Participant under an Award theretofore granted, without the Participant's consent; or (ii) make the applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable to any Section 16 Participant with respect to an Award heretofore granted without the Participant's consent; provided, however, that in no event shall any such amendment be made with respect to any Award which is subject to the restrictions on deferred compensation under Section 409A, if such amendment would cause such Award to be subject to adverse tax consequences to the Participant under Section 409A.

(d)    Except for adjustments pursuant to Section 3(c), in no event may any Stock Option or Stock Appreciation Right granted under the Plan be amended to decrease the Option Exercise Price or strike price/base value thereof, as the case may be, or be cancelled (i) in exchange for a cash payment exceeding the excess (if any) of the Fair Market Value of shares covered by such Stock Option or Stock Appreciation Right over the corresponding exercise price or strike price/base value for such Award or (ii) in conjunction with the grant of any new Stock Option or Stock Appreciation Right or other Award with a lower Option Exercise Price or strike price/base value, as the case may be, or otherwise be subject to any action that would be treated under the rules of the New York Stock Exchange (or such other exchange upon which the Stock may be listed at that time) as a “repricing” of such Stock Option or Stock Appreciation Right, unless such amendment, cancellation or action is approved by the Company’s shareholders.

(e)    Subject to the above provisions, the Board and the Committee shall have all necessary authority to amend the Plan and Award Agreements to take into account changes in applicable securities and tax laws and accounting rules, as well as other developments.

SECTION 13.  Unfunded Status of Plan.

The Plan is intended to constitute an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.

SECTION 14.  General Provisions.

(a)    The Committee may require each Participant acquiring Stock pursuant to an Award under the Plan to represent to and agree with the Company in writing that the Participant is acquiring the Stock without a view to distribution thereof.  Any certificates for such shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer.

All shares of Stock or other securities issued under the Plan shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Stock is then listed, and any applicable federal or state securities laws (including the Company’s Insider Trading Policy, if applicable), and the Committee may cause a legend or legends to be placed on any certificates for such shares to make appropriate reference to such restrictions or to cause such restrictions to be noted in the records of the Company’s stock transfer agent and any applicable book entry system.

(b)    Nothing contained in this Plan shall prevent the Board or the Committee from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

(c)    Neither the adoption of the Plan, nor its operation, nor any document describing, implementing or referring to the Plan, or any part thereof, shall confer upon any Participant under the Plan any right to continue in the employ, or as a director, of the Company or any Subsidiary or Affiliate, or shall in any way affect the right and power of the Company or any Subsidiary or Affiliate to terminate the employment, or service as a director, or change the job title, duties, authority, position or compensation of any Participant in the Plan at any time with or without assigning a reason therefor, to the same extent as the Company or any Subsidiary or Affiliate might have done if the Plan had not been adopted.

(d)    For purposes of this Plan, a transfer of the employment of a Participant between the Company and any of its Subsidiaries or Affiliates, or between such Subsidiaries or Affiliates, shall not be deemed a termination of employment or adversely affect or enlarge the rights of any Participant under this Plan or with respect to any Award.

(e)    No later than the date as of which an amount relating to any Award under the Plan first becomes taxable, the Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, at least the minimum Taxes and other items of any kind required by law to be withheld with respect to such amount.  Subject to the following sentence and such rules and procedures as the Committee may determine from time to time, unless otherwise determined by the Committee, minimum Taxes may be settled with Stock, including, without limitation, unrestricted Stock previously owned by the Participant or that would otherwise be delivered to or purchased by the Participant in connection with the Award that gives rise to the withholding requirement.  Notwithstanding the foregoing, any election by a Section 16 Participant to settle such tax withholding obligation with Stock that is previously owned by the Participant shall be subject to prior approval by the Committee.  The obligations of the Company under the Plan shall be conditioned on such payment or arrangements and the Company and its Subsidiaries and Affiliates to the extent permitted by law shall have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. 

(f)    The Plan, all Awards made and all actions taken thereunder and any agreements relating thereto, shall be governed by and construed in accordance with the laws of the State of Ohio applicable to contracts made and performed wholly within such state by residents thereof.

(g)    In the event any Award is transferred or assigned pursuant to a court order, such transfer or assignment shall be without liability to the Company and the Company shall have the right to offset against such Award any expenses (including attorneys’ fees) incurred by the Company in connection with such transfer or assignment.

(h)    The following provisions shall apply to Awards, as applicable, in addition to any similar provisions required to apply to Awards under applicable law and the rules of any national securities exchange on which shares of Stock are traded:

(i)    If (A) a Performance-Based Award granted to any executive officer shall vest hereunder on the basis of the achievement of certain financial or operating results as specified by the Committee (which includes, for purposes hereof, all of the Performance Goals that are available to the Committee under this Plan), (B) those financial or operating results were incorrect and were subsequently the subject of a restatement by the Company within three (3) years after the date of vesting, and (C) the vesting event would not have occurred as to some or all of such shares if the actual financial or operating results had been known as of the date of vesting, then the Company shall have the right of recoupment from the executive officer who received such shares of Stock upon or after such vesting or who elected to defer such shares at vesting.  The Company will have this right of recoupment whether or not the executive officer in question was at fault or responsible in any way in causing such restatement.  In such circumstances, the Company will have the right to adjust and amend the terms of all outstanding Stock Options as may be appropriate, and to recover from each executive officer, and each such executive officer will refund to the Company promptly on demand, at the Company’s discretion, either (X) the number of shares of Stock that vested (or that were subject to Stock Options that vested and were thereafter exercised), were delivered or were deferred (as applicable) upon or after such vesting based on the incorrect operating or financial results, (Y) the dollar equivalent of such number of Shares as of the date of such vesting, without interest, or (Z) the value that was paid to or earned by the executive officer, as applicable, at or after the time of vesting or upon the exercise of rights pursuant to any such vested Award, without interest.  Such recovery, at the Committee’s discretion, may be made by lump sum payment, installment payments, credits against unvested Awards made hereunder, credits against future bonus or other incentive payments or awards, or other appropriate mechanism.  

(ii)      If any recipient of an Award engaged in fraud or other misconduct (as determined by the Committee or the Board) resulting, in whole or in part, in a restatement of the financial or operating results used to determine the vesting of a Performance-Based Award hereunder, the Company will have the right to recoup from such individual, and such individual will transfer or pay to the Company promptly upon demand, in the Company’s discretion, either (A) the number of shares of Stock that vested (or that were subject to Stock Options that vested and were thereafter exercised), were delivered or were deferred (as applicable) upon or after such vesting based on the incorrect operating or financial results, (B) the dollar equivalent of such number of shares determined as of the date of such vesting, or (C) the value that was paid to or earned by such individual, as applicable, at or after the time of vesting or upon the exercise of rights pursuant to any such vested Award, and in the case of (B) and (C) plus interest at the rate of eight percent (8%) per annum or, if lower, the highest rate permitted by law, calculated from such vesting date.  The Company further shall have the right to terminate and cancel any and all Awards previously made to such individual at any time hereunder that are then unvested or, if applicable, that have vested but have not then been exercised, and to recover from such individual the Company’s costs and expenses incurred in connection with recovering such Shares or funds from such individual and enforcing its rights under this subsection (ii), including, without limitation, reasonable attorneys’ fees and court costs.  There shall be no time limit on the Company’s right to recover such amounts under this subsection (ii), except as otherwise provided by applicable law.

(iii)  The rights contained in this subsection (h) shall be in addition to, and shall not limit, any other rights or remedies that the Company may have under this Plan or under any applicable law or regulation.
    
(i)    The Plan is intended to comply with the requirements of Section 409A or an exemption or exclusion therefrom and, with respect to Awards and amounts that are subject to Section 409A, it is intended that the Plan be administered in all respects in accordance with Section 409A. Accordingly, any action taken under the Plan, including any acceleration or conversion under Section 11, shall be made in compliance with Section 409A. Notwithstanding anything to the contrary contained herein, no Option or Stock Appreciation Right granted under the Plan shall contain any feature for the deferral of compensation.  Each payment under any Award that constitutes non-qualified deferred compensation subject to section 409A shall be treated as a “separate payment” for purposes of Section 409A. In no event may a Participant, directly or indirectly, designate the calendar year of any payment to be made under any Award that constitutes non-qualified deferred compensation subject to Section 409A. Notwithstanding any other provision of the Plan or any Award Agreement to the contrary, in the event that a Participant is a “specified employee” within the meaning of Section 409A (as determined in accordance with the methodology established by the Corporation), amounts that constitute “non-qualified deferred compensation” within the meaning of Section 409A that would otherwise be payable during the six (6) month period immediately following a Participant’s termination of employment with the Company and its Subsidiaries and Affiliates by reason of such termination shall instead be paid or provided on the first business day of the 7th month following the month in which the Participant’s termination occurs.  If the Participant dies following any termination of employment with the Company and its Subsidiaries and Affiliates and prior to the payment of any amounts delayed on account of Section 409A, such amounts shall be paid to the personal representative of the Participant’s estate within thirty (30) days following the date of the Participant’s death (with the first date following the date of the Participant’s death being the first day of such thirty (30)-day period). Interest shall not accrue on such amounts during the period of delay. All references in this Plan and any Award Agreement to a Participant’s “termination”, “termination of employment”, “termination of service” and any other similar terminology, shall be interpreted as requiring that a “separation from service” within the meaning of Section 409A has occurred upon any such referenced event.

(j)    The Company shall have the unrestricted right to set off against or recover out of any delivery of shares of Stock (through withholding or cash delivered) to any Participant under an Award Agreement any amounts owed by such Participant to the Company or any of its Subsidiaries or Affiliates.

SECTION 15.  Shareholder Approval; Effective Date of Plan.

The Plan was adopted by the Board on January 29, 2015 and is subject to approval by the holders of the Company's outstanding Stock.  The Plan will become effective on the date of such approval (the “Plan Effective Date”).

SECTION 16.  Term of Plan.

No Award shall be granted pursuant to the Plan on or after January 31, 2025, but Awards granted prior to such date may extend beyond that date, subject to the terms hereof and the applicable Award Agreement.

1Exhibit 10.1

 

	DATE	January 29, 2015
	 	 
	Angelo Muscarella	(1)
	 	 
	Coord3 Industries s.r.l.	(2)
	 	 
	and	 
	 	 
	Perceptron CMM, LLC	(3)

 

 

	 
	
        Agreement

         

	 
	for the purchase of
	 
	
        100% of the business of

         

	 
	Coord3 Industries s.r.l.
	 

 

    	 

    	 

    

  

TABLE OF CONTENTS

 

SECTIONS

 

	Section 1	Introduction and Exhibits – Interpretation – Certain definitions	1
	 	 	 
	Section 2	The Transaction	3
	 	 	 
	Section 3	Establishment of NewCo	3
	 	 	 
	Section 4	Contribution in Kind	4
	 	 	 
	Section 5	Sale and purchase of the Shares	5
	 	 	 
	Section 6	
        Purchase Price - Purchase Price Adjustment

        
	6
	 	 	 
	Section 7	Completion – Conditions to Completion	8
	 	 	 
	Section 8	
        Pre-Completion Date Covenants

        
	10
	 	 	 
	Section 9	Due Diligence	14
	 	 	 
	Section 10	Representations and warranties	14
	 	 	 
	Section 11	Indemnification	14
	 	 	 
	Section 12	Further covenants and specific indemnities of the Sellers	17
	 	 	 
	Section 13	Restrictive Covenants	19
	 	 	 
	Section 14	Indemnity Holdback Account	20
	 	 	 
	Section 15	The Service Agreements	21
	 	 	 
	Section 16	Termination	21
	 	 	 
	Section 17	Miscellaneous	22
	 	 	 
	Section 18	Governing Law - Arbitration	25

 

LIST OF THE EXHIBITS

 

	Exhibit A:	 	description of the Target Business	 
	 	 	 	 
	Exhibit 1.03:	 	Certain definitions	 
	 	 	 	 
	Appendix A:	 	Appraisal Financial Situation	 
	 	 	 	 
	Appendix B:	 	Indemnity Matters	 
	 	 	 	 
	Exhibit 7.02(a)(i)(cc):	 	Director’s resignation form	 
	 	 	 	 
	Exhibit 7.02(a)(i)(ii)	 	Sellers Release	 
	 	 	 	 
	Exhibit 10.01:	 	Buyer’s representations and warranties	 
	 	 	 	 
	Exhibit 10.02:	 	
        Sellers’ representations
and warranties 
	 
	 	 	 	 
	Exhibit 15(a):	 	the Muscarella Service Agreement	 

 

    	 

    	 

    

 

agreement

 

This agreement (the “Agreement”) is entered
into on Janaury 29, 2015

 

by and amongst

 

(1)         Angelo
Muscarella, Italian national, born in [ ], on [ ], domiciled at [ ], tax registration number [ ] (“Muscarella”)

 

(2)         Coord3
Industries s.r.l., a company established under the laws of Italy, with registered offices at corso Siccardi 11bis, Torino,
Italy, registered with the Company Registry of Torino, Italy, registration and tax registration number 09061500014, issued and
subscribed share capital equal to EUR 110,000, fully paid, for the purposes of this Agreement represented by Angelo Muscarella,
in his capacity as sole director (“Coord3”)

 

(hereinafter
jointly “Sellers”),

 

and

 

(3)         Perceptron
CMM, LLC, a company established under the laws of the State of Michigan, United States of America, with offices at 47827 Halyard
Drive, Plymouth, Michigan 48170, United States of America, State of Michigan ID no. E5614M, for the purposes of this Agreement
represented by Jeffrey M. Armstrong, in his capacity as President and Chief Executive Officer (“Buyer”),

 

(the Sellers and the Buyer when jointly
referred to “Parties” and each of them when generically and individually referred to “Party”)

 

    	1

    	 

    

  

INTRODUCTION

 

A.           Coord3
is the sole legal and beneficial owner of the business as a going concern formed by the assets (both tangible and intangible) and
the liabilities, the contracts, utilities, licenses and permits, the employment agreements with the employees and all other elements
listed in Exhibit A (“Target Business”), through which Coord3 carries out its business activity.

 

B.           The
share capital of Coord3 is entirely owned by Muscarella and his son, Riccardo Muscarella, [ ], in the following proportions:

 

(i)          Muscarella:
shares of total par value of EUR 108,900, representing 99% of Coord3’s issued share capital;

 

(ii)         Riccardo
Muscarella: shares of total par value of Eur 1,100, representing 1% of Coord3’s issued share capital.

 

C.           Coord3
is managed by Muscarella in his capacity as sole director, with broad powers and authority to run both the ordinary and extraordinary
course of the business.

 

D.           On
November 7, 2011, Muscarella and Mr. Keith Mills, a British national, born in [ ], on [ ], domiciled at [ ], (“Mills”)
entered into a Master Share Purchase Agreement and a Share Purchase Agreement whereby Muscarella agreed to sell to Mills and Mills
agreed to purchase shares equal to 25% of Coord3’s share capital, upon the occurrence of certain conditions provided for
therein (“November 2011 Agreements”); Mills has waived any and all rights relating to and deriving from November
2011 Agreements.

 

E.           The
Buyer is a non-contact vision and metrology company with a long established experience in laser-based technology and applications.

 

F.           The
Buyer is interested in acquiring the Target Business, upon the terms and conditions set forth in this Agreement.

 

G.           The
Sellers declared that they are interested and willing to transfer and to cause the transfer of the Target Business to the Buyer,
upon the terms and conditions set forth in this Agreement.

 

Now therefore,

 

the Parties agree as follows:

 

SECTION 1

 

Introduction and Exhibits - Interpretation
– Certain definitions

 

1.01 Introduction, Exhibits, Appendices
and Annexes

 

The Introduction, the Exhibits, the Appendices
and Annexes form an integral and essential part of this Agreement, as amended from time to time as provided in Section 17.03(b).

 

1.02 Interpretation

 

In this Agreement, unless the context otherwise
requires:

 

(a)          reference
to “this Agreement” shall include its Introduction, all of its Exhibits, Appendices and Annexes;

 

(b)          reference
to the term “control”, “controlling” and “controlled” shall be interpreted according to article
2359 of the Italian Civil Code;

 

    	2

    	 

    

  

(c)          the
term “person” includes individuals, firms, companies, corporations, unincorporated associations, governments, public
agencies as well as any association or partnership or joint venture (whether or not having a separate full legal capacity).

 

1.03 Certain definitions

 

In addition to terms elsewhere defined
in this Agreement and unless otherwise provided herein, the terms and expressions listed in Exhibit 1.03 shall have the meanings
indicated therein and grammatical variations of such terms shall have corresponding meanings.

 

SECTION
2

 

The Transaction

 

(a)          The
Buyer acknowledges that, for the purposes of the transaction contemplated in this Agreement (“Transaction”),
the Sellers will cause Coord3 to:

 

(i)          establish
a new, wholly owned limited liability subsidiary company, under the laws of Italy, on the terms set forth in Section 3 (“NewCo”);

 

(ii)         contribute
the Target Business to NewCo in exchange for shares, on the terms set forth in Section 4 (“Contribution in Kind”).

 

(b)          In
light of paragraph (a) above, the Parties agree that the Transaction shall entail the acquisition by the Buyer of 100% of the share
capital of NewCo (“Shares”), following the Contribution in Kind by Coord3 to NewCo, so that, upon Completion,
the Buyer will be the sole legal and beneficial owner of and will have full title to the Shares, free and clear of any Encumbrances,
and NewCo will be the legal and beneficial owner of and will have full title to the Target Business, free and clear of any Encumbrance.

