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Exhibit 10.1  

 
 

AMENDED AND RESTATED
  STOCK INCENTIVE PLAN OF VICAL INCORPORATED    
  

SECTION 1.    ESTABLISHMENT AND PURPOSE.  

        The Plan was adopted on October 14, 1992. The Plan was amended and restated effective as of January 7, 1993, was amended and restated effective as
of December 4, 1996, was amended and restated March 11, 1998, was amended and restated March 2, 1999, was amended and restated effective as of May 30, 2001, was amended and
restated effective as of May 24, 2002, and was amended and restated effective as of June 14, 2002. 

        The
purpose of the Plan is to offer Employees an opportunity to acquire a proprietary interest in the success of the Company, or to increase such interest, by purchasing Shares of the
Company's Stock. The Plan provides both for the direct award or sale of Shares and for the grant of Options to purchase Shares. Options granted under the Plan may include NSOs as well as ISOs intended
to qualify under Section 422 of the Code. 

        The
Plan is intended to comply in all respects with Rule 16b-3 (or its successor) under the Exchange Act and shall be construed accordingly. 

SECTION 2.    DEFINITIONS.  

        (a)    "Board of Directors" shall mean the Board of Directors of the Company, as constituted from time
to time. 

        (b)    "Change in Control" shall mean the occurrence of either of the following events: 

        (i)    A
change in the composition of the Board of Directors, as a result of which fewer than one-half of the incumbent directors are directors who either: 

        (A)    Had
been directors of the Company 24 months prior to such change; or 

        (B)    Were
elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the directors who had been directors of the
Company 24 months prior to such change and who were still in office at the time of the election or nomination; or 

        (ii)    Any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) by the acquisition or aggregation of securities is or becomes the beneficial owner,
directly or indirectly, of securities of the Company representing 50 percent or more of the combined voting power of the Company's then outstanding securities ordinarily (and apart from rights
accruing under special circumstances) having the right to vote at elections of directors (the "Base Capital Stock"); except that any change in the relative beneficial ownership of the Company's
securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person's ownership of securities,
shall be disregarded until such person increases in any manner, directly or indirectly, such person's beneficial ownership of any securities of the Company. 

        (c)    "Code" shall mean the Internal Revenue Code of 1986, as amended. 

        (d)    "Committee" shall mean a committee of the Board of Directors, as described in Section 3(a). 

        (e)    "Common-Law Employee" means an individual paid from W-2 Payroll of the Company or a Subsidiary.
If, during any period, the Company (or a Subsidiary, as applicable) has not treated an individual as a Common-Law Employee and, for that reason, has not withheld employment taxes with 

1

 

respect to him or her, then that individual shall not be an Employee for that period, even if any person, court of law or government agency determines, retroactively, that individual is or was a
Common-Law Employee during all or any portion of that period. 

        (f)    "Company" shall mean Vical Incorporated, a Delaware corporation. 

        (g)    "Employee" shall mean (i) any individual who is a Common-Law Employee of the Company or of a
Subsidiary or (ii) an Outside Director and (iii) a consultant or adviser who provides services to the Company or a Subsidiary as an independent contractor. Service as an Outside Director
or as an independent contractor shall be considered employment for all purposes of the Plan except as provided in Section 4(b). 

        (h)    "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 

        (i)    "Exercise Price" shall mean the amount for which one Share may be purchased upon exercise of an option, as specified by
the Committee in the applicable Stock Option Agreement. 

        (j)    "Fair Market Value" shall mean the market price of Stock, determined by the Committee as follows: 

        (i)    If
Stock was traded over-the-counter on the date in question but was not traded on the Nasdaq Stock Market or the Nasdaq National Market, then
the Fair Market Value shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which
Stock is quoted or, if Stock is not quoted on any such system, the "Pink Sheets" published by the National Quotation Bureau, Inc.; 

        (ii)    If
Stock was traded over-the-counter on the date in question and was traded on the Nasdaq Stock Market or the Nasdaq National Market, then the
Fair Market Value shall be equal to the last transaction price quoted for such date by the Nasdaq Stock Market or the Nasdaq National Market; 

        (iii)    If
Stock was traded on a stock exchange on the date in question, then the Fair Market Value shall be equal to the closing price reported by the applicable composite
transactions report for such date; and 

        (iv)    If
none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall be based on the prices reported in the Western Edition of THE WALL STREET JOURNAL. Such determination shall be
conclusive and binding on all persons. 

        (k)    "Incentive Stock Option" or "ISO" shall mean an employee incentive stock
option described in Section 422(b) of the Code. 

        (l)    "Nonstatutory Option" or "NSO" shall mean an employee stock option not
described in Sections 422(b) or 423(b) of the Code. 

        (m)    "Offeree" shall mean an individual to whom the Committee has offered the right to acquire Shares under the Plan (other
than upon exercise of an Option). 

        (n)    "Option" shall mean an ISO or NSO granted under the Plan and entitling the holder to purchase Shares. 

        (o)    "Optionee" shall mean an individual who holds an Option. 

        (p)    "Outside Director" shall mean a member of the Board of Directors who is not a Common-Law Employee of the
Company or of a Subsidiary. 

2

 

        (q)    "Plan" shall mean this Stock Incentive Plan of Vical Incorporated, formerly the 1992 Stock Plan of Vical Incorporated. 

        (r)    "Purchase Price" shall mean the consideration for which one Share may be acquired under the Plan (other than upon
exercise of an Option), as specified by the Committee. 

        (s)    "Service" shall mean service as an Employee. 

        (t)    "Share" shall mean one share of Stock, as adjusted in accordance with Section 9 (if applicable). 

        (u)    "Stock" shall mean the Common Stock ($.01 par value) of the Company. 

        (v)    "Stock Option Agreement" shall mean the agreement between the Company and an Optionee, which contains the terms,
conditions and restrictions pertaining to the Optionee's Option. 

        (w)    "Stock Purchase Agreement" shall mean the agreement between the Company and an Offeree who acquires Shares under the
Plan, which contains the terms, conditions and restrictions pertaining to the acquisition of such Shares. 

        (x)    "Subsidiary" shall mean any corporation if the Company and/or one or more other Subsidiaries own not less than
50 percent of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the
Plan shall be considered a Subsidiary commencing as of such date. 

        (y)    "Total and Permanent Disability" shall mean that the Optionee is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than
one year. 

        (z)    "W-2 Payroll" shall mean whatever mechanism or procedure that the Company or a Subsidiary utilizes to pay any
individual which results in the issuance of a Form W-2 to the individual. "W-2 Payroll" does not include any mechanism or procedure which results in the issuance of any
form other than a Form W-2 to an individual, including, but not limited to, any Form 1099 which may be issued to an independent contractor, an agency employee or a
consultant. Whether a mechanism or procedure qualifies as a "W-2 Payroll" shall be determined in the absolute discretion of the Company (or Subsidiary, as applicable), and the Company or
Subsidiary determination shall be conclusive and binding on all persons. 

SECTION 3.    ADMINISTRATION.  

        (a)    Committee Composition.    The Plan shall be administered by the Committee. Except as provided below, the
Committee shall consist exclusively of directors of the Company, who shall be appointed by the Board. In addition, the composition of the Committee shall satisfy: 

        (i)    Such
requirements, if any, as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under
Rule 16b-3 (or its successor) under the Exchange Act; and 

        (ii)    Such
requirements as the Internal Revenue Service may establish for outside directors acting under plans intended to qualify for exemption under
Section 162(m)(4)(C) of the Code. 

The
Board may act on its own behalf with respect to Outside Directors and may also appoint one or more separate committees composed of one or more officers of the Company, who need not be directors of
the Company and who need not satisfy the foregoing requirements, who may administer the Plan with respect to Employees who are not "covered employees" under Section 162(m)(3) of the Code and
who are not required to report pursuant to Section 16(a) of the Exchange Act. 

3

 

        (b)    Committee Responsibilities.    The Committee shall (i) select the Employees who are to receive Options
and other rights to acquire shares under the Plan, (ii) determine the type, number, vesting requirements and other features and conditions of such Options or other rights,
(iii) interpret the Plan and (iv) make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement
the Plan. The Committee's determinations under the Plan shall be final and binding on all persons. 

SECTION 4.    ELIGIBILITY.  

        (a)    General Rules.    Only Employees (including, without limitation, independent contractors who are not members of
the Board) shall be eligible for designation as Optionees or Offerees by the Committee. 

        (b)    Incentive Stock Options.    Only Employees who are Common-Law Employees of the Company or a
Subsidiary shall be eligible for the grant of ISOs. In addition, an Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company or any of its
Subsidiaries shall not be eligible for the grant of an ISO unless the requirements set forth in Section 422(c)(5) of the Code are satisfied. 

SECTION 5.    STOCK SUBJECT TO PLAN.  

        (a)    Basic Limitation.    Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares.
The aggregate number of Shares which maybe issued under the Plan (upon exercise of Options or other rights to acquire Shares) shall not exceed 4,700,000 Shares (subject to adjustment pursuant to
Section 9). Of the Shares available hereunder, no more than 30% in the aggregate shall be available with respect to Outside Directors, subject to adjustment pursuant to Section 9. The
number of Shares that are subject to Options or other rights outstanding at any time under the Plan shall not exceed the number of Shares that then remain available for issuance under the Plan. The
Company, during the term of the Plan, shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan. Notwithstanding any other provision of the Plan, no
Employee shall receive a grant of more than 300,000 Shares in any calendar year. 

        (b)    Additional Shares.    In the event that any outstanding option or other right for any reason expires or is
canceled or otherwise terminated, the Shares allocable to the unexercised portion of such Option or other right shall again be available for the purposes of the Plan. In the event that Shares issued
under the Plan are reacquired by the Company pursuant to any forfeiture provision, right of repurchase or right of first refusal, such Shares shall again be available for the purposes of the Plan;
provided, however, that no such reacquired Shares may be used for the grant of an ISO. 

SECTION 6.    TERMS AND CONDITIONS OF AWARDS OR SALES.  

        (a)    Stock Purchase Agreement.    Each award or sale of Shares under the Plan (other than upon exercise of an
option) shall be evidenced by a Stock Purchase Agreement between the Offeree and the Company. Such award or sale shall be subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Purchase Agreement. The provisions of the various Stock
Purchase Agreements entered into under the Plan need not be identical. 

        (b)    Duration of Offers and Non-Transferability of Rights.    Any right to acquire Shares under the Plan
(other than an Option) shall automatically expire if not exercised by the Offeree within 30 days after the grant of such right was communicated to the Offeree by the Committee. Such right shall
not be transferable and shall be exercisable only by the Offeree to whom such right was granted. 

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        (c)    Purchase Price.    The Purchase Price of Shares to be offered under the Plan shall not be less than the par
value of such Shares. Subject to the preceding sentence, the Purchase Price shall be determined by the Committee in its sole discretion. The Purchase Price shall be payable in a form described in
Section 8. 

        (d)    Withholding Taxes.    As a condition to the purchase of Shares, the Offeree shall make such arrangements as the
Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such purchase. The Committee may permit the Offeree to
satisfy all or part of his or her tax obligations related to such Shares by having the Company withhold a portion of any Shares that otherwise would be issued to him or her or by surrendering any
Shares that previously were acquired by him or her. The Shares withheld or surrendered shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. The
payment of taxes by assigning Shares to the Company, if permitted by the Committee, shall be subject to such restrictions as the Committee may impose, including any restrictions required by rules of
the Securities and Exchange Commission. 

        (e)    Restrictions on Transfer of Shares.    Any Shares awarded or sold under the Plan shall be subject to such
special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable
Stock Purchase Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. 

        (f)    Effect of Change in Control.    The Committee may set forth in an Offeree's Stock Purchase Agreement, or in any
subsequent written agreement between the Company and the Offeree, terms upon which the Shares shall become fully vested on an accelerated basis in the event that a Change in Control occurs with
respect to the Company; provided, however, that in the absence of any such terms, no such acceleration shall occur with respect to the Shares. 

SECTION 7.    TERMS AND CONDITIONS OF OPTIONS.  

        (a)    Stock Option Agreement.    Each grant of an Option under the Plan shall be evidenced by a Stock Option
Agreement between the Optionee and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Agreement. The Stock Option Agreement shall specify whether the Option is an ISO or
an NSO. The provisions of the various Stock Option Agreements entered into under the Plan need not be identical. 

        (b)    Number of Shares.    Each Stock Option Agreement shall specify the number of Shares that are subject to the
Option and shall provide for the adjustment of such number in accordance with Section 9. 

        (c)    Exercise Price.    Each Stock Option Agreement shall specify the Exercise Price; provided that the Exercise
Price shall in no event be less than 100% of the Fair Market Value of a Share on the date of grant (except as a higher percentage may be required by Section 4(b)). Subject to the preceding
sentence, the Exercise Price under any Option shall be determined by the Committee at its sole discretion. The Exercise Price shall be payable in a form described in Section 8. 

        (d)    Withholding Taxes.    As a condition to the exercise of an Option, the Optionee shall make such arrangements as
the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Optionee shall also make such
arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired
by exercising an Option. The Committee may permit the Optionee to satisfy all or part of his 

5

 

or her tax obligations related to the Option by having the Company withhold a portion of any Shares that otherwise would be issued to him or her or by surrendering any Shares that previously were
acquired by him or her. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. The payment of taxes by assigning Shares to the Company, if
permitted by the Committee, shall be subject to such restrictions as the Committee may impose, including any restrictions required by rules of the Securities and Exchange Commission. 

        (e)    Exercisability.    Each Stock Option Agreement shall specify the date when all or any installment of the Option
is to become exercisable. The vesting of any Option shall be determined by the Committee at its sole discretion. A Stock Option Agreement may provide for accelerated exercisability in the event of the
Optionee's death, Total and Permanent Disability, retirement or other events. 

        (f)    Effect of Change in Control.    The Committee may set forth in an Optionee's Stock Option Agreement, or in any
subsequent written agreement between the Company and the Optionee, terms upon which the Option grant shall become exercisable on an accelerated basis in the event that a Change in Control occurs with
respect to the Company; provided, however, that in the absence of any such terms, no such acceleration shall occur with respect to the Option. 

        (g)    Term.    The Stock Option Agreement shall specify the term of the Option. The term shall not exceed
10 years from the date of grant, except as otherwise provided in Section 4(b). Subject to the preceding sentence, the Committee at its sole discretion shall determine when an Option is
to expire. 

        (h)    Non-Transferability.    An option granted under the Plan shall not be anticipated, assigned,
attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law, except as approved by the Committee. Notwithstanding
the foregoing, ISOs may not be transferable. However, this Section 7 shall not preclude an Optionee from designating a beneficiary who will receive any outstanding Options in the event of the
Optionee's death, nor shall it preclude a transfer of Options by will or by the laws of descent and distribution. 

        (i)    Termination of Service (except by death).    If an Optionee's Service terminates for any reason other than the
Optionee's death, then the Optionee's Option(s) shall, except to the extent determined by the Committee, expire on the earliest of the following occasions: 

        (i)    The
expiration date determined pursuant to Subsection (g) above; 

        (ii)    The
date 90 days after the termination of the Optionee's Service for any reason other than Total and Permanent Disability; or 

        (iii)    The
date six months after the termination of the Optionee's Service by reason of Total and Permanent Disability. 

The
Optionee may exercise all or part of the Optionee's Option(s) at any time before the expiration of such Option(s) under the preceding sentence, but only to the extent that such Option(s) had
become exercisable before the Optionee's Service terminated. The balance of such Option(s) shall lapse when the Optionee's Service terminates. In the event that the Optionee dies after the termination
of the Optionee's Service but before the expiration of the Optionee's Option(s), all or part of such Option(s) may be exercised (prior to expiration) by the executors or administrators of the
Optionee's estate or by any person who has acquired such Option(s) directly from the Optionee by bequest, beneficiary designation or inheritance, but only to the extent that such Option(s) had become
exercisable before the Optionee's Service terminated. 

        (j)    Leaves of Absence.    For purposes of Subsection (i) above, Service shall, except to the extent
determined by the Committee, be deemed to continue while the Optionee is on military leave, sick-leave or other bona fide leave of absence (as determined by the Committee). The foregoing
notwithstanding, in the case of an ISO granted under the Plan, Service shall not be deemed to continue 

6

 

beyond the first 90 days of such leave, unless the Optionee's reemployment rights are guaranteed by statute or by contract. 

        (k)    Death of Optionee.    If an Optionee dies while the Optionee is in Service, then the Optionee's Option(s)
shall, except to the extent determined by the Committee, expire on the earlier of the following dates: 

        (i)    The
expiration date determined pursuant to Subsection (g) above; or 

        (ii)    The
date six months after the Optionee's death. 

All
or part of the Optionee's Option(s) may be exercised at any time before the expiration of such Option(s) under the preceding sentence by the executors or administrators of the Optionee's estate or
by any person who has acquired such Option(s) directly from the Optionee by bequest, beneficiary designation or inheritance, but only to the extent that such Option(s) had become exercisable before
the Optionee's death. The balance of such Option(s) shall lapse when the Optionee dies. 

        (l)    No Rights as a Stockholder.    An Optionee, or a transferee of an Optionee, shall have no rights as a
stockholder with respect to any Shares covered by the Optionee's Option until such person is entitled, pursuant to the terms of such Option, to receive such Shares. No adjustments shall be made,
except as provided in Section 9. 

        (m)    Modification, Extension and Assumption of Options.    Within the limitations of the Plan, the Committee may
modify, extend or assume outstanding Options or may accept the cancellation of outstanding Options (whether granted by the Company or another issuer) in return for the grant of new Options for the
same or a different number of Shares and at the same or a different Exercise Price. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, impair the
Optionee's rights or increase the Optionee's obligations under such Option. 

        (n)    Restrictions on Transfer of Shares.    Any Shares issued upon exercise of an Option shall be subject to such
special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable
Stock Option Agreement and shall apply in addition to any restrictions that may apply to holders of Shares generally. 

SECTION 8.    PAYMENT FOR SHARES.  

        (a)    General Rule.    The entire Purchase Price or Exercise Price of Shares issued under the Plan shall be payable
in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Subsections (b), (c), (d) and (e) below. 

        (b)    Surrender of Stock.    To the extent that a Stock Option Agreement so provides, payment may be made all or in
part with Shares which have already been owned by the Optionee or the Optionee's representative for more than six months and which are surrendered to the Company in good form for transfer. Such Shares
shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. 

        (c)    Promissory Note.    To the extent that a Stock Option Agreement or Stock Purchase Agreement so provides, a
portion of the Exercise Price or Purchase Price (as the case may be) of Shares issued under the Plan may be paid with a full-recourse promissory note, provided that (i) the par
value of such Shares must be paid in lawful money of the United States of America at the time when such Shares are purchased, (ii) the Shares are pledged as security for payment of the
principal amount of the promissory note and interest thereon and (iii) the interest rate payable under the terms of the promissory note shall not be less than the minimum rate (if any) required
to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Committee (at its sole 

7

 

discretion) shall specify the term, interest rate, amortization requirements (if any) and other provisions of such note. 

        (d)    Exercise/Sale.    To the extent that a Stock Option Agreement so provides, payment may be made all or in part
by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the
Company in payment of all or part of the Exercise Price and any withholding taxes. 

        (e)    Exercise/Pledge.    To the extent that a Stock Option Agreement so provides, payment may be made all or in part
by the delivery (on a form prescribed by the Company) of an irrevocable direction to pledge Shares to a securities broker or lender approved by the Company, as security for a loan, and to deliver all
or part of the loan proceeds to the Company in payment of all or part of the Exercise Price and any withholding taxes. 

SECTION 9.    ADJUSTMENT OF SHARES.  

        (a)    General.    In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in
Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a
material effect on the value of Shares, a combination or consolidation of the outstanding Stock into a lesser number of Shares, a recapitalization, a spinoff, a reclassification or a similar
occurrence, the Committee shall make appropriate adjustments in one or more of (i) the number of Shares available for future grants under Section 5(a), (ii) the number of Shares
covered by each outstanding Option or (iii) the Exercise Price under each outstanding Option. 

        (b)    Mergers and Consolidations.    In the event that the Company is a party to a merger or consolidation,
outstanding Options shall be subject to the agreement of merger or consolidation. Such agreement may provide for the assumption of outstanding Options by the surviving corporation or its parent or for
their continuation by the Company (if the Company is the surviving corporation). In the event the Company is not the surviving corporation and the surviving corporation will not assume the outstanding
Options, the agreement of merger or consolidation may provide for payment of a cash settlement for exercisable options equal to the difference between the amount to be paid for one Share under such
agreement and the Exercise Price and for the cancellation of Options not exercised or settled, in either case without the Optionees' consent. 

        (c)    Reservation of Rights.    Except as provided in this Section 9, an Optionee or Offeree shall have no
rights by reason of (i) any subdivision or consolidation of shares of stock of any class, (ii) the payment of any dividend or (iii) any other increase or decrease in the number of
shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Option. The grant of an Option pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of
its business or assets. 

SECTION 10.    SECURITIES LAWS.  

        Shares shall not be issued under the Plan unless the issuance and delivery of such Shares comply with (or are exempt from) all applicable requirements of law,
including (without limitation) the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of
any stock exchange on which the Company's securities may then be listed. 

8

 

SECTION 11.    NO EMPLOYMENT RIGHTS.  

        No provision of the Plan, nor any right or Option granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to
remain an Employee. The Company and its Subsidiaries reserve the right to terminate any person's Service at any time and for any reason. 

SECTION 12.    DURATION AND AMENDMENTS.  

        (a)    Term of the Plan.    The Plan, as set forth herein, shall become effective as of the date indicated herein. The
Plan shall terminate automatically 10 years after its amendment and restatement by the Board of Directors to read as set forth herein and may be terminated on any earlier date pursuant to
Subsection (b) below. 

        (b)    Right to amend or Terminate the Plan.    The Board of Directors may at any time and for any reason, amend,
suspend or terminate the Plan. An amendment of the Plan shall be subject to the approval the Company's stockholders only to the extent required by applicable laws, regulations and rules, including the
rules of any applicable exchange. 

        (c)    Effect of Amendment or Termination.    No Shares shall be issued or sold under the Plan after the termination
thereof, except upon exercise of an Option granted prior to such termination. The termination of the Plan, or any amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan. 

SECTION 13.    EXECUTION.  

        To record the amendment and restatement of the Plan by the Board of Directors, effective June 14, 2002, the Company has caused its authorized officer to
execute the same. 

	 	 	VICAL INCORPORATED
	 	 	 	 	 
	

 	
 	

By:	
 	

/s/  MARTHA J. DEMSKI      
 Martha J. Demski

9

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EXHIBIT 10.1    
  

ASSET
PURCHASE AGREEMENT 

by
and among 

EQUITY
MARKETING, INC.,

a Delaware corporation 

as
"Acquiror", 

PROMOTIONAL
MARKETING, L.L.C.

d/b/a UPSHOT,

an Illinois limited liability company 

as
"Seller", 

and 

HA-LO
INDUSTRIES, INC.,

a Delaware corporation 

as
"Parent" 

Dated:
May 22, 2002 

  

 
 

TABLE OF CONTENTS    
  

	 
	 
	 	Page

	ARTICLE I. DEFINITIONS	 	1
	 	

1.1.	

Defined Terms	
 	

1
	 	1.2.	Other Defined Terms	 	10
	

ARTICLE II. PURCHASE AND SALE OF ASSETS; PURCHASE PRICE	
 	

11
	 	

2.1.	

