Document:

KBH - 02.28.2014 - Exhibit - 10.48

EXHIBIT 10.48 

KB HOME

2014 EQUITY INCENTIVE PLAN

Effective April 3, 2014

TABLE OF CONTENTS

 

	
						
	 
	 
	 
	 
	 
	Page

	ARTICLE 1.
	 
	 
	PURPOSE...............................................................................
	 
	1

	ARTICLE 2.
	 
	 
	DEFINITIONS AND CONSTRUCTION...............................
	 
	1

	ARTICLE 3.
	 
	 
	SHARES SUBJECT TO THE PLAN.....................................
	 
	8

	3.1
	 
	Number of Shares..........................................................................
	 
	8

	3.2
	 
	Stock Distributed...........................................................................
	 
	9

	ARTICLE 4.
	 
	 
	GRANTING OF AWARDS....................................................
	 
	9

	4.1
	 
	Participation...................................................................................
	 
	9

	4.2
	 
	Award Agreement..........................................................................
	 
	9

	4.3
	 
	Programs........................................................................................
	 
	9

	4.4
	 
	Limitations Applicable to Section 16 Persons...............................
	 
	9

	4.5
	 
	Fiscal Year Award Limit.................................................................
	 
	9

	4.6
	 
	At-Will Employment......................................................................
	 
	10

	4.7
	 
	Stand-Alone and Tandem Awards..................................................
	 
	10

	ARTICLE 5.
	 
	 
	PERFORMANCE-BASED COMPENSATION.....................
	 
	10

	5.1
	 
	Purpose...........................................................................................
	 
	10

	5.2
	 
	Applicability...................................................................................
	 
	10

	5.3
	 
	Types of Awards.............................................................................
	 
	11

	5.4
	 
	Procedures with Respect to Performance-Based Awards..............
	 
	11

	5.5
	 
	Payment of Performance-Based Awards........................................
	 
	11

	5.6
	 
	Additional Limitations...................................................................
	 
	11

	ARTICLE 6.
	 
	 
	GRANTING OF OPTIONS....................................................
	 
	11

	6.1
	 
	Granting of Options to Eligible Individuals..................................
	 
	11

	6.2
	 
	Qualification of Incentive Stock Options......................................
	 
	12

	6.3
	 
	Option Exercise Price....................................................................
	 
	12

	6.4
	 
	Option Term...................................................................................
	 
	12

	6.5
	 
	Option Vesting...............................................................................
	 
	12

	6.6
	 
	Substitute Awards...........................................................................
	 
	13

	6.7
	 
	Substitution of Stock Appreciation Rights.....................................
	 
	13

	ARTICLE 7.
	 
	 
	EXERCISE OF OPTIONS......................................................
	 
	13

	7.1
	 
	Partial Exercise..............................................................................
	 
	13

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TABLE OF CONTENTS
(continued)

	
						
	 
	 
	 
	 
	 
	Page

	7.2
	 
	Manner of Exercise........................................................................
	 
	13

	7.3
	 
	Notification Regarding Disposition...............................................
	 
	14

	ARTICLE 8.
	 
	 
	AWARD OF RESTRICTED STOCK.....................................
	 
	14

	8.1
	 
	Award of Restricted Stock.............................................................
	 
	14

	8.2
	 
	Rights as Stockholders...................................................................
	 
	14

	8.3
	 
	Restrictions....................................................................................
	 
	14

	8.4
	 
	Repurchase or Forfeiture of Restricted Stock................................
	 
	15

	8.5
	 
	Certificates for Restricted Stock....................................................
	 
	15

	8.6
	 
	Section 83(b) Election....................................................................
	 
	15

	ARTICLE 9.
	 
	 
	AWARD OF PERFORMANCE AWARDS, STOCK PAYMENTS AND RESTRICTED STOCK UNITS...............
	 
	15

	9.1
	 
	Performance Awards......................................................................
	 
	15

	9.2
	 
	Stock Payments..............................................................................
	 
	16

	9.3
	 
	Restricted Stock Units....................................................................
	 
	16

	9.4
	 
	Term...............................................................................................
	 
	16

	9.5
	 
	Exercise or Purchase Price.............................................................
	 
	16

	9.6
	 
	Dividend Equivalents.....................................................................
	 
	16

	ARTICLE 10.
	 
	 
	AWARD OF STOCK APPRECIATION RIGHTS..................
	 
	17

	10.1
	 
	Grant of Stock Appreciation Rights...............................................
	 
	17

	10.2
	 
	Stock Appreciation Right Term......................................................
	 
	17

	10.3
	 
	Stock Appreciation Right Vesting..................................................
	 
	18

	10.4
	 
	Manner of Exercise........................................................................
	 
	18

	10.5
	 
	Payment..........................................................................................
	 
	18

	ARTICLE 11.
	 
	 
	ADDITIONAL TERMS OF AWARDS..................................
	 
	18

	11.1
	 
	Payment..........................................................................................
	 
	18

	11.2
	 
	Tax Withholding.............................................................................
	 
	19

	11.3
	 
	Transferability of Awards...............................................................
	 
	19

	11.4
	 
	Conditions to Issuance of Shares...................................................
	 
	20

	11.5
	 
	Forfeiture Provisions......................................................................
	 
	21

	11.6
	 
	Prohibition on Repricing................................................................
	 
	21

	11.7
	 
	Permitted Replacement Awards.....................................................
	 
	21

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TABLE OF CONTENTS
(continued)

	
						
	 
	 
	 
	 
	 
	Page

	ARTICLE 12.
	 
	 
	ADMINISTRATION...............................................................
	 
	22

	12.1
	 
	Committee......................................................................................
	 
	22

	12.2
	 
	Duties and Powers of Committee..................................................
	 
	22

	12.3
	 
	Action by the Committee...............................................................
	 
	22

	12.4
	 
	Authority of Committee.................................................................
	 
	23

	12.5
	 
	Decisions Binding..........................................................................
	 
	23

	12.6
	 
	Delegation of Authority..................................................................
	 
	23

	ARTICLE 13.
	 
	 
	MISCELLANEOUS PROVISIONS.......................................
	 
	24

	13.1
	 
	Amendment, Suspension or Termination of the Plan....................
	 
	24

	13.2
	 
	Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.............................................................................................
	 
	24

	13.3
	 
	No Stockholder Rights...................................................................
	 
	27

	13.4
	 
	Paperless Administration...............................................................
	 
	27

	13.5
	 
	Effect of Plan upon Other Compensation Plans............................
	 
	27

	13.6
	 
	Compliance with Laws..................................................................
	 
	27

	13.7
	 
	Titles and Headings, References to Sections of the Code, the Securities Act or Exchange Act......................................................
	 
	27

	13.8
	 
	Governing Law...............................................................................
	 
	28

	13.9
	 
	Section 409A..................................................................................
	 
	28

	13.10
	 
	No Rights to Awards......................................................................
	 
	29

	13.11
	 
	Unfunded Status of Awards............................................................
	 
	29

	13.12
	 
	Indemnification..............................................................................
	 
	29

	13.13
	 
	Term...............................................................................................
	 
	29

 

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KB HOME
2014 EQUITY INCENTIVE PLAN

ARTICLE 1.
PURPOSE
The purpose of the KB Home 2014 Equity Incentive Plan (the “Plan”) is to attract, motivate and retain the services of Employees, Non-Employee Directors and Consultants by enabling them to participate in the growth and financial success of KB Home (the “Company”) and to align their individual interests to those of the Company’s stockholders.
ARTICLE 2.
DEFINITIONS AND CONSTRUCTION
Wherever the following terms are used in the Plan they shall have the meanings specified below:
1.    “Affiliate” shall mean a person or entity that directly or indirectly controls or is controlled by, or is under common control with, the Company.
2.    “Award” shall mean, as the case may be, a grant under the Plan of Options, Restricted Stock, Restricted Stock Units, Performance Awards, Stock Payments or Stock Appreciation Rights.
3.    “Award Agreement” shall mean any written notice, terms and conditions, contract or other instrument or document evidencing an Award, including in electronic form, which shall contain any terms and conditions with respect to the Award as the Committee shall determine consistent with the Plan and any applicable Program.
4.    “Award Limit” shall mean with respect to Awards payable in Shares or in cash, as the case may be, the respective limit set forth in Section 4.5.
5.    “Board” shall mean the Board of Directors of the Company.
6.    A “Change of Ownership” shall be deemed to have occurred if any of the following has occurred: (a) any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company, as determined in accordance with Section 1.409A-3(i)(5)(v) of the Treasury Regulations; provided, that if a person or group is considered either to own more than 50% of the total fair market value or total voting power of the stock of the Company, or to own more than the market value or total voting power specified in (b) below, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “Change of Ownership”; (b) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) ownership of stock of the Company possessing 30% or more of the total voting power of the stock of the Company, as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury Regulations; provided, 

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that if a person or group is considered to possess 30% or more of the total voting power of the stock of the Company, and such person or group acquires additional stock of the Company, the acquisition of additional stock by such person or group shall not be considered to cause a “Change of Ownership”; (c) a majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of the appointment or election, as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury Regulations; (d) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all of the assets of the Company immediately before such acquisition or acquisitions, as determined in accordance with Section 1.409A-3(i)(5)(vii) of the Treasury Regulations; provided, that a transfer of assets shall not be treated as a “Change of Ownership” when such transfer is made to an entity that is controlled by the stockholders of the Company, as determined in accordance with Section 1.409A-3(i)(5)(vii)(B) of the Treasury Regulations; or (e) the Company’s stockholders approve a liquidation or dissolution of the Company.
7.    “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the Treasury Regulations and official guidance promulgated by the U.S. Department of Treasury.
8.    “Committee” shall mean the Management Development and Compensation Committee of the Board or another committee of the Board designated by the Board that consists solely of Directors meeting the qualifications described in Section 12.1. 
9.    “Common Stock” shall mean the common stock of the Company, par value $1.00 per share.
10.    “Company Stock Administrator” shall mean the stock administrator of the Company, or such other person or entity designated by the Committee, or his, her or its office, as applicable, whether or not employed by the Company.
11.    “Consultant” shall mean any consultant or advisor engaged to provide services to the Company or any Affiliate that qualifies as a consultant or advisor under the instructions for use of a Form S-8 Registration Statement.
12.    “Covered Employee” shall mean any Employee who is, or who the Committee believes may become, a “covered employee” within the meaning of Section 162(m) of the Code.
13.    “Director” shall mean a member of the Board.
14.    “Effective Date” shall mean the date the Plan is first approved by the Company’s stockholders in accordance with the requirements of the Company’s by-laws, the applicable Securities Exchange and Sections 162(m) and 422 of the Code.
15.    “Eligible Individual” shall mean any person who is an Employee, a Consultant or a Non-Employee Director, as determined by the Committee or the Board.

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16.    “Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code) of the Company or of any Affiliate.
17.    “Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the Company) or the Share price (or the price of other securities), and results upon its implementation in a change in the per-Share value of the Shares underlying outstanding Awards.
18.    “Exchange Act” shall mean the Securities Exchange Act of 1934.
19.    “Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:
(1)    If the Common Stock is listed on any Securities Exchange, its Fair Market Value shall be the closing sales price for a Share as quoted on such Securities Exchange for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported by The Wall Street Journal or such other source (whether in print or electronic) as the Committee deems reliable;
(2)    If the Common Stock is not listed on any Securities Exchange, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported by The Wall Street Journal or such other source (whether in print or electronic) as the Committee deems reliable; or
(3)    If the Common Stock is neither listed on any Securities Exchange nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Committee in good faith.
20.    “Full Value Award” shall mean any Award other than (i) an Option, (ii) a Stock Appreciation Right or (iii) any other Award for which the Holder must pay the intrinsic value existing as of the date of grant (whether directly or by forgoing a right to receive a payment from the Company or any Affiliate) as a condition to exercising or receiving payment under it.
21.    “Greater Than 10% Stockholder” shall mean an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation (as defined in Section 424(f) of the Code) or parent corporation (as defined in Section 424(e) of the Code) thereof.
22.    “Holder” shall mean a person who has been granted an Award.
23.    “Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.

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24.    “Non-Employee Director” shall mean a Director of the Company who is not an Employee.
25.    “Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option.
26.    “Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 6. An Option shall be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Non-Employee Directors and Consultants shall only be Non-Qualified Stock Options.
27.    “Performance Award” shall mean a cash bonus award, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 9.1.
28.    “Performance-Based Compensation” shall mean any compensation that is intended to qualify as “performance-based compensation” as described in Section 162(m)(4)(C) of the Code.
29.    “Performance Criteria” shall mean the criteria that the Committee selects for an Award for purposes of establishing the Performance Goal or Performance Goals for a Performance Period.  The Performance Criteria that shall be used to establish Performance Goals are limited to the following: (i)  income/loss (e.g., operating income/loss, EBIT or similar measures, net income/loss, earnings/loss per share, residual or economic earnings), (ii) cash flow (e.g., operating cash flow, total cash flow, EBITDA, cash flow in excess of cost of capital or residual cash flow, cash flow return on investment and cash flow sufficient to achieve financial ratios or a specified cash balance), (iii) returns (e.g., on revenues, investments, assets, capital or equity), (iv) working capital (e.g., working capital divided by revenues), (v) margins (e.g., variable margin, profits divided by revenues, gross margins or margins divided by revenues), (vi) liquidity (e.g., total or net debt, debt reduction, debt-to-capital, debt-to-EBITDA and other liquidity ratios), (vii) revenues, cost initiative and stock price metrics (e.g., revenues, stock price, total stockholder return, expenses, cost structure improvements and costs divided by revenues or other metrics); provided that any of the foregoing in (i) through (vii) may be calculated, or described on a GAAP or non-GAAP basis; and (viii) strategic metrics (e.g., market share, customer satisfaction, employee satisfaction /turnover/development, service quality, unit volume, orders, backlog, traffic, homes delivered, cancellation rates, productivity, operating efficiency, inventory management, community count, goals related to acquisitions, divestitures or other transactions and goals related to KBnxt operational business model principles, including goals based on a per-employee, per-home delivered or other basis).  
30.    “Performance Goals” shall mean, for a Performance Period, one or more goals established in writing by the Committee for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance, either independently or as compared to one or more companies, performance of specific subsidiaries or business units, either independently or as compared to one or more companies’ subsidiaries or business units, or otherwise as determined by the Committee.  If the Committee 

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believes, in its sole discretion, that an equitable adjustment to any Performance Goal is advisable in light of new developments or circumstances, the Committee may provide for one or more objectively determinable adjustments. Such adjustments may include or arise from one or more of the following: (i) items related to a change in accounting principle; (ii) items relating to financing or capital market activities; (iii) expenses for restructuring or productivity initiatives; (iv) other non-operating items; (v) items related to acquisitions; (vi) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (vii) items related to the disposal of a business or segment of a business; (viii) items related to discontinued operations that do not qualify as a segment of a business under applicable accounting standards; (ix) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; (x) any other items of significant income or expense which are determined to be appropriate adjustments; (xi) items relating to unusual or extraordinary corporate transactions, events or developments, (xii) items related to amortization of acquired intangible assets; (xiii) items that are outside the scope of the Company’s core, on-going business activities; (xiv) items related to acquired in-process research and development; (xv) items relating to changes in tax laws; (xvi) items relating to major licensing or partnership arrangements; (xvii) items relating to asset impairment charges; (xviii) items relating to gains or losses for litigation, arbitration and contractual settlements; or (xix) items relating to any other unusual or nonrecurring events or changes in applicable laws or business conditions.  For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.
31.    “Performance Period” shall mean one or more periods of time, which may be of varying and overlapping durations, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Holder’s right to, and the payment of, a Performance Award.
32.    “Permitted Transferee” shall mean, with respect to a Holder, any person entitled to use a Form S-8 Registration Statement to exercise Awards originally granted to the Holder and to sell Shares issued pursuant to Awards originally granted to the Holder.
33.    “Program” shall mean any program adopted by the Committee pursuant to the Plan containing terms and conditions intended to govern one or more specific types of Awards and/or the manner in which they may be granted.
34.    “QDRO” shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the regulations or official guidance promulgated thereunder.
35.    “Restricted Stock” shall mean Shares awarded under Article 8 that are subject to certain restrictions and may be subject to risk of forfeiture or repurchase.
36.    “Restricted Stock Units” shall mean the right to receive Shares or the value of Shares awarded under Section 9.3.

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37.    “Retirement” shall mean an Employee’s severance from employment with the Company and its Affiliates for any reason other than a leave of absence, termination for cause, death or disability, at such time as the Employee’s age and years of service with the Company and its Affiliates equals at least 65 or more, provided that the Employee is then at least 55 years of age.  The Company shall have the sole right to determine whether an Employee’s severance from employment constitutes a Retirement.
38.    “Securities Act” shall mean the Securities Act of 1933.
39.    “Securities Exchange” shall mean the New York Stock Exchange or any other securities exchange, national market system or automated quotation system on which the Shares are listed, quoted or traded.
40.    “Shares” shall mean shares of Common Stock.
41.    “Stock Appreciation Right” shall mean a stock appreciation right as described and granted under Article 10.
42.    “Stock Payment” shall mean (a) a payment in the form of Shares or (b) a right to purchase Shares, however denominated or described, as part of a bonus, deferred compensation or other arrangement, in any such case awarded under Section 9.2.
43.    “Substitute Award” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.
44.    “Termination of Service” shall mean,
(1)    As to a Consultant, the time when the engagement of a Holder as a Consultant to the Company or an Affiliate is terminated for any reason, with or without cause, including, without limitation, by resignation, discharge, death or retirement, but excluding terminations where the Consultant simultaneously commences or remains in employment or service with the Company or any Affiliate.
(2)    As to a Non-Employee Director, the time when a Holder who is a Non-Employee Director ceases to be a Director for any reason, with or without cause, including, without limitation, a termination by resignation, failure to be elected, death or retirement, but excluding terminations where the Holder simultaneously commences employment or service with the Company or any Affiliate.
(3)    As to an Employee, the time when the employee-employer relationship between a Holder and the Company or any Affiliate is terminated for any reason, with or without cause, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate.

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The Committee, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations of Service, including, without limitation, the question of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service; provided, however, that, with respect to Incentive Stock Options, unless the Committee otherwise provides in the terms of the Program, Award Agreement or otherwise, a leave of absence, change in status from an employee to an independent contractor or other change in the employee-employer relationship shall constitute a Termination of Service only if and to the extent that any such event interrupts employment for the purposes of Section 422(a)(2) of the Code.  For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relationship shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).  
Notwithstanding the foregoing, with respect to any Award that constitutes “deferred compensation” subject to the requirements of Section 409A of the Code, a Termination of Service shall be deemed to have occurred upon a “separation from service” within the meaning of Section 409A of the Code, as determined in accordance with Section 1.409A-1(h) of the Treasury Regulations; provided that (i) for a Holder who provides services to the Company as an Employee, a separation from service shall be deemed to occur when the Holder has experienced a termination of employment with the Company and the facts and circumstances indicate that the Holder and the Company reasonably anticipate that either (A) no further services will be performed by the Holder for the Company after a certain date or (B) the level of bona fide services the Holder will perform for the Company after a certain date (whether as an Employee or as an independent contractor) will permanently decrease to no more than 20% of the average level of bona fide services performed by the Holder (whether as an Employee or an independent contractor) over the immediately preceding 36-month period (or the full period of services performed for the Company if the Holder has been performing services for less than 36 months); and (ii) for a Holder who provides services to the Company as an independent contractor, a separation from service shall be deemed to occur upon expiration or termination of all contracts under which services are performed by the Holder for the Company, provided that such expiration or termination constitutes a good-faith and complete severing of the contractual relationship between the Holder and the Company, and provided, further, that for a Holder who provides services to the Company as both an Employee and an independent contractor, a separation from service shall generally not occur until the Holder has ceased providing services for the Company as both an Employee and an independent contractor pursuant to clauses (i) and (ii) of this sentence.  For purposes of determining whether a separation from service has occurred, services performed for the Company shall include services performed both for the Company and for any other corporation that is a member of the same “controlled group” as the Company under Section 414(b) of the Code or any other trade or business (such as a partnership) that is under common control with the Company as determined under Section 414(c) of the Code, in each case as modified by Section 1.409A-1(h)(3) of the Treasury Regulations and substituting “at least 50 percent” for “at least 80 percent” each place it appears in Section 1563(a) of the Code or Section 1.414(c)-2 of the Treasury Regulations.

