Document:

EXECUTION

Exhibit 4.1

MQ
ASSOCIATES, INC.

 

AND

 

WELLS
FARGO BANK, NATIONAL ASSOCIATION 

(AS SUCCESSOR TO WACHOVIA BANK, NATIONAL ASSOCIATION)

as
Trustee

 

SUPPLEMENTAL
INDENTURE

 

Dated
as of January 15, 2008

to

Indenture

Dated as of August 24, 2004

121⁄4% SENIOR DISCOUNT NOTES DUE 2012

 

 

THIS SECOND SUPPLEMENTAL INDENTURE, dated as of January 15, 2008 (this “Supplemental
Indenture”), is
by and between MQ Associates Inc., a
Delaware corporation (the “Issuer”), and Wells Fargo Bank, National Association (as
successor to Wachovia Bank, National Association), as trustee (the “Trustee”).

WHEREAS, the Issuer and the Trustee have entered into that certain
Indenture dated as of August 24, 2004 (as amended by the First
Supplemental Indenture dated as of August 15, 2005, the “Indenture”), providing for the issuance of 121⁄4%
Senior Discount Notes due 2012
(the “Notes”);

WHEREAS,
the Issuer originally issued $136.0 million in aggregate principal amount at
maturity of the Notes;

WHEREAS,
Section 9.2 of the Indenture provides that the Indenture may be amended
with the consent of the Holders of a majority in principal amount at maturity
of the Notes then outstanding (including without limitation, consents obtained
in connection with a purchase of, or tender offer or exchange offer for,
Notes);

WHEREAS,
the Issuer desires and has requested the Trustee to join with it in entering
into this Supplemental Indenture for the purpose of amending the Indenture in
certain respects as permitted by Section 9.2 of the Indenture;

WHEREAS,
the execution and delivery of this Supplemental Indenture has been authorized
by the Board of Directors of the Issuer;

WHEREAS,
(1) the Issuer has received the consent of the Holders of a majority in
principal amount at maturity of the outstanding Notes and have satisfied all
other conditions precedent, if any, provided under the Indenture to enable the
Issuer and the Trustee to enter into this Supplemental Indenture, all as
certified by an Officers’ Certificate, delivered to the Trustee simultaneously with
the execution and delivery of this Supplemental Indenture as contemplated by Section 9.6
of the Indenture, and (2) the Issuer has delivered to the Trustee
simultaneously with the execution and delivery of this Supplemental Indenture
an Opinion of Counsel relating to this Supplemental Indenture as contemplated
by Section 9.6 of the Indenture; and

NOW,
THEREFORE, in consideration of the above premises, each party hereby agrees,
for the benefit of the others and for the equal and ratable benefit of the Holders
of the Notes, as follows:

ARTICLE I

DEFINITIONS

 

Section 1.1                                   Deletion of Definitions and Related
References.  Section 1.1 of the Indenture
is hereby amended to delete in their entirety all terms and their respective
definitions for which all references are eliminated in the Indenture as a
result of the amendments set forth in Article II of this Supplemental
Indenture and all cross references to the provisions or definitions in the
Indenture that have been deleted as a result of this Supplemental Indenture.

ARTICLE II

AMENDMENTS TO INDENTURE

 

Section 2.1                                   Amendments to the Indenture.  The Indenture is
hereby amended by:

 

(i)                                     deleting
the following sections of the Indenture and all references thereto in the
Indenture in their entirety:

 

Section 3.2
(SEC
Reports)

Section 3.3
(Limitation
on Indebtedness)

Section 3.4
(Limitation
on Restricted Payments)

 

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Section 3.5
(Limitations
on Liens)

Section 3.6
(Limitation
on Restrictions on Distributions from Restricted Subsidiaries)

Section 3.7
(Limitation
on Sales of Assets and Subsidiary Stock)

Section 3.8  (Limitation on Affiliate Transactions)

Section 3.9
(Change
of Control)

Section 3.10
(Limitation
on Sale of Capital Stock of Restricted Subsidiaries)

Section 3.11
(Future
Subsidiary Guarantors)

Section 3.12
(Limitation
on Lines of Business)

Section 3.13
(Maintenance
of Office or Agency)

Section 3.15
(Payment
of Taxes and Other Claims)

Section 3.17
(Compliance
Certificate)

Section 3.18
(Further
Instruments and Acts)

Section 3.19
(Statement
by Officers as to Default)

Sections
4.1(2), 4.1(3), 4.1(5), 4.1(A)(ii), 4.1(A)(iii) and 4.1(B) (Merger
and Consolidation)

Sections 6.1(3), 6.1(4), 6.1(5), 6.1(6), 6.1(8) and
6.1(9) (Events of Default)

ARTICLE III

MISCELLANEOUS PROVISIONS

 

Section 3.1                                   Indenture.  Except as amended
hereby, the Indenture is in all respects ratified and confirmed and all the
terms, conditions and provisions thereof shall remain in full force and
effect.  This Supplemental Indenture
shall form a part of the Indenture for all purposes, and every Holder of Notes
heretofore or hereafter authenticated and delivered under the Indenture shall
be bound by the Indenture as amended hereby. 
Subject to Section 10.1 of the Indenture, in the case of conflict
between the Indenture and this Supplemental Indenture, the provisions of this
Supplemental Indenture shall control.

Section 3.2                                   Severability.  In
case any provision in this Supplemental Indenture shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

Section 3.3                                   Capitalized
Terms.  Capitalized terms used herein but not defined shall have the meanings
assigned to them in the Indenture.

Section 3.4                                   Effect
of Headings.  The Article and Section headings used
herein are for convenience only and shall not affect the construction of this
Supplemental Indenture.

Section 3.5                                   Trustee
Makes No Representations.  The Trustee makes no representation as to the
validity or sufficiency of this Supplemental Indenture.

Section 3.6                                   Certain
Duties and Responsibilities of the Trustee.  In
entering into this Supplemental Indenture, the Trustee shall be entitled to the
benefit of every provision of the Indenture relating to the conduct or
affecting the liability or affording protection to the Trustee, whether or not
elsewhere herein so provided.

Section 3.7                                   Governing
Law.  THIS SUPPLEMENTAL INDENTURE
AND THE NOTES WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.  Each of the parties hereto agrees to submit
to the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of, or relating to, this Supplemental Indenture or the
Notes.

Section 3.8                                   Counterparts.  The
parties may sign any number of copies of this Supplemental Indenture.  Each signed copy shall be an original, but
all of them together represent one and the same agreement.

 

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Section 3.9                                   Successors.  All agreements of the
Issuer and the Trustee in this Supplemental Indenture and the Notes shall bind
their respective successors.

Section 3.10                            Effectiveness.  This
Supplemental Indenture shall be effective upon execution hereof by the Company
and the Trustee; provided, however, that the provisions of Articles I and II of
this Supplemental Indenture shall be operative at the time MQ Associates
accepts for purchase at least a majority in aggregate principal amount at
maturity of the outstanding Notes issued under the Indenture.

Section 3.11                            Endorsement and Change of Form of Notes.  Any Notes authenticated and delivered after
the close of business on the date that this Supplemental Indenture becomes
effective may be affixed to, stamped, imprinted or otherwise legended by the
Trustee, with a notation as follows:

“Effective as of January 15, 2008, the restrictive covenants of
the Issuer and certain of the Events of Default have been eliminated, as
provided in the Second Supplemental Indenture, dated as of January 15,
2008.  Reference is hereby made to said
Second Supplemental Indenture, copies of which are on file with the Trustee,
for a description of the amendments made therein.”

 

[THE REMAINDER OF THIS PAGE
IS INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF,
the parties hereto have caused this Second Supplemental Indenture to be duly
executed as of the day and year written above.

 

	
   

  	
   

  	
  MQ ASSOCIATES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Todd E. Andrews

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Todd E. Andrews

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
							

 

 

	
   

  	
   

  	
  WELLS FARGO BANK, NATIONAL
  ASSOCIATION,

  as Trustee

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Joseph P. O’Donnell

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Joseph P. O’Donnell

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice PresidentExhibit 10.29

 

 

AGREEMENT AND PLAN OF MERGER

 

AMONG

 

UFP TECHNOLOGIES, INC.

 

S&L ACQUISITION CORP.

 

and

 

STEPHENSON & LAWYER, INC.

 

DATED: 
JANUARY 14, 2008

 

 

 

AGREEMENT AND PLAN OF MERGER

 

TABLE OF CONTENTS AND LIST OF EXHIBITS

 

	
  Exhibit A

  	
   

  	
  List of Company Shareholders, the number and class of Company Shares
  held by each Company Shareholder and the Merger Consideration to be received
  by each Company Shareholder

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Form of General Release

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Form of Legal Opinion by the Company’s Counsel

  
	
   

  	
   

  	
   

  
	
  Exhibit D-1

  	
   

  	
  Form of Noncompetition Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit D-2

  	
   

  	
  Form of Noncompetition Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit D-3

  	
   

  	
  Form of Noncompetition Agreement

  

 

i

 

AGREEMENT AND PLAN OF MERGER

 

AGREEMENT AND
PLAN OF MERGER (“Agreement”) entered into as of January 14,
2008, by and among UFP Technologies, Inc., a Delaware corporation (“Parent”), S&L Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent (the “Merger Sub”),
and Stephenson & Lawyer, Inc., a Michigan corporation (“Company”).  All
capitalized terms used in this Agreement have the meanings specified or
referred to in Article 11.

 

RECITALS

 

WHEREAS,
Parent, Merger Sub and the Company desire to effectuate a business combination
of Parent and the Company and to effectuate this combination, Merger Sub will
be merged with and into the Company (the “Merger”) and
the shareholders of the Company will receive cash consideration upon the terms
and subject to the conditions set forth in this Agreement and in accordance
with the provisions of the MBCA and the DGCL;

 

WHEREAS, the
respective Boards of Directors of Parent, Merger Sub and the Company have
approved the Merger, upon the terms and subject to the conditions set forth in
this Agreement; and

 

WHEREAS, it is
intended that, for U.S. federal income tax purposes, the Merger constitute a
taxable sale of the stock of the Company to Parent.

 

NOW,
THEREFORE, in consideration for the mutual agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

 

ARTICLE 1.           THE MERGER

 

1.1           Procedure
for the Merger

 

Upon the terms
and subject to the conditions set forth in this Agreement, Merger Sub shall be
merged, in accordance with the provisions of the MBCA and the DGCL, with and
into the Company.  The Merger shall be
effected by filing a certificate of merger with the Department of Labor &
Economic Growth of the State of Michigan in accordance with the MBCA and a
certificate of merger with the Secretary of State of the State of Delaware in
accordance with the DGCL.

 

1.2           Surviving
Corporation

 

Following the
Merger, the separate corporate existence of Merger Sub shall cease and the
Company shall continue as the surviving corporation (the “Surviving
Corporation”).  The name of
the Surviving Corporation shall be Stephenson & Lawyer, Inc.

 

1.3           Time
and Place of Closing

 

The closing of
the Merger provided for in this Agreement ( the “Closing”)
shall be held at the law offices of Brown Rudnick Berlack Israels LLP, One
Financial Center, Boston, 

 

1

 

Massachusetts, within three (3) business days of the satisfaction
or waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to action
that will be taken at the Closing itself), or at such other place, date or time
as may be fixed by mutual agreement of the parties (the “Closing Date”);
provided, however, that in no event shall the Closing Date be extended beyond February 29,
2008.  Each of the parties agrees to use
its reasonable efforts to close the Merger by January 21, 2008.

 

1.4           Effective
Time

 

Subject to the
provisions of this Agreement, as soon as practicable after the Closing Date,
the parties shall cause the Merger contemplated by this Agreement to be
consummated by the filing of a certificate of merger with the Department of
Labor & Economic Growth of the State of Michigan executed in
accordance with the relevant provisions of the MBCA, and the parties shall make
all other filings or recordings required under the MBCA, and the filing of a
certificate of merger with the Secretary of State of the State of Delaware executed
in accordance with the relevant provisions of the DGCL, and the parties shall
make all other filings or recordings required under the MBCA and the DGCL.  The Merger shall become effective at the
later of the filing of the certificate of merger with the Secretary of State of
the State of Michigan or the filing of the certificate of merger with the
Secretary of State of the State of Delaware, or at such subsequent date or time
as the parties shall agree upon in writing and specify in such filings (the time
the Merger becomes effective being hereinafter referred to as the “Effective Time”).

 

1.5           Certificate
of Incorporation, Bylaws and Officers and Directors of the Surviving
Corporation

 

(a)           Certificate.  Unless otherwise determined by Parent in its
sole discretion prior to the Effective Time, at the Effective Time, the
certificate of incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation, unless and until thereafter changed or amended in accordance with
applicable law.

 

(b)           Bylaws.  Unless otherwise determined by Parent in its
sole discretion prior to the Effective Time, at the Effective Time, the bylaws
of Merger Sub, as in effect immediately prior to the Effective Time, shall be
the bylaws of the Surviving Corporation, unless and until thereafter changed or
amended in accordance with applicable law.

 

(c)           Officers
and Directors.  The officers of
Merger Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, in each case until the earliest of their
resignation or removal from office or their otherwise ceasing to be officers or
until their respective successors are duly elected and qualified.  The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation.

 

2

 

1.6           Intentionally
Deleted

 

1.7           Effect
of Merger on Capital Stock

 

As of the
Effective Time, by virtue of the Merger and without any action on the part of
any of the Constituent Corporations or the holders of any securities of the
Constituent Corporations:

 

(a)           Surviving
Corporation.  At the Effective Time,
the effect of the Merger shall be as provided in this Agreement and the
applicable provisions of the MBCA and the DGCL. 
Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the property, rights, privileges, powers and
franchises of Merger Sub and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Merger Sub and the
Company shall become the debts, liabilities and duties of the Surviving
Corporation.

 

(b)           Company
Shares.  Upon the terms and subject
to the conditions set forth in this Agreement, at the Effective Time, by virtue
of the Merger and without any action on the part of Merger Sub, the Company or the
Company Shareholders, the Company Shares (excluding any Treasury Shares) shall
be converted into the right to receive and be exchangeable for the amount of
cash set forth next to such Company Shareholder’s name on Exhibit A
(an aggregate purchase price of $7,225,000 in cash) (the “Merger Consideration”).

 

(c)           Cancellation
of Certificates for Company Shares. 
At the Effective Time, all Company Shares shall cease to be outstanding,
shall be canceled and retired and shall cease to exist, and each certificate (a
“Certificate”) formerly
representing a Company Share (other than a Treasury Share) shall thereafter
cease to have any rights with respect to the Company Shares, except as provided
herein or by law.

 

(d)           Treasury
Stock.  Each Company Share owned by
the Company (“Treasury Shares”)
shall automatically be canceled and retired and shall cease to exist, and no
consideration shall be delivered in exchange therefor.

 

(e)           Merger
Sub Stock.  Each share of common
stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of capital stock, par value
$0.01 per share, of the Surviving Corporation, such that Parent shall be the
holder of all of the issued and outstanding shares of capital stock of the
Surviving Corporation following the Merger.

 

1.8           Payment
of Merger Consideration

 

The Merger
Consideration shall be paid as follows:

 

3

 

(a)           at
the Closing, the aggregate sum of $6,975,000 shall be paid to the Company
Shareholders in cash by paying to each Company Shareholder by certified or bank
check or by wire transfer of funds to an account specified by such Company
Shareholder in writing at least three days prior to the Closing Date the cash
amount set forth next to his name under the heading “Cash Payment at Closing”
on Exhibit A hereto, as amended;

 

(b)           within
five (5) business days following the end of the AR Collection Period, Parent
shall pay each Company Shareholder its Pro Rata Percentage of an amount, if
any, equal to (i) the AR Holdback, minus (ii) any portion of the AR
Holdback which Parent is entitled to retain under Section 8.7, by
certified or bank check or by wire transfer of funds to accounts specified by
the Shareholder Representative in writing at least three days prior to such
distribution date.

 

1.9           Delivery
of Company Shares

 

At the
Closing, the Company Shareholders shall deliver or cause to be delivered to
Parent:

 

(a)           certificates
for all the Company Shares owned by each Company Shareholder, duly endorsed in
blank for transfer, or with stock powers attached duly executed in blank, with
all signatures notarized;

 

(b)           such
other documents as may be required to effect a valid transfer of the Company
Shares by the Company Shareholders, free and clear of any and all Encumbrances
including, without limitation, any Encumbrances or other claims under Article 8
of the Uniform Commercial Code, provided that Parent and Merger Sub qualify as
Protected Purchasers under Article 8 of the Uniform Commercial Code to the
extent that the Company’s representations in Section 2.2 are accurate;

 

(c)           general
releases in substantially the form of Exhibit B by all officers,
directors and stockholders of the Company releasing any liability of the
Company to them, or any claim that they may have against the Company (excluding
claims arising under this Agreement and the Company’s obligation to pay accrued
and unpaid compensation and to continue officer and director indemnification in
accordance with the terms hereof) (the “General
Releases”); and

 

(d)           such
other documents as may be required elsewhere in this Agreement or may be
reasonably requested by counsel to the Parent.

 

1.10         Further
Assurances

 

The Company
Shareholders from time to time after the Closing, at the request of Parent and
without further consideration, shall execute and deliver such further
instruments of transfer and assignment (in addition to those delivered under Section 1.9)
and take such other action as 

 

4

 

the Parent may reasonably require to effect the Merger and the other
transactions contemplated by this Agreement and the Ancillary Agreements.

 

1.11         Shareholder
Representative

 

(a)           Each
Company Shareholder will be deemed to have irrevocably constituted and
appointed, effective as of the Closing, Mr. John Barrows (together with
his permitted successors, the “Shareholder
Representative”), as his true and lawful agent and attorney-in-fact
to enter into any agreement in connection with the transactions contemplated by
this Agreement, to exercise all or any of the powers, authority and discretion
conferred on him under any such agreement, to waive any terms and conditions of
any such agreement (other than the payment of the Merger Consideration in
accordance with Section 1.8), to give and receive notices on his behalf
and to be his exclusive representative with respect to any matter, suit, claim,
action or Proceeding arising with respect to any transaction contemplated by
any such agreement, including, without limitation, the defense, settlement or
compromise of any claim, action or proceeding for which Parent or, following
the Closing, Company may be entitled to indemnification.  This power of attorney is coupled with an
interest and is irrevocable.  Each
Company Shareholder agrees that any action that may be taken or right that may
be exercised under or related to this Agreement or any transaction contemplated
hereby by such Company Shareholder may only be taken or exercised by the
Shareholder Representative, and that such Company Shareholder shall be bound by
all actions and omissions of the Shareholder Representative.  Without limiting the foregoing, any notice or
other communication to be delivered to the Company Shareholders hereunder shall
be effective for all purposes if such notice or other communication is
delivered to the Shareholder Representative.

