UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): December 15, 2017

 

STEEL PARTNERS HOLDINGS L.P.
(Exact name of registrant as specified in its charter)
     
Delaware 001-35493 13-3727655
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
     
590 Madison Avenue, 32nd Floor, New York, New York 10022
(Address of Principal Executive Offices) (Zip Code)

 

Registrant’s Telephone Number, Including Area Code: (212) 520-2300

 

N/A
(Former Name or Former Address, If Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 

 

 

 

Item 1.01.Entry into a Material Definitive Agreement.

Preferred Stock Purchase Agreement and Certificate of Designations

On December 15, 2017, ModusLink Global Solutions, Inc. (“ModusLink”), and SPH Group Holdings LLC (“SPH Group”), a subsidiary of Steel Partners Holdings L.P. (the “Company”), entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which ModusLink issued 35,000 shares of ModusLink’s newly created Series C Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”), to SPH Group at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million (the “Preferred Stock Transaction”).  The terms, rights, obligations and preferences of the Preferred Stock are set forth in a Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of ModusLink (the “Certificate of Designations”), which has been filed with the Secretary of State of the State of Delaware.

Under the Certificate of Designations, each share of Preferred Stock can be converted into shares of ModusLink’s common stock, par value $0.01 per share (the “Common Stock”), at an initial conversion price equal to $1.96 per share, subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction. Holders of the Preferred Stock will also receive dividends at 6% per annum payable in cash or Common Stock. If at any time the closing bid price of ModusLink’s Common Stock exceeds 170% of the conversion price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction), ModusLink has the right to require each holder of Preferred Stock to convert all, or any whole number, of shares of the Preferred Stock into Common Stock.

Upon the occurrence of certain triggering events such as a liquidation, dissolution or winding up of ModusLink, either voluntary or involuntary, or the merger or consolidation of ModusLink or significant subsidiary, or the sale of substantially all of the assets or capital stock of ModusLink or a significant subsidiary, the holders of the Preferred Stock are entitled to receive, prior and in preference to any distribution of any of the assets or funds of ModusLink to the holders of other equity or equity equivalent securities of ModusLink other than the Preferred Stock by reason of their ownership thereof, an amount per share in cash equal to the sum of (i) one hundred percent (100%) of the stated value per share of Preferred Stock (initially $1,000 per share) then held by them (as adjusted for any stock split, stock dividend, stock combination or other similar transactions with respect to the Preferred Stock), plus (ii) 100% of all declared but unpaid dividends, and all accrued but unpaid dividends on each such share of Preferred Stock, in each case as the date of the triggering event. On or after December 15, 2022, each holder of Preferred Stock can also require ModusLink to redeem its Preferred Stock in cash at a price equal to the Liquidation Preference (as defined in Certificate of Designations).  

Each holder of Preferred Stock has a vote equal to the number of shares of Common Stock into which its Preferred Stock would be convertible as of the record date, provided that the number of shares voted is based upon a conversion price which is no less than the greater of the book or market value of the Common Stock on the closing date of the purchase of the Preferred Stock. In addition, for so long as the Preferred Stock remains outstanding, ModusLink will not, directly or indirectly, and including in each case with respect to any significant subsidiary, without the affirmative vote of the holders of a majority of the Preferred Stock (i) liquidate, dissolve or wind up ModusLink or any significant subsidiary; (ii) consummate any transaction that would constitute or result in a Liquidation Event (as defined in the Certificate of Designations); (iii) effect or consummate any Prohibited Issuance (as defined in the Certificate of Designations); or (iv) create, incur, assume or suffer to exist any Indebtedness (as defined in the Certificate of Designations) of any kind, other than certain existing Indebtedness of ModusLink and any replacement financing thereto, unless any such replacement financing be on substantially similar terms as such existing Indebtedness.

The Purchase Agreement provides that ModusLink will use its commercially reasonable efforts to effect the piggyback registration of the Common Stock issuable on the conversion of the Preferred Stock and any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing, with the Securities and Exchange Commission and in all states reasonably requested by the holder in accordance with certain enumerated conditions. The Purchase Agreement also contains other representations, warranties and covenants customary for an issuance of Preferred Stock in a private placement of this nature.

The Preferred Stock Transaction was approved and recommended to the board of directors of ModusLink (the “ModusLink Board”) by a special committee of the Board consisting of independent directors not affiliated with Steel Partners Holdings GP Inc. (“Steel Holdings GP”), an affiliate of the Company, which controls the power to vote and dispose of the securities held by SPH Group and its affiliates.

On December 15, 2017, contemporaneously with the closing of the Preferred Stock Transaction, ModusLink entered into a Warrant Repurchase Agreement (the “Warrant Repurchase”) with the Company pursuant to which ModusLink repurchased for $100 the warrant to acquire 2,000,000 shares of the Common Stock (the “Warrant”) that ModusLink had previously issued to the Company. The Warrant, which was to expire in 2018, was terminated by ModusLink upon repurchase.

 

 

As of December 14, 2017 (prior to the closing of the Preferred Stock Transaction), SPH Group and its affiliates beneficially owned approximately 35.62% of ModusLink’s outstanding shares of Common Stock. Upon closing of the Preferred Stock Transaction and the Warrant Repurchase and following certain equity grants, SPH Group and its affiliates beneficially own approximately 52% of ModusLink’s outstanding shares of Common Stock and, as a result, ModusLink became a consolidated subsidiary of the Company and may be deemed to be a controlled company under Nasdaq rules.

Warren G. Lichtenstein, the Executive Chairman of the ModusLink Board, is also the Executive Chairman of Steel Holdings GP. Glen Kassan, Vice Chairman of the ModusLink Board and former Chief Administrative Officer, is also affiliated with Steel Holdings GP. Jack L. Howard and William T. Fejes, Jr. who were elected to the ModusLink Board upon the closing of the Preferred Stock Transaction, are also affiliated with Steel Holdings GP. Mr. Howard has served as the President of Steel Holdings GP since July 2009 and has served as a director of Steel Holdings GP since October 2011. Mr. Howard is the President of the Company and has been associated with the Company and its predecessors and affiliates since 1993. Mr. Howard served as the Vice Chairman of the Board of Handy & Harman Ltd. (“HNH”), a shareholder of ModusLink and affiliate of SPH Group, from March 2012 to October 2017 and Principal Executive Officer of HNH from January 2013 to October 2017, and has served as a director of HNH since July 2005. Mr. Fejes has served as the president of Steel Services, Ltd. (“Steel Services”), an indirect wholly owned subsidiary of the Company, since October 2017. Mr. Fejes has also served as Senior Vice President of HNH and President and Chief Executive Officer of Handy & Harman Group Ltd. since June 2016.

Acquisition of IWCO Direct

On December 15, 2017 (the “Effective Date”), ModusLink entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among ModusLink, MLGS Merger Company, Inc., a Delaware corporation and newly formed wholly-owned subsidiary of the ModusLink ("MLGS"), IWCO Direct Holdings Inc. a Delaware corporation (“IWCO”), CSC Shareholder Services, LLC, a Delaware limited liability company (solely in its capacity as representative), and the stockholders of IWCO listed on the signature pages thereto. The stockholders of IWCO party to the Merger Agreement were Court Square Capital Partners II, L.P., Court Square Capital Partners II-A, L.P., Court Square Capital Partners (Executive) II, L.P., Court Square Capital Partners (Offshore) II, L.P., ACP/IWCO Holdings LLC, ACP/IWCO Splitter, L.P., WAM Holdings, INC., James N. Andersen, Joseph Morrison, THOMAS C. WICKA & ANGELA M. WICKA, TTEE, UA/DTD, FEB. 27, 2006, THOMAS C. WICKA, 2006 GRAT, and THOMAS C. WICKA, TRUSTEE UA/DTD, 10/3/05 TOM WICKA REVOCABLE TRUST.

On the Effective Date and pursuant to the Merger Agreement, MLGS was merged with and into IWCO, with IWCO surviving as a wholly-owned subsidiary of ModusLink (the “IWCO Acquisition”).

The aggregate consideration paid to stockholders of IWCO by ModusLink in the IWCO Acquisition was $475,600,000 in cash, subject to certain adjustments (the “Purchase Price”), of which $2,500,000 is held in escrow pursuant to a separate escrow agreement. The Purchase Price was funded with a combination of cash on hand and financing available under the Senior Credit Facility described below. The Merger Agreement includes detailed representations, warranties, covenants and indemnification provisions that are customary for Merger Agreements of this type.

Financing

On December 15, 2017, MLGS entered into a Financing Agreement (the “Financing Agreement”), by and among MLGS (as the initial borrower), Instant Web, LLC, a Delaware corporation and wholly owned subsidiary of IWCO (as “Borrower”), IWCO, and certain of IWCO’s subsidiaries identified on the signature pages thereto (together with IWCO, the “Guarantors”), the lenders from time to time party thereto, and Cerberus Business Finance, LLC, as collateral agent and administrative agent for the lenders. MLGS was the initial borrower under the Financing Agreement, but immediately upon the consummation of the acquisition of IWCO, as described above, Borrower became the borrower under the Financing Agreement.

The Financing Agreement provides for $393.0 million term loan facility (the “Term Loan”) and a $25.0 million revolving credit facility (collectively, the “Senior Credit Facility”). Proceeds of the Senior Credit Facility will be used (i) to finance a portion of the IWCO Acquisition, (ii) to repay certain existing indebtedness of the Borrower and its subsidiaries, (iii) for working capital and general corporate purposes and (iv) to pay fees and expenses related to this Agreement and the IWCO Acquisition.

The Senior Credit Facility has a maturity of five years. Borrowings under the Senior Credit Facility bear interest, at the Borrower’s option, at a Reference Rate plus 3.75% or a LIBOR Rate plus 6.5%, each as defined the Financing Agreement. The initial interest rate under the Senior Credit Facility will be at the LIBOR Rate option.

2

 

The Term Loan under the Senior Credit Facility is repayable in consecutive quarterly installments, each of which will be in an amount equal per quarter of $1,500,000 and each such installment to be due and payable, in arrears, on the last day of each quarter commencing on March 31, 2018 and ending on the earlier of (a) December 15, 2022 and (b) upon the payment in full of all obligations under the Financing Agreement and the termination of all commitments under the Financing Agreement. Further, the Term Loan would be permanently reduced pursuant to certain mandatory prepayment events including an annual “excess cash flow sweep” of 50% of the consolidated excess cash flow, with a step-down to 25% when the Leverage Ratio (as defined in the Financing Agreement) is below 3.50:1.00; provided that, in any fiscal year, any voluntary prepayments of the Term Loan shall be credited against the Borrower’s “excess cash flow” prepayment obligations on a dollar-for-dollar basis for such fiscal year.

Borrowings under the Financing Agreement are fully guaranteed by the Guarantors and are collateralized by substantially all the assets of the Borrower and the Guarantors and a pledge of all of the issued and outstanding equity interests of each of IWCO’s subsidiaries.

The Financing Agreement contains certain representations, warranties, events of default, mandatory prepayment requirements, as well as certain affirmative and negative covenants customary for financing agreements of this type. These covenants include restrictions on borrowings, investments and dispositions, as well as limitations on the Borrower’s and the Guarantors’ ability to make certain capital expenditures and pay dividends. Upon the occurrence and during the continuation of an event of default under the Financing Agreement, the lenders under the Financing Agreement may, among other things, terminate all commitments and declare all or a portion of the loans under the Financing Agreement immediately due and payable and increase the interest rate at which loans and obligations under the Financing Agreement bear interest.

The foregoing summaries of certain of the material terms of the Purchase Agreement, Certificate of Designations, Merger Agreement and Financing Agreement do not purport to be complete and are subject to, are qualified in their entirety by, the full texts of the Purchase Agreement, Certificate of Designations, Merger Agreement and Financing Agreement, attached hereto as Exhibits 10.1, 4.1, 2.1 and 10.2, respectively, and are incorporated into this Item 1.01 by reference.

Item 2.01.Completion of Acquisition or Disposition of Assets.

The descriptions of the Merger Agreement and the purchase of the Preferred Stock provided under the headings “Acquisition of IWCO Direct” and “Preferred Stock Purchase Agreement and Certificate of Designations” in Item 1.01 are incorporated into this Item 2.01 by reference.

Item 7.01.Regulation FD Disclosure 

On December 18, 2017, the Company and ModusLink issued a joint press release (the “Press Release”) announcing ModusLink’s acquisition of IWCO and the other transactions. A copy of the Press Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. A reconciliation related to the non-GAAP financial measures used in the Press Release is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished by the Company pursuant to this item, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any Company filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.

Item 9.01.Financial Statements and Exhibits.
(a)Financial Statements of Business Acquired.

Any financial statements required by Item 9.01(a) will be filed by amendment as soon as practicable, but no later than 71 calendar days after the date on which this initial Current Report on Form 8-K was required to be filed.

(b)Pro Forma Financial Information.

Any pro forma financial information required by Item 9.01(b) will be filed by amendment as soon as practicable, but no later than 71 calendar days after the date on which this initial Current Report on Form 8-K was required to be filed.

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(d)Exhibits

Exhibit No. Description

2.1Agreement and Plan of Merger, dated December 15, 2017, by and among ModusLink Global Solutions, Inc., MLGS Merger Company, Inc., IWCO Direct Holdings Inc., CSC Shareholder Services, LLC (solely in its capacity as representative), and the stockholders of IWCO Direct Holdings Inc.*
4.1Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of ModusLink Global Solutions, Inc. filed with the Secretary of State of the State of Delaware on December 15, 2017.
10.1Preferred Stock Purchase Agreement dated as of December 15, 2017, by and between ModusLink Global Solutions, Inc. and SPH Group Holdings LLC.
10.2Financing Agreement dated as of December 15, 2017, by and among IWCO Direct Holdings Inc., MLGS Merger Company, Inc., Instant Web, LLC, certain subsidiaries of IWCO Direct Holdings Inc. identified on the signature pages thereto, the lenders from time to time party hereto, and Cerberus Business Finance, LLC, as collateral agent and administrative agent for the lenders.
99.1Press Release of ModusLink Global Solutions, Inc. and Steel Partners Holdings L.P. dated December 18, 2017.
99.2Information Related to the Use of Non-GAAP Financial Measures
*Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementary copies of any of the omitted schedules or exhibits upon request by the Securities and Exchange Commission.

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

December 18, 2017 STEEL PARTNERS HOLDINGS L.P.
   
  By: Steel Partners Holdings GP Inc.
    Its General Partner
     
   
  By: /s/ Douglas B. Woodworth
    Douglas B. Woodworth
    Chief Financial Officer

 

 

5

Exhibit 2.1

 

 

 

AGREEMENT AND PLAN OF MERGER

by and among

IWCO DIRECT HOLDINGS INC.,

CERTAIN STOCKHOLDERS OF IWCO DIRECT HOLDINGS INC.,

CSC SHAREHOLDER SERVICES, LLC,

AS REPRESENTATIVE,

MODUSLINK GLOBAL SOLUTIONS, INC.

and

MLGS MERGER COMPANY, INC.

Dated December 15, 2017

 

 

 

 

 

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS 1
Section 1.1.   Certain Definitions 1
Section 1.2.   Interpretation. 12
ARTICLE II MERGER 13
Section 2.1.   The Merger 13
Section 2.2.   Certificate of Merger 13
Section 2.3.   Certificate of Incorporation 13
Section 2.4.   Bylaws 13
Section 2.5.   Officers 13
Section 2.6.   Directors 14
Section 2.7.   Merger Consideration. 14
Section 2.8.   Conversion or Cancellation of Shares. 17
Section 2.9.   Exchange of Certificates. 19
Section 2.10.   Dissenting Shares 20
Section 2.11.   Closing. 20
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 23
Section 3.1.   Organization and Qualification 23
Section 3.2.   Authorization 23
Section 3.3.   Non-contravention 23
Section 3.4.   Consents 24
Section 3.5.   Capitalization; Subsidiaries. 24
Section 3.6.   Financial Statements; Undisclosed Liabilities. 25
Section 3.7.   Absence of Certain Developments 26
Section 3.8.   Compliance with Law; Governmental Authorizations; Licenses; Etc. 27
Section 3.9.   Litigation 28
Section 3.10.   Taxes 28
Section 3.11.   Environmental Matters. 31
Section 3.12.   Employee Matters. 32
Section 3.13.   Employee Benefit Plans. 33

 

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TABLE OF CONTENTS

(continued)

Page

Section 3.14.   Intellectual Property Rights; Software; Information Technology. 35
Section 3.15.   Contracts 38
Section 3.16.   Insurance 39
Section 3.17.   Real Property 40
Section 3.18.   Title to Assets 41
Section 3.19.   Related Party Transactions 41
Section 3.20.   Brokers 42
Section 3.21.   Customers and Suppliers 42
Section 3.22.   Accounts Receivable 42
Section 3.23.   Inventory 42
Section 3.24.   Products 42
Section 3.25.   Banking Facilities; Powers of Attorney 43
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO 43
Section 4.1.   Organization 43
Section 4.2.   Authorization 44
Section 4.3.   Non-contravention 44
Section 4.4.   No Consents 44
Section 4.5.   Litigation 44
Section 4.6.   Brokers 44
Section 4.7.   Solvency 44
Section 4.8.   NO ADDITIONAL REPRESENTATIONS 45
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS 46
Section 5.1.   Organization and Qualification 46
Section 5.2.   Authorization 46
Section 5.3.   Non-contravention 46
Section 5.4.   Consents 47
Section 5.5.   Litigation 47
Section 5.6.   Brokers 47
Section 5.7.   Title to Company Stock 47

 

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TABLE OF CONTENTS

(continued)

Page

ARTICLE VI COVENANTS AND AGREEMENTS 48
Section 6.1.   Retention of Information 48
Section 6.2.   Public Announcements 48
Section 6.3.   Employee Benefits. 48
Section 6.4.   Indemnification of Directors and Officers. 49
Section 6.5.   Tax Matters. 50
Section 6.6.   Stockholder Matters 55
Section 6.7.   Restrictions on Dissolution 55
ARTICLE VII SURVIVAL; INDEMNIFICATION 55
Section 7.1.   Survival of Representations 55
Section 7.2.   Indemnification. 55
Section 7.3.   Claims. 57
Section 7.4.   Limitations on Indemnification Obligations 58
Section 7.5.   Special Rule for Fraud 59
Section 7.6.   Exclusive Remedy 59
Section 7.7.   Mitigation of Damages 60
Section 7.8.   Effect of Investigation or Knowledge 60
ARTICLE VIII REPRESENTATIVE OF THE STOCKHOLDERS OF THE COMPANY 60
Section 8.1.   Authorization of Representative. 60
ARTICLE IX MISCELLANEOUS 63
Section 9.1.   Notices 63
Section 9.2.   Exhibits and Schedules 64
Section 9.3.   Time of the Essence; Computation of Time 64
Section 9.4.   Expenses 65
Section 9.5.   Governing Law 65
Section 9.6.   Assignment; Successors and Assigns; No Third Party Rights 65
Section 9.7.   Counterparts 66
Section 9.8.   Titles and Headings 66
Section 9.9.   Entire Agreement 66

 

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TABLE OF CONTENTS

(continued)

Page

Section 9.10.   Severability 66
Section 9.11.   No Strict Construction 66
Section 9.12.   Specific Performance 66
Section 9.13.   Waiver of Jury Trial 67
Section 9.14.   Failure or Indulgence not Waiver 67
Section 9.15.   Amendments 67
Section 9.16.   Conflict Waiver 67
Section 9.17.   Protected Communication 68
Section 9.18.   No Waiver of Privilege; Protection from Disclosure or Use 68

Exhibit ASupport Agreement

Exhibit BForm of Escrow Agreement

Exhibit CCertificate of Merger

Exhibit DEstimated Merger Consideration Statement

Exhibit EForm of Letter of Transmittal

Exhibit FR&W Insurance Policy

Exhibit GCertificate of Incorporation of Surviving Corporation

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INDEX OF TERMS

Page

ACA 36
Accounting Firm 16
Action 1
Adjustment Escrow Amount 1
Affiliate 2
Affiliated Group 2
Agreement 2
Appraisal Claim 59
Business Day 2
Buyer Indemnitee 56
Buyer Indemnitees 56
Cash and Cash Equivalents 2
Certificate of Incorporation 2
Certificate of Merger 13
Certificates 2
Claim 61
Closing 21
Closing Balance Sheet 15
Closing Cash Consideration 2
Closing Date 21
Closing Date Bank Debt 2
Closing Date Funded Indebtedness 2
Closing Date Payments 15
COBRA 2
Code 3
Common Stock 3
Company 1
Company Data 3
Company Employee 49
Company Fundamental Representations 3
Company Intellectual Property Rights 3
Company Stock 3
Company Tax Liability 3
Contract 3
CSC 1
Current Representation 68
D&O Indemnified Persons 50
D&O Insurance Tail Policy 50
Data Room 13
Defaulted Funded Indebtedness 3
DGCL 13
Disputed Merger Consideration Items 16
Dissenting Shares 20

 

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INDEX OF TERMS

(continued)

Page

Distribution 3
Distribution Amount 3
Distribution Percentage 4
Effective Time 13
Employee Benefit Plan 4
Environmental Laws 4
ERISA 4
ERISA Affiliate 4
Escrow Account 15
Escrow Agreement 4
Estimated Balance Sheet 14
Estimated Merger Consideration 14
Estimated Merger Consideration Statement 14
Exception Claims 4
Expense Funds 62
Expense Reserve 15
Final Merger Consideration 17
Financial Statements 26
Financing Expenses 8
Former Holders 4
Former Holders of Common Stock 5
Former Holders of Series A Preferred Stock 5
Former Holders of Series B-1 Preferred Stock 5
Former Holders of Series B-2 Preferred Stock 5
Fraud 5
Fundamental Payout Amount 56
Fundamental Representations 5
Funded Indebtedness 5
GAAP 5
GAAP Consistently Applied 5
Governmental Authority 6
Hazardous Substances 6
HSR Act 6
Indemnification Cap 6
Indemnified Party 57
Indemnitors 50
Information Technology Infrastructure 6
Intellectual Property Licenses 39
Intellectual Property Rights 6
Knowledge 7
L/T Representations 7
Laws 7
Leased Property 41

 

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INDEX OF TERMS

(continued)

Page

Letter of Transmittal 19
Liabilities 7
Lien 7
Loss 56
Material Adverse Effect 7
Material Contracts 39
Material Customers 42
Material Lease 41
Material Leases 41
Material Suppliers 43
Merger 13
Merger Consideration 14
Merger Consideration Dispute Notice 16
Merger Documents 8
Multiemployer Plan 8
Net Working Capital 8
Net Working Capital Adjustment 8
Newco 1
Order 8
Ordinary Course of Business 9
Parent 1
Parent Benefit Plan 49
Parent Group 52
Parent Prepared Tax Returns 51
Per Share Series A Preferred Closing Consideration 9
Permitted Liens 9
Person 9
Personal Data 9
Post-Closing Representation 68
Pre-Closing Net Operating Loss 52
Pre-Closing Tax Period 9
Property 9
Proposed Final Merger Consideration 15
Proposed Final Merger Consideration Statement 15
Proprietary Software 37
Protected Communications 9
R&W Insurance Policy 23
Recent Balance Sheet 9
Recent Balance Sheet Date 10
Recent Financial Statements 10
Reference Amount 10
Refund Amount 54
Refund Forms 52

 

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INDEX OF TERMS

(continued)

Page

Representative 61
Responsible Party 57
Retention Amount 10
Sales Taxes 10
Schedules 10
Seller Expenses 10
Seller Group 68
Seller Indemnitee 57
Seller Indemnitees 57
Series A Preferred Stock 10
Series B-1 Preferred Stock 10
Series B-2 Preferred Stock 10
Shareholders Agreement 10
Signing Stockholder 1
Software 6
Solvent 45
Stockholders 11
Straddle Period 53
Subsidiary 11
Support Agreement 1
Surviving Corporation 13
Tax 11
Tax Contest 53
Tax Representations 11
Tax Return 11
Third Party Claim 58
Transaction Incentive Award Closing Amount 11
Transaction Incentive Award Distribution Amount 12
Transaction Incentive Awards 11
Transaction Tax Deductions 12
Transfer Taxes 65
Unresolved Merger Consideration Items 16
Waiving Parties 68
Written Consent 21
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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated December 15, 2017, by and among (a) ModusLink Global Solutions, Inc., a Delaware corporation (“Parent”), (b) MLGS Merger Company, Inc., a Delaware corporation (“Newco”), (c) IWCO DIRECT HOLDINGS INC., a Delaware corporation (the “Company”), (d) CSC Shareholder Services, LLC, a Delaware limited liability company (“CSC”), solely in its capacity as Representative, and (e) the stockholders of the Company listed on the signature pages hereto (each, a “Signing Stockholder”).

WHEREAS, the respective Boards of Directors of Parent, Newco and the Company, and the respective stockholders of Newco and the Company, have approved the merger of Newco with and into the Company on the terms and subject to the conditions set forth herein.

WHEREAS, in furtherance thereof, the Boards of Directors of each of Parent, Newco and the Company, and the stockholders of each of Newco and the Company, have approved this Agreement and the Merger (as defined below), upon the terms of and subject to the conditions set forth in this Agreement.

WHEREAS, pursuant to the Merger, each share of Series A Preferred Stock will be converted into the Per Share Series A Closing Consideration (as defined below) and the applicable Distribution Per Share Amount (as defined below) in respect of any future Distributions (as defined below), in the manner set forth herein.

WHEREAS, as a condition precedent to each stockholder of the Company receiving their respective portion of the consideration pursuant to this Agreement, each stockholder has entered, or will be required to enter, into a Support Agreement, by and among Parent, Newco, the Company, the Representative and such stockholder, substantially in the form attached hereto as Exhibit A (the “Support Agreement”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations, warranties and undertakings contained herein and in the Letters of Transmittal (as defined herein), and intending to be legally bound, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1. Certain Definitions. As used in this Agreement, the following terms have the respective meanings set forth below.

Action” means any lawsuit, administrative charge, investigation, action, proceeding, arbitration, audit, injunction or order by or before any Governmental Authority.

Adjustment Escrow Amount” means Two Million Five Hundred Thousand Dollars ($2,500,000) in cash to be held in accordance with the Escrow Agreement.

 

 

Affiliate” means a Person that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, a specified Person. A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise.

Affiliated Group” means any affiliated group within the meaning of Code Section 1504(a) or any similar group defined under a similar provision of state, local, or non-U.S. law.

Agreement” means this Agreement and Plan of Merger.

Business Day” means a day, other than a Saturday or Sunday, on which commercial banks in New York City are open for the general transaction of business.

Cash and Cash Equivalents” means the sum of the fair market value (expressed in United States dollars) of all cash and cash equivalents of any kind in accordance with GAAP (including bank account balances (net of outstanding checks but including inbound checks), marketable securities, short term investments and any amounts accrued or paid in advance by customers for postage, products or services) and certificates of deposit of the Company and its Subsidiaries as of the open of business on the Closing Date, net of any issued and uncleared checks as of the open of business on the Closing Date.

Certificates” means the outstanding certificates which immediately prior to the Effective Time represent shares of Common Stock, Series A Preferred Stock, Series B-1 Preferred Stock or Series B-2 Preferred Stock, as applicable.

Certificate of Incorporation” means the Company’s Amended and Restated Certificate of Incorporation, filed March 28, 2014.

Closing Cash Consideration” means an amount equal to (i) the Estimated Merger Consideration minus (ii) the Adjustment Escrow Amount minus (iii) the Expense Reserve.

Closing Date Bank Debt” means the outstanding principal amount of, accrued and unpaid interest on and other payment obligations (including any prepayment premiums payable as a result of the consummation of the Merger) arising under (i) that certain Credit and Security Agreement, dated as of March 28, 2014, among the Company and its Subsidiaries and Wells Fargo Bank, National Association and (ii) that certain Loan Agreement, dated as of March 28, 2014, among the Company, Prospect Capital Corporation and the other parties thereto, in each case as amended, restated, supplemented or otherwise modified from time to time.

Closing Date Funded Indebtedness” means the Funded Indebtedness as of the open of business on the Closing Date; provided that in calculating the Merger Consideration for purposes of Section 2.7, Closing Date Funded Indebtedness shall be reduced by the Cash and Cash Equivalents.

COBRA” means Part 6 of Subtitle B of Title I of ERISA, Section 4980B of the Code and any similar state Law.

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

Common Stock” means the Class A Common Stock, par value $0.01 per share, of the Company.

Company Data” means the Company’s and its Subsidiaries’ proprietary, confidential data, including customer data and Personal Data held by the Company or its Subsidiaries.

Company Fundamental Representations” means the representations and warranties set forth in Section 3.1, Section 3.2, Section 3.5, Section 3.20, Section 5.1, Section 5.2, Section 5.6 and Section 5.7, the following representations and warranties set forth in each Letter of Transmittal: (a), (b), (c) and (f) and the following representations and warranties set forth in each Support Agreement: Section 3(a), Section 3(b), Section 3(c) and Section 3(f).

Company Intellectual Property Rights” means all Intellectual Property Rights owned in whole or in part by the Company or its Subsidiaries.

Company Stock” means, collectively, the Common Stock, the Series A Preferred Stock, the Series B-1 Preferred Stock and the Series B-2 Preferred Stock.

Company Tax Liability” means Liabilities of the Company and its Subsidiaries for the payment of Sales Taxes owed by the Company or its Subsidiaries with respect to the Pre-Closing Tax Period in jurisdictions in which the Company or any of its Subsidiaries has not previously filed Sales Tax Returns.

Contract” means any contract, agreement, indenture, note, bond, loan, instrument, lease, mortgage, license, or other agreements or commitments, whether written or oral.

Defaulted Funded Indebtedness” means any Funded Indebtedness which is in default or would be in default after the consummation of the transactions contemplated by this Agreement.

Distribution” means any cash distribution to be paid to holders of Transaction Incentive Awards and Former Holders of Series A Preferred Stock following the Closing as set forth in this Agreement, including any distribution pursuant to Section 2.7(e) and any distribution in respect of the Expense Reserve (excluding, for the avoidance of doubt, the Estimated Merger Consideration on the Closing Date).

Distribution Amount” means the amount of any Distribution less the Transaction Incentive Distribution Amount in respect of such Distribution.

Distribution Per Share Amount” means, with respect to any Distribution Amount, with respect to each share of Series A Preferred Stock, an amount equal to the Distribution Amount divided by the number of issued and outstanding shares of Series A Preferred Stock immediately prior to the Effective Time.

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Distribution Percentage” means with respect to each Former Holder and holder of Transaction Incentive Awards, the percentage set forth opposite such holder’s name on Section 1.1(a) of the Schedules.

Employee Benefit Plan” means any plan, program, policy, practice or Contract, whether written or unwritten, providing benefits or compensation to any employee, officer, director, consultant or independent contractor (in each case current or former) or any beneficiary or dependent thereof that is sponsored or maintained by the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries contributes or is obligated to contribute, or otherwise has any Liability (including through an ERISA Affiliate) whether contingent or otherwise, including any employee welfare benefit plan within the meaning of Section 3(1) of ERISA, any employee pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not such plan is subject to ERISA) or any bonus, incentive, deferred compensation, vacation, insurance, supplemental unemployment, retention, stock purchase, phantom equity, stock option or other equity-related award, severance, employment, consulting, change of control or fringe benefit plan, program, policy, practice or Contract.

Environmental Laws” means all applicable federal, state, local and foreign Laws, guidance documents (where binding and enforceable), approvals, authorizations, licenses or permits issued by any Governmental Authority and all applicable judicial, administrative and regulatory Orders and similar provisions having the force or effect of Law concerning protection of human health from exposure to Hazardous Substances, pollution or protection of the environment (including ambient air, surface water, ground water, land surface or surface strata).

ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder from time to time.

ERISA Affiliate” means any entity that would be considered a single employer with the Company or any of its Subsidiaries within the meaning of Section 414 of the Code.

Escrow Agreement” means the Escrow Agreement to be entered into on the Closing Date by and among Parent, the Representative and Wells Fargo Bank, National Association, substantially in the form of Exhibit B attached hereto.

Exception Claims” means if a Third Party Claim (i) seeks non-monetary relief, (ii) involves a criminal allegation by a Governmental Authority, (iii) involves a claim by or against a customer or supplier of the Company or any of its Subsidiaries, (iv) involves, in the opinion of counsel of the Indemnified Party, a conflict of interest between the Responsible Party and the Indemnified Party or (v) involves a claim for which the insurer under the R&W Insurance Policy has assumed the conduct and control.

Former Holders” means, collectively, the Former Holders of Common Stock, the Former Holders of Series A Preferred Stock, the Former Holders of Series B-1 Preferred Stock and the Former Holders of Series B-2 Preferred Stock, and includes, without limitation, the Stockholders.

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Former Holders of Common Stock” means the holders of Common Stock as of immediately prior to the Closing.

Former Holders of Series A Preferred Stock” means the holders of Series A Preferred Stock as of immediately prior to the Closing.

Former Holders of Series B-1 Preferred Stock” means the holders of Series B-1 Preferred Stock as of immediately prior to the Closing.

Former Holders of Series B-2 Preferred Stock” means the holders of Series B-2 Preferred Stock as of immediately prior to the Closing.

Fraud” means, with respect to a Former Holder or any officer, director or employee of the Company or any of its Subsidiaries, intentional and knowing misrepresentation of material facts with the intent to mislead or deceive with respect to the making of a representation or warranty pursuant to this Agreement that would constitute common law fraud.

Funded Indebtedness” means, as of any date, without duplication, the outstanding principal amount of, accrued and unpaid interest on and other payment obligations (including any prepayment premiums payable as a result of the consummation of the Merger) arising under any obligations of the Company or any of its Subsidiaries for (i) indebtedness for borrowed money, (ii) indebtedness evidenced by any note, bond, debenture or other debt security, (iii) obligations of the types described in clauses (i) and (ii) guaranteed, directly or indirectly, in any manner by the Company or any of its Subsidiaries, (iv) letters of credit, only to the extent drawn, and bankers’ acceptances issued for the account of the Company or any of its Subsidiaries, (v) obligations under leases required in accordance with GAAP to be recorded as capital leases, (vi) indebtedness for the deferred purchase price of property or services, other than ordinary course trade payables, (vii) all payment obligations under any interest rate swap agreements or interest rate hedge agreements, in each case excluding (x) any intercompany obligations between or among the Company and any of its Subsidiaries and Financing Expenses and (y) any items taken into account in determining Net Working Capital.

Fundamental Representations” means the representations and warranties set forth in Section 3.1, Section 3.2, Section 3.5, Section 3.20, Section 4.1, Section 4.2, Section 4.6, Section 5.1, Section 5.2, Section 5.6 and Section 5.7, the following representations and warranties set forth in each Letter of Transmittal: (a), (b), (c) and (f) and the following representations and warranties set forth in each Support Agreement: Section 3(a), Section 3(b), Section 3(c) and Section 3(f).

GAAP” means generally accepted accounting principles as in effect in the United States as of the date of preparation.

GAAP Consistently Applied” means GAAP using the same accounting methods, principles, policies, practices, and procedures, with consistent classification, judgments, and estimation methodology, as were used in preparing the Recent Financial Statements (provided that if there is any difference between such principles and GAAP then such principles shall apply) and (i) not taking into account any changes in circumstances or events occurring after the opening of business on the Closing Date; (ii) not including any purchase accounting or other adjustment arising out of the consummation of the transactions contemplated by this Agreement; (iii) not reflecting, directly or indirectly, any additional reserve or accrual (not including amounts thereof) that is not reflected on the Recent Balance Sheet, and (iv) not introducing any new class or classes of liabilities, asset reserves or valuation allowances in the determination of Net Working Capital that were not used in determining the Reference Amount.

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Governmental Authority” means any national, federal, state, provincial, county, municipal or local government, foreign or domestic, or the government of any political subdivision of any of the foregoing, or any entity, authority, agency, ministry or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including any authority or other quasi-governmental entity established to perform any of such functions.

Hazardous Substances” means hazardous or toxic substances or materials, hazardous wastes, pollutants or contaminants as said terms are defined by applicable Environmental Laws or with respect to which Liability or standards of conduct are imposed under any applicable Environmental Laws, including without limitation, petroleum or petroleum constituents, friable asbestos-containing material, polychlorinated biphenyls, asbestos and toxic mold.

HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

Indemnification Cap” means an amount equal to (i) $475,600,000 plus (ii) the Net Working Capital Adjustment (which may be a negative number).

Information Technology Infrastructure” means the hardware, software, network infrastructure and other information technology infrastructure systems of Company and its Subsidiaries (whether owned, leased, software as a service, cloud-based or otherwise) that are used in their respective business or operations.

Intellectual Property Rights” means the following: (i) patents and patent applications, reexaminations, extensions and counterparts claiming priority therefrom; (ii) inventions, invention disclosures, discoveries and improvements, whether or not patentable invention; (iii) computer software and firmware, including without limitation data files, source code, object code and software-related specifications and documentation (collectively “Software”); (iv) copyright rights and all works of authorship, including such works fixed in a tangible medium or expression, whether registered or unregistered, including but not limited to all copyright registrations or foreign equivalents, applications for registration or foreign equivalents, all moral rights, all common-law rights, and all rights to register and obtain renewals and extension of copyright registrations, together with all other copyright interests accruing by reason of international copyright convention; (v) trademarks, trade names, service marks, certification marks, service names, brands, trade dress and logos and the goodwill associated therewith; (vi) trade secrets (including those trade secrets defined in the Uniform Trade Secrets Act and under corresponding foreign statutory Law and common law), non-public information, and confidential information, know-how, business and technical information, and rights to limit the use or disclosure thereof by any Person; (vii) domain names, social media handles and accounts, and all websites, including without limitation all of the data, scripts, information, text and graphics relating to websites or FTP sites on the internet, the structure, sequence and organization of the sites, all text, graphics and other information displayed thereon and the rights owned or licensed for any and all Software used to develop, maintain or enhance such text, graphics and other information displayed thereon; and (viii) proprietary databases and data compilations and all documentation relating to the foregoing including in each case any registrations of, applications to register, and renewals and extensions of, any of the foregoing with or by any Governmental Authority in any jurisdiction.

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Knowledge” means, with respect to any Person, the actual knowledge of such Person after reasonable inquiry; provided that, in the case of the Company, such Knowledge shall be limited to the Knowledge of James Andersen, Jake Hertel, Joseph Morrison and Mike Ertel.

Laws” means any statutes, laws, rules, regulations, codes, ordinances, policies and Orders of all Governmental Authorities.

Liabilities” with respect to any Person, means any liability, debt or other monetary obligation or guarantee of such Person, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, or otherwise, and whether or not the same is required to be accrued on the financial statements of such Person.

Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind.

L/T Representations” means the representations and warranties of the Former Holders set forth in each Letter of Transmittal and in each Support Agreement.

Material Adverse Effect” means any event, change, occurrence, condition or circumstance which has had or could reasonably be expected to have a material adverse effect upon the financial condition, business or results of operations of the Company and its Subsidiaries, taken as a whole; provided, however, that any event, change, occurrence, condition or circumstance arising from or related to any of the following shall not be deemed to constitute and shall not be taken into account in determining whether a “Material Adverse Effect” has occurred: (i) conditions generally affecting the United States or foreign economies or generally affecting one or more industries in which the Company or its Subsidiaries operate; (ii) national or international political or social conditions, including terrorism or the engagement by the United States in hostilities or acts of war or the escalation thereof, whether or not pursuant to the declaration of a national emergency or war, or the occurrence or the escalation of any military, cyber or terrorist attack upon the United States, or any of its territories, possessions, or diplomatic or consular offices or upon any military installation, asset, equipment or personnel of the United States; (iii) financial, banking or securities markets (including (x) any disruption thereof, (y) any decline or rise in the price of any security or any market index and (z) any increased cost, or decreased availability, of capital or pricing or terms related to any financing for the transactions contemplated hereby); (iv) any failure, in and of itself, by the Company or its Subsidiaries to meet any internal or disseminated projections, forecasts or revenue or earnings predictions for any period (it being understood that the facts and circumstances giving rise or contributing to such failure may be taken into account in determining whether there has been a Material Adverse Effect); provided that the matters described in (i) and (ii) shall be taken into account to the extent such matter has a disproportionate impact on the Company and its Subsidiaries, taken as a whole, as compared to other participants in the industry in which the Company and its Subsidiaries operate.

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Merger Documents” means, collectively, this Agreement, the Certificate of Merger, each Letter of Transmittal, each Support Agreement, and all other agreements and documents entered into in connection with the Merger and the other transactions contemplated hereby.

Multiemployer Plan” has the meaning set forth in Section 3(37) or Section 4001(a)(3) of ERISA or 414(f) of the Code.

Net Working Capital Adjustment” means (i) the amount by which Net Working Capital exceeds the Reference Amount or (ii) the amount by which Net Working Capital is less than the Reference Amount; provided that any amount which is calculated pursuant to clause (ii) of this definition shall be deemed to be a negative number.

Net Working Capital” means the “current assets” of the Company and its Subsidiaries set forth in Section 1.1(b) of the Schedules less the “current liabilities” of the Company and its Subsidiaries set forth in Section 1.1(b) of the Schedules, in each case, as each such “current asset” and “current liability” is accrued and reflected on the books and records of the Company and its Subsidiaries in accordance with GAAP Consistently Applied as of the opening of business on the Closing Date, subject to the adjustments and exclusions set forth in Section 1.1(b) of the Schedules; provided that, for the avoidance of doubt, “current assets” shall not include (a) Cash and Cash Equivalents, or (b) any Tax assets, and “current liabilities” shall not include (u) any Funded Indebtedness, (w) notes payable, (x) Seller Expenses, (y) any Tax liabilities, or (z) any fees and expenses to the extent incurred by or at the direction of Parent, Newco or their respective Affiliates or otherwise relating to Parent’s, Newco’s or their respective Affiliates’ financing for the transactions contemplated hereby (the “Financing Expenses”). For the further avoidance of doubt, the determination of the Net Working Capital Adjustment and the preparation of the Final Merger Consideration will take into account only those components (i.e., only those line items) and adjustments reflected in Section 1.1(b) of the Schedules and used in calculating the Reference Amount. Further to the preceding sentence, the calculation of Final Merger Consideration will be determined in all instances in accordance with GAAP Consistently Applied (and without any change in or introduction of any new reserves), and without duplication to any items counted in such calculation. The parties agree that the purpose of preparing and calculating the Net Working Capital hereunder is to measure changes in Net Working Capital without the introduction of new or different accounting methods, policies, practices, procedures, classifications, judgments or estimation methodologies from GAAP Consistently Applied. The parties hereto agree that Net Working Capital shall be calculated and formatted consistent with the illustrative calculation of Net Working Capital set forth in Section 1.1(b) of the Schedules.

Order” means any outstanding order, ruling, judgment, writ, injunction, stipulation, award, decree or similar order of any Governmental Authority or arbitrator.

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Ordinary Course of Business” means any action taken by a Person if such action is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal day-to-day operations of such Person.

Permitted Liens” means (a) mechanics’, materialmens’, carriers’, workmens’, repairmens’, contractors’ or other similar Liens arising or incurred in the Ordinary Course of Business for amounts that are not delinquent and which are set forth as a current liability in the Net Working Capital, (b) as to any Property, easements, rights-of-way, restrictions and other similar charges and encumbrances of record not interfering materially with the ordinary conduct of the business of the Company and its Subsidiaries or the use or occupancy, value of the assets subject thereto, (c) Liens for Taxes not yet due and payable, or for Taxes that the taxpayer is contesting, and for which adequate reserve has been made in the Net Working Capital and (d) as to any Leased Property, Liens created, permitted or suffered by the fee owner thereof.

