Document:

hzo-ex1012_638.htm

Exhibit 10.12 

 

NOTE: PORTIONS OF THIS EXHIBIT INDICATED BY “[****]” HAVE BEEN OMITTED FROM THIS EXHIBIT AS THESE PORTIONS ARE NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM IF PUBLICLY DISCLOSED.  

 

EQUITY PURCHASE AGREEMENT

AMONG

SKIPPER MARINE HOLDINGS, INC., 

SSY HOLDINGS, INC.,

MICHAEL J. PRETASKY, SR.,

MICHAEL JOHN PRETASKY, JR. 2014 TRUST, 

MARK ELLERBROCK,

AND

ROBERT ROSS TEFFT, JR.,

AS THE SELLERS,

MICHAEL J. PRETASKY, JR., 

AS THE SELLERS’ REPRESENTATIVE,

AND

MARINEMAX, INC.,

AS THE BUYER,

DATED AS OF OCTOBER 1, 2020

 

 

 

 

 

 

TABLE OF CONTENTS

 

	
Article I Definitions
	
2
	
 

	
Article II Purchase and Sale of the EQUITY and the TRADEMARKS
	
2
	
 

	
 
	
2.1
	
Basic Transaction2
	
 

	
 
	
2.2
	
Purchase Price2
	
 

	
 
	
2.3
	
The Closing2
	
 

	
 
	
2.4
	
Net Working Capital, Cash, Company Expenses and Indebtedness Calculation and Purchase Price Adjustment3
	
 

	
 
	
2.5
	
Earnout Payments5
	
 

	
 
	
2.6
	
Withholding Rights8
	
 

	
 
	
2.7
	
Allocation of Purchase Price9
	
 

	
Article III Representations and Warranties Concerning the Transaction
	
9
	
 

	
 
	
3.1
	
The Sellers’ Representations and Warranties9
	
 

	
 
	
3.2
	
The Buyer’s Representations and Warranties11
	
 

	
Article IV Representations and Warranties Concerning the Companies
	
11
	
 

	
 
	
4.1
	
Organization, Qualification, and Corporate Power12
	
 

	
 
	
4.2
	
Capitalization12
	
 

	
 
	
4.3
	
Non-contravention12
	
 

	
 
	
4.4
	
Brokers’ Fees13
	
 

	
 
	
4.5
	
Title to Assets13
	
 

	
 
	
4.6
	
Subsidiaries13
	
 

	
 
	
4.7
	
Financial Statements13
	
 

	
 
	
4.8
	
Events Subsequent to Most Recent Fiscal Year End14
	
 

	
 
	
4.9
	
Undisclosed Liabilities; Indebtedness15
	
 

	
 
	
4.10
	
Legal Compliance15
	
 

	
 
	
4.11
	
Tax Matters17
	
 

	
 
	
4.12
	
Real Property20
	
 

	
 
	
4.13
	
Intellectual Property22
	
 

	
 
	
4.14
	
Tangible Assets24
	
 

	
 
	
4.15
	
Contracts24
	
 

i

 

	
 
	
4.16
	
Notes and Accounts Receivable26
	
 

	
 
	
4.17
	
Powers of Attorney26
	
 

	
 
	
4.18
	
Insurance26
	
 

	
 
	
4.19
	
Litigation27
	
 

	
 
	
4.20
	
Employees28
	
 

	
 
	
4.21
	
Employee Benefits30
	
 

	
 
	
4.22
	
Guaranties33
	
 

	
 
	
4.23
	
Environmental, Health and Safety Matters33
	
 

	
 
	
4.24
	
[****]34
	
 

	
 
	
4.25
	
No Other Representations or Warranties34
	
 

	
Article V Post-Closing Covenants
	
35
	
 

	
 
	
5.1
	
General35
	
 

	
 
	
5.2
	
Litigation Support35
	
 

	
 
	
5.3
	
Transition36
	
 

	
 
	
5.4
	
Confidentiality36
	
 

	
 
	
5.5
	
Covenant Not to Compete36
	
 

	
 
	
5.6
	
Non-Solicitation37
	
 

	
 
	
5.7
	
Sellers Release37
	
 

	
 
	
5.8
	
Company Books and Records38
	
 

	
 
	
5.9
	
Personnel38
	
 

	
 
	
5.10
	
[****]39
	
 

	
 
	
5.11
	
SSY Corporate Records39
	
 

	
Article VI CLOSING OBLIGATIONS
	
39
	
 

	
 
	
6.1
	
The Seller’s Obligation39
	
 

	
 
	
6.2
	
The Buyer’s Obligation40
	
 

	
Article VII Remedies for Breaches of this Agreement
	
41
	
 

	
 
	
7.1
	
Survival of Representations and Warranties41
	
 

	
 
	
7.2
	
Indemnification Provisions for the Buyer’s Benefit42
	
 

	
 
	
7.3
	
R&W Insurance45
	
 

	
 
	
7.4
	
Indemnification Provisions for the Sellers’ Benefit45
	
 

	
 
	
7.5
	
Matters Involving Third Parties45
	
 

	
 
	
7.6
	
Direct Claims46
	
 

	
 
	
7.7
	
Escrow47
	
 

ii

 

 

	
 
	
7.8
	
[****] Holdback47
	
 

	
 
	
7.9
	
[****] Holdback47
	
 

	
 
	
7.10
	
Environmental Indemnification48
	
 

	
Article VIII TAX MATTERS
	
48
	
 

	
 
	
8.1
	
Tax Returns.48
	
 

	
 
	
8.2
	
Payment of Taxes.49
	
 

	
 
	
8.3
	
Cooperation on Tax Matters.50
	
 

	
 
	
8.4
	
Tax-Sharing Agreements.50
	
 

	
 
	
8.5
	
Certain Taxes and Fees.50
	
 

	
 
	
8.6
	
Tax Treatment of Transactions.50
	
 

	
 
	
8.7
	
Refunds51
	
 

	
 
	
8.8
	
Tax Claims51
	
 

	
 
	
8.9
	
Prohibited Actions51
	
 

	
 
	
8.10
	
Post-Closing Tax Filings51
	
 

	
 
	
8.11
	
Transaction Deductions52
	
 

	
Article IX APPOINTMENT OF SELLERS’ REPRESENTATIVE
	
52
	
 

	
 
	
9.1
	
Appointment52
	
 

	
 
	
9.2
	
Acceptance53
	
 

	
 
	
9.3
	
Replacement53
	
 

	
 
	
9.4
	
Communications53
	
 

	
Article X MISCELLANEOUS
	
53
	
 

	
 
	
10.1
	
Press Releases and Public Announcements53
	
 

	
 
	
10.2
	
No Third-Party Beneficiaries53
	
 

	
 
	
10.3
	
Entire Agreement53
	
 

	
 
	
10.4
	
Succession and Assignment53
	
 

	
 
	
10.5
	
Counterparts54
	
 

	
 
	
10.6
	
Headings54
	
 

	
 
	
10.7
	
Notices54
	
 

	
 
	
10.8
	
Governing Law55
	
 

	
 
	
10.9
	
Jurisdiction; Waiver of Jury Trial56
	
 

	
 
	
10.10
	
Amendments and Waivers56
	
 

	
 
	
10.11
	
Severability56
	
 

	
 
	
10.12
	
Expenses56
	
 

iii

 

 

	
 
	
10.13
	
Construction56
	
 

	
 
	
10.14
	
Incorporation of Exhibits, Annexes and Disclosure Schedule57
	
 

	
 
	
10.15
	
Waiver of Conflicts57
	
 

	
 
	
10.16
	
Pre-Closing Privileged Communications57
	
 

	
 
	
10.17
	
Specific Performance58
	
 

 

 

	
Annex I
	
Definitions 

	
Annex II
	
Net Working Capital Example

	
Annex III
	
Key Employees

	
Annex IV
	
Required Consents

	
Exhibit A
	
 Equity of the Sellers 

	
Exhibit B
	
 Trademarks 

	
Exhibit C
	
 Pro Rata Percentages

	
Exhibit D
	
Allocation Methodology

	
Exhibit E
	
Exceptions to the Sellers’ Representations and Warranties Concerning the Transaction

	
Exhibit F
	
Exceptions to the Buyer’s Representations and Warranties Concerning the Transaction

	
Exhibit G
	
Form of Trademark Assignment Agreement

	
Exhibit H
	
Form of Affiliate Real Property Lease 

	
Exhibit I
	
Form of Escrow Agreement

	
Exhibit J
	
Permitted Liens

	
Disclosure Schedule 
	
Exceptions to Representations and Warranties Concerning the Companies 

 

 

 

 

 

iv

 

 

EQUITY PURCHASE AGREEMENT

This EQUITY PURCHASE AGREEMENT (this “Agreement”) is entered into on October 1, 2020, by and among: (a) Skipper Marine Holdings, Inc., a Delaware corporation (“SM Holdings”), SSY Holdings, Inc., a Delaware corporation (“SSY Holdings”), Michael J. Pretasky, Sr. (“Pretasky”), Michael John Pretasky, Jr. 2014 Trust (“MJPJ Trust”), Mark Ellerbrock (“Ellerbrock”) and Robert Ross Tefft, Jr. (“Tefft” and collectively with Pretasky, MJPJ Trust and Ellerbrock, the “Individual Sellers” and together with SM Holdings and SSY, the “Sellers”); (b) Michael J. Pretasky, Jr., as the representative of the Sellers (the “Sellers’ Representative”); and (c) MarineMax, Inc., a Florida corporation (the “Buyer”).  The Sellers, Sellers’ Representative and the Buyer are referred to collectively in this Agreement as the “Parties” and each as a “Party.”

BACKGROUND

 

Pretasky, MJPJ Trust and Ellerbrock own all of the issued and outstanding equity of SM Holdings.

SM Holdings owns all of the issued and outstanding equity of Skipper Marine Corp., a Wisconsin corporation (“SMC”), Skipper Marine of Madison, Inc., a Wisconsin corporation (“SMMA”), Skipper Marine of Fox Valley, Inc., a Wisconsin corporation (“SMFV”), Skipper Bud’s of Illinois, Inc.,  an Illinois corporation (“SBI”), Skipper Marine of Chicago-Land, Inc., an Illinois corporation (“SMCL”), Skipper Marine of Michigan, Inc., a Michigan corporation (“SMMI”), and Skipper Marine of Ohio, LLC, an Ohio limited liability company (“SMO”).

Pretasky, MJPJ Trust, Ellerbrock and Tefft own all of the issued and outstanding equity of SSY Holdings.

SSY Holdings owns all of the issued and outstanding equity of Silver Seas Yachts, Inc., an Arizona corporation (“SSY”, and collectively with SMC, SMMA, SMFV, SBI, SMCL, SMMI and SMO, the “Companies” and each a “Company”).  

The ownership of the equity of the Companies (the “Equity”) is as set forth on Exhibit A to this Agreement. 

Additionally, SM Holdings owns the Marks set forth on Exhibit B to this Agreement (the “Trademarks”). 

This Agreement contemplates that the Buyer will purchase from the Sellers, and the Sellers will sell to the Buyer, the Equity and the Trademarks in return for the consideration specified in Article II below.  

Accordingly, in consideration of the above and the mutual promises made in this Agreement, and in consideration of the representations, warranties, and covenants contained in this Agreement, the Parties agree as follows.

1

 

TERMS

Article I
Definitions

Unless otherwise defined in this Agreement, capitalized terms used in this Agreement have the meanings specified in Annex I to this Agreement.

 

Article II
Purchase and Sale of the EQUITY and the TRADEMARKS

2.1Basic Transaction

. On and subject to the terms and conditions of this Agreement, the Buyer agrees to purchase from the Sellers, and the Sellers agree to sell to the Buyer all of the Equity and the Trademarks, free and clear of any Liens, for the consideration specified below in this Article II.  

2.2Purchase Price

.  In consideration for the sale of the Equity and the Trademarks pursuant to Section 2.1, the Buyer shall pay to the Sellers an aggregate amount equal to: (i) $55,000,000; plus (ii) the amount of the Estimated Closing Date Cash; plus (iii) the amount of the Estimated Closing Date Net Working Capital; less (iv) the amount of the Estimated Closing Date Indebtedness; and less (v) the Estimated Closing Date Company Expenses (with the results of items (i) through (v) being referred to in this Agreement as the “Preliminary Purchase Price”), less (vi) the Escrow Amount, less (vii) the [****] Holdback Amount, and less (viii) the [****] Holdback Amount (with the results of items (i) through (viii) being referred to in this Agreement as the “Closing Date Payment”).  The Closing Date Payment shall be allocated among the Sellers in proportion to their respective percentage ownership interests as set forth on Exhibit C (the “Pro Rata Percentages”).  The Escrow Amount will be deposited with the Escrow Agent.  The Buyer will hold back the [****] Holdback Amount and the [****] Holdback Amount.  Payments to be made by the Buyer pursuant to Section 2.2 shall be made by wire transfer of immediately available funds to one or more accounts, which account or accounts shall be designated by the Sellers’ Representative and Escrow Agent, as applicable, in writing to the Buyer not less than two Business Days prior to the Closing Date. 

 

2.3The Closing

.

(a)  The closing (the “Closing”) of the purchase and sale of the Equity and the Trademarks and the other transactions contemplated by this Agreement (the “Transaction”) shall take place by electronic means (in which separate counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument, will be delivered by DocuSign, a .pdf electronic mail exchange, or other electronic transmission of signature pages addressed to each Party’s counsel) on the date of this Agreement (the “Closing Date”) subject to the satisfaction or waiver of the respective obligations of the Parties under Article VI below. The Closing will be deemed to occur at 12:01 a.m. local time on the Closing Date for tax and accounting purposes.  

2

 

 

(b)At the Closing: (i) the Sellers will deliver to the Buyer the various certificates and documents referred to in Section 6.1 below; (ii) the Buyer will deliver to the Sellers the various certificates and documents referred to in Section 6.2 below.

2.4Net Working Capital, Cash, Company Expenses and Indebtedness Calculation and Purchase Price Adjustment

.  

(a)Estimate of Net Working Capital, Cash, Company Expenses and Indebtedness.  At least three Business Days prior to the Closing Date, the Sellers’ Representative has, in accordance with the historical principles, practices, methodologies, procedures and policies used by the Companies in connection with the preparation of and reflected and applied in the Financial Statements, prepared and delivered to the Buyer a good faith written estimate (the “Estimated Closing Statement”) of the Net Working Capital as of August 31, 2020 and the Cash, the Company Expenses and the Indebtedness of the Companies as of the Closing Date, together with reasonably detailed supporting documentation (with the good faith written estimate of the Net Working Capital, the Cash, the Company Expenses and the Indebtedness of the Companies as of the Closing Date being referred to as the “Estimated Closing Date Net Working Capital,” the “Estimated Closing Date Cash,” the “Estimated Closing Date Company Expenses,” and the “Estimated Closing Date Indebtedness,” respectively).  The Sellers’ Representative consulted with the Buyer regarding the preparation of the Estimated Closing Statement, including any estimates of such amounts.  

(b)Closing Statement.  Within 90 days after the Closing Date, the Buyer shall, in accordance with the historical principles, practices, methodologies, procedures and policies used by the Companies in connection with the preparation of and reflected and applied in the Financial Statements, prepare and deliver to the Sellers’ Representative a calculation of the Net Working Capital, the Cash, the Company Expenses and the Indebtedness of the Companies, in each case as of the Closing Date (determined on a pro forma basis as though the Buyer and the Sellers had not consummated the Transaction), together with reasonably detailed supporting documentation (the “Draft Closing Statement”). Upon reasonable advance notice, the Sellers’ Representative shall have full access to all information (including books and records of the Companies and working paper used for the preparation of the Draft Closing Statement) during normal business hours.  The Sellers’ Representative shall deliver a certificate setting forth their acceptance of, or objections to, the Draft Closing Statement within 60 days of receipt of such Draft Closing Statement.  If there are no objections, the Draft Closing Statement shall be deemed accepted by the Sellers.  In the event that the Sellers’ Representative object to the Draft Closing Statement, the Buyer and the Sellers’ Representative shall attempt in good faith to promptly resolve any such objections, and in the event that the Buyer and the Sellers’ Representative are unable to resolve such objections within 30 days after the Buyer’s receipt of the Sellers’ Representative’s written objections to the Draft Closing Statement, such dispute shall be governed by Section 2.4(c) below.  The Draft Closing Statement, upon its acceptance by the Sellers’ Representative or as agreed between the Buyer and the Sellers’ Representative or as determined after any disputes have been resolved in accordance with Section 2.4(c) below, shall be referred to as the “Closing Statement,” and such statement shall include the Net Working Capital, Cash, the Company Expenses and the Indebtedness of the Companies, in each case as of the Closing Date (the “Closing Date Net Working Capital,” “Closing Date Cash,” “Closing Date Company Expenses,” and “Closing Date Indebtedness,” respectively).

3

 

 

(c)Resolutions of Objections.  If the Buyer and the Sellers’ Representative are unable to resolve any objections to any statement prepared pursuant to this Section 2.4, either the Buyer or the Sellers’ Representative may refer the issue(s) to [****] (the “Independent Accountant”) (unless another Independent Accountant is agreed to in writing) to resolve any such remaining objections acting as independent expert.  The determination of any Independent Accountant so selected will be set forth in writing and will be conclusive and binding upon the Buyer and the Sellers. When making such determinations, the Independent Accountant shall (i) use only the historical principles, practices, methodologies, procedures and policies used by the Companies in connection with the preparation of and reflected and applied in the Financial Statements, (ii) not assign to an item in dispute a value that is (A) greater than the greatest value for such item assigned by the Buyer, on the one hand, or the Sellers’ Representative, on the other hand, (B) less than the smallest value for such item assigned by the Buyer, on the one hand, or the Sellers’ Representative, on the other hand, (iii) make its determination(s) based on this Agreement and the written submissions of the Buyer and the Sellers’ Representatives (which will be in accordance with the guidelines and procedures set forth in this Agreement) (i.e. and not an independent review by the Independent Accountant) and (iv) not allow a party or its respective representatives to have any ex parte conferences, conversations, testimony, depositions, discovery or communications with the Independent Accountant.  Each Party shall be permitted to submit such data, documents and information to the Independent Accountant as such Party deems appropriate.  In the event the Buyer or the Sellers’ Representative submit any unresolved objections to an Independent Accountant for resolution as provided in this Section 2.4(c), the Buyer and the Sellers will share responsibility for the fees and expenses of the Independent Accountant as follows:

(i)if the Independent Accountant resolves all of the remaining objections in favor of the Buyer, the Sellers will be responsible for all of the fees and expenses of the Independent Accountant;

(ii)if the Independent Accountant resolves all of the remaining objections in favor of the Sellers, the Buyer will be responsible for all of the fees and expenses of the Independent Accountant; and

(iii)if the Independent Accountant resolves some of the remaining objections in favor of the Buyer and the rest of the remaining objections in favor of the Sellers, the Sellers will be responsible for the fees and expenses of the Independent Accountant associated with any objections resolved in favor of the Buyer and the Buyer will be responsible for the fees and expenses of the Independent Accountant associated with any objection resolved in favor of the Sellers.  Purely by way of illustration, if the items in dispute were to amount to $1,000 and the Independent Accountant was to award $600 in favor of the Sellers’ position, 60% of the cost of its review would be borne by the Buyer and 40% of the cost of its review would be borne by the Sellers.  

(d)Adjustment Payment.  The Preliminary Purchase Price will be adjusted as follows:  

(i)The “Final Purchase Price” means: (a) $55,000,000, plus (b) the amount of the Closing Date Cash of the Companies, plus (c) the amount of the Closing Date Net 

4

 

 

Working Capital of the Companies, less (d) the amount of the Closing Date Indebtedness of the Companies, and less (e) the Closing Date Company Expenses.

(ii)If the Final Purchase Price exceeds the Preliminary Purchase Price, then the Buyer shall, within three Business Days after the date on which the Final Purchase Price is finally determined pursuant to this Section 2.4, pay to the Sellers the amounts of such excess by wire transfer or delivery of immediately available funds to one or more accounts designated by the Sellers’ Representative for distribution to the Sellers in accordance with the Pro Rata Percentages. 

(iii)If the Final Purchase Price is less than the Preliminary Purchase Price, then the Sellers shall, within three Business Days after the date on which the Final Purchase Price is finally determined pursuant to this Section 2.4, pay to the Buyer the amount of such difference by wire transfer or delivery of immediately available funds to an account designated by the Buyer based on their Pro Rata Percentages.  

2.5Earnout Payments

.  

(a)As additional consideration for the Equity, at such times as provided in this Section 2.5(a), the Buyer shall pay to the Sellers (if any, the “Earnout Payments”): 

(i)$1,500,000, if the Pre-Tax Earnings for the First Calculation Period is equal to or greater than [****], plus 150% of the amount by which the Pre-Tax Earnings for the First Calculation Period exceeds [****]; provided, however, that in no event will such Earnout Payment for the First Calculation Period exceed $3,000,000; 

(ii)$1,500,000, if the Pre-Tax Earnings for the Second Calculation Period is equal to or greater than [****], plus 150% of the amount by which the Pre-Tax Earnings for the Second Calculation Period exceeds [****]; provided, however, that in no event will such Earnout Payment for the Second Calculation Period exceed $4,000,000; 

(iii)$1,500,000, if the Pre-Tax Earnings for the Third Calculation Period is equal to or greater than [****], plus 150% of the amount by which the Pre-Tax Earnings for the Third Calculation Period exceeds [****]; 

(iv)$1,500,000, if the Pre-Tax Earnings for the Fourth Calculation Period is equal to or greater than [****], plus 150% of the amount by which the Pre-Tax Earnings for the Fourth Calculation Period exceeds [****]; and

(v)$1,500,000, if the Pre-Tax Earnings for the Fifth Calculation Period is equal to or greater than [****], plus 150% of the amount by which the Pre-Tax Earnings for the Fifth Calculation Period exceeds [****].

In the event that the Earnout Payment is capped for the First Calculation Period or the Second Calculation Period, the excess Pre-Tax Earnings that caused the Earnout Payment to be capped will be carried over to the Third Calculation Period.  However, in no event shall the Buyer be obligated to pay the Sellers more than $9,250,000 in the aggregate for all Calculation Periods (the “Cumulative Maximum Earnout Payment”).  For the avoidance of doubt, except as otherwise provided in this Agreement no Earnout Payment will be made if the targets described above are 

5

 

 

not met.  For example, if in the First Calculation Period Pre-Tax Earnings does not equal or exceed [****], no payment shall be made. 

(b)Procedures Applicable to Determination of the Earnout Payments.

(i)On or before the date which is 60 days after the last day of each Calculation Period, the Buyer shall prepare and deliver to the Sellers’ Representative a written statement (in each case, an “Earnout Payment Notice”) setting forth in reasonable detail its determination of Pre-Tax Earnings for the applicable Calculation Period and its calculation of the resulting Earnout Payment.

(ii)The Sellers’ Representative shall have 20 days after receipt of the Earnout Payment Calculation Notice for each Calculation Period (in each case, the “Review Period”) to review the Earnout Payment Notice. During the Review Period, the Sellers’ Representative shall have the right to inspect the Buyer’s books and records during normal business hours at the Buyer’s offices, upon reasonable prior notice and solely for purposes reasonably related to the determinations of Pre-Tax Earnings and the resulting Earnout Payment. Prior to the expiration of the Review Period, the Sellers’ Representative may object to the Earnout Payment calculation set forth in the Earnout Payment Notice for the applicable Calculation Period by delivering a written notice of objection to the Buyer. Any objection shall specify the items in the applicable Earnout Payment disputed by the Sellers’ Representative and shall describe in reasonable detail the Basis for such objection, as well as the amount in dispute. If the Sellers’ Representative fail to deliver an objection to the Buyer prior to the expiration of the Review Period, then the Earnout Payment set forth in the Earnout Payment Notice shall be final and binding on the Parties. If the Sellers’ Representative timely deliver an objection, the Buyer and the Sellers’ Representative shall negotiate in good faith to resolve the disputed items and agree upon the resulting amount of the Pre-Tax Earnings and the Earnout Payment for the applicable Calculation Period. If the Buyer and the Sellers’ Representative are unable to reach agreement within 30 days after such an objection has been given, such dispute shall be governed in accordance with the procedures set forth in Section 2.4(c), as applied to a dispute regarding the Earnout Payment Notice.

(c)Independence of Earnout Payments. The Buyer’s obligation to pay each of the Earnout Payments to the Sellers in accordance with Section 2.5(a) is an independent obligation of the Buyer and is not otherwise conditioned or contingent upon the satisfaction of any conditions precedent to any preceding or subsequent Earnout Payment and the obligation to pay an Earnout Payment to the Sellers shall not obligate the Buyer to pay any preceding or subsequent Earnout Payment. 

(d)Timing of Payment of Earnout Payments. Subject to Section 2.5(f), any Earnout Payment that the Buyer is required to pay pursuant to Section 2.5(a) shall be paid in full no later than five Business Days following the date upon which the determination of Pre-Tax Earnings for the applicable Calculation Period becomes final and binding upon the Parties as provided in Section 2.5(b)(ii) (including any final resolution of any dispute raised by the Sellers’ Representative in an objection to an Earnout Payment Notice).  The Buyer shall pay to the Sellers’ Representative for distribution to the Sellers the applicable Earnout Payment in cash by wire transfer of immediately available funds to one or more bank accounts designated by the Sellers’ 

6

 

 

Representative at least three Business Days prior to the date of payment in accordance with the Pro Rata Percentages. 

(e)Acceleration upon the Buyer’s Election. At any time after the Closing Date, the Buyer may, in its sole discretion, elect to make a payment to Sellers in the amount equal to (i) the Cumulative Maximum Earnout Payment less (ii) the aggregate sum of all Earnout Payments made prior to such date which, upon payment thereof, shall fully release and discharge the Buyer, its successors and assigns from any further liability or obligation pursuant to this Section 2.5.

(f)Post-Closing Operation of the Companies. 

(i)Subject to the terms of this Agreement, subsequent to the Closing, the management of the Companies during the Calculation Periods will be consistent with the Buyer’s and its Affiliates policies and procedures as applied across all of the Buyer’s and its Affiliates businesses, including, but not limited to, those relating to internal controls, cash management, corporate governance, audit, legal and regulatory matters.  Subject to the above and during the Calculation Periods, the Buyer agrees to allow Michael J. Pretasky, Jr. (“MJPJ”) to directly oversee and operate the Companies on a day-to-day basis consistent with and subject to the terms of his employment offer from the Buyer, including terms regarding his employment (which the Buyer agrees that during the Calculation Periods, [****]) and during his employment with the Buyer, MJPJ [****] set forth on Annex III (the “[****]”) that he determines are critical to the ongoing success of the Companies.  In no event shall MJPJ act in a manner that disadvantages the long-term growth of the Companies and their Affiliates in favor of short-term earnings or achieving thresholds for earning an Earnout Payment.  In no event shall the Buyer or its Affiliates take, or fail to take, any action primarily intended to interfere with the calculation of, or negatively impact, the Earnout Payments or the Sellers’ ability to achieve any Earnout Payment or to distort unfairly and/or adversely affect the financial results of the Companies (including, changing accounting methods or practices, ceasing carrying on the business of the Companies in whole or in part, selling, liquidating or winding down the business of the Companies, shifting any Pre-Tax Earnings to any other Person during the Calculation Periods, shifting costs or expenses of any Affiliate of the Buyer to any of the Companies, bundling or transferring pricing, discounting, or implementing purchasing or supplying programs, or closing any of the locations currently used by the Sellers in the operation of the Companies, unless agreed to by the Parties); it being understood that any action required by Applicable Law shall not be deemed to have been primarily intended to interfere with any Earnout Payments. If after the Closing, the Buyer and MJPJ mutually agree that MJPJ should take on management responsibility for any location other than those historically operated by the Companies, the Buyer and MJPJ will mutually agree on fair compensation for the additional responsibilities, separate and apart from the Earnout Payments. 

(ii)The Buyer will at all times during the Calculation Periods record, retain and maintain all records, data and other information reasonably necessary to calculate Pre-Tax Earnings in accordance with the Buyer’s accounting principles, practices, methodologies, procedures and policies used by the Buyer, and maintain separately identifiable financial results and books and records for the Companies for purposes of determining Earnout Payments due and owning (or that may become due and owing).  The Parties agree that if the Buyer combines the business operations of [****] with the Buyer’s similar business operations in [****] ([****]”): (A) any negative pre-tax earnings resulting from the Buyer’s [****] operations will not be included 

7

 

 

in the determination of the Pre-Tax Earnings of [****] for purposes of calculating the Earnout Payments; (B) any positive pre-tax earnings resulting from the Buyer’s [****] Operations shall be included in the determination of the Pre-Tax Earnings of [****] for purposes of calculating the Earnout Payments; and (C) the pre-tax earnings (whether positive or negative) of [****] shall be included in the determination of the Pre-Tax Earnings of [****] for the purposes of calculating the Earnout Payments.

(iii)Subject to inventory availability (provided that the Companies’ allocation is consistent with the Buyer’s company-wide inventory practices) and compliance with the Buyer’s standard pricing structure, Buyer will allow the Companies to sell all of Buyer’s boat lines that Buyer is able to provide access to based upon its agreements with manufacturers, [****], and the net profit from such sales (as calculated in accordance with the Buyer’s accounting principles, practices, methodologies, procedures and policies) shall be included for purposes of determining Pre-Tax Earnings and calculating Earnout Payments. 

(iv)The Buyer will at all times during the Calculation Periods supply the Companies with adequate working capital to fund operations commensurate with the Buyer’s historical practices with respect to its other boat lines.

(v)This Agreement is not intended to, and does not, create or impose any fiduciary duty on any of the Parties or their respective Affiliates. Further, each Party waives any fiduciary duties that, absent such waiver, may be implied by Applicable Law, and in doing so, recognizes, acknowledges and agrees that the duties and obligations of the Parties to each other are only as expressly set forth in this Agreement.  Notwithstanding anything to the contrary set forth in this Agreement, the Sellers acknowledge and agree that: (A) there is no assurance that it will receive any Earnout Payments under this Agreement or otherwise, and (B) neither the Buyer nor any of its Affiliates have promised or projected any amounts to be received by the Sellers under this Agreement as Earnout Payments or otherwise. 

(g)Right of Set-off. The Buyer shall have the right to withhold and set off against any amount otherwise due to be paid pursuant to this Section 2.5 the amount of any amounts to which any Buyer Indemnitee may be entitled under Section 7.2 of the Agreement.

(h)No Security.  The Parties understand and agree that: (i) the contingent rights to receive any Earnout Payment shall not be represented by any form of certificate or other instrument, are not transferable, except by operation of Applicable Laws relating to descent and distribution, divorce and community property, and do not constitute an equity or ownership interest in the Companies, the Buyer or any of its Affiliates; (ii) the Sellers shall not have any rights as a securityholder of the Companies, the Buyer or any of its Affiliates as a result of the Sellers’ contingent right to receive any Earnout Payment under this Agreement; and (iii) no interest is payable with respect to any Earnout Payment.

2.6Withholding Rights

. The Buyer and any other applicable withholding agent shall be entitled to deduct and withhold from the consideration otherwise payable to or for the benefit of any Person pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of Tax law.  Any amounts 

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withheld in accordance with this Section 2.6 shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

2.7Allocation of Purchase Price

. The Sellers’ Representative, the Sellers and the Buyer agree that: (a) the Preliminary Purchase Price, the Final Purchase Price, the Liabilities of the Companies (plus other relevant items treated as consideration for income tax purposes), the Earnout Payments and all adjustments to the preceding made pursuant to the terms of this Agreement shall be allocated for all Tax purposes among the assets deemed to be sold by each of SM Holdings and SSY Holdings and (b) this allocation shall be in accordance with the allocation methodology attached as Exhibit D attached to this Agreement (the “Allocation Methodology”).  Within thirty (30) days after the determination of the Final Purchase Price and any Earnout Payments (or any subsequent adjustments thereto), the Sellers’ Representative shall prepare a purchase price allocation in accordance with the methodology set forth on Exhibit D for review and approval by the Buyer.  Following receipt thereof, Buyer shall have a period of ten (10) days to provide Seller’s Representative with a statement of any disputed items with respect to such allocation.  In the event Buyer provides such statement and Buyer and Sellers’ Representative are unable to reach agreement with respect to any disputed items within a period of ten days after Seller’s Representative’s receipt of such statement, all such disputed items shall be submitted to the Independent Accountant for final resolution.  The allocation ultimately agreed upon by Buyer and Sellers’ Representative under this Section 2.7 shall be referred to herein as the “Purchase Price Allocation”.  Neither the Sellers’ Representative, the Sellers nor the Buyer shall take any position (whether in audits, Tax Returns or otherwise) that is inconsistent with such Purchase Price Allocation (or amended Purchase Price Allocation, if applicable) unless required to do so by Applicable Law.  The Buyer and the Companies shall report the allocation of the total consideration among the Companies assets in a manner consistent with the final Purchase Price Allocation and act in accordance with the final Purchase Price Allocation in the preparation and timely filing of all Tax Returns (including filing IRS Form 8594 with their respective federal income Tax Returns for the taxable year that includes the Closing Date).  The Buyer and the Sellers’ Representative agree to promptly provide the other parties with any reasonable additional information with respect to the Buyer or the Sellers, as the case may be, and reasonable assistance required to complete IRS Form 8594 or to compute Taxes arising in connection with (or otherwise affected by) the transactions contemplated by this Agreement.  Each Party will promptly inform the others of any challenge by any Governmental Authority to any allocation made pursuant to this Section 2.7 and the Buyer and the Sellers’ Representative agree to consult with one another and to keep each other fully informed with respect to the status of, and any discussion, proposal or submission with respect to, such challenge and, provided further, in no event will the Buyer or the Companies settle or otherwise resolve any such challenge without the prior written consent of the Sellers’ Representative, such consent not to be unreasonably withheld or delayed.

Article III
Representations and Warranties Concerning the Transaction

3.1The Sellers’ Representations and Warranties

. Each of the Sellers, jointly and severally, represents and warrants to the Buyer that the statements contained in this Section 3.1 are correct and complete as of the Closing Date with respect to itself, himself or herself, except as set forth in Exhibit E attached to this Agreement. 

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(a)Organization of the Sellers.  SM Holdings is duly organized, validly existing, and in good standing or has active status (or the equivalent) under the laws of the jurisdiction of its incorporation or other formation.  SSY Holdings is duly organized, validly existing, and in good standing or has active status (or the equivalent) under the laws of the jurisdiction of its incorporation or other formation.

(b)Authorization of Transaction.  Each of the Sellers has full power and authority (including full corporate or other entity power and authority) to execute and deliver this Agreement and to perform its or his obligations under this Agreement.  This Agreement constitutes the valid and legally binding obligation of each of the Sellers, enforceable in accordance with its terms and conditions.  None of the Sellers need to give any notice to, make any filing with, or obtain any Governmental Authorization of any Governmental Authority in Order to consummate the Transaction.  The execution, delivery, and performance of this Agreement and all other agreements contemplated by this Agreement have been duly authorized by each of the Sellers.

