STOCKPURCHASE AGREEMENT AMONG STEVENMADDEN, LTD., DOLCEVITA HOLDINGS, INC., EVANGELOSC. LAMPROU AND MANUELN. LUCIO August13, 2014

                (b)              Cash to the Shareholders. At the Closing, Buyer shall deliver to the Shareholders an amount equal to Sixty Million Three Hundred Thousand Dollars ($60,300,000), plus (ii) the Estimated Closing Cash, plus (iii) the Estimated Net Working Capital Adjustment Amount, minus (iii) the Escrow Amount, minus (iv) any amounts paid by Buyer directly to the holders of Funded Indebtedness pursuant to Section 2.5 of this Agreement, minus (v) the Transaction Expenses of the Company.

                (c)               Payment of Adjustment Amount. On or before the tenth (10th) Business Day following the determination of the Final Closing Balance Sheet, (A) either (i) Buyer shall deliver to the Shareholders the amount, if any, by which the Net Working Capital Adjustment Amount as reflected on the Final Closing Balance Sheet is greater than the Estimated Net Working Capital Adjustment Amount set forth on the Estimated Closing Balance Sheet or (ii) the Shareholders shall deliver to Buyer the amount, if any, by which the Net Working Capital Adjustment Amount is less than the Estimated Net Working Capital Adjustment Amount and (B) either (i) Buyer shall deliver to the Shareholders the amount, if any, by which the Closing Cash as reflected on the Final Closing Balance Sheet (the “Final Closing Cash”) is greater than the Closing Cash set forth on the Estimated Closing Balance Sheet (the “Estimated Closing Cash”), or (ii) the Shareholders shall deliver to Buyer the amount, if any, by which the Final Closing Cash is less than the Estimated Closing Cash. Illustrative examples of the determination of the amounts described in clause (A) in this Section 2.2(c) are set forth on Exhibit 2.2(c) hereto.

                (d)              Earn-Out. Buyer shall pay to the Shareholders additional consideration in cash as described herein (the “Earn-Out,” with the payment made pursuant to the Earn-Out being the “Earn-Out Payment”), in accordance with the following:

                   (i)           The Shareholders shall receive an Earn-Out Payment from Buyer in an amount of fifty percent (50%) of the EBITDA of the Company during each of (1) the period commencing on October 1, 2014 and ending on September 30, 2015 (the “First Earn-Out Year”) and (2) the period commencing on October 1, 2015 and ending on September 30, 2016 (the “Second Earn-Out Year” and together with the First Earn-Out Year, the “Earn-Out Period”).

                   (ii)          Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate Earn-Out Payment for the Earn-Out Period be less than Five Million Dollars ($5,000,000) (the “Minimum Earn-Out Amount”). If the amount of the Final First Earn-Out Year Payment (as defined below) is less than the Minimum Earn-Out Amount, then such difference, less any amounts withheld in connection with any Unresolved Claims, shall be paid to the Shareholders by wire transfer of immediately available funds on October 1, 2016. If the aggregate amount of the Earn-Out Payment for the Earn-Out Period as finally determined hereunder is greater than the Minimum Earn-Out Amount, then such difference, less any amounts withheld in connection with any Unresolved Claims, shall be paid to the Shareholders in accordance with the terms of this Section 2.2(d).

                   (iii)          For each of the First Earn-Out Year and the Second Earn-Out Year, Buyer shall prepare and complete a calculation of the Earn-Out Payment for the applicable Earn-Out Year based on the EBITDA for the Company during such Earn-Out Year calculated in accordance with GAAP, applied on a consistent basis with the Company’s past practices as of the Closing Date. Buyer shall deliver the calculation of the Earn-Out Payment for the applicable Earn-Out Year, along with reasonable supporting documentation, to the Shareholders within forty-five (45) days after the end of the applicable Earn-Out Year.

During the period following delivery by the Buyer of the calculation of the Earn-Out Payment for the applicable Earn-Out Year until the final determination of the Earn-Out Payment for such Earn-Out Year in accordance with the terms of this Agreement, the Shareholders, after providing at least two (2) Business Days’ advanced notice to Buyer, shall have reasonable access to the books and records (including financial statements) of the Business, to the extent necessary, to the Facilities and employees of the Business and to Buyer’s accountant’s work papers during regular business hours to review the computation of EBITDA for the applicable Earn-Out Year. Buyer’s calculation of the Earn-Out Payment for each Earn-Out Year shall be deemed conclusive and binding on the Parties for purposes of computing the Earn-Out Payment, unless the Shareholders notify Buyer in writing within forty-five (45) days after receipt of any such calculation of the disagreement therewith by the Shareholders. Any such notice of dispute shall state in reasonable detail the reasons for any such disagreement and identify the amounts and items in dispute. Buyer and the Shareholders will use reasonable efforts to resolve any such disagreements themselves. If Buyer and the Shareholders are unable to resolve any such disagreement within thirty (30) days of receipt of notice of the Shareholders’ disagreement, then such dispute shall be resolved in a manner consistent with the procedures set forth in Section 2.4(f). If the Shareholders fail to provide written notice of a disagreement with Buyer’s calculation of any such Earn-Out Payment to Buyer within such forty-five (45) day period or if the Shareholders indicate in writing that the Shareholders have no dispute with respect to the calculation of such Earn-Out Payment prior to the expiration of such forty-five (45) day period, then Buyer shall make such Earn-Out Payment, less any portion of the Earn-Out Payment previously paid and less any amounts withheld in connection with any Unresolved Claims, within fifteen (15) days after the earlier of Buyer’s receipt of notice from the Shareholders that the Shareholders have no dispute with respect to the calculation of such Earn-Out Payment or the expiration of the forty-five (45) day period during which the Shareholders are required to provide such written notice pursuant to this Section 2.2(d).

                (a)              Balance Sheet. As used in this Agreement, “Balance Sheet” shall mean a schedule in the form of a consolidated balance sheet of the Company and its Subsidiaries as of the Effective Time showing the net book values, as of a specified time, of the respective categories of assets and liabilities set forth on Schedule 2.4. Each Balance Sheet shall be prepared in accordance with generally accepted accounting principles in the United States, applied on a consistent basis (“GAAP”) using the same accounting methods, policies, principles, practices and procedures, with consistent classifications, judgments and estimation methodology as were used in the preparation of the Recent Balance Sheet and the principles set forth on Exhibit 2.4(a) (collectively, the “Accounting Principles”), shall be accompanied by schedules setting forth in reasonable detail all assets and liabilities included therein and shall not include any changes in assets or liabilities as a result of purchase accounting adjustments or other changes arising from or resulting as a consequence of the transactions contemplated hereby. Without limitation, for purposes of preparing the Preliminary Closing Balance Sheet, the Company shall complete a physical inventory as of the Effective Time, and Buyer and the Shareholders shall have the right to monitor and/or participate in such physical inventory.

                (b)              Estimated Closing Balance Sheet. Not less than three (3) Business Days prior to the Closing Date, the Company and the Shareholders shall, in consultation with Buyer, prepare, or cause to be prepared, and deliver to Buyer a Balance Sheet as of the Effective Time, which shall represent the Company’s and the Shareholders’ reasonable estimate of (i) Net Working Capital as of the Effective Time and (ii) Closing Cash, which estimates shall be reasonably acceptable to Buyer. The estimated balance sheet as delivered by the Company and the Shareholders and reasonably acceptable to Buyer pursuant to this Section 2.4(b) is referred to as the “Estimated Closing Balance Sheet”. In connection with the determination of the Estimated Closing Balance Sheet, the Company and the Shareholders shall provide Buyer with such information and detail as Buyer reasonably requests.

                (c)               Preliminary Closing Balance Sheet. As promptly as possible, but in any event within forty-five (45) days after the Closing, Buyer and the Company shall prepare, or cause to be prepared, and deliver to the Shareholders a Balance Sheet as of the Effective Time (the “Preliminary Closing Balance Sheet”). The Preliminary Closing Balance Sheet shall set forth (i) the amount of the Net Working Capital as of the Effective Time, (ii) the amount of Closing Cash and (iii) the amount of any adjustment to the Purchase Price to be paid and by whom pursuant to Section 2.2(c).