Per Share Series A Preferred Closing Consideration” means, with respect to each share of Series A Preferred Stock, an amount equal to the Closing Cash Consideration divided by the number of issued and outstanding shares of Series A Preferred Stock immediately prior to the Effective Time.

Person” means an individual, partnership, corporation, limited partnership, limited liability company, joint stock company, unincorporated organization or association, trust, joint venture, association or other organization, whether or not a legal entity, or a Governmental Authority.

Personal Data” means (i) a natural person’s name, street address, telephone number, email address, photograph, passport number, credit card number, bank information, or account number, and (ii) any other piece of non-publicly available information that allows the identification of such natural person.

Pre-Closing Tax Period” means any taxable period ending on or before the Closing and the portion through the end of the day on the Closing Date for the Straddle Period.

Property” means the Leased Property and all real property owned by the Company or any Subsidiary.

Protected Communications” means, at any time, any and all communications in whatever form, whether written, oral, video, electronic or otherwise, that shall have occurred between or among any of the Company or its Subsidiaries, the Former Holders, or any of their respective Affiliates, equity holders, directors, officers, employees, agents, advisors (including Houlihan Lokey) and attorneys (including Dechert LLP or any predecessor or successor law firm of the foregoing) relating to or in connection with this Agreement, the events and negotiations leading to this Agreement, any of the transactions contemplated herein or any other potential sale or transfer of control transaction involving the Company and its Subsidiaries.

Recent Balance Sheet” means the consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2017.

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Recent Balance Sheet Date” means September 30, 2017.

Recent Financial Statements” means the Recent Balance Sheet and the related consolidated unaudited statements of operations and cash flows of the Company and its Subsidiaries for the nine (9) months ended as of September 30, 2017.

Reference Amount” means $13,173,524.

Retention Amount” means $4,756,000.

Sales Taxes” means Taxes imposed on the Company or its Subsidiaries with respect to the Company’s or any of its Subsidiary’s retail sale of tangible personal property and other items subject to such Tax in a relevant jurisdiction.

Schedules” means the disclosure schedules delivered by the Company to Parent and Newco in connection with this Agreement.

Seller Expenses” means (i) any investment banking, accounting, attorney or other professional fees incurred by the Company or the Former Holders on or prior to Closing with respect to the transactions contemplated by this Agreement plus (ii) any management or transaction fees (including any accelerated management fees) incurred by the Company or the Former Holders on or prior to Closing in connection with any of the transactions contemplated by this Agreement, plus (iii) all sale, transaction, or change of control payments to current or former directors, officers, consultants, employees of the Company or its Subsidiaries or other service providers that are payable by the Company or any of its Subsidiaries upon, in whole or in part by reason of, the consummation of the transactions contemplated hereby (and in no event as a result of a “double trigger” provision where the Closing is the first such trigger), plus (iv) the Expense Funds, plus (v) the premium and all costs and expenses for the R&W Insurance Policy, plus (vi) the premium for the D&O Insurance Tail Policy; in all cases to the extent (A) as in effect as of immediately prior to the Closing and (B) unpaid at or immediately prior to Closing. For the avoidance of doubt, Transaction Incentive Awards paid in accordance with the terms of the applicable letter agreement shall not constitute Seller Expenses.

Series A Preferred Stock” means the Series A Preferred Stock, par value $0.01 per share, of the Company.

Series B-1 Preferred Stock” means the Series B-1 Preferred Stock, par value $0.01 per share, of the Company.

Series B-2 Preferred Stock” means the Series B-2 Preferred Stock, par value $0.01 per share, of the Company.

Shareholders Agreement” means that certain Amended and Restated Shareholders Agreement, dated March 28, 2014, by and among IWCO Direct Holdings Inc., Court Square Capital Partners II, L.P., Court Square Capital Partners II-A, L.P., Court Square Capital Partners (Executive) II, L.P., Court Square Capital Partners (Offshore) II, L.P., WAM Holdings, LLC, ACP/IWCO Holdings, LLC, ACP IWCO Splitter, L.P., Avista Capital Partners (Offshore), L.P., the Senior Executives (as defined therein) and the Management Investors (as defined therein).

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Stockholders” means the owners of Company Stock.

Subsidiary” means, with respect to any Person, any corporation, partnership, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination thereof, including, without limitation, with respect to the Company, (i) Instant Web LLC, a Delaware limited liability company, (ii) United Mailing, Inc., a Minnesota corporation, (iii) Victory Envelope, Inc., a Minnesota corporation, (iv) IWCO Direct New York, Inc., a Delaware corporation, (v) IWCO Direct North Carolina, Inc., a Minnesota corporation, and (vi) IWCO Direct TWIN LLC, a Delaware limited liability company. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a partnership, association or other business entity if such Person or Persons shall be allocated a majority of partnership, association or other business entity gains or losses or shall be or control the managing director, managing member, general partner or other managing Person of such partnership, association or other business entity. Unless the context requires otherwise, each reference to a Subsidiary shall be deemed to be a reference to a Subsidiary of the Company.

Tax” means any federal, state, local or foreign income, gross receipts, franchise, estimated, alternative minimum, add on minimum, sales, use, transfer, real property gains, registration, value added, excise, severance, stamp, transfer, occupation, windfall profits, customs, duties, real property, personal property, capital stock, social security, employment, unemployment, disability, payroll, license, withholding, or other tax, of any kind whatsoever, including any interest, penalties or additions to tax or similar items in respect of the foregoing.

Tax Representations” means any representation or warranty in Section 3.10 (Taxes).

Tax Return” means any return, statement, form, report, declaration, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax of any party or the administration of any Laws relating to any Tax (including any amendment thereof).

Transaction Incentive Awards” means outstanding awards granted by the Company to employees pursuant to letter agreements with the recipients thereof.

Transaction Incentive Award Closing Amount” means the aggregate amount of Closing Date Payments payable to holders of Transaction Incentive Awards at Closing pursuant to the terms of such awards.

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Transaction Incentive Award Distribution Amount” means, with respect to any Distribution, the aggregate amount of such Distribution payable to holders of Transaction Incentive Awards pursuant to the terms of such awards based on the aggregate Distribution Percentage set forth on Section 1.1(a) of the Schedules applicable to the Transaction Incentive Awards.

Transaction Tax Deductions” means the sum of all items of loss or deduction for U.S. federal income Tax purposes resulting from or attributable to (a) any sale, retention, or similar bonus or change of control or other payments or benefits to current or former directors, officers, consultants, employees or other service providers payable by the Company or any of its Subsidiaries in connection with the consummation of the transaction contemplated by this Agreement (including, without limitation, amounts payable in respect of the Transaction Incentive Awards), (b) any fees, expenses and interest (including unamortized original issue discount and any other amounts treated as interest for U.S. federal income tax purposes), and any prepayment penalty or breakage fees paid in connection with the consummation of the transaction contemplated by this Agreement, unamortized debt issuance costs or deferred reorganization costs of the Company or any of its Subsidiaries as of the Closing Date, (c) any Seller Expenses not included in clauses (a) or (b), in each case to the extent there is substantial authority, in the reasonable judgment of the Representative and Parent, that such item is deductible for U.S. federal income tax purposes, and (d) the amounts listed on Section 1.1(c) of the Schedules.

Section 1.2. Interpretation.

(a) Unless otherwise indicated to the contrary herein by the context or use thereof: (i) the words, “herein,” “hereto,” “hereof,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular Section or paragraph hereof; (ii) the word “including” means “including, but not limited to”; (iii) the word “or” is used in the inclusive sense of “and/or”; (iv) masculine gender shall also include the feminine and neutral genders, and vice versa; (v) words importing the singular shall also include the plural, and vice versa; and (vi) accounting terms which are not otherwise defined in this Agreement shall have the meanings given to them under GAAP.

(b) Unless the context of this Agreement otherwise requires and except for references in the Schedules, references to agreements and other documents shall be deemed to include all subsequent amendments and other modifications thereto.

(c) Unless the context of this Agreement otherwise requires, references to statutes shall include all regulations promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory provisions consolidating, amending or replacing the statute or regulation.

(d) References in this Agreement to dollar amount thresholds shall not be deemed to be evidence of a Material Adverse Effect or materiality.

(e) References to documents or other materials “provided” or “made available” to Parent or Newco or similar phrases shall mean that such documents or other materials were present in the online data room (the “Data Room”) maintained by the Company or the Former Holders for purposes of the transactions contemplated by this Agreement prior to the date hereof.

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(f) The parties intend that each representation, warranty, covenant and agreement contained herein shall have independent significance. If any party has breached any representation, warranty, covenant or agreement contained herein in any respect, the fact that there exists another representation, warranty, covenant or agreement relating to the same subject matter (regardless of the relative levels of specificity) that the party has or has not breached shall not (i) detract from or mitigate the fact that the party is in breach of such representation, warranty, covenant or agreement or (ii) prevent or in any way limit recovery pursuant to this Agreement for breach of such representation, warranty, covenant or agreement.

ARTICLE II

MERGER

Section 2.1. The Merger. Upon the terms and subject to the conditions of this Agreement, at the Effective Time, Newco shall, pursuant to the provisions of the Delaware General Corporation Law (as amended from time to time, the “DGCL”), be merged with and into the Company (the “Merger”), and the separate corporate existence of Newco shall thereupon cease in accordance with the provisions of the DGCL. The Company shall be the surviving corporation in the Merger and shall continue to exist as said surviving corporation under its present name pursuant to the provisions of the DGCL. The separate corporate existence of the Company with all its rights, privileges, powers and franchises shall continue unaffected by the Merger. The Merger shall have the effects specified in the DGCL. Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights, privileges, immunities, powers, franchises, licenses and authority of the Company and Newco shall vest in the Surviving Corporation, and all debts (other than Funded Indebtedness), Liabilities, restrictions and duties of each of the Company and Newco shall become the debts, Liabilities, restrictions and duties of the Surviving Corporation. From and after the Effective Time, the Company is sometimes referred to herein as the “Surviving Corporation.” Notwithstanding Section 251 of the Delaware General Corporation Law, as amended, no Former Holder shall be entitled to any consideration pursuant to this Agreement unless and until such Former Holder has entered into a Support Agreement, which agreements are part of the terms and conditions of the Merger.

Section 2.2. Certificate of Merger. On the Closing Date, the parties hereto shall cause the Merger to be effected by executing and filing a certificate of merger substantially in the form attached hereto as Exhibit C (the “Certificate of Merger”), in accordance with the relevant provisions of the DGCL to be properly executed and filed in accordance with the DGCL and shall make all other filings or recordings required under the DGCL in connection with the Merger. The Merger shall be effective on the Closing Date at the time of the filing of the Certificate of Merger in accordance with the DGCL (the “Effective Time”).

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Section 2.3. Certificate of Incorporation. The certificate of incorporation attached hereto as Exhibit G hereto shall be the certificate of incorporation of the Surviving Corporation and shall continue in full force and effect until further amended in the manner prescribed by the provisions of the DGCL.

Section 2.4. Bylaws. The bylaws of the Company as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with the provisions thereof and applicable Law.

Section 2.5. Officers. The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation and will hold office until their successors are duly elected or appointed and qualify in the manner provided in the certificate of incorporation or bylaws of the Surviving Corporation or as otherwise provided by Law, or until their earlier death, resignation or removal.

Section 2.6. Directors. The directors of Newco immediately prior to the Effective Time and Jim Andersen shall be the directors of the Surviving Corporation and will serve until their successors are duly elected or appointed and qualify in the manner provided in the certificate of incorporation or bylaws of the Surviving Corporation or as otherwise provided by Law, or until their earlier death, resignation or removal.

Section 2.7. Merger Consideration.

(a) Merger Consideration. The aggregate consideration for the Company Stock pursuant to the Merger shall be a dollar amount equal to (i) $475,600,000, plus (ii) the Net Working Capital Adjustment (which may be a negative number), minus (iii) the amount of Closing Date Funded Indebtedness, minus (iv) the amount of any Seller Expenses, minus (v) the Transaction Incentive Award Closing Amount (the “Merger Consideration”).

(b) Estimated Merger Consideration. Attached hereto as Exhibit D is a statement prepared by the Company (the “Estimated Merger Consideration Statement”) consisting of a good faith estimate by the Company of (i) the Merger Consideration (the “Estimated Merger Consideration”) and (ii) a consolidated balance sheet of the Company and its Subsidiaries as of the opening of business on the Closing Date (the “Estimated Balance Sheet”) but without giving effect to the Closing, in the same form and including the same line items as the Recent Balance Sheet and prepared in accordance with GAAP Consistently Applied. The Estimated Merger Consideration and such balance sheet shall be determined by the Company based upon the Recent Financial Statements while taking into account changes in the Company’s financial position since the Recent Balance Sheet Date. In connection with determining the Estimated Merger Consideration, the Company shall (A) estimate the amount of the Net Working Capital Adjustment (the “Estimated Net Working Capital Adjustment”), (B) estimate the amount of Closing Date Funded Indebtedness (including the amount of Cash and Cash Equivalents as of the opening of business on the Closing Date), (C) estimate the Seller Expenses and (D) set forth the amounts of each of the Closing Date Payments (as defined below).

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(c) Closing Date Payments. On the Closing Date, contemporaneously with the filing of the Certificate of Merger, Parent shall make the following payments in cash on behalf of Parent (collectively, the “Closing Date Payments”):

(i) The Closing Date Bank Debt and Defaulted Funded Indebtedness shall be paid to the holders thereof on behalf of the Company as specified in each holder’s applicable payoff letter, by wire transfer of immediately available funds to such account or accounts as directed in the applicable payoff letter or as directed by the Company in writing to Parent;

(ii) The Surviving Corporation shall pay on the Closing Date any Seller Expenses not paid by the Company prior to the Closing;

(iii) The Surviving Corporation shall receive by wire transfer of immediately available funds, for further distribution to the holders of Transaction Incentive Awards, an amount equal to the Transaction Incentive Award Closing Amount as set forth in the Estimated Merger Consideration Statement;

(iv) The Adjustment Escrow Amount shall be deposited on behalf of Parent for the benefit of the Former Holders of Series A Preferred Stock and the holders of the Transaction Incentive Awards into a non-interest bearing escrow account (the “Escrow Account”), which shall be established pursuant to the Escrow Agreement;

(v) $200,000 shall be delivered to the Representative to cover costs and expenses incurred by the Representative in its capacity as the Representative (the “Expense Reserve”); and

(vi) Each Former Holder of Series A Preferred Stock shall receive by wire transfer of immediately available funds an amount equal to the Per Share Series A Preferred Closing Consideration for each share of Series A Preferred Stock owned by such Former Holder subject to and in accordance with Sections 2.8 and 2.9, in each case as set forth in the Estimated Merger Consideration Statement.

(d) Determination of the Final Merger Consideration.

(i) As soon as practicable, but no later than 60 days after the Closing Date, Parent shall prepare and deliver to the Representative a statement (the “Proposed Final Merger Consideration Statement”) consisting of (x) a consolidated balance sheet of the Surviving Corporation and its Subsidiaries as of the opening of business on the Closing Date but without giving effect to the Closing, in the same form and including the same line items as the Recent Balance Sheet and prepared in accordance with GAAP Consistently Applied (the “Closing Balance Sheet”) and (y) a proposed calculation in reasonable detail of the Merger Consideration (the “Proposed Final Merger Consideration”), which shall include a calculation of the proposed Net Working Capital Adjustment, the proposed Closing Date Funded Indebtedness (including the amount of Cash and Cash Equivalents as of the opening of business on the Closing Date) and the proposed Seller Expenses. During the 30-day period following the Representative’s receipt of the Proposed Final Merger Consideration Statement, the Representative and its accountants (which may be the Company’s current auditors or accounting consultants) shall, at the Representative’s expense, be permitted reasonable access to review the books and records (including, working papers, appropriate personnel and outside advisors) of Parent and Parent’s independent accountant relating to the Proposed Final Merger Consideration Statement as may be reasonably requested by the Representative.

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(ii) If the Representative does not give a written notice of dispute setting forth in reasonable detail the items and amounts in dispute (a “Merger Consideration Dispute Notice”) to Parent within 30 days after receiving the Proposed Final Merger Consideration Statement, the parties hereto agree that the Proposed Final Merger Consideration Statement shall become final, binding and conclusive upon the parties. If the Representative gives a Merger Consideration Dispute Notice to Parent (the items and amounts in dispute, the “Disputed Merger Consideration Items”) within such 30-day period, the Representative and Parent shall use reasonable efforts to resolve the Disputed Merger Consideration Items during the 30-day period commencing on the date Parent receives such Merger Consideration Dispute Notice. If the parties reach agreement with respect to any Disputed Merger Consideration Items within such 30-day period, Parent shall revise the Proposed Final Merger Consideration Statement to reflect such agreement, which shall be final, binding and conclusive upon the parties. If the Representative and Parent do not obtain a final written resolution of all Disputed Merger Consideration Items within such 30-day period, then the unresolved Disputed Merger Consideration Items (the “Unresolved Merger Consideration Items”) shall be submitted immediately to the New York, New York office of Deloitte (the “Accounting Firm”). The Accounting Firm shall be required to render a determination regarding the Unresolved Merger Consideration Items within 30 days after referral of the matter to the Accounting Firm, or as soon as practicable thereafter, which determination must be in accordance with the terms of this Agreement and in writing and must set forth, in reasonable detail, the basis therefor. The determination of the Accounting Firm shall be conclusive and binding upon the Representative, Parent and the other parties hereto absent manifest error, and judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced.

(iii) The Accounting Firm shall act as an expert and not as an arbitrator, shall make a determination only with respect to the Unresolved Merger Consideration Items and in a manner consistent with this Section 2.7 and the requirements of this Agreement, and in no event shall its determination of Unresolved Merger Consideration Items be for an amount outside the range of the parties’ disagreement. Each party shall use its reasonable best efforts to furnish to the Accounting Firm such work papers and other documents and information pertaining to the Unresolved Merger Consideration Items as the Accounting Firm may request. If possible, the Accounting Firm shall make its determination based solely on presentations by Parent and the Representative; provided, that if the Accounting Firm is unable to reach a conclusion on this basis, the Accounting Firm shall review such additional information provided by Parent and the Representative upon request of the Accounting Firm and perform such additional procedures as the Accounting Firm deems reasonably necessary. In the event Parent or the Representative does not comply with the procedural and time requirements contained herein or such other procedural or time requirements as required by the Accounting Firm or as Parent or the Representative otherwise elect in writing, the Accounting Firm shall render a decision based solely on the evidence it has which was timely submitted by such parties. The scope of the disputes to be arbitrated by the Accounting Firm is limited to those items or calculations specifically in dispute between Parent and the Representative; and the Accounting Firm is not to make any other determination, including whether the agreed upon dollar amount of the Reference Amount is correct or appropriate.

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(iv) Parent shall revise the Proposed Final Merger Consideration Statement to reflect the determination of the Accounting Firm pursuant to Section 2.7(d)(ii). The “Final Merger Consideration” shall mean the Proposed Final Merger Consideration as finally revised pursuant to this Section 2.7(d).

(v) The fees and expenses of the Accounting Firm shall be borne in the same proportion as the aggregate dollar amount of the Unresolved Merger Consideration Items that are unsuccessfully disputed by each party (as finally determined by the Accounting Firm) bears to the aggregate dollar amount of all of the Unresolved Merger Consideration Items submitted to the Accounting Firm.

(vi) Until the Final Merger Consideration is determined, each of Parent and the Surviving Corporation shall, and shall cause its respective Subsidiaries to, provide to the Representative and its accountants (which may be the Company’s current auditors or accounting consultants) and other representatives, at the Representative’s expense, reasonable access to review the books and records (including, working papers) and access to employees relating to the Proposed Final Merger Consideration Statement as may be reasonably requested by the Representative.

(e) Post-Closing Final Merger Consideration Payment. No later than three Business Days after the date on which the Final Merger Consideration is finally determined pursuant to Section 2.7(d):

(i) if the Final Merger Consideration exceeds the Estimated Merger Consideration, Parent shall pay the amount by which the Final Merger Consideration exceeds the Estimated Merger Consideration to the Former Holders of Series A Preferred Stock and the holders of Transaction Incentive Awards in accordance with their respective Distribution Percentages; or

(ii) if the Estimated Merger Consideration exceeds the Final Merger Consideration, then the Stockholders shall cause to be paid to Parent an amount equal to the amount by which the Estimated Merger Consideration exceeds the Final Merger Consideration. Such payment shall be distributed to Parent solely from the Adjustment Escrow Amount pursuant to the Escrow Agreement, and Parent shall have no recourse against the Representative, the Stockholders or holders of Transaction Incentive Awards in respect of such payment. Subject to Section 7.3(d), any Adjustment Escrow Amount remaining in the Escrow Account after such distribution shall be distributed to the Former Holders of Series A Preferred Stock and the holders of Transaction Incentive Awards in accordance with their respective Distribution Percentages, in each case in accordance with the Escrow Agreement.

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(f) Any amounts paid or distributed pursuant to this Agreement that are attributable to the Transaction Incentive Awards, including any amounts distributed from the Escrow Account or paid pursuant to this Section 2.7, shall be paid to the Surviving Corporation based on their Distribution Percentages of such amount. The Surviving Corporation shall in turn pay to the applicable holders of Transaction Incentive Awards as of the Closing Date his or her pro rata portion of any such (i) Transaction Incentive Award Closing Amount (less any applicable deductions or withholding Taxes applicable to payments to such holder), in accordance with the terms of the applicable Transaction Incentive Award, as promptly as practicable thereafter, but in no event later than 15 days following the receipt thereof, through the Surviving Corporation’s payroll system; and (ii) Transaction Incentive Award Distribution Amount (less any applicable deductions or withholding Taxes applicable to payments to such holder), in accordance with the terms of the applicable Transaction Incentive Award, through the Surviving Corporation’s payroll system.

Section 2.8. Conversion or Cancellation of Shares.

(a) Conversion of Company Stock. As of the Effective Time, by virtue of the Merger, and without any action on the part of any holder thereof or any party hereto, each share of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (other than shares held in the Company’s treasury or by any of its Subsidiaries) shall be canceled and converted into the right to receive the Per Share Series A Preferred Closing Consideration and, with respect to any future Distributions, the applicable Distribution Per Share Amount payable, in cash to the holders thereof, without interest thereon, upon surrender of the Certificate formerly representing such share, all in accordance with Section 2.7 and Section 2.9 and shall otherwise cease to exist.

(b) Cancellation of Company Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of any holder thereof or any party hereto:

(i) each share of Common Stock issued and outstanding immediately prior to the Effective Time shall be canceled without any consideration therefor and shall otherwise cease to exist;

(ii) each share of Series B-1 Preferred Stock issued and outstanding immediately prior to the Effective Time shall be canceled without any consideration therefor and shall otherwise cease to exist; and

(iii) each share of Series B-2 Preferred Stock issued and outstanding immediately prior to the Effective time shall be canceled without any consideration therefor and shall otherwise cease to exist.

(c) Withholding. Parent or the Surviving Corporation shall be entitled to deduct and withhold from the applicable Closing Date Payments and any Distributions otherwise payable pursuant to this Agreement to any Former Holder in respect of their Company Stock such amount as Parent or the Surviving Corporation is required to deduct and withhold with respect to such payment under the Code, or any provision of applicable state, local or foreign Law; provided, that (except with respect to any Transaction Incentive Awards) Parent or the Surviving Corporation, as the case may be, shall notify the Representative of any intention to so deduct and withhold, and the legal basis therefor prior to the Closing. To the extent that amounts are so withheld or deducted and timely paid by Parent or the Surviving Corporation, as applicable, to the applicable Governmental Authority, such withheld or deducted amounts shall be treated for all purposes of this Agreement as having been paid to the Former Holder or holder of Transaction Incentive Awards in respect of which such deduction or withholding was made. For the avoidance of doubt, any amounts payable pursuant to this Agreement to holders of Transaction Incentive Awards that are considered compensatory for Tax purposes shall be processed and paid through the payroll system of the Surviving Corporation as described in Section 2.7(f).

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(d) Treasury Shares. Each share of Company Stock held in the treasury of the Company or by any Subsidiary of the Company immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holders thereof, be canceled, retired and cease to exist as of the Effective Time and no payment shall be made with respect thereto.

(e) Newco Shares. As of the Effective Time, each share of capital stock of Newco issued and outstanding immediately prior to the Effective Time shall, without any action on the part of Newco, be converted into one share of common stock of the Surviving Corporation.

(f) Holders of Certificates. From and after the Effective Time, the holders of Certificates (other than Certificates representing Dissenting Shares) shall cease to have any rights with respect to such Certificates, except the right to receive the applicable Closing Date Payments and the Distribution Amount (if any) with respect to each of the shares represented thereby in accordance with Section 2.8 and Section 2.9.

(g) Options. The Company’s 2007 Equity Incentive Plan and all options issued pursuant thereto shall be terminated as of the Effective Time and no payment shall be made with respect thereto.

Section 2.9. Exchange of Certificates.

(a) Upon (i) with respect to each Signing Stockholder, delivery of the items set forth in Sections 2.11(b)(i), (ii) and (iii) or (ii) with respect to each Former Holder, other than the Signing Stockholders, surrender of any Certificates (other than Certificates representing Dissenting Shares), together with a duly executed letter of transmittal in the form attached as Exhibit E hereto (a “Letter of Transmittal”) and a duly executed Support Agreement to Parent or the Surviving Corporation, then, in each such case, the holder of each Certificate shall receive from the Surviving Corporation and/or Parent in exchange for each share of Company Stock evidenced thereby, the applicable Closing Date Payment to which such holder is entitled pursuant to Section 2.7 and Section 2.8 in respect of its shares of Company Stock, in the form of cash by wire transfer of immediately available funds (or by check if so indicated by any such holder in his or her Letter of Transmittal). Each Certificate surrendered in accordance with the provision of this Section 2.9 shall be canceled; provided that, notwithstanding the cancellation of such Certificate, the Former Holder shall remain entitled to receive, for each share of Company Stock evidenced thereby, the applicable Closing Date Payment and any applicable Distribution Per Share Amount. If payment or delivery is to be made to a Person other than the Person in whose name a Certificate so surrendered is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer, that the signatures on the certificate or any related stock power shall be properly guaranteed and that the Person requesting such payment either pay any transfer or other Taxes required by reason of the payment to a Person other than the registered holder of the Certificate so surrendered or establish to the satisfaction of the Surviving Corporation that such Tax has been paid or is not applicable. Until surrendered in accordance with the provisions of this Section 2.9, each Certificate (other than Certificates canceled pursuant to Section 2.8(b) and Certificates representing Dissenting Shares) shall represent for all purposes only the right to receive the applicable Closing Date Payment and any applicable Distribution Per Share Amount (if any), in the form provided for by this Agreement, without interest.

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(b) In the event that any Certificate (other than any Certificate representing Dissenting Shares) shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact and indemnity by the registered holder of such lost, stolen or destroyed Certificate in form and substance reasonably acceptable to the Company (if such affidavit is accepted before the Effective Time) or the Surviving Corporation (if such affidavit is accepted after the Effective Time), the Surviving Corporation will deliver in exchange for such lost, stolen or destroyed Certificate the applicable Closing Date Payment and any applicable Distribution Per Share Amount in respect thereof in the manner set forth in Section 2.7 and Section 2.8.

(c) If Certificates are not surrendered prior to the date that is two (2) years after the Effective Time (or such earlier date, immediately prior to such time when the amounts would otherwise escheat to or become property of any Governmental Authority), unclaimed amounts (including interest thereon) of the Closing Date Payments and any Distributions, as applicable, shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation and may be commingled with the general funds of the Surviving Corporation, free and clear of all claims or interest of any Person previously entitled thereto. Notwithstanding the foregoing, any Stockholders who have not theretofore complied with the provisions of this Section 2.9 shall thereafter look only to the Surviving Corporation or Parent, as applicable, and only as general creditors thereof for payment for their claims in the form and amounts to which such Stockholders are entitled.

(d) After the Effective Time, there shall be no transfers on the stock transfer books of the Surviving Corporation of the shares of Company Stock that were outstanding immediately prior to the Effective Time. Subject to Section 2.9(c), if, after the Effective Time, Certificates (other than Certificates representing Dissenting Shares) are presented to the Surviving Corporation, they shall be canceled and exchanged for the consideration as provided for, and in accordance with, the provisions of this Agreement.

Section 2.10. Dissenting Shares. Each share of Company Stock issued and outstanding immediately prior to the Effective Time held by Stockholders who shall have properly exercised their appraisal rights with respect thereto under Section 262 of the DGCL (“Dissenting Shares”) shall not be converted into the right to receive the applicable form of consideration pursuant to the Merger, but shall be entitled to receive payment of the fair value of such shares in accordance with the provisions of Section 262 of the DGCL, except that each Dissenting Share held by a Stockholder who shall thereafter withdraw his or her demand for appraisal or shall fail to perfect or otherwise waive or lose his or her right to such payment as provided in such Section 262 shall be deemed to be converted, as of the Effective Time, into the right to receive the applicable consideration in the form such Stockholder otherwise would have been entitled to receive as a result of the Merger in accordance with this Agreement. The Company will enforce any contractual waivers that Stockholders have granted regarding appraisal rights that would apply to the Merger.

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Section 2.11. Closing.

(a) The closing of the transactions contemplated hereby (the “Closing”) shall take place concurrently with the execution of this Agreement on the date hereof and shall be effective as of the Effective Time. The time and date of the Closing is herein called the “Closing Date.” The Closing shall be held by the remote exchange of documents unless another method or place is agreed to in writing by the Company and Parent.

(b) At or prior to the Closing, the Company shall deliver to Parent the following documents:

(i) this Agreement, duly executed by the Company, the Signing Stockholders and the Representative;

(ii) the Certificates held by the Signing Stockholders accompanied by executed stock powers or other instruments of transfer;

(iii) a Support Agreement, duly executed by each Signing Stockholder and the Company;

(iv) resignations of all officers, directors and managers of the Company and its Subsidiaries;

(v) copies of each consent, waiver, authorization and approval set forth on Schedule 2.10(b)(v);

(vi) copies of the (x) written consent of the stockholders of the Company voting in favor of the adoption of this Agreement and approval of the transactions contemplated by this Agreement (the “Written Consent”), which consent shall constitute approval of this Agreement by the requisite percentage of stockholders for purposes of the DGCL and pursuant to the Certificate of Incorporation and Shareholders Agreement; and (y) written consent or resolutions of the Board of Directors of the Company approving this Agreement and the transactions contemplated hereby, each certified to be true, complete, correct and in full force and effect by the Secretary of the Company;

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(vii) Certificates of Good Standing of the Company and each Subsidiary issued by the Secretary of State of its state of organization and each state where such entity is qualified to do business in such state, each dated within five (5) calendar days of the Closing;

(viii) copies of (x) the certified certificate of incorporation or articles of incorporation, as applicable, of the Company and each of its Subsidiaries, including all amendments thereto, and (ix) the bylaws or operating agreement, as applicable, of the Company and each of its Subsidiaries, including all amendments thereto, each certified to be true, complete, correct and in full force and effect by the Secretary of the Company;

(ix) evidence that all of the arrangements required to be disclosed on Section 3.19 of the Schedules, including all Transaction Incentive Awards, the Shareholders Agreement, the Company’s Amended and Restated Registration Rights Agreement and the Company’s 2007 Equity Incentive Plan and all options and other equity grants issued pursuant thereto, have been terminated with no Liability to Parent or the Surviving Corporation;

(x) if applicable, evidence reasonably satisfactory to Parent that any payments or benefits that constitute, separately or in the aggregate, a payment referred to in Code Section 280G(b)(2), to the extent such payments would also constitute “excess parachute payments” under Code Section 280G(b)(1) shall be exempt from Code Section 280G(a) under Code Section 280G(b)(5)(B), or, in the absence of such evidence, each Person who would otherwise have been entitled to any such payments or benefits shall have duly executed and delivered to Parent a waiver of all payments or benefits that may result in any “excess parachute payments” under Code Section 280G, in form and substance reasonably satisfactory to Parent;

(xi) a certificate, in the form and substance required under Treasury Regulation §1.897-2(h), so that Parent is exempt from withholding any portion of the Merger Consideration pursuant to Treasury Regulation §1.1445-2; provided, however, that Parent’s only recourse for the Company’s failure to provide such certificate or any defect in such certificate shall be the ability to withhold tax from the Merger Consideration as required by applicable Law;

(xii) a direction letter directing payment of the Closing Date Bank Debt, Defaulted Funded Indebtedness and the Seller Expenses, including setting forth the amount of the Closing Date Bank Debt, Defaulted Funded Indebtedness and the Seller Expenses and the parties to which such amounts are payable;

(xiii) payoff letters for each instrument evidencing all outstanding Defaulted Funded Indebtedness from the obligees thereunder setting forth the amounts necessary to pay off all such Defaulted Funded Indebtedness under such instrument as of the Closing Date along with the per diem interest amount with respect thereto, and evidence reasonably satisfactory to Parent of the release of, or commitment to release upon receipt of payment, all Liens on the Company's assets and UCC financing statements related thereto; and

(xiv) the Escrow Agreement, duly executed on behalf of the escrow agent and the Representative.

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(c) At or prior to the Closing, Parent shall deliver to the Representative the following documents:

(i) this Agreement, duly executed by Parent and Newco;

(ii) copies of the (x) written consent or resolutions of the Board of Directors of Newco approving this Agreement and the transactions contemplated hereby; and (y) written consent or resolutions of the Board of Directors of Parent approving this Agreement and the transactions contemplated hereby, each certified to be true, complete, correct and in full force and effect by the Secretary of Parent;

(iii) a copy of the “buyer’s” representations and warranties insurance policy from VALE Insurance Partners, LLC (the “R&W Insurance Policy”), substantially in the form attached hereto as Exhibit F, insuring Parent and the Surviving Corporation for Losses due to breaches of representations and warranties under Article III and Article V having a coverage limit of not less than $46,500,000; and

(iv) Escrow Agreement, duly executed on behalf of Parent and dated as of the Closing Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Newco as of the Closing Date as follows:

Section 3.1. Organization and Qualification. Each of the Company and its Subsidiaries is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization specified in Section 3.1(a) of the Schedules and has all requisite power and authority necessary to own or lease its property and assets and to carry on its business as presently conducted, and is duly qualified to do business and in good standing as a foreign corporation or limited liability company, as applicable, and is in good standing in each jurisdiction wherein the nature of its business or the ownership of its assets makes such qualification necessary, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole, each such jurisdiction set forth in Section 3.1(b) of the Schedules. The Company has made available to Parent and Newco in the Data Room true and complete copies of (i) its Certificate of Incorporation and all amendments thereto or restatements thereof, (ii) its bylaws as currently in effect and (iii) true and complete copies of the certificate or articles of incorporation and bylaws (or equivalent organizational documents), as currently in effect, of each Subsidiary.

Section 3.2. Authorization. The Company has the corporate power and authority to execute and deliver this Agreement and each other Merger Document to which the Company is a party and to perform its obligations hereunder and thereunder, all of which have been duly authorized by all requisite corporate action (including any required stockholder approvals) and no other corporate or stockholder action on the part of the Company or its stockholders is necessary to authorize the execution, delivery and performance of this Agreement and each other Merger Document by the Company and the consummation by the Company of the Merger and the other transactions contemplated hereby and thereby. This Agreement and each other Merger Document to which the Company is a party has been duly authorized, executed and delivered by the Company and, assuming that this Agreement has been duly and validly authorized, executed and delivered by Parent and Newco, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Laws from time to time in effect relating to creditors’ rights and remedies generally and general principles of equity.

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Section 3.3. Non-contravention. Except as set forth in Section 3.3 of the Schedules, neither the execution and delivery of this Agreement or any other Merger Document, the consummation of the Merger and the other transactions contemplated hereby or thereby nor the fulfillment of and the performance by the Company of its obligations hereunder or thereunder will (i) contravene any provision contained in the Company’s Certificate of Incorporation or bylaws, the organizational documents of the Company’s Subsidiaries, (ii) conflict with, violate or result in a breach (with or without the lapse of time, the giving of notice or both) of, or constitute a default (with or without the lapse of time, the giving of notice or both) under (A) any Material Contract, license, permit or other instrument or obligation or (B) assuming satisfaction of the requirements set forth in Section 3.4 below, any judgment, Law or other restriction of any Governmental Authority, in each case to which the Company or any of its Subsidiaries is a party or by which any of them is bound or to which any of their respective assets or properties are subject, (iii) except as set forth in Section 3.3 of the Schedules, result in the acceleration of, or permit any Person to terminate, modify, cancel, accelerate or declare due and payable prior to its stated maturity, any obligation of the Company or any of its Subsidiaries under any Material Contract or (iv) result in the imposition of any Lien on the assets of the Company or any of its Subsidiaries (with or without the lapse of time, the giving of notice or both).

Section 3.4. Consents. No notice to, filing with, or authorization, registration, consent or approval of any Governmental Authority is necessary for the execution, delivery or performance of this Agreement, the other Merger Documents to which the Company is a party or the consummation of the transactions contemplated hereby or thereby by the Company, except for (i) filing and recordation of appropriate Merger Documents as required by the DGCL and (ii) any filings and approvals set forth in Section 3.4 of the Schedules. Based on the amount of Funded Indebtedness and the aggregate accrued preferred dividends on the Series A Preferred Stock as of immediately prior to the Closing, the “size of transaction” as used in the HSR Act will be less than $80,800,000.

Section 3.5. Capitalization; Subsidiaries.

(a) The Company’s authorized capital stock consists solely of (i) 880,000 authorized shares of Common Stock, 625,000 shares of which are presently issued and outstanding, (ii) 1,190,000 authorized shares of Series A Preferred Stock, 768,072.29 shares of which are presently issued and outstanding and (iii) 12,000,000 authorized shares of Series B-1 Preferred Stock, 11,582,030 shares of which are presently issued and outstanding and (iv) 3,500,000 authorized shares of Series B-2 Preferred Stock, 2,901,493 shares of which are presently issued and outstanding, which shares are held of record by the Persons set forth in Section 3.5(a) of the Schedules in the amounts set forth opposite such Person’s name. Except as set forth in this Section 3.5(a) or in Section 3.5(a) of the Schedules, the Company does not have (A) any shares of Company Stock reserved for issuance, (B) any shares of common stock, preferred stock, equity interests or other voting securities issued or outstanding, and there are no preemptive or other outstanding rights, subscriptions, options, warrants, stock appreciation rights, phantom equity or similar rights, redemption rights, repurchase rights, convertible, exercisable or exchangeable securities, or other Contracts, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other ownership interest in the Company or any other securities or obligations convertible or exchangeable into or exercisable for, or giving any Person, directly or indirectly (whether with or without the occurrence of any contingency), a right to subscribe for or acquire, any securities or other equity interests of the Company, and no securities or other equity interests evidencing such rights are authorized, issued or outstanding, (C) voting trusts, proxies or other agreements among the Company’s stockholders with respect to the voting or transfer of the Company’s capital stock or governance of the Company, or (D) outstanding obligations of the Company or any of the its Subsidiaries to repurchase, redeem or otherwise acquire or retire any capital stock of the Company. All of the issued and outstanding shares of capital stock of the Company have been duly authorized, validly issued, are fully paid and are non-assessable, none of such shares were issued in violation of any preemptive or similar rights and all of them were issued in compliance with applicable federal and state securities Laws. The aggregate accrued preferred dividends on the Series A Preferred Stock as of immediately prior to the Closing is $87,837,604.

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(b) All Subsidiaries of the Company are listed in Section 3.5(b) of the Schedules. All of the outstanding capital stock of, or other ownership interests in, each Subsidiary of the Company is owned beneficially and of record as set forth in Section 3.5(b) of the Schedules, is validly issued, fully paid and non-assessable and free and clear of any Liens. Except as set forth in Section 3.5(b) of the Schedules, there are no (i) shares of capital stock or other equity interests of the Company’s Subsidiaries reserved for issuance, (ii) shares of common stock, preferred stock, equity interests or other voting securities issued or outstanding, any preemptive or other outstanding rights, subscriptions, options, warrants, stock appreciation rights, phantom equity or similar rights, redemption rights, repurchase rights, convertible, exercisable or exchangeable securities, or other Contracts, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock or other ownership interest in the Company’s Subsidiaries or any other securities or obligations convertible or exchangeable into or exercisable for, or giving any Person, directly or indirectly (whether with or without the occurrence of any contingency), a right to subscribe for or acquire, any securities or other equity interests of the Company’s Subsidiaries, nor any securities or other equity interests evidencing such rights are authorized, issued or outstanding, (iii) voting trusts, proxies or other agreements among the Company’s Subsidiaries’ stockholders or members with respect to the voting or transfer of the Company’s Subsidiaries’ capital stock or other ownership interest or governance of a Subsidiary, or (iv) outstanding obligations of the Company or any of the Company’s Subsidiaries to repurchase, redeem or otherwise acquire or retire any outstanding shares of capital stock or other ownership interests in any Subsidiary. All of the issued and outstanding shares of capital stock or other ownership interest of each of the Company’s Subsidiaries have been duly authorized and validly issued, and are fully paid and non-assessable, none of such shares or ownership interest were issued in violation of any preemptive or similar rights and all of them were issued in compliance with applicable federal and state securities Laws.

Section 3.6. Financial Statements; Undisclosed Liabilities.

(a) Each of the financial statements of the Company listed in Section 3.6(a) of the Schedules (the “Financial Statements”) present fairly and accurately, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as of the respective dates or for the respective periods set forth therein, have been prepared in all material respects in accordance GAAP during the periods involved, except as set forth on Section 3.6(a) of the Schedules, and subject, in the case of the Recent Financial Statements, to the absence of footnotes and to normal year-end adjustments (none of which will be material, individually or in the aggregate). The Financial Statements have been prepared based on the books and records of the Company.

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(b) Neither the Company nor any of its Subsidiaries has any material Liabilities or Funded Indebtedness, except (i) Liabilities and Funded Indebtedness that are accrued, reserved against or reflected in the Recent Balance Sheet (and not in the notes thereto), (ii) Liabilities which have arisen since the Recent Balance Sheet Date that were incurred in the Ordinary Course of Business (none of which results from, arises out of, relates to, is in the nature of or was caused by any breach of Contract, breach of warranty, tort, infringement or violation of Law), all of which are reflected in the Estimated Balance Sheet, or (iii) Liabilities otherwise disclosed in Section 3.6(b) of the Schedules or within any dollar threshold contained in any other representation in this Agreement.

(c) The Company and its Subsidiaries maintain a system of internal accounting controls designed to provide reasonable assurance that (i) all material information concerning the Company and its Subsidiaries is made known on a timely basis to the individuals responsible for the preparation of the Financial Statements, (ii) transactions have been recorded as necessary to permit the preparation of the Financial Statements in conformity with GAAP in all material respects and (iii) transactions are executed with management's authorization and (iv) prevention or timely detection of unauthorized acquisition, use, or disposition of material assets. Neither the Company nor, to the Company’s Knowledge, the Company’s independent accountants, have, since December 31, 2015, identified or been made aware of (x) any significant deficiency or material weakness in the design or operation of internal control over financial reporting utilized by the Company or any of its Subsidiaries, (y) any illegal act or fraud, whether or not material, that involves the management of the Company or any of its Subsidiaries, or (z) any claim or allegation regarding any of the foregoing.