(c)Non-contravention.  Neither the execution and delivery of this Agreement, nor the consummation of the Transaction, will: (i) violate any constitution, statute, regulation, rule, injunction, judgment, Order, decree, ruling, charge, or other restriction of any Governmental Authority to which any of the Sellers is subject or any provision of its Organizational Documents; (ii) except as set for in Section 4.3 of the Disclosure Schedule, 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 agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party or by which it is bound or to which any of its assets are subject; or (iii) result in the imposition or creation of a Lien upon or with respect to the Equity or the Trademarks.

(d)Brokers’ Fees.  None of the Sellers has any Liability to pay any fees or commissions to any broker, finder, or agent with respect to the Transaction.

(e)The Equity.  The Sellers hold of record and own beneficially all of the Equity, all free and clear of any restrictions on transfer (other than any restrictions under the Organizational Documents of the Companies, the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands.  No Seller is a party to any option, warrant, purchase right, or other contract or commitment (directly or indirectly, other than this Agreement) that could require such Seller to sell, transfer, or otherwise dispose of any Equity of any of the Companies.  No Seller is a party to any voting trust, proxy, or other agreement or understanding (directly or indirectly) with respect to the voting of any Equity of any of the Companies.  Following the Closing Date, the Buyer will own all of the Equity of the Companies free and clear of any restrictions on transfer (other than any restrictions under the Organizational Documents of the Companies, the Securities Act and state securities laws), Taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands.  

(f)The Trademarks.  SM Holdings owns, free and clear of all Liens, the Trademarks.  None of the Trademarks is invalid or unenforceable in whole or in part and SM Holdings has taken all action necessary, performed all customary acts and paid all fees and Taxes (to the extent applicable) required to protect and maintain in full force and effect the Trademarks. 

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The Trademarks do not infringe, misappropriate or otherwise violate the Intellectual Property of any Person.  There have been no claims or demands asserted in writing (or to the Knowledge of SM Holdings, otherwise) by any other Person pertaining to any of the Trademarks; and no Proceeding has been instituted, or is pending or threatened, which challenges the validity or enforceability of, or SM Holdings’ rights in or ownership of, or alleges any infringement in respect of, the Trademarks.

3.2The Buyer’s Representations and Warranties

. The Buyer represents and warrants to the Sellers that the statements contained in this Section 3.2 are correct and complete as of the Closing Date, except as set forth in Exhibit F.

(a)Organization of the Buyer.  The Buyer is duly organized, validly existing, and has active status under the laws of the State of Florida.

(b)Authorization of Transaction.  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.  This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable in accordance with its terms and conditions.  The Buyer need not give any notice to, make any filing with, or obtain any Governmental Authorization of any Governmental Authority in order to consummate the Transaction.  The execution, delivery, and performance of this Agreement and all other agreements contemplated by this Agreement have been duly authorized by the Buyer.

(c)Non-contravention.  Neither the execution and delivery of this Agreement, nor the consummation of the Transaction, will: (i) violate any constitution, statute, regulation, rule, injunction, judgment, Order, decree, ruling, charge, or other restriction of any government, Governmental Authority, or court to which the Buyer is subject or any provision of its Organizational Documents; 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 agreement, contract, lease, license, instrument, or other arrangement to which the Buyer is a party or by which it is bound or to which any of its assets are subject.  

(d)Brokers’ Fees.  The Buyer has no Liability to pay any fees or commissions to any broker, finder, or agent with respect to the Transaction.

(e)Investment.  The Buyer is not acquiring the Equity with a view to or for sale in connection with any distribution of the Equity.

Article IV
Representations and Warranties Concerning the Companies 

 Each of the Sellers, jointly and severally, represents and warrants to the Buyer that the statements contained in this Article IV are correct and complete as of the Closing Date, except as otherwise stated in this Agreement or set forth in the disclosure schedule delivered by the Sellers to the Buyer on the Closing Date (the “Disclosure Schedule”).  The Disclosure Schedule shall be arranged in paragraphs corresponding to the lettered and numbered paragraphs contained in this Article IV and where a particular representation and warranty has subparts or subsections, noting 

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which specific subpart or subsection is being excepted.  The schedules and information set forth in the Disclosure Schedules refer to the paragraph of this Agreement to which such schedule and information is responsive, and each such schedule and information shall be deemed to have been disclosed with respect to all other paragraphs of this Agreement to the extent the same is reasonably apparent on its face without any further inquiry.  All capitalized terms used in the Disclosure Schedules and not otherwise defined therein shall have the same meanings as are ascribed to such terms in this Agreement.  

4.1Organization, Qualification, and Corporate Power

.  Each of the Companies is a corporation duly organized, validly existing, and is in good standing or has active status (or the equivalent) under the laws of the jurisdiction of its incorporation.  Each of the Companies is duly authorized to conduct business and is in good standing or has active status (or the equivalent) under the laws of each jurisdiction where such qualification is required.  Each of the Companies has full corporate power and authority and all licenses and Governmental Authorizations necessary to carry on the businesses in which it is engaged and to own and use the properties currently owned and used by it.  Section 4.1 of the Disclosure Schedule lists the directors, managers and officers (or their equivalents) of each of the Companies.  The Sellers have delivered to the Buyer correct and complete copies of the Organizational Documents for each of the Companies (as amended to date).  The minute books (containing the records of meetings of the stockholders, members, board of directors, any committees of the board of directors, and managers, as applicable), the stock or membership interest certificate books, and the stock or membership interest record books of each of the Companies (as applicable for each Company under the relevant jurisdiction) are correct and complete in all material respects.  None of the Companies is in default under or in violation of any provision of its Organizational Documents.

4.2Capitalization

. 

(a)Section 4.2(a) of the Disclosure Schedule sets forth the authorized shares of capital stock or membership interest, the outstanding issued shares (where applicable) of capital stock or membership interests, and the record owners of such outstanding shares (where applicable) of capital stock or membership interests of each of the Companies.  All of the issued and outstanding equity (where applicable) of the Companies have been duly authorized and are validly issued, fully paid, and non-assessable. 

(b)Except as provided in Section 4.2(b) of the Disclosure Schedule, (i) there are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other contracts or commitments that could require any of the Companies to issue, sell, or otherwise cause to become outstanding any of its equity; (ii) there are no outstanding or authorized stock or membership interest appreciation, phantom stock, profit participation, or similar rights with respect to any of the Companies; and (iii) there are no voting trusts, proxies, or other agreements or understandings with respect to the voting of the equity of any of the Companies.

4.3Non-contravention

. Except as set forth in Section 4.3 of the Disclosure Schedule, neither the execution, delivery or performance of this Agreement, nor the consummation of the Transaction, will: (i) violate any constitution, statute, regulation, rule, injunction, judgment, Order, decree, ruling, charge, or other restriction of any government, Governmental Authority, or court 

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to which any of the Companies is subject or any provision of the Organizational Documents of any of the Companies; 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 Material Contract to which any of the Companies 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 Lien upon any of its assets).  Except as set forth in Section 4.3 of the Disclosure Schedule: (i) none of the Companies needs to give any notice to, make any filing with, or obtain any authorization, consent, or approval or any third party in connection with the consummation of the Transaction; or (ii) require the Companies to give any notice to, make any filing with, or obtain any authorization of any Governmental Authority; in each case, in order for the Parties to consummate the Transaction.

4.4Brokers’ Fees

. None of the Companies has any Liability to pay any fees or commissions to any broker, finder, or agent with respect to the Transaction.

4.5Title to Assets

. Except as set forth on Section 4.5 of the Disclosure Schedule, each of the Companies has good and marketable title to, or a valid leasehold interest in, or other valid right to use the properties and assets used by it in connection with its businesses, including, but not limited to, the properties and assets located on the Real Property, or shown on the Most Recent Balance Sheet or acquired after the Most Recent Fiscal Year End, free and clear of all Liens, other than Permitted Liens, and except for properties and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet.  Such assets (including Intellectual Property) and properties are sufficient for each of the Companies to operate their businesses as currently conducted.  Except as set forth on Section 4.5 of the Disclosure Schedule, none of the assets used in the business of each relevant Company will, as of the Closing Date, be owned by, or in any way will be licensed or leased from, the Sellers or any Affiliate of the Sellers (other than the Companies).  

4.6Subsidiaries

. Except as set forth on Section 4.6 of the Disclosure Schedule: (i) there are no Subsidiaries of the Companies; (ii) none of the Companies controls, directly or indirectly, or has any direct or indirect equity participation in any corporation, partnership, trust, or other business association that is not a Subsidiary of the respective Company; and (iii) none of the Companies owns or has any right to acquire, directly or indirectly, any outstanding capital stock of, or other equity interests in, any Person.

4.7Financial Statements

.

(a)Attached to Section 4.7(a) of the Disclosure Schedule are the following financial statements for each of the Companies (collectively the “Financial Statements”): (i) balance sheets as of and for the fiscal year ended December 31, 2019, prepared for the purposes of the Transaction (the “Most Recent Fiscal Year End”); and (ii) balance sheets (the “Most Recent Financial Statements”) as of and for the eight (8) months ended August 31, 2020 (the “Most Recent Fiscal Month End”). 

(b)Except as set forth in Section 4.7(b) of the Disclosure Schedule, the Financial Statements (including the notes to the Financial Statements) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered, present fairly 

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the financial condition of the Companies as of such dates and the results of operations of the Companies for such periods in all material respects, are correct and complete, and are consistent with the books and records of the Companies (which books and records are correct and complete in all material respects), subject in the case of the Most Recent Financial Statements to the absence of footnotes and normal year-end adjustments. No financial statements of any other Person are required by GAAP to be included or reflected in the Financial Statements. 

(c)The Companies make and keep books, records and accounts which: (i) accurately and fairly reflect in all material respects the transactions and dispositions of their assets; (ii) have been maintained in accordance with GAAP and good business practices on a Basis consistent with prior years; (iii) are stated in reasonable detail and reflect the transactions of the Companies; (iv) constitute the Basis for the Financial Statements; and (v) accurately and fairly reflect the assets and liabilities of the Companies.  The Companies maintain systems of accounting procedures sufficient to provide reasonable assurances that: (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit the preparation of financial statements and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

4.8Events Subsequent to Most Recent Fiscal Year End

.  Except as set forth in Section 4.8 of the Disclosure Schedule, since the Most Recent Fiscal Year End: 

(a)there has not been any event, occurrence or development that has caused, or would reasonably be expected to cause, individually or in the aggregate, a Material Adverse Change;

(b)none of the Companies has sold, leased, transferred, or assigned any of its assets, tangible or intangible, other than for a fair consideration in the Ordinary Course of Business;

(c)none of the Companies has imposed any Liens upon any of its assets, other than Permitted Liens, tangible or intangible;

(d)none of the Companies has made any capital expenditure (or series of related capital expenditures) either involving more than $50,000 each or outside the Ordinary Course of Business;

(e)none of the Companies has issued any note, bond, or other debt security or created, incurred, assumed, or guaranteed any Indebtedness either involving more than $50,000 singly or $100,000 in the aggregate;

(f)there has been no change made or authorized in the Organizational Documents of any of the Companies;

(g)none of the Companies has issued, sold, or otherwise disposed of any of its equity interests, or granted any options, warrants, or other rights to purchase or obtain (including upon conversion, exchange, or exercise) any of its equity interests;

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(h)none of the Companies has declared, set aside, or paid any dividend or made any distribution with respect to its equity interests (whether in cash or in kind) or redeemed, purchased, or otherwise acquired any of its equity interests;

(i)none of the Companies has adopted, amended, modified, or terminated any bonus, profit sharing, incentive, severance, or other material plan, contract, or commitment for the benefit of any of its directors, officers, and employees (or taken any such action with respect to any other Employee Benefit Plan);

(j)neither SM Holdings, SSY Holdings nor any of the Companies has: (A) made any change in its Tax reporting or accounting principles; (B) settled or compromised any Tax Liability; (C) made, changed or rescinded any Tax election; (D) surrendered any right in respect of Taxes (including any right to claim a Tax abatement, reduction, exemption, credit or refund); (E) filed any amended Tax Return; or (F) consented to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes; and

(k)none of the Companies has committed to any of the above.

4.9Undisclosed Liabilities; Indebtedness

.  

(a)None of the Companies has any material Liability, except for: (i) Liabilities set forth on Section 4.9(a) of the Disclosure Schedule, (ii) Liabilities set forth on the face of the Most Recent Balance Sheet; (iii) Liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law) (iv) executory Contracts not yet fully performed, and as to which the Company is not in breach or violation; and (v) Liabilities with a value not exceeding $100,000 in the aggregate.

(b)Section 4.9(b) of the Disclosure Schedule sets forth a detailed and complete list of all of the outstanding Indebtedness of the Companies as of the Closing Date.

4.10Legal Compliance

.  Except for Environmental, Health and Safety Matters which are addressed in Section 4.23: 

(a)(i) Each of the Companies and their respective Predecessors and Affiliates has within the past five years complied in all material respects with all Applicable Laws, and there is no charge, Proceeding or investigation by any Governmental Authority with respect to a violation or alleged violation of any Applicable Law that is now pending or has been asserted or threatened with respect to any of the Companies and none of the Companies has made any voluntary disclosure with respect to a possible violation of any Applicable Law; (ii) no Proceeding has been filed or commenced against any of the Companies or their respective Predecessors within the past five years alleging any failure to so comply; (iii) none of the Companies, nor, to the Knowledge of the Sellers, any officers, directors, employees or agents of the Companies (or members, distributors, representatives or other Persons acting on the express, implied or apparent authority of the Companies) has offered, paid, promised to pay or authorized the payment, directly or indirectly through any other Person, of anything of value to any Person acting on behalf of any Governmental Authority (including employees of state-owned entities) or political party or 

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candidate for public office, for the purpose of influencing any act or decision of such Person or of the Governmental Authority to obtain or retain business; and (iv) there is no charge, Proceeding or investigation by any Governmental Authority with respect to a violation or alleged violation of any anti-corruption law that is now pending or has been asserted or threatened with respect to any of the Companies and none of the Companies has made any voluntary disclosure with respect to a possible violation of any anti-corruption law.  Notwithstanding the above, the Sellers are in compliance in all material respects with all COVID-19 Measures enacted in response to the COVID-19 pandemic, and have used reasonable commercial efforts to implement health and safety protocols at all worksites under the control of Seller, consistent with guidance issued by applicable United States federal, state and local health authorities.

(b)Section 4.10(b) of the Disclosure Schedule lists each material Governmental Authorization that is held by each of the Companies or that otherwise relates to the business of, or to any assets owned or used by, the Companies.  Each Governmental Authorization listed in Section 4.10(b) of the Disclosure Schedule is valid and in full force and effect.  No Company is in breach of or default with the terms of any Governmental Authorization listed in Section 4.10(b) of the Disclosure Schedule.  Within the past five years, none of the Companies has received any notice or other communication from any Governmental Authority or 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.  All fees and charges due and payable with respect to such Governmental Authorizations listed in Section 4.10(b) of the Disclosure Schedule have been paid in full.  All applications required to have been filed for the renewal or reissuance of the Governmental Authorizations listed in Section 4.10(b) of the Disclosure Schedule have been duly filed on a timely basis with the appropriate Governmental Authorities and 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.  The Governmental Authorizations listed in Section 4.10(b) of the Disclosure Schedule constitute all material Governmental Authorizations necessary or advisable to permit each of the Companies lawfully to continue to conduct their business in the manner in which it currently conducts such business, and to own and use its assets in the manner in which it currently owns and uses such assets.

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4.11Tax Matters

.

(a)Except as set forth on Section 4.11(a) of the Disclosure Schedule: (i) each of SM Holdings, SSY Holdings and the Companies has complied in all material respects with all Applicable Laws related to Taxes; (ii) each of SM Holdings, SSY Holdings and the Companies has filed on a timely basis all Tax Returns that it was required to file under Applicable Laws; (iii) all such Tax Returns were correct and complete in all material respects and were prepared in compliance with all Applicable Laws; (iv) all Taxes due and owed by each of SM Holdings, SSY Holdings and the Companies (whether or not shown or required to be shown on any Tax Return) have been paid (or adequately reserved for if such Taxes are not yet due and payable); (v) neither SM Holdings, SSY Holdings nor any of the Companies currently is the beneficiary of any extension of time within which to file any Tax Return; (vi) no written claim has ever been made by an authority in a jurisdiction where SM Holdings, SSY Holdings or any of the Companies does not file Tax Returns that SM Holdings, SSY Holdings or any of the Companies is or may be subject to taxation by that jurisdiction; and (vii) there are no Liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of SM Holdings, SSY Holdings or the Companies.

(b)Except as set forth on Section 4.11(b) of the Disclosure Schedule, each of the Companies has withheld from its employees, independent contractors, creditors, shareholders, members and third parties and timely paid to the appropriate Governmental Authority proper and accurate amounts in all material respects required to have been withheld or paid over for all periods ending on or before the Closing Date in compliance with all Tax withholding and remitting provisions of Applicable Laws and has complied in all material respects with all Tax information reporting provisions of all Applicable Laws.  None of the Companies has 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.

(c)No Company expects any Governmental Authority to assess any additional Taxes for any period with respect to which Tax Returns have been filed.  No tax audits or administrative or judicial Tax Proceedings are pending or being conducted with respect to SM Holdings, SSY Holdings or the Companies.  Except as set forth on Section 4.11(c) of the Disclosure Schedule, neither SM Holdings, SSY Holdings nor any of the Companies has received from any Taxing Authority (including jurisdictions where the Companies have not filed Tax Returns) any: (i) notice indicating an intent to open an audit or other review; (ii) request for information related to Tax matters; or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any Taxing Authority against any of SM Holdings, SSY Holdings or the Companies.  Section 4.11(c) of the Disclosure Schedule lists all Tax Returns filed with respect to SM Holdings, SSY Holdings and any of the Companies for taxable periods ended on or after December 31, 2014, indicates those Tax Returns that have been audited, and indicates those Tax Returns that currently are the subject of audit.  

(d)Neither SM Holdings, SSY Holdings nor any of the Companies has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency that currently is in effect, and no power of attorney with respect to any Taxes has been executed or filed with any Governmental Authority that currently is in effect.

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(e)No amount paid or payable in connection with the transactions contemplated in this Agreement could result in:  (i) any “excess parachute payment” within the meaning of Code Section 280G (or any corresponding provision of state, local or non-U.S. Tax law); or (ii) any amount that will not be fully deductible as a result of Code Section 162(m) (or any corresponding provision of state, local or non-U.S. Tax law).  Each of the Companies has disclosed on its federal income Tax Returns all positions taken that could give rise to a substantial understatement of federal income Tax within the meaning of Code Section 6662 (or any corresponding provision of state, local or non-U.S. Tax law). Neither SM Holdings, SSY Holdings nor any of the Companies is a party to or bound by any Tax allocation or sharing agreement (other than pursuant to any contract the primary purpose of which is not the allocation or payment of Tax Liability and in which such provisions regarding Tax Liability are typical of such contracts such as leases where the obligation to pay certain Taxes is passed through to the tenant).  Neither SM Holdings, SSY Holdings nor any of the Companies: (A) has ever been a member of an Affiliated Group filing a consolidated federal, state or non-U.S. income Tax Return; (B) has ever been a party to any tax sharing, indemnification or allocation agreement; or (C) has any Liability for the Taxes of any Person under Treasury Regulations Section 1.1502-6 (or any corresponding provision of state, local or non-U.S. Applicable Law), as a transferee or successor or by contract or agreement (other than pursuant to any contract the primary purpose of which is not the allocation or payment of Tax Liability and in which such provisions regarding Tax Liability are typical of such contracts such as leases where the obligation to pay certain Taxes is passed through to the tenant).

(f)The unpaid Taxes of the Companies: (i) did not, as of the Most Recent Fiscal Month End, exceed the reserve for Tax Liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the Most Recent Balance Sheet (rather than in any notes to the Most Recent Balance Sheet); and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Companies in filing their Tax Returns. Since the date of the Most Recent Balance Sheet, none of the Companies has incurred any Liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the Ordinary Course of Business consistent with past custom and practice.  The Companies do not have any Liability (whether Tax Liability or otherwise), nor is there any Basis for any Liability, with respect to the Companies’ LIFO reserves.

(g)None of the Companies will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion of such period) ending after the Closing Date as a result of the [****] or any:

(i)change in method of accounting for a taxable period ending on or prior to the Closing Date;

(ii)use of an improper method of accounting for a taxable period ending on or prior to the Closing Date;

(iii)agreement with any Governmental Authority executed on or prior to the Closing Date;

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(iv)installment sale or open transaction disposition made on or prior to the Closing Date; 

(v)prepaid amount received on or prior to the Closing Date; or

(vi)election under Code Section 108(i) (or any corresponding provision of state or local Tax law). 

(h)Neither SM Holdings, SSY Holdings nor any of the Companies is or has been a party to any “reportable transaction,” as defined in Code Section 6707A(c)(1) and Reg. Section 1.6011-4(b) (or any corresponding provisions of state, local or non-U.S. Tax law).

(i)The Sellers have made available to the Buyer for inspection: (A) complete and correct copies of all income and other material Tax Returns of SM Holdings, SSY Holdings and each of the Companies; and (B) complete and correct copies of all private letter rulings, revenue agent reports, material information document requests, notices of proposed deficiencies, deficiency notices, protests, petitions, closing agreements, settlement agreements, pending ruling requests, gain recognition agreements and any similar documents, submitted by, received by or agreed to by or on behalf of SM Holdings, SSY Holdings or the Companies, in each case relating to Taxes for all taxable periods since December 31, 2014.

(j)None of the Companies has participated in an international boycott within the meaning of Section 999 of the Code (or any corresponding provision of state, local or non-U.S. Tax law).

(k)None of the Companies has in effect any tax elections for federal income tax purposes under Sections 108, 168, 338 (other than respect to SSY, as set forth in this Agreement), 441, 471, 1017, 1033, 1502 and 4977 of the Code (or any corresponding provisions of state, local or non-U.S. Tax law).

(l)During the previous two years none of the Companies has engaged in any exchange under which the gain realized on such exchange was not recognized due to Section 1031 of the Code (or any corresponding provision of state, local or non-U.S. Tax law).

(m)None of the Companies has any Indebtedness that (i) was “corporate acquisition indebtedness” as defined in Section 279 of the Code (or any corresponding provision of state, local or non-U.S. Tax law); (ii) bore interest any portion of which was “disqualified interest” as defined in Section 163(j)(3) of the Code (or any corresponding provision of state, local or non-U.S. Tax law), or (iii) was an “applicable high yield discount obligation” as defined in Section 168(i)(1) of the Code (or any corresponding provision of state, local or non-U.S. Tax law).

(n)All related party transactions involving SM Holdings, SSY Holdings or any of the Companies have been at arm’s length in compliance with Applicable Law.  Each of SM Holdings, SSY Holdings and the Companies has maintained documentation (including any applicable transfer pricing studies) in connection with such related party transactions in accordance with Applicable Law.  No Taxing Authority is asserting in writing, nor to the Knowledge of the Sellers, threatening to assert a claim against any of the Companies under or as a result of the alleged failure to maintain arm’s length treatment with respect to related party transactions.

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(o)To the Knowledge of the Sellers, none of the Companies has taken any action not in accordance with past practice that would have the effect of deferring a measure of Tax from a period (or portion of such period) ending on or before the Closing Date to a period (or portion of such period) beginning after the Closing Date.

(p)Each of SM Holdings, SSY Holdings and the Companies is materially in compliance with the terms and conditions of any applicable Tax exemptions, Tax agreements or Tax orders of any Governmental Authority to which it may be subject or which it may have claimed, and the Transaction will not have any significant adverse effect on such compliance.

(q)None of the Companies is a party to any joint venture, partnership or other agreement or arrangement which is treated or required to be treated as an entity for income Tax purposes. 

(r)Each of the Companies has made all required estimated Tax payments sufficient to avoid any underpayment penalties with respect to Taxes required to be paid by it.

(s)Section 4.11(s) of the Disclosure Schedule lists the (i) income Tax characterization of each of SM Holdings, SSY Holdings and the Companies, including any changes in characterization in the past ten (10) years (i.e., S corporation, C corporation, qualified subchapter S subsidiary, partnership or disregarded entity); and (ii) all entity classification elections under Treasury Regulations Section 301.7701-3 (or any corresponding provision of state, local or non-U.S. Applicable Law) which have been made by any of the Companies, and the effective date of each such election, and the characterization of each of SM Holdings, SSY Holdings and the Companies shall remain the same through the end of the Closing Date.  

(t)None of the Companies will be liable for any Tax under Section 1374 of the Code in connection with the deemed sale of the Companies’ assets pursuant to the terms of this Agreement. 

(u)None of the Companies will be liable for any payroll Taxes relating to any Pre-Closing Tax Period that was deferred under the CARES Act or by executive order of a Governmental Authority. 

(v)The entrance into this Agreement by the Sellers, including the agreement by the Sellers as to the Pro Rata Percentages, did not have a principal purpose of circumventing the one class of stock requirement of Section 1361(b)(1)(D) of the Code and Treasury Regulations Section 1.1361-1(e)(2)(i) with respect to either SM Holdings or SSY Holdings.

4.12Real Property

.  Except for Environmental, Health and Safety Matters which are addressed in Section 4.23: 

(a)None of the Companies has any Owned Real Property.  Section 4.12(a) of the Disclosure Schedule sets forth the address of each parcel of Affiliate Real Property.  With respect to the Affiliate Real Property, the applicable Affiliate has good and marketable fee simple title, free and clear of all Liens, other than Permitted Liens.  Except as set forth on Section 4.12(a)  of the Disclosure Schedule, the applicable Affiliate has not leased or otherwise granted to any Person other than the applicable Company the right to use or occupy such Affiliate Real Property 

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or any portion thereof, and there are no outstanding options, rights of first offer or rights of first refusal to purchase such Affiliate Real Property or any portion of the Affiliate Real Property or interest in the Affiliate Real Property.  

(b)Section 4.12(b) of the Disclosure Schedule sets forth the address of each parcel of Leased Real Property, and a true and complete list of all Leases for each such Leased Real Property (including the date and name of the parties to such Lease document).  The Sellers have delivered to the Buyer a true and complete copy of each such Lease document.  Except as set forth in Section 4.12(b) of the Disclosure Schedule, with respect to each of the Leases:

(i)such Lease is legal, valid, binding, enforceable and in full force and effect;

(ii)the Companies’ possession and quiet enjoyment of the Leased Real Property under such Lease is not being disturbed as of the Closing Date and, to the Knowledge of the Sellers, there is no Basis for any such disturbance, and there are no disputes with respect to such Lease as of the Closing Date;

(iii)no security deposit or portion of such securities deposit with respect to such Lease has been applied in respect of a breach of or default under such Lease that has not been redeposited in full;

(iv)none of the Companies owes, or will owe in the future, any brokerage commissions or finder’s fees with respect to such Lease;

(v)none of the Companies has subleased, licensed or otherwise granted any Person the right to use or occupy the Leased Real Property or any portion of the Leased Real Property; and

(vi)none of the Companies has collaterally assigned or granted any other Lien in such Lease or any interest in such Lease.

(c)The Real Property identified in Section 4.12(a) and Section 4.12(b) of the Disclosure Schedule, comprises all of the Real Property currently used or intended to be used in, or otherwise related to, the business of the Companies; and none of the Companies is a party to any agreement or option to purchase any real property or interest in any real property.

(d)Except as set forth on Section 4.12(d) of the Disclosure Schedule, all buildings, structures, fixtures, building systems and equipment, and all components included in the Real Property (the “Improvements”) are in a condition sufficient for the operation of the Companies’ businesses as currently conducted on such property. To the Knowledge of the Sellers, there are no facts or conditions affecting any of the Improvements that would, individually or in the aggregate, interfere with the use or occupancy of the Improvements or any portion of the Improvements in the operation of the Companies’ businesses as currently conducted on such property.

(e)None of the Companies has received any written notice of violation of any applicable building, zoning, subdivision, health and safety and other land use laws, and all 

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insurance requirements affecting the Real Property (collectively, the “Real Property Laws”) and, to the Knowledge of the Sellers, there is no Basis for the issuance of any such notice or the taking of any action for such violation.

(f)Except as set forth on Section 4.12(f) of the Disclosure Schedule, the classification of each parcel of Real Property under applicable Real Property Laws permits the use and occupancy of such parcel and the operation of the Companies’ businesses as currently conducted thereon, and permits the Improvements located on such property as currently constructed, used and occupied. To the Knowledge of the Sellers, the Companies’ use or occupancy of the Real Property or any portion of the Real Property or the operation of the Companies’ businesses as currently conducted on the Real Property is not dependent on a “permitted non-conforming use” or “permitted non-conforming structure” or similar variance, exemption, or approval from any Governmental Authority.

(g)None of the Improvements encroaches on any land that is not included in the Real Property or on any easement affecting such Real Property, or violates any building lines or set back lines, and there are no encroachments onto the Real Property, or any portion of the Real Property, that would materially and adversely interfere with the use or occupancy of such Real Property or the continued operation of the Companies’ businesses as currently conducted on such property.

(h)There is no condemnation, expropriation or other Proceeding in eminent domain, pending or, to the Knowledge of the Sellers, threatened, affecting any parcel of Real 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, to the Knowledge of the Sellers, threatened, that would interfere with the ownership, lease, use or occupancy of the Real Property or any portion thereof by the Companies, or the operation of the Companies’ businesses as currently conducted on such property.

(i)The current use and occupancy of the Real Property and the operation of the Companies’ businesses as currently conducted thereon do not violate any easement, covenant, condition, restriction, or similar provision in any instrument of record, or in any other unrecorded instrument or agreement of which the Sellers have Knowledge, affecting such Real Property (the “Encumbrance Documents”).  None of the Companies’ has received any written notice of violation of any Encumbrance Documents and, to the Knowledge of the Sellers, and there is no Basis for the issuance of any such notice or the taking of any action for such violation.

4.13Intellectual Property

.

(a)Section 4.13(a) of the Disclosure Schedule sets forth a true and complete list of all: (i) patented or registered Company-Owned Intellectual Property; and (ii) pending patent applications and applications for other registrations of Intellectual Property filed by or on behalf of the Companies (indicating for each of (i) and (ii) the applicable jurisdiction, registration number or application number and date issued or, if not issued, date filed).

(b)Section 4.13(b)(i) of the Disclosure Schedule sets forth a true and complete list of all Intellectual Property licensed to the Companies (excluding generally commercially 

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available, off the shelf software programs licensed pursuant to shrink-wrap or “click to accept” agreements with a replacement cost and/or annual license fee of less than $25,000) and any license or other agreement relating to such Intellectual Property (each, an “Inbound IP License”).  Section 4.13(b)(ii) of the Disclosure Schedule sets forth a true and complete list of all Intellectual Property licensed by any of the Companies to any third Person and any license or other agreement relating to such Intellectual Property (each, an “Outbound IP License”). 

(c)Each of the Companies has good and marketable title to, or Inbound IP Licenses to, the Intellectual Property used by it in connection with its businesses.  The Companies own, free and clear of all Liens, other than Permitted Liens, all Company-Owned Intellectual Property, and have valid and enforceable licenses as set forth on Section 4.13(b)(i) of the Disclosure Schedule to use, free and clear of all Liens, other than Permitted Liens, all Company Non-Owned Intellectual Property.  None of the Company-Owned Intellectual Property is invalid or unenforceable in whole or in part and the Companies have taken all action necessary, performed all customary acts and paid all fees and Taxes (to the extent applicable) required to protect and maintain in full force and effect the Company Intellectual Property.  There have been no claims or demands asserted in writing (or to the Knowledge of the Sellers, otherwise) by any other Person pertaining to any Company Intellectual Property (including any cease-and-desist letters or demands or offers to license any Intellectual Property from any other Person); and no Proceeding has been instituted, or is pending or threatened, which challenges the validity or enforceability of, or the Companies’ rights in or ownership of, or alleges any infringement in respect of, the Company Intellectual Property.

(d)The Companies and their respective businesses have not infringed, misappropriated or violated any Intellectual Property of any other Person and, to the Knowledge of the Sellers, no other Person has infringed, misappropriated or violated any Company Intellectual Property.

(e)Except as set forth in Section 4.13(e) of the Disclosure Schedule, all Company-Owned Intellectual Property which the Companies purport to own was developed by employees, agents, consultants, contractors or other Persons who have executed appropriate, valid, enforceable and irrevocable instruments of assignment in favor of the Companies as assignee that have conveyed to the Companies ownership of all Intellectual Property rights in the Company-Owned Intellectual Property.  No current or former shareholder, member, officer, director, manager, employee, agent, consultant, or contractor has any claim, right (whether or not currently exercisable), or interest to or in any Company-Owned Intellectual Property.  To the extent that any Company Intellectual Property has been developed or created by a third party for the Companies, the Companies have a written agreement with such third party with respect to such Company Intellectual Property and the Companies either: (i) have obtained ownership of and are the exclusive owner of or (ii) have obtained a license (sufficient for the conduct of its business as currently conducted) to, all of such third party’s Intellectual Property rights in such work, material or invention by operation of law or by valid assignment.

(f)Except as set forth in Section 4.13(f) of the Disclosure Schedule, (i) all of the computer systems, including software, hardware and networks, used by the Companies in connection with the operation of the Companies’ businesses (the “Systems”) are maintained and operated exclusively by the Companies and are not wholly or partly dependent on any facilities or 

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means (including any electronic, mechanical or photographic process, computerized or otherwise) which are not under the exclusive ownership and control of the Companies and (ii) the Systems are sufficient for the current needs of the Companies and their respective businesses, including as to capacity and ability to process current peak volumes in a timely manner, and in the past twelve (12) months, there have been no bugs in, or failures, breakdowns, or continued substandard performance of, any Systems that has caused the substantial disruption or interruption in or to the use of such Systems.

(g)Except as set forth in Section 4.13(g) of the Disclosure Schedule, each of the Companies maintains policies or procedures regarding data security, privacy, and Personal Information that are commercially reasonable for such Company and, in any event, comply in all material respects with all obligations to its customers or to other Data Subjects and all Applicable Privacy Laws.  The use and dissemination of any and all Personal Information by each of the Companies is in compliance with all applicable publicly-posted privacy policies and terms of use, any customer agreements involving the process of Personal Information and all Applicable Privacy Laws.  The Transaction will not violate any publicly-posted privacy policy or terms of use, or any customer agreements involving the processing of Personal Information or any Applicable Privacy Law relating to the use, dissemination or transfer of any Personal Information.  Within the last five years, there has been no security breach relating to and there has been no unauthorized disclosure or acquisition by a third party of, any Personal Information or Company Intellectual Property stored by or on behalf of any of the Companies.  Each Company has used commercially reasonable information security controls, system and data backup practices, and disaster recovery and business-continuity practices that comply with all Applicable Privacy Laws. Each Company has: (i) conducted commercially reasonable reviews or audits of its IT Infrastructure and information security controls (collectively, “Information Security Reviews”); (ii) corrected any exceptions or vulnerabilities identified in such Information Security Reviews; and (iii) installed software security patches and other fixes to identified technical information security vulnerabilities.

4.14Tangible Assets

.  Each of the Companies own or leases all tangible assets necessary for the conduct of their business as presently conducted and as presently proposed to be conducted.  Each such tangible asset is free from material defects (patent and latent), has been maintained in accordance with normal industry practice, is in good operating condition and repair (subject to normal wear and tear), and is suitable for the purposes for which it presently is used. 

