Asset Purchase Agreement among Axium International, Inc., Diversity MSP, Inc., Chimes Inc., and Computer Horizons Corp.

 Exhibit 2.1 ASSET PURCHASE AGREEMENT BY AND AMONG AXIUM INTERNATIONAL, INC., DIVERSITY MSP, INC., AS BUYER, CHIMES INC., AS SELLER AND COMPUTER HORIZONS CORP. Dated as of October 18, 2006  TABLE OF CONTENTS ARTICLE I ASSETS TO BE PURCHASED AND ASSUMPTION OF OBLIGATIONS...........................1 Section 1.1(a) Description of Assets.......................................1 Section 1.2 Assumption of Certain Liabilities..............................4 Section 1.3 Non-Assignment of Certain Property.............................4 Section 1.4 Liabilities Not Assumed........................................4 ARTICLE II PURCHASE PRICE.................................................................5 Section 2.1 Consideration..................................................5 Section 2.2 Prorations.....................................................5 ARTICLE III CLOSING........................................................................5 Section 3.1 Closing........................................................5 ARTICLE IV REPRESENTATIONS AND WARRANTIES.................................................6 Section 4.1 Representations and Warranties of Axium and Buyer..............6 Section 4.2 Representations and Warranties of Seller and CHC...............8 ARTICLE V COVENANTS.....................................................................17 Section 5.1 Conduct of Business...........................................17 Section 5.2 Notice of Default.............................................18 Section 5.3 Confidentiality...............................................19 Section 5.4 Preservation of Books and Records.............................19 Section 5.5 CHC Shareholders Meeting......................................19 Section 5.6 Additional Covenants..........................................20 Section 5.7 Sales and Transfer Taxes......................................20 Section 5.8 Transferred Employees.........................................20 Section 5.9 Noncompete....................................................21 Section 5.10 Superior Offer...............................................21 Section 5.11 Name Change..................................................22 Section 5.12 Conversion to LLC............................................22 Section 5.13 Transition Services Agreement................................22 Section 5.14 No Amendment of Financing....................................22 ARTICLE VI CONDITIONS TO CLOSING.........................................................23 Section 6.1 Conditions to Obligations of Seller and CHC...................23 Section 6.2 Conditions to the Obligations of Buyer and Axium..............24  ARTICLE VII INDEMNIFICATION...............................................................26 Section 7.1 Indemnification of Axium and Buyer............................26 Section 7.2 Indemnification of CHC and Seller.............................26 Section 7.3 Method of Asserting Claims....................................26 Section 7.4 Exclusive Remedy..............................................28 ARTICLE VIII TERMINATION OF AGREEMENT......................................................28 Section 8.1 Termination...................................................28 Section 8.2 Effect of Termination.........................................29 Section 8.3 Termination Payment...........................................29 Section 8.4 Expenses......................................................29 Section 8.5 Payment.......................................................30 Section 8.6 Waiver........................................................30 ARTICLE IX MISCELLANEOUS.................................................................30 Section 9.1 Notices.......................................................30 Section 9.2 Entire Agreement..............................................31 Section 9.3 Binding Effect, Benefits, Assignments.........................31 Section 9.4 Applicable Law................................................31 Section 9.5 Jurisdiction..................................................31 Section 9.6 Further Assurances............................................32 Section 9.7 Counterparts..................................................32 Section 9.8 Headings......................................................32 Section 9.9 Severability..................................................32 Section 9.10 Publicity and Disclosures....................................32 Section 9.11 Amendment....................................................32 Section 9.12 Knowledge of Seller or CHC...................................33 Exhibit A - Bill of Sale Exhibit B - [Intentionally Omitted] Exhibit C - Buyer's Solvency Certificate Exhibit D - IP Assignment Exhibit E - Seller's Solvency Certificate Exhibit F - Transition Services Agreement ii  ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into as of October 18, 2006 by and among AXIUM INTERNATIONAL, INC., a Delaware corporation ("AXIUM"), DIVERSITY MSP, INC., a California corporation ("BUYER"), CHIMES, INC., a Delaware corporation ("SELLER") and Computer Horizons Corp., a New York corporation ("CHC"). W I T N E S S E T H: WHEREAS, Seller is engaged in the business of providing business process outsourcing services and work-force procurement and management services (the "BUSINESS"); WHEREAS, Buyer desires to purchase and Seller desires to sell substantially all of the Seller's assets, upon the terms and subject to the conditions set forth in this Agreement; and WHEREAS, the respective Boards of Directors of Axium and Buyer and the respective Boards of Directors of Seller and CHC deem it advisable and in the best interest of their respective shareholders that Buyer acquire the assets and assume the liabilities of Seller described in and on the terms and subject to the conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows: ARTICLE I ASSETS TO BE PURCHASED AND ASSUMPTION OF OBLIGATIONS Section 1.1 (a) DESCRIPTION OF ASSETS. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing (as hereinafter defined), Seller shall sell, convey, transfer, assign and deliver to Buyer, and Buyer shall purchase, acquire and take assignment and delivery from Seller, all of Seller's right and title to and interest in and to its business assets, properties, rights (contractual or otherwise) and claims (other than the Excluded Assets specified in SECTION 1.1(B)) free and clear of liens and encumbrances (the "PROPERTY"). Nothing contained herein shall require the physical delivery of the Property. The Property shall include, without limitation, all of Seller's right, title and interest in and to the following: (i) All of Seller's inventory, raw materials, packaging materials, machinery, obsolete inventory, equipment, tooling, parts, furniture, supplies, vehicles, office equipment and other tangible personal property (the "PERSONAL PROPERTY"), including, without limitation, the Personal Property listed on SCHEDULE 1.1(A)(I) hereto; (ii) All of Seller's industrial and intellectual property rights, including, without limitation, patents, patent rights, patent applications, inventions, trade secrets, processes, formulas, customer lists, proprietary rights, proprietary knowledge, computer software, websites, URLs,  domain names, trademarks, names, service marks, brand marks, brand names, trade names, source or object code, copyrights, trade secrets relating to or arising from any proprietary process, symbols and logos related to the Business and all applications therefor, registrations thereof and licenses and sublicenses or agreements in respect thereof, which Seller owns or has the right to use or to which Seller is a party and all filings, registrations or issuances of any of the foregoing with or by any federal, state, local or foreign regulatory, administrative or governmental office including, without limitation, those listed on SCHEDULE 1.1(A)(II) and the goodwill appurtenant thereto (collectively, the "PROPRIETARY RIGHTS"); (iii) All leases of equipment, machinery or other tangible personal property to which Seller is a party, as listed on SCHEDULE 1.1(A)(III) hereto (the "PERSONAL PROPERTY LEASES"); (iv) All contracts, agreements, contract rights, license agreements, customer contracts, distribution agreements, franchise rights and agreements, purchase and sales orders, quotations and executory commitments, instruments, royalty agreements, third party guaranties, indemnifications, arrangements and understandings, whether oral or written, to which Seller is a party (whether or not legally bound thereby), including without limitation those listed on SCHEDULE 1.1(A)(IV) hereto (the "CONTRACTS"); (v) All franchises, licenses, permits, consents, authorizations, approvals and certificates of any regulatory, administrative or other Governmental Authority (as defined herein) (to the extent the same are transferable by Seller to Buyer), as listed on SCHEDULE 1.1(A)(V) hereto (the "PERMITS"); (vi) All of Seller's rights under all of its leases for its facilities together with all buildings, structures, installations, fixtures and all other improvements, appurtenant thereto or situated thereon and all other rights, interests and appurtenances of Seller pertaining thereto (the "OFFICE LEASES"); (vii) All of Seller's accounts receivable as listed on SCHEDULE 1.1(A)(VII) (the "RECEIVABLES"); (viii) All causes of action, judgments, claims or demands of whatever kind or description which Seller has or may have against any other person or entity as listed on SCHEDULE 1.1(A)(VIII) hereto (the "CAUSES OF ACTION"); (ix) Seller's marketing and sales materials; (x) Seller's backlog (sales orders which have not yet been processed); (xi) All of Seller's customer or client lists, files, documentation, records and related documentation, including, without limitation, those listed on SCHEDULE 1.1(A)(XI) hereto; (xii) All of Seller's security deposits, prepaid expenses, and other miscellaneous assets, including, without limitation, those listed on SCHEDULE 1.1(A)(XII) hereto; (xiii) All of Seller's goodwill; 2  (xiv) All of Seller's other tangible and intangible assets, other than the Excluded Assets; (xv) All of the cash held by Seller (i) as restricted cash received by Seller and held in client-specific bank accounts, listed on SCHEDULE 1.1(A)(XV) hereto, to be used to make payments to vendors of the applicable client ("VENDOR RESTRICTED FUNDS") and (ii) to be disbursed to Seller's vendors in accordance with the client payment terms ("VENDOR CASH"); and (xvi) All right, title and interest in and to all of the securities of Seller's subsidiaries, including, without limitation, (A) Chimes (Canada), Inc., a corporation organized under the laws of Nova Scotia, Canada, (B) Chimes Servicing Corp., a corporation organized under the laws of the State of Delaware, (C) Chimes Netherlands B.V., a private limited liability company organized under the laws of the Netherlands, (D) Chimes (UK) Limited, a private company organized under the laws of England and Wales, and (E) Chimes (Puerto Rico) Inc., a corporation organized under the laws of Puerto Rico. (b) Notwithstanding the foregoing, the following assets are being retained by Seller and/or CHC, are expressly excluded from the purchase and sale contemplated hereby, and, as such, are not included in the Property (the "EXCLUDED ASSETS"): (i) Seller's stock record books and corporate record books containing minutes of meetings of directors and stockholders, and any other records that relate exclusively to Seller's organization or stock capitalization (collectively, the "CORPORATE RECORDS") (ii) Except as related to warranty obligations assumed by Buyer as set forth in Section 1.2(d), all insurance policies, including, without limitation, all rights to receive proceeds of insurance policies and all rights of offset, counterclaims and insurance coverage thereunder; (iii) all cash, bank accounts, certificates of deposit, commercial paper, annuities, treasury notes and bills and other marketable securities other than Vendor Restricted Funds and Vendor Cash; (iv) any and all income tax credits and refunds for the period ending on the Closing Date; (v) all severance, pension, retirement and other employee benefit plans; (vi) all rights of Seller with respect to the claims, refunds, causes of action, rights of recovery, rights of set-off and all other rights and assets of every kind and nature related to the Excluded Liabilities (as defined below); (vii) all monies to be received by, and all other rights of, Seller and/or CHC under this Agreement, including, without limitation the Purchase Price (as defined herein) and the other agreements, documents, and instruments executed or delivered in connection with this Agreement; and 3  (viii) the right to receive mail and other communications addressed to Seller and/or CHC relating to any of the assets described in the foregoing clauses (i) through (vi) or the Excluded Liabilities. Section 1.2 ASSUMPTION OF