Transfer of Assets	
 	

11
	 	2.2.	Assumption of Liabilities	 	11
	 	2.3.	Nonassumption of Liabilities	 	12
	 	2.4.	Purchase Price	 	12
	 	2.5.	Pre-Closing Adjustment	 	13
	 	2.6.	Post-Closing Adjustment	 	13
	 	2.7.	Earnout	 	14
	 	2.8.	Transfer Taxes	 	16
	

ARTICLE III. CLOSING	
 	

16
	 	

3.1.	

Closing	
 	

16
	 	3.2.	Deliveries at Closing	 	16
	 	3.3.	Other Closing Transactions	 	18
	 	3.4.	Other Deliveries	 	18
	

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES	
 	

18
	 	

4.1.	

Organization of Seller and Parent	
 	

18
	 	4.2.	Subsidiaries	 	18
	 	4.3.	Authorization	 	19
	 	4.4.	Consents and Approvals	 	19
	 	4.5.	Absence of Certain Changes or Events	 	19
	 	4.6.	Facilities	 	21
	 	4.7.	Assets	 	21
	 	4.8.	Contracts and Commitments	 	21
	 	4.9.	Permits	 	23
	 	4.10.	No Conflict or Violation	 	24
	 	4.11.	Financial Statements	 	24
	 	4.12.	Undisclosed Liabilities	 	24
	 	4.13.	Books and Records	 	24
	 	4.14.	Litigation	 	25
	 	4.15.	Labor Matters	 	25
	 	4.16.	Compliance with Law	 	25
	 	4.17.	No Brokers	 	25
	 	4.18.	No Other Agreements to Sell the Assets or Membership Interest of Seller	 	25
	 	4.19.	Intellectual Property	 	26
	 	4.20.	Employee Matters	 	27
	 	4.21.	Transactions with Certain Persons	 	29
	 	4.22.	Certain Payments	 	29
	 	4.23.	Tax Matters	 	29
	 	4.24.	Insurance	 	30
	 	4.25.	Accounts Receivable	 	30
	 	4.26.	Other Current Assets	 	31

i

 

	 	4.27.	Customers, Distributors and Suppliers	 	31
	 	4.28.	Compliance with Environmental Laws	 	31
	 	4.29.	Billings	 	31
	 	4.30.	Banking Relationships	 	32
	 	4.31.	Relationship of Seller and Parent	 	32
	

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ACQUIROR	
 	

32
	 	

5.1.	

Organization of Acquiror	
 	

32
	 	5.2.	Authorization	 	32
	 	5.3.	No Conflict or Violation	 	33
	 	5.4.	SEC Filings	 	33
	

ARTICLE VI. COVENANTS OF THE SELLER PARTIES AND ACQUIROR	
 	

33
	 	

6.1.	

Confidentiality and Non-Competition	
 	

33
	 	6.2.	Further Assurances	 	35
	 	6.3.	No Solicitation	 	36
	 	6.4.	Notification of Certain Matters	 	36
	 	6.5.	Investigation by Acquiror	 	36
	 	6.6.	Conduct of Business	 	37
	 	6.7.	Employee Matters	 	37
	 	6.8.	Bankruptcy Court Approval	 	38
	 	6.9.	Corporate Name of Subsidiaries of Seller	 	39
	 	6.10.	Patent License Agreement	 	39
	

ARTICLE VII. CONSENTS TO ASSIGNMENT	
 	

39
	 	

7.1.	

Consents to Assignment	
 	

39
	

ARTICLE VIII. CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS	
 	

40
	 	

8.1.	

Representations, Warranties and Covenants	
 	

40
	 	8.2.	No Actions or Court Orders	 	40
	 	8.3.	Authorization	 	40
	 	8.4.	Ancillary Agreements	 	40
	 	8.5.	Other Deliveries	 	40
	 	8.6.	Effectiveness of Lease Amendment	 	40
	 	8.7.	Approval Order	 	40
	

ARTICLE IX. CONDITIONS TO ACQUIROR'S OBLIGATIONS	
 	

41
	 	

9.1.	

Representations, Warranties and Covenants	
 	

41
	 	9.2.	Consents; Regulatory Compliance and Approval	 	41
	 	9.3.	No Actions or Court Orders	 	41
	 	9.4.	Material Changes	 	41
	 	9.5.	Other Deliveries	 	41
	 	9.6.	Effectiveness of Lease Amendment	 	41
	 	9.7.	Final Order	 	41
	

ARTICLE X. ACTIONS BY SELLER AND ACQUIROR AFTER THE CLOSING	
 	

41
	 	

10.1.	

Books and Records; Tax Matters	
 	

41
	 	10.2.	Survival of Representations, Etc.	 	42
	 	10.3.	Indemnification	 	42
	 	10.4.	Holdback Amount	 	45

ii

 

	 	10.5.	Bulk Sales	 	45
	 	10.6.	Taxes	 	45
	 	10.7.	Insurance	 	46
	 	10.8.	Exclusive Remedy	 	46
	 	10.9.	Right of Offset	 	46
	

ARTICLE XI. TERMINATION	
 	

46
	 	

11.1.	

Termination	
 	

46
	 	11.2.	Termination Payment	 	47
	 	11.3.	Procedure and Effect of Termination	 	48
	

ARTICLE XII. MISCELLANEOUS	
 	

48
	 	

12.1.	

Assignment	
 	

48
	 	12.2.	Notices	 	48
	 	12.3.	Choice of Law	 	49
	 	12.4.	Entire Agreement; Amendments and Waivers	 	49
	 	12.5.	Counterparts	 	49
	 	12.6.	Expenses	 	49
	 	12.7.	Severability	 	49
	 	12.8.	Headings	 	49
	 	12.9.	Publicity	 	50
	 	12.10.	Cumulative Remedies	 	50
	 	12.11.	No Third-Party Beneficiaries	 	50
	 	12.12.	Arbitration; Process	 	50
	 	12.13.	WAIVER OF JURY TRIAL	 	50

iii

 
 

ASSET PURCHASE AGREEMENT    
  

        This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of May 22, 2002, is entered into by and among
EQUITY MARKETING, INC., a Delaware corporation ("Acquiror"), PROMOTIONAL MARKETING, L.L.C. d/b/a UPSHOT, an Illinois limited liability company
("Seller"), and HA-LO INDUSTRIES, INC., a Delaware corporation ("Parent" and together
with Seller, the "Seller Parties"). 

 
 

RECITALS    
  

        WHEREAS, Seller wishes to sell to Acquiror, and Acquiror wishes to purchase from Seller, the Assets (as defined below) at the price and under the specified terms
and conditions as set forth herein; 

        WHEREAS,
as the sole member of Seller, Parent will benefit from the sale of the Assets to Acquiror; 

        WHEREAS,
Parent has filed a voluntary bankruptcy petition pursuant to Chapter 11 of Title 11 of the United States Code (the "Bankruptcy
Code") before the United States Bankruptcy Court for the District of Delaware in Wilmington, Delaware, Case No. 01-10000 (the
"Case"); 

        WHEREAS,
the venue for the Case has been transferred to the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the
"Bankruptcy Court"); and 

        WHEREAS,
Parent intends to seek an order of the Bankruptcy Court or such other court exercising jurisdiction over the Case approving Parent's entering into this Agreement and performing
its obligations contemplated hereby. 

 
 

AGREEMENT    
  

        NOW THEREFORE, in consideration of the respective covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows: 

 
 

ARTICLE I.
  
    DEFINITIONS    
  

        1.1    Defined Terms.    As used herein, the terms below shall have the following meanings. Any such term, unless the
context otherwise requires, may be used in the singular or plural, depending upon the reference. 

        "Accounts Receivable" shall mean all accounts and notes receivable (whether current or noncurrent) of Seller, including trade accounts
receivable (including accounts receivable for any products shipped prior to the Closing Date but not invoiced) outstanding as of the Closing Date, and any other rights to receive payments of Seller as
of the Closing Date in respect of goods shipped, products sold or services rendered prior to the Closing Date. 

        "Acquiror's Expenses" shall mean all out-of-pocket expenses incurred by Acquiror, any of its Representatives or
any of its Affiliates in connection with the authorization, preparation, negotiation, execution and performance of this Agreement and the Ancillary Agreements, appearances before and proceedings
involving the Bankruptcy Court, arranging financing for the transaction, and the due diligence investigation of Seller (including, but not limited, to (a) fees and expenses of lenders or
financing sources and (b) financial advisors', investment bankers', accountants', attorneys', experts' or consultants' fees and expenses); provided,
however, that Acquiror's Expenses shall not exceed $475,000 and Acquiror's expenses shall exclude out-of-pocket expenses of Acquiror's employees. 

        "Action" shall mean any action, complaint claim, suit, litigation, proceeding, labor dispute, arbitral action, governmental audit,
inquiry, criminal prosecution, civil or criminal investigation or unfair labor practice charge or complaint. 

 

        "Affiliate" shall mean, when used with reference to any specified Person, any other Person directly or indirectly controlling, controlled
by, or under direct or indirect common control with, such specified Person. For the purposes of this definition, "control," when used with respect to any specified Person, means the power to direct or
cause the direction of management or policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative of the foregoing. 

        "Approval Order" shall mean an order of the Bankruptcy Court, substantially in the form attached hereto as  Exhibit A, with such modifications thereto as the parties
shall each approve, authorizing and approving, among other things, the sale, transfer
and assignment of the Assets to Acquiror in accordance with the terms and conditions of this Agreement." 

        "Assets" shall mean all of the right, title and interest of Seller in and to the business, properties, assets and rights of any kind,
whether tangible or intangible, real or personal and constituting, or used or useful in connection with, or related to, the Business, including, without limitation, all of Seller's right, title and
interest in the following: 

        (a)  all
cash and cash equivalents held by Seller; 

        (b)  all
Accounts Receivable (whether current or noncurrent); 

        (c)  all
Contract Rights, to the extent transferable; 

        (d)  all
Leases; 

        (e)  all
Leasehold Estates; 

        (f)    all
Fixtures and Equipment; 

        (g)  all
Inventory; 

        (h)  all
Books and Records; 

        (i)    all
Intellectual Property of Seller; 

        (j)    all
Permits, to the extent transferable; 

        (k)  all
available supplies, sales literature, promotional literature, customer, supplier and distributor lists, art work, display units, telephone and fax numbers and
purchasing records related to the Business; 

        (l)    all
rights under or pursuant to all warranties, representations and guarantees made by suppliers in connection with the Assets or services furnished to Seller pertaining
to the Business or affecting the Assets, to the extent such warranties, representations and guarantees are assignable; 

        (m)  all
refunds, deposits, prepayments and prepaid expenses of Seller; and 

        (n)  all
claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind, against any person or entity, including without
limitation any liens, security interests, pledges or other rights to payment or to enforce payment in connection with products delivered by Seller on or prior to the Closing Date other than those set
forth on Exhibit B attached hereto; 

but
excluding therefrom (in each case) the Excluded Assets. 

        "Assignment and Assumption of Contract Rights" shall mean the Assignment and Assumption of Contract Rights, substantially in the form
attached hereto as Exhibit C to be entered into at the Closing by and between Seller and Acquiror. 

2

 

        "Assignment and Assumption of Leases" shall mean the Assignment and Assumption of Leases, substantially in the form attached hereto as  Exhibit D to be entered into
at the Closing by and between Seller and Acquiror. 

        "Assignment of Intellectual Property" shall mean the Assignment of Intellectual Property Rights, substantially in the form attached hereto
as Exhibit E, to be executed at the Closing by Seller in favor of Acquiror. 

        "Balance Sheet" shall mean the balance sheet of Seller at the date indicated thereon, together with the notes thereto. 

        "Balance Sheet Date" shall mean December 31, 2001. 

        "Balance Sheet Liabilities" shall mean (i) the Current Liabilities and (ii) the non-current portion of the
deferred bonus liability to Jon Cheffings in the amount of $237,500 pursuant to Section 3(b) of that certain Employment Agreement, dated as of January 3, 2000, and amended on
January 28, 2002, by and between Jon Cheffings and Seller (as assignee of Parent's rights pursuant to that certain Assignment and Assumption Agreement, dated as of July 27, 2001, by and
between Seller and Parent), to be set forth on the Pre-Closing Balance Sheet and the Closing Balance Sheet. 

        "Benefit Arrangement" shall mean any employment, consulting, severance or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for insurance coverage (including, without limitation, any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits, retirement benefits, life, health, disability or accident benefits (including, without limitation, any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code providing for the same or other benefits) or for deferred compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive compensation or post-retirement insurance, compensation or benefits which is not a Welfare Plan, Pension Plan or
Multiemployer Plan. 

        "Bidding Procedures" shall mean those bidding procedures, attached hereto as  Exhibit F, to be employed with respect to the sale of the Assets subject to Bankruptcy
Court approval pursuant to the Sale Procedure Order. 

        "Bill of Sale" shall mean the Bill of Sale, substantially in the form attached hereto as  Exhibit G, to be executed at the Closing by Seller in favor of Acquiror.

        "Bonus Amount" shall mean Twenty One Million Dollars ($21,000,000.00). 

        "Books and Records" shall mean all business records, tangible data, documents, management information systems (including related computer
software), files, customer lists, supplier lists, blueprints,
specifications, designs, drawings, plans, operation or maintenance manuals, bids, personnel records, invoices, sales literature, all Tax Returns and all worksheets, notes, files or documents related
thereto, and all other books and records maintained by Seller. 

        "Business" shall mean any business of Seller, including without limitation, Seller's business of providing advertising, direct marketing,
promotional marketing, brand strategy and identity, sports marketing and event marketing services, excluding the business of the Subsidiaries of Seller listed on  Schedule 4.2. 

        "Business Day" shall mean a day other than Saturday, Sunday or any day on which banks located in the State of California are authorized or
obligated to close. 

        "Change of Control of Acquiror" shall mean a sale of all or substantially all of the assets of Acquiror, a sale of the majority of the
capital stock of Acquiror, or any other transaction or series 

3

 

of related transactions (including, without limitation, any reorganization, merger or consolidation) as a result of which Acquiror's stockholders of record as constituted immediately prior to such
transaction (or series of related transactions) hold less than fifty (50%) of the voting power of the surviving or acquiring entity immediately following consummation of such transaction (or series of
related transactions). 

        "Closing Adjustment Escrow Agreement" shall mean that certain Closing Adjustment Escrow Agreement, to be entered into on the Closing Date,
by and among Acquiror, Seller, and the escrow agent named therein, substantially in the form attached hereto as Exhibit H. 

        "Closing Net Working Capital" shall mean Current Assets minus Balance Sheet Liabilities, in each case, as of the Closing Date. 

        "Code" shall mean the Internal Revenue Code of 1986, as amended. 

        "Contract" shall mean any agreement, contract, note, loan, evidence of indebtedness, purchase order, letter of credit, indenture, security
or pledge agreement, franchise agreement, undertaking, practice, covenant not to compete, employment agreement, license, instrument, obligation or commitment to which Seller is a party or is bound,
whether oral or written, but excluding all Leases. 

        "Contract Rights" shall mean all of Seller's rights and obligations under the Contracts and Leases identified on  Schedule 4.8 as "Assumed Contracts" or "Assumed
Leases" and under any Contracts or Leases not so listed which Acquiror, in its sole discretion,
elects to accept and assume. 

        "Court Order" shall mean any judgment, decision, consent decree, injunction, ruling or order of any federal, state or local court or
governmental agency, department or authority that is binding on any person or its property under applicable law. 

        "Current Assets" shall mean the current assets (excluding intercompany receivables of Seller or the Business) of the Business (to the
extent included in the Assets) determined in accordance with GAAP. 

        "Current Liabilities" shall mean the current liabilities of the Business incurred in the ordinary course of business determined in
accordance with GAAP (excluding any (i) intercompany liabilities of Seller or the Business, (ii) liabilities (including accrued liabilities) for Taxes of Seller, (iii) liabilities
relating to the New York and Toronto operations of the Business, (iv) liabilities to John R. Kelley, Jr. and/or Carol R. Griseto, including any liabilities that may arise as a result of the
consummation of the transactions contemplated by this Agreement, (v) severance liabilities, and (vi) indebtedness for borrowed money). 

        "Default" shall mean (a) a breach of or default under any Contract or Lease, (b) the occurrence of an event that with the
passage of time or the giving of notice or both would constitute a breach of or default under any Contract or Lease, or (c) the occurrence of an event that with or without the passage of time
or the giving of notice or both would give rise to a right of termination, renegotiation or acceleration under any Contract or Lease. 

        "Disclosure Schedule" shall mean a schedule executed and delivered by the Seller Parties to Acquiror as of the date hereof which sets
forth the exceptions to the representations and warranties contained in Article IV hereof and certain other information called for by this
Agreement. Unless otherwise specified, each reference in this Agreement to any numbered schedule is a reference to that numbered schedule which is included in the Disclosure Schedule. 

        "Employee Plans" shall mean all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans which are, or within the past
six years were, sponsored, maintained, contributed 

4

 

to or required to be contributed to by Seller, Seller or any of their ERISA Affiliates or under which Parent, Seller or any of their ERISA Affiliates may incur any liability. 

        "Encumbrance" shall mean any claim (as defined in Section 101(5) of the Bankruptcy Code), lien, pledge, option, charge, easement,
security interest, deed of trust, mortgage, right-of-way, encroachment,
building or use restriction, conditional sales agreement, encumbrance or other right of third parties, whether voluntarily incurred or arising by operation of law, and includes, without limitation,
any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof. 

        "Environmental Laws" shall mean all applicable federal, state, or local laws, statutes, or regulations, which regulate or relate to the
protection or clean up of the environment; the use, treatment, storage, transportation, handling, disposal or release of hazardous substances, or the health and safety of persons or property. 

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. 

        "ERISA Affiliate" shall mean, with respect to any Person, any entity which is (or at any relevant time was) a member of a "controlled
group of corporations" with, under "common control" with, or a member of an "affiliated service group" with, such Person as defined in Section 414(b), (c), (m) or (o) of the Code,
but only with respect to such time that such entity was an ERISA Affiliate. 

        "Escrow Agent" shall mean a bank or other institution reasonably acceptable to Acquiror and Seller to be designated by Acquiror and Seller
prior to the Closing. 

        "Escrow Indemnification Agreement" shall mean that certain Escrow Indemnification Agreement, to be entered into on the Closing Date, by
and among Acquiror, Seller and the Escrow Agent, substantially in the form attached hereto as Exhibit I. 

        "Estimated Closing Net Working Capital" shall mean Current Assets minus Balance Sheet Liabilities, in each case as set forth on the
Pre-Closing Balance Sheet. 

        "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 

        "Excluded Assets" shall mean the following assets of Seller which are not to be acquired by Acquiror hereunder: 

        (a)  all
Permits, to the extent not transferable; 

        (b)  all
tangible assets of the Business located at and exclusively used in connection with the New York and Toronto offices of the Business and all Contracts and Leases
relating primarily to the New York and Toronto operations of the Business; 

        (c)  all
claims, causes of action, choses in action, rights of recovery and rights of set-off of any kind against any Person arising out of or relating to the
Assets to the extent related to the Excluded Liabilities; 

        (d)  all
obligations of Parent or its Affiliates to Seller; 

        (e)  interests
in the Subsidiaries of Seller listed on Schedule 4.2; and 

        (f)    such
assets set forth on Exhibit J attached hereto. 

        "Excluded Liabilities" shall mean any and all Liabilities of any Seller Party (including any Liability to or in respect of any employee or
former employee of Seller or its ERISA Affiliates, including, without limitation any Liability under any employment agreement that is not an 

5

 

Assumed Contract, whether or not written, between Seller and any person, and any Liability under or with respect to any Employee Plan), other than the Assumed Liabilities. 

        "Facilities" shall mean all plants, offices, manufacturing facilities, stores, warehouses, improvements, administration buildings, and all
real property and related facilities of Seller. 

        "Facility Leases" shall mean all of the leases of Facilities listed on  Schedule 4.8(a)(xiii). 

        "Final Order" shall mean an order or determination by the Bankruptcy Court (a) that is not reversed, stayed, enjoined, set aside,
annulled or suspended within the deadlines provided by applicable statutes or regulations, (b) with respect to which no request for stay, motion or petition for reconsideration, application or
request for review, or notice of appeal or other judicial petition for review has been filed and is pending, and (c) as to which all deadlines for filing any such request, motion, petition,
application, appeal or notice have expired. 

        "Financial Statements" shall mean the Year-End Financial Statements and the Interim Financial Statements. 

        "Fixtures and Equipment" shall mean all of the furniture, fixtures, furnishings, machinery, automobiles, trucks, spare parts, supplies,
equipment, tooling, molds, patterns, dies and other tangible personal property owned by Seller, wherever located and including any such Fixtures and Equipment in the possession of any of Seller's
suppliers, including all warranty rights with respect thereto. 

        "GAAP" shall mean United States generally accepted accounting principles and practices as in effect from time to time. 

        "Insurance Policies" shall mean the insurance policies of Seller listed on  Schedule 4.24. 

        "Intellectual Property" shall mean any and all rights in or affecting intellectual or industrial property or other proprietary rights,
existing now or in the future in the United States or anywhere in the universe. Intellectual Property includes, without limitation, any and all rights in, to, or subsisting in the following: 

        (a)  all
issued patents, reissued or reexamined patents, revivals of patents, divisions, continuations and continuations-in-part of patents, all
renewals and extensions thereof utility models, and certificates of invention, regardless of country or formal name; 

        (b)  all
published or unpublished nonprovisional and provisional patent applications, including the right to file other or further applications, reexamination proceedings,
invention disclosures and records of invention; 

        (c)  all
copyrights, copyrightable works, semiconductor topography and mask work rights, including, without limitation, all rights of authorship, use, publication,
reproduction, distribution, performance, transformation, moral rights and ownership of copyrightable works, semiconductor topography works and mask works, the right to create derivative works, and all
applications for registration, registrations, renewals and extensions of registrations, together with all other interests accruing by reason of international copyright, semiconductor topography and
mask work conventions; 

        (d)  all
trademarks, service marks, logos, trade names, domain names, 1-800, 1-888, 1-877 and other "vanity" telephone numbers, together
with the goodwill of the business associated therewith, all applications for registration and registrations thereof, renewals thereof, the right to bring opposition and cancellation proceedings and
any and all rights under the laws of trade dress; 

6

 

        (e)  all
proprietary information and materials, whether or not patentable or copyrightable, and whether or not reduced to practice, including limitation all technology,
ideas, research and development, inventions, designs, manufacturing and operating specifications and processes, know-how, formulae, customer and supplier lists, shop rights, designs,
drawings, patterns, trade secrets and technical data, computer programs, and all hardware, software and processes; and 

        (f)    all
other intangible assets, properties and rights (whether or not appropriate steps have been taken to protect, under applicable law, such other intangible assets,
properties or rights) including, without limitation, all claims, causes of action and rights to sue for past, present and future infringement or unconsented use of any of the Intellectual Property,
the right to file applications and obtain registrations, and all rights arising therefrom and pertaining thereto and all products, proceeds and revenues arising from or relating to any and all of the
foregoing. 

        "Interim Balance Sheet" shall mean the unaudited Balance Sheet dated the Interim Balance Sheet Date. 

        "Interim Balance Sheet Date" shall mean April 30, 2002. 

        "Interim Financial Statements" shall mean the Interim Balance Sheet and the unaudited statements of operations, changes in stockholders'
equity and cash flow of the Business for the three month period ended on the Interim Balance Sheet Date. 