Section 3.7. Absence of Certain Developments. Since December 31, 2016, (i) there has not been any Material Adverse Effect and (ii) the Company has conducted its business in the ordinary and usual course consistent with past practices. Except as set forth in Section 3.7 of the Schedules or as otherwise contemplated by this Agreement, since the Recent Balance Sheet Date through the Closing Date, there has not occurred any of the following with respect to the Company or any of its Subsidiaries:

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(a) amendment to its Certificate of Incorporation, Articles of Incorporation, bylaws, operating agreement or other organizational documents;

(b) incurrence of any Funded Indebtedness or mortgage, pledge or imposition of any Lien;

(c) loans or advances to, guarantees for the benefit of, or any investments in, any Person;

(d) cancellation, waiver, release, settlement, assignment or compromise of any debts or any claims or rights of material value;

(e) merger or consolidation with, or purchase of material assets of, or other acquisition of the business of, any Person outside the Ordinary Course of Business;

(f) damage or destruction affecting a material portion of its assets or properties;

(g) sale, transfer, lease or other disposition of any material assets other than in the Ordinary Course of Business;

(h) complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization, or adoption of a plan therefor;

(i) change of its fiscal year or of its accounting policies, procedures or methodologies;

(j) except in the Ordinary Course of Business, (i) acceleration of sales into a current period or deferral of any sales into a future period, (ii) delay or postponement of the repair or maintenance of any properties or assets, or (iii) variance in any inventory purchase practices in any material respect from past practices;

(k) issuance of any capital stock or other ownership interests or issuance or becoming a party to any subscriptions, warrants, rights, options, convertible securities or other agreements or commitments of any character relating to its issued or unissued capital stock or its other equity securities, if any, or grant any stock appreciation or similar rights;

(l) declaration or payment of any dividend or making of any other distribution to its stockholders or members in respect of its capital stock or other ownership interests or redeem, repurchase or otherwise reacquire any shares of its capital stock or other ownership interests;

(m) made, revoked or changed any material Tax election, filed any material amended Tax Return, entered into any closing agreement, or settled any material Tax claim or assessment;

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(n) except for normal increases in the Ordinary Course of Business, increase in the compensation or benefits payable to any officers, directors or employees;

(o) grant of rights to severance or termination pay to, or entrance into any employment, consulting or severance agreement with, any current or former officers, directors, employees or independent contractor;

(p) establishment, entrance into, or amendment, modification or termination of, any Employee Benefit Plans, except as required by applicable Law, in connection with the renewal of any insurance contract or as required by the terms of any Employee Benefit Plan or collective bargaining agreement;

(q) except as set forth in the Company’s 2017 budget for capital expenditures (as amended or supplemented through the date hereof), incurrence of any single capital expenditure in excess of $200,000; or

(r) agreement or commitment to do any of the foregoing.

Section 3.8. Compliance with Law; Governmental Authorizations; Licenses; Etc.

(a) Except as set forth in Section 3.8(a)(i) of the Schedules, each of the Company and its Subsidiaries, and the business of the Company and its Subsidiaries, are, and during the previous five (5) years have been, in material compliance with all applicable Laws, except for any such non-compliance that has been resolved. Except as set forth on Section 3.8(a)(ii) of the Schedules, neither the Company nor any of its Subsidiaries has received, at any time during the previous five (5) years, any written notice from any Governmental Authority alleging any actual, alleged, or potential violation of, or failure to comply with, any term or requirement of any Law, in each case which is pending and unresolved.

(b) Neither the Company, any of its Subsidiaries, nor any of their respective directors, officers, employees, agents, distributors, affiliates, representatives or any other Person, in each case acting on behalf of the Company or one of its Subsidiaries, has directly or indirectly made any bribes, rebates, payoffs, influence payments, kickbacks, illegal payments, illegal political contributions, or other payments, in the form of cash, gifts, or otherwise, or taken any other action, in violation of the Foreign Corrupt Practices Act of 1977.

(c) Except as set forth in Section 3.8(b)(i) of the Schedules, each of the Company and its Subsidiaries has all material permits, licenses, approvals, certificates and other authorizations, and has made all notifications, registrations, certifications and filings with all Governmental Authorities required by applicable Law for the operation of its business as currently conducted in all material respects. Section 3.8(c)(ii) of the Schedules sets forth a true and correct list of all material permits, licenses, approvals, certificates, other authorizations, notifications, registrations, certifications and filings owned or possessed by the Company and its Subsidiaries. Except as set forth in Section 3.8(c)(iii) of the Schedules, the consummation of the Merger and the transactions contemplated hereby shall not interrupt or give any Governmental Authority the right to modify, terminate or interrupt the continuation of any such permits, licenses, approvals, certificates, other authorizations, notifications, registrations, certifications and filings or the conduct of the business of the Company and its Subsidiaries. Except as set forth in Section 3.8(c)(iv) of the Schedules, the Company and its Subsidiaries is in material compliance with all terms, conditions and requirements of all such permits, licenses, approvals, certificates, other authorizations, notifications, registrations, certifications and filings, and no Action is pending or, to the Knowledge of the Company, threatened, relating to the revocation or limitation thereof.

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Section 3.9. Litigation. Except as set forth in Section 3.9 of the Schedules, (a) there is no Action pending or, to the Company’s Knowledge, threatened, against the Company or its Subsidiaries or affecting any of their assets or properties, (b) in the previous five (5) years, neither the Company nor any of its Subsidiaries has been a party to any Action which is no longer pending and which required any payment by the Company or any of its Subsidiaries in excess of $50,000, (c) neither the Company nor any of its Subsidiaries nor any of their assets or properties is subject to any Order and (d) there are no settlements to which the Company or any of its Subsidiaries is a party or by which any of their assets or properties are bound. The Company is not a party to any Action or threatened Action which would reasonably be expected to affect or prohibit the consummation of the transactions contemplated hereby.

Section 3.10. Taxes Except as set forth on Section 3.10 of the Schedules:

(a) Each of the Company and its Subsidiaries has duly and timely (taking into account applicable extensions) filed all Tax Returns required to be filed by it. Each such Tax Return has been prepared in compliance with all applicable Laws and is complete and correct and correctly reflects the taxable income or loss (or other measure of Tax) of the Company and its Subsidiaries. There are not now any extensions of time in effect with respect to the dates on which any Tax Returns of the Company or any Subsidiary were or are due to be filed. Neither the Company nor any of its Subsidiaries have incurred any Liability for Taxes outside the Ordinary Course of Business or otherwise inconsistent with past custom and practice.

(b) All Taxes owed by each of the Company and its Subsidiaries (whether or not shown as due and owing by the Company or its Subsidiaries on any Tax Returns) have been timely paid in full. The accrual for Taxes on the Recent Balance Sheet, as adjusted for the passage of time through the Closing Date in accordance with past practice, will be adequate to pay all unpaid Taxes of the Company and its Subsidiaries through the Closing Date.

(c) No federal, state, local, or non-U.S. tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to Company or any of its Subsidiaries. Neither Company nor any of its Subsidiaries has received from any federal, state, local, or non-U.S. taxing authority (including jurisdictions where Company or its Subsidiaries have not filed Tax Returns) any (i) written notice indicating an intent to open an audit or (ii) written notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any Governmental Authority against Company or any of its Subsidiaries. The Company has delivered, or otherwise made available, to Parent correct and complete copies of all federal income Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by Company or any of its Subsidiaries filed or received since December 31, 2013.

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(d) Each of the Company and its Subsidiaries have withheld, collected and paid all Taxes required to have been withheld, collected and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder or other third party, or is properly holding for such payment, all Taxes required by Law to be withheld or collected.

(e) Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of Taxes or consented to extend the time, or is the beneficiary of any extension of time, in which any Tax may be assessed or collected by any Governmental Authority.

(f) No Governmental Authority with which the Company does not file Tax Returns has asserted in writing that the Company is or may be required to pay Taxes to or file Tax Returns with that Governmental Authority.

(g) Except to the extent referred to in Section 2.11(x), neither Company nor any of its Subsidiaries is a party to any Contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (i) any ‘‘excess parachute payment’’ within the meaning of Code Section 280G (or any corresponding provision of state, local, or non-U.S. Tax law) or (ii) any amount that will not be fully deductible as a result of Code Section 162(m) (or any corresponding provision of state, local, or non-U.S. Tax law). Neither Company nor any of its Subsidiaries has been a United States real property holding corporation within the meaning of Code Section 897(c)(2) during the applicable period specified in Code Section 897(c)(1)(A)(ii).

(h) Neither Company nor any of its Subsidiaries is a party to or bound by any Tax allocation or sharing agreement. Neither Company nor any of its Subsidiaries (i) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which was Target) or (ii) has any Liability for the Taxes of any Person (other than Company or any of its Subsidiaries) under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local, or non-U.S. law), as a transferee or successor, by contract, or otherwise.

(i) Neither Company nor any of its Subsidiaries will be required to include any material item of income in, or exclude any material item of deduction from, taxable income for any taxable period (or portion thereof) ending on or after the Closing Date as a result of any:

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

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

(iii) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law) executed on or prior to the Closing Date;

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(iv) intercompany transaction or excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local, or non-U.S. income Tax law);

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

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

(vii) election under Code §108(i).

(j) Within the past three (3) years, neither the Company nor any of its Subsidiaries has distributed stock of another Person, or had its stock distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Section 355 of the Code

(k) Neither the Company nor any of its Subsidiaries is party to any “closing agreement” as described in Section 7121 of the Code (or any comparable provision or state or local Law). Neither the Company nor any of its Subsidiaries has received any letter ruling from the Internal Revenue Service (or any comparable ruling from any other Governmental Authority).

(l) Neither the Company nor any of its Subsidiaries has engaged in any “listed transaction” as defined in Treasury Regulations Section 1.6011-4.

(m) Neither Company nor any of its Subsidiaries (i) is a “controlled foreign corporation” as defined in Code Section 957, (ii) is a “passive foreign investment company” within the meaning of Code Section 1297, or (iii) has a permanent establishment (within the meaning of an applicable Tax treaty) or otherwise has an office or fixed place of business in a country other than the country in which it is organized.

Section 3.11. Environmental Matters.

(a) Except as set forth in Section 3.11 of the Schedules, the Company and its Subsidiaries are, and for the past five (5) years have been, in material compliance with all Environmental Laws, and have and are in material compliance with all permits required by Environmental Laws for the operation of their businesses as currently conducted, except for any failures to so comply or to have such permits that have been resolved.

(b) Except as set forth in Section 3.11 of the Schedules, the Company and its Subsidiaries have not received any written notice from any Governmental Authority or other Person regarding any actual or alleged material violation of Environmental Laws, or any material Liabilities or potential material Liabilities for personal injury, property damage or investigatory or cleanup obligations arising under Environmental Laws (including in connection with the release, disposal of or arrangement for disposal of any Hazardous Substance), in the last five (5) years, except for violations or Liabilities that have been resolved. Except as set forth in Section 3.11 of the Schedules, no material capital expenditures by the Company or any of its Subsidiaries will be required to establish or maintain compliance with any applicable Environmental Laws.

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(c) Except as set forth in Section 3.11 of the Schedules, there are no material Actions by or before any Governmental Authority or material Orders in effect, pending or, to the Company’s Knowledge, threatened, against the Company or any Subsidiary regarding compliance with or liability under Environmental Laws.

(d) Except as set forth in Section 3.11 of the Schedules, neither the Company nor its Subsidiaries has spilled, leaked or otherwise released any Hazardous Substance in material violation of Environmental Law, except for any such releases that have been resolved or would not reasonably be expected to result in the Company incurring material Liability. Except as set forth in Section 3.11 of the Schedules, no previous owner or tenant of the Property has spilled, disposed, discharged, emitted or released any Hazardous Materials into, upon or from any Property or into or upon the soil, ground or surface water thereof in violation of Environmental Law that would reasonably be expected to require remediation pursuant to Environmental Law, except for any such releases that have been resolved or would not reasonably be expected to result in the Company incurring material Liability.

(e) Except as set forth in Section 3.11 of the Schedules, neither the Company nor its Subsidiaries has assumed by Contract or operation of Law any material liability of any other Person pursuant to Environmental Law. Except as set forth in Section 3.11 of the Schedules, neither the Company nor its Subsidiaries has entered into any agreement with any Governmental Authority relating to any environmental matter or any environmental or Hazardous Materials cleanup (other than any environmental permits), which would reasonably be expected to result in the Company incurring a material Liability.

Section 3.12. Employee Matters.

(a) Except as set forth in Section 3.12(a) of the Schedules, (i) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreements with respect to its employees, (ii) none of the employees of the Company or any of its Subsidiaries are represented by a labor union with respect to their employment by the Company or any of its Subsidiaries, (iii) there is no labor strike or work stoppage or slowdown or lockout pending or, to the Company’s Knowledge, threatened against or by the Company or any of its Subsidiaries and during the past five (5) years there has been no such action, (iv) to the Company’s Knowledge, no union organization campaign is in progress against the Company or any of its Subsidiaries with respect to any of the employees of the Company or any of its Subsidiaries, (iv) there is no unfair labor practice charge or complaint pending or, to the Knowledge of the Company, threatened, against the Company or any of its Subsidiaries, (v) there is no charge against the Company or any of its Subsidiaries pending before or continuing obligations of the Company or any of its Subsidiaries pertaining to the Equal Employment Opportunity Commission or any other agency responsible for the prevention of unlawful or discriminatory employment practices, other than any obligations under applicable Laws, (vi) since January 1, 2013, neither the Company nor any of its Subsidiaries has received any notice of the intent of any Governmental Authority responsible for the enforcement of labor or employment Laws to conduct an investigation or other inquiry relating to the employment practices of the Company or any of its Subsidiaries or violation or enforcement of labor or employment Laws, and no such investigation or other inquiry is in progress, (vii) there is no Action pending or, to the Knowledge of the Company, threatened, in any forum by or on behalf of any present or former employee of the Company or any of its Subsidiaries, any applicant for employment or any class or classes of the foregoing, in each case, alleging breach of any express or implied Contract of employment, any Law governing employment or the termination thereof or other discriminatory, wrongful or tortious conduct in connection with the employment relationship and (vii) to the Knowledge of the Company, no key employees of the Company or any of its Subsidiaries has any current or immediate plans to terminate his or her employment within the 30 days following the Closing Date. Neither the Company nor any of its Subsidiaries has engaged in any employee layoff activities within the last five (5) years that would violate the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state or local mass layoff statute, rule or regulation.

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(b) The Company and its Subsidiaries are in compliance in all material respects with all applicable employment Laws governing wages, hours, discrimination, retaliation, harassment, disability rights, occupational safety and health and plant closing.

(c) Except as listed on Section 3.12(c) of the Schedules, neither the Company nor any of its Subsidiaries has entered into any severance or similar arrangement with any employee that would result in any material Liability of the Company (including the Surviving Corporation) to make any payment to such employee upon a termination of service with the Company or its Subsidiaries.

(d) The Company and each of its Subsidiaries has maintained workers' compensation coverage as required by applicable Law through the purchase of insurance and not by self-insurance or otherwise.

(e) Section 3.12(e) of the Schedules contains a true and correct list of the current employees of the Company and each of its Subsidiaries as of the Closing Date and shows with respect to each such employee, the employee's name, position, base salary or hourly wage rate, actual and target incentive compensation (including, without limitation, bonus, commissions, and fringe benefits that are not provided to all employees as applicable) for 2016 and 2017, as applicable.

(f) Neither the Company nor any of its Subsidiaries is sponsoring any employee to work in the United States or any other country under a visa or work authorization, and no petition for admission of any alien under a non-immigrant or other visa, or for transfer of sponsorship of any such employee, is currently pending. Each employee of the Company and each of its Subsidiaries is authorized to work in the United States. The Company and each of its Subsidiaries has current Forms I-9 for all employees who work in the United States, and has complied with required processes with respect to obtaining such Forms I-9.

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Section 3.13. Employee Benefit Plans.

(a) Section 3.13(a) of the Schedules lists all material Employee Benefit Plans. As applicable with respect to each material Employee Benefit Plan, the Company has made available to Parent and Newco true, complete and correct copies, to the extent applicable, of (i) the plan and trust documents (including any material amendments thereto) as in effect at any time during the past six (6) years, and the most recent summary plan description, together with the summaries of material modifications thereto, (ii) the six (6) most recently filed annual reports (Form 5500 series) including all schedules thereto, (iii) current Internal Revenue Service determination, advisory or opinion letter, (iv) all material written Contracts relating to each Employee Benefit Plan, including administrative service agreements and group insurance contracts, (v) all material or non-routine correspondence to or from any Governmental Authority relating to any Employee Benefit Plan; and (vi) all insurance pertaining to fiduciary liability insurance covering the fiduciaries for Employee Benefit Plan.

(b) Except as set forth in Section 3.13(b) of the Schedules, neither the Company, any of its Subsidiaries nor any ERISA Affiliate has, within the past six (6) years, maintained, been a participating employer in, has had any Liability (whether contingent or otherwise) with respect to or contributed to (i) any Multiemployer Plan; (ii) any multiple employer plan within the meaning of Section 4063 or 4064 of ERISA or Section 413(c) of the Code; or (iii) any other employee benefit plan, fund, program, contract or arrangement that is subject to Section 412 of the Code, Section 302 of ERISA or Title IV of ERISA.

(c) No Employee Benefit Plan provides and neither the Company nor any of its Subsidiaries have any Liability to provide health, life insurance or other welfare benefits to former employees of the Company or any of its Subsidiaries other than as required by COBRA. Neither Company nor any of its Subsidiaries has ever represented, promised or contracted (whether in oral or written form) to any employee (either individually or as a group) or any other Person that such employee(s) or other Person would be provided with retiree life insurance, retiree health benefit or other retiree employee welfare benefits, except to the extent required by COBRA.

(d) Each Employee Benefit Plan has been maintained and administered in compliance in all material respects (a) with the terms of such plan and (b) with the applicable requirements of ERISA, the Code and any other applicable Law, including the applicable tax qualification requirements under the Code. Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code is the subject of a current favorable determination, advisory or opinion letter from the Internal Revenue Service that it is so qualified and, to the Company’s Knowledge, no circumstances exist which could result in the loss of such qualified status. The Company and each of its Subsidiaries has performed all obligations required to be performed by it under each Employee Benefit Plan and is not in default or violation of, and the Company has no Knowledge of any default or violation by any other party to, the terms of any Employee Benefit Plan. All contributions to, and payments from, any Employee Benefit Plan which may have been required to be made in accordance with the terms of such Employee Benefit Plan or applicable Law have been timely made, and all contributions for any period ending on or before the Closing Date which are not yet due are reflected as an accrued liability on the Company's financial statements in accordance with GAAP. Each Employee Benefit Plan that is a “plan” within the meaning of Section 3(3) of ERISA can be amended, terminated or otherwise discontinued after the date of this Agreement without liability to the Company or any of its Subsidiaries (other than ordinary administration expenses). There are no audits, formal inquiries by Governmental Authority or Actions pending or, to the Knowledge of the Company, threatened, by any Person with respect to any Employee Benefit Plan. All ERISA Affiliates who maintain, sponsor, contribute or have any Liability with respect to any Employee Benefit Plan are listed on Section 3.13(d) of the Schedules. There are no Employee Benefit Plans maintained outside the United States.

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(e) Neither the Company nor any of its Subsidiaries, the employees or directors of the Company or any of its Subsidiaries, nor to the Company’s Knowledge, any fiduciary, trustee or administrator of any Employee Benefit Plan, has engaged in, or in connection with the transactions contemplated by this Agreement will engage in, any transaction with respect to any Employee Benefit Plan which would subject any such Employee Benefit Plan, the Company, any of its Subsidiaries or Parent to a tax, penalty or liability for a “prohibited transaction” under Section 406 of ERISA or Section 4975 of the Code.

(f) Except as set forth in Section 3.13(f) of the Schedules, or the Transaction Incentive Awards, neither the execution, the delivery, nor the performance or consummation of the transactions contemplated by this Agreement will either alone or in connection with any other event(s) will or may (i) constitute an event that may result in any material payment (whether of severance pay or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution, increase in payments or benefits or obligation to fund benefits to any current or former employee, director, officer, or independent contractor of the Company or any Subsidiary thereof, (ii) materially increase any amount of compensation or benefits otherwise payable under any Employee Benefit Plan, (iii) result in the acceleration of the time of any material payment, funding or vesting of any benefits under any Employee Benefit Plan, (iv) require any material contribution or payment to fund any obligation under any Employee Benefit Plan, (v) limit the right to merge, amend or terminate any Employee Benefit Plan or (vi) create or otherwise result in any material Liability with respect to any Employee Benefit Plan. Each Employee Benefit Plan in which any employee, officer or director of the Company or any of its Subsidiaries participates is either exempt from or has been established, documented, maintained and operated in compliance with Section 409A of the Code and the applicable guidance issued thereunder.

(g) Neither the Company nor any of its Subsidiaries is a party to or has any Liability under any Contract to indemnify or gross-up any Person for any Taxes.

(h) There are no pending or, to the Knowledge of the Company, threatened, audits or Actions against any of the Employee Benefit Plans, the assets of any of the Employee Benefit Plans, the Company, any of its Subsidiaries or, to the Knowledge of the Company, the Employee Benefit Plans administrator or any fiduciary of the Employee Benefit Plans with respect to such Employee Benefit Plans or asserting any rights or claims to benefits under such Company Employee Plan (other than routine, uncontested benefit claims), and, to the Knowledge of the Company, there are no facts or circumstances which could form the basis for any such Actions.

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(i) Neither the Company nor any of its Subsidiaries maintains any voluntary employees’ beneficiary association within the meaning of Sections 501(c)(9) and 505 of the Code or other welfare benefits trust or fund with respect to any Employee Benefit Plan.

(j) The Company and each ERISA Affiliate have complied in all material respects with the applicable provisions of the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively, the “ACA”) including all provisions of the ACA applicable to the employees of the Company. The Company and each ERISA Affiliate have complied in all material respects with applicable information reporting requirements under Code Sections 6055 and 6056 (and all applicable regulations) with respect to the employees (and their covered dependents) of the Company and each ERISA Affiliate.

(k) With respect to each Employee Benefit Plan: (i) all premiums contributions or other payments required to have been made by Law or under its terms or any Contact relating thereto have been timely made; (ii) all reports, returns and similar documents required to be filed with any Governmental Authority or distributed to any plan participant have been duly and timely filed or distributed and (iii) there have been no acts or omissions by the Company or any ERISA Affiliates that have given or could give rise to any material fines, penalties, taxes or related charges under Sections 502 or 4071 of ERISA or Section 511 or Chapter 43 of the Code, or under any other applicable Law, for which the Company or any Subsidiary may have any Liabilities.

Section 3.14. Intellectual Property Rights; Software; Information Technology.

(a) Section 3.14(a) of the Schedules contains a complete and correct list of all Company Intellectual Property Rights registered with, or the subject of a pending application for registration with, any Governmental Authority, specifying as to each such item, as applicable, the name of the registered owner, jurisdiction of application and/or registration, application and/or registration number and date of application or registration.

(b) The Company Intellectual Property Rights identified in Section 3.14(a) of the Schedules are held and recorded in the name of the Company or its Subsidiaries, not subject to any pending cancellation, reexamination, inter partes review, or other similar legal proceeding (in the case of pending applications, other than prosecution in the ordinary course), and are owned by the Company and its Subsidiaries free and clear of any Liens (other than inbound Intellectual Property Licenses and (ii) granted by the Company and its Subsidiaries (expressly or implicitly) in the Ordinary Course of Business). The Company and its Subsidiaries either own or possess sufficient license rights to use and otherwise exploit the Company Intellectual Property Rights as used in the conduct of their respective businesses. To the Company’s Knowledge, none of the personnel of Company or any Subsidiary is in violation thereof. All required filings and fees related to the Company Intellectual Property Rights registered or applied for have been timely filed with and paid to the relevant Governmental Authority and authorized registrars, and all such Company Intellectual Property Rights are in good standing.

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(c) The products and services and the business of the Company and its Subsidiaries as currently conducted do not infringe or misappropriate or otherwise violate the Intellectual Property Rights of any third party and (ii) to the Company’s Knowledge, no third party is infringing on or otherwise violating any material Company Intellectual Property Right. In the last two years the Company and its Subsidiaries have not sent any written notice to any Person alleging that such Person infringed or misappropriated any Company Intellectual Property Right. There is no Action pending, or threatened in writing, against the Company or any of its Subsidiaries and in the last five (5) years no third party has asserted any claim in writing against the Company and its Subsidiaries, alleging that the Company or its Subsidiaries have infringed, misappropriated or otherwise violated any Intellectual Property Right of any third party, or notifying the Company or any Subsidiary of such third party’s rights and inviting further discussions to take a license, and to the Company’s Knowledge, there are no facts in existence that would support such a claim or threat. Neither the Company nor any of its Subsidiaries has agreed to indemnify any third party against any charge of infringement or other violation with respect to any Intellectual Property Rights, except in Contracts with customers of the Company and its Subsidiaries.

(d) The Company and its Subsidiaries have taken commercially reasonable steps to protect and maintain all material Company Intellectual Property Rights and to preserve the confidentiality of any material trade secrets comprised in Company Intellectual Property Rights. Any access allowed to or disclosure by the Company or any of its Subsidiaries of any material trade secret to any third party has been pursuant to the terms of a written agreement with such Person or is otherwise lawful.

(e) All material Software owned, licensed, used, or otherwise held for use in the business of the Company and its Subsidiaries is in good working order and condition and is sufficient in all material respects for the purposes for which it is used in the business of the Company and its Subsidiaries as presently conducted. The Company and all of its Subsidiaries possess all necessary license and other rights to use all Software used by the Company and its Subsidiaries. Neither the Company nor its Subsidiaries have experienced any material defects in design, workmanship or material in connection with the use of such Software that have not been corrected. No such Software contains any computer code or any other procedures, routines or mechanisms which: (i) disrupt, disable, harm or impair in any material way such software’s operation, (ii) cause such software to damage or corrupt any data, storage media, programs, equipment or communications of Company, its Subsidiaries, or its clients, or otherwise interfere with Company’s or its Subsidiary’s operations for a prolonged period or (iii) permit any third party to access any such software to cause material disruption, disablement, harm, impairment, damage erasure or corruption (sometimes referred to as “traps”, “viruses”, “access codes”, “back doors” “Trojan horses,” “time bombs,” “worms,” or “drop dead devices”). Other than any proprietary Software customized by or developed by the Company or its Subsidiaries or their respective contractors for use in connection with the business needs of the Company or its Subsidiaries (the “Proprietary Software”), all Software used by the Company in connection with the Company’s business is commercially available and is licensed to the Company by a third party. All material Proprietary Software is set forth on Section 3.14(e) of the Schedules. The Company and its Subsidiaries have taken commercially reasonable and necessary steps to protect the Proprietary Software and its rights thereunder. Except as set forth on Section 3.14(e) of the Schedules, the Company and its Subsidiaries have, with respect to all Software (other than the Proprietary Software) used in the Company’s and its Subsidiaries’ business, sufficient and fully paid for licenses with such third parties for the number of users of that Software. The Company or its Subsidiaries is in actual possession of and has control over a complete and correct copy of the Source Code for all Proprietary Software, including all previous major releases. The Company and its Subsidiaries have created and have safely stored back-up copies of all its Proprietary Software.

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(f) Except as specifically set forth on Section 3.14(f) of the Schedules, the Proprietary Software does not include any “open source” code (as defined by the Open Source Initiative) or “free” code (as defined by the Free Software Foundation), nor has it been created in such a way that it is compiled with or linked to any such code. To the extent that the Company Intellectual Property Rights includes the “open source” and “free” code identified on Section 3.14(f) of the Schedules, such code is not integrated in any way into any of the Proprietary Software which could result in a requirement for the Company or any of its Subsidiaries to make available the Source Code for any Proprietary Software other than those specific components of the Source Code which are “open source” or “free” code, or could otherwise impose any limitation, restriction, or condition on the right or ability of the Company or any of its Subsidiaries to use such Proprietary Software for its business purposes or in connection with the transaction contemplated by this Agreement.

(g) The Company’s and its Subsidiary’s practices with regard to the collection, dissemination and use of Company Data are and have been in accordance in all material respects with applicable Laws relating to data protection and any published privacy policies.

(h) The Company and its Subsidiaries have established, implemented and maintained (i) industry standard and reasonable safeguards against the destruction, loss or alteration of, and unauthorized access to, all Company Data, Personal Data, and other confidential information of the Company and its Subsidiaries; and (ii) industry standard and reasonable physical, network, electronic and internet security procedures, protocols, security gateways and firewalls with respect to all Company Data, Personal Data, and other confidential information, all in accordance with applicable industry standards and using state of the art resources. There are no actual material weaknesses or vulnerabilities with respect to the security of any Software or the Information Technology Infrastructure. There has been no actual or suspected unauthorized disclosure or use of, or access to, any of the Company Data, Personal Data, other information in the possession or control of the Company or any of its Subsidiaries, the Information Technology Infrastructure or Software, including any actual or suspected unauthorized access to or disclosure of any confidential information. The Company and its Subsidiaries have installed and updated all Software used in the Information Technology Infrastructure and business with patches, updates, fixes and upgrades made available or provided to Company or any of its Subsidiaries by its vendors that are necessary or recommended for the maintenance of security of such Software as it pertains to Company Data, Personal Data or confidential information of the Company and its Subsidiaries.

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(i)The Company and each of its Subsidiaries is and has been in compliance in all material respects with all of its contractual obligations regarding Company Data and Personal Data, and with all applicable Laws relating to data security, privacy, data procurement, use and handling, data loss, theft, and breach of security notification obligations. The Company and its Subsidiaries and their respective contractors are not under investigation, subject to any monitoring or audit requirements that are ongoing or occurred in the last five (5) years or in receipt of any inquiries from regulatory authorities. The transactions contemplated by this Agreement and the other Merger Documents will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other Person in respect of, or otherwise adversely affect any right, title or interest of Company or any of its Subsidiaries in and to any Company Intellectual Property.

(j)The Information Technology Infrastructure is operational and functioning consistent with the purposes for which it is being used by the Company and its Subsidiaries as of the date hereof, and is free from material defects or programming errors. Except as set forth on Section 3.14(j) of the Schedules, there are no material upgrades or additions required, or other material changes planned to be made to the Information Technology Infrastructure.

 

Section 3.15. Contracts. Section 3.15 of the Schedules sets forth all Contracts (except for purchase or service orders executed in the normal course of business and Employee Benefit Plans) to which, as of the Closing Date, the Company or any of its Subsidiaries is a party or is otherwise bound, of the type described below (collectively, such Contracts together with the Contracts listed on Section 3.12(c) of the Schedules and Section 3.13(a) of the Schedules, the “Material Contracts”), with all such Contracts identified by reference to the specific clause of this Section 3.15 to which such Contract relates:

(a) all Contracts for the purchase or lease (capital or operating) by the Company or any Subsidiary of vehicles, machinery, equipment or other personal property or Property;

(b) all Contracts (or group of related Contracts) for the furnishing or receipt of products or services, in each case, which provides for annual payments to or by the Company in excess of $4,000,000;

(c) all license, sublicense, or royalty Contracts relating to (i) any of the material Company Intellectual Property Rights owned by the Company or any Subsidiary and (ii) any material Intellectual Property Rights licensed by a third party to the Company or any of its Subsidiaries (other than any commercially available shrink wrap or similar off-the-shelf license for generally available Software for an annual license fee of no more than $50,000) (the “Intellectual Property Licenses”);

(d) all Contracts that (i) prohibit the Company or any of its Subsidiaries from competing in a particular geographic area or freely engaging in any business, (ii) limit or restrains the Company or any of its Subsidiaries from soliciting any individual for employment, (iii) contain “most favored nation” pricing terms or grant any right of first offer or right of first refusal, or (iv) contain “take or pay” or “requirements” terms;

(e) all mortgages, indentures, notes, bonds or other Contracts relating to Funded Indebtedness or under which the Company or any of its Subsidiaries has permitted any of its assets to be subject to a Lien;

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(f) all Contracts related to any partnership, joint venture, strategic alliance or sharing of profits or losses with any Person to which the Company and its Subsidiaries is a party;

(g) all Contracts with a Material Customer or a Material Supplier;

(h) all Contracts for any single capital expenditure in excess of $500,000;

(i) all Contracts involving amounts in excess of $3,000,000 per annum containing change-of-control provisions that would be triggered by the transactions contemplated herein; and

(j) all Contracts for the acquisition, sale, assignment, transfer or other acquisition or disposition of any business or any material assets of the Company or any of its Subsidiaries (in a single transaction or a series of related transactions, whether by merger, sale of stock, sale of assets or otherwise) and under which the Company or any of its Subsidiaries have any continuing liability, other than contracts entered into in the Ordinary Course of Business;

(k) all Contracts with any agency, dealer, distributor or sales representative;

(l) all Contracts with Governmental Authorities.

The Company has provided Parent with true and complete copies of all written Material Contracts and each amendment, supplement, waiver or modification thereto. As of the Closing Date, each Material Contract is a valid and binding agreement of the Company or one of its Subsidiaries, as the case may be, and to the Company’s Knowledge, of each other party thereto, and enforceable in accordance with its terms and is in full force and effect. Except as set forth in in Section 3.15 of the Schedules, the Company or one of its Subsidiaries party thereto and, to the Company’s Knowledge, each of the other parties thereto, are not in material default under any of such Material Contracts and no event has occurred which, with or without notice or lapse of time, or both, would constitute such a material default. Neither the Company nor any of its Subsidiaries has (i) received any notice of cancellation or termination or, other than pursuant to the terms of such Material Contract existing as of the Closing Date. Except as set forth on Section 3.3 of the Schedules, the consummation of the Merger and the other transactions contemplated by this Agreement shall not afford any other party the right to terminate any Material Contract.

Section 3.16. Insurance. Section 3.16 of the Schedules contains an accurate and complete list of all policies of fire, liability, workers’ compensation, property, casualty and other forms of insurance owned or held by the Company and its Subsidiaries. All such policies are in full force and effect, all premiums due with respect thereto have been timely paid in full, the Company and its Subsidiaries are in material compliance with the terms and provisions thereof and neither the Company nor its Subsidiaries has received notice of default under, or cancellation or modification of any such policies. No notice of cancellation or termination has been received with respect to any such policies. There is no claim by the Company or its Subsidiaries pending under any such policies as to which coverage has been questioned, denied or disputed by the underwriters of any such policies and there is no basis for denial of any claim under any such policies. Neither the Company nor any of its Subsidiaries has received any notice from or on behalf of any insurance carrier issuing any such policies that insurance rates therefor shall hereafter be increased or that there shall hereafter be a cancellation or an increase in a deductible (or an increase in premiums in order to maintain an existing deductible) or non-renewal of any such policies. Neither the Company nor any of its Subsidiaries has experienced claims in excess of current coverage of such insurance. There are no outstanding bonds or other surety arrangements issued or entered into in connection with the assets, properties or business of the Company or its Subsidiaries. No bond is required to satisfy any contractual, statutory or regulatory requirement applicable to the Company or its Subsidiaries. The representations and warranties set forth in this Section 3.16 do not apply to insurance maintained or provided in connection with any Employee Benefit Plan.

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Section 3.17. Real Property.

(a) Section 3.17(a)(i) of the Schedules sets forth (whether as lessee or lessor) a list of all leases of real property (such real property, the “Leased Property”) to which the Company or any Subsidiary is a party or by which it is bound (each a “Material Lease,” and collectively the “Material Leases”). Except as set forth in Section 3.17(a)(ii) of the Schedules, neither the Company nor any Subsidiary owns or has owned within the prior five (5) years, any real property.

(b) Except as set forth in Section 3.17(b) of the Schedules, (i) each Material Lease is valid and binding on the Company or one of its Subsidiaries, as applicable, and, to the Company’s Knowledge, on the other parties thereto, is in full force and effect and is enforceable in accordance with its terms, (ii) the Company or one of its Subsidiaries has good, valid and marketable estate in all owned Property, free and clear of all Liens except Permitted Liens, (iii) the Company or one of its Subsidiaries has good, valid and marketable leasehold estate in all Leased Property, free and clear of all Liens except Permitted Liens, and (iv) the Company or one of its Subsidiaries and, to the Company’s Knowledge, each of the other parties thereto, is not in material default under each Material Lease. During the past two (2) years, neither the Company nor any of its Subsidiaries has received written notice of any material default under any Material Lease, and no event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time, or both) will, or could reasonably be expected to, result in a material breach or violation of, or material default under, any Material Lease.

(c) None of the Property is subject to any lease, option to purchase, purchase agreement or grant to any Person of any right relating to the use, occupancy or enjoyment of such property or any portion thereof.

(d) The Property is not subject to any use restrictions, exceptions, reservations or limitations which interfere with or impair the present and continued use thereof as currently used by the Company and its Subsidiaries in the conduct of their respective businesses. No portion of the Property is operated as a nonconforming use.

(e) During the past five (5) years, neither the Company nor any of its Subsidiaries has received notice to the effect that any buildings, structures and improvements located on, fixtures contained in, and appurtenances attached to the Property violate in any material respect any applicable Laws. All such buildings, structures, improvements, fixtures and appurtenances are in good condition and repair in all material respects, subject to normal wear and tear and all necessary utilities are currently available to the Property in sufficient size and capacity to adequately serve the continued use thereof as currently used by the Company and its Subsidiaries in the conduct of their respective businesses.

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(f) During the past five (5) years, neither the Company nor any of its Subsidiaries has received notice of any pending or threatened condemnation Actions relating to any of the Property.

(g) The Property is properly zoned to permit the continued use of the Property for the conduct of the respective businesses of the Company and its Subsidiaries.

Section 3.18. Title to Assets. Each of the Company and its Subsidiaries has good and marketable title to, or a valid leasehold interest in, all of its tangible assets and properties (including those reflected on the Recent Balance Sheet and those purchased after the Recent Balance Sheet Date, but excluding any such tangible assets and properties sold, consumed, or otherwise disposed of in the Ordinary Course of Business since the Recent Balance Sheet Date), free and clear of all Liens except for Permitted Liens and except as set forth in Section 3.18 of the Schedules. There are no material assets or property used in the operation of the respective businesses of the Company and its Subsidiaries other than the assets and properties reflected on the Recent Balance Sheet or purchased or leased in the Ordinary Course of Business since the Recent Balance Sheet Date. All material properties and assets used or useful in the operation of the business of the Company and its Subsidiaries are in good operating condition and repair (except for ordinary wear and tear and routine maintenance in the Ordinary Course of Business), are adequate for the purposes for which they are presently used in the conduct of the business of the Company and its Subsidiaries, are usable in a manner consistent with their current use.

Section 3.19. Related Party Transactions. Except as set forth in Section 3.19 of the Schedules, none of the Company’s or any of its Subsidiaries’ stockholders, directors, officers or employees (or any Affiliate, equity holder, director, officer or family member thereof) is involved or has been involved during the prior twelve (12) months in any business arrangement, relationship or Contract with the Company or its Subsidiaries other than employment arrangements entered into in the Ordinary Course of Business, and none of the Company’s stockholders, directors, officers or employees (or any Affiliate, equity holder, director, officer or family member thereof) owns or has owned during the prior twelve (12) months any property or right, tangible or intangible, which is used by the Company or its Subsidiaries.

Section 3.20. Brokers. Except as set forth in Section 3.20 of the Schedules (which fees shall be paid and fully discharged by the Company and included in the Seller Expenses), no Person is or will be entitled to a broker’s, finder’s, investment banker’s, financial adviser’s or similar fee from the Company or its Subsidiaries in connection with this Agreement or any of the transactions contemplated hereby.

Section 3.21. Customers and Suppliers. Section 3.21 of the Schedules sets forth the ten (10) largest customers of the Company and its Subsidiaries, taken as a whole, based on revenue (with specification of revenues) during each of the last two (2) calendar years and the current calendar year though the Recent Balance Sheet Date (the “Material Customers”), and the ten (10) largest suppliers of the Company and its Subsidiaries, taken as a whole, based on payments from the Company and its Subsidiaries (with specification of expenditures) during each of the last two (2) calendar years and the current calendar year though the Recent Balance Sheet Date (the “Material Suppliers”). Except as set forth on Section 3.21 of the Schedules, since December 31, 2016, no Material Customer or Material Supplier has (a) terminated any Contract with the Company or any of its Subsidiaries, (b) materially reduced, or informed the Company or any Subsidiary that it intends to terminate or materially reduce its business relationship with the Company or any Subsidiary or (c) informed the Company or any Subsidiary of any material problem or dispute with respect to such Material Customer or Material Supplier.

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Section 3.22. Accounts Receivable. The accounts receivable, notes receivable and other receivables of the Company and its Subsidiaries on the Recent Balance Sheet, and all of the Company’s and its Subsidiaries’ accounts receivable, notes receivable and other receivables since the Recent Balance Sheet Date arose from bona fide transactions, the goods involved have been sold and shipped to or on behalf of the account obligors and no further goods are required to be provided and no further services are required to be rendered in order to complete the sales reflected by such accounts receivable, notes receivable and other receivables. Except as set forth on Section 3.22 of the Schedules, no such receivable has been assigned or pledged, in whole or in part, to any Person. All outstanding accounts receivable, notes receivable and other receivables that are uncollectible in whole or in part have been reserved against on the Financial Statements in accordance with GAAP. Since the Recent Balance Sheet Date, neither the Company nor any of its Subsidiaries has cancelled, or has agreed to cancel, in whole or in part, any such receivables, except in the Ordinary Course of Business.

Section 3.23. Inventory. The inventory of the Company and its Subsidiaries consists of good, usable and merchantable quality in all material respects and none of such inventory is damaged or obsolete, except to the extent of reserves on the Recent Balance Sheet, as adjusted in accordance with GAAP in the Ordinary Course of Business since the date thereof. All of such inventory has been valued in a manner consistent with past practice (including, without limitation, the method of computing overhead and other indirect expenses applied to inventory) and in accordance with GAAP. All of such inventory conforms and was manufactured in accordance, in each case, in all material respects, with applicable Law.

Section 3.24. Products.

(a) Parent has been provided with complete and accurate copies of the standard terms and conditions of sale for each of the products of the Company and its Subsidiaries (containing applicable guaranty, warranty and indemnity provisions). Except for such standard terms and conditions of sale, no product sold or delivered by the Company or any of its Subsidiaries is subject to any guaranty, warranty or other indemnity, express or implied, beyond such standard terms and conditions.

(b) Neither the Company nor its Subsidiaries has any material Liability of any nature whether based on strict liability, negligence, breach of warranty (express or implied), breach of contract or otherwise, in respect of any product or other item sold, designed or produced prior to the Closing by the Company or any of its Subsidiaries that is not otherwise fully and adequately reserved against as reflected on the face of the Recent Balance Sheet. All products or other items sold, designed or produced prior to the Closing by the Company or any of its Subsidiaries have been manufactured and sold in compliance with all Laws in all material respects.

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(c) Except as set forth on Section 3.24 of the Schedules, neither the Company nor any of its Subsidiaries has entered into, or offered to enter into, any Contract pursuant to which the Company or any of its Subsidiaries is or shall be obligated to make any rebates, discounts, promotional allowances or similar payments or arrangements with or to any customer or other business relation. The Company and its Subsidiaries have paid all rebates, discounts, promotional allowances or similar payments or arrangements due and owing by it, and has adequately accrued for any such rebates, discounts, promotional allowances or similar payments or arrangements on the Recent Balance Sheet.

Section 3.25. Banking Facilities; Powers of Attorney. Section 3.25 of the Schedules sets forth a true, correct and complete list of: (a) each bank, savings and loan or similar financial institution with which the Company or any of its Subsidiaries has an account or safety deposit box or other arrangement, and any numbers or other identifying codes of such accounts, safety deposit boxes or such other arrangements maintained by the Company or any of its Subsidiaries thereat; (b) the names of all Persons authorized to draw on any such account or to have access to any such safety deposit box facility or such other arrangement; and (c) any outstanding general or special powers of attorney executed by or on behalf of the Company or any of its Subsidiaries.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO

Parent and Newco hereby jointly and severally represent and warrant to the Company as of the Closing Date as follows:

Section 4.1. Organization. Each of Parent and Newco is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware and has all requisite corporate power and authority to own, lease and operate its property and assets and to carry on its business as presently conducted. Each of Parent and Newco has delivered or made available to the Company true and complete copies of its certificate of incorporation (and all amendments thereto) and bylaws (as currently in effect).

