ASSET PURCHASE AGREEMENT

Exhibit 10.3

ASSET PURCHASE AGREEMENT

by and among

GRANITE ACQUISITION CORP.
(a Delaware corporation),

and

LION RIBBON COMPANY, INC.
(a Delaware corporation),

and

HAMPSHIRE PAPER CORP.
(a New Hampshire corporation),

and

the SHAREHOLDERS of HAMPSHIRE PAPER CORP.

TABLE OF CONTENTS

TABLE OF CONTENTS
(continued)

TABLE OF CONTENTS
(continued)

TABLE OF CONTENTS
(continued)

ASSET PURCHASE AGREEMENT

INTRODUCTION

This ASSET PURCHASE AGREEMENT, dated as of August 1, 2008, is made and entered into by and among Granite Acquisition Corp., a Delaware corporation (“ Buyer ”), Lion Ribbon Company, Inc., a Delaware corporation, which owns all of the outstanding stock of Buyer (“Parent”), Hampshire Paper Corp., a New Hampshire corporation (“ Seller ”), and each of the Persons (as defined herein) listed on Exhibit A hereto (each, a “ Shareholder ” and, collectively, the “ Shareholders ;” and together with Seller, each, a “ Seller Party ” and, collectively, the “ Seller Parties ”). Buyer, Seller and the Shareholders are each referred to herein as a “ Party ” and, collectively, as the “ Parties .”

BACKGROUND

Seller owns and operates the Business (defined below). This Agreement sets forth the terms and conditions upon which Buyer is purchasing the Purchased Assets (defined below) and assuming the Assumed Liabilities (defined below) from Seller, and Seller is selling the Purchased Assets and transferring the Assumed Liabilities to Buyer.

NOW, THEREFORE, in consideration of the respective covenants, representations and warranties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows:

1.  Definitions .

For convenience, certain terms used in more than one part of this Agreement are listed in alphabetical order and defined or referred to below.

“ Accounts Receivable ” means, as of any specified date, any trade accounts receivable, notes receivable, bid or performance deposits and other miscellaneous receivables of the Business.

“ Action ” is defined in Section 10.5 .

“ Affiliates ” means, with respect to a particular party, Persons controlling, controlled by or under common control with that party, as well as any officers, directors and majority-owned entities of that party and of its other Affiliates. For the purposes of the foregoing, ownership, directly or indirectly, of 20% or more of the voting stock or other equity interest shall be deemed to constitute control.

“ Agreement ” means this Asset Purchase Agreement, including all schedules, and exhibits hereto.

“ Allocation ” is defined in Section 2.6 .

“ Arbitration ” is defined in Section 13.5(c) .

“ Assets ” means all of Seller’s assets, properties, business, goodwill and rights of every kind and description, real and personal, tangible and intangible, wherever situated and whether or not reflected on the Current Balance Sheet.

“ Assignee ” is defined in Section 13.2 .

“ Assumed Liabilities ” is defined in Section 2.4(a) .

“ Auditor ” means Ernst & Young LLP.

“ Base Purchase Price ” is $10,250,000.

“ Bill of Sale, Assignment and Assumption Agreement ” means a bill of sale, assignment and assumption agreement by and between Seller and Buyer in substantially the same form as Exhibit B .

“ Business ” means the business, operations and facilities of Seller relating to the design, marketing, distribution and sale of paper, foil and foil decorative packaging to the wholesale floral and retail packaging industries, and such other items that are designed, marketed, distributed or sold by the Seller as of the date hereof, including the goodwill appurtenant to such business and assets.

“ Business Day ” means any calendar day which is not a Saturday, Sunday or public holiday under the laws of the State of New Hampshire.

“ Buyer Officer’s Certificate ” is defined in Section 9.1 .

“ Buyer’s Legal Opinion ” is defined in Section 9.3 .

“ Cap ” is defined in Section 10.3(c) .

“ CERCLA ” is defined in Section 4.25 .

“ Charter Documents ” means an entity’s certificate or articles of incorporation or formation, certificate defining the rights and preferences of securities, articles of organization, bylaws, general or limited partnership agreement, operating agreement, certificate of limited partnership, joint venture agreement or similar document governing the entity.

“ Claim Notice ” is defined in Section 10.3(a) .

“ Claim Response ” is defined in Section 10.3(a) .

“ Closing ” is defined in Section 3.1 .

“ Closing Balance Sheet ” is defined in Section 2.5(a) .

“ Closing Consents ” is defined in Section 8.3 .

“ Closing Date ” is defined in Section 3.1 .

“ Closing Financial Data ” is defined in Section 2.5(b) .

“ Closing Payment ” is defined in Section 2.2(a) .

“ Code ” means the US Internal Revenue Code of 1986, as amended, and the rules and regulations thereunder.

“ Confidential Information ” means any confidential or proprietary information of Seller that is used or held for use in the Business, including personnel information, know-how, data, databases, software, source code, advertising and marketing plans or systems, distribution and sales methods or systems, pricing lists and pricing formulae, customer and client lists, customer, client, dealer, distributor, wholesaler and supplier information (including principal contacts, addresses and telephone numbers, purchasing history, equipment demographics, payment information and any other information), financial information (including the sales, cost and profit figures associated with the Business and its products and services) and any relationships with dealers, distributors, wholesalers, customers, clients, suppliers and any other Persons who have, or have had, business dealings with the Business.

“ Confidentiality Agreement ” is defined in Section 4.14(a)(ii) .

“ Consumer Acts ” is defined in Section 4.36 .

“ Contingent Claim ” is defined in Section 10.9 .

“ Contract ” means any written or oral contract, agreement, purchase order, lease, license, plan, instrument or other document, commitment, arrangement, undertaking, practice or authorization that is or may be binding on any Person or its property under applicable Law.

“ Copyrights ” means any copyrights and registrations and applications therefore, including all renewals and extensions thereof and rights corresponding thereto in both published and unpublished works throughout the world, owned, used, held for use or licensed by Seller in connection with the conduct of the Business.

“ Court Order ” means any judgment, decree, injunction, order or ruling of any federal, state, local or foreign court or governmental or regulatory body or authority that is binding on any Person or its property under applicable Law.

“ Current Balance Sheet ” is defined in Section 4.6(a)(ii) .

“ Current Balance Sheet Date ” is defined in Section 4.6(a)(iii) .

“ Damages ” is defined in Section 10.1(a) .

“ Default ” means (i) a breach, default or violation, (ii) the occurrence of an event that with or without the passage of time or the giving of notice, or both, would constitute a breach, default or violation or (iii) with respect to any Contract, the occurrence of an event that, under the terms of the applicable Contract, would give rise to a right of termination, renegotiation or acceleration; provided, however, if a Party has a right to cure the breach, default or violations and does in fact cure within the applicable grace periods, then that breach, default or violation, or triggering occurrence, shall not constitute a Default.

“ Dispute ” is defined in Section 13.5(a) .

“ Effective Date ” is defined in Section 3.1 .

“ Employee Payments ” is defined in Section 6.13 .

“ Employment Agreement ” is defined in Section 8.9 .