        "Inventory" shall mean all of Seller's inventory held for resale and all of Seller's raw materials, unbilled receivables, deferred costs,
work in process, finished products, wrapping, supply and packaging items and similar items, in each case, wherever the same may be located. 

        "IRS" shall mean the Internal Revenue Service. 

        "Key Employees" shall mean Brian Kristofek, G. Brock Montgomery, Jon Cheffings and Nicholas Jones. 

        "Landlord" shall mean 303 Wacker Realty L.L.C., a Delaware limited liability company. 

        "Leasehold Estates" shall mean all of Seller's rights and obligations as lessee under the Leases. 

        "Leasehold Improvements" shall mean all leasehold improvements situated in or on the Leased Real Property and owned by Seller. 

        "Leased Real Property" shall mean all leased property described in the Facility Leases. 

        "Lease Amendment" shall mean the Assignment, Assumption, Consent and Third Amendment to Lease, dated as of the date hereof by and among
Landlord, Seller and Acquiror. 

        "Leases" shall mean all of the existing leases with respect to the real or personal property of Seller listed on  Schedule 4.8(a)(xiii) and Schedule 4.8(a)(xiv) respectively, and leases with respect to
the real or personal property of Seller which are not required to be listed on Schedule 4.8(a)(xiii) or  Schedule 4.8(a)(xiv). 

        "Liabilities" shall mean any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any Person of any type, whether accrued, absolute, contingent, matured, unmatured or other, and shall include all reserves. 

        "Material Adverse Effect" or "Material Adverse Change" shall mean any significant adverse
effect or change in the condition (financial or other), business, results of operations, prospects, assets, Liabilities or operations of the Business, taken as a whole, or on the ability of Parent or
Seller to consummate the transactions contemplated hereby, or any event or condition which would, with the passage of time, constitute a "Material Adverse Effect" or "Material Adverse 

7

 

Change"; provided, however, that changes or events (a) resulting from the entry into this Agreement or the public announcement thereof,
(b) resulting from conditions specifically affecting the marketing and advertising business (excluding any such conditions that result in material adverse changes or developments in United
States financial markets (including as a result of the occurrence of any outbreak or escalation of national or international hostilities, acts of terrorism involving the United States or declaration
of a national emergency or war by the United States), the material effect of which does not dissipate within ten Business Days) or (c) described on  Schedule 4.5 (other than clause (r)(4)
of Schedule 4.5) attached hereto shall not
constitute a "Material Adverse Effect" or "Material Adverse Change" hereunder. 

        "Multiemployer Plan" shall mean any "multiemployer plan," as defined in Section 3(37) or 4001(a)(3) of ERISA. 

        "Net Revenue" shall have the meaning set forth on Schedule 2.5(a) and shall be calculated using the same applicable methodology as
was applied in connection with the preparation of the final Closing Balance Sheet. 

        "ordinary course of business" or "ordinary course" or any similar phrase shall mean the
ordinary course of the Business and consistent with Seller's past practice. 

        "Organizational Documents" shall mean (a) the articles or certificate of incorporation, all certificates of determination and
designation, and the bylaws of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the
certificate or articles of limited partnership of a limited partnership; (d) the operating agreement, limited liability company agreement and the certificate or articles of organization or
formation of a limited liability company; (e) any charter or similar document adopted or filed in connection with the creation, formation or organization of any other Person; and (f) any
amendment to any of the foregoing. 

        "Owned Real Property" shall mean all real property owned in fee by Seller, including, without limitation, all rights, easements and
privileges appertaining or relating thereto, all buildings, fixtures, and improvements located thereon and all Facilities thereon, if any. 

        "Parent's Expenses" shall mean all out of pocket expenses incurred by Parent, Seller, any of their respective Representatives or any of
their respective Affiliates in connection with the authorization, preparation, negotiation, execution and performance of this Agreement and the Ancillary Agreements and appearances before and
proceedings involving the Bankruptcy Court relating to this Agreement (including, but not limited, to financial advisors', investment bankers', accountants', experts' or consultants' fees and
expenses); provided, however, that Parent's Expenses shall not exceed $475,000 and Parent's expenses shall exclude out-of-pocket
expenses of employees of either Seller Party. 

        "Patent License" means the Patent License Agreement dated September 5, 2000 between Westminster International
Computers, Inc. and Upshot Integrated, Inc. under which Seller is a Licensee (as defined therein). 

        "PBGC" shall mean the Pension Benefit Guaranty Corporation. 

        "Pension Plan" shall mean any "employee pension benefit plan" as defined in Section 3(2) of ERISA (other than a Multiemployer
Plan). 

        "Permits" shall mean all material licenses, permits, franchises, approvals, authorizations, consents or orders of, or filings with, any
governmental authority, whether foreign, federal, state or local, or any other person, necessary or desirable for the past, present or anticipated conduct of, or relating to the operation of Seller. 

8

 

        "Permitted Encumbrances" shall mean the Encumbrances set forth in Schedule 4.7(c). 

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

        "Qualified Prospect" shall mean any Person that executes a Confidentiality Agreement (as defined in the Bidding Procedures) pursuant to
the Bidding Procedures. 

        "Regulations" shall mean any laws, statutes, ordinances, regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any foreign, federal, state or local government and any other governmental department or agency, including, without limitation, Environmental Laws, energy, motor
vehicle safety, public utility, zoning, building and health codes, occupational safety and health and laws respecting employment practices, employee documentation, terms and conditions of employment
and wages and hours. 

        "Representative" shall mean any officer, director, principal, attorney, agent, employee or other representative. 

        "Richmond Lease" means that certain Deed of Lease, dated as of December 15, 1999, by and between Liberty Property Limited
Partnership and Seller as successor by merger to Upshot Direct Incorporated. 

        "Sale Procedure Order" shall mean an order of the Bankruptcy Court, substantially in the form attached hereto as  Exhibit K. 

        "Seller Employee Plan" shall mean any Employee Plan in which any employee, former employee, director, or former director of Seller or its
subsidiaries participates, has participated, or is eligible to participate on the Closing Date. 

        "Seller Parties' Knowledge" or "Knowledge of the Seller Parties" or
"Seller's Knowledge" shall mean the actual knowledge of any of Marc S. Simon, Gregory J. Kilrea or Keith Stenlund, in each case, following due inquiry,
including due inquiry of Brock Montgomery and Brian Kristofek (it being understood that the Seller Parties may rely on a certificate in the form presented to Acquiror on the date hereof executed by
Brock Montgomery and Brian Kristofek on the date of this Agreement and the Closing Date for purposes of such due inquiry (unless such a certificate is not executed by one or both of them on the
Closing Date, in which case the Seller Parties may rely on the certificate executed by the applicable individual on the date of this Agreement)). 

        "Subsidiary" shall mean (a) any corporation in an unbroken chain of corporations beginning with Seller if each of the corporations
other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain, (b) any partnership in which Seller is a general partner, or (c) any partnership in which Seller possesses a fifty percent (50%) or greater interest in the total capital
or total income of such partnership. 

        "Target Amount" shall mean Seventeen Million Dollars ($17,000,000.00). 

        "Tax" shall mean (a) any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, license, registration, recording, documentary, conveyancing, gains, withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalty, addition to
tax or additional amount imposed by any governmental authority responsible for the imposition of any such tax (United States or foreign), (b) liability for the payment of any amount described
in clause (a) as a result of being or having been a member of an 

9

 

affiliated, consolidated, combined or unitary group, and (c) liability for the payment of any amounts of the type described in clause (a) as a result of being party to any agreement or
any express or implied obligation to indemnify any other Person. 

        "Taxpayer" shall mean (a) Parent, (b) Seller and (c) each member of any group of corporations with respect to which
Parent or Seller files or has filed a consolidated, combined or unitary Tax Return. 

        "Tax Return" shall mean a report, return or other information required to be supplied to a governmental agency with respect to Taxes,
including, where permitted or required, combined or consolidated returns for any group of entities that includes Seller. 

        "Termination Payment" shall have the meaning specified in the Bidding Procedures and repeated in  Section 11.2(a). 

        "Upshot Business" shall mean Seller's existing business of providing advertising, direct marketing, promotional marketing, brand strategy
and identity, sports marketing and event marketing (specifically excluding any existing business of Acquiror and excluding any other businesses acquired or separately commenced by Acquiror after the
Closing Date). 

        "Welfare Plan" shall mean any "employee welfare benefit plan" as defined in Section 3(1) of ERISA. 

        "Year-End Financial Statements" shall mean the balance sheet and the statement of operations, changes in stockholders' equity
and cash flow of the Business for the twelve month period ended on the Balance Sheet Date. 

        1.2.    Other Defined Terms.    The following terms shall have the meanings defined for such terms in the Sections set
forth below: 

	Term
 
	 	Section

	Acquiring Party	 	6.1(b)
	Acquiror 401(k) Plan	 	6.7(i)
	Acquiror Benefit Plans	 	6.7(f)
	Acquiror Indemnitees	 	10.3(a)
	Acquiror SEC Reports	 	5.4
	Additional Contracts	 	2.2(a)
	Adjustment Amount	 	2.6(b)
	Amended Patent License Agreement	 	6.10
	Ancillary Agreements	 	4.3
	Assumed Liabilities	 	2.4
	Break-up Fee	 	11.2(a)
	Claim	 	10.3(d)
	Claim Notice	 	10.3(d)
	Closing	 	3.1
	Closing Balance Sheet	 	2.6(a)
	Closing Date	 	3.1
	Competitive Activities	 	6.1(b)
	Consultant	 	6.5(b)
	Damages	 	10.3(a)
	Earnout Payment	 	2.7(a)
	Escrow Amount	 	2.4(a)
	Fee Reimbursement	 	11.2(a)
	Holdback Amount	 	2.4(b)

10

 

	Holdback Fund	 	10.4
	Independent Accountant	 	2.7(b)
	Notifying Party	 	6.4
	Pre-Closing Tax Period	 	10.6(a)
	Post-Closing Tax Period	 	10.6(a)
	Proposed Acquisition Transaction	 	6.2(a)
	Purchase Price	 	2.4
	Purchase Price Allocation Schedule	 	2.4
	Rehired Employee	 	6.7(a)
	Restricted Person	 	6.1(a)
	SEC	 	5.4
	Seller 401(k) Plan	 	6.7(i)
	Seller Indemnitees	 	9.3(b)
	Seller's Account	 	2.4
	Shortfall Amount	 	2.6(b)
	Termination Payment	 	11.2(a)
	Upshot Business Financial Statements	 	2.7(a)
	Third Party Sale	 	11.2(a)
	WARN Act	 	4.17(b)

 
 

ARTICLE II.
  
    PURCHASE AND SALE OF ASSETS; PURCHASE PRICE    
  

        2.1    Transfer of Assets.    Upon the terms and subject to the conditions contained herein, on the Closing Date,
Seller hereby agrees to sell, convey, transfer, assign and deliver to Acquiror, and Acquiror hereby agrees to purchase, acquire and accept from Seller, the Assets, free and clear of all Encumbrances
other than Permitted Encumbrances in accordance with, and with all of the protections afforded by, Section 363 of Title 11 of the Bankruptcy Code. 

        2.2.    Assumption of Liabilities.    

        (a)  Upon
the terms and subject to the conditions contained herein, at the Closing, Acquiror agrees to assume (i) all Liabilities accruing, arising out of, or relating
to periods, events or occurrences happening after the Closing Date under (a) the Contracts and Leases identified on Schedule 4.8 as
"Assumed Contracts" or "Assumed Leases"; (b) any Contract or Lease not required to be set forth on Schedule 4.8 which (1) is
commercially reasonable as to its terms binding Seller, (2) is terminable by Seller within twelve (12) months of Closing, without adverse recourse, (3) is reflected in the Books
and Records, (4) was entered into as a result of an arms' length negotiation in the ordinary course of business and (5) would not, together with other such Contracts described in
clause (b), create a Material Adverse
Effect; and (c) under any other Contracts or Leases that are not Assumed Contracts pursuant to the foregoing clauses (a) or (b) which Acquiror elects to accept and assume in its
sole discretion (the "Additional Contracts"), excluding in each case any Liability for any Default under any Contract or Lease occurring on or prior to
the Closing Date, and excluding, in each case, any intercompany Contracts of Seller or the Business, (ii) all Balance Sheet Liabilities, and (iii) liability for real property, personal
property and similar ad valorem taxes specifically apportioned to Acquiror pursuant to Section 10.7 hereof (collectively, the
"Assumed Liabilities"). 

        (b)  If
Seller discovers an Additional Contract, it shall promptly give Acquiror written notice of such Additional Contract and a copy of such Additional Contract, and
Acquiror shall have fifteen (15) days after the date it receives such notice to notify Seller whether it elects to assume 

11

 

such Additional Contract in its sole discretion. If Acquiror fails to notify Seller of its intention to assume such Additional Contract during such fifteen (15) day period, Seller may assume
that Acquiror does not intend to assume such Additional Contract. If Acquiror discovers an Additional Contract, it may assume such Additional Contract in its sole discretion by giving Seller written
notice of its intention to assume such Additional Contract. Any Additional Contracts which Acquiror elects to assume pursuant to this  Section 2.2(b) shall be deemed Assumed Contracts for purposes
of this Agreement and the Assignment and Assumption of Contract Rights. 

        2.3.    Nonassumption of Liabilities.    Notwithstanding any other provisions of this Agreement, except for the
Assumed Liabilities expressly specified in Section 2.2 above, Acquiror shall not assume or otherwise be responsible for any of the Excluded
Liabilities. 

        2.4.    Purchase Price.    

        (a)  Upon
the terms and subject to the conditions contained herein, at the Closing, in consideration for the transfer of the Assets pursuant to  Section 2.1 of this Agreement, Acquiror shall pay the Purchase
Price (as defined herein) by depositing in an account designated by Seller (which
account shall be designated by Seller in writing at least three (3) Business Days prior to the Closing) (the "Seller's Account"): (a) Ten
Million Two Hundred Fifty Thousand Dollars ($10,250,000.00) (the "Purchase Price"), subject, however, to
the pre-closing adjustment set forth in Section 2.5, less (b) the Escrow Amount, and less (c) the Holdback Amount. The
amount to be deposited in the Seller's Account on the Closing Date shall be paid in cash by wire transfer of immediately available funds to the Seller's Account. In the event Seller has not paid any
amount required to be paid by Seller to Landlord under the Lease Amendment as a condition to the effectiveness of the Lease Amendment, Acquiror may, at its election, pay such amounts to Landlord
directly and offset any amounts so paid against the portion of the Purchase Price to be paid to Seller's Account at the Closing. 

        (b)  Seller
and Acquiror agree that as soon as reasonably practical after the Closing, and prior to the filing of any Tax Return which includes information related to the
transactions contemplated by this Agreement, the Purchase Price and the Assumed Liabilities shall be allocated among the Assets in
accordance with an allocation schedule (the "Purchase Price Allocation Schedule") proposed by Acquiror and reasonably acceptable to Seller, which shall
be prepared in a manner required by Section 1060 of the Code and other applicable law and delivered by Acquiror to Seller no later than forty-five (45) days after the
Closing. In connection with the Purchase Price Allocation Schedule, Seller and Acquiror shall discuss the allocation of the Purchase Price and attempt in good faith to reach agreement with respect
thereto. Seller and Acquiror shall prepare mutually acceptable and substantially identical initial and supplemental IRS Forms 8594 "Asset Acquisition Statements Under Section 1060" consistent
with the Purchase Price Allocation Schedule (giving effect to mutually agreed-upon adjustments to the allocation set forth on the Purchase Price Allocation Schedule as a result of any
required adjustments to the Purchase Price or payment of any Earnout Payment pursuant to Article II which the parties shall use to report the
transactions contemplated by this Agreement to the applicable Taxing authorities. 

        (c)  The
"Escrow Amount" shall be an amount equal to One Million Dollars ($1,000,000.00) which Acquiror, at the Closing,
shall, pursuant to the Closing Adjustment Escrow Agreement, deliver to the escrow agent named therein to be held in an escrow account (the "Escrow
Account"), pending the final determination of the Adjustment Amount (as defined in Section 2.6 below). 

        (d)  The
"Holdback Amount" shall be an amount equal to (i) One Million Twenty Five Thousand Dollars ($1,025,000.00)
which Acquiror, at the Closing, shall, pursuant to the Escrow Indemnification Agreement, deliver to the Escrow Agent, plus (ii) any amount required to be deposited in the Holdback Fund in
accordance with Section 2.7(c)(ii). 

12

  

        2.5.    Pre-Closing Adjustment.    

        (a)    Pre-Closing Balance Sheet.    No later than five (5) Business Days before the Closing Date,
Seller shall prepare and deliver to Acquiror (i) an unaudited Balance Sheet dated the Closing Date (the "Pre-Closing Balance Sheet"),
and (ii) a reasonably detailed calculation of the Estimated Closing Net Working Capital. The Pre-Closing Balance Sheet shall be prepared by Seller's personnel in accordance with
GAAP, as applied in preparation of the Year-End Balance Sheet (subject to the items set forth in Schedule 2.5(a)) and shall fairly in
all material respects present the Current Assets and Balance Sheet Liabilities of the Business as of the Closing Date. Seller shall consult with Acquiror and its accountants with respect to the
preparation of the Pre-Closing Balance Sheet. The Pre-Closing Balance Sheet shall be accompanied by reasonably detailed schedules indicating a calculation of the Estimated
Closing Net Working Capital as set forth on the Pre-Closing Balance Sheet. 

        (i)    If
the Estimated Closing Net Working Capital is a positive number, then the Purchase Price to be paid by Acquiror at the Closing shall be increased by an amount equal to
the Estimated Closing Net Working Capital. 

        (ii)  If
the Estimated Closing Net Working Capital is a negative number, then the Purchase Price to be paid by Acquiror at the Closing shall be decreased by an amount equal
to the absolute value of the Estimated Closing Net Working Capital. 

        2.6.    Post-Closing Adjustment.    

        (a)    Closing Balance Sheet.    No later than ninety (90) calendar days following the Closing Date, Acquiror
shall prepare and deliver to Seller (i) a Balance Sheet dated the Closing Date (the "Closing Balance Sheet"), and (ii) a reasonably
detailed calculation of the Adjustment Amount. The Closing Balance Sheet shall be prepared by Acquiror's personnel in accordance with GAAP, as applied in preparation of the Year-End
Balance Sheet (subject to the items set forth in Schedule 2.5(a)) and shall fairly in all material respects present the Current Assets and
Balance Sheet Liabilities of the Business as of the Closing Date. The Closing Balance Sheet shall be accompanied by reasonably detailed schedules indicating a calculation of the Closing Net Working
Capital as set forth on the Closing Balance Sheet. 

        (b)    Adjustment Amount.    The "Adjustment Amount" shall be an
amount equal to (i) Closing Net Working Capital, minus (ii) Estimated Closing Net Working Capital. 

        (i)    If
the Adjustment Amount is a positive number, then Acquiror and Seller shall promptly execute and deliver joint written instructions to the Escrow Agent, instructing
the Escrow Agent to distribute to Seller an amount equal to the Escrow Amount (including accrued interest earned in the Escrow Account), and Acquiror shall pay to Seller the Adjustment Amount plus
interest on the amount of the Adjustment Amount calculated from the Closing Date at the rate of five percent (5%) per annum. 

        (ii)  If
the Adjustment Amount is a negative number, the absolute value of which is less than or equal to the Escrow Amount, then Acquiror and Seller shall promptly execute
and deliver joint written instructions to the Escrow Agent, instructing the Escrow Agent to distribute to Acquiror an amount equal to the absolute value of the Adjustment Amount plus that portion of
accrued interest earned in the Escrow Account relating to the portion of the Escrow Account being paid to Acquiror. The joint written instructions executed and delivered by Acquiror and Seller to the
Escrow Agent, shall also instruct the Escrow Agent to distribute to Seller the balance of the Escrow Amount. 

        (iii)  If
the Adjustment Amount is a negative number, the absolute value of which is greater than the Escrow Amount, Acquiror and Seller shall promptly execute and deliver
joint 

13

 

written instructions to the Escrow Agent, instructing the Escrow Agent to distribute to Acquiror an amount equal to the Escrow Amount (including accrued interest held in the Escrow Account), and
Seller Parties shall pay to Acquiror an amount equal to the absolute value of the Adjustment Amount less the Escrow Amount plus interest on such difference calculated from the Closing Date at the rate
of five percent (5%) per annum (the "Shortfall Amount"). Seller Parties' obligation to pay the Shortfall Amount shall be joint and several, and the
obligation of Parent to pay the Shortfall Amount shall be entitled to administrative status under 11 U.S.C. Section 503(b) and 507(a). 

        (c)    Disputed Adjustment Amount.    If Seller shall disagree with the Adjustment Amount, it shall notify Acquiror of
such disagreement in writing specifying in detail the particulars of such disagreement within fifteen (15) Business Days after Seller's receipt of the Closing Balance Sheet. To the extent that
any portion of the Adjustment Amount is not in dispute, within fifteen (15) Business Days after Seller's receipt of the Closing Balance Sheet, Acquiror and Seller shall promptly execute and
deliver joint written instructions to the Escrow Agent, instructing the Escrow Agent to distribute to Acquiror or Seller, as the case may be, that portion of the Adjustment Amount which is not in
dispute in the manner set forth in Section 2.6(b). 

        (d)    Resolution of Disputed Adjustment Amount.    Acquiror and Seller shall use their reasonable efforts for a
period of thirty (30) calendar days after Seller's delivery of such notice (or such longer period as Acquiror and Seller shall mutually agree upon) to resolve any disagreements raised by Seller
with respect to the calculation of the Adjustment Amount and shall promptly execute and deliver appropriate joint written instructions to the Escrow Agent if such disagreement is resolved. If, at the
end of such period, Acquiror and Seller are unable to resolve such disagreements, Acquiror and Seller shall jointly select an independent auditor of recognized national standing that is not Andersen
to resolve any remaining disagreements; provided that PricewaterhouseCoopers LLP will be the independent auditor if Acquiror and Seller cannot agree on
the selection of such independent auditor. The determination by such independent auditor shall be final, binding and conclusive on the parties. Acquiror and Seller shall use their reasonable efforts
to cause the independent auditor to make its determination within thirty (30) calendar days of accepting its selection. Within ten (10) calendar days after the date of determination of
such independent auditor, Acquiror and Seller shall promptly execute and deliver joint written instructions to the Escrow Agent, instructing the Escrow Agent to distribute to Acquiror and/or Seller,
as the case may be, any funds remaining in the Escrow Account in accordance with the determination of the independent auditor. The fees and expenses of such independent auditor shall be borne by
Acquiror and Seller Parties in proportion to the aggregate amount of all disputed items as to which such party's claim was unsuccessful (i.e., if there
are $1,000,000 of disputed items and the independent auditor determines that Seller's claim prevails with respect to $250,000 of such disputed items and Acquiror's claim prevails with respect to
$750,000 of such disputed items, then Seller Parties would be obligated to pay seventy five percent (75%) of the fees and expenses and Acquiror would be obligated to pay twenty five percent (25%) of
the fees and expenses). 

        (e)    Payment of Adjustment Amount.    All payments made by Acquiror or Seller or out of the Escrow Account as part
of the Adjustment Amount, shall be made by wire transfer of immediately available funds to an account designated by the payee. 