                (d)              Objection to Preliminary Closing Balance Sheet. After the Preliminary Closing Balance Sheet is delivered to the Shareholders pursuant to Section 2.4(b), the Shareholders shall have thirty (30) days to review and respond to it in accordance with this Section 2.4(d). If the Shareholders determine that the Preliminary Closing Balance Sheet has not been prepared in accordance with Section 2.4(a) or Section 2.4(b), then the Shareholders shall inform Buyer on or before the last day of such thirty (30) day period by delivering written notice to Buyer (the “Balance Sheet Objection”) which shall (i) set forth a reasonable description of the basis of the Balance Sheet Objection and the adjustments to the Preliminary Closing Balance Sheet that the Shareholders believe should be made and (ii) only include objections based on mathematical errors or based on the Preliminary Closing Balance Sheet not being prepared in accordance with Section 2.4(a) or Section 2.4(b). If no Balance Sheet Objection is delivered to Buyer within such thirty (30) day period, then the Shareholders shall be deemed to have accepted the Preliminary Closing Balance Sheet.

                (e)              Response to Balance Sheet Objection. If a Balance Sheet Objection is delivered to Buyer pursuant to Section 2.4(d), then Buyer shall have thirty (30) days to review and respond to the Balance Sheet Objection by delivering written notice to the Shareholders setting forth a reasonable description of the scope of its disagreement with the information contained in it. If no such written notice is delivered to the Shareholders within such thirty (30) day period, then Buyer shall be deemed to have accepted the Balance Sheet Objection.

                (f)               Dispute Resolution Following Objection.

                   (i)            Negotiation. If Buyer delivers a written notice to the Shareholders in response to a Balance Sheet Objection pursuant to Section 2.4(e), then Buyer and the Shareholders shall promptly meet (in person, by telephone or otherwise) and attempt in good faith to resolve any dispute or disagreement relating to the Preliminary Closing Balance Sheet, the calculation of Net Working Capital as of the Effective Time and the calculation of Closing Cash (the “Balance Sheet Dispute”).

                   (ii)           Resolution by CPA Firm. If Buyer and the Shareholders are unable to resolve the Balance Sheet Dispute within thirty (30) days following the delivery of a Balance Sheet Objection to Buyer, then, at any time thereafter, Buyer or the Shareholders may elect to have the Balance Sheet Dispute resolved by KPMG, provided, that, (i) if at such time either the Shareholders or Buyer shall discover a bona fide conflict with respect to KMPG or (ii) if KPMG does not accept the engagement, then by another independent nationally recognized accounting firm as to which Buyer and the Shareholders mutually agree (the “CPA Firm”), which shall make a final determination of Closing Cash and Net Working Capital calculated with reference to such amounts to the extent such amounts are in the Balance Sheet Dispute in accordance with the guidelines and procedures set forth on Exhibit 2.4(f).

                (a)              Organization. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington.

                (b)              Corporate Power. The Company has all requisite corporate power and authority to own, operate and lease its assets, to carry on its business as and where such is currently conducted, and to execute and deliver this Agreement and the other documents and instruments to be executed and delivered by the Company pursuant hereto and to carry out the transactions contemplated hereby and thereby.

                (c)              Qualification. The Company is duly licensed or qualified to do business as a foreign corporation, and is in good standing, in each jurisdiction in which the character of the assets owned or leased by it, or the nature of its business, makes such licensing or qualification necessary, except for jurisdictions wherein the failure to be so qualified would not have a Material Adverse Effect. Schedule 3.1(c) sets forth a correct and complete list of the jurisdictions in which the Company is duly licensed or qualified to do business as a foreign corporation.

                (d)              Subsidiaries. Schedule 3.1(d) contains a correct and complete list of the name, jurisdiction of incorporation or organization, capitalization and ownership of each corporation, limited liability company, partnership or other entity of which capital stock or other equity or ownership securities are directly or indirectly owned by the Company (collectively, the “Subsidiaries”). Except as set forth in Schedule 3.1(d), the Company does not directly or indirectly own any capital stock or other equity or ownership securities of any corporation, limited liability company, partnership or other entity. Except as set forth in Schedule 3.1(d), no Person or entity other than the Company directly or indirectly owns any capital stock or other equity or ownership securities of any Subsidiary. All outstanding capital stock and other equity or ownership securities of each Subsidiary are held free and clear of any Liens, other than any transfer restrictions imposed pursuant to federal or state securities laws, and are legally and validly issued, fully paid and non-assessable. There are no (i) securities convertible into or exchangeable for the capital stock or other equity or ownership securities of any Subsidiary; (ii) options, warrants or other rights to purchase or subscribe to capital stock or other equity or ownership securities of any Subsidiary or securities that are convertible into or exchangeable for capital stock or other equity or ownership securities of any Subsidiary; or (iii) Contracts relating to the issuance, sale or transfer of any capital stock or other equity or ownership securities of any Subsidiary, any such convertible or exchangeable securities or any such options, warrants or other rights. Each Subsidiary (A) is a corporation, limited liability company, partnership or other entity duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, (B) has full corporate or other power and authority to carry on its business as it is now being conducted and to own and lease the properties and assets it now owns and leases and (C) is in good standing and is duly qualified or licensed to do business as a foreign corporation or other entity in each jurisdiction wherein the character of the properties owned by it, or the nature of its business, makes such licensing or qualification necessary, except for jurisdictions wherein the failure to be so qualified would not have a Material Adverse Effect.

                (e)              Directors and Officers. Set forth in Schedule 3.1(e) is a correct and complete list of the directors and officers of the Company.

                (f)               Capitalization. The authorized capital stock of the Company consists entirely of 10,000,000 shares of common stock, 8,000,000 of which are Class A Voting Common Stock, no par value and 2,000,000 of which are Class B Non-Voting Common Stock, no par value. No shares of such capital stock are issued or outstanding except for 6,000,000 shares of Class A Voting Common Stock of the Company, 3,000,000 of which are owned of record and beneficially by Evangelos C. Lamprou and 3,000,000 of which are owned of record and beneficially by Manuel N. Lucio. All Shares are validly issued, fully paid and nonassessable. There are no (i) securities convertible into or exchangeable for any capital stock or other securities of the Company, (ii) options, warrants or other rights to purchase or subscribe to capital stock or other securities of the Company or securities that are convertible into or exchangeable for capital stock or other securities of the Company or (iii) Contracts relating to the issuance, sale or transfer of any capital stock or other securities of the Company, any such convertible or exchangeable securities or any such options, warrants or other rights.

                (a)              Included as Schedule 3.5 are financial statements of the Company (collectively, the “Financial Statements”) consisting of (i) the audited financial statements (including the consolidated balance sheets and consolidated statements of earnings, shareholders’ equity and cash flows) of the Company for each of the fiscal years ended December 31, 2011, December 31, 2012 and December 31, 2013 (including the notes contained therein or annexed thereto), which financial statements have been reported on, and are accompanied by, the signed, unqualified opinions of Moss Adams LLP with respect to the fiscal year ended December 31, 2013, and Clothier & Head P.S., with respect to the fiscal years ended December 31, 2012 and December 31, 2011, independent accountants for the Company for such years, and (ii) an unaudited balance sheet of the Company as of June 30, 2014 (the “Recent Balance Sheet”), and the related unaudited statements of earnings, shareholders’ equity and cash flows for the six (6) months then ended. The Financial Statements (A) have been prepared in accordance with GAAP applied on a consistent basis with the Company’s past practices and the Accounting Policies; and (B) fairly present in all material respects the consolidated financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated; subject, in the case of the Recent Balance Sheet and the other unaudited statements, for the absence of footnote disclosure and the absence of year-end adjustments.

                (b)              Since January 1, 2011, the Company has no Knowledge of any fraud that involves management or employees of the Company or any of the Subsidiaries who have a significant role in the internal control over financial reporting of the Company or any of the Subsidiaries. Since January 1, 2011, neither the Company nor any of the Subsidiaries nor, to the Knowledge of the Company, any banking, financial or other outside advisors or independent accountants of the Company or any of the Subsidiaries has received any material complaint, allegation, assertion or claim in writing regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of the Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of the Subsidiaries has engaged in questionable or fraudulent accounting or auditing practices.