CERTAIN LIABILITIES. On the Closing Date (as hereinafter defined), Buyer shall, subject to SECTION 1.4 hereof, assume and hereby agrees to pay, perform and discharge when due, all accrued debts, liabilities, obligations and commitments of Seller except for the Excluded Liabilities (as defined herein) including, without limitation, the following: (a) all accounts payable (the "ACCOUNTS PAYABLE"); (b) all accrued liabilities relating to the Property as shown on the balance sheet dated June 30, 2006 to the extent not satisfied, and those accruing since that date in the ordinary course of business consistent with past practice; (c) all debts, liabilities, obligations and commitments arising under the Permits, Personal Property Leases, Office Leases and Contracts transferred to Buyer; and (d) all warranty obligations. The liabilities of Seller being assumed by Buyer are hereinafter collectively referred to as the "ASSUMED LIABILITIES." Section 1.3 NON-ASSIGNMENT OF CERTAIN PROPERTY. To the extent that the assignment hereunder of any of the Permits, Personal Property Leases, Office Leases or Contracts shall require the consent of any other party (or in the event that any of the same shall be nonassignable) (each, a "CONSENT CONTRACT"), neither this Agreement nor any action taken pursuant to its provisions shall constitute an assignment or an agreement to assign if such assignment or attempted assignment would constitute a breach thereof; PROVIDED, HOWEVER, that in each such case, Seller shall use its good faith commercially reasonable efforts to obtain the consent of such other party to an assignment to Buyer without being obligated to pay any fees or to make any other payments to any party to obtain any such consent. If such consent is not obtained, (i) such Consent Contract shall not be deemed assigned at Closing, (ii) Buyer shall act as Seller's agent to perform Seller's obligations thereunder and shall so perform, and (iii) Seller and/or CHC, at Buyer's expense, shall cooperate with Buyer in any reasonable arrangement designed to provide for Buyer the full benefits of any such Consent Contract including, without limitation, enforcement, for the account and benefit of Buyer, of any and all rights of Seller against any other person with respect to any such Consent Contract. When such consents to the transfer, conveyance and assignment of a Consent Contract have been obtained, if ever, such Consent Contract shall thereupon automatically be transferred, conveyed and assigned to Buyer, and the obligations and liabilities of Seller under such Consent Contract shall automatically cease to be excluded from the Bill of Sale (as hereinafter defined) by reason of this SECTION 1.3, without the payment of any additional consideration. Section 1.4 LIABILITIES NOT ASSUMED. With the exception of the Assumed Liabilities, Buyer shall not, by execution and performance of this Agreement or otherwise, assume or otherwise be responsible for any debt, liability, obligation or commitment of any nature of Seller, whether relating to the 4  Business, any of Seller's other assets, operations, businesses or activities, or claims of such liability or obligation, matured or unmatured, liquidated or unliquidated, fixed or contingent, or known or unknown, whether arising out of occurrences prior to, at or after the Closing Date. The liabilities of Seller not being assumed by Buyer are hereinafter collectively referred to as the "EXCLUDED LIABILITIES." ARTICLE II PURCHASE PRICE Section 2.1 CONSIDERATION. Upon the terms and subject to the conditions set forth in this Agreement, in consideration for the sale, assignment and transfer of the Property, Buyer shall: (a) assume the Assumed Liabilities at the Closing as provided in SECTION 1.2 hereof pursuant to a bill of sale, assignment and assumption agreement in the form of EXHIBIT A hereto (the "BILL OF SALE"); and (b) at the Closing pay to Seller in cash by wire transfer of immediately available funds in accordance with Seller's written instructions to Buyer, the sum of EIGHTY MILLION DOLLARS ($80,000,000) (the "PURCHASE PRICE"). Section 2.2 PRORATIONS. The following prorations relating to the Property will be made as of the Closing Date, with Seller liable to the extent that such items relate to any time period up to and including the Closing Date and Buyer liable to the extent that such items relate to periods subsequent to the Closing Date: (a) Real and personal property taxes and assessments relating to the Property and the Business; (b) Water, sewer and other similar types of taxes, and installments on special benefit assessments; (c) Electric, gas, telephone and utility charges; (d) Charges under maintenance and service contracts and fees under licenses transferred to or assumed by Buyer; and (e) Prepaid expenses of Seller or CHC to the extent that the benefit thereof will be available to Buyer after the Closing Date. ARTICLE III CLOSING Section 3.1 CLOSING. Unless this Agreement is earlier terminated pursuant to Article VIII, the consummation of the transactions contemplated by this Agreement, including the purchase and sale of the Property and the 5  assumption of the Assumed Liabilities (the "CLOSING"), shall take place at the offices of Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, New York 10022 within three (3) business days after the date on which the conditions set forth in Article VI are satisfied or waived, unless another time or place shall be agreed to by the parties (the date on which such closing occurs being herein referred to as the "CLOSING DATE"). ARTICLE IV REPRESENTATIONS AND WARRANTIES Section 4.1 REPRESENTATIONS AND WARRANTIES OF AXIUM AND BUYER. Axium and Buyer hereby jointly and severally represent and warrant to Seller and CHC as of the date hereof and as of the Closing Date that: (a) CORPORATE ORGANIZATION; REQUISITE AUTHORITY. Axium is a corporation, duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to carry on its business as now being conducted and as contemplated to be conducted immediately following the Closing. Buyer is a corporation, duly organized, validly existing and in good standing under the laws of the State of California and has all requisite power and authority to carry on its business as now being conducted and as contemplated to be conducted immediately following the Closing. Complete and correct copies of the Certificate of Incorporation of Axium and all amendments thereto, certified by the Secretary of State of the State of Delaware and the bylaws of Axium and all amendments thereto have been previously delivered to Seller. Complete and correct copies of the Articles of Incorporation of Buyer and all amendments thereto, certified by the Secretary of State of the State of California and the bylaws of Buyer and all amendments thereto have been previously delivered to Seller. (b) AUTHORIZATION; VALIDITY. Each of Axium and Buyer has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, the Transition Services Agreement, the Bill of Sale and the Solvency Certificate (as such terms are defined herein), and all other agreements, documents and instruments required to be executed by Axium or Buyer pursuant hereto (collectively, the "BUYER AGREEMENTS") and to consummate the transactions contemplated hereby and thereby. All necessary corporate action has been taken by Axium and Buyer with respect to the execution, delivery and performance by Axium and Buyer of this Agreement and the applicable Buyer Agreements and the consummation of the transactions contemplated hereby and thereby, and no further corporate authorization will be necessary to authorize the execution and delivery by Axium or Buyer of, and the performance of either Axium's or Buyer's obligations under, this Agreement or the applicable Buyer Agreements. Each of Axium and Buyer has delivered to Seller a copy of the resolutions of its Board of Directors approving the execution and delivery of this Agreement and the applicable Buyer Agreements and the consummation of all of the transactions contemplated hereby and thereby, duly certified by an authorized officer of Axium or Buyer, as applicable. (c) EXECUTION AND DELIVERY. This Agreement has been duly executed and delivered by Axium and Buyer and this Agreement constitutes, and when executed and delivered the Buyer Agreements will constitute, legal, valid and binding obligations of Axium and Buyer, enforceable against Axium or Buyer, 6  as applicable, in accordance with their respective terms, except (i) as such enforceability may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, (ii) as such obligations are subject to general principles of equity and (iii) as rights to indemnity may be limited by federal or state securities laws or by public policy. (d) GOVERNMENTAL CONSENTS. Except pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), no action, waiver or consent by any federal, state, municipal or other governmental department, commission or agency ("GOVERNMENTAL AUTHORITY") is necessary to make this Agreement and the applicable Buyer Agreements, as appropriate, valid instruments binding upon Axium and Buyer in accordance with their respective terms and neither Axium nor Buyer is required to submit any notice, report or other filing with any Governmental Authority in connection with the execution, delivery or performance of this Agreement or any of the Buyer Agreements. (e) NO CONFLICTS; ABSENCE OF DEFAULT. Neither the execution, delivery and performance of this Agreement or any of the applicable Buyer Agreements by Axium or Buyer, nor the consummation by Axium and Buyer of the transactions contemplated hereby and thereby, nor compliance by Axium and Buyer with the provisions hereof and thereof will (i) conflict with or violate Axium's or Buyer's Certificate of Incorporation or Articles of Incorporation, as the case may be, or bylaws or (ii) conflict with or violate any law, administrative regulation or rule or court order, writ, judgment or decree (a "LAW" or "LAWS") applicable to Axium or Buyer except for any such conflict or violation which would not reasonably be expected to have a material adverse effect on Axium's or Buyer's financial condition or ability to consummate the transactions contemplated by this Agreement (a "BUYER MATERIAL ADVERSE EFFECT") or (iii) breach, conflict with, violate or cause a default under any material contract, license or agreement, permit, instrument or obligation to which either Axium or Buyer or any of their assets is or may be bound. Neither the execution and delivery of this Agreement and the applicable Buyer Agreements, nor the consummation of the transactions contemplated hereby and thereby, will require any consent, waiver, approval, exemption, registration, declaration, license, authorization or permit of, or filing with or notification to, any other person or entity. There are no corporate, contractual, statutory or other restrictions of any kind upon the power and authority of Axium or Buyer to execute and deliver this Agreement and the applicable Buyer Agreements and to consummate the transactions contemplated hereunder and thereunder. (f) BROKER. No broker, finder or investment banker is entitled to any brokerage or finder's fee or other commission from Axium or Buyer in connection with the transactions contemplated hereby based upon the arrangements made by or on behalf of Axium or Buyer. (g) LITIGATION. There is no suit, action or administrative or other legal proceeding, nor any order, decree or judgment in progress, pending or in effect, or to the knowledge of Axium or Buyer, threatened against Axium or Buyer in connection with or relating to the transactions contemplated by this Agreement, or any other agreement to be executed by Axium or Buyer pursuant hereto, and Axium and Buyer do not know or have any reason to be aware of any basis for the same. 7  (h) SOLVENCY. Each of Axium and Buyer is Solvent (as defined below). Neither Axium nor Buyer will fail to be Solvent as a result of the execution and delivery of this Agreement or any of the other agreements, documents, or instruments to which it is a party or as a result of the transactions contemplated hereunder. "SOLVENT" shall mean, when used with respect to any person or entity, that at the time of determination: (i) it is then able and expects to be able to pay its debts as they mature; and (ii) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. (i) FINANCING. Buyer has received financing commitments from GoldenTree Asset Management, LP and such commitments shall provide adequate financing to consummate the transactions contemplated hereby, by the Buyer Agreements and by the Seller Agreements, as applicable. (j) NO DEFAULT. Neither Axium nor Buyer is in default with respect to any indebtedness, note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which Axium or Buyer is a party or by which it is bound, and neither Axium nor Buyer has received any notice or demands with respect to the same, which default or demand would cause a Buyer Material Adverse Effect. Section 4.2 REPRESENTATIONS AND WARRANTIES OF SELLER AND CHC. Each of the following representations and warranties by CHC and Seller to Buyer is qualified by all of the Seller's disclosure schedules annexed hereto, which set forth certain disclosures concerning the Seller and its business. Seller and CHC hereby represent and warrant to Buyer as of the date hereof and as of the Closing Date that: (a) CORPORATE ORGANIZATION; REQUISITE AUTHORITY TO CONDUCT BUSINESS. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, operate or lease the Property and to carry on the Business as now being conducted. CHC is a corporation duly organized, validly existing and in good standing under the laws of the State of New York. Complete and correct copies of the Certificate of Incorporation of Seller and all amendments thereto, certified by the Secretary of State of the State of Delaware, and the bylaws of Seller and all amendments thereto have been previously delivered or made available to Buyer. Seller is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which the ownership or leasing of the Property or the transaction of business by the Business requires it to be so qualified or licensed, except where the failure to be so qualified or licensed would not in the aggregate reasonably be expected to have a Seller Material Adverse Effect. As used in this Agreement, "SELLER MATERIAL ADVERSE EFFECT" means a material adverse effect on the business, financial condition or results of operations of the Business or the ability of Seller to consummate the transactions contemplated by this Agreement, except in each case for any such effects resulting from, arising out of, or relating to (a) legal, accounting or investment banking fees for the negotiation, 8  preparation and execution of this Agreement, (b) the entry into or announcement of this Agreement and the other transactions contemplated hereby, (c) any change in or interpretations of (i) GAAP or (ii) any Law, (d) any change in interest rates or general economic conditions in the industries or markets in which Seller or any of its subsidiaries operates or affecting United States or foreign economies in general or United States or foreign financial, banking or securities markets, (e) any action taken by Buyer or any of its Affiliates, or (f) any natural disaster or act of God. (b) AUTHORIZATION; VALIDITY. Seller has all requisite power and authority to execute, deliver and perform its obligations under this Agreement, and the Transition Services Agreement, the Bill of Sale, the IP Assignment (as such term is defined herein), and all other agreements, documents and instruments required to be executed by Seller pursuant hereto (collectively, the "SELLER AGREEMENTS"), and to consummate the transactions contemplated hereby and thereby. CHC has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby and thereby. All necessary corporate action has been taken by Seller with respect to the execution, delivery and performance by Seller of this Agreement and the Seller Agreements and the consummation of the transactions contemplated hereby and thereby, and no further corporate authorization will be necessary to authorize the execution and delivery by Seller and the performance of its obligations under this Agreement or the Seller Agreements. All necessary corporate action has been taken by CHC with respect to the execution, delivery and performance by CHC of this Agreement and the consummation of the transactions contemplated hereby, and no further corporate authorization will be necessary to authorize the execution and delivery by CHC and the performance of its obligations under this Agreement (other than the requisite approval of the transactions contemplated hereby by the shareholders of CHC in accordance with CHC'S Certificate of Incorporation and the New York Business Corporation Law ("NYBCL")). (c) EXECUTION AND DELIVERY. (i) This Agreement has been duly executed and delivered by Seller and this Agreement constitutes, and when executed and delivered the Seller Agreements will constitute, legal, valid and binding obligations of Seller, enforceable against Seller in accordance with their respective terms, and (ii) this Agreement has been duly executed and delivered by CHC and constitutes a legal, valid and binding obligation of CHC enforceable against CHC in accordance with its terms; except, in both cases, (x) as such enforceability may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally, (y) as such obligations are subject to general principles of equity and (z) as rights to indemnity may be limited by federal or state securities laws or by public policy. (d) GOVERNMENTAL CONSENTS; PERMITS. Except pursuant to the HSR Act and as set forth on SCHEDULE 4.2(D), no action, waiver or consent by any Governmental Authority is necessary to make this Agreement and the Seller Agreements, as appropriate, valid instruments binding upon Seller in accordance with their respective terms and Seller is not required to submit any notice, report or other filing with any Governmental Authority in connection with the execution, delivery or performance of this Agreement or any of the Seller Agreements, except where the failure to do so would not have a Seller Material Adverse Effect. The Permits listed on SCHEDULE 1.1(A)(V) are all of the permits necessary to sell the products and services of the Business being sold as of the date hereof. 9  (e) CONFLICTS; ABSENCE OF DEFAULT. Neither the execution, delivery or performance of this Agreement or any of the Seller Agreements by Seller, nor the execution, delivery or performance of this Agreement by CHC, nor the consummation by Seller or CHC of the transactions contemplated by such documents to which it is a party, nor compliance by Seller or CHC with any of the provisions of such documents to which it is a party will (i) in the case of Seller, conflict with or violate Seller's Certificate of Incorporation or bylaws, and in the case of CHC, conflict with or violate CHC's Certificate of Incorporation or bylaws; (ii) conflict with or violate any Law applicable to the Business or any of the Property, which would have a Seller Material Adverse Effect; or (iii) breach, conflict with, violate or cause a default under any material contract, license or agreement, permit, instrument, or obligation (the "SELLER CONTRACTS") to which Seller or any of its assets is or may be bound, except for any such breach, conflict, violation or default which would not reasonably be expected to cause a Seller Material Adverse Effect. Neither the execution and delivery of this Agreement and the Seller Agreements, in the case of Seller, nor the execution and delivery of this Agreement, in the case of CHC, nor the consummation by Seller or CHC of the transactions contemplated by such documents to which it is a party will require any consent, waiver, approval, exemption, registration, declaration, license, authorization or permit of, or filing with or notification to, any other person or entity, except for the HSR Act (as herein defined) and such consents, waivers, approvals, exemptions, registrations, declarations, licenses authorizations, permits, filings or notifications which have been obtained or are listed on SCHEDULE 4.2(E), or which, if not obtained or made, will not allow for the termination, cancellation or acceleration of any obligation to repay under, any of the terms, conditions or provisions of any Contract or obligation. Seller's inability to obtain consents to the assignment of Contracts to Buyer shall not constitute a breach or default of any provision of this Agreement. Neither the execution, delivery or performance of this Agreement or any of the Seller Agreements by Seller, nor the execution, delivery or performance of this Agreement by CHC, nor the consummation by Seller or CHC of the transactions contemplated by such documents to which it is a party, nor compliance by Seller or CHC with any of the provisions of such documents to which it is a party, will constitute a default (in and of itself or with the giving of notice, passage of time or both) under the Seller Contracts, or result in the creation or imposition of any encumbrance upon, or giving to any other party or parties any claim, interest or right including rights of termination or cancellation in, or with respect to, the Business or Property, which would have a Seller Material Adverse Effect; or result in the loss of any license, franchise or legal privilege possessed by Seller or give a right of termination to any party to any agreement or other instrument to which Seller is a party or by which any of the Property or the Business is bound, which would have a Seller Material Adverse Effect. Except for the approval of CHC's shareholders and except as set forth on SCHEDULE 4.2(E), there are no corporate, contractual, statutory or other restrictions of any kind upon the power and authority of Seller to execute and deliver this Agreement and the Seller Agreements, upon the power and authority of CHC to execute and deliver this Agreement, and for Seller or CHC to consummate the transactions contemplated by such documents to which it is a party. (f) ENVIRONMENTAL MATTERS. (i) Except as set forth on SCHEDULE 4.2(F) and in CHC's annual, quarterly and current reports as filed since January 1, 2005 with the United States Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K pursuant to the Securities and Exchange Act of 1934, as amended (the "SEC REPORTS"), (A) Seller is in compliance with all applicable Environmental Laws, 10  except where failure to be in compliance would not have a Seller Material Adverse Effect; (B) there is no Environmental Claim pending against Seller; (C) Seller has obtained all material permits, approvals, identification numbers, licenses or other authorizations required under any applicable Environmental Laws (the "ENVIRONMENTAL PERMITS") and is and has been in compliance with their requirements; (D) there are no underground or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in which Hazardous Materials are being or have been treated, stored or disposed of on any real property currently owned or leased by Seller other than in compliance with Environmental Laws; (E) Seller has not undertaken or completed any investigation or assessment or remedial or response action relating to any such release, discharge or disposal of or contamination with Hazardous Materials at any site, location or operation of the Business, either voluntarily or pursuant to the order of any Governmental Entity or the requirements of any Environmental Law; and (F) except as set forth on SCHEDULE 4.2(F), there have been no Environmental Claims against the Seller. (ii) For purposes of this SECTION 4.2(F): (A) "ENVIRONMENTAL CLAIM" shall mean any claim, action, demand, order, or notice by or on behalf of, any Governmental Authority or person alleging potential liability arising out of, based on or resulting from the violation of any Environmental Law or permit or relating to any Hazardous Materials. (B) "ENVIRONMENTAL LAWS" shall mean all Laws that are applicable to the Business or the Property relating to Releases or threatened Releases of Hazardous Materials or otherwise relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to (A) the Releases or threatened releases of Hazardous Materials or materials containing Hazardous Materials or (B) the manufacture, generation, handling, treatment, storage, transport, disposal or handling of Hazardous Materials or materials containing Hazardous Materials. (C) "HAZARDOUS MATERIALS" means all substances, matters and other particles defined or listed as "hazardous" or "toxic" under Environmental Laws or are otherwise subject to or regulated by Environmental Laws. (D) "RELEASE" shall mean any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment, including the movement of Hazardous Materials through the air, soil, surface water or groundwater. (g) ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on SCHEDULE 4.2(G), since September 30, 2006, there has not been: (i) Any Seller Material Adverse Effect; (ii) Other than in the usual and ordinary course of business, any increase in amounts payable by Seller to or for the benefit of or committed to be paid by Seller to or for the benefit of any officer, consultant, agent or employee of Seller, in any capacity, whether in the form of salary, bonus, consulting fee, directors fee or otherwise, or in any benefits granted 11  under any bonus, stock option, profit sharing, pension, retirement, deferred compensation, insurance, or other direct or indirect benefit plan with respect to any such person; (iii) Any transaction entered into or carried out by Seller other than in the ordinary and usual course of its business resulting in the incurrence of liabilities or obligations of Seller; (iv) Any material change made by Seller in the methods of doing business or in the accounting principles or practices or the method of application of such principles or practices; (v) Any mortgage, pledge, lien, security interest, hypothecation, charge or other encumbrance imposed or agreed to be imposed on or with respect to the Property which will not be discharged prior to the Closing, except for