        2.7.    Earnout.    

        (a)  In
connection with this Section 2.7, Acquiror shall deliver to the Seller no later than sixty (60) days
following the end of each of the first four calendar quarters following the Closing Date (it being understood that if the Closing occurs in June, the first of such calendar quarters shall be the
calendar quarter ending September 30, 2002), financial statements of the Upshot Business 

14

 

setting forth the amount of aggregate Net Revenue of the Upshot Business for each month in such calendar quarter beginning with the first full calendar month following the Closing Date and ending
with the twelfth full calendar month following the Closing Date (the "Upshot Business Financial Statements"). The Upshot Business Financial Statements
shall set forth the Net Revenue attributable to the Upshot Business on a client by client basis and shall specify the amount of each adjustment to Net Revenues contemplated by clauses
(a)-(    ) of Schedule 2.5(a). In the event Net Revenue of the Upshot Business for the first full twelve calendar month period following the Closing Date equals or exceeds the Target
Amount, Acquiror shall pay to Seller an amount equal to fifty percent (50%) of the amount by which Net Revenue exceeds the Target Amount in accordance with the terms of this  Section 2.7, up to a
maximum aggregate payment of Two Million Dollars ($2,000,000.00) pursuant to this sentence. In the event Net Revenue of the
Upshot Business for the first twelve calendar month period following the Closing Date exceeds the Bonus Amount, Acquiror shall pay to Seller an amount equal to thirty three percent (33%) of the amount
by which Net Revenue exceeds the Bonus Amount (in addition to the amount paid pursuant to the preceding sentence) in accordance with the terms of this  Section 2.7. Any amounts required to be paid
pursuant to either of the preceding two sentences are collectively referred to as
"Earnout Payments". Notwithstanding the foregoing, in the event a Change of Control of Acquiror
occurs and Brian Kristofek's responsibilities are expanded beyond the Upshot Business, then the maximum aggregate Earnout Payments that Acquiror will be required to make under this  Section 2.7 will
equal Four Million Seven Hundred Fifty Thousand Dollars ($4,750,000.00). If Net Revenue for the first full twelve calendar month
period following the Closing Date equals or is less than the Target Amount, Acquiror shall have no obligation to pay any Earnout Payment. 

        (b)  Unless
Seller gives written notice to Acquiror on or before the twentieth (20th) calendar day after Seller's receipt of the final Upshot Business Financial
Statement to be delivered pursuant to this Section 2.7(b), specifying in reasonable detail all disputed items and the basis therefor, Seller shall be deemed to have accepted the Upshot Business
Financial Statements and Acquiror shall (i) have no obligation to pay any Earnout Payment to Seller if Net Revenue for the first full twelve calendar month period following the Closing Date is
equal to or less than the Target Amount or (ii) have an obligation to pay the applicable Earnout Payment(s) if Net Revenue exceeds the Target Amount. If Seller so notifies Acquiror of its
objection to the Upshot Business Financial Statements, Seller and Acquiror shall, within twenty (20) days following such notice, attempt to resolve their differences in good faith, and any
resolution by them as to any disputed amounts shall be final, binding and conclusive. If, at the end of such twenty (20) day period, Seller and Acquiror are unable to resolve such
disagreements, Acquiror and Seller shall jointly select an independent auditor of recognized national standing that is not Andersen to resolve any remaining disagreements;  provided that PricewaterhouseCoopers LLP will be the independent auditor if Acquiror and Seller cannot agree on the selection of such independent
auditor (the "Independent Accountant"). Acquiror and Seller shall use their reasonable efforts to cause the Independent Accountant to make its
determination within thirty (30) calendar days of accepting its selection. The determination by the Independent Accountant shall be final, binding and conclusive on the parties. The fees and
expenses of the Independent Accountant shall be borne by Acquiror and Seller Parties in proportion to the aggregate amount of all disputed items as to which such party's claim was unsuccessful
(i.e., if there is a $1,000,000 dispute regarding the amount of the Earnout Payment and the Independent Accountant determines that Seller's claim
prevails with respect to $250,000 of such disputed amount and Acquiror's claim prevails with respect to $750,000 of such disputed amount, then Seller Parties would be obligated to pay seventy five
percent (75%) of the fees and expenses and Acquiror would be obligated to pay twenty five percent (25%) of the fees and expenses). 

        (c)  Subject
to Section 10.9 below, within ten (10) calendar days after (i) receipt by Seller of Upshot
Business Financial Statements which reflect aggregate Net Revenue for the first twelve 

15

 

month period following the Closing Date equal to or in excess of the Target Amount, or (ii) in the event of a disagreement, the date of resolution of such disagreement by the Parties or the
date of determination by the Independent Accountant pursuant to Section 2.7(c) (it being understood that this clause (ii) shall only apply to any disputed portion of the Earnout
Payments), the applicable Earnout Payment shall be paid by Acquiror as follows: 

        (i)    Acquiror
shall pay ninety percent (90%) of the Earnout Payment to an account designated by Seller in writing; and 

        (ii)  Acquiror
shall deposit ten percent (10%) of the Earnout Payment to the Holdback Fund, which amount shall become part of the Holdback Amount. 

        (d)  In
connection with the operation of the Upshot Business after the Closing, Acquiror agrees to maintain separate divisional books and records for the Upshot Business in
accordance with GAAP, consistently applied. Acquiror and each of the Seller Parties agree to act in good faith during the Earnout Period relative to the Upshot Business and not to take actions that
would be unfairly prejudicial or discriminatory to the Upshot Business for the purpose of adversely affecting Seller's interest in receiving an Earnout Payment. 

        (e)  Upon
delivery of the Upshot Business Financial Statements, Acquiror shall afford to Seller and its accounting representatives prompt and reasonable access upon
reasonable notice to all information reasonably necessary to verify calculation of the Net Revenue. Acquiror shall make its employees who are familiar with such matters, its independent outside
accounting firm available to Seller and its representatives on a mutually convenient basis at reasonable times during normal business hours to provide an explanation of such materials and to provide
such other information as Seller and its representatives may reasonably request in connection with its review of the Upshot Business Financial Statements. 

        2.8.    Transfer Taxes.    Seller shall pay, and Seller shall indemnify and hold harmless Acquiror from, all transfer,
conveyance or similar Taxes imposed as a result of the transactions contemplated by this Agreement. Seller and Acquiror shall cooperate in timely making all filings, returns, reports and forms as may
be required in connection with Sellers' payment of such Taxes. Seller and Acquiror, as appropriate, shall execute and deliver all instruments and certificates necessary to enable the other to comply
with any filing requirements relating to any such Taxes. 

 
 

ARTICLE III.
  
    CLOSING    
  

        3.1.    Closing.    The closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. local time on the Closing Date at the offices of Latham & Watkins, Sears Tower, Suite 5800, 233
South Wacker Drive, Chicago, Illinois, 60606-6401 on the date that is three (3) Business Days following the satisfaction or waiver of each of the conditions to the obligations of
the parties set forth in Article VIII and Article IX, or at such other time or place as
Acquiror and Seller may mutually agree in writing (the date on which the Closing takes place being the "Closing Date"). 

        3.2.    Deliveries at Closing.    

        (a)    Deliveries by Acquiror.    Subject to the terms and conditions of this Agreement, in reliance on the
representations, warranties and agreements of the Seller Parties contained herein, in consideration of the sale, assignment and transfer of the Assets, Acquiror agrees to deliver (or cause to be
delivered) to Seller at the Closing on the Closing Date the following agreements and documents, all satisfactory in form and substance to Seller and its respective legal counsel: 

        (i)    the
wire transfer of the portion of the Purchase Price to be paid to Seller on the Closing Date, subject to the pre-closing adjustment set forth in  Section 2.5; 

16

 

        (ii)  a
certificate executed by the Secretary or an Assistant Secretary of Acquiror certifying as of the Closing Date (A) a true and complete copy of the
Organizational Documents of Acquiror certified as of a recent date by the Secretary of State of the State of Delaware, (B) a true an complete copy of the resolutions of the board of directors
of Acquiror authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and (C) incumbency matters; 

        (iii)  a
certificate of good standing and/or subsistence of Acquiror, dated as of a recent date prior to the Closing, issued by the Secretary of State of the State of
Delaware; and 

        (iv)  a
certificate executed by an officer of Acquiror certifying that as of the Closing Date (A) all representations and warranties of Acquiror contained in  Article V shall be true and correct in all
respects on and as of the Closing with the same effect as though such representations and warranties
had been made on and as of the date of the Closing, and (B) Acquiror shall have performed and satisfied in all respects all agreements and covenants required hereby to be performed by it prior
to or on the Closing Date; except in each case for any such failure to so perform and/or the inaccuracy of any representation which, individually or in the aggregate, has not resulted in and would not
reasonably be expected to result in a Material Adverse Effect or a Material Adverse Change. 

        (b)    Deliveries by the Seller Parties.    Subject to the terms and conditions of this Agreement, in reliance upon
the representations, warranties and agreements of Acquiror contained herein and in consideration of the Purchase Price to be paid to Seller, the Seller Parties agree to deliver (or cause to be
delivered) to Acquiror at the Closing on the Closing Date the following agreements and documents, all satisfactory in form and substance to Acquiror and its legal counsel: 

        (i)    a
certificate executed by the Secretary or an Assistant Secretary of Parent certifying as of the Closing Date (A) a true and complete copy of the Organizational
Documents of Parent certified as of a recent date by the Secretary of State of the State of Delaware, (B) a true an complete copy of the resolutions of the board of directors of Parent
authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and (C) incumbency matters; 

        (ii)  a
certificate executed by the Secretary or an Assistant Secretary of Seller certifying as of the Closing Date (A) a true and complete copy of the Organizational
Documents of Seller certified as of a recent date by the Secretary of State of the State of Illinois, (B) a true an complete copy of the resolutions of Parent as sole member of Seller and
managers of Seller authorizing the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby and (C) incumbency matters; 

        (iii)  certificates
of good standing and/or subsistence of Seller, dated as of a recent date prior to the Closing, issued by the Secretary of State of the State of Illinois
and the Secretary of State of Virginia and a certificate of good standing of Parent, dated as of a recent date prior to the Closing issued by the Secretary of State of the State of Delaware; 

        (iv)  a
certificate executed by each of the Seller Parties certifying that as of the Closing Date (A) all representations and warranties of the Seller Parties
contained in Article IV shall be true and correct in all respects on and as of the Closing with the same effect as though such representations
and warranties had been made on and as of the date of the Closing, and (B) the Seller Parties shall have performed and satisfied in all respects all agreements and covenants required hereby to
be performed by it prior to or on the Closing Date; except in each case for any such failure to so perform and/or the inaccuracy of any representation which, individually or in the aggregate, has not
resulted in and would not reasonably be expected to result in a Material Adverse Effect or a Material Adverse Change; 

17

 

        (v)  an
opinion of Neal Gerber & Eisenberg, counsel to the Seller Parties, dated as of the Closing Date, in the form attached hereto as  Exhibit L; 

        (vi)  evidence
of receipt of all consents set forth on Schedule 3.2(b)(vi); 

        (vii)    an
affidavit from Seller stating, under penalties of perjury, Seller's taxpayer identification number and that Seller is not a foreign person pursuant to
Section 1445(b)(2) of the Code; and 

        (viii)    a
Release executed by Parent in favor of Acquiror, in the form attached hereto as Exhibit M. 

        3.3.    Other Closing Transactions.    In addition, subject to the terms and conditions of this Agreement, Acquiror
and the applicable Seller Parties shall deliver or cause to be delivered to each other party on the Closing Date: 

        (a)  the
Bill of Sale; 

        (b)  the
Assignment and Assumption of Contract Rights; 

        (c)  the
Assignment and Assumption of Leases; 

        (d)  the
Assignment of Intellectual Property; 

        (e)  the
Closing Adjustment Escrow Agreement; and 

        (f)    the
Escrow Indemnification Agreement. 

        3.4.    Other Deliveries.    In addition, subject to the terms and conditions of this Agreement, the Seller Parties
shall deliver or cause to be delivered to Acquiror on the Closing Date such other documents and instruments as in the opinion of counsel for Acquiror may be reasonably required to effectuate the terms
of this Agreement and to comply with the terms hereof. 

 
 

ARTICLE IV.
  
    REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES    
  

        Each of the Seller Parties jointly and severally hereby represents and warrants to Acquiror as follows, except as otherwise set forth on the Disclosure Schedule,
which representations and warranties are, as of the date hereof, and will be, as of the Closing Date, true and correct: 

        4.1.    Organization of Seller and Parent.    Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware with full corporate power and authority to conduct its business as it is presently being conducted, to own and or use the properties and assets that it
purports to own or use, and to perform all its obligations under its Contracts. Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State
of Illinois with full power and authority to conduct its business as it is presently being conducted, to own and or use the properties and assets that it purports to own or use, and to perform all its
obligations under its Contracts. Parent is the sole member of Seller. Seller is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction listed on  Schedule 4.1, being all the jurisdictions in which the character of its properties owned or leased or the nature of its activities make such
qualification necessary, other than where the failure to be so qualified would not have a Material Adverse Effect. Copies of the Organizational Documents of Seller, and all amendments thereto,
heretofore delivered to Acquiror are true, accurate and complete as of the date hereof. 

        4.2.    Subsidiaries.    Except as set forth on Schedule 4.2,
Seller does not have any Subsidiaries. None of the Subsidiaries set forth on Schedule 4.2 have any right, title or interest in or to any assets
used or useful with, or related to, the Business. Except as set forth on Schedule 4.2, Seller has no direct 

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or indirect stock or other equity or ownership interest (whether controlling or not) in any corporation, association, partnership, limited liability company, joint venture or other entity. 

        4.3.    Authorization.    Subject to the issuance of the Approval Order, each Seller Party has all requisite power and
authority, and has taken all action necessary, to execute and deliver this Agreement and the other agreements, instruments, documents and certificates to be executed and delivered by any of the Seller
Parties pursuant hereto (collectively, the "Ancillary Agreements") and to consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder. The execution and delivery of this Agreement and the Ancillary Agreements by the Seller Parties and the consummation by the Seller Parties of the transactions
contemplated hereby and thereby have been duly approved by the board of directors of Parent, the managers of Seller and Parent in its capacity as the sole member of Seller, and Acquiror has been
provided with documentation of such board, manager and member approvals. No corporate or limited liability company proceedings, as applicable, or other actions on the part of any Seller Party are
necessary to authorize this Agreement and the Ancillary Agreements and the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by each of the Seller
Parties and is, and upon execution and delivery of the Ancillary Agreements, each of the Ancillary Agreements will be, subject to, the issuance of the Sale Procedure Order, legal, valid and binding
obligations of each of the Seller Parties enforceable against each of them in accordance with their terms, in each case, except as such enforceability may be limited by (a) bankruptcy,
insolvency, moratorium, reorganization and other similar laws affecting creditors' rights generally and (b) the general principles of equity, regardless of whether asserted in a proceeding in
equity or at law. 

        4.4.    Consents and Approvals.    Except for the entry of the Sale Procedure Order and the Approval Order,
(a) except as set forth on Schedule 4.4(a) no notice to, declaration, filing or registration with, or authorization, consent or approval
of, or permit from, any Person (other than the consent of the manager and member of Seller, which has already been obtained and other than consents to the assignment of Contracts), and
(b) except as set forth on Schedule 4.4(b) no consent to the assignment of
any Contract required to be disclosed on Schedule 4.8 or Schedule 4.19(b) from any other
Person, is, in each case, required to be made or obtained by Parent, Seller or any other Affiliate of Parent or Seller in connection with the execution, delivery and performance of this Agreement and
the Ancillary Agreements and the consummation of the transactions contemplated hereby and thereby by Parent, Seller or any other Affiliate of Parent or Seller, as applicable. 

        4.5.    Absence of Certain Changes or Events.    Since the Balance Sheet Date, except as set forth on  Schedule 4.5, there has
not been any: 

        (a)  change
in Seller's authorized or issued membership interests; grant of any membership interest option or right to purchase any equity interest in Seller; issuance of any
security convertible into such equity interest; grant of any registration rights; purchase, redemption, retirement or other acquisition by Seller of any such equity interests; or declaration or
payment of any dividend or other distribution or payment in respect of such equity interests; 

        (b)  amendment
to the Organizational Documents of Seller; 

        (c)  actual
or, to Seller's Knowledge, threatened Material Adverse Change in the financial condition, working capital, members' equity, assets, Liabilities, reserves,
revenues, income earnings, prospects or Business of Seller; 

        (d)  change
in accounting methods, principles or practices by Seller affecting the Assets, its Liabilities or the Business; 

        (e)  material
revaluation by Seller of any of the Assets, including, without limitation, writing down the value of inventory or writing off notes or accounts receivable; 

19

 

        (f)    damage,
destruction or loss (whether or not covered by insurance) materially and adversely affecting the Assets or the Business; 

        (g)  cancellation
of any indebtedness or waiver or release of any right or claim of Seller relating to its activities or properties which had or will have a Material Adverse
Effect; 

        (h)  increase
of ten percent (10%) or more in the rate of compensation payable or to become payable to any director, officer or other employee of Seller or any consultant,
Representative or agent of Seller, including, without limitation, the making of any loan to, or the payment, grant or accrual of any bonus, incentive compensation, service award or other similar
benefit to, any such person, or the addition to, modification of, or contribution to any Seller Employee Plan, arrangement, or practice described in the Disclosure Schedule other than
(i) contributions made for the fiscal year 2001 in accordance with the normal practices of Seller or (ii) the extension of coverage to others who become eligible after the Balance Sheet
Date; 

        (i)    to
Seller's Knowledge, entry into, amendment, cancellation or termination of any Contract, commitment, agreement, Lease, transaction or Permit relating to the Assets or
the Business, including, without limitation, any employment, consulting, distributorship, dealer, sales representative, joint venture, credit or similar agreement or any Contract or transaction
involving a total remaining commitment by or to Seller of at least $100,000; 

        (j)    to
Seller's Knowledge, mortgage, pledge or other encumbrance of any Assets of Seller having, individually or in the aggregate, a value of $100,000 or more, except
purchase money mortgages arising in the ordinary course of business; 

        (k)  to
Seller's Knowledge, sale, assignment or transfer of any of the Assets of Seller having, individually or in the aggregate, a value of $100,000 or more, other than in
the ordinary course of business; 

        (l)    to
Seller's Knowledge, incurrence of indebtedness in excess of $100,000 by Seller for borrowed money or commitment to borrow money entered into by Seller, or loans made
or agreed to be made by Seller, or indebtedness guaranteed by Seller; 

        (m)  to
Seller's Knowledge, incurrence by Seller of Liabilities in excess, individually or in the aggregate, of $100,000 or more, except Liabilities incurred in the ordinary
course of business, or increase or change in any assumptions underlying or methods of calculating, any doubtful account contingency or other reserves of Seller; 

        (n)  to
Seller's Knowledge, payment, discharge or satisfaction of any Liabilities of Seller in excess, individually or in the aggregate, of $100,000 or more other than the
payment, discharge or satisfaction in the ordinary course of business of Liabilities set forth or reserved for on the Financial Statements or incurred in the ordinary course of business; 

        (o)  to
Seller's Knowledge, capital expenditure by Seller, the execution of any Lease by Seller or the incurring of any obligation by Seller to make any capital expenditure
or execute any Lease, in each case, in excess, individually or in the aggregate, of $100,000 or more; 

        (p)  failure
to pay or satisfy when due any Liability of Seller, except where the failure would not have a Material Adverse Effect; 

        (q)  disposition
or lapsing of any material Intellectual Property or any disposition or disclosure to any person of any Intellectual Property not theretofore a matter of
public knowledge; 

        (r)  to
Seller's Knowledge, existence of any other event or condition which in any one case or in the aggregate has or would reasonably be expected to have a Material Adverse
Effect; or 

20

 

        (s)  to
Seller's Knowledge, agreement, whether oral or written, by Seller to do any of the things described in the preceding clauses (a) through (r) other than
as expressly provided for herein. 

        4.6.    Facilities.    

        (a)    Owned Real Property.    Seller does not have any Owned Real Property. 

        (b)    Actions.    There are no pending or, to the Knowledge of the Seller Parties, threatened condemnation
proceedings or other Actions relating to any Facility. 

        (c)    Leases or Other Agreements.    Except for Facility Leases listed on  Schedule 4.8(a)(xiii) below, there are no leases,
subleases, licenses, occupancy agreements, options, rights, concessions or other agreements or
arrangements, written or oral, granting to any person the right to purchase, use or occupy any Facility, or any real property or any portion thereof or interest in any such Facility or real property. 

        (d)    Facility Leases and Leased Real Property.    With respect to each Facility Lease, Seller has and will transfer
to Acquiror at the Closing an unencumbered interest in the applicable Leasehold Estate. Seller enjoys peaceful and undisturbed possession of all the Leased Real Property.  Schedule 4.8(a)(xiii) sets
forth a complete and accurate list of all real property Leases or other interests therein owned by Seller. 

        (e)    Certificate of Occupancy.    To the Knowledge of the Seller Parties, all Facilities have received all required
approvals of governmental authorities (including, without limitation, Permits and a certificate of occupancy or other similar certificate permitting lawful occupancy of the Facilities) required in
connection with the operation thereof and have been operated and maintained in all material respects in accordance with applicable Regulations. 

        (f)    No Special Assessment.    To the Knowledge of the Seller Parties, Seller has not received notice of any special
assessment relating to any Facility or any portion thereof and there is no pending or threatened special assessment. 

        4.7.    Assets.    Seller has and will transfer good and marketable title to the Assets and upon the consummation of
the transactions contemplated hereby and Acquiror will acquire good and marketable title to all of the Assets, in each case free and clear of any Encumbrances other than Permitted Encumbrances. To
Seller's Knowledge, the Assets include without limitation all material assets necessary for the conduct of the Business as presently conducted by Seller and to permit Acquiror to continue to conduct
the Business in all respects in substantially the same manner as the Business has been conducted through the date hereof. Except as set forth on  Schedule 4.7(a), no assets used in connection with
the operation of the Business are owned by Parent or any Affiliate of Parent other than
Seller. Schedule 4.7(b) contains accurate lists and summary descriptions of all the tangible Assets where the value of an individual item exceeds
$10,000 or where an aggregate of similar items exceeds $25,000. To Seller's Knowledge, all tangible assets and properties which are part of the Assets are in good operating condition and repair,
subject to repair or replacement from time to time in the ordinary course of business, and are usable in the ordinary course of business and conform in all material respects to all applicable
Regulations (including Environmental Laws) relating to their construction, use and operation. 