Section 4.2. Authorization. Each of Parent and Newco has the corporate power and authority to execute and deliver this Agreement and each other Merger Document to which it is a party and to perform its obligations hereunder and thereunder, all of which have been duly authorized by all requisite corporate action (including any required stockholder approvals) and no other corporate or stockholder action on the part of Parent or its stockholders is necessary to authorize the execution, delivery and performance of this Agreement and each other Merger Document by Parent or Newco and the consummation by Parent or Newco of the Merger and the other transactions contemplated hereby and thereby. This Agreement and each other Merger Agreement to which Parent or Newco is a party has been duly authorized, executed and delivered by Parent and Newco and, assuming that this Agreement has been duly and validly authorized, executed and delivered by the Company and the Stockholders, constitutes a valid and binding agreement of Parent and Newco, enforceable against Parent and Newco in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Laws from time to time in effect relating to creditors’ rights and remedies generally and general principles of equity.

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Section 4.3. Non-contravention. The execution, delivery and performance by Parent and Newco of this Agreement and each other Merger Document to which it is a party, the consummation of the Merger and each of the other transactions contemplated hereby and thereby will not (i) contravene any provision contained in such entity’s certificate of incorporation or bylaws, (ii) conflict with, violate or result in a material breach (with or without the lapse of time, the giving of notice or both) of or constitute a material default (with or without the lapse of time, the giving of notice or both) under (A) any Contract, license, permit or other instrument or obligation or (B) assuming satisfaction of the requirements set forth in Section 4.4 below, any judgment, Law or other restriction of any Governmental Authority, in each case to which such entity is a party or by which it is bound or to which any of its assets or properties are subject or (iii) result in the acceleration of, or permit any Person to terminate, modify, cancel, accelerate or declare due and payable prior to its stated maturity any material obligation of such entity.

Section 4.4. No Consents. No notice to, filing with, or authorization, registration, consent or approval of any Governmental Authority is necessary for the execution, delivery or performance of this Agreement, the other Merger Documents to which Parent or Newco is a party or the consummation of the transactions contemplated hereby or thereby by Parent or Newco, except for filing and recordation of appropriate Merger Documents as required by the DGCL.

Section 4.5. Litigation. Neither Parent nor Newco is party to any litigation or threatened litigation which would reasonably be expected to affect or prohibit the consummation of the transactions contemplated hereby.

Section 4.6. Brokers. No Person is or will be entitled to a broker’s, finder’s, investment banker’s, financial adviser’s or similar fee from Parent or Newco in connection with this Agreement or any of the transactions contemplated hereby.

Section 4.7. Solvency. As of the Closing, Parent shall have taken all measures necessary, including, without limitation, the contribution of capital to Newco, to ensure that, after giving effect to the transactions contemplated by this Agreement, including the payment of the Final Merger Consideration and the satisfaction of all Liabilities of the Surviving Corporation, (a) the Surviving Corporation (or its successors and assigns) will be Solvent and (b) the Present Fair Saleable Value of the assets of the Surviving Corporation will exceed its debt, plus its total “capital,” as such term is determined in accordance with Section 154 of the DGCL. For purposes of this Agreement, “Solvent” when used with respect to the Surviving Corporation (or its successors and assigns), means that, as of any date of determination (i) the amount of the Present Fair Saleable Value of their assets will, as of such date, exceed all of its Liabilities, contingent or otherwise, as of such date, (ii) the Surviving Corporation will not have, as of such date, an unreasonably small amount of capital for the business in which it is engaged or will be engaged and (iii) the Surviving Corporation (or its successors and assigns) will be able to pay its debts as they become absolute and mature, taking into account the timing of and amounts of cash to be received by the Surviving Corporation and the timing of and amounts of cash to be payable on or in respect of its indebtedness, in each case after giving effect to the transactions contemplated by this Agreement. For purposes of the definition of “Solvent,” (i) “debt” means Liability on a “claim” and (ii) “claim” means (A) any right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (B) the right to an equitable remedy for breach on performance if such breach gives rise to a right to payment, whether or not such equitable remedy is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured.

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Section 4.8. NO ADDITIONAL REPRESENTATIONS. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN ARTICLE III AND ARTICLE V OF THIS AGREEMENT (AS QUALIFIED BY THE SCHEDULES) AND IN THE OTHER MERGER DOCUMENTS, INCLUDING THE L/T REPRESENTATIONS, THE FORMER HOLDERS AND THE COMPANY EXPRESSLY DISCLAIM ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE, EXPRESS OR IMPLIED. EACH OF PARENT AND NEWCO ACKNOWLEDGES AND AGREES THAT IT IS NOT RELYING ON ANY STATEMENT OR REPRESENTATION MADE BY OR ON BEHALF OF THE FORMER HOLDERS OR THE COMPANY EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE III OR ARTICLE V HEREOF (AS QUALIFIED BY THE SCHEDULES AS SUPPLEMENTED OR AMENDED) AND IN THE OTHER MERGER DOCUMENTS, INCLUDING THE L/T REPRESENTATIONS, AND THAT NO PERSON HAS BEEN AUTHORIZED BY THE FORMER HOLDERS OR THE COMPANY TO MAKE ANY REPRESENTATION OR WARRANTY RELATING TO THE FORMER HOLDERS, THE COMPANY OR ANY OF ITS SUBSIDIARIES, THE BUSINESSES OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY EXCEPT AS SET FORTH IN ARTICLE III OR ARTICLE V HEREOF (AS QUALIFIED BY THE SCHEDULES) AND IN THE other MERGER DOCUMENTS, INCLUDING THE L/T REPRESENTATIONS, AND, IF MADE, ANY SUCH REPRESENTATION OR WARRANTY MUST NOT BE RELIED UPON. EACH OF THE COMPANY AND THE FORMER HOLDERS ARE RELYING UPON PARENT AND NEWCO’s REPRESENTATIONS IN THIS SECTION 4.8 IN ENTERING INTO THIS AGREEMENT OR THE LETTERS OF TRANSMITTAL. EACH OF PARENT AND NEWCO FURTHER ACKNOWLEDGES THAT NEITHER THE FORMER HOLDERS, THE COMPANY NOR ANY OTHER PERSON OR ENTITY WILL HAVE OR BE SUBJECT TO ANY LIABILITY TO PARENT OR NEWCO RESULTING FROM THE DISTRIBUTION TO PARENT, NEWCO OR THEIR REPRESENTATIVES OR PARENT’S OR NEWCO’S USE OF ANY INFORMATION REGARDING THE COMPANY OR ITS BUSINESSES NOT EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE OTHER MERGER DOCUMENTS, INCLUDING ANY PROJECTIONS OR OTHER INFORMATION PROVIDED BY OR ON BEHALF OF THE COMPANY OR SET FORTH IN THE COMPANY’S CONFIDENTIAL INFORMATION MEMORANDUM OR MANAGEMENT PRESENTATIONS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS

Each Stockholder hereby represents and warrants to Parent and Newco as of the Closing Date as follows:

Section 5.1. Organization and Qualification. If such Stockholder is an entity, such Stockholder is a trust, limited liability company or limited partnership, as applicable, duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite power and authority necessary to own or lease its property and assets and to carry on its business as presently conducted.

Section 5.2. Authorization. Such Stockholder has the legal capacity, power and authority to execute and deliver this Agreement and each other Merger Document to which such Stockholder is a party and to perform its obligations hereunder and thereunder, all of which have been duly authorized by all requisite action and no other action on the part of such Stockholder and, if such Stockholder is an entity, its equity holders, is necessary to authorize the execution, delivery and performance of this Agreement and each other Merger Document by such Company and the consummation by such Stockholder of the transactions contemplated hereby and thereby. This Agreement and each other Merger Document to which such Stockholder is a party has been duly authorized, executed and delivered by such Stockholder and, assuming that this Agreement has been duly and validly authorized, executed and delivered by Parent and Newco, constitutes a valid and binding agreement of such Stockholder, enforceable against such Stockholder in accordance with its terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other Laws from time to time in effect relating to creditors’ rights and remedies generally and general principles of equity.

Section 5.3. Non-contravention. Neither the execution and delivery of this Agreement or any other Merger Document, the consummation of the transactions contemplated hereby or thereby nor the fulfillment of and the performance by such Stockholder of its obligations hereunder or thereunder will (i) if such Stockholder is an entity, contravene any provision contained in such Stockholder's organizational documents (ii) conflict with, violate or result in a breach (with or without the lapse of time, the giving of notice or both) of, or constitute a default (with or without the lapse of time, the giving of notice or both) under (A) any Contract, license, permit or other instrument or obligation or (B) assuming satisfaction of the requirements set forth in Section 5.4 below, any judgment, Law or other restriction of any Governmental Authority, in each case to which such Stockholder is a party or by which it is bound or to which any of its respective assets or properties, including any Company Stock, are subject, or (iii) result in the acceleration of, or permit any Person to terminate, modify, cancel, accelerate or declare due and payable prior to its stated maturity, any obligation of such Stockholder, (iv) result in the imposition of any Lien on the Company Stock owned by such Stockholder (with or without the lapse of time, the giving of notice or both); which, in the case of clauses (ii) and (iii) above, would, individually or in the aggregate, reasonably be expected to prevent such Stockholder from entering into this Agreement or any Merger Document, performing its obligations under this Agreement or any Merger Document or consummating the transactions contemplated hereby or thereby.

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Section 5.4. Consents. No notice to, filing with, or authorization, registration, consent or approval of any Governmental Authority is necessary for the execution, delivery or performance of this Agreement, the other Merger Documents to which such Stockholder is a party or the consummation of the transactions contemplated hereby or thereby by such Stockholder, except for filing and recordation of appropriate Merger Documents as required by the DGCL and those the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to affect the ability of such Stockholder to enter into, or prevent such Stockholder from entering into, this Agreement or any Merger Document, performing its obligations under this Agreement or any Merger Document or consummating the transactions contemplated hereby or thereby.

Section 5.5. Litigation. Such Stockholder is not a party to any litigation or threatened litigation which would, individually or in the aggregate, reasonably be expected to prevent such Stockholder from entering into this Agreement or any Merger Document, performing its obligations under this Agreement or any Merger Document or consummating the transactions contemplated hereby or thereby.

Section 5.6. Brokers. Except as set forth in Section 3.20 of the Schedules (which fees shall be paid and fully discharged by the Company and included in the Seller Expenses), no Person is or will be entitled to a broker’s, finder’s, investment banker’s, financial adviser’s or similar fee from such Stockholder in connection with this Agreement or any of the transactions contemplated hereby.

Section 5.7. Title to Company Stock. Such Stockholder (a) has good and marketable title to, and is the record and beneficial owner of, all of the Company Stock listed as held by such Stockholder on Section 3.5(a) of the Schedules, (b) has complete and unrestricted power and unqualified right to sell, convey, assign, transfer and deliver all such Company Stock, except for any restrictions under the Shareholders Agreement, which shall be terminated at the Closing, and (c) except pursuant to this Agreement, has not directly or indirectly, granted any option, warrant or other right which is in effect to any Person to acquire any Company Stock.

ARTICLE VI

COVENANTS AND AGREEMENTS

Section 6.1. Retention of Information. After the Effective Time, Parent shall make available, and shall cause the Surviving Corporation to make available, to the Representative and its accountants, agents and representatives, any and all books, records, contracts and other information of the Company and its Subsidiaries existing at the Effective Time to the extent reasonably requested by the Representative in connection with any purposes contemplated by this Agreement. Parent will cause the Surviving Corporation to hold all of the books and records of the Company and its Subsidiaries existing on the Closing Date and not destroy or dispose of any thereof for a period of seven years from the Closing Date or such longer time as may be required by Law, and thereafter, if it desires to destroy or dispose of such books and records, will offer first in writing at least 60 days prior to such destruction or disposition to surrender them to the Representative.

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Section 6.2. Public Announcements. The timing and content of all announcements regarding any aspect of this Agreement or the Merger, including to the financial community, government agencies, employees or the general public shall be mutually agreed upon in advance by the Representative and Parent; provided that each party hereto may make any such announcement which it in good faith believes, based on advice of counsel, is required by Law or any applicable securities exchange rules or regulations. Notwithstanding the foregoing, each party shall use its reasonable efforts to consult with the Parent and the Representative prior to any such announcement to the extent practicable, and shall in any event promptly provide the other parties hereto with copies of any such announcement.

Section 6.3. Employee Benefits.

(a) Parent shall provide, or cause to be provided, to each individual who is an actively employed employee of the Company or any of its Subsidiaries immediately prior to the Effective Time (a “Company Employee”), for a period of one (1) year following the Closing Date, (i) during his or her employment, (x) base salary level or base wages that are comparable to those provided by the Company or any of its Subsidiaries to such Company Employee immediately prior to the Effective Time, and (y) employee benefits that are substantially similar in the aggregate to those offered to similarly situated employees of Parent, and (ii) to the extent his or her employment is terminated during such one (1) year period, severance benefits at least as favorable as those offered by the Company or its Subsidiaries to similarly situated employees immediately prior to the Effective Time as set forth on Schedule 6.3(a). After the Closing, Parent and the Surviving Corporation shall continue to implement and adhere to the terms and conditions of the 2017 IWCO Direct Management Incentive Plan.

(b) For purposes of eligibility for participation, vesting, paid time off and severance, each Company Employee shall be credited under each benefit plan of Parent or its Affiliates (including the Surviving Corporation and its Subsidiaries), other than any equity plans, to which such Company Employee is entitled to participate (a “Parent Benefit Plan”) with all years of service with the Company or its Subsidiaries before the Closing Date, except to the extent such credit would result in a duplication of benefits. In addition: (i) for any Parent Benefit Plan to which a Company Employee is entitled to participate and which replaces coverage under comparable Employee Benefit Plans in which such Company Employee participated, such Company Employee shall be immediately eligible to participate, without any waiting time; (ii) for purposes of each Parent Benefit Plan providing medical, dental, pharmaceutical and/or vision benefits to any Company Employee, Parent shall use commercially reasonable efforts to cause all preexisting condition exclusions and actively-at-work requirements of such Parent Benefit Plan to be waived for such Company Employee and his or her covered dependents, and (iii) Parent shall use commercially reasonable efforts to cause any eligible expenses incurred by such Company Employee and his or her covered dependents during the portion of the plan year of the Employee Benefit Plan ending on the Closing Date, to be taken into account under such Parent Benefit Plan for the remainder of the Parent Benefit Plan year in which the Closing Date occurs for purposes of satisfying all deductible, coinsurance and maximum out-of-pocket requirements applicable to such Company Employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such Parent Benefit Plan.

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(c) Parent or the Surviving Corporation or their Subsidiaries, as applicable, shall (i) to the extent reflected as a current liability in the Net Working Capital, credit each of the Company Employees with an amount of paid time off days following the Closing equal to the amount of paid time off days each such Company Employee has accrued but not yet used or cashed out as of the Closing under the Company's paid time off policies as in effect immediately prior to the Closing, and (ii) allow each of the Company Employees to use such accrued paid time off days at such times as each would have been allowed under the Company's paid time off policies as in effect immediately prior to the Closing.

(d) This Section 6.3 shall be binding upon and inure solely to the benefit of each party hereto (and not any current or former officer, employee or service provider of the Company or any of its Subsidiaries or Parent), and for the avoidance of doubt, nothing in this Agreement is intended to (i) confer upon any current or former employee or other service provider of the Company or any of its Subsidiaries any right to employment or continued employment or continued service with Parent or any of its Subsidiaries (including, the Surviving Corporation (if applicable) or any Subsidiary thereof (if applicable)), (ii) constitute or create an employment agreement with, or modify the at-will status of any, employee or other service provider, (iii) amend or create any rights under an Employee Benefit Plan or Parent Benefit Plan or (iv) amend or cause a creation of any employee benefit plan or other compensatory arrangements of Parent or any of its Subsidiaries (including, the Surviving Corporation (if applicable) or any Subsidiary thereof (if applicable)).

Section 6.4. Indemnification of Directors and Officers.

(a) The Company has obtained a six-year “tail” policy providing coverage substantially similar to the Company's existing officers' and directors' liability insurance coverage (the “D&O Insurance Tail Policy”), a copy of which has been made available to Parent.

(b) After the Effective Time through the sixth anniversary of the Effective Time, the Surviving Corporation shall indemnify and hold harmless any present (as of the Effective Time) or former officer or director or employee of the Company and its Subsidiaries (the “D&O Indemnified Persons”), to the extent that any D&O Indemnified Person becomes subject to any claims, losses, liabilities, damages, judgments, fines and reasonable fees, costs and expenses (including attorneys’ fees and expenses) incurred in connection with any claim, action, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to (i) the fact that the D&O Indemnified Person is or was an officer, director or employee of the Company or any of its Subsidiaries at or prior to the Effective Time or (ii) matters existing or occurring at or prior to the Effective Time (including this Agreement and the transactions and actions contemplated hereby), whether asserted or claimed prior to, at or after the Effective Time, to the fullest extent permitted under applicable Law.

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(c) Parent hereby acknowledges that certain D&O Indemnified Persons may have rights to indemnification, advancement of expenses and/or insurance provided by Persons other than the Company or its Subsidiaries (collectively, the “Indemnitors”). Parent hereby agrees (i) that the D&O Insurance Tail Policy is primary and any obligation of the Indemnitors are secondary and (ii) Parent and the Surviving Corporation irrevocably waive, relinquish and release the Indemnitors from any and all claims against the Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof to the extent covered by the D&O Insurance Tail Policy. Each of Parent and the Surviving Corporation further agree that no advancement or payment by an Indemnitor on behalf of a D&O Indemnified Person with respect to any claim for which a D&O Indemnified Person has sought recovery under the D&O Insurance Tail Policy shall affect the foregoing and the applicable Indemnitor shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of the D&O Indemnified Person under the D&O Insurance Tail Policy. Parent and the D&O Indemnified Persons agree that the Indemnitors are express third party beneficiaries of the terms of this Section 6.4(b).

(d) Parent shall cause the Surviving Corporation and its Subsidiaries to maintain in effect in its certificate of incorporation and bylaws (or similar governing documents) for a period of six (6) years after the Effective Time, the current provisions as in effect immediately prior to the Effective Time regarding elimination of liability of directors and indemnification of, and advancement of expenses to, officers, directors and employees contained in the certificate of incorporation and bylaws of the Company and its Subsidiaries.

(e) In the event that the Surviving Corporation (i) consolidates with or merges into any other Person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers or conveys all or substantially all of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors or assigns of the Surviving Corporation shall succeed to the obligations set forth in this Section 6.4.

Section 6.5. Tax Matters.

(a) Tax Cooperation and Reporting. Parent and the Representative shall reasonably cooperate with each other in connection with the preparation of Tax Returns related to the Company and each of its Subsidiaries and shall preserve all information, returns, books, records and documents relating to any liabilities for Taxes with respect to any taxable period until the later of the expiration of all applicable statutes of limitation and extensions thereof or a final determination with respect to Taxes for such period, and shall not destroy or otherwise dispose of any record without first providing the other party a reasonable opportunity to review and copy the same.

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(b) Preparation of Tax Returns; Refund Forms.

(i) Parent shall cause the Surviving Corporation and any Subsidiary to prepare all Tax Returns of the Surviving Corporation and any Subsidiary for any Pre-Closing Tax Period (including any Straddle Period) due on or after the Closing Date (the “Parent Prepared Tax Returns”). Parent shall deliver, or cause to be delivered, to the Representative drafts of each Parent Prepared Tax Return (other than any Sales Tax Returns with respect to the Company Tax Liability) and each Refund Form no later than 30 days prior to the due date of such Parent Prepared Tax Return or Refund Form (taking into account any extensions thereof) for the Representative’s review and consent; provided, that Representative’s consent shall not be unreasonably withheld, conditioned, or delayed with respect to any position taken on a Parent Prepared Tax Return if, and solely to the extent, such position could not adversely impact any Refund Forms or Refund Amounts. The Representative shall review and comment on such Tax Returns within fifteen (15) days of receipt thereof. If the Representative does not submit comments within such period, then the Representative will be deemed to have approved such Tax Returns as prepared by Parent. If the Representative delivers comments to Parent within such period, Parent shall incorporate any reasonable comments provided by Representative relating any Refund Forms or Refund Amounts; provided that, in the event the Representative and Parent disagree with respect to such comments, such dispute shall be referred to the Accounting Firm for resolution in accordance with the general procedures set forth in Section 2.7(d); provided, further, that parties hereto acknowledge that the Transaction Tax Deductions set forth on Section 1.1(c) of the Schedules have been agreed to except for amounts reflected on such Schedule incurred in the tax year ending with the Closing, which amounts the Parties agree are reasonable estimates of Transaction Tax Deductions incurred in the tax year ending with the Closing and shall be subject to Parent’s reasonable review and verification.. Parent shall timely file, or cause to be timely filed, any such Parent Prepared Tax Returns and shall cause the Surviving Corporation and any Subsidiary to timely pay all Taxes shown as due on a Parent Prepared Tax Return, if any.

(ii) Except as set forth in Section 6.5(h), Parent shall cause the Surviving Corporation and its Subsidiaries or the Parent Group, as applicable, to (A) file or cause to be filed an IRS Form 4466 (Corporation Application for Quick Refund of Overpayment of Estimated Taxes) and any analogous state and local forms (if applicable) to claim a refund with respect to any overpayments of estimated Tax by the Company and its Subsidiaries for the Tax year ending on the Closing Date, (B) file or cause to be filed an IRS Form 1139 (Corporation Application for Tentative Refund) and any analogous state and local forms (if applicable) (the forms described in this clause (B) and the preceding clause (A), collectively, the “Refund Forms”) to claim a refund with respect to the carryback of any net operating loss of the Company and its subsidiaries for the taxable period ending on the Closing Date (a “Pre-Closing Net Operating Loss”) and (C) not waive or cause to be waived the carryback period for a Pre-Closing Net Operating Loss, it being understood that any refund claimed in connection with any Refund Forms shall be claimed in cash rather than as a credit against future Tax liabilities (to the extent permitted by applicable Law). Any such Refund Forms shall be treated as a Parent Prepared Tax Return that is subject to analogous review, comment, dispute resolution and filing procedures to those set forth in Section 6.5(b)(i).

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(c) Closing of the Tax Year. Notwithstanding anything to the contrary in this Agreement (including Section 6.15(d)), Parent shall cause the Company and its Subsidiaries to become members of the affiliated group filing a consolidated federal income Tax Return to which Parent is a member (the “Parent Group”), such that the taxable year of the Company shall terminate on the Closing Date for federal (and applicable state and local) income Tax purposes. With respect to any Parent Prepared Tax Returns, Parent and Representative, and their respective Affiliates shall, to the extent permitted by applicable Law, cause the Company and its Subsidiaries and the Parent Group, as applicable, to (i) allocate all items accruing on the Closing Date for federal income tax purposes to the taxable period of the Company and its Subsidiaries ending on the Closing Date pursuant to Treasury Regulations § 1.1502-76(b)(1) and (not pursuant to the ratable allocation method under Treasury Regulations §§ 1.1502-76(b)(2)(ii) or 1.1502-76(b)(2)(iii)), (ii) treat all deductions described in in the definition of Transaction Tax Deductions that accrue on or prior to the Closing Date as being deductible by the Company and its Subsidiaries in the taxable period of the Company and its Subsidiaries ending on the Closing Date and not to utilize the “next day rule” in Treasury Regulations §1.1502-76(b)(1)(ii)(B) (or any similar provision of state, local or foreign law), (iii) report all transactions not in the ordinary course of business (as reasonably determined by Parent and Representative) that occur on the Closing Date after the Closing as having occurred on the day following the Closing Date to the extent permitted by applicable Law, (iv) make the election to deduct 70% of any success-based fees incurred in connection with the transactions contemplated by this Agreement in accordance with Revenue Procedure 2011-29 on the Tax Return of the Company and its Subsidiaries (or the parent of the Parent Group) for the taxable period ending on the Closing Date.

(d) Straddle Period. Subject to Section 6.5(c), the parties agree to treat (and to cause the Company and each of its Subsidiaries to treat) each Tax year of the Company and each of its Subsidiaries as ending at the end of the day on the Closing Date, unless such election is not permitted in a jurisdiction under applicable Law. If any Tax year of the Company or any Subsidiary does not end at the end of the day on the Closing Date pursuant to the preceding sentence (each, a “Straddle Period”), the, with respect to any specific Tax that the Company or any Subsidiary is required to file a Tax Return for a Straddle Period, the parties agree to utilize the following conventions for determining the amount of Taxes attributable to the portion of the Straddle Period ending at the end of the day on the Closing Date (including for purposes of preparing any Tax Returns and Refund Forms in accordance with Section 6.5(b)): (i) in the case of property Taxes and other similar Taxes imposed on a periodic basis, the amount attributable to the portion of the Straddle Period ending at the end of the day on the Closing Date shall equal the Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days in the portion of the period ending at the end of the day on the Closing Date and the denominator of which is the number of calendar days in the entire Straddle Period; and (ii) in the case of all other Taxes (including income Taxes, Sales Taxes, employment Taxes and withholding Taxes), the amount attributable to the portion of the Straddle Period ending at the end of the day on the Closing Date shall be determined as if the Company or any Subsidiary filed a separate Tax Return with respect to such Taxes for the portion of the Straddle Period ending at the end of the day on the Closing Date using a “closing of the books methodology”.

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(e) Tax Contests. Parent shall notify the Representative in writing within ten (10) days after receipt by Parent, the Surviving Corporation or any of their Affiliates of any official inquiry, examination audit or proceeding regarding any Taxes of the Company, the Surviving Corporation or any of their Affiliates (i) relating to any Refund Forms, or (ii) that could adversely impact any refund claimed on any Refund Form or any Pre-Closing Net Operating Loss (each a “Tax Contest”). Upon providing written notice to Parent, the Representative shall have the option to exercise, on behalf of the Stockholders and at the expense of the Stockholders, control over the handling, disposition or settlement of any issue raised in any such Tax Contest relating to any item described in clauses (i) or (ii) of the preceding sentence; provided, that Parent shall have the right at its expense to participate in, any such Tax Contest controlled by the Representative and the Representative shall keep Parent informed of all material developments relating to such Tax Contest on a timely basis (including providing copies of all correspondence with and any submissions to the relevant Governmental Authority). The Representative shall not settle any such Tax Contest or related issue raised in any such Tax Contest controlled by the Representative without the prior written consent of Parent (such consent not to be unreasonably withheld, conditioned or delayed). If the Representative does not exercise its option to control the handling, disposition or settlement of any issued raised in any such Tax Contest as provided in this Section 6.5(b), or fails to notify Parent of its intent to exercise its option within twenty-one (21) days of receiving notice from Parent of such Tax Contest, then Parent shall have the right to control the handling, disposition or settlement of any such issue; provided that the Representative shall be entitled to participate in any such Tax Contest controlled by Parent, and Parent shall keep the Representative informed of all material developments relating to such Tax Contest on a timely basis (including providing copies of all correspondence with and any submissions to the relevant Governmental Authority). Parent shall not settle any Tax Contest controlled by Parent without the prior written consent of the Representative (such consent not to be unreasonably withheld, conditioned, or delayed).

(f) Tax Refunds. Except as set forth in Section 6.5(h), Parent shall promptly, but in any event no later than five (5) Business Days of receipt, pay and transfer, or cause to be paid and transferred to the Representative (for further distribution to the Former Holders of Series A Preferred Stock) and the holders of Transaction Incentive Award Amounts in the manner provided in Section 2.7(f), in each case in accordance with their respective Distribution Percentages, the amount of any cash Tax refund that is received by the Surviving Corporation, Parent, the Parent Group, or any of their respective Affiliates with respect to (i) the taxable period ending on the Closing Date or (ii) the filing of a Refund Form, in each case with respect to clauses (i) and (ii) to the extent the amount of any such Tax refund is attributable to the Transaction Tax Deductions (including any refund of estimated tax payments attributable to Transaction Tax Deductions or any refund resulting from the carryback of any Pre-Closing Net Operating Loss attributable to the Transaction Tax Deductions) (the amounts described in clauses (i) and (ii), each a “Refund Amount”), net of any reasonable out-of-pocket costs incurred by Surviving Corporation, Parent, the Parent Group, or any of their respective Affiliates in connection with preparing and filing such Refund Forms and obtaining such Tax refunds. For purposes of this Section 6.5(f), the aggregate amount of  the Refund Amounts shall not exceed the aggregate amount of the Refund Amounts calculated by taking into account the difference between the aggregate Tax refunds, if any, that would have been received by the Surviving Corporation, Parent, the Parent Group, or any of their respective Affiliates with respect to the taxable period ending on the Closing Date and the filing of any Refund Forms without any Transaction Tax Deductions, and the actual aggregate amount of such Tax refunds received by the Surviving Corporation, Parent, the Parent Group, or any of their respective Affiliates with respect to the taxable period ending on the Closing Date and the filing of such Refund Forms taking into account the Transaction Tax Deductions, it being the intention that the payment of Tax refunds to the Representative be limited to Tax refunds attributable only to the Transaction Tax Deductions.

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(g) Post-Closing Actions. Except with respect to the Company Tax Liability, Parent and its Affiliates shall not, and shall cause the Company, the Surviving Corporation, their respective Affiliates, and the Parent Group to not, without the prior written consent of the Representative (which such consent not to be unreasonably withheld, conditioned or delayed): (i) file, refile, amend, revoke or otherwise modify any Tax Return or any Tax election for any Pre-Closing Tax Period or any Straddle Period, (ii) waive any carryback of any Pre-Closing Net Operating Loss or other Tax attribute of the Company or any of its Subsidiaries arising in any Pre-Closing Tax Period, (iii) extend or waive, any statute of limitations or other period for the assessment of any Taxes of the Company or any of its Subsidiaries for any Pre-Closing Tax Period, or (iv) initiate any discussions or examinations with, or otherwise provide information to, any Governmental Authority with respect to any Taxes of the Company or any of its Subsidiaries for any Pre-Closing Tax Period, in each case (clauses (i), (ii), (iii) and (iv)), only to the extent that it could adversely impact any Refund Form, any Refund Amount, or any Pre-Closing Net Operating Loss. For avoidance of doubt, and except for matters that are expressly governed by other provisions of this Agreement (including Section 6.5(b)(i) and Section 6.5(e)), Parent, the Surviving Corporation and its Subsidiaries shall have sole control all other matters related to any Pre-Closing Tax Period.

(h) Company Tax Liability. Notwithstanding anything to the contrary in this Section 6.5, Parent, the Surviving Corporation and its Subsidiaries (and not the Representative or any Stockholder) shall be entitled to (i) receive any Tax refunds and other Tax benefits arising from, related to or associated with the Company Tax Liability and (ii) shall have sole control over any inquiry, examination audit or proceeding regarding any Taxes of the Company, the Surviving Corporation or any of their Affiliates arising from, related to or associated with the Company Tax Liability. Parent shall be solely entitled to, and may cause the Surviving Corporation and any Subsidiary to, prepare and file all Tax Returns of the Surviving Corporation and any Subsidiary arising from, related to or associated with the Company Tax Liability or payment of any Taxes related thereto, including, without limitation, (A) filing, refiling, amending, revoking or otherwise modifying any Tax Return or any Tax election for any Pre-Closing Tax Period or any Straddle Period, (B) filing any Tax refund form, (C) extending or waiving, any statute of limitations or other period for the assessment of any Taxes of the Company or any of its Subsidiaries for any Pre-Closing Tax Period, and (D) initiating any discussions or examinations with, or otherwise providing information to, any Governmental Authority. Any such Tax Returns shall not be subject to any analogous review, comment, dispute resolution and filing procedures to those set forth in Section 6.5(b)(i).

Section 6.6. Stockholder Matters. As a condition precedent to receiving its consideration pursuant to this Agreement, each Former Holder has entered (or will enter prior to receiving its consideration) a Support Agreement. The parties hereto acknowledge and agree that (i) the Support Agreements are an integral part of the transactions contemplated by this Agreement and the other Merger Documents, (ii) the Support Agreements are part of the terms and conditions of this Agreement and (iii) each stockholder of the Company (or Former Holder, as the case may be) must enter into a Support Agreement prior to receiving any consideration pursuant to this Agreement (or otherwise in connection with the Merger). Parent and Newco hereby acknowledge receipt of Support Agreements from the Stockholders.

Section 6.7. Restrictions on Dissolution. Each of Court Square Capital Partners II, L.P., Court Square Capital Partners II-A, L.P., Court Square Capital Partners (Executive) II, L.P., Court Square Capital Partners (Offshore) II, L.P., ACP/IWCO Holdings LLC and ACP/IWCO Splitter, L.P. agree not to dissolve and liquidate for a period of sixty (60) days following the Closing.

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ARTICLE VII

SURVIVAL; INDEMNIFICATION

Section 7.1. Survival of Representations. The Fundamental Representations shall survive the Closing for a period of three (3) years and the representations and warranties in Section 3.11 (Environmental Matters) and Section 3.13 (Employee Benefit Matters) shall survive the Closing for a period of six (6) years. No other representations and warranties of the parties hereunder or in any Letter of Transmittal shall survive the Closing, except in the case of a Fundamental Payout Amount. If a Fundamental Payment Amount occurs at any time, then all representations and warranties in Article III and Article V, in each Letter of Transmittal and in each Support Agreement shall be deemed to survive the Closing for a period of three (3) years (except that the Tax Representations and the representations and warranties in Section 3.11 (Environmental Matters) and Section 3.13 (Employee Benefit Matters) survive the Closing for a period of six (6) years). The covenants and obligations contained in this Agreement that, by their terms, provide for performance following the Closing Date shall survive the Closing in accordance with their terms. No indemnifying party shall have any liability hereunder with respect to any claim for breach of any such representation, warranty or covenant, unless notice of such claim is first given in accordance with Section 7.3 before the end of the survival period specified therefor in this Section 7.1 and such notice specifies in reasonable detail the matter giving rise to the claim, the nature of the claim and, to the extent then known, the amount of the claim. Any representation, warranty or covenant subject to a notice of a claim first given in accordance with Section 7.3 before the end of the survival period (or deemed survival period) specified therefor in this Section 7.1 shall, notwithstanding the provisions of this Section 7.1, survive until final resolution of each such claim.

Section 7.2. Indemnification.

(a) Subject to the provisions of this Article VII, the Stockholders and the holders of Transaction Incentive Awards, severally but not jointly, in accordance with their respective Distribution Percentages, agree to indemnify, defend and hold each of Parent, Newco, the Surviving Corporation and/or any of their respective officers, directors, employees, affiliates and/or agents (each a “Buyer Indemnitee” and together the “Buyer Indemnitees”) harmless from any Actions, damages, losses, Liabilities, interest, costs or expenses (including, without limitation, reasonable attorneys’ fees and expenses, but excluding punitive and exemplary damages (in each case other than such amounts payable to third parties in respect of Third Party Claims)) (“Loss”) as a result of or arising out of (i) the breach or failure of any Company Fundamental Representation to be true and correct, (ii) the breach or failure of any representation or warranty in Article III or Article V, any L/T Representations, other than any Company Fundamental Representation, to be true and correct but only in case of this clause (ii) in the event that Losses are payable to the Buyer Indemnitees under the R&W Insurance Policy for a breach of a Company Fundamental Representation (such amount, the “Fundamental Payout Amount”) and the coverage limit under the R&W Insurance Policy is exceeded, and then only to the extent of the Fundamental Payout Amount, (iii) any breach by any Former Holder or Representative of any of its covenants or agreements contained herein, in any Support Agreement or in any Letter of Transmittal, (iv) the exercise by any Former Holder of appraisal rights under Section 262 of the DGCL, including any amounts paid to the Former Holders, including any interest required to be paid thereon, that are in excess of what the Former Holders would have received hereunder; (v) any claim made by any Former Holder or any holder of Transaction Incentive Awards relating to such Person’s rights with respect to the Merger Consideration or the calculations and determinations set forth on the Estimated Merger Consideration Statement Spreadsheet; (vi) any Closing Date Funded Indebtedness to the extent not taken into account in the Merger Consideration and (vii) any Seller Expenses to the extent not taken into account in the Merger Consideration; provided, however, that in the case of any breach or failure of a representation or warranty in Article V, any Support Agreement or any L/T Representation to be true and correct, each Stockholder and each holder of a Transaction Incentive Award shall only be liable for its own breach or misrepresentation.

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(b) Subject to the provisions of this Article VII, each of Parent and the Surviving Corporation agrees to indemnify, defend and hold each of the Former Holders and their respective officers, directors, employees, partners, Affiliates and/or agents (each a “Seller Indemnitee” and together the “Seller Indemnitees”) harmless from any Loss suffered or paid, directly or indirectly, as a result of or arising out of (i) the failure of any Fundamental Representation made by Parent or Newco to be true and correct as of the Closing Date (or on the date when made in the case of any representation or warranty which specifically relates to an earlier date), (ii) any breach by Parent or Newco of any of its covenants or agreements contained herein, (iii) any Company Tax Liability and (iv) any breach by the Surviving Corporation (including by way of being the successor of Newco and the Company) of any of its covenants or agreements contained herein which are to be performed by the Surviving Corporation after the Closing Date.

(c) For purposes of determining the existence of any inaccuracy in, breach of or failure of any representation, warranty or covenant in this Agreement, any Letter of Transmittal or any Support Agreement, or calculating the amount of any Loss incurred in connection therewith, any and all references to "material," "materially," and "materiality" (or other correlative or similar terms or qualifiers) shall be disregarded.

(d) All indemnification payments under this Article VII shall be adjustments to the Merger Consideration except as otherwise required by applicable law.

Section 7.3. Claims.

(a) Any party seeking indemnification under Section 7.2 (an “Indemnified Party”) shall promptly give the party from whom indemnification is being sought (or, in the case of a Buyer Indemnitee seeking indemnification, such Buyer Indemnitee shall promptly notify the Representative in writing) (such notified party, the “Responsible Party”) notice of any matter which such Indemnified Party has determined has given rise to a right of indemnification under this Agreement, within 30 days of such determination, stating in reasonable detail, the nature of the claim, a good-faith reasonable estimate of the Loss to the extent then known and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises; provided that, subject to the survival periods set forth in Section 8.1, the failure to so notify shall not relieve the Responsible Party of its obligations hereunder, except to the extent (and only to the extent) that the Responsible Party is actually materially prejudiced thereby. If the Responsible Party has disputed a claim for indemnification (including any Third-Party Claim), the Responsible Party and the Indemnified Party shall proceed in good faith to negotiate a resolution to such dispute. If the Responsible Party and the Indemnified Party cannot resolve such dispute in a reasonable period of time after notice is delivered, such dispute shall be resolved pursuant to the terms of Section 9.5.

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(b) If an Action by a third party (a “Third Party Claim”) is made against any Indemnified Party, and if such Indemnified Party intends to seek indemnity with respect thereto under this Article VII, such Indemnified Party shall promptly, and in any event within 30 days of the determination that a right to indemnification exists, notify the Responsible Party of such claims in writing; provided that, subject to the survival periods set forth in Section 7.1, the failure to so notify shall not relieve the Responsible Party of its obligations hereunder, except to the extent (and only to the extent) that the Responsible Party is actually materially prejudiced thereby. Except with respect to Exception Claims, the Responsible Party may, by delivery to the Indemnified Party of written notice acknowledging the Responsible Party's obligation to indemnify the Indemnified Party with respect to any Loss related to such Third Party Claim subject to the limitations set forth in this Article VII, assume the conduct and control, through counsel reasonably acceptable to the Indemnified Party at the expense of the Responsible Party, of the settlement or defense thereof, and the Indemnified Party shall cooperate with it in connection therewith in accordance with Section 7.3(c); provided that the Responsible Party shall permit the Indemnified Party to participate in such settlement or defense through counsel chosen by such Indemnified Party, at the Indemnified Party’s own cost and expense. So long as the Responsible Party is reasonably contesting any such claim in good faith, the Indemnified Party shall not pay or settle any such claim. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim, provided that in such event it shall waive any right to indemnity therefor by the Responsible Party for such claim unless the Responsible Party shall have consented to such payment or settlement. If the Responsible Party does not elect to undertake the defense thereof or if such Third Party Claim is an Exception Claim, the Indemnified Party shall have the right to contest, settle or compromise the claim and shall not thereby waive any right to indemnity therefor pursuant to this Agreement. With respect to a Third Party Claim for which the Responsible Party has assumed the conduct and control, the Responsible Party shall not, except with the consent of the Indemnified Party, enter into any settlement (i) that does not include as an unconditional term thereof the giving by the person or persons asserting such claim to all Indemnified Parties of an unconditional release from all liability with respect to such claim or consent to entry of any judgment or (ii) that grants any relief other than money damages (which are paid by the Responsible Party to the extent provided herein). The Responsible Party may not pay or settle any other Third Party Claim. In the event of any conflict between this Section 7.3(b) and Section 6.5(b) with respect to any Tax Contests, the provisions of Section 6.5(b) shall control.

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(c) With respect to a Third Party Claim for which the Responsible Party has assumed the conduct and control pursuant to Section 7.3(b), any Indemnified Party shall, at the expense of the Responsible Party, cooperate in all reasonable respects with the Responsible Party and its attorneys in the investigation, trial and defense of such Third Party Claim and any appeal arising therefrom and shall, at the expense of the Responsible Party, furnish such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection therewith. Such cooperation shall include reasonable access during normal business hours afforded to the Responsible Party and its agents and representatives to, and reasonable retention by the Indemnified Party of records and information which have been identified by the Responsible Party as being reasonably relevant to such Third Party Claim, and making mutually agreed upon employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. The parties shall cooperate with each other in any notifications to insurers.

(d) The parties acknowledge and agree that any Losses related to claims for indemnification pursuant to Section 7.2(a)(iv) made on or prior to sixty (60) days following the Closing Date (an “Appraisal Claim”) may, at the election of the Buyer Indemnitee, be paid from the Adjustment Escrow Amount remaining in the Escrow Account. In the event any Appraisal Claims remains unresolved as of date the Adjustment Escrow Amount is to be distributed to the Former Holders of Series A Preferred Stock and the holders of Transaction Incentive Awards pursuant to Section 2.7(e), any Adjustment Escrow Amount remaining in the Escrow Account shall remain in the Escrow Account until all Appraisal Claims have been fully resolved and any Losses related thereto fully paid. Within two (2) Business Days after an Appraisal Claim is resolved, Representative and Parent shall deliver to the Escrow Agent joint written instruction instructing the Escrow Agent to make payment of all Losses related to such Appraisal Claim to the applicable Buyer Indemnitee. The Buyer Indemnitees' remedy against the Escrow Account pursuant to this Section 7.3(d) is cumulative with any other remedies available pursuant to this Agreement, and not exclusive.

Section 7.4. Limitations on Indemnification Obligations. The rights of the Buyer Indemnitees to indemnification pursuant to the provisions of Section 7.2 are subject to the following limitations:

(a) The Buyer Indemnitees shall not be entitled to recover that portion of any Losses to the extent such Losses are specifically reflected or reserved for as a current liability in the calculation of Net Working Capital, as finally determined in accordance with Section 2.7;

(b) The Buyer Indemnitees’ sole recourse for any claims or Losses pursuant to Section 7.2(a)(i) or Section 7.2(a)(ii) (with respect to Section 7.2(a)(ii), other than any Fundamental Payout Amount, but only to the extent of such Fundamental Payout Amount as set forth in Section 7.2(a)(ii)) is the R&W Insurance Policy except for claims or Losses pursuant to Section 7.2(a)(i) which are (x) in an aggregate amount up to the Retention Amount or (y) after the R&W Insurance Policy has been exhausted.