 

(b)           The
Shareholder Representative shall not be liable to anyone for any action taken
or not taken by him in good faith or for any mistake of fact or law for
anything that he may do or refrain from doing in connection with his
obligations under this Agreement (i) with the consent of Company
Shareholders who, as of the date of this Agreement, owned a majority in number
of the outstanding Company Shares or (ii) even without such consent, in
the absence of his own gross negligence or willful misconduct.  Any action taken or not taken pursuant to the
advice of counsel shall be conclusive evidence of such good faith.  The Company Shareholders shall, jointly and
severally, indemnify and hold the Shareholder Representative, and each
successor thereof, harmless from any and all liability and expenses (including,
without limitation, counsel fees) that may arise out of any action taken or
omitted by him as Shareholder Representative in accordance with this Agreement,
as the same may be amended, modified or supplemented, except such liability and
expense as may result from the gross negligence or willful misconduct of the
Shareholder Representative.

 

(c)           The
Shareholder Representative may rely and shall be protected in relying or
refraining from acting on any instrument reasonably 

 

5

 

believed to be
genuine and to have been signed or presented by the proper party or
parties.  The Shareholder Representative
shall not be liable for other parties’ forgeries, fraud or false presentations.

 

(d)           The
Shareholder Representative shall have reasonable access to information about
the Company and the reasonable assistance of the Company’s officers and
employees for purposes of performing his duties and exercising his rights
hereunder, provided that the Shareholder Representative shall treat
confidentially and not disclose any nonpublic information from or about the
Company to anyone (except on a need to know basis to individuals who agree to
treat such information confidentially).

 

(e)           If
the Shareholder Representative shall be unable or unwilling to serve in such
capacity, his successor shall be named by those persons holding a majority of
the Company Shares outstanding immediately prior to the Closing, and such
successor(s) shall serve and exercise the powers of the Shareholder
Representative hereunder.

 

ARTICLE 2.           REPRESENTATIONS AND
WARRANTIES OF THE COMPANY AND THE COMPANY SHAREHOLDERS.

 

The Company
and each Company Shareholder, jointly and severally, hereby represent and
warrant to Parent as follows.  The
Schedules to this Article 2 (and the information contained in such
Schedules) constitute exceptions to and limitations of the representations and
warranties of the Company and the Company Shareholders contained in this
Agreement.  Any exception, limitation or
information disclosed on any specific Schedule shall be deemed to be disclosed
in each other applicable Schedule if and to the extent the relevance of such
exception, limitation or information is reasonably apparent on the face of the
Schedules and to apply to and limit all representations and warranties of the
Company and the Company Shareholders to which it is relevant.

 

2.1           Organization
and Qualification of the Company

 

(a)           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan, with full power and authority to own
or lease its properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business is conducted
by it.  The copies of the Company’s
Articles of Incorporation, as amended to date (“Charter”), certified by the Department of Labor &
Economic Growth of the State of Michigan, and of the Company’s bylaws, as
amended to date, certified by the Company’s Secretary, are attached to Schedule
2.1(a) hereto and are complete and correct.  The Company is duly qualified to do business
as a foreign corporation in each of the jurisdictions listed on said Schedule
2.1(a) and is not required to be qualified in any other jurisdiction,
except jurisdictions where a failure to so qualify would not result in a
Material Adverse Effect.

 

6

 

2.2           Capitalization
of the Company

 

(a)           The
authorized equity securities of the Company consist of Five Hundred Thousand
(500,000) shares of Class A common stock, par value of $0.10 per share,
and Four Million Five Hundred Thousand (4,500,000) shares of Class B
common stock, par value of $0.10 per share.  
As of the date hereof, 345,623 shares of the Company’s Class A
common stock and 2,981,724 shares of the Company’s Class B common stock
were issued and outstanding.  Schedule
2.2(a) contains a complete and accurate list of all issued and
outstanding options, warrants or other rights to acquire Company Shares
including the name of the holder, the issue date, the exercise price, the
amount and type of security underlying such right and the expiration date.

 

(b)           No
equity securities of the Company are held in the treasury of the Company.  All of the outstanding equity securities of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable.  Schedule 2.2(b) sets
forth a complete and correct list of all of the Company Shareholders and the
number of shares of each type of capital stock of the Company owned, of record
and beneficially, by each such Company Shareholder.  Except as set forth on Schedule 2.2(b), no
Company Shareholder owns of record or beneficially any other shares of capital
stock of the Company, or any rights, options, or warrants with respect
thereto.  The Company Shares to be
delivered by the Company Shareholders to the Parent hereunder will be, when
delivered pursuant to the terms of this Agreement and upon payment therefor,
duly authorized, validly issued, fully paid and nonassessable, free and clear
of all Encumbrances.  Except as set forth
in Schedule 2.2(b), the Company is subject to no liability on account of
the issuance or sale of any securities including, without limitation, all
outstanding Company Shares.  Schedule
2.2(b) sets forth all outstanding securities of the Company, including
but not limited to securities reserved for any purpose, all debt and equity
securities and Company Shares. Except as set forth on Schedule 2.2(a) there
are no (i) outstanding or authorized subscriptions, warrants, options or
other rights granted by the Company or binding upon the Company to purchase or
acquire, or preemptive rights with respect to the issuance or sale of, the
capital stock of the Company or which obligate or may obligate the Company to
issue any additional shares of its capital stock or any securities convertible
into or evidencing the right to subscribe for any shares of its capital stock, (ii) other
securities of the Company directly or indirectly convertible into or
exchangeable for shares of capital stock of the Company, (iii) restrictions
on the transfer of the Company’s capital stock (other than restrictions under
the Securities Act and state securities laws), (iv) voting rights with
respect to the capital stock of the Company or (v) stock appreciation,
phantom stock or similar rights with respect to the Company.  Except as set forth on Schedule 2.2(b),
none of the securities of the Company are subject to “antidilution” or similar
provisions.  Except as set forth on Schedule
2.2(b) there are no voting trusts or other Contracts or understandings
to which the Company or any Company Shareholder is a party with respect to the
transfer, voting or registration of the capital stock of the Company.  Except as set forth on Schedule 

 

7

 

2.2(b) there
are no Contracts relating to the sale or transfer of any equity securities or
other securities of the Company.  Except
as set forth on Schedule 2.2(b) the Company does not own, nor does
it have any Contract to acquire any equity securities or other securities of
any Person or any direct or indirect equity or ownership interest in any other
business.  Except as set forth on Schedule
2.2(b) no Person has any preemptive rights with respect to any
security of the Company or any of its subsidiaries.

 

2.3           Organization,
Qualification and Capitalization of the Subsidiaries

 

(a)           Each
of the Company’s Subsidiaries is set forth on Schedule 2.3(a) and
is a corporation duly organized, validly existing and in good standing under
the laws of its state of organization, each of which is set forth on Schedule
2.3(a), and each of the Company’s Subsidiaries has the full power and
authority to own or lease its properties and to conduct its business in the
manner and in the places where such properties are owned or leased or such
business is conducted by it.  The copies
of the Company’s Subsidiaries’ Articles of Incorporation, as amended to date,
certified by the applicable department or division of the relevant state
government, and of the Company’s Subsidiaries’ bylaws, as amended to date,
certified by the Company’s Secretary, are attached to Schedule 2.3(a) hereto
and are complete and correct.  Each of
the Company’s Subsidiaries is duly qualified to do business as a foreign
corporation in each of the jurisdictions listed on said Schedule 2.3(a) and
is not required to be qualified in any other jurisdiction, except jurisdictions
where a failure to so qualify would not result in a Material Adverse Effect.

 

(b)           Schedule
2.3(b) sets forth the total authorized and outstanding capital stock
of each of the Company’s Subsidiaries. 
All of the issued and outstanding shares of capital stock of each of the
Company’s Subsidiaries have been duly authorized and are validly issued and
outstanding, fully paid and non-assessable. 
All of the issued and outstanding shares of capital stock of each of the
Company’s Subsidiaries are owned beneficially and of record by the Company free
and clear of all Encumbrances.  Except as
set forth on Schedule 2.3(b), there are no outstanding subscriptions,
options, warrants, commitments, preemptive rights, agreements, arrangements or
commitments of any kind for or relating to the ownership, issuance, sale,
registration or voting of, or outstanding securities convertible into or
exchangeable for, any shares of capital stock of any class or other equity or
ownership interests of any of the Company’s Subsidiaries.  Neither the Company nor any of its
Subsidiaries is a partner or participant in any joint venture or partnership of
any kind.

 

2.4           Authorization
of Transaction

 

(a)           The
Company has the full corporate power and authority to execute, deliver and
perform this Agreement and the Ancillary Agreements; to perform its obligations
hereunder and thereunder, and to carry out the transactions contemplated hereby
and thereby.  All necessary action,
corporate or otherwise, 

 

8

 

has been taken
by the Company to authorize the execution, delivery and performance of this
Agreement and each of the Ancillary Agreements and the transactions
contemplated hereby and thereby.  This
Agreement has been, and each Ancillary Agreement will be at the Closing, duly
executed and delivered by the Company and this Agreement and each Ancillary
Agreement is, or upon the Closing will be, the legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
their terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights
generally, and (ii) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses
and to the discretion of the court before which any proceeding therefore may be
brought.

 

(b)           The
Board of Directors of the Company, at a meeting duly called and held, or
through an action by written consent, unanimously has (i) approved the
Merger in accordance with the provisions of the MBCA, (ii) approved this
Agreement, the Merger and the other transactions contemplated hereby, (iii) authorized
the execution and delivery of this Agreement and the other Ancillary
Agreements, (iv) directed that this Agreement and the Merger be submitted
to the Company Shareholders for their approval and (v) resolved to
recommend that the Company Shareholders vote in favor of the approval of this
Agreement and the Merger.  Except for
approval of the Company’s Shareholders, all other necessary action, corporate
or otherwise, has been taken by the Company to approve the Merger and to
authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements.

 

2.5           Present
Compliance with Obligations and Laws

 

Except as set
forth on Schedule 2.5, neither the Company nor any of its Subsidiaries
is:  (a) in violation of its Charter
or bylaws or similar organizational or governing documents; (b) in default
in the performance of or breach of (with or without the passage of time or the
giving of notice) any Material Contract to which it is a party or by which it
or any of its assets are bound; or (d) in violation of any court order,
judgment, administrative or judicial order, writ, decree, stipulation,
arbitration, award or injunction (collectively, “Court Orders”)
or any license, permit, order, franchise agreement, concession, grant,
authorization, consent or approval (collectively, “Government
Authorizations”) that is held by the Company applicable to it or its
business or assets, or any statute, law, ordinance, rule or regulation
applicable to its business or assets (collectively, “Laws”).

 

2.6           No
Conflict of Transaction With Obligations and Laws

 

Except as set
forth on Schedule 2.6, neither the execution, delivery and performance
of this Agreement or the Ancillary Agreements by the Company, nor the performance
by the Company of the transactions contemplated hereby or thereby, will:  (i) constitute a breach or violation of
any provision of the Charter or bylaws of the Company or the Charter or bylaws
or similar organizational or governing documents of any of the Company’s
Subsidiaries; (ii) require any consent, approval or authorization of or
declaration, filing or registration with any Person; 

 

9

 

(iii) constitute (with or without the passage of time or giving of
notice) a default under or breach of any agreement, instrument or obligation to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries or any of their assets are bound; (iv) result
in the creation of any lien, option (including right of first refusal or first
offer), encumbrance, charge, restriction of any kind (including any restriction
on use, voting, transfer, receipt of income or exercise of any other attribute
of ownership), easement, mortgage, pledge, security interest, title exception
or defect, condition, conditional sale agreement, community property interest,
lease, deed of trust, equitable interest, claim or charge of any kind or
character, any filing of any financing statement as debtor under the Uniform
Commercial Code or comparable law of any jurisdiction, any other restriction or
limitation whatsoever and any agreement to give or make any of the foregoing
(each an “Encumbrance”), other than Permitted
Encumbrances, upon any of the properties or assets of the Company or any of its
Subsidiaries; (v) contravene, conflict with, or result in the violation of
any Court Order or Law, or give any governmental authority, whether foreign,
federal, state, local, tribunal, or other commission, political subdivision or
agency of any of the foregoing (each a “Government Authority”),
or any other person, the right to exercise any remedy or obtain any relief
under any Court Order or Law, to which the Company or any of its Subsidiaries
are subject or by which the properties or assets of the Company or any of its
Subsidiaries are bound; or (vi) contravene, conflict with or result in the
violation of any of the terms and requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate or modify,
any Government Authorization.

 

2.7           Financial
Statements

 

(a)           Except
as provided on Schedule 2.7, the Company has delivered to Parent
the following financial statements (the “Financial
Statements”) of the Company, all of which are unaudited and all of
which statements (excluding all issues and items related to inventory) are
complete and correct and fairly present in all material respects the financial
position of the Company and its Subsidiaries on a consolidated basis, on the date
of such statements and the results of their operations for the periods covered
thereby, and such Financial Statements (excluding all issues and items related
to inventory) have been prepared in accordance with GAAP consistently applied
throughout the periods involved and prior periods:

 

·      Unaudited balance sheet,
income statement, statement of changes in stockholders equity and statement of
cash flow at and as of the twelve (12) months ended June 30, 2007.

 

·      Unaudited balance sheet,
income statement, statement of changes in stockholders equity and statement of
cash flow at and as of the five (5) months ended November 30, 2007.

 

The balance
sheet dated June 30, 2007 (the “Base Balance Sheet Date”)
in the above-referenced financial statements is hereinafter referred to as the “Base Balance Sheet”.

 

10

 

(b)           Except as provided on Schedule 2.7,
excluding all issues and items related to inventory, the books of account of
the Company for all periods fairly reflect in all material respects the financial
position of the Company and its Subsidiaries on a consolidated basis, in all
respects, and have been maintained on a consistent basis.  All auditor’s letters to management of the
Company for all years and other significant correspondence from or to such
auditors during such period, if any, are attached as Schedule 2.7(b) hereto.

 

2.8           Absence
of Undisclosed Liabilities

 

Neither the
Company nor any of its Subsidiaries have any liabilities of any nature (including
without limitation liabilities as guarantor or otherwise with respect to
obligations of others, or liabilities for taxes due), except: (a) liabilities
stated or reserved against on the Base Balance Sheet to the extent required by
GAAP; (b) liabilities not required by GAAP to be reserved against on the
Base Balance Sheet and incurred in the ordinary course of business; (c) liabilities
incurred since the Base Balance Sheet Date in the ordinary course of business
consistent with past practices and liabilities, or liabilities stated or
reserved against in the Company’s other Financial Statements delivered to
Parent to the extent required by GAAP; and (d) liabilities disclosed in Schedule
2.8 hereto or any other Schedule hereto.

 

2.9           Absence
of Certain Changes

 

Except as set
forth on Schedule 2.9 hereto, since the Base Balance Sheet Date there
has not been:

 

(a)           any
Material Adverse Effect;

 

(b)           any
sale or other disposition, or any agreement or other arrangements for the sale
or other disposition, of any of the properties or assets of the Company or any of
its Subsidiaries other than the sale of inventory in the ordinary course of
business consistent with past practices;

 

(c)           any
Encumbrance, other than a Permitted Encumbrance, placed on any of the
properties of the Company or any of its Subsidiaries which remains in existence
at the time of Closing;

 

(d)           any
capital expenditure, lease or commitment or agreement to lease in excess of
$15,000 with respect to any individual item or $50,000 with respect to all such
items;

 

(e)           any
elimination or disposal of any inventory, except for eliminations or disposals
that are in the aggregate less than $10,000 in the ordinary course of business
consistent with past practices, and except for sales of inventory in the
ordinary course of business consistent with past practices;

 

(f)            any
write-downs of the value of any notes or accounts receivable as uncollectible,
except for write-downs or write-offs that are in the 

 

11

 

aggregate less
than $10,000 in the ordinary course of business consistent with past practices;

 

(g)           any
material damage, destruction or loss, whether or not covered by insurance, to
the properties or assets of the Company or any of its Subsidiaries;

 

(h)           other
than (i) dividends declared and paid in January 2008 to certain
Company Shareholders in the amount of $1,151,776.87 as contemplated by Section 4.9
relating to the Life Insurance Policies, and (ii) stock redemptions in the
amount of $13,627.10, any declaration, setting aside or payment of any dividend
on, or the making of any other distribution in respect of, the capital stock of
the Company or any of its Subsidiaries, including distributions on account of
any income tax liabilities; any direct or indirect redemption, purchase or
other acquisition by the Company or any of its Subsidiaries of any of their
capital stock, or any issuance of any securities of the Company or any of its
Subsidiaries, or any payment made to or for the personal account or benefit of
any Company Shareholder;

 

(i)            any
entrance into any employment, severance or consulting agreement; or (except for
annual increases in the ordinary course of business) any change in the
compensation payable or to become payable by the Company or any of its
Subsidiaries to any of their Affiliates, directors, officers, employees or
agents or in any bonus, pension or profit sharing payment, enhancement or
arrangement made to or with any such Affiliates, directors, officers, employees
or agents, or any grant or termination of, or modification to, any severance,
termination or change of control payments or benefits to any Affiliates,
directors, officers, employees or agents of the Company or any of its
Subsidiaries;

 

(j)            any
change with respect to the business organization, management, or supervisory
personnel of the Company or any of its Subsidiaries;

 

(k)           any
payment or discharge of a material lien, claim, obligation, liability or other
Encumbrance of the Company or any of its Subsidiaries which was not shown on or
included in the Base Balance Sheet or incurred in the ordinary course of
business, consistent with past practices, after the Base Balance Sheet Date;

 

(l)            any
obligation or liability incurred by the Company or any of its Subsidiaries to
any of their Affiliates, officers, directors or stockholders, or any loans or
advances made by the Company or any of its Subsidiaries to any of their
Affiliates, officers, directors or stockholders, except normal compensation,
benefits and expense allowances;

 

(m)          any
change in any method of accounting or accounting practice, whether or not such
change was permitted by GAAP;

 

12

 

(n)           any
agreement, arrangement, understanding or commitment, whether in writing or
otherwise, to take any action described in this Section 2.9.