Permitted Liens (as hereinafter defined); (vi) Any sale, lease or other disposition of, or any agreement to sell, lease or otherwise dispose of any Property, individually in excess of $100,000, or in the aggregate in excess of $250,000, excluding sales in the ordinary course of business; (vii) Any purchase of or any agreement to purchase capital assets or any lease or any agreement to lease, as lessee, any capital assets of the Business individually in excess of $100,000 or in the aggregate in excess of $250,000; (viii) Any modification, waiver, change, amendment, release, rescission or termination of, or accord and satisfaction with respect to, any term, condition or provision of any contract, agreement, license or other instrument to which Seller is a party, which would have a Seller Material Adverse Effect, other than any satisfaction by performance in accordance with the terms thereof in the usual and ordinary course of its business; (ix) Any damage, destruction or similar loss, whether or not covered by insurance, adversely affecting the Seller in excess of $100,000 individually, or $250,000 in the aggregate; (x) Any strike, picketing, work slowdown or labor disturbance with respect to the Business; or (xi) To the knowledge of Seller or CHC, any change in any Law applicable to or binding upon the Business or the Property, which would have a Seller Material Adverse Effect. (h) TAXES AND TAX RETURNS. (i) For purposes of this Agreement, (A) the term "TAXES" shall mean all taxes, charges, fees, levies or other assessments, including, without limitation, income, gross receipts, excise, property, use, sales, transfer, license, payroll and franchise or other taxes of any kind whatsoever, imposed by the United States, or any state, local or foreign government or subdivision or agency thereof whether computed on a unitary, combined or any other basis; and such term shall include any interest and penalties or additions to tax; and (B) the term "TAX RETURN" shall mean any 12  report, return or other information required to be filed with, supplied to or otherwise made available to a taxing authority in connection with Taxes. (ii) Except for transfer tax returns in connection with the transactions contemplated by this Agreement, which will be filed promptly after the Closing Date, Seller has (A) filed with the appropriate taxing authorities all Tax Returns relating to the Property or the Business required to be filed for any period ending on or before the Closing Date (or are properly on extension), and all such filed Tax Returns are true, correct and complete in all material respects, and (B) paid in full all Taxes shown to be due on such Tax Returns, together with any penalties or fines due in connection therewith. There are no liens for Taxes upon the Property except for statutory liens for current Taxes not yet due and payable. Seller will file appropriate Tax Returns for any period ending on or before the Closing Date, and pay any Taxes for such periods when due. Seller has not received any outstanding notice of audit, and is not undergoing any audit, of Tax Returns relating to the Property or the Business and has never received any notice of deficiency or assessment from any taxing authority with respect to liability for Taxes relating to the Property or the Business which has not been fully paid or finally settled and has not been notified in writing of any potential or actual dispute or claim concerning any Tax liability of Seller relating to the Property or the Business. There have been no waivers of statutes of limitations by Seller with respect to any Tax Returns relating to the Property or the Business. Seller has complied in all material respects with all applicable laws, rules and regulations relating to the payment and withholding of Taxes and has withheld all amounts required by law to be withheld from the wages or salaries of employees and independent contractors of the Business, and is not liable for any Taxes with respect to the employees and independent contractors of the Business for failure to comply with such laws, rules and regulations. (i) EMPLOYMENT MATTERS; ERISA MATTERS. Except as set forth on SCHEDULE 4.2(I) or in the SEC Reports, there are no employment, consulting, severance or indemnification contracts between the Seller and any of its employees. The Seller is not a party to any union contract or collective bargaining agreement. SCHEDULE 4.2(I) identifies those employees of the Seller who are deemed to be key employees to the operations of the Business. Except as otherwise set forth in this Agreement, Seller has no plans to terminate any key employee, and none of the key employees is expected to terminate his employment with Seller. Seller is in compliance with Laws respecting employment and employment practices, terms and conditions of employment and wages and hours. Seller has no responsibility for and has not assumed any pension-related liability of any predecessor business or Person. (j) TITLE TO PROPERTY. (i) Seller has good and marketable title, or valid leasehold rights (in the case of leased property), to all of the Personal Property, free and clear of all liens, claims and encumbrances of any nature, other than as disclosed on SCHEDULE 4.2(J) (the "PERMITTED LIENS"). On the Closing Date, Seller will convey to Buyer good and marketable title to the Personal Property or, in the case of assets constituting Personal Property which are leased or licensed by Seller pursuant to Personal Property Leases or other Contracts, valid leasehold interests or licenses to such Personal Property Leases or other Contracts, free and clear of all liens, claims and encumbrances of any nature other than Permitted Liens. Except for the Excluded Assets, (i) SCHEDULE 1.1(A)(I) sets forth a complete and accurate list of all the Personal Property owned by Seller, including without limitation, all inventory, raw materials, packaging materials, machinery, equipment, tooling, parts, furniture, supplies, vehicles, office equipment and other tangible personal property, and 13  (ii) SCHEDULE 1.1(A)(III) sets forth a complete and accurate list of all Personal Property Leases owned by Seller, including, without limitation, all leases of equipment or other personal property used in the conduct of the Business with a value in excess of $25,000 individually or $50,000 in the aggregate. All Personal Property used in the conduct of the Business is owned or leased by Seller and is held free and clear of all mortgages, pledges, liens, security interests, claims, encumbrances and restrictions of any nature whatsoever other than Permitted Liens. Except for Permitted Liens and except as disclosed on SCHEDULE 4.2(J), no financing statement under the Uniform Commercial Code or similar law naming Seller as debtor has been filed, and not been terminated, prior to the Closing Date in any jurisdiction in respect of the Property, and, except as disclosed on SCHEDULE 4.2(J), Seller is not a party to or bound under any agreement or legal obligation authorizing any party to file any such financing statement. (ii) SCHEDULE 1.1(A)(III) sets forth, with respect to Personal Property Leases, the commencement date, termination date, renewal options, if any, and annual base rents. Except as disclosed on SCHEDULE 4.2(J) and in the SEC Reports, each such Personal Property Lease is valid and enforceable in accordance with its terms in all respects and is in full force and effect. Neither Seller, nor to the knowledge of Seller or CHC, any other party to any Personal Property Lease, is in default of its obligations thereunder, and Seller (or any other party to any such Personal Property Lease) has not at any time delivered or received any notice of default which remains uncured under any such Personal Property Lease and no event has occurred which, with the giving of notice or the passage of time, or both, would constitute a default under any such Lease. (k) TRADEMARKS, PATENTS AND COPYRIGHTS. (i) Except as disclosed on SCHEDULE 4.2(K), Seller owns or has the right to use, sell or license all Proprietary Rights and such Proprietary Rights are sufficient for the conduct of the Business of Seller as it is currently being conducted as of the date hereof. SCHEDULE 1.1(A)(II) hereto lists each patent, patent right, patent application, tradename, trademark, trade name registration, trademark registration, trademark application, copyright registration, copyright registration application, service mark, brand mark and brand name, trade secret, formula, source and object code owned or licensed by Seller, and any license for any of the foregoing in each case. (ii) Except as disclosed on SCHEDULE 4.2(K), the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not constitute a breach of any instrument or agreement governing any Proprietary Rights, will not cause the forfeiture or termination or give rise to a right of forfeiture or termination of any Proprietary Rights or impair the right of the Business to use, sell or license any Proprietary Rights or any portion thereof. (iii) Except as disclosed on SCHEDULE 4.2(K), neither the manufacture, marketing, license, sale or intended use of any product or service currently sold violates any license or agreement between Seller and any third party relating to such product or service or to the knowledge of Seller or CHC infringes any intellectual property right of any other party, and there is no pending or, to either Seller's or CHC's knowledge, threatened claim or litigation contesting the validity and Seller's ownership or right to use, sell, license or dispose of any Proprietary Right nor has Seller received any notice 14  asserting that any Proprietary Right or the proposed use, sale, license or disposition thereof conflicts or will conflict with the rights of any other party, and Seller has neither licensed the use of the Proprietary Rights to any third party nor permitted the use by any third party of the same in a manner which would infringe the Proprietary Rights of Seller. (iv) Except as disclosed on SCHEDULE 4.2(K), no current or prior members, officers, employees or consultants of Seller have asserted in writing, nor to the knowledge of Seller or CHC threatened, any claim to an ownership interest in any of the Proprietary Rights as a result of having been involved in the development of such property while employed by or consulting to the Business or otherwise. (l) ACCOUNTS RECEIVABLE. The Receivables listed on SCHEDULE 1.1(A)(VII) are or will be subsisting; arose or will arise in the ordinary and usual course of Seller's business; are not and will not be subject to any counterclaim, set-off or defense known to the Seller; and are not and will not be subject to any lien or encumbrance, other than Permitted Liens. (m) LEGAL PROCEEDINGS, CLAIMS, INVESTIGATIONS, ETC. Except as disclosed on SCHEDULE 4.2(M) and in the SEC Reports, there is no legal, administrative, arbitration or other action or proceeding or governmental investigation pending against Seller or, to the knowledge of Seller or CHC, pending against any member, officer or employee thereof. Except as disclosed on SCHEDULE 4.2(M) and in the SEC Reports, Seller has not been informed of any violation of or default under, any laws, ordinances, regulations, judgments, injunctions, orders or decrees (including without limitation, any immigration laws or regulations) of any court, governmental department, commission, agency, instrumentality or arbitrator. Except as disclosed in SCHEDULE 4.2(M) and in the SEC Reports, the Seller is not currently subject to any judgment, order, injunction or decree of any court, arbitral authority, administrative agency or Governmental Authority. (n) CONTRACTS. SCHEDULE 1.1(A)(IV) sets forth a complete and accurate list of all contracts or agreements to which Seller is a party, involving either aggregate consideration payable to or by Seller of $50,000 in a twelve month period or the Property, and Seller has provided or made available to Buyer copies of all of such Contracts ("MATERIAL CONTRACTS"). Each Material Contract (i) is in full force and effect and is binding upon and enforceable against Seller, and, to the knowledge of Seller or CHC, all other parties thereto in accordance with its terms, (ii) has not been otherwise materially amended or modified by Seller except as specified in such Schedule and (iii) is not in material default due to the action of Seller or, to the knowledge of Seller or CHC, any other party thereto. Without limiting Section 4.2(v), neither Seller nor CHC has received notice that any party to any Material Contract intends to cancel or terminate such Contract, and neither Seller nor CHC is aware of any pending, or to either Seller's and CHC's knowledge, threatened dispute or other information that might result in any party to any Material Contract canceling or terminating such Contract. (o) CERTAIN TRANSACTIONS. No officer or employee of Seller, nor any member of any such person's family is presently a party to any material transaction with Seller, including without limitation, any contract, agreement or other arrangement (i) providing