               (b)              The provision made for Taxes (excluding any provision for deferred Taxes established to reflect timing differences between book and Tax income) on the Recent Balance Sheet is sufficient for the payment of all material Taxes of the Company and each of its Subsidiaries at the date of the Recent Balance Sheet and for all years and periods prior thereto. Since the date of the Recent Balance Sheet, neither the Company nor any Subsidiary has incurred any Taxes other than Taxes incurred in the ordinary course of business consistent in type and amount with past practices of the Company and such Subsidiary. All Income Taxes and all other material Taxes of the Company and each of its Subsidiaries attributable to periods ending on or before the Closing Date will be paid prior to the Closing Date or included in a correct and complete liability accrual on the Final Closing Balance Sheet. The Company and each of its Subsidiaries has complied in all material respects with all applicable Laws relating to the withholding of Taxes and has, in the time and manner prescribed by applicable Law, paid to the proper Governmental Entity all material amounts required to be withheld and paid to such Governmental Entity in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party of the Company.

                (c)              All Income Tax Returns and all other material Tax Returns required to be filed by or on behalf of the Company and each of its Subsidiaries have been timely filed and, when filed, were correct and complete in all material respects. Neither the Company nor any of its Subsidiaries is currently the beneficiary of any extension of time within which to file any Tax Return.

                (d)              No Claim has ever been made in writing by any Governmental Entity in a jurisdiction in which the Company or any Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. The Tax Returns of the Company and its Subsidiaries that are under audit or have been audited by any Governmental Entity since January 1, 2009 are set forth in Schedule 3.6(d). Neither the Company nor any Subsidiary has received from any Governmental Entity any written notice of underpayment or assessment of Taxes or other deficiency that has not been paid or any objection to any Tax Return filed by the Company or any Subsidiary. There are no outstanding Contracts or waivers extending the statutory period of limitations applicable to any Tax Return of the Company or any Subsidiary, and none has been requested.

                (e)              Neither the Company nor any Subsidiary has ever been a member of an affiliated group of corporations that filed a combined, consolidated, or unitary Tax Return.

                (f)               The assets of the Company and the assets of each Subsidiary are not subject to any Liens for Taxes other than Permitted Liens.

                (g)              Neither the Company nor any Subsidiary has (i) applied for any Tax ruling or (ii) entered into a closing agreement as described in Section 7121 of the Code or otherwise (or any corresponding or similar provision of any state, municipal, county, local, foreign, supranational or other Tax Law) or any other Contract with any Governmental Entity.

                (h)              Neither the Company nor any Subsidiary has been a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355 of the Code) with respect to a transaction described in Section 355 of the Code.

                (i)               Neither the Company nor any Subsidiary has a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States and such foreign country.

                (j)               Neither the Company nor any Subsidiary has ever (i) been party to any Tax allocation, Tax sharing or Tax indemnification Contract or (ii) had any liability for the Taxes of any Person (A) as a transferee or successor, (B) by Contract (other than commercial lending arrangements and Contracts entered into in the ordinary course of business) or (C) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Law).

                (k)              Neither the Company nor any Subsidiary will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (i) installment sale or open transaction disposition made on or prior to the Closing Date, (ii) prepaid amount received on or prior to the Closing Date, (iii) any adjustment under Section 481 of the Code by reason of any change in accounting method made on or prior to the Closing Date, or (iv) any cancellation of indebtedness of the Company or any Subsidiary on or prior to the Closing Date. Neither the Company nor any Subsidiary will be required to include in income for a taxable period ending after the Closing Date income that accrued in a Pre-Closing Tax Period but was not recognized for Tax purposes in such prior taxable period as a result of the cash method of accounting.

                (a)              Material Adverse Effect. Any Material Adverse Effect.

                (b)              No Damage. Any material loss, damage or destruction, whether covered by insurance or not, relating to or affecting any assets material to the Business.

                (c)              No Increase in Compensation. Other than in the ordinary course of business consistent with past practice, any increase in the compensation, salaries, commissions or wages payable or to become payable to any employees or agents of the Company, including any bonus or other employee benefit granted, made or accrued in respect of such employees or agents, or any increase in the number of such employees or agents (including any such increase or change pursuant to any Employee Plan/Agreement or other commitment), in each case, other than in the ordinary course of business.

                (d)              No Increase in Affiliate Obligations. Any increase in the Company’s investment in, receivable from or payable to any Affiliate of the Company.

                (e)              No Disposition of Property. Any sale, lease, grant or other transfer or disposition of any material assets of the Company, except for the sale of Inventory items in the ordinary course of business consistent with past practice.

                (f)               No Material Acquisitions. Any merger or consolidation with, any acquisition of an interest in or any acquisition of a substantial portion of the assets or business, of any Person or entity other than acquisitions of Inventory or materials in the ordinary course of business.

                (g)              No Indebtedness. Any Funded Indebtedness incurred, assumed or guaranteed by the Company.

                (h)              No Amendment of Contracts, Rights. Except to the extent permitted or required by this Agreement, (i) any entering into, material amendment to or early termination of any Material Contract to which the Company is a party, in each case other than in the ordinary course of business consistent with past practice, (ii) any release or waiver of any material claims or rights under any Material Contract to which the Company or any Subsidiary is a party, or (iii) any renewal notice period or option period permitted to lapse with respect to any Material Contract or any notice of termination of any Contract, except for terminations of Material Contracts upon their expiration in accordance with their terms.

                (i)               Loans and Advances. Any loan or advance made by the Company to any Person or entity, other than advances for travel and entertainment made to the Company’s employees in the ordinary course of business consistent with past practice.

                (j)               Credit. Any grant of credit by the Company to any customer (including any distributor) of the Company on terms or in amounts more favorable in the aggregate than those that have been extended to such customer in the past, any other material change in the terms of any credit heretofore extended by the Company or any other material change of the Company’s policies or practices with respect to the granting of credit.

                (k)              Discharge of Obligations. Any discharge, satisfaction or agreement to satisfy or discharge any material Liability of the Company, other than the discharge or satisfaction of Funded Indebtedness or, in the ordinary course of business, of Current Liabilities reflected on the face of the Recent Balance Sheet and, in the ordinary course of business, of Current Liabilities incurred since the date of the Recent Balance Sheet.

                (l)               Settlement of Claims. Cancellation or compromise of any material debt or claim, except in the ordinary course of business consistent with past practices and which, in the aggregate, would not be material to the Company and the Subsidiaries.

                (m)             Accounting Principles. Any material change in the Company’s financial or Tax accounting principles or methods, except to the extent required by GAAP.

                (n)              Liens. Any material properties or assets (real, personal or mixed, tangible or intangible) of the Company subjected to any Liens, except for Permitted Liens.

                (o)              Employee Plans/Agreements. Any adoption or, except as required by Law, material amendment of any Employee Plans/Agreements, in each case, other than in the ordinary course of business.

                (p)              Employees. Any loss of the services of an employee whose annual salary exceeded Seventy-Five Thousand Dollars ($75,000).

                (q)               Commitments. Any entering into, amending or early termination of any Contract to take any of the actions specified in this Section 3.9, other than this Agreement and the transactions contemplated hereby.

                (a)              Laws and Orders. Except as set forth in Schedule 3.12(a), the Company (including its business and assets) is, and has been since January 1, 2010 in compliance in all material respects with all applicable Laws and Orders. Except as set forth in Schedule 3.12(a) or with respect to violations of any Laws that have not had a Material Adverse Effect, the Company has not received written notice of any violation or alleged violation of any Laws or Orders.

                (b)              Licenses and Permits. The Company has all licenses, permits, approvals, registrations, certifications, consents and listings of all Governmental Entities and of all certification organizations, and all exemptions from requirements to obtain or apply for any of the foregoing, necessary for the conduct of, or material to, the Business (as the Company currently conducts its business) and the operation of the Facilities (the “Material Licenses”), except for licenses, permits, approvals, registrations, certifications, consents and listings the absence of which would not have a Material Adverse Effect. True and correct copies of all such Material Licenses have been provided or made available to Buyer. The Material Licenses are in full force and effect. Neither the Company or any Subsidiary of the Company is in material default under any such Material License.