 

(c)          The
Parties acknowledge that, in the interest of the Buyer:

 

(i)          the
Target Business after Completion would benefit if it could receive – whether directly or indirectly - Muscarella’s
continuous support and dedication to the Target Business so as to secure an orderly and smooth hand over of the same business to
the Buyer;

 

(ii)         36
months from the Completion Date is a sufficient time to guarantee an orderly and smooth hand over of the Target Business;

 

(iii)        therefore,
the Service Agreements are an essential part of the Transaction and the services thereunder shall be provided until the third anniversary
of the Completion Date, without prejudice to the Buyer’s right to terminate with notice as indicated in the same Service
Agreements.

 

(d)          The
Sellers represent and warrant that no clause or covenant of any of the November 2011 Agreements may prevent the Transaction from
being completed or may be an obstacle to Completion. In any case, by signing this Agreement, the Sellers hereby waive any right
which arises from any of the November 2011 Agreements and which may prevent the Transaction from being completed or may be an obstacle
to Completion and waive the right to activate any clause or covenant thereof which may prevent the Transaction from being completed
or may be an obstacle to Completion.

 

SECTION
3

 

Establishment of NewCo

 

With respect to the establishment of NewCo,
the Parties agree and the Sellers agree to procure that:

 

		(i)	NewCo shall be established by Coord3 as sole shareholder in the form of an Italian limited liability
company (società a responsabilità limitata);

 

    	3

    	 

    

  

(ii)         the
notary deed for the establishment of NewCo (“Deed of Establishment”) shall be executed at least 10 (ten) days
prior to Completion and before notary Giovanna Ioli, with offices in Torino, Italy, via Alfieri 17 (“Designated Notary”);

 

(iii)        the
contents and all of the terms and conditions of the Deed of Establishment and of NewCo’s by-laws shall be agreed upon with
the Buyer prior to the execution of the Deed of Establishment;

 

(iv)        NewCo’s
initial share capital, to be injected and fully paid by Coord3 upon NewCo’s establishment, shall be Eur 10,000 (ten thousand);

 

(v)         upon
the establishment of NewCo, Muscarella shall be appointed as sole director and he shall waive the right to any director’s
fees, until the sole director will be replaced by a board of directors upon Completion.

 

SECTION
4

 

Contribution in Kind

 

4.01 General

 

The Parties acknowledge that, to complete
the Contribution in Kind, the following actions are required:

 

(i)          appointment
by Coord3 of an appraiser (“Appraiser”) for the appraisal of the Target Business for the purposes of and pursuant
to article 2465 of the Italian civil code (“Appraisal”);

 

(ii)         preparation
of an accurate financial situation of the Target Business as at a date which shall not be earlier than 4 (four) months prior to
the Completion Date, to be attached to the Appraisal;

 

(iii)        increase
of NewCo’s share capital to be subscribed for by Coord3 through the Contribution in Kind;

 

(iv)        execution
of a notary deed of contribution of the Target Business in exchange for shares (“Deed of Contribution”).

 

4.02 Appraisal and the financial situation

 

(a)          The
Sellers represent that Coord3 has already appointed Mr. Guido Franco, with offices at Corso Giuseppe Siccardi 11 bis, 10122 Torino,
Italy, as the Appraiser and that the Appraiser was entrusted with the following tasks:

 

(i)          to
prepare the Appraisal;

 

(ii)         to
work closely with the Parties and Coord3’s management to prepare a financial situation of the Target Business as at the Reference
Date, which, in any case, shall not be earlier than 4 (four) months prior to the Completion Date, a draft of which is attached
hereto as Appendix A to Exhibit 1.03 (“Appraisal Financial Situation”);

 

(iii)        to
deliver the Appraisal and the Appraisal Financial Situation to the Parties prior to the Completion Date.

 

(b)          The
costs of the Appraisal shall be borne by NewCo.

 

4.03 NewCo’s Share Capital Increase

 

The Parties shall procure that an increase
of NewCo’s share capital is approved as follows (“Share Capital Increase”):

 

(i)          the
resolution for the Share Capital Increase shall be approved on a day which is not later than 10 (ten) days prior to the Completion
Date;

 

    	4

    	 

    

  

(ii)         the
Share Capital Increase shall be subscribed for by Coord3, in its capacity as sole shareholder of NewCo, by way of the Contribution
in Kind;

 

(iii)        the
resolution to approve the Share Capital Increase shall allow also for a partial subscription pursuant to article 2481bis 3rd
paragraph of the Italian civil code;

 

(iv)        the
final term for the subscription of the Share Capital Increase shall be set on a day which is 10 (ten) days after the Completion
Date, though without prejudice to Section 4.04;

 

(v)         the
amount of the Share Capital Increase shall be Eur 990,000 (nine hundred ninety thousand), provided that the value of the Target
Business as resulting from the Appraisal in excess of such amount of the Share Capital Increase shall constitute and shall be accounted
for as a share premium reserve.

 

4.04 The Contribution in Kind

 

(a)          The
Sellers shall procure that Coord3 subscribes for the entire Share Capital Increase by effecting the Contribution in Kind and, for
these purposes, that the Deed of Contribution is duly executed by Coord3 as contributor and NewCo as recipient of the Contribution
in Kind on the Completion Date, before the Designated Notary on the Completion Date. Upon the execution of the Deed of Contribution,
NewCo shall acquire full title to and ownership of the Target Business, free and clear of any Encumbrance.

 

(b)          The
contents and all of the terms and conditions of the Deed of Contribution shall be agreed upon with the Buyer prior to the execution
of the same deed. In any case, the Deed of Contribution shall provide for representations and warranties given by Coord3 as contributor
of the Target Business for the benefit of NewCo as recipient of the Contribution in Kind which are the same as those given by the
Sellers to the Buyer under this Agreement, as applicable. It is understood that no duplication for breach of warranties shall be
allowed. Therefore, if a claim for an event which constitutes a breach of a representation or warranty is raised under this Agreement,
no claim for the same event which constitutes also a breach of a representation or warranty under the Deed of Contribution may
be raised pursuant to the latter.

 

(c)          The
costs, duties and notary fees relating to the execution of the Deed of Contribution and the filing of the same with the Company
Registry shall be borne by NewCo.

 

SECTION
5

 

Sale and purchase of the Shares

 

(a)          Upon
the terms and subject to the conditions set forth in this Agreement, the Sellers agree to procure the sale of the Shares by Coord3
to the Buyer and the Buyer agrees to buy the Shares, on the Completion Date.

 

(b)          On
the Completion Date, Coord3 and the Buyer shall enter into and execute the Notary Deed of Transfer immediately after the execution
of the Deed of Contribution. The Sellers shall procure that Coord3 executes the Notary Deed of Transfer. The Parties agree that
the Notary Deed of Transfer shall be subject to this Agreement and therefore, they shall ensure that any claim however relating
to the sale of the Shares is raised under this Agreement.

 

(c)          Upon
fulfillment of all other formalities as required by Section 7.02 and fulfillment (or waiver) of all the conditions provided for
in Section 7.03, the Buyer shall acquire full title to and ownership of the Shares, free and clear of any Encumbrance, together
with all rights attached thereto. The Parties agree that the Buyer shall benefit from all the economic effects of the sale of the
Shares as contemplated by this Agreement as from the Completion Date.

 

(d)          The
Parties further acknowledge that the Buyer shall be entitled to appoint a third party legal entity directly or indirectly controlled
by, controlling or under common control with the Buyer, pursuant to article 1401 Italian civil code, which will acquire the Shares.
Should the Buyer wish to appoint such third party legal entity, it may do so up to the Completion Date, by notice in writing to
the Sellers. All of the Buyer’s rights and obligations arising from this Agreement shall inure to the benefit of such third
party. In any event, the Buyer will remain jointly liable together with such third party for the performance of the obligations
arising from this Agreement. The execution by such third party and Coord3 of the Notary Deed of Transfer shall be deemed as notice
of the appointment, acceptance by the Sellers and acceptance of the appointment by such third party.

 

    	5

    	 

    

  

SECTION 6

 

Purchase Price – Purchase Price
Adjustment

 

6.01 Purchase Price

 

(a)          The
Parties agree that the purchase price in consideration of the transfer to the Buyer of full title to and ownership of the Shares,
free and clear of any Encumbrances, shall be paid by the Buyer to Coord3 and it shall comprise of:

 

(i)          a
provisional purchase price to be paid upon Completion as follows:

 

(aa)         Eur
2,000,000 (two million) in cash (“Provisional Purchase Price”);

 

and it
shall be subject to Sections 6.02 (the Provisional Purchase Price, as adjusted pursuant to Section 6.02 “Purchase Price”).

 

(b)          In
addition to the truthfulness of the representations and warranties of the Sellers pursuant to this Agreement, and to the other
covenants of the same, the Purchase Price is determined on the basis of the following essential assumptions:

 

(i)          the
Completion Date Net Working Capital is equal to or greater than zero (the “Target Net Working Capital”);

 

(ii)         upon
the Completion Date, NewCo’s Financial Debt is not greater than Eur 2,100,000 (two million one hundred thousand) (“Target
Financial Debt”);

 

(iii)        Muscarella’s
full-time services to the Buyer or NewCo pursuant to Section 15 continue at least until the third anniversary of the Completion
Date.

 

6.02 Purchase Price Adjustment and
Determination of the Purchase Price

 

(a)          The
Parties agree that the Purchase Price shall be:

 

(i)          decreased
by an amount equal to amount by which the Completion Date Net Working Capital is less than the Target Net Working Capital, if any,
(“Notional Net Working Capital Adjustment”), and;

 

(ii)         further
decreased by an amount equal to the amount by which the Completion Date Debt exceeds the Target Financial Debt, if any (“Debt
Adjustment”),

 

(the adjustments
pursuant to this paragraph (a) hereinafter collectively “Purchase Price Adjustment”).

 

(b)          If
there is a Purchase Price Adjustment, the Purchase Price shall be determined by decreasing the Provisional Purchase Price pursuant
to Section 6.02(a) and shall therefore be the result of the following formula:

 

Provisional
Purchase Price

 

		-	amount of the Notional Net Working Capital Adjustment

 

		-	amount of the Debt Adjustment

 

	 	 	 

 

		=	Purchase Price

 

    	6

    	 

    

  

(c)          The
Parties agree that no adjustment shall be made, and no payment shall be made under Section 6.04(c), in the event the Purchase Price
Adjustment is less then Eur 25,000 (twenty-five thousand).

 

6.03 Completion Date Balance-Sheet

 

(a)          Within
30 (thirty) Business Days following the Completion Date, the Buyer shall prepare and deliver to the Sellers the Completion Date
Balance-Sheet and its determination of the Completion Date Net Working Capital and the Completion Date Financial Debt and therefore
of the Purchase Price Adjustment.

 

(b)          The
Sellers shall review the Completion Date Balance-Sheet, the Completion Date Net Working Capital, the Completion Date Financial
Debt and the determination of the Purchase Price Adjustment, as delivered pursuant to paragraph (a) above. Should the Sellers disagree
with the determination of any of the Completion Date Net Working Capital or the Completion Date Financial Debt and therefore on
the determination of the Purchase Price Adjustment as delivered pursuant to paragraph (a) above, the Sellers’ Representative
shall notify the Buyer within 30 (thirty) Business Days (the “Objection Period”) following the date of delivery
pursuant to paragraph (a) above, by way of a written notice whereby the Sellers’ Representative indicates the matters on
which they disagree (“Disputed Matters”). If the Sellers’ Representative does not deliver a notice of
disagreement within the Objection Period, the Completion Date Balance-Sheet, the Completion Date Net Working Capital, the Completion
Date Financial Debt, or the Purchase Price Adjustment, as applicable, shall become final and binding on Buyer, Sellers and the
Sellers’ Representative.

 

(c)          In
the event of a Disputed Matter pursuant to paragraph (b), the Buyer and the Sellers’ Representative shall negotiate in good
faith in order to reach a mutually acceptable, final and binding agreement on the determination of the Purchase Price Adjustment.

 

(d)          Should
the Buyer and the Sellers’ Representative fail to reach an agreement on the Disputed Matters pursuant to paragraph (c) above
within 15 (fifteen) Business Days following the Sellers’ Representative’s notice indicated in paragraph (b) above,
the Buyer and the Sellers agree to submit the Disputed Matters to KPMG S.p.A. (provided that, when its services are required, KPMG
S.p.A. is independent from the Parties) (“Expert”), and the following shall apply:

 

(i)          the
Expert shall settle the Disputed Matters. In the case of Section 6.03(a), the Expert shall determine the Purchase Price Adjustment
and in doing so it shall (aa) take into account and reflect any agreement between the Parties; (bb) be limited to deciding each
such Disputed Matter in an amount which shall be equal to or in between the amounts proposed by the Sellers’ Representative
and the Buyer, and no more and no less; (cc) use those items or amounts not disputed by the Sellers’ Representatives in the
notice of disagreement; (dd) determine the Completion Date Net Working Capital or the Completion Date Financial Debt (depending
on the Disputed Matter) by applying the Agreed Accounting Principles; (ee) apply the terms of this Agreement and in particular
Section 6.02; (ff) justify in writing its determinations with respect to each of the Disputed Matters;

 

(ii)         the
Parties, each to the extent within their control, shall allow the Expert to have access to Coord3’s and NewCo's books and
records;

 

(iii)        the
Expert shall deliver its determinations to the Parties in writing within thirty (30) Business Days from the acceptance of the assignment;

 

(iv)        the
determinations of the Expert prepared and delivered in accordance with this paragraph (d) shall be final and binding upon the Parties.
Hence, the Purchase Price Adjustment, calculated on the basis of the Expert’s decision shall be final and binding upon the
Parties;

 

(v)         all
fees and disbursements of the Expert shall be equally borne by the Parties, unless the Expert confirms the determinations of one
Party, in which case the fees and disbursements shall be entirely borne by the other Party;

 

    	7

    	 

    

  

(vi)        the
Expert shall act as an expert (and not as an arbitrator) pursuant to article 1349 1st paragraph of the Italian Civil
Code; and

 

(vii)       should
the Expert decline the appointment or not be independent from the Parties when its services are required or fail to deliver its
determinations within the term indicated in paragraph (d)(iii) above, each Party shall be entitled to request the Chairman of the
Ordine dei Commercialisti of Torino to appoint any other audit firm of international repute, which is not in conflict of
interest with any of the Parties. The audit firm appointed pursuant to this sub-paragraph (vii) shall act as the Expert in accordance
with this paragraph (d).

 

(e)          The
Parties agree that the Completion Date Balance-Sheet shall be prepared and the Completion Date Net Working Capital and the Completion
Date Financial Debt shall be determined by applying the Agreed Accounting Principles.

 

6.04 Payment of the Purchase Price

 

(a)          The
payments of all portions of the Purchase Price to be paid in cash shall be made by the Buyer to Coord3 by bank wire transfers to
Coord3’s bank account the details of which shall be indicated by the Sellers in writing at least 7 (seven) Business Days
prior to each date on which payments fall due, as indicated in the following clauses of this Section 6.04.

 

(b)          The
Provisional Purchase Price shall be paid to Coord3 upon the execution of the Notary Deed of Transfer as follows:

 

(i)          as
to Eur 1,700,000 (one million seven hundred thousand), to Coord3’s bank account as indicated in paragraph (a) above.

 

(ii)         as
to Eur 300,000 (three hundred thousand), to be credited in the Buyer’s financial records as an Indemnity Holdback Account
and paid to Coord3 as set forth in Section 14.

 

(c)          The
amount of the Purchase Price Adjustment shall be paid by the Sellers to the Buyer if a decrease in the Purchase Price within 10
(ten) Business Days from the date on which the Purchase Price Adjustment has been finally determined, pursuant to Sections 6.02
and 6.03.

 

(d)          No
interest shall accrue on any of the amounts to be paid by either Party pursuant to paragraphs (b) and (c) above, if timely paid.

 

SECTION 7

 

Completion – Conditions to Completion

 

7.01 Completion Date

 

(a)          Completion
shall occur on February 27, 2015 or any other date as agreed between the Parties, subject to the conditions to Completion indicated
in Section 7.03 being satisfied or waived by the interested Parties in writing on or before the Completion Date.

 

(b)          The
Completion session and the execution of the Notary Deed of Transfer shall take place at the office of notary Giovanna Ioli in Torino,
Italy, via Alfieri 17 or any other place as agreed between the Parties.

 

7.02 Completion

 

(a)          The
Parties, each to the extent within its control, shall consummate or procure the consummation of all of the following actions and
transactions, on or before the Completion Date, as follows:

 

(i)          the
Sellers shall cause the following to occur or have occurred:

 

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(aa)         subscription
of the Share Capital Increase and execution of the Deed of Contribution, to be effective on the Completion Date;

 

(bb)         delivery
to the Buyer of a notary certificate which confirms the execution of the Deed of Contribution and that the same is effective on
the Completion Date;

 

(cc)         Muscarella’s
resignation from the office of sole director of NewCo with effect as from the Completion Date together with a statement (in the
agreed form attached hereto as Exhibit 7.02(a)(i)(cc)) whereby he declares to have no and waives any and all rights or claims vis-à-vis
NewCo in relation to his role and duties as director;

 

(dd)         delivery
to the Buyer of a copy of the resignation letter and statement indicated in sub-paragraph (cc) above;

 

(ee)         approval
of a shareholders’ resolution of NewCo (on the Completion Date prior to the execution of the Notary Deed of Transfer) for
the purpose of:

 

(aaa)        appointing
the new directors of NewCo as designated by the Buyer to replace the sole director who will have resigned pursuant to paragraph
(aa);

 

(bbb)        determining
the new directors’ remuneration as agreed with the Buyer;

 

(ff)         delivery
to the Buyer of a written statement whereby the Sellers warrant to the Buyer that, as from the date hereof:

 

(aaa)        the
Target Business has been conducted in accordance with the provisions of Section 8.01;

 

(bbb)        NewCo
has not traded nor transacted any business or assumed any liability or undertaken any obligation;

 

(gg)         delivery
to the Buyer of a written statement whereby the Sellers warrant that the representations and warranties given by the Sellers and
referred to in Section 10.02, Section 2(d), and Section 9(b) are accurate, true and correct as at the Completion Date and as if
given at the Completion Date, and also with respect to NewCo;

 

(hh)         delivery
to the Buyer of a copy of an agreement signed by Riccardo Muscarella and AFS which contemplates the terms and conditions indicated
in Section 13(c);

 

(ii)         delivery
to the Buyer of a written statement with the release of all claims from Sellers in the form attached as Exhibit 7.02(a)(i)(ii);

 

(jj)         delivery
to the Buyer of a written statement whereby all Sellers agree to and confirm the restrictive covenants provided for in Section
13;

 

(kk)         delivery
to the Buyer of a statement whereby Coord3 acknowledges receipt of the Provisional Purchase Price;

 

(ll)         delivery
to the Buyer of the Fire Department Clearance (Certificato Prevenzione Incendi) concerning the Property;

 

(mm)         delivery
to the Buyer of a certified copy of Coord3’s shareholders’ resolution which approved Coord3’s financial statements
as at December 31, 2013.