4.15Contracts

.  Section 4.15 of the Disclosure Schedule lists the following Contracts and other agreements to which any of the Companies is a party (collectively, the “Material Contracts”):  

(a)any Contract (or group of related Contracts), other than contracts with brokers, employment contracts with employees, directors or officers, contracts with public utilities for energy, water or similar services, voice and data traffic services and cleaning, that represents an aggregate future Liability in excess of $50,000 in one fiscal year; 

(b)any Contract (or group of related Contracts) that relates to capital expenditures and involves future payments in excess of $50,000 in one fiscal year;

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(c)any Contract (or group of related Contracts) that is a Lease or similar contract;

(d)any Contract concerning a partnership, joint venture or limited liability company involving the sharing of profits, losses, costs, Taxes or other Liabilities by any of the Companies with any other Person;

(e)any Contract containing covenants that in any way purport to restrict the right or freedom of any of the Companies or any other Person for the benefit of the Companies to: (A) engage in any business activity; (B) engage in any line of business or compete with any Person; or (C) solicit any Person to enter into a business or employment relationship, or enter into such a relationship with any Person;

(f)any Contract (or group of related Contracts) under which it has created, incurred, assumed, or guaranteed any Indebtedness, in excess of $25,000 or under which it has imposed a Lien on any of its assets, tangible or intangible;

(g)any Contract concerning confidentiality or non-disparagement;

(h)any profit sharing, equity option, equity purchase, equity appreciation, deferred compensation, change of control, severance, or other plan or arrangement for the benefit of its current or former directors, officers, employees, and consultants;

(i)any Contract containing or providing for an express undertaking by any of the Companies to be responsible for consequential, special, or liquidated damages or penalties or to indemnify any other Person; 

(j)any collective bargaining agreement or any Contract with any labor union or other employee representative of a group of employees of any of the Companies;

(k)any Contract for the employment of any individual on a full-time, part-time, consulting, or other Basis providing annual compensation in excess of $50,000 or providing severance or change of control benefits;

(l)any Contract under which a leasing, staffing or temporary services company provides workers to any of the Companies;

(m)any Contract under which it has advanced or loaned any amount to any of its directors, officers, and employees outside the Ordinary Course of Business;

(n)any Contract under which any of the Companies has advanced or loaned any other Person amounts in the aggregate exceeding $10,000; 

(o)any Contract under which the consequences of a default or termination could reasonably be expected to have a Material Adverse Effect; 

(p)any Contract with any Governmental Authority; 

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(q)any Contract concerning Company Intellectual Property;

(r)any Inbound IP License;

(s)any Outbound IP License; or

(t)any agreement under which compliance with regulatory reporting obligations has been outsourced to a third party. 

No Material Contract is an oral Contract.  The Sellers have made available to the Buyer a correct and complete copy of each written Material Contract (as amended to date) listed in Section 4.15 of the Disclosure Schedule.  With respect to each such Material Contract: (i) the Material Contract is legal, valid, binding, enforceable, and in full force and effect against the Company that is a party to such Material Contract, and to the Knowledge of the Sellers, the other parties thereto; (ii) the Material Contract will be, as of immediately following the consummation of the Transaction, legal, valid, binding, enforceable, and in full force and effect against the Company that is a party to such Material Contract on identical terms (save for any termination by the other party which is not a consequence of a breach of the relevant terms by the Companies), and to the Knowledge of the Sellers, the other parties thereto; (iii) neither any Company nor, to the Knowledge of the Sellers, any other party is in breach or default, and no event has occurred that with notice or lapse of time would constitute a breach or default which would permit termination, modification, or acceleration, under such Material Contract; and (iv) no Company has received written notice alleging a breach on the part of the Company of a Material Contract or which indicates an intention to cancel, terminate, breach or attempt to alter the terms of any such Material Contract, or to exercise or not exercise any option to renew thereunder.

4.16Notes and Accounts Receivable

.  All notes and Receivables of each of the Companies are reflected properly on their books and records and in the Financial Statements, represent valid obligations arising from sales actually made or services actually performed in the Ordinary Course of Business, are valid Receivables subject to no setoffs, expenses, counterclaims, or other reduction, are current and collectible and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts (which reserve is adequate and calculated consistent with past practice in the preparation of the Financial Statements) set forth on the face of the Most Recent Balance Sheet as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Companies.

4.17Powers of Attorney

.  Except as set forth in Section 4.17 of the Disclosure Schedule, there are no outstanding powers of attorney executed on behalf of any of the Companies.

4.18Insurance

.

(a)The Seller has made available to the Buyer accurate and complete copies of all insurance policies maintained by the Companies.  Section 4.18 of the Disclosure Schedule sets forth the following information with respect to each insurance policy (including policies providing property, casualty, liability, and workers’ compensation coverage and bond and surety arrangements) to which any of the Companies has been a party, a named insured, or otherwise the beneficiary of coverage at any time within the past five years or that provides coverage to any director, officer or manager of the Companies in such capacity: (i) the name of the insurer, the 

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name of the policyholder, and the name of each covered insured; (ii) the policy number and the period of coverage; (iii) the scope (including an indication of whether the coverage was on a claims made, occurrence, or other Basis) and amount (including a description of how deductibles and ceilings are calculated and operate) of coverage; (iv) a summary of the loss experience; (v) a statement describing each claim for an amount in excess of $50,000, which set forth the name of the claimant, a description of the applicably policy, and the amount and a brief description of the claim; and (vi) a description of any retroactive premium adjustments or other loss-sharing arrangements.

(b)With respect to each such insurance policy: (i) the policy is legal, valid, binding, enforceable, and in full force and effect; (ii) the policy will be, as of immediately following the consummation of the Transaction, legal, valid, binding, enforceable, and in full force and effect on identical terms  (save for any termination by the insurance companies which is not a consequence of a breach of the terms of the policy by the Companies); (iii) none of the Companies nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred that, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; and (iv) no party to the policy has repudiated any provision of such policy.  Each of the Companies have been covered during the past five years by insurance in scope and amount customary and reasonable for the businesses in which they have engaged during the aforementioned period.  Section 4.18 of the Disclosure Schedule describes any self-insurance arrangements affecting the Companies.  Each of the Companies have paid all premiums due, and has otherwise performed their obligations, under each policy of insurance to which it is a party or that provides coverage to it or to any of its directors, officers, or managers, in their capacity as such.  Each of the Companies has given notice to the insurer of all insured claims. None of the Companies has received any notice of any, and there are no, planned or proposed increases in the premiums or any other adverse change in the terms of any policy of insurance covering the Companies, or any officer, director, or manager of the Companies in his or her capacity as such.  None of the Companies has provided any information to any insurer in connection with any application for insurance that could reasonably be expected to result in (x) cancellation of any insurance policy or bond for the benefit of the Companies or (y) denial of coverage for a risk otherwise covered by any such insurance policy or bond.

4.19Litigation

.  Section 4.19 of the Disclosure Schedule sets forth each instance in which any of the Companies: (i) is subject to any outstanding Order; or (ii) is a party or is threatened to be made a party to any Proceeding of, in, or before (or that could come before) any Governmental Authority or court or quasi-judicial or administrative agency of any jurisdiction or before (or that could come before) any arbitrator ((i) and (ii) collectively, the “Litigation”). None of Litigation set forth in Section 4.19 of the Disclosure Schedule could reasonably be expected to result in any Material Adverse Change.  None of the Sellers and the directors and officers (and employees with responsibility for litigation matters) of the Companies has any reason to believe that, except for the Litigation set forth in Section 4.19 of the Disclosure Schedule, any Order or Proceeding may be brought or threatened against any of the Companies or that there is any Basis for the above. Except as set forth in Section 4.19 of the Disclosure Schedule: (i) each of the Companies has at all times been in compliance with each Order to which it, or any assets owned or used by it, is or has been subject, in each case during the past five years; (ii) no event has occurred or circumstance exists that could constitute or result in (with or without notice or lapse 

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of time) a violation of, or failure to comply with, any Order to which any of the Companies, or any assets owned or used by any of the Companies, is subject; and (iii) none of the Companies has within the past five years received any notice or other communication (whether oral or written) from any Governmental Authority or any other Person regarding any actual, alleged, or potential violation of, or failure to comply with, any Order to which any of the Companies or any assets owned or used by any of the Companies is subject.  

4.20Employees

.  

(a)Section 4.20(a) of the Disclosure Schedule lists the following information for each current employee of the Companies: name, job title, date of hiring, date of commencement of employment, whether the employee is classified as exempt or non-exempt, details of leave of absence or layoff, rate of compensation, bonus arrangement, vacation, sick time, and personal leave accrued as of the Most Recent Fiscal Month End, leave of absence or layoff status, and service credited for purposes of vesting and eligibility to participate under any Employee Benefit Plan. All persons who are required to be classified as employees of the Companies under Applicable Laws are so classified in the payroll records and other records and books of account of the Companies.

(b)Except as set forth on Section 4.20(b) of the Disclosure Schedules, to the Knowledge of the Sellers, no officer, or other key employee of the Companies intends to end such Person’s employment with the Companies.

(c)Section 4.20(c) of the Disclosure Schedule states the number of employees terminated or laid off by the Companies since January 1, 2018, and contains a list of the following information for each employee of the Companies who has been terminated or laid off, or whose hours of work have been reduced by more than 50% by the Companies, in the twelve (12) months prior to the Closing Date: (i) the date of such termination, layoff, or reduction in hours; (ii) the reason for such termination, layoff, or reduction in hours; and (iii) the location to which the employee was assigned.

(d)Each of the Companies has within the past five years complied in all material respects with all Applicable Laws relating to employment practices, terms, and conditions of employment, equal employment opportunity, nondiscrimination, sexual harassment, immigration, wages (including the payment of overtime wages), hours (including the provision of all lunch and rest breaks required by Applicable Laws) payment of overtime wages, classification of workers as “employees” or “contractors,” the payment of social security and similar Taxes, and occupational safety and health (including the provision of all personal protective equipment required by Applicable Laws).  None of the Companies is liable for the payment of any Taxes, fines, penalties, or other amounts, however designated, for failure to comply with any of the above Applicable Laws within the past five years. The Companies have taken reasonable steps to properly classify and treat all of their employees and independent contractors as such, and have taken reasonable steps to properly classify and treat their employees as “exempt” or “nonexempt” from overtime requirements under Applicable Laws. The Companies are not delinquent in payments to any of their employees or consultants for any wages, salaries, overtime pay, commissions, bonuses, accrued and unused vacation, or other compensation, if any, for any services or otherwise arising under any policy, practice, Contract or Applicable Law. None of the 

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Companies’ employment policies or practices is currently being audited or to the Knowledge of the Sellers investigated by any Governmental Authority.  The Companies have complied within the past five years with all Applicable Laws and has not been charged with, received any notice of or to the Knowledge of the Sellers been under investigation with respect to, any alleged default under, violation of or nonconformity with any Applicable Laws concerning unemployment compensation, worker’s compensation, wages and hours, discrimination in employment, or unfair labor practices under the National Labor Relations Act, and the employment of workers under the Immigration Reform and Control Act of 1986, and all state and local immigration Applicable Laws.

(e)Except as set forth in Section 4.20(e) of the Disclosure Schedule, with respect to the business of the Companies:

(i)currently there is no collective bargaining agreement or similar agreement or relationship with any labor organization;

(ii)to the Knowledge of the Sellers, no officer or other key employee of any of the Companies is currently a party to any confidentiality, non-competition, proprietary rights or other such agreement between such employee and any Person besides the Companies that would be material to the performance of such employee’s employment duties, or the ability of such entity or the Buyer to conduct the business of such entity;

(iii)no labor organization or group of employees has filed any representation petition or made any written or oral demand for recognition within the past five years;

(iv)no union organizing or decertification efforts are currently underway or to the Knowledge of the Sellers threatened and no other question concerning representation exists;

(v)no labor strike, work stoppage, picketing, slowdown, employee grievance process, or other material labor dispute has occurred within the past five years, and to the Knowledge of the Sellers none is underway or threatened;

(vi)there is no current workmen’s compensation liability, experience or matter outside the Ordinary Course of Business;

(vii)there is no current employment-related charge, complaint, grievance, investigation or inquiry, that is pending or to the Knowledge of the Sellers is threatened in any forum, relating to an alleged violation or breach by any of the Companies, (or its or their officers or directors) of any Applicable Laws, regulations or contracts; and

(viii)to the Knowledge of the Sellers, no employee or agent of any of the Companies has within the past five years committed any act or omission giving rise to material Liability for any violation or breach of the Applicable Laws identified in subsection (v) above.

(f)Section 4.20(f) of the Disclosure Schedule sets forth a list of all: (i) employment contracts or severance or change of control agreements that (A) are with any 

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employees of the Companies employed within the past five years or (B) under which the Companies have or may have any outstanding obligations; and (ii) written personnel policies, rules, or procedures currently applicable to employees of the Companies.  True and complete copies of all such policies, rules or procedures have been made available to the Buyer prior to the Closing Date.  

(g)With respect to this Transaction, any notice required under any law or collective bargaining agreement has been given, and all bargaining obligations with any employee representative have been satisfied.

(h)Within the past five years, none of the Companies have implemented any layoffs, plant closings, reductions in force, or terminations of employees that, in the aggregate, would trigger the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101 et seq. (the “WARN Act”) or any other similar law, rule, or regulation of any Governmental Authority.

4.21Employee Benefits

.

(a)Section 4.21(a) of the Disclosure Schedule lists each Employee Benefit Plan that the Companies maintain, to which any of the Companies contributes or has any obligation to contribute, or with respect to which any of the Companies has any Liability.  None of the Companies intends, or has committed, to establish or enter into any new Employee Benefit Plan, practice, policy, agreement or arrangement or to modify any Employee Benefit Plan, except to conform such Employee Benefit Plan to any Applicable Law.

(i)Each such Employee Benefit Plan (and each related trust or fund) has been established, maintained, funded and administered in accordance with the terms of such Employee Benefit Plan and the terms of any applicable collective bargaining agreement and complies in form and in operation in all respects with the applicable requirements of Applicable Laws.  None of the Companies has received any notice within the last six years from any Governmental Authority questioning or challenging any Employee Benefit Plan’s compliance with Applicable Laws. There are no audits, investigations or examinations pending or, to the Knowledge of the Sellers, threatened by any Governmental Authority with respect to any Employee Benefit Plan. There is no Basis for any such audit, investigation or examination.  With respect to each Employee Benefit Plan, (A) no actions, suits, or claims (other than routine claims for benefits in the ordinary course) are pending or, to the Knowledge of the Sellers, threatened; (B) no facts or circumstances exist that could give rise to any such actions, suits, or claims; (C) no “prohibited transaction” has occurred within the meaning of the applicable provisions of ERISA or the Code; and (D) no reportable event (within the meaning of Section 4043 of ERISA) has occurred, other than one for which the thirty (30) day notice requirement has been waived.

(ii)All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by Applicable Law to each such Employee Benefit Plan that is an Employee Pension Benefit Plan and all contributions for any period ending on or before the Closing Date that are not yet due have been made to each such Employee Pension Benefit Plan or accrued in accordance with the past custom and practice of the Companies. All premiums or other payments for all periods ending on or before the Closing Date have been paid with respect to each such Employee 

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Benefit Plan that is an Employee Welfare Benefit Plan.  All contributions to any social security benefit, social fund, or other state-sponsored or state-mandated benefit plan or program have been timely made. Each Employee Benefit Plan that is a group health plan is in compliance in all material respects with the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (collectively, the “Healthcare Reform Law”), to the extent applicable, and the operation of each Employee Benefit Plan will not result in the incurrence of any penalty to the Companies pursuant to the Healthcare Reform Law.

(iii)The Companies have complied in all respects with the notice and continuation coverage requirements, and all other requirements, of Section 4980B of the Code and Parts 6 and 7 of Title I of ERISA, and the regulations thereunder, and any other Applicable Law with respect to each Employee Benefit Plan that is a group health plan within the meaning of Section 5000(b)(1) of the Code.

(iv)For any Employee Benefit Plan in the United States, each such Employee Benefit Plan that is intended to meet the requirements of a “qualified plan” under Code Section 401(a) has received a determination from the Internal Revenue Service, or is the subject of an opinion letter from the Internal Revenue Service, that such Employee Benefit Plan is so qualified, and, to the Knowledge of the Sellers, nothing has occurred since the date of such determination or opinion letter that could adversely affect the qualified status of any such Employee Benefit Plan and no circumstance exists that could result in revocation of any such favorable determination letter or opinion letter.  

(v)No Proceeding with respect to the administration or the investment of the assets of any Employee Benefit Plan (other than routine claims for benefits) is pending or, to the Knowledge of the Sellers, threatened.

(vi)For each Employee Benefit Plan currently maintained by the Companies, the Sellers have delivered to the Buyer correct and complete current copies of: (A) the plan documents and all amendments to the plan documents (or in the case of such an Employee Benefit Plan that is unwritten, a written summary of the plan);  (B) the summary plan descriptions together with the summaries of material modifications to the plan; (C) if applicable, the most recent determination letter, advisory letter or opinion letter received from the applicable Governmental Authority relating to the qualified status of the Employee Benefit Plan; (D), as applicable, the annual reports for the three most recently completed plan years; (E) all related trust agreements, insurance contracts, and other funding arrangements that implement each such Employee Benefit Plan; (F) all written contracts relating to such Employee Benefit Plan, including administrative agreements and contracts with service providers; (G) all material correspondence or notices to or from any Governmental Authority relating to such Employee Benefit Plan; (H) all discrimination tests performed during the three most recently completed plan years; and (I) any filings under any amnesty, voluntary compliance or similar program sponsored by any Governmental Authority.

(vii)No current or former independent contractor of any of the Companies could reasonably be deemed to be a misclassified employee.  Except as set forth in Section 4.21(a)(vii), no independent contractor of any of the Companies is eligible to participate in any Employee Benefit Plan.  None of the Companies has ever excluded from participation in any Employee Benefit Plan, or failed to treat and account for as an employee, any temporary or 

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leased employees that were eligible to participate in such Employee Benefit Plan, or were legally required to be treated and accounted for as employees. 

(b)None of the Companies, nor any member of any Company’s “Controlled Group”, (defined as any organization which is a member of the Company’s controlled group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code) has ever contributed to, has ever had any obligation to contribute to, or has ever had any Liability under or with respect to any Employee Pension Benefit Plan that is a Multiemployer Plan or is subject to Section 412 of the Code or Title IV of ERISA.  No assets of any of the Companies are subject to any Lien under Title IV of ERISA.  

(c)None of the Companies maintains, contributes to or has an obligation to contribute to, or has any Liability with respect to, any Employee Welfare Benefit Plan or other arrangement providing health or life insurance or other welfare-type benefits for current or future retired or terminated directors, officers or employees (or any spouse or other dependent) of the Companies, except as required to avoid an excise tax under Section 4980B of the Code or as may be required pursuant to any other Applicable Law.  No Employee Benefit Plan in the United States is intended to meet the requirements of Section 501(c)(9) of the Code.

(d)Except as set forth in Section 4.21(d) of the Disclosure Schedule, neither execution, delivery nor performance of this Agreement nor consummation of the Transaction will either alone or in combination with any other event: (i) result in any payment (including severance, change in control payment, “stay pay,” transaction bonus, retention bonus, or otherwise) becoming due to any employee, director or consultant of any of the Companies; (ii) increase any compensation or benefits otherwise payable by any of the Companies under any Employee Benefit Plan; (iii) accelerate the time of the payment or vesting of, or increase the amount of, or result in the forfeiture of compensation or benefits under, any Employee Benefit Plan nor will they, directly or indirectly (with or without notice or lapse of time), result in an amendment, modification, or termination of any Employee Benefit Plan; or (iv) limit or restrict the right of the Companies to merge, amend, or terminate any Employee Benefit Plan.  No amount paid or payable in connection with the transactions contemplated in this Agreement could be characterized as an “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provisions of state, local or non-U.S. tax law). None of the Companies has any indemnity or gross-up obligation for any Taxes imposed under Code Sections 4999 or 280G (or any corresponding provision of state, local or non-U.S. Tax law).

(e)Each Employee Benefit Plan subject to Section 409A of the Code (or any corresponding provision of state, local or non-U.S. Tax law)complies with the requirements of Code Section 409A(a)(2), (3), and (4) and any Internal Revenue Service guidance issued under such Sections (or any corresponding provision of state, local or non-U.S. Tax law) and no amounts under any such Employee Benefit Plan is or has been subject to the interest and additional tax set forth under Code Section 409A(a)(1)(B) (or any corresponding provision of state, local or non-U.S. Tax law).  None of the Companies has any actual or potential obligation to reimburse or otherwise “gross-up” any Person for the interest or additional tax set forth under Code Section 409A(a)(1)(B (or any corresponding provision of state, local or non-U.S. Tax law)).  None of the Companies has been required to report to any Governmental Authority any corrections made or 

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Taxes due as a result of a failure to comply with Code Section 409A (or any corresponding provision of state, local or non-U.S. Tax law).

(f)No Employee Benefit Plan provides benefits to any individual who is not a current or former employee of the Company, or the dependents or other beneficiaries of any such current or former employee.  No Employee Benefit Plan is subject to the laws of, or provides benefits for any employee providing services in, any jurisdiction outside of the United States.

4.22Guaranties

. None of the Companies is a guarantor, surety or otherwise is liable for any Liability (including Indebtedness) of any other Person.

4.23Environmental, Health and Safety Matters

.  Except as set forth on Schedule 4.23 of the Disclosure Schedule: 

(a)Each of the Companies and their respective Predecessors and Affiliates have for the past five years complied in all material respects and are currently in compliance in all material respects with all Environmental, Health, and Safety Requirements.

(b)Without limiting the generality of the above, each of the Companies and their respective Predecessors and Affiliates have obtained and for the past five years complied with in all material respects, and are currently in compliance with in all material respects, all Permits, Orders, and Governmental Authorizations that are required pursuant to Environmental, Health, and Safety Requirements for the occupation of the Real Property and the operation of their business.  A list of all such Permits is set forth on Section 4.23(b) of the Disclosure Schedule.

(c)In the past ten years, none of the Companies nor their respective Affiliates has received any:  (i) order, written or oral notice, or report regarding any actual or alleged violation of Environmental, Health, and Safety Requirements from any Governmental Authority; or (ii) any Liabilities, including any investigatory, remedial or corrective obligations, relating to any of them or their business arising under Environmental, Health, and Safety Requirements; which remains outstanding or unresolved.

(d)No facts, events, or conditions relating to the past or present facilities, properties, or operations of the Companies or their respective Affiliates will prevent in a material way continued material compliance with Environmental, Health, and Safety Requirements, give rise to any material investigatory, remedial, or corrective obligations pursuant to Environmental, Health, and Safety Requirements, or give rise to any material Liabilities pursuant to Environmental, Health, and Safety Requirements.

(e)The Sellers and the Companies have furnished to the Buyer: (i) all material written environmental regulatory compliance audits, environmental site assessments, investigations, monitoring reports, risk assessment reports, corrective action reports, and other material environmental documents, including, but not limited to any Phase I and Phase II environmental assessments, relating to its properties, facilities, or operations; and (ii) all material correspondence and other material documents relating to communications to or from any Governmental Authority or any third party regarding notification of any material actual or alleged violations of any Environmental, Health, and Safety Requirements or of any conditions that are reasonably likely to give rise to material Liability or responsibility under the Environmental, 

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Health, and Safety Requirements in connection with the Companies’ businesses, in Sellers’ possession within the last ten years.

(f)Except as disclosed in Section 4.23(f) of the Disclosure Schedule (and in the case of clauses (ii) and (viii), to the Knowledge of the Sellers), none of the following is present at the Real Property: (i) underground storage tanks or septic systems; (ii) asbestos-containing material in any form or condition; (iii) materials or equipment containing polychlorinated biphenyls in any form or condition; (iv) hazardous waste, surface impoundments, or disposal areas; (v) groundwater monitoring wells, drinking water wells, or production water wells; (vi) above-ground storage tanks of any capacity containing or which at one time contained any quantity of Hazardous material; (vii) Environmental Contamination; or (viii) materials or equipment containing lead-based paint in any form or condition.

The representations and warranties set forth in this Section 4.23 are the sole and exclusive representations and warranties pertaining to environmental, health and safety matters. 

4.24[****]

.  

(a)Section 4.24 of the Disclosure Schedule provides the following information regarding the loan provided to the Companies pursuant to the [****] (the “[****]”) and, as it relates to the [****]: (i) the lender; (ii) the date the Companies applied for the [****]; (iii) the date the [****] was approved by the lender; (iv) the [****]; (v) the aggregate original principal amount of the [****]; (vi) the date of receipt of the [****]; (vii) the date the Companies applied for forgiveness for the [****] and relevant details, including details regarding the Companies’ use of [****]; and (viii) the total amount of [****] expended as of the Closing Date.  The [****] was obtained in compliance with all rules, regulations and requirements set forth in the [****] application and all certifications made to obtain the [****], including but not limited to certifications with respect to the Sellers’ and the Companies’ eligibility for the [****], current and anticipated need for the [****], and appropriate use of the [****], were made in good faith.  

(b)The Companies have used the [****] in accordance with the [****] rules solely to cover payroll costs and mortgage interest, rent and utility costs that allow the Companies to be eligible for loan forgiveness under the terms of the [****] as of the Closing Date.  The Sellers have caused the Companies to use the [****] solely for purposes to maximize the prospects of loan forgiveness and minimize the potential liabilities related to ineligible uses of such funds. The Sellers have not caused the Companies to take any actions or make any communications, or fail to take any necessary actions or make any necessary communications, that materially increased the likelihood of increased scrutiny or liability with respect to the [****]. 

 

(c)The Companies have each deposited (the “[****]”) a sum equal to the amount of the [****] to each Company with First Midwest Bank, the lender of the [****], in accordance with the terms of the [****], and such deposit is reflected as restricted cash on the books and records of the Companies.

 

4.25No Other Representations or Warranties

.  Except for the representations and warranties contained in Article III and Article IV, none of the Sellers make any other express or implied 

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representation or warranty with respect to the Companies (including their respective assets, financial condition or business) or with respect to any other information provided to the Buyer (including by use of a “data room” or in any executive summary), and the Sellers hereby disclaim any other representations or warranties.  Without limiting the generality of the preceding sentence, the Sellers make no representation or warranty whatsoever with respect to any projections and other forecasts (including the reasonableness of the assumptions underlying such projections and other forecasts).  THE BUYER ACKNOWLEDGES AND AGREES THAT THE BUYER HAS NOT RELIED, AND IS NOT RELYING, AND WILL NOT ASSERT THAT IT IS RELYING, UPON ANY STATEMENT, WARRANTY OR REPRESENTATION (WHETHER WRITTEN OR ORAL) NOT EXPRESSLY MADE IN THIS AGREEMENT (AS QUALIFIED BY THE DISCLOSURE SCHEDULES). 

Article V
Post-Closing Covenants

The Parties agree as follows with respect to the period following the Closing:

5.1General

.  In case at any time after the Closing any further actions are necessary or desirable to carry out the purposes of this Agreement, including any notifications to Governmental Authorities of the Transaction contemplated by this Agreement (or any actions requiring the furnishing of information required under the Hart-Scott-Rodino Antitrust Improvement Act, if deemed necessary), each of the Parties will take such further actions (including the execution and delivery of such further instruments and documents) as any other Party may reasonably request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled to indemnification for such action under Article VII below).  Promptly following the Closing, the Sellers shall assist the Buyer and the Companies in their efforts to obtain each of the consents required under Section 4.3 and listed in Section 4.3 of the Disclosure Schedule.  Each of the Sellers acknowledges and agrees that from and after the Closing, the Buyer will be entitled to possession of all documents, books, records (including Tax records), agreements, and financial data of any sort relating to the Companies.

5.2Litigation Support

. 

(a)In the event and for so long as any Party actively is contesting or defending against any Litigation in connection with: (i) any transaction contemplated under this Agreement or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction on or prior to the Closing Date involving any of the Companies, including, but not limited to any of the above as it may relate to a [****] forgiveness application or an audit related to the [****], each of the other Parties will cooperate with it and its counsel in the contest or defense, make available its personnel, and provide such testimony and access to its books and records as shall be advisable in the opinion of the defending Party required by the Party in connection with the contest or defense, all at the sole cost and expense of the contesting or defending Party (unless the contesting or defending Party is entitled to indemnification under Article VII below). 

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(b)Notwithstanding the above, and except as set forth in Article VII below, after the Closing: (i) the Buyer shall have sole control of the Litigation and any Proceedings or negotiations with any Governmental Authority in connection with the Litigation, including, but not limited to, all aspects of the prosecution and defense of claims in such Litigation and/or Proceeding and the settlement of such Litigation and/or Proceeding and (ii) the Sellers shall have no right to assume any role related to the Litigation. 

5.3Transition

.  The Sellers shall cooperate with the Buyer after the Closing to ensure the orderly transition of the ownership and control of the Companies to the Buyer and to minimize any disruption to the business of the Companies that might result from the transactions contemplated hereby. Each of the Sellers will refer all customer inquiries relating to the business of the Companies to the Buyer from and for a period of five years after the Closing.

5.4Confidentiality

.  For a period of five years from and after the Closing Date, each of the Sellers will treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information except in connection with this Agreement, and deliver promptly to the Buyer or destroy, at the request and option of the Buyer, all tangible embodiments (and all copies) of the Confidential Information that are its possession.  In the event that any of the Sellers is requested or required pursuant to written or oral question or request for information or documents in any Proceeding, interrogatory, subpoena, civil investigative demand, or similar process to disclose any Confidential Information, the Sellers will notify the Buyer promptly of the request or requirement so that the Buyer may seek an appropriate protective order or waive compliance with the provisions of this Section 5.4.  If, in the absence of a protective order or the receipt of a waiver under this Agreement, any of the Sellers is compelled to disclose any Confidential Information to any court or tribunal or else stand liable for contempt, the Sellers may disclose the Confidential Information to the court or tribunal; provided, however, that the Sellers shall use reasonable commercial efforts to obtain, at the reasonable request and expense of the Buyer, an order or other assurance that confidential treatment will be accorded to such portion of the Confidential Information required to be disclosed as the Buyer shall designate.

5.5Covenant Not to Compete

.  For a period of five years from and after the Closing Date, none of the Sellers nor any of their Affiliates shall engage directly or indirectly in the United States and Canada in any business that any of the Companies or the Buyer conducts as of the Closing Date; provided, however, that (a) no owner of less than 5% of the outstanding stock of any publicly traded corporation shall be deemed to engage solely by reason of such ownership in its business, and (b) Pretasky, MJPJ Trust, MJPJ and Ellerbrock may own, lease and operate any real estate (including a marina) that is currently owned by the Sellers or any of their Affiliates that is not subject after the Closing to a valid, continuing lease to the Buyer, so long as Pretasky, MJPJ Trust, MJPJ and Ellerbrock do not own or operate a business at such real estate that sells, brokers, services, or offers financial services for new or used boats, trailers or related parts or accessories for a period of five years from and after the Closing Date; provided, that if an Affiliate Real Property Lease is terminated as a result of a default on the part of the Buyer under such Affiliate Real Property Lease, then Pretasky, MJPJ Trust, MJPJ and Ellerbrock may lease such Affiliate Real Property to an unrelated third party that sells, brokers, services, or offers financial services for new or used boats, trailers or related parts or accessories so long at Pretasky, MJPJ Trust, MJPJ and Ellerbrock do not hold any ownership interests in such unrelated third party and are not engaged in the management of such unrelated third party. Notwithstanding the above, if the final 

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judgment of a court of competent jurisdiction or an arbitration panel declares that any term or provision of this Section 5.5 is invalid or unenforceable, the Parties agree that the court or arbitration panel making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.  

5.6Non-Solicitation

.  For a period of five years from and after the Closing Date, none of the Sellers nor any of their Affiliates will directly or indirectly, hire any employee, agent, broker or independent contractor of the Companies.  For a period of five years from and after the Closing Date, none of the Sellers nor any of their Affiliates will, directly or indirectly: (i) solicit, induce, or encourage any employee, agent, or independent contractor retained by any of the Companies and/or their Affiliates to cease rendering services to the Companies and/or their Affiliates (it being understood that a general advertisement seeking employees which is not specifically directed at the Companies’ business or their employees shall not be deemed a solicitation pursuant to this clause); (ii) solicit, induce, or encourage any employee of any of the Companies and/or their Affiliates to render services to any business that is similar to any business conducted by any of the Companies; (iii) solicit, induce, or encourage any supplier or prospective supplier of services or products to cease to supply such services or products to any of the Companies or their Affiliates or to alter the terms pursuant to which such services or products were supplied to any of the Companies and/or their Affiliates immediately prior to the Closing Date; or (iv) solicit, induce or encourage any customer or prospective customer of any of the Companies to cease being a customer of the Companies or their Affiliates or to alter the terms pursuant to which any of the Companies and/or their Affiliates provided products and services to such customer or prospective customer immediately prior to the Closing Date.

5.7Sellers Release

.  Effective as of the Closing Date and to the extent permitted by Applicable Law, each of the Sellers does for itself, himself or herself, and for its or his Affiliates, partners, members, heirs, beneficiaries, successors and assigns, if any (each a “Releasing Party”), release and absolutely forever discharge the Companies and the Buyer, and their respective Subsidiaries, Affiliates, including, in each case, their respective officers, directors, managers, members, Affiliates, employee and agents (each a “Released Party”) from and against all Released Matters.  “Released Matters” means any and all claims, demands, damages, debts, Liabilities, obligations, costs, expenses (including attorneys’ and accountants’ fees and expenses), actions, and causes of action of any nature, arising on or prior to the Closing Date, whether now known or unknown, suspected or unsuspected, that such Releasing Party now has, or at any time previously had, or shall or may have in the future, as a stockholder, equity holder, principal, officer, director, contractor, consultant or employee of any of the Companies (including, without limitation, any claims pursuant to any statutory or other indemnity obligations of the Companies to the Sellers as directors or officers of the Companies), arising by virtue of or in any manner related to any actions or inactions with respect to any of the Companies or their respective affairs on or before the Closing Date; provided that Released Matters shall not include any rights or obligations arising under this Agreement, all other agreements contemplated by this Agreement or the transactions contemplated by this Agreement or any rights or obligations under earned but unpaid compensation and benefits provided under the Employee Benefit Plans in accordance with their 

37

 

 

terms or rights under any director’s and officer’s liability insurance policies relating to the period prior to the Closing Date or pursuant to any tail policy relating thereto purchased by the Sellers.  It is the intention of the Releasing Parties in executing this release, and in giving and receiving the consideration called for under this Agreement, that the release contained in this Section 5.7 shall be effective as a full and final accord and satisfaction and general release of and from all Released Matters and the final resolution by such Releasing Parties and the Released Parties of all Released Matters.  Notwithstanding anything in this Agreement or otherwise to the contrary, the release contained in this Section 5.7  will not be effective so as to benefit a particular Released Party in connection with any matter or event that would otherwise constitute a Released Matter, but involved fraud or the breach of any Applicable Law on the party of such Released Party.  The invalidity or unenforceability of any part of this Section 5.7 shall not affect the validity or enforceability of the remainder of this Section 5.7, which shall remain in full force and effect.  Each Releasing Party represents and warrants that it, he or she, as applicable, has not knowingly assigned or transferred or purported to assign or transfer to any Person any Released Matters.