        4.8.    Contracts and Commitments.    

        (a)    Contracts.    Schedule 4.8 sets forth a complete and
accurate list of all Contracts (including, to Seller's Knowledge, oral agreements) of the following categories: 

        (i)    Contracts
not made in the ordinary course of business involving obligations in excess of $25,000; 

21

 

        (ii)  Employment
contracts and severance agreements, including, without limitation, Contracts (A) to employ or terminate executive officers or other personnel and
other contracts with present or former officers, directors or shareholders of Seller or (B) that will result in the payment by, or the creation of any Liability to pay on behalf of Acquiror or
Seller any severance, termination, "golden parachute," or
other similar payments to any present or former personnel following termination of employment or otherwise as a result of the consummation of the transactions contemplated by this Agreement; 

        (iii)  Labor
or union contacts; 

        (iv)  Distribution,
franchise, license, technical assistance, sales, customer, commission, consulting, agency or advertising contracts related to the Assets or the Business
involving obligations in excess of $25,000; 

        (v)  Options
with respect to any property, real or personal, whether Seller shall be the grantor or grantee thereunder; 

        (vi)  Contracts
involving future expenditures or Liabilities, actual or potential, in excess of $25,000 or otherwise material to the Business or the Assets; 

        (vii)    Contracts
involving performance of services or delivery of goods or materials by Seller, actual or potential, in excess of $25,000; 

        (viii)    Contracts
involving receipts, actual or potential, in excess of $25,000; 

        (ix)  Contracts
or commitments relating to commission arrangements with others; 

        (x)  Promissory
notes, loans, agreements, indentures, evidences of indebtedness, letters of credit, guarantees, or other instruments relating to an obligation to pay money,
individually in excess of or in the aggregate in excess of $25,000, whether Seller shall be the borrower, lender or guarantor thereunder or whereby any Assets are pledged (excluding credit provided by
Seller in the ordinary course of business to purchasers of Seller's products); 

        (xi)  Contracts
containing covenants limiting the freedom of Seller or any officer, manager, member or Affiliate of Seller, to engage in any line of business or compete with
any Person; 

        (xii)    Any
Contract with the United States, state or local government or any agency or department thereof; 

        (xiii)    Leases
of real property; 

        (xiv)    Leases
of personal property not cancelable (without Liability) within thirty (30) calendar days reflecting obligations of Seller of at least $2,000 per month in
each case; 

        (xv) Joint
venture, partnership and other Contracts (however named) involving a sharing of profits, losses costs or Liabilities by Seller with any other Person; 

        (xvi)    Licensing
agreements or other Contracts with respect to patents, trademarks, copyrights, or other intellectual property, including agreements with current or former
employees, consultants, or contractors regarding the appropriation or the nondisclosure of any of the Intellectual Property of Seller; and 

        (xvii)    Each
power of attorney that is currently effective and outstanding. 

The
Seller Parties have delivered to Acquiror true, correct and complete copies of all of the Contracts listed on Schedule 4.8 including all
amendments and supplements thereto. Each of the bids, proposals, Contracts or unfilled orders set forth on Schedule 4.8(a)(vii) were made in the
ordinary course of business. 

22

 

        (b)    Absence of Defaults.    All of the Contracts and Leases listed or required to be listed on  Schedule 4.8 to which Seller
is party are valid, binding and enforceable in accordance with their terms. To Seller's Knowledge, Seller has
fulfilled, or taken all action necessary to enable it to fulfill when due, all of its material obligations under each of such Contracts and Leases. Seller has complied in all material respects with
the provisions thereof, and to the Knowledge of the Seller Parties, all other parties to such Contracts and Leases have complied in all material respects with the provisions thereof, and neither
Seller nor, to the Seller Parties' Knowledge, any other party is in Default in any material respect thereunder and no notice of any claim of Default has been given to any Seller Party. To the
Knowledge of Seller Parties, except as set forth on Schedule 4.8, no event has occurred or circumstance exists that (with or without notice or
lapse of time) may contravene, conflict with, or result in a violation or breach of, or give Seller or any other Person the right to default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Contract. Parent does not have and may not acquire any rights under, and Parent does not have and may not become subject to any obligations
or Liability under any Contract that relates to the Business or the Assets. No Seller Party has Knowledge that the products and services called for by any unfinished Contract cannot be supplied in
accordance with the terms of such Contract, including time specifications, and has no reason to believe that any unfinished Contract will upon performance by
Seller result in a loss to Seller. With respect to any Leases, no Seller Party has received any notice of cancellation or termination under any option or right reserved to the lessor, or any notice of
Default, thereunder. 

        (c)    Product Warranty.    To Seller's Knowledge, Seller has committed no act, and there has been no omission by
Seller, which may result in, and there has been no occurrence which may give rise to, product liability or Liability for breach of warranty (whether covered by insurance or not) on the part of Seller,
with respect to products designed, manufactured, assembled, repaired, maintained, delivered, distributed or installed or services rendered prior to or on the Closing Date. 

        4.9.    Permits.    

        (a)  Schedule 4.9 sets forth a complete list of all Permits used in the operation of the Business or otherwise held by
Seller. Seller has, and at all times has had, all Permits required under any Regulation (including Environmental Laws) in the operation of its Business or in the ownership of the Assets, and owns or
possesses such Permits free and clear of all Encumbrances, except such Permits the failure of which to obtain would not have a Material Adverse Effect. Seller is not in Default, nor has it received
any notice of any claim of Default, with respect to any such Permit, except where the Default would not have a Material Adverse Effect. Except as otherwise governed by law, all such Permits are
renewable by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine filing fees. No present or
former stockholder, member, director, officer, manager, employee of Seller or any Affiliate thereof, or any other person, firm, corporation or other entity, owns or has any proprietary, financial or
other interest (direct or indirect) in any Permit which Seller owns, possesses or uses. 

        (b)  Except
as disclosed on Schedule 4.9(b) hereto, no notice to, declaration, filing or registration with, or Permit
from, any domestic or foreign governmental or regulatory body or authority, or any other person or entity, is required to be made or obtained by Seller in connection with the execution, delivery or
performance of this Agreement and the consummation of the transactions contemplated hereby. 

        (c)  The
Permits set forth on Schedule 4.9 collectively constitute all of the Permits necessary to permit Seller to
lawfully conduct and operate its business in the manner it currently conducts and operates such business and to permit Seller to own and use its assets in the manner in which 

23

 

it currently owns and uses such assets, except for such Permits, the absence of which would not, individually or in the aggregate, have a Material Adverse Effect. 

        4.10.    No Conflict or Violation.    Neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by any Seller Party with any of the provisions hereof, will (a) violate or conflict with any provision of the Organizational
Documents of
Parent or Seller, (b) except as set forth on Schedule 4.10, and subject to the attainment of consents set forth on  Schedule 4.4 by third
parties to the assignment of Contracts, violate, conflict with, or result in or constitute a Default under, or result in
the termination of, or accelerate the performance required by, or result in a right of termination or acceleration, or result in the creation of any Encumbrance upon or with respect to any of the
Assets under any of the terms, conditions or provisions of any Contract, Lease or Permit, (i) to which Seller is a party or (ii) by which any the Assets are bound, (c) violate any
Regulation or Court Order, (d) impose any Encumbrance on the Assets or the Business, (e) cause Acquiror or Seller to become subject to, or to become liable for the payment of, any Tax,
or (f) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any governmental body the right to revoke, withdraw, suspend, cancel, terminate, or
modify any Permits that are held by Seller or that otherwise relates to the Business or the Assets. 

        4.11.    Financial Statements.    The Financial Statements are attached hereto as  Schedule 4.11. The Financial Statements
(a) are in accordance with the books and records of Seller, (b) have been prepared in
accordance with GAAP consistently applied throughout the periods covered thereby and (c) fairly and accurately in all material respects present the assets, Liabilities (including all reserves)
and financial position of the Business as of the respective dates thereof and the results of operations and changes in cash flows of the Business for the periods then ended (subject, in the case of
the Interim Financial Statements, to normal year-end adjustments). At the respective dates of the Financial Statements, there were no material Liabilities of Seller, which, in accordance
with GAAP, should have been set forth or reserved for in the Financial Statements or the notes thereto, which are not set forth or reserved for in the Financial Statements or the notes thereto. 

        4.12.    Undisclosed Liabilities.    Seller does not have any Liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise), except (a) as disclosed on the Interim Balance Sheet, (b) for Current Liabilities incurred in the ordinary course of business, (c) for
those incurred in the ordinary course of business consistent with past practice since the Interim Balance Sheet Date, (d) such Liabilities reflected on  Schedule 4.12 or (e) other
Liabilities not to exceed, individually or in the aggregate, $100,000. 

        4.13.    Books and Records.    Seller has made and kept (and given Acquiror access to) Books and Records and accounts,
which, in reasonable detail, fairly reflect the activities of Seller. The minute books of Seller previously delivered to Acquiror accurately and adequately reflect all action previously taken by the
members, managers and committees of the managers of Seller. The copies of the stock book records of Seller previously delivered to Acquiror are true, correct and complete, and accurately reflect all
transactions effected in Seller's equity interests through and including the date hereof. Seller has not maintained any bank account or used any corporate funds except for bank accounts and funds
which have been and are reflected in the normally maintained books and records of Seller. 

24

  

        4.14.    Litigation.    Except as set forth on Schedule 4.14,
there are no Actions pending, or, to the Seller Parties' Knowledge, threatened (a) against, related to or affecting (i) Seller, the Business or the Assets (including with respect to
Environmental Laws), (ii) to Seller's Knowledge, any officers or directors of Seller in their capacity as such, or (iii) any member of Seller in such member's capacity as a member of
Seller, (b) seeking to delay, limit or enjoin the transactions contemplated by this Agreement, (c) that involve the risk of criminal liability or (d) in which Seller is a
plaintiff. Seller is not in Default with respect to or subject to any Court Order, and there are no unsatisfied judgments against Seller, the Business or any of the Assets. There are no Court Orders
or agreements with, or liens by, any governmental authority or quasi-governmental entity relating to any Environmental Law which regulate, obligate, bind or in any way affect Seller, the Business or
the Assets. 

        4.15.    Labor Matters.    

        (a)    General.    Seller is not a party to any labor agreement with respect to its employees with any labor
organization, union, group or association and there are no employee unions (nor any other similar labor or employee organizations) under local statutes, custom or practice. Seller has not experienced
any attempt by organized labor or its representatives to make Seller conform to demands of organized labor relating to its employees or to enter into a binding agreement with organized labor that
would cover the employees of Seller. There is no labor strike or labor disturbance pending or, to the best of the Seller Parties' Knowledge, threatened against Seller nor is any grievance currently
being asserted, and Seller has not experienced a work stoppage or other labor difficulty, and is not and has not engaged in any unfair labor practice. Without limiting the foregoing, Seller is in
material compliance with the Immigration Reform and Control Act of 1986 and maintains a current Form I-9, as required by such Act, in the personnel file of each employee hired after
November 9, 1986. Schedule 4.15(a) sets forth the names and current annual salary rates or current hourly wages of all present employees
of Seller, and also sets forth the earnings for each employee as reflected on Form W-2 for the 2001 calendar year. 

        (b)    WARN Act.    Since the enactment of Worker Adjustment and Retraining Notification Act (the
"WARN Act"), 29 U.S.C. §§ 2101 et seq., Seller has not effectuated (1) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of Seller, or (2) a "mass
layoff" (as defined in the WARN Act) affecting any site of employment or facility of Seller, nor has Seller been affected by any transaction or engaged in layoffs or employment terminations sufficient
in number to trigger application of any similar state or local law. Except as set forth in Schedule 4.15(b), none of Seller's Employees has
suffered an "employment loss" (as defined in the WARN Act) in the past three years. 

        4.16.    Compliance with Law.    Seller and the conduct of the Business have not violated and are in compliance with
all Court Orders and Regulations relating to the Assets or the Business, except for any such violations which would not, individually or in the aggregate, have a Material Adverse Effect. No Seller
Party has received any written notice to the effect that, or otherwise been advised that, Seller is not in compliance with any such Regulations or Court Orders in any material respect. 

        4.17.    No Brokers.    Neither Parent, Seller nor any of their respective officers, directors, managers, employees,
stockholders, members, Representatives or Affiliates has employed or made any agreement with any broker, finder or similar agent or any person or firm which will result in the obligation of Seller,
Acquiror or any of Acquiror's Affiliates to pay any finder's fee, brokerage fees or commission or similar payment in connection with the transactions contemplated hereby. 

        4.18.    No Other Agreements to Sell the Assets or Membership Interest of Seller.    Neither Parent, Seller nor any of
their respective officers, directors, managers, employees, stockholders, members or Affiliates have any commitment or legal obligation, absolute or contingent, to any other person or firm other than
Acquiror to sell, assign, transfer or effect a sale of the Assets (other than inventory in the 

25

 

ordinary course of business), to sell or effect a sale of any membership interest of Seller, to effect any merger, consolidation, liquidation, dissolution or other reorganization of Seller, or to
enter into any agreement or cause the entering into of an agreement with respect to any of the foregoing. Parent is not now engaged in negotiations with any party other than Acquiror with respect to
any of the foregoing. 

        4.19.    Intellectual Property.    

        (a)  Schedule 4.19(a) sets forth a true and complete list all of Seller's material patents, registered trademarks and
registered copyrights. Schedule 4.19(a) also sets forth: (i) for each patent, the number, normal expiration date and subject matter for
each country in which such patent has been issued, or, if applicable, the application number, date of filing and subject matter for each country, (ii) for each registered trademark and service
mark, the application/serial number or registration number, the class of goods covered and the expiration date for each country, and (iii) for each registered copyright, the registration number
and expiration date for each country, or, if applicable, the application number and date of filing for each country in which a copyright application has been filed. True and correct copies of all
patents and patent applications, trademark and service mark applications and registrations and copyright applications and registrations owned, controlled, filed or used by or on behalf of Seller or in
which Seller has any interest whatsoever have been provided to Acquiror. 

        (b)  Schedule 4.19(b) sets forth a true and complete list of all material license, sublicense and royalty agreements
relating to the Intellectual Property. A true and correct copy of each such agreement has
been delivered to Acquiror. With respect to each item of Intellectual Property required to be identified in Schedule 4.19(a), to Seller's
Knowledge: 

        (i)    all
licenses, sublicenses or agreements set forth in Schedule 4.19(b) are legal, valid, binding, enforceable and
in full force and effect; 

        (ii)  upon
consummation of the transactions contemplated by this Agreement, subject to the attainment of applicable consents set forth on  Schedule 4.4, all licenses, sublicenses or agreements will continue to
be legal, valid, binding, enforceable and in full force and effect on
terms identical to those in effect as of the date of this Agreement; 

        (iii)  neither
Seller's nor any other party to any license, sublicense or agreement is in breach or default under any such license, sublicense or agreement or has performed
any act or omitted to perform any act, with notice or lapse of time or both, which will become a material breach of default thereunder; 

        (iv)  no
party to any license, sublicense or agreement has given notice of termination or repudiation of any provision thereof; 

        (v)  with
respect to each sublicense, the representations and warranties set forth above in subsections 4.19(b)(i)-(iv) are true and correct with respect to the
underlying license; 

        (vi)  the
underlying item of Intellectual Property is not subject to any outstanding injunction, judgment, order, decree or ruling; 

        (vii)    Seller
has not granted any sublicense or similar right with respect to the license, sublicense or agreement; 

        (viii)    except
as set forth in Schedule 4.19(b), Seller is not obligated or under any liability whatsoever to make any
payments by way of royalties, fees or otherwise to any owner or licensee of, or other claimant to, any Intellectual Property; and 

26

 

        (ix)  no
action, suit, proceeding, hearing, investigation or complaint is pending or is threatened, nor has any claim or demand been made, which challenges the legality,
validity, enforceability or ownership of the underlying item of Intellectual Property. 

        (c)    Ownership and Protection of Intellectual Property.    Seller owns exclusively or, in the case of licensed
rights, the valid and enforceable right to use all of the Intellectual Property listed on Schedule 4.19(a) or underlying the licenses set forth
on Schedule 4.19(b), and the Intellectual Property will not cease to be valid rights of Seller by reason of the execution, delivery and
performance of this Agreement or the consummation of the transactions contemplated hereby. All of the pending applications have been duly filed. Seller has not received any written notice of
invalidity or infringement of any rights of others with respect to such Intellectual Property. Seller has taken all reasonable and prudent steps to protect the Intellectual Property listed on  Schedule 4.19(a)
 from infringement by any other Person. No other Person (i) has the right to use any of Seller's trademarks or service
marks on the goods and/or services in connection with which they are now being used either in identical form or in such near resemblance thereto as to be likely, when applied to the goods or services
of any such person, to cause confusion with such trademarks or to cause a mistake or to deceive, (ii) has notified Seller in writing that it is claiming any ownership of or right to use any of
the Intellectual Property, or (iii) to Seller's Knowledge, is infringing upon, violating or misappropriating any of the Intellectual Property in any way. To Seller's Knowledge, the Intellectual
Property does not and will not conflict with, infringe upon, misappropriate or otherwise violate the valid rights of any Person in or to such Intellectual Property, and no Action has been instituted
against or written notices received by Seller that are presently outstanding alleging that Seller's use of the Intellectual Property infringes upon, misappropriates or otherwise violates any rights of
a Person in or to such Intellectual Property. 

        (d)    Liabilities.    Seller has no reasonable basis to believe that it has any present or future liability under any
agreement to provide indemnification for infringement of any third-party rights or otherwise, or provide updates, enhancements, improvements, modifications, fixes, support or maintenance for any
products or Intellectual Property. 

        (e)    Trade Secrets.    Seller has taken reasonable security measures to protect the secrecy, confidentiality and
value of all of its trade secrets and confidential information, including without limitation entering into written agreements with its employees and other persons who may have participated in the
development, discovery or invention of any trade secret or have knowledge of or access to any trade secret or confidential information, which such agreements provide for the non-disclosure
or trade secrets and confidential information and the transfer of all rights in and to any development, discovery or invention to Seller. 

        4.20.    Employee Matters.    

        (a)    Disclosure; Delivery of Copies of Relevant Documents and Other
Information.    Schedule 4.20 contains a complete list of all current Seller Employee Plans and all former
Seller Employee Plans under which Acquiror may incur any liability. True and complete copies of each of the following documents have been delivered or made available by Seller to Acquiror:
(i) each such Seller Employee Plan and all amendments thereto and the summary plan description for each such plan, and, if none, any written
descriptions thereof which have been distributed to Seller's employees, (ii) a complete description of any material Seller Employee Plan which is not in writing, (iii) the most recent
determination or opinion letter issued by the Internal Revenue Service with respect to each Seller Employee Plan which is a Pension Plan, and (iv) a description of complete age, salary and
service as of December 31, 2001 for employees of Seller as of May 15, 2002. 

27

 

        (b)    Representations.    Except as set forth in  Schedule 4.20, Seller represents and warrants as follows: 

        (i)    Pension Plans    

        (A)  None
of Parent, Seller or any of their ERISA Affiliates sponsors, maintains, contributes to or has an obligation to contribute to, or has, within the six (6) year
period prior to the Closing Date, sponsored, maintained, contributed to or had an obligation to contribute to, any Pension Plan that is subject to Title IV of ERISA. 

        (B)  Each
Seller Employee Plan which is a Pension Plan, and each related trust agreement, annuity contract or other funding instrument has been determined by the Internal
Revenue Service to be qualified and tax-exempt under the provisions of Code Section 401(a) (or 403(a), as appropriate), and, to the Knowledge of the Seller Parties, nothing has
occurred which could reasonably cause the loss of such qualification or tax exemption. An application for a favorable determination letter has been filed with respect to the HA-LO
Industries, Inc. 401(k) Savings Plan within the remedial amendment period for the so-called "GUST" legislation. 

        (C)  None
of the Assets is, or may reasonably be expected to become, the subject of any lien arising under ERISA or Section 412(n) of the Code. Except as set forth on  Schedule 4.20, neither Seller nor
any ERISA Affiliate has any Liability for unpaid contributions with respect to any Pension Plans subject to
Title IV of ERISA. 

        (ii)    Multiemployer Plans.    None of Parent, Seller or any of their ERISA Affiliates sponsors, maintains,
contributes to or has an obligation to contribute to, or has, within the six (6) year period prior to the Closing Date, sponsored, maintained, contributed to or had an obligation to contribute
to, any Multiemployer Plan. None of Parent, Seller or any of their ERISA Affiliates has any unsatisfied liability due to a complete or partial withdrawal from a Multiemployer Plan or due to the
termination or reorganization of a Multiemployer Plan. 

        (iii)    Welfare Plans    

        (A)  Each
Seller Employee Plan which is a Welfare Plan which is a "group health plan," as defined in Section 607(1) of ERISA, has been operated in compliance in all
material respects with provisions of Part 6 of Title I, Subtitle B of ERISA and Sections 162(k) and 4980B of the Code at all times. 

        (iv)    Compliance With Law.    Except as has not resulted in and would not reasonably be expected to result in a
Material Adverse Effect, each Seller Employee Plan, and any related trust agreement, annuity contract or other funding instrument, presently complies and has been maintained in compliance with its
terms and, both as to form and in operation, with the requirements prescribed by any and all Regulations and Court Orders which are applicable to such plans, including, without limitation, ERISA and
the Code. All contributions required to be made under each Seller Employee Plan as of the date of this Agreement have been timely made or, if not yet due, have been properly reflected on the most
recent consolidated balance sheet filed or incorporated by reference in the Financial Statements prior to the date of this Agreement. 

        (v)  Except
as provided in Section 6.7 of this Agreement, the consummation of the transactions contemplated by this
Agreement will not give rise to any liability of Acquiror for severance pay, termination pay or any similar payment to any of Seller's employees, including but not limited to any liability related to
Seller Employee Plans, bonus payments or any other benefits previously provided by Seller to any of Seller's employees. 

28

 

        (vi)    No Foreign Plans.    Neither Seller nor any of its Subsidiaries whose Assets are being transferred pursuant to
this Agreement, sponsors, contributes to or has any liability with respect to any employee benefit plan, program or arrangement that provides benefits to non-resident aliens with no United
States source income outside of the United States. 

        4.21.    Transactions with Certain Persons.    Except as set forth on  Schedule 4.21, no member, officer, director or limited
liability company manager of Parent or Seller nor any member of any such Person's
immediate family and, to the Knowledge of the Seller Parties, no employee of Parent or Seller (nor any member of any such employee's immediate family) (a) is presently, or since
January 1, 2001 has been a party to any material transaction with Seller, including, without limitation, any contract, agreement or other arrangement (i) providing for the furnishing of
services by, (ii) providing for the rental of real or personal property from, or (iii) otherwise requiring payments to (other than for services as officers, directors or employees of
Seller) any such Person or corporation, partnership, trust or other entity in which any such Person has an interest as a stockholder, officer, director, trustee or partner; (b) is presently, or
since January 1, 2001 has been engaged in competition with Seller with respect to its business in any material respect; or (c) has presently or since January 1, 2001 has had
material business dealings or a material financial interest in any transaction with Seller (other than business dealings or
transactions conducted in the ordinary course of the business with Seller at substantially prevailing market prices and on substantially prevailing market terms). 

        4.22.    Certain Payments.    Except with respect to matters which would not reflect or yield a Material Adverse
Effect, to the Seller Parties' Knowledge, since January 1, 2001, neither Seller, nor any of its directors, officers or employees or any other Person affiliated with or acting for or on behalf
of Seller, has directly or indirectly (a) 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 (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special
concessions or for special concessions already obtained, for or in respect of Seller or any of its Affiliates or (iv) in violation of any Regulations (including, without limitation, the United
States Foreign Corrupt Practices' Act), or (b) established or maintained any fund or asset that has not been recorded in the books and records of Seller. Seller has not participated, directly
or indirectly, in any boycotts or other similar practices affecting any of its actual or potential customers and has at all times done business in an open and ethical manner. 

        4.23.    Tax Matters.    

        (a)  Each
Taxpayer has timely filed with the appropriate taxing authorities all Tax Returns required to be filed through the date hereof and will timely file any such Tax
Returns required to be filed on or prior to the Closing Date. Such Tax Returns are true, complete and accurate in all material respects. To Seller's Knowledge, no claim has ever been made by a taxing
authority in a jurisdiction where a Taxpayer does not file Tax Returns that such entity is or may be subject to taxation by that jurisdiction. 