“ Encumbrances ” means any lien, mortgage, security interest, pledge, restriction on transferability, defect of title or other claim, charge or encumbrance of any nature whatsoever on any property or property interest, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

“ Environmental Claims ” is defined in Section 4.25(i) .

“ Environmental Laws ” is defined in Section 4.25(ii) .

“ Environmental Permit ” is defined in Section 4.25(iii) .

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and all regulations and rules issued thereunder, or any successor law.

“ ERISA Affiliate ” means any person, that together with Seller, is or was at any time treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.

“ Escrow Agent ” means LaSalle Bank National Association.

“ Escrow Agreement ” means the escrow agreement by and among Seller, the Shareholders, Buyer and the Escrow Agent in substantially the same form as Exhibit C .

“ Escrow Funds ” is defined in Section 2.2(b)(ii) .

“ Escrow Payment ” is defined in Section 2.2(a) .

“ Escrow Rate ” means the average rate of investment return during the applicable period on the investment of the Escrow Funds by the Escrow Agent under the Escrow Agreement.

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

“ Excluded Assets ” is defined in Section 2.1(b) .

“ Expiration Date ” is defined in Section 10.4 .

“ GAAP ” means generally accepted accounting principles in the United States, consistently applied.

“ Governmental Body ” means any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign or other government or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, regulatory body or other entity and any court, arbitrator or other tribunal).

“ Governmental Permits ” means any permits, licenses, franchises, registrations, certificates, variances, exemptions, consents, approvals, privileges or other authorizations of any nature whatsoever, granted, approved or allowed by any Governmental Body.

“ Guaranty ” is defined in Section 2.8 .

“ Hazardous Material ” is defined in Section 4.25(iv) .

“ Indemnified Buyer Party ” is defined in Section 10.1 .

“ Indemnified Party ” is defined in Section 10.3(a) .

“ Indemnified Seller Party ” is defined in Section 10.2 .

“ Indemnitor ” is defined in Section 10.3(a) .

“ Information Technology ” means all communications systems and computer systems used or held for use in the conduct of the Business by Seller including all hardware, software, URLs, websites and domain names.

“ Intellectual Property ” means all intellectual property used or held for use in the conduct of the Business by Seller, including without limitation all Copyrights, Patents, Trademarks, technology rights and licenses, franchises, inventions (whether or not patentable) and other similar property, including without limitation: (A) all registered and unregistered trademarks (including without limitation, the right to use the names “Hampshire Paper”, “Mark Degradable Film Planet Safe”, Mark Bio-degradable Film Planet Safe”, “Mark Oxo-Biodegradable Film Planet Safe”, “Mark Oxo-Degradable Film Planet Safe”, “Kwik Cover”, “Guardsman”, and “Krystalphone”), service marks, trade names, trade dress, logos, designs, domain names, URLs or other marks, including the goodwill associated therewith, and all applications, registrations, and renewals in connection therewith; (B) copyrights, including all registrations, renewals and application in connection therewith, copyrightable works, databases, websites, domain names, and advertisements; (C) software, including object code and source code, and related manuals used by the Business; (D) inventions (whether patentable or unpatentable and whether or not reduced to practice), and all patents, patent applications and patent disclosures (and all rights related thereto, including all reissues, divisions, continuations, continuations-in-part, substitutions, extensions, or renewals of any of the foregoing); and (E) formulae, trade secrets, know how, designs, production methods and techniques, samples, catalogs, hard and soft copy design library, and other proprietary information including, without limitation, all processes used in the Business.

“ Inventory ” means all inventory of Seller, including, without limitation, raw materials, work-in-process, finished goods, products under research and development, office and other supplies, parts, packaging materials and other accessories related thereto, wherever located, which are used or held for use by Seller in the conduct of the Business, together with all rights of Sellers against suppliers of such inventory.

“ Law ” means any statute, law, ordinance, regulation, order or rule of any federal, state, local or, foreign governmental or regulatory body or authority, including those covering environmental, energy, safety, health, information technology, transportation, bribery, record keeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters.

“ Legal Proceeding ” means any action, arbitration, suit, audit, hearing, investigation, litigation or proceeding (public or private) by or before, or otherwise involving a Governmental Body or an arbitrator.

“ Liability ” means any direct or indirect liability, indebtedness, obligation, expense, debt, claim, loss, damage, deficiency, guaranty or endorsement of any nature, of or by any Person, whether absolute or contingent, known or unknown, secured or unsecured, recourse or non-recourse, filed or unfiled, accrued or unaccrued, due or to become due, or liquidated or unliquidated.

“ Liquidated Claim Notice ” is defined in Section 10.3(a) .

“ Litigation ” means any lawsuit, action, arbitration, administrative or other proceeding, criminal prosecution or governmental investigation or inquiry.

“ Manufacturing Lease ” is defined in Section 8.8 .

“ Manufacturing Property ” means the approximately 54,000 square foot manufacturing facility currently used by the Seller and located at 1 Hampshire Drive, Milford, New Hampshire.

“ Material Adverse Effect ” means a material adverse effect on the Business (measured on any of a quarterly, annual or long-term basis), including any of the Assets, financial condition, results of operations, prospects, liquidity, products, competitive position, customers or customer relations thereof.

“ Mediation ” is defined in Section 13.5(b) .

“ Non-Assignable Contract ” is defined in Section 2.6 .

“ Non-Competition Period ” is defined in Section 7.1(a) .

“ Non-Real Estate Leases ” is defined in Section 4.21 .

“ Objection Notice ” is defined in Section 2.5(b) .

“ Off-the-Shelf Software ” is defined in Section 4.14(a)(i) .

“ Ordinary course ” or “ ordinary course of business ” means the ordinary course of business that is consistent with past practices.

“ Party ” and “ Parties ” is each defined above in the Introduction.

“ Patents ” means any patents together with any extensions, reexaminations and reissues of such patents, patents of addition, patent applications, divisions, continuations, continuations-in-part, and any subsequent filings in any country or jurisdiction claiming priority therefrom, owned, used, held for use or licensed by Seller in connection with the conduct of the Business.

“ PBGC ” is defined in Section 4.22(e) .

“ Person ” means any natural person, corporation, partnership, proprietorship, association, joint venture, trust or other legal entity.

“ Plans ” is defined in Section 4.22(a) .

“ Prime Rate ” means the prime lending rate as reported in The Wall Street Journal from time to time as the base rate on corporate loans.

“ Purchased Assets ” is defined in Section 2.1(a) .

“ Purchase Price ” means is defined in Section 2.2(a) .

“ Qualified Plan ” is defined in Section 4.22(c) .

“ Real Estate Leases ” is defined in Section 4.13 .

“ Real Property ” means all rights and interests in or to real property (including any real estate, land, building, condominium, town house or other real property of any nature), including all shares or stock or other ownership interests in cooperative or condominium associations, fee estates, leaseholds and subleaseholds, purchase options, easements, licenses, privileges, hereditaments, appurtenances thereto, rights to access and rights of way, easement or prescriptive right and all Structures, owned by Seller or used in the operation of the Business, together with any additions thereto or replacements thereof.