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45.    “Treasury Regulations” shall mean the final, temporary and proposed regulations promulgated by the U.S. Department of the Treasury under the Code, as such regulations may be amended from time to time.
ARTICLE 3
SHARES SUBJECT TO THE PLAN
3.1    Number of Shares.
(a)    Subject to adjustment as provided in Section 3.1(b) and Section 13.2, the aggregate number of Shares which may be authorized for grant under the Plan is the sum of (i) Four Million Eight Hundred Thousand (4,800,000) Shares and (ii) any Shares which as of the Effective Date are available for grant under the Company’s 2010 Equity Incentive Plan, and (iii) any Shares which are, as of the Effective Date, subject to awards under the Company’s 2010 Equity Incentive Plan and which subsequently expire or are canceled, forfeited, tendered or withheld to satisfy tax withholding obligations in respect of full value awards or settled for cash. Any Share that is subject to an Award that could be settled with Shares and is not a Full Value Award shall be deducted from this limit at the ratio of one (1) Share for every one (1) Share subject to the Award.  Any Share that is subject to a Full Value Award that could be settled with Shares shall be deducted from this limit at the ratio of 1.78 Shares for every one (1) Share subject to the Award. After the Effective Date, no new awards may be granted under the 2010 Equity Incentive Plan, but any awards under the 2010 Equity Incentive Plan that are outstanding as of the Effective Date shall continue to be subject to the terms and conditions of the 2010 Equity Incentive Plan.  
(b)    If an Award expires or is canceled, forfeited or settled for cash (in whole or in part), the Shares subject to such Award shall, to the extent of such expiration, cancellation, forfeiture or cash settlement, again be available as Shares authorized for grant under the Plan, in accordance with Section 3.1(d) below.  Shares tendered by a Holder or withheld by the Company to satisfy any tax withholding obligation with respect to a Full Value Award shall again be available as Shares authorized for grant under the Plan in accordance with Section 3.1(d) below.  Notwithstanding anything to the contrary contained herein, Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Award or to satisfy any tax withholding obligation with respect to an Award that is not a Full Value Award shall not be available as Shares authorized for grant under the Plan. 
(c)    To the extent permitted by applicable law or the requirements of the Securities Exchange, Substitute Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on grants to a Participant under Section 4.5, nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided in paragraph (b) above. Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used 

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for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided, that Awards using such available shares shall not be made after the date awards could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.
(d)    Each Share that again becomes available for grant pursuant to this Section 3.1 shall be added back as (i) one (1) Share if such Share was subject to an Award other than a Full Value Award, and (ii) as 1.78 Share if such Share was subject to a Full Value Award.  
3.2    Stock Distributed.  Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market.
ARTICLE 4.
GRANTING OF AWARDS
4.1    Participation.  The Committee may, from time to time, select from among all Eligible Individuals, those to whom an Award shall be granted.
4.2    Award Agreement.  Each Award shall be evidenced by an Award Agreement. Award Agreements shall contain such terms and conditions as may be determined by the Committee that are not inconsistent with the Plan, including any terms and conditions that are necessary for Awards to comply with, or be exempt from, the requirements of Section 409A of the Code.  Award Agreements evidencing Awards intended to qualify as Performance-Based Compensation shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.
4.3    Programs.  The Board or the Committee may from time to time establish Programs pursuant to the Plan. An Award Agreement evidencing an Award granted pursuant to any Program shall comply with the terms and conditions of such Program and the Plan.  
4.4    Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan, the Plan, any Award granted to any individual who is then subject to Section 16 of the Exchange Act, and any applicable Program, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule. To the extent permitted by applicable law, the Plan and each Program and Award shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
4.5    Fiscal Year Award Limit.  Notwithstanding any provision in the Plan to the contrary, and subject to Section 13.2 and the terms of this Section 4.5 with respect to a Non-Employee Director, the maximum aggregate number of Shares with respect to one or more Awards that may be granted to any one person during any fiscal year of the Company shall be One Million (1,000,000) and the maximum aggregate amount of cash that may be paid to any 

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one person during any fiscal year of the Company with respect to one or more Performance Awards payable in cash shall be Ten Million Dollars ($10,000,000); provided, however, that any Award granted pursuant to Section 11.7 shall not count against such fiscal year limits.  To the extent required by Section 162(m) of the Code, Shares subject to Awards that are canceled shall continue to be counted against the Award Limit specified in the preceding sentence.  Notwithstanding any provision in the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Awards granted to any Non-Employee Director during any fiscal year of the Company shall not exceed One Million Dollars ($1,000,000); provided, however, that any Award granted pursuant to Section 11.7, any cash retainer or meeting fee paid or provided for service on the Board or any committee thereof, or any Award granted in lieu of any such cash retainer or meeting fee shall not count against such fiscal year limit.  
4.6    At-Will Employment.  Nothing in the Plan, any Program or any Award Agreement shall confer upon any Holder any right to be employed by or to serve as a Director or Consultant for the Company or any Affiliate, or to continue in such employment or service, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment or engagement, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate.
4.7    Stand-Alone and Tandem Awards.  Awards granted pursuant to the Plan may, in the sole discretion of the Committee, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan. Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or (subject to the requirements of Section 409A of the Code) at a different time from the grant of such other Awards.
ARTICLE 5.
PERFORMANCE-BASED COMPENSATION
5.1    Purpose.  The Committee, in its sole discretion, may determine at the time an Award is granted whether such Award is intended to qualify as Performance-Based Compensation. If the Committee, in its sole discretion, decides to grant such an Award to an Eligible Individual that is intended to qualify as Performance-Based Compensation, then the provisions of this Article 5 shall control over any contrary provision contained in the Plan.  The Committee may in its sole discretion grant Awards to other Eligible Individuals that are based on Performance Criteria or Performance Goals but that do not satisfy the requirements of this Article 5 and that are not intended to qualify as Performance-Based Compensation.
5.2    Applicability.  The grant of an Award to an Eligible Individual for a particular Performance Period shall not require the grant of an Award to such Eligible Individual in any subsequent Performance Period (or entitle such Eligible Individual to any such grant) and the grant of an Award to any one Eligible Individual shall not require the grant of an Award to any other Eligible Individual in such period or in any other period (or entitle any such other Eligible Individual to any such grant).

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5.3    Types of Awards.  Notwithstanding anything in the Plan to the contrary, the Committee may grant any Award to a Covered Employee in a manner intended to qualify as Performance-Based Compensation, including, without limitation, Restricted Stock for which the restrictions lapse upon the attainment of specified Performance Goals, and any Performance Awards described in Article 9 that vest or become exercisable or payable upon the attainment of one or more specified Performance Goals.
5.4    Procedures with Respect to Performance-Based Awards.  To the extent necessary to comply with the requirements of Section 162(m)(4)(C) of the Code, with respect to any Award granted to one or more Covered Employees and that is intended to qualify as Performance-Based Compensation, no later than 90 days following the commencement of any Performance Period (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing, (a) designate one or more Eligible Individuals, (b) select the Performance Criteria applicable to the Performance Period, (c) establish objective Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period based on the Performance Criteria, and (d) specify an objective relationship between the Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period. Following the completion of each Performance Period, the Committee shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned or payable under such Awards, to the extent provided under any applicable Program or Award Agreement, the Committee shall have the right to reduce or eliminate (but not to increase) the amount earned or payable at a given level of performance to take into account additional factors that the Committee may deem relevant, including, without limitation, the assessment of individual or Company performance for the Performance Period.
5.5    Payment of Performance-Based Awards.  Unless otherwise provided in the applicable Program or Award Agreement, as to an Award that is intended to qualify as Performance-Based Compensation, the Holder must be employed by the Company or an Affiliate throughout the Performance Period. Unless otherwise provided in the applicable Performance Goals, Program or Award Agreement, a Holder shall be eligible to receive payment pursuant to such Awards for a Performance Period only if and to the extent the Performance Goals for such period are achieved.
5.6    Additional Limitations.  Notwithstanding any other provision of the Plan and except as otherwise determined by the Committee, any Award that is granted to a Covered Employee and is intended to qualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code that are requirements for qualification as Performance-Based Compensation, and the Plan, any applicable Program and the Award Agreement shall be deemed amended to the extent necessary to conform to such requirements.

ARTICLE 6.
GRANTING OF OPTIONS
6.1    Granting of Options to Eligible Individuals.  The Committee is authorized to grant Options to Eligible Individuals on such terms and conditions as it may determine that are 

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not inconsistent with the Plan; provided, however, that no Option shall be granted to any Employee or Consultant of an Affiliate unless the Company is an “eligible issuer of service recipient stock” with respect to such person within the meaning of Section 409A of the Code.
6.2    Qualification of Incentive Stock Options.  No Incentive Stock Option shall be granted to any person who is not an Employee of the Company or any subsidiary corporation of the Company (as defined in Section 424(f) of the Code). No person who is a Greater Than 10% Stockholder may be granted an Incentive Stock Option unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code.  Any Incentive Stock Option granted under the Plan may be modified by the Committee, with the consent of the Holder, to disqualify such Option from treatment as an “incentive stock option” under Section 422 of the Code. To the extent that the aggregate Fair Market Value of Shares with respect to which “incentive stock options” (within the meaning of Section 422 of the Code, but without regard to Section 422(d) of the Code) are exercisable for the first time by a Holder during any calendar year under the Plan, and all other plans of the Company and any subsidiary or parent corporation thereof (each as defined in Section 424(f) and (e) of the Code, respectively), exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to the extent required by Section 422 of the Code.  The requirements set forth in the preceding sentence shall be applied by taking Options and other “incentive stock options” into account in the order in which they were granted and the Fair Market Value of Shares shall be determined as of the time the respective instruments were granted. Subject to adjustment as provided in Section 3.1(b) and Section 13.2, no more than One Million Seven Hundred and Fifty Thousand (1,750,000) Shares may be issued pursuant to the exercise of Incentive Stock Options granted under the Plan.  
6.3    Option Exercise Price.  The exercise price per Share subject to each Option shall be set by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date the Option is granted (or on the date the Option is modified, extended or renewed for purposes of Section 409A of the Code or, as to an Incentive Stock Option, Section 424(h) of the Code). In addition, in the case of Incentive Stock Options granted to a Greater Than 10% Stockholder, such price shall not be less than 110% of the Fair Market Value of a Share on the date the Option is granted (or the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code).
6.4    Option Term.  The term of each Option shall be set by the Committee in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Option is granted, or five (5) years from the date an Incentive Stock Option is granted to a Greater Than 10% Stockholder.  The Committee shall determine the time period, including the time period following a Termination of Service, during which a Holder has the right to exercise the vested Options, which time period may not extend beyond the term of the Option.  
6.5    Option Vesting.  The Committee shall determine the period of time and other conditions that must be satisfied before the Holder’s right to exercise an Option, in whole or in part, shall vest.  Such vesting may be based on service with the Company or an Affiliate, any of the Performance Criteria, or any other criterion or condition determined by the Committee. No portion of an Option that cannot be exercised at the Holder’s Termination of Service shall thereafter become exercisable.  

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6.6    Substitute Awards.  Notwithstanding the foregoing provisions of this Article 6 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant; provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate Fair Market Value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such Fair Market Value to be determined by the Committee) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares, and that the grant of the Substitute Award otherwise satisfies the requirements of Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations or, in the case of an Incentive Stock Option, Section 1.424-1(a) of the Treasury Regulations.
6.7    Substitution of Stock Appreciation Rights.  The Committee may provide in the applicable Program or the Award Agreement evidencing the grant of an Option that the Committee, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided, that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable and such Stock Appreciation Right shall have the same exercise price and the same remaining vesting schedule and term as such Option.

ARTICLE 7.
EXERCISE OF OPTIONS
7.1    Partial Exercise.  An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional shares and the Committee may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of Shares.
7.2    Manner of Exercise.  All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Company Stock Administrator:
(a)    A written or electronic notice complying with the applicable rules established by the Company Stock Administrator stating that the Option, or a portion thereof, is exercised.  The notice must be signed in writing or electronically by the Holder or other person then entitled to exercise the Option or such portion of the Option;
(b)    Such representations and documents as the Company Stock Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable laws and regulations, and the rules of any applicable Securities Exchange.  The Company Stock Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;
(c)    In the event that the Option shall be exercised by any person other than the Holder who is permitted to exercise the Option in accordance with Section 11.3, appropriate 

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proof of the right of such person to exercise the Option, as determined in the sole discretion of the Company Stock Administrator; and
(d)    Full payment of the exercise price and applicable withholding taxes to the Company for the Shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Section 11.1 and 11.2.
7.3    Notification Regarding Disposition.  The Holder shall give the Company Stock Administrator prompt written or electronic notice of any disposition of Shares acquired by exercise of an Incentive Stock Option which occurs within (a) two years from the date of granting (including the date the Option is modified, extended or renewed for purposes of Section 424(h) of the Code) such Option to such Holder, or (b) one year after the transfer of such shares to such Holder.

ARTICLE 8.
AWARD OF RESTRICTED STOCK
8.1    Award of Restricted Stock.  
(e)    The Committee is authorized to grant Restricted Stock to Eligible Individuals, and shall determine such terms and conditions, including the restrictions applicable to each Award of Restricted Stock, that are not inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock, as it deems appropriate.
(f)    The Committee shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value of the Shares to be purchased, unless otherwise permitted by applicable state law. In all cases, legal consideration shall be required for each issuance of Restricted Stock.
8.2    Rights as Stockholders.  Subject to Section 8.4, upon the grant of a Restricted Stock Award, the Holder shall have, unless otherwise provided in the terms of the applicable Award Agreement, all the rights of a stockholder with respect to the Shares subject to the Award, subject to the restrictions in the applicable Program or in his or her Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the Shares; provided, however, that if the lifting or lapsing of the restrictions on an Award of Restricted Stock is subject to satisfaction of one or more Performance Goals, the Holder shall not be entitled to receive dividends or other distributions with respect to the Shares subject to the Award unless and until each of the applicable Performance Goals has been satisfied, at which time declared and accrued but unpaid dividends and distributions from and after the date of grant of the Award shall become payable to the Holder as soon as practicable.  
8.3    Restrictions.  All Shares of Restricted Stock (including any Shares received by Holders thereof with respect to Shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, under the terms of the applicable Program or Award Agreement, be subject to such restrictions and vesting requirements as the Committee 

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shall provide. Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Committee, including, without limitation, criteria based on the Holder’s duration of employment or service with the Company or its Affiliates, applicable Performance Criteria, Company performance or individual performance. Restricted Stock may not be sold or encumbered until all applicable restrictions are satisfied, terminated or expire.
8.4    Repurchase or Forfeiture of Restricted Stock.  If no purchase price was paid by a Holder in cash or property for a grant of Restricted Stock, upon a Termination of Service the Holder’s rights in any Shares of Restricted Stock then subject to restrictions shall terminate, and such Shares of Restricted Stock shall be surrendered to the Company and cancelled without consideration. If a purchase price was paid by a Holder in cash or property for a grant of Restricted Stock, upon a Termination of Service the Company shall have the right to repurchase from the Holder the Shares of Restricted Stock then subject to restrictions at a cash price per Share equal to the purchase price paid by the Holder in cash or property for such Shares of Restricted Stock or such other amount as may be specified under the applicable Program or in the applicable Award Agreement.  
8.5    Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Company Stock Administrator shall determine. Certificates, book entries or electronic registration evidencing shares of Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, and the Company may, in it sole discretion, retain physical possession of any stock certificate until such time as all applicable restrictions lapse.
8.6    Section 83(b) Election.  If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

ARTICLE 9.
AWARD OF PERFORMANCE AWARDS, STOCK 
PAYMENTS AND RESTRICTED STOCK UNITS
9.1    Performance Awards.  
(a)    The Committee is authorized to grant Performance Awards to any Eligible Individual, and to determine such terms and conditions that are not inconsistent with the Plan and whether such Performance Awards shall be Performance-Based Compensation.  The number of Shares subject to a Performance Award and the value of a Performance Award may be linked to any one or more of the Performance Criteria or other specific criteria determined by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee. Performance Awards may be paid in cash, Shares, or both, as determined by the Committee.

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(b)    Without limiting Section 9.1(a), the Committee may grant Performance Awards to any Eligible Individual in the form of a cash bonus payable upon the attainment of objective Performance Goals, or such other criteria, whether or not objective, which are established by the Committee, in each case on a specified date or dates or over any period or periods determined by the Committee.  Any such bonuses paid to a Holder that are intended to be Performance-Based Compensation shall be based upon objectively determinable bonus formulas established in accordance with the provisions of Article 5.
9.2    Stock Payments.  The Committee is authorized to make Stock Payments to any Eligible Individual and to determine such terms and conditions that are not inconsistent with the Plan.  The number or value of Shares of any Stock Payment shall be determined by the Committee and may be based upon one or more Performance Criteria or any other specific criteria, including service to the Company or any Affiliate, determined by the Committee. Shares underlying a Stock Payment that is subject to a vesting schedule or other restrictions, conditions or criteria set by the Committee will not be issued until the restrictions, conditions or criteria have been satisfied. Unless otherwise provided in the applicable Award Agreement, a Holder of a Stock Payment shall have no rights as a Company stockholder with respect to such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder. Stock Payments may, but are not required to, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual.
9.3    Restricted Stock Units.  The Committee is authorized to grant Restricted Stock Units to any Eligible Individual.  The number and terms and conditions of Restricted Stock Units shall be determined by the Committee, which shall not be inconsistent with the Plan.  The Committee shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such vesting restrictions, conditions or criteria as it deems appropriate, including, without limitation, conditions based on one or more Performance Criteria or other specific criteria, including service to the Company or any Affiliate, in each case on a specified date or dates or over any period or periods, as the Committee determines.  The Company Stock Administrator shall specify, or permit the Holder to elect, the conditions and dates upon which the Shares underlying the Restricted Stock Units that shall be issued, if applicable, subject to the requirements of Section 409A of the Code. Restricted Stock Units may be paid in cash, Shares, or both, as determined by the Committee. On the distribution dates, the Company shall issue to the Holder one unrestricted, fully transferable Share (or the Fair Market Value of one such Share in cash) for each vested and nonforfeitable Restricted Stock Unit.
9.4    Term.  The term of a Performance Award, Stock Payment award and/or Restricted Stock Unit award shall be set by the Committee in its sole discretion.
9.5    Exercise or Purchase Price.  The Committee may establish an exercise or purchase price for a Performance Award, Shares distributed as a part of a Stock Payment or Shares distributed pursuant to a Restricted Stock Unit Award.   
9.6    Dividend Equivalents.  Dividend equivalents may be granted by the Committee based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Award is granted and the date such Award vests, is 

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exercised, is distributed or expires, as determined by the Committee.  Such dividend equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee.