for the furnishing of services by, (ii) providing for the rental of real or personal property from, or (iii) otherwise requiring payments to (other than for services as managers, officers, directors or employees of the Seller), any such person or any corporation, partnership, 15  trust or other entity in which any such person has a substantial interest as a stockholder, officer, director, trustee or partner. (p) BROKER. Other than Jefferies Broadview, no broker, finder or investment banker is entitled to any brokerage or finder's fee or other commission from Seller in connection with the transactions contemplated hereby based on the arrangements made by or on behalf of Seller. (q) LICENSES. Seller is the holder of all state, federal and local licenses, permits and approvals required to conduct the Business as it is presently being conducted, except where the failure to hold the same would not have a Seller Material Adverse Effect. Except as set forth on SCHEDULE 4.2(Q)(I) and in the SEC Reports, all of the Permits are in good standing, valid and effective, and free and clear of any liens, conditions or restrictions which might limit their full utilization as authorized by any governmental authority. SCHEDULE 1.1(A)(V) lists each transferable Permit held by Seller and its date of expiration. SCHEDULE 4.2(Q)(II) sets forth those Permits issued by various Governmental Authorities to Seller that are not assignable. Seller's inability to assign such Permits to Buyer shall not constitute a breach or default of any provision of this Agreement. (r) COMPLIANCE WITH LAW. Except as set forth on SCHEDULE 4.2(R) and in the SEC Reports, Seller has complied in all material respects with all Laws, which are applicable to or binding upon the Business or the Property. (s) BOOKS OF ACCOUNT; RECORDS. The general ledgers, books of account and other records of Seller are complete and correct in all respects and have been maintained in accordance with good business practices and on a consistent basis from period to period reflected therein. (t) CONDITION OF THE PROPERTY. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, ALL OF THE PROPERTY IS CONVEYED TO BUYER AS IS, WHERE IS AND SELLER AND CHC HEREBY DISCLAIM ALL WARRANTIES WITH RESPECT THERETO, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. (u) ACCOUNTS PAYABLE. All of Seller's accounts payable have been incurred in the ordinary course of business consistent with past practice. (v) CUSTOMERS. Except as set forth on SCHEDULE 4.2(V) and in the SEC Reports, there are no pending, or to either Seller's and CHC's knowledge, threatened disputes between Seller and any of the licensors, licensees, vendors, suppliers, clients or customers of the Business or other parties which in any way relate to Seller's operation of the Business. Neither Seller nor CHC has any information, or is aware of any facts, indicating that any licensors, licensees, vendors, suppliers, clients or customers of the Business or other parties which in any way relate to Seller's operation of the Business, intends to cease doing business with Seller or materially alter the amount of business they are presently doing with Seller, and neither Seller nor CHC is aware of any pending, or to either Seller's and CHC's knowledge, threatened dispute or other information that might result in any licensors, licensees, vendors, suppliers, clients or customers of the Business or other parties which in any way relate to Seller's operation of the Business, ceasing to do business with Seller or 16  materially altering the amount of business they are presently doing with Seller or any disputes between Seller and any of the vendors, suppliers, or customers of the Business or other parties which in any way relate to Seller's operation of the Business. (w) ENTIRE BUSINESS. The sale of the Property to be sold by Seller to Buyer pursuant to this Agreement will convey to Buyer the entire Business and all of the tangible and intangible property used by Seller (whether owned, leased or held under license by Seller) in connection with the conduct of the Business as heretofore conducted by Seller. ARTICLE V COVENANTS Section 5.1 CONDUCT OF BUSINESS. Between the date of this Agreement and the Closing Date, Seller shall, and CHC shall cause Seller to: (a) Conduct the Business and enter into transactions only in the ordinary course in accordance with past practices and, without Buyer's prior written consent, refrain from changing or introducing any method of management or operations; (b) Refrain from making any changes in its accounting practices, including with respect to revenue and expense recognition methods and depreciation or amortization methods, policies or rates; (c) Continue all accounts receivable collection efforts and accounts payable payments in the ordinary course consistent with past practices; (d) Refrain from making any purchase, sale, or disposition of any asset or property in excess of $100,000 or, in the aggregate, in excess of $250,000 (including, without limitation, any mortgage loan in excess of such amount), other than in the ordinary course of business and from mortgaging, pledging, subjecting to a Lien or otherwise encumbering any of its properties or assets; (e) Refrain from incurring any contingent liability as a guarantor or otherwise with respect to the obligations of others, and from incurring any other contingent or fixed obligations or liabilities; (f) Refrain from entering into transactions with affiliated persons or entities; (g) Except as set forth on SCHEDULE 5.1 hereto, refrain from declaring, setting aside, or paying any dividend, making any other distribution in respect of its capital stock, or making any direct or indirect redemption, purchase, or other acquisition of its stock; (h) Refrain from making any change in the compensation payable or to become payable to any of its officers, employees, agents, or independent contractors, and from adopting or amending in any material respect any employee benefit plan; 17  (i) Refrain from amending its Certificate of Incorporation or by-laws without the consent of Buyer; (j) Refrain from canceling any material indebtedness (individually or in the aggregate) or waive any claims or rights of substantial value; (k) Refrain from entering into any material contract, including any lease of real property, without the consent of Buyer, other than in the ordinary course of business; (l) Refrain from materially modifying or amending, or terminating or permitting the lapse of, any material contracts or leases, without the consent of Buyer, other than in the ordinary course of business; (m) Refrain from making, or committing to make, any capital expenditure in excess of $100,000 and $250,000 in the aggregate without the consent of Buyer; (n) Have in effect and maintain at all times all insurance of the kind, in the amount, and with the insurers previously disclosed to Buyer or equivalent insurance with any substitute insurers approved in writing by Buyer; (o) Furnish to Buyer and its attorneys, accountants, advisors and other representatives (collectively, "REPRESENTATIVES") such financial and other information with respect to the Business or its assets as Buyer may from time to time reasonably request; (p) Provide Buyer and its Representatives with full and complete access at reasonable times and upon reasonable prior notice to all of the facilities, books and records (including marketing statistics) of the Business and of Seller; (q) Provide Buyer and its Representatives with full and complete access to, and reasonably assist Buyer and its Representatives with, Seller's licensors, licensees, vendors, suppliers, clients and customers; (r) Perform or permit the following: (i) permit Buyer and its Representatives to conduct a full investigation of the Property, including, but not limited to, books, records, contracts, and such other documents as Buyer may reasonably request, as well as the operating condition, environmental condition and other aspects of the Purchased Assets and (ii) cooperate fully with Buyer and its Representatives, and cause its employees, agents and other Representatives to cooperate fully with Buyer and its Representatives, for the purpose of enabling Buyer and its Representatives to conduct the activities described above; and (s) Maintain the overall marketing effort of the Business at levels consistent with the past practices of Seller, except as may be modified in the ordinary course of business. Section 5.2 NOTICE OF DEFAULT. From the date hereof until the Closing, promptly upon the occurrence of, or promptly upon Seller or CHC, on the one hand, or Buyer or Axium, on the other hand, becoming aware of the impending or threatened occurrence of, any event which would cause or constitute a breach or default hereunder, or would have caused or constituted a breach or default had such event occurred or been known to Seller or CHC, on the one hand, or Buyer or 18  Axium, on the other hand, prior to the date hereof, of any of the representations, warranties, or covenants of Seller or CHC, on the one hand, or Buyer or Axium, on the other hand, contained in or referred to in this Agreement or in any Schedule or Exhibit referred to in this Agreement, Seller or CHC or Buyer or Axium (as applicable) shall give detailed written notice thereof to Buyer or Seller (as applicable) and shall use its reasonable best efforts to prevent or promptly remedy the same. Section 5.3 CONFIDENTIALITY. Subject to the provisions of SECTION 9.10 and except as otherwise required by law, Seller, CHC, Buyer and Axium shall protect and maintain the confidentiality of all matters related to and contemplated by this Agreement and the agreements executed and delivered in connection herewith. Section 5.4 PRESERVATION OF BOOKS AND RECORDS. Until at least the expiration of ninety (90) days after the Closing Date, CHC and Seller will preserve and maintain all of Seller's books and records and all books and records of CHC exclusively related to the Business that are in their possession and not otherwise transferred to Buyer pursuant to this Agreement and will provide Buyer and its auditors, employees and agents with full access to the records of Seller (other than Seller's attorney-client communications and work product) upon reasonable notice during normal business hours and shall allow Buyer and its auditors, employees and agents, at Buyer's expense, to make copies of such documents, records and other information pertaining to the Business as Buyer may reasonably request. If CHC or Seller desires to dispose of any such books and records before the expiration of such period, CHC or Seller, as applicable, will first give written notice thereof to Buyer and will, at Buyer's option and expense, appropriately package and deliver such books and records to Buyer at such location as Buyer shall designate. If upon receiving written notice of CHC's or Seller's desire to dispose of books and records, Buyer does not direct CHC or Seller, as applicable, to deliver such books and records within 45 days, then CHC or Seller, as applicable, may dispose of such books and records without violating the terms of this Agreement. Section 5.5 CHC SHAREHOLDERS MEETING. CHC, acting through its Board of Directors, shall, in accordance with the applicable provisions of its Certificate of Incorporation and the NYBCL, use its commercially reasonable efforts to obtain the approval of its shareholders and the adoption of this Agreement and the transactions contemplated hereby (the "TRANSACTION"), including: (i) As promptly as practicable following the execution and delivery of this Agreement, duly call, give notice of, convene and hold a special meeting of its shareholders (the "SPECIAL MEETING") for the purposes of considering and taking action upon the approval and adoption of the Transaction; (ii) As promptly as practicable following the execution and delivery of this Agreement, subject to SECTION 5.10, declare advisable and recommend to its shareholders that they approve the Transaction and adopt this Agreement, and include disclosure regarding the approval of CHC's Board of Directors (the "CHC BOARD"); and (iii) As promptly as practicable following the execution and delivery of this Agreement, but in no event later than the later of (a) the expiration of twenty (20) calendar days after the full execution and delivery of 19  this Agreement, if a definitive agreement is not executed by CHC for the sale of all or substantially all of the assets of CHC's Commercial Services Business Unit (the "SALE OF COMMERCIAL"), or (b) the expiration of thirty-four (34) calendar days after the full execution and delivery of this Agreement, if a definitive agreement is executed by CHC for the Sale of Commercial, prepare and file with the Securities and Exchange Commission (the "SEC") a preliminary proxy or information statement (y) relating solely to the Transaction and this Agreement, if a definitive agreement is not executed by CHC for the Sale of Commercial, or (z) relating solely to the Transaction, this Agreement, the Sale of Commercial and the adoption of a plan of