                (a)               Environmental Matters. Without limiting the generality of the foregoing provisions of this Section 3.12, except for past violations for which the Company is not subject to any current Liability and cannot become subject to any future Liability and except as set forth in Schedule 3.12(c), the Company (including its business and assets) is and has been since January 1, 2011 in compliance in all material respects with all Environmental Laws. Except as set forth in Schedule 3.12(c), there is no Litigation pending, or to the Company’s Knowledge, threatened or anticipated against the Company relating in any way to any Environmental Laws, nor to the Company’s Knowledge is any litigation pending or threatened against any third party for whom the Company may have retained or assumed by, or could be imputed or attributed to the Company relating in any way to any Environmental Laws. Except as set forth on Schedule 3.12(c), to the Company’s Knowledge there are no past or present events, conditions, circumstances, activities, practices, incidents, actions, omissions or plans that may (i) interfere with or prevent compliance or continued compliance by the Company with all Environmental Laws or (ii) give rise to any Liability, including Liability under the Comprehensive Environmental Response, Compensation, and Liability Act, as amended, or similar state, municipal, county, local, foreign, supranational or other Laws, or otherwise form the basis of any Litigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling, or the emission, discharge, release or threatened or anticipated release into the environment, of any Waste. To the extent they exist, true and correct copies of all environmental studies (including without limitation, Phase 1, and Phase 2 reports, and environmental compliance studies or audits), in the possession or reasonable control of the Company or Shareholders respecting property or operations currently or formerly owned or operated by the Company, or for which the Company is or has alleged to have Liability under any Environmental Laws, have been provided to the Buyer. To the Company’s Knowledge, (A) no portion of any of the Real Property has been used as a landfill or for storage or landfill of Waste, (B) no underground storage tanks have been present on any of the Real Property, (C) no transformers or capacitors containing polychlorinated biphenyls (PCBs) have been present on any of the Real Property and (D) no asbestos is contained in or forms a part of any building, building component, structure, office space or equipment owned, operated, leased, managed or controlled by the Company or located on the Real Property.

                (a)              Marketable Title. Except as set forth on Schedule 3.13(a), for Inventory or other assets sold or disposed of in the ordinary course of business since the date of the Recent Balance Sheet or as would not be material to the Business, the Company has good and marketable fee title to, or, in the case of leased or subleased assets, valid and subsisting leasehold interests in, all of the assets (tangible and intangible) used in the conduct of the Business, free and clear of all Liens, except, in the case of Permitted Liens.

                (b)              Condition. Except as set forth on Schedule 3.13(b), all tangible assets (real and personal) owned or utilized by the Company are in good operating condition and repair in all material respects (subject to normal wear and tear) and free from any defects (except for such defects as do not interfere with the use thereof in the conduct of the normal operations of the Business).

                (c)              Real Property. Schedule 3.13(c) sets forth a true and accurate description of all real property currently leased, licensed, subleased, or otherwise occupied by the Company and/or its Subsidiaries, as applicable (such real property currently leased, licensed, subleased, or otherwise occupied by the Company and/or its Subsidiaries, as applicable, shall be referred to as the “Real Property”). Neither the Company nor its Subsidiaries owns any real property. To the Company’s Knowledge, no Person or entity other than the Company and its Subsidiaries, as applicable, has any right or option to acquire or lease any portion of or interest in the Real Property, and neither Company nor any of its Subsidiaries has subleased all or any portion of the Real Property to any third party. Each of the Company’s or its applicable Subsidiary’s interests in the leased Real Property is free and clear of Liens, except for Permitted Liens. To the Company’s Knowledge, there is no violation or default (nor does there exist any condition which, with the passage of time or the giving of notice or both, would cause such a violation or default) by the Company or its Subsidiaries under any such lease for Real Property, except for such violations or defaults that would not have a Material Adverse Effect.  To the Company’s Knowledge, the Company has the right to use the Real Property for the purposes for which the Real Property is currently used, and the Company is using the Real Property in compliance in all material respects with applicable laws. To the Company’s Knowledge, with respect to any previously leased Real Property, the Company has paid all amounts owed to the landlords thereunder, including any termination fees, and has no other Liabilities associated therewith. To the Company’s Knowledge, all of the Real Property has rights of access to dedicated public highways or roads. To the Company’s Knowledge, no public improvements are pending or planned that may result in special assessments against or otherwise materially adversely affect any Real Property. The Company has no Knowledge of any Order requiring repair, alteration or correction of any existing condition affecting any Real Property or the systems or improvements thereat.

                (a)               Real Property Leases. The Company (whether as lessor or lessee) has no Contracts for the lease or occupancy of Real Property.

                (b)               Personal Property Leases. The Company (whether as lessor or lessee) has no Contracts for the lease or use of personal property involving any required remaining consideration, termination charge or other expenditure in excess of Fifty Thousand Dollars ($50,000) (or its foreign currency equivalent as of the date hereof) or which is otherwise material to the Business.

                (c)               Security Agreements. The Company has no mortgage agreements, deeds of trust, security agreements, purchase money agreements, conditional sales contracts or capital leases.

                (d)              Employment Agreements. The Company has no employment or similar agreement providing for compensation, severance or a fixed term of employment in respect of services performed by any employee of the Company requiring payments in excess of Fifty Thousand Dollars ($50,000) per year or One Hundred Thousand Dollars ($100,000) in the aggregate.

                (e)              Consulting Agreements. The Company has no management, consulting, independent contractor, subcontractor, retainer or other similar type of agreement under which services are provided by any Person to the Company requiring payments in excess of One Hundred Thousand Dollars ($100,000) per year or One Hundred Fifty Thousand Dollars ($150,000) in the aggregate.

                (f)               Purchase Commitments. The Company has no Contracts relating to the purchase of Inventory involving any required remaining consideration, termination charge or other expenditure in excess of Two Hundred Thousand Dollars ($200,000) (or its foreign currency equivalent as of the date hereof) to any one supplier or group of affiliated suppliers. The Company has no Contracts relating to the purchase of equipment, fixed assets or similar goods involving any remaining required consideration, termination charge or other expenditure on the part of the Company in excess of One Hundred Thousand Dollars ($100,000) (or its foreign currency equivalent as of the date hereof).

                (g)              Sales Commitments. The Company has no sales Contracts that aggregate in excess of Two Hundred Thousand Dollars ($200,000) (or its foreign currency equivalent as of the date hereof) to any one customer or group of affiliated customers.

                (h)              Manufacturing Agreements. The Company has no manufacturing, distribution or sourcing agreement or arrangement material to the Business.

                (i)               Powers of Attorney. The Company has not given a power of attorney or proxy that is currently in effect to any Person or entity.

                (j)               Affiliate Agreements. The Company has no agreements with Affiliates or with any entity in which an officer or director of the Company holds an interest.

                (k)              Joint Ventures. The Company has no partnership, joint venture or similar agreements.

                (l)               Collective Bargaining Agreements. The Company has no collective bargaining Contract with any unions or similar groups.

                (m)             Loan Agreements. The Company has no loan Contract, promissory note, letter of credit, performance or other type of bond or other evidence of indebtedness, including any Contract evidencing or relating to Funded Indebtedness, as a signatory, guarantor or otherwise.

                (n)              Guarantees. The Company has not guaranteed the payment or performance of any Person or entity (except under Contracts entered into by the Company in the ordinary course of business) or to act as a surety, or otherwise agreed to be contingently or secondarily liable for the obligations of any Person or entity.

                (o)              Indemnities. The Company has no agreements that obligate it to indemnify any employee, officer, director or agent of the Company (except under Contracts entered into by the Company in the ordinary course of business) or to indemnify any third party for amounts over One Hundred Thousand Dollars ($100,000).

                (p)              Agreements Relating to the Company Trade Rights. The Company has no consulting, development, joint development, license or similar Contract relating to, or any Contract requiring the assignment of any interest in, any material Company Trade Rights (other than software commercially available on shrinkwrap or other non-negotiated terms).

                (q)              Restrictive Agreements. The Company has no Contract (i) prohibiting or restricting the Company or any of its employees from competing in any business or geographical area, or soliciting customers or employees, or otherwise restricting it from carrying on any business anywhere in the world following the Closing, (ii) containing any “most favored nation,” “most favored customer” or similar provisions; (iii) granting any type of exclusive rights to any Person or entity or (iv) prohibiting or restricting the Company’s use of any of its Trade Rights.

                (r)               Other Material Contracts. The Company has no Contract of any nature (i) involving any required remaining consideration or other expenditure in excess of Two Hundred Thousand Dollars ($200,000) (or its foreign currency equivalent as of the date hereof) or (ii) that is otherwise individually material to the Business.