        (b)  All
Taxes due and payable for which any Taxpayer is liable, whether to taxing authorities or to any other Person or entities, have been timely paid. All Taxes required
to be withheld by any Taxpayer have been collected and withheld and have been timely paid to the respective governmental agencies. 

        (c)  Except
as set forth in Schedule 4.23(c), no deficiencies for Taxes, have been claimed, proposed or assessed by any
taxing or other governmental authority against any Taxpayer and there are no pending or, to the Seller Parties' Knowledge, threatened, any audits, examinations, investigations or other proceedings in
respect of Taxes or Tax matters. No extension of a statute of limitations relating to Taxes is in effect with respect to any Taxpayer. All deficiencies asserted or assessments made as a result of any
examination have been fully paid. 

29

 

        (d)  Notwithstanding
the foregoing, the representations and warranties set forth in Section 4.23(a),  Section 4.23(b) and Section 4.23(c)
 hereof shall not be applicable to the extent that the
Assets cannot be
made subject to Tax liens and Buyer cannot be held liable for Taxes relating to matters constituting any breach of such representations and warranties. 

        (e)  There
are no liens for Taxes (other than for current Taxes not yet due and payable) on any of the Assets. 

        (f)    None
of the Assets is property that is required to be treated as being owned by any other person pursuant to the so-called safe harbor lease provisions of
former Section 168(f)(8) of the Code. 

        (g)  None
of the Assets directly or indirectly secures any debt the interest on which is tax-exempt under Section 103(a) of the Code. 

        (h)  None
of the Assets is "tax-exempt use property" within the meaning of Section 168(h) of the Code. 

        (i)    Seller
is not a person other than a United States person within the meaning of the Code. 

        (j)    The
transaction contemplated herein is not subject to the tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or
of any other provision of law. 

        4.24.    Insurance.    Schedule 4.24 contains a complete and
accurate list of all policies or binders of fire, liability, title, worker's compensation, product liability (which list shall be for three years) and other forms of insurance (showing as to each
policy or binder the carrier, policy number, coverage limits, expiration dates, annual premiums, a general description of the type of coverage provided, loss experience history by line of coverage)
maintained by Seller on the Business, the Assets or its employees. True and correct copies of all such policies or binders have been delivered to Acquiror. To Seller's Knowledge, all insurance
coverage applicable to Seller, the Business or the Assets is in full force and effect. There is no material Default under any such coverage nor has there been any failure to give notice or present any
material claim under any such coverage in a due and timely fashion. There are no outstanding unpaid premiums except in the ordinary course of business and no notice of cancellation or nonrenewal of
any such coverage has been received. All products liability, general liability and workers' compensation insurance policies maintained by Seller have been occurrence policies and not claims made
policies. There are no outstanding performance bonds covering or issued for the benefit of Seller. No insurer has advised Seller in writing that it intends to reduce coverage, increase premiums or
fail to renew existing policy or binder. 

        4.25.    Accounts Receivable.    The accounts receivable set forth on the Interim Balance Sheet, and all accounts
receivable arising since the Interim Balance Sheet Date, represent bona fide claims of Seller against debtors for sales, services performed or other
charges arising on or before the date hereof, and
all the goods delivered and services performed which gave rise to said accounts were delivered or performed in accordance with the applicable orders, Contracts or customer requirements. Said accounts
receivable are subject to no defenses, counterclaims or rights of setoff, except to the extent of the appropriate reserves for bad debts on accounts receivable as set forth on the Interim Balance
Sheet and, in the case of accounts receivable arising since the Interim Balance Sheet Date, to the extent of a reasonable reserve rate for bad debts on accounts receivable which is not greater than
the rate reflected by the reserve for bad debts on the Interim Balance Sheet. As of the Closing Date, the Accounts Receivable set forth on the Pre-Closing Balance Sheet will represent  bona fide claims
of Seller against debtors for sales, services performed or other charges arising on or before the date hereof, and all the goods
delivered and services performed which gave rise to said accounts were delivered or performed in accordance with the applicable orders, Contracts or customer requirements. Said Accounts Receivable
will be subject to no defenses, counterclaims or rights of setoff, except to the 

30

 

extent of the appropriate reserves for bad debts on Accounts Receivable as set forth on the Pre-Closing Balance Sheet. 

        4.26.    Other Current Assets.    Schedule 4.26 contains a complete and accurate list of all unbilled
receivables, deferred costs, prepaid assets and other current assets (other than accounts receivable) set forth on the Interim Balance Sheet. The unbilled receivables, deferred costs, prepaid assets
and other current assets (other than accounts receivable) as set forth (a) on the Interim Balance Sheet or arising since the Interim Balance Sheet Date and (b) as of the Closing Date, on
the Pre-Closing Balance Sheet, respectively are valued at reasonable amounts based on the normal valuation policy of Seller in accordance with GAAP. None of such unbilled receivables,
deferred costs, prepaid assets or other current assets are subject to write-off or write-down, except for such items which have been written down to realizable market value, or
for which adequate reserves have been provided, in the Interim Balance Sheet and in the Pre-Closing Balance Sheet, respectively. All unbilled receivables, deferred costs, prepaid assets
and other current assets (other than accounts receivable) will, when converted to accounts receivable, if applicable, represent bona fide claims of
Seller against debtors for sales, services performed or other charges arising on or before the Closing Date, and all the goods delivered and services performed which gave rise to said accounts were
delivered or performed in accordance with the applicable orders, Contracts or customer requirements. Said accounts receivable will be subject to no defenses, counterclaims or rights of setoff, except
to the extent adequate reserves have been provided in the Interim Balance Sheet and in the Pre-Closing Balance Sheet, respectively. 

        4.27.    Customers, Distributors and Suppliers.    Seller has previously delivered to Acquiror a complete and accurate
list of the names and addresses of Seller's (a) the ten (10) largest customers (including advertisers) of Seller based on dollar revenues to Seller during Seller's last fiscal year,
showing the approximate total revenues in dollars to Seller from each such customer during such fiscal year; (b) the ten (10) largest distributors of Seller based on amount of sales
during Seller's last fiscal year, showing the approximate total sales in dollars by Seller to each such distributor during such fiscal year; and (c) the ten (10) largest suppliers of
Seller based on dollar purchases during Seller's last fiscal year, showing the approximate total purchases in dollars by Seller from each such supplier during such fiscal year. Since the Interim
Balance Sheet Date, except as set forth on Schedule 4.27, there has been no Material Adverse Change in the business relationship of Seller with
any customer, distributor or supplier named on Schedule 4.27. Seller has not received any communication from any customer, distributor or
supplier named on Schedule 4.27 of any intention to terminate or materially reduce purchases from or supplies to Seller. 

        4.28.    Compliance with Environmental Laws.    Except as disclosed on  Schedule 4.28, (a) to Seller's Knowledge, Seller is
now and has always been in material compliance with all applicable Environmental Laws;
(b) to Seller's Knowledge, Seller has not used, generated, treated, stored, transported, disposed of, released, or handled hazardous substances except in material compliance with all applicable
Environmental Laws; (c) to Seller's Knowledge, there is no site to which Seller has arranged the transport of hazardous substances which is the subject of an environmental action,
(d) Seller has not received any written notice of any alleged non-compliance with, or alleged responsibility or potential responsibility under, any Environmental Law, nor is Seller
aware (to Seller's Knowledge) of any information which might reasonably be expected to form the basis of such a notice, and (e) Seller has not released or indemnified (other than
indemnification obligations pursuant to Facility Leases or in connection with third party loans) any other person or entity from claims or liability under any Environmental Law nor has Seller waived
any rights concerning any claims under any Environmental Law. 

        4.29.    Billings.    Except for billings with respect to client deposits or retainers and except as set forth in  Schedule 4.29(a), to Seller's Knowledge: Seller has not made any billings whatsoever to its customers or clients for services to be provided or
products to be sold after the Closing; all client deposits held by Seller arose from written agreements between Seller and the remitting client, are 

31

 

correct as to amount, and no such client has notified Seller of its intention to seek a refund of its deposit; all such client deposits were received by Seller in cash, in the ordinary course of
business. Except as set forth in Schedule 4.29(b), as of the date of this Agreement, to the Knowledge of the Seller Parties, no party to any such
agreement has defaulted in any of its material obligations thereunder, and no client is in default of its payment obligations on invoices for services previously rendered or products previously sold
by Seller. Except as set forth in Schedule 4.29(c), to Seller's Knowledge, the open purchase orders of Seller were entered into by Seller in good
faith, in accordance with past practices, in the ordinary course of business, and with the exception of routine cancellations in the ordinary course of business, such open purchase orders were, and to
the extent any such order remains unfilled as of the date of this Agreement, are, in full force and effect. There is no outstanding bid, proposal, Contract or unfilled order which will or would, if
accepted, have a Material Adverse Effect. 

        4.30.    Banking Relationships.    Schedule 4.30 sets forth a
complete and accurate description of all arrangements that Seller has with any banks, savings and loan associations or other financial institutions providing for checking accounts, safe deposit boxes,
borrowing arrangements, and certificates of deposit or otherwise, indicating in each case account numbers, if applicable, and the person or persons authorized to act or sign on behalf of Seller in
respect of any of the foregoing. 

        4.31.    Relationship of Seller and Parent.    The Business is different from and has been operated separately from
the business of Parent. Following the Closing, Parent will continue to have material business operations and own material assets (other than the Assets). 

        Acquiror
acknowledges and agrees that Seller Parties are making no representations and warranties with respect to the Assets or the Business other than the representations and warranties
set forth in this Agreement and the Ancillary Agreements. 

 
 

ARTICLE V.
  
    REPRESENTATIONS AND WARRANTIES OF ACQUIROR    
  

        Acquiror hereby represents and warrants to Seller as follows, which representations and warranties are, as of the date hereof, and will be, as of the Closing
Date, true and correct: 

        5.1.    Organization of Acquiror.    Acquiror is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with full power and authority to own and lease its properties and assets and conduct its business as its is presently being conducted. Acquiror is duly
qualified to do business and is in good standing in each jurisdiction in which its right, title and interest in or to any of the assets held by it, or the conduct of its business, requires such
qualification except where failure to be so qualified or in good standing, would not, individually or in the aggregate, have a Material Adverse Effect on the condition (financial or otherwise),
liabilities, operations or results of operations of Acquiror. 

        5.2.    Authorization.    Acquiror has all requisite power and authority, and has taken all action necessary, to
execute and deliver this Agreement and the Ancillary Agreements, to consummate the transactions contemplated hereby and thereby and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Ancillary Agreements by Acquiror and the consummation by Acquiror of the transactions contemplated hereby and thereby have been duly approved by the board of
directors of Acquiror. No other corporate proceedings on the part of Acquiror are necessary to authorize this Agreement and the Ancillary Agreements to which Acquiror is a party and the transactions
contemplated hereby and thereby. This Agreement has been duly executed and delivered by Acquiror and is, and upon execution and delivery the Ancillary Agreements will be, legal, valid and binding
obligations of Acquiror, enforceable against Acquiror in accordance with their terms, except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws 

32

 

relating to creditor's rights generally or by equitable principles (whether considered in an action at law or in equity). 

        5.3.    No Conflict or Violation.    Neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by Acquiror with any of the provisions hereof, will (a) violate or conflict with any provision of the Organizational
Documents of Acquiror, (b) violate, conflict with, or result in or constitute a Default under, or result in the termination of, or accelerate the performance required by, or result in a right
of termination or acceleration under, or result in the creation of any Encumbrance upon any of Acquiror's assets under, any of the terms, conditions or provisions of any contract, indebtedness, note,
bond, indenture, security
or pledge agreement, commitment, license, lease, franchise, permit, agreement, authorization, concession, or other instrument or obligation to which Acquiror is a party or (c) violate any
Regulation or Court Order. 

        5.4.    SEC Filings.    Acquiror has filed all forms, reports and documents, together with any amendments to be made
with respect thereto that are required to be filed by Acquiror with the Securities and Exchange Commission ("SEC") since January 1, 2001. All
such required forms, reports and documents (together with any amendments required to be made with respect thereto (including those forms, reports, documents and amendments) that Acquiror may file
subsequent to the date hereof) are referred to herein as the "Acquiror SEC Reports." As of their respective dates, the Acquiror SEC Reports, including
the financial statements, exhibits and schedules thereto (i) were prepared in all material respects in accordance with the requirements of the Securities Act of 1933, as amended or the Exchange
Act of 1934, as amended, as the case may be, and the rules and regulations of the SEC thereunder applicable to such Acquiror SEC Reports, and (ii) did not at the time they were filed (or if
amended or superseded by a filing, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were made, not misleading, except to the extent corrected by a subsequently filed Acquiror SEC Report. 

 
 

ARTICLE VI.
  
    COVENANTS OF THE SELLER PARTIES AND ACQUIROR    
  

        The Seller Parties and Acquiror each covenant with the other as follows: 

        6.1.    Confidentiality and Non-Competition.    

        (a)  Seller
Parties acknowledge that they have knowledge of certain Confidential Information and that such Confidential Information is confidential and proprietary to the
Business and constitutes valuable trade secrets of the Business, which affect, among other things, the successful conduct, furtherance and protection of the Business and related goodwill. Seller
Parties acknowledge that the unauthorized use or disclosure of such Confidential Information is likely to be highly prejudicial to the interests of Acquiror or its customers, clients and patrons, an
invasion of privacy, or an improper disclosure of trade secrets. Seller Parties agree that a substantial portion of the Purchase Price is being paid for such Confidential Information and that it
represents a substantial investment having great economic and commercial value to Acquiror, and constitutes a substantial part of the value to Acquiror of the Business. Seller Parties further
acknowledge that Acquiror would be irreparably damaged if any of the Confidential Information was disclosed to, or used or exploited on behalf of, any Person other than Acquiror or any of its
Affiliates. Accordingly, Seller Parties covenant and agree that they shall not, directly or indirectly, and shall use their best efforts to ensure that any agents, Affiliates and any other persons
acting on either Seller Party's behalf (Seller Parties and such agents, Affiliates and other persons with respect to either Seller Party being collectively referred to as the
"Restricted Persons") do not, without the prior written consent of Acquiror, disclose, use, exploit, furnish or make accessible to anyone or 

33

 

any other entity, any such Confidential Information, for the benefit of any such Restricted Person or of any third party, at any time for so long as such information shall remain secret or
confidential or otherwise remain wholly or partially protectable except that Seller Parties may use or exploit a particular item of Confidential Information if and to the extent (but only if and to
the extent) that such item is: 

        (i)    or
becomes generally known on a non-confidential basis to persons in the industry, through no wrongful act of any Restricted Person, in which Acquiror is
engaged and is part of the public domain; 

        (ii)  or
was within a Restricted Person's possession prior to its being furnished to such Restricted Person by or on behalf of Seller or Acquiror, the source of such
information was not known by such Restricted Person to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to either Seller Party or
Acquiror or any other Person with respect to such information; or 

        (iii)  or
becomes available to a Restricted Person on a non-confidential basis from a source other than a Seller Party or Acquiror or any of their respective
Representatives, provided that such source is not bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of
confidentiality to either Seller Party or Acquiror or any other Person with respect to such information. 

        (b)  Seller
Parties hereby acknowledge that Acquiror will invest substantial time, money and resources in acquiring the Business, as well as in the development and retention
of Seller's inventions, Confidential Information, customers, accounts and business partners of Seller. Therefore, Seller Parties hereby agrees that, if allowed to participate in a competitive business
in violation of this Section 6.1(b), Seller Parties would substantially impair the value of the Assets being acquired by Acquiror. Seller Parties
agree that for a two (2) year period following the Closing Date, Seller Parties shall not in any capacity, or in association with others, directly or indirectly, as advisor, agent, owner,
partner, stockholder, beneficial owner or in any other capacity, and shall use their best efforts to ensure that the Restricted Persons do not, directly or indirectly, for the benefit of any of such
Restricted Persons or their respective Affiliates: 

        (i)    engage
in the Business or in any business activity that in any manner whatsoever competes with the Business in any state of the United States or elsewhere (the
"Competitive Activities"); provided that this clause (i) shall not restrict the business
activities of any entity that may acquire the operations of Parent or an Affiliate of Parent (in a stock, merger or asset transaction) (the "Acquiring
Party") from and after the Closing Date unless the Acquiring Party is an Affiliate of either Seller Party prior to such acquisition transaction (or would be considered an
Affiliate of either Seller Party if the acquisition transaction were consummated on the date hereof), in which case the restrictions in this clause (i) shall apply to the Acquiring Party;
further provided that this clause (i) will not prohibit (a) the sale and distribution of promotional and consumer products, (b) event planning or (c) the businesses as
currently
operated in Canada by Upshot Integrated, Inc. and One to One Integrated Technologies, Inc. until such time as Seller has sold such businesses; 

        (ii)  own
any interest in, manage, operate, join or control any business or organization that engages in a Competitive Activity; provided that  this clause (ii) shall not restrict the business activities of
any Acquiring Party from and after the Closing Date unless the Acquiring Party is an Affiliate of either
Seller Party prior to such acquisition transaction (or would be considered an Affiliate of either Seller Party if the acquisition transaction were consummated on the date hereof), in which case the
restrictions in this clause (ii) shall apply to the Acquiring Party; 

34

 

        (iii)  solicit
for employment, employ or engage any person or entity who is employed by Seller on the date hereof or prior to the Closing Date and becomes employed by
Acquiror on the Closing Date; or 

        (iv)  solicit
or entice suppliers or customers of the Business, Acquiror or an Affiliate of Acquiror to cease doing business with or reduce its relationship with Acquiror or
an Affiliate of Acquiror. 

If
a court determines that the restrictions set forth in Sections 6.1(b) above are too broad or otherwise unreasonable under applicable law, including
with respect to time or geographical scope, the court is hereby requested and authorized by the parties without further action by the parties hereto to revise the restrictions in  Section 6.1(b) to
include the maximum restrictions allowed under the applicable law. 

        (c)  Seller
Parties hereby expressly acknowledge that the covenants contained in this Section 6.1 are integral to the
purchase of the Assets by Acquiror and that without the protection of such covenants, Acquiror would not have entered into this Agreement. Seller Parties hereby further acknowledges that money damages
will be impossible to calculate and may not adequately compensate Acquiror in connection with an actual or threatened breach by a Restricted Person of the provisions of this  Section 6.1.
Accordingly, on their own behalf and on behalf of each of the other Restricted Persons, Seller Parties hereby expressly waive all
rights to raise the adequacy of Acquiror's remedies at law as a defense if Acquiror seeks to enforce by injunction or other equitable relief the due and proper performance and observance of the
provisions of this Section 6.1. In addition, Acquiror shall be entitled to pursue any other available remedies at law or equity, including the
recovery of money damages, in respect of the actual or threatened breach of the provisions of this Section 6.1. Seller Parties hereby expressly
waive any right to assert inadequacy of consideration as a defense to enforcement of the confidentiality covenants in this Section 6.1 should
such enforcement ever become necessary. 

        6.2.    Further Assurances.    Upon the terms and subject to the conditions contained herein, the parties agree, both
before and after the Closing (a) to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate
and
make effective the transactions contemplated by this Agreement and the Ancillary Agreements, provided, however, that neither Seller Party nor Acquiror
shall be required to make any payments greater than $25,000, commence litigation or agree to modifications of the terms of any Contracts to effectuate same (other than modifications which would not
impose additional obligations on Seller Parties), (b) to execute any documents, instruments or conveyances of any kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder or thereunder, and (c) to cooperate with each other in connection with the foregoing. Without limiting the foregoing, the parties agree to use their
respective commercially reasonable efforts (a) to obtain all necessary waivers, consents and approvals necessary or desirable for the consummation of the transactions contemplated by this
Agreement or the Ancillary Agreements from other parties to the Contracts and Leases;, that neither Seller Parties nor Acquiror shall be required to make any payments, commence litigation or agree to
modifications of the terms thereof in order to obtain any such waivers, consents or approvals, (b) to obtain all necessary Permits as are required to be obtained under any Regulations,
(c) to defend all Actions challenging this Agreement or the consummation of the transactions contemplated hereby, (d) to lift or rescind any injunction or restraining order or other
Court Order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, (e) to give all notices to, and make all registrations and filings with third
parties, including, without limitation, submissions of information requested by governmental authorities, (f) to obtain any clearance certificate or similar document(s) which may be required by
any state taxing authority to relieve Acquiror of any obligations to withhold any portion of the Purchase Price to be paid to Seller pursuant to this Agreement and (g) prior to the Closing, to
fulfill all conditions to this Agreement. 

35

 

        6.3.    No Solicitation.    Except as permitted in the Bidding Procedures, following the date the Sale Procedure Order
is entered into, the Seller Parties shall not, and each of the Seller Parties shall cause each of their respective Representatives (including, without limitation, investment bankers, attorneys and
accountants), not to, directly or indirectly, enter into, solicit, initiate or continue any discussions or negotiations with, or encourage or respond to any inquiries or proposals by, or participate
in any negotiations with, or provide any information to, or otherwise cooperate in any other way with, any corporation, partnership, person or other entity or group, other than Acquiror and its
Representatives, concerning any sale of all or a portion of the Assets, or of any equity interest in Seller, or any merger, consolidation, liquidation, dissolution or similar transaction involving
Seller (each such transaction being referred to herein as a "Proposed Acquisition Transaction"). Except as permitted in the Bidding Procedures,
following the date the Sale Procedure Order is entered into, the Seller Parties shall not, directly or indirectly, through any officer, director, employee, Representative, agent or otherwise, solicit,
initiate or encourage the submission of any proposal or offer from any Person or entity relating to any Proposed Acquisition Transaction or participate in any negotiations regarding, or furnish to any
other person any information with respect to Seller for the purposes of, or otherwise cooperate in any way with, or assist or participate in, facilitate or encourage, any effort or attempt by any
other person to seek or effect a Proposed Acquisition Transaction. The Seller Parties hereby jointly and severally represent and warrant that none of them is now engaged in negotiations with any party
other than Acquiror with respect to any of the foregoing. The Seller Parties shall promptly advise such prospective purchaser or soliciting party, by written notice (with a copy to Acquiror), of the
terms of this Section 6.3 and will promptly notify Acquiror (orally and in writing) if any such offer, or any inquiry or contact with any Person
with respect thereto, is made and shall provide Acquiror with a copy of such offer, the terms of any proposal, including, without limitation, the identity of the prospective purchaser or soliciting
party, and shall keep Acquiror informed on the status of any negotiations regarding such offer. The Seller Parties agree not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which Seller is a party. 

        6.4.    Notification of Certain Matters.    From the date hereof through the Closing, each Party shall give prompt
notice to the other Party (the party giving such notice being referred to as the "Notifying Party") (in the case of any Seller Party, such obligation
shall arise only upon receipt of actual knowledge by any of Gregory J. Kilrea, Marc Simon or Keith Stenlund and in the case of Acquiror, such obligation shall arise only upon receipt of actual
knowledge by Donald A. Kurz, Leland P. Smith or Lawrence Madden) of the occurrence, or failure to occur from the date hereof to the Closing, of any event which occurrence or failure would be likely to
cause the closing conditions set forth in Section 8.1 and Section 9.1, respectively,
hereof not to be satisfied as of the Closing Date or of any material breach of a representation, warranty of covenant;,, that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement or to satisfy any condition. From the date hereof through the Closing, the Seller Parties shall promptly notify Acquiror upon receipt of actual
Knowledge by any of Marc Simon, Greg Kilrea or Keith Stenlund of any Default or threat or commencement of any Action, in either case that could in any way materially affect Seller or the Business. 