 

(nn)         Coord3’s
Subsidiaries and Coord3 China Ltd shall sell all of their assets to Buyer or its Affiliates for nominal consideration.

 

(oo)         delivery
of the waiver from Mills of any right which arises from any of the November 2011 Agreements, assignment to Coord3 of all domain
names used by Coord3 in Mills name and a release signed by Mills in a form similar to Exhibit 7.02(a)(i)(ii).

 

(ii)         the
Buyer shall:

 

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(aa)         deliver
to the Sellers evidence of the payment, by bank wire transfer, of the Provisional Purchase Price to be paid at the Completion Date.

 

(iii)        the
Sellers and the Buyer shall, each to the extent within their control:

 

(aa)         cause
a resolution of the board of directors of NewCo to be validly approved on the Completion Date with the newly appointed directors,
for the purpose of appointing NewCo’s chairman and managing director and of vesting them with the necessary powers to run
and manage NewCo’s business;

 

(bb)         cause
the execution by the Buyer and Coord3 of the Notary Deed of Transfer;

 

(cc)         cause
the Service Agreements to be entered into and duly executed by the relevant parties;

 

(b)          Completion
shall be deemed to have occurred when all of the actions and transactions indicated in Section 7.02(a) above shall have been duly
consummated or waived by the interested Party.

 

7.03 Conditions to Completion

 

(a)          Completion
is subject to the following conditions to Completion which shall have occurred or shall have been satisfied or waived by the interested
Party by the Completion Date:

 

		(a1)	conditions in favor of each of the Buyer and the Sellers: all actions and transactions provided
for in Section 7.02 shall have been consummated or waived by the interested Party in writing;

 

		(a2)	conditions in favor of the Buyer:

 

(i)          the
Target Business, all of its assets and the Shares are free and clear of any Encumbrances;

 

(ii)         no
Material Adverse Change in Coord3, NewCo or the Target Business since the Reference Date;

 

(iii)        the
Buyer (or one of its affiliated companies) has acquired full title to and ownership of the Czech Shares, free and clear of any
Encumbrances;

 

(iv)        Receipt
of Required Consents and the lease agreement between AGO and BNP Paribas Lease Group relating to the Property;

 

(v)         Zeiss
has not withdrawn its waiver of its right of pre-emption nor asserted a right to manufacture under the Cooperation Agreement between
Coord3 and Zeiss;

 

(vi)        no
legal proceedings are pending which are aimed at preventing the Transaction (or any portion thereof) from completing.

 

(b)          Should
any of the conditions indicated in paragraph (a) above not be satisfied or waived by the interested Party by the Completion Date,
the Parties shall be released from the obligation to complete the acquisition of the Shares contemplated by this Agreement, which
shall be deemed terminated.

 

(c)          Should
any of the conditions to Completion provided for in this Section 7.03 not be met or satisfied by the Completion Date due
to one of the Parties’ failure to provide its utmost co-operation for the purpose of the satisfaction of such conditions
or to fulfil the obligations provided for in Section 7.02, termination of this Agreement pursuant to Section 7.03(b) shall be without
prejudice to any remedy the other Party may have under the law or pursuant to this Agreement.

 

SECTION 8

 

Pre-Completion Date Covenants

 

8.01 Management and conduct of NewCo
and of the Target Business

 

(a)          From
the date hereof and until the Completion Date, unless otherwise contemplated by this Agreement or approved by the Buyer in writing,
the Sellers shall cause Coord3 to:

 

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(i)          conduct
the Target Business (including managing the working capital, the collection of accounts receivable, the payment of accounts payable)
with due care and diligence in the ordinary and usual course, consistent with past practice as disclosed to the Buyer;

 

(ii)         continue
to insure all insured assets which are part of the Target Business, whether owned or leased, and use, operate, maintain and repair
all such assets in accordance with past practice;

 

(iii)        preserve
its relationships with the employees, self-employed persons, distributors, agents, representatives, suppliers and customers;

 

(iv)        refrain
from acting or omit to act in such way as to cause a material breach of any material agreement, contract, commitment or obligation
of Coord3 which is part of the Target Business;

 

(v)         keep
the facilities, machinery and equipment which are part of the Target Business in normal operating conditions and repair, except
for ordinary wear and tear;

 

(vi)        duly
and timely comply in all material respects with all of its obligations, including the obligations arising from any loan or other
financial commitment;

 

(vii)       give
the Buyer reasonable direct access to management, legal and financial advisors, auditors and documents of the Target Business.

 

(viii)      continue
to maintain its books and records in accordance with all applicable laws and the Italian Accounting Principles.

 

(ix)         provide
to Buyer financial statements for each month prepared by Coord3 for its internal use or for delivery to third parties, if any,
promptly following their preparation, but in no event later than the 20th day following the end of the month.

 

(b)          The
Parties agree (and the Sellers agree to procure) that, from the date hereof and until the Completion Date, decisions by Coord3
concerning the matters listed below shall not be made and shall not be implemented without the Buyer’s prior written consent
(such consent not to be unreasonably denied or delayed):

 

(i)          sale
or disposal of any assets;

 

(ii)         granting
of any rights (including in rem securities) in respect of any of Coord3’s assets or the charging of any of said assets
with any Encumbrances;

 

(iii)        decisions
to incur any indebtedness or to borrow any money (except within the limits of the facilities currently available to Coord3 as disclosed
to the Buyer), or to enter into any factoring or invoice discount agreement;

 

(iv)        extension
of the terms of payment of any payables or other liabilities or of any receivables or discount any receivables;

 

(v)         transactions
(including share capital increase or decrease) which affect the share capital of Coord3;

 

(vi)        the
granting of any rights (including in rem security rights) on any of the shares of NewCo or any further share to be issued
by NewCo and issuance of any bond or other securities;

 

(vii)       decisions
to undertake any capital commitment (purchase or financial / capital lease of fixed or other assets);

 

(viii)      decisions
to enter into any partnership, consortium, association, joint venture agreements;

 

(ix)         change
of the remuneration of or benefits provided to any of the employees or managing director, other than increases required by the
law or by the applicable collective bargaining agreements;

 

(x)          recruitment
of any new dirigente or quadro or promotion of any employee to such levels;

 

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(xi)         any
redundancy plan or the dismissal of any dirigente or quadro;

 

(xii)        acquisition
or disposal of equity interests in other entities or of businesses as going concerns or any branches thereof;

 

(xiii)       agreements
with customers or suppliers (including purchase orders) which are outside of the ordinary course of business or (aa) which have
each a value greater than EUR 150,000 as to customers contracts and EUR 150,000 as to suppliers, or (bb) whereby the counterpart
may withdraw or terminate without cause, or (cc) whereby the counterpart may withdraw or terminate for change of control, or (dd)
which provide for restrictions to Coord3’s or any of Coord3’s present or future affiliates’ freedom to operate
in the market, or (ee) whereby Coord3 must give unusual warranties or guarantees, or (ff) which contemplate unusual payment terms
if compared with standard market practice;

 

(xiv)      agreements
with related parties (including shareholders, directors or employees of Coord3 or relatives of the shareholders or of the directors
or employees);

 

(xv)       change
in accounting methods, policies or procedures or presentations of accounts; declaration and distribution of dividends;

 

(xvi)      settlements
of disputes when the overall value exceeds EUR 150,000;

 

(xvii)     guarantees
to secure the obligations of a third party;

 

(xviii)    liquidation;
dissolution; mergers, de-mergers and restructurings;

 

(xix)       real
estate leases;

 

(xx)        permitting
the lapse or forfeiture of intellectual property rights or other intangible assets;

 

(xxi)       fail
to file any tax returns or any other report to any authority as required under the law or any contract by its applicable due date
or fail to pay any taxes that first become due and payable after the date hereof, as and when they first became due and payable;

 

(xxii)      negotiations
for the settlement or compromise, settlements or compromise of any tax liability;

 

(xxiii)     Enter
into or amend any agreement, except for acceptance or placement of purchase orders in the ordinary course of business;

 

(xxiv)    pay
any dividend or distribution;

 

(xxv)     terminate
any material agreement;

 

(xxvi)    taking
any action that would make any of the representations and warranties hereof untrue or failing to take any action that would prevent
any of the representations and warranties from becoming untrue.

 

8.02 NewCo

 

From the date of its establishment and
until the Completion Date, unless otherwise contemplated by this Agreement or approved by the Buyer in writing, the Sellers shall
cause NewCo to refrain from trading and transacting any business and they shall ensure that it will not assume any liability or
undertake any obligation.

 

8.03 Site visits

 

The Sellers, prior to Completion Date,
shall ensure that representatives of the Buyer are allowed to visit the Property and the manufacturing facilities of Coord3, upon
Buyer’s reasonable request, which shall be made in writing (also via email) at least 2 Business Days before the date of the
visit; in any event, the Buyer hereby acknowledges that the visit on site shall be carried on in a manner which will not unreasonably
disrupt the normal and ordinary activity of Coord3, its directors, managers and employees.

 

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8.04 Tax Certificate

 

(a)          The
Parties acknowledge that, within the context of the Transaction, the Buyer will request the issuance of a Tax Certificate relating
to Coord3.

 

(b)          The
Sellers shall ensure that, upon the Buyer’s request and within 2 (two) days from receipt of such request, Coord3:

 

(i)          grants
its consent – if necessary – for the Buyer to file a request with the competent authorities to obtain the Tax Certificate
relating to Coord3;

 

(ii)         signs
and delivers to the Buyer whatever document or form is necessary for the purposes of paragraph (i).

 

8.05 Consultation process pursuant
to art. 47 law 29.12.1990 no. 428

 

(a)          The
Parties acknowledge that the transfer of title to and ownership of the Target Business upon the Contribution in Kind as contemplated
by this Agreement requires that a consultation process with the trade unions and the work councils of Coord3 is conducted pursuant
to art. 47 law 29.12.1990 no. 428 (and subsequent amendments).

 

(b)          The
Parties agree:

 

(i)          to
provide their utmost mutual cooperation so that the consultation process is fulfilled in accordance with all statutory provisions
of law:

 

(ii)         that
all phases and steps of this process shall be carried out by mutual consent before the Completion Date. In particular, the contents
of the notice to be given to the trade unions and work councils to open the consultation process as well as the contents of the
agreement at the end of the process (if any) shall be agreed upon between the Parties beforehand.

 

8.06 Other Pre-Completion Date Covenants

 

(a)          The
Sellers shall ensure that, from the date hereof until the Completion Date, the Buyer will have access to Coord3’s and NewCo’s
books, records, contracts and personnel, upon its reasonable request which shall be made in writing (also via email) at least 2
Business Days before the date of the relevant access, being agreed and understood that such access shall be carried on in a manner
which will not unreasonably disrupt the normal and ordinary activity of Coord3, its directors, managers and employees.

 

(b)          The
Sellers shall take all necessary actions to obtain the Required Consents, so that they are delivered prior to the Completion Date.

 

(c)          During
the term of this Agreement, the Sellers will not, and will cause their respective officers, directors, employees, legal counsel,
accountants, advisors or other consultants or agents to not directly or indirectly, solicit or enter into any agreement or negotiations
with, or furnish information to, any person with respect to any proposal to acquire any of the share capital or a substantial portion
of the assets of Coord3 or to merge or consolidate with Coord3. If the Sellers receive any such proposals, or inquiries regarding
the same, the Sellers shall promptly notify the Buyer of the terms of such proposals or inquiries and the identity of the parties
making the same.

 

8.07 Next Metrology

 

Coord3 acknowledges and agrees that it
does not have a legally binding right to require Next Metrology to permit it to sell, license, or distribute TouchDMIS or other
software owned by Next Metrology. This Section 8.07 shall survive the termination of this Agreement.

 

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SECTION 9

 

Due diligence

 

(a)          Prior
to the execution of the Agreement, the Buyer has conducted a full legal, economic, financial, accounting, commercial, tax, employment,
social security, corporate and environmental due diligence on the Target Business (“Due Diligence”). Without
prejudice to any other term and condition contemplated by this Agreement, on the basis of the outcome of the Due Diligence, the
Buyer has agreed to enter into this Agreement.

 

(b)          The
Sellers warrant and represent that all information and data which the Sellers, the directors, employees or advisors of Coord3 provided
to the Buyer during the Due Diligence process and the negotiations prior to the execution of the Agreement are complete, accurate,
truthful and fairly reflect the financial, economic and business situation of the Target Business and no relevant document and
information has been withheld.

 

SECTION 10

 

Representations and warranties

 

10.01 Buyer’s representations
and warranties.

 

The Buyer gives the Sellers the representations
and warranties indicated in Exhibit 10.01 and hereby acknowledges that each of such representations and warranties is material
and essential to the Sellers, who are relying on such representations and warranties in entering into this Agreement. For the avoidance
of any doubt, it is agreed that the Buyer’s representations and warranties shall not be affected, limited or diminished by
any knowledge by the Sellers of the matters covered by the representations and warranties.

 

10.02 Sellers’ representations
and warranties.

 

The Sellers give the Buyer the representations
and warranties indicated in Exhibit 10.02, and hereby acknowledge that each of such representations and warranties is material
and essential to the Buyer, who is relying on such representations and warranties in entering into this Agreement. For the avoidance
of any doubt, it is agreed that the Sellers’ representations and warranties shall not be affected, limited or diminished
by any investigation (including the Due Diligence) up to this date or hereafter made by the Buyer (directly and through its advisors)
with respect to NewCo, the Shares, the Target Business, its assets, liabilities and properties or by any knowledge by the Buyer
of the matters covered by the representations and warranties. As of the date of this Agreement, the Buyer’s representatives,
Jeffrey Armstrong or Keith Marchiando, do not have actual conscious awareness of any mistake, inaccuracy or breach of the representations
and warranties of Sellers in this Agreement.

 

SECTION 11

 

Indemnification

 

11.01 Sellers’ indemnification
obligation

 

(a)          General

 

(i)          The
Sellers shall indemnify the Buyer from and against any and all liabilities, reduced value of the assets, losses, damages, costs,
penalties, deficiencies, of the Target Business or incurred in or suffered by NewCo resulting or deriving from any mistake, inaccuracy
or breach of any of the representations and warranties made or given by the Sellers in Section 10, Section 2(d) and Section 9(b)
or confirmed by the Sellers at the Completion Date pursuant to Section 7.02(a)(i)(gg) (“Losses” and each a “Loss”).

 

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(ii)         The
indemnification obligation provided for in this Section 11.01 shall extend to all costs, expenses (including reasonable attorney’s
fees and experts’ costs) and disbursements incurred by the Buyer in enforcing its rights in respect of a claim under this
Agreement and/or by NewCo in enforcing its rights and in resisting any Third Party Claim.

 

(iii)        The
amount of a Loss shall be reduced by the amount of any specific provision made in the Completion Date Net Working Capital against
the risk which resulted in the relevant Loss.

 

(iv)        The
Parties agree that any payments due by the Sellers as indemnification shall be made by the Sellers directly to the Buyer, unless
the Buyer gives instructions to the Sellers to make such payments directly to NewCo.

 

(v)         The
Sellers shall be under no obligation to indemnify the Buyer under this Section 11.01 for any Loss in relation to which, by the
time the payment by the Sellers is due, either the Buyer or NewCo receives compensation, indemnification or reimbursement by third
parties (including insurance companies), without recourse, to the extent of such compensation, indemnification or reimbursement.

 

(vi)        The
Sellers and the Buyer expressly agree (aa) that the direct and strict object of the sale contemplated by this Agreement is the
Shares themselves rather than the underlying net assets of NewCo; (bb) hence, the provisions of Section 10 (Representations and
Warranties), Section 2(d), Section 9(b) and Section 11 (Indemnification) are autonomous representations, warranties and indemnities.

 

(b)          Limitations
to the Sellers’ liability

 

(i)          The
Sellers shall only be liable to the Buyer under this Section 11.01 for any Losses if the aggregate amount of the Losses exceeds
Eur 50,000 (fifty thousand), in which case the Sellers shall be liable only for the excess amount.

 

(ii)         The
Sellers shall be liable to the Buyer under this Section 11.01 for Losses up to a maximum aggregate amount equal to Eur 600,000
(six hundred thousand) (the “Indemnity Cap”).

 

(iii)        The
limitation to the Sellers’ liability provided for in paragraphs (b)(i) and (b)(ii) above shall not apply to Losses resulting
or deriving from any mistake, inaccuracy or breach of any of the representations and warranties relating to authority, good standing,
title to the shares and the Target Business, regulatory compliance, damages to public authorities/entities (danno erariale),
Encumbrances or Coord3 Income Taxes.