ARTICLE 10.
AWARD OF STOCK APPRECIATION RIGHTS
10.1    Grant of Stock Appreciation Rights.
(a)    The Committee is authorized to grant Stock Appreciation Rights to Eligible Individuals on such terms and conditions as it may determine that are not inconsistent with the Plan; provided, however, that no Stock Appreciation Right shall be granted to any Employee or Consultant of an Affiliate unless the Company is an “eligible issuer of service recipient stock” with respect to such person within the meaning of Section 409A of the Code.
(b)    A Stock Appreciation Right shall entitle the Holder (or other person entitled to exercise the Stock Appreciation Right) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price of the Stock Appreciation Right from the Fair Market Value of a Share on the date of exercise of the Stock Appreciation Right, and multiplying the difference, if positive, by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Committee may impose. Except as described in Section 10.1(c) below, the exercise price of each Stock Appreciation Right shall be set by the Committee, but shall not be less than 100% of the Fair Market Value of a Share on the date the Stock Appreciation Right is granted (or on the date the Stock Appreciation Right is modified, extended or renewed for purposes of Section 409A of the Code).
(c)    Notwithstanding the foregoing provisions of Section 10.1(b) to the contrary, in the case of a Stock Appreciation Right that is a Substitute Award, the exercise price of such Stock Appreciation Right may be less than 100% of the Fair Market Value of a Share on the date of grant; provided, that the excess of: (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the Shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of: (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Committee) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares, and that the grant of the Substitute Award otherwise satisfies the requirements of Section 1.409A-1(b)(5)(v)(D) of the Treasury Regulations.
10.2    Stock Appreciation Right Term.  The term of each Stock Appreciation Right shall be set by the Committee in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted.  The Committee shall determine the time period, including the time period following a Termination of Service, during 

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which the Holder has the right to exercise a vested Stock Appreciation Right, which time period may not extend beyond the term of the Stock Appreciation Right.
10.3    Stock Appreciation Right Vesting.  The Committee shall determine the period of time and other conditions that must be satisfied before the Holder’s right to exercise a Stock Appreciation Right, in whole or in part, shall vest.  Such vesting may be based on service with the Company or an Affiliate, any of the Performance Criteria, or any other criterion or condition determined by the Committee.  No portion of a Stock Appreciation Right that cannot be exercised at the Holder’s Termination of Service shall thereafter become exercisable.
10.4    Manner of Exercise.  All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the Company Stock Administrator, or such other person or entity designated by the Committee, or his, her or its office, as applicable:
(a)    A written or electronic notice complying with the applicable rules established by the Company Stock Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised.  The notice must be signed in writing or electronically by the Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right;
(b)    Such representations and documents as the Company Stock Administrator, in its sole discretion, deems necessary or advisable to effect compliance with applicable laws and regulations.  The Company Stock Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance; and
(c)    In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 10.4 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Stock Appreciation Right.
10.5    Payment.  Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 10 shall be in cash, Shares (based on their Fair Market Value as of the date the Stock Appreciation Right is exercised), or a combination of both, as determined by the Committee, less the applicable withholding taxes.

ARTICLE 11.
ADDITIONAL TERMS OF AWARDS
11.1    Payment.  The Committee shall determine the methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of an Award, Shares issuable pursuant to the exercise of the Award) or Shares not subject to any pledge or security interest and held for such period of time as may be required by the Committee, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise or vesting of an Award, 

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and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided, that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other property or legal consideration acceptable to the Committee.  The Committee shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Holders.  Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company to the extent it would violate Section 13(k) of the Exchange Act.
11.2    Tax Withholding.  The Company and any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA or employment tax obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan.  The Committee may, in its sole discretion and in satisfaction of the foregoing requirement, allow a Holder to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the surrender of Shares).  The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities not to exceed the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.  The Company Stock Administrator shall determine the Fair Market Value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted cashless Option exercise or a Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.
11.3    Transferability of Awards.
(d)    Except as otherwise provided in Section 11.3(b):
(i)    No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than to a Permitted Transferee by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a QDRO, unless and until and to the extent such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed;
(ii)    No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or the Holder’s successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted imposition of liability thereon or disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted hereunder; and

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(iii)    During the lifetime of the Holder, only the Holder (or the personal representative of an incompetent Holder) may exercise an Award (or any portion thereof) granted to such Holder under the Plan, unless it has been disposed of pursuant to a QDRO, in which case the beneficiary of the QDRO may exercise the Award; after the death of the Holder, any exercisable portion of an Award may be exercised by a Permitted Transferee, but only prior to the time when such portion expires or becomes unexercisable under the Plan or the applicable Program or Award Agreement.
(e)    Notwithstanding Section 11.3(a), the Committee, in its sole discretion and subject to such terms and conditions as it may impose, may permit a Holder to transfer an Award other than an Incentive Stock Option to any one or more Permitted Transferees, subject to any state, federal, local or foreign tax and securities laws applicable to transferable Awards.
(f)    A Holder may, in the manner determined by the Committee, designate a Permitted Transferee to exercise the rights of the Holder as his or her beneficiary and to receive any distribution with respect to any Award upon the Holder’s death. Such person shall be subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder, except to the extent the Plan, the Program, the Award Agreement or applicable law otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Committee. If the Holder is married and resides in a community property state, a designation of a person other than the Holder’s spouse as his or her beneficiary with respect to more than 50% of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse. Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time provided the change or revocation is filed with the Committee prior to the Holder’s death. If no beneficiary has been designated in this manner or the beneficiary does not survive the Holder, the rights of the Holder shall be exercisable by the Holder’s executor or administrator.
11.4    Conditions to Issuance of Shares.
(a)    Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise or vesting of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such Shares is in compliance with all applicable laws and regulations and, if applicable, the requirements of any Securities Exchange, and the Shares are covered by an effective registration statement or applicable exemption from registration. In addition to the terms and conditions provided herein, the Board or the Committee may require that a Holder make such reasonable covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.
(b)    All certificates evidencing Shares delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Committee or the Company Stock Administrator deems necessary or advisable to comply with applicable laws and regulations and the rules of any Securities Exchange.  

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(c)    The Company Stock Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, vesting, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Company Stock Administrator, or because of any other requirement arising from compliance with any applicable laws or regulations, as determined by the Company Stock Administrator, in its sole discretion.
(d)    No fractional Shares shall be issued and the Company Stock Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding.
(e)    Notwithstanding any other provision of the Plan, unless otherwise determined by the Company Stock Administrator or required by any applicable laws or regulations, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or the Company Stock Administrator).
11.5    Forfeiture Provisions.  Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Committee shall have the right to provide, in the terms or conditions of Programs or Awards made under the Plan or in any policy with respect to the recovery or recoupment of compensation or benefits in the event of financial restatements or the occurrence of other events that are inconsistent with the payment of compensation, as determined by the Committee, or to require a Holder to agree by separate written or electronic instrument, that: (a)(i) any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (b)(i) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, (ii) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Committee, (iii) the Holder incurs a Termination of Service for “cause” (as such term is defined in the sole discretion of the Committee, or as set forth in a written agreement relating to such Award between the Company and the Holder) or (iv) the Company’s financial results are restated and such proceeds, gains or other economic benefit actually or constructively received by the Holder would have been lower had they been calculated based on such restated results.
11.6    Prohibition on Repricing.  Except as provided in Section 13.2, the Committee shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its exercise price, except with respect to any Substitute Award, or (ii) cancel any outstanding Option or Stock Appreciation Right in exchange for cash or another Award that has a lower exercise price or that provides additional value to the Holder, except with respect to any Substitute Award. 
11.7    Permitted Replacement Awards.  The Committee shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award (or any award granted under another Company plan, subject to the terms of such other plan) to increase            

21

the exercise price or to cancel and replace an Award (or any award granted under another Company plan, subject to the terms of such other plan) with the grant of an Award having an exercise price that is greater than or equal to the original price per share and/or having vesting schedule and term equal to the remaining vesting schedule and term of the Award (or award granted under another Company plan) being replaced.

ARTICLE 12.
ADMINISTRATION
12.1    Committee.  The Committee shall administer the Plan (except as otherwise permitted herein) and shall consist solely of two or more Non-Employee Directors appointed by and holding office at the pleasure of the Board, each of whom is intended to qualify as a “non-employee director” as defined by Rule 16b-3 of the Exchange Act or any successor rule, an “outside director” for purposes of Section 162(m) of the Code and an “independent director” under the rules of any Securities Exchange; provided, that any action taken by the Committee shall be valid and effective, whether or not members of the Committee at the time of such action are later determined not to have satisfied the requirements for membership set forth in this Section 12.1 or otherwise provided in any charter of the Committee.
12.2    Duties and Powers of Committee.  It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions, subject to the Committee’s power to delegate duties under Section 12.6.  The Committee shall have the power to interpret the Plan, the Program and any Award Agreement, and to adopt such rules for the administration, interpretation and application of the Plan as are not inconsistent therewith, to interpret, amend or revoke any such rules and to amend any Program or Award Agreement in any manner not inconsistent with the Plan; provided that the rights of the Holder of an Award that is the subject of any such Program or Award Agreement are not affected adversely by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 13.9.  Any such Award under the Plan need not be the same with respect to each Holder.  Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except with respect to matters which under Rule 16b-3 under the Exchange Act, Section 162(m) of the Code or the rules of any Securities Exchange require otherwise.
12.3    Action by the Committee.  Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee for purposes of the Plan. Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any compensation consultant, attorney or other professional retained by the Company to assist in the administration of the Plan.

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12.4    Authority of Committee.  Subject to any specific designation in the Plan or any applicable Program, the Committee has the exclusive power, authority and sole discretion to:
(a)    Designate Eligible Individuals to receive Awards;
(b)    Determine the type or types of Awards to be granted to each Eligible Individual;
(c)    Determine the number of Awards to be granted and the number of Shares to which an Award will relate;
(d)    Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to: the exercise price, grant price, or purchase price; any Performance Criteria; any restrictions or limitations on the Award; any schedule for vesting; lapse of forfeiture restrictions or restrictions on the exercisability of an Award and accelerations or waivers thereof; and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Committee in its sole discretion determines;
(e)    Determine whether, to what extent, and pursuant to what circumstances (i) an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property (subject to the requirements of Section 409A of the Code), or (ii) an Award may be canceled, forfeited, or surrendered;
(f)    Prescribe the form of each Award Agreement, which need not be identical for each Holder;
(g)    Decide all other matters that must be determined in connection with an Award;
(h)    Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;
(i)    Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement; and
(j)    Make all other decisions and determinations that may be required pursuant to the Plan or as the Committee deems necessary or advisable to administer the Plan.
12.5    Decisions Binding.  The Committee’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Committee with respect to the Plan are final, binding, and conclusive on all parties.
12.6    Delegation of Authority.  The Board or Committee may from time to time delegate (a) to a committee of one or more members of the Board the authority to grant or amend Awards and (b) to a committee of one or more members of the Board or to one or more officers of the Company the authority to take administrative actions pursuant to Article 12; provided that 

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any delegation of authority shall only be permitted to the extent it is permissible under Section 162(m) of the Code, applicable securities laws, the rules of any applicable Securities Exchange and any Company policy governing the grant of equity-based awards.  Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegate. At all times, the delegatee appointed under this Section 12.6 shall serve in such capacity at the pleasure of the Board and the Committee.
ARTICLE 13.
MISCELLANEOUS PROVISIONS
13.1    Amendment, Suspension or Termination of the Plan.  Except as otherwise provided in this Section 13.1, the Plan and any Award Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee. However, without approval of the Company’s stockholders, no action of the Committee may, except as provided in Section 13.2, (i) increase the limits imposed in Section 3.1 on the maximum number of Shares that may be issued under the Plan, (ii) take any action described in Section 11.6 above, (iii) materially modify the requirements for eligibility to participate in the Plan, (iv) materially increase the benefits accruing to participants in the Plan,  or (v) take any other action that requires the approval of the Company’s stockholders under the rules of any applicable Securities Exchange. Except as provided in Section 13.9, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, adversely affect the rights of the Holder under any Award theretofore granted to such Holder, unless the Award itself otherwise expressly so provides.
13.2    Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.
(f)    In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the Share price other than an Equity Restructuring, the Committee shall make equitable adjustments, if any, to reflect such change with respect to (i) the aggregate number and kind of securities that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 on the maximum number and kind of securities that may be issued under the Plan, adjustments of the Award Limit, and adjustments of the manner in which securities subject to Full Value Awards will be counted); (ii) the number and kind of securities (or other property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for any outstanding Awards under the Plan.  
(g)    In the event of any transaction or event described in Section 13.2(a) or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations or accounting principles, the Committee, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon 

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the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Committee determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:
(i)    To provide for either (A) termination of any such Award in exchange for an amount of cash, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 13.2 the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Committee in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such Award been currently exercisable or payable or fully vested;
(ii)    To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;
(iii)    To make adjustments in the number and type of securities (or other property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future;
(iv)    To provide that such Award shall be exercisable or payable or fully vested with respect to all Shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement; and/or
(v)    To provide that the Award cannot vest, be exercised or become payable after such event.
(h)    In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 13.2(a) and 13.2(b):
(i)    The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or
(ii)    The number and kind of securities that may be issued under the Plan pursuant to new Awards shall be equitably adjusted. 
(i)    The Committee may, in its sole discretion, include such further provisions and limitations in any Award, Program, Award Agreement or certificate or book-entry   

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evidencing Shares, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.
(j)    No adjustment or action described in this Section 13.2 or in any other provision of the Plan, any applicable Program or the Award Agreement shall be authorized to the extent that such adjustment or action would cause such Award to violate the requirements of Section 409A of the Code. With respect to any Award which is granted to a Covered Employee and is intended to qualify as Performance-Based Compensation, no adjustment or action described in this Section 13.2 or in any other provision of the Plan, any applicable Program or the Award Agreement shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based Compensation, unless the Committee determines that the Award should not so qualify. No adjustment or action described in this Section 13.2 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause the Plan to violate Section 422(b)(1) of the Code, unless the Committee determines that Options granted under the Plan are not to qualify as “incentive stock options”. Furthermore, no such adjustment or action shall be authorized to the extent such adjustment or action could result in short-swing profits liability under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the Committee determines that the Award is not to comply with such exemptive conditions.
(k)    The existence of the Plan, any Program, any Award Agreement and any Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
(l)    In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the Share price, including any Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of thirty (30) days prior to the consummation of any such transaction.
(m)    Without limiting the generality of the foregoing, the vesting of an Award will not automatically accelerate upon the occurrence of a Change of Ownership; provided, however, the Committee may determine that upon the occurrence of a Change of Ownership, (i) the acquirer or surviving entity shall be required to assume an Award or substitute a comparable award with respect to the equity of the acquirer or surviving entity, (ii) the vesting of all or any portion of the Award will accelerate to the time immediately prior to the consummation of the Change of Ownership, or, in the case of an Option or Stock Appreciation Right, all or any portion of the Award shall become immediately exercisable so that the Holder will have the opportunity to exercise the Award (or portion thereof) immediately prior to consummation of the 

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Change of Ownership, and/or (iii) all or any portion of the Award, including any unvested portion should the Committee so determine, shall be purchased for (x) in the case of an Option or Stock Appreciation Right, cash in an amount equal to the excess of the aggregate Fair Market Value of the Shares subject to the Award to be purchased over the aggregate exercise price for such Shares, net of tax withholding, and (y) in the case of any other Award, such consideration as the Committee may in good faith determine to be equitable under the circumstances; provided, further, that any determination of the Committee in this regard shall comply with Sections 409A and 424 of the Code.
13.3    No Stockholder Rights.  Except as otherwise provided herein, a Holder shall have none of the rights of a stockholder with respect to Shares subject to any Award until the Holder becomes the record owner of such Shares.
13.4    Paperless Administration.  In the event that the Company Stock Administrator establishes, for the Company or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.
13.5    Effect of Plan upon Other Compensation Plans.  The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate, except as described in Section 3.1(a) above with respect to the Company’s 2010 Equity Incentive Plan.  Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate: (a) to establish any other forms of incentives or compensation for Employees, Directors or Consultants of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.
13.6    Compliance with Laws.  The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded under the Plan are subject to compliance with all applicable laws and regulations, the rules of any Securities Exchange, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan, any Program and any Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
13.7    Titles and Headings, References to Sections of the Code, the Securities Act or Exchange Act.  The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or 

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headings, shall control. References to sections of the Code, the Securities Act or the Exchange Act shall include any amendment or successor thereto.
13.8    Governing Law.  The Plan, any Program and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof.
13.9    Section 409A.  
(a)    To the extent that the Committee determines that any Award granted under the Plan is subject to Section 409A of the Code, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code. To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A of the Code.  Notwithstanding any provision of the Plan or the applicable Program or Award Agreement to the contrary, in the event that following the Effective Date the Committee determines that any Award may be subject to Section 409A of the Code, the Committee may adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (i) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (ii) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.
(b)    If, at the time of a Holder’s “separation from service” (within the meaning of Section 409A of the Code), (i) such Holder is a “specified employee” (within the meaning of Section 409A of the Code as determined annually by the Committee in accordance with the methodology specified by resolution of the Board or the Committee and in accordance with Section 1.409A-1(i) of the Treasury Regulations) and (ii) the Committee shall make a good-faith determination that an amount payable pursuant to an Option or Award constitutes “deferred compensation” (within the meaning of Section 409A of the Code) the payment of which is required to be delayed pursuant to the six-month delay rule set forth in Section 409A of the Code in order to preserve the tax treatment intended for such payment or to avoid additional tax, interest, or penalties under Section 409A of the Code, then the Company shall not pay such amount on the otherwise scheduled payment date but shall instead pay it on the first business day after such six-month period.  Such amount shall be paid without interest, unless otherwise determined by the Committee, in its sole discretion, or as otherwise provided in any applicable agreement between the Company and the relevant Holder.
(c)    The Holder shall be solely responsible and liable for the satisfaction of all taxes, interest, and penalties that may be imposed on such Holder or for such Holder’s account in connection with any Award (including any taxes, interest, and penalties under Section 409A of the Code), and neither the Company nor its Affiliates shall have any obligation to reimburse, indemnify or otherwise hold such Holder harmless from any or all of such taxes, interest, or penalties.

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13.10    No Rights to Awards.  No Eligible Individual or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Committee is obligated to treat Eligible Individuals, Holders or any other persons uniformly.
13.11    Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate.
13.12    Indemnification.  To the extent allowable pursuant to applicable law, each member of the Committee or of the Board shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.
13.13    Term.  The ability to grant new awards under this Plan shall terminate on the tenth (10th) anniversary of the Effective Date.
# # #

29Exhibit 10.1 Framework  Agreement

Exhibit 10.1

FRAMEWORK AGREEMENT
BETWEEN
CLEARONE, INC.
AND
DIALCOM NETWORKS S.L.