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(c) The Buyer Indemnitees shall not be entitled to recover for any Losses that in the aggregate exceed the Indemnification Cap. In no event shall any Stockholder or holder of a Transaction Incentive Award be required to indemnify the Buyer Indemnitees for any Losses that in the aggregate exceed such Person's pro rata share (based on the amount of proceeds received by such Person in relation to the proceeds received by all Former Holders and holders of Transaction Incentive Awards) of the Indemnification Cap; provided, however, that, with respect to a holder of a Transaction Incentive Award who is not a Former Holder of Series A Preferred Stock, such holder shall not be required to indemnify the Buyer Indemnitees for any Losses that exceed the amount received by such holder pursuant to the Transaction Incentive Award.

Section 7.5. Special Rule for Fraud. Notwithstanding anything to the contrary contained in this Article VII or elsewhere in this Agreement, in the event of any breach of a representation or warranty constitutes Fraud (as finally determined by a court of competent jurisdiction), then (a) such representation or warranty shall survive indefinitely and (b) the limitations and conditions set forth Section 7.4, as applicable, shall not apply to any Loss that the Buyer Indemnitees may suffer, sustain or become subject to, as a result of, arising out of, relating to or in connection with any such breach; provided that the Buyer Indemnitees shall not be entitled to recover for any Losses that in the aggregate exceed the Indemnification Cap.

Section 7.6. Exclusive Remedy. Notwithstanding anything else contained in this Agreement to the contrary, indemnification pursuant to, and subject to the limitations provided in, this Article VII shall be the sole and exclusive remedy for the parties hereto for any misrepresentation or breach of any warranty, covenant or other provision contained in this Agreement and with respect to any and all claims by Buyer Indemnitees relating to this Agreement, the Company and its Subsidiaries and by Seller Indemnitees relating to this Agreement, other than as provided in Section 2.7(d), as provided in Section 6.5(e) with respect to Tax Contests, for specific performance under Section 9.12, in the case of Fraud. Without limiting the generality or effect of the foregoing, as a material inducement to the other parties hereto entering into this Agreement, Parent, Newco, Stockholders and Representative hereby unconditionally and irrevocably waive, on behalf of themselves, their Affiliates and their respective directors, officers, managers, partners and equity holders, any claim or cause of action (including known or unknown, foreseen or unforeseen) arising from this Agreement, the events giving rise to or subject matter of this Agreement and the transactions contemplated hereby, which it or any of its Affiliates (including the Surviving Corporation) may have against the other parties hereto or any of their respective successors, assigns, and any present or former directors, managers, officers, employees or agents of such Person, including without limitation under the common law or federal or state securities laws, trade regulation laws or other laws, except for claims or causes of action brought under and subject to the terms and conditions of this Article VII (other than as provided in Section 2.7(d), for specific performance under Section 9.12, in the case of Fraud).

Section 7.7. Mitigation of Damages. Each Indemnified Party shall use its reasonable efforts to mitigate any indemnifiable Loss as required by Law. In the event that an Indemnified Party fails to mitigate an indemnifiable Loss as required by Law, the Responsible Party shall have no liability for any portion of such Loss that reasonably could have been avoided had the Indemnified Party made such efforts.

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Section 7.8. Effect of Investigation or Knowledge. Any claim by a Buyer Indemnitee for indemnification shall not be adversely affected by any investigation by or opportunity to investigate afforded to Parent, Newco or any of their respective Affiliates or any of their respective officers, directors, employees, investors, lenders, agents or representatives, nor shall such a claim be adversely affected by the knowledge of Parent, Newco or any of their respective Affiliates or any of their respective officers, directors, employees, investors, lenders, agents or representatives on or before the Closing Date of any breach or inaccuracy of any of the representations or warranties contained herein or of any state of facts that may give rise to such a breach.

ARTICLE VIII

REPRESENTATIVE OF THE STOCKHOLDERS OF THE COMPANY

Section 8.1. Authorization of Representative.

(a) CSC (and any successor of CSC or any assign of CSC) is hereby appointed, authorized and empowered to act as a representative (the “Representative”), for the benefit of the Former Holders and the holders of Transaction Incentive Awards, as the exclusive agent and attorney-in-fact to act on behalf of each Former Holder and each holder of an Transaction Incentive Award, in connection with and to facilitate the consummation of the transactions contemplated hereby, which shall include the power and authority:

(i) to execute and deliver the Escrow Agreement (with such modifications or changes therein as to which the Representative, in its sole discretion, shall have consented) and to agree to such amendments or modifications thereto as the Representative, in its sole discretion, determines to be desirable;

(ii) to execute and deliver such amendments, waivers and consents in connection with this Agreement and the Escrow Agreement and the consummation of the transactions contemplated hereby and thereby as the Representative, in its sole discretion, may deem necessary or desirable;

(iii) to determine, negotiate and agree upon the Net Working Capital Adjustment;

(iv) as Representative, to enforce and protect the rights and interests of the Former Holders and the holders of Transaction Incentive Awards and to enforce and protect the rights and interests of the Representative arising out of or under or in any manner relating to this Agreement and the Escrow Agreement and each other Merger Document or the transactions provided for herein or therein (including, without limitation, in connection with any and all claims for indemnification brought under Article VII hereof), and to take any and all actions which the Representative believes are necessary or appropriate under the Escrow Agreement and/or this Agreement for and on behalf of the Former Holders and the holders of Transaction Incentive Awards, including, without limitation, asserting or pursuing any Action (a “Claim”) against Parent and/or Surviving Corporation, defending any Third Party Claims or Claims by the Buyer Indemnitees, consenting to, compromising or settling any such Third Party Claims or Claims, conducting negotiations with Parent, Surviving Corporation and their respective representatives regarding such Third Party Claims or Claims, and, in connection therewith, to (A) assert any claim or institute any Action; (B) investigate, defend, contest or litigate any Action initiated by Parent, the Surviving Corporation or any other Person, or by any Governmental Authority against the Representative and/or any of the Former Holders or the holders of Transaction Incentive Awards and/or the Adjustment Escrow Funds, and receive process on behalf of any or all of the Former Holders and the holders of Transaction Incentive Awards in any such Action and compromise or settle on such terms as the Representative shall determine to be appropriate, and give receipts, releases and discharges with respect to, any such Action; (C) file any proofs of debt, claims and petitions as the Representative may deem advisable or necessary; (D) settle or compromise any claims asserted under this Agreement or the Escrow Agreement; and (E) file and prosecute appeals from any decision, judgment or award rendered in any such action, proceeding or investigation, it being understood that the Representative shall not have any obligation to take any such actions, and shall not have any liability for any failure to take any such actions;

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(v) to refrain from enforcing any right of the Former Holders and the holders of Transaction Incentive Awards or any of them and/or the Representative arising out of or under or in any manner relating to this Agreement, the Escrow Agreement or any other Merger Documents; and

(vi) to make, execute, acknowledge and deliver all such other agreements, guarantees, orders, receipts, endorsements, notices, requests, instructions, certificates, stock powers, letters and other writings, and, in general, to do any and all things and to take any and all action that the Representative, in its sole and absolute discretion, may consider necessary or proper or convenient in connection with or to carry out the transactions contemplated by this Agreement, the Escrow Agreement, and all other Merger Documents.

(b) The Representative shall not be entitled to any fee, commission or other compensation for the performance of its services hereunder, but shall be entitled to the payment of all its costs and expenses incurred as the Representative. In connection with the foregoing, the Representative shall be entitled to cover or recover the costs and expenses incurred by the Representative in its capacity as the Representative from the Expense Reserve. In addition, to the extent that the Expense Reserve is at any time insufficient (as determined by the Representative in its sole discretion) to cover all of the costs and expenses incurred by the Representative in its capacity as the Representative, then the Representative may, at its option, (i) retain such amount of the proceeds received by the Former Holders and the holders of Transaction Incentive Awards after the Closing Date under any term or provision of this Agreement (such amount together with the Expense Reserve, the “Expense Funds”) or (ii) seek reimbursement of such costs and expenses directly from the Former Holders. Once the Representative determines, in its sole discretion, that the Representative will not incur any additional expenses in its capacity as the Representative, then the Representative will distribute the remaining unused Expense Funds (if any) to the Former Holders of Series A Preferred Stock and, for further distribution to the holders of Transaction Incentive Awards, the Surviving Corporation, in accordance with their respective Distribution Percentages. In connection with this Agreement, the Escrow Agreement and any other Merger Documents, and in exercising or failing to exercise all or any of the powers conferred upon the Representative hereunder (i) the Representative shall incur no responsibility whatsoever to any Former Holders or any holders of Transaction Incentive Awards by reason of any error in judgment or other act or omission performed or omitted hereunder or in connection with the Escrow Agreement or any such other Merger Documents, excepting only responsibility for any act or failure to act which represents bad faith or willful misconduct, and (ii) the Representative shall be entitled to rely in good faith on the advice of counsel, public accountants or other experts experienced in the matter at issue, and any error in judgment or other act or omission of the Representative pursuant to such advice shall in no event subject the Representative to liability to any Former Holders or any holders of Transaction Incentive Awards. Each Former Holder and holder of Transaction Incentive Awards shall indemnify, pro rata based upon such holder’s Distribution Percentage, the Representative against all losses, damages, Liabilities, claims, obligations, costs and expenses, including reasonable attorneys’, accountants’ and other experts’ fees and the amount of any judgment against them, of any nature whatsoever (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened or any claims whatsoever), arising out of or in connection with any Action or in connection with any appeal thereof, relating to the acts or omissions of the Representative hereunder, or under the Escrow Agreement or otherwise; provided, however, that the foregoing indemnification shall not apply in the event of any action or proceeding which finally adjudicates the liability of the Representative hereunder for its bad faith or willful misconduct. Any amount payable to the Representative pursuant to this Section 8.1 shall (A) first be paid from the Expense Funds and (B) thereafter paid to the Representative by the Former Holders and the holders of Transaction Incentive Awards in accordance with their respective Distribution Percentages. In the latter case, upon written notice from the Representative to the Former Holders and the holders of Transaction Incentive Awards as to the existence of a deficiency toward the payment of any such indemnification amount, each Former Holder and holder of Transaction Incentive Awards shall promptly deliver to the Representative full payment of his, her or its ratable share of the amount of such deficiency based upon such holder’s Distribution Percentage; provided, that no such holder shall be liable for any claim of indemnification by the Representative pursuant to this Section 8.1(b) which is, individually or in the aggregate, in excess of such holder’s pro rata portion of the Merger Consideration to which such holder or participant is entitled pursuant to this Agreement.

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(c) Parent, Newco, the Surviving Corporation may conclusively and absolutely rely, without inquiry, upon any consent, approval or action of the Representative as the consent, approval or action, as the case may be, of each Former Holder and each holder of Transaction Incentive Awards individually and all of the Former Holders and holders of Transaction Incentive Awards as a group in all matters referred to in this Section 8.1

(d) Notwithstanding the provisions of Section 8.1, all of the indemnities, immunities and powers granted to the Representative under this Agreement shall survive the Effective Time and/or any termination of the Escrow Agreement.

(e) The grant of authority provided for herein (i) is coupled with an interest and shall be irrevocable and survive the death, incompetency, bankruptcy or liquidation of any Former Holder or holder of a Transaction Incentive Award; and (ii) shall survive the consummation of the Merger.

ARTICLE IX

MISCELLANEOUS

Section 9.1. Notices. Any notice, request, instruction, or other document to be given hereunder by any party hereto to any other party shall be in writing and shall be delivered personally, by overnight delivery service, by facsimile, by email or sent by certified, registered or express air mail, postage prepaid (and shall be deemed given (a) when delivered, if delivered by hand, (b) one Business Day after deposited with an overnight delivery service, if delivered by overnight delivery, (c) upon electronic confirmation of receipt, if faxed during normal business hours, or upon transmission, if sent by email, in either case so long as written notice of such transmission is sent within three Business Days thereafter by another delivery method described in clauses (a), (b) or (d) confirming such transmission, and (d) five days after mailing if mailed), as follows:

If to Parent or the Surviving Corporation:

ModusLink Global Solutions, Inc.
1601 Trapelo Road, Suite 170

Waltham, MA 02451

Attention: Legal Department

Facsimile: (781) 663-5095

Email: info@moduslink.com

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

Ice Miller LLP

One American Square, Suite 2900
Indianapolis, Indiana 46282
Attention: John R. Thornburgh, Esq.

Facsimile: (317) 592-4783
Email: John.Thornburgh@icemiller.com

If to the Representative:

CSC Shareholder Services LLC
c/o Court Square Capital Partners

Park Avenue Plaza

55 East 52nd Street, 34th Floor
New York, New York 10055
Facsimile: (212) 752-6184
Attention: John Civantos

Email: jcivantos@courtsquare.com

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

Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, Pennsylvania 19104
Facsimile: (215) 994-2222
Attention: Craig L. Godshall, Esq.

Email: craig.godshall@dechert.com

If to any Stockholder or any holder of Transaction Incentive Awards, to the address set forth in the books and records of the Company,

or to such other address as any party hereto shall notify the other parties hereto (as provided above) from time to time.

Section 9.2. Exhibits and Schedules. All exhibits and schedules hereto, or documents expressly incorporated into this Agreement, are hereby incorporated into this Agreement and are hereby made a part hereof as if set out in full in this Agreement. For the purposes of this Agreement, any matter that is disclosed in a Schedule to this Agreement shall be deemed to have been included in the other Schedules, notwithstanding the omission of a cross reference thereto, so long as the relevance of such matter to such other Schedules is reasonably apparent from the plain reading of the disclosure as so made. Disclosure of any fact or item in any Schedule shall not necessarily mean that such fact or item is material to the Company or its Subsidiaries individually or taken as a whole. Certain facts and items disclosed in the Schedules may not be believed to be material or may not be required to be disclosed pursuant to the terms of the representations and warranties in the Agreement. Such facts and items are being disclosed for informational purposes only. No disclosure on any Schedule relating to a possible breach or violation of any contract or Law shall be construed as an admission or indication that a breach or violation exists or has actually occurred.

Section 9.3. Time of the Essence; Computation of Time. Time is of the essence for each and every provision of this Agreement. Whenever the last day for the exercise of any privilege or the discharge or any duty hereunder shall fall upon a Saturday, Sunday, or any date on which banks in New York City, New York are authorized to be closed, the party having such privilege or duty may exercise such privilege or discharge such duty on the next succeeding day which is a regular Business Day.

Section 9.4. Expenses. Except as otherwise provided herein, each party hereto shall pay its own expenses incident to this Agreement and the transactions contemplated herein. Parent and Newco understand and acknowledge that all out of pocket fees and expenses incurred or to be incurred by the Company in connection with the transactions contemplated hereby (including, without limitation, the Seller Expenses) will be paid by the Company in cash at or prior to the Closing or will be a part of the Seller Expenses. Parent, on the one hand, and the Stockholders, on the other hand, shall each be responsible for fifty percent (50%) of any transfer, documentary, sales, use, stamp, registration and other such Taxes (“Transfer Taxes”), and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement. Parent will, at its own expense, file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, fees and charges. The parties hereto agree to cooperate with Parent in the filing any such Tax Returns and other documentation, including promptly supplying any information in its possession reasonably requested by Parent that is reasonably necessary to complete such Tax Returns and other documentation.

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Section 9.5. Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal Laws of the State of New York, without reference to the choice of Law or conflicts of Law principles thereof, except to the extent that the DGCL is mandatorily applicable. The parties hereto hereby agree and consent to be subject to the exclusive jurisdiction of the United States District Court for the Southern District of New York, and in the absence of such Federal jurisdiction, the parties consent to be subject to the exclusive jurisdiction of the state courts located in New York City, and hereby waive the right to assert the lack of personal or subject matter jurisdiction or improper venue in connection with any such suit, action or other proceeding. In furtherance of the foregoing, each of the parties (i) waives the defense of inconvenient forum, (ii) agrees not to commence any suit, action or other proceeding arising out of this Agreement or any transactions contemplated hereby other than in any such court, and (iii) agrees that a final judgment in any such suit, action or other proceeding (including any appeals therefrom) shall be conclusive and may be enforced in other jurisdictions by suit or judgment or in any other manner provided by Law.

Section 9.6. Assignment; Successors and Assigns; No Third Party Rights. This Agreement may not, without the prior written consent of Parent and Representative, be assigned by operation of Law or otherwise, and any attempted assignment shall be null and void; provided, however, that (a) Parent and the Surviving Corporation may assign their rights to a Subsidiary of Parent upon written notice of the same to the Representative and (b) Parent and the Surviving Corporation may without such consent and upon written notice to Representative assign their rights hereunder or under the other Merger Documents as collateral security to any lender or any other debt financing source providing financing in connection with the transactions contemplated hereby, which assignment in either case of clause (a) or (b) above shall not relieve Parent or the Surviving Corporation of any of their obligations hereunder. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto, the Former Holders, the holders of Transaction Incentive Awards and their respective heirs, successors, permitted assigns and legal representatives. This Agreement shall be for the sole benefit of the parties to this Agreement, the Former Holders, the holders of Transaction Incentive Awards and their respective heirs, successors, permitted assigns and legal representatives and is not intended, nor shall be construed, to give any Person, other than the parties hereto, the Former Holders, the holders of Transaction Incentive Awards and their respective heirs, successors, assigns and legal representatives, any legal or equitable right, remedy or claim hereunder, except that the Buyer Indemnitees and the Seller Indemnitees shall be intended third party beneficiaries of Article VII and the D&O Indemnified Persons shall be intended third party beneficiaries of Section 6.4.

Section 9.7. Counterparts. This Agreement may be executed in two or more counterparts for the convenience of the parties hereto, each of which shall be deemed an original and all of which together will constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or portable document format shall be effective as delivery of a manually executed counterpart to this Agreement.

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Section 9.8. Titles and Headings. The titles, captions and table of contents in this Agreement are for reference purposes only, and shall not in any way define, limit, extend or describe the scope of this Agreement or otherwise affect the meaning or interpretation of this Agreement.

Section 9.9. Entire Agreement. This Agreement, including the Exhibits and Schedules attached thereto, and the other Merger Documents, constitute the entire agreement among the parties with respect to the matters covered hereby and supersede all previous written, oral or implied understandings among them with respect to such matters.

Section 9.10. Severability. The invalidity of any portion hereof shall not affect the validity, force or effect of the remaining portions hereof. If it is ever held that any restriction hereunder is too broad to permit enforcement of such restriction to its fullest extent, such restriction shall be enforced to the maximum extent permitted by Law.

Section 9.11. No Strict Construction. Each of the parties hereto acknowledges that this Agreement has been prepared jointly by the parties hereto, and shall not be strictly construed against either party. As a consequence, the parties do not intend that the presumptions of any Laws or rules relating to the interpretation of contracts against the drafter of any particular clause should be applied to this Agreement and therefore waive their effects.

Section 9.12. Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by the parties hereto in accordance with their specific terms or were otherwise breached. It is accordingly agreed that any party hereto shall be entitled to seek an injunction or injunctions to prevent breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction set forth in Section 9.5. Such remedies shall, however, be cumulative and not exclusive and shall be in addition to any other remedies which any party may have under this Agreement or otherwise. The parties hereto agree that the right of specific performance and other equitable relief is an integral part of the transactions contemplated by this Agreement and without that right, no party hereto would have entered into this Agreement. Each of the parties hereto hereby waives (i) any defenses in any action for specific performance, including the defense that a remedy at Law would be adequate and (ii) any requirement under any Law to post a bond or other security as a prerequisite to obtaining equitable relief.

Section 9.13. Waiver of Jury Trial. TO THE EXTENT NOT PROHIBITED BY LAW, WHICH CANNOT BE WAIVED, EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR ACTION OF ANY PARTY HERETO. EACH PARTY AGREES THAT IN ANY SUCH LITIGATION, THE MATTERS SHALL BE TRIED TO A COURT AND NOT TO A JURY.

66

 

Section 9.14. Failure or Indulgence not Waiver. No failure or delay on the part of any party hereto in the exercise of any right hereunder shall impair such right or be construed to be waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or parties exercise of any such right preclude any other or further exercise thereof or any other right. To the maximum extent permitted by applicable Law, (a) no claim or right arising out of this Agreement or any of the other Merger Documents can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by such party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of that party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or any of the other Merger Documents. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

Section 9.15. Amendments. This Agreement may be amended by Parent and Representative. This Agreement (including the provisions of this Section 9.15) may not be amended or modified except by an instrument in writing signed by Parent and Representative.

Section 9.16. Conflict Waiver. Each of the parties to this Agreement, on its own behalf and on behalf of its directors, members, partners, officers, employees and Affiliates, and each of their successors and assigns (all such parties, the “Waiving Parties”), agree that (a) Dechert LLP may represent the Representative, the Former Holders and their Affiliates (collectively, the “Seller Group”), on the one hand, and the Company and its Subsidiaries, on the other hand, in connection with the negotiation, preparation, execution and delivery of this Agreement, the other Merger Documents and the consummation of the transactions contemplated hereby and thereby (such representation, the “Current Representation”), and (ii) Dechert LLP (or any successor) may represent the Representative, any and all members of the Seller Group or any director, member, partner, officer, employee or Affiliate of the Seller Group in connection with any dispute, Action or obligation arising out of or relating to this Agreement, any other Merger Documents or the transactions contemplated hereby or thereby (any such representation, the “Post-Closing Representation”), notwithstanding such pre-Closing representation of the Company and/or any of its Subsidiaries, and each of Parent, the Surviving Corporation, the Company and each of its Subsidiaries on behalf of itself and the Waiving Parties hereby consents thereto and waives (and will not assert) any conflict of interest or any objection arising therefrom or relating thereto. Parent, the Surviving Corporation, the Company and each of its Subsidiaries acknowledge that the foregoing provision applies whether or not Dechert LLP provides legal services to the Company or any of its Subsidiaries after the Closing Date. Parent, the Surviving Corporation, the Company and each of its Subsidiaries, for itself and the Waiving Parties, hereby irrevocably acknowledges and agrees that all communications among the Company (prior to the Closing), the Seller Group and their counsel, including Dechert LLP, made in connection with the negotiation, preparation, execution, delivery and performance under, or any dispute or Action arising out of or relating to, this Agreement, any other Merger Documents or the transactions contemplated hereby or thereby, or any matter relating to any of the foregoing, are privileged communications between the Seller Group and such counsel and none of Parent, the Surviving Corporation, the Company, any of its Subsidiaries or any of the Waiving Parties or any Person purporting to act on behalf of or through the Company, any of its Subsidiaries or any of the Waiving Parties, will seek to obtain the same by any process. From and after the Closing, each of Parent, the Surviving Corporation, the Company and its Subsidiaries, on behalf of itself and the Waiving Parties, waives and will not assert any attorney-client privilege with respect to any communication between Dechert LLP and the Company, its Subsidiaries or any Person in the Seller Group occurring during the Current Representation in connection with any Post-Closing Representation.

67

 

Section 9.17. Protected Communication. The Company and each of its Subsidiaries hereby agrees that, immediately prior to the Closing, without the need for any further action (a) all right, title and interest of the Company and its Subsidiaries in and to all Protected Communications shall thereupon transfer to and be vested solely in the Former Holders and their successors in interest, and (b) any and all protections from disclosure, including, but not limited to, attorney client privileges and work product protections, associated with or arising from any Protected Communications that would have been exercisable by the Company or its Subsidiaries shall thereupon be vested exclusively in the Former Holders and their successors in interest and shall be exercised or waived solely as directed by the Former Holders or their successors in interest. None of the Company or its Subsidiaries, Parent or any Person acting on any of their behalf shall, without the prior written consent of the Former Holders or their successors in interest, assert or waive or attempt to assert or waive any such protection against disclosure, including, but not limited to, the attorney-client privilege or work product protection, or to discover, obtain, use or disclose or attempt to discover, obtain, use or disclose any Protected Communications in any manner, including in connection with any dispute or legal proceeding relating to or in connection with this Agreement, the events and negotiations leading to this Agreement, or any of the transactions contemplated herein, provided, however, the foregoing shall neither prohibit the Company or its Subsidiaries or any Person acting on any of their behalf from seeking proper discovery of such documents nor the Former Holders from asserting that such documents are not discoverable to the extent that applicable attorney client privileges and work product protections have attached thereto. The Former Holders and their successors in interest shall have the right at any time prior to the Closing to remove, erase, delete, disable, copy or otherwise deal with any Protected Communications in whatever way they desire, and the Surviving Corporation and its Subsidiaries shall provide reasonable assistance at the expense of the Person requesting such assistance in order to give full force and effect to the rights of Seller and its successors in interest hereunder.

Section 9.18. No Waiver of Privilege; Protection from Disclosure or Use. The parties hereto understand and agree that nothing in this Agreement, including the foregoing provisions regarding the assertions of protection from disclosure and use, privilege and conflicts of interest, shall be deemed to be a waiver of any applicable attorney-client privilege or other protection from disclosure or use. The parties understand and agree that the consummation of the transactions contemplated by this Agreement could result in the inadvertent disclosure of information that may be confidential, eligible to be subject to a claim of privilege, or otherwise protected from disclosure. The parties hereto further understand and agree that any disclosure of information that may be confidential, subject to a claim of privilege, or otherwise protected from disclosure will not constitute a waiver of or otherwise prejudice any claim of confidentiality, privilege, or protection from disclosure, including, but not limited to, with respect to information involving or concerning the same subject matter as the disclosed information. The parties hereto agree to use reasonable best efforts to return any inadvertently disclosed information to the disclosing party promptly upon becoming aware of its existence. Each of the parties hereto further agree that promptly after the return of any inadvertently disclosed information, the party returning such information shall destroy any and all copies, summaries, descriptions and/or notes of such inadvertently disclosed information, including electronic versions thereof, and all portions of larger documents or communications that contain such copies, summaries, descriptions or notes.

* * * * * * *

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of Merger to be duly executed as of the day and year first above written.

  PARENT
   
  MODUSLINK GLOBAL SOLUTIONS, INC.
   
  By:

/s/ Jim Henderson

    Name: Jim Henderson
    Title: Chief Executive Officer

 

  “NEWCO”
   
  MLGS MERGER COMPANY, INC.
   
  By:

/s/ Jim Henderson

    Name: Jim Henderson
    Title: Chief Executive Officer

 

  COMPANY
   
  IWCO DIRECT HOLDINGS INC.
   
  By: /s/ Joseph Morrison
 
    Name: Joseph Morrison
    Title: President

 

  REPRESENTATIVE
   
  CSC SHAREHOLDER SERVICES, LLC
   
  By: /s/ John Civantos
 
    Name: John Civantos
    Title: Authorized Signatory

 

Signature Page to Agreement and Plan of Merger

 

  STOCKHOLDERS
   
  COURT SQUARE CAPITAL PARTNERS II, L.P.
   
  By: Court Square Capital GP, LLC, its General Partner
     
  By:  /s/ John Civantos
 
    John Civantos, Partner

 

 

  COURT SQUARE CAPITAL PARTNERS II-A, L.P.
   
  By: Court Square Capital GP, LLC, its General Partner
     
  By: /s/ John Civantos
 
    John Civantos, Partner

 

 

  COURT SQUARE CAPITAL PARTNERS (EXECUTIVE) II, L.P.
   
  By: Court Square Capital GP, LLC, its General Partner
     
  By:  /s/ John Civantos
 
    John Civantos, Partner

 

 

  COURT SQUARE CAPITAL PARTNERS (OFFSHORE) II, L.P.
   
  By: Court Square Capital GP, LLC, its General Partner
     
  By:  /s/ John Civantos
 
    John Civantos, Partner

 

Signature Page to Agreement and Plan of Merger

 

  STOCKHOLDERS
   
  ACP/IWCO HOLDINGS LLC
     
  By: /s/ Ben Silbert
 
    Ben Silbert, Authorized Signatory

 

  ACP/IWCO SPLITTER, L.P.
     
  By: /s/ Ben Silbert
 
    Ben Silbert, Authorized Signatory

 

 

Signature Page to Agreement and Plan of Merger

 

  STOCKHOLDERS
   
  WAM HOLDINGS, INC.
   
  By: /s/ James N. Anderson
 
    Name: James N. Anderson
    Title: Chief Manager

 

   
  /s/ James N. Andersen
 
  James N. Andersen

 

   
  /s/ Joseph Morrison
 
  Joseph Morrison

 

 

  THOMAS C. WICKA & ANGELA M. WICKA, TTEE, UA/DTD, FEB. 27, 2006, THOMAS C. WICKA, 2006 GRAT
   
  By: /s/ Thomas C. Wicka
 
    Name: Thomas C. Wicka
    Title: Trustee

 

 

  THOMAS C. WICKA, TRUSTEE UA/DTD, 10/3/05 TOM WICKA REVOCABLE TRUST
   
  By:  /s/ Thomas C. Wicka
 
    Name: Thomas C. Wicka
    Title: Trustee

 

 

 

Signature Page to Agreement and Plan of Merger

 

 

DISCLOSURE SCHEDULES TO THE

AGREEMENT AND PLAN OF MERGER*

 

 

Section 1.1(a) - Distribution Percentage

Section 1.1(b) - Net Working Capital

Section 1.1(c) - Transaction Tax Deduction

Section 2.10(b)(v) - Required Consents

Section 3.1(a) - Organization and Qualification

Section 3.1(b) - Jurisdictions

Section 3.3 - Non-contravention

Section 3.4 - Consents

Section 3.5(a) - Capitalization

Section 3.5(b) – Subsidiaries

Section 3.6(a) - Financial Statements

Section 3.6(b) - Undisclosed Liabilities

Section 3.7 - Absence of Certain Developments

Section 3.8(a) - Compliance with Law

Section 3.8(c) - Permits

Section 3.9 - Litigation

Section 3.10 - Taxes

Section 3.11 - Environmental Matters

Section 3.12(a) - Employee Matters

Section 3.12(c) - Severance Arrangements

Section 3.12(e) - Current Employees

Section 3.13(a) - Employee Benefit Plans

Section 3.13(b) - Employee Benefit Plan Matters

Section 3.13(c) - Employee Benefit Plan Matters

Section 3.13(d) - ERISA Affiliates

Section 3.13(f) - Acceleration of Rights

Section 3.14(a) - Intellectual Property Rights

Section 3.14(e) - Software

Section 3.14(f) - Proprietary Software

 

 

 

*Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementary copies of any of the omitted schedules or exhibits upon request by the Securities and Exchange Commission.

 

 

Section 3.14(j) - Information Technology Infrastructure

Section 3.15 - Contracts

Section 3.16 - Insurance

Section 3.17(a) - Real Property

Section 3.17(b) - Real Property

Section 3.18 - Title to Assets

Section 3.19 - Related Party Transactions

Section 3.20 - Brokers

Section 3.21 - Customers and Suppliers

Section 3.22 - Accounts Receivable

Section 3.24 - Products

Section 3.25 - Bank Accounts

Section 6.3(a) - Employee Benefits

 

 

EXHIBITS TO THE

AGREEMENT AND PLAN OF MERGER*

 

 

Exhibit A – Form of Support Agreement

Exhibit B – Form of Escrow Agreement

Exhibit C – Certificate of Merger

Exhibit D – Estimated Merger Consideration Statement

Exhibit E – Form of Letter of Transmittal

Exhibit F – R&W Insurance Policy

 

 

 

 

 

*Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to furnish supplementary copies of any of the omitted schedules or exhibits upon request by the Securities and Exchange Commission.

 

  

Exhibit 4.1

 

CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS

OF

Series C CONVERTIBLE PREFERRED STOCK

OF

MODUSLINK GLOBAL SOLUTIONS, INC.

_______________

(Pursuant to Section 151 of the Delaware General Corporation Law)

_______________

ModusLink Global Solutions, Inc. (the “Corporation”), a corporation organized and existing under the laws of the State of Delaware, hereby certifies that, pursuant to authority conferred on its Board of Directors (the “Board”) by the Restated Certificate of Incorporation of the Corporation, as amended (the “Certificate of Incorporation”), and in accordance with Section 141 of the Delaware General Corporation Law, the following resolution was adopted by the Board at a meeting of the Board duly held on December 6, 2017, which resolution remains in full force and effect on the date hereof:

RESOLVED, that the Board of Directors of the Corporation, pursuant to authority expressly vested in it by the provisions of the Restated Certificate of Incorporation of the Corporation, as amended, hereby authorizes the issuance of a series of preferred stock designated as the Series C Convertible Preferred Stock, par value $0.01 per share, of the Corporation and hereby fixes the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions thereof (in addition to any provisions set forth in the Restated Certificate of Incorporation of the Corporation, as amended, which are applicable to the Corporation’s preferred stock of all classes and series) as follows:

1.                  Designation, Amount and Par Value. Pursuant to this Certificate of Designations, Preferences and Rights of Series C Convertible Preferred Stock of the Corporation (this “Certificate of Designations”), there is hereby designated a series of the Corporation’s authorized preferred stock having a par value of $0.01 per share (the “Preferred Stock”), which series shall be designated as “Series C Convertible Preferred Stock” (the “Series C Preferred Stock”), and the number of shares so designated shall be 35,000. Each share of Series C Preferred Stock shall have a par value of $0.01 per share. The “Stated Value” for each share of Series C Preferred Stock shall initially equal $1,000.00.

2.                  Definitions. In addition to the terms defined elsewhere in this Certificate of Designations, the following terms have the meanings indicated. Capitalized terms used but not defined in this Certificate of Designations shall have the respective meanings given to them in the Purchase Agreement (as defined below):

 

 

Affiliate” of a Person means any other Person that, directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the first Person.

Amended Provision” has the meaning set forth in Section 14.

Bankruptcy Event” means any of the following events: (a) the Corporation or any Significant Subsidiary commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Corporation or any Significant Subsidiary thereof; (b) there is commenced against the Corporation or any Significant Subsidiary any such case or proceeding that is not dismissed within 60 days after commencement; (c) the Corporation or any Significant Subsidiary is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered; (d) the Corporation or any Significant Subsidiary suffers any appointment of any custodian or the like for it or any material part of its property that is not discharged or stayed within 60 days; (e) the Corporation or any Significant Subsidiary makes a general assignment for the benefit of creditors; (f) the Corporation or any Subsidiary fails to pay, or states in writing that it is unable to pay or is unable to pay, any Indebtedness in an amount exceeding $500,000 generally as any such Indebtedness becomes due, which is not cured within the greater of (x) the time permitted by the agreements governing such Indebtedness, or (y) 30 days, other than pursuant to a good faith dispute relating to such Indebtedness; or (g) the Corporation or any Significant Subsidiary, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

Board” has the meaning set forth in the preamble to this Certificate of Designations.

Breach Event” has the meaning set forth in Section 9(a).

Business Day” means any day except Saturday, Sunday and any day which is a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

Certificate of Designation” has the meaning set forth in Section 1.

Certificate of Incorporation” has the meaning set forth in the preamble to this Certificate of Designations.

Closing Bid Price” means the last closing bid price for the Common Stock on the Principal Market (or, if the Common Stock is not traded on the Principal Market, on the Eligible Market on which the Common Stock is then traded), as reported by Bloomberg, L.P., or, if the Principal Market (or, if the Common Stock is not traded on the Principal Market, on the Eligible Market on which the Common Stock is then traded) begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price of the Common Stock prior to 4:00 p.m., New York Time, as reported by Bloomberg, L.P., or if the foregoing do not apply, the average of the bid prices of any market makers for the Common Stock as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).

2

 

Common Stock” means the common stock of the Corporation, par value $0.01 per share, and any securities into which such common stock may hereafter be reclassified.

Common Stock Equivalents” means, collectively, Options and Convertible Securities.

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Conversion Date” means an Optional Conversion Date or a Mandatory Conversion Date.

Conversion Dividends” has the meaning set forth in Section 7(d)(i).

Conversion Price” has the meaning set forth in Section 7(c).

Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

Corporation” has the meaning set forth in the preamble to this Certificate of Designations.

Dividend Payment Date” has the meaning set forth in Section 3(a).

Dividend Price” means the arithmetic average of the VWAP of the Common Stock for the 20 Trading Days immediately prior to the applicable Dividend Payment Date.

Dividend Rate” has the meaning set forth in Section 3(a).

DTC” means The Depository Trust Corporation.

Eligible Market” means any of the following: the Principal Market, the New York Stock Exchange, the NYSE MKT, The NASDAQ Global Select Market, The NASDAQ Capital Market or the OTC Bulletin Board.

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

Fractional Cash Payment” has the meaning set forth in Section 7(h).

Holder” means any holder of Series C Preferred Stock.

3

 

Indebtedness” of any Person means (i) all indebtedness representing money borrowed which is created, assumed, incurred or guaranteed in any manner by such Person or for which such Person is responsible or liable (whether by guarantee of such indebtedness, agreement to purchase indebtedness of, or to supply funds to or invest in, others), (ii) any direct or contingent obligations of such Person arising under any letter of credit (including standby and commercial), bankers acceptances, bank guaranties, surety bonds and similar instruments, (iii) all indebtedness secured by any Lien existing on property or assets owned by such Person and (iv) any shares of capital stock or other securities having a redemption or repayment feature; provided that the Series C Preferred Stock, and any obligations due in respect thereof in accordance with this Certificate of Designations, as in effect on the date hereof, shall not be deemed to be Indebtedness pursuant to this definition.

Junior Securities” means the Common Stock and all other equity or equity equivalent securities of the Corporation other than the Series C Preferred Stock.

Liquidation Event” means any of the following: (i) any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, (ii) any merger or consolidation in which the Corporation is a constituent party or a Significant Subsidiary is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation such that the stockholders of the Company prior to such merger or consolidation hold less than 50.0% of the aggregate voting securities of the Company following such merger or consolidation, or (iii) any sale of all or substantially all of the assets or capital stock of the Corporation or one or more Significant Subsidiaries if substantially all of the assets of the Corporation are held by such Significant Subsidiary or Significant Subsidiaries.

Majority Holders” means, as of any date of determination, the holders of a majority of the then outstanding shares of Series C Preferred Stock.

Mandatory Conversion” has the meaning set forth in Section 7(b)(i).

Mandatory Conversion Allocation Percentage” has the meaning set forth in Section 7(b)(ii).

Mandatory Conversion Certification” has the meaning set forth in Section 7(b)(i).

Mandatory Conversion Conditions” has the meaning set forth in Section 7(b)(i).

Mandatory Conversion Conditions Failure” has the meaning set forth in Section 7(b)(i).

Mandatory Conversion Date” has the meaning set forth in Section 7(b)(i).

Mandatory Conversion Notice” has the meaning set forth in Section 7(b)(i).

4

 

Mandatory Conversion Notice Date” has the meaning set forth in Section 7(b)(i).

Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, or condition (financial or otherwise) of the Corporation and its Subsidiaries, taken as a whole, or on the transactions contemplated by the Transaction Documents, or on the authority or ability of the Corporation to perform its obligations under the Transaction Documents; provided, however, that any effect(s) to the extent arising out of or resulting from any of the following will not be taken into account (provided, that, with respect to clauses (i), (ii), (iii) and (iv), any effect does not disproportionately adversely affect the Corporation or its Subsidiaries compared to other companies of similar size operating in the industry in which the Corporation and its Subsidiaries operate): (i) general economic conditions; (ii) conditions in the securities markets, financial markets or currency markets; (iii) political conditions or acts of war, sabotage or terrorism; and (iv) acts of God, natural disasters, weather conditions or other calamities.

Maximum Permitted Rate” has the meaning set forth in Section 6(c).

Optional Conversion Date” has the meaning set forth in Section 7(a).

Optional Conversion Notice” has the meaning set forth in Section 7(a).

Options” means any rights, warrants or options to, directly or indirectly, subscribe for or purchase Common Stock or Convertible Securities.

Original Issue Date” with respect to any share of Series C Preferred Stock means the date of the first issuance of such share of the Series C Preferred Stock, regardless of the number of transfers of any particular shares of Series C Preferred Stock thereafter and regardless of the number of certificates that may be issued to evidence shares of Series C Preferred Stock.

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock corporation, government (or an agency or subdivision thereof) or other entity of any kind.

Preferred Stock” has the meaning set forth in Section 1.

Pre-Stockholder Approval Maximum Common Stock Issuance Amount” has the meaning set forth in Section 3(e).

“Principal Market” means The NASDAQ Global Market.

Prohibited Issuance” means the issuance of: (A) any shares of Common Stock at a purchase price less than the then-existing Conversion Price or the issuance of any Common Stock Equivalents with a conversion price or exercise price less than the then-existing Conversion Price, except under any stockholder approved equity incentive plan; (B) any Common Stock Equivalents consisting of Indebtedness that is convertible into or exchangeable or exercisable for Common Stock at a price below the then-existing Conversion Price; (C) any preferred stock of the Corporation that is senior to or pari passu with the Preferred Stock with respect to rights, preferences or privileges as to dividends, liquidation preference or redemption or contains a greater than 1x liquidation preference or is a “participating” preferred stock; (D) any shares of Common Stock or Common Stock Equivalents to the extent the effective purchase or conversion price or the number of underlying shares floats or resets or otherwise varies or is subject to adjustment (directly or indirectly) based on market prices of the Common Stock; or (E) any warrants or other rights to purchase Common Stock that, when valued on a black scholes basis, decreases the purchase price for such warrants or other rights below the then-existing Conversion Price.

5

 

Pro Rata Mandatory Conversion Amount” has the meaning set forth in Section 7(b)(ii).

Pro Rata Portion” means, with respect to a Holder, the number of shares of Series C Preferred Stock held by such Holder divided by the number of shares of Series C Preferred Stock held by all of the Holders.

Purchase Agreement” means the Preferred Stock Purchase Agreement, dated on or about the date hereof, between the Corporation and the Purchaser, as amended from time to time.

Purchaser” means SPH Group Holdings LLC.

Redemption Date” has the meaning set forth in Section 8(a).

Redemption Notice” has the meaning set forth in Section 8(a).

Redemption Price” has the meaning set forth in Section 8(a).

Securities Act” means the Securities Act of 1933, as amended.

Series C Preferred Dividends” has the meaning set forth in Section 3(a).

Series C Preferred Stock” has the meaning set forth in Section 1.

Series C Preferred Stock Liquidation Preference” has the meaning set forth in Section 6(a).

Series C Preferred Stock Register” has the meaning set forth in Section 4.

Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article I, Rule 1-02 of Regulation S-X.

Stated Value” has the meaning set forth in Section 1.

6

 

Subsidiary” means at any time, any Person (other than a natural person or Governmental Authority) which the Corporation (either alone or through or together with any other Subsidiary), owns, directly or indirectly, more than a majority of the capital stock or equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such Person.

Trading Day” means any day on which the Common Stock is traded on the Principal Market (or, if not traded on the Principal Market, on the Eligible Market on which the Common Stock is then traded); provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on the Principal Market (or, if not traded on the Principal Market, in any applicable Eligible Market) for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on the Principal Market (or, if not traded on the Principal Market, on the Eligible Market on which the Common Stock is then traded) does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00 p.m., New York Time).

Transaction Documents” means this Certificate of Designations, the Purchase Agreement, and any other documents, certificates or agreements executed or delivered in connection with the transactions contemplated by the Purchase Agreement.