 

(iv)        The
Parties agree that any event or circumstance disclosed by the Sellers in Exhibit 10.02 will exclude the Sellers’ liability
under this Section 11.01 as to the Losses which specifically relate to the disclosure.

 

(c)          Time
limits to Sellers’ liability

 

The Sellers shall not be liable
to the Buyer under this Section 11.01 in respect of any Loss if the relevant Indemnification Claim is notified to the Sellers after:

 

(aa)         the
20th (twentieth) Business Day after the date of expiration of the relevant statute of limitation (termine di prescrizione),
as to Losses referred to in paragraph (b)(iii) above;

 

(bb)         the
20th (twentieth) Business Day after the 3rd (third) anniversary of the Completion Date, for Losses relating
to any employment matters;

 

(cc)         the
20th (twentieth) Business Day after 18 months from the Completion Date, for Losses relating to any matters other than
those indicated in sub-paragraphs (aa) and (bb).

 

11.02 Buyer’s indemnification
obligation

 

(a)           The
Buyer shall indemnify the Sellers from and against all losses, damages, costs and penalties incurred in, or suffered by the Sellers,
resulting or deriving from any mistake, inaccuracy or breach of any of the representations and warranties made or given by the
Buyer in or pursuant to Section 10.

 

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(b)          The
provisions of Section 11.01 (including those concerning liability limitations) shall apply to the indemnification obligations of
the Buyer herein, as applicable.

 

11.03 Indemnification procedure

 

(a)          Whenever
an event or circumstance which could give rise to an Indemnification Claim (including a Third Party Claim) (“Indemnity
Event”) occurs for which a Party may seek indemnification under this Section 11, the Party seeking indemnification (“Indemnified
Party”) shall notify in writing the Party from which indemnification is sought (“Indemnifying Party”)
(and, for a Third Party Claim, within 120 (one hundred twenty) days after the Indemnified Party has actual knowledge of the Indemnity
Event) (“Notice of Claim”). The Notice of Claim shall specify relevant facts known to the Indemnified Party
giving rise to the Indemnification Claim, the amount of the Loss and the request for indemnification. The Parties agree that in
case an indemnification is requested by the Buyer to the Sellers, Notice of Claim may also be validly served by NewCo.

 

(b)          Notwithstanding
the above, no claim shall be made by the Indemnified Party against the Indemnifying Party under this Agreement in respect of any
matter or liability to the extent that:

 

(i)          it
has been paid or satisfied on or before the Completion Date where that payment or satisfaction is reflected in the Completion Date
Net Working Capital;

 

(ii)         to
the extent that provision or reserve was made for it in the Completion Date Balance-Sheet;

 

(iii)        it
would not have arisen or occurred but solely by reason of an action or omission of the Indemnifying Party specifically required
to be taken by them under this Agreement;

 

(iv)        it
would not have arisen or occurred but solely for an act, omission or transaction of the Indemnified Party or any of its respective
directors, employees or agents;

 

(v)         it
would not have arisen or would have been reduced (to the extent of the relevant reduction) or eliminated but solely for the failure
or omission on the part of the Indemnified Party to make any claim, election, surrender or disclaimer or to give any notice or
consent or to do any other thing under the provisions of any relevant legislation.

 

(c)          If
the Indemnity Event is a Third Party Claim against NewCo, the following shall apply:

 

(i)          the
Buyer shall cause NewCo to diligently take all reasonable defensive steps;

 

(ii)         in
the defense against the Third Party Claim, the Buyer shall cause NewCo to consult with the Sellers’ Representative;

 

(iii)        NewCo’s
management and/or the Buyer shall inform the Sellers about the status of the relevant matter and about any developments in connection
with the Third Party Claim;

 

(iv)        in
any event, the Buyer shall not agree to any settlement of the Third Party Claim or to any waiver related thereto, without the prior
written consent of the Sellers, not to be unreasonably withheld or delayed and which shall be considered as granted absent response
within 30 (thirty) Business Days (or such shorter term required by the circumstances) following written request from the Buyer
to the Sellers. Should the Sellers deny their approval, as a condition to the effectiveness of such denial, (aa) they shall specify
the reasons for the denial in writing, and (bb) they shall be liable for the relevant Loss, including the immediate payment of
all costs incurred to defend such Third Party Claim as they are incurred by Indemnified Party.

 

(v)         the
relevant indemnification obligations shall survive until the Third Party Claim has been finally resolved.

 

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(d)          Payments
of all amounts due by the Indemnifying Party pursuant to this Section 11 shall be made as follows:

 

(i)          if
the Indemnity Event is a Third Party Claim against NewCo, payments shall be made within 15 (fifteen) Business Days from receipt
of the Buyer’s written request, which shall bear a copy:

 

(aa)         of
the enforceable decision, award or order, whether final or provisional, served upon NewCo and which ascertains or determines the
Loss; or

 

(bb)         of
the settlement agreement entered into by NewCo which determines a Loss.

 

In any
event, if either the Buyer or NewCo elect to settle the matter related to a Third Party Claim notwithstanding the timely denial
in writing of the Sellers of the approval of such settlement as provided above, no obligation of payment shall arise for the Sellers;

 

(ii)         in
case of an Indemnity Event other than a Third Party Claim against NewCo, within 10 (ten) Business Days from receipt of the Notice
of Claim; provided that Sellers have not objected in writing to such Notice of Claim within such 10 (ten) Business Day period (“Notice
of Objection). Any such Notice of Objection shall state the nature and basis of any such objection and the monetary amount of the
claim in dispute. Payment of such claim shall be made by Sellers, together with interest thereon from the date of the original
Notice of Claim until the date paid, at the interest rate set forth in Section 17.12, within 15 (fifteen) business days from receipt
of the Buyer’s written request, which shall bear:

 

(aa)         a
certified copy of an award (whether final or provisions) by the arbitral tribunal referred to in Section 18.02 which ascertains
or determines that the Sellers are liable for the claim; or

 

(bb)         a
copy of the settlement agreement entered into between Buyer and Sellers which determines the amount that Sellers must pay relating
to the claim.

 

SECTION 12

 

Further covenants and specific indemnities
of the Sellers

 

12.01 General

 

The Parties agree that:

 

(i)          for
the avoidance of any doubt, the Sellers’ indemnification obligations provided for in this Section 12 shall not be subject
to Section 11 nor to the same restrictions, limitations and procedure therein, except as otherwise specifically provided herein;

 

(ii)         any
payments due by the Sellers pursuant to this Section 12 shall be made by the Sellers directly to the Buyer, unless the Buyer gives
instructions to the Sellers to make such payments directly to NewCo.

 

12.02 Sole Director’s Claims

 

The Sellers shall indemnify and hold the
Buyer and NewCo harmless from and against any claim (and any consequence thereof) by the sole director of NewCo who was in office
at any time up to Completion, in relation to matters relating to the period up to Completion.

 

12.03 Subsidiaries – China

 

(a)       The
Sellers shall indemnify and hold the Buyer and NewCo harmless from and against any liabilities, reduced assets, losses, damages,
costs, penalties, deficiencies, incurred in or suffered by NewCo or any claim (and any consequence thereof) deriving from or however
connected to the interests and shares held by Coord3 in any of the Subsidiaries (including as a consequence of any claim raised
by any third party or any of their employees against any such Subsidiary) or to Coord3’s being a party to any agreement with
the other shareholders of the Subsidiaries, if any.

 

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(b)       The Sellers shall indemnify and hold the Buyer and NewCo harmless from and against any liabilities, reduced assets, losses,
damages, costs, penalties, deficiencies, incurred in or suffered by NewCo or any claim (and any consequence thereof) deriving
from or however connected to Coord3’s operations in the People’s Republic of China (including those however
connected to Coord3’s Chinese representative office or prior joint venture with Purein Ltd).

 

12.04 Coord3

 

(a)       If,
after Completion, any third party (including public authorities or government agencies) raises any claim, demand any payment or
asserts any right against Coord3, whether prior to or during a liquidation process should Coord3 undergo such a process, the Sellers
shall:

 

(i)        immediately
and, in any case, within 5 (five) Business Days from receipt of the claim, inform the Buyer in writing and they shall provide the
Buyer with all relevant information regarding the nature of the claim, the amount, the third party’s asserted grounds for
the claim and any possible counterargument or counterclaim;

 

(ii)       at
their own costs and expenses, ensure that Coord3 resists against the claim as necessary;

 

(iii)      fund
Coord3 so that it can timely and duly fulfil any obligations arising from such claims;

 

(iv)      cause
Coord3 to timely and duly fulfil any obligations arising from such claims.

 

(b)       Should
Coord3 lack the financial resources to fulfil any obligations arising from any of the claims referred to in paragraph (a) above,
the Buyer may elect, at its own discretion, to assume the liability and pay the relevant third party or cause NewCo or any other
of its affiliated companies to do so.

 

(c)       The
Sellers shall indemnify the Buyer (or NewCo or any other of its affiliated companies as the case may be and as directed by the
Buyer) of any amount paid by the Buyer (or NewCo or any other of its affiliated companies as the case may be) pursuant to paragraph
(b) above and against any losses, damages, costs suffered or incurred as a consequence thereof. For the avoidance of any doubt,
the Sellers’ indemnification obligations provided for in this Section 12.04 shall not be subject to Section 11 nor to the
same restrictions, limitations and procedure therein.

 

(d)       The
Sellers shall indemnify Buyer (or NewCo or any other of its affiliated companies, as the case may be, and as directed by the Buyer)
for any liability incurred by it for Coord3’s Taxes, including, but not limited to, Coord3 Income Taxes, other than the Government
Debt or Taxes included in Completion Date Net Working Capital.

 

12.05 Trade-names, trademarks and
other intellectual or industrial property

 

(a)       The
Sellers shall cause Coord3 to change its name as soon as practically possible after the Completion Date and, in any case, within
15 (fifteen) days thereafter, so as to remove any reference to “Coord3”; and, at the written request of Buyer, to cause
its Subsidiaries to remove reference to “Coord3” in their names; provided that Buyer shall permit Coord3 to continue
to use its name and the names of its Subsidiaries to the extent reasonably required by Coord3 and its Subsidiaries to collect any
accounts receivable they retain and to wind up their business activities.

 

(b)       The
Sellers shall not use or attempt to use, in the course of any business on their own account or in conjunction with or on behalf
of any person or in any other manner whatsoever, directly or indirectly, the trade-names, trademarks, service marks, brand names,
designs or logos, domain names and any other similar intellectual property, whether registered or not, or any other trade-name,
trademark, service mark, brand name, design or logo similar to such trade-names, trademarks service marks, brand names, designs,
logos, domain names or other similar intellectual property of NewCo (including the name Coord3 whether used as a standalone name
or in association with other names).

 

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12.06 Apportionments

 

(a)       All
rents, rent charges, leasing expenses, rates, insurance premiums, gas, water, electricity and telephone charges, royalties and
any other costs and expenses of any nature whatsoever relating to or payable or accruing in respect of the Target Business shall
be borne by Coord3 through to the date of contribution and shall be borne by NewCo as from the date of contribution. All the above
items shall, as appropriate, be apportioned accordingly between Coord3 and NewCo.

 

(b)       All
salaries, wages and other emoluments and all contributions in respect of the Target Business for which Coord3 is liable as an employer
in respect of any employee, agent or consultant under any contractual or statutory obligation shall be borne by Coord3 through
to the date of contribution and shall be borne by NewCo as from the date of contribution.

 

(c)       The
Parties agree that any payment made by third parties to a Coord3 bank account relating to the Target Business after the date of
contribution shall be forwarded to NewCo within 15 (fifteen) Business Days after the actual cash is received by Coord3. Similarly,
any payment made by third parties to a NewCo bank account relating to Coord3’s activities after the date of contribution
shall be forwarded to Coord3 within 5 Business Days after the actual cash is received by NewCo.

 

12.07 Further indemnities

 

(a)       The
Sellers shall indemnify and hold the Buyer harmless against any liabilities, losses, damages, costs which are the consequence of
any claim indicated on Appendix B to Exhibit 1.03.

 

(b)       Payments
of the Sellers’ indemnification obligations provided for in this Section 12.07 shall be subject to the restrictions, limitations
and procedures set forth in Section 11, including being included in the calculation of the Indemnity Cap, to the extent provided
for therein.

 

SECTION 13

 

Restrictive Covenants

 

(a)       The
Sellers agree that, as from the Completion Date and for a period of 3 (three) years thereafter (or in the case of Muscarella, for
the period of time until the expiration date of any restrictive covenants provided for in their relevant Service Agreements, if
shorter), in their capacity as sellers of the Shares and irrespective and without prejudice to any other restrictive covenant they
have agreed or will agree to, they shall not:

 

(i)          either
on their own account or in conjunction with or on behalf of any person, carry on, engage, be concerned or interested (directly
or indirectly and whether as principals, shareholders, directors, employees, agents, distributors, consultants, partners or otherwise)
in the business of designing, engineering, manufacturing, marketing, selling, installing, servicing and maintaining CMMs and laser-based
and other technology, software and applications used in connection with CMMs;

 

(ii)         either
on their own account or in conjunction with or on behalf of any person, solicit or endeavour to entice away from the Target Business
or the Company any person who, at the Completion Date, is an officer, manager, employee, self-employed person, consultant of Coord3
and who is in any manner whatsoever associated to the Target Business, whether or not such person would commit a breach of contract
by reason of leaving service or office;

 

(iii)        either
on their own account or in conjunction with or on behalf of any person, endeavour to entice away from the Target Business or the
Company any person who, at the Completion Date of this Agreement, is a customer of Coord3, whether or not such customer would be
in breach of its contract with Coord3 or – after Completion – with the Company as a result thereof; and

 

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(iv)        either
on their own account or in conjunction with or on behalf of any person, endeavour to entice away from the Target Business or the
Company any person who, at the Completion Date, is a supplier of Coord3, whether or not such supplier would be in breach of its
contract with Coord3 or – after Completion – with the Company as a result hereof;

 

(v)         either
on their own account or in conjunction with or on behalf of any person, carry on, engage, be concerned or interested (directly
or indirectly and whether as principals, shareholders, directors, employees, agents, distributors, consultants, partners or otherwise)
in any business conducted by the Company at the Completion Date, or in any business involving the design, development, manufacture,
sale or servicing of CMMs.

 

(b)          The
Sellers and the Buyer represent to each other and acknowledge that the provisions contained in Section 13(a) are necessary for
the protection of the Buyer’s and the Target Business’ interests and goodwill. Should any such restriction or undertaking
be void or voidable but would be valid and enforceable if some part or parts of the restriction or undertaking were deleted or
modified, such restriction or undertaking shall apply with such deletion or modification as may be necessary to make it valid and
enforceable. The consideration for the Sellers’ fulfilment of the obligations contained in this Section 13 has been included
in the Purchase Price.

 

(c)          The
foregoing restrictive covenants shall not prohibit Riccardo Muscarella from owning and operating AFS srl (“AFS”);
provided that (i) Riccardo Muscarella and AFS agree, in writing, that during the term of the restrictive covenants set forth above,
they shall (A) comply with the restrictive covenants set forth in Section 13(a) as though they were Sellers, and (B) they shall
limit their business activities to activities which are not in competition with the activities currently conducted by the Buyer
and its Affiliates and, particularly, may engage in business activities relating to servicing, retrofitting, refurbishing and commercialising
used CMMs and related equipment and to calibrating CMMs and (ii) Muscarella is not interested in AFS, directly or indirectly and
whether as a principal, shareholder, director, employee, agent, distributor, consultant, partner or otherwise.

 

SECTION 14

 

Indemnity Holdback Account

 

(a)          The
Buyer shall credit, by book entry only, to an escrow ledger account (“Indemnity Holdback Account”) maintained
by Buyer a portion of the Provisional Purchase Prices equal, in the aggregate, to Eur 300,000 (three hundred thousand) (“Indemnity
Holdback Amount”). The Indemnity Holdback Amount shall serve the purpose to secure the Sellers’ timely fulfillment
of all of their obligations as arising from this Agreement (including the indemnification obligations provided for in Sections
11 and 12, the indemnification obligations deriving from any breach of the obligations arising from Section 13 (as confirmed pursuant
to Section 7.02(a)(i)(jj)) and the obligation to refund the amount paid by the Buyer in excess, pursuant to Section 6.04(c)).

 

(b)          Any
remaining balance in the Indemnity Holdback Account shall be paid by Buyer to Coord3 (or pro-rata to its shareholders in the event
that the liquidation process of Coord3 is already completed at the date on which the payment of the Indemnity Holdback Account
falls due) upon expiration of the Indemnity Holdback Account, provided that, if claims which may trigger Seller’s obligations
to indemnify are pending upon the expiration date:

 

(aa)         the
term will be extended until these claims are resolved;

 

(bb)         an
amount equal to the lower of the balance of the Indemnity Holdback Account and the aggregate amount of the outstanding claims
upon the expiration of the Indemnity Holdback Account will be frozen in the Indemnity Holdback Account until these claims are
resolved.

 

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(c)          Except
as otherwise provided in Section 14(b), the Indemnity Holdback Account shall expire on the 20th Business Day after
the eighteen month anniversary of the Completion Date.

 

(d)          The
following amounts shall be credited against and so reduce the Indemnity Holdback Account:

 

(i)          amounts
mutually agreed upon by the Buyer and Coord3;

 

(ii)         amounts
set forth in a certified copy of any award (whether final or provisional) by the arbitral tribunal referred to in Section 18.02
which orders the Sellers to indemnify the Buyer (or NewCo), but only to the extent of the amount to be paid by the Sellers as
indicated in the relevant award;

 

(iii)        at
the written request of the Buyer, within 10 (ten) days following the final determination of the Purchase Price Adjustment, an
amount equal to any Purchase Price Adjustment payable by the Sellers.