5.8Company Books and Records

.  Each of the Sellers shall deliver to the Buyer within fourteen days after the Closing each of the relevant Companies’ Organizational Documents, the original minute book (containing the records of meetings of the stockholders, members, board of directors, managers and any committees of the board of directors (or their equivalents)), the stock certificate or membership interest book, and the stock or membership interest record book of each of the Companies.  The Sellers may, after the Closing, retain copies of any books and records of the Companies, including books and records stored on computer disks or any other storage medium, as the Sellers are reasonably likely to need to meet accounting, auditing and Tax requirements.  Upon reasonable notice and request by any of the Sellers, the Buyer, during normal business hours, shall: (i) make the employees of the Companies available to the Sellers at such employees’ normal business location(s) and during such employees’ normal business hours and (ii) permit the Sellers to examine, copy and make extracts from all book and records of the Companies, all without cost, surcharge or expense to the Sellers other than reasonable copy charges, in each case as is reasonably necessary in connection with any accounting, auditing or Tax requirements.

5.9Personnel

.  Following the Closing Date, the Buyer will, or will cause one of its Affiliates to, continue to provide the employees who are employed by the Companies (or one of their Affiliates) in the business of the Companies as of immediately prior to the Closing and who remain employed by the Companies in the business of the Companies after the Closing (who, for the avoidance of doubt, will be employed at-will) with (i) total cash compensation, including base salary or wages and bonus opportunity, that is no less favorable in than total cash compensation opportunity immediately prior to the Closing Date and (ii) employee benefits that are consistent with employee benefits offered by the Buyer at its other locations.  With respect to any employee benefit plan sponsored by the Buyer or any other Affiliate of the Buyer, the Buyer will, and will cause its Affiliates to: (A) allow immediate participation by all employees of the Companies as long as such employees have met the minimum tenures (as stated in the Buyer’s and its Affiliates’ plan documents) with the Companies as of the Closing Date, (B) waive all pre-existing condition exclusions or limitations and waiting periods with respect to participation and coverage requirements, (C) to the extent feasible, provide credit for any co-payments, co-insurance and deductibles paid by such employees with respect to any Employee Benefit Plan prior to becoming eligible to participate in any such analogous employee benefit plan in satisfying any applicable 

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deductible or out-of-pocket maximum requirements under such analogous employee benefit plan during the plan year in which such participation begins, and (D) recognize all continuous service with the Company and its Predecessors for all purposes (except to the extent such service recognition would result in a duplication of benefits). Notwithstanding the above, nothing in this Section 5.9 will, after the Closing Date, impose on Buyer any obligation to retain any employee in its employment for any amount of time.

5.10[****]

.  In the event that any of the [****] for the Companies is forgiven by the [****] and First Midwest Bank does not return the [****] directly to the Sellers, the Buyer agrees to promptly remit such amounts of the [****] actually received from First Midwest Bank to SM Holdings (but in any event, within five Business Days of the receipt of such funds).  

5.11SSY Corporate Records

.  Promptly following the Closing, the Sellers shall complete the necessary and appropriate clean-up of the corporate records of SSY to the reasonable satisfaction of the Buyer.  

Article VI
CLOSING OBLIGATIONS

6.1The Seller’s Obligation

s.  Simultaneously with the execution of this Agreement and the Closing, the Sellers shall deliver to the Buyer: 

(a)the stock or membership interest certificates representing all of the Equity of the Companies, endorsed in blank or accompanied by a duly executed assignment document;

(b)a trademark assignment agreement (the “Trademark Assignment Agreement”) transferring the Trademarks from SM Holdings to the Buyer, substantially in the form of Exhibit G attached to this Agreement; 

(c)the necessary authorizations, consents, and/or approvals set forth on Annex IV attached to this Agreement;

(d)payoff letters from the holders of Indebtedness identified on Section 4.9 of the Disclosure Schedules (other than the [****] referenced therein) and evidence of having made customary arrangements for such holders of such Indebtedness to deliver all related Lien releases to the Buyer as soon as practicable after the Closing;

(e)acceptance in writing by each of Pretasky and MJPJ of the Buyer’s offers of employment or consulting; 

(f)the resignations, effective immediately, of each director and officer of the Companies of his, her or its directorship and officership (but not his, her or its employment);   

(g)two copies of a USB or similar electronic storage containing all of the information uploaded to the Data Room and made available to the Buyer by the Sellers and the Companies prior to the Closing Date;

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(h)the Affiliate Real Property Leases executed by each Affiliate Real Property Owner for the corresponding Affiliate Real Property;

(i)the Escrow Agreement, duly executed by the Sellers; 

(j)a (i) copy of the Organizational Documents of each of the Companies certified by the Secretary of State of the state of incorporation or formation of each of the Companies and (ii) certificate of good standing, active status (or the equivalent) for each of the Companies issued by the relevant Secretary of State (or the equivalent) of the state of incorporation or formation of each of the Companies and of the states in which each Company is qualified to do business, in each case, dated within ten days prior to the Closing Date;

(k)a certificate signed by the secretary or manager of each of the Companies certifying as to the Organizational Documents of such Company and that such Organizational Documents have not been rescinded or modified and remain in full force and effect as of the Closing Date;

(l)a certificate signed by the secretary or manager of such Seller certifying: (i) the resolutions of the board of directors, managers or other authorizing body (or a duly authorized committee of such authorizing body) of such Seller authorizing the execution, delivery, and performance of this Agreement and the transactions contemplated by this Agreement and that such resolutions have not been rescinded or modified and remain in full force and effect as of the Closing Date; and (ii) incumbency and signatures of the officers of such Seller executing this Agreement or any other agreement contemplated by this Agreement; and

(m)(i) a properly completed IRS Form W-9; (ii) a Certificate of Non-Foreign Status in accordance with Treasury Regulations Section 1.1445-2(b)(2) executed on behalf of each Seller; and (iii) such other Tax forms as reasonably requested by the Buyer. 

6.2The Buyer’s Obligation

s.  Simultaneously with the execution of this Agreement and the Closing, the Buyer shall deliver to the Sellers:

(a)the Trademark Assignment Agreement, duly executed by the Buyer; 

(b)a copy of the finalized and bound R&W Insurance Policy; 

(c)the Affiliate Real Property Leases executed by the Companies for the corresponding Affiliate Real Property; and

(d)the Escrow Agreement, duly executed by the Buyer and the Escrow Agent. 

Article VII
Remedies for Breaches of this Agreement

7.1Survival of Representations and Warranties

.

(a)All of the representations and warranties of the Parties contained in Article III and Article IV of this Agreement shall survive the Closing under this Agreement (even if the damaged 

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Party knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing) and continue in full force and effect for a period of eighteen (18) months, other than: (i) the representations and warranties of the Sellers contained in Section 3.1 (the “Sellers’ Representations and Warranties” representation), the representations and warranties of the Buyer contained in Section 3.2 (the “Buyer’s Representations and Warranties” representation), Section 4.1 (the “Organization, Qualification and Corporate Power” representation), Section 4.2 (the “Capitalization” representation), Section 4.4 (the “Brokers’ Fees” representation), Section 4.9 (the “Undisclosed Liabilities; Indebtedness” representation), Section 4.11 (the “Tax Matters” representation) Section 4.21 (the “Employee Benefits” representation), and 4.23 (the “Environmental, Health and Safety Matters” representation) above (such representations and warranties described in clause (i), collectively referred to in this Agreement as the “Specified Representations”) which shall survive the Closing (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty at the time of Closing)  and continue in full force and effect for a period of six (6) years; and (ii) fraud and criminal misconduct which shall survive the Closing (even if the damaged Party knew or had reason to know of any misrepresentation or breach of warranty at the time of the Closing) without limitation.  The covenants and agreements contained in this Agreement, outside of Article III and Article IV above, to be performed or complied with on or after the Closing will survive until the expiration of any applicable statutes of limitations (after giving effect to any extensions or waivers). All of the covenants contained in Article V shall survive the Closing under this Agreement and continue in full force and effect for five (5) years.  No Indemnified Party shall be indemnified under this Article VII for any liability for breach of a representation, warranty or covenants unless the Sellers or the Buyer, as applicable, is given written notice from such Buyer Indemnitee or Seller Indemnitee asserting a claim on or before the expiration date of the survival period for a representation, warranty and covenant.  

(b)Notwithstanding anything in this Agreement to the contrary, (i) if written notice of any claim for indemnification under this Agreement has been delivered in accordance with this Agreement prior to the expiration of time between the Closing Date and the survival period date, as set forth in this Section 7.1 for such representation, warranty or covenant upon which such claim is based, the relevant representation, warranty or covenant shall not expire with respect to such claim, and such claim may be pursued, until the final resolution of such claim in accordance with the provisions of this Article VII, (ii) in no case shall the expiration of the applicable survival period for any representations, warranties and/or covenants affect or apply to any claim based on fraud; and (iii) the survival periods set forth in this Section 7.1 shall not affect or otherwise limit any claim made or available under the R&W Insurance Policy.  For purposes of this Article VII, “fraud” means actual fraud committed in the making of the representations, warranties and covenants of this Agreement. 

7.2Indemnification Provisions for the Buyer’s Benefit

.  

(a)The Sellers shall be obligated, severally and not jointly (based on their Pro Rata Percentages), to indemnify the Buyer and/or its officers, directors, shareholders, members, employees, representatives, advisors, Affiliates (including the Companies) and/or agents (each a “Buyer Indemnitee”) from and against the entirety of any Adverse Consequences the Buyer Indemnitee incurs, whether or not arising out of a third-party claim, through and after the date of the claim for indemnification (including any Adverse Consequences any Buyer Indemnitee may 

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suffer after the end of any applicable survival period; provided, that an indemnification claim with respect to such matter is made pursuant to Section 7.1 prior to the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by: (i) any breach (in the event any third party alleges facts that, if true, would be because the Sellers have breached or the alleged breach) by any of the Sellers of any of its representations and warranties contained in this Agreement, or made any misrepresentation or inaccuracy in its representations and warranties; provided, however, that in the event the Buyer elects to consummate the transactions contemplated herein notwithstanding that one or more of the consents required under Section 4.3 and listed in Section 4.3 of the Disclosure Schedule has not been obtained as of the Closing, the Buyer shall not be entitled to indemnification from the Sellers under this Section 7.2(a)(i) for a breach of any representation or warranty in Section 3.1(c) or Section 4.3 to the extent related to not obtaining such consent prior to Closing; or (ii) any breach by any of the Sellers of any of its covenants or agreements contained in this Agreement, including without limitation, the Sellers’ obligation to make payments of certain Taxes pursuant to Section 8.2.

(b)The Sellers shall be obligated, severally and not jointly (based on their Pro Rata Percentages), to indemnify each Buyer Indemnitee from and against the entirety of any Adverse Consequences Buyer Indemnitee may suffer resulting from, arising out of, incurred with respect to, relating to, in the nature of, or caused by: (i) any Indebtedness of any of the Companies that is outstanding as of immediately prior to the Closing and is not paid on or before the Closing; (ii) the Sellers’ application for the [****], application for forgiveness of the [****] and use of the [****], including, but not limited to, any costs, expenses, Proceedings, criminal or civil liabilities and/or penalties that may result; (iii) any Company Expenses that are not taken into account in the determination of the Final Purchase Price; and (iv) any claims, damages and costs arising from any non-compliance with Applicable Privacy Laws that is disclosed in Section 4.13(g) of the Disclosure Schedule as of the Closing Date, including, without limitation, costs associated with achieving compliance, as well as any third party claims and regulatory investigations, including any associated damages or amounts paid in settlement (including court costs and reasonable attorneys’ fees) that arise from or relate to the disclosures in Section 4.13(g) of the Disclosure Schedule (and for the avoidance of doubt, notwithstanding any provision in this Agreement to the contrary, to the extent there exists any non-compliance with Applicable Privacy Laws that is disclosed to the Buyer in the Disclosure Schedule (and therefore excluded from coverage under the R&W Insurance Policy by its terms), the Buyer shall not be required to pursue recovery from the R&W Policy before proceeding against the Sellers).   

(c)Each Buyer Indemnitee’s right to indemnity shall in no way be limited by (i) any inspection, survey, audit and access to the books and records of the Companies that the Buyer may directly or through its representatives have conducted prior to the Closing Date; or (ii) the knowledge of the Buyer as of the Closing Date of the existence of facts, events, omissions or documents which may be in breach of any representations and warranties or covenants and agreements or in any event give rise to an indemnification commitment of the Sellers.

(d)Notwithstanding anything provided in this Agreement to the contrary, the indemnification obligations of the Sellers pursuant to this Section 7.2 shall be limited as follows: 

(i)  no Adverse Consequences shall be payable under Section 7.2(a)(i) until the total of such Adverse Consequences exceeds an amount equal to the Seller Deductible, 

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and then only Adverse Consequences in excess of the Seller Deductible shall be payable; provided, however, that the above limitation shall not apply in the case of fraud or any breach of any of the Specified Representations;

(ii)  the Sellers’ aggregate Liability for all indemnification under Section 7.2(a)(i) shall be limited to, and shall not exceed, an amount equal to the Seller Cap; provided, however, that the above limitation shall not apply in the case of fraud or any breach of any of the Specified Representations; and 

(iii)notwithstanding the above, in no event will the Sellers be liable for Adverse Consequences exceeding the proceeds received by the Sellers under this Agreement; and

(iv)subject to the other limitations, conditions and restrictions of this Article VII, the sole recourse and exclusive remedy of the Buyer Indemnitees with respect to claims for indemnification for Adverse Consequences pursuant to Section 7.2(a)(i) shall be (A) first, during the period during which the Escrow Agreement remains in effect, be satisfied from the Escrow Amount (if and to the extent funds are available) pursuant to the terms and conditions of the Escrow Agreement, and (B) then second, to the extent that any such obligation is not able to be satisfied in full from the Escrow Amount, be satisfied, without duplication, from the R&W Insurance Policy; provided however, that if and to the extent Adverse Consequences arising pursuant to Section 7.2(a)(i) are the result of (a) fraud or criminal misconduct by the Sellers in the making of the representations and warranties contained in Section 3.1 or Article IV or (b) a breach of the Specified Representations, then, subject to the other limitations, conditions and restrictions set forth in this Article VII, (x) (1) in respect of fraud or criminal misconduct in the making of representation and warranties contained in Article IV and (2) in respect of a breach of the Specified Representations (other than Sections 3.1(a)-(e)), the Sellers may be responsible, severally and not jointly (based on their Pro Rata Percentages), for the amount of such Adverse Consequences that are less than the retention under the Representation and Warranty Policy then in effect (e.g. subject to reduction of such retention following any “drop-down date”) and the amount of such Adverse Consequences that exceed the then-existing coverage under the R&W Insurance Policy (if any), and (y) (1) in respect of fraud or criminal misconduct in the making of representation and warranties by any Seller in Section 3.1 and (2) in respect of a breach of the Specified Representations in Sections 3.1(a)-(e), the applicable Seller (and no other Seller(s)) may be responsible for the amount of such Adverse Consequences that are less than the retention under the R&W Insurance Policy then in effect (e.g. subject to reduction of such retention following any “drop-down date”) and the amount of such Adverse Consequences that exceed the then-existing coverage under the R&W Insurance Policy (if any).

(e)The provisions in Section 7.2(c) above are not applicable to, and shall not in any way limit, claims under the R&W Insurance Policy, except as and to the extent expressly set forth in the R&W Insurance Policy.

(f)With respect to any matter covered by this Article VII, any indemnification claim shall be net of any insurance proceeds actually received by the Indemnified Party (net of any deductible amounts and reasonable costs of collection and any increase in premiums in connection therewith), and, to the extent that insurance proceeds are collected by the Indemnified Party after an indemnification claim has been settled or finally determined, the Indemnified Party shall 

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reimburse the Indemnifying Party for any and all Adverse Consequences paid by the Indemnifying Party to the Indemnified Party pursuant to this Agreement to the extent such amount is subsequently paid to the Indemnified Party by any Person other than the Indemnifying Party.

(g)Notwithstanding anything contained in this Agreement to the contrary, (a) the Buyer Indemnitees may not recover duplicative Adverse Consequences in respect of a single set of facts or circumstances under more than one warranty, representation or covenant in this Agreement whether such facts or circumstances would give rise to a breach of more than one warranty, representation or covenant in this Agreement, and (b) the Buyer Indemnitees may not assert any claim under Article VII for any Adverse Consequences to the extent such item was actually included in the Net Working Capital, the Indebtedness or the Company Expenses, in each case, in the calculation of the Final Purchase Price, as determined pursuant to Section 2.4.  In no event may a Buyer Indemnified Party have a “double recovery” from both the Sellers and the R&W Insurance Policy with respect to the same Adverse Consequences.  

(h)The Indemnified Party shall use commercially reasonable efforts within its control to mitigate any Adverse Consequences or potential Adverse Consequences after any event which would reasonably be expected to give rise to any Adverse Consequence.

(i)The Buyer’s and the Sellers’ sole remedy for any and all claims with respect to the transactions contemplated by this Agreement (other than with respect to fraud, criminal misconduct, Sections 5.4, 5.5 and 5.6 and Article VIII) shall be the indemnity set forth in this Article VII, and none of the Buyer Indemnitees or the Seller Indemnitees shall have any other entitlement, remedy or recourse, whether in contract, tort or otherwise, against the other party with respect to the transactions contemplated by this Agreement, all of such remedies, entitlements and recourse being expressly waived by the parties hereto to the fullest extent permitted by Applicable Law. Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall affect the ability of the Buyer to make any claim under the R&W Insurance Policy.

(j)For purposes of determining the amount of Adverse Consequences resulting from any misrepresentation or breach of a representation or warranty and for purposes of determining whether there has been any misrepresentation or breach of a representation or warranty, all representations and warranties set forth in this Agreement, that are qualified by reference to “material,” “materially,” “Material Adverse Effect or Change” or any similar term shall be deemed to have been made without giving effect to such materiality qualifiers.

(k)The Sellers shall not have any right of contribution against any Company with respect to any breach by the Sellers of any of their respective representations, warranties, covenants or agreements.

(l)Pretasky and MJPJ shall be obligated, jointly and severally, to indemnify each Buyer Indemnitee from and against the entirety of any Adverse Consequences the Buyer Indemnitee may suffer resulting from, arising out of, relating to any claim made by any former owner (other than the Sellers) of membership interests or other equity securities of SSY or SSY’s Predecessor, Criterion Holdings, LLC, relating to any purchase or sale or other transfer of such membership interests or other equity securities, allocation of profits and losses in connection with 

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such membership interests or other equity interests or any distribution made or to have been made with respect to such membership interests or other equity securities.  

7.3R&W Insurance

.  The Sellers shall use reasonable commercial efforts to assist and fully cooperate with the Buyer in connection with any claim by the Buyer under, or recovery by the Buyer with respect to, the R&W Insurance Policy.  Following the Closing, the Buyer shall not modify or amend the R&W Insurance Policy’s subrogation or third-party beneficiary provisions to the extent benefitting the Sellers.

7.4Indemnification Provisions for the Sellers’ Benefit

.  The Buyer shall be obligated to indemnify the Sellers and/or their respective officers, directors, employees, representatives, advisors, Affiliates and/or agents (each a “Seller Indemnitee”) from and against the entirety of any Adverse Consequences that such Seller Indemnitee suffered through and after the date of the claim for indemnification (including any Adverse Consequences that such Seller Indemnitee suffered after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by: (i) any breach (in the event any third party alleges facts that, if true, would be because the Buyer had breached or the alleged breach) by the Buyer of any of its representations and warranties contained in this Agreement, or made any misrepresentation or inaccuracy in its representations and warranties; or (ii) any breach by the Buyer of any of its covenants or agreements contained in this Agreement. 

7.5Matters Involving Third Parties

.

(a)If any third party notifies any Party (the “Indemnified Party”) with respect to any matter (a “Third-Party Claim”) that may give rise to a claim for indemnification against any other Party (the “Indemnifying Party”) under this Article VII, then the Indemnified Party shall promptly notify each Indemnifying Party of the Third-Party Claim in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation under this Agreement unless (and then solely to the extent) the Indemnifying Party is actually and materially prejudiced by such delay.

(b)Any Indemnifying Party will have the right to defend the Indemnified Party against the Third-Party Claim with counsel of its choice satisfactory to the Indemnified Party so long as: (A) the Indemnifying Party notifies the Indemnified Party in writing within 15 days after the Indemnified Party has given notice of the Third-Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against the Adverse Consequences, subject to the limitations (if any) under this Article VII, the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third-Party Claim; (B) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party has and will have the financial resources to defend against the Third-Party Claim and fulfill its indemnification obligations under this Agreement; (C) the Third-Party Claim involves only money damages and does not seek an injunction or other equitable relief; (D) settlement of, or an adverse judgment with respect to, the Third-Party Claim is not, in the good faith judgment of the Indemnified Party, likely to be adverse to the continuing business interests or the reputation of the Indemnified Party; (E) the Third-Party Claim does not relate to or arise in connection with any Proceeding (other than any non-criminal Tax Proceeding with respect to a Pre-Closing Tax Period that is not a Straddle Period); (F) the Indemnifying Party conducts the 

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defense of the Third-Party Claim actively and diligently; (G) the assumption of the defense by the Indemnifying Party is not reasonably likely to cause a Buyer Indemnitee to lose coverage under the R&W Insurance Policy; (H) a Buyer Indemnitee or the insurer is not required to assume the defense of such Third-Party Claim pursuant to the R&W Insurance Policy; or (I) the insurer of the R&W Insurance Policy and the Buyer have not confirmed in writing that the applicable Adverse Consequences will be fully covered other than by the Sellers.

(c)So long as the Indemnifying Party is conducting the defense of the Third-Party Claim in accordance with Section 7.5(b) above: (A) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim; (B) the Indemnified Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnifying Party (not to be unreasonably withheld) and the consent of the insurer under the R&W Insurance Policy; and (C) the Indemnifying Party will not consent to the entry of any judgment on or enter into any settlement with respect to the Third-Party Claim without the prior written consent of the Indemnified Party (not to be unreasonably withheld; provided that the Indemnified Party may withhold consent if such consent would require the Indemnified Party to admit fraud, intentional wrongdoing or a violation of Applicable Law or impose any restriction on the business of the Indemnified Party).

(d)In the event any of the conditions in Section 7.5(b) above is or becomes unsatisfied, however: (A) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into any settlement with respect to, the Third-Party Claim if it acts reasonably and in good faith upon fifteen (15) days’ prior written notice (if possible) to the Indemnifying Party (and the Indemnified Party need not consult with, or obtain any consent from, any Indemnifying Party); (B) the Indemnifying Parties will reimburse the Indemnified Party promptly and periodically for the reasonable costs of defending against the Third-Party Claim (including attorneys’ fees and expenses at all levels of Proceedings); and (C) the Indemnifying Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, incurred with respect to, relating to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this Article VII.

(e)Notwithstanding anything to the contrary in this Section 7.5, the control of the defense of any Third-Party Claim for which a Buyer Indemnitee may seek recovery under the R&W Insurance Policy shall be subject to the provisions of the R&W Insurance Policy.

7.6Direct Claims

.  An Indemnified Party shall, as promptly as is reasonably practicable after becoming aware of any Adverse Consequences, obligations, or facts, in each case, with respect to any matter which has or could reasonably be expected to give rise to a claim for indemnification under this Article VII and not involving a Third-Party Claim, provide prompt written notice to the Indemnifying Party under this Agreement describing the subject matter of such claim or demand; provided, however, that no delay on the part of such Indemnified Party in notifying an Indemnifying Party shall relieve the Indemnifying Party from any obligation under this Agreement unless (and then solely to the extent) the Indemnifying Party is actually prejudiced by such delay.

7.7Escrow

. 

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(a)On the Closing Date, the Buyer shall pay to the Escrow Agent the Escrow Amount to be held pursuant to the terms of the Escrow Agreement. 

(b)On the date that is eighteen (18) months after the Closing Date (the “Escrow Release Date”), the remaining portion of the Escrow Amount less the aggregate amount claimed by any Buyer Indemnitee pursuant to claims made against such funds in accordance with this Agreement and not fully resolved prior to such date shall be released to the Sellers’ Representative, to be distributed to each Seller in accordance with its Pro Rata Percentage.  At any time following the Escrow Release Date, to the extent the available portion of the Escrow Amount exceeds the aggregate amount claimed by any Buyer Indemnitee pursuant to claims for indemnification under this Agreement and not fully resolved prior to the time of determination, such excess shall be promptly released to the Sellers.

(c)The Buyer and the Sellers’ Representative shall deliver joint written instructions to the Escrow Agent instructing the Escrow Agent to make any distributions from the Escrow Account provided for in this Agreement. 

7.8[****]

.  On the Closing Date, the Buyer shall retain the [****] Amount. The Parties agree that if, within ninety (90) days after the Closing, [****], a division of [****], fails to consent to the change of control contemplated by this Agreement or terminates any of the dealer agreements with the Companies listed on Schedule 7.8(a) (the “[****]”) for any geographic regions set forth on Schedule 7.8(b) (the “Regions”) for any reason other than any action or inaction by the Buyer (excluding the Transaction), the [****] Amount per Region (up to the full [****] Amount).  If, after ninety (90) days after the Closing, [****] has consented to the change of control contemplated by this Agreement and has not terminated any of the [****] Dealer Agreements for the Regions, the Buyer shall release the [****] Amount (less any amounts retained by the Buyer pursuant to this Section 7.8) to the Sellers in accordance with the Pro Rata Percentages.

7.9[****]

.  On the Closing Date, the Buyer shall retain the [****] Amount. The Parties agree that if the [****] n/k/a [****] (“[****]”) consents to a sublease between Skipper Real Estate Holdings, Inc., a Wisconsin corporation (“SREH”), and SBI pursuant to the [****] Leases for the premises located at [****], [****] and [****] ([****]”) or otherwise agrees in writing to allow SBI to continue to operate in substantially the same manner  as the Sellers’ operation of the Companies and upon substantially the same terms as the [****] Leases, including, without limitation, the amount of the lease payments (the “[****]”), the Buyer shall release the [****] to the Sellers promptly after receipt of the [****] Consent in accordance with the Pro Rata Percentages.  The Buyer may keep the [****] Holdback Amount if the [****] has issued a final, non-appealable Order that (i) requires SBI to vacate the [****] or (ii) prevents SBI from continuing to operate in substantially the same manner as the Sellers’ operation of the Companies.  All pre-tax earnings of SBI from the [****] shall be included in the determination of Pre-Tax Earnings of the Companies for purposes of calculating the Earnout Payments pursuant to Section 2.5.  

7.10Environmental Indemnification

. 

(a)The Sellers shall be obligated, severally and not jointly (based on their Pro Rata Percentages), to indemnify each Buyer Indemnitee from and against the entirety of any Adverse 

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Consequences Buyer Indemnitee may suffer resulting from, arising out of, incurred with respect to, relating to, in the nature of, or caused by any Pre-existing Environmental Condition and any violation of Environmental, Health and Safety Law at the Real Property immediately prior to the Closing Date, whether discovered pre- or post-Closing, except to the extent caused solely by the Buyer after the Closing; provided, however, that if such liability emanates from the Buyer’s operation of the Companies in substantially the same manner as the Sellers’ operation of the Companies and is discovered within 180 days following the Closing, the Sellers shall be solely liable for such liability and the Sellers shall promptly take all commercially reasonable actions at their sole expense as required by any Environmental, Health and Safety Law which regulates such Pre-existing Environmental Condition or violation; provided, however, that if such Pre-existing Environmental Condition and any violation of Environmental, Health and Safety Law at the Real Property is also a breach of a representation or warranty under Article IV, the Buyer shall first be required to pursue recovery for such Adverse Consequences under the R&W Insurance Policy in the manner described under Section 7.2(d)(iv) above, unless such Pre-existing Environmental Condition is disclosed to the Buyer in the Disclosure Schedule (and therefore excluded from coverage under the R&W Insurance Policy by its terms).

(b)Notwithstanding any provision in an Affiliate Real Property Lease, the Sellers covenant not initiate a formal legal action in court or with a Governmental Authority against the Buyer alleging that the Buyer caused Environmental Contamination on the Affiliate Real Property without first providing to Buyer a written opinion under seal from a licensed professional engineer (not an employee of any Seller) that the post-Closing operation of the Real Property appears to have caused or contributed to a release of Hazardous Materials in violation of Environmental, Health and Safety Laws and/or which likely resulted in Environmental Contamination.  In the event Sellers have reason to believe that a violation of Environmental, Health and Safety Laws has occurred or that Environmental Contamination may be present on, in, or under or about the Real Property, Buyer shall cooperate fully in any investigation or evaluation by Sellers, including, without limitation, providing full and timely access to the Real Property and any relevant or potentially relevant books, papers, records, equipment, and/or interviews of employees of Buyer. 

Article VIII
TAX MATTERS

The following provisions shall govern the allocation of responsibility as between the Buyer and the Sellers for certain tax matters following the Closing Date:   

8.1Tax Returns.  

(a)The Sellers’ Representative shall have the exclusive authority and obligation to prepare, or cause to be prepared, all Tax Returns for the Companies for all periods ending on or before the Closing Date, and the appropriate officer of each relevant Company shall sign and timely file the same; provided, however, that (i) the Sellers’ Representative shall provide the Buyer with draft Tax Returns for the relevant Company required to be prepared after the Closing Date by the Sellers’ Representative pursuant to this Section 8.1(a) at least thirty (30) days prior to the due date (or extended due date) for the filing of such Tax Returns, (ii) at least fifteen (15) days prior to the due date for the filing of such Tax Returns, the Buyer shall notify the Sellers’ Representative of the existence of any objections the Buyer may have to any items set forth on 

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such draft Tax Returns, and (iii) if, after consulting in good faith, the Buyer and the Sellers’ Representative are unable to resolve such objection(s), such objection(s) shall be referred to the Independent Accountant for resolution on a basis consistent with the past practices of the relevant Company with respect to such items.  The cost of the Independent Accountant pursuant to this Section 8.1(a) shall be borne 50% by the Sellers and 50% by the Buyer.

(b)Except as provided in Section 8.1(a) above, the Buyer shall have the exclusive authority and obligation to prepare and timely file, or cause to be prepared and timely filed, all Tax Returns of the relevant Company for tax periods ending after the Closing Date; provided, however, that (i) the Buyer shall provide the Sellers’ Representative with draft Tax Returns for the relevant Company required to be prepared by the Buyer pursuant to this Section 8.1(b) for a Straddle Period at least thirty (30) days prior to the due date (or extended due date) for filing such Tax Returns, (ii) at least fifteen (15) days prior to the due date for the filing of such Tax Returns, the Sellers’ Representative shall notify the Buyer of the existence of any objection the Sellers’ Representative may have to any items set forth on such draft Tax Returns, and (iii) if, after consulting in good faith, the Buyer and the Sellers’ Representative are unable to resolve such objection(s), such objection(s) shall be referred to the Independent Accountant for resolution on a basis consistent with the past practices of the relevant Company with respect to such items.  The cost of the Independent Accountant pursuant to this Section 8.1(b) shall be borne fifty percent by the Sellers and fifty percent by the Buyer.  The Buyer shall prepare all Tax Returns for Straddle Periods on a basis consistent with past practices of the relevant Company, except to the extent otherwise required by Applicable Law.

8.2Payment of Taxes.

(a)Each Seller shall be responsible and liable for the timely payment of its pro rata share of any and all Taxes for any Pre-Closing Tax Period with respect to the properties, income and operations of the Companies.  The Sellers shall not be liable for Taxes that are Excluded Taxes.  Each Seller shall pay to the Buyer its pro rata share of the amount of any Taxes allocated to the Sellers pursuant to this Section 8.2(a) or Section 8.2(b) below (to the extent not already paid by the Sellers on or prior to five (5) Business Days prior to the due date of such Taxes).

(b)All Taxes (other than Excluded Taxes) with respect to the income, property or operations of the Company that relate to a Straddle Period shall be apportioned between the Sellers and the Buyer as follows: (i) in the case of Taxes other than income, sales and use and withholding Taxes, on a per diem basis, based on the number of days in the Pre-Closing Tax Period and (ii) in the case of income, sales and use and withholding Taxes, as determined from the books and records of the relevant Company as though the taxable year of the relevant Company terminated at 11:59 p.m. local time on the Closing Date.  

8.3Cooperation on Tax Matters.

(a)The Buyer and the Sellers shall cooperate fully, as and to the extent reasonably requested by the other Party, in connection with the filing of Tax Returns pursuant to this Article VIII and any Proceeding with respect to Taxes.  Such cooperation shall include the retention and (upon the other Party’s request) the provision of records and information that are 

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reasonably relevant to any such Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided under this Agreement.  The Buyer and the Sellers agree: (A) to retain all books and records with respect to Tax matters pertinent to the Companies relating to any taxable period beginning on or before the Closing Date until the expiration of the statute of limitations (and, to the extent notified by the Buyer or the Sellers, any extensions) of the respective taxable periods, and to abide by all record retention agreements entered into with any Taxing Authority; and (B) to give the other Party reasonable written notice prior to transferring, destroying or discarding any such books and records and, if the other Party so requests, the Buyer or the Sellers, as the case may be, shall allow the other Party to take possession of such books and records.

(b)The Buyer and the Sellers further agree, upon request, to use their reasonable commercial efforts to obtain any certificate or other document from any Governmental Authority or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including, but not limited to, with respect to the Transaction).

(c)The Buyer and the Sellers further agree, upon request, to provide the other Party with all information that either Party may be required to report pursuant to Code Section 6043 (or any corresponding provision of state, local or non-U.S. Tax law), or Code Section 6043A (or any corresponding provision of state, local or non-U.S. Tax law), or Treasury Regulations promulgated under such Sections (or any corresponding provision of state, local or non-U.S. Applicable Law).

8.4Tax-Sharing Agreements.

 All tax-sharing agreements or similar agreements with respect to or involving the Companies shall be terminated as of the Closing Date and, after the Closing Date, the Companies shall not be bound by such agreements or have any Liability under such agreements.

8.5Certain Taxes and Fees.

 All transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the Transaction (collectively, the “Transfer Taxes”) shall be paid 50% by the Buyer and 50% by the Sellers when due, and the Buyer will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by Applicable Law, the Sellers will join in the execution of any such Tax Returns and other documentation. Any such Transfer Taxes that were taken into account as Company Expenses in determining the Final Purchase Price shall be treated as having been paid by the Sellers for purposes of this Section 8.5.

8.6Tax Treatment of Transactions.

 The Parties agree that the purchase by the Buyer of all of the issued and outstanding equity interests of a qualified subchapter S subsidiary or a limited liability company that is a disregarded entity for income Tax purposes shall be treated as a purchase of assets by the Buyer for income Tax purposes. 