DECEMBER 20, 2013

FRAMEWORK AGREEMENT
THIS FRAMEWORK AGREEMENT (this “Agreement”) is entered into on December [20], 2013, by and between ClearOne, Inc., a corporation registered in the State of Utah, United States, represented by Zeyneb Hakimoglu acting as empowered attorney, (the “Purchaser”), and Dialcom Networks S.L., a Spanish private limited company, registered with the Zaragoza Trade registry under page Z-30936, and represented by Enrique Domínguez García acting as empowered attorney (the “Seller”).  Purchaser and Seller are referred to collectively herein as the “Parties” and individually as a “Party.”
RECITALS
WHEREAS, Seller is engaged in the research, development, manufacture, sale and distribution of certain custom enterprise group video collaboration and conferencing systems through an enterprise class software as a service platform, branded under the name “Spontania” or “Webcall” (the “Spontania Business”); 
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, the Spontania Business on the terms and conditions set forth herein; 
WHEREAS, to provide for the sale and transfer of the Spontania Business from Seller to Purchaser, Seller will spin off the Spontania Business (the “Spin-Off Transaction”) by depositing a spin-off project (“proyecto de segregación” or “Spin-Off Project), and later passing the necessary Public Deed to be presented to the Zaragoza Trade Registry  (the “Registry”), which transaction shall consist of the following steps: (a) a new Spanish Sociedad Limitada, preferably called “ClearOne Iberia”, “ClearOne Spain” “ClearOne España” or any other name suggested by the Purchaser (“Newco”), will be organized by Seller; (b) Seller will transfer, as part of the spin-off procedure, the Spontania Assets to Newco, and Newco will assume the Assumed Spontania Liabilities, and none others, in consideration of the issuance of the Shares by Newco to Seller; and (c) Newco shall maintain those Seller Employees agreed to by the Parties and that accept such employment, all on the terms and conditions set forth in Section 2.2; 
WHEREAS, contingent on the Spin-Off Transaction being approved by the Registry and completed, and subject to the other terms and conditions of this Agreement, Purchaser will acquire all of the issued and outstanding Shares of Newco from Seller (the “Acquisition Transaction”); and
WHEREAS, the Spin-Off Transaction is being completed in part because the Company will continue to exist and will own other assets, including the Orion/Brandtalk Assets, which it intends to sell or otherwise cause to be transferred to a third party purchaser in a separate transaction (the “Orion/Brandtalk Transaction”).

Now, therefore, in consideration of the foregoing Recitals, and in consideration of the representations, warranties, and covenants herein contained, the Parties, intending to be legally bound, agree as follows.
ARTICLE I 
DEFINITIONS
1.1    Certain Definitions.  As used in this Agreement, and unless otherwise defined, the following capitalized terms shall have the following meanings: 
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, assessment, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Acquisition Escrow Amount” means 15% of the base Purchase Price, before any adjustment or additions or subtractions, or € 547,500.
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “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.  
 “Assumed Spontania Liabilities” means the Liabilities to be assumed by Newco in the Spin-Off Transaction, specifically including only the following: (a) all Liabilities in respect of the Spontania Contracts but only to the extent that such Liabilities thereunder are required to be first performed after the Closing Date, were incurred in the Ordinary Course of Business and do not relate to any failure to perform, improper performance, warranty or other breach, default, violation or tortious conduct by Seller on or prior to the Closing Date and (b) any Liabilities related to the continued employment of the Newco Employees, including Liabilities related to any accrued severance and benefits, but only to the extent such Liabilities and amounts are required by applicable Laws (the “Assumed Employee Liabilities”).  Without limitation, the Assumed Spontania Liabilities shall not include any other Liabilities and, specifically, shall not include the following (“Excluded Liabilities”): (a) any Liabilities in respect of Taxes payable by Seller; (b) any Liabilities of Seller related to any Seller Employees other than the Assumed Employee Liabilities; (c) any Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including fees and expenses of counsel, accountants, consultants, advisers and others; (d) any Liability under any confidentiality or non-disclosure obligation or 

    

undertaking contained in any Assumed Contract to the extent such arises on account of any failure to perform, improper performance, warranty or other breach, default or violation at or following the Closing by any current or former Seller Employee, contractor or consultant who does not become a Newco Employee in connection with the Spin-Off Transaction; (e) any Liabilities in respect of any assets other than the Spontania Assets; (f) any Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation of the Spontania Business or the Spontania Assets to the extent such Action relates to such operation on or prior to the Closing Date; (g) any recall, design defect or similar claims of any products manufactured or sold or any service performed by Seller; (h) any Liabilities arising out of, in respect of or in connection with the failure of Seller or any of its Affiliates to comply with any Law or Governmental Authorization; and (i) any Liabilities to any financial institution or Governmental Authority.  
“Charter Documents” means the deed of incorporation and bylaws, or equivalent corporate documents, including all amendments thereto, of an Entity. 
“Closing Payment Amount” means the Purchase Price less the Acquisition Escrow Amount.  
“Consent” means any approval, consent, ratification, permission, waiver or authorization (including any Governmental Authorization).
“Contract” means any contract, lease, deed, mortgage, license, instrument, note, commitment, undertaking, indenture, joint venture and any other agreement, commitment or legally binding arrangement, whether written or oral.
“Creditor Escrow” means an escrow account established pursuant to Section 2.2(b)(ii).
“Direct Creditor Payment” means any payment made directly by the Purchaser to a creditor of the Spontania Business in accordance with Section 2.2(b)(i).
“Disclosure Schedules” means the written set of the disclosures required by this Agreement and exceptions to representations and warranties made in this Agreement which, when mutually agreed to by the Parties, shall be incorporated herein by reference.  
“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

    

“Entity” means a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a governmental entity (or any department, agency, or political subdivision thereof). 
“Environmental, Health, and Safety Requirements” means all Laws and policies concerning public health and safety, worker health and safety, and pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances or wastes, as such requirements are enacted and in effect on or prior to the Closing Date.
“Escrow Agent” means the Person engaged to serve as the escrow agent under the Escrow Agreement, as the Parties mutually agree. 
“Escrow Agreement” means the agreement to be entered into between and among the Parties and the Escrow Agent, to be negotiated and agreed to by such parties prior to Closing, providing for establishment of the Escrow Fund.  
“Escrow Fund” means the escrow fund established pursuant to the Escrow Agreement to hold the Acquisition Escrow Amount and any Creditor Escrow, to the extent any such Creditor Escrow will be governed by the Escrow Agreement and not any alternative agreement with another escrow agent. 
“Escrow Period” means a period of six months following the date of Closing. 
“Executive Agreement” means one or more separate agreements to be entered into at Closing by Purchaser, or an Entity designated by Purchaser, and each of Seller’s CEO and CTO, to engage each such individual (a) to provide consulting services to Purchaser following the Closing for a period of up to nine months following Closing and/or (b) to become an employee thereafter, at terms substantially equivalent to the current terms of employment of such persons with Seller, provided, that any such agreements shall allow the individuals to provide consulting services to Seller for up to a mutually agreed period of time. 
“Governmental Authority” means any: (a) nation, autonomous región, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign or other government; or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, unit, body or entity and any registry, court or other tribunal).

    

“Governmental Authorization” means any: (a) permit, license, certificate, franchise, permission, clearance, registration, qualification or authorization issued, granted, given or otherwise made available by or under the authority of any Governmental Authority; (b) any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority; or (c) right under any Contract with any Governmental Authority.
“Identified Creditors” means the creditors listed in Appendix A.
“Identified Creditor Amounts” means the amount Seller represents are owed to the Identified Creditors, as listed on Appendix A.
“Intellectual Property” means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand names, logos, slogans, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations and applications for registration of such trademarks, including intent-to-use applications, and all issuances, extensions and renewals of such registrations and applications, all of the foregoing including associated goodwill; (b) internet domain names, whether or not trademarks, registered in any generic top level domain by any authorized private registrar or Governmental Authority; (c) original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered, unregistered or arising by Law), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications; (d) confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable; (e) patented and patentable designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, reexaminations and renewals of such patents and applications; and (f) other proprietary rights in Technology.
“Intellectual Property Licenses” means all licenses, sublicenses and other agreements by or through which other Persons, including Seller’s Affiliates, grant Seller exclusive or non-exclusive rights or interests in or to any Intellectual Property that is used in or necessary for the conduct of the Spontania Business.
“Key Employees” shall mean those nine Seller Employees listed on Appendix C.
“Knowledge” means the actual or constructive knowledge of a Person.  An individual shall be deemed to have “Knowledge” of a particular fact or other matter if: (a) such individual is actually aware of such fact or other matter; or (b) a prudent individual should have known such fact or other matter under the circumstances. Seller shall be deemed to have “Knowledge” of a particular fact 

    

or other matter if any manager, officer or director of the Seller has Knowledge of such fact or other matter.
“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.
“Liabilities” means, unless the context specifically provides otherwise, liabilities, debts, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.
“Losses” means losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the reasonable cost of pursuing any insurance providers.
“Made Available” means that the referenced item was provided in physical or electronic medium to Purchaser prior to the date of this Agreement.  
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to (a) the business, operations, results of operations, prospects, condition (financial or otherwise) or assets of the Spontania Business, (b) the value of the Spontania Assets or (c) the ability of any Party to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition, or change, directly or indirectly, arising out of or attributable to changes, conditions or effects that generally affect the industries in which the Spontania Business operates, and not affecting the Spontania Business in a disproportionate manner.
“Maximum Creditor Amount” means € 3,102,500
“Newco Employee” means each current Seller Employee that is engaged in the Spontania Business and who becomes an employee of Newco at the completion of the Spin-Off Transaction, as listed on Appendix B annexed hereto but subject to being approved by Purchaser.  
“Office Lease” means that certain lease for office space at Plaza España, no 3, Floor 7, Office B, Zaragoza, Spain, commencing on 1 May 2013, between GIMÉNEZ LOMBAR Y CÍA, S.A. and the Seller.  
“Open Source Code” means any software code that is distributed as “free software” or “open source software” or is otherwise distributed publicly in source code form under terms that permit modification and redistribution of such software.  Open Source Code includes software code 

    

that is licensed under the GNU General Public License, GNU Lesser General Public License, Mozilla License, Common Public License, Apache License, BSD License, Artistic License, or Sun Community Source License.
“Ordinary Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency).
“Orion/Brandtalk Business” means the registered Intellectual Property, Source Code, Software and assets of another enterprise carried on by Seller, not included in the Spontania Assets or this Agreement. 
“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.
“Person” means an individual or an Entity. 
“Personal Data” means a natural Person’s name, street address, telephone number, e-mail address, photograph, social security number (or similar number), driver’s license number, passport number, or customer or account number, or any other piece of information or data that allows (whether or not in accordance with and under the rules of any requirement of Law) the identification of a natural person.
“Purchase Price” means the amount to be paid for the Shares, as set forth in Section 2.3(a).
“Registered Spontania IP” means all Spontania IP that is subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.
“Representative” means, with respect to any Entity, any and all directors, managers, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Seller Employee” means each Person currently or previously employed by Seller.  
“Shares” means the outstanding equity interests in Newco following the Spin-Off Transaction.  
“Source Code” means computer Software and code, in form other than object code or machine readable form, including related programmer comments and annotations, help text, data 

    

and data mining structure, instructions and procedural, object-oriented and other code, which may be printed out or displayed in human readable form.
“Software” means computer programs (including firmware and other software embedded in hardware devices and databases, compilations, tool sets, compilers, higher level or “proprietary” languages), including any and all software implementations of algorithms, models and methodologies, whether in Source Code or object code, design documents, flow-charts, user manuals and training materials relating thereto and any translations thereof. 
“Spontania Assets” means the assets used in the Spontania Business to be transferred by Seller to Newco in the Spin-Off Transaction, specifically including only the following: (a) the Spontania IP; (b) all computers, telecommunications equipment, equipment (including, without limitation, all production equipment), hardware, Software used in the business, fixtures, dies, stencils, machinery supplies, tools, spare parts, supplies, materials, product lines, fixed assets, and other items of tangible personal property relating to, or used in connection with, the Spontania Business, listed on Section 3.9 of the Disclosure Schedule (“Equipment”); (c) all Spontania Domains and related websites, all telephone numbers and all electronic mail addresses used in the Spontania Business; (d) the Spontania Contracts; (e) all Permits for the Spontania Business; (f) all rights to any Actions of any nature available to or being pursued by Seller, whether arising by way of counterclaim or otherwise, in connection with the Spontania Business; (g) all of Seller’s rights under warranties, indemnities and all similar rights against third parties to the extent related to any Spontania Assets; (h) originals of all books and records (whether in electronic or other form) compiled or maintained by Seller related to the Spontania Business, including, but not limited to, employee files, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, customer lists, customer purchasing histories, price lists, distribution lists, supplier lists, bills of material, production data, quality control records and procedures, customer complaints and inquiry files, research and development files, records and data (including all correspondence with any Governmental Authority), sales material and records (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), strategic plans, internal financial statements, marketing and promotional surveys, material and research and intellectual property files relating to the Spontania IP and the Intellectual Property Licenses (“Records”); and (i) all goodwill and the going concern value of the Spontania Business. 
“Spontania Contracts” means those currently effective Contracts to which Seller is a party or by which Seller or any of the Spontania Assets is or may become bound and which are related to the Spontania Business and are to be assigned to Newco in the Spin-Off Process, including Intellectual Property Licenses, customer orders, supplier orders, and other Contracts, as set forth or described on Section 3.12 of the Disclosure Schedule.

    

“Spontania Domains” means the domain names used in the Spontania Business, as listed on Section 3.21 of the Disclosure Schedules, including all related URLs and websites.
“Spontania IP” means the Spontania Software and all Technology and Intellectual Property in which Seller has (or purports to have) an ownership interest and that is used in or necessary for the conduct of the Spontania Business (including, for clarity, any assets or business that are part of Webcall).  
“Spontania Privacy Policy” means each external or internal, past or present privacy policy of Seller for the Spontania Business, including any policy and/or bilateral agreement between the Seller and a third party regarding the provision of services in connection with the Spontania Business by or to the benefit of Seller that involve the processing of Personal Data or User Data relating to: (a) the privacy of users of the Spontania services or any Seller website; (b) the collection, storage, disclosure, and transfer of any User Data or Personal Data; and (c) any employee information.
“Spontania Software” means the Spontania Software and Webcall Software duly filed for registration (including firmware and other software embedded in hardware devices but excluding any non-customized shrink-wrap code not incorporated into the Spontania Software) and all versions of such Software, or other product or service that is currently being or at any time has been developed, manufactured, supported, marketed, distributed, licensed, sold or made available (as part of a service bureau, time-sharing, application service or similar arrangement or otherwise) by Seller in the Spontania Business.
“Straddle Period” means any Tax period that includes (but does not end on) the Closing Date.
“Taxes” means any tax (including any income tax, capital gains tax, value-added tax, sales tax, payroll tax, excise tax, property tax, gift tax, or estate tax), levy, assessment, tariff, duty (including any customs duty), deficiency, or other fee, and any related charge or amount (including any fine, penalty, interest, or addition to tax), imposed, assessed, or collected by or under the authority of any Governmental Authority or payable pursuant to any tax-sharing agreement or any other Contract relating to the sharing or payment of any such tax, levy, assessment, tariff, duty, deficiency, or fee.
“Tax Return” means any return (including any information return), report, statement, declaration, remittance, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any Governmental Authority in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any Law relating to any Tax.

    

“Technology” shall mean sales methodologies and processes, training protocols and similar methods and processes, algorithms, APIs, apparatus, circuit designs and assemblies, gate arrays, net lists, test vectors, design rules, models, databases, data collections, diagrams, formulae, marks, methods, network configurations and architectures, processes, proprietary information, protocols, schematics, specifications, Software, Software code (in any form, including Source Code), subroutines, techniques, user interfaces, and other forms of technology (whether or not embodied in any tangible form and including all tangible embodiments of the foregoing, such as instruction manuals, laboratory notebooks, prototypes, samples, studies and summaries).
“Transaction Documents” means this Agreement (and its Appendixes, Exhibits, Annexes and Schedules), the public deed for the purchase or transfer of the Shares, the Escrow Agreement, the Executive Agreements, and the other agreements, instruments and documents required to be delivered at the Closing. 
“User Data” means any Personal Data or information collected by or on behalf of the Seller from users of the Spontania Software.
1.2    Additional Defined Terms.  The following terms have the meaning assigned to such terms in the Sections of the Agreement set forth below:
	
		
	Term
	Section

	Acquisition Transaction
	Recitals

	Agreed Amount
	2.2(b)(i)

	Agreement
	Introductory Paragraph

	Balance Sheet
	3.4

	Balance Sheet Date
	3.4

	Benefit Plans
	3.15(b)

	Closing
	2.6

	Closing Date
	2.6

	Company Database
	3.10(h)

	Creditor Escrow
	2.2(b)(ii)

	Direct Creditor Payment
	2.2(b)(i)

	Escrow Fund
	2.4(a)

	Financial Statements
	3.4

	Fundamental Representations
	8.1

	Indemnification Period
	8.1

	Interim Operating Expense Amount
	2.3(a)

    

	
		
	Term
	Section

	Leased Premises
	3.8(b)

	Material Customers
	3.20(a)

	Material Suppliers
	3.20(b)

	Newco
	Recitals

	Objecting Creditor
	2.2(b)

	Orion/Brandtalk Transaction
	Recitals

	Party or Parties
	Introductory Paragraph

	Pre-Closing Period
	5.7

	Proposal
	2.2(b)(ii)

	Public Deed
	2.2(a)

	Purchase Price
	2.3(a)

	Purchaser
	Introductory Paragraph

	Purchaser Indemnitees
	8.2

	Registry
	Recitals

	Release Amount
	2.2(b)(iii)(A)

	Seller
	Introductory Paragraph

	Spin-Off Applications
	2.2(a)

	Spin-Off Project
	Recitals

	Spin-Off Transactions
	Recitals

	Spontania Business
	Recitals

	Termination Right
	2.2(b)(iii)(B)

	Use
	3.11(g)

1.3    Interpretation.  For purposes of this Agreement: (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive and is used in the inclusive sense of “and/or”; (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole; (d) references to the plural include the singular, and references to the singular include the plural; (e) references to one gender include the other gender; and (f) if a word or phrase is defined, then its other grammatical or derivative forms have a corresponding meaning. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute 

    

means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder.  This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted.  The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.
ARTICLE II     
SALE AND PURCHASE OF SHARES; SPIN-OFF AND RELATED TRANSACTIONS
2.1    Sale and Purchase of Shares.  At the Closing, Seller shall sell, assign, transfer and deliver the Shares to the Purchaser and the Purchaser shall purchase the Shares from the Seller, on the terms and conditions set forth in this Agreement.
2.2    Spin-Off Transaction. 
(a)    Promptly following execution of this Agreement, and in any case within 7 business days thereafter, Seller will deposit with the Registry the Spin-Off Project.  The Spin-Off Project shall provide that there are no Liabilities related to the Spontania Business other than the Assumed Employee Liabilities, that no Identified Creditor will become a creditor of Newco, and that after the execution of the Spin-Off Transaction, (i) Newco will be organized as a new entity; (ii) the Spontania Assets will be transferred to Newco, free and clear of all Liabilities and Encumbrances except the Assumed Spontania Liabilities; (iii) Newco will assume the Assumed Spontania Liabilities (and none others); (iv) the Seller Employees identified by Purchaser and who accept employment with Newco will no longer be Seller Employees but will be Newco Employees; and (v) all of the Shares will be held by Seller.
(b)    After the presentation of the Spin-off Project to the Registrar, Seller shall make such filings and notifications as appropriate under Spanish Law related to the Spin-Off Transaction, including notification to creditors by publication.  In the event that, during such notification process, (i) any Identified Creditor listed in the Spin-Off Project timely objects to the Spin-Off Transaction because it determines it will be less secure following such Spin-Off Transaction or (ii) any additional third party (or parties) who is not listed in the Spin-Off Project or Public Deed or related process asserts it is a creditor of Seller (each such creditor in (i) or (ii), an “Objecting Creditor”), then the following shall apply:
(i)    Seller will have a period of thirty days following receipt of any notice from an Objecting Creditor to work in good faith to resolve the dispute raised by such Objecting Creditor and to obtain resolution of the Objecting Creditor’s claim.  If Seller and an Objecting Creditor agree upon an amount to settle the Objecting Creditor’s claim (in each case, an “Agreed Amount”), then Seller shall pay such Objecting Creditor the Agreed Amount directly or, if Seller 