  

SECTION 15

 

The Service Agreements

 

(a)          For
the purposes indicated in Section 2(c), Muscarella agrees to provide his full-time services to the Company (as agreed between the
Parties) until at least the third anniversary of the Completion Date upon the terms and conditions of the agreement attached herewith
in agreed form as Exhibit 15(a) (“Muscarella Service Agreement”).

 

(b)          The
Parties, each to the extent within their control, shall cause the Service Agreements to be entered into and duly executed by the
relevant parties on the Completion Date.

 

SECTION 16

 

Termination

 

(a)          The
Parties acknowledge that any material breach by the Sellers of any of the obligations provided for in Section 8.01 or any breach
of Sections 8.02, 8.03, 8.04, 8.05, or 8.06, which shall be deemed material, shall entitle the Buyer to terminate this Agreement
with immediate effect by way of written notice.

 

(b)          The
Buyer shall further be entitled to terminate this Agreement with immediate effect by way of written notice:

 

(i)          in
case any material breach of any of the representations and warranties given by the Sellers pursuant to this Agreement occurs prior
to or on the Completion Date;

 

(ii)         in
case either Party receives an order or other enforceable instrument issued by any Governmental Authority which enjoins that Party
to refrain from executing any document or taking any action required for Completion pursuant to this Agreement or the law.

 

(iii)        if
the amount of the Government Debt exceeds Eur 7,100,000.

 

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SECTION 17

 

Miscellaneous

 

17.01 Compliance

 

(a)          The
Parties acknowledge that, as from the Completion Date, NewCo shall adopt and implement organisational and internal audit and control
models and procedures in compliance with those applied by the group to which the Buyer belongs, including its ethical rules, compliance,
anti-bribery, anti-corruption and anti-money laundering regulations. The Sellers shall provide their utmost assistance and support
in the process which will be required to implement such models and procedures so as to guarantee as swift an integration of the
Target Business into the Buyer’s group as possible after Completion.

 

(b)          Furthermore,
the Parties acknowledge that in due course after the Completion Date, NewCo shall adopt and apply an organizational model which
shall comply with Italian Legislative Decree 231/2001.

 

17.02 Confidentiality

 

(a)          Each
of the Sellers and the Buyer shall at all times keep strictly confidential and, as applicable, each of the Sellers and the Buyer
shall procure that their respective officers, employees and professional advisers keep strictly confidential any information pertaining
to this Agreement (including but not limited to the Purchase Price and terms of sale) and the financials, business operations,
marketing practices or policies, litigation, identity of customers as well as any other confidential aspect of the Target Business,
except for such information relating to this Agreement which Buyer and its Affiliates may be required to disclose in connection
with reporting and disclosures requirements of the Buyer and its Affiliates under applicable law or the rules of The Nasdaq Stock
Market and except for any such information which:

 

(i)          at
the time of disclosure is publicly available or becomes publicly available otherwise than, directly or indirectly, through the
breach by any of the Sellers or the Buyer of this Section 17.02 or the failure of any officer, employee or professional adviser
referred to above to keep the same confidential; or

 

(ii)         is
required to be disclosed by any other applicable law or by any supervisory or regulatory body, in which case the Party shall inform,
to the extent reasonably practicable, the other Party that such disclosure is required, and the Parties shall use their reasonable
efforts to agree in good faith on the content of such disclosure prior to it being made.

 

(b)          The
Sellers acknowledge that an Affiliate of the Buyer is listed on The Nasdaq Stock Market and its stock is registered with the Securities
and Exchange Commission and is therefore subject to strict regulatory obligations in relation to the disclosure of any information
and data concerning transactions similar to the Transaction. Therefore, the Sellers agree that any public disclosure of any information
or data concerning the Transaction, including any press release, shall be made only at such time and in such form and substance
as acceptable to the Buyer.

 

17.03 Entire agreement and amendments

 

(a)          This
Agreement is the sole and entire agreement between the Parties governing the Transaction as contemplated herein and supersedes
all prior verbal and/or written agreements between the Parties concerning its subject matter.

 

(b)          The
amendments to this Agreement shall be valid and effective if agreed upon by the Parties in writing.

 

17.04 Successors - Assignment

 

This Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of the Parties and their respective permitted assignees, heirs or successors.
Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by one Party without the prior
written consent of the other, without prejudice to the Buyer’s appointment pursuant to Section 5(d) and the consequences
thereof and except for any assignment to any of that Party’s Affiliates or to a party who acquires all or substantially all
of the assets of NewCo or Buyer, provided that such assignment shall not relieve Buyer of its obligations under this Agreement
without the prior written consent of the Sellers’ Representatives.

 

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17.05 The Sellers’ Representative

 

The Sellers hereby appoint Muscarella as
their representative (“Sellers’ Representative”) to act in the name and on behalf of each of them for
the purpose of receiving any communication or notification under this Agreement. Any notice to be made to the Sellers and any appointments,
approvals, consents to be made by the Buyer under or in relation to this Agreement (including the service of any judicial deed,
the Notice of Claim, the notices required to be made for the purposes of Sections 6.03) shall be validly made to all Sellers also
if made to the Sellers’ Representative at the address indicated in Section 17.06 or at any other address indicated by the
Sellers’ Representative in accordance with Section 17.06. For the purposes herein, all Sellers elect domicile at the Sellers’
Representative’s address as indicated in Section 17.06. It is agreed that “the Sellers” shall be construed as
meaning the “Sellers’ Representatives” for any notice to be received under this Agreement.

 

17.06 Notices

 

Any communication or notice required or
permitted to be given under this Agreement shall be made in writing and in the English language by way of either registered mail
or telefax, addressed, in each case, to the addresses indicated below (or to such other address as each Party may hereafter provide
to the other by written notice as provided herein) and with a copy by e-mail and it shall be deemed to have been duly and validly
given: (i) in case of notice sent by registered mail, upon receipt of the same; and (ii) in case of notice sent by telefax, upon
acknowledgement of successful and complete transmission by the fax machine of the sender:

 

if to Buyer:

 

c/o Perceptron, Inc.

47827
Halyard Drive

Plymouth,
MI 48170

U.S.A.

 

Fax
No. +1-734-414-4800

Attention:
Jeffrey M. Armstrong, President

e-mail: armstrong@perceptron.com

 

with a copy (which shall not constitute
notice) to:

 

Thomas S. Vaughn

Dykema Gossett PLLC

400 Renaissance Center

Detroit, MI 48243

U.S.A.

 

Fax No.: +1-313-568-6915

e-mail: tvaughn@dykema.com

 

if to the Sellers:

to the Sellers’ Representative:

 

Angelo Muscarella

c/o

Avv. Luca Mastromatteo, Esq.

Gianni, Origoni, Grippo, Cappelli &
Partners

Corso Vittorio, Emanuele II, 83

10128 Torino, Italy.

 

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Fax: +39-011 5185932

lmastromatteo@gop.it

 

with a copy (which shall not constitute
notice) to:

 

Avv. Luca Mastromatteo, Esq.

Gianni, Origoni, Grippo, Cappelli &
Partners

Corso Vittorio, Emanuele II, 83

10128 Torino, Italy.

 

Fax: +39-011 5185932

lmastromatteo@gop.it

 

17.07 Language

 

This Agreement is entered into in the English
language. The Parties hereby acknowledge to have fully understood its content and all of its terms and conditions.

 

Il presente contratto è stipulato
in lingua inglese. Le Parti dichiarano di aver pienamente compreso il suo contenuto e tutti i suoi termini e condizioni.

 

17.08 Severability

 

If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Agreement, such provision
shall be fully severable. This Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part of this Agreement and the remaining provisions of this Agreement shall remain in full force and effect
and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. Furthermore,
in lieu of each such illegal, invalid, or unenforceable provision, a provision as similar in terms to such illegal, invalid
or unenforceable provision as may be possible and be legal, valid and enforceable shall be added automatically, as a part of this
Agreement.

 

17.09 Fees and expenses

 

(a)          Except
as otherwise expressly provided for by this Agreement, all legal and other advisors’ fees, costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be borne by the Party incurring such fees, costs
or expenses.

 

(b)          All
stamp duties, registration taxes and notary fees relating to the transfer of the Shares pursuant to Section 5(b) shall be borne
by the Buyer.

 

17.10 Obligations of the Sellers:
general clause

 

(a)          All
of the obligations and covenants of the Sellers under this Agreement are undertaken and all representations and warranties are
given by them both jointly and severally.

 

(b)          Muscarella
hereby agrees to cause Coord3 to duly and timely fulfill all of the obligations arising from this Agreement.

 

17.11 Set-off

 

(a)          The
Buyer shall be entitled to offset any portion of the Purchase Price which is unpaid at any time and any amount otherwise due to
any of the Sellers under this Agreement against any amount due by any of the Sellers to the Buyer (or to NewCo) under this Agreement.
The exercise in good faith of such right of setoff by Buyer will not constitute a breach or default under any agreement, including
this Agreement, pursuant to which such payment is due. Neither the exercise of nor the failure to exercise such right of setoff
will constitute an election of remedies or limit Buyer in any manner in the enforcement of any other remedies that may be available
to it. As a condition to any assignment by any Seller of its rights under this Agreement, such assignee must agree that Buyer may
continue to exercise its right of set off against any portion of the Purchase Price assigned to assignee for claims by Buyer against
Sellers arising under this Agreement.

 

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(b)          Any
amount collected by NewCo after Completion on NewCo trade accounts receivable outstanding on the Completion Date in excess of the
amount of such trade account receivable as used in calculating the Completion Date Net Working Capital (net of any specific allowance
for uncollectibility of the account included in the calculation of the Completion Date Net Working Capital), up to Eur 300,000
(three hundred thousand), (the “Collected Receivables Amount”) shall be offset by the Buyer against amounts
otherwise due by the Sellers to Buyer under Sections 11 or 12 of this Agreement, but in no event shall Buyer be required to pay
Sellers any such Collected Receivables Amounts.

 

17.12 Interest Rate

 

Should any payment due under this Agreement
by either Party not be made on or before the agreed term for payment, annual interest equal to EURIBOR 3 months plus 500 basis
points (or the maximum percentage allowed by anti-usury laws and regulations from time to time, if lower) will accrue from the
date of expiration of the payment term until the actual payment is provided.

 

SECTION 18

 

Governing Law – Arbitration

 

18.01         Governing
Law

 

This Agreement shall be governed by and
construed in accordance with the laws of the Republic of Italy, without regard to the provisions governing conflicts of laws.

 

18.02         Arbitration

 

(a)          Any
dispute arising out of or related to this Agreement shall be settled by arbitration under the Rules of Arbitration of the International
Chamber of Commerce of Paris, by three arbitrators, appointed in accordance with such rules, who shall be fluent in the English
language.

 

(b)          The
place of the arbitration shall be Paris, France. The language of the arbitration shall be English.

 

(c)          Any
dispute arising out of this Agreement and any comparable dispute arising out of the Czech Agreements shall be heard and decided
together in a single arbitration proceeding.

 

[Signature Page Follows]

 

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SIGNED by ANGELO MUSCARELLA

 

	Signature	: /s/ Angelo Muscarella

 

SIGNED by COORD3 INDUSTRIES S.R.L.

 

Angelo Muscarella

Sole director

 

	Signature	: /s/ Angelo Muscarella

 

SIGNED by PERCEPTRON CMM, LLC

 

Jeffrey M. Armstrong

President and Chief Executive Officer

 

	Signature	: /s/ Jeffrey M. Armstrong

 

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EXHIBIT 1.03

 

Certain Definitions

 

	“2013 Financial Statements”	shall mean the financial statements of Coord3 as at December 31, 2013 as finally approved by the shareholders.
	 	 
	“Affiliates”	shall mean persons controlling, controlled by or under common control with the person.
	 	 
	“AGO”	shall mean AGO Renewables s.p.a.
	 	 
	“AFS”	shall have the meaning indicated in Section 13(c).
	 	 
	“Agreed Accounting Principles”	
        shall mean the Italian Accounting Principles
        and, to the extent properly applied, consistent with past application thereof by Coord3.

         

	“Agreement”	shall mean this agreement, inclusive of the Exhibits, Appendices and Annexes.
	 	 
	“Annexes”	shall mean all annexes, as listed above in the table of contents.
	 	 
	“Appendices”	shall mean all appendices, as listed above in the table of contents.
	 	 
	 “Appraiser”	shall have the meaning indicated in Section 4.01(i).
	 	 
	“Appraisal”	shall have the meaning indicated in Section 4.01(i).
	 	 
	“Appraisal Financial Situation”	shall have the meaning indicated in Section 4.02(a)(ii).
	 	 
	“Business Day/s”	shall mean each calendar day other than Saturdays, Sundays and any other days on which banks are closed for business in the City of Torino, Italy.
	 	 
	“Buyer”	shall have the meaning indicated in the headings of this Agreement.
	 	 
	“Collected Receivables Amount”	shall have the meaning indicated in Section 17.11(b).
	 	 
	“Company”	shall mean the Buyer, NewCo and their Affiliates.

 

    	 

    	 

    

  

	“Completion”	shall mean the consummation of all of the actions and transactions indicated in Section 7.02 (unless waived by the interested Party) and the completion of the transfer of full title to and ownership of the Shares to the Buyer as contemplated in this Agreement.
	 	 
	“Completion Date”	shall mean the date upon which Completion will take place, as specified in Section 7.01(a).
	 	 
	“Completion Date Balance-Sheet”	shall mean the balance-sheet of NewCo as at the Completion Date, after the acquisition of the Target Business, to be prepared in accordance with the Agreed Accounting Principles.
	 	 
	“Completion Date Financial Debt”	shall mean the Financial Debt of NewCo as at the Completion Date, after the acquisition of the Target Business.
	 	 
	
        “Completion
Date Net Working Capital”
	shall mean the Notional Net Working Capital of NewCo as at the Completion Date, after the acquisition of the Target Business, to be determined in accordance with the Agreed Accounting Principles.
	 	 
	“Contribution in Kind”	shall have the meaning indicated in Section 2(a)(ii).
	 	 
	“CMM”	means coordinate measuring machine and equipment.
	 	 
	“Coord3”	shall have the meaning indicated in the headings of this Agreement.
	 	 
	“Coord3 Income Taxes”	shall mean Taxes based upon or related to Coord3’s income, production or value added taxes, not yet subject to installment agreements with the Italian government, including, but not limited to IRES and IRAP for 2013 and 2014.
	 	 
	“Current Business”	shall have the meaning indicated in Section 34 of Exhibit 10.02.
	 	 
	“Czech Agreements”	means the Stock Purchase Agreements between Perceptron, Inc. and each of Keith Mills and Angelo Muscarella, dated even date with the Agreement.
	 	 
	“Czech Shares”	shall mean 100% of Next Metrology’s share capital.
	 	 
	“Debt Adjustment”	shall have the meaning indicated in Section 6.02(a)(ii).
	 	 
	“Deed of Contribution”	shall have the meaning indicated in Section 4.01(iv).

 

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	“Deed of Establishment”	shall have the meaning indicated in Section 3(ii).
	 	 
	“Designated Notary”	shall have the meaning indicated in Section 3(ii).
	 	 
	“Disputed Matters”	shall have the meaning indicated in Section 6.03(b).
	 	 
	“Due Diligence”	shall have the meaning indicated in Section 9(a).
	 	 
	“Encumbrance”	shall mean any mortgage, charge, pledge, lien, security interest or attachment of any nature whatsoever, options, title retention, third party rights (including in rem rights) or other securities or de facto situations attached to a certain object or asset or share and limiting the rights thereupon. “Encumbrances” shall be construed accordingly.
	 	 
	“Environmental Law”	shall mean all applicable international treaties, laws, conventions, EU directives or regulations, statutes, regulations, subordinate legislation (in particular any regional, provincial municipal and other local law and/or regulation), applicable in Italy, which from time to time relate to Environmental Matters and Environmental Licences and all enforceable orders or other instruments and other requirements of or issued by any competent public authority, court or agency, concerning the protection of the environment or the prevention, limitation, mitigation or remediation of harm to the environment or relating to Environmental Matters.
	 	 
	“Environmental License”	shall mean any permit, licence, authorization, consent or other approval, registration, notification or communication required by any Environmental Law for the operations of Coord3 or NewCo or of its business or in relation to the ownership, lease, occupation or use of the properties used for the operations of the Company or of its business.
	 	 
	“Environmental Matters”	shall mean all or any of the following: air (including all layers of atmosphere), water and land (including, without limitation, any of the foregoing within buildings and other material or man-made structures above or below the ground) as well as all organic and inorganic matter and living organisms and the systems supported by or including any of the components of the foregoing; the disposal, spillage, deposit, escape, discharge, leek, emission or presence of, contact with and exposure of, any person to Hazardous Materials or Waste, as well as the creation of any noise, vibration, radiation, nuisance or other adverse impact on the environment, maintenance of human health and safety, and any other matters relating to the condition, protection, maintenance, restoration or replacement of the environment or any part of it. “Environmental” shall be interpreted accordingly.
	 	 
	“Exhibit/s”	shall mean all exhibits, as listed above in the table of contents.

 

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	“Expert”	
        shall
        have the meaning indicated in Section 6.03(d).

         

	 	 
	“Financial Debt”	shall mean all financial debts, inclusive of any bank debt, invoice discounting facility, loan, borrowing, overdraft, shareholders’ loan, financial (capital) lease.
	 	 
	“Government Debt”	shall mean the total of all amounts owed by Coord3 to various Italian government tax or social security authorities or agencies; including amounts owed under so called installment agreements and all other amounts owing that have not yet been formalized into agreements (including interest and penalties); including both short term and long term amounts owed, other than Coord3 Income Taxes.
	 	 