8.7Refunds

.  The Sellers shall be entitled to receive any refunds of Taxes for any Pre-Closing Tax Period, whether received by the Buyer, the Companies, or any of their respective Affiliates, and whether received in the form of a refund, offset, credit, receipt of payment, or otherwise, along with any interest paid with respect thereto by the relevant Governmental 

50

 

 

Authority (a “Tax Refund”), unless such Tax Refund was specifically reflected as an asset within Net Working Capital or is with respect to a Tax paid by the Buyer, the Companies or their respective Affiliates after the Closing and was not an Excluded Tax.  The Buyer, the Companies, and their respective Affiliates shall cause any Tax Refunds to be paid promptly to the appropriate Sellers.  In the case of any Straddle Period, the amount of Tax Refunds to which the appropriate Sellers are entitled shall be determined in the same manner as Taxes are allocated to the Sellers with respect to such Straddle Period under Section 8.2(b).  The Buyer, the Companies, and their respective Affiliates shall promptly execute such documents, take commercially reasonable additional actions, and otherwise reasonably cooperate as may be necessary to perfect their rights in and obtain all Tax Refunds.  Neither the Buyer, the Companies, nor any of their respective Affiliates shall forfeit, fail to collect, or otherwise minimize or delay any Tax Refund.  The Buyer, the Companies, and their respective Affiliates shall provide the Sellers with such assistance or access to records or information as may be reasonably requested in connection with the review of any Tax Return, including the filing of any claim for refund, for purposes of determining the Tax Refunds payable pursuant to this Section 8.7.  The amount of any Tax liabilities included in the Net Working Capital that are not actually paid to the relevant Governmental Authority shall be treated as a Tax Refund to which this Section 8.7 applies. The amount of a Tax Refund shall be reduced by the expenses incurred by the Buyer, the Companies or their respective Affiliates, including any Tax resulting from the receipt of the Tax Refund.

8.8Tax Claims

.  Section 7.5 shall apply to any Tax-related matters that are Third-Party Claims.  For the avoidance of doubt, subject to the qualifications and limitations set forth above in this Section 7.5, the Indemnifying Party will have the right to defend the Indemnified Party against any Third-Party Claim that is a Tax Proceeding. 

8.9Prohibited Actions

.  Unless otherwise required by Applicable Law (in which case, the Buyer shall give the Sellers 30 days’ notice), without first obtaining the prior written consent of the Sellers’ Representative (such consent not to be unreasonably withheld or delayed), after the Closing, neither the Buyer, the Companies, nor their respective Affiliates shall (i) file, re-file, supplement, or amend any Tax Return of any Company for any Pre-Closing Tax Period; (ii) file any voluntary disclosure agreement, participate in any arrangement similar to a voluntary disclosure agreement, or voluntarily approach any taxing authority regarding any Taxes or Tax Returns of any Company for any Pre-Closing Tax Period; or (iii) take any other action relating to Taxes that could reasonably be expected to create a Tax liability for the Sellers with respect to a Pre-Closing Tax Period.

8.10Post-Closing Tax Filings

.  Except as otherwise provided in Section 8.1(a) with respect to Straddle Periods, the Buyer acknowledges and agrees that it is responsible for making its own determinations with respect to Tax filings after Closing and it shall not rely on the pre-Closing practices of any Seller (and/or any Affiliate thereof) or any Company with respect to such filings, nor shall it be bound by such pre-Closing practices of any Seller.

8.11Transaction Deductions

.  The Buyer and the Sellers shall each be allocated the income Tax deduction attributable to any transaction expense for which each party bears the economic detriment, except to the extent otherwise required by Applicable Law.

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Article IX
APPOINTMENT OF SELLERS’ REPRESENTATIVE

9.1Appointment

.  By virtue of the execution of this Agreement, each Seller (a) appoints, as of the Closing Date, the Sellers’ Representative, as his, her or its true and lawful agent and attorney-in-fact to: (i) direct the Escrow Agent regarding how to distribute any amounts released from the Escrow Account; (ii) give and receive notices and communications to or from the Buyer and/or the Escrow Agent relating to this Agreement, the Escrow Agreement or any of the transactions and other matters contemplated by this Agreement or the Escrow Agreement; (iii) authorize deliveries to the Buyer of cash and/or cash equivalents from the Escrow Amount in satisfaction of claims asserted by Buyer (including by not objecting to claims); (iv) object to any claims by the Buyer in respect of payment from the Escrow Amount; (v) consent or agree to, negotiate, enter into settlements and compromises of, and agree to arbitration and comply with orders of courts and awards of arbitrators with respect to such claims; (vi) assert, negotiate, enter into settlements and compromises of, and agree to arbitration and comply with orders of courts and awards of arbitrators with respect to any other claim by the Buyer against any such Seller or by any such Seller against the Buyer or any dispute between the Buyer and any such Seller, in each case relating to this Agreement, the Escrow Agreement, or the transactions contemplated by this Agreement or the Escrow Agreement;; and (vii) take all other actions necessary or appropriate in the judgment of the Sellers’ Representative in connection with any transaction contemplated under this Agreement or for the accomplishment of the above, in each case without having to seek or obtain the consent of any Person under any circumstance (clauses (i) through (vii), collectively, the “Sellers’ Representative Actions”) and (b) consents to the removal and replacement of the Sellers’ Representative pursuant to Section 9.3 below.  The appointment of the Sellers’ Representative shall be deemed coupled with an interest and shall be irrevocable, and any other Person, including the Buyer and its Affiliates, may conclusively and absolutely rely, without inquiry, upon any action of the Sellers’ Representative as the act of each Seller in all matters referred to in this Agreement, and any such Person shall have no liability for any action taken (or not taken) in reliance upon any action or instruction of the Sellers’ Representative. Without limiting the generality or effect of the above, any claims or disputes between or among the Buyer, the Sellers’ Representative and/or any one or more Sellers relating to this Agreement or the Escrow Agreement or the transactions contemplated by this Agreement or the Escrow Agreement shall, in the case of any claim or dispute asserted by or against or involving any such Seller (other than any claim against or dispute with the Sellers’ Representative), be asserted or otherwise addressed solely by the Sellers’ Representative on behalf of such Seller (and not by such Seller acting on its own behalf).  The Sellers’ Representative shall have no liability to the Sellers or their respective Affiliates for any actions or omissions taken or suffered in good faith in his capacity as the Sellers’ Representative.  The Sellers shall reimburse the Sellers’ Representative for all Adverse Consequences, including out-of-pocket expenses, incurred in connection with his duties and obligations as the Sellers’ Representative hereunder, including, without limitation, all Adverse Consequences incurred in connection with the duties and obligations set forth in this Article IX.    

9.2Acceptance

.  Michael J. Pretasky, Jr. accepts his appointment as the Sellers’ Representative.

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9.3Replacement

. The Person serving as the Sellers’ Representative may be replaced from time to time by Sellers upon not less than ten days’ prior written notice to the Buyer.  

9.4Communications

. Any notice or communication given or received by, and any decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction of, the Sellers’ Representative shall constitute a notice or communication to or by, or a decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction of, all of the Sellers and shall be final, binding and conclusive upon each such Seller; and the Buyer and the Escrow Agent shall be entitled to rely upon any such notice, communication, decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction as being a notice or communication to or by, or a decision, action, failure to act within a designated period of time, agreement, consent, settlement, resolution or instruction of, each and every such Seller.  The Buyer and the Escrow Agent are relieved from any Liability to any Person for any acts done by them in accordance with any such notice, communication, decision, action, failure to act within a designated period of time, agreement, consent or instruction of the Sellers’ Representative.

Article X
MISCELLANEOUS

10.1Press Releases and Public Announcements

.  No Party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the Buyer and the Sellers; provided, however, the Buyer may make any public disclosure it believes in good faith is required by Applicable Law or any listing or trading agreement concerning its publicly traded securities (in which case the Buyer will use its reasonable commercial efforts to advise the other Parties prior to making the disclosure).

10.2No Third-Party Beneficiaries

. This Agreement shall not confer any rights or remedies upon any Person (including the employees of the Company) other than the Parties, the Buyer Indemnitees, the Seller Indemnitees and their respective successors and permitted assigns.

10.3Entire Agreement

.  This Agreement (including the documents referred to in this Agreement) constitutes the entire agreement among the Parties and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the extent they relate in any way to the subject matter of this Agreement.

10.4Succession and Assignment

.  This Agreement shall be binding upon and inure to the benefit of the Parties named in this Agreement and their respective successors and permitted assigns.  No Party may assign or delegate either this Agreement or any of his, her or its rights, interests, or obligations under this Agreement without the prior written approval of the Buyer and the Sellers; provided, however, that the Buyer may: (a) assign any or all of its rights and interests under this Agreement to one or more of its Affiliates and (b) designate one or more of its Affiliates to perform its obligations under this Agreement (in any or all of which cases the Buyer shall remain responsible for the performance of all of its obligations under this Agreement). Any attempted assignment or delegation of this Agreement or any rights, interests or obligations under this Agreement not in accordance with the terms of this Section 10.4 shall be void.

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10.5Counterparts

.  This Agreement may be executed in several counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute one agreement.  The exchange of a fully executed Agreement (in counterparts or otherwise) by electronic transmission in .PDF format or by facsimile shall be sufficient to bind the Parties to the terms and conditions of this Agreement.  

10.6Headings

.  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

10.7Notices

.  All notices, requests, demands, claims, and other communications under this Agreement shall be in writing.  Any notice, request, demand, claim, or other communication under this Agreement shall be deemed duly given: (i) when delivered personally to the recipient; (ii) two Business Days after being sent to the recipient by reputable international overnight courier service (charges prepaid); or (iii) one Business Day after being sent to the recipient by facsimile transmission or electronic mail, addressed to the intended recipient as set forth below:

If to the Sellers:

c/o Michael J. Pretasky, Jr.

S38W33768 County Road D

Dousman, WI 53118

Telephone: 414-870-2848

Email: mpretaskyjr@skipperbuds.com

 

With copies to:

 

Godfrey & Kahn, S.C. 

833 East Michigan Street

Suite 1800

Milwaukee, Wisconsin 53202

USA

Attention: Paul Griepentrog

Telephone: +1 414 287 9218

Facsimile: +1 414 273 5198

Email: pgriepentrog@gklaw.com

 

If to the Sellers’ Representative:

Michael J. Pretasky, Jr.

S38W33768 County Road D

Dousman, WI 53118

Telephone: 414-870-2848

Email: mpretaskyjr@skipperbuds.com

 

 

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With copies to:

 

Godfrey & Kahn, S.C. 

833 East Michigan Street

Suite 1800

Milwaukee, Wisconsin 53202

USA

Attention: Paul Griepentrog

Telephone: +1 414 287 9218

Facsimile: +1 414 273 5198

Email: pgriepentrog@gklaw.com

 

If to the Buyer:   

MarineMax, Inc.

2600 McCormick Drive

Suite 200
Clearwater, Florida 33759

USA
Attention: Mike McLamb 

                 Manny Alvare
Telephone:  +1 727 531 1700
Facsimile:  +1 727 532 8367

Email: mike.mclamb@marinemax.com

            manny.alvare@marinemax.com

 

With copies to:

Holland & Knight, LLP
100 North Tampa Street, Suite 4100
Tampa, Florida 33602

USA
Attention:  Robert J. Grammig
Telephone:  +1 813 227 6515 
Facsimile:  +1 813 229 0134

Email: robert.grammig@hklaw.com

 

Any Party may change the address to which notices, requests, demands, claims, and other communications under this Agreement are to be delivered by giving the other Party notice in the manner set forth in this Agreement.

10.8Governing Law

.  This Agreement shall be governed by and construed in accordance with the domestic laws of Wisconsin without giving effect to any choice or conflict of law provision or rule (whether of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than Wisconsin.  

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10.9Jurisdiction; Waiver of Jury Trial

.  All issues and questions concerning the construction, validity, interpretation and enforceability of this Agreement and its exhibits and schedules, and all related claims and disputes arising, whether in contract or tort, or at law or in equity, shall be governed by, and construed in accordance with, the laws of the State of Wisconsin, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Wisconsin or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Wisconsin. The Parties irrevocably agree and consent to be subject to the exclusive jurisdiction of the United States District Court for the Eastern District of the State of Wisconsin, and waive the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other Proceeding. In furtherance of the above, each of the Parties (a) waives the defense of inconvenient forum, (b) agrees not to commence any suit, action or other Proceeding arising out of this Agreement or any transactions contemplated hereby other than in any such court, and (c) agrees that a final judgment in any such suit, action or other Proceeding shall be conclusive and may be enforced in other jurisdictions by suit or judgment or in any other manner provided by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY COURT (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO OR IN CONNECTION WITH (i) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE, INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR (ii) THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.  

10.10Amendments and Waivers

.  No amendment of any provision of this Agreement shall be valid unless in writing and signed by the Buyer and the Sellers. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or breach of warranty or covenant under this Agreement, whether intentional or not, shall be valid unless in writing and signed by the Party making such waiver.  Any shall such waiver shall not be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant under this Agreement or affect in any way any rights arising by virtue of any prior or subsequent such default, misrepresentation, or breach of warranty or covenant.

10.11Severability

.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions of this Agreement or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

10.12Expenses

.  Except as otherwise specifically set forth in this Agreement, each Party shall bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the Transaction.  Notwithstanding the above, the Buyer, on one hand, and the Sellers, on the Sellers, on the other hand, each agree to pay 50% of all fees and expenses related to the R&W Insurance Policy, including the total premium, underwriting costs, brokerage commissions, surplus line taxes and other fees and expenses of such policy. 

10.13Construction

.  The Parties have participated jointly in the negotiation and drafting of this Agreement.  The Parties hereto agree that they have been represented by counsel during the 

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negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any statute or law shall be deemed also to refer to all rules and regulations promulgated under such laws, unless the context requires otherwise.  Any accounting term used in this Agreement shall have, unless otherwise specifically provided in this Agreement, the meaning customarily given such term in accordance with GAAP and all financial computations under this Agreement will be computed, unless otherwise specifically provided in this Agreement, in accordance with GAAP consistently applied.  The word “including” shall mean including without limitation.  The word “indemnify” means “indemnify” means indemnify, defend, reimburse and hold harmless.  The Parties intend that each representation, warranty, and covenant contained in this Agreement shall have independent significance. If any Party has breached or violated, or if there is an inaccuracy in, any representation, warranty, or covenant contained in this Agreement in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the Party has not breached or violated, or in respect of which there is not an inaccuracy, shall not detract from or mitigate the fact that the Party is in breach of the first representation, warranty, or covenant.  

10.14Incorporation of Exhibits, Annexes and Disclosure Schedule

.  The Exhibits, Annexes and Disclosure Schedule identified in this Agreement are incorporated in this Agreement by reference and made a part of this Agreement.

10.15Waiver of Conflicts

.  Recognizing that Godfrey & Kahn, S.C. has acted as legal counsel to the Sellers and the Companies prior to the Closing, and that Godfrey & Kahn, S.C. intends to act as legal counsel to the Sellers (which will no longer include the Company) after the Closing, the Buyer hereby waives, on its own behalf and agrees to cause its Affiliates to waive (including, after the Closing, the Companies), any conflicts that may arise in connection with Godfrey & Kahn, S.C. representing any Sellers after the Closing as such representation may relate to the Buyer, the Companies and/or the transactions contemplated by this Agreement.

10.16Pre-Closing Privileged Communications

.  The parties acknowledge that Godfrey & Kahn, S.C. has represented the Sellers and the Companies (collectively, the “Pre-Closing Represented Persons”) in connection with the transactions contemplated by and/or relating to this Agreement prior to the Closing (“Pre-Closing Representation”).  Any privilege attaching as a result of Godfrey & Kahn, S.C.’s representation of such Pre-Closing Represented Persons in connection with the Pre-Closing Representation shall survive the Closing and shall remain in effect; provided that such privilege from and after the Closing shall be assigned to and belong to and controlled by, as applicable, the Sellers (collectively, the “Pre-Closing Represented Seller Persons”).  For clarity, such privilege (i) may be waived only by the applicable Pre-Closing Represented Seller Person(s), and not by the Buyer, the Companies or any of their respective Affiliates, and (ii) shall not pass to or be claimed or used by Buyer, the Companies or any of their respective Affiliates.  As to any privileged attorney-client communications between counsel and any Pre-Closing Represented Person(s) prior to Closing (collectively, the “Privileged Communications”), the Buyer agrees, on its own behalf and on behalf of its Affiliates (including, after the Closing, the Companies) and 

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their respective successors and/or assigns, that none of the Buyer, any of its Affiliates (including, after the Closing, the Companies) or any of their respective successors or assigns, may use or rely on any of the Privileged Communications in any action or claim against or involving any of the parties to this Agreement after the Closing.  Further, the parties to this Agreement understand and agree that any failure to segregate and/or restrict the Buyer’s access to any Privileged Communications shall not be considered a waiver of the privilege.  None of the Buyer or any of its Affiliates (including, after the Closing, the Companies) shall have access to any Privileged Communications or to the files of Godfrey & Kahn, S.C. relating to the Pre-Closing Representation after the Closing.  Without limiting the generality of the foregoing, from and after the Closing (a) the Pre-Closing Represented Seller Person(s) (as applicable) and their respective Affiliates (and not the Companies) shall be the sole holders of the attorney-client privilege with respect to the Pre-Closing Representation, (b) to the extent that files of Godfrey & Kahn, S.C. in respect of the Pre-Closing Representation constitute property of the client, only the Pre-Closing Represented Seller Person(s) (as applicable) and their respective Affiliates (and not the Company) shall hold such property rights, and (c) Godfrey & Kahn, S.C. shall have no duty whatsoever to reveal or disclose any Privileged Communications or files to the Buyer, the Companies or any of their respective Affiliates by reason of any attorney-client relationship between Godfrey & Kahn, S.C. and the Pre-Closing Represented Persons.

Notwithstanding the foregoing, in the event a dispute arises between Buyer and/or the Companies, on the one hand, and a third party (other than a party to this Agreement or any of their respective Affiliates) after the Closing, the Companies (to the extent applicable) may assert the attorney-client privilege to prevent disclosure of confidential communications with Godfrey & Kahn, S.C. to such third party; provided that, in such instance, neither the Buyer nor the Companies may intentionally waive such privilege without the prior written consent of the Sellers’ Representative.

For the avoidance of doubt, this Section 10.16 shall only be applicable to the Pre-Closing Representation and shall not be applicable to any other engagement of Godfrey & Kahn, S.C. by any of the Companies.

10.17Specific Performance

. Each Party acknowledges and agrees that the other Parties may be damaged irreparably in the event any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached, so that a Party shall be entitled to injunctive relief to prevent breaches of this Agreement and to enforce specifically this Agreement and the terms and provisions of this Agreement in addition to any other remedy to which such Party may be entitled, at law or in equity.  In particular, the Parties acknowledge that the business of the Companies is unique and recognize and affirm that in the event any of the Sellers breaches this Agreement, money damages may be inadequate and the Buyer may have no adequate remedy at law, so that the Buyer shall have the right, in addition to any other rights and remedies existing in its favor, to enforce its rights and the Sellers’ obligations under this Agreement not only by action for damages but also by action for specific performance, injunctive, and/or other equitable relief.  Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement or any document in connection with the Transaction contemplated by this Agreement shall affect the ability of the Buyer to make any claim under the R&W Insurance Policy.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the Parties to this Agreement have executed this Agreement as of the date first above written.

	
	
SELLERS:

 

	
SKIPPER MARINE HOLDINGS, INC.

 

 

By:   /s/ Michael J. Pretasky, Sr.  

Name: Michael J. Pretasky, Sr.

Title:   Chairman of the Board

 

	
SSY HOLDINGS, INC.

 

 

By: /s/ Michael J. Pretasky, Jr.

Name: Michael J. Pretasky, Jr.

Title:   Chief Executive Officer

 

 

	
  /s/ Michael J. Pretasky, Sr.  

Michael J. Pretasky, Sr.

 

 

	
/s/ Michael J. Pretasky, Jr.

Michael John Pretasky, Jr. 2014 Trust, 
by Michael J. Pretasky, as co-trustee

 

	
 

	
/s/ Peter M. Sommerhauser

Michael John Pretasky, Jr. 2014 Trust, 
by Peter M. Sommerhauser, as co-trustee

 

	
/s/ Mark Ellerbrock

Mark Ellerbrock

 

 

	
/s/ Robert Ross Tefft, Jr.

Robert Ross Tefft, Jr.

 

	
 

SELLERS’ REPRESENTATIVE:

 

	
/s/ Michael J. Pretasky, Jr.

Michael J. Pretasky, Jr.

[Signature Page to Equity Purchase Agreement]

 

 

	
	
	
 

BUYER:

 

	
MARINEMAX, INC.

 

 

By: /s/ Michael McLamb

Name: Michael McLamb

Title: Executive Vice President, Chief Financial Officer and Secretary 

 

 

[Signature Page to Equity Purchase Agreement]

 

ANNEX I

DEFINITIONS

 

“Adverse Consequences” means any and all actions, suits, Proceedings, hearings, investigations, charges, complaints, claims, causes of action, (of every nature, arising from contract, tort, statute, regulation or otherwise), demands, injunctions, judgments, Orders, decrees, rulings, damages of any nature including any deficiency, dues, penalties, fines, charges, awards, assessments, costs, amounts paid in settlement, Liabilities, obligations, Taxes, Liens, controversies, losses, expenses, and fees (including costs of investigation, court costs and reasonable attorneys’ fees and expenses); provided, that Adverse Consequences shall not include any punitive damages, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

“Affiliate” means a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with the first-mentioned Person.  For purposes of this definition, “control” of a Person shall mean the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by ownership of voting stock, by contract or otherwise.

“Affiliate Real Property” means all land, buildings, structures, Improvements, fixtures, or other interest in real property that is owned by an Affiliate Real Property Owner and that is occupied or used by any of the Companies to operate their businesses as currently conducted, as set forth on Section 4.12(a) of the Disclosure Schedule.

“Affiliate Real Property Lease” means the Lease, in substantially the form attached as Exhibit H, for each Affiliate Real Property that will be entered into at the Closing between the corresponding Affiliate Real Property Owner and the applicable Company.

“Affiliate Real Property Owner” means any Affiliate of any of the Companies or any of the Sellers that owns any Affiliate Real Property.

“Applicable Law” means, with respect to any Person, any constitution, statute, law, ordinance, rule, principle of common law, code, administrative interpretation, regulation, act, treaty, Order, writ, injunction, directive, judgment, decree or other requirement of any Governmental Authority applicable to such Person or any of its Affiliates or any of their respective properties, assets, officers, directors, employees, consultants or agents.

“Applicable Privacy Laws” means the Applicable Laws (as amended and enacted from time to time) that relate to Personal Information, privacy, data protection or data transfer issues, including all implementing laws, rules and regulations, all applicable state privacy, security, data protection and destruction, and data breach notification laws, including without limitation the European Union General Data Protection Regulation and applicable implementing laws, the California Consumer Privacy Act, as well as applicable industry standards such as the Payment Card Industry Data Security Standard (PCI-DSS).

 

 

“Basis” means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act, or transaction that forms or could form the basis for any specified consequence.

“Business Day” means any day other than a Saturday, Sunday or a national bank holiday in Florida or Wisconsin.

“Calculation Periods” means: (a) the period beginning on the Closing Date and ending on the day prior to the first anniversary of the Closing Date (the “First Calculation Period”); (b) the period beginning on the second anniversary of the Closing Date and ending on the day prior to the third anniversary of the Closing Date (the “Second Calculation Period”), (c) the period beginning on the third anniversary of the Closing Date and ending on the day prior to the fourth anniversary of the Closing Date (the “Third Calculation Period”), (d) the period beginning on the fourth anniversary of the Closing Date and ending on the day prior to the fifth anniversary of the Closing Date (the “Fourth Calculation Period”), and (e) the period beginning on the fifth anniversary of the Closing Date and ending on the day prior to the sixth anniversary of the Closing Date (the “Fifth Calculation Period”).  

“CARES Act” means the Coronavirus Aid, Relief and Economic Security Act.

“Cash” means unrestricted cash and cash equivalents of the Companies, taken together, as determined in accordance with GAAP.

“[****]” [****]

“Cleanup” means all actions to clean up, treat, decontaminate, remove, remediate, or in any other way address the presence, or Release of any Hazardous Material whether or not any expense incurred in connection with such action constitutes a capital expenditure.

“COBRA” means the requirements of Part 6 of Subtitle B of Title I of ERISA and Code Section 4980B and of any similar local, state or non U.S. law.

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

“Company Expenses” means, without duplication, the collective amount due and payable by the Companies, as of the Closing Date for all fees, costs and expenses incurred in connection with the Transaction, including: (a) the fees and expenses of each of the Companies’ advisors; (b) any stay bonuses or severance, termination, change in control, retention or similar payments or benefits payable to any employee of the Companies in connection with the Transaction and any associated payroll Taxes, in each case to the extent incurred on or prior to the Closing Date (including as a result of the Closing and including any retention arrangements agreed upon by the Buyer and the Sellers prior to the Closing); (c) all fees, costs and expenses set forth in Section 3.1(d) above and Section 4.4 above; provided, however, that if such fees, costs and expenses are paid by the Companies prior to the Closing Date and have been otherwise reflected in the Closing Statement, such fees, costs and expenses will not be considered Company Expenses; (d) one-half of the fees and expenses due to the Escrow Agent; (e) one-half of the fees and expenses due to the insurer under the R&W Insurance Policy; (f) one-half of all Transfer Taxes.

Annex I – 2

 

 

“Company Intellectual Property” means Company-Owned Intellectual Property and Company Non-Owned Intellectual Property. 

“Company Non-Owned Intellectual Property” means all non-owned Intellectual Property that is used or under development by, or licensed to, any of the Companies or necessary for the operation of any of the Companies’ businesses as presently conducted and proposed to be conducted.

 “Company-Owned Intellectual Property” means all Intellectual Property that is owned by any of the Companies.

“Confidential Information” means any information concerning the businesses and affairs of any of the Companies that is not already generally available to the public.

“Contract” means any agreement, contract, Lease, consensual obligation, promise, commitment, or undertaking (whether written or oral and whether express or implied). 

“Copyright” means any moral rights and any copyright: (i) licensed from any third party; or (ii) assigned, registered or applied for, and all applications, registrations and renewals in connection therewith.

“COVID-19” means SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), coronavirus disease or COVID-19.

“COVID-19 Measures” means any quarantine, “shelter in place”, “stay at home”, workforce reduction, social distancing, shut down, closure, sequester in connection with COVID-19 or any other Applicable Law, Order, directive, guidelines or recommendations by any Governmental Authority in connection with or in response to COVID-19, including, but not limited to, the CARES Act.

“Data Room” means the online data room established by the Sellers and the Companies for purposes of this Transaction prior to 12:00 p.m. noon Eastern Time on September 30, 2020.

“Deed Restriction” means an institutional control, restriction or use limitation to run with the land.

“Employee Benefit Plan” means collectively, each pension, retirement, supplemental retirement, profit-sharing, deferred compensation, stock option, employee stock ownership, dividend reinvestment, severance pay, vacation, change in control, retention, bonus or other performance or other incentive plan, medical, vision, dental or other health plan, any life insurance plan, and any other written or unwritten employee benefit plan, program, arrangement, agreement or understanding, whether arrived at through collective bargaining or otherwise, currently or previously adopted, maintained by, sponsored in whole or in part by, or contributed to by any of the Companies, or under which any of the Companies has any Liability, for the benefit of employees, retirees, dependents, spouses, directors, independent contractors or other beneficiaries and under which employees, retirees, dependents, spouses, directors, independent contractors or other beneficiaries are eligible to participate. 

Annex I – 3

 

 

“Employee Pension Benefit Plan” means any employee pension and post-retirement benefit plan, program or arrangement under Section 3(2) of ERISA. 

“Employee Welfare Benefit Plan” has the employee welfare benefit plan, program or arrangement under Section 3(1) of ERISA. 

“Environment” means soil, land surface and subsurface strata, surface waters (including navigable and non-navigable inland and ocean waters), groundwaters, drinking water supply, stream sediments, ambient air (including indoor and outdoor air), and plant and animal life.

“Environmental Contamination” means the presence of free product, Hazardous Materials, or any form of contaminant in the Environment in violation of Environmental, Health and Safety Requirements or in such concentrations or quantities that exceed the applicable limits or standards and requires investigation, remediation, removal or other response action under Environmental, Health and Safety Requirements. 

“Environmental, Health and Safety Requirements” means all applicable federal, state, local and foreign statutes, regulations, and ordinances concerning public health and safety, worker health and safety, and pollution or protection of the Environment, including all those relating to the generation, handling, transportation, treatment, storage, disposal, distribution, labeling, discharge, release, control, or Cleanup of any Hazardous Materials, substances or wastes, as such of the above are enacted and in effect on or prior to the Closing Date.

“ERISA” means the United States Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any entity that would, within the past six years, have been considered a single employer with the Companies under Section 4001(b) of ERISA or part of the same “controlled group” as the Companies for purposes of Section 302(d) of ERISA.

“Escrow Account” means an escrow account to be established and maintained by the Escrow Agent.

“Escrow Agent” means TMI Trust Company, or its successor, in its capacity as such pursuant to the Escrow Agreement.

“Escrow Agreement” means the Escrow Agreement by and among the Sellers, the Buyer and the Escrow Agent executed as of the Closing Date, substantially in the form attached as Exhibit I.

“Escrow Amount” means $275,000 deposited with the Escrow Agent to serve as a source of funds to satisfy the indemnification obligations of the Sellers under Section 7.2(a).  

“Excluded Taxes” means any Taxes taken into account in the calculation of Closing Date Net Working Capital.

“GAAP” means the United States generally accepted accounting principles, consistently applied, used in the preparation of the Company Financial Statements.

Annex I – 4

 

 

“Governmental Authority” means any applicable foreign or domestic federal, territorial, state or local governmental authority, quasi-governmental authority or non-governmental regulatory authority, instrumentality, court, government or self-regulatory organization, commission, tribunal or organization or any regulatory, administrative or other agency, or any political or other subdivision, department or branch of any of the above validly exercising its authority.  

“Governmental Authorization” means any: (a) consent, license, registration, approval, authorization, permit, Order, 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; or (b) right under any Contract with any Governmental Authority.

“Hazardous Material” means any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or man-made, that is hazardous, acutely hazardous, or toxic, or otherwise regulated under Environmental, Health and Safety Requirements.

“Indebtedness” means, as of any time with respect to any Person, without duplication, the outstanding principal amount of, accrued and unpaid interest on, and other payment obligations (including any prepayment or other fees, expenses, breakage or other costs, commitment fees, penalties, make-whole premiums or other similar fees or premiums payable as a result of the transactions) arising under, any Liabilities or obligations of any of the Companies consisting of:  (a) indebtedness for borrowed money or indebtedness issued or incurred in substitution or exchange for indebtedness for borrowed money or for the deferred or contingent purchase price of property, including, without limitation, floor plan inventory purchases; (b) indebtedness evidenced by any note, bond, debenture or other debt security, in each case, as of such date; (c) obligations in respect of any financial hedging arrangements or similar agreements; (d) all obligations, including reimbursement obligations, arising under lines of credit, letters of credit, bankers’ acceptances, bank guaranties, surety bonds and similar instruments; (e) obligations as lessee or lessees under leases that may be treated as capital leases in accordance with GAAP; (f) all unfunded obligations for defined benefit pension arrangements in accordance with GAAP; (g) all other financial debt-like obligations; and (h) all guarantees in respect of clauses (a) through (f).  For the avoidance of doubt, Indebtedness does not include the [****]. 

“Intellectual Property” means any: (i) Patents; (ii) Marks; (iii) Copyrights; (iv) Confidential Information and trade secrets, including confidential research and development, know-how, formulas, compositions, manufacturing and production processes and techniques, methods, schematics, technology, technical data, designs, drawings, flowcharts, block diagrams, specifications, customer and supplier lists, pricing and cost information, and business and marketing plans and proposals, all inventions (whether patentable or not), invention disclosures, databases and data collections, and all documentation relating to any of the above; (v) software or computer programs, internet uniform resource locators, domain names, databases, subroutines, user interfaces, techniques, URLs, web sites and data collections and all rights in such software; (vi) all moral and economic rights of authors and inventors, however denominated; (vii) all unregistered rights in copyright to print or electronic publications and content; (viii) all other forms of technology (whether or not embodied in any tangible form and including all tangible embodiments of the above such as instruction manuals, prototypes, samples, studies, and 

Annex I – 5

 

 

summaries); (ix) any similar or equivalent rights to any of the above; and (x) licenses and agreements pursuant to which a Person has acquired rights in or to any of the above or licenses or agreements pursuant to which a Person has licensed or transferred the right to use any of the above.

“Internal Revenue Service” or “IRS” means the Internal Revenue Service of the United States Department of the Treasury. 

“IT Infrastructure” means information technology resources and services used for operations of the Companies, including: (i) applications, operating system, network, supply chain, enterprise resource management and other software; (ii) network, routing, wireless, telecommunications and other hardware; (iii) servers, workstations, personal computers and mobile devices; and (iv) hosting, cloud, data center, disaster recovery and managed services.

“Knowledge” means, as to the Sellers, the actual knowledge of Michael J. Pretasky, Sr., Michael J. Pretasky, Jr., Mark Ellerbrock, Robert Ross Tefft, Jr., and Anthony E. Donarski, in each case after reasonable inquiry of the Company’s employees with primary responsibility for the subject matter.

“Leased Real Property” means all leasehold or subleasehold estates and other rights to use or occupy any land, buildings, structures, Improvements, fixtures, or other interest in real property held by any of the Companies, as set forth on Section 4.12(b) of the Disclosure Schedule.

“Leases” means all leases, subleases, licenses, concessions and other agreements (written or oral), including all amendments, extensions, renewals, guaranties, and other agreements with respect to such Leases, pursuant to which any of the Companies holds any Leased Real Property, including the right to all security deposits and other amounts and instruments deposited by or on behalf of any of the Companies under such agreements.

“Liability” means any Indebtedness, liability, claim, cause of action, loss, damage, deficiency, responsibility or obligation of whatever kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether secured or unsecured, whether disputed or undisputed, whether incurred or consequential, whether liquidated or unliquidated, whether due or to become due, whether joint or several, whether vested or unvested, whether choate or inchoate), including any liability for Taxes, other governmental charges or lawsuits brought, whether or not of a kind required by GAAP to be set forth in financial statement and regardless of whether such Indebtedness, duty or liability, is immediately due and payable, and including all related costs and expenses.

“Lien” means any charge, claim, community or other marital property interest, condition, equitable interest, lien, option, pledge, charge, security interest, mortgage, right of way, easement, encroachment, servitude, right of first option, right of first refusal, or similar restriction, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership.

“Mark” means any trademark, trade name, trade dress, service mark, domain name, logos, brand names, slogans, product names, designs, and any registrations and applications for any of the above.

Annex I – 6

 

 

“Material Adverse Effect” or “Material Adverse Change” means any change, event or effect that has a materially adverse effect on the business, assets, Liabilities, or results of operations of any of the Companies, taken as a whole, except to the extent resulting from: (a) changes in general local, domestic, foreign, or international economic conditions; (b) changes affecting generally the industries or markets in which the Company operates; (c) acts of war, sabotage or terrorism, military actions; (d) any changes in Applicable Laws or accounting rules or principles, including changes in GAAP; (e) the announcement of any of the Transaction; or (f) any outbreak, epidemic, pandemic, health crisis or public health event (including with respect to COVID-19 or any variation, adaption or mutation thereof), and any worsening thereof on or after the date hereof.

“Most Recent Balance Sheet” means the balance sheet contained within the Most Recent Financial Statements.

“Multiemployer Plan” means any multiemployer pension plan, program or arrangement contemplated under Section 3(37) of ERISA.