 

2.10         Conduct
of Business

 

Since the Base
Balance Sheet Date, the Company and each of its Subsidiaries has conducted
their business only in the ordinary course, in substantially the same manner as
operated prior to such date.

 

2.11         Payment
of Taxes

 

For purposes
of this Section 2.11, “the Company” refers to “the Company and each of its
Subsidiaries”.

 

(a)           The
Company has duly and timely filed all federal, state, local, and foreign
government income, excise, gross receipts or franchise tax returns, real estate
and personal property tax returns, sales and use tax returns, employee tax and
contribution returns, and all other Tax returns, reports and declarations,
including valid extensions therefor, or estimated taxes required to be filed by
it, with respect to all applicable Taxes (“Tax
Returns”) of every kind, character or description, and imposed by
any government or quasi-governmental authority (domestic or foreign), and any
interest or fines, and any and all penalties or additions relating to such
taxes, charges, fees, levies or other assessments (“Taxes”).  All of the Tax
Returns are complete and correct.  Copies
of the Company’s Federal and state Tax Returns for the past three (3) years
are identified on Schedule 2.11 and have been delivered to Parent.  All Taxes shown to be due on each Tax Return
have been paid or are being contested in good faith by the Company (which
contest is being diligently pursued and is described on Schedule 2.11).  With respect to all other Taxes for which no
return is required, or which have not yet become due, provision has been made
for such Taxes in the pertinent Financial Statements to the extent required by
GAAP.  All Taxes and other assessments
and levies which the Company is required to withhold or collect have been
withheld or collected and paid over or will be paid over to proper governmental
authorities as required.  Except as set
forth on Schedule 2.11, in the past three (3) years the income tax
returns of the Company have never been audited by the Internal Revenue Service
or any state, local or foreign tax authority. 
The Company does not have Knowledge of any intention on the part of any
governmental agency, to examine any of the Tax Returns.  No deficiencies have been asserted or
assessments made against the Company, nor is the Internal Revenue Service or
any other taxing authority now asserting or, to the Knowledge of the Company
without inquiry, threatening to assert against the Company any deficiency or
claim for additional taxes or interest thereon or penalties in connection
therewith.  The Company has not extended
the time for the filing of any Tax Return or the assessment of deficiencies or
waived any statute of limitations for any year, which extension or waiver is
still in effect.

 

(b)           There
are no liens for Taxes (other than Taxes not yet due and payable) upon any of
the assets of the Company.  The Company
is not a party to any agreement, contract, arrangement, or plan that has
resulted or would result, separately or in the aggregate, in the payment of any
“excess parachute payment” within the meaning of Section 280G of the 

 

13

 

Code (or any
corresponding provision of state, local, or foreign Tax law) as a result of the
transactions contemplated hereby.  The
Company has not been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii).  The Company is not a party to and is not
bound by any tax allocation or sharing agreement.  The Company has not been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a
group the common parent of which is the Company), and does not have any liability
for the Taxes of any person (other than the Company) under Treasury Regulations
section 1.1502-6 (or any similar provision of state, local, or foreign law).

 

(c)           The
Company will not be required to include any item of income in, or exclude any
item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Closing Date as a result of any: (A) change in
method of accounting for a taxable period ending on or prior to the Closing
Date; (B) “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local, or foreign
income Tax law) executed on or prior to the Closing Date;  (C) intercompany transactions or any
excess loss account described in Treasury Regulations under Section 1502
of the Code (or any corresponding or similar provision of state, local, or
foreign income Tax law);  (D) installment
sale or open transaction disposition made on or prior to the Closing Date; or (E) prepaid
amount received on or prior to the Closing Date.

 

(d)           The
Company has not distributed stock of another person, or has had its stock
distributed by another person, in a transaction that was purported or intended
to be governed in whole or in part by Sections 355 or 361 of the Code.

 

2.12         Title
to Properties; Liens; Condition of Properties

 

(a)           Set
forth on Schedule 2.12(a) is a listing of (i) all the real
property owned by the Company or any of its Subsidiaries at the date hereof and
(ii) all leases under which the Company or any of its Subsidiaries leases
real property at the date hereof whether as lessor or lessee.  Except as specifically disclosed in Schedule
2.12(a), (i) the Company and each of its Subsidiaries has, and at
Closing shall have, good and marketable title in fee simple absolute to all of
the real property they own, free and clear of all Encumbrances (except for
Permitted Encumbrances); and (ii) all of its leases for real property are,
and at Closing shall be (subject to obtaining required consents, all of which
are listed on Schedule 2.6),, valid and subsisting and no material
default by Company (or to Company’s Knowledge, by any other party thereto)
exists under any thereof.  The Company
has delivered to Parent true, correct and complete copies of all leases,
subleases, rental agreements, contracts of sale, tenancies or licenses related
to any of the real property identified on Schedule 2.12(a).  The property located at 3831 Patterson Ave.,
S.E. Grand Rapids, Michigan that is listed on Schedule 2.12(a) is herein
referred to as the “Property”.

 

(b)           Set
forth on Schedule 2.12(b) is (i) a complete description of all
personal property with a value in excess of $10,000 (excluding inventory) (the “Personal Property”) used or owned by the
Company or any of its 

 

14

 

Subsidiaries
as of the date hereof, and (ii) all leases under which the Company or any of
its Subsidiaries leases any Personal Property at the date hereof whether as
lessor or lessee.  Except as specifically
disclosed in Schedule 2.12(b), (i) the Company and each of its
Subsidiaries has, and at Closing shall have, good and marketable title to all
of their owned Personal Property, free and clear of all Encumbrances, excepting
only Permitted Encumbrances; and (ii) all of its leases for Personal
Property are, and at Closing shall be (subject to obtaining required consents,
all of which are listed on Schedule 2.6), valid and subsisting, and no
material default by Company (or to Company’s Knowledge, by any other party
thereto) exists under any thereof.  The
Company has delivered to Parent true, correct and complete copies of all
leases, subleases, rental agreements, contracts of sale, tenancies or licenses
related to any of the Personal Property identified on Schedule 2.12(b).

 

(c)                                  None
of the real property owned or used by the Company or any of its Subsidiaries is
subject to any Encumbrance (other than Permitted Encumbrances) of any nature
whatsoever, except as specifically disclosed in Schedule 2.12(a) or
in the Base Balance Sheet.

 

(d)                                 As
of the date hereof, the Company does not have Knowledge of any pending or
threatened change of any ordinance, regulation or zoning or other law that
affects the real or personal property of the Company or any of its
Subsidiaries, and there is no pending or, to Company’s Knowledge, threatened
condemnation of any such property.

 

(e)                                  To
the Company’s Knowledge, all water, waste disposal, sewer, gas, electric,
telephone, drainage facilities and all other utilities are installed across
public property or valid easements to the boundary lines of the Property, and
are connected pursuant to valid permits, and neither the Company nor any of its
Subsidiaries has received any notice that such utilities are inadequate to
service the Property.

 

(f)                                    To
the Knowledge of the Company, the Company and each of its Subsidiaries have
obtained all licenses, permits, easements, and rights-of-way, including without
limitation, proof of dedication, required from all governmental authorities
having jurisdiction over the Property or from private parties to assure
vehicular and pedestrian ingress to and egress from the Property.

 

(g)                                 Also
set forth on Schedule 2.12(b) is a list of all locations where any
of the Personal Property or the Company’s or any of its Subsidiaries’
inventories (other than goods in transit in the ordinary course of business,
consistent with past practices) are located.

 

(h)                                 The
real and personal property identified on such Schedule 2.12(a) and Schedule
2.12(b) includes all material property and assets used or required for
use in the Company’s and its Subsidiaries’ businesses, except for property not
required to be disclosed on such Schedule.

 

15

 

2.13                                       Collectibility
of Receivables

 

All of the
accounts receivable of the Company and its Subsidiaries shown or reflected on
the Company’s balance sheet dated December 31, 2007 (the “12/31 Balance Sheet”), less a reserve for bad debts in the
amount of $17,644 (the “Allowed Reserve”)
(regardless of the total amount of reserves that may appear on the 12/31
Balance Sheet) and less any portion of such accounts receivable collected prior
to the Closing are (a) valid and enforceable claims, (b) arose out of
transactions with unaffiliated, independent third parties, (c) fully
collectible within one hundred fifty (150) days of the Closing Date through
normal means of collection, and (d) subject to no set-off, defense or
counterclaim.  The reserves for doubtful
accounts and the values at which accounts receivable are accrued on the
Financial Statements and the 12/31 Balance Sheet are in accordance with GAAP
applied on a basis consistent with prior financial statements of the Company,
on a consolidated basis.  A complete and
accurate list of each account receivable accrued on the 12/31 Balance Sheet
that remains uncollected (the “12/31 Balance Sheet AR”),
which lists the name, age and amount thereof, and any reserve for bad debts
related thereto, is attached as Schedule 2.13.  Since the Base Balance Sheet Date, there has
not been a material change in the Company’s or its Subsidiaries’ receivables’
aging practice.

 

2.14                                       Inventories

 

Notwithstanding
any other provision hereof (other than Section 2.9(e) regarding
the elimination or disposal of inventory since the Base Balance Sheet Date),
Parent accepts the Company’s inventory “AS IS, WHERE IS”, and neither the
Company nor the Company Shareholders makes any representation or warranty of
any kind with respect to the Company’s or its Subsidiaries’ inventory.  Without limitation to the foregoing, neither
the Company nor the Company Shareholders makes any representation or warranty
with respect to whether the Company’s inventory is good or saleable or the
extent to which any inventory may be obsolete. 
Notwithstanding the foregoing, the parties acknowledge and agree that
the Merger Consideration was reduced from $7,500,000 to $7,250,000 to address
all potential inventory issues (other than Section 2.9(e) regarding
the elimination or disposal of inventory since the Base Balance Sheet
Date).  The parties agree that in the
event of a conflict between this provision and another provision hereof (such
as another provision which may imply that the Company or the Company
Shareholders are making a representation or warranty related to the Company’s
or its Subsidiaries’ inventory (other than Section 2.9(e) regarding
the elimination or disposal of inventory since the Base Balance Sheet Date)),
this provision shall control and limit the other conflicting provision.

 

2.15                                       Intellectual
Property Rights

 

(a)                                  For
purposes of this Section 2.15, “Intellectual
Property” means all Patents, Marks, Copyrights and Trade Secrets,
and any licenses (in or out) of or relating to any Patents, Marks, Copyrights
and Trade Secrets, owned or used by the Company or any of its Subsidiaries.

 

(b)                                 All
rights of ownership of, or material licenses to use, material Intellectual
Property held by the Company or any of its Subsidiaries are listed on Schedule
2.15.  There are no Intellectual
Property rights other than those 

 

16

 

set forth on Schedule
2.15, necessary to or regularly used in, the conduct of the business of the
Company or any of its Subsidiaries as presently conducted or presently in the
process of development.

 

(c)                                  Except
as set forth on Schedule 2.15, all rights to Patents, Marks, and
Copyrights required to be listed in Schedule 2.15:

 

(i)                                     have
been duly registered, filed in, or issued by, the United States Patent and
Trademark Office, and United States Register of Copyrights;

 

(ii)                                  have
been properly maintained and renewed in accordance with all applicable laws and
regulations in the United States; and

 

(iii)                               have
been duly assigned to the Company or one of its Subsidiaries and such
assignment(s) have been recorded in the appropriate government offices.

 

(d)                                 No
proceedings to which the Company or any of its Subsidiaries is a party have
been commenced which (i) challenge the rights of the Company or any of its
Subsidiaries in respect of the Intellectual Property listed on Schedule 2.15,
or (ii) charge the Company or any of its Subsidiaries with infringement of
any other person’s rights in Intellectual Property and, to the Knowledge of the
Company, no such proceeding has been threatened or is threatened to be
filed.  To Company’s Knowledge, none of
the rights in Intellectual Property listed on Schedule 2.15 is being
infringed by any other person.

 

(e)                                  Except
as set forth on Schedule 2.15, no Affiliate, director, officer or
employee of the Company or any of its Subsidiaries owns, directly or
indirectly, in whole or in part, any Intellectual Property right which the
Company or any of its Subsidiaries have used, is presently using, or the use of
which is reasonably necessary to any of their businesses as now conducted or
presently contemplated to be conducted.

 

(f)                                    In
addition to the Intellectual Property described above, the Company and each of
its Subsidiaries has the right to use, free and clear of any claims or rights
of others, except claims or rights described in Schedule 2.15, all Trade
Secrets required for or used in the manufacture or marketing of all products
formerly or presently produced by the Company or any of its Subsidiaries,
including products licensed from others. 
The Company has disclosed to Parent all written documentation relating
to its and each of its Subsidiaries’ Trade Secrets.  Neither the Company nor any of its
Subsidiaries is using or in any way making use of any Trade Secrets of any
third party, including without limitation, a former employer of any present or
past employee of the Company or any of its Subsidiaries.

 

17

 

2.16                                       Contracts
and Commitments

 

(a)                                  Except
for contracts, commitments, plans, agreements, arrangements, understandings and
licenses described in Schedule 2.16(a) hereto (the “Material Contracts”), neither the Company
nor any of its Subsidiaries is a party to or subject to any Contract (excluding
purchase orders entered into in the ordinary course of business):

 

(i)                                     for
the purchase of any commodity, material, equipment or asset (except for
purchase orders in the ordinary course of business, consistent with past
practice, or contracts involving payments of less than $50,000 each);

 

(ii)                                  creating
any obligations of the Company or any of its Subsidiaries after the Base
Balance Sheet Date which call for payments of more than $15,000 during any
month for agreements without a fixed term or more than $50,000 over the term of
the agreement for agreements with a fixed term;

 

(iii)                               providing
for the purchase of all or substantially all of its requirements of a
particular product from a supplier;

 

(iv)                              which
by its terms does not terminate or is not terminable without premium or penalty
by the Company or any of its Subsidiaries, as applicable (or their respective
successors or assigns) upon notice of ninety (90) days or less;

 

(v)                                 for
the sale or lease of its products not made in the ordinary course of business;

 

(vi)                              with
any sales agent or distributor of products of the Company or any of its
Subsidiaries;

 

(vii)                           containing
covenants limiting the freedom of the Company or any of its Subsidiaries to
compete in any line of business or with any person or entity;

 

(viii)                        for a
license or franchise (as licensor or licensee or franchisor or franchisee);

 

(ix)                                involving
any arrangement or obligation with respect to the return of inventory or
merchandise other than on account of a defect in condition, or failure to
conform to the applicable contract;

 

(x)                                   with
the United States government;

 

18

 

(xi)                                which
contains covenants as to noncompetition or nonsolicitation restricting or for
the benefit of the Company or any of its Subsidiaries; or (excluding Contracts
entered into in the ordinary course of business consistent with past practices)
which contains covenants as to nondisclosure or confidentiality restricting or
for the benefit of the Company or its Subsidiaries; or

 

(xii)                             which
is material to the assets or business of the Company or any of its
Subsidiaries.

 

(b)                                 Each
of the contracts, commitments, plans, agreements and licenses to which the
Company or any of its Subsidiaries is a party or to which the Company or any of
its Subsidiaries is subject (whether written or oral), including those listed
on Schedule 2.16(a) (each a “Contract”)
is valid, binding and enforceable against the Company and its Subsidiaries, as
applicable, and, to the Knowledge of the Company, against the other parties
thereto; the Company and its Subsidiaries, as applicable, is in material
compliance with all terms and conditions of each Contract; and neither the
Company nor any of its Subsidiaries has given or received notice of any alleged
violation of or default under any such Contract.

 

(c)                                  Except
as set forth on Schedule 2.16(c), since January 1, 2007, neither
the Company nor any of its Subsidiaries have experienced any termination,
cancellation, limitation or modification or material and adverse change in any
business relationship with any material supplier or material customer, nor has
the Company or any of its Subsidiaries received notice or otherwise have
Knowledge that any material customer or material supplier intends to cease, or
materially reduce or change the terms of, doing business with the Company or
any of its Subsidiaries or to terminate any agreement with the Company or any
of its Subsidiaries, where any such action, individually or in the aggregate,
has had or would have a Material Adverse Effect.  Schedule 2.16(c) lists every
material customer or supplier of the Company and each of its Subsidiaries and
the amount of business with that customer. 
For purposes hereof, (i) a supplier is material if during fiscal
2005, 2006 or 2007, it accounted for more than five percent (5%) by value of
the orders of the Company and its Subsidiaries, taken as a whole, for purchase
of all their raw materials and other products essential to their manufacturing
processes for such year, and (ii) a customer is material if it accounted
for more than three percent (3%) by value of the orders of the Company and its
Subsidiaries, taken as a whole, in either fiscal 2005, 2006 or 2007.

 

(d)                                 All
of the Company’s sales and purchase commitments were made in the ordinary
course of business, consistent with past practices.

 

19

 

2.17                                       Labor
and Employee Relations

 

(a)                                  Except
as shown on Schedule 2.17 hereto, there are no currently effective
consulting, employment, noncompetition, nonsolicitation, retention, severance
or change of control agreements, or other material agreements with individual
consultants, directors or employees to which the Company or any of its
Subsidiaries is a party.  Complete and
accurate copies of all such written agreements have been delivered to
Parent.  Also shown on Schedule 2.17
are the name and rate of compensation (including all bonus compensation) of
each officer, employee or agent of the Company and each of its Subsidiaries.

 

(b)                                 None
of the employees of the Company or any of its Subsidiaries is covered by any
collective bargaining agreement with any trade or labor union, employees’
association or similar association. 
There are no representation elections, arbitration proceedings, labor
strikes, slowdowns or stoppages, or claims of discrimination or unfair labor
practices pending, or, to the Knowledge of the Company, threatened, with
respect to the employees of the Company or any of its Subsidiaries, nor has the
Company or any of its Subsidiaries experienced any work stoppage or other
material labor difficulty during the five (5) years immediately preceding
the date of this Agreement.