“ Response Period ” is defined in Section 10.3(a) .

“ Restricted Party ” is defined in Section 7.1(a) .

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

“ Seller Contracts ” is defined in Section 4.15(c) .

“ Seller Financial Statements ” is defined in Section 4.6(a)(ii) .

“ Seller’s Legal Opinion ” is defined in Section 8.6 .

“ Seller Officer’s Certificate ” is defined in Section 8.1 .

“ Seller Party ” and “ Seller Parties ” is each defined in the Introduction.

“ Seller Required Consents ” is defined in Section 4.4 .

“ Structures ” all buildings, structures, fixtures, facilities and improvements to any Real Property.

“ Tangible Real Assets ” all Structures and all structural, mechanical and other physical systems thereof that constitute part of the Real Property, including the walls, roofs and structural elements thereof and the heating, ventilation, air conditioning, plumbing, electrical, communications, mechanical, water, sewer, waste water, storm water, paving and parking equipment, systems and facilities included therein and other material items at the Real Property.

“ Taxes ” shall mean all taxes, duties, charges, fees, levies or other assessment imposed by any taxing authority, including income, gross receipts, value-added, excise, withholding, personal property, real estate, sale, use, ad valorem, license, lease, service, severance, stamp, transfer, payroll, employment, customs, duties, alternative, add-on minimum, estimated and franchise taxes (including any interest, penalties or additions attributable to or imposed on or with respect to any such assessment).

“ Tax Returns ” means any and all returns, reports, claims for refund, information returns, or other statements (including elections, declarations, disclosures, schedules, estimates, and attachments), including estimates or amendments thereof, required to be filed by a Party with respect to any Taxes.

“ Termination Date ” is defined in Section 11.1(b) .

“ Third Party Payments ” is defined in Section 6.14 .

“ Threshold Amount ” is defined in Section 10.3(c) .

“ Trademarks ” means any registered trademarks, registered service marks, trademark and service mark applications and unregistered trademarks and service marks, brand names, certification marks, trade names, logos, trade dress, and all goodwill associated with the foregoing throughout the world and registrations in any jurisdictions of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application, owned, used, held for use or licensed by Seller in connection with the conduct of the Business.

“ Transaction Documents ” means this Agreement, the Bill of Sale, Assignment and Assumption Agreement, the Escrow Agreement, the Manufacturing Lease, the Warehouse Lease, the Employment Agreement, all schedules and exhibits, and any other certificate, instrument, agreement or document required to be delivered pursuant to the terms hereof and thereof.

“ Transactions ” means the purchase and sale of the Purchased Assets and the transfer and assumption of the Assumed Liabilities at the Closing and the other transactions contemplated by the Transaction Documents.

“ Transferred Employees ” is defined in Section 6.5 .

“ Unassumed Liability ” is defined in Section 2.4(b) .

“ Unliquidated Claim ” is defined in Section 10.3(a) .

“ US ” means the United States of America.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act, as amended.

“ Warehouse Lease ” is defined in Section 8.8 .

“ Warehouse Property ” means the approximately 58,000 square foot office facility current used by the Seller and located at 24 Powers Street, Milford, New Hampshire.

“ Year-End Financials ” is defined in Section 4.6(a)(i) .

2.  Sale and Purchase .

2.1 Agreement to Sell and Purchase .

(a) At the Closing, Seller shall grant, sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase from Seller, all right, title and interest in and to all of the Assets, properties, and rights of every kind, and description, real, personal and mixed, tangible and intangible, wherever situated, on the Closing Date other than the Excluded Assets (the “ Purchased Assets ”), free and clear of all Encumbrances, including the following:

(i) all Accounts Receivable;

(ii) all Inventory;

(iii) all Tangible Real Assets located on or related to the Manufacturing Property or to the Warehouse Property;

(iv) all fixed assets, furniture, fixtures, automobiles, leasehold improvements, tooling, machinery and equipment;

(v) all records with respect to suppliers, employees and other aspects of the Business;

(vi) all Confidential Information;

(vii) all telephone numbers and facsimile numbers currently used in the Business;

(viii) all manufacturing, warehouse and office supplies;

(ix) all rights under the Non-Real Estate Leases, and any deposits or other rights pertaining thereto;

(x) all rights under any Governmental Permits that have been issued or applied for;

(xi) all rights related to any prepaid expenses;

(xii) all the Assets of Seller, whether or not otherwise described in this subsection (a), as set forth on the Current Balance Sheet, and those Assets of Seller whose ownership by Seller is implied by the assumptions made in the preparation of the Current Balance Sheet and are set forth on Schedule 2.1(a)(xii) ;

(xiii) all rights under any insurance Contracts that are assignable or transferable under the terms of such Contracts;

(xiv) all Intellectual Property used or otherwise exploited by or in connection with the Business;

(xv) all rights under any Contracts listed on Schedule 2.1(a)(xv) that are assignable or transferable under the terms of such Contracts, except to the extent specified in Section 2.4 ; and

(xvi) all petty cash provided to the Seller’s truck drivers as cash advances.

(b) Notwithstanding the foregoing, the Purchased Assets shall not include any of the following (the “ Excluded Assets ”):

(i) all cash and cash equivalents, other than petty cash specified in Section 2.1(a)(xvi) ;

(ii) the corporate seals, Charter Documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of Seller;

(iii) all rights and obligations under the existing automobile lease for the Seller-provided vehicle used as of the date of this Agreement by Michael Stepanek

(iv) all rights and obligations under the existing real estate leases for the Manufacturing Property and for the Warehouse Property;

(v) all rights to the cash surrender value of any life insurance policies in existence as of the date of this Agreement insuring the lives of the Shareholders;

(vi) all rights to any income tax refund with respect to the Business for taxable periods ending on or before the Closing Date; and

(vii) the rights that accrue or will accrue to Seller under the Transaction Documents.

2.2 Purchase Price .

(a) In consideration of the grant, sale, conveyance, assignment, transfer and delivery of the Purchased Assets to Buyer and the assumption by Buyer of the Assumed Liabilities, Buyer shall pay a total amount (the “ Purchase Price ”) equal to: (i) $8,450,000 (the “ Closing Payment ”), plus (ii) $1,800,000 (the “ Escrow Payment ”). The Purchase Price shall be subject to adjustment as set forth in Section 2.5 hereof.

(b) Buyer shall pay the Purchase Price as set forth below:

(i) at the Closing, Buyer shall pay to Seller the Closing Payment by a wire transfer of immediately available funds, in accordance with written instructions provided by Seller to Buyer prior to the Closing Date;

(ii) at the Closing, Buyer shall pay the Escrow Payment to the Escrow Agent in accordance with the Escrow Agreement. Such cash delivered to the Escrow Agent, together with any investment proceeds thereon and any distributions with respect thereto as provided in the Escrow Agreement, are referred to collectively herein as the “ Escrow Funds ;” and

(iii) after the Closing, any adjustment to the Purchase Price, if any, in accordance with Section 2.5 .