	“Governmental Authority”	means any foreign, European Union, or Italian national, regional or local governmental authority, quasi-governmental authority, court, or any regulatory, administrative or other agency, or any subdivision, department or branch of any of the foregoing.
	 	 
	“Governmental Authorization”	means any consent, permit, concession, license, registration, approval, authorization, order, exemption, certificate, franchise, or variance issued, granted, given, or otherwise made available by or under the authority of any Governmental Authority or pursuant to any applicable law.
	 	 
	“Hazardous Substance/s”	shall mean any substance which is defined to be hazardous, dangerous, toxic or harmful under any Environmental Law.
	 	 
	“Indemnification Claim”	shall mean a claim raised by the Indemnified Party in accordance with Section 11.03 to claim indemnification against a Loss.
	 	 
	“Indemnified Party”	shall have the meaning indicated in Section 11.03(a).
	 	 
	“Indemnifying Party”	shall have the meaning indicated in Section 11.03(a).
	 	 
	“Indemnity Cap”	shall have the meaning indicated in Section 11.01(b)(ii).
	 	 
	“Indemnity Holdback Account”	shall have the meaning indicated in Section 14(a).
	 	 
	“Indemnity Holdback Amount”	shall have the meaning indicated in Section 14(a).
	 	 
	“Indemnity Event”	shall have the meaning indicated in Section 11.03(a).

 

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	“Intellectual Property”	shall have the meaning indicated in Section 11(i) of Exhibit 10.02.
	 	 
	“Inventories”	shall mean remainders of raw material, work in progress and finished goods as indicated in Article 2424 of the Italian Civil Code, in the section “assets”, letter C). “Inventory” shall be construed accordingly.
	 	 
	“IT System”	shall have the meaning indicated in Section 27(i) of Exhibit 10.02.
	 	 
	“Italian Accounting Principles”	shall mean the provisions established by the Italian Civil Code as well as the accounting principles recommended by the National Council of Licensed Accountants and Bookkeepers (“Consiglio Nazionale degli Ordini dei Dottori Commercialisti e dei Ragionieri”) and modified by the Italian Accounting Body (“Organismo Italiano di Contabilià – O.I.C.) as well as those directly issued by the latter.
	 	 
	“Losses” and “Loss”	shall have the meaning indicated in Section 11.01(a)(i).
	 	 
	“Material Adverse Change”	shall mean any change or effect that is materially adverse to the financial situation, financial performance, business, prospects, assets, liabilities, key people or value of the net assets of the Target Business, impacting the value of the Target Business to Buyer by greater than Eur 1,000,000; but excluding any change or effect arising out of general economic conditions or conditions affecting companies generally in the industry in which Coord3 operates.
	 	 
	“Muscarella”	shall have the meaning indicated in the headings of this Agreement.
	 	 
	“Muscarella Service Agreement”	shall have the meaning indicated in Section 15(a).
	 	 
	“Mills”	shall mean Keith Mills, British national, born in [ ] on [ ], domiciled at [ ]. UK passport no. [ ]
	 	 
	“NewCo”	shall have the meaning indicated in Section 2(a)(i).
	 	 
	“Next Metrology”	shall mean Next Metrology Software, s.r.o., a company established under the laws of the Czech Republic.
	 	 
	“Notary Deed of Transfer”	the notary deed of transfer to be executed on the Completion Date, pursuant to Article 2470 of the Italian Civil Code, before and by the Designated Notary, to effect the transfer of full title to and ownership of the Shares to the Buyer.

 

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	“Notice of Claim”	shall have the meaning indicated in Section 11.03(a).
	 	 
	“Notice of Objection”	shall have the meaning indicated in Section 11.03(d)(ii).
	 	 
	“Notional Net Working Capital”	shall mean the net balance of the following accounts as maintained under Agreed Accounting Principles and identified on the Contribution in Kind, (a) short term assets; (i) cash including investments in cash equivalent securities that have a life of less than one year, (ii) Trade Accounts Receivable, net of reserves for uncollectible accounts, (iii) Inventories net of agreed reserves, (iv) Prepaid Expenses with life less than one year, less (b) short term liabilities; (i) Trade Accounts Payable, (ii) Deposits/Advances from Customers, (iii) Accrued Expenses and Other Deferred Income, (iv) Amounts due to Banks (including amounts due to overdraft facilities, and bank notes including accrued interest and fees), (v) Accrued Payroll, Payroll taxes, holiday and vacation and relevant Payroll Taxes accruals (but excluding “Fondi TFR”)
	 	 
	“Notional Net Working Capital	shall have the meaning indicated in Section 6.02(a)(i).
	Adjustment”	 
	 	 
	“November 2011 Agreements”	shall have the meaning indicated in Introduction D.
	 	 
	“Objection Period”	shall have the meaning indicated in Section 6.03(b).
	 	 
	“Parties”	shall mean the Sellers and the Buyer.
	 	 
	“Party”	shall mean each of the Sellers jointly and the Buyer, when individually and generically referred to.
	 	 
	“Property”	means the property situated at Bruzolo, Strada Statale 25 n. 3, used by Coord3 to carry out its business.
	 	 
	“Provisional Purchase Price”	shall have the meaning indicated in Section 6.01(a)(i).
	 	 
	“Purchase Price”	shall have the meaning indicated in Section 6.01(a).
	 	 
	“Purchase Price Adjustment”	shall have the meaning indicated in Section 6.02(a).
	 	 
	“Real Estate Impositions”	shall have the meaning indicated in Section 9(ix) of Exhibit 10.02.
	 	 
	“Real Property Permit”	means any certificate of occupancy, building permits, licenses, franchises, consents, approvals and authorizations as well as any other Governmental Authorization concerning real estate properties.

 

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	“Required Consents”	shall have the meaning indicated in Section 1 of Exhibit 10.02.
	 	 
	“Reference Date”	shall mean November, 30 2014.
	 	 
	“Sellers”	shall have the meaning indicated in the headings of this Agreement.
	 	 
	“Sellers’ Representative”	shall have the meaning indicated in Section 17.05.
	 	 
	“Service Agreements”	shall mean the Muscarella Service Agreement.
	 	 
	“Share Capital Increase”	shall have the meaning indicated in Section 4.03.
	 	 
	“Shares”	shall have the meaning indicated in Section 2(b).
	 	 
	“Slow Moving Inventory”	shall mean any and all inventory items that are in excess of 360 days old as of the Completion Date.
	 	 
	“Subsidiaries”	shall mean the following subsidiaries of Coord3, Coord3 Metrology India Private Limited, Coord3 Metrology, LLC and Coord3 Beijing Machinery Ltd.
	 	 
	“Target Business”	shall have the meaning indicated in Introduction A.
	 	 
	“Target Business Employees”	shall have the meaning indicated in Section 16(iii) of Exhibit 10.02.
	 	 
	“Target Financial Debt”	shall have the meaning indicated in Section 6.01(b)(ii).
	 	 
	“Target Net Working Capital”	shall have the meaning indicated in Section 6.01(b)(i).
	 	 
	
        “Tax Certificate”

         
	means
        the certificate issued by the tax authorities in accordance with Sect. 14 of the D.Lgs. no. 472 of December 19, 1977.
	 	 
	“Taxes”	shall mean all taxes, charges, fees, levies, deficiencies or other assessments of whatever kind or nature imposed by any Government Authority, including income, receipts, sales, use, ad valorem, transfer, franchise, profits, license, withholding, payroll, employment, unemployment, social security, excise, estimated, stamp, property, intangible or occupancy tax, including amounts owed under so called instalment agreements and all other amounts owing that have not yet been formalized into agreements (including interest and penalties), including both short term and long term amounts owed.

 

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	“Tax Returns”	shall mean any return (including any information return), declaration, report, claim for refund or credit information return or statement, and any amendment thereto, whether on a consolidated, combined unitary or separate basis, or other document (including any related or supporting information or schedule), filed or required to be filed with any Governmental Authority in connection with the determination, assessment, collection or payment of Taxes or the administration of any laws, regulations or administrative requirements relating to Taxes.
	 	 
	“Third Party Claim”	shall mean a claim brought by any third party against NewCo.
	 	 
	“Transaction”	shall have the meaning indicated in Section 2(a).
	 	 
	“Waste”	shall mean any waste as defined or regulated by any Environmental Law.

 

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EXHIBIT 10.01

 

Buyer’s Representations and
Warranties

 

		1.	Good
standing – Authority

 

(a)          The
Buyer is a limited liability company validly existing, duly incorporated and in good standing under the laws of the State of Michigan,
United States of America.

 

(b)          The
Buyer has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement
and to perform its obligations under this Agreement. The Buyer does not need to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any third party, or need to give any notice to, make any filing with, or obtain any
Governmental Authorization from, any Governmental Authority in order for the it to consummate the transactions contemplated by
this Agreement, other than as otherwise specified in the Agreement.

 

(c)          Neither
the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated by this Agreement shall:
(i) violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any Governmental Authority, or court to which Buyer is subject; or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any contract, license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which
any of its assets is subject.

 

(d)          All
corporate actions taken and which will be taken in connection with the Agreement have been duly authorized by all required corporate
actions and the Buyer has not taken any action that, in any respect, conflicts with, constitutes a default under or results in
any violation of any provision of its articles of association or by-laws.

 

(e)          The
Buyer’s authorized representative has all the necessary corporate powers to enter into this Agreement.

 

		2.	No
bankruptcy proceedings

 

The Buyer is not insolvent
or subject to any insolvency or pre-insolvency proceeding nor is it a party to or is negotiating any creditors’ arrangement
of any kind.

 

    	 

    	 

    

  

EXHIBIT
10.2

 

Sellers’ representations and warranties

 

		1.	Authority

 

(a)          Coord3
and the other Sellers have full power and authority (including full corporate or other entity power and authority) to execute and
deliver this Agreement and to perform their obligations under this Agreement. Coord3 and the other Sellers do not need to give
any notice to, make any filing with, or obtain any authorization, consent, or approval of any third party, or need to give any
notice to, make any filing with, or obtain any Governmental Authorization from, any Governmental Authority in order for the Parties
to consummate the transactions contemplated by this Agreement (including the establishment of NewCo, the Contribution in Kind and
the transfer of the Shares by Coord3).

 

(b)          Non-contravention.
Except as set forth in Annex 1 (the “Required Consents”), neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated by this Agreement (including the establishment of NewCo, the Contribution
in Kind and the transfer of the Shares by Coord3), shall: (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any Governmental Authority, or court to which Coord3 is subject;
or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the
right to accelerate, terminate, modify, or cancel, or require any notice under any contract, license, instrument, or other arrangement
to which Coord3 is a party or by which it is bound or to which any of its assets is subject (or result in the imposition of any
Encumbrance upon any of its assets, particularly the Target Business).

 

		2.	Good
Standing

 

(a)          Good
standing - Authority

 

(i)          Coord3
is a company limited by shares, validly existing, duly incorporated and in good standing under the laws of Italy.

 

(ii)         No
resolution has been passed or will be passed prior to Completion to approve the winding up of Coord3 or of NewCo.

 

(iii)        Coord3
has all the necessary powers and authority to own, operate or lease the Target Business and all of its assets and to carry on its
business activity as it has been and is currently carried on.

 

(iv)        All
corporate actions taken and which will be taken, including the establishment of NewCo, the Contribution in Kind and the transfer
of the Shares by Coord3, have been duly authorized and the Sellers and Coord3 have not taken any action that, in any respect, conflicts
with, constitutes a default under or results in any violation of any provision of law or of its articles of association or by-laws.

 

(b)          No
insolvency proceedings

 

(i)          None
of the Sellers is subject to any insolvency proceeding of any kind nor does it satisfy the requirements for filing any insolvency
procedure of any kind. No liquidator, bankruptcy receiver, administrator or similar officer has been appointed in respect of any
of the Sellers. No action is currently being taken with a view to file for any insolvency proceeding or to appoint any such liquidator,
bankruptcy receiver, administrator or similar officer.

 

(ii)         No
arrangement with any of the Sellers’ creditors of any kind has been entered into or is currently being negotiated.

 

(iii)        None
of the Sellers has entered into any agreement for the assignment of its assets (or any part of them) for the benefit of its creditors.

 

    	 

    	 

    

  

(iv)        None
of the Sellers has filed any petition for the restructuring of its debt.

 

(c)          Licenses,
permits, authorizations

 

(i)          Coord3
has all licences, permits, authorizations and consents from any person, authority or body which are necessary to carry on its business
and, in particular, to operate the Target Business. Coord3 has at all times been in compliance with each Governmental Authorization.
No event has occurred or circumstance exists that could (with or without notice or lapse of time) (I) constitute or result, directly
or indirectly, in a violation of, or a failure on the part of Coord3 to comply with, any Governmental Authorization, or (II) result,
directly or indirectly, in the revocation, suspension, cancellation, termination, or modification of any Governmental Authorization.

 

(ii)         Coord3
has not received any notice or other communication (whether oral or written) from any Governmental Authority or any other person
regarding (I) any actual, alleged, or potential violation of, or failure to comply with, any Governmental Authorization, or (II)
any actual, proposed, or potential revocation, suspension, cancellation, termination, or modification of any Governmental Authorization.

 

(iii)           All
applications required to have been filed for the renewal or reissuance of the Governmental Authorizations have been duly filed
on a timely basis with the appropriate Governmental Authorities;

 

(iv)          All
other filings required to have been made with respect to such Governmental Authorizations have been duly made on a timely basis
with the appropriate Governmental Authorities.

 

(ii)         All
of such licences, permits, authorizations and consents are in full force and effect and neither the Contribution in Kind nor the
transfer of the Shares contemplated by this Agreement will affect the validity and effectiveness of any licences, permits, authorizations
and consents.

 

(iii)        No
violation exists in respect of any such licences, permits, authorizations and consents and no proceeding is pending or, to the
best of the Sellers’ knowledge, threatened against Coord3 to revoke or materially limit any such licences, permits, authorizations
or consents.

 

		3.	Share
Capital of Coord3

 

(i)          The
issued and outstanding share capital of Coord3 is that indicated in the headings of the Agreement. The issued share capital has
been duly authorized, and is fully subscribed and paid.

 

(ii)         Muscarella
and Riccardo Muscarella are the sole registered, legal and beneficial owners of 100% of the share capital of Coord3 in the proportions
set out in Introduction B of the Agreement.

 

(iii)        Coord3’s
shares are free and clear from any Encumbrances.

 

(iv)        No
resolution has been passed to approve any increase or decrease of the share capital of Coord3 and there are no outstanding options,
warrants, agreements, conversion rights, pre-emption rights or other rights to subscribe for, purchase or otherwise acquire any
Shares or any further shares of Coord3’s share capital.

 

(v)         Coord3
has issued no bonds or other securities.

 

		4.	Title
to the Target Business

 

(i)          Coord3
is (and upon Completion NewCo will be) the sole legal and beneficial owner of the Target Business.

 

(ii)         The
Target Business and all of its assets are (and upon Completion will be) free and clear of any Encumbrances and there are no outstanding
options, warrants, agreements, pre-emption rights or other rights to purchase or otherwise acquire the Target Business, any portion
thereof or any of its assets.

 

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		5.	Financial
Statements

 

Each of
the 2013 Financial Statements and the Appraisal Financial Situation: (i) have been prepared in accordance with the Italian Accounting
Principles and with the valuation criteria and the methodologies of application of such accounting principles, as consistently
applied by Coord3 according to past practice; (ii) are true and complete; (iii) fairly represent the assets, liabilities, the financial
position and the results of Coord3 respectively as at December 31, 2013 and at the Reference Date; and (iv) are in accordance with
the books and records of Coord3.

 

		6.	Undisclosed
liabilities

 

(i)          As
at December 31, 2013, Coord3 had suffered or incurred no loss, cost, liability, asset deficiency, debt, third party claim or obligation
of any nature which is not shown or provided for in the 2013 Financial Statements.

 

(ii)         As
at the Reference Date, Coord3 had suffered or incurred no loss, cost, liability, asset deficiency, debt, third party claim or obligation
of any nature which is not shown or provided for in the Appraisal Financial Situation.

 

		7.	Inventories

 

			All Inventory included in the Target Business consists of raw materials and supplies, manufactured
and purchased parts, goods in process, and finished goods, all of which is merchantable and fit for the purpose for which it was
procured or manufactured, saleable in the normal course of business, and none of which is Slow-Moving (except for specific reserves
for such items set forth in the relevant Appraisal Financial Situation), obsolete, damaged, or defective. All such Inventories
are owned free and clear of any Encumbrances. For the purposes hereof, “Slow Moving” shall mean Inventory that Coord3
acquired more than 360 days prior to the Completion Date, other than Inventory described on Annex 7.

 

		8.	Accounts
receivable

 

The accounts receivable of Coord3
included in the Target Business, after taking into account any applicable reserve for returns, claims and bad debts shown in the
Appraisal Financial Situation or on Annex 8, are existing, valid and legitimate and collectable.

 

	9.		Real
                                         estate properties

 

(i)          Coord3
carries out and operates the Target Business in the Property only and it does not own, lease or otherwise use or occupy any other
real estate property (and NewCo upon Completion will carry out and operate the Target Business in the Property only and will not
own, lease or otherwise use or occupy any other real estate property).

 

(ii)         Coord3
is entitled to use the Property, with no restriction whatsoever, on the basis of the contract of Conditional Sale with AGO Renewables
(“AGO”) attached under Annex 9(ii) and of the side letter dated May 28, 2014 (also attached under Annex 9(ii)).
Coord3 has duly and timely fulfilled all obligations arising from such agreement. AGO is not entitled to terminate or withdraw
from the agreement referred to above as a consequence of the consummation of the Transaction.