liquidation for CHC, if a definitive agreement is executed by CHC for the Sale of Commercial, and, in either case, obtain and furnish the information required to be included by the SEC in the proxy or information statement and, after consultation with Buyer, respond promptly to any comments made by the SEC with respect to the preliminary proxy or information statement and cause a definitive proxy or information statement, including any amendments or supplements thereto (the "PROXY STATEMENT") to be mailed to its shareholders at the earliest practicable date. Notwithstanding anything herein to the contrary, in no event shall CHC or its Board of Directors be required to take any of the actions set forth in this Section 5.5 prior to the date specified in subclause (a) or (b) of Section 5.5(iii), as applicable. Section 5.6 ADDITIONAL COVENANTS. Seller, Buyer, CHC and Axium covenant and agree, subject to the conditions set forth herein, to proceed diligently and to use reasonable efforts to take or cause to be taken all actions and to do or cause to be done all things necessary, proper and advisable to consummate the transactions contemplated by this Agreement and to prepare and execute such additional documents and to take or cause to be taken such additional actions, as either party may reasonably request pursuant to the terms and conditions of this Agreement. Section 5.7 SALES AND TRANSFER TAXES. All sales and transfer taxes, recording taxes, and similar taxes and charges, incurred in connection with the sale of the Property under this Agreement will be borne by Buyer. Section 5.8 TRANSFERRED EMPLOYEES. (a) OFFER OF EMPLOYMENT. Subject to and in accordance with the provisions of this SECTION 5.8, Buyer shall, effective upon the Closing, offer full-time employment to substantially all (i.e., at least 90% and up to 100%) of the employees who are employed by Seller as of the Closing Date (the "EMPLOYEES") on terms and conditions comparable to the terms and conditions of employment and benefits for current employees of Buyer in similar job classifications and grades. Buyer shall hire all of the Employees who accept such offer. Buyer will deliver to Seller a list of all of the Employees who have accepted an offer of employment from Buyer promptly after the Closing. Each of the Employees who actually becomes a full-time employee of Buyer upon the Closing is hereinafter referred to as a "TRANSFERRED EMPLOYEE." (b) TRANSITION. The employment of each Transferred Employee by Seller shall end effective as of the close of business on the day before the Closing Date and the employment of the Transferred Employees by Buyer shall commence at or after 12:01 a.m. on the day of the Closing Date. 20  (c) RETENTION OF EMPLOYEES PRIOR TO CLOSING. Seller shall expend its reasonable efforts to assist Buyer in securing the employment on the Closing Date of the Employees; provided, however, that Seller shall not be required to incur any financial obligation beyond continuing to pay for current employee compensation and benefits prior to the Closing in connection with the foregoing unless otherwise required by this Agreement. (d) COMPENSATION AND BENEFITS OF TRANSFERRED EMPLOYEES. Coverage for Transferred Employees under Buyer's benefit plans and programs shall commence as of 12:01 a.m. on the Closing Date. Buyer shall maintain for the benefit of Transferred Employees a package of employee benefits that is comparable in the aggregate to the employee benefit programs for current employees of Buyer in similar job classifications and grades. (e) EMPLOYEES OTHER THAN TRANSFERRED EMPLOYEES. Seller shall retain responsibility only for employees of Seller who do not accept offers of employment from Buyer. Section 5.9 NONCOMPETE. For a period of three (3) years from and after the Closing Date, neither CHC nor Seller shall engage or compete, directly or indirectly, on its own account or as an equity holder, agent, partner, joint venturer or consultant, in or with any business entity that is engaged in the sale, distribution, manufacture or provision of products or services heretofore sold, distributed, manufactured or provided by the Business; provided that CHC and its affiliates shall be entitled to conduct and operate the businesses and operations of the Commercial Services Business Unit of CHC as currently conducted by CHC even if such businesses or operations might be deemed to be the same as or to compete with the products or services heretofore sold, distributed, manufactured or provided by the Business. Section 5.10 SUPERIOR OFFER. Notwithstanding anything in this Agreement to the contrary, the CHC Board may at any time prior to the Closing, (x) withdraw or modify its approval or recommendation of this Agreement or the Transaction or (y) approve or recommend a Superior Offer (as herein defined) if: (A) a bona fide written offer is made to CHC by a third party for an Acquisition Proposal, and such offer is not withdrawn; (B) the CHC Board determines in good faith, after consultation with its financial advisor, that such offer constitutes a Superior Offer; (C) following consultation with outside legal counsel, the CHC Board or a committee of disinterested directors determines that the withdrawal or modification of its approval or recommendation of this Agreement or the Transaction is required to comply with the fiduciary duties of the CHC Board to the shareholders of CHC under applicable Law; (D) such approval or recommendation is not withdrawn or modified in a manner adverse to Buyer at any time prior to five (5) business days after Buyer and Axium receive written notice from CHC confirming that the CHC Board has determined that such offer is a Superior Offer, setting forth in reasonable detail all material terms of such Superior Offer; and (E) at the end of such five (5) business day period, after taking into account any adjustment or modification of the terms of this Agreement proposed by Buyer or Axium (and any adjustment or modification of the terms of such Acquisition Proposal), the CHC Board again makes the determination in good faith that the withdrawal or modification of such approval or recommendation of this Agreement or the Transaction is required to comply with the fiduciary duties of the CHC Board to the shareholders of CHC under applicable Law. For purposes of this Agreement, (i) the term "SUPERIOR OFFER" 21  means an Acquisition Proposal on terms that the CHC Board determines, in good faith, based upon consultations with its outside legal counsel and its financial advisor, that if consummated, is more favorable to CHC's shareholders than the Transaction or this Agreement and is reasonably likely to be consummated, taking into account all legal, financial and regulatory aspects of the offer and the person making the offer and would, if consummated, be in the best interests of the shareholders of CHC and (ii) the term "ACQUISITION PROPOSAL" means (other than the transaction contemplated by this Agreement) any inquiry, proposal or offer from any person relating to (1) any direct or indirect acquisition or purchase of the Business or (2) any direct or indirect acquisition or purchase of assets representing 20% or more of the assets of CHC, (3) any issuance, sale, or other disposition of (including by way of merger, consolidation, business combination, share exchange, joint venture, or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 20% or more of the voting power of CHC, (4) any tender offer, exchange offer or other transaction in which, if consummated, any person shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership, or any "group" (as such term is defined under the Exchange Act) shall have been formed which beneficially owns or has the right to acquire beneficial ownership, of 20% or more of the outstanding voting capital stock of CHC, or (5) any merger, consolidation, share exchange, business combination, recapitalization, liquidation or dissolution involving CHC. Section 5.11 NAME CHANGE. Within twenty (20) business days after the Closing Date, Seller shall change its name to a name not confusingly similar with its current name. Section 5.12 CONVERSION TO LLC. Notwithstanding any other provision of this Agreement, CHC shall be entitled to convert Seller to a limited liability company or liquidate and dissolve Seller at any time in its discretion without the consent of Buyer or Axium. Section 5.13 TRANSITION SERVICES AGREEMENT. The parties hereto intend to enter into a Transition Services Agreement on the Closing Date substantially in the form set forth as EXHIBIT F hereto (the "TRANSITION SERVICES AGREEMENT") providing for such Items of Service (as defined in the Transition Services Agreement) as the Buyer may reasonably request by notice to the Seller given not later than forty-five (45) days prior to the Closing. Section 5.14 NO AMENDMENT OF FINANCING. Neither Axium nor Buyer shall amend, supplement or modify its financing of the acquisition of the Property and its assumption of the Assumed Liabilities, as to be provided by GoldenTree Asset Management, LP pursuant to its commitment letter with Axium of October 16, 2006, a copy of which has been provided to CHC and Seller, so as to prevent the transactions contemplated by this Agreement. 22  ARTICLE VI CONDITIONS TO CLOSING Section 6.1 CONDITIONS TO OBLIGATIONS OF SELLER AND CHC. The obligations of Seller and CHC to consummate the transactions contemplated this Agreement are subject to the fulfillment, or waiver by Seller or CHC, as of the Closing, of the following conditions precedent: (a) REPRESENTATIONS: WARRANTIES; COVENANTS. All of the representations and warranties of Axium and Buyer contained in SECTION 4.1 shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date and Axium and Buyer shall, on or before the Closing, have performed all of their obligations hereunder which by the terms hereof are to be performed on or before the Closing. (b) CERTIFICATES FROM OFFICER OF AXIUM AND BUYER. Axium and Buyer shall have delivered to Seller and CHC a certificate of the President of Axium and Buyer dated as of the Closing Date to the effect that the statements set forth in paragraph (a) above in this SECTION 6.1 are true and correct. (c) NO ADVERSE PROCEEDINGS. No law, rule or regulation shall have been enacted or promulgated, and no investigation, action, suit or proceeding shall have been threatened or instituted against Seller, CHC, Axium or Buyer, which, in any such case, in the reasonable judgment of Seller or CHC, prohibits or precludes the consummation of the transactions contemplated hereby, or which claims, or might give rise to a claim for, damages against Seller or CHC as a result of the consummation of such transaction. (d) SHAREHOLDER APPROVAL. The shareholders of CHC shall have duly approved this Agreement and the transactions contemplated hereby in accordance with CHC's Certificate of Incorporation and the NYBCL and as contemplated by this Agreement. (e) FAIRNESS OPINION NOT WITHDRAWN OR MODIFIED. Any financial advisor's opinion received by the CHC Board to the effect that this Agreement and the Transaction and the consideration to be received Seller in connection herewith is fair to Seller from a financial point of view shall not have been withdrawn or materially modified. (f) BUYER'S SECRETARY'S CERTIFICATE. Buyer shall have delivered a certificate, dated the Closing Date, executed by Buyer's Secretary, to the effect that (A) the Certificate of Incorporation and by-laws of Buyer shall have not been amended since the date upon which certified copies of each had been delivered to Seller and CHC and remain in full force and effect and (B) the officers executing this Agreement and the Buyer Agreements are duly elected and hold the offices set forth therein, with copies of resolutions approved by the Board of Directors of Buyer attached as an exhibit thereto. (g) AXIUM'S SECRETARY'S CERTIFICATE. Axium shall have delivered a certificate, dated the Closing Date, executed by Axium's Secretary, to the effect that (A) the Certificate of Incorporation and by-laws of Axium shall have not been amended since the date upon which certified copies of each had been delivered to Seller and CHC and remain in full force and effect and (B) the 23  officers executing this Agreement and the Buyer Agreements are duly elected and hold the offices set forth therein, with copies of resolutions approved by the Board of Directors of Axium attached as an exhibit thereto. (h) BILL OF SALE. Buyer shall have delivered a duly executed copy of the Bill of Sale and such deeds, assignments, certificates of title and other instruments of transfer and conveyance, conveying, selling, transferring and assigning to Buyer title to all of the Property (subject to SECTION 1.3), free and clear of all security interests, liens, charges or encumbrances whatsoever, except for Permitted Liens and those liens assumed by Buyer pursuant to this Agreement or the Bill of Sale; together with the written consents of all parties necessary in order to duly transfer such title to the extent obtained. (i) PURCHASE PRICE. Buyer shall have paid the Purchase