2.3 Escrow Account . At the Closing, Buyer and Seller shall enter into the Escrow Agreement with the Escrow Agent under which the Escrow Agent shall hold the Escrow Funds for possible claims against the Seller Parties under Section 2.5 and Section 10 .

2.4 Assumption of Liabilities .

(a) At the Closing, Buyer shall assume and agree to pay, discharge or perform, as appropriate, when due only the Liabilities of Seller specifically identified below in this subsection (a) (the “ Assumed Liabilities ”):

(i) any post-Closing executory obligations under the Contracts, but only to the extent that any such obligation relates to an event that occurs after the Closing Date;

(ii) all Liabilities of Seller arising in the ordinary course of business after the Closing Date related solely to the operation of the Purchased Assets, and with respect to such Liabilities arising under or related to any Laws, including Environmental Laws, only to the extent such Liabilities arise from or are related to any event that occurs after the Closing Date; and

(iii) the Seller’s obligations to pay to each Transferred Employee after the Closing Date any sick pay and any vacation pay attributable to such Transferred Employee which as of the Closing Date is accrued, earned and unpaid and relates to the period commencing January 1, 2008 and ending on the Closing Date.

(b) Notwithstanding subsection (a) above or any other provision of this Agreement, Buyer is not assuming under this Agreement or any other Transaction Document any Liability that is not specifically identified as an Assumed Liability under subsection (a) above, regardless of when made or asserted, including any of the following (each, an “ Unassumed Liability ”): (i) undisclosed Liabilities; (ii) any product or service liability or similar claim for injury to any Person or property, regardless of when made or asserted, that arises out of or is based upon any express or implied representation, warranty, agreement or guarantee made by Seller, or alleged to have been made by Seller, or that is imposed or asserted to be imposed by operation of law in connection with any service performed or product sold or leased by or on behalf of Seller on or prior to the Closing, whether or not billed as of the Closing Date; (iii) any Federal, state or local income or other Tax payable with respect to the Business, the Purchased Assets, or other properties or operations of Seller or any Person that was an affiliate of Seller for a period prior to the Closing Date; (iv) any Liabilities under or in connection with any Excluded Assets; (v) any Liabilities arising prior to the Closing Date or as a result of the Closing relating to Seller’s employment of Persons, including any Liabilities with respect to any employee wages, salaries, benefits or withholding taxes, workers compensation claim or any other Liability of Seller to its respective employees relating in any way to their employment by Seller (other than Liabilities accrued in respect thereof on the Closing Balance Sheet); (vi) any Liabilities of Seller arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the Transactions, including any Liability to any broker or finder retained by or on behalf of Seller in connection with the Transactions; (vii) any Environmental Liability; (viii) Liabilities arising from or related to governmental fines or penalties arising out of or based upon or incurred during the period prior to the Closing Date; (ix) any Liabilities for money borrowed, whether direct or contingent; (x) any Liability of Seller owing to any Person holding an equity interest in Seller, (xi) any proceeding commenced by any Person claiming that such Person is or was at any time the holder of any equity interest in Seller, and (xii) any Liabilities arising prior to the Closing Date or as a result of the Closing relating to the infringement, misappropriation, dilution or other violation of the confidential information, proprietary information or intellectual property of any Person.

2.5 Post-Closing Purchase Price Adjustment . The Purchase Price shall be subject to adjustment, if any, as follows.

(a)  Draft Estimated Closing Balance Sheet . As soon as practicable following (but not more than ninety (90) days after) the Closing Date, Buyer shall prepare and deliver to Seller a consolidated statement of the Purchased Assets and Assumed Liabilities as of the Closing (the “ Estimated Closing Balance Sheet ”). The Estimated Closing Balance Sheet shall be prepared in accordance with GAAP. The Estimated Closing Balance Sheet shall not make any retroactive adjustments inconsistent with the Seller Financial Statements that would reduce the NAV as of the Closing Date. All expenses incurred in connection with the preparation of the Estimated Closing Balance Sheet shall be the responsibility of Buyer.

(b)  Review of Estimated Closing Balance Sheet . The Estimated Closing Balance Sheet shall become final and binding upon the Parties unless, within sixty (60) days following its submittal to Seller (the “Review Period”), Seller notifies Buyer of its objection thereto, which objection may only be that the Estimated Closing Balance Sheet was not prepared in accordance with Section 2.5(a) (except for clear error or mistake, or willful misrepresentation). If Seller so notifies Buyer of its objection to the Estimated Closing Balance Sheet, Seller and Buyer shall negotiate in good faith to resolve any differences. If within thirty (30) days following receipt of such notice by Buyer any such differences have not been resolved, they shall be resolved by the Auditor, using the methods and criteria and such procedures as that firm may determine in its sole discretion, and the Auditor’s opinion thereon and the resulting balance sheet shall be final, binding and not subject to any appeal (except for clear error or mistake, disregard of Section 2.5(a), or willful misrepresentation, in which event the Dispute would be resolved pursuant to Section 13.5). The fees and expenses of the Auditor shall be paid one-half by Seller and one-half by Buyer. If Seller does not notify Buyer of any objections during the Review Period, the Estimated Closing Balance Sheet shall become final and binding. The final and binding balance sheet, as determined in accordance with this Section 2.5(b), is hereinafter referred to as the “ Closing Balance Sheet .”

(c)  Closing Payment Adjustment . Within five (5) days after the final determination of the Closing Balance Sheet, (i) if the Net Asset Value is less than $6,250,000, then, in accordance with Section 7 of the Escrow Agreement, Seller and Buyer shall provide joint written directions to the Escrow Agent for the release to Buyer from the Escrow Funds (as such term is defined in the Escrow Agreement) as a reduction in the Purchase Price the amount of such deficiency (subject to adjustment as set forth in the last sentence of this Section 2.5(c)), plus interest on such deficient amount at the Escrow Rate from the Closing Date until the date paid; provided, however, that if the amount of the Escrow Funds is insufficient to pay the amount of such deficiency, any excess deficient amount shall be paid by the Seller Parties, or (ii) if the Net Asset Value is greater than $6,300,000, then Buyer shall pay Seller in cash as an increase in the Purchase Price the amount of such excess, plus interest on such excess amount at the Escrow Rate from the Closing Date until the date paid. For purposes of this Section 2.5(c), “ Net Asset Value ” means the sum of (i) the aggregate book value of all of the Purchased Assets set forth on the Closing Balance Sheet as reflected on Seller’s books and records minus (ii) the aggregate book value of current Assumed Liabilities set forth on the Closing Balance Sheet as reflected on Seller’s books and records; as determined in a manner consistent with GAAP. For purposes of clause (i) of this Section 2.5(c), if the Net Asset Value is less than $6,250,000 and the value of “Inventory -WIP”, as set forth on the Closing Balance Sheet, is less than $433,000, then the amount to be paid by the Seller Parties pursuant to this Section 2.5(c) shall be reduced by the lesser of (x) $50,000 or (y) the difference between $433,000 and the value of “Inventory — WIP” as set forth on the Closing Balance Sheet.