“Net Working Capital” means, on a consolidated basis, an amount equal to: (a) the sum of (i) trade accounts receivable, plus (ii) inventory, plus (iii) cash deposits and prepaid costs and prepaid expenses; minus (b) the sum of (i) trade accounts payable and customer deposits, plus (ii) checks in transit, plus (iii) accrued expenses and other accrued Liabilities (other than the Closing Date Indebtedness), plus (iv) unearned revenue.  For the avoidance of doubt, the calculation of Net Working Capital shall not take into account any Cash, Closing Date Indebtedness or Closing Date Company Expenses.  Net Working Capital shall be calculated in accordance with the historical principles, practices, methodologies, procedures and policies used by the Companies in connection with the preparation of and reflected and applied in the Financial Statements, subject to the following: 

 

(A)accounts receivable will be valued at book value net of bad debt reserves; 

 

(B)cash deposits, prepaid costs and prepaid expenses will be valued at book value; 

 

(C)Global Insurance rebates related to the Companies’ retail insurance policies payable to the Companies for any pre-Closing period will be included;

 

(D)2020 and 2021 new boat inventory will be valued at normal net invoice value, plus hard rigging costs, less any “backside” incentives paid to and received by the Companies in respect of inventory that remains in stock as of the Closing Date; 

 

(E)2019 new boat inventory will be valued at normal net invoice value, plus hard rigging costs, less a 10% discount, and less any “backside” incentives paid to and received by the Companies in respect of inventory that remains in stock as of the Closing Date; 

 

(F)used boat inventory will be valued as agreed by the Parties;

 

(G)parts and accessories will be valued at cost, provided that parts and accessories more than two (2) years old will have a value of $0; 

Annex I – 7

 

 

 

(H)trailers will be valued at (i) 100% of invoice value if current, (ii) 66% of invoice value if one year old on model year, (iii) 33% of invoice value if two (2) years old on model year, and (iv) $0 if three (3) years old or older on model year; and 

 

(I)sales contracts not closed and delivered by the Closing will become the Buyer’s transactions.

 

An example of the Working Capital of the Companies is attached to this Agreement as Annex II.

 

“[****] Holdback Amount” means a sum equal to $4,500,000.

“[****] Leases” [****].  

“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).

“Organizational Documents” means: (a) the articles or certificate of incorporation and the bylaws of a corporation; (b) the certificate of formation and limited liability company agreement, operating agreement, or similar agreement of a limited liability company; (c) the partnership agreement and any statement of partnership of a general partnership; (d) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (e) any charter or agreement or similar document adopted or filed in connection with the creation, formation, or organization of a Person; and (f) any amendment to or restatement of any of the above.

“Order” means any award, assessment, decision, decree, injunction, judgment, order, ruling, subpoena, writ, verdict arbitration award, charge or similar requirement entered, issued, made or rendered by any Governmental Authority.

“Owned Real Property” means all land, together with all buildings, structures, Improvements, and fixtures located thereon, that is owned by a Company. 

“Patent” means any patent, any application for a patent, or any continuation, continuation-in-part, division, renewal, extension (including any supplemental protection certificate), reexamination or reissue of such items.

“Permits” means all Governmental Authorizations and applications for any Governmental Authorization that are necessary, or required by Applicable Law, to own, lease and/or operate the Company and its business or to operate, occupy, or use the Real Property substantially as it is currently operated, occupied, and used.

“Permitted Liens” means (i) liens for Taxes, assessments or other governmental charges or levies not yet due and payable as of the Closing and for which appropriate reserves have been established in accordance with GAAP, (ii) mechanics’, workmen’s, repairmen’s, warehousemen’s, carriers’ or other like liens arising or incurred in the ordinary course of business if the underlying obligations are not yet due and payable as of the Closing, (iii) any interest or title of a lessor under an operating lease or capitalized lease or of any licensor or licensee under a non-exclusive license, (iv) liens of lessors under Real Property leases, (v) easements, rights of way, zoning ordinances 

Annex I – 8

 

 

and other similar encumbrances affecting the Leased Real Property which are not violated by the current use or occupancy of such Leased Real Property and are not, individually or in the aggregate, material to the business of the Companies, and (vi) those liens set forth on Exhibit J to this Agreement. 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity, or a Governmental Authority (or any department, agency, or political subdivision of a Governmental Authority).

“Personal Information” means information that identifies a natural person (a “Data Subject”), including name, mailing address, email address, social security number, license number, financial account information, credit/debit cardholder information, and information that permits or facilitates identity theft.

“[****]” means the [****].

“[****]” means the Cash proceeds of the [****].

“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and the portion of a Straddle Period deemed to end on the Closing Date.

“Pre-existing Environmental Condition” means Environmental Contamination existing as of the Closing Date, whether known or unknown at the time of Closing.

“Pre-Tax Earnings” means, with respect to any Calculation Period, as determined in accordance with GAAP on a consolidated basis, and without duplication, the pre-tax earnings of the Companies, which shall be calculated in accordance with the historical principles, practices, methodologies, procedures and policies used by the Buyer, and which, for the avoidance of doubt, excludes any debt forgiveness income associated with the [****]. 

“Predecessor” means (i) any Person that has ever merged with or into a Company, consolidated with the Company, engaged in a share exchange with the Company or effected a similar transaction, (ii) any Person a majority of whose capital stock (or similar outstanding ownership interests) or equity interests has ever been acquired by a Company, (iii) any Person all or substantially all of whose assets has ever been acquired by a Company, (iv) any spin-offs or other dispositions, and (v) any prior names of a Company or any Person described in clauses (i) through (iv) of this definition.

“Proceeding” means any present or future, threatened or pending, civil, administrative, investigative, criminal, labor, Tax, judicial or other type of demand, claim, complaint, litigation, suit, action, demand, hearing, proceeding, assessment, audit, charge, grievance, indictment, allegation, investigation, interrogatory, subpoena, inquiry, discussion, notice, alternative dispute resolution mechanism (including, without limitation, any shareholder or derivative action or mediation or arbitration proceeding), and any appeals, whether by a Governmental Authority or otherwise.

Annex I – 9

 

 

“R&W Insurance Policy” means the buy-side representations and warranties insurance policy underwritten by Dual Transactional Risk, a division of Dual Commercial LLC, and provided to the Buyer (as it may be amended, modified or otherwise supplemented from time to time).

“Real Property” means the Owned Real Property, the Affiliate Real Property, and the Leased Real Property.

“Receivables” means all trade accounts receivable and other rights to payment from customers of any of the Companies in respect of goods shipped or products sold or services rendered on behalf of the Companies’ businesses, and any related claim, remedy or other right.

“Release” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, escaping, seeping, injection, deposit, disposal, discharge, dispersal, leaching, or migration on or into the Environment, or into, onto, under, above, about, within or out of any property.

“SBA” means the U.S. Small Business Administration.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Seller Cap” means $275,000.  

 “Seller Deductible” means $275,000.  

“Straddle Period” means any taxable period beginning on or before the Closing Date and ending after the Closing Date.

“Subsidiary” means, with respect to any Person, another Person (i) of which 50% or more of any class of capital stock or other equity interest is owned or controlled, directly or indirectly, by such first Person, or (ii) of which such first Person is a general partner. 

 “Tax” or “Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, social security (or similar), estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, value added, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever imposed by a Governmental Authority, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, whether disputed or not and including any obligations to indemnify or otherwise assume or succeed to the Tax Liability of any other Person. 

“Tax Return” means any return, report, statement, schedule, notice, form, listing, declaration, claim for refund, or information return or other document or information relating to Taxes, including any schedule or attachment to such Tax Return, and including any amendment of such Tax Return.

Annex I – 10

 

 

“Taxing Authority” means any Governmental Authority exercising any authority to impose, collect, enforce, regulate or administer the imposition of Taxes.

“[****]  Amount” means a sum equal to $2,000,000.

“United States” or “U.S.” means the United States of America, including its territories and possessions.

 

Annex I – 11

 

 

ANNEX II

 

NET WORKING CAPITAL EXAMPLE

 

[****]

 

 

ANNEX III

 

KEY EMPLOYEES

 

Tony Donarski    

Todd Riepe          

Trevis Burbach      

Tory Windorski 

Eric Norberg      

Ross Tefft

       

 

 

 

ANNEX IV

 

CONSENTS REQUIRED TO CLOSE

None.

 

 

EXHIBIT A

EQUITY OF THE SELLERS 

 

 

 

				
	
Company
	
Authorized Shares
	
Outstanding Shares
	
Record Owners

	
Skipper Marine Corp.
	
2,800 shares of no par value Common Stock
	
1,000 shares of no par value Common Stock
	
Skipper Marine Holdings, Inc.

	
Skipper Marine of Madison, Inc.
	
2,800 shares of no par value Common Stock
	
500 shares of no par value Common Stock
	
Skipper Marine Holdings, Inc.

	
Skipper Marine of Fox Valley, Inc.
	
2,800 shares of no par value Common Stock
	
1,000 shares of no par value Common Stock
	
Skipper Marine Holdings, Inc.

	
Skipper Bud’s of Illinois, Inc.
	
20,000 shares of no par value Common Stock
	
4,004 shares of no par value Common Stock
	
Skipper Marine Holdings, Inc.

	
Skipper Marine of Chicago-Land, Inc.
	
10,000 shares of $0.01 par value Common Stock
	
1,000 shares of $0.01 par value Common Stock
	
Skipper Marine Holdings, Inc.

	
Skipper Marine of Michigan, Inc.
	
60,000 shares of no par value Common Stock
	
100 shares of no par value Common Stock
	
Skipper Marine Holdings, Inc.

	
Skipper Marine of Ohio, LLC
	
N/A
	
100% of the membership interests
	
Skipper Marine Holdings, Inc.

	
Silver Seas Yachts, Inc.
	
1,000 shares of no par value Common Stock
	
1,000 shares of no par value Common Stock
	
SSY Holdings, Inc.

 

 

 

EXHIBIT B

TRADEMARKS

 

						
	
MARK
	
APPLICATION NO.
	
FILING DATE
	
REG. NO.
	
REG. DATE
	
OWNER

	
SKIPPERBUD'S
	
88108806
	
09/07/2018
	
5797910
	
07/09/2019
	
Skipper Marine Holdings, Inc.

	

	
73689880
	
10/13/1987
	
1591327
	
04/10/1990
	
Skipper Marine Holdings, Inc.

 

 

 

EXHIBIT C

PRO RATA PERCENTAGES

 

 

									
	
As it relates to SM Holdings and SSY Holdings:
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
SM Holdings
	
 
	
 
	
 
	
90%
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
SSY Holdings
	
 
	
 
	
 
	
10%
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
As it relates to Individual Sellers:
	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Michael J. Pretasky, Sr. 
	
 
	
 
	
 
	
 
	
14.70%
	
 

	
(854 shares of SM Holdings, 77 shares of SSY Holdings)
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Michael John Pretasky, Jr. 2014 Trust
	
 
	
 
	
 
	
70.79%
	
 

	
(4,110 shares of SM Holdings, 373 shares of SSY Holdings)
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Mark Ellerbrock
	
 
	
 
	
 
	
 
	
 
	
9.51%
	
 

	
(552 shares of SM Holdings, 50 shares of SSY Holdings)
	
 
	
 
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Robert Ross Tefft, Jr. 
	
 
	
 
	
 
	
 
	
5.00%
	
 

	
(500 shares of SSY Holdings)
	
 
	
 
	
 
	
 
	
 
	
 

 

 

 

EXHIBIT D

 

ALLOCATION METHODOLOGY

Purchase Price Allocation Methodology

		
	
Asset Class
	
Purchase Price Allocation Methodology

	
1.Class I Assets (cash, demand deposits and similar accounts in financial institutions) 
	
Amount taken into account for the Closing Date Net Working Capital 

 

	
2.Class II Assets (certificates of deposit, U.S. Government securities, readily marketable stock or securities (other than stock of affiliates) and foreign currency)

 
	
Amount taken into account for the Closing Date Net Working Capital 

 

	
3.Class III Assets (debt instruments including accounts receivable) 

 
	
Amount taken into account for the Closing Date Net Working Capital 

 

	
4.Class IV Assets (inventory)
	
Amount taken into account for the Closing Date Net Working Capital 

 

	
5.Class V Assets (all assets that are not Class I, II, III, IV, VI or VII assets)
	
Fair Market Value*

	
6.Class VI Assets (all Code Section 197 intangibles other than goodwill and going concern value, including designs, patterns, know-how, formulas, customer-based intangibles, supplier-based intangibles, franchises, trademarks, and trade names)

 

7.Class VII Assets (goodwill and going concern value)

 

 
	
Fair Market Value*

 

 

 

 

 

Residual

 

 

* The Buyer shall pay to the Sellers the amount of any additional Tax cost at an agreed upon 20% effective rate to the Individual Sellers attributable to the allocation of over $4,300,000 in the aggregate to Class V Assets and Class VI Assets.

 

 

 

 

 

EXHIBIT E

 

EXCEPTIONS TO THE SELLERS’ REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION

[****]

 

 

EXHIBIT F

EXCEPTIONS TO THE BUYER’S REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION

[****]

 

 

EXHIBIT G

FORM OF TRADEMARK ASSIGNMENT AGREEMENT

[****]

 

 

EXHIBIT H

FORM OF AFFILIATE REAL PROPERTY LEASE

[****]

 

 

EXHIBIT I

FORM OF ESCROW AGREEMENT

[****]

 

 

EXHIBIT J

PERMITTED LIENS

	
 
	
1.
	
Liens have been imposed on certain inventory assets of the Companies related to the Companies’ floor plan financing:

 

	
 
	
a.
	
The following entities have liens on specific inventory assets of Skipper Marine Corp. related to its floor plan financing:

 

	
 
	
i.
	
Wells Fargo Commercial Distribution Finance Corporation;

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC; and

 

	
 
	
iii.
	
Yamaha Motor Finance Corporation.

 

	
 
	
b.
	
Wells Fargo Commercial Distribution Finance, LLC has a lien on specific inventory assets of Silver Seas Yachts, Inc. related to its floor plan financing.

 

	
 
	
c.
	
The following entities have liens on the assets of Skipper Marine of Ohio, LLC related to third-party customer lending agreements:

 

	
 
	
i.
	
GE Commercial Distribution Finance LLC; and

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC.

 

	
 
	
d.
	
The following entities have liens on specific inventory assets of Skipper Marine of Madison, Inc. related to floor plan financing:

 

	
 
	
i.
	
Wells Fargo Commercial Distribution Finance Corporation; and

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC.

 

	
 
	
e.
	
The following entities have liens on specific inventory assets of Skipper Marine of Fox Valley, Inc. related to floor plan financing:

 

	
 
	
i.
	
GE Commercial Distribution Finance Corporation; and

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC.

 

	
 
	
iii.
	
Wells Fargo Commercial Distribution Finance, LLC

 

	
 
	
f.
	
The following entities have liens on specific inventory assets of Skipper Bud’s of Illinois, Inc. related to floor plan financing:

 

	
 
	
i.
	
Wells Fargo Commercial Distribution Finance Corporation; and

 

 

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC.

 

	
 
	
g.
	
The following entities have liens on specific inventory assets of Skipper Marine of Chicago-Land, Inc. related to floor plan financing:

 

	
 
	
i.
	
Wells Fargo Commercial Distribution Finance Corporation; and

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC.

 

	
 
	
h.
	
The following entities have liens on specific inventory assets of Skipper Marine of Michigan, Inc. related to floor plan financing:

 

	
 
	
i.
	
Wells Fargo Commercial Distribution Finance Corporation; and

 

	
 
	
ii.
	
Brunswick Acceptance Company, LLC.

 

Annex I – 2

 

 

DISCLOSURE SCHEDULE

[****]Exhibit 10.1

	 

 

REGISTRATION RIGHTS AGREEMENT

 

by and between

 

PETROS PHARMACEUTICALS, INC.,

 

JCP III SM AIV, L.P.

 

Dated as of December 1, 2020

	 

 

    

     

    

 

Table
of Contents

 

	 	Page

 

	Section 1.	 	Certain Definitions	1
	Section 2.	 	Registration Rights	5
	2.1.	 	 	Demand Registrations	5
	2.2.	 	 	Piggyback Registrations	10
	2.3.	 	 	Allocation of Securities Included in Registration Statement	11
	2.4.	 	 	Registration Procedures	14
	2.5.	 	 	Registration Expenses	21
	2.6.	 	 	Certain Limitations on Registration Rights	21
	2.7.	 	 	Limitations on Sale or Distribution of Other Securities	21
	2.8.	 	 	No Required Sale	22
	2.9.	 	 	Indemnification	23
	2.10.	 	 	Limitations on Registration of Other Securities; Representation	27
	2.11.	 	 	No Inconsistent Agreements	27
	2.12.	 	 	Partner Distributions	27
	Section 3.	 	Underwritten Offerings	27
	3.1.	 	 	Requested Underwritten Offerings	27
	3.2.	 	 	Piggyback Underwritten Offerings	27
	Section 4.	 	General	28
	4.1.	 	 	Adjustments Affecting Registrable Securities	28
	4.2.	 	 	Rule 144 and Rule 144A	28
	4.3.	 	 	Nominees for Beneficial Owners	28
	4.4.	 	 	Amendments and Waivers	28
	4.5.	 	 	Notices	29
	4.6.	 	 	Successors and Assigns	30
	4.7.	 	 	Termination	30
	4.8.	 	 	Entire Agreement	30
	4.9.	 	 	Governing Law; Jurisdiction; WAIVER OF JURY TRIAL	31
	4.10.	 	 	Interpretation; Construction	31
	4.11.	 	 	Counterparts	31
	4.12.	 	 	Severability	31

 

    -i-

     

    

 

Table
of Contents 

(continued)

 

	 	Page

 

	4.13.	 	 	Specific Enforcement	32
	4.14.	 	 	Further Assurances	32
	4.15.	 	 	Confidentiality	32
	4.16.	 	 	Opt-Out Requests	33
	 	 	 	 	 
	Exhibit A	 	 	Joinder Agreement	 

 

    -ii-

     

    

 

REGISTRATION RIGHTS
AGREEMENT, dated as of December 1, 2020 (as amended, restated, supplemented or otherwise modified from time to time,
this “Agreement”), by and among (i) Petros Pharmaceuticals, Inc., a Delaware corporation (the “Parent”)
and (ii) JCP III SM AIV, L.P.

 

RECITALS:

 

WHEREAS, the
Parent, PM Merger Sub 1, LLC, a Delaware limited liability company (“Metuchen Merger Sub”), Metuchen Pharmaceuticals
LLC, a Delaware limited liability company (“Metuchen”), Neurotrope, Inc., a Nevada corporation (“Neurotrope”),
and PN Merger Sub 2, Inc., a Delaware corporation (“Neurotrope Merger Sub”) have entered into an Agreement
and Plan of Merger, dated as of May 17, 2020 (as amended from time to time on or prior to the date hereof, the “Merger
Agreement”), pursuant to which (i) Metuchen Merger Sub merged with and into Metuchen with Metuchen continuing as
the surviving entity and a wholly-owned subsidiary of the Parent (the “Metuchen Merger”) and (ii) Neurotrope
Merger Sub merged with and into Neurotrope with Metuchen continuing as the surviving entity and a wholly-owned subsidiary of the
Parent (the “Neurotrope Merger” and, with the Metuchen Merger, the “Mergers”).

 

WHEREAS, as
of or immediately following the closing of the Mergers (the “Closing”), the Juggernaut Holders (as defined
herein) will beneficially own shares of common stock, $0.0001 par value per share, of the Parent;

 

WHEREAS, in
connection with the Mergers, the Parent has agreed to provide the registration rights set forth in this Agreement.

 

NOW, THEREFORE,
in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby
agree as follows:

 

Section 1.     Certain
Definitions. As used herein, the following terms shall have the following meanings:

 

“Additional
Piggyback Rights” has the meaning ascribed to such term in Section 2.2(b).

 

“Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by or is under common
control with, such Person. For the purposes of this definition “control” (including, with correlative meanings, the
terms “controlling”, “controlled by” and “under common control with”), with respect to any
Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of such specified Person, whether through the ownership of voting securities (the ownership of more than fifty percent (50%) of
the voting securities of an entity shall for purposes of this definition be deemed to be “control”), by contract or
otherwise. For the avoidance of doubt, neither the Parent nor any Person controlled by the Parent shall be deemed to be an Affiliate
of any Holder.

 

“Agreement”
has the meaning ascribed to such term in the Preamble.

 

“automatic
shelf registration statement” has the meaning ascribed to such term in Section 2.4.

 

    

     

    

 

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

 

“Business
Day” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized
or required by law to close.

 

“Claims”
has the meaning ascribed to such term in Section 2.9(a).

 

“Common Stock”
means all shares existing or hereafter authorized of common stock, $0.0001 par value per share, of the Parent and any class of
common stock of the Parent and any and all securities of any kind whatsoever which may be issued after the date hereof in respect
of, or in exchange for, such shares of common stock of the Parent pursuant to a merger, consolidation, stock split, stock dividend
or recapitalization of the Parent or otherwise.

 

“Common Stock
Equivalents” means, with respect to the Parent, all options, warrants and other securities convertible into, or exchangeable
or exercisable for (at any time or upon the occurrence of any event or contingency and without regard to any vesting or other
conditions to which such securities may be subject), shares of Common Stock (including any note or debt security convertible into
or exchangeable for shares of Common Stock).

 

“Parent”
has the meaning ascribed to such term in the Preamble and, for purposes of this Agreement, such term shall include any Subsidiary
or parent company of the Parent.

 

“Confidential
Information” has the meaning ascribed to such term in Section 4.14.

 

“Demand Exercise
Notice” has the meaning ascribed to such term in Section 2.1(b).

 

“Demand Registration”
has the meaning ascribed to such term in Section 2.1(b).

 

“Demand Registration
Period” has the meaning ascribed to such term in Section 2.1(b).

 

“Demand Registration
Request” has the meaning ascribed to such term in Section 2.1(b).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC issued under
such Act, as they may from time to time be in effect.

 

“Expenses”
means any and all fees and expenses incident to the Parent’s performance of or compliance with Section 2, including:
(i) SEC, stock exchange, FINRA and all other registration and filing fees and all listing fees and fees with respect to the
inclusion of securities on the Nasdaq or on any other U.S. or non-U.S. securities market on which the Registrable Securities are
listed or quoted, (ii) fees and expenses of compliance with state securities or “blue sky” laws of any state
or jurisdiction of the United States or compliance with the securities laws of foreign jurisdictions and in connection with the
preparation of a “blue sky” survey, including reasonable fees and expenses of outside “blue sky” counsel
and securities counsel in foreign jurisdictions, (iii) word processing, printing and copying expenses, (iv) messenger
and delivery expenses, (v) expenses incurred in connection with any road show, (vi) fees and disbursements of counsel
for the Parent, (vii) with respect to each registration or underwritten offering, the reasonable fees and disbursements of
one counsel for the Initiating Holder and one counsel for all other Participating Holder(s) collectively (selected by the
holders of a majority of the Registrable Securities held by such other Participating Holder(s)), together in each case with any
local counsel, provided that expenses payable by the Parent pursuant to this clause (vii) shall not exceed (1) $150,000
for the first registration pursuant to this Agreement and (2) $100,000 for each subsequent registration, (viii) fees
and disbursements of all independent public accountants (including the expenses of any opinion and/or audit/review and/or “comfort”
letter and updates thereof) and fees and expenses of other Persons, including special experts, retained by the Parent, (ix) fees
and expenses payable to a Qualified Independent Underwriter (but expressly excluding any underwriting discounts and commissions),
(x) fees and expenses of any transfer agent or custodian, (xi) any other fees and disbursements of underwriters, if
any, customarily paid by issuers or sellers of securities, including reasonable fees and expenses of counsel for the underwriters
in connection with any filing with or review by FINRA (but expressly excluding any underwriting discounts and commissions) and
(xii) rating agency fees and expenses.

 

    2

     

    

 

“FINRA”
means the Financial Industry Regulatory Authority, Inc.

 

“Holder”
or “Holders” means (1) any Person who is a signatory to this Agreement or (2) any permitted transferee
of Registrable Securities to whom any Person who is a signatory to this Agreement shall assign or transfer any rights hereunder,
provided that such transferee has agreed in writing to be bound by the terms of this Agreement in respect of such Registrable
Securities.

 

“Initiating
Holders” has the meaning ascribed to such term in Section 2.1(b).

 

“Joinder
Agreement” means a writing in the form set forth in Exhibit A hereto whereby a new Holder of Registrable
Securities becomes a party to, and agrees to be bound, to the same extent as its transferor, as applicable, by the terms of this
Agreement.

 

“Juggernaut
Holders” means JCP III SM AIV, L.P. and its Affiliates.

 

“Majority
Participating Holders” means Participating Holders holding more than 50% of the Registrable Securities proposed to be
included in any offering of Registrable Securities by such Participating Holders pursuant to Section 2.1 or Section 2.2.

 

“Manager”
has the meaning ascribed to such term in Section 2.1(d).

 

“Merger Agreement”
has the meaning ascribed to such term in the Recitals.

 

“Merger Sub”
has the meaning ascribed to such term in the Recitals.

 

“Metuchen”
has the meaning ascribed to such term in the Recitals.

 

“Minimum
Threshold” means $10.0 million.

 

“Opt-Out
Request” has the meaning ascribed to such term in Section 4.15.

 

“Participating
Holders” means all Holders of Registrable Securities which are proposed to be included in any offering of Registrable
Securities pursuant to Section 2.1 or Section 2.2.

 

    3

     

    

 

“Partner
Distribution” has the meaning ascribed to such term in Section 2.1(a)(iii).

 

“Person”
means any individual, firm, corporation, company, limited liability company, partnership, trust, joint stock company, business
trust, incorporated or unincorporated association, joint venture, governmental authority or other legal entity of any nature whatsoever.

 

“Piggyback
Notice” has the meaning ascribed to such term in Section 2.2(a).

 

“Piggyback
Shares” has the meaning ascribed to such term in Section 2.3(a)(ii).

 

“Postponement
Period” has the meaning ascribed to such term in Section 2.1(c).

 

“Qualified
Independent Underwriter” means a “qualified independent underwriter” within the meaning of FINRA Rule 5121.

 

“Registrable
Securities” means (a) any shares of Common Stock held by the Holders at any time (including those held as a result
of, or issuable upon, the conversion or exercise of Common Stock Equivalents), whether now owned or acquired by the Holders at
a later time other than any shares of Common Stock received pursuant to an equity incentive plan adopted by the Parent on or after
the Closing Date, (b) any shares of Common Stock issued or issuable, directly or indirectly, in exchange for or with respect
to the Common Stock referenced in clause (a) above by way of stock dividend, stock split or combination of shares or in connection
with a reclassification, recapitalization, merger, share exchange, consolidation or other reorganization and (c) any securities
issued in replacement of or exchange for any securities described in clause (a) or (b) above. For purposes of this
Agreement, a Person will be deemed to be a holder of Registrable Securities whenever such Person has the right to acquire, directly
or indirectly, such Registrable Securities (including upon conversion, exercise or exchange of any equity interests but disregarding
any restrictions or limitations upon the exercise of such right), whether or not such acquisition has actually been effected,
and such Person shall not be required to convert, exercise or exchange such equity interests (or otherwise acquire such Registrable
Securities) to participate in any registered offering hereunder until the closing of such offering. As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (A) a registration statement with respect to the
sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (B) such securities shall have been disposed of in compliance with the
requirements of Rule 144, (C) such securities have been sold in a public offering of securities or (D) such securities
have ceased to be outstanding.

 

“Rule 144”
and “Rule 144A” have the meaning ascribed to such term in Section 4.2.

 

“SEC”
means the U.S. Securities and Exchange Commission or such other federal agency which at such time administers the Securities Act.

 

“Section 2.3(a) Sale
Number” has the meaning ascribed to such term in Section 2.3(a).

 

“Section 2.3(b) Sale
Number” has the meaning ascribed to such term in Section 2.3(b).

 

“Section 2.3(c) Sale
Number” has the meaning ascribed to such term in Section 2.3(c).

 

    4

     

    

 

“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC issued under such Act,
as they may from time to time be in effect.

 

“Shareholders
Agreement” has the meaning ascribed to such term in the Recitals.

 

“Shelf Registrable
Securities” has the meaning ascribed to such term in Section 2.1(a)(i).

 

“Shelf Registration
Statement” has the meaning ascribed to such term in Section 2.1(a)(i).

 

“Shelf Underwriting”
has the meaning ascribed to such term in Section 2.1(a)(ii).

 

“Shelf Underwriting
Initiating Holders” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

“Shelf Underwriting
Notice” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

“Shelf Underwriting
Request” has the meaning ascribed to such term in Section 2.1(a)(ii).

 

“Subsidiary”
means any direct or indirect subsidiary of the Parent on the date hereof and any direct or indirect subsidiary of the Parent organized
or acquired after the date hereof.

 

“Underwritten
Block Trade” has the meaning ascribed to such term in Section 2.1(a)(iii).

 

“Valid Business
Reason” has the meaning ascribed to such term in Section 2.1(c).

 

“WKSI”
means a “well-known seasoned issuer” (as defined in Rule 405 of the Securities Act).

 

Section 2.             Registration
Rights.

 

2.1.         Demand
Registrations.

 

(a)           (i) As
soon as practicable but no later than forty-five (45) calendar days following the closing of the Merger (the “Filing Date”),
the Parent shall prepare and file with the SEC a shelf registration statement under Rule 415 of the Securities Act (such
registration statement, a “Shelf Registration Statement”) covering the resale of all the Registrable Securities
(determined as of two business days prior to such filing) on a delayed or continuous basis and shall use its commercially reasonable
efforts to have such Shelf declared effective as soon as practicable after the filing thereof and no later than the earlier of
(x) the ninetieth (90th) calendar day following the Filing Date if the Commission notifies the Parent that it will “review”
the Shelf Registration Statement and (y) the tenth (10th) business day after the date the Parent is notified in writing by
the SEC that such Shelf Registration Statement will not be “reviewed” or will not be subject to further review. Such
Shelf Registration Statement shall provide for the resale of the Registrable Securities included therein pursuant to any method
or combination of methods legally available to, and requested by, any Holder named therein. The Parent shall maintain the Shelf
Registration Statement in accordance with the terms hereof, and shall prepare and file with the SEC such amendments, including
post-effective amendments, and supplements as may be necessary to keep a Shelf Registration Statement continuously effective,
available for use to permit all Holders named therein to sell their Registrable Securities included therein and in compliance
with the provisions of the Securities Act until such time as there are no longer any Registrable Securities. In the event the
Parent files a Shelf Registration Statement on Form S-1, the Parent shall use its commercially reasonable efforts to convert
such Shelf Registration Statement to a Shelf Registration Statement on Form S-3 as soon as practicable after the Parent is
eligible to use Form S-3.

 

    5

     

    

 

(ii)            Subject
to Section 2.1(c), following the nine (9) month anniversary of the date hereof, (i) the Juggernaut Holders shall
have the unlimited right at any time and from time to time to elect to sell all or any part (subject to the Minimum Threshold)
of its and its Affiliates’ Registrable Securities pursuant to an underwritten offering pursuant to the Shelf Registration
Statement, in each case by delivering a written request therefor to the Parent specifying the number of Registrable Securities
to be included in such registration and the intended method of distribution thereof. The Juggernaut Holders shall make such election
by delivering to the Parent a written request (a “Shelf Underwriting Request”) for such underwritten offering
specifying the number of Registrable Securities that the Juggernaut Holders desire to sell pursuant to such underwritten offering
(the “Shelf Underwriting”). With respect to any Shelf Underwriting Request, the Juggernaut Holders making such
demand for registration shall be referred to as the “Shelf Underwriting Initiating Holders”. As promptly as
practicable, but no later than three (3) Business Days after receipt of a Shelf Underwriting Request, the Parent shall give
written notice (the “Shelf Underwriting Notice”) of such Shelf Underwriting Request to the Holders of record
of other Registrable Securities registered on such Shelf Registration Statement (“Shelf Registrable Securities”).
The Parent, subject to Sections 2.3 and 2.6, shall include in such Shelf Underwriting (x) the Registrable
Securities of the Shelf Underwriting Initiating Holders and (y) the Shelf Registrable Securities of any other Holder of Shelf
Registrable Securities which shall have made a written request to the Parent for inclusion in such Shelf Underwriting (which request
shall specify the maximum number of Shelf Registrable Securities intended to be disposed of by such Holder) within five (5) days
after the receipt of the Shelf Underwriting Notice. The Parent shall, as expeditiously as possible (and in any event within fifteen
(15) Business Days after the receipt of a Shelf Underwriting Request), but subject to Section 2.1(b), use its reasonable
best efforts to effect such Shelf Underwriting. The Parent shall, at the request of any Shelf Underwriting Initiating Holder or
any other Holder of Registrable Securities registered on such Shelf Registration Statement, file any prospectus supplement or,
if the applicable Shelf Registration Statement is an automatic shelf registration statement, any post-effective amendments and
otherwise take any action necessary to include therein all disclosure and language deemed necessary or advisable by the Shelf
Underwriting Initiating Holders or any other Holder of Shelf Registrable Securities to effect such Shelf Underwriting. Once a
Shelf Registration Statement has been declared effective, the Shelf Underwriting Initiating Holders may request, and the Parent
shall be required to facilitate, subject to Section 2.1(b), an unlimited number of Shelf Underwritings initiated by
the Juggernaut Holders pursuant to such Shelf Registration Statement. Notwithstanding anything to the contrary in this Section 2.1(a)(ii),
each Shelf Underwriting must include, in the aggregate, Registrable Securities having an aggregate market value of at least the
lesser of (a) the Minimum Threshold (based on the Registrable Securities included in such Shelf Underwriting by all Holders
participating in such Shelf Underwriting) and (b) the market value of the Shelf Underwriting Initiating Holders’ remaining
Registrable Securities, provided that such market value is at least $5.0 million. In connection with any Shelf Underwriting
(including an Underwritten Block Trade), the Shelf Underwriting Initiating Holders shall have the right to designate the Manager
and each other managing underwriter in connection with any such Shelf Underwriting or Underwritten Block Trade; provided
that in each case, each such underwriter is reasonably satisfactory to the Parent, which approval shall not be unreasonably withheld
or delayed.

 

    6

     

    

 

(iii)           Notwithstanding
the foregoing, if a Shelf Underwriting Initiating Holder wishes to engage in an underwritten block trade or similar transaction
or other transaction with a 2-day or less marketing period (collectively, “Underwritten Block Trade”) off of
a Shelf Registration Statement (either through filing an automatic shelf registration statement or through a take-down from an
already effective Shelf Registration Statement), then notwithstanding the foregoing time periods, such Shelf Underwriting Initiating
Holder only needs to notify the Parent of the Underwritten Block Trade two (2) Business Days prior to the day such offering
is to commence and the Holders of record of other Registrable Securities shall not be entitled to notice of such Underwritten
Block Trade and shall not be entitled to participate in such Underwritten Block Trade; provided, however, that
the Shelf Underwriting Initiating Holder requesting such Underwritten Block Trade shall use commercially reasonable efforts to
work with the Parent and the underwriters prior to making such request in order to facilitate preparation of the registration
statement, prospectus and other offering documentation related to the Underwritten Block Trade.