Price as provided in SECTION 2.1(B). (j) SOLVENCY CERTIFICATE. Buyer shall have delivered a certificate dated the Closing Date, in substantially in the form of EXHIBIT C, signed by the Chief Financial Officer of Buyer, certifying that Buyer is Solvent on the Closing Date after giving effect to the transactions contemplated hereby (the "BUYER'S SOLVENCY CERTIFICATE"). (k) HSR ACT. The required waiting period under the HSR Act shall have expired or been terminated without adverse action by the Federal Trade Commission or United States Department of Justice. (l) CONSENTS. Buyer shall have delivered a copy of the consent of each Governmental Authority and each other person whose consent is required for the consummation of the transactions contemplated by this Agreement or for the assignment of any of the Property of Seller to Buyer. Section 6.2 CONDITIONS TO THE OBLIGATIONS OF BUYER AND AXIUM. The obligations of Axium and Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment, or waiver by Axium and Buyer, as of the Closing, of the following conditions precedent: (a) REPRESENTATIONS; WARRANTIES; COVENANTS. All of the representations and warranties of Seller and CHC contained in SECTION 4.2 shall be true and correct in all material respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of such date; and Seller and CHC shall, on or before the Closing, have performed all of their obligations hereunder which by the terms hereof are to be performed on or before the Closing. (b) CERTIFICATES FROM OFFICER OF SELLER AND CHC. Seller and CHC shall have delivered to Buyer a certificate of the President of Seller and CHC dated as of the Closing Date to the effect that the statements set forth in paragraph (a) above in this SECTION 6.2 are true and correct. (c) NO ADVERSE PROCEEDINGS. No law, rule or regulation shall have been enacted or promulgated, and no investigation, action, suit or proceeding shall have been threatened or instituted against Seller, CHC, Buyer 24  or Axium, which, in any such case, in the reasonable judgment of Buyer or Axium, prohibits or precludes the consummation of the transactions contemplated hereby, or which claims, or might give rise to a claim for, damages against Seller or CHC as a result of the consummation of such transaction. (d) SHAREHOLDER APPROVAL. The shareholders of CHC shall have duly approved this Agreement and the transactions contemplated hereby in accordance with CHC's Certificate of Incorporation and the NYBCL and as contemplated by this Agreement. (e) SELLER'S SECRETARY'S CERTIFICATE. Seller shall have delivered a certificate, dated the Closing Date, executed by Seller's Secretary, to the effect that (A) the Certificate of Incorporation and bylaws of Seller shall have not been amended since the date upon which certified copies of each had been delivered to Buyer and remain in full force and effect and (B) the officers executing this Agreement and Seller Agreements on behalf of Seller are duly elected and hold the offices set forth therein, with copies of resolutions approved by the Board of Directors of Seller attached as an exhibit thereto. (f) CHC'S SECRETARY'S CERTIFICATE. CHC shall have delivered a certificate, dated the Closing Date, executed by CHC's Secretary, to the effect that the officers executing this Agreement on behalf of CHC are duly elected and hold the offices set forth therein, with copies of resolutions approved by the CHC Board attached as an exhibit thereto. (g) BILL OF SALE. Seller shall have delivered a duly executed copy of the Bill of Sale and such deeds, assignments, certificates of title and other instruments of transfer and conveyance, conveying, selling, transferring and assigning to Buyer title to all of the Property (subject to SECTION 1.3), free and clear of all security interests, liens, charges or encumbrances whatsoever, except for Permitted Liens and those liens assumed by Buyer pursuant to this Agreement or the Bill of Sale; together with the written consents of all parties necessary in order to duly transfer such title to the extent obtained. (h) IP ASSIGNMENT. Seller shall have delivered the Assignment of Intellectual Property Rights in the form attached hereto as EXHIBIT D (the "IP ASSIGNMENT"). (i) CONSENTS. Seller shall have delivered a copy of the consent of each Governmental Authority whose consent is required for the consummation of the transactions contemplated by this Agreement or for the assignment of any of the Property. (j) HSR ACT. The required waiting period under the HSR Act shall have expired or been terminated without adverse action by the Federal Trade Commission or United States Department of Justice. (k) SOLVENCY CERTIFICATE. Seller shall have delivered a certificate dated the Closing Date, in substantially in the form of Exhibit E, signed by the Chief Financial Officer of Seller, certifying that Seller is Solvent on the Closing Date after giving effect to the transactions contemplated hereby ("SELLER'S SOLVENCY CERTIFICATE"). (l) VENDOR CASH. Seller shall have delivered to Axium and Buyer an accounting as of the Closing Date of all Vendor Cash to be disbursed to Seller's vendors in accordance with the client payment terms, identifying the 25  client-specific bank accounts in which such Vendor Cash has been deposited, the clients to which such Vendor cash relates and the amounts and dates of the payments to be made. ARTICLE VII INDEMNIFICATION Section 7.1 INDEMNIFICATION OF AXIUM AND BUYER. Subject to the limitations contained in this Article VII, Seller and CHC, jointly and severally, agree to indemnify, defend and hold harmless Axium and Buyer and their respective directors, officers, stockholders, Affiliates, partners, employees, consultants, successors and assigns from and against any and all indebtedness, liabilities, claims, losses, damages, deficiencies or responsibilities, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise (including punitive or exemplary damages and fines or penalties and any interest thereon), expenses (including reasonable fees and disbursements of counsel and expenses of investigation and defense), liens or other obligations of any nature whatsoever (hereinafter individually, a "Loss" and collectively, "LOSSES") which, directly or indirectly, arise out of, result from or relate to: (a) any inaccuracy in or any breach of any representation and warranty, or any breach of any covenant or agreement, of Seller or CHC contained in this Agreement or in any document or other papers delivered pursuant to this Agreement, provided that a claim for indemnity is asserted on or before the expiration of six (6) months after the Closing Date, provided that the indemnification liability of Seller and CHC to Axium and Buyer under this Article VII shall not exceed the aggregate amount of eight million dollars ($8,000,000) and that neither Axium nor Buyer shall make any claim for indemnification by Seller and CHC until the total claims for indemnification of Axium or Buyer are at least two hundred fifty thousand dollars ($250,000); and (b) any claim for indemnification, or any litigation whether listed on the litigation schedule or not, by Hewlett-Packard Company, or its affiliates or subsidiaries, for any Loss which arises out of, results from or relates to occurrences prior to or at the Closing Date. Section 7.2 INDEMNIFICATION OF CHC AND SELLER. Subject to the limitations contained in this Article VII, both Axium and Buyer, jointly and severally, agree to indemnify, defend and hold harmless Seller and CHC from and against any and all Losses which, directly or indirectly, arise out of, result from or relate to any inaccuracy in or any breach of any representation and warranty, or any breach of any covenant or agreement, of Axium or Buyer contained in this Agreement or in any documents or other papers delivered pursuant to this Agreement, PROVIDED that a claim for indemnity is asserted on or before the expiration of six (6) months after the Closing Date, provided that the indemnification liability of Axium and Buyer to Seller and CHC under this Article VII shall not exceed the aggregate amount of eight million dollars ($8,000,000) and that neither Seller nor CHC shall make any claim for indemnification by Axium and Buyer until the total claims for indemnification of Seller or CHC are at least two hundred fifty thousand dollars ($250,000). Section 7.3 METHOD OF ASSERTING CLAIMS. The party making a claim under this Article VII is referred to as the "INDEMNIFIED PARTY" and the party against whom such claims are asserted under this Article VII is referred to as the "INDEMNIFYING PARTY." All claims by any Indemnified Party under this Article VII shall be asserted and resolved as follows: 26  (a) In the event that any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party hereunder is asserted against or sought to be collected from such Indemnified Party by a third party, said Indemnified Party shall with reasonable promptness, but in no event later than thirty (30) days after knowledge of the claim or demand, notify in writing the Indemnifying Party of such claim or demand, specifying the basis for such claim or demand, and the amount or the estimated amount thereof to the extent then determinable (which estimate shall not be conclusive of the final amount of such claim and demand; the "Claim Notice"); provided, however, that any failure to give such Claim Notice will not be deemed a waiver of any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced by such failure. The Indemnifying Party, upon request of the Indemnified Party, shall retain counsel (who shall be reasonably acceptable to the Indemnified Party) to represent the Indemnified Party and shall pay the reasonable fees and disbursements of such counsel with regard thereto, provided, however, that any Indemnified Party is hereby authorized prior to the date on which it receives written notice from the Indemnifying Party designating such counsel, to retain counsel, whose reasonable fees and expenses shall be at the expense of the Indemnifying Party, to file any motion, answer or other pleading and take such other action which it reasonably shall deem necessary to protect its interests or those of the Indemnifying Party until the date on which the Indemnified Party receives such notice from the Indemnifying Party. After the Indemnifying Party shall retain such counsel, the Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (x) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (y) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Indemnifying Party shall not, in connection with any proceedings or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one such firm for the Indemnified Party (except to the extent the Indemnified Party retained counsel to protect its (or the Indemnifying Party's) rights prior to the selection of counsel by the Indemnifying Party.) If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any claim or demand which the Indemnifying Party defends. A claim or demand may not be settled by the Indemnifying Party without the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld) unless, as part of such settlement, the Indemnified Party shall receive a full and unconditional release reasonably satisfactory to the Indemnified Party. (b) In the event any Indemnified Party shall have a claim against any Indemnifying Party hereunder which does not involve a claim or demand being asserted against or sought to be collected from it by a third party, the Indemnified Party shall send a Claim Notice with respect to such claim to the Indemnifying Party. (c) After delivery of a Claim Notice, so long as any right to indemnification exists pursuant to this Article VII, the affected parties each agree to retain all Books and Records related to such Claim Notice. In each instance, the Indemnified Party shall have the right to be kept fully informed by the Indemnifying Party and its legal counsel with respect to any legal proceedings. Any information or documents made available to any party hereunder and designated as confidential by the party providing such information or 27  documents and which is not otherwise generally available to the public and not already within the knowledge of the party to whom the information is provided (unless otherwise covered by the confidentiality provision of any other agreement among the parties hereto, or any of them), and except as may be required by applicable law, shall not be disclosed to any third Person (except for the representatives of the party being provided with information, in which event the party being provided with the information shall request its representatives not to disclose any such information which it otherwise required hereunder to be kept confidential). Section 7.4 EXCLUSIVE REMEDY. Except for fraud, willful or intentional misrepresentation or willful or intentional breach of warranty, covenant or agreement, the indemnification provided in this Article VII shall be the sole and exclusive post-Closing remedy available to any party against any other party for any claim arising out of any breach of a representation, warranty or