    

notifies Purchaser that Seller does not have sufficient resources to pay such amount, then Purchaser may elect to pay such Objecting Creditor the Agreed Amount (in each case of payment by Purchaser, a “Direct Creditor Payment”), which shall reduce the Purchase Price.  All Direct Creditor Payments to be made hereunder shall be paid at Closing, subject to the other terms and conditions of this Agreement and subject to obtaining an appropriate release from such Objecting Creditor.  In the case of a Direct Creditor Payment, Seller shall provide Purchaser with a full statement of facts of the nature of the dispute between Seller and Objecting Creditor, including such information as necessary to indicate how the parties to the dispute agreed upon the Agreed Amount, prior to providing Purchaser with payment instructions and other necessary details for Purchaser’s satisfaction.
(ii)    If Seller and an Objecting Creditor do not timely resolve the dispute between such Objecting Creditor and Seller, Purchaser may elect to offer to establish at Closing an escrow amount (a “Creditor Escrow”) for an amount mutually agreed to between the Seller and the specific Objecting Creditor (which will include an estimated amount of interest) in consideration of the Objecting Creditor agreeing in writing (in form reasonably acceptable to Purchaser) to (a) the Spin-Off Project and (b) the release of Newco from any claims.  It shall be Seller’s responsibility to first approach the Objecting Creditor with a proposal (a “Proposal”) for resolution of such Objecting Creditor’s claims and, once such Proposal is agreed upon in writing by Seller and the Objecting Creditor, as contemplated above, to then approach Purchaser, which shall then decide whether or not to make the election referenced in the first sentence hereof.   Any amounts paid into a Creditor Escrow pursuant to an agreed upon Proposal shall reduce the Purchase Price. A separate Creditor Escrow will be established under the Escrow Agreement (or otherwise as may be agreed) for each Objecting Creditor with respect to which Purchaser elects to offer to establish such an escrow in connection with each accepted Proposal.
(iii)    With respect to any Objecting Creditor whose claim is not resolved pursuant to Section 2.2.(b)(i) or Section 2.2(b)(ii) (including any circumstance where Purchaser, Seller or the Objecting Creditor refuses, for any reason, to agree upon a Proposal or to allow a Creditor Escrow to be established, Purchaser may elect one of the following options:
(A)    Purchaser may enter into an agreement with each such remaining Objecting Creditor under which Purchaser will directly pay to each such Objecting Creditor an amount (“Release Amount”) sufficient to obtain a release in favor of Purchaser from each such Objecting Creditor and each such Objecting Creditor will assign to Seller the Objecting Creditor’s claim against Seller.  Purchaser will then be able to pursue such claim against Seller directly and, if the dispute is resolved prior to the termination of the Escrow Fund, Purchaser shall be entitled to recover the established amount from the Escrow Fund.  

    

(B)    Purchaser may deem such lack of resolution to be a terminable event (a “Termination Right”) and elect to terminate the Agreement in accordance with Section 9.1(f).
(iv)    Purchaser will not make any Direct Creditor Payment or deposit any amount into a Creditor Escrow unless it is satisfied, in its sole discretion, that the objections of all Objecting Creditors have been resolved or are likely to be resolved under the provisions of Section 2.2(b).  If it appears to Purchaser that the sum of the amounts to be paid (i) to Identified Creditors who did not become Objecting Creditors; (ii) to Objecting Creditors as Direct Creditor Payments; and (iii) into escrow as Creditor Escrows will exceed the Maximum Creditor Amount, then Purchaser shall have the right to terminate this Agreement in accordance with Section 9.1(e).   
(v)    Seller shall provide Purchaser with satisfactory documentary evidence for resolving claims of creditors that they claim to have resolved pursuant to this Section 2.2.
(c)    Once the Spin-off Project has been registered and the period for opposition of creditors has elapsed, the Seller will hold a shareholder meeting within [3] days thereafter and pass into a public deed the decision to spin-off the Spontania Business and present the same to the Zaragoza Registry providing to the Purchaser a copy of the presentation voucher. In any case, the Purchaser will have to verify the contents of the referred Public Deed before it is granted.
(d)     If the Spin-Off Public Deed is not registered due to any type of defect, Seller will inform the Purchaser within two days after Seller learns of the inability to effect registration. Should the defect be of a technical or immaterial nature, the Seller will be obliged to immediately amend the given document in order to comply with the Registrar’s objection. If the defects identified or created by the Registrar alter in any way the Spin-Off Transaction or Acquisition Transaction referred to in this Agreement, or if the defects are such that they are not capable of being cured, the Parties shall negotiate in good faith in order to find a fair solution during a period of [20] days. If no agreement is timely reached, the Purchaser shall have the right, but not the obligation, to terminate the Agreement in accordance with Section 9.1(g).
(e)    Once the Spin-off Project has been registered and the period for objection by creditors has elapsed, the Seller shall provide Purchaser, within [3] days thereafter, with a statement regarding the status of each unpaid creditor, whether an Objecting Creditor or not, including the details of any disputed amount.
(f)    Seller shall provide Purchaser with such additional information as Purchaser may request within [3] days of Purchaser’s request, including information about Seller’s plans and recommendations to resolve claims made by unpaid creditors.  After receiving all requested information, Purchaser shall prepare within [3] days a final statement of status of creditors 

    

identifying separately all Direct Creditor Payments, Creditor Escrows, creditors to whom direct payments have been made by Seller, and unpaid creditors.  Seller will certify and accept said final statement of creditors and Purchaser will make decisions on payment or termination only in the event that the sum of the amounts to be paid to Identified Creditors who do not object, as Direct Creditor Payments, and to be placed into escrow as a Creditor Escrow, will exceed the Maximum Creditor Amount, within [5] days of Seller certifying said final statement.  Seller and Purchaser agree to establish more detailed procedures to implement this subsection, as determined necessary.
(g)    Prior to the Closing, the Seller shall carry out all necessary steps to file before the Spanish Data Protection Agency (SDPA) the necessary documents to request that Newco is appointed as the Data Controller of all the registered files in the SDPA’s Registry of which Seller is the current Data Controller. The Seller shall provide the Purchaser with the said documents duly sealed by the SDPA.  Seller shall diligently prosecute such change, even following the Closing.
(h)     Prior to Closing, the Seller shall carry out all necessary steps to file before the Spanish Intellectual Property registry (SIPR) the necessary documents to request the transfer of all the rights of the Spontania Software (also including, for the sake of clarity, the Webcall Software) to Newco.  The Seller shal provide the Purchaser with the said documents duly sealed by the SIPR.  Seller shall diligently prosecute such change, even following the Closing. 
2.3    Purchase Price.  
(a)    Subject to the other terms and conditions of this Article II, the aggregate consideration payable by the Purchaser for the Shares shall be an amount equal to (i)  € 3.65 million; plus (ii) an amount (the “Interim Operating Expense Amount”)  equal to 80,000€ multiplied by the number of months between December 31, 2013 and the Closing Date, with the last month to be expressed as a fraction, the numerator of which is the number of days in such month prior to and including the Closing Date and the denominator is the total number of days in such month, provided that the Interim Operating Expense Amount shall be no more than three months of such expenses; minus: (iii) the accrued and unpaid payrolls of Newco Employees, and (iv) the amount of any revenue invoiced by Seller with respect to the Spontania Business in the period after the date of this Agreement through the Closing Date (the “Purchase Price”), which Purchase Price is subject to further adjustment as contemplated by this Agreement.  The Purchase Price shall be paid by the Seller as set forth herein. 
(b)    At the Closing, Purchaser shall pay to Seller the Closing Payment Amount, less the aggregate amount of (i) any Identified Creditor Amounts that exist at Closing, which shall be paid by Purchaser directly to the Identified Creditors at Closing pursuant to the following subparagraph (c), (ii) the aggregate amount of any Direct Creditor Payments pursuant to Section 2.2(b)(i) and (iii) the amounts paid by Purchaser into Creditor Escrows established pursuant to 

    

Section 2.2(b)(ii), all such payments subject to obtaining an appropriate release and/or agreement from each such creditor.
(c)    With respect to the Identified Creditors, the Seller will provide that the same are present at the Closing Date together with a certificate of debt in which each one of them states the exact amount due at such date. The Purchaser will deduct from the Purchase Price said amounts and directly pay the same to the Identified Creditors in exchange for a full release in form satisfactory to Purchaser.  
2.4    Escrow.  
(a)    At Closing, Purchaser shall deposit an amount equal to the sum of the Acquisition Escrow Amount and the amounts of any Creditor Escrow(s) to be established pursuant to Section 2.2(b)(ii) (the “Escrow Fund”) with the Escrow Agent and administered substantially in accordance with the provisions of the Escrow Agreement, provided, however, the Parties understand that a Creditor Escrow may be established through a different escrow agent if the Purchaser and applicable Objecting Creditor so agree.  
(b)    The Parties acknowledge and agree that the Acquisition Escrow Amount shall be used for the purpose of securing the Seller’s indemnification obligations pursuant to ARTICLE VIII.  The Acquisition Escrow Amount and the Creditor Escrows shall be administered in accordance substantially with the provisions of the Escrow Agreement.  Subject to applicable Law, the Escrow Fund shall be held as a trust fund and shall not be subject to any lien, attachment, trustee process or any other judicial process of any creditor of any Party and shall be held and disbursed solely for the purposes and in accordance with the respective terms of the Escrow Agreement or any other governing agreement.
2.5    Consents and Approval; Failure to Obtain Third Party Consents.  To the extent that Seller’s rights under any Spontania Asset may not be assigned to Newco without the consent of another Person which has not been obtained, neither this Agreement nor the Public Deed shall constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Seller, at its expense, shall use its reasonable best efforts to obtain any such required Consent(s) as promptly as possible.  If any such Consent shall not be obtained or if any attempted assignment would be ineffective or would impair Newco’s rights under the Spontania Asset in question so that Newco would not in effect acquire the benefit of all such rights, Seller, to the maximum extent permitted by law and the Spontania Asset, shall act after the Closing (assuming Purchaser has waived the requirement that all Consents be obtained before Closing or if such Consent requirement is identified after Closing) as Newco’s and Purchaser’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Spontania Asset, with Newco and Purchaser in any other reasonable arrangement designed to provide such benefits to Newco and Purchaser.

    

2.6    Closing; Time and Place of Closing.  The consummation of the Acquisition Transaction contemplated by this Agreement (the “Closing”) shall take place at Madrid before Mr. Ángel Almoguera Gómez a Madrid Public Notary and at which meeting the various payments and deliveries contemplated by this Agreement to be made by the parties will be made.  Further, the Seller and the Purchaser will sign the Share Purchase Deed in accordance with this Agreement.  The Closing shall take place no later than 5 business days after completion of the Spin-Off Transaction and the satisfaction of all other covenants or conditions precedent set forth herein (including the satisfaction of the conditions set forth in ARTICLE VI and ARTICLE VII) (the “Closing Date”).  All transactions occurring at the Closing shall be deemed to take place simultaneously, and no transaction shall be deemed to have been completed and no document or certificate shall be deemed to have been delivered until all transactions are completed and all documents delivered. Unless otherwise indicated, all documents and certificates shall be dated on or as of the Closing Date.  
(a)    Seller Closing Deliveries.  At the Closing Seller shall deliver to Purchaser:
(i)    a true and correct copy of resolutions of Seller’s Board of Directors approving the Spin-Off Transaction, this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby;
(ii)    a true and correct copy of resolutions of Seller’s shareholders approving the Spin-Off Transaction, this Agreement and the Transaction Documents and the transactions contemplated hereby and thereby, to the extent such is required;
(iii)    a counterpart of the Escrow Agreement duly executed by Seller and by the Escrow Agent;
(iv)    Proof that Newco is the holder of the Spontania Domains and of the transferred trademarks included in the Spontania IP together with such documents as necessary to transfer any Spontania IP (the “Intellectual Property Assignments”);
(v)    duly executed counterpart signature page to the Executive Agreements;
(vi)    Sealed filing before the Spanish Data Protection Agency requesting the modification of the name of the data processor of the files currently registered in the Spanish Data Protection Agency Register, of which the Seller is the current data processor.  The sealed filing shall request the modification of the name of the data processor from Seller to Newco;
(vii)    Non-Compete Agreement or Side Letter with respect to shareholders and officers of Seller specified in Schedule 2.6.(a).(vii), in form acceptable to the Parties; 
(viii)    the Consents that are reasonably required by Purchaser;

    

(ix)    an officers’ certificate to the effect that the representations and warranties set forth in Article III are true and correct in all material respects, except that as to (A) such representations and warranties as are qualified by terms such as “material” and “Material Adverse Effect” and (B) the Fundamental Representations, such certificate shall state that such representations and warranties are true and correct in all respects;
(x)    executed documents for assumption of the Office Lease, subject to obtaining any necessary Consent from  landlord; and 
(xi)    such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Purchaser, as may be required to give effect to this Agreement.
(b)    Purchaser Closing Deliveries.  At the Closing Purchaser shall deliver to Seller:
(i)    the consideration referred to in Section 2.2; 
(ii)    a counterpart of the Escrow Agreement duly executed by Purchaser; 
(iii)    a counterpart of the Executive Agreements duly executed by the correct party; and
(iv)    such other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Seller, as may be required to give effect to this Agreement.
ARTICLE III     
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the correspondingly numbered Section of the Disclosure Schedules, Seller represents and warrants to Purchaser as follows as of the date of this Agreement and as of the Closing:
3.1    Organization and Qualification; Outstanding Shares. 
(i)    Seller is a private limited company duly organized, validly existing and in good standing under the Laws of Spain and has full corporate power and authority to own, operate or lease the Spontania Assets owned or held by it, and to carry on the Spontania Business as conducted prior to the completion of the Spin-Off Transaction.  Following the Spin-Off Transaction, Newco will be a Sociedad Limitada duly organized, validly existing and in good standing under the Laws of Spain and will have full corporate power and authority to own, operate or lease the Spontania Assets, and to carry on the Spontania Business.  

    

(j)    Section 3.1(b) of the Disclosure Schedule sets forth each jurisdiction in which Seller is licensed or qualified to do business, and Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in each jurisdiction in which the ownership of the Spontania Assets or the historical operation of the Spontania Business makes such licensing or qualification necessary.  
(k)    Except as set forth on Schedule 3.1(c), Seller does not own any shares of capital stock or any other equity interest in or control any other Person and no such Person has been engaged in the Spontania Business.
(l)    Seller has not granted to any Person any power of attorney in respect of it or any of the Spontania Assets.  
(m)    Except in connection with the Spin-Off Transaction, neither the Seller nor any of its shareholders has ever approved, or commenced any proceeding or made any election contemplating, the dissolution or liquidation of the Seller or the winding up or cessation of its affairs or the Spontania Business. 
(n)    Following the completion of the Spin-Off Transaction and as of the Closing, (i) the Shares issued in the Spin-Off Transaction will be all of the shares of Newco and will be held by Seller; (ii) all of the Shares will be duly authorized, validly issued, and fully paid and nonassessable; and (iii) none of the Shares are or will be subject to any repurchase option, forfeiture provision or restriction on transfer (other than restrictions on transfer imposed by applicable securities laws); 
(o)    Following the completion of the Spin-Off Transaction and as of the Closing, (i) there is and will be no outstanding subscription, option, call, convertible note, warrant or right (whether or not currently exercisable) to acquire any shares of capital stock of Newco or any derivative of any of the foregoing; (ii) there is and will be no outstanding security, instrument or obligation that is or may become convertible into or exchangeable for any shares of capital stock of Newco or any derivative of any of the foregoing; (iii) there is and will be no Contract under which Newco is or may become obligated to sell or otherwise issue any shares of capital stock or any other securities, including any promise or commitment to grant any securities of Newco to an employee of or other service provider to Newco; or (iv) condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of capital stock or other securities of Newco.
3.2    Authorization.  Seller has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Seller of this Agreement and any other Transaction Document to 

    

which Seller is a party, the performance by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Seller. This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Purchaser) this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms. When each other Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms. 
3.3    Consents and Approvals; Authority Relative to this Agreement.  The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Charter Documents of Seller or Newco, as amended to date, or any other governing organizational documents of Seller or Newco, including any shareholders’ agreement; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Authorization applicable to Seller, Newco, the Spontania Business or the Spontania Assets; (c) except as set forth in Section 3.3 of the Disclosure Schedule and in connection with obtaining the approval of the Registry to the Spin-Off Transaction, require the Consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Spontania Contract or Permit to which Seller is a party or by which Seller or the Spontania Business is bound or to which any of the Spontania Assets are subject; or (d) result in the creation or imposition of any Encumbrance on the Spontania Assets.  Except as set forth on Section 3.3 of the Disclosure Schedule and in connection with obtaining the approval of the Registry to the Spin-Off Transaction, no Consent, approval, Permit, Governmental Authorization, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Seller or Newco in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby and the performance by Seller of its obligations thereunder.
3.4    Financial Statements; No Undisclosed Liabilities. 
(a)    Seller has Made Available to Purchaser (i) the unaudited balance sheets of Seller as of December 31, 2012, and the related profits and loss statements (income statements), and cash flows for the years then ended (collectively all such financial statements are referred to as the “Financial Statements”).  Except as set forth on Section 3.4(a) of the Disclosure Schedule, the Financial Statements are true, correct and complete and fairly present, in all material respects, 