 

(c)                                  the
Company and each of its Subsidiaries has complied in all material respects with
applicable laws, rules and regulations relating to the employment of
labor, including without limitation those relating to wages, hours, unfair
labor practices, discrimination, and payment of social security and similar
taxes.  There are no complaints against
the Company or any of its Subsidiaries pending or, to the Knowledge of the
Company, threatened before the National Labor Relations Board or any similar
state or local labor agencies, or before the Equal Employment Opportunity
Commission or any similar state or local agency, by or on behalf of any
employee or former employee of the Company or any of its Subsidiaries.

 

(d)                                 Except
as described on Schedule 2.17, the execution, delivery and performance
of this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby will not trigger any entitlement
to compensation, severance pay or change of control obligation to any current
or former employee, director or consultant of the Company or its Subsidiaries
under any contract, agreement, arrangement, commitment or understanding or at
law.

 

(e)                                  The
Company has provided to Parent a complete description of all employment
policies under which the Company and each of its Subsidiaries has operated or
which have been communicated to their employees.

 

(f)                                    Except
as set forth in Schedule 2.17, the Company and each of its
Subsidiaries has paid in full (or made provisions for payment in full) to each 

 

20

 

of their
employees, agents and contractors all wages, salaries, commissions, bonuses and
other direct compensation for all services performed by them which have become
due and payable.  Neither the Company nor
any of its Subsidiaries have and will not have on the Closing Date, any
contingent liability for sick leave, vacation time, holiday pay, severance pay
or similar items not set forth on Schedule 2.17, excluding such amounts
arising in the ordinary course of business. 
Schedule 2.17 sets forth, as of January 1, 2008, all accrued
vacation pay of the Company and its Subsidiaries.

 

(g)                                 In
the past three (3) years, except as set forth on Schedule 2.17,
there has not been any citation, fine or penalty imposed or asserted against
the Company or any of its Subsidiaries under any law or regulation relating to
employment, immigration or occupational safety matters.

 

2.18                                       ERISA
and Employee Benefits

 

(a)                                  Schedule
2.18 sets forth a brief description of every plan, arrangement or policy,
written or oral, relating to employees of the Company or any of its
Subsidiaries or of any member of a controlled group or affiliated service group
(as defined in Internal Revenue Code Section 414(b), (c), (m) and
(o)) which includes the Company or any of its Subsidiaries (an “ERISA Affiliate”), which is:

 

(i)                                     an
employee benefit plan within the meaning of Section 3 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”); or

 

(ii)                                  a
multiemployer pension plan within the meaning of Section 3(37) or 4001(a)(3) of
ERISA; or

 

(iii)                               a
compensation, stock purchase, stock option, stock bonus, stock appreciation,
phantom stock, severance, deferred compensation, health, welfare, life,
disability or other benefit plan, fund, program, arrangement or practice which
is not covered by clause (i) or (ii) above (including policies
related to vacation pay, holiday time, moving expense reimbursement programs,
sick leave and salary reduction agreements, charge-in-control agreements, and
severance agreements).

 

(Hereinafter, “ERISA Benefit Plan” refers to plans or arrangements under
clauses (i) and (ii) above and “Benefit Plan” refers to plans or
arrangements under clauses (i) - (iii) above.)

 

(b)                                 There
are no agreements or commitments of the Company or any ERISA Affiliate, whether
or not legally binding, to create any additional ERISA Benefit Plan or Benefit
Plan not listed on Schedule 2.18. 
Except as set forth on Schedule 2.18, there have been no
multiemployer pension plans or defined benefit pension plans covering employees
of the Company or an ERISA Affiliate within the last ten (10) years.

 

21

 

(c)                                  With
respect to each Benefit Plan, the Company has furnished to Parent complete and
accurate copies of each Benefit Plan described in Schedule 2.18,
including all amendments thereto.  With
respect to each ERISA Benefit Plan, the Company has also furnished the three
most recent Form 5500s and the most recent Internal Revenue Service
determination letter (if any), plan actuarial report, summary plan description,
summary annual report and employee manual, discrimination testing results for
any benefit plan qualified under Section 401(a) of the Code for the
current year and three prior years as well as summaries of material
modifications, material employee communications, and all reports of the Benefit
Plan required by ERISA and the regulations thereunder.  The Company has also furnished Parent copies
of any insurance contracts or trust agreements through which any ERISA Benefit
Plan is funded, any custodial or investment contracts relating to assets or
benefits under the Benefit Plan, any contracts relating to record keeping or
administration for the Benefit Plan, and notice of any material adverse change
occurring with respect to any Benefit Plan since the date of the most recently
completed and filed annual report.

 

(d)                                 Neither
the Company nor any of its Subsidiaries have any ERISA Benefit Plan which
constitutes a pension plan within the meaning of Section 3(2) of
ERISA.

 

(e)                                  Except
as set forth on Schedule 2.18, with respect to each Benefit Plan:

 

(i)                                     each
Benefit Plan complies currently in all material respects and has complied in
all material respects in the past, as to form and operation, with the
provisions of all applicable Federal and state laws, such as ERISA and the
Internal Revenue Code, including without limitation all requirements regarding
discrimination, disclosure, and continuation coverage (under Section 4980B
of the Code); and no nonexempt “prohibited transaction” (as defined in Section 4975
of the Code or enumerated in Section 406(a) or (b) of ERISA) has
occurred;

 

(ii)                                  all
required government filings, reports, and notices have been properly and timely
made, and all such filings and employee disclosures required to be made within
thirty (30) days after Closing that are based in whole or in part upon the
period prior to the Closing shall have been prepared and delivered to Parent on
or before the Closing;

 

(iii)                               no
such Benefit Plan is currently under audit or investigation by any governmental
agency or body;

 

(iv)                              there
are no actions, suits or claims (other than routine claims for benefits)
pending or, to Company’s 

 

22

 

Knowledge, threatened against
any of the Benefit Plans or against the assets of any Benefit Plan;

 

(v)                                 all
premiums and contributions due in connection with the Benefit Plan, including
without limitation premiums due the PBGC and premiums for life and health
insurance and annuity contracts, have been paid in full when due and, except as
specifically disclosed on Schedule 2.18, there are no such premiums that
are attributable to any period of time before the Closing that will not have
been paid on or before the Closing;

 

(vi)                              all
reports and filings made pursuant to ERISA, including without limitation all
form 5500 and attachments, summary annual reports, and participant reports, and
any other documents reasonably necessary to enable Parent to perform its
responsibilities with respect to any employee program subsequent to the
Closing, are and shall be available at the offices of the Company on and
immediately after the Closing;

 

(vii)                           except
as required by COBRA (Section 4980B of the Internal Revenue Code) or the
Family Medical Leave Act, no Benefit Plan provides health or other welfare
benefits to retirees, former employees, or their dependents.

 

(f)                                    Except
as required by COBRA or the Family Medical Leave Act, neither the Company nor
any ERISA Affiliate has made any promises or incurred any obligation to provide
any health or other welfare benefits to any retirees, former employees, or
their dependents.

 

(g)                                 The
execution and delivery of this Agreement and the Ancillary Agreements by the
Company and the consummation of the transactions contemplated hereunder and
thereunder:

 

(i)                                     do
not constitute a prohibited transaction within the meaning of Section 406
of ERISA or Section 4975 of the Code;

 

(ii)                                  will
not result in any obligation or liability of the Parent or the Company to any
employee of the Company or any ERISA Affiliate or to the PBGC in respect of any
Benefit Plan (other than $40,000 in respect of the Employment Contract).

 

2.19                                       Environmental
Matters

 

(a)                                  Except
as disclosed in Schedule 2.19 hereto, any and all Hazardous Materials
used or generated by the Company or any of its Subsidiaries have always been
and are being generated, used, stored, treated and disposed on 

 

23

 

and at any of
the properties or Facilities owned or leased by the Company and each of its
Subsidiaries, or, to the Knowledge of the Company, any predecessors-in-interest
of the Company and each of its Subsidiaries (for the purposes of this Section 2.19,
a “Site”) in compliance with all
applicable Environmental Laws.

 

(b)                                 Except
as set forth on Schedule 2.19 hereto, neither the Company nor any of its
Subsidiaries has received or become subject to any claim, notice, complaint,
Court Order, administrative order or request for information from any
Governmental Authority or private party or any other Person (i) alleging
violation of, or asserting any exceedence or noncompliance with any
Environmental Law, by it, (ii) asserting potential liability, (iii) requesting
information, or (iv) requesting investigation or clean-up of any Site
under any Environmental Law.

 

(c)                                  Except
as disclosed in Schedule 2.19, no Hazardous Materials used or generated
by the Company or any of its Subsidiaries, or, to the Knowledge of the Company,
any predecessors-in-interest to the Company or any of its Subsidiaries, have
ever been, or are being spilled, released, discharged, disposed, placed,
leaked, or otherwise caused to become located in the air, soil or water in,
under or upon a Site or any land adjacent thereto in violation of Environmental
Law.

 

(d)                                 Neither
the Company nor any of its Subsidiaries has received any notice that any Sites
or facilities to which any Hazardous Materials have been shipped or sent to are
subject to or, to the Knowledge of the Company, are threatened to become
subject to any governmental response action or clean up order.

 

(e)                                  Except
as set forth on Schedule 2.19 neither the Company, any of its
Subsidiaries, nor, to the Knowledge of the Company, any predecessor-in-interest
to the Company or any of its Subsidiaries, have treated, stored for more than
ninety (90) days, disposed of or recycled any Hazardous Materials on any Site
nor to Company’s Knowledge has anyone else, treated, stored for more than
ninety (90) days, disposed of or recycled any of the foregoing on any Site.

 

(f)                                    Except
as disclosed in Schedule 2.19 hereto, Hazardous Materials have been
collected, managed, recycled, shipped and disposed by the Company and each of
its Subsidiaries in accordance with all Environmental Laws.

 

(g)                                 All
underground tanks and other storage facilities for Hazardous Materials located
at any Site are disclosed in Schedule 2.19 hereto and, except as set
forth on Schedule 2.19, to the Knowledge of the Company, no other
underground tanks or other storage facilities for Hazardous Materials have been
located on a Site.  To the extent that
such documents are reasonably available and in the possession or control of the
Company, copies of all notifications made to Federal, state or local
authorities pursuant to Environmental Laws relating to underground storage
tanks have been provided to Parent.  As
of the date hereof, 

 

24

 

none of such
tanks and other underground storage facilities are in violation of any Environmental
Law, in any respect.

 

(h)                                 Except
as disclosed in Schedule 2.19 hereto, all wells, water discharges and
other water diversions and all air emission sources on any Site are properly
registered and/or permitted under, and copies of such permits have been
provided to Parent and do not violate any applicable law.

 

(i)                                     Except
as set forth on Schedule 2.19, to the Company’s Knowledge, there are no
asbestos-containing materials, or capacitors, transformers or other equipment
or fixtures containing PCBs located at any Site.

 

(j)                                     To
the Knowledge of the Company, neither the Company nor any of its Subsidiaries
produces, purchases or uses in its products, or purchases or uses any material,
part, component or subassembly incorporated into its products, containing any
chemical or other material to which state packaging and/or disclosure laws
apply except as set forth on Schedule 2.19.

 

(k)                                  There
are no Encumbrances (except for Permitted Encumbrances) under Environmental
Laws on any Site or any assets of the Company or any of its Subsidiaries and no
governmental actions have been taken or, to the Knowledge of the Company, are
in process which with the passage of time are likely to subject any Site to
such Encumbrances (except for Permitted Encumbrances) with respect to
Environmental, Health and Safety Liabilities.

 

(l)                                     To
the extent that such documents are reasonably available and in the possession
or control of the Company, the Company has made available to Parent all
environmental reports, audits, assessments or studies within the possession of
the Company or any of its Subsidiaries with respect to the Company’s or any of
its Subsidiaries’ Facilities or any Site and the results of sampling and
analysis of any asbestos, air, soil, or water, including ground and surface
water, undertaken with respect to its Facilities or any Site.

 

(m)                               Except
as disclosed on Schedule 2.19 hereto, the Company and each of its
Subsidiaries is in material compliance with all Federal and state worker safety
laws and requirements, including, but not limited to requirements under the
Occupational Safety and Health Act.

 

2.20                                       Governmental
Authorizations

 

The Company
and each of its Subsidiaries holds all material Governmental Authorizations
which are required to permit it to conduct their business as presently
conducted.  All such Governmental
Authorizations are listed on Schedule 2.20 hereto, together with the
applicable expiration date, and are now, and will be after the Closing, valid
and in full force and effect, and Parent shall have full benefit of the
same.  Neither the Company nor any of its
Subsidiaries have received any notification of any present failure (or past and
unremedied failure) by any of them to obtain any such Governmental
Authorization, approval or franchise, 

 

25

 

and no proceeding is pending, or to the knowledge of the Company,
threatened, seeking the revocation or limitation of any Government
Authorization.

 

2.21                                       Warranty
or Other Claims

 

(a)                                  Except
as set forth on Schedule 2.21, the Company does not have Knowledge of
any existing or threatened claims against the Company or any of its
Subsidiaries for services or merchandise that are defective or fail to meet any
product warranties.  No claim has been
asserted against the Company or any of its Subsidiaries for renegotiation or
price redetermination of any business transaction.

 

(b)                                 To
Company’s Knowledge, (i) all products that were designed, manufactured or
sold by the Company or any of its Subsidiaries complied with applicable contracts,
agreed product specifications, Laws and standards (whether of the Company or
any of its Subsidiaries, government or industry), and (ii) there are no
defects in such products.  Schedule
2.21 sets forth the Company’s and each of its Subsidiaries’ experiences
with returns of products sold by the Company or any of its Subsidiaries for
fiscal years 2005, 2006 and 2007 and for the portion of the current fiscal year
(including claims or notices that products may or will be returned, whether by
reason of alleged overshipments, defective merchandise or otherwise).

 

2.22                                       Litigation

 

Except for
matters described in Schedule 2.22 hereto, there is no action, suit,
claim, proceeding, arbitration or (to Company’s Knowledge) investigation
pending (or, to the Knowledge of the Company, threatened) against or, to the
Knowledge of the Company, otherwise involving, the Company Shares, or the
Company, any of its Subsidiaries or any of their Affiliates, or to the Company’s
Knowledge any of their respective officers, directors, former officers or
directors, employees, stockholders or agents (in their capacities as such) and
there are no outstanding Court Orders to which the Company or any of its
Subsidiaries is a party or by which any of the assets of the Company or any of
its Subsidiaries are bound.

 

2.23                                       Insurance

 

(a)                                  Schedule
2.23 contains a complete and correct list of all policies of insurance
maintained by the Company and each of its Subsidiaries (including insurance
providing benefits for employees) in effect on the date hereof, together with
complete and correct information with respect to the premiums, coverages,
insurers, expiration dates, and deductibles in respect of such policies.

 

(b)                                 Except
as set forth on Schedule 2.23, there are no claims pending under any of
said policies, or disputes with insurers, and all premiums due and payable
thereunder have been paid, and all such policies are in full force and effect
in accordance with their respective terms. 
No notice of cancellation or termination has been received with respect
to any such policy.

 

26

 

(c)                                  Except
as forth on Schedule 2.23, to Company’s Knowledge, neither the Company
nor any of its Subsidiaries has any current or prior insurance policy which
remains subject to retrospective adjustment of the premiums payable thereunder.

 

2.24                                       Finder’s
Fee

 

The Company
has not incurred or become liable for any broker’s commission or finder’s fee
relating to or in connection with the transactions contemplated by this Agreement
or any Ancillary Agreement.

 

2.25                                       Transactions
with Interested Persons

 

Except as
provided on Schedule 2.25, no officer, director or stockholder of the
Company, any of its Subsidiaries, or any of their Affiliates, or any of their
respective spouses or children, (a) owns, directly or indirectly, on an
individual or joint basis, any interest in, or serves as an officer or director
of, any customer, competitor or supplier of the Company or any of its
Subsidiaries, or any organization which has a material Contract with the
Company or any of its Subsidiaries, or (b) has any Contract with the
Company or any of its Subsidiaries.

 

2.26                                       Absence
of Sensitive Payments

 

Neither the
Company, any of its Subsidiaries, nor any of their Affiliates, nor any of their
respective directors, officers, agents, stockholders or employees, on behalf of
any of them:

 

(a)                                  has
made or has agreed to make any contributions, payments or gifts of funds or
property to any governmental official, employee or agent where either the
payment or the purpose of such contribution, payment or gift was or is illegal
under the laws of the United States, any state thereof, or any other
jurisdiction (foreign or domestic);

 

(b)                                 has
established or maintained any unrecorded fund or asset for any purpose, or has
made any false or artificial entries on any of its books or records for any
reason; or

 

(c)                                  has
made or has agreed to make any contribution or expenditure, or has reimbursed
any political gift or contribution or expenditure made by any other person to
candidates for public office, whether federal, state or local (foreign or
domestic) where such contributions were or would be a violation of applicable
law.

 

2.27                                       Copies
of Documents; Books and Records

 

Complete and
correct copies of any underlying documents listed in any Schedules delivered
pursuant to this Article 2 or described as having been delivered to
Parent in this Article 2, together with all amendments, renewals
and modifications related thereto have been delivered to Parent.  The minute books of the Company contain true,
complete and accurate records of all meetings held of, and corporate action
taken by, the shareholders, the boards of directors, and 

 

27

 

committees of the boards of directors of the Company.  The stock books of the Company and each of
its Subsidiaries are true, complete and correct.

 

2.28                                       Absence
of Material Adverse Effect.  Since
the Base Balance Sheet Date, there has not been any Material Adverse Effect.

 

2.29                                       Disclosure
of Material Information

 

Neither this
Agreement, any Ancillary Agreement, nor any exhibit or Schedule hereto or
certificate issued pursuant hereto contains any untrue statement of a material
fact by the Company or the Company Shareholders, or omits to state a material
fact Known to the Company or the Company Shareholders necessary to make the
statements by the Company or the Company Shareholders herein or therein not
misleading, relating to the Company Shareholders or the business or affairs of
the Company or any of its Subsidiaries.

 

2.30                                       No
Other Representations

 

Except with
respect to the representations and warranties expressly contained in this
Agreement, including, without limitation, Section 2.29, COMPANY AND THE
COMPANY SHAREHOLDERS HAVE NOT MADE AND DO NOT MAKE ANY REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, OF ANY KIND WITH RESPECT TO THE COMPANY, THE
SUBSIDIARIES, THE COMPANY’S SECURITIES, THE ASSETS OR LIABILITIES OF THE
COMPANY OR THE SUBSIDIARIES OR ANY OTHER MATTER; AND COMPANY AND THE COMPANY
SHAREHOLDERS SPECIFICALLY HAVE NOT MADE AND DO NOT MAKE ANY IMPLIED WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT THERETO.