 

(b)           At
any time that a Shelf Registration Statement provided for in Section 2.1(a) is not available for use by the Holders
following such Shelf Registration Statement being declared effective by the SEC (a “Demand Registration Period”),
subject to this Section 2.1(b) and Sections 2.1(c) and 2.3, at any time and from time
to time during such Demand Registration Period, following the nine (9) month anniversary of the date hereof, the Juggernaut
Holders shall have the right to require the Parent to effect one or more registration statements under the Securities Act covering
all or any part (subject to the Minimum Threshold) of its and its Affiliates’ Registrable Securities by delivering a written
request therefor to the Parent specifying the number of Registrable Securities to be included in such registration and the intended
method of distribution thereof. Any such request by any Juggernaut Holder pursuant to this Section 2.1(b) is
referred to herein as a “Demand Registration Request,” and the registration so requested is referred to herein
as a “Demand Registration” (with respect to any Demand Registration, the Juggernaut Holder(s) making such
demand for registration being referred to as the “Initiating Holders”). Subject to Section 2.1(c),
the Juggernaut Holders shall be entitled to request (and the Parent shall be required to effect) an unlimited number of Demand
Registrations. The Parent shall give written notice (the “Demand Exercise Notice”) of such Demand Registration
Request to each of the Holders of record of Registrable Securities as promptly as practicable but no later than three (3) Business
Days (days after receipt of the Demand Registration Request. The Parent, subject to Sections 2.3 and 2.6,
shall include in a Demand Registration (x) the Registrable Securities of the Initiating Holders and (y) the Registrable
Securities of any other Holder of Registrable Securities which shall have made a written request to the Parent for inclusion in
such registration pursuant to Section 2.2 (which request shall specify the maximum number of Registrable Securities
intended to be disposed of by such Participating Holder) within five (5) days following the receipt of any such Demand Exercise
Notice. The Parent shall, as expeditiously as possible, but subject to Section 2.1(c), use its reasonable best efforts
to (x) file with the SEC (no later than (A) sixty (60) days from the Parent’s receipt of the applicable Demand
Registration Request if the Demand Registration is on Form S-1 or similar long-form registration and or (B) thirty (30)
days from the Parent’s receipt of the applicable Demand Registration Request if the Demand Registration is on Form S-3
or any similar short-form registration), (y) cause to be declared effective as soon as reasonably practicable such registration
statement under the Securities Act that includes the Registrable Securities which the Parent has been so requested to register,
for distribution in accordance with the intended method of distribution, including a distribution to, and resale by, the members
or partners of a Holder (a “Partner Distribution”) and (z) if requested by the Initiating Holders, obtain
acceleration of the effective date of the registration statement relating to such registration.

 

    7

     

    

 

(c)           Notwithstanding
anything to the contrary in Section 2.1(a) or Section 2.1(b), the Shelf Underwriting and Demand Registration
rights granted in Section 2.1 (a) and 2.1(b) are subject to the following limitations: (i) the Parent
shall not be required to cause a registration statement filed pursuant to Section 2.1(b) to be declared effective
within a period of ninety (90) days after the effective date of any other registration statement of the Parent filed pursuant
to the Securities Act (other than a Form S-4, Form S-8 or a comparable form or an equivalent registration form then
in effect); (ii) the Parent shall not be required to effect more than two (2) Demand Registrations on Form S-1
or any similar long-form registration statement at the request of the Holders (it being understood that if a single Demand Registration
Request is delivered by more than one Holder, the registration requested by such Demand Registration Request shall constitute
only one Demand Registration); provided, however, that the Holders shall be entitled to request an unlimited number
of Demand Registrations on Form S-3 or any similar short-form registration; (iii) each registration in respect of a
Demand Registration Request made by any Initiating Holder and each Shelf Underwriting Request made by a Shelf Underwriting Initiating
Holder must include, in the aggregate, Registrable Securities having an aggregate market value of at least the Minimum Threshold
(based on the Registrable Securities included in such registration or Shelf Underwriting by all Holders participating in such
registration); and (iv) if the Board, in its good faith judgment, determines that any registration of Registrable Securities
or Shelf Underwriting should not be made or continued because it would materially and adversely interfere with any existing or
potential financing, acquisition, corporate reorganization, merger, share exchange or other transaction or event involving the
Parent or any of its subsidiaries or would otherwise result in the public disclosure of information that the Board in good faith
has a bona fide business purpose for keeping confidential (a “Valid Business Reason”), then (x) the Parent
may postpone filing a registration statement relating to a Demand Registration Request or a prospectus supplement relating to
a Shelf Underwriting Request until five (5) Business Days after such Valid Business Reason no longer exists, but in no event
for more than forty five (45) days after the date the Board determines a Valid Business Reason exists or (y) if a registration
statement has been filed relating to a Demand Registration Request or a prospectus supplement has been filed relating to a Shelf
Underwriting Request, if the Valid Business Reason has not resulted in whole or in part from actions taken or omitted to be taken
by the Parent (other than actions taken or omitted with the consent of the Initiating Holder (not to be unreasonably withheld
or delayed)), the Parent may, to the extent determined in the good faith judgment of the Board to be reasonably necessary to avoid
interference with any of the transactions described above, suspend use of or, if required by the SEC, cause such registration
statement to be withdrawn and its effectiveness terminated or may postpone amending or supplementing such registration statement
until five (5) Business Days after such Valid Business Reason no longer exists, but in no event for more than forty five
(45) days after the date the Board determines a Valid Business Reason exists (such period of postponement or withdrawal under
this clause (iv), the “Postponement Period”). The Parent shall give written notice to the Initiating Holders
or Shelf Underwriting Initiating Holders and any other Holders that have requested registration pursuant to Section 2.2
of its determination to postpone or suspend use of or withdraw a registration statement and of the fact that the Valid Business
Reason for such postponement or suspension or withdrawal no longer exists, in each case, promptly after the occurrence thereof;
provided, however, that the Parent shall not be entitled to more than two (2) Postponement Periods during any
twelve (12) month period.

 

    8

     

    

 

If the Parent shall
give any notice of postponement or suspension or withdrawal of any registration statement pursuant to clause (c) (iv) above,
the Parent shall not, during the Postponement Period, register any Common Stock, other than pursuant to a registration statement
on Form S-4 or S-8 (or an equivalent registration form then in effect). Each Holder of Registrable Securities agrees that,
upon receipt of any notice from the Parent that the Parent has determined to suspend use of, withdraw, terminate or postpone amending
or supplementing any registration statement pursuant to clause (c)(iv) above, such Holder will discontinue its disposition
of Registrable Securities pursuant to such registration statement. If the Parent shall have suspended use of, withdrawn or terminated
a registration statement filed under Section 2.1(b) (whether pursuant to clause (c)(iv) above or as a result
of any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court), the Parent
shall not be considered to have effected a Demand Registration for the purposes of this Agreement and such request shall not count
as a Demand Registration Request under this Agreement until the Parent shall have permitted use of such suspended registration
statement or filed a new registration statement covering the Registrable Securities covered by the withdrawn or terminated registration
statement and such registration statement shall have been declared effective and shall not have been withdrawn. If the Parent
shall give any notice of suspension, withdrawal or postponement of a registration statement, the Parent shall, not later than
five (5) Business Days after the Valid Business Reason that caused such suspension, withdrawal or postponement no longer
exists (but, with respect to a suspension, withdrawal or postponement pursuant to clause (c)(iv) above, in no event later
than forty five (45) days after the date of the suspension, postponement or withdrawal), as applicable, permit use of such suspended
registration statement or use its reasonable best efforts to effect the registration under the Securities Act of the Registrable
Securities covered by the withdrawn or postponed registration statement in accordance with this Section 2.1 (unless
the Initiating Holders or Shelf Underwriting Initiating Holders shall have withdrawn such request, in which case the Parent shall
not be considered to have effected a Demand Registration for the purposes of this Agreement and such request shall not count as
a Demand Registration Request under this Agreement), and following such permission or such effectiveness such registration shall
no longer be deemed to be suspended, withdrawn or postponed pursuant to clause (iv) of Section 2.1(c) above.

 

(d)           In
connection with any Demand Registration, the Initiating Holder shall have the right to designate the lead managing underwriter
(any lead managing underwriter for the purposes of this Agreement, the “Manager”) in connection with any underwritten
offering pursuant to such registration and each other managing underwriter for any such underwritten offering; provided
that in each case, each such underwriter is reasonably satisfactory to the Parent, which approval shall not be unreasonably
withheld or delayed.

 

    9

     

    

 

(e)           No
Demand Registration shall be deemed to have occurred for purposes of Section 2.1(b) (i) if the registration
statement relating thereto (x) does not become effective, (y) is not maintained effective for a period of at least one
hundred eighty (180) days after the effective date thereof or such shorter period during which all Registrable Securities included
in such Registration Statement have actually been sold (provided, however, that such period shall be extended for
a period of time equal to the period any Holder of Registrable Securities refrains from selling any securities included in such
Registration Statement at the request of the Parent or an underwriter of the Parent), or (z) is subject to a stop order,
injunction, or similar order or requirement of the SEC during such period, (ii) for each Initiating Holder, if less than
seventy five percent (75%) of the Registrable Securities requested by such Initiating Holder to be included in such Demand Registration
are not so included pursuant to Section 2.3, (iii) if the method of disposition is a firm commitment underwritten
public offering and less than seventy five percent (75%) of the applicable Registrable Securities have not been sold pursuant
thereto (excluding any Registrable Securities included for sale in the underwriters’ overallotment option) or (iv) if
the conditions to closing specified in any underwriting agreement, purchase agreement or similar agreement entered into in connection
with the registration relating to such request are not satisfied (other than as a result of a default or breach thereunder by
such Initiating Holder(s) or its Affiliates or are otherwise waived by such Initiating Holder(s)).

 

(f)            Any
Initiating Holder may withdraw or revoke a Demand Registration Request delivered by such Initiating Holder at any time prior to
the effectiveness of such Demand Registration by giving written notice to the Parent of such withdrawal or revocation and such
Demand Registration shall have no further force or effect and such request shall not count as a Demand Registration Request under
this Agreement.

 

2.2.         Piggyback
Registrations.

 

(a)           If
the Parent proposes or is required (pursuant to Section 2.1 or otherwise) to register any of its equity securities
for its own account or for the account of any other shareholder under the Securities Act (other than pursuant to registrations
on Form S-4 or Form S-8 or any similar successor forms thereto), the Parent shall give written notice (the “Piggyback
Notice”) of its intention to do so to each of the Holders of record of Registrable Securities, at least five (5) Business
Days prior to the filing of any registration statement under the Securities Act. Notwithstanding the foregoing, the Parent may
delay any Piggyback Notice until after filing a registration statement, so long as all recipients of such notice have the same
amount of time to determine whether to participate in an offering as they would have had if such notice had not been so delayed.
Upon the written request of any such Holder, made within five (5) days following the receipt of any such Piggyback Notice
(which request shall specify the maximum number of Registrable Securities intended to be disposed of by such Holder and the intended
method of distribution thereof), the Parent shall, subject to Sections 2.2(c), 2.3 and 2.6 hereof, use
its reasonable best efforts to cause all such Registrable Securities, the Holders of which have so requested the registration
thereof, to be registered under the Securities Act with the securities which the Parent at the time proposes to register to permit
the sale or other disposition by the Holders (in accordance with the intended method of distribution thereof) of the Registrable
Securities to be so registered, including, if necessary, by filing with the SEC a post-effective amendment or a supplement to
the registration statement filed by the Parent or the prospectus related thereto. There is no limitation on the number of such
piggyback registrations which the Parent is obligated to effect pursuant to the preceding sentence. No registration of Registrable
Securities effected under this Section 2.2(a) shall relieve the Parent of its obligations to effect Demand Registrations
under Section 2.1 hereof. For the avoidance of doubt, this Section 2.2 shall not apply to any Underwritten Block
Trade.

 

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(b)           The
Parent, subject to Sections 2.3 and 2.6, may elect to include in any registration statement filed pursuant
to Section 2.1, (i) authorized but unissued shares of Common Stock or shares of Common Stock held by the Parent
as treasury shares and (ii) any other shares of Common Stock which are requested to be included in such registration pursuant
to the exercise of piggyback registration rights granted by the Parent after the date hereof and which are not inconsistent with
the rights granted in, or otherwise conflict with the terms of, this Agreement (“Additional Piggyback Rights”);
provided, however, that, with respect to any underwritten offering, including an Underwritten Block Trade, such
inclusion shall be permitted only to the extent that it is pursuant to, and subject to, the terms of the underwriting agreement
or arrangements, if any, entered into by the Initiating Holders or the Majority Participating Holders in such underwritten offering.

 

(c)           Other
than in connection with a Demand Registration or a Shelf Underwriting, at any time after giving a Piggyback Notice and prior to
the effective date of the registration statement filed in connection with such registration, if the Parent shall determine for
any reason not to register or to delay registration of such equity securities, the Parent may, at its election, give written notice
of such determination to all Holders of record of Registrable Securities and (x) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Securities in connection with such abandoned registration, without
prejudice, however, to the rights of Holders under Section 2.1, and (y) in the case of a determination to delay
such registration of its equity securities, shall be permitted to delay the registration of such Registrable Securities for the
same period as the delay in registering such other equity securities.

 

(d)           Any
Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any registration statement
pursuant to this Section 2.2 by giving written notice to the Parent of its request to withdraw; provided, however,
that such request must be made in writing prior to the earlier of the execution by such Holder of the underwriting agreement or
the execution by such Holder of the custody agreement with respect to such registration or as otherwise required by the underwriters.

 

2.3.         Allocation
of Securities Included in Registration Statement.

 

(a)           If
any requested registration or offering made pursuant to Section 2.1 (including a Shelf Underwriting) involves an underwritten
offering and the Manager of such offering shall advise the Parent in good faith that, in its view, the number of securities requested
to be included in such underwritten offering by the Holders of Registrable Securities, the Parent or any other Persons exercising
Additional Piggyback Rights exceeds the largest number of securities (the “Section 2.3(a) Sale Number”)
that can be sold in an orderly manner in such underwritten offering within a price range acceptable to the Initiating Holders
and the Majority Participating Holders, the Parent shall include in such underwritten offering:

 

(i)             first,
all Registrable Securities requested to be included in such underwritten offering by the Holders thereof (including pursuant to
the exercise of piggyback rights pursuant to Section 2.2); provided, however, that if the number of
such Registrable Securities exceeds the Section 2.3(a) Sale Number, the number of such Registrable Securities (not to
exceed the Section 2.3(a) Sale Number) to be included in such underwritten offering shall be allocated on a pro rata
basis among all Holders (including each Initiating Holder) requesting that Registrable Securities be included in such underwritten
offering (including pursuant to the exercise of piggyback rights pursuant to Section 2.2), based on the number of
Registrable Securities then owned by each such Holder requesting inclusion in relation to the aggregate number of Registrable
Securities owned by all Holders requesting inclusion;

 

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(ii)            second,
to the extent that the number of Registrable Securities to be included pursuant to clause (i) of this Section 2.3(a) is
less than the Section 2.3(a) Sale Number, any securities that the Parent proposes to register for its own account, up
to the Section 2.3(a) Sale Number; and

 

(iii)           third,
to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(a) is
less than the Section 2.3(a) Sale Number, the remaining securities to be included in such underwritten offering shall
be allocated on a pro rata basis among all Persons requesting that securities be included in such underwritten offering pursuant
to the exercise of Additional Piggyback Rights (“Piggyback Shares”), based on the aggregate number of Piggyback
Shares then owned by each Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons
requesting inclusion, up to the Section 2.3(a) Sale Number.

 

Notwithstanding anything
in this Section 2.3(a) to the contrary, no employee stockholder of the Parent will be entitled to include Registrable
Securities in an underwritten offering requested by the Initiating Holders or a Shelf Underwriting requested by the Shelf Underwriting
Initiating Holders pursuant to Section 2.1 to the extent that the Manager of such underwritten offering shall determine
in good faith that the participation of such employee stockholder would adversely affect the marketability of the securities being
sold by the Initiating Holders or Shelf Underwriting Initiating Holders in such underwritten offering.

 

(b)          If
any registration or offering made pursuant to Section 2.2 involves an underwritten primary offering on behalf of the
Parent and the Manager shall advise the Parent that, in its view, the number of securities requested to be included in such underwritten
offering by the Holders of Registrable Securities, the Parent or any other Persons exercising Additional Piggyback Rights exceeds
the largest number of securities (the “Section 2.3(b) Sale Number”) that can be sold in an orderly
manner in such underwritten offering within a price range acceptable to the Parent, the Parent shall include in such underwritten
offering:

 

(i)             first,
all equity securities that the Parent proposes to register for its own account;

 

(ii)            second,
to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(b) is
less than the Section 2.3(b) Sale Number, the remaining Registrable Securities to be included in such underwritten offering
shall be allocated on a pro rata basis among all Holders requesting that Registrable Securities be included in such underwritten
offering pursuant to the exercise of piggyback rights pursuant to Section 2.2(a), based on the aggregate number of
Registrable Securities then owned by each such Holder requesting inclusion in relation to the aggregate number of Registrable
Securities owned by all Holders requesting inclusion, up to the Section 2.3(b) Sale Number; and

 

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(iii)           third,
to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(b) is
less than the Section 2.3(b) Sale Number, the remaining securities to be included in such underwritten offering shall
be allocated on a pro rata basis among all Persons requesting that Piggyback Shares be included in such underwritten offering
pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Piggyback Shares then owned by each
Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion,
up to the Section 2.3(b) Sale Number.

 

(c)          If
any registration pursuant to Section 2.2 involves an underwritten offering that was initially requested by any Person(s) (other
than a Holder) to whom the Parent has granted registration rights which are not inconsistent with the rights granted in, and do
not otherwise conflict with the terms of, this Agreement and the Manager shall advise the Parent that, in its view, the number
of securities requested to be included in such underwritten offering exceeds the largest number of securities (the “Section 2.3(c) Sale
Number”) that can be sold in an orderly manner in such underwritten offering within a price range acceptable to the
Parent, the Parent shall include in such underwritten offering:

 

(i)             first,
the shares requested to be included in such underwritten offering shall be allocated on a pro rata basis among such Person(s) requesting
the registration and all Holders requesting that Registrable Securities be included in such underwritten offering pursuant to
the exercise of piggyback rights pursuant to Section 2.2(a), based on the aggregate number of securities or Registrable
Securities, as applicable, then owned by each of the foregoing requesting inclusion in relation to the aggregate number of securities
or Registrable Securities, as applicable, owned by all such Persons and Holders requesting inclusion, up to the Section 2.3(c) Sale
Number;

 

(ii)            second,
to the extent that the number of securities to be included pursuant to clause (i) of this Section 2.3(c) is
less than the Section 2.3(c) Sale Number, the remaining securities to be included in such underwritten offering shall
be allocated on a pro rata basis among all Persons requesting that Piggyback Shares be included in such underwritten offering
pursuant to the exercise of Additional Piggyback Rights, based on the aggregate number of Piggyback Shares then owned by each
Person requesting inclusion in relation to the aggregate number of Piggyback Shares owned by all Persons requesting inclusion,
up to the Section 2.3(c) Sale Number; and

 

(iii)           third,
to the extent that the number of securities to be included pursuant to clauses (i) and (ii) of this Section 2.3(c) is
less than the Section 2.3(c) Sale Number, any equity securities that the Parent proposes to register for its own account,
up to the Section 2.3(c) Sale Number.

 

(d)          If,
as a result of the proration provisions set forth in clauses (a), (b) or (c) of this Section 2.3,
any Holder shall not be entitled to include all Registrable Securities in an underwritten offering that such Holder has requested
be included, such Holder may elect to withdraw such Holder’s request to include Registrable Securities in the registration
to which such underwritten offering relates or may reduce the number requested to be included; provided, however,
that (x) such request must be made in writing prior to the earlier of such Holder’s execution of the underwriting agreement
or such Holder’s execution of the custody agreement with respect to such registration and (y) such withdrawal or reduction
shall be irrevocable and, after making such withdrawal or reduction, such Holder shall no longer have any right to include Registrable
Securities in the registration as to which such withdrawal or reduction was made to the extent of the Registrable Securities so
withdrawn or reduced.

 

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2.4.          Registration
Procedures. If and whenever the Parent is required by the provisions of this Agreement to effect or cause the registration
of and/or participate in any offering or sale of any Registrable Securities under the Securities Act as provided in this Agreement
(or use reasonable best efforts to accomplish the same), the Parent shall, as expeditiously as possible:

 

(a)            prepare
and file all filings with the SEC and FINRA required for the consummation of the offering, including preparing and filing with
the SEC a registration statement on an appropriate registration form of the SEC for the disposition of such Registrable Securities
in accordance with the intended method of disposition thereof (including a Partner Distribution), which registration form (i) shall
be selected by the Parent (except as provided for in a Demand Registration Request) and (ii) shall, in the case of a shelf
registration, be available for the sale of the Registrable Securities by the selling Holders thereof and such registration statement
shall comply as to form in all material respects with the requirements of the applicable registration form and include all financial
statements required by the SEC to be filed therewith, and the Parent shall use its reasonable best efforts to cause such registration
statement to become effective and remain continuously effective for such period as required by this Agreement (provided,
however, that as far in advance as reasonably practicable before filing a registration statement or prospectus or any amendments
or supplements thereto, or comparable statements under securities or state “blue sky” laws of any jurisdiction, or
any free writing prospectus related thereto, the Parent will furnish to the Holders participating in the planned offering and
to the Manager, if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will
be subject to their reasonable review and reasonable comment and the Parent shall not file any registration statement or amendment
thereto, any prospectus or supplement thereto or any free writing prospectus related thereto to which the Initiating Holders,
the Majority Participating Holders or the underwriters, if any, shall reasonably object); provided, however, that,
notwithstanding the foregoing, in no event shall the Parent be required to file any document with the SEC which in the view of
the Parent or its counsel contains an untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make any statement therein not misleading;

 

(b)            (i) prepare
and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith
and such free writing prospectuses and Exchange Act reports as may be necessary to keep such registration statement continuously
effective for such period as required by this Agreement and to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all Registrable Securities covered by such registration statement, and any prospectus so supplemented
to be filed pursuant to Rule 424 under the Securities Act, in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement and (ii) provide notice to such sellers of Registrable
Securities and the Manager, if any, of the Parent’s reasonable determination that a post-effective amendment to a registration
statement would be appropriate;

 

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(c)            furnish,
without charge, to each Participating Holder and each underwriter, if any, of the securities covered by such registration statement
such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits),
the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus) and
any other prospectus filed under Rule 424 under the Securities Act, each free writing prospectus utilized in connection therewith,
in each case, in conformity with the requirements of the Securities Act, and other documents, as such seller and underwriter may
reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller
(the Parent hereby consenting to the use in accordance with all applicable laws of each such registration statement (or amendment
or post-effective amendment thereto) and each such prospectus (or preliminary prospectus or supplement thereto) or free writing
prospectus by each such Participating Holder and the underwriters, if any, in connection with the offering and sale of the Registrable
Securities covered by such registration statement or prospectus);

 

(d)            use
its reasonable best efforts to register or qualify the Registrable Securities covered by such registration statement under such
other securities or state “blue sky” laws of such jurisdictions as any sellers of Registrable Securities or any managing
underwriter, if any, shall reasonably request in writing, and do any and all other acts and things which may be reasonably necessary
or advisable to enable such sellers or underwriter, if any, to consummate the disposition of the Registrable Securities in such
jurisdictions (including keeping such registration or qualification in effect for so long as such registration statement remains
in effect), except that in no event shall the Parent be required to qualify to do business as a foreign corporation in any jurisdiction
where it would not, but for the requirements of this paragraph (d), be required to be so qualified, to subject itself to taxation
in any such jurisdiction or to consent to general service of process in any such jurisdiction;

 

(e)            promptly
notify each Participating Holder and each managing underwriter, if any: (i) when the registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement related thereto, any post-effective amendment to the registration statement
or any free writing prospectus has been filed with the SEC and, with respect to the registration statement or any post-effective
amendment, when the same has become effective; (ii) of any request by the SEC or state securities authority for amendments
or supplements to the registration statement or the prospectus related thereto or for additional information; (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings
for that purpose; (iv) of the receipt by the Parent of any notification with respect to the suspension of the qualification
of any Registrable Securities for sale under the securities or state “blue sky” laws of any jurisdiction or the initiation
of any proceeding for such purpose; (v) of the existence of any fact of which the Parent becomes aware which results in the
registration statement or any amendment thereto, the prospectus related thereto or any supplement thereto, any document incorporated
therein by reference, any free writing prospectus or the information conveyed at the time of sale to any purchaser containing
an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make
any statement therein not misleading; and (vi) if at any time the representations and warranties contemplated by any underwriting
agreement, securities sale agreement, or other similar agreement, relating to the offering shall cease to be true and correct
in all material respects (unless otherwise qualified by materiality in which case such representations and warranties shall cease
to be true and correct in all respects); and, if the notification relates to an event described in clause (v), unless the
Parent has declared that a Postponement Period exists, the Parent shall promptly prepare and furnish to each such seller and each
underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein in the light of the circumstances
under which they were made not misleading;

 

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(f)            comply
(and continue to comply) with all applicable rules and regulations of the SEC (including maintaining disclosure controls
and procedures (as defined in Exchange Act Rule 13a-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rule 13a-15(f)) in accordance with the Exchange Act), and make generally available to its security holders (including
by way of filings with the SEC), as soon as reasonably practicable after the effective date of the registration statement (and
in any event within forty-five (45) days, or ninety (90) days if it is a fiscal year, after the end of such twelve month period
described hereafter), an earnings statement (which need not be audited) covering the period of at least twelve (12) consecutive
months beginning with the first day of the Parent’s first calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;

 

(g)            (i) (A) use
its reasonable best efforts to cause all such Registrable Securities covered by such registration statement to be listed on the
principal securities exchange on which similar securities issued by the Parent are then listed, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, or (B) if no similar securities are then so listed, use
its reasonable best efforts to either cause all such Registrable Securities to be listed on a national securities exchange or
to secure designation of all such Registrable Securities as a Nasdaq National Market “national market system security”
within the meaning of Rule 11Aa2-1 of the Exchange Act or, failing that, secure Nasdaq National Market authorization for
such shares and, without limiting the generality of the foregoing, take all actions that may be required by the Parent as the
issuer of such Registrable Securities in order to facilitate the managing underwriter’s arranging for the registration of
at least two market makers as such with respect to such shares with FINRA, and (ii) comply (and continue to comply) with
the requirements of any self-regulatory organization applicable to the Parent, including all corporate governance requirements;

 

(h)            cause
its senior management, officers and employees to participate in, and to otherwise facilitate and cooperate with the preparation
of the registration statement and prospectus and any amendments or supplements thereto (including participating in meetings, drafting
sessions, due diligence sessions and rating agency presentations) taking into account the Parent’s reasonable business needs;

 

(i)            provide
and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such registration statement
not later than the effective date of such registration statement and, in the case of any secondary equity offering, provide and
enter into any reasonable agreements with a custodian for the Registrable Securities;

 

(j)            enter
into such customary agreements (including, if applicable, an underwriting agreement) and take such other actions as the Initiating
Holder or the Majority Participating Holders or the underwriters shall reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (it being understood that the Holders of the Registrable Securities which are to be
distributed by any underwriters shall be parties to any such underwriting agreement and may, at their option, require that the
Parent make for the benefit of such Holders the representations, warranties and covenants of the Parent which are being made to
and for the benefit of such underwriters);

 

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(k)             use
its reasonable best efforts (i) to obtain opinions from the Parent’s counsel, including local and/or regulatory counsel,
and a “comfort” letter and updates thereof from the independent public accountants who have certified the financial
statements of the Parent (and/or any other financial statements) included or incorporated by reference in such registration statement,
in each case, in customary form and covering such matters as are customarily covered by such opinions and “comfort”
letters (including, in the case of such “comfort” letter, events subsequent to the date of such financial statements)
delivered to underwriters in underwritten public offerings, which opinions and letters shall be dated the dates such opinions
and “comfort” letters are customarily dated and otherwise reasonably satisfactory to the underwriters, if any, and
(ii) furnish to each Participating Holder and to each underwriter, if any, a copy of such opinions and letters addressed
to such underwriter;

 

(l)             deliver
promptly to counsel for the Majority Participating Holders and to each managing underwriter, if any, copies of all correspondence
between the SEC and the Parent, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with
respect to the registration statement, and, upon receipt of such confidentiality agreements as the Parent may reasonably request,
make reasonably available for inspection by counsel for the Majority Participating Holders, by counsel for any underwriter participating
in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained
by the Majority Participating Holders or any such underwriter, during regular business hours, all pertinent financial and other
records, pertinent corporate documents and properties of the Parent, and cause all of the Parent’s officers, directors and
employees to supply all information reasonably requested by any such counsel for the Majority Participating Holders, counsel for
an underwriter, attorney, accountant or agent in connection with such registration statement;

 

(m)            use
its reasonable best efforts to prevent the issuance or obtain the prompt withdrawal of any order suspending the effectiveness
of the registration statement, or the prompt lifting of any suspension of the qualification of any of the Registrable Securities
for sale in any jurisdiction, in each case, as promptly as reasonably practicable;

 

(n)            provide
a CUSIP number for all Registrable Securities, not later than the effective date of the registration statement;

 

(o)            use
its reasonable best efforts to make available its senior management for participation in “road shows” and other marketing
efforts and otherwise provide reasonable assistance to the underwriters (taking into account the Parent’s reasonable business
needs and the requirements of the marketing process) in the marketing of Registrable Securities in any underwritten offering;

 

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(p)            promptly
prior to the filing of any document which is to be incorporated by reference into the registration statement or the prospectus
(after the initial filing or confidential submission of such registration statement), and prior to the filing or use of any free
writing prospectus, provide copies of such document to counsel for the Majority Participating Holders and to each managing underwriter,
if any, and make the Parent’s representatives reasonably available for discussion of such document and make such changes
in such document concerning the information regarding the Participating Holders contained therein prior to the filing thereof
as counsel for the Majority Participating Holders or underwriters may reasonably request (provided, however, that,
notwithstanding the foregoing, in no event shall the Parent be required to file any document with the SEC which in the view of
the Parent or its counsel contains an untrue statement of a material fact or omits to state a material fact required to be stated
therein or necessary to make any statement therein not misleading);

 

(q)            furnish
to counsel for the Majority Participating Holders and to each managing underwriter, without charge, upon request, at least one
conformed copy of the registration statement and any post-effective amendments or supplements thereto, including financial statements
and schedules, all documents incorporated therein by reference, the prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus), any other prospectus and prospectus supplement filed under Rule 424
under the Securities Act and all exhibits (including those incorporated by reference) and any free writing prospectus utilized
in connection therewith;

 

(r)            cooperate
with the Participating Holders and the managing underwriter, if any, to facilitate the timely preparation and delivery of certificates
not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities
to be issued in such denominations and registered in such names in accordance with the underwriting agreement at least two (2) Business
Days prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the
instructions of the Participating Holders at least two (2) Business Days prior to any sale of Registrable Securities and
instruct any transfer agent and registrar of Registrable Securities to release any stop transfer orders in respect thereof (and,
in the case of Registrable Securities registered on a Shelf Registration Statement, at the request of any Holder, prepare and
deliver certificates representing such Registrable Securities not bearing any restrictive legends and deliver or cause to be delivered
an opinion or instructions to the transfer agent in order to allow such Registrable Securities to be sold from time to time);

 

(s)            include
in any prospectus or prospectus supplement if requested by any managing underwriter updated financial or business information
for the Parent’s most recent period or current quarterly period (including estimated results or ranges of results) if required
for purposes of marketing the offering in the view of the managing underwriter;

 

(t)            take
no direct or indirect action prohibited by Regulation M under the Exchange Act; provided, however, that to the extent
that any prohibition is applicable to the Parent, the Parent will use its reasonable best efforts to make any such prohibition
inapplicable;

 

(u)            use
its reasonable best efforts to cause the Registrable Securities covered by the applicable registration statement to be registered
with or approved by such other governmental agencies or authorities as may be necessary to enable the Participating Holders or
the underwriters, if any, to consummate the disposition of such Registrable Securities;

 

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(v)            take
all such other commercially reasonable actions as are necessary or advisable in order to expedite or facilitate the disposition
of such Registrable Securities;

 

(w)            take
all reasonable action to ensure that any free writing prospectus utilized in connection with any registration covered by Section 2.1
or 2.2 complies in all material respects with the Securities Act, is filed in accordance with the Securities Act to
the extent required thereby, is retained in accordance with the Securities Act to the extent required thereby and, when taken
together with the related prospectus, prospectus supplement and related documents, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading;

 

(x)            in
connection with any underwritten offering, if at any time the information conveyed to a purchaser at the time of sale includes
any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading, promptly file with the SEC such amendments or supplements
to such information as may be necessary so that the statements as so amended or supplemented will not, in the light of the circumstances,
be misleading;

 

(y)            to
the extent required by the rules and regulations of FINRA, retain a Qualified Independent Underwriter acceptable to the managing
underwriter; and

 

(z)            use
reasonable best efforts to cooperate with the managing underwriters, Participating Holders, any indemnitee of the Parent and their
respective counsel in connection with the preparation and filing of any applications, notices, registrations and responses to
requests for additional information with FINRA, Nasdaq, or any other national securities exchange on which the shares of Common
Stock are listed.

 

To the extent the
Parent is a WKSI at the time any Demand Registration Request is submitted to the Parent, the Parent shall file an automatic shelf
registration statement (as defined in Rule 405 under the Securities Act) (an “automatic shelf registration statement”)
on Form S-3 which covers those Registrable Securities which are requested to be registered. The Parent shall not take any
action that would result in it not remaining a WKSI or would result in it becoming an ineligible issuer (as defined in Rule 405
under the Securities Act) during the period during which such automatic shelf registration statement is required to remain effective.
If the Parent does not pay the filing fee covering the Registrable Securities at the time the automatic shelf registration statement
is filed, the Parent agrees to pay such fee at such time or times as the Registrable Securities are to be sold in compliance with
the SEC rules. If the automatic shelf registration statement has been outstanding for at least three (3) years, at or prior
to the end of the third year the Parent shall refile a new automatic shelf registration statement covering the Registrable Securities.
If at any time when the Parent is required to re-evaluate its WKSI status the Parent determines that it is not a WKSI, the Parent
shall use its reasonable best efforts to refile the shelf registration statement on Form S-3 and, if such form is not available,
Form S-1 and keep such registration statement effective during the period which such registration statement is required to
be kept effective.

 

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If the Parent files
any shelf registration statement for the benefit of the holders of any of its securities other than the Holders, and the Holders
do not request that their Registrable Securities be included in such Shelf Registration Statement, the Parent agrees that it shall
include in such registration statement such disclosures as may be required by Rule 430B under the Securities Act (referring
to the unnamed selling security holders in a generic manner by identifying the initial offering of the securities to the Holders)
in order to ensure that the Holders may be added to such shelf registration statement at a later time through the filing of a
prospectus supplement rather than a post-effective amendment.

 

The Parent may require
as a condition precedent to the Parent’s obligations under this Section 2.4 that each Participating Holder as
to which any registration is being effected (i) furnish the Parent such information regarding such seller and the distribution
of such securities as the Parent may from time to time reasonably request (including as required under state securities laws),
provided that such information is necessary for the Parent to consummate such registration and shall be used only in connection
with such registration and (ii) provide any underwriters participating in the distribution of such securities such information
as the underwriters may request and execute and deliver any agreements, certificates or other documents as the underwriters may
request.