(d) Nothing in this Section 2.5 shall preclude any party from exercising, or shall adversely affect or otherwise limit in any respect the exercise of, any right or remedy available to it hereunder or otherwise for any misrepresentation or breach of warranty hereunder, but neither Buyer nor Seller shall have any right to dispute the Closing Balance Sheet or any portion thereof (except as provided in Section 2.5(b)) once it has been finally determined in accordance with this Section 2.5.

2.6 Allocation of Purchase Price . Within thirty (30) days after the final determination of the Closing Balance Sheet, as provided in Section 2.5 herein, the Buyer shall deliver to the Seller the Buyer’s proposal for allocation of the Purchase Price among the Purchased Assets for all purposes (including financial, accounting and tax purposes) in a manner consistent with Section 1060 of the Code (the “ Allocation ”). In the event that the Seller does not object to the Allocation within thirty (30) days of the Seller’s receipt of the Allocation, then the Seller Parties shall be deemed to have agreed to the Allocation. Buyer and Seller will endeavor in good faith to resolve any differences with respect to the preparation of the Allocation. If differences arise with respect to such preparation, and Buyer and Seller have acted in good faith to resolve such differences, then any remaining disputed matters will be finally and conclusively determined by the Auditor. The Auditor will determine (based solely on presentations by Buyer and Seller and not by independent review) only those matters in dispute and will render a written report as to the disputed matters and the resulting allocation of Purchase Price (together with the Assumed Liabilities), which report shall be conclusive and binding upon the Parties, except that any Party may object if the Auditor’s determination disregards the restrictions imposed by this Section 2.6 (in which event the Dispute would be resolved pursuant to Section 13.5). Each Party shall fully comply with the reporting requirements of Section 1060 of the Code relating to allocation rules for certain asset acquisitions. Buyer and Seller shall not, subject to the requirements of any applicable Tax Law or election, file any Tax Returns and reports or take any positions before any Governmental Body inconsistent with the Allocation. Buyer and Seller shall cooperate in the preparation and filing of IRS Form 8594 (as amended) and any required exhibits thereto with the IRS (and any comparable forms with the appropriate authorities) in a manner consistent with the Allocation, which the Parties shall each file with the IRS on a timely basis.

2.7 Consent of Third Parties . Nothing in this Agreement shall be construed as an attempt by Seller to assign to Buyer pursuant to this Agreement any Contract, permit, franchise, claim or Asset included in the Purchased Assets that is by its terms or by law nonassignable without the consent of any other party or parties, unless such consent or approval shall have been given, or as to which all the remedies for the enforcement thereof available to Seller would not by law pass to Buyer as an incident of the assignments provided for by this Agreement (a “ Non-Assignable Contract ”). To the extent that any Seller Required Consent in respect of, or a novation of, a Non-Assignable Contract shall not have been obtained on or before the Closing Date, Seller shall continue to use its reasonable best efforts to obtain any such Seller Required Consent or novation after the Closing Date until such time as it shall have been obtained, and Seller shall cooperate with Buyer in any economically feasible arrangement to provide that Buyer shall receive the interest of Seller in the benefits under such Non-Assignable Contract, including performance by Seller as agent if economically feasible; provided that Buyer shall undertake to pay or satisfy the corresponding Liabilities under the terms of such Non-Assignable Contract to the extent that Buyer would have been responsible therefor if such consent or approval had been obtained. Seller shall pay and discharge, and shall indemnify and hold harmless Buyer and its Affiliates from and against, any and all out-of-pocket costs of seeking to obtain or obtaining any such Seller Required Consent whether before or after the Closing Date. Nothing contained in this Section 2.7 or elsewhere in this Agreement shall be deemed a waiver by Buyer of its right to have received on the Closing Date an effective assignment of all of the Purchased Assets or of the covenant of Seller to obtain all of the Seller Required Consents, nor shall this Section 2.7 or any other provision of this Agreement be deemed to constitute an agreement to exclude from the Purchased Assets any Contracts as to which a Seller Required Consent may be necessary.

2.8 Guaranty . Upon the execution of this Agreement, Parent has executed and delivered to the Seller a guaranty, substantially in the form of Exhibit 2.8 (the “Guaranty”).

3.  Closing .

3.1 Location; Date; Deliveries . The closing for the Transactions (the “ Closing ”) shall be held at the offices of CSS Industries, Inc. in Philadelphia, Pennsylvania, on August 4, 2008 or at such other date and place as may be mutually agreed by the Parties (the “ Closing Date ”). The Transactions shall become binding and effective upon the later to occur of receipt of wire transferred funds by (i) Seller, of the Closing Payment, and (ii) Escrow Agent, of the Escrow Payment (the “Effective Date”). The effective time of the Closing shall be at 12:01am (Philadelphia time) on the Closing Date, or at such other time as may be mutually agreed by the Parties. At the Closing and as a condition to Closing:

(a) The Seller Parties shall deliver, or caused to be delivered, to Buyer:

(i) duly executed counterparts to the Transaction Documents;

(ii) all of the Closing Consents and the Seller Required Consents, or in lieu thereof waivers, obtained prior to the Closing. Such Closing Consents and Seller Required Consents (or in lieu thereof, waivers) shall (A) be in form and substance reasonably satisfactory to Buyer, (B) not be subject to the satisfaction of any condition that has not been satisfied or waived, and (C) be in full force and effect;

(iii) the Seller Officer’s Certificate;

(iv) the Seller’s Legal Opinion;

(v) executed releases of any Encumbrance identified on Schedule 4.11 in forms satisfactory to Buyer in its sole discretion;

(vi) duly executed assignment documents (reasonably satisfactory to Buyer) assigning to Buyer all right, title and interest in and to the Confidential Information; and

(vii) such other instruments of conveyance and transfer, in form reasonably satisfactory to Buyer and its counsel, as shall be necessary and effective to transfer and assign to, and vest in, Buyer all of Seller’s right, title and interest in and to the Purchased Assets, and such other documents, instruments, certificates and agreements as may be reasonably required by the Buyer to consummate and give effect to the Transactions. Simultaneously with such deliveries, all such steps will be taken by Seller as may be required to put Buyer in actual possession and operating control of the Purchased Assets.

(b) Buyer shall deliver to the Seller Parties:

(i) duly executed counterparts to the Transaction Documents to which the Buyer is a party;

(ii) the Buyer Officer’s Certificate;

(iii) the Buyer’s Legal Opinion; and

(iv) such other documents, instruments, certificates and agreements as may be reasonably required by the Seller Parties to consummate and give effect to the Transactions.

(c) Buyer shall deliver the Closing Payment to Seller and the Escrow Payment to the Escrow Agent in accordance with Section 2.2(b) .

4.  Representations and Warranties of Seller . The Seller Parties, jointly and severally, hereby represent and warrant to Buyer as follows:

4.1 Organization and Standing . Seller is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it was incorporated and, except as specified in Schedule 4. 1, is duly qualified or licensed to do business as a foreign corporation in each jurisdiction where the Business or the ownership of the Purchased Assets would require it to be so qualified or licensed. The Charter Documents and bylaws of Seller that have been delivered to Buyer as of the date hereof are effective under applicable Laws and are current, correct and complete.