 

(iii)        To
the best of Sellers’ knowledge, the Property:

 

(aa)         was
built on the basis of and in compliance with lawful building permits;

 

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(bb)         complies
with all laws and regulations (including without limitation all building and zoning laws and regulations);

 

(cc)         has
obtained the relevant licenses and permits (including without limitation the Fire Department’s clearance and certificato
di agibilità) which are currently (and upon Completion will be) valid and effective; and

 

(dd)         may
therefore be legitimately used to carry out Coord3’s business (and NewCo’s business) as it is currently run and to
operate the Target Business.

 

(iii)        The
Property is in good condition and repair and sufficient for the operation of the Target Business. There are no structural deficiencies
or latent defects affecting any of the Property and there are no facts or conditions affecting the Property which would, individually
or in the aggregate, interfere in any respect with the use or occupancy of the same or any portion thereof in the operation of
the Target Business as currently conducted thereon, except for the solar plant located on the roof as better described under Annex
9(iii), which does not interfere with the use or occupancy of the Property in the operation of the Target Business as currently
conducted thereon.

 

(iv)        There
is no condemnation, expropriation, eviction, temporary taking or other proceedings, pending or threatened, affecting any parcel
of the Property or any portion thereof or interest therein. There is no injunction, decree, order, writ or judgment outstanding,
or any claim, litigation, administrative action or similar proceeding, pending or threatened, relating to the ownership, lease,
use or occupancy of the Property or any portion thereof, or the operation of the Target Business as currently conducted thereon.

 

(v)         The
Property is (and upon Completion will be) in compliance with all laws and regulations, and the use and occupancy of the Property
and operation of the Target Business thereon do not (and upon Completion will not) violate any laws or regulations. Coord3 has
not received any notice of violation of any law or regulations and, to the best of Sellers’ knowledge, there is no basis
for the issuance of any such notice or the taking of any action for such violation.

 

(vi)        The
Property has (and upon Completion will have) direct vehicular and pedestrian access to a public street adjoining the Property,
and such access is not (and upon Completion will not be) dependent on any land or other real property interest that is not included
in the Property.

 

(vii)       All
water, oil, gas, electrical, steam, compressed air, telecommunications, sewer, storm and waste water systems and other utility
services or systems for the Property have been installed and are operational and sufficient for the operation of the Target Business
as currently conducted thereon and are fully compliant with all applicable laws and regulations.

 

(viii)      Coord3
has not received any notice from any Governmental Authority or other entity having jurisdiction over the Property threatening a
suspension, revocation, modification or cancellation of any Real Property Permit and, to the best of Sellers’ knowledge,
there is no basis for the issuance of any such notice or the taking of any such action. There is not Governmental Authorization
relating to the Real Property Permits or disclosure, filing of other action by Coord3 (or by NewCo) relating thereto required in
connection with the Transaction.

 

(ix)         There
are no Taxes, assessments, fees, charges or similar costs or expenses imposed by any Governmental Authority, association or other
entity having jurisdiction over the Property (collectively, the “Real Estate Impositions”) that are delinquent.
There is no pending or, to the best of the Sellers’ knowledge, threatened increase or special assessment or reassessment
of any Real Estate Impositions for the Property.

 

(x)          There
is no amount due and payable to any architect, contractor, subcontractor, materialman, or other person or entity for work or labor
performed for, or materials or supplies provided to, or in connection with, the Property or portion thereof which is delinquent.
There is no work or labor being performed for, or materials or supplies being provided to, or in connection with, the Property
or portion thereof, or to be performed or supplied prior to the Completion, other than routine maintenance and repair work.

 

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(xi)         The
Property has access to water resources necessary in the operation of the Target Business as currently conducted thereon.

 

(xii)        Except
as set forth on Annex 9(xii), there are no pending property insurance claims with respect to the Property or any portion
thereof

 

		10.	Fixed
tangible assets (other than real estate properties)

 

(a)          Ownership

 

(i)          Coord3
has good title to and legal and beneficial ownership of the assets listed in Annex 10(a)(i).

 

(ii)         The
assets listed in Annex 10(a)(i) are free and clear of any Encumbrances.

 

(b)          Capital
Lease

 

Coord3
is not a party to any capital lease agreement (leasing). Coord3 has duly and timely fulfilled all obligations arising from
such capital lease agreements.

 

(c)          Operating
Lease

 

Coord3
has no operating lease agreements in place for any asset, except for the assets listed in Annex 10(c). Coord3 has duly and
timely fulfilled all obligations arising from such operating lease agreements.

 

(d)          General

 

(i)          Annex
10(a)(i) is a complete and accurate list of all assets owned and used (as the case may be) by Coord3.

 

(ii)         To
the best of the Sellers’ knowledge, all assets owned or however used Coord3 comply with all laws and regulations.

 

(iii)        All
assets owned or however used by Coord3 are in good operating conditions and repair, subject to normal wear and tear, and usable
in the regular and ordinary course of the business.

 

(iv)        The
assets listed in Annex 10(a)(i) are sufficient to allow Coord3 to properly operate the Target Business as currently conducted.

 

		11.	Intellectual
property

 

(i)          Coord3
is the sole legal and beneficial owner of the trademarks, trademark applications, industrial designs, manufacturing and trade secrets,
inventions, patents, patent applications, copyright, software know-how, technology and drawings listed and described in Annex
11(i) (“Intellectual Property”). Coord3 owns no intellectual property other than that listed in Annex
11(i).

 

(ii)         The
trademarks applications if any are filed for registration in the jurisdictions indicated in Annex 11(i).

 

(iii)        The
Intellectual Property is free and clear from any Encumbrances.

 

(iv)        The
Intellectual Property is used in good faith.

 

(v)         None
of the items and assets of the Intellectual Property is licensed to third parties or is part of a branch of a business as a going
concern (ramo d’azienda) which is leased to third parties or on which a third party is entitled to the usufruct.

 

(vi)        All
fees, taxes and duties for all the registrations and maintenance of all Intellectual Property have been duly and timely paid by
Coord3.

 

(vii)       Annex
11(i) lists any deadlines related to: (A) registration, maintenance or renewal fees with respect to the Intellectual Property;
and (B) the filing of any documents, applications or certificates (including responses to office actions) that are required within
ninety (90) days of the Completion Date to maintain any such Intellectual Property.

 

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(viii)      The
Intellectual Property is sufficient to allow Coord3 to properly operate the Target Business as currently conducted.

 

(ix)         To
the best of the Sellers’ knowledge, the Intellectual Property does not infringe any third party rights.

 

(x)          There
are no proceedings (including opposition proceedings before any authority or challenges) concerning the Intellectual Property which
are pending or, to the best of the Sellers’ knowledge, threatened, and Coord3 has not entered into nor is it negotiating
any settlement agreements regarding the Intellectual Property. Coord3 is not obligated to pay any royalty, license fee, charge
or other amount with regard to any Intellectual Property.

 

(xi)
        The Sellers are not aware of any actual or potential infringements of the Intellectual Property by any third party.

 

(xii)        No
director, officer, shareholder, employee, consultant, contractor, agent or other representative of Coord3 owns or claims any rights
in (nor has any of them made application for) any Intellectual Property.

 

(xiii)       All
research and development activities, drawings and specifications, and know-how concerning the products currently manufactured by
Coord3 have been acquired or completed or fully developed by Coord3 and all related costs have already been incurred.

 

(xiv)      Each
software used by Coord3 has been and is duly licensed to it and all relevant considerations for such licenses have been duly and
timely paid by Coord3.

 

(xv)       To
the best of the Sellers’ knowledge, Coord3’s software does not contain viruses, worms, time bombs, or backdoor access
that could be used to interfere with the functionality of such software.

 

(xvi)      No
person has (or had) a copy of, or has (or had) the right to access now or at some time in the future to any source code for material
Software; and there are no agreements under which Coord3 has placed or is required to place into escrow any such source code.

 

(xvii)     No
Intellectual Property was developed by Coord3 using (in whole or in part) government funding or facilities nor was it obtained
from any Governmental Authority. Coord3 has not granted to any Governmental Authority, either expressly, or by any act or omission
of Coord3, any unlimited, unrestricted or government purpose rights in the Intellectual Property.

 

(xviii)    No
person other than the Seller has ownership of or rights to any Intellectual Property, excluding that is the subject of a license.

 

(xix)       Coord3 has taken
commercially reasonable actions to protect its trade secrets included in the Intellectual Property from unauthorized use or disclosure,
and to maintain such trade secrets in confidence. To the best of the Sellers’ knowledge, these trade secret policies comply
(x) with all contracts between Coord3 and customers or other third parties; and (y) with applicable law. To the best of the Sellers’
knowledge, there have been no material breaches or deviations from these trade secret policies, and no breach of any contract between
the Seller and customers or other third parties with respect to trade secrets.

 

		12.	Debt

 

As of the date this representation
is made, Coord3’s debt and accounts payable are as indicated in Annex 12, plus accounts payable incurred after the
date hereof in the ordinary course of business consistent with the past practice.

 

		13.	Guarantees
and securities

 

(i)          No
guarantees or patronage letters or other securities have been granted or created by third parties (including the Sellers) for the
benefit of Coord3.

 

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(ii)         Coord3
has issued or granted no guarantees or patronage letters and/or created securities in favor of any third party including any of
the Sellers.

 

(iii)        There
are no off balance-sheet items in the books and records of Coord3.

 

		14.	Books
and records

 

(i)          All
books and records of Coord3 (including all tax books) have been fully, properly and accurately kept and completed in accordance
with all applicable laws and the Italian Accounting Principles and fairly reflect, in reasonable detail, the transactions, the
financial position and the assets and liabilities of Coord3. All of such books and records are under the direct control of Coord3
and have been kept for the duration prescribed by the applicable civil and tax laws and regulations.

 

(ii)         The
records of the resolutions of the board of directors and the shareholders of Coord3 are accurate and accurately reflect all actions
taken and all resolutions passed by the board of directors and the shareholders of Coord3.

 

		15.	Litigation

 

(i)          There
are no claims, actions, suits, proceedings or investigations pending or threatened in writing or, to the best knowledge of the
Sellers, threatened other than in writing, before any court or governmental or regulatory or administrative authority, domestic
or foreign, or before any arbitrator of any nature to which Coord3 is a party. To the best of the Sellers’ knowledge, no
facts or circumstances exist which may give rise to any claims, actions, suits, proceedings or investigations.

 

		16.	Employment
matters - Agents

 

(i)          Annex
16(i) lists the employees of Coord3 with their name, employment level, seniority, duties, annual salary (net, gross and cost
for the employer), total accrued deferred salary/severance indemnity (TFR) and the other statutory accrued entitlements and who
are inherent in the Target Business and whose employment contracts will be transferred to NewCo upon the Contribution in Kind (“Target
Business Employees”). The information contained in Annex 16(i) is true, accurate and complete as of the date hereof.

 

(ii)         Coord3
has no employees other than the employees listed in Annex 16(i). No person other than the employees listed in Annex 16(i)
may legitimately claim that he/she has a subordinate employment relationship with Coord3.

 

(iii)        [intentionally
left blank]

 

(iv)        No
litigation, whether pending or threatened in writing or, to the best knowledge of the Sellers, threatened but not in writing, exists
between Coord3 and any employee who is presently on its payroll as well as any former employee.

 

(v)         Coord3
is not in breach of any obligation to pay to any of its employees any wages, salaries, commissions, bonuses, benefits or other
direct or indirect compensation for any services performed to the date hereof or amount required to be reimbursed to such employees,
nor is it in breach of any other obligation arising from the employment agreements with their employees.

 

(vi)        Coord3
has complied with all employment and social security applicable laws and regulations and collective bargaining agreements (including
those executed with local/plant unions, if any) governing employment, as well as with all employment practices, terms and conditions
of employment, wages, hours and benefits, including any provision relating to health and safety.

 

(vii)       Up
to the date hereof no employee of Coord3 has actually performed or actually performs tasks which are not substantially corresponding
to those prescribed by the relevant provisions of the collective bargaining agreements and of his/her individual employment agreement.

 

    	7

    	 

    

  

(viii)      There
is no strike, slowdown or stoppage actually pending or threatened in writing or, to the best knowledge of the Sellers, threatened
but not in writing, against or involving Coord3.

 

(ix)         There
is no employee bonus, stock option, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement,
pension or severance plans (i) to which Coord3 is a party or (ii) which are maintained, contributed to or sponsored by Coord3 for
the benefit of the employees, other than those provided for by the law or by the applicable National Collective Bargaining Agreement.

 

(x)          Up
to the date hereof the total accrued deferred salary / severance indemnity (TFR) of each employee of Coord3 has been calculated
and accrued according to the applicable laws and/or other applicable contractual provisions.

 

(xi)         Except
as set forth on Annex 16(xi) relating to the Government Debt, Coord3 has: (1) paid to the competent authorities all compulsory
social welfare and social security funds and provided to such authorities any requested document concerning the same; (2) fully
paid or, as the case may be, posted in the 2013 Financial Statements and in the Appraisal Financial Situation all contributions
(including interest, penalties and taxes, if applicable) concerning wages paid or due; and (3) withheld and paid to the competent
authorities the total contributions and taxes to be withheld from the paid wages.

 

(xii)        No
employee of Coord3 is entitled to receive any payment of any nature whatsoever as a consequence of the execution of this Agreement
and/or of the Completion as contemplated by this Agreement.

 

(xiii)       Coord3
applies the National Collective Bargaining Agreement for Industrial Companies (“CCNL Industria Metalmeccanica”).

 

(xiv)      Coord3
has had access to cassa integrazione guadagni in the past and it has always duly complied with all the related obligations.
A procedure for contratto di solidarietàis currently pending and the relevant terms are summarized in Annex 16(xiv).

 

(xv)       Coord3
has not made any loan to any of its employees.

 

(xvi)      Coord3
has no workers on a project basis (collaboratori a progetto), except for those listed under Annex 16(xvi).

 

(xvii)     Coord3
has no fixed term employees.

 

(xviii)    Coord3
has no self-employed workers (including collaboratori coordinati e continuativi), except for those listed under Annex
16(xviii).

 

(xix)       Coord3
has duly and timely fulfilled all of its tax and social security obligations in relation to the current and past members of the
board of directors.

 

(xx)        Coord3
has no commercial agents.

 

		17.	Insurances

 

(i)          The
insurance policies entered into and maintained by Coord3 are listed in Annex 17(i), which, for each insurance policy, lists
the insurance company, the risk covered, the date of execution of the policy, the premium, the expiration date. Such policies are
of the type and amount which are appropriate for the conduct of Coord3’s business and, in particular, of the Target Business
and are sufficient for material compliance with all agreements to which they are a party or by which they are bound.

 

(ii)         All
premiums concerning the insurance policies have been paid at the due dates. Such insurance policies are in full force and effect
as of the date hereof and are validly enforceable.

 

(iii)        No
event relating to Coord3 or to the Target Business has occurred which could reasonably be expected to result in a retroactive upward
adjustment in premiums under any such insurance policies or which (to the best of the Sellers’ knowledge) is likely to result
in a prospective upward adjustment in such premiums or in any other adverse change in the terms of any policy of insurance covering
the Target Business.

 

    	8

    	 

    

  

(iv)        The
insurance policies shall continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated by this Agreement; neither Coord3, the other Sellers nor any other party to the
insurance policies is in breach or default, and no event has occurred which, with notice or the lapse of time, would constitute
such a breach or default, or permit termination, modification, or acceleration, under the policy.

 

(v)         Coord3
has given notice to the insurer of all insured claims.

 

		18.	Environmental

 

(a)          Coord3
is not and has not been in breach of any applicable Environmental Law.

 

(b)          No
plants, factories, sheds, stores, warehouses, offices, facilities and land owned or used by Coord3 contain, or have previously
contained, any Hazardous Substances, including, without limitation, asbestos, petroleum or petroleum products (including gasoline,
crude oil or any fraction thereof), polychlorinated biphenyl’s, and urea-formaldehyde insulation, to be considered Hazardous
Substances, in amounts or concentrations that constitute or constituted a violation of, or could give rise to any liability under,
any applicable Environmental Law.

 

(c)          Hazardous
Substances have not been transported or disposed of from any plant, factory, shed, store, warehouse, office or facility of Coord3,
in violation of, or in a manner or to a location which could give rise to any liability under, any applicable Environmental Law,
nor have any Hazardous Substance been generated, treated, stored or disposed of at, on or under any of the plants, factories, sheds,
stores, warehouses, offices and facilities of Coord3, in violation of, or in a manner that could give rise to any liability under,
any applicable Environmental Law.

 

(d)          All
Environmental Licenses required for the operations of the Target Business have been obtained, are in full force and effect and
have been complied with by Coord3.

 

(e)          Coord3
is not currently the subject of any claim, investigation or inspection (including for liabilities for cleaning up, remediation
or costs for personal injury or property damages) under any applicable Environmental Law or to the best of the Sellers’ knowledge
for any breach, suspected breach or alleged breach by Coord3 of any Environmental License, and to the best of the Sellers’
knowledge no such claim, investigation or inspection is pending, threatened or proposed and there are no facts or circumstances
which may lead to any such claims, investigations or inspections.

 

(f)          To
the best of the Sellers’ knowledge, no expenditures are required in connection with the business of Coord3 as presently conducted
and/or plant and/or facility of Coord3 in order to comply with any applicable Environmental Law.