        6.5.    Investigation by Acquiror.    From the date hereof through the Closing Date: 

        (a)  Seller
shall, and shall cause its officers, directors, employees and agents to, afford the Representatives of Acquiror and its Affiliates reasonable access on at least
two (2) days prior notice to Seller and the Business for the purpose of inspecting the same, and to the officers, managers, attorneys, accountants, properties, Books and Records and Contracts
of Seller, and shall furnish Acquiror and its Representatives all financial, operating and other data and information as Acquiror or its Affiliates, through their respective Representatives, may
reasonably request, including an unaudited balance sheet and the related statements of income, retained earnings and cash flow for each month from the date hereof through the Closing Date within ten
(10) calendar days after the end of each month which financial statements shall (i) be true, correct and complete, (ii) be in accordance with the books and records of Seller and
(iii) accurately set forth the assets, Liabilities and financial condition, results of operations and other information purported to be set forth therein in accordance with GAAP consistently
applied. 

36

  

        (b)  Following
the Closing Date, the Seller Parties shall provide Acquiror and its independent accountants reasonable access to the records and personnel of the Seller
Parties for the purpose of enabling Acquiror to prepare audited and unaudited financial statements of Seller and the Business that are required to be filed by Acquiror under the Exchange Act, and
shall cooperate with Acquiror in connection with the foregoing. 

        6.6.    Conduct of Business.    Except as otherwise expressly permitted by this Agreement, between the date of this
Agreement and the Closing Date, Seller shall conduct its business in the ordinary course of business, consistent with past practices, and Parent and Seller will not, and Parent will cause Seller not
to, without the prior consent of Acquiror, take any affirmative action, or fail to take any reasonable action within their control, as a result of which any of the changes or events listed in  Section 4.5 is likely to occur. 

        6.7.    Employee Matters.    

        (a)  Acquiror
shall employ at least 81 of Seller's employees in Seller's Chicago Facility, whom Acquiror may select and hire, in Acquiror's sole discretion (such employees
are hereinafter referred to as the "Rehired Employees"), which offers shall be on terms and conditions which Acquiror shall determine in its sole
discretion; provided, however, that Rehired Employees shall not include John R. Kelley, Jr., Carol R. Griseto, Dan Pearson and James Dygas. Seller shall
terminate the employment of all Rehired Employees immediately prior to the Closing and shall cooperate with and use its best efforts to assist Acquiror in its efforts to secure satisfactory employment
arrangements with the Rehired Employees. 

        (b)  Seller
shall comply with the requirements of the WARN Act with respect to any "plant closing" or "mass layoff", as those terms are defined in WARN Act, which may result
from Seller's termination of the employment of any of the employees of the Business in connection with Seller's sale of the Assets to Acquiror or any of the other transactions contemplated by this
Agreement; provided, however, that Acquiror shall be solely responsible for any WARN Act liability that results from Acquiror failing to hire the
minimum number of Rehired Employees specified in Section 6.7(a) above, and shall indemnify Seller against any such WARN Act liability. 

        (c)  Seller
shall be solely responsible for all of the Employee Plans and all obligations and liabilities thereunder. Acquiror shall not assume any of the Employee Plans or
any obligation or liability thereunder. 

        (d)  Nothing
contained in this Agreement shall confer upon any Rehired Employee any right with respect to continuance of employment by Acquiror, nor shall anything herein
interfere with the right of Acquiror to terminate the employment of any of the Rehired Employees at any time, with or without cause, or restrict Acquiror in the exercise of its independent business
judgment in modifying any of the terms and conditions of the employment of the Rehired Employees; provided, however, that Acquiror shall be solely
responsible for any Warn Act liability that results from its termination of any of the Rehired Employees. 

        (e)  No
provision of this Agreement shall create any third party beneficiary rights in any Rehired Employee, any beneficiary or dependents thereof, or any collective
bargaining representative thereof, with respect to the compensation, terms and conditions of employment and benefits that may be provided to any Rehired Employee by Acquiror or under any benefit plan
which Acquiror may maintain. 

        (f)    Following
the Closing Date, Acquiror shall, pursuant to plans and arrangements established or maintained by Acquiror (the "Acquiror Benefit
Plans"), provide the Rehired Employees with health and welfare benefits which are comparable to the health and welfare benefits which the Acquiror provides to similarly
situated employees of the Acquiror. 

37

 

        (g)  With
respect to Rehired Employees that are covered under a medical and health plan of Seller as of the Closing Date, Acquiror shall cause the Acquiror's medical and
health plan covering such Rehired Employees to waive all limitations as to pre-existing condition exclusions and waiting periods with respect to participation and coverage requirements and
benefits applicable to such Rehired Employees, to the extent that the applicable Rehired Employee is not subject to such exclusions and waiting periods under the applicable Seller welfare plan
immediately prior to the Closing Date. 

        (h)  Acquiror
shall not be required to give Rehired Employees credit under the Acquiror Benefit Plans for service prior to the Closing Date with Seller and its Affiliates,
other than for purposes of Acquiror's vacation policy. 

        (i)    All
Rehired Employees shall, to the extent provided in the HA-LO Industries, Inc. 401(k) Savings Plan (the "Seller 401(k)
Plan"), be vested in their account balances under the Seller 401(k) Plan as of the Closing Date, and shall be entitled to either (i) a distribution of their account
balances in accordance with the terms of such plan and applicable law, or (ii) maintain such amounts in the Seller 401(k) Plan to the extent permitted by the Seller 401(k) Plan. Acquiror may
designate one or more defined contribution plans maintained by the Acquiror (the "Acquiror 401(k) Plan") to accept rollover contributions from Rehired
Employees in accordance with, and to the extent permitted by, the terms of the Acquiror 401(k) Plan. 

        6.8.    Bankruptcy Court Approval.    

        (a)  Within
three (3) Business Day after the execution of this Agreement, Parent shall file a motion or motions with the Bankruptcy Court seeking entry of
(i) the Approval Order, and (ii) the Sale Procedure Order. Acquiror and Parent agree to make promptly any filings, to take all actions and to use their commercially reasonable efforts to
schedule the hearing at which the Sale Procedure Order will be considered by the Bankruptcy Court on or prior to June 10, 2002 and to obtain entry of the Sale Procedure Order, entry of the
Approval Order and any and all other approvals and orders from the Bankruptcy Court necessary or appropriate for the consummation of the transactions contemplated hereby. 

        (b)  Prior
to or at the sale hearing where the Bankruptcy Court approves the entry of the Approval Order, Seller and Acquiror shall accurately inform the Bankruptcy Court of
all material facts of which they are aware relating to this Agreement and the transactions contemplated hereby. 

        (c)  If
the Approval Order, Sale Procedure Order or any other orders of the Bankruptcy Court relating to this Agreement shall be appealed by any Person (or a petition for or
motion for rehearing or reargument shall be filed with respect thereto), Parent agrees to use commercially reasonable efforts to defend against such appeal, petition or motion, and obtain an expedited
resolution of such appeal; provided, however, that nothing herein shall preclude the parties hereto from consummating the transactions contemplated
herein if the Approval Order shall have been entered and shall not have been stayed and Acquiror, in its sole discretion, waives in writing the requirement that the Approval Order be a Final Order. 

        (d)  Parent
shall cooperate with Acquiror, its Affiliates and their respective Representatives in connection with the Approval Order, the Sale Procedure Order and the
bankruptcy proceedings in connection therewith. Such cooperation shall include, but not be limited to, consulting with Acquiror and its Affiliates at its request concerning the status of such
proceedings, providing Acquiror and its Affiliates with copies of requested pleadings, notices, proposed orders and other documents relating to such proceedings as soon as reasonably practicable prior
to any submission thereof to the Bankruptcy Court and filing such pleadings, notices, proposed orders and other documents only in a form reasonably acceptable to Acquiror. Parent further covenants and
agrees that the terms of any plan submitted by Parent to the Bankruptcy Court for confirmation shall not 

38

 

conflict with, supersede, abrogate, nullify, modify or restrict the terms of this Agreement and the rights of Acquiror hereunder or in any way prevent or interfere with the consummation or
performance of the transactions contemplated by this Agreement including, without limitation, any transaction that is contemplated by or approved pursuant to the Approval Order and the Sale Procedure
Order. 

        (e)  Parent
acknowledges that the overbid provisions, the Termination Payment, the Reimbursement Fee and the other bid protections in the Bidding Procedures are designed to
compensate Acquiror and its Affiliates for their considerable efforts and agreements to date, to induce Acquiror to enter into this Agreement, and to facilitate a full and fair process designed to
maximize the value of the Assets for the benefit of each Seller Party's stakeholders. Parent will not amend, modify or change or attempt to amend, modify or change the Bidding Procedures without the
prior written approval of Acquiror. 

        6.9.    Corporate Name of Subsidiaries of Seller.    Promptly following the Closing, the Seller Parties hereby
acknowledge and agree to change the corporate name of any Subsidiary of the Seller Parties that contains the word "Upshot", and upon effectuating the change of the corporate name of any such
Subsidiary of the Seller Parties, each of the Seller Parties hereby acknowledges and agrees that it shall cease using the corporate name "Upshot" (or any corporate name containing the word "Upshot")
in connection with any business conducted by such party. 

        6.10.    Patent License Agreement.    The Seller Parties are in the process of negotiating an amendment and
restatement to the Patent License Agreement (the "Amended Patent License Agreement") pursuant to which the existing Patent License Agreement will be amended to provide, among other things
(i) that the patents covered by the Patent License Agreement which are licensed to Seller may be assigned by Seller to Acquiror on a perpetual, non-exclusive and
royalty-free basis and (ii) that the Licensee (and Acquiror, together with any permitted assignees) under the Amended Patent License Agreement will have no affirmative obligations
under the License Agreement to use or make efforts to derive revenues from the use of the patent licensed thereunder. The Seller Parties agree to use commercially reasonable efforts to execute the
Amended Patent License Agreement prior to the Closing Date. The Seller Parties shall notify Acquiror if the Amended Patent License Agreement is entered into (whether the Amended Patent License
Agreement is entered into prior to or after the Closing) and provide Acquiror with a copy thereof. Acquiror may elect to assume Seller's benefits and obligations under the Amended Patent License
Agreement in its sole discretion and, if Acquiror elects to assume the Amended Patent License Agreement, such agreement will become an Assumed Contract. In the event the Amended Patent License
Agreement has not been executed as of the Closing Date, then Seller Parties shall use commercially reasonable efforts, without the obligation to expend funds, to obtain consent from the licensor under
the Patent License Agreement to sublicense the patent covered thereby to Acquiror on a perpetual, royalty-free basis (and if such consent is obtained, Seller shall enter into such a
sublicense in a form reasonably acceptable to Acquiror at the Closing). Notwithstanding anything in this Section to the contrary, Acquiror shall have the right in its sole discretion, upon written
notice to Seller and with the consent of licensor (if required), to assume Seller's rights under the existing Patent License Agreement at any time on or after the Closing Date and, if Acquiror
exercises such right, Seller's rights and obligations under the existing Patent License Agreement shall be considered an Assumed Contract. 

 
 

ARTICLE VII.
  
    CONSENTS TO ASSIGNMENT    
  

        7.1.    Consents to Assignment.    Anything in this Agreement to the contrary notwithstanding, this Agreement shall
not constitute an agreement to assign any of the Contracts, Leases or Permits or any claim or right or any benefit arising thereunder or resulting therefrom if an attempted assignment 

39

 

thereof, without the consent of a third party thereto, would constitute a Default thereunder or in any way adversely affect the rights of Acquiror thereunder or thereto. If such consent is not
obtained, or if an attempted assignment thereof would be ineffective or would affect the rights thereunder so that Acquiror would not receive all such rights, each Party will use its respective
commercially reasonable efforts to provide to Acquiror the benefits and relieve Seller of the burdens of such Contract, Lease or Permit, including, without limitation, enforcement for the benefit of
Acquiror of any and all rights of the Seller Parties (and the extinguishment of the burdens of Seller) against a third party thereto arising out of the Default or cancellation by such third party or
otherwise. Nothing in this Section 7.1 shall affect Acquiror's right to terminate this Agreement under  Section 12.1 in the event that any
required consent or approval to the transfer of any of the Assets set forth on  Schedule 9.2 is not obtained. 

 
 

ARTICLE VIII.
  
    CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS    
  

        The obligations of the Seller Parties to consummate the transactions provided for hereby are subject, in the discretion of the Seller Parties, to the
satisfaction, on or prior to the Closing Date, of each of the following conditions, any of which may be waived by the Seller Parties: 

        8.1.    Representations, Warranties and Covenants.    All representations and warranties of Acquiror contained in this
Agreement shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date (in each case without giving effect to materiality qualifications or
Material Adverse Effect qualifications) and Acquiror shall have performed and satisfied in all respects all agreements and covenants required hereby to be performed by it prior to or on the Closing
Date; provided that this condition will be deemed satisfied unless any such failure to so perform and/or the inaccuracy of any representation,
individually or in the aggregate, has resulted in or would reasonably be expected to result in a Material Adverse Effect. 

        8.2.    No Actions or Court Orders.    No suit, action, investigation, inquiry or other proceeding by any governmental
body or other Person or legal or administrative proceeding shall have been instituted or threatened which seeks to restrain, enjoin, prevent the consummation of or otherwise materially affect the
transactions contemplated by this Agreement or which questions the validity or legality of the transactions contemplated hereby or the ability of Seller to transfer the Assets free and clear of any
Encumbrances other than Permitted Encumbrances. 

        8.3.    Authorization.    Seller shall have received from Acquiror a copy of resolutions adopted by the board of
directors of Acquiror approving this Agreement and the Ancillary Agreements to which Acquiror is a party and the transactions contemplated hereby or thereby, certified by Acquiror's corporate
secretary. 

        8.4.    Ancillary Agreements.    Acquiror shall have executed and delivered the Ancillary Agreements to which Acquiror
is a party. 

        8.5.    Other Deliveries.    Seller shall have received from Acquiror each of the documents set forth in  Section 3.2(a) and
each of the documents set forth in Section 3.3 to which Acquiror is a
party. 

        8.6.    Effectiveness of Lease Amendment.    The Lease Amendment shall have become effective (unless the failure of
the Lease Amendment to become effective is attributable, in whole or in part, to a breach by Seller of its obligations under the Lease Amendment). 

        8.7.    Approval Order.    The Approval Order and the Sale Procedure Order shall have been entered and any
modifications to the forms of Approval Order and Sale Procedure Order attached as Exhibit A and  Exhibit K hereto shall be reasonably satisfactory
to Parent. 

40

 

 
 

ARTICLE IX.
  
    CONDITIONS TO ACQUIROR'S OBLIGATIONS    
  

        The obligations of Acquiror to consummate the transactions provided for hereby are subject, in the discretion of Acquiror, to the satisfaction, on or prior to the
Closing Date, of each of the following conditions, any of which may be waived by Acquiror: 

        9.1.    Representations, Warranties and Covenants.    All representations and warranties of the Seller Parties
contained in this Agreement shall be true and correct in all respects at and as of the date of this Agreement and at and as of the Closing Date (in each case without giving effect to materiality
qualifications or Material Adverse Effect qualifications) and the Seller Parties shall have performed and satisfied in all respects all agreements and covenants required hereby to be performed by it
prior to or on the Closing Date; provided that this condition will be deemed satisfied unless any such failure to so perform and/or the inaccuracy of
any representation, individually or in the aggregate, has resulted in or would reasonably be expected to result in a Material Adverse Effect. 

        9.2.    Consents; Regulatory Compliance and Approval.    The consents set forth on  Schedule 9.2 necessary for the conveyance of
the Assets or the valid consummation of the transactions contemplated hereby shall have been
obtained, Acquiror shall have received evidence reasonably satisfactory to it that LaSalle
Bank National Association shall release all liens or other Encumbrances of LaSalle Bank National Association on the Assets upon payment by Acquiror of the portion of the Purchase Price to be paid to
Seller's Account in accordance with Section 2.4 and LaSalle Bank National Association National Association shall have executed and delivered the
Closing Adjustment Escrow Agreement and the Escrow Indemnification Agreement. 

        9.3.    No Actions or Court Orders.    No suit, action, investigation, inquiry or other proceeding by any governmental
body or other Person or legal or administrative proceeding shall have been instituted or threatened which seeks to restrain, enjoin, prevent the consummation of or otherwise materially affect the
transactions contemplated by this Agreement or which questions the validity or legality of the transactions contemplated hereby or the ability of Seller to transfer the Assets free and clear of any
Encumbrances. 

        9.4.    Material Changes.    Since the Interim Balance Sheet Date, there shall not have been any Material Adverse
Change not reflected on Schedule 4.5. 

        9.5.    Other Deliveries.    Acquiror shall have received from the Seller Parties or such other parties each of the
documents set forth in Section 3.2(b) and each of the documents set forth in Section 3.3. 

        9.6.    Effectiveness of Lease Amendment.    The Lease Amendment shall have become effective (unless the failure of
the Lease Amendment to become effective is attributable, in whole or in part, to a breach by Acquiror of its obligations under the Lease Amendment). 

        9.7.    Final Order.    The Approval Order and the Sale Procedure Order shall have been entered and shall have become
a Final Order, (ii) any modifications to the forms of Approval Order and Sale Procedure Order attached as Exhibit A and  Exhibit K hereto
shall be reasonably satisfactory to Acquiror and (iii) any other orders of the Bankruptcy Court with respect to this
Agreement or the transactions contemplated hereby shall be in form and substance reasonably satisfactory to Acquiror. 

 
 

ARTICLE X.
  
    ACTIONS BY SELLER AND ACQUIROR AFTER THE CLOSING    
  

        10.1.    Books and Records; Tax Matters.    

        (a)    Books and Records.    Each party agrees that it will cooperate with and make available to the other parties,
during normal business hours, all Books and Records, information and 

41

 

employees (without substantial disruption of employment) retained and remaining in existence after the Closing which are necessary or useful in connection with any tax inquiry, audit, investigation
or dispute, any litigation or investigation or any other matter requiring any such Books and Records, information or employees for any reasonable business purpose. The party requesting any such Books
and Records, information or employees shall bear all of the out-of-pocket costs and expenses (including, without limitation, attorneys' fees, but excluding reimbursement for
salaries and employee benefits) reasonably incurred in connection with providing such Books and Records, information or employees. All information received pursuant to this  Section 10.1(a) shall be
subject to provisions set forth in Section 6.1 above. 

        (b)    Cooperation and Records Retention.    The Seller Parties and Acquiror shall each provide the other with such
assistance as may reasonably be requested by any of them in connection with the preparation of any Tax Return, audit, or other examination by any taxing authority or judicial or administrative
proceedings relating to Liability for Taxes. 

        10.2.    Survival of Representations, Etc.    

        (a)  All
of the representations, warranties, covenants and agreements made by each party in this Agreement or in any attachment, Exhibit, the Disclosure Schedule,
certificate, document or list delivered by any such party pursuant hereto shall survive the Closing for a period of (and claims based upon or arising out of such representations, warranties, covenants
and agreements may be asserted at any time before the date which shall be) eighteen (18) months following the Closing, except with respect to the representations and warranties set forth in  Section 4.1 and Section 4.3, which shall survive indefinitely and the representations and
warranties set forth in Section 4.20, Section 4.23 and  Section 4.28 which shall survive until
thirty (30) days following the expiration of the applicable statute of limitations (with
extensions) with respect to the matters addressed in such sections. Seller, on the one hand, and Acquiror, on the other hand, shall be entitled to rely upon the representations and warranties of
Acquiror or the Seller Parties, as applicable, set forth in this Agreement. The termination of the representations and warranties provided herein shall not affect the rights of a party in respect of
any Claim made by such party in a writing received by the applicable party prior to the expiration of the applicable survival period provided herein. 

        (b)  Subject
to the following sentence and Section 10.2(d), any covenant required to be performed prior to the Closing
shall not survive the Closing, and any covenant required to be performed after the Closing shall survive the Closing. Notwithstanding the foregoing, if and to the extent that a covenant contained
herein requires performance prior to and after the Closing, such covenant shall survive the Closing solely to the extent intended or required to be performed after the Closing. 

        (c)  Subject
to Section 10.2(d) below, upon the Closing, the conditions set forth in  Article VIII and Article IX shall expire and be of no further force or effect. 

        (d)  Nothing
in Section 10.2(b) or Section 10.2(c) shall limit
Acquiror's indemnification rights with respect to breaches of representations and warranties even if such breaches relate to matters that also would constitute breaches of any covenants that do not
survive the Closing or to matters that would have resulted in the failure of any condition to the Closing to be satisfied. 

        10.3.    Indemnification.    

        (a)    By the Seller Parties.    Each of the Seller Parties, jointly and severally, shall indemnify, save and hold
harmless Acquiror, its stockholders, Affiliates and subsidiaries and its and their respective Representatives (collectively, the "Acquiror
Indemnitees"), from and against any and all costs, losses (including, without limitation, diminution in value), Taxes, Liabilities, obligations, damages, lawsuits,
deficiencies, claims, demands, and expenses (whether or not arising out of third-party claims), including, without limitation, interest, penalties, costs of mitigation, losses in 

42

 

connection with any Environmental Law (including, without limitation, any clean-up or remedial action), Liabilities arising under or relating to the Employee Plans or employees or former
employees of Seller, lost profits and other losses resulting from any shutdown or curtailment of operations, damages to the environment, attorneys' fees and all amounts paid in investigation, defense
or settlement of any of the foregoing (herein, "Damages"), incurred in connection with, arising out of, resulting from or incident to (i) any
breach of any representation or warranty or the inaccuracy of any representation made by any of the Seller Parties in this Agreement; (ii) any breach of any covenant or agreement made by any of
the Seller Parties in this Agreement; (iii) any Excluded Liability; (iv) any Damages arising prior to the Closing Date of any nature (absolute, accrued, contingent or otherwise) of
Seller, or any ERISA Affiliate of Seller arising under or related to any Employee Plan; (v) any product shipped or manufactured by, or any services provided by Seller prior to the Closing Date;
(vi) any Liability (other than the Assumed Liabilities) imposed upon Acquiror by reason of Acquiror's status as transferee of the Business or the Assets; (vii) any Liability (other than
the Assumed Liabilities) imposed upon the Acquiror Indemnitees by reason of and to the extent arising from Seller's conduct of the Business on or prior to the Closing Date; or (viii) any claim
by any Person for brokerage or finder's fees or commissions or similar payments based upon any agreement or understanding alleged to have been made by any such Person with any of the Seller Parties
(or any Person acting on their behalf) in connection with any transactions contemplated by this Agreement. 

        The
term "Damages" as used in this Section 10.3 is not limited to matters asserted
by third parties against Seller or Acquiror, but includes Damages incurred or sustained by Seller or Acquiror in the absence of third-party claims. Payments by a party of amounts for which such party
is indemnified hereunder shall not be a condition precedent to recovery. 

        (b)    By Acquiror.    Acquiror shall indemnify and save and hold harmless Seller, its Affiliates, and its
Representatives (collectively, the "Seller Indemnitees") from and against any and all Damages incurred in connection with, arising out of, resulting
from or incident to (i) any breach of any representation or warranty or the inaccuracy of any representation, made by Acquiror in or pursuant to this Agreement; (ii) any breach of any
covenant or agreement made by Acquiror in or pursuant to this Agreement; (iii) from and after the Closing, any Assumed Liability; (iv) any Liability (other than the Excluded Liabilities)
imposed upon the Seller Indemnitees by reason of and to the extent arising from Acquiror's conduct of the Business after the Closing Date or (v) any Liability arising from and after the Closing
resulting from the failure to obtain consent to the assignment of the Richmond Lease from Seller to Acquiror at the Closing. 