 

Each Holder of Registrable
Securities agrees that upon receipt of any notice from the Parent of the happening of any event of the kind described in clause
(v) of paragraph (e) of this Section 2.4, such Holder will discontinue such Holder’s disposition of
Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder’s receipt
of the copies of the supplemented or amended prospectus contemplated by paragraph (e) of this Section 2.4 and,
if so directed by the Parent, will deliver to the Parent (at the Parent’s expense) all copies, other than permanent file
copies, then in such Holder’s possession of the prospectus covering such Registrable Securities that was in effect at the
time of receipt of such notice. In the event the Parent shall give any such notice, the applicable period mentioned in paragraph
(b) of this Section 2.4 shall be extended by the number of days during such period from and including the date
of the giving of such notice to and including the date when each Participating Holder covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated by paragraph (e) of this Section 2.4.

 

The Parent agrees
not to file or make any amendment to any registration statement with respect to any Registrable Securities, or any amendment of
or supplement to the prospectus, or any free writing prospectus, which amendment refers to any Holder covered thereby by name,
or otherwise identifies such Holder, without the consent of such Holder, such consent not to be unreasonably withheld or delayed,
unless such disclosure is required by law, in which case the Parent shall provide written notice to such Holders no less than
five (5) Business Days prior to the filing.

 

To the extent that
any of the Holders is or may be deemed to be an “underwriter” of Registrable Securities pursuant to any SEC comments
or policies, the Parent agrees that (1) the indemnification and contribution provisions contained in Section 2.9
shall be applicable for the benefit of the applicable Holders, in their role as an underwriter or deemed underwriter in addition
to their capacity as a Holder and (2) the applicable Holders shall be entitled to conduct the due diligence which an underwriter
would normally conduct in connection with an offering of securities registered under the Securities Act, including receipt of
customary opinions and comfort letters addressed to the applicable Holders.

 

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2.5.          Registration
Expenses.

 

(a)            The
Parent shall pay all Expenses with respect to any registration or offering of Registrable Securities pursuant to Section 2,
whether or not a registration statement becomes effective or the offering is consummated.

 

(b)            Notwithstanding
the foregoing, (x) the provisions of this Section 2.5 shall be deemed amended to the extent necessary to cause
these expense provisions to comply with state “blue sky” laws of each state in which the offering is made and (y) in
connection with any underwritten offering hereunder, each Participating Holder shall pay all underwriting discounts and commissions
and any transfer taxes, if any, attributable to the sale of such Registrable Securities, pro rata with respect to payments of
discounts and commissions in accordance with the number of shares sold in the offering by such Participating Holder.

 

2.6.         Certain
Limitations on Registration Rights. In the case of any registration under Section 2.1 involving an underwritten
offering, or, in the case of a registration under Section 2.2, if the Parent has determined to enter into an underwriting
agreement in connection therewith, all securities to be included in such underwritten offering shall be subject to such underwriting
agreement and no Person may participate in such underwritten offering unless such Person (i) agrees to sell such Person’s
securities on the basis provided therein and completes and executes all reasonable questionnaires, and other documents (including
custody agreements and powers of attorney) which must be executed in connection therewith; provided, however, that
all such documents shall be consistent with the provisions hereof and (ii) provides such other information to the Parent
or the underwriter as may be necessary to register such Person’s securities.

 

2.7.          Limitations
on Sale or Distribution of Other Securities.

 

(a)            Each
director and officer listed as a signatory to this Agreement and each Holder of 1% or more of the then-outstanding Common Stock
and Common Stock Equivalents agrees (whether or not such Holder can participate in any such offering), to the extent requested
by a managing underwriter, if any, of any underwritten public offering pursuant to a registration or offering effected pursuant
to Section 2.1 (including any Shelf Underwriting pursuant to Section 2.1(e)) or Section 2.2
(including any offering effected by the Parent for its own account and any offering in which one or more Holders is selling Common
Stock pursuant to the exercise of piggyback rights under Section 2.2 hereof), not to sell, transfer or otherwise dispose
of, including any sale pursuant to Rule 144, any Common Stock or Common Stock Equivalents (other than as part of such underwritten
public offering) during the time period reasonably requested by the managing underwriter, not to exceed the period from seven
days prior to the pricing date of such offering until (A) ninety (90) days after the pricing date of the first such offering
and (B) seventy-five (75) days after the pricing date of any subsequent such offering or, in each case, such shorter period
as the managing underwriter, the Parent or any executive officer or director of the Parent shall agree to; provided that
the time period may be longer than ninety (90) days or seventy-five (75) days, as applicable, if required by the managing underwriter,
as long as all Holders, directors and officers are subject to the same lock-up). The Parent agrees to use its reasonable best
efforts to cause each holder of 1% or more of the then-outstanding Common Stock and Common Stock Equivalents, purchased or otherwise
acquired from the Parent (other than in a public offering) at any time after the date of this Agreement to agree, and shall use
its reasonable best efforts to cause each of its officers, directors and beneficial holders of 5% or more of the Common Stock
to agree, not to sell, transfer or otherwise dispose of, including any sale pursuant to Rule 144, any Common Stock or Common
Stock Equivalents (other than as part of such underwritten public offering) during the period referred to in the first sentence
of this clause (a). Notwithstanding the foregoing, none of the provisions or restrictions set forth in this Section 2.7(a) shall
in any way limit the Juggernaut Holders or any of their Affiliates from engaging in any brokerage, investment advisory, financial
advisory, anti-raid advisory, principaling, merger advisory, financing, asset management, trading, market making, arbitrage, investment
activity and other similar activities conducted in the ordinary course of their business.

 

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(b)            The
Parent hereby agrees that, in connection with an offering pursuant to Section 2.1 (including any Shelf Underwriting
pursuant to Section 2.1(e)) or 2.2, the Parent shall not sell, transfer, or otherwise dispose of, any Common
Stock or Common Stock Equivalent (other than as part of such underwritten public offering, a registration on Form S-4 or
Form S-8 or any successor or similar form which is (x) then in effect or (y) shall become effective upon the conversion,
exchange or exercise of any then outstanding Common Stock Equivalent), until a period from seven days prior to the pricing date
of such offering until (A) ninety (90) days after the pricing date of the first such offering and (B) seventy-five (75)
days after the pricing date of any subsequent such offering or, in each case, such shorter period as the managing underwriter,
the Parent or any executive officer or director of the Parent shall agree to; provided that the time period may be longer
than ninety (90) days or seventy-five (75) days, as applicable, if required by the managing underwriter, as long as all Holders,
directors and officers are subject to the same lock-up; and the Parent shall (i) so provide in any registration rights agreements
hereafter entered into with respect to any of its securities and (ii) use its reasonable best efforts to cause each holder
of 1% or more of the then-outstanding Common Stock and Common Stock Equivalents, purchased or otherwise acquired from the Parent
(other than in a public offering) at any time after the date of this Agreement to so agree, and shall use its reasonable best
efforts to cause each of its officers, directors and beneficial holders of 5% or more of the Common Stock to so agree.

 

2.8.          No
Required Sale. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Holder
to sell any Registrable Securities pursuant to any effective registration statement. A Holder is not required to include any of
its Registrable Securities in any registration statement, is not required to sell any of its Registrable Securities which are
included in any effective registration statement, and may sell any of its Registrable Securities in any manner in compliance with
applicable law (subject to compliance with any applicable lockup restrictions hereunder or under any agreement to which such Holder
is a party) even if such shares are already included on an effective registration statement.

 

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2.9.         Indemnification.

 

(a)            In
the event of any registration or offer and sale of any securities of the Parent under the Securities Act pursuant to this Section 2,
the Parent will (without limitation as to time), and hereby agrees to, and hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, each Participating Holder, its directors, officers, employees, stockholders, members, general and limited
partners, agents, affiliates, representatives, successors and assigns (and the directors, officers, employees, stockholders, members,
general and limited partners, agents, affiliates, representatives, successors and assigns thereof), each other Person who participates
as a seller (and its directors, officers, employees, stockholders, members, general and limited partners, agents, affiliates,
representatives, successors and assigns), underwriter or Qualified Independent Underwriter, if any, in the offering or sale of
such securities, each officer, director, employee, stockholder, managing director, agent, affiliate, representative, successor,
assign or partner of such underwriter or Qualified Independent Underwriter, and each other Person, if any, who controls (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) such seller or any such underwriter
or Qualified Independent Underwriter and each director, officer, employee, stockholder, managing director, agent, affiliate, representative,
successor, assign or partner of such controlling Person, from and against any and all losses, claims, damages or liabilities,
joint or several, actions or proceedings (whether commenced or threatened) and expenses (including reasonable fees of counsel
and any amounts paid in any settlement effected with the Parent’s consent, which consent shall not be unreasonably withheld
or delayed) to which each such indemnified party may become subject under the Securities Act or otherwise in respect thereof (collectively,
 “Claims”), insofar as such Claims arise out of, are based upon, relate to or are in connection with (i) any
untrue statement or alleged untrue statement of a material fact contained in any registration statement under which such securities
were registered under the Securities Act or the omission or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement
of a material fact contained in any preliminary, final or summary prospectus or any amendment or supplement thereto, together
with the documents incorporated by reference therein, or any free writing prospectus utilized in connection therewith, or the
omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading, or (iii) any untrue statement
or alleged untrue statement of a material fact in the information conveyed by the Parent or any underwriter to any purchaser at
the time of the sale to such purchaser, or the omission or alleged omission to state therein a material fact required to be stated
therein, or (iv) any violation by the Parent of any federal, state or common law rule or regulation applicable to the
Parent and relating to any action required of or inaction by the Parent in connection with any such offering of Registrable Securities,
and the Parent will reimburse any such indemnified party for any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however,
that the Parent shall not be liable to any such indemnified party in any such case to the extent such Claim arises out of or is
based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact
made in such registration statement or amendment thereof or supplement thereto or in any such prospectus or any preliminary, final
or summary prospectus or free writing prospectus in reliance upon and in conformity with written information furnished to the
Parent by or on behalf of such indemnified party specifically for use therein. Such indemnity and reimbursement of expenses shall
remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive
the transfer of such securities by such seller.

 

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(b)            Each
Participating Holder (and, if the Parent requires as a condition to including any Registrable Securities in any registration statement
filed in accordance with Section 2.1 or 2.2, any underwriter and Qualified Independent Underwriter, if any)
shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in paragraph
(a) of this Section 2.9) to the extent permitted by law the Parent, its officers and its directors, each Person
controlling the Parent within the meaning of the Securities Act and all other prospective sellers and their directors, officers,
stockholders, fiduciaries, managing directors, agents, affiliates, representatives, successors, assigns or general and limited
partners and respective controlling Persons with respect to any untrue statement or alleged untrue statement of any material fact
in, or omission or alleged omission of any material fact from, such registration statement, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto, or any free writing prospectus utilized in connection therewith,
if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written
information furnished to the Parent or its representatives by or on behalf of such Participating Holder or underwriter or Qualified
Independent Underwriter, if any, specifically for use therein, and each such Participating Holder, underwriter or Qualified Independent
Underwriter, if any, shall reimburse such indemnified party for any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such Claim as such expenses are incurred; provided, however,
that the aggregate amount which any such Participating Holder shall be required to pay pursuant to this Section 2.9
(including pursuant to indemnity, contribution or otherwise) shall in no case be greater than the amount of the net proceeds received
by such Participating Holder upon the sale of the Registrable Securities pursuant to the registration statement giving rise to
such Claim; provided, further, that such Participating Holder shall not be liable in any such case to the extent
that prior to the filing of any such registration statement or prospectus or amendment thereof or supplement thereto, or any free
writing prospectus utilized in connection therewith, such Participating Holder has furnished in writing to the Parent information
expressly for use in such registration statement or prospectus or any amendment thereof or supplement thereto or free writing
prospectus which corrected or made not misleading information previously furnished to the Parent. The Parent and each Participating
Holder hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by such Participating Holders to the
contrary, for all purposes of this Agreement, the only information furnished or to be furnished to the Parent for use in any such
registration statement, preliminary, final or summary prospectus or amendment or supplement thereto, or any free writing prospectus,
are statements specifically relating to (i) the beneficial ownership of shares of Common Stock by such Participating Holder
and its Affiliates as disclosed in the section of such document entitled “Selling Stockholders” or “Principal
and Selling Stockholders” and (ii) the name and address of such Participating Holder. If any additional information
about such Holder or the plan of distribution (other than for an underwritten offering) is required by law to be disclosed in
any such document, then such Holder shall not unreasonably withhold its agreement referred to in the immediately preceding sentence.
Such indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or
on behalf of such indemnified party and shall survive the transfer of such securities by such Holder.

 

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(c)            Indemnification
similar to that specified in the preceding paragraphs (a) and (b) of this Section 2.9 (with appropriate
modifications) shall be given by the Parent and each Participating Holder with respect to any required registration or other qualification
of securities under any applicable securities and state “blue sky” laws.

 

(d)            Any
Person entitled to indemnification under this Agreement shall notify promptly the indemnifying party in writing of the commencement
of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 2.9,
but the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under
the preceding paragraphs of this Section 2.9, except to the extent the indemnifying party is materially and actually
prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party
otherwise than under this Section 2. In case any action or proceeding is brought against an indemnified party and
such indemnified party shall have notified the indemnifying party of the commencement thereof (as required above), the indemnifying
party shall be entitled to participate therein and, unless in the reasonable opinion of outside counsel to the indemnified party
a conflict of interest between such indemnified and indemnifying parties exists in respect of such Claim, to assume the defense
thereof jointly with any other indemnifying party similarly notified, to the extent that it chooses, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such indemnified party that it so chooses, the indemnifying
party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that
(i) if the indemnifying party fails to take reasonable steps necessary to defend diligently the action or proceeding within
twenty (20) days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so;
or (ii) if such indemnified party who is a defendant in any action or proceeding which is also brought against the indemnifying
party reasonably shall have concluded that there may be one or more legal or equitable defenses available to such indemnified
party which are not available to the indemnifying party or which may conflict with or be different from those available to another
indemnified party with respect to such Claim; or (iii) if representation of both parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct, then, in any such case, the indemnified party shall have the
right to assume or continue its own defense as set forth above (but with no more than one firm of counsel for all indemnified
parties in each jurisdiction, except to the extent any indemnified party or parties reasonably shall have made a conclusion described
in clause (ii) or (iii) above) and the indemnifying party shall be liable for any expenses therefor. No indemnifying
party shall be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably
withheld or delayed), but if settled with such consent or if there be a final judgment for the plaintiff, such indemnifying party
agrees to indemnify each indemnified party from and against any loss, claim, damage, liability or expense by reason of such settlement
or judgment. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification
or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or
claim) unless such settlement, compromise or judgment (A) includes an unconditional release of the indemnified party from
all liability arising out of such action or claim and (B) does not include a statement as to or an admission of fault or
culpability, by or on behalf of any indemnified party.

 

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(e)            If
for any reason the foregoing indemnity is unavailable, unenforceable or is insufficient to hold harmless an indemnified party
under Sections 2.9(a), (b) or (c), then each applicable indemnifying party shall contribute to
the amount paid or payable to such indemnified party as a result of any Claim in such proportion as is appropriate to reflect
the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, with respect to such
Claim. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying
party or the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. If, however, the allocation provided in the second preceding sentence is not permitted
by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party
and the indemnified party as well as any other relevant equitable considerations. The parties hereto agree that it would not be
just and equitable if any contribution pursuant to this Section 2.9(e) were to be determined by pro rata allocation
or by any other method of allocation which does not take account of the equitable considerations referred to in the preceding
sentences of this Section 2.9(e). The amount paid or payable in respect of any Claim shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such Claim.
No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in
this Section 2.9(e) to the contrary, no indemnifying party (other than the Parent) shall be required pursuant
to this Section 2.9(e) to contribute any amount greater than the amount of the net proceeds received by such
indemnifying party from the sale of Registrable Securities pursuant to the registration statement giving rise to such Claim, less
the amount of any indemnification payment made by such indemnifying party pursuant to Sections 2.9(b) and (c).
In addition, no Holder of Registrable Securities or any Affiliate thereof shall be required to pay any amount under this Section 2.9(e) unless
such Person or entity would have been required to pay an amount pursuant to Section 2.9(b) if it had been applicable
in accordance with its terms.

 

(f)            The
indemnity and contribution agreements contained herein shall be in addition to any other rights to indemnification or contribution
which any indemnified party may have pursuant to law or contract and shall remain operative and in full force and effect regardless
of any investigation made or omitted by or on behalf of any indemnified party and shall survive the transfer of the Registrable
Securities by any such party.

 

(g)            The
indemnification and contribution required by this Section 2.9 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred.

 

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2.10.            Limitations
on Registration of Other Securities; Representation. From and after the date of this Agreement, the Parent shall
not, without the prior written consent of the Juggernaut Holders, enter into any agreement with any holder or prospective holder
of any securities of the Parent giving such holder or prospective holder any registration rights the terms of which are (i) more
favorable taken as a whole than the registration rights granted to the Holders hereunder or (ii) on parity with the registration
rights granted to the Holders hereunder.

 

2.11.            No
Inconsistent Agreements. The Parent shall not hereafter enter into any agreement with respect to its securities that
is inconsistent in any material respects with the rights granted to the Holders in this Agreement.

 

2.12.            Partner
Distributions. Notwithstanding anything contained herein to the contrary, the Parent shall, at the request of any Holder
(including to effect a Partner Distribution) pursuant to Section 2.1 or Section 2.2, file any prospectus
supplement or post-effective amendments, or include in the initial registration statement any disclosure or language, or include
in any prospectus supplement or post-effective amendment any disclosure or language, and otherwise take any action, deemed necessary
or advisable by such Holder or its counsel (including to effect such Partner Distribution).

 

Section 3.                  Underwritten
Offerings.

 

3.1.              Requested
Underwritten Offerings. If requested by the underwriters for any underwritten offering pursuant to a registration requested
under Section 2.1, the Parent shall enter into a customary underwriting agreement with the underwriters. Such underwriting
agreement shall (i) be satisfactory in form and substance to the Initiating Holders and the Majority Participating Holders,
(ii) contain terms not inconsistent with the provisions of this Agreement and (iii) contain such representations and
warranties by, and such other agreements on the part of, the Parent and such other terms as are generally prevailing in agreements
of that type, including indemnities and contribution agreements on substantially the same terms as those contained herein or as
otherwise customary for the lead underwriter. Every Participating Holder shall be a party to such underwriting agreement. Each
Participating Holder shall not be required to make any representations or warranties to or agreements with the Parent or the underwriters
other than customary representations of a selling shareholder, including representations, warranties or agreements regarding its
ownership of and title to the Registrable Securities, any written information specifically provided by such Participating Holder
for inclusion in the registration statement and its intended method of distribution; and any liability of such Participating Holder
to any underwriter or other Person under such underwriting agreement for indemnity, contribution or otherwise shall in no case
be greater than the amount of the net proceeds received by such Participating Holder upon the sale of Registrable Securities pursuant
to such registration statement and in no event shall relate to anything other than information about such Holder specifically
provided by such Holder for use in the registration statement and prospectus.

 

3.2.              Piggyback
Underwritten Offerings. In the case of a registration pursuant to Section 2.2, if the Parent shall have
determined to enter into an underwriting agreement in connection therewith, all of the Participating Holders’ Registrable
Securities to be included in such registration shall be subject to such underwriting agreement. Each such Participating Holder
shall not be required to make any representations or warranties to or agreements with the Parent or the underwriters other than
customary representations of a selling shareholder, including representations, warranties or agreements regarding its ownership
of and title to the Registrable Securities, any written information specifically provided by such Participating Holder for inclusion
in the registration statement and its intended method of distribution; and any liability of such Participating Holder to any underwriter
or other Person under such underwriting agreement shall in no case be greater than the amount of the net proceeds received by
such Participating Holder upon the sale of Registrable Securities pursuant to such registration statement and in no event shall
relate to anything other than information about such Holder specifically provided by such Holder for use in the registration statement
and prospectus.

 

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Section 4.                 General.

 

4.1.             Adjustments
Affecting Registrable Securities. The provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Registrable Securities, to any and all shares of capital stock of the Parent, any successor or assign of the
Parent (whether by merger, share exchange, consolidation, sale of assets or otherwise) or any Subsidiary or parent company of
the Parent which may be issued in respect of, in exchange for or in substitution of, Registrable Securities and shall be appropriately
adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date
hereof.

 

4.2.              Rule 144
and Rule 144A. The Parent covenants that (i) so long as it remains subject to the reporting provisions of
the Exchange Act, it will timely file the reports required to be filed by it under the Securities Act or the Exchange Act (including,
but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c)(1)(i) of
Rule 144 under the Securities Act, as such Rule may be amended (“Rule 144”)) or, if the Parent
is not required to file such reports, it will, upon the request of any Holder, make publicly available other information so long
as necessary to permit sales by such Holder under Rule 144, Rule 144A under the Securities Act, as such Rule may
be amended (“Rule 144A”), or any similar rules or regulations hereafter adopted by the SEC, and (ii) it
will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such
Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided
by (A) Rule 144, (B) Rule 144A, (C) Regulation S under the Securities Act or (D) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder of Registrable Securities, the Parent will promptly deliver
to such Holder a written statement as to whether it has complied with such requirements.

 

4.3.              Nominees
for Beneficial Owners. If Registrable Securities are held by a nominee for the beneficial owner thereof, the beneficial
owner thereof may, at its option, be treated as the Holder of such Registrable Securities for purposes of any request or other
action by any Holder or Holders of Registrable Securities pursuant to this Agreement (or any determination of any number or percentage
of shares constituting Registrable Securities held by any Holder or Holders of Registrable Securities contemplated by this Agreement);
provided, however, that the Parent shall have received evidence reasonably satisfactory to it of such beneficial
ownership.

 

4.4.              Amendments
and Waivers. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement
shall be effective against the Parent or any Holder unless such modification, amendment or waiver is approved in writing by the
Parent and the Holders holding a majority of the Registrable Securities then held by all Holders; provided that notwithstanding
the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a Holder of
Registrable Securities, in a manner that is materially different from the other Holders (in such capacity) shall require the consent
of the Holder so affected. No waiver of any of the provisions of this Agreement shall be deemed to or shall constitute a waiver
of any other provision hereof (whether or not similar). No failure or delay on the part of any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof or of any other or future exercise of any such right, power or
privilege.

 

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4.5.         Notices.
Any notice or other communication required or permitted to be delivered to any party under this Agreement will be in writing and
will be deemed properly delivered, given and received:  (a) if delivered by hand, when delivered; (b) if sent
on a Business Day by email before 11:59 p.m. (recipient’s time), when transmitted; (c) if sent by email on a day
other than a Business Day, or if sent by email after 11:59 p.m. (recipient’s time), on the Business Day following the
date when transmitted; (d) if sent by registered, certified or first class mail, the third Business Day after being sent;
and (e) if sent by overnight delivery via a national courier service, one Business Day after being sent, in each case to
the address set forth beneath the name of such party below (or to such other address as such party shall have specified in a written
notice given to the other parties hereto):

 

if to the Parent, to:

 

Petros Pharmaceuticals, Inc.

200 U.S. 9, Ste 500

Manalapan Township, NJ 07726

Attn: Chairman of the Board

E-Mail: jshulman@juggernautcap.com

 

With a copy to:

 

Morgan, Lewis & Bockius
LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

Attn: Andrew M. Ray

Email: andrew.ray@morganlewis.com

 

if to the Juggernaut Holders, to:

 

c/o Juggernaut Capital Partners

5301 Wisconsin Avenue NW, Suite 570

Washington, DC 20015

Attention:    John Shulman

Phone:         (301) 215-7740

Email:          jshulman@juggernautcap.com

 

With a copy to:

 

Morgan, Lewis & Bockius
LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004

Attn: Andrew M. Ray

Email: andrew.ray@morganlewis.com

 

    29

     

    

 

4.6.         Successors
and Assigns. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and the respective successors, permitted assigns, heirs and personal representatives
of the parties hereto, whether so expressed or not. This Agreement may not be assigned by the Parent without the prior written
consent of the Holders. No Holder shall have the right to assign all or part of its or his rights and obligations under this Agreement
to any Person, unless such transferee duly executes and delivers to the Parent a Joinder Agreement and such transfer does not
violate any other agreement by and between the Parent and such Holder. Upon any such assignment, such assignee shall have and
be able to exercise and enforce all rights of the assigning Holder which are assigned to it and, to the extent such rights are
assigned, any reference to the assigning Holder shall be treated as a reference to the assignee. If any Holder shall acquire additional
Registrable Securities, such Registrable Securities shall be subject to all of the terms, and entitled to all the benefits, of
this Agreement. Additional Persons may become parties to this Agreement with the consent of the Parent and the Juggernaut Holders
(not to be unreasonably withheld or delayed), by executing and delivering to the Parent the Joinder Agreement.

 

4.7.         Termination.

 

(a)          The
obligations of the Parent and a Holder under this Agreement, in each case solely with respect to such Holder, will terminate upon
the earlier of:

 

(i)            the
date on which such Holder no longer holds any Registrable Securities; or (ii) the later of (A) the date on which
such Holder no longer beneficially owns at least 2% of the then outstanding Common Stock or Common Stock Equivalents, and such
Holder (notwithstanding any beneficial ownership of Common Stock or Common Stock Equivalents by such Holder) is not an Affiliate
of the Parent and (B) the date on which such the Holder is eligible to sell its Registrable Securities pursuant to Rule 144.

 

(b)          This
Agreement shall terminate on the date that is five (5) years from date hereof.

 

(c)          Notwithstanding
clauses (a) and (b) above, Section 2.5, Section 2.9, Section 4.9 and Section 4.13
shall survive termination of this Agreement.

 

4.8.         Entire
Agreement. This Agreement and the other documents referred to herein or delivered pursuant hereto which form part hereof
constitute the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof.

 

    30

     

    

 

4.9.         Governing
Law; Jurisdiction; WAIVER OF JURY TRIAL.

 

(a)          This
Agreement will be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the
principles of conflict of laws thereof.

 

(b)          Any
suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this
Agreement may be brought against any of the parties in the United States District Court for the Southern District of New York or
any New York state court located in New York, New York, and each of the parties hereby consents to the exclusive jurisdiction of
such court (and of the appropriate appellate courts) in any such suit, action or proceeding and waives any objection to venue laid
therein. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without
the jurisdiction of any such court. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

4.10.       Interpretation;
Construction.

 

(a)          The
table of contents and headings in this Agreement are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made
to a Section, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words “include,”
 “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words
 “without limitation.”

 

(b)          The
parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.

 

4.11.       Counterparts.
This Agreement may be executed and delivered in any number of separate counterparts (including by facsimile or electronic mail),
each of which shall be an original, but all of which together shall constitute one and the same agreement.

 

4.12.       Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect
the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof
to any person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such provision to other persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity
or enforceability of such provision, or the application thereof, in any other jurisdiction.

 

    31

     

    

 

4.13.       Specific
Enforcement. It is agreed and understood that monetary damages would not adequately compensate an injured party for
the breach of this Agreement by any party hereto and, accordingly, that this Agreement shall be specifically enforceable, in addition
to any other remedy to which such injured party is entitled at law or in equity, and that any breach of this Agreement shall be
the proper subject of a temporary or permanent injunction or restraining order. Further, each party hereto waives any claim or
defense that there is an adequate remedy at law for such breach or threatened breach or an award of specific performance is not
an appropriate remedy for any reason at law or equity and agrees that a party’s rights would be materially and adversely
affected if the obligations of the other parties under this Agreement were not carried out in accordance with the terms and conditions
hereof. Each party further agrees that no party shall be required to obtain, furnish or post any bond or similar instrument in
connection with or as a condition to obtain any remedy referred to in this Section 4.13, and each party irrevocably
waives any right it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

4.14.       Further
Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things
and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably
may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions
contemplated hereby.

 

4.15.       Confidentiality.
Each Holder agrees that any non-public information which they may receive relating to the Parent and its Subsidiaries (the “Confidential
Information”) will be held strictly confidential and will not be disclosed by it to any Person without the express written
permission of the Parent; provided, however, that the Confidential Information may be disclosed (i) in the event of any compulsory
legal process or compliance with any applicable law, subpoena or other legal process, as required by an administrative requirement,
order, decree or the rules of any relevant stock exchange or in connection with any filings that the Holder may be required
to make with any regulatory authority; provided, however, that in the event of compulsory legal process, unless prohibited by
applicable law or that process, each Holder agrees (A) to give the Juggernaut Holders and the Parent prompt notice thereof
and to cooperate with the Parent and the Juggernaut Holders in securing a protective order in the event of compulsory disclosure
and (B) that any disclosure made pursuant to public filings will be subject to the prior reasonable review of the Parent
and the Juggernaut Holders, (ii) to any foreign or domestic governmental or quasi-governmental regulatory authority, including
any stock exchange or other self-regulatory organization having jurisdiction over such party, (iii) to each Holder’s
or its Affiliate’s, officers, directors, employees, partners, accountants, lawyers and other professional advisors for use
relating solely to management of the investment or administrative purposes with respect to such Holder and (iv) to a proposed
transferee of securities of the Parent held by a Holder; provided, however, that the Holder informs the proposed transferee of
the confidential nature of the information and the proposed transferee agrees in writing to comply with the restrictions in this
Section 4.15 and delivers a copy of such writing to the Parent.

 

    32

     

    

 

4.16.       Opt-Out
Requests. Each Holder shall have the right, at any time and from time to time (including after receiving information
regarding any potential public offering), to elect to not receive any notice that the Parent or any other Holders otherwise are
required to deliver pursuant to this Agreement by delivering to the Parent a written statement signed by such Holder that it does
not want to receive any notices hereunder (an “Opt-Out Request”); in which case and notwithstanding anything
to the contrary in this Agreement the Parent and other Holders shall not be required to, and shall not, deliver any notice or
other information required to be provided to Holders hereunder to the extent that the Parent or such other Holders reasonably
expect would result in a Holder acquiring material non-public information within the meaning of Regulation FD promulgated under
the Exchange Act. An Opt-Out Request may state a date on which it expires or, if no such date is specified, shall remain in effect
indefinitely. A Holder who previously has given the Parent an Opt-Out Request may revoke such request at any time, and there shall
be no limit on the ability of a Holder to issue and revoke subsequent Opt-Out Requests; provided that each Holder shall
use commercially reasonable efforts to minimize the administrative burden on the Parent arising in connection with any such Opt-Out
Requests.

 

[Remainder of Page Intentionally
Left Blank]

 

    33

     

    

 

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

 

	 	THE COMPANY:
	 	 	 
	 	PETROS PHARMACEUTICALS, INC.
	 	 	                                            
	 	By:	/s/ John Shulman
	 	 	Name: John Shulman
	 	 	Title:   Chairman of the Board

 

[Signature
Page to Registration Rights Agreement]

 

    

     

    

 

	 	JUGGERNAUT HOLDERS
	 	 	 
	 	JCP III SM AIV, L.P.
	 	 	 
	 	By:	Juggernaut Partners III GP, L.P.,
	 	 	its general partner

 

	 	By:	Juggernaut Partners III GP, Ltd.
	 	 	its general partner
	 	 	 

 

	 	By: 	/s/ John Shulman
	 	Name:	John Shulman
	 	Title:	Managing Partner

 

[Signature
Page to Registration Rights Agreement]

 

    

     

    

 

Exhibit A

 

JOINDER AGREEMENT

 

This
Joinder Agreement (this “Joinder Agreement”) is made as of [           ],
by [and among [            ] (the “Transferring Holder”)
and] [          ] (the “New Holder”), in accordance
with that certain Registration Rights Agreement, dated as of [●], 2020 (as amended from time to time, the “Agreement”),
by and among Petros Pharmaceuticals, Inc., a Delaware corporation (the
 “Parent”) and the other Holders party thereto.

 

WHEREAS, the
Agreement requires the New Holder to become a party to the Agreement by executing this Joinder Agreement, and upon the New Holder
signing this Joinder Agreement, the Agreement will be deemed to be amended to include the New Holder as a Holder thereunder;

 

NOW, THEREFORE,
in consideration of the foregoing, and of the representations, warranties, covenants and agreements contained herein, and intending
to be legally bound hereby, the parties hereto agree as follows:

 

Section 1.             Party
to the Agreement. By execution of this Joinder Agreement, as of the date hereof the New Holder is hereby made a party to the
Agreement as a Holder. The New Holder hereby agrees to become a party to the Agreement and to be bound by, and subject to, all
of the representations, covenants, terms and conditions of the Agreement that are applicable to, and assignable under the Agreement
by, the Transferring Holder, in the same manner as if the New Holder were an original signatory to the Agreement. Execution and
delivery of this Joinder Agreement by the New Holder shall also constitute execution and delivery by the New Holder of the Agreement,
without further action of any party.

 

Section 2.             Defined
Terms. Capitalized terms used but not defined herein shall have the meanings set forth in the Agreement unless otherwise noted.

 

Section 3.              Representations
and Warranties of the New Holder.

 

3.1.         Authorization.
The New Holder has all requisite power and authority and has taken all action necessary in order to duly and validly approve the
New Holder’s execution and delivery of, and performance of its obligations under, this Joinder Agreement. This Joinder Agreement
has been duly executed and delivered by the New Holder and constitutes a legal, valid and binding agreement of the New Holder,
enforceable against the New Holder in accordance with its terms.

 

3.2.         No
Conflict. The New Holder is not under any obligation or restriction, nor shall it assume any such obligation or restriction,
that does or would materially interfere or conflict with the performance of its obligations under this Joinder Agreement.

 

Section 4.              Further
Assurances. The parties agree to execute and deliver any further instruments or perform any acts which are or may become necessary
to effectuate the purposes of this Joinder Agreement.

 

    Exhibit A-1

     

    

 

Section 5.              Governing
Law. This Joinder Agreement will be governed by, and construed in accordance with, the laws of the State of New York, without
giving effect to the principles of conflict of laws thereof.

 

Section 6.              Counterparts.
This Joinder Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the
same amendatory instrument.

 

Section 7.              Entire
Agreement. This Joinder Agreement and the Agreement contain the entire understanding, whether oral or written, of the parties
hereto with respect to the matters covered hereby. Any amendment or change in this Joinder Agreement shall not be valid unless
made in writing and signed by each of the parties hereto.

 

[Signature pages follow]

 

    Exhibit A-2

     

    

 

Exhibit A

 

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

 

	 	[TRANSFERRING HOLDER]
	 	 	      
	 	[ _____]

 

	 	By:	 
	 	 	Name:
	 	 	Title:

 

	 	NEW HOLDER
	 	 	       
	 	[ _____]

 

	 	By:	 
	 	 	Name:
	 	 	Title:

 

	 	Notice Address:	[                                                                       ]
	 	[ _____]	 
	 	[ _____]	 

	 	Attn: 	[                      ]
	 	Facsimile: 	[                ]

 

Accepted and Agreed to as of

the date first written above:

 

COMPANY

 

PETROS PHARMACEUTICALS, INC.

 

	By:	     	 
	 	Name:	 
	 	Title:	 

 

    Exhibit A-3

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