                (a)              Disclosure. Schedule 3.18(a) sets forth a correct and complete list of all material plans, programs, Contracts, policies and practices providing benefits to any current or former director, employee or independent contractor of the Company, or beneficiary or dependent thereof, sponsored or maintained by the Company, to which the Company has contributed, contributes or is obligated to contribute, or under which the Company has or is reasonably expected to have any Liability, including any pension, thrift, savings, profit sharing, retirement, bonus, incentive, health, dental, death, accident, disability, stock purchase, stock option, stock appreciation, stock bonus, executive or deferred compensation, hospitalization, severance, vacation, sick leave, fringe or welfare benefits, employment or consulting Contracts, “golden parachutes,” collective bargaining agreements, “employee benefit plans” (as defined in Section 3(3) of ERISA), employee manuals, and written or binding oral statements of policies, practices or understandings relating to employment (collectively, the “Employee Plans/Agreements”). No Employee Plan/Agreement is a “multiemployer plan” (as defined in Section 4001 of ERISA), and neither the Company nor any ERISA Affiliate has ever contributed nor been obligated to contribute to any such multiemployer plan.

                (b)              Delivery of Documents. The Company has delivered or has made available to Buyer correct and complete copies of the following information with respect to each Employee Plan/Agreement:

                   (i)           the Employee Plan/Agreement, including all amendments, or, if there is not a written plan document, a written summary of the material terms and conditions of the Employee Plan/Agreement;

                   (ii)          the annual report, if required under ERISA, with respect to the Employee Plan/Agreement for each of the previous two (2) plan years;

                   (iii)         the summary plan description, together with each summary of material modifications, if required under ERISA, with respect to the Employee Plan/Agreement;

                   (iv)         if the Employee Plan/Agreement is funded through insurance or a trust, insurance or any third party funding vehicle, the trust contract, insurance policy or other funding agreement and the latest financial statements thereof; and

                   (i)            no such plan has been terminated so as to subject any of the Company’s assets to any Liability or the imposition of any Lien under Title IV of ERISA;

                   (ii)           no proceeding has been initiated or threatened by any Person or entity (including the Pension Benefit Guaranty Corporation) to terminate any such plan;

                   (iii)          no condition or event currently exists or is reasonably expected to occur that would subject any of the Company’s assets to any material Liability or the imposition of any Lien under Title IV of ERISA, whether to the Pension Benefit Guaranty Corporation or to any other Person or entity or otherwise on account of the termination of any such plan;

                   (iv)         no “reportable event” (as defined in Section 4043 of ERISA) has occurred with respect to such plan during the past six (6) years for which any (A) applicable notice was not provided, or (B) notice period has expired;

                   (v)          no such plan is a plan described in Section 4063 or 4064 of ERISA or Section 413(c) of the Code; and

                   (vi)         with respect to any multiemployer plan within the meaning of Section 3(37) or 4001(a)(3) of ERISA, the foregoing representations of this Section 3.18(c) are limited to the Company’s Knowledge.

                (d)              Prohibited Transactions. Neither the Company nor any employee or director of the Company, or, to the Company’s Knowledge, any other “disqualified person” (as defined in Section 4975 of the Code) or any other “party in interest” (as defined in Section 3(14) of ERISA) has engaged in, or been a party to, any “prohibited transaction” (within the meaning of Section 4975 of the Code or Section 406 or 407 of ERISA) for which a statutory, regulatory, or administrative exemption does not apply or for which a correction has not been made in full.

                (e)              Full Funding. Except as would not reasonably be likely to have a Material Adverse Effect, the funds available under each Employee Plan/Agreement that is intended to be qualified under Section 401(a) of the Code exceed the amounts required to be paid, or that would be required to be paid if such Employee Plan/Agreement were terminated, on account of rights vested or accrued as of the Closing Date (using the actuarial methods and assumptions then used by the Company’s actuaries in connection with the funding of such Employee Plan/Agreement).

                (f)               Controlled Group; Affiliated Service Group. Other than the Company and its Subsidiaries, the Company is not and never has been a member of a controlled group of corporations (as defined in Section 414(b) of the Code), under common control with any unincorporated trade or business (as determined under Section 414(c) of the Code) or a member of an “affiliated service group” (within the meaning of Section 414(m) of the Code).

                (g)              Payments and Compliance. With respect to each Employee Plan/Agreement: (i) the Company has complied in all material respects with, and the operation of the Employee Plan/Agreement has conformed in all material respects to, all applicable Laws and the terms of the Employee Plan/Agreement; (ii) if the Employee Plan/Agreement is intended to qualify under Section 401 of the Code, it has received a favorable determination letter or opinion letter from the IRS regarding its qualification, its related trust has been determined to be exempt from taxation under Section 501(a) of the Code, and, to the Company’s Knowledge, nothing has occurred since the date of such letter that has adversely affected or is reasonably likely to adversely affect such qualification or exemption; (iii) there is no material claim pending (other than routine claims for benefits being reviewed pursuant to the plan’s internal claim and approval process) or, to the Company’s Knowledge, threatened or anticipated with respect to the Employee Plan/Agreement or against the assets of the Employee Plan/Agreement; and (iv) the Employee Plan/Agreement is not a plan that is established and maintained outside the United States primarily for the benefit of individuals substantially all of whom are nonresident aliens.

                (h)              Post-Retirement Benefits. Except as disclosed in Schedule 3.18(h), no Employee Plan/Agreement provides welfare benefits (whether or not insured), with respect to current or former directors, employees or independent contractors of the Company beyond their retirement or other termination of service other than as required by applicable Law, including Sections 601 through 609 of ERISA.

                (i)               No Triggering of Obligations. Except as disclosed in Schedule 3.18(i), the consummation of the transactions contemplated hereby will not (i) entitle any current or former director, employee or independent contractor of the Company to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting or increase the amount of compensation due to any current or former director, employee or independent contractor of the Company, or (iii) require the Company to fund any Liability or place in trust or otherwise set aside any amounts in respect of any Employee Plans / Agreements.

                (j)               Future Commitments. The Company has no announced plans or legally binding commitment to create any additional Employee Plans/Agreements or to materially amend or modify any existing Employee Plans/Agreements.

                (a)               Major Customers. Schedule 3.21(a) contains a correct and complete list of the ten (10) largest customers, including distributors, of the Company for the fiscal year ended December 31, 2013 (determined on the basis of the total dollar amount of net sales) showing the total dollar amount of net sales to each such customer during such year. As of the date hereof, the Company has no Knowledge that any of the customers listed in Schedule 3.21(a), nor has any customer listed in Schedule 3.21(a) provided written notice to the Company that such customer, does not intend to continue to be a customer of the Company following the date hereof or that any of such customers intends to substantially or materially reduce or alter the level of purchases as compared to the prior fiscal year.

                (b)              Major Suppliers. Schedule 3.21(b) contains a correct and complete list of the ten (10) largest suppliers to the Company for the fiscal year ended December 31, 2013 (determined on the basis of the total dollar amount of purchases) showing the total dollar amount of purchases from each such supplier during such year. As of the date hereof, the Company has no Knowledge that any of the suppliers listed in Schedule 3.21(b), nor has any supplier listed in Schedule 3.21(b) provided written notice that such supplier, does not intend to continue to be a supplier to the Company after the date hereof and does not intend to continue to supply the Company with substantially the same quantity and quality goods and services.

                (c)               Dealers and Distributors. Other than employees of the Company, the Company has no sales representatives, dealers, distributors, franchisees or other third parties performing similar functions for the Company.

                (d)               Promotions. Schedule 3.21(c) sets forth the terms of all return markdown, promotion, co-op advertising and other similar programs and allowances currently offered by the Company to any of its customers as of the date hereof. As of the date hereof, the Company has not established reserves regarding the foregoing.

                (a)               Organization. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware.

                (b)              Corporate Power. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and the other documents and instruments to be executed and delivered by Buyer pursuant hereto and to carry out the transactions contemplated hereby and thereby.