 

(g)          There
are no judicial proceedings or governmental or administrative actions pending, contemplated or threatened in writing or, to the
best knowledge of the Sellers, threatened but not in writing, under any presently applicable and enacted Environmental Law to which
Coord3 and/or their directors, officers, agents or employees, as the case may be, is or will be named as a party with respect to
each relevant plant, factory, shed, store, warehouse, office and facility, nor are there any decrees, administrative orders or
other orders or administrative or judicial requirements outstanding under any applicable Environmental Law with respect to the
relevant plant, factory, shed, store, warehouse, office and facility.

 

(h)          There
is no presence, discharge, spillage, emission or other release of any Hazardous Substance in, onto, under or from any of the properties
used by Coord3 and, to the best of the Sellers’ knowledge, no claims or complaints relating to any such occurrence are pending
and the Sellers are not aware of any circumstance which could result in any such claim or complaint being received.

 

(i)          All
Waste which is or has at any time been produced by Coord3 has been disposed of in accordance with the requirements of all Environmental
Laws as from time to time, up to now, in force.

 

    	9

    	 

    

  

(j)          Except
for temporary storage of Waste prior to collection as permitted pursuant to Environmental Laws as from time to time in force, no
Waste is or has ever been stored or disposed of on any of the properties used by Coord3 in breach of any Environmental Law as from
time to time in force or has been disposed of or stored by Coord3 at any such property.

 

(k)          Except
as provided in Annex 18(xi), all information provided by Coord3 to any competent authority in accordance with the requirements
of the Environmental Laws as from time to time in force and all records and data required to be maintained by Coord3 under the
provisions of any applicable Environmental Law regarding any processes currently carried on at or emissions, discharges or Waste
disposal from any of the properties used by Coord3 is complete and accurate.

 

(l)          Neither
Coord3, nor any of Coord3’s directors, officers, or employees is in breach of or has incurred or become convicted of or become
subject to any civil or administrative or criminal liability under any applicable Environmental Law or the terms of any Environmental
License (other than a liability to pay routine costs or charges under any required license) and Coord3 has not received any notice
or other communication or become aware of any facts or circumstances from which it appears that they or any such other person may
be or is alleged to be in breach of or to have incurred any such liability under any applicable Environmental Law or Environmental
License.

 

		19.	Compliance
with the law – Regulatory compliance

 

(i)          The
operations of Coord3 have been conducted, in all material respects, in compliance with all permits, applicable laws, regulations,
orders and other requirements of all courts and other governmental or regulatory authorities having jurisdiction over Coord3, including
any such laws, regulations, orders or other requirements relating to product safety, accident prevention, export control, money
laundering, anti-corruption, international sales and business ethics and health and safety on the work place.

 

(ii)         Coord3
has not received a notification of any violation of any such law, regulation, order or requirement, or are in default with respect
to any order, writ, judgment, award, injunction or decree of any court or governmental or regulatory authority or arbitrator applicable
to Coord3, or any of its assets, properties or operations.

 

(iii)        Neither
Coord3 nor any of its directors, officers or employees has committed any act or omission which may have caused any damage to any
public authority or entity (danno erariale).

 

(iv)        Coord3
has not adopted any organizational model in accordance with Legislative Decree 231/2001. The Sellers represent and warrant that
no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or notice has been filed or commenced against
Coord3 pursuant to Legislative Decree 231/2001, nor any action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of Coord3’s employees or directors which may result in an action
pursuant to Legislative Decree 231/2001 and no facts occurred and will occur prior to Completion which could result in action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand pursuant to Legislative Decree 231/2001.

 

		20.	Contracts

 

(i)          Annex
20(i) lists all contracts to which Coord3 is a party and which are part of the Target Business.

 

(ii)         In
relation to the customers’ or suppliers’ contracts of which Coord3 is a party, none of the customers or suppliers (as
the case may be) is entitled to terminate or withdraw from the relevant contracts referred to in this paragraph (i) as a consequence
of the Contribution in Kind or of the sale of the Shares to the Buyer.

 

    	10

    	 

    

  

(iii)        Coord3
has duly and timely fulfilled in all material respects all of the obligations arising from all of the contracts referred to in
paragraph 20(i) above.

 

(iv)        With
respect to each contract entered into by Coord3 which is part of the Target Business: (A) the contract is legal, valid, binding,
enforceable, and in full force and effect (or, as the case may be in relation to past agreement expired or terminated, were legal,
valid, binding and enforceable) against Coord3 and, to the best of Sellers’ knowledge the other parties thereto; (B) the
contract shall continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated by this Agreement; (C) neither Coord3, nor, to the best of Sellers’ knowledge,
any other party is in breach or default, and, to the best of Sellers’ knowledge, no event has occurred that with notice or
lapse of time would constitute a breach or default, or permit termination, modification, or acceleration, under such contract;
(D) no party has repudiated any provision of such contract; and (E) there is no renegotiation of, attempt to renegotiate, or outstanding
rights to renegotiate any such contracts with any person, and no person has made written demand for such renegotiation; (F) no
party is entitled to withdraw from any contract without cause or as a consequence of the consummation of the Transaction; (G) to
the best of the Sellers’ knowledge, all contracts to which Coord3 is a party and which should have been awarded through a
public tender process have been awarded in compliance with applicable laws and regulations.

 

(v)         Since
September 30, 2014, no supplier of Coord3 has indicated that it shall stop, or materially decrease the rate of, supplying materials,
products or services to Coord3 or initiated or threatened litigation as a result of a dispute nor has Coord3 refused to pay any
such supplier due to quality timeliness or other issues.

 

(vi)        Since
September 30, 2014, no customer has indicated that it stop, or materially decrease the rate of, purchasing products or services
from Coord3, refused to pay due to quality, timeliness or other issues or initiated or threatened litigation as a result of a dispute.
None of Coord3’s agreements with its customers contain provisions which permit the customer to terminate their arrangement
with Coord3 as a result of the consummation of the transactions contemplated hereby.

 

		21.	Product
Liability and product warranty

 

(i)          No
product liability claims are pending against Coord3.

 

(ii)         Coord3
has not received any order from any Governmental Authority to recall any of the products manufactured and delivered. No event has
occurred or circumstance exists that (with or without notice or lapse of time) could result in any such liability or recall. No
product liability claims of Coord3 have been settled during the past two (2) years.

 

(iii)        There
is not a standard form for product warranty issued by Coord3. Each product manufactured, repaired, sold, leased, or delivered by
Coord3 has been in conformity with all applicable contractual commitments and all express and implied warranties, and Coord3 has
no liability (and, to the best of Sellers’ knowledge, there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against it giving rise to any liability) for replacement or repair
thereof or other damages in connection therewith. No product manufactured, repaired, sold, leased, or delivered by Coord3 is subject
to any guaranty, warranty, or other indemnity beyond the applicable standard terms and conditions of sale or lease.

 

(iv)        The
products manufactured and delivered by Coord3 prior to the date hereof do not have any material design or serial defects which
may reasonably be expected to result in any claim. Coord3 has no liability (and there is no basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or demand against it giving rise to any adverse consequence)
as a result of any defect or other deficiency (whether of design, materials, workmanship, labelling, instructions, or otherwise)
with respect to any product designed, manufactured, repaired, sold, leased, licensed, or delivered, or any service provided by
Coord3 and pertaining to the Target Business.

 

    	11

    	 

    

 

		22.	Taxes

 

Except
as set forth in Annex 22:

 

(i)          Coord3
complied with all obligations in respect of Tax. Annex 22(i) sets forth the outstanding Government Debt.

 

(ii)         All
tax returns, reports or other filings that are required to be filed by Coord3 on or before the date this representation is being
made with any tax or social security authorities have been duly and timely filed. Such tax returns, reports or other filings fully
reflect the tax and social security liabilities of Coord3, at the time of the filing, for the relevant tax period. Coord3 currently
is not the beneficiary of any extension of time within which to file any Tax Return. No claim has ever been made by an authority
in a jurisdiction where Coord3 does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. There are
no liens for Taxes (other than Taxes not yet due and payable) upon the Target Business.

 

(iii)        All
Taxes of Coord3: (i) payable on or before the date this representation is made; or (ii) that are attributable to any relevant period
up to the date hereof, but are not yet due and payable as of the date this representation is made, in each case have been timely
and duly paid or appropriate provisions have been made therefore in the Appraisal Financial Situation.

 

(iv)        No
claim for assessment or collection of Taxes has been asserted against Coord3 and there are no such claims threatened in writing
or, to the best of the Sellers’ knowledge, threatened other than in writing against Coord3. Neither Coord3 nor the other
Sellers nor any director or officer (or employee responsible for Tax matters) of Coord3 expects any Governmental Authority to assess
any additional Taxes for any period for which Tax Returns have been filed.

 

(v)         Coord3
has withheld from its employees, independent contractors, creditors, shareholders and third parties and timely paid to the appropriate
Governmental Authority proper and accurate amounts in all respects required to have been withheld or paid over for all periods
ending on or before the Completion Date in compliance with all Tax withholding and remitting provisions of applicable laws and
have complied in all respects with all Tax information reporting provisions of all applicable laws.

 

(vi)        Coord3
has not received any written or oral notice that it is in violation (or with notice will be in violation) of any applicable law
relating to the payment or withholding of Taxes.

 

(vii)       Coord3
has not received any notice of a proposed Tax or social security inspection or any other administrative proceeding or court proceeding
nor are any of the foregoing pending or threatened in writing, or to the best of the Sellers’ knowledge, threatened but not
in writing with regard to any Taxes or Tax Returns.

 

(viii)      Coord3
is a party to no dispute with any tax authority in relation to any Tax.

 

(ix)         Annex
22(ix) sets forth the amount of Coord3’s unpaid Taxes as of the date the representation is being made, together with
interest and penalties.

 

(x)          Annex
22(x) sets forth all of Coord3’s open tax audit years.

 

		23.	Public
grants

 

Coord3
has never received nor benefitted from any public grants.

 

		24.	Privacy
and personal data protection

 

(i)          Coord3
has complied with all laws and regulations governing the protection of privacy and personal data.

 

    	12

    	 

    

  

(ii)         Coord3
maintains policies and procedures regarding data security, privacy, and personal information that are commercially reasonable and,
in any event, comply with all obligations to its employees, customers, suppliers and data subjects, or others, and with all applicable
laws and regulations. The consummation of the Transaction will not violate any privacy policy, information security policy, terms
of use, customer agreements or any applicable laws or regulations relating to the use, storage, treatment, dissemination or transfer
of any personal data or information or confidential information of a third party.

 

		25.	Loans
to or by the Sellers

 

			There is no outstanding indebtedness or other liability (actual or contingent) owed by Coord3 to
the other Sellers, their Affiliates or to any director, officer, or employee of Coord3 or any person related to a director, officer,
or employee as aforesaid, nor is there any indebtedness owed to Coord3 by any such person.

 

		26.	Equity
Interests; Branches

 

(i)          No
interest in any legal entity is owned (whether directly or indirectly) by Coord3 nor is Coord3 a member of any partnership, joint
venture, consortium or other incorporated or unincorporated association, except as disclosed in Annex 26(i).

 

		27.	Information
Technology

 

(i)          Coord3
has an information technology system (i.e. personal computers, network, servers and connected devices and software, hereinafter
“IT System”) fully functioning and suitable to operate the Target Business in an efficient manner.

 

(ii)         The
IT System is suitable and works properly for the purpose of supporting the management of the Target Business and allowing all its
employees to carry out their intended tasks and duties, including, but not limited to, keeping the accounts and storing all relevant
information.

 

(iii)        The
IT System is suitable to run all programs and perform all actions necessary for the specific business of the Target Business, including
but not limited to, design, simulation and calculation.

 

(iv)          Coord3
has acquired full title to and ownership of, or a legitimate right to use, any and all third party software and/or intellectual
property used in the IT System.

 

(v)         To
the best knowledge of the Sellers, the use of the software and intellectual property relating to the IT Systems and use of the
IT System itself does not infringe any third party right or statutory provision.

 

(vii)       Coord3
has devised and implemented with the utmost care specific procedures aimed at protecting the IT System from viruses and any other
harm and preserving the security of their IT System, data and intellectual property.

 

(viii)      Coord3
has taken all reasonable steps to safeguard the IT System utilized in the operation of the Target Business, including the implementation
of procedures to ensure that such information technology systems are free from any disabling codes or instructions, timer, copy
protection device, clock, counter or other limiting design or routing and any "back door," "time bomb," "Trojan
horse," "worm," "drop dead device," "virus," or other software routines or hardware components
that in each case permit unauthorized access or the unauthorized disablement or unauthorized erasure of data or other software
by a third party, and to date there have been no successful unauthorized intrusions or breaches of the security of the information
technology systems.

 

(ix)         The
consummation of the Transaction (or any part thereof) will not disrupt or discontinue the operation and functionality of the IT
System.

 

    	13

    	 

    

  

		28.	Subsequent
Events

 

(a)          
Since the Reference Date, the business of Coord3 has been conducted in accordance with Section 8.01(a) of the Agreement and of
all applicable laws. Since the Reference Date, Coord3 has taken none of the following actions:

 

(xxvii)   sale
or disposal of any assets outside the ordinary course of business;

 

(xxviii)    granting
of any rights (including in rem securities) in respect of any of Coord3’s assets or the charging of any of said assets
with any Encumbrances;

 

(xxix)      decisions
to incur any indebtedness or to borrow any money (except within the limits of the facilities currently available to Coord3 as disclosed
to the Buyer), or to enter into any factoring or invoice discount agreement;

 

(xxx)        extension
of the terms of payment of any payables or other liabilities or of any receivables, outside of ordinary course of business, or
discount any receivables;

 

(xxxi)      transactions
(including share capital increase or decrease) which affect the share capital of Coord3;

 

(xxxii)     the
granting of any rights (including in rem security rights) on any of the shares of NewCo or any further share to be issued by NewCo
and issuance of any bond or other securities;

 

(xxxiii)    decisions
to undertake any capital commitment (purchase or financial / capital lease of fixed or other assets);

 

(xxxiv)     decisions
to enter into any partnership, consortium, association, joint venture agreements;

 

(xxxv)      change
of the remuneration of any of the employees, other than increases required by the law or by the applicable collective bargaining
agreements;

 

(xxxvi)     recruitment
of any new dirigente or quadro or promotion of any employee to such levels;

 

(xxxvii)    any
redundancy plan or the dismissal of any dirigente or quadro;

 

(xxxviii)    acquisition
or disposal of equity interests in other entities or of businesses as going concerns or any branches thereof;

 

(xxxix)     agreements
with customers or suppliers (including purchase orders) which are outside the ordinary course of business or (aa) whereby the counterpart
may withdraw or terminate for change of control, (bb) which provide for restrictions to the freedom to operate in the market; or
(cc) which contemplate unusual payment terms outside ordinary course of business if compared with standard market practice;

 

(xl)         agreements
with related parties (including shareholders, directors or employees of Coord3 or relatives of the shareholders or of the directors
or employees);

 

(xli)        change
in accounting methods, policies or procedures or presentations of accounts; declaration and distribution of dividends;

 

(xlii)      settlements
of disputes when the overall value exceeds EUR 30,000;

 

(xliii)     guarantees
to secure the obligations of a third party;

 

(xliv)      liquidation;
dissolution; mergers, de-mergers and restructurings;

 

(xlv)        real
estate leases;

 

(xlvi)      permitting
the lapse or forfeiture of intellectual property rights or other intangible assets;

 

(xlvii)     fail
to file any tax returns or any other report to any authority as required under the law or any contract by its applicable due date
or fail to pay any taxes, as and when they first became due and payable;

 

(xlviii)    negotiation
for the settlements or compromise, settlements or compromise of any tax liability;

 

(xlix)      payment
of dividends or distributions;

 

(l)          termination
of any material agreement;

 

    	14

    	 

    

  

(li)         enter
into or amend any agreement, except for acceptance or placement of purchase orders in the ordinary course of business.

 

(b)          As
at the date this representation is made, Coord3 had suffered or incurred no loss, cost, liability, asset deficiency, debt, third
party claim or obligation of any nature, except as shown or provided for in the Appraisal Financial Situation or incurred in the
ordinary course of business since the Reference Date.

 

		29.	Material
Adverse Change

 

No Material Adverse Change in
Coord3 has occurred between the Reference Date and the date this representation is made.

 

		30.	No
Broker

 

The Sellers have entered into
negotiations with the Buyer in relation to the Transaction and have entered into this Agreement without using the services of any
broker.

 

		31.	No
omission

 

No representation or warranty
made by the Sellers and none of the Appendices and Annexes contains or will contain any untrue statement of any fact, or omit any
fact, the omission of which would be misleading.

 

		32.	International
Trade Sanctions

 

Neither Coord3, nor any other
Sellers acting on its behalf, nor any of their respective directors, officers, agents, employees or any other persons acting on
behalf of Coord3 has, in connection with the operation of Coord3 or the Target Business, (i) used any corporate or other funds
for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity,
to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful
or unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977, as amended, or any Italian applicable
or other similar applicable law relating to corruption, (ii) paid, accepted or received any unlawful contributions, payments, expenditures
or gifts, or (iii) violated or operated in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations
or other similar applicable law.

 

		33.	Affiliate
Transactions

 

None of the Sellers, Coord3’s
directors, officers or employees, their Affiliates, and their relatives are a party to, or the beneficiary of, any contract or
material transaction relating to Coord3 or the Target Business, including any contract providing for any loans, advances, the employment
of, furnishing of services by, rental of assets from or to, or otherwise requiring payments to or from, any such persons.

 

		34.	No
Other Business

 

Coord3 has never conducted any
business or other operations other than the current business of designing, engineering, manufacturing, marketing, selling, installing,
servicing and maintaining CMMs (the “Current Business”) and Coord3 has no liabilities or obligations, known,
unknown, contingent or otherwise, arising from previously disposed of or discontinued operations, or that are not related to or
did not arise from the operation of the Current Business.

 

    	15

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