    

the financial position and results of operation of the Spontania Business as of the applicable dates and for the periods indicated. No information has come to the attention of Seller since such respective dates that would indicate that such financial statements are not true and correct in all material respects as of the dates thereof.  Seller has attained revenue of € 1 million in the nine months ended September 30, 2013, and will attain revenue of € 1.5 million by year-end 2013.  
(b)    Except as set forth in the Financial Statements or Section 3.4(b) of the Disclosure Schedule, Seller has no Liabilities.  Except for the Assumed Spontania Liabilities, Newco will have no Liabilities following the completion of the Spin-Off Transaction or as of the Closing.
(c)    The Financial Statements are complete and accurate in all material respects and present fairly the financial position of Seller as of the respective dates thereof and the results of operations and cash flows of Seller, including the results of operations of the Spontania Business, for the periods covered thereby.    
(d)    As of the Closing Date, Seller will provide an accurate and complete breackdown and aging of all accounts payable, Contracts, obligations and Liabilities of the Seller related to the Spontania Business and included in the Spontania Assets. 
(e)    The Identified Creditors, for an aggregate amount of € 2.032.409, are the only third party creditors that currently hold any type of credit against the Seller. 
3.5    Absence of Certain Effects or Changes.  Except as set forth in Section 3.5 of the Disclosure Schedule, since December 31, 2012, there has not been any (a) event, occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (b) change in any method of accounting or accounting practice for Seller or the Spontania Business; (c) damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting Seller or any of the Spontania Assets; (d) change in cash management practices and policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts receivable, accrual of accounts receivable, inventory control, prepayment of expenses, payment of accounts payable, accrual of other expenses, deferral of revenue and acceptance of customer deposits; (e) entry into any Spontania Contract other than in the Ordinary Course of Business; (f) acceleration, termination, modification to or cancellation of any Spontania Contract or Permit; (g) incurrence, assumption or guarantee of any indebtedness for borrowed money in connection with the Spontania Business except unsecured current obligations and Liabilities incurred in the Ordinary Course of Business; (h) transfer, assignment, sale or other disposition of any of the Spontania Assets; (i) transfer, assignment or grant of any license or sublicense of any rights under or with respect to any Spontania IP or Intellectual Property Licenses; (j) capital expenditures which would constitute an Assumed Spontania Liability; (k) imposition of any Encumbrance upon any of the Spontania Assets; (l) adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy 

    

under any provisions of bankruptcy or reorganization Law (except for the Public Deed with the Registry respecting the Spin-Off Transaction) or consent to the filing of any bankruptcy petition against it under any similar Law; (m) the Seller has not commenced or settled any legal proceedings or other Action; or (n) any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.  
3.6    Inventories.  The Seller has no inventories of products for sale. 
3.7    Title to, Sufficiency and Condition of Assets. Seller has good and valid title to, and is the lawful owner of, all of the Spontania Assets.  Upon assignment to Newco in connection with the Spin-Off Transaction, Seller will thereby transfer to Newco good and marketable title to the Spontania Assets, subject to no Encumbrances.   The Spontania Assets are sufficient for the continued conduct of the Spontania Business after the Closing in substantially the same manner as conducted prior to the Closing and, except as set forth in Section 3.7 of the Disclosure Schedule, constitute all of the assets, properties and rights currently used by Seller or reasonably necessary in the conduct of the Spontania Business.  
3.8    Real Property. 
(a)    Seller does not own and has never owned any real property, nor does it hold any option to acquire any real property.  
(b)    The Seller leases office space (the “Leased Premises”) pursuant to the Office Lease, which lease is included in the Spontania Assets.  The Leased Premises is the only real property leased by Seller.  With respect to the Office Lease, (i) such lease is valid, binding, enforceable and in full force and effect, and Seller enjoys peaceful and undisturbed possession of the Leased Premises; (ii) Seller is not in breach or default under such lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default, and Seller has timely paid all rent or other amounts due and payable under such lease; (iii) Seller has not received nor given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by Seller under the lease and, to the Knowledge of Seller, no other party is in default thereof, and no party to the lease has exercised any termination rights with respect thereto; (iv) Seller has not subleased, assigned or otherwise granted to any Person the right to use or occupy any Leased Premises or any portion thereof; and (v) Seller has not pledged, mortgaged or otherwise granted an Encumbrance on its leasehold interest in the Leased Premises.  
3.9    Equipment and Tangible Assets.  Section 3.9 of the Disclosure Schedule is a true, correct and complete list of all Equipment included in the Spontania Assets and having an individual book value in excess of € 2,000. Seller has made available to Purchaser true, correct and complete copies of any and all Equipment leases. Except as set forth in Section 3.9 of the Disclosure Schedule, all of the Equipment and other tangible assets included in the Spontania Assets are in good operating 

    

condition and repair (with the exception of normal wear and tear) for the purposes of the Spontania Business as currently operated and none of them is in need of maintenance or repairs other than routine maintenance and repairs.
3.10    Intellectual Property.
(a)    Section 3.10(a) of the Disclosure Schedule is a true, correct and complete list of all (i) Spontania IP that is not registered but that is material to the operation of the Spontania Business and (ii) Registered Spontania IP that is included in the Spontania Assets.  With respect to the Registered Spontania IP, including such registrations that may have lapsed, the schedule includes (i) the name of the applicant/registrant, inventor/author, if applicable, and current owner; (ii) the jurisdiction in which such item of Registered Spontania IP has been registered or filed; (iii) the applicable registration or serial number; (iv) the filing date, and issuance/registration/grant date; and (v) a brief description of the prosecution status thereof.  All required filings and fees related to the Registered Spontania IP have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars, and all Spontania IP registrations are otherwise in good standing and enforceable.  Seller has made Available to Purchaser a true, correct and complete copy of the file histories, documents, certificates, office actions, correspondence and other materials related to all Registered Spontania IP.  Seller has no Knowledge of any information, materials, facts or circumstances what would render any Spontania IP that is Registered Spontania IP invalid or unenforceable or would materially and adversely affect any pending application for such Registered Spontania IP.   
(b)    Seller owns all right, title and interest in and to the Spontania IP, free and clear of Encumbrances (other than nonexclusive licenses to customers in the Ordinary Course of Business), and none of the Spontania IP has been subject to any Encumbrances except where a release has been properly filed. Without limiting the generality of the foregoing, except as set forth on Section 3.10(b) of the Disclosure Schedule, Seller has entered into binding, written agreements with every current and former Seller Employee, and with every current and former consultant and independent contractor, whereby such Seller Employees, consultants and independent contractors (i) assign to Seller any ownership interest and right they may have in any Spontania IP; and (ii) acknowledge Seller’s exclusive ownership of all Spontania IP.  Seller has Made Available to Purchaser true, correct and complete copies of all such agreements.  Seller is in full compliance with all legal requirements applicable to the Spontania IP and Seller’s ownership and use thereof. 
(c)    Section 3.10(c) of the Disclosure Schedule sets forth a true, correct and complete list of all inbound Intellectual Property Licenses excluding licensees for non-customized shrink-wrap code with a cost of less than € 3,500.  Seller has Made Available to Purchaser true, correct and complete copies of all such Intellectual Property Licenses. All such Intellectual Property Licenses are valid, binding and enforceable between Seller and the other parties thereto, and Seller 

    

and such other parties are in full compliance with the terms and conditions of such Intellectual Property Licenses.  
(d)    The Spontania IP and Intellectual Property Licenses as currently or formerly owned, licensed or used by Seller or proposed to be used by Seller, and the conduct of the Spontania Business as currently and formerly conducted by Seller and proposed to be conducted by Purchaser have not, do not and will not infringe, violate or misappropriate the Intellectual Property of any Person.  Seller has not received any communication, and no Action has been instituted, settled or, to Seller’s Knowledge, threatened, that alleges any such infringement, violation or misappropriation, and none of the Spontania IP are subject to any outstanding Governmental Authorization.
(e)    Section 3.10(e) of the Disclosure Schedule is a true, correct and complete list of all Contracts, licenses, sublicenses and other agreements pursuant to which Seller grants rights or authority to any Person with respect to any Spontania IP or Intellectual Property Licenses.  Seller has Made Available to Purchaser true, correct and complete copies of all such agreements. All such agreements are valid, binding and enforceable between Seller and the other parties thereto, and Seller and such other parties are in full compliance with the terms and conditions of such agreements.  No Person has infringed, violated or misappropriated, or is infringing, violating or misappropriating, any Spontania IP.  
(f)    There is no pending or, to Seller’s Knowledge, threatened Action challenging the registrability of any Spontania IP.  Seller has no notice of any, or Knowledge of any basis for any, claim that the Spontania Business infringes, misappropriates, or violates any Intellectual Property or any such rights of any other Person.  The Seller has no Knowledge of any basis for a claim that any Spontania IP is invalid or unenforceable.  
(g)    Seller has the sole and exclusive right to bring Actions for infringement, misappropriation, dilution, violation or unauthorized use of the Spontania IP and, to Seller’s Knowledge, there is no basis for any such action. The Seller is not bound by, and no Spontania IP is subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of Seller to use, exploit, license, transfer, assert or enforce any Spontania IP anywhere in the world.
(h)    Except as set forth on Section 3.10(h) of the Disclosure Schedule, no funding, facilities or personnel of any Governmental Authority or college, university or other educational institution were used, directly or indirectly, to develop or create, in whole or in part, any Spontania IP.  
(i)    Seller has taken all reasonable steps to maintain the confidentiality of and otherwise protect and enforce its rights in all proprietary information pertaining to the Seller. 

    

(j)    Section 3.10(j) of the Disclosure Schedule contains a complete and accurate list and summary of all royalties, fees, commissions and other amounts payable by the Seller to any other Person for the use or exploitation of any Spontania IP incorporated into or used in the development, testing, distribution, provision, maintenance or support of, any product offering by Seller.
(k)    Neither the execution, delivery or performance of this Agreement or any other Transaction Documents nor the consummation of any of the transactions contemplated hereby or thereby will, with or without notice or lapse of time, result in, or give any other Person the right or option to cause or declare: (i) a loss of, or Encumbrance on, any Spontania IP or any other Technology or Intellectual Property incorporated into or used in the development, testing, distribution, provision, maintenance or support of the Spontania Software; (ii) a breach of or default under any Spontania Contract; (iii) a payment or increased royalty or an obligation to offer any discount or be bound by any “most favored pricing” terms under any Spontania Contract; (iv) the release, disclosure or delivery of any Spontania IP by or to any escrow agent or other Person; (v) any right of termination or cancellation under any Spontania Contract; or (vi) the grant, assignment or transfer to any other Person of any license or other right or interest in, under, or with respect to, either any of the Spontania IP or any other Technology or the Intellectual Property of Purchaser.  Following the Closing, all Spontania IP will be fully transferable, alienable or licensable by Purchaser without restriction and without payment of any kind to any third party. 
(l)    The Seller has delivered to the Purchaser a complete and accurate copy of each standard form of Contract used by the Seller at any time, including each standard form of: (i) end user license agreement; (ii) software license, software-as-a-service (SaaS) or cloud-based services agreement, (iii) development agreement; (iv) employee agreement containing any assignment or license of Technology or Intellectual Property Rights or any confidentiality provision; (v) maintenance agreement; (vi) consulting or independent contractor agreement containing any assignment or license of Technology or Intellectual Property Rights or any confidentiality provision; or (vii) confidentiality or nondisclosure agreement
3.11    Spontania Software.
(a)    The Spontania Software is the only product offering of the Spontania Business that will be transferred to Newco in the Spin-Off Transaction.  The Spontania Software does not include any Intellectual Property that is part of or included in any other software or product of Seller, including any such Intellectual Property in the Orion/Brandtalk Business.  Except as set forth on Section 3.11(a) of the Disclosure Schedule, the Spontania Software was either (i) developed by employees of Seller within the scope of their employment thereby or (ii) developed by independent contractors who have assigned all of their right, title and interest therein to Seller pursuant to written agreements.  Except as set forth in Section 3.11(a) of the Disclosure Schedule, none of the Spontania Software contains any code, documentation or other materials or development 

    

environments that embody Intellectual Property of any Person other than Seller. Section 3.11(a) of the Disclosure Schedule is a true, correct and complete copy of the most recent “bug list” with respect to the Spontania.
(b)    Section 3.11(b) of the Disclosure Schedule is a true, correct and complete list of and description of all Software, other than the Spontania Software, licensed to or used by Seller and with respect to each such item of Software the number or type of installations thereof and nature and physical location of proofs of purchase of the related license thereof to the extent the Software is not Spontania Software.
(c)    The Source Code for all Spontania Software has been documented in a professional manner  that is sufficient to independently enable a programmer of reasonable skill and competence to understand, analyze, and interpret program logic, correct errors and improve, enhance, modify and support the Spontania Software.  No Source Code for any Spontania Software has been delivered, licensed or made available to any escrow agent or other Person who is not, as of the date of this Agreement, an employee of Seller.  Seller does not have any duty or obligation (whether present, contingent or otherwise) to deliver, license or make available the Source Code for any Spontania Software to any escrow agent or other Person.  No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, license or disclosure of the Source Code for any Spontania Software to any other Person.  No Source Code for any Software retained in the Orion/Brandtalk Business is included in any Source Code for the Spontania Software. 
(d)    Section 3.11(d) of the Disclosure Schedule is a true, correct and complete list and description of: (i) each item of Open Source Code that is contained in, distributed with, or used in the development of the Spontania Software or from which any part of any Spontania Software is derived; (ii) the applicable license terms for each such item of Open Source Code and (iii) the product and services to which each such item of Open Source Code relates.  Except as set forth in Section 3.11(d) of the Disclosure Schedule, no Spontania Software contains, is derived from, is distributed with, or is being or was developed using Open Source Code that is licensed under any terms that (i) impose or could impose a requirement or condition that any Seller Owned Software or part thereof: (A) be disclosed or distributed in source code form; (B) be licensed for the purpose of making modifications or derivative works or (C) be redistributable at no charge or (ii) otherwise impose or could impose any other limitation, restriction, or condition on the right or ability of Seller to use or distribute such Spontania Software.
(e)    Except as listed on Section 3.11(e) of the Disclosure Schedule, none of the Spontania Software (a) contains any bug, defect, or error (including any bug, defect, or error relating to or resulting from the display, manipulation, processing, storage, transmission, or use of any data) that materially and adversely affects the use, functionality, or performance of such Spontania Software or any product or system containing or used in conjunction with such Spontania Software; 

    

or (b) fails to comply with any applicable warranty or other contractual commitment relating to the use, functionality, or performance of such Spontania Software or any product or system containing or used in conjunction with such Spontania Software.  The Seller has provided to the Purchaser a complete and accurate list of all known bugs, defects, and errors in each version of the Spontania Software.
(f)    To the Knowledge of Seller, none of the Spontania Software contains any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such terms are commonly understood in the software industry) or any other code designed or intended to have, or capable of performing, any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is stored or installed; or (ii) damaging or destroying any data or file without the user’s consent.
(g)    Section 3.11(g) of the Disclosure Schedule contains each Spontania Privacy Policy and identifies, with respect to each Spontania Privacy Policy: (i) the period of time during which such privacy policy was or has been in effect; (ii) whether the terms of a later Spontania Privacy Policy apply to the data or information collected under such privacy policy; and (iii) if applicable, the mechanism (such as opt-in, opt-out or notice only) used to apply a later Spontania Privacy Policy to data or information previously collected under such privacy policy.  The Seller has complied at all times and in all material respects with all of the Spontania Privacy Policies, any third-party privacy policies applicable to the Seller, and with all applicable legal requirements pertaining to privacy, data security, User Data or Personal Data.  The Seller has had at all times the right to receive, collect, retain, disclose, store, transfer, dispose or otherwise use (collectively, “Use”) the User Data and Personal Data received by the Seller, and the Seller at all times has required all applicable Persons to obtain the right for the Seller to Use the User Data in accordance with the most current Spontania Privacy Policy.  Neither the execution, delivery or performance of this Agreement or any of the other agreements referred to in this Agreement nor the consummation of any of the transactions contemplated by this Agreement or any such other agreements, nor the Purchaser’s possession or Use of the User Data, Personal Data or any data or information in the Seller’s databases, will result in any violation of any Spontania Privacy Policy or any legal requirement pertaining to privacy, data security, User Data or Personal Data.  No claim is pending or has been since inception been threatened against the Seller alleging a violation of any Person’s rights under any Spontania Privacy Policy or otherwise pertaining to privacy, data security, User Data or Personal Data.
(h)    Section 3.11(h) of the Disclosure Schedule identifies and describes each distinct electronic or other database containing (in whole or in part) Personal Data and User Data maintained by or for the Seller at any time (the “Company Databases”), the types of Personal Data and User Data in each such database, the means by which the Personal Data was collected, the 

    

security policies that have been adopted and maintained with respect to each such database, and the reports, audits, investigations, administrative proceedings in regard to violations of legal requirements pertaining to privacy, data security, User Data or Personal Data, as well as a list of incidents of data security breaches falling under and/or as to be reported in accordance with legal requirements.  No breach or violation of any such security policy has occurred or is threatened, and there has been no unauthorized or illegal Use, modification or disclosure of or access to any of the data or information in any of the Company Databases or any other Personal Data or User Data collected by the Seller.  The Seller has at all times taken the steps reasonably necessary (including without limitation implementing and monitoring compliance with adequate measures with respect to technical and physical security) to ensure that all Personal Data, User Data and Company Databases are protected against loss and against unauthorized or illegal Use, modification, disclosure or access. 
3.12    Contracts.   
(a)    Section 3.12(a) of the Disclosure Schedule is a true, correct and complete list of all Spontania Contracts. 
(b)    Seller has Made Available to Purchaser a true, correct and complete copy of each Spontania Contract.
(c)    Each Spontania Contract is valid and binding on Seller in accordance with its terms and is in full force and effect and, following the Spin-Off Transaction, will be binding on Newco in accordance with its terms.  No Person has guaranteed Seller’s or Newco’s performance under any Spontania Contract.  Neither Seller nor, to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any notice of any intention to terminate, any Spontania Contract.  No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Spontania Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.  Seller is not currently renegotiating or paying liquidated damages in lieu of performance under any of the Spontania Contracts.  There are no material disputes pending or threatened under any Spontania Contract.
3.13    Permits.  Section 3.13 of the Disclosure Schedule is a true, correct and complete list of all Permits, including their dates of expiration, that are used by Seller in the Spontania Business.  All such Permits are included in the Spontania Assets, are transferable without Consent or additional consideration, and will be transferred to Newco in the Spin-Off Transaction.  All fees and charges with respect to the Permits so listed have been paid in full and such are in full force and effect.  Seller has not received any notice that any such Permit will be revoked or canceled and Seller has no Knowledge of any basis under which any such Permit may be revoked or cancelled.  Except for 

    

the Permits listed on Section 3.13 of the Disclosure Schedule there are no Permits that are necessary to entitle Seller, or Newco following the Spin-Off Transaction, to own or lease, operate and use the Spontania Assets or are otherwise necessary for the lawful continued operation of the Spontania Business.
3.14    Insurance.  Section 3.14 of the Disclosure Schedule is a true, correct and complete list of all policies of fire, liability, workers’ compensation and other forms of insurance owned or held by Seller and all claims made or notices given by Seller thereunder since January 1, 2012.  Seller has Made Available to Purchaser true, correct and complete copies of all such policies.  Seller has complied with each of such policies and all policies set forth in Section 3.14 of the Disclosure Schedule are in full force and effect.  Such policies are of the type and in the amounts customarily carried by Persons conducting a business similar to the Spontania Business and are sufficient for compliance with all applicable Laws and Contracts. 
3.15    Employee Benefit Plans and Employment Agreements.  
(a)    Section 3.15(a) of the Disclosure Schedule, lists each employee benefit plan,  retirement, savings, thrift, deferred compensation, performance, incentive compensation, stock ownership, stock purchase, stock option, unemployment compensation, vacation or holiday pay, severance pay, bonus, hospitalization or other medical, disability, life or other insurance, fringe benefit arrangement or other welfare, retiree welfare or benefit plan, policy, trust, understanding or arrangement of any kind, whether written or oral which covers any current or former employee, contractor or consultant of Seller. 
(b)    A true, correct and complete copy of each of the plans, arrangements and agreements listed in Section 3.15(a) of the Disclosure Schedule (collectively, the “Benefit Plans”), each as in effect on the date hereof, has been Made Available to Purchaser.  There are no loans or advances by Seller to any of the Employees.
(c)    All Benefit Plans comply, and have been administered in compliance, in all material respects, with all Laws applicable thereto, and there has been no notice issued by any Governmental Authority questioning or challenging such compliance, and there are no actions, suits or claims (other than routine claims for benefits) pending or, to Seller’s Knowledge, threatened, involving any such Benefit Plan or the assets of any such Benefit Plan. 