Triggering Event” means any of the following events: (a) the Common Stock is not listed or quoted, or is suspended from trading, on the Principal Market (or, if not traded on the Principal Market, on the Eligible Market on which the Common Stock is then traded) for a period of forty-five (45) or more consecutive Trading Days or for more than an aggregate of sixty (60) Trading Days in any in any 12-month period; (b) the Corporation fails for any reason to deliver a certificate evidencing any shares of Common Stock to a Purchaser after delivery of such certificate is required pursuant to this Certificate of Designations (including upon conversion of any Series C Preferred Stock by a Holder pursuant to this Certificate of Designations), which failure is not cured within ten (10) Business Days, or the right of any Holder to convert the shares of Series C Preferred Stock held by such Holder into Common Stock is suspended for any reason; (c) the Corporation fails to have full authority, including under all laws, rules and regulations of the Principal Market (or, if not traded on the Principal Market, of the Eligible Market on which the Common Stock is then traded), to issue Underlying Shares, subject to any limitation on issuance of Underlying Shares set forth in Section 3(c) and Section 3(e); (d) at any time after the Closing Date, any Common Stock issuable pursuant to the Transaction Documents is not listed on an Eligible Market; or (e) the Closing Bid Price is less than $0.10 (as adjusted for any stock split, stock dividend, stock combination or other similar transactions with respect to the Common Stock) for forty-five (45) or more consecutive Trading Days or for more than an aggregate of sixty (60) Trading Days in any in any 12-month period.

Underlying Shares” means the shares of Common Stock issued or issuable (i) upon conversion of the Series C Preferred Stock pursuant to this Certificate of Designations, or (ii) in satisfaction of any other obligation or right of the Corporation to issue shares of Common Stock pursuant to this Certificate of Designations, and in each case, any securities issued or issuable in exchange for or in respect of such securities.

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Voting Period” has the meaning set forth in Section 9(b)(ii).

VWAP” means on any particular Trading Day or for any particular period the volume weighted average trading price per share of Common Stock on such date or for such period on the Principal Market (or, if not traded on the Principal Market, on the Eligible Market on which the Common Stock is then traded) as reported by Bloomberg L.P., through its “Volume at Price” functions, or, if the foregoing does not apply, the average of the highest Closing Bid Price and the lowest closing ask price of any of the market makers for the Common Stock as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.); provided, however, that during any period the VWAP is being determined, the VWAP shall be subject to adjustment from time to time for stock splits, stock dividends, combinations and similar events, as applicable.

3.                  Dividends.

(a)                Each Holder, in preference and priority to the holders of all Junior Securities, shall be entitled to receive, with respect to each share of Series C Preferred Stock then outstanding and held by such Holder, out of funds legally available therefor, and the Corporation shall pay, cumulative dividends at the rate (as a percentage of the Stated Value per share) of (the “Dividend Rate”) six percent (6%) per annum (the “Series C Preferred Dividends”), accruing on a daily basis and payable by the Corporation quarterly, in arrears, with payments commencing on March 31,2018, and thereafter on each June 30, September 30, December 31 and March 31, except if such day is not a Trading Day, in which case such dividend shall be payable on the next succeeding Trading Day (each, a “Dividend Payment Date”). Dividends on the shares of Series C Preferred Stock shall be calculated on the basis of a 360-day year, shall accrue daily commencing on the Original Issue Date of the applicable shares of Series C Preferred Stock until the date when such shares are no longer outstanding, and shall be deemed to accrue with respect to such shares from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends.

(a)                   Subject to the conditions and limitations set forth herein, the Corporation shall, at the election of the Corporation, pay the Series C Preferred Dividends at each Dividend Payment Date to any Holder in either (i) cash by wire transfer of immediately available funds to the account of such Holder as designated by the Holder in accordance with the terms hereof or (ii) Common Stock to the extent, and only to the extent, such payment in Common Stock to any such Holder would not violate any of the limitations set forth in this Certificate of Designations (including Section 3(c), Section 3(d), and Section 3(e)). For purposes of determining the dividends payable to each Holder on each Dividend Payment Date, the Corporation shall aggregate all shares of Series C Preferred Stock held by such Holder and, to the extent a dividend is paid in Common Stock, the number of shares of Common Stock to be issued shall be (i) determined by dividing the total dividend then being paid to such Holder in shares of Common Stock by the Dividend Price, and (ii) paid to such Holder in accordance with Section 3(g) and Section 3(h) below. In no event shall the Corporation be required to issue or cause to be issued fractional shares of Common Stock to any Holder in payment for dividends.

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(b)                  Notwithstanding the foregoing, the Corporation shall not, without the prior approval of its stockholders as required pursuant to the rules and regulations of the Principal Market, issue shares of Common Stock under the Transaction Documents (whether upon conversion of the Series C Preferred Stock pursuant to Section 7, payment of Series C Preferred Dividends pursuant to Section 3(a), or payment of the Conversion Dividends pursuant to Section 7) to any Holder that, together with such Holder’s Affiliates and any other persons acting as a group together with such Holder and any of such Holder’s Affiliates, immediately prior to the applicable Dividend Payment Date, Optional Conversion Date or Mandatory Conversion Date, as applicable, beneficially owns more than 19.99% of the outstanding shares of Common Stock (as such ownership is calculated pursuant to the rules of The NASDAQ Global Market), if such Holder (together with such Holder’s Affiliates and any other persons acting as a group together with such Holder and any of such Holder’s Affiliates) is not the largest beneficial owner of the Common Stock (as such ownership is calculated pursuant to the rules of The NASDAQ Global Market) immediately prior to the applicable Dividend Payment Date, Optional Conversion Date or Mandatory Conversion Date, as applicable, but, as a result of such issuance of Common Stock to such Holder, such Holder (together with such Holder’s Affiliates and any other persons acting as a group together with such Holder’s and any of such Holder’s Affiliates) would (X) become the largest beneficial owner of the Common Stock (as such ownership is calculated pursuant to the rules of The NASDAQ Global Market) immediately after giving effect to the issuance of such Common Stock or (Y) become the beneficial owner of a number of shares of Common Stock (as such ownership is calculated pursuant to the rules of The NASDAQ Global Market) immediately after giving effect to the issuance of such Common Stock which, had such Common Stock been received by such Holder as of the date such Holder entered into its binding commitment to purchase the Series C Preferred Stock, would have caused such Holder to become the largest beneficial owner of Common Stock (as such ownership is calculated pursuant to the rules of The NASDAQ Global Market) as of such earlier date. Immediately following the date (if ever) that the Corporation obtains the requisite stockholder approval required pursuant to the rules and regulations of the Principal Market, the restrictions in this Section 3(c) shall terminate and be of no further force or effect.

(c)                   Notwithstanding the foregoing, the Corporation may not pay dividends, including Conversion Dividends, by issuing Common Stock to any Holder unless, at such time, the number of authorized but unissued and otherwise unreserved shares of Common Stock is sufficient for such issuance.

(d)                  Notwithstanding the foregoing, without the prior approval of its stockholders as required pursuant to the rules and regulations of the Principal Market, the aggregate number of shares of Common Stock actually issued by the Corporation under the Transaction Documents (whether upon conversion of the Series C Preferred Stock pursuant to Section 7, payment of Series C Preferred Dividends pursuant to Section 3(a) or payment of the Conversion Dividends pursuant to Section 7) shall not exceed 19.99% of the Common Stock outstanding as of the Original Issue Date (the “Pre-Stockholder Approval Maximum Common Stock Issuance Amount”), for purposes of NASDAQ Listing Rule 5635(d), at a price, determined in accordance with the rules and regulations of the Principal Market, that is less than the greater of book or market value on the Principal Market on the closing date of the purchase of the Series C Preferred Stock (subject to adjustment from time to time for stock splits, stock dividends, stock combinations and similar events, as applicable, with respect to the Common Stock) . Immediately following the date (if ever) that the Corporation obtains the requisite stockholder approval required pursuant to the rules and regulations of the Principal Market, the restrictions in this Section 3(e) shall terminate and be of no further force or effect.

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(e)                   With respect to dividends other than Conversion Dividends, in the event that the Corporation elects to pay dividends in shares of Common Stock, and is permitted to do so pursuant to Sections 3(c), (d), and (e), the number of shares of Common Stock to be issued to each applicable Holder as such dividend shall be (i) determined by dividing the total dividend then being paid to such Holder in shares of Common Stock by the Dividend Price, and rounding down to the nearest whole share, and (ii) paid to such Holder in accordance with Section 3(g) below.

(f)                   In the event that any dividends, including Conversion Dividends, are paid in Common Stock the Corporation shall, on or before the third (3rd) Trading Day following the applicable Dividend Payment Date, (i) credit the number of shares of Common Stock to which such Holder shall be entitled based on the dividend being paid in Common Stock to such Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission System, or (ii) in the event that clause (i) is not applicable, issue and deliver to each applicable Holder a certificate, registered in the name of such Holder or its designee, for the number of shares of Common Stock to which such Holder shall be entitled. Notwithstanding the foregoing, the Corporation shall, upon request of the Holder, use its reasonable best efforts to deliver the shares of Common Stock electronically through the DTC.

(g)                  The Corporation shall not be required to issue or cause to be issued fractional shares of Common Stock in payment of dividends on the Series C Preferred Stock. If any fraction of a Common Stock would, except for the provisions of this Section 3(h), be issuable upon the issuance of shares of Common Stock in payment of dividends on the Series C Preferred Stock, the number of shares of Common Stock to be issued will be rounded down to the nearest whole share, and the Corporation shall, in lieu of issuing any fractional share, pay an amount of cash equal to the product of such fraction multiplied by the Dividend Price on the date of payment.

(h)                  So long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not pay or declare any dividend (whether in cash or property), or make any other distribution on the Common Stock or any other capital stock of the Corporation, until all accrued and unpaid dividends as set forth in Section 3(a) above on the Series C Preferred Stock shall have been paid.

(i)                    Except (A) with respect to cash payments for fractional shares of Common Stock otherwise issuable in respect of any dividend payment or (B) with respect to any limitations set forth in this Certificate of Designations (including those set forth in Section 3(c) and Section 3(e)) on paying dividends to a Holder in Common Stock, dividends payable to each Holder shall be paid in the same form as the dividends paid to any other Holder or in the same proportion of Common Stock, cash or Series C Preferred Stock among all the Holders.

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4.                  Registration of Issuance and Ownership of Series C Preferred Stock. The Corporation shall register the issuance and ownership of shares of the Series C Preferred Stock, upon records to be maintained by the Corporation for that purpose (the “Series C Preferred Stock Register”), in the name of the record Holders thereof from time to time. The Corporation may deem and treat the registered Holder as the absolute owner thereof for the purpose of any distribution to such Holder, and for all other purposes, absent actual notice to the contrary.

5.                  Registration of Transfers. The Corporation shall register the transfer of any shares of Series C Preferred Stock in the Series C Preferred Stock Register, upon surrender of certificates evidencing such shares to the Corporation at its address specified herein. Upon any such registration or transfer, a new certificate evidencing the shares of Series C Preferred Stock so transferred shall be issued to the transferee and a new certificate evidencing the remaining portion of the shares not so transferred, if any, shall be issued to the transferring Holder.

6.                  Liquidation.

(a)                Upon the occurrence of any Liquidation Event, the Holders shall be entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Corporation to the holders of Junior Securities by reason of their ownership thereof, an amount per share in cash equal to the sum of (i) one hundred percent (100%) of the Stated Value per share of Series C Preferred Stock then held by them (as adjusted for any stock split, stock dividend, stock combination or other similar transactions with respect to the Series C Preferred Stock), plus (ii) 100% of all declared but unpaid dividends, and all accrued but unpaid dividends on each such share of Series C Preferred Stock (including, for the avoidance of doubt, any Series C Preferred Dividends applicable to such share of Series C Preferred Stock that have accrued thereon), in each case as of the date of such Liquidation Event (clauses (i) and (ii) together, the “Series C Preferred Stock Liquidation Preference”).

(b)               If, upon the occurrence of a Liquidation Event, the assets and funds distributed among the Holders shall be insufficient to permit the payment to such Holders of the full Series C Preferred Stock Liquidation Preference, then (x) the Corporation shall take any action necessary or appropriate, to the extent permissible under applicable law and reasonably within its control, to remove promptly any impediments to its ability to pay the total Series C Preferred Stock Liquidation Preference, including to the extent permissible under applicable law, reducing the stated capital of the Corporation or causing a revaluation of the assets of the Corporation to create sufficient surplus to make such payment, and (y) the entire assets and funds of the Corporation legally available for distribution shall be distributed ratably among the Holders in proportion to the aggregate Series C Preferred Stock Liquidation Preference that would otherwise be payable to each of such Holders with respect to the Series C Preferred Stock.

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(c)                In the event that the Series C Preferred Stock Liquidation Preference is not paid with respect to any shares of Series C Preferred Stock as required to be paid pursuant to this Section 6, (i) such shares shall continue to be entitled to dividends thereon as provided in Section 3, and (ii) such event shall constitute a Breach Event. In the event that the Series C Preferred Stock Liquidation Preference is not paid with respect to any shares of Series C Preferred Stock as required to be paid pursuant to this Section 6, all such shares shall remain outstanding and entitled to all the rights and preferences provided herein, and the Corporation shall pay interest on the Series C Preferred Stock Liquidation Preference and any dividends accruing after the date payment thereof is due pursuant to this Section 6 with respect to such shares, at an aggregate rate per annum equal to the prime corporate rate announced from time to time at the end of each calendar month by the Wall Street Journal plus ten percent (10%) (increased by one percent (1%) at the end of each six (6) month period thereafter up to a maximum of 19%, until the Series C Preferred Stock Liquidation Preference, and any interest thereon, is paid in full), with such interest to accrue daily in arrears and to be compounded monthly; provided that in no event shall such interest exceed the maximum permitted rate of interest under applicable law; and provided further that the Corporation shall make all filings necessary to raise such rate to the maximum permitted rate of interest under applicable law (the “Maximum Permitted Rate”). In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the date payment of the Series C Preferred Stock Liquidation Preference is due pursuant to this Section 6 to the extent permitted by law.

(d)               To the extent not prohibited by applicable law, upon the occurrence of a Liquidation Event, following completion of the distributions required by Section 6(a) (including without limitation the payment in full of the Series C Preferred Stock Liquidation Preference), if assets or surplus funds remain in the Corporation, no further payments shall be due with respect to the Series C Preferred Stock and the holders of the Common Stock and other Junior Securities shall share in all remaining assets of the Corporation.

(e)                The Corporation shall provide written notice of any Liquidation Event to each record Holder, if practicable, not less than 30 days prior to the payment date or effective date thereof, or, if not practicable to provide prior notice, promptly upon the occurrence thereof.

(f)                In the event that, immediately prior to the closing of a Liquidation Event, the cash distributions required by Section 6(a) have not been made, the Corporation shall forthwith either: (i) make payment of such distributions upon or immediately following the closing of such Liquidation Event; (ii) cause such closing to be postponed until such time as such cash distributions have been made; or (iii) cancel such transaction, in which event the rights, preferences and privileges of the Holders shall revert to and be the same as such rights, preferences and privileges existing immediately prior to the date of the first notice by the Corporation required under Section 6(e) and no additional amounts shall be due and owing by the Corporation pursuant to Section 6(c).

(g)               Notwithstanding anything herein, the Corporation shall not, directly or indirectly, without the prior affirmative vote or prior written consent of the Majority Holders, consummate or be subject to the occurrence of a Liquidation Event.

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7.                  Conversion Rights.

Subject to Sections 3(c) and 3(e), the holders of the Series C Preferred Stock shall have the following rights and restrictions with respect to the conversion of the Series C Preferred Stock into shares of Common Stock:

(a)                Optional Conversion. At the option of any Holder, any Series C Preferred Stock held by such Holder may be converted into Common Stock based on the applicable Conversion Price then in effect for the Series C Preferred Stock. A Holder may convert Series C Preferred Stock into Common Stock pursuant to this paragraph at any time, and from time to time, after the Original Issue Date for the applicable shares of Series C Preferred Stock, by delivering to the Corporation a conversion notice (the “Optional Conversion Notice”), in the form attached hereto on Annex A, properly completed and duly executed, and the date any such Optional Conversion Notice is delivered to the Corporation (as determined in accordance with the notice provisions hereof) is an “Optional Conversion Date.”

(b)               Mandatory Conversion.

(i)                 If at any time the Closing Bid Price of the Common Stock exceeds 170% of the Conversion Price for at least five consecutive trading days (subject to appropriate adjustments for any stock dividend, stock split, stock combination, reclassification or similar transaction) (the “Mandatory Conversion Condition”), the Corporation shall have the right to require each Holder to convert all, or any whole number, of shares of Series C Preferred Stock, in each case as designated in the Mandatory Conversion Notice, into such number of fully paid, validly issued and nonassessable shares of Common Stock (as determined pursuant to Section 7(d)(i)) in accordance with this Section 7(b)(i) as of the Mandatory Conversion Date (a “Mandatory Conversion”). The Corporation may exercise its right to require conversion under this Section 7(b)(i) by delivering a written notice thereof to all, but not less than all, of the holders of shares of Series C Preferred Stock and the Corporation’s transfer agent (the “Mandatory Conversion Notice” and the date on which such notice is deemed given to all of the Holders pursuant to Section 12 hereof is referred to as the “Mandatory Conversion Notice Date”). The Mandatory Conversion Notice shall be irrevocable except with respect to a Mandatory Conversion Conditions Failure (as defined below). The Mandatory Conversion Notice shall state: (i) the Trading Day selected for the Mandatory Conversion in accordance with this Section 7(b)(i), which Trading Day shall be the fifth (5th) Trading Day following the Mandatory Conversion Notice Date (the “Mandatory Conversion Date”); (ii) the aggregate number of shares of Series C Preferred Stock and any accrued and unpaid Series C Preferred Dividends thereon subject to Mandatory Conversion from such Holder and the other Holders pursuant to this Section 7(b)(i); (iii) the number of shares of Common Stock to be issued to such Holder on the Mandatory Conversion Date; and (iv) that the Mandatory Conversion Condition has been satisfied. The Corporation shall deliver to each Holder a certificate signed by the Chief Financial Officer of the Corporation (the “Mandatory Conversion Certification”) no later than 10:00 a.m., New York time, on the Mandatory Conversion Date, certifying that the Mandatory Conversion Condition has been met; provided, that to the extent the Corporation is deemed to have not given the foregoing Mandatory Conversion Certification by such deadline (a “Mandatory Conversion Conditions Failure”), such Mandatory Conversion Certification shall instead state, unless such Holder waives any such conditions, that the conditions have not been met and that such Mandatory Conversion Notice is revoked and null and void; provided, further, that a failure by the Corporation to deliver a Mandatory Conversion Certification to such Holder on the Mandatory Conversion Date shall be deemed to be a Mandatory Conversion Conditions Failure. Notwithstanding the foregoing, the Corporation may effect only one (1) Mandatory Conversion during any thirty (30) calendar day period. If there is a Mandatory Conversion Conditions Failure after the delivery by the Corporation of the Mandatory Conversion Notice Date and prior to the Mandatory Conversion Date, the Corporation shall promptly deliver to each Holder a notice of such Mandatory Conversion Conditions Failure and each Holder shall have the right to either (I) waive the Mandatory Conversion Conditions Failure, in which case the Corporation shall complete the Mandatory Conversion in accordance with this Section 7(b), or (II) elect that the conversion of such Holder’s shares of Series C Preferred Stock pursuant to the Mandatory Conversion not occur. For the avoidance of doubt, upon any Mandatory Conversion of any shares of Series C Preferred Stock, the Common Stock delivered in connection with such Mandatory Conversion shall be accompanied by the payment to the Holder of the Conversion Dividends, in accordance in Section 7(d), with respect to the shares of Series C Preferred Stock being converted in accordance with this Section 7(b) as if such Mandatory Conversion Date was a “Dividend Payment Date” for all purposes hereunder.

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(ii)               Pro Rata Mandatory Conversion Requirement. If the Corporation elects to cause a conversion of any shares of Series C Preferred Stock pursuant to Section 7(b)(i), then it must simultaneously take the same action in the same proportion with respect to all holders of shares of Series C Preferred Stock, subject, however, to the limitations set forth in Section 3(c) and Section 3(e). If the Corporation elects a Mandatory Conversion pursuant to Section 7(b)(i) with respect to less than all of the number of shares of Series C Preferred Stock then outstanding, then the Corporation shall require conversion of shares of Series C Preferred Stock from each of the Holders equal to the product of (i) the aggregate shares of Series C Preferred Stock which the Corporation has elected to cause to be converted pursuant to Section 7(b)(i), multiplied by (ii) such Holder’s Pro Rata Portion (such fraction with respect to each such holder is referred to as its “Mandatory Conversion Allocation Percentage”, and such amount with respect to each Holder is referred to as its “Pro Rata Mandatory Conversion Amount”). In the event that the initial holder of any shares of Series C Preferred Stock shall sell or otherwise transfer any of such Holder’s shares of Series C Preferred Stock, the transferee shall be allocated a pro rata portion of such Holder’s Mandatory Conversion Allocation Percentage and the Pro Rata Mandatory Conversion Amount.

(iii)             From and after the Mandatory Conversion Date, all rights of any Holder shall automatically cease and terminate with respect to any shares of Series C Preferred Stock so converted into Common Stock on the Mandatory Conversion Date, and all shares of Series C Preferred Stock so converted shall automatically be cancelled and shall no longer be outstanding.

(c)                Conversion Price. The conversion price for the Series C Preferred Stock shall initially be $1.96 (the “Conversion Price”). Such initial Conversion Price shall be adjusted from time to time in accordance with Sections 7(e) and (f). All references to the Conversion Price herein shall mean the Conversion Price as so adjusted.

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(d)               Mechanics of Conversion.

(i)                 The number of shares of Common Stock issuable upon any conversion of shares of Series C Preferred Stock hereunder shall equal the quotient of (x) the product of (A) the Stated Value (as adjusted for any stock split of the Series C Preferred Stock, stock combination of the Series C Preferred Stock or other similar transaction of the Series C Preferred Stock) multiplied by, (B) the number of shares of Series C Preferred Stock to be converted, divided by, (y) the Conversion Price on the Conversion Date. The Corporation shall pay each Holder of shares of Series C Preferred Stock being converted pursuant to either Section 7(a), or Section 7(b), the amount of any accrued but unpaid dividends on such shares of Series C Preferred Stock held by such Holder on the Conversion Date (the “Conversion Dividends”) in a manner consistent with the provisions governing the payment of Series C Preferred Dividends set forth in Section 3 of this Certificate of Designations.

(ii)               Upon conversion of any shares of Series C Preferred Stock, the Corporation shall promptly (but in no event later than three (3) Trading Days after the Conversion Date) (i) credit the number of shares of Common Stock to which such Holder shall be entitled to such Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission System, or (ii) in the event that clause (i) is not applicable, issue or cause to be issued and cause to be delivered to or upon the written order of the Holder and in such name or names as the Holder may designate a certificate for the Underlying Shares issuable upon such conversion. The Holder, or any Person so designated by the Holder to receive Underlying Shares, shall be deemed to have become holder of record of such Underlying Shares as of the Conversion Date.

(iii)             The Holder shall not be required to deliver the original certificate(s) evidencing the Series C Preferred Stock being converted in order to effect a conversion of such Series C Preferred Stock hereunder. Execution and delivery of the Conversion Notice shall have the same effect as cancellation of the original certificate(s) and issuance of a new certificate evidencing the remaining shares of Series C Preferred Stock; provided that the cancellation of the original certificate(s) shall not be deemed effective until a certificate for such Underlying Shares is delivered to the Holder, or the Holder or its designee receives a credit for such Underlying Shares to its balance account with the DTC through its Deposit Withdrawal Agent Commission System. Upon surrender of a certificate following one or more partial conversions, the Corporation shall promptly deliver to the Holder a new certificate representing the remaining shares of Series C Preferred Stock.

(iv)             The Corporation’s obligations to issue and deliver Underlying Shares upon conversion of shares of Series C Preferred Stock in accordance with the terms and subject to the conditions hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, or the recovery of any judgment against any Person or any action to enforce the same, or any set-off, counterclaim, recoupment, limitation or termination.

(e)                Adjustment for Stock Splits and Combinations. If at any time or from time to time on or after the Original Issue Date the Corporation effects a subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased. Conversely, if at any time or from time to time after the Original Issue Date the Corporation combines the outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this Section 7(e) shall become effective at the close of business on the date the subdivision or combination becomes effective.

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(f)                Adjustment for Reclassification, Exchange, Substitution, Reorganization, Merger or Consolidation. If at any time or from time to time on or after the Original Issue Date the Common Stock issuable upon the conversion of the Series C Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification, merger, consolidation or otherwise (other than a subdivision or combination of shares provided for elsewhere in this Section 7), in any such event each Holder shall then have the right to convert Series C Preferred Stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification, merger, consolidation or other change by holders of the maximum number of shares of Common Stock into which such shares of Series C Preferred Stock could have been converted immediately prior to such recapitalization, reclassification, merger, consolidation or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 7 with respect to the rights of the holders of Series C Preferred Stock after the capital reorganization to the end that the provisions of this Section 7 (including adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of the Series C Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

(g)               Certificate of Adjustment. In each case of an adjustment or readjustment of the Conversion Price for the number of shares of Common Stock or other securities issuable upon conversion of the Series C Preferred Stock, if the Series C Preferred Stock is then convertible pursuant to this Section 7, the Corporation, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and shall, upon request, prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each Holder so requesting at the Holder’s address as shown in the Corporation’s books. Failure to request or provide such notice shall have no effect on any such adjustment.

(h)               Fractional Shares. The Corporation shall not be required to issue or cause to be issued fractional shares of Common Stock on conversion of Series C Preferred Stock. Subject to Section 7(j), if any fraction of a share of Common Stock would, except for the provisions of this Section, be issuable upon conversion of Series C Preferred Stock, the number of shares of Common Stock to be issued will be rounded down to the nearest whole share, and the Corporation shall, in lieu of issuing any fractional share, pay an amount of cash equal to the product of such fraction multiplied by the Conversion Price on the date of conversion (each such payment in cash, the “Fractional Cash Payment”).

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(i)                 Payment of Taxes. The Corporation will pay all documentary, stamp, transfer (but only in respect of the registered Holder thereof) and other similar taxes that may be imposed with respect to the issue or delivery of shares of Common Stock upon conversion of shares of Series C Preferred Stock, excluding any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series C Preferred Stock so converted were registered. Holders shall be liable for any income, capital gain or similar tax imposed in connection with such transfer.

(j)                 Restrictions. Notwithstanding anything else set forth in this Section 7 to the contrary, the Corporation shall not be required to pay any Fractional Cash Payments pursuant to Section 7(h) to any Holder if the payment of such Fractional Cash Payments would cause the Corporation to violate any applicable law or regulation or order. The Corporation shall pay any Fractional Cash Payments owed by it but that it did not pay pursuant to the immediately preceding sentence on the date that is on or before the day that is five (5) days after the Corporation is first able to pay such Fractional Cash Payments without violating any applicable law or regulation or order.

8.                  Redemption.

(a)                Each Holder shall have the right to require the Corporation to redeem all or any portion of its outstanding shares of Series C Preferred Stock at any time, and from time to time, after December 15, 2022, by delivering written notice (the “Redemption Notice”) thereof to the Corporation, which shall specify (i) the number of shares of Series C Preferred Stock to be redeemed and (ii) the date on which the Holder’s optional redemption shall occur, which date shall be not less than thirty (30) Business Days from the date the Corporation receives the Redemption Notice (such date hereinafter referred to as the “Redemption Date”). On the Redemption Date, the shares of Series C Preferred Stock specified in the Redemption Notice shall be redeemed by the Corporation at a price per share equal to the Series C Preferred Stock Liquidation Preference, in each case as of the Redemption Date, in cash to the Holder thereof (the “Redemption Price”).

(b)               If the funds of the Corporation legally available to redeem shares of Series C Preferred Stock on the Redemption Date are insufficient to redeem the total number of such shares required to be redeemed on such date or the Corporation is otherwise prohibited from redeeming the total number of such shares, the Corporation shall (i) take any action necessary or appropriate, to the extent permissible under applicable law and reasonably within its control, to remove promptly any impediments to its ability to redeem the total number of shares of Series C Preferred Stock required to be so redeemed, including to the extent permissible under applicable law, reducing the stated capital of the Corporation or causing a revaluation of the assets of the Corporation to create sufficient surplus to make such redemption, and (ii) in any event, use any funds legally available to redeem the maximum possible number of such shares from the holders of such shares to be redeemed in proportion to the respective number of such shares that otherwise would have been redeemed if all such shares had been redeemed in full. In the event that any shares of Series C Preferred Stock required to be redeemed pursuant to this Section 8 are not redeemed and continue to be outstanding, (A) such shares shall continue to be entitled to dividends thereon as provided in Section 3 until the date on which the Corporation actually redeems such shares and (B) such event shall constitute a Breach Event.

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(c)                If any shares of Series C Preferred Stock are not redeemed for any reason when required pursuant to this Section 8, on the Redemption Date all such unredeemed shares shall remain outstanding and entitled to all the rights and preferences provided herein, and the Corporation shall pay interest on the Redemption Price and any dividend accruing after the Redemption Date with respect to such unredeemed shares, at an aggregate rate per annum equal to the prime corporate rate announced from time to time at the end of each calendar month by the Wall Street Journal plus ten percent (10%) (increased by one percent (1%) at the end of each six (6) month period thereafter up to a maximum of 19% until the Redemption Price, and any interest thereon, is paid in full), with such interest to accrue daily in arrears and to be compounded monthly; provided that in no event shall such interest exceed the Maximum Permitted Rate. In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the Redemption Date to the extent permitted by law.

(d)               Each Holder of Series C Preferred Stock to be redeemed pursuant to this Section 8 shall surrender to the Corporation the certificate or certificates representing such shares within three (3) Business Days after such Holder’s receipt of the Redemption Price and all other amounts due to such Holder pursuant to this Section 8, in the manner and at the place designated by the Corporation. In the event less than all the shares represented by any such certificate are redeemed, a new certificate shall be issued to the Holder by the Corporation representing the unredeemed shares.

(e)                The Corporation may redeem the Series C Preferred Stock at any time upon thirty (30) days advance notice to each Holder at the Redemption Price; provided, that the Holders shall have the right to convert their shares of Series C Preferred Stock into Common Stock in lieu of receiving the Redemption Price.

9.                  Breach Events and Breach Event Redemption.

(a)                A “Breach Event” means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation):

(i)                 any provision of any Transaction Document, at any time after the Original Issue Date, and for any reason other than as permitted thereunder, ceases to be in full force and effect as against the Corporation in any material respect or the Corporation purports to revoke, terminate or rescind any Transaction Document as against any Holder other than in respect of a material breach thereby by such Holder;

(ii)               any default in any payment obligations in respect of any Series C Preferred Stock or any other payment obligation of the Corporation to any Holder pursuant to any Transaction Document, as and when the same become due and payable pursuant to this Certificate of Designations or the applicable Transaction Document (including, for purposes of clarity, in the case any payments contemplated to be made pursuant to Sections 3, 6, 7 and 8 are not made because they are deemed to be legally prohibited), and such payment shall not have been made within ten (10) Business Days of the date such payment is due pursuant to the applicable Transaction Document;

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(iii)             the Corporation or any Subsidiary defaults in any of its covenants or other obligations in respect of any Indebtedness in an amount exceeding $500,000, whether such Indebtedness now exists or is hereafter created, and any such default is not cured within the greater of (x) the time permitted by such agreements, or (y) 30 days, other than pursuant to a good faith dispute relating to such Indebtedness;

(iv)             the Corporation or any Subsidiary is in default under or has breached any provision of any Contract (which default or breach is not cured within the applicable cure period set forth in such Contract) and such breach or default individually or, when taken together with all other breaches or defaults under any other Contracts to which the Corporation or any Subsidiary is a party (after giving effect to any applicable cure periods), in the aggregate has had, or could reasonably be expected to have, a Material Adverse Effect;

(v)               there is entered against the Corporation or any Significant Subsidiary (A) a final judgment or order or settlement by a court of competent jurisdiction for the payment of money in an aggregate amount exceeding $500,000, except to the extent such amounts have been paid to or on behalf of the Corporation or such Significant Subsidiary by its respective insurer(s), or (B) any one or more non-monetary final judgments by a court or courts of competent jurisdiction that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(vi)             any change, event or circumstance occurs that has had, individually or in the aggregate, a Material Adverse Effect;

(vii)           a breach of any covenant set forth in Section 14(b) hereto;

(viii)         the occurrence of any Liquidation Event which is not approved by the Majority Holders;

(ix)             the occurrence of any Triggering Event; or

(x)               the occurrence of any Bankruptcy Event.

(b)               Upon the occurrence of any Breach Event,

(i)                 each Holder may elect by written notice to the Corporation, to require the Corporation to repurchase any outstanding shares of Series C Preferred Stock held by such Holder at a price per share equal to the greater of (A) the Series C Preferred Stock Liquidation Preference; and (B) the product of (y) that number of shares of Common Stock into which such share of Series C Preferred Stock (and all accrued but unpaid dividends with respect thereto) is then convertible (without giving effect to any limitations on conversion contained herein), multiplied by (z) the Closing Bid Price as of the date of the occurrence of such Breach Event, payable in cash; and

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(ii)               if in connection with such Breach Event the Corporation is in default under or has breached any provision of any Transaction Document in respect of its obligations to redeem a majority of the then outstanding shares of Series C Preferred Stock, upon the affirmative vote or by written consent of the Majority Holders, and without further action by any Holders, the number of directors constituting the Board shall automatically be increased by a number sufficient to cause such additional directors to constitute a majority of the Board. The Holders, voting as a single class to the exclusion of the holders of all other securities and classes of capital stock of the Corporation, shall elect such additional directors. For the avoidance of doubt, such additional directors shall constitute a majority of the Board. The period beginning on the date any Breach Event occurs and ending on the date upon which all shares of Series C Preferred Stock required to be redeemed pursuant to Section 9(b)(i) are so redeemed is referred to herein as the “Voting Period.” As soon as practicable after the commencement of the Voting Period, the Corporation shall call a special meeting of the Holders to be held not more than 20 days after the date of mailing of notice of such meeting. If the Corporation fails to send a notice, any such Holder may call the meeting on like notice. The record date for determining those Holders entitled to notice of and to vote at such special meeting shall be the close of business on the fifth (5th) Business Day preceding the day on which such notice is mailed or as otherwise required by applicable law. At any such special meeting and at each meeting of such Holders held during a Voting Period at which directors are to be elected (or with respect to any action by written consent in lieu of a meeting of stockholders), the Majority Holders, voting together as a single class to the exclusion of the holders of all other securities and classes of capital stock of the Corporation, shall be entitled to elect the number of directors prescribed in this Section 9(b)(ii), and each share of Series C Preferred Stock held by a Holder shall be entitled to one (1) vote (whether voted in person by the holder thereof or by proxy or pursuant to a stockholders’ consent). The terms of office of all persons who are incumbent directors of the Corporation at the time of a special meeting of the Holders (or any action by written consent in lieu of a meeting of stockholders) to elect such additional directors shall continue, notwithstanding the election at such meeting or pursuant to such written consent of the additional directors that such Holders are entitled to elect, and the additional directors so elected by such Holders, together with such incumbent directors, shall constitute the duly elected directors of the Corporation. Simultaneously with the termination of the Voting Period, the terms of office of the additional directors elected by the Holders under this Section 9(b)(ii) shall terminate, such incumbent directors shall constitute the directors of the Corporation, the number of directors constituting the Board shall automatically be decreased so that the number equals the number immediately prior to the increase pursuant to this Section 9(b)(ii) and the rights of the Holders to elect directors pursuant to this Section 9(b)(ii) shall cease.

(c)                If any payments are not made for any reason when required pursuant to this Section 9, the Corporation shall pay interest on all amounts due under this Section 9, at an aggregate rate per annum equal to the prime corporate rate announced from time to time at the end of each calendar month by the Wall Street Journal plus ten percent (10%) (increased by one percent (1%) at the end of each six (6) month period thereafter up to a maximum of 19% until all such payments have been made, and any interest thereon, are paid in full), with such interest to accrue daily in arrears and to be compounded monthly; provided that in no event shall such interest exceed the Maximum Permitted Rate. In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the date such payment and/or delivery is due to the extent permitted by law.

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10.              Replacement Certificates. If any certificate evidencing Series C Preferred Stock, or Common Stock deliverable pursuant to this Certificate of Designations, is mutilated, lost, stolen or destroyed, the Corporation shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution for such certificate, a new certificate, but only upon receipt of evidence reasonably satisfactory to the Corporation of such loss, theft or destruction (in such case) and, in each case, customary and reasonable indemnity, if requested. Applicants for a new certificate under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Corporation may prescribe.

11.              Reservation of Common Stock. The Corporation shall at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Underlying Shares as required hereunder, the number of shares of Common Stock which are then issuable and deliverable pursuant to this Certificate of Designations, in each case free from preemptive rights or any other contingent purchase rights of Persons other than the Holders. All shares of Common Stock so issuable and deliverable shall, upon issuance in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to issue Underlying Shares as required hereunder, the Corporation will take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

12.              Notices. Any and all notices or other communications or deliveries hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email or facsimile at the email address or facsimile number specified in this Section prior to 5:30 p.m. (New York City time) on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via email or facsimile at the email address or facsimile number specified in this Section on a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (iii) the Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address or facsimile number for such communications shall be: (i) if to the Corporation, to the address or facsimile number therefor set forth in the Purchase Agreement, or (ii) if to a Holder, to the address or facsimile number appearing on the Corporation’s stockholder records or such other address or facsimile number as such Holder may provide to the Corporation in accordance with this Section 12.

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13.              Voting Rights. In addition to the rights provided by law and otherwise provided in this Certificate of Designations, the Holder shall be entitled to vote on all matters as to which holders of Common Stock shall be entitled to vote, in the same manner and with the same effect as such holders of Common Stock, voting together with the holders of Common Stock as one class (including without limitation with respect to any matter relating to a Liquidation Event, any amendment of the Certificate of Incorporation, any increase or decrease in the number of authorized shares of Common Stock of the Corporation or any other matter subject to the vote or consent of the holders of Common Stock), and, except as specifically required by applicable law or in the event the Corporation enters into transaction with Purchaser or any Affiliate of Purchaser that could result in a Liquidation Event and the Board in its exercise of its fiduciary duties determines that a separate vote of the Common Stock is required, in no event shall the holders of the Common Stock vote as a separate class from the Series C Preferred Stock on any matter. With respect to the voting rights of the Holders pursuant to the preceding sentence, each Holder shall be entitled to one vote for each share of Common Stock that would be issuable to such Holder upon the conversion of all the shares of Series C Preferred Stock held by such Holder on the record date for the determination of stockholders entitled to vote, subject to (i) the limitations set forth in Section 3(c) and Section 3(e) and (ii) the number of shares voted is based on a conversion price which is no less than the greater of the book or market value of the Common Stock on the Principal Market on the closing date of the purchase of the Series C Preferred Stock (subject to adjustment from time to time for stock splits, stock dividends, stock combinations and similar events, as applicable, with respect to the Common Stock).

14.              Actions Prohibited.

(a)                To the extent the Corporation is prohibited by law from taking any action specified in this Certificate of Designations, the Corporation shall, upon the request of the Majority Holders, in addition to any other requirements of this Certificate of Designations, take such actions as may be reasonably requested by the Majority Holders to implement a valid and enforceable provision that is a reasonable substitute for the prohibited provision in order to give the maximum effect to the intent of the Corporation and the Holders (the “Amended Provision”). The Corporation shall take any action necessary or appropriate, to the extent reasonably within its control, to cause this Certificate of Designations to be amended to include the Amended Provision.

(b)               For so long as the Series C Preferred Stock remains outstanding, the Corporation shall not, directly or indirectly, and including in each case with respect to any Significant Subsidiary (as applicable), without the affirmative vote of the Majority Holders:

(i)                 liquidate, dissolve or wind up the Corporation or any Significant Subsidiary

(ii)               consummate any transaction that would constitute or result in a Liquidation Event;

(iii)             effect or consummate any Prohibited Issuance; or

(iv)             create, incur, assume or suffer to exist any Indebtedness of any kind, other than existing Indebtedness of the Corporation as set forth on Schedule 4.8 to the Purchase Agreement and any replacement financing thereto, provided that any such replacement financing be on substantially similar terms as such existing Indebtedness.

15.              Miscellaneous.

(a)                The headings herein are for convenience only, do not constitute a part of this Certificate of Designations and shall not be deemed to limit or affect any of the provisions hereof.

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(b)               No provision of this Certificate of Designations may be amended, except in a written instrument signed by the Corporation and the Majority Holders. Any of the rights of the Holders set forth herein may be waived by the affirmative vote or by written consent of the Majority Holders, except that each Holder may waive its own rights as provided in this Certificate of Designations. No waiver of any default with respect to any provision, condition or requirement of this Certificate of Designations shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

[Signature page follows]

 

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IN WITNESS WHEREOF, the undersigned has caused this Certificate of Designations to be duly executed as of this 15th day of December, 2017.

  MODUSLINK GLOBAL SOLUTIONS, INC.
   
  By: /s/ Louis J. Belardi
    Name:  /s/ Louis J. Belardi
    Title: Chief Financial Officer

 

 

 

 

ANNEX A

 

NOTICE OF CONVERSION

 

(To be Executed by the Registered Holder in order
to Convert Shares of SERIES C Preferred Stock)

 

The undersigned Holder hereby irrevocably elects to convert the number of shares of Series C Preferred Stock indicated below, represented by stock certificate No(s). ___________, into shares of common stock, par value $0.01 per share (the “Common Stock”), of ModusLink Global Solutions, Inc., a Delaware corporation (the “Corporation”), as of the date written below. If securities are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto.

 

 

Conversion calculations:

 

Date to Effect Conversion: _____________________________________________

 

Number of shares of Series C Preferred Stock owned prior to Conversion: ________

 

Number of shares of Series C Preferred Stock to be Converted: _________________

 

Number of shares of Common Stock to be Issued: ___________________________

 

Address for delivery of physical certificates: ______________________

 

or

 

for DWAC Delivery:

 

DWAC Instructions:

Broker no: _________

Account no: ___________

 

  [HOLDER]
   
  By:
 
    Name:  
    Title:  
    Date:  

  

A-1

 

Exhibit 10.1

 

 

 

MODUSLINK GLOBAL SOLUTIONS, INC.

PREFERRED STOCK PURCHASE AGREEMENT

DECEMBER 15, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

PAGE

ARTICLE I.   DEFINITIONS 1
1.1   Definitions 1
ARTICLE II.   PURCHASE AND SALE 7
2.1   Purchase and Sale of the Securities 7
2.2   Closing 7
2.3   Closing Deliveries 7
ARTICLE III.   REPRESENTATIONS AND WARRANTIES 8
3.1   Representations and Warranties of the Company 8
3.2   Representations and Warranties of the Purchaser 15
ARTICLE IV.   OTHER AGREEMENTS OF THE PARTIES 16
4.1   Legends 16
4.2   Dilution 17
4.3   Reservation and Listing of Securities 18
4.4   Conversion Procedures 18
4.5   Securities Laws Disclosure; Publicity 18
4.6   Use of Proceeds 19
4.7   Covenants 19
4.8   No Impairment 21
4.9   Indemnification 21
4.10   Shareholders Rights Plan 22
4.11   Access 22
4.12   Amendments to Transaction Documents 22
4.13   Further Assurances 22
4.14   Best Efforts 23
4.15   Stockholder Approval

23

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ARTICLE V.   CONDITIONS 23
5.1   Conditions Precedent to the Obligations of the Purchaser 23
5.2   Conditions Precedent to the Obligations of the Company 24
ARTICLE VI.   REGISTRATION RIGHTS 25
6.1   Piggyback Registration Requirements 25
6.2   Registration Expenses 28
6.3   Registration on Form S-3 28
6.4   Registration Period 28
6.5   Indemnification 29
6.6   Contribution 30
ARTICLE VII.   MISCELLANEOUS 31
7.1   Fees and Expenses 31
7.2   Entire Agreement 31
7.3   Notices 32
7.4   Amendments; Waivers 32
7.5   Construction 33
7.6   Successors and Assigns 33
7.7   No Third-Party Beneficiaries 33
7.8   Governing Law; Venue; Waiver of Jury Trial 33
7.9   Survival 34
7.10   Execution 34
7.11   Severability 34
7.12   Rescission and Withdrawal Right 34
7.13   Replacement of Securities 34
7.14   Remedies 34
7.15   Payment Set Aside 35
7.16   Adjustments in Share Numbers and Prices 35
7.17   Construction 35
7.18   Legal Counsel 35

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PREFERRED STOCK PURCHASE AGREEMENT

This Preferred Stock Purchase Agreement is entered into and dated as of December 15, 2017 (this “Agreement”), by and between ModusLink Global Solutions, Inc., a Delaware corporation (the “Company”), and SPH Group Holdings LLC (the “Purchaser”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, and rules promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, shares of the Company’s Series C Convertible Preferred Stock, par value $0.01 per share, pursuant to the terms set forth herein.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

ARTICLE I.
DEFINITIONS

1.1              Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

Affiliate” of a Person means any other Person that, directly or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the first Person. Without limiting the foregoing with respect to the Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Purchaser will be deemed to be an Affiliate of the Purchaser.