        (c)    Cooperation.    The indemnified party shall cooperate in all reasonable respects with the indemnifying party
and such attorneys in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom; provided, however, that the
indemnified party may, at its own cost, participate in the investigation, trial and defense of such lawsuit or action and any appeal arising therefrom. The parties shall cooperate with each other in
any notifications to insurers. 

        (d)    Claims Between the Parties.    References in this  Article X to "indemnifying party" when an Acquiror Indemnitee is an
indemnified party shall be deemed references to Seller and Parent, jointly
and severally. If a claim for Damages (a "Claim") is to be made by a party entitled to indemnification hereunder against the indemnifying party, the
party claiming such indemnification shall, subject to Section 10.3, give written notice (a "Claim
Notice") to the indemnifying party as soon as practicable after the party entitled to indemnification becomes aware of any fact, condition or event which may give rise to
Damages for which indemnification may be sought under this Section 10.2. All Claims for Damages against Parent under this Agreement shall
constitute administrative expenses under Sections 503(b) and 507(a)(1) of the Bankruptcy Code and shall be payable in accordance with this  Article X without further order of the Bankruptcy Court.

43

 

        (e)    Defense of Third-Party Claims.    If any lawsuit or enforcement action is filed by a third party against any
party entitled to the benefit of indemnity hereunder, written notice thereof shall be given to the indemnifying party as promptly as practicable (and in any event within fifteen (15) calendar
days after the service of the citation or summons). The failure of any indemnified party to give timely notice hereunder shall not affect rights to indemnification hereunder, except to the extent that
the indemnifying party demonstrates actual damage caused by such failure. After such notice, if the indemnifying party shall acknowledge in writing to the indemnified party that the indemnifying party
shall be obligated under the terms of its indemnity hereunder in connection with such lawsuit or action, then the indemnifying party shall be entitled, if it so elects at its own cost, risk and
expense, (i) to take control of the defense and investigation of such lawsuit or action, (ii) to employ and engage attorneys of its own choice to handle and defend the same unless the
named parties to such action or proceeding include both the indemnifying party and the indemnified party and the indemnified party has been advised in writing by counsel that there may be one or more
legal defenses available to such indemnified party that are different from or additional to those available to the indemnifying party, in which event the indemnified party shall be entitled, at the
indemnifying party's cost, risk and expense, to separate counsel of its own choosing, and (iii) to compromise or settle such claim, which compromise
or settlement shall be made only with the written consent of the indemnified party, such consent not to be unreasonably withheld (unless such compromise or settlement (a) solely requires
payment of monetary damages by the indemnifying party and (b) does not impose obligations or restrictions on or require the admission of liability by the indemnified party or its business, in
which case approval of the indemnified party shall not be required); provided, however, if the resolution of any such Claim is reasonably expected to
impose obligations or restrictions on the indemnified party or its business, then, notwithstanding the foregoing, the indemnified party shall be entitled to control such resolution, including, without
limitation, to take control of the defense and investigation of such lawsuit or action, to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party's
cost, risk and expense, and to compromise or settle such Claim (which compromise or settlement shall be subject to the written consent of the indemnifying party, which consent shall not be
unreasonably withheld). 

        If
the indemnifying party fails to assume the defense of such claim within fifteen (15) calendar days after receipt of the Claim Notice, the indemnified party against which such
claim has been asserted will (upon delivering notice to such effect to the indemnifying party) have the right to undertake, at the indemnifying party's cost and expense, the defense, compromise or
settlement of such claim on behalf of and for the account and risk of the indemnifying party; provided, however, that such Claim shall not be
compromised or settled without the written consent of the indemnifying party, which consent shall not be unreasonably withheld. In the event the indemnified party assumes the defense of the claim, the
indemnified party will keep the indemnifying party reasonably informed of the progress of any such defense, compromise or settlement. The indemnifying party shall be liable for any settlement of any
action effected pursuant to and in accordance with this Section 10.3 and for any final judgment (subject to any right of appeal), and the
indemnifying party agrees to indemnify and hold harmless an indemnified party from and against any Damages by reason of such settlement or judgment. The right to indemnification, payment of Damages or
other remedy based on any representations, warranties, covenants and obligations will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable or being
acquired) at any time, whether before or after the execution and delivery of this Agreement or the Closing, with respect to the accuracy or inaccuracy of or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages, or other remedies based on such representations, warranties, covenants and obligations. 

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        (f)    Limitations on Indemnity.    Neither Acquiror, on the one hand, nor any of the Seller Parties, on the other
hand, shall be liable to the other under Section 10.3(a)(i) or Section 10.3(b)(i), as
applicable, for any Damages until the aggregate amount otherwise due the party being indemnified exceeds an accumulated total of One Hundred Thousand Dollars ($100,000.00);  provided that, once the
aggregate amount of Damages exceeds such threshold amount, then the indemnified party shall have the right to recover all
Damages in excess of such threshold; provided further that (i) the Seller Parties' liability under  Section 10.3(a)(i) shall not exceed the amount
of the Holdback Fund (as adjusted pursuant to  Section 2.7(b)) and (ii) Acquiror's liability under Section 10.3(b)(i) shall not
exceed the amount of the Holdback Fund (as adjusted pursuant to Section 2.7(b)). Notwithstanding the foregoing, the limitations contemplated by
this Section 10.3(f) shall not apply to or limit any recovery for Damages arising from fraudulent misrepresentation or fraudulent conduct. 

        10.4.    Holdback Amount.    Each of Acquiror and Seller shall enter into the Escrow Indemnification Agreement with
the Escrow Agent. On the Closing Date, Acquiror shall deposit the Holdback Amount in an escrow fund held by the Escrow Agent (the "Holdback Fund"). All
interest and other income earned from the investment of the Holdback Fund shall be the property of Acquiror, distributed to Acquiror and taxable to Acquiror. To the extent that any portion of the
Holdback Amount is distributed to Seller in accordance with the provisions of the Escrow Indemnification Agreement, Acquiror shall pay interest to Seller on such amount calculated from the Closing
Date at a rate equal to the rate of interest earned in the Holdback Fund from the Closing Date through the date that the Holdback Amount or portion thereof is paid to Seller. 

        10.5.    Bulk Sales.    It may not be practicable to comply or attempt to comply with the procedures of the "Bulk
Sales Act" or similar law of any or all of the states in which the Assets are situated or of any other state which may be asserted to be applicable to the transactions contemplated hereby.
Accordingly, to induce Acquiror to waive any requirements for compliance with any or all of such laws, the Seller Parties hereby agree jointly and severally that the indemnity provisions of  Section 10.3 hereof shall apply to any Damages incurred by any Acquiror Indemnitees arising out of or resulting from the failure of the Seller
Parties or the Acquiror Parties to comply with any such laws. 

        10.6.    Taxes.    

        (a)  All
real property taxes, personal property taxes and similar ad valorem obligations levied with respect to the assets of Seller for a taxable period which includes (but
does not end on) the Closing Date shall, to the extent not reflected as Current Liabilities on the Closing Balance Sheet, be apportioned between Seller and Acquiror based on the number of days of such
taxable period which fall on or before the Closing Date (a "Pre-Closing Tax Period") and the number of days of such taxable period after the
Closing Date (a "Post-Closing Tax Period"). Seller Parties shall be liable for the proportionate amount of such taxes not reflected as
Current Liabilities on the Closing Balance Sheet that is attributable to the Pre-Closing Tax Period, and Acquiror shall be liable for the proportionate amount of such taxes that is
attributable to the Post-Closing Tax Period. 

        (b)  With
respect to Taxes to be prorated in accordance with this Section 10.6(b) only, Acquiror shall prepare and
timely fill all Tax Returns required to be filed after the Closing with respect to the assets of Seller. Acquiror's preparation of any such Tax Return shall be subject to Seller's approval, not to be
unreasonably withheld. Acquiror shall make such Tax Returns available for Seller's review no later than fifteen (15) days prior to the due date for filing such Tax Return. Within ten
(10) days after receipt of such Tax Return, Seller Parties shall pay to Acquiror Seller's proportionate share of the amount shown as due on such Tax Return determined in accordance with this  Section 10.6(b)
 of this Agreement. 

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        (c)  The
Parties shall make appropriate adjustments for the tax benefits if any, accruing from the indemnifiable Damages in calculating the amount of Damages under this
Agreement. 

        10.7.    Insurance.    The parties shall make appropriate adjustments for insurance proceeds actually received in
calculating Damages under this Agreement. 

        10.8.    Exclusive Remedy.    The Parties agree that should the Closing occur, the indemnification provisions of this  Article Xshall be the exclusive remedy with respect to any Claims for breaches of representations and warranties under this Agreement, this
Section 10.8shall not apply with respect to any Claims for breaches of representations and warranties under this Agreement arising from
fraudulent misrepresentation or fraudulent conduct. 

        10.9.    Right of Offset.    Anything in this Agreement to the contrary notwithstanding, Acquiror may withhold and set
off against any amounts due to any Seller Party under Section 2.7 the amount of any Damages to which any Seller Indemnitee is entitled. 

 
 

ARTICLE XI.
  
    TERMINATION    
  

        11.1.    Termination.    

        (a)  This
Agreement may be terminated at any time prior to Closing: 

        (i)    By
mutual written consent of Acquiror and Seller; 

        (ii)  By
Acquiror or the Seller Parties if the Closing shall not have occurred on or before August 31, 2002 (the "Termination
Date"); provided, however, that this provision shall not be available to a Party that is in material breach of any of its
representations, warranties, covenants or agreements contained in this Agreement; 

        (iii)  By
Acquiror if any of the conditions set forth in Article IX shall, in the reasonable judgment of Acquiror, have
become incapable of fulfillment prior to the Termination Date (and such condition is
not waived in writing by Acquiror); provided that this provision shall not be available to Acquiror if Acquiror is in material breach of any of its
representations, warranties, covenants or agreements contained in this Agreement; or 

        (iv)  By
the Seller Parties if any of the conditions set forth in Article VIII (other than the condition set forth in  Section 8.6) shall, in the
reasonable judgment of Seller, have become incapable of fulfillment prior to the Termination Date (and such condition
is not waived in writing by Seller); provided that this provision shall not be available to the Seller Parties if any Seller Party is in material breach
of any of its representations, warranties, covenants or agreements contained in this Agreement. 

        (b)  This
Agreement will automatically terminate upon the occurrence of any of the following unless Acquiror elects, in its sole discretion, to waive the applicable
provision: 

        (i)    if
the Sale Procedure Order has not been entered by the Bankruptcy Court by June 14, 2002; 

        (ii)  if
the Approval Order has not been entered by the Bankruptcy Court by July 17, 2002; 

        (iii)  if
either the Sale Procedure Order (including the Bidding Procedures) or the Approval Order shall fail to be in full force and effect or shall have been stayed,
reversed, modified or amended in any respect without the prior written consent of Acquiror, which may be withheld in its sole discretion; or 

46

 

        (iv)  if
a Chapter 11 Trustee is appointed in the Case or the Case is converted to a case under Chapter 7 of the Bankruptcy Code. 

        11.2.    Termination Payment.    

        (a)  In
the event (i) the Closing does not occur (other than as a result of a material breach by Acquiror) notwithstanding the satisfaction of the conditions set forth
in Article VIII and the satisfaction or waiver of the conditions set forth in Article IX  or as a result of a material willful breach (including a
material willful anticipatory breach) of this Agreement by either Seller Party or (ii) the Closing does not
occur (other than a result of a material willful breach by Acquiror) and a sale of a material portion of the Business (or of Seller) to a Qualified Prospect or an Affiliate of a Qualified Prospect (a
"Third Party Sale") is consummated within one hundred eighty (180) days of the termination of this Agreement (A) by Acquiror pursuant to  Section 11.1(a)
(ii) or Section 11.1(a)(iii), (B) by Seller pursuant to  Section 11.1(a)(ii) (unless Acquiror would not have the
right to also terminate the Agreement pursuant to
Section 11.1(a)(ii) at the time Seller terminates this Agreement pursuant to  Section 11.1(a)(ii)) or (C) pursuant to Section 11.1(b), or (iii) the
Bankruptcy Court enters an order approving a Qualified Bid (as such term is defined in the Bidding Procedures) other than that of Acquiror, then Seller Parties shall jointly and severally be obligated
to pay Acquiror or any designees of Acquiror, Four Hundred Thousand Dollars ($400,000.00) (the "Break-Up Fee") plus an amount equal to the
Acquiror's Expenses (the "Fee Reimbursement," and together with the Break-Up Fee, the "Termination
Payment"); provided that clause (ii) shall not apply if the conditions set forth in  Article IX were satisfied and
Acquiror breached its obligation to consummate the Closing pursuant to the terms of this Agreement. If none of
clauses (i), (ii) or (iii) of the preceding sentence is applicable and this Agreement is terminated by Acquiror pursuant to  Section 11.1(a)(iii) because, in the reasonable judgment of
Acquiror, the condition set forth in  Section 9.1 has become incapable of fulfillment prior to the Termination Date (other than as a result of an event occurring after the date of
this Agreement that is not within the control of Seller Parties so long as Seller Parties have taken all reasonable actions to mitigate the effects of such event), the Seller Parties shall jointly and
severally be obligated to pay Acquiror or any designees of Acquiror an amount equal to the Fee Reimbursement. If the Bankruptcy Court disallows any portion of the Termination Payment as it relates to
Parent, Parent's joint and several liability under this sentence shall be the maximum amount permitted by the Bankruptcy Court (it being understood that Seller shall remain jointly and severally
liable for the full amount of the Termination Payment). If this Agreement is terminated by Seller Parties pursuant to Section 11.1(a)(iv)
because, in the reasonable judgment of the Seller Parties, the condition set forth in Section 8.1 has become incapable of fulfillment prior to
the Closing Date (other than as a result of an event occurring after the date of this Agreement that is not within the control of Acquiror so long as Acquiror has taken all reasonable actions to
mitigate the effect of such event), Acquiror shall be obligated to pay Parent an amount equal to Parent's Expenses. Any Termination Payment, Fee Reimbursement or Parent's Expenses payable upon
termination of this Agreement pursuant to any of the Sections referenced in this Section 11.2 shall be paid by Seller Parties to Acquiror or its
designee or by Acquiror to Parent or its designee, as applicable on the date this Agreement is terminated (or, if applicable, on the date that a Third Party Sale is consummated or on the date that the
Bankruptcy Court enters an order approving a Qualified Bid). 

        (b)  All
payments and refunds to Acquiror or any designees of Acquiror pursuant to this Section 11.2 shall be by wire
transfer of immediately available funds to such account or accounts as Acquiror shall designate in writing. 

        (c)  The
obligation of Parent to pay any Termination Payment or Fee Reimbursement shall be entitled to administrative status under 11 U.S.C. Section 503(b) and 507(a). 

47

 

        11.3.    Procedure and Effect of Termination.    In the event of termination of this Agreement: 

        (a)  Each
party will redeliver all documents, work papers and other material of any other party relating to the transactions contemplated hereby, and all copies thereof,
whether so obtained before or after the execution hereof, to the party furnishing the same; and 

        (b)  No
party hereto shall have any Liability to any other party to this Agreement, except as stated in subsections (a), and (b) of this  Section 11.3 and except that Seller shall remain liable for any
Termination Payment owed or that becomes owed to Acquiror pursuant to  Section 11.2 and except that this Section 11.3(b) shall not relieve any
party from
liabilities arising from any breach of this Agreement occurring prior to the proper termination of this Agreement (to the extent the non-breaching Party's damages exceed any payments such
Party may receive pursuant to Section 11.2). The foregoing provisions shall not limit or restrict the availability of specific performance or
other injunctive relief to the extent that specific performance or such other relief would otherwise be available to a party hereunder. 

 
 

ARTICLE XII.
  
    MISCELLANEOUS    
  

        12.1.    Assignment.    Neither this Agreement nor any of the rights or obligations hereunder may be assigned by any
party without the prior written consent of the other parties; except that Acquiror may, without such consent, assign all such rights to any lender as collateral security and assign all such rights and
obligations to any Affiliate or subsidiary of Acquiror or to a successor in interest to Acquiror, in each case which shall assume all rights and obligations of Acquiror under this Agreement, so long
as Acquiror remains liable for its obligations hereunder. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, and no other person shall have any right, benefit or obligation under this Agreement as a third-party beneficiary or otherwise. 

        12.2.    Notices.    All notices, requests, demands and other communications which are required or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given when received if personally delivered; when transmitted if transmitted by telecopy; the day after it is sent, if sent for
next day delivery to a domestic address by recognized overnight delivery service (e.g., Federal Express); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to: 

If
to a Seller Party, addressed to: 

HA-LO
Industries, Inc.

500 Lake Cook Road, Suite 350

Deerfield, Illinois 60015

Attention: Marc S. Simon, Chief Executive Officer

Facsimile: (847) 600-4500 

With
a copy to: 

Neal
Gerber & Eisenberg

2 North LaSalle Street

Chicago, Illinois 60602

Attention: Barry Shkolnik, Esq.

Facsimile: (312) 269-1747 

48

 

If
to Acquiror, addressed to: 

Equity
Marketing, Inc.

6330 San Vicente Blvd.

Los Angeles, California 90048

Attention: Leland P. Smith, Esq.,

                  Senior Vice President and General Counsel

Facsimile: (323) 932-4488 

With
a copy to: 

Latham &
Watkins

633 West Fifth Street, Suite 4000

Los Angeles, California 90071

Attention: W. Alex Voxman, Esq.

Facsimile: (213) 891-8763 

or
to such other place and with such other copies as either party may designate as to itself by written notice to the others. 

        12.3.    Choice of Law.    This Agreement shall be construed, interpreted and the rights of the parties determined in
accordance with the laws of the State of Delaware, without reference to principles of conflicts of laws. 

        12.4.    Entire Agreement; Amendments and Waivers.    This Agreement and the Ancillary Agreements, together with all
exhibits and schedules hereto and thereto (including the Disclosure Schedule), constitute the entire agreement among the parties pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or written, of the parties. Without limiting the generality of the foregoing, the Parties acknowledge and agree that  Section 16 of the Lease Amendment is not intended to modify the representations and warranties of the Parties contained herein. This Agreement
may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. No amendment, supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 

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

        12.6.    Expenses.    Except as otherwise specified in this Agreement, each party hereto shall pay its own legal,
accounting, out-of-pocket and other expenses incident to this Agreement and to any action taken by such party in preparation for carrying this Agreement into effect. 

        12.7.    Severability.    In the event that any one or more of the provisions contained in this Agreement or in any
other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement or any other such instrument. 

        12.8.    Headings.    The titles, captions or headings of the Articles and Sections herein are for convenience of
reference only and are not intended to be a part of or to affect or restrict the meaning or interpretation of this Agreement. 

49

 

        12.9.    Publicity.    Except as required by applicable law, neither Acquiror nor Seller shall issue any press release
or make any public statement regarding the transactions contemplated hereby, without prior written approval of the other party. Notwithstanding the foregoing, Acquiror may, at its discretion, issue or
make an appropriate press release or public announcement after the execution and delivery of this Agreement and the closing. 

        12.10.    Cumulative Remedies.    All rights and remedies of either party hereto are cumulative of each other, and the
exercise of one or more rights or remedies shall not prejudice or impair the concurrent or subsequent exercise of other rights or remedies provided in this Agreement, and nothing herein shall
be deemed to preclude Acquiror from bringing an action for specific performance or seeking injunctive relief. 

        12.11.    No Third-Party Beneficiaries.    This Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, Claim, benefit or remedy of any nature whatsoever
under or by reason of this Agreement. Notwithstanding the foregoing, the Acquiror Indemnitees are intended third-party beneficiaries of Article X
of this Agreement. 

        12.12.    Arbitration; Process.    

        (a)  Except
as provided in Section 12.12(b) below, in the event any controversy or claim arising out of or relating to
this Agreement or the making, performance or interpretation thereof shall be heard and determined by the Bankruptcy Court, and each of the parties irrevocably submits to the exclusive jurisdiction of
the Bankruptcy Court with respect to such claims, waives (and shall not plead or claim) any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims shall be
heard and determined only in the Bankruptcy Court and agrees not to bring any claim arising out of or relating to this Agreement or any transactions contemplated hereby in any other court. 

        (b)  If
the Bankruptcy Court abstains from exercising or declines to exercise jurisdiction as provided in  Section 12.12(a) above, then any controversy or claim arising out of or relating to this Agreement
or the making, performance or interpretation
thereof shall be settled by arbitration in the City of Chicago, Illinois, in accordance with the with the Commercial Arbitration Rules of the American Arbitration Association then in effect, and
judgment on the arbitration award may be entered in any Federal or State Court in Los Chicago, Illinois having competent jurisdiction over the subject matter of the controversy. Notwithstanding
anything in this Section 12.12 to the contrary, any of the parties hereto may apply to a court of competent jurisdiction for interim relief or a
provisional remedy pending the decision of the arbitrator. If any party to this Agreement brings an action to enforce its rights under this Agreement, the prevailing party shall be entitled to recover
its costs and expenses, including, without limitation, reasonable attorneys' fees, incurred in connection with such action, including any appeal of such action. 

        (c)  Process
in any arbitration or proceeding referred to in this Section 12.12 may be served on any party anywhere in
the world. 

        12.13.    WAIVER OF JURY TRIAL.    THE PARTIES HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE. THE PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR
AGREEMENT AMONG THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT
ANY ACTION WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A
JURY.

[Signature Page Follows]

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        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on their respective behalf, by their respective officers thereunto duly authorized, all as of the
day and year first set forth above. 

	 	 	EQUITY MARKETING, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  LELAND P. SMITH      

	 	 	 	Name:	Leland P. Smith
	 	 	 	Title:	Senior Vice President
	

 	
 	

 	

 	

 
	 	 	HA-LO INDUSTRIES, INC.
	

 	
 	

 	

 	

 
	 	 	By:	/s/  MARC S. SIMON      

	 	 	 	Name:	Marc S. Simon
	 	 	 	Title:	Chief Executive Officer
	

 	
 	

 	

 	

 
	 	 	PROMOTIONAL MARKETING, L.L.C.

d/b/a UPSHOT
	

 	
 	

 	

 	

 
	 	 	By:	/s/  MARC S. SIMON      

	 	 	 	Name:	Marc S. Simon
	 	 	 	Title:	Manager
	

 	
 	

 	

 	

 

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QuickLinks

EXHIBIT 10.1

TABLE OF CONTENTS

ASSET PURCHASE AGREEMENT

RECITALS

AGREEMENT

ARTICLE I. DEFINITIONS

ARTICLE II. PURCHASE AND SALE OF ASSETS; PURCHASE PRICE

ARTICLE III. CLOSING

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE SELLER PARTIES

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF ACQUIROR

ARTICLE VI. COVENANTS OF THE SELLER PARTIES AND ACQUIROR

ARTICLE VII. CONSENTS TO ASSIGNMENT

ARTICLE VIII. CONDITIONS TO THE SELLER PARTIES' OBLIGATIONS

ARTICLE IX. CONDITIONS TO ACQUIROR'S OBLIGATIONS

ARTICLE X. ACTIONS BY SELLER AND ACQUIROR AFTER THE CLOSING

ARTICLE XI. TERMINATION

ARTICLE XII. MISCELLANEOUS

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