 

ARTICLE 3.                                REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB

 

Parent and
Merger Sub hereby represent and warrant to the Company and the Company
Shareholders as follows:

 

3.1                                             Organization
of Parent

 

Parent is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware with full power to own or lease its properties
and to conduct its business in the manner and in the places where such
properties are owned or leased or such business is conducted by it.

 

3.2                                             Authorization
of Transaction

 

Parent has the
full power and authority to execute, deliver and perform this Agreement and the
Ancillary Agreements and to carry out the transactions contemplated hereby and
thereby.  All necessary action, corporate
or otherwise, has been taken by Parent to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements and the same are the
valid and binding obligation of Parent enforceable in accordance with their
terms.

 

28

 

3.3                                             No
Conflict of Transaction with Obligations and Laws

 

Except as
forth on Schedule 3.3, neither the execution, delivery and performance
of this Agreement or any of the Ancillary Agreements, nor the performance of
the transactions contemplated hereby or thereby, will:  (i) constitute a breach or violation of
the Parent’s Charter or bylaws; (ii) conflict with or constitute (with or
without the passage of time or the giving of notice) a breach of, or default
under any material agreement, instrument or obligation to which Parent is a
party or by which it or its assets are bound which would materially affect the
performance by Parent of its obligations under this Agreement; or (iii) result
in a violation of any Law or Court Order applicable to Parent.

 

3.4                                             Finder’s
Fee

 

Parent has not
incurred or become liable for any broker’s commission or finder’s fee relating
to or in connection with the transactions contemplated by this Agreement or any
Ancillary Agreement.

 

ARTICLE 4.                                COVENANTS

 

The parties,
as applicable, hereby covenant and agree as follows:

 

4.1                                             Normal
Course

 

From the date
hereof until the Closing Date, the Company shall, and shall cause each of its
Subsidiaries to: (i) maintain its corporate existence in good standing; (ii) maintain
the general character of its business; (iii) maintain in effect all of its
presently existing insurance coverage (or substantially equivalent insurance
coverage), other than the Life Insurance Policies; (iv) use commercially
reasonable efforts to preserve intact in all material respects its business
organization, preserve its goodwill and the confidentiality of its business
know-how, use commercially reasonable efforts to keep available to the Company
and each of its Subsidiaries, as applicable, the services of its current
officers and key employees and preserve its present material business
relationships with its collaborators, licensors, customers, suppliers and other
Persons with which the Company and each of its Subsidiaries has material
business relations; and (v) in all respects conduct its business only in
the usual and ordinary manner consistent with past practice and perform all
Contracts.

 

4.2                                             Conduct
Of Business

 

From the date
hereof until the Closing Date, except as set forth in Schedule 4.2 or as
expressly contemplated by Section 4.9 with respect to the Life Insurance
Policies and the Employment Contract, the Company shall not, and the Company
shall cause each of its Subsidiaries not to, directly or indirectly do, or
propose to do, any of the following, without the prior written consent of
Parent, which consent shall not be unreasonably withheld:

 

(a)                                  amend
or otherwise modify its Organizational Documents;

 

(b)                                 issue,
sell, dispose of or Encumber (excluding Permitted Encumbrances) or authorize
the issuance, sale, disposition or Encumbrance

 

29

 

(excluding
Permitted Encumbrances) of, or grant or issue any option, warrant or other
right to acquire or make any agreement of the type referred to in Section 2.2
with respect to any shares of its capital stock or any of its other securities
or any security convertible or exercisable into or exchangeable for any such
shares or securities, or alter any term of any of its outstanding securities or
make any change in its outstanding shares of capital stock or its
capitalization, whether by reason of a reclassification, recapitalization,
stock split, combination, exchange or readjustment of shares, stock dividend or
otherwise;

 

(c)                                  Encumber
(excluding Permitted Encumbrances) any material assets or properties of the
Company or any of its Subsidiaries;

 

(d)                                 declare,
set aside, make or pay any dividend or other distribution to any shareholder
with respect to the capital stock of the Company or any of its Subsidiaries;

 

(e)                                  redeem,
purchase or otherwise acquire any capital stock or other securities of the
Company or any of its Subsidiaries;

 

(f)                                    increase
the compensation or other remuneration or benefits payable or to become payable
to any director or officer of the Company or any of its Subsidiaries, or
increase the compensation or other remuneration or benefits payable or to
become payable to any of its other employees or agents, except for increases in
the ordinary course of business;

 

(g)                                 adopt
or (except as otherwise required by law) amend or make any unscheduled
contribution to any ERISA Benefit Plan for or with employees, or enter into any
collective bargaining agreement;

 

(h)                                 terminate
or modify any Contract requiring future payments to or from the Company or any
of its Subsidiaries, individually or in the aggregate, in excess of $10,000,
except for termination of Contracts upon their natural expiration during such
period in accordance with their terms;

 

(i)                                     create,
incur, assume or otherwise become liable for any indebtedness in an aggregate
amount in excess of $50,000, or guarantee or endorse any obligation or the net
worth of any Person, except for endorsements of negotiable instruments for
collection in the ordinary course of business;

 

(j)                                     pay,
discharge or satisfy any obligation or liability, absolute, accrued, contingent
or otherwise, whether due or to become due, in an aggregate amount in excess of
$50,000, except for liabilities incurred in the ordinary course of business;

 

(k)                                  sell,
transfer, lease or otherwise dispose of any of its assets or properties, except
for sales of inventory and products in the ordinary course of business
consistent with past practice;

 

30

 

(l)            cancel, compromise,
release or waive any material debt, claim or right;

 

(m)          make any loan or
advance to any Person other than travel and other similar routine advances in
the ordinary course of business consistent with past practice, or acquire any capital
stock or other securities or any ownership interest in, or substantially all of
the assets of, any other business enterprise;

 

(n)           make any material
capital investment or expenditure or capital improvement, addition or
betterment, in excess of $50,000;

 

(o)           change its method of
accounting or the accounting principles or practices utilized in the
preparation of the Financial Statements, other than as required by GAAP or
applicable law;

 

(p)           institute or settle
any Proceeding before any Governmental Authority relating to it or its assets
or properties;

 

(q)           adopt a plan of
dissolution or liquidation with respect to the Company or any of its
Subsidiaries;

 

(r)            create any
obligation or liability to any of their Affiliates, officers, directors or
stockholders other than as expressly permitted by this Agreement, or make any
loans or advances to any of their Affiliates, officers, directors or
stockholders, except normal compensation, benefits and expense allowances;

 

(s)           enter into any
Contract, except Contracts made in the ordinary course of business consistent
with past practice;

 

(t)            except as required
by law, make or change any election, change an annual accounting period, adopt
or change any accounting method, file any amended Tax Return, enter into any closing
agreement, settle any Tax claim or assessment, surrender any right to claim a
refund of Taxes, consent to any extension or waiver of the limitation period
applicable to any Tax claim or assessment, or take any other similar action
relating to the filing of any Tax Return or the payment of any Tax;

 

(u)           take or omit to take
any action that would constitute a material violation of or material default
under, or waive any material rights under, any material Contract;

 

(v)           except for sales of
inventory in the ordinary course of business consistent with past practice,
eliminate or dispose of any inventory, whether or not any such elimination or
disposal is reserved against or reflected in the Financial Statements of the
Company;

 

31

 

(w)          enter into any
commitment to do any of the foregoing, or any action that would make any of the
representations or warranties of the Company or any of its Subsidiaries
contained in this Agreement untrue or incorrect in any material respect
(subject to the knowledge and materiality limitations set forth therein) or
cause any covenant, condition or agreement of the Company or any of its
Subsidiaries in this Agreement not to be complied with or satisfied in any
material respect; or

 

(x)            enter into any
contracts or other agreements of any nature whatsoever that would require the
consent of or notice to any third party in connection with the Merger or the
transactions contemplated hereby.

 

4.3                     Certain
Filings

 

The Company
shall cooperate with Parent with respect to all filings with Governmental
Authorities that are required to be made by the Company or any of its
Subsidiaries to carry out the transactions contemplated by this Agreement and
the Ancillary Agreements.  The Company
and each of its Subsidiaries shall assist Parent in making all such filings,
applications and notices as may be necessary or desirable in order to obtain
the authorization, approval or consent of any Governmental Authority that may
be reasonably required or which Parent may reasonably request in connection
with the consummation of the transactions contemplated by this Agreement and
the Ancillary Agreements.

 

4.4                     Notification
Of Certain Matters

 

The Company
shall promptly notify Parent of (i) the occurrence or non-occurrence of
any fact or event of which the Company has Knowledge that would be reasonably
likely (A) to cause any representation or warranty of the Company, any of
its Subsidiaries and/or each of the Company Shareholders contained in this
Agreement or any Ancillary Agreements to be untrue or incorrect in any material
respect at any time from the date hereof to the Closing Date or (B) to
cause any covenant, condition or agreement of the Company, any of its
Subsidiaries and/or each of the Company Shareholders in this Agreement or any
Ancillary Agreements not to be complied with or satisfied in any material
respect and (ii) any failure of the Company, any of its Subsidiaries
and/or each of the Company Shareholders to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder or
thereunder in any material respect; provided, however, that no such
notification shall affect the right of Parent to rely on the representations
and warranties of the Company in this Agreement prior to the Closing, or the
conditions to the obligations of Parent, or the remedies available hereunder or
thereunder to Parent prior to the Closing. 
If the Company or any Company Shareholder provides Parent with such a
notice, which shall be reasonably detailed, and Parent chooses to proceed to
Closing, then notwithstanding the foregoing or any other provision of this
Agreement, unless the Company and the Parent otherwise agree in writing (a) the
Company and the Company Shareholders shall not be deemed to have breached or
violated this Agreement as a result and to the extent of the information
contained in any such notice; and (b) the Company Shareholders shall have
no liability or obligation, and Parent Indemnified Parties shall not have the right
to be indemnified or to pursue any other claim or cause of action, for any
matter contained in the notice.  The
Company, each of its Subsidiaries and/or each of the Company Shareholders shall

 

32

 

give prompt
notice to Parent of any notice or other communication from any third Person
alleging that the consent of such third Person is or may be required in
connection with the transactions contemplated by this Agreement or any
Ancillary Agreement.

 

4.5       No Solicitation

 

From the date
hereof until the earlier of (i) February 29, 2008, or (ii) termination
of this Agreement, the Company and the Company Shareholders shall not, and
shall not permit any Subsidiary of the Company or any officer, director,
shareholder, employee, investment banker or other agent of the Company to,
directly or indirectly, (A) solicit, engage in discussions or negotiate
with any Person (whether or not such discussions or negotiations are initiated
by the Company), or take any other action intended or designed to facilitate
the efforts of any Person, other than Parent, relating to the possible
acquisition of the Company or any of its Subsidiaries (whether by way of
merger, purchase of capital stock, purchase of assets or otherwise) or any significant
portion of any of their capital stock or assets (an “Alternative Acquisition”), (B) provide information with
respect to the Company or any of its Subsidiaries to any Person, other than
Parent, relating to a possible Alternative Acquisition by any Person, other
than Parent, (C) enter into an agreement with any Person, other than
Parent, providing for a possible Alternative Acquisition, or (D) make or
authorize any statement, recommendation or solicitation in support of any
possible Alternative Acquisition by any Person, other than by Parent.

 

4.6                     Access
To Information; Confidentiality

 

(a)           Subject to the
following sentence, upon reasonable written notice, the Company and each of its
Subsidiaries shall permit representatives of Parent to have access (at all
reasonable times and in a manner so as not to interfere with the normal
business operations of the other party) to all premises, properties, financial
and accounting records, Contracts, other records and documents, and personnel
of or pertaining to the Company and each of its Subsidiaries, all in accordance
with the terms of the Confidentiality Agreement.  Notwithstanding the foregoing sentence, (i) prior
to having any contact with any of the Company’s or any of its Subsidiaries’
employees, customers or suppliers, Parent and Mr. Con Oswald, on behalf of
the Company and its Subsidiaries, shall agree to the terms of such contact; and
(ii) prior to conducting any environmental testing, assessment or
investigation with respect to any real property owned or used by the Company or
any of its Subsidiaries, Parent and the Company shall have entered into a
mutually agreed upon written site access agreement with respect to such
testing, assessment and investigation, provided, however, that neither
the Company nor any of its Subsidiaries shall unreasonably withhold, condition
or delay their approval or consent of Parent’s reasonable requests for access
as provided herein.

 

(b)           Subject to Section 4.4,
no investigation or examination by Parent shall diminish, obviate or constitute
a waiver of the enforcement of any of the representations, warranties,
covenants or agreements of the Company, or any of its Subsidiaries or the
Company Shareholders under this Agreement except to the extent that such
investigation or examination results in the Company acquiring

 

33

 

specific knowledge of the
existence and magnitude of claim for indemnification pursuant to Section 8.2(a) prior
to the Closing Date.

 

4.7                     Reasonable
Efforts; Further Action

 

(a)           Upon the terms and
subject to the conditions hereof, each of the parties hereto shall use its
reasonable efforts (exercised diligently and in good faith) to take, or cause
to be taken, all actions and to do, or cause to be done, all other things
reasonably necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents, authorizations and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement.

 

(b)           Notwithstanding any
provision of this Agreement to the contrary, Parent shall not be obligated to
divest, abandon, license, dispose of, hold separate or take similar action with
respect to any portion of the business, assets or properties (tangible or
intangible) of Parent, any of its Subsidiaries or the Company, in connection
with seeking to obtain or obtaining any waiver, consent, authorization or
approval of any Person associated with the consummation of the transactions
contemplated hereby or otherwise.

 

4.8                     Tax
Matters

 

(a)       Parent shall prepare or
cause to be prepared and filed or cause to be filed all Tax Returns for the
Company and its Subsidiaries that are filed after the Closing, and be
responsible for and pay or cause to be paid all Taxes due with respect to such
Tax Returns.

 

(i)            The Company Shareholders shall
cooperate fully with Parent and the Company and its Subsidiaries, as and to the
extent reasonably requested by Parent, in connection with the filing of Tax
Returns pursuant to this subsection (a), and any audit, litigation or other
proceeding with respect to Taxes. To the extent in its possession or under its
control, each party agrees (A) to retain all books and records with
respect to Tax matters pertinent to the Company and its Subsidiaries relating
to any taxable period beginning before the Closing Date until the expiration of
the statue of limitations (and, to the extent notified thereof, any extensions
thereof) of the respective taxable periods, and to abide by all record
retention agreements entered into with any taxing authority, and (B) to
give each other party reasonable written notice prior to transferring,
destroying or discarding any such books and records and, if another party so
requests, the other Company shall allow Parent to take possession of such books
and records.

 

34

 

(ii)           Parent and the Company Shareholders
further agree, upon request, to provide the other party with all information
that either party may be required to report pursuant to Sections 6043 or 6043A
of the Code, or Treasury Regulations promulgated thereunder.

 

(b)           All tax-sharing
agreements or similar agreements with respect to or involving the Company and
its Subsidiaries shall be terminated as of the Closing Date and, after the
Closing Date, the Company and its Subsidiaries shall not be bound thereby or
have any liability thereunder.

 

(c)           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
transactions contemplated by this Agreement shall be paid one-half by Parent
and one-half by the Company Shareholders when due, and the Company will file
all necessary Tax Returns and other documentation with respect to all such Taxes,
fees and charges if required by applicable law, and Parent will, and will cause
its Affiliates to, join in the execution of any such Tax Returns and other
documentation if required by applicable law.

 

4.9                     Life
Insurance Payments And Employment Contracts

 

(a)           The Company has
cancelled the Life Insurance Policies and prior to the Closing, the Company
shall dividend and distribute an amount equal to $1,151,776.87 (which amount
equals (i) the cash surrender value of the Life Insurance Policies, minus (ii) $36,051.93,
the amount of premiums paid by the Company with respect to the Life Insurance
Policies between the Base Balance Sheet Date and the Closing Date) to the
Company Shareholders, such that (i) none of the Life Insurance Policies
shall be outstanding on the Closing Date and (ii) neither Parent nor the
Company shall be Encumbered in any manner whatsoever by the Life Insurance
Policies as of and after the Closing or owe any further dividend, payment or
other amount related thereto.

 

(b)           Prior to or at the Closing,
the Company shall, and shall cause each of its Subsidiaries, as applicable, to
terminate the Employment Contract, at the cost of the Company Shareholders
(except $40,000, which is the portion of such cost which is accrued on the Base
Balance Sheet, which cost, if the Closing occurs, shall be borne by the Company
and Parent and not borne by the Company Shareholders), such that (i) the
Employment Contract shall not be outstanding immediately following the Closing
and (ii) except as otherwise provided above, neither Parent nor the
Company shall be Encumbered in any manner whatsoever by the Employment Contract
as of and after the Closing.

 

35

 

4.10     Company Shareholders’
Meeting

 

Promptly after
the execution and delivery of this Agreement, the Company shall take all
reasonable actions necessary under all applicable Laws to call, give notice of
and hold a meeting of the Company Shareholders to vote on the approval of the
Merger, this Agreement, and all the transactions contemplated by this
Agreement.  The notice to the Company
Shareholders shall include a statement to the effect that the Company’s board
of directors has unanimously approved the Merger, this Agreement, and all the
transactions contemplated by this Agreement and recommends that the Company
Shareholders vote to approve the Merger, this Agreement, and all the
transactions contemplated by this Agreement, except to the extent that the
fiduciary obligations of the Company’s board of directors may cause the board
of directors to withdraw or modify its recommendation.

 

ARTICLE 5.                                ADDITIONAL
COVENANTS OF PARENT AND MERGER SUB

 

Parent hereby
covenants and agrees as follows:

 

5.1                     Certain
Filings

 

Parent agrees
to make or cause to be made all filings with Governmental Authorities that are
required to be made by Parent to carry out the transactions contemplated by
this Agreement and the Ancillary Agreements.