covenant made pursuant to this Agreement. ARTICLE VIII TERMINATION OF AGREEMENT Section 8.1 TERMINATION. At any time prior to the Closing, this Agreement may be terminated: (a) by mutual written consent of all of the parties to this Agreement; and (b) by any of Buyer, Seller or CHC, provided such party has not previously been declared in default hereunder, pursuant to written notice to the other parties hereto, if the Closing shall not have occurred by March 18, 2007 or by such later date as may be mutually agreed upon by the parties; and (c) by any of Buyer, Seller or CHC if there shall be in effect a final non-appealable court order restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated hereby; and (d) by Buyer, provided neither Seller nor CHC has previously declared Buyer in default hereunder and terminated this Agreement pursuant to SECTION 8.L(E) hereof, pursuant to written notice to Seller, if Seller or CHC breaches any of their respective material representations, warranties, covenants or agreements contained herein and, if such breach is curable, such breach is not cured within five (5) business days after written notice thereof; and (e) by Seller or CHC, provided neither Buyer nor Axium has previously declared Seller or CHC in default hereunder and terminated this Agreement pursuant to SECTION 8.1(D) hereof, pursuant to written notice to Buyer, if Buyer or Axium breaches any of its material representations, warranties, covenants or agreements contained herein, and if such breach is curable, such breach is not cured within five (5) business days after written notice thereof; and (f) by CHC or Seller, if the CHC Board shall have withdrawn or modified in a manner adverse to Buyer the approval or recommendation of this Agreement and the Transaction in accordance with SECTION 5.10 of this Agreement, but only (i) after providing written notice to Buyer (a "NOTICE OF SUPERIOR OFFER") advising Buyer that the CHC Board has received a Superior Offer, 28  specifying the material terms and conditions of such Superior Offer in reasonable detail and identifying the person making such Superior Offer, and (ii) if Buyer does not, within five (5) business days of Buyer's receipt of the Notice of Superior Offer, make an offer that the CHC Board determines, in its good faith judgment (after consultation with its advisors), to be at least as favorable to CHC's shareholders as the Superior Offer; PROVIDED that during such five (5) business day period, CHC shall negotiate in good faith with Buyer (to the extent Buyer wishes to negotiate) to enable Buyer to make such an offer; PROVIDED FURTHER, that Buyer acknowledges and agrees that concurrently with such termination CHC may enter into a definitive agreement providing for implementation of such Superior Offer. Section 8.2 EFFECT OF TERMINATION. All obligations of the parties hereunder shall cease upon any termination pursuant to SECTION 8.1 (the date such termination occurs, a "TERMINATION DATE"), PROVIDED, HOWEVER, that the provisions of Article VII, this Article VIII and Section 5.3, Section 9.4, Section 9.5, and Section 9.10 hereof shall survive any termination of this Agreement and nothing herein shall relieve any party from any liability for a material error or omission in any of its representations or warranties contained herein or a material failure to comply with any of its covenants, conditions, or agreements contained herein. Section 8.3 TERMINATION PAYMENT. CHC and Seller, jointly and severally, agree that in order to compensate Buyer for the direct and substantial expense and damages suffered by Buyer in the event of termination of this Agreement under certain circumstances, which damages cannot be determined with reasonable certainty, CHC and Seller shall pay to Buyer an amount equal to four million dollars ($4,000,000) (the "TERMINATION PAYMENT") if Seller or CHC terminates this Agreement pursuant to Section 8.1(f) hereof. Section 8.4 EXPENSES. (a) Except as otherwise set forth in this Section 8.4, all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such Expenses, whether or not the transactions contemplated hereby are consummated. As used in this Agreement, the term "EXPENSES" shall mean all reasonable out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financing sources, experts and consultants to a party hereto and its affiliates) incurred by a party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution and performance of this Agreement, the preparation, printing, filing and mailing of the Proxy Statement, the solicitation of shareholder approvals and all other matters related to the closing of the transactions contemplated by this Agreement. Buyer and Axium, on the one hand, and Seller and CHC, on the other hand, shall each pay one-half of the total filing fees in connection with the filing by Buyer and Axium and Seller and CHC under the HSR Act. (b) If this Agreement shall be terminated: (i) by Buyer pursuant to Section 8.1(d), Seller and CHC shall pay the reasonably documented Expenses of Buyer and Axium up to a maximum amount of $250,000, and 29  (ii) by Seller or CHC pursuant to Section 8.1(e), Buyer and Axium shall pay the reasonably documented Expenses of Seller and CHC up to a maximum amount of $250,000. Section 8.5 PAYMENT. Amounts payable in accordance with Section 8.3 or Section 8.4(b) shall be paid in immediately available funds within two business days after receipt by the party obligated to pay of a written demand for, and reasonable documentation with respect to, such Expenses. Section 8.6 WAIVER. Seller and CHC may extend the time for the performance of any of the obligations or other acts of Buyer or Axium hereunder, waive any inaccuracies in the representations and warranties of Buyer or Axium contained herein or in any document delivered pursuant hereto, or waive compliance by Buyer or Axium with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by Seller and CHC. Axium or Buyer may extend the time for the performance of any of the obligations or other acts of Seller or CHC hereunder, waive any inaccuracies in the representations and warranties of Seller or CHC contained herein or in any document delivered pursuant hereto, or waive compliance by Seller or CHC with any of the agreements or conditions contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by Buyer and Axium. ARTICLE IX MISCELLANEOUS Section 9.1 NOTICES. All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given when (i) delivered personally or by facsimile transmission (and a copy is mailed by regular mail within 24 hours of such transmission), in either case with receipt acknowledged, (ii) three business days after being sent by registered or certified mail, return receipt requested, or (iii) one business day after being sent by prepaid overnight carrier, with a record of receipt, to the parties at the following addresses: (a) If to Buyer or Axium to: Axium International, Inc. 5800 Wilshire Boulevard Los Angeles, California 90036 Facsimile: 323 ###-###-#### Attention: John Visconti and Ronald D. Garber with a copy (which shall not constitute notice) to: Alschuler, Grossman, Stein & Kahan LLP 1620 26th Street North Tower Fourth Floor Santa Monica, California 90404 Facsimile: 310 ###-###-#### Attention: Louis R. Dienes, Esq. 30  (b) If to Seller or CHC to: Computer Horizons Corp. 49 Old Bloomfield Avenue Mountain Lakes, NJ 07046-1495 Facsimile: 973 ###-###-#### Attention: Dennis J. Conroy with a copy (which shall not constitute notice) to: Olshan Grundman Frome Rosenzweig & Wolosky LLP Park Avenue Tower 65 East 55th Street New York, New York 10022 Facsimile: (212) 451-2222 Attention: Steven Wolosky, Esq. or to such other address as any party shall have specified by notice in writing to the other in compliance with this SECTION 9.1. Section 9.2 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits attached hereto, the Buyer Agreements and the Seller Agreements constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersedes all prior agreements, representations and understandings among the parties hereto. Section 9.3 BINDING EFFECT, BENEFITS, ASSIGNMENTS. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns; nothing in this Agreement, expressed or implied, is intended to confer on any other person, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. This Agreement may not be assigned without the prior written consent of the other parties hereto. Section 9.4 APPLICABLE LAW. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of law rules of such state. Section 9.5 JURISDICTION. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any New York state court or federal court sitting in the State of New York for the Southern District of New York over any action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby and each of the parties hereto hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York state or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent legally possible, the defense of an inconvenient forum to the maintenance of such action or proceeding. Each of the parties hereto irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to such party at its address set forth in this Agreement. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. 31  Section 9.6 FURTHER ASSURANCES. At, and from time to time after the date hereof, at the request and expense of Buyer but without further consideration, Seller will execute and deliver such other instruments of conveyance, assignment, transfer, and delivery and take such other action as Buyer reasonably may request in order more effectively to convey, transfer, assign and deliver to Buyer, and to place Buyer in possession and control of, any of the rights, properties, assets and business constituting part of the Property, or to assist in the collection or reduction to possession of any and all of such rights, properties, and assets or to enable Buyer to exercise and enjoy all rights and benefits of Seller with respect to the Property. Section 9.7 COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Section 9.8 HEADINGS. The headings used herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. Section 9.9 SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by virtue of any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the maximum extent possible. Section 9.10 PUBLICITY AND DISCLOSURES. From the date hereof to the first to occur of a Termination Date or the Closing, and except as and to the extent required by Law, without the prior written consent of the other parties hereto (which consent shall not be unreasonably withheld), none of Buyer, CHC, Seller or Axium shall, and each shall direct its Representatives not to, directly or indirectly, make any public comment, statement, or communication with respect to, or otherwise disclose or permit the disclosure of the existence of discussions regarding a possible transaction between the parties hereto or any of the terms, conditions or other aspects of the transactions contemplated by this Agreement or any confidential information, except that such comments, statements, communications and disclosures may be made (a) by each of Axium, Buyer, CHC and Seller to such of their Representatives as need to know such information for the purpose of evaluating or otherwise effecting the transactions contemplated by this Agreement, (b) by CHC and Seller to their employees in connection with the Closing, and (c) by each of Axium, Buyer, CHC and Seller if it is required to do so by applicable securities laws, PROVIDED, that Axium and Buyer shall notify Seller in advance of any such disclosure. If a party hereto is required by law to make any such disclosure, it shall provide to the other parties the content of the proposed disclosure, the reasons that such disclosure is required by law and the time and place that such disclosure will be made. Section 9.11 AMENDMENT. This Agreement may be amended, supplemented or modified only by a written instrument duly executed by each party hereto. 32  Section 9.12 KNOWLEDGE OF SELLER OR CHC. Any reference to the words "knowledge of Seller", "knowledge of CHC", "knowledge of Seller or CHC" or similar words means the knowledge, after due inquiry, of the persons named in and acting in such capacities described on SCHEDULE 9.12 or any of his or her direct reports or any person who is deemed to have primary functional responsibility for the area in question. [Remainder of page intentionally left blank.] 33  IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year hereinabove first set forth. BUYER: DIVERSITY MSP, INC. By: /s/ Ronald D. Garber ----------------------------------------- Name: Ronald D. Garber Title: Chief Operating Officer AXIUM: AXIUM INTERNATIONAL, INC. By: /s/ John Visconti ----------------------------------------- Name: John Visconti Title: Chairman and Chief Executive Officer SELLER: CHIMES, INC. By: /s/ Dennis J. Conroy ----------------------------------------- Name: Dennis J. Conroy Title: Chairman CHC: COMPUTER HORIZONS CORP. By: /s/ Dennis J. Conroy ----------------------------------------- Name: Dennis J. Conroy Title: President and CEO