3.16    Employment and Labor Matters.  
(a)    Section 3.16(a) of the Disclosure Schedule is a true, correct and complete list of all Persons who are employees, consultants, or contractors of the Spontania Business as of the date hereof, and sets forth for each such individual the following: (i) name; (ii) title or position 

    

(including whether full or part time); (iii) hire date; (iv) current annual base compensation rate; (v) commission, bonus or other incentive-based compensation; and (vi) a description of the fringe and social  benefits provided to each such individual as of the date hereof. As of the date hereof, all compensation, commissions, bonuses, and social or fringe benefits payable to Employees, consultants, or contractors of the Spontania Business for services performed on or prior to the date hereof have been paid in full and there are no outstanding agreements, understandings or commitments of Seller with respect to any commissions, bonuses or increases in compensation.  Seller is not a party to, or bound by, any collective bargaining or other Contract with a labor organization representing any of its employees, and there are no labor organizations representing, purporting to represent or, to Seller’s Knowledge, attempting to represent any employee. There has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor activity or dispute affecting Seller or any of its employees.  
(b)    Seller is and has been in compliance with all applicable Laws pertaining to employment and employment practices to the extent they relate to the Seller Employees, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, health and safety, workers’ compensation, leaves of absence and unemployment insurance. All individuals characterized and treated by Seller as consultants or contractors of the Spontania Business are properly treated as independent contractors under all applicable Laws. There are no Actions against Seller pending, or to the Seller’s Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former Employee, consultant or independent contractor of the Spontania Business, including, without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay or any other employment related matter arising under applicable Laws.
(c)    To Seller’s Knowledge, no Seller Employee, officer, independent contractor, director, management or Affiliate of Seller has any direct or indirect interests in the business of Seller’s competitors.  
(d)    There is  no labor dispute pending or, to Seller’s Knowledge, threatened, against Sellers.  
(e)    None of the Seller Employees that will remain employed by Seller or that are not listed on Appendix B will have any claim or right to be included as a Newco Employee.  Therefore, Seller agrees to compensate Newco for any damage caused or Liability or Loss suffered as a consequence of any judicial decision or out of court agreement as a consequence of which Newco may be obliged to pay salaries, social security costs, dismissal costs or any other quantity to, or caused by, any of Dialcom’s remaining Seller Employee.

    

3.17    Taxes. 
(a)    Except as set forth in section 3.17 of Disclosure Schedule, all Tax Returns required to be filed by Seller for any pre-Closing Tax period have been, or will be, timely filed.  Such Tax Returns are, or will be, true, complete and correct in all respects.  All Taxes due and owing by Seller and its shareholders (whether or not shown on any Tax Return) have been, or will be, timely paid. All deficiencies asserted, or assessments made, against Seller or its shareholders as a result of any examinations by any taxing authority have been fully paid.
(b)    There is no Action pending or proposed or threatened with respect to Taxes and, to Seller’s Knowledge, no basis exists therefor.
(c)    All Taxes which Seller is required by Law to withhold or collect, including sales and use Taxes, and amounts required to be withheld for Taxes of employees and other withholding taxes, have been duly withheld or collected and, to the extent required, have been paid over to the proper Governmental Authorities or are held in separate bank accounts for such purpose.  Seller has complied with all information reporting and backup withholding requirements.
(d)    There are no Tax liens (other than liens for Taxes not yet due and payable) upon the Spontania Assets.
(e)    Seller has not granted or been requested to grant any waiver of any statutes of limitations applicable to any claims for Taxes.
(f)    No transaction contemplated by this Agreement is subject to withholding and no sales Taxes, use Taxes, real estate transfer Taxes or other similar Taxes will be imposed on the transfer of the Spontania Assets or the assumption of the Assumed Liabilities pursuant to this Agreement.  
3.18    Compliance with Laws.  Seller has complied and is in compliance with all Laws applicable to or binding on it, the operation of the Spontania Business or the ownership and use of the Spontania Assets (including any labor, environmental, occupational health, zoning or other law, regulation or ordinance).  Seller has not received written notice from any Governmental Authority claiming any violation by Seller of any Law.
3.19    Litigation; Governmental Authorizations.  Except as set forth on Section 3.19 of the Disclosure Schedule there are no Actions pending or, to Seller’s Knowledge, threatened, against or by Seller or any of its officers, directors, employees, consultant, contractors or shareholders in their capacity as such (a) relating to or affecting the Spontania Business, the Spontania Assets or the Assumed Liabilities or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.  No event has occurred or circumstances exist that may give rise to, or serve as a basis for, any such Action.  There are no outstanding Governmental 

    

Authorizations and no unsatisfied judgments, penalties or awards against, relating to or affecting the Spontania Business.  
3.20    Customers and Suppliers.
(a)    Section 3.20(a) of the Disclosure Schedule sets forth with respect to the Spontania Business (i) each customer who has paid aggregate consideration to Seller for goods or services rendered in an amount greater than or equal to € 3,500 for each of the two most recent fiscal years (collectively, the “Material Customers”); and (ii) the amount of consideration paid by each Material Customer during such periods.  Seller has not received any notice, and has no reason to believe, that any of the Material Customers has ceased, or intends to cease after the Closing, to use the goods or services of the Spontania Business or to otherwise terminate or materially reduce its relationship with the Spontania Business.
(b)    Section 3.20(b) of the Disclosure Schedule sets forth with respect to the Spontania Business (i) each supplier to whom Seller has paid consideration for goods or services rendered in an amount greater than or equal to € 3,500 for each of the [two] most recent fiscal years (collectively, the “Material Suppliers”); and (ii) the amount of purchases from each Material Supplier during such periods.  Seller has not received any notice, and has no reason to believe, that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services to the Spontania Business or to otherwise terminate or materially reduce its relationship with the Spontania Business.  
3.21    Domain Names.
(a)    Section 3.21(a) of the Disclosure Schedule is a true, correct and complete list of all Spontania Domains (by name, owner, Gtld or ccTLD, registrar and expiration date), whether owned exclusively, jointly with another Person or otherwise, together with user name, password and “whois” information for such domain name necessary to effect a revision of and to each registration record.  Seller owns the entire right, title and interest to all Spontania Domains free and clear of all Encumbrances other than liens for current Taxes not yet due.  Each Spontania Domain is validly and properly registered to Seller and reflects “whois” information that is accurate, correct and up-to-date and was validly and legally obtained, including in compliance with the procedures or policies of, and were registered without fraud on or misrepresentation to, ICANN or any other applicable domain name registry or registrar and without infringement or misappropriation of the Intellectual Property of any Person.  All Spontania Domains will be transferred to Newco in connection with the Spin-Off Transaction.
(b)    There have been no challenges to the ownership or use by Seller of any Spontania Domains used, owned or purported to be owned by it and to the Knowledge of Seller there are no facts which would constitute a basis for such a challenge.

    

(c)    Section 3.21(c) of the Disclosure Schedule is a true, correct and complete list of each Contract between Seller and any domain name registry or registrar and the amount of deposits that are held at each domain registry and registrar as prepayment for future domain name registrations and the name of each such registry and registrar.
3.22    Product Quality.  The Spontania Software performs on a consistent basis, in all respects, the functions described in the marketing materials, the agreed specifications and end-user documentation and customer agreements, subject only to routine bugs and errors that can be corrected promptly by Seller in the course of providing customer support without further liability to Seller.  All development services, support services, training services, upgrade services and other services that have been performed by Seller were performed properly and in all respects in full conformity with the applicable Laws and Contracts.  Except as set forth on Section 3.22 of the Disclosure Schedule, excluding complaints in the Ordinary Course of Business regarding nonmaterial product or service issues, other than any of which have a common root cause and in the aggregate are material, since January 1, 2012, no Person has asserted or threatened to assert any claim against Seller under or based upon any warranty.
3.23    Certain Business Practices.
(a)    Neither Seller nor any director, officer, agent, employee, contractor or consultant of Seller, or any other Person associated with or acting for or on behalf of Seller, has directly or indirectly: (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment to any Person, private or public, regardless of form, whether in money, property, or services: (A) to obtain favorable treatment or an improper advantage in securing business; (B) to pay for favorable treatment for business secured or (C) to obtain special concessions or for special concessions already obtained, for or in respect of Seller or any Affiliate of Seller or (ii) established or maintained any fund or asset that has not been recorded in the books and records of Seller.
(b)    Seller has (i) not exported or transmitted Software or other material or items, including technological data, in connection with the Spontania Business to any country, or made available to any Person, with respect to which such export, transmission or availability is restricted by any Law, without first having obtained all legally required  authorizations and (ii) maintained all records to the extent required by any Law.  
3.24    Brokers.  Except as set forth in Section 3.24 of the Disclosure Schedule, no agent, broker, finder, investment banker, financial advisor or other Person retained or engaged by Seller or any of its Affiliates or any Person acting on its behalf is or will be entitled to any brokers’ or finders’ fee or any other commission or similar fee in respect of any of the transactions contemplated by this Agreement. 

    

3.25    Environmental Matters.  Seller is in compliance with all applicable Environmental, Health, and Safety Requirements.  Seller has not received any written notice (or, to the Knowledge of Seller, other communication), whether from a Governmental Authority, citizens group, Employee or otherwise, that alleges that Seller is not in compliance with any Environmental, Health, and Safety Requirements and there are no circumstances that may prevent or interfere with Seller’s compliance with any Environmental, Health, and Safety Requirements in the future. To the Knowledge of Seller, no current or prior owner of any property leased or controlled by Seller has received any written notice (or, to the Knowledge of Seller, other communication), whether from a Governmental Authority, citizens group, Employee or otherwise, that alleges that such current or prior owner or Seller is not in compliance with any Environmental, Health, and Safety Requirements. 
3.26    Government Grant Programs.  Except as set forth on Section 3.26 of the Disclosure Schedule, Seller has no Liability due to any pending or outstanding grants, tax benefits, incentives and/or subsidies from the Government of Spain or any agency thereof related.
3.27    No US Operations.  Except as set forth on Section 3.27 of the Disclosure Schedule, Seller does not conduct and has not conducted operations in, has no employees or contractors in, and does not receive and has not received any income from any source located within the United States of America. 
3.28    Disclosure.  No representation or warranty of Seller in this Agreement, no statement in the Disclosure Schedule and no document delivered pursuant hereto by Seller contains any untrue statement or omits to state a material fact necessary to make the statements herein or therein, in light of the circumstances in which they were made, not misleading. Except for those matters disclosed in this Agreement and the Disclosure Schedule, there are no facts not disclosed in this Agreement or the Disclosure Schedule which, if learned by Purchaser, might reasonably be expected to materially diminish Purchaser’s evaluation of the value of the Spontania Assets or which, if learned by Purchaser or Seller, might reasonably be expected to deter Purchaser from completing the transactions contemplated by this Agreement on the terms and conditions contemplated hereby.
ARTICLE IV     
REPRESENTATIONS AND WARRANTIES OF PURCHASER 
Purchaser represents and warrants to Seller that the statements contained in this Article IV are true and correct as of the date hereof and as of Closing.
4.1    Organization of Purchaser.  Purchaser is a corporation duly incorporated and validly existing under the laws of the United States of America, State of Utah.
4.2    Authority of Purchaser.  Purchaser has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Purchaser is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated 

    

hereby and thereby. The execution and delivery by Purchaser of this Agreement and any other Transaction Document to which Purchaser is a party, the performance by Purchaser of its obligations hereunder and thereunder and the consummation by Purchaser of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Purchaser.  This Agreement has been duly executed and delivered by Purchaser, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms. When each other Transaction Document to which Purchaser is or will be a party has been duly executed and delivered by Purchaser (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Purchaser enforceable against it in accordance with its terms. 
4.3    No Conflicts; Consents.  The execution, delivery and performance by Purchaser of this Agreement and the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the Charter Documents of Purchaser, as amended to date, or any other organizational documents of Purchaser; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Authorization applicable to Purchaser; or (c) require the consent, notice or other action by any Person under any Contract to which Purchaser is a party.  No Consent, approval, Permit, Governmental Authorization, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Purchaser in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby, except for such consents, approvals, Permits, Governmental Authorizations, declarations, filings or notices which, in the aggregate, would not have a Material Adverse Effect.
4.4    Brokers.  No agent, broker, finder, investment banker, financial advisor or other Person retained or engaged by Purchaser or any of its Affiliates or any Person acting on its behalf is or will be entitled to any brokers’ or finders’ fee or any other commission or similar fee in respect of any of the transactions contemplated by this Agreement.
ARTICLE V     
COVENANTS
5.1    Preservation of Books and Records; Access.  As necessary following the Closing Date, Purchaser and Seller will make available to each other material data or information in such Party’s custody or control reasonably necessary for the purpose of preparing any financial statement or tax return or reasonably necessary in preparing for or defending any tax-related examination of the requesting party or Seller or Newco by any Governmental Authority. Purchaser and Seller will 

    

afford to each other reasonable access to such records during normal business hours, upon reasonable advance notice. 
5.2    Employees; Employee Benefit Plans. 
(a)    In connection with the Spin-Off Transaction, Seller shall transfer certain Seller Employees, as identified and agreed to by Purchaser, to be employed by Newco as Newco Employees following the Spin-Off Transaction.  
(b)    Seller shall be solely responsible, and Purchaser shall have no obligations whatsoever for, any compensation or other amounts payable to any Seller Employee (or former Seller Employee), including, without limitation, hourly pay, commission, bonus, salary, accrued vacations, healthcare benefits, fringe, pension or profit sharing benefits, or severance pay payable to any Seller Employee (or former Seller Employee) for any period relating to the service with Seller at any time prior to the Closing Date and Seller shall pay all such amounts to all entitled Employees on or prior to the Closing Date. 
(c)    Seller shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health, accident or disability benefits brought by or in respect of Seller Employees (or former Seller Employees) or agents of Seller which claims relate to events occurring prior to the Closing Date.  Seller also shall remain solely responsible for all worker’s compensation claims of any Seller Employees (or former Seller Employees) or agents of Seller which relate to events occurring prior to the Closing Date.  Seller shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.
(d)    Each Seller Employee who becomes a Newco Employee in connection with the Acquisition Transaction shall be given service credit, subject to applicable Law and the terms of such plans, for the purpose of eligibility under Newco’s group health plan and eligibility and vesting only under Seller’s existing plans for his or her period of service with the Seller prior to the Closing Date; provided, however, that (i) such credit shall be given pursuant to payroll or plan records, at the election of Purchaser, in its sole and absolute discretion; and (ii) such service crediting shall be permitted and consistent with Purchaser’s defined contribution retirement plan.  
5.3    Confidentiality. From and after the Closing, Seller shall, and shall cause its Affiliates and Representatives to, hold in confidence any and all information, whether written or oral, concerning the Spontania Business, except to the extent that Seller can show that such information (a) is generally available to and known by the public through no fault of Seller, any of its Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller, any of its Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller or any of its Affiliates or their respective Representatives are compelled to disclose any information by judicial 

    

or administrative process or by other requirements of Law, Seller shall promptly notify Purchaser in writing and shall disclose only that portion of such information which Seller is advised by its counsel in writing is legally required to be disclosed, provided that Seller shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.
5.4    Covenant Not to Compete or Solicit Business.
(a)    In furtherance of the sale of the Spontania Assets and the Spontania Business to Purchaser hereunder by virtue of the transactions contemplated hereby and more effectively to protect the value and goodwill of the Spontania Assets and the Spontania Business so sold, Seller agrees that, neither Seller nor any Affiliate will: 
(v)    for a period ending on the third anniversary of the Closing Date, directly or indirectly (whether as principal, agent, consultant, independent contractor, partner or otherwise) own, manage, operate, control, participate in, perform services for, or otherwise carry on, a business competitive with the Spontania Business anywhere in the world, except that, for a period ending on, or before, September 30th 2014, Seller and its Affiliates may continue the existing Orion/Brandtalk Business; or   
(vi)    for a period ending on the third anniversary of the Closing Date, employ, retain or hire any employee, contractor, consultant, agent or customer of the Spontania Business or induce or attempt to persuade, on behalf of any other business organization in competition with the Spontania Business, any employee, contractor, consultant, agent or customer of Purchaser to terminate such employment, consulting, agency or business relationship in order to enter into any such relationship with any such business organization; provided, however, that nothing set forth in this Section 5.4 shall prohibit Seller or any Affiliate from owning as a passive investment not in excess of 2% in the aggregate of any class of capital stock of any corporation if such stock is publicly traded.  
(b)    If Seller or any Affiliate violates any of its obligations under this Section 5.4, Purchaser may proceed against it in law or in equity for such damages or other relief as a court may deem appropriate.  Seller acknowledges that a violation of this Section 5.4 may cause Purchaser irreparable harm which may not be adequately compensated for by money damages.  Seller therefore agrees that in the event of any actual or threatened violation of this Section 5.4, Purchaser shall be entitled, in addition to other remedies that it may have, to a temporary restraining order and to preliminary and final injunctive relief against Seller or its Affiliates to prevent any violations of this Section 5.4, without the necessity of posting a bond.  The prevailing party in any action commenced under this Section 5.4 shall also be entitled to receive reasonable attorneys’ fees and court costs.  It is the intent and understanding of each party hereto that if, in any action before any court or agency legally empowered to enforce this Section 5.4, any term, restriction, covenant or 

    

promise in this Section 5.4 is found to be unreasonable and for that reason unenforceable, then such term, restriction, covenant or promise shall be deemed modified to the extent necessary to make it enforceable by such court or agency.
5.5    Use of Spontania Name.  Seller agrees immediately after the Closing Date to cease using any reference to “Spontania” in its operations. 
5.6    Taxes. 
(a)    Seller shall be liable for and pay, and shall defend, indemnify and hold harmless Purchaser from and against, all Taxes (whether assessed or unassessed) applicable to the Spontania Business and the Spontania Assets, in each case attributable to Taxable years or periods ending on or prior to the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period ending on and including the Closing Date.  Purchaser shall be liable for and shall pay all Taxes (whether assessed or unassessed) applicable to the Spontania Business, the Spontania Assets and the Assumed Spontania Liabilities that are attributable to taxable years or periods beginning after the Closing Date and, with respect to any Straddle Period, the portion of such Straddle Period beginning after the Closing Date; provided, that Purchaser shall not be liable for any Taxes for which Seller is liable under this Agreement.  For purposes of this Section, any Straddle Period shall be treated on a “closing of the books” basis as two partial periods, one ending at the close of the Closing Date and the other beginning on the day after the Closing Date, except that Taxes (such as property Taxes) imposed on a periodic basis shall be allocated on a daily basis.
(b)    Notwithstanding Section 5.6(a) any sales Tax, use Tax, real property transfer or gains Tax, documentary stamp Tax or similar Tax attributable to the sale or transfer of the Spontania Business, the Spontania Assets or the Assumed Spontania Liabilities shall be paid by Seller.  
(c)    Seller and Purchaser shall cooperate in preparing any Tax Returns which such other party is responsible for preparing and filing and in preparing for any audits of, or disputes with taxing authorities regarding, any Tax Returns of the Spontania Business or the Spontania Assets.
5.7    Access and Investigation.  During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement pursuant to Article IX or the Closing Date (the “Pre-Closing Period”), the Seller shall, and shall cause its Representatives to: (a) provide the Purchaser and the Purchaser’s Representatives with reasonable access during normal business hours to the Seller’s Representatives, personnel and assets and to all existing books, records, Tax Returns, work papers and other documents and information relating to the Spontania Business; (b) provide the Purchaser and the Purchaser’s Representatives with copies of such existing books, records, Tax Returns, work papers and other documents and information relating to the Spontania Business, and with such additional financial, operating and other data and information regarding 