 

5.2                     Notification
Of Certain Matters

 

Parent shall
promptly notify the Company of (i) the occurrence or non-occurrence of any
fact or event of which Parent has knowledge which would be reasonably likely (A) to
cause any representation or warranty of Parent contained in this Agreement
and/or the Ancillary Agreements to be untrue or incorrect in any material respect
at any time from the date hereof to the Closing Date or (B) to cause any
covenant, condition or agreement of Parent in this Agreement and/or the
Ancillary Agreements not to be complied with or satisfied in any material
respect and (ii) any failure of Parent to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; provided, however, that no such
notification shall affect the right of the Company to rely on the representations
and warranties of Parent in this Agreement prior to the Closing, or the
conditions to the obligations of the Company, or the remedies available
hereunder or thereunder to the Company prior to the Closing.  If Parent provides the Company with such a notice,
which shall be reasonably detailed, and the Company chooses to proceed to
Closing, then notwithstanding the foregoing or any other provision of this
Agreement, unless the Company and the Parent otherwise agree in writing (a) Parent
shall not be deemed to have breached or violated this Agreement as a result and
to the extent of the information contained in any such notice; and (b) Parent
shall have no liability or obligation, and the Company Indemnified Parties
shall not have the right to be indemnified or to pursue any other claim or
cause of action, for any matter contained in the notice.  Parent shall give prompt notice to the
Company of any notice or other communication from any third Person alleging
that the consent of such third Person is or may be required in connection with
the transactions contemplated by this Agreement.

 

36

 

5.3       Officer and Director
Insurance and Indemnification.

 

(a)           Parent
agrees that on and after the Closing Date it shall cause all rights to
indemnification or exculpation now existing in favor of the employees, agents,
directors and/or officers of each member of the Company and its Subsidiaries
(the “Company Indemnified Parties”) as
provided in the organizational documents of the Company and its Subsidiaries,
or as provided in any agreements between a Company Indemnified Party and the
Company or its Subsidiaries that are listed on Schedule 5.3 and which
have been provided to Parent prior to Closing (the “Indemnification
Agreements”) to continue in full force and effect for a period of
six (6) years from the Closing Date; provided, however, that, in the event
any claim or claims are asserted or made within such six (6) year period,
Parent shall cause all rights to indemnification in respect of any such claim
or claims to continue until the final disposition of any and all such
claims.  Any determination required to be
made with respect to whether a Company Indemnified Party’s conduct complies
with the standards set forth in the organizational documents of the Company or
its Subsidiaries or the Indemnification Agreements, or whether a Company
Indemnified Party is otherwise entitled to indemnification, shall be made by
independent counsel selected by the Company Indemnified Party in question and
who is approved in advance as reasonably satisfactory to Parent, which approval
shall not be unreasonably withheld (whose reasonable fees and expenses shall be
paid by the Surviving Corporation). 
Parent agrees from and after the Closing Date to cause the Surviving
Corporation to fully perform all obligations to be performed with respect to
the indemnification of the Company Indemnified Parties.  Parent further agrees that, for six (6) years
after the Closing, it shall cause the Surviving Corporation to maintain
officers’ and directors’ liability insurance policies indemnifying and holding
harmless the Company Indemnified Parties with respect to any actions or
omissions occurring prior to the Closing, with amounts of coverage that are not
less than, and on terms no less advantageous to the Company Indemnified Parties
than, the Company’s existing policy(ies) of officers’ and directors’ liability
insurance; provided that in the event any claim is asserted or made within such
six (6) year period, Parent shall cause the coverage under such insurance
to be continued in respect thereof until final disposition of such claim.  In the event the foregoing indemnities or
insurance policies become unavailable or unenforceable for any reason, Parent
agrees from and after the Closing to cause the Surviving Corporation to
indemnify and hold harmless the Company Indemnified Parties to the same extent
as if such indemnities and insurance were available and in full force and
effect.  The provisions of this Section 5.3(a) and
Section 5.3(b) are intended to be for the benefit of, and shall be
enforceable by, each Company Indemnified Party, his or her heirs and his or her
personal representatives and shall be binding on all successors and assigns of
the Surviving Corporation.

 

(b)           In
the event that, during the six (6) year period described in Section 5.3(a) above
(as such may be extended as provided above with respect to on-going claims),
the Surviving Corporation or any of its successors or assigns (i) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger, or (ii) transfers
all or substantially all of its properties, assets or stock to any person, then
and in each such case, Parent shall cause proper provision to be made so that
the successors and assigns of 

 

37

 

the Surviving
Corporation (or its successors and assigns) shall assume the obligations of the
Surviving Corporation set forth in this Section 5.3.

 

ARTICLE 6.                                CONDITIONS
TO OBLIGATIONS OF PARENT.

 

The obligation
of Parent to consummate this Agreement and the transactions contemplated hereby
are subject to the satisfaction on or before the Closing of the following
actions:

 

6.1                     Representations
and Warranties

 

The
representations and warranties of the Company, each of its Subsidiaries and
each of the Company Shareholders contained in this Agreement or in the
Schedules hereto or any certificate delivered pursuant hereto shall be true,
complete and correct in all material respects (except for representations and
warranties that by their terms are already qualified by materiality, which
shall be true, complete and correct in all respects) as of the date when made
and as of the Closing Date.

 

6.2                     Performance
of Covenants and Agreements

 

The Company,
each of its Subsidiaries and each of the Company Shareholders shall have
performed and complied in all respects with each covenant, agreement and
condition required by this Agreement and the Ancillary Agreements to be
performed or complied with by them at or prior to the Closing Date.

 

6.3                     No
Material Adverse Effect

 

There shall
have been no Material Adverse Effect.

 

6.4                     Absence
of Certain Litigation

 

There shall not be any (i) injunction,
restraining order or order of any nature issued by any court of competent
jurisdiction which directs that this Agreement or any material transaction contemplated hereby shall not be consummated as herein provided, (ii) suit,
action or other proceeding by any Governmental Authority, or threatened to be
filed or initiated, wherein such complainant seeks the restraint or prohibition
of the consummation of any material transaction contemplated by this Agreement
or asserts the illegality thereof, or (iii) suit, action or other
proceeding by a private party pending before any Governmental Authority, or
threatened to be filed or initiated, which, in the reasonable opinion of
counsel for Parent, is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby or the obtaining
of an amount in payment (or indemnification) of material damages from or other
material relief against Parent or against any directors or officers of Parent
in connection with the consummation of any material transaction contemplated
hereby.

 

6.5                     Resignations

 

Parent shall
have received the written resignations, dated as of the Closing Date, of each
of the directors and corporate and executive officers of the Company and each
of its Subsidiaries.

 

38

 

6.6                     General
Releases

 

Parent shall
have received the General Releases, dated as of the Closing Date, of each of
the officers, directors and stockholders of the Company.

 

6.7                     Retained
Liabilities

 

The Company
shall have delivered to Parent evidence reasonably satisfactory to Parent and
its counsel that (i) the Company Shareholders are able to deliver all of
the Company Shares, free and clear of all Encumbrances of any nature whatsoever
at or prior to Closing and (ii) notwithstanding anything herein to the
contrary, as of the Closing, the Company and each of its Subsidiaries shall be
free and clear of all Encumbrances of any nature whatsoever relating to the
Retained Liabilities.

 

6.8                     Exhibit A

 

The Company
shall have delivered a completed Exhibit A in form and substance
reasonably satisfactory to Parent.

 

6.9                     Third
Party Consents

 

The Company
shall have delivered to Parent all consents of third parties necessary to
effectuate the transactions contemplated by this Agreement and the Ancillary
Agreements, including under any contracts and leases; provided, however, that
it shall not be a condition to Parent’s obligations that a consent be obtained
if proceeding to Closing without first obtaining such consent would not be
likely to result in a Material Adverse Effect or involve a violation of Law.

 

6.10               Financial
Statements

 

The Company
shall have delivered to Parent, at the Company’s cost (which cost
notwithstanding any other provision hereof shall not be the responsibility of
the Company Shareholders) (i) the audited balance sheet, income statement,
statement of changes in stockholders equity and statement of cash flow at and
as of the twelve (12) months ended June 30, 2007 with an unqualified audit
opinion, and (ii) the remainder of the Financial Statements.

 

6.11               Opinion
of the Company’s Counsel

 

Varnum,
Riddering, Schmidt & Howlett LLP, counsel to the Company, shall have
delivered to Parent an opinion in the form of Exhibit C hereto.

 

6.12               Noncompetition
Agreements

 

Each of the
Key Employees shall have executed and delivered to Parent a noncompetition
agreement in either the form attached as Exhibit D-1 or Exhibit D-2,
or Exhibit D-3, as indicated by Parent.

 

39

 

6.13               FIRPTA
Certificate

 

At the
Closing, the Company shall have delivered to Parent a certificate which
satisfies the requirements of the regulations under Section 1445 of the
Internal Revenue Code of 1986, as amended.

 

6.14               Secretary’s
Certificate

 

Parent shall
have received from the Company a Certificate executed by the Secretary of the
Company certifying as to:  (i) the
Company’s Charter, certified as of a recent date by the Department of Labor &
Economic Growth of the State of Michigan, (ii) the bylaws of the Company, (iii) that
said Charter and bylaws as appended thereto have not been amended or modified, (iv) the
incumbency of the officers of the Company certifying the names, titles and
signatures of the officers authorized to execute this Agreement and the
Ancillary Agreements, (v) copies of the minutes, unanimous written
consents or resolutions, as applicable, of the Company’s board of directors and
stockholders authorizing and approving the Merger and the execution, delivery
and performance of this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby, (vi) that said board and
stockholders’ minutes, unanimous written consents or resolutions, as
applicable, are the only minutes, unanimous written consents or resolutions, as
applicable, relating to the subject matter thereof, have not been amended or
rescinded and are in full force and effect; and (vii) the number of
Company Shares voted in favor of the authorization and approval of the
Merger.  Such Certificate shall be in
form and substance reasonably satisfactory to Parent.

 

6.15     Required Shareholder
Approval

 

At a duly
called Company Shareholders’ meeting, the Company Shareholders shall have
approved this Agreement, the Merger and all transactions contemplated hereby,
as required by the MBCA.

 

ARTICLE 7.                                CONDITIONS
TO OBLIGATION OF THE COMPANY.

 

The obligation
of the Company to consummate this Agreement and the transactions contemplated
hereby are subject to the satisfaction on or before the Closing of the
following actions:

 

7.1                     Representations
and Warranties

 

The
representations and warranties of Parent and Merger Sub contained in this
Agreement or in the Schedules hereto or any certificate delivered pursuant
hereto shall be complete and correct in all material respects (except for
representations and warranties that by their terms are already qualified by
materiality, which shall be true, complete and correct in all respects) as of
the date when made and as of the Closing Date.

 

40

 

7.2                     Performance
of Covenants and Agreements

 

Each of Parent
and Merger Sub shall have performed and complied in all material respects with
each covenant, agreement and condition required by this Agreement to be
performed or complied with by it at or prior to the Closing Date.

 

7.3                     Required
Shareholder Approval

 

At a duly
called Company Shareholders’ meeting, the Company Shareholders shall have
approved this Agreement, the Merger and all transactions contemplated hereby,
as required by the MBCA.

 

ARTICLE 8.                                INDEMNIFICATION.

 

8.1                     Definitions

 

For purposes
of this Article 8:

 

“Indemnified Person” means any person entitled to be
indemnified under this Article 8.

 

“Indemnifying Person” means any person obligated to indemnify
another person under this Article 8.

 

“Losses” means all losses, damages (including, without
limitation, punitive and consequential damages), fines, penalties, liabilities,
payments and obligations, and all reasonable expenses related thereto.  Losses shall include any reasonable legal
fees and reasonable costs incurred by any of the Indemnified Persons subsequent
to the Closing in defense of or in connection with any alleged or asserted
liability, payment or obligation, whether or not any liability or payment,
obligation or judgment is ultimately imposed against the Indemnified Persons
and whether or not the Indemnified Persons are made or become parties to any
such action.

 

“Parent’s Indemnified Persons” means the Parent, its
Affiliates and their respective directors, officers, employees, stockholders
and agents, the Company after the Closing, and any person serving as a
director, officer, employee or agent of the Company at Parent’s request after
the Closing.

 

“Third Party Action” means any written assertion of a claim,
or the commencement of any action, suit, or proceeding, by a third party as to
which any person believes it may be an Indemnified Person hereunder.

 

8.2       Indemnification by
the Company.

 

(a)           Subject to the
limitations in paragraph (b) below, the Company Shareholders and, prior to
the Closing, the Company, jointly and severally agree to defend, indemnify and
hold harmless Parent’s Indemnified Persons from and against all Losses directly
and indirectly incurred by them to the extent:

 

41

 

(i)            resulting from or arising out of any
breach of any of the representations or warranties (other than those in
Sections 2.2, 2.3, 2.4, 2.11, 2.12(a), (b), (c) and (h), 2.13, 2.18 and
2.19) made by the Company, any of its Subsidiaries or the Company Shareholders
in or pursuant to this Agreement or any Ancillary Agreement;

 

(ii)           resulting from or arising out of any
breach of any of the representations or warranties made by the Company, any of
its Subsidiaries or the Company Shareholders pursuant to Sections 2.2, 2.3, 2.4
and 2.12(a), (b), (c) and (h) of this Agreement;

 

(iii)          resulting from or arising out of any
breach of any of the representations and warranties made by the Company, any of
its Subsidiaries or the Company Shareholders pursuant to Section 2.11;

 

(iv)          resulting from or arising out of any
breach of any of the representations or warranties made by the Company, any of
its Subsidiaries or the Company Shareholders pursuant to Section 2.18 of
this Agreement;

 

(v)           resulting from or arising out of (A) any
breach of any of the representations and warranties made by the Company, any of
its Subsidiaries or the Company Shareholders pursuant to Section 2.19 or (B) any
Third Party Action, whether by a Governmental Authority or other third party
for damages, including fines or penalties, or clean-up costs or other
compliance costs under any Environmental Law or from the violation of any
Environmental Law arising out of the acts or omissions of the Company or any of
its Subsidiaries on or before the Closing Date; provided, however, that
subparagraph (B) above shall not apply to or impose any liability or
obligation on the Company Shareholders or any other Indemnifying Person (x) to
perform the removal, abatement or remediation of any asbestos or
asbestos-containing materials identified in the Asbestos Inspection and Survey
Report, dated December 19, 2007, performed by Grand Rapids Environmental,
LLC for Driesenga & Associates, Inc. for Parent, or (y) for
or with respect to any Losses arising directly or indirectly from (A) anything
disclosed in this Agreement, the Financial Statements or the Schedules hereto
(provided such disclosure is reasonably apparent on the face of such
documents), and (B) actions or omissions occurring after the Closing Date,
including, without limitation, any noncompliance or violations of Environmental
Laws, by the Surviving Corporation or its Affiliates after the Closing Date.

 

42

 

(vi)          resulting from or arising out of any
breach of any of the representations or warranties made by the Company, any of
its Subsidiaries or the Company Shareholders pursuant to Sections 2.13 of this
Agreement;

 

(vii)         resulting from or arising out of any
breach of any covenant or agreement made by the Company, any of its
Subsidiaries or the Company Shareholders in or pursuant to this Agreement or
any Ancillary Agreement;

 

(viii)        in respect of any Retained Liability;

 

(ix)           resulting from or arising out of the
intentional misrepresentation or intentional breach of warranty of the Company,
any of its Subsidiaries or any of the Company Shareholders, or any intentional
failure of the Company, any of its Subsidiaries or any of the Company
Shareholders to perform or comply with any covenant or agreement of the
Company, any of its Subsidiaries or any of the Company Shareholders,
respectively; or

 

(x)            resulting from or arising out of any
Third Party Action (including a binding arbitration or an audit by any taxing
authority), that it is instituted or threatened against any of Parent’s
Indemnified Persons as a result of the matters described in subsections (i)-(ix) of
this Section 8.2(a).

 

(b)           The right to
indemnification under paragraph (a) is subject to the following
limitations:

 

(i)            The Company and the Company
Shareholders shall have no liability, obligation or loss under paragraph (a) or
otherwise with respect to indemnifying any Parent’s Indemnified Person unless
one or more of the Parent’s Indemnified Persons gives written notice to the
Company Shareholders asserting a claim for Losses, including reasonably
detailed facts and circumstances pertaining thereto, before the expiration of
the period set forth below:

 

(A)                              for
claims under clauses (vi) and (x) (insofar as a claim under clause (x) relates
to any matters included under clause (vi)) of paragraph (a) above, a
period of thirty (30) business days following the AR Collection Period;

 

(B)                                for
claims under clauses (i) and (x) (insofar as a claim under clause (x) relates
to any matter included under clause (i)) of paragraph (a) above, a period
of two (2) years from the Closing Date;

 

43

 

(C)                                for
claims under clauses (iii), (iv), (v) and (x) (insofar as a claim
under clause (x) relates to any matter included under clause (iii), (iv) or
(v)) of paragraph (a) above, for so long as any claim may be made in
respect of such matters under any applicable statute of limitations, as it may
be extended; and

 

(D)                               for
claims under clauses (ii), (vii), (viii), (ix) and (x) (insofar as a
claim under clause (x) relates to any matter included under clause (ii),
(vii), (viii) or (ix)) of paragraph (a) above, without limitation as
to time.

 

(ii)           For the purpose of this Section 8.2,
any qualification of any representations and warranties by reference to the
materiality of matters stated therein shall be disregarded in determining any
breach thereof or any Losses.

 

(iii)          Indemnification for claims under
paragraph (a) shall be payable by the Company Shareholders only if the aggregate
amount of indemnifiable Losses for all claims under this Section 8.2 is in
excess $25,000, at which point the Company Shareholders shall be responsible
for all such Losses; provided, however, that this clause (b)(iii) shall
not apply to claims under clauses (ii), (vi), (vii), (viii), (ix) and (x) (insofar
as a claim under clause (x) relates to any matter included under clause
(ii), (vi), (vii), (viii) or (ix)) of paragraph (a) above.

 

(iv)          The Company Shareholders’ aggregate
liability for claims made under paragraph (a) shall not exceed the amount
set forth below:

 

(A)                              for
claims under clauses (i), (iii), (iv) and (v) and (x) (insofar
as a claim under clause (x) relates to any matter included under clause
(i), (iii), (iv) and (v)) of paragraph (a) above, an amount equal to
100% of the Merger Consideration; and

 

(B)                                for
claims under clauses (ii), (vi), (vii), (viii), (ix) and (x) (insofar
as a claim under clause (x) relates to any matter included under clause
(ii), (vi), (vii), (viii) or (ix)) of paragraph (a) above, or for
claims arising from the fraud or willful misconduct of the Company, any of its
Subsidiaries or any of the Company Shareholders, without limit as to amount.