4.2 Ownership . The Shareholders are the record and beneficial owners of all of the issued and outstanding capital stock of Seller. Except for shares of the capital stock of Seller owned by the Shareholders, (i) there are no other issued or outstanding securities of Seller, (ii) there are no subscriptions, options, “phantom” stock rights, warrants or other rights of any kind entitling any Person to acquire or otherwise receive from Seller any shares of capital stock, and (iii) there are no Contracts of any kind relating to the issuance of any capital stock, convertible or exchangeable securities, or any options, warrants or similar rights of Seller.

4.3 Authority and Binding Effect .

(a) Seller has the full power and authority to (i) own the Purchased Assets, (ii) carry on the Business, (iii) execute and deliver each Transaction Document to which it is or will be a party, (iv) perform the Transactions performed or to be performed by it and (v) satisfy or perform, as the case may be, its obligations under those Transaction Documents to which it is a party. The execution, delivery and performance by Seller have been duly authorized by all necessary corporate or other action, including approval by the Shareholders. Each Transaction Document executed and delivered by Seller has been duly executed and delivered by Seller and, assuming due authorization, execution and delivery by the other parties thereto, constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium, receivership and similar laws affecting the enforcement of creditors’ rights generally and to general equitable principles.

(b) Each Shareholder has the legal capacity to (i) execute and deliver each Transaction Document to which he is or will be a party, (ii) perform the Transactions performed or to be performed by him, and (iii) satisfy or perform, as the case may be, his obligations under those Transaction Documents to which he is a party. Each Transaction Document executed and delivered by each Shareholder has been duly executed and delivered by each such Shareholder and, assuming due authorization, execution and delivery by the other Parties thereto, constitutes a valid and binding obligation of each such Shareholder, enforceable against each such Shareholder in accordance with its terms except to the extent that its enforceability may be subject to applicable bankruptcy, insolvency, reorganization, moratorium, receivership and similar laws affecting the enforcement of creditors’ rights generally and to general equitable principles.

4.4 Consents and Approvals . Except for any notices, filings, consents or approvals specified in Schedule 4.4 (the “ Seller Required Consents ”), neither the execution and delivery by Seller or any Shareholder of any of the Transaction Documents to which it is a party, nor the performance of the Transactions performed or to be performed by Seller or any Shareholder, require any notice, filing, consent, renegotiation or approval, constitute a Default, cause any payment obligation to arise, or give any Person the right to challenge any of the Transactions, under (i) any Law or Court Order which is applicable to Seller or any Shareholder, (ii) any Contract, Governmental Permit or other document to which Seller or any Shareholder is a party or by which the properties or other assets of Seller or any Shareholder may be bound or (iii) the Charter Documents of Seller or any Shareholder.

4.5 Third-Party Options . There are no existing Contracts, options or commitments with any third party to acquire Seller, any of the Purchased Assets or any interest therein or in the Business.

4.6 Financial Statements; Books of Account .

(a) Seller has delivered to Buyer prior to the date hereof:

(i) true, complete and correct copies of reviewed balance sheets of Seller as of December 31, 2007, December 31, 2006 and December 31, 2005, and the related statements of income, retained earnings and cash flows for the time periods then ended (collectively, the “ Year-End Financials ”); and

(ii) true, complete and correct copies of the unaudited balance sheet of Seller as of June 30, 2008 (the “ Current Balance Sheet Date ”) and the related statements of income, retained earnings and cash flows for the six-month period then ended (the “ Current Balance Sheet ”, and together with the Year-End Financials, the “ Seller Financial Statements ”).

(b) The Seller Financial Statements were prepared in accordance with the Statements on Standards for Accounting and Review Services, issued by the American Institute of Certified Public Accountants, and, subject to any qualifications set forth in the applicable notes and schedules, fairly present in all material respects the results of operations and financial condition of Seller, and the Purchased Assets and the Assumed Liabilities as of the dates indicated and for the periods covered.

(c) Except as described in Schedule 4.6, the Current Balance Sheet (i) fairly presents in all material respects the financial condition of the Business and the Purchased Assets and the Assumed Liabilities as of the Current Balance Sheet Date and (ii) does not include any Assets that are not intended to constitute part of the Business or the Purchased Assets after giving effect to the Transactions. Except as described in Schedule 4.6 , all Assumed Liabilities of the Business at the Current Balance Sheet Date required to be reflected or reserved in accordance with the Statements on Standards for Accounting and Review Services, issued by the American Institute of Certified Public Accountants, are fully reflected or reserved for in the Current Balance Sheet.

(d) The books of account of Seller reflect, in accordance with the Statements on Standards for Accounting and Review Services, issued by the American Institute of Certified Public Accountants, (i) all transactions relating to the Business or the Purchased Assets and (b) all items of income and expense, and all items of Assets, Liabilities and accruals relating to Seller. Seller has not engaged in any material transaction, maintained any bank account or used any corporate funds except for transactions, bank accounts and funds which have been and are reflected in the normally maintained books and records of Seller.

4.7 Taxes .

(a) Seller has timely filed all Tax Returns due on or before the Closing Date and all such Tax Returns are true, correct and complete in all respects.

(b) Except as described on Schedule 4.7(b) , Seller has paid in full on a timely basis all Taxes owed by it, whether or not shown on any Tax Return.

(c) Seller has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency.

(d) The amount of Seller’s Liability for unpaid Taxes as of the Current Balance Sheet Date did not exceed the amount of the current Liability accruals for Taxes (excluding reserves for deferred Taxes) shown on the Current Balance Sheet, and, except as described on Schedule 4.7(d) , the amount of Seller’s Liability for unpaid Taxes for all periods or portions thereof ending on or before the Closing Date will not exceed the amount of the current Liability accruals for Taxes (excluding reserves for deferred Taxes) as such accruals are reflected on the books and records of Seller on the Closing Date.

(e) There are no ongoing examinations or claims against Seller for Taxes, and no written notice of any audit, examination or claim for Taxes, whether pending or threatened, has been received.

(f) Except as described on Schedule 4.7(f) , Seller has withheld and paid over to the proper taxing authorities all Taxes required to have been withheld and paid over, and complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto.

(g) Seller has disclosed on its federal income Tax Returns all positions taken therein that could give rise to a substantial understatement of federal income Tax within the meaning of section 6662 of the Code. Except as described on Schedule 4.7(g) , Seller has not assumed the Tax Liability of any other Person under any Contract. Seller does not have joint and several liability for the Taxes of any other Person (including joint and several liability arising under any foreign Law). Seller does not have transferee or successor liability for the Taxes of any other Person (including transferee or successor liability arising under any foreign Law). Seller is not required to make any adjustments to income under section 481 of the Code for any period ending after the Closing Date or otherwise include in taxable income any amount that is attributable to a transaction occurring in a period ending on or prior to the Closing Date.

(h) All copies of (i) any Tax examinations, (ii) extensions of statutory limitations for the collection or assessment of Taxes and (iii) the Tax Returns of Seller for the last three fiscal years have been delivered to Buyer.

(i) There are (and as of immediately following the Closing there will be) no Encumbrances on the Purchased Assets relating to or attributable to Taxes.