    

the Spontania Business, as the Purchaser may reasonably request; and (c) cause the Seller’s officers to report regularly to the Purchaser, upon the Purchaser’s request, concerning the status of the Seller and the Spontania Business; provided, however, that (x) such access does not unreasonably disrupt the normal operations of the Seller and (y) Seller is under no obligation to disclose to the Purchaser or the Purchaser’s Representatives any information the disclosure of which is subject to attorney-client privilege.  During the Pre-Closing Period, the Purchaser may make inquiries of Persons having business relationships with the Seller (including suppliers, licensors, distributors and customers) and the Seller shall help facilitate (and shall cooperate fully with the Purchaser in connection with) such inquiries. 
5.9    Notification; Updates to Disclosure Schedule.
(a)    During the Pre-Closing Period, the Seller shall promptly notify the Purchaser in writing of: (i) the discovery by the Seller of any event, condition, fact or circumstance that occurred or existed on or prior to the date of this Agreement and that caused or constitutes a breach of or an inaccuracy in any representation or warranty made by the Seller in this Agreement; (ii) any event, condition, fact or circumstance that occurs, arises or exists after the date of this Agreement and that would cause or constitute a breach of or an inaccuracy in any representation or warranty made by the Seller in this Agreement if: (A) such representation or warranty had been made as of the time of the occurrence, existence or discovery of such event, condition, fact or circumstance; or (B) such event, condition, fact or circumstance had occurred, arisen or existed on or prior to the date of this Agreement; (iii) any breach of any covenant or obligation of the Seller; and (iv) any event, condition, fact or circumstance that would make the timely satisfaction of any of the conditions set forth in Article VI impossible or unlikely.  
(b)    If any event, condition, fact or circumstance that is required to be disclosed pursuant to Section 5.9(a) requires any change in the Disclosure Schedule, or if any such event, condition, fact or circumstance would require such a change assuming the Disclosure Schedule were dated as of the date of the occurrence, existence or discovery of such event, condition, fact or circumstance, then the Seller shall promptly deliver to the Purchaser an update to the Disclosure Schedule specifying such change.  No such update shall be deemed to supplement or amend the Disclosure Schedule for the purpose of determining whether any of the conditions set forth in Article VI has been satisfied.
5.10    No Negotiation.  During the Pre-Closing Period, the Seller shall not authorize or permit the Seller or any Representative to: (a) solicit or encourage the initiation or submission of any expression of interest, inquiry, proposal or offer from any Person (other than the Purchaser) relating to a possible acquisition or merger involving the Spontania Business or Spontania Assets; (b) participate in any discussions or negotiations or enter into any agreement, understanding or arrangement with, or provide any non-public information to, any Person (other than the Purchaser or its Representatives) relating to or in connection with a possible acquisition or merger involving

    

 the Spontania Business or Spontania Assets; or (c) entertain or accept any proposal or offer from any Person (other than the Purchaser) relating to a possible acquisition or merger involving the Spontania Business or Spontania Assets.  The Seller shall promptly (and in any event within 24 hours of receipt thereof) notify the Purchaser in writing of any inquiry, indication of interest, proposal or offer relating to a possible acquisition or merger involving the Spontania Business or Spontania Assets that is received by the Seller during the Pre-Closing Period (including, the identity of the Person making or submitting such inquiry, indication of interest, proposal or offer, and the terms thereof).
5.11    Closing Conditions. From the date hereof until the Closing, each Party shall use reasonable best efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VI and Article VII hereof.
5.12    Public Announcements. Unless otherwise required by applicable Law, or the stock exchange or securities law reporting requirements, no Party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement
5.13    Further Assurances. Following the Closing, each Parties and its respective Affiliates shall execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
ARTICLE VI     
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE PURCHASER
The obligations of the Purchaser to purchase the Shares and to take the other actions required to be taken by the Purchaser at the Closing are subject to the satisfaction (or waiver by the Purchaser), at or prior to the Closing, of each of the following conditions:
6.1    Accuracy of Representations. 
(a)    Each of the representations and warranties made by the Seller in this Agreement shall have been accurate in all material respects as of the date of this Agreement, except where the failure of the representations and warranties to be accurate has not impaired or delayed the Seller’s ability to consummate the Transactions; provided, however, that for purposes of determining the accuracy of such representations and warranties, all materiality qualifications limiting the scope of such representations and warranties shall be disregarded, and provided further that the failure of a representation and warranty to be accurate, even though not impairing or delaying the Seller’s ability to consummate the Acquisition Transaction, shall not excuse the failure to be 

    

accurate of the representations and warranties referenced in subsection (b) immediately below, as provided therein.
(b)    The representations and warranties made by the Seller in this Agreement shall be accurate in all material respects as of the Closing Date as if made on and as of the Closing Date, other than representations and warranties which by their terms are made as of a specific date, which shall have been accurate in all material respects as of such date; provided, however, that for purposes of determining the accuracy of such representations and warranties: (i) all materiality qualifications limiting the scope of such representations and warranties shall be disregarded; and (ii) any update of or modification to the Disclosure Schedule made or purported to have been made on or after the date of this Agreement shall be disregarded.
6.2    Performance of Covenants.  Seller shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date.
6.3    Governmental and Other Consents. All filings with and other Consents of any Governmental Body required to be made or obtained in connection with the Transactions, including approval of the Spin-Off Transaction by the Registry, shall have been made or obtained and shall be in full force and effect and any waiting period under any applicable Law, regulation or other legal requirement shall have expired or been terminated.  All Consents of third parties (other than Governmental Bodies) required to be obtained in connection with the Transactions shall have been obtained and shall be in full force and effect.  
6.4    No Material Adverse Effect.  Since the date of this Agreement, there shall not have occurred and be continuing any Material Adverse Effect and no event shall have occurred or circumstance shall exist that, in combination with any other events or circumstances, could reasonably be expected to have or result in any Material Adverse Effect.
6.5    Agreements and Documents.  All of the documents required to be delivered by Seller in accordance with Article II shall have been delivered.  
6.6    No Restraints.  No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Spin-Off Transaction or the Acquisition Transaction shall have been issued by any court of competent jurisdiction and remain in effect, and there shall not be any legal requirement enacted or deemed applicable to any of the transactions that makes consummation thereof illegal.
6.7    No Legal Proceedings.  No Action shall have been commenced against Purchaser or Seller, which would prevent the Closing. No injunction or restraining order shall have been issued 

    

by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.
6.8    Newco Employees.  It shall be a condition precedent to Closing that the Key Employees shall have agreed to become Newco Employees at and as of the time of Closing, provided that if up to two Key Employees do not accept such employment, Seller may procure a replacement employee with equal or greater qualifications, as mutually agreed by the Parties, for each such Key Employee that fails to accept employment.  By way of clarity, at least 7 of the 9 Key Employees must accept and be a Newco Employee at Closing and up to two Key Employees may refuse employment with Newco, provided that Seller has identified two replacement willing employees acceptable to Purchaser at the Closing.
ARTICLE VII     
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER
The obligations of the Seller to sell the Shares and to take the other actions required to be taken by the Seller at the Closing are subject to the satisfaction (or waiver by the Seller), at or prior to the Closing, of each of the following conditions:
7.1    Accuracy of Representations. 
(a)    Each of the representations and warranties made by the Purchaser in this Agreement shall have been accurate in all material respects as of the date of this Agreement, except where the failure of the representations and warranties to be accurate has not impaired or delayed the Purchaser’s ability to consummate the Transactions; provided, however, that for purposes of determining the accuracy of such representations and warranties, all materiality qualifications limiting the scope of such representations and warranties shall be disregarded, and provided further that the failure of a representation and warranty to be accurate, even though not impairing or delaying the Purchaser’s ability to consummate the Acquisition Transaction, shall not excuse the failure to be accurate of the representations and warranties referenced in subsection (b) immediately below, as provided therein..
(b)    Each of the representations and warranties made by the Purchaser in this Agreement shall be accurate in all material respects as of the Closing Date as if made on and as of the Closing Date, other than representations and warranties which by their terms are made as of a specific date, which shall have been accurate in all material respects as of such date, except where the failure of the representations and warranties to be accurate has not impaired or delayed the Purchaser’s ability to consummate the Transactions; provided, however, that for purposes of determining the accuracy of such representations and warranties, all materiality qualifications limiting the scope of such representations and warranties shall be disregarded.

    

7.2    Performance of Covenants.  Seller shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date.
7.3    Agreements and Documents.  All of the documents required to be delivered by Purchaser in accordance with Article II shall have been delivered.  
7.4    No Restraints.  No temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the sale of the Shares shall have been issued by any court of competent jurisdiction and remain in effect, and there shall not be any legal requirement enacted or deemed applicable to the sale of the Shares that makes consummation thereof illegal. 
ARTICLE VIII     
INDEMNIFICATION
8.1    Survival.  The representations and warranties of the Parties contained herein and in the Transaction Documents shall survive the Closing for a period of 6 months after the Closing (the “Indemnification Period”); except for (a) the representations and warranties set forth in Sections 3.1, 3.2, 3.7, 3.10, 3.11, 3.12, 3.16, and 3.17  in the case of the Seller (the “Fundamental Representations”), and Sections 4.1 and 4.2 in the case of the Purchaser, all of which shall survive the Closing and until the applicable statute of limitations has expired; and (b) any indemnification or right thereto arising out of any breach or alleged breach of which the indemnified Person has notified the indemnifying Person in writing on or prior to the date such representation or warranty would otherwise terminate in accordance with this Section 8.1, which shall not terminate until after the liability of the indemnifying Persons shall have been determined and the indemnifying Persons shall have paid the indemnified Persons the full amount of such liability, if any. The maximum indemnity for Fundamental Representations should be the Purchase Price.   
8.2    Indemnification of Purchaser.  Subject to the other terms and conditions of this Article VIII, Seller shall indemnify, hold harmless and defend Purchaser, Newco, and their respective directors, officers, shareholders, and employees (collectively, the “Purchaser Indemnitees”) from and against any and all Losses incurred by or suffered by the Purchaser Indemnities arising out of any of the following: 
(a)    any breach or any inaccuracy in any representation or warranty made by Seller in this Agreement or any Transaction Document or any certificate delivered by or on behalf of the Seller pursuant hereto; 
(b)    any breach of or failure by the Seller to perform, any of its covenants or obligations required to be performed by it pursuant to this Agreement or any Transaction Document; 

    

(c)    any liability or obligation of Seller arising out of or in connection with the ownership of the Spontania Assets or the operation of the Spontania Business arising on or before the Closing; or  
(d)    any failure of the Seller to perform or otherwise pay or discharge any Seller Liability that is not an Assumed Spontania Liability. 
Notwithstanding anything contained herein to the contrary, the Seller’s aggregate indemnification obligation hereunder shall not exceed the Acquisition Escrow Amount unless and to the extent the Losses for which indemnification is being sought arise from any representation or warranty that was fraudulently provided, the Seller’s breach of the representations and warranties given in any Fundamental Representations, any statutory liens, or the Seller’s breach of the confidentiality obligations under Section 5.3.  
8.3    Indemnification of Seller.  From and after the Closing, Purchaser shall indemnify, hold harmless and defend the Seller and its directors, officers and shareholders from and against any and all Losses incurred by or suffered by the Seller arising out of any of the following: 
(a)    any breach or any inaccuracy in any representation or warranty made by Purchaser in this Agreement or any Transaction Document or any certificate delivered by or on behalf of Purchaser pursuant hereto; 
(b)    any breach by Purchaser of, or any failure by Purchaser to perform, any covenant or obligation required to be performed by it pursuant to this Agreement or any Transaction Document, or 
(c)    any failure of the Purchaser to perform the Assumed Spontania Liabilities.  
8.4    Payment.  Until expiration of the Escrow Period, the Purchaser may make a claim against the Acquisition Escrow Amount for indemnification pursuant to this Article VI on the terms and conditions of the Escrow Agreement.  
The Parties agrees that no claims shall be made until the aggregate Loss of such claims exceeds €17,500.
8.5    Indemnification for Additional Employee Liabilities In the event any Seller Employee who does not become a Newco Employee makes a claim against Newco or Purchaser that such persons should be Newco Employees or that amounts are owed to them by Newco or Purchaser, then Seller will indemnify, hold harmless and defend, Newco, Purchaser, and any Purchaser Indemnitees for any amounts related to such claims. 
8.6    Purchase Price Adjustments.  To the extent permitted by Law, any amounts payable under Sections 8.2, 8.3, or 8.5 shall be treated by the Parties as an adjustment to the Purchase Price. 

    

ARTICLE IX     
TERMINATION
9.1    Termination. This Agreement may be terminated at any time prior to the Closing:
(a)    by the mutual written consent of Seller and Purchaser;
(b)    by Purchaser by written notice to Seller, if Purchaser is not then in material breach of any provision of this Agreement, and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VI and such breach, inaccuracy or failure has not been cured by Seller within ten days of Seller’s receipt of written notice of such breach from Purchaser; 
(c)    by Seller by written notice to Purchaser, if Seller is not then in material breach of any provision of this Agreement, and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Purchaser pursuant to this Agreement that would give rise to the failure of any of the conditions specified in ARTICLE VII and such breach, inaccuracy or failure has not been cured by Purchaser within ten days of Purchaser’s receipt of written notice of such breach from Seller; 
(d)    by Purchaser by written notice to Seller if the Spin-Off Transaction is not approved by the Registry and completed by March 31, 2014; 
(e)    by Purchaser by written notice to Seller if Seller reasonably expects that the sum of the amounts to be paid by Purchaser (i) as Direct Creditor Payments; (ii) into Creditor Escrows; (iii) as a Release Amount; or (iv) directly to Identified Creditors that are not otherwise paid will exceed the Closing Payment Amount;  
(f)    by Purchaser by written notice to Seller if there is a Termination Right pursuant to Section 2.2(b)(iii)(B);
(g)    by Purchaser by written notice to Seller if the Spin-Off Transaction is not completed because the parties cannot resolve any defects in the Public Deed, as contemplated by Section 2.2(d);
(h)    by Purchaser by written notice to Seller if Seller shall take any action to alter the Public Deed or any part of the Spin-Off Transaction without approval of Purchaser; and 
(i)    by Purchaser or Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining or enjoining 

    

the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable. 
9.2    Effect of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:
(a)    as set forth in this Article IX and Article X hereof ; and
(b)    that nothing herein shall relieve any Party hereto from liability for any willful breach of any provision hereof or limit any Party’s legal rights,, including the right of a Party to seek specific performance in accordance with Section 10.12. 
ARTICLE X     
MISCELLANEOUS
10.1    No Third-Party Beneficiaries.  This Agreement is for the sole benefit of the Parties and shall not confer any legal or equitable, rights, benefits or remedies of any nature whatsoever upon any Person other than the Parties and their respective successors and permitted assigns.
10.2    Entire Agreement.  This Agreement and the other Transaction Documents constitute the entire agreement among the Parties and supersedes all prior and contemporaneous understandings, agreements, or representations by or among the Parties, written or oral, to the extent they have related in any way to the subject matter hereof.  In the event of any inconsistency between the statements in the body of this Agreement and (a) those in the other Transaction Documents or (b) the Exhibits and Schedules to this Agreement or the other Transaction Documents, the statements in the body of this Agreement will control
10.3    Further Assurances.  Following the Closing, each of the Parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents.
10.4    Succession and Assignment.  This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns.  Seller may not assign this Agreement or any of his or its rights, interests, or obligations hereunder without prior written approval of Purchaser.
10.5    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument.

    

10.6    Headings.  The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
10.7    Notices.  All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid.  Such communications must be sent to the respective parties at the following addresses:
	
			
	If to Seller:
	Dialcom Networks, S.L.
Plaza de España, no 3, 7o-B
50004 – Zaragoza - Spain
Facsimile: (+34) 976.21.18.73
E-mail: enrique.dominguez@dialcom.com
Attention: Enrique Dominguez. President and CEO

	with a copy to:
	Exlege Asesores, S.L.P.
Paseo de la Habana, no 16 – 1o.
28036 – Madrid - Spain
Facsímile: (+34) 91.563.44.23 
E-mail: nrodriguez@exlegeasesores.com
Attention: Nicolas Rodriguez

	If to Purchaser:
	Clearone, Inc.
5225 Wiley Post Way, Suite 500
Salt Lake City, Utah 84116
Facsimile:  +1 8013033333
Attention:  Zee Hakimoglu, President and CEO

	 

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

    

	
	
	Parsons Behle & Latimer
PO Box 45898
Salt Lake City, Utah 84145-0898
Telephone:  801 532 1234
Facsimile: 801 536 6111 
E-mail: gmangum@parsonsbehle.com
Attention: Geoff Mangum 

Roca Junyent
Jose Abascal, 56, 7th Floor
28003 Madrid Spain
Telephone: +34 91 781 97 60
Facsimile: +34 91 781 97 64
E-mail: p.callol@rocajunyent.com
Attention: Pedro Callol Garcia

Any Party may send any notice, request, demand, claim, or other communication hereunder to the intended recipient at the address set forth above using any other means (including personal delivery, expedited courier, messenger service, telecopy, telex, ordinary mail, or electronic mail), but no such notice, request, demand, claim, or other communication shall be deemed to have been duly given unless and until it actually is received by the intended recipient.  Any Party may change the address to which notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in the manner herein set forth.
10.8    Governing Law; Jurisdiction; Service of Process.  
(a)    This Agreement shall be governed by and construed in accordance with Spanish Law.  
(b)    The Parties agree that all disputes arising in connection with this Agreement, or further documents resulting thereof, shall exclusively be referred to the Courts of Zaragoza, with express waiver of any other jurisdiction that may correspond to any of them. 
10.9    Amendments and Waivers.  No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the all the Parties.  No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

    

10.10    Severability.  Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.  Upon such determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.
10.11    Expenses.  Each of the Parties will bear its own costs and expenses (including legal fees and expenses) incurred in connection with this Agreement and the transactions contemplated hereby, provided, however,.  For clarity, it will be the obligation of Seller to satisfy any claims or Liabilities related to any brokerage or success fee, as identified on Section 3.24 of the Disclosure Schedule or that otherwise becomes Sellers obligation.  Notary fees in connection with the transactions contemplated by this Agreement will be borne equally by the Parties.  
10.12    Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.
10.13    Incorporation of Exhibits and Schedules.  The Exhibits and Schedules identified in this Agreement are incorporated herein by reference and made a part hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement on as of the date first above written.
	
		
	 
	ClearOne, Inc.

	 
	By   
Name: Zeyneb Hakimoglu
Title: President & CEO

    

	
		
	 
	Dialcom Networks S.L.
 

	 
	By   
Name:Enrique Domínguez García
Title: President & CEO

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