 

44

 

8.3                     Defense
of Third Party Actions

 

(a)           Promptly after
receipt of notice of any Third Party Action, any person who believes he, she or
it may be an Indemnified Person will give notice to the potential Indemnifying
Person of such action.  The omission to
give such notice to the Indemnifying Person will not relieve the Indemnifying
Person of any liability hereunder unless it was prejudiced thereby.

 

(b)           Upon receipt of a
notice of a Third Party Action, the Indemnifying Person shall have the right,
at its option and at its own expense, to participate in and be present at the
defense of such Third Party Action, but not to control the defense, negotiation
or settlement thereof, which control shall remain with the Indemnified Person,
unless the Indemnifying Person makes the election provided in paragraph (c) below.

 

(c)           By written notice
within forty-five (45) days after receipt of a notice of a Third Party Action,
an Indemnifying Person may elect to assume control of the defense, negotiation
and settlement thereof, with counsel reasonably satisfactory to the Indemnified
Person; provided, however, that the Indemnifying Person agrees (subject
to the other limitations set forth herein) (i) to promptly indemnify the
Indemnified Person for its reasonable expenses to date, and (ii) to hold
the Indemnified Person harmless from and against any and all Losses caused by
or arising out of any settlement of the Third Party Action approved by the
Indemnifying Person or any judgment in connection with that Third Party Action.  The Indemnifying Persons shall not in the
defense of the Third Party Action enter into any settlement or consent to entry
of any judgment except with the consent of the Indemnified Person, which
consent shall not be unreasonably withheld.

 

(d)           Upon assumption of
control of the defense of a Third Party Action under paragraph (c) above,
the Indemnifying Person will not be liable to the Indemnified Person hereunder
for any legal or other expenses subsequently incurred in connection with the
defense of the Third Party Action, other than reasonable expenses of
investigation.

 

(e)           If the Indemnifying
Person does not elect to control the defense of a Third Party Action under
paragraph (c), the Indemnifying Person shall promptly reimburse the Indemnified
Person for expenses incurred by the Indemnified Person in connection with
defense of such Third Party Action, as and when the same shall be incurred by
the Indemnified Person.

 

(f)            Any person who is
not controlling the defense of any Third Party Action shall have the duty to
cooperate with the party which is controlling such defense.

 

(g)           With respect to any
claim related to environmental matters or issues (“Environmental Indemnity Claims”), then, in addition to the
procedures set forth above, the following shall apply: (i) the Indemnified
Party

 

45

 

shall
cooperate with, and provide reasonable access to the relevant real property to,
the Indemnifying Party in responding to or remediating or addressing any
Environmental Indemnity Claim; and (ii) in the event that remediation or
cleanup with respect to an Environmental Indemnity Claim is necessary and the
responsibility of the Indemnifying Party, the Indemnifying Party shall only be
responsible for remediating or cleaning up to applicable industrial cleanup
criteria, unless additional remediation is required by applicable Environmental
Law or Governmental Authority, and the Indemnified Party shall record or
implement any deed restrictions and institutional controls necessary to allow
the use of such industrial cleanup criteria. 
The Indemnified Party may pursue additional cleanup or remediation
beyond such levels at its own expense, without liability to the Indemnifying
Party (and the Indemnified Party shall not be entitled to indemnification
therefor).

 

8.4                     Miscellaneous

 

(a)           Parent’s Indemnified
Persons shall be entitled to indemnification under Section 8.2(a),
regardless of whether the matter giving rise to the applicable liability,
payment, obligation or expense may have been previously disclosed to any such
person unless expressly disclosed in this Agreement, the Financial Statements
of the Company or the Schedules (provided such disclosure is reasonably
apparent on the face of such documents).

 

(b)           If any Loss is
recoverable under more than one provision hereof, the Indemnified Person shall
be entitled to assert a claim for such Loss until the expiration of the longest
period of time within which to assert a claim for Loss under any of the
provisions which are applicable.

 

(c)           In computing any individual
or aggregate amounts of Losses, damages, liabilities, costs and expenses for
indemnification, the amount of each such item shall be deemed to be an amount (i) net
of any tax benefit realized by the party to be indemnified; and (ii) net
of any insurance proceeds received by the party to be indemnified and any
indemnity, contribution or other similar payment paid by any third party to the
party to be indemnified with respect thereto.

 

(d)           The indemnification
provisions of this Article 8 constitute the sole and exclusive remedy of
Parent’s Indemnified Persons with respect to any and all claims relating to the
subject matter of this Agreement (and all Ancillary Agreements), and no other
remedy shall be had in Law or at equity or otherwise by any Parent’s
Indemnified Person or its officers, directors, employees, agents, affiliates,
attorneys, consultants, successors or assigns, all such remedies being hereby
expressly waived to the fullest extent permitted under applicable Law.  Without limitation, the procedures set forth
in this Article 8 constitute the sole and exclusive remedy of the Parent’s
Indemnified Persons arising out of any breach or claimed breach of the
representations and warranties set forth in this Agreement or any Ancillary
Agreement.  In addition to the foregoing,
the amount of

 

46

 

indemnification
obligations of the Company Shareholders set forth in this Article 8 shall
be the maximum amount of their indemnification obligations with respect to this
Agreement (and all related Ancillary Agreements) and potential liability and
Losses under this Agreement (and all related Ancillary Agreements), and Parent’s
Indemnified Persons shall not be entitled to any further indemnification or
other rights or claims of any nature whatsoever, all of which such parties
hereby waive.

 

(e)           Parent may, at its
option, recover any amount owing by the Company Shareholders for
indemnification hereunder by setoff against any amounts that may otherwise be
due from the Parent or the Company to the Company Shareholders, or any of them,
under this Agreement; provided that Parent shall not be required to recover
such claims in such manner and may proceed against the Indemnified Party at any
time or times for recovery of indemnification claims.

 

8.5                     Payment
of Indemnification

 

Claims for
indemnification under this Article 8 shall be paid or otherwise
satisfied by Indemnifying Persons within thirty (30) days after notice thereof
is given by the Indemnified Person.

 

8.6                     AR
Holdback

 

At the end of
the AR Collection Period (a) to the extent there are 12/31 Balance Sheet AR
which have not been collected by the Surviving Corporation, then Parent shall (i) retain
that portion of the AR Holdback equal to (A) the amount of such 12/31
Balance Sheet AR that has not been collected, minus (B) the Allowed
Reserve (the “Uncollectible AR Amount”) and (ii) properly
and effectively transfer, convey and assign such uncollected 12/31 Balance
Sheet AR to the Company Shareholders, and (b) pay each Company
Shareholder, in accordance with Section 1.8(b), its Pro Rata
Percentage of any portion of the AR Holdback which Parent is not entitled to
retain pursuant to subparagraph (a) above, if any.  To the extent the Uncollectible AR Amount
exceeds the amount of the AR Holdback, Parent shall be entitled to pursue
indemnification to the extent provided in this Article 8.  Parent shall cause the Surviving Corporation
to use all reasonable efforts to collect all of the Company’s accounts
receivable and shall act with respect to such accounts receivable in a manner
consistent with the Company’s past practice. 
To the extent requested by the Shareholder Representative and subject to
the Shareholder Representative agreeing to reasonable confidentiality
restrictions and any other restrictions reasonably required by the Company’s
accountant with respect to its work papers, Parent shall cause the Surviving
Corporation to provide the Shareholder Representative with reasonable access to
the Surviving Corporation’s books and records to confirm the Uncollectible AR
Amount.

 

47

 

ARTICLE 9.                                TERMINATION
OF AGREEMENT

 

9.1                     TERMINATION

 

This Agreement
shall not be terminated, except in accordance with the provisions of this Article 9,
strictly construed against the party seeking such termination.  This Agreement may be terminated any time
prior to the Closing Date:

 

(a)           by mutual written
consent of the parties;

 

(b)           by either the Parent
or the Shareholder Representative, if, without fault of such terminating party,
the transactions contemplated by this Agreement shall not have been consummated
on or before February 29, 2008, unless such failure shall be due to a
material breach of any representation or warranty, or the nonfulfillment in a
material respect, and failure to cure such nonfulfillment, of any covenant or
agreement contained herein on the part of the party or parties seeking to
terminate; and

 

(c)           by Parent or the
Shareholder Representative if a Governmental Authority shall have issued a
nonappealable final order or taken any other action having the effect of permanently
restraining, enjoining or otherwise prohibiting the transactions contemplated
by this Agreement (provided that the right to terminate this Agreement under
this Section 9.1 shall not be available to any party who has not complied
with its obligations under this Agreement if such noncompliance materially
contributed to the issuance of any such order or the taking of such action).

 

9.2                     TERMINATION
BY PARENT

 

This Agreement
may be terminated by Parent, at any time prior to the Closing Date, if:

 

(a)           the Company, any of
its Subsidiaries or any of the Company Shareholders shall have failed to comply
with any of the covenants or agreements contained in this Agreement such that
the closing condition set forth in Section 6.2 would not be satisfied;
provided, however, that if such breach or breaches are capable of being cured
prior to the Closing Date, such breach or breaches shall not have been cured
within 15 days of delivery to the Company or the Company Shareholders of
written notice of such breach;

 

(b)           there exists a
breach of any representation or warranty of the Company, any of its
Subsidiaries or any of the Company Shareholders contained in this Agreement
such that the closing condition set forth in Section 6.1 would not be
satisfied; provided, however, that if such failure or failures are capable of
being cured prior to the Closing Date, such failure or failures shall not have
been cured within 15 days of delivery to the Company or the Company
Shareholders of written notice of such failure; or

 

48

 

(c)           the Company or the
Company Shareholders breaches Section 4.5 hereof.

 

9.3                     TERMINATION
BY THE COMPANY

 

This Agreement
may be terminated at any time prior to the Closing Date by action of the
Shareholder Representative, if:

 

(a)           Parent shall have
failed to comply with any of the covenants or agreements contained in this
Agreement such that the closing condition set forth in Section 7.2 would
not be satisfied; provided however, that if such failure or failures are
capable of being cured prior to the Closing Date, such failure or failures
shall not have been cured within 15 days of delivery to the Parent of written
notice of such failure; or

 

(b)           there exists a
breach or breaches of any representation or warranty of the Parent contained in
this Agreement such that the closing condition set forth in Section 7.1
would not be satisfied; provided however, that if such breach or breaches are
capable of being cured prior to the Closing Date, such breach or breaches shall
not have been cured within 15 days of delivery to the Parent of written notice
of such breach.

 

9.4                     PROCEDURE
FOR TERMINATION

 

In the event
of termination by the Parent or the Shareholder Representative pursuant to this
Article 9, written notice thereof shall forthwith be given to the
other party.

 

9.5                     EFFECT
OF TERMINATION

 

(a)           In the event of
termination of this Agreement in accordance with the provisions of this Article 9,
this Agreement shall forthwith become void and no party to this Agreement shall
have any liability or further obligation to any other party, except as provided
in the Confidentiality Agreement, this Section 9.5 and in Article 10
of this Agreement, which provisions shall survive such termination, and except
that nothing herein shall relieve any party from liability for any breach of
this Agreement.

 

(b)           In the event of
termination of this Agreement by Parent in accordance with Section 9.2(c),
the Company shall promptly (but in any event within two (2) business days
of such termination) pay to Parent, by wire transfer of immediately available
funds to such accounts as Parent may designate, the sum of $50,000.

 

9.6                     RIGHT
TO PROCEED

 

Anything in
this Agreement to the contrary notwithstanding, if any of the conditions
specified in Article 6 hereof have not been satisfied, Parent shall
have the right to waive the satisfaction of any such condition as provided in Article 6
and to proceed with the transactions 

 

49

 

contemplated hereby, however, it shall be deemed to have waived any
claim for indemnification arising out of any condition which has been so waived
and the underlying facts related thereto (including, without limitation, any
related breach of this Agreement).  If
any of the conditions specified in Article 7 hereof has not been
satisfied, the Shareholder Representative shall have the right to waive the
satisfaction of any such condition as provided in Article 7 and to
proceed with the transactions contemplated hereby, however, the Company and the
Company Shareholders shall be deemed to have waived any claim for
indemnification arising out of any condition which has been so waived and the
underlying facts related thereto (including, without limitation, any related
breach of this Agreement).

 

ARTICLE 10.                          MISCELLANEOUS.

 

10.1               Fees
and Expenses

 

Unless as
otherwise set forth herein, the Company Shareholders will pay their own and the
Company’s legal, accounting, financial advisory and any other expenses in
connection with the negotiation and the consummation of the transactions
contemplated by this Agreement.  The
Company Shareholders shall bear such expenses in such proportions as they may
agree.  No expenses of the Company
Shareholders or the Company to the extent relating to the Retained Liabilities
shall be included in any account of the Company as of the Closing or shall be
charged to or paid by Parent.  Parent
will pay its own legal, accounting, financial advisory and other expenses
incurred in connection with the negotiation and consummation of the
transactions contemplated by this Agreement. 
Notwithstanding the foregoing, if the Closing occurs, the Company (and
not the Company Shareholders) shall after the Closing be responsible for (a) the
cost of the audit of the Company’s June 30, 2007, financial statements and
(b) any other costs of the Company to the extent accrued in the Base
Balance Sheet (including, without limitation, $40,000 related to the
termination of the Employment Contract).

 

10.2               Notices

 

Any notice or
other communication in connection with this Agreement shall be deemed to be
delivered if in writing addressed as provided below and if either (a) actually
delivered electronically or physically at said address (provided that if said
address is a business, delivery is made during normal business hours), or (b) in
the case of a letter, three business days shall have elapsed after the same
shall have been deposited in the United States mail, postage prepaid and
registered or certified, return receipt requested, or (c) forty eight (48)
hours shall have elapsed after the same shall have been sent by nationally
recognized overnight receipted courier:

 

If to the
Company prior to the Closing, to:

 

Stephenson & Lawyer, Inc.

3831 Patterson Ave.

P.O. Box 8834

Grand Rapids, MI 49518

Attn:  Conrad Oswald

Telephone:  (616) 949-8100

Facsimile:   (616) 949-5175

 

50

 

with a copy
to:

 

Varnum, Riddering, Schmidt & Howlett LLP

Bridgewater Place 

333 Bridge Street, N.W.

P.O. Box 352

Grand Rapids, MI 49501-0352

Attn:  Peter G. Roth

Telephone:  (616) 336-6429

Facsimile:  (616) 336-7000

 

If to the
Company Shareholders, to:

 

c/o John Barrows

2106 N. Quail Crest Ct., S.E.

Grand Rapids, MI  49546

Telephone:  (616) 285-9910

 

with a copy
to:

 

Varnum, Riddering, Schmidt & Howlett LLP

Bridgewater Place 

333 Bridge Street, N.W.

P.O. Box 352

Grand Rapids, MI 49501-0352

Attn:  Peter G. Roth

Telephone:  (616) 336-6429

Facsimile:  (616) 336-7000

 

If to the
Parent or, after the Closing, the Company, to:

 

UFP Technologies, Inc.

172 East Main Street

Georgetown, MA  01833

Attn:  R. Jeffrey Bailly

Tel: (978) 352-2200

Fax:  (978) 352-5616

 

51

 

with a copy
to:

 

Brown Rudnick Berlack Israels LLP

One Financial Center

Boston, MA  02111

Attn:  Samuel P. Williams,
Esquire

Telephone:  (617) 856-8200

Facsimile:  (617) 852-8201

 

and in any
case at such other address as the addressee shall have specified by written
notice.  All periods of notice shall be
measured from the date of delivery thereof.

 

10.3               Confidentiality;
Public Announcements

 

Except as
required by law, no press releases or any public disclosure, either written or
oral, of the transactions contemplated by this Agreement shall be made without
the prior knowledge and written consent of both the Parent and the Shareholder
Representative.  If such a public notice
is required by law, the disclosing party will use its reasonable best efforts
to give the other prior written notice of the disclosure to be made; provided,
however, that Parent may disclose this Agreement and the transactions
contemplated hereby to third parties in connection with its financing
arrangements for the Merger, so long as such third parties are subject to
reasonable confidentiality restrictions. 
The Company, the Shareholder Representative and Parent will consult with
each other concerning the means by which the Company’s employees, customers and
suppliers and other Persons having dealings with the Company will be informed
of this Agreement, the Closing, and the other transactions contemplated hereby,
and representatives of Parent may at its option be present for any such
communication.  This provision shall
survive the Closing of the transactions contemplated hereby.

 

10.4               Entire
Agreement

 

This Agreement
(including all exhibits or schedules appended to this Agreement and all
documents delivered pursuant to or referred to in this Agreement, including
without limitation the Ancillary Agreements, all of which are hereby
incorporated herein by reference) constitutes the entire agreement between the
parties, and all promises, representations, understandings, warranties and
agreements with reference to the subject matter hereof and inducements to the
making of this Agreement relied upon by any party hereto, have been expressed
herein.  This Agreement supersedes,
replaces and terminates all prior written or verbal agreements and all
contemporaneous verbal agreements, including the letter of intent between the
parties dated November 13, 2007.

 

10.5               Severability

 

The invalidity
or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision hereof.

 

52

 

10.6               Assignability,
Successors and No Third Party Rights

 

Neither this
Agreement nor any right to the payment of money or other obligations hereunder
may be assigned by any party without the prior written consent of all of the
other parties.  This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. 
Except as expressly provided for in Section 5.3 hereof,
nothing expressed or referred to in this Agreement shall be construed to give
any Person other than the parties to this Agreement any legal or equitable
right, remedy or claim under or with respect to this Agreement or any provision
of this Agreement.

 

10.7               Amendment

 

This Agreement
may be amended, and provisions hereof may be waived, only by a written
agreement executed by Parent and the Company.

 

10.8               Governing
Law

 

This Agreement
will be governed by the internal laws of The Commonwealth of Massachusetts
without regard to principles of conflict of laws.

 

10.9               Jurisdiction;
Service Of Process

 

Any Proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement shall be brought exclusively in the courts of the State of Michigan
located in Kent county, Michigan, or the United States District Court located
in the Western District of Michigan, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such Proceeding and waives any objection to venue laid therein.