(j) To Seller’s knowledge, there is no basis for the assertion of any claim relating to or attributable to Taxes which, if adversely determined, would result in any Encumbrance on the Purchased Assets or otherwise have a Material Adverse Effect.

(k) Seller is not, and has not been at any time, a party to a Tax sharing, Tax indemnity, Tax allocation or similar Contract, and Seller has not assumed the Tax Liability of any other Person under any Contract.

(l)  Schedule 4.7(l) lists all federal, state, local, and foreign jurisdictions in which income Tax Returns have been filed with respect the Business for the last three fiscal years.

(m) Except as described on Schedule 4.7(m) , no claim has ever been made by any Governmental Body in a jurisdiction where Seller or its partners do not file a Tax Return that Seller or its partners are or may be subject to taxation by that jurisdiction or that any of them must file Tax Returns with regard to such jurisdiction.

4.8 Undisclosed Liabilities . Except as described on Schedule 4.8 , Seller does not have any Liabilities except for:

(a) those Liabilities adequately and specifically set forth or reserved for on the Current Balance Sheet and not heretofore paid or discharged;

(b) those Liabilities arising in the ordinary course of business under any Contract specifically disclosed on Schedule 4.15 to this Agreement other than Liabilities arising out of the breach of any such Contract by Seller;

(c) those Liabilities incurred in the ordinary course of business since the Current Balance Sheet Date and not heretofore paid or discharged, and that, individually or in the aggregate, are not material to the Business; and

(d) pursuant to this Agreement.

4.9 Accounts Receivable . The Accounts Receivable included in the Purchased Assets are bona fide Accounts Receivable created in the ordinary course of business. Except as described on Schedule 4.9 , all of the Accounts Receivable included in the Purchased Assets are collectible within 60 days from the respective dates of sale, without taking into account any reserve to be included in the determination of the Accounts Receivable specified in the Current Balance Sheet. To Seller’s knowledge, there is no contest, claim, defense or right of set-off, other than returns in the ordinary course of business consistent with past practice, of any account debtor relating to the amount or validity of any Account Receivable. Schedule 4.9 contains a complete and accurate list of all Accounts Receivable and sets forth the aging of each such Account Receivable. To Seller’s knowledge, there are no facts or circumstances that are likely to result in any increase in the uncollectibility of such Accounts Receivable.

4.10 Inventory . Except as described in Schedule 4.10 , the Inventory included in the Purchased Assets was acquired and has been maintained in the ordinary course of business consistent with past practice, and consists of items of good, usable and merchantable quality in all respects and none of such Inventory is damaged or obsolete. Except as described in Schedule 4.10, since December 31, 2007 (a) all sales of Inventory items have been made by Seller in the ordinary course of business, and (b) all purchases of Inventory items have been made by Seller and valued by Seller on its books consistent with past practice. No items which have previously been written off will be considered as Inventory. The Inventory, including the Inventory that is the subject of any purchase Contract by Seller, will not be in excess of Seller’s reasonable requirements (consistent with Seller’s practices in the ordinary course of business during the period from December 31, 2007 to the date hereof), and such items of Inventory will be valued on the Closing Balance Sheet in accordance with GAAP (except as described in Schedule 4.10 ) at actual cost (determined prior to giving effect to any reserve for excess or obsolete inventory using the same standard costs utilized by Seller in determining the cost of inventory on the Current Balance Sheet).

4.11 Title to Purchased Assets and Related Matters . Except as otherwise set forth on Schedule 4.11 , to Seller’s knowledge Seller has good and marketable title to, valid leasehold interest in or valid licenses to use, all the Purchased Assets, free from any Encumbrances. The use of the Purchased Assets is not subject to any Encumbrances. The use of the Purchased Assets (excluding the Confidential Information and the Intellectual Property) does not encroach on the property or the rights of any Person, and to Seller’s knowledge the use of the Confidential Information and the Intellectual Property does not encroach on the property or the rights of any Person. Except as otherwise set forth on Schedule 4.11 , the Purchased Assets constitute all the Assets and services required for the continued operation of the Business by Buyer as operated by Seller during the past 12 months. The Purchased Assets, taken as a whole, constitute the Assets relating to or used or held for use in connection with the Business during the past 12 months (except for Inventory sold, cash disposed of, Accounts Receivable collected, prepaid expenses realized, Contracts fully performed, properties or Assets replaced by equivalent or superior Assets, in each case in the ordinary course of business, and Excluded Assets). To Seller’s knowledge, there are no Assets used in the operation of the Business that are owned by any Person other than Seller that will not be licensed or leased to Buyer under valid, current license arrangements or leases.

4.12 Condition and Location of Purchased Assets . Except as otherwise set forth on Schedule 4. 12, the equipment and all other tangible assets and properties which are part of the Purchased Assets are: (i) in good operating condition and repair, ordinary wear and tear excepted(given the age of each Asset), and are usable in the ordinary course of the business, and to Seller’s knowledge conform in all respects to all applicable Laws relating to their use and operation as such Purchased Assets are currently used in the conduct of the Business; and (ii) located at either the Manufacturing Property or the Warehouse Property. Except pursuant to leases described on any Schedule hereto, no Person other than Seller owns any vehicles, equipment or other tangible Assets situated on the facilities used by Seller in the Business which are necessary to the operation of the Business.

4.13 Real Property . Seller does not own, and has never owned, any Real Property. Schedule 4.13 contains an accurate and complete list of all Real Property leased by Seller (the “ Real Estate Leases ”), showing location, rental cost and landlord. Each of the Real Estate Leases is in full force and effect, grants to its tenant the exclusive right to use and occupy the leased premises, is not subject to any Encumbrances and has not been assigned, modified, supplemented or amended. All Real Property under lease to or otherwise used by Seller is in good condition, ordinary wear and tear excepted, and is sufficient for the current and currently contemplated operations of the Business. Seller has peaceful, undisturbed and exclusive possession of the leasehold estate or other interest created under the Real Estate Leases, and there are no leases, subleases, licenses, concessions, or

other Contracts granting to any other Person the right to use or occupy such Real Property. Seller is not, and to the knowledge of Seller, the landlord thereunder is not, in Default under any Contract or Law with respect to the occupancy, maintenance or use of any Real Property, and no notice or threat from any lessor, Governmental Body or other Person has been received by Seller or served upon any such Real Property claiming any Default or Obligation under, any Contract or Law, or requiring or calling attention to the need for any work, repairs, construction, alteration, installations or environmental remediation. No Actions are pending which would affect the zoning or use of any Real Property occupied, maintained or used by Seller. No portion of any Real Property occupied, maintained or used by Seller is within an identified flood plain or other designated flood hazard area as established under any Law or otherwise by any Governmental Body. All Real Property occupied, maintained or used by Seller has direct legal access to, abuts, and is served by a publicly maintained road, which road does and shall provide a valid means of ingress and egress thereto and therefrom, without additional expense. All utilities, including water, gas, telephone, electricity, sanitary and storm sewers, are currently available to all Real Property occupied, maintained or used by Seller at normal and customary rates, and are adequate to serve such Real Property for Seller’s current and currently contemplated use thereof.