Breach Event” shall have the definition set forth in the Certificate of Designations.

Business Day” means any day except Saturday, Sunday and any day which is a U.S. federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

Certificate of Designations” means the Certificate of Designations, Preferences and Rights of the Series C Convertible Preferred Stock of ModusLink Global Solutions, Inc. in the form attached hereto as Exhibit A.

Claim” is defined in Section 3.1(n).

Closing” is defined in Section 2.2.

Closing Date” is defined in Section 2.2.

Commission” or “SEC” means the U.S. Securities and Exchange Commission.

 

 

Committee Counsel” means Littman Krooks LLP, counsel to the Special Committee.

Common Stock” means the common stock of the Company, par value $0.01 per share, and any securities into which such common stock may hereafter be reclassified or converted.

Common Stock Equivalents” means, collectively, Options and Convertible Securities.

Company” is defined in the Preamble hereto.

Company Bylaws” is defined in Section 3.1(a).

Company Certificate” is defined in Section 3.1(a).

Company’s Knowledge” means the actual knowledge, as of the date of this Agreement, of the executive officers (as defined in Rule 405 under the Securities Act) of the Company, after reasonable inquiry.

Contracts” means, with respect to any Person, any agreement, undertaking, franchise, permit, lease, loan, license, guarantee, understanding, commitment, contract, note, bond, indenture, mortgage, deed of trust or other obligation, instrument, document, agreement or other arrangement of any kind (written or oral) to which such Person is a party or by which such Person, or any material amount of such Person’s property, is bound.

Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Conversion Price” is defined in the Certificate of Designations and, whenever referred to in this Agreement, the term “Conversion Price” shall refer to the Conversion Price as then in effect under the Certificate of Designations.

Convertible Notes” means the 5.25% Convertible Senior Notes due 2019 of the Company.

Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

Debt” is defined in Section 3.1(n).

DTC” is defined in Section 4.1(c).

Eligible Market” means any of the following: the Principal Market, the New York Stock Exchange, the NYSE MKT, The NASDAQ Global Select Market, The NASDAQ Capital Market or the OTC Bulletin Board.

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Evaluation Date” is defined in Section 3.1(m).

Event” is defined in Section 6.1(b)(v).

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

First Meeting” is defined in Section 4.15(b).

GAAP” is defined in Section 3.1(h).

Governmental Authority” means any government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

Holder” and “Holders” shall include the Purchaser and any permitted transferee or transferees of Registrable Securities (as defined below) which have not been sold to the public to whom the registration rights conferred by this Agreement have been transferred in compliance with this Agreement; provided that neither such Person nor any Affiliate of such Person is registered as a broker or dealer under Section 15(a) of the Securities Exchange Act of 1934, as amended, or a member of the Financial Industry Regulatory Authority.

Holder Representative” is defined in Section 6.1(e).

Indebtedness” of any Person means (i) all indebtedness representing money borrowed which is created, assumed, incurred or guaranteed in any manner by such Person or for which such Person is responsible or liable (whether by guarantee of such indebtedness, agreement to purchase indebtedness of, or to supply funds to or invest in, others), (ii) any direct or contingent obligations of such Person arising under any letter of credit (including standby and commercial), bankers acceptances, bank guaranties, surety bonds and similar instruments, (iii) all indebtedness secured by any Lien existing on property or assets owned by such Person and (iv) any shares of capital stock or other securities having a redemption feature; provided that the Preferred Stock, and any obligations due in respect thereof in accordance, as applicable, with the Certificate of Designations shall not be deemed to be Indebtedness pursuant to this definition.

Indemnified Party” is defined in Section 6.5(c)(i).

Indemnifying Party” is defined in Section 6.5(c)(i).

IRS” is defined in Section 3.1(m)(iv).

Liens” is defined in Section 3.1(e).

Losses” means any and all damages, fines, penalties, deficiencies, liabilities, claims, losses (including loss of value), judgments, awards, settlements, taxes, actions, obligations and costs and expenses in connection therewith (including, without limitation, interest, court costs and reasonable fees and expenses of attorneys, accountants and other experts, or any other expenses of litigation or other Proceedings or of any default or assessment).

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Material Adverse Effect” means any material adverse effect on the business, properties, assets, operations, results of operations, or condition (financial or otherwise) of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated by the Transaction Documents, or on the authority or ability of the Company to perform its obligations under the Transaction Documents; provided, however, that no effect(s) arising out of or resulting from any of the following will, in and of itself, constitute a Material Adverse Effect (provided, that, with respect to clauses (i), (ii), (iii) and (iv), any effect does not disproportionately adversely affect the Company or its Subsidiaries compared to other companies of similar size operating in the industry in which the Company and its Subsidiaries operate): (i) general economic conditions; (ii) conditions generally in the securities markets, financial markets or currency markets; (iii) political conditions or acts of war, sabotage or terrorism; and (iv) acts of God, natural disasters, weather conditions or other calamities.

Material Contract” means (A) any agreement which requires future expenditures by the Company or any Subsidiary in excess of $500,000 or which might result in payments to the Company or any Subsidiary in excess of $500,000; (B) any purchase or task order which might result in payments to the Company or any Subsidiary in excess of $500,000; (C) any employment agreements (not including at-will employment letters with employees), (D)  any agreement that is or would be required to be filed as an exhibit to the SEC Documents pursuant to Item 601(b)(10) of Regulation S-K of the Commission, and (E) any Contract the violation of which, or default under which, by the Company or any Subsidiary, on the one hand, or the other party(ies) to such Contract, on the other hand, could reasonably be expected to result in a Material Adverse Effect.

Options” means any rights, warrants or options to, directly or indirectly, subscribe for or purchase Common Stock or Convertible Securities.

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

Piggyback Registration Statement” is defined in Section 6.1(a).

Preferred Shares” means the shares of Preferred Stock to be sold and issued by the Company to the Purchaser in accordance with and subject to the terms and conditions of this Agreement.

Preferred Stock” means the Series C Convertible Preferred Stock of the Company, par value $0.01 per share, and all securities into which such preferred stock may be reclassified or converted (other than the Common Stock).

Principal Market” means The NASDAQ Global Market.

Proceeding” means an action, claim, suit, inquiry, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or, to the Company’s Knowledge, threatened.

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Prohibited Issuance” means the issuance of: (A) any shares of Common Stock at a purchase price less than the then-existing Conversion Price or the issuance of any Common Stock Equivalents with a conversion price or exercise price less than the then-existing Conversion Price, except under any stockholder approved equity incentive plan; (B) any Common Stock Equivalents consisting of Indebtedness that is convertible into or exchangeable or exercisable for Common Stock; (C) any preferred stock of the Company that is senior to or pari passu with the Preferred Stock with respect to rights, preferences or privileges as to dividends, liquidation preference or redemption or contains a greater than 1x liquidation preference or is a “participating” preferred stock; (D) any shares of Common Stock or Common Stock Equivalents to the extent the effective purchase or conversion price or the number of underlying shares floats or resets or otherwise varies or is subject to adjustment (directly or indirectly) based on market prices of the Common Stock; or (E) any warrants or other rights to purchase Common Stock that, when valued on a black scholes basis, decreases the exercise price for such warrants or other rights below the then-existing Conversion Price.

Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

Purchase Price” is defined in Section 2.1.

Purchaser Counsel” or “Olshan” means Olshan Frome Wolosky LLP, counsel to the Purchaser.

Purchaser” is defined in the Preamble hereto.

Records” is defined in Section 6.1(d).

register,” “registered” and “registration” shall refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

Registrable Securities” means all Underlying Shares, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

Registration Statement” means any registration statements on Forms S-1 or S-3 required to be filed under Section 6.1, including (in each case) the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

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Registration Expenses” shall mean all expenses to be incurred by the Company in connection with each Holder’s registration rights under this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses, and the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company, which shall be paid in any event by the Company).

Regulation D” shall mean Regulation D as promulgated pursuant to the Securities Act, and as subsequently amended.

Related Person” is defined in Section 4.9.

Required Approvals” is defined in Section 3.1(e).

Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively, promulgated by the Commission pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

SEC Documents” has the meaning set forth in Section 3.1(h).

Securities” means the Preferred Shares and the Underlying Shares issued or issuable (as applicable) to the Purchaser pursuant to the Transaction Documents.

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

Selling Expenses” shall mean all underwriting discounts and selling commissions applicable to the sale of Registrable Securities and all fees and disbursements of counsel for the Holder not included within “Registration Expenses”.

Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article I, Rule 1-02 of Regulation S-X.

Special Committee” means the special committee of independent directors of the Board of Directors of the Company established to evaluate the terms and conditions of the transactions set forth herein.

Stockholder Approval” is defined in Section 4.15(a).

Solvent” is defined in Section 3.1(n).

Subsidiary(ies)” means at any time, any Person (other than a natural person or Governmental Authority) which the Company (either alone or through or together with any other Subsidiary), owns, directly or indirectly, more than a majority of the capital stock or equity interests the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such Person.

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Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, or (b) if the Common Stock is not then listed or quoted and traded on any Trading Market, then any Business Day.

Trading Market” means The NASDAQ Global Market or any other primary Eligible Market or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted.

Transaction Documents” means this Agreement, the Certificate of Designations, and any other documents, certificates or agreements executed or delivered in connection with the transactions contemplated hereby.

Underlying Shares” means the shares of Common Stock issued or issuable (i) upon conversion of the Preferred Stock and (ii) in satisfaction of any other obligation or right of the Company to issue shares of Common Stock pursuant to the Transaction Documents (including upon payment of any dividends in Common Stock to the holders of Preferred Stock to the extent specifically permitted by the Certificate of Designations), and in each case, any securities issued or issuable in exchange for or in respect of such securities.

8-K Filing” is defined in Section 4.5.

ARTICLE II.
PURCHASE AND SALE

2.1              Purchase and Sale of the Securities. Subject to the terms and conditions of this Agreement, the Purchaser agrees to purchase from the Company, and the Company agrees to sell and issue to the Purchaser, at the Closing, the Preferred Shares in the amounts set forth opposite the Purchaser’s name on Schedule A hereto for the aggregate purchase price set forth opposite the Purchaser’s name on Schedule A hereto under the headings “Number of Preferred Shares.” The purchase price for each Preferred Share shall be One Thousand Dollars ($1,000) (the “Purchase Price”).

2.2              Closing. The purchase and sale of the Preferred Shares pursuant to the terms of this Agreement (the “Closing”) shall take place at the offices of Olshan Frome Wolosky LLP in New York City, New York, at 10:00 A.M. (New York City time) on the date each of the conditions set forth in Section 2.3 and Article 5 have been satisfied, or at such other time and place as the Company and the Purchaser mutually agree upon in writing (the “Closing Date”).

2.3              Closing Deliveries.

(a)                  At the Closing, the Company shall deliver or cause to be delivered to the Purchaser the following:

(i)            a stock certificate representing the Preferred Shares registered in the name of the Purchaser (or one or more of its assignees or designees), in the amount indicated opposite the Purchaser’s name on Schedule A hereto, in proper form for transfer, and with any required stock transfer stamps affixed thereto;

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(ii)          the Certificate of Designations, together with confirmation of filing and effectiveness with the Secretary of State of the State of Delaware;

(iii)         a certificate dated as of the Closing Date and signed by the Chief Executive Officer of the Company certifying as of the Closing Date (i) as to the fulfillment of each of the conditions set forth in Section 5.1 and (ii) that no Breach Event, or event which, with the giving of notice or the passing of time, would constitute a Breach Event, exists as of such date;

(iv)         certificates dated as of the Closing Date and signed by the Secretary of the Company certifying: (1) that attached thereto is a true and complete copy of all resolutions adopted by the Special Committee and Board of Directors authorizing the execution, delivery and performance of each of the Transaction Documents, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated by this Agreement; (2) that attached thereto are true and complete copies of the Company Certificate and Company Bylaws, and that such documents are in full force and effect; and (3) the signatures and titles of the officers of the Company executing each of the Transaction Documents; and

(v)          any other document reasonably requested by the Purchaser or its counsel.

(b)                  At the Closing, the Purchaser shall deliver or cause to be delivered to the Company the purchase price set forth opposite the Purchaser’s name on Schedule A hereto under the heading “Aggregate Purchase Price,” in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose.

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1              Representations and Warranties of the Company. The Company hereby represents and warrants to, and agrees with, the Purchaser as of the date hereof as follows:

(a)                  Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation or bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not reasonably be expected to, individually or in the aggregate result in a Material Adverse Effect, and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification. The Company has delivered or made available to the Purchaser true and complete copies of the Restated Certificate of Incorporation of the Company (the “Company Certificate”) and Fourth Amended and Restated Bylaws of the Company (the “Company Bylaws”), each as amended to date, and the respective certificate or articles of incorporation or bylaws or other organizational or charter documents of each Subsidiary. Each of the foregoing documents is in full force and effect. The Company has not violated any provision of the Company Certificate, the Company Bylaws or any certificate or articles of incorporation or bylaws or other organizational or charter documents of any Subsidiary, in a manner that has not been cured and that materially and adversely affects the Company.

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(b)                  Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its respective obligations hereunder and thereunder and to issue the Securities in accordance with the terms hereof and thereof. The execution and delivery by the Company of each of the Transaction Documents and the consummation by it of the transactions contemplated hereunder and thereunder, including, without limitation, the issuance of the Preferred Shares and the reservation for issuance and the issuance of the Underlying Shares, have been duly authorized by all necessary action on the part of the Company and no further consent or action is required by the Company, or its Board of Directors or stockholders. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the legal, valid and binding obligation of the Company, enforceable against the Company, in accordance with its terms, subject to (i) laws of general application relating to bankruptcy, insolvency and the relief of debtors, or (ii) rules of law governing specific performance, injunctive relief or other equitable remedies.

(c)                  No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the Subsidiaries and the consummation by them of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Preferred Shares, and the reservation for issuance and the issuance of the Underlying Shares) do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or result in, or have the enforcement of the rights provided for in the Transactions Documents constitute, a change of control (including, without limitation, by being deemed to be a merger, consolidation, or other disposition of all or substantially all of the assets or businesses of the Company or any of its Subsidiaries) or similar outcome in any respect under, or give to others any rights (x) of termination, amendment, acceleration or cancellation of, or (y) to any payment (including, without limitation, any employment or severance payment) under, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected or result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any Governmental Authority or any regulatory or self-regulatory agency to which the Company or a Subsidiary is subject (including foreign, federal and state securities laws and regulations and the rules and regulations of the Principal Market and applicable laws of the State of Delaware), or by which any property or asset of the Company or a Subsidiary is bound or affected.

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(d)                 Filings, Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization, permit or order of, give any notice to, or make any filing or registration with, any Governmental Authority or any regulatory or self-regulatory agency or any other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than the filing by the Company of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, the filing of the Certificate of Designations, state and applicable Blue Sky filings, and the consents, waivers, authorizations, permits, orders, notices, filings or registrations set forth on Schedule 3.1(d) (collectively, the “Required Approvals”). To the Company’s Knowledge, the Company and its Subsidiaries are unaware of any facts or circumstances that might prevent the Company from obtaining or effecting any of the Required Approvals.

(e)                  Subsidiaries. The Company does not directly or indirectly control or own any interest in any other Person other than those listed in Schedule 3.1(e). The jurisdiction of organization of each Subsidiary is as set forth on Schedule 3.1(e). Except as disclosed in Schedule 3.1(e), the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any lien, charge, claim, tax, security interest, encumbrance, right of first refusal or similar right or other restriction (collectively, “Liens”), and all the issued and outstanding shares of capital stock of each Subsidiary have been validly issued and are duly authorized, fully paid and non-assessable and free of preemptive and similar rights.

(f)                   Issuance of the Securities. The Preferred Shares and the Underlying Shares issuable upon conversion of the Preferred Shares and any other Underlying Shares issuable pursuant to the Transaction Documents shall be duly authorized as of the Closing. As of the Closing, the Preferred Shares shall be, and any Underlying Shares when so issued in accordance with the terms of the applicable Transaction Documents will be, validly issued, fully paid and nonassessable and free from all preemptive or similar rights or Liens with respect to the issue thereof. As of the Closing, the Preferred Shares have been, and the Underlying Shares when so issued in accordance with the terms of the applicable Transaction Documents will be, issued in compliance with applicable securities laws, rules and regulations. The issuance and sale of the Securities contemplated hereby does not conflict with or violate any rules or regulations of the Principal Market. As of the Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals or exceeds 100% of the aggregate of the maximum number of shares of Common Stock issuable upon conversion of all of the Preferred Shares.

(g)                  Capitalization. Immediately prior to the issuance of the Preferred Shares hereunder, the authorized capital stock of the Company consists of (i) 1,400,000,000 shares of Common Stock, of which 55,557,326 shares are issued and outstanding, (ii) 5,000,000 shares of preferred stock, par value $0.01 per share (A) of which 140,000 shares are designated as “Series A Junior Participating Preferred Stock, of which no shares are issued or outstanding and (B) there is a sufficient amount of authorized preferred stock to issue the Preferred Shares. All of the outstanding shares have been validly issued and are fully paid and nonassessable. No shares of Common Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as set forth in the SEC Documents, as of the date hereof, (i) there are no outstanding options (except for options granted under the Company’s existing equity incentive plans), warrants, scrip, rights to subscribe to, Common Stock Equivalents, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company and (ii) there are no agreements or arrangements under which the Company is obligated to register the sale of any of its securities under the Securities Act except as provided herein. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of any of the Securities as described in this Agreement.

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(h)                  SEC Reports; Financial Statements. During the twelve (12) months prior to the date hereof, the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the Commission pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date hereof, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the Commission, contained any untrue statement of a material fact or omitted 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. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. As of their respective filing dates, the financial statements of the Company included in the SEC Documents and, as of the respective dates delivered by the Company to the Purchaser, any other financial statements of the Company (if any) delivered by the Company to the Purchaser complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect to financial statements included in the SEC Documents. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments); as of the date hereof, there are no obligations, liabilities or indebtedness (including contingent and indirect liabilities) which are material to the Company and not reflected in such financial statements, and no material adverse changes have occurred in the financial condition or business of the Company since the date of the most recent financial statement provided by the Company to the Purchaser or included in the SEC Documents.

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(i)                    Taxes. The Company and each of its Subsidiaries (i) has made or filed all foreign, U.S. federal and (to the Company’s Knowledge, solely with respect to state income tax returns) state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes yet to become due for the periods to which such returns, reports or declarations apply. All tax returns are true and correct in all material respects. There is no liability for any tax to be imposed upon its or any of its Subsidiaries’ properties or assets as of the date of this Agreement for which adequate provision has not been made. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. No material tax returns of the Company have been audited, and to the Company’s Knowledge, no deficiency assessment or proposed adjustment of the Company’s or the Subsidiaries material taxes is pending.

(j)                    No Material Adverse Effect; Absence of Certain Changes. Since August 1, 2017, there has been no Material Adverse Effect on the business, assets, properties, operations, condition (financial or otherwise) or results of operations of the Company or its Subsidiaries and there is no specific fact known to the Company which would reasonably be expected to result in any Material Adverse Effect. Except as disclosed in the SEC Documents or Schedule 3.1(j), since August 1, 2017, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (ii) sold any assets, individually or in the aggregate, in excess of $500,000, (iii) had capital expenditures, individually or in the aggregate, in excess of $500,000, (iv) altered its method of accounting or the identity of its auditors, (v) incurred any liabilities (contingent or otherwise), individually or in the aggregate, in excess of $500,000, other than (A) trade payables and accrued expenses incurred in the ordinary course of business and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP (including, without limitation, the footnotes thereto) or required to be disclosed in filings made with the SEC or (vi) issued any equity securities to any officer, director or Affiliate. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor to do so. The Company does not have pending before the Commission any request for confidential treatment of information. Neither the Company nor any Affiliate of the Company (including, without limitation, any pension plan, employee stock option plan or similar plan) has purchased or sold any securities of the Company within the 90 days preceding the date hereof. The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). No event, liability, development or circumstance has occurred or exists, or, to the Company’s Knowledge, is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the Commission relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced.

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(k)                  Litigation. As of the date hereof, except as disclosed in the SEC Documents or listed on Schedule 3.1(k), there is no suit, claim, action, arbitration, investigation or proceeding pending or, to the Company’s Knowledge, threatened that (i) if determined adversely to the Company or any of the Company’s Subsidiaries, has had or would reasonably be expected to result in losses greater than $500,000, or (ii) could reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary is subject to any outstanding order, writ, injunction, judgment, decree or arbitration ruling, award or other finding that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect

(l)                    Compliance. Except as set forth in Schedule 3.1(l), as of the date hereof, each of the Company and its Subsidiaries has complied and is in compliance with all statutes, ordinances, rules and regulations of any Governmental Authority or any regulatory or self-regulatory agency, to which the Company or a Subsidiary is subject, except for any non-compliance that, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect

(m)                Internal Accounting Controls. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, including without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Except as disclosed in the SEC Documents, during the twelve (12) months prior to the date hereof neither the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant relating to any material weakness in any part of the system of internal accounting controls of the Company or any of its Subsidiaries.

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(n)                  Solvency. No proceedings have been taken, instituted or, to the knowledge of the Company, are pending for the dissolution or liquidation of the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy or insolvency laws, nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any knowledge of any fact that would reasonably lead a creditor to do so. The Company and its Subsidiaries, taken as a whole, are, as of the date hereof, and after giving effect to the transactions contemplated hereby, will be Solvent. As used herein, (x) “Solvent”, with regard to any Person, means that (a) the sum of the assets of such Person, both at a fair valuation and at present fair salable value, exceeds its liabilities, including contingent, subordinated, unmatured, unliquidated and disputed liabilities, (b) such Person has sufficient capital with which to conduct its business, and (c) such Person has not incurred Debts, and does not intend to incur Debts, beyond its ability to pay such Debts as they mature, (y) “Debt” means any liability on a Claim, and (z) “Claim” means (i) a right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured, or (ii) a right to an equitable remedy for breach of performance if such breach gives rise to a payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured; with respect to any such contingent liabilities, such liabilities shall be computed at the amount which, in light of all of the facts and circumstances existing at the time, represents the amount which can reasonably be expected to become an actual or matured liability.

(o)                  Broker Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.

(p)                  Private Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, (i) no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser under the Transaction Documents, and (ii) the issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Principal Market.

(q)                  Disclosure. This Agreement and the Schedules set forth herein do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed.

(r)                   Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby and thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Purchaser or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives. The Company further acknowledges that the Purchaser has not made any promises or commitments other than as set forth in this Agreement, including any promises or commitments for any additional investment by the Purchaser in the Company.

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3.2              Representations and Warranties of the Purchaser. The Purchaser hereby, as to itself only, represents and warrants to the Company as follows:

(a)                  Organization; Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate, limited liability company or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance by the Purchaser of the Transaction Documents to which it is a party have been duly authorized by all necessary corporate or, if the Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of the Purchaser. Each of the Transaction Documents to which the Purchaser is a party has been duly executed by the Purchaser and, when delivered by the Purchaser in accordance with terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms.

(b)                  Investment Intent. The Purchaser is acquiring the Securities as principal for its own account for investment purposes and not with a view to distributing or reselling such Securities or any part thereof in violation of applicable securities laws, without prejudice, however, to the Purchaser’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws. Nothing contained herein shall be deemed a representation or warranty by the Purchaser to hold the Securities for any specific period of time. The Purchaser understands that the Securities have not been registered under the Securities Act, and therefore the Securities may not be sold, assigned or transferred unless pursuant to (i) an effective registration statement under the Securities Act with respect thereto or (ii) an available exemption from the registration requirements of the Securities Act.

(c)                  Purchaser Status. At the time the Purchaser was offered the Securities, it was, and at the date hereof it is, an “accredited investor” as defined in Rule 501(a) under the Securities Act. The Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act.

(d)                 Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

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(e)                  Access to Data. The Purchaser has received and reviewed information about the Company and has had an opportunity to discuss the Company’s business, management and financial affairs with its management and to review the Company’s facilities. The foregoing, however, does not limit or modify the representations and warranties made by the Company in this Agreement or any other provision in this Agreement or the right of the Purchaser to rely thereon.

(f)                   Broker Fees. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Purchaser.

(g)                  No Other Representations or Warranties. Except for the representations and warranties set forth in this Section 3.2, neither the Purchaser nor any other Person makes any express or implied representation or warranty with respect to the Purchaser or with respect to any other information provided to the Company in connection with the transactions contemplated hereunder.

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

4.1              Legends.

(a)                  Certificates evidencing the Preferred Stock and, when issued, the Underlying Shares shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form, until such time as they may be resold without restriction as to current public information, manner of sale or volume limitations under applicable securities laws or as otherwise provided in Section 4.1(c):

THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

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(b)                  The Company acknowledges and agrees that the Purchaser may from time to time pledge, and/or grant a security interest in, some or all of the legended Securities in connection with applicable securities laws, pursuant to a bona fide margin agreement in compliance with a bona fide margin loan. Such a pledge would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion shall be required in connection with a subsequent transfer or foreclosure following default by the Purchaser’s transferee of the pledge. No notice shall be required of such pledge, but the Purchaser’s transferee shall promptly notify the Company of any such subsequent transfer or foreclosure. The Purchaser acknowledges that the Company shall not be responsible for any pledges relating to, or the grant of any security interest in, any of the Securities or for any agreement, understanding or arrangement between the Purchaser and its pledgee or secured party. At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.

(c)                  The legend set forth in Section 4.1(a) above shall be removed and the Company shall issue one or more certificates without such legend or any other legend to the holder of the applicable Preferred Stock or Underlying Shares upon which it is stamped or issue to such holder by electronic delivery at the applicable balance account at the Depository Trust Company (“DTC”), if (i) such Preferred Stock or Underlying Shares are registered for resale under the Securities Act (provided that the Purchaser agrees to only sell such Preferred Stock or Underlying Shares when, and as permitted, by the effective registration statement permitting such resale), (ii) such Preferred Stock or Underlying Shares are sold or transferred pursuant to Rule 144 (if the transferor is not an Affiliate of the Company), or (iii) such Preferred Stock or Underlying Shares are eligible for resale under the Securities Act without regard to current public information, manner of sale or volume limitations. The Company may request an opinion of counsel to the holder of any such Preferred Stock or Underlying Shares and such other certifications as the Company shall reasonably request with respect to the legal and factual grounds for the removal of such legends. Any fees (with respect to the Company’s transfer agent, Company counsel or otherwise) associated with the removal of such legend shall be borne by the Company and the fees of any counsel to the holder shall be borne by such holder. The Company may not make any notation on its records or give instructions to its transfer agent that enlarge the restrictions on transfer set forth in this Section 4.1. Certificates for Preferred Stock or Underlying Shares subject to legend removal hereunder may be transmitted by the Company’s transfer agent to the Purchaser by crediting the account of the Purchaser’s prime broker with DTC.

4.2              Dilution. The Company acknowledges that the issuance of the Securities (including the Underlying Shares) will result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including without limitation its obligation to issue the Securities (including the Underlying Shares) pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim that the Company may have against the Purchaser.

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4.3              Reservation and Listing of Securities. Unless the Purchaser shall otherwise consent:

(a)                  The Company shall take all action necessary to have authorized and reserved solely for the purpose of providing for the conversion of all of the outstanding Preferred Stock, such number of shares of Common Stock as shall from time to time equal to the number of shares sufficient to permit the conversion, in full, of all of the outstanding Preferred Stock in accordance with the terms of the Certificate of Designations but without regard to any conversion limitations contained therein.

(b)                  The Company shall promptly following the removal of any legends pursuant to Section 4.1(c) above, or the effectiveness of any Piggyback Registration Statement, as applicable, (i) prepare and timely file with each Trading Market an additional shares listing application covering all of the shares of Common Stock issued or issuable under the Transaction Documents, (ii) use best efforts to cause such shares of Common Stock to be approved for listing on each Trading Market as soon as practicable thereafter, (iii) provide to the Purchaser evidence of such listing, and (iv) use best efforts to maintain the listing of such Common Stock on each such Trading Market or another Eligible Market.

4.4              Conversion Procedures. The form of Conversion Notice included in the Certificate of Designations sets forth the totality of the procedures required by the Purchaser in order for the Purchaser to voluntarily convert the Preferred Stock into Common Stock. No other information or instructions shall be necessary to enable the Purchaser to convert the Preferred Stock into Common Stock. The Company shall honor all conversions of the Preferred Stock and shall deliver all Underlying Shares issuable upon conversion thereof, in each case in accordance with the terms and conditions set forth in the Transaction Documents.

4.5              Securities Laws Disclosure; Publicity. Within four (4) Business Days of the Closing Date, the Company shall file a Current Report on Form 8-K with the Commission (the “8-K Filing”) describing the material terms of the transactions contemplated by the Transaction Documents and including as exhibits to such Current Report on Form 8-K this Agreement and the form of the Certificate of Designations, in the form required by the Exchange Act. Thereafter, the Company shall timely file any filings and notices required by the Commission or applicable law with respect to the transactions contemplated hereby and provide copies thereof to the Purchaser promptly after filing. The Company shall, at least one (1) Trading Day prior to the filing or dissemination of any disclosure required by this paragraph, provide a copy thereof to the Purchaser for its review. The Company and the Purchaser shall consult with each other in issuing any press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or Trading Market with respect to the transactions contemplated hereby, and neither party shall issue any such press release or otherwise make any such public statement, filing or other communication without the prior consent of the other, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement, filing or other communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market (other than the Registration Statement, the 8-K Filing and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the Exchange Act and any application to list additional shares filed with the Trading Market), without the prior written consent of the Purchaser, except to the extent such disclosure is required by law, Trading Market regulations or the Commission, in which case the Company shall provide the Purchaser with prior notice of such disclosure. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents, the Purchaser shall have the right to require the Company to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material nonpublic information. The Purchaser shall not have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure. Each press release disseminated by the Company during the twelve (12) months prior to the Closing Date did not at the time of release 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 light of the circumstances under which they were made, not misleading.

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4.6              Use of Proceeds. The Company may use the proceeds from the sale of the Securities hereunder to repurchase or pay amounts due under the Convertible Notes currently outstanding, for working capital purposes and/or for general corporate purposes.

4.7              Covenants.

(a)                  For so long as the Preferred Shares remain outstanding, the Company shall:

(i)            (A) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and its rights and franchises; (B) continue to conduct its business substantially as now conducted or as otherwise currently contemplated and permitted under this Agreement; and (C) at all times maintain, preserve and protect in all material respects all of its assets and properties used or useful in the conduct of its business;

(ii)          keep adequate books and records with respect to its business activities in which proper entries, reflecting all bona fide financial transactions, are made in accordance with GAAP;

(iii)         comply in all material respects with (i) the applicable laws and regulations wherever its business is conducted, (ii) the provisions of (A) the Company Certificate and Company Bylaws and (B) the Certificate of Designations, and (iii) all Material Contracts;

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(iv)         promptly notify the Purchaser in writing of the occurrence of any Breach Event;

(v)          give notice to Purchaser in writing within three (3) Business Days of becoming aware of any litigation or Proceedings threatened in writing against the Company or any of its Subsidiaries or any pending litigation and Proceedings affecting the Company or any of its Subsidiaries or to which any of them is or becomes a party involving a claim against any of them that could reasonably be expected to result in a Material Adverse Effect, stating the nature and status of such litigation or Proceedings; and

(vi)         (a) as soon as practicable, but in any event no later than the time prescribed by the Commission (and, if not subject to the periodic reporting requirements of the Exchange Act, no later than the ninetieth (90th) day after the end of each fiscal year of the Company), deliver to Purchaser a balance sheet as of the end of such fiscal year and an income statement and statement of cash flow for such fiscal year, audited and certified by the Company’s nationally recognized independent public accountants; and (b) as soon as practicable, but in any event no later than the time prescribed by the Commission (and, if not subject to the periodic reporting requirements of the Exchange Act, no later than the forty-fifth (45th) day after the end of each fiscal quarter of the Company), deliver to Purchaser an unaudited balance sheet, income statement and statement of cash flows for such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP); provided that the filing of any report with the SEC containing the foregoing information shall satisfy the delivery requirements set forth herein.

(b)                  For so long as the Preferred Shares remain outstanding, the Company shall not, directly or indirectly, and including in each case with respect to any Significant Subsidiary (as applicable), without the affirmative vote of the holders owning a majority of the outstanding shares of Preferred Stock:

(i)            by operation of law or otherwise, (A) amend or restate (x) the Company Certificate (excluding the Certificate of Designations) or Company Bylaws in a manner that adversely affects the voting powers, preferences, rights or privileges of the Preferred Stock or (y) the Certificate of Designations in any manner, (B) convert the Company into any other organizational form, (C) liquidate, dissolve or wind up the Company or any Significant Subsidiary or (D) merge with, consolidate with, acquire all or substantially all of the assets or capital stock of, or otherwise combine with or acquire or be acquired by, or sell all or substantially all of the assets or capital stock to, any Person or any operating division of any Person;

(ii)          (A) effect or consummate any Prohibited Issuance, (B) issue any additional shares of Preferred Stock, (C) reclassify any capital stock, or (D) directly or indirectly, redeem, purchase or otherwise acquire any capital stock or set aside any monies for such a redemption, purchase or other acquisition of its capital stock; provided that the Company may directly or indirectly, redeem, purchase or otherwise acquire Securities if specifically permitted pursuant to the Certificate of Designations and in all events in accordance with the terms of the Certificate of Designations;

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(iii)         set aside, declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares or other interests in the Company, other than distributions (A) or dividend payments in respect of the Preferred Shares in accordance with the terms of the Certificate of Designations, (B) to directly or indirectly redeem, purchase or otherwise acquire Securities if specifically permitted pursuant to the Certificate of Designations and in all events in accordance with the terms of the Certificate of Designations, and (C) of Common Stock as a dividend on the Common Stock, to the extent specifically permitted by the Certificate of Designations, distributed pro rata to the holders thereof;

(iv)         create, incur, assume or suffer to exist any Indebtedness of any kind, other than certain existing Indebtedness of the Company as set forth on Schedule 4.8 of this Agreement and any replacement financing thereto, provided that any such replacement financing be on substantially similar terms as the existing Indebtedness; or

(v)          enter into any agreement to do any of the foregoing or cause or permit any Subsidiary of the Company directly or indirectly to take any actions described in clauses (i) through (iv) above;

 

provided, that nothing set forth herein shall prohibit the Company from repurchasing any of the Convertible Notes.

 

4.8              No Impairment. At all times after the date hereof, the Company will not take or permit any action, or cause or permit any Subsidiary to take or permit any action that impairs or adversely affects the rights of the Purchaser under any Transaction Document.

4.9              Indemnification. If the Purchaser or any of its Affiliates or any officer, director, partner, controlling person, employee or agent of the Purchaser or any of its Affiliates (a “Related Person”) becomes involved in any capacity in any Proceeding brought by or against any Person in connection with or as a result of the transactions contemplated by the Transaction Documents, the Company will indemnify and hold harmless the Purchaser or Related Person for its reasonable legal and other expenses (including the reasonable costs of any investigation, preparation and travel) and for any Losses incurred in connection therewith, as such expenses or Losses are incurred, excluding only Losses that result directly from the Purchaser’s or Related Person’s gross negligence or willful misconduct. In addition, the Company shall indemnify and hold harmless the Purchaser and Related Person from and against any and all Losses, as incurred, arising out of or relating to any misrepresentation or breach by the Company or any Subsidiary of any of the representations, warranties or covenants made by the Company or any Subsidiary in this Agreement or any other Transaction Document, or any allegation by a third party that, if true, would constitute such a breach or misrepresentation. The conduct of any Proceedings for which indemnification is available under this paragraph shall be governed by Section 6.5 below. The indemnification obligations of the Company under this paragraph shall be in addition to any liability that the Company or any Subsidiary may otherwise have and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Purchaser and any such Related Persons. If the Company or any Subsidiary breaches its obligations under any Transaction Document, then, in addition to any other liabilities the Company may have under any Transaction Document or applicable law, the Company shall pay or reimburse the Purchaser on demand for all costs of collection and enforcement (including reasonable attorneys fees and expenses). Without limiting the generality of the foregoing, the Company specifically agrees to reimburse the Purchaser on demand for all costs of enforcing the indemnification obligations in this paragraph.

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4.10          Shareholders Rights Plan. No claim will be made or enforced by the Company or any other Person that the Purchaser is an “Acquiring Person” or any similar term under any stockholders rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.

4.11          Access. In addition to any other rights provided by law or set forth herein, from and after the date of this Agreement, the Company shall, and shall cause each of the Subsidiaries, to give Purchaser and its representatives, at the request of Purchaser, access during reasonable business hours to (a) all properties, assets, books, contracts, commitments, reports and records relating to the Company and the Subsidiaries, and (b) the management, accountants, lenders, customers and suppliers of the Company and the Subsidiaries; provided, however, that the Company shall not be required to provide Purchaser access to any information or Persons if the Company reasonably determines that access to such information or Persons (x) would adversely affect the attorney-client privilege between the Company and its counsel and cannot be provided to Purchaser in a manner that would avoid the adverse effect on the attorney-client privilege between the Company and its counsel, (y) would result in the disclosure of trade secrets, material nonpublic information or other confidential or proprietary information and cannot be provided to Purchaser in a manner that would avoid the disclosure of trade secrets, material nonpublic information or other confidential or proprietary information, or (z) would violate the requirements of any Governmental Authority, applicable law or regulation with respect to the confidentiality of information or security clearances and cannot be provided to Purchaser in a manner that would not violate any such requirements, law or regulation; provided further that the Company shall be required to provide Purchaser with access to the information contemplated in clause (y) if Purchaser signs a customary confidentiality agreement with the Company with respect to such information.

4.12          Amendments to Transaction Documents. Without the prior written consent of Purchaser, the Company shall not, and shall not permit any of its Subsidiaries to, enter into or become or remain subject to any agreement or instrument, except for the Transaction Documents, that would prohibit or require the consent of any Person to any amendment, modification or supplement to any of the Transaction Documents.

4.13          Further Assurances. The parties to this Agreement agree to make, execute and deliver all such additional and further acts, things, deeds and instruments, as Purchaser may reasonably require with respect to the Company, and the Company may reasonably require with respect to the Purchaser, to document and consummate the transactions contemplated hereby in a manner consistent herewith and to vest completely in and insure the Purchaser or the Company their respective rights under this Agreement and the other Transaction Documents.

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4.14          Best Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and the conditions to be satisfied by it as provided in Section 5 of this Agreement.

4.15          Stockholder Approval.

(a)      To the extent required by the rules and regulations of the Principal Market applicable to the Company, the Company shall use its commercially reasonable best efforts to obtain the approval of its stockholders to issue any Underlying Shares and to otherwise perform its respective obligations under the Transactions Documents, including approving (i) the issuance of in excess of 19.99% of the shares of Common Stock outstanding on the date of this Agreement at a price, determined in accordance with the rules and regulations of the Principal Market, that may be less than the greater of book or market value and (ii) any potential change of control of the Company which may occur as a result of the transactions contemplated by the Transaction Documents (the “Stockholder Approval”).

(b)      In furtherance of the obligations of the Company under Section 4.15(a), and only to the extent required by the rules and regulations of the Principal Market applicable to the Company, (i) the Board of Directors of the Company shall adopt proper resolutions authorizing the actions set forth in Section 4.15(a) above, (ii) the Board of Directors of the Company shall recommend and the Company shall otherwise use its commercially reasonable best efforts to promptly and duly obtain Stockholder Approval, including, without limitation, by filing any required proxy materials with the Principal Market and the Commission, by delivering proxy materials to its stockholders in furtherance thereof as soon as practicable thereafter, by soliciting proxies from its stockholders in connection therewith in the same manner as all other management proposals in such proxy statement and having all management-appointed proxy-holders vote their proxies in favor of such proposals to carry out such resolutions and (iii) within three Business Days of obtaining such Stockholder Approval, take all actions necessary to effectuate the actions set forth in Section 4.15(a) above. If the Company does not obtain Stockholder Approval at the first meeting (the “First Meeting”), the Company shall in addition to satisfying clauses (i), (ii) and (iii) as contemplated above, call a special meeting of its stockholders as soon as reasonably practicable but in no event later than ninety (90) days following the First Meeting to seek Stockholder Approval until the date Stockholder Approval is obtained.

ARTICLE V.
CONDITIONS

5.1              Conditions Precedent to the Obligations of the Purchaser. The obligation of the Purchaser to acquire the Preferred Shares at the Closing is subject to the satisfaction or waiver by the Purchaser, at or before the Closing, of each of the following conditions:

(a)                  Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects (except to the extent such representations and warranties are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects);

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(b)                  Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing;

(c)                  No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;

(d)                 Adverse Changes. On and as of the Closing Date, there shall not exist any Material Adverse Effect with respect to the Company;

(e)                  No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the Commission or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company), and the Common Stock shall be listed for trading on an Eligible Market;

(f)                   Secretary of State Certificates. The Purchaser shall have received Certificates, as of a recent date, of the Secretary of State of Delaware and each other jurisdiction where a Subsidiary is organized showing the Company and each Subsidiary, as applicable, to be validly existing in their respective jurisdictions of organization and in good standing;

(g)                  Required Approvals. All Required Approvals shall have been obtained reasonably satisfactory in form and substance to the Purchaser.

(h)                  Other Documents. All other Transaction Documents, opinions, certificates and other instruments and all proceedings in connection with the transactions contemplated by this Agreement shall be reasonably satisfactory in form and substance to the Purchaser. The Purchaser shall have received copies of all other documents, opinions, certificates and instruments required to be delivered at the Closing pursuant to Section 2.3(a) hereof and all other documents, opinions, certificates and instruments reasonably requested thereby, with respect to the transactions contemplated by this Agreement and the other Transaction Documents in form and substance satisfactory to the Purchaser.

5.2              Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Preferred Shares at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a)                  Representations and Warranties. The representations and warranties of the Purchaser contained herein shall be true and correct in all material respects (except to the extent such representations and warranties are qualified as to materiality, in which case such representations and warranties shall be true and correct in all respects);

(b)                  Performance. The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Purchaser at or prior to the Closing; and

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(c)                  No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or Governmental Authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents.