 

10.10         Counterparts

 

This Agreement
may be executed in multiple counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument, and all signatures need not appear on any one counterpart.

 

10.11   Effect of Table of
Contents and Headings

 

Any table of
contents, title of an article or section heading herein contained is for
convenience of reference only and shall not affect the meaning or construction
of any or the provisions hereof.

 

ARTICLE 11.                          DEFINITIONS

 

For purposes
of this Agreement, the following terms have the meanings specified or referred
to in this Section 11:

 

“Affiliate”
– as to any Person, any other Person which, directly
or indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, such 

 

53

 

Person.  As used in this
definition, “control” (including, with its correlative meanings, “controlling,”
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities,
by contract, or otherwise.

 

“Agreement”
- this Agreement, including the Schedules and Exhibits hereto.

 

“Ancillary
Agreements” - are the other agreements to be executed
and delivered pursuant to and in connection with this Agreement, and the
Confidentiality Agreement.

 

“Alternative
Acquisition” - is defined in Section 4.5.

 

“AR
Collection Period” - is defined as the period from the
Closing Date through the date which is one hundred fifty (150) days after the
Closing Date.

 

“AR
Holdback” - is defined as Two Hundred Fifty Thousand
Dollars ($250,000).

 

“Base
Balance Sheet” - is defined in Section 2.7(a).

 

“Base
Balance Sheet Date” – is defined in Section 2.7(a).

 

“Certificate”
- is defined in Section 1.7(c).

 

“Charter”
- is defined in Section 2.1.

 

“Closing”
- is defined in Section 1.3.

 

“Closing
Date” - is defined in Section 1.3.

 

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

 

“Company”
- is defined in the first paragraph of this Agreement.

 

“Company
Indemnified Parties” - is defined in Section 5.3(a).

 

“Company
Shareholders” - the holders of the Company Shares
listed on Exhibit A.

 

“Company
Shareholders Indemnified Persons” - is defined in Section 8.1.

 

“Company
Shares” - all of the issued and outstanding shares of
the Company’s capital stock, which includes the Company’s Class A and Class B
common stock, all of which is owned by the Company Shareholders.

 

“Confidentiality
Agreement” - the two Confidentiality and
Non-Disclosure Agreements between Parent and Company, dated May 30, 2007.

 

“Constituent Corporations” - Parent, Merger Sub and the
Company.

 

“Contract”
- is defined in Section 2.16(b).

 

54

 

“Copyrights”
- means all copyrights in both published works and unpublished works, including
training manuals, marketing and promotional materials, internal reports,
websites, business plans, mask works, software (both source and object code),
programs and related documentation, and videos and any other expressions,
whether registered or unregistered, and all registrations or applications in
connection therewith.

 

“Court
Orders” - is defined in Section 2.5.

 

“DGCL”
- the Delaware General Corporation Law, as amended.

 

“Effective
Time” - is defined in Section 1.4.

 

“Employment
Contract” - means that certain Employment Agreement,
dated September 23, 2005, between the Company and Mr. Conrad Oswald.

 

“Encumbrance”
- is defined in Section 2.6.

 

“Environmental
Claim” - any accusation, allegation, notice of
violation, action, claim, Encumbrance, demand, abatement or other Court Order
or direction (conditional or otherwise) by any Governmental Authority or any
Person for personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions resulting from or based upon (i) the existence,
or the continuation of the existence, of a Release (including, without
limitation, sudden or non-sudden accidental or non-accidental Releases) of, or
exposure to, any Hazardous Material or other substance, chemical, material,
pollutant, contaminant, odor, audible noise, or other Release in, into or onto
the environment (including, without limitation, the air soil, soil, surface
water or groundwater) at, in, by, from or related to the Facilities or any
activities conducted thereon; (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Materials in connection with the
operation of the Facilities; or (iii) the violation, or alleged violation,
of any Environmental Laws, Court Orders or Governmental Permits of or from any
Governmental Authority relating to environmental matters connected with the
Facilities.

 

“Environmental
Indemnity Claim” - is defined in Section 8.4(g).

 

“Environmental,
Health and Safety Liabilities” – any cost, damage,
expense, liability, obligation or other responsibility arising from or under
any Environmental Law or Occupational Safety and Health Law and consisting of
or relating to: (a) any environmental, health or safety matter or
condition (including on-site or off-site contamination, generation, handling
and disposal of Hazardous Materials, occupational safety and health, and
regulation of chemical and Hazardous Materials); (b) fines, penalties,
judgments, awards, settlements, legal or administrative proceedings, damages,
losses, litigation, including civil and criminal claims, demands and responses,
investigative, remedial, response or inspection costs and expenses arising
under Environmental Law or Occupational Safety and Health Law; (c) financial
responsibility under Environmental Law or Occupational Safety and Health Law
for cleanup costs or corrective action, including any investigation, cleanup,
removal, containment or other remediation or response actions required by
applicable Environmental Law or Occupational Safety and Health Law and for any
natural resource damages; or (d) any other compliance, 

 

55

 

corrective, investigative or remedial measures required under
Environmental Law or Occupational Safety and Health Law.  The terms “removal,” “remedial,” and “response
action,” include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. § 9601 et seq., as amended (“CERCLA”).

 

“Environmental
Law” – means Laws, Court Orders and Governmental
Authorizations concerning the environment, or activities that might threaten or
result in damage to the environment or human health, or any Laws, Court Orders
and Governmental Permits that are concerned, in whole or in part, with: (1) the
environment and with protecting or improving the quality of the environment and
human and employee health and safety issues; or (2) the management of
pollution or Hazardous Materials, (including, but not limited to, in the case
of the United States of America, the following federal laws: (a) CERCLA; (b) Resource
Conservation and Recovery Act (“RCRA”); (c) Clean Air Act; (d) Clean
Water Act; (e) Toxic Substances Control Act; (f) Emergency Planning
and Community Right-to-Know Act of 1986; (g) Hazardous Materials Transportation
Act; (h) Federal Water Pollution Control Act; (i) the Federal
Insecticide, Fungicide and Rodenticide Act (“FIFRA”), and (j) Occupational
Safety and Health Act (“OSHA”), as such laws have been amended or supplemented,
and the regulations promulgated pursuant thereto.

 

“ERISA”
- the Employee Retirement Income Security Act of 1974, as amended, or any
successor law.

 

“ERISA
Affiliate” - is defined in Section 2.18(a).

 

“ERISA
Benefit Plan” - is defined in Section 2.18(a).

 

“Facilities”
- any real property, leaseholds or other interests currently or formerly owned
or operated by the Company or any of its Subsidiaries and any buildings,
plants, structures or equipment (including motor vehicles) currently or
formerly owned or operated by the Company or any of its Subsidiaries.

 

“Financial
Statements” = is defined in Section 2.7(a).

 

“GAAP”
- United States generally accepted accounting principles, practices and
methods.

 

“General
Releases” - is defined in Section 1.9(c).

 

“Government
Authority” - is defined in Section 2.6.

 

“Governmental
Authorizations” - is defined in Section 2.5.

 

“Hazardous
Materials” - any substance, material or waste which is
regulated by Environmental Law, including, without limitation, any material or
substance which is defined as a “hazardous waste,” “hazardous material,” “hazardous
substance,” “extremely hazardous waste,” “restricted hazardous waste,” “subject
waste,” “contaminant,” “toxic waste” or “toxic substance” 

 

56

 

under any provision of Environmental Law, including but not limited to,
petroleum products, asbestos and polychlorinated biphenyls.

 

“Indemnification
Agreements” - is defined in Section 5.3(a).

 

“Indemnified Person” - is defined in Section 8.1.

 

“Indemnifying
Person” -
is defined in Section 8.1.

 

“Intellectual
Property” - is defined in Section 2.15.

 

“Key
Employees” - Mr. John Barrows, Mr. Con
Oswald, Mr. Larry Barrows and Mr. Mike Dale.

 

“Knowledge”
or “knowledge” - Except as specified otherwise in this Agreement, any reference to
the knowledge of any Person shall mean to the actual knowledge of such Person
after due inquiry and, with respect to the Company, means (i) the actual
knowledge after due inquiry of Mr. Con Oswald and Mr. Larry Barrows
and (ii) the actual knowledge of Mr. John Barrows and Mr. Mike
Dale.

 

“Law”
- is defined in Section 2.5.

 

“Life
Insurance Policies” - means the $1,000,000 life
insurance policy on the life of John W. Barrows (Guardian Policy No. 3570774)
and the $2,000,000 second-to-die life insurance policy on the lives of John W.
Barrows and Nancy L. Barrows (Guardian Policy No. 3539148).

 

“Losses”
- is defined in Section 8.1.

 

“Marks”
- means (whether registered or unregistered) all trademarks, service marks,
trade names, common law trademarks, business names, Internet domain names and
addresses, trade dress, slogans, and all registrations or applications
therefor, and the goodwill associated therewith.

 

“Material
Adverse Effect” - means any state of facts, change,
circumstance, condition or effect which, individually or in the aggregate, has
had or would reasonably be expected to have a material adverse effect on, or
cause a material adverse change in, the assets, liabilities, financial
condition, results of operations or business of the Company and each of its
Subsidiaries, taken as a whole, or on the ability of the Company to execute,
deliver and perform this Agreement, any Ancillary Agreements and the
transactions contemplated hereby and thereby, other than any such state of
facts, change, circumstance, condition or effect resulting from or arising in
connection with: (a) any change in general economic, capital or financial
markets; (b) war, act of terrorism, or similar event; (c) any change
generally affecting the industry in which the Company and its Subsidiaries
operate; (d) any change in any Law or accounting rule or standard;
and (e) any event, condition, circumstance or fact disclosed in the
Schedules hereto or in the Company Financial Statements; and (f) action
permitted or required by this Agreement or any fact, change, circumstance,
condition or effect proximately caused by the announcement or pendency of the
transactions contemplated by this Agreement; provided, however, that no 

 

57

 

exception enumerated in any of the immediately preceding clauses (a),
(b), (c) or (d) shall apply to the extent any such fact, change,
circumstance, condition or effect has a disproportionate effect on the Company
and its Subsidiaries, taken as a whole, relative to other comparable companies
in the industry in which the Company and its Subsidiaries operate.

 

“Material
Contracts” - is defined in Section 2.16(a).

 

“MBCA” - is the Michigan Business Corporation Act,
as amended.

 

“Merger”
- is defined in the Recitals of this Agreement.

 

“Merger
Consideration”
- is defined in Section 1.7(b).

 

“Merger
Sub” -
is defined in the first paragraph of this Agreement.

 

“Occupational
Safety and Health Law” - any legal or governmental
requirement or obligation relating to safe and healthful working conditions or
to reduce occupational safety and health hazards, and any program, whether
governmental or private (including those promulgated or sponsored by industry
associations and insurance companies issuing insurance policies to a party to
this Agreement), designed to provide safe and healthful working conditions.

 

“Organizational
Documents” - (a) the articles or certificate of
incorporation and the bylaws or code of regulations of a corporation; (b) the
partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of
limited partnership of a limited partnership; (d) the articles or
certificate of formation and operating agreement of a limited liability company;
(e) any charter, trust certificate or document or similar document adopted
or filed in connection with the creation, formation or organization of a
Person; and (e) any and all currently effective amendments to any of the
foregoing.

 

“Parent”
- is defined in the first paragraph of this Agreement.

 

“Parent’s
Indemnified Persons” - is defined in Section 8.1.

 

“Patents”
- means all patents, patent applications and inventions and discoveries that
may be patentable, including any patents issuing therefrom, and any reissues,
reexaminations, divisions, continuations in whole or in part, extensions and
foreign counterparts thereof.

 

“Permitted
Encumbrances” - is defined as (a) Encumbrances,
liens (statutory or otherwise), security interests, mortgages, pledges and
other similar matters for taxes and other governmental charges and assessments
which are not yet due and payable or are being contested in good faith by
appropriate proceedings; (b) Encumbrances, liens (statutory or otherwise),
security interests, mortgages, pledges and other similar matters of landlords
or of carriers, warehousemen, mechanics and materialmen and other like items
arising in the ordinary course of business for sums not yet due and payable; (c) with
respect to any real property, (i) applicable zoning Laws, building codes
and other land use Laws, (ii) easements, Encumbrances, restrictions and
other matters of record, (iii) easements, Encumbrances, restrictions and
other matters that would be shown by an accurate ALTA title insurance policy or
an accurate ALTA/ACSM survey, and (iv) rights of any landlords;; and (d) any
other Encumbrances, liens (statutory or 

 

58

 

otherwise), security interests, mortgages, pledges and other similar
matters which are insignificant in amount or that do not significantly detract
from the value of or significantly impair or interfere with the existing use of
the property affected by such.

 

“Person”
- any individual, corporation (including any non-profit corporation), general
or limited partnership, limited liability company, joint venture, estate,
trust, association, organization, labor union or other entity or governmental
body or Governmental Authority.

 

“Personal
Property” - is defined in Section 2.12(b).

 

“Pro Rata
Percentage” - is defined with respect to each Company
Shareholder as the percentage set forth next to such Company Shareholder’s name
on Exhibit A, and indicates such Company Shareholder’s percentage
ownership of the Company Shares.

 

“Proceeding”
- any pending claim, action, formal or informal investigation, arbitration,
litigation or other judicial, regulatory or administrative proceeding.

 

“Property”
- as defined in Section 2.12(a).

 

“Release”
- any release, spill, effluent, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, or migration into the indoor or
outdoor environment of any Hazardous Material through or in the air, soil,
surface water or groundwater.

 

“Retained
Liabilities” - means any and all claims, liabilities,
obligations and Encumbrances (a) relating to the Life Insurance Policies
and (b) in excess of $40,000 (which is the amount accrued in the Base
Balance Sheet with respect to the Employment Contract and is not a Retained
Liability) relating to the Employment Contract, all of each of which shall be
retained by the Company Shareholders.

 

“Securities
Act” - the Securities Act of 1933, as amended, or any
successor law.

 

“Shareholder
Representative” - as defined in Section 1.11.

 

“Site”
- is defined in Section 2.19(a).

 

“Subsidiary”
- with respect to any Person, any corporation, joint venture, limited liability
company, partnership, association or other business entity of which more than
50% of the total voting power of stock or other equity entitled to vote generally
in the election of directors or managers or equivalent persons thereof is owned
or controlled, directly or indirectly, by such Person.

 

“Surviving
Corporation” - is defined in Section 1.12.

 

“Tax
Returns” - is defined in Section 2.11(a).

 

“Taxes”
- is defined in Section 2.11(a).

 

“Third
Party Action” - is defined in Section 8.1.

 

59

 

“Trade
Secrets” - means all trade secrets, know-how,
confidential information, customer lists, technical information, proprietary
information, technologies, processes and formulae, source code, algorithms,
architecture, structure, display screens and development tools, data, plans,
drawings and blue prints, whether tangible or intangible and whether stored,
compiled, or memorialized physically, electronically, photographically, or
otherwise.

 

“Treasury
Shares” - is defined in Section 1.7(d).

 

 

[remainder of page intentionally
blank; signature page follows]

 

60

 

IN WITNESS
WHEREOF, the parties hereto have executed this Agreement or caused this
Agreement to be executed by their duly authorized representatives in multiple
counterparts as of the date set forth above.

 

 

	
   

  	
  PARENT:

  
	
   

  	
   

  
	
   

  	
  UFP TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ R. Jeffrey Bailly

  	
   

  
	
   

  	
  Name:

  	
  R. Jeffrey Bailly

  	
   

  
	
   

  	
  Title:

  	
  President & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MERGER SUB:

  
	
   

  	
   

  
	
   

  	
  S&L ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ R. Jeffrey Bailly

  	
   

  
	
   

  	
  Name:

  	
  R. Jeffrey Bailly

  	
   

  
	
   

  	
  Title:

  	
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  STEPHENSON & LAWYER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Conrad S. Oswald

  	
   

  
	
   

  	
  Name:

  	
  Conrad S. Oswald

  	
   

  
	
   

  	
  Title:

  	
  President & CEO

  	
   

  
							

 

61

 

	
  List of Schedules

  
	
   

  	
   

  
	
  Schedule 2.1(a):

  	
   Organization and Qualification

  
	
   

  	
   

  
	
  Schedule 2.2:

  	
   Capitalization

  
	
   

  	
   

  
	
  Schedule 2.3:

  	
   Organization and Qualification
  of Subsidiaries

  
	
   

  	
   

  
	
  Schedule 2.5:

  	
   Compliance with Obligations
  and Laws

  
	
   

  	
   

  
	
  Schedule 2.6:

  	
   Conflicts

  
	
   

  	
   

  
	
  Schedule 2.7:

  	
   Financial Statements

  
	
   

  	
   

  
	
  Schedule 2.8:

  	
   Absence of Undisclosed
  Indebtedness

  
	
   

  	
   

  
	
  Schedule 2.9:

  	
   Absence of Certain Changes

  
	
   

  	
   

  
	
  Schedule 2.11:

  	
   Taxes

  
	
   

  	
   

  
	
  Schedule 2.12:

  	
   Real and Personal Property

  
	
   

  	
   

  
	
  Schedule 2.13:

  	
   Accounts Receivable

  
	
   

  	
   

  
	
  Schedule 2.15:

  	
   Intellectual Property

  
	
   

  	
   

  
	
  Schedule 2.16:

  	
   Contracts and Commitments

  
	
   

  	
   

  
	
  Schedule 2.17:

  	
   Labor and Employee Relations

  
	
   

  	
   

  
	
  Schedule 2.18:

  	
   ERISA and Employee Benefits

  
	
   

  	
   

  
	
  Schedule 2.19:

  	
   Environmental Matters

  
	
   

  	
   

  
	
  Schedule 2.20:

  	
   Governmental Authorizations

  
	
   

  	
   

  
	
  Schedule 2.21:

  	
   Warranty and Other Claims

  
	
   

  	
   

  
	
  Schedule 2.22:

  	
   Litigation

  
	
   

  	
   

  
	
  Schedule 2.23:

  	
   Insurance

  
	
   

  	
   

  
	
  Schedule 2.25:

  	
   Transactions with Interested
  Persons

  
	
   

  	
   

  
	
  Schedule 4.2:

  	
   Conduct of Business

  
	
   

  	
   

  
	
  Schedule 5.3:

  	
   Officer and Director
  Indemnification

  

 

62

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