4.14 Confidential Information; Intellectual Property .

(a)  Confidential Information . To Seller’s actual knowledge, without any further factual investigation:

(i) The Business, including the products and services of the Business, does not infringe upon, misappropriate, dilute or otherwise violate any confidential information, proprietary information, or any intellectual property owned or controlled by any other Person. Except as set forth in Schedule 4.14(a)(i) , no written notice or claim has been received by Seller or any Shareholder asserting that the Business, including the products or services of the Business, infringes upon, misappropriates, dilutes or otherwise violates any confidential information, proprietary information, or any intellectual property owned or controlled by any other Person.

(ii) The Confidential Information constitutes all of the Confidential Information that has been used or held for use, or relied upon in the operation of the Business during the past 36 months or that will be used or relied upon in the operation of the Business as it is currently contemplated to be operated. No Seller Party has transferred ownership of, nor granted any exclusive license with respect to, any Confidential Information that is or was material to the Business, to any other Person, or intentionally caused Seller’s rights in such Confidential Information to lapse or enter the public domain. Except as described on Schedule 4.14(a)(ii) , Seller is the owner of all right, title and interest in and to each item of the Confidential Information that is or was material to the Business, or, in the case of licensed Confidential Information, has obtained all licenses necessary to freely use and commercially exploit the Confidential Information in perpetuity, free and clear of any Encumbrances, and has the right to use all of the Confidential Information that is or was material to the Business without payment to a third party. Except as described on Schedule 4.14(a)(ii) , all Seller’s right, title and interest in the Confidential Information is fully transferable, alienable or licensable by Buyer without restriction and without payment of any kind to any other Person.

(iii) Except as described on Schedule 4.14(a)(iii) , all employees of Seller who have ever been or currently are involved in the design, review, evaluation or development of the Confidential Information have executed a nondisclosure and assignment agreement, and each such agreement is enforceable against the employee thereto in accordance with its terms.

(iv) Except as specified on Schedule 4.14(a)(iv) , none of the employees or consultants of Seller is subject to any contractual or legal restrictions that might interfere with the use of his or her best efforts to promote the interests of the Business. No employee of Seller has entered into any Contract that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign or disclose information concerning his or her work to anyone other than Seller. Schedule 4.14(a)(iv) lists all Contracts between or among Seller, any employee thereof and a third party that imparts or that imparted an obligation of noncompetition, secrecy, confidentiality or non-disclosure upon Seller, any employee thereof or any third party. Except as described in Schedule 4.14(a)(iv) , Seller has no reason to believe that Seller or any employee thereof either is or was under any obligation of noncompetition, secrecy, confidentiality or non-disclosure to any third party.

(v) None of Seller, its employees or consultants (A) has used any other Persons’ confidential information, proprietary information, or intellectual property in the course of his or her work or (B) is, or is or currently expected to be, in Default under any term of any Contract relating to the Confidential Information, or any Confidentiality Agreement or any other Contract or any restrictive covenant relating to the Confidential Information, or the development or exploitation thereof.

(b)  Intellectual Property .

(i)  Schedule 4.14(b)(i) contains a complete and accurate list and summary description, including any royalties paid or received by Seller, of all Contracts relating to the Intellectual Property to which Seller is a party or by which Seller is bound, except for any license implied by the sale of a product and perpetual, paid-up royalty free and transferable license rights for “off-the-shelf” third party application software licensed for use in the Business, in any individual case, under a license with a maximum payment obligation on the part of Seller of less than $5,000 (“ Off-the-Shelf Software ”). There are no outstanding or threatened disputes or disagreements with respect to any such Contract. To Seller’s actual knowledge without any further factual investigation, except for any rights under written licenses or other written Contracts related to the Intellectual Property, no current or former employee of Seller and no other Person owns or has any proprietary, financial or other interest, direct or indirect, in whole or in part, and including any right to royalties or other compensation, in any of the Intellectual Property, or in any application therefor.

(ii) Except as set forth in Schedule 4.14(b)(ii) , to Seller’s actual knowledge without any further factual investigation, no Intellectual Property is subject to any proceeding or outstanding order or stipulation restricting in any manner the use, transfer, or licensing thereof by Buyer, or which may adversely affect the validity, use or enforceability of such Intellectual Property. To Seller’s actual knowledge without any further factual investigation, except as set forth in Schedule 4.14(b)(ii), each item of Intellectual Property currently used to operate the Business is valid, subsisting, and enforceable, any necessary registration, maintenance and renewal fees currently due in connection with such Intellectual Property have been made and all necessary documents, recordations and certificates in connection with such Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the US or foreign jurisdictions, as the case may be, for the purposes of perfecting and maintaining such Intellectual Property.

(iii) Except as set forth in Schedule 4.14(b)(iii) , all former and current employees of Seller have executed written Contracts with Seller that assign to Seller all rights to all Intellectual Property, including any inventions (whether or not patentable), improvements, discoveries or information made during or derived from their relationship to Seller, and, to Seller’s actual knowledge without any further factual investigation, each such agreement is enforceable against the employee thereto in accordance with its terms.

(iv) To Seller’s actual knowledge without any further factual investigation, except as set forth in Schedule 4.14(b)(iv) , no Person is infringing, misappropriating, diluting or otherwise violating, or challenging or threatening in any way, any Intellectual Property. Seller has not given any indemnification rights to any other Person against infringement, misappropriation, dilution or other violation of any Intellectual Property.

(v) All Information Technology currently used to operate the Business is owned by Seller free and clear of any Encumbrances, or is leased or licensed by Seller.

(vi) All Off-the-Shelf Software and similar products currently used to operate the Business have been duly licensed by Seller and, except as set forth in Schedule 4.14(b)(vi), will be properly transferred to Buyer.

(vii) Set forth in Schedule 4.14(b)(vii) is a complete and correct list of all URLs, websites and domain names used or held for use in the operation of the Business and a description of all of Seller’s rights with respect thereto.

(c)  Patents .

(i)  Schedule 4.14(c)(i) contains a complete and accurate list and summary description of all Patents in which Seller has an ownership interest, including the jurisdiction in which each item is issued or registered or in which any application for issuance or registration has been filed, and the date of application and issuance or registration of the item. Seller owns all right, title and interest, including the right to bring actions for infringement or other violation thereof, in and to each of the Patents, free and clear of any Encumbrances.

(ii) All of the issued Patents are currently in compliance with formal legal requirements (including payment of filing, examination, and maintenance fees and proofs of working or use), are valid and enforceable to Seller’s actual knowledge without any further factual investigation, and are not subject to any maintenance fees or Taxes or actions falling due within 90 days after the Closing Date.

(iii) No Patent has been or is now involved in any interference, reissue, reexamination, or opposition proceeding. To Seller’s knowledge, there is no potentially interfering patent or patent application of any third party.

(iv) To Seller’s knowledge, all products made, used or sold under the Patents have been marked with the proper patent notice.

(d)  Trademarks .

(i)  Schedule 4.14(d)(i) contains a complete and accurate list and summary de