                (a)              Access to Information. From and after the Closing until the seven (7) year anniversary of the Closing Date (or if any indemnity claims pursuant to Article 6 are pending as of such date, the date such claims are Finally Determined), each Party shall afford any other Party, its respective counsel, accountants and other representatives, during normal business hours, reasonable access to the books, records and other data in such Party’s possession relating directly or indirectly to the Business and the assets, Liabilities or operations of the Company and its Subsidiaries, and the right to make copies and extracts therefrom at its expense, to the extent such access is reasonably required by the requesting Party for any proper business purpose, including in connection with the transactions contemplated hereby. Without limitation, after the Closing, each Party shall make available to any other Party, as reasonably requested, and to any Governmental Entity that is legally permitted to receive the following pursuant to its subpoena power or its equivalent, all books, records and other data relating to Tax Liabilities or potential Tax Liabilities for all periods prior to or including the Closing Date and shall preserve all such books, records and other data until the expiration of any applicable statute of limitations for assessment or refund of Taxes or extensions thereof. Subject to the previous sentence, each Party agrees, for a period of seven (7) years after the Closing Date, not to destroy or otherwise dispose of any of the books, records or other data described in this Section 5.1(a) without first offering in writing to surrender such books, records and other data to the other Parties, which the other Parties shall have thirty (30) days after such offer to agree in writing to take possession thereof.

                (b)              Cooperation. Each Party shall cooperate, as and to the extent reasonably requested by any other Party, in connection with (i) the filing of Tax Returns pursuant to Section 5.2 and (ii) any Litigation (including insurance claims) brought by or against any third party in connection with (A) any transaction contemplated by this Agreement or (B) any fact or condition relating to the Company’s business or assets prior to the Closing. Such cooperation shall include making available to the requesting Party, at such times and under such circumstances so as not to unreasonably disrupt business, the relevant information, documents, records and employees of the cooperating Party, allowing the relevant personnel of the cooperating Party to assist the requesting Party in participating in any such matter (including providing testimony in Litigation), executing and delivering documents or instruments and taking all such action as the requesting Party reasonably requests in connection with such matter. The requesting Party shall promptly reimburse the cooperating Party for all out-of-pocket costs directly relating to such cooperation of such Party and any of the cooperating Party’s employees and representatives who assist the requesting Party (unless the contesting or defending party is entitled to indemnification therefor under Article 6). The Shareholders agree, as and to the extent reasonably requested by Buyer and at Buyer’s expenses, to use its commercially reasonable efforts to obtain any certificate or other document from any Governmental Entity or other person or entity as may be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including with respect to the transactions contemplated hereby). Buyer and the Shareholders further agree, as and to the extent reasonably requested by the other Party, to provide such other Party with all information that either Party may be required to report pursuant to Section 6043 of the Code and all Treasury Regulations promulgated thereunder (if any).

                (a)               Tax Returns for Pre-Closing Tax Periods. The Shareholders shall file, or cause the Company to file, on a timely basis, all Income Tax Returns for Pre-Closing Tax Periods and any other Tax Returns that are required to be filed by the Company on or prior to the Closing Date (taking into account any extensions of time to file). The Shareholders shall allow Buyer to review and comment on any Tax Return prepared pursuant to this Section 5.2(a) at any time during the forty-five (45) day period immediately preceding the filing of such Tax Return and, to the extent required to comply with applicable Tax Laws, shall accept any reasonable comments made by Buyer. The Shareholders shall pay or cause the Company to pay (or reimburse Buyer for) all Taxes due and payable on the Tax Returns filed under the first sentence of this Section 5.2(a), but only to the extent such Taxes are not taken into account in computing the Final Closing Net Working Capital.

                (b)              Tax Returns for Straddle Periods. Buyer shall cause to be prepared and filed any Tax Returns of the Company for Pre-Closing Tax Periods not described in Section 5.2(a) and for Straddle Periods and shall cause the Company to pay the Taxes shown to be due thereon, provided that Shareholders shall promptly reimburse Buyer for the portion of such Tax that relates to a Pre-Closing Tax Period to the extent such Taxes are not taken into account in the calculation of the Final Closing Net Working Capital. Buyer shall allow the Shareholders to review and comment upon any Tax Return prepared pursuant to this Section 5.2(b) at any time during the forty-five (45) day period immediately preceding the filing of such Tax Return and shall accept any reasonable comments made by the Shareholders. Buyer and Shareholders agree to cause the Company to prepare any Tax Returns for any Straddle Period consistently with past practices (except as otherwise required by Law) and to file all Tax Returns covered by this Section 5.2(b) on the basis that the relevant taxable period ended as of the close of business on the Closing Date, unless the relevant Governmental Entity will not accept a Tax Return filed on that basis. For purposes of this Section 5.2(b), in the case of any Taxes that are imposed on a periodic basis and are payable for a Tax period that includes (but does not end on) the Closing Date, the portion of such Taxes that relates to the portion of such Tax period ending on the Closing Date shall (A) in the case of any Taxes other than Taxes based upon or related to income or receipts, be deemed to be the amount of such Taxes for the entire Tax period multiplied by a fraction, the numerator of which is the number of days in the Tax period ending on and including the Closing Date, and the denominator of which is the number of days in the entire Tax period, and (B) in the case of any Taxes based upon or related to income or receipts, be deemed equal to the amount that would be payable if the relevant Tax period ended on the Closing Date, using the “closing of the books” method of accounting, and in a manner consistent with the Recent Balance Sheet. Any credits relating to a Tax period that begins before and ends after the Closing Date shall be taken into account as though the relevant Tax period ended on the Closing Date.

                   (i)           Buyer shall notify the Shareholders in writing promptly, and in any event within 30 days, after becoming aware of the commencement of any audit or administrative or judicial proceeding, or of any demand or claim on the Company, the Buyer or any of its Affiliates which could give rise to a claim for indemnification under Section 6.1(c) (a “Tax Indemnification Event”). Such notice shall contain factual information (to the extent known to the Buyer or its Affiliates) with respect to the Tax Indemnification Event in reasonable detail and shall include copies of any notice or other document received from any Governmental Entity in respect thereof. If, in breach of its obligations hereunder, the Buyer fails to give the Shareholders notice of a Tax Indemnification Event or fails to apprise the Shareholders in sufficient detail of the nature of the claim (in each instance taking into account the facts and circumstances with respect to such claim), the Shareholders shall not be liable under this Agreement for such claim to the extent that the rights of the Shareholders with respect to such claim are actually prejudiced or the amount of Tax which the Shareholders would be required to indemnify is increased.

                   (ii)          The Shareholders may elect to direct, through counsel of their own choosing and at their own expense, any audit, claim for refund or administrative or judicial proceeding involving any Taxes for which indemnity could be sought from the Shareholders under Section 6.1(c) (any such audit, claim for refund or proceeding is referred to herein as a “Tax Audit”) and which relates to a Pre-Closing Tax Period that is not a Straddle Period. Any Tax Audit with respect to a Straddle Period shall be directed by Buyer, provided that Buyer shall allow the Shareholders and their counsel to participate in such Tax Audit at the Shareholders’ sole expense, and that Buyer shall not settle or compromise any asserted Tax liability for such Straddle Period for which Shareholders may be liable under this Agreement without the consent of the Shareholders, not to be unreasonably withheld or delayed. If the Shareholders elect to direct any Tax Audit as permitted under the first sentence of this Section 5.2(c)(ii), they shall promptly notify the Buyer of the intent to do so and in any event within sixty (60) days of receipt of the notice of the Tax Indemnification Event relating to such Tax Audit. In the case of any Tax Audit, the Buyer and each of its Affiliates, as the case may be, shall give to the Shareholders any information reasonably requested by the Shareholders relating to such Tax Audit and otherwise shall cooperate with the Shareholders in good faith in order to contest effectively any such Tax Audit. If the Shareholders choose to direct the Tax Audit, the Buyer shall promptly empower and shall cause each of its Affiliates, as applicable, promptly to empower (by power of attorney and such other documentation as may be necessary and appropriate) such representatives of the Shareholders as it may designate to represent the Buyer and any relevant Affiliate in the Tax Audit insofar as the Tax Audit involves an asserted Tax Liability for which the Shareholders could be liable under Section 6.1(c). The Shareholders may not settle or compromise any asserted Tax Liability of the Company for any Pre-Closing Tax Period without the consent of Buyer (which shall not be unreasonably withheld or delayed) if such settlement or compromise would have the effect of increasing Taxes of the Company for any period ending after the Closing Date; provided, however, that consent to settlement or compromise shall not be unreasonably withheld or delayed. In any case where Buyer is permitted to direct any Tax Audit as herein provided, the Buyer and each of its Affiliates, as applicable, shall take such reasonable steps as may be prudent and within its capacity to preserve the right of the relevant entity to contest such asserted Tax Liability, may pay, compromise or contest, such asserted Tax Liability and shall be reimbursed by the Shareholders for all “out of pocket” costs and expenses, including reasonable attorneys’ and accountants’ fees and disbursements incurred pursuant to this sentence to the extent attributable to a Tax Liability indemnifiable by the Shareholders hereunder. However, in each such case, neither the Buyer nor any of its Affiliates may settle or compromise any asserted Tax Liability without the consent of the Shareholders; provided, however, that consent to settlement or compromise shall not be unreasonably withheld or delayed.