ARTICLE VI.
REGISTRATION RIGHTS

6.1              Piggyback Registration Requirements. The Company shall use its commercially reasonable efforts to effect the piggyback registration of the Registrable Securities (including, without limitation, the execution of an undertaking to file post-effective amendments, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act) as would permit or facilitate the sale or distribution of all the Registrable Securities in the manner (including manner of sale) and in all states reasonably requested by the Holder in accordance with the following:

(a)                  If at any time after the Closing Date the Company proposes to register the offer and sale of any shares of its Common Stock under the Securities Act (other than a registration (A) pursuant to a registration statement on Form S-8 (or other registration solely relating to an offering or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (B) pursuant to a registration statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or any successor rule thereto), or (C) in connection with any dividend or distribution reinvestment or similar plan), whether for its own account or for the account of one or more stockholders of the Company and the form of Registration Statement (a “Piggyback Registration Statement”) to be used may be used for any registration of securities of the Company, the Company shall give prompt written notice (in any event no later than 30 days prior to the filing of such registration statement) to the Holder of the Registrable Securities of its intention to effect such a registration and, shall include in such Registration Statement all Registrable Securities with respect to which the Company has received written requests for inclusion from the Holders of Registrable Securities within 20 days after the Company’s notice has been given to each such Holder. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration Statement at any time in its sole discretion. Each Holder of Registrable Securities shall furnish to the Company or the underwriter(s) (if any) in respect of the offering pursuant to the subject Registration Statement, as applicable, such information regarding the Holder and the distribution proposed by it as the Company may reasonably request in connection with any registration or offering referred to in this Section. Each Holder of Registrable Securities shall cooperate as reasonably requested by the Company in connection with the preparation of the Registration Statement with respect to such registration, and for so long as the Company is obligated to file and keep effective such Registration Statement, shall provide to the Company, in writing, for use in the Registration Statement, all such information regarding the Holder of Registrable Securities of and its plan of distribution of shares of Common Stock included in such Registration Statement as may be reasonably necessary to enable the Company to prepare such Registration Statement, to maintain the currency and effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith. Notwithstanding anything to the contrary in this Section, if a piggyback registration is initiated as a primary underwritten offering on behalf of the Company and the managing underwriter advises the Company and the Holders of Registrable Securities (if any Holders of Registrable Securities have elected to include Registrable Securities in such piggyback registration) in writing that in its reasonable and good faith opinion the number of shares of Common Stock proposed to be included in such registration or takedown, including all Registrable Securities and all other shares of Common Stock proposed to be included in such underwritten offering, exceeds the number of shares of Common Stock which can be sold in such offering and/or that the number of shares of Common Stock proposed to be included in any such registration would adversely affect the price per share of the Common Stock to be sold in such offering, the Company shall include in such registration or takedown (i) first, the shares of Common Stock that the Company proposes to sell; (ii) second, the shares of Common Stock requested to be included therein by Holders of Registrable Securities, allocated pro rata among all such Holders on the basis of the number of Registrable Securities owned by each such Holder or in such manner as they may otherwise agree; and (iii) third, the shares of Common Stock requested to be included therein by Holders of Common Stock other than Holders of Registrable Securities, allocated among such Holders in such manner as they may agree.

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(b)                  The Company’s commercially reasonable efforts to effect the piggyback registration of the Registrable Securities shall include, without limitation, the following:

(i)            Cause such Registration Statement and other filings to be declared effective as soon as commercially reasonably possible.

(ii)          Prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement and notify the Holders of the filing and effectiveness of such Registration Statement and any amendments or supplements.

(iii)         Furnish to each Holder that has Registrable Securities included in the Registration Statement such numbers of copies of a current prospectus conforming with the requirements of the Securities Act, copies of the Registration Statement, any amendment or supplement thereto and any documents incorporated by reference therein and such other documents as such Holder may reasonably require in order to facilitate the disposition of Registrable Securities owned by such Holder.

(iv)         Register and qualify the securities covered by such Registration Statement under the securities or “Blue Sky” laws of all domestic jurisdictions; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(v)          Notify promptly each Holder that has Registrable Securities included in the Registration Statement of the happening of any event (but not the substance or details of any such event) of which the Company has knowledge as a result of which the prospectus (including any supplements thereto or thereof) included in such Registration Statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (each an “Event”), and use its best efforts to promptly update and/or correct such prospectus. Each Holder will hold in confidence and will not make any disclosure of any such Event and any related information disclosed by the Company.

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(vi)         Notify each Holder of the issuance by the SEC or any state securities commission or agency of any stop order suspending the effectiveness of the Registration Statement or the threat or initiation of any proceedings for that purpose. The Company shall use its best efforts to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible time.

(vii)        List the Registrable Securities covered by such Registration Statement with all securities exchange(s) and/or markets on which the Common Stock is then listed and prepare and file any required filings with the Nasdaq Stock Market or any other exchange or market where the shares of Common Stock are traded.

(viii)      Take all steps reasonably necessary to enable Holders to avail themselves of the prospectus delivery mechanism set forth in Rule 153 (or successor thereto) under the Securities Act.

(c)                  Notwithstanding the obligations under this Section 6 or any other provision of this Agreement, if (i) in the good faith judgment of the Company, following consultation with legal counsel, it would be detrimental to the Company and its stockholders for resales of Registrable Securities to be made pursuant to the Registration Statement due to the existence of a material development or potential material development involving the Company that the Company would be obligated to disclose in the Registration Statement, which disclosure would be premature or otherwise inadvisable at such time or would have a material adverse effect upon the Company and its stockholders, or (ii) in the good faith judgment of the Company, it would adversely affect or require premature disclosure of the filing of a Company-initiated registration of any class of its equity securities, then the Company will have the right to suspend the use of the Registration Statement for a period of not more than 90 consecutive calendar days, but only if the Company reasonably concludes, after consultation with outside legal counsel, that the failure to suspend the use of the Registration Statement as such would create a risk of a material liability or violation under applicable securities laws or regulations.

(d)                 During the registration period, the Company will make available, upon reasonable advance notice during normal business hours, for inspection by any Holder whose Registrable Securities are being sold pursuant to a Registration Statement, all pertinent financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as reasonably necessary to enable each such Holder to exercise its due diligence responsibility in connection with or related to the contemplated offering. The Company will cause its officers, directors and employees to supply all information that any Holder may reasonably request for purposes of performing such due diligence.

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(e)                  Each Holder will hold in confidence, use only in connection with the contemplated offering and not make any disclosure of all Records and other information that the Company determines in good faith to be confidential, and of which determination the Holders are so notified, unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in any Registration Statement, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court or government body of competent jurisdiction, (iii) the information in such Records has been made generally available to the public other than by disclosure in violation of this or any other agreement (to the knowledge of the relevant Holder), (iv) the Records or other information was developed independently by the Holder without breach of this Agreement, (v) the information was known to the Holder before receipt of such information from the Company, or (vi) the information was disclosed to the Holder by a third party not under an obligation of confidentiality. However, a Holder may make disclosure of such Records and other information to any attorney, adviser, or other third party retained by it that needs to know the information as determined in good faith by the Holder (the “Holder Representative”), if the Holder advises the Holder Representative of the confidentiality provisions of this Section 6.1(e), but the Holder will be liable for any act or omission of any of its Holder Representatives relative to such information as if the act or omission was that of the Holder. The Company is not required to disclose any confidential information in the Records to any Holder unless and until such Holder has entered into a confidentiality agreement (in form and substance satisfactory to the Company) with the Company with respect thereto, substantially to the effect of this Section 6.1(e). Unless legally prohibited from so doing, each Holder will, upon learning that disclosure of Records containing confidential information is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the Records deemed confidential. Nothing herein will be deemed to limit the Holder’s ability to sell Registrable Securities in a manner that is otherwise consistent with applicable laws and regulations.

6.2              Registration Expenses. All Registration Expenses in connection with any registration, qualification or compliance with registration pursuant to this Agreement shall be borne by the Company, and all Selling Expenses of a Holder shall be borne by such Holder.

6.3              Registration on Form S-3. The Company shall use its reasonable best efforts to meet the “registrant eligibility” requirements for a secondary offering set forth in the general instructions to Form S-3 or any comparable or successor form or forms, or in the event that the Company is ineligible to use such form, such form as the Company is eligible to use under the Securities Act, provided that if such other form is used, the Company shall convert such other form to a Form S-3 as soon as the Company becomes so eligible.

6.4              Registration Period. In the case of the registration effected by the Company pursuant to this Agreement, the Company shall keep such registration effective until the date on which all the Holders have completed the sales or distribution described in the Registration Statement relating thereto or, if earlier until such Registrable Securities may be sold by the Holders under Rule 144 (provided that the Company’s transfer agent has accepted an instruction from the Company to such effect).

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6.5              Indemnification.

(a)                  Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, partners, members, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees of each of them, each Person who controls each Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding a Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to a Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by the Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto.

(b)                  Indemnification by the Purchaser. Each Holder shall indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material fact contained in the Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statement or omission is based solely upon information regarding the Holder furnished in writing to the Company by the Holder expressly for use in such Registration Statement or Prospectus, or to the extent that such information relates to the Holder or the Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by the Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto. In no event shall the liability of any Holder hereunder be greater in amount than the dollar amount of the net proceeds received by the Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

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(c)                  Conduct of Indemnification Proceedings.

(i)            If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

(ii)          An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

(iii)         All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten (10) Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

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6.6              Contribution.

(a)                  If a claim for indemnification under Section 6.5 is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

(b)                  The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.6(b) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.6(b), the Purchaser shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by the Purchaser from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that the Purchaser has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

(c)                  The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

ARTICLE VII.
MISCELLANEOUS

7.1              Fees and Expenses. The parties hereto shall pay their own costs and expenses in connection herewith. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the issuance of any Securities.

7.2              Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto and the respective nondisclosure agreements between the Company and the Purchaser, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. At or after the Closing, and without further consideration, the Company will execute and deliver to the Purchaser such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.

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7.3              Notices. Any and all notices or other communications or deliveries required or permitted to be provided under this Agreement or any other Transaction Document shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email or facsimile at the email address or facsimile number specified in this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section later than 5:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, specifying next business day delivery or (iv) upon actual receipt by the party to whom such notice is required to be given if delivered by hand. The address for such notices and communications shall be as follows:

If to the Company:

ModusLink Global Solutions, Inc.
1601 Trapelo Road
Suite 170
Waltham, MA 02451
Attn.: Louis J. Belandi

With a copy to:

Littman Krooks LLP
655 Third Avenue, 20th Floor
New York, New York 10017
Attn.: Martin W. Enright, Esq.
Email: menright@littmankrooks.com
Fax: 212-490-2990

If to Purchaser:

SPH Group Holdings LLC
590 Madison Avenue
New York, NY 10022
Attn: Jack L. Howard

With a copy to:

Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, NY 10019
Attn.: Steve Wolosky and Adam Finerman
Email: swolosky@olshanlaw.com and afinerman@olshanlaw.com
Fax: 212-451-2222

or such other address as may be designated in writing hereafter, in the same manner, by such Person by two (2) Trading Days’ prior notice to the other party in accordance with this Section 7.3.

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7.4              Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed by Purchaser and the Company. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Purchasers under Article VI and that does not directly or indirectly affect the rights of other Purchasers may be given by Purchasers holding at least a majority of the Registrable Securities to which such waiver or consent relates. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration also is offered on identical terms to all of the parties to the Transaction Documents that are holders of Preferred Shares.

7.5              Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

7.6              Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder, without the prior written consent of the Purchaser. The Purchaser may assign its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof and of the applicable Transaction Documents that apply to the “Purchaser.” Notwithstanding anything to the contrary herein, Securities may be pledged to any Person in connection with a bona fide margin account or other loan or financing arrangement secured by such Securities.

7.7              No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that each Related Person is an intended third party beneficiary of Section 4.9 and each Indemnified Party is an intended third party beneficiary of Section 6.5 and (in each case) may enforce the provisions of such Sections directly against the parties with obligations thereunder.

7.8              Governing Law; Venue; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York (except for matters governed by corporate law in the State of Delaware), without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this agreement (whether brought against a party hereto or its respective affiliates, directors, officers, stockholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such Proceeding is improper. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby.

33

 

7.9              Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing.

7.10          Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original thereof.

7.11          Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

7.12          Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

7.13          Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.

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7.14          Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agree that, in any action for specific performance of any such obligation, it shall not assert or shall waive the defense that a remedy at law would be adequate.

7.15          Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser hereunder or under any other Transaction Document or the Purchaser enforces or exercises its rights hereunder or thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

7.16          Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof, each reference in this Agreement to a number of shares or a price per share shall be amended to appropriately account for such event.

7.17          Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.

7.18          Legal Counsel. The Purchaser has engaged Olshan as its legal counsel in connection with the preparation of this Agreement. Olshan has previously represented and/or concurrently represents the interests of the Purchaser, the Company, and/or parties related thereto in connection with matters other than the preparation of this Agreement and may represent such Persons in the future. The Company: (i) approves of Olshan’s representation of the Purchaser in the preparation of this Agreement; and (ii) acknowledges that Olshan has not been engaged by the Company, the Board or the Special Committee to protect or represent the interests of the Company in connection with the preparation of this Agreement, and that actual or potential conflicts of interest may exist among the Purchaser and the Company in connection with the preparation of this Agreement. In addition, the Company: (iii) acknowledges the possibility of a future conflict or dispute among the Company and the Purchaser; and (iv) acknowledges the possibility that, under the laws and ethical rules governing the conduct of attorneys, Olshan may be precluded from representing the Purchaser and/or the Company in connection with any such conflict or dispute. Nothing in this Section 7.18 shall preclude the Purchaser from selecting different legal counsel to represent it at any time in the future and the Company shall be deemed by virtue of this Section 7.18 to have waived its right to object to any conflict of interest relating to matters other than this Agreement or the transactions contemplated herein.

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IN WITNESS WHEREOF, the parties hereto have caused this Preferred Stock Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

  MODUSLINK GLOBAL SOLUTIONS, INC.
 
   
   
  By:

/s/ Louis J. Belardi

    Name: Louis J. Belardi
    Title: Chief Financial Officer

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE OF THE PURCHASER FOLLOWS]

36

 

    PURCHASER:
    SPH GROUP HOLDINGS LLC

 

  By: Steel Partners Holdings GP Inc.
Manager

 

  By:

/s/ Jack L. Howard

    Name: Jack L. Howard
    Title: President

 

 

Schedule A

Name of Purchaser Number of Preferred Shares Aggregate Purchase Price
SPH Group Holdings LLC 35,000 $35,000,000

  

37

 

 

EXHIBIT A

Form of Certificate of Designations

38

 

Exhibit 10.2

 

 

FINANCING AGREEMENT

Dated as of December 15, 2017


by and among


IWCO DIRECT HOLDINGS INC.
as Parent,

MLGS MERGER COMPANY, INC.,

as the Initial Borrower, and immediately upon the consummation of the IWCO Acquisition,

 

INSTANT WEB, LLC,
as Borrower,

PARENT AND EACH OTHER SUBSIDIARY OF PARENT
LISTED AS A GUARANTOR ON THE SIGNATURE PAGES HERETO,
as Guarantors,


THE LENDERS FROM TIME TO TIME PARTY HERETO,
as Lenders,


CERBERUS BUSINESS FINANCE, LLC,
as Administrative Agent

and

Collateral Agent

 

 

 

TABLE OF CONTENTS

Page

Article I DEFINITIONS; CERTAIN TERMS 2
Section 1.01   Definitions 2
Section 1.02   Terms Generally 49
Section 1.03   Certain Matters of Construction 50
Section 1.04   Accounting and Other Terms 50
Section 1.05   Time References 52
Article II THE LOANS 52
Section 2.01   Commitments 52
Section 2.02   Making the Loans 52
Section 2.03   Repayment of Loans; Evidence of Debt 56
Section 2.04   Interest 56
Section 2.05   Reduction of Commitment; Prepayment of Loans 57
Section 2.06   Fees 62
Section 2.07   LIBOR Option 63
Section 2.08   [Reserved] 66
Section 2.09   Taxes 66
Section 2.10   [Reserved] 69
Section 2.11   Increased Costs and Reduced Return 69
Section 2.12   Changes in Law; Impracticability or Illegality 71
Section 2.13   Mitigation Obligations; Replacement of Lenders 72

 

i

 

Article III [RESERVED] 73
Article IV APPLICATION OF PAYMENTS; DEFAULTING LENDERS; JOINT AND SEVERAL LIABILITY OF BORROWERS 73
Section 4.01   Payments; Computations and Statements 73
Section 4.02   Sharing of Payments 74
Section 4.03   Apportionment of Payments 74
Section 4.04   Defaulting Lenders 76
Article V CONDITIONS TO LOANS 77
Section 5.01   Conditions Precedent to Effectiveness 77
Section 5.02   Conditions Precedent to All Loans After the Effective Date 81
Section 5.03   Conditions Subsequent to Effectiveness 81
Article VI REPRESENTATIONS AND WARRANTIES 82
Section 6.01   Representations and Warranties 82
Article VII COVENANTS OF THE LOAN PARTIES 91
Section 7.01   Affirmative Covenants 91
Section 7.02   Negative Covenants 99
Section 7.03   Financial Covenant 106
Article VIII CASH MANAGEMENT ARRANGEMENTS AND OTHER COLLATERAL MATTERS 107
Section 8.01   Cash Management Arrangements 107
Article IX EVENTS OF DEFAULT 108
Section 9.01   Events of Default 108
Article X AGENTS 112
Section 10.01   Appointment 112
Section 10.02   Nature of Duties; Delegation 113

 

ii

 

Section 10.03   Rights, Exculpation, Etc. 113
Section 10.04   Reliance 114
Section 10.05   Indemnification 114
Section 10.06   Agents Individually 115
Section 10.07   Successor Agent 115
Section 10.08   Collateral Matters 115
Section 10.09   Agency for Perfection 117
Section 10.10   No Reliance on any Agent's Customer Identification Program 118
Section 10.11   No Third Party Beneficiaries 118
Section 10.12   No Fiduciary Relationship 118
Section 10.13   Reports; Confidentiality; Disclaimers 119
Section 10.14   Collateral Custodian 119
Section 10.15   Cerberus as Sub-Agent 120
Section 10.16   Collateral Agent May File Proofs of Claim 120
Article XI GUARANTY 120
Section 11.01   Guaranty 120
Section 11.02   Guaranty Absolute 121
Section 11.03   Waiver 122
Section 11.04   Continuing Guaranty; Assignments 122
Section 11.05   Subrogation 122
Section 11.06   Contribution 123
Article XII MISCELLANEOUS 124
Section 12.01   Notices, Etc. 124
Section 12.02   Amendments, Etc. 125

 

iii

 

Section 12.03   No Waiver; Remedies, Etc. 127
Section 12.04   Expenses; Attorneys' Fees 127
Section 12.05   Right of Set-off 129
Section 12.06   Severability 129
Section 12.07   Assignments and Participations 129
Section 12.08   Counterparts 136
Section 12.09   GOVERNING LAW 136
Section 12.10   CONSENT TO JURISDICTION; SERVICE OF PROCESS AND VENUE 136
Section 12.11   WAIVER OF JURY TRIAL, ETC. 137
Section 12.12   Consent by the Agents and Lenders 137
Section 12.13   No Party Deemed Drafter 137
Section 12.14   Reinstatement; Certain Payments 137
Section 12.15   Indemnification; Limitation of Liability for Certain Damages 138
Section 12.16   Records 139
Section 12.17   Binding Effect 139
Section 12.18   Highest Lawful Rate 139
Section 12.19   Confidentiality 140
Section 12.20   Public Disclosure 141
Section 12.21   Integration 141
Section 12.22   USA PATRIOT Act 141
Section 12.23   Waiver of Immunity 141
Section 12.24   Keepwell 142
Section 12.25   Assumption and Acknowledgment 142

 

iv

 

SCHEDULES AND EXHIBITS

Schedule 1.01(A)Lenders and Lenders' Commitments

Schedule 1.01(B)Facilities

Schedule 1.01(D)Immaterial Subsidiaries and Certain Other Excluded Subsidiaries

Schedule 6.01(e)Capitalization; Subsidiaries

Schedule 6.01(f)Litigation

Schedule 6.01(i)ERISA

Schedule 6.01(l)Nature of Business

Schedule 6.01(q)Environmental Matters

Schedule 6.01(r)Insurance

Schedule 6.01(u)Intellectual Property

Schedule 7.02(a)Existing Liens

Schedule 7.02(b)Existing Indebtedness

Schedule 7.02(e)Existing Investments

Schedule 7.02(k)Limitations on Dividends and Other Payment Restrictions

Schedule 8.01Cash Management Banks and Cash Management Accounts

 

Exhibit AForm of Joinder Agreement

Exhibit BForm of Assignment and Acceptance Agreement

Exhibit CForm of Notice of Borrowing

Exhibit DForm of LIBOR Notice

Exhibit EForm of Term Note

Exhibit FForm of Revolving Note

Exhibit GSolvency Certificate

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FINANCING AGREEMENT

Financing Agreement, dated as of December 15, 2017, by and among IWCO Direct Holdings Inc., a Delaware corporation (the "Parent"), MLGS Merger Company, Inc., a Delaware corporation (the "Initial Borrower") and immediately upon the consummation of the IWCO Acquisition (as hereinafter defined), Instant Web, LLC, a Delaware corporation (the "Borrower"), each subsidiary of the Parent listed as a "Guarantor" on the signature pages hereto (together with the Parent and each other Person that executes a joinder agreement and becomes a "Guarantor" hereunder or otherwise guaranties all or any part of the Obligations (as hereinafter defined), each a "Guarantor" and, collectively, the "Guarantors"), the lenders from time to time party hereto (each a "Lender" and, collectively, the "Lenders"), Cerberus Business Finance, LLC, a Delaware limited liability company ("Cerberus"), as collateral agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Collateral Agent"), and Cerberus, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, the "Administrative Agent" and together with the Collateral Agent, each an "Agent" and, collectively, the "Agents").

RECITALS

Pursuant to that certain Agreement and Plan of Merger, dated as of December 15, 2017 (as amended, restated, amended and restated supplement or otherwise modified from time to time, the "IWCO Acquisition Agreement"), by and among ModusLink, (b) MLGS Merger Company, Inc., a Delaware corporation, (c) IWCO Direct Holdings Inc., a Delaware corporation, (d) CSC Shareholder Services, LLC, a Delaware limited liability company, solely in its capacity as Representative, and (e) the stockholders of the Company listed on the signature pages thereto, ModusLink shall obtain all of the outstanding equity interests of IWCO Direct Holdings Inc. (the "IWCO Acquisition").

The Borrower has asked the Lenders to extend credit to the Borrower consisting of (a) a Term Loan (as hereinafter defined) in the aggregate principal amount of $393,000,000 and (b) a revolving credit facility in an aggregate principal amount not to exceed $25,000,000 at any time outstanding. The proceeds of the Term Loan and the Revolving Loans made on the Effective Date shall be used (i) to finance a portion of the IWCO Acquisition, (ii) to repay certain existing indebtedness of the Borrower and its subsidiaries, (iii) for working capital and general corporate purposes of the Loan Parties and (iv) to pay fees and expenses related to this Agreement and the IWCO Acquisition. The proceeds of any Revolving Loans made under the revolving credit facility after the Effective Date shall be used for working capital and general corporate purposes of the Loan Parties. The Lenders are severally, and not jointly, willing to extend such credit to the Borrower subject to the terms and conditions hereinafter set forth.

 

 

In consideration of the premises and the covenants and agreements contained herein, the parties hereto agree as follows:

Article I

DEFINITIONS; CERTAIN TERMS

Section 1.01 Definitions.

As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

"Account Debtor" means, with respect to any Person, each debtor, customer or obligor in any way obligated on or in connection with any Account Receivable of such Person.

"Account Receivable" means, with respect to any Person, any and all rights of such Person to payment for goods sold or leased and/or services rendered, including accounts, general intangibles and any and all such rights evidenced by chattel paper, instruments or documents, whether due or to become due and whether or not earned by performance, and whether now or hereafter acquired or arising in the future, and any proceeds arising therefrom or relating thereto.

"Acquisition" means the acquisition (whether by means of a merger, consolidation or otherwise) of all of the Equity Interests of any Person or all or substantially all of the assets of (or any division or business line of) any Person.

"Acquisition Assets" means, with respect to any Acquisition, all of the property and assets (tangible and intangible and including any Equity Interests) purported to be purchased by Parent or any of its Subsidiaries pursuant to the applicable acquisition agreement or other documentation evidencing or otherwise relating to such Acquisition.

"Acquisition Collateral Assignment" means the Collateral Assignment of Acquisition Documents, dated as of the date hereof, and in form and substance reasonably satisfactory to the Collateral Agent, made by ModusLink, Parent, Initial Borrower and Borrower in favor of the Collateral Agent.

"Action" has the meaning specified therefor in Section 12.12.

"Additional Amount" has the meaning specified therefor in Section 2.09(a).

"Administrative Agent" has the meaning specified therefor in the preamble hereto.

"Administrative Agent's Account" means an account at a bank designated by the Administrative Agent from time to time as the account into which the Loan Parties shall make all payments to the Administrative Agent for the benefit of the Agents and the Lenders under this Agreement and the other Loan Documents.

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"Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" of a Person means the power, directly or indirectly, either to (a) vote 25% or more of the Equity Interests having ordinary voting power for the election of members of the Board of Directors of such Person or (b) direct or cause the direction of the management and policies of such Person whether by contract or otherwise. Notwithstanding anything herein to the contrary, in no event shall any Agent or any Lender be considered an "Affiliate" of any Loan Party.

"Affiliated Investment Fund" means an Affiliate of Sponsor (other than Parent, the Borrower or any of its respective Subsidiaries) that is a bona fide debt fund that is primarily engaged in, or advises funds or other investment vehicles that are engaged in, making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of credit or securities in the ordinary course of its business.

"Affiliated Lender" means, at any time, any Lender (not a natural person) that is the Sponsor or an Affiliate thereof (including Affiliated Investment Funds) other than the Parent, the Borrower or any of its respective Subsidiaries.

"Affiliated Lender Amendment" has the meaning set forth in Section 12.07(a)(iv)(B).

"Agent" and "Agents" have the respective meanings specified therefor in the preamble hereto.

"Agent Advances" has the meaning specified therefor in Section 10.08(a).

"Agreement" means this Financing Agreement, including all amendments, restatements, amendments and restatements, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative.

"Anti-Corruption Laws" has the meaning specified therefor in Section 6.01(aa).

"Anti-Terrorism Laws" means any Requirement of Law relating to terrorism, economic sanctions or money laundering, including, without limitation, (a) the Money Laundering Control Act of 1986 (i.e., 18 U.S.C. §§ 1956 and 1957), (b) the Bank Secrecy Act of 1970 (31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), and the implementing regulations promulgated thereunder, (c) the USA PATRIOT Act and the implementing regulations promulgated thereunder, (d) the laws, regulations and executive orders administered by the United States Department of the Treasury's Office of Foreign Assets Control ("OFAC"), (e) any law prohibiting or directed against terrorist activities or the financing or support of terrorist activities (e.g., 18 U.S.C. §§ 2339A and 2339B), and (f) any similar laws enacted in the United States or any other jurisdictions in which the parties to this Agreement operate, as any of the foregoing laws have been, or shall hereafter be, amended, renewed, extended, or replaced and all other present and future legal requirements of any Governmental Authority governing, addressing, relating to, or attempting to eliminate, terrorist acts and acts of war and any regulations promulgated pursuant thereto.

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"Applicable Margin" means, as of any date of determination, with respect to the interest rate of (a) any Reference Rate Loan or any portion thereof, 3.75% and (b) any LIBOR Rate Loan or any portion thereof, 6.50%.

"Applicable Premium Trigger Event" means:

(a) any permanent reduction of the Total Revolving Credit Commitment (i) pursuant to Section 2.05 (other than any permanent reduction of the Total Revolving Credit Commitment made pursuant to Section 2.05(c)(i), Section 2.05(c)(iv) and Section 2.05(c)(v)) whether before or after the occurrence of an Event of Default or (ii) as a result of the acceleration of the Obligations (for any reason), including, without limitation, the acceleration of the Obligations as a result of the commencement of any Insolvency Proceeding; and

(b) the prepayment of all or any portion of the principal balance of the Term Loan for any reason prior to the Final Maturity Date (including, without limitation, any optional prepayment or mandatory prepayment, but excluding any repayment of the Term Loan made pursuant to Section 2.03(b) and mandatory prepayments made pursuant to Section 2.05(c)(i), Section 2.05(c)(iv) and Section 2.05(c)(v)) whether before or after (i) the occurrence of an Event of Default, or (ii) the commencement of any Insolvency Proceeding, and notwithstanding any acceleration (for any reason) of the Obligations.

"Applicable Prepayment Premium" means,

(a) as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (a) of the definition thereof:

(i) during the period of time from and after the Effective Date up to and including the date that is the twelve month anniversary of the Effective Date (the "First Period"), an amount equal to 2.00% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date; and

(ii) during the period of time from and after the First Period up to and including the date that is the twenty-four month anniversary of the Effective Date (the "Second Period"), an amount equal to 1.00% times the amount of the permanent reduction of the Total Revolving Credit Commitment on such date; and

(iii) thereafter, zero; and

(b) as of the date of the occurrence of an Applicable Premium Trigger Event specified in clause (b) of the definition thereof:

(i) during the First Period, an amount equal to 2.00% times the principal amount of the Term Loan Obligations (other than the Applicable Prepayment Premium) being paid on such date;

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(ii) during the Second Period, an amount equal to 1.00% times the principal amount of the Term Loan Obligations (other than the Applicable Prepayment Premium) being paid on such date; and

(iii) thereafter, zero.

"Approved Bank" means any commercial bank that is organized under the laws of the United States, any state thereof, the District of Columbia or any member nation of the Organization for Economic Cooperation and Development or any other jurisdiction in which a Loan Party conducts business, in each case, which is reputable and financially sound.

"Assignee" has the meaning specified therefor in Section 12.07(a)(i).

"Assignment and Acceptance" means an assignment and acceptance entered into by an assigning Lender and an assignee (with the consent of any Person required by Section 12.07), and accepted by the Collateral Agent (and the Administrative Agent, if applicable), in accordance with Section 12.07 hereof and substantially in the form of Exhibit B hereto or such other form reasonably acceptable to the Collateral Agent.

"Authorized Officer" means, with respect to any Person, the chief executive officer, chief operating officer, chief financial officer, treasurer, controller or other financial officer performing similar functions, president or executive vice president of such Person.

"Availability" means, as of the date of determination, an amount equal to (a) the Total Revolving Credit Commitment minus (b) the aggregate outstanding principal amount of all Revolving Loans.

"Bankruptcy Code" means Title 11 of the United States Code, as amended from time to time and any successor statute or any similar federal or state law for the relief of debtors.

"Basel III" means: (a) the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated, (b) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated, and (c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".

"Blocked Person" means any Person:

(a) that (i) is identified on the list of "Specially Designated Nationals and Blocked Persons" published by OFAC; (ii) resides, is organized or chartered, or has a place of business in a country or territory that is the subject of an OFAC Sanctions Program; or (iii) a United States Person is prohibited from dealing or engaging in a transaction with under any of the Anti-Terrorism Laws;

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(b) that is owned or controlled by, or that owns or controls, or that is acting for or on behalf of, any Person described in clause (a) above; or

(c) that is affiliated or associated with a Person described in clauses (a) and (b) above.

"Board" means the Board of Governors of the Federal Reserve System of the United States (or any successor).

"Board of Directors" means with respect to (a) any corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board, (b) a partnership, the board of directors of the general partner of the partnership, (c) a limited liability company, the managing member or members or any controlling committee or board of managers or equivalent governing body of such company or the sole member or the managing member thereof, and (d) any other Person, the board or committee of such Person serving a similar function.

"Borrower" has the meaning specified therefor in the introductory paragraph hereto.

"Business Day" means (a) for all purposes other than as described in clause (b) below, any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required to be closed for business in New York City, and (b) with respect to the borrowing, payment or continuation of, or determination of interest rate on, LIBOR Rate Loans, any day that is a Business Day described in clause (a) above and on which dealings in Dollars may be carried on in the interbank eurodollar markets in New York City and London.

"Capital Expenditures" means, with respect to any Person for any period, the aggregate of all expenditures by such Person and its Subsidiaries during such period that in accordance with GAAP are capital expenditures, whether such expenditures are paid in cash or financed, including all Capitalized Lease Obligations that are paid or due and payable during such period; provided that the term "Capital Expenditures" shall not include any such expenditures which constitute (i) expenditures by a Loan Party made in connection with the replacement, substitution or restoration of such Loan Party's assets pursuant to Section 2.05(c)(vi) from the Net Cash Proceeds of Dispositions and Extraordinary Receipts, (ii) expenditures financed with the proceeds received from the sale or issuance of Equity Interests to a Permitted Holder or any other Person permitted under this Agreement so long as (A) the Borrower is not required to make a prepayment of the Loans with such proceeds pursuant to Section 2.05(c)(v) and (B) such proceeds are used exclusively to fund such expenditures, (iii) a Permitted Acquisition, (iv) expenditures that are accounted for as capital expenditures of such Person and that actually are paid for or reimbursed by a third party (excluding any Loan Party) and for which no Loan Party has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such third party or any other person (whether before, during or after such period), (v) property, plant and equipment taken in settlement of Accounts Receivable in the ordinary course of business and (vi) the purchase price of equipment that is purchased substantially contemporaneously with the trade in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time.

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"Capitalized Lease" means, with respect to any Person, any lease of (or other arrangement conveying the right to use) real or personal property by such Person as lessee which is required under GAAP to be capitalized on the balance sheet of such Person; provided that any change in GAAP after the Effective Date that recharacterizes the treatment of operating leases as Capitalized Leases shall be ignored for all purposes of this Agreement.

"Capitalized Lease Obligations" means, with respect to any Person, obligations of such Person and its Subsidiaries under Capitalized Leases, and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

"Cash Equivalents" means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case, maturing within one year from the date of acquisition thereof; (b) commercial paper, maturing not more than one year after the date of acquisition thereof rated P-1 by Moody's or A-1 by Standard & Poor's; (c) certificates of deposit, bankers' acceptances, overnight deposits and time deposits maturing not more than one year after the date of issue, issued by commercial banking institutions and money market or demand deposit accounts maintained at commercial banking institutions, each of which is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000; (d) repurchase agreements having maturities of not more than 90 days from the date of acquisition which are entered into with major money center banks included in the commercial banking institutions described in clause (c) above and which are secured by readily marketable direct obligations of the United States Government or any agency thereof; (e) deposit accounts maintained with (i) any commercial banking institution that satisfies the criteria described in clause (c) above, or (ii) any commercial banking institution organized under the laws of the United States or any state thereof so long as the full amount maintained with any such commercial banking institution is insured by the Federal Deposit Insurance Corporation; (f) debt securities with maturities of one year or less from the date of acquisition backed by letters of credit issued by any commercial banking institution described in clause (c) above; (g) money market accounts maintained with mutual funds having assets in excess of $2,500,000,000, which assets are primarily comprised of Cash Equivalents described in another clause of this definition; and (h) marketable tax exempt securities rated A or higher by Moody's or A+ or higher by Standard & Poor's, in each case, maturing within one year from the date of acquisition thereof.

"Cash Management Accounts" means the bank accounts of each Loan Party maintained at one or more Cash Management Banks listed on Schedule 8.01 (other than Excluded Accounts).

"Cash Management Bank" has the meaning specified therefor in Section 8.01(a).

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"CFTC" means the Commodity Futures Trading Commission.

"Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation, judicial ruling, judgment or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority, or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority, provided that, notwithstanding anything herein to the contrary, the following shall, in each case, be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued: (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (ii) subject to Section 2.11(c)(iii) and (d), all requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, including, inter alia, Basel III and any law or regulation that implements or applies Basel III.

"Change of Control" means each occurrence of any of the following:

(a)the Permitted Holders cease beneficially and of record to own and control, directly or indirectly, at least 25% on a fully diluted basis of the aggregate outstanding voting and economic power of the Equity Interests of ModusLink;

(b)the acquisition, directly or indirectly, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) other than a Permitted Holder of beneficial ownership of more than 33% of the aggregate outstanding voting or economic power of the Equity Interests of ModusLink;

(c)ModusLink shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 100% of the aggregate voting or economic power of the Equity Interests of the Parent;

(d)the Parent shall cease to have beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 100% of the aggregate voting or economic power of the Equity Interests of each other Loan Party and each of its Subsidiaries (other than in connection with any transaction permitted pursuant to Section 7.02(c)(i)), free and clear of all Liens (other than Permitted Specified Liens); or

(e)a "Change of Control" (or any comparable term or provision) under or with respect to any of the Equity Interests of the Parent or any of its Subsidiaries.

"Closing Equity Investment" has the meaning specified therefor in Section 5.01(h).

"Collateral" means all of the property and assets and all interests therein and proceeds thereof now owned or hereafter acquired by any Loan Party upon which a Lien is granted or purported to be granted by such Person as security for all or any part of the Obligations pursuant to the terms of any Loan Document; provided that, notwithstanding anything in this Agreement to the contrary, "Collateral" shall not include any Excluded Property.

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"Collateral Agent" has the meaning specified therefor in the preamble hereto.

"Collections" means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds).

"Commitments" means, with respect to each Lender, such Lender's Revolving Credit Commitment and Term Loan Commitment.

"Commodity Exchange Act" means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

"Competitor" means (a) any Person that is an operating company directly and primarily engaged in substantially similar business operations as the Borrower and (b) any of such Person's Subsidiaries that competes in similar markets in a material manner.

"Compliance Certificate" has the meaning assigned to such term in Section 7.01(a)(iv).

"Compliance Date" means the last day of any applicable fiscal quarter (commencing with the first fiscal quarter ending after the Effective Date) if Liquidity (which shall be measured as the average Liquidity for the last 10 consecutive days of the applicable fiscal quarter) of Parent and its Subsidiaries is less than $15,000,000.

"Consolidated EBITDA" means, with respect to any Person for any period:

(a) the Consolidated Net Income of such Person for such period,

plus

(b) without duplication, the sum of the following amounts for such period to the extent deducted in the calculation of Consolidated Net Income for such period:

(i) any provision for United States federal income taxes or other taxes measured by net income,

(ii) Consolidated Net Interest Expense,

(iii) any loss from (A) extraordinary  items and (B) other non-recurring items (including, without limitation, severance, relocation expenses and one-time compensation costs) to the extent, in the case of this subclause (B), such losses are incurred within 12 months of the Effective Date,

(iv) any depreciation and amortization expense,

(v) any sales and use tax settlement,

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(vi) any aggregate net loss on the Disposition of property (other than accounts and Inventory) outside the ordinary course of business, and

(vii) any other non-cash expenditure, charge or loss for such period (other than any non-cash expenditure, charge or loss relating to write-offs, write-downs or reserves with respect to accounts and Inventory),

minus

(c) without duplication, the sum of the following amounts for such period to the extent included in the calculation of such Consolidated Net Income for such period:

(i) any credit for United States federal income taxes or other taxes measured by net income,

(ii) any gain from extraordinary items,

(iii) any aggregate net gain from the Disposition of property (other than accounts and Inventory) outside the ordinary course of business, and

(iv) any other non-cash gain, including any reversal of a charge referred to in clause (b)(vi) above by reason of a decrease in the value of any Equity Interest;

in each case, determined on a consolidated basis in accordance with GAAP.

"Consolidated Net Income" means, with respect to any Person, for any period, the consolidated net income (or loss) of such Person and its Subsidiaries for such period; provided, however, that the following shall be excluded: (a) the net income of any other Person in which such Person or one of its Subsidiaries has a joint interest with a third-party (which interest does not cause the net income of such other Person to be consolidated into the net income of such Person), except to the extent of the amount of dividends or distributions paid to such Person or Subsidiary, (b) the net income of any Subsidiary of such Person that is, on the last day of such period, subject to any restriction or limitation on the payment of dividends or the making of other distributions, to the extent of such restriction or limitation, and (c) the net income of any other Person arising prior to such other Person becoming a Subsidiary of such Person or merging or consolidating into such Person or its Subsidiaries.

"Consolidated Net Interest Expense" means, with respect to any Person for any period, (a) gross interest expense of such Person and its Subsidiaries for such period determined on a consolidated basis and in accordance with GAAP (including, without limitation, interest expense paid to Affiliates of such Person), less (b) the sum of (i) interest income for such period and (ii) gains for such period on Hedging Agreements (to the extent not included in interest income above and to the extent not deducted in the calculation of gross interest expense), plus (c) the sum of (i) losses for such period on Hedging Agreements (to the extent not included in gross interest expense) and (ii) the upfront costs or fees for such period associated with Hedging Agreements (to the extent not included in gross interest expense), in each case, determined on a consolidated basis and in accordance with GAAP.

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"Contingent Indemnity Obligations" means any Obligation constituting a contingent, unliquidated indemnification obligation of any Loan Party, in each case, to the extent (a) such obligation has not accrued and is not yet due and payable and (b) no claim has been made or is reasonably anticipated to be made with respect thereto.

"Contingent Obligation" means, with respect to any Person, any obligation of such Person guaranteeing or intending to guarantee any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term "Contingent Obligation" shall not include any product warranties extended or endorsements of instruments for deposit or collection made in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith.

"Contractual Obligation" means, as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound.

"Control Agreement" means, with respect to any deposit account, any securities account, commodity account, securities entitlement or commodity contract, an agreement, in form and substance reasonably satisfactory to the Collateral Agent, among the Collateral Agent, the financial institution or other Person at which such account is maintained or with which such entitlement or contract is carried and the Loan Party maintaining such account, effective to grant "control" (as defined under the applicable UCC) over such account to the Collateral Agent.

"Controlled Investment Affiliate" means, as to any Person, any other Person that (a) directly or indirectly, is in control of, is controlled by, or is under common control with, such Person and (b) is organized by such Person primarily for the purpose of making equity or debt investments in one or more companies. For purposes of this definition, "control" of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

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"Cure Right" has the meaning specified therefor in Section 7.03.

"Current Value" has the meaning specified therefor in Section 7.01(m).

"Daily LIBOR Rate" means, for any day, the Published Rate.

"Debtor Relief Law" means the Bankruptcy Code and any other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, administration or similar debtor relief law of the United States or other applicable jurisdiction from time to time in effect.

"Default" means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

"Defaulting Lender" means any Lender that (a) has failed to (i) fund all or any portion of its Loans within 2 Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender's good faith determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within 2 Business Days of the date when due, (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender's obligation to fund a Loan hereunder and states that such position is based on such Lender's determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within 3 Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity. Notwithstanding anything to the contrary herein, a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Interest in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender as of the date established therefor by the Administrative Agent in a written notice of such determination, which shall be delivered by the Administrative Agent to the Borrower and each Lender promptly following such determination.

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"Disbursement Letter" means a disbursement letter, in form and substance reasonably satisfactory to the Collateral Agent, by and among the Loan Parties, the Agents, the Lenders and the other Persons party thereto, and the related funds flow memorandum describing the sources and uses of all cash payments in connection with the transactions contemplated to occur on the Effective Date.

"Disposition" means any transaction, or series of related transactions, pursuant to which any Person or any of its Subsidiaries sells, assigns, transfers, leases, licenses (as licensor) or otherwise disposes of any property or assets (whether now owned or hereafter acquired) to any other Person, in each case, whether or not the consideration therefor consists of cash, securities or other assets owned by the acquiring Person. For purposes of clarification, "Disposition" shall include (a) the sale or other disposition for value of any contracts or merchant accounts (or any rights thereto (including, without limitation, any rights to any residual payment stream with respect thereto), or (b) the early termination or modification of any contract resulting in the receipt by any Loan Party of a cash payment or other consideration in exchange for any such events during any calendar year (other than payments in the ordinary course for accrued and unpaid amounts due through the date of termination or modification).