                (d)               Tax Sharing Agreement. All Tax sharing Contracts or similar Contracts with respect to or involving the Company shall be terminated as of the Closing Date. After the Closing Date, the Company shall not be bound thereby or have any Liability thereunder, and such Contracts shall have no further effect for any Tax year (whether the current year, a future year or a past year).

                (e)               Section 338(h)(10) Election. Shareholders and Buyer shall timely join in making an election under Section 338(h)(10) of the Code (and any corresponding elections under state, local, or foreign tax Law) (collectively, a “Section 338(h)(10) Election”) with respect to the purchase and sale of the stock of the Company. In that event:

                   (i)           With respect to any Pre-Closing Tax Period, the Shareholders shall pay any Tax attributable to the making of the Section 338(h)(10) Election (including, without limitation, any Liability of the Company for any state, local, or non-U.S. Tax imposed on the Company’s gain).

                   (ii)          Buyer and Shareholders shall exchange completed and executed copies of IRS Form 8023 and required schedules thereto and any other form or schedule required to effect the Section 338(h)(10) Election.

                   (iii)         The “aggregate deemed sales price” (as defined in Treas. Reg. §1.338-4) (the “ADSP”) and the “adjusted gross-up basis” (as defined in Treas. Reg. §1.338-5) (the “AGUB”) shall be allocated among the assets of each Company in accordance with the principles set forth on Schedule 5.2(e). Buyer shall deliver to the Shareholders a proposed allocation schedule (“Proposed Allocation Schedule”) consistent with the principles described in Schedule 5.2(e) no later than one hundred twenty (120) days after the Closing. The Shareholders shall have thirty (30) days to review and respond to the Proposed Allocation Schedule. If the Shareholders determine that the Proposed Allocation Schedule has not been prepared in accordance with the principles described in Schedule 5.2(e) or otherwise object to the Proposed Allocation Schedule, then the Shareholders shall inform Buyer on or before the last day of such thirty (30) day period by delivering written notice to Buyer (the “Allocation Schedule Objection”). If no Allocation Schedule Objection is delivered to Buyer within such thirty (30) day period, then the Shareholders shall be deemed to have accepted the Proposed Allocation Schedule. If an Allocation Schedule Objection is delivered to Buyer, then Buyer shall have fifteen (15) days to review and respond to the Allocation Schedule Objection by delivering written notice to the Shareholders specifying the scope of its disagreement with the information contained in it. If no such written notice is delivered to the Shareholders within such fifteen (15) day period, then Buyer shall be deemed to have accepted the Allocation Schedule Objection. If Buyer delivers a written notice to the Shareholders in response to an Allocation Schedule Objection, then Buyer and the Shareholders shall promptly meet (in Person, by telephone or otherwise) and attempt in good faith to resolve any dispute or disagreement relating to the Proposed Allocation Schedule (the “Allocation Schedule Dispute”). If Buyer and the Shareholders are unable to resolve the Allocation Schedule Dispute within thirty (30) days following the delivery of an Allocation Schedule Objection to Buyer, then, at any time thereafter, Buyer or the Shareholders may elect to have the Allocation Schedule Dispute resolved by the CPA Firm, with the fees for such CPA Firm to be apportioned equitably by the CPA Firm in inverse proportion to the amount in dispute for which each of them is successful. The allocation schedule, as agreed to by Buyer and the Shareholders or as revised by the CPA Firm, shall be the final allocation schedule (the “Final Allocation Schedule”). The Parties agree not to take any position inconsistent with the Final Allocation Schedule for Tax reporting purposes unless otherwise required by a “determination” within the meaning of Section 1313 of the Code (or similar state law) to the contrary.

                (a)               Subject to Section 5.4(d) below, from and after the Closing, the Company and each of its respective Subsidiaries shall, to the fullest extent permitted by applicable Law, indemnify, defend and hold harmless, each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Closing, an officer, director or employee of the Company of any of its Subsidiaries (each, a “D&O Indemnified Party”) to the same extent that such Persons are indemnified as of the date hereof by the Company or any of its Subsidiaries pursuant to their respective organizational documents, in existence on the date hereof with any D&O Indemnified Party; provided that, the Company and its Subsidiaries shall not indemnify, defend or hold harmless any D&O Indemnified Party for acts or omissions that involve bad faith, fraud or intentional misconduct or for any transaction from which the D&O Indemnified Party has or will personally receive a benefit in money, property, or services to which he or she is not legally entitled.

                (b)              For a period of six (6) years after the Closing and at all times subject to applicable Law, unless otherwise agreed by the Shareholders, Buyer shall not (and shall not cause or permit the Company or its Subsidiaries or any of Buyer’s other Subsidiaries or Affiliates to) amend or modify in any way adverse to the D&O Indemnified Parties, or to the beneficiaries thereof, the exculpation and indemnification provisions set forth in the organizational documents of the Company or its Subsidiaries with respect to time periods at or prior to the Closing.

                (c)               Prior to the Closing, the Company shall have obtained and paid for an extended reporting period also referred to as tail or runoff coverage under the directors’ and officers’ liability, Employment Practices Liability, and Fiduciary Liability insurance policy at coverage levels currently in place for those Persons who are covered by the Company’s directors’ and officers’ liability, Employment Practices Liability, and Fiduciary Liability insurance policy on the date hereof (the “Tail Policy”) by (a) maintaining the current directors’ and officers’ liability insurance of the Company with respect to actions or omissions prior to the Closing for a duration of no less than six (6) years after the Closing Date and/or (b) by purchasing a “tail” policy with respect thereto for no less than six (6) years after the Closing Date. Fifty percent (50%) of the cost of such Tail Policy shall be at the Buyer’s expense. The Shareholders have provided a copy of such tail or runoff coverage to Buyer prior to Closing. From and after the Closing, Buyer shall (and/or shall cause the Company or its Subsidiaries or its other subsidiaries or Affiliates, as applicable, to) continue to honor its obligations under any such insurance procured pursuant to this Section 5.4, and shall not cancel (or permit to be canceled) or take (or cause to be taken) any action or omission that would reasonably be expected to result in the cancellation thereof.

                (d)              Notwithstanding anything to the contrary in this Section 5.4, (i) no Shareholder Indemnified Party shall be entitled to seek indemnification from the Company under this Section 5.4 for any matter for which a Buyer Indemnified Party is entitled to indemnification from a Shareholder pursuant to Article 6 hereof, (ii) in no event shall a D&O Indemnified Party be entitled to recover or make a claim for indemnification pursuant to Section 5.4(a) unless and until such D&O Indemnified Party has first pursued a claim with respect thereto under the Tail Policy and shall only be entitled to make a claim for indemnification to the extent such claim is not paid in full by the Tail Policy; and (iii) this Section 5.4 shall not apply to claims brought by or on behalf of the Shareholders.

                (b)              consult with, advise or assist in any material way, whether or not for consideration, any Competitor in any aspect of the Business, including advertising or otherwise endorsing the products or services of any such Competitor, soliciting customers or otherwise serving as an intermediary for any such Competitor or loaning money or rendering any other form of financial assistance to any such Competitor;

                (c)               hire any of the individuals listed on Schedule 5.6(c);

                (d)              unless otherwise approved in advance by Buyer in writing, solicit, induce or otherwise offer employment or engagement as an independent contractor to, or engage in discussions regarding employment or engagement as an independent contractor with, any Person who is or was an employee, commissioned salesperson or consultant of, or who performed similar services for Buyer and each of its Affiliates (including the Company), or assist any third party with respect to any of the foregoing, unless such Person has been separated from his or her employment or other relationship with Buyer and each of its Affiliates (including the Company) for a period of twelve (12) consecutive months; provided, however, that any general solicitation not specifically targeted to any Person who is or was an employee, commissioned salesperson or consultant of the Buyer and each of its Affiliates (including the Company) shall not be deemed a violation of this clause (d) so long as such person is not hired by any Shareholder or any of their respective Affiliates; and/or

                (e)              engage in any practice the purpose of which is to evade the provisions of this covenant not to compete;

                (b)              With respect to each Person who is an employee of the Company immediately prior to the Effective Time (a “Continuing Employee”), for a period of at least twelve (12) months following the Closing Date, Buyer shall provide each such Continuing Employee while such Continuing Employee remains in the employment of the Company and its Affiliates, with (i) a base salary or wage rate at least equal to the Continuing Employee’s base salary or wage rate in effect as of immediately prior to the Effective Time, and (ii) employee benefits (other than any equity-based compensation, defined benefit pension benefits and retiree medical benefits, if any) that are, in the aggregate, no less favorable than the employee benefits (other than any incentive compensation, equity-based compensation, defined benefit pension benefits and retiree medical benefits, if any) provided to Buyer’s similarly-situated employees immediately prior to the Effective Time.

                (c)              For purposes of eligibility, vesting and entitlement to benefits, including the determination of the level or amount of vacation and severance pay benefits under the benefit and compensation plans, programs, agreements and arrangements of Buyer, the Company or any of their respective Affiliates in which Continuing Employees are eligible to participate following the Closing (the “Buyer Plans”), Buyer, the Company or their respective Affiliates shall credit each Continuing Employee with his or her years of service with the Company and any predecessor entities, to the same extent as such Continuing Employee was entitled immediately prior to the Closing to credit for such service under any similar Employee Plan/Agreement or if no such Employee Plan/Agreement was in effect, to the extent permitted under the applicable Buyer Plan, except where such credit would result in a duplication of benefits. Each Continuing Employee shall be immediately eligible to participate, without any waiting time, in any and all Buyer Plans to the extent coverage under such Buyer Plan replaces coverage under a substantially similar Employee Plan/Agreement in which such Continuing Employee participated immediately before such replacement. For purposes of each Buyer Plan providing medical, dental, pharmaceutical and/or vision benefits to any Continuing Employee, Buyer, the Company or their respective Affiliates shall (i) cause all pre-existing condition exclusions and actively-at-work requirements of such Buyer Plan to be waived for such Continuing Employee and his or her covered dependents except to the extent such pre-existing conditions and actively-at-work requirements would apply under the analogous Employee Plan/Agreement and (ii) to the extent adequate records are provided to Buyer to permit Buyer to comply with this clause (ii), cause any eligible expenses incurred by such Continuing Employee and his or her covered dependents under an Employee Plan/Agreement during the portion of the plan year prior to the Closing Date to be taken into account under such Buyer Plan for purposes of satisfying all deductible, co-insurance, co-payment and maximum out-of-pocket requirements applicable to such employee and his or her covered dependents for the applicable plan year as if such amounts had been paid in accordance with such Buyer Plan. Notwithstanding anything to the contrary in this Agreement, with respect to any Buyer Plan that is a fully insured welfare plan, the foregoing provisions of this Section 5.7(c) shall not apply unless the insurance carrier consents thereto; provided that Buyer, the Company or their respective Affiliates shall use commercially reasonable efforts to cause such insurance carrier to consent to the foregoing provisions of this Section 5.7(c).

                   (i)           shall maintain separate books and records for the Business and maintain and operate the Business as a separate and distinct division of Buyer, in order to facilitate, among other things, the calculation of EBITDA as contemplated hereby;

                   (ii)          shall not take any action (x) with the intention of reducing the EBITDA for the Earn-Out Period or (y) with the primary effect of reducing the EBITDA for the Earn-Out Period without any legitimate business purpose; and

                   (iii)         shall use reasonable efforts to ensure that the Business has capital adequate for its existing operations.

                (a)               Notice. The Indemnified Party shall give the Party or Parties from whom indemnification is sought (collectively, the “Indemnifying Party”) prompt written notice of any Third Party Claim describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand (taking into account the information then available to the Indemnified Party) and an estimate of the amount of Losses with respect to such claim or demand if such an estimate is reasonably determinable. Failure to give notice of the Third Party Claim shall not affect the Indemnifying Party’s duties or obligations under this Article 6, except to the extent the Indemnifying Party is materially prejudiced thereby, it being agreed that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in this Article 6 for such representation, warranty, covenant or agreement and that such notice shall preserve any such claim despite the subsequent expiration of such survival period.

                (b)              Defense. The Indemnifying Party shall be entitled to undertake and control the defense, compromise and/or settlement of the Third Party Claim, by representatives chosen by the Indemnifying Party and reasonably acceptable to the Indemnified Party, if the Indemnifying Party admits that it has an indemnification obligation hereunder with respect to the Third Party Claim, subject to the terms, limitations and conditions of this Article 6, in which case such admission shall constitute the Indemnifying Party’s undertaking to pay directly all costs, expenses, damages, judgments, awards, penalties and assessments incurred in connection therewith subject to the terms, limitations and conditions of this Article 6. With the prior written consent of the Indemnified Party, the Indemnifying Party may undertake and control the defense, compromise and/or settlement of the Third Party Claim without admitting that it has an indemnification obligation hereunder. If the Indemnifying Party undertakes the defense of the Third Party Claim, then the Indemnifying Party shall allow the Indemnified Party a reasonable opportunity to participate in the defense of the Third Party Claim at its own expense. So long as the Indemnifying Party is defending the Third Party Claim actively and in good faith pursuant to this Section 6.3(b), the Indemnified Party shall not compromise or settle, or consent to the entry of a judgment with respect to, the Third Party Claim without the prior written consent of the Indemnified Party; provided, that no such consent shall be required for any such settlement or compromise that (i) is exclusively monetary, (ii) includes, as an unconditional term thereof, the giving by the third party asserting such claim to all Indemnified Parties of an unconditional release from all liability with respect to such claim and (iii) does not contain an admission of liability on the part of the Indemnified Party.

                (c)               Failure to Defend. If the Indemnifying Party, within a reasonable time after notice of the Third Party Claim, fails to defend the Third Party Claim actively and in good faith as described in Section 6.3(b), then the Indemnified Party shall (upon written notice to the Indemnifying Party) have the right to undertake the defense, compromise or settlement of the Third Party Claim and in the event it is Finally Determined by a court of competent jurisdiction that the claim was a matter for which the Indemnifying Party is required to provide indemnification under the terms of this Article 6, the Indemnifying Party will bear the reasonable costs and expenses of such defense (including fees and expenses of counsel). Notwithstanding the preceding sentence, if the Indemnified Party undertakes the defense, compromise or settlement of the Third Party Claim, the Indemnifying Party may nonetheless participate in the defense of such Third Party Claim with its own counsel and at its own expense and the Indemnified Party shall provide the Indemnifying Party with reasonable cooperation in the defense of the Third Party Claim. None of the Indemnified Party or Indemnifying Party shall consent to the entry of any judgment or enter into any settlement or compromise with respect to a Third Party Claim contemplated in this Section 6.3(c) without the prior written consent of the Indemnified Party or Indemnifying Party, as applicable, not to be unreasonably withheld, conditioned or delayed unless such settlement results in no monetary or other obligations on the Indemnifying Parties.

                (d)               Indemnified Party’s Rights. Notwithstanding anything to the contrary in this Article 6, if a Third Party Claim (i) relates to or has arisen in connection with any criminal action or (ii) seeks an injunction or other equitable relief against an Indemnified Party or any of its Affiliates that could adversely affect in any material respect an Indemnified Party (except where equitable or injunctive relief is incidental to a primary claim or claims for monetary damages) then the Indemnified Party shall have the right to undertake and control the defense, compromise and/or settlement of such Third Party Claim without waiver of its rights against the Indemnifying Party, subject to the terms and conditions of this Article 6; provided, that the Indemnifying Party shall not settle or compromise, or consent to the entry of judgment with respect to, any such Third Party Claim that does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party of a release from all Liability in respect of such Third Party Claim without the prior written consent of the Indemnified Party.  Notwithstanding the preceding sentence, if the Indemnified Party undertakes the defense, compromise or settlement of the Third Party Claim, the Indemnifying Party may nonetheless participate in the defense of such Third Party Claim with its own counsel and at its own expense and the Indemnified Party shall provide the Indemnifying Party with reasonable cooperation